Caledon Resources places loan notes to raise £4.2 million for working capital

Caledon Resources (AIM: CDN)  has placed £4.2 million worth of nominal 8.5% unsecured convertible loan notes due 2013, each with a par value of £50,000 to provide additional working capital for the company including the potential lodging of a bid bond associated with the Wiggins Island tonnage allocation process.

The loan notes have a conversion price of 47.5p per ordinary share subject to adjustment in accordance with the terms of the loan note instrument. Shares in the company closed at 36.25 pence yesterday.

The company said that the directors consider that the terms of the transaction to be fair and reasonable after consulting with Caledon’s nominated adviser RBC Capital Markets.

The placement was classified as a related party transaction due to the participation of Polo resources Limited, which is a substantial shareholder in the company.

Last month, Caledon reported higher production in Q4 and said the saleable production of 485,000 tonnes it managed to achieve at its Cook coal mine operations in 2009 was in line with a previous announcement in December. It is still planning on a base production of 700,000t for 2010 and investigating options for further expansion.

Caledon sold 109,000t and 403,000t of coking coal in Q4 and full year 2009 respectively, marking an improvement of 4% and 1% respectively. Thermal coal sales dropped 81% to 7,000t in Q4, but climbed 15% to 76,000t in 2009.

The company produced 485,000 tonnes of coal in 2009. It plans on a base production of 700,000t for 2010 and currently investigating options for further expansion.

http://www.proactiveinvestors.co.uk/companies/news/13230/caledon-resources-places-loan-notes-to-raise-42-million-for-working-capital-13230.html