Embattled Buffalo Coal relies on seventh renegotiation with Investec
JOHANNESBURG (miningweekly.com) – The survival of South Africa-focused coal miner Buffalo Coal depends on the outcome of the seventh amendment to the company’s term loan and revolving credit agreement with specialist banker and asset management firm Investec, which is currently being negotiated.
Despite having implemented various restructuring initiatives, the embattled miner continues to experience operational challenges and is still in breach of “certain covenants” with respect to its borrowings from Investec.
Buffalo Coal said in a statement on Wednesday that it was in default of two R7.5-million repayments to Investec, scheduled for March 31 and June 30, and that default notices were received from the investment firm with regard to its breach of agreement.
While Investec has in the past stated that it does not intend to exercise its right to request payment of the outstanding debt, it has reserved the right to review this decision, with no obligation to keep Buffalo Coal advised in this regard.
Concurrently, Buffalo Coal said it could provide no assurance that it would be able to meet its covenants in the future which, therefore, casts “significant doubt as to whether the group can continue as a going concern”.
As at June 30, the group had a shareholders’ deficiency of R220.1-million, a working capital deficiency of R217-million and a net loss of R2.7-million for the six months ended June 30.
TSX- and AltX-listed Buffalo Coal produces high-quality thermal and metallurgical coal at its operations near the town of Dundee, in KwaZulu-Natal. The company’s two operating mines are the Magdalena thermal coal mine and the Aviemore anthracite colliery, with a calcine processing plant located nearby, at its Coal Fields site.
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