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42.792.808 von elsolivars am 23.02.12
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February 22, 2012 - 3:13 PM EST
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Royal Coal Announces Withdrawal of Preliminary Prospectus and
Provides Corporate Update
TORONTO, ONTARIO--(Marketwire - Feb. 22, 2012) -
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
RELEASE, PUBLICATION, DISTRIBUTION OR DISSEMINATION DIRECTLY, OR
INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES.
Royal Coal Corp. ("Royal Coal" or the "Company") (TSX
VENTURE:RDA)(FRANKFURT:RLC), a US Central Appalachian producer of
high BTU, low sulphur thermal coal, announces that it has decided
to withdraw the preliminary short form prospectus that was filed on
January 17, 2012 with respect to a proposed offering of units of
the Company, because it was not able to complete the offering under
current market conditions.
The Company does not currently have positive cash flow to meet its
ongoing operational requirements and debt service and repayment
obligations and requires a combination of additional financing and
a restructuring of its existing debt structure to enable it to
continue its operations. In addition, price realizations from coal
sales have been adversely affected by recent weak thermal coal
prices. While the Company is actively pursuing other sources of
funds that may be available to fund such needs, additional
financing may not be available to it or, even, if available, the
terms of such financing might not be favorable to the Company and
might involve substantial dilution to existing shareholders.
If
the Company fails to raise additional funds and restructure its
existing debt it is doubtful that it will be able to continue as a
going concern.
The Company is using every effort to reduce or delay expenditures,
seek additional capital, and restructure or refinance its
indebtedness. In addition to seeking to reduce its debt
obligations, the Company is revising its mine plan with the goal of
reaching sustainable profitable operations at its Big Branch Mine
and phasing in additional production at the Big Branch Mine
extension and the Sid Mine over time.
As previously announced, the Company and certain of its
subsidiaries entered into an agreement (the "Coal Purchase Amending
Agreement") with Sandstorm Metals & Energy Ltd. and Sandstorm
Metals & Energy (US) Inc. (collectively, "Sandstorm"),
providing for certain amendments to the coal production payment
agreement (the "Coal Purchase Agreement") dated November 26, 2010
between such parties. The amendments were conditional on the
completion by the Company of an equity financing for aggregate
gross proceeds of not less than $5 million (the "Equity Financing")
on or before January 31, 2012, which did not occur. As a result,
the Coal Purchase Amending Agreement terminated automatically, the
amendments did not take effect and the Coal Purchase Agreement
continues in full force and effect, unamended.
The Coal Purchase Agreement includes certain production level and
cash flow guarantees and provides for a general security interest
in favour of Sandstorm over the assets of the Company. Unless
otherwise waived by Sandstorm, failure to meet such guarantees
constitutes an event of default under the Coal Purchase Agreement,
entitling Sandstorm to enforce its security interest, impose cash
penalties on the Company and/or terminate the Coal Purchase
Agreement. The Company did not meet the production levels set out
in the Coal Purchase Agreement for the calendar year 2011 and, as a
result, is required to pay USD $1,018,597 to Sandstorm with respect
to the deficiency in the guaranteed minimum cash flows for such
period, which it has not done when such payment was due. Without
additional financing or Sandstorm's waiver of any event of default,
there is significant doubt as to the Company's ability to meet its
current and future production or cash flow commitments and continue
as a going concern.
In addition, if the Company does not complete the Equity
Financing on or prior to February 29, 2012, all amounts outstanding
under its loan agreement (the "Loan Agreement") entered into on
December 22, 2011 with Sandstorm, in the principal amount of USD
$3,177,829.21, will become immediately due and payable.
The Company did not pay the interest owing pursuant to the secured
convertible debenture (the "Convertible Debenture") issued to
Mercuria Energy Group Holding SA ("Mercuria") in respect of the
period ending on December 31, 2012 when any such interest became or
becomes due and payable.
The Company has been in ongoing co-operative discussions with its
secured and unsecured creditors, including with respect to possible
financing opportunities and amendments, waivers, and continued
forbearance on the exercise of any rights (including any
enforcement of security), under applicable agreements between the
Company and such parties. Current discussions include the
possibility of converting some debt to equity. To date, none of
Sandstorm, Mercuria or any party to any such agreement has taken
any action or commenced any proceedings with respect to the
enforcement of any of its rights or remedies under such agreements.
The Company continues to try to raise sufficient funds to settle
all unpaid amounts that are due and payable to creditors or amend
its existing agreements with them. However, any default under any
one of the Coal Purchase Agreement, the Loan Agreement or the
Mercuria Convertible Debenture also constitutes a default under the
other of these agreements, which would have a material adverse
effect on the business, financial condition and continued
operations of the Company.
Update on Operations at Flatwoods and Elk Creek
Royal Coal has also determined not to continue the contract mining
operations it previously announced December 28, 2011 where Royal
Coal would mine and sell the coal at certain leases held by Novadx
Ventures Corp. and the Ikerd Group of Companies in Kentucky, USA on
a contract basis, including the Flatwoods and Elk Creek mines. In
recent weeks, thermal coal fundamentals have deteriorated
significantly and the Company has determined that it cannot operate
the Flatwoods and Elk Creek mines effectively given current
available coal prices.
About Royal Coal
Royal Coal is a coal exploration and production company,
headquartered in Toronto, Ontario, Canada with a regional office in
Hazard, Kentucky, U.S.A. whose primary business focus is developing
producing surface coal mining operations in the Central Appalachian
coal producing region of the United States, which includes parts of
West Virginia, Virginia, Kentucky, Ohio, and Tennessee.
Neither TSX Venture Exchange nor its Regulation Services Provider
(as that term is defined in the policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release.
Source: Marketwire International (February 22, 2012 - 3:13 PM
EST)
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also , so ganz prickelnd ist die situation für royal coal leider
nicht.
elsolivars