Prairie Mining says near deal with Chinese banks to fund Polish mine
LONDON, Oct 12 (Reuters) – London-listed Prairie Mining is in advanced talks with Chinese lenders to finance its coking coal mine project in Poland, its chief executive said.
Prairie, which is also listed in Australia, is developing the Jan Karski mine in south eastern Poland and bought the Debiensko mine last year with a view to becoming a supplier of cheap coking coal in Europe where most steelmakers import their coal.
Upfront capital costs for the development of the Jan Karski mine totals $630 million with Chinese lenders expected to financing 85 percent of it, Chief Executive Ben Stoikovich told Reuters.
The company signed a deal with state-owned China Coal No. 5 Construction Ltd in November last year for the construction of the mine and to help secure Chinese funding.
"We want their technology, we want their expertise and that is why we have partnered with them," Stoikovich said, adding that China Coal had a good track record of developing mines quickly and at competitive costs.
Chinese coking coal futures jumped over 160 percent in 2016 as years of oversupply came to an end but prices are mostly flat this year.
Prairie's London-listed shares are up about 50 percent this year, adding to gains of around 200 percent in 2016. The price was unchanged at 33 pence on Thursday.
The company is also embarking on a drilling programme to inform its redevelopment plan for the newly acquired Debiensko mine. The mine, which was mothballed in 2000, will be modernised to make it a low cost producer at a cost of about $500 million.
"The mine tended to use old fashioned mining methods," Stoikovich said. "We are going in with a very Australian view – how do we automate this as much as possible."
In addition to tapping Chinese banks for funding, Prairie could look at raising cash from London investors for further development in future, Stoikovich said.
(Reporting by Zandi Shabalala; Editing by Greg Mahlich)