Bandanna Energy (ASX:BND) has unlocked capital from its investment in a Gladstone gas port development to chase its coal production goal.
The company has sold its preference equity in the Wiggins Island Coast Export Terminal (WICET) to an undisclosed buyer for $47 million, providing a net gain of $6 million, it announced today.
BND is sitting on cash reserves of $121 million, of which only $23 million is secured against infrastructure contracts, which it will pump into its Springsure Creek Coal Mine Project.
Funds will be used for the mining lease approvals process and pre-development activities at the underground thermal coal mine. The project is the company’s priority and production is slated for the first half of 2015.
The sale has been applauded by the market, with Bananna shares jumping 20 per cent at the open of trade today, before settling this afternoon 13.64 per cent higher at $0.125 this afternoon.
BND is part of a consortium of eight resource companies involved in the WICET joint venture and maintains its 14 per cent shareholding in Stage 1, representation on the board and a 4mtpa coal allocation.
With construction more than half way finished at WICET, it is time for BND to move its focus, says managing director Michael Gray.
“Bandanna’s initial $41 million investment in WIPS in September 2011, along with that of the other WICET Stage 1 shippers, was critical to ensuring completion of the $2.5 billion financing package to enable commencement of construction of the port,” says Gray.
“With the port construction now more than 60 per cent complete, Bandanna energy considers those funds would be better applied directly towards continued progress of development of Springsure Creek.”