The note is to be convertible at RCF’s election into ordinary fully paid shares in Ascot at a 25% conversion premium on the current ASX share price.

Ascot has undertaken to obtain requisite shareholder approvals to enable conversion within three months of the issue of the note, otherwise it becomes immediately repayable.

The company also has the ability to redeem the note on or after May 9, 2014, by giving the requisite notice to RCF.

Ascot will use the money raised to complete its maiden coal resource estimate for the company’s flagship Titiribi Coal Project in Colombia, advance a scoping study at the project and for general corporate and working capital.

“Entering into a financial agreement of this nature with a counter-party of the calibre of

RCF is further evidence of the quality of the company’s Titiribi coal project,” Ascot managing director Andrew Caruso said.

“RCF is a world-renowned and respected specialist mining investor. In addition, the company was pleased to have negotiated the term sheet on favourable terms, particularly against the backdrop of challenging market conditions currently faced by junior resource exploration and development companies.”

The Titiribi project, which was acquired mid-last year, is in an established mining region within the state of Antioquia, Colombia, just 70km from state capital Medellin.

Ascot holds a 90% interest in the project, which consists of three mining licenses with an option over three more adjoining concessions that in total cover approximately 700 hectares.

Ascot is aiming initial production at Titiribi by mid-2014 of 250,000 tonnes per annum.

Ascot said it intended to grow its Colombian business via asset acquisition and would continually assess opportunities within the country.