Cuesta has engaged mining consultant Xenith to conduct a scoping study on the Moorlands project and is finalising its development activities for 2013.
Moorlands provides the company with a significant development project opportunity and the funding agreement allows Cuesta to achieve its development objectives, managing director Matthew Crawford said.
“This funding is a significant vote of confidence by our major shareholder. Beijing Guoli recognises the potential of Moorlands and has indicated that it will continue to support our growth.
“This takes Guoli’s total investment in Cuesta to $32 million.
“Our immediate priority is to complete the mine scoping study at Moorlands in Q1 2013 followed by resource drilling programs in the lead up to feasibility studies.
“We now have a significant amount of working capital to fund the company’s ongoing activities and remain focussed on maximising shareholder value.”
The company issued 66,666,667 shares at $0.18 a share to split between the redemption of convertible notes and to add to working capital for its Moorlands project.
ILN spoke to Crawford about the raising and the company’s relationship with Longluck Investment, a wholly owned subsidiary of Beijing Guoli Energy Investment.
“We are very fortunate to have such a significant investor during this important transitional time from being an exploration company to becoming a mining company,” Crawford said.
“Beijing Guoli is a little bit like a Chinese version of Wesfarmers; acting as an industrial conglomerate for a number of businesses based in China. They are currently making their foray into Australia and have recently opened an office in Sydney.”
Beijing Guoli’s current investments include electrical generation, coal mining, financial investment, chemicals and real estate development.
“They have indicated that they have recognised the potential in our company and they are happy with our progress to date,” he added.
About $5 million for the raising will be used to redeem 50% of the $10 million convertible notes that will be issued to the vendors upon settlement of the acquisition of the Orion Coal project, announced in December.
The other $7 million is to be added to working capital for the Moorlands project in Queensland.
“We had $10 million at the end of the December quarter and we now have a further $7 million to add to that, so we are sitting quite comfortably financially,” Crawford said.
“We will use the money to begin mine scoping with Xenith in four to six weeks and we have a technical team currently planning two stages of drilling for this year.”
Ruoshui Wang represents Beijing Guoli on the Cuesta Coal Board and said that the company was looking forward to supporting Cuesta’s ongoing growth.
“Beijing Guoli is pleased to continue supporting Cuesta’s growth and development. The Moorlands deposit has significant unlocked value, and this capital raising will help to fund a broad range of development activities this year,” he said.
Cuesta announced a resource upgrade to 53.4Mt on its EPC 1738 last year. And on December 12, it announced the acquisition of the Orion Coal project (EPCs 775 and 776) from Hannigan & Associates.
The Orion Coal project is to the immediate north and a continuation of Cuesta’s existing resource in EPC 1738. Together, the deposits are called the Moorlands project.
The Moorlands project contains a combined resource of 136.3Mt and an exploration target of 85â€Ã‚Â150Mt.
