The alteration to the agreement relieves Guildford Coal of paying any further success fees to The Chairmen1 stipulated under its previous agreement in exchange for 74 million shares in Guildford Coal.
Shareholders approved the alteration of the management agreement between Guildford Coal and major shareholder The Chairmen1 on February 27.
Guildford’s management agreement with the Chairmen1 group entailed a success fee of $20 million for each 100 million tonnes of indicated resource of coal in connection with one or more of the projects acquired by the company prior to it being listed on the Australian Securities Exchange.
The first instalment of the existing success fee was paid to Chairmen1 by Guildford on August 3 by way of the issue of 44,179,369 fully paid ordinary shares.
Guildford has developed a JORC resource in excess of 2 billion tonnes of thermal and coking coal across multiple projects in Queensland and Mongolia.
The company has substantial exploration upside with a further estimated exploration target of 0.98Bt to 8.89Bt across its managed projects.
It announced an independently prepared maiden inferred resource of 252.6Mt of thermal/PCI coal for its Springsure project in Queensland on February 25.
Guildford has now entered into a number of financing arrangements, including the issuance of convertible bonds in the company, to maintain funding for its projects. Gross cash proceeds from the financing arrangements totalled $23.7 million. Cash at bank at the end of the reporting period was $9.4 million, with net assets of $114.3 million.
During the first half, the Queensland and Mongolian company signed a memorandum of understanding with Asciano for the provision of a pit-to-port transport and logistics solution for the Greater Northern Galilee Coal project, further developed geological models for the Hughenden and Clyde Park projects and embarked on drilling activities on its Hughenden, White Mountain, Kolan, Springsure and Mongolian projects.
“Guildford’s Mongolian operations have made significant progress in the development of the East and North Pits of the South Gobi Project, with coking coal production forecast to commence during the first half of calendar year 2013,” the company said.
