MetroCoal offers $250,000 to Cape Alumina for Bauxite Hill project

MetroCoal, a major shareholder in Cape Alumina, bails the bauxite developer out of debt by financing A$250,000 to continue the Bauxite Hill project in western Cape York, Queensland.

Cape Alumina reported that the loan would help the company reserve its existing cash resource, pending the MetroCoal’s takeover bid launched in August, which was primarily floated to ensure that the Bauxite Hills project continues.

The new cash flow will be directed towards bauxite analysis, environmental work and additional drilling for the estimation of a measured Joint Ore Reserves Committee resource definition.

The unsecured loan is supposed to be repaid on October 3, 2015 with a 10% per year, or within 21 business days from the issue of Cape Alumina’s marketable securities worth at least A$ 1-million, or when the company suffers from additional debt.

The reason for MetroCoal’s generous loan was to ensure that Cape Alumina can get most of the work done that was scheduled for the dry season. If this cycle was delayed that the entire project evaluation as well as permitting and feasibility study programs by almost a year.

After the March attempt MetroCoal has launched a second takeover earlier this month, offering to buy back the 43% Cape Alumina shares. In this new offer, MetroCoal is offering 1 of its shares for every 1.3 Cape Alumina shares held by the shareholders, with the offer representing a 35% premium to the 20-day volume weighted average price of Cape Alumina shares.