Paringa Resources Ltd

Paringa says Nasdaq staff have decided to delist its ADSs, with trading suspended from March 5, 2020, because its subsidiary Hartshorne Mining Group, LLC filed for Chapter 11 bankruptcy protection. The ASX suspension continues until at least March 31, 2020. The filing does not say what happens to the Poplar Grove mine, the Tribeca loan or Paringa's ordinary shares; it only notes the ADSs might trade over-the-counter if a market maker obtains approval. This follows the December 2019 lender-covenant warning and the mining problems at Poplar Grove.

listing compliance notice

Paringa's shares were put in a trading halt on the ASX (and its Nasdaq ADSs halted to match) pending an update on talks with its lenders. The company says a new, unplanned geological fault at Poplar Grove (coal seam displaced about 12 feet) caused substantial Unit 1 production problems in December, which it says hurt revenue. As a result its cash may fall below the US$5.0 million minimum required under the Tribeca Term Loan Facility; if so it has 15 business days to fix the breach and is working with Tribeca. This contradicts the earlier message that the faults were predicted and the ramp-up to 560 ft/shift was on track; the company says no consultant identified this fault in the mine plan. It also shows the Tribeca facility was in place, which was an open question.

listing compliance notice

Regulators approved a longer cut plan for mining Unit 1 at Poplar Grove (cut depth up from 20 ft to 40 ft), and a record 644 ft was mined in one shift soon afterwards. Approval for heavier truck loads between the plant and Ainsworth Dock should cut trucking costs. Unit 2 hit a geological fault the company says was predicted and will be moved over about five days; the company still targets 560 ft/shift per unit before the end of 2019 (1.8 Mtpa annualised).

regulatory community update

Paringa signed a term sheet for a US$56 million, three-year senior secured loan from Tribeca, at US Prime plus 7.50%, with 25 million options at A$0.20 strike issued to the lender. It would refinance the US$21.7 million Macquarie facility, fund a third mining unit and add working capital; funding is still subject to due diligence and conditions, with drawdown expected by April 30, 2019. The company also says mining began in Q1 2019 and first coal sales to LG&E are expected the week of March 25, 2019.

debt financing

Paringa signed a five-year coal sales agreement with Big Rivers Electric Corporation for 1.28 to 1.4 million tons from 2019 to 2023, sold free-on-board barge at its Ainsworth Dock. Together with existing contracts with LG&E/KU (4.75 million tons) and OVEC-IKEC (0.65 million tons), the company says its five-year contracted sales reach 6.8 million tons (the CEO quote says 6.7 million).

asset acquisition disposition

The Poplar Grove slope and both ventilation shafts have reached the Western Kentucky No. 9 coal seam, which the company calls a material milestone and which lets it start bottom development work. This follows the earlier December 2018 target for first coal; the plant and river dock are said to be on target for commissioning, and the company says mining equipment is arriving ahead of a January switch from contract mining to owner-operated production.

drilling result

Paringa filed its 2018 annual report and corporate governance statement alongside a press release saying its American Depositary Receipts (each worth 50 ordinary shares) began trading on Nasdaq as 'PNRL' on September 28, 2018, while its shares stay listed in Australia as 'PNL'. No capital was raised; the company reported US$22.6 million cash at June 30, 2018 and has drawn the first US$15.0 million of its US$21.7 million Macquarie project loan. Poplar Grove construction is described as well advanced, with first coal expected in December 2018.

regulatory community update