Allegiance Coal (ASX:AHQ) plans acquisition and capital raise

Petra

The Market Herald

  • Allegiance Coal (AHQ) enters a trading halt while it plans a capital raise and acquisition
  • It isn’t certain who or what the company will be acquiring nor how much will be raised
  • Earlier this week, AHQ and its offtake partner replaced the coal blend to be sold following some less-than-pleasing results in the original blend
  • AHQ expects to come out of the trading halt on Friday, July 30 by which time it would have made the acquisition and funding details public
  • Company shares last traded at 72 cents on Tuesday, July 27

Allegiance Coal (AHQ) has entered a trading halt while it plans a capital raise and acquisition.

It isn’t certain who or what the company will be acquiring nor how much will be raised. The funds may support the acquisition but this isn’t yet clear.

AHQ expects to come out of the trading halt on Friday, July 30 by which time it would have made the acquisition and funding details public.

Earlier this week, Allegiance Coal announced a change to its offtake agreement with Mays Mining.

The companies signed a four-year deal in December for Mays to acquire Pratt seam coal on a monthly basis to blend with blue seam coal from AHQ’s New Elk coking coal mine.

Due to some less-than-pleasing test results, the Blue Pratt blend’s status and value was reduced and the companies have agreed to replace Pratt coal with Nickel Plate and American (NPA) coal seams.

NPA coal seams are ultra-low ash, ultra-low phosphorous and have lower sulphur than the Pratt seam. They also show higher coke strength characteristics that will improve product quality and value.

Allegiance expects the first sale of the Blue NPA blend will begin in the final quarter of the year as it depends on how the recommencement of production progresses at New Elk.

Production is around three weeks behind the mine’s original schedule but should be recovered and exceeded by early September.

Company shares last traded at 72 cents on Tuesday, July 27.