Bowen Coking Coal has launched a $70 million equity raising to help fund the planned Plumtree North mine development at its Burton mine complex and cover other costs.

While the entitlement offer comes amid positive news on the operational side at the company’s Bowen Basin operations, Bowen Coking Coal warned that it may not be able to continue as a going concern if it failed to reach a minimum subscription of $60 million and was forced to seek alternative sources of liquidity.

Bowen Coking Coal executive chairman Nick Jorss said the partially-underwritten renounceable entitlement offer was planned to strengthen the company’s balance sheet following its successful debt renegotiation.

Related: Bowen Coking Coal secures revised debt terms

“A tremendous amount of work has been undertaken by the team to reduce costs and achieve Bowen’s current positive operating performance in the face of multiple challenges including ongoing cost inflation, a decline in coal prices, rail and port delays, and the imposition of onerous Queensland State royalties,” he said.

“The Burton operations are now performing strongly, having achieved steady state production levels at Ellensfield South.”

Mr Jorss, who also heads industry advocacy group Coal Australia, said the operating outlook for the Burton complex under the company’s mine plan was strong, with the next five years planned at sub 7 to 1 strip ratio as it transitioned to the Plumtree North pit.

“We are encouraged by the recent rebound in coking coal prices, which, if maintained, will boost projected cash flows,” he said.

“The entitlement offer is intended to build on recent operational success and strengthen the company’s balance sheet.”

The offer is underwritten by Shaw and Partners and Morgans to the value of $40.5 million provided a $60 million minimum subscription is reached and consent of MPC Lenton is obtained.

It is supported by the following commitments:

• a $10.5 million sub-underwriting commitment made by Bowen shareholders Crocodile Capital 1 Global Focus Fund, Crocodile Capital Offshore Fund and Crocodile Capital Partners GmbH; and
• a $30 million sub-underwriting commitment made by incoming investors Square Resources Holdings and Taurus Mining Finance Fund No. 2.

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