Cim Strengthens Finances For Acquisitions
The Age
Wednesday August 7, 1996
The new-breed New South Wales coal producer CIM Resources is negotiating a $190 million loan facility with the dual purpose of refinancing borrowings and giving it firepower on the takeover trail.
CIM's planning for future growth follows its successful entry into the NSW coal business in the June year from its Stratford mine in the Gloucester Valley, north of Newcastle.
Stratford began production in June last year and has underpinned the group's maiden annual profit of $8.2 million compared with a loss of $4.1 million previously.
The strong showing has prompted the group to declare an unfranked maiden dividend of one cent a share, covered by earnings per share of 8.42 cents.
The Stratford mine achieved an impressive cash margin of $17 a tonne on its sales, a result that CIM said reflected its focus on productivity and cost control.
CIM's 70 per cent share of sales for the year was 855,000 tonnes. The group has recently acquired a further 20 per cent interest in the mine, which has also been expanded. As a result, CIM expects its coal sales to more than double this year.
The group's profit would have been higher but for the ``poor performance" of the Newcastle port in the last quarter, with CIM forced to book demurrage costs of $600,000.
There have been up to 20 ships at any one time waiting off Newcastle for the past four months. The commissioning of a new loader is expected to ease the congestion.
The chief executive of CIM, Mr Michael Palmer, said the $190 million credit line being organised for the group would deliver a substantial reduction in group interest charges ($3 million in the June year).
The credit line would also provide financing for the development of the group's next mine, the Duralie project, 20 kilometres to the south of Stratford.
Mr Palmer said the credit line - along with the potential $113 million equity injection from RJB Mining of Britain - would give CIM some firepower for an acquistion.
© 1996 The Age
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