Allegiance secures funding from GEAR

The private placement with GEAR comes just days after Allegiance Coal raised A$15-million through a private placement to sophisticated and professional investors, priced at 8c each, to fund refurbishment activity at its New Elk coal mine, in Colorado.

Allegiance on Monday said that in addition to the private placement, GEAR has agreed, in principle, to provide funding of up to $27-million to Allegiance subsidiary New Elk Coal Company for the reconstruction of a 27-mile rail spur from the main rail line to the New Elk mine.

The coal developer told shareholders that the reconstruction of the rail spur was critical to the mine’s growth, as it removed restrictions on production tonnes allowed to be trucked on the road, and reduced cash costs by around $6/t.

The reconstruction of the rail spur also fulfills Allegiance’s commitment to the local community that road trucking of coal would only be for the first two years of production.

Allegiance MD and chairperson Mark Gray has welcomed the investment by GEAR.

“While we are fully funded in our plans to recommence mining at New Elk, the insurance that GEAR’s investment and commitment provides our company in terms of its growth and development, is of enormous comfort to the board.”

GEAR’s funding commitment is subject to the negotiation and execution of legally binding agreements