INDUSTRIAL services group Hargreaves has started coal shipments early from its Welsh colliery joint venture and arranged new banking facilities to fund its expansion.
Coal is being delivered from Tower Colliery in the Rhondda Valley in Wales to Aberthow Power Station, with which it has a three-year supply contract.
Hargreaves is running the opencast site on behalf of the former miners who bought the pit, the last deep coal mine in Wales. It expects the colliery to be fully operational by May.
A spokesman said: “Tower is progressing rapidly through fast investment in capital equipment and as a result of the three-year contract to supply RWE’s Aberthow Power Station.”
Hargreaves revealed the early start to production as it announced a reorganisation of its group banking agreements, to increase its facilities from £115m to £175m.
This consists of a £125m revolving credit facility and a £50m invoice finance facility. The agreement, with RBS, HSBC, Lloyds, Santander and Barclays – is committed to October 2015.
The Hargeaves spokesman said: “The decision to secure new facilities early will result in an exceptional charge in the current financial year to write off unamortised arrangement fees totalling £0.4m but will provide certainty, lock in slightly improved pricing and provide the group with increased debt capacity to support its growth aspirations.
“It wasn’t essential to renew the banking facilities now, but very favourable terms were offered and so Hargreaves took the opportunity to lock into new facilities.
“Europe is a key area for growth. Hargreaves recently announced its first contract in Germany to supply a generator.
“Also Industrial Services recently won four contracts with three major steel works in the UK and the division has aspirations to continue to expand with more new contracts.”
It has also agreed banking terms for Tower, with £10.5m in working capital committed for two years and asset financing credit lines of £32m for five years. The facilities are expected to be completed this week.
Stockbroker Brewin Dolphin called the announcements “a positive update, confirming increased debt capacity in the UK to support Hargreaves’ growth aspirations and further progress at Tower, slightly ahead of schedule”.
Hargreaves only received final planning permission for the Tower project in December after a long drawn-out planning process.
The group, which runs cokeworks, international mineral trading and transport, invested £17.9m into the site and aims to plough £1.8m into its opencast plans over the next two years.
Chief executive Gordon Banham said in February the group is looking at three potential sites in the North East, including a small opencast site near Morpeth in Northumberland.