The company said that current market conditions and operational performance have made it necessary for restructuring, and more capital injection.

Buffalo Coal plans to use additional funds to improve operating efficiencies and for working capital requirements during the restructuring period.

The $4m loan facility will be advanced as a bridge loan, and will add to Buffalo’s existing $25m convertible loan with RCF, subject to shareholder approval.

Proceeds from the bridge loan will be used to cover costs associated with restructuring process at Buffalo Coal’s operations in Dundee, South Africa.

The bridge loan will bear interest at a rate of 15% a year which will be payable in common shares of Buffalo at price equal to the 20-day volume weighted average price as at the date the payment is due, the company said.

Buffalo Coal signed a term sheet in February this year for the $4m facility.