Mining out a business opportunity
Financing a new open cast mine
At a glance
- Unusual business with complex funding background
- £700K funding line
- Business needed funding to start excavation
- Funds provided on the pipeline of contracts and associated company security.
When John Hornsby found a business opportunity which meant he would be opening up one of Britain’s newest open cast mines, he knew it was too good an opportunity to pass up.
“I had no previous background in mining, but I saw an opportunity and had to act on it”
John Hornsby, Managing Director of HM Project Developments Limited (HMPD)
On the right tracks
Having secured the option to purchase a site in Northumberland, John started the process of acquiring planning permission from the local council and purchasing the land. The high quality of indigenous coal that could be extracted from the site provided an instant market opportunity for HMPD - The Steam Railway Industry.
There are over 200 steam railways operating across the UK and Ireland that originally operated at a time when there was a ready supply of British coal. The demise of British coal production has had a financial impact on the British steam railway industry. Operators now have to pay a premium for this type of quality coal together with increased transportation costs in a bid to secure continuous supply. This can now be provided more locally by HMPD through their new site.
The original business plan intended to have the site open within 4 years of securing the option to purchase the land. However, additional planning issues and other unforeseen challenges have meant that it has taken over 8 years for the project to finally come to fruition and for excavation to begin. It was during the latter years of the appeals and legal costs where John needed to find external funding to ensure the business could finally start to ‘dig for coal’.
Dig for Victory
After approaching a number of funders over many months it was clear that there was no appetite to fund a mining business. John needed the final £700k to get the site up and running and finally begin extracting the coal. That’s where Catalyst came in.
The Catalyst Finance team saw beyond the unusual nature of the business and visited the site on two occasions. The team took the time to get to know the people behind HMPD and understand their unique business and their funding needs.
“When other funders told us no, Catalyst Finance was the only funder who took the time to come and see us and work alongside us to get the cash we needed.
“The entire team at Catalyst have been fantastic - I can’t recommend them highly enough. After 8 years of legal and planning appeals plus spending hundreds of thousands of pounds to get the business off the ground, I was very close to falling at the very last hurdle - and that was something I wasn’t going to let happen” says John “but Catalyst saw the value in the business and what I was trying to achieve. Now we have started excavating we’ll be contributing to the local community here in Northumberland and once again supplying quality British coal.”
Looking to the future
The site is now open and is currently employing 12 people which will increase to 30+ as the development progresses. HMPD’s long term business plan is to provide a supply of premium coal not just for the Railway sector but also other industries across the country as well as the UK domestic market.