Our first project is to partner with New Crofton Co-op Colliery Ltd (NCCC) to develop a new underground drift coal mine near Wakefield in West Yorkshire. We acknowledge there are concerns about the environmental effects of burning fossil fuels, and recognise that all unabated coal fired electricity generation in the UK must cease by 2025. However, over two million tonnes of coal are used for other purposes, including industrial, domestic and heritage steam, for which replacements will be extremely difficult to find. Once the coal-fired power stations close, the high cost of importing relatively small quantities coal will mean that future indigenous suppliers will be well positioned to supply the small but important market. We believe that by supporting the first new underground coal mine since 1995, generating over 200,000 tonnes of coal a year for 20 years, we will not only help to keep some industrial sectors and steam locomotives running, but also provide much-needed employment and investment in the surrounding coalfield communities. The key benefits of the mine will be:
- The direct creation of 50 high quality jobs.
- The provision of up to 4.9 million tonnes of coal to supply ongoing industrial, heritage and domestic markets.
- The investment of around £40 million of mining surplus back into the local area to generate more jobs and co-operatively owned businesses, including other co-operatively owned coal mines.
NCCC was granted planning permission in May 2015 and has an agreement in place to sell all its coal for the first five years of production. Delays in raising the necessary finance to start operations have been caused by the safeguarding of land around the mine by HS2 (high speed rail-link) for potential development. However, the proposed location of the rolling stock depot has now been moved away from this area, and so NCCC expect the safeguarding to be lifted in the near future, thus removing any remaining uncertainty for potential investors, with whom discussions are ongoing.
The Why, Where and How of the mine are explained in a 12-minute presentation which you can access here or by clicking the image on the right. For up-to-date news, see NCCC’s website: http://www.newcroftoncoopcolliery.co.uk.
A. PHASE 1 SHARE ISSUE (closed) CCIS managed to raise £167,000 through its first Community Withdrawable Share Issue. Withdrawable shares are not like normal Transferrable Shares: they are not tradeable and will never be worth more than their initial value, although their value can go down! This is because the primary reason for investing in a Community Share Issue is for community benefit, not for financial gain. However, reasonable interest can be paid on the investment, so CCIS’s stated target was that interest would be paid to shareholders at a rate of Base Rate + 5.5% per annum, and that they would buy back the shares at the original value after five years, if funds allowed. During the first three years interest would accrue but would not be paid until the end of year three. These commitments were dependent on NCCC being able to make the interest payments due to CCIS on its loan, and on repaying the loan amount in full after five years.
B. IMPACT OF DELAYS The delay in the start of mining operations means that NCCC has not yet been able to make any interest payments to CCIS, therefore causing a delay in the first payment of interest to CCIS shareholders. This delay was accepted by the members at the AGM in July 2018 as it was unanimously agreed that the primary reason for investment was to support the development of the mine, and members did not want to take any action which might jeopardise that. NCCC have given an undertaking that interest payments will be made to CCIS as a matter of urgent priority as soon as funds become available, at which point outstanding interest will be paid to CCIS’s shareholders.
It is also likely that there will be delays in the repayment of the loan by NCCC (due in 2020) because once work does commence, it will take two to three years for it to become self-financing and therefore be able to repay its loans. This means there may also be a delay in CCIS being able to buy back the shares from shareholders. However, NCCC are expected to eventually make its interest payments and repay the loan in full, including any additional interest resulting from delayed repayment. CCIS shareholders should therefore continue to receive interest at the target rate up until the time when CCIS has the funds to purchase back the shares at the original value.
C. PHASE 2 SHARE ISSUE (open) Despite the delays outlined above, there remains a high level of commitment from the local community and other interested parties. In order to assist NCCC in continuing with their preparation and pre-commencement works, and to further broaden the involvement of local communities in the mine, the Directors of CCIS have re-opened the Share Offer as Phase 2. It is likely to remain open until NCCC starts driving the drifts from the surface.
The terms of the offer are very similar to Phase 1, with the same commitment (5 years) and the same target interest rate (Base Rate + 5.5%). A new version (V-5) of the Share Offer Document will be available shortly, but all the information is given in this website which also has a page describing how you can purchase shares.
The minimum investment in the Society by an individual or group is £500 and the maximum investment is £100,000. All investors become Members of the Society (CCIS) and are eligible to attend meetings of the Society with voting rights. All Members will be acknowledged and celebrated in an installation at the New Crofton Mine.
For any individual or business prepared to invest more than £100,000, or who would like to talk about sponsorship opportunities in relation to the mine, we suggest they talk directly with NCCC.
D. HOW CCIS WILL USE YOUR INVESTMENT Money raised from this issue will be loaned to NCCC for a period of five years to enable the mine to carry out preparatory and pre-commencement work, and to assist with the cashflow in the early years of production. The agreed interest rate is in line with the rates paid to other social investors and is sufficient to cover the interest payment due to the CCIS shareholders, and any administrative costs. At the end of years 3, 4 & 5, CCIS will receive interest on the loan held by NCCC, sufficient to pay the interest due to its shareholders (see the section below). After five years NCCC will repay the loan to CCIS, and any funds left after buying shares back from the shareholders will be invested in co-operative ventures in coalfield communities in the UK.
E. WHAT WILL HAPPEN TO MY SHARES? You will not be able to withdraw your money by selling your shares back to the Society until after year 5, and then only if funds permit. By then we expect that the Society will have identified other projects to invest in, giving members the option to leave their funds in place to invest in these other projects. The Society is not setting a target interest rate after year 5, and investors will be able to withdraw their shares (i.e. sell them back to CCIS) at this point if they wish. The intention is to declare interest at Bank of England Base Rate + 5.5% (with a maximum of 8%) for years 1-5.
Interest for Phase 2 shares will be paid from year 3 onwards on the anniversary of the date the Share Certificate was issued. For example, assuming the Base Rate stays at 0.75%, the Society intends that an investment of £10,000 would yield the following, based on 6% interest: £1,875 in year 3, £625 in year 4 and £625 in year 5.
F. RISK The description of the Phase 1 Share Issue in Sections A & B indicates the risks that are involved. The principal risk is the failure of the mine to generate sufficient income to meet its financial obligations; including payment of interest to CCIS after years 3, 4 and 5, and repaying its loan to CCIS after five years. To date the project has been financed mainly by its Founder Members, a social investor and the loan from CCIS resulting from the First Phase Community Share Issue which has enabled the purchase of 2nd hand mining equipment.
Money raised by Phase 2 of the share offer will be used for preparation and pre-commencement work. If for some reason, NCCC is not able to gain sufficient funds to begin operations, then your shares will be bought back by CCIS at a value as close to the original value as possible. No interest will be payable. The Directors of CCIS feel that once the mine is operational, it is very unlikely that it will fail to extract coal in sufficient quantities to meet its financial obligations.
In circumstances of financial failure, the Directors may be compelled to write down the value of your shares. Should you then wish to withdraw your shares, you should expect to receive only their written down value. Membership of the Society and the purchase of shares should be seen as a social investment to support the aims of the Society and not an investment for personal gain or profit. Membership is not suitable for anyone who may need immediate access to his or her capital. Although the Board of Directors will implement prudent management policies, there is always the risk that you could lose some or all of your share capital. Your investment is NOT covered by any share deposit protection scheme. For further details, see the SMALL PRINT below.
G. AND BEYOND? Once the Society has covered its operating costs and members have received interest on their shares, we intend to use funds from the surplus generated to invest into other co-operatively owned enterprises operating in coalfield areas across the UK. We also hope that members will choose to retain their shares after year 5 so that CCIS can continue to use the share capital to invest into these other projects. The Society is not setting a target interest rate after year 5 of the Phase 2 Share Issue and investors will be able to sell their shares to CCIS at this point if they wish.
Terms & Conditions and The Small Print
You cannot withdraw your application for shares after we receive your application form. Your application will be considered for approval by a minimum of two Directors, and therefore you should not expect an immediate response. The Directors do not have to accept your application for shares. They may decide not to issue shares to you or may allocate to you fewer shares than you applied for. They do not have to give any reason for their decision.
The Directors will acknowledge receipt of your application and cheque or BACS transfer. If the Board decides not to issue shares to you, your cheque will be returned, or a BACS transfer made into your account, within 28 days of the decision being made. If they decide to issue fewer shares to you than you applied for, they will return the balance to you (within 28 days of the decision being made). The money will belong to Coalfield Community Investment Society Ltd as soon as the Directors issue shares to you (to the extent that they take it as payment for shares). The Society will not pay interest on any money it returns to you.
THE SMALL PRINT
By completing the application for membership, you consent to the Society and our contractors and agents holding personal data about you in accordance with the General Data Protection Regulation. You can request a copy of our Data Protection Policy and Privacy Notice, but in brief, we do not sell or exchange mailing lists.
Important Notice on Money Laundering
It is a term of this offer that, to ensure compliance with the Money Laundering Regulations 2007, and the Proceeds of Crime Act 2002 and such similar legislation, you must have the authority to sign the application form. If you are signing for another person, you will provide the Directors with evidence of your authority to sign if they ask to see it. You will also supply us with proof of identity and address if asked.
Governing Law and Investor Protection
Coalfield Community Investment Society Ltd is not an authorised institution and does not accept deposits. This means there is no share deposit protection scheme for investors. Coalfield Community Investment Society Ltd is an exempt person from the regulated activity of deposit taking by its issue of shares pursuant to Paragraph 24 of the Schedule to the Financial Services and Markets Act 2000 (“FSMA”) Exemption Order (2001). The shares are not a specified investment for the purposes of Section 22 of FSMA (What is a Regulated Activity) pursuant to Paragraph 76 of FSMA (Regulated Activities) Order 2001. The issue of withdrawable shares, which are not transferable, exempts this document from the requirements of an approved prospectus required by Section 85(1) of FSMA. An investment in the withdrawable and non-transferable shares of a Community Benefit Society is not treated as a controlled investment for the purposes of Section 21 of FSMA (The Financial Promotion Prohibition) pursuant to Paragraph 14(3) of Schedule 1 of the FSMA (Financial Promotion) Order 2005. Coalfield Community Investment Society Ltd has taken all reasonable care to ensure that every statement of fact or opinion included in this information document is true and not misleading.
Conflict of Interest
Toby White has a conflict of interest as a member of New Crofton Co-op Colliery Ltd. However, as a shareholder in the Society he can guarantee at all times to act in accordance with the best interests of the Society.
If you have any doubts about this document please seek advice from a professional financial adviser.