In light of the turmoil that the global outbreak of the COVID-19 virus is having on financial markets, Resgen has obtained confirmation of continued commitment and support for development of the Boikarabelo Mine.
These measures include the South African Government’s introduction of a strict 21-day stay-at-home lock-down.
In response, the Company has implemented measures to ensure continued pursuit of Financial Close for project funding but acknowledges that the restrictions pose a challenge where collaboration through face to face meetings is not possible.
The Conditions Precedent to achieve Financial Close section below details that the Company is now seeking to achieve Financial Close by 30 June 2020 and this change is partly attributable to the challenges created by the steps being taken by the South African Government to contain the spread of the COVID-19 virus.
The Company is also monitoring the macro economic impacts of COVID-19 on the Boikarabelo Coal Mine Project such as foreign exchange and interest rate fluctuations and potential supply chain constraints.
The situation remains fluid with significant foreign exchange volatility.
The USD:ZAR exchange rate used in the Independent Expert’s Report dispatched to shareholders of R14.79 average for 2020 compares with the current rate on 30 March 2020 of R17.92.
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The Company has not received notice from the Independent Expert that any update to its report is currently required in respect of this or any other matter.
However, if the USD:ZAR exchange rate does not improve before Financial Close then repayment of the US dollar denominated working capital component of the Noble Facility Agreement (which including the further extension described below totals US$29.15m plus interest) from first proceeds of the Mine Funding Package will require further negotiation.
The situation will continue to be monitored as the Company moves towards Financial Close.
Resgen also advises that it has reached in-principle agreement with the Noble Group to provide additional working capital to its partly owned subsidiary, Ledjadja Coal in the form of a further extension to the Facility Agreement dated 3 March 2014 as amended from time to time, including most recently on 11 December 2019.
Lulamile Xate, Chairman of Resource Generation comments:
“The Company is appreciative of the continued financial support from Noble and looks forward to a continuing strong partnership with Noble.
“The Company’s primary focus remains on achieving financial close and development of Boikarabelo Mine. However, exploring other low carbon opportunities in the South African market will be put on the agenda for the Board’s strategic planning in the longer term and this would include consideration of the supply of clean coal and other low carbon energy consistent with the new global energy narrative.”
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