Resource Generation (Resgen) has signed an extension of its facility agreement with Noble Resources for funds of up to US$8.4 million for the Boikarabelo project. The funds will be provided to Resgen's BEE subsidiary, Ledjadja Coal, to fund the operations and development of the Boikarabelo mine project in the Limpopo province of South Africa while project funding is secured. The additional funds will be made available in three tranches over the period to 30 September 2017, the company said.
As part of negotiating the extension to the facility, Resgen has also agreed to restate the existing domestic offtake and coal marketing agreements it has with Indo-Spanish conglomeration Noble Resources.
The key principles of the restated agreements include an offtake agreement for 3 Mtpa of Boikarabelo domestic thermal coal for a 8-year period; the inclusion of a fee payable to Noble Resources of the price paid by the lender for domestic coal; and the first right of refusal for Noble Resources to buy any additional uncontracted coal produced by Boikarabelo mine.
What is more, Noble Resources will be the exclusive supply chain management and marketing advisor for both export and domestic coal for a period of 35 years and Noble Resources is entitled to fees – depending on whether domestic, export or certain contracts are in place at the time of agreement.
The slight delay in closing the project funding has meant that Resgen has has to push back its preferred timeline in which to develop the mine. As a result Resgen expects Boikarabelo to produce first coal in the first quarter of 2019, as opposed to the initial target of the final quarter of 2018.
Resgen, an emerging ASX and JSE-listed energy company, is currently developing the Boikarabelo coal mine in South Africa’s Waterberg region.
The Waterberg accounts for around 40% of the country’s currently known coal resources. The coal resources and reserves for the Boikarabelo coal mine, held through the operating subsidiary Ledjadja Coal, were recently updated based on a new mine plan and execution strategy.
The Boikarabelo coal resources total 995 Mt and the coal reserves total 267 Mt. Resgen plans to produce 6 Mtpa of saleable coal during stage one of the mine development.