JSE– and ASX-listed Resource Generation is considering alternative sources of funding to construct its Boikarabelo coal mine on one of South Africa’s largest remaining coal deposits, following its receipt of credit-approved offers of project finance that it said deviates from the agreed terms sheet.The company advised that credit approvals received from Resource Generation‘s mandated debt financiers include commercial conditions that are unacceptable to the company; however, negotiations on these conditions are continuing. Resource Generation has also revealed that parallel discussions are at an advanced stage with existing and potential customers who have expressed interest in providing equity funding to enable major construction to begin.
Without contingencies and costs associated with debt funding, capital expenditure is estimated at AU$530 million (R5.05 billion), which includes AU$100 million for mobile equipment. “If we secure finance from alternative sources to part-fund this expenditure, the company will have flexibility to raise the remaining capital required to complete construction of the mine by way of equity or debt at a later time,” said Resource Generation’s MD, Paul Jury.“The due diligence conducted by independent experts on behalf of the financiers identified no material issues and I believe the credit-approved offers of finance confirm Boikarabelo‘s viability and potential. All regulatory approvals have been received, the land for the mine and rail link has been acquired, and we have contracts providing rail haulage and port access. In addition, we have three significant export contracts for thermal coal with major Indian customers and the global trader Noble Group.” Construction of site infrastructure, roadworks, water and power connections has begun and the site is now classified as an operating mine site. Resource Generation has other coal interests in South Africa. Its current priority is to develop its planned Boikarabelo mine in the Waterberg region where there are probable reserves of 744.8 Mt of coal on 35% of the companys tenements.