Resource Generation has entered into two arrangements with Valu Investments, the first being a 20 year offtake agreement for 1 Mpta from Boikarabelo.

This is a special purpose vehicle jointly owned by Mr Jaimin Vyas, an entrepreneur, investor and project developer in the infrastructure sector, and IL&FS Energy Development Company Limited (IEDCL), an Indian company specialising in the energy infrastructure space.

The Valu contract starts with supply immediately after production commences at the Boikarabelo mine. Coal prices will be set by reference to an internationally recognised index at the time of each shipment. Following the commencement of stage 2 production, the volume increases to 2 Mtpa.

In conjunction with this, the existing 0.5 Mtpa contract with Bhushan Steel has been terminated with no penalty payable by either party. Bhushan Steel is not a shareholder in Resource Generation.

Valu has undertaken to conduct feasibility studies for the development of both a 200 MW power station and a larger 1200 MW coal fired power station proposed to be located adjacent to the Boikarabelo mine. Resource Generation has granted Valu the right to own, build and operate both of the coal fired power stations as an independent power project. In conjunction with this, the feasibility study arrangements with CESC Limited have been terminated with no penalty payable by either party.

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