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Boikarabelo coal project, South Africa

13th May 2016

By: Sheila Barradas

Creamer Media Research Coordinator & Senior Deputy Editor

  

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Name and Location
Boikarabelo coal project, Limpopo, South Africa.

Client
Resource Generation (Resgen).

Project Description
Boikarabelo has probable reserves of 744.8-million tonnes, a measured resource of 1.1-billion tonnes, an indicated resource of 551.7-million tonnes and an inferred resource of 1.5-billion tonnes.

The Boikarabelo coal seam is between 20 m and 30 m below surface, enabling low-cost, opencut mining. The seam is between 120 m and 130 m thick, with zones of varying-quality thermal and soft coking coal.

The mine will be developed using a two-phased approach to limit upfront capital expenditure. The first phase will deliver about 14-million tonnes of run-of-mine coal a year, which will equate to about six-million tonnes of product coal. Of this, three-million tonnes will be exported and three-million tonnes will be used domestically.

Phase 2, planned for 2022, will involve ramping up production to 20-million tonnes of product thermal coal.

The project includes a 40 km rail link to the existing rail network.

Boikarabelo hosts a life-of-mine of up to 100 years.

Net Present Value/Internal Rate of Return
Not stated.

Value
The estimated capital cost for the project is $480-million.

Duration
Resgen black economic-empowerment subsidiary Ledjadja Coal received the Boikarabelo mining rights from the Department of Mineral Resources in April 2011.

Initial construction of the mine started in the first quarter of 2013 and is scheduled for completion in the second half of 2017.

The mine is expected to begin production in late 2017.

Latest Developments
Resgen has signed a heads of agreement (HoA) and letter of intent (LoI) with project house Sedgman for the design, procurement and construction of a coal handling and preparations plant (CHPP) for its Boikarabelo mine.

The agreement provides for a fixed lump sum contract of $141-million, subject to exchange rate fluctuation, with Resgen saying the contract price represents a ‘substantial saving’ over previous estimates, as the Sedgman design offers a smaller footprint, while offering an equal production output.

In addition, under provisions in the LoI, Resgen has indicated an intent to negotiate a three-year CHPP operations contract with Sedgman following the expiry of a 15-month operations contract, to cover the warranty period after the commissioning of the CHPP and to negotiate with Sedgman a contract for the construction of the ancillary infrastructure works.

Resgen CEO Rob Lowe has said that the conclusion of the contract with Sedgman is a major milestone for the Boikarabelo mine, and places the company a step closer to securing full funding for the completion of the mine.

The agreement is subject to a number of conditions precedent, including board approval and funding.

In March this year, Resgen said it would implement a revised mining plan, based on selective mining and in-pit dumping, following a technical review of its Boikarabelo mine.

The different approach to the Boikarabelo coal resource will achieve a better opportunity than previously expected, while increasing productivity and reducing operating costs.

Resgen also indicated that it would implement a project development strategy that would entail the appointment of a small number of reputable engineering, procurement and construction contractors with substantial balance sheets to undertake mine construction, allowing for recourse in the event of failure or delay.

Key Contracts and Suppliers
Digby Wells Environmental (mining right application, mine-waste licence, environmental authorisation process for power plant); RSV Enco (engineering, procurement and construction management, or EPCM, for mine construction); FLSmidth Roymec (CHPP); RCE (rail design and construction); Ceenex (water EPCM services); Komatsu Financial Limited Partnership (mobile equipment fleet) and EHL Energy (transmission lines).

On Budget and on Time?
First production has been delayed to late in 2017.

Detailed mining and engineering plans, together with the results of tenders, support the estimated first-stage cost of the mine of $480-million.

Contact Details for Project Information
Resgen (Australia), tel +61 2 9376 9000, fax +61 2 9376 9013 or email info@resgen.com.au; or (South Africa), tel +27 12 345 1057 or fax +27 12 345 5314.
Boikarabelo mine site, tel +27 14 944 0199.
Digby Wells Environmental, tel +27 11 789 9495 or +27 11 504 1400, fax +27 11 789 9498 or +27 11 504 1446, or email info@digbywells.co.za.
RSV Enco, tel +27 11 498 6010, fax +27 11 498 6210 or email enco@rsvenco.com.
RCE, tel +27 12 450 0040 or fax +27 12 450 0060.
FLSmidth Roymec, tel  +27 10 210 4000 or fax +27 10 210 4050.
Ceenex, tel +27 12 347 2620.
Komatsu Financial Limited Partnership, tel +1 888 500 6001 or fax +1 847 437 3199.
EHL Energy, tel +27 11 370 7400 or fax +27 11 834 4203.
 
 

Edited by Creamer Media Reporter

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