Name of the Project
Boikarabelo coal project.

Location
Waterberg region in Limpopo, South Africa.

Client
Ledjadja Coal Limited (LCL), a subsidiary of Resource Generation (Resgen).

Project Description
The project has a 6.4-billion-tonne resource, with probable reserves of 744.8-million tonnes on 35% of the tenements under management and delineated to date.

The Boikarabelo coal seam is between 20 m and 30 m below the surface, allowing for low-cost, opencut mining. The seam is between 100 m and 120 m thick, with zones of varying-quality thermal and soft coking coal.

In February 2016, Resgen reported that it would implement a revised mine plan at its Boikarabelo coal mine. This followed a technical review of the geological model by its technical committee comprising in-house and external experts, who suggested that the revised mine plan could achieve a better opportunity than previously expected. The plan is based on selective mining and in-pit dumping to maximise productivity, reduce operating costs and minimise any environmental impact.

The company will also implement a project execution strategy that transfers mine construction risk through the appointment of a small number of reputable engineering, procurement and construction (EPC) contractors with substantial balance sheets, which will allow for recourse in the event of failure or delay.

The mine will be developed using a two-phased approach to limit upfront capital expenditure. The first phase will deliver about 15-million tonnes of run-of-mine coal a year, which will equate to about six-million tonnes of product coal. Of this, about 3.6-million tonnes will be exported and about 2.4-million tonnes will be used domestically.

Phase 2, planned for 2022, will involve ramping up production to 12-million tonnes of product thermal coal.

The project includes a 48 km rail link to the existing rail network.

To expand the Boikarabelo project’s economic base, a bankable feasibility study on a 600 MW independent mine-mouth power station is being fast-tracked to operate as an approved independent power producer (IPP). Environmental and land-use approvals have been obtained for a 300 MW IPP and are being revised to accommodate a 600 MW IPP.

Jobs to be Created
The project is expected to create 2 500 jobs in the construction phase and 709 full-time jobs.

Net Present Value/Internal Rate of Return
The project has an internal rate of return of 17%.

Value
The estimated capital cost for the project is $545-million.

Duration
Resgen’s 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 was scheduled for completion in September 2018. However, the mine’s expected date of first coal production has been delayed and is now expected to begin production in 2019.

Latest Developments
Resgen’s Ledjadja Coal subsidiary has signed an offtake agreement with energy products company Noble Resources International to supply additional uncontracted coal from the Boikarabelo mine.

The uncontracted tonnage offtake agreement builds on earlier offtake and coal marketing agreements between Resgen and Noble.

In March, Resgen also granted Noble the first right of refusal to buy any additional uncontracted coal produced at the mine.

Under the terms of the uncontracted tonnage offtake agreement, LCL will sell and deliver a committed quantity of 800 000 t/y of coal to Noble for the first three years, plus a further 300 000 t/y as advised by LCL to Noble on a quarterly basis.

Further, from the fourth year, LCL has agreed to sell and deliver up to 200 000 t/y of coal, as advised by LCL, to Noble on a quarterly basis.

LCL's obligation to sell and deliver the coal under the uncontracted tonnage offtake agreement is subject to LCL’s having sufficient contracted rail and port capacity to deliver the agreed-upon volumes.

Key Contracts and Suppliers
Digby Wells Environmental (mining right application, mine-waste licence, environmental authorisation process for power plant); Sedgman (coal handling and processing plant and ancillary work packages); RCE (rail design and construction, EPC management services); NuWater (water EPCM services); EHL Energy (transmission lines), Stefanutti Stocks (preferred mining contractor), Stefanutti Stocks Road and Earthworks (rail earthworks and bridges) and Transnet Freight Rail (ballast, track and signaling).

On Budget and on Time?
First production has been delayed to 2019.

Contact Details for Project Information
Resgen, tel +27 12 345 1057, fax +27 12 345 or email info@resgen.com.au.