Name of the Project
Boikarabelo coal project.

Location
Waterberg region in Limpopo, South Africa.

Project Owner/s
Ledjadja Coal Limited (LCL), a subsidiary of Resource Generation (Resgen).

Project Description
Boikarabelo had 2012 Joint Ore Reserves Committee-compliant resources of 3.45-billion tonnes and reserves of 267.1-million tonnes as at June 30, 2018.

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 implemented a revised mine plan. This followed a technical review of the geological model by its technical committee comprising in-house and external experts, who suggested that the revised plan could achieve more 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 also implemented a project execution strategy, which 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. Stage 1 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.

Stage 2 will involve ramping up production to 12-million tonnes of product thermal coal. It is estimated that fully funded Phase 2 construction and production will not begin before 2025.

The project includes a 44 km rail link to the existing rail network.

To expand the Boikarabelo project’s economic base, a bankable feasibility study on a potential 300 MW independent mine-mouth power station will be completed once the Boikarabelo mine has been commissioned.
 
Potential Job Creation
The project is expected to create 2 500 jobs in the construction phase and 709 full-time jobs.

All-in Sustaining Costs/All-in Costs
Not stated.

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

Capital Expenditure
The estimated capital cost for the project is $300-million.

Planned Start/End Date
LCL received the Boikarabelo mining rights from what was then known as 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 it is now expected to begin production in 2021.

Latest Developments
Resgen plans to obtain shareholder approval for parts of the mine funding package for the construction of the Boikarabelo coal project.

The company has determined that several aspects of the arrangements contemplated as part of the mine funding package will require shareholder approval.

It has, therefore, commissioned an independent expert’s report for inclusion in the notice, advising shareholders of a general meeting to vote on the affected aspects of the funding package.

The shareholders’ meeting is expected to be held in late March or early April.

In December 2019, Resgen, along with its subsidiary Ledjadja Coal, announced that the principal binding agreements for the funding of the construction of Boikarabelo by the lending syndicate had been executed.

Meanwhile, the rail link negotiations for a funding package of R750-million is continuing.

The finalisation of an unconditional comprehensive rail link funding agreement is a condition precedent attached to the mine funding package and is regarded as being on the critical path for the transaction to become effective and allow for the first draw-down of funds for mine construction.

Key Contracts and Suppliers
Digby Wells Environmental (mining right application, mine-waste licence, environmental authorisation process for power plant); Sedgman (design, engineering, procurement and construction contract for the coal handling preparation plant, as well as for the ongoing operation and maintenance of the plant); RCE (rail design and construction, engineering, procurement and construction management, or EPCM, 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 signalling).

Contact Details for Project Information
Resgen, tel +27 11 010 6310, fax +27 86 539 3792 or email info@resgen.com.au.