PERTH (miningweekly.com) – ASX- and JSE-listed Resource Generation (Resgen) on Tuesday announced that it was looking at alternative sources of funding to construct its Boikarabelo coal mine, in South Africa's Limpopo province.

The miner said that it had received credit-approved offers of project finance, but noted that these offers included commercial conditions which were unacceptable to the company.

While negotiations around these conditions were continuing, Resgen has launched parallel discussions with existing and potential customers that have expressed interest in providing equity funding to enable major construction at Boikarabelo to start.

“Without contingencies and cost associated with debt funding, capital expenditure is estimated at A$530-million, which includes A$100-million for mobile equipment,” said Resgen MD Paul Jury.

“If we secure finance from alternative sources to part-fund this expenditure, the company will have the flexibility to raise the remaining capital required to complete construction of the mine by way of equity or debt at a later time.”

Jury added that the due diligence conducted by the independent experts, on behalf of the financiers, had identified no material issues, adding that the credit-approved offers of finance confirmed the Boikarabelo project’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,” Jury said.

The Boikarabelo mine would be developed in two phases, the first of which would deliver about 12-million tons of coal a year, which equated to about six-million tons of product coal.

Phase 2, planned for 2018, would see production ramp up to 20-million tons of product coal.

Construction of site infrastructure, roadworks and water and power connections had started, and the site was now classified as an operating mine site.