PERTH (miningweekly.com) – ASX-listed Resource Generation (Resgen) has divested of a 7.5% stake in the company to fund the development of its Boikarabelo coal mine, in South Africa.

The miner reported on Tuesday that it had entered into a strategic partnership with Noble Group, which would see the placement of more than 21.3-million shares, at 40c a share, to raise A$8.5-million.

In addition, Noble Group had agreed to provide Resgen with a secured loan facility of up to $123-million on normal commercial terms. The facility could be drawn down until the end of December, and would be repayable 21 months after the first draw-down.

The loan facility was in addition to the A$20-million secured debenture issued to Noble in January this year.

Noble had also increased the tonnage and term for its offtake contract from 2.5-million tons, which would have been supplied over a five-year period. Under the new offtake agreement, Resgen would supply some 500 000 t/y over the first eight years of operation, a further 1.5-million tons a year over years 9 to 12, some two-million tons a year between years 13 and 14, and some 2.5-million tons a year during years 15 to 35.

“This agreement gives Resgen a strong strategic partner as we continue with the construction of Boikarabelo infrastructure,” said Resgen MD Paul Jury.

“Noble Group’s investment and loan facility and its increased offtake commitment demonstrate the group’s confidence in the mine’s potential. They also provide a platform for continuing to secure additional funding for the project,” he added.

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.