PERTH (miningweekly.com) – South Africa-focused Resource Generation (Resgen) has signed a memorandum of understanding (MoU) with Swiss private company HAB & JPR Privee to provide €480-million to enable the construction of the Boikarabelo mine.

“We are pleased, after a protracted process of seeking funding in a difficult market for coal projects, to have achieved an in-principle agreement for funding to enable all the remaining phases of the mine construction and its social labour programmes to be completed,” said Resgen MD Paul Jury.

“The cost of the HAB & JPR Privee funding is the most attractive of the various sources that we have considered and materially more favourable than the incomplete proposals of the debt club involving Noble Group and Altius.”

The Swiss funding would be provided in two tranches, with the first €175-million to be paid on or before January 31, 2016. The remaining €305-million would be paid in June 2016.

The two tranches would be deposited into an account controlled by Resgen and drawn down in nine quarterly instalments as required for mine construction.

The funding would have a 20-year term, with the cost of the funding equivalent to some 4.5% a year, including upfront fees and costs. Principal and interest payments would start within three years of draw down.

The funding announcement comes just a day after Resgen shareholder Altius Investment Holdings called for the removal of the Resgen board of directors.

Altius subsidiary Shinto Torii, which held a 10.7% stake in Resgen, had requested a shareholder meeting to have the four current directors sidelined owing to a perceived risk of the project stalling or being delayed amid challenges in securing the required finance.

In response, Resgen said it would defer its November 4 annual general meeting until later in November to accommodate both meetings on the same day.

HAB & JPR Privee has indicated that if there was a change of directors, the financier reserved the right to cancel the loan facility.

The Boikarabelo mine was expected to deliver six-million tonnes a year of coal from its Stage 1 operation.