JOHANNESBURG (miningweekly.com) – ASX- and JSE-listed Resource Generation (Resgen) is in discussions with Noble Resources International to extend its support to the coal company until April amid a prolonged funding gap.
As Resgen has been working to secure an alternative funding source that is not linked to committed domestic coal supply for the development of the Boikarabelo coal mine, in Limpopo, Noble had granted Resgen an extended facility to draw down on.
“The company has been able to survive financially thanks solely to the support provided by Noble, one of its significant shareholders and a long-standing and committed supporter of the Boikarabelo project,” outgoing chairperson Denis Gately told shareholders at the company’s 2017 yearly general meeting.
With State-owned power utility Eskom not expected to undertake a public tender process for the supply of coal from the Waterberg region until 2019, Resgen’s prior hopes of securing funding from the the debt club lenders, led by Rand Merchant Bank, dissipated.
The lack of certainty around the terms of supply brought nearly two years of negotiations to a halt, with the lenders stating they required committed domestic offtake arrangements with Eskom for 40% of the proposed yearly production before an internal credit approval process would be initiated.
Resgen then entered into negotiations with another syndicate of potential lenders, which has since completed its due diligence investigations and is now undertaking its respective internal credit approval processes.
Meanwhile, the company continued to advance the contractual arrangements for the construction of the mine and the transport of coal to port.
The arrangements for the R650-million funding and construction of the rail link are not yet settled and discussions with Transnet Freight Rail and the Development Bank of Southern Africa are ongoing.
In addition, the estimated R300-million funding for ramp-up costs post commissioning of the coal preparation plant has not yet been secured.
“[However], management and the board are confident that funding can be obtained from commercial sources as, at that time, the project will have been substantially derisked,” Gately concluded.