JOHANNESBURG (miningweekly.com) – JSE- and ASX-listed Resource Generation (Resgen) has turned down a request by funding partner the Noble Group to appoint additional directors to the boards of the company and its black economic-empowerment subsidiary Ledjadja Coal, citing Noble’s inability to elucidate how the board additions would benefit shareholders or the operations of the company.
“Accordingly, there would be no benefit to the company and its shareholders at this time in appointing additional directors nominated by Noble and, consequently, the board will not make any such appointments at this time,” Resgen said in a statement.
The miner entered into a strategic partnership with Noble in 2013, which saw the placement of more than 21.3-million shares, at 40c a share, to raise A$8.5-million to fund development of the Boikarabelo coal project, in South Africa.
Noble this week, however, announced that it was reaching a “critical juncture”, both in relation to debt funding and construction of the project.
Noble claimed that there were “significant” issues in relation to continuing debt support for this project by both the Export Finance and Insurance Corporation and Danish export credit agency EKF, whose participation Noble considered as critically important to it procuring the necessary funding.
The group further cautioned that it would “pursue other alternatives” should the appointment of additional directors not be undertaken by Resgen by September 25.
Resgen had, however, countered that it had the required expertise and had appointed external consultants to assist with the challenges experienced at Boikarabelo.
Moreover, the company added that, as announced on August 19 and at the request of Noble on behalf of a club of lenders with which the company had been negotiating debt finance, Resgen was seeking quotes from mining contractors to establish whether a contract-mining model could reduce the mine’s costs and capital requirement.
“Noble, as part of one club of lenders, is already actively involved in the structuring and negotiation of the terms and conditions of the facilities proposed by that club, which remain incomplete and subject to negotiation and agreement among the parties.
“Terms and conditions put forward to date by the club have not been acceptable to the company [owing] to the excessive returns sought by some of the club members, including Noble. There is no benefit to the company in having Noble nominees on the board in this situation,” Resgen held.
The company also continued discussions with intermediaries with respect to various other potential lenders for loan facilities for the Boikarabelo coal project, as previously announced.