JOHANNESBURG (miningweekly.com) – A proposed funding facility currently under negotiation is intended to provide the total funds required to complete the construction of Resource Generation’s (Resgen’s) Boikarabelo coal mine, in South Africa’s Waterberg region, to the point of commissioning, the dual-listed company said on Wednesday.

However, this facility does not include the costs of building the rail link or the costs of ramp-up to full production of coal.

“Those proposed lenders have completed their due diligence investigations of the project and the company and are currently engaged in their respective internal credit approval processes,” said Resgen.

Once those credit approvals have been obtained, the parties propose to execute term sheets recording the principal terms of the proposed funding.

The term sheets have been drafted based on negotiations between the proposed lenders and the company.

“Although the credit approval processes are ongoing; at this stage, the company is unable to forecast with any certainty when credit approvals and a signed terms sheet will be obtained from all proposed lenders, but a further announcement will be made when that occurs,” it said.

Resgen has also received legal advice that this funding proposal will require the approval of shareholders. An independent expert based in Australia has been identified and will be appointed to prepare a report to shareholders in respect of the proposal when term sheets have been executed.

An extraordinary general meeting of shareholders will then be called for the purpose of considering the funding proposal.

In conjunction with the funding proposal for the construction of the mine, the company is continuing to progress discussions with respect to the funding of the rail link.

Ramp-up costs for the mine are estimated to be about R300-million. Management believes these funds can be raised when required from the commercial banks, as the project will have been substantially derisked at that point in time.