Name of the Project
Boikarabelo coal project.

Location
Waterberg region in Limpopo, South Africa.

Project Owner/s
Ledjadja Coal Limited (LCL), a subsidiary of Resource Generation (Resgen).

Project Description
The Boikarabelo coal reserves were estimated at 267.1-million tonnes as at June 30, 2018.

The Boikarabelo coal seam is between 20 m and 30 m below the surface, allowing for low-cost, opencut mining. The seam is between 100 m and 120 m thick, with zones of varying-quality thermal and soft coking coal.

In February 2016, Resgen implemented a revised mine plan. This followed a technical review of the geological model by its technical committee comprising in-house and external experts, who suggested that the revised plan could achieve more than previously expected. The plan is based on selective mining and in-pit dumping to maximise productivity, reduce operating costs and minimise any environmental impact.

The company also implemented a project execution strategy, which transfers mine construction risk, through the appointment of a small number of reputable engineering, procurement and construction (EPC) contractors with substantial balance sheets, which will allow for recourse in the event of failure or delay.

The mine will be developed using a two-phased approach to limit upfront capital expenditure.

Stage 1 will deliver about 15-million tonnes of run-of-mine coal a year, which will equate to about six-million tonnes of product coal. Of this, about 3.6-million tonnes will be exported and about 2.4-million tonnes will be used domestically.

Stage 2 will involve ramping up production to 12-million tonnes of product thermal coal. It is estimated that fully funded Phase 2 construction and production will not begin before 2025.

The project includes a 44 km rail link to the existing rail network.

To expand the Boikarabelo project’s economic base, a bankable feasibility study on a potential 300 MW independent mine-mouth power station will be completed once the Boikarabelo mine has been commissioned.
 
Potential Job Creation
The project is expected to create 2 500 jobs in the construction phase and 709 full-time jobs.

Net Present Value/Internal Rate of Return
The project has an internal rate of return of 17%.

Capital Expenditure
The estimated capital cost for the project is $300-million.

Planned Start/End Date
LCL received the Boikarabelo mining rights from what was then known as Department of Mineral Resources in April 2011. Initial construction of the mine started in the first quarter of 2013 and was scheduled for completion in September 2018. However, the mine’s expected date of first coal production has been delayed and the first deliveries of coal are now scheduled for the second half of 2022.

Latest Developments
Resgen is considering alternative arrangements for its extraordinary general meeting, which is scheduled for April 7, in Australia.

The meeting will be used to seek shareholder approval for the mine funding package for the construction of the Boikarabelo coal project.

The company’s board is considering deferring the meeting to a later date, but has also emphasised that “time is of the essence” to finalise the mine funding package, as the company has limited financial resources, and further delays may impact on project economics.

Key Contracts and Suppliers
Digby Wells Environmental (mining right application, mine-waste licence, environmental authorisation process for power plant); Sedgman (design, engineering, procurement and construction contract for the coal handling preparation plant, the ongoing operation and maintenance of the plant, and construction of the ancillary works relating to the infrastructure of the mine); RCE (rail design and construction, engineering, procurement and construction management, or EPCM, services); NuWater (water EPCM services); EHL Energy (transmission lines), Stefanutti Stocks (preferred mining contractor), Stefanutti Stocks Road and Earthworks (rail earthworks and bridges) and Transnet Freight Rail (ballast, track and signalling).

Contact Details for Project Information
Resgen, tel +27 11 010 6310, fax +27 86 539 3792 or email info@resgen.com.au.