Resgen progresses talks with DBSA over funding for rail link at Boikarabelo

4th May 2017 By: Megan van Wyngaardt - Creamer Media Contributing Editor Online

JOHANNESBURG ( – JSE-and ASX-listed Resource Generation (Resgen) said talks with the Development Bank of Southern Africa (DBSA) concerning the funding for a rail link at its Boikabarelo coal mine, in Limpopo, were now at an advanced stage, with the DBSA to submit its application for first stage credit approval this week.

“If approval is granted, there will follow a short due diligence and, subject to a satisfactory outcome, a binding term sheet will be prepared for approval by the board,” Resgen chairperson Denis Gately explained, adding that the DBSA was targeting financial close by September.

Negotiations with the three preferred contractors have also been concluded, including RCE Consultants for the engineering, procurement and construction (EPC) management services; Stefanutti Stocks Roads and Earthworks for rail earthworks and bridges; and Transnet Freight Rail for ballast, track and signalling.

Resgen was now targeting the completion of the rail link EPC by end-July.

Meanwhile, the company noted that its talks with State-owned power provider Eskom to conclude a coal supply agreement has been placed on hold, pending the outcome of internal enquiries taking place within the parastatal, unconnected with the negotiation of the agreement.

In other news, Resgen together with its advisers, Waterbourne Capital, have actively been preparing its submission for a 300 MW independent power programme (IPP) towards the end of this year.

“We submitted a full response to the Department of Energy’s (DoE’s) public request for information, detailing the mine’s current status and the work done to date on the IPP. The department has acknowledged our submission and has undertaken to take our comments into consideration,” said Gately.

The company will now seek to appoint a legal firm to advise the bid through a joint development agreement (JDA). “In parallel, we are identifying local partners to join our consortium.”

Once the JDA has been completed, Resgen will start with the process of selecting an EPC partner. It is expected that the partner will be Japanese or South Korean, as both countries have well-established credentials that are most likely to comply with the request for proposal when issued by the DoE.