All regulatory approvals have been received, the land for the mine and rail link has been acquired, and we have contracts providing rail haulage and port access.

In addition, we have three significant export contracts for thermal coal with major Indian customers and the global trader Noble Group.”

Significantly, with construction of site infrastructure, roadworks, and water and power connections beginning, and the site is now classified as an operating mine site.

The Boikarabelo mine in the Waterberg region of South Africa has probable reserves of 744.8 million tonnes of coal on 35% of the company’s tenements.



Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX “Small and Mid-cap” stocks with distribution in Australia, UK, North America and Hong Kong / China.

The company is in talks with six South African and global banks and other financiers to secure the project financing.

The lending institutions will be getting their credit processes underway with a binding offer expected early next year.

Resource Generation is developing the Boikarabelo coal mine in the Waterberg region of South Africa where there are probable reserves of 744.8 million tonnes of coal on 35% of the tenements under its control.

The Stage 1 of the mine development targets saleable coal production of 6 million tonnes per annum.

Subject to obtaining final credit approval and execution of finance and security documents, the financing syndicate will provide about 60% of the total funds required for the mine construction.

The proposed terms of the facility include a term of 9 years including the construction period, a senior debt facility of around US$400 million plus associated facilities including a working capital facility.

Once the formal credit approval is in place, Resource Generation will tap the capital markets to fund the balance of the expected capital expenditure for the mine development.

Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX “Small and Mid-cap” stocks with distribution in Australia, UK, North America and Hong Kong / China.

Proactive Investors is a market leader in the investment news space, providing ASX “Small and Mid-cap” company news, research reports, StockTube videos and One2One Investor Forums.

With the detailed mining fleet and engineering designs for Boikarabelo completed in September, Resource Generation is positioned to fast track construction once funding is secured.

Resource Generation has noted a report in the South African Coal Report (SACR), which was published late yesterday by Energy Publishing Pty Limited.

The SACR states that: ‘Transnet is putting the finishing touches to a memorandum of understanding (MOU) with Resource Generation, providing comfort of coal haulage for the Boikarabelo project’.

The SACR quotes an interview with Brian Molefe, the CEO of the Transnet Group stating: ‘an agreement would be finalised by the end of the week’.

The SACR further quotes Divyesh Kalan, the GM Transnet Group Commercial, who stated: ‘it’s somewhere between providing comfort and a guarantee’.

Resource Generation has confirmed it has been in negotiations with Transnet and an MOU has been signed by its subsidiary, Ledjadja. It is awaiting confirmation from Transnet that it agrees to the MOU and will sign it.

The company said the market will be informed of the major terms of the MOU once agreement and Transnet’s signature is received.

The company said that it has been made aware that an appeal has been lodged with the South African Department of Mineral Resources regarding the granting of the Boikarabelo Mining Right to Ledjadja Coal (Pty) Limited.

Importantly - Resource Generation said that the Mining Right remains valid, as the appeal does not suspend the Mining Right.

The appeal has been lodged by three individuals whose farms are located in the area of the proposed mine, the nearest being 13 kilometres away.

The objections raised are of a general nature and are substantially the same as those lodged by the same parties during the public consultation phase of the Mining Right Application process, which were considered in the granting of the Mining Right.

There is a statutory process to be followed and at this stage no formal notification has been received.

Resource Generation is confident that the Mining Right will be confirmed at the end of that statutory process, with the company continuing normal activities to develop the Boikarabelo mine.

Potential debt funders were asked to submit expressions of interest and indicative term sheets, and submissions have been received which more than cover the company’s anticipated debt requirements.

Paul Jury, managing director, said ‘We are very pleased with the level of interest and look forward to working through the proposals with the potential lenders.

"The offers contain a number of conditions precedent including satisfactory contractual arrangements with Transnet and Eskom, which we are working towards.

"This is another positive step forward for our plans to start development of the Boikarabelo mine."

Last month Resource Generation ticked off another major milestone for Boikarabelo, with the company receiving formal documentation for a 30 year Mining Right.

Boikarabelo is forecast to start production towards the end of 2013, and is part of the Ledjadja joint venture with Resource Generation holding 74%.

Boikarabelo has a massive 6.4 billion tonne resource, a 120 metre thick coal seam at a shallow depth of 20-35 metres.

The current probable reserve is 745 million tonnes of thermal coal, which has the potential to increase as this reserve amounts to only 35% of the resource bearing tenements.

The Boikarabelo coal seam is between 20 and 30 metres below the surface, enabling low-cost, open-cut mining.

The seam is between 120 and 130 metres thick, with zones of varying quality thermal and soft coking coal.

Importantly, the Boikarabelo tenements are only 40 kilometres by road from an existing rail system that provides access to domestic markets and to the ports of Maputo, Richards Bay and Durban for export shipments.

These three ports all have potential to expand their coal capacity, and a proposed new railway to Walvis Bay in Namibia, if constructed, would also offer access to export markets.

Resource Generation has now received the formal documentation for a 30 year Mining Right.

Paul Jury, managing director, said "We expect the Mining Right will facilitate our discussions with Eskom regarding coal supply to its power stations and with Transnet regarding transport to domestic customers and ports."

Boikarabelo is forecast to start production towards the end of 2013, and is part of the Ledjadja joint venture with Resource Generation holding 74%.

The documentation also confirmed the change of Resource Generation’s BEE (black economic empowerment) partner in Ledjadja to Fairy Wing Trading 136 (Pty) Limited.

Fairy Wing Trading 136 (Pty) Limited (FWT), a company owned by a group of South African businessmen and women with strong commercial and government relationships, has agreed to acquire the 26% shareholding in the Ledjadja JV that was owned by its original BEE (black economic empowerment) partner.

Boikarabelo has a massive 6.4 billion tonne resource – a 120 metre thick coal seam at shallow depth of 20-35 metres. Current probable reserve is 745 million tonnes of thermal coal, which has the potential to increase as this reserve amounts to only 35% of the resource bearing tenements.

The Boikarabelo coal seam is between 20 and 30 metres below the surface, enabling low-cost, open-cut mining. The seam is between 120 and 130 metres thick, with zones of varying quality thermal and soft coking coal.

Importantly, the Boikarabelo tenements are only 40 kilometres by road from an existing rail system that provides access to domestic markets and to the ports of Maputo, Richards Bay and Durban for export shipments.

These three ports all have potential to expand their coal capacity, and a proposed new railway to Walvis Bay in Namibia, if constructed, would also offer access to export markets.

Boikarabelo has around 745 million tonnes of thermal coal, which has the potential to increase substantially as this reserve amounts to only 35% of the resource bearing tenements.

Boikarabelo can therefore now supply large quantities of thermal coal to both the export and domestic thermal coal markets, over several decades.

As part of the rail line process, three farms are being acquired for a total of ZAR67.5 million, around A$10 million.

ZAR21.1 million was paid in the last quarter and the balance is expected to be settled this quarter.

Resource Generation said agreements have been signed to acquire an additional farm or a servitude across the farm.

Back in November 2010, the company raised A$30 million through the issue of 60 million shares at $0.50, to bring forward the construction of the rail link.