Resource Generation (ASX: RES) is developing one of South Africa’s largest remaining coal deposits, with the company's focos on the Boikarabelo tenements, in the Waterberg region of South Africa.
The strategy for the company is to develop high grade “energy” related resources into viable and competitive mining operations. Accelerated shareholder value will be delivered through the delivery of physical mining activity.
South African-focussed Resource Generation (ASX:RES) has taken a major step toward establishing the Boikarabelo mine in South as a major supplier of coal with the first coal off-take contract signed with Integrated Coal Mining.
Integrated, on behalf of its affiliated company CESC Limited (BSE:CESC IN), will purchase one million tonnes of thermal coal per annum for three years and two million tonnes per annum for a further 17 years.
Integrated Coal Mining and CESC are both parts of the RPG Group, one of India’s largest industrial groups with a market capitalisation of US$3.0 billion. CESC is India’s third largest power utility,
Integrated will also subscribe $10.5 million for a 10 per cent shareholding in Resource Generation. Resource Generation has agreed to place 18,268,053 shares with Integrated Coal Mining at a share price of $0.575.
Purchases will begin when the Boikarabelo mine commences production, which currently is scheduled for early 2013, with price agreed annually based on the international benchmark price.
Paul Jury, managing director of Resource Generation, said, "This is a major step in our plan to establish our Boikarabelo mine as a significant supplier of coal to both export and South African domestic markets."
"It represents a vote of confidence by CESC in Boikarabelo’s potential, and positions us to sell increasing quantities of coal as CESC’s generating capacity grows."
Resource's planned Boikarabelo mine is in the Waterberg region of South Africa, one of the country’s largest remaining coal deposits.