[miningmx.com] – RESOURCE Generation (Resgen) said the ‘architecture’ of its proposed Boikarabelo coal mine in South Africa’s Limpopo province, was “unlikely to change”, but it would consider alternate operational models.
The company was also interested in pursuing the supply of coal to an approved independent power producer (IPP) in addition to supplying export markets and Eskom, said Rob Lowe, interim CEO of Resgen in an interview.
“The architecture of the project is a blend of domestic and export coal. We are not chasing a coal supply agreement with Eskom in the short term because we have offtake with Noble Group. That is not to say we are not keen to talk to Eskom,” he said.
Noble is an anchor shareholder in Resgen as well as a strategic partner having put up a $68m loan facility as well as an additional $55m loan to pay for construction of a feeder rail link from the mine to the main Transnet railway out of the Waterberg.
Noble is also the supply chain manager and exclusive marketing agent and has signed an off-take contract to buy an initial three million tonnes/year (mtpa) of coal for the first eight years of production.
Lowe said, however, there were other options. “One of the strategies that we are interested in pursuing is the supply of middlings coal from Boikarabelo to a 245MW IPP. We are very anxious to fast-track that,” said Lowe.
Lowe is the CEO of Altius Investment Holdings which is a major shareholder in Resgen and helped, in co-operation with Noble Group, to lead the ouster of Resgen’s long-standing CEO, Paul Jury, and the rest of its board in an extraordinary general meeting (EGM) on November 26.
Six new directors were appointed of which four are South African – Rob Croll, Lulamile Xate, Leapeetswe (Papi) Molotsane and Konji Sebati. Two Australian directors – Denis Gately (chairman) and Colin Gilligan – were appointed.
The confrontation between Noble/Altius and the former Resgen board become public in mid-September and was triggered by Resgen’s problems in raising the outstanding $400m required to build its proposed Boikarabelo coal mine.
Gately said in an update today that a review of the company’s business had “… proved more difficult than anticipated due to the retrenchment of all Sydney office staff by the former executives, including themselves, on the day prior to the AGM/EGM”.
However, Lowe had set about rebuilding the firm’s executive team as well as surveying the funding options for Boikarabelo which also include private equity with a Swiss firm, the details of which remain unclear, and traditional lending from a club of bankers such as HSBC and Rand Merchant Bank.
Said Gately: “The board’s objective is to complete the funding for the project as soon as possible so that the company can commence contract tendering during this optimal
period of contractor pricing pressure”.
He added that viable alternate operational models would include owner/operator or contract mining “… in order to reduce the capital cost of the project. We will also examine options to make more efficient use of capital and minimize risk exposure during the execution phase.
“My aim is to report to you on the outcome of the board’s assessment of these
project development options early in 2016,” said Gately.
