[miningmx.com] – ASX and JSE – listed Resource Generation (Resgen) is continuing its uphill battle to source the US$400 million required to build its proposed Boikarabelo coal mine in the Waterberg.
The mine was originally supposed to be in operation by the end of this year but major construction has yet to begin because of management’s inability to raise the debt funding required and the latest development could see a further delay of several months.
A Resgen statement released today said the company is reviewing its plans to determine whether moving to a contract mining model for the proposed mine could reduce its costs and capital requirements.
According to MD Paul Jury “finalising negotiations have been hampered by a weakened AP14 coal price forecast. In June 2015 the company believed it was close to an in-principle agreement with a club of financiers on the term sheet for a multi-layered funding package.
“In order to determine if gearing levels can be lowered, the club of financiers have now asked Resource Generation to investigate whether a contract mining model could reduce the mine’s costs and capital requirement. “
Jury added, “while weakness is the coal price forecast has delayed our securing the remaining finance to build the mine, we believe the asset is valuable and – once construction is financed on acceptable terms – will provide value to shareholders.’
Stage one production from Boikarabelo is planned at 6 million sales tons (mt) per year rising to 25mt/yea in Stage 2.
Resgen is one of two Australian juniors trying to develop new coal projects in the Waterberg and the other – Waterberg Coal Company – has also run into funding problems.
Trading in Waterberg shares on the ASX has been suspended until August 24 as the company tries to “finalise a proposed third party funding arrangement to replace its existing funding facility with Standard Bank of South Africa which was due for repayment on April 9, 2015.’
