RESOURCE Generation (Resgen) could not allow logistical challenges brought on by the COVID-19 virus stand in the way of its extraordinary general meeting (EGM) scheduled for April 7, saying in an announcement today that “time was of the essence”.
The EGM is to approve a R4.2bn finance package in order to complete construction of the Boikarabelo thermal coal mine situated in the Waterberg, a coal-rich district in South Africa’s Limpopo province.
The company said today that its South African based directors and management team would not be able to attend the EGM in Brisbane, Australia where the company is registered owing to travel restrictions aimed at limited the spread of the virus.
Consequently, it was considering alternative EGM arrangements that would enable shareholders to participate without directors having to travel. “It should be noted that the board considered deferring the EGM to a later date, however time is of the essence to finalise the Mine Funding Package as the company has access to limited financial resources and further delays may impact the project economics,” it said.
It has taken Resgen’s current board the best part of five years to get this far with Boikarabelo – a process that began with the ouster of the firm’s Australian-based directors in 2015. Between then and now, there has been a dramatic sea change in the way society views new thermal coal mine production which has made funding of new projects difficult.
The funding package up for approval sees South African government-owned institutions, the Industrial Development Corporation (IDC), the Public Investment Corporation (PIC), as well as Noble Resources agreed to jointly finance Bokarabelo.
The funding package consists of about R4bn in loans with the balance in equity investments. This excludes R500m required for working capital purposes – which will only be raised at later stage when the project was finished – and finance required to build a 42km siding connecting Boikarabelo with the main Transnet Freight Rail line to Richards Bay.
On November 23, Resgen announced it had signed a conditional coal transportation agreement (TCA) with Transnet for freight of 3.6 million tons in thermal coal from the Boikarabelo project, situated in the Waterberg coal fields.
The EGM is also being convened in order to approve an independent expert’s report on the Boikarabel project.
The Waterberg contains about 40% of South Africa’s total thermal coal and is an element of the government-backed National Development Plan in terms of unlocking the Northern Mineral Belt. This explains the involvement of South African government-owned lenders in the funding of the mine.