THE final act in Resource Generation’s (Resgen’s) fruitless 13-year bid to develop the Boikarabelo thermal coal mine in South Africa’s Limpopo province is underway after the company said today it was considering going into administration.
This followed a decision by Singapore-based commodities trading firm, Noble Resources, that it would no longer provide working capital to Resgen. It agreed to provide just under $1m for March but further advances for April and May would not be forthcoming.
“The board has entered into urgent discussions and is considering all options including the appointment of administrators,” Resgen said in a statement to the JSE today.
Resgen’s CFO, Brian Harvey, and Zirk van der Bank, the COO, will leave the company at the end of this month after they tendered their resignations, Resgen said.
Boikarabelo had been scoped to produce 6.5 million tons a year (Mt/y) of thermal coal with the second phase of 18Mt/y in the offing, pending development of rail infrastructure.
Boikarabelo is situated in the Waterberg coalfields which are estimated to contain about 40% of South Africa’s total thermal coal. It is also an element of the government-backed National Development Plan in terms of unlocking the Northern Mineral Belt.
The writing was on the wall for Resgen after the government-owned Industrial Development Bank (IDC) announced in October it would withdraw from a syndicate of banks that were to support the project, scoped at about R4.2bn.
In addition to the IDC, the Public Investment Corporation (PIC) and Noble Resources were part of the syndicate that agreed on a debt, mezzanine finance, and equity package in December 2019. In terms of equity loans, the PIC and the IDC were to provide R100m each with Noble Resources providing R30m.
By dint of its ongoing development and working capital support, Noble Group owned at least 14% of Resgen’s issued share capital.