RESOURCE Generation (Resgen) hopes in the next six months to secure the remaining $178m it needs for a large coal-mining project in Limpopo.
Resgen has cash on hand of $79m, which reduces the $257m it has yet to find for the $480m Boikarabelo project.
Of the $178m outstanding, Resgen needs to raise $97m towards the completion of its coal handling and preparation plant and $81m for the balance of the capital expenditure.
"We are currently in negotiations and will hopefully close those over the first quarter of next year in terms of a project funding arrangement with several banks," CEO Paul Jury said on Friday.
"Currently, nine banks are still in the process of evaluating the information we have before them to put in place funding offers," he said.
Resgen is also in talks with mobile equipment suppliers to secure a higher level of gearing than it has at present.
"In the meantime, we will continue to pursue alternative funding possibilities in keeping with the same practice we’ve had over the past nine months of trying to fund the capital expenditure in whatever way we can.
"Sometime between now and the next six months we hope to complete the funding required to fully finance the project," he said.
"Based on the work we’re doing and the funds we’ve received we still hope that given that success in funding we will be able to complete the project in 24 months," he said.
A $55m, fully funded rail loop of about 40km long is being planned and work has started on clearing the area for the rail. Work on camp access and five road projects are also under way. Accommodation for workers will be ready by the end of March next year.
Resgen has secured its water use licence and it has contracted power arrangements with Eskom.
It has agreed on a 10-year take-or-pay contract with Transnet to rail the coal down to the harbour in Durban and it has a take-or-pay arrangement with the port for its export coal.
The first five years of the mine’s life will be a ramp-up and expansion to stage two.
The first phase will produce 6-million tonnes of saleable coal and the second phase in the next four year will treble output to 15-million tonnes.
From 10 years onwards, the mine will generate 25-million tonnes of saleable coal.
The key aspect of the growth in production is to tie it in with Transnet’s plans to increase rail capacity from the Waterberg coal fields.
Resgen has long-term offtake contracts for its coal, with Noble, CESC and Valu key clients. Noble has provided funding of more than $150m towards the project.
The lower grade coal could be sold domestically to Eskom, which needs coal.
Resgen has identified two power stations for its site. One is already approved and is forecast to produce 260MW. It can either augment power supply to the mine or push electricity into the national grid.
A second power plant of 1,200MW is being considered by Indian power utilities to take part in the independent power producer scheme to bolster South Africa’s electricity supply. The feasibility study for this plant is in the early stage.
RES Price at posting:
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