MORE PRESS!!DEVELOPING coal miner Resource Generation (Resgen)...

MORE PRESS!!

DEVELOPING coal miner Resource Generation (Resgen) will take action to recover $22.6m from the Blumont Group due for Blumont’s subscription for 102.6-million shares at $0.22, Resgen said on Thursday.

Blumont is a Singapore-listed company with long-term investments in global resources, including coal and uranium.

Its subscription for shares would have given it a 15% stake in Resgen, making it the second-biggest shareholder, after the Public Investment Corporation with 16.6%.

Blumont’s subscription was a significant portion of a $62.6m equity raising launched by Resgen in June to build the Boikarabelo coal mine in the Waterberg. In the first stage of development Boikarabelo is targeting six-million tonnes a year of saleable coal for export and the domestic market. Resgen MD Paul Jury told the annual general meeting in Australia last week that the Boikarabelo project had received all regulatory approvals and begun construction, which is expected to take 24 months.

If all funding arrangements were in place within the next six months, Boikarabelo would produce its first coal in late 2015.

He said Resgen had reduced the capital required for the project to $480m from $530m. Apart from equity funding, Resgen was also raising project finance and equipment loans for its fleet. Taking Resgen’s cash holdings into account, it still needed to raise $178m, Mr Jury said. Presumably, if $22m is not forthcoming from Blumont, that will rise to $200m.

Investec’s natural resources team said Blumont probably did not have enough cash to pay for the shares as the collapse in Blumont’s share price was restricting its ability to raise capital. Blumont has also not completed a proposed convertible bond issue to Platinum Partners. Blumont’s failure to pay is a setback for Resgen as it may need to raise additional equity before completing project financing, Investec said. But with about $80m in cash, Resgen was in a strong financial position.

On Tuesday, Resgen traded for the first time on the JSE, with 794,500 shares changing hands at 220c each.


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