res resurgent boikarabelo attracts capital

Hi all,


Below is an article worth the read, after reading it I decided to not wait for Rob to buy some more, and placed an order for 30,000 odd shares which I hope I will get.

Reading between the lines, I'm confidence that PJ will get us through these trouble times of late, as FP has said before, "BUY BUY BUY NOW"......Before its to late once we get the news, we all know what will happen to the sp up she will go!



26 Apr 2013


SAY what you want about Eskom, the supply of coal to the power utility remains one of the more solid business cases in South African mining.

Firstly, there’s little risk of oversupply. Eskom reckons it needs 4 billion tonnes of thermal quality coal between now and 2040 of which about half is not yet contracted.

Secondly, Eskom is paying decent prices for the coal. It has to because Indian traders, desperate to fill a similar thermal coal supply deficit in their home country, will offer good prices.

Investors just have to see through the short-term headwinds which include infrastructure issues and access to water, and the like. Although, to be honest, these are problems typical of almost any miner operating in South Africa today.

So keep an eye on those junior coal companies building mines.

It’s no coincidence Firestone Energy, JSE-listed, is fighting off a takeover proposal by Australians Range River Gold – an offer it deems opportunistic (it is) and that doesn’t pay the Firestone shareholders for the strategic nature of the Waterberg Joint Venture.

The Waterberg Joint Venture is a thermal coal mine in Limpopo province. Another is Boikarabelo owned by Resource Generation (Resgen).

Like Firestone Energy, Resgen is primarily listed in Australia, but has a secondary Johannesburg presence.

What’s interesting about Resgen is that it’s finally raised finance – about $123m - for Boikarabelo, a proposed six million tonnes a year (Mtpa) mine of which half will be sold to Eskom.

The rest is being supplied to Noble Group, a Singapore-based trading house that provided the loan and which could trigger the additional $300m in loans required to fully fund Boikarabelo.

Paul Jury, MD of Resgen, likens it to a “who blinks first” Western moment. With the initial finance in for Boikarabelo, banks will have to decide if they will join in having offered terms earlier this year that Resgen couldn’t accept.

Alternatively, existing shareholders such as Calcutta Electric (11.6% or Bhushan Steel (6.65%) could increase their exposure to Boikarabelo.

Said Jury of the investment by Noble Group: “This is the first step in getting to stage two”.

Goldman Sachs said stage two of the project could be developed from internal cash flow, but that there was a possibility that it could “get fast-tracked” such that it was developed along side stage one albeit on a lagged time frame.

“The company has provided less guidance for stage two but we assume that capex is likely to be $700M to $800M with 35Mtpa to 38Mtpa of run-of-mine (and about 17Mtpa of product coal) with 50% for the domestic and 50% for the export market,” Goldman Sachs said.


http://www.miningmx.com/page/news/energy/1580978-Resgen-resurgent-Boikarabelo-attracts-capital#.UX3_IsrLuPU



Good luck to all that hold RES