Resgen seeks to raise P4,2bn for Waterberg coal mine

| Thursday July 15, 2010 00:00

Resgen, which has a primary listing on the ASX, planned to start production at its Boikarabelo project in Limpopo as early as 2013.

Speaking to Mining Weekly Online at the listing event, Resgen MD Paul Jury said that the company planned to raise an initial R4,5-billion(P4,2-billion) in project financing, which would consist of 60% debt and 40% equity finance.

'In raising project funding, we would like to include South African banks and other investors to invest in the development of a significant coal resource in their own country.'  Resgen lodged an application for Boikarabelo mining right in February and hoped to secure the right by early 2011.

'We would like the project funding to crystallise at around the same time as the granting of the right,' said Jury. If all goes according to plan, construction of the mine would start by mid-2011, and would take between 18 months to 24 months to complete.

Jury explained that the mine would be developed in a two-phased approach to limit the upfront capital expenditure.  With the first phase completed, the mine would be able to deliver about 12-million tons run-of-mine coal a year, which would equate to around six-million tons of product coal.

Of this, three-million tons were destined for the export market, and three-million tons would be used domestically.  The envisaged opencut mine would be in the immediate vicinity to the construction of State-owned utility Eskom's new large-scale power station Medupi, and the existing power station, Matimba.

The Boikarabelo tenements are also a short distance away from the rail link to South Africa's coal ports, and Jury noted that the company had started discussions with freight utility Transnet.

Phase two, planned for 2018, would involve ramping-up production to 20-million tons of product coal and the project could boast a mine-of-life of up to 100 years.  Studies showed that the Boikarabelo project had probable saleable reserves of 603,3-million tons of coal, an indicated resource of 569,5-million tons, plus an inferred resource of 1,7-billion tons.

Jury pointed out that further drilling was expected to increase the figures further. 'With supplies from coal fields in Mpumalanga and KwaZulu-Natal declining, the coal from the Waterberg coalfield, which contains 40% of South Africa's remaining coal resource will greatly assist South Africa in meeting its energy and development targets going into the future,' said Jury.

South Africa is expected to consume 269-million tons of coal a year by 2018 to meet its growing energy demands. (Mining Weekly)