JOHANNESBURG (miningweekly.com) – Discussions between State-owned power utility Eskom and ASX- and JSE-listed Waterberg Coal Company (WCC) to resolve the outstanding requirements to convert the Waterberg coal project’s (WCP’s) offtake memorandum of understanding (MoU) into a coal supply agreement (CSA) were ongoing, WCC said on Tuesday.

In terms of the MoU, ten-million tonnes a year of coal product would be delivered to Eskom’s Majuba power station, in Mpumalanga, on a take or pay basis.

The outstanding requirements to convert the MoU to a CSA included coal specification finalisation, final pricing, delivery dates and the provision to Eskom of a satisfactory due diligence report on the WCP’s definitive feasibility study (DFS), WCC said, adding that the due diligence report was expected to be finalised by the end of October.

Meanwhile, while the due diligence was being done, the project partners had also been in discussions with potential funding parties.

WCC explained that the potential funding for the project was predicated on, among other factors, the completion of the CSA with Eskom and a satisfactory outcome of the due diligence review.

It was expected that it could take between 6 and 12 months after the receipt of the review report for the debt funders to provide the project funding.

WCC further noted that the delays with regard to this project had necessitated the company’s A$35-million convertible secured facility, that had been drawn down on April 9, 2013, to be restructured.

WCC noted that it had entered into discussions with the lenders of this facility regarding its restructuring and a potential extension of its maturity date, which was currently set for October 9.

Meanwhile, in light of the substantial technical work on the Eskom project by the project partners and owing to the expected project delay, the project partners had also identified the potential for a standalone export project.

This project would be subject to a standalone DFS, with the project partners currently also considering separate funding options for this proposed project, WCC said.