Name and Location
Boikarabelo coal project, Limpopo, South Africa.

Client
Resource Generation (ResGen).

Project Description
Boikarabelo has probable reserves of 745-million tons, a measured resource of 1.1-billion tons, an indicated resource of 551.7-million tons and an inferred resource of 1.5-billion tons.

The Boikarabelo coal seam is between 20 m and 30 m below surface, enabling low-cost, opencut mining. The seam is between 120 m and 130 m thick, with zones of varying quality thermal and soft coking coal.

The mine will be developed in a two-phased approach to limit upfront capital expenditure. The first phase will deliver about 12-million tons of run-of-mine coal a year, which will equate to about six-million tons of product coal. Of this, three-million tons are destined for the export market and three-million tons will be used domestically.

Phase 2, planned for 2018, will involve ramping up production to 20-million tons of product coal.

The project includes a 36 km rail link to the existing rail network.

Boikarabelo hosts a life-of-mine of up to 100 years.

Value
ResGen has reported that it will save about $120-million in construction costs at its Boikarabelo mine, after it secured electricity supply from the grid.

The estimated capital cost for the project has now been reduced to $630-million, reflecting the flexibility of State-owned power utility Eskom and its commitment to supply power for Stage 1 of the mine development by as early as 2014.

Duration
ResGen’s black economic-empowerment subsidiary, Ledjadja Coal, received the Boikarabelo mining rights from the Department of Mineral Resources in April 2011.

Construction of the mine is scheduled to start by the first quarter of 2013 and will take about 24 months to complete.

The mine is expected to begin production in 2015.

Latest Developments
ResGen has divested of a 7.5% stake in the company to fund the development of its Boikarabelo coal mine.

The miner has entered into a strategic partnership with Noble Group, which will result in the placement of more than 21.3-million shares, at 40c a share, to raise A$8.5-million.

In addition, Noble Group has agreed to provide ResGen with a secured loan facility of up to $123-million on normal commercial terms. The facility could be drawn down until the end of December and would be repayable 21 months after the first draw-down.

The loan facility is in addition to the A$20-million secured debenture issued to Noble in January this year.

Noble has also increased the tonnage and term for its offtake contract, which stipulated that 2.5-million tons would have been supplied over a five-year period. Under the new offtake agreement, ResGen will supply about 500 000 t/y over the first eight years of operation, a further 1.5-million tons a year over years 9 to 12, about two-million tons a year between years 13 and 14, and sabout 2.5-million tons a year during years 15 to 35.

Meanwhile, the construction of site infrastructure and roadworks, as well as water and power connections, have started. The site is now classified as an operating mine site.

Key Contracts and Suppliers
Digby Wells Environmental (mining right application, mine-waste licence, environmental authorisation process for power plant), RSV Enco (engineering, procurement and construction management for mine construction) and RCE (rail design and construction).

On Budget and on Time?
First production has been delayed to the first half of 2015.

Detailed mining and engineering plans have reduced the estimated first-stage cost of the mine to $630-million.

Contact Details for Project Information
ResGen (Australia), tel +61 2 9376 9000, fax +61 2 9376 9013 or email info@resgen.com.au; or (South Africa), tel +27 12 345 1057 or fax +27 86 539 3792.
Digby Wells Environmental, tel +27 11 789 9495 or +27 11 504 1400, fax +27 11 789 9498 or +27 11 504 1446, or email info@digbywells.co.za.
RSV Enco, tel +27 11 498 6010, fax + 27 11 498 6210 or email enco@rsvenco.com.
RCE, tel +27 12 450 0040 or fax +27 12 450 0060.