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

Client
Resource Generation (Resgen).

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

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 using a two-phased approach to limit upfront capital expenditure. The first phase will deliver about 12-million tonnes of run-of-mine coal a year, which will equate to about six-million tonnes of product coal. Of this, three-million tonnes will be exported and three-million tons will be used domestically.

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

The project includes a 40 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 to Stage 1 of the mine development 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
Preparatory construction work on the 40 km rail link to Resgen’s Boikarabelo coal mine and the existing coal rail network continued in the three months ended September 30, progressing the envisaged six-million-tonne-a-year operation towards its targeted 2015 production date.

“All regulatory hurdles have been overcome, all necessary land has been acquired and the company has rail haulage and port access contracts sufficient for Boikarabelo’s Stage 1 production,” the company noted in its quarterly report.

Resgen highlighted that land clearing for the rail link had started. Earthworks and construction of the initial camp for 200 workers who will build the rail link are also under way.

Meanwhile, during the quarter, work continued on community consultation and mapping of the local skills base. Projects that are due to start shortly include the construction of the provincial road bypass and the main mine access road, as well as the upgrading of the current access road.

The majority of tenders received for mobile equipment, materials handling for the coal handling and preparation plant (CHPP) and the entire CHPP, have funding support. Technical assessments of the various tenders have been completed and negotiations are continuing on the funding support.

Resgen has also entered into a long-term export offtake contract with Indian power utility CESC, as well as with Valu Investments and the Noble Group, which have underwritten the bulk of the forecast revenue from Boikarabelo’s Stage 1 production and a substantial portion of Stage 2 production.

A domestic offtake contract for three-million tonnes a year of middlings coal has been entered into with the Noble Group for the first eight years of production.

In addition, Valu Investments has started feasibility studies for the proposed development of a 200 MW power station, adjacent to Boikarabelo.

Further, Resgen has recently welcomed the South African government's Public Investment Corporation (PIC) as a major shareholder, following a recent A$62.6-million capital raising to start major construction work at its Boikrabelo coal mine.

Existing shareholder Noble Group has supported the raising with other major South African investors, including Altius Investment Holdings, which introduced PIC to Resgen’s share registry.
The PIC is reported to have a 19.9% shareholding in ResGen.

Resgen also recently sold a 15% interest in the company between A$20-million and A$25-million to Singapore-listed Blumont Group.

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.