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

Client
Resource Generation (Resgen).

Project Description
Boikarabelo has probable reserves of 744.8-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 14-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 tonnes will be used domestically.

Phase 2, planned for 2020, will involve ramping up production to 20-million tonnes of product thermal 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
The estimated capital cost for the project is $480-million.

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

Initial construction of the mine started in the first quarter of 2013 and is scheduled for completion in the first half of 2016.

The mine is expected to begin production in mid-2016.

Latest Developments
Regen continues to progress the development of its Boikarabelo coal mine.

The company says in a report for the three months ended September 30 that construction of the infrastructure for the mine continued during the quarter, while debt funding was being finalised to shorten the overall construction time.

Debt funding of $400-million is being sought to fund the construction of all site infrastructure and a rail link, including a contingency.

Meanwhile, construction over the three months included the development of a 1 320-person construction camp; rail link bridges; power-supply infrastructure; the construction of an office complex; the rail network stabilisation facility (NSF); earthworks pertaining to the construction offices, power supply and the NSF; permanent water supply infrastructure; and 13 km of water pipeline adjacent to public roads.

Services, kitchen at and dining facilities, and accommodation units have been installed at the construction camp to allow for immediate occupation by 400 persons.

The installation took place despite earthworks for the rail link, and the access roads and provincial roads having been suspended early in the quarter after the main earthworks contractor was placed into liquidation.

The subcontractor for the construction of bridges under and over the rail line has since been contracted directly and is on target to complete the first three bridges by the end of the calendar year.

Power supply for the construction process has, meanwhile, been connected to the main locations. During the quarter, a contract was signed with EHL Energy to construct 132 kV power transmission lines, a substation and a switch room for power supply to the mining operation. This is expected to be completed by October 2015.

In addition, the terrace for the construction offices was completed during the quarter and services are currently being installed.

The earthworks for the intersection of the rail link to the main line also started during the quarter. Once completed, the rail turnouts and associated signalling will be installed. The design of this intersection is complex, with multiple lines to allow the rearrangement of trains without delays or stoppages.

The rail network stabilisation facility consists of two siding lines: one loop line and a main line bypass; they will eventually be capable of carrying trains with up to 100 wagons.

Permanent water supply infrastructure continued to be installed during the quarter, including holding tanks and pumping facilities, initially from the main borehole on Zeekoevley.

This infrastructure will be used during the construction of the mine and will later become one of the main water sources for mine operations.

The Marapong effluent treatment facility, in Lephalale, and the associated pipeline to Boikarabelo, remain an integral part of the mine’s social and labour plan.

In the quarter ended September 30, a contract was signed with engineering advisory firm Ceenex to undertake engineering, procurement and construction management (EPCM) services for the construction of the treatment plant, the 58 km pipeline to Boikarabelo and associated pump infrastructure.

Work started in the quarter with the completion of two main road underpasses for the pipeline and initial construction of a 13 km section of the pipeline adjacent to a main road.

All regulatory consents have been received, all necessary land has been acquired and rail haulage and port access contracts sufficient for the mine’s Stage 1 production have been signed, Resgen notes.

The company also signed an engineering, procurement and supply contract with FLSmidth Roymec, the South African black economic-empowerment subsidiary of FLSmidth & Co – a supplier of complete plants, equipment and services for the global minerals industry.

The start of fabrication and supply is conditional on completion of debt funding; however, all detailed designs and specifications have been completed.

In early October, a construction management contract was also signed with FLSmidth to manage the on-site mechanical and electrical installations for the coal handling and preparation plant (CHPP).

Further, Resgen signed a five-year loan facility of up to $113-million for the full cost of the mobile equipment fleet with Komatsu Financial Limited Partnership.

Moreover, three long-term export offtake contracts have been entered into with CESC, Value Investments and Noble Group.

These contracts underwrite most 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 tons a year of middlings coal has been entered into with the Noble Group for the first eight years of production.

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); FLSmidth (coal handling and preparation plant); RCE (rail design and construction) and FLSmidth Roymec, (engineering, procurement and supply contract); Ceenex (EPCM services); FLSmidth  (CHPP); Komatsu Financial Limited Partnership (mobile equipment fleet).

On Budget and on Time?
First production has been delayed to the first half of 2016.

Detailed mining and engineering plans, together with the results of tenders, support the estimated first-stage cost of the mine of $480-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.
FLSmidth Roymec, tel  +27 10 210 4000 or fax +27 10 210 4050.
Ceenex, tel +27 12 347 2620.
Komatsu Financial Limited Partnership, tel +1 888 500 6001 or fax +1 847 437 3199.