Name of the Project
Boikarabelo coal project.

Location
Limpopo, South Africa.

Client
Resource Generation (Resgen).

Project Description
In February 2016, Resgen reported that it would implement a revised mine plan at its Boikarabelo coal mine. This followed a technical review of the geological model by its technical committee comprising in-house and external experts, which suggested that the revised mine plan could achieve a better opportunity than previously expected. The plan is based on selective mining and in-pit dumping to maximise productivity, reduce operating costs and minimise any environmental impact.

The company will also implement a project execution strategy that transfers mine construction risk through the appointment of a small number of reputable engineering, procurement and construction (EPC) contractors with substantial balance sheets, which will allow for recourse in the event of failure or delay.

The company also plans to implement a strategy to reduce capital costs and minimise risk by appointing a suitably qualified contract miner. Sedgman has been appointed the coal handling processing plant (CHPP) contractor.

Resource Generation has probable reserves of 744.8-million tonnes, a measured resource of 1.58-billion tonnes, an indicated resource of 641.1-million tonnes and an inferred resource of 1.48-billion tonnes.

The Boikarabelo coal seam is between 20 m and 30 m below the surface, eallowing for low-cost, opencut mining. The seam is between 100 m and 120 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 2022, will involve ramping up production to 12-million tonnes of product thermal coal.

The project includes a 48 km rail link to the existing rail network.

Boikarabelo hosts a life-of-mine of more than 100 years.

Jobs to be Created
The project is expected to create 2500 jobs in the construction phase and 709 full-time jobs.

Net Present Value/Internal Rate of Return
The project has an internal rate of return of 17%.

Value
The estimated capital cost for the project is $545-million.

Duration
Resgen black economic-empowerment (BEE) 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 September 2018.

The mine is expected to begin production in late 2018.

Latest Developments
Resgen is a step closer to the development of its Boikarabelo coal mine after signing a heads of agreement with a mining contractor.

Boikarabelo mine operating subsidiary Ledjadja Coal has selected Stefanutti Stocks Mining Services as the preferred mining contractor.

The parties will now exclusively negotiate a detailed term sheet to cover mining and related services, and the terms and conditions of a mining contractor agreement, which will be subject to conditions precedent, such as board approval by both parties of the formal agreement and project funding being procured by the company.

Ledjadja Coal secured R5.52-billion to complete the construction of the mine in August and is now working towards fulfilling the conditions precedent.

Resgen signed a heads of agreement with project house Sedgman in May this year for the design, procurement and construction of a $141-million coal-handling and preparation plant at the mine.

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, or EPCM, for mine construction); Sedgman (CHPP); RCE (rail design and construction); NuWater (water EPCM services) and EHL Energy (transmission lines).

On Budget and on Time?
First production has been delayed to late 2018.

Contact Details for Project Information
Resgen, tel +27 12 345 1057, fax +27 12 345 or email info@resgen.com.au
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.
EHL Energy, tel +27 11 370 7400 or fax +27 11 834 4203.