JOHANNESBURG (miningweekly.com) – Preparatory construction work on the 40 km rail link between ASX-listed Resource Generation’s (Resgen’s) Waterberg-based 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 a quarterly report on Monday.

Resgen, in which South Africa’s Public Investment Corporation now held a significant stake, 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 had also gotten under way.

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

Stating that its main focus during the quarter was on arranging alternative sources of funding, Resgen said debt finance negotiations had continued with 11 banks that had received data room access and were undertaking due diligence.

Progress was expected to be made in terms of achieving final term sheets and credit approval over the next quarter.

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

“Such funding is complex and is targeted for completion over the next few months,” the company stated.

The dual-listed company 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 underwrote 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,” said the miner.