JOHANNESBURG (miningweekly.com) – Coal asset developer Resource Generation (Resgen) continues to progress the development of its Boikarabelo coal mine, in the Waterberg region.

The company said in a report for the three months ended September 30, that construction of the infrastructure for the mine, which boasted probable coal reserves of 744.8-million tons, continued during the quarter, while debt funding was being finalised to shorten the overall construction time.

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

“Project funding negotiations are still under way, with banks and others to provide final funding offers. Noble Group’s loans, which have been announced previously, may form part of a consortium’s debt finance, which is expected to have export credit agency support,” said the group.

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

At the construction camp, services, kitchen and dining facilities and accommodation units had been installed to allow 400 persons to take up immediate occupation.

This despite earthworks for the rail link, 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,” outlined Resgen.

Power supply for the construction process had, 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 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 were 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 group outlined.

The rail network stabilisation facility consisted of two siding lines: one loop line and a main line bypass and would 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 would be used during the construction of the mine and would later become one of the main water sources for mine operations. 

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

During the quarter, 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 during 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 noted.

During the quarter, 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 was conditional on completion of debt funding; however, all detailed designs and specifications had 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).

During the quarter, 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 had been entered into with CESC, Valu Investments and Noble Group.

These contracts underwrote 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 had been entered into with the Noble Group for the first eight years of production.