Resource Generation (Resgen), which is developing one of South Africa's largest remaining coal deposits, on Thursday said its Ledjadja joint venture has been awarded a 30-year mining right for its Boikarabelo mine in South Africa.
“This is a major step in the development of the Boikarabelo mine, which is expected to begin production in late 2013,” said Resgen managing director Paul Jury.
“We expect the Mining Right will facilitate our discussions with Eskom regarding coal supply to its power stations and with Transnet regarding transport to domestic customers and ports,” he added.
Resgen has a 74% shareholding in the joint venture while the remaining 26% is held by Fairy Wing Trading (FWT), a company owned by a group of South African businessmen and women with strong commercial and government relationships.
The company said earlier this month that it would facilitate FWT's acquisition of the stake in the joint venture through an 80 million rand loan.
Secured over FWT's shares in Ledjadja and repayable out of the first dividends due to FWT from the joint venture, the loan will be provided from Regen's existing funds.
According to Proactive Investors, Boikarabelo has a massive 6.4 billion tonne resource - a 120 metre thick coal seam at shallow depth of 20-35 metres.
Current probable reserve is 745 million tonnes of thermal coal, which has the potential to increase as this reserve amounts to only 35% of the resource bearing tenements.
The Boikarabelo coal seam is between 20 and 30 metres below the surface, enabling low-cost, open-cut mining. The seam is between 120 and 130 metres thick, with zones of varying quality thermal and soft coking coal. - I-Net Bridge