DURBAN - The plan by Resource Generation (ResGen), the JSE and Australian-listed company, to bring the Boikarabelo coal project in Limpopo into production received a boost yesterday after it entered into non-binding term sheets with potential funders.
The company said that its subsidiary, Ledjadja Coal, had entered into two non-binding term sheets, being the equity and debt term sheets, with the Government Employees Pension Fund (GEPF), the Unemployment Insurance Fund (UIF), the Industrial Development Corporation (IDC) of South Africa and Noble Resources International.
The GEPF and the UIF are both managed by the Public Investment Corporation (PIC), Africa’s biggest investment vehicle.
Group interim managing director and interim chief executive Leapeetswe “Papi” Molotsane said the announcement was significant for the construction of the mine.
“This marks a significant milestone in the process of securing the funding required to be able to successfully bring the Boikarabelo Coal Mine into operation,” said Molotsane.
Molotsane said as regards the term sheets, Ledjadja Coal would be the borrower in respect of any funds advanced by the lending syndicate with the company, with Ledjadja Coal and a number of the company’s other subsidiaries providing security for these advances.
Molotsane said the company had appointed legal advisers and that work on drafting definitive legal documentation based on the term sheets was in progress.
The funding comes weeks after Transnet and Ledjadja Coal agreed to a 10-year R10billion transportation deal to move coal to the Richards Bay Terminal Grindrod from Lephalale in Limpopo.
The take or pay agreement involves the transportation of 3.6million tons of coal annually from Ledjadja’s Boikarabelo Mine in the Waterberg to Richards Bay for the export, mainly to India.
Ledjadja was also in the process of talking with power utility Eskom to secure further contract to supply 3million tons for the security of domestic supply for South Africa.
Boikarabelo is expected to load its first coal to the port from June 2022.
Transnet’s chief customer officer, Mike Fanucchi, said signing the contract was a significant milestone and gave Ledjadja a sense of security in terms of its business plan.