Australian- and JSE-listed Resource Generation (ResGen‚ RSG) says Boikarabelo’s substantial value is expected to be confirmed by project financiers’ due diligence.
The company has secured major regulatory approvals and transport contracts for development of its Boikarabelo mine on one of SA’s largest remaining coal deposits.
Releasing its report for the three months to June 2012‚ ResGen confirmed that banks are undertaking due diligence before offering terms for project finance for the mine’s stage 1 development.
“Offers of project finance would confirm banks’ confidence in Boikarabelo’s cash flow and‚ assuming completion‚ would support a substantial increase in Resource Generation’s enterprise value. This value would then determine the price at which equity is raised for the balance of the stage 1 capital development cost and working capital‚” ResGen MD Paul Jury said.
“We estimate that construction of stage 2 of the project will be financed from cash flow and it is not expected to require a further equity raising‚” he said.
Confirming management’s confidence that project finance and equity capital can be secured‚ the quarterly report also announces that the company has started to expand its South African management team to enable construction to begin early in 2013.
The Boikarabelo coal mine is situated in the Waterberg region‚ where there are probable reserves of 744.8 million tonnes of coal on 35% of the tenements under its control. Stage 1 of the mine development targets annual saleable coal production of 6 million tonnes. - I-Net Bridge