Minority shareholders in Resource Generation (Resgen) may be forgiven for questioning the apparent lack of progress in getting final funding approval from a club of lenders for a loan to build its flagship coal mine, but a lot of work is being done to satisfy lenders’ requirements.
Resgen is developing a substantial coal mine, Boikarabelo, in the Waterberg that will produce about 6mt/year in its first phase. Though work on preparing the site began in 2011 when previous management said lenders were queuing up to provide the US$552m needed to build the mine, there’s still no financing and no coal.
Last year Resgen’s major shareholders, the Public Investment Corp, Altius Investment Holdings and Noble Group, finally became impatient and replaced the CEO, chairman and deputy chairman. Altius founder Rob Lowe stepped in as CEO in November. Some progress has been made in the past seven months. An execution plan was drawn up that will reduce capital costs to $515m and manage risk by appointing a limited number of experienced engineering, procurement and construction contractors. Sedgman has been appointed to build the processing plant and Stefanutti Stocks has been appointed for contract mining. There is also a new mine plan to mine more selectively rather than do bulk mining and preparations have been made to participate in government’s next call for independent baseload coal power. A “developmental tariff” has been negotiated with Transnet Freight Rail to transport coal to Richards Bay, which will be more economical than railing it to Durban.