Name and Location
Boikarabelo coal project, Limpopo, South Africa.

Client
Resource Generation (Resgen).

Project Description
Boikarabelo has probable reserves of 745-million tonnes, a measured resource of 1.1-billion tonnes, an indicated resource of 551.7-million tonnes and an inferred resource of 1.5-billion tonnes.

The Boikarabelo coal seam is between 20 m and 30 m below surface, enabling low-cost, opencut mining. The seam is between 120 m and 130 m thick, with zones of varying quality thermal and soft coking coal.

The mine will be developed using a two-phased approach to limit upfront capital expenditure. The first phase will deliver about 14-million tonnes of run-of-mine coal a year, which will equate to about six-million tonnes of product coal. Of this, three-million tonnes will be exported and three-million tons will be used domestically.

Phase 2, planned for 2020, will involve ramping up production to 20-million tonnes of product coal.

The project includes a 40 km rail link to the existing rail network.

Boikarabelo hosts a life-of-mine of up to 100 years.

Value
The estimated capital cost for the project has been reduced to $480-million, reflecting reduced costs of the coal handling and preparation plant.

Duration
Resgen’s black economic-empowerment subsidiary, Ledjadja Coal, received the Boikarabelo mining rights from the Department of Mineral Resources in April 2011.

Initial construction of the mine started in the first quarter of 2013 and is scheduled for completion by the end of 2015.

The mine is expected to begin production in the first half of 2016.

Latest Developments
Resgen is undertaking the development of some projects at its Boikarabelo mine, in the Waterberg, while it works to find a new earthworks contractor for the operation.

The coal hopeful reported earlier this month that the sudden shutdown of the Boikarabelo earthworks contractor Protech Khuthele Holdings’ operations, would delay the completion of the mine by three to six months, with first coal to be delivered only in the first half of 2016.

Protech Khuthele Holdings was placed under liquidation in July. It removed all staff from the mine site and terminated all activities, including those of its subcontractor, which was building three bridges under and over the rail line.

Resgen has reiterated that it does not foresee any challenges in securing a new contractor at a similar cost, but says commercial prudence requires a diligence process to be undertaken.

Therefore, the restart of earthworks for the rail link, roads and incomplete terraces requires detailed surveys to establish a bill of quantities for retendering, all of which will take time.

In the interim, the company will continue work on several projects, including the completion of the construction camp; the completion of the first three of seven rail link bridges and the main water supply infrastructure; and the completion of a construction office complex.

Construction on the 132 kVA main power infrastructure will also continue.

Resgen has also made changes to its rail haulage and port contracts to defer take or pay commitments until the first half of 2016.

Meanwhile, Resgen has indicated that while negotiations on term sheets for project finance to complete the development of the mine has been protracted and are continuing, the company has, during the three months ended June 30, made progress in terms of negotiations with three parties for the funding of mobile equipment valued at $100-million.

Key Contracts and Suppliers
Digby Wells Environmental (mining right application, mine-waste licence, environmental authorisation process for power plant), RSV Enco (engineering, procurement and construction management for mine construction), FLSmidth (coal handling and preparation plant), Protech Kuthele (earthworks for the rail link, the site infrastructure and roads) and RCE (rail design and construction).

On Budget and on Time?
First production has been delayed to the last quarter of 2015.

Detailed mining and engineering plans, together with the results of tenders, have reduced the estimated first-stage cost of the mine to $480-million.

Contact Details for Project Information
Resgen (Australia), tel +61 2 9376 9000, fax +61 2 9376 9013 or email info@resgen.com.au; or (South Africa), tel +27 12 345 1057 or fax +27 86 539 3792.
Digby Wells Environmental, tel +27 11 789 9495 or +27 11 504 1400, fax +27 11 789 9498 or +27 11 504 1446, or email info@digbywells.co.za.
RSV Enco, tel +27 11 498 6010, fax + 27 11 498 6210 or email enco@rsvenco.com.
RCE, tel +27 12 450 0040 or fax +27 12 450 0060.