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

Client
Resource Generation (Resgen).

Project Description
In February 2016, Resgen reported that it would implement a revised mine plan at its Boikarabelo coal mine.

This followed a technical review of the geological model by an independent expert, which suggested that the revised mine plan could achieve a better opportunity than previously expected.

The revised mine plan is based on selective mining and in-pit dumping to maximise productivity and reduce operating costs.

The company will also implement a project development strategy that transfers mine construction risk by appointing a small number of reputable engineering, procurement and construction (EPC) contractors with substantial balance sheets, which will allow for recourse in the event of failure or delay.

The company also plans to implement a strategy to reduce capital costs and minimize risk by appointing a suitably qualified contract miner.

Boikarabelo has probable reserves of 744.8-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 tonnes will be used domestically.

Phase 2, planned for 2022, will involve ramping up production to 20-million tonnes of product thermal 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.

Net Present Value/Internal Rate of Return
Not stated.

Value
The estimated capital cost for the project is $480-million.

Duration
Resgen 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 in the second half of 2017.

The mine is expected to begin production in late 2017.

Latest Developments
Resgen has said that all efforts are now focused on preparing the Boikarabelo coal mine for the mobilisation of the first of the EPC contractors in the fourth quarter of this year.

The appointment of a mining contractor is expected to occur this month, after Resgen shortlisted three candidates in June.

Resgen signed a heads of agreement with project house Sedgman in May this year for the design, procurement and construction of a $141-million coal handling and preparation plant at the Boikarabelo mine.

The company is also on course to finalise the required debt funding.

“The base case financial model (BCFM) has now been completed by the lead arranger and, based on the information contained in the BCFM, the project is believed to be fundable without recourse to the shareholders for further equity,” the company has explained.

Further, a high-level funding offer from a US-based source is being reviewed by Resgen.

Meanwhile, Resgen has said it is investigating the potential of building a 450 MW or 600 MW coal-fired power station following the receipt and review of a concept feasibility study for a 300 MW power station.

While there is a compelling economic case for a 300 MW mouth-of-mine station, with the electricity produced to be sold to the national utility or a private offtaker, the study indicates that it is not optimal and that a 450 MW or 600 MW coal-fired power station present a more compelling economic case.

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, or EPCM, for mine construction); FLSmidth Roymec (CHPP); RCE (rail design and construction); Ceenex (water EPCM services); Komatsu Financial Limited Partnership (mobile equipment fleet) and EHL Energy (transmission lines).

On Budget and on Time?
First production has been delayed to late 2017.

Detailed mining and engineering plans, together with the results of tenders, support the estimated first-stage cost of the mine of $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 12 345 5314.
Boikarabelo mine site, tel +27 14 944 0199.
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.
FLSmidth Roymec, tel  +27 10 210 4000 or fax +27 10 210 4050.
Ceenex, tel +27 12 347 2620.
Komatsu Financial Limited Partnership, tel +1 888 500 6001 or fax +1 847 437 3199.
EHL Energy, tel +27 11 370 7400 or fax +27 11 834 4203.