Resgen secures $8.4m facility extension

JOHANNESBURG (miningweekly.com) – Dual-listed Resource Generation (Resgen) has obtained a further $8.4-million to fund the operations and development of the Boikarabelo mine, in the Waterberg coalfield, until project funding is secured.

An extension of a March 2014 facility agreement with Noble Resources International, agreed on Tuesday, will see the additional funds become available to Resgen’s subsidiary Ledjadja Coal in three tranches over the period to September 30.

The additional funds, together with an existing $20-million facility, are unsecured and subject to a guarantee by the parent company and the restatement of existing 2013 domestic offtake and coal marketing agreements between Resgen and Noble.

The offtake agreement includes the supply of three-million tonnes a year of domestic thermal coal mined at Boikarabelo over an eight-year period, subject to certain quality specifications, with two purchase price options at Noble’s election and an opportunity for Ledjadja to participate in the upside in any on-sale.

In addition, Noble obtains the first right of refusal to buy any additional uncontracted coal produced from the mine, with the terms to be agreed on by June 30, or failing which, the adoption of the terms of the sale and purchase agreement of December 31, 2012.

Further, Noble will be appointed as the exclusive supply chain management and marketing adviser for both export and domestic coal produced at Boikarabelo for 35 years under separate contractual arrangements, and is subject to fees depending on whether domestic, export or certain contracts are already in place at the time of the agreement.

The facility is repayable in instalments starting September 30, with a termination date of March 10, 2024; however, the additional funds made available under the extension of the facility are repayable from the proceeds of the first drawdown of funding secured for the project.