| Tue 20 Sep 2011, 10:29 | | RSG - Resource Generation Limited - Boikarabelo update |
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RSG
RSG
RSG - Resource Generation Limited - Boikarabelo update
Resource Generation Limited
Registration number ACN 059 950 337
(Incorporated and registered in Australia)
Share code on the JSE Limited: RSG
Share code on the Australian Stock Exchange: RES
ISIN Code: AU000000RES1
("the Company")
20 September 2011
ASX Release
Boikarabelo Update
Resource Generation has completed detailed mining fleet and engineering
designs for its planned Boikarabelo mine in the Waterberg region of South
Africa, where there are probable reserves of 744.8 million tonnes of coal
on 35% of the tenements controlled by the company. These designs will
enable the company to fast track construction once funding is secured.
Detailed designs for the 40MW power station required for stage 1 are
being finalised and its funding has been included in the mine`s capital
estimate.
Using the mid-range cost estimate of $100 million for construction of the
power station, estimated capital expenditure for construction of stage 1
of the mine is now $750 million. This is higher than originally estimated
due to inclusion of the power station and increased construction costs,
particularly for the coal handling and washing facilities. The company is
considering the possibility of segregating debt funding for the power
station from the project facility for the mine.
Project funding is conditional on a rail haulage contract with Transnet
Freight Rail (TFR). To date, TFR`s task team negotiating with Resource
Generation has declined to commit to a contract and the company has
elevated the matter to Transnet`s group chief executive who in the past
has indicated his support for the Boikarabelo project and for a rail
haulage contract.
Meanwhile, progress has been made in obtaining the two remaining major
licence approvals. The first, under the National Environment Management
Act (NEMA), will enable construction of the mine and the rail link to
begin and, as soon as this is received, pre-construction works will
commence on site. The second is the Integrated Water Use Licence from the
Department of Water Affairs, enabling the use of water from the borefield
on the company`s properties, which will provide sufficient water for
stage 1 of the mine`s operations. Both licence approvals are expected
during the final quarter of 2011.
As anticipated by the company in an announcement on 12 August, the South
African Department of Mineral Resources (DMR) has notified the company`s
subsidiary, Ledjadja Coal (Pty) Limited, that an appeal has been lodged
regarding the granting of the Boikarabelo mining right. The appeal does
not suspend the mining right, which remains valid. The statutory appeal
process is now underway and Ledjadja has provided its formal response to
the DMR. The company is confident that the mining right will be confirmed
and is continuing its normal activities to develop the mine.
Discussions continue with Eskom for supply of coal to the Mpumalanga
power stations.
Paul Jury, managing director of Resource Generation, said: `The
reluctance of TFR`s task team to commit to a rail haulage contract will
delay the mine`s initial production until the first half of 2014,
assuming an acceptable contract is agreed by the end of 2011 and funding
is obtained. We are confident of achieving a contract with TFR eventually
and believe the delay is related to process and timing, rather than
inability to provide haulage.
`We are proceeding with development activities and, after completing the
sale of our Tasmanian tenements last week, have over $25 million in cash
available. These funds are sufficient to enable us to continue normal
operations for the foreseeable future.`
Contacts
Paul Jury, Managing Director on (02) 9376 9000 or
Steve Matthews, Company Secretary on (02) 9376 9000
Media enquiries
Anthony Tregoning (02) 8264 1000
Sydney, Australia
JSE Sponsor: Deloitte & Touche Sponsor Services (Pty) Limited
Resource Generation is developing the Boikarabelo coal mine in the
Waterberg region of South Africa where there are probable reserves of
744.8 million tonnes of coal on 35% of the tenements under its control.
Date: 20/09/2011 10:29:14 Produced by the JSE SENS Department.
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