Energy: ResGen gets funding to start mining coal in South Africa
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Resource Generation (ASX:RES) had some good news for the market this morning: it’s secured funds to advance its Boikarabelo coal mine in South Africa.
The company said it executed binding agreements for a syndicated loan facility of 4.2 billion South African rand ($421m) to develop the project.
ResGen runs the mine through its operating subsidiary, Ledjadja Coal. The latest JORC estimate for Boikarabelo was measured at 995 million tonnes.
For stage one of the development, Ledjadja is targeting annual coal production of 6 million tonnes per annum. Markets responded positively to the announcement and sent the stock up 30 per cent in morning trade.
Under the terms of the agreement, the mine operation will be funded by a mix of debt and equity.
ResGen’s three-strong lending syndicate is comprised of two government backed entities — a fund manager with pension and insurance operations and South Africa’s Industrial Development Corporation — and a company, Noble Resources International.
Ledjadja operates as a Black Economic Empowerment company in accordance with South Africa’s Black Economic Empowerment Act.
The debt component will be primarily made up of a senior debt facility from the three lender totalling 2.34 billion rand along with mezzanine debt facilities of 1.6 billion rand.
The three lenders will also be eligible to take an equity interest in the project on the proviso that they issue additional shareholder loans for the purpose of funding the project, to an aggregate value of 230m rand.
The senior and mezzanine debt facilities will have tenors of seven years and 12 years respectively, with interest rates during the mine construction phase of 600 basis points (0.6 per cent) and 1,200 basis points (1.2 per cent) above the three-month Johannesburg interbank lending rate.
ResMed said aspects of the deal would need to be approved by shareholders, and it planned to hold an extraordinary general meeting by the March quarter of next year.
Potash company Danakali (ASX:DNK), which runs a joint venture project with the Eritrean National Mining Corporation, said it was “pleased to share” that the $US5 billion Pan-African infrastructure group, the Africa Finance Corporation (AFC), has now ratified Eritrea as an AFC member state.
Shares in Buru Energy (ASX:BRU) rose 3 per cent after the company announced it was converting its 50 per cent interest in three Canning Basin exploration permits to a 100 per cent stake, after project partner Roc Oil agreed to withdraw from its farm-in agreement.