A binding term sheet has been signed with FLSmidth Roymec, the South African black economic empowerment subsidiary of FLSmidth & Co, a supplier of complete plants, equipment and services for the global minerals industry.

The cost of the plant is expected to be under $US200 million ($213.5 million), more than $50 million less than earlier estimates.

Resource Generation managing director Paul Jury said: “This agreement is in line with our plan to raise the capital needed to construct the mine from a variety of sources, including supplier finance, project finance and the $62.6 million equity entitlement offer completed in October.

“The EKF guarantee, if confirmed, is expected to facilitate raising project finance for the CHPP.”

Resource Generation is also in discussions with EKF, the Danish state-owned export credit agency, regarding a guarantee to cover over 50% of this cost.

FLSmidth & Co, headquartered in Denmark, employs over 15,000 people in more than 50 countries and is listed on Nasdaq OMX Nordic Exchange Copenhagen.

“The CHPP is the largest capex item in Boikarabelo’s budget, and this agreement represents significant progress,” Jury said.

“We are completing final drawings for the plant and look forward to working with FLSmidth to bring the mine to fruition, with production currently targeted to begin in late 2015.”