The Australian Stock Exchange-listed company signed a binding term sheet with Noble Resources International, a wholly owned subsidiary of commodity trader Noble Group, for the $US55.3 million loan facility.
Noble Group, Asia’s largest diversified commodities trading company, has provided a considerable amount of funding to ResGen over the past year and holds a 7.5% stake in the company as a strategic partner.
ResGen said the 38km rail link from the Boikarabelo mine to the existing Transnet Freight Rail network was one of the longer lead time items for the construction of the mine.
The loan will have a term of eight years and will begin to be drawn down as soon as possible, as will the start of construction. Security will be granted over the rail link and associated servitude rights.
“Commencing the rail link is a major catalyst for the construction of the Boikarabelo coal mine,” ResGen managing director Paul Jury said.
“The loan enabling the works is also another innovative example of our efforts to finance construction and mitigate completion risk.
“The knock-on effect of this construction activity is significant in terms of physical site establishment as well as providing a stimulus for further funding of the remaining construction.
“It complements action already undertaken with respect to mobile equipment and material handling leveraged funding, in addition to the continuing negotiations with ten banks for project finance,” he added.
By agreeing to this rail link loan facility, the parties have agreed to reduce the existing loan facility of $US123 million by $55.3 million to $67.7 million. The other terms of the existing loan facility remain the same, ResGen said.
The Boikarabelo project is expected to produce an initial 6Mtpa, split equally between export and domestic coal.
It has probable reserves of 744.8Mt of coal on 35% of the company’s tenements.
