Under the contract, the company will construct, operate and maintain a wastewater treatment plant at Marapong, approximately 50km from Boikarabelo.

It will treat municipal effluent and generate up to 16 megalitres per day of water, which will be pumped to the mine site via a new pipeline.

Resource Generation has been working with LLM for two years on plans for the plant, which will provide LLM with essential infrastructure.

It is a key responsibility which the company’s black economically empowered subsidiary, Ledjadja Coal, committed to undertake as part of its social and labour plan for the Boikarabelo mine.

Sufficient water for stage 1 of the mine is available from groundwater boreholes on mine properties the company already owns.

Use is subject to receiving an integrated water use licence, which was applied for in January 2011 and is expected to be received shortly.

“This agreement, which follows two years’ cooperative work with LLM, is another significant step in the development of our Boikarabelo mine,” Resource Generation managing director Paul Jury said.

“The plant will provide sufficient water to meet the medium and long-term needs of the mine, including after the stage 2 expansion.

“Importantly it will also provide the local municipality with essential infrastructure and environmental protection.

“This is the first of many activities we will be undertaking for the Limpopo community.”

The term of the agreement is 30 years from the date the water use licence is granted by the Department of Water Affairs, subject to satisfaction of a number of conditions.

The conditions include sufficient power supply being secured by LMM, an environmental impact assessment being approved by relevant government departments and all other required government approvals (including under the National Environmental Management Act) being obtained by February 28, 2013.

An extension of time is possible should delays be experienced.

Resource Generation will pay for the Marapong wastewater treatment plant upgrade and expansion works to extend capacity to 4ML/day by January 2014, increasing to 16ML/day by January 2017.

It will also construct the Marapong-Boikarabelo effluent transfer pump station and associated works including the transfer pipeline.

Resource Generation will manage, operate and maintain the treatment plant after the expansion at its own cost until the operations transfer date, which is one year after completion of the expansion works.

At which time, LLM will become responsible for management, operation and maintenance of the plant.

From January 1, 2014, the Boikarabelo mine will be supplied with a minimum of 4ML/day megalitres of treated effluent and from January 1, 2017, a maximum of 16ML/day.

From the operations transfer date, Resource Generation will continue to pay for the operation and maintenance costs.

The company will also pay for insurance for the plant for the term of the agreement.