Modern Mining September 2015

MINING News

Contract mining for Boikarabelo coal mine under consideration

ASX-listed Resource Generation Limited, which is developing the Boikarabelo coal mine in the Waterberg coalfield of South Africa, says it has been negotiating with financiers for more than three years to secure the US$400 million required to complete the mine and related infrastructure. The aim has been to fund construction through debt in order to avoid issuing additional equity and diluting shareholders’ interest in the project. This – says the company – has proved to be difficult due to changing macro-economic factors resulting in changes to the financiers’ requirements. In June 2015 the company believed it was close to an in-principle agreement with a club of financiers on the term sheet for a multi-layered funding package. Together with other funding commitments, this would have provided the necessary finance. Finalising negotiations since has been hampered by a weakened API4 coal price forecast. As a result, in order to deter- mine if gearing levels can be lowered, the club of financiers has now asked Resource Generation to investigate whether a contract mining model could reduce the mine’s costs and capital requirement. Consequently,

ongoing recovery of large exceptional diamonds from the Karowe mine contin- ues to support the resource estimates. This resource has consistently produced significant value for the company and its shareholders and the ongoing recovery of high value stones sets Lucara apart from most other diamond producers.”  Resource Generation is seeking quotes from mining contractors and this process is likely to take several months to complete. Meanwhile, other sources of finance are being explored. Nevertheless, development at the mine continues with construction of the 22 kilo- metre long, 132 kV power line, electrical substation and switch room, and MBET pipe- line either finished or nearing completion. Paul Jury, MD of Resource Generation, said: “With low production costs, transport arrangements in place and a number of years’ production already underwritten by sales contracts, Boikarabelo is well placed to benefit from any improved growth in global demand for coal. While weakness in the coal price forecast has delayed our securing the remaining finance to build the mine, we believe the asset is valuable and once con- struction is financed on acceptable terms will provide value to shareholders. Sufficient cash reserves exist for the company to oper- ate in the medium term whilst pursuing completion of the project funding.” Stage 1 of the Boikarabelo mine develop- ment targets saleable coal production of 6 million tonnes per annum. 

More big stones recovered at Karowe Canada’s Lucara Diamond Corp reports the recovery of a number of exceptional diamonds at its Karowe mine in Botswana. It says the resource is continuing to deliver according to expectations with the recovery of a spectacular Type IIa, 336-carat diamond. In addition to this, a further three exceptional diamonds were recovered recently – a 184-carat stone, a 94-carat stone and an 86-carat stone. The mine has also recently produced a 12-carat pale pink diamond, the colour of which will be confirmed post cleaning. Over the past three years, since Karowe produced its first large diamond, Lucara has recovered 216 diamonds that have sold for more than US$250 000 each. Twelve of these diamonds sold for more than US$5,0 million each.

The Type IIa, 336-carat diamond recently recovered at Karowe (photo: Lucara).

William Lamb, President and Chief Executive Officer, commented, “The

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