resgen.com.au
Resource Generation (ASX: RES) is developing one of South Africa’s largest remaining coal deposits, with the company's focos on the Boikarabelo tenements, in the Waterberg region of South Africa.
The strategy for the company is to develop high grade “energy” related resources into viable and competitive mining operations. Accelerated shareholder value will be delivered through the delivery of physical mining activity.
Resource Generation boosts thermal coal resource by 17% at Boikarabelo to 744.8Mt
The potential of the Boikarabelo thermal coal project in South Africa continues to build for Resource Generation (ASX: RES), with a 17% boost in thermal coal to 744.8 million tonnes.
Importantly, the area covered by this reserve amounts to only 35% of the resource bearing tenements, identifying the likelihood of further resource boosts in the future.
The Boikarabelo coal seam is between 20 and 30 metres below the surface, enabling low-cost, open-cut mining.
The seam is between 120 and 130 metres thick, with zones of varying quality thermal and soft coking coal.
Boikarabelo can therefore now supply large quantities of thermal coal to both the export and domestic thermal coal markets, over several decades.
This supply will be relatively easy, as the Boikarabelo tenements are only 40 kilometres by road from an existing rail system that provides access to domestic markets, and to the ports of Maputo, Richards Bay and Durban for export shipments.
These three ports all have potential to expand their coal capacity, and a proposed new railway to Walvis Bay in Namibia, if constructed, would also offer access to export markets.
Resource Generation already has two major off-take agreements in place.
The first is with Indian steal company Bhushan Steel (BSE:BHUSSTEEL IN) which will purchase coal for 20 years from Boikarabelo, at the rate of 500,000 tonnes of thermal coal annually for the first five years of production, followed by a minimum of 500,000 tonnes each year for another 15 years.
The price will be at international market prices at the time of each shipment.
The second is with Integrated Coal Mining for one million tonnes of thermal coal annually for the first three years, followed by two million tonnes each year for another 17 years.
The Boikarabelo mine is in the Waterberg region, with the Waterberg coal field though to contain around 40% of South Africa’s remaining coal resource, and is considered to be the main source of coal in the future.
