Resource Generation (Resgen) has signed an extension of the facility agreement with Noble Resources International to gain an additional $8.4m for its subsidiary Ledjadja Coal (LCL) needed to fund operations of Boikarabelo mine project in South Africa.
The original facility agreeement was signed on 3 March 2014. Under the deal, the additional fund will be made available in three tranches over the period up to 30 September this year.
Additional funds along with the existing $20m facility are unsecured and subject to a guarantee by the parent company.
Subject to regulatory and governance approval, the agreement provides Noble Resources International the right to appoint a nominee to the Resgen board and approve one of the Resgen's nominees to the board of LCL.
Resgen needs to repay the loan in instalments, which are scheduled to start from 30 September and end by 10 March 2024.
Additional funds procured will be repayable from proceeds of the first drawdown of funding secured for the project.
Under the extension to the facility, Resgen has also agreed to restate the existing domestic offtake and coal marketing agreements it has with the lender and its related bodies corporate (restatement agreements) with effect from 31 December 2013, including the incorporation of a term sheet also signed that year.
The offtake agreement comprises supply of three million tonnes per annum of Boikarabelo domestic thermal coal for eight years, subject to certain quality specifications.
It also includes two purchase price options at the Noble Resources’ election, along with the opportunity for LCL to participate in the upside in any on-sale.
Noble Resources also reserves the first right of refusal to buy any additional uncontracted coal produced from the mine on terms to be agreed on 30 June this year. Failing this, the same terms as the sale and purchase agreement of Boikarabelo Thermal Coal of 31 December 2012 will be effective.
In addition, Noble Resources will be the exclusive supply chain management and marketing adviser for both export and domestic coal for a 35-year period under separate contractual arrangements.
Boikarabelo Coal Mine is located in the Waterberg region of South Africa.
The Waterberg region has nearly 40% of the country’s coal resources.
Image: Boikarabelo coal mine in South Africa. Photo: courtesy of Resgen.