Resource Generation Limited (ASX: RES) is engaged in the financing and development of the Boikarabelo Coal Mine, which is situated in the Waterberg of South Africa. ResGen recently announced an update regarding the funding status of the mine.
The second member of the proposed Lending Syndicate has recently confirmed participation (credit approval) for their proposed contribution to RES’s funding application with regards to the construction of the Boikarabelo mine. However, the approval has not been provided by the second member to the proposed Lending Syndicate to be named as their offer to participate is not formally accepted by the RES. Such acceptance by ResGen will take place in the form of a Board approved common term sheet agreed with all members to the proposed Lending Syndicate.
This positive development is expected to facilitate completion of the project finance for the construction of the mine. However, investors are alerted and opine that there are other several hurdles to conquer prior to the achievement of Financial Close. These approvals/activities include:
- Obtaining written approvals from the third and final member of the proposed Lending Syndicate;
- Agreement on a common term sheet for all the lenders as mentioned above;
- Finalising the rail link funding, which is at an advanced stage and will be assisted by this recent development;
- Approval of Board of Directors for a common term sheet, which also comprises the rail link funding terms and recommendation to shareholders. Additionally, the terms will be binding on all the parties and only subject to certain conditions precedent that are specified by the proposed Lenders. RES will then disclose the key terms related to the mine and rail link funding packages;
- As per the regulation, the proposed mine funding package will be required to put to shareholders at an EGM. For the purpose, the Notice of Meeting needs to include an Independent Expert’s Report that will address to shareholders of the company;
- Finalising the key project in relation to contracts and legacy contractual arrangements;
- Preparing legal papers with regards to the proposed funding package;
- Completing all the conditions as mentioned by the proposed Lenders.
As per the recent updates, RES advised that the key terms of the amendments to the Facility Agreement have been documented with Noble in the form of a Sixth Deed of Amendment and the Deed has been executed by the parties. These terms included an extension of the current working capital facility, interest rate details, changes in the first date for the repayment of facility, additional fund details, circumstances/conditions to start drawdown of further funds under the Facility Agreement, etc.
The company, in its Quarterly Report for the three months ended 31 March 2019, summarised the capital structure and cash position at 31st March 2019, which is as follows:
- Issued fully paid ordinary shares: 581,380,338
- Performance share rights: 5,700,000
- Cash at bank: $1.43 million
- Noble Facility – undrawn $US0.5 million
- Noble Facility – conditionally agreed $US2.5 million
At market close on 3rd June 2019, the stock of RES was trading at $0.180, up significantly over 20%, with a market cap of $87.21 million.