If funding is completed by the end of 2012, construction of the mine and its infrastructure is expected to take two years, with stage one saleable production of 6 million tonnes per annum beginning at the start of 2015.
Resource Generation has already secured major regulatory approvals and transport contracts for development of its Boikarabelo mine on one of South Africa's largest remaining coal deposits.
With the Transnet rail contract in place, Resource Generation's plan is to secure project debt first then top up project funding with equity. Based on indicative offers it expects debt package to cover 50% of capital expenditure.
Paul Jury, managing director, commented: "Offers of project finance would confirm banks' confidence in Boikarabelo's cash flow and, assuming completion would support a substantial increase in Resource Generation's enterprise value.
"This value would then determine the price at which equity is raised for the balance of the stage one capital development cost and working capital.
"We estimate that construction of stage two of the project will be financed from cash flow and it is not expected to require a further equity raising."
The Boikarabelo mine has a major 6.4 billion tonne resource - with current probable reserves of 745 million tonnes and two long term export contracts already in place to support the funding initiative.
Stage one of the mine development targets saleable coal production of 6 million tonnes per annum, with stage two planned to increase to more than 20 million tonnes per annum.
Importantly, Boikarabelo's sovereign risk has been minimised as a result of Resource Generation overcoming all major regulatory hurdles faced.
Eskom negotiations advance
Negotiations have proceeded further with Eskom, South Africa's power generation company, to supply 3 million tonnes of thermal coal per annum to its Mpumalanga power stations.
Expanding management team
Resource Generation has already appointed two key executives, general manager Boikarabelo Mine and general manager human resources, responsible for the development and operations of the Boikarabelo mine.
Cashed-up ahead of construction
Cash reserves at the end of the June quarter totalled A$12.1 million, which is expected to be sufficient to cover cash requirements prior to the anticipated start of mine construction.
The main focus for the September quarter will be the negotiations for the project finance for the development of the Boikarabelo mine.
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