The deal made through ResGen subsidiary Ledjadja Coal is being touted as a major breakthrough in the finalizing of the open cut’s finances.

ResGen managing director Paul Jury said the contract allowed the company to progress project financing with banks which have already confirmed keen interest.

“Once all debt and equity funding is in place, we will then be able to begin construction of the mine and infrastructure,” he said.

“Our agreement with TFR is a significant step towards opening up the Waterberg region which has one of South Africa’s largest remaining coal deposits.

“Boikarabelo is a massive project which will provide a major boost to the South African economy and create a substantial number of jobs for many years.”

ResGen reports that the Waterberg region where Boikarabelo is located holds a probable reserve of 744.8 million tonnes of coal.

“We can now see the light at the end of the tunnel and, if construction commences in the last quarter of this year, production could start in late 2014 and we can begin to supply our customers’ contracts,” Jury said.

Compromises made in order to achieve a contract with TFR include agreeing to a condition for the allocation of capacity and the requirement of Ledjadja to complete a 36km rail link to the proposed mine.

ResGen said it was already well advanced with planning the Boikarabelo mine and had designed the facility’s coal handling and preparation plant.

Stage 1 of the mine development targets saleable coal production of 6 million tonnes per annum.