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RSG - Resource Generation Limited - Quarterly Report for the three months ended

Release Date: 26/10/2010 11:11:17      Code(s): RSG
RSG - Resource Generation Limited - Quarterly Report for the three months ended 
30 September 2010                                                               
Resource Generation Limited                                                     
ACN 059 950 337                                                                 
(Incorporated and registered in Australia)                                      
(Registration number ACN 059 950 337)                                           
Share code on the JSE Limited: RSG    ISIN: AU000000RES1                        
Share code on the Australian Stock Exchange Limited: RES    ISIN: AU000000RES1  
(JSE short name: "Resgen" or "the Company")                                     
Quarterly Report for the three months ended 30 September 2010                   
Resource Generation has coal interests in South Africa and Tasmania.  Its       
current priority is to develop its planned Boikarabelo coal mine in the         
Waterberg region of South Africa, which has one of the country`s largest        
remaining coal deposits.                                                        
-    First offtake contract for Boikarabelo signed with a major Indian power    
-    Progress with mining rights application.                                   
-    Resources and reserves upgraded.                                           
-    Progress with planning access to rail network.                             
-    Continued discussions with other potential customers.                      
-    Commenced discussions with banks for funding arrangements for the mine     
South Africa                                                                    
Offtake contract                                                                
Integrated Coal Mining, on behalf of its affiliated company CESC Limited, has   
agreed to purchase from Resgen one million tonnes of thermal coal per annum for 
three years and two million tonnes per annum for a further 17 years. These      
purchases will begin when the Boikarabelo mine commences production, which      
currently is scheduled for early 2013. Prices will be agreed at the time based  
on international benchmark prices.                                              
In addition, Integrated Coal Mining has subscribed $10.5 million for a 10%      
shareholding in Resgen. This involved the placement to Integrated Coal Mining of
18,268,053 Resgen shares at $0.575 per share.                                   
Integrated Coal Mining and CESC are both parts of the RPG Group, one of India`s 
most respected industrial groups. CESC is India`s third largest power utility,  
with a current installed generating capacity of 1225 MW serving nearly 2.5      
million consumers across the twin cities of Kolkata and Howrah.  Its published  
growth plan envisages an increase in its installed generating capacity to 5745  
Progress with mining rights application                                         
Progress with Resgen`s mining rights application is continuing and initial      
public consultation on the environmental management plan has been completed.    
The only issue that arose was the environmental impact of the road and rail     
siding which were proposed for the first few years of the mine`s operations.    
Consequently, the application has been modified to address these concerns, and  
construction of the proposed 45 kilometre rail link from the mine site to the   
existing rail infrastructure will take place at the commencement of the project 
for a total cost estimated at $100 million.                                     
The company has held constructive meetings with the Department of Mineral       
Resources and the process is likely to be concluded in early to mid 2011.       
Resource and reserve upgrade                                                    
An upgrade was announced after the end of the quarter.  Boikarabelo`s resources 
and reserves are now as follows:                                                
-    probable reserves of 636.0 million tonnes, an increase of 32.7 million     
tonnes; plus                                                                
-    a new measured resource of 204.0 million tonnes; plus                      
-    an indicated resource of 551.7 million tonnes; plus                        
-    an inferred resource of 1.5 billion tonnes.                                
Mine planning is being undertaken which will enable the measured resource to be 
upgraded to probable reserve status.  This is expected to be completed by the   
end of November 2010.                                                           
Access to rail network                                                          
The company has continued detailed discussions with Transnet regarding access to
its rail network to provide transport to east coast ports.  As noted above, the 
construction of the proposed 45 kilometre rail link from the mine site to the   
existing rail infrastructure is being brought forward to the commencement of the
project.  Work has commenced on the approval application which needs to be      
submitted under the National Environmental Management Act.                      
Discussions with potential customers                                            
In addition to the contract with Integrated Coal Mining Limited, the company is 
also in discussions with other potential export and domestic customers regarding
purchases of Boikarabelo coal when production begins.                           
Discussions with banks                                                          
Significant progress was made in the quarter towards completion of the bankable 
feasibility model and discussions have commenced with potential debt providers  
from South Africa and Europe.  The company is targeting project finance         
facilities for the construction of the mine and hopes to obtain 60% of total    
funding from debt providers.                                                    
A drilling programme of 25 holes was completed on the Woodbury tenement, where  
Resource Generation is exploring for thermal coal.  A total of 16 fully cored   
drill holes, totalling 910.3 metres, and 9 open holes totalling 839.6 metres    
have been completed.  All holes were geophysically logged.  Laboratory analysis 
and geological modelling has commenced, with results expected in early 2011.    
There was no activity during the quarter on Resgen`s uranium tenements in       
Corporate Information                                                           
Scott Douglas            Non-Executive Chairman                                 
Paul Jury                Managing Director                                      
Steve Matthews           Executive Director                                     
Geoffrey (Toby) Rose     Non-Executive Director                                 
Company Secretary                                                               
Steve Matthews                                                                  
Registered Office                                                               
Level 12, Chifley Tower                                                         
2 Chifley Square                                                                
Sydney NSW 2000                                                                 
Telephone:     02 9376 9000                                                     
Facsimile:     02 9376 9013                                                     
Website:       www.resgen.com.au                                                
Mailing Address                                                                 
GPO Box 5490                                                                    
Sydney NSW 2001                                                                 
Paul Jury                                                                       
Steve Matthews                                                                  
JSE Sponsor: Deloitte & Touche Sponsor Services (Pty) Limited                   
* Information in this report that relates to exploration results, mineral       
resources or ore reserves is based on information compiled by Mr Dawie Van Wyk  
who is a consultant to the Company and is a member of a Recognised Overseas     
Professional Organisation. Mr Van Wyk has sufficient experience which is        
relevant to the style of mineralisation and type of deposit under consideration 
and to the activity which he is undertaking to qualify as a Competent Person as 
defined in the 2004 Edition of the `Australasian Code for Reporting of          
Exploration Results, Mineral Resources and Ore Reserves`. Mr Van Wyk has given  
and has not withdrawn consents to the inclusion in the report of the matters    
based on his information in the form and context in which it appears            
Appendix 5B                                                                     
Mining exploration entity quarterly report                                      
Introduced 1/7/96.  Origin:  Appendix 8.  Amended 1/7/97, 1/7/98, 30/9/2001.    
Name of entity                                                                  
Resource Generation Limited                                                     
ABN                                   Quarter ended                             
                                   ("current quarter")                          
91 059 950 337                        30 September 2010                         
Consolidated statement of cash flows                                            
                                       Current    Year to date                  
Cash flows related to operating        quarter    (3 mths)                      
activities                             $A`000     $A`000                        
1.1     Receipts from product sales    -          -                             
        and related debtors                                                     
1.2     Payments for        (a)        (469)      (469)                         
        exploration and evaluation     (1,665)    (1,665)                       
                  (b)  development     -          -                             
                  (c)  production      (944)      (944)                         
(d)  administration                                           
1.3     Dividends received             -          -                             
1.4     Interest and other items of a  123        123                           
        similar nature received                                                 
1.5     Interest and other costs of    (2)        (2)                           
        finance paid                                                            
1.6     Income taxes paid              -          -                             
1.7     Other (provide details if      -          -                             
        Net Operating Cash Flows       (2,957)    (2,957)                       
        Cash flows related to                                                   
investing activities                                                    
1.8     Payment for purchases of:      -          -                             
        (a) prospects                  -          -                             
             (b) equity investments    -          -                             
(c) other fixed assets                                             
1.9     Proceeds from sale of:   (a)   -          -                             
        prospects                      -          -                             
(b) equity investments    -          -                             
             (c) other fixed assets                                             
1.10    Loans to other entities        -          -                             
1.11    Loans repaid by other entities -          -                             
1.12    Other- Government charges in   -          -                             
        relation to land acquisitions                                           
(0)        (0)                           
        Net investing cash flows                                                
1.13    Total operating and investing  (2,957)    (2,957)                       
        cash flows (carried forward)                                            


                                       Current    Year to date                  
                                       quarter    (3 mths)                      
$A`000     $A`000                        
1.13    Total operating and investing  (2,957)    (2,957)                       
        cash flows (brought forward)                                            
        Cash flows related to                                                   
1.14    financing activities           10,504     10,504                        
        Proceeds from issues of                                                 
        shares, options, etc.                                                   
1.15    Proceeds from sale of          -          -                             
forfeited shares                                                        
1.16    Proceeds from borrowings       -          -                             
1.17    Repayment of borrowings        -          -                             
1.18    Dividends paid                 -          -                             
1.19    Other (provide details if      -          -                             
        Net financing cash flows       10,504     10,504                        
        Net increase (decrease) in     7,547      7,547                         
cash held                                                               
1.20    Cash at beginning of           6,088      6,088                         
        quarter/year to date                                                    
1.21    Exchange rate adjustments to   (50)       (50)                          
        item 1.20                                                               
1.22    Cash at end of quarter         13,585     13,585                        
Payments to directors of the entity and associates of the directors             
Payments to related entities of the entity and associates of the related        
1.23    Aggregate amount of payments to the       262                           
       parties included in item 1.2                                             
1.24    Aggregate amount of loans to the parties  -                             
included in item 1.10                                                    
1.25    Explanation necessary for an understanding of the                       
Executive salaries and directors fees                                    
Non-cash financing and investing activities                                     
2.1  Details of financing and investing transactions which                      
    have had a material effect on consolidated assets and                       
liabilities but did not involve cash flows                                  
2.2  Details of outlays made by other entities to                               
    establish or increase their share in projects in                            
which the reporting entity has an interest                                  
Financing facilities available                                                  
Add notes as necessary for an understanding of the position.                    
Amount         Amount                           
                                available      used                             
                                $A`000         $A`000                           
3.1  Loan facilities             -              -                               
3.2  Credit standby              -              -                               
Estimated cash outflows for next quarter                                        
4.1     Exploration and evaluation           (102)                              
4.2     Development                          (1,016)                            
4.3     Production                           -                                  
4.4     Administration                       (555)                              
Total                                (1,673)                            
Reconciliation of cash                                                          
Reconciliation of cash at the end   Current       Previous                      
of the quarter (as shown in the     quarter       quarter                       
consolidated statement of cash      $A`000        $A`000                        
flows) to the related items in the                                              
accounts is as follows.                                                         
5.1     Cash on hand and at bank    18            14                            
5.2     Deposits at call            13,385        5,892                         
5.3     Bank overdraft              -             -                             
5.4     Other (Bank guarantees)     182           182                           
       Total: cash at end of       13,585        6,088                          
quarter (item 1.22)                                                      
Changes in interests in mining tenements                                        
                  Tenement     Nature of       Interes  Intere                  
                  reference    interest        t at     st at                   
beginni  end of                  
                                               ng of    quarte                  
                                               quarter  r                       
6.1     Interests  N/A                                                          
in mining                                                                
reduced or                                                               
6.2     Interests  N/A                                                          
in mining                                                                
Issued and quoted securities at end of current quarter                          
Description includes rate of interest and any redemption or conversion rights   
together with prices and dates.                                                 
                     Total     Number    Issue    Amount                        
                     number    quoted    price    paid up                       
per      per                           
                                         security security                      
                                         (cents)  (cents)                       
7.1  +Preference     N/A                                                        
7.2  Changes during  N/A                                                        
     returns of                                                                 
     capital, buy-                                                              
7.3  +Ordinary       182,680,  182,680,  Various  Fully                         
     securities      530       530                paid                          
7.4  Changes during                                                             
     quarter         18,268,0  18,268,0  57.5     57.5                          
     Increases       53        53                                               
     through issues                                                             
Nil      Nil                           
     Decreases       Nil       Nil                                              
     returns of                                                                 
capital, buy-                                                              
7.5  +Convertible    N/A                                                        
7.6  Changes during  N/A                                                        
7.7   Options                             Exercise Expiry                       
     (description    450,000   Nil       price    date                          
     and conversion  1,875,00  Nil                28/11/20                      
     factor)         0         Nil       $0.25    12                            
2,875,00  Nil                31/12/20                      
                     0         Nil       $0.50    12                            
                     250,000   Nil                7/7/2013                      
                     450,000   Nil       $0.50    17/3/201                      
250,000   Nil                3                             
                     350,000   Nil       $0.50    28/11/20                      
                     350,000   Nil                12                            
                     375,000   Nil       $0.60    17/3/201                      
375,000                      3                             
                     500,000             $0.70    17/3/201                      
                                         $1.00    17/3/201                      
                                         $1.50    28/5/201                      
                                         $1.55    28/5/201                      
                                         $1.85    28/5/201                      

7.8   Issued during   Nil                                                       
7.9   Exercised       Nil                                                       
during quarter                                                             
7.10  Expired during  Nil                                                       
7.11  Debentures      N/A                                                       
(totals only)                                                              
7.12  Unsecured       N/A                                                       
     notes (totals                                                              
Compliance statement                                                            
1    This statement has been prepared under accounting policies which comply    
    with accounting standards as defined in the Corporations Act.               
2    This statement does give a true and fair view of the matters disclosed.    
3    The information contained in this report has not been reviewed nor         
    reported on by the company`s auditors.                                      
Date: 26 October 2010                                                           
STEPHEN JAMES MATTHEWS                                                          
(Company secretary)                                                             
Date: 26/10/2010 11:11:17 Supplied by www.sharenet.co.za                     
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