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RSG - Resgen - Quarterly Report for the three months ended 31 December 2010

Release Date: 26/01/2011 08:17:03      Code(s): RSG
RSG - Resgen - Quarterly Report for the three months ended 31 December 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 31 December 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.                                                        
-    Boikarabelo reserves upgraded.                                             
-    Progress with access to rail network.                                      
-    Second offtake contract for Boikarabelo signed with an Indian company.     
-    Ownership in Ledjadja Joint Venture increased to the maximum 74%.          
-    $30 million equity placement.                                              
SOUTH AFRICA                                                                    
Reserves upgrade                                                                
An upgrade was announced during the quarter.  Boikarabelo now has probable      
reserves of 744.8 million tonnes of coal, an increase of 108.8 million          
tonnes.  The area covered by these reserves amounts to only 35% of              
Boikarabelo`s resource-bearing tenements.  Boikarabelo`s resources and          
reserves are now as follows:                                                    
(100%         Inferred   Indicated    Measured   Total         Probable         
figures)      Resource*  Resource*    Resource*  Resource*     Reserve          
Waterberg #1                          426.3      426.3         314.2            
Waterberg #1             551.7                   551.7                          
Witkopje S &                          664.2      664.2         430.6            
Draai Om      791.3                              791.3                          
Witkopje N    688.3                              688.3                          
Total         1,479.6    551.7        1,090.5    3,121.8       744.8            
* Total in-situ tonnes of coal excluding shale content. The total resource      
including shale is 6.4 billion tonnes.                                          
Access to rail network                                                          
Considerable progress has been made regarding access to land required for       
the proposed 36 kilometre rail link from the mine site to the existing rail     
infrastructure.  Two properties have been purchased, contracts have been        
signed for the acquisition of two further properties, one servitude             
agreement has been secured and one remains to be secured.  The application      
for development approval, which needs to be submitted under the National        
Environmental Management Act, was lodged in January 2011.                       
Discussions continued with Transnet to secure transport facilities to enable    
the sale of 6 million tonnes of coal per annum from 2013.                       
Second offtake contract                                                         
During the quarter a second 20 year coal sales contract was signed with         
Bhushan Steel Limited (Bhushan), which will purchase coal from Boikarabelo.     
Under the terms of the contract, Bhushan will purchase 500,000 tonnes of        
thermal coal per annum for the first five years of production and a minimum     
500,000 tonnes per annum for a further 15 years. The price will be at           
international market prices at the time of each shipment.  This contract        
complements a 20 year offtake contract signed with Integrated Coal Mining in    
September 2010 and provides further long-term security for coal sales.          
Bhushan is one of the fastest growing steel companies in India.  Based in       
Delhi, it has operations in Delhi, Orissa and Mumbai.  Bhushan`s growth plan    
includes diversification into power generation through its subsidiary,          
Bhushan Energy Limited, which already has installed capacity of 300MW.  The     
supply of coal from Boikarabelo is targeted for the expansion of Bhushan`s      
power generation capacity.                                                      
Joint venture ownership increase                                                
Resource Generation increased its ownership of Ledjadja Coal (Pty) Limited      
from 49% to 74%, in line with the shareholders` agreement.  Ledjadja owns       
the prospecting rights for the tenements which contain the major portion of     
Boikarabelo`s coal resources and reserves. The company will now pursue ways     
in which it can enhance the effectiveness of its BEE partners.                  
Progress with mining rights application                                         
Progress with Resource Generation`s mining rights application is continuing     
with constructive reviews and discussions with the Department of Mineral        
Resources.  The company hopes that the process will be concluded by mid-        
Power supply                                                                    
Arrangements are progressing with Eskom regarding the power supply              
requirements of the Boikarabelo mine.  The company is also considering an       
independent power supply option.                                                
Discussions with potential customers                                            
In addition to the contracts with Integrated Coal Mining Limited and            
Bhushan, the company is in discussions with other potential export and          
domestic customers regarding purchases of Boikarabelo coal when production      
Discussions with banks                                                          
Several potential debt providers from South Africa and Europe have expressed    
interest in considering the project funding. Distribution of information for    
banks to commence due diligence is progressing.                                 
A drilling programme of 25 holes was completed in the previous quarter on       
the Woodbury tenement, where Resource Generation is exploring for thermal       
coal.  Laboratory analysis and geological modelling is continuing, with         
results expected in the forthcoming quarter.                                    
Following detailed desk-top studies of the tenement at La Trobe, the company    
decided it was not worth undertaking any additional work and intends to         
relinquish the tenement.                                                        
There was no activity during the quarter on Resource Generation`s uranium       
tenements in Cameroon.                                                          
New Chairman                                                                    
The Board appointed Brain Warner as Chairman after the most recent AGM.         
Brian has considerable experience and skills in both the mining and finance     
industries. He recently retired as the senior resources analyst at Citibank,    
a position he had held for 6 years.                                             
Equity raising                                                                  
The company successfully raised $30.6 million through a placement to            
institutions and sophisticated investors and an associated Share Purchase       
Plan.  The proceeds will be used primarily for land acquisitions and access     
rights for the rail link as well as other expenditure for the company`s         
Boikarabelo mine in South Africa and working capital.                           
CORPORATE INFORMATION                                                           
Brian Warner             Non-Executive Chairman                                 
Paul Jury                Managing Director                                      
Steve Matthews           Executive Director                                     
Scott Douglas            Non-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                                                                  
Anthony Tregoning, FCR on (02) 8264 1000                                        
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                       31 December 2010                           
Consolidated statement of cash flows                                            
Current quarter    Year to date (6        
Cash flows related to operating        $A`000             mths)                 
activities                                                $A`000                
1.1      Receipts from product sales   -                  -                     
and related debtors                                                     
1.2      Payments for        (a)       (1,102)            (1,572)               
        exploration and evaluation    (1,576)            (3,241)                
(b)  development    -                  -                      
                  (c)  production     (323)              (1,266)                
1.3      Dividends received            -                  -                     
1.4      Interest and other items of   110                233                   
        a similar nature received                                               
1.5      Interest and other costs of   (8)                (10)                  
finance paid                                                            
1.6      Income taxes paid             -                  -                     
1.7      Other (provide details if     -                  -                     
Net Operating Cash Flows      (2,899)            (5,856)                
        Cash flows related to                                                   
        investing activities                                                    
1.8      Payment for purchases of:     -                  -                     
        (a) prospects                 -                  -                      
             (b) equity investments   (3,479)            (3,479)                
             (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         -                  -                     
1.12     Other- Government charges in  1,120              1,120                 
        relation to land                                                        
        acquisitions (refundable)                                               
(2,359)            (2,359)                
        Net investing cash flows                                                
1.13     Total operating and           (5,258)            (8,215)               
        investing cash flows                                                    
(carried forward)                                                       
Current quarter    Year to date (6        
                                      $A`000             mths)                  
1.13     Total operating and           (5,258)            (8,215)               
investing cash flows                                                    
        (brought forward)                                                       
        Cash flows related to                                                   
1.14     financing activities          28,912             39,416                
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      28,912             39,416                 
        Net increase (decrease) in    23,654             31,201                 
        cash held                                                               

1.20     Cash at beginning of          13,585             6,088                 
        quarter/year to date                                                    
1.21     Exchange rate adjustments to  (16)               (66)                  
item 1.20                                                               
1.22     Cash at end of quarter        37,223             37,223                
Payments to directors of the entity and associates of the directors             
Payments to related entities of the entity and associates of the related        
                                               Current quarter                  
1.23     Aggregate amount of payments to the    270                             
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          (498)                                  
4.2  Development                         (1,281)                                
4.3  Production                          -                                      
4.4  Administration                      (501)                                  
    Total                               (2,280)                                 
Reconciliation of cash                                                          
Reconciliation of cash at the end of     Current       Previous                 
the quarter (as shown in the             quarter       quarter                  
consolidated statement of cash flows)    $A`000        $A`000                   
to the related items in the accounts is                                         
as follows.                                                                     
5.1   Cash on hand and at bank           16            18                       
5.2   Deposits at call                   37,025        13,385                   
5.3   Bank overdraft                     -             -                        
5.4   Other (Bank guarantees)            182           182                      
     Total: cash at end of quarter      37,223        13,585                    
     (item 1.22)                                                                
Changes in interests in mining tenements                                        
Tenement    Nature of interest   Interest at  Interest at     
                  reference                        beginning    end of          
                                                   of quarter   quarter         
6.1  Interests in  N/A                                                          
    , reduced or                                                                
6.2  Interests in  PR679/2007  Shareholding in      49%          74%            
    mining                    Ledjadja Coal                                     
tenements                 (Pty) Limited, the                                
    acquired or               owner of the                                      
    increased                 tenement                                          

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 price   Amount paid        
                        number     quoted      per security  up per             
                                               (cents)       security           
7.1   +Preference        N/A                                                    
7.2   Changes during     N/A                                                    
     Increases through                                                          
through returns                                                            
     of capital, buy-                                                           
7.3   +Ordinary          243,900,5  243,900,530 Various       Fully paid        
     securities         30                                                      
7.4   Changes during                                                            
quarter            61,220,00  61,220,000  50.0          50.0               
     Increases          0                                                       
     through issues                                                             
                                   Nil         Nil           Nil                
Decreases          Nil                                                     
     through returns                                                            
     of capital, buy-                                                           
7.5   +Convertible debt  N/A                                                    
7.6   Changes during     N/A                                                    
     Increases through                                                          
     Decreases through                                                          
7.7   Options                                   Exercise      Expiry date       
(description and   450,000    Nil         price         28/11/2012         
     conversion         1,875,000  Nil                       31/12/2012         
     factor)            2,875,000  Nil         $0.25         7/7/2013           
                        250,000    Nil                       17/3/2013          
450,000    Nil         $0.50         28/11/2012         
                        250,000    Nil                       17/3/2013          
                        350,000    Nil         $0.50         17/3/2013          
                        350,000    Nil                       17/3/2013          
375,000    Nil         $0.50         28/5/2013          
                        375,000    Nil                       28/5/2013          
                        500,000    Nil         $0.60         28/5/2013          
7.8   Issued during      Nil                                                    
7.9   Exercised during   Nil                                                    
7.10  Expired during     Nil                                                    
7.11  Debentures         N/A                                                    
     (totals only)                                                              
7.12  Unsecured notes    N/A                                                    
     (totals only)                                                              
Compliance statement                                                            
1    This statement has been prepared under accounting policies which comply    
with accounting standards as defined in the Corporations Act or other           
standards acceptable to ASX (see note 5).                                       
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 January 2011                                                           
STEPHEN JAMES MATTHEWS                                                          
(Company secretary)                                                             
1    The quarterly report provides a basis for informing the market how the     
entity`s activities have been financed for the past quarter and the effect      
on its cash position.  An entity wanting to disclose additional information     
is encouraged to do so, in a note or notes attached to this report.             
2    The "Nature of interest" (items 6.1 and 6.2) includes options in           
respect of interests in mining tenements acquired, exercised or lapsed          
during the reporting period.  If the entity is involved in a joint venture      
agreement and there are conditions precedent which will change its              
percentage interest in a mining tenement, it should disclose the change of      
percentage interest and conditions precedent in the list required for items     
6.1 and 6.2.                                                                    
3    Issued and quoted securities  The issue price and amount paid up is not    
required in items 7.1 and 7.3 for fully paid securities.                        
4    The definitions in, and provisions of, AASB 6: Exploration for and         
Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply     
to this report.                                                                 
5    Accounting Standards ASX will accept, for example, the use of              
International Financial Reporting Standards for foreign entities.  If the       
standards used do not address a topic, the Australian standard on that topic    
(if any) must be complied with.                                                 
Date: 26/01/2011 08:17:02 Supplied by www.sharenet.co.za                     
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