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Rsg - Resource Generation Limited - Interim Financial Results

Release Date: 03/02/2011 11:11:14      Code(s): RSG
RSG - Resource Generation Limited - Interim Financial Results                   
Resource Generation Limited                                                     
Registration number ACN 059 950 337                                             
(Incorporated and registered in Australia)                                      
Share code on the JSE Limited: RSG                                              
Share code on the Australian Stock Exchange: RES                                
ISIN Code: AU000000RES1                                                         
("Resgen" or "the Company")                                                     
RESGEN - INTERIM FINANCIAL RESULTS                                              
Resource Generation Limited today released its consolidated interim financial   
statements for the half year ended 31 December 2010.                            
The interim financial statements were approved by the Board of Directors and    
signed by Paul Jury (Managing Director).                                        
The financial statements have been reviewed by Deloitte & Touche and their      
unmodified audit opinion is available for inspection at the Company`s           
registered office.                                                              
The full set of interim financial statements are available on Resource          
Generation                                                                      
Limited`s website www.resgen.com.au                                             
Extracts from the interim financial statements for the half year ended 31       
December 2010.                                                                  
APPENDIX 4D                                                                     
Half Year Report for the period ended 31 December 2010                          
31-Dec                                            
                              2010                           Movement           
                              $`000         Up/(Down)                           
                                                                                
Revenue from ordinary          365           (265)            -42.06%           
activities                                                                      
Loss from ordinary activities  (3,542)       (2,525)          -248.28%          
after tax                                                                       
Net loss for the year          (3,542)       (2,525)          -248.28%          
                                                                                
                                                                                
Dividends                      Not                                              
applicable                                        
                                                                                
Net tangible asset backing     31-Dec                      31-Dec               
                              2010                        2009                  
$                           $                     
                              0.52                        0.55                  
Commentary                                                                      
A loss for the half year of $3.5 million was recorded.  The major items making  
up this loss were as follows:                                                   
  Interest income                                              $0.4             
                                                               million          
  Share based compensation:  The share based compensation      ($2.3            
relates to the expense associated with share rights          million)         
  converted during the period and those approved at the                         
  Annual General Meeting on 26 October 2009, the issue of                       
  which is subject to performance criteria.                                     

  Tasmania: The expenses associated with the assessment of     ($0.5            
  the resources are fully impaired, as a conservative          million)         
  measure.                                                                      

  Listing fees: Fees associated with the secondary listing on  ($0.2            
  the Johannesburg Stock Exchange.                             million)         
                                                                                
Net operating expenses                                       ($0.9            
                                                               million)         
  Loss                                                         ($3.5            
                                                               million)         
During the half year ended 31 December 2010 the consolidated                 
   entity recorded a net loss of $3.542 million.                                
                                                                                
   Key activities during the six months to 31 December 2010 were:-              

        The Company proceeded with its secondary listing on the                 
        Johannesburg Stock Exchange ("JSE") on 14 July 2010. The                
        secondary listing on the JSE is a further step in the                   
development of the Boikarabelo Project providing South African          
        investors easier access to participate in the project and               
        improves the Company`s flexibility in pursuing its strategies.          
                                                                                
In September 2010 the Company secured its first coal off-take           
        contract with Integrated Coal Mining Limited, part of the RPG           
        Group, whereby they will purchase coal for 20 years from the            
        Boikarabelo mine in South Africa and subscribed $10.5 million           
for a 10 per cent holding in Resource Generation. In December           
        2010 a second coal off-take contract was signed with Bhushan            
        Steel Limited to purchase coal for 20 years.                            
                                                                                
Resource and reserve upgrades in the Waterberg area of South            
        Africa were announced in October and December 2010. The gross           
        in-situ resource base where the Boikarabelo mine is being               
        developed is 6.4 billion tonnes or 3.1 billion tonnes                   
excluding shale, being 1.1 billion tonnes of measured                   
        resource, 0.5 billion tonnes of indicated resource and 1.5              
        billion tonnes of inferred resource. Probable reserves are 745          
        million tonnes.                                                         

        An equity placement to raise $30 million in cash was announced          
        in November 2010. The proceeds will be primarily used for the           
        rail link acquisitions and access rights for the Company`s              
Boikarabelo mine and for working capital. This was                      
        successfully completed by December 2010, together with a share          
        purchase plan.                                                          
                                                                                
Continued evaluation of the coal resource in Tasmania.                  
                                                                                
        The Company increased its ownership of Ledjadja Coal (Pty)              
        Limited ("Ledjadja") from 49% to 74% in November 2010, having           
completed the process under the shareholders agreement.                 
        Ledjadja owns the prospecting rights which contain the major            
        portion of the coal resources and reserves of the proposed              
        Boikarabelo mine.                                                       
Condensed consolidated  statement of comprehensive income  for the            
  half year ended 31 December 2010                                              
                                                                                
                                                     Half year                  
Notes                                                                         
                                                     2010      2009             
                                                     $`000     $`000            
                                                                                
Revenue from continuing operations                                            
                                                     365       630              
                                                                                
                                                                                
Administrative, rent and corporate                 (688)     (269)            
  Employee benefits expense                          (258)     (150)            
  Depreciation of property, plant & equipment        (59)      (44)             
  Provision for diminution                           (539)     (42)             
Share based compensation                           (2,349)   (1,142)          
  Other expenses                                      -         -               
                                                                                
  Loss before income tax expense                     (3,528)   (1,017)          

  Income tax expense                                 (14)                       
                                                               -                
                                                                                
Loss from continuing operations                    (3,542)   (1,017)          
                                                                                
  Loss for the half year                             (3,542)   (1,017)          
                                                                                
Other comprehensive income                                                    
  Exchange differences on translation of foreign                                
  operations                                         85        306              
  Total comprehensive income for the half year       (3,457)   (711)            

                                                                                
  Loss is attributable to:                                                      
     Owners of Resource Generation Limited           (3,542)   (1,017)          

  Total comprehensive income for the half year is                               
  attributable to:                                                              
     Owners of Resource Generation Limited           (3,457)   (711)            

                                                                                
                                                                                
                                                     Cents     Cents            
Basic earnings per share                           (0.02)    (0.01)           
  Diluted earnings per share                         (0.02)    (0.01)           
In terms of reporting under the JSE Limited Listings requirements, the Company  
makes the following disclosure in respect of headline earnings together with    
the reconciliation for the 2010 interim financial statements.                   
This information has been extracted from the interim financial statements.      
                                            Half Year                           
                             2010        2009                                   
$`000       $`000                                  
                                                                                
Net Loss                      (3,542)     (1,017)                               
Adjustment  for investment    539         42                                    
diminution                                                                      
Headline earnings             (3,003)     (975)                                 
                                                                                
EPS (cents)                   (0.02)      (0.01)                                
Headline earnings EPS         (0.01)      (0.01)                                
(cents)                                                                         
Condensed consolidated statement of financial position                          
As at 31 December 2010                                                          

Notes                                       31 December         30 June         
                                           2010                2010             
                                           $`000               $`000            

Current assets                                                                  
 Cash and cash equivalents                 37,224              6,088            
 Trade and other receivables               994                 1,709            
38,218              7,797            
                                                                                
Non-current assets                                                              
 Property, plant and equipment             27,306              22,951           
Mining tenements and exploration (net of  64,401              61,423           
 provision for diminution)                                                      
                                           91,707              84,374           
                                                                                
TOTAL ASSETS                                129,925             92,171          
                                                                                
                                                                                
Current liabilities                                                             
Trade and other payables                  172                 1,582            
 Provisions                                169                 147              
                                           341                 1,729            
                                                                                
Non-current liabilities                                                         
 Royalties payable                         3,874               3,926            
 Loan                                      927                 -                
                                           4,801               3,926            

TOTAL LIABILITIES                           5,142               5,655           
                                                                                
NET ASSETS                                  124,783             86,516          

Equity                                                                          
 Issued Capital                            135,320             95,945           
 Reserves                                  22,459              20,025           
Accumulated losses                        (33,024)            (29,482)         
 Total parent entity interest              124,755             86,488           
 Non-controlling interest                  28                  28               
                                                                                
TOTAL EQUITY                                124,783             86,516          
Condensed consolidated statement of changes in equity                           
For the Half  Year Ended 31 December 2010                                       
             Attributable to owners of Resource                                 
Generation Limited                                                 
             Contri-  Reserves  Retained  Total   Non-         Total            
             buted              earnings          controlling  equity           
             equity                               interests                     
$`000    $`000     $`000     $`000   $`000        $`000            
                                                                                
Bal 1/7/09    65,376   18,012    (26,202)  57,186  28           57,214          
                                                                                
Loss for the                -    (1,017)   (             -      (1,017)         
period        -                            1,017)                               
Other                  306              -      306       -          306         
comprehensive -                                                                 
income for                                                                      
the period                                                                      
Total                     306    ( 1,017)  ( 711)        -      ( 711)          
comprehensive -                                                                 
income for                                                                      
the period                                                                      
                                                                                
Contributions               -           -   30,624       -       30,624         
of equity,    30,624                                                            
net of                                                                          
transaction                                                                     
costs                                                                           
Employee                  278           -      278       -          278         
share options -                                                                 
- value of                                                                      
emp services                                                                    
278           -   30,902       -       30,902          
             30,624                                                             
                                                                                
Bal 31/12/09  96,000   18,596    (27,219)  87,377  28           87,405          

Bal 1/7/10    95,945   20,025    (29,482)  86,488  28           86,516          
                                                                                
Loss for the                -    (3,542)   (             -      (3,542)         
period        -                            3,542)                               
Other                      85           -       85       -           85         
comprehensive -                                                                 
income for                                                                      
the period                                                                      
Total                      85    ( 3,542)  (             -      (               
comprehensive -                            3,457)               3,457)          
income for                                                                      
the period                                                                      
                                                                                
Contributions               -           -   39,375       -       39,375         
of equity,    39,375                                                            
net of                                                                          
transaction                                                                     
costs                                                                           
Employee                2,349           -    2,349       -        2,349         
share options -                                                                 
- value of                                                                      
emp services                                                                    
                       2,349           -   41,724       -       41,724          
39,375                                                             
                                                                                
Bal 31/12/10  135,320  22,459    (33,024)  124,755 28           124,783         
Condensed consolidated cash flow statement                                      
For the half year ended 31 December 2010                                        
                           Half year                                            
                                                                                
                           2010          2009                                   
$`000         $`000                                  
                                                                                
Cash flows from operating                                                       
activities                                                                      
Receipts from customers     4             44                                    
(Inclusive of goods and                                                         
services tax)                                                                   
Payments to suppliers and   (1,270)       (544)                                 
employees (inclusive of                                                         
goods and services tax)                                                         
Interest received           233           601                                   
Interest paid               (10)          -                                     
Net cash inflow (outflow)   (1,043)       101                                   
from operating activities                                                       
                                                                                
Cash flows from investing                                                       
activities                                                                      
Payments for property,      (3,478)       (13,660)                              
plant and equipment                                                             
(Payments)/receipts for     1,120         (1,712)                               
government charges                                                              
associated with land                                                            
acquisition (refundable)                                                        
Payments for exploration    (4,812)       (2,029)                               
costs                                                                           
Net cash (outflow) from     (7,170)       (17,401)                              
investing activities                                                            
                                                                                
Cash flows from financing                                                       
activities                                                                      
Net proceeds from issue of  39,416        29,633                                
shares                                                                          
Net cash inflow from        39,416        29,633                                
financing activities                                                            
                                                                                
Net increase in cash and    31,203        12,333                                
cash equivalents                                                                
Cash and cash equivalents   6,088         5,091                                 
at the beginning of the                                                         
half year                                                                       
Effects of exchange rate    (67)          263                                   
movements on cash and cash                                                      
equivalents                                                                     
Cash and cash equivalents   37,224        17,687                                
at the end of the half year                                                     
Notes to the  condensed financial statements                                    
For the half year ended 31 December 2010                                        
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                   
(a) Basis of preparation of half year financial report                          
This general purpose financial report for the interim half year reporting       
period 31 December 2010 has been prepared in accordance with Accounting         
Standard AASB 134 Interim Financial Reporting and the Corporations Act          
2001.                                                                           
This interim financial report does not include all the notes of the type        
normally included in an annual financial report.   Accordingly, this            
report is to be read in conjunction with the Annual Report for the year         
ended 30 June 2010 and any public announcements made by Resource                
Generation Limited during the interim reporting period in accordance with       
the continuous disclosure requirements of the Corporations Act 2001.            
The accounting policies adopted are consistent with those of the previous       
financial year and corresponding interim reporting period.                      
(b) Significant accounting policies                                             
The interim financial report has been prepared using the same accounting        
policies as used in the annual financial statements for the year ended 30       
June 2010.                                                                      
                                                                                
The significant accounting policy for the Company is development                
expenditure.                                                                    

Development expenditure                                                         
Development expenditure incurred by or on behalf of the consolidated            
entity is accumulated separately for each area of interest in which             
economically recoverable reserves have been identified to the satisfaction      
of the directors.  Such expenditure comprises direct costs plus overhead        
expenditure incurred which can be directly attributable to the development      
process.                                                                        

All expenditure incurred prior to the commencement of commercial levels of      
production from each area of interest is carried forward to the extent          
which recoupment out of revenue to be derived from the sale of production       
from the area of interest or, by its sale, is reasonably assured. Once          
commercial levels of production commence, the development expenditure in        
respect of that area of interest will be amortised on a straight line           
basis, based upon an estimate of the life of the area of interest.              
The interim financial report comprises the financial statements of              
Resource Generation Limited and its subsidiaries as at 31 December 2010         
("the Consolidated Entity").                                                    
                                                                                
2. SEGMENT INFORMATION                                                          
(a) Description of segments                                                     
          Business segments                                                     
          The consolidated entity is organised into the following               
divisions by product and service type:                                
          Mineral tenements and exploration                                     
          Prospective coal tenements in South Africa and Tasmania and           
          uranium tenements in Cameroon.                                        
Geographical segments                                                 
          The Company is domiciled in Australia. Exploration activities         
          are undertaken in South Africa and Tasmania. The Company has          
          established a presence in Mauritius.                                  
(b) Primary reporting format - business segments                                
Half year          Mining tenements         Corporate   Total                   
2010               Africa     Australia     Australia                           
                  $`000      $`000         $`000       $`000                    

Total segment and  129                      236         365                     
consolidated                  -                                                 
revenue                                                                         
Loss before        (3)        (539)         (2,986)     (3,528)                 
income tax                                                                      
Income tax         (14)                                 (14)                    
expense                       -             -                                   
Loss for the half  (17)       (539)         (2,986)     (3,542)                 
year                                                                            
                                                                                
Half year          Mining tenements         Corporate   Total                   
2009                Africa    Australia     Australia                           
                  $`000      $`000         $`000       $`000                    
                                                                                
Total segment and           -               630         630                     
consolidated                  -                                                 
revenue                                                                         
Loss before        (16)       (34)          (967)       (1,017)                 
income tax                                                                      
Income tax                  -                                      -            
expense                       -             -                                   
Loss for the half  (16)       (34)          (967)       (1,017)                 
year                                                                            
3. COMMITMENTS                                                                  
The Company has committed $7.9 million to acquire land in relation to the       
development of the rail link.                                                   
4. EVENTS OCCURRING AFTER THE BALANCE SHEET DATE                                
On 31 January 2011 the Company confirmed that it has secured access for         
its proposed rail link route from the Boikarabelo mine to the existing          
Transnet rail line in the Waterberg region of South Africa. There are no        
other matters of significance up to the date of this report that have not       
been included in the interim financial statements.                              
Resource Generation has coal interests in South Africa and Tasmania.  Its       
current priority is to develop its resources in the Waterberg region of         
South Africa.                                                                   
Sydney, Australia                                                               
3 February 2011                                                                 
Contacts                                                                        
Paul Jury, Managing Director on +612 9376 9000 or                               
Steve Matthews, Company Secretary on +612 9376 9000                             
Media enquiries, Anthony Tregoning +612 8264 1000                               
JSE Sponsor: Deloitte & Touche Sponsor Services (Pty) Limited                   
Date: 03/02/2011 11:11:13 Supplied by www.sharenet.co.za                     
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