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Rsg - Resource Generation Limited - Quarterly Report For The Three Months Ended

Release Date: 25/07/2011 11:58:02      Code(s): RSG
RSG - Resource Generation Limited - Quarterly Report for the three months ended 
30 June 2011                                                                    
Resource Generation Limited                                                     
(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 June 2011                        
Resource Generation is developing its Boikarabelo coal mine in the Waterberg    
region of South Africa, which has one of the country`s largest remaining coal   
deposits.                                                                       
HIGHLIGHTS                                                                      
*    Boikarabelo mining right received.                                         
*    Strong interest from financiers for debt funding.                          
*    Export coal off-take contract increased.                                   
*    Eskom and Transnet discussions progressing.                                
*    New BEE partner.                                                           
*    Waterberg One Coal shareholding increased.                                 
*    Regulatory approval update.                                                
*    Detailed engineering design update.                                        
SOUTH AFRICA                                                                    
Mining right received                                                           
A 30 year mining right was issued to Ledjadja Coal (Pty) Limited (Ledjadja), in 
which Resource Generation has a 74% shareholding, for its Boikarabelo mine by   
the South African Department of Mineral Resources (DMR).  A rehabilitation      
deposit of R17.7 million ($2.5 million) was provided to the DMR.                
Strong interest from financiers for debt funding                                
Potential debt funders were invited to submit expressions of interest and       
indicative term sheets, and a number of submissions were received which more    
than cover the company`s anticipated debt requirements.  The Company is pleased 
with the confidence shown in Boikarabelo by these potential debt providers.     
Completion of the financiers` due diligence is subject to satisfactory          
arrangements with both Transnet Freight Rail and Eskom.                         
Export coal off-take contract increased                                         
Integrated Coal Mining Limited, part of India`s RPG Group, signed a contract to 
increase its purchases of thermal coal from the Boikarabelo mine to 139 million 
tonnes from 37 million tonnes. The purchases will take place over 38 years, up  
from 20 years in the original contract. Pricing will be based on the            
international market price at the time of each shipment.                        
The initial off-take of 37 million tonnes has increased to 73 million tonnes    
beginning when the Boikarabelo mine commences production, which is currently    
scheduled for late 2013.  The balance of the additional off-take of 66 million  
tonnes is linked to the mine`s stage 2 expansion which envisages doubling       
production to around 40 million tonnes per annum of run-of-mine coal, maximising
production of export quality coal and generating an equivalent volume of        
domestic product.                                                               
In conjunction, CESC Limited, the flagship power company of the RPG Group, is   
beginning a feasibility study for construction of a 1,320MW coal-fired power    
station adjacent to the Boikarabelo mine to supply power to the South African   
grid. This proposed power station would use around half of the additional       
domestic product, thereby underpinning plans to develop Stage 2, reducing       
reliance on domestic coal off-take from Eskom and maximising export coal        
production.                                                                     
Progress with Eskom                                                             
Detailed discussions continued with Eskom regarding a contract for the supply of
3mtpa of domestic grade thermal coal to Eskom`s Mpumalanga power stations.      
Recently, senior executives of Eskom have called for rapid development of       
Waterberg mines.                                                                
Progress with Transnet                                                          
Discussions continue with Transnet Freight Rail regarding the transport of 6mtpa
of export and domestic coal from late 2013. In principle agreement has been     
reached on facets of access whilst availability of rolling stock needs further  
definition. Intensive effort is being made to reach a binding agreement in the  
near term.                                                                      
New BEE partner                                                                 
Fairy Wing Trading 136 (Pty) Limited (FWT), a company owned by a group of South 
African businessmen and women with strong commercial and government             
relationships, finalised arrangements to acquire the 26% shareholding in        
Ledjadja that was owned by Resource Generation`s original BEE (black economic   
empowerment) partners.                                                          
Increase in Waterberg One Coal shareholding                                     
Following the expenditure of USD5 million on exploration and development,       
Resource Generation increased its shareholding in Waterberg One Coal (Pty)      
Limited from 20% to 70%.  Waterberg One Coal owns the Waterberg One tenement,   
which is adjacent to Ledjadja`s and contains a measured resource of 865 million 
tonnes, an indicated resource of 1.1 billion tonnes and a probable reserve of   
314 million tonnes.                                                             
Regulatory approval update                                                      
Ledjadja applied for approval under the National Environmental Management Act   
(NEMA) in January 2011 for construction of the mine infrastructure and the 36   
kilometre rail link route from the Boikarabelo mine to the existing Transnet    
rail line.  Public consultation and administrative reviews have progressed      
without any material issues; however protracted departmental processes have     
delayed the expected approval from July 2011 for several months.                
The application for an Integrated Water Use Licence (IWULA) in December 2010 has
also progressed favourably and approval is anticipated in the third quarter of  
2011.                                                                           
Power for mine construction has been secured from existing supply to properties 
associated with the project. Power for the production stages will be through a  
fluidised bed power station at the mine site, and the environmental impact study
for this is underway.  In addition, progress continues to be made with Eskom    
regarding arrangements for mains power supply requirements.                     
Detailed engineering                                                            
Final engineering designs for the mine infrastructure and the 36 kilometre rail 
link were completed during July with capital expenditure broadly in line with   
expectations, whilst final designs of the coal handling and preparation plant   
are due by the end of July 2011.                                                
Specifications of the on-site power station are still being finalised, although 
financial failure of the principal contractor has resulted in the Company having
to review its approach to construction, and this review should be concluded in  
the next quarter. Capital expenditure estimates for the construction of the mine
will be determined following completion of the remaining final engineering      
designs.                                                                        
TASMANIA                                                                        
Geological modelling and analysis were completed from the drill programme       
undertaken on the Woodbury tenement, where Resource Generation is exploring for 
thermal coal. Coal qualities of an 18-20% ash product have been derived at an   
average yield of 61%, accessed by open cut methods.                             
The programme was not sufficient to quantify a JORC resource and further        
drilling and analysis have been planned for both this tenement and the adjoining
Jericho areas.                                                                  
CAMEROON                                                                        
There was no activity during the quarter on Resource Generation`s uranium       
tenements in Cameroon.                                                          
CORPORATE                                                                       
Equity raising                                                                  
Bantal Singapore Pte Limited, a wholly owned subsidiary of CESC Limited,        
subscribed $10.0 million for a 4.6% shareholding in Resource Generation.  This  
involved the placement of 12,195,122 Resource Generation shares at $0.82 per    
share.                                                                          
CORPORATE INFORMATION                                                           
Directors                                                                       
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                                                                 
Contacts                                                                        
Paul Jury                                                                       
Steve Matthews                                                                  
Media                                                                           
Anthony Tregoning, FCR on (02) 8264 1000                                        
JSE Sponsor: Deloitte & Touche Sponsor Services (Pty) Limited                   
Date: 25 July 2011                                                              
* 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 June 2011                              
Consolidated statement of cash flows                                            
  Cash flows related to operating activities  Current    Year to date           
quarter    (12 mths)              
                                              $A`000     $A`000                 
  1.1    Receipts from product sales and      -          -                      
         related debtors                                                        

  1.2    Payments for        (a)              (23)       (1,595)                
         exploration and evaluation           (710)      (5,839)                
                   (b)  development           -          -                      
(c)  production            (726)      (2,559)                
                   (d)  administration                                          
  1.3    Dividends received                   -          -                      
  1.4    Interest and other items of a        416        1,023                  
similar nature received                                                
  1.5    Interest and other costs of finance  (3)        (16)                   
         paid                                                                   
  1.6    Income taxes paid                    -          -                      
1.7    Other (provide details if material)  -          -                      
         Net Operating Cash Flows             (1,046)    (8,986)                
                                                                                
         Cash flows related to investing                                        
activities                                                             
  1.8    Payment for purchases of:     (a)    -          -                      
         prospects                            (726)      (726)                  
              (b) equity investments                                            
(subsidiary)                         (1,174)    (10,122)               
              (c) other fixed assets (land)                                     
  1.12   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         (935)      667                    
         relation to land acquisitions                                          
         (refundable)                                                           
         Net investing cash flows             (2,835)    (10,181)               
1.13   Total operating and investing cash   (3,881)    (19,167)               
         flows (carried forward)                                                
                                              Current    Year to date           
                                              quarter    (12 mths)              
$A`000     $A`000                 
  1.13   Total operating and investing cash   (3,881)    (19,167)               
         flows (brought forward)                                                
         Cash flows related to financing                                        
1.14   activities                           10,203     49,870                 
         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 (BEE Loan)                     (8,331)    (8,331)                
  1.19   Other (Mining Licence Deposit)       (2,553)    (2,553)                
         Net financing cash flows             (681)      38,986                 
         Net increase (decrease) in cash      (4,562)    19,819                 
held                                                                   
                                                                                
  1.20   Cash at beginning of quarter/year    30,310     6,088                  
         to date                                                                
1.21   Exchange rate adjustments to item    (426)      (585)                  
         1.20                                                                   
  1.22   Cash at end of quarter               25,322     25,322                 
Payments to directors of the entity and associates of the directors             
Payments to related entities of the entity and associates of the related        
entities                                                                        
                                               Current quarter                  
                                               $A`000                           
1.2   Aggregate amount of payments to the       270                             
3     parties included in item 1.2                                              
1.2   Aggregate amount of loans to the parties  -                               
4     included in item 1.10                                                     

1.2   Explanation necessary for an understanding of the transactions            
5                                                                               
     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                                                  
N/A                                                                         
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                                                             
N/A                                                                         
Financing facilities available                                                  
Add notes as necessary for an understanding of the position.                    
                                     Amount available  Amount used              
$A`000            $A`000                   
3.1  Loan facilities                  -                 -                       
3.2  Credit standby arrangements      -                 -                       
Estimated cash outflows for next quarter                                        
$A`000                             
4.  Exploration and evaluation                -                                 
1                                                                               
4.  Development                               (1,984)                           
2   Production                                -                                 
4.  Administration                            (408)                             
3                                                                               
4.                                                                              
4                                                                               
   Total                                     (2,392)                            
Reconciliation of cash                                                          
Reconciliation of cash at the end of the      Current        Previous           
quarter (as shown in the consolidated         quarter        quarter            
statement of cash flows) to the related       $A`000         $A`000             
items in the accounts is as follows.                                            
5.  Cash on hand and at bank                  26             14                 
1                                                                               
5.  Deposits at call                          25,111         30,114             
2                                                                               
5.  Bank overdraft                            -              -                  
3                                                                               
5.  Other (Bank guarantees)                   185            182                
4                                                                               
   Total: cash at end of quarter (item       25,322         30,310              
1.22)                                                                        
Changes in interests in mining tenements                                        
               Tenement     Nature of       Interest at    Interest at          
               reference    interest        beginning of   end of               
quarter        quarter              
6.  Interests   N/A                                                             
1   in mining                                                                   
   tenements                                                                    
relinquish                                                                   
   ed,                                                                          
   reduced or                                                                   
   lapsed                                                                       

6.  Interests   PR678/2007   Shareholding   20%             70%                 
2   in mining   PR720/2007   in Waterberg                                       
   tenements                One Coal (Pty)                                      
acquired                 Limited, the                                        
   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      Amount paid             
                        number   quoted      price per  up per                  
security   security ($)            
                                             ($)                                
7.1 +Preference          N/A                                                    
     securities                                                                 
(description)                                                                
7.2 Changes during       N/A                                                    
   quarter                                                                      
   Increases through                                                            
issues                                                                       
   Decreases                                                                    
   through returns of                                                           
   capital, buy-                                                                
backs, redemptions                                                           
7.3 +Ordinary            262,895, 262,895,6   Various    Fully paid             
   securities           652      52                                             
                                                                                
7.4 Changes during                                                              
   quarter              5,800,00 5,800,000   0.94*      Fully paid              
   Increases            0        500,000     0.50       Fully paid              
   through issues       500,000  12,195,12   0.82       Fully paid              
12,195,1 2                                              
   Decreases            22                   *Employee                          
   through returns of                        Share                              
   capital, buy-backs                        Plan -                             
Nil                  market                             
                                             value                              
                                             on day of                          
                                             grant                              
7.5 +Convertible debt    N/A                                                    
   securities                                                                   
   (description)                                                                
7.6 Changes during       N/A                                                    
quarter                                                                      
   Increases through                                                            
          issues                                                                
   Decreases through                                                            
securities                                                                  
   matured,                                                                     
    converted                                                                   
7.7  Options                                   Exercise   Expiry date           
(description and    450,000   Nil         price      28/11/2012             
    conversion factor)  1,875,00  Nil                    31/12/2012             
                        0         Nil         $0.25      7/7/2013               
                        1,875,00  Nil                    17/3/2013              
0         Nil         $0.50      28/11/2012             
                        250,000   Nil                    17/3/2013              
                        450,000   Nil         $0.50      17/3/2013              
                        250,000   Nil                    17/3/2013              
350,000   Nil         $0.50      28/5/2013              
                        350,000   Nil                    28/5/2013              
                        375,000   Nil         $0.60      28/5/2013              
                        375,000                                                 
500,000               $0.70                             
                                                                                
                                              $1.00                             
                                                                                
$1.50                             
                                                                                
                                              $1.55                             
                                                                                
$1.85                             
                                                                                
                                              $2.05                             
                                                                                
7.8  Issued during       Nil                                                    
    quarter                                                                     
7.9  Exercised during    500,000   Nil         $0.50      7/7/2013              
    quarter                                                                     
7.10 Expired during      Nil                                                    
    quarter                                                                     
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: 25 July 2011                                                              
Print name:    STEPHEN JAMES MATTHEWS                                           
(Company secretary)                                                             
Notes                                                                           
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: 25/07/2011 11:58:01 Supplied by www.sharenet.co.za                     
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