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Rsg - Resource Generation Limited - Transnet Mou Signed

Release Date: 26/10/2011 10:44:01      Code(s): RSG
RSG - Resource Generation Limited - Transnet MOU signed                         
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                                                                    
("Resgen")                                                                      
Transnet MOU Signed                                                             
Further to Resource Generation`s announcement on 19 October 2011, the           
company is pleased to report that the memorandum of understanding               
(MOU) has now been signed by Transnet Freight Rail (TFR).                       
Under the MOU, TFR has agreed with Resource Generation`s BEE                    
subsidiary, Ledjadja, to haul Boikarabelo coal on a take or pay basis           
as follows: 4 million tonnes in the year commencing 1 July 2014, 5              
million tonnes in the year commencing 1 July 2015 and 6 million tonnes          
per annum from 1 July 2016.  50% of the coal will be hauled to export           
ports and 50% to the Mpumalanga Highveld, which is where Eskom`s power          
stations are located.  Freight rates are yet to be determined but will          
reflect commercially fair and reasonable terms.                                 
Whilst rail capacity currently exists, upgrade works on the existing            
line between Lephalale and Pyramid South have been identified and need          
to be completed before coal haulage can commence.  Ledjadja has agreed          
to undertake the upgrade works if TFR agrees.  These works are minor            
and able to be completed prior to the forecast commencement of mining.          
Ledjadja has also agreed to work with TFR to unlock additional                  
capacity from the Waterberg.                                                    
The haulage agreement is conditional upon Boikarabelo commencing to             
produce coal, the upgrade works being completed and the rail link from          
Boikarabelo to the existing network being completed.  The rail link is          
part of the capital expenditure of the Boikarabelo mine and ownership           
and operations of the rail link will be transferred to TFR in due               
course with compensation to be negotiated.  The rail link is intended           
to be a common user facility.  The agreement is also conditional on             
TFR completing its Waterberg Feasibility Study aimed at unlocking a             
potential haulage capacity of 22.5 million tonnes per annum from the            
Waterberg and formal allocation of capacity by TFR.                             
Ledjadja and TFR have agreed to enter into negotiations to complete a           
definitive long term coal haulage agreement.                                    
Paul Jury, managing director, said: `It is pleasing that we have been           
able to complete this first step in working with Transnet to open up            
the Waterberg coalfields.  Whilst it is a binding agreement, its                
conditionality prevents it from triggering a move to project funding.           
We will be making every effort in the next few months to finalise the           
contract which will be necessary to complete the funding required to            
develop the Boikarabelo mine.`                                                  
Sydney, Australia                                                               
26 October 2011                                                                 
Contacts                                                                        
Paul Jury, Managing Director on (02) 9376 9000 or                               
Steve Matthews, Company Secretary on (02) 9376 9000                             
Media enquiries                                                                 
Anthony Tregoning (02) 8264 1000                                                
JSE Sponsor: Deloitte & Touche Sponsor Services (Pty) Limited                   
Resource Generation is developing the Boikarabelo coal mine in the              
Waterberg region of South Africa where there are probable reserves of           
744.8 million tonnes of coal on 35% of the tenements under its                  
control.                                                                        
Date: 26/10/2011 10:44:01 Supplied by www.sharenet.co.za                     
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