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

Release Date: 30/04/2012 09:54:13      Code(s): RSG
RSG - Resource Generation Limited - Quarterly Report for the three months       
ended 31 March 2012                                                             
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 31 March 2012                       
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.  The Boikarabelo mine has probable reserves of 744.8 million     
tonnes of coal on 35% of the tenements under the company`s control. Stage 1     
of the mine development targets saleable coal production of 6 million tonnes    
per annum.                                                                      
PRESENT STATUS                                                                  
Resource Generation is now ready to finalise funding arrangements for           
construction of the mine, subject to agreeing a satisfactory transport          
tariff with Transnet Freight Rail (Transnet).  Negotiations on this tariff      
are currently in progress.  Negotiations on other contractual terms are         
substantially complete but still exclude a firm tonnage allocation.             
While Transnet has indicated it is unwilling to commit to a firm tonnage        
allocation before the end of 2012, the company has decided to proceed with      
securing finance, conditional on obtaining sufficient allocation, as soon as    
agreement has been reached on the tariff.  Management`s confidence that         
capacity will be available is based on several statements by Transnet;          
earlier this month Transnet confirmed that some R50 billion ($6.25 billion)     
had been set aside for the Richards Bay coal corridor, including a              
substantial expansion of export capacity from the Waterberg region.             
Following agreement on a tariff, Resource Generation expects to finalise        
funding arrangements within four to five months.  Construction of the mine      
and infrastructure will then take approximately two years.                      
PROGRESS ON OTHER MATTERS                                                       
Development consent received                                                    
Development consent was received during the quarter for construction            
activities at the Boikarabelo mine.  The approval was given under the           
National Environmental Management Act (NEMA) and enables the company to         
construct the mine, all the required mine infrastructure and the associated     
36 kilometre rail link to the existing rail network.  The approval was the      
culmination of 15 months` close liaison and work with the Limpopo Department    
of Economic Development, Environment and Tourism.                               
Water Use Licence update                                                        
Discussions with the Department of Water Affairs have been concluded            
regarding the Integrated Water Use Licence Application that was lodged in       
December 2010.  Indications are that the Record of Decision should be           
received during May 2012.                                                       
Mining right update                                                             
As previously advised, the appeal that was lodged with the South African        
Department of Mineral Resources (DMR) against the 30 year mining right does     
not suspend the mining right, which remains valid.  Indications are that the    
DMR will dismiss the appeal but formal communication is yet to be received.     
The company is confident that the mining right will be confirmed and is         
continuing its normal activities to develop the mine.                           
Land acquisitions enhance stage 2 of production                                 
An agreement was signed during the quarter to acquire land adjacent to the      
company`s Boikarabelo mine.  The properties being acquired are Swelpan and      
Kleinpan, highlighted in black and grey stripes on the map below. Please        
refer to the Resgen website to review the map.                                  
Swelpan contains significant coal resources and is contiguous to the            
Boikarabelo coal tenements.  The bulk of the Kleinpan property contains no      
defined coal resources but it provides an ideal location for the 2x660MW        
power station that CESC Limited proposes to build.  As previously announced,    
this proposed power station would enable the Boikarabelo mine to commence       
its stage 2 expansion earlier than originally planned.  The company is          
working closely with CESC on its planning and processes for its feasibility     
study for the power station.                                                    
Potential resource expansion                                                    
During the quarter Ledjadja, Resource Generation`s BEE subsidiary, entered      
into a put option arrangement with Exxaro Resources under which Exxaro can      
sell the prospecting rights it holds over four properties to Ledjadja.  The     
four properties, which include Swelpan and Kleinpan, are highlighted in red     
on the map above.  Any transfer of the prospecting rights would be subject      
to approval by the Department of Mineral Resources (DMR) under Section 11 of    
the Mineral and Petroleum Resources Development Act, 2002.  The coal            
tenements contain an indicated resource of 974.5 million tonnes*, excluding     
shale content.  Coal qualities are consistent with the rest of the              
Boikarabelo tenements.                                                          
Should Exxaro exercise the put option and the DMR approve the transfer, the     
Boikarabelo mine will have the following resources and reserves, excluding      
shale content; ie an increase in total resources of 31%:                        
 Measured   Indicated   Inferred    Total       Probable                        
 Resource   Resource    Resource    Resource    Reserve                         
 (Mt)       (Mt)        (Mt)        (Mt)        (Mt)                            
1,090.5    1,526.2     1,479.6     4,096.3     744.8                           
Drilling activities                                                             
The last of six large diameter core holes drilled on the Kalkpan property       
was completed in the quarter.  Kalkpan will be the commencement point for       
the Boikarabelo open cut mine pit.  These large cores are being used to         
obtain a greater understanding of the coal qualities and washability data of    
the Boikarabelo coal.  This information is necessary to fine tune the design    
of the coal preparation plant and to add to the information being provided      
to Eskom to supplement the earlier successful test burn results.                
Eskom update                                                                    
Negotiations are progressing with Eskom on the contractual terms for the        
initial supply of 3 million tonnes of thermal coal per annum.                   
Coal handling and preparation plant update                                      
A front end engineering design (FEED) was completed by a major provider of      
coal handling and preparation plants (CHPPs) in 2011.  A further FEED was       
received during the quarter for an alternative design and operation from        
another major provider of CHPPs.  Both FEEDs are now the subject of detailed    
reviews to enable the company to determine the optimal solution from both a     
functional and cost perspective.                                                
Power supply                                                                    
Tenders are due to be received shortly for the design and construction of a     
3x15MW power station at the Boikarabelo mine site.  This proposed power         
station will meet all the mine`s power requirements for stage 1 of              
production and removes any uncertainty of power supply, should Eskom have       
difficulties with its ability to supply power to the mine in sufficient         
Recruitment of key executives                                                   
Two key positions for the development and operations of the Boikarabelo mine    
have been successfully filled in the past few weeks and the new executives      
will commence in their roles shortly.  Andy McLeod, an experienced mine         
manager in both South Africa and Australia, most recently with Anglo            
American, has been appointed as General Manager Boikarabelo Mine.  Andy will    
be responsible for overseeing the construction, development and operations      
of the mine. Bongi Ndimande, an experienced human resources executive in        
South Africa, most recently with Sasol, has been appointed as General           
Manager Human Resources.  Her role encompasses human resources, training and    
industrial relations.                                                           
Continued strong interest from financiers for debt funding                      
Potential debt funders have re-confirmed their continued strong interest in     
providing project finance for the development of the Boikarabelo mine.          
There was no activity during the quarter on Resource Generation`s uranium       
tenements in Cameroon.                                                          
Cash reserves at 31 March 2012 were $19.1 million.  Following the settlement    
for the acquisition of the Swelpan and Kleinpan properties in April 2012,       
cash reserves have reduced to $15 million.  This is expected to be              
sufficient to cover cash requirements prior to the anticipated commencement     
of mine construction.                                                           
CORPORATE INFORMATION                                                           
Brian Warner             Non-Executive Chairman                                 
Paul Jury                Managing Director                                      
Steve Matthews           Executive Director                                     
Geoffrey (Toby) Rose     Non-Executive Director                                 
Company Secretary                                                               
Steve Matthews                                                                  
Registered Office                                                               
Level 12, Chifley Tower                                                         
2 Chifley Square                                                                
Sydney NSW 2000                                                                 
Telephone:     02 9376 9000                                                     
Facsimile:     02 9376 9013                                                     
Website:  www.resgen.com.au                                                     
Mailing Address                                                                 
GPO Box 5490                                                                    
Sydney NSW 2001                                                                 
Paul Jury                                                                       
Steve Matthews                                                                  
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 March 2012                              
Consolidated statement of cash flows                                            
                                         Current     Year to date (9            
Cash flows related to operating           quarter     mths)                     
activities                                $A`000      $A`000                    
1.1     Receipts from product sales and   -           -                         
       related debtors                                                          
1.2     Payments for        (a)           (142)       (433)                     
exploration and evaluation        (1,273)     (4,440)                    
                 (b)  development        -           -                          
                 (c)  production         (691)       (2,033)                    
                 (d)  administration                                            
1.3     Dividends received                -           -                         
1.4     Interest and other items of a     221         824                       
       similar nature received                                                  
1.5     Interest and other costs of       (4)         (8)                       
finance paid                                                             
1.6     Income taxes paid                 -           -                         
1.7     Other (provide details if         -           -                         
Net Operating Cash Flows          (1,889)     (6,090)                    
       Cash flows related to investing                                          
1.8     Payment for purchases of:         -           -                         
       (a) prospects                     -           -                          
            (b) equity investments       (128)       (207)                      
            (c) other fixed assets                                              
1.12    Proceeds from sale of:   (a)      -           -                         
       prospects                         -           -                          
            (b) equity investment        -           1,500                      
                                         -           -                          
            (c) other fixed assets                                              
1.10    Loans to other entities           -           -                         
1.11    Loans repaid by other entities    -           -                         
1.12    Other- Government charges in      10          464                       
       relation to land acquisitions                                            
                                         (118)       1,757                      
Net investing cash flows                                                 
1.13    Total operating and investing     (2,007)     (4,333)                   
       cash flows (carried forward)                                             

                                         Current     Year to date (9            
                                         quarter     mths)                      
                                         $A`000      $A`000                     
1.13    Total operating and investing   (2,007)     (4,333)                    
         cash flows (brought forward)                                           
         Cash flows related to                                                  
 1.14    financing activities            -           -                          
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)                -           (1,283)                    

         Net financing cash flows        -           (1,283)                    
         Net increase (decrease) in      (2,007)     (5,616)                    
         cash held                                                              

 1.20    Cash at beginning of            20,825      25,322                     
         quarter/year to date                                                   
 1.21    Exchange rate adjustments to    270         (618)                      
item 1.20                                                              
 1.22    Cash at end of quarter          19,088      19,088                     
Payments to directors of the entity and associates of the directors             
Payments to related entities of the entity and associates of the related        
1.23     Aggregate amount of payments to the       277                          
        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           (137)                               
4.2    Development                          (1,575)                             
4.3    Production                           -                                   
4.4    Administration                       (417)                               
      Total                                (2,129)                              
Reconciliation of cash                                                          
Reconciliation of cash at the     Current       Previous                        
end of the quarter (as shown in   quarter       quarter                         
the consolidated statement of     $A`000        $A`000                          
cash flows) to the related items                                                
in the accounts is as follows.                                                  
5.1  Cash on hand and at bank     19            32                              
5.2  Deposits at call             18,730        20,453                          
5.3  Bank overdraft               -             -                               
5.4  Other (Bank guarantees)      340           340                             
    Total: cash at end of        19,089        20,825                           
    quarter (item 1.22)                                                         
Changes in interests in mining tenements                                        
                 Tenement     Nature of     Interest   Interest                 
                 reference    interest      at         at end of                
                                            beginning  quarter                  
6.1    Interests  N/A          N/A           N/A        N/A                     
      in mining                                                                 
      reduced or                                                                
6.2    Interests  N/A          N/A          N/A         N/A                     
      in mining                                                                 

Issued and quoted securities at end of current quarter                          
Description includes rate of interest and any redemption or conversion          
rights together with prices and dates.                                          
                   Total      Number     Issue      Amount                      
                   number     quoted     price per  paid up                     
                                         security   per                         
($)        security                    
7.1 +Preference     N/A                                                         
7.2 Changes during  N/A                                                         
   (a) Increases                                                                
   (b) Decreases                                                                
returns of                                                               
   capital, buy-                                                                
7.3 +Ordinary       262,895,6  262,895,6  Various    Fully                      
   securities      52         52                    paid                        
7.4 Changes during                                                              
quarter         Nil                                                          
   (a) Increases                                                                
       issues      Nil                                                          

   (b) Decreases                                                                
       returns of                                                               
capital, buy-                                                                
7.5 +Convertible    N/A                                                         
7.6 Changes during  N/A                                                         
(a) Increases                                                                
   (b) Decreases                                                                
7.7  Options                               Exercise   Expiry                    
    (description    450,000    Nil        price      date                       
    and conversion  1,875,000  Nil                   28/11/201                  
    factor)         1,875,000  Nil        $0.25      2                          
250,000    Nil                   31/12/201                  
                    450,000    Nil        $0.50      2                          
                    250,000    Nil                   7/7/2013                   
                    350,000    Nil        $0.50      17/3/2013                  
350,000    Nil                   28/11/201                  
                    375,000    Nil        $0.50      2                          
                    375,000    Nil                   17/3/2013                  
                    500,000    Nil        $0.60      17/3/2013                  
                                          $0.70      28/5/2013                  
                                          $1.00      28/5/2013                  



7.8  Issued during   Nil                                                        
7.9  Exercised       Nil                                                        
during quarter                                                              
7.10 Expired during  Nil                                                        
7.11 Debentures      N/A                                                        
(totals only)                                                               
7.12 Unsecured       N/A                                                        
    notes (totals                                                               
Compliance statement                                                            
1.   This statement has been prepared under accounting policies which comply    
    with accounting standards as defined in the Corporations Act 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: 30 April 2012                                                             
(Company secretary)                                                             
STEPHEN JAMES MATTHEWS                                                          
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     
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: 30/04/2012 09:54:12 Supplied by www.sharenet.co.za                     
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information disseminated through SENS.                                          

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