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RSG - Resource Generation Limited - Resgen signs Transnet contract

Release Date: 27/06/2012 09:23:01      Code(s): RSG
RSG - Resource Generation Limited - Resgen signs Transnet contract              
Resource Generation Limited                                                     
Registered in Australia under the Corporations Act, 2001 (Cth) with             
registration number ACN: 059 950 337                                            
ISIN: AU000000RES1                                                              
Share Code on the ASX: RES                                                      
Share Code on the JSE: RSG                                                      
("Resgen" or the "Company")                                                     
Resgen signs Transnet contract                                                  
Resgen has overcome its remaining major hurdle before proceeding to finalise    
project finance for its Boikarabelo open-cut coal mine in the Waterberg region  
of South Africa.                                                                
The company`s BEE subsidiary, Ledjadja Coal, has signed a ten-year take-or-pay  
rail haulage contract with Transnet Freight Rail (TFR) to haul up to 6 million  
tonnes of coal per annum.                                                       
`Having previously secured the major regulatory approvals, crossing this        
bridge to finalise a contract with TFR will enable us to progress project       
finance with banks, which have confirmed they are keen to provide funding.      
Once all debt and equity funding is in place, we will then be able to begin     
construction of the mine and infrastructure,` said Paul Jury, managing          
director of Resource Generation.                                                
`Our agreement with TFR is a significant step towards opening up the Waterberg  
region which has one of South Africa`s largest remaining coal deposits.         
Boikarabelo is a massive project which will provide a major boost to the South  
African economy and create a substantial number of jobs for many years.  We     
can now see the light at the end of the tunnel and, if construction commences   
in the last quarter of this year, production could start in late 2014 and we    
can begin to supply our customers` contracts.                                   
`We have had to make compromises in order to achieve a signed contract with     
TFR, in particular agreeing to a condition for the allocation of capacity.  We  
are confident, however, that Ledjadja Coal will be provided with its required   
allocation because our studies show that sufficient rail capacity for our       
target production should be available once TFR has completed the minimal        
upgrade works that are required.  We have indicated we are prepared to          
complete these works for TFR if there is a delay.`                              
The main terms of the contract are as follows:                                  
-    The initial term is for 10 years with provision to extend for a further    
    10 years.                                                                   
-    The contract allows for 4 million tonnes in the first year, 5 million      
tonnes in the second year and 6 million tonnes per annum thereafter.        
    Should Eskom elect to contract directly with TFR (which is Eskom`s          
    intention) for the proposed domestic purchases (currently under             
    negotiation), the take-or-pay quantities in the contract will reduce to     
export tonnage only.                                                        
-    The contract specifies an indicative tariff for the current year.  The     
    actual tariff will be determined annually by negotiation.                   
-    The contract is conditional on Ledjadja Coal completing construction of    
the 36 kilometre rail link to the existing rail network.                    
-    The contract is also conditional on TFR completing its processes to        
    determine a fair, proportional and equitable allocation of rail capacity    
    to all interested parties from the Waterberg.  If these are not completed   
by 31 December 2012, this condition is automatically waived and the above   
    tonnage allocation becomes firm.                                            
27 June 2012                                                                    
JSE Sponsor:                                                                    
Macquarie First South Capital (Proprietary) Limited                             
Paul Jury, Managing Director on (02) 9376 9000 or                               
Steve Matthews, Company Secretary on (02) 9376 9000                             
Media enquiries                                                                 
Anthony Tregoning (02) 8264 1000 or 0411 852 448                                
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.  Stage 1 of the mine  
development targets saleable coal production of 6 million tonnes per annum.     
Date: 27/06/2012 09:23:01 Supplied by www.sharenet.co.za                     
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information disseminated through SENS.                                          

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