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RESOURCE GENERATION LIMITED - Quarterly Report for the three months ended 30 June 2012

Release Date: 31/07/2012 08:20:00      Code(s): RSG     
                              Resource Generation Limited
                                          ACN 059 950 337

                                   Quarterly Report
                       for the three months ended 30 June 2012

    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.

-     Banks are now undertaking detailed due diligence before offering terms for project
      finance to develop the company?s massive open-cut coal mine.
-     This follows Resource Generation signing a haulage contract with Transnet in June 2012
      ? overcoming its last hurdle before raising finance.
-     The project?s sovereign risk has been minimised as a result of overcoming all major
      regulatory hurdles faced by the company.
-     Assuming agreement on project finance is reached, it will underwrite confidence in the
      asset?s potential cash flow, which should increase the company?s enterprise value and
      will determine the price at which equity is raised for the balance of the Stage 1
      development cost and working capital.
-     If funding is completed by the end of 2012, construction of the mine and its
      infrastructure is expected to take 24 months, with Stage 1 saleable production (6 million
      tonnes per annum) beginning at the start of 2015.
-     Construction of Stage 2, planned to increase saleable production to more than 20 million
      tonnes per annum, is expected to be funded from cash flow and a further equity capital
      raising is not envisaged.
-     The Waterberg region accounts for 40% of South Africa?s remaining coal resources and
      Boikarabelo has probable reserves of 744.8 million tonnes* on 35% of its tenements ?
      which will make it a world-class mine by any measure.
-     A contract to buy 139 million tonnes of coal over 38 years has already been signed with
      India?s RPG Group, which owns 11.6% of Resource Generation after buying shares at
      $0.575 in September 2010 and $0.82 in June 2011.
-     A second contract has been signed with India?s Bhushan Steel to buy 500,000 tonnes per
      annum for five years and a minimum of 500,000 tonnes per annum for a further 15 years.
-     Negotiations have proceeded further with Eskom, South Africa?s power generation
      company, to supply 3 million tonnes of thermal coal per annum to its Mpumalanga
      power stations.


Transnet Freight Rail contract signed
During the quarter, the company?s BEE subsidiary, Ledjadja Coal, 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.

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.
Water Use Licence received
An Integrated Water Use Licence governing all aspects of water use at the mine was received
during the quarter from the Department of Water Affairs. This enables the mine to conduct all
activities for stage 1 of planned production and to utilise its borefield.

Mining Right appeal dismissed
As previously advised, an appeal was lodged with the South African Department of Mineral
Resources (DMR) against Ledjadja Coal?s 30 year mining right. During the quarter, the
DMR wrote to Ledjadja Coal advising that the appeal against the mining right had been
dismissed and finalised.

Eskom update
Negotiations have proceeded further 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
Detailed review and analysis of the two front-end engineering designs, which have been
completed by major providers of coal handling and preparation plants, continued during the
quarter. The reviews are nearing completion and the outcomes will enable the company to
determine the optimal solution from both a functional and cost perspective.

Power supply
Two comprehensive tenders were received for the design and construction of a 3x15MW
power station at the Boikarabelo mine site. The reviews of the tenders are nearing                                          
completion, after which the company will be in a position to determine the best alternative
from both a functional and cost perspective.

Mine management team
The two key executives responsible for the development and operations of the Boikarabelo
mine both commenced in their roles during the quarter, being the General Manager
Boikarabelo Mine and General Manager Human Resources.

Continued strong interest from financiers for debt funding
All of the potential debt funders have confirmed that they are commencing their detailed due
diligence to provide project finance for the development of the Boikarabelo mine.

There was no activity during the quarter on Resource Generation?s uranium tenements in

Cash reserves at 30 June 2012 were $12.1 million. This is expected to be sufficient to cover
cash requirements prior to the anticipated commencement of mine construction. The main
focus for the next quarter will be the negotiations for the project finance for the development
of the Boikarabelo mine.


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

* 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

                                                          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 2012

  Consolidated statement of cash flows
                                                                                  Current quarter     Year to date (12 mths)
Cash flows related to operating activities                                           $A?000                  $A?000

1.1       Receipts from product sales and related debtors                                         -                          -

1.2       Payments for       (a) exploration and evaluation                                   (41)                       (474)
                             (b) development                                               (2,538)                     (6,978)
                             (c) production                                                       -                          -
                             (d) administration                                              (172)                     (2,205)
1.3       Dividends received                                                                      -                          -
1.4       Interest and other items of a similar nature received                                205                       1,029
1.5       Interest and other costs of finance paid                                              (2)                       (10)
1.6       Income taxes paid                                                                       -                          -
1.7       Other (provide details if material)                                                     -                          -
          Net Operating Cash Flows                                                         (2,548)                     (8,638)

          Cash flows related to investing activities
1.8       Payment for purchases of: (a) prospects                                                -                           -
                                     (b) equity investments                                      -                           -
                                     (c) other fixed assets                                (4,230)                     (4,437)
1.12      Proceeds from sale of:     (a) prospects                                               -                           -
                                     (b) equity investment                                       -                           -
                                         (subsidiary)                                            -                       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 relation to land                                         26                        490
          acquisitions (refundable)
                                                                                           (4,204)                     (2,447)
          Net investing cash flows

1.13      Total operating and investing cash flows (carried
                                                                              (6,752)                  (11,085)

                                                                      Current quarter   Year to date (12 mths)
                                                                         $A?000                $A?000
   1.13      Total operating and investing cash flows (brought
                                                                              (6,752)                  (11,085)
             Cash flows related to financing activities
   1.14      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 cash held                             (6,752)                  (12,368)

   1.20      Cash at beginning of quarter/year to date                         19,088                    25,322
   1.21      Exchange rate adjustments to item 1.20                             (220)                     (838)
   1.22      Cash at end of quarter                                            12,116                    12,116

  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
   1.23       Aggregate amount of payments to the parties included in item 1.2                              278

   1.24       Aggregate amount of loans to the parties included in item 1.10                                   -

   1.25       Explanation necessary for an understanding of the transactions
              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 available           Amount used
                                                                      $A?000                    $A?000
     3.1      Loan facilities                                                          -                        -

     3.2      Credit standby arrangements                                              -                        -

    Estimated cash outflows for next quarter
   4.1     Exploration and evaluation                                                                         (7)

   4.2     Development                                                                                  (737)
   4.3     Production                                                                                           -
   4.4     Administration                                                                               (841)

           Total                                                                                       (1,585)

Reconciliation of cash
    Reconciliation of cash at the end of the quarter (as        Current quarter            Previous quarter
    shown in the consolidated statement of cash flows) to          $A?000                      $A?000
    the related items in the accounts is as follows.
    5.1    Cash on hand and at bank                                               32                          19

    5.2    Deposits at call                                                   12,084                   18,730

    5.3    Bank overdraft                                                          -                            -

    5.4    Other (Bank guarantees)                                                 -                      340

           Total: cash at end of quarter (item 1.22)                          12,116                   19,089

Changes in interests in mining tenements

                                Tenement reference       Nature of interest        Interest at     Interest at
                                                                                  beginning of       end of
                                                                                    quarter         quarter
   6.1     Interests in                       N/A                         N/A              N/A            N/A
           mining tenements
           reduced or lapsed

    6.2    Interests in                       N/A                         N/A               N/A          N/A
           mining tenements
           acquired or

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        Number              Issue price per     Amount paid
                                                              quoted                     security    up per security
                                                                                              ($)                ($)
 7.1       +Preference                                N/A
            securities (description)
 7.2       Changes during quarter                     N/A
           (a) Increases through
           (b) Decreases
               through returns of
               capital, buy-backs,
 7.3       +Ordinary securities              262,895,652         262,895,652             Various           Fully paid

 7.4       Changes during quarter
           (a) Increases                               Nil
               through issues

           (b) Decreases                               Nil
               through returns of
               capital, buy-backs
 7.5       +Convertible   debt                        N/A
           securities (description)
 7.6       Changes during quarter                     N/A
           (a) Increases through
           (b) Decreases through
                securities matured,
  7.7      Options (description                                                   Exercise price         Expiry date
           and conversion factor)                 450,000                  Nil           $0.25           28/11/2012
                                                1,875,000                  Nil           $0.50           31/12/2012
                                                1,875,000                  Nil           $0.50             7/7/2013
                                                  250,000                  Nil           $0.50            17/3/2013
                                                  450,000                  Nil           $0.60           28/11/2012
                                                  250,000                  Nil           $0.70            17/3/2013
                                                  350,000                  Nil           $1.00            17/3/2013
                                                  350,000                  Nil           $1.50            17/3/2013
                                                  375,000                  Nil           $1.55            28/5/2013
                                                  375,000                  Nil           $1.85            28/5/2013
                                                  500,000                  Nil           $2.05            28/5/2013

  7.8      Issued during quarter                       Nil
  7.9      Exercised during quarter                    Nil
 7.10      Expired during quarter                      Nil
 7.11      Debentures                                 N/A
           (totals only)
 7.12      Unsecured notes (totals                    N/A

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.

Sign here:                                            Date: 31 July 2012
                (Company secretary)



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: 31/07/2012 08:20:00 Supplied by www.sharenet.co.za                     
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