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RESOURCE GENERATION LIMITED - Quarterly Report for the three months ended 31 December 2012

Release Date: 25/01/2013 08:40:00      Code(s): RSG     
for the three months ended 31 December 2012

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?) 

 Quarterly Report
 for the three months ended 31 December 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.

   The financiers mandated to provide a project finance facility for the development of the
   Boikarabelo mine are now finalising their credit submissions to obtain formal credit
   approvals for the facility. The terms sheet supporting these submissions was agreed
   immediately prior to Christmas. Final decisions by the credit committees are anticipated
   by the end of February.
   Assuming binding offers for project finance are received, the company will progress to
   an equity raising for the balance of the funds needed to develop the mine.
   Key achievements to date have been:
    o Obtaining a 30 year mining right.
    o Life?of-mine development consent for construction of the mine and the rail link to
      the existing network.
    o Obtaining an integrated water use licence, that includes utilising bore water from the
      company?s properties, which will be sufficient for stage 1 of operations.
    o A rail haulage contract with Transnet with confirmed allocation to meet export and
      domestic sales requirements for stage 1 of operations.
    o A port access contract which is sufficient for stage 1 export requirements.
    o Three significant export contracts to supply thermal coal to Indian customers and a
      global trader.
    o Acquisition of all land required for the mine and for the rail link, including some
      servitude arrangements.
    o Sufficient power supply arranged for stage 1 of operations.
    o A fully compliant BEE structure.
   The project?s sovereign risk has been minimised as a result of overcoming all major
   regulatory hurdles faced by the company.
   If funding is completed by the end of March 2013, construction of the mine, its
   infrastructure and the rail link is expected to take 24 months, with Stage 1 saleable
   production (6 million tonnes per annum) beginning at the end of the first quarter in 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.


Financing Syndicate Progress
At the start of the quarter, Resource Generation?s BEE Boikarabelo project awarded a
mandate to six South African and global banks and other financiers (the Financing
Syndicate) to provide project debt finance for the construction of the Boikarabelo mine. The
financiers are:

        Absa Capital, a division of Absa Limited, a member of the Barclays Bank Group;
        Caterpillar Financial SARL;
        FirstRand Bank Limited, acting through its Rand Merchant Bank division;
        Hong Kong & Shanghai Banking Corporation (HSBC);
        Nedbank Capital, a division of Nedbank Limited; and
        Standard Chartered Bank.

The award of the mandate to the Financing Syndicate followed an extensive tender process
(including other global banks) and negotiation of key commercial terms.

Due diligence reports have been finalised by independent experts engaged on behalf of the
financiers. The experts are Bowman Gilfillan Inc (legal), Coffey Mining, Jardine Lloyd
Thompson, KPMG and Wood McKenzie.

At the end of the quarter a credit submissible terms sheet was agreed with the Financing
Syndicate. The financiers are now processing their credit submissions to obtain formal credit
approvals for the facility and these are targeted for receipt by the end of February. Financial
close and first funding are expected to be subject to conditions precedent typical of project
finance facilities of this nature, including raising sufficient equity capital to fully fund the
balance of the expected capital expenditure and project costs for mine development.

Assuming credit approval for the debt funding is obtained as envisaged, the company will
proceed with an equity raising for the balance of the funds needed to develop the mine. The
company is confident that the mine?s projected cash flow potential and value will be
recognised in the price of the proposed equity raising. However, the terms of the equity
raising and participants in the raising are still to be determined.

Port Access Arrangements
A port access contract was signed with Bulk Connections which operates a multi-purpose
terminal at the Port of Durban. Under the take or pay contract, Bulk Connections, which is
part of the Bidvest Group, will allocate Boikarabelo sufficient stockpile capacity to ship coal
at least once per week, enabling the company to meet its Stage 1 export targets from early

Additional coal offtake contract
A third coal offtake contract for the Boikarabelo project has been entered into with Noble
Resources International Pte. Ltd. (a wholly owned subsidiary of the Noble Group) (Noble)
for the supply of 2.5 million tonnes of coal over a five year period, after production
commences at the Boikarabelo mine. Coal prices will be set by reference to an
internationally recognised index at the time of each shipment.

                                          Page 2 of 9

Resource Generation and Noble have also agreed to have good faith discussions with regards
to a strategic marketing alliance for Boikarabelo coal.

Eskom update
Eskom is studying technical assessments from its preferred power stations relating to
contractual terms for the initial supply of 3 million tonnes of thermal coal per annum.

Coal handling and preparation plant update
The optimal solution has been finalised from both a functional and cost perspective and is
being incorporated into the mine design. Aveng E+PC has commenced detailed design work.

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

Cash reserves at 31 December 2012 were $6.5 million. Immediately after the end of the
quarter, Resource Generation agreed to issue a secured debenture to Noble to raise $20
million cash to augment available funding and progress construction activities at its
Boikarabelo coal mine. Funds were received on 8 January 2013 and are on normal
commercial terms. The debenture is repayable in December 2013. The raising has been
necessary due to a delay in the completion of the project debt finance from the Company?s
initial expectations. Construction activities are scheduled to commence on site on
11 February 2013, which will facilitate the commencement of the major construction as soon
as possible after the completion of funding.

The main focus for the next quarter will be finalising the project finance for the development
of the Boikarabelo mine and the subsequent equity raising to meet the required total
expenditure required to develop the mine.

                                          Page 3 of 9

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

                                                  Page 4 of 9

                                                          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 December 2012

  Consolidated statement of cash flows
                                                                                  Current quarter      Year to date (6 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                                   (15)                        (38)
                             (b) development                                               (3,603)                     (5,923)
                             (c) production                                                      -                            -
                             (d) administration                                              (537)                       (739)
1.3       Dividends received                                                                     -                            -
1.4       Interest and other items of a similar nature received                                 89                         257
1.5       Interest and other costs of finance paid                                             (3)                          (3)
1.6       Income taxes paid                                                                      -                            -
1.7       Other (provide details if material)                                                    -                            -
          Net Operating Cash Flows                                                         (4,069)                     (6,446)

          Cash flows related to investing activities
1.8       Payment for purchases of: (a) prospects                                                -                           -
                                     (b) equity investments                                      -                           -
                                     (c) other fixed assets                                  (189)                       (470)
1.12      Proceeds from sale of:     (a) prospects                                               -                           -
                                     (b) equity investment                                       -                           -
                                         (subsidiary)                                            -                           -
                                     (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                                       130                         731
          acquisitions    and     development expenditure
                                                                                              (59)                        261
          Net investing cash flows

1.13      Total operating and investing cash flows (carried
                                                                                           (4,128)                     (6,185)

                                                                    Page 5 of 9
Resource Generation Limited
Quarterly Report to 31 December 2012

                                                                    Current quarter   Year to date (6 mths)
                                                                       $A?000                $A?000
 1.13      Total operating and investing cash flows (brought
                                                                            (4,128)                   (6,185)
           Cash flows related to financing activities
 1.14      Proceeds from issues of shares, options, etc.                        113                       113
 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)                                                   (108)                   (1,269)
 1.19      Other (Mining Licence Deposit)                                     1,846                     1,846

           Net financing cash flows                                           1,851                       690

           Net increase (decrease) in cash held                             (2,277)                   (5,495)

 1.20      Cash at beginning of quarter/year to date                          8,855                    12,116
 1.21      Exchange rate adjustments to item 1.20                              (27)                      (70)
 1.22      Cash at end of quarter                                             6,551                     6,551

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                              271

 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.
On 8 January 2013, the company issued a secured debenture to Noble and received $20 million cash to augment
available funding and progress construction activities at its Boikarabelo coal mine. The debenture is repayable
in December 2013.
                                                                  Amount available         Amount used
                                                                       $A?000                $A?000
 3.1       Loan facilities                                                             -                      -

 3.2       Credit standby arrangements                                                 -                      -

                                                      Page 6 of 9
    Resource Generation Limited
    Quarterly Report to 31 December 2012

    Estimated cash outflows for next quarter
   4.1    Exploration and evaluation                                                                  (250)

   4.2    Development                                                                               (4,106)
   4.3    Production                                                                                       -
   4.4    Administration                                                                              (686)

          Total                                                                                     (5,042)

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                                               203                    148

    5.2   Deposits at call                                                   6,348                    8,707

    5.3   Bank overdraft                                                           -                       -

    5.4   Other (Bank guarantees)                                                  -                       -

          Total: cash at end of quarter (item 1.22)                          6,551                    8,855

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

                                                   Page 7 of 9
Resource Generation Limited
Quarterly Report to 31 December 2012

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              263,345,652         263,345,652              Various          Fully paid

 7.4       Changes during quarter
           (a) Increases                          450,000             450,000               $0.25               $0.25
               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)               1,875,000                  Nil           $0.50             7/7/2013
                                                1,875,000                  Nil           $0.50            13/3/2014
                                                  250,000                  Nil           $0.50            17/3/2013
                                                  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               450,000                  Nil             $0.25         28/11/2012
 7.10      Expired during quarter                 450,000                  Nil             $0.60         28/11/2012
 7.11      Debentures                                N/A
           (totals only)
 7.12      Unsecured notes (totals                    N/A

                                                       Page 8 of 9
Resource Generation Limited
Quarterly Report to 31 December 2012

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: 24 January 2013
                (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.

                                        == == == == ==

                                          Page 9 of 9

25 January 2013

JSE Sponsor:
Macquarie First South Capital (Proprietary) Limited

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