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RESOURCE GENERATION LIMITED - Quarterly report for the three months ended 31 December 2014

Release Date: 21/01/2015 11:28:00      Code(s): RSG     
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?)
 Resource Generation Limited
 ACN 059 950 337

                                  Quarterly Report
                   for the three months ended 31 December 2014

 Resource Generation is developing its Boikarabelo coal mine in the Waterberg region
 of South Africa, which accounts for 40% of the country?s remaining coal resources.
 There are probable reserves of 744.8* million tonnes of coal on 35% of the tenements
 under the company?s control (refer ASX announcement dated 16 December 2010).
 Stage 1 of the mine development targets saleable coal production of 6 million tonnes
 per annum.

Boikarabelo mine construction
Construction of the mine?s infrastructure continued during the quarter, while debt funding
was being finalised, in order to shorten the overall construction time. This included:
   .   construction camp for up to 1,320 persons;
   .   rail link bridges;
   .   power supply infrastructure;
   .   construction office complex;
   .   rail network stabilisation facility (NSF);
   .   earthworks relating to the construction offices, power supply and the NSF;
   .   permanent water supply infrastructure; and
   .   13 kilometres of water pipeline adjacent to public roads.
At the construction camp, services, kitchen and dining facilities have been installed for 1,320
people. Accommodation units have been installed to allow 400 persons to take up immediate
Construction of the first three bridges (total of seven) under and over the rail line was
completed, with some remaining punch list items being completed during January.
EHL Energy (Pty) Limited commenced erecting power poles for the 132kv power
transmission lines. Earthworks for the substation and switch room were completed, and their
construction, which is funded by a deferred payment facility, is scheduled for completion by
October 2015.
The construction offices were completed and site personnel moved in prior to Christmas.
Earthworks for the NSF were substantially completed, and final drainage and retaining walls
are being finished in January. The rail turnouts and associated signalling will be installed

Permanent water supply infrastructure was completed, including holding tanks and pumping
facilities, initially from the main borehole on Zeekoevley. This will be used during
construction of the mine and later will become one of the main water sources for mine

The Marapong effluent treatment facility in Lephalale and the 58 kilometre pipeline to
Boikarabelo are an integral part of the mine?s social and labour plan, and earthworks were
completed for a 13 kilometre section of the pipeline adjacent to a main road. Pipes were
delivered and are being installed during the current quarter.

Other than finalisation of the bridges and NSF earthworks during January, the only site
construction during the March 2015 quarter will be power infrastructure and the 13 kilometre
section of pipeline. Other activities have been deferred until debt funding is finalised.

All regulatory consents have been received, all necessary land has been acquired and rail
haulage and port access contracts sufficient for the mine?s stage 1 production have been
signed. As mentioned below, contracts have been signed that underwrite most of stage 1

Coal handling and preparation plant (CHPP)
A construction management contract was signed during the quarter for the management of
on-site mechanical and electrical installations for the CHPP. This contract is with FLSmidth
Roymec (Pty) Limited, the South African black economic empowerment subsidiary of
FLSmidth & Co, the leading supplier of complete plants, equipment and services for the
global minerals industry. Commencement of fabrication and supply is conditional on
completion of debt funding. All detailed designs and specifications have been completed.

Mobile equipment
A supply agreement was also signed during the quarter with Komatsu Southern Africa Pty
Ltd for the supply of mobile equipment for mining operations. This is supported by a loan
facility of up to US$113 million by Komatsu Financial Limited Partnership for the full cost
of the mobile equipment fleet. The agreements will not be activated until the balance of the
debt required to complete project construction has been secured.

Debt funding
Management has continued to pursue debt funding of approximately $400 million required to
complete construction of site infrastructure and the rail link. Although negotiations have been
protracted, their continuation indicates that all parties seek to agree a structure that provides
the funding. Noble Group?s loans, which have been announced previously, may form part of
a consortium?s debt finance.

Offtake contracts
Three long-term export offtake contracts have been entered into with CESC, Valu
Investments and Noble Group. These contracts underwrite most of the forecast revenue from
Boikarabelo?s stage 1 production and a substantial portion of stage 2 production.
A domestic offtake contract for 3.0 million tonnes per annum of middlings coal has been
entered into with Noble Group for the first eight years of production.
The company?s current export coal contracts (in million tonnes per annum) are as follows:


                         Stage 1                                       Stage 2
                     Y1-Y3 Y4-Y7               Y8      Y9-12     Y13-14 Y15-20         Y21-35     Y36-Y38
  CESC                  1.0      2.0           4.0       4.0        4.0       4.0         4.0          4.0
  Noble                 0.5      0.5           0.5       1.5        2.0       2.5         2.5
  Valu                  1.0      1.0           2.0       2.0        2.0       2.0
  Total                 2.5      3.5           6.5       7.5        8.0       8.5           6.5            4.0

  Note. If, as expected, stage 2 production commences earlier, both CESC and Valu tonnages will increase
        earlier by 1.0 mtpa.

Mining tenements
The coal mining rights and exploration tenements held at the end of the quarter were as
follows in South Africa (Waterberg):
. MPT15/2012 MR (74%)
. PR720/2007 (74%)
. PR678/2007 (74%)
The company has no interest in farm-in or farm-out agreements.

Cash reserves at 31 December 2014 were $37.9 million.

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
* This information was prepared under the JORC Code 2012. 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 2012 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, 31/9/2001.

Name of entity
Resource Generation Limited

ABN                                                                             Quarter ended (?current quarter?)
91 059 950 337                                                                           31 December 2014

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                                 (38)                       (162)
                             (b) development                                            (11,030)                    (18,645)
                             (c) production                                                     -                           -
                             (d) administration                                            (936)                     (1,458)
1.3       Dividends received                                                                    -                           -
1.4       Interest and other items of a similar nature received                              145                         400
1.5       Interest and other costs of finance paid                                            (2)                         (3)
1.6       Income taxes paid                                                                     -                           -
1.7       Other                                                                                 -                           -
          Net Operating Cash Flows                                                      (11,861)                    (19,868)

          Cash flows related to investing activities
1.8       Payment for purchases of: (a) prospects                                               -                            -
                                     (b) equity investments                                     -                            -
                                     (c) other fixed assets                                 (46)                       (338)

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                                         -                            -
          acquisitions and borrowings
                                                                                            (46)                       (338)
          Net investing cash flows

1.13      Total operating and investing cash flows (carried
                                                                                        (11,907)                    (20,206)
                                                                    Current quarter    Year to date (6 mths)
                                                                       $A?000                 $A?000
  1.13      Total operating and investing cash flows (brought
                                                                           (11,907)                   (20,206)
            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)                                                   (50)                       (98)

            Net financing cash flows                                           (50)                       (98)

            Net increase (decrease) in cash held                           (11,957)                   (20,304)

  1.20      Cash at beginning of quarter/year to date                        45,944                     54,337
  1.21      Exchange rate adjustments to item 1.20                            3,909                      3,863
  1.22      Cash at end of quarter                                           37,896                     37,896

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.
Two binding term sheets have been entered into with the Noble Group. A US$55.3 million loan is available for
the construction of the rail link and a US$65 million loan is available for site infrastructure. US$20 million has
been drawn down from the rail link loan.
                                                                    Amount available             Amount used
                                                                         $A?000                    $A?000
  3.1       Loan facilities                                                      147,410                22,046

  3.2       Credit standby arrangements                                                 -                      -

        Estimated cash outflows for next quarter
    4.1    Exploration and evaluation                                                                   (20)

    4.2    Development                                                                              (12,672)
    4.3    Production                                                                                        -
    4.4    Administration                                                                              (642)

           Total                                                                                    (13,334)

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                                                86                       50

     5.2   Deposits at call                                                  37,218                  45,398

     5.3   Bank overdraft                                                           -                        -

     5.4   Other (Contract retentions)                                            592                    496

           Total: cash at end of quarter (item 1.22)                         37,896                  45,944

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               581,380,338        581,380,338              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                         Nil
            and conversion factor)
   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.

Date: 21 January 2015
 (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.

JSE Sponsor: Deloitte & Touche Sponsor Services (Pty) Ltd
21 January 2015


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