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RESOURCE GENERATION LIMITED - Quarterly Report for the three months ended 31 December 2015

Release Date: 27/01/2016 10:53:00      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
(?Resource Generation? or the ?Company?)

                                  Quarterly Report
                   for the three months ended 31 December 2015

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

Following the Company's receipt of a requisition for a General Meeting from Altius Investment
Holdings (Pty) Limited (?Altius?) to replace the Company's board, the Company submitted an
application to the Takeovers Panel seeking a declaration of unacceptable circumstances in
relation to the affairs of the Company with orders that, among other things, the Company's
majority shareholders, Shinto Torii Inc. (a subsidiary of Altius), Noble Group Limited and
Public Investment Corporation SOC Limited, be excluded from voting at the General Meeting.
The Takeovers Panel declined to make such an order and, at the General Meeting held on 26th
November 2015, shareholders approved the election of a new board of directors of the
Company, comprising Denis Gately (Chairman), Lulamile Xate (Deputy Chairman), Colin
Gilligan, Dr Konji Sebati, Leapeetswe Molotsane and Robert Croll. The new board appointed
Rob Lowe as the interim Chief Executive Officer effective 26th November 2015.

On 25th November 2015, the day prior to the General Meeting, the former Managing Director
of the Company approved the retrenchment of all Sydney office staff. In addition, the former
board approved the payment of termination benefits to the two executive directors in their
expectation that their position as directors would be terminated at the General Meeting to be
held the following day. Termination benefits totalling $2,303,504 were paid to the former board
members, executives and staff on the same day. The new board is seeking legal advice in
relation to the payment of the termination benefits.

The new board met in South Africa on 14th December 2015 and subsequently the Chairman
released a board report to shareholders on 16th December 2015 outlining the board?s priorities
with respect to rebuilding the executive team, meeting with potential funders, reviewing the
Boikarabelo mine architecture and evaluating alternative mine operating models.

Cash reserves as at 31 December 2015 were $18.3 million.

Debt funding

                                            Page 1 of 8
 Resource Generation Limited
 Quarterly Report to 31 December 2015

Immediately following the General Meeting, the interim CEO made contact with the various
funders with whom the Company had been in negotiations during the preceding quarter. A
number of meetings were held with these funders in the period to 31 December 2015 with
discussions due to recommence in January 2016. The top priority of the board is to secure
appropriate funding for the Boikarabelo coal mine project in 2016.

Boikarabelo mine construction
The final stages of the Boikarabelo mine?s early works construction continued during the
quarter while securing of the funding continued. Construction of the bulk transformer yard and
substation that is separately funded by a deferred payment facility was successfully
commissioned by EHL Energy (Pty) Limited. Connection into the Eskom power grid is
scheduled for July 2016. In addition, all switches and signalling installations, including the
construction of the 400 metre permanent way of the Network Stabilisation Facility (?NSF?),
was safely and successfully commissioned. The NSF is now in a position to be used as the
construction access for the rest of the railway line system to the mine.

As previously announced, the Kubu Mining Right along with the Social and Labour Plan were
lodged with the Department of Mineral Resources and the application is currently being
reviewed. The development of the environmental impact assessment is underway and will be
lodged during the next quarter.

Focus on the mine has now shifted from construction to operational readiness as the early works
construction comes to an end.

Mining tenements
The coal mining rights and exploration tenements held at the end of the quarter were as

.   MPT15/2012 MR (74%)
.   PR720/2007 (74%)
.   PR678/2007 (74%)

The Company has no interest in farm-in or farm-out agreements.
The Company is in the process of relinquishing PR720/2007, over the properties Lisbon and
Zoetfontein, as these are distant from the Boikarabelo site and contain minimal resources that
have not been included in the stated JORC resource.

Yours faithfully

Mike Meintjes
Company Secretary

                                         Page 2 of 8
 Resource Generation Limited
 Quarterly Report to 31 December 2015

Corporate information
Denis Gately                           Non-Executive Chairman
Lulamile Xate                          Non-Executive Deputy Chairman
Robert Croll                           Non-Executive Director
Colin Gilligan                         Non-Executive Director
Leapeetswe Molotsane                   Non-Executive Director
Dr Konji Sebati                        Non-Executive Director

Company secretary
Mike Meintjes

Registered office
Level 12, Chifley Tower
2 Chifley Square
Sydney NSW 2000

Telephone:         +61 2 9376 9000
Facsimile:         +61 2 9376 9013
Website:           www.resgen.com.au

Mailing address
GPO Box 5490
Sydney NSW 2001

Denis Gately
Rob Lowe

Martin Debelle, Citadel MAGNUS
t: +61 2 8234 0100 d: +61 2 8234 0102 m: +61 409 911 189
Level 15, 61 York Street, Sydney NSW 2000 Australia
* This information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply
with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported.
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.

                                                      Page 3 of 8
  Resource Generation Limited
  Quarterly Report to 31 December 2015

                                                        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 2015

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                                    -                            -
                             (b) development                                             (2,034)                     (5,170)
                             (c) production                                                    -                            -
                             (d) administration                                          (3,656)                     (4,609)
1.3       Dividends received                                                                   -                            -
1.4       Interest and other items of a similar nature received                               53                         130
1.5       Interest and other costs of finance paid                                           (2)                          (3)
1.6       Income taxes paid                                                                    -                            -
1.7       Other                                                                                -                            -
          Net Operating Cash Flows                                                       (5,639)                     (9,652)

          Cash flows related to investing activities
1.8       Payment for purchases of: (a) prospects                                                 -                           -
                                     (b) equity investments                                       -                           -
                                     (c) other fixed assets                                 (650)                      (650)

1.9       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- Mining related deposit                                                           -                           -
                                                                                            (650)                      (650)
          Net investing cash flows

1.13      Total operating and investing cash flows (carried
                                                                                         (6,289)                    (10,302)

                                                                  Page 4 of 8
 Resource Generation Limited
 Quarterly Report to 31 December 2015

                                                                    Current quarter     Year to date (6 mths)
                                                                       $A?000                 $A?000

  1.13      Total operating and investing cash flows (brought
                                                                            (6,289)                   (10,302)
            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                                            (564)                     (564)
  1.18      Dividends paid                                                         -                         -
  1.19      Other (BEE Loan)                                                    (27)                      (69)

            Net financing cash flows                                           (591)                     (633)

            Net increase (decrease) in cash held                            (6,880)                   (10,935)

  1.20      Cash at beginning of quarter/year to date                         26,170                    28,548
  1.21      Exchange rate adjustments to item 1.20                             (975)                       702
  1.22      Cash at end of quarter                                            18,315                    18,315

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                            2,242

  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 (including termination payments) 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.
Note 1 A binding term sheet was entered into with the Noble Group for a US$65 million loan for site
infrastructure, but if drawn down would be repayable by 31 March 2016. This is included below at the ASX?s
request, but in practise would not be drawn down as in the Company?s opinion it is not a viable option and the
Company recommends that shareholders should consider it as not available.
Note 2 As disclosed in the Company's 2015 annual report, US$20 million was drawn down as an unsecured
loan from Noble Group in March 2014. It is repayable in quarterly instalments over 8 years commencing in June
2016 and has an annual interest rate of 10.75%.
Note 3 EHL Energy (Pty) Limited are building the electricity sub-station at the Boikarabelo mine which
connects the mine to the grid. The construction is subject to a deferred payment plan, with interest payable at the

                                                      Page 5 of 8
     Resource Generation Limited
     Quarterly Report to 31 December 2015

    ABSA Bank prime lending rate plus 3%. The loan is unsecured and repayable in 16 quarterly instalments from
    November 2015.
                                                                 Amount available           Amount used
                                                                      $A?000                   $A?000
      3.1      Loan facilities
                    ?    Infrastructure loan (Note 1 above)                             89,114                        -
                    ?    Unsecured loan (Note 2 above)                                  27,420                27,420
                    ?    Unsecured loan (Note 3 above)                                   6,835                 6,835

      3.2      Credit standby arrangements                                                    -                       -

    Estimated cash outflows for next quarter
    4.1     Exploration and evaluation                                                                                -

    4.2     Development                                                                                        (801)
    4.3     Production                                                                                                -
    4.4     Administration                                                                                    (2,122)

            Total                                                                                             (2,923)

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                                                    408                          16

     5.2    Deposits at call                                                       17,797                     25,927

     5.3    Bank overdraft                                                                -                           -

     5.4    Other (Contract retentions)                                                 110                      227

            Total: cash at end of quarter (item 1.22)                              18,315                     26,170

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 6 of 8
 Resource Generation Limited
 Quarterly Report to 31 December 2015

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

                                                       Page 7 of 8
 Resource Generation Limited
 Quarterly Report to 31 December 2015

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: 27 January 2016

(Company secretary)

JSE Sponsor: Deloitte & Touche Sponsor Services (Pty) Ltd


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 8 of 8

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