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RESOURCE GENERATION LIMITED - Quarterly Report for the three months ended 31 March 2016

Release Date: 26/04/2016 09:10:00      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 March 2016

 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.

At its meeting in Johannesburg on 18 February 2016, the board received detailed reports from
the CEO and the Technical Committee on the progress of reviewing all aspects of the
Boikarabelo project. Substantial progress has been made on all material fronts. Work
undertaken by the Technical Committee resulted in the following recommendations:

   .   a revised mining plan based on selective mining and in-pit dumping with the aim of
       maximizing productivity and reducing operating costs;
   .   a different development approach to the Boikarabelo coal resource which can achieve
       higher CHPP yields than previously expected;
   .   a project development strategy that transfers mine construction risk by the appointment
       of a small number of reputable EPC contractors with substantial balance sheets,
       allowing for recourse in the event of failure or delay, and managed by a small in-house
       specialist owner?s team; and
   .   a strategy to reduce capital costs and minimize risk by appointing a suitably qualified
       contract miner.

The Technical Committee advised, based on market inquiries, that the currently depressed
market for EPC contractor services provides an ideal opportunity to minimise mine
development costs and embed a low cost of capital for the life of the Boikarabelo project.

An international search agent has been engaged to identify ?best in class? candidates to be
appointed to the South Africa-based in-house specialist owner?s team referred to above. The
work undertaken to date by the Technical Committee has given the board an increased level of
confidence in the execution of the project post completion of the debt funding and the economic
prospects of the project after first production of coal.

Development opportunity
In order to expand the economic base of the Boikarabelo project, the preparation has been fast
tracked of a bankable feasibility study for the construction of a 260MW independent mine-
                                         Page 1 of 9
 Resource Generation Limited
 Quarterly Report to 31 March 2016

mouth power station to operate as an approved independent power producer (?IPP?). The
project has already received the environmental and land use approvals required for the IPP.
Should the feasibility study confirm economic viability, construction of the IPP will provide
the Company with optionality with regard to its domestic coal production and an additional
revenue stream. The project would also transit the Company from the coal sector to the more
diversified and higher-valued energy sector. Supply agreements with both the public and
private sectors are being explored.

Infrastructure arrangements
Our relationships with key stakeholders in South Africa including the Department of Mineral
Resources and Transnet Freight Rail (?TFR?) continue to develop in a positive manner.
Discussions with TFR concerning tariffs and the project?s access to the Richards Bay Coal
Terminal are in progress. A successful negotiation will result in our costs of logistics being
substantially reduced from earlier plans.

Other activities
While the Technical Committee and project funding initiatives are in progress, little
construction work is required at the mine. The focus at site is on maintenance of the facility
and structures already completed and continuation of the environmental and social
responsibility programs.

Debt funding
On 22 January 2016, the Company appointed Grant Samuel to advise the Board in connection
with the funding of the Boikarabelo Coal Mine project (?the project?). In-depth discussions,
including due diligence investigations, with a number of parties concerning proposed funding
solutions have taken place during the quarter. Of the proposals investigated by the Company
during this period, the preferred funding solution is the debt funding referred to in previous
announcements which is being negotiated with FirstRand Bank Limited, acting through its
Rand Merchant Bank division (?RMB?), Hong Kong & Shanghai Banking Corporation PLC
(?HSBC?), Noble Group Limited, Public Investment Corporation of South Africa SOC Limited
(?PIC?), Industrial Development Corporation Limited (?IDC?), Export Finance and Insurance
Corporation and UK Export Finance (collectively ?the debt club?). All members of the debt
club have renewed their commitment to work with the Company to finalise a commercially
competitive and sustainable funding solution as soon as possible.

The strategic realignment of the project with South Africa, and the appointment of South
African representatives to the Board and the appointment of a South African management team
has secured a high degree of comfort and goodwill from the South African-based prospective
lenders, HSBC, RMB, PIC and IDC, from whom the bulk of the debt funding will be sourced.

On 17 February 2016, the Company appointed RMB as lead arranger and co-lender for the
financing of the project. RMB is a leading financier in the resource sector in South Africa and
enjoys an excellent reputation for the completion of project funding packages, including a very
recent R10 billion debt facility for a client despite the prevailing difficult economic climate.
The Company is confident that RMB and all members of the debt club are committed to
complete the funding process in the shortest time possible. In conjunction with RMB, the
Company is considering other providers of funding and credible solutions will be incorporated
into the debt club as required.

                                          Page 2 of 9
 Resource Generation Limited
 Quarterly Report to 31 March 2016

The Company previously made announcements on 30 September 2015 concerning a
Memorandum of Understanding between the Company and HAB & JPR Priv?e (?HAB?),
which was there described as ?a Swiss private company?. The newly appointed management
and Board of the Company has, since those announcements, sought clarification as to the
identity of the principals of HAB, the source of funds, the track record of the ultimate lender
and the ability of HAB to provide funding as previously suggested in the 30 September 2015
announcements. The Company has not received satisfactory responses, or even confirmation
that HAB is able to provide such funding. Accordingly, the Company has, on the advice of
Grant Samuel and the legal advisers appointed in relation to this matter, ceased communication
with HAB to pursue a funding solution.

Cash reserves as at 31 March 2016 were $A14.7 million.

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

.   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.
The Mining Right Application for Kubu, adjacent to Boikarabelo, was lodged at the end of
2015. Kubu was previously known as Waterberg No 1 and encompasses the farm Koert Louw
Zyn Pan (PR678/2007).

On behalf of the Board of Directors
Yours faithfully

Mike Meintjes
Company Secretary

                                          Page 3 of 9
 Resource Generation Limited
 Quarterly Report to 31 March 2016

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 1, 17 Station Road
Indooroopilly, QLD, 4068

Telephone:          +61 2 9376 9000
Facsimile:          +27 12 345 5314
Website:            www.resgen.com.au

Mailing address
PO Box 126
QLD 4010

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 4 of 9
  Resource Generation Limited
  Quarterly Report to 31 March 2016

                                                        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 March 2016

Consolidated statement of cash flows
                                                                                Current quarter       Year to date (9 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                                               (648)                     (5,818)
                             (c) production                                                    -                            -
                             (d) administration                                          (1,377)                     (5,986)
1.3       Dividends received                                                                   -                            -
1.4       Interest and other items of a similar nature received                               40                         170
1.5       Interest and other costs of finance paid                                           (2)                          (5)
1.6       Income taxes paid                                                                    -                            -
1.7       Other                                                                                -                            -
          Net Operating Cash Flows                                                       (1,987)                    (11,639)

          Cash flows related to investing activities
1.8       Payment for purchases of: (a) prospects                                                 -                           -
                                     (b) equity investments                                       -                           -
                                     (c) other fixed assets                                 (280)                      (930)

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                                                           -                           -
                                                                                            (280)                      (930)
          Net investing cash flows

1.13      Total operating and investing cash flows (carried
                                                                                         (2,267)                    (12,569)

                                                                  Page 5 of 9
 Resource Generation Limited
 Quarterly Report to 31 March 2016

                                                                    Current quarter     Year to date (9 mths)
                                                                       $A?000                 $A?000

  1.13      Total operating and investing cash flows (brought
                                                                            (2,267)                   (12,569)
            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                                            (685)                   (1,249)
  1.18      Dividends paid                                                         -                         -
  1.19      Other (BEE Loan)                                                    (26)                      (95)

            Net financing cash flows                                           (711)                   (1,344)

            Net increase (decrease) in cash held                            (2,978)                   (13,913)

  1.20      Cash at beginning of quarter/year to date                         18,315                    28,548
  1.21      Exchange rate adjustments to item 1.20                             (621)                        81
  1.22      Cash at end of quarter                                            14,716                    14,716

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                              318

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

  1.25       Explanation necessary for an understanding of the transactions
             Directors' remuneration for the period 26 Nov 2015 ? 31 March 2016 and consulting 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 US$20 million was drawn down as an unsecured loan from Noble Group in March 2014. It is repayable
in quarterly instalments of capital and interest over 8 years commencing in February 2017 and has an annual
interest rate of 10.75%.
Note 2 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 ABSA
Bank prime lending rate plus 3%. The loan is unsecured and repayable in 16 quarterly instalments from November

                                                      Page 6 of 9
     Resource Generation Limited
     Quarterly Report to 31 March 2016

                                                                     Amount available             Amount used
                                                                        $A?000                      $A?000
      3.1      Loan facilities
                    ?    Unsecured loan (Note 1 above)                                26,082               26,082
                    ?    Unsecured loan (Note 2 above)                                 6,353                6,353

      3.2      Credit standby arrangements                                                 -                      -

    Estimated cash outflows for next quarter
    4.1     Exploration and evaluation                                                                            -

    4.2     Development                                                                                    (1,135)
    4.3     Production                                                                                            -
    4.4     Administration                                                                                 (2,159)

            Total                                                                                          (3,294)

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                                                  25                      408

     5.2    Deposits at call                                                   14,607                      17,797

     5.3    Bank overdraft                                                             -                          -

     5.4    Other (Contract retentions)                                               84                      110

            Total: cash at end of quarter (item 1.22)                          14,716                      18,315

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 March 2016

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 8 of 9
 Resource Generation Limited
 Quarterly Report to 31 March 2016

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: 26 April 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 9 of 9

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