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RESOURCE GENERATION LIMITED - Board report to shareholders

Release Date: 01/06/2016 07:53:00      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?)

ASX/JSE Announcement: 01 JUNE 2016


Dear fellow shareholders

I am pleased to take this opportunity to update you on developments since my last report from the
Board on 26th February 2016.
At its meeting in Johannesburg on 19th May 2016, your board received detailed reports from the
CEO and Chairman of the Technical Committee, summarizing very satisfactory progress on all
material fronts in the three months since the last meeting of the board.

The work of the Technical Committee, established by the Board in December 2015 to review all
aspects of the project, has now been substantially completed. We have adopted a new execution
strategy that will reduce the capital cost of the project and reduce risk through the appointment of
established EPC contractors with good track records and substantial balance sheets. A new mining
plan has been developed which will maximize recovery of the coal deposit by mining all seams and
minimize out-of-pit dumping of waste resulting in increased productivity and reduced operating
costs. All efforts at the mine are now being directed towards having the project ready for
mobilization of the first of the EPC contractors on 1st October 2016.

EPC Contractors
Resource Generation Limited (ACN 059 950 337)
c/o Level 1, 17 Station Road, Indooroopilly, QLD, 4068
GPO Box 126, Albion QLD 4010. Phone +61-2-9376 9000 Fax +27 (012) 345 5314           www.resgen.com.au
      .   As announced on 6th May 2016 we have concluded a Heads of Agreement with Sedgman
          Limited for the procurement and construction of the coal handling plant for a lump sum fixed
          price of US$141 million. This represents a substantial saving over the previously announced
          estimate of US$200 million

      .   A Request for Information was issued to seven established mining contract companies in
          March 2016. All seven have responded and a Request for Proposal will be delivered to a
          short list of three candidates at the beginning of June 2016 with the appointment of the
          mining contractor expected during July 2016

Chief Operations Officer
The appointment of an experienced and talented COO has been made. A full announcement will be
made to the market during June 2016 when confidentiality restrictions are lifted by the current

Project Funding
Further progress has been made towards securing the requisite debt funding to complete
construction of the project. The base case financial model (?BCFM?) has now been completed by
the lead arranger and, based on the information contained in the BCFM, the project is believed to be
fundable without recourse to the shareholders for further equity. Development of a preferred capital
structure is at an advanced stage and is currently being negotiated with all members of the debt
club referred to in my previous updates. The board remains confident that the Company is on
course to finalize the debt funding by September so that the balance of construction may commence
during the last quarter of 2016.
In parallel with the proposed debt club funding we are investigating a high level offer of funding
received from a source in the United States.

A concept feasibility study for a 300MW coal fired power station (?IPP?) has been received and
reviewed. There is a very compelling economic case for a mouth of mine IPP with sale of the
electricity produced to the national utility or a private off-taker. The study does however indicate that
300MW IPP is not optimal and that 450MW or 600MW presents a more compelling economic case.
We are now investigating this option.

Infrastructure Arrangements
Negotiations with Transnet Freight Rail concerning the tariff, access to Richards?s Bay Coal
Terminal and construction of the rail link are proceeding in a very positive manner. An early
resolution of these issues is expected.

                                                                                                   PAGE 2
The next scheduled board meeting is to be held on 25th August 2016 and I intend to provide you
with a further report at that time.
Yours sincerely

Denis Gately
For and on behalf of the Board

For further information contact: Mike Meintjes, Company Secretary on mmeintjes@resgen.com.au
or +61 413 706 143


Australia: Martin Debelle on + 61 2 8234 0102

South Africa: Thembisa Kotobe: tel +27 11 880 3924
               Marion Brower: tel +27 71 493 0387
JSE Sponsor: Deloitte & Touche Sponsor Services (Pty) Ltd

Address:    Resource Generation Limited (ACN 059 950 337)
              c/o Level 1, 17 Station Road, Indooroopilly, QLD, 4068
              GPO Box 126, Albion QLD 4010

  Phone:      +61-2-9376 9000
  Fax:        +27 (012) 345 5314

                                                                                            PAGE 3

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