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Resource Generation Limited - Shareholder Update: Boikarabelo Development Timetable

Release Date: 14/10/2016 07:05:00      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?)
14 October 2016


ASX Announcement



          Shareholder Update: Boikarabelo Development Timetable
Dear fellow shareholders
Since my last report on 1 June 2016, our company has taken significant steps towards our objective
of constructing the Boikarabelo mine and delivering coal to market in approximately two years. I want
to pay tribute to the tireless efforts of our executive team, assisted by the Board, in sticking to a
demanding timeline across many work streams.
We have provided regular market updates, including the Appointment of Chief Operating Officer (3
June 2016), Agreement of Commercial Terms with Funding Syndicate for Project Finance (8 August
2016) and Appointment of Preferred Mining Contractor and Project Funding Update (4 October 2016).
We will shortly be releasing our results for the September 2016 quarter.
To better accommodate the timing and consideration of contract negotiations and tendering
processes we have had to be more flexible with scheduled board meetings. The meeting originally
planned for 25 August 2016, was postponed to 22 September 2016, and finally held in Johannesburg
on 5 and 6 October 2016.
Boikarabelo Project Update
The extensive review of mine design, mining options, construction, and contracting options during this
year has enabled the company to significantly reduce the capital requirement for mine development
and avoid substantial development and operating risks in the future. The benefits of this new strategic
approach to project development will be reflected in the terms of the contracts and agreements
currently in negotiation. Highlights of the progress made since June include:

      .      Appointment commencing 1 July 2016 of a very experienced mining executive as Chief
             Operating Officer of Ledjadja Coal, Zirk van der Bank;
      .      Negotiation of detailed terms sheet for the construction of the coal handling and preparation
             plant by Sedgman Limited (Sedgman) and a number of leading Australian mining services
             SMEs, and expected to be finalised by 31 October 2016;
Resource Generation Australia (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
Directors: Denis Gately (Chairman), Lulamile Xate (Deputy Chairman), Robert Croll, Dr. Konji Sebati,
Colin Gilligan, Leapeetswe Molotsane                                                                   www.resgen.com.au
CEO: Rob Lowe
Company secretary: Mike Meintjies
   .   Concurrently, we are negotiating both an operating and maintenance agreement and an
       ancillary works program contract with Sedgman, again with a view to finalising both by 31
       October 2016;
   .   Selection of our preferred mining contractor, Stefanutti Stocks Mining Services, a highly
       regarded South African contracting firm, and a detailed term sheet currently under negotiation
       with a view to executing a formal contract by 30 November 2016;
   .   In principle agreement with Transnet Freight Rail on a commercial rail logistics agreement for
       transport of export coal to Richards Bay Coal Terminal. Final negotiations are currently under
       way with a view to execution of formal contract documents by 30 November 2016;
   .   We are also working with TFR for export capacity at Richard?s Bay Coal Terminal (RBCT) for
       the export of our export coal production. A RBCT solution will result in a considerable saving
       compared with the original Port of Durban proposal;
   .   At the mine the operations team is engaged on ensuring that the site is ready to receive the
       EPC contractors immediately following financial close of our project funding;
   .   Additional drilling programme aimed at confirming coal processing design data, verifying
       geotechnical assumptions and updating the geological modelling was completed; a new
       geological and coal quality model has been built; and
   .   Extensive reviews have led to optimisation of capital estimates and extensive risk mitigation.

Project Funding
In parallel, we have been engaging with potential financiers to secure the best funding package for
the required finance. At this stage, a funding syndicate including but not limited to RMB, PIC, IDC and
Noble is our preferred source of funds ? and all efforts are currently directed at achieving the required
internal credit committee approvals by mid-December 2016. In parallel discussions continue with
Export Finance and Insurance Corporation (EFIC) for it to conduct due diligence and join the syndicate
and we are attending to the satisfaction of the Conditions Precedent to financial close.
This represents a slight slippage in our earlier preferred timeline, but if achieved, should enable us
to reach financial close no later than March 2017. This translates into ?First Coal? by Q1 2019


Coal Price Movement
The slight delay in financial close of the project funding has improved confidence amongst the
funding syndicate as the seaborne thermal coal market has shifted significantly upward in the past
three months. Sales are now being reported at a price of $75/tonne, which is more than 40% above
the long-term price assumed for our financial modelling. However, we remain cautiously optimistic
only, as increases of that size over such a short timeframe may be more evidence of volatility than
an emerging trend. It is our opinion that the upward trend will continue and Q1 2019 should
therefore deliver higher coal prices than we have used in our modelling.

Independent Power Producer (IPP)
On 10 October 2016 the South African Energy Minister made a long-awaited announcement of the
successful bids for the first round of coal-fired IPPs. The Minister also indicated that the Integrated
Energy Plan and Integrated Resource Plan were to be considered by Cabinet in the course of the
next week and shortly thereafter would be released for public comment. At this stage, it is not clear
when invitations for the second round of coal-fired IPPs will be issued. It could be imminent or as late


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as the first quarter of 2018. We remain in a good position to make a decision to participate in that
second round, and will keep you informed.


Website
A new website has been prepared and is now live. Shareholders may access the website on
www.resgen.com.au

Other
The next scheduled board meeting is to be held on 22 November 2016, immediately prior to our
Annual General Meeting on 23 November 2016. I intend to provide you with a further report at that
time.
I look forward to meeting many of you in person at the AGM.
Yours sincerely


Denis Gately
Chairman
For and on behalf of the Board


About Resgen:

Resource Generation Limited (Resgen) is an emerging ASX and JSE-listed energy company,
currently developing the Boikarabelo Coal Mine in South Africa?s Waterberg region. The Waterberg
accounts for around 40% of the country?s currently known coal resources. The operating subsidiary,
Ledjadja Coal, is currently updating the previously reported Probable Coal Reserves as a result of
preparing a new mine plan and execution strategy as part of the Project funding. Stage 1 of the mine
development targets saleable coal production of 6 million tonnes per annum. Ledjadja Coal is a Black
Economic Empowerment subsidiary (BEE) operating under South Africa?s Broad-based Black
Economic Empowerment Act, Section 9(5): Codes of Good Practice

ResGen?s primary shareholders are the Public Investment Corporation of South Africa (PIC), Noble
Group and Altius Investment Holdings.

For further information please contact:

Mike Meintjes, Company Secretary on mmeintjes@resgen.com.au or +61 413 706 143

Media enquiries:

Australia: Martin Debelle on + 61 282 340 102

South Africa: Charmane Russell/Thembisa Kotobe on +27 11 880 3924

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



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