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Resource Generation Limited - Quarterly Report For The Three Months Ended 31 December 2016

Release Date: 30/01/2017 09:06:00      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 2016

 Resource Generation Limited (the ?Company? or ?Resgen?) 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. Based on a new business model for the
 Boikarabelo Coal Mine, where the intent is to service both export customers and domestic
 power stations, the JORC Code 2012 Probable Coal Reserves total 267m/t at 31 December
 2016.

General
Work continued at the Boikarabelo Mine site during the quarter in order to ensure project
readiness for the mobilisation of the EPC contractors. In parallel significant progress has been
made towards completion of the material contracts with inter alia Transnet Freight Rail
(logistics), Sedgman (CHPP and O&M contracts) and Stefanutti Stocks Mining Services (mining
contract). All of these contracts are conditions precedent to financial close of funding with
the Financing Syndicate. Completion of the project funding continues to be Company?s
highest priority.

The Company held its Annual General Meeting in Brisbane on 23 November 2016 at which
the CEO provided details on the current status of the project?s material contracts and funding.
All resolutions put to the AGM were passed.

Capital structure and cash position
The Company?s summarised capital structure at 31 December 2016 is as follows:

Issued fully paid ordinary shares:           581,380,338
Performance rights:                          6,250,000
Cash at bank:                                $4.5 million

Shareholders and potential investors should also review the Company?s Annual Report and
audited Financial Report for the year ending 30 June 2016 to fully appreciate the Company?s
financial position.

The Company has received, and is presently considering, a proposal to increase the existing
unsecured loan facility (now fully drawn down) as announced to the market in Quarterly
Report for the three months ending on 31 March 2014. The provider of the facility has offered
the facility increase in order to provide the Company with additional working capital for the
period up to the first drawdown under the proposed project funding arrangements. The


                                         Page 1 of 11
                                                                                                  Resource Generation
Limited
                                                                                       Quarterly Report to 31 December
                                                                                      2016

Company expects to finalise its consideration of the proposed increase during the month of
February 2017 and will update the market when this occurs.



Coal Resources and Reserves Statement at 31 December 2016

The Coal Resources and Coal Reserves estimate for Boikarabelo Coal Mine has been updated
in accordance with the Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves, (The JORC Code, 2012 Edition) (the JORC Code 2012) (ASX
Announcement 23 January 2017).
This update of the Coal Resources and Coal Reserves estimates relate specifically to the
Ledjadja #1 and Ledjadja #3 project areas where an optimised mine design has now been
completed. These two project areas make up 27% of Resgen?s Coal Resources and 46% of
Resgen?s Coal Reserves.
Resgen has previously secured export offtake contracts and has developed a dual
export/domestic business model intending to service both export customers and domestic
power stations. This model has resulted in a meaningful increase in the Net Present Value
(NPV) and Internal Rate of Return (IRR) of the project.
The previously announced 2010 estimated Coal Resources and Coal Reserves (?the 2010
Release?) was based on a single, low quality product for sale to domestic power stations.
An updated statement of those estimated Coal Resources and Coal Reserves as at 31
December 2016 is included below.
The total Coal Resources and Coal Reserves base at 31 December 2016 is summarised in the
table below:
                                                                                                         Coal
                                                          Area                 Coal
                 Project Area                                                                          Reserves
                                                       (hectares)          Resources (Mt)
                                                                                                         (Mt)
  Ledjadja #1 and Ledjadja #3 (*)                             830.0                     994.81            267.09
 Ledjadja #1 and Ledjadja #2(**)(i)                           877.0                     1479.6                 -
      Waterberg #1 (***) (i)                                  536.0                      426.3             314.2
        Waterberg #1(**)(i)                                   706.0                      551.7                 -
               Total                                        2,949.0                   3,711.61            581.29

(*)- determined by applying the JORC Code 2012

(**)- determined by applying the JORC Code 2004; and relates to the Inferred Resources of the Project Area

(***)- determined by applying the JORC Code 2004, and relates to the Measured and Indicated Resources of the Project Area


Note (i) -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.

                                                          Page 2 of 11
                                                                    Resource Generation
Limited
                                                             Quarterly Report to 31 December
                                                            2016



The new business model for the Boikarabelo Coal Mine has resulted in the following
variations to the 2010 Release:
Coal Resources
The Measured and Indicated Tonnes of 664.2 million tonnes have increased to 994.81 million
tonnes. This is attributable to an increase in the Measured Resource Area as a result of
additional drilling.
Coal Reserves
The Marketable Coal Reserves have reduced from 430.6 million tonnes to 267.09 million
tonnes and are now based on:

.     an export quality product with an average of 14% ash and an average 25.73 MJ/kg
      calorific value determined on an Air Dried (AD) basis; and

.     a domestic power station product with an average 19.5 MJ/kg calorific value and an
      average 31.43 % ash determined on an AD basis.
The export quality product has an average yield of 23.68% and the domestic power station
product has an average yield of 19.61 %. This equates to an overall average yield of 43.3%.

The run of mine (ROM) of 616.85 million tonnes equates to a life of mine in excess of 40 years
at an annual production rate of 15.12 million tonnes and sales for a similar period at a rate of
6.55 million tonnes per annum (Production Target). The material assumptions on which this
Production Target is based are:

.     open pit truck and shovel terrace operation,

.     minimum coal seam/mining height thickness of 0.5m,

.     dual product mine applying a minimum total yield cut off of 24%,

.     appropriate pit slope angles (overall 450),

.     appropriate mining recovery factors, dilution and contamination; and

.     beneficiation of the coal for a dual product in a high density beneficiation plant and
      applying appropriate plant factors.
The Production Target is based purely on Probable Coal Reserves and these Coal Reserves
have been signed off by the Competent Persons.




                                         Page 3 of 11
                                                                 Resource Generation
Limited
                                                        Quarterly Report to 31 December
                                                       2016

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

.   MPT 169 MR (74%)
.   PR678/2007 (74%)
.   PR720/2007 (74%)

The Company has no interest in farm-in or farm-out agreements.
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).
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 JORC resource.

On behalf of the Board of Directors
Yours faithfully


Mike Meintjes
Company Secretary
RESOURCE GENERATION LIMITED




                                      Page 4 of 11
                                                                   Resource Generation
Limited
                                                            Quarterly Report to 31 December
                                                           2016


Corporate information
Directors
Denis Gately                     Non-Executive Chairman
Lulamile Xate                    Non-Executive Deputy Chairman
Rob 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, Australia

Telephone:     +27 12 345 1057
Facsimile:     +27 12 345 5314
Website:       www.resgen.com.au

Mailing address

                  South Africa                                   Australia
 PO Box 5384                                     PO Box 126
 Rietvalleirand 0174                             Albion
 Gauteng, South Africa                           QLD 4010, Australia

Contacts

Denis Gately
Rob Lowe

Media

                 South Africa                                      Australia
 Russell and Associates (Marion Brower)          Citadel MAGNUS (Martin Debelle)
 t: +27 11 880 3924                              t: +61 2 8234 0100 m: +61 409 911 189
 42 Glenhove Rd, Johannesburg 2196               Level 15, 61 York Street, Sydney
 Gauteng, South Africa                           NSW 2000, Australia




                                          Page 5 of 11
                                                                                  Resource Generation
Limited
                                                                         Quarterly Report to 31 December
                                                                        2016


Competent Persons? Statement
The information contained in this Quarterly which relates to estimates of Coal Resources and
Coal Reserves is based on and accurately reflects reports prepared by Competent Persons
named beside the respective information in the Table below. Mr Ben Bruwer is a Principal
Consultant with VBKom (Pty) Ltd (VBKOM). Mr Riaan Joubert is the Principal Geologist
employed by Ledjadja.
Summary of Competent Persons responsible for Coal Resources and Coal Reserves
 Competent   Area of  Professional   Year of Membership
   Person  Competency   Society    Registration Number

R. Joubert        Coal             SACNASP*           2002            400040/02
                  Resources
                                                                      Member

B. Bruwer         Coal             SAIMM**            1994            701068
                  Reserves
                                                                      Member
*SACNASP - South African Council for Natural Scientific Professions

** SAIMM - Southern African Institute of Mining and Metallurgy

The above-named Competent Persons both consent to the inclusion of material in the form
and context in which it appears in this Release. Both individuals are members of a Recognised
Professional Organisation in terms of the JORC Code 2012, and both have a minimum of five
years? relevant experience in relation to the mineralisation and type of deposit being reported
on by them to qualify as Competent Persons as defined in the JORC Code 2012.
Neither Mr Bruwer, nor VBKOM has a material interest or entitlement, direct or indirect, in
the securities of Resource Generation Ltd. Mr Joubert holds no shares in Resource Generation
Limited.




                                                  Page 6 of 11
                                                                           Resource Generation
Limited
                                                                  Quarterly Report to 31 December
                                                                 2016

                                                                                              Rule 5.5
                                            Appendix 5B
       Mining exploration entity and oil and gas exploration entity
                            quarterly report
 Name of entity
 Resource Generation Limited

 ABN                                                  Quarter ended (?current quarter?)
 91 059 950 337                                       31 December 2016


                                                            Current quarter         Year to date
 Consolidated statement of cash flows
                                                                                     (6 months)
                                                                $A?000                 $A?000
 1.       Cash flows from operating activities
 1.1      Receipts from customers                                              -                     -
 1.2      Payments for
          (a) exploration & evaluation                                         -                     -
          (b) development                                                (1,896)             (3,425)
          (c) production                                                       -                     -
          (d) staff costs                                                 (931)              (2,054)
          (e) administration and corporate costs                          (453)                  (726)
 1.3      Dividends received (see note 3)                                      -                     -
 1.4      Interest received                                                   31                    66
 1.5      Interest and other costs of finance paid                             -                     -
 1.6      Income taxes paid                                                    -                     -
 1.7      Research and development refunds                                     -                     -
 1.8      Other (sale of game)                                                 -                   203
 1.9      Net cash from / (used in) operating                         (3,249)                (5,936)
          activities


 2.       Cash flows from investing activities
 2.1      Payments to acquire:
          (a) property, plant and equipment                                 (28)                 (110)
          (b) tenements (see item 10)                                          -                     -

                                             Page 7 of 11
                                                                              Resource Generation
Limited
                                                                     Quarterly Report to 31 December
                                                                    2016

                                                               Current quarter         Year to date
 Consolidated statement of cash flows
                                                                                        (6 months)
                                                                   $A?000                 $A?000
          (c) investments                                                         -                    -
          (d) other non-current assets                                            -                    -
 2.2      Proceeds from the disposal of:
          (a) property, plant and equipment                                       -                    -
          (b) tenements (see item 10)                                             -                    -
          (c) investments                                                         -                    -
          (d) other non-current assets                                            -                    -
 2.3      Cash flows from loans to other entities                                 -                    -
 2.4      Dividends received (see note 3)                                         -                    -
 2.5      Other (provide details if material)                                     -                    -
 2.6      Net cash from / (used in) investing                                  (28)               (110)
          activities


 3.       Cash flows from financing activities
 3.1      Proceeds from issues of shares                                          -                    -
 3.2      Proceeds from issue of convertible notes                                -                    -
 3.3      Proceeds from exercise of share options                                 -                    -
 3.4      Transaction costs related to issues of                                  -                    -
          shares, convertible notes or options
 3.5      Proceeds from borrowings                                                -                    -
 3.6      Repayment of borrowings                                            (686)              (1,381)
 3.7      Transaction costs related to loans and                                  -                    -
          borrowings
 3.8      Dividends paid                                                          -                    -
 3.9      Other (provide details if material)                                     -                    -
 3.10     Net cash from / (used in) financing                                (686)              (1,381)
          activities


 4.       Net increase / (decrease) in cash and
          cash equivalents for the period
 4.1      Cash and cash equivalents at beginning of                          8,209              11,955
          period
 4.2      Net cash from / (used in) operating                               (3,249)             (5,936)
          activities (item 1.9 above)

                                                Page 8 of 11
                                                                         Resource Generation
Limited
                                                                 Quarterly Report to 31 December
                                                                2016

                                                           Current quarter         Year to date
 Consolidated statement of cash flows
                                                                                    (6 months)
                                                               $A?000                 $A?000
 4.3      Net cash from / (used in) investing                            (28)                   (110)
          activities (item 2.6 above)
 4.4      Net cash from / (used in) financing                           (686)                  (1,381)
          activities (item 3.10 above)
 4.5      Effect of movement in exchange rates on                        271                      (11)
          cash held
 4.6      Cash and cash equivalents at end of                           4,517                   4,517
          period


 5.       Reconciliation of cash and cash                  Current quarter       Previous quarter
          equivalents                                          $A?000                 $A?000
          at the end of the quarter (as shown in the
          consolidated statement of cash flows) to
          the related items in the accounts
 5.1      Bank balances                                                  569                       24
 5.2      Call deposits                                                 3,948                   8,185
 5.3      Bank overdrafts                                                    -                       -
 5.4      Other (contract retentions)                                        -                       -
 5.5      Cash and cash equivalents at end of                           4,517                   8,209
          quarter (should equal item 4.6 above)


 6.       Payments to directors of the entity and their associates               Current quarter
                                                                                     $A'000
 6.1      Aggregate amount of payments to these parties included in                               199
          item 1.2
 6.2      Aggregate amount of cash flow from loans to these parties                                  -
          included in item 2.3
 6.3      Include below any explanation necessary to understand the transactions included in
          items 6.1 and 6.2
 Directors? remuneration and consulting fees




                                            Page 9 of 11
                                                                                Resource Generation
Limited
                                                                        Quarterly Report to 31 December
                                                                       2016

 7.       Payments to related entities of the entity and their                          Current quarter
          associates                                                                        $A'000

 7.1      Aggregate amount of payments to these parties included in                                       -
          item 1.2
 7.2      Aggregate amount of cash flow from loans to these parties                                       -
          included in item 2.3
 7.3      Include below any explanation necessary to understand the transactions included in
          items 7.1 and 7.2




 8.       Financing facilities available                       Total facility amount    Amount drawn at
          Add notes as necessary for an understanding of the      at quarter end          quarter end
          position                                                    $A?000                $A?000
 8.1      Loan facilities
              ?    Unsecured loan (note 1)                                   27,789                 27,789
              ?    Unsecured loan (note 2)                                     5,753                  5,753

 8.2      Credit standby arrangements                                              -                      -

 8.3      Other (please specify)                                                   -                      -

 8.4      Include below a description of each facility above, including the lender, interest rate and
          whether it is secured or unsecured. If any additional facilities have been entered into or are
          proposed to be entered into after quarter end, include details of those facilities as well.
 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 Coal 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 there are
 11 quarterly instalments remaining to be paid as at 31 December 2016.


 9.       Estimated cash outflows for next quarter                                     $A?000
 9.1      Exploration and evaluation                                                                      -

 9.2      Development                                                                              (3,260)

 9.3      Production                                                                                      -

 9.4      Staff costs                                                                              (1,146)

 9.5      Administration and corporate costs                                                          (493)

 9.6      Other ? loan repayments and mining-related deposits                                      (2,257)

 9.7      Total estimated cash outflows                                                            (7,156)


                                                  Page 10 of 11
                                                                                 Resource Generation
Limited
                                                                        Quarterly Report to 31 December
                                                                       2016



    10.       Changes in               Tenement      Nature of interest              Interest     Interest
              tenements                reference                                     at           at end of
              (items 2.1(b) and        and                                           beginning    quarter
              2.2(b) above)            location                                      of quarter

    10.1      Interests in mining            -                     -                     -            -
              tenements and
              petroleum tenements
              lapsed, relinquished
              or reduced
    10.2      Interests in mining            -                     -                     -            -
              tenements and
              petroleum tenements
              acquired or increased


Compliance statement
1          This statement has been prepared in accordance with accounting standards and policies which
           comply with Listing Rule 19.11A.
2          This statement gives a true and fair view of the matters disclosed.




Sign here:                                                                       Date: 30 January 2017
                        (Company secretary)


Print name:          MICHAEL MEINTJES
JSE Sponsor: Deloitte & Touche Sponsor Services (Pty) Ltd


Notes
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 that wishes to
           disclose additional information is encouraged to do so, in a note or notes included in or attached
           to this report.
2.         If this quarterly report has been prepared in accordance with Australian Accounting Standards,
           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. If this quarterly report has been
           prepared in accordance with other accounting standards agreed by ASX pursuant to Listing
           Rule 19.11A, the corresponding equivalent standards apply to this report.
3.         Dividends received may be classified either as cash flows from operating activities or cash flows
           from investing activities, depending on the accounting policy of the entity.




                                                 Page 11 of 11

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