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Resource Generation Limited - Quarterly Report For The Three Months Ended 31 March 2017

Release Date: 28/04/2017 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?)


                                   Quarterly Report
                     for the three months ended 31 March 2017

 Resource Generation Limited (the ?Company? or ?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 Coal Resources and Coal Reserves for the Boikarabelo Coal Mine, held through the operating
 subsidiary Ledjadja Coal, were recently updated based upon a new mine plan and execution
 strategy. The Boikarabelo Coal Resources total 995Mt and the Coal Reserves total 267Mt applying
 the JORC Code 2012 (ASX Announcement 23 January 2017). 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 Broadbased 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.

Project Funding
The Company?s primary focus this quarter has been to finalise the key material agreements
relating to the mine and logistics. These include the Engineering, Procurement and
Construction (EPC) contract for the Coal Handling and Preparation Plant (CHPP), the CHPP
Operations & Maintenance contract, the Ancillary Works EPC contract, the Transportation of
Coal Agreement, the Port Service Level Agreement and the Mining Contract. A number of
these contracts have been concluded and submitted to the Lenders and Independent
Technical Expert for review. In parallel good progress has been made towards the funding of
the rail link and the rail link EPC construction contract. Activities continue to be undertaken
at the mine site preparing for the arrival of the EPC contractors. We are hopeful that this
orderly and deliberate process will result in the conclusion of funding arrangements for the
project during 2017 (ASX Announcement: 2 March 2017).

Independent Power Producer (IPP)

In parallel to advancing the development of the mine, the Company has continued to plan to
also operate as an Independent Power Producer, providing another option for the domestic
sale of coal. We have appointed external consultants, J Maynard and WaterBorne Capital, to
assist us with the selection and appointment of the main EPC contractor and preparation of
a Joint Development Agreement. At the same time, we are working to be ready to submit our
proposal when the Department of Energy opens the next submission window. This is expected
to be towards the end of 2017.

Working Capital Facility

                                           Page 1 of 10
                                                                        Resource Generation Limited
                                                                   Quarterly Report to 31 March 2017

The Company signed an extension of the Facility Agreement of 3 March 2014 (ASX
Announcement: 14 March 2017), under which Noble Resources International Pte Ltd has
agreed to make available further funds of up to US$8.4M to the Company's subsidiary,
Ledjadja Coal Pty Ltd (LCL), to fund the operations and development of the mine whilst project
funding is secured. Those additional funds are to be available in three tranches over the
period to 30 September 2017.

Key terms associated with the extension of the Facility include:

       *The additional funds together with the existing Facility of US$20m are unsecured and
       subject to a parent company guarantee;
       *Interest accrues at 10.75% pa and can be capitalised on a six-monthly basis unless
       the borrower elects otherwise to pay such interest;
       *The right for the Lender to appoint a nominee to the Board of the Company and
       approve one of the Company's nominees to the Board of LCL, subject to regulatory
       and governance requirements; and
       *The Facility is repayable in instalments commencing from 30 September 2017 with a
       termination date of 10 March 2024, however the additional funds made available
       under the extension of the Facility is repayable from the proceeds of the first
       drawdown of funding secured for the Project.

As part of negotiating the extension to the Facility, the Company has also agreed to restate
the existing domestic offtake and coal marketing agreements it has with the Lender and its
related bodies corporate with effect from 31 December 2013, including the incorporation of
a term sheet signed in 2013.

Subsequent to quarter end the Group received the first drawdown of US$2.4m under the
extended Facility Agreement and has commenced the process of appointing the Lender
nominee to the Board of the Company and obtain the approval for the appointment of a
further director to the Board of LCL.

Capital structure and cash position
The Company?s summarised capital structure at 31 March 2017 is as follows:

Issued fully paid ordinary shares:           581,380,338
Performance rights:                          6,250,000
Cash at bank:                                $1.2 million

Shareholders and potential investors should also review the Company?s Annual Report,
audited Financial Report for the year ending 30 June 2016 and Interim Financial Report for
the six months ending 31 December 2016 to fully appreciate the Company?s financial position.

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

       *MPT 169 MR (74%)

                                         Page 2 of 10
                                                                 Resource Generation Limited
                                                            Quarterly Report to 31 March 2017

       *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
26 April 2017




                                       Page 3 of 10
                                                                      Resource Generation Limited
                                                                 Quarterly Report to 31 March 2017


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 4 of 10
                                                                                    Resource Generation Limited
                                                                               Quarterly Report to 31 March 2017


Competent Persons? Statement
The information contained in this Quarterly Report which relates to estimates of the
Boikarabelo Coal Mine 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 Riaan Joubert is the Principal Geologist employed by Ledjadja Coal. Mr Ben Bruwer
is a Principal Consultant with VBKom (Pty) Ltd (VBKOM).
Summary of Competent Persons responsible for the Boikarabelo Coal Mine Coal Resources
and Coal Reserves
Competent Person Area of Competency Professional                        Year of    Membership Number
                                      Society                         Registration
R. Joubert               Coal Resources             SACNASP*            2002             400040/02
B. Bruwer                Coal Reserves              SAIMM**             1994              701068

*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 Limited. Mr Joubert holds no shares in Resource
Generation Limited.




                                                      Page 5 of 10
                                                                          Resource Generation Limited
                                                                     Quarterly Report to 31 March 2017


                                                                                               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 March 2017


                                                          Current quarter          Year to date
Consolidated statement of cash flows
                                                                                    (9 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                                                 (876)                 (4,300)
        (c) production                                                       -                       -
        (d) staff costs                                                (1,049)                (3,103)
        (e) administration and corporate costs                          (321)                 (1,047)
1.3     Dividends received (see note 3)                                      -                       -
1.4     Interest received                                                   30                     96
1.5     Interest and other costs of finance paid                             -                       -
1.6     Income taxes (paid)/refunded                                         1                      1
1.7     Research and development refunds                                     -                       -
1.8     Other (sale of game)                                                 -                    203
1.9     Net cash from / (used in) operating                          (2,215)                  (8,150)
        activities


2.      Cash flows from investing activities
2.1     Payments to acquire:
        (a) property, plant and equipment                                 (60)                  (170)
        (b) tenements (see item 10)                                          -                       -
        (c) investments                                                      -                       -

                                           Page 6 of 10
                                                                           Resource Generation Limited
                                                                      Quarterly Report to 31 March 2017

                                                            Current quarter         Year to date
Consolidated statement of cash flows
                                                                                     (9 months)
                                                                $A?000                 $A?000
       (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                                  (60)                (170)
       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                                            (682)                (2,063)
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                                (682)                (2,063)
       activities


4.     Net increase / (decrease) in cash and
       cash equivalents for the period
4.1    Cash and cash equivalents at beginning of                          4,517                11,955
       period
4.2    Net cash from / (used in) operating                               (2,215)               (8,150)
       activities (item 1.9 above)
4.3    Net cash from / (used in) investing                                  (60)                 (170)
       activities (item 2.6 above)


                                             Page 7 of 10
                                                                           Resource Generation Limited
                                                                      Quarterly Report to 31 March 2017

                                                            Current quarter          Year to date
Consolidated statement of cash flows
                                                                                      (9 months)
                                                                $A?000                  $A?000
4.4    Net cash from / (used in) financing                               (682)                 (2,063)
       activities (item 3.10 above)
4.5    Effect of movement in exchange rates on                           (319)                   (331)
       cash held
4.6    Cash and cash equivalents at end of                               1,241                  1,241
       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                                                          43                    569
5.2    Call deposits                                                     1,198                  3,948
5.3    Bank overdrafts                                                         -                      -
5.4    Other (contract retentions)                                             -                      -
5.5    Cash and cash equivalents at end of                               1,241                  4,517
       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                                    155
       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 8 of 10
                                                                              Resource Generation Limited
                                                                         Quarterly Report to 31 March 2017

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)                                   37,156                  26,166
               *Unsecured loan (note 2)                                     5,034                   5,034

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 The Company has a US$28.4 million unsecured loan facility with Noble Group. US$20.0
million has been drawn down as at 31 March 2017. It is repayable in quarterly instalments of capital
and interest over 78 months commencing in September 2017 and has an annual interest rate of
10.75%.
Note 2 EHL Energy (Pty) Limited constructed the electricity sub-station at the Boikarabelo Coal Mine
which connects the mine to the grid. The construction was 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
10 quarterly instalments remaining to be paid as at 31 March 2017.


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

9.2     Development                                                                               (3,762)

9.3     Production                                                                                      -

9.4     Staff costs                                                                               (1,090)

9.5     Administration and corporate costs                                                          (348)

9.6     Other ? loan repayments                                                                     (667)

9.7     Total estimated cash outflows                                                             (5,867)



                                                 Page 9 of 10
                                                                                Resource Generation Limited
                                                                           Quarterly Report to 31 March 2017

    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.


Date: 28 April 2017
Company secretary: 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 10 of 10

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