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RESOURCE GENERATION LIMITED - Quarterly Report for the three months ended 30 June 2017

Release Date: 27/07/2017 08:10:00      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 30 June 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 (BEE) subsidiary 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
Meaningful progress continues to be made on securing Project Funding. In what is a complex
bank project finance process, multiple contracting agreements are being negotiated in
parallel with the finalisation of the independent technical reports. All major contracts are now
substantially agreed and in executable format following an all-party meeting of lenders,
including senior representatives and their advisers, that was held in Johannesburg on 14th

The purpose of the all-party meeting was to review the material EPC and logistics contracts
and to address matters outstanding from the lenders? legal due diligence. At the conclusion
of the meeting, a small number of items were identified to be addressed or produced
including updating the financial model, term sheet and finalisation of the funding terms of
the rail link and conclusion of a Memorandum of Understanding (MOU) with ESKOM before
the lenders are able to commence their respective credit approval processes. We are doing
everything within our control to ensure that all outstanding items will be delivered to the
lenders by no later than 31st July and this then will allow them to approach their credit
approval committees to obtain the requisite credit approvals. Most of the outstanding items
are either under the Company?s direct control or very likely to be delivered to the Company
by third parties during July. Discussions continue with ESKOM concerning a Memorandum of
Understanding and Coal Supply Agreement. These discussions will continue beyond the end
of July 2017.

The all-party meeting was viewed as positive and the Company is encouraged by the support
for the project shown by the lenders. The credit approval processes are estimated to be
completed within approximately two months from commencement.

                                           Page 1 of 10
                                                                     Resource Generation Limited
                                                                  Quarterly Report to 30 June 2017

Rail Link
DBSA has submitted its application for credit and stage 1 of the approval process has been

Transnet Freight Rail (TFR) has advised that it has received internal approval for the
construction of the Network Stabilising Facility (NSF) which forms an integral part of the link
between the Boikarabelo Coal Mine and the main line to the port of Richards Bay. TFR has
mobilised its contractors and construction of the NSF is scheduled to be completed by Q4

Independent Power Producer (IPP)

Together with our advisers, WaterBorne Capital, we have been actively preparing for our
submission for a 300MW IPP towards the end of 2017. In particular, the following work was
undertaken during the current quarter:

   .   We submitted a full response to the Department of Energy?s public request for
       information, detailing the mine?s current status and the work done to date on the IPP.
       The Department has acknowledged our submission and has undertaken to take our
       comments into consideration;
   .   We have concluded a ?beauty parade? of leading law firms with the intention of making
       an appointment as legal counsel to the bid;
   .   Once appointed, the first task of the legal firm will be the preparation of the Joint
       Development Agreement (JDA);
   .   In parallel with the preparation of the JDA we are identifying local partners to join our
       consortium, subject to board approval;
   .   We have invited various insurance firms to tender for the appointment as Insurance
       Advisor to the bid;
   .   We have invited various environmental firms to tender for the appointment as
       Environmental Advisor to the bid; and
   .   A project information memorandum is currently being prepared and will be used to
       introduce the local commercial banks and developmental funding institutions to the

Once the JDA has been completed, we will commence with the process of selecting an EPC
partner, again subject to board approval. It is expected that the partner will be either
Japanese or South Korean as both countries have well-established credentials that are most
likely to comply with the Request for Proposal (RFP) when issued by the Department. We are
expecting the RFP to be released towards the end of 2017.

Working Capital Facility

The Company has drawn down two tranches under the extended Noble Facility Agreement
(Facility). In line with the anticipated timing of Project Funding, discussions have been held
with Noble Resources International Pte Ltd (Noble) to agree to a deferral of loan repayments
that are due to commence on 30th September 2017. These discussions are on-going and the
outcome will be communicated to Shareholders in due course.

                                         Page 2 of 10
                                                                    Resource Generation Limited
                                                                 Quarterly Report to 30 June 2017

Under the terms of the Facility, Noble and Ledjadja Coal were to finalise arrangements before
30th June 2017 in relation to Noble having a first right of refusal to purchase any additional
uncontracted coal to be produced from the mine. The completion period has been extended
by mutual agreement until 10th August 2017.

Non-Executive Director Appointment

Mr Manish Dahiya was appointed as a Non-Executive Director of the Company during the
quarter. Mr Dahiya is appointed to the Board as a nominee of Noble under the terms of the
extension of the Facility Agreement of 3 March 2014 (ASX Announcement: 14 March 2017).
Noble is a substantial shareholder in the Company.

Capital structure and cash position
The Company?s summarised capital structure at 30 June 2017 is as follows:

Issued fully paid ordinary shares:          581,380,338
Performance share rights:                   5,750,000
Cash at bank:                               $4.7 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

   .   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 Waterberg No. 1 adjacent to Boikarabelo, was lodged at the
end of 2015. Waterberg No.1 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

                                         Page 3 of 10
                                                                    Resource Generation Limited
                                                                 Quarterly Report to 30 June 2017

Corporate information
Denis Gately                     Non-Executive Chairman
Lulamile Xate                    Non-Executive Deputy Chairman
Rob Croll                        Non-Executive Director
Manish Dahiya                    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

Company contacts
Denis Gately +27 12 345 1057
Rob Lowe     +27 12 345 1057

Media contacts
                 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 30 June 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

Competent Person Area of Competency Professional                        Year of       Membership Number
                                      Society                         Registration
Riaan Joubert            Coal Resources             SACNASP*             2002              400040/02
Ben 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 30 June 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                                       30 June 2017

                                                          Current quarter            Year to date
Consolidated statement of cash flows
                                                                                     (12 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                                                (1,213)                 (5,514)
        (c) production                                                       -                         -
        (d) staff costs                                                 (940)                  (4,043)
        (e) administration and corporate costs                          (461)                  (1,508)
1.3     Dividends received (see note 3)                                      -                         -
1.4     Interest received                                                   44                      140
1.5     Interest and other costs of finance paid                             -                         -
1.6     Income taxes (paid)/refunded                                         -                        1
1.7     Research and development refunds                                     -                         -
1.8     Other (sale of game)                                                 -                      203
1.9     Net cash from / (used in) operating                         (2,570)                   (10,721)

2.      Cash flows from investing activities
2.1     Payments to acquire:
        (a) property, plant and equipment                                  (7)                   (176)
        (b) tenements (see item 10)                                          -                         -
        (c) investments                                                      -                         -

                                           Page 6 of 10
                                                                             Resource Generation Limited
                                                                          Quarterly Report to 30 June 2017

                                                            Current quarter            Year to date
Consolidated statement of cash flows
                                                                                       (12 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                                   (7)                   (176)

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                                           6,595                    6,595
3.6    Repayment of borrowings                                            (667)                  (2,730)
3.7    Transaction costs related to loans and                                  -                        -
3.8    Dividends paid                                                          -                        -
3.9    Other (provide details if material)                                     -                        -
3.10   Net cash from / (used in) financing                                5,928                    3,865

4.     Net increase / (decrease) in cash and
       cash equivalents for the period
4.1    Cash and cash equivalents at beginning of                          1,241                   11,955
4.2    Net cash from / (used in) operating                               (2,570)                (10,721)
       activities (item 1.9 above)
4.3    Net cash from / (used in) investing                                   (7)                   (176)
       activities (item 2.6 above)

                                             Page 7 of 10
                                                                            Resource Generation Limited
                                                                         Quarterly Report to 30 June 2017

                                                            Current quarter           Year to date
Consolidated statement of cash flows
                                                                                      (12 months)
                                                                $A?000                  $A?000
4.4    Net cash from / (used in) financing                               5,928                    3,865
       activities (item 3.10 above)
4.5    Effect of movement in exchange rates on                                90                  (241)
       cash held
4.6    Cash and cash equivalents at end of                               4,682                    4,682

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                                                          40                      43
5.2    Call deposits                                                     4,642                    1,198
5.3    Bank overdrafts                                                         -                       -
5.4    Other (contract retentions)                                             -                       -
5.5    Cash and cash equivalents at end of                               4,682                    1,241
       quarter (should equal item 4.6 above)

6.     Payments to directors of the entity and their associates                     Current quarter
6.1    Aggregate amount of payments to these parties included in                                     178
       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 30 June 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)                                   36,953                   32,738
            ?   Unsecured loan (note 2)                                     4,630                   4,630

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$25.2
million has been drawn down as at 30 June 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
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 amounted to ZAR82.5
million, is unsecured and there are 9 quarterly instalments remaining to be paid as at 30 June 2017.

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

9.2     Development                                                                                (2,049)

9.3     Production                                                                                       -

9.4     Staff costs                                                                                (1,136)

9.5     Administration and corporate costs                                                           (380)

9.6     Other ? repayment of borrowings                                                            (2,419)

9.7     Total estimated cash outflows                                                              (5,984)

                                                 Page 9 of 10
                                                                                Resource Generation Limited
                                                                             Quarterly Report to 30 June 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.

Sign here:                                       Date: 27 July 2017
                        (Company secretary)

Print name:          MICHAEL MEINTJES
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 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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