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Quarterly Report for the three months ended 30 September 2017
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 September 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
Since the “all party” meeting of lenders held on 14th June 2017 Management has continued
to finalise all material contracts for the development of the Boikarabelo Coal Mine. At it’s
meeting in Johannesburg on 16th August 2017 the Board received an update on all material
developments. Demonstrable progress had been made on the material contracts and funding
of the rail link but not on the terms of the proposed coal supply to Eskom.
In the circumstances, the Board believed it would be reasonable to ask the Debt Club lenders
to undertake their credit approval process to a conclusion, but on the basis that any draw
down of senior debt be subject to a concluded coal supply agreement being in place with
Eskom. That request was made on 21st August 2017.
However, on 23rd August 2017 some members of the Debt Club formally declined to proceed
on that basis and required a greater degree of certainty around the terms of supply to Eskom
before proceeding to secure credit approval for funding of the project. In the circumstances,
the Board believed that this source of project finance is no longer viable.
Mindful of the present difficulties in securing terms of supply with Eskom, Management had
in parallel been exploring an alternative funding proposal to place before the Board. This
proposal is not subject to a committed domestic coal supply with Eskom.
The due diligence activities and preparation for the credit approval processes of these
lenders, who are familiar with the project, has been ongoing since the Debt Club
announcement on 25th August 2017. The lenders have advised that they have a two-tier credit
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Resource Generation Limited
Quarterly Report to 30 September 2017
approval process. First stage credit approved and signed term sheets are expected by end
October/early November. At that time the Board will consider a recommendation from
Management and make a decision on this alternative funding proposal. Legal advice on the
draft term sheets is that shareholder approval will be required should the Board accept this
proposal.
The Board of Resource Generation Limited as well as the Board of Ledjadja Coal (Pty) Ltd have
approved execution of the Sedgman suite of contracts (CHPP, Ancillary Works and Operations
& Maintenance), subject to finalisation of one matter regarding insurance bonds for the
development works. Details will be released to the market once the agreements are executed
by both parties.
Rail Link
First credit approval for full funding of the rail link was obtained by Development Bank of
South Africa. The rail link is to be constructed by RME, a subsidiary of Transnet Freight Rail,
under fixed price, turn key, EPC contract.
Independent Power Producer (IPP)
Good progress is being made with regard to the planned 300MW IPP. A provisional equity
structure under which the Company and Ledjadja Coal, will have direct equity interests is
under discussion. A joint development agreement is being drafted by the Company’s
appointed legal counsel and a full technical specification of the IPP is currently being prepared
by an independent consulting firm.
It is expected that a selection process to identify and appoint the EPC contractor will
commence during the first half of 2018.
Working Capital Facility (WCF)
During the quarter, the Group drew down the final instalment of the WCF. In addition, the
Group agreed with Noble Resources International Pte Ltd to extend the commencement of
repayment of the amounts borrowed under the Facility Agreement dated 3 March 2014 from
September 2017 to April 2018.
On the assumption that the Board approves the proposed project finance solution outlined
above, the likely time scale will be as follows:
. Finance documents completed by early February 2018
. Meeting of Shareholders mid to late February 2018
. First draw down March 2018
In order to ensure that the Group has sufficient working capital until first draw down
discussions have commenced with Noble in order to secure a further extension of the WCF.
Annual General Meeting and Director resignation
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Resource Generation Limited
Quarterly Report to 30 September 2017
Subsequent to the end of the quarter the Company released its Notice of Meeting for the
Annual General Meeting which will be held on Wednesday 22 nd November at 10am in
Brisbane.
Denis Gately has notified the Company of his intention to resign as Chairman and a Director
of the Company with effect on and from the conclusion of the Annual General Meeting of the
Company called for 22nd November 2017. The continuing Directors propose to elect Lulamile
Xate as Chairman to succeed Mr Gately.
Capital structure and cash position
The Company’s summarised capital structure at 30th September 2017 is as follows:
Issued fully paid ordinary shares: 581,380,338
Performance share rights: 5,750,000
Cash at bank: $5.1 million
Shareholders and potential investors should also review the Company’s 2017 Annual Report,
audited Financial Report for the year ending 30 June 2017 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%)
. 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
RESOURCE GENERATION LIMITED
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Resource Generation Limited
Quarterly Report to 30 September 2017
Corporate information
Directors
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
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Resource Generation Limited
Quarterly Report to 30 September 2017
Competent Persons’ Statements
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
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.
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Resource Generation Limited
Quarterly Report to 30 September 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 September 2017
Current quarter Year to date
Consolidated statement of cash flows
(3 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 (1,390) (1,390)
(c) production - -
(d) staff costs (971) (971)
(e) administration and corporate costs (492) (492)
1.3 Dividends received (see note 3) - -
1.4 Interest received 64 64
1.5 Interest and other costs of finance paid - -
1.6 Income taxes (paid)/refunded - -
1.7 Research and development refunds - -
1.8 Other (sale of game) - -
1.9 Net cash from / (used in) operating (2,789) (2,789)
activities
2. Cash flows from investing activities
2.1 Payments to acquire:
(a) property, plant and equipment (1) (1)
(b) tenements (see item 10) - -
(c) investments - -
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Resource Generation Limited
Quarterly Report to 30 September 2017
Current quarter Year to date
Consolidated statement of cash flows
(3 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 (1) (1)
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 4,164 4,164
3.6 Repayment of borrowings (652) (652)
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 3,512 3,512
activities
4. Net increase / (decrease) in cash and
cash equivalents for the period
4.1 Cash and cash equivalents at beginning of 4,682 4,682
period
4.2 Net cash from / (used in) operating (2,789) (2,789)
activities (item 1.9 above)
4.3 Net cash from / (used in) investing (1) (1)
activities (item 2.6 above)
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Resource Generation Limited
Quarterly Report to 30 September 2017
Current quarter Year to date
Consolidated statement of cash flows
(3 months)
$A’000 $A’000
4.4 Net cash from / (used in) financing 3,512 3,512
activities (item 3.10 above)
4.5 Effect of movement in exchange rates on (264) (264)
cash held
4.6 Cash and cash equivalents at end of 5,140 5,140
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 29 40
5.2 Call deposits 5,111 4,642
5.3 Bank overdrafts - -
5.4 Other (contract retentions) - -
5.5 Cash and cash equivalents at end of 5,140 4,682
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 141
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
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Resource Generation Limited
Quarterly Report to 30 September 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) 36,271 36,271
? Unsecured loan (note 2) 3,889 3,889
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 Resources International
Pte Ltd (Noble) in March 2014. The Company signed an extension of the Facility Agreement on 3
March 2017 (ASX Announcement: 14 March 2017), whereby Noble agreed to make available further
funds of up to US$8.4 million to the Company's subsidiary Ledjadja Coal (Pty) Ltd, to fund the
operations and development of the mine whilst project funding is secured. US$28.4 million has been
drawn down as at 30 September 2017. It is repayable in quarterly instalments of capital and interest
over 78 months commencing in April 2018 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 amounted to ZAR82.5
million, is unsecured and there are 8 quarterly instalments remaining to be paid as at 30 September
2017.
9. Estimated cash outflows for next quarter $A’000
9.1 Exploration and evaluation -
9.2 Development (2,953)
9.3 Production -
9.4 Staff costs (1,074)
9.5 Administration and corporate costs (484)
9.6 Other – repayment of borrowings (615)
9.7 Total estimated cash outflows (5,126)
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Resource Generation Limited
Quarterly Report to 30 September 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: 26 October 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 10 of 10
Date: 26/10/2017 08:31:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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