Wrap Text
Quarterly Report for the three months ended 30 June 2020
Resource Generation Limited
Registration number ACN 059 950 337
(Incorporated and registered in Australia)
ISIN: AU000000RES1
Share Code on the ASX: RES
Share Code on the JSE: RSG
(“Resgen” or the “Company”)
31 July 2020
Resource Generation Limited
ACN 059 950 337
Quarterly Report
for the three months ended 30 June 2020 (Quarter)
Resource Generation Limited (the “Company” or “Resgen”) is an emerging ASX and JSE-listed
energy company, currently developing the Boikarabelo Coal Mine (“the mine”) in South Africa’s
Waterberg coalfield. The Waterberg coalfield 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 Company’s operating subsidiary Ledjadja Coal, were updated in 2016 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 - In
accordance with Listing Rule 5.23.2 the Company confirms that it is not aware of any new
information that would impact on the reported Coal Resources and Coal Reserves). 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 Broad-based
Black Economic Empowerment Act, Section 9(5): Codes of Good Practice.
Resgen’s primary shareholders are the Public Investment Corporation of South Africa (PIC), Noble
Group and Altius Investment Holdings.
Project Funding
Mine Funding Package
On 5 December 2019, the Company announced the execution of binding arrangements for
the funding of the Boikarabelo Coal Mine (Mine Funding Package) which remains subject to
a number of conditions requiring satisfaction, deferral or waiver by the Lenders (Conditions
Precedent or CPs) before the transaction completes and becomes effective (Financial Close).
These conditions include those customary for Lender’s to manage risk exposures in
transactions of this nature.
Since execution of the Mine Funding Package the Company has diligently focused on satisfying
the Conditions Precedent and has made significant progress in satisfying most of the
Conditions Precedent including the rail link funding as detailed below. However, a small
number of Conditions Precedent remain outstanding including finalising a ramp-up working
capital facility, working with the mining contractor to secure funding for the yellow goods,
finalising logistics contracts and arranging a back-to-back domestic coal sale contract with
Eskom. In addition to pursuing satisfaction of these conditions the Company and Ledjadja Coal
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Resource Generation Limited
Quarterly Report to 30 June 2020
have also approached the Lenders with a request to waive or convert certain of these to
Conditions Subsequent.
The Funding Calendar was updated and advised to the market on 3 July 2020. The update was
based on Management’s best estimate of an achievable timeline for addressing the key tasks
required to finalise the remaining Conditions Precedent. Based on the updated Funding
Calendar and recent interactions with the Lenders the target for Financial Close is now the
end of September 2020.
A Deed of Amendment to the Common Terms Agreement for the Mine Funding Package
extending the Sunset Date for achieving Financial Close from 30 June to 30 September 2020
has been confirmed in principle by all Lenders. Execution of the Deed remains at various
stages of finalisation under the Lenders’ governance processes however all parties are
performing on the basis that this extension is in place.
Final submissions for collation and subsequent consideration by the Lenders’ Credit
Committees are due in the second half of August and any request for waivers or deferral of
certain CPs at that time remain subject to agreement by these governance bodies during
September 2020.
Rail Link Funding
On 5 May 2020, the Company announced that its subsidiary, Ledjadja Coal Pty Ltd (Ledjadja
Coal), has entered into non-binding equity and debt term sheets (collectively, the Term
Sheets) with Pan African Infrastructure Development Fund 2 SA and PAIDF2 LLC under the
management of Harith General Partners Proprietary Limited (Harith) for the funding of the
Boikarabelo Coal Project Rail Link.
After the end of the Quarter, on 16 July 2020 the Company confirmed that Harith had
obtained all requisite approvals for the Term Sheets executed with Ledjadja Coal Pty Ltd. The
Term Sheets, whilst now binding on the Parties, remain subject to the fulfilment of various
Conditions Precedent including conclusion of definitive transaction agreements, regulatory
approvals including the registration of each servitude to effect the transaction and the Mine
Funding Package (see ASX Announcement: 5 December 2019) being fully funded and
unconditional.
Preparation of the definitive transaction agreements comprising the terms and conditions set
out in the Terms Sheets are well progressed with a target for finalisation and execution in
September 2020.
Director resignation
Manish Dahiya is no longer an employee of Noble Group and consequently resigned as
Alternate Director for Greg Hunter after the end of the Quarter.
Capital Structure and Cash Position
The Company’s summarised capital structure at 30 June 2020 is as follows:
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Resource Generation Limited
Quarterly Report to 30 June 2020
Issued fully paid ordinary shares: 581,380,338
Performance share rights: 3,000,000
Cash at bank: $0.30 million
Noble Facility – undrawn $US2.0 million
On 19 June 2020, the Company confirmed that legal documentation had been finalised and
executed for an additional working capital facility of US$2.25m in the form of an Eighth Deed
of Amendment to the Facility Agreement with Noble Group dated 3 March 2014 (Eighth
Deed). The additional working capital facility under the Eighth Deed had an availability period
through to 30 June 2020 at which time only $250,000 had been received. The Company was
then able to agree the following amendments to the Eighth Deed:
• Extension of the period of availability of the undrawn facility totalling US$2m to 31 July
2020; and
. Extension of the first date for repayment under the Facility Agreement to 30 September
2020 to align with the new Sunset Date of the Common Terms Agreement with the
Lenders for the Mine Funding Package.
Shareholders and potential investors should also review the Company’s 2019 Annual Report
and the audited Interim Financial Report for the six months ending 31 December 2019 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%)
The Company has no interest in farm-in or farm-out agreements.
The Mining Right Application for Waterberg #1 was lodged at the end of 2015 and the
Company is awaiting the outcome of this process. Waterberg #1 encompasses the farm Koert
Louw Zyn Pan (PR678/2007) and is adjacent to the Boikarabelo Coal Mine.
The Company will keep the market informed in accordance with its continuous disclosure
obligations.
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 June 2020
Corporate information
Directors
Lulamile Xate Non-Executive Chairman
Rob Croll Lead Independent Non-Executive Director
Greg Hunter Non-Executive Director
Colin Gilligan Independent Non-Executive Director
Michael Gray Independent Non-Executive Director
Leapeetswe Molotsane Interim Managing Director and CEO
Dr Konji Sebati Independent Non-Executive Director
Company Secretary
Mike Meintjes
JSE Sponsor
Deloitte & Touche Sponsor Services (Pty) Limited
Registered office
Level 1, 17 Station Road
Indooroopilly, QLD 4068, Australia
Telephone: +27 11 010 6310
Facsimile: +27 86 539 3792
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
Lulamile Xate +27 11 010 6310
Leapeetswe Molotsane +27 11 010 6310
Media contacts
South Africa
Russell and Associates (Marion Brower)
t: +27 11 880 3924
42 Glenhove Rd, Johannesburg 2196
Gauteng, South Africa
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Resource Generation Limited
Quarterly Report to 30 June 2020
Competent Persons’ Statements
The information contained in this Quarterly Report relates to estimates of Coal Resources and
Coal Reserves and 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 contracted by Ledjadja Coal. Mr Ben Bruwer is a Principal Consultant with VBKom
(Pty) Ltd (VBKOM).
Summary of Competent Persons responsible for the 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 consent to the inclusion of material in the form and
context in which it appears in this Quarterly Report. Both are members of a Recognised
Professional Organisation in terms of the JORC Code 2012 and 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 Mr Joubert, or VBKOM, have material interest or entitlement, direct
or indirect, in the securities of Resource Generation Limited.
Forward looking statements
This Quarterly contains certain forward-looking statements. Forward-looking statements
include those containing words such as “anticipate”, “believe”, “expect”, “project”,
“forecast”, “estimate”, “likely”, “intend”, “should”, “could”, “may”, “target”, “plan”,
“consider”, “foresee”, “aim”, “will” and other similar expressions. Any forward-looking
statements, opinions and estimates provided in this Quarterly are based on assumptions and
contingencies which are subject to change without notice and involve known and unknown
risks and uncertainties and other factors which are beyond the control of ResGen. This
includes any statements about the terms on which ResGen might obtain funding for the
Project. To the maximum extent permitted by law, the directors of ResGen, ResGen and any
of its related bodies corporate and affiliates, and their officers, partners, employees, agents,
associates and advisers disclaim any obligations or undertaking to release any updates or
revisions to the information in this announcement to reflect any change in expectations or
assumptions, do not make any representation or warranty, express or implied, as to the
accuracy, reliability or completeness of such information, or likelihood of fulfillment of any
forward-looking statement or any event or results expressed or implied in any forward-
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Quarterly Report to 30 June 2020
looking statement, and disclaim all responsibility and liability for these forward-looking
statements (including, without limitation, liability for negligence).
The Mine Funding Package and Term Sheets referred to in this Quarterly whilst binding
remain subject to a various conditions precedent. Negotiations and the required further
actions described in those Term Sheets are ongoing and incomplete and there is no certainty
that a Project funding transaction will be concluded based on the terms set out in the Mine
Funding Package and Term Sheets (or at all). ResGen makes no representations or warranties
whatsoever as to the outcome.
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Resource Generation Limited
Quarterly Report to 30 June 2020
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 2020
Consolidated statement of cash flows Current quarter Year to date
$A’000 (12 months)
$A’000
1. Cash flows from operating activities
1.1 Receipts from customers - -
1.2 Payments for
(a) exploration & evaluation - -
(b) development (949) (3,326)
(c) production - -
(d) staff costs (560) (2,243)
(e) administration and corporate costs (370) (1,533)
1.3 Dividends received (see note 3) - -
1.4 Interest received 11 85
1.5 Interest and other costs of finance paid - -
1.6 Income taxes paid - -
1.7 Government grants and tax incentives - -
1.8 Other (provide details if material) - -
1.9 Net cash from / (used in) operating (1,868) (7,017)
activities
2. Cash flows from investing activities
2.1 Payments to acquire or for:
(a) entities - -
(b) tenements - -
(c) property, plant and equipment - -
(d) exploration & evaluation - -
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Quarterly Report to 30 June 2020
Consolidated statement of cash flows Current quarter Year to date
$A’000 (12 months)
$A’000
(e) investments - -
(f) other non-current assets - -
2.2 Proceeds from the disposal of:
(a) entities - -
(b) tenements - -
(c) property, plant and equipment - -
(d) investments - -
(e) 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 - -
activities
3. Cash flows from financing activities
3.1 Proceeds from issues of equity securities
(excluding convertible debt securities) - -
3.2 Proceeds from issue of convertible debt - -
securities
3.3 Proceeds from exercise of options - -
3.4 Transaction costs related to issues of equity - -
securities or convertible debt securities
3.5 Proceeds from borrowings 1,319 6,481
3.6 Repayment of borrowings - (526)
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 1,319 5,955
activities
4. Net increase / (decrease) in cash and
cash equivalents for the period
4.1 Cash and cash equivalents at beginning of 897 1,474
period
4.2 Net cash from / (used in) operating (1,868) (7,017)
activities (item 1.9 above)
4.3 Net cash from / (used in) investing activities - -
(item 2.6 above)
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Resource Generation Limited
Quarterly Report to 30 June 2020
Consolidated statement of cash flows Current quarter Year to date
$A’000 (12 months)
$A’000
4.4 Net cash from / (used in) financing activities 1,319 5,955
(item 3.10 above)
4.5 Effect of movement in exchange rates on (25) (89)
cash held
4.6 Cash and cash equivalents at end of 323 323
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 16 64
5.2 Call deposits 307 833
5.3 Bank overdrafts - -
5.4 Other (provide details) - -
5.5 Cash and cash equivalents at end of 323 897
quarter (should equal item 4.6 above)
6. Payments to related parties of the entity and their Current quarter
associates $A'000
6.1 Aggregate amount of payments to related parties and their 159
associates included in item 1
6.2 Aggregate amount of payments to related parties and their -
associates included in item 2
Note: if any amounts are shown in items 6.1 or 6.2, your quarterly activity report must include a description of, and an
explanation for, such payments.
Directors’ remuneration
Payments to related parties of the entity and their associates (6.1) includes the remuneration of Directors for the quarter
ending 30 June 2020.
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Resource Generation Limited
Quarterly Report to 30 June 2020
7. Financing facilities Total facility Amount drawn at
Note: the term “facility’ includes all forms of financing amount at quarter quarter end
arrangements available to the entity.
end $A’000
Add notes as necessary for an understanding of the
sources of finance available to the entity. $A’000
7.1 Loan facilities 71,479 68,571
7.2 Credit standby arrangements - -
7.3 Other (please specify) - -
7.4 Total financing facilities 71,479 68,571
7.5 Unused financing facilities available at quarter end 2,909
7.6 Include in the box below a description of each facility above, including the lender, interest
rate, maturity date and whether it is secured or unsecured. If any additional financing
facilities have been entered into or are proposed to be entered into after quarter end,
include a note providing details of those facilities as well.
The Company has a Facility Agreement under which Noble Resources International Pte Ltd
has agreed to make available funds of up to US$49.1 million to the Company's subsidiary,
Ledjadja Coal (Pty) Ltd, to fund the operations and development of the Boikarabelo Coal
Mine whilst funding to complete the project is secured. US$47.1 million has been drawn
down as at 30 June 2020. The loan is repayable in quarterly instalments over 78 months
commencing from 30 September 2020 and has an annual interest rate of 10.75%. The
Company has provided a Parent Company Guarantee for the Facility along with a pledge
over Resgen's interest in 74% of the shares in Ledjadja, which are held by another Resgen
subsidiary, Resgen Africa Holdings Limited.
8. Estimated cash available for future operating activities $A’000
8.1 Net cash from / (used in) operating activities (item 1.9) (1,868)
8.2 (Payments for exploration & evaluation classified as investing -
activities) (item 2.1(d))
8.3 Total relevant outgoings (item 8.1 + item 8.2) (1,868)
8.4 Cash and cash equivalents at quarter end (item 4.6) 323
8.5 Unused finance facilities available at quarter end (item 7.5) 2,909
8.6 Total available funding (item 8.4 + item 8.5) 3,232
8.7 Estimated quarters of funding available (item 8.6 divided by
1.73
item 8.3)
Note: if the entity has reported positive relevant outgoings (ie a net cash inflow) in item 8.3, answer item 8.7 as “N/A”.
Otherwise, a figure for the estimated quarters of funding available must be included in item 8.7.
8.8 If item 8.7 is less than 2 quarters, please provide answers to the following questions:
8.8.1 Does the entity expect that it will continue to have the current level of net operating
cash flows for the time being and, if not, why not?
Answer:
Yes
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Quarterly Report to 30 June 2020
8.8.2 Has the entity taken any steps, or does it propose to take any steps, to raise further
cash to fund its operations and, if so, what are those steps and how likely does it
believe that they will be successful?
Answer:
The Company is in the process of completing the outstanding Conditions Precedent to
achieve Financial Close and enable drawdown of funds under the Project Funding
Agreements executed on 5 December 2019 (Mine Funding Package) by the Sunset Date in
the Common Terms Agreement of 30 September 2020. Whilst certain matters are outside of
the direct control of the Company, at the date of this Quarterly Activities Report,
achievement of Financial Close remains reasonably probable.
The Company needs to achieve the 30 September 2020 deadline to be able to access the
facilities under the Mine Funding Package to continue as a going concern. Access to the
facilities is also required to cover certain Project development related contractor and legal
fees to be incurred during the Quarter to finalise certain Conditions Precedent.
8.8.3 Does the entity expect to be able to continue its operations and to meet its business
objectives and, if so, on what basis?
Answer:
Yes, refer to 8.8.2 above.
Note: where item 8.7 is less than 2 quarters, all of questions 8.8.1, 8.8.2 and 8.8.3 above must be answered.
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: ...........31 July 2020........................................................................
Authorised by: …….Board of Directors..................................................................................
(Name of body or officer authorising release – see note 4)
Notes
1. This quarterly cash flow report and the accompanying activity report provide a basis for informing the market about the
entity’s activities for the past quarter, how they have been financed and the effect this has had on its cash position. An
entity that wishes to disclose additional information over and above the minimum required under the Listing Rules is
encouraged to do so.
2. If this quarterly cash flow 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 cash flow 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.
4. If this report has been authorised for release to the market by your board of directors, you can insert here: “By the
board”. If it has been authorised for release to the market by a committee of your board of directors, you can insert
here: “By the [name of board committee – eg Audit and Risk Committee]”. If it has been authorised for release to the
market by a disclosure committee, you can insert here: “By the Disclosure Committee”.
5. If this report has been authorised for release to the market by your board of directors and you wish to hold yourself out
as complying with recommendation 4.2 of the ASX Corporate Governance Council’s Corporate Governance Principles
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Resource Generation Limited
Quarterly Report to 30 June 2020
and Recommendations, the board should have received a declaration from its CEO and CFO that, in their opinion, the
financial records of the entity have been properly maintained, that this report complies with the appropriate accounting
standards and gives a true and fair view of the cash flows of the entity, and that their opinion has been formed on the
basis of a sound system of risk management and internal control which is operating effectively.
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Date: 31-07-2020 08:09:00
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