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RSG - Resource Generation Limited - Quarterly Report for the three months
ended 31 March 2012
Resource Generation Limited
(Incorporated and registered in Australia)
(Registration number ACN 059 950 337)
Share code on the JSE Limited: RSG ISIN: AU000000RES1
Share code on the Australian Stock Exchange Limited: RES ISIN: AU000000RES1
(JSE short name: "Resgen" or "the Company")
Quarterly Report for the three months ended 31 March 2012
Resource Generation is developing its Boikarabelo coal mine in the Waterberg
region of South Africa, which has one of the country`s largest remaining
coal deposits. The Boikarabelo mine has probable reserves of 744.8 million
tonnes of coal on 35% of the tenements under the company`s control. Stage 1
of the mine development targets saleable coal production of 6 million tonnes
per annum.
PRESENT STATUS
Resource Generation is now ready to finalise funding arrangements for
construction of the mine, subject to agreeing a satisfactory transport
tariff with Transnet Freight Rail (Transnet). Negotiations on this tariff
are currently in progress. Negotiations on other contractual terms are
substantially complete but still exclude a firm tonnage allocation.
While Transnet has indicated it is unwilling to commit to a firm tonnage
allocation before the end of 2012, the company has decided to proceed with
securing finance, conditional on obtaining sufficient allocation, as soon as
agreement has been reached on the tariff. Management`s confidence that
capacity will be available is based on several statements by Transnet;
earlier this month Transnet confirmed that some R50 billion ($6.25 billion)
had been set aside for the Richards Bay coal corridor, including a
substantial expansion of export capacity from the Waterberg region.
Following agreement on a tariff, Resource Generation expects to finalise
funding arrangements within four to five months. Construction of the mine
and infrastructure will then take approximately two years.
PROGRESS ON OTHER MATTERS
Development consent received
Development consent was received during the quarter for construction
activities at the Boikarabelo mine. The approval was given under the
National Environmental Management Act (NEMA) and enables the company to
construct the mine, all the required mine infrastructure and the associated
36 kilometre rail link to the existing rail network. The approval was the
culmination of 15 months` close liaison and work with the Limpopo Department
of Economic Development, Environment and Tourism.
Water Use Licence update
Discussions with the Department of Water Affairs have been concluded
regarding the Integrated Water Use Licence Application that was lodged in
December 2010. Indications are that the Record of Decision should be
received during May 2012.
Mining right update
As previously advised, the appeal that was lodged with the South African
Department of Mineral Resources (DMR) against the 30 year mining right does
not suspend the mining right, which remains valid. Indications are that the
DMR will dismiss the appeal but formal communication is yet to be received.
The company is confident that the mining right will be confirmed and is
continuing its normal activities to develop the mine.
Land acquisitions enhance stage 2 of production
An agreement was signed during the quarter to acquire land adjacent to the
company`s Boikarabelo mine. The properties being acquired are Swelpan and
Kleinpan, highlighted in black and grey stripes on the map below. Please
refer to the Resgen website to review the map.
Swelpan contains significant coal resources and is contiguous to the
Boikarabelo coal tenements. The bulk of the Kleinpan property contains no
defined coal resources but it provides an ideal location for the 2x660MW
power station that CESC Limited proposes to build. As previously announced,
this proposed power station would enable the Boikarabelo mine to commence
its stage 2 expansion earlier than originally planned. The company is
working closely with CESC on its planning and processes for its feasibility
study for the power station.
Potential resource expansion
During the quarter Ledjadja, Resource Generation`s BEE subsidiary, entered
into a put option arrangement with Exxaro Resources under which Exxaro can
sell the prospecting rights it holds over four properties to Ledjadja. The
four properties, which include Swelpan and Kleinpan, are highlighted in red
on the map above. Any transfer of the prospecting rights would be subject
to approval by the Department of Mineral Resources (DMR) under Section 11 of
the Mineral and Petroleum Resources Development Act, 2002. The coal
tenements contain an indicated resource of 974.5 million tonnes*, excluding
shale content. Coal qualities are consistent with the rest of the
Boikarabelo tenements.
Should Exxaro exercise the put option and the DMR approve the transfer, the
Boikarabelo mine will have the following resources and reserves, excluding
shale content; ie an increase in total resources of 31%:
Measured Indicated Inferred Total Probable
Resource Resource Resource Resource Reserve
(Mt) (Mt) (Mt) (Mt) (Mt)
1,090.5 1,526.2 1,479.6 4,096.3 744.8
Drilling activities
The last of six large diameter core holes drilled on the Kalkpan property
was completed in the quarter. Kalkpan will be the commencement point for
the Boikarabelo open cut mine pit. These large cores are being used to
obtain a greater understanding of the coal qualities and washability data of
the Boikarabelo coal. This information is necessary to fine tune the design
of the coal preparation plant and to add to the information being provided
to Eskom to supplement the earlier successful test burn results.
Eskom update
Negotiations are progressing with Eskom on the contractual terms for the
initial supply of 3 million tonnes of thermal coal per annum.
Coal handling and preparation plant update
A front end engineering design (FEED) was completed by a major provider of
coal handling and preparation plants (CHPPs) in 2011. A further FEED was
received during the quarter for an alternative design and operation from
another major provider of CHPPs. Both FEEDs are now the subject of detailed
reviews to enable the company to determine the optimal solution from both a
functional and cost perspective.
Power supply
Tenders are due to be received shortly for the design and construction of a
3x15MW power station at the Boikarabelo mine site. This proposed power
station will meet all the mine`s power requirements for stage 1 of
production and removes any uncertainty of power supply, should Eskom have
difficulties with its ability to supply power to the mine in sufficient
time.
Recruitment of key executives
Two key positions for the development and operations of the Boikarabelo mine
have been successfully filled in the past few weeks and the new executives
will commence in their roles shortly. Andy McLeod, an experienced mine
manager in both South Africa and Australia, most recently with Anglo
American, has been appointed as General Manager Boikarabelo Mine. Andy will
be responsible for overseeing the construction, development and operations
of the mine. Bongi Ndimande, an experienced human resources executive in
South Africa, most recently with Sasol, has been appointed as General
Manager Human Resources. Her role encompasses human resources, training and
industrial relations.
Continued strong interest from financiers for debt funding
Potential debt funders have re-confirmed their continued strong interest in
providing project finance for the development of the Boikarabelo mine.
CAMEROON
There was no activity during the quarter on Resource Generation`s uranium
tenements in Cameroon.
CORPORATE
Cash reserves at 31 March 2012 were $19.1 million. Following the settlement
for the acquisition of the Swelpan and Kleinpan properties in April 2012,
cash reserves have reduced to $15 million. This is expected to be
sufficient to cover cash requirements prior to the anticipated commencement
of mine construction.
CORPORATE INFORMATION
Directors
Brian Warner Non-Executive Chairman
Paul Jury Managing Director
Steve Matthews Executive Director
Geoffrey (Toby) Rose Non-Executive Director
Company Secretary
Steve Matthews
Registered Office
Level 12, Chifley Tower
2 Chifley Square
Sydney NSW 2000
Telephone: 02 9376 9000
Facsimile: 02 9376 9013
Website: www.resgen.com.au
Mailing Address
GPO Box 5490
Sydney NSW 2001
Contacts
Paul Jury
Steve Matthews
Media
Anthony Tregoning, FCR on (02) 8264 1000
JSE Sponsor: Deloitte & Touche Sponsor Services (Pty) Limited
* Information in this report that relates to exploration results, mineral
resources or ore reserves is based on information compiled by Mr Dawie Van
Wyk who is a consultant to the Company and is a member of a Recognised
Overseas Professional Organisation. Mr Van Wyk has sufficient experience
which is relevant to the style of mineralisation and type of deposit under
consideration and to the activity which he is undertaking to qualify as a
Competent Person as defined in the 2004 Edition of the `Australasian Code
for Reporting of Exploration Results, Mineral Resources and Ore Reserves`.
Mr Van Wyk has given and has not withdrawn consents to the inclusion in the
report of the matters based on his information in the form and context in
which it appears.
Appendix 5B
Mining exploration entity quarterly report
Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001.
Name of entity
Resource Generation Limited
ABN Quarter ended
("current quarter")
91 059 950 337 31 March 2012
Consolidated statement of cash flows
Current Year to date (9
Cash flows related to operating quarter mths)
activities $A`000 $A`000
1.1 Receipts from product sales and - -
related debtors
1.2 Payments for (a) (142) (433)
exploration and evaluation (1,273) (4,440)
(b) development - -
(c) production (691) (2,033)
(d) administration
1.3 Dividends received - -
1.4 Interest and other items of a 221 824
similar nature received
1.5 Interest and other costs of (4) (8)
finance paid
1.6 Income taxes paid - -
1.7 Other (provide details if - -
material)
Net Operating Cash Flows (1,889) (6,090)
Cash flows related to investing
activities
1.8 Payment for purchases of: - -
(a) prospects - -
(b) equity investments (128) (207)
(c) other fixed assets
1.12 Proceeds from sale of: (a) - -
prospects - -
(b) equity investment - 1,500
- -
(subsidiary)
(c) other fixed assets
1.10 Loans to other entities - -
1.11 Loans repaid by other entities - -
1.12 Other- Government charges in 10 464
relation to land acquisitions
(refundable)
(118) 1,757
Net investing cash flows
1.13 Total operating and investing (2,007) (4,333)
cash flows (carried forward)
Current Year to date (9
quarter mths)
$A`000 $A`000
1.13 Total operating and investing (2,007) (4,333)
cash flows (brought forward)
Cash flows related to
1.14 financing activities - -
Proceeds from issues of
shares, options, etc.
1.15 Proceeds from sale of - -
forfeited shares
1.16 Proceeds from borrowings - -
1.17 Repayment of borrowings - -
1.18 Dividends paid - -
1.19 Other (BEE Loan) - (1,283)
Net financing cash flows - (1,283)
Net increase (decrease) in (2,007) (5,616)
cash held
1.20 Cash at beginning of 20,825 25,322
quarter/year to date
1.21 Exchange rate adjustments to 270 (618)
item 1.20
1.22 Cash at end of quarter 19,088 19,088
Payments to directors of the entity and associates of the directors
Payments to related entities of the entity and associates of the related
entities
Current
quarter
$A`000
1.23 Aggregate amount of payments to the 277
parties included in item 1.2
1.24 Aggregate amount of loans to the parties -
included in item 1.10
1.25 Explanation necessary for an understanding of the
transactions
Executive salaries and directors fees
Non-cash financing and investing activities
2.1 Details of financing and investing transactions which
have had a material effect on consolidated assets and
liabilities but did not involve cash flows
N/A
2.2 Details of outlays made by other entities to
establish or increase their share in projects in
which the reporting entity has an interest
N/A
Financing facilities available
Add notes as necessary for an understanding of the position.
Amount Amount
available used
$A`000 $A`000
3.1 Loan facilities - -
3.2 Credit standby - -
arrangements
Estimated cash outflows for next quarter
$A`000
4.1 Exploration and evaluation (137)
4.2 Development (1,575)
4.3 Production -
4.4 Administration (417)
Total (2,129)
Reconciliation of cash
Reconciliation of cash at the Current Previous
end of the quarter (as shown in quarter quarter
the consolidated statement of $A`000 $A`000
cash flows) to the related items
in the accounts is as follows.
5.1 Cash on hand and at bank 19 32
5.2 Deposits at call 18,730 20,453
5.3 Bank overdraft - -
5.4 Other (Bank guarantees) 340 340
Total: cash at end of 19,089 20,825
quarter (item 1.22)
Changes in interests in mining tenements
Tenement Nature of Interest Interest
reference interest at at end of
beginning quarter
of
quarter
6.1 Interests N/A N/A N/A N/A
in mining
tenements
relinquish
ed,
reduced or
lapsed
6.2 Interests N/A N/A N/A N/A
in mining
tenements
acquired
or
increased
Issued and quoted securities at end of current quarter
Description includes rate of interest and any redemption or conversion
rights together with prices and dates.
Total Number Issue Amount
number quoted price per paid up
security per
($) security
($)
7.1 +Preference N/A
securities
(description)
7.2 Changes during N/A
quarter
(a) Increases
through
issues
(b) Decreases
through
returns of
capital, buy-
backs,
redemptions
7.3 +Ordinary 262,895,6 262,895,6 Various Fully
securities 52 52 paid
7.4 Changes during
quarter Nil
(a) Increases
through
issues Nil
(b) Decreases
through
returns of
capital, buy-
backs
7.5 +Convertible N/A
debt
securities
(description)
7.6 Changes during N/A
quarter
(a) Increases
through
issues
(b) Decreases
through
securities
matured,
converted
7.7 Options Exercise Expiry
(description 450,000 Nil price date
and conversion 1,875,000 Nil 28/11/201
factor) 1,875,000 Nil $0.25 2
250,000 Nil 31/12/201
450,000 Nil $0.50 2
250,000 Nil 7/7/2013
350,000 Nil $0.50 17/3/2013
350,000 Nil 28/11/201
375,000 Nil $0.50 2
375,000 Nil 17/3/2013
500,000 Nil $0.60 17/3/2013
17/3/2013
$0.70 28/5/2013
28/5/2013
$1.00 28/5/2013
$1.50
$1.55
$1.85
$2.05
7.8 Issued during Nil
quarter
7.9 Exercised Nil
during quarter
7.10 Expired during Nil
quarter
7.11 Debentures N/A
(totals only)
7.12 Unsecured N/A
notes (totals
only)
Compliance statement
1. This statement has been prepared under accounting policies which comply
with accounting standards as defined in the Corporations Act or other
standards acceptable to ASX (see note 5).
2. This statement does give a true and fair view of the matters disclosed.
3. The information contained in this report has not been reviewed nor
reported on by the company`s auditors.
Date: 30 April 2012
(Company secretary)
STEPHEN JAMES MATTHEWS
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 wanting to disclose additional
information is encouraged to do so, in a note or notes attached to this
report.
2. The "Nature of interest" (items 6.1 and 6.2) includes options in
respect of interests in mining tenements acquired, exercised or lapsed
during the reporting period. If the entity is involved in a joint
venture agreement and there are conditions precedent which will change
its percentage interest in a mining tenement, it should disclose the
change of percentage interest and conditions precedent in the list
required for items 6.1 and 6.2.
3. Issued and quoted securities The issue price and amount paid up is not
required in items 7.1 and 7.3 for fully paid securities.
4. 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.
5. Accounting Standards ASX will accept, for example, the use of
International Financial Reporting Standards for foreign entities. If
the standards used do not address a topic, the Australian standard on
that topic (if any) must be complied with.
Date: 30/04/2012 09:54:12 Supplied by www.sharenet.co.za
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