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RSG - Resgen - Quarterly Report for the three months ended 31 December 2010
Resource Generation Limited
ACN 059 950 337
(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 December 2010
Resource Generation has coal interests in South Africa and Tasmania. Its
current priority is to develop its planned Boikarabelo coal mine in the
Waterberg region of South Africa, which has one of the country`s largest
remaining coal deposits.
HIGHLIGHTS
- Boikarabelo reserves upgraded.
- Progress with access to rail network.
- Second offtake contract for Boikarabelo signed with an Indian company.
- Ownership in Ledjadja Joint Venture increased to the maximum 74%.
- $30 million equity placement.
SOUTH AFRICA
Reserves upgrade
An upgrade was announced during the quarter. Boikarabelo now has probable
reserves of 744.8 million tonnes of coal, an increase of 108.8 million
tonnes. The area covered by these reserves amounts to only 35% of
Boikarabelo`s resource-bearing tenements. Boikarabelo`s resources and
reserves are now as follows:
(100% Inferred Indicated Measured Total Probable
figures) Resource* Resource* Resource* Resource* Reserve
(million
tonnes)
Waterberg #1 426.3 426.3 314.2
SW
Waterberg #1 551.7 551.7
NE
Witkopje S & 664.2 664.2 430.6
Kalkpan
Draai Om 791.3 791.3
Witkopje N 688.3 688.3
Total 1,479.6 551.7 1,090.5 3,121.8 744.8
* Total in-situ tonnes of coal excluding shale content. The total resource
including shale is 6.4 billion tonnes.
Access to rail network
Considerable progress has been made regarding access to land required for
the proposed 36 kilometre rail link from the mine site to the existing rail
infrastructure. Two properties have been purchased, contracts have been
signed for the acquisition of two further properties, one servitude
agreement has been secured and one remains to be secured. The application
for development approval, which needs to be submitted under the National
Environmental Management Act, was lodged in January 2011.
Discussions continued with Transnet to secure transport facilities to enable
the sale of 6 million tonnes of coal per annum from 2013.
Second offtake contract
During the quarter a second 20 year coal sales contract was signed with
Bhushan Steel Limited (Bhushan), which will purchase coal from Boikarabelo.
Under the terms of the contract, Bhushan will purchase 500,000 tonnes of
thermal coal per annum for the first five years of production and a minimum
500,000 tonnes per annum for a further 15 years. The price will be at
international market prices at the time of each shipment. This contract
complements a 20 year offtake contract signed with Integrated Coal Mining in
September 2010 and provides further long-term security for coal sales.
Bhushan is one of the fastest growing steel companies in India. Based in
Delhi, it has operations in Delhi, Orissa and Mumbai. Bhushan`s growth plan
includes diversification into power generation through its subsidiary,
Bhushan Energy Limited, which already has installed capacity of 300MW. The
supply of coal from Boikarabelo is targeted for the expansion of Bhushan`s
power generation capacity.
Joint venture ownership increase
Resource Generation increased its ownership of Ledjadja Coal (Pty) Limited
from 49% to 74%, in line with the shareholders` agreement. Ledjadja owns
the prospecting rights for the tenements which contain the major portion of
Boikarabelo`s coal resources and reserves. The company will now pursue ways
in which it can enhance the effectiveness of its BEE partners.
Progress with mining rights application
Progress with Resource Generation`s mining rights application is continuing
with constructive reviews and discussions with the Department of Mineral
Resources. The company hopes that the process will be concluded by mid-
2011.
Power supply
Arrangements are progressing with Eskom regarding the power supply
requirements of the Boikarabelo mine. The company is also considering an
independent power supply option.
Discussions with potential customers
In addition to the contracts with Integrated Coal Mining Limited and
Bhushan, the company is in discussions with other potential export and
domestic customers regarding purchases of Boikarabelo coal when production
begins.
Discussions with banks
Several potential debt providers from South Africa and Europe have expressed
interest in considering the project funding. Distribution of information for
banks to commence due diligence is progressing.
TASMANIA
A drilling programme of 25 holes was completed in the previous quarter on
the Woodbury tenement, where Resource Generation is exploring for thermal
coal. Laboratory analysis and geological modelling is continuing, with
results expected in the forthcoming quarter.
Following detailed desk-top studies of the tenement at La Trobe, the company
decided it was not worth undertaking any additional work and intends to
relinquish the tenement.
CAMEROON
There was no activity during the quarter on Resource Generation`s uranium
tenements in Cameroon.
CORPORATE
New Chairman
The Board appointed Brain Warner as Chairman after the most recent AGM.
Brian has considerable experience and skills in both the mining and finance
industries. He recently retired as the senior resources analyst at Citibank,
a position he had held for 6 years.
Equity raising
The company successfully raised $30.6 million through a placement to
institutions and sophisticated investors and an associated Share Purchase
Plan. The proceeds will be used primarily for land acquisitions and access
rights for the rail link as well as other expenditure for the company`s
Boikarabelo mine in South Africa and working capital.
CORPORATE INFORMATION
Directors
Brian Warner Non-Executive Chairman
Paul Jury Managing Director
Steve Matthews Executive Director
Scott Douglas Non-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 December 2010
Consolidated statement of cash flows
Current quarter Year to date (6
Cash flows related to operating $A`000 mths)
activities $A`000
1.1 Receipts from product sales - -
and related debtors
1.2 Payments for (a) (1,102) (1,572)
exploration and evaluation (1,576) (3,241)
(b) development - -
(c) production (323) (1,266)
(d)
administration
1.3 Dividends received - -
1.4 Interest and other items of 110 233
a similar nature received
1.5 Interest and other costs of (8) (10)
finance paid
1.6 Income taxes paid - -
1.7 Other (provide details if - -
material)
Net Operating Cash Flows (2,899) (5,856)
Cash flows related to
investing activities
1.8 Payment for purchases of: - -
(a) prospects - -
(b) equity investments (3,479) (3,479)
(c) other fixed assets
(land)
1.9 Proceeds from sale of: (a) - -
prospects - -
(b) equity investments - -
(c) other fixed assets
1.10 Loans to other entities - -
1.11 Loans repaid by other - -
entities
1.12 Other- Government charges in 1,120 1,120
relation to land
acquisitions (refundable)
(2,359) (2,359)
Net investing cash flows
1.13 Total operating and (5,258) (8,215)
investing cash flows
(carried forward)
Current quarter Year to date (6
$A`000 mths)
$A`000
1.13 Total operating and (5,258) (8,215)
investing cash flows
(brought forward)
Cash flows related to
1.14 financing activities 28,912 39,416
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 (provide details if - -
material)
Net financing cash flows 28,912 39,416
Net increase (decrease) in 23,654 31,201
cash held
1.20 Cash at beginning of 13,585 6,088
quarter/year to date
1.21 Exchange rate adjustments to (16) (66)
item 1.20
1.22 Cash at end of quarter 37,223 37,223
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 270
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 (498)
4.2 Development (1,281)
4.3 Production -
4.4 Administration (501)
Total (2,280)
Reconciliation of cash
Reconciliation of cash at the end of Current Previous
the quarter (as shown in the quarter quarter
consolidated statement of cash flows) $A`000 $A`000
to the related items in the accounts is
as follows.
5.1 Cash on hand and at bank 16 18
5.2 Deposits at call 37,025 13,385
5.3 Bank overdraft - -
5.4 Other (Bank guarantees) 182 182
Total: cash at end of quarter 37,223 13,585
(item 1.22)
Changes in interests in mining tenements
Tenement Nature of interest Interest at Interest at
reference beginning end of
of quarter quarter
6.1 Interests in N/A
mining
tenements
relinquished
, reduced or
lapsed
6.2 Interests in PR679/2007 Shareholding in 49% 74%
mining Ledjadja Coal
tenements (Pty) Limited, the
acquired or owner of the
increased tenement
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 price Amount paid
number quoted per security up per
(cents) security
(cents)
7.1 +Preference N/A
securities
(description)
7.2 Changes during N/A
quarter
Increases through
issues
Decreases
through returns
of capital, buy-
backs,
redemptions
7.3 +Ordinary 243,900,5 243,900,530 Various Fully paid
securities 30
7.4 Changes during
quarter 61,220,00 61,220,000 50.0 50.0
Increases 0
through issues
Nil Nil Nil
Decreases Nil
through returns
of capital, buy-
backs
7.5 +Convertible debt N/A
securities
(description)
7.6 Changes during N/A
quarter
Increases through
issues
Decreases through
securities
matured,
converted
7.7 Options Exercise Expiry date
(description and 450,000 Nil price 28/11/2012
conversion 1,875,000 Nil 31/12/2012
factor) 2,875,000 Nil $0.25 7/7/2013
250,000 Nil 17/3/2013
450,000 Nil $0.50 28/11/2012
250,000 Nil 17/3/2013
350,000 Nil $0.50 17/3/2013
350,000 Nil 17/3/2013
375,000 Nil $0.50 28/5/2013
375,000 Nil 28/5/2013
500,000 Nil $0.60 28/5/2013
$0.70
$1.00
$1.50
$1.55
$1.85
$2.05
7.8 Issued during Nil
quarter
7.9 Exercised during Nil
quarter
7.10 Expired during Nil
quarter
7.11 Debentures N/A
(totals only)
7.12 Unsecured notes N/A
(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: 26 January 2011
STEPHEN JAMES MATTHEWS
(Company secretary)
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: 26/01/2011 08:17:02 Supplied by www.sharenet.co.za
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