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RSG - Resource Generation Limited - Quarterly Report for the three months ended
31 March 2011
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 March 2011
Resource Generation is developing 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 mining right approved.
* New BEE partner arrangements.
* Rail link route confirmed.
* Water security enhanced.
* Eskom and Transnet discussions progressing.
* Detailed engineering close to completion.
SOUTH AFRICA
Mining right approved
The Ledjadja joint venture, in which Resource Generation has a 74% shareholding,
received notification during the quarter that it has been granted a 30 year
mining right for its Boikarabelo mine by the South African Department of Mineral
Resources. Execution of formal documentation and establishment of a $2 million
rehabilitation deposit is due to be completed by Easter.
BEE partners
During the quarter, Fairy Wing Trading 136 (Pty) Limited (FWT), a company owned
by a group of South African businessmen and women with strong commercial and
government relationships, agreed to acquire the 26% shareholding in Resource
Generation`s Ledjadja joint venture that was owned by its original BEE (black
economic empowerment) partners.
Resource Generation will facilitate the acquisition through a loan of R80
million ($11.5 million) to FWT. The loan, which will be secured over FWT`s
shares in Ledjadja and repayable out of the first dividends due to FWT from the
joint venture, will be made available in three tranches. The first tranche of
R60 million will be paid during the current quarter following finalisation of
documentation for the Boikarabelo mining right, which will incorporate FWT as
the BEE partner; the second tranche of R10 million will be paid on 30 September
2011 with the final tranche of R10 million on 30 September 2012. The loan will
be provided from Resource Generation`s existing funds.
As part of the transaction, the Ledjadja joint venture will assume Resource
Generation`s obligation to pay to Apex Resources Inc. a royalty of R2 per tonne
of coal shipped up to a limit of R30 million.
Access to rail network
Resource Generation arranged access during the quarter for its proposed 36
kilometre rail link route from the Boikarabelo mine to the existing Transnet
rail line.
Three farms have been acquired for a total of R67.5 million. R33.0 million was
paid in the last quarter and the remaining balance of R13.5 million is expected
to be settled in the coming quarter. Agreements were also signed to acquire
either an additional farm or a servitude across the farm.
Agreements were reached for the granting of rail servitudes with the two
corporate owners of land for the balance of the rail link. These agreements
will be formalised after securing necessary regulatory and environmental
approvals for the entire route, the application for which was lodged in the
quarter and is expected to be received in July 2011.
Discussions continued with Transnet to secure transport facilities to enable the
sale of 6 million tonnes of coal per annum from 2013.
Water security
During the quarter significant progress was made towards securing the water that
will be needed for the company`s proposed Boikarabelo mine.
The company has been chosen as the preferred party to construct, operate and
maintain a wastewater treatment plant at Marapong, approximately 50 kilometres
from Boikarabelo. The plant will treat municipal effluent and is expected to
generate up to 16 megalitres of water per day, which will be pumped to the mine
site via a new pipeline.
Resource Generation had been working for 18 months with the Lephalale Local
Municipality in Limpopo Province on plans for the plant. This is a key
responsibility that the company has committed to undertake as part of its social
and labour plan, which was submitted with its mining right application for the
Boikarabelo mine in early 2010. Before construction begins, Resource Generation
and the municipality are required to obtain government approval and finalise
contractual arrangements.
Sufficient water for stage 1 of the mine is available from groundwater boreholes
on the mine properties that the company already owns. Use is subject to
receiving an Integrated Water Use Licence which was applied for in January 2011.
Progress with Eskom
Discussions continued with Eskom regarding the supply of 3mtpa of domestic grade
thermal coal to Eskom`s Mpumalanga power stations. The receipt of the mining
right represented a considerable step forward in these discussions.
Progress with Transnet
Discussions continued with Transnet Freight Rail regarding the transport of
6mtpa of export and domestic coal from late 2013. Once again, receipt of the
mining right provides a positive catalyst in progressing discussions.
Detailed engineering
Considerable progress was made during the quarter on the final engineering
designs of the mine infrastructure (by RSV Enco) and the coal handling and
preparation plant (by DRA). Design work is expected to be completed in the
current quarter.
Power supply
Arrangements continued to progress with Eskom regarding the power supply
requirements of the Boikarabelo mine. The company is also undertaking an
environmental impact study for a potential independent power supply option at
the mine site.
Discussions with banks
Potential debt providers from South Africa and Europe have commenced their
analysis for the project funding. Distribution of information occurred during
the quarter.
TASMANIA
Laboratory analysis and geological modelling continued from the drill programme
undertaken on the Woodbury tenement, where Resource Generation is exploring for
thermal coal. The programme was not sufficient to quantify a JORC resource and
further drilling is being considered for the current quarter. The analysis of
the drill holes confirmed the presence of coal mineralisation with high in situ
ash content.
CAMEROON
There was no activity during the quarter on Resource Generation`s uranium
tenements in Cameroon.
CORPORATE
ADR programme
A Level 1 American Depositary Receipt (ADR) programme was established during the
quarter, which will permit investors to invest in the company through a US-
traded security.
The Resource Generation ADR is traded on the US over-the-counter market and is
sponsored by Citi, which acts as the Depositary Bank. Each ADR has a ratio of
4:1; ie one ADR is equivalent to 4 shares.
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 March 2011
Consolidated statement of cash flows
Current Year to date
Cash flows related to operating activities quarter (9 mths)
$A`000 $A`000
1.1 Receipts from product sales and related - -
debtors
1.2 Payments for (a) exploration and - (1,572)
evaluation (1,888) (5,129)
(b) development - -
(c) production (567) (1,833)
(d) administration
1.3 Dividends received - -
1.4 Interest and other items of a similar 374 607
nature received
1.5 Interest and other costs of finance paid (3) (13)
1.6 Income taxes paid - -
1.7 Other (provide details if material) - -
Net Operating Cash Flows (2,084) (7,940)
Cash flows related to investing
activities
1.8 Payment for purchases of: (a) - -
prospects - -
(b) equity investments (5,469) (8,948)
(c) other fixed assets (land)
1.9 Proceeds from sale of: (a) prospects - -
(b) equity investments - -
(c) other fixed assets - -
1.1 Loans to other entities - -
0
1.1 Loans repaid by other entities - -
1
1.1 Other- Government charges in relation to 482 1,602
2 land acquisitions (refundable)
(4,987) (7,346)
Net investing cash flows
1.1 Total operating and investing cash flows (7,071) (15,286)
3 (carried forward)
Current Year to date
quarter (9 mths)
$A`000 $A`000
1.13 Total operating and investing (7,071) (15,286)
cash flows (brought forward)
Cash flows related to financing
1.14 activities 250 39,666
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 250 39,666
Net increase (decrease) in cash (6,821) 24,380
held
1.20 Cash at beginning of 37,223 6,088
quarter/year to date
1.21 Exchange rate adjustments to (92) (158)
item 1.20
1.22 Cash at end of quarter 30,310 30,310
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 available Amount 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 -
4.2 Development (2,148)
4.3 Production -
4.4 Administration (457)
Total (2,605)
Reconciliation of cash
Reconciliation of cash at the end of the Current quarter Previous
quarter (as shown in the consolidated $A`000 quarter
statement of cash flows) to the related items $A`000
in the accounts is as follows.
5. Cash on hand and at bank 14 16
1
5. Deposits at call 30,114 37,025
2
5. Bank overdraft - -
3
5. Other (Bank guarantees) 182 182
4
Total: cash at end of quarter (item 1.22) 30,310 37,223
Changes in interests in mining tenements
Tenement Nature of Interest at Interest at
reference interest beginning end of
of quarter quarter
6. Interests EL64/2007 Exploration 100% 0%
1 in mining licence in
tenements Tasmania
relinquish relinquished
ed,
reduced or
lapsed
6. Interests N/A
2 in mining
tenements
acquired
or
increased
Issued and quoted securities at end of current quarter
Description includes rate of interest and any redemption or conversion rights
together with prices and dates.
Total number Number Issue Amount paid
quoted price up per
per security ($)
security
($)
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 244,400,530 244,400, Various Fully paid
securities 530
7.4 Changes during
quarter 500,000 500,000 $0.50 $0.50
Increases
through issues
Nil
Decreases
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) 2,375,000 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 500,000 Nil $0.50 7/7/2013
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: 14 April 2011
(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: 14/04/2011 09:28:01 Supplied by www.sharenet.co.za
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