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RSG - Resource Generation Limited - Quarterly Report for the three months ended
30 June 2011
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 30 June 2011
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.
HIGHLIGHTS
* Boikarabelo mining right received.
* Strong interest from financiers for debt funding.
* Export coal off-take contract increased.
* Eskom and Transnet discussions progressing.
* New BEE partner.
* Waterberg One Coal shareholding increased.
* Regulatory approval update.
* Detailed engineering design update.
SOUTH AFRICA
Mining right received
A 30 year mining right was issued to Ledjadja Coal (Pty) Limited (Ledjadja), in
which Resource Generation has a 74% shareholding, for its Boikarabelo mine by
the South African Department of Mineral Resources (DMR). A rehabilitation
deposit of R17.7 million ($2.5 million) was provided to the DMR.
Strong interest from financiers for debt funding
Potential debt funders were invited to submit expressions of interest and
indicative term sheets, and a number of submissions were received which more
than cover the company`s anticipated debt requirements. The Company is pleased
with the confidence shown in Boikarabelo by these potential debt providers.
Completion of the financiers` due diligence is subject to satisfactory
arrangements with both Transnet Freight Rail and Eskom.
Export coal off-take contract increased
Integrated Coal Mining Limited, part of India`s RPG Group, signed a contract to
increase its purchases of thermal coal from the Boikarabelo mine to 139 million
tonnes from 37 million tonnes. The purchases will take place over 38 years, up
from 20 years in the original contract. Pricing will be based on the
international market price at the time of each shipment.
The initial off-take of 37 million tonnes has increased to 73 million tonnes
beginning when the Boikarabelo mine commences production, which is currently
scheduled for late 2013. The balance of the additional off-take of 66 million
tonnes is linked to the mine`s stage 2 expansion which envisages doubling
production to around 40 million tonnes per annum of run-of-mine coal, maximising
production of export quality coal and generating an equivalent volume of
domestic product.
In conjunction, CESC Limited, the flagship power company of the RPG Group, is
beginning a feasibility study for construction of a 1,320MW coal-fired power
station adjacent to the Boikarabelo mine to supply power to the South African
grid. This proposed power station would use around half of the additional
domestic product, thereby underpinning plans to develop Stage 2, reducing
reliance on domestic coal off-take from Eskom and maximising export coal
production.
Progress with Eskom
Detailed discussions continued with Eskom regarding a contract for the supply of
3mtpa of domestic grade thermal coal to Eskom`s Mpumalanga power stations.
Recently, senior executives of Eskom have called for rapid development of
Waterberg mines.
Progress with Transnet
Discussions continue with Transnet Freight Rail regarding the transport of 6mtpa
of export and domestic coal from late 2013. In principle agreement has been
reached on facets of access whilst availability of rolling stock needs further
definition. Intensive effort is being made to reach a binding agreement in the
near term.
New BEE partner
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, finalised arrangements to acquire the 26% shareholding in
Ledjadja that was owned by Resource Generation`s original BEE (black economic
empowerment) partners.
Increase in Waterberg One Coal shareholding
Following the expenditure of USD5 million on exploration and development,
Resource Generation increased its shareholding in Waterberg One Coal (Pty)
Limited from 20% to 70%. Waterberg One Coal owns the Waterberg One tenement,
which is adjacent to Ledjadja`s and contains a measured resource of 865 million
tonnes, an indicated resource of 1.1 billion tonnes and a probable reserve of
314 million tonnes.
Regulatory approval update
Ledjadja applied for approval under the National Environmental Management Act
(NEMA) in January 2011 for construction of the mine infrastructure and the 36
kilometre rail link route from the Boikarabelo mine to the existing Transnet
rail line. Public consultation and administrative reviews have progressed
without any material issues; however protracted departmental processes have
delayed the expected approval from July 2011 for several months.
The application for an Integrated Water Use Licence (IWULA) in December 2010 has
also progressed favourably and approval is anticipated in the third quarter of
2011.
Power for mine construction has been secured from existing supply to properties
associated with the project. Power for the production stages will be through a
fluidised bed power station at the mine site, and the environmental impact study
for this is underway. In addition, progress continues to be made with Eskom
regarding arrangements for mains power supply requirements.
Detailed engineering
Final engineering designs for the mine infrastructure and the 36 kilometre rail
link were completed during July with capital expenditure broadly in line with
expectations, whilst final designs of the coal handling and preparation plant
are due by the end of July 2011.
Specifications of the on-site power station are still being finalised, although
financial failure of the principal contractor has resulted in the Company having
to review its approach to construction, and this review should be concluded in
the next quarter. Capital expenditure estimates for the construction of the mine
will be determined following completion of the remaining final engineering
designs.
TASMANIA
Geological modelling and analysis were completed from the drill programme
undertaken on the Woodbury tenement, where Resource Generation is exploring for
thermal coal. Coal qualities of an 18-20% ash product have been derived at an
average yield of 61%, accessed by open cut methods.
The programme was not sufficient to quantify a JORC resource and further
drilling and analysis have been planned for both this tenement and the adjoining
Jericho areas.
CAMEROON
There was no activity during the quarter on Resource Generation`s uranium
tenements in Cameroon.
CORPORATE
Equity raising
Bantal Singapore Pte Limited, a wholly owned subsidiary of CESC Limited,
subscribed $10.0 million for a 4.6% shareholding in Resource Generation. This
involved the placement of 12,195,122 Resource Generation shares at $0.82 per
share.
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
Date: 25 July 2011
* 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 30 June 2011
Consolidated statement of cash flows
Cash flows related to operating activities Current Year to date
quarter (12 mths)
$A`000 $A`000
1.1 Receipts from product sales and - -
related debtors
1.2 Payments for (a) (23) (1,595)
exploration and evaluation (710) (5,839)
(b) development - -
(c) production (726) (2,559)
(d) administration
1.3 Dividends received - -
1.4 Interest and other items of a 416 1,023
similar nature received
1.5 Interest and other costs of finance (3) (16)
paid
1.6 Income taxes paid - -
1.7 Other (provide details if material) - -
Net Operating Cash Flows (1,046) (8,986)
Cash flows related to investing
activities
1.8 Payment for purchases of: (a) - -
prospects (726) (726)
(b) equity investments
(subsidiary) (1,174) (10,122)
(c) other fixed assets (land)
1.12 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 (935) 667
relation to land acquisitions
(refundable)
Net investing cash flows (2,835) (10,181)
1.13 Total operating and investing cash (3,881) (19,167)
flows (carried forward)
Current Year to date
quarter (12 mths)
$A`000 $A`000
1.13 Total operating and investing cash (3,881) (19,167)
flows (brought forward)
Cash flows related to financing
1.14 activities 10,203 49,870
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) (8,331) (8,331)
1.19 Other (Mining Licence Deposit) (2,553) (2,553)
Net financing cash flows (681) 38,986
Net increase (decrease) in cash (4,562) 19,819
held
1.20 Cash at beginning of quarter/year 30,310 6,088
to date
1.21 Exchange rate adjustments to item (426) (585)
1.20
1.22 Cash at end of quarter 25,322 25,322
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
1.2 Aggregate amount of payments to the 270
3 parties included in item 1.2
1.2 Aggregate amount of loans to the parties -
4 included in item 1.10
1.2 Explanation necessary for an understanding of the transactions
5
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. Exploration and evaluation -
1
4. Development (1,984)
2 Production -
4. Administration (408)
3
4.
4
Total (2,392)
Reconciliation of cash
Reconciliation of cash at the end of the Current Previous
quarter (as shown in the consolidated quarter quarter
statement of cash flows) to the related $A`000 $A`000
items in the accounts is as follows.
5. Cash on hand and at bank 26 14
1
5. Deposits at call 25,111 30,114
2
5. Bank overdraft - -
3
5. Other (Bank guarantees) 185 182
4
Total: cash at end of quarter (item 25,322 30,310
1.22)
Changes in interests in mining tenements
Tenement Nature of Interest at Interest at
reference interest beginning of end of
quarter quarter
6. Interests N/A
1 in mining
tenements
relinquish
ed,
reduced or
lapsed
6. Interests PR678/2007 Shareholding 20% 70%
2 in mining PR720/2007 in Waterberg
tenements One Coal (Pty)
acquired Limited, the
or owner of the
increased tenement
Issued and quoted securities at end of current quarter
Description includes rate of interest and any redemption or conversion rights
together with prices and dates.
Total Number Issue Amount paid
number quoted price per up per
security security ($)
($)
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 262,895, 262,895,6 Various Fully paid
securities 652 52
7.4 Changes during
quarter 5,800,00 5,800,000 0.94* Fully paid
Increases 0 500,000 0.50 Fully paid
through issues 500,000 12,195,12 0.82 Fully paid
12,195,1 2
Decreases 22 *Employee
through returns of Share
capital, buy-backs Plan -
Nil market
value
on day of
grant
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 factor) 1,875,00 Nil 31/12/2012
0 Nil $0.25 7/7/2013
1,875,00 Nil 17/3/2013
0 Nil $0.50 28/11/2012
250,000 Nil 17/3/2013
450,000 Nil $0.50 17/3/2013
250,000 Nil 17/3/2013
350,000 Nil $0.50 28/5/2013
350,000 Nil 28/5/2013
375,000 Nil $0.60 28/5/2013
375,000
500,000 $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: 25 July 2011
Print name: 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: 25/07/2011 11:58:01 Supplied by www.sharenet.co.za
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