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RSG - Resource Generation Limited - Quarterly Report for the three months ended
31 December 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 December 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. The Boikarabelo mine has probable reserves of 744.8 million tonnes of
coal on 35% of the tenements under the company`s control.
HIGHLIGHTS
* MOU signed with Transnet.
* Boikarabelo mining right update.
* Regulatory approval update.
* Agreement signed to secure water for stage 2 of the mine operations
* Continued strong interest from financiers for debt funding.
SOUTH AFRICA
MOU signed with Transnet
Ledjadja signed a memorandum of understanding (MOU) with Transnet Freight Rail
(TFR) during the quarter. Under the MOU, TFR has agreed to haul Boikarabelo
coal on a take or pay basis as follows: 4 million tonnes in the year commencing
1 July 2014, 5 million tonnes in the year commencing 1 July 2015 and 6 million
tonnes per annum from 1 July 2016. 50% of the coal will be hauled to export
ports and 50% to the Mpumalanga Highveld, which is where Eskom`s power stations
are located. Freight rates are yet to be determined but will reflect
commercially fair and reasonable terms.
Whilst rail capacity currently exists, upgrade works on the existing line
between Lephalale and Pyramid South have been identified and need to be
completed before coal haulage can commence. Ledjadja has agreed to undertake
the upgrade works if TFR agrees. These works are minor and able to be completed
prior to the forecast commencement of mining. Ledjadja has also agreed to work
with TFR to unlock additional capacity from the Waterberg.
The haulage agreement is conditional upon Boikarabelo commencing to produce
coal, the upgrade works being completed and the rail link from Boikarabelo to
the existing network being completed. The rail link is part of the capital
expenditure of the Boikarabelo mine and ownership and operations of the rail
link will be transferred to TFR in due course with compensation to be
negotiated. The rail link is intended to be a common user facility. The
agreement is also conditional on TFR completing its Waterberg Feasibility Study
aimed at unlocking a potential haulage capacity of 22.5 million tonnes per annum
from the Waterberg and formal allocation of capacity by TFR.
Ledjadja submitted a draft long term coal haulage agreement based on TFR`s
standard terms and conditions on 18 November 2011. Communications are occurring
and TFR`s recent announcements of infrastructure upgrades to expand the
Waterberg network have been welcomed.
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. The statutory appeal process is
underway and Ledjadja provided its formal response to the DMR in the previous
quarter. The DMR`s communication of its response to the appellants is awaited.
The company is confident that the mining right will be confirmed and is
continuing its normal activities to develop the mine.
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 progressed without
any material issues; however minor variations to the application resulted in
departmental processes requiring a second environmental impact assessment, which
has delayed the expected NEMA approval until early 2012.
The application for an Integrated Water Use Licence (IWULA) in December 2010 has
also progressed to a mature stage.
Agreement signed to secure water for stage 2 of the mine operations
An agreement was signed during the quarter with the Lephalale Local Municipality
(LLM) in Limpopo Province which will secure the water required for stage 2 of
the company`s planned Boikarabelo mine.
Under the contract, which is subject to a number of conditions, the company will
construct, operate and maintain a wastewater treatment plant at Marapong,
approximately 50 kilometres from Boikarabelo. This will treat municipal effluent
and generate up to 16 megalitres of water per day, which will be pumped to the
mine site via a new pipeline.
Resource Generation has been working with LLM for two years on plans for the
plant, which will provide LLM with essential infrastructure. This is a key
responsibility which the company`s black empowered subsidiary, Ledjadja Coal
(Pty) Limited, committed to undertake as part of its social and labour plan for
the Boikarabelo mine.
The key terms of the agreement with LLM are as follows:
* The term is 30 years from the date of grant of the water use licence by the
Department of Water Affairs, subject to satisfaction of a number of
conditions. The conditions include an environmental impact assessment
being approved by relevant government departments by 28 February 2013,
sufficient power supply being secured by LMM, and all other required
government approvals (including NEMA approval) being obtained by 28
February 2013. An extension of time is possible should delays be
experienced.
* Resource Generation will pay for the Marapong wastewater treatment plant
upgrade works and expansion works to extend capacity to 4 megalitres per
day by January 2014, increasing to 16 megalitres per day by January 2017.
It will also construct the Marapong -Boikarabelo effluent transfer pump
station and associated works including the transfer pipeline.
* Resource Generation will manage, operate and maintain the treatment plant
after the expansion at its own cost until the operations transfer date,
which is one year after completion of the expansion works. At that time LLM
will become responsible for management, operation and maintenance of the
plant.
* From 1 January 2014, the Boikarabelo mine will be supplied with a minimum
of 4 megalitres of treated effluent per day and from 1 January 2017 a
maximum of 16 megalitres per day.
* From the operations transfer date, Resource Generation will continue to pay
for the operation and maintenance costs. The company will also pay for
insurance for the plant for the term of the agreement.
Continued strong interest from financiers for debt funding
Potential debt funders have confirmed their continued strong interest in
providing project finance for the development of the Boikarabelo mine.
Completion of the financiers` due diligence is subject to satisfactory
arrangements with both TFR and Eskom. The company is working toward contractual
arrangements with both of these parties.
Drilling activities
Five large diameter core holes were drilled on the Kalkpan property which will
be the commencement point for the Boikarabelo open cut mine pit. A sixth hole
is due to be completed in February. 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.
Two core holes were drilled on each of the three Waterberg One Coal properties
as part of the requirements for maintenance of the prospecting rights. Results
were as expected and do not alter the earlier interpretations of resources and
reserves.
CAMEROON
There was no activity during the quarter on Resource Generation`s uranium
tenements in Cameroon.
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 December 2011
Consolidated statement of cash flows
Current Year to date
Cash flows related to operating activities quarter (6 mths)
$A`000 $A`000
1.1 Receipts from product sales - -
and related debtors
1.2 Payments for (a) (291) (291)
exploration and evaluation (1,766) (3,167)
(b) development - -
(c) production (671) (1,342)
(d) administration
1.3 Dividends received - -
1.4 Interest and other items of a 318 603
similar nature received
1.5 Interest and other costs of (2) (4)
finance paid
1.6 Income taxes paid - -
1.7 Other (provide details if - -
material)
Net Operating Cash Flows (2,412) (4,201)
Cash flows related to
investing activities
1.8 Payment for purchases of: - -
(a) prospects - -
(b) equity investments (79) (79)
(c) other fixed assets
1.12 Proceeds from sale of: (a) - -
prospects - -
(b) equity investment (38) 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 57 454
relation to land acquisitions
(refundable)
(60) 1,875
Net investing cash flows
1.13 Total operating and investing (2,472) (2,326)
cash flows (carried forward)
Current Year to date
quarter (6 mths)
$A`000 $A`000
1.13 Total operating and investing (2,472) (2,326)
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 (2,472) (3,609)
cash held
1.20 Cash at beginning of 23,685 25,322
quarter/year to date
1.21 Exchange rate adjustments to (388) (888)
item 1.20
1.22 Cash at end of quarter 20,825 20,825
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 272
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 (210)
4.2 Development (1,983)
4.3 Production -
4.4 Administration (637)
Total (2,830)
Reconciliation of cash
Reconciliation of cash at the end of Current quarter Previous quarter
the quarter (as shown in the $A`000 $A`000
consolidated statement of cash
flows) to the related items in the
accounts is as follows.
5. Cash on hand and at bank 32 443
1
5. Deposits at call 20,453 22,788
2
5. Bank overdraft - -
3
5. Other (Bank guarantees) 340 454
4
Total: cash at end of quarter 20,825 23,685
(item 1.22)
Changes in interests in mining tenements
Tenement Nature of Interest Interest at
reference interest at end of
beginning quarter
of quarter
6.1 Interests in N/A N/A N/A N/A
mining
tenements
relinquished,
reduced or
lapsed
6.2 Interests in N/A N/A N/A N/A
mining
tenements
acquired or
increased
Issued and quoted securities at end of current quarter
Description includes rate of interest and any redemption or conversion rights
together with prices and dates.
Total number Number Issue Amount paid
quoted price per up per
security security
($) ($)
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 262,895,652 262,895,652 Various Fully paid
securities
7.4 Changes during
quarter Nil
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) 1,875,000 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: 27 January 2012
(Company secretary)
Print name: 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: 27/01/2012 10:13:01 Supplied by www.sharenet.co.za
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