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Quarterly Report
for the three months ended 31 December 2012
Resource Generation Limited
Registered in Australia under the Corporations Act, 2001 (Cth) with registration number ACN: 059 950 337
ISIN: AU000000RES1
Share Code on the ASX: RES
Share Code on the JSE: RSG
("Resgen" or the “Company”)
Quarterly Report
for the three months ended 31 December 2012
Resource Generation is developing the Boikarabelo coal mine in the Waterberg
region of South Africa where there are probable reserves of 744.8 million tonnes of
coal on 35% of the tenements under its control. Stage 1 of the mine development
targets saleable coal production of 6 million tonnes per annum.
PRESENT STATUS
The financiers mandated to provide a project finance facility for the development of the
Boikarabelo mine are now finalising their credit submissions to obtain formal credit
approvals for the facility. The terms sheet supporting these submissions was agreed
immediately prior to Christmas. Final decisions by the credit committees are anticipated
by the end of February.
Assuming binding offers for project finance are received, the company will progress to
an equity raising for the balance of the funds needed to develop the mine.
Key achievements to date have been:
o Obtaining a 30 year mining right.
o Life–of-mine development consent for construction of the mine and the rail link to
the existing network.
o Obtaining an integrated water use licence, that includes utilising bore water from the
company’s properties, which will be sufficient for stage 1 of operations.
o A rail haulage contract with Transnet with confirmed allocation to meet export and
domestic sales requirements for stage 1 of operations.
o A port access contract which is sufficient for stage 1 export requirements.
o Three significant export contracts to supply thermal coal to Indian customers and a
global trader.
o Acquisition of all land required for the mine and for the rail link, including some
servitude arrangements.
o Sufficient power supply arranged for stage 1 of operations.
o A fully compliant BEE structure.
The project’s sovereign risk has been minimised as a result of overcoming all major
regulatory hurdles faced by the company.
If funding is completed by the end of March 2013, construction of the mine, its
infrastructure and the rail link is expected to take 24 months, with Stage 1 saleable
production (6 million tonnes per annum) beginning at the end of the first quarter in 2015.
Construction of Stage 2, planned to increase saleable production to more than 20 million
tonnes per annum, is expected to be funded from cash flow and a further equity capital
raising is not envisaged.
The Waterberg region accounts for 40% of South Africa’s remaining coal resources and
Boikarabelo has probable reserves of 744.8 million tonnes* on 35% of its tenements.
PROGRESS DURING THE QUARTER
Financing Syndicate Progress
At the start of the quarter, Resource Generation’s BEE Boikarabelo project awarded a
mandate to six South African and global banks and other financiers (the Financing
Syndicate) to provide project debt finance for the construction of the Boikarabelo mine. The
financiers are:
Absa Capital, a division of Absa Limited, a member of the Barclays Bank Group;
Caterpillar Financial SARL;
FirstRand Bank Limited, acting through its Rand Merchant Bank division;
Hong Kong & Shanghai Banking Corporation (HSBC);
Nedbank Capital, a division of Nedbank Limited; and
Standard Chartered Bank.
The award of the mandate to the Financing Syndicate followed an extensive tender process
(including other global banks) and negotiation of key commercial terms.
Due diligence reports have been finalised by independent experts engaged on behalf of the
financiers. The experts are Bowman Gilfillan Inc (legal), Coffey Mining, Jardine Lloyd
Thompson, KPMG and Wood McKenzie.
At the end of the quarter a credit submissible terms sheet was agreed with the Financing
Syndicate. The financiers are now processing their credit submissions to obtain formal credit
approvals for the facility and these are targeted for receipt by the end of February. Financial
close and first funding are expected to be subject to conditions precedent typical of project
finance facilities of this nature, including raising sufficient equity capital to fully fund the
balance of the expected capital expenditure and project costs for mine development.
Assuming credit approval for the debt funding is obtained as envisaged, the company will
proceed with an equity raising for the balance of the funds needed to develop the mine. The
company is confident that the mine’s projected cash flow potential and value will be
recognised in the price of the proposed equity raising. However, the terms of the equity
raising and participants in the raising are still to be determined.
Port Access Arrangements
A port access contract was signed with Bulk Connections which operates a multi-purpose
terminal at the Port of Durban. Under the take or pay contract, Bulk Connections, which is
part of the Bidvest Group, will allocate Boikarabelo sufficient stockpile capacity to ship coal
at least once per week, enabling the company to meet its Stage 1 export targets from early
2015.
Additional coal offtake contract
A third coal offtake contract for the Boikarabelo project has been entered into with Noble
Resources International Pte. Ltd. (a wholly owned subsidiary of the Noble Group) (Noble)
for the supply of 2.5 million tonnes of coal over a five year period, after production
commences at the Boikarabelo mine. Coal prices will be set by reference to an
internationally recognised index at the time of each shipment.
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Resource Generation and Noble have also agreed to have good faith discussions with regards
to a strategic marketing alliance for Boikarabelo coal.
Eskom update
Eskom is studying technical assessments from its preferred power stations relating to
contractual terms for the initial supply of 3 million tonnes of thermal coal per annum.
Coal handling and preparation plant update
The optimal solution has been finalised from both a functional and cost perspective and is
being incorporated into the mine design. Aveng E+PC has commenced detailed design work.
CAMEROON
There was no activity during the quarter on Resource Generation’s uranium tenements in
Cameroon.
CORPORATE
Cash reserves at 31 December 2012 were $6.5 million. Immediately after the end of the
quarter, Resource Generation agreed to issue a secured debenture to Noble to raise $20
million cash to augment available funding and progress construction activities at its
Boikarabelo coal mine. Funds were received on 8 January 2013 and are on normal
commercial terms. The debenture is repayable in December 2013. The raising has been
necessary due to a delay in the completion of the project debt finance from the Company’s
initial expectations. Construction activities are scheduled to commence on site on
11 February 2013, which will facilitate the commencement of the major construction as soon
as possible after the completion of funding.
The main focus for the next quarter will be finalising the project finance for the development
of the Boikarabelo mine and the subsequent equity raising to meet the required total
expenditure required to develop the mine.
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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
* 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.
Page 4 of 9
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 2012
Consolidated statement of cash flows
Current quarter Year to date (6 mths)
Cash flows related to operating activities $A’000 $A’000
1.1 Receipts from product sales and related debtors - -
1.2 Payments for (a) exploration and evaluation (15) (38)
(b) development (3,603) (5,923)
(c) production - -
(d) administration (537) (739)
1.3 Dividends received - -
1.4 Interest and other items of a similar nature received 89 257
1.5 Interest and other costs of finance paid (3) (3)
1.6 Income taxes paid - -
1.7 Other (provide details if material) - -
Net Operating Cash Flows (4,069) (6,446)
Cash flows related to investing activities
1.8 Payment for purchases of: (a) prospects - -
(b) equity investments - -
(c) other fixed assets (189) (470)
1.12 Proceeds from sale of: (a) prospects - -
(b) equity investment - -
(subsidiary) - -
(c) other fixed assets - -
1.10 Loans to other entities - -
1.11 Loans repaid by other entities - -
1.12 Other- Government charges in relation to land 130 731
acquisitions and development expenditure
(refundable)
(59) 261
Net investing cash flows
1.13 Total operating and investing cash flows (carried
(4,128) (6,185)
forward)
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Resource Generation Limited
Quarterly Report to 31 December 2012
Current quarter Year to date (6 mths)
$A’000 $A’000
1.13 Total operating and investing cash flows (brought
(4,128) (6,185)
forward)
Cash flows related to financing activities
1.14 Proceeds from issues of shares, options, etc. 113 113
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) (108) (1,269)
1.19 Other (Mining Licence Deposit) 1,846 1,846
Net financing cash flows 1,851 690
Net increase (decrease) in cash held (2,277) (5,495)
1.20 Cash at beginning of quarter/year to date 8,855 12,116
1.21 Exchange rate adjustments to item 1.20 (27) (70)
1.22 Cash at end of quarter 6,551 6,551
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 parties included in item 1.2 271
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.
On 8 January 2013, the company issued a secured debenture to Noble and received $20 million cash to augment
available funding and progress construction activities at its Boikarabelo coal mine. The debenture is repayable
in December 2013.
Amount available Amount used
$A’000 $A’000
3.1 Loan facilities - -
3.2 Credit standby arrangements - -
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Resource Generation Limited
Quarterly Report to 31 December 2012
Estimated cash outflows for next quarter
$A’000
4.1 Exploration and evaluation (250)
4.2 Development (4,106)
4.3 Production -
4.4 Administration (686)
Total (5,042)
Reconciliation of cash
Reconciliation of cash at the end of the quarter (as Current quarter Previous quarter
shown in the consolidated statement of cash flows) to $A’000 $A’000
the related items in the accounts is as follows.
5.1 Cash on hand and at bank 203 148
5.2 Deposits at call 6,348 8,707
5.3 Bank overdraft - -
5.4 Other (Bank guarantees) - -
Total: cash at end of quarter (item 1.22) 6,551 8,855
Changes in interests in mining tenements
Tenement reference Nature of interest Interest at Interest at
beginning of end of
quarter quarter
6.1 Interests in N/A N/A N/A N/A
mining tenements
relinquished,
reduced or lapsed
6.2 Interests in N/A N/A N/A N/A
mining tenements
acquired or
increased
Page 7 of 9
Resource Generation Limited
Quarterly Report to 31 December 2012
Issued and quoted securities at end of current quarter
Description includes rate of interest and any redemption or conversion rights together with prices and dates.
Total number Number Issue price per Amount paid
quoted security up per security
($) ($)
7.1 +Preference N/A
securities (description)
7.2 Changes during quarter N/A
(a) Increases through
issues
(b) Decreases
through returns of
capital, buy-backs,
redemptions
7.3 +Ordinary securities 263,345,652 263,345,652 Various Fully paid
7.4 Changes during quarter
(a) Increases 450,000 450,000 $0.25 $0.25
through issues
(b) Decreases Nil
through returns of
capital, buy-backs
7.5 +Convertible debt N/A
securities (description)
7.6 Changes during quarter N/A
(a) Increases through
issues
(b) Decreases through
securities matured,
converted
7.7 Options (description Exercise price Expiry date
and conversion factor) 1,875,000 Nil $0.50 7/7/2013
1,875,000 Nil $0.50 13/3/2014
250,000 Nil $0.50 17/3/2013
250,000 Nil $0.70 17/3/2013
350,000 Nil $1.00 17/3/2013
350,000 Nil $1.50 17/3/2013
375,000 Nil $1.55 28/5/2013
375,000 Nil $1.85 28/5/2013
500,000 Nil $2.05 28/5/2013
7.8 Issued during quarter Nil
7.9 Exercised during quarter 450,000 Nil $0.25 28/11/2012
7.10 Expired during quarter 450,000 Nil $0.60 28/11/2012
7.11 Debentures N/A
(totals only)
7.12 Unsecured notes (totals N/A
only)
Page 8 of 9
Resource Generation Limited
Quarterly Report to 31 December 2012
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.
Sign here: Date: 24 January 2013
(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.
== == == == ==
Page 9 of 9
Sydney
25 January 2013
JSE Sponsor:
Macquarie First South Capital (Proprietary) Limited
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