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Quarterly Report for the three months ended 31 March 2013
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 March 2013
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
- Mine construction activities have commenced, with the site now classified as an
operating mine site. Initial activities encompass site infrastructure, roadworks and water
and power connections.
- A strategic partnership has been entered into with Noble under which
- Noble acquired a 7.5% shareholding at 40c per share;
- A US$123 million loan facility has been provided by Noble;
- Noble has entered into a 35 year off-take contract; and
- Noble has been appointed the supply chain manager and exclusive marketing agent
for Boikarabelo.
- Due to the delay experienced prior to the receipt of the project finance offers, a secured
debenture was issued to the Noble Group (Noble) to raise $20 million cash to augment
available funding and commence initial construction activities at Boikarabelo.
- The financiers mandated to provide a project finance facility for the development of the
Boikarabelo coal mine provided credit-approved offers of project finance. The offers
deviated from the agreed terms sheet credit approvals for the facility and included
commercial conditions which are unacceptable to the company. Negotiations on these
conditions are continuing.
- Funding is being undertaken in stages, including equipment finance and utilisation of
Noble’s debt facility as a platform for continuing to secure project funding. An
equipment finance facility offer has been received from Caterpillar Finance for the
mobile equipment and negotiations are underway to finalise the terms, which if not
resolved will lead to the equipment being tendered to the major manufacturers. Tenders
have also been released for the materials handling equipment, which include finance
optionality. Discussions are proceeding with financial institutions to join Noble for a
debt facility.
- Key achievements to date have been:
- Obtaining a 30 year mining right.
- Life–of-mine development consent for construction of the mine and the rail link to
the existing network.
- 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.
- A rail haulage contract with Transnet with confirmed allocation to meet export and
domestic sales requirements for stage 1 of operations.
- A port access contract which is sufficient for stage 1 export requirements.
- Three significant export contracts to supply thermal coal to Indian customers and a
global trader.
- Acquisition of all land required for the mine and for the rail link.
- Sufficient power supply arranged for stage 1 of operations.
- A fully compliant BEE structure.
- A strategic partnership with Noble.
- The project’s sovereign risk has been minimised as a result of overcoming all major
regulatory hurdles faced by the company.
- 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
Noble Debenture and Offtake Contract
Early in the quarter, a secured debenture was issued to Noble to raise $20 million cash to
augment available funding and commence initial construction activities at Boikarabelo.
A third export coal offtake contract for the Boikarabelo project was also entered into with
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.
Financing Syndicate Progress
The financiers mandated to provide a project finance facility for the development of the
Boikarabelo coal mine provided credit-approved offers of project finance during the quarter.
The offers deviated from the agreed terms sheet for credit approvals for the facility and
included commercial conditions which are unacceptable to the company. Negotiations on
these conditions are continuing.
Resource Generation thus announced that it is considering alternative sources of funding to
construct Boikarabelo. This process will allow greater flexibility and without contingencies
and costs associated with debt funding, capital expenditure is estimated at $530 million,
which includes $100 million for mobile equipment. By securing finance from alternative
sources to part-fund this expenditure, the company will have flexibility to raise the remaining
capital required to complete construction of the mine by way of equity or debt at a later time.
The US$123 million loan from Noble (refer below) and the Caterpillar equipment finance
offer are the first steps towards completing funding.
Strategic Partnership with Noble
In addition to subscribing for 7.5% of Resource Generation’s equity at $0.40 per share at the
end of the quarter, Noble has agreed to provide Resource Generation with a secured loan
facility of up to US$123 million on normal commercial terms. The facility can be drawn
down until 31 December 2013 and will be repayable 21 months after the first draw-down.
This loan facility is in addition to the $20 million secured debenture issued to Noble in
January 2013.
Noble has increased the tonnages and term of the off-take contract agreed earlier from 2.5
million tonnes which was to be supplied over five years to the following:
Delivery Period Annual Quantity
(Tonnes)
Years 1-8 500,000
Years 9-12 1,500,000
Years 13-14 2,000,000
Years 15-35 2,500,000
Prices will be set by reference to an internationally recognised index at the time of each
shipment.
Resource Generation has also entered into an exclusive supply chain management and
marketing agreement with Noble under which Noble will manage the supply chain and
marketing of Boikarabelo’s domestic and export coal sales for 35 years.
Physical Progress on Site
Mine construction activities commenced at Boikarabelo in mid-February, with the site now
classified as an operating mine site. Initial activities encompass site infrastructure, roadworks
and water and power connections. Good progress has been made to date. Depicted below are
some of the local workforce of equal gender split, who are employed in the mine
construction.
Preparation for Construction
Together with the EPCM providers for the construction of the mine, tenders have been issued
for longer lead time items and packages for the early stages of construction. Aveng E+PC is
assisting the company with the preparation plant designs and associated tenders. RSV Enco
is assisting the company with the infrastructure designs and associated tenders, including for
the mobile equipment, which will be released shortly.
CAMEROON
There was no activity during the quarter on Resource Generation’s uranium tenements in
Cameroon.
CORPORATE
Cash reserves at 31 March 2013 were $25.7 million. These funds are after receiving $20
million from Noble through a secured debenture and $8.5 million raised by way of an equity
placement to Noble at $0.40 per share.
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.
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 2013
Consolidated statement of cash flows
Current quarter Year to date (9 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 (5) (43)
(b) development (1,993) (7,916)
(c) production - -
(d) administration (811) (1,550)
1.3 Dividends received - -
1.4 Interest and other items of a similar nature received 147 404
1.5 Interest and other costs of finance paid (5) (8)
1.6 Income taxes paid - -
1.7 Other (provide details if material) - -
Net Operating Cash Flows (2,667) (9,113)
Cash flows related to investing activities
1.8 Payment for purchases of: (a) prospects - -
(b) equity investments - -
(c) other fixed assets (6,347) (6,817)
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 129 860
acquisitions, borrowings and development
expenditure (refundable)
(6,218) (5,957)
Net investing cash flows
1.13 Total operating and investing cash flows (carried
(8,885) (15,070)
forward)
Current quarter Year to date (9 mths)
$A’000 $A’000
1.13 Total operating and investing cash flows (brought
(8,885) (15,070)
forward)
Cash flows related to financing activities
1.14 Proceeds from issues of shares, options, etc. 8,541 8,654
1.15 Proceeds from sale of forfeited shares - -
1.16 Proceeds from borrowings 20,000 20,000
1.17 Repayment of borrowings - -
1.18 Dividends paid - -
1.19 Other (BEE Loan) (54) (1,323)
1.19 Other (Mining Licence Deposit) - 1,846
1.19 Other (Cost of Borrowings) (500) (500)
Net financing cash flows 27,987 28,677
Net increase (decrease) in cash held 19,102 13,607
1.20 Cash at beginning of quarter/year to date 6,551 12,116
1.21 Exchange rate adjustments to item 1.20 27 (43)
1.22 Cash at end of quarter 25,680 25,680
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. A US$123 million loan facility agreement was entered into with Noble on 28 March 2013.
Amount available Amount used
$A’000 $A’000
3.1 Loan facilities 137,974 20,000
3.2 Credit standby arrangements - -
Resource Generation Limited
Quarterly Report to 31 March 2013
Estimated cash outflows for next quarter
$A’000
4.1 Exploration and evaluation (261)
4.2 Development (8,179)
4.3 Production -
4.4 Administration (729)
Total (9,169)
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 $A’000
the related items in the accounts is as follows.
5.1 Cash on hand and at bank 10 203
5.2 Deposits at call 25,670 6,348
5.3 Bank overdraft - -
5.4 Other (Bank guarantees) - -
Total: cash at end of quarter (item 1.22) 25,680 6,551
Changes in interests in mining tenements
Tenement reference Nature of interest Interest at Interest at
beginning of end of
quarter quarter
6.1 Interests in N/A N/A N/A N/A
mining tenements
relinquished,
reduced or lapsed
6.2 Interests in N/A N/A N/A N/A
mining tenements
acquired or
increased
Issued and quoted securities at end of current quarter
Description includes rate of interest and any redemption or conversion rights together with prices and dates.
Total number Number Issue price per Amount paid
quoted security up per security
($) ($)
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 284,698,002 284,698,002 Various Fully paid
7.4 Changes during quarter
(a) Increases 21,352,350 21,352,350 $0.40 $0.40
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
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 Nil
7.10 Expired during quarter 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
7.11 Debentures N/A
(totals only)
7.12 Unsecured notes (totals N/A
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.
Sign here: Date: 18 April 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.
Sydney
17 April 2013
JSE Sponsor:
Macquarie First South Capital (Proprietary) Limited
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