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Quarterly Report for the three months ended 30 September 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 30 September 2013
Resource Generation is developing its Boikarabelo coal mine in the Waterberg region
of South Africa, which accounts for 40% of the country’s remaining coal resources.
There are probable reserves of 744.8* million tonnes of coal on 35% of the tenements
under the company’s control. Stage 1 of the mine development targets saleable coal
production of 6 million tonnes per annum.
PRESENT STATUS
Finance
- Public Investment Corporation SOC Limited (one of Africa’s largest investment
managers, owned by the South African Government and managing assets of over
ZAR1.4 trillion (A$150 billion), Barsington Ltd (a subsidiary of Noble Group) and
Shinto Torii Inc (a subsidiary of Altius Investment Holdings (Pty) Limited) and a
number of domestic and international investors acquired 237.2 million shares at 22 cents
per share after the end of the quarter, completing the 1-for-1 entitlement offer that raised
a total of $62.6 million.
- Following this placement, Public Investment Corporation’s shareholding in Resource
Generation is 19.90%, Barsington’s is 17.97% and Shinto Torii’s is 10.91%.
- Two pathways are being undertaken to debt fund both the infrastructure and equipment,
including negotiations with 11 project finance banks.
- Tenders have been received and evaluated for the supply of mobile equipment and
materials handling equipment for the coal handling and preparation plant (CHPP) and
the entire CHPP. Funding is being negotiated with the suppliers.
Physical Progress
- Construction of Boikarabelo’s mine infrastructure has continued.
- Preparatory construction of the 40 kilometre rail link began during the quarter.
- Social and labour plan projects in the local communities have begun to be implemented.
Timetable
? Construction is expected to take two years and, subject to agreements on funding,
production is expected to begin in late 2015.
? All regulatory hurdles have been overcome, all necessary land has been acquired, and the
company has rail haulage and port access contracts sufficient for Boikarabelo’s stage 1
production.
Offtake Contracts
- Three long-term export offtake contracts have been entered into with CESC, Valu
Investments and Noble Group. These contracts underwrite most of the forecast revenue
from Boikarabelo’s stage 1 production and a substantial portion of stage 2 production.
- A domestic offtake contract for 3.0 million tonnes per annum of middlings coal has been
entered into with Noble Group for the first eight years of production.
Resource Generation Limited
Quarterly Report to 30 September 2013
Proposed Power Stations
- Valu has commenced feasibility studies for the proposed development of a 200 MW
power station and a larger 1200 MW coal-fired power station adjacent to the Boikarabelo
mine.
PROGRESS DURING THE QUARTER
Debt Finance
Negotiations continued with 11 banks who received data room access and are undertaking
due diligence. Progress is expected towards achieving final term sheets and credit approval
over the next quarter.
The main focus during the quarter was on arranging alternative sources of funding. The
majority of tenders received, for mobile equipment, materials handling for the CHPP, and the
entire CHPP, had funding support. Technical assessments of the various tenders have been
completed and negotiations are continuing on the funding support. Such funding is complex
and is targeted for completion over the next few months.
Operational Activities
The bulk of the company’s South African employees have relocated to an interim office at
the mine site and are installing the mine’s safety and operational procedures for the
construction contractors’ compliance. Land clearing for the development of the construction
camp has been completed. Earthworks and construction of the initial camp for construction
of the rail link, which will house 200 people, have begun.
Land clearing for the 40 kilometre rail link has also commenced. Projects to commence
shortly will be a provincial road bypass, the main mine access road and upgrading of the
current access road.
Social & Labour Plan Activities
The mining right for Boikarabelo requires implementation of the social and labour plan
approved by the Department of Mineral Resources. Activities to comply have commenced in
earnest, including the award of bursaries to university students, sponsorship of apprenticeship
(artisan) training, adult basic education and training classes for local villagers, and upgrading
the local village’s meeting hall.
Work also continued on community consultation, mapping of the local village, a skills
database and expansion of the database of small, medium and micro enterprises. The initial
phase of the mine recruitment process was completed, with the receipt of 11,390 CVs.
CORPORATE
- Cash reserves at 30 September 2013 were $27.3 million. Following the end of the
quarter, the balance of the 1 for 1 entitlement offer was successfully placed, raising a
further $52.2 million. The shares were mainly placed with strategic shareholders, being
Public Investment Corporation SOC Limited (PIC ), Barsington Ltd (a subsidiary of the
Noble Group) and Shinto Torii Inc (a subsidiary of Altius Investment Holdings (Pty)
Limited). PIC is one of the largest investment managers in Africa, managing assets of
over ZAR1.4 trillion (A$150 billion). It is a registered financial services provider wholly
owned by the South African Government.
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 30 September 2013
Consolidated statement of cash flows
Current quarter Year to date (3 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 (40) (40)
(b) development (3,937) (3,937)
(c) production - -
(d) administration (791) (791)
1.3 Dividends received - -
1.4 Interest and other items of a similar nature received 283 283
1.5 Interest and other costs of finance paid (2) (2)
1.6 Income taxes paid - -
1.7 Other (provide details if material) - -
Net Operating Cash Flows (4,487) (4,487)
Cash flows related to investing activities
1.8 Payment for purchases of: (a) prospects - -
(b) equity investments - -
(c) other fixed assets - -
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 - -
acquisitions, borrowings and development
expenditure (refundable)
- -
Net investing cash flows
1.13 Total operating and investing cash flows (carried
(4,487) (4,487)
forward)
Current quarter Year to date (3 mths)
$A’000 $A’000
1.13 Total operating and investing cash flows (brought
(4,487) (4,487)
forward)
Cash flows related to financing activities
1.14 Proceeds from issues of shares, options, etc. 10,420 10,420
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) (53) (53)
1.19 Other (Mining Related Deposits) - -
1.19 Other (Cost of Borrowings) - -
Net financing cash flows 10,367 10,367
Net increase (decrease) in cash held 5,880 5,880
1.20 Cash at beginning of quarter/year to date 21,428 21,428
1.21 Exchange rate adjustments to item 1.20 (27) (27)
1.22 Cash at end of quarter 27,281 27,281
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 28 June 2013, the company converted US$51.3 million of its US$123 million loan facility agreement with
Noble into a dedicated rail link loan facility. An A$20 million secured debenture was issued to Noble in
January 2013. The debenture is repayable in December 2013.
Amount available Amount used
$A’000 $A’000
3.1 Loan facilities 137,974 20,000
3.2 Credit standby arrangements - -
Estimated cash outflows for next quarter
$A’000
4.1 Exploration and evaluation (163)
4.2 Development (3,812)
4.3 Production -
4.4 Administration (3,364)
Total (7,339)
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 $A’000
the related items in the accounts is as follows.
5.1 Cash on hand and at bank 51 82
5.2 Deposits at call 27,230 21,436
5.3 Bank overdraft - -
5.4 Other (Bank guarantees) - -
Total: cash at end of quarter (item 1.22) 27,281 21,428
Changes in interests in mining tenements
Tenement reference Nature of interest Interest at Interest at
beginning of end of
quarter quarter
6.1 Interests in N/A N/A N/A N/A
mining tenements
relinquished,
reduced or lapsed
6.2 Interests in N/A N/A N/A N/A
mining tenements
acquired or
increased
Issued and quoted securities at end of current quarter
Description includes rate of interest and any redemption or conversion rights together with prices and dates.
Total number Number Issue price per Amount paid
quoted security up per security
($) ($)
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 332,234,604 332,234,604 Various Fully paid
7.4 Changes during quarter
(a) Increases 47,536,602 47,536,602 $0.22 Fully paid
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 13/3/2014
7.8 Issued during quarter Nil
7.9 Exercised during quarter Nil
7.10 Expired during quarter 1,875,000 Nil $0.50 7/7/2013
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: 28 October 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
28 October 2013
JSE Sponsor:
Macquarie First South Capital Proprietary Limited
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