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Quarterly Report for the three months ended 31 December 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 December 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.
Significant progress was achieved during the quarter in securing additional funds and
advancing construction activities at the Boikarabelo coal project.
PRESENT STATUS
Finance
- The 1-for-1 entitlement offer at $0.22 per share was completed to raise a total of $62.6
million.
- A binding term sheet for an infrastructure construction loan of US$65 million was
entered into during the quarter with the Noble Group.
- A binding term sheet is in place for a US$55.3 million loan from the Noble Group for the
construction of the rail link from the Boikarabelo mine to the existing Transnet Freight
Rail network
- Funding discussions for the purchase or lease of mobile equipment are at an advanced
stage with three parties.
- A binding term sheet was signed with FLSmidth for the construction of the coal handling
and preparation plant (CHPP). Associated with this, discussions have advanced for
export credit agency support.
- Negotiations continue for bank provided project finance.
Physical Progress
- Construction of Boikarabelo’s mine infrastructure has continued.
- Bush clearing for the 40 kilometre rail link continued during the quarter.
- Social and labour plan projects in the local communities are in place. The first newsletter
was published during the quarter and is available on the company’s website.
Timetable
- Construction is expected to take two years and, subject to agreements on funding, coal
production is expected to begin in December 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.
PROGRESS DURING THE QUARTER
Debt Finance
Bank negotiations continued with term sheets and credit approval being sought during the
quarter ended March 2014.
The main focus during the quarter was on arranging alternative sources of funding:
- A binding term sheet was signed with FLSmidth Roymec (Pty) Limited, the South
African black economic empowerment subsidiary of FLSmidth & Co, the leading
supplier of complete plants, equipment and services for the global minerals industry.
FLSmidth will undertake the construction of the CHPP. The cost of the CHPP is now
expected to be below US$200 million, more than US$50 million less than earlier
estimates. Advanced discussions are being held with EKF, the Danish state-owned
export credit agency, regarding a guarantee to cover over 50% of the cost.
- A binding term sheet for an infrastructure construction loan of US$65 million was
entered into during the quarter with Noble Resources International Pte Limited (Noble
Group). The loan is on normal commercial terms and is able to be drawn down from 1
January 2014 until 31 December 2015. It is secured over the site infrastructure and is
repayable in full by 31 March 2016, by which time the Boikarabelo mine is expected to
be in production. The loan is expected to be refinanced at that time when the completion
risk is expected to have been eliminated.
- US$67.7 million loan facility dated 28 March 2013 from Noble Group expired on 31
December 2013 without any drawdowns having occurred.
- Funding discussions for the purchase or lease of mobile equipment are at an advanced
stage with three parties.
Operational Activities
Earthworks for the development of the initial 200 person construction camp have been
completed. Earthworks to expand the construction camp to 1,300 people have begun.
Ground clearing for the 40 kilometre rail link from the Boikarabelo mine to the existing
Transnet Freight Rail network has been substantially completed with the route cleared being
35 metres wide. Earthworks for rail line construction are now underway.
Physical receipt of rail and sleepers 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.
CORPORATE
- Cash reserves at 31 December 2013 were $49.7 million. The A$20 million debenture
provided by Noble Group in January 2013 was repaid during the quarter.
- Blumont Group Ltd (Blumont) paid a deposit of $2.5 million immediately following the
end of the quarter. This is in relation to Blumont’s commitment to the placement of
102,596,530 shares at 22 cents per share, for which payment of $22,571,236.60 was due
on 4 December 2013. The settlement of the balance, including a commercial rate of
interest, is due to occur on 26 February 2014. If Blumont does not settle on 26 February
2014, the deposit of $2.5 million will be forfeited with no issue of shares in relation
thereto.
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, 31/9/2001.
Name of entity
Resource Generation Limited
ABN Quarter ended (“current quarter”)
91 059 950 337 31 December 2013
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 (22) (60)
(b) development (3,113) (7,052)
(c) production - -
(d) administration (3,643) (4,434)
1.3 Dividends received - -
1.4 Interest and other items of a similar nature received 454 737
1.5 Interest and other costs of finance paid (1,002) (1,004)
1.6 Income taxes paid - -
1.7 Other (provide details if material) - -
Net Operating Cash Flows (7,326) (11,813)
Cash flows related to investing activities
1.8 Payment for purchases of: (a) prospects - -
(b) equity investments (285) (285)
(subsidiary)
(c) other fixed assets (948) (948)
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 330 330
acquisitions, borrowings and development
expenditure (refundable)
(903) (903)
Net investing cash flows
1.13 Total operating and investing cash flows (carried
(8,229) (12,716)
forward)
Current quarter Year to date (6 mths)
$A’000 $A’000
1.13 Total operating and investing cash flows (brought
(8,229) (12,716)
forward)
Cash flows related to financing activities
1.14 Proceeds from issues of shares, options, etc. 52,492 62,912
1.15 Proceeds from sale of forfeited shares - -
1.16 Proceeds from borrowings - -
1.17 Repayment of borrowings (20,000) (20,000)
1.18 Dividends paid - -
1.19 Other (BEE Loan) (1,865) (1,918)
1.19 Other (Mining Related Deposits) - -
1.19 Other (Cost of Borrowings) - -
Net financing cash flows 30,627 40,994
Net increase (decrease) in cash held 22,398 28,278
1.20 Cash at beginning of quarter/year to date 27,281 21,428
1.21 Exchange rate adjustments to item 1.20 (18) (45)
1.22 Cash at end of quarter 49,661 49,661
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.
Two binding term sheets have been entered into with the Noble Group. A US$55.3 million loan is available for
the construction of the rail link and a US$65 million loan is available for site infrastructure. The A$20 million
debenture from Noble Group was repaid.
Amount available Amount used
$A’000 $A’000
3.1 Loan facilities 134,443 -
3.2 Credit standby arrangements - -
Estimated cash outflows for next quarter
$A’000
4.1 Exploration and evaluation (150)
4.2 Development (20,521)
4.3 Production -
4.4 Administration (529)
Total (21,200)
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 $A’000
the related items in the accounts is as follows.
5.1 Cash on hand and at bank 59 51
5.2 Deposits at call 49,602 27,230
5.3 Bank overdraft - -
5.4 Other (Bank guarantees) - -
Total: cash at end of quarter (item 1.22) 49,661 27,281
Changes in interests in mining tenements
Tenement reference Nature of interest Interest at Interest at
beginning of end of
quarter quarter
6.1 Interests in N/A N/A N/A N/A
mining tenements
relinquished,
reduced or lapsed
6.2 Interests in PR720/2007 Shareholding in 70% 74%
mining tenements PR678/2007 Waterberg One Coal 70% 74%
acquired or (Pty) Limited, the
increased owner of the tenements
Issued and quoted securities at end of current quarter
Description includes rate of interest and any redemption or conversion rights together with prices and dates.
Total number Number Issue price per Amount paid
quoted security up per security
($) ($)
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 581,380,338 581,380,338 Various Fully paid
7.4 Changes during quarter
(a) Increases 242,361,400 242,361,400 $0.22 Fully paid
through issues 6,784,334 6,784,334 $0.40 Fully paid
(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 Nil
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: 29 January 2014
(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
29 January 2014
JSE Sponsor
Macquarie First South Capital Proprietary Limited
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