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Quarterly Report for the three months ended 30 June 2014
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 June 2014
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 (refer ASX announcement dated 16 December 2010).
Stage 1 of the mine development targets saleable coal production of 6 million tonnes
per annum.
Boikarabelo mine construction
Construction of the mine’s infrastructure continued during the quarter. This included:
- construction camp for up to 1,320 persons;
- 40km rail link earthworks and bridge construction;
- 36.8 km of roads;
- permanent water supply infrastructure;
- construction power infrastructure; and
- construction office complex.
A site inspection was conducted by the Chief Executive Officer of Transnet Freight Rail
(TFR) and key members of his senior management team, accompanied by the Department of
Mineral Resources Limpopo Regional Manager and senior officers.
As previously announced, the main earthworks contractor, Protech Kuthele (Pty) Limited
(PK), was placed initially into business rescue proceedings and then into liquidation in early
July 2014. PK removed all staff from the mine site and terminated all activities, including
those of its sub-contractor which was constructing three bridges under and over the rail line.
This unforeseen development is expected to delay completion of the project by three to six
months, with first coal production now estimated for the first half of 2016.
Recommencing earthworks for the rail link, roads and incomplete terraces require detailed
surveys to establish bill of quantities for retendering. Whilst Resource Generation does not
expect any difficulty in appointing an alternative earthworks contractor for a similar cost,
commercial prudence requires a diligent process to be undertaken.
Work will continue in the interim period on several projects:
- completion of the construction camp including services for the full camp of 1,320
and installation of units for 400 people;
- smaller discrete earthworks to enable construction to continue on a network
stabilisation facility for TFR, construction offices and water storage tank terraces;
- completion of the first three rail link bridges (seven in total);
- completion of main water supply infrastructure;
- commencement of 132 kvA main power infrastructure; and
- completion of the construction office complex.
Good progress was made during the quarter on the road underpasses for the water pipeline
from the Marapong effluent treatment facility to Boikarabelo, which is an integral part of the
mine’s social and labour plan.
All regulatory consents have been received, all necessary land has been acquired and rail
haulage and port access contracts sufficient for the mine’s stage 1 production have been
signed. Addenda to both the rail haulage contract and the port contract were signed during
the quarter to defer take or pay commitments until the first half of 2016.
Figure 1: The construction camp, with new dining room under construction
Figure 2: Bridge construction on the rail link
Funding Status
Negotiations on term sheets for project finance to complete the mine have been protracted
and whilst these continue, alternative funding solutions are also being negotiated. Progress
was made during the quarter with three parties for the funding of mobile equipment totalling
approximately $100 million.
Binding term sheets are in place with Noble Group for a US$65 million loan for construction
of infrastructure and a US$55.3 million loan for construction of the rail link. US$20 million
has been drawn down from the rail link loan.
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.
The company’s current export coal contracts (in million tonnes per annum) are as follows:
Stage 1 Stage 2
Y1-Y3 Y4-Y7 Y8 Y9-12 Y13-14 Y15-20 Y21-35 Y36-Y38
CESC 1.0 2.0 4.0 4.0 4.0 4.0 4.0 4.0
Noble 0.5 0.5 0.5 1.5 2.0 2.5 2.5
Valu 1.0 1.0 2.0 2.0 2.0 2.0
Total 2.5 3.5 6.5 7.5 8.0 8.5 6.5 4.0
Note. If, as expected, stage 2 production commences earlier, both CESC and Valu tonnages will increase
earlier by 1.0 mtpa.
Mining tenements
The coal mining rights and exploration tenements held at the end of the quarter were as
follows:
South Africa (Waterberg)
- MPT15/2012 MR (74%)
- PR720/2007 (74%)
- PR678/2007 (74%)
The company has no interest in farm-in or farm-out agreements.
Corporate
Cash reserves at 30 June 2014 were $54.3 million.
Sydney
29 July 2014
JSE Sponsor
Macquarie First South Capital Proprietary Limited
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
* This information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply
with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported.
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 30 June 2014
Consolidated statement of cash flows
Current quarter Year to date (12 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 - (124)
(b) development (9,850) (22,801)
(c) production - -
(d) administration (613) (5,752)
1.3 Dividends received - -
1.4 Interest and other items of a similar nature received 441 1,713
1.5 Interest and other costs of finance paid (2) (1,008)
1.6 Income taxes paid - -
1.7 Other-forfeited Blumont deposit - 2,500
Net Operating Cash Flows (10,024) (25,472)
Cash flows related to investing activities
1.8 Payment for purchases of: (a) prospects - -
(b) equity investments - (287)
(subsidiary)
(c) other fixed assets (913) (1,861)
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
acquisitions and borrowings
(913) (1,818)
Net investing cash flows
1.13 Total operating and investing cash flows (carried
(10,937) (27,290)
forward)
Current quarter Year to date (12 mths)
$A’000 $A’000
1.13 Total operating and investing cash flows (brought
(10,937) (27,290)
forward)
Cash flows related to financing activities
1.14 Proceeds from issues of shares, options, etc. (487) 62,425
1.15 Proceeds from sale of forfeited shares - -
1.16 Proceeds from borrowings - 22,046
1.17 Repayment of borrowings - (20,000)
1.18 Dividends paid - -
1.19 Other (BEE Loan) (49) (2,026)
Net financing cash flows (536) 62,445
Net increase (decrease) in cash held (11,473) 35,155
1.20 Cash at beginning of quarter/year to date 67,019 21,428
1.21 Exchange rate adjustments to item 1.20 (1,209) (2,246)
1.22 Cash at end of quarter 54,337 54,337
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. US$20 million has
been drawn down from the rail link loan.
Amount available Amount used
$A’000 $A’000
3.1 Loan facilities 127,707 22,046
3.2 Credit standby arrangements - -
Estimated cash outflows for next quarter
$A’000
4.1 Exploration and evaluation (20)
4.2 Development (17,111)
4.3 Production -
4.4 Administration (538)
Total (17,669)
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 $A’000
the related items in the accounts is as follows.
5.1 Cash on hand and at bank 63 71
5.2 Deposits at call 53,888 66,790
5.3 Bank overdraft - -
5.4 Other (Contract retentions) 386 158
Total: cash at end of quarter (item 1.22) 54,337 67,019
Changes in interests in mining tenements
Tenement reference Nature of interest Interest at Interest at
beginning of end of
quarter quarter
6.1 Interests in N/A N/A N/A N/A
mining tenements
relinquished,
reduced or lapsed
6.2 Interests in N/A N/A N/A N/A
mining tenements
acquired or
increased
Issued and quoted securities at end of current quarter
Description includes rate of interest and any redemption or conversion rights together with prices and dates.
Total number Number Issue price per Amount paid
quoted security up per security
($) ($)
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 581,380,338 581,380,338 Various Fully paid
7.4 Changes during quarter
(a) Increases Nil
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 Nil
and conversion factor)
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 July 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.
Date: 29/07/2014 09:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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