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Quarterly Report for the three months ended 30 September 2015
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
("Resource Generation")
Quarterly Report for the three months ended 30 September 2015
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.
Corporate
Negotiations continued during the quarter with various parties to provide project finance for
the construction of the Boikarabelo mine.
One of these parties was a club of financiers that included Noble Group Limited (Noble).
Together with Altius Investment Holdings (Pty) Limited (Altius), which was the arranger of
the potential debt club funding, Noble proposed alternative financial and operating models in
which Resource Generation’s board identified discrepancies and which the board was not
prepared to accept. Noble also tried to persuade the board to engage its nominated mining
contractor, Mota Engil, without a competitive tender, and to contract an alternative coal
handling and preparation plant designer and builder, despite Resource Generation having
previously signed a contract with FLSmidth. The current status of the debt club is uncertain.
Noble sought board representation which was declined and, subsequently, Altius requisitioned
a general meeting to remove the current board and replace it with its own nominees.
The general meeting will take place on 26 November 2015. The company has submitted an
application to the Takeovers Panel seeking orders that Altius, Noble and Public Investment
Corporation SOC Limited be excluded from voting at the meeting. That application is pending.
Resource Generation has continued to explore alternate debt funding arrangements to complete
construction of the Boikarabelo mine and, the day before Altius requisitioned the meeting,
signed an MOU with a Swiss private company to provide in-principle funding of EUR480
million. Following Altius’ actions, the Swiss funder indicated that it reserves the right to cancel
the loan facility if there is a change of directors. Clarity on the current status is being sought.
The company’s cash reserves at 30 September 2015 were $26.2 million.
Boikarabelo mine construction
Construction of initial stages of the mine’s infrastructure continued during the quarter, while
project debt funding was being negotiated. Work occurred on:
*power supply infrastructure;
*rail installation at the network stabilisation facility (NSF); and
*13 kilometres of water pipeline associated with the effluent treatment plant.
EHL Energy (Pty) Limited completed the construction of the substation and switch room after
the end of the quarter and final testing for completion has also occurred. The power supply
infrastructure is funded by a deferred payment facility.
At the NSF, the 26 tonne axle load switch and signalling system was installed and
commissioned at the end of the quarter. 400 metres of rail is being installed in the current
quarter.
The Marapong effluent treatment facility in Lephalale and the 58 kilometre pipeline to
Boikarabelo are an integral part of the mine’s social and labour plan. Installation of a 13
kilometre section of the pipeline adjacent to a main road was completed and final testing and
handover occurred in October 2015.
As previously announced, 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. Sales contracts have been signed that underwrite most of stage 1
production.
The Mining Right Application for Kubu, adjacent to Boikarabelo, was lodged during the
quarter. Kubu was previously known as Waterberg No 1 and encompasses the farm Koert
Louw Zyn Pan. The owners of Koert Louw Zyn Pan and part of the adjacent Nazarov property
signed sales contracts for the properties for ZAR55.2 million after the quarter end. A 10%
deposit was paid with the balance being payable post funding completion.
Mining tenements
The coal mining rights and exploration tenements held in the Waterberg region of South Africa
at the end of the quarter were as follows:
*MPT15/2012 MR (74%)
*PR720/2007 (74%)
*PR678/2007 (74%)
The company has no interest in farm-in or farm-out agreements.
The company is in the process of relinquishing PR720/2007 over the properties Lisbon and
Zoetfontein, as these are distant from the Boikarabelo site and contain minimal resources that
have not been included in the stated JORC resource.
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 September 2015
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 - -
(b) development (3,136) (3,136)
(c) production - -
(d) administration (953) (953)
1.3 Dividends received - -
1.4 Interest and other items of a similar nature received 78 78
1.5 Interest and other costs of finance paid (2) (2)
1.6 Income taxes paid - -
1.7 Other - -
Net Operating Cash Flows (4,013) (4,013)
Cash flows related to investing activities
1.8 Payment for purchases of: (a) prospects - -
(b) equity investments - -
(subsidiary)
(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- Mining related deposit - -
- -
Net investing cash flows
1.13 Total operating and investing cash flows (carried
(4,013) (4,013)
forward)
Current quarter Year to date (3 mths)
$A’000 $A’000
1.13 Total operating and investing cash flows (brought
(4,013) (4,013)
forward)
Cash flows related to financing activities
1.14 Proceeds from issues of shares, options, etc. - -
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) (42) (42)
Net financing cash flows (42) (42)
Net increase (decrease) in cash held (4,055) (4,055)
1.20 Cash at beginning of quarter/year to date 28,548 28,548
1.21 Exchange rate adjustments to item 1.20 1,677 1,677
1.22 Cash at end of quarter 26,170 26,170
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.
A binding term sheet has been entered into with the Noble Group for a US$65 million loan site infrastructure,
but if drawn would be repayable by 31 March 2016. This has been excluded as an amount available below.
Amount available Amount used
$A’000 $A’000
3.1 Loan facilities - -
3.2 Credit standby arrangements - -
Estimated cash outflows for next quarter
$A’000
4.1 Exploration and evaluation -
4.2 Development (5,860)
4.3 Production -
4.4 Administration (1,028)
Total (6,888)
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 $A’000
the related items in the accounts is as follows.
5.1 Cash on hand and at bank 16 130
5.2 Deposits at call 25,927 28,156
5.3 Bank overdraft - -
5.4 Other (Contract retentions) 227 284
Total: cash at end of quarter (item 1.22) 26,170 28,570
Changes in interests in mining tenements
Tenement reference Nature of interest Interest at Interest at
beginning of end of
quarter quarter
6.1 Interests in N/A N/A N/A N/A
mining tenements
relinquished,
reduced or lapsed
6.2 Interests in N/A N/A N/A N/A
mining tenements
acquired or
increased
Issued and quoted securities at end of current quarter
Description includes rate of interest and any redemption or conversion rights together with prices and dates.
Total number Number Issue price per Amount paid
quoted security up per security
($) ($)
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.
Date: 29 October 2015
(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.
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