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Quarterly Report for the three months ended 31 December 2016
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” or the “Company”)
Quarterly Report
for the three months ended 31 December 2016
Resource Generation Limited (the “Company” or “Resgen”) is developing its Boikarabelo
Coal Mine in the Waterberg region of South Africa. This region accounts for 40% of the
country’s remaining identified coal resources. Based on a new business model for the
Boikarabelo Coal Mine, where the intent is to service both export customers and domestic
power stations, the JORC Code 2012 Probable Coal Reserves total 267m/t at 31 December
2016.
General
Work continued at the Boikarabelo Mine site during the quarter in order to ensure project
readiness for the mobilisation of the EPC contractors. In parallel significant progress has been
made towards completion of the material contracts with inter alia Transnet Freight Rail
(logistics), Sedgman (CHPP and O&M contracts) and Stefanutti Stocks Mining Services (mining
contract). All of these contracts are conditions precedent to financial close of funding with
the Financing Syndicate. Completion of the project funding continues to be Company’s
highest priority.
The Company held its Annual General Meeting in Brisbane on 23 November 2016 at which
the CEO provided details on the current status of the project’s material contracts and funding.
All resolutions put to the AGM were passed.
Capital structure and cash position
The Company’s summarised capital structure at 31 December 2016 is as follows:
Issued fully paid ordinary shares: 581,380,338
Performance rights: 6,250,000
Cash at bank: $4.5 million
Shareholders and potential investors should also review the Company’s Annual Report and
audited Financial Report for the year ending 30 June 2016 to fully appreciate the Company’s
financial position.
The Company has received, and is presently considering, a proposal to increase the existing
unsecured loan facility (now fully drawn down) as announced to the market in Quarterly
Report for the three months ending on 31 March 2014. The provider of the facility has offered
the facility increase in order to provide the Company with additional working capital for the
period up to the first drawdown under the proposed project funding arrangements. The
Page 1 of 11
Resource Generation
Limited
Quarterly Report to 31 December
2016
Company expects to finalise its consideration of the proposed increase during the month of
February 2017 and will update the market when this occurs.
Coal Resources and Reserves Statement at 31 December 2016
The Coal Resources and Coal Reserves estimate for Boikarabelo Coal Mine has been updated
in accordance with the Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves, (The JORC Code, 2012 Edition) (the JORC Code 2012) (ASX
Announcement 23 January 2017).
This update of the Coal Resources and Coal Reserves estimates relate specifically to the
Ledjadja #1 and Ledjadja #3 project areas where an optimised mine design has now been
completed. These two project areas make up 27% of Resgen’s Coal Resources and 46% of
Resgen’s Coal Reserves.
Resgen has previously secured export offtake contracts and has developed a dual
export/domestic business model intending to service both export customers and domestic
power stations. This model has resulted in a meaningful increase in the Net Present Value
(NPV) and Internal Rate of Return (IRR) of the project.
The previously announced 2010 estimated Coal Resources and Coal Reserves (“the 2010
Release”) was based on a single, low quality product for sale to domestic power stations.
An updated statement of those estimated Coal Resources and Coal Reserves as at 31
December 2016 is included below.
The total Coal Resources and Coal Reserves base at 31 December 2016 is summarised in the
table below:
Coal
Area Coal
Project Area Reserves
(hectares) Resources (Mt)
(Mt)
Ledjadja #1 and Ledjadja #3 (*) 830.0 994.81 267.09
Ledjadja #1 and Ledjadja #2(**)(i) 877.0 1479.6 -
Waterberg #1 (***) (i) 536.0 426.3 314.2
Waterberg #1(**)(i) 706.0 551.7 -
Total 2,949.0 3,711.61 581.29
(*)- determined by applying the JORC Code 2012
(**)- determined by applying the JORC Code 2004; and relates to the Inferred Resources of the Project Area
(***)- determined by applying the JORC Code 2004, and relates to the Measured and Indicated Resources of the Project Area
Note (i) -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.
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Resource Generation
Limited
Quarterly Report to 31 December
2016
The new business model for the Boikarabelo Coal Mine has resulted in the following
variations to the 2010 Release:
Coal Resources
The Measured and Indicated Tonnes of 664.2 million tonnes have increased to 994.81 million
tonnes. This is attributable to an increase in the Measured Resource Area as a result of
additional drilling.
Coal Reserves
The Marketable Coal Reserves have reduced from 430.6 million tonnes to 267.09 million
tonnes and are now based on:
. an export quality product with an average of 14% ash and an average 25.73 MJ/kg
calorific value determined on an Air Dried (AD) basis; and
. a domestic power station product with an average 19.5 MJ/kg calorific value and an
average 31.43 % ash determined on an AD basis.
The export quality product has an average yield of 23.68% and the domestic power station
product has an average yield of 19.61 %. This equates to an overall average yield of 43.3%.
The run of mine (ROM) of 616.85 million tonnes equates to a life of mine in excess of 40 years
at an annual production rate of 15.12 million tonnes and sales for a similar period at a rate of
6.55 million tonnes per annum (Production Target). The material assumptions on which this
Production Target is based are:
. open pit truck and shovel terrace operation,
. minimum coal seam/mining height thickness of 0.5m,
. dual product mine applying a minimum total yield cut off of 24%,
. appropriate pit slope angles (overall 450),
. appropriate mining recovery factors, dilution and contamination; and
. beneficiation of the coal for a dual product in a high density beneficiation plant and
applying appropriate plant factors.
The Production Target is based purely on Probable Coal Reserves and these Coal Reserves
have been signed off by the Competent Persons.
Page 3 of 11
Resource Generation
Limited
Quarterly Report to 31 December
2016
Mining tenements
The coal mining rights and exploration tenements held at the end of the quarter were as
follows:
. MPT 169 MR (74%)
. PR678/2007 (74%)
. PR720/2007 (74%)
The Company has no interest in farm-in or farm-out agreements.
The Mining Right Application for Kubu, adjacent to Boikarabelo, was lodged at the end of
2015. Kubu was previously known as Waterberg No 1 and encompasses the farm Koert Louw
Zyn Pan (PR678/2007).
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 JORC resource.
On behalf of the Board of Directors
Yours faithfully
Mike Meintjes
Company Secretary
RESOURCE GENERATION LIMITED
Page 4 of 11
Resource Generation
Limited
Quarterly Report to 31 December
2016
Corporate information
Directors
Denis Gately Non-Executive Chairman
Lulamile Xate Non-Executive Deputy Chairman
Rob Croll Non-Executive Director
Colin Gilligan Non-Executive Director
Leapeetswe Molotsane Non-Executive Director
Dr Konji Sebati Non-Executive Director
Company secretary
Mike Meintjes
Registered office
Level 1, 17 Station Road
Indooroopilly, QLD 4068, Australia
Telephone: +27 12 345 1057
Facsimile: +27 12 345 5314
Website: www.resgen.com.au
Mailing address
South Africa Australia
PO Box 5384 PO Box 126
Rietvalleirand 0174 Albion
Gauteng, South Africa QLD 4010, Australia
Contacts
Denis Gately
Rob Lowe
Media
South Africa Australia
Russell and Associates (Marion Brower) Citadel MAGNUS (Martin Debelle)
t: +27 11 880 3924 t: +61 2 8234 0100 m: +61 409 911 189
42 Glenhove Rd, Johannesburg 2196 Level 15, 61 York Street, Sydney
Gauteng, South Africa NSW 2000, Australia
Page 5 of 11
Resource Generation
Limited
Quarterly Report to 31 December
2016
Competent Persons’ Statement
The information contained in this Quarterly which relates to estimates of Coal Resources and
Coal Reserves is based on and accurately reflects reports prepared by Competent Persons
named beside the respective information in the Table below. Mr Ben Bruwer is a Principal
Consultant with VBKom (Pty) Ltd (VBKOM). Mr Riaan Joubert is the Principal Geologist
employed by Ledjadja.
Summary of Competent Persons responsible for Coal Resources and Coal Reserves
Competent Area of Professional Year of Membership
Person Competency Society Registration Number
R. Joubert Coal SACNASP* 2002 400040/02
Resources
Member
B. Bruwer Coal SAIMM** 1994 701068
Reserves
Member
*SACNASP - South African Council for Natural Scientific Professions
** SAIMM - Southern African Institute of Mining and Metallurgy
The above-named Competent Persons both consent to the inclusion of material in the form
and context in which it appears in this Release. Both individuals are members of a Recognised
Professional Organisation in terms of the JORC Code 2012, and both have a minimum of five
years’ relevant experience in relation to the mineralisation and type of deposit being reported
on by them to qualify as Competent Persons as defined in the JORC Code 2012.
Neither Mr Bruwer, nor VBKOM has a material interest or entitlement, direct or indirect, in
the securities of Resource Generation Ltd. Mr Joubert holds no shares in Resource Generation
Limited.
Page 6 of 11
Resource Generation
Limited
Quarterly Report to 31 December
2016
Rule 5.5
Appendix 5B
Mining exploration entity and oil and gas exploration entity
quarterly report
Name of entity
Resource Generation Limited
ABN Quarter ended (“current quarter”)
91 059 950 337 31 December 2016
Current quarter Year to date
Consolidated statement of cash flows
(6 months)
$A’000 $A’000
1. Cash flows from operating activities
1.1 Receipts from customers - -
1.2 Payments for
(a) exploration & evaluation - -
(b) development (1,896) (3,425)
(c) production - -
(d) staff costs (931) (2,054)
(e) administration and corporate costs (453) (726)
1.3 Dividends received (see note 3) - -
1.4 Interest received 31 66
1.5 Interest and other costs of finance paid - -
1.6 Income taxes paid - -
1.7 Research and development refunds - -
1.8 Other (sale of game) - 203
1.9 Net cash from / (used in) operating (3,249) (5,936)
activities
2. Cash flows from investing activities
2.1 Payments to acquire:
(a) property, plant and equipment (28) (110)
(b) tenements (see item 10) - -
Page 7 of 11
Resource Generation
Limited
Quarterly Report to 31 December
2016
Current quarter Year to date
Consolidated statement of cash flows
(6 months)
$A’000 $A’000
(c) investments - -
(d) other non-current assets - -
2.2 Proceeds from the disposal of:
(a) property, plant and equipment - -
(b) tenements (see item 10) - -
(c) investments - -
(d) other non-current assets - -
2.3 Cash flows from loans to other entities - -
2.4 Dividends received (see note 3) - -
2.5 Other (provide details if material) - -
2.6 Net cash from / (used in) investing (28) (110)
activities
3. Cash flows from financing activities
3.1 Proceeds from issues of shares - -
3.2 Proceeds from issue of convertible notes - -
3.3 Proceeds from exercise of share options - -
3.4 Transaction costs related to issues of - -
shares, convertible notes or options
3.5 Proceeds from borrowings - -
3.6 Repayment of borrowings (686) (1,381)
3.7 Transaction costs related to loans and - -
borrowings
3.8 Dividends paid - -
3.9 Other (provide details if material) - -
3.10 Net cash from / (used in) financing (686) (1,381)
activities
4. Net increase / (decrease) in cash and
cash equivalents for the period
4.1 Cash and cash equivalents at beginning of 8,209 11,955
period
4.2 Net cash from / (used in) operating (3,249) (5,936)
activities (item 1.9 above)
Page 8 of 11
Resource Generation
Limited
Quarterly Report to 31 December
2016
Current quarter Year to date
Consolidated statement of cash flows
(6 months)
$A’000 $A’000
4.3 Net cash from / (used in) investing (28) (110)
activities (item 2.6 above)
4.4 Net cash from / (used in) financing (686) (1,381)
activities (item 3.10 above)
4.5 Effect of movement in exchange rates on 271 (11)
cash held
4.6 Cash and cash equivalents at end of 4,517 4,517
period
5. Reconciliation of cash and cash Current quarter Previous quarter
equivalents $A’000 $A’000
at the end of the quarter (as shown in the
consolidated statement of cash flows) to
the related items in the accounts
5.1 Bank balances 569 24
5.2 Call deposits 3,948 8,185
5.3 Bank overdrafts - -
5.4 Other (contract retentions) - -
5.5 Cash and cash equivalents at end of 4,517 8,209
quarter (should equal item 4.6 above)
6. Payments to directors of the entity and their associates Current quarter
$A'000
6.1 Aggregate amount of payments to these parties included in 199
item 1.2
6.2 Aggregate amount of cash flow from loans to these parties -
included in item 2.3
6.3 Include below any explanation necessary to understand the transactions included in
items 6.1 and 6.2
Directors’ remuneration and consulting fees
Page 9 of 11
Resource Generation
Limited
Quarterly Report to 31 December
2016
7. Payments to related entities of the entity and their Current quarter
associates $A'000
7.1 Aggregate amount of payments to these parties included in -
item 1.2
7.2 Aggregate amount of cash flow from loans to these parties -
included in item 2.3
7.3 Include below any explanation necessary to understand the transactions included in
items 7.1 and 7.2
8. Financing facilities available Total facility amount Amount drawn at
Add notes as necessary for an understanding of the at quarter end quarter end
position $A’000 $A’000
8.1 Loan facilities
? Unsecured loan (note 1) 27,789 27,789
? Unsecured loan (note 2) 5,753 5,753
8.2 Credit standby arrangements - -
8.3 Other (please specify) - -
8.4 Include below a description of each facility above, including the lender, interest rate and
whether it is secured or unsecured. If any additional facilities have been entered into or are
proposed to be entered into after quarter end, include details of those facilities as well.
Note 1 US$20 million was drawn down as an unsecured loan from Noble Group in March 2014. It is
repayable in quarterly instalments of capital and interest over 8 years commencing in February 2017
and has an annual interest rate of 10.75%.
Note 2 EHL Energy (Pty) Limited are building the electricity sub-station at the Boikarabelo Coal Mine
which connects the mine to the grid. The construction is subject to a deferred payment plan, with
interest payable at the ABSA Bank prime lending rate plus 3%. The loan is unsecured and there are
11 quarterly instalments remaining to be paid as at 31 December 2016.
9. Estimated cash outflows for next quarter $A’000
9.1 Exploration and evaluation -
9.2 Development (3,260)
9.3 Production -
9.4 Staff costs (1,146)
9.5 Administration and corporate costs (493)
9.6 Other – loan repayments and mining-related deposits (2,257)
9.7 Total estimated cash outflows (7,156)
Page 10 of 11
Resource Generation
Limited
Quarterly Report to 31 December
2016
10. Changes in Tenement Nature of interest Interest Interest
tenements reference at at end of
(items 2.1(b) and and beginning quarter
2.2(b) above) location of quarter
10.1 Interests in mining - - - -
tenements and
petroleum tenements
lapsed, relinquished
or reduced
10.2 Interests in mining - - - -
tenements and
petroleum tenements
acquired or increased
Compliance statement
1 This statement has been prepared in accordance with accounting standards and policies which
comply with Listing Rule 19.11A.
2 This statement gives a true and fair view of the matters disclosed.
Sign here: Date: 30 January 2017
(Company secretary)
Print name: MICHAEL MEINTJES
JSE Sponsor: Deloitte & Touche Sponsor Services (Pty) Ltd
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 that wishes to
disclose additional information is encouraged to do so, in a note or notes included in or attached
to this report.
2. If this quarterly report has been prepared in accordance with Australian Accounting Standards,
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. If this quarterly report has been
prepared in accordance with other accounting standards agreed by ASX pursuant to Listing
Rule 19.11A, the corresponding equivalent standards apply to this report.
3. Dividends received may be classified either as cash flows from operating activities or cash flows
from investing activities, depending on the accounting policy of the entity.
Page 11 of 11
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