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RESOURCE GENERATION LIMITED - Interim Financial Report for the half year ended 31 December 2016

Release Date: 14/03/2017 11:01
Code(s): RSG     PDF:  
Wrap Text
Interim Financial Report for the half year 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”)


Interim Financial Report for the half year ended 31 December 2016

Contents                                                                                                                             Page

Directors' report                                                                                                                       2
Auditor's independence declaration                                                                                                      4
Interim financial report
             Condensed consolidated statement of profit or loss and other comprehensive income                                          5
             Condensed consolidated statement of financial position                                                                     6
             Condensed consolidated statement of changes in equity                                                                      7
             Condensed consolidated statement of cash flows                                                                             8
             Notes to the condensed consolidated financial statements                                                                   9
             Directors' declaration                                                                                                    13
             Independent auditor's review report to members                                                                            14
             Supplementary information - presentation of financial information in South African Rand                                   16


This interim financial report does not include all of the notes of the type normally included in an annual financial report. Accordingly, this
report is to be read in conjunction with the annual report for the year ended 30 June 2016 and any public announcements made by
Resource Generation Limited during the interim reporting period in accordance with the continuous disclosure requirements of the
Corporations Act 2001 and the ASX Listing Rules.
RESOURCE GENERATION LIMITED

Directors' report

The Board of Directors present their report on the consolidated entity (referred to hereafter as the Group) consisting of Resource
Generation Limited (Resgen or the Company) and the entities it controlled for the half year ended 31 December 2016.

1. Directors

The following persons were Directors of Resource Generation Limited at the date of this report:
                                                               Length of service
Mr D Gately           Chairman                                    1.25 years
Mr L Xate             Deputy Chairman                             1.25 years
Mr R Croll            Non-Executive Director                      1.25 years
MrC Gilligan          Non-Executive Director                      1.25 years
Mr L Molotsane        Non-Executive Director                      1.25 years
Dr K Sebati           Non-Executive Director                      1.25 years


2. Principal activities

During the half year the principal continuing activities of the Group consisted of the development of the Boikarabelo Coal Mine in the
Waterberg region of South Africa .

3. Review of operations

During the half year ended 31 December 2016 the Group recorded a net loss of $1.2 million (2015: $8.1 million loss). The reduction
in the net loss from the comparative period was principally due to an appreciation in ZAR against the US$ foreign exchange rate.
The net loss for the half year to 31 December 2016 of $1.2 million includes administrative and corporate expenses of $2.0 million,
employee expenses of $1.4 million and an unrealised foreign exchange gain of $2.2 million.


Negotiations with various parties including a club of potential financiers to provide project finance for the construction of the
Boikarabelo Coal Mine continued during the period. Commercial terms were agreed with the club of financiers in July 2016.
Satisfactory progress towards financial close is being made but is slow due to the complexities associated with project finance . It is
proposed that if this facility proceeds, the existing loan from Noble Group will become part of the above facility .


Expectations are that the project finance will provide all required remaining funding for the mine construction. Consequently , if the
proposed facility is made available, the Company does not envisage the need for an associated equity raising.


While this protracted process is on-going, the Company continues to explore alternate debt funding arrangements to maximise the
chance of finalising the successful development of the Boikarabelo Coal Mine.


Work continued at the Boikarabelo Coal Mine during the last six months of the year 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 Stock Mining Services (mining
contract) .All these contracts are conditions precedent to financial close of funding with the Financing Syndicate. Completion of the
oroiect fundina continues to be the Comoanv's hiahest orioritv.




                                                                     Page 2
RESOURCE GENERATION LIMITED

Directors' report (continued)
The Coal Resources and Coal Reserves estimates for Boikarabelo Coal Mine have been updated at 31 December 2016 in
accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves . 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 and Internal Rate of Return of the project. The previously announced 2010 estimated Coal Resources and Coal Reserves was
based on a single low-quality product for sale to domestic power stations .


4. Dividends

No dividends were paid or proposed to be paid to members during the financial half year (2015: nil).

5. Events occurring after the balance sheet date

An agreement for additional funding of US$8.4 million from Noble was signed on 14 March 2017. The first drawdown is expected to
be before the end of March 2017 and repayments under the facility have been deferred until September 2017.



6. Auditor's independence declaration

A copy of the auditor's independence declaration as required under Section 307C of the Corporations Act 2001 is set out on page 4.



7. Rounding of amounts

The Company is a company of the kind referred to in ASIC Corporations (Rounding in Financials/Directors' Reports) Instrument
2016/191, dated 24 March 2016, and in accordance with that Corporations Instrument amounts in the Directors' report and the half
year financial report are rounded off to the nearest thousand dollars , unless otherwise indicated .




This report is made in accordance with a resolution of the Directors , pursuant to Section 306(3) of the Corporations Act 2001.

On behalf of the Directors


 ce                  t'      r
                          ---"1

D Gately
Chairman

Brisbane
14 March 2017

                                                                   Page 3
Deloitte.                                                                              Deloitte Touche Tohmatsu
                                                                                       ABN 74 490 121 060

                                                                                       Riverside Centre
                                                                                       Level26
                                                                                       123 Eagle Street
                                                                                       Brisbane QLD 4000
                                                                                       GPO Box 1463
                                                                                       Brisbane QLD 4001 Australia

                                                                                       Tel: +61 (0) 7 3308 7000
                                                                                       Fax: +61 (0) 7 3308 7001
                                                                                       www.deloitte.com.au
The Directors
Resource Generation Limited
Level I , Station Street,
Jndooroopilly,
QLD 4068


14 March 20 1 7


Dear Board Memb ers

                                           Resource Generation Limited

In accordance with section 307C of the Corporations Act 2001, Iam pleased to prov ide the
following declaration of independence to the directors of Resource Generat ion Limited.

As lead audit partn er for the review of the financia l statements of Resource Generation
Limited for the half-year ended 3 1 December 2016, I declare that to the best of my
knowledge and bel ief, there have been no contravent ions of:

           (i) the auditor independ ence requirements of the Corporations Act 2001 in relation
               to the review ; and
           (ii) any applicable code of professi onal condu ct in relation to the review.


Yours sincerely




DELOITTE TOUCHE TOHMATSU




Matthew Donaldsoif'
Partner
Chartered Accountants




Liability limited by a sch eme approved under Professional Standard s Legislation.
Member ofDel oitte Tou che Tohmat su Limited
                                                             Page4
RESOURCE GENERATION LIMITED

Condensed consolidated statement of profit or loss and other comprehensive income
For the half year ended 31 December 2016


                                                                                            Half year ended
                                                                                                           31-Dec-15
                                                                                         31-Dec-16          Restated*
                                                                           Note              $'000              $'000

Revenue from continuing operations                                                             315                  164

Administrative, rent and corporate                                                          (2,049)                (792)
Depreciation of property, plant and equipment                                                 (183)                (172)
Employee benefits expense                                                                   (1,379)              (2,178)
Finance expenses                                                                                 (3)
Share-based compensation (charge)/credit                                     4                (138)               1,873
Unrealised foreign exchange movements                                        4               2,208               (7,010)


Loss before income tax                                                                      (1,229)              (8,115)

Income tax credit

Loss for the half year                                                                      (1,228)              (8,115)


Other comprehensive income/(loss)

Items that may be reclassified subsequently to profit or loss:
Exchange gain/(loss) on translation of foreign operations                    8              15,504              (17,206)


Total comprehensive income/(loss) for the half year                                         14,276              (25,321)


Loss is attributable to:
 Owners of Resource Generation Limited                                                      (1,228)              (8,115)


Total comprehensive income/(loss) for the half year is attributable to:
  Owners of Resource Generation Limited                                                     14,276              (25,321)


Loss per share

From continuing operations                                                                   Cents                Cents
Basic loss per share                                                                         (0.21)               (1.40)
Diluted loss per share                                                                       (0.21)               (1.40)
Headline loss per share                                                                      (0.21)               (1.40)

*Please refer to Note 3 'Critical accounting estimates and judgements'.


The above condensed consolidated statement of profit or loss and other comprehensive income should be read in
conjunction with the accompanying notes.


                                                            PageS
RESOURCE GENERATION LIMITED

Condensed consolidated statement of financial position
As at 31 December 2016


                                                                                               31-Dec-16           30-Jun-16
                                                                                 Note              $'000               $'000

Current assets
           Cash and cash equivalents                                                               4,517             11,955
           Trade and other receivables                                                               210                 146
           Deposits and prepayments                                                                  169                 174
                                                                                                   4,896             12,275

Non-current assets
            Property , plant and equipment                                                        33,772             30,365
            Mining tenements and mining development                                              150,741            128,644
            Deposits                                                                               2,075               1,859
                                                                                                 186,588            160,868

TOTAL ASSETS                                                                                     191,484            173,143



Current liabilities
             Trade and other payables                                                              7,841              6,967
             Provisions                                                                              271                180
             Borrowings                                                          5                 6,702              3,887
                                                                                                  14,814             11,034


Non-current liabilities
           Provisions                                                                              2,211              1,983
           Borrowings                                                            5                35,296             35,728
           Royalties payable                                                                       2,170              1,946
                                                                                                  39,677             39,657


TOTAL LIABILITIES                                                                                 54,491             50,691


NET ASSETS                                                                                       136,993            122,452


Equity
            Contributed equity                                                   6               223,622            223,622
            Reserves                                                             8               (35,186)           (50,955)
            Accumulated losses                                                                   (51,443)           (50,215)


TOTAL EQUITY                                                                                     136,993            122,452

The above condensed consolidated statement of financial position should be read in conjunction with the accompanying notes.

                                                                Page 6
RESOURCE GENERATION LIMITED
 Condensed consolidated statement of changes in equity
 For the half year ended 31 December 2016


                                                                                Attributable to owners of Resource Generation Limited
                                                                                Contributed                     Retained
                                                                                     equity      Reserves       earnings      Total equity
                                                                       Note           $'000         $'000           $'000           $'000

 Balance at 1 July 2015 (restated*)                                                 223,622       (11,817)       (60,240)         151,565

 Loss for the period                                                                                              (8,115)          (8,115)
 Other comprehensive loss for the period                                                          (17,206)                        (17,206)
 Total comprehensive loss for the period                                                          (17,206)        (8,115)         (25,321)

 Employee share plan - value of employee services                                                  (1,873)                         (1,873)
                                                                                                   (1,873)                         (1,873)

 Balance at 31 December 2015                                                        223,622       (30,896)       (68,355)        124,371


 Balance at 1 July 2016                                                             223,622       (50,955)       (50,215)        122,452

 Loss for the period                                                                                              (1,228)         (1,228)
 Other comprehensive income for the period                                                         15,504                         15,504
 Total comprehensive income/(loss) for the period                                                  15,504         (1,228)         14,276

 Employee share plan - value of employee services                       8                             265                            265
                                                                                                      265                            265

 Balance at 31 December 2016                                                        223,622       (35,186)       (51,443)        136,993

 *Please refer to Note 3 'Critical accounting estimates and judgements' .


 The above condensed consolidated statement of changes in equity should be read in conjunction with the accompanying notes.




                                                                       Page 7
RESOURCE GENERATION LIMITED

Condensed consolidated statement of cash flows
For the half year ended 31 December 2016


                                                                                             Half year ended


                                                                                           31-Dec-16       31-Dec-15
                                                                                               $'000           $'000
Cash flows from operating activities
Payments to suppliers and employees                                                           (3,364)          (4,609)
Interest received                                                                                 70              130
lnteresUfinance costs paid                                                                        (3)              (3)
Taxation refund                                                                                    1

Net cash outflow from operating activities                                                    (3,296)          (4,482)



Cash flows from investing activities
Payments for property, plant and equipment                                                      (118)            (650)
Payments for mining tenements and mining development                                          (3,116)          (5,170)

Net cash outflow from investing activities                                                    (3,234)          (5,820)

Cash flows from financing activities
Repayment of borrowings                                                                       (1,403)           (564)
Loan to related party                                                                                             (69)
Net cash outflow from financing activities                                                    (1,403)           (633)

Net decrease in cash and cash equivalents                                                    (7,933)         (10,935)
Cash and cash equivalents at the beginning of the half year                                  11,955           28,551
Effects of exchange rate movements on cash and cash equivalents                                 495              699
Cash and cash equivalents at the end of the half year                                         4,517           18,315




The above condensed consolidated statement of cash flows should be read in conjunction with the accompanying notes.




                                                              Page 8
 RESOURCE GENERATION LIMITED

 Notes to the condensed consolidated financial statements
 For the half year ended 31December 2016

 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 (a) Basis of preparation of half year financial report


 This general purpose financial report for the interim half year reporting period ended 31 December 2016 has been prepared in accordance with AASB 134
 Interim Financial Reporting and the Corporations Act 2001.Compliance with AASB 134 ensures compliance with International Financial Reporting
 Standard lAS 34 'Interim Financial Reporting'.


 This interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly,this report is to be read
 in conjunction with the Annual Report for the year ended 30 June 2016 and any public announcements made by Resource Generation Limited during the
 interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001 and the ASX Listing Rules.

 The interim financialreport has been prepared on the basis of historicalcost except for the revaluation of certain financial instruments . Cost is based on
 the fair values of consideration given in exchange for assets.All amounts are presented in Australian Dollars, unless otherwise noted.

 Disclosure surrounding adoption of new or revised Standards

 The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that are
 relevant to their operations and effective for the current half-year.

'AASB 2015-1 Annual Improvements to Australian Accounting Standards 2012-2014 Cycle
                                i
  'AASB 2015-2 Disclosure Initative:Amendments to AASB 101
  *AASB 2014-4 Clarification of Acceptable Methods of Depreciation and Amor1isation

 The Company has reviewed the above Accounting Standards and determined that they have no material impact on the interim financial report for the half
 year ended 31 December 2016.

 The following new accounting standards are not yet effective but may have an impact on the Group in the financial years commencing 1July 2016 or

                                                                            i
 *AASB 2016-2 Amendments to Australian Accounting Standards ·Disclosure Initative:Amendments to AASB 107
 *AASB 9 Financial Instruments 2014
 *AASB 15 Revenue from Contracts with Customers
 *AASB 2014-5 Amendments to Aust ralian Accounting Standards arising from AASB 15
 *AASB 2015-8 Amendments to Australian Accounting Standards- Effective date of AASB 15
 *AASB 2016-3 Amendments to Australian Accounting Standards· Clarification to AASB 15
 *AASB 2016-5 Amendments to Australian Accounting Standards- Classification and Measurement of Share-based Payment Transactions
 *AASB 16 Leases

 The Company is in the process of determining the potential impact of adopting the above standards and they have not been applied in the preparation of
 the interim financial report for the half year ended 31 December 2016.

 (b) Significant accounting policies

 The accounting policies and methods of computation adopted in the preparation of the interim financial report are consistent with those adopted and
 disclosed in the Company's annual financial report for the year ended 30 June 2016.These accounting policies are consistent with Australian Accounting
 Standards and with International Financial Reporting Standards.


 The interim financial repor1 comprises the financial statements of Resource Generation Limited and its subsidiaries as at 31 December 2016 ('the
 Consolidated Entity").


 Going concern


 The interim financial report has been prepared on the going concern basis which presumes the realisation of assets and the discharge of liabilities in the
 normal course of business for the foreseeable future.

 As at 31 December 2016,the Group had net current liabilities of $9.9 million (30 June 2016: $1.2 million net current assets) , made a loss for the half year
 of $1.2 million (30 June 2016: $7.7 million for the year) and recorded net cash outflows from operating and investing activities of $6.5 million (30 June
 2016:$14 .6 million for the year). The Group has a cash balance at 31 December 2016 of $4.5 million (30 June 2016:$12.0 million).




                                                                                                    Page 9
RESOURCE GENERATION LIMITED

Notes to the condensed consolidated financial statements
For the half year ended 31 December 2016

 .
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Going concern (continued)

In concluding that the going concern basis is appropriate, a cash flow forecast was prepared for the 2017 calendar year. The forecast assumes the
receipt of additional funding from Noble amounting to US$8.4 million, which is an extension of the existing US$20 million working capital facility . An
agreement for the additional funding has been signed with Noble, with the first tranche expected to be drawn down before the end of March 2017 and
subsequent funding up to US$8.4 million made available until September 2017,when repayments are due to commence.


In addition, the Group's ability to continue as a going concern is dependent on securing project funding for the Boikarabelo Coal Mine.The Directors
continue to pursue a number of project funding options. Whilst the Directors are continuing to work towards achieving financial dose for project funding
by the end of June 2017, as there are a number of conditions to be satisfied before this is achieved,precise times are impossible to predict with certainty.
Assuming financial close occurs at the end of June 2017, construction of the mine would commence immediately thereafter with completion and first
saleable coal production scheduled for the third quarter of 2019.


On the above basis,the Directors believe the Group is a going concern and will be able to pay its debts as and when they fall due and payable.


Notwithstanding this, should the Group not receive the project funding referred to above, there are material uncertainties as to whether the Group will be
able to continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at the
amounts stated in the interim financial report.


The interim financial report does not include adjustments relating to the recoverability and classification of recorded asset amounts nor to the amounts
and classification of liabilities that might be necessary should the Group not continue as a going concern.


(c) Income Tax


The Directors have not recognised any deferred tax assets in relation to carry forward unused tax losses. Given the history of operating losses,the
Directors have determined that the most appropriate time to recognise deferred tax assets from carry forward unused tax losses is when the mine
commences production.

 .
2 SEGMENT INFORMATIO N

(a) Description of operating segments

Management has determined the segments based upon reports reviewed by the Board that are used to make strategic decisions.The Board considers
the Group from both a business and geographic perspective,with the Board being the chief operating decision maker.


Business segments
The Group has coal interests in South Africa. The main priority is to develop its coal resources in the Waterberg region of South Africa. Management has
determined that there is one operating segment, being mining tenements and mining development. Unallocated corporate administration reflects other
                                     i
corporate costs andincludes equity rasings and administration costs.


(b) Primary reporting format

Information regarding these segments is presented below.The accounting of the reportable segments is the same as the Group's accounting policies.

                                                                                                     Mining tenements            Corporate
Half year 2016
                                                                                                                  Africa          Australia               Total
                                                                                                                  $'000            $'000                  $'000
Total segment and consolidated revenue                                                                             248                 67                  315
Loss before income tax                                                                                            (589)              (640)              (1,229)
Income tax credit                                                                                                      1                                      1
Loss for the half year                                                                                            (588)               (640)             (1,228)




                                                                                                 Page 10
  RESOURCE GENERATION LIMITED

  Notes to the condensed consolidated financial statements
  For the half year ended 31 December 2016


2.SEGMENT INFORMATION (continued)

                                                                                                                                        Mining tenements          Corporate
Half year 2015

                                                                                                                                                         Africa    Australia            Total
                                                                                                                                                         $'000        $'000             $'000
Totalsegment and consolidated revenue                                                                                                                     136            28              164
Loss before income tax                                                                                                                                   (548)       (7,567)          (8,115)
Income tax expense
Loss for the half year                                                                                                                                    (548)      (7,567)          (8,115)

3.CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Restatement of accounts

The comparative 31 December 2015 numbers have been restated in respect of the accounting for foreign exchange on acquisition adjustments as
reported in the statement of profit or loss and other comprehensive income and statement of changes in equity.The Group previously acquired interests
in South African subsidiaries that held exploration licences for the Boikarabelo Coal Mine project. The difference between the net assets of the
subsidiaries acquired and the purchase consideration was recorded as an exploration asset, subsequently reclassified to mining tenements and mining
development assets. Such differences should be treated as assets of the foreign operation and therefore foreign exchange differences arising on
tr::mc::l::dirm nf t h.o P ;: c:c::.otc:: fnr rnnc::nlir/;:" tinn n• •rnnc::.oc:: c::hll hP r nrrl.orl in th.o fnr.oinn r1 1rr.onf'V tr nc:l tinn rllc::,:mfP


4. LOSS FOR THE HALF YEAR                                                                                                                                           Half year ended
                                                                                                                                                                  31-Dec-16         31-Dec-15
                                                                                                                                                                      $'000             $'000
Loss for the half year includes the following items that are unusual because of their nature, size or incidence:

Expenses
Share-based compensation charge!(credit)                                                                                                                                138           (1,873)
Unrealised foreign exchange movements                                                                                                                               (2,208)            7,010

5.BORROWINGS
                                                                                                                                                                  31-Dec-16        30-Jun-16
                                                                                                                                                                      $'000            $'000

Current liabilities·Borrowings (unsecured)                                                                                                                           6,702             3,887
                                                                                                                                                                     6,702             3,887

Non-currentliabilities· Borrowings (unsecured)                                                                                                                      35,296            35,728
                                                                                                                                                                    35,296            35,728


Noble loan
US$20 million was drawn down as an unsecured loan from Noble Resources International Pte ltd in March 2014.Itis repayable in quarterly instalments
of capital and interest over 8 years and has an annual interest rate of 10.75%.The first repayment instalment of the loan is due in September 2017.

EHL loan

EHL Energy (P y) Limited completed 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 amounted to ZAR R82.5 million,is
unsecured and repayablein 16 quarterly instalments from November 2015. There were 11quarterly instalments remaining to be paid as at 31 December
2016.



Ledjadja Coal (Ply) ltd is the borrower under both of the above loan facilities. The Company has provided a guarantee to the respective lenders.

6. CONTRIBUTED EQUITY
                                                                                                                        31-Dec-16                  30-Jun- 16     31-Dec-16         30-Jun-16
                                                                                                                           Shares                     Shares           $'000            $'000

Opening balance                                                                                                    581,380,338                581,380,338           223,622          223,622

Issues of ordinary shares
Closing balance                                                                                                    581,380,338                581,380,338           223,622          223,622



                                                                                                                                      Page 11
RESOURCE GENERATION LIMITED

Notes to the condensed consolidated financial statements
For the half year ended 31 December 2016

7. DEVELOPMENT PARTNERS
                                                                                                                              31-Dec-16           30-Jun-16
                                                                                                                                Interest            Interest
                                                                                                                                     %                     %
Waterberg One Coal (Ply) Limited                                                                                                     74                    74
Ledjadja Coal (Ply) Limited                                                                                                          74                    74

B.RESERVES
                                                                                                                             31-Dec-16            30-Jun-16
                                                                                                                                 $'000                $'000
Reserves
Other contributed equity                                                                                                           1,085              1,085
Treasury shares                                                                                                                   (2,317)            (2,317)
Share-based payment reserve                                                                                                          971                706
Foreign currency translation reserve                                                                                            (34,925)            (50,429)
                                                                                                                                (35,186)            (50,955)

Movements in reserves
Share-based payment reserve
Opening balance                                                                                                                     706              20,294
Employee share plan expense/(credit)                                                                                                138              (1,906)
Employee share plan expense· development cost                                                                                       127
Transfer to accumulated losses                                                                                                                      (17,682)
Closing balance                                                                                                                     971                 706

Foreign currency translation reserve
Opening balance                                                                                                                 (50.429)            (30,879)
Movement                                                                                                                         15,504             (19,550)
Closing balance                                                                                                                 (34,925)            (50.429)


Foreign currency translation reserve movement for the current half year relates to a 10% appreciation of the Rand against the Australian Dollar during the
half year ended 31 December 2016 (30 June 2016: 17% depreciation).

9. COMMITMENTS

Capital commitments


The Group has $5.7 million (30 June 2016: $5.4 million) in commitments in respect of the development of the Boikarabelo Coal Mine.

10. EVENTS OCCURRING AFTER THE BALANCE SHEET DATE

An agreement for additional funding of US$8.4 million from Noble was signed on 14 March 2017. The first drawdown is expected to be before the end of
March 2017 and repayments under the facility have been deferred until September 2017 .


There are no other matters of significance up to the date of this report that have arisen since 31 December 2016 that has significantly affected, or may
significantly affect, the Group's operations in future years, the results of those operations or the state of affairs in future years.


11. CONTINGENT LIABILITIES

Land acquisition


There is a potential property acquisition of $10.1 million (30 June 2016:$9.0 million) contingent to events subseque nt to the commencement of mine
production.




                                                                                               Page 12
RESOURCE GENERATION LIMITED


Directors' declaration

In the Directors' opinion:

(a) there are reasonable grounds to believe that Resource Generation Limited will be able to pay its debts as and when they become due
and payable;and


(b) the financial statements and notes set out on pages 5 to 12 are in accordance with the Corporations Act 2001, including compliance
with accounting standards and giving a true and fair view of the financial position as at 31 December 2016 and of the performance of the
consolidated entity for the half year ended on that date.




This declaration is made in accordance with a resolution of the Directors,pursuant to Section 303(5) of the Corporations Act 2001.




D Gately
Chairman

Brisbane
14 March 2017




                                                                 Page 13
                                                                                          Deloitte Touche Tohmatsu


Deloitte.                                                                                 ABN 74 490 121 060

                                                                                          Riverside Centre
                                                                                          Level26
                                                                                          123 Eagle Street
                                                                                          Brisbane QLD 4000
                                                                                          GPO Box 1463
                                                                                          Brisbane QLD 4001 Australia

                                                                                          Tel: +61 (0) 7 3308 7000
                                                                                          Fax: +61 (0) 7 3308 7001
                                                                                          www.deloitte.com .au




          Independent Auditor's Review Report
    to the members of Resource Generation Limited
Report on the Half-Year Financial Report

We have reviewed the accompany ing half-year financial report of Resource Generation Limited,
which comprises the condensed statement of financial position as at 3 I December 2016, and th e
condensed statement of profit or loss and other comprehensive income, the condensed statem ent of
cash flows and the condensed statement of changes in equity for the half-year ended on that date,
notes compr ising a summary of si gnificant accountin g policies and other explanat ory information,
and the directors' declaration of th e consolidated entity compr ising the company and the entiti es it
controlled at the end of the half-year or from tim e to time during th e half-year as set out on pa ges 5
to 13.

Directors' Responsibility for the Half-Year Financial Repor t

The directors of the compan y are respon s ible for the preparation of the half-yea r financial report
that gi ves a true and fair view in accordance with Au stralian Accountin g Standards an d th e
Corporations Act 2001 and for such interna l control as the directors determ ine is necessa ry to
enable the pr eparation of the half-year financial report that gives a true and fa i r v iew and is free
from mat erial misstatement, whether due to fraud or error.

Auditor 's Responsibility

Ou r respon sibility is to express a conclu sion on the half-year financial report based on our rev iew.
We conducted our review in accordan ce with Auditin g Standard on Revi ew Engagem ents ASRE
2410 Review of a Financial Report Performed by the Independ ent Auditor of the Entity, in order to state
whether, on the basis of the procedures described, we have become aware of any matter that makes
us believe that the ha lf-year financia l report is not in accordance with the Corporations Ac t 2001
includin g: giv ing a true and fa ir v iew of the consol idated entity 's financial position as at 31 Decem
ber 201 5 and its performan ce for the half-year ended on that date; and complying with Accountin
g Standard AASB 1 34 Interim Financial Reporting and th e Corporations Regulations 2001. As th e
auditor of Resour ce Gen eration L imited, ASRE 2410 requ ires that we comply w ith th e ethica l
requir ements relevant to the audit of the annu al financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons
responsible for financial and accountin g matters, and apply ing analytica l and other review
procedures. A review is substantially less in scope than an audit conducted in accorda nce with
Australian Aud iting Standard s and consequently does not enable us to obta in assurance that we
would become aware of all significant matters that mi ght be identified in an audit. Accord ingly,
we do not expr ess an audit opinion .
Liability lim ited by a schem e approv ed und er Professional Standard s Legi slation .

Member ofDeloitte Touche Tohmat su Limited .
                                                                        Page 14
Deloitte.
Auditor's Independence Declaration

In conducting our review, we have complied with the ind ependence requirements of the
Corporations Act 2001 . We confirm that the independence declaration requir ed by th e
Corporations Act 2001, whi ch has been given to the directors of Resource Generati on Limited,
wou ld be in the same terms if gi ven to the directors as at the time of this auditor 's review report.

Conclusion

Based on ou r review, wh ich is not an audit, we have not become aware of any matter that makes us
believe that the half-year financi al report of Resource Gen eration Limited i s not in accordanc e
w ith the Corporations Act 2001, including:

(a) givin g a true and fair view of the consolidated entity 's financ ial position as at 3 1 December
    20 16 and of its perform ance for the half-year ended on that date; and

(b) comply ing with Accounting Standard AASB 134 Interim Financial Reporting and the
     Corporations Regulations 2001.


Material Uncertainty Related to Going Concern

We draw attention to Note l(b) in the half-year financial report wh ich indicates that the consolidated
entity incurred a loss of$1.2 million (30 June 20 1 6:$7.7 million) and used net cash in operating
and invest in g acti v ities of $6.5 million (30 June 2016: $ 14.6 mill ion) during the hal f- year ended
31 December 2016. These conditions, along with oth er matters as set out in Note l(b), indicate the
existence of a material un certainty that may cast significant doubt about the ability of the
consolidated entity to continu e as a going concern. Our conclu sion is n ot m od ified in respect of this
matter.




DELOITTE TOUCHE TOHMATSU




Matthew Dona ldson
Partner
Chartered Accou ntants
Sydn ey, 14 March 2017




                                                    Page 15
RESOURCE GENERAT ION LIMITED

Supplementary Information - presentation of financial information in South African Rand

The presentation currency used in the preparation of the financial statements is the Australian dollar ($A). The Group has translated the
financial statements to the South African Rand (ZAR) because the Boikarabelo Coal Mine,which represents the Group's most significant
activity , is located in this region. This supplementary information has restated the financial statements in Rand.Assets and liabilities were
translated to Rand using the relevant closing rate of exchange and income and expense items were translated using the relevant
cumulative average rate of exchange . The applicable rates used in the restatement of information are as follows:


                                                                                               Dec-16            Jun-16             Dec-15

Average rate of exchange $A/Rand                                                              10.5407            10.5610            9.8365
Closing rate of exchange $A/Rand                                                               9.8603            10.9930            11.317



Consolidated statements of comprehensive income- ZAR Convenience Translat ion (Supplementary Information)
For the half year ended 31 December 2016

                                                                                                                     Half year ended
                                                                                                                                   31-Dec-15
                                                                                                                  31-Dec-16        Restated*
                                                                                                                      R'OOO            R'OOO

Revenue from continuing operations                                                                                     3,320              1,613

Administration, rent and corporate                                                                                   (21,598)           (7,791)
Depreciation of property, plant and equipment                                                                          (1,929)          (1,692)
Employee benefits expense                                                                                            (14,536)          (21,424)
Finance expenses                                                                                                           (32)
Share-based compensation (charge)/cre dit                                                                              (1,455)          18,424
Unrealised foreign exchange movements                                                                                 23,274           (68,954)
Loss before income tax                                                                                               (12,956)          (79,824)

Income tax credit                                                                                                          11

Loss for the half year                                                                                               (12,945)          (79,824)


Other comprehensive income/(loss)

Items that may be reclassified subsequently to profit or loss:
Exchange gain/(loss) on translation of foreign operations                                                           163,423           (169,247)

Total comprehensive income/(loss) for the half year                                                                 150,478           (249,071)


Loss is attributable to:
Owners of Resource Generation Limited                                                                                (12,945)          (79,824)

Total comprehensive income/(loss) for the year is attributable to:
Owners of Resource Generation Limited                                                                               150,478           (249,071)


Loss per share                                                                                                          Rand               Rand

From continuing operations
Basic loss per share                                                                                                      (2.2)           (13.8)
Diluted loss per share                                                                                                    (2.2)           (13.8)
Headline loss per share                                                                                                   (2.2)           (13.8)

*Please refer to Note 3 'Critical accounting estimates and judgements' .
RESOURCE GENERAT ION LIMITED   Page 16
RESOURCE GENERATION LIMITED

Consolidated statements of financial position • ZAR Convenience Translation (Supplementary Information)
As at 31 December 2016


                                                                                                   31-Dec-16    30-Jun-16
                                                                                                       R'OOO        R'OOO

Current assets
Cash and cash equivalents                                                                             44,539     131,421
Trade and other receivables                                                                            2,071       1,605
Deposits and prepayments                                                                               1,666       1,913
                                                                                                      48,276     134,939

Non-current assets
Property , plant and equipment                                                                       333,002      333,802
Mining tenements and mining development                                                            1,486,348    1,414,184
Deposits                                                                                              20,460       20,436
                                                                                                   1,839,810    1,768,422
TOTAL ASSETS                                                                                       1,888,086    1,903,361


Current liabilities
Trade and other payables                                                                              77,311      76,588
Provisions                                                                                             2,672       1,979
Borrowings                                                                                            66,086      42,730
                                                                                                     146,069     121,297

Non-current liabilities
Provisions                                                                                            21,801      21,799
Borrowings                                                                                           348,031     392,758
Royalties payable                                                                                     21,397      21,392
                                                                                                     391,229     435,949
TOTAL LIABILITIES                                                                                    537,298     557,246

NET ASSETS                                                                                         1,350,788    1,346,115


Equity
Contributed equity                                                                                 2,204,978    2,229,377
Reserves                                                                                            (346,944)    (331,249)
Accumulated losses                                                                                  (507,246)    (552,013)
TOTAL EQUITY                                                                                       1,350,788    1,346,115




                                                                        Page 17
  RESOURCE GENERATION LIMITED

  Consolidated statement of cash flows· ZAR Convenience Translation (Supplementary Information)
  For the half year ended 31 December 2016

                                                                                                    Half year ended
                                                                                                  31-Dec-16       31-Dec-15
                                                                                                      R'OOO          R'OOO
 Cash flows from operating activities

 Payments to suppliers and employees                                                                (35,459)       (45,336)
 Interest received                                                                                      738          1,279
 Interest paid                                                                                          (32)            (30)
 Taxation refund                                                                                         11

 Net cash outflow from operating activities                                                        (34,742)        (44,087)




 Cash flows from investing activities
 Payments for property, plant and equipment                                                         (1,244)          (6,393)
 Payments for mining tenements and mining development                                              (32,845)        (50,855)
 Net cash outflow from investing activities                                                        (34,089)        (57,248)



 Cash flows from financing activities
 Repayment of borrowings                                                                           (14,789)         (5,548)
 Loan to related party                                                                                                (679)
 Net cash outflow from financing activities                                                        (14,789)         (6,227)

 Net decrease in cash and cash equivalents                                                         (83,620)       (107,562)
 Cash and cash equivalents at the beginning of the half year                                       267 ,609        267,609
 Effects of exchange rate movements on cash and cash equivalents                                  (139,450)         47,224
 Cash and cash equivalents at the end of the half year                                              44,539         207,271



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RESOURCE GENERATION LIMITED
                              Page 18

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