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Quarterly Report for the three months ended 31 March 2017
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 March 2017
Resource Generation Limited (the “Company” or “Resgen”) is an emerging ASX and JSE-listed
energy company, currently developing the Boikarabelo Coal Mine in South Africa’s Waterberg
region. The Waterberg accounts for around 40% of the country’s currently known coal resources.
The Coal Resources and Coal Reserves for the Boikarabelo Coal Mine, held through the operating
subsidiary Ledjadja Coal, were recently updated based upon a new mine plan and execution
strategy. The Boikarabelo Coal Resources total 995Mt and the Coal Reserves total 267Mt applying
the JORC Code 2012 (ASX Announcement 23 January 2017). Stage 1 of the mine development
targets saleable coal production of 6 million tonnes per annum. Ledjadja Coal is a Black Economic
Empowerment subsidiary (BEE) operating under South Africa’s Broadbased Black Economic
Empowerment Act, Section 9(5): Codes of Good Practice.
Resgen’s primary shareholders are the Public Investment Corporation of South Africa (PIC), Noble
Group and Altius Investment Holdings.
Project Funding
The Company’s primary focus this quarter has been to finalise the key material agreements
relating to the mine and logistics. These include the Engineering, Procurement and
Construction (EPC) contract for the Coal Handling and Preparation Plant (CHPP), the CHPP
Operations & Maintenance contract, the Ancillary Works EPC contract, the Transportation of
Coal Agreement, the Port Service Level Agreement and the Mining Contract. A number of
these contracts have been concluded and submitted to the Lenders and Independent
Technical Expert for review. In parallel good progress has been made towards the funding of
the rail link and the rail link EPC construction contract. Activities continue to be undertaken
at the mine site preparing for the arrival of the EPC contractors. We are hopeful that this
orderly and deliberate process will result in the conclusion of funding arrangements for the
project during 2017 (ASX Announcement: 2 March 2017).
Independent Power Producer (IPP)
In parallel to advancing the development of the mine, the Company has continued to plan to
also operate as an Independent Power Producer, providing another option for the domestic
sale of coal. We have appointed external consultants, J Maynard and WaterBorne Capital, to
assist us with the selection and appointment of the main EPC contractor and preparation of
a Joint Development Agreement. At the same time, we are working to be ready to submit our
proposal when the Department of Energy opens the next submission window. This is expected
to be towards the end of 2017.
Working Capital Facility
Page 1 of 10
Resource Generation Limited
Quarterly Report to 31 March 2017
The Company signed an extension of the Facility Agreement of 3 March 2014 (ASX
Announcement: 14 March 2017), under which Noble Resources International Pte Ltd has
agreed to make available further funds of up to US$8.4M to the Company's subsidiary,
Ledjadja Coal Pty Ltd (LCL), to fund the operations and development of the mine whilst project
funding is secured. Those additional funds are to be available in three tranches over the
period to 30 September 2017.
Key terms associated with the extension of the Facility include:
*The additional funds together with the existing Facility of US$20m are unsecured and
subject to a parent company guarantee;
*Interest accrues at 10.75% pa and can be capitalised on a six-monthly basis unless
the borrower elects otherwise to pay such interest;
*The right for the Lender to appoint a nominee to the Board of the Company and
approve one of the Company's nominees to the Board of LCL, subject to regulatory
and governance requirements; and
*The Facility is repayable in instalments commencing from 30 September 2017 with a
termination date of 10 March 2024, however the additional funds made available
under the extension of the Facility is repayable from the proceeds of the first
drawdown of funding secured for the Project.
As part of negotiating the extension to the Facility, the Company has also agreed to restate
the existing domestic offtake and coal marketing agreements it has with the Lender and its
related bodies corporate with effect from 31 December 2013, including the incorporation of
a term sheet signed in 2013.
Subsequent to quarter end the Group received the first drawdown of US$2.4m under the
extended Facility Agreement and has commenced the process of appointing the Lender
nominee to the Board of the Company and obtain the approval for the appointment of a
further director to the Board of LCL.
Capital structure and cash position
The Company’s summarised capital structure at 31 March 2017 is as follows:
Issued fully paid ordinary shares: 581,380,338
Performance rights: 6,250,000
Cash at bank: $1.2 million
Shareholders and potential investors should also review the Company’s Annual Report,
audited Financial Report for the year ending 30 June 2016 and Interim Financial Report for
the six months ending 31 December 2016 to fully appreciate the Company’s financial position.
Mining tenements
The coal mining rights and exploration tenements held at the end of the quarter were as
follows:
*MPT 169 MR (74%)
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Resource Generation Limited
Quarterly Report to 31 March 2017
*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
26 April 2017
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Resource Generation Limited
Quarterly Report to 31 March 2017
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
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Resource Generation Limited
Quarterly Report to 31 March 2017
Competent Persons’ Statement
The information contained in this Quarterly Report which relates to estimates of the
Boikarabelo Coal Mine 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 Riaan Joubert is the Principal Geologist employed by Ledjadja Coal. Mr Ben Bruwer
is a Principal Consultant with VBKom (Pty) Ltd (VBKOM).
Summary of Competent Persons responsible for the Boikarabelo Coal Mine Coal Resources
and Coal Reserves
Competent Person Area of Competency Professional Year of Membership Number
Society Registration
R. Joubert Coal Resources SACNASP* 2002 400040/02
B. Bruwer Coal Reserves SAIMM** 1994 701068
*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 Limited. Mr Joubert holds no shares in Resource
Generation Limited.
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Resource Generation Limited
Quarterly Report to 31 March 2017
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 March 2017
Current quarter Year to date
Consolidated statement of cash flows
(9 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 (876) (4,300)
(c) production - -
(d) staff costs (1,049) (3,103)
(e) administration and corporate costs (321) (1,047)
1.3 Dividends received (see note 3) - -
1.4 Interest received 30 96
1.5 Interest and other costs of finance paid - -
1.6 Income taxes (paid)/refunded 1 1
1.7 Research and development refunds - -
1.8 Other (sale of game) - 203
1.9 Net cash from / (used in) operating (2,215) (8,150)
activities
2. Cash flows from investing activities
2.1 Payments to acquire:
(a) property, plant and equipment (60) (170)
(b) tenements (see item 10) - -
(c) investments - -
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Resource Generation Limited
Quarterly Report to 31 March 2017
Current quarter Year to date
Consolidated statement of cash flows
(9 months)
$A’000 $A’000
(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 (60) (170)
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 (682) (2,063)
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 (682) (2,063)
activities
4. Net increase / (decrease) in cash and
cash equivalents for the period
4.1 Cash and cash equivalents at beginning of 4,517 11,955
period
4.2 Net cash from / (used in) operating (2,215) (8,150)
activities (item 1.9 above)
4.3 Net cash from / (used in) investing (60) (170)
activities (item 2.6 above)
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Resource Generation Limited
Quarterly Report to 31 March 2017
Current quarter Year to date
Consolidated statement of cash flows
(9 months)
$A’000 $A’000
4.4 Net cash from / (used in) financing (682) (2,063)
activities (item 3.10 above)
4.5 Effect of movement in exchange rates on (319) (331)
cash held
4.6 Cash and cash equivalents at end of 1,241 1,241
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 43 569
5.2 Call deposits 1,198 3,948
5.3 Bank overdrafts - -
5.4 Other (contract retentions) - -
5.5 Cash and cash equivalents at end of 1,241 4,517
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 155
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
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Resource Generation Limited
Quarterly Report to 31 March 2017
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) 37,156 26,166
*Unsecured loan (note 2) 5,034 5,034
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 The Company has a US$28.4 million unsecured loan facility with Noble Group. US$20.0
million has been drawn down as at 31 March 2017. It is repayable in quarterly instalments of capital
and interest over 78 months commencing in September 2017 and has an annual interest rate of
10.75%.
Note 2 EHL Energy (Pty) Limited constructed the electricity sub-station at the Boikarabelo Coal Mine
which connects the mine to the grid. The construction was 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
10 quarterly instalments remaining to be paid as at 31 March 2017.
9. Estimated cash outflows for next quarter $A’000
9.1 Exploration and evaluation -
9.2 Development (3,762)
9.3 Production -
9.4 Staff costs (1,090)
9.5 Administration and corporate costs (348)
9.6 Other – loan repayments (667)
9.7 Total estimated cash outflows (5,867)
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Resource Generation Limited
Quarterly Report to 31 March 2017
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.
Date: 28 April 2017
Company secretary: 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 10 of 10
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