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Quarterly Report for the three months ended 30 June 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 30 June 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 (BEE) subsidiary 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
Meaningful progress continues to be made on securing Project Funding. In what is a complex
bank project finance process, multiple contracting agreements are being negotiated in
parallel with the finalisation of the independent technical reports. All major contracts are now
substantially agreed and in executable format following an all-party meeting of lenders,
including senior representatives and their advisers, that was held in Johannesburg on 14th
June.
The purpose of the all-party meeting was to review the material EPC and logistics contracts
and to address matters outstanding from the lenders’ legal due diligence. At the conclusion
of the meeting, a small number of items were identified to be addressed or produced
including updating the financial model, term sheet and finalisation of the funding terms of
the rail link and conclusion of a Memorandum of Understanding (MOU) with ESKOM before
the lenders are able to commence their respective credit approval processes. We are doing
everything within our control to ensure that all outstanding items will be delivered to the
lenders by no later than 31st July and this then will allow them to approach their credit
approval committees to obtain the requisite credit approvals. Most of the outstanding items
are either under the Company’s direct control or very likely to be delivered to the Company
by third parties during July. Discussions continue with ESKOM concerning a Memorandum of
Understanding and Coal Supply Agreement. These discussions will continue beyond the end
of July 2017.
The all-party meeting was viewed as positive and the Company is encouraged by the support
for the project shown by the lenders. The credit approval processes are estimated to be
completed within approximately two months from commencement.
Page 1 of 10
Resource Generation Limited
Quarterly Report to 30 June 2017
Rail Link
DBSA has submitted its application for credit and stage 1 of the approval process has been
successful.
Transnet Freight Rail (TFR) has advised that it has received internal approval for the
construction of the Network Stabilising Facility (NSF) which forms an integral part of the link
between the Boikarabelo Coal Mine and the main line to the port of Richards Bay. TFR has
mobilised its contractors and construction of the NSF is scheduled to be completed by Q4
2017.
Independent Power Producer (IPP)
Together with our advisers, WaterBorne Capital, we have been actively preparing for our
submission for a 300MW IPP towards the end of 2017. In particular, the following work was
undertaken during the current quarter:
. We submitted a full response to the Department of Energy’s public request for
information, detailing the mine’s current status and the work done to date on the IPP.
The Department has acknowledged our submission and has undertaken to take our
comments into consideration;
. We have concluded a ‘beauty parade’ of leading law firms with the intention of making
an appointment as legal counsel to the bid;
. Once appointed, the first task of the legal firm will be the preparation of the Joint
Development Agreement (JDA);
. In parallel with the preparation of the JDA we are identifying local partners to join our
consortium, subject to board approval;
. We have invited various insurance firms to tender for the appointment as Insurance
Advisor to the bid;
. We have invited various environmental firms to tender for the appointment as
Environmental Advisor to the bid; and
. A project information memorandum is currently being prepared and will be used to
introduce the local commercial banks and developmental funding institutions to the
project.
Once the JDA has been completed, we will commence with the process of selecting an EPC
partner, again subject to board approval. It is expected that the partner will be either
Japanese or South Korean as both countries have well-established credentials that are most
likely to comply with the Request for Proposal (RFP) when issued by the Department. We are
expecting the RFP to be released towards the end of 2017.
Working Capital Facility
The Company has drawn down two tranches under the extended Noble Facility Agreement
(Facility). In line with the anticipated timing of Project Funding, discussions have been held
with Noble Resources International Pte Ltd (Noble) to agree to a deferral of loan repayments
that are due to commence on 30th September 2017. These discussions are on-going and the
outcome will be communicated to Shareholders in due course.
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Resource Generation Limited
Quarterly Report to 30 June 2017
Under the terms of the Facility, Noble and Ledjadja Coal were to finalise arrangements before
30th June 2017 in relation to Noble having a first right of refusal to purchase any additional
uncontracted coal to be produced from the mine. The completion period has been extended
by mutual agreement until 10th August 2017.
Non-Executive Director Appointment
Mr Manish Dahiya was appointed as a Non-Executive Director of the Company during the
quarter. Mr Dahiya is appointed to the Board as a nominee of Noble under the terms of the
extension of the Facility Agreement of 3 March 2014 (ASX Announcement: 14 March 2017).
Noble is a substantial shareholder in the Company.
Capital structure and cash position
The Company’s summarised capital structure at 30 June 2017 is as follows:
Issued fully paid ordinary shares: 581,380,338
Performance share rights: 5,750,000
Cash at bank: $4.7 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%)
. PR678/2007 (74%)
. PR720/2007 (74%)
The Company has no interest in farm-in or farm-out agreements.
The Mining Right Application for Waterberg No. 1 adjacent to Boikarabelo, was lodged at the
end of 2015. Waterberg No.1 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
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Resource Generation Limited
Quarterly Report to 30 June 2017
Corporate information
Directors
Denis Gately Non-Executive Chairman
Lulamile Xate Non-Executive Deputy Chairman
Rob Croll Non-Executive Director
Manish Dahiya 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
Company contacts
Denis Gately +27 12 345 1057
Rob Lowe +27 12 345 1057
Media contacts
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 4 of 10
Resource Generation Limited
Quarterly Report to 30 June 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
Riaan Joubert Coal Resources SACNASP* 2002 400040/02
Ben 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 30 June 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 30 June 2017
Current quarter Year to date
Consolidated statement of cash flows
(12 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 (1,213) (5,514)
(c) production - -
(d) staff costs (940) (4,043)
(e) administration and corporate costs (461) (1,508)
1.3 Dividends received (see note 3) - -
1.4 Interest received 44 140
1.5 Interest and other costs of finance paid - -
1.6 Income taxes (paid)/refunded - 1
1.7 Research and development refunds - -
1.8 Other (sale of game) - 203
1.9 Net cash from / (used in) operating (2,570) (10,721)
activities
2. Cash flows from investing activities
2.1 Payments to acquire:
(a) property, plant and equipment (7) (176)
(b) tenements (see item 10) - -
(c) investments - -
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Resource Generation Limited
Quarterly Report to 30 June 2017
Current quarter Year to date
Consolidated statement of cash flows
(12 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 (7) (176)
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 6,595 6,595
3.6 Repayment of borrowings (667) (2,730)
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 5,928 3,865
activities
4. Net increase / (decrease) in cash and
cash equivalents for the period
4.1 Cash and cash equivalents at beginning of 1,241 11,955
period
4.2 Net cash from / (used in) operating (2,570) (10,721)
activities (item 1.9 above)
4.3 Net cash from / (used in) investing (7) (176)
activities (item 2.6 above)
Page 7 of 10
Resource Generation Limited
Quarterly Report to 30 June 2017
Current quarter Year to date
Consolidated statement of cash flows
(12 months)
$A’000 $A’000
4.4 Net cash from / (used in) financing 5,928 3,865
activities (item 3.10 above)
4.5 Effect of movement in exchange rates on 90 (241)
cash held
4.6 Cash and cash equivalents at end of 4,682 4,682
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 40 43
5.2 Call deposits 4,642 1,198
5.3 Bank overdrafts - -
5.4 Other (contract retentions) - -
5.5 Cash and cash equivalents at end of 4,682 1,241
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 178
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 30 June 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) 36,953 32,738
? Unsecured loan (note 2) 4,630 4,630
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$25.2
million has been drawn down as at 30 June 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 amounted to ZAR82.5
million, is unsecured and there are 9 quarterly instalments remaining to be paid as at 30 June 2017.
9. Estimated cash outflows for next quarter $A’000
9.1 Exploration and evaluation -
9.2 Development (2,049)
9.3 Production -
9.4 Staff costs (1,136)
9.5 Administration and corporate costs (380)
9.6 Other – repayment of borrowings (2,419)
9.7 Total estimated cash outflows (5,984)
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Resource Generation Limited
Quarterly Report to 30 June 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.
Sign here: Date: 27 July 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 10 of 10
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