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Quarterly Report for the three months ended 31 December 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 December 2017
Resource Generation Limited (the “Company” or “Resgen”) is an emerging ASX and JSE-listed
energy company, currently developing the Boikarabelo Coal Mine (“the 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
Company’s operating subsidiary Ledjadja Coal, were updated in 2016 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 - In accordance with
Listing Rule 5.23.2 the Company confirms that it is not aware of any new information that would
impact on the reported Coal Resources and Coal Reserves). 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 Broad-based 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
Previous Shareholder communications included reference to an alternative funding proposal
and an expectation that the relevant lenders’ credit approval processes and signed terms
sheets would be concluded by (initially) end September/early October 2017 and (then
subsequently) late October/early November 2017. Although the proposed lenders have
completed their due diligence investigations and credit submissions, one of the lenders was
unable to fix meetings of its credit committee due to the intervention of the year-end
holidays. The Company is unable to forecast with any certainty the outcome of the credit
approval process and when any signed terms sheets will be received but is conducting its own
internal planning on these milestones being achieved by end February/early March 2018.
The proposed facility under negotiation is intended to provide the total funds required to
complete the construction of the mine to the point of commissioning, but does not include
the costs of constructing the rail link.
The Company has received legal advice that the funding proposal will require approval of
Shareholders under ASX Listing Rule requirements. An independent expert based in Australia
has been identified and has been briefed on the funding proposal currently under negotiation
and will be instructed to prepare a report for Shareholders. Any such report will need to
contain a detailed synopsis of the proposed funding and financial implications. An
extraordinary general meeting of Shareholders would then be called for the purpose of
considering and approving the funding proposal.
Page 1 of 10
Resource Generation Limited
Quarterly Report to 31 December 2017
In parallel the Company is continuing to progress negotiations with respect to the funding of
the rail link with a number of interested parties. The cost of the rail link is estimated to be
approximately R650 million (approximately A$68.4 million). A further announcement in
respect of this funding will be released in due course.
Ramp-up costs for the mine are estimated to be approximately R300 million (approximately
A$31.5 million). Management believes these funds can be raised when required from
commercial banks, as the Project will have been substantially de-risked at that point in time.
Offtake Agreement
The Company, through its subsidiary, Ledjadja Coal (Pty) Ltd (LCL), executed an agreement
with Noble Resources International Pte Ltd (Noble) for the supply of additional uncontracted
coal to be produced from the mine (ASX Announcement 11 December 2017). The grant to
Noble of this first right of refusal to purchase any additional uncontracted coal to be produced
from the mine arose during negotiations of an extension to the Facility Agreement (ASX
Announcement 14 March 2017). Performance of the Offtake Agreement is subject to receipt
of relevant regulatory/shareholder approvals.
LCL has agreed to offer to sell and deliver to Noble a committed quantity of 800,000 tonnes
of coal per annum, plus up to 300,000 tonnes of coal per annum as advised by LCL to Noble
on a quarterly basis for years 1 to 3; and from year 4 onwards, up to 200,000 tonnes of coal
per annum as advised by LCL to Noble on a quarterly basis.
Working Capital Facility
The Company executed a further extension of the Facility Agreement of 3 March 2014, under
which Noble agreed to make available additional funds of up to US$3.8 million to LCL to fund
the operations and development of the mine whilst project funding is secured (ASX
Announcement 7 December 2017). The total facility made available to the Company is now
US$32.2 million. The additional funds are to be made available on the same terms as the
existing facility and can be drawn in monthly tranches over the period to 31 March 2018.
Board of Directors
During the quarter, Mr Peter Watson was appointed as a Non-Executive Director of the
Company (ASX Announcement 23 November 2017). Peter is appointed to the Board following
the resignation of Mr Denis Gately as a Non-Executive Director of the Company. The
appointment ensures continued compliance with the Corporations Act requirement for a
public company to have two Australian resident directors.
Mr Lulamile Xate was appointed as Chairman following the resignation of Mr Gately.
Capital Structure and Cash Position
The Company’s summarised capital structure at 31 December 2017 is as follows:
Issued fully paid ordinary shares: 581,380,338
Performance share rights: 5,750,000
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Resource Generation Limited
Quarterly Report to 31 December 2017
Cash at bank: $1.8 million
Shareholders and potential investors should also review the Company’s 2017 Annual Report,
the audited Financial Report for the year ending 30 June 2017 and the 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 was lodged at the end of 2015. Waterberg
No.1 encompasses the farm Koert Louw Zyn Pan (PR678/2007) and is adjacent to the
Boikarabelo Coal Mine.
The Company is in the process of relinquishing PR720/2007, over the properties Lisbon and
Zoetfontein, as these are distant from the mine and contain minimal resources that have not
been included in the declared JORC resource.
On behalf of the Board of Directors
Yours faithfully
Mike Meintjes
Company Secretary
RESOURCE GENERATION LIMITED
Page 3 of 10
Resource Generation Limited
Quarterly Report to 31 December 2017
Corporate information
Directors
Lulamile Xate Non-Executive 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
Peter Watson Non-Executive Director
Company secretary
Mike Meintjes
Registered office
Level 1, 17 Station Road
Indooroopilly, QLD 4068, Australia
Telephone: +27 11 010 6310
Facsimile: +27 86 539 3792
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
Lulamile Xate +27 11 010 6310
Rob Lowe +27 11 010 6310
Media contacts
South Africa Australia
Russell and Associates (Marion Brower) Citadel MAGNUS (James Strong)
t: +27 11 880 3924 t: +61 2 8234 0100
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 December 2017
Competent Persons’ Statements
The information contained in this Quarterly Report which relates to estimates of the Coal
Resources and Coal Reserves for the Boikarabelo Coal Mine 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 Coal Resources and Coal Reserves for the
Boikarabelo Coal Mine
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 Quarterly Report. 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.
Page 5 of 10
Resource Generation Limited
Quarterly Report to 31 December 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 December 2017
Current quarter Year to date
Consolidated statement of cash flows
(6 months)
$A’000 $A’000
1. Cash flows from operating activities
1.1 Receipts from customers - -
1.2 Payments for
(a) exploration & evaluation - -
(b) development (2,178) (3,568)
(c) production - -
(d) staff costs (904) (1,875)
(e) administration and corporate costs (505) (997)
1.3 Dividends received (see note 3) - -
1.4 Interest received 61 126
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 - -
1.9 Net cash from / (used in) operating (3,527) (6,315)
activities
2. Cash flows from investing activities
2.1 Payments to acquire:
(a) property, plant and equipment - (1)
(b) tenements (see item 10) - -
(c) investments - -
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Resource Generation Limited
Quarterly Report to 31 December 2017
Current quarter Year to date
Consolidated statement of cash flows
(6 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 - (1)
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 647 4,810
3.6 Repayment of borrowings (648) (1,300)
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 (1) 3,510
activities
4. Net increase / (decrease) in cash and
cash equivalents for the period
4.1 Cash and cash equivalents at beginning of 5,140 4,682
period
4.2 Net cash from / (used in) operating (3,527) (6,315)
activities (item 1.9 above)
4.3 Net cash from / (used in) investing - (1)
activities (item 2.6 above)
Page 7 of 10
Resource Generation Limited
Quarterly Report to 31 December 2017
Current quarter Year to date
Consolidated statement of cash flows
(6 months)
$A’000 $A’000
4.4 Net cash from / (used in) financing (1) 3,510
activities (item 3.10 above)
4.5 Effect of movement in exchange rates on 218 (46)
cash held
4.6 Cash and cash equivalents at end of 1,830 1,830
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 121 29
5.2 Call deposits 1,709 5,111
5.3 Bank overdrafts - -
5.4 Other (contract retentions) - -
5.5 Cash and cash equivalents at end of 1,830 5,140
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 139
item 1.2
6.2 Aggregate amount of cash flow from loans to these parties -
included in item 2.3
6.3 Include below any explanation necessary to understand the transactions included in
items 6.1 and 6.2
Directors’ remuneration and consulting fees
Page 8 of 10
Resource Generation Limited
Quarterly Report to 31 December 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) 41,256 37,028
? Unsecured loan (note 2) 3,744 3,744
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 Facility Agreement under which Noble Resources International Pte Ltd
has agreed to make available funds of up to US$32.2 million to the Company's subsidiary, Ledjadja
Coal (Pty) Ltd, to fund the operations and development of the Boikarabelo Coal Mine whilst funding
to complete the project is secured. US$28.9 million has been drawn down as at 31 December 2017.
The loan is repayable in quarterly instalments over 78 months commencing in April 2018 and has an
annual interest rate of 10.75%.
Note 2 EHL Energy (Pty) Ltd 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 amounted
to ZAR82.5 million. There are 7 quarterly instalments remaining to be paid as at 31 December 2017.
9. Estimated cash outflows for next quarter $A’000
9.1 Exploration and evaluation -
9.2 Development (2,234)
9.3 Production -
9.4 Staff costs (1,120)
9.5 Administration and corporate costs (450)
9.6 Other – repayment of borrowings (660)
9.7 Total estimated cash outflows (4,464)
Page 9 of 10
Resource Generation Limited
Quarterly Report to 31 December 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: 25 January 2018
(Company secretary)
Print name: MICHAEL MEINTJES
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.
JSE Sponsor: Deloitte & Touche Sponsor Services (Pty) Ltd
Page 10 of 10
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