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Quarterly Report for the three months ended 30 September 2018 (Quarter)
Resource Generation Limited
Registration number ACN 059 950 337
(Incorporated and registered in Australia)
ISIN: AU000000RES1
Share Code on the ASX: RES
Share Code on the JSE: RSG
(“Resgen” or the “Company”)
Quarterly Report
for the three months ended 30 September 2018 (Quarter)
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 coalfield. The Waterberg coalfield 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
Progress during the quarter
During the Quarter the Company indicated that it was pursuing a tandem approach to finding
a funding solution (ASX Release: 20 August 2018). This approach involved:
1. Continuing to engage with the proposed lending syndicate (Syndicate) and more
specifically the Lender delaying its credit committee approval processes due to a
broad-based internal review of the organisation’s ESG investment criteria; and
2. Subject to due diligence, to structure involvement by a third party as a substitute
funder in the Syndicate or as a complementary participant in the Syndicate.
Towards the end of the Quarter the Company received a commitment from the Lender
referred to in 1 above to table a funding proposal prepared by the Deal Team for credit
committee approval (ASX Release: 13 September 2018) and, if secured, final Lender Board
approval by the end of October 2018. Consequently, the Board agreed to prioritise this
funding route and dedicate all time and resources to securing a favourable outcome.
Notwithstanding the priority assigned securing a funding outcome with the Syndicate
referred to in 1 above, engagement and due diligence planning continued to be progressed
with the interested third party funder referred to in 2 above.
In early September 2018, the Company recalibrated the funding calendar for achieving
Financial Close and determined that this is likely to only occur towards the end of Q1 in 2019.
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Resource Generation
Limited
Quarterly Report to 30 September
2018
Consequently, this highlighted the need to secure additional working capital to allow an
orderly conclusion to the funding process. In this regard a conditional agreement was reached
with Noble Group (Noble) (ASX Release: 13 September 2018) to provide the projected
additional working capital requirements through to 31 March 2019. This agreement included
the following terms and conditions:
• extending the current Working Capital Facility (a component of the Facility
Agreement) by an additional US$4.7m;
• amending the first date for repayment of the Facility from 1 November 2018 to 1 April
2019;
• granting of new security to secure Resgen and Ledjadja Coal’s obligations to Noble
under the Facility Agreement;
• executing full form documents effecting the necessary amendment to the Facility
Agreement and the additional security documents;
• Resgen and Ledjadja Coal obtaining all necessary internal and regulatory approvals or
waivers in respect of all documents being entered into; and
• all costs associated with negotiation and documentation to be borne by Resgen.
Subsequent to quarter end
The Company updated all Independent Technical Expert Reports (Technical, Marketing,
Environmental and Legal) and submitted these to the Syndicate preparing their credit
committee submission. The Company has received confirmation of completeness of the
documentation from the Deal Team and an indication that the submission will occur during
the week commencing 29 October 2018. Where credit committee approval is secured, the
proposal will then be tabled for their Board approval at the November 2018 meeting.
Rail Link Funding
The Company has been able to identify a number of parties interested in funding the required
rail link for the Project. Due diligence activities and discussions continue with the objective of
securing the offer of credit approved term sheets.
EPC Contracts
The Company executed three separate contracts with Sedgman (South Africa) (Proprietary)
Limited and Sedgman Pty Limited (collectively Sedgman) for the Boikarabelo Coal Mine (ASX
Release: 1 August 2018) relating to the following:
• The engineering design, construction and commissioning of the CHPP;
• The operations and maintenance for the CHPP; and
• The construction of ancillary works relating to the infrastructure of the mine.
Under the provisions of the CHPP contract, Sedgman will design, procure, construct and
commission the CHPP for the processing of 15 million tons of raw coal per annum.
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Resource Generation
Limited
Quarterly Report to 30 September
2018
Under the provisions of the Operations and Maintenance contract, Sedgman will operate and
maintain the CHPP for 4 years post commissioning subject to strict performance criteria.
Under the Ancillary Works contract, Sedgman will undertake construction of infrastructure
associated with the CHPP and additional infrastructure including buildings, piping, electrical,
water and drainage during the mine development phase.
Working Capital Facility
The Company agreed a further extension of the Facility Agreement of 3 March 2014 (Facility),
under which Noble Resources International Pte Ltd made available additional funds of up to
US$2.5m to the Company's subsidiary, Ledjadja Coal (Pty) Ltd (LCL) to fund operations whilst
project funding is secured (ASX Release: 1 August 2018). The total Facility made available to
the Company at Quarter end was US$37.2m. The additional funds are being made available
on the same terms as the existing Facility and are being drawn in monthly tranches over the
period to 31 October 2018.
Subsequent to quarter end
The Company agreed a further extension of the Facility Agreement of 3 March 2014 (Facility),
under which Noble Resources International Pte Ltd made available additional funds of up to
US$4.7m to the Company's subsidiary, Ledjadja Coal (Pty) Ltd (LCL) to fund operations whilst
project funding is secured (ASX Release: 30 October 2018). The total Facility made available
to the Company is now US$41.9m.
Capital Structure and Cash Position
The Company’s summarised capital structure at 30 September 2018 is as follows:
Issued fully paid ordinary shares: 581,380,338
Performance share rights: 5,700,000
Cash at bank: $1.9 million
Shareholders and potential investors should also review the Company’s 2018 Annual Report
and the audited Financial Report for the year ending 30 June 2018 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%)
The Company has no interest in farm-in or farm-out agreements.
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Resource Generation
Limited
Quarterly Report to 30 September
2018
The Mining Right Application for Waterberg #1 was lodged at the end of 2015 and the
Company is awaiting the outcome of this process. Waterberg #1 encompasses the farm Koert
Louw Zyn Pan (PR678/2007) and is adjacent to the Boikarabelo Coal Mine.
On behalf of the Board of Directors
Yours faithfully
Mike Meintjes
Joint Company Secretary
RESOURCE GENERATION LIMITED
Corporate information
Directors
Lulamile Xate Non-Executive Chairman
Rob Croll Independent Non-Executive Director
Manish Dahiya Non-Executive Director
Colin Gilligan Independent Non-Executive Director
Leapeetswe Molotsane Interim Managing Director and CEO
Dr Konji Sebati Independent Non-Executive Director
Peter Watson Independent Non-Executive Director
Greg Hunter Alternate Non-Executive Director for M. Dahiya
Joint Company Secretaries
Mike Meintjes and Brendan O’Regan
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
Leapeetswe Molotsane +27 11 010 6310
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Resource Generation
Limited
Quarterly Report to 30 September
2018
Media contacts
South Africa
Russell and Associates (Marion Brower)
t: +27 11 880 3924
42 Glenhove Rd, Johannesburg 2196
Gauteng, South Africa
Page 5 of 12
Resource Generation
Limited
Quarterly Report to 30 September
2018
Competent Persons’ Statements
The information contained in this Quarterly Report relates to estimates of Coal Resources and
Coal Reserves and 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 engaged 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
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 consent to the inclusion of material in the form and
context in which it appears in this Quarterly Report. Both are members of a Recognised
Professional Organisation in terms of the JORC Code 2012 and 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 September
2018
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 September 2018
Current quarter Year to date
Consolidated statement of cash flows
(3 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 (1,768) (1,768)
(c) production - -
(d) staff costs (1,060) (1,060)
(e) administration and corporate costs (397) (397)
1.3 Dividends received (see note 3) - -
1.4 Interest received 29 29
1.5 Interest and other costs of finance paid - -
1.6 Income taxes (paid)/refunded - -
1.7 Research and development refunds - -
1.8 Other - -
1.9 Net cash from / (used in) operating (3,196) (3,196)
activities
2. Cash flows from investing activities
2.1 Payments to acquire:
(a) property, plant and equipment - -
(b) tenements (see item 10) - -
Page 7 of 12
Resource Generation
Limited
Quarterly Report to 30 September
2018
Current quarter Year to date
Consolidated statement of cash flows
(3 months)
$A’000 $A’000
(c) investments - -
(d) other non-current assets - -
2.2 Proceeds from the disposal of:
(a) property, plant and equipment - -
(b) tenements (see item 10) - -
(c) investments - -
(d) other non-current assets - -
2.3 Cash flows from loans to other entities - -
2.4 Dividends received (see note 3) - -
2.5 Other (provide details if material) - -
2.6 Net cash from / (used in) investing - -
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 3,937 3,937
3.6 Repayment of borrowings (583) (583)
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 3,354 3,354
activities
4. Net increase / (decrease) in cash and
cash equivalents for the period
4.1 Cash and cash equivalents at beginning of 1,729 1,729
period
4.2 Net cash from / (used in) operating (3,196) (3,196)
activities (item 1.9 above)
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Resource Generation
Limited
Quarterly Report to 30 September
2018
Current quarter Year to date
Consolidated statement of cash flows
(3 months)
$A’000 $A’000
4.3 Net cash from / (used in) investing - -
activities (item 2.6 above)
4.4 Net cash from / (used in) financing 3,354 3,354
activities (item 3.10 above)
4.5 Effect of movement in exchange rates on (1) (1)
cash held
4.6 Cash and cash equivalents at end of 1,886 1,886
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 52 52
5.2 Call deposits 1,834 1,834
5.3 Bank overdrafts - -
5.4 Other (contract retentions) - -
5.5 Cash and cash equivalents at end of 1,886 1,886
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 174
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
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Resource Generation
Limited
Quarterly Report to 30 September
2018
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 15
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
Office rental and associated services
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) 51,541 50,155
. Unsecured loan (note 2) 2,026 2,026
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$37.2 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$36.2 million has been drawn down as at 30 September 2018.
The loan is repayable in quarterly instalments over 78 months commencing from 1 November 2018
and has an annual interest rate of 10.75% (an extension of the facility and repayment date is
currently under negotiation and is expected to be finalised before the due date). The Company has
provided a Parent Company Guarantee for the Facility.
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 4 quarterly instalments remaining to be paid as at 30 September 2018.
Page 10 of 12
Resource Generation
Limited
Quarterly Report to 30 September
2018
9. Estimated cash outflows for next quarter $A’000
9.1 Exploration and evaluation -
9.2 Development (3,773)
9.3 Production -
9.4 Staff costs (1,174)
9.5 Administration and corporate costs (410)
9.6 Other – repayment of borrowings (573)
9.7 Total estimated cash outflows (prepared on the basis that additional (5,930)
working capital is secured as noted in the Quarterly Activities Report)
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: 31 October 2018
(Company secretary)
Print name: MICHAEL MEINTJES
JSE Sponsor: Deloitte & Touche Sponsor Services (Pty) Limited
Page 11 of 12
Resource Generation
Limited
Quarterly Report to 30 September
2018
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 12 of 12
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