To view the PDF file, sign up for a MySharenet subscription.

RESOURCE GENERATION LIMITED - Interim Financial Report for the half year ended 31 December 2018

Release Date: 15/03/2019 11:20
Code(s): RSG     PDF:  
 
Wrap Text
Interim Financial Report for the half year ended 31 December 2018

RESOURCE GENERATION LIMITED                                                                                                       ABN 91 059 950 337



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”)


Interim Financial Report for the half year ended 31 December 2018
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 financialposition                                                                         6
Condensed consolidated                 statement of changesin equity                                                                          7
Condensed consolidated statement of cash flows                                                                                                8
Notes to the condensed consolidated            financial statements                                                                           9
Directors' declaration                                                                                                                       14
Independent auditor's review report                                                                                                          15
Supplementary information - presentation of financial information in South African Rand                                                      17

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 2018 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.


Shareholders can also view the on-line version on the Company’s website at http://www.resgen.com.au/investors-and-media/financial-reports/2019
       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 2018 (HY19). In order to comply with the provision of the Corporations Act 2001, the Directors
report as follows:

1. Directors
The following persons were Directors of Resource Generation Limited during or since the end of the half year:
 Name                 Position                                                     Length of service to 31 December 2018
 Mr L Xate            Chairman and Non-executive Director                          3.25 years                                       (As Chair effective 22 November 2017)
 Mr R Croll           Lead Independent Non-executive Director                      3.25 years
 Mr M Dahiya          Non-executive Director                                       1.58 years
 Mr C Gilligan        Independent Non-executive Director                           3.25 years
 Mr L Molotsane *     Executive Director                                           3.25 years
 Dr K Sebati          Independent Non-executive Director                           3.25 years
 Mr P Watson          Independent Non-executive Director                           1.00 year                                        (Resigned 30 November 2018)
 Mr M Gray            Independent Non-executive Director                           1 month                                          (Appointed 01 December 2018)
* Mr Molotsane was appointed Interim Managing Director and CEO effective 8 March 2018.

Mr M Meintjes has been Company Secretary since 26 November 2015.
2. Principal activities
During the half year the principal continuing activities of the Group consisted of the financing and development of the Boikarabelo Coal Mine in the Waterberg region of
South Africa.

3. Review of operations
During the HY19 the Group recorded a net loss of $6.7 million (HY18: $1.2 million loss). The HY19 net loss of $6.7 million includes administrative and corporate expenses
of $1.5 million, employee expenses of $1.2 million, interest expense of $1.3m and an unrealised foreign exchange losses of $2.7 million.
Interest expenses of $1.2 million (2017: nil) being the portion of interest on the Noble loan that cannot be capitalised under IAS23 and the unrealised foreign exchange loss
of $2.7 (2017: $1.5m gain) being an unrealised loss from the translation of the amount outstanding under the Noble loan facility.
The Company announced the execution of a Bilateral Senior Loan Facility Agreement (ASX Announcement: 16 April 2018) between the Industrial Development
Corporation of South Africa Ltd (IDC) and its subsidiary Ledjadja Coal (Pty) Ltd. The IDC is the first party of the alternative funding solution (comprising of a syndicate of
three parties) to secure credit committee approval.
During the period, the Company updated all Independent Technical Expert Reports and submitted these to the Syndicate Lender (ASX Announcement 12 November 2018)
preparing their Credit Committee submissions. The Lender's Deal Team next in line for completing approvals confirmed that this Lender remains committed to the Project
from a technical, commercial and strategic perspective and that they were satisfied with the content of the updated Expert Report
Management maintained regular contact with the Lender's Deal Team over this period in anticipation that both Credit Committee and subsequent Board approval could be
finalised before the Christmas break in South Africa. When it became apparent in early December 2018 that this timeline would not be met, the Company elevated the
priority of progressing a mitigating strategy through an alternative funding option with a party or parties as a substitute in the current proposed Lending Syndicate. This
further delay also impacted the targeted date for financial close of 31 March 2019 as disclosed in the 2018 Annual Report. The Board and Management are therefore
focused on strategies to conserve cash and/or secure any required additional financial support whilst a new timetable can be determined with the appropriate level of
certainty to advise Shareholders.
Subsequent to the period end the Company reaffirmed that the Lending Syndicate remained the preferred option.
Shareholders are cautioned that plans for finalising project funding involve a number of matters outside of the control of the Company, however the broad focus of activities
is anticipated to be on, (i) Securing all remaining credit approvals from the Lending Syndicate for funding the mine development; (ii) On the basis that credit approvals are
secured from all parties to the Lending Syndicate, harmonising the term sheets for any final matters that are raised through credit review; (iii) Finalising negotiations to
secure terms for the commitment to fund the 44km rail loop and link; (iv) Updating all final inputs and assumptions for the two funding packages in the Base Case Financial
Model (BCFM) for the Project and tabling these appropriately supported proposals for consideration and approval with the Board; and (v) Proceeding with plans to schedule
a meeting to secure Shareholder approval for the proposed mine development 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 discussion continue with
the objective of securing the offer of credit approved term sheets.
Directors' report (continued)
3. Review of operations (continued)
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$4.7 million
to LCL to fund the operations and development of the mine whilst project funding is secured. The total facility made available to the Company is now US$41.9 million. The
additional funds are to be made available on substantially the same terms as the Existing facility and are being drawn in monthly tranches over the period to 31 March
2019. The only major change to the terms of the Facility is that the total Facility is now secured by a pledge over Resgen's interest in 74% of the shares in Ledjadja, which
are held by another Resgen subsidiary, Resgen Africa Holdings Limited (RAHL). Approval for granting this security to a substantial shareholder was obtained from
Shareholders at the AGM held on 30 November 2018.
4. Dividends
No dividends were paid or proposed to be paid to members during the financial half year (2017: nil).
5. Events occurring after the balance sheet date
The Company and its subsidiary Ledjadja Coal (Pty) Ltd reached a conditional agreement with Noble Resources International Pte Ltd on 15 March 2019 regarding securing
additional funds of up to US$2.5 million of additional working capital and extension of the first loan repayment from 30 June 2019 to 30 September 2019.
The specific conditions related to this agreement are as follows:
*     credit approvals from all members of the Lending Syndicate to be secured by 29 March 2019 and, if not forthcoming, the Company to facilitate a meeting between
      itself, Noble Resources International Pte Ltd, the IDC and other potential members of the Lending Syndicate to agree a way forward;


                                                                                     Page 2
      RESOURCE GENERATION LIMITED

*    no later than 29 March 2019, the Company to develop a high-level plan and timetable on the potential feasibility of executing a small-scale mining operation at the
     Boikarabelo Coal Mine;
*                     Noble Resources International Pte Ltd to have oversight of all expenditure and contracts;
*                     executing full form documents effecting the neccesary amendment to the Facility Agreement and additional security documents;
*    the Company and its subsidiary Ledjadja Coal (Pty) Ltd 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 the Company and its subsidiary Ledjajda Coal (Pty) Ltd.

6. Auditor's independence declaration

The auditors' independence declaration is included on page 4 of the interim financial report.

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 Instrument amounts in the Directors' report and the interim financial report have been 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




L Xate Chairman
Johannesburg 15 March 2019

JSE Sponsor: Deloitte & Touche Sponsor Services (Pty) Limited




                                                                                   Page 3
          RESOURCE GENERATION LIMITED


Auditor's Independence Declaration




Tel: +61 7 3237 5999 Fax: +61 7 3221 9227 www.bdo.com.au
As lead auditor for the review of Resource Generation Limited for the half-year ended 31 December 2018, I declare
that, to the best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review;
    and
2. No contraventions of any applicable code of professional conduct in relation to the review.
This declaration is in respect of Resource Generation Limited and the entities it controlled during the period.
DECLARATION OF INDEPENDENCE BY R M SWABY TO THE DIRECTORS OF RESOURCE GENERATION LIMITED
Level 10, 12 Creek St
Brisbane QLD 4000
GPO Box 457 Brisbane QLD 4001
Australia




BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by
guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent
member firms. Liability limited by a scheme approved under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.


Brisbane, 15 March 2019
BDO Audit Pty Ltd
R M Swaby
Director

Condensed consolidated statement of profit or loss and other comprehensive income For the half year ended 31 December 2018
Half year ended
31-Dec-18                                                                                                      31-Dec-17
Notes                                                                                            $'000             $'000
Other income from continuing operations                                           ____________ 103 _____________ 179

                                                                                                                                                                      (1,272)
                                                                                                                                      (1,539)                         (187)
Administrative, rent and corporate Depreciation of property, plant and                                                                (149)                           (1,231)
equipment Employee benefits expense Finance expenses                                                                                  (1,180)                         (3)
Share-based compensation expense                                                                                3                     (1,264)                         (130)
Unrealised foreign exchange movements - (loss)/gain                                                             3                     (2,684)                         1,456

Loss before income tax                                                                                                                (6,713)                         (1,188)


Income tax benefit                                                                                                                    -                               -



Loss for the half year                                                                                                                (6,713)                         (1,188)

Other comprehensive income


Items that may be reclassified subsequently to profit or loss: Exchange
                                                                                                                7                     1,164                           5,222
gain on translation of foreign operations, net of tax

Total comprehensive (loss)/income for the half year                                                                                   (5,549)                         4,034




                                                                                           Page 4
   RESOURCE GENERATION LIMITED



Loss is attributable to:
Owners of Resource Generation Limited                                                  (6,713)             (1,188)

Total comprehensive (loss)/income for the half year is attributable to:
Owners of Resource Generation Limited                                                  (5,549)             4,034

Headline loss                                                                          (6,713)             (1,188)

Loss per share


                                                                                       Cents               Cents
                                                                                       (1.16)              (0.21)
Loss per share for loss from continuing operations Basic loss per share                (1.16)              (0.21)
Diluted loss per share Headline loss per share                                         (1.16)              (0.21)
The above condensed consolidated statement of profit or loss and other comprehensive income should be read in conjunction with
the accompanying notes.




                                                                Page 5
    RESOURCE GENERATION LIMITED

Condensed consolidated statement of financial position As at 31 December 2018
                                                                                                    31-Dec-18                30-Jun-18
                                                                                 Notes              $'000                    $'000


Current assets
Cash and cash equivalents                                                                           1,240                    1,729
Trade and other receivables                                                                         45                       82
Deposits and prepayments                                                                            278
                                                                                                    1,563                    168
                                                                                                                             1,979

Non-current assets
Property, plant and equipment                                                                       32,172                   32,323
Mining tenements and mining development                                                             167,803                  161,719
Deposits                                                                                            1,215                    1,207
                                                                                                    201,190                  195,249


TOTAL ASSETS                                                                                        202,753                  197,228



Current liabilities
Trade and other payables                                                                            3,844                    6,302
Provisions                                                                                          326                      563
Borrowings                                                                       4                  15,376                   19,660
                                                                                                    19,546                   26,525


Non-current liabilities
Provisions                                                                                          2,349                    2,150
Borrowings                                                                       4                  62,514                   44,420
Royalties payable                                                                                   1,579                    1,645
                                                                                                    66,442                   48,215


TOTAL LIABILITIES                                                                                   85,988                   74,740


NET ASSETS                                                                                          116,765                  122,488



Contributed equity                                                               5                  223,622                  223,622
Reserves                                                                         7                  (37,439)                 (38,603)
Accumulated losses                                                                                  (69,418)                 (62,531)

TOTAL EQUITY                                                                                          116,765              122,488
The above condensed consolidated statement of financial position should be read in conjunction with the accompanying notes.
Condensed consolidated statement of changes in equity For the half year ended 31 December 2018
Attributable to owners of Resource Generation Limited
                                                                                    Contributed                    Accumulated
                                                                                    equity            Reserves     Losses          Total equity
Notes                                                                               $'000             $'000        $'000           $'000


Balance at 1 July 2017                                                                   223,622     (36,910)     (52,189)              134,523

Loss for the period                                                                      -           -            (1,188)               (1,188)
Other comprehensive income for the period (foreign currency translation), net of tax     -           5,222        -                     5,222
Total comprehensive (loss)/income for the period                                         -           5,222        (1,188)               4,034



                                                                               Page 6
       RESOURCE GENERATION LIMITED


Transactions with owners in their capacity as owners                                                    130                       130
Treasury shares to be issued - vesting 30 June 2018                                    -                27            -           27
                                                                                       -                157           -           157

Balance at 31 December 2017                                                            223,622          (31,531)      (53,377)    138,714


Balance at 1 July 2018                                                                 223,622          (38,603)      (62,705)    122,314


Loss for the period                                                                                                   (6,713)     (6,713)
Other comprehensive income for the period (foreign currency translation), net of tax   -                1,164         -           1,164
Total comprehensive (loss)/income for the period                                       -                1,164         (6,713)     (5,549)

Balance at 31 December 2018                                                           223,622             (37,439)     (69,418)   116,765
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 2018
Half year ended
                                                                            31-Dec-18                                 31-Dec-17
                                                                            $'000                                     $'000
Cash flows from operating activities
Payments to suppliers and employees                                                   (5,263)                         (3,254)
Interest received                                                                     70                              112
Interest/finance costs paid                                                           (22)                            (3)
Net cash outflow from operating activities                                            (5,215)                         (3,145)


Cash flows from investing activities
Payments for property, plant and equipment                                            -                               (1)
Payments for mining tenements and mining development                                  (1,893)                         (3,377)
Net cash outflow from investing activities                                            (1,893)                         (3,378)


Cash flows from financing activities
Repayment of borrowings                                                               (1,153)                         (1,256)
Drawdown of borrowings                                                                7,772                           4,776
Net cash inflow/(outflow) from financing activities                                   6,619                           3,520


Net decrease in cash and cash equivalents                                             (489)                           (3,003)
Cash and cash equivalents at the beginning of the half year                           1,729                           4,682
Effects of exchange rate movements on cash and cash equivalents                       -                               151
Cash and cash equivalents at the end of the half year                                 1,240                           1,830
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 31 December 2018

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 2018 (HY19) 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 IAS 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 2018 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 financial report been prepared on the basis of historical cost, except for financial instruments which are measured at fair value. Cost is based on the fair values of
the consideration given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise noted.
The Company is a Company of the kind referred to in ASIC Corporations (Rounding in Financial/Directors' Report) Instruments 2016/191, dated 24 March 2016, and in
accordance with that Corporations Instrument amounts in the financial report are rounded off to the nearest thousand dollars, unless otherwise stated.
Disclosure surrounding adoption of new or revised Standards
The interim financial report has been prepared using the same accounting policies as used in the annual financial statements for the year ended 30 June 2018, with exception
that the group has applied for the first time the requirements of:
(a)                    The Company has adopted AASB 15 Revenue from Contracts with Customers. As the Company is not trading, there is no impact on the adoption of AASB
15 Revenue from Contracts with Customers, therefore there was no transition adjustment required.
(b)                    AASB 9: Financial Instruments introduces extensive changes to AASB 139 Financial Instruments: Recognition and Measurement guidance on the
classification and measurement of financial assets and introduced a new "expected credit loss" model for the impairment of financial assets. Provisioning for financial assets
and hedge accounting is not currently applicable to the Company. AASB 9 largely retains the existing requirements in AASB 139 for the classification of the financial liabilities.
AASB 9 also provides new guidance on the application of hedge accounting. As the measurement basis of financial assets and liabilities measured at amortised cost is virtually
the same between AASB 139 and AASB 9, there was no impact on adopting AASB 9 at reporting period.
The following new accounting standards are not yet effective but may have an impact on the Group in the financial years commencing 1 July 2019 or later:
AASB 16 Leases specifies howto recognise, measure and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognise right-of-use
assets and lease liabilities for almost all leases. AASB 16 applies to annual reporting periods beginning on or after 1 January 2019 and replaces AASB 117 Leases and related
interpretations. The Group has not yet quantified the effect of the new standard, however the following impacts are expected:
*                                    the total assets and liabilities on the balance sheet will increase;
*      the straight-line operating lease expense will be replaced with a depreciation charge for the right-of-use assets and interest expense on the lease liabilities;
*                                    interest expenses will increase due to the unwinding of the effect interest rate implicit in the lease; and
*                                    repayment of the principal portion of all lease liabilities will be classified as financing activities.




                                                                                         Page 9
                RESOURCE GENERATION LIMITED



Notes to the condensed consolidated financial statements For the half year ended 31 December 2018
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(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 2018. These accounting policies are consistent with Australian Accounting Standards and with International Financial
Reporting Standards.
The interim financial report comprises the financial statements of Resource Generation Limited and its subsidiaries as at 31 December 2018 ("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 2018, the Group had net current liabilities of $18.0 million (30 June 2018: net current liabilities of $24.5 million), made a loss for the half year of $6.7 million
(2018: $10.3 million loss for the year) and recorded a net cash outflow from operations of $5.2 million (2018: $5.8 million for the year). The Group had a cash balance at 31
December 2018 of $1.2 million (30 June 2018: $1.7 million).
In concluding that the going concern basis is appropriate, a cash flow forecast has been prepared for the fifteen months to 31 March 2019. The forecast includes the following
key assumptions:
(a) the drawdown of the remaining US$2.95 million from the US$4.7 million extended Working Capital Facility agreed with Noble, which is an extension of the existing fully
       drawn US$37.2 million Working Capital Facility;
(b) securing additional funds (the “bridging funding”) of up to A$3.5 million (US$2.5 million) before 29 March 2019 as an extention of the facility agreement dated 3 March
       2014, to cover forecast operating costs for the period through to 30 June 2019;
       (c)                           the deferral of the loan repayments on the Noble Working Capital Facility from 30 June 2019 to 30 September 2019; and
       (d)      credit approval for the funding of the Boikarabelo Coal Mine and all conditions precedent are met by 30 June 2019 so that first drawdown of project funding from
the proposed Lending Syndicate would take place in July 2019 and this would permit construction of the mine to commence, with scheduled completion in October 2021. First
saleable coal production would occur in the last quarter of 2021.
The Directors
(a)
(b)
note the following in respect of the key assumptions:
a conditional agreement was reached between the Company, its subsidiary Ledjadja Coal (Pty) Ltd and Noble Resources International Pte Ltd on 15 March 2019 to provide
additional working capital funding of up to US$2.5 million and extending the date for loan repayment to 30 September 2019; and
if credit approvals from all members of the Lending Syndicate are not secured by 29 March 2019, the Company will submit by 29 March 2019 a high-level plan and timetable on
the potential feasibility of executing a small-scale mining operation at the Boikarabelo Coal Mine, as an alternative to the current development and funding plan.
Notwithstanding this, should the Group not secure bridging funding and not receive the proceeds anticipated under 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 financial report.
The 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.




                                                                                        Page 10
               RESOURCE GENERATION LIMITED


Notes to the condensed consolidated financial statements For the half year ended 31 December 2018
2. SEGMENT INFORMATION
(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 business from both a
business and geographic perspective, with the Board being the chief operating decision maker.
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 corporate 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.
 Half year 31 December 2018                                             Mining                                  Corporate
                                                                        tenements
                                                                        Africa                                     Australia         Total
                                                                        $'000                                      $'000             $'000
Total segment and consolidated other income                             103                                        -                 103
Loss before income tax                                                  (6,368)                                    (345)             (6,713)
Loss for the half year                                                  (6,368)                                    (345)             (6,713)

Half year 31 December 2017                                              Mining                                     Corporate
                                                                        tenements
                                                                        Africa                                     Australia         Total
                                                                        $'000                                      $'000             $'000
Total segment and consolidated other income                             111                                        68                179
Loss before income tax                                                  (366)                                      (822)             (1,188)
Loss for the half year                                                  (366)                                      (822)             (1,188)

3. LOSS FOR THE HALF YEAR                                                                                          Half year ended
                                                                                                                   31-Dec-18         31-Dec-17
                                                                                                                   $'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 expense                                                   -                                                 130
Unrealised foreign exchange movements                                              2,684                                             (1,456)

4. BORROWINGS
                                                                                   31-Dec-18                                         30-Jun-18
                                                                                   $'000                                             $'000

Current liabilities - EHL loan (unsecured)                                         1,552                                             2,076
Current liabilities - Noble loan (secured)                                         13,824                                            17,584
                                                                                   15,376                                            19,660

Non-current liabilities - EHL loan (unsecured)                                     -                                                 508
Non-current liabilities - Noble loan (secured)                                     62,514                                            43,912
                                                                                   62,514                                            44,420




                                                                                       Page 11
               RESOURCE GENERATION LIMITED



Notes to the condensed consolidated financial statements For the half year ended 31 December 2018
4. BORROWINGS (continued)
Noble loan
US$20 million was drawn down as an unsecured loan from Noble Resources International Pte Ltd (Noble) in March 2014. The Company signed a further extension of the
Facility Agreement on 29 March 2018, under which Noble agreed to make available additional funds up to US$2.5 million to the Company's subsidiary, Ledjadja Coal (Pty) Ltd
(LCL), to fund the operations and development of the Boikarabelo Coal Mine project being undertaken in South Africa, while project funding is secured. The total Facility made
available to the Company is now $59.4 million (US$41.9 million). $52.7 million (US$37.2 million) has been drawn down as at 31 December 2018. $21.1 million of interest has
been capitalised on the loan as at 31 December 2018. It is repayable in quarterly instalments of capital and interest over 78 months commencing 30 June 2019 and has an
annual interest of 10.75%. The Facility is now secured by a pledge over Resgen's interest in 74% of the shares in Ledjadja, which are held by another Resgen subsidiary,
Resgen Africa Holdings Limited. Approval for the security was obtained from Shareholders at the AGM held on 30 November 2018.
EHL loan
EHL Energy (Pty) Ltd 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 $8.6 million (R82.5 million), is unsecured and repayable in 16 quarterly
instalments from November 2015. There were 3 quarterly instalments remaining to be paid as at 31 December 2018, amounting to $1.5 million (R16.8 million).
LCL is the borrower under both of the above loan facilities. The Company has provided a guarantee to the respective lenders.
5. CONTRIBUTED EQUITY
                                                    31-Dec-18                                 30-Jun-18            31-Dec-18        30-Jun-18
                                                    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


6. DEVELOPMENT PARTNERS
                                                                                                       31-Dec-18                         30-Jun-18
                                                                                                       Interest                          Interest
                                                                                                       %                                 %
Waterberg One Coal (Pty) Ltd                                                                           74                                74
Ledjadja Coal (Pty) Ltd                                                                                74                                74


The minority interest in Ledjadja Coal (Pty) Ltd and Waterberg One Coal (Pty) Ltd is held by Fairy Wing Trading 136 (Pty) Ltd (Fairy Wing), the
Group's black economic empowerment (BEE) partner. Pursuant to the terms of a loan from the Group to facilitate the acquisition of the shares,
Fairy Wing only nominally holds the minority interest and is not currently entitled to a share in the residual interest of the subsidiaries. For this
reason, a non-controlling interest is not presented in the interim financial report.


7. RESERVES
                                                                                                       31-Dec-18                         30-Jun-18
                                                                                                       $'000                             $'000
Reserves
Other contributed equity
                                                                                                       1,085                             1,085
Share-based payment reserve                                                                            1,026                             1,026
Treasury shares                                                                                        (2,079)                           (2,079)
Foreign currency translation reserve                                                                   (37,471)                          (38,635)
                                                                                                       (37,439)                          (38,603)



Movements in reserves
Share-based payment reserve Opening balance                                                   1,026                                      910
Employee share plan expense                                                                   -                                          116
Closing balance                                                                               1,026                                      1,026
Notes to the condensed consolidated financial statements For the half year ended 31 December 2018
7. RESERVES (continued)
                                                                                            31-Dec-18                                    30-Jun-18
                                                                                            $'000                                        $'000
Treasury shares
Opening balance                                                                                       (2,079)                            (2,124)
Share-based compensation                                                                              -                                  87
Share-based compensation (shares to be issued, vesting on 30 June 2018)                               -                                  (42)
Closing balance                                                                                       (2,079)                            (2,079)

Foreign currency translation reserve
Opening balance                                                                                       (38,635)                           (36,781)




                                                                                        Page 12
               RESOURCE GENERATION LIMITED



Movement                                                                                          1,164                               (1,854)
Closing balance                                                                                   (37,471)                            (38,635)
Foreign currency translation reserve movement for the current half year relates to 0% of the Rand against the Australian Dollar during the half year ended 31 December 2018
(30 June 2018: 1% depreciation).

8.                 COMMITMENTS Capital commitments
The Group has no commitments in respect of the development of the Boikarabelo Coal Mine, as the construction contract signed with Sedgman (ASX Announcement: 1 August
2018) is subject to concluding a project financing arrangement.
There are potential property acquisitions of $9.7 million (30 June 2018: $11.3 million) contingent to events subsequent to the commencement of mine production.
9.                   EVENTS OCCURRING AFTER THE BALANCE SHEET DATE
The Company and its subsidiary Ledjadja Coal (Pty) Ltd reached a conditional agreement with Noble Resources International Pte Ltd on 15 March 2019 regarding securing
additional funds of up to US$2.5 million of additional working capital and extension of the first loan repayment from 30 June 2019 to 30 September 2019. The specific conditions
related to this agreement are as follows:
*     credit approvals from all members of the Lending Syndicate to be secured by 29 March 2019 and, if not forthcoming, the Company to facilitate a meeting between itself,
      Noble Resources International Pte Ltd, the IDC and other potential members of the Lending Syndicate to agree a way forward;
*     no later than 29 March 2019, the Company to develop a high-level plan and timetable on the potential feasibility of executing a small-scale mining operation at the
      Boikarabelo Coal Mine;
*                                 Noble Resources International Pte Ltd to have oversight of all expenditure and contracts;
*     executing full form documents effecting the neccesary amendment to the Facility Agreement and additional security documents;
*     the Company and its subsidiary Ledjadja Coal (Pty) Ltd 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 the Company and its subsidiary Ledjajda Coal (Pty)
Ltd.

10.                  CONTINGENT LIABILITIES Environmental rehabilitation
Legislation stipulates that all mining operations within South Africa are required to make provision for environmental rehabilitation during the life of the mine and at closure. In
line with this requirement, the Company entered into policies with a reputable insurance broker to set aside funds for aforementioned purposes. On the back of these policies
the insurance broker provides the required mining rehabilitation guarantees which are accepted by the Department of Mineral Resources. The Company makes annual premium
payments towards structured products that will allow the matching of the environmental rehabilitation liability against Company assets over a period of time.
                                                                                   31-Dec-18                                           30-Jun-18
                                                                                   $'000                                               $'000

Guarantees for rehabilitation                                                    2,349                                                2,216
Less: Funds available on Guardrisk Policy                                        (1,287)                                              (1,119)
Contingent liability                                                             1,062                                                1,097




                                                                                      Page 13
       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 13 are in accordance with the Corporations Act 2001, including compliance with
accounting standards, including AASB 134 Interim Financial Reporting and giving a true and fair view of the financial position as at 31 December 2018 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.




Chairman
Johannesburg 15 March 2019



              Tel: +61 7 3237 5999 Fax: +61 7 3221 9227 www.bdo.com.au
              Level 10, 12 Creek St
              Brisbane QLD 4000
              GPO Box 457 Brisbane QLD 4001
              Australia
        INDEPENDENT AUDITOR'S REVIEW REPORT
        To the members of Resource Generation Limited
        Report on the Half-Year Financial Report
        Conclusion
        We have reviewed the half-year financial report of Resource Generation Limited (the Company) and its
        subsidiaries (the Group), which comprises the consolidated statement of financial position as at 31 December
        2018, the consolidated statement of profit or loss and other comprehensive income, the consolidated
        statement of changes in equity and the consolidated statement of cash flows for the halfyear then ended,
        notes comprising a statement of accounting policies and other explanatory information, and the directors’
        declaration.
        Based on our review, which is not an audit, we have not become aware of any matter that makes us believe
        that the half-year financial report of the Group is not in accordance with the Corporations Act 2001 including:
        (i) Giving a true and fair view of the Group’s financial position as at 31 December 2018 and of its financial
             performance for the half-year ended on that date; and
        (ii) Complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations
             2001.
        Emphasis of matter - Material uncertainty relating to going concern
        We draw attention to Note 1 in the financial report which describes the events and/or conditions which give
        rise to the existence of a material uncertainty that may cast significant doubt about the Group’s ability to
        continue as a going concern and therefore the Group may be unable to realise its assets and discharge its
        liabilities in the normal course of business. Our conclusion is not modified in respect of this matter.
        Directors’ responsibility for the Half-Year Financial Report
        The directors of the company are responsible for the preparation of the half-year financial report that gives a
        true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
        such internal control as the directors determine is necessary to enable the preparation of the half-year
        financial report that is free from material misstatement, whether due to fraud or error.
        EDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian
        company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international
        BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation, other than for the acts or omissions of financial services
        licensees.




                                                                                             Page 14
Auditor’s responsibility
Our responsibility is to express a conclusion on the half-year financial report based on our review. We
conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a
Financial Report Performed by the Independent 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 half-year
financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of
the Group’s financial position as at 31 December 2018 and its financial performance for the half-year ended
on that date and complying with Accounting Standard AASB 134 Interim Financial Reporting and the
Corporations Regulations 2001. As the auditor of the Group, ASRE 2410 requires that we comply with the
ethical requirements relevant to the audit of the annual financial report.
A review of a half-year financial report consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and
consequently does not enable us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit opinion.
Independence
In conducting our review, we have complied with the independence requirements of the Corporations Act
2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Group, would be in the same terms if given to the directors as at the time of this
auditor’s review report.
BDO Audit Pty Ltd




Richard M Swaby

Director

Brisbane, 15 March 2019
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian
company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international
BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation, other than for the acts or omissions of financial services
licensees.
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-18                                                                                                            Jun-18              Dec-17
Average rate of exchange $A/Rand                                                               10.2553            9.9494              10.4310
Closing rate of exchange $A/Rand                                                               10.1427            10.1426             9.6430
Consolidated statements of comprehensive income - ZAR Convenience Translation (Supplementary Information)
For the half year ended 31 December 2018
Half year ended
                                                                                           31-Dec-18                                 31-Dec-17
                                                                                           R'000                                     R'000


Other income from continuing operations                                                                         1,056                                             1,867

Administration, rent and corporate                                                                              (15,784)                                          (13,269)
Depreciation of property, plant and equipment                                                                   (1,528)                                           (1,951)
Employee benefits expense                                                                                       (12,101)                                          (12,841)
Finance expenses                                                                                                (12,963)                                          (31)


                                                                                          Page 15
RESOURCE GENERATION LIMITED
Share-based compensation expense                                                         -          (1,356)
Unrealised foreign exchange movements                                                    (27,525)   15,188
Loss before income tax                                                                   (68,845)   (12,393)

Income tax benefit
                                                                                         -          -

Loss for the half year                                                                   (68,845)   (12,393)

Other comprehensive loss/income


Items that may be reclassified subsequently to profit or loss: Exchange gain on
                                                                                         11,937     54,471
translation of foreign operations, net of tax

Total comprehensive loss/income for the half year                                        (56,908)   42,078


Loss is attributable to:
Owners of Resource Generation Limited                                                    (68,845)   (12,393)


Total comprehensive income for the half year is attributable to: Owners of Resource
Generation Limited                                                                       (56,908)   42,078

Headline loss                                                                            (68,845)   (12,393)
Loss per share                                                                        Rand            Rand


Loss per share for loss from continuing operations
Basic loss per share                                                                  (11.9)            (2.1)
Diluted loss per share                                                                (11.9)            (2.1)
Headline loss per share                                                               (11.9)            (2.1)




                                                                   Page 16
      RESOURCE GENERATION LIMITED


Consolidated statements of financial position   - ZAR Convenience Translation (Supplementary Information)
As at 31 December 2018

                                                31-Dec-18                                                   30-Jun-18
                                                R'000                                                       R'000


Current assets
Cash and cash equivalents                       12,577                                                      17,538
Trade and other receivables                     456                                                         832
Deposits and prepayments                        2,820                                                       1,704
                                                15,853                                                      20,074


Non-current assets
Property, plant and equipment                   326,311                                                     327,840
Mining tenements and mining development         1,701,973                                                   1,640,256
Deposits                                        12,323                                                      12,242
                                                2,040,607                                                   1,980,338
TOTAL ASSETS                                    2,056,460                                                   2,000,412


Current liabilities
Trade and other payables                        38,988                                                      63,914
Provisions                                      3,307                                                       5,710
Borrowings                                      155,954                                                     199,404
                                                198,249                                                     269,028


Non-current liabilities
Provisions                                      23,825                                                      21,807
Borrowings                                      634,060                                                     450,536
Royalties payable                               16,015                                                      16,685
                                                673,900                                                     489,028
TOTAL LIABILITIES                               872,149                                                     758,056

NET ASSETS                                      1,184,311                                                   1,242,356


Equity
Contributed equity                              2,268,128                                                   2,229,377
Reserves                                        (379,728)                                                   (352,798)
Accumulated losses                              (704,085)                                                   (634,223)
TOTAL EQUITY                                    1,184,315                                                   1,242,356




                                                                    Page 17
      RESOURCE GENERATION LIMITED


Consolidated statement of cash flows - ZAR Convenience Translation (Supplementary Information) For the half year ended 31
December 2018
Half year ended
                                                                       31-Dec-18                                    31-Dec-17
                                                                       R'000                                        R'000
Cash flows from operating activities
Payments to suppliers and employees                                     (53,974)                                   (33,942)
Interest received                                                       718                                        1,168
Interest paid                                                           (226)                                      (31)
Net cash outflow from operating activities                              (53,482)                                   (32,805)


Cash flows from investing activities
Payments for property, plant and equipment                                     -                                    (11)
Payments for mining tenements and mining development                           (19,418)                             (35,225)
Net cash outflow from investing activities                                     (19,418)                             (35,236)


Cash flows from financing activities
Repayment of borrowings
                                                                                    (11,823)                        (13,101)
Drawdown of borrowings                                                              79,706                          49,818
Net cash inflow/(outflow) from financing activities                                 67,883                          36,717

Net decrease in cash and cash equivalents                                           (5,017)                         (31,324)
Cash and cash equivalents at the beginning of the half year                         17,538                          46,935
Effects of exchange rate movements on cash and cash equivalents                     54                              2,036
Cash and cash equivalents at the end of the half year                               12,575                          17,647




                                                                   Page 18

Date: 15/03/2019 11:20:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

Email this JSE Sens Item to a Friend.

Share This Story