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RESOURCE GENERATION LIMITED - ASX Listing Rule 10.1 Waiver - Additional US$2.5m working capital funding announced in March 2019

Release Date: 17/05/2019 09:04
Code(s): RSG     PDF:  
 
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ASX Listing Rule 10.1 Waiver - Additional US$2.5m working capital funding announced in March 2019

    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”)


    17 May 2019
    ASX Announcement



      ASX Listing Rule 10.1 Waiver - Additional US$2.5m working
               capital funding announced in March 2019
    Summary

    .         Resgen is granted a waiver from ASX Listing Rule 10.1 in order to grant
              security in respect of the further US$2.5m in conditional funding from Noble
              announced in March 2019;
    .         Resgen complies with the waiver requirement to release a market update
              setting out the waiver conditions; and
    .         Resgen to now proceed as quickly as possible to finalise the legal
              documentation and conditions precedent so that the first drawdown notice
              can be issued to access the additional funding.

    Resource Generation Limited (ASX:RES) (ResGen or Company) announced to the
    market on 15 March 2019 that a conditional agreement had been reached with Noble
    Resources International Pte Ltd (Noble) to provide up to an additional US$2.5m in
    working capital for the period through to 30 June 2019.

    The legal documentation to support this conditional commitment is in the process of
    being drafted as an amendment to the facility agreement originally entered into between
    Noble and Ledjadja Coal (Pty) Ltd (Ledjadja), being the subsidiary holding ResGen’s

Resource Generation Australia (ACN 059 950 337)
c/o Level 1, 17 Station Road, Indooroopilly, QLD, 4068
GPO Box 126, Albion QLD 4010. Phone +27 (011) 010 6310 Fax +27 (086) 539 3792
Directors: Lulamile Xate (Chairman), Robert Croll, Dr. Konji Sebati,
Colin Gilligan, Leapeetswe Molotsane, Manish Dahiya, Michael Gray               www.resgen.com.au
Acting CEO: Leapeetswe Molotsane
Company secretary: Mike Meintjes
interest in the Boikarabelo Coal Mine project, in March 2014 (Facility Agreement).
ResGen is the guarantor of Ledjadja's obligations under the Facility Agreement.

One of the conditions of this further extension to the Facility Agreement is that the
amount provided under the extension be secured by the Share Pledge that has already
been granted in favour of Noble over ResGen's interest in 74% of the shares in Ledjadja
(held through a wholly owned subsidiary, Resgen Africa Holdings Limited (RAHL)). As
Noble is a substantial shareholder in ResGen, the grant of security to it must comply
with ASX Listing Rule 10.1. The original grant of the Share Pledge to Noble (securing
up to US$41.9m in advances as agreed in October 2018) was approved by
Shareholders for the purposes of ASX Listing Rule 10.1 at the 2018 Annual General
Meeting. However, the extension of up to US$2.5m under the Facility Agreement cannot
be secured under the Share Pledge without first obtaining a waiver of ASX Listing Rule
10.1 from ASX or obtaining another Shareholder approval.

In late March 2019, the Company submitted an application to ASX seeking a waiver
from the application of ASX Listing Rule 10.1 to permit the Company, including its wholly
owned subsidiary RAHL, to increase the amount secured by the Share Pledge provided
to Noble to secure up to a further US$2.5m in advances from Noble under the Facility
Agreement without obtaining Shareholder approval. The Company is now pleased to
advise that the ASX has granted this waiver, subject to certain conditions that are
described below.

Approval of the Listing Rule waiver allows the Company to enter into the amendments
to the Facility Agreement and increase the amount secured by the Share Pledge. The
Company now plans to proceed to finalise and execute the proposed amendment to the
Facility Agreement as soon as possible. On the assumption that execution of the Facility
Agreement and satisfaction of the conditions precedent occur without delay, the
Company currently expects to make its first drawdown of the additional funds by the end
of May 2019.

The conditions set out in the waiver granted to the Company by ASX are that:

   .   the Share Pledge include a term that if an event of default occurs and Noble
       exercises its rights under the Share Pledge, neither Noble or any if its associates
       can acquire any legal or beneficial interest in an asset of the Company or RAHL
       in full or part satisfaction of the Company’s obligations under the Share Pledge,
       or otherwise deal with the assets of the Company or RAHL without the Company
       first having complied with any applicable listing rules, including listing rule 10.1,
       other than as required by law or through a receiver, or a receiver or manager (or
       analogous person, including without limitation an administrator or liquidator)
       appointed by Noble exercising its power of sale under the Share Pledge and
       selling the asset to an unrelated third party on arm’s length commercial terms
       and conditions and distributing the cash proceeds to Noble in accordance with

                                                                                         PAGE 2
        their legal entitlements. ResGen confirms that it is intended that the Share Pledge
        will contain a term to this effect;
   .    the Company provide a summary of the material terms of the Facility Agreement
        and Share Pledge in each Annual Report during the term of the Facility
        Agreement;
   .    any variation to the terms of the Share Pledge which is not a minor change or
        inconsistent with the terms of the waiver must be subject to Shareholder
        approval;
   .    the Company and Noble must seek to discharge the Share Pledge when the
        funds advanced to Ledjadja are either repaid, or if it is not discharged, seek
        Shareholder approval for the continuation of the Share Pledge for any further
        period; and
   .    that the Company releases to the Market an announcement which sets out the
        terms of the waiver, including:
       o the Company's plans with respect to the repayment of the funds advanced
           under the Facility Agreement, and discharge of the Share Pledge, including
           the timeframe within which it expects repayment and discharge to occur (as to
           which, see the details regarding repayment terms and release arrangements
           for the Share Pledge set out below); and
       o a statement of the reasons why the Company has chosen to obtain further
           funding and grant security to Noble, a Listing Rule 10.1 party, rather than a
           lender that is not a Listing Rule 10.1 party, and the steps that the Board took
           to satisfy itself that the transaction was being entered into is on arm’s length
           terms and is fair and reasonable from the perspective of the Company’s
           Shareholders.

In relation to the last item listed above, the following is noted:

   .   the Company requires additional working capital funding to reach financial close
       for funding of the Project (Financial Close) which is not currently expected to be
       obtained before late August or September 2019 and is still subject to factors
       outside the control of the Company that mean it is difficult for the Company to
       provide any firm forecast on timing;
   .   repayment of all Facility Agreement advances made by Noble post the initial
       US$20m loan together with accrued interest is planned to occur out of the first
       advance received after Financial Close (at which point the Share Pledge must be
       released by Noble if required by the Project funders). The initial US$20m loan,
       plus accrued interest, is to be repaid in equal monthly instalments of principal and
       interest over the period from 30 September 2019 to 31 March 2026;
   .   the Company determined that, if no further funding was obtained, it would be
       likely to exhaust its current working capital funding sometime in late May 2019;
   .   the Company considered the available sources of funding to meet this need and
       identified Noble as the only party that was in a position to make a firm
       commitment within the relevant timeframe; and


                                                                                        PAGE 3
   .   the terms proposed by Noble were consistent with those previously negotiated
       and agreed under the Facility Agreement.



Lulamile Xate
Chairman
For and on behalf of the Board


About Resgen:

Resource Generation Limited (Resgen) is an emerging ASX and JSE-listed energy company,
currently developing the Boikarabelo Coal Mine in South Africa’s Waterberg region. The Waterberg
accounts for around 40% of the country’s currently known coal resources. The Coal Resources
and Coal Reserves for the Boikarabelo Coal Mine, held through the operating subsidiary Ledjadja
Coal, were recently updated based upon a new mine plan and execution strategy. The Boikarabelo
Coal Resources total 995Mt and the Coal Reserves total 267Mt applying the JORC Code 2012
(ASX Announcement :23 January 2017- 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 subsidiary (BEE)
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.




For further information please contact:

Mike Meintjes, Company Secretary on mmeintjes@resgen.com.au or +61 413 706 143

Media enquiries:

South Africa: Marion Brower/ Charmane Russell on +27 11 880 3924

JSE Sponsor:

Deloitte & Touche Sponsor Services (Pty) Ltd




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