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

RESOURCE GENERATION LIMITED - Quarterly Report for the three months ended 30 June 2019 (Quarter)

Release Date: 31/07/2019 10:24
Code(s): RSG     PDF:  
 
Wrap Text
Quarterly Report for the three months ended 30 June 2019 (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 June 2019 (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
During June 2019 the Company was able to advise the market that the second and third
members of a proposed Lending Syndicate had confirmed participation (credit approval) of
their respective contributions to the Company’s funding application for construction of the
Boikarabelo Coal Mine. The offers of participation from the three proposed Lenders are
subject to certain terms and conditions which require consolidation into a common term
sheet. This consolidation process has continued through July 2019 in a constructive manner.

The combined proposed mine construction funding package offered by members of the
Lending Syndicate was confirmed as R4.2b (approx. A$420m).

Once proposed common terms are agreed and available for incorporation into the Base Case
Financial Model for the Project, the Board will be in a position to consider these for approval.
All parties are committed to a timely completion of common terms with only a few key
matters still to be resolved.

At the time that all parties agree and obtain approval to common funding terms these will
become binding on the parties, subject to the satisfaction of certain conditions precedent to
enable first drawdown (Financial Close). It is at that this time that the Company will be able
to provide key details of the proposed mine construction funding package.




                                             Page 1 of 9
                                                                     Resource Generation Limited
                                                                  Quarterly Report to 30 June 2019



Rail link negotiations for a funding package of R750m (approx. A$75m) are at an advanced
stage and the funding is required to construct the 44km rail infrastructure linking the mine to
the Transnet main line.

Any proposal for the mine construction funding package and the rail link funding package
approved by the Board will remain subject to approval by Shareholders at an EGM to be
scheduled for this purpose.

Based on current expectations and matters within the control of the Company, Financial Close
is being targeted for the end of November 2019. In the interim the Board and Management
remain focused on strategies to conserve cash and/or secure any required additional financial
support to achieve this objective.

Capital Structure and Cash Position

The Company’s summarised capital structure at 30 June 2019 is as follows:

Issued fully paid ordinary shares:           581,380,338
Performance share rights:                    3,200,000
Cash at bank:                                $1.37 million
Noble Facility – undrawn                     $US1.5 million

Shareholders and potential investors should also review the Company’s Interim Financial
Report for the six months ending 31 December 2018 to fully appreciate the Company’s
financial position.

The Company is currently in discussions with Noble Group regarding further working capital
funding required in order to reach Financial Close.

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.
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
Company Secretary

                                          Page 2 of 9
                                                                      Resource Generation Limited
                                                                   Quarterly Report to 30 June 2019



Corporate information
Directors
Lulamile Xate                    Non-Executive Chairman
Rob Croll                        Lead Independent Non-Executive Director
Greg Hunter                      Non-Executive Director
Colin Gilligan                   Independent Non-Executive Director
Michael Gray                     Independent Non-Executive Director
Leapeetswe Molotsane             Interim Managing Director and CEO
Dr Konji Sebati                  Independent Non-Executive Director
Manish Dahiya                    Alternate Non-Executive Director for G. Hunter

Company Secretary
Mike Meintjes

Registered office
Level 1, 17 Station Road
Indooroopilly, QLD 4068, Australia

Telephone:      +27 11 010 6310
Facsimile:      +27 86 539 3792
Website:        www.resgen.com.au

Mailing address
                  South Africa                                     Australia
 PO Box 5384                                       PO Box 126
 Rietvalleirand 0174                               Albion
 Gauteng, South Africa                             QLD 4010, Australia

Company contacts
Lulamile Xate                    +27 11 010 6310
Leapeetswe Molotsane             +27 11 010 6310

Media contacts
                 South Africa
 Russell and Associates (Marion Brower)
 t: +27 11 880 3924
 42 Glenhove Rd, Johannesburg 2196
 Gauteng, South Africa


JSE Sponsor
Deloitte & Touche Sponsor Services (Pty) Limited



                                            Page 3 of 9
                                                                                   Resource Generation Limited
                                                                                Quarterly Report to 30 June 2019




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 Mr Joubert, or VBKOM, have material interest or entitlement, direct
or indirect, in the securities of Resource Generation Limited.




                                                       Page 4 of 9
                                                                          Resource Generation Limited
                                                                       Quarterly Report to 30 June 2019


                                                                                                Rule 5.5
                                          Appendix 5B
      Mining exploration entity and oil and gas exploration entity
                           quarterly report
Name of entity
Resource Generation Limited

ABN                                                   Quarter ended (“current quarter”)
91 059 950 337                                        30 June 2019


                                                          Current quarter           Year to date
Consolidated statement of cash flows
                                                                                    (12 months)
                                                              $A’000                  $A’000
1.      Cash flows from operating activities
1.1     Receipts from customers                                              -                        -
1.2     Payments for
        (a) exploration & evaluation                                         -                        -
        (b) development                                                (614)                  (5,655)
        (c) production                                                       -                        -
        (d) staff costs                                                (689)                  (4,093)
        (e) administration and corporate costs                         (330)                  (1,507)
1.3     Dividends received (see note 3)                                      -                        -
1.4     Interest received                                                   31                     132
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                          (1,602)                 (11,123)
        activities


2.      Cash flows from investing activities
2.1     Payments to acquire:
        (a) property, plant and equipment                                    -                        -
        (b) tenements (see item 10)                                          -                        -
        (c) investments                                                      -                        -

                                            Page 5 of 9
                                                                            Resource Generation Limited
                                                                         Quarterly Report to 30 June 2019

                                                           Current quarter            Year to date
Consolidated statement of cash flows
                                                                                      (12 months)
                                                               $A’000                   $A’000
       (d) other non-current assets                                           -                        -
2.2    Proceeds from the disposal of:
       (a) property, plant and equipment                                      -                        -
       (b) tenements (see item 10)                                            -                        -
       (c) investments                                                        -                        -
       (d) other non-current assets                                           -                        -
2.3    Cash flows from loans to other entities                                -                        -
2.4    Dividends received (see note 3)                                        -                        -
2.5    Other (provide details if material)                                    -                        -
2.6    Net cash from / (used in) investing                                    -                        -
       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                                          2,134                   13,113
3.6    Repayment of borrowings                                           (542)                  (2,252)
3.7    Transaction costs related to loans and                                 -                        -
       borrowings
3.8    Dividends paid                                                         -                        -
3.9    Other (provide details if material)                                    -                        -
3.10   Net cash from / (used in) financing                               1,592                   10,861
       activities


4.     Net increase / (decrease) in cash and
       cash equivalents for the period
4.1    Cash and cash equivalents at beginning of                         1,427                    1,729
       period
4.2    Net cash from / (used in) operating                              (1,602)                (11,123)
       activities (item 1.9 above)
4.3    Net cash from / (used in) investing                                    -                        -
       activities (item 2.6 above)


                                             Page 6 of 9
                                                                           Resource Generation Limited
                                                                        Quarterly Report to 30 June 2019

                                                           Current quarter           Year to date
Consolidated statement of cash flows
                                                                                     (12 months)
                                                               $A’000                  $A’000
4.4    Net cash from / (used in) financing                              1,592                   10,861
       activities (item 3.10 above)
4.5    Effect of movement in exchange rates on                            (50)                   (100)
       cash held
4.6    Cash and cash equivalents at end of                              1,367                    1,367
       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                                                         53                      83
5.2    Call deposits                                                    1,314                    1,344
5.3    Bank overdrafts                                                        -                       -
5.4    Other (contract retentions)                                            -                       -
5.5    Cash and cash equivalents at end of                              1,367                    1,427
       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                                    179
       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




                                             Page 7 of 9
                                                                               Resource Generation Limited
                                                                            Quarterly Report to 30 June 2019

7.      Payments to related entities of the entity and their                           Current quarter
        associates                                                                         $A'000

7.1     Aggregate amount of payments to these parties included in                                         -
        item 1.2
7.2     Aggregate amount of cash flow from loans to these parties                                         -
        included in item 2.3
7.3     Include below any explanation necessary to understand the transactions included in
        items 7.1 and 7.2



8.      Financing facilities available                       Total facility amount    Amount drawn at
        Add notes as necessary for an understanding of the      at quarter end          quarter end
        position                                                    $A’000                $A’000
8.1     Loan facilities
                                                                                                    61,152
            ?    Secured loan (note 1)                                     63,290
                                                                              523                      523
            ?    Unsecured loan (note 2)
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$44.4 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$42.9 million has been drawn down as at 30 June 2019. The
loan is repayable in quarterly instalments over 78 months commencing from 30 September 2019
and has an annual interest rate of 10.75%. The Company has provided a Parent Company Guarantee
for the Facility along with a pledge over Resgen's interest in 74% of the shares in Ledjadja, which are
held by another Resgen subsidiary, Resgen Africa Holdings Limited.
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 is 1 quarterly instalment remaining to be paid as at 30 June 2019. The
Company has provided a Parent Company Guarantee for the loan.

9.      Estimated cash outflows for next quarter                                               $A’000
9.1     Exploration and evaluation                                                                        -

9.2     Development                                                                                 (1,406)

9.3     Production                                                                                        -

9.4     Staff costs                                                                                   (616)

9.5     Administration and corporate costs                                                            (496)

9.6     Other – repayment of borrowings                                                               (558)

9.7     Total estimated cash outflows (prepared on the basis that additional                        (3,076)
        working capital is secured as noted in the Quarterly Activities Report)

                                                  Page 8 of 9
                                                                                Resource Generation Limited
                                                                             Quarterly Report to 30 June 2019



    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 July 2019
                        (Company secretary)
Print name:          MICHAEL MEINTJES
Notes
1.         The quarterly report provides a basis for informing the market how the entity’s activities have
           been financed for the past quarter and the effect on its cash position. An entity that wishes to
           disclose additional information is encouraged to do so, in a note or notes included in or attached
           to this report.
2.         If this quarterly report has been prepared in accordance with Australian Accounting Standards,
           the definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources
           and AASB 107: Statement of Cash Flows apply to this report. If this quarterly report has been
           prepared in accordance with other accounting standards agreed by ASX pursuant to Listing
           Rule 19.11A, the corresponding equivalent standards apply to this report.
3.         Dividends received may be classified either as cash flows from operating activities or cash flows
           from investing activities, depending on the accounting policy of the entity.
4.         This report is also accessible at:
           https://senspdf.jse.co.za/documents/2019/jse/isse/rsg/Qtr06_2019.pdf




                                                    Page 9 of 9

Date: 31/07/2019 10:24:00
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