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Quarterly Report for the three months ended 31 December 2019
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 31 December 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
Firstly, on 3 December 2019 the Company announced that along with its partly owned
subsidiary, Ledjajdja Coal (Pty) Ltd, it had entered into two non-binding term sheets, being
equity and debt term sheets with a Lending Syndicate for the funding of the Boikarabelo Coal
Project.
On 5 December 2019, the Company then advised that principal binding agreements for
funding of the construction of the Project had been executed with the Lending Syndicate. The
key terms of the Project Funding Agreements mirror the terms set out in the non-binding
Term Sheets announced on 3 December 2019.
The members of the Lending Syndicate were identified as:
• Government Employees Pension Fund and the Unemployment Insurance Fund, (both
managed by the Public Investment Corporation SOC Limited (PIC);
• Industrial Development Corporation of South Africa Limited (IDC); and
• Noble Resources International Pte Ltd (Noble).
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Resource Generation Limited
Quarterly Report to 31 December 2019
The ability to draw-down on facilities established under the Project Funding Agreements
(Financial Close) is subject to the satisfaction of a number of conditions precedent, including
Shareholder approval at an Extraordinary General Meeting (EGM) called for that purpose,
conclusion of an unconditional fully funded Project Rail Link funding agreement and related
infrastructure agreements related to the Project Rail Link and conclusion of a Ramp-up
Working Capital Facility.
The Company has commissioned the preparation of an Independent Expert’s Report for
inclusion in the EGM Notice of Meeting. The Independent Expert has advised that their Report
will be available in early February. This will enable the Company to finalise the meeting
documentation, secure the required ASX clearance and to then advise Shareholders of the
date and location for the EGM.
Rail Link negotiations for a funding package of R750m (approx. A$75m) are at an advanced
stage. The funding is required to construct the 44km rail infrastructure linking the mine to the
Transnet main line.
Due to delays in reaching Financial Close, the Company has received approval from the Board
of Noble Group to provide an additional working capital facility to its partially owned
subsidiary, Ledjadja Coal (Pty) Ltd, to cover projected needs through to 31 March 2020. The
approval involves the extension of the Facility Agreement with Noble Group and amendment
of the first repayment date from 30 September 2019 to 31 March 2020. These terms have
now been incorporated into a Seventh Deed of Amendment to the Facility Agreement and
were executed 11 December 2019.
The Company continues to target Financial Close by 31 March 2020 however there are a
number of conditions precedent associated with the Project Funding Agreements that are
outside of its direct control.
The Company will keep the market informed in accordance with its continuous disclosure
obligations.
Capital Structure and Cash Position)
The Company’s summarised capital structure at 31 December 2019 is as follows:
Issued fully paid ordinary shares: 581,380,338
Performance share rights: 3,000,000
Cash at bank: $1.29 million
Noble Facility – undrawn $US1.5 million
Shareholders and potential investors should also review the Company’s 2019 Annual Report
and the audited Financial Report for the year ending 30 June 2019 to fully appreciate the
Company’s financial position. The Company is in discussions with Noble Group regarding
further funding, should this be required, in order to reach Financial Close.
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Resource Generation Limited
Quarterly Report to 31 December 2019
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
RESOURCE GENERATION LIMITED
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
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Resource Generation Limited
Quarterly Report to 31 December 2019
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
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 contracted 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.
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Resource Generation Limited
Quarterly Report to 31 December 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 31 December 2019
Consolidated statement of cash flows Current quarter Year to date
$A’000 (6 months)
$A’000
1. Cash flows from operating activities
1.1 Receipts from customers - -
1.2 Payments for
(a) exploration & evaluation (if expensed) - -
(b) development (1,205) (1,592)
(c) production - -
(d) staff costs (501) (1,102)
(e) administration and corporate costs (370) (674)
1.3 Dividends received (see note 3) - -
1.4 Interest received 24 49
1.5 Interest and other costs of finance paid - -
1.6 Income taxes paid - -
1.7 Government grants and tax incentives - -
1.8 Other (provide details if material) - -
1.9 Net cash from / (used in) operating (2,052) (3,319)
activities
2. Cash flows from investing activities
2.1 Payments to acquire:
(a) entities - -
(b) tenements - -
(c) property, plant and equipment - -
(d) exploration & evaluation (if capitalised) - -
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Resource Generation Limited
Quarterly Report to 31 December 2019
Consolidated statement of cash flows Current quarter Year to date
$A’000 (6 months)
$A’000
(e) investments - -
(f) other non-current assets - -
2.2 Proceeds from the disposal of:
(a) entities - -
(b) tenements - -
(c) property, plant and equipment - -
(d) investments - -
(e) 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 equity securities
(excluding convertible debt securities) - -
3.2 Proceeds from issue of convertible debt - -
securities
3.3 Proceeds from exercise of options - -
3.4 Transaction costs related to issues of equity - -
securities or convertible debt securities
3.5 Proceeds from borrowings 2,142 3,618
3.6 Repayment of borrowings - (526)
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 2,142 3,092
activities
4. Net increase / (decrease) in cash and
cash equivalents for the period
4.1 Cash and cash equivalents at beginning of 1,159 1,474
period
4.2 Net cash from / (used in) operating (2,052) (3,319)
activities (item 1.9 above)
4.3 Net cash from / (used in) investing activities - -
(item 2.6 above)
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Resource Generation Limited
Quarterly Report to 31 December 2019
Consolidated statement of cash flows Current quarter Year to date
$A’000 (6 months)
$A’000
4.4 Net cash from / (used in) financing activities 2,142 3,092
(item 3.10 above)
4.5 Effect of movement in exchange rates on 43 45
cash held
4.6 Cash and cash equivalents at end of 1,292 1,292
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 108 69
5.2 Call deposits 1,184 1,090
5.3 Bank overdrafts - -
5.4 Other (provide details) - -
5.5 Cash and cash equivalents at end of 1,292 1,159
quarter (should equal item 4.6 above)
6. Payments to related parties of the entity and their Current quarter
associates $A'000
6.1 Aggregate amount of payments to related parties and their 180
associates included in item 1
6.2 Aggregate amount of payments to related parties and their -
associates included in item 2
Note: if any amounts are shown in items 6.1 or 6.2, your quarterly activity report must include a description of,
and an explanation for, such payments
Directors’ remuneration
Payments to related parties of the entity and their associates (6.1) includes the remuneration of Directors for the
quarter ending 31 December 2019.
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Resource Generation Limited
Quarterly Report to 31 December 2019
7. Financing facilities Total facility Amount drawn at
Note: the term “facility’ includes all forms of financing amount at quarter quarter end
arrangements available to the entity.
end $A’000
Add notes as necessary for an understanding of the
sources of finance available to the entity. $A’000
7.1 Loan facilities 66,878 64,739
7.2 Credit standby arrangements - -
7.3 Other (please specify) - -
7.4 Total financing facilities 66,878 64,739
7.5 Unused financing facilities available at quarter end 2,139
7.6 Include in the box below a description of each facility above, including the lender, interest
rate, maturity date and whether it is secured or unsecured. If any additional financing
facilities have been entered into or are proposed to be entered into after quarter end,
include a note providing 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$46.9 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$45.4 million has been drawn down as at 31 December 2019.
The loan is repayable in quarterly instalments over 78 months commencing from 31 March 2020
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.
8. Estimated cash available for future operating activities $A’000
8.1 Net cash from / (used in) operating activities (Item 1.9) (2,052)
8.2 Capitalised exploration & evaluation (Item 2.1(d)) -
8.3 Total relevant outgoings (Item 8.1 + Item 8.2) (2,052)
8.4 Cash and cash equivalents at quarter end (Item 4.6) 1,292
8.5 Unused finance facilities available at quarter end (Item 7.5) 2,139
8.6 Total available funding (Item 8.4 + Item 8.5) 3,431
8.7 Estimated quarters of funding available (Item 8.6 divided by 1.67
Item 8.3)
8.8 If Item 8.7 is less than 2 quarters, please provide answers to the following questions:
1. Does the entity expect that it will continue to have the current level of net operating
cash flows for the time being and, if not, why not?
Answer:
Yes
2. Has the entity taken any steps, or does it propose to take any steps, to raise further
cash to fund its operations and, if so, what are those steps and how likely does it
believe that they will be successful?
Answer:
Yes. The Company is in the process of completing outstanding conditions precedent to
achieve Financial Close and draw-down funds under the Project Funding Agreements
executed on 5 December 2019. Discussions have also commenced with a related party on
being able to access additional funding should this be required to reach Financial Close.
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Resource Generation Limited
Quarterly Report to 31 December 2019
3. Does the entity expect to be able to continue its operations and to meet its business
objectives and, if so, on what basis?
Answer:
Yes, refer to 2 above.
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.
Date: .....31 January 2020..............................................................................
Authorised by: .......Resgen Board of Directors............................................................................
(Name of body or officer authorising release – see note 4)
Notes
1. This quarterly cash flow report and the accompanying activity report provide a basis for informing the market about the
entity’s activities for the past quarter, how they have been financed and the effect this has had on its cash position. An
entity that wishes to disclose additional information over and above the minimum required under the Listing Rules is
encouraged to do so.
2. If this quarterly cash flow 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 cash flow 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. If this report has been authorised for release to the market by your board of directors, you can insert here: “By the
board”. If it has been authorised for release to the market by a committee of your board of directors, you can insert
here: “By the name of board committee – eg Audit and Risk Committee”. If it has been authorised for release to the
market by a disclosure committee, you can insert here: “By the Disclosure Committee”.
5. If this report has been authorised for release to the market by your board of directors and you wish to hold yourself out
as complying with recommendation 4.2 of the ASX Corporate Governance Council’s Corporate Governance Principles
and Recommendations, the board should have received a declaration from its CEO and CFO that, in their opinion, the
financial records of the entity have been properly maintained, that this report complies with the appropriate accounting
standards and gives a true and fair view of the cash flows of the entity, and that their opinion has been formed on the
basis of a sound system of risk management and internal control which is operating effectively.
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Date: 31-01-2020 03:10:00
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