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Quarterly Report for the three months ended 31 March 2020 (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”)
30 April 2020
Resource Generation Limited
ACN 059 950 337
Quarterly Report
for the three months ended 31 March 2020 (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
On 5 March 2020, the Company dispatched a Notice of Meeting to Shareholders (with an
Independent Expert’s Report attached) for consideration at an Extraordinary General Meeting
(EGM) to be held on 7 April 2020. Shareholders were asked to consider approval of the
proposed Mine Funding Package (ASX Announcement: 5 December 2019) recommended by
Directors. Subsequent to quarter end, Shareholders voted overwhelmingly in favour of
approving the Mine Funding Package with 99.6% of votes cast being in favour.
The global outbreak of the COVID-19 virus has resulted in Governments introducing
significant social and travel restrictions creating significant economic uncertainty. In light of
these circumstances, Resgen has continued to engage constructively with the Mine Funding
Package Lenders to ensure continued commitment and support for development of the
Boikarabelo Coal Mine (Mine).
The Company is monitoring the impacts of the COVID-19 pandemic on future plans including
the macro-economic impacts such as foreign exchange rates, supply chain constraints and
interest rate fluctuations. In the lead up to the EGM on 7 April 2020, the Company confirmed
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Resource Generation
Limited
Quarterly Report to 31 March 2020
with the Independent Expert that no significant matters had arisen requiring an update to
their Report. It should however be noted that if the USD:ZAR exchange rate does not improve
before targeted Financial Close then repayment of the US dollar denominated working capital
component of the Noble Facility Agreement from first proceeds of the Mine Funding Package
will require further negotiation.
The Interim Financial Report for the six months ended 31 December 2019 indicated ( see
Note 1) that Resgen had reached ‘in-principle’ agreement with the Noble Group (Noble)
to provide additional working capital to its partly owned subsidiary, Ledjadja Coal (Pty) Ltd
(Ledjadja Coal), in the form of a further extension to the Facility Agreement dated 3 March
2014 as amended from time to time, including most recently on 11 December 2019 (Facility
Agreement). Subsequent to quarter end the Company advised (ASX Announcement: 2 April
2020) that it had formalised the ‘in-principle’ agreement for the extension of up to
US$2.25m in additional working capital for the period to 30 June 2020. The working capital
component of the Facility Agreement (which excludes the Original Noble Loan of US$20m
plus accumulated interest) will now be up to US$29.15m plus accumulated interest
including this additional extension. This amount is to be repaid from the proceeds of the
Mine Funding Package upon Financial Close. The ‘in-principle’ agreement which was
formalised as a Letter of Support includes the following terms:
. extending the Facility Agreement by up to an additional US$2.25m. This further
extension is to be made available in order to facilitate the satisfactory completion or
waiver of the conditions precedent (CPs) to the Mine Funding Package by 30 June
2020;
. interest at a rate of 16% on the extension of the additional funds;
. amending the first date for repayment of the Facility Agreement from 31 March 2020
to 31 July 2020;
. the terms of the Valu offtake agreement to be renegotiated to reflect current market
norms by aligning with the Noble Export contracts as disclosed to the Borrower;
. Noble Board approval at a meeting to be held in early April 2020;
. executing full form documents effecting the necessary amendment to the Facility
Agreement and any further documents required to affect any of the financial
support;
. Resgen and Ledjadja Coal obtaining all necessary internal and regulatory approvals
or waivers in respect of all documents being entered into; and
. All costs associated with negotiation and documentation to be borne by Resgen and
Ledjadja Coal.
The Company is now in the process of securing the required regulatory approvals and
translating the arrangement into a further amendment to the Facility Agreement.
Progress continues to be made in addressing the key CPs associated with achieving Financial
Close, including the requirements to secure a binding arrangement for the funding of the rail
link to the Mine and access to ramp-up working capital for commencement of operations. No
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Limited
Quarterly Report to 31 March 2020
binding arrangements are yet in place however negotiations continue to be actively pursued
under the COVID-19 restrictions referred to above. Whilst certain matters are outside of the
control of the Company, the target for Financial Close by 30 June 2020 is regarded as
achievable.
Brian Harvey will join the Company as Chief Finance Officer (CFO) of Resgen and Ledjadja Coal
commencing 1 June 2020 (ASX Announcement: 10 February 2020). Brian has over 15 years’
experience in senior finance roles after having initially qualified and worked as a mechanical
engineer. He then undertook a conversion course to obtain a BCom (Hons) and qualified as a
CA (SA) in 2004. He has worked for multinational, foreign listed and JSE listed companies,
principally in the resources sector, including Weir Minerals Africa and Middle East, Royal
Bafokeng Holdings Pty Ltd and Anglo American plc.
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 March 2020 is as follows:
Issued fully paid ordinary shares: 581,380,338
Performance share rights: 3,000,000
Cash at bank: $0.90 million
Noble Facility – undrawn $US0.50 million
Shareholders and potential investors should also review the Company’s 2019 Annual Report
and the audit reviewed Interim Financial Report for the six-month period ending 31 December
2019 to fully appreciate the Company’s financial position.
The Company has reached ‘in-principle’ agreement (in the form of a Letter of Support) with
Noble Group regarding the extension of further working capital funding 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.
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Resource Generation
Limited
Quarterly Report to 31 March 2020
Authorised for release by 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
Company contacts
Lulamile Xate +27 11 010 6310
Leapeetswe Molotsane +27 11 010 6310
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Resource Generation
Limited
Quarterly Report to 31 March 2020
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 March 2020
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 March 2020
Consolidated statement of cash flows Current quarter Year to date
$A’000 (9 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 (785) (2,377)
(c) production - -
(d) staff costs (581) (1,683)
(e) administration and corporate costs (489) (1,163)
1.3 Dividends received (see note 3) - -
1.4 Interest received 25 74
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 (1,830) (5,149)
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 March 2020
Consolidated statement of cash flows Current quarter Year to date
$A’000 (9 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 1,544 5,162
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 1,544 4,636
activities
4. Net increase / (decrease) in cash and
cash equivalents for the period
4.1 Cash and cash equivalents at beginning of 1,292 1,474
period
4.2 Net cash from / (used in) operating (1,830) (5,149)
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 March 2020
Consolidated statement of cash flows Current quarter Year to date
$A’000 (9 months)
$A’000
4.4 Net cash from / (used in) financing activities 1,544 4,636
(item 3.10 above)
4.5 Effect of movement in exchange rates on (109) (64)
cash held
4.6 Cash and cash equivalents at end of 897 897
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 64 108
5.2 Call deposits 833 1,184
5.3 Bank overdrafts - -
5.4 Other (provide details) - -
5.5 Cash and cash equivalents at end of 897 1,292
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 March 2020.
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Resource Generation
Limited
Quarterly Report to 31 March 2020
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 76,386 75,572
7.2 Credit standby arrangements - -
7.3 Other (please specify) - -
7.4 Total financing facilities 76,386 75,572
7.5 Unused financing facilities available at quarter end 814
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 development of the project is secured. US$46.4 million has been drawn down as at 31
March 2020. The loan is repayable in quarterly instalments over 78 months commencing from 31
July 2020 (extension agreed post quarter end) 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) (1,830)
8.2 Capitalised exploration & evaluation (Item 2.1(d)) -
8.3 Total relevant outgoings (Item 8.1 + Item 8.2) (1,830)
8.4 Cash and cash equivalents at quarter end (Item 4.6) 897
8.5 Unused finance facilities available at quarter end (Item 7.5) 814
8.6 Total available funding (Item 8.4 + Item 8.5) 1,711
8.7 Estimated quarters of funding available (Item 8.6 divided by 0.93
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?
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Resource Generation
Limited
Quarterly Report to 31 March 2020
Answer:
Yes.
1. Subsequent to quarter end the Company secured ‘in-principle’ agreement (in the form
of a Letter of Support) with Noble for the extension of a further US$2.25m under the
Facility Agreement dated 3 March 2014, as amended from time to time. This funding
will enable the Company to target Financial Close for project funding to develop the
Boikarabelo Coal Mine by 30 June 2020; and
2. The Company is in the process of completing the outstanding conditions precedent to
achieve Financial Close and draw-down funds under the Project Funding Agreements
executed on 5 December 2019 (Mine Funding Package) by the target date of 30 June
2020.
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: .....30 April 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: 30-04-2020 08:42:00
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