Resource Generation : Quarterly Activities Report & Appendix 5B- June 2016

Microsoft Word - RES_ASX_Qtr_App5B_30_Jun_2016_Final Resource Generation Limited

ACN 059 950 337

Quarterly Report for the three months ended 30 June 2016

Resource Generation Limited (the "Company") is developing its Boikarabelo coal mine in the Waterberg region of South Africa. This region accounts for 40% of the country's remaining identified coal resources. There are probable reserves of 744.8* million tonnes of coal on 35% of the tenements under the Company's control (ASX/JSE announcement: 16 December 2010). Stage 1 of the mine development targets saleable coal production of 6 million tonnes per annum.

Project

The work of the Technical Committee, established by the Board in December 2015 to review all aspects of the project, has now been substantially completed. A new execution strategy has been adopted that will reduce the capital cost of the project and reduce risk through the appointment of established EPC contractors with good track records and substantial balance sheets. A new mining plan has been developed which will maximize recovery of the coal deposit by mining all seams and minimize out-of-pit dumping of waste, resulting in increased productivity and reduced operating costs. All efforts at the mine are now being directed towards having the project ready for mobilization of the first of the EPC contractors in Q4 2016.

EPC Contractors

A Heads of Agreement was concluded with Sedgman Limited (ASX/JSE Announcement: 6 May 2016) for the procurement and construction of the coal handling plant for a lump sum fixed price of US$141 million. This represents a substantial saving over the previously announced estimate of US$200 million.

A Request for Information was issued to seven established mining contract companies in March 2016. All seven responded and a Request for Proposal was delivered to a short list of three candidates at the beginning of June 2016 with the appointment of the mining contractor expected during July 2016.

Chief Operations Officer

Mr Zirk van der Bank was appointed as COO of Ledjadja Coal, the main operating subsidiary (ASX/JSE Announcement: 3 June 2016). Mr van der Bank is an experienced mining engineer with more than 20 years' experience in the coal mining industry. He has held a range of supervisory and management positions at Sasol Mining, Moolman Mining, Shanduka Coal and Glencore Coal SA.

Project Funding

Further progress has been made towards securing the requisite debt funding to complete construction of the project. The base case financial model ("BCFM") has now been completed by the lead arranger and, based on the information contained in the BCFM, the project is believed to be fundable without recourse to the shareholders for further equity.

Development of a preferred capital structure is at an advanced stage and is currently being negotiated with all members of the debt club referred to in previous quarterly reports. The Board remains confident that the Company is on course to finalize the debt funding so that the balance of construction may commence during the last quarter of 2016.

In parallel with the proposed debt club funding, the Company is investigating a high level offer of funding received from a source in the United States.

Cash reserves as at 30 June 2016 were $A12.0 million.

IPP

A concept feasibility study for a 300MW coal fired power station ("IPP") has been received and reviewed. There is a very compelling economic case for a mouth-of-mine IPP with sale of the electricity produced to the national utility or a private offtaker. The study does however indicate that 300MW IPP is not optimal and that 450MW or 600MW presents a more compelling economic case. This option is now being investigated.

Infrastructure arrangements

Negotiations with Transnet Freight Rail concerning the tariff, access to Richards Bay Coal Terminal and construction of the rail link are proceeding in a very positive manner. An early resolution of these issues is expected.

Mining tenements

The coal mining rights and exploration tenements held at the end of the quarter were as follows:

 MPT15/2012 MR (74%)

 PR720/2007 (74%)

 PR678/2007 (74%)

The Company has no interest in farm-in or farm-out agreements.

The Company is in the process of relinquishing PR720/2007, over the properties Lisbon and Zoetfontein, as these are distant from the Boikarabelo site and contain minimal resources that have not been included in the stated JORC resource.

The Mining Right Application for Kubu, adjacent to Boikarabelo, was lodged at the end of 2015. Kubu was previously known as Waterberg No 1 and encompasses the farm Koert Louw Zyn Pan (PR678/2007).

On behalf of the Board of Directors Yours faithfully

Mike Meintjes Company Secretary

RESOURCE GENERATION LIMITED Corporate information Directors

Denis Gately Non-Executive Chairman

Lulamile Xate Non-Executive Deputy Chairman

Robert Croll Non-Executive Director

Colin Gilligan Non-Executive Director Leapeetswe Molotsane Non-Executive Director Dr Konji Sebati Non-Executive Director

Company secretary

Mike Meintjes

Registered office

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

Telephone: +27 12 345 1057

Facsimile: +27 12 345 5314 Website: www.resgen.com.au

Mailing address

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

Contacts Denis Gately Rob Lowe Media

South Africa	Australia
Russell and Associates	Citadel MAGNUS (Martin Debelle)
t: +27 11 880 3924	t: +61 2 8234 0100 m: +61 409 911 189
42 Glenhove Rd, Johannesburg 2196,	Level 15, 61 York Street, Sydney,
Gauteng, South Africa	NSW 2000, Australia

* This information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported. Information in this report that relates to exploration results, mineral resources or ore reserves is based on information compiled by Mr Dawie van Wyk who is a consultant to the Company and is a member of a Recognised Overseas Professional Organisation. Mr van Wyk has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr van Wyk has given and has not withdrawn consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Appendix 5B Mining exploration entity quarterly report

Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001.

Name of entity

Resource Generation Limited

ABN Quarter ended ("current quarter")

91 059 950 337

30 June 2016

Consolidated statement of cash flows

Cash flows related to operating activities		Current quarter $A'000	Year to date (12 mths) $A'000
1.1 1.2 1.3 1.4 1.5 1.6 1.7	Receipts from product sales and related debtors Payments for (a) exploration and evaluation development production administration Dividends received Interest and other items of a similar nature received Interest and other costs of finance paid Income taxes paid Other Net Operating Cash Flows	- - (1,152) - (1,186) - 33 (2) - 20	- - (6,970) - (7,172) - 203 (7) - 20
		(2,287)	(13,926)
1.8	Cash flows related to investing activities Payment for purchases of: (a) prospects equity investments (subsidiary) other fixed assets Proceeds from sale of: (a) prospects equity investment (subsidiary) other fixed assets Loans to other entities Loans repaid by other entities Other- Mining related deposit Net investing cash flows	-	-
-		-
(161)		(1,090)
1.9		-	-
-		-
-		-
-		-
1.10		-	-
1.11		-	-
1.12		-	-
		(161)	(1,090)
1.13	Total operating and investing cash flows (carried forward)	(2,448)	(15,016)