Resource Generation Limited

ACN 059 950 337

Quarterly Report for the three months ended 30 June 2017

Resource Generation Limited (the "Company" or "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). 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 Broadbased 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

Meaningful progress continues to be made on securing Project Funding. In what is a complex bank project finance process, multiple contracting agreements are being negotiated in parallel with the finalisation of the independent technical reports. All major contracts are now substantially agreed and in executable format following an all-party meeting of lenders, including senior representatives and their advisers, that was held in Johannesburg on 14th June.

The purpose of the all-party meeting was to review the material EPC and logistics contracts and to address matters outstanding from the lenders' legal due diligence. At the conclusion of the meeting, a small number of items were identified to be addressed or produced including updating the financial model, term sheet and finalisation of the funding terms of the rail link and conclusion of a Memorandum of Understanding (MOU) with ESKOM before the lenders are able to commence their respective credit approval processes. We are doing everything within our control to ensure that all outstanding items will be delivered to the lenders by no later than 31st July and this then will allow them to approach their credit approval committees to obtain the requisite credit approvals. Most of the outstanding items are either under the Company's direct control or very likely to be delivered to the Company by third parties during July. Discussions continue with ESKOM concerning a Memorandum of Understanding and Coal Supply Agreement. These discussions will continue beyond the end of July 2017.

The all-party meeting was viewed as positive and the Company is encouraged by the support for the project shown by the lenders. The credit approval processes are estimated to be completed within approximately two months from commencement.

Rail Link

DBSA has submitted its application for credit and stage 1 of the approval process has been successful.

Transnet Freight Rail (TFR) has advised that it has received internal approval for the construction of the Network Stabilising Facility (NSF) which forms an integral part of the link between the Boikarabelo Coal Mine and the main line to the port of Richards Bay. TFR has mobilised its contractors and construction of the NSF is scheduled to be completed by Q4 2017.

Independent Power Producer (IPP)

Together with our advisers, WaterBorne Capital, we have been actively preparing for our submission for a 300MW IPP towards the end of 2017. In particular, the following work was undertaken during the current quarter:

  • We submitted a full response to the Department of Energy's public request for information, detailing the mine's current status and the work done to date on the IPP. The Department has acknowledged our submission and has undertaken to take our comments into consideration;

  • We have concluded a 'beauty parade' of leading law firms with the intention of making an appointment as legal counsel to the bid;

  • Once appointed, the first task of the legal firm will be the preparation of the Joint Development Agreement (JDA);

  • In parallel with the preparation of the JDA we are identifying local partners to join our consortium, subject to board approval;

  • We have invited various insurance firms to tender for the appointment as Insurance Advisor to the bid;

  • We have invited various environmental firms to tender for the appointment as Environmental Advisor to the bid; and

  • A project information memorandum is currently being prepared and will be used to introduce the local commercial banks and developmental funding institutions to the project.

Once the JDA has been completed, we will commence with the process of selecting an EPC partner, again subject to board approval. It is expected that the partner will be either Japanese or South Korean as both countries have well-established credentials that are most likely to comply with the Request for Proposal (RFP) when issued by the Department. We are expecting the RFP to be released towards the end of 2017.

Working Capital Facility

The Company has drawn down two tranches under the extended Noble Facility Agreement (Facility). In line with the anticipated timing of Project Funding, discussions have been held with Noble Resources International Pte Ltd (Noble) to agree to a deferral of loan repayments that are due to commence on 30th September 2017. These discussions are on-going and the outcome will be communicated to Shareholders in due course.

Under the terms of the Facility, Noble and Ledjadja Coal were to finalise arrangements before 30th June 2017 in relation to Noble having a first right of refusal to purchase any additional uncontracted coal to be produced from the mine. The completion period has been extended by mutual agreement until 10th August 2017.

Non-Executive Director Appointment

Mr Manish Dahiya was appointed as a Non-Executive Director of the Company during the quarter. Mr Dahiya is appointed to the Board as a nominee of Noble under the terms of the extension of the Facility Agreement of 3 March 2014 (ASX Announcement: 14 March 2017). Noble is a substantial shareholder in the Company.

Capital structure and cash position

The Company's summarised capital structure at 30 June 2017 is as follows:

Issued fully paid ordinary shares: 581,380,338

Performance share rights: 5,750,000

Cash at bank: $4.7 million

Shareholders and potential investors should also review the Company's Annual Report, audited Financial Report for the year ending 30 June 2016 and Interim Financial Report for the six months ending 31 December 2016 to fully appreciate the Company's financial position.

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%)

PR720/2007 (74%)

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

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

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 JORC resource.

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

Rob Croll Non-Executive Director

Manish Dahiya 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

Company contacts

Denis Gately +27 12 345 1057

Rob Lowe +27 12 345 1057

Media contacts

South Africa

Australia

Russell and Associates (Marion Brower) t: +27 11 880 3924

42 Glenhove Rd, Johannesburg 2196 Gauteng, South Africa

Citadel MAGNUS (Martin Debelle)

t: +61 2 8234 0100 m: +61 409 911 189

Level 15, 61 York Street, Sydney

NSW 2000, Australia

Resource Generation Limited published this content on 27 July 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 27 July 2017 05:44:04 UTC.

Original documenthttp://www.resgen.com.au/component/jdownloads/send/53-2017/498-quarterly-report-for-the-three-months-ended-30-june-2017

Public permalinkhttp://www.publicnow.com/view/3B862DE3A7B1CFA2150C355C600570212C9BEFCB