Resource Generation : Quarterly Report for the three months ended 30 September 2017

ACN 059 950 337

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.

Since the "all party" meeting of lenders held on 14th June 2017 Management has continued to finalise all material contracts for the development of the Boikarabelo Coal Mine. At it's meeting in Johannesburg on 16th August 2017 the Board received an update on all material developments. Demonstrable progress had been made on the material contracts and funding of the rail link but not on the terms of the proposed coal supply to Eskom.

In the circumstances, the Board believed it would be reasonable to ask the Debt Club lenders to undertake their credit approval process to a conclusion, but on the basis that any draw down of senior debt be subject to a concluded coal supply agreement being in place with Eskom. That request was made on 21st August 2017.

However, on 23rd August 2017 some members of the Debt Club formally declined to proceed on that basis and required a greater degree of certainty around the terms of supply to Eskom before proceeding to secure credit approval for funding of the project. In the circumstances, the Board believed that this source of project finance is no longer viable.

Mindful of the present difficulties in securing terms of supply with Eskom, Management had in parallel been exploring an alternative funding proposal to place before the Board. This proposal is not subject to a committed domestic coal supply with Eskom.

The due diligence activities and preparation for the credit approval processes of these lenders, who are familiar with the project, has been ongoing since the Debt Club announcement on 25th August 2017. The lenders have advised that they have a two-tier credit approval process. First stage credit approved and signed term sheets are expected by end October/early November. At that time the Board will consider a recommendation from Management and make a decision on this alternative funding proposal. Legal advice on the draft term sheets is that shareholder approval will be required should the Board accept this proposal.

The Board of Resource Generation Limited as well as the Board of Ledjadja Coal (Pty) Ltd have approved execution of the Sedgman suite of contracts (CHPP, Ancillary Works and Operations

& Maintenance), subject to finalisation of one matter regarding insurance bonds for the development works. Details will be released to the market once the agreements are executed by both parties.

First credit approval for full funding of the rail link was obtained by Development Bank of South Africa. The rail link is to be constructed by RME, a subsidiary of Transnet Freight Rail, under fixed price, turn key, EPC contract.

Good progress is being made with regard to the planned 300MW IPP. A provisional equity structure under which the Company and Ledjadja Coal, will have direct equity interests is under discussion. A joint development agreement is being drafted by the Company's appointed legal counsel and a full technical specification of the IPP is currently being prepared by an independent consulting firm.

It is expected that a selection process to identify and appoint the EPC contractor will commence during the first half of 2018.

During the quarter, the Group drew down the final instalment of the WCF. In addition, the Group agreed with Noble Resources International Pte Ltd to extend the commencement of repayment of the amounts borrowed under the Facility Agreement dated 3 March 2014 from September 2017 to April 2018.

On the assumption that the Board approves the proposed project finance solution outlined above, the likely time scale will be as follows:

• Finance documents completed by early February 2018

• Meeting of Shareholders mid to late February 2018

• First draw down March 2018

In order to ensure that the Group has sufficient working capital until first draw down discussions have commenced with Noble in order to secure a further extension of the WCF.

Subsequent to the end of the quarter the Company released its Notice of Meeting for the Annual General Meeting which will be held on Wednesday 22nd November at 10am in Brisbane.

Denis Gately has notified the Company of his intention to resign as Chairman and a Director of the Company with effect on and from the conclusion of the Annual General Meeting of the Company called for 22nd November 2017. The continuing Directors propose to elect Lulamile Xate as Chairman to succeed Mr Gately.

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

Issued fully paid ordinary shares: 581,380,338

Performance share rights: 5,750,000

Cash at bank: $5.1 million

Shareholders and potential investors should also review the Company's 2017 Annual Report, audited Financial Report for the year ending 30 June 2017 and Interim Financial Report for the six months ending 31 December 2016 to fully appreciate the Company's financial position.

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

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

Mike Meintjes

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

Telephone: +27 12 345 1057

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

Denis Gately +27 12 345 1057

Rob Lowe +27 12 345 1057