Resource Generation reports on quarterly performance

Resource Generation (ASX: RES) has reported on its quarterly performance for the three months ended 31 March 2010. The company has coal interests in South Africa and Tasmania.

Its current priority is to develop its planned Boikarabelo mine in the Waterberg region of South Africa.

Further drilling was completed on an additional 18% of the shallow coal bearing part of the Ledjadja tenement area. Seam continuity and thickness were consistent with previous drilling. The resource and reserve classifications are expected to improve following analysis.

The mining rights application was lodged and two further properties totalling 2,771 hectares in the Waterberg area were acquired; these will form part of the proposed open-cut pit.

The board has decided to seek a secondary listing on the Johannesburg Stock Exchange to assist with future project funding. Documentation is underway to complete the process.

The Ledjadja Coal Joint Venture (LCJV) has a further 21 cored holes and 4 percussion holes on the northern half of Kalkpan (L3) were completed during the quarter, and seam continuity and thickness were consistent with previous drilling.  Analysis is underway, and is expected to lead to an increase in the resource and reserve classification on that tenement.

The expenditure of ZAR20 million (currently approximately A$3 million) on exploration and development activities will enable the company to increase its rights in the LCJV from 49% to 65%, with a further entitlement to increase to 74%, subject to final regulatory consent.

Regulatory consent has been applied for by the company’s black economic empowerment (BEE) partners and is awaited.  ZAR20.5 million has been spent to date, so the expenditure hurdle to increase to 65% has been achieved.

The Waterberg One Coal Joint Venture (WCJV) had no exploration drilling during the quarter.  The drilling programme was completed early in 2009.

As previously advised by the company, expenditure of US$5 million will increase Resource Generation’s rights in the WCJV from its current 20% to 70%.  US$3.6 million has been spent to date.

The Boikarabelo Project Development has two further properties in the Waterberg area, Draai Om and Witkopje, totalling 2,771 hectares were acquired during the quarter.  Both properties coincide with the Ledjadja prospecting right and represent the target area for the open-cut pit.

The mining rights application and associated documentation, such as social and labour plans, were lodged with the Department of Mines and Energy and accepted in February 2010. 

Subject to the regulatory process, a mining right is expected to be granted early in 2011, with the aim of starting coal production by January 2013.

Detailed scheduling of mine operations continued for use in discussions on debt funding with several finance providers. 

The company said the potential for higher returns than indicated in the pre-feasibility study has been identified, particularly with respect to mining costs, capital and transport-related expenditure. 

Work continued on domestic and export offtake arrangements and securing appropriate logistics solutions.

Drilling of the Woodbury coal tenement in Tasmania is due to be commenced subject to access arrangements.

No activities were undertaken on the uranium tenements in Cameroon during the quarter.

http://www.proactiveinvestors.com.au/companies/news/6470/resource-generation-reports-on-quarterly-performance-6470.html