Renergen : Quarterly Appendix 5B Cash Flow Report

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Appendix 5B

Mining exploration entity or oil and gas exploration entity

quarterly cash flow report

Name of entity

RENERGEN LIMITED

ABN	Quarter ended ("current quarter")
93998352675	31 May 2022

personal use

Consolidated statement of cash flows

1. Cash flows from operating activities

1.1 Receipts from customers

1.2 Payments for

(a) exploration & evaluation

(b) development

(c) production

(d) staff costs

(e) administration and corporate costs

1.3 Dividends received (see note 3)

1.4 Interest received

1.5 Interest and other costs of finance paid

1.6 Income taxes paid

1.7 Government grants and tax incentives

1.8 Other - comprised mainly of working capital changes (-R22.1m), movement of restricted cash (-R17.3m), foreign exchange differences (R0.3m) and other (R0.8m).

1.9 Net cash used in operating activities

Current	Year to date
quarter	(3 months)
ZAR'000	ZAR'000
803	803
(13)	(13)
-	-
(193)	(193)
(1 810)	(1 810)
(9 677)	(9 677)
-	-
1 034	1 034
(74)	(74)
-	-
-	-

(38 256)	(38 256)
(48 186)	(48 186)

For

2. Cash flows from investing activities

2.1 Payments to acquire or for:

(a) entities

(b) tenements

(c) property, plant and equipment

(d) exploration & evaluation

(e) investments

1. other non-current assets - other intangible assets

-	-
-	-
(84 702)	(84 702)
(14 595)	(14 595)
-	-
(11 713)	(11 713)

only

Consolidated statement of cash flows

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 used in investing activities

Current	Year to date
quarter	(3 months)
ZAR'000	ZAR'000
-	-
-	-
-	-
-	-
-	-
-	-
-	-
-	-
(111 010)	(111 010)

For personal use

3.	Cash flows from financing activities
3.1	Proceeds from issues of equity securities	202 358	202 358
	(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	-	-
3.6	Repayment of borrowings	(9 258)	(9 258)
3.7	Transaction costs related to loans and
	borrowings	-	-
3.8	Dividends paid	-	-
3.9	Other (provide details if material)	(776)	(776)
3.10	Net cash from financing activities	192 324	192 324

4. Net increase/(decrease) in cash and cash equivalents for the period

4.1	Cash and cash equivalents at beginning of	95 088	95 088
	period
4.2	Net cash used in operating activities	(48 186)	(48 186)
	(item 1.9 above)
4.3	Net cash used in investing activities	(111 010)	(111 010)
	(item 2.6 above)
4.4	Net cash from financing activities (item 3.10	192 324	192 324
	above)
4.5	Effect of movement in exchange rates on	(273)	(273)
	cash held
4.6	Cash and cash equivalents at end of	127 943	127 943
	period

use only

5. Reconciliation of cash and cash

	equivalents	Current
	at the end of the quarter (as shown in the	quarter
	consolidated statement of cash flows) to the
	ZAR'000
	related items in the accounts
5.1	Bank balances	16 509
5.2	Call deposits	111 434
5.3	Bank overdrafts	-
5.4	Other (provide details)	-
5.5	Cash and cash equivalents at end of	127 943
	quarter (should equal item 4.6 above)

6. Payments to related parties of the entity and their associates

1. Aggregate amount of payments to related parties and their associates included in item 1
2. Aggregate amount of payments to related parties and their associates included in item 2

Year to date

(3 months) ZAR'000

16 509

111 434

-

-

127 943

Current

quarter ZAR'000

800

4 160

For personal

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.

The amounts disclosed under 6.1 and 6.2 relate to remuneration paid to directors and prescribed officers.

7. Financing facilities

Note: the term "facility' includes all forms of financing arrangements available to the entity.

Add notes as necessary for an understanding of the sources of finance available to the entity.

Total facility	Amount drawn
amount at quarter	at quarter
end	end
ZAR'000	ZAR'000

For personal use only

7.1	Loan facilities	834 253	834 253
7.2	Credit standby arrangements	-	-
7.3	Other (please specify)	-	-
7.4	Total financing facilities	834 253	834 253
7.5	Unused financing facilities available at quarter end		-

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.

The amounts disclosed above were translated at a rate of R15.4902/US$1 on 31 May 2022.

DFC Loan

Tetra4 entered into a US$40.0 million finance agreement with the US International Development Finance Corporation ("DFC") on 20 August 2019 ("Facility Agreement"). The first draw down of US$20.0 million took place in September 2019, the second draw down of US$12.5 million in June 2020 and the final drawdown of US$7.5 million on 28 September 2021. Tetra4 shall repay the loan in equal quarterly instalments of US$1.1 million (R16.7 million using the rate at 31 May 2022) on each payment date beginning on 1 August 2022 and ending on 15 August 2031. The loan is secured by a pledge of the Group's assets under construction, land and the Debt Service Reserve Account.

The first drawdown of $20.0 million attracts interest of 2.11% per annum. Interest on the second and final drawdowns is 1.49% and 1.24% per annum, respectively. Interest is payable by Tetra4 to the DFC quarterly on 15 February, 15 May, 15 August and 15 November of each year ("Repayment Dates") for the duration of the loan. This interest is capitalised to assets under construction within property, plant and equipment in line with the Group policy. Interest paid during the quarter totalled US$0.2 million (R2.8 million).

A guaranty fee of 4% per annum is payable by Tetra4 to DFC on any outstanding loan balance. The guaranty fee is payable quarterly on the Repayment Dates. Tetra4 paid guaranty fees totalling US$0.4 million (R6.4 million) during the quarter.

A commitment fee of 0.5% per annum was payable by Tetra4 to the DFC on any undisbursed amounts under the Facility Agreement. Commitment fees were payable quarterly on the Repayment Dates. Tetra4 did not pay any commitment fees during the quarter as there were no undrawn amounts during the period.

An annual maintenance fee of US$0.04 million is payable by Tetra4 to the DFC for the duration of the loan term and is payable on 15 November of each year, commencing on 15 November 2020. The maintenance fee covers administrative costs relating to the loan.

The DFC loan outstanding at 31 May 2022 amounted to US$40.0 million (R619.6 million).

For personal use only

IDC loan

Tetra4 entered into a R160.7 million loan agreement with the IDC on 17 December 2021. An amount of R158.8 million was drawn down on 22 December 2021 and is repayable in 102 equal monthly payments commencing in July 2023. The loan terms include a 12-month interest capitalisation and an 18-month capital repayment moratorium. The loan accrues interest at the prime lending rate plus 3.5% and is secured by a pledge of the Group's assets under construction, land and the Debt Service Reserve Account. The IDC loan outstanding at 31 May 2022 amounted to R166.7 million.

Molopo loan

Tetra4 entered into a R50.0 million loan agreement with Molopo on 1 May 2013. This loan was part of the conditions of the sale of shares in Tetra4 from Molopo to Windfall Energy Proprietary Limited. The loan agreement is for the period from inception of the loan on 1 May 2013 until 31 December 2022. During this period, the loan is unsecured and interest free. The loan can only be repaid when Tetra4 declares a dividend and utilising a maximum of 36% of the distributable profits in order to pay the dividend. If by 31 December 2022 the loan is not repaid, the loan shall bear interest at the prime lending rate plus 2% and will have no repayment terms. It is not expected that the loan will be repaid in the next 12 months given the unavailability of distributable profits. As such, the loan has been classified as long term. The loan advanced to Tetra4 by Renergen can only be repaid after the loan from Molopo has been settled.

The loan is discounted to its present value for the period that it is interest free, at a discount rate which is equal to the prime lending rate plus 2.00% which at 31 May 2022 is 9.75% (prime lending rate of 7.75% plus 2.00%). The imputed interest expense is included in profit and loss. The fair value of the loan amount outstanding at 31 May 2022 amounts to R47.9 million.

Debt covenants

The following debt covenants apply to the DFC loan:

1. Tetra4 is required to maintain at all times i) a ratio of all interest bearing Debt to EBITDA of not more than 3.0 to 1; (ii) a ratio of Current Assets to Current Liabilities of not less than 1 to 1; and (iii) a Reserve Tail Ratio of not less than 25%.

1. Tetra4 is required to maintain at all times (i) a ratio of Cash Flow for the most recently completed four (4) consecutive full fiscal quarters, taken as a single accounting period, to Debt Service for the most recently completed four (4) consecutive full fiscal quarters, taken as a single accounting period, of not less than 1.30 to 1; and (ii) a ratio of Cash Flow for the most recently completed four (4) consecutive full fiscal quarters, taken as a single accounting period, to Debt Service for the next succeeding four (4) consecutive full fiscal quarters of not less than 1.3 to 1.
2. Tetra4 is required to ensure that the Debt Service Reserve Account is funded in the aggregate of all amounts due to the DFC within the next 6 months.

The covenants in a) and b) will apply 18 months after the completion of the construction of the Virginia Gas Plant. The Group has complied with the covenant under c) above for the quarter and believes that it will be able to comply with the covenants throughout the tenure of the loan.

"Reserve Tail Ratio" means for any calculation date, the quotient obtained by dividing (a) all of the Borrower's remaining Proved Reserves as of such calculation date by (b) all of the Borrower's Proved Reserves as of the date of this Agreement.

The following debt covenants apply to the IDC loan.