ABN 47 149 490 353
Annual Report - 30 June 2021
Corporate Directory
Directors
Mark Gray – Chairman and Managing Director
Malcolm Carson
Larry Cook
Bernie Mason
Jonathan Reynolds
Company secretary
Jonathan Reynolds
Registered office and
Principal place of
business
Suite 107
109 Pitt Street
Sydney NSW 2000
Telephone: +61 2 9233 5579
Facsimile: +61 2 9233 1349
Share register
Auditor
Solicitors
Computershare Investor Services Pty Limited
Level 3, 60 Carrington Street
Sydney NSW 2000
Telephone: 1300 787 272
Facsimile: +61 2 8234 5050
SCS Audit & Corporate Services Pty Ltd
Suite 802
309 Pitt Street
Sydney 2000
HWL Ebsworth
Level 20
240 St Georges Terrace
Perth WA 6000
Stock exchange listing
Allegiance Coal Limited shares are listed on the Australian Securities
Exchange
(ASX code: AHQ)
Website
www.allegiancecoal.com.au
Email address
info@allegiancecoal.com.au
Contents
Directors’ Report .................................................................................................................................... 1
Corporate governance statement ........................................................................................................ 21
Statement of comprehensive income .................................................................................................. 30
Statement of financial position ............................................................................................................. 31
Statement of changes in equity ........................................................................................................... 32
Statement of cash flows ....................................................................................................................... 34
Directors’ declaration ........................................................................................................................... 79
Auditor’s independence declaration ..................................................................................................... 80
Independent Auditor’s report ............................................................................................................... 81
Additional Securities Exchange information ........................................................................................ 87
Directors’ Report
30 June 2021
The directors present their report, together with the financial statements, on the consolidated entity
(referred to hereafter as the 'consolidated entity') consisting of Allegiance Coal Limited (referred to
hereafter as the 'Company' or 'parent entity') and the entities it controlled at the end of, or during, the
year ended 30 June 2021.
Directors
The following persons were directors of Allegiance Coal Limited during the whole of the financial year
and up to the date of this report, unless otherwise stated:
Mark Gray (Chairman)
Malcolm Carson
Larry Cook
Bernie Mason – Appointed on 1 February 2021
Jonathan Reynolds
Principal activities
The continuing principal activity of the consolidated entity during the financial year was the acquisition,
exploration and development of coal tenements.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Review of operations
United States metallurgical coal
The Group’s strategy is to offer for supply a variety of coals to both the Pacific and Atlantic seaborne
metallurgical coal markets. Creating optionality in the products that the Group can deliver is a hedge to
demand volatility and provides an opportunity to optimise value based on product demand at any point
in time.
In October 2020, the Company completed the acquisition from Cline Mining Corporation (Cline) of 100%
of the voting equity instruments in New Elk Coal Company LLC (NECC) which company owns the New
Elk hard coking coal mine (Mine) located in southeast Colorado, United States.
At acquisition, the Mine was fully constructed and permitted for the production of hard coking coal and
NECC was debt free, except for debt owing to Cline totalling US$39M (Debt). The key terms of the
acquisition were:
•
•
The purchase price for the shares in NECC was US$1.
The Debt, which has a maturity date of 1 July 2030, will be repaid by NECC to Cline as follows:
o US$4M in shares in the Company, which were issued on completion;
o US$3M from the release of reclamation bonds held with the Colorado State
government following their replacement with an insurance surety bond, which took
place in January 2021;
o US$6M in cash on the earlier of commencing commercial production, as defined, and
1 December 2021;
o The balance to be repaid from 60% of NECC operating cash flow after provision for
following period’s preferred debt payments and working and sustaining capital.
The assets acquired include rights to coal resources and reserves, a coal handling and preparation
plant (CHPP), production equipment, underground and above ground mine infrastructure, a power sub-
station, office buildings, wash-house, warehouse and workshop, and surface support equipment. At
acquisition, the Mine had been on care and maintenance for several years.
Annual Report | 30 June 2021 | | Page 1 of 92
During the financial year, the major activity of the Company revolved around the rehabilitation of the
Mine’s underground and above ground equipment, plant and infrastructure and the all-important task
of recruiting production staff and support teams. The Mine currently operates two production units (each
still in a start-up stage working towards target production). The wash plant has had sufficient tonnes
processed at various gravities to test its performance, and to give Management an indication as to what
ash product can be achieved at various gravities and at what yields.
In December 2020, the Company advised the details of its finalised plan for the New Elk mine start-up.
Key changes to the New Elk Final Start-up Mine Plan from the previous Slow Start-up Mine plan
announced on 29 April 2020 were:
• A reduction in the number of production units from four to two;
• A rescheduling of labour and the production units to mine the entire Blue seam reserve; and
• An extended Blue seam mine life from 15 to 24 years.
The key objective to arriving at the Final Start-up Mine Plan was to achieve maximum saleable coal
sales, for minimal start-up capital, as soon as possible. The Blue seam has 22Mt of saleable coal
reserves at a coal seam cut-off height of four foot and the mine plan contemplates mining the entire
Blue seam reserve with just two continuous miners over a period of 24 years. For the first 36 months of
production, Blue seam coal will be conveyed from the CHPP to a rail loadout and siding adjacent to
railway track owned by BNSF Rail, in 30t road trucks on a sealed road for 21 miles. During this period,
track will be re-laid from BNSF’s line to the CHPP after which train sets will be loaded from the two
12,500t silos located at the Mine.
Coal production commenced in the Blue Seam at the Mine on 21 May 2021, with the first production
unit. Commencement was delayed by three weeks against the Company’s target start date due to
delays in obtaining approvals to mine operational plans from Mine Safety and Health Administration, a
US Federal Government department tasked with regulating the safety of mining operations in the US
(MSHA). The delay was due primarily to the impact of COVID on MSHA with the closure of its office in
Colorado coupled with key staff away on leave. There were no material issues in relation to any of the
Mine’s operational plans.
The first train was loaded late July 2021 for delivery of coal to the Port of Guaymas, Mexico, with further
trains transporting additional coal thereafter.
The Company held its first New Elk Open House event attended by more than 100 people. Copies of
the Story Boards used to engage with attendees can be found on New Elk’s website, at the following
link https://www.newelkcoal.com/site/responsible-mining1/community-open-house-poster-boards
During the financial year, approximately 1,500 tons of coal was sold FOB the mine gate to a local
cement plant. A request for up to 10,000 tons per month has been received from that plant which New
Elk will consider once it reaches sustained production.
Four 70,000 tonne cargoes of Blue Seam have been sold to Asian steel mill customers for delivery in
the 2022 financial year.
A request for a 20,000 tonne trial shipment to another Asian steel mill customer has been received and
again, New Elk will look to commit to that once it reaches sustained production.
In December 2020, the Company entered a contract with Mays Mining to acquire 30,000 tonnes per
month of Pratt seam coal increasing to 60,000 tonnes per month, to blend with New Elk’s Blue seam
coal at a ratio of ~53% Blue to ~47% Pratt. Following CSR tests undertaken on the Pratt, lower than
expected results were received reducing the status and value of the Blue Pratt blend – the calculated
CSR was 50 against a CSR test result of <40. Mays could not therefore deliver the CSR specification
of 50 under the terms of the off-take contract. In July 2021, the parties agreed to replace Pratt coal with
NPA coal supplied by Yellowhammer Energy Solutions LLC., a Mays related entity.
Annual Report | 30 June 2021 | | Page 2 of 92
In August 2021, the Company completed the acquisition of all the shares in Black Warrior Minerals Inc,
a company that owns the operating open pit BWM Mine located 40 miles northeast of Birmingham
Alabama, United States. The purchase price is US$4M in cash; and US$5.3M to replace the reclamation
bond lodged with the state. In addition, the Company contracted to make an ongoing payment of US$1
per tonne for any coal sold by BWM to the Alabama Coal Cooperative. Subsequent to the closing, the
Company paid a further US$1M in cash to close out this royalty payment.
The BWM Mine comprises 9.6M tons of in-place coal and currently produces around 220,000 tonnes
per annum of high CSR coking coal including globally recognized brands Blue Creek and Mary Lee
(BCML). Presently, 6.8M tons are located on leased property, with the balance lying on property the
Company intends to seek to lease. Production has historically been sold as a thermal coal, run-of-mine,
to the Alabama power market. The acquisition gives the Company immediate access to a premium CSR
coking coal which it intends to blend with the NPA coal it is contracted to buy from Yellowhammer
Energy, and its own New Elk Blue seam coal, to present an on-spec high vol A coking coal for sale on
the seaborne met coal market.
Independent mining consultant, Marshall Miller has been engaged to assist in the development of a life-
of-mine plan to optimise existing mining operations including, amongst other things, a material reduction
in operating costs. In addition, coal samples will be collected and sent to a laboratory for coal washability
and quality tests, as well as a CSR test following which, the Company will commence marketing efforts
with steel mills for supply of the blended product.
Lorencito property
In April 2020, the Company entered into coal lease agreements to mine and sell all the coal comprised
in the Lorencito Property which neighbours the New Elk Mine, hosting, inter alia, the Primero seam with
quality parameters that align with high-vol A hard coking coal specifications. The Lorencito Property is
permitted for coal production but the permit will require an extension to enable the Primero seam to be
mined. The Primero seam outcrops at surface potentially providing low cost access to coal. An initial
lease payment of US$260,000 in cash was paid to the leaseholders and exploration activities are on-
going. Exploration costs for this area of interest have been expensed in profit and loss.
Telkwa metallurgical coal project (equity interest 90%)
The Company has remained focussed on advancing the Telkwa metallurgical coal project (Telkwa
Project) to production. The Telkwa Project, owned by the Company’s subsidiary Telkwa Coal Limited
(TCL) is located on the western side of British Columbia, Canada, 375km by both rail and road to the
deep water port of Prince Rupert and the Ridley Island Coal Terminal. The key attractions of the Telkwa
Project remain its relatively low mining strip ratio; relatively simple mining and coal washing process;
and access to rail, port, power, water, workforce and services.
During the 2021 financial year, post DFS optimisation work has been ongoing focussing on reducing
sustaining capital as well as mitigating potential environmental impacts with engineering solutions to
enhance the Environmental Assessment Application. This includes a substantial geotechnical drilling
program undertaken to support the planned management ponds.
In addition, the Company continued to invest significant resources working to finalise the Application
Information Requirements document and progressing the drafting of the application for an
Environmental Assessment Certificate. Completion of the documentation was delayed by the need to
review the water quality and quantity predictions. The review has been completed to the satisfaction of
Management allowing other project disciplines that rely on that model to complete their environmental
impact studies and to complete their respective sections of the application document. Current progress
indicates the EA application will now be lodged Q4 2021, the outstanding section being Part C which
relates to First Nations considerations.
While this has been a demanding and more lengthy process than anticipated, the achievement of
lodging an application for an Environmental Assessment Certificate cannot be understated. It activates
a time regulated formal review process where the EAO has 180 days to review the application after
Annual Report | 30 June 2021 | | Page 3 of 92
which the Ministers for Environment and for Energy and Mines, both of British Columbia, have 40 days
to decide on the granting of an Environmental Assessment Certificate.
During the period, Itochu Corporation of Japan has advanced $0.35 million to TCL, pro-rata to its
shareholding in TCL, bringing its total advance to C$0.5 million. The parties have agreed to capitalise
their advances pro-rata their equity interest in TCL following lodgement of the application. Accordingly,
the advances, which are interest free and unsecured, are quasi-equity. This advance is in addition to
the tranche 1 and 2 payments previously made by Itochu, totalling C$3 million, to secure its 10% equity
interest.
Kilmain and Back Creek Projects, Queensland
The Back Creek tenement has been relinquished. The Kilmain Project remains under review. There
were no activities of note during the year ended 30 June 2021.
Covid-19
Until August 2021, the Company had not suffered any direct impact from the Covid-19 pandemic. In
August 2021, however, the Company reported that three staff at the New Elk Mine had tested positive
to Covid-19 necessitating a period of isolation for the affected teams. This has led to delays to planned
production and sales.
Share capital
During the year ended 30 June 2021, the Company undertook the following capital raising initiatives:
In September 2020, following shareholder approval, the Company placed 1.8 million ordinary shares
with directors and consultants raising $0.1 million, before costs. The capital was raised to fund costs in
connection with the planned acquisition of the New Elk mine and the studies and assessments required
to support the Tenas environmental assessment application.
In October 2020, in connection with the completion of the acquisition of NECC, the Company issued
70.65 million initial debt reduction shares to Cline at an attributed value of $5.65 million (US$4 million).
And further, as a consequence of the closing, 3.75 million performance rights, with an attributed value
of $0.49 million, vested.
In November 2020, the Company completed a placement of 150.8 million ordinary shares to
sophisticated and professional investors raising $7.54 million, before costs. And in December 2020,
following shareholder approval, the Company placed 1.86 million ordinary shares with directors raising
$0.1 million, before costs. The capital was raised to fund development working capital at New Elk and
the Tenas environmental assessment application.
In March 2021, the Company completed a placement of 187.5 million ordinary shares to sophisticated
and professional investors raising $15 million, before costs. In addition, the Company completed a share
purchase plan, issuing 38.2 million ordinary shares and raising $3 million before costs. The capital was
raised to fund mine and equipment refurbishments at New Elk, the Tenas environmental assessment
application and debt repayment.
In April 2021, following shareholder approval, the Company completed a placement of 125 million
ordinary shares to sophisticated and professional investors raising $10 million, before costs. The capital
was raised to fund New Elk development.
In August 2020, the Company issued 0.7 million tranche 1 fee shares, with an attributed value of
$50,000, to Mercer Street Global Opportunity Fund LLC (Mercer) in connection with the Mercer secured
convertible note, and in September 2020, following shareholder approval, the Company issued 2.2
million tranche 2 fee shares, with an attributed value of $0.15 million, to Mercer. In November 2020,
Mercer elected to convert $0.2 million of the notes and the Company allotted 4.4 million shares to
Mercer. In December 2020, Mercer elected to convert $0.5 million of the notes and the Company
allotted 11.2 million shares to Mercer. In February 2021, Mercer elected to convert $0.4 million of the
Annual Report | 30 June 2021 | | Page 4 of 92
notes and the Company allotted 4.5 million shares to Mercer. In April 2021, Mercer elected to convert
$0.4 million of the notes and the Company allotted 5.4 million shares to Mercer.
In May 2021, following shareholder approval, the Company’s share capital was consolidated on a one
for five basis.
In May 2021, the Company completed a placement of 34.4 million ordinary shares to sophisticated and
professional investors raising $15.5 million, before costs. The capital was raised to fund New Elk
development.
In June 2021, 0.25 million performance rights, with an attributed value of $0.16 million, vested.
In June 2021, Mercer elected to convert $1.6 million of the notes and the Company allotted 3.3 million
shares to Mercer.
Loans
In February 2020, the consolidated entity secured a bridging loan of US$2.5M from the Nebari Natural
Resources Credit Fund 1 LP (Nebari) secured over the assets of the Company (excluding the shares
in Telkwa Coal Limited). The loan did not bear interest but was repaid during the current financial year
by paying the amount of US$4M to Nebari as follows: US$1.25 million on each 31 December 2020 and
14 February 2021; and US$1.5 million on 31 March 2021.
Itochu has advanced C$0.5 million to TCL, in addition to the tranche 1 and 2 payments totalling C$3
million for its 10% equity interest, pending lodgement by TCL of the Tenas metallurgical coal project
environmental assessment application. Itochu has agreed to capitalise the loan pro-rata its equity
interest in TCL following lodgement of the application. Accordingly, the advances, which are interest
free and unsecured, are quasi-equity.
In July 2020, the Company secured up to $8 million of funding by way of a secured convertible note
issued to Mercer Street Global Opportunity Fund LLC (Mercer), a New York based investment fund;
$0.66 million of which was drawn in August 2020; $1.34 million of which was drawn in September 2020;
$1 million of which was drawn in October 2020; and $2 million of which was drawn in January 2021;
and with further amounts to be drawn at the discretion of the parties subject to any required shareholder
approval. In August 2020, following receipt of the tranche 1 funds, notes with a face value of $772,105
maturing 5 August 2021 were issued. In September 2020, following receipt of the tranche 2 funds, notes
with a face value of $1,561,228 maturing 24 September 2021 were issued. By 30 June 2021, all tranche
1 and 2 notes had been converted into ordinary shares. In October 2020, following receipt of the first
tranche 3 funds, notes with a face value of $1.15 million maturing 30 October 2021 were issued. In
January 2021, following receipt of the second tranche 3 funds, notes with a face value of $2.3 million
maturing 20 January 2022 were issued. By 30 June 2021, $0.75 million of the tranche 3 notes had been
converted into ordinary shares, with a further $1 million converted in July 2021. The balance of the
notes are convertible at Mercer’s election into ordinary shares on the following terms : the conversion
price is the lesser of $0.75 (post consolidation) or 90% of the lowest daily VWAP of Allegiance shares
selected by Mercer for the 10 trading days on which Allegiance shares are traded in the ordinary course
of business on the ASX ending on the date immediately prior to a conversion notice. The fair value of
the conversion rights of $1,477,039 has been recognised in profit and loss as an element of finance
costs expense. If the note is not converted, it will be repaid on maturity at its issued face value. As at
the date of this report, Mercer holds notes with a face value of $1.7 million.
In October 2020, in connection with the acquisition of NECC, the Group has assumed a note, maturing
1 July 2030, in favour of Cline. The note is interest free and secured against the assets of New Elk, but
subordinated to up to US$40 million of project debt. The face value of the note, net of US$4 million of
Allegiance shares issued on closing, is US$35.12 million. US$3 million of the note was repaid in January
2021 from funds held by the Colorado government as security for rehabilitation bonds, which was
released upon replacement with an insurance surety bond. A further initial debt repayment of US$6
million is payable on the earlier of the date New Elk commences commercial production (as defined)
and 1 December 2021. The balance of the note is repayable in quarterly instalments from 60% of New
Annual Report | 30 June 2021 | | Page 5 of 92
Elk’s net cash flow after providing for preferred debt payments and for sustaining and working capital
requirements.
In September 2020, the Group received a C$40,000 loan from the Canadian government as part of its
response to Covid-19. The loan is unsecured, interest free and repayable on or before 31 December
2022.
Going concern
The Group is involved in the exploration, evaluation, development and exploitation of mineral
tenements. Further expenditure will be required upon these tenements to finally ascertain whether they
contain economically recoverable reserves and can be commercially developed and whether the
mineral reserves can be commercially and profitably exploited.
For the year ended 30 June 2021 the consolidated entity reported a net loss of $15,837,633 (2020:
$9,215,936) and net operating cash outflows of $7,653,106 (2020: $5,755,536). The operating cash
outflows have been funded by cash inflows from equity raisings of $56,861,791 (2020: $5,779,786);
project participation contributions from Itochu Corporation of Japan of $350,234 (2020: $1,822,716) and
borrowings of $5,042,927 (2020: $3,804,822) during the year. As at 30 June 2021 the consolidated
entity had net current assets of $4,018,971 (2020 net current liabilities: $4,642,114) including cash
reserves of $18,689,261 (2020: $442,055).
The balance of these cash reserves may not be sufficient to meet the consolidated entity’s planned
expenditure, evaluation and development budget, including exploration activities, evaluation, operating
and administrative expenditure, for the 12 months to 30 September 2022. In order to fully implement its
exploration, evaluation and development strategy, the consolidated entity will require additional funds.
Notwithstanding the above, the financial statements have been prepared on a going concern basis
which contemplates the continuity of normal business activities and the realisation of assets and
settlement of liabilities in the ordinary course of business.
To continue as a going concern, the Group requires additional funding to be secured from sources
including but not limited to:
•
•
•
Further equity capital raisings;
The potential farm-out of participating interests in the Group’s tenements and rights; and / or
Other financing arrangements.
Having carefully assessed the uncertainties relating to the likelihood of securing additional funding, the
Group’s ability to effectively manage its expenditures and cash flows from operations and the
opportunity to farm-out participating interests in existing permits and rights, the Directors believe that
the Group will continue to operate as a going concern for the foreseeable future. Therefore, the
Directors consider it appropriate to prepare the financial statements on a going concern basis.
In the event that the assumptions underpinning the basis of preparation do not occur as anticipated, as
noted above, there is material uncertainty that may cast significant doubt whether the Group will
continue to operate as a going concern. If the Group is unable to continue as a going concern it may
be required to realise its assets and extinguish its liabilities other than in the normal course of business
and at amounts different to those stated in the financial statements.
No adjustments have been made to the financial report relating to the recoverability and classification
of the asset carrying amounts or the classification of liabilities that might be necessary should the Group
not continue as a going concern.
Board
In February 2021, Bernie Mason was appointed as a Non-Executive Director of the Company with
specific responsibility to assist in the commissioning of the New Elk Mine and for overseeing the
Alabama coal acquisition strategy.
Annual Report | 30 June 2021 | | Page 6 of 92
Trading results
The loss for the consolidated entity after providing for income tax amounted to $15,837,633 (30 June
2020: $9,215,936).
Significant changes in the state of affairs
Significant changes in the state of the consolidated affairs during the current year are reflected under
the review of operations above.
Matters subsequent to the end of the financial year
In July 2021, Mercer elected to convert $1 million of the notes and the Company allotted 1.6 million
shares to Mercer.
In August 2021, the Company completed the acquisition of all the shares in Black Warrior Minerals Inc,
a company that owns the operating open pit BWM Mine located 40 miles northeast of Birmingham
Alabama, United States. The purchase price is US$4M in cash; and US$5.3M to replace the reclamation
bond lodged with the state. In addition, the Company contracted to make an ongoing payment of US$1
per tonne for any coal sold by BWM to the Alabama Coal Cooperative. Subsequent to the closing, the
Company paid a further US$1M in cash to close out this royalty payment.
In August 2021, in connection with the BWM Mine acquisition, the Company completed a placement of
44.8 million ordinary shares to sophisticated and professional investors raising $30 million, before costs.
Likely developments and expected results of operations
The consolidated entity intends progressing development of the Telkwa and the New Elk metallurgical
coal projects as reflected under the review of operations above.
Environmental regulation
The consolidated entity is subject to and compliant with all aspects of environmental regulations of its
exploration activities. Management is not aware of any environmental law that has not been complied
with.
Information on directors
Name:
Title:
Qualifications:
Experience and
expertise:
Mark Gray
Chairman from May 2019
Managing Director from May 2017
LLB
Mark secured the Telkwa Project and founded Telkwa Coal Limited (a wholly
owned subsidiary of the Company) in September 2014. He is a corporate
lawyer with 30 years’ transactional experience gained as a lawyer with Herbert
Smith in London, a partner with Bell Gully in New Zealand, and as a director
of the London based investment bank Barclays de Zoette Wedd. He has been
an advisor to and company executive of mining companies and operations
including underground coal in Australia and open pit mining in Africa, as well
as exploration and development projects in several minerals including coal.
He was appointed to the Board on 29 May 2017.
None
Other current
directorships
Former directorships
(last 3 years):
Special
responsibilities
Interests in shares: 181,860 ordinary shares held directly (5,418,600 ordinary shares held
None
None
Interests in options No options held directly (1,000,000 options held indirectly)
indirectly)
Annual Report | 30 June 2021 | | Page 7 of 92
Name:
Title:
Qualifications:
Experience and
expertise:
Malcolm Carson
Independent Non-Executive Director from March 2018
MSc, BSc, MAusIMM, AIG
Malcolm has over 40 years’ experience in the resource sector including field
exploration geologist and commercial evaluation of resources and project
finance. He has held senior positions in exploration and mining companies,
the West Australian Government, investment banks and executive roles in
ASX and TSX publicly listed companies. He was appointed to the Board on 11
August 2016.
Chairman of Zuleika Gold Limited (ASX: ZAG)
Director Pacific Wildcat Corp (TSX)
Other current
directorships:
Former directorships
(last 3 years):
Special
responsibilities:
Interests in shares: 17,514 held indirectly
Interests in options: No options held directly (300,000 options held indirectly)
None
None
Name:
Title:
Qualifications:
Experience and
expertise:
Larry Cook
Independent Non-Executive Director from July 2019
B.S.E.M- Mining Engineering
Larry has over 40 years of technical knowledge of underground coal mining
and methods. For the first 20 years of his career he worked in various
underground roles in coal mines primarily in West Virginia. He is highly
regarded in both the US and Australia as an extremely capable underground
coal mining engineer. Previous positions include Vice President of Operations
at Mid-Vol Mining, Madison WV; General Superintendent at Mistic Energy Inc,
Beckley WV; Mine Manager of five underground coal mines owned by Eastern
Associated Coal Corporation in Wharton WV; founding shareholder and
director of Bounty Industries Ltd providing contract mining at Ivanhoe Colliery,
NSW, for Centennial Coal and at German Creek Colliery, Central QLD, for
Anglo Coal. Most recently, Mr Cook recommissioned the Donkin underground
coal mine located in Nova Scotia, Canada.
None
None
Other current
directorships
Former directorships
(last 3 years):
Special
responsibilities
Interests in shares: 522,878 held directly
500,000 held directly
Interests in
performance rights:
Interests in options Nil
None
Name:
Title:
Qualifications:
Experience and
expertise:
Bernie Mason
Independent Non-Executive Director from February 2021
BSc
Bernie has worked across many minerals although predominantly in US coal
for more than 40 years. In more recent times he has assumed executive
management positions in some very large and significant producers of coal in
the United States including: President and CEO of Xinergy Ltd producing up
to 3Mtpa of metallurgical and thermal coal; Chief Operating Officer of
Appalachian Fuels, LLC managing a workforce of 600 employees and
producing 8Mtpa of metallurgical and thermal coal from five surface mines and
three underground mines; and Vice President of Technical Services and
Business Development of AEI Resources, Inc which operated surface and
underground coal mines producing in excess of 54Mtpa.
Annual Report | 30 June 2021 | | Page 8 of 92
None
None
Other current
directorships
Former directorships
(last 3 years):
Special
responsibilities
Interests in shares: 500,000 held indirectly
Interests in
performance rights:
Interests in options Nil
500,000 held directly
None
Name:
Title:
Qualifications:
Experience and
expertise:
Jonathan Reynolds
Finance Director
B.Com (Hons), CA, F Fin
Jonathan is a chartered accountant with more than 25 years’ experience
across many sectors spent mostly in financial management roles. Most
recently, he has been finance director of a resource investment house,
managing investments across a range of commodities, including coal. Prior to
that he held the position of chief financial officer with a number of listed entities
and before that was a senior manager with an international firm of chartered
accountants. He is a member of Chartered Accountants Australia and New
Zealand, a fellow of Financial Services Institute of Australia and holds a
Bachelor of Commerce (Honours) degree. He was appointed to the Board on
11 August 2016.
None
Director of MCB Resources Limited (ASX: MCB)
Other current
directorships:
Former directorships
(last 3 years):
Special
responsibilities:
Interests in shares: 490,000 ordinary shares held directly
Interests in options: 550,000 options held directly
None
'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships in all other
types of entities, unless otherwise stated.
'Former directorships (in the last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and
excludes directorships in all other types of entities, unless otherwise stated.
Company secretary Jonathan Reynolds
Information on Jonathan Reynolds is included in 'Information on directors' above.
Meetings of directors
The number of meetings of the Company's Board of Directors ('the Board') held during the year ended
30 June 2021, and the number of meetings attended by each director were:
Mark Gray
Malcolm Carson
Larry Cook
Bernie Mason
Jonathan Reynolds
Attended
4
4
4
2
4
Held
4
4
4
2
4
Held: represents the number of meetings held during the time the director held office.
The roles of the Remuneration and Nomination Committee and Audit and Risk Committee are
performed by the full Board.
Annual Report | 30 June 2021 | | Page 9 of 92
Remuneration report (audited)
The remuneration report, which has been audited, outlines the director and executive remuneration
arrangements for the consolidated entity and the Company, in accordance with the requirements of the
Corporations Act 2001 and its Regulations.
The remuneration report is set out under the following main headings:
•
•
•
•
Principles used to determine the nature and amount of remuneration
Details of remuneration
Share-based compensation
Additional disclosures relating to key management personnel
Principles used to determine the nature and amount of remuneration
The objective of the consolidated entity's and Company's executive reward framework is to ensure
reward for performance is competitive and appropriate for the results delivered. The framework aligns
executive reward with the achievement of strategic objectives and the creation of value for
shareholders, and conforms with the market best practice for delivery of reward. The Board of Directors
('the Board') ensures that executive reward satisfies the following key criteria for good reward
governance practices:
•
•
•
•
competitiveness and reasonableness
acceptability to shareholders
performance linkage / alignment of executive compensation
transparency
The Board is responsible for determining and reviewing remuneration arrangements for Directors and
executives. The performance of the consolidated entity and Company depends on the quality of its
directors and executives. The remuneration philosophy is to attract, motivate and retain high
performance and high quality personnel.
Alignment to shareholders' interests:
•
•
has economic profit as a core component of plan design
focuses on sustained growth in shareholder wealth and delivering constant or increasing return
on assets
attracts and retains high calibre executives
•
Alignment to program participants' interests:
•
•
•
rewards capability and experience
reflects competitive reward for contribution to growth in shareholder wealth
provides a clear structure for earning rewards
In accordance with best practice corporate governance, the structure of non-executive director and
executive remunerations are separate.
Non-executive directors’ remuneration
Fees and payments to non-executive directors reflect the demands which are made on, and the
responsibilities of, the directors. Non-executive directors receive a fixed fee for time, commitment and
responsibilities and may be paid remuneration as the directors determine where the director performs
services outside the scope of the ordinary duties of the director. Non-executive directors may also be
paid expenses properly incurred in attending meetings or otherwise in connection with the Company’s
business.
The Company’s constitution provides that the non-executive directors as a whole may be paid or
provided fees or other remuneration for their services as a director of the Company, the total amount or
value of which must not exceed $500,000 (excluding mandatory superannuation) per annum or such
other maximum amount periodically determined by the Company in a general meeting.
Fees for non-executive directors are not linked to individual performance. Given the Company is at an
early stage of development and the financial restrictions placed on it, the Company may consider it
Annual Report | 30 June 2021 | | Page 10 of 92
appropriate to issue individual options to non-executive directors, subject to obtaining relevant
shareholder approvals.
Executive remuneration
The consolidated entity and Company aim to reward executives with a level and mix of remuneration
based on their position and responsibility, which is both fixed and variable.
The executive remuneration and reward framework has four components:
•
•
•
•
base pay and non-monetary benefits
short-term performance incentives
share-based payments
other remuneration such as superannuation and long service leave
The combination of these comprises the executive's total remuneration.
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits are reviewed
annually by the Board, based on individual and business unit performance, the overall performance of
the consolidated entity and comparable market remuneration.
Executives can receive their fixed remuneration in the form of cash or other fringe benefits (for example
motor vehicle benefits) where it does not create any additional costs to the consolidated entity and adds
additional value to the executive.
The short-term incentives ('STI') include bonus arrangements as may be approved by the Board.
The long-term incentives ('LTI') includes long service leave and share-based payments.
Consolidated entity performance and link to remuneration
There is no link between the consolidated entity's performance and remuneration.
Use of remuneration consultants
During the financial year ended 30 June 2021, the Company did not engage remuneration consultants
to review its existing remuneration policies and provide recommendations on how to improve both the
short-term incentives ('STI') and long-term incentives ('LTI') programs of the Company and consolidated
entity.
Voting and comments made at the Company's 2020 Annual General Meeting ('AGM')
At the last AGM, the shareholders voted to adopt the remuneration report for the year ended 30 June
2020. The Company did not receive any specific feedback at the AGM regarding its remuneration
practices.
Annual Report | 30 June 2021 | | Page 11 of 92
Details of remuneration
Amounts of remuneration
Details of the remuneration of the directors and key management personnel are set out in the following
tables. Key management personnel are defined as those who have the authority and responsibility for
planning, directing and controlling the major activities of the consolidated entity.
Short-term benefits
Post-
employment
benefits
Cash
salary and
fees
$
Bonus
$
Non-
monetary
$
Super-
annuation
$
Long-
term
benefit
s
Long
service
leave
$
Share-
based
payments
Equity-
settled
$
2021
Non-Executive Directors:
Malcolm Carson
Larry Cook
Bernie Mason
Executive Directors:
Mark Gray
Jonathan Reynolds
Executives:
Dan Farmer1
Amon Mahon2
Angela Waterman3
40,500
224,017
88,943
-
-
-
-
-
-
410,668 120,000
40,000
237,500
36,346
-
272,940
133,918
212,534
-
-
-
1,621,020 160,000
-
20,337
-
56,683
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
$
40,500
224,017
88,943
567,014
277,500
-
-
-
-
-
272,940
-
154,255
-
-
212,534
- 1,837,703
1 Chief Operating Officer Telkwa Coal Ltd
2 Chief Operating Officer New Elk Coal Company, LLC (since December 2020)
3 Environmental and Government Telkwa Coal Ltd
Short-term benefits
Post-
employment
benefits
Cash
salary and
fees
$
2020
Non-Executive Directors:
Malcolm Carson
Larry Cook
31,500
128,731
Bonus
$
Non-
monetary
$
Super-
annuation
$
-
-
-
-
Executive Directors:
Mark Gray
Jonathan Reynolds
Executives:
Dan Farmer*
Angela Waterman+
301,971 29,042
157,500 15,000
36,241
-
213,507 20,334
166,061 15,815
999,270 80,191
-
-
36,241
* Chief Operating Officer Telkwa Coal Ltd
+ Environmental and Government Telkwa Coal Ltd
Long-
term
benefits
Long
service
leave
$
Share-
based
payments
Equity-
settled
$
Total
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
33,479
650,000
64,979
778,731
133,914
66,957
501,168
239,457
53,566
-
287,407
181,876
937,916 2,053,618
Annual Report | 30 June 2021 | | Page 12 of 92
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Non-Executive Directors:
Malcolm Carson
Larry Cook
Bernie Mason
Executive Directors:
Mark Gray
Jonathan Reynolds
Executives:
Dan Farmer
Amon Mahon
Angela Waterman
Share-based compensation
Fixed remuneration
2021
2020
At risk - STI
2021
2020
At risk - LTI
2021
2020
100%
100%
100%
77%
86%
100%
100%
48%
17%
-%
67%
66%
74%
91%
-%
-%
-%
23%
14%
-%
-%
-%
-%
-%
6%
6%
7%
9%
-%
-%
-%
-%
-%
-%
-%
52%
83%
-%
27%
28%
19%
-%
Issue of performance rights
During the year ended 30 June 2020, 1 million performance rights (post consolidation) were granted to
Larry Cook in four separate classes, B through E. The performance rights will automatically vest and
convert into Shares on a one for one basis upon satisfaction of milestones, all relating to the New Elk
Coal Mine. A performance right will lapse upon the earlier to occur of: (a) the cessation of the holder's
employment or other engagement with the Company; and (b) the Vesting Condition not being satisfied
on or before the Expiry Date.
Details of performance rights issued are summarised below:
• 250,000 Class B Performance Rights which vested upon Completion of the Mine acquisition;
• 250,000 Class C Performance Rights which vested on completion of the commissioning of the
Mine and commencement of production;
• 250,000 Class D Performance Rights which will vest on the sale of the first 500,000 metric
tonnes of coal from the Mine, expiring 2 December 2022; and
• 250,000 Class E Performance Rights which will vest on the sale of the second 500,000 metric
tonnes of coal from the Mine, expiring 2 December 2023.
During the year ended 30 June 2020, 1 million performance rights (post consolidation) were granted to
each Bernie Mason and Amon Mahon (prior to their being appointed a director and a key management
personnel respectively) in four separate classes, A, B D and E. The performance rights will automatically
vest and convert into Shares on a one for one basis upon satisfaction of milestones, all relating to the
New Elk Coal Mine. A performance right will lapse upon the earlier to occur of: (a) the cessation of the
holder's employment or other engagement with the Company; and (b) the Vesting Condition not being
satisfied on or before the Expiry Date.
Details of performance rights issued are summarised below:
• 250,000 Class A Performance Rights which vested upon shareholder approval;
• 250,000 Class B Performance Rights which vested upon Completion of the Mine acquisition;
• 250,000 Class D Performance Rights which will vest on the sale of the first 500,000 metric
tonnes of coal from the Mine, expiring 2 December 2022; and
• 250,000 Class E Performance Rights which will vest on the sale of the second 500,000 metric
tonnes of coal from the Mine, expiring 2 December 2023.
There were no shares issued to directors and other key management personnel as part of
compensation during the year ended 30 June 2021.
Annual Report | 30 June 2021 | | Page 13 of 92
Options
The terms and conditions of each grant of options over ordinary shares affecting remuneration of
directors and other key management personnel in this financial year or future reporting years are as
follows:
During the year ended 30 June 2020, 1,290,000 options (post consolidation) were granted to directors
and other key management personnel as part of compensation.
Grant date
Vesting and
exercisable date
Expiry date
Exercise
price
Fair value per
option at grant date
3 December 2019
See table below
3 December 2024
$1.40
$0.223
Vesting and exercisable date
M Gray
M Carson
J Reynolds
D Farmer
a
100,000
-
50,000
40,000
190,000
b
100,000
-
50,000
40,000
190,000
c
500,000
-
50,000
40,000
190,000
3 Dec
2020
100,000
50,000
50,000
40,000
240,000
3 Dec
2021
100,000
50,000
50,000
40,000
240,000
3 Dec
2022
100,000
50,000
50,000
40,000
Total
600,000
150,000
300,000
240,000
240,000 1,290,000
a - The date of the commissioning of the New Elk Mine and commencement of production.
b - The date of the sale of the first 500,000 metric tonnes of coal from the New Elk Mine.
c - The date of the sale of the second 500,000 metric tonnes of coal from the New Elk Mine.
No performance rights or options were granted to directors and other key management personnel as
part of compensation during the year ended 30 June 2021.
Options granted carry no dividend or voting rights.
Values of performance rights granted, vested and lapsed for directors and other key management
personnel as part of compensation during the year ended 30 June 2021 are set out below:
Value of
performance
rights
granted
during the
year
$
-
-
-
Value of
performance
rights vested
during the
year
$
325,000
-
-
Value of
performance
rights
lapsed
during the
year
$
-
-
-
Remuneration
consisting of
performance
rights for the
year
%
-
-
-
Name
Larry Cook
Bernie Mason*
Amon Mahon*
* During the period engaged as a director or key management personnel
Annual Report | 30 June 2021 | | Page 14 of 92
Values of options over ordinary shares granted, vested and lapsed for directors and other key
management personnel as part of compensation during the year ended 30 June 2021 are set out below:
Value of
options
granted
during the
year
$
-
-
-
-
-
Value of
options
vested
during the
year
$
54,884
16,283
35,127
22,978
5,123
Value of
options
lapsed
during the
year
$
-
-
-
-
-
Remuneration
consisting of
options for the
year
%
-
-
-
-
-
Name
Mark Gray
Malcolm Carson
Jonathan Reynolds
Dan Farmer
Angela Waterman
Values of performance rights granted, vested and lapsed for directors and other key management
personnel as part of compensation during the year ended 30 June 2020 are set out below:
Value of
performance
rights
granted
during the
year
$
650,000
Value of
performance
rights vested
during the
year
$
-
Value of
performance
rights
lapsed
during the
year
$
-
Remuneration
consisting of
performance
rights for the
year
%
83%
Name
Larry Cook
Values of options over ordinary shares granted, vested and lapsed for directors and other key
management personnel as part of compensation during the year ended 30 June 2020 are set out below:
Value of
options
granted
during the
year
$
133,915
33,479
66,957
53,566
-
Value of
options
vested
during the
year
$
10,246
5,123
6,404
5,123
5,123
Value of
options
lapsed
during the
year
$
-
-
-
-
-
Remuneration
consisting of
options for the
year
%
27%
52%
28%
19%
-
Name
Mark Gray
Malcolm Carson
Jonathan Reynolds
Dan Farmer
Angela Waterman
Service agreements
Key management personnel have no entitlements to termination payments in the event of removal for
misconduct.
Annual Report | 30 June 2021 | | Page 15 of 92
Additional disclosures relating to key management personnel
In accordance with Class Order 14/632, issued by the Australian Securities and Investments
Commission, relating to 'Key management personnel equity instrument disclosures', the following
disclosure relates only to equity instruments in the Company or its subsidiaries.
Performance
rights
Name
Larry Cook
Bernie Mason
Amon Mahon
Vesting
Grant date
date
3 Dec 2019 Note 1
3 Dec 2019 Note 2
3 Dec 2019 Note 2
Value of
rights
Number of
granted
rights
granted
$
1,000,000 650,000 325,000
1,000,000 650,000 325,000
1,000,000 650,000 325,000
Value of
rights
vested
$
Number of
rights
lapsed
-
-
-
Value of
rights
lapsed
$
-
-
-
Note 1: The performance rights vest as follows:
• 250,000 Class B Performance Rights vested upon completion of the New Elk Mine acquisition;
• 250,000 Class C Performance Rights vested on completion of the commissioning of the New
Elk Mine and commencement of production;
• 250,000 Class D Performance Rights vest on the sale of the first 500,000 metric tonnes of coal
from the New Elk Mine; and
• 250,000 Class E Performance Rights vest on the sale of the second 500,000 metric tonnes of
coal from the New Elk Coal Mine.
Note 2: The performance rights vest as follows:
• 250,000 Class A Performance Rights vested upon shareholder approval;
• 250,000 Class B Performance Rights vested upon completion of the New Elk Mine acquisition;
• 250,000 Class D Performance Rights vest on the sale of the first 500,000 metric tonnes of coal
from the New Elk Mine; and
• 250,000 Class E Performance Rights vest on the sale of the second 500,000 metric tonnes of
coal from the New Elk Coal Mine.
Options
Name
M Gray
M Gray
M Carson
M Carson
J Reynolds
J Reynolds
D Farmer
D Farmer
A Waterman
Vesting
Grant date
date
6 Dec 2017 Note 1
3 Dec 2019 Note 2
6 Dec 2017 Note 1
3 Dec 2019 Note 2
6 Dec 2017 Note 1
3 Dec 2019 Note 2
6 Dec 2017 Note 1
3 Dec 2019 Note 2
6 Dec 2017 Note 1
Number of
options
granted
Value of
options
granted
$
Value of
options
vested
$
400,000
40,985
600,000 133,915
15,369
150,000
33,479
150,000
25,616
250,000
66,957
300,000
30,739
300,000
53,566
240,000
30,739
300,000
10,426
-
10,246
-
6,404
-
10,246
-
10,246
Number of
options
lapsed
-
-
-
-
-
-
-
-
-
Value of
options
lapsed
$
-
-
-
-
-
-
-
-
-
Note 1: The options vest on the dates set out in the following table:
Annual Report | 30 June 2021 | | Page 16 of 92
Vesting and exercisable date
M Gray
M Carson
J Reynolds
D Farmer
A Waterman
a
-
-
-
50,000
50,000
100,000
b
-
-
-
50,000
50,000
100,000
c
100,000
-
62,500
50,000
50,000
262,500
d
100,000
-
62,500
50,000
50,000
262,500
6 Dec
2018
6 Dec
2019
- 100,000
50,000
62,500
50,000
50,000
50,000 312,500
50,000
-
-
-
6 Dec
2020
100,000
50,000
62,500
50,000
50,000
Total
400,000
150,000
250,000
300,000
300,000
312,500 1,400,000
a - The date the Tenas Project baseline studies are completed.
b - The date the Tenas Project affected party agreements are completed.
c - The date the Tenas Project mining permit applications are filed.
d - The date the Tenas Project mining permits are issued.
Note 2: The options vest on the dates set out in the following table:
Vesting and exercisable date
M Gray
M Carson
J Reynolds
D Farmer
a
100,000
-
50,000
40,000
190,000
b
100,000
-
50,000
40,000
190,000
c
100,000
-
50,000
40,000
190,000
3 Dec
2020
100,000
50,000
50,000
40,000
240,000
3 Dec
2021
100,000
50,000
50,000
40,000
240,000
Total
3 Dec
2022
100,000
50,000
50,000
40,000
600,000
150,000
300,000
240,000
240,000 1,290,000
a The date of the commissioning of the New Elk Mine and commencement of production.
b The date of the sale of the first 500,000 metric tonnes of coal from the New Elk Mine.
c The date of the sale of the second 500,000 metric tonnes of coal from the New Elk Mine.
Shareholding
The number of shares in the Company held during the financial year by each director and other
members of key management personnel of the consolidated entity, including their personally related
parties, is set out below (post consolidation):
Ordinary shares
Mark Gray
Malcolm Carson
Larry Cook
Bernie Mason
Jonathan Reynolds
Amon Mahon
Dan Farmer
Angela Waterman
Balance at
the start of
the year /
appointment
Received as
part of
remuneration
5,025,466
-
-
500,000
363,400
500,000
503,927
-
6,892,793
-
-
250,000
-
-
-
-
-
250,000
Additions
574,994
17,514
272,878
-
126,600
-
120,278
50,652
1,162,916
Disposals/
other
Balance
at the end of
the year
-
-
-
-
-
-
-
-
5,600,460
17,514
522,878
500,000
490,000
500,000
624,205
50,652
8,305,709
Annual Report | 30 June 2021 | | Page 17 of 92
Performance rights holding
The number of performance rights in the Company held during the financial year by each director and
other members of key management personnel of the consolidated entity, including their personally
related parties, is set out below (post consolidation):
Balance at
the start of
the year /
appointment
Received as
part of
remuneration
Disposals/
vested /
other
Balance
at the end of
the year
Additions
Performance rights
Mark Gray
Malcolm Carson
Larry Cook
Bernie Mason
Jonathan Reynolds
Amon Mahon
Dan Farmer
Angela Waterman
-
-
1,000,000
500,000
-
500,000
-
-
2,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(500,000)
-
-
-
-
-
(500,000)
-
-
500,000
500,000
-
500,000
-
-
1,500,000
Option holding
The number of options over ordinary shares in the Company held during the financial year by each
director and other members of key management personnel of the consolidated entity, including their
personally related parties, is set out below (post consolidation):
Options over ordinary
shares
Mark Gray
Malcolm Carson
Larry Cook
Bernie Mason
Jonathan Reynolds
Amon Mahon
Dan Farmer
Angela Waterman
Balance at the
start of the
year /
appointment Granted
Exercised
Expired/
forfeited/
other
Balance at the
end of the
year
1,000,000
300,000
-
-
550,000
-
540,000
300,000
2,690,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,000,000
300,000
-
-
550,000
-
540,000
300,000
2,690,000
Options over ordinary shares
Mark Gray
Malcolm Carson
Larry Cook
Bernie Mason
Jonathan Reynolds
Amon Mahon
Dan Farmer
Angela Waterman
Vested and
exercisable
Unvested and
unexercisable
Balance at the
end of the year
400,000
200,000
-
-
225,000
-
230,000
150,000
1,205,000
600,000
100,000
-
-
325,000
-
310,000
150,000
1,485,000
1,000,000
300,000
-
-
550,000
-
540,000
300,000
2,690,000
Annual Report | 30 June 2021 | | Page 18 of 92
Loans to key management personnel and their related parties
There were no loans made to key management personnel and their related parties during the financial
year ended 30 June 2021.
Other transactions with key management personnel and their related parties
Consultancy fees paid to related parties, included in remuneration disclosures above
Gray Corporate Law Ltd, a related party of Mark Gray, totalling $305,416
•
Gray Corporate Ltd, a related party of Mark Gray, totalling $225,252
•
Mineral Resource Consultants Pty Ltd, a related party of Malcom Carson, totalling $40,500
•
Cook Consulting Services, a related party of Larry Cook, totalling $224,017
•
J Reynolds CA Pty Ltd, a related party of Jonathan Reynolds, totalling $277,500
•
Coalsense Consulting Inc, a related party of Dan Farmer, totalling $272,940
•
Expenses reimbursements paid to related parties:
•
•
•
Gray Corporate Law Ltd, a related party of Mark Gray, totalling $91,307
Cook Consulting Services, a related party of Larry Cook, totalling $4,678
J Reynolds CA Pty Ltd, a related party of Jonathan Reynolds, totalling $23,313
This concludes the remuneration report, which has been audited
Performance rights
Unissued ordinary shares of Allegiance Coal Limited subject to performance rights at the date of this
report are as follows (post consolidation):
Grant date
Expiry date
Exercise price
3 December 2019
Note 1
$-
Number
1,500,000
Note 1:
• 750,000 Class D Performance Rights which will vest on the sale of the first 500,000 metric
tonnes of coal from the New Elk Mine, expiring 2 December 2022; and
• 750,000 Class E Performance Rights which will vest on the sale of the second 500,000 metric
tonnes of coal from the New Elk Mine, expiring 2 December 2023.
No person entitled to exercise the performance rights had or has any right by virtue of the performance
right to participate in any share issue of the Company or of any other body corporate.
Shares under option
Unissued ordinary shares of Allegiance Coal Limited under option at the date of this report are as follows
(post consolidation):
Grant date
6 December 2017
3 December 2019
3 March 2021
11 May 2021
5 August 2021
Expiry date
Exercise price
Number under option
6 December 2022
3 December 2024
3 March 2024
11 May 2024
5 August 2024
$0.375
$1.40
$0.50
$0.5625
$0.8375
1,310,000
1,290,000
1,125,000
1,033,333
1,343,283
No person entitled to exercise the options had or has any right by virtue of the option to participate in
any share issue of the Company or of any other body corporate.
Annual Report | 30 June 2021 | | Page 19 of 92
Shares issued on the exercise of options
There were no ordinary shares of Allegiance Coal Limited issued on the exercise of options during the
year ended 30 June 2021 and up to the date of this report.
Indemnity and insurance of officers
The Company has indemnified the directors and executives of the Company for costs incurred, in their
capacity as a director or executive, for which they may be held personally liable, except where there is
a lack of good faith.
During the financial year, the Company paid a premium in respect of a contract to insure the directors
and executives of the Company against a liability to the extent permitted by the Corporations Act 2001.
The contract of insurance prohibits disclosure of the nature of liability and the amount of the premium.
Indemnity and insurance of auditor
The Company has not, during or since the financial year, indemnified or agreed to indemnify the auditor
of the Company or any related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect of a contract to insure the
auditor of the Company or any related entity.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a
party for the purpose of taking responsibility on behalf of the Company for all or part of those
proceedings.
Non-audit services
There were no non-audit services provided during the financial year by the auditor.
Officers of the Company who are former audit directors of SCS Audit & Corporate Services Pty
Ltd
There are no officers of the Company who are former audit directors of SCS Audit & Corporate Services
Pty Ltd.
Auditor’s independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations
Act 2001 is set out on page 80.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the
Corporations Act 2001.
On behalf of the directors
Mark Gray
Chairman
28 September 2021
Sydney
Annual Report | 30 June 2021 | | Page 20 of 92
Corporate governance statement
30 June 2021
The Board of Allegiance Coal Limited (‘Board’) is committed to ensuring that the Company’s obligations
and responsibilities to its various stakeholders are fulfilled through its corporate governance practices.
The directors of the Company (‘Directors’, being either Non-Executive Directors or Executive Directors)
undertake to perform their duties with honesty, integrity, care and due diligence, to act in good faith in
the best interests of the Company in a manner that reflects the highest standards of corporate
governance.
The Company’s Board are committed to a high standard of corporate governance practices, ensuring
that the Company complies with the Corporations Act 2001 (Cth), ASX Listing Rules, Company
Constitution and other applicable laws and regulations.
Corporate Governance Compliance
The Company has followed the 4th edition of the ASX Corporate Governance Council’s Principles and
Recommendations (‘Principles and Recommendations’) where the Board has considered the
recommendations to be an appropriate benchmark for its corporate governance practices.
Where, after due consideration, the Company’s corporate governance practices depart from a
recommendation, the Board has offered full disclosure and reason for adoption of its own practice, in
compliance with the “if not, why not” regime.
The 2021 Corporate Governance Statement is dated at 28 September 2021 and reflects the corporate
governance practices in place throughout the year ended 30 June 2021. A description of the Company’s
current corporate governance practices is set out in the Company’s Corporate Governance Manual
which can be viewed at www.allegiancecoal.com.au
This statement was approved by the Board on 28 September 2021.
Annual Report | 30 June 2021 | | Page 21 of 92
ASX CORPORATE GOVERNANCE COUNCIL’S PRINCIPLES AND RECOMMENDATIONS
Principle Recommendation
Conform
Disclosure
Principle
1:
1.1
1.2
Yes
Yes
Lay solid foundation for
management and oversight
A listed entity should have and
disclose a board charter setting out:
(a) the respective roles and
responsibilities of its board and
management; and
(b) those matters expressly
reserved to the board and those
delegated to management.
A listed entity should:
(a) undertake appropriate checks
before appointing a person, or
putting forward to security holders a
candidate for election, as a
Director; and
(b) provide security holders with all
material information in its
possession relevant to a decision
on whether or not to elect or re-
elect a Director.
1.3
1.4
1.5
A listed entity should have a written
agreement with each Director and
senior executive setting out the
terms of their appointment.
Yes
Yes
Does not
comply. Refer
to “Diversity”
in the
Corporate
Governance
Manual
The Company Secretary of a listed
entity should be accountable
directly to the Board, through the
Chair, on all matters to do with the
proper functioning of the Board.
A listed entity should:
(a) have and disclose a diversity
policy;
(b) through its board or a
committee of the board set
measurable objectives for
achieving gender diversity in the
composition of its board, senior(c)
disclose in relation to each
reporting period:
executives and workforce
generally; and
The Board Charter details the functions and responsibilities of
the Board and management, including matters reserved for the
Board. The Board Charter is included in the Corporate
Governance Manual on the Company’s website.
The full Board undertakes the duties that fall to the nomination
committee under the Company’s Nomination Committee Charter,
which is included in the Corporate Governance Manual on the
Company’s website.
The role of the Nomination Committee is to identify and
recommend candidates to fill casual vacancies and to determine
the appropriateness of director nominees for election to the
Board. The Nomination Committee Charter requires the Board to
make appropriate background checks prior to recommending a
candidate for election or re-election as a director. The Board
must identify and recommend candidates only after considering
the necessary and desirable competencies of new Board
members to ensure the appropriate mix of skills and experience
and after an assessment of how the candidate can contribute to
the strategic direction of the Company.
The Nomination Committee Charter also requires the Board to
ensure appropriate background checks are undertaken for all
senior executive candidates.
All material information relevant to whether or not to elect or re-
elect a director is provided to the Company’s shareholders as
part of the Notice of Meeting and explanatory memorandum for
the relevant meeting of shareholders which addresses the
election or re-election of a director.
The Remuneration Committee Charter, which is included in the
Corporate Governance Manual on the Company’s website,
requires the Company to have a written agreement with each
Director and senior executive setting out the terms of their
engagement.
Each Non-Executive Director has signed a letter of appointment.
Each Executive Director has signed an executive service
agreement. Each senior executive has signed an employment
agreement.
The Company Secretary is accountable to the Board, through the
Chair, on all governance matters and reports directly to the Chair
as the representative of the Board. The Company Secretary has
primary responsibility for ensuring that the Board processes and
procedures run efficiently and effectively.
The Company has adopted a Diversity Policy which is included in
the Corporate Governance Manual disclosed on the Company’s
website. The Company recognises that a diverse and talented
workforce is a competitive advantage and encourages a culture
that embraces diversity. The Company does not think that it is
appropriate to state measurable objectives for achieving gender
diversity due to its size and stage of development.
The proportion of women employees in the whole organisation is
< 10% (excluding directors).
There are currently no women in senior executive positions or on
the Board
Annual Report | 30 June 2021 | | Page 22 of 92
Principle Recommendation
Conform
Disclosure
(1) the measurable objectives
set for that period to achieve
gender diversity;
(2) the entity’s progress towards
achieving those objectives; and
(3) either:
(A) the respective proportions
of men and women on the
board, in senior executive
positions and across the
whole workforce (including
how the entity has defined
“senior executive” for these
purposes); or
(B) if the entity is a “relevant
employer” under the
Workplace Gender Equality
Act, the entity’s most recent
“Gender Equality Indicators”,
as defined in and published
under that Act.
If the entity was in the S&P / ASX
300 Index at the commencement of
the reporting period, the
measurable objective for achieving
gender diversity in the composition
of its board should be to have not
less than 30% of its directors of
each gender within a specified
period.
A listed entity should:
(a) have and disclose a process for
periodically evaluating the
performance of the Board, its
committees and individual
Directors; and
(b) disclose for each reporting
period whether a performance
evaluation has been undertaken in
accordance with that process
during or in respect of that period
A listed entity should:
(a) have and disclose a process for
evaluating the performance of its
senior executives at least once
every reporting period; and
(b) disclose for each reporting
period whether a performance
evaluation has been undertaken in
accordance with that process
during or in respect of that period.
Structure the Board to be effective
and add value
The board of a listed entity should:
(a) have a nomination committee
which:
(1) has at least three members, a
majority of whom are independent
directors; and
(2) is chaired by an independent
director,
and disclose:
Yes
Yes
Yes
Yes
Yes
No
No
1.6
1.7
Principle
2
2.1
The process for periodically evaluating the performance of the
Board, its committees and individual Directors is included in the
Corporate Governance Manual on the Company’s website. It
requires the Chair to conduct performance reviews on an annual
basis.
The Chair has conducted a formal evaluation of the performance
of the Board, its committees and individual Directors for the year
ended 30 June 2021.
The process for periodically evaluating the performance of the
Company’s senior executives is included in the Corporate
Governance Manual on the Company’s website. It requires the
Chair to conduct performance reviews on an ongoing basis. This
evaluation is based on specific criteria, including the business
performance of the Company and its subsidiaries, whether
strategic objectives are being achieved and the development of
management and personnel.
The Chair has conducted an evaluation of the performance of
senior executives for the year ended 30 June 2021.
The Board has decided that, due to the Company’s current stage
of development, no efficiencies will be achieved by establishing a
separate nomination committee. The Board carries out the duties
that would otherwise be undertaken by the nomination
committee, in accordance with the Nomination Committee
Charter, which is included in the Corporate Governance Manual
on the Company’s website. The Board has, for the year ended
30 June 2021 formally considered whether the board has the
appropriate balance of skills, knowledge, experience,
Annual Report | 30 June 2021 | | Page 23 of 92
Principle Recommendation
(3) the charter of the committee;
(4) the members of the committee;
and
(5) as at the end of each reporting
period, the number of times the
committee met throughout the
period and the individual
attendances of the members at
those meetings; or
(b) if it does not have a nomination
committee, disclose that fact and
the processes it employs to
address board succession issues
and to ensure that the board has
the appropriate balance of skills,
knowledge, experience,
independence and diversity to
enable it to discharge its duties and
responsibilities effectively.
A listed entity should have and
disclose a board skills matrix
setting out the mix of skills that the
board currently has or is looking to
achieve in its membership
A listed entity should disclose:
(a) the names of the Directors
considered by the Board to be
independent Directors;
(b) if a Director has an interest,
position, association or relationship
of the type described in Box 2.3 but
the Board is of the opinion that it
does not compromise the
independence of the Director, the
nature of the interest, position,
association or relationship in
question and an explanation of why
the Board is of that opinion; and
(c) the length of service of each
Director.
A majority of the Board of a listed
entity should be independent
Directors.
The chair of the Board of a listed
entity should be an independent
Director and, in particular, should
not be the same person as the
CEO of the entity.
A listed entity should have a
program for inducting new directors
and for periodically reviewing
whether there is a need for existing
directors to undertake professional
development to maintain the skills
and knowledge needed to perform
their role as directors effectively.
Instil a culture of acting lawfully,
ethically and responsibly
A listed entity should articulate and
disclose its values.
2.2
2.3
2.4
2.5
2.6
Principle
3
3.1
Disclosure
independence and diversity to enable it to discharge its duties
and responsibilities effectively
Conform
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
Yes
Yes
The board skills matrix setting out the mix of skills that the board
currently has or is looking to achieve in its membership is
included in the Corporate Governance Manual on the Company’s
website.
The names of the Directors considered by the Board to be
independent Directors is set out in the Directors Report.
Taking into account the Company’s current stage of development
and in an effort to minimize cash remuneration, the Board
considers allocations of performance-based remuneration
(including options or performance rights) does not of itself lead to
a determination that the director is not independent.
The details of performance based remuneration for each director
is set out in the Directors Report.
The Board considers these benefits are not of sufficient
magnitude to affect the relevant directors’ ability to discharge his
duties with an independent mind.
The length of service of each Directors is set out in the Directors
Report.
Following the appointment, in February 2021, of Bernie Mason
as a Director, the majority of the board are independent
Directors. For the period from July 2020 to February 2021, half
the board comprised independent Directors.
Mr Mark Gray fulfills the role of both Chairman and Managing
Director of the Company. Taking into account the Company’s
current stage of development, the Board considers the benefits
to be obtained from Mr Gray fulfilling both these roles outweighs
the potential risks.
Induction and professional development form part of the
responsibilities of the Nomination Committee as noted in the
Nomination Committee Charter, which is included in the
Corporate Governance Manual on the Company’s website. The
Company Secretary is available to assist with the process of new
Directors familiarising themselves with the Company.
Professional development requirements are addressed by the
Board on at least an annual basis.
The Company has formulated a general Code of Conduct and a
Code of Conduct for Directors and Executives which all
employees and directors are expected, at a minimum, to follow.
The Codes are included in the Corporate Governance Manual
Annual Report | 30 June 2021 | | Page 24 of 92
Principle Recommendation
Conform
3.2
3.3
3.4
Principle
4
4.1
Yes
Yes
Yes
Yes
No
No
Yes
No
No
Yes
Yes
No
Yes
A listed entity should:
(a) have and disclose a code of
conduct for its directors, senior
executives and employees; and
(b) ensure that the board or a
committee of the board is informed
of any material breaches of that
code.
A listed entity should:
(a) have and disclose a
whistleblower policy; and
(b) ensure that the board or a
committee of the board is informed
of any material incidents reported
under that policy.
A listed entity should:
(a) have and disclose an anti-
bribery and corruption policy; and
(b) ensure that the board or
committee of the board is informed
of any material breaches of that
policy.
Safeguard the integrity of corporate
reports
The board of a listed entity should:
(a) have an audit committee which:
(1) has at least three members, all
of whom are non-executive
directors and a majority of whom
are independent directors; and
(2) is chaired by an independent
director, who is not the chair of the
board,
and disclose:
(3) the charter of the committee;
(4) the relevant qualifications and
experience of the members of the
committee; and
(5) in relation to each reporting
period, the number of times the
committee met throughout the
period and the individual
attendances of the members at
those meetings; or
(b) if it does not have an audit
committee, disclose that fact and
the processes it employs that
independently verify and safeguard
the integrity of its corporate
reporting, including the processes
for the appointment and removal of
the external auditor and the rotation
of the audit engagement partner.
4.2
The Board of a listed entity should,
before it approves the entity’s
financial statements for a financial
Yes
Disclosure
on the Company’s website.
The Company has formulated a general Code of Conduct and a
Code of Conduct for Directors and Executives which all
employees and directors are expected, at a minimum, to follow.
The Codes are included in the Corporate Governance Manual on
the Company’s website.
The Code of Conduct states that any breach of the Code is to be
reported directly to the Managing Director or under the Whistle-
blower Policy, as appropriate, with any material breach to be
reported to the full Board.
The Company has formulated a Whistle-blower Policy, which is
included in the Corporate Governance Manual on the Company’s
website. The Audit Committee is responsible for carrying out the
processes under the policy.
The Policy states that the Committee must report the results of
any material incidents to the Board.
The Company has formulated a general Code of Conduct and a
Code of Conduct for Directors and Executives both of which
include requirements to disclose conflicts, promote the highest
standard of ethics and integrity and guidelines in relation to
giving and receiving gifts. The Company does not think that it is
appropriate to formulate a separate anti-bribery and corruption
policy due to its stage of development.
The Code of Conduct states that any breach of the Code is to be
reported directly to the Managing Director or under the Whistle-
blower Policy, as appropriate, with any material breach to be
reported to the full Board.
The Board has decided that, due to the Company’s current stage
of development, no efficiencies will be achieved by establishing a
separate audit committee. The Board carries out the duties that
would otherwise be undertaken by the audit committee, in
accordance with the Audit Committee Charter, which is included
in the Corporate Governance Manual on the Company’s website.
The relevant qualifications and experience of the Board is set out
in the Directors’ Report
The Board has, for the year ended 30 June 2021, relied on the
declarations made by the Chief Executive and Chief Financial
Officers received in accordance with the requirements of the
Corporations Act, and relied on the independent external audit
function to verify and safeguard the integrity of its corporate
reporting.
The processes for the appointment and removal of the external
auditor and the rotation of the audit engagement partner is set
out in the Policy On Selection, Appointment And Rotation Of
External Auditors, which is included in the Corporate
Governance Manual on the Company’s website.
Under the Company’s Risk Management Policy, which is
included in the Corporate Governance Manual on the Company’s
website, the Chief Executive and Chief Financial Officers will
Annual Report | 30 June 2021 | | Page 25 of 92
Principle Recommendation
Conform
period, receive from its CEO and
CFO a declaration that, in their
opinion, the financial records of the
entity have been properly
maintained and that the financial
statements comply with the
appropriate accounting standards
and give a true and fair view of the
financial position and performance
of the entity and that the opinion
has been formed on the basis of a
sound system of risk management
and internal control which is
operating effectively.
A listed entity should disclose its
process to verify the integrity of any
periodic corporate report it releases
to the market that is not audited or
reviewed by an external auditor.
Make timely and balanced
disclosure
A listed entity should have and
disclose a written policy for
complying with its continuous
disclosure obligations under listing
rule 3.1.
A listed entity should ensure that its
board receives copies of all
material market announcements
promptly after they have been
made.
A listed entity that gives a new and
substantive investor or analyst
presentation should release a copy
of the presentation materials on the
ASX Market Announcements
Platform ahead of the presentation.
Respect the rights of security
holders
A listed entity should provide
information about itself and its
governance to investors via its
website.
A listed entity should have an
investor relations program that
facilitates effective two-way
communication with investors.
A listed entity should disclose how
it facilitates and encourages
participation at meetings of security
holders.
Yes
Yes
Yes
Yes
Yes
Yes
Yes
A listed entity should ensure that all
substantive resolutions at a
meeting of security holders are
Yes
4.3
Principle
5
5.1
5.2
5.3
Principle
6
6.1
6.2
6.3
6.4
Disclosure
provide a written declaration of assurance that in their opinion,
the financial records of the Company for the relevant reporting
period have been properly maintained, comply with appropriate
accounting standards and give a true and fair view of the
financial position and performance of the Company and has
been formed on the basis of a sound system of risk management
and internal control which is operating effectively.
The Company provides quarterly updates of the Company’s
progress across all areas of the business, including select
financial information. The Managing Director is responsible for all
such updates. Individual components are also reviewed by
senior management with responsibility for the specific
component subject matter. The financial information is compiled
by the Chief Financial Officer in accordance with generally
accepted accounting practices.
The Company has adopted a Continuous Disclosure Policy,
which is included in the Corporate Governance Manual on the
Company’s website. The Policy is designed to guide compliance
with ASX Listing Rules disclosure requirements, and to ensure
all Directors, senior executives and employees of the Company
understand their responsibilities under the Policy.
The Board Charter, which is included in the Corporate
Governance Manual on the Company’s website, delegates to the
Company Secretary responsibility for ensuring all market
announcements are provided to all directors promptly after
release
The Company has adopted a Continuous Disclosure Policy,
which is included in the Corporate Governance Manual on the
Company’s website. The Policy stipulates that the Company
should release a copy of the presentation materials on the ASX
Market Announcements Platform ahead of the presentation.
The Company’s website provides information about the
Company, its projects, its Board and management and
governance. It is a platform to disclose ASX announcements of
material information and periodic reports, notices and
presentations.
The Company has a Shareholder Communication Policy, which
is included in the Corporate Governance Manual on the
Company’s website.
The company website provides a mechanism for shareholders to
contact the Company via email.
The Company has a Shareholder Communication Policy, which
is included in the Corporate Governance Manual on the
Company’s website. The Policy specifically encourages full
participation of shareholders at the Annual General Meeting to
ensure a high level of accountability and identification with the
Company’s strategy and goals and outlines the various ways in
which the Company communicates with shareholders.
In accordance with ASX guidance, all Listing Rule resolutions
and all substantive resolutions are decided by a poll rather than
by a show of hands.
Annual Report | 30 June 2021 | | Page 26 of 92
Principle Recommendation
Conform
Disclosure
6.5
Principle
7
7.1
7.2
7.3
7.4
decided by a poll rather than by a
show of hands.
A listed entity should give security
holders the option to receive
communications from, and send
communications to, the entity and
its security registry electronically.
Recognise and manage risk
The board of a listed entity should:
(a) have a committee or
committees to oversee risk, each of
which:
(1) has at least three members, a
majority of whom are independent
directors; and
(2) is chaired by an independent
director,
and disclose:
(3) the charter of the committee;
(4) the members of the committee;
and
(5) as at the end of each reporting
period, the number of times the
committee met throughout the
period and the individual
attendances of the members at
those meetings; or
(b) if it does not have a risk
committee or committees that
satisfy (a) above, disclose that fact
and the processes it employs for
overseeing the entity’s risk
management framework.
The board or a committee of the
board should:
(a) review the entity’s risk
management framework at least
annually to satisfy itself that it
continues to be sound and that the
entity is operating with due regard
to the risk appetite set by the
board; and
(b) disclose, in relation to each
reporting period, whether such a
review has taken place.
A listed entity should disclose:
(a) if it has an internal audit
function, how the function is
structured and what role it
performs; or
(b) if it does not have an internal
audit function, that fact and the
processes it employs for evaluating
and continually improving the
effectiveness of its governance, risk
management and internal control
processes
A listed entity should disclose
whether it has any material
Yes
No
Yes
Yes
No
Yes
Yes
Shareholders can register with the Company to receive email
notifications of when an announcement is made by the Company
to ASX, including the release of annual, half-yearly and quarterly
reports. Further, the Company provides information through its
website enabling security holders to email the Company. The
share registrar also provides the ability to email the share
registrar and to receive documents by email from the share
registrar.
The Board has decided that, due to the Company’s current stage
of development, no efficiencies will be achieved by establishing a
separate risk management committee. The Board carries out the
duties that would otherwise be undertaken by the risk
management committee, in accordance with the Risk
Management Committee Charter, which is included in the
Corporate Governance Manual on the Company’s website.
The Board recognises its responsibility for identifying areas of
significant business risk and for ensuring that arrangements are
in place for adequately managing these risks. This issue is
regularly reviewed at Board meetings and risk management
culture is encouraged amongst employees and contractors.
The Board determines the Company’s ‘risk profile’ and is
responsible for overseeing and approving risk management
strategy and policies, internal compliance and non-financial
internal control.
For the year ended 30 June 2021, the Board has undertaken a
review of the entity’s risk management framework and has
satisfied itself that it continues to be sound and that the entity is
operating with due regard to the risk appetite set by the Board.
The Company does not have an internal audit function.
Under the Company’s Risk Management Policy, the
responsibility for undertaking and assessing risk management
and internal control effectiveness is assumed by the full Board.
The Company operates in the mineral resources sector and is
subject to a variety of environmental and social risks that have
Annual Report | 30 June 2021 | | Page 27 of 92
Principle Recommendation
Conform
exposure to environmental or social
risks and, if it does, how it manages
or intends to manage those risks.
Principle
8
8.1
8.2
8.3
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Remunerate fairly and responsibly
The board of a listed entity should:
(a) have a remuneration committee
which:
(1) has at least three members, a
majority of whom are independent
directors; and
(2) is chaired by an independent
director,
and disclose:
(3) the charter of the committee;
(4) the members of the committee;
and
(5) as at the end of each reporting
period, the number of times the
committee met throughout the
period and the individual
attendances of the members at
those meetings; or
(b) if it does not have a
remuneration committee, disclose
that fact and the processes it
employs for setting the level and
composition of remuneration for
directors and senior executives and
ensuring that such remuneration is
appropriate and not excessive.
A listed entity should separately
disclose its policies and practices
regarding the remuneration of non-
executive directors and the
remuneration of executive directors
and other senior executives.
A listed entity which has an equity-
based remuneration scheme
should:
(a) have a policy on whether
participants are permitted to enter
into transactions (whether through
the use of derivatives or otherwise)
which limit the economic risk of
participating in the scheme; and
Disclosure
the potential to have a material impact on its business. These
risks include, but are not limited to:
Environmental risks
As with most resources’ projects, the Company’s activities have
the potential to impact on the environment giving rise to
substantial costs for environmental rehabilitation, damage,
control and losses. Exploration, development and operational
activities are subject to relevant Government laws and
regulations concerning the environment. The Company strives to
conduct its activities to the highest standard of environmental
obligation, including compliance with all environmental laws. In
achieving its aim of maintaining stable functioning ecosystems in
the environs of its activities, the Company uses careful design;
creation of biodiversity offsets; progressive rehabilitation; and
rigorous monitoring, management and report plans.
Social risks
Whilst not materially exposed to social risk, the Company has a
Social Policy, which is included in the Corporate Overview on the
Company’s website, designed to prevent or minimise adverse
impacts of its operations on host communities.
The Company has established a Remuneration Committee which
comprises all the Company’s non-executive directors (Malcolm
Carson, Larry Cook and Bernie Mason). The Remuneration
Committee Charter is included in the Corporate Governance
Manual on the Company’s website. The Remuneration
Committee chair is Mr Carson, who is considered by the Board to
be an independent director and is not the chair of the Board.
The qualifications and experience of the members of the
Remuneration Committee are disclosed in the Directors’ Report.
The Remuneration Committee met once during the year ended
30 June 2021.
Details of the Company’s policies and practices regarding the
remuneration of Directors and other senior management is set
out in the Remuneration Report as disclosed in the Directors’
Report.
The Company has a Securities Trading Policy, which is included
in the Corporate Governance Manual on the Company’s website
The Company’s Securities Trading Policy provides guidance
encouraging employees not to engage in margin lending or
otherwise leveraging securities without the fully informed consent
of the board.
Annual Report | 30 June 2021 | | Page 28 of 92
Principle Recommendation
Conform
Disclosure
Principle
9
9.1
9.2
9.3
(b) disclose that policy or a
summary of it.
Additional recommendations that
apply only in certain cases
A listed entity with a director who
does not speak the language in
which board or security holder
meetings are held or key corporate
documents are written should
disclose the processes it has in
place to ensure the director
understands and can contribute to
the discussions at those meetings
and understands and can
discharge their obligations in
relation to those documents.
A listed entity established outside
Australia should ensure that
meetings of security holders are
held at a reasonable place and
time.
A listed entity established outside
Australia, and an externally
managed listed entity that has an
AGM, should ensure that its
external auditor attends its AGM
and is available to answer
questions from security holders
relevant to the audit.
Not applicable
Not applicable
Not applicable
All references are to sections of the Company’s Corporate Governance Manual unless otherwise stated.
Annual Report | 30 June 2021 | | Page 29 of 92
Statement of comprehensive income
For the year ended 30 June 2021
Revenue
Expenses
Depreciation and amortisation
Employee benefits expense
Finance costs expense
Investor and public relations
Legal fees
Listing expense
Net foreign exchange loss
New Elk expenses, pre- and post-acquisition costs
including cash operating costs but excluding finance
costs
Office rent
Project generation expenses
Travel expenses
Other expenses
Note
5
6
6
Consolidated
2021
$
97,315
2020
$
2,165
(583,972)
(687,047)
(4,377,126)
(23,165)
(28,440)
(80,380)
(193,970)
-
(2,490,738)
(1,799,454)
(48,322)
(54,852)
(58,918)
(52,378)
(9,142,845)
(93,081)
(255,236)
(78,507)
(391,179)
(4,190,909)
(82,520)
-
(180,722)
(259,288)
Loss before income tax benefit
(15,837,633)
(9,215,936)
Income tax benefit
7
-
-
Loss after income tax benefit for the year
attributable to
Equity holders of the Company
Minority interest
(15,803,245)
(34,388)
(9,184,486)
(31,450)
Loss for the year
(15,837,633)
(9,215,936)
Other comprehensive income for the year, net of tax
Foreign exchange movement
Gain on dilution of interest in subsidiary
153,590
-
272,168
986,567
Total comprehensive loss for the year attributable
to the owners of Allegiance Coal Limited
Basic loss per share
Diluted loss per share
(15,684,043)
(7,957,201)
33
33
Cents
(8.89)
(5.61)
Cents
(8.02)
(7.50)
* The above statement of comprehensive income should be read in conjunction with the accompanying notes.
Annual Report | 30 June 2021 | | Page 30 of 92
Statement of financial position
As at 30 June 2021
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventory
Total current assets
Non-current assets
Other receivables
Exploration and evaluation asset
Property, plant and equipment
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity attributable to equity holders of the Company
Minority interest
Total equity
Consolidated
Note
2021
$
2020
$
8
9
10
9
11
12
13
14
14
15
16
17
18
20
18,689,261
904,018
1,167,772
20,761,051
442,055
172,281
-
614,336
3,923,408
27,565,897
58,625,644
90,114,949
-
21,070,371
-
21,070,371
110,876,000
21,684,707
6,195,333
10,546,747
16,742,080
718,859
4,351,230
5,070,089
27,324,748
7,162,504
34,487,252
186,361
-
186,361
51,229,332
5,256,450
59,646,668
16,428,257
91,040,096
2,707,435
33,528,305
2,428,963
(35,283,768) (20,746,304)
58,463,763
1,182,905
15,210,964
1,217,293
59,646,668
16,428,257
* The above statement of financial position should be read in conjunction with the accompanying notes.
Annual Report | 30 June 2021 | | Page 31 of 92
Statement of changes in equity
For the year ended 30 June 2021
Consolidated
Balance at 1 July 2020
Issued
capital
$
33,528,305
General
reserve
$
Share based
payment
reserve
$
16
2,231,784
Foreign
currency
translation
reserve
$
197,163
Accumulated
losses
$
(20,746,304)
Minority
interest
$
1,217,293
Total equity
$
16,428,257
Loss after income tax benefit for the year
Other comprehensive income for the year, net
of tax
Total comprehensive income for the year
-
-
-
Transactions with owners in their capacity as
owners:
Share issues for cash
Costs of share issues
Shares issued to settle debt
Share issued on note conversions
Shares issued on performance rights vesting
Share based payments
Conversion rights on Mercer notes
Mercer notes converted
Options lapsed or expired
Balance at 30 June 2021
51,297,890
(3,371,544)
5,652,112
3,083,333
650,000
200,000
-
-
-
91,040,096
-
-
-
-
-
-
-
-
-
-
-
-
16
-
-
-
-
(15,803,245)
(34,388)
(15,837,633)
153,590
153,590
-
(15,803,245)
-
(34,388)
153,590
(15,684,043)
-
-
-
-
(650,000)
563,624
1,477,039
(1,146,877)
(118,904)
2,356,666
-
-
-
-
-
-
-
-
-
350,753
-
-
-
-
-
-
-
1,146,877
118,904
(35,283,768)
-
-
-
-
-
-
-
-
-
1,182,905
51,297,890
(3,371,544)
5,652,112
3,083,333
-
763,624
1,477,039
-
-
59,646,668
* The above statement of changes in equity should be read in conjunction with the accompanying notes.
Annual Report | 30 June 2021 | | Page 32 of 92
Statement of changes in equity
For the year ended 30 June 2021 (continued)
Consolidated
Balance at 1 July 2019
Issued
capital
$
27,423,519
Loss after income tax benefit for the year
Other comprehensive income for the year, net
of tax
Dilution of interest in subsidiary at fair value
Total comprehensive income for the year
-
-
-
-
Transactions with owners in their capacity as
owners:
Share issues for cash
Costs of share issues
Shares issued to settle debt
Shares issued on performance rights vesting
Share based payments
Balance at 30 June 2020
5,684,290
(380,504)
476,000
325,000
-
33,528,305
General
reserve
$
16
-
-
-
-
-
-
-
-
-
16
Share based
payment
reserve
$
318,867
Foreign
currency
translation
reserve
$
(75,005)
Accumulated
losses
$
Minority
interest
$
Total equity
$
(12,548,385)
602,310
15,721,322
-
-
-
-
-
(9,184,486)
(31,450)
(9,215,936)
272,168
-
272,168
-
986,567
(8,197,919)
-
646,433
614,983
272,168
1,633,000
(7,310,768)
-
-
-
-
1,912,917
2,231,784
-
-
-
-
-
197,163
-
-
-
-
-
(20,746,304)
-
-
-
-
-
1,217,293
476,000
325,000
1,912,917
16,428,257
* The above statement of changes in equity should be read in conjunction with the accompanying notes.
Annual Report | 30 June 2021 | | Page 33 of 92
Statement of cash flows
For the year ended 30 June 2021
Cash used in operating activities
Payments to suppliers (inclusive of GST)
Interest received
Interest and other finance costs paid
Consolidated
Note
2021
$
2020
$
(7,102,858)
(7,102,858)
(4,512,146)
(4,512,146)
869
(551,117)
2,165
(1,245,555)
Net cash used in operating activities
32
(7,653,106)
(5,755,536)
Cash used in investing activities
Acquisition of subsidiary, net of cash acquired
Payments for reclamation bonds
Proceeds from recovery of reclamation bond
Payments for other assets
Payments for property, plant and equipment
Payments for exploration and evaluation
30,003
(2,943,408)
8,190,861
(610,827)
(16,300,007)
(6,555,685)
-
-
-
-
(5,603,767)
Net cash used in investing activities
(18,189,063)
(5,603,767)
Cash from financing activities
Share issues, net of costs
Borrowings raised
Contributions from Joint Venture partner
Repayments of borrowings
56,861,791
5,042,927
350,234
(18,165,577)
5,779,786
3,804,822
1,822,716
(2,201,592)
Net cash from financing activities
44,089,375
9,205,732
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial
year
18,247,206
(2,153,571)
442,055
2,595,626
Cash and cash equivalents at the end of the financial
year
18,689,261
442,055
* The above statement of cash flows should be read in conjunction with the accompanying notes.
Annual Report | 30 June 2021 | | Page 34 of 92
Notes to the financial statements
30 June 2021
Note 1. General Information
The financial statements cover Allegiance Coal Limited as a consolidated entity consisting of Allegiance
Coal Limited and its subsidiaries.
Allegiance Coal Limited is a listed public company whose shares are publicly traded on the Australian
Securities Exchange, limited by shares, incorporated and domiciled in Australia. Its registered office
and principal place of business is:
Suite 107, 109 Pitt Street
Sydney NSW 2000
A description of the nature of the consolidated entity's operations and its principal activities are included
in the directors' report, which is not part of the financial statements.
The principal accounting policies adopted in the preparation of the financial statements are set out
below.
Going concern
The consolidated entity is involved in the exploration, evaluation, development and exploitation of
mineral tenements. Further expenditure will be required upon these tenements to finally ascertain
whether they contain economically recoverable reserves and can be commercially developed and
whether the mineral reserves can be commercially and profitably exploited.
For the year ended 30 June 2021 the consolidated entity reported a net loss of $15,837,633 (2020:
$9,215,936) and net operating cash outflows of $7,653,106 (2020: $5,755,536). The operating cash
outflows have been funded by cash inflows from equity raisings of $56,861,791 (2020: $5,779,786);
project participation contributions from Itochu Corporation of Japan of $350,234 (2020: $1,822,716) and
borrowings of $5,042,927 (2020: $3,804,822) during the year. As at 30 June 2021 the consolidated
entity had net current assets of $4,018,971 (2020 net liabilities: $4,642,114) including cash reserves of
$18,689,261 (2020: $442,055).
The balance of these cash reserves may not be sufficient to meet the consolidated entity’s planned
expenditure, evaluation and development budget, including exploration activities, evaluation, operating
and administrative expenditure, for the 12 months to 30 September 2022. In order to fully implement its
exploration, evaluation and development strategy, the consolidated entity will require additional funds.
The existence of these conditions indicates a material uncertainty that may cast doubt on the
consolidated entity’s ability to continue as a going concern.
Notwithstanding the above, the financial statements have been prepared on a going concern basis
which contemplates the continuity of normal business activities and the realisation of assets and
settlement of liabilities in the ordinary course of business.
To continue as a going concern, the consolidated entity requires additional funding to be secured from
sources including but not limited to:
•
•
Further equity capital raisings;
The potential farm-out of participating interests in the consolidated entity’s tenements and rights;
and / or
Other financing arrangements.
•
Annual Report | 30 June 2021 | | Page 35 of 92
Notes to the financial statements
30 June 2021
Having carefully assessed the uncertainties relating to the likelihood of securing additional funding, the
consolidated entity’s ability to effectively manage its expenditures and cash flows from operations and
the opportunity to farm-out participating interests in existing permits and rights, the Directors believe
that the consolidated entity will continue to operate as a going concern for the foreseeable future.
Therefore, the Directors consider it appropriate to prepare the financial statements on a going concern
basis.
In the event that the assumptions underpinning the basis of preparation do not occur as anticipated, as
noted above, there is material uncertainty that may cast significant doubt whether the consolidated
entity will continue to operate as a going concern. If the consolidated entity is unable to continue as a
going concern it may be required to realise its assets and extinguish its liabilities other than in the normal
course of business and at amounts different to those stated in the financial statements.
No adjustments have been made to the financial report relating to the recoverability and classification
of the asset carrying amounts or the classification of liabilities that might be necessary should the
consolidated entity not continue as a going concern.
Basis of Preparation
The financial report is a general-purpose financial report, which has been prepared in accordance with
the requirements of the Corporations Act 2001, Australian Accounting Standards and interpretations
and complies with other requirements of the law.
Accounting policies are selected and applied in a manner which ensures that the resulting financial
information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of
the underlying transactions or other events is reported.
The accounting policies detailed below have been consistently applied to all of the years presented
unless otherwise stated. The financial statements are for the Group consisting of Allegiance Coal
Limited and its subsidiaries.
Historical cost convention
The financial statements have been prepared on a historical cost basis, except for Identifiable assets
and liabilities acquired through a business combination.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It
also requires management to exercise its judgement in the process of applying the consolidated entity's
accounting policies. The areas involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial statements, are disclosed in note 3.
Adoption of new and revised standards
In the year ended 30 June 2021, the Directors have reviewed all of the new and revised Standards and
Interpretations issued by the AASB that are relevant to the Group’s operations and effective for the
current annual reporting period.
The Directors have also reviewed all new Standards and Interpretations that have been issued but are
not yet effective for the year ended 30 June 2021. As a result of this review the Directors have
determined that there is no impact, material or otherwise, of the new and revised Standards and
Interpretations on the Group’s business and, therefore, no change necessary to Group accounting
policies.
Annual Report | 30 June 2021 | | Page 36 of 92
Notes to the financial statements
30 June 2021
Statement of Compliance
The financial report was authorised for issue, in accordance with a resolution of directors, on 28
September 2021. The directors have the power to amend and reissue the financial statements.
The financial report complies with Australian Accounting Standards, which include Australian
equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures
that the financial report comprising the financial statements and notes thereto, complies with
International Financial Reporting Standards (IFRS).
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the
consolidated entity only. Supplementary information about the parent entity is disclosed in note 29.
Note 2. Significant accounting policies
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of
Allegiance Coal Limited ('Company' or 'parent entity') as at 30 June 2021 and the results of all
subsidiaries for the year then ended. Allegiance Coal Limited and its subsidiaries together are referred
to in these financial statements as the 'consolidated entity'.
Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity
controls an entity when the consolidated entity is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns through its power to direct the
activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred
to the consolidated entity. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the
consolidated entity are eliminated. Unrealised losses are also eliminated unless the transaction
provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have
been changed where necessary to ensure consistency with the policies adopted by the consolidated
entity.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change
in ownership interest, without the loss of control, is accounted for as an equity transaction, where the
difference between the consideration transferred and the book value of the share of the non-controlling
interest acquired is recognised directly in equity attributable to the parent.
Where the consolidated entity loses control over a subsidiary, it derecognises the assets including
goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation
differences recognised in equity. The consolidated entity recognises the fair value of the consideration
received and the fair value of any investment retained together with any gain or loss in profit or loss.
Revenue recognition
Revenue is recognised when it is probable that the economic benefit will flow to the consolidated entity
and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration
received or receivable.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method
of calculating the amortised cost of a financial asset and allocating the interest income over the relevant
Annual Report | 30 June 2021 | | Page 37 of 92
Notes to the financial statements
30 June 2021
period using the effective interest rate, which is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial asset to the net carrying amount of the financial asset.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-
current classification.
An asset is current when: it is expected to be realised or intended to be sold or consumed in the normal
operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12
months after the reporting period; or the asset is cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets
are classified as non-current.
A liability is current when: it is expected to be settled in the normal operating cycle; it is held primarily
for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is
no unconditional right to defer the settlement of the liability for at least 12 months after the reporting
period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other
short-term, highly liquid investments with original maturities of three months or less that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Trade and other receivables
Prepayments and other receivables are recognised at amortised cost, less any provision for impairment.
Inventory
Coal Inventory is valued at the lower of an average weighted cost and net realisable value (NRV). Cost
comprises direct costs and an appropriate proportion of fixed and variable expenditure including
depreciation and amortisation.
Inventories of consumable supplies and spare parts to be used in production are valued at weighted
average cost.
NRV is the estimated selling price in the ordinary course of business less the estimated costs of
production and to complete the sale.
Investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are
included as part of the initial measurement, except for financial assets at fair value through profit or
loss. They are subsequently measured at either amortised cost or fair value depending on their
classification. Classification is determined based on the purpose of the acquisition and subsequent
reclassification to other categories is restricted.
Financial assets are derecognised when the rights to receive cash flows from the financial assets have
expired or have been transferred and the consolidated entity has transferred substantially all the risks
and rewards of ownership.
Annual Report | 30 June 2021 | | Page 38 of 92
Notes to the financial statements
30 June 2021
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market. They are carried at amortised cost using the effective interest rate
method. Gains and losses are recognised in profit or loss when the asset is derecognised or impaired.
Impairment of financial assets
The consolidated entity assesses at the end of each reporting period whether there is any objective
evidence that a financial asset or group of financial assets is impaired. Objective evidence includes
significant financial difficulty of the issuer or obligor; a breach of contract such as default or delinquency
in payments; the lender granting to a borrower concessions due to economic or legal reasons that the
lender would not otherwise do; it becomes probable that the borrower will enter bankruptcy or other
financial reorganisation; the disappearance of an active market for the financial asset; or observable
data indicating that there is a measurable decrease in estimated future cash flows.
The amount of the impairment allowance for loans and receivables carried at amortised cost is the
difference between the asset's carrying amount and the present value of estimated future cash flows,
discounted at the original effective interest rate. If there is a reversal of impairment, the reversal cannot
exceed the amortised cost that would have been recognised had the impairment not been made and is
reversed to profit or loss.
Property, plant, and equipment
Property, plant and equipment is stated at fair value on acquisition (for assets acquired as part of a
business combination) or at historical cost at the date of acquisition, less accumulated depreciation and
accumulated impairment losses, if any. Historical cost includes expenditure that is directly attributable
to the acquisition of the items and costs incurred in bringing the asset into use.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item flow to the
consolidated entity and the cost of the item can be measured reliably.
Mine development costs are capitalised to property, plant and equipment only once a decision to mine
is made and the development is fully funded. Mine development expenditure represents the cost
incurred in preparing mines for commissioning and production, and also includes other attributable costs
incurred before production commences. These costs are capitalised to the extent they are expected to
be recouped through successful exploitation of the related mining project. Once production
commences, these costs are amortised over the estimated economic life of the mine. Mine development
costs are written off if the mine property is abandoned. Development costs incurred to maintain
production are expensed as incurred against the related production.
At each reporting date, the entity assesses whether there is any indication that an asset may be
impaired. Where an indicator of impairment exists, the entity makes a formal assessment of recoverable
amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered
impaired and is written down to its recoverable amount. Recoverable amount is the greater of fair value
less costs of disposal and value in use.
Depreciation
Depreciation is provided on a straight -line basis on all plant and equipment commencing from the time
the asset is held ready for use. Major depreciation periods are:
• Plant, equipment and infrastructure – 1 to 20 years
An item of property, plant and equipment and any significant part initially recognised is derecognised
upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or
Annual Report | 30 June 2021 | | Page 39 of 92
Notes to the financial statements
30 June 2021
loss arising on de -recognition of the asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included in the Statement of Comprehensive Income
when the asset is derecognised.
The assets’ residual values, useful lives and depreciation methods are reviewed at each reporting
period and adjusted prospectively, if appropriate.
Leases
Right of use asset
The Group recognises right-of-use assets at the commencement date of the lease (i.e. the date the
underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for any re-measurement of lease liabilities. The cost
of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred,
and lease payments made at or before the commencement date less any lease incentives received.
Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease
term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its
estimated useful life and the lease term. Right-of-use assets are subject to impairment.
Lease Liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present
value of lease payments to be made over the lease term. The lease payments include fixed payments
(including in-substance fixed payments) less any lease incentives receivable, variable lease payments
that depend on an index or a rate, and amounts expected to be paid under residual value guarantees.
The lease payments also include the exercise price of a purchase option reasonably certain to be
exercised by the Group and payments of penalties for terminating a lease, if the lease term reflects the
Group exercising the option to terminate. The variable lease payments that do not depend on an index
or a rate are recognised as expense in the period in which the event or condition that triggers the
payment occurs.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at
the lease commencement date if the interest rate implicit in the lease is not readily determinable. After
the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest
and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is
remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed
lease payments or a change in the assessment to purchase the underlying asset.
The Group recognises the lease payments as an expense on a straight line basis over the lease term.
The Group has elected not to recognise right of use assets and lease liabilities for short term leases
and low value assets
Intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured
at their fair value at the date of the acquisition. Intangible assets acquired separately are initially
recognised at cost. Indefinite life intangible assets are not amortised and are subsequently measured
at cost less any impairment. Finite life intangible assets are subsequently measured at cost less
amortisation and any impairment. The gains or losses recognised in profit or loss arising from the de-
recognition of intangible assets are measured as the difference between net disposal proceeds and the
carrying amount of the intangible asset. The method and useful lives of finite life intangible assets are
reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for
prospectively by changing the amortisation method or period.
Annual Report | 30 June 2021 | | Page 40 of 92
Notes to the financial statements
30 June 2021
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation
and are tested annually for impairment, or more frequently if events or changes in circumstances
indicate that they might be impaired. Other non-financial assets are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by which the asset's carrying amount exceeds its
recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The
value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax
discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do
not have independent cash flows are grouped together to form a cash-generating unit.
Trade and other payables
These amounts represent liabilities for goods and services provided to the consolidated entity prior to
the end of the financial year and which are unpaid. Due to their short-term nature they are measured at
amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days
of recognition.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of
transaction costs. Subsequent to initial recognition, borrowings are stated at amortised cost with any
difference between cost and redemption being recognised in the Statement of Comprehensive Income
over the period of the borrowings on an effective interest basis.
Where there is an unconditional right to defer settlement of the liability for at least 12 months after the
reporting date, the loans or borrowings are classified as non-current.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs
are expensed in the period in which they are incurred, including interest on short-term and long-term
borrowings.
Foreign currency translation
The functional and presentation currency of Allegiance Coal Limited and its Australian subsidiaries is
Australian dollars (A$). Foreign currency transactions are translated into the functional currency using
the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in
foreign currencies are retranslated at the rate of exchange ruling at the end of the financial reporting
period. Foreign exchange gains and losses resulting from settling foreign currency transactions, as well
as from restating foreign currency denominated monetary assets and liabilities, are recognised in profit
or loss.
Non-monetary items measured at fair value in a foreign currency are translated using the exchange
rates at the date when fair value was determined.
The functional currency of the overseas subsidiaries is United States dollars (US$) and Canadian
dollars (C$). At the reporting date, the assets and liabilities of the overseas subsidiaries are translated
into the presentation currency of Allegiance Coal Limited at the closing rate at the end of the financial
reporting period and income and expenses are translated at the weighted average exchange rates for
the period. All resulting exchange differences are recognised as other comprehensive income or
expense and in a separate component of equity (foreign exchange translation reserve). On disposal of
Annual Report | 30 June 2021 | | Page 41 of 92
Notes to the financial statements
30 June 2021
a foreign entity, the cumulative exchange differences recognised in foreign currency translation
reserves relating to that particular foreign operation is recognised in profit or loss.
Provisions
Provisions are recognised when the consolidated entity has a legal or constructive obligation, as a result
of past events, for which it is probable that an outflow of economic benefits will result and that outflow
can be reliably measured.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave
expected to be settled within 12 months of the reporting date are recognised in current liabilities in
respect of employees' services up to the reporting date and are measured at the amounts expected to
be paid when the liabilities are settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the
reporting date are recognised in non-current liabilities, provided there is an unconditional right to defer
settlement of the liability. The liability is measured as the present value of expected future payments to
be made in respect of services provided by employees up to the reporting date using the projected unit
credit method. Consideration is given to expected future wage and salary levels, experience of
employee departures and periods of service. Expected future payments are discounted using market
yields at the reporting date on national government bonds with terms to maturity and currency that
match, as closely as possible, the estimated future cash outflows.
Superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they
are incurred.
Share-based payments
Equity-settled and cash-settled share-based compensation benefits may be provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees
in exchange for the rendering of services. Cash-settled transactions are awards of cash for the
exchange of services, where the amount of cash is determined by reference to the share price.
The cost of equity-settled transactions is measured at fair value on grant date. Fair value is
independently determined using either the Binomial or Black-Scholes option pricing model that takes
into account the exercise price, the term of the option, the impact of dilution, the share price at grant
date and expected price volatility of the underlying share, the expected dividend yield and the risk free
interest rate for the term of the option, together with non-vesting conditions that do not determine
whether the consolidated entity receives the services that entitle the employees to receive payment. No
account is taken of any other vesting conditions.
The cost of equity-settled transactions is recognised as an expense with a corresponding increase in
equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant
date fair value of the award, the best estimate of the number of awards that are likely to vest and the
expired portion of the vesting period. The amount recognised in profit or loss for the period is the
cumulative amount calculated at each reporting date less amounts already recognised in previous
periods.
Annual Report | 30 June 2021 | | Page 42 of 92
Notes to the financial statements
30 June 2021
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by
applying either the Binomial or Black-Scholes option pricing model, taking into consideration the terms
and conditions on which the award was granted. The cumulative charge to profit or loss until settlement
of the liability is calculated as follows:
•
during the vesting period, the liability at each reporting date is the fair value of the award at that
date multiplied by the expired portion of the vesting period.
from the end of the vesting period until settlement of the award, the liability is the full fair value of
the liability at the reporting date.
•
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions
is the cash paid to settle the liability.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject
to market conditions are considered to vest irrespective of whether or not that market condition has
been met, provided all other conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has
not been made. An additional expense is recognised, over the remaining vesting period, for any
modification that increases the total fair value of the share-based compensation benefit as at the date
of modification.
If the non-vesting condition is within the control of the consolidated entity or employee, the failure to
satisfy the condition is treated as a cancellation. If the condition is not within the control of the
consolidated entity or employee and is not satisfied during the vesting period, any remaining expense
for the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and
any remaining expense is recognised immediately. If a new replacement award is substituted for the
cancelled award, the cancelled and new award is treated as if they were a modification.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or
disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants at the measurement date;
and assumes that the transaction will take place either in the principal market; or in the absence of a
principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset
or liability, assuming they act in their economic best interest. For non-financial assets, the fair value
measurement is based on its highest and best use. Valuation techniques that are appropriate in the
circumstances and for which sufficient data are available to measure fair value, are used, maximising
the use of relevant observable inputs and minimising the use of unobservable inputs.
Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
Business combinations
The acquisition method of accounting is used to account for business combinations regardless of
whether equity instruments or other assets are acquired.
Annual Report | 30 June 2021 | | Page 43 of 92
Notes to the financial statements
30 June 2021
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred,
equity instruments issued or liabilities incurred by the acquirer to former owners of the acquiree and the
amount of any non-controlling interest in the acquiree. For each business combination, the non-
controlling interest in the acquiree is measured at either fair value or at the proportionate share of the
acquiree's identifiable net assets. All acquisition costs are expensed as incurred to profit or loss.
On the acquisition of a business, the consolidated entity assesses the financial assets acquired and
liabilities assumed for appropriate classification and designation in accordance with the contractual
terms, economic conditions, the consolidated entity's operating or accounting policies and other
pertinent conditions in existence at the acquisition-date.
Where the business combination is achieved in stages, the consolidated entity remeasures its
previously held equity interest in the acquiree at the acquisition-date fair value and the difference
between the fair value and the previous carrying amount is recognised in profit or loss.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair
value. Subsequent changes in the fair value of contingent consideration classified as an asset or liability
is recognised in profit or loss. Contingent consideration classified as equity is not remeasured and its
subsequent settlement is accounted for within equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any
non-controlling interest in the acquiree and the fair value of the consideration transferred and the fair
value of any pre-existing investment in the acquiree is recognised as goodwill. If the consideration
transferred and the pre-existing fair value is less than the fair value of the identifiable net assets
acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly in
profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification
and measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the
consideration transferred and the acquirer's previously held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively
adjusts the provisional amounts recognised and also recognises additional assets or liabilities during
the measurement period, based on new information obtained about the facts and circumstances that
existed at the acquisition-date. The measurement period ends on either the earlier of (i) 12 months from
the date of the acquisition or (ii) when the acquirer receives all the information possible to determine
fair value.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Allegiance Coal
Limited, excluding any costs of servicing equity other than ordinary shares, by the weighted average
number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary
shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to
take into account the after income tax effect of interest and other financing costs associated with dilutive
potential ordinary shares and the weighted average number of shares assumed to have been issued
for no consideration in relation to dilutive potential ordinary shares.
Annual Report | 30 June 2021 | | Page 44 of 92
Notes to the financial statements
30 June 2021
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST
incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the
acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net
amount of GST recoverable from, or payable to, the tax authority is included in other receivables or
other payables in the statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing
or financing activities which are recoverable from, or payable to the tax authority, are presented as
operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable
to, the tax authority.
Note 3. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts in the financial statements. Management continually
evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue
and expenses. Management bases its judgements, estimates and assumptions on historical experience
and on other various factors, including expectations of future events, management believes to be
reasonable under the circumstances. The resulting accounting judgements and estimates will seldom
equal the related actual results. The judgements, estimates and assumptions that have a significant
risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the
respective notes) within the next financial year are discussed below.
Impairment of Property, Plant and Equipment and Mine Development Expenditure
Non-current assets are assessed for impairment when there is an indication that their carrying amount
may not be recoverable. The recoverable amount of each Cash Generating Unit (CGU) is determined
as the higher of value-in-use and fair value less costs of disposal estimated on the basis of discounted
present value of the future cash flows (a level 3 fair value estimation method).
The estimates of discounted future cash flows for each CGU are based on significant assumptions
including:
•
estimates of the quantities of mineral reserves and ore resources for which there is a high
degree of confidence of economic extraction and the timing of access to these reserves and
ore resources:
future production levels and the ability to sell that production
future product prices based on the consolidated entity’s assessment of forecast short and long
term prices for each of the key products
future exchange rates for the Australian dollar compared to the US dollar using external
forecasts by recognised economic forecasters
future cash costs of production, sustaining capital expenditure, rehabilitation and mine closure
the asset specific discount rate applicable to the CGU
•
•
•
•
•
Determination of Mineral Resources and Ore Reserves
The determination of reserves impacts the accounting for asset carrying values, depreciation and
amortisation rates, and provision for decommissioning and restoration. The information in this report as
it relates to ore reserves, mineral resources or mineralisation is reported in accordance with the
“Australian Code for Reporting of Identified Mineral Resources and Ore Reserves 2012”, known as
JORC 2012 (the Code). The information has been prepared by or under supervision of competent
Annual Report | 30 June 2021 | | Page 45 of 92
Notes to the financial statements
30 June 2021
persons as identified by the Code. There are numerous uncertainties inherent in estimating mineral
resources and ore reserves and assumptions that are valid at the time of estimation may change
significantly when new information becomes available. Changes in the forecast prices of commodities,
exchange rates, production costs or recovery rates may change the economic status of reserves and
may ultimately result in the reserves being restated.
Exploration and evaluation asset
The consolidated entity capitalises expenditure relating to exploration and evaluation where it is
considered likely to be recoverable or where the activities have not reached a stage that permits
reasonable assessment of the existence of reserves.
The ultimate recoupment of capitalised expenditure in relation to each area of interest is dependent on
the successful development and commercial exploitation or, alternatively, sale of the respective areas
the results of which are still uncertain.
The Telkwa metallurgical coal project has yet to reach a stage of development where a determination
of the technical feasibility or commercial viability can be finally assessed. Whilst the project is not
currently generating cash flow, the consolidated entity is of the view that the area of interest will
contribute significant value in the future and that this value will be in excess of the current value of the
capitalised costs. In these circumstances, whether there is any indication that the asset has been
impaired is a matter of judgement, as is the determination of the quantum of any required impairment
adjustment. The Directors have used their experience to conclude that no impairment adjustment is
required in the current year ended 30 June 2021 (refer to note 11).
Rehabilitation Provision
Significant estimates and assumptions are made in determining the provision for rehabilitation of the
mine as there are numerous factors that will affect the ultimate liability payable. These factors include
estimates of the extent and costs of rehabilitation activities, technological changes, regulatory changes,
cost increases as compared to inflation rates, and changes in discount rates. These uncertainties may
result in future actual expenditure differing from amounts currently provided.
Share-based payment transactions
The consolidated entity measures the cost of equity-settled transactions with employees by reference
to the fair value of the equity instruments at the date at which they are granted. The fair value is
determined by using either the Binomial or Black-Scholes model taking into account the terms and
conditions upon which the instruments were granted. The accounting estimates and assumptions
relating to equity-settled share-based payments would have no impact on the carrying amounts of
assets and liabilities within the next annual reporting period but may impact profit or loss and equity.
Income tax
The benefit of the tax losses has not been brought to account at 30 June 2021 because the directors
do not believe it is appropriate to regard realisation of the deferred tax asset as being probable at this
point in time. These tax losses are also subject to final determination by the Taxation authorities when
the consolidated entity derives a taxable income. The benefits will only be realised if:
•
the Company and its subsidiaries derive future assessable income of a nature and of an amount
sufficient to enable the benefit of the deduction for the losses to be realised;
the Company and its subsidiaries continue to comply with the conditions for the deductibility
imposed by law; and
no changes in the tax legislation adversely affect the Company and its subsidiaries in realising
the benefit of the losses.
•
•
Annual Report | 30 June 2021 | | Page 46 of 92
Notes to the financial statements
30 June 2021
Australian tax losses are subject to further review by the consolidated entity to determine if they satisfy
the necessary legislative requirements under the Income Tax legislation for the carry forward and
recoupment of tax losses.
Note 4. Segment reporting
Operating segments are presented using the 'management approach', where the information presented
is on the same basis as the internal reports provided to the Chief Operating Decision Makers ('CODM').
The CODM, which is the Board of Directors, is responsible for the allocation of resources to operating
segments and assessing their performance.
Identification of reportable operating segments
The consolidated entity is organised into one operating segment being the acquisition, exploration,
evaluation, development and exploitation of coal tenements. The operating segment information is as
disclosed in the statements and notes to the financial statements throughout the report.
The principal business and geographical segment of the consolidated entity is the acquisition,
exploration, evaluation, development and exploitation of coal tenements within North America. The
consolidated entity has its head office, which represents a non-reportable business segment, in
Australia.
Major customers
During the year ended 30 June 2021 there was one customer from whom the consolidated entity derived
its revenue (2020: none derived from major customers). Interest from cash deposits in banking
institutions account for $869 (2020: $2,165).
Note 5. Revenue
Sales revenue
Interest
Other revenue
Revenue
Consolidated
2020
$
2021
$
87,352
869
9,094
97,315
-
2,165
-
2,165
Annual Report | 30 June 2021 | | Page 47 of 92
Notes to the financial statements
30 June 2021
Note 6. Expenses
Loss before income tax includes the following specific expenses:
Finance costs
Interest, finance charges and finance related expense
Unwinding of present value discount of Cline note
Less: Unwinding of present value discount of Cline note capitalised
to property, plant and equipment
Rental expenses
Minimum lease payments
Employee benefits expense
Superannuation expense
Employee benefits expense
Share based payment
Total employee benefits expense
Consolidated
2021
$
20209
$
4,088,213
2,344,326
1,799,454
-
(2,055,413)
4,377,126
-
1,799,454
93,081
82,520
687,047
-
687,047
-
577,822
1,912,916
2,490,738
The weighted average interest rate on the consolidated entity’s borrowings is 27% (2020: 33%).
Note 7. Income tax
The income tax expense or benefit for the period is the tax payable on the current period's taxable
income based on the national income tax rate for each jurisdiction, adjusted by changes in deferred tax
assets and liabilities attributable to temporary differences between the tax base of assets and liabilities
and their carrying amounts in the financial statements and to unused tax losses.
Deferred tax assets and liabilities are recognised for temporary differences, between carrying amounts
of assets and liabilities for financial reporting purposes and their respective tax bases, at the tax rates
expected to apply when the assets are recovered or liabilities are settled, based on those tax rates that
are enacted or substantively enacted for each jurisdiction. Exceptions are made for certain temporary
differences arising on initial recognition of an asset or a liability if they arose in a transaction, other than
a business combination, that at the time of the transaction did not affect their accounting profit or taxable
profit.
Deferred tax assets are only recognised for deductible temporary differences and unused tax losses if
it is probable that future taxable amounts will be available to utilise those temporary differences and
losses.
Deferred tax assets and liabilities are not recognised for temporary differences between the carrying
amount and tax bases of investments in subsidiaries, associates and interests in joint ventures where
the parent entity is able to control the timing of the reversal of the temporary differences and it is
probable that the differences will not reverse in the foreseeable future.
Annual Report | 30 June 2021 | | Page 48 of 92
Notes to the financial statements
30 June 2021
Note 7. Income tax (continued)
Current and deferred tax balances relating to amounts recognised directly in equity are also recognised
directly in equity.
Allegiance Coal Limited (the 'head entity') and its wholly-owned Australian subsidiaries have formed an
income tax consolidated group under the tax consolidation regime. The head entity and each subsidiary
in the tax consolidated group continue to account for their own current and deferred tax amounts. The
tax consolidated group has applied the 'separate taxpayer within group' approach in determining the
appropriate amount of taxes to allocate to members of the tax consolidated group.
In addition to its own current and deferred tax amounts, the head entity also recognises the current tax
liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits
assumed from controlled entities in the tax consolidated group.
Income tax benefit
Current Tax
Aggregate income tax benefit
Consolidated
2021
$
2020
$
-
-
-
-
Numerical reconciliation of income tax benefit and tax at the statutory rate
Loss before income tax benefit
(14,360,594)
(9,215,936)
Tax at the statutory tax rate of 27.5%
(3,949,163)
(2,534,382)
Tax effect amounts which are not deductible in calculating taxable income:
Impairment of assets
-
-
(3,949,163)
(2,534,382)
Current year tax losses not recognised
3,949,163
2,534,382
Income tax benefit
-
-
Annual Report | 30 June 2021 | | Page 49 of 92
Notes to the financial statements
30 June 2021
Note 7. Income tax (continued)
Tax losses not recognised
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit at 26%
Tax losses have been adjusted for prior income tax returns lodged.
Note 8. Current assets - cash and cash equivalents
Cash at bank
Note 9. Trade and other receivables
Current
Trade receivable
GST recoverable
Prepayments
Non-Current
Prepayments
Reclamation bond deposits
Receivables are neither past due nor impaired.
Consolidated
2021
$
2020
$
34,711,670
20,351,076
9,025,034
5,291,280
Consolidated
2021
$
18,689,261
18,689,261
2020
$
442,055
442,055
Consolidated
2021
$
2020
$
86,771
294,139
523,108
-
75,926
96,355
904,018
172,281
980,000
2,943,408
3,923,408
-
-
-
Annual Report | 30 June 2021 | | Page 50 of 92
Notes to the financial statements
30 June 2021
Note 10. Current assets – inventory
Consumables
Work in progress
Coal stockpile
Consolidated
2021
$
850,347
14,984
302,441
1,167,772
2020
$
-
-
-
-
Note 11. Non-current assets - exploration and evaluation
Exploration and evaluation expenditure in relation to separate areas of interest for which rights of tenure
are current is carried forward as an asset in the statement of financial position where it is expected that
the expenditure will be recovered through the successful development and exploitation of an area of
interest, or by its sale; or exploration activities are continuing in an area and activities have not reached
a stage which permits a reasonable estimate of the existence or otherwise of economically recoverable
reserves. Where a project or an area of interest has been abandoned, the expenditure incurred thereon
is written off in the year in which the decision is made.
Exploration and evaluation assets are initially measured at cost and include acquisition of rights to
explore, studies, exploratory drilling, trenching and sampling and associated activities and an allocation
of depreciation and amortisation of assets used in exploration and evaluation activities. General and
administrative costs are only included in the measurement of exploration and evaluation costs where
they are related directly to operational activities in a particular area of interest.
Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest
that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount.
The recoverable amount of the exploration and evaluation asset (or the cash-generating unit(s) to which
it has been allocated, being no larger than the relevant area of interest) is estimated to determine the
extent of the impairment loss (if any). Where an impairment loss subsequently reverses, the carrying
amount of the asset is increased to the revised estimate of its recoverable amount but only to the extent
that the increased carrying amount does not exceed the carrying amount that would have been
determined had no impairment loss been recognised for the asset in previous years.
Where a decision is made to proceed with development in respect of a particular area of interest, the
relevant exploration and evaluation asset is tested for impairment and the balance is then reclassified
to development.
Annual Report | 30 June 2021 | | Page 51 of 92
Notes to the financial statements
30 June 2021
Note 11. Non-current assets - exploration and evaluation (continued)
Exploration and evaluation - at cost and fair value
Less: Impairment
Consolidated
2021
$
27,565,897
-
27,565,897
2020
$
21,070,371
-
21,070,371
The value of the consolidated entity’s interest in exploration and evaluation expenditure is dependent
upon:
•
•
•
the continuance of the consolidated entity’s rights to tenure of the areas of interest;
the results of future exploration and evaluation; and
the recoupment of costs through successful development and exploitation of the areas of
interest, or alternatively, by their sale.
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous
financial year are set out below:
Balance at 1 July 2019
Additions, at cost
Foreign exchange movement
Balance at 1 July 2020
Additions, at cost
Foreign exchange movement
Balance at 30 June 2021
Telkwa
$
16,508,615
4,265,378
296,378
21,070,371
6,175,398
320,127
27,565,896
Total
$
16,508,615
4,265,378
296,378
21,070,371
6,175,398
320,127
27,565,896
In December 2017, the consolidated entity entered into an agreement to acquire from Altius Minerals
Corporation (Altius), 100 percent ownership of all the rights to coal licences that make up the Telkwa
metallurgical coal project (Telkwa Project) (Acquisition). Up until the Acquisition, the consolidated entity
had earned 20 percent Telkwa Project ownership, and had the right to earn up to 90 percent Telkwa
Project ownership upon satisfaction of several milestones. The remaining 10 percent Telkwa Project
ownership would be retained by Altius who had a free carry on its Telkwa Project equity. In consideration
for the issue to Altius of 8.12 million, post consolidation, ordinary shares in the Company and the
continued performance of the milestone obligations (as set out in the table below, which table
incorporates an amendment agreed to in the year ended 30 June 2019), Altius agreed to transfer full
ownership of the Telkwa Project to the consolidated entity. As security against the performance of the
milestone obligations, the consolidated entity has provided a charge over the Telkwa Project. The
charge shall be subordinated to Telkwa Project debt finance.
Annual Report | 30 June 2021 | | Page 52 of 92
Notes to the financial statements
30 June 2021
Note 11. Non-current assets - exploration and evaluation (continued)
Milestone
File mine permit applications
Grant of small mine** permits
Sale of 100k tonnes from a small mine**
Grant of major mine** permits
Sale of 500k tonnes from a major mine**
Payment
Commitment *
C$0.5 million
C$0.5 million
C$2 million
C$2 million
C$5 million
Payable
C$300,000 upon milestone
C$200,000 18 months later
Upon milestone
Upon milestone
12 months after milestone
12 months after milestone
* payable, at Altius’ option, in cash or shares in the Company.
** a small mine is defined as one permitted to produce up to 250,000 saleable tpa and a major mine is
one permitted to produce more than 250,000 saleable tpa.
Impairment
The Telkwa Project has yet to reach a stage of development where a final determination of the technical
feasibility or commercial viability can be assessed. In these circumstances, whether there is any
indication that the asset has been impaired is a matter of judgement, as is the determination of the
quantum of any required impairment adjustment. The Directors have used their experience to conclude
that no impairment adjustment is required in the current year ended 30 June 2021.
Note 12. Non-current assets – property, plant and equipment
Cost or fair value
Less: accumulated depreciation
Net book value
Consolidated
2021
$
59,205,732
(580,088)
58,625,644
2020
$
-
-
-
Annual Report | 30 June 2021 | | Page 53 of 92
Notes to the financial statements
30 June 2021
Note 12. Non-current assets – property, plant and equipment (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous
financial year are set out below:
Cost or fair value
Balance at 1 July 2019
Additions
Foreign exchange movement
Balance at 1 July 2020
Acquired through business combination, at
fair value
Additions, at cost
Foreign exchange movement
Balance at 30 June 2021
Accumulated depreciation
Balance at 1 July 2019
Depreciation
Foreign exchange movement
Balance at 1 July 2020
Depreciation
Foreign exchange movement
Balance at 30 June 2021
Net book value
At 1 July 2020
At 30 June 2021
-
-
-
-
6,566,016
5,864,328
(293,545)
12,136,799
Washplant
$
-
-
-
-
49,992
(332)
49,660
Washplant
$
Infrastructure
$
Equipment
$
Total
$
-
-
-
-
-
-
-
-
-
-
-
-
17,591,246
3,856,712
(1,029,375)
20,418,583
18,828,176
8,986,386
(1,164,212)
26,650,350
42,985,438
18,707,426
(2,487,132)
59,205,732
Infrastructure Equipment
$
-
-
-
-
381,207
(2,536)
378,671
152,773
(1,016)
151,757
Washplant
$
-
12,087,139
Infrastructure Equipment
$
-
26,271,679
20,266,826
Total
$
-
-
-
-
583,972
(3,884)
580,088
Total
$
-
58,625,644
Note 13. Current liabilities - trade and other payables
Trade payables – other entities
Other payables
Refer to note 21 for further information on financial instruments.
Consolidated
2021
$
4,818,290
1,377,043
6,195,333
2020
$
331,642
387,217
718,859
Annual Report | 30 June 2021 | | Page 54 of 92
Notes to the financial statements
30 June 2021
Note 14. Borrowings
Current
Cline Mining Corporation note - current portion
Convertible notes - Mercer Street Global Opportunity Fund LLC
Secured Loan – Nebari Natural Resources Credit Fund I LP
Non-Current
Note – Cline Mining Corporation
Less : Present value discount of Cline note
Add : Unwinding of present value discount of Cline note
Foreign exchange movement
Itochu Corporation advances to Telkwa Coal Ltd
Canadian government Covid-19 loan
Consolidated
2021
$
2020
$
7,980,845
2,565,901
-
10,546,747
-
-
4,351,230
4,351,230
34,744,175
(10,971,250)
2,344,326
627,974
536,596
42,927
27,324,748
-
-
-
186,361
-
186,361
Refer to note 21 for further information on financial instruments.
In July 2020, the Company secured up to $8 million of funding by way of a secured convertible note
issued to Mercer Street Global Opportunity Fund LLC (Mercer), a New York based investment fund;
$662,000 of which was drawn in August 2020; $1,338,000 of which was drawn in September 2020;
$1,000,000 of which was drawn in October 2020; and $2,000,000 of which was drawn in January 2021;
and with further amounts to be drawn at the discretion of the parties subject to any required shareholder
approval. In August 2020, following receipt of the tranche 1 funds, notes with a face value of $772,105
maturing 5 August 2021 were issued. In September 2020, following receipt of the tranche 2 funds, notes
with a face value of $1,561,228 maturing 24 September 2021 were issued. In October 2020, following
receipt of the first tranche 3 funds, notes with a face value of $1,150,000 maturing 30 October 2021
were issued. In January 2021, following receipt of the second tranche 3 funds, notes with a face value
of $2,300,000 maturing 20 January 2022 were issued. The notes are convertible at Mercer’s election
into ordinary shares on the following terms : for the tranche 1 and 2 notes, the conversion price is the
lesser of $0.50 (post consolidation), or 92% of the lowest daily VWAP of Allegiance shares selected by
Mercer for the 10 trading days on which Allegiance shares are traded in the ordinary course of business
on the ASX ending on the date immediately prior to a conversion notice; and for the tranche 3 notes,
the conversion price is the lesser of $0.75 (post consolidation), or 90% of the lowest daily VWAP of
Allegiance shares selected by Mercer for the 10 trading days on which Allegiance shares are traded in
the ordinary course of business on the ASX ending on the date immediately prior to a conversion notice.
If the note is not converted, it will be repaid on maturity at its issued face value. By 30 June 2021, all
the tranche 1 and 2 notes and $750,000 of the tranche 3 notes had been converted into ordinary shares.
(see note 16). The fair value of the conversion rights of $1,477,039, has been recognised in profit and
loss as an element of finance costs expense.
In February 2020, the consolidated entity secured a bridging loan of US$2.5M from the Nebari Natural
Resources Credit Fund 1 LP (Nebari) secured over the assets of the Company (excluding the shares
in Telkwa Coal Limited). The loan did not bear interest but was repaid by paying the amount of US$4M
to Nebari as follows: US$1.25 million on each 31 December 2020 and 14 February 2021; and US$1.5
million on 31 March 2021.
Annual Report | 30 June 2021 | | Page 55 of 92
Notes to the financial statements
30 June 2021
Note 14. Borrowings (continued)
In October 2020, in connection with the acquisition of New Elk Coal Company LLC (New Elk), the Group
has assumed a note, maturing 1 July 2030, in favour of Cline Mining Corporation (Cline). The note is
interest free and secured against the assets of New Elk, but subordinated to up to US$40 million of
project debt. The face value of the note, net of US$4 million of Allegiance shares issued on closing (see
note 16), is US$35.12 million. US$3 million of the note was repaid in January 2021 from funds held by
the Colorado government as security for rehabilitation bonds, which was released upon replacement
with an insurance surety bond. A further initial debt repayment of US$6 million is payable on the earlier
of the date New Elk commences commercial production, as defined, and 1 December 2021. The
balance of the note is repayable in quarterly instalments from 60% of New Elk’s net cash flow after
providing for preferred debt payments and for sustaining and working capital requirements.
As the loan contains an interest-free period, AASB 9 Financial Instruments requires the full amount of
A$49,626,495 (US$35,120,671) to be discounted back to present value using prevailing market interest
rates for an equivalent loan. The fair value of the loan at 27 October 2020 is estimated at A$38,655,245
(US$27,356,317). The difference of A$10,971,250 (US$7,764,354) is the benefit derived from the
interest-free period of the loan and is recognised over the estimated life of the debt. A total of
A$2,344,326 (US$1,750,742) represents the unwinding of the present value discount up to 30 June
2021 and is recognised in the statement of comprehensive income under finance costs expense, net of
any capitalised finance costs.
Itochu advances to Telkwa Coal Ltd (TCL), which are in addition to the tranche 1 to 3 payments, relate
to amounts received from Itochu pending lodgement by TCL of the Tenas metallurgical coal project
environmental assessment application. Itochu has agreed to capitalise the loan pro-rata to its equity
interest in TCL following lodgement of the application. Accordingly, the advances, which are interest
free and unsecured, are quasi-equity.
In September 2020, the Group received a C$40,000 loan from the Canadian government as part of its
response to Covid-19. The loan is unsecured, interest free and repayable on or before 31 December
2022.
Note 15. Provisions
Mine closure and rehabilitation
Current portion – due within one year
Non-current portion – due after more than one year
Consolidated
2021
$
7,162,504
7,162,504
-
7,162,504
7,162,504
2020
$
-
-
-
-
-
Annual Report | 30 June 2021 | | Page 56 of 92
Notes to the financial statements
30 June 2021
Note 15. Provisions (continued)
Balance at 1 July 2019
Additions, at cost
Foreign exchange movement
Balance at 1 July 2020
Acquired through business combination, at fair value
Charged to profit or loss
Foreign exchange movement
Balance at 30 June 2021
Rehabilitation
$
Total
$
-
-
-
-
-
-
-
7,513,164
90,659
(441,319)
7,162,504
-
7,513,164
90,659
(441,319)
7,162,504
Mine closure and rehabilitation obligations
The calculation of the mine closure and rehabilitation provision requires assumptions such as
application of environmental legislation, mine closure dates, available technologies, engineering costs
and inflation and discount rates. A change in any of the assumptions used may have a material impact
on the carrying value of mine closure and rehabilitation obligations.
The mine closure and rehabilitation provision is recorded as a liability at fair value, assuming a risk-free
discount rate equivalent to the 30 year US Government bond rate of 1.91% as at 30 June 2021 (30
June 2020: nil) and an inflation factor of 1.8% (30 June 2020: nil). Although the ultimate amount to be
incurred is uncertain, management has, at 30 June 2021, estimated the asset retirement cost of work
completed to date using an expected remaining mine life of 25 years and a total undiscounted estimated
cash flow of $11,494,363 (US$8,641,462) (30 June 2020: nil).
Recognition and measurement of provisions
Provisions are recognised when the Company has a legal or constructive obligation, as a result of past
events, for which it is probable that an outflow of economic benefits will result and that outflow can be
reliably measured.
A mine closure and rehabilitation provision is recognised at the commencement of a mining project
and/or construction based on the estimated costs necessary to meet legislative requirements by
estimating future costs and discounting these to a present value. The provision is recognised as a
liability, separated into current (estimated costs arising within twelve months) and noncurrent
components based on the expected timing of these cash flows. A corresponding asset is included as
property, plant and equipment (mine development assets section), only to the extent that it is probable
that future economic benefits associated with the restoration expenditure will flow to the entity, and is
amortised over the life of the mine.
At each reporting date the mine closure and rehabilitation provision is re-measured in line with changes
in discount rates and timing or amounts of the costs to be incurred. Adjustments to the estimated amount
and timing of future closure and rehabilitation cash flows are a normal occurrence in light of the
significant judgements and estimates involved and are dealt with on a prospective basis as they arise.
Annual Report | 30 June 2021 | | Page 57 of 92
Notes to the financial statements
30 June 2021
Note 15. Provisions (continued)
Changes in the liability relating to mine closure and rehabilitation obligations are added to or deducted
from the related asset (where it is probable that future economic benefits will flow to the entity), other
than the unwinding of the discount which is recognised as a financing expense in Profit or Loss.
Changes in the asset value have a corresponding adjustment to future amortisation charges.
The mine closure and rehabilitation provision does not include any amounts related to remediation costs
associated with unforeseen circumstances.
Note 16. Equity – Issued Capital
Issued capital
Ordinary shares - fully paid
Consolidated
2021
$
91,040,096
2020
$
33,528,305
Annual Report | 30 June 2021 | | Page 58 of 92
Notes to the financial statements
30 June 2021
Note 16. Equity – Issued Capital (continued)
Consolidated
Balance at 1 July
Shares issued for cash in August 2019
Less costs
Shares issued for cash in September 2019
Less costs
Shares issued for cash in October 2019
Less costs
Shares vesting from performance rights
Less costs
Shares issued for cash in April 2020
Less costs
Shares issued on loan settlement
Share based payment
Shares issued for cash in September 2020
Cline Mining Initial Debt Reductions shares
Shares vesting from performance rights
Shares issued for cash in November and
December 2020
Less costs
Shares issued for cash in March 2021
Less costs
March 2021 Share Purchase Plan
Less costs
Shares issued for cash in April 2021
Less costs
Shares issued on conversion of notes
1 for 5 consolidation (incl. rounding)
Shares issued for cash in May 2021
Less costs
Shares vesting from performance rights
Less costs
Shares issued on conversion of notes
Balance at 30 June
2021
Number
2020
Number
2021
$
2020
$
801,666
22,017,871
614,260,861 545,681,260 33,528,305 27,423,519
60,125
(1,922)
3,082,502
(248,651)
619,600
(17,961)
325,000
(3,157)
1,922,063
(108,813)
476,000
32,034,376
4,425,688
2,500,000
6,800,000
2,955,083
1,790,999
70,651,405
3,750,000
152,658,612
187,500,000
38,218,750
125,000,000
25,490,121
1,222,275,831
244,455,344
34,444,444
250,000
3,277,780
200,000
107,460
5,652,112
487,500
7,632,931
(541,013)
15,000,000
(1,364,134)
3,057,500
(49,164)
10,000,000
(128,555)
1,475,000
15,500,000
(1,286,373)
162,500
(2,306)
1,608,333
282,427,568 614,260,861 91,040,096 33,528,305
Annual Report | 30 June 2021 | | Page 59 of 92
Notes to the financial statements
30 June 2021
Note 16. Equity – Issued Capital (continued)
In August 2020, the Company issued 0.7 million tranche 1 fee shares, with an attributed value of
$50,000, to Mercer Street Global Opportunity Fund LLC (Mercer) in connection with the Mercer secured
convertible note, and in September 2020, following shareholder approval, the Company issued 2.2
million tranche 2 fee shares, with an attributed value of $0.15 million, to Mercer.
In September 2020, following shareholder approval, the Company placed 1.8 million ordinary shares
with directors and consultants raising $0.1 million, before costs. The capital was raised to fund costs in
connection with the planned acquisition of the New Elk hard coking coal mine and the studies and
assessments required to support the Tenas Project mine permit application process.
In October 2020, in connection with the completion of the acquisition of New Elk Coal Company LLC,
the Company issued 70.65 million initial debt reduction shares to Cline Mining Corporation at an
attributed value of $5.65 million (US$4 million) (see note 25). And further, as a consequence of the
closing, 3.75 million performance rights, with an attributed value of $0.49 million, vested.
In November 2020, the Company completed a placement of 150.8 million ordinary shares to
sophisticated and professional investors raising $7.54 million, before costs. And in December 2020,
following shareholder approval, the Company placed 1.86 million ordinary shares with directors raising
$0.1 million, before costs. The capital was raised to fund development working capital at New Elk and
the Tenas environmental assessment application.
In March 2021, the Company completed a placement of 187.5 million ordinary shares to sophisticated
and professional investors raising $15 million, before costs. In addition, the Company completed a share
purchase plan, issuing 38.2 million ordinary shares and raising $3 million before costs. The capital was
raised to fund mine and equipment refurbishments at New Elk, the Tenas environmental assessment
application and debt repayment.
In April 2021, following shareholder approval, the Company completed a placement of 125 million
ordinary shares to sophisticated and professional investors raising $10 million, before costs. The capital
was raised to fund New Elk development.
In November 2020, Mercer elected to convert $0.2 million of the notes and the Company allotted 4.4
million shares to Mercer. In December 2020, Mercer elected to convert $0.5 million of the notes and the
Company allotted 11.2 million shares to Mercer. In February 2021, Mercer elected to convert $0.4
million of the notes and the Company allotted 4.5 million shares to Mercer. In April 2021, Mercer elected
to convert $0.4 million of the notes and the Company allotted 5.4 million shares to Mercer. (see note
14).
In May 2021, following shareholder approval, the Company’s share capital was consolidated on a one
for five basis.
In May 2021, the Company completed a placement of 34.4 million ordinary shares to sophisticated and
professional investors raising $15.5 million, before costs. The capital was raised to fund New Elk
development.
In June 2021, 0.25 million performance rights, with an attributed value of $0.16 million, vested.
In June 2021, Mercer elected to convert $1.6 million of the notes and the Company allotted 3.3 million
shares to Mercer. (see note 14).
Annual Report | 30 June 2021 | | Page 60 of 92
Notes to the financial statements
30 June 2021
Note 16. Equity – Issued Capital (continued)
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the
Company in proportion to the number of shares held. The ordinary shares have no par value and the
Company does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and
upon a poll each share shall have one vote.
Share buy-back
There is no current on-market share buy-back.
Performance rights
Performance rights, post consolidation, of Allegiance Coal Limited on issue, subject to vesting
conditions, at 30 June 2021 are 1,500,000 (2020: 2,500,000).
Options
Unissued ordinary shares, post consolidation, of Allegiance Coal Limited under option at 30 June 2021
are 5,148,333 (2020: 4,150,000).
Capital risk management
The consolidated entity's objectives when managing capital are to safeguard its ability to continue as a
going concern so that it can provide returns for shareholders and benefits for other stakeholders and to
maintain an optimum capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of
dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce
debt.
The consolidated entity would look to raise capital when an opportunity to invest in a business or
company was seen as value adding relative to the current parent entity's share price at the time of the
investment.
There are no externally imposed capital requirements. The capital risk management policy remains
unchanged from the 30 June 2020 Annual Report.
Note 17. Equity – reserves
General reserve
Share-based payments reserve
Foreign currency translation reserve
Consolidated
2021
$
16
2,356,666
350,753
2,707,435
2020
$
16
2,231,784
197,163
2,428,963
Annual Report | 30 June 2021 | | Page 61 of 92
Notes to the financial statements
30 June 2021
Note 17. Equity – reserves (continued)
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and directors as
part of their remuneration, and other parties as part of their compensation for services.
Foreign currency translation reserve
The foreign currency translation reserve comprises all foreign currency differences arising from the
translation of the financial statements of foreign operations.
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2019
Grant of performance rights and
options
Foreign exchange movement
Balance at 30 June 2020
Grant of performance rights and
share options
Performance rights vested
Options lapsed or expired
Conversion rights on Mercer notes
Mercer notes converted
Foreign exchange movement
General
$
Share-based
payment
$
Foreign
currency
translation
$
Total
$
16
-
-
16
-
-
-
-
-
-
318,867
(75,005)
243,878
1,912,917
-
-
272,168
1,912,917
272,168
2,231,784
197,163
2,428,963
563,624
(650,000)
(118,904)
1,477,039
(1,146,877)
-
-
-
-
-
-
153,590
563,624
(650,000)
(118,904)
1,477,039
(1,146,877)
153,590
Balance at 30 June 2021
16
2,356,666
350,753
2,707,435
Note 18. Equity - accumulated losses
Accumulated losses at the beginning of the financial year
Loss after income tax benefit for the year attributable to equity
holders of the Company
Gain on dilution of interest in subsidiary
Share options lapsed or expired
Mercer notes converted
Accumulated losses at the end of the financial year
Consolidated
2021
$
(20,746,304)
2020
$
(12,548,385)
(15,803,245)
-
118,904
1,146,877
(35,283,768)
(9,184,486)
986,567
-
-
(20,746,304)
Annual Report | 30 June 2021 | | Page 62 of 92
Notes to the financial statements
30 June 2021
Note 19. Equity - dividends
There were no dividends paid, recommended or declared during the current or previous financial
year.
Note 20. Minority interest
Minority interest at the beginning of the financial year
Dilution of interest in subsidiary at fair value
Loss after income tax benefit for the year attributable to minority
interest
Minority interest at the end of the financial year
Consolidated
2021
$
1,217,293
-
2020
$
602,310
646,433
(34,388)
1,182,905
(31,450)
1,217,293
Note 21. Financial instruments
Financial risk management objectives
The consolidated entity's activities expose it to a variety of financial risks: market risk (including foreign
currency risk, price risk and interest rate risk), credit risk and liquidity risk. The consolidated entity's
overall risk management program focuses on the unpredictability of financial markets and seeks to
minimise potential adverse effects on the financial performance of the consolidated entity. The
consolidated entity may use derivative financial instruments such as forward foreign exchange contracts
to hedge certain risk exposures. Derivatives are exclusively used for hedging purposes, i.e. not as
trading or other speculative instruments. The consolidated entity uses different methods to measure
different types of risk to which it is exposed. These methods include sensitivity analysis in the case of
interest rate, foreign exchange and other price risks, ageing analysis for credit risk and beta analysis in
respect of investment portfolios to determine market risk.
Risk management is carried out by senior finance executives ('Finance') under policies approved by the
Board of Directors ('the Board'). These policies include identification and analysis of the risk exposure
of the consolidated entity and appropriate procedures, controls and risk limits. Finance identifies,
evaluates and hedges financial risks within the consolidated entity's operating units. Finance reports to
the Board on a monthly basis.
Market risk
Foreign currency risk
The consolidated entity undertakes transactions denominated in foreign currency and is exposed to
foreign currency risk through foreign exchange rate fluctuations.
Foreign exchange risk arises from future commercial transactions and recognised financial assets and
financial liabilities denominated in a currency that is not the entity's functional currency. The risk is
measured using sensitivity analysis and cash flow forecasting.
Commodity price risk
The consolidated entity’s main commodity price risk is an adverse movement in the price of
metallurgical coal.
Annual Report | 30 June 2021 | | Page 63 of 92
Notes to the financial statements
30 June 2021
Note 21. Financial instruments (continued)
Interest rate risk
The consolidated entity's main interest rate risk arises from cash and cash equivalents and third party
loans.
The sensitivity analyses have been determined based on the exposure to interest rates and the
stipulated change taking place at the beginning of the financial year and held constant throughout the
reporting period.
As at the reporting date, the consolidated entity had the following variable rate borrowings and cash
and cash equivalents:
Consolidated
Cash and cash equivalents
Loans
Net exposure to cash flow interest
rate risk
2021
2020
Weighted
average
interest rate
%
Weighted
average
interest rate
%
Balance
$
0.1%
-
18,689,261
-
0.1%
-
Balance
$
442,055
-
18,689,261
442,055
Consolidated – 2021
Basis points increase
Basis
points
change
Effect on
profit before
tax
Effect on
equity
Basis points decrease
Effect on
profit
before tax
Basis
points
change
Effect on
equity
Cash and cash equivalents
Loans
200
200
373,785
-
373,785
373,785
-
373,785
200
200
(373,785)
-
(373,785)
(373,785)
-
(373,785)
Consolidated – 2020
Basis points increase
Basis
points
change
Effect on
profit before
tax
Effect on
equity
Basis points decrease
Effect on
profit
before tax
Basis
points
change
Effect on
equity
Cash and cash equivalents
Loans
200
200
8,841
-
8,841
8,841
-
8,841
200
200
(8,841)
-
(8,841)
(8,841)
-
(8,841)
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in
financial loss to the consolidated entity. The consolidated entity has a strict code of credit, including
obtaining agency credit information, confirming references and setting appropriate credit limits. The
consolidated entity obtains guarantees where appropriate to mitigate credit risk.
Annual Report | 30 June 2021 | | Page 64 of 92
Notes to the financial statements
30 June 2021
Note 21. Financial instruments (continued)
The consolidated entity's maximum exposure to credit risk at the reporting date in relation to each class
of recognised financial assets is the carrying amount as disclosed in the statement of financial position
and notes to the financial statements. The consolidated entity does not hold any collateral.
Liquidity risk
Vigilant liquidity risk management requires the consolidated entity to maintain sufficient liquid assets
(mainly cash and cash equivalents) and available borrowing facilities to be able to pay debts as and
when they become due and payable.
The consolidated entity manages liquidity risk by maintaining adequate cash reserves and available
borrowing facilities by continuously monitoring actual and forecast cash flows and matching the maturity
profiles of financial assets and liabilities.
Remaining contractual maturities
The following tables detail the consolidated entity's remaining contractual maturity for its financial
instrument liabilities. The tables have been drawn up based on the undiscounted cash flows of financial
liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables
include both interest and principal cash flows disclosed as remaining contractual maturities and
therefore these totals may differ from their carrying amount in the statement of financial position.
Consolidated – 2021
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Interest-bearing - fixed
Loans
Total non-derivatives
Consolidated – 2020
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Interest-bearing - fixed
Loans
Total non-derivatives
Weighted
average
interest rate
%
1 year or
less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5
years
$
Remaining
contractual
maturities
$
-% 4,818,290
-% 1,377,043
-
-
-
-
-
-
4,818,290
1,377,043
-% 10,590,845 11,971,268 22,772,906
16,786,178 11,971,268 22,772,906
- 45,335,019
- 51,530,352
Weighted
average
interest rate
%
1 year or
less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5
years
$
Remaining
contractual
maturities
$
-%
-%
331,642
387,217
-% 5,464,083
6,182,942
-
-
-
-
-
-
-
-
-
-
-
-
331,642
387,217
5,464,083
6,182,942
Annual Report | 30 June 2021 | | Page 65 of 92
Notes to the financial statements
30 June 2021
Note 21. Financial instruments (continued)
Credit risk
The cash flows in the maturity analysis above are not expected to occur significantly earlier than
contractually disclosed above.
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
Note 22. Fair value measurement
A number of assets and liabilities included in the Group’s financial statements require measurement
at, and/or disclosure of, fair value.
The fair value measurement of the Group’s financial and non-financial assets and liabilities utilises
market observable inputs and data as far as possible. Inputs used in determining fair value
measurements are categorised into different levels based on how observable the inputs used in the
valuation technique utilised are (the ‘fair value hierarchy’):
•
•
•
Level 1: Quoted prices in active markets for identical items (unadjusted)
Level 2: Observable direct or indirect inputs other than Level 1 inputs
Level 3: Unobservable inputs (i.e. not derived from market data).
The classification of an item into the above levels is based on the lowest level of the inputs used that
has a significant effect on the fair value measurement of the item. Transfers of items between levels
are recognised in the period they occur.
The carrying amounts of trade and other receivables and trade and other payables are assumed to
approximate their fair values due to their short-term nature.
The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at
the current market interest rate that is available for similar financial liabilities.
Annual Report | 30 June 2021 | | Page 66 of 92
Notes to the financial statements
30 June 2021
Note 23. Key management personnel disclosures
Directors
The following persons were directors of Allegiance Coal Limited during the financial year:
•
•
•
•
•
Mark Gray (Managing Director and Chairman)
Malcolm Carson (Non-executive Director)
Larry Cook (Non-executive Director)
Bernie Mason (Non-executive Director, appointed 1 February 2021)
Jonathan Reynolds (Finance Director)
Compensation
The aggregate compensation made to directors and other members of key management personnel of
the consolidated entity is set out below:
Short-term employee benefits
Post-employment benefits
Share-based payments
Consolidated
2021
$
1,837,703
-
-
1,837,703
2020
$
1,079,461
-
937,916
2,017,377
Loans to key management personnel and their related parties
There were no loans made to key management personnel and their related parties during the financial
year ended 30 June 2021 or 30 June 2020.
Other transactions with key management personnel and their related parties
Consultancy fees paid to related parties, included in remuneration disclosures above
Gray Corporate Law Ltd, a related party of Mark Gray, totalling $305,416
•
Gray Corporate Ltd, a related party of Mark Gray, totalling $225,252
•
Mineral Resource Consultants Pty Ltd, a related party of Malcom Carson, totalling $40,500
•
Cook Consulting Services, a related party of Larry Cook, totalling $224,017
•
J Reynolds CA Pty Ltd, a related party of Jonathan Reynolds, totalling $277,500
•
Coalsense Consulting Inc, a related party of Dan Farmer, totalling $272,940
•
Expenses reimbursements paid to related parties:
•
•
•
Gray Corporate Law Ltd, a related party of Mark Gray, totalling $91,307
Cook Consulting Services, a related party of Larry Cook, totalling $4,678
J Reynolds CA Pty Ltd, a related party of Jonathan Reynolds, totalling $23,313
Annual Report | 30 June 2021 | | Page 67 of 92
Notes to the financial statements
30 June 2021
Note 24. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by SCS
Superannuation & Taxation Services Pty Ltd, the auditor of the Company, and related firms:
Audit and review of the financial statements – SCS Audit & Corporate
Services Pty Ltd
Consolidated
2021
$
45,000
45,000
2020
$
25,000
25,000
Note 25. Business combinations during the period
On 26 October 2020 the Group acquired 100% of the voting equity instruments of New Elk Coal
Company LLC, a company whose principal activity is the New Elk metallurgical coal mine, in Colorado
USA, on care and maintenance at the time. The principal reason for this acquisition was to acquire a
fully permitted coal mine, to restart operation and commence supply of metallurgical coal onto the
seaborne market.
Details of the fair value of identifiable assets and liabilities acquired and purchase consideration are as
follows:
Cash and cash equivalents
Other receivables
Inventory
Property, plant and equipment
Trade and other payables
Borrowings
Provisions
Total net assets
Fair value of consideration paid
Cash
Initial Debt Reduction Shares issued
Total net assets
Fair value
$
30,004
8,832,457
1,233,401
42,985,438
(1,260,778)
(38,655,245)
(7,513,164)
5,652,113
Fair value
$
1
5,652,112
5,652,113
Annual Report | 30 June 2021 | | Page 68 of 92
Notes to the financial statements
30 June 2021
Note 26. Contingent assets and liabilities
Consolidated
Balance at 30 June 2019
New Elk Mine acquisition
Lorencito property coal leases
Balance at 30 June 2020
BWM Mine acquisition
Balance at 30 June 2021
Contingent
assets
$
-
58,591,670
5,478,654
Contingent
liabilities
$
-
58,591,670
5,478,654
64,070,324
64,070,324
17,406,902
17,406,902
17,406,902
17,406,902
In July 2021, the Company entered into a binding agreement to acquire all the shares in the Black
Warrior Minerals, Inc (BWM), which company owns the operating BWM coal mine located in Alabama,
United States. The acquisition closed in August 2021.
The key aspects of the acquisition are:
•
•
The purchase price for the shares in BWM is US$4 million which was paid on completion in
August 2021.
The Company is required to place funds or an insurance surety bond to secure the US$5.3
million Alabama state reclamation bond.
Note 27. Commitments
Operating leases
Within one year
One to five years
Later than five years
Consolidated
2021
$
1,131,978
3,135,610
7,125,366
11,392,954
2020
$
49,990
6,567
-
56,557
Operating lease commitments include contracted amounts for various offices, equipment and access
to coal and infrastructure under non-cancellable operating leases expiring within one to twenty six
years.
Annual Report | 30 June 2021 | | Page 69 of 92
Notes to the financial statements
30 June 2021
Note 27. Commitments (continued)
Capital commitments – plant and equipment
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
Consolidated
2021
$
2020
$
2,443,296
948,563
3,391,859
-
-
-
In April 2020, New Elk entered into coal lease agreements to mine and sell all the coal comprised in the
Lorencito property which neighbours the New Elk Mine. An initial lease payment of US$260,000 in cash
was paid to the leaseholders prior to the New Elk acquisition closing. The following milestone payments
are required to be paid to the leaseholders.
Milestone
Complete JORC 2012 Feasibility Study
Obtain mining and other permits
Production of first 1m tonnes of clean coal
Payment
Commitment
US$0.5 million
US$1 million
US$2 million
In addition to the above, the leaseholders will receive a US$1 royalty per tonne of coal sold where the
coal price is equal to or less than US$100 per tonne; plus an additional US$1 per tonne royalty for each
US$10 increase in the coal price up to a maximum royalty of US$20 per tonne.
In addition to the above, the leaseholders will receive 2.5% of the equity in New Elk Coal Holdings LLC,
once the Lorencito Property is in production, and that equity interest will be non-dilutionary up to the
capital cost required to reach 3Mt of annual saleable coal production
The consolidated entity acquired the Telkwa Project from a subsidiary of Altius Minerals Corporation
(Altius). The remaining payment commitments are summarised in the table below.
Milestone
File mine permit applications
Grant of small mine** permits
Sale of 100k tonnes from a small mine**
Grant of major mine** permits
Sale of 500k tonnes from a major mine**
Payment Commitment *
Payable
C$500,000 C$300,000 upon milestone
C$200,000 18 months later
Upon milestone
Upon milestone
12 months after milestone
12 months after milestone
C$500,000
C$2 million
C$2 million
C$5 million
* payable, at Altius’ option, in cash or shares in the Company.
** a small mine is defined as one permitted to produce up to 250,000 saleable tpa and a major mine is
one permitted to produce at more than 250,000 saleable tpa.
In addition to the above, Altius will receive a 3% gross sales royalty on coal sold where the benchmark
coal price is less than US$100 per tonne; 3.5% where the benchmark coal price is US$100-US$109.99
per tonne; 4% where the benchmark coal price is US$110-US$119.99 per tonne; and 4.5% where the
benchmark coal price is greater than US$120 per tonne.
Annual Report | 30 June 2021 | | Page 70 of 92
Notes to the financial statements
30 June 2021
Note 27. Commitments (continued)
As security for its performance of the above milestone payments, the consolidated entity has provided
a charge over the Telkwa Project in favour of Altius. The charge shall be subordinated to Telkwa Project
debt finance.
As the Kilmain project is currently under review, no exploration and evaluation expenditure has been
recognised as a commitment or liability payable, in relation to permits EPC1298 and EPC1917.
Note 28. Related party transactions
Parent entity
Allegiance Coal Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 30.
Key management personnel
Disclosures relating to key management personnel are set out in note 23 and the remuneration report
in the directors' report.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Annual Report | 30 June 2021 | | Page 71 of 92
Notes to the financial statements
30 June 2021
Note 28. Related party transactions (continued)
Set out below is the supplementary information about the parent entity.
Statement of comprehensive income
Loss after income tax
Total comprehensive loss
Statement of financial position
Total current assets
Parent
2021
$
(5,696,835)
(5,696,835)
2020
$
(8,880,253)
(8,880,253)
Parent
2021
$
15,332,061
2020
$
381,567
Total non-current assets
60,848,854
25,999,403
Total assets
Total current liabilities
Total liabilities
Net assets
Equity
Issued capital
Share-based payments reserve
Accumulated losses
Total equity
76,180,915
26,380,970
2,614,742
4,543,376
2,614,742
4,543,376
73,566,173
21,837,594
91,040,096
2,026,504
(19,500,427)
33,528,305
2,231,784
(13,922,495)
73,566,173
21,837,594
Annual Report | 30 June 2021 | | Page 72 of 92
Notes to the financial statements
30 June 2021
Note 29. Parent entity information
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
As at 30 June 2021, the parent entity has provided guarantees in respect of reclamation bond
obligations of subsidiaries totalling US$3.3 million.
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2020.
Contingent assets liabilities
The parent entity contingent assets and liabilities as at 30 June 2021 and 30 June 2020 are set out in
note 26.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2021
and 30 June 2020.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as
disclosed in note 2, except for the following:
•
•
•
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Investments in associates are accounted for at cost, less any impairment, in the parent entity.
Dividends received from subsidiaries are recognised as other income by the parent entity and its
receipt may be an indicator of an impairment of the investment.
Note 30. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following
subsidiaries in accordance with the accounting policy described in note 2:
Name
Telkwa Coal Limited
Allegiance Coal USA Limited
New Elk Coal Holdings LLC
New Elk Coal Company LLC
North Central Energy Company
Raton Basin Analytical LLC
Mineral & Coal Investments Pty Limited
Principal place of
business / Country of
incorporation
Canada
United States of America
United States of America
United States of America
United States of America
United States of America
Australia
Ownership interest
2020
2021
%
%
90%
90%
100%
100%
100%
100%
-
100%
-
100%
-
100%
100%
100%
Annual Report | 30 June 2021 | | Page 73 of 92
Notes to the financial statements
30 June 2021
Note 31. Events after the reporting period
In July 2021, Mercer elected to convert $1 million of the notes and the Company allotted 1.6 million
shares to Mercer.
In August 2021, the Company completed the acquisition of all the shares in Black Warrior Minerals Inc,
a company that owns the operating open pit BWM Mine located 40 miles northeast of Birmingham
Alabama, United States. The purchase price is US$4M in cash; and US$5.3M to replace the reclamation
bond lodged with the state. In addition, the Company contracted to make an ongoing payment of US$1
per tonne for any coal sold by BWM to the Alabama Coal Cooperative. Subsequent to the closing, the
Company paid a further US$1M in cash to close out this royalty payment.
In August 2021, in connection with the BWM Mine acquisition, the Company completed a placement of
44.8 million ordinary shares to sophisticated and professional investors raising $30 million, before costs.
Note 32. Reconciliation of loss after income tax to net cash used in operating activities
Loss after income tax benefit for the year
Adjustments for:
Depreciation and amortisation
Share-based payments
Non-cash fair value of conversion rights on Mercer note
Present value discount of debt instruments
Increase in rehabilitation provision
Change in operating assets and liabilities:
(Increase) / decrease in trade and other receivables
Increase in inventory
Increase in trade and other payables
Net cash used in operating activities
Consolidated
2021
$
(15,837,633)
2020
$
(9,215,936)
583,972
-
1,477,039
2,348,969
90,659
-
2,237,916
-
549,875
-
(393,625)
(286,377)
4,363,890
(7,653,106)
12,463
-
660,146
(5,755,536)
Annual Report | 30 June 2021 | | Page 74 of 92
Notes to the financial statements
30 June 2021
Note 33. Loss per share
Loss after income tax attributable to the owners of Allegiance Coal
Limited
(15,837,633)
(9,215,936)
Consolidated
2021
$
2020
$
Weighted average number of ordinary shares used in calculating basic
loss per share
Weighted average number of ordinary shares used in calculating diluted
loss per share
Basic loss per share
Diluted loss per share
Number
Number
178,245,837 114,891,584
282,427,568 122,852,172
Cents
Cents
(8.89)
(8.02)
(5.61)
(7.50)
Options have been excluded from the above calculation as their inclusion would be anti-dilutive.
Note 34. Share-based payments
Lead Manager Options
The Company engaged Petra Capital Pty Limited (Petra) as the Lead Manager for each the March and
May 2021 Placements. As part of the mandate, the Company issued to Petra a total of 2.2 million
Options (post consolidation) on successful completion of the Placements, which issues were
subsequently approved shareholders in general meeting.
Each option entitles Petra to subscribe for and be allotted one fully paid ordinary share. The Options
are personal to Petra, or its nominee, and may not be exercised by another person, or transferred,
disposed of or otherwise dealt with, unless the prior written consent of the Company is obtained. The
Optionholder has no rights to participate in new issues of capital offered to shareholders. However, the
Company will give Petra notice of the proposed issue prior to the date for determining entitlements to
participate in any such issue. The Options were issued for no consideration, as they were issued in
consideration for services provided in connection with the Placements.
The options were granted for a fixed period of three years and will expire on 3 March and 11 May 2024,
respectively, if not exercised on or before that date.
The Company engaged Bell Potter Securities Limited (BPSL) as the Lead Manager for the October
2017 Placement. As part of the mandate, the Company issued to BPSL a total of 1 million Options (post
consolidation) on successful completion of the Placement, which issue was approved at the Company’s
2017 annual general meeting. The options were granted for a fixed period and expired on 6 December
2020 unexercised.
Annual Report | 30 June 2021 | | Page 75 of 92
Notes to the financial statements
30 June 2021
Note 34. Share-based payments (continued)
2017 Participants Securities Incentive Plan
The 2017 Participants Securities Incentive Plan ('PSIP') was approved at the Company’s 2017 AGM.
The objective of the PSIP is to attract, motivate and retain key Directors, employees and consultants
and it is considered that issue of Securities under the PSIP will provide participants with the opportunity
to participate in the future growth of the Company.
Under the PSIP, the Board may in its discretion offer options to eligible participants. Offers must be
made under an offer document, which complies with applicable laws. Eligible participants may accept
such offers by completing and returning to the Company an application form within the timeframe
specified in the offer document.
Each Option held by a participant entitles them to subscribe for and be allotted one fully paid ordinary
share. Participant options are personal to the participant and may not be exercised by another person,
or transferred, disposed of or otherwise dealt with, except with the prior written approval of the
Company. A participant has no rights to participate in new issues of capital offered to shareholders.
However, the Company will ensure that for the purposes of determining entitlements to such an issue,
the record date will be at least ten business days after the issue is announced. The rights of a participant
may be changed to the extent necessary to comply with the ASX listing rules in respect of a
reorganisation of capital. Participant Options are issued under the PSIP for no consideration.
Options will lapse if:
i)
the conditions of exercise of the Options have not been met, or where the participant ceases to
render services to the consolidated entity;
the conditions of exercise of the Options are unable to be met; or
five years, or any other lapsing period specified in the offer document, has passed after the grant
of the Options;
ii)
iii)
All of a participant’s rights in respect of consultant options are immediately lost if the consultant options
lapse.
Set out below are summaries of Options granted (on a post-consolidation basis) under the plans:
2021
Exercise
price
Grant date Expiry date
6/12/2017 6/12/2020*
$0.25
6/12/2017 6/12/2022** $0.375
3/12/2019 3/12/2024**
$1.40
3/03/2021
3/3/2024*
$0.50
11/5/2021 11/5/2024* $0.5625
Balance at
the start of
the year
1,000,000
1,850,000
1,290,000
-
-
-
- 1,125,000
- 1,033,333
4,140,000 2,158,333
Granted Exercised
Balance at
the end of
the year
Expired/
forfeited/
other
-
- 1,000,000
150,000 1,700,000
-
- 1,290,000
-
- 1,125,000
-
-
- 1,033,333
- 1,150,000 5,148,333
Weighted average exercise price
* Lead Manager Options
** 2017 Participants Securities Incentive Plan
$0.6968
Annual Report | 30 June 2021 | | Page 76 of 92
Notes to the financial statements
30 June 2021
Note 34. Share-based payments (continued)
2020
Exercise
price
Grant date Expiry date
6/12/2017 6/12/2020*
$0.25
6/12/2017 6/12/2022** $0.375
3/12/2019 3/12/2024**
$1.40
Balance at
the start of
the year
1,000,000
1,850,000
-
-
- 1,290,000
2,850,000 1,290,000
Granted Exercised
-
-
-
-
Weighted average exercise price
* Lead Manager Options
** 2017 Participants Securities Incentive Plan
Expired/
forfeited/
other
Balance at
the end of
the year
- 1,000,000
- 1,850,000
- 1,290,000
- 4,140,000
$0.6640
Set out below are the options exercisable (on a post-consolidation basis) at the end of the financial
year:
Grant date
6/12/2017
6/12/2017
6/12/2017
3/03/2021
11/5/2021
Expiry date
6/12/2020*
6/12/2022**
6/12/2024**
3/3/2024*
11/5/2024*
* Lead Manager Options
** 2017 Participants Securities Incentive Plan
2021
Number
-
1,700,000
1,290,000
1,125,000
1,033,333
5,148,333
2020
Number
1,000,000
1,850,000
1,290,000
-
-
4,140,000
The weighted average share price (on a post-consolidation basis) during the financial year was
$0.2704 (2020: $0.5505).
The weighted average remaining contractual life of options outstanding at the end of the financial year
was 2.5 years (2020: 2.2 years).
Performance Rights
An issue of performance rights was approved at the Company’s 2019 annual general meeting to three
individuals directly associated with the origination and re-start of the New Elk Mine (Mine). The issue of
Performance Rights seeks to align the efforts of the three individuals in pursuing growth of the
Company's Share price and in the creation of Shareholder value. The Company believes that
incentivising with Performance Rights is a prudent means of conserving the Company's available cash
reserves. In addition, the Company believes the Performance Rights will assist to attract and retain
highly experienced and qualified board members and management in a competitive market.
In total, 3 million (post consolidation) Performance Rights have been issued in five separate classes, A
through E. The Performance Rights will automatically vest and convert into Shares on a one for one
basis upon satisfaction of milestones. A Performance Right will lapse upon the earlier to occur of: (a)
the cessation of the holder's employment or other engagement with the Company; and (b) the Vesting
Condition not being satisfied on or before the Expiry Date.
Annual Report | 30 June 2021 | | Page 77 of 92
Notes to the financial statements
30 June 2021
Note 34. Share-based payments (continued)
Details of Performance Rights issued are summarised below:
• 500,000 Class A Performance Rights which vested in December 2019, following shareholder
approval;
• 750,000 Class B Performance Rights which vested upon Completion of the Mine acquisition;
• 250,000 Class C Performance Rights which vested on completion of the commissioning of the
Mine and commencement of production;
• 750,000 Class D Performance Rights which will vest on the sale of the first 500,000 metric
tonnes of coal from the Mine, expiring 2 December 2022; and
• 750,000 Class E Performance Rights which will vest on the sale of the second 500,000 metric
tonnes of coal from the Mine, expiring 2 December 2023.
2021
Class
B
C
D
E
Expiry
date
2/6/21
2/2/22
2/12/22
2/12/23
Exercise
Price
$nil
$nil
$nil
$nil
2020
Class
A
B
C
D
E
Expiry
date
n/a
2/6/21
2/2/22
2/12/22
2/12/23
Exercise
Price
$nil
$nil
$nil
$nil
$nil
Balance at
the start of
the year
750,000
250,000
750,000
750,000
2,500,000
Balance at
the start of
the year
-
-
-
-
-
-
Granted
Expired/
forfeited
/ Other
-
-
-
-
-
Balance at
the end of
the year
-
-
750,000
750,000
1,500,000
Vested
750,000
-
250,000
-
-
-
-
-
- 1,000,000
Granted
500,000
750,000
250,000
750,000
750,000
3,000,000
Vested
500,000
-
-
-
-
500,000
Expired/
forfeited
/ Other
-
-
-
-
-
-
Balance at
the end of
the year
-
750,000
250,000
750,000
750,000
2,500,000
Annual Report | 30 June 2021 | | Page 78 of 92
Directors’ declaration
30 June 2021
1.
In the opinion of the directors of Allegiance Coal Limited (the ‘Company’):
a)
the financial report and the Remuneration Report included in the Directors’ Report,
designated as audited, of the consolidated entity are in accordance with the Corporations
Act 2001, including:
i) giving a true and fair view of the consolidated entity’s financial position as at 30
June 2021 and of its performance for the year ended on that date; and
ii) complying with Australian Accounting Standards, the Corporations Regulations
2001, professional reporting requirements and other mandatory requirements; and
b)
there are reasonable grounds to believe that the Company will be able to pay its debts as
and when they become due and payable; and
2. The financial statements and notes comply with International Financial Reporting Standards, as
discussed in Note 1; and
3. This declaration has been made after receiving the declarations required by section 295A of the
Corporations Act 2001 from the chief executive officer and chief financial officer for the financial
year ended 30 June 2021.
Signed in accordance with a resolution of the Board of Directors made pursuant to section 295(5) of the
Corporation Act 2001. This declaration is made in accordance with a resolution of the directors.
Mark Gray
Chairman
28 September 2021
Sydney
Annual Report | 30 June 2021 | | Page 79 of 92
Auditor’s independence declaration
LEAD AUDITOR’S INDEPENDENCE DECLARATION
UNDER SECTION 307C OF THE CORPORATIONS ACT 2001
TO : The Directors of Allegiance Coal Limited
In accordance with Section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence.
As Audit Director for the audit of Allegiance Coal Limited for the financial year ended 30 June 2021, I
declare that, to the best of my knowledge and belief, there have been no contraventions of:
•
•
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
any applicable code of professional conduct in relation to the audit.
Yours faithfully
SCS Audit & Corporate Services Pty Ltd
(An Authorised Audit Company)
________________
Didarul Khan
Director
Sydney
28 September 2021
Independent Auditor’s report
30 June 2021
Independent Auditor’s Report to the shareholders of Allegiance Coal Limited
Opinion
We have audited the financial report of Allegiance Coal Limited (“the Company”) and its subsidiaries
(“the Group”), which comprises the consolidated statement of financial position as at 30 June 2021, the
consolidated statement of comprehensive income, the consolidated statement of cash flows and the
consolidated statement of changes in equity for the year ended on that date, notes comprising a
statement of accounting policies and selected explanatory notes and the directors’ declaration.
In our opinion:
the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
(i)
giving a true and fair view of the consolidated financial position of the Group as at 30 June
2021 and of its consolidated performance for the year ended on that date; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors at the time
of this Auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Material uncertainty related to going concern:
Without qualifying our above opinion, we draw attention to Note 1 of the financial report – going concern,
which indicates that the Group incurred a loss from continuing operations after tax of $15,837,633. The
matters detailed in Note 1 describe events and / or conditions which indicate the existence of a material
uncertainty which may cast doubt as to the ability of the Group to continue as a going concern. The
Group may be unable to realise its assets and discharge its liabilities in the normal course of business,
at the amounts stated in the financial report. The financial statements do not include the adjustments
that would result if the Group was unable to continue as a going concern.
Independent Auditor’s Report to the shareholders of Allegiance Coal Limited (continued)
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of our
audit of the financial report as a whole, and in forming our opinion thereon. For each matter below, our
description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of material
misstatement of the financial report. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying
financial report.
1 Exploration and evaluation assets
Why significant
How our audit addressed the key audit matter
The Group has incurred significant exploration
and evaluation expenditures which has been
capitalised. As the carrying value of exploration
and evaluation expenditures represents a
significant asset of the Group, we considered it
necessary
facts and
to assess whether
circumstances existed to suggest that the
carrying amount of this asset may exceed its
recoverable amount.
Our audit procedures included:
• Obtaining independent searches that the Group
the areas
has valid
represented by the capitalised exploration and
evaluation expenditure;
to explore
rights
in
• Confirming that the rights to tenure of the areas
of interest remained current at the reporting date
as well as confirming that the rights to tenure are
expected to be renewed.
2 Carrying value of the capitalised exploration and evaluation assets
Why significant
How our audit addressed the key audit matter
resources
AASB 6: Exploration for and evaluation of
mineral
detailed
requirements with respect to both the initial
recognition of such assets and ongoing
requirements to continue to carry forward the
assets.
contains
Note 11 to the financial statements contains the
accounting policy and disclosures in relation to
exploration and evaluation expenditures.
• Reviewing the directors’ assessment of the carrying
value of the exploration and evaluation costs,
ensuring that management have considered the
effect of impairment indicators, commodity prices
and the stage of the Group’s project;
• Reviewing budgets and challenging assumptions
made by the Group to ensure that substantive
expenditure on further exploration for and evaluation
of the mineral resources in the areas of interest are
planned;
• Reviewing ASX announcements and minutes of
directors’ meetings to ensure that the Group had not
decided to discontinue activities in any of its areas
of interest.
Independent Auditor’s Report to the shareholders of Allegiance Coal Limited (continued)
3 Going concern
Why significant
How our audit addressed the key audit matter
including
For the year ended 30 June 2021 the Group
reported a net loss of $15,837,633 and net
operating cash outflows of $7,653,106. As at 30
June 2021 the Group had net current assets of
reserves of
cash
$4,018,971
$18,689,261. These matters
the
indicate
existence of an uncertainty which may cast
doubt as to the ability of the Group to continue
as a going concern. The Group may be unable
to realise its assets and discharge its liabilities
in the normal course of business, and at the
amounts stated in the financial report.
We evaluated the Group’s assessment of its ability to
continue
the
to operate as a going concern
foreseeable future. In obtaining sufficient audit evidence
we:
for
•
considered the Group’s budget for the 2022
financial year.
• made enquiries with directors of the Company as
to the intentions and strategy of the Group.
considered the adequacy of the disclosures
made by the Group in Note 1 to the financial
statements.
•
• Considered the need for Joint Venture partners.
Refer to Note 1 – going concern.
4 Exploration and evaluation expenses
Why significant
How our audit addressed the key audit matter
• The significance of the balance to the
Group’s Statement of Comprehensive
Income.
• The
required
level of
judgement
in
evaluating management’s application of
AASB 6 Exploration for and Evaluation of
Mineral Resources (“AASB6”). AASB 6 is an
industry specific accounting standard
the application of significant
requiring
judgements,
industry
knowledge.
estimates
and
• The assessment of exploration and
inherently
evaluation expenditure being
difficult.
•
•
Assessing management’s determination of its area
of interest for consistency with the definition of
AASB 6. This involved analysing the tenements in
the
which
the Group holds an
exploration programmes planned
those
tenements;
For each area of interest, we assessed the Group’s
right to tenure evaluating agreements in place with
other parties as applicable;
interest and
for
• We tested the additions to allocated expenditure for
the year by evaluating a sample of recorded
expenditure for consistency to underlying records,
the capitalisation requirements of the Group’s
accounting policy and the requirements of AASB 6.
Independent Auditor’s Report to the shareholders of Allegiance Coal Limited (continued)
5 Acquisition accounting of New Elk Coal Company LLC
Why significant
How our audit addressed the key audit matter
Our procedures included, but not limited to:
• Reviewing the purchase and sale agreements to
the
the Management’s
understand
the
acquisitions and evaluating
application of the relevant Accounting Standards;
terms and conditions of
• Obtaining an understanding of the transactions
including an assessment of whether the transaction
constituted a business or asset acquisition;
• Checking the calculation of share-based payments,
the value of the assets and the liabilities acquired
and the related acquisition cost; and
Assessing the appropriateness of the Group’s
disclosures in respect of the acquisition in note 25.
•
As disclosed in note 25 of the financial report,
the Company acquired from Cline Mining
Corporation (Cline) 100% of the voting equity
instruments in New Elk Coal Company LLC
(NECC) which company owns the New Elk hard
coking coal mine (Mine) located in southeast
Colorado, United States
The key terms of the acquisition were:
• The purchase price for the shares in NECC
was US$1.
• The Debt, which has a maturity date of 1
July 2030, will be repaid by NECC to Cline
as follows:
o US$4M in shares in the Company,
which were issued on completion;
o US$3M from the release of reclamation
bonds held with the Colorado State
government
their
replacement with an insurance surety
bond, which took place in January
2021;
following
o
o US$6M in cash on the earlier of
commencing commercial production,
as defined, and 1 December 2021;
The balance to be repaid from 60% of
flow after
NECC operating cash
provision
period’s
for
preferred debt payments and working
and sustaining capital.
following
The audit of the accounting for this acquisition
is a key audit matter due to the:
• Complexity
involved
the
determination of the accounting treatment of
the acquisition; and
in assessing
• The financial significance of the balance to
the statement of the financial position.
Independent Auditor’s Report to the shareholders of Allegiance Coal Limited (continued)
Information other than the financial statements and auditor’s report
The directors of the Company are responsible for the other information. The other information included
in the Group’s annual report for the year ended 30 June 2021 comprises the Director’s Report (but does
not include the financial report and our auditor’s report thereon), which we obtained prior to the date of
this auditor’s report.
Our opinion on the financial report does not cover the other information and we do not and will not
express any form of assurance conclusion thereon with the exception of the Remuneration Report.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors of the Company for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and
for such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or
error.
In preparing the financial report, the directors of the Company are responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and
using the going concern basis of accounting unless the directors of the Company either intend to
liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website http://www.auasb.gov.au/auditiors_responsibilities/ar1.pdf
This description forms part of our auditor’s report.
Independent Auditor’s Report to the shareholders of Allegiance Coal Limited (continued)
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 10 to 19 of the Directors’ Report for the
year ended 30 June 2021.
In our opinion, the Remuneration Report of Allegiance Coal Limited for the year ended 30 June 2021,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express
an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
SCS Audit & Corporate Services Pty Ltd
(An Authorised Audit Company)
____________________
Didarul Khan
Director
Sydney
Dated 28 September 2021
Additional Securities Exchange information
As at 24 August 2021
Distribution of securities
Analysis of number of security holders by size of holding:
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Ordinary
shares
234
254
162
491
237
Options Performance
rights
-
-
-
-
3
-
-
-
2
7
Convertible
notes
-
-
-
-
1
Total
1,378
9
3
1
Name
Equity security holders
The names of the twenty largest security holders of Ordinary Shares listed on the share register are:
% of Units
16.32
12.33
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
Units
53,646,687
40,547,111
CS Third Nominees Pty Limited
Cline Mining Corporation
Delphi Unternehmenberatung AG
Deutsche Balaton Aktiengesellschaft
J P Morgan Nominees Australia Limited
Cs Fourth Nominees Pty Limited
BNP Paribas Nominees Pty Ltd
Telkwa Holdings Ltd
Mr Clive Thomas
2invest AG
JA Ashton Nominees (Qld) Pty Ltd
GFT Nominees (Qld) Pty Ltd
UBS Nominees Pty Ltd
John Wardman & Associates Pty Ltd
Latimore Family Pty Ltd
Franklin Civil Pty Ltd
2invest AG
NGE Capital Limited
20,395,758
14,130,281
10,042,538
9,138,060
8,444,935
7,633,917
5,756,493
5,350,296
5,000,000
4,959,824
4,944,467
4,217,035
3,616,035
3,400,000
3,155,888
3,125,458
3,074,628
3,070,896
6.20
4.30
3.05
2.78
2.57
2.32
1.75
1.63
1.52
1.51
1.50
1.28
1.10
1.03
0.96
0.95
0.94
0.93
Unquoted equity securities
The Company has the following unquoted equity securities on issue: 3.501,616 million Lead Manager
Options granted to Petra Capital Pty Ltd; 2,990,000 2017 PSIP Options; 1,500,000 Performance Rights;
and 1,700,000 Notes convertible into ordinary shares at the election of the note-holder.
Unmarketable parcels
There are 208 holders holding less than a marketable parcel of the entity’s quoted equity securities.
Annual Report | 30 June 2021 | | Page 87 of 92
On-Market Buyback
There is no current on-market buyback.
Substantial Holders
Substantial holders in the Company are set out below:
Rank
Name
Address
Units
% of
Units
43,781,095
13.32
Golden Energy and
Resources Limited
(GEAR)
Deutsche Balaton AG,
Delphi
Unternehmenberatung AG
and 2invest AG
Ascend Global Investment
Fund - Asia Opportunity
SP(AGIF-AOSP)
Regal Funds Management
Pty Ltd (RFM)
1.
2.
3.
4.
20 Cecil Street, #05-05 PLUS, Singapore
049705
Ziegelhaeuser Landstrasse 1, Heidelberg
69120, Germany
and Ziegelhaeuser Landstrasse 3,
Heidelberg 69120, Germany
Cricket Square, Hutchins Drive, P.O. Box
2681, Grand Cayman, KY1-1111,
Cayman Islands
Level 47 Gateway 1 Macquarie Place
Sydney NSW 2000
31,390,354
9.55
19,185,310
5.82
17,694,702
5.38
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote
and upon a poll each share shall have one vote.
Options over ordinary shares
There are no voting rights attached to the options over ordinary shares.
Performance rights
There are no voting rights attached to the performance rights.
Convertible notes
There are no voting rights attached to the convertible notes.
There are no other classes of equity securities.
Restricted securities
There are no restricted securities.
Tenements
Description
New Elk Coal Company LLC
New Elk Coal Mine – Colorado, USA
Lorencito Project – Colorado, USA
Black Warrior Minerals Inc
Black Warrior Mine – Alabama, USA
Telkwa Coal Limited
Telkwa Project – British Columbia, Canada
Tenement number
Interest owned
%
635047
607075
Note 1
Note 2
100
100
100%
100
Annual Report | 30 June 2021 | | Page 88 of 92
Mineral and Coal Investments Pty Limited
Kilmain - Bowen Basin
Kilmain – Bowen Basin
EPC 1917
EPC 1298
100
100
Note 1, The coal resources are located within Jefferson County, State of Alabama. Control of the
property is governed by various lease agreements with several different landowners and mineral
rights owners.
Note 2, List of tenements the subject of the Telkwa Project:
DL 230 PID - 014-958-724; DL 237 PID - 014-958-732; DL 389 PID - 014-965-666; DL 391 PID - 014-
965-674; DL 401 PID - 014-965-682; 353440; 334059; 327972; 327836; 327837; 327838; 327839;
327845; 328672; 327834; 327840; 327865; 327866.; 327936; 327944; 327951; 327952; 327953;
327954; 327964; 327965.
Resources and reserves
New Elk Coal Company LLC
The Company’s JORC Code 2012 coal resource and reserve statement for New Elk Coal Company
LLC is as follows:
Combined, the New Elk Mine and the Lorencito Property comprise 744Mt of coal resources of which
45.1Mt have been converted from three of nine coal seams representing 31% of total coal resources,
into coal reserves.
In its 15 July 2019 announcement, the Company listed the New Elk Mine coal resources previously
prepared in July 2012 in accordance with National Instrument NI 43-101 ‘Standards of Disclosure for
Mineral Projects’ (NI 43-101) by Agapito Associates, Inc., a US nationally recognised engineering firm
(Report). The Report declared a mineral resource estimate of 656Mt of coal resources at a minimum
seam height of three foot. The mineral resource estimate is shared across 8 coal seams summarised
below.
Coal seams
Green
Loco
Blue
BCU
Red
Maxwell
Apache
Allen
Total
Seam height
3 to 7 foot
3 to 4 foot
3 to 5 foot
3 to 6 foot
3 to 4 foot
3 to 9 foot
3 to 5 foot
3 to 5 foot
Measured Mt
29.94
13.06
47.36
11.61
21.14
65.41
45.63
38.83
271.97
Indicated Mt
24.95
27.22
34.56
33.38
9.34
65.05
51.53
43.45
289.48
Inferred Mt
0.09
24.13
0.82
27.22
0.00
15.79
13.97
12.79
94.80
Total Mt
53.98
64.41
82.74
72.21
30.48
146.24
111.13
95.07
656.26
Cautionary statement: Investors should note that the Agapito mineral resource estimates for the New
Elk Project are foreign estimates under ASX Listing Rule 5.12 and are not reported in accordance with
JORC Code (2012 Edition of the “Australian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves”) (JORC Code).
Except as is stated below in relation to the Green, Blue and Allen seams, a competent person has not
done sufficient work to classify the foreign estimates as a mineral resource under the JORC Code in
relation to the other coal seams, and it is uncertain that following further exploration or evaluation work
that this foreign estimate in relation to those other seams, will be able to be reported as a mineral
resource in accordance with the JORC Code.
Annual Report | 30 June 2021 | | Page 89 of 92
Pursuant to the feasibility study, Stantec has prepared a statement of resources and reserves in
accordance with the JORC Code and NI 43-101 in relation to the Green, Blue and Allen seams only, as
set out below.
Resources
Green seam
Blue seam
Allen seam
Total
Reserves
Green seam
Blue seam
Allen seam
Total
Seam height Measured Mt
19.1
89.6
68.9
177.6
3.0 foot
3.0 foot
3.0 foot
3.0 foot
Indicated Mt
17.7
31.4
25.4
74.4
Inferred Mt
5.6
9.1
0.7
15.6
Total Mt
42.4
130.2
95.1
267.6
4.0 foot
4.0 foot
4.0 foot
4.0 foot
Proven Mt Probable Mt Saleable Mt
0.8
22.2
22.1
45.1
0.8
17.7
16.7
35.2
-
4.5
5.5
9.9
As disclosed in the Company’s announcements of 5 and 9 December 2019, the Lorencito Property has
been the subject of several drill programmes totalling 217 holes, geological and scoping studies, the
most recent the Company is aware of was by Mine Engineers, Inc. from Wyoming, dated November
2008 (Study). The Study developed a geological model based on existing coal exploration and coal bed
natural gas wells covering eight coal seams, including the Primero seam.
In its resource estimation, the Study relied on resource estimates from a report dated 1997 prepared
by Reserve Services of Laramie, Wyoming, US, prepared in conformity with guidelines of the U.S
Bureau of Mines and U.S Geological Survey “Coal Resource Classification System” (USGS Circular
No. 891, 1983) (Source Report).
The Source Report categorised the resources in accordance with USGS Circular No. 891, 1983, as
‘Demonstrated in place coal resources’, and then went on to apply parameters to categorise the ‘in
place’ resources as Measured and Indicated. Under USGS Circular No. 891, 1983, Demonstrated in
place coal is the sum of Measured and Indicated resources. The Study relied upon the Source Report
to establish the same categorisation of ‘in place coal’ but did not proceed to break that down into further
categories.
The calculated in-place coal resources for the Primero seam is 87.6Mt, summarised in the table below
by reference to coal seam thickness. As is evident, the vast majority of the in-place coal exceeds 4 foot
thickness.
In place coal seam thickness (feet)
3.0 to 4.0
4.0 to 5.0
5.0 to 6.0
6.0 +
Total
Demonstrated in place coal resources (metric tonnes)
24.5
33.8
23.0
6.3
87.6
Cautionary statement: Investors should note that the mineral resource estimates for the Lorencito
Property are foreign estimates under ASX Listing Rule 5.12 and are not reported in accordance with
JORC Code (2012 Edition of the “Australian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves”) (JORC Code). A competent person has not done sufficient work to
classify the foreign estimates as a mineral resource under the JORC Code and it is uncertain that
following further exploration or evaluation work that this foreign estimate will be able to be reported as
a mineral resource in accordance with the JORC Code.
The coal resources referred to above were first reported in the Company’s 15 July 2019 announcement
(July 2019 Announcement) and its 5 and 9 December 2019 announcements (together the December
2019 Announcement). The coal reserves referred to above were first reported in the Company’s release
Annual Report | 30 June 2021 | | Page 90 of 92
of its New Elk feasibility study results on 28 November 2019 (November 2019 Announcement). The
Company confirms that it is not aware of any new information or data that materially affects the
information included in the July 2019 Announcement, the December 2019 Announcement or the
November 2019 Announcement (together the Announcements), and that all material assumptions and
technical parameters underpinning the estimates in the Announcements continue to apply and have not
materially changed.
Black Warrior Minerals Inc
The Company’s JORC Code 2012 coal resource statement for Black Warrior Minerals Inc is as follows:
Controlled Coal Resource (Mt)
Newcastle
Mary Lee
Blue Creek
Total
Measured
0.436
0.991
0.748
2.175
Not Controlled Coal Resource (Mt) Measured
0.002
Newcastle
0.006
Mary Lee
0.004
Blue Creek
0.012
Total
Indicated
0.715
1.449
0.997
3.161
Indicated
0.212
1.073
0.635
1.921
Inferred
0.141
745.8
0.557.2
1.441
Inferred
0.119
0.513
0.235
0.867
Total
1.289
3.186
2.303
6.779
Total
1.333
1.592
0.874
2.800
The coal resources referred to above were first reported in the Company’s announcement advising the
acquisition of Black Warrior Minerals Inc on 30 July 2021 (the July 2021 Announcement). The Company
confirms that it is not aware of any new information or data that materially affects the information
included in the July 2021 Announcement and that all material assumptions and technical parameters
underpinning the estimates in the July 2021 Announcement continue to apply and have not materially
changed.
Telkwa Coal Limited
The Company’s JORC Code 2012 coal resource and reserve statement for Telkwa Coal Limited is as
follows:
Coal Resource (Mt)
Tenas
Goathorn
Telkwa North
Total
Measured
58.8
59.5
15.7
134.0
Indicated
-
9.2
3.7
12.9
Inferred
-
0.2
1.0
1.2
Total
58.8
68.9
20.4
148.1
In July 2017 the Company completed a pre-feasibility study (PFS) declaring 42.5Mt of saleable coal
reserves across the resource base as follows:
Reserve (Mt)
Tenas Proven
Tenas Probable
Tenas Total
Goathorn Proven
Goathorn Probable
Goathorn Total
Telkwa North Proven
Telkwa North Probable
Telkwa North Total
Grand Total
ROM Coal
29.1
-
29.1
22.1
0.2
22.3
10.8
0.7
11.5
62.9
Clean Coal
20.6
-
20.6
12.6
0.1
12.7
6.4
0.4
6.8
40.1
Total
21.0
-
21.0
13.8
0.1
13.9
7.0
0.5
7.5
42.5
Annual Report | 30 June 2021 | | Page 91 of 92
In March 2019, the Company completed a definitive feasibility study focussed solely on the Tenas
deposit, as part of which the Tenas reserve was updated and declared to be :
Reserve (Mt)
Proven
ROM coal
Saleable coal
Probable
ROM coal
Saleable coal
Total
ROM coal
Saleable coal
Tenas
17.1
12.9
4.9
3.7
22.0
16.5
The coal resources referred to above were first reported in the Company’s release of its updated
geological model on 18 June 2018, supplemented by its 26 June 2018 announcement (together the
June 2018 Announcement). The coal reserves referred to above were first reported in the Company’s
release of its Telkwa PFS results on 3 July 2017 (July 2017 Announcement), updated in the Tenas DFS
on 18 March 2019 (March 2019 Announcement). The Company confirms that it is not aware of any new
information or data that materially affects the information included in the July 2017 Announcement, the
June 2018 Announcement or the March 2019 Announcement (together the Announcements), and that
all material assumptions and technical parameters underpinning the estimates in the Announcements
continue to apply and have not materially changed.
Competent Person Statement
The information above that relates to Mineral Resources and Reserves, unless otherwise stated, is
based on information reviewed and compiled by Mr Dan Farmer, a registered professional engineer
with the Association of Professional Engineers and Geoscientists of British Columbia. Mr Farmer is
engaged by the Company on a full-time basis and has sufficient experience which is relevant to the
style of mineralisation and the type of deposit under consideration and to the activity which he is
undertaking to qualify as a Competent Person as defined in the JORC Code (2012 Edition of the
“Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”). Mr
Farmer has consented to the inclusion of the information in the form and context in which it appears
above.
Annual Report | 30 June 2021 | | Page 92 of 92