More annual reports from Altura Mining Limited:
2020 ReportANNUAL REPORT 2016 CORPORATE DIRECTORY DIRECTORS James Brown Managing Director Paul Mantell Executive Director Allan Buckler Non-Executive Director Dan O’Neill Non-Executive Director Beng Teik Kuan Non-Executive Director COMPANY SECRETARIES Noel Young Damon Cox REGISTERED OFFICE Units 5 & 6 25 Hamilton Street Subiaco WA 6008 T: +61 8 9488 5100 F: +61 8 9488 5199 E: cosec@alturamining.com W: alturamining.com AUSTRALIAN SECURITIES EXCHANGE Code: AJM AUDITORS PKF Hacketts Audit Level 6 10 Eagle Street Brisbane QLD 4000 SHARE REGISTRY Link Market Services Limited Level 4 152 St George’s Terrace Perth WA 6000 2016 YEAR IN REVIEW 2016 HIGHLIGHTS PILGANGOORA LITHIUM CORPORATE DEVELOPMENTS FINANCIAL STATEMENTS DIRECTORS’ REPORT AUDITORS’ INDEPENDENCE DECLARATION CONSOLIDATED STATEMENT OF PROFIT AND LOSS CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME CONSOLIDATED BALANCE SHEET CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONSOLIDATED STATEMENT OF CASH FLOWS NOTES TO THE FINANCIAL STATEMENTS DIRECTORS' DECLARATION INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS ADDITIONAL ASX INFORMATION MINERAL RESOURCES AND ORE RESERVES STATEMENT 2 4 6 10 13 14 26 27 28 29 30 31 32 75 76 78 81 CONTENTS PILGANGOORA LITHIUM: RAPIDLY DEVELOPING TOWARDS PRODUCTION Dear Shareholder, I am pleased to report that over the past year the Pilgangoora Lithium project has rapidly developed towards production. Since our last annual report Altura has recruited a project team under the guidance of Mr Chris Evans, General Manager Operations, to coordinate the required feasibility studies, undertake the mine planning and advance the various mining approvals for the project. The development of the Pilgangoora Lithium project has now accelerated to the point where subject to finance and expected government approval of the Mining Proposal, construction of the mine can commence early in 2017. With an 11 month construction period, the first production from the mine is planned to occur from Q4 2017 which will place Altura in an elite group of near term lithium supply companies. The journey from a “large hard rock lithium deposit” to “Australia’s likely next producing lithium mine” over the past 12 months has been remarkable, and would not have been possible without the dedicated efforts of the Pilgangoora Lithium project team located on site and in the Perth office backed by the ongoing support of our shareholders. The key milestones that have underpinned the rapid development of the project include: 2016 YEAR IN REVIEW 2 ALTURA MINING LIMITED ANNUAL REPORT 2016 • Definitive Feasibility Study (DFS) released in September 2016 • Haul road design and agreement with local authority • Feasibility Study (FS) announced in April 2016 • Mining Proposal lodged in September 2016 • Maiden and revised Ore Reserve estimates • Upgraded Mineral Resource estimates • Binding offtake agreement and share placement with Chinese lithium company, Lionergy Limited • Completion of access agreements with landowners • Metallurgical testwork for the design of the minesite plant During the year the Company also undertook a review of the long-term viability of the Indonesian coal assets which comprise the Delta Coal mine and Tabalong Coal Project, and has taken the decision to divest the assets as soon as practicable. At the conclusion of this coal restructuring process, Altura will become a pure lithium play company. I also take this opportunity to acknowledge the valuable support of our shareholders, particularly those who have participated in recent capital raisings. • Issue of mining tender and power plant tender documents This ongoing support has enabled the Company to quickly progress the Pilgangoora Lithium project through the feasibility studies and mine planning processes to bring the project to where it is today. Your board will continue to ensure that the Company remains focussed on accelerating the development of the Pilgangoora Lithium Project towards production in the earliest possible timeframe. Sincerely, James Brown Managing Director 3 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED 2016 HIGHLIGHTS $20msuccessful capital raising conducted FSPilgangoora Lithium Project Feasibility Study completed and released 11 April 2016 DFS Pilgangoora Lithium Project Definitive Feasibility Study released 26 September 2016 Binding Offtake Agreement signed with China based group Lionergy Limited for 100,000 tonnes of 6% Li2O grade spodumene concentrate annually for an initial 5 year period Access and Compensation Deed signed with the pastoral lease holders who occupy the land over which Altura’s Pilgangoora tenements are located Non-binding Memorandum of Understanding (MOU) with China based lithium battery and electronic vehicle producing group, Optimum Nano Battery Co. Limited Native title Agreement with the Njamal people, the traditional owners of the land (early July 2016) PROGRESS TOWARDS PILGANGOORA LITHIUM MINE DEVELOPMENT 4 ALTURA MINING LIMITED ANNUAL REPORT 2016 PILGANGOORA LITHIUM DFS KEY OUTCOMES (released in September 2016) 219k Annual spodumene concentrate production in tonnes over 13 year mine life $411m Project net present value pre-tax $316 Life of mine cash cost per tonne of spodumene concentrate (AUD) $140m Capital estimate, including sustaining capital 2.9:1 Life of mine strip ratio 1.8Payback period (years) Mining proposal prepared for submission to the (WA Department of Mines and Petroleum) Power plant tender issued Haul road design commenced Mining tender documents issued to prospective contractor bidders Agreement reached with the local authority to upgrade the haul road In-house Project team significantly expanded including recruitment of a full time Processing Manager and a Mining Superintendent 5 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED PILGANGOORA LITHIUM During the year, Altura completed its Feasibility Study on the Pilgangoora Lithium Project, followed by announcement of the results of its Definitive Feasibility Study (DFS) in September 2016. PROJECT OVERVIEW The Pilgangoora Lithium Project is located in Western Australia’s Pilbara region. The Project seeks to develop mining, processing, logistics and support infrastructure to mine and process an average 1.54 Mtpa of ore to produce approximately 219,000 tonnes of lithium spodumene concentrate per annum, commencing Q4 2017. Pilgangoora will be extracted by open pit methods enhanced by the shallow and thick mineralisation allowing spodumene ore to be mined from the commencement of mining. The deposit has a low Life of Mine (LOM) strip ratio of 2.9:1, providing Altura with a very low operational mining cost. PROJECT LOCATION The Project is approximately 90 km south of Port Hedland (see Figure below) and road access to the site is via the Great Northern Highway and then Shire roads and station tracks. The Pilgangoora mining lease tenements are M45/1230 and M45/1231 and cover a total area of 394 hectares. DEFINITIVE FEASIBILITY STUDY The outcomes of the Definitive Feasibility Study (DFS) released on 26 September 2016 have confirmed the Pilgangoora Lithium Project as a significant mining opportunity that will deliver substantial long-term value to shareholders. The DFS has assessed strategic options for development, and determined an economic open pit mine operation, production schedule and site layout for the preferred option. The key outcomes of the DFS are: • Project net present value (NPV) of $411 million over an initial 13 year mine life; 6 ALTURA MINING LIMITED ANNUAL REPORT 2016 • An attractive capital estimate of A$139.7 million including sustaining capital and a payback period of 1.8 years; • Life of Mine (LOM) cash cost of A$316 per tonne of spodumene concentrate; of spodumene concentrate at 6% Li2O; • Ore Reserve estimate of 20.33 Mt @ 1.07% Li2O (entirely in the Probable category) which underpins the initial 13 year mine plan; and The DFS capital and operating cost estimates, which carry an expected accuracy range of +/-10%, have been externally peer reviewed by integrated project service group Aquenta Consulting Pty Ltd. • Average annual ore feed of 1.54 Mt and average annual production of 219,000 tonnes • Attractive LOM strip ratio of 2.9:1 (waste to ore) providing a very low operational mining cost. For further information, please refer to the ASX Release on 26 September 2016. DEFINITIVE FEASIBILITY STUDY KEY RESULTS Description Average annual ore feed to plant (LOM)1 Total ore mined Annual spodumene concentrate production (6% Li2O) Life of Mine (LOM) Total spodumene concentrate produced LOM strip ratio Spodumene concentrate average market price2 Capital cost estimate3 Total revenue Project EBITDA4 Total cash cost FOB/tonne product5 Net present value (NPV)6 Internal rate of return (IRR) Discount rate Project payback period Exchange rate Units Mtpa Mt tonnes years Mt waste:ore US$/wmt A$M A$M A$M A$ A$M % % years Results 1.54 20.33 219,000 13.2 2.89 2.9:1 538.80 139.7 2,074 1,064 315.90 411 58.1 10 1.8 AUD:USD 0.7500 1. Average annual ore feed based nominal 1.4 Mtpa capacity; process and mechanical design of the plant allows for 15% engineering contingency on the nominal throughput of 1.4 Mtpa, allowing capacity to be maintained at 1.45 Mtpa and to peak at 1.54 Mtpa. 2. Price based on FOB forecast equivalent. 3. Including sustaining capital and pre-development capital. 4. EBITDA is after allowing for Native Title and Royalties. 5. Total cash cost FOB/tonne product is defined as all cash costs to free on board, excluding royalties, interest, tax and depreciation. 6. Net Present Value (NPV) is pre-tax and on a real basis, at a 10% discount rate. 7 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED ORE RESERVE ESTIMATE ORE RESERVE ESTIMATE – SEPTEMBER 2016 JORC category Proven Probable Total Cut-off Li2O % Ore (million tonnes) 0.4% 0.4% 0.4% - 20.3 20.3 Li2O (%) Fe2O3 (%) - 1.06 1.06 - 1.96 1.96 MINERAL RESOURCE ESTIMATE – SEPTEMBER 2016 JORC category Measured Indicated Inferred Total Cut-off Li2O % Ore (million tonnes) 0.4% 0.4% 0.4% - 30.56 8.60 0.4% 39.16 Li2O (%) Fe2O3 (%) - 1.04 0.95 1.02 - 2.00 2.05 2.01 Contained Li2O (tonnes) - 215,000 215,000 Contained Li2O (tonnes) - 318,000 82,000 400,000 The Pilgangoora project has a current Ore Reserve estimate of 20.3 million tonnes at 1.06% Li2O and 215,000 tonnes of contained Li2O, which is classified entirely in the Probable category. This revised estimate was prepared by Orelogy Consulting Pty Ltd, a Western Australian mine planning consulting firm. It replaces the maiden ore reserve estimate announced in April 2016 in conjunction with the Feasibility Study, also prepared by Orelogy. REVISED MINERAL RESOURCE ESTIMATE The Pilgangoora Lithium Project presently has a revised Mineral Resource estimate of 39.2 million tonnes at 1.02% Li2O and 400,000 tonnes of contained Li2O. This latest estimate is an increase of 10% over the previous estimate released in February 2016. Altura is currently undertaking additional drilling on its Pilgangoora tenements, and further increases to both the mineral resource and ore reserve estimates can be expected. For further information on both the reserve and resource estimates please refer to the ASX announcement on 22 September 2016. 8 ALTURA MINING LIMITED ANNUAL REPORT 2016 OFFTAKE AGREEMENTS Altura has successfully negotiated the following agreements for product offtake: • A binding offtake agreement with Lionergy for a minimum of 100,000 tpa of lithium spodumene concentrate for an initial five year period; and • A non-binding memorandum of understanding with Optimum Nano also for a minimum 100,000 tpa of lithium spodumene concentrate. Lionergy is a China based company specialising in the Lithium industry. Its business scope covers spodumene exploration and mine development, spodumene concentrate sales and distribution, lithium carbonate and lithium hydroxide manufacturing and sales, lithium metal manufacturing, and cathode materials manufacturing for Li-ion batteries. The Optimum Nano Group is a leading Chinese battery maker that supplies electric battery solutions to the growing Chinese large electric vehicle market. GOVERNMENT APPROVALS AND LANDHOLDER AGREEMENTS In August 2016 Altura received advice that its two mining leases (M45/1230 and M45/1230) had been granted by the Department of Mines and Petroleum (DMP). This followed the successful completion of: • The signing of an Access and Compensation Deed with the pastoral lease holders in May 2016; mining lease and stockpiled on the ROM stockpile adjacent to the pit. • The signing in July 2016 of a Native Title Agreement with the Njamal people, the traditional owners of the land; and • The purchase and transfer of exploration licence E45/2363 from Atlas Operations Pty Ltd. Altura has subsequently lodged the Mining Proposal for these two mining leases with the DMP for assessment and approval (under WA legislation a Mining Proposal cannot be submitted until the mining lease has been granted). The Mining Proposal covers the proposed mining operations, processing and power plants, mine site infrastructure, environmental assessments, hydrogeology studies, and the mine rehabilitation plan. It is anticipated that approval of the Mining Proposal will be obtained by the end of 2016, which will pave the way for construction to commence soon after. MINING PROCESS AND MINE LAYOUT Mining will be undertaken by conventional bulk mining methods, utilising hydraulic excavators, dump trucks, and drill and blast, coupled to a ROM stockpile. Ore will be trucked directly from the blasted faces to the ROM stockpile and fed to the primary crusher using front-end loaders. The Project has a relatively small footprint of some 400 hectares covered by two mining leases. The ore will be mined from a single pit located on the eastern side of the Process plant and site facilities are to be located immediately to the west of the pit, with the ex-pit waste rock dump and the tailings storage facility located in the centre and north-west of the tenement respectively. STRATEGIC DEVELOPMENT ADVANTAGES Altura has several strategic advantages over its competitors that place it in a solid position to become Australia’s likely next producing lithium mine. These include: • Altura is well advanced with its statutory approvals, with landowner agreements obtained, the mining leases granted and the Mining Proposal lodged; • A binding offtake agreement for a minimum of 100,000 tpa of lithium spodumene concentrate for an initial five year period; and • Securing long lead capital items comprising the purchase of, and/or ordering of, high pressure grinding rolls, crushing and screening plant and ball mill. 9 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED CORPORATE DEVELOPMENTS Key corporate developments during the year include: of $3 million at an issue price of 8.1 cents per share. FUNDING The rights issue and placement conducted in April and May 2015 enabled the Company to commence the 2015/16 financial year with sufficient funds to undertake feasibility studies and progress the mining lease towards grant at the Pilgangoora Lithium Project. Altura received further funding during 2015/16 from the following sources. Listed options expiring 30 June 2016 Listed options exercisable at 2 cents each were issued as part of the 2015 rights issue and placement. Funds from these options were received periodically during the year, with the vast majority of options being exercised during the June quarter. The listed options had a take-up rate of 99.9% and resulted in Altura receiving over $4 million in proceeds. Share placement with Lionergy Limited In February 2016 Altura agreed on a share placement with Lionergy Limited in the amount This capital raising coincided with the negotiation of a non-binding letter of intent for spodumene concentrate offtake. Placement and share purchase plan A direct placement of $20 million to institutional investors via Joint Lead Managers, Bizzell Capital Partners Pty Ltd and Canaccord Genuity (Australia) Limited was completed in June 2016. The Company also conducted a share purchase plan (SPP) capital raising as a means to offer existing shareholders the opportunity to acquire shares at the same price as the Placement, and a further $774,000 was received from the SPP in July 2016. INDONESIAN COAL ASSETS During the year, the planned spin-out of the Indonesian coal assets was put on hold due to the challenging commodity market and investor interest in the coal sector. Altura has decided to divest these assets to allow it to focus on the Pilgangoora lithium project, and is pursuing a number of options for the coal assets including their possible sale or an asset integration with other similar operations. These assets comprise: • The Delta coal mine in East Kalimantan, where Altura has a 331/3% interest; and • The Tabalong coal project in South Kalimantan in which Altura holds a 70% interest in three Mining Permits (“SPK”, “SCC” and “SP”) and a 56% interest in two Mining Licences (“KM” and “MBM”). SALE OF TANAMI TENEMENTS Altura advised in June 2015 that it had entered into an agreement with ABM Resources NL to sell 90% of its right, title and interest in its four tenements located in the Tanami region of the Northern Territory. The requisite approvals from the Central Land Council were subsequently obtained and settlement of the transaction occurred during the December quarter 2015. 10 ALTURA MINING LIMITED ANNUAL REPORT 2016 11 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED 12 ALTURA MINING LIMITED ANNUAL REPORT 2016 FINANCIAL STATEMENTS 13 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED DIRECTORS' REPORT Your directors have pleasure in presenting the annual financial report of Altura Mining Limited ("Altura" or "the Company") and its controlled entities (“the Group”) for the financial year ended 30 June 2016. DIRECTORS The names of the directors in office at any time during or since the end of the financial year are: Mr James Brown Mr Paul Mantell Mr Allan Buckler Mr Dan O’Neill Mr Beng Teik Kuan COMPANY SECRETARIES The names of the secretaries in office during the whole of the financial year and up to the date of this report are as follows: Mr Noel Young Mr Damon Cox PRINCIPAL ACTIVITIES The principal activities of the Group during the financial year were exploration and development activities, including completion of a very successful feasibility study at its 100% owned Pilgangoora Lithium Project in the Pilbara region of Western Australia. OPERATING AND FINANCIAL REVIEW Overview Altura Mining Limited is an ASX listed entity that is focused on the development of its 100% owned Pilgangoora Lithium Project in Western Australia. Altura also has interests in the producing Delta Coal project in Indonesia, and the Tabalong Coal project both of which are planned to be divested. Operating results The Group’s operating loss after providing for income tax and non-‐controlling interests for the year ended 30 June 2016 was $31,498,799 (2015: loss $29,847,345). The loss in 2016 was principally due to the impairment its equity accounted asset, a reduced loss from its equity accounted asset and lower activity in the group’s exploration services sector. The result was assisted by a foreign exchange gain due to a lower Australian dollar at year end. Strategy The Company’s objective is to create shareholder value through the development of profitable mining operations, and other mining activities that deliver strong cash flows for the Group. Altura is focussed on completion of the definitive feasibility study and associated activities at the Pilgangoora lithium project, with the intention of commencing construction of the mine in the near term. The Company also holds coal assets in Indonesia in which it intends to divest as soon as possible. 14 ALTURA MINING LIMITED ANNUAL REPORT 2016 DIRECTORS' REPORT CONTINUED Pilgangoora Lithium During the year, Altura completed its Feasibility Study (FS) on the Pilgangoora Lithium Project, and commenced work on the Definitive Feasibility Study (DFS). The FS released to the ASX on 11 April 2016 was a landmark achievement as mining development is fast tracked towards production in 2017. The key outcomes of the FS included: § § § § § § § Annual spodumene concentrate production of 215,000 tonnes over a 14 year mine life; Project Net Present Value (NPV) of $382 million pre-‐tax and an Internal Rate of Return of 59.5%; Life of Mine (LOM) cash cost of A$298 per tonne of spodumene concentrate; Gross margin of A$348 per tonne, based on a market price at the time of US$494; A capital estimate of A$129 million including deferred capital; A very attractive LOM strip ratio of 2.7:1; and A payback period of 1.7 years. The DFS is due for completion during Q3 2016, with production planned for Q4 2017 after a nine month construction period which will place Altura in an elite group of near term lithium supply companies. Altura’s Pilgangoora deposit will be mined by conventional bulk mining methods utilising hydraulic excavators, dump trucks and drill and blast coupled to a ROM stockpile. Ore will be trucked directly from the blasted faces to the ROM stockpile and fed to the primary crusher using a front-‐end loader. The spodumene concentrate will be exported by ship from Port Hedland to lithium producers, predominantly in China, for further processing into a wide range of lithium chemicals, including lithium carbonate (standard and battery grade), lithium hydroxide, lithium metal, and lithium chloride. The Company has signed a binding Offtake Agreement (BOA) with China based group Lionergy Limited, in which Lionergy will take a minimum of 100,000 tonnes of 6% Li2O grade spodumene concentrate annually for an initial 5 year period, with options for extensions to be negotiated between the parties. Altura has also entered into a non-‐binding Memorandum of Understanding (MOU) with China based lithium battery and electronic vehicle producing group, Optimum Nano Battery Co. Limited (Optimum Nano). Apart from Altura’s proposed supply of spodumene to Optimum Nano, the MOU paves the way for Altura to enter into an alliance with Optimum Nano as a natural resource supplier into the expanding lithium battery market. During the year, Altura signed an Access and Compensation Deed with the pastoral lease holders who occupy the land over which Altura’s Pilgangoora tenements are located, and in early July 2016, the Company signed a Native title Agreement with the Njamal people, the traditional owners of the land. As part of its progression of the project to commencement of development, the Company has also prepared the mining proposal for submission to the DMP (WA Department of Mines and Petroleum), issued mining tender documents to prospective contractor bidders, issued a power plant tender, reached agreement with the local authority to upgrade the haul road and commenced haul road design. The in-‐house Project team has also been significantly expanded including recruitment of a full time Processing Manager, and a Mining Superintendent. Coal Assets Delta Coal During the year, Altura continued to hold its interest in the one-‐third owned Delta coal mine on the island of Kalimantan in Indonesia. The Delta mine produces a medium energy thermal coal and during the 2015/16 financial year, the mine produced 0.404 million tonnes (mt) and sold 0.453mt of coal. Production during the year was lower than during the 2014/15 financial year due a depressed coal market, and continuing lower production from contractors during the year. It is the stated intention of the Company that the coal asset would be divested. 15 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED DIRECTORS' REPORT CONTINUED Tabalong Coal The Tabalong Coal Project is a premium grade thermal coal deposit located in South Kalimantan, Indonesia. The project consists of five (5) Mining Licences (IUPs), with all five (5) IUPs granted for Operation Production. Altura holds 70% of three IUPs and 56% of the remaining two. Divestment of Coal Assets During the year, the Company stated its intention to divest its interests in both the Delta and Tabalong coal assets. It is pursuing a number of options including the possible sale of the coal assets or an asset integration with other similar operations. Financial position The net assets of the consolidated group in 2016 are similar to the 2015 year, with current assets significantly higher due to the recent $20 million capital raising conducted by the Company, while non-‐current assets are lower due to the impairment of the investments accounted for using the equity method. Risk Development of Altura’s Pilgangoora Lithium Project is subject to the Company receiving all approvals necessary to allow it to commence construction, and the ability of the Company to finance its construction. The Company is also subject to movements in international commodity prices, and being an Australian based company, foreign exchange movements. DIVIDENDS There were no dividends paid or declared during the year ended 30 June 2016 (2015: Nil). SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS There were no other significant changes in the nature of the Group’s principal activities during the financial year, other than as discussed in the financial report and elsewhere in this Directors Report. MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR The Share Purchase Plan closed on 13 July 2016. Applications for 3,869,000 shares were received, all were accepted resulting in the receipt of $773,800 into the Company’s bank account, together with shares issued on 18 July 2016. Two Mining Leases (M45/1230 and M45/1231) for the Company’s Pilgangoora Lithium Project were granted on 26 August 2016, enabling the Mining Proposal to be lodged with the DMP on 2 September 2016. FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES The Group will focus on completing the definitive feasibility study for the Pilgangoora lithium project, so that commencement of construction of the mine can commence as soon as possible. The Group intends to divest is interests in the coal projects as soon as possible so it can focus on its lithium project. ENVIRONMENTAL PERFORMANCE The Group is committed to achieving a high standard of environmental performance. The Board of Directors is responsible for regular monitoring of environmental exposures and compliance with environmental regulations. The Group complied with its environmental performance obligations during the year. 16 ALTURA MINING LIMITED ANNUAL REPORT 2016 DIRECTORS' REPORT CONTINUED INFORMATION ON DIRECTORS Mr James Brown (Managing Director) Qualifications Graduate Diploma in Mining from University of Ballarat Experience Mr Brown is a mining engineer with more than 30 years' experience in the coal mining industry in Australia and Indonesia, including 22 years at New Hope Corporation. He was appointed as Managing Director of Altura in September 2010 and was previously Altura’s Group General Manager since December 2008. His coal development and operations experience includes the New Acland and Jeebropilly mines in South East Queensland, the Adaro and Multi Harapan Utama operations in Indonesia and Blair Athol in the Bowen Basin in Central Queensland. Other current directorships in listed entities Sayona Mining Limited Former directorships in last 3 years None Special responsibilities Chief Executive Officer Interests in shares 26,518,301 ordinary shares in Altura Mining Limited Mr Paul Mantell (Executive Director) Qualifications Bachelor of Commerce from the University of Queensland and a Fellow of CPA Australia Experience Mr Mantell is an accountant with more than 35 years corporate experience in the mining and associated industries. He has been involved in all aspects of accounting and finance, financial reporting, taxation and administration, including the responsibilities of an ASX listed entity. His responsibilities have included arranging finance for mining and infrastructure projects both in Australia and Indonesia and for setting up corporate, administrative and financial systems to support new and expanding mining operations. He was appointed a director on 25 May 2009. Mr Mantell stepped down as an Executive Director of the Company in September 2013 to work on a number of projects in Asia, but returned to the full time Executive Directors role in early 2016. Other current directorships in listed entities None Former directorships in last 3 years None Special responsibilities Chief Financial Officer Interests in shares and options 32,503,084 ordinary shares in Altura Mining Limited 17 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED DIRECTORS' REPORT CONTINUED INFORMATION ON DIRECTORS (continued) Mr Allan Buckler (Non-‐Executive Director) Qualifications Certificate in Mine Surveying and Mining, First Class Mine Managers Certificate and a Mine Surveyor Certificate issued by the Queensland Government’s Department of Mines Experience Mr Buckler has over 40 years’ experience in the mining industry and has taken lead roles in the establishment of several leading mining and port operations in both Australia and Indonesia. Significant operations such as PT Adaro Indonesia, PT Indonesia Bulk Terminal and New Hope Coal Australia have been developed under his leadership. Mr Buckler was appointed a director on 18 December 2008. Other current directorships in listed entities Sayona Mining Limited Former directorships in last 3 years None Special responsibilities Member of the Audit & Risk Committee Member of the Remuneration & Nomination Committee Interests in shares and options 177,193,692 ordinary shares in Altura Mining Limited Mr Dan O’Neill (Independent Non-‐Executive Director) Qualifications Bachelor of Science in geology from the University of Western Australia Experience Mr O’Neill was appointed a director on 18 December 2008. He has held positions with a number of Australian and multinational exploration companies and has managed exploration programs in a diverse range of environments and locations including Botswana, North America, South East Asia, North Africa and Australasia. During his 30 years’ experience he has held executive management positions with ASX listed companies and has worked on a range of commodities including diamonds, gold, base metals, coal, oil and gas. Other current directorships in listed entities Sayona Mining Limited Former directorships in last 3 years None Special responsibilities Chairman of the Remuneration & Nomination Committee Member of the Audit & Risk Committee Interests in shares and options 14,333,336 ordinary shares in Altura Mining Limited 18 ALTURA MINING LIMITED ANNUAL REPORT 2016 DIRECTORS' REPORT CONTINUED INFORMATION ON DIRECTORS (continued) Mr Beng Teik Kuan (Independent Non-‐Executive Director) Qualifications Bachelor of Engineering (University of Malaya) Experience Mr Kuan is an engineer with considerable experience in bulk handling and terminal operations, including responsibility for the development and management of the Pulau Laut Coal Terminal in South Kalimantan, Indonesia. He also has experience in Indonesia, Malaysia and Singapore with tin dredging operations, managing rubber, palm oil and cocoa processing factories, and managing palm oil bulk terminals. He was appointed a director on 28 November 2007. Other current directorships in listed entities None Former directorships in last 3 years None Special responsibilities Chairman of the Audit & Risk Committee Member of the Remuneration & Nomination Committee Interests in shares and options 20,800,000 ordinary shares in Altura Mining Limited COMPANY SECRETARIES Mr Noel Young Mr Young is a Fellow of the Institute of Public Accountants. He has over 30 years’ experience in the mining industry and holds the dual role of Group Financial Controller and Company Secretary. Mr Damon Cox Mr Cox is a Chartered Secretary, and a CPA. He has over 30 years’ experience in various roles including corporate governance, compliance, treasury and strategic policy advice. 19 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED DIRECTORS' REPORT CONTINUED REMUNERATION REPORT (Audited) This report details the nature and amount of remuneration for directors and other key management personnel. Remuneration Policy The Company’s policy is to remunerate fairly and in line with companies of similar size, operations and in the same industry. Individual remuneration decisions are made by the Remuneration & Nomination Committee taking into account the following factors: • • • • The responsibility of the role; Experience of the employee; Past performance and future expectations; and Industry conditions and trends. In order to retain and attract key management personnel of sufficient calibre to facilitate the efficient and effective management of the Company’s operations, the Remuneration & Nomination Committee may seek the advice of external advisors in connection with the structure of remuneration packages. Remuneration packages may contain the following key elements: a) b) c) Primary benefits -‐ salary/fees, bonuses and non-‐monetary benefits including the provision of a motor vehicle; Post-‐employment benefits -‐ including superannuation and prescribed retirement benefits; and Equity -‐ performance rights and share options granted under the Long-‐Term Incentive Plan as disclosed in Note 22 to the financial statements. None of the Company’s personnel remuneration packages are linked directly to the Company’s profitability or other measure of performance. The Company maintains a Long-‐Term Incentive Plan under which employees may be granted performance rights and share options which vest subject to service conditions being met. Directors may also be allocated options as an incentive that could be realised if the Company’s share price increases. During the 2016 year, directors were issued with shares on the vesting of previously issued performance rights. Performance-‐based remuneration The Company currently has performance based remuneration in place refer Note 22. Group Performance, Shareholder Wealth and Director and Executive Remuneration The Group has recorded the following earnings from continuing operations over the last five years: Revenues and sundry income EBITDA * NPBT * NPAT * Dividends paid 2016 1,485,611 (11,290,052) (30,839,474) (31,618,016) -‐ 2015 4,779,039 (15,861,975) (16,947,795) (17,268,152) -‐ 2014 7,610,019 (5,588,222) (6,530,675) (7,017,662) -‐ 2013 7,370,049 (535,167) (1,044,269) (979,641) -‐ 2012 10,424,210 (1,719,227) (1,580,280) (1,919,347) -‐ * Definitions: EBITDA = Earnings before interest, tax, depreciation and amortisation NPBT = Net profit before tax NPAT = Net profit after tax & minority interest Key Management Personnel Remuneration Policy The Remuneration & Nomination Committee reviews the remuneration packages of all directors and key management personnel on an annual basis. Remuneration packages are reviewed and determined with due regard to relevant market conditions and individual’s experience and qualification and are benchmarked against comparable industry salaries. Payment of bonuses and share based compensation benefits is discretionary. 20 ALTURA MINING LIMITED ANNUAL REPORT 2016 DIRECTORS' REPORT CONTINUED REMUNERATION REPORT (Audited) (continued) Employment Contracts of Key Management Personnel Contracts of employment are given to key management personnel at time of employment. Details are as follows: James Brown, Managing Director -‐ the agreement is of no fixed term and allows for payment of a monthly cash salary in US dollars, reviewed each year, plus allowances. Three months’ notice of termination by either party is required, with a separation allowance equivalent to one year’s salary and entitlements to be paid if employment is terminated by the Company. Paul Mantell, Executive Director – During the 2015/16 financial year, Mr Mantell returned to the full time role of Executive Director. His agreement is of no fixed term and allows for payment of an annual cash salary, reviewed each year, and superannuation. Provision of a motor vehicle or equivalent allowance and other non-‐cash benefits is included. Three months’ notice of termination by either party is required, with a separation allowance equivalent to one year’s gross salary to be paid if employment was terminated by the Company. Chris Evans, General Manager, Operations -‐ The agreement is of no fixed term and allows for payment of an annual cash salary, reviewed each year, and superannuation. Three months’ notice of termination by either party is required, with a separation allowance equivalent to one month’s salary for every completed year of service up to a maximum of six months’ salary will be paid if employment was terminated by the Company. Noel Young, Group Financial Controller & Company Secretary – the agreement is of no fixed term and allows for payment of an annual cash salary in US dollars, reviewed each year, plus allowances. Two months’ notice of termination by either party is required, with a separation allowance equivalent to six month’s gross salary to be paid if employment is terminated by the Company. Damon Cox, Company Secretary -‐ the agreement is of no fixed term and allows for payment of an annual cash salary, reviewed each year, and superannuation. Provision of a motor vehicle is included. One month’s notice of termination by either party is required. 21 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED DIRECTORS' REPORT CONTINUED REMUNERATION REPORT (Audited) (continued) Key Management Personnel Remuneration 2016 Name Short-‐term benefits Cash salary and fees $ Bonus $ Non-‐ monetary benefits $ Post employment Share based payments Total Super-‐ annuation $ Performance rights $ Bonus $ $ Performance rights as a percentage of Total % Non-‐executive directors A Buckler D O’Neill B Kuan P Mantell # Sub total non-‐executive directors Managing directors J Brown Other key management personnel P Mantell ^ C Evans ## N Young D Cox Total for key management personnel compensation Total compensation 30,000 36,000 23,000 -‐ 89,000 346,223 111,834 191,026 205,737 125,000 979,820 1,068,820 -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ 2,850 3,420 16,420 4,770 4,770 4,770 6,624 -‐ 23,850 88,200 88,200 88,200 88,200 125,820 132,390 132,390 118,674 3.8 3.6 3.9 20.1 6,624 22,690 38,160 352,800 509,274 94,913 -‐ 47,700 88,200 577,036 8.3 3,312 -‐ 69,223 20,177 14,011 18,147 3,810 11,875 -‐ 9,540 9,540 9,540 -‐ 115,146 16,500 235,213 -‐ -‐ 288,310 166,592 -‐ 4.1 3.3 5.7 187,625 47,844 76,320 104,700 1,396,309 194,249 70,534 114,480 457,500 1,905,583 # Non-‐executive director until 29 February 2016 ^ Executive director from 1 March 2016 ## Commenced employment with Altura on 20 July 2015 No termination payments or long service leave payments were made during the year 22 ALTURA MINING LIMITED ANNUAL REPORT 2016 DIRECTORS' REPORT CONTINUED REMUNERATION REPORT (Audited) (continued) 2015 Name Short-‐term benefits Post employment Share based payments Total Cash salary and fees $ Bonus $ Non-‐ monetary benefits $ Super-‐ annuation $ Performance rights $ Bonus $ $ Performance rights as a percentage of Total % Non-‐executive directors A Buckler D O’Neill B Kuan P Mantell Sub total non-‐executive directors Managing directors J Brown Other key management personnel N Young D Cox Total for key management personnel compensation Total compensation 40,000 48,000 45,000 19,710 152,710 362,485 135,819 125,000 623,304 776,014 -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ 3,800 4,560 4,275 6,714 6,714 6,714 10,383 25,690 33,569 19,950 19,950 19,950 99,750 70,464 79,224 75,939 189,102 9.5 8.5 8.8 17.8 10,383 38,325 53,711 159,600 414,729 86,734 -‐ 67,138 199,500 715,857 9.4 23,199 20,283 13,062 11,875 13,428 13,428 39,900 39,900 225,408 210,486 6.0 6.4 130,216 24,937 93,994 279,300 1,151,752 140,599 63,262 147,705 438,900 1,566,480 No termination payments or long service leave payments were made during the year. Shares Shares were issued to directors (following approval at the Annual General Meeting in November 2015), key management personnel and other senior staff as part of their remuneration for the year ended 30 June 2016. The following shares were issued to directors and key management personnel during the year ended 30 June 2016: J Brown P Mantell A Buckler D O’Neill BT Kuan C Evans Number issued Issue date 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 1,000,000 11,000,000 20/11/15 20/11/15 20/11/15 20/11/15 20/11/15 11/08/15 Value per share at issue date $ 0.0441 0.0441 0.0441 0.0441 0.0441 0.0165 Shares were also issued on the vesting of performance rights to directors (the issuing of the rights had been approved at the 2014 AGM), key management personnel and other senior staff as part of their remuneration for the year ended 30 June 2016. 23 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED DIRECTORS' REPORT CONTINUED REMUNERATION REPORT (Audited) (continued) The following shares on the vesting of performance rights were issued to directors and key management personnel during the year ended 30 June 2016: Number issued Issue date 1,000,000 500,000 100,000 100,000 100,000 200,000 200,000 200,000 2,400,000 11/12/15 11/12/15 11/12/15 11/12/15 11/12/15 11/12/15 11/12/15 11/12/15 Value per share at issue date $ 0.0477 0.0477 0.0477 0.0477 0.0477 0.0477 0.0477 0.0477 J Brown P Mantell A Buckler D O’Neill BT Kuan C Evans N Young D Cox Options There were no new options issued to directors and key management personnel as part of their remuneration for the year ended 30 June 2016, and there are no options on issue as at 30 June 2016. Performance Rights In 2014 the Company established a new Long-‐Term Incentive Plan (LTIP) to assist in the reward and retention of directors and employees. A total of 8,100,000 rights were granted in December 2014 to directors (with shareholder approval), key management personnel and other senior staff. A further 1,450,000 rights were granted to key management personnel and other senior staff in the year ended 30 June 2016. The rights awarded during the year were granted for no consideration. No amount is payable on the vesting of the rights. The rights will vest and automatically convert to ordinary shares in the Company following the satisfaction of the service conditions. The following performance rights were on issue to directors and key management personnel as at 30 June 2016: Granted number 2,000,000 1,000,000 200,000 200,000 200,000 800,000 400,000 400,000 5,200,000 Vesting 30 Nov 2016 1,000,000 500,000 100,000 100,000 100,000 400,000 200,000 200,000 2,600,000 Vesting 30 Nov 2017 1,000,000 500,000 100,000 100,000 100,000 400,000 200,000 200,000 2,600,000 End of Audited Remuneration Report J Brown P Mantell A Buckler D O’Neill BT Kuan C Evans N Young D Cox 24 ALTURA MINING LIMITED ANNUAL REPORT 2016 DIRECTORS' REPORT CONTINUED MEETINGS OF DIRECTORS The following table sets out the number of Directors’ meetings (including meetings of committees of directors) held during the financial year and the number of meetings attended by each director (while they were a director or committee member). During the financial year there were 4 Directors’ meetings, 3 Audit & Risk Committee meetings and 2 Remuneration & Nomination Committee meetings held. Directors’ Meetings Audit & Risk Committee Number eligible to attend 4 4 4 4 4 Number attended 4 4 4 3 4 Number eligible to attend -‐ -‐ 3 3 3 Number attended -‐ -‐ 3 2 3 Remuneration & Nomination Committee Number eligible to attend -‐ -‐ 2 2 2 Number attended -‐ -‐ 2 2 2 J Brown P Mantell A Buckler D O’Neill B Kuan INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS The Company has entered into Deeds of Indemnity with all of its directors in accordance with the Company’s Constitution. During the financial year the Company paid a premium to insure the directors, officers and managers of the Company and its controlled entities. The insurance contract requires that the amount of the premium paid is kept confidential. OPTIONS At the date of signing this report, there were no unissued ordinary shares of Altura Mining Limited under option. PROCEEDINGS ON BEHALF OF THE COMPANY No person has applied for leave of the Court to bring proceedings on behalf of the Company or 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 any part of those proceedings. The Company was not party to any such proceedings during the year. NON-‐AUDIT SERVICES The Company’s auditor, PKF Hacketts Audit, did not provide any non-‐audit services to the Company during the year ended 30 June 2016. ROUNDING OF AMOUNTS The Company is an entity to which ASIC Class Order 98/100 applies and, accordingly, amounts in the financial statements and directors’ report have been rounded to the nearest thousand dollars. AUDITOR’S INDEPENDENCE DECLARATION The auditor’s independence declaration for the year ended 30 June 2016 has been received and is included on page 14 of the annual report. Signed in accordance with a resolution of the Directors made pursuant to Section 298(2) of the Corporations Act 2001. On behalf of the Directors, BT Kuan Director Brisbane, 13 September 2016 25 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED AUDITOR'S INDEPENDENCE DECLARATION AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF ALTURA MINING LIMITED I declare that, to the best of my knowledge and belief, during the year ended 30 June 2016, there have been: (a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (b) no contraventions of any applicable code of professional conduct in relation to the audit. PKF HACKETTS AUDIT Liam Murphy Partner Brisbane, 13 September 2016 26 14 ALTURA MINING LIMITED ANNUAL REPORT 2016 CONSOLIDATED STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 30 JUNE 2016 Continuing operations Revenue Cost of sales Operating profit / (loss) Other income Foreign exchange movement gain Sundry income Expenses Administration costs Employee benefits expense Exploration costs written off Other expenses Financing costs Impairment of goodwill Impairment on equity accounted asset Impairment of property, plant and equipment Share of net profit / (loss) of equity accounted investee, net of tax Profit / (loss) before income tax Income tax (expense) / benefit Profit / (loss) after income tax from continuing operations Discontinued operations Loss from discontinued operations after tax Net profit / (loss) for the year Profit / (loss) attributable to: Owners of Altura Mining Limited Non-‐controlling interest Note 5(a) 5(c) 5(b) 5(f) 15 5(d) 5(e) 16,24(c) 7(a) 3 2016 $’000 1,350 (2,112) (762) 1,006 135 (4,074) (2,668) (3,895) (51) (277) -‐ (18,480) (261) (1,513) 2015 $’000 4,745 (4,718) 27 4,730 34 (2,905) (2,159) (182) (122) (267) (4,529) (7,682) -‐ (3,894) (30,840) (16,949) (778) (31,618) -‐ (31,618) (31,499) (119) (31,618) (320) (17,269) (12,793) (30,062) (29,847) (215) (30,062) Earnings per share for profit from continuing operations attributable to the ordinary equity holders of the company: Basic earnings / (loss) per share (cents per share) Diluted earnings / (loss) per share (cents per share) Earnings per share for profit attributable to the ordinary equity holders of the company: Basic earnings / (loss) per share (cents per share) Diluted earnings / (loss) per share (cents per share) 6 6 6 6 (3.50) (3.50) (3.48) (3.48) (3.50) (3.50) (6.09) (6.09) The above Consolidated Statement of Profit and Loss should be read in conjunction with the accompanying Notes. ANNUAL REPORT 2016 ALTURA MINING LIMITED 27 ALTURA MINING LIMITED ANNUAL REPORT 2016 CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2016 Profit / (loss) for the year (31,618) (30,062) Note 2016 $’000 2015 $’000 Other comprehensive income / (loss) for the year Items that may be reclassified to profit and loss Changes in the fair value of available-‐for-‐sale financial assets Exchange differences on translation of foreign controlled entities Other comprehensive income / (loss) for the year, net of tax Total comprehensive income / (loss) for the year Total comprehensive income / (loss) attributable to: Members of the parent entity Non-‐controlling interest 760 (409) 351 (31,267) (31,132) (135) (31,267) (11) (496) (507) (30,569) (30,300) (269) (30,569) The above Consolidated Statement of Other Comprehensive Income should be read in conjunction with the accompanying Notes. 28 ALTURA MINING LIMITED ANNUAL REPORT 2016 CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2016 Current assets Cash and cash equivalents Trade and other receivables Held to maturity investments Inventories Current tax prepaid Other current assets Assets classified as held for sale Total current assets Non-‐current assets Other receivables Available-‐for-‐sale financial assets Property, plant and equipment Exploration and evaluation Investments accounted for using the equity method Deferred tax asset Total non-‐current assets Total assets Current liabilities Trade and other payables Borrowings Short term provisions Total current liabilities Non-‐current liabilities Borrowings Total non-‐current liabilities Total liabilities Net assets Equity Contributed equity Reserves Accumulated losses Capital and reserves attributable to owners of Altura Mining Limited Non-‐controlling interest Total equity Note 8 9 11 10 12 9 13 14 15 16 20(c) 17 18 19 18 21 21 2016 $’000 22,132 1,126 50 1 248 461 -‐ 24,018 2,482 1,333 526 14,394 144 -‐ 18,879 42,897 2,072 -‐ 847 2,919 18,437 18,437 21,356 21,541 105,840 (240) (84,333) 21,267 274 21,541 The above Consolidated Balance Sheet should be read in conjunction with the accompanying Notes. 2015 $’000 2,092 2,758 1,280 1 525 480 100 7,236 2,377 573 1,382 14,949 19,451 505 39,237 46,473 1,872 397 777 3,046 17,607 17,607 20,653 25,820 78,904 179 (53,672) 25,411 409 25,820 29 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2016 Contributed equity Accumulated losses Option & performance rights reserve Change in fair value -‐ market valuation Foreign currency translation reserve Non-‐ controlling interests Total $’000 $’000 $’000 $’000 $’000 $’000 $’000 Balance as at 30 June 2014 74,562 (23,870) 880 54 (442) 678 51,862 Total comprehensive income for the year -‐ (29,847) Transactions with owners in their capacity as owners: Issue of shares – employee bonus payment Contributions of equity, net of transaction costs Option reserve on recognition of bonus element of options Transfer from option reserve on expiry of options Sub-‐Total 552 3,790 -‐ -‐ 4,342 -‐ -‐ -‐ 45 45 -‐ -‐ -‐ 184 (45) 139 (11) (441) (269) (30,568) -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ 552 3,790 184 -‐ 4,526 Balance as at 30 June 2015 78,904 (53,672) 1,019 43 (883) 409 25,820 Balance as at 30 June 2015 78,904 (53,672) 1,019 43 (883) 409 25,820 Total comprehensive income for the year -‐ (31,499) Transactions with owners in their capacity as owners: Issue of shares – employee bonus payment Issue of shares – loan repayment Contributions of equity, net of transaction costs Transfer from share based payment reserve to equity Option reserve on recognition of bonus element of options Transfer from option reserve on expiry of options Sub-‐Total 546 360 25,847 183 -‐ -‐ 26,936 -‐ -‐ -‐ -‐ -‐ 838 838 Balance as at 30 June 2016 105,840 (84,333) -‐ -‐ -‐ -‐ (183) 235 (838) (786) 233 760 (393) (135) (31,267) -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ 546 360 25,847 -‐ 235 -‐ 26,988 803 (1,276) 274 21,541 The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying Notes. 30 ALTURA MINING LIMITED ANNUAL REPORT 2016 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2016 Note 27(b) Cash flows from operating activities Receipts from customers Payments to suppliers and employees Sundry income Interest received Interest paid Income tax paid Net cash used in operating activities Cash flows from investing activities Expenditure on exploration and evaluation activities Purchase of property, plant and equipment Proceeds / (payments) from held to maturity investments Proceeds from sale of property, plant and equipment Net cash (used in) / provided by investing activities Cash flows from financing activities Proceeds from the issue of shares -‐ net of transaction costs Payment of hire purchase liabilities Proceeds from borrowings Repayment of borrowings Net cash provided by (used in) financing activities Net increase / (decrease) in cash and cash equivalents held Cash and cash equivalents at the beginning of year Effect of exchange rate changes on cash holdings in foreign currencies Cash and cash equivalents at the end of year 27(a) Non cash investing and financing activities Proceeds from the sale of 30% interest in the Mt Webber DSO project Repayment of the Atlas Operations Pty Ltd loan facility Increase in the Atlas Operations Pty Ltd loan facility Contributions made to Atlas Operations Pty Ltd loan facility Share based payments Increase in the Directors and management loan facility through expense reimbursement Repayment of Directors and management loan facility by the issue of shares 3 3 22 2016 $’000 2,293 (6,369) 82 23 (8) (75) (4,054) (3,100) (12) 1,230 168 (1,714) 25,848 (11) -‐ (20) 25,817 20,049 2,092 (9) 22,132 -‐ -‐ -‐ -‐ (545) -‐ (360) The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying Notes. 2015 $’000 4,226 (7,243) 86 64 (23) (64) (2,954) (834) (45) (1,000) 35 (1,844) 3,791 (17) 300 (500) 3,574 (1,224) 3,403 (87) 2,092 24,489 (24,489) 6,893 (6,893) (552) 89 -‐ 31 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED NOTES TO THE FINANCIAL STATEMENTS This financial report includes the consolidated financial statements and notes of Altura Mining Limited and controlled entities (‘Consolidated Group’ or ‘Group’). Altura Mining Limited is a company limited by shares, incorporated and domiciled in Australia, whose shares are publically traded on the Australian Securities Exchange. The separate financial statements of the parent entity, Altura Mining Limited, have not been presented within this financial report as permitted by amendments made to the Corporations Act 2001. The Group is a for-‐profit entity for financial reporting purposes under Australian Accounting Standards. The financial statements were authorised for issue on 13 September 2016 by the directors of the Company. 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES a) Basis of preparation The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The following is a summary of the material accounting policies adopted by the Consolidated Group in the preparation of the financial report. The financial report has been prepared on an accruals basis. The accounting policies have been consistently applied, unless otherwise stated. i) New accounting standards for application in future periods Accounting Standards issued by the AASB that are not yet mandatorily applicable to the Group, together with an assessment of the potential impact of such pronouncements on the Group when adopted in future periods, are discussed below: AASB 9: Financial Instruments and associated Amending Standards (applicable for annual reporting periods beginning on or after 1 January 2018). The Standard will be applicable retrospectively (subject to the provisions on hedge accounting outlined below) and includes revised requirements for the classification and measurement of financial instruments, revised recognition and derecognition requirements for financial instruments and simplified requirements for hedge accounting. The key changes that may affect the Group on initial application include certain simplifications to the classification of financial assets, simplifications to the accounting of embedded derivatives, upfront accounting for expected credit loss, and the irrevocable election to recognise gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. AASB 9 also introduces a new model for hedge accounting that will allow greater flexibility in the ability to hedge risk, particularly with respect to hedges of non-‐ financial items. Should the entity elect to change its hedge policies in line with the new hedge accounting requirements of the Standard, the application of such accounting would be largely prospective Although the directors do not anticipate that the adoption of AASB 9 will have a material impact on the Group’s financial instruments, including hedging activity, it is impracticable at this stage to provide a reasonable estimate of such impact. AASB 15: Revenue from Contracts with Customers (applicable to annual reporting periods beginning on or after 1 January 2018, as deferred by AASB 2015-‐8: Amendments to Australian Accounting Standards – Effective Date of AASB 15). This Standard is not expected to significantly impact the Group’s financial statements. AASB 16: Leases (applicable for annual reporting periods beginning on or after 1 January 2019). When effective, this Standard will replace the current accounting requirements applicable to leases in AASB 117: Leases and related Interpretations. AASB 16 introduces a single lessee accounting model that eliminates the requirement for leases to be classified as operating or finance leases. 32 ALTURA MINING LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued) i) New accounting standards for application in future periods (Continued) The main changes introduced by the new Standard include: • • • • recognition of a right-‐to-‐use asset and liability for all leases (excluding short-‐term leases with less than 12 months of tenure and leases relating to low-‐value assets; depreciation of right-‐to-‐use asset in line with AASB 116: Property, Plant and Equipment in profit or loss and unwinding of the liability in principal and interest components; variable lease payments that depend on an index or a rate are included in the initial measurement of the lease liability using the index or rate at the commencement date; by applying a practical expedient, a lessee is permitted to elect not to separate non-‐lease components and instead account for all components as a lease; and • additional disclosure requirements. The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the Standard to comparatives in line with AASB 108 or recognize the cumulative effect of retrospective applications as an adjustment to opening equity on the date of initial application. Although the directors anticipate that the adoption of AASB 16 will impact the Group’s financial statements, it is impracticable at this stage to provide a reasonable estimate of such impact. ii) Impact of standards issued but not yet applied by the Group The Group has not applied any accounting standards or amendments for the first time for the annual reporting period commencing 1 July 2015. iii) Historical cost convention Except for cash flow information, the financial statements have been prepared on an accruals basis and are based on historical costs, modified, where applicable, by the measurement at fair value of selected non-‐current assets, financial assets and financial liabilities. iv) Critical accounting estimates The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas including a high degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 1n. b) Carrying value of exploration and evaluation expenditure The Group has capitalised exploration expenditure of $14.394 million as at 30 June 2016 (2015: $14.949 million). This expenditure includes drilling and analysis costs, feasibility study costs and employee remuneration costs. The costs are capitalised as an intangible asset until the Company has completed its assessment of the existence or otherwise of recoverable resources. The ultimate recovery of the carrying value of exploration expenditure is dependent upon the successful development and commercial exploitation or, alternatively, sale of the interest in the tenements. Until exploration and evaluation activities have reached a stage where the assessment is complete, including the forecasting of cash flows to assess the fair value of the expenditure, there is an uncertainty as to the carrying value of the expenditure. The Directors are of the opinion that the exploration expenditure is recoverable for the amount stated in the financial report. 33 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED NOTES TO THE FINANCIAL STATEMENTS CONTINUED 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued) c) Principles of consolidation i) Subsidiaries The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Altura Mining Limited (‘Company’ or ‘Parent Entity’) as at 30 June 2016 and the results of the subsidiaries for the year then ended. Altura Mining Limited and its subsidiaries together are referred to in this financial report as the Group or Consolidated Entity. The Group controls an entity when the Group 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 over the entity. A list of controlled entities is contained in Note 25 to the financial statements. All Australian controlled entities have a June financial year-‐end and all other controlled entities have a December financial year end. All inter-‐company balances and transactions between entities in the Group, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the Group. Where controlled entities have entered or left the Group during the year, their operating results have been included from the date control was obtained or until the date control ceased. Non-‐controlling interests, being that portion of the profit or loss and net assets of subsidiaries attributable to equity interests held by persons outside the Group, are shown separately within the equity section of the Consolidated Balance Sheet and in the Consolidated Income Statement. Losses applicable to the non-‐controlling interest in a consolidated subsidiary are allocated against the controlling interest except to the extent that the non-‐controlling interest has a binding obligation and is able to make additional investment to cover the losses. If in future years the subsidiary reports profits, such profits are allocated to the controlling interest until the non-‐ controlling interest’s share of losses previously absorbed by the controlling interest have been recovered. The acquisition method of accounting is used to account for business combinations by the Group. ii) Associates Associates are all entities over which the Group has significant influence but not control or joint control, generally accompanying a shareholding between 20% and 50% of voting rights. Investments in associates are accounted for using the equity method of accounting, after initially being recognised at cost. The Group’s investments in associates includes goodwill identified on acquisition. The Group’s share of its associates post-‐acquisition profit or losses is recognised in profit or loss, and its share of post-‐acquisition other comprehensive income is recognised in other comprehensive income. The cumulative post-‐ acquisition movements are adjusted against the carrying amount of the investment. Dividends receivable from associates are recognised as a reduction in the carrying amount of the investment. iii) Joint arrangements A joint arrangement is a contractual arrangement whereby two or more parties undertake economic activities under joint control. Joint control exists only when the strategic, financial and operational policy decisions relating to the activities of the joint arrangement require the unanimous consent of the parties sharing control A joint arrangement is either a joint operation or a joint venture. The structure of each joint arrangement is analysed to determine whether the joint arrangement is a joint operation or a joint venture. The classification of a joint arrangement is dependent on the rights and obligations of the parties to the arrangement. iv) Joint operation The Group recognises its direct right to the assets, liabilities, revenues and expenses of joint operations and its share of any jointly held or incurred assets, liabilities, revenues and expenses. These have been incorporated in the financial statements under the appropriate headings. Details of the joint operation are set out in Note 24. 34 ALTURA MINING LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued) v) Joint venture A joint venture is structured through a separate vehicle and the parties have rights to the net assets of the arrangement. Joint ventures are accounted for using the equity method where the assets and liabilities will be aggregated into one line item on the face of the Consolidated Balance Sheet, after adjusting for the share of profit or loss after tax, which is shown as a separate line item on the face of the Consolidated Statement of Profit or Loss and Other Comprehensive Income, after adjusting for amounts recognised directly in equity. When the Group’s share of losses in a joint venture equals or exceeds its interest in the joint venture (which includes any long-‐term interests that, in substance, form a part of the Group’s net investment in the joint venture), the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint venture. Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interest in the joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures have been changed where necessary, to ensure consistency with the policies adopted by the Group. vi) Changes in ownership interests The Group treats transactions with non-‐controlling interests that do not result in a loss of control as transactions with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-‐controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-‐controlling interests and any consideration paid or received is recognised in a separate reserve within equity attributable to the owners of Altura Mining Limited. When the Group ceases to have control, joint control or significant influence, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. This fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, jointly controlled entity or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss. If the ownership interest in a jointly controlled entity or an associate is reduced but joint control or significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate. d) Business combinations The acquisition method of accounting is used to account for all business combinations, including business combinations involving entities or businesses under common control, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred also includes the fair value of any contingent consideration arrangement and the fair value of any pre-‐existing equity interest in the subsidiary. Acquisition related costs are expensed as incurred with the exception of stamp duty. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition by acquisition basis, the Group recognises any non-‐controlling interest in the acquiree either at fair value or at the non-‐controlling interest’s proportionate share of the acquiree’s net identifiable assets. The excess of the consideration transferred and the amount of any non-‐controlling interest in the acquiree and the acquisition date fair value of any previous equity interest in the acquiree over the fair value of the Group’s share of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a gain on acquisition of subsidiaries. 35 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED NOTES TO THE FINANCIAL STATEMENTS CONTINUED 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions. Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss. e) Income tax The charge for current income tax expense is based on the result for the year adjusted for any non-‐assessable or disallowed items. It is calculated using the tax rates that have been enacted or are substantially enacted by the balance date for each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. Deferred tax is calculated at the tax rates (and laws) that have been enacted, or substantially enacted by the end of the reporting period and are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the income statement except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity. Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences and unused tax losses can be utilised. The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the Group has a legally enforceable right to offset and intends to settle on a net basis, or to realise the asset and settle the liability simultaneously. Altura Mining Limited and some of its wholly-‐owned Australian subsidiaries have formed an income tax consolidated group under the tax consolidation regime. Each entity in the group recognises its own current and deferred tax amounts, except for any deferred tax liabilities (or assets) resulting from unused tax losses and tax credits, which are immediately assumed by the parent entity. The current tax liability of each group entity is then subsequently assumed by the parent entity. The group notified the Australian Tax Office that it had formed an income tax consolidated group to apply from 1 July 2005. The tax consolidated group has entered a tax sharing agreement under which the wholly-‐ owned entities fully compensate Altura Mining Limited for any current tax payable assumed and are compensated by Altura Mining Limited for any current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to Altura Mining Limited under the tax consolidated legislation. The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head entity, which is issued as soon as practicable after the end of each financial year. The head entity may also require payment of interim funding amounts to assist with its obligations to pay tax instalments. Assets or liabilities arising under tax funding agreements within the tax consolidated entities are recognised as current amounts receivable from or payable to other entities in the Group. Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are recognised as a contribution to (or distribution from) wholly-‐owned tax consolidated entities. 36 ALTURA MINING LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued) f) Segment reporting Operating Segments are reported in a manner consistent with the internal reporting provided to the Chief Operating decision maker. The Chief Operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments has been identified as the Board of Directors. g) Property, plant and equipment Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses. Property Freehold land and buildings are measured on the cost basis. The carrying amount of land and buildings is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. Plant and equipment Plant and equipment are measured on the cost basis. 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 will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. The carrying amount of plant and equipment is reviewed annually to ensure it is not in excess of the recoverable amount from these assets. Mine development Mine development assets include all mining related development expenditure that is not included under land, buildings and plant and equipment. These capitalised costs are amortised over the life of the mine on a unit of production basis following the commencement of commercial production. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward mine development costs in relation to that area of interest. Mine development is written down immediately to its recoverable amount if the carrying value is greater than its estimated recoverable amount (on a CGU basis). Depreciation The depreciable amount of all fixed assets excluding freehold land, is depreciated on a straight-‐line basis over their useful lives to the Group commencing from the time the asset is held ready for use. Leased assets are depreciated over the asset’s useful life or over the shorter of the assets useful life and the lease term if there is no reasonable certainty that the Group will obtain ownership at the end of the lease term. The depreciation rates used for each class of depreciable assets are: Class of Fixed Asset Plant and equipment Leased plant and equipment Mine development Depreciation Rate 20% -‐ 50% 12.5% units of production The asset’s residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in profit or loss. 37 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED NOTES TO THE FINANCIAL STATEMENTS CONTINUED 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued) h) Exploration and evaluation expenditure Exploration, evaluation and development expenditure incurred is accumulated in respect of each separately identifiable area of interest. These costs are only carried forward where the right of tenure for the area of interest is current and to the extent that they are expected to be recouped through the successful development and commercial exploitation of the area, or alternatively sale of the area, or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves. Exploration and evaluation expenditure assets acquired in a business combination are recognised at their fair value at the acquisition date. Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, the exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified to mining development. Accumulated costs in relation to an abandoned area are written off in full against the result in the year in which the decision to abandon the area is made. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. i) Leases Leases of property, plant and equipment where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership that is transferred to entities in the Group, are classified as finance leases. Finance leases are capitalised at the lease inception date, by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period. Leased assets are depreciated on a straight-‐line basis over the shorter of their estimated useful lives or the lease terms if there is no reasonable certainty that the Group will obtain ownership at the end of the lease term. Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses on a straight-‐line basis over the period of the lease. Lease incentives under operating leases are recognised as a liability and amortised on a straight-‐line basis over the life of the lease term. j) Impairment of assets Goodwill and 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 assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised immediately in profit or loss for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash generating units, “CGUs”). For the purposes of goodwill impairment testing, CGUs to which goodwill has been allocated are aggregated so that the level at which impairment is tested reflects the lowest level at which goodwill is monitored for internal reporting purposes. The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to CGUs that are expected to benefit from the synergies of the combination. Non-‐financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at the end of each reporting period. 38 ALTURA MINING LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued) k) Investments and other financial assets The Group classifies its financial assets in the following categories: financial assets at fair value through profit or loss, loans and receivables, held to maturity investment and available-‐for-‐sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and in the case of assets classified as held to maturity, re-‐evaluates this designation at the end of each reporting period. i) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Assets in this category are classified as current assets if they are expected to be settled within 12 months, otherwise they are classified as non-‐current. ii) 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 included in current assets, except for those with maturities greater than 12 months after the reporting period which are classified as non-‐current assets. Loans and receivables are included in current trade and other receivables and non-‐current trade and other receivables (refer to Note 9). iii) Held-‐to-‐maturity investments Held to maturity investments are non-‐derivative financial assets with fixed or determinable payments and fixed maturities that the Group’s management has the positive intention and ability to hold to maturity. If the Group were to sell other than an insignificant amount of held to maturity financial assets, the whole category would be tainted and reclassified as available for sale. Held to maturity financial assets are included in non-‐current assets, except for those with maturities less than 12 months from the end of the reporting period, which are classified as current assets. iv) Available-‐for-‐sale financial assets Available-‐for-‐sale financial assets, comprising principally listed marketable equity securities, are non-‐derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-‐current assets unless management intends to dispose of the investment within 12 months of the end of the reporting period. Investments are designated as available-‐for-‐sale if they do not have fixed maturities and fixed or determinable payments and management intends to hold them for the medium to long term. v) Recognition and de-‐recognition Purchases and sales of financial assets are recognised on trade date, the date on which the Group commits to purchase or sell the asset. Financial assets are initially recognised at fair value plus transaction costs except where the financial asset is classified as fair value through profit or loss in which case transaction costs are expensed in profit or loss. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. When securities classified as available-‐for-‐sale are sold, the accumulated fair value adjustments recognised in other comprehensive income and reclassified to profit or loss as gains and losses from investment securities. vi) Subsequent measurement Loans and receivables are carried at amortised cost using the effective interest method. Available-‐for-‐sale financial assets, financial assets at fair value through profit or loss and held to maturity investments are subsequently carried at fair value. Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are presented in profit or loss within other income or other expenses in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in profit or loss as part of revenue from continuing operations when the Group’s right to receive payments is established. 39 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED NOTES TO THE FINANCIAL STATEMENTS CONTINUED 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Investment in shares in unlisted companies, which do not have a quoted market price and whose fair value cannot be reliably measured, are classified as available-‐for-‐sale and are measured at cost. Gains or losses are recognised in profit or loss when the investments are derecognised or impaired. vii) Impairment The Group assess at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. In the case of equity securities classified as available-‐for-‐sale, a significant or prolonged decline in the fair value of a security below its cost is considered as an indicator that the securities are impaired. If any such evidence exists for available-‐for-‐sale financial assets, the cumulative loss, measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss, is reclassified from equity and recognised in profit or loss. Impairment losses recognised in profit or loss on equity instruments classified as available-‐for-‐sale are not reversed through profit or loss. If there is evidence of impairment for any of the Group’s financial assets carried at amortised cost, the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, excluding future credit losses that have not been incurred. The cash flows are discounted at the financial asset’s original effective interest rate. The loss is recognised in profit or loss. l) Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to prepare for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised as an expense in the period in which they are incurred. m) Employee benefits i) Wages and salaries, annual leave and sick leave Liabilities for employee benefits for wages, salaries, annual leave and accumulating sick leave that are expected to be settled within 12 months of the reporting date represent present obligations resulting from employees’ services provided to the reporting date and are calculated at undiscounted amounts based on wage and salary rates that the Group expects to pay as at reporting date including related on costs, such as superannuation, workers compensation, insurance and payroll tax and are included in trade and other payables. Non-‐ accumulating, non-‐monetary benefits such as housing and cars are expensed by the Group as the benefits are used by the employee. Employee benefits payable later than 12 months have been measured at the present value of the estimated future cash outflows to be made for those benefits. In determining the liability, consideration is given to employee salary and wage increases and the probability that the employee may satisfy any vesting requirements. Those cash flows are discounted using market yields with terms to maturity that match the expected timing of cash flows attributable to employee benefits. ii) Long service leave The Group’s net obligation in respect of long term service benefits is the amount of future benefit that employees have earned in return for their service to the reporting date. The obligation is calculated using expected future increases in wages and salary rates including related on costs and expected settlement dates, and is discounted using an appropriate discount rate. The current liability for long service leave represents all unconditional obligations where employees have fulfilled the required criteria and also those where employees are entitled to a pro rata payment in certain circumstances and is included in the current provisions. The non-‐current provision for long service leave includes the remaining long service leave obligations. 40 ALTURA MINING LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued) iii) Superannuation Contributions made by the Group to defined contribution superannuation funds are recognised as an expense in the period in which they are incurred. iv) Equity-‐settled compensation The Group operates an employee share ownership plan. Share-‐based payments to employees are measured at the fair value of the instruments issued and amortised over the vesting periods. Share-‐based payments to non-‐ employees are measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received. The corresponding amount is recorded to the option reserve. The fair value of options is determined using the Black-‐Scholes pricing model. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognised for services received as consideration for the equity instruments granted is based on the number of equity instruments that eventually vest. n) Significant accounting estimates and judgements The Directors evaluate estimates and judgements incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Group. The resulting accounting estimates, will, by definition, seldom equal the related actual results. Management has identified the following significant accounting policies for which significant judgements, estimates and assumptions are made. i) Significant accounting estimates and assumptions Critical accounting estimates and judgements Following is a summary of the key assumptions concerning the future, and other key sources of estimation and accounting judgements at reporting date that have not be disclosed elsewhere in these financial statements. a. Determination of coal resources and reserves The Company estimates its coal ore resources and reserves based on information compiled by Competent Persons defined in the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves (December 2012), which is prepared by the Joint Ore Reserves Committee (“JORC”) of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia, known as the JORC Code. Reserves determined in this way are used in the calculation of depreciation, amortisation and impairment charges, the assessment of mine lives and for forecasting the timing of the payment of rehabilitation costs. The amount of reserves that may actually be mined in the future and the Company’s estimate of reserves from time to time in the future may vary from current reserve estimates. b. Exploration and evaluation expenditure The application of the Group’s accounting policy for exploration and evaluation expenditure requires judgement in determining whether it is likely that future economic benefits are likely, which may be based on assumptions about future events or circumstances. Estimates and assumptions may change if new information becomes available. If after expenditure is capitalised information becomes available suggesting that the recovery of expenditure is unlikely, the amount capitalised is written off in the Consolidated Statement of Profit or Loss in the period when the new information becomes available. c. Impairment The Group assess impairment by evaluation of conditions and events specific to the Company that may be indicative of impairment triggers. Goodwill is assessed for impairment at each reporting period. Recoverable amounts of relevant assets are reassessed using the higher of fair value less costs to sell and value in use calculations which incorporate various key assumptions (refer to Note 16 and 18). 41 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED NOTES TO THE FINANCIAL STATEMENTS CONTINUED 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued) d. Rehabilitation The calculation of the provisions for rehabilitation and the related mine development assets rely on estimates of the cost to rehabilitate an area which is currently disturbed based on legislative requirements and future costs. The costs are estimated on the basis of a mine closure plan. Cost estimates take into account expectations about future events including the mine lives, the time of rehabilitation expenditure, regulations, inflation and discount rates. When these expectations change in the future, the provision and where applicable, the mine development assets are recalculated in the period in which they change. e. Derivatives The fair value of financial instruments must be estimated for recognition and measurement purposes. The fair value of financial instruments traded in active markets such as available-‐for-‐sale securities is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Group is the current bid price. The fair value of financial instruments that are not traded in an active market are determined using valuation techniques that use observable market data at the reporting date where it is available. f. Income taxes The Group is subject to income taxes in Australia and jurisdictions where it has foreign operations. Significant judgement is required in determining the provision for income taxes. There are transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Group estimates its tax liabilities based on the Group’s understanding of the tax law. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made. g. Share-‐based payment transactions From time to time the Company has issued options to directors and employees. The Company measures fair value of share-‐based payments using the Black-‐Scholes Pricing Model, using the assumptions detailed in Note 22. This formula takes into account the terms and conditions under which the instruments were granted. o) Provisions Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. i) Rehabilitation costs Provision is made for the Group’s estimated liability arising under specific legislative requirements and the conditions of its exploration permits and mining leases for future costs expected to be incurred in restoring mining areas of interest. The estimated liability is based on the restoration work required using existing technology as a result of activities to date. The liability includes the cost of reclamation of the site, including infrastructure removal and land fill costs. An asset is created as part of the mine development asset, to the extent that the development relates to future production activities, which is offset by a current and non-‐current provision for rehabilitation. p) Cash and cash equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-‐term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, net of bank overdrafts. 42 ALTURA MINING LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued) q) Revenue Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances, rebates and amounts collected on behalf of third parties. The Group recognises revenue when the amount of revenue can be reliably measured and it is probable that future economic benefits will flow to the entity. Revenue is recognised in the profit or loss as follows: i) Sale of goods Revenue from the sale of bulk commodities is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and can be measured reliably. Risks and rewards are considered passed to the buyer at the time of delivery, usually on a Free On Board (“FOB”) basis. ii) Dividends Dividends are recognised as revenue when the right to receive payment is established. iii) Interest Interest income from a financial asset is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts the estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount. iv) Services Revenue from the rendering of a service is recognised upon the delivery of the service to the customer. r) Goods and services tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the relevant taxation authorities. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the balance sheet are shown inclusive of GST. Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows. s) Foreign operations The financial performance and position of foreign operations whose functional currency is different from the Group’s presentation currency are translated as follows: • • assets and liabilities are translated at exchange rates prevailing at balance sheet date; and income and expenses are translated at monthly average exchange rates for the period. Exchange differences arising on translation of foreign operations are transferred directly to the Group’s foreign currency translation reserve as a separate component of equity. These differences are recognised in the income statement upon disposal of the foreign operation. t) Foreign currency transactions and balances The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in which the entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity’s functional and presentation currency. Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the period end exchange rate. Non-‐monetary items measured at historical cost continue to be carried at the exchange rate at the date when fair values were determined. 43 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED NOTES TO THE FINANCIAL STATEMENTS CONTINUED 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Exchange differences arising on the translation of monetary items are recognised in the income statement, except where deferred in equity as a qualifying cash flow or net investment hedge. Exchange differences arising on the translation of non-‐monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the income statement. u) Goodwill and intangibles Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary or associate at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisitions of associates is included in investments in associates. Goodwill is not amortised, it is tested for impairment at each reporting date or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash generating units (“CGUs”) for the purpose of impairment testing. The allocation is made to those CGUs or groups of CGUs that are expected to benefit from the business combination in which the goodwill arose. v) Financial liabilities and equity Non-‐derivative financial liabilities (including trade and other payables and interest-‐bearing liabilities excluding financial guarantees) are initially recognised at fair value, net of transaction costs incurred and subsequently measured at amortised cost using the effective interest rate method. Financial liabilities are derecognised when the obligation specified in the relevant contract is discharged, cancelled or expires. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss. All non-‐derivative financial liabilities are classified as current liabilities unless there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Costs directly attributable to the issue of new shares or options are shown as a deduction from the equity proceeds, net of any income tax benefit. Costs directly attributable to the issue of new shares or options associated with the acquisition of a business are included as part of the purchase consideration. w) Comparative figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. x) Inventories Consumable stores Inventories of consumable supplies and spare parts expected to be used in the supply of services are valued at cost. Bulk commodities Bulk commodity stockpiles are physically surveyed or estimated and valued at the lower of cost or net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and costs of selling final product. Cost is determined by the weighted average method and comprises direct purchase costs and an appropriate portion of fixed and variable overhead costs, including depreciation and amortisation, incurred in converting materials into finished goods. y) 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. 44 ALTURA MINING LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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. Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Classifications are reviewed each reporting date and transfers between levels are determined based on a reassessment of the lowest level input that is significant to the fair value measurement. For recurring and non-‐recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data. z) Deferred mining cost During the commercial production stage of open pit operations, production stripping costs comprises the accumulation of expenses incurred to enable access to the ore body (coal or iron ore), and includes direct removal costs and machinery and plant running costs. Production stripping costs are capitalised as part of an asset if it can be demonstrated that it is probable that future economic benefits will be realised, the costs can be reliably measured and the entity can identify the component of the ore body for which access has been improved. The asset is called “stripping activity asset”. The stripping asset is amortised on a systematic basis, over the expected useful life of the identified component of the ore body that becomes more accessible as a result of the stripping activity. The units of production method shall be applied. Production stripping costs that do not satisfy the asset recognition criteria are expensed. 45 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED NOTES TO THE FINANCIAL STATEMENTS CONTINUED 2. FINANCIAL RISK MANAGEMENT The Group’s principal financial instruments comprise receivables, payables, loans, finance leases, cash and short term deposits. These activities expose the Group to a variety of financial risks: market risk (which includes currency risk, interest rate risk and price risk), credit risk and liquidity risk. The Group manages these risks in accordance with the Group’s financial risk management policy. The Group uses different methods and assumptions to measure and manage different types of risks to which it is exposed at each balance date. The Board reviews and approves policies for managing each of the Group’s financial risk areas. The Group holds the following financial instruments: FINANCIAL ASSETS Cash and cash equivalents Trade and other receivables Receivables non-‐current Held to maturity investments Available-‐for-‐sale investments FINANCIAL LIABILITIES Trade and other payables Borrowings a) Market risk 2016 $’000 22,132 1,126 2,482 50 1,333 27,123 2,072 18,437 20,509 2015 $’000 2,092 2,758 2,377 1,280 573 9,080 1,872 18,004 19,876 Market risk is the risk that changes in market prices, such as foreign exchange rates, securities prices, and coal prices, will affect the Group’s income or the value of its holdings of financial investments. i) Foreign currency risk The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily in respect to the US dollar. Export coal sales are denominated in US dollars and a strengthening of the Australian dollar against the US dollar has an adverse impact on earnings and cash flow settlement. Liabilities for some loans are denominated in currencies other than the Australian dollar and a weakening of the Australian dollar against other currencies has an adverse impact on earnings and cash flow settlement. The Group’s overseas subsidiaries have a US dollar functional currency. This exposes the Group to foreign exchange fluctuations upon conversion to AUD. At 30 June 2016, the Group held funds in foreign currency amounting to US$205,000 (2015: US$243,000). The Group does not enter into any hedging arrangements. Foreign currency risk sensitivity analysis At 30 June 2016, the effect on profit and equity as a result of changes in the value of the Australian Dollar to the US Dollar that management considers to be reasonably possible, with all other variables remaining constant is as follows: Change in profit — — Improvement in AUD to USD by 11% Decline in AUD to USD by 11% Change in equity — — Improvement in AUD to USD by 11% Decline in AUD to USD by 11% 46 2016 $’000 (2,761) 2,761 (2,761) 2,761 2015 $’000 (2,691) 2,691 (2,691) 2,691 ALTURA MINING LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 2. FINANCIAL RISK MANAGEMENT (Continued) ii) Price risk The Group is exposed to coal price risk and equity securities price risk. The Group currently does not have any hedges in place against the movements in the spot price of coal. The Group's equity investments are publicly traded on the United States of America OTCBB and are not quoted on any market Index. The table below summarises the impact of increases/decreases in the value on the Group's equity investments as at balance date. The analysis is based on the assumption that the equity pricing had increased/decreased by 10% with all other variables held constant and all the Group's equity instruments moved according to the historical correlation with the index. Change in profit — — Increase in equity value by 10% Decrease in equity value by 10% Change in equity — — Increase in equity value by 10% Decrease in equity value by 10% 2016 $’000 -‐ -‐ 133 (133) 2015 $’000 -‐ -‐ (57) 57 iii) Interest rate risk At balance date the Group’s debt was fixed rate. For further details on interest rate risk refer to Note 2d. Interest rate sensitivity analysis At 30 June 2016, the effect on profit and equity as a result of changes in the interest rate that management considers to be reasonably possible, with all other variables remaining constant would be as follows: Change in profit — — Increase in interest rate by 1% Decrease in interest rate by 1% Change in equity — — Increase in interest rate by 1% Decrease in interest rate by 1% 2016 $’000 200 (200) (200) 200 2015 $’000 -‐ -‐ -‐ -‐ Term deposits have been treated as a floating rate due to the short term nature of the deposits. b) Credit risk Credit risk refers to the risk that a third party will default on its contractual obligations resulting in financial loss to the Consolidated Group. The Consolidated Group has adopted the policy of only dealing with credit worthy counterparties and obtaining sufficient collateral or other security where appropriate, as a means of mitigating the risk of financial loss from defaults. The carrying amount of financial assets recorded in the financial statements, net of any provisions for losses, represents the Company's maximum exposure to credit risk. c) Liquidity risk Liquidity risk includes the risk that the Group will not be able to meet its financial obligations as they fall due. The Group will be impacted in the following ways: i) Will not have sufficient funds to settle transactions on the due date; ii) Will be forced to sell financial assets at a value which is less than what they are worth; or iii) May be unable to settle or recover a financial asset at all. The Group manages liquidity risk by monitoring forecast cash flows. 47 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED NOTES TO THE FINANCIAL STATEMENTS CONTINUED 2. FINANCIAL RISK MANAGEMENT (Continued) d) Financial instrument composition and maturity analysis The tables below reflect the undiscounted contractual settlement terms for financial instruments of a fixed period of maturity, as well as management’s expectations for the settlement period for all other financial instruments. As such the amounts may not reconcile to the balance sheet. Weighted average effective interest rate 2015 2016 % % Floating interest rate Within 1 year Fixed interest rate maturing Over 5 years 1 to 5 years Non-‐interest bearing Total 2016 $’000 2015 $’000 2016 $’000 2015 $’000 2016 $’000 2015 $’000 2016 $’000 2015 $’000 2016 $’000 2015 $’000 2016 $’000 2015 $’000 Consolidated Group Financial assets: Cash & cash equivalents Trade and other receivables Available for sale investments Receivables non-‐ current 1.75 1.20 22,132 2,092 -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ 50 1,280 Term deposit 2.65 2.96 Total financial Assets Financial liabilities: Trade & sundry payables Directors and Management Loans Lease liabilities Borrowings UJV funding facility Total financial liabilities 22,132 2,092 50 1,280 -‐ -‐ -‐ -‐ -‐ -‐ 8.00 8.09 -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ 389 -‐ -‐ 389 Trade and sundry payables are expected to be paid as follows: Less than 6 months More than 6 months 48 -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ 8 -‐ -‐ 8 -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ 22,132 2,092 1,126 2,758 1,126 2,758 1,333 573 1,333 573 2,482 2,377 2,482 2,377 -‐ -‐ 50 1,280 4,941 5,708 27,123 9,080 -‐ 2,072 1,872 3,036 2,584 -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ 389 8 -‐ 18,437 17,607 17,473 16,895 -‐ -‐ -‐ -‐ -‐ 20,509 19,479 20,509 19,876 2016 $’000 2,072 -‐ 2,072 2015 $’000 1,872 -‐ 1,872 ALTURA MINING LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 2. FINANCIAL RISK MANAGEMENT (Continued) e) Fair value measurements i) Fair value hierarchy The Group uses various methods in estimating the fair value of financial instruments. AASB 13 Fair Value Measurement requires disclosure of fair value measurements by level in accordance with the following fair value measurement hierarchy: a) Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1) b) Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (level 2); and Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3) c) The following table presents the Group’s financial assets and financial liabilities measured and recognised at fair value at 30 June 2016 and 30 June 2015. 2016 Assets Listed investments Total Assets 2015 Assets Listed investments Total Assets ii) Valuation techniques Level 1 $’000 Level 2 $’000 Level 3 $’000 Total $’000 1,333 1,333 573 573 -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ 1,333 1,333 573 573 The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets and liabilities held by the Group is the closing price. These instruments are included in level 1. Specific valuation techniques used to value financial instruments include: • • The use of quoted market prices or dealer quotes for similar instruments; Other techniques, such as discounted cash flow analysis, are used to determine the fair value for the remaining financial instruments. 49 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED NOTES TO THE FINANCIAL STATEMENTS CONTINUED 3. DISCONTINUED OPERATIONS a) Description On 24 December 2014, a controlled entity entered an agreement to sell its 30% share in the Mt Webber Exploration and Operational joint ventures to its partner Atlas Iron Limited. Shareholder approval was granted at a general meeting held on 12 February 2015 and settlement occurred on 17 February 2015. Financial information relating to the discontinued operation for the period to the date of disposal is set out below. b) Financial performance and cash flow information of discontinued operations The financial performance and cash flow information presented are for the period ending June 2016. Revenue Expenses Loss before income tax Loss after income tax of discontinued operation Loss on sale of joint ventures before income tax Loss from discontinued operations after income tax Net cash (outflow) from financing activities Net decrease in cash generated by the division c) Carrying amounts of assets and liabilities The carrying amounts of assets and liabilities as at 30th June were: Inventory Mine development Total assets Mining restoration & rehabilitation provision Total liabilities Net assets d) Details of the sale of the joint ventures Consideration Total consideration Carrying value of net assets sold Loss on sale before income tax Loss on sale after income tax expense 2016 $’000 -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ 2015 $’000 1,199 (11,879) (10,680) (10,680) (2,113) (12,793) (500) (500) -‐ 29,417 29,417 2,815 2,815 26,602 24,489 24,489 26,602 (2,113) (2,113) 50 ALTURA MINING LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 4. SEGMENT INFORMATION The Group reports the following operating segments to the chief operating decision maker, being the Board of Directors of Altura Mining Limited, in assessing performance and determining the allocation of resources. Unless otherwise stated, all amounts reported to the Board are determined in accordance with accounting policies that are consistent to those adopted in the annual financial statements of the Group. The Coal mining segment derives its revenue from coal sold to customers. As the Group's investment in coal is equity accounted, no revenue from this activity is included in this segment note. The exploration services segment provides a range of drilling services to its customers, predominately mining and exploration companies. The mineral exploration segment revenue comprises interest earned on funds raised to carry out the exploration activities. An internally determined service rate is set for all intersegment transactions. All such transactions are eliminated on consolidation of the Group’s financial statements. 2016 Revenue External sales Other income Other segments Total segment revenue Unallocated revenue Total consolidated revenue Coal Mining $’000 Exploration services $’000 Mineral exploration $’000 Eliminations Total $’000 $’000 -‐ -‐ -‐ -‐ 1,350 112 308 1,770 -‐ 23 -‐ 23 -‐ -‐ (308) (308) 1,350 135 -‐ 1,485 -‐ 1,485 Segment result (19,993) (2,541) (8,029) Other segments Unallocated expenses net of unallocated revenue Profit / (loss) before income tax and finance costs Finance costs Profit / (loss) before income tax Income tax expense Net profit / (loss) for the year Assets and liabilities Segment assets Unallocated assets Total assets Segment liabilities Unallocated liabilities Total liabilities 144 1,835 40,918 16,833 1,849 2,674 Other segment information Capital expenditure Exploration expenditure Depreciation and amortisation -‐ -‐ -‐ -‐ -‐ 511 12 3,100 43 -‐ (30,563) -‐ -‐ (30,563) (277) (30,840) (778) (31,618) 42,897 -‐ 42,897 21,356 -‐ 21,356 12 3,100 554 -‐ -‐ -‐ -‐ -‐ 51 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED NOTES TO THE FINANCIAL STATEMENTS CONTINUED 4. SEGMENT INFORMATION (Continued) 2015 Revenue External sales Other income Other segments Total segment revenue Unallocated revenue Total consolidated revenue Coal Mining $’000 Exploration services $’000 Mineral exploration $’000 Eliminations Total $’000 $’000 -‐ -‐ -‐ -‐ 4,745 6 1,368 6,119 -‐ 28 -‐ 28 -‐ -‐ (1,368) (1,368) Segment result (11,576) (6,661) 1,555 Other segments Unallocated expenses net of unallocated revenue Profit / (loss) before income tax and finance costs Finance costs Profit / (loss) from discontinued operations Profit / (loss) before income tax Income tax expense Net profit / (loss) for the year Assets and liabilities Segment assets Unallocated assets Total assets Segment liabilities Unallocated liabilities Total liabilities Other segment information Capital expenditure Exploration expenditure Depreciation and amortisation 19,451 -‐ 4,450 -‐ 21,977 -‐ 16,056 -‐ 2,051 -‐ 2,546 -‐ -‐ -‐ -‐ 45 -‐ 752 -‐ 834 95 -‐ -‐ -‐ -‐ -‐ -‐ -‐ 52 4,745 34 -‐ 4,779 -‐ 4,779 (16,682) -‐ -‐ (16,682) (267) (12,793) (29,792) (320) (30,062) 45,968 505 46,473 20,653 -‐ 20,653 45 834 847 ALTURA MINING LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 4. SEGMENT INFORMATION (Continued) Geographical segments The Group’s geographical segments are determined based on the location of the Group’s assets. Australia $’000 Indonesia $’000 Other $’000 Eliminations $’000 Total $’000 -‐ 25 -‐ 25 1,350 110 308 1,768 -‐ -‐ -‐ -‐ -‐ -‐ (308) (308) 2016 Revenue External sales Other income Other segments Total segment revenue Unallocated revenue Total revenue Segment assets Unallocated assets Total assets Segment liabilities Unallocated Liabilities Total liabilities Capital expenditure Exploration expenditure Depreciation and amortisation 2015 Revenue External sales Other income Other segments Total segment revenue Unallocated revenue Total revenue Segment assets Unallocated assets Total assets Segment liabilities Unallocated Liabilities Total liabilities 31,704 10,952 241 551 20,619 186 12 3,027 161 -‐ 30 32 62 -‐ 73 393 4,745 4 1,361 6,110 -‐ -‐ -‐ -‐ -‐ -‐ -‐ 13,492 31,892 584 772 19,863 18 1,350 135 -‐ 1,485 -‐ 1,485 42,897 -‐ 42,897 21,356 -‐ 21,356 12 3,100 554 4,745 34 -‐ -‐ 4,779 45,968 505 46,473 20,653 -‐ 20,653 45 834 847 -‐ -‐ -‐ -‐ -‐ -‐ -‐ (1,393) (1,393) -‐ -‐ -‐ -‐ -‐ Capital expenditure Exploration expenditure Depreciation and amortisation 3 526 83 42 308 764 -‐ -‐ -‐ The Group has a number of customers to whom it provides services. The Group supplies three external customers in the services segment who account for 56% (US$523,000), 12% (US$109,000) and 10% (US$91,000) of external revenue (2015: 92%). 53 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED NOTES TO THE FINANCIAL STATEMENTS CONTINUED 5. PROFIT / (LOSS) FROM ORDINARY ACTIVITIES (a) Revenue Revenue from sales Total sales revenues from ordinary activities (b) Other revenues Interest received from other corporations Profit on sale of assets Other revenue Total other revenues from ordinary activities Total revenue (c) Cost of sales Drilling costs Depreciation -‐ plant & equipment Total cost of sales (d) Other expenses Depreciation -‐ plant & equipment Loss on sale of assets Total other expenses from ordinary activities (e) Financing costs Interest expense Total financing costs (f) Employee benefits expense Employee share scheme expense Bonus paid by way of issue of shares to directors and staff Other employee benefits expense Total employee benefits expense 2016 $’000 1,350 1,350 23 111 1 135 2015 $’000 4,745 4,745 29 4 1 34 1,485 4,779 1,609 503 2,112 51 -‐ 51 277 277 235 545 1,888 2,668 3,966 752 4,718 95 27 122 267 267 184 552 1,423 2,159 54 ALTURA MINING LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 6. EARNINGS / (LOSS) PER SHARE (a) Basic earnings / (loss) per share From continuing operations attributable to the ordinary equity holders of the company From discontinued operation Total basic earnings per share attributable to the ordinary equity holders of the company (b) Diluted earnings / (loss) per share From continuing operations attributable to the ordinary equity holders of the company From discontinued operation Total basic earnings per share attributable to the ordinary equity holders of the company 2016 cents per share 2015 cents per share (3.50) -‐ (3.50) (3.50) -‐ (3.50) (3.48) (2.61) (6.09) (3.48) (2.61) (6.09) 2016 Number 2015 number (c) Weighted average number of ordinary shares used as the denominator in calculating the basic and diluted earnings per share. Listed and unlisted options are not considered as potential ordinary shares and are not included in the calculation because they are antidilutive for the year end 30 June 2016. These options could potentially dilute basic earnings per share in the future. 900,582,172 489,828,314 (d) Earnings used in the calculation of basic earnings per share reconciles to net profit in the income statement as follows: Net profit / (loss) Less -‐ profit /( loss) from discontinued operations Earnings used in the calculation of basic EPS (e) As at 30 June 2016, there were 5,536,201 listed share options outstanding, with 5,299,098 of these share options converted to shares on 12 July 2016, the remainder (237,103 share options) lapsing. These potential ordinary shares would reduce the loss per share from continuing ordinary operations on conversion, and hence these potential ordinary shares are not dilutive. (f) As at 30 June 2016, there were 6,650,000 Management performance rights outstanding, these potential ordinary shares would reduce the loss per share from continuing ordinary operations on conversion, and hence these potential ordinary shares are not dilutive. 2016 $’000 (31,499) -‐ (31,499) 2015 $’000 (29,847) (12,793) (17,054) 55 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED NOTES TO THE FINANCIAL STATEMENTS CONTINUED 7. INCOME TAX EXPENSE (a) The components of tax expense comprise: Current Tax Current year Adjustments in respect of prior periods Deferred Tax Current year deferred tax Total income tax expense per income statement (b) Income tax expense is attributable to : Profit / (loss) from continuing operations Profit / (loss) from discontinued operations 2016 $’000 2015 $’000 -‐ 254 524 778 778 -‐ 778 160 214 (54) 320 320 -‐ 320 (c) The prima facie tax on profit / (loss) before income tax is reconciled to the income tax as follows: Profit / (loss) from continuing operations Profit / (loss) from discontinued operations Profit / (loss) before tax (30,840) -‐ (30,840) (16,949) (12,793) (29,742) Income tax calculated at the Australian rate of 30% (9,252) (8,923) Increase in income tax due to: Non-‐deductible expenses Share compensation costs Effect of current year tax losses derecognised Under / (over) provision in prior year Difference in overseas tax rates Income tax expense 7,750 234 1,881 254 (89) 778 6,003 173 3,035 214 (182) 320 Deferred tax assets arising from tax losses are only recognised to the extent that there are equivalent deferred tax liabilities. The remaining tax losses have not been recognised as an asset because recovery of the losses is not regarded as probable: Tax losses not recognised -‐ revenue 9,584 8,640 (d) Tax consolidation system Legislation to allow groups, comprising a parent entity and its Australian resident wholly-‐owned entities, to elect to consolidate and be treated as a single entity for income tax purposes was substantively enacted on 21 October 2002. Altura Mining Limited and certain of its wholly-‐owned Australian subsidiaries are eligible to consolidate for tax purposes and have elected to form an income tax group under the Tax Consolidation Regime effective 1 July 2005. The implementation of the tax consolidation group was formally recognised by the ATO on 22 July 2005 with start date for income tax consolidation 1 July 2005 and Altura Mining Limited as the head entity of the group. Entities within the tax-‐consolidated group have entered into a tax-‐sharing agreement with the head entity. Under the terms of this agreement, Altura Mining Limited and each of the entities in the tax consolidated group has agreed to pay a tax equivalent payment to or from the head entity, based on standalone tax payer basis. Such amounts are reflected in amounts receivable from or payable to other entities in the tax consolidated group. 56 ALTURA MINING LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 8. CASH AND CASH EQUIVALENTS 2016 $’000 2015 $’000 Cash at bank and on hand 22,132 2,092 9. RECEIVABLES CURRENT Trade and other receivables Provision for doubtful debts NON-‐CURRENT Other receivables – Related parties * 1,977 (851) 1,126 2,482 2,482 3,265 (507) 2,758 2,377 2,377 * These unsecured amounts are due from a minority party in the Tabalong coal project. Their recoverability is dependent on the commercial exploitation of certain mining tenements in the project. The timing of which is currently unknown, and as such the amounts have not been discounted. No losses are expected on these amounts. 2016 Consolidated 2015 Consolidated 0-‐30 days $000 307 1,517 31-‐60 days $000 83 163 61-‐90 days $000 736 120 90+ days $000 Total $000 -‐ 1,126 958 2,758 As at 30 June 2016, $819,000 (2015: $1,241,000) trade receivables were past due. 10. INVENTORIES Consumables and stores – at cost 11. HELD TO MATURITY INVESTMENTS Term deposits The term deposits are held to their maturity of less than one year and carry a weighted average fixed interest rate of 2.65% (2015: 2.96%). Due to their short term nature their carrying value is assumed to approximate their fair value. Information about the Group’s exposure to credit risk is disclosed in Note 2. 2016 $’000 1 1 50 50 2015 $’000 1 1 1,280 1,280 57 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED NOTES TO THE FINANCIAL STATEMENTS CONTINUED 12. OTHER CURRENT ASSETS Financial assets (security deposits) Prepayments 13. AVAILABLE-‐FOR-‐SALE FINANCIAL ASSESTS Listed investments at fair value 2016 $’000 132 329 461 1,333 1,333 2015 $’000 192 288 480 573 573 In November 2012 the Group acquired a 14.7% interest in Lithium Corporation, Nevada USA by way of a non-‐brokered private placement. Lithium Corporation is quoted on the US OTCBB (Over The Counter Bulletin Board). 14. PROPERTY, PLANT AND EQUIPMENT Motor vehicles Office equipment Plant and equipment Land Exploration $’000 $’000 $’000 $’000 $’000 Plant and equipment under lease $’000 Total $’000 755 -‐ 63 18 (123) 713 658 52 -‐ 46 35 (105) 686 27 599 12 -‐ 16 (11) 616 478 72 -‐ -‐ 26 (11) 565 51 7,208 -‐ -‐ 134 -‐ 7,342 6,089 418 261 -‐ 126 -‐ 6,894 448 16 -‐ -‐ -‐ (16) -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ 108 -‐ -‐ -‐ -‐ 108 107 1 -‐ -‐ -‐ -‐ 108 -‐ 61 -‐ (63) 2 -‐ -‐ 33 11 -‐ (46) 2 -‐ -‐ -‐ 8,747 12 -‐ 170 (150) 8,779 7,365 554 261 -‐ 189 (116) 8,253 526 2016 Gross carrying amount Balance at 30 June 2015 Additions Transfer Exchange difference Disposals Balance at 30 June 2016 Accumulated depreciation Balance at 30 June 2015 Depreciation expense Impairment expense Transfer Exchange difference Disposals Balance at 30 June 2016 Net book value as at 30 June 2016 58 ALTURA MINING LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 14. PROPERTY, PLANT AND EQUIPMENT (Continued) Motor vehicles Office equipment Plant and equipment Land Exploration $’000 $’000 $’000 $’000 $’000 Plant and equipment under lease $’000 Total $’000 2015 Gross carrying amount Balance at 30 June 2014 Additions Transfer Exchange difference Disposals Balance at 30 June 2015 Accumulated depreciation Balance at 30 June 2014 Depreciation expense Transfer Exchange difference Disposals Balance at 30 June 2015 Net book value as at 30 June 2015 661 -‐ -‐ 94 755 481 51 -‐ 126 -‐ 658 97 683 4 -‐ 86 (174) 599 444 106 -‐ 66 (138) 478 121 6,218 41 -‐ 949 -‐ 7,208 4,639 664 -‐ 786 -‐ 6,089 14 -‐ -‐ 2 -‐ 16 -‐ -‐ -‐ -‐ -‐ -‐ 1,119 16 15. EXPLORATION AND EVALUATION Exploration and evaluation expenditure at cost: Carried forward from previous year Transfer to mine development costs Incurred during the year Disposed during year Written off during the year Total exploration and evaluation expenditure The recovery of expenditure carried forward is dependent upon the discovery of commercially viable mineral and other natural resource deposits, their development and exploitation, or alternatively their sale. The Company's title to certain mining tenements is subject to Ministerial approval and may be subject to successful outcomes of native title issues. 139 -‐ -‐ -‐ (31) 108 125 12 -‐ -‐ (30) 107 1 49 -‐ -‐ 12 -‐ 61 16 14 -‐ 3 -‐ 33 28 7,764 45 -‐ 1,143 (205) 8,747 5,705 847 -‐ 981 (168) 7,365 1,382 2016 $’000 2015 $’000 14,949 -‐ 3,340 -‐ 18,289 (3,895) 14,394 14,205 -‐ 859 -‐ 15,064 (115) 14,949 59 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED NOTES TO THE FINANCIAL STATEMENTS CONTINUED 16. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD Non-‐Current Assets Investments in associates (refer to Note 1C(ii) and Note 24 (b)) Impairment assessment An impairment charge of $18.5 million was recognised during the 12 months ended 30 June 2016 to the Group’s investment in the Delta Coal operations. The recoverable amount is based on the Director’s assessment of the likely return to the Company on sale of the asset. 17. TRADE AND OTHER PAYABLES Trade payables 18. BORROWINGS Current borrowings Interest bearing Hire purchase liabilities (Note 33) Director & Management loans (Note 26) Total current borrowings Non-‐current borrowings Non-‐interest bearing Loan from other entities ## Vendor loan # Total non-‐current borrowings 2016 $’000 144 144 2015 $’000 19,451 19,451 2,072 2,072 1,872 1,872 -‐ -‐ -‐ 1,604 16,833 18,437 8 389 397 1,551 16,056 17,607 60 ALTURA MINING LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 19. CURRENT PROVISIONS Employee benefits Movements in Provisions Short term employee benefits Opening balance Provision increase / (decrease) Expense incurred Balance at year end The aggregate employee entitlement liability recognised and included in the financial statements is as follows: Provision for employee entitlements: Current Total 20. CURRENT TAXATION & DEFERRED TAX LIABILITIES & ASSETS (a) Liabilities Current Income tax paid / payable Non-‐Current Deferred tax liability comprises: Unrealised foreign exchange gain Tax allowances relating to exploration Other (b) Assets Non-‐Current Deferred assets comprises: Provisions Revenue losses Revenue losses not recognised Property, plant and equipment Other (c) Reconciliation of: Gross movements The overall movement in the deferred tax account is as follows: Opening balance -‐ net deferred taxes (Charge) / credit to income statement (Charge) / credit to equity Closing balance -‐ net deferred taxes 2016 $’000 2015 $’000 847 847 777 132 (62) 847 847 847 777 777 544 335 (102) 777 777 777 -‐ -‐ 2,140 2,483 3 4,627 254 13,887 (9,584) 7 63 4,627 505 (524) 19 -‐ 1,875 2,740 18 4,633 439 13,002 (8,640) 230 107 5,138 367 54 84 505 61 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED NOTES TO THE FINANCIAL STATEMENTS CONTINUED 21. CONTRIBUTED EQUITY Issued capital 2016 $’000 2015 $’000 1,222,459,902 (2015: 837,676,732) ordinary shares issued and fully paid 105,840 78,904 Fully paid ordinary shares Balance at the beginning of the financial year Issue of shares to directors and staff # Issue of shares on vesting of performance rights ## Share purchase plan Non renounceable rights issue Share placement and lead managers fee Exercise of Listed Options Repayment of Director and Management loans by the issue of shares Share issue costs 2016 2015 Number $’000 Number $’000 837,676,732 11,450,000 2,900,000 -‐ -‐ 137,037,037 197,396,133 78,904 545 183 -‐ -‐ 23,000 3,948 36,000,000 360 -‐ (1,100) 454,272,181 8,300,000 -‐ 5,240,000 303,720,989 66,143,562 -‐ -‐ -‐ 74,562 552 -‐ 262 3,037 661 -‐ -‐ (170) Balance at the end of the financial year 1,222,459,902 105,840 837,676,732 78,904 # 11,000,000 shares were issued to directors and other key management personnel. ## 2,400,000 shares were issued to directors and other key management personnel. Fully paid ordinary shares carry one vote per share and carry the rights to dividends. Ordinary shares have no par value. Reserves Option and performance rights reserve The option and performance rights reserve records items recognised as expenses on the valuation of share options. Foreign currency translation reserve The foreign currency translation reserve records exchange differences arising on translation of a foreign controlled subsidiary. Change in fair value reserve The change in fair value reserve records valuation differences arising on the market valuation of available for sale financial assets. Capital management The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. There were no changes to the consolidated entity's approach to capital management during the year. Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements. The Board effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels and by share issues. 62 ALTURA MINING LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 22. SHARE BASED PAYMENTS a) Options The Company previously had in place an Employee Share Option Plan (ESOP) under which employees and directors of the Group may be issued on a discretionary basis with options over ordinary shares of Altura Mining Limited. In 2014 this plan was replaced with a Long-‐Term Incentive Plan referred to below in (b). There were 9 million employee share options expiring on 30 September 2015, all of which lapsed. Number of options 2016 Weighted average exercise price $ Number of options 2015 Weighted average exercise price $ Outstanding at the beginning of the year Granted Forfeited / expired Exercised Outstanding at year-‐end Exercisable at year-‐end 9,000,000 -‐ (9,000,000) -‐ -‐ -‐ 0.20 -‐ -‐ -‐ -‐ -‐ 9,575,000 -‐ (575,000) -‐ 9,000,000 9,000,000 0.20 -‐ -‐ -‐ 0.20 0.20 There were no new options issued to staff during the year ended 30 June 2016. b) Performance Rights In 2014 the Company approved a Long-‐Term Incentive Plan (LTIP) under which employees and directors of the Group may be issued on a discretionary basis with performance rights over ordinary shares of Altura Mining Limited. The purpose of this plan is to: • • • assist in the reward, retention and motivation of employees and directors; align the interests of employees and directors more closely with the interests of Shareholders by providing an opportunity for employees and directors to receive an equity interest in the form of Awards; and provide employees and directors with the opportunity to share in any future growth in value of the Company. The Performance Rights lapse when employment ceases with Altura Mining Limited. The Performance Rights have been granted for no consideration, and no amount is payable on the vesting or exercising of the Performance Rights. All rights subject to the LTIP carry no rights to dividends and no voting rights, until converted into ordinary shares. The Company had the following Performance Rights granted under the LTIP as at 30 June 2016: Number Issue date Vesting date 2,700,000 11 December 2014 30 November 2016 400,000 150,000 11 August 2015 21 June 2016 30 November 2016 30 November 2016 2,700,000 11 December 2014 30 November 2017 400,000 300,000 11 August 2015 21 June 2016 30 November 2017 30 November 2017 63 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED NOTES TO THE FINANCIAL STATEMENTS CONTINUED SHARE BASED PAYMENTS (continued) c) Bonus Shares During the year 11,450,000 shares were issued to the directors and staff for no consideration. During the year, the Company has the following share based payments expenses: Options expense (Note 22a) Performance rights (Note 22b) Bonus shares (Note 22c) 2016 $’000 -‐ 235 545 780 2015 $’000 3 181 552 736 23. KEY MANAGEMENT PERSONNEL COMPENSATION a) Names and positions held of key management personnel in office at any time during the financial year are: Directors James Brown Paul Mantell Allan Buckler Dan O’Neill BT Kuan Managing Director Non-‐Executive Director Non-‐Executive Director Non-‐Executive Director Non-‐Executive Director Key Management Personnel Chris Evans Noel Young Damon Cox General Manager, Operations Group Financial Controller and Company Secretary Company Secretary b) Key management personnel remuneration Short-‐term employee benefits Long-‐term employee benefits Post-‐employment benefits Termination benefits Share based payments c) Option holdings Number of options held by key management personnel 2016 $ 1,263,069 -‐ 70,534 -‐ 571,980 1,905,583 2015 $ 916,613 -‐ 63,262 -‐ 586,605 1,566,480 2016 J Brown P Mantell A Buckler D O’Neill B Kuan C Evans N Young D Cox Balance at the start of the year 4,500,001 5,523,334 28,682,283 1,555,556 3,500,000 -‐ 2,180,000 425,000 Purchased in rights issue -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ Granted for loan conversion 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000 -‐ 3,000,000 -‐ Exercised Lapsed Balance at end of the year Vested and exercisable (5,500,001) (6,523,334) (30,682,283) (3,555,556) (5,500,000) -‐ (4,830,000) (75,000) (2,000,000) (2,000,000) (1,000,000) (1,000,000) (1,000,000) -‐ (350,000) (350,000) -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ 64 ALTURA MINING LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 23. KEY MANAGEMENT PERSONNEL COMPENSATION (continued) Details of options granted as compensation and shares issued on the exercise of such options, together with terms and conditions of the options, can be found in the Directors’ Report and under Note 22. 2015 J Brown P Mantell A Buckler D O’Neill B Kuan C Evans N Young D Cox Balance at the start of the year 2,000,000 2,000,000 1,000,000 1,000,000 1,000,000 -‐ 350,000 350,000 Purchased in rights issue 2,500,001 3,523,334 27,682,283 555,556 2,500,000 -‐ 1,830,000 75,000 Granted for loan conversion -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ Exercised Lapsed -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ Balance at end of the year 4,500,001 5,523,334 28,682,283 1,555,556 3,500,000 -‐ 2,180,000 425,000 Vested and exercisable 4,500,001 5,523,334 28,682,283 1,555,556 3,500,000 -‐ 2,180,000 425,000 -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ d) Performance Rights Number of performance rights held by key management personnel The number of performance rights in the Company held during the financial year by each director of Altura Mining Limited and other key management personnel of the Group, including their personally related parties, are set out below. 2016 J Brown P Mantell A Buckler D O’Neill B Kuan C Evans N Young D Cox 2015 J Brown P Mantell A Buckler D O’Neill B Kuan C Evans N Young D Cox Balance at the start of the year 3,000,000 1,500,000 300,000 300,000 300,000 Granted as compensation Shares issued/ rights lapsed Balance at the end of the year Vesting 30 Nov 2015 Vesting 30 Nov 2016 Vesting 30 Nov 2017 -‐ -‐ -‐ -‐ -‐ (1,000,000) 2,000,000 (500,000) 1,000,000 (100,000) (100,000) (100,000) (200,000) (200,000) (200,000) 200,000 200,000 200,000 800,000 400,000 400,000 -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ 1,000,000 1,000,000 500,000 500,000 100,000 100,000 100,000 100,000 100,000 100,000 400,000 400,000 200,000 200,000 200,000 200,000 -‐ 1,000,000 600,000 600,000 -‐ -‐ Balance at the start of the year Granted as compensation Shares issued/ rights lapsed Balance at the end of the year Vesting 30 Nov 2015 Vesting 30 Nov 2016 Vesting 30 Nov 2017 -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ 3,000,000 1,500,000 300,000 300,000 300,000 -‐ 600,000 600,000 -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ 3,000,000 1,000,000 1,000,000 1,000,000 1,500,000 500,000 500,000 500,000 300,000 100,000 100,000 100,000 300,000 100,000 100,000 100,000 300,000 100,000 100,000 100,000 -‐ -‐ -‐ -‐ 600,000 200,000 200,000 200,000 600,000 200,000 200,000 200,000 Details of performance rights awarded as compensation and shares issued on the vesting of the rights, together with terms and conditions of the rights, can be found in the Directors’ Report and under Note 22. 65 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED NOTES TO THE FINANCIAL STATEMENTS CONTINUED 23. KEY MANAGEMENT PERSONNEL COMPENSATION (continued) e) Share holdings Number of shares held by key management personnel The number of shares in the Company held during the financial year by each director of Altura Mining Limited and other key management personnel of the Group, including their personally related parties, are set out below. Other changes during the year include the bonus issue of shares to directors (following approval at the 2015 AGM) and shares issued to directors and other key management personnel on the vesting of performance rights. 2016 J Brown P Mantell A Buckler D O’Neill B Kuan C Evans N Young D Cox 2015 J Brown P Mantell A Buckler D O’Neill B Kuan C Evans N Young D Cox Balance at start of the year 12,018,300 17,479,750 138,411,409 2,777,780 7,182,968 -‐ 6,144,411 1,000,000 3,718,300 9,233,083 82,146,845 1,166,668 1,882,968 -‐ 1,584,411 250,000 Purchased / (sold) Exercise of Listed Options Conversion of loans to Company Purchased in rights issue / SPP Other changes Balance at the end of the year -‐ -‐ -‐ (100,000) 17,032 (159,000) -‐ -‐ 5,500,001 6,523,334 30,682,283 3,555,556 5,500,000 -‐ 4,830,000 75,000 6,000,000 6,000,000 6,000,000 6,000,000 6,000,000 -‐ 6,000,000 -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ 3,000,000 2,500,000 2,100,000 2,100,000 2,100,000 1,200,000 200,000 200,000 26,518,301 32,503,084 177,193,692 14,333,336 20,800,000 1,041,000 17,174,411 1,275,000 -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ 5,300,000 7,346,667 55,964,564 1,311,112 5,000,000 -‐ 3,960,000 150,000 3,000,000 900,000 300,000 300,000 300,000 -‐ 600,000 600,000 12,018,300 17,479,750 138,411,409 2,777,780 7,182,968 -‐ 6,144,411 1,000,000 66 ALTURA MINING LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 24. INVESTMENTS IN OTHER ENTITIES a) Joint operations Altura Mining Limited holds no interests in any joint operations or ventures. b) Interests are held in the following associated companies: Name Principal Activities Country of Incorporation Ownership Interest Carrying Amount of Investment Unlisted: Evora Mining Inc.* Merida Mining Pte. Ltd. Coal Mining Holding and Investment British Virgin Islands Singapore 2016 % 33⅓ 33⅓ 2015 % 33⅓ 33⅓ 2016 $’000 2015 $’000 144 -‐ 144 19,451 -‐ 19,451 * Evora Mining Inc. is the ultimate controlling entity of PT Binamitra Sumberata, the owner and operator of the Delta coal mining tenements. The Group acquired 33⅓% of the issued shares of Evora Mining Inc. in 2013. c) Movement in carrying amounts Opening acquisition value Share of profits after income tax Foreign exchange movement Impairment Carrying amount at the end of the financial year Information relating to associated companies is set out below: d) Summarised financial information of associates Share of assets and liabilities Current assets Non-‐current assets Total assets Current liabilities Non-‐current liabilities Total liabilities Net assets Share of revenues, expenses and profits: Revenues Expenses Profit (loss) before income tax Income tax expense / (benefit) Profit (loss) after income tax 2016 $’000 2015 $’000 19,451 (1,513) 686 (18,480) 144 25,772 (3,894) 5,255 (7,682) 19,451 4,948 12,302 17,250 18,841 -‐ 18,841 (1,591) 6,001 (7,514) (1,513) -‐ (1,513) 2,896 14,530 17,426 15,691 1,384 17,076 350 14,910 (19,858) (4,948) (1,054) (3,894) 67 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED NOTES TO THE FINANCIAL STATEMENTS CONTINUED 25. INTERESTS IN SUBSIDIARIES The consolidated financial statements incorporate the assets, liabilities and results of the following wholly-‐owned subsidiaries in accordance with the accounting policy described in Note 1: Name of entity Altura Exploration Pty Ltd Altura Drilling Pty Ltd Altura Lithium Pty Ltd Minvest Australia Pty Ltd Minvest International Corporation Altura Asia Pte Ltd Altura Mining Philippines Inc. * PT Asiadrill Bara Utama PT Altura Indonesia PT Minvest Mitra Pembangunan PT Cakrawala Jasa Pratama PT Minvest Jasatama Teknik PT Cybertek Global Utama Country of incorporation Ownership interest Australia Australia Australia Australia Mauritius Singapore Philippines Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia 2016 % 100 100 100 100 100 100 40 100 100 100 100 100 100 2015 % 100 100 100 100 100 100 40 100 100 100 100 100 100 * Altura Mining Limited through its wholly owned subsidiary, Altura Asia Pte Ltd holds 40% direct equity in Altura Mining Philippines Inc. This entity is considered a subsidiary as the Group has full economic and management rights. The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries with non-‐ controlling interests in accordance with the accounting policy described in Note 1: Country of incorporation Principal activities Parent Ownership interest Non-‐controlling interest Name of entity PT Velseis Indonesia * PT Jasa Tambang Pratama # PT Cahaya Permata Khatulistiwa # PT Suryaraya Permata Cemerlang # PT Suryaraya Cahaya Khatulistiwa # PT Suryaraya Cahaya Cemerlang # PT Suryaraya Permata Khatulistiwa # PT Suryaraya Pusaka # PT Kodio Multicom PT Marangkayu Bara Makarti Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Mining Services Mining and Exploration Mining and Exploration Mining and Exploration Mining and Exploration Mining and Exploration Mining and Exploration Mining and Exploration Mining and Exploration Mining and Exploration 2016 % 50 70 70 70 70 70 70 70 56 56 2015 % 50 70 70 70 70 70 70 70 56 56 2016 % 50 30 30 30 30 30 30 30 44 44 2015 % 50 30 30 30 30 30 30 30 44 44 Altura Mining Limited, Altura Exploration Pty Ltd and Altura Lithium Pty Ltd are included within the tax consolidation group. # Altura Mining Limited through its wholly owned subsidiary, Altura Asia Pte Ltd holds 70% direct equity in these seven entities. * Altura Mining Limited through its wholly owned subsidiary, Minvest International Corporation holds 50% direct equity in PT Velseis Indonesia. This entity is considered a subsidiary as the Group has full management rights. 68 ALTURA MINING LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 25. INTERESTS IN SUBSIDIARIES (continued) Summarised financial information Summarised financial information of the subsidiaries with non-‐controlling interests that are material to the consolidated entity are set out below: PT Velseis Indonesia $’000 PT Suryaraya Pusaka $’000 PT Kodio Multicom $’000 PT Marangkayu Bara Makarti $’000 2016 Summarised statement of financial position Current assets Non-‐current assets Total assets Current liabilities Non-‐current liabilities Total liabilities Net assets Summarised statement of profit or loss and other comprehensive income Revenue Expenses Profit / (loss) before income tax expense Income tax expense / (benefit) Profit / (loss) after income tax expense Other comprehensive income Total comprehensive income Statement of cash flows Net cash from operating activities Net cash used in investing activities Net cash used in financing activities Net increase / (decrease) in cash and cash equivalents Other financial information Profit attributable to non-‐controlling interests Accumulated non-‐controlling interest at the end of reporting period 372 265 637 231 -‐ 231 406 475 520 (45) 54 (99) 12 (87) (27) -‐ -‐ (27) (44) 146 176 1,550 1,726 -‐ 1,156 1,156 570 -‐ 3 (3) -‐ (3) (2) (5) (24) -‐ -‐ (24) (1) 1 -‐ 1,885 1,885 1 831 832 1,053 -‐ (8) 8 -‐ 8 (9) (1) (5) -‐ -‐ (5) -‐ 25 -‐ 2,712 2,712 5 1,638 1,643 1,069 -‐ (8) 8 -‐ 8 (9) (1) (5) -‐ -‐ (5) -‐ 32 69 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED NOTES TO THE FINANCIAL STATEMENTS CONTINUED 25. INTERESTS IN SUBSIDIARIES (continued) 2015 Summarised statement of financial position Current assets Non-‐current assets Total assets Current liabilities Non-‐current liabilities Total liabilities Net assets Summarised statement of profit or loss and other comprehensive income Revenue Expenses Profit / (loss) before income tax expense Income tax expense / (benefit) Profit / (loss) after income tax expense Other comprehensive income Total comprehensive income Statement of cash flows Net cash from operating activities Net cash used in investing activities Net cash used in financing activities Net increase / (decrease) in cash and cash equivalents Other financial information Profit attributable to non-‐controlling interests Accumulated non-‐controlling interest at the end of reporting period 26. RELATED PARTIES Transactions within the wholly-‐owned group The wholly-‐owned group includes: PT Velseis Indonesia $’000 PT Suryaraya Pusaka $’000 PT Kodio Multicom $’000 PT Marangkayu Bara Makarti $’000 350 299 649 160 -‐ 160 489 356 499 (143) 63 (206) 123 (83) (88) -‐ -‐ (88) (42) 190 189 1,477 1,666 -‐ 1,113 1,113 553 -‐ 1 (1) -‐ (1) (13) (14) 4 -‐ -‐ 4 (4) 6 5 1,803 1,808 1 798 799 1,009 -‐ 97 (97) -‐ (97) (40) 5 2,603 2,608 5 1,578 1,583 1,025 -‐ 83 (83) -‐ (83) (38) (137) (121) -‐ -‐ -‐ -‐ (60) 26 -‐ -‐ -‐ -‐ (53) 32 • • the ultimate parent entity in the wholly-‐owned group; and wholly-‐owned controlled entities. The ultimate parent entity in the wholly-‐owned Group is Altura Mining Limited. During the year the parent entity provided financial assistance to its wholly owned and controlled entities by way of intercompany loans. The loans are unsecured, interest free and have no fixed term of repayment. Sales and purchases between related parties within the Group have been eliminated upon consolidation. There were no further sales or purchases from related parties during the financial year. Transactions with directors and key management personnel The Directors provided Altura Mining Limited with a short term facility to support the working capital requirements of the Group prior to capital raising during the 2015 financial year. This facility was fully repaid on 19 November 2015 by the issue of shares, which occurred on 20 November 2015. The facility attracted interest at 8% per annum and amounted to $10,473. 70 ALTURA MINING LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 27. NOTES TO STATEMENT OF CASH FLOWS a) For the purpose of the statement of cash flows, cash includes cash on hand and in banks, and investments in money market instruments, net of outstanding bank overdrafts. Cash at the end of the financial year as shown in the statements of cash flows is reconciled to the related items in the balance sheet as follows: Cash at bank and on hand (Note 8) Cash per statement of cash flows Reconciliation to Statement of Cash Flows For the purposes of the Statement of Cash Flows, cash and cash equivalents comprise the following at 30 June: Cash at bank and on hand Short-‐term deposits Cash at bank and on hand 2016 $’000 22,132 22,132 2015 $’000 2,092 2,092 22,132 -‐ 22,132 1,592 500 2,092 b) Reconciliation of operating profit / (loss) after income tax to net cash used in operating activities Operating loss after income tax (31,618) (17,269) Adjustments for non-‐cash income and expense items: Option and share pricing Interest expense Bonus paid by way of issue of shares to directors and staff Impairment -‐ goodwill Impairment – property, plant and equipment Impairment -‐ equity Depreciation of property, plant and equipment Exploration expenditure written off Share of (profit) / loss of associates and joint venture partnership Foreign currency exchange rate movement (Increase) / decrease in current tax prepaid Increase / (decrease) in deferred tax balances Changes in assets and liabilities: (Increase) / decrease in receivables (Decrease) / increase in other creditors and accruals (Increase) / decrease in deposits and prepayments Increase / (decrease) in current provisions Net cash used in operating activities c) Acquisition of entities The Group did not acquire any interest in entities during the year. 235 252 545 -‐ 261 18,480 554 3,895 1,513 (1,066) 277 505 1,632 452 (41) 70 (4,054) 184 251 552 4,529 -‐ 7,682 847 115 3,894 (3,565) (269) (138) (677) 562 115 233 (2,954) 71 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED NOTES TO THE FINANCIAL STATEMENTS CONTINUED 28. PARENT ENTITY DISCLOSURE (a) Summary of financial information The individual financial statements for the parent entity show the following aggregate amounts: Balance sheet Current assets Total assets Current liabilities Total liabilities Net assets Equity Contributed equity Reserves Retained profits / (accumulated losses) Total shareholder equity Loss for the year Total comprehensive loss for the year (b) Contingent liabilities Contingent liabilities are disclosed in Note 31. (c) Contractual commitments No later than one year Later than one year and not later than five years Later than five years 29. AUDITORS’ REMUNERATION Amount paid or payable for the audit or review of the financial report 30. SUBSEQUENT EVENTS 2016 $’000 Parent 2015 $’000 Parent 21,980 67,259 554 554 66,705 105,840 233 (39,367) 66,705 3,143 53,377 775 775 52,602 78,904 1,019 (27,321) 52,602 (12,883) (12,958) (12,883) (12,958) 44 15 -‐ 59 2016 $’000 107 107 52 -‐ -‐ 52 2015 $’000 96 96 The Share Purchase Plan closed on 13 July 2016. Applications for 3,869,000 shares were received, all were accepted resulting in the receipt of $773,800 into the Company’s bank account, together with shares issued on 18 July 2016. Two Mining Leases (M45/1230 and M45/1231) for the Company’s Pilgangoora Lithium Project were granted on 26 August 2016, enabling the Mining Proposal to be lodged with the DMP on 2 September 2016. 72 ALTURA MINING LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 31. CONTINGENT LIABILITIES Details and estimates of maximum amounts of contingent liabilities for which no provision is included in the financial statements are as follows: The bankers of the Group and parent entity have issued undertakings and guarantees to the DME (Northern Territory Department of Mines and Energy) and various other entities. A subsidiary of the Group has entered into a conditional loan agreement No losses are anticipated in respect of any of the above contingent liabilities. 32. COMMITMENTS 2016 $’000 -‐ 2015 $’000 157 In order to maintain an interest in the mining and exploration tenements in which the Group is involved, the Group is committed to meeting the conditions under which the tenements were granted and the obligations of any joint venture agreements. The timing and amount of exploration expenditure commitments and obligations of the Group are subject to the minimum expenditure commitments required by the relevant State Departments of Minerals and Energy, and may vary significantly from the forecast based upon the results of the work performed which will determine the prospectivity of the relevant area of interest. One of the Group's subsidiaries has contracted to provide up to a US$4 million facility to a minority party in the Tabalong coal project. The provision of the facility is contingent on project milestones being achieved. The facility will be repaid in accordance with the loan agreement between the parties. The likelihood of this proceeding is highly probable. a) Exploration work The Company has certain obligations to perform minimum exploration work and expend minimum amounts on its wholly owned mining tenements. Obligations for the next 12 months are expected to amount to $262,897 (2015: $258,203). No estimate has been given of expenditure commitments beyond 12 months for its wholly owned tenements as this is dependent on the Directors’ ongoing assessment of operations and, in certain instances, native title negotiations. b) Asset acquisitions The Group has no commitments for asset acquisitions at 30 June 2016. c) Operating leases The Group has entered into operating leases for office premises at Subiaco in Western Australia and at Jakarta and Balikpapan in Indonesia. The Group also has operating leases in relation to office equipment. The commitment in respect of these leases is: No later than one year Later than one year and not later than five years Later than five years 2016 $’000 325 363 -‐ 688 2015 $’000 378 19 -‐ 397 73 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED NOTES TO THE FINANCIAL STATEMENTS CONTINUED 33. HIRE PURCHASE COMMITMENTS Hire purchase agreements The Group will acquire the plant and equipment at the conclusion of the respective agreements No later than one year Later than one year and not later than five years Later than five years Included in the financial statements as: Current hire purchase liabilities (Note 18) Non-‐current hire purchase liabilities (Note 18) 2016 $’000 2015 $’000 -‐ -‐ -‐ -‐ -‐ -‐ -‐ 8 -‐ -‐ 8 8 -‐ 8 74 ALTURA MINING LIMITED ANNUAL REPORT 2016 DIRECTORS' DECLARATION In the Directors’ opinion: (a) The financial statements and notes are in accordance with the Corporations Act 2001 and: a. b. comply with Accounting Standards and the Corporations Regulations 2001; and give a true and fair view of the consolidated entity’s financial position as at 30 June 2016 and its performance for the financial year ended on that date; (b) the financial statements and notes also comply with International Financial Reporting Standards as set out in Note 1; (c) the remuneration disclosures that are contained in the remuneration report in the Directors’ report comply with Australian Accounting Standard AASB 124 Related Party Disclosures, the Corporations Act 2001 and the Corporations Regulations 2001; and (d) there are reasonable grounds to believe that the Company will be able to pay its debt as and when they become due and payable. The Directors have been given the declarations by the Chief Executive Officer and the Chief Financial Officer required under section 295A of the Corporations Act 2001. This declaration is made in accordance with a resolution of the directors. __________________________ BT Kuan Director Brisbane, 13 September 2016 75 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED INDEPENDENT AUDIT REPORT INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ALTURA MINING LIMITED Report on the Financial Report We have audited the accompanying financial report of Altura Mining Limited (“the company”) and its Controlled Entities (“the group”) which comprises the consolidated balance sheet as at 30 June 2016, the consolidated statement of profit or loss, consolidated statement of other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the Directors’ declaration of the group comprising the company and the entity it controlled at the year’s end or from time to time during the financial year. INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ALTURA MINING LIMITED Report on the Financial Report We have audited the accompanying financial report of Altura Mining Limited (“the company”) and its Controlled Entities (“the group”) which comprises the consolidated balance sheet as at 30 June 2016, the consolidated statement of profit or loss, consolidated statement of other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the Directors’ declaration of the group comprising the company and the entity it controlled at the year’s end or from time to time during the financial year. Directors’ Responsibility 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 is free from material misstatement, whether due to fraud or error. In Note 1, the Directors also state, in accordance with Accounting Standard AASB 101: Presentation of Financial Statements that the financial statements comply with International Financial Reporting Standards. Auditor’s Responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement. Directors’ Responsibility 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 is free from material misstatement, whether due to fraud or error. In Note 1, the Directors also state, in accordance with Accounting Standard AASB 101: Presentation of Financial Statements that the financial statements comply with International Financial Reporting Standards. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial report. Auditor’s Responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial report. Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. 76 ALTURA MINING LIMITED ANNUAL REPORT 2016 INDEPENDENT AUDIT REPORT CONTINUED INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS ALTURA MINING LIMITED (continued) Auditor’s Opinion In our opinion: a) the financial report of Altura Mining Limited and its Controlled Entities is in accordance with the Corporations Act 2001, including: i. ii. giving a true and fair view of the group’s financial position as at 30 June 2016 and of their performance for the year ended on that date; and complying with Australian Accounting Standards and the Corporations Regulations 2001; and b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1. Report on the Remuneration Report We have audited the Remuneration Report included in pages 8 to 12 of the Directors’ Report for the year ended 30 June 2016. 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. Opinion In our opinion the Remuneration Report of Altura Mining Limited for the year ended 30 June 2016, complies with section 300A of the Corporations Act 2001. PKF HACKETTS AUDIT Liam Murphy Partner Brisbane, 13 September 2016 77 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED ADDITIONAL ASX INFORMATION SCHEDULE OF MINERAL PROPERTIES Location Tenement Number Interest 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 10% 10% 10% 10% 331/3% 70% 70% 70% 56% 56% 100% 100% 100% Pilbara, Western Australia Tanami, Northern Territory E 45/2277 E 45/2287 E 45/2363 E 45/3488 P 45/2758 M 45/1230 M 45/1231 L 45/392 L 45/400 L 45/401 L 45/404 L 45/409 ELA 26626 ELA 26627 EL 26628 EL 29828 Delta, East Kalimantan PT Delta Ultima Coal Tabalong, South Kalimantan PT Suryaraya Permata Khatulistiwa PT Suryaraya Cahaya Cemerlang PT Suryaraya Pusaka PT Kodio Multicom PT Marangkayu Bara Makarti Catanduanes, Philippines COC 182 (Area 3) – Catanduanes Albay Region, Philippines COC 200 (Area 4) – Rapu-Rapu Bislig Region, Philippines COC 202 (Area 17) – Surigao del Sur Key to tenement type: E, EL: Exploration Licence G: General Purpose Lease L: Miscellaneous Licence M, ML: Mining Lease P: Prospecting Licence 78 ALTURA MINING LIMITED ANNUAL REPORT 2016 ADDITIONAL ASX INFORMATION CONTINUED ISSUED CAPITAL The issued capital of the company as at 30 September 2016 consists of 1,231,778,000 fully paid ordinary shares. DISTRIBUTION OF SHAREHOLDERS AS AT 30 SEPTEMBER 2016 FULLY PAID ORDINARY SHARES Number of holders: 6,026 Holders of less than a marketable parcel: 742 NUMBER OF HOLDERS IN THE FOLLOWING DISTRIBUTION CATEGORIES: Fully paid ordinary shares 0–1,000 1,001–5,000 5,001–10,000 10,001–100,000 100,001 and over Total 267 861 868 2,991 1,039 6,026 SUBSTANTIAL SHAREHOLDERS The names of substantial shareholders as disclosed in substantial shareholder notices received by the Company are: Holder name AC Buckler (Shazo Holdings Pty Ltd) MT Smith (Hartco Nominees Pty Ltd) Shares 177,193,692 167,264,481 VOTING RIGHTS ON ORDINARY SHARES On a show of hands, every person present who is a Shareholder or a proxy, attorney or Representative of a Shareholder has one vote. On a poll, every person present who is a Shareholder or a proxy, attorney or Representative of a Shareholder has one vote for each fully paid share held. ON MARKET BUY BACK There is no current on market buy back of Altura shares. 79 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED ADDITIONAL ASX INFORMATION CONTINUED 20 LARGEST SHAREHOLDERS – FULLY PAID SHARES The names of the 20 largest shareholders as at 30 September 2016 are as follows: Rank Holder name 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Shazo Holdings Pty Ltd MT Smith Hartco Nominees Pty Ltd Farjoy Pty Ltd Navibell Services Limited PK & MA Mantell Lionergy Limited JS & ML Brown BT Kuan Rookharp Investments Pty Ltd Lido Trading Limited AC Buckler E.M. Enterprises (Qld) Pty Ltd Sand King Pty Ltd HSBC Custody Nominees (Australia) Limited Finn Air Holdings Pty Ltd National Nominees Limited NT Young Citicorp Nominees Pty Ltd N Young Investments Pty Ltd Units % of issued shares 162,353,691 13.18% 84,021,645 83,242,836 48,784,288 34,892,128 32,363,083 27,191,358 22,428,914 20,800,000 20,460,552 14,845,679 14,840,001 13,400,000 12,000,000 11,800,899 11,272,034 10,123,094 9,200,000 8,607,926 7,974,411 6.82% 6.76% 3.96% 2.83% 2.63% 2.21% 1.82% 1.69% 1.66% 1.21% 1.20% 1.09% 0.97% 0.96% 0.92% 0.82% 0.75% 0.70% 0.65% Total 650,602,539 52.82% 80 ALTURA MINING LIMITED ANNUAL REPORT 2016 MINERAL RESOURCES AND ORE RESERVES STATEMENT DELTA COAL EAST KALIMANTAN, INDONESIA Updated coal reserves and coal resources are currently being prepared for the Delta coal mine. These estimations were not available at the time that the annual report went to print, but are expected to be completed and published during the December quarter 2016. A comparison with the previous year’s estimate is therefore not currently able to be made. TABALONG COAL EAST KALIMANTAN, INDONESIA the entire Tabalong coal project. The updated estimation was not available at the time that the annual report went to print, but is expected to be completed and published during the December quarter 2016. A comparison with the previous estimate is therefore not currently able to be made. PILGANGOORA LITHIUM WESTERN AUSTRALIA Mineral resource estimate The previous mineral resource estimate in the 2015 annual report was released to the ASX on 14 September 2015, and the current estimate was reported on 22 September 2016. A revised coal resource estimate is currently being prepared for The differences between the current and previous resource estimates are the result of further exploration drilling conducted in recent months, and the use of a lower cut-off grade as prescribed by the February 2016 Orelogy Mining Study. The previous estimate was completed by Ravensgate Mining Industry Consultants, and the current estimate was prepared by Hyland Geological and Mining Consultants (HGMC). Mr Stephen Hyland was the designated Competent Person for the previous Ravensgate resource estimate and now acts in the same capacity for HGMC providing continuity in the collation, modelling, interpretation and reporting of results. Mineral resource estimate comparison JORC resource category Measured Indicated Inferred Total Current estimate (0.4% Li2O cut-off grade) Previous estimate (0.8% Li2O cut-off grade) Tonnes (Mt) - 30.56 8.60 39.16 Li2O (%) - Li2O (tonnes) - 1.04 0.95 1.02 318,000 82,000 400,000 Tonnes (Mt) - 19.77 6.29 26.06 Li2O (%) - Li2O (tonnes) - 1.21 1.20 1.20 239,000 76,000 315,000 Ore reserve estimate Ore reserve estimate A maiden ore reserve estimate was reported during the 2015/16 year, and as such, there is no comparison to be made with the previous annual report. The ore reserve estimate was prepared by Orelogy Consulting Pty Ltd. JORC resource category Current estimate (0.4% Li2O cut-off grade) Tonnes (Mt) Li2O (%) Li2O (tonnes) Proven Probable Total - 20.33 20.33 - 1.06 1.06 - 215,000 215,000 81 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED MINERAL RESOURCES AND ORE RESERVES CONTINUED SUMMARY OF GOVERNANCE ARRANGEMENTS AND INTERNAL CONTROLS Altura has ensured that the Mineral Resource and Ore Reserve Estimates are subject to good governance arrangements and internal controls. The Mineral Resources and Ore Reserves reported have been generated by independent consultants who are experienced in modelling and estimation methods. The consultants have undertaken reviews of the quality and the suitability of the data and information used to generate the resource estimations. Altura carries out regular reviews of its own internal practices and those of external contractors who are engaged in a range of specialist areas by the Company. The Mineral Resources and Ore Reserves for Pilgangoora have been compiled and reported in accordance with the “Australian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves” (the JORC Code) 2012 Edition. COMPETENT PERSONS STATEMENTS The information in this Mineral Resources and Ore Reserves (MROR) statement is based on, and fairly represents, information and supporting documentation prepared by the competent persons listed below. The MROR statement for Pilgangoora Lithium has been prepared and approved by Mr Bryan Bourke, Altura’s Exploration Manager. PILGANGOORA LITHIUM The information in this report that relates to the Mineral Resource for the Pilgangoora lithium deposit is based on information compiled by Mr Stephen Hyland and Mr Bryan Bourke. Mr Hyland is a Fellow of the Australasian Institute of Mining and Metallurgy and Mr Bourke is a Member of the Australian Institute of Geoscientists. Mr Hyland is a principal consultant at Hyland Geological and Mining Consultants and has sufficient experience that is relevant to the style of mineralisation under consideration and to the activity of mineral resource estimation to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Bourke is the Exploration Manager of Altura Mining Limited and has had sufficient experience that is relevant to the style of mineralisation and to the type of deposit under consideration to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Hyland and Mr Bourke consent to the inclusion in the report of the matters based on this information in the form and context in which it appears. The information in this report that relates to the Ore Reserve for the Pilgangoora lithium deposit is based on information compiled by Mr Jake Fitzsimons. Mr Fitzsimons is a Member of the Australasian Institute of Mining and Metallurgy. Mr Fitzsimons is a principal consultant at Orelogy Consulting Pty Ltd and has sufficient experience that is relevant to the style of mineralisation under consideration and to the activity of ore reserve estimation to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Fitzsimons consents to the inclusion in the report of the matters based on this information in the form and context in which it appears. The Company confirms that it is not aware of any new information or data that materially affects the information included in the ASX announcement on 22 September 2016. Further, all material assumptions and technical parameters underpinning the mineral resource and ore reserve estimates in that announcement continue to apply and have not materially changed. 82 ALTURA MINING LIMITED ANNUAL REPORT 2016 NOTES 83 ALTURA MINING LIMITED ANNUAL REPORT 2016 ANNUAL REPORT 2016 ALTURA MINING LIMITED 84 ALTURA MINING LIMITED ANNUAL REPORT 2016 ALTURA MINING LIMITED ANNUAL REPORT 2016 alturamining.com
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