Annual Report
Australian Pacific Coal Limited
Year Ending 30 June 2022
ABN 49 089 206 986
AUSTRALIAN PACIFIC COAL LIMITED
ABN 49 089 206 986
ANNUAL REPORT – 30 JUNE 2022
Annual Report
Australian Pacific Coal Limited
TOC
Year Ending 30 June 2022
ABN 49 089 206 986
TABLE OF CONTENTS
Executive Chairman’s Report
i
Information on Australian Pacific Coal
iii
Review of Operations
v
Annual Financial Report
ix
- Directors’ Report
2
- Remuneration Report
6
- Auditor’s Independence Declaration
13
- Statement of Profit or Loss and Other Comprehensive Income
15
- Statement of Financial Position
16
- Statement of Changes in Equity
17
- Statement of Cash Flows
18
- Notes to the Financial Statements
19
- Directors’ Declaration
53
- Independent Audit Report
54
Corporate Governance Statement
58
ASX Additional Information
69
Corporate Directory
71
EXECUTIVE CHAIRMAN’S REPORT
Page i
Australian Pacific Coal Limited
Annual Report
Executive Chairman’s Report
ABN 49 089 206 986
Year Ending 30 June 2022
Dear Shareholders,
On behalf of my fellow Directors and colleagues I am pleased to provide this report for shareholders.
The current year has once again been challenging whilst at the same time presenting opportunities for the Board
to consider in seeking a positive future for the Company under challenging conditions.
Our primary focus was again the resolution of the Section 75W modification (DA 231-7-2000 MOD7) to existing
approvals to facilitate recommencement of underground mining operations at the Dartbrook coal mine.
The Company through the significant and valued support of its financiers invested substantial resources to pursue
the MOD7 and subsequently submitted material through conciliation forums and the IPC to sufficiently deal with
outstanding issues or contentions that were raised.
During this period and after consideration and independent assessment, the Board called a general meeting of
shareholders held 30 July 2021 to consider, amongst other matters, a proposal from its major shareholder and
creditor Trepang Services Pty Ltd (Trepang) for the Company to proceed with the sale of land on which the
Company’s Dartbrook coal mine is situated and associated water rights to Trepang. This was approved by
shareholders at that meeting and the transaction completed by the Company.
At completion, the purchase price (being $33,794,192, before sale adjustments) was offset against debt owed to
Trepang.
The Company was pleased to announce that it was successful in its MOD7 appeal and entered into an agreement
with the Minister for Planning and Public Spaces under s34 of the Land and Environment Court Act 1979 which,
amongst other things, provides for a 5-year extension of mining operations under the development consent. The
Land and Environment Court has now modified the development consent in accordance with the s34 agreement.
Given the uncertainty in connection with the MOD7 the Company had been assessing other opportunities in
parallel with the MOD7 approval process. These opportunities have been assessed over the past 12 months
during the Company’s strategic review however agreed terms were unable to be reached between all relevant
stakeholders for each of these opportunities.
During the year the Company also received from Trepang, a binding offer for Trepang or its nominee to purchase
the Dartbrook coal mine through acquisition of 100% of the Company’s wholly owned subsidiaries (AQC
Investments 2 Pty Ltd; ACQ Dartbrook Pty Ltd; AQC Dartbrook Management Pty Ltd and Dartbrook Coal (Sales)
Pty Ltd ‘Subsidiaries’) (the Offer).
The Offer had been made by Trepang on the basis that all debt and accrued interest owed by the Company to
Trepang and its associates would be novated to the Subsidiaries such that at completion of the transaction the
Company would be released from all liabilities with respect to debts owed to Trepang and its associates.
In addition, the Offer provided that the Company would receive a royalty of A$2.50 per tonne of certain coal
extracted from the Dartbrook Coal Project and an additional A$2.50 per tonne (total of A$5.00 per tonne) where
coal was extracted and sold at above US$200 per tonne.
As part of its consideration, the Board sought independent assessment of the Offer and subsequently called a
general meeting of shareholders to consider the Offer (EGM).
During this period, the Company received an alternate proposal for consideration. After receipt of that proposal,
the Board deferred the EGM to consider the Trepang proposal to allow sufficient time to ensure shareholders
were fully informed. Prior to a new EGM date being announced several new proposals were received and in
consultation with our financiers and advisers were considered.
In conjunction with considering the proposals received, the Board felt that it was wise to consider a fallback
position that gave the Company options in the event shareholders did not approve the proposed Dartbrook sale
to Trepang at the rescheduled EGM and subsequently announced plans for a $100m capital raise through a rights
issue.
EXECUTIVE CHAIRMAN’S REPORT
Annual Report
Australian Pacific Coal Limited
Page ii
Year Ending 30 June 2022
ABN 49 089 206 986
Executive Chairman’s Report
Subsequently, Trepang elected to terminate the agreement to purchase the Dartbrook coal mine and the
Company continued with the $100m capital raise to provide greater financial certainty to the Company given the
level of debt which remained on call to Trepang.
The Board were pleased to advise recently that a binding agreement had been entered into with Trepang, Tetra
and M Resources in relation to a joint venture that the Board are confident will enable the Company to restart
mining, have minimal debt and be well resourced.
Given the current buoyant coal market conditions against a backdrop of global economic uncertainty we believe
this creates an exciting period ahead for the Company with the Dartbrook mine moving towards a return to
production.
The Company and its Board will now focus on ensuring this joint venture is implemented with the appropriate
approvals and governance.
The Company believes it is now well positioned to seek new opportunities for growth.
I would like to take the opportunity to thank Mark Jagla for his service before his resignation as a Director in
December.
I would particularly like to thank my fellow Directors, Tony Lalor and Craig McPherson.
They have provided extraordinary support that as a result has enabled the Company to carefully consider its
responsibilities on behalf of shareholders to ensure the interests of all shareholders remained our priority for a
positive period ahead.
I would also like to acknowledge the support of our financiers Trepang in enabling the Company to be in a position
to undertake with optimism the future ahead.
David Conry
Chief Executive Officer
29 September 2022
INFORMATION ON AUSTRALIAN PACIFIC COAL
Page iii
Australian Pacific Coal Limited
Annual Report
Information on Australian Pacific Coal
ABN 49 089 206 986
Year Ending 30 June 2022
Australian Pacific Coal Limited (‘AQC’) is an ASX-listed company focused on acquiring and developing mineral
resource prospects. AQC listed on the Australian Stock Exchange in 1999 and currently has approximately 1,000
shareholders.
AQC completed the acquisition of the Dartbrook coal mine in the Hunter Valley, NSW, on 29 May 2017.
In August 2019 AQC received limited approval from the Independent Planning Commission (IPC) of its application
to modify the existing development consent for the Dartbrook Coal Mine in order to recommence underground
mining (MOD7). The approval was a significant milestone for the project. Disappointingly the IPC determination
rejected the AQC application for a 5 year extension to the current mining approvals through till December 2027.
In November 2019 AQC resolved to lodge an appeal against the determination made in August 2019 by the IPC,
acting as the delegate for the Minister of Planning, Infrastructure and Environment (MPIE), with respect to AQC’s
Modification 7 Submission. The appeal sought to have the decision amended, within the current NSW guidelines
for coal mining projects, to permit restart of the mining operations and to provide a reasonable time frame for the
mining to facilitate the necessary capital costs which will be incurred.
On 14 March 2022, the Company announced an update to the application to modify the development consent for
the Dartbrook Coal mine (Modification 7) and the associated Land and Environment Court proceedings. The
Company advised that it had entered into an agreement with the Minister for Planning and Public Spaces under
s34 of the Land and Environment Court Act 1979 which, amongst other things, provides for a 5 year extension of
mining operations under the development consent. Further that the Land and Environment Court has now
modified the development consent in accordance with the s34 agreement.
AQC’s long term strategic focus is to identify valuable resource investment opportunities. In addition to its
Dartbrook asset, the Company will continue to take advantage of low entry cost resource investment opportunities
that it identifies.
BOARD OF DIRECTORS
Mr David Conry AM
Chairman and Chief Executive Officer1
Mr Conry is an experienced company director and senior executive, who has held or holds several board roles in
the private sector and also for all three levels of government. Mr Conry has private and executive interests in
investment, advisory services, mining and mine rehabilitation.
1 Mr David Conry AM was appointed as a director on 2 April 2020.
Mr Tony Lalor Bachelor of Commerce, Bachelor of Laws
Non-executive Director2
Mr Lalor is a partner at a leading Australian law firm with over 20 years work experience. He practices in corporate
advisory with particular experience in mergers and acquisitions and equity capital market transactions.
2 Mr Tony Lalor was appointed as a director on 2 November 2020.
Mr Craig McPherson Bachelor of Commerce
Non-executive Director3
Mr McPherson has qualifications in Bachelor of Applied Science (Building), University of Canberra. Mr Jagla holds
several board roles in the private sector and has extensive experience as a senior manager in the property and
construction
3 Mr McPherson was appointed as a Non-executive Director on 6 December 2021.
INFORMATION ON AUSTRALIAN PACIFIC COAL
Annual Report
Australian Pacific Coal Limited
Page iv
Year Ending 30 June 2022
ABN 49 089 206 986
Information on Australian Pacific Coal
KEY COMPANY DATA (as at 28 September 2022)
Listing:
Australian Securities Exchange (ASX:AQC) – Listed in 1999
Shares on Issue:
52,984,810 AQC ORD
(1,053 shareholders)
Options:
Nil.
Performance Rights
Nil
Quarterly Share Price Activity1:
High
Low
Close
30 June 2022
$0.120
$0.090
$0.090
31 March 2022
$0.220
$0.185
$0.220
31 December 2021
$0.15
$0.150
$0.150
30 September 2021
$0.150
$0.150
$0.150
1 Represent share price activity on the last trading day of the relevant quarter.
REVIEW OF OPERATIONS
Page v
Australian Pacific Coal Limited
Annual Report
Review of Operations
ABN 49 089 206 986
Year Ending 30 June 2022
DARTBROOK COAL MINE
Australian Pacific Coal completed the 100% acquisition of the Dartbrook mine in May 2017. The mine is located
in the Hunter Valley coal region of NSW, approximately 4km west of Aberdeen and 10km north-west of
Muswellbrook (and 250km north of Sydney). The mine includes substantial existing infrastructure with access to
a skilled workforce and the support industries utilised by major mining companies in the region, including rail and
port facilities.. The mine contains an estimated marketable resource of 2.5 billion tonnes of high quality thermal
coal. The current marketable reserve estimate is 370 million tonne. Previous underground operations have mined
approximately 30 million tonnes of ROM coal from the Wynn and Kayuga seams.
Since completing the acquisition, the Company has undertaken a range of activities to assess various
development options for Dartbrook:
•
Completion of the Open Cut Pre-Feasibility Study (OC PFS)1
•
Completion of a Coal Reserve2 estimate
•
In February 2018 submission of an application and supporting environmental assessment materials to
recommence limited B&P underground mining (MOD7);
•
During September 2018 completion of an environmental-focused drilling program to provide enhanced
environmental monitoring to the Company and community stakeholder groups.
During the year, the Company continued to advance the application to modify the existing mining approval to
recommence underground mining operations at the Dartbrook Coal Mine which resulting in a positive outcome in
March 2022.
1 Refer ASX announcement titled “Dartbrook Open Cut Pre-Feasibility Study Completed” dated 28 March 2018
2 Refer ASX announcement titled “Dartbrook Coal Reserve Estimate” dated 28 March 2018 and Additional Information section of this report
REVIEW OF OPERATIONS
Annual Report
Australian Pacific Coal Limited
Page vi
Year Ending 30 June 2022
ABN 49 089 206 986
Review of Operations
Regional Mining Operations and Projects
REVIEW OF OPERATIONS
Page vii
Australian Pacific Coal Limited
Annual Report
Review of Operations
ABN 49 089 206 986
Year Ending 30 June 2022
Application to Modify Mining Approval (MOD7)
In March 2018 the Company announced it had lodged an application to modify the existing mining approval to
recommence underground mining operations at the Dartbrook Coal Mine. The modification (MOD 7) proposed
bord and pillar mining of the Kayuga coal seam (as an alternative to the approved longwall mining activities) and
changes to the method of transferring coal to the train loadout facility. The modification also sought to extend the
period of approval by 5 years (until 5 December 2027).
In August 2019 AQC received limited approval from the Independent Planning Commission (IPC) of its application
to modify the existing development consent for the Dartbrook Coal Mine in order to recommence underground
mining (MOD7). The approval was a significant milestone for the project. Disappointingly the IPC determination
rejected the AQC application for a 5 year extension to the current mining approvals through till December 2027.
In November 2019 AQC resolved to lodge an appeal against the determination made in August 2019 by the IPC,
acting as the delegate for the Minister of Planning, Infrastructure and Environment (MPIE), with respect to AQC’s
Modification 7 Submission. The appeal sought to have the decision amended, within the current NSW guidelines
for coal mining projects, to permit restart of the mining operations and to provide a reasonable time frame for the
mining to facilitate the necessary capital costs which will be incurred.
On 14 March 2022, the Company announced an update to the application to modify the development consent for
the Dartbrook Coal mine (Modification 7) and the associated Land and Environment Court proceedings. The
Company advised that it had entered into an agreement with the Minister for Planning and Public Spaces under
s34 of the Land and Environment Court Act 1979 which, amongst other things, provides for a 5 year extension of
mining operations under the development consent. Further that the Land and Environment Court has now
modified the development consent in accordance with the s34 agreement.
The Company is now focussed on assessing its options as to the next steps for the Dartbrook Mine.
REVIEW OF OPERATIONS
Annual Report
Australian Pacific Coal Limited
Page viii
Year Ending 30 June 2022
ABN 49 089 206 986
Review of Operations
OTHER PROJECTS
In Queensland, the Company holds interests in the Matuan Downs Bentonite Project and a Joint Venture interest
on tenements with Blackwood Resources. The Company will continue to assess potential development or
divestment opportunities in relation to these assets.
MINING TENEMENT SUMMARY
Name
Number
Status
Interest Held
Dartbrook Project, Hunter Valley NSW
AUTH 256
AUTH 256
Renewal Pending *
100%
EL 4574
EL 4574
Renewal Pending *
100%
EL 4575
EL 4575
Renewal Pending *
100%
EL 5525
EL 5525
Renewal Pending *
100%
CL 386
CL 386
Granted
100%
ML 1381
ML 1381
Renewal Pending *
100%
ML 1456
ML 1456
Renewal Pending *
100%
ML 1497
ML 1497
Granted
100%
Matuan Downs Bentonite Project, Alpha
Mantuan
ML 70360
Granted
100%
* The Company has lodged renewal applications for certain Dartbrook Project Authorities,
EL’s and ML’s as noted above.
Name
Number
Status
Interest Held
Blackwood Joint Venture, Miles QLD
Bungaban Creek
EPC 1955
Granted
10% #
Quondong
EPC 1987
Granted
10% #
# The Company’s 100% owned subsidiary Mining Investments One Pty Ltd holds a 10% interest
in each of the following Blackwood Resources Pty Ltd JV tenements.
Page ix
Australian Pacific Coal Limited
ABN 49 089 206 986
Annual Financial Report - 30 June 2022
Australian Pacific Coal Limited
Directors' report
30 June 2022
2
The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as
the 'consolidated entity') consisting of Australian Pacific Coal Limited (referred to hereafter as the 'company' or 'parent entity')
and the entities it controlled at the end of, or during, the year ended 30 June 2022.
Directors
The following persons were directors of Australian Pacific Coal Limited during the whole of the financial year and up to the
date of this report, unless otherwise stated:
Mr David Conry AM (appointed 2 April 2020)
Mr Tony Lalor (appointed 2 November 2020)
Mr Craig McPherson (appointed 6 December 2021)
Mr Mark Jagla (appointed 23 September 2020, resigned 6 December 2021)
Principal activities
During the financial year the principal continuing activities of the consolidated entity consisted of exploration and development
activities at the consolidated entity’s mining tenements situated in New South Wales, Australia.
Dividends
No dividends were declared or paid for the financial year ended 30 June 2022.
Review of operations
The review of operations of the consolidated entity during the year is detailed in the review of operations commencing on
page 2 of this annual report and forms part of the directors’ report.
The loss for the consolidated entity after providing for income tax and non-controlling interest amounted to $11,496,349 (30
June 2021: loss of $23,697,496).
Significant changes in the state of affairs
There were no significant changes in the state of affairs of the consolidated entity during the financial year.
Likely developments and expected results of operations
The consolidated entity intends to continue its exploration and development activities on its existing projects and to explore
other suitable opportunities as they arise.
Environmental regulation
The consolidated entity is subject to, and is compliant with, all aspects of environmental regulation in its exploration and
mining activities. The directors believe that the Company is in compliance with all environmental laws.
The consolidated entity is subject to the reporting requirements of both the Energy Efficiency Opportunities Act 2006 and the
National Greenhouse and Energy Reporting Act 2007.
The Energy Efficiency Opportunities Act 2006 requires the consolidated entity to assess its energy usages, including the
identification, investigation and evaluation of energy saving opportunities, and to report publicly on the assessments
undertaken, including what action the consolidated entity intends to take as a result of these assessments. Due to this Act,
the consolidated entity has registered with the Department of Resources, Energy and Tourism as a participant entity and
reports the results from its assessments.
The National Greenhouse and Energy Reporting Act 2007 require the consolidated entity to report its annual greenhouse
gas emissions and energy use. The consolidated entity has previously implemented systems and processes for the collection
and calculation of data.
Further information on the reporting and results of the application of the above Acts to the Company’s activities can be found
on the consolidated entity's website.
Australian Pacific Coal Limited
Directors' report
30 June 2022
3
Matters subsequent to the end of the financial year
The following matters or events have occurred subsequent to the end of the reporting period:
•
On 22 July 2022, the Company called a general meeting of shareholders which was proposed to be held on 22
August 20022 with such meeting for shareholders to consider the sale of the Dartbrook Project to Trepang Services
Pty Ltd or its nominee. The terms of the proposed sale for consideration by shareholders were provided to
shareholders, as set out in the Notice of Meeting.
•
On 22 August 2022, the Company announced that it had received a non-binding alternative proposal to the sale of
the Dartbook Project to Trepang Services Pty Ltd from Nakevo Pty Ltd. As a result, the general meeting of
shareholders proposed for 22 August 2022 was postponed by the Company. The proposal required, amongst other
things, the support of Trepang Services Pty Ltd as to how the debt owed by the Company should be dealt with as
part of the Naveko proposal. Further details of the Nakevo proposal can be obtained from the 22 August
announcement.
•
On 25 August 2022, the Company announced that it had received another non-binding proposal from M Resources
Pty Ltd. The proposal required, amongst other things, the support of Trepang Services Pty Ltd as to how the debt
owed by the Company should be dealt with as part of the M Resources proposal. Further details of the M Resources
proposal can be obtained from the 25 August announcement.
•
On 2 September 2022, the company announced that:
a) Trepang Services Pty Ltd had acknowledged the Nakevo and M Resources proposals, including that both
proposals were subject to a number of conditions including Trepang agreeing to certain terms of the proposals,
including how the debt owed by the Company should be dealt with. The Company announced that Trepang advised
that they would not consider or enter into any such agreements meaning that the critical pre-conditions to both
proposals progressing could not be satisfied.
b) Further, the Company advised that Trepang had advised that it was terminating the share sale agreement for the
purchase of the Dartbrook Project which was to be the subject of the postponed general meeting of shareholders.
As a result, the Company’s work with respect to re-convening the postponed shareholders meeting was to cease.
c) While working through the re-convening of the postponed EGM, the Board was concerned that there was no
fallback position in the event that shareholders did not approve the Trepang Transaction at the postponed general
meeting of shareholders. If shareholders did not approve the Trepang Transaction at the postponed general meeting
of shareholders, the Company would be left in a perilous financial position with Trepang, Robinson and Paspaley
immediately capable of calling in their debt, with the Company having no means to repay that debt. Therefore, as a
contingency plan, the Board had been seeking fallback funding to repay the Trepang debt if shareholders did not
approve the Trepang Transaction. The Company was in the process of finalising that funding when it received
termination of the Trepang Transaction.
As a result of the termination, the fallback position become an essential path to ensure the Company was suitably
funded to service its ongoing obligations. The Company announced the immediate launch of a 5.83 for 1 (5.83 new
shares for every 1 existing share held on the record date) fully underwritten renounceable pro rata entitlement offer
of shares in the Company at A$0.34 per share (Offer Price) pursuant to which the Company will raise up to
approximately A$100 million (before costs and expenses and subject to rounding) (Entitlement Offer).
In conjunction with the launch of the Entitlement Offer, the Company announced it had entered into a non-binding
agreement with M Resources Pty Ltd, an entity associated with Matthew Latimore, with respect to a proposed 50:50
joint venture for the operation of the Dartbrook mine and for potential future mine management services at the
Dartbrook mine (including marketing services, logistics services and technical services). In addition, M Resources
committed A$10 million in sub-underwriting to the Entitlement Offer and will be entitled to appoint a director to the
Board, subject to compliance with laws and the ASX Listing Rules.
•
On 8 September 2022, the company announced that:
a) Since the announcement of the Entitlement Offer both the Board and its largest shareholder, Trepang Services
Pty Limited (Trepang), had engaged in constructive discussions with respect to the future direction of the
Company, particularly with respect to the Company now being in the position to raise sufficient funds to repay
the debt it owes to Trepang (and its associates) (Trepang Debt) and the Company’s proposal to enter into a
50/50 joint venture with M Resources Pty Ltd (M Resources) to assist with the re-commissioning of the Dartbrook
Coal Project in the Hunter Valley, NSW (Dartbrook). The Company and Trepang had been investigating a
Australian Pacific Coal Limited
Directors' report
30 June 2022
4
transaction structure which would see Trepang being provided an economic interest in Dartbrook by M
Resources in consideration for Trepang extending the land access agreements and water rights to allow
underground mining operations at Dartbrook to continue.
b) The Company had received a further non-binding indicative proposal from Pacific Premium Coal Pty Ltd (PPC).
The proposal contained a number of pre-conditions, including the Company enter into an agreement with the
Trepang Parties to convert the Trepang Debt into a direct 40% interest in Dartbrook on terms acceptable to PPC,
or should such an agreement not be forthcoming from Trepang, then PPC would repay all outstanding debts to
the Trepang. The Company requested urgent advice from Trepang as to whether Trepang is willing to support
the proposal and satisfy the pre-condition. Trepang has advised the Company that they are seeking advice on
the proposal. A further response is awaited from Trepang. Further details of the proposal are as set out in the
announcement.
•
On 14 September 2022, the Company announced that it had received another conditional non-binding proposal from
Tetra Resources Pty Ltd and Javelin Private Capital Group LLC. Further details of the proposed transaction are as
set out in the announcement.
•
On 27 September 2022, the Company announced that it has agreed terms and entered into a binding term sheet
with each of Trepang Services Pty Ltd, M Resources Pty Ltd and Tetra Resources Pty Ltd for a strategic partnership
between all of the parties that aims to see Dartbrook re-commissioned as a coal producing mine as soon as
practicable (Strategic Partnership).
Under the Strategic Partnership, each of M Resources and Tetra Resources will earn a 20% direct joint venture
interest in Dartbrook. In addition, Trepang, if it agrees to extend the existing AQC access and compensation
agreement, various easement arrangements and term transfer of water rights on mutually agreeable commercial
terms to allow underground mining operations to continue at Dartbrook for the duration of mine life extension
approvals, will earn a 10% free-carried direct joint venture interest, subject to AQC obtaining any required
shareholder approvals. AQC will retain a 50% direct joint venture interest in Dartbrook. If M Resources and Tetra
Resources do not achieve production restart at Dartbrook within 27 months, each of M Resources and Tetra
Resources will relinquish their joint venture interest and that interest will revert to AQC. Further details of the
proposed transaction are as set out in the announcement.
•
On 27 September 2022, the Company announced that it had issued 2,500,000 fully paid ordinary shares upon
satisfaction of vesting conditions attaching to performance rights approved by shareholders in general meeting.
No other matter or circumstance has arisen since 30 June 2022 that has significantly affected, or may significantly affect the
consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial
years.
Information on directors
Name:
Mr David Conry
Title:
Chairman and Chief Executive Officer
Experience and expertise:
Mr Conry is an experienced company director and senior executive, who has held or
holds several board roles in the private sector and also for all three levels of
government. Director of Australian Pacific Coal Limited since 2 April 2020 and
appointed as Chief Executive Officer on 16 April 2020.
Other current directorships
None
Former directorships (last 3 years):
None
Special responsibilities:
None
Interests in shares:
None
Interests in options:
None
Interests in performance rights:
1,000,000
Australian Pacific Coal Limited
Directors' report
30 June 2022
5
Name:
Mr Tony Lalor
Title:
Non-Executive Director
Appointed as a Director on 2 November 2020
Qualifications:
B.Com, LLB
Experience and expertise:
Mr Lalor is a partner at a leading Australian law firm with over 20 years work
experience. He practices in corporate advisory with particular experience in mergers
and acquisitions and equity capital market transactions. Director of Australian Pacific
Coal Limited since 2 November 2020.
Other current directorships:
None
Former directorships (last 3 years):
None
Special responsibilities:
None
Interests in shares:
None
Interests in options:
None
Interests in performance rights:
750,000
Name:
Mr Craig McPherson
Title:
Non-Executive Director
Appointed 6 December 2021
Qualifications:
Bachelor of Applied Science (Building)
Experience and expertise:
Mr McPherson graduated with a Bachelor of Commerce degree from the University
of Queensland and is a member of Chartered Accountants Australia and New
Zealand. He has over twenty years of commercial and financial management
experience and has held various roles with ASX and TSX listed companies for in
excess of ten years in Australia and overseas.
Other current directorships:
None
Former directorships (last 3 years):
None
Special responsibilities:
None
Interests in shares:
None
Interests in options:
None
Interests in performance rights:
750,000
Name
Mr Mark Jagla
Mr Jagla was appointed as a Director of Australian Pacific Coal Limited on 23
September 2020. Mr Jagla resigned from the Company effective 6 December 2021.
'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all
other types of entities, unless otherwise stated.
'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes
directorships of all other types of entities, unless otherwise stated.
Company secretary
Mr Craig McPherson was appointed Company Secretary on 23 August 2019.
Meetings of directors
The number of meetings of the company's Board of Directors ('the Board') and of each Board committee held during the year
ended 30 June 2022, and the number of meetings attended by each director were:
Full board
Audit and Risk Committee
Attended
Held
Attended
Held
Mr David Conry
7
7
-
-
Ms Tony Lalor
7
7
-
-
Mr Craig McPherson
5
5
-
-
Mr Mark Jagla
1
2
-
-
Held: represents the number of meetings held during the time the director held office or was a member of the relevant
committee.
Australian Pacific Coal Limited
Directors' report
30 June 2022
6
Remuneration report (audited)
The remuneration report details the key management personnel remuneration arrangements for the consolidated entity in
accordance with the requirements of the Corporations Act 2001 and its Regulations.
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the
activities of the entity, directly or indirectly, including all directors.
The remuneration report is set out under the following main headings:
● Principles used to determine the nature and amount of remuneration
● Details of remuneration
● Service agreements
● Share-based compensation
● Additional information
● Additional disclosures relating to key management personnel
Principles used to determine the nature and amount of remuneration
The objective of the consolidated entity's executive reward framework is to ensure reward for performance is competitive
and appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic objectives
and the creation of value for shareholders, and it is considered to conform to the market best practice for the delivery of
reward. The Board of Directors ('the Board') ensures that executive reward satisfies the following key criteria for good reward
governance practices:
● competitiveness and reasonableness
● acceptability to shareholders
● performance linkage / alignment of executive compensation
● transparency
The Board is responsible for determining and reviewing remuneration arrangements for its directors and executives. The
performance of the consolidated entity depends on the quality of its directors and executives. The remuneration philosophy
is to attract, motivate and retain high performance and high-quality personnel.
The Board has structured an executive remuneration framework that is market competitive and complementary to the reward
strategy of the consolidated entity.
The reward framework is designed to align executive reward to shareholders' interests. The Board has considered that it
should seek to enhance shareholders' interests by:
● having economic profit as a core component of plan design
● focusing on sustained growth in shareholder wealth, consisting of dividends and growth in share price, and delivering
constant or increasing return on assets as well as focusing the executive on key financial and non-financial drivers of
value
● attracting and retaining high calibre executives
Additionally, the reward framework seeks to enhance executives' interests by:
● rewarding capability and experience
● reflecting competitive reward for contribution to growth in shareholder wealth
● providing a clear structure for earning rewards
In accordance with best practice corporate governance, the structure of non-executive director and executive director
remuneration is separate.
Non-executive director’s remuneration
Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Board may, from time
to time, receive advice from independent remuneration consultants to ensure non-executive directors' fees and payments
are appropriate and in line with the market. The chairman's fees are determined independently to the fees of other non-
executive directors based on comparative roles in the external market. The chairman is not present at any discussions
relating to the determination of his own remuneration.
Australian Pacific Coal Limited
Directors' report
30 June 2022
7
ASX listing rules require the aggregate non-executive directors' remuneration be determined periodically by a general
meeting. The most recent determination was at the General Meeting held on 30 October 2015 where the shareholders
approved a maximum annual aggregate remuneration of $500,000.
Non-executive directors are also entitled to consulting fees to the extent that they provide services in excess of those typically
provided as a non-executive director of the Company.
Executive remuneration
The consolidated entity aims to reward executives based on their position and responsibility, with a level and mix of
remuneration which has both fixed and variable components.
The executive remuneration and reward framework has four components:
● base pay and non-monetary benefits
● short-term performance incentives
● share-based payments
● other remuneration such as superannuation and long service leave
The combination of these components comprises the executive's total remuneration.
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, is reviewed regularly by the Board
and subject to individual contracts is based on individual and business unit performance, the overall performance of the
consolidated entity and comparable market remunerations.
Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle
benefits) where it does not create any additional costs to the consolidated entity and provides additional value to the
executive.
The Board periodically reviews the company’s short-term and long-term incentive arrangements for executive directors,
non-executive directors and employees and consultants to ensure the appropriate alignment of interests of all stakeholders
and to reward the achievement of pre-specified Key Performance Indicators.
Consolidated entity performance and link to remuneration
Remuneration for certain individuals may be directly linked to the performance of, and outcomes achieved for, the
consolidated entity together with bonus and incentive payments at the discretion of the Board.
During the year the Board has implemented an incentive program for executive directors, non-executive directors and
employees and consultants.
Voting and comments made at the company's 2021 Annual General Meeting ('AGM')
At the 2021 AGM, shareholders voted to support the adoption of the remuneration report for the year ended 30 June 2021.
The company did not receive any specific feedback at the AGM regarding its remuneration practices.
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the consolidated entity are set out in the following tables.
The key management personnel of the consolidated entity consisted of the following directors of Australian Pacific Coal
Limited during the year:
●
David Conry – Chairman and Chief Executive Officer (appointed 2 April 2020)
●
Mr Tony Lalor – Non-executive Director (appointed 2 November 2020)
●
Mr Craig McPherson – Non-executive Director (appointed 6 December 2021)
●
Mr Mark Jagla – Non-executive Director (appointed 23 September 2020, resigned 6 December 2021)
Australian Pacific Coal Limited
Directors' report
30 June 2022
8
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-based payments
Cash salary
Cash
Termination
Super-
Long service Equity-settled Equity-settled
and fees
bonus
annuation
leave
shares
options
Total
2022
$
$
$
$
$
$
$
$
Non-Executive
Directors:
Tony Lalor
51,996
-
-
-
-
124,125
-
176,121
Mark Jagla
18,939
-
-
1,894
-
-
-
20,833
Craig McPherson
30,333
-
-
-
30,333
Executive Directors:
David Conry
379,985
200,000
-
-
-
165,500
-
745,485
481,253
200,000
-
1,894
-
289,625
-
972,772
1.
Mark Jagla resigned 6 December 2021
2.
Craig McPherson was appointed 6 December 2021
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-based payments
Cash salary
Cash
Non-
Super-
Long service Equity-settled Equity-settled
and fees
bonus
monetary
annuation
leave
shares
options
Total
2021
$
$
$
$
$
$
$
$
Non-Executive
Directors:
Shane Stone
33,333
-
-
-
-
-
-
33,333
Ainslie Maclean
-
-
-
-
-
-
-
-
Mark Jagla
35,261
3,350
38,611
Tony Lalor
34,665
-
-
-
-
-
-
34,665
Executive Directors:
David Conry
372,485
-
-
-
-
-
-
372,485
475,744
-
-
3,350
-
-
-
479,094
1.
Ainslie Maclean resigned 23 September 2020
2.
Shane Stone resigned 2 November 2020
3.
Mark Jagla was appointed 23 September 2020
4.
Tony Lalor was appointed 2 November 2020
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Fixed remuneration
At risk - STI
At risk - LTI
Name
2022
2021
2022
2021
2022
2021
Non-Executive Directors:
Tony Lalor
30%
100%
-
-
70%
-
Mark Jagla
100%
100%
-
-
-
-
Craig McPherson
100%
-
-
-
-
-
Shane Stone
-
100%
-
-
-
-
Ainslie Maclean
-
-
-
-
Executive Directors:
David Conry
51%
100%
27%
-
22%
-
Australian Pacific Coal Limited
Directors' report
30 June 2022
9
Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service agreements. Details
of these agreements are as follows:
Current agreements:
Name
David Conry
Title
Chairman and Chief Executive Officer (appointed 2 April 2020)
Term of agreement
Ongoing appointment, subject to termination rights noted below.
Details
Base salary for the year ended 30 June 2022 of $350,000 plus a motor vehicle
allowance of $30,000 per year. Mr Conry or his nominee is eligible to receive any forms
of equity type compensation as reasonably determined by the Board from time to time.
The officer may give 3 months’ notice of intention to resign and the Company may
terminate the agreement by giving 3 months’ notice.
Mr Conry was also entitled to receive the following STI’s which were achieved during
the year ended 30 June 2022:
a. $100,000 bonus on the realisation of land sales exceeding $20 million exclusive
of GST payable within 60 days after settlement;
b. $100,000 bonus on the Appeal being upheld facilitating a start on the
underground Dartbrook mine; payable on realisation of the land sales within 60
days.
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
Options
There were no options over ordinary shared issued as remuneration to directors or other key management personnel in the
year ended 30 June 2022.
Performance Rights
The terms and conditions of each grant of performance right over ordinary shares affecting remuneration of directors and
other key management personnel in this financial year are as follows:
Number of
performance
rights granted
Grant date
Expiry date
Exercise price
Fair Value per
performance
rights at grant
date
David Conry
500,000
27.08.2021
27.08.2024
$Nil
$0.164
David Conry
500,000
27.08.2021
27.08.2026
$Nil
$0.167
Tony Lalor
375,000
27.08.2021
27.08.2024
$Nil
$0.164
Tony Lalor
375,000
27.08.2021
27.08.2026
$Nil
$0.167
Values of performance rights over ordinary shares granted exercised and lapsed for directors and other key management
personnel as part of compensation during the year ended 30 June 2022 are set out below:
Value of performance
rights granted during the
year
Value of performance
rights vested during the
year
Value of performance
rights lapsed during the
year
David Conry
$165,500
-
-
Tony Lalor
$124,125
-
-
No performance rights have been granted to Key Management Personnel since the end of the financial year.
Australian Pacific Coal Limited
Directors' report
30 June 2022
10
Additional disclosures relating to key management personnel
Shareholding
The number of shares in the company held during the financial year by each director and other members of key management
personnel of the consolidated entity, including their personally related parties, is set out below:
Balance at
Received
Balance at
the start of
as part of
Disposals*/
the end of
the year
remuneration
Additions
Other**
the year
Ordinary shares
David Conry
-
-
-
-
-
Tony Lalor
-
-
-
-
Craig McPherson
-
1
-
-
-
-
Mark Jagla
-
-
-
-
2
-
-
-
-
-
1. Represent shareholding at date of appointment
2. Represent shareholding at date of resignation
Option holding
There were no options over ordinary shares in the company held during the financial year by any director and other members
of key management personnel of the consolidated entity, including their personally related parties.
Performance Rights Held by Key Management Personnel
Details of Performance Rights held directly, indirectly or beneficially by key management personnel during the year ended 30
June 2022 were as follows:
Balance at 1
July 2021
Granted as
Compensation
Vested
Lapsed
Balance at
30 June
2022
Total Vested 30
June 2022
David Conry
-
1,000,000
-
-
1,000,000
-
Tony Lalor
-
750,000
-
-
750,000
-
Craig McPherson
-
750,000 1
-
-
750,000
-
1. Represent holding prior to date of appointment as director
Other transactions with key management personnel and their related parties
During the year the Group paid MH Private Pty Ltd, an entity associated with Mr McPherson, $162,000 for financial, corporate
secretarial and bookkeeping services. At reporting date there was no amount outstanding payable to MH Private Pty Ltd.
During the year the Group paid Mills Oakley, a law firm of which Mr Lalor is a Partner, $134,676 for legal services. At reporting
date there was $50,638 outstanding payable to Mills Oakley.
There were no other transactions with key management personnel and their related parties during the financial year other than
those transactions disclosed within this annual financial report.
This concludes the remuneration report, which has been audited.
Australian Pacific Coal Limited
Directors' report
30 June 2022
11
Shares under option, performance rights or convertible note
Unissued ordinary shares of Australian Pacific Coal Limited under option or convertible note at the date of this report are as
follows:
Exercise
Number
Issue date
Face Value
price
under option
or convertible
note
18 April 2017 (Mr John Robinson Snr)
$10.448 million
$0.80
13,060,783
18 April 2017 (Mr Nick Paspaley)
$10.448 million
$0.80
13,060,783
Each of the convertible notes attract capitalised interest of 10% (compounding monthly). Upon conversion, accrued interest
may be paid, at the consolidated entity’s election, either via cash or settlement in shares based on the 5-day trailing volume
weighted average price.
At the date of this report, the Company has issued 2.500,000 performance rights under the company’s employee incentive
plan. 1,250,000 performance rights will convert into Shares on a one for one basis in the event the Company’s share’s trade
at a VWAP of at least $0.25 for a minimum of 10 consecutive trading days. The balance of 1,250,000 performance rights will
convert into Shares on a one for one basis in the event the Company’s share’s trade at a VWAP of at least $0.35 for a
minimum of 10 consecutive trading days.
Proceedings on behalf of the company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf
of the company, or to intervene in any proceedings to which the company is a party for the purpose of taking responsibility
on behalf of the company for all or part of those proceedings.
Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor
are outlined in Note 23 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial year by the auditor (or by another
person or firm on the auditor's behalf) is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001.
The directors are of the opinion that the services as disclosed in Note 23 to the financial statements do not compromise the
external auditor's independence requirements of the Corporations Act 2001 for the following reasons:
●
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity
of the auditor; and
●
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code
of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including
reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the company,
acting as advocate for the company or jointly sharing economic risks and rewards.
The following fees were paid or payable to Hall Chadwick Melbourne for non-audit services provided during the year ended
30 June 2022:
$
Taxation services
$38,400
$38,400
Indemnity and insurance of officers
The company has indemnified the directors and executives of the company for costs incurred, in their capacity as a director
or executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the company paid a premium in respect of a contract to insure the directors and executives of the
company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of the liability and the amount of the premium.
Australian Pacific Coal Limited
Directors' report
30 June 2022
12
Officers of the company who are former partners of Hall Chadwick Chartered Accountants
There are no officers of the company who are former partners of Hall Chadwick Chartered Accountants.
Rounding of amounts
The company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and
Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that
Corporations Instrument to the nearest dollar.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out
immediately after this directors' report.
Auditor
Hall Chadwick Chartered Accountants continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
On behalf of the directors
___________________________
David Conry AM
Chairman
29 September 2022
Brisbane
SYDNEY · PENRITH · MELBOURNE · BRISBANE · PERTH · DARWIN
Liability limited by a scheme approved under Professional Standards Legislation
www.hallchadwick.com.au
AUSTRALIAN PACIFIC COAL LIMITED
AND CONTROLLED ENTITIES
ABN 49 089 206 986
AUDITOR’S INDEPENDENCE DECLARATION
UNDER SECTION 307C OF THE CORPORATIONS ACT 2001
TO THE DIRECTORS OF AUSTRALIAN PACIFIC COAL LIMITED AND
CONTROLLED ENTITIES
In accordance with section 307C of the Corporations Act 2001, I am pleased to
provide the following declaration of independence to the directors of Australian Pacific
Coal Limited and controlled entities. As the lead audit partner for the audit of the
financial report of Australian Pacific Coal Limited and controlled entities for the year
ended 30 June 2022, I declare that, to the best of my knowledge and belief, there
have been no contraventions of:
(i)
the auditor independence requirements as set out in the Corporations Act 2001
in relation to the audit; and
(ii)
any applicable code of professional conduct in relation to the audit.
Hall Chadwick
Sydney NSW 2000
SANDEEP KUMAR
Partner
Date: 29 September 2022
13
Australian Pacific Coal Limited
Directors' report
30 June 2022
14
Statement of profit or loss and other comprehensive income
15
Statement of financial position
16
Statement of changes in equity
17
Statement of cash flows
18
Notes to the financial statements
19
Directors' declaration
53
Independent auditor's report to the members of Australian Pacific Coal Limited
54
General information
The financial statements cover Australian Pacific Coal Limited as a consolidated entity consisting of Australian Pacific Coal
Limited and the entities it controlled at the end of, or during, the year. The financial statements are presented in Australian
dollars, which is Australian Pacific Coal Limited’s functional and presentation currency.
Australian Pacific Coal Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its
registered office and principal place of business are:
Registered office
Principal place of business
Level 1, 371 Queen Street
Stair Street
Brisbane QLD 4000
Kayuga NSW 2333
A description of the nature of the consolidated entity's operations and its principal activities are included in the directors'
report, which is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 29 September 2022. The
directors have the power to amend and reissue the financial statements.
Australian Pacific Coal Limited
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2022
Consolidated
Note
2022
2021
$
$
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
15
Revenue
4
55,288
337,926
Other income
5
-
13,309
Expenses
Employee benefits expense
(1,386,768)
(496,621)
Depreciation and amortisation expense
6
(1,011,851)
(1,151,625)
Impairment of capitalised exploration and evaluation
14
-
(3,619,528)
Exploration and evaluation expense
(43,869)
(69,558)
Share-based payments
(413,750)
-
Fair value movement of financial assets
10
-
(5,503,899)
Administration and consulting expenses
(1,528,046)
(4,905,891)
Finance costs
6
(7,167,353)
(8,301,609)
Loss before income tax expense from continuing operations
(11,496,349) (23,697,496)
Income tax expense
7
-
-
Other comprehensive income
Other comprehensive income for the year, net of tax
-
-
Total comprehensive income for the year
(11,496,349) (23,697,496)
Cents
Cents
Earnings per share for profit attributable to the owners of Australian Pacific
Coal Limited
Basic earnings per share
31
(22.7)
(46.7)
Diluted earnings per share
31
(22.7)
(46.7)
Australian Pacific Coal Limited
Statement of financial position
As at 30 June 2022
Consolidated
Note
2022
2021
$
$
The above statement of financial position should be read in conjunction with the accompanying notes
16
Assets
Current assets
Cash and cash equivalents
8
338,558
512,136
Trade and other receivables
9
417,930
66,388
Available for sale asset
10
-
33,694,192
Other
11
123,062
110,616
Total current assets
879,550
34,383,332
Non-current assets
Property, plant and equipment
12
3,741,304
4,737,881
Exploration and evaluation
13
5,720,170
5,435,242
Other
15
8,998,733
8,998,733
Total non-current assets
18,460,207
19,171,856
Total assets
19,339,757
53,555,188
Liabilities
Current liabilities
Trade and other payables
16
10,114,564
7,788,815
Borrowings
17
57,462,280
82,920,861
Total current liabilities
67,576,844
90,709,676
Non-current liabilities
Provisions
18
19,550,000
19,550,000
Total non-current liabilities
19,550,000
19,550,000
Total liabilities
87,126,844
110,259,676
Net assets
(67,787,087) (56,704,488)
Equity
Issued capital
19
60,487,791
60,487,791
Reserves
413,750
-
Retained profits
(128,688,628)
(117,192,279)
Total equity
(67,787,087) (56,704,488)
Australian Pacific Coal Limited
Statement of changes in equity
For the year ended 30 June 2022
The above statement of changes in equity should be read in conjunction with the accompanying notes
17
Issued
Reserves
Retained
Total equity
capital
profits
Consolidated
$
$
$
$
Balance at 1 July 2020
60,487,791
-
(93,494,783)
(33,006,992)
Loss after income tax expense for the year
-
(23,697,496) (23,697,496)
Other comprehensive income for the year, net of
tax
-
-
-
-
Total comprehensive income for the year
-
- (23,697,496) (23,697,496)
Transactions with owners in their capacity as
owners:
Contributions of equity, net of transaction costs
-
-
-
-
Balance at 30 June 2021
60,487,791
-
(117,192,279)
(56,704,488)
Issued
Reserves
Retained
Total equity
capital
Profits/(loss)
Consolidated
$
$
$
Balance at 1 July 2021
60,487,791
- (117,192,279)
(56,704,488)
Loss after income tax expense for the half-year
-
-
(11,496,349)
(11,496,349)
Other comprehensive income for the half-year,
net of tax
-
-
-
-
Total comprehensive income for the half-year
-
-
(11,496,349)
(11,496,349)
Transactions with owners in their capacity as
owners:
Share based payments
-
413,750
-
413,750
Contributions of equity, net of transaction costs
-
-
-
-
Contributions of equity, transfers from reserves
-
-
-
-
Balance at 30 June 2022
60,487,791
413,750 (128,688,628)
(67,787,087)
Australian Pacific Coal Limited
Statement of cash flows
For the year ended 30 June 2022
Consolidated
Note
2022
2021
$
$
The above statement of cash flows should be read in conjunction with the accompanying notes
18
Cash flows from operating activities
Receipts from customers
55,224
353,229
Payments to suppliers and employees
(2,914,909)
(5,624,612)
(2,859,685)
(5,271,383)
Net interest received / (paid)
(5,055)
(2,337)
Net cash from operating activities
30
(2,864,740)
(5,273,720)
Cash flows from investing activities
Payments for property, plant and equipment
(32,358)
(93,252)
Proceeds from sale of property plant & equipment
17,082
77,734
Proceeds from sale of land
-
3,299,750
Payments for exploration and evaluation
(284,928)
(171,971)
Proceeds from sale of investments
-
Net cash used in investing activities
(300,204)
3,112,261
Cash flows from financing activities
Proceeds from issue of shares
-
-
Proceeds from borrowings
3,109,677
5,278,946
Repayment of borrowings
(118,311)
(3,296,081)
Net cash used in financing activities
2,991,366
1,982,865
Net increase/(decrease) in cash and cash equivalents
(173,578)
(178,594)
Cash and cash equivalents at the beginning of the financial year
537,136
715,730
Cash and cash equivalents at the end of the financial year
8
363,558
537,136
Australian Pacific Coal Limited
Notes to the financial statements
30 June 2022
19
Note 1. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate
for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board ('IASB').
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where applicable, the
revaluation of available-for-sale financial assets, financial assets and liabilities at fair value through profit or loss, investment
properties, certain classes of property, plant and equipment and derivative financial instruments.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the consolidated entity's accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the
financial statements, are disclosed in note 2.
Going Concern
The consolidated entity has incurred a net loss of $11,496,349 for the year ended 30 June 2022 and has a deficiency in net
assets of $67,787,087 as at 30 June 2022.
This financial report has been prepared on a going concern basis as the Directors consider that the company and the
consolidated entity will be able to realise its assets and settle its liabilities in the normal course of business and at amounts
stated in the financial report. The continuation of the company and the consolidated entity as a going concern is dependent
on their ability to achieve the following objectives:
●
Capital raisings, borrowings or joint ventures from related and non-related parties to support existing or new opportunities.
●
Development, exploitation or advancement of existing or new opportunities.
●
Continued support from financiers.
●
Realisation of surplus assets.
Should the above not generate the expected cash flows, the company may not be able to pay its debts as and when they
become due and payable and it may be required to realise assets and extinguish liabilities other than in the ordinary course
of business and at amounts different from those stated in the financial statements. This report does not include any
adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that
might be necessary should the company and the consolidated entity not continue as going concerns.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only.
Supplementary information about the parent entity is disclosed in Note 27.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Australian Pacific Coal
Limited ('company' or 'parent entity') as at 30 June 2022 and the results of all subsidiaries for the year then ended. Australian
Pacific Coal Limited and its subsidiaries together are referred to in these financial statements as the 'consolidated entity'.
Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity
when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from
the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control ceases.
Australian Pacific Coal Limited
Notes to the financial statements
30 June 2022
Note 1. Significant accounting policies (continued)
20
Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset
transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies
adopted by the consolidated entity.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest,
without the loss of control, is accounted for as an equity transaction, where the difference between the consideration
transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable
to the parent.
Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and
other comprehensive income, statement of financial position and statement of changes in equity of the consolidated entity.
Losses incurred by the consolidated entity are attributed to the non-controlling interest in full, even if that results in a deficit
balance.
Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and
non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The
consolidated entity recognises the fair value of the consideration received and the fair value of any investment retained
together with any gain or loss in profit or loss.
Operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same basis
as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation
of resources to operating segments and assessing their performance.
Foreign currency translation
The financial statements are presented in Australian dollars, which is Australian Pacific Coal Limited’s functional and
presentation currency.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation
at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in
profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting
date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange
rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences
are recognised in other comprehensive income through the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.
Revenue recognition
The Group has applied AASB 15: Revenue from Contracts with Customers. The major components of revenue are
recognised as follows:
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate,
which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the
net carrying amount of the financial asset.
Rent
Rent revenue from investment properties is recognised on a straight-line basis over the lease term. Lease incentives granted
are recognised as part of the rental revenue. Contingent rentals are recognised as income in the period when earned.
Australian Pacific Coal Limited
Notes to the financial statements
30 June 2022
Note 1. Significant accounting policies (continued)
21
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
Income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable
income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary
differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the
assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:
●
When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor
taxable profits; or
●
When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the
timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable
future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax
assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the
carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable
that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against
current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on
either the same taxable entity or different taxable entities which intend to settle simultaneously.
Australian Pacific Coal Limited (the 'head entity') and its wholly-owned Australian subsidiaries have formed an income tax
consolidated group under the tax consolidation regime. The head entity and each subsidiary in the tax consolidated group
continue to account for their own current and deferred tax amounts. The tax consolidated group has applied the 'separate
taxpayer within group' approach in determining the appropriate amount of taxes to allocate to members of the tax
consolidated group.
In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities (or assets)
and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each subsidiary in the tax
consolidated group.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts
receivable from or payable to other entities in the tax consolidated group. The tax funding arrangement ensures that the
intercompany charge equals the current tax liability or benefit of each tax consolidated group member, resulting in neither a
contribution by the head entity to the subsidiaries nor a distribution by the subsidiaries to the head entity.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the
consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within
12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used
to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the consolidated entity's normal operating cycle;
it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no
unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities
are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Australian Pacific Coal Limited
Notes to the financial statements
30 June 2022
Note 1. Significant accounting policies (continued)
22
Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value. For the statement of cash flows presentation purposes, cash
and cash equivalents also includes bank overdrafts, which are shown within borrowings in current liabilities on the statement
of financial position.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest method, less any provision for impairment. Trade receivables are generally due for settlement within 30 days.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written
off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is objective
evidence that the consolidated entity will not be able to collect all amounts due according to the original terms of the
receivables. The amount of the impairment allowance is the difference between the asset's carrying amount and the present
value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term
receivables are not discounted if the effect of discounting is immaterial.
A simple approach is followed in relation to trade receivables, as the loss allowance is measured at lifetime expected credit
loss.
Inventories
Inventories are stated at the lower of cost and net realisable value on a 'first in first out' basis. Cost comprises direct materials
and delivery costs, direct labour, import duties and other taxes, an appropriate proportion of variable and fixed overhead
expenditure based on normal operating capacity, and, where applicable, transfers from cash flow hedging reserves in equity.
Costs of purchased inventory are determined after deducting rebates and discounts received or receivable.
Cost is determined on the following basis:
(a) Ore and other metals on hand is valued on an average total production cost method
(b) Ore stockpiles are valued at the average cost of mining and stockpiling the ore, including haulage
(c) A proportion of related depreciation and amortisation charge is included in the cost of inventory
Stock in transit is stated at the lower of cost and net realisable value. Cost comprises of purchase and delivery costs, net of
rebates and discounts received or receivable.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion
and the estimated costs necessary to make the sale.
Property, plant and equipment
Land and buildings are shown at historical cost. On any revaluation, accumulated depreciation at the date of revaluation is
eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset.
Increases in the carrying amounts arising on revaluation of land and buildings are credited in other comprehensive income
through to the revaluation surplus reserve in equity. Any revaluation decrements are initially taken in other comprehensive
income through to the revaluation surplus reserve to the extent of any previous revaluation surplus of the same asset.
Thereafter the decrements are taken to profit or loss.
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment
(excluding land) over their expected useful lives as follows:
Buildings
15%
Plant and equipment
17%
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
Australian Pacific Coal Limited
Notes to the financial statements
30 June 2022
Note 1. Significant accounting policies (continued)
23
Leasehold improvements and plant and equipment under lease are depreciated over the unexpired period of the lease or
the estimated useful life of the assets, whichever is shorter.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the
consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
Any revaluation surplus reserve relating to the item disposed of is transferred directly to retained profits.
Exploration and evaluation assets
Exploration and evaluation expenditure in relation to separate areas of interest for which rights of tenure are current is carried
forward as an asset in the statement of financial position where it is expected that the expenditure will be recovered through
the successful development and exploitation of an area of interest, or by its sale; or exploration activities are continuing in
an area and activities have not reached a stage which permits a reasonable estimate of the existence or otherwise of
economically recoverable reserves. Where a project or an area of interest has been abandoned, the expenditure incurred
thereon is written off in the year in which the decision is made.
Mining assets
Capitalised mining development costs include expenditures incurred to develop new ore bodies to define further
mineralisation in existing ore bodies, to expand the capacity of a mine and to maintain production. Mining development also
includes costs transferred from exploration and evaluation phase once production commences in the area of interest.
Amortisation of mining development is computed by the units of production basis over the estimated proved and probable
reserves. Proved and probable mineral reserves reflect estimated quantities of economically recoverable reserves which can
be recovered in the future from known mineral deposits. These reserves are amortised from the date on which production
commences. The amortisation is calculated from recoverable proven and probable reserves and a predetermined percentage
of the recoverable measured, indicated and inferred resource. This percentage is reviewed annually.
Restoration costs expected to be incurred are provided for as part of development phase that give rise to the need for
restoration.
Intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at
the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible
assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are
subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising
from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying
amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in
the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or
period.
Water licences
The Company acquired various water licences associated with the Dartbrook Coal Mine through the acquisition of the mine
in May 2017. The water licences were valued at fair market value via the final purchase price accounting for the business
combination. The licences continue to be held in good standing and are renewable at the Company’s election, subject to
ongoing compliance with regulatory requirements of each licence. Subsequent period reporting is on a cost basis.
Impairment of non-financial assets
Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount
exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or
cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to
form a cash-generating unit.
Australian Pacific Coal Limited
Notes to the financial statements
30 June 2022
Note 1. Significant accounting policies (continued)
24
Trade and other payables
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial
year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The
amounts are unsecured and are usually paid within 30 days of recognition.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They
are subsequently measured at amortised cost using the effective interest method.
The component of the convertible notes that exhibits characteristics of a liability is recognised as a liability in the statement
of financial position, net of transaction costs.
On the issue of the convertible notes the fair value of the liability component is determined using a market rate for an
equivalent non-convertible bond and this amount is carried as a non-current liability on the amortised cost basis until
extinguished on conversion or redemption. The increase in the liability due to the passage of time is recognised as a finance
cost. The remainder of the proceeds are allocated to the conversion option that is recognised and included in shareholders
equity as a convertible note reserve, net of transaction costs. The carrying amount of the conversion option is not remeasured
in the subsequent years. The corresponding interest on convertible notes is expensed to profit or loss.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in
the period in which they are incurred.
Provisions
Provisions are recognised when the consolidated entity has a present (legal or constructive) obligation as a result of a past
event, it is probable the consolidated entity will be required to settle the obligation, and a reliable estimate can be made of
the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to
settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation.
If the time value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The
increase in the provision resulting from the passage of time is recognised as a finance cost.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be
settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities
are settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are
measured at the present value of expected future payments to be made in respect of services provided by employees up to
the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels,
experience of employee departures and periods of service. Expected future payments are discounted using market yields at
the reporting date on corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated
future cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
Share-based payments
Equity-settled and cash-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the
rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount of cash
is determined by reference to the share price.
Australian Pacific Coal Limited
Notes to the financial statements
30 June 2022
Note 1. Significant accounting policies (continued)
25
The cost of equity-settled transactions is measured at fair value on grant date. Fair value is independently determined using
either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option,
the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend
yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine
whether the consolidated entity receives the services that entitle the employees to receive payment. No account is taken of
any other vesting conditions.
The cost of equity-settled transactions is recognised as an expense with a corresponding increase in equity over the vesting
period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate
of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit
or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous
periods.
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying either the
Binomial or Black-Scholes option pricing model, taking into consideration the terms and conditions on which the award was
granted. The cumulative charge to profit or loss until settlement of the liability is calculated as follows:
●
during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the
expired portion of the vesting period.
●
from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the
reporting date.
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid to
settle the liability.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions
are considered to vest irrespective of whether that market condition has been met, provided all other conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An
additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value
of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the condition is
treated as a cancellation. If the condition is not within the control of the consolidated entity or employee and is not satisfied
during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the
award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense
is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award
is treated as if they were a modification.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair
value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date; and assumes that the transaction will take place either: in the principal
market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming
they act in their economic best interests. 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 at each reporting date and transfers
between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value
measurement.
Australian Pacific Coal Limited
Notes to the financial statements
30 June 2022
Note 1. Significant accounting policies (continued)
26
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.
Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds.
Dividends
Dividends are recognised when declared during the financial year and no longer at the discretion of the company.
Business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments
or other assets are acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments
issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest
in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value
or at the proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to profit
or loss.
On the acquisition of a business, the consolidated entity assesses the financial assets acquired and liabilities assumed for
appropriate classification and designation in accordance with the contractual terms, economic conditions, the consolidated
entity's operating or accounting policies and other pertinent conditions in existence at the acquisition-date.
Where the business combination is achieved in stages, the consolidated entity remeasures its previously held equity interest
in the acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount
is recognised in profit or loss.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent
changes in the fair value of the contingent consideration classified as an asset or liability is recognised in profit or loss.
Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling interest
in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in the
acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair value
of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly
in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and measurement
of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer's
previously held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional
amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new
information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends
on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information
possible to determine fair value.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Australian Pacific Coal Limited,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares
outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
Australian Pacific Coal Limited
Notes to the financial statements
30 June 2022
Note 1. Significant accounting policies (continued)
27
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the
after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted
average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of
the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of
financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities
which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
Rounding of amounts
The company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and
Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that
Corporations Instrument to the nearest dollar.
New or amended Accounting Standards and Interpretations adopted
The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
New and Amended Standards and Interpretations for Future Periods
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory,
have not been early adopted by the consolidated entity for the annual reporting period ended 30 June 2022.
The consolidated entity has not yet assessed the impact of these new or amended Accounting Standards and Interpretations.
Note 2. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in
relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and
assumptions on historical experience and on other various factors, including expectations of future events, management
believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal
the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are
discussed below.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have,
on the consolidated entity based on known information. This consideration extends to the nature of the products and services
offered, customers, supply chain, staffing and geographic regions in which the consolidated entity operates. Other than as
addressed in specific notes, there does not currently appear to be either any significant impact upon the financial statements
or any significant uncertainties with respect to events or conditions which may impact the consolidated entity unfavourably
as at the reporting date or subsequently as a result of the Coronavirus (COVID-19) pandemic.
Australian Pacific Coal Limited
Notes to the financial statements
30 June 2022
Note 2. Critical accounting judgements, estimates and assumptions (continued)
28
Share-based payment transactions
The consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair value of the
equity instruments at the date at which they are granted. The fair value is determined by using either the Binomial or Black-
Scholes model taking into account the terms and conditions upon which the instruments were granted. The accounting
estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts
of assets and liabilities within the next annual reporting period but may impact profit or loss and equity.
Provision for impairment of receivables
A simple approach is followed in relation to trade receivables, as the loss allowance is measured at lifetime expected credit
loss.
Allowance for expected credit losses
The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the
lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall expected credit
loss rate for each group. These assumptions include recent sales experience, historical collection rates, the impact of the
Coronavirus (COVID-19) pandemic and forward-looking information that is available. The allowance for expected credit
losses, as disclosed in note 9, is calculated based on the information available at the time of preparation. The actual credit
losses in future years may be higher or lower.
Provision for impairment of inventories
The provision for impairment of inventories assessment requires a degree of estimation and judgement. Costs incurred in or
benefits of the productive process are accumulated as stockpiles, copper and other metals in process, ore on leach pads
and product inventory. Net realisable value tests are performed at least annually and represent the estimated future sales
price of the product based on prevailing metal prices, less estimated costs to complete production and bring the product to
sale.
Stockpiles are measured by estimating the number of tonnes added and removed from the stockpile, the number contained
metal ounces based on assay data, and the estimated recovery percentage based on the expected processing method.
Stockpile tonnages are verified by periodic surveys.
Although the quantity of recoverable metal is reconciled by comparing the grades of the ore to the quantities of metals actually
recovered (metallurgical balancing), the nature of the process inherently limits the ability to precisely monitor recoverability
levels. As a result, the metallurgical balancing process is constantly monitored and the engineering estimates are refined
based on actual results over time.
Fair value measurement hierarchy
The consolidated entity is required to classify all assets and liabilities, measured at fair value, using a three level hierarchy,
based on the lowest level of input that is significant to the entire fair value measurement, being: Level 1: Quoted prices
(unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; Level 2:
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly;
and Level 3: Unobservable inputs for the asset or liability. Considerable judgement is required to determine what is significant
to fair value and therefore which category the asset or liability is placed in can be subjective.
The fair value of assets and liabilities classified as level 3 is determined by the use of valuation models. These include
discounted cash flow analysis or the use of observable inputs that require significant adjustments based on unobservable
inputs.
Estimation of useful lives of assets
The consolidated entity determines the estimated useful lives and related depreciation and amortisation charges for its
property, plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of
technical innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are
less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will
be written off or written down.
Australian Pacific Coal Limited
Notes to the financial statements
30 June 2022
Note 2. Critical accounting judgements, estimates and assumptions (continued)
29
Impairment of non-financial assets other than goodwill and other indefinite life intangible assets
The consolidated entity assesses impairment of non-financial assets other than goodwill and other indefinite life intangible
assets at each reporting date by evaluating conditions specific to the consolidated entity and to the particular asset that may
lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value
less costs of disposal or value-in-use calculations, which incorporate a number of key estimates and assumptions.
It is reasonably possible that the underlying metal price assumption may change which may then impact the estimated life
of mine determinant and may then require a material adjustment to the carrying value of mining plant and equipment, mining
infrastructure and mining development assets. Furthermore, the expected future cash flows used to determine the value-in-
use of these assets are inherently uncertain and could materially change over time. They are significantly affected by a
number of factors including reserves and production estimates, together with economic factors such as metal spot prices,
discount rates, estimates of costs to produce reserves and future capital expenditure.
Business combinations
The acquisition method is used to account for business combinations. The fair value of assets acquired, liabilities and
contingent liabilities are measured by the consolidated entity taking into consideration all acquisition costs at the reporting
date. Fair value adjustments on the finalisation of the business combination accounting is retrospective, where applicable,
to the period the combination occurred and may have an impact on the assets and liabilities, depreciation and amortisation
reported.
Income tax
The consolidated entity is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required
in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary
course of business for which the ultimate tax determination is uncertain. The consolidated entity recognises liabilities for
anticipated tax audit issues based on the consolidated entity's current understanding of the tax law. Where the final tax
outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax
provisions in the period in which such determination is made.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only if the consolidated entity considers it is probable
that future taxable amounts will be available to utilise those temporary differences and losses.
Employee benefits provision
As discussed in note 1, the liability for employee benefits expected to be settled more than 12 months from the reporting
date are recognised and measured at the present value of the estimated future cash flows to be made in respect of all
employees at the reporting date. In determining the present value of the liability, estimates of attrition rates and pay increases
through promotion and inflation have been taken into account.
Lease make good provision
A provision has been made for the present value of anticipated costs for future restoration of leased premises. The provision
includes future cost estimates associated with closure of the premises. The calculation of this provision requires assumptions
such as application of closure dates and cost estimates. The provision recognised for each site is periodically reviewed and
updated based on the facts and circumstances available at the time. Changes to the estimated future costs for sites are
recognised in the statement of financial position by adjusting the asset and the provision. Reductions in the provision that
exceed the carrying amount of the asset will be recognised in profit or loss.
Rehabilitation provision
A provision has been made for the present value of anticipated costs for future rehabilitation of land explored or mined. The
consolidated entity's mining and exploration activities are subject to various laws and regulations governing the protection of
the environment. The consolidated entity recognises management's best estimate for assets retirement obligations and site
rehabilitations in the period in which they are incurred. Actual costs incurred in the future periods could differ materially from
the estimates. Additionally, future changes to environmental laws and regulations, life of mine estimates and discount rates
could affect the carrying amount of this provision.
Australian Pacific Coal Limited
Notes to the financial statements
30 June 2022
Note 2. Critical accounting judgements, estimates and assumptions (continued)
30
Exploration and evaluation costs
Exploration and evaluation costs have been capitalised on the basis that the consolidated entity will commence commercial
production in the future, from which time the costs will be amortised in proportion to the depletion of the mineral resources.
Key judgements are applied in considering costs to be capitalised which includes determining expenditures directly related
to these activities and allocating overheads between those that are expensed and capitalised. In addition, costs are only
capitalised that are expected to be recovered either through successful development or sale of the relevant mining interest.
Factors that could impact the future commercial production at the mine include the level of reserves and resources, future
technology changes, which could impact the cost of mining, future legal changes and changes in commodity prices. To the
extent that capitalised costs are determined not to be recoverable in the future, they will be written off in the period in which
this determination is made.
Vendor royalty provision
A provision has been made for the present value of the anticipated production royalty payable to the vendors of the Dartbrook
Mine. The net present value adopted is lower than the full nominal amount of the vendor royalty to reflect, amongst other
things, the risk and probability associated with recommencing mining operations and the consequential time value of the
royalty payment stream. Accordingly, the vendor royalty in excess of the recognised net present value amount is a contingent
liability, with remeasurement likely to occur once development approvals are obtained and the directors resolve to progress
toward construction and operation. The consolidated entity will review the measurement of the provision each annual
reporting period to reflect the then-current probability weighted estimate of incurring royalty payments to the vendors.
Australian Pacific Coal Limited
Notes to the financial statements
30 June 2022
31
Note 3. Operating segments
Identification of reportable operating segments
The consolidated entity is organised into two operating segments, being bentonite mining and exploration and evaluation.
These operating segments are based on the internal reports that are reviewed and used by the Board of Directors (who are
identified as the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation of
resources.
The CODM reviews net profit or loss before tax and total assets of each operating segment. The accounting policies adopted
for internal reporting to the CODM are consistent with those adopted in the financial statements.
The information reported to the CODM is on a monthly basis.
Types of products and services
The principal products and services of this operating segment are the bentonite mining operations and exploration and
evaluation activities in Australia. The bentonite operations are currently under care and maintenance with no production or
external sales recorded for the year ended 30 June 2022.
Major customers
During the year ended 30 June 2022 there were no external sales made from operations (2021: Nil).
Financial information
Net loss from continuing
operations before tax
Total Assets
2022
2021
2022
2021
$
$
$
$
Exploration & Evaluation
1,451,069
14,248,284
18,898,603
52,977,949
Bentonite mining
34,955
113,086
18,233
18,233
Corporate
10,010,325
9,336,126
422,923
559,006
11,496,349
23,697,496
19,339,759
53,555,188
Note 4. Revenue
Consolidated
2022
2021
$
$
Other revenue
Interest
64
63
Rent
55,224
337,863
55,288
337,926
Total Revenue
55,288
337,926
Note 5. Other income
Consolidated
2022
2021
$
$
Other revenue
-
13,309
Other income
-
13,309
Australian Pacific Coal Limited
Notes to the financial statements
30 June 2022
32
Note 6. Expenses
Consolidated
2022
2021
$
$
Loss before income tax includes the following specific expenses:
Depreciation
Land and buildings
5,867
146,870
Plant and equipment
1,005,984
1,004,755
Total depreciation
1,011,851
1,151,625
Finance costs
Interest and finance charges paid/payable
7,167,353
8,301,609
Finance costs expensed
7,167,353
8,301,609
Rental expense relating to operating leases
Minimum lease payments
19,292
133,741
Superannuation expense
Defined contribution superannuation expense
67,751
4,629
Note 7. Income tax expense
Consolidated
2022
2021
$
$
Numerical reconciliation of income tax expense and tax at the statutory rate
Profit before income tax expense from continuing operations
(11,496,349) (23,697,496)
Profit before income tax expense from discontinued operations
(11,496,349) (23,697,496)
Tax at the statutory tax rate of 25%
(2,874,087)
(6,516,810)
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Depreciation and amortisation
252,963
316,696
Entertainment expense
153
-
Other non-allowable items
9,323,904
10,637,648
Other allowable items
(7,575,257)
(6,141,830)
(872,324)
(1,704,296)
Tax losses and temporary differences not brought to account
872,324
1,704,296
Income tax expense
-
-
Australian Pacific Coal Limited
Notes to the financial statements
30 June 2022
33
Note 8. Current assets - cash and cash equivalents
Consolidated
2022
2021
$
$
Current:
Cash at bank and on hand
338,558
512,136
338,558
512,136
Reconciliation to cash and cash equivalents at the end of the financial year
The above figures are reconciled to cash and cash equivalents at the end of the financial
year as shown in the statement of cash flows as follows:
Balances as above
338,558
512,136
Deposit as security for rental bonds and equipment leases (Note 18)
25,000
25,000
Balance as per statement of cash flows
363,558
537,136
Note 9. Current assets - trade and other receivables
Consolidated
2022
2021
$
$
Trade and other receivables
417,930
66,388
Less: Allowance for expected credit loss
-
-
417,930
66,388
Note 10. Available for sale assets
Consolidated
2022
2021
$
$
Available for sale assets
-
33,694,192
-
33,694,192
On 14 May 2021 the consolidated entity received an offer from its major shareholder and creditor Trepang Services Pty Ltd
(Trepang) to purchase certain real properties and water rights owned by the consolidated entity that underly the Dartbrook
coal mine. The offer was subject to approval by shareholders at a meeting which was held on 30 July 2021, where amongst
other things shareholders approved the sale of land and water rights owned by the consolidated entity to Trepang.
The consolidated entity has recorded an amount of $18,405,695 (being an amount net of anticipated realisation costs) as an
available for sale asset with such amount separately recognised.
Note 11. Current assets - other
Consolidated
2022
2021
$
$
Prepayments
123,062
110,616
123,062
110,616
Australian Pacific Coal Limited
Notes to the financial statements
30 June 2022
34
Note 12. Non-current assets - property, plant and equipment
Consolidated
2022
2021
$
$
Land and buildings - at cost
850,786
850,788
Less: Accumulated depreciation
(133,335)
(127,468)
717,451
723,320
Leasehold improvements - at cost
180,217
180,217
Less: Accumulated depreciation
(171,594)
(171,362)
8,623
8,855
Plant and equipment - at cost
8,263,141
8,252,778
Less: Accumulated depreciation
(5,247,911)
(4,247,072)
3,015,230
4,005,706
3,741,304
4,737,881
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Land and
Leasehold
Plant and
buildings
improvements
equipment
Total
Consolidated
$
$
$
$
Balance at 1 July 2020
37,748,029
9,087
4,980,316
42,737,432
Additions
-
-
93,252
93,252
Disposals
(3,299,750)
-
(63,698)
(3,363,448)
Impairment
(5,503,899)
-
-
(5,503,899)
Available for Sale
(28,073,831)
-
-
(28,073,831)
Depreciation expense
(147,229)
(232)
(1,004,164)
(1,151,625)
723,320
8,855
4,005,706
4,737,881
Balance at 30 June 2021
723,320
8,855
4,005,706
4,737,881
Additions
-
-
32,356
32,356
Disposals
-
-
(17,082)
(17,082)
Impairment
-
-
-
-
Available for Sale
-
-
-
-
Depreciation expense
(5,869)
(232)
(1,005,750)
(1,011,851)
Balance at 30 June 2022
717,451
8,623
3,015,230
3,741,304
Refer to Note 21 for further information on fair value measurement.
Australian Pacific Coal Limited
Notes to the financial statements
30 June 2022
35
Note 13. Non-current assets - exploration and evaluation
Consolidated
2022
2021
$
$
Exploration and evaluation - at cost
5,720,170
5,435,242
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Exploration
and
evaluation
Total
Consolidated
$
$
Balance at 1 July 2020
8,882,799
8,882,799
Additions
171,973
171,973
Tenements surrendered
(3,619,528)
(3,619,528)
Balance at 30 June 2021
5,435,244
5,435,244
Additions
284,927
284,927
Balance at 30 June 2022
5,720,170
5,720,170
Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. These costs
are only carried forward to the extent that they are expected to be recouped through the successful development of the area
or where activities in the area have not yet reached a stage which permits reasonable assessment of the existence of
economically recoverable resources and active or significant operations in relation to the area are continuing.
Where the minimum expenditure on some tenements have not been met in the current period, rent continues to be paid and
various tenement renewals are in progress. This process and potential delays with respect to the renewals are not considered
to be significant or material to warrant impairment of the tenement assets.
Note 14. Non-current assets - deferred tax
Consolidated
2022
2021
$
$
Deferred tax asset comprises temporary differences attributable to:
Amounts recognised in profit or loss
8,853,077
8,327,516
Tax losses – operating losses
15,694,902
19,113,018
Tax losses – capital losses
-
523,984
Dartbrook Mine Acquisition
62,225,341
2,400,317
Tax assets not brought to account
(30,773,320) (30,364,835)
Deferred tax asset
-
-
Australian Pacific Coal Limited
Notes to the financial statements
30 June 2022
36
Note 15. Non-current assets - other
Consolidated
2022
2021
$
$
Cash on deposit for rental bonds and bank facilities
25,000
25,000
Security deposits
8,973,733
8,973,733
8,998,733
8,998,733
Note 16. Current liabilities - trade and other payables
Consolidated
2022
2021
$
$
Trade and other payables
2,781,970
2,264,392
Accrued interest – loans
7,332,594
5,524,423
10,114,564
7,788,815
Refer to Note 20 for further information on financial instruments.
Australian Pacific Coal Limited
Notes to the financial statements
30 June 2022
37
Note 17. Current liabilities - borrowings
Consolidated
2022
2021
$
$
Convertible securities
a)
48,152,603
66,443,979
Insurance premium funding
-
118,311
Unsecured Loan – Trepang Services Pty Ltd
b)
1,609,677
8,658,571
Interest bearing liabilities
c)
7,700,000
7,700,000
57,462,280
82,920,861
a) The Convertible securities balance is comprised of following instruments:
i.
On 1 February 2016 the consolidated entity issued two convertible securities, with a face value of $10,000,000 each,
for total proceeds of $20,000,000. Subsequently on 13 April 2017, shareholders of the Company approved new
terms for the convertible notes including the capitalization of interest into new convertible securities resulting is a
new face value of $22,532,803 which was partially repaid in the year and now has an outstanding balance of
$20,897,182 (30 June 2021: $22,532,803). Interest is payable at a rate of 10.0% per annum based on the face value.
The notes are convertible into ordinary shares of the parent entity, at any time at the option of the holder, or repayable
on the maturity date. The number of ordinary shares to be issued is calculated as the conversion amount divided by
the conversion price ($0.80), but subject to adjustments for reconstructions of equity. The revised terms of the notes
were approved by shareholders on 29 November 2018.
ii.
On 1 March 2017 the consolidated entered into the Trepang Convertible Loan Deed, to conditionally secure an
additional $15,000,000 in funding to assist in completing the acquisition of 100% of the Dartbrook Joint Venture. The
amount was fully repaid in the year and now has an outstanding balance of $nil (30 June 2021: $15,000,000). Interest
is payable at a rate of 10.0% per annum based on the face value. The notes are convertible into ordinary shares of
the parent entity, at any time at the option of the holder, or repayable on the maturity date. The number of ordinary
shares to be issued is calculated as the conversion amount divided by the conversion price ($0.80), but subject to
adjustments for reconstructions of equity. The revised terms of the notes were approved by shareholders on 29
November 2018.
iii.
On 29 November 2018, shareholders of the Company approved the issuance of a new convertible note to Trepang
Services Pty Ltd with a face value of $7,000,000. The amount was fully repaid in half year and now has an
outstanding balance of $nil (30 June 2021: $7,000,000).Interest is payable at a rate of 10.0% per annum based on
the face value. The notes are convertible into ordinary shares of the parent entity, at any time at the option of the
holder, or repayable on the maturity date. The number of ordinary shares to be issued is calculated as the conversion
amount divided by the conversion price ($0.80), but subject to adjustments for reconstructions of equity.
iv.
Total accrued interest relating to the above loans as at balance date of $27,255,421 (30 June 2021: $21,911,176).
v.
In the prior period the consolidated entity recognised an available for sale assets of $33,694,192 (refer Note 10).
Proceeds from the sale were used to repay funds owing to Trepang Services Pty Ltd during the current year.
b) During the financial year, Trepang Services Pty Ltd has contributed further capital of $1,609,677 to the Company by way
of an unsecured loan bearing 10% interest, capitalised on a monthly basis. Total accrued interest relating to the loan as at
balance date is $2,257,787 (refer Note 16).
c) On 29 May 2017, the consolidated entity announced it has agreed terms with Anglo American Metallurgical Coal Assets
Pty Ltd for the provision of a loan for $7,700,000, secured against certain assets of the consolidated entity for a term of
three years with at a 10% interest rate. On 28 April 2020 the consolidated entity announced that it had received notice from
Anglo that it had assigned to Trepang Services Pty Ltd all of its rights, title and interest in the loan. The term of the loan has
been varied to provide for a revised maturity date of 30 November 2021. Total accrued interest relating to the loan as at
balance date is $5,074,807 (refer Note 16).
Refer to Note 20 for further information on financial instruments.
Australian Pacific Coal Limited
Notes to the financial statements
30 June 2022
38
Total secured liabilities
The total secured liabilities (current and non-current) are as follows:
Consolidated
2022
2021
$
$
Insurance premium funding
-
118,311
Convertible securities
48,152,603
66,443,979
Loan – Trepang Services Pty Ltd
7,700,000
7,700,000
55,852,603
74,262,290
Assets pledged as security
The bank loans are secured by a restricted short-term deposit held by the bank.
The insurance premium funding is secured by the underlying insurance policy.
The convertible securities are issued to Mr Robinson Snr, Mr Paspaley and Trepang Services Pty Ltd. The interests of the
convertible note holders is subordinated to the secured vendor loan of $7.7 million.
Shareholders of the consolidated entity approved, at the extraordinary general meeting on 11 August 2017, the granting of
first ranking security to Anglo American Metallurgical Coal Assets Pty Ltd in respect of the $7.7 million vendor loan provided
on completion of the Dartbrook acquisition. On 28 April 2020 the consolidated entity announced that it had received notice
from Anglo that it had assigned to Trepang Services Pty Ltd all of its rights, title and interest in the loan.
Australian Pacific Coal Limited
Notes to the financial statements
30 June 2022
39
Note 18. Provisions
Consolidated
2022
2021
Note
$
$
Non-Current:
Rehabilitation provision
8,950,000
8,950,000
Vendor Royalty provision
24
10,600,000
10,600,000
19,550,000
19,550,000
Reconciliation of movements:
Vendor Royalty provision
Opening balance
10,600,000
10,600,000
Remeasurement
-
-
Depletion – rehabilitation activities completed or reassessed
-
-
Closing
10,600,000
10,600,000
Rehabilitation
The provision for rehabilitation closure costs relate to a present assessment to reinstate disturbed areas in accordance with
the Dartbrook mining consent. Provision has been made to rehabilitate all areas of disturbance including surface
infrastructure, buildings, underground mine workings and underground entries, using internal and external expert
assessment of each aspect to calculate an anticipated cash outflow discounted to a net present value. At each reporting date
the rehabilitation provision is re-measured in line with the then-current level of disturbance, cost estimates and other key
inputs. The amount of provision relating to rehabilitation of areas is recognised in profit or loss as incurred.
The Dartbrook mine was acquired under care and maintenance remained in that state through the financial year ended 30
June 2022. The consolidated entity has provided cash of $8,950,000 to the NSW government, as required under relevant
laws and assessed by the relevant NSW government department. The consolidated entity will continue to assess the
available and efficient rehabilitation options in parallel with potential development options for the mine.
Vendor Royalty
On 7 June 2016 the consolidated entity announced it had reached agreement with the minority joint venture partner at
Dartbrook to acquire the minority partner’s stake, thereby taking the Company’s ownership of Dartbrook to 100%. A combined
contingent royalty arrangement was agreed with the vendors on the following terms:
•
An aggregate royalty to the vendors at a rate of A$3.00 per tonne of coal sold or otherwise disposed of and A$0.25
per tonne of any third-party coal processed through the Dartbrook infrastructure, capped at A$30 million with
indexation to apply to the rate and the cap.
The vendor royalty is contingent on the Company achieving future development milestones which may or may not occur. The
Company had assessed the acquisition of Dartbrook Mine and, through the work undertaken by the expert, assessed a
discounted net present value associated with the obligation to pay the vendor royalty of $11.1 million, which had been
recognised as a Non-Current Liability. Given the strategic intent of the Company and the Modification 7 application to progress
the mine via underground methods, the directors have reviewed the net present liability and remeasured the liability based on
an assumed bord & pillar production profile. The liability has been assessed at $10.6 million.
The maximum amount payable under the product-based royalty remains capped at $30 million with indexation to apply to the
cap. The net present value adopted is lower than the full nominal amount to reflect, amongst other things, the risk and time
value of the royalty payment stream. Accordingly, the vendor royalty in excess of the recognised net present value amount is
a contingent liability.
Australian Pacific Coal Limited
Notes to the financial statements
30 June 2022
40
Note 19. Equity - issued capital
Consolidated
2022
2021
2022
2021
Shares
Shares
$
$
Ordinary shares - fully paid
50,484,810
50,484,810
60,487,791
60,487,791
Balance 30 June 2021
50,484,810
60,487,791
Balance 30 June 2022
50,484,810
60,487,791
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion
to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company
does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
Share buy-back
There is no current on-market share buy-back.
Capital risk management
The consolidated entity's objectives when managing capital is to safeguard its ability to continue as a going concern, so that
it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to
reduce the cost of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated
as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The consolidated entity would look to raise capital when an opportunity to invest in a business or company was seen as
value adding relative to the current company's share price at the time of the investment. The consolidated entity is not actively
pursuing additional investments in the short term as it continues to integrate and grow its existing businesses in order to
maximise synergies.
The consolidated entity is subject to certain financing arrangements covenants and meeting these is given priority in all
capital risk management decisions. There have been no events of default on the financing arrangements during the financial
year.
The capital risk management policy remains unchanged.
Australian Pacific Coal Limited
Notes to the financial statements
30 June 2022
41
Note 20. Financial instruments
Financial risk management objectives
The consolidated entity's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price
risk and interest rate risk), credit risk and liquidity risk. The consolidated entity's overall risk management program focuses
on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of
the consolidated entity. The consolidated entity uses different methods to measure different types of risk to which it is
exposed. These methods include sensitivity analysis in the case of interest rate and other price risks, ageing analysis for
credit risk.
Risk management is carried out by the Chief Executive Officer ('CEO') under policies approved by the Board of Directors
('the Board'). These policies include identification and analysis of the risk exposure of the consolidated entity and appropriate
procedures, controls and risk limits. The CEO identifies, evaluates and hedges financial risks within the consolidated entity's
operating units. The CEO reports to the Board on a regular basis.
Market risk
Foreign currency risk
The consolidated entity is not currently exposed to foreign currency risk.
Price risk
The consolidated entity is not currently exposed to price risk.
Interest rate risk
The consolidated entity's main interest rate risk arises from long-term borrowings or convertible securities. Borrowings
obtained at variable rates expose the consolidated entity to interest rate risk. Borrowings obtained at fixed rates expose the
consolidated entity to fair value risk.
The consolidated entity's convertible securities (face value $20,897,182) attract a fixed interest rate of 10% per annum, with
interest either capitalised or settled by way of issue of ordinary shares, at the consolidated entity’s election. The consolidated
entity also holds a vendor loan for $7,700,000 at a fixed rate of 10% per annum. An official increase/decrease in interest
rates of 100 (2021: 100) basis points for all interest-bearing items would have an adverse/favourable effect on profit before
tax of $28,597 (2020: $52,232) per annum.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
consolidated entity. Credit risk is managed through the maintenance of procedures (such procedures include the utilisation
of systems for the approval, granting and renewal of credit limits, regular monitoring of exposures against such limits and
monitoring of the financial stability of significant customers and counterparties), ensuring to the extent possible, that
customers and counterparties to transactions are of sound credit worthiness. Such monitoring is used in assessing
receivables for impairment. Depending on the division within the Group, credit terms are generally 14 to 30 days from the
invoice date.
The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any
provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial
statements. The consolidated entity does not hold any collateral.
The consolidated entity has no significant concentration of credit risk with any single counterparty or group of counterparties.
Liquidity risk
Vigilant liquidity risk management requires the consolidated entity to maintain sufficient liquid assets (mainly cash and cash
equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable.
The consolidated entity manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by
continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.
Australian Pacific Coal Limited
Notes to the financial statements
30 June 2022
Note 20: Financial instruments (continued)
42
Remaining contractual maturities
The following tables detail the consolidated entity's remaining contractual maturity for its financial instrument liabilities. The
tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which
the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining
contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position.
Weighted
average
interest rate 1 year or less
Between 1
and 2 years
Between 2
and 5 years
Over 5 years
Remaining
contractual
maturities
Consolidated - 2022
%
$
$
$
$
$
Non-derivatives
Non-interest bearing
Trade and other payables
2,781,970
2,781,970
Interest-bearing - fixed rate
Bank loans
5.04%
-
-
Other loans
5.68%
-
-
Secured loans *
10.00%
7,700,000
7,700,000
Unsecured loans *
10.00%
1,609,677
1,609,677
Convertible notes payable *
10.00%
20,897,182
20,897,182
Total non-derivatives
32,988,829
32,988,829
* In addition, interest continues to accrue on amounts owing as outlined in Note 17.
Weighted
average
interest rate 1 year or less
Between 1
and 2 years
Between 2
and 5 years
Over 5
years
Remaining
contractual
maturities
Consolidated - 2021
%
$
$
$
$
$
Non-derivatives
Non-interest bearing
Trade and other payables
-
2,264,243
-
-
-
2,264,243
Interest-bearing - fixed rate
Bank loans
5.04%
-
-
-
-
-
Other loans
5.68%
118,311
-
-
-
118,311
Secured loans *
10.00%
7,700,000
-
-
-
7,700,000
Unsecured loans *
10.00%
8,658,571
-
-
-
8,658,571
Convertible notes payable *
10.00%
44,532,803
-
-
-
44,532,803
Total non-derivatives
63,273,928
-
-
-
63,273,928
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
Australian Pacific Coal Limited
Notes to the financial statements
30 June 2022
43
Note 21. Fair value measurement
Fair value hierarchy
The following tables detail the consolidated entity's assets and liabilities, measured or disclosed at fair value, using a three-
level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or
indirectly
Level 3: Unobservable inputs for the asset or liability
Level 1
Total
Consolidated - 2022
$
$
Assets
Non-current assets – Exploration & Evaluation Impairment
-
-
Non-current assets – Land Impairment
-
-
Ordinary shares
-
-
Total assets
-
-
Level 1
Total
Consolidated - 2021
$
$
Assets
Non-current assets – Exploration & Evaluation Impairment
(3,619,528)
-
Non-current assets – Land Impairment
(5,403,899)
-
Ordinary shares
-
-
Total assets
(9,123,427)
-
Assets and liabilities held for sale are measured at fair value on a non-recurring basis.
There were no transfers between levels during the financial year.
The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their fair
values due to their short-term nature.
The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current market
interest rate that is available for similar financial liabilities.
Assets and liabilities held for sale are measured at fair value on a non-recurring basis.
There were no transfers between levels during the financial year.
The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their fair
values due to their short-term nature.
Australian Pacific Coal Limited
Notes to the financial statements
30 June 2022
44
Note 22. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the consolidated entity
is set out below:
Consolidated
2022
2021
$
$
Short-term employee benefits
681,253
475,744
Share-based payments
289,625
-
Post-employment benefits
1,894
3,350
972,772
479,094
Note 23. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by Hall Chadwick Chartered
Accountants, the auditor of the company, its network firms and unrelated firms:
Consolidated
2022
2021
$
$
Audit services – Hall Chadwick Chartered Accountants
Audit or review of the financial statements
91,500
89,750
Other services – Hall Chadwick Chartered Accountants
Preparation of the tax return
38,400
10,606
129,900
100,356
Australian Pacific Coal Limited
Notes to the financial statements
30 June 2022
45
Note 24. Contingent liabilities
Vendor Royalty
On 7 June 2016 the consolidated entity announced it had reached agreement with the minority joint venture partner at
Dartbrook to acquire the minority partner’s stake, thereby taking the Company’s ownership of Dartbrook to 100%. A
combined contingent royalty arrangement was agreed with the vendors on the following terms:
•
An aggregate royalty to the vendors at a rate of A$3.00 per tonne of coal sold or otherwise disposed of and A$0.25
per tonne of any third-party coal processed through the Dartbrook infrastructure, capped at A$30 million with
indexation to apply to the rate and the cap.
The vendor royalty is contingent on the Company achieving future development milestones which may or may not occur.
The Company had assessed the acquisition of Dartbrook Mine and, through the work undertaken by the expert, assessed
a discounted net present value associated with the obligation to pay the vendor royalty of $11.1 million, which had been
recognised as a Non-Current Liability. Given the strategic intent of the Company and the Modification 7 application to
progress the mine via underground methods, the directors have reviewed the net present liability and remeasured the
liability based on an assumed bord & pillar production profile. The liability has been assessed at $10.6 million with the net
movement ($0.5 million gain) recorded in the P&L. The maximum amount payable under the product-based royalty
remains capped at $30 million with indexation to apply to the cap.
The net present value adopted is lower than the full nominal amount to reflect, amongst other things, the risk and time
value of the royalty payment stream. Accordingly, the vendor royalty in excess of the recognised net present value amount
is a contingent liability, with remeasurement likely to occur once development approvals are obtained and the directors
resolve to progress toward construction and operation.
Royalty for Existing Financiers
On 27 September 2018, entity announced it had agreed revised terms with Mr Nicholas Paspaley, Mr John Robinson (Snr)
and Trepang (collectively, the Existing Financiers) in relation to their existing financing arrangements with AQC. These
amendments were approved by shareholders in November 2018 and included two potential royalties payable to the
Existing Financiers:
•
In the instance where the proposed joint venture transaction with SNR is completed, the Existing Financiers will
receive a $2.00 per product tonne royalty for coal produced and sold by the joint venture, based on the Company’s
interest in the joint venture (Royalty 1).
•
In the instance where the proposed joint venture transaction with SNR does not complete, the Existing Financiers
will receive a $2.50 per product tonne royalty for all coal produced and sold at Dartbrook (Royalty 2).
At present the Dartbrook Mine is permitted to operate as an underground mine by longwall mining method. The potential
royalties payable to the Existing Financiers become payable after the vendor royalty is full discharged. In a prior period the
proposed joint venture transaction with SNR was terminated and therefore this proposed royalty (Royalty 1) is no longer
applicable.
Australian Pacific Coal Limited
Notes to the financial statements
30 June 2022
46
Note 25. Commitments
Consolidated
2022
2021
$
$
Exploration and evaluating expenditure commitments – operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
-
364,000
One to five years
-
More than five years
-
-
364,000
The consolidated entity is required to meet minimum exploration and evaluation expenditure
commitments in accordance with the terms of the tenement grant documents. Any shortfall in
annual expenditure is planned to be made up in the following period with a view to avoiding
any penalties that the government may impose. At this stage no penalties for under-
expenditure have been or are expected to be incurred.
Note 26. Related party transactions
Parent entity
Australian Pacific Coal Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in Note 28.
Key management personnel
Disclosures relating to key management personnel are set out in Note 22 and the remuneration report included in the
directors' report.
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Consolidated
2022
2021
$
$
Current convertible securities (payable):
Mr John Robinson (Snr)
10,448,591
11,226,401
Mr Nick Paspaley
10,448,591
11,226,401
Trepang Services Pty Ltd
-
22,000,000
Current secured loans (payable):
Trepang Services Pty Ltd
7,700,000
7,700,000
Current unsecured loans (payable):
Trepang Services Pty Ltd
1,609,677
8,658,571
In addition, interest continues to accrue on the above amounts owing to related parties as set out in Note 17.
The terms of convertible securities issued to Mr Robinson (Snr), Mr Paspaley and Trepang Services Pty Ltd and the
secured loan from Trepang Services Pty Ltd are set out in Note 17.
The Company has received funding support from Trepang Services Pty Ltd by way of an unsecured loan. The terms of the
loan are set out at Note 17.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Australian Pacific Coal Limited
Notes to the financial statements
30 June 2022
47
Note 27. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Parent
2022
2021
$
$
Loss after income tax
(6,918,713)
(8,241,196)
Total comprehensive income
(6,918,713)
(8,241,196)
Statement of financial position
Parent
2022
2021
$
$
Total current assets
417,134
548,113
Total assets
23,265,876
54,758,888
Total current liabilities
52,662,002
55,325,131
Total liabilities
52,662,002
77,236,308
Equity
Issued capital
60,487,791
60,487,791
Share based payment reserve
Retained profits
(89,883,924) (80,965,211)
Total equity
(29,396,133) (22,477,420)
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity has entered into a guarantee in connection with the consolidated entities’ purchase of the Dartbrook coal
mine.
The parent entity has not entered into any other guarantees, in the current or previous financial year, in relation to the
debts of its subsidiaries.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2022.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2022.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 1, except
for the following:
●
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Australian Pacific Coal Limited
Notes to the financial statements
30 June 2022
48
Note 28. 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:
Ownership interest
Principal place of business /
2022
2021
Name
Country of incorporation
%
%
AQC Investments 1 Pty Ltd
Australia
100.00%
100.00%
AQC Investments 2 Pty Ltd
Australia
100.00%
100.00%
Area Coal Pty Ltd
Australia
100.00%
100.00%
AQC Services Pty Ltd
Australia
100.00%
100.00%
AQC Dartbrook Pty Ltd
Australia
100.00%
100.00%
AQC Dartbrook Management Pty Ltd
Australia
100.00%
100.00%
Dartbrook Coal (Sales) Pty Ltd
Australia
100.00%
100.00%
Ipoh Pacific Resources Pty Ltd
Australia
100.00%
100.00%
Felix St Pty Ltd
Australia
100.00%
100.00%
IPR Operations Pty Ltd
Australia
100.00%
100.00%
Mining Investments One Pty Ltd
Australia
100.00%
100.00%
Australian Pacific Coal Limited
Notes to the financial statements
30 June 2022
49
Note 29. Events after the reporting period
The following matters or events have occurred subsequent to the end of the reporting period:
•
On 22 July 2022, the Company called a general meeting of shareholders which was proposed to be held on 22
August 20022 with such meeting for shareholders to consider the sale of the Dartbrook Project to Trepang Services
Pty Ltd or its nominee. The terms of the proposed sale for consideration by shareholders were provided to
shareholders, as set out in the Notice of Meeting.
•
On 22 August 2022, the Company announced that it had received a non-binding alternative proposal to the sale of
the Dartbook Project to Trepang Services Pty Ltd from Nakevo Pty Ltd. As a result, the general meeting of
shareholders proposed for 22 August 2022 was postponed by the Company. The proposal required, amongst other
things, the support of Trepang Services Pty Ltd as to how the debt owed by the Company should be dealt with as
part of the Naveko proposal. Further details of the Nakevo proposal can be obtained from the 22 August
announcement.
•
On 25 August 2022, the Company announced that it had received another non-binding proposal from M Resources
Pty Ltd. The proposal required, amongst other things, the support of Trepang Services Pty Ltd as to how the debt
owed by the Company should be dealt with as part of the M Resources proposal. Further details of the M Resources
proposal can be obtained from the 25 August announcement.
•
On 2 September 2022, the company announced that:
a) Trepang Services Pty Ltd had acknowledged the Nakevo and M Resources proposals, including that both proposals were
subject to a number of conditions including Trepang agreeing to certain terms of the proposals, including how the debt owed
by the Company should be dealt with. The Company announced that Trepang advised that they would not consider or enter
into any such agreements meaning that the critical pre-conditions to both proposals progressing could not be satisfied.
b) Further, the Company advised that Trepang had advised that it was terminating the share sale agreement for the purchase
of the Dartbrook Project which was to be the subject of the postponed general meeting of shareholders. A a results the
Company’s work with respect to re-convening the postponed shareholders meeting was to cease.
c) While working through the re-convening of the postponed EGM, the Board was concerned that there was no fallback
position in the event that shareholders did not approve the Trepang Transaction at the postponed general meeting of
shareholders. If shareholders did not approve the Trepang Transaction at the postponed general meeting of shareholders,
the Company would be left in a perilous financial position with Trepang, Robinson and Paspaley immediately capable of
calling in their debt, with the Company having no means to repay that debt. Therefore, as a contingency plan, the Board had
been seeking fallback funding to repay the Trepang debt if shareholders did not approve the Trepang Transaction. The
Company was in the process of finalising that funding when it received termination of the Trepang Transaction.
As a result of the termination, the fallback position become an essential path to ensure the Company was suitably funded to
service its ongoing obligations. The Company announced the immediate launch of a 5.83 for 1 (5.83 new shares for every 1
existing share held on the record date) fully underwritten renounceable pro rata entitlement offer of shares in the Company
at A$0.34 per share (Offer Price) pursuant to which the Company will raise up to approximately A$100 million (before costs
and expenses and subject to rounding) (Entitlement Offer).
In conjunction with the launch of the Entitlement Offer, the Company announced it had entered into a non-binding agreement
with M Resources Pty Ltd, an entity associated with Matthew Latimore, with respect to a proposed 50:50 joint venture for the
operation of the Dartbrook mine and for potential future mine management services at the Dartbrook mine (including
marketing services, logistics services and technical services). In addition, M Resources committed A$10 million in sub-
underwriting to the Entitlement Offer and will be entitled to appoint a director to the Board, subject to compliance with laws
and the ASX Listing Rules.
•
On 8 September 2022, the company announced that:
a) Since the announcement of the Entitlement Offer both the Board and its largest shareholder, Trepang Services
Pty Limited (Trepang), had engaged in constructive discussions with respect to the future direction of the
Company, particularly with respect to the Company now being in the position to raise sufficient funds to repay
the debt it owes to Trepang (and its associates) (Trepang Debt) and the Company’s proposal to enter into a
50/50 joint venture with M Resources Pty Ltd (M Resources) to assist with the re-commissioning of the Dartbrook
Coal Project in the Hunter Valley, NSW (Dartbrook). The Company and Trepang had been investigating a
transaction structure which would see Trepang being provided an economic interest in Dartbrook by M
Australian Pacific Coal Limited
Notes to the financial statements
30 June 2022
Note 29. Events after the reporting period (continued)
50
Resources in consideration for Trepang extending the land access agreements and water rights to allow
underground mining operations at Dartbrook to continue.
b) The Company had received a further non-binding indicative proposal from Pacific Premium Coal Pty Ltd (PPC).
The proposal contained a number of pre-conditions, including the Company enter into an agreement with the
Trepang Parties to convert the Trepang Debt into a direct 40% interest in Dartbrook on terms acceptable to PPC,
or should such an agreement not be forthcoming from Trepang, then PPC would repay all outstanding debts to
the Trepang. The Company requested urgent advice from Trepang as to whether Trepang is willing to support
the proposal and satisfy the pre-condition. Trepang has advised the Company that they are seeking advice on
the proposal. A further response is awaited from Trepang. Further details of the proposal are as set out in the
announcement.
•
On 14 September 2022, the Company announced that it had received another conditional non-binding proposal from
Tetra Resources Pty Ltd and Javelin Private Capital Group LLC. Further details of the proposed transaction are as
set out in the announcement.
•
On 27 September 2022, the Company announced that it has agreed terms and entered into a binding term sheet
with each of Trepang Services Pty Ltd, M Resources Pty Ltd and Tetra Resources Pty Ltd for a strategic partnership
between all of the parties that aims to see Dartbrook re-commissioned as a coal producing mine as soon as
practicable (Strategic Partnership).
•
Under the Strategic Partnership, each of M Resources and Tetra Resources will earn a 20% direct joint venture
interest in Dartbrook. In addition, Trepang, if it agrees to extend the existing AQC access and compensation
agreement, various easement arrangements and term transfer of water rights on mutually agreeable commercial
terms to allow underground mining operations to continue at Dartbrook for the duration of mine life extension
approvals, will earn a 10% free-carried direct joint venture interest, subject to AQC obtaining any required
shareholder approvals. AQC will retain a 50% direct joint venture interest in Dartbrook. If M Resources and Tetra
Resources do not achieve production restart at Dartbrook within 27 months, each of M Resources and Tetra
Resources will relinquish their joint venture interest and that interest will revert to AQC. Further details of the
proposed transaction are as set out in the announcement.
•
On 27 September 2022, the Company announced that it had issued 2,500,000 fully paid ordinary shares upon
satisfaction of vesting conditions attaching to performance rights approved by shareholders in general meeting.
No other matter or circumstance has arisen since 30 June 2022 that has significantly affected, or may significantly affect
the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future
financial years.
Australian Pacific Coal Limited
Notes to the financial statements
30 June 2022
51
Note 30. Reconciliation of profit after income tax to net cash from operating activities
Consolidated
2022
2021
$
$
Loss after income tax expense for the year
(11,496,349)
(23,697,496)
Adjustments for:
Depreciation and amortisation
1,011,851
1,151,622
Impairment of exploration & evaluation
-
3,619,528
Impairment of Other Assets
-
5,503,899
Share-based payments
413,750
-
Accrued finance costs
7,152,413
8,299,216
Available for sale assets
(100,000)
-
Change in operating assets and liabilities:
Increase / (decrease) in trade and other receivables
(351,540)
18,402
Increase / (decrease) in prepayments
(12,446)
(25,763)
(Increase) / decrease in trade and other payables
417,578
(143,128)
Net cash from operating activities
(2,864,740)
(5,273,720)
Note 31. Earnings per share
Consolidated
2022
2021
$
$
Earnings per share for profit from continuing operations
Profit after income tax
(11,496,349) (23,697,496)
Non-controlling interest
Profit after income tax attributable to the owners of Australian Pacific Coal Limited
(11,496,349) (23,697,496)
Cents
Cents
Basic earnings per share
(22.7)
(46.7)
Diluted earnings per share
(22.7)
(46.7)
Number
Number
Weighted average number of ordinary shares
Weighted average number of ordinary shares used in calculating basic earnings per share
50,484,810
50,484,810
Adjustments for calculation of diluted earnings per share:
Options over ordinary shares
-
-
Convertible notes
-
-
Weighted average number of ordinary shares used in calculating diluted earnings per share
50,484,810
50,484,810
Convertible notes are considered anti-dilutive as the consolidated entity is loss making. Convertible notes potentially dilute
earnings per share in the future.
Australian Pacific Coal Limited
Notes to the financial statements
30 June 2022
52
Note 32. Share-based payments
Share-based payment expense recognised during the year:
2022
2021
$
$
Share-based payment expense recognised during the period:
Performance rights issued to a directors and management
413,750
-
413,750
-
Notes for the above table, relating to the year ended 30 June 2022
1. The Company has issued 2.500,000 performance rights under the company’s employee incentive plan. 1,250,000
performance rights will convert into Shares on a one for one basis in the event the Company’s share’s trade at a
VWAP of at least $0.25 for a minimum of 10 consecutive trading days. The balance of 1,250,000 performance rights
will convert into Shares on a one for one basis in the event the Company’s share’s trade at a VWAP of at least $0.35
for a minimum of 10 consecutive trading days.
Australian Pacific Coal Limited
Directors' declaration
30 June 2022
53
In the opinion of the directors of Australian Pacific Coal Limited (the Company)
●
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
●
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 1 to the financial statements;
●
the attached financial statements and notes give a true and fair view of the consolidated entity's financial position as at
30 June 2022 and of its performance for the financial year ended on that date; and
●
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due
and payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
___________________________
David Conry AM
Chairman and Chief Executive Officer
29 September 2022
Brisbane
54
SYDNEY · PENRITH · MELBOURNE · BRISBANE · PERTH · DARWIN
Liability limited by a scheme approved under Professional Standards Legislation
www.hallchadwick.com.au
AUSTRALIAN PACIFIC COAL LIMITED
AND CONTROLLED ENTITIES
ABN 49 089 206 986
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
AUSTRALIAN PACIFIC COAL LIMITED
REPORT ON THE AUDIT OF CONSOLIDATED FINANCIAL STATEMENTS
Report on the Financial Report
Opinion
We have audited the financial report of Australian Pacific Coal Limited and Controlled Entities (the
Group), which comprises the consolidated statement of financial position as at 30 June 2022, the
consolidated statement of profit and loss and other comprehensive income, the consolidated
statement of changes in equity and the consolidated statement of cash flows for the year then
ended, and notes to the consolidated financial statements, including a summary of significant
accounting policies and other explanatory information, and the directors’ declaration.
In our opinion the accompanying financial report of Australian Pacific Coal Limited and Controlled
Entities is in accordance with the Corporations Act 2001, including:
(a)
giving a true and fair view of the Group’s financial position as at 30 June 2022
and of its financial performance for the year then ended; and
(b)
complying with Australian Accounting Standards and the Corporations
Regulations 2001; and
Basis for Opinion
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. Our responsibilities under those standards are further described in the
Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110: Code of Ethics for Professional Accountants (the Code) that are
relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical
responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, has been
given to the directors of the company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 1 in the financial report, which indicates that the company incurred a
net loss of $11,496,349 during the year ended 30 June 2022 and, as of that date; the company's
total liabilities exceeded its total assets by $67,787,087. As stated in Note 1 these conditions,
along with other matters as set forth in Note 1, indicate that a material uncertainty exists that
may cast significant doubt about the company’s ability to continue as a going concern and
therefore, the company may be unable to realise its assets and discharge its liabilities in the
normal course of business and at the amounts stated in the financial report. Our opinion is not
modified in respect of this matter.
AUSTRALIAN PACIFIC COAL LIMITED
AND CONTROLLED ENTITIES
ABN 49 089 206 986
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF AUSTRALIAN PACIFIC COAL LIMITED
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report for the year ended 30 June 2022. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
Key Audit Matter
How Our Audit Addressed the Key Audit Matter
Exploration and evaluation expenditure
Refer to Note 13 ‘Exploration and Evaluation’
At 30 June 2022, the Consolidated Entity had capitalised
exploration
assets
of
$5,720,170.
The
Group’s
accounting policy in respect of exploration and evaluation
assets is outlined in Note 1.
This is a key audit matter because the carrying value of
the assets are material to the financial statements and
the significant judgements applied in determining whether
an indicator of impairment exists in relation to capitalised
exploration and expenditure assets in accordance with
Australian Accounting Standard AASB 6 Exploration for
and Evaluation of Mineral Resources.
Our Procedures included, amongst others:
•
We confirmed the existence and tenure of the
exploration assets in which the Group has a
contracted interest by obtaining a confirmation of the
titles.
•
In assessing whether an indicator of impairment
exists in relation to the Group’s exploration assets in
accordance with AASB 6 – Exploration for and
Evaluation of Mineral Resources, we:
o examined the minutes of the Group’s board
meetings and updates from the Group’s
exploration partners;
o discussed with management the Group’s ability
and intention to undertake further exploration
activities; and
o reviewed any tenements that have been
surrendered
ensuring
these
have
been
expensed as required.
•
We tested a sample of additions of capitalised
exploration expenditure to supporting documentation.
Key Audit Matter
How Our Audit Addressed the Key Audit Matter
Borrowings
Refer to Note 18 ‘Current - Borrowings’
The Group has $57,462,280 of current borrowings as at
30 June 2022.
This is considered to be a key area of audit focus due to
its materiality to the financial report.
Our Procedures included, amongst others:
•
We have reviewed the loan documentations
including the terms of the convertible notes and
secured loans and evaluated the accounting
treatment adopted by management in accounting
for the borrowings.
•
We recalculated the interest in relation to the
borrowings and ensured it has been accurately
recognised.
•
We assessed the adequacy of the Group’s
disclosures in respect of borrowings.
55
AUSTRALIAN PACIFIC COAL LIMITED
AND CONTROLLED ENTITIES
ABN 49 089 206 986
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF AUSTRALIAN PACIFIC COAL LIMITED
Information Other Than The Financial Report And Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the information included in the
Group’s annual report for the year ended 30 June 2022, but does not include the financial report and our auditor’s report
thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the
other information and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we
have performed, we conclude that there is a material misstatement of this other information, we are required to report that
fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in
accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the
directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free
from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do
so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with the Australian
Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement
and maintain professional skepticism throughout the audit. We also:
–
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control
–
Obtain an understanding of internal control relevant to the audit 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 Group’s internal control.
–
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
–
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group to cease to continue as
a going concern.
56
AUSTRALIAN PACIFIC COAL LIMITED
AND CONTROLLED ENTITIES
ABN 49 089 206 986
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF AUSTRALIAN PACIFIC COAL LIMITED
–
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in a
manner that achieves fair presentation.
–
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are responsible
for the direction, supervision and performance of the Group audit. We remain solely responsible for
our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most significance
in the audit of the financial report of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Report on the Remuneration Report
We have audited the remuneration report included in pages 6 to 10 of the directors’ report for the year ended
30 June 2022.
In our opinion, the remuneration report of Australian Pacific Coal Limited, for the year ended 30 June 2022,
complies with 300A of the Corporations Act 2001.
Responsibilities
The directors of the company are responsible for the preparation and presentation of the remuneration report
in accordance with Section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on
the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards.
Hall Chadwick
Sydney NSW 2000
SANDEEP KUMAR
Partner
Date: 29 September 2022
57
CORPORATE GOVERNANCE STATEMENT
Annual Report
Australian Pacific Coal Limited
Page 58
Year Ending 30 June 2022
ABN 49 089 206 986
Corporate Governance Statement
The Board of Directors of Australian Pacific Coal Limited (“the Company”) is responsible for establishing the
corporate governance framework of the Group having regard to the ASX Corporate Governance Council (“CGC”)
Principles and Recommendations and published guidelines. The Board guides and monitors the business and
affairs of the Company on behalf of the shareholders.
The Board seeks, where appropriate to adopt without modification, the CGC recommendations. Where there has
been any variation from the CGC recommendations, it is because the Board believes the Company is not as yet
of size, nor are its financial affairs of such complexity, to justify some of these recommendations. The Board is of
the view that with the exception of the departures to the CGC Corporate Governance Principles and
Recommendations as are set out below, it otherwise complied with all of the CGC Corporate Governance
Principles and Recommendations. The Company’s ASX Appendix 4G, which is a checklist cross-referencing the
ASX Principles and Recommendations to the relevant disclosures in either this statement or Annual Report, is
available on our website www.aqcltd.com.au. This statement has been approved by the Company’s Board of
Director’s and is current as at 29 September 2022.
The following table summarises the Company’s compliance with the CGC recommendations and states whether
the Company has complied with each recommendation.
Recommendation
Summary of the Company’s Compliance
Principle 1 – Lay solid foundations for management and oversight
Companies should clearly delineate the respective roles and responsibilities of its board and management
and regularly review their performance.
1.1: A listed entity should have a board charter
setting out:
a) the respective roles and responsibilities of its
board and management; and
b) those matters expressly reserved to the board
and those delegated to management.
A formal board charter has not been established given
the size of the Company’s Board and management.
The Board is ultimately accountable for the
performance of the Company and provides leadership
and sets the strategic objectives of the Company. It
appoints all senior executives and assesses their
performance on an annual basis. It is responsible for
overseeing
all
corporate
reporting
systems,
remuneration frameworks, governance issues, and
stakeholder communications. Decisions reserved for
the Board relate to those that have a fundamental
impact on the Company, such as material acquisitions
and takeovers, dividends and buybacks, material
profits upgrades and downgrades, and significant
closures.
Management is responsible for implementing Board
strategy,
day-to-day
operational
aspects,
and
ensuring that all risks and performance issues are
brought to the Board’s attention. They must operate
within the risk and authorisation parameters set by the
Board.
CORPORATE GOVERNANCE STATEMENT
Page 59
Australian Pacific Coal Limited
Annual Report
Corporate Governance Statement
ABN 49 089 206 986
Year Ending 30 June 2022
1.2: A listed entity should:
a) undertake appropriate checks before appointing
a person, or putting forward to security holders a
candidate for election, as a director; and
b) provide security holders with all material
information in its possession relevant to a
decision on whether or not to elect or re-elect a
director.
The Company undertakes relevant reference checks
prior to appointing a director, or putting that person
forward as a candidate to ensure that person is
competent, experienced, and would not be impaired
in any way from undertaking the duties of director.
The Company provides relevant information to
shareholders for their consideration about the
attributes of candidates together with whether the
Board supports the appointment or re-election of a
director.
1.3: A listed entity should have a written
agreement with each director and senior
executive setting out the terms of their
appointment.
The terms of the appointment of a non-executive
director, executive directors and senior executives
are agreed upon and set out in writing at the time of
appointment.
1.4: The Company secretary of a listed entity
should be accountable directly to the board,
through the chair, on all matters to do with the
proper functioning of the board.
The Company Secretary reports directly to the Board
through the Chairman and is accessible to all
directors.
1.5: A listed entity should:
a) have and disclose a diversity policy;
b) through its board or a committee of the board set
measurable objectives for achieving gender
diversity in the composition of its board, senior
executives and workforce generally; and
c) disclose in relation to each reporting period:
i.
the measurable objectives set for that
period to achieve gender diversity;
ii.
the entity’s progress towards achieving
those objectives; and
iii.
either:
i. the respective proportions of men and
women on the Board, in senior executive
positions and across the whole
organisation (including how the entity
has defined “senior executive” for these
purposes); or
ii. if the entity is a “relevant employer”
under the Workplace Gender Equality
Act, the entity’s most recent “Gender
Equality Indicators”, as defined in and
published under that Act
The Company has not adopted a formal Diversity
Policy nor has it set measurable objectives for
achieving gender diversity as it has a small number of
directors and employees and has limited opportunity
and scope to adopt formalised policy guidelines or
measurable objectives.
The Board is committed to developing diversity in its
workplace to assist the Company to meet its goals
and objectives by providing an environment whereby
appointments, advancement and opportunities are
considered on a fair and equitable basis. The
Company is committed to promoting a corporate
culture which embraces diversity when determining
the composition of the Board, senior management
and employees.
The Company will ensure that recruitment and
selection decisions are based on the principle of
merit, skills and qualifications and regardless of age,
gender, nationality, cultural background or any other
factor not relevant to the position. Past skills and
experience in the mining and exploration industries
will be a key determinant in the selection process.
At reporting date, the Company had three directors
and one company secretary all of which were male.
During the year the board did however include one
female participation.
No entity within the consolidated entity is a ‘relevant
employer’ for the purposes of the Workplace Gender
Equality Act 2012 (Cth) and therefore no Gender
Equality Indicators to be disclosed.
CORPORATE GOVERNANCE STATEMENT
Annual Report
Australian Pacific Coal Limited
Page 60
Year Ending 30 June 2022
ABN 49 089 206 986
Corporate Governance Statement
1.6: A listed entity should:
a) have and disclose a process for periodically
evaluating the performance of the Board, its
committees and individual directors; and
b) disclose, in relation to each reporting period,
whether a performance evaluation was
undertaken in the reporting period in accordance
with that process.
Due to its size the Company does not currently have
a formal process for evaluating the performance of the
Board, its committees or individual directors. The
Board conducts its own evaluation of the skills,
performance and remuneration of existing Directors
from
time
to
time.
Individual
Directors
may
recommend changes to the composition of the Board.
Until such time as the Company expands to justify an
expansion of Board members, the Board is of the
current opinion that such performance evaluation is
suitable for the Company.
1.7: A listed entity should:
a) have and disclose a process for evaluating the
performance of its senior executives at least
once every reporting period; and
b) disclose, in relation to each reporting period,
whether a performance evaluation was
undertaken in the reporting period in accordance
with that process.
The Board reviews the performance of senior
executives periodically.
No performance evaluation of the executives was
undertaken during the reporting period given the
status of the company, its business operations and
the composition of its executive.
Principle 2 – Structure the board to be effective and add value
A listed entity should be of an appropriate size and collectively have the skills, commitment and knowledge of
the entity and the industry in which it operates, to enable it to discharge its duties effectively and to add value.
2.1: The board of a listed entity should:
a) have a nomination committee which:
i.
has at least three members, a majority of
whom are independent directors; and
ii.
is chaired by an independent director,
and disclose:
iii. the charter of the committee;
iv. the members of the committee; and
v. as at the end of each reporting period, the
number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; or
b) if it does not have a nomination committee,
disclose that fact and the processes it employs
to address board succession issues and to
ensure that the board has the appropriate
balance of skills, knowledge, experience,
independence and diversity to enable it to
discharge its duties and responsibilities
effectively.
The Company does not have a separate nomination
committee. Given the size of the Board, the Board as
a whole decides the selection of members of the
Board and makes recommendations to shareholders
for election of Directors. Each Board member is
responsible
for
assessing
the
necessary
competencies of the Board members to add value to
the Company, reviewing Board succession plans and
evaluating the Board’s performance.
CORPORATE GOVERNANCE STATEMENT
Page 61
Australian Pacific Coal Limited
Annual Report
Corporate Governance Statement
ABN 49 089 206 986
Year Ending 30 June 2022
2.2: A listed entity should have and disclose a
board skills matrix setting out the mix of skills and
diversity that the board currently has or is looking
to achieve in its membership.
The current Board members represent individuals
that
have
extensive
experience
as
well
as
professionals that bring to the Board their specific
skills in order for the Company to achieve its strategic,
operational
and
compliance
objectives.
Their
suitability to the directorship has therefore been
determined primarily on the basis of their ability to
deliver outcomes in accordance with the Company’s
short and long term objectives and therefore deliver
value to shareholders.
All Board members are expected to demonstrate the
following attributes:
Board Member Attributes
Leadership
Represents the Company
positively amongst stakeholders
and external parties; decisively
acts ensuring that all pertinent
facts are considered; leads
others to action; proactive
solution seeker.
Ethics and
integrity
Awareness of social,
professional and legal
responsibilities at individual,
Company and community level;
ability to identify independence
conflicts; applies sound
professional judgement;
identifies when external counsel
should be sought; upholds
Board confidentiality; respectful
in every situation.
Communication
Effective in working within
defined corporate
communications policies; makes
constructive and precise
contribution to the Board both
verbally and in written form; an
effective communicator with
executives.
Corporate
governance
Experienced director that is
familiar with the mechanisms,
controls and channels to deliver
effective governance and
manage risks.
2.3: A listed entity should disclose:
a) the names of the directors considered by the
board to be independent directors;
b) if a director has an interest, position, association
or relationship of the type described in Box 2.3
Details of the Board of directors, their appointment
dated, length of service and independence status is
as follows:
CORPORATE GOVERNANCE STATEMENT
Annual Report
Australian Pacific Coal Limited
Page 62
Year Ending 30 June 2022
ABN 49 089 206 986
Corporate Governance Statement
but the board is of the opinion that it does not
compromise the independence of the director,
the nature of the interest, position, association or
relationship in question and an explanation of
why the board is of that opinion; and
c) the length of service of each director.
Mr David Conry AM: Appointed 2 April 2020, served
more than 2 year, Independent Executive Director.
Mr Tony Lalor: Appointed 2 November 2020, served
more than 1 year, Independent Non-Executive
Director.
Mr Craig McPherson: Appointed 6 December 2021,
served less than 1 year, Independent Non-executive
Director.
2.4: A majority of the board of a listed entity
should be independent directors.
The board consists of three directors, all of who are
considered independent.
2.5: The chair of the board of a listed entity should
be an independent director and, in particular,
should not be the same person as the CEO of the
entity.
The current Chair, Mr David Conry AM, is considered
an independent director however he also fulfills the
role of CEO.
Given the size and status of the Company and its
operational status, the Board considered this to be
appropriate.
2.6: A listed entity should have a program for
inducting new directors and for periodically
reviewing whether there is a need for existing
directors to undertake professional development
to maintain the skills and knowledge needed to
perform their role as directors effectively.
New directors undertake an induction program
coordinated by the Company Secretary that briefs
and informs the director on all relevant aspects of the
Company’s operations and background. Directors are
encouraged to undertake director development
programs to ensure that directors can enhance their
skills and remain abreast of important developments,
however no formal program of review has been
implemented given the status of the Company and its
operational status.
Principle 3 – Instil a culture of acting lawfully, ethically and responsibly
A listed entity should instil and continually reinforce a culture across the organisation of acting lawfully, ethically
and responsibly.
3.1: A listed entity should articulate and disclose
its values.
A formal value statement has not been established or
disclosed given the size of the Company’s Board and
management.
The Company is committed to conducting all of its
business activities fairly, honestly with a high level of
integrity, and in compliance with all applicable laws,
rules and regulations. The Board and management
are dedicated to high ethical standards and recognise
and
support
the
Company’s
commitment
to
compliance with these standards.
3.2: A listed entity should:
a) have and disclose a code of conduct for its
directors, senior executives and employees; and
b) ensure that the board or a committee of the
board is informed of any material breaches of
that code.
A formal code of conduct has not been established
given the size of the Company’s Board and
management.
CORPORATE GOVERNANCE STATEMENT
Page 63
Australian Pacific Coal Limited
Annual Report
Corporate Governance Statement
ABN 49 089 206 986
Year Ending 30 June 2022
3.3: A listed entity should:
a) have and disclose a whistleblower policy; and
b) ensure that the board or a committee of the
board is informed of any material incidents
reported under that policy.
The Company’s Whistleblower Policy is available on
the Company’s website. Any material breaches of the
Whistleblower Protection Policy are to be reported in
accordance with this policy.
3.4: A listed entity should:
a) have and disclose an anti-bribery and corruption
policy; and
b) ensure that the board or a committee of the
board is informed of any material breaches of
that code.
A formal anti-bribery and corruption policy has not
been established given the size of the Company’s
Board and management.
Principle 4 – Safeguard the integrity of corporate reports
A listed entity should have formal and rigorous processes that independently verify and safeguard the
integrity of its corporate reporting.
4.1 - The board of a listed entity should:
a) have an audit committee which:
i.
has at least three members, all of whom are
non-executive directors and a majority of
whom are independent directors; and
ii.
is chaired by an independent director, who
is not the chair of the board, and disclose:
iii. the charter of the committee;
iv. the relevant qualifications and experience of
the members of the committee; and
v. in relation to each reporting period, the
number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; or
b) if it does not have an audit committee, disclose
that fact and the processes it employs that
independently verify and safeguard the integrity
of its corporate reporting, including the
processes for the appointment and removal of
the external auditor and the rotation of the audit
engagement partner.
Given the current membership of the Board and the
size, organisational complexity and scope of
operations, the same efficiencies of an audit
committee would not be derived from a formal
committee structure.
Responsibility for establishing and maintaining a
framework of internal control and setting appropriate
standards for the management of the Company rests
with the Board. The Board is also responsible for the
integrity of financial information in the financial
statements; audit, accounting and financial reporting
obligations; safeguarding the independence of the
external auditor; and financial risk management.
4.2: The board of a listed entity should, before it
approves the entity’s financial statements for a
financial period, receive from its CEO and CFO a
declaration that, in their opinion, the financial records
of the entity have been properly maintained and that
the financial statements comply with the appropriate
accounting standards and give a true and fair view of
the financial position and performance of the entity
and that the opinion has been formed on the basis of
a sound system of risk management and internal
control which is operating effectively.
For the financial year ended 30 June 2022 the
Company’s CEO and CFO provided the Board with
the required declarations.
CORPORATE GOVERNANCE STATEMENT
Annual Report
Australian Pacific Coal Limited
Page 64
Year Ending 30 June 2022
ABN 49 089 206 986
Corporate Governance Statement
4.3: A listed entity should disclose its process to verify
the integrity of any periodic corporate report it
releases to the market that is not audited or reviewed
by an external auditor.
Given the current size of the Board and management,
the Company ensures that the corporate reports it
releases are reviewed by the Board to ensure the
financial and technical content is accurate, balanced
and understandable.
Principle 5 – Make timely and balanced disclosure
A listed entity should make timely and balanced disclosure of all matters concerning it that a reasonable
person would expect to have a material effect on the price or value of its securities.
5.1: A listed entity should have and disclose a
written policy for complying with its continuous
disclosure obligations under listing rule 3.1.
The Company is committed to promoting investor
confidence and ensuring that shareholders and the
market are provided with timely and balanced
disclosure of all material matters concerning the
Company, as well as ensuring that all shareholders
have equal and timely access to externally available
information issued by the Company, and takes its
continuous disclosure obligations seriously.
Primary responsibility rests with the Chief Executive
Officer, while the Company Secretary is primarily
responsible for communications with the Exchange.
Whilst the Company does not have a formal policy,
the
Company
notifies
the
ASX
promptly
of
information:
• concerning the Company, that a reasonable person
would expect to have a material effect on the price or
value of the Company’s securities; and
• that would, or would be likely to, influence persons
who commonly invest in securities in deciding
whether to acquire or dispose of the Company’s
securities.
Announcements are made in a timely manner, are
factual and do not omit material information in order
to avoid the emergence of a false market in the
Company’s securities.
Given the size of the Consolidated Entity, a formal
continuous disclosure policy has not been adopted.
5.2: A listed entity should ensure that its board
receives copies of all material market
announcements promptly after they have been
made.
Given the current size of the Board and management,
the Company aims to ensure that all market
announcements are received prior to release to the
market, but if not they are promptly distributed at the
time of market announcement.
5.3: A listed entity that gives a new and
substantive investor or analyst presentation
should release a copy of the presentation
materials on the ASX Market Announcements
Platform ahead of the presentation.
Given the status of the Company’s operations, the
company has not recently provided an presentations
to investors or analysts.
CORPORATE GOVERNANCE STATEMENT
Page 65
Australian Pacific Coal Limited
Annual Report
Corporate Governance Statement
ABN 49 089 206 986
Year Ending 30 June 2022
The company will comply in the event there is a future
presentation to investors.
Principle 6 – Respect the rights of security holders
A listed entity should respect the rights of its security holders by providing them with appropriate information
and facilities to allow them to exercise those rights effectively.
6.1: A listed entity should provide information about
itself and its governance to investors via its website.
The Company maintains information in relation to
governance
documents,
directors
and
senior
executives, annual report, ASX announcements and
contact details on the Company’s website.
The Company is committed to:
•
Communicating effectively with its shareholders
and ensuring that it is easy for shareholders to
communicate with the Company;
•
Complying
with
its
continuous
disclosure
obligations applicable to the ASX listing rules and
other regulations; and
•
Ensuring that the shareholders and other
stakeholders are provided with timely and full
information about the Company’s activities.
6.2: A listed entity should have an investor relations
program
that
facilitate
effective
two-way
communication with investors.
The Company does not have a formal investor
relations program. The Board
and
Company
Secretary engage with investors at the AGM, in
relation to material announcements, and respond to
shareholder enquiries on an ad hoc basis. Material
communications are dispatched to investors either via
email, surface mail, and/or via market announcement.
6.3: A listed entity should disclose how it facilitates
and encourages participation at meetings of security
holders
To facilitate and to encourage participation at
meetings of shareholders, the Company ensures that
information is communicated to its shareholders
through:
•
Posting information on the Company’s web site at
www.aqcltd.com;
•
The distribution of Notice of Meetings and other
information directly to shareholders through
letters, email and other forms of communications;
•
Ensuring that auditors are invited to the Annual
General Meeting to consider questions regarding
the conduct of the audit and the preparation and
content of the auditor report; and
•
Allowing
shareholders
the
opportunity
at
meetings to discuss resolutions.
6.4: A listed entity should ensure that all substantive
resolutions at a meeting of security holders are
decided by a poll rather than by a show of hands.
The Company will ensure that all substantive
resolutions at shareholders meetings are decided by
poll rather than a show of hands.
CORPORATE GOVERNANCE STATEMENT
Annual Report
Australian Pacific Coal Limited
Page 66
Year Ending 30 June 2022
ABN 49 089 206 986
Corporate Governance Statement
6.5: A listed entity should give security holders the
option to receive communications from, and send
communications to, the entity and its security registry
electronically.
The Company engages its share registry to manage
the majority of communications with shareholders.
Shareholders
are
encouraged
to
receive
correspondence from the Company electronically,
thereby facilitating a more effective, efficient and
environmentally friendly communication mechanism
with
shareholders.
Shareholders
not
already
receiving information electronically can elect to do so
through the share registry, Link Market Services
Limited at:
https://www.linkmarketservices.com.au/corporate/Inv
estorServices/Investor-Services.html.
Principle 7 – Recognise and manage risk
A listed entity should establish a sound risk management framework and periodically review the effectiveness
of that framework.
7.1: The board of a listed entity should:
a) have a committee or committees to oversee risk,
each of which:
i.
has at least three members, a majority of
whom are independent directors; and
ii.
is chaired by an independent director, and
disclose:
iii. the charter of the committee;
iv. the members of the committee; and
v. as at the end of each reporting period, the
number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; or
b) if it does not have a risk committee or
committees that satisfy a) above, disclose that
fact and the processes it employs for overseeing
the entity’s risk management framework
The Company has not established a separate Risk
Committee as it is considered that the current size of
the Board does not warrant the formal establishment
of a separate committee. The Board as a whole
therefore performs the function of such a committee
which includes the setting of corporate governance
policy and exercising due care and skill in assessing
risk, developing strategies to mitigate such risk,
monitoring the risk and the Company’s effectiveness
in managing it. The Company maintains internal
controls which assist in managing enterprise risk, and
these are reviewed as part of the scope of the external
audit, with the auditor providing the Board with
commentary on their effectiveness and the need for
any additional controls. The CEO is responsible for
monitoring operational risk, ensuring all relevant
insurances are in place, and ensuring that all
regulatory and compliance obligations of the
Company are satisfied.
7.2: The board or a committee of the board
should:
a) review the entity’s risk management framework
at least annually to satisfy itself that it continues
to be sound; and
b) disclose, in relation to each reporting period,
whether such a review has taken place
The
Board
is responsible for reviewing the
Company’s policy on risk management and risk
oversight. The Board did not conduct a formal review
of the Company’s risk management framework during
the reporting period due to the nature of the
operations during the year.
CORPORATE GOVERNANCE STATEMENT
Page 67
Australian Pacific Coal Limited
Annual Report
Corporate Governance Statement
ABN 49 089 206 986
Year Ending 30 June 2022
7.3: A listed entity should disclose:
a) if it has an internal audit function, how the
function is structured and what role it performs;
or
b) if it does not have an internal audit function, that
fact and the processes it employs for evaluating
and continually improving the effectiveness of its
risk management and internal control processes.
The Company does not have a dedicated internal
audit function. The responsibility for risk management
and internal controls lies with both the CEO and CFO
who continually monitor the Company’s internal and
external risk environment. Necessary action is taken
to protect the integrity of the Company’s books and
records
including
by
way
of
design
and
implementation of internal controls, and to ensure
operational efficiencies, mitigation of risks, and
safeguard of Company assets.
7.4: A listed entity should disclose whether it has any
material exposure to economic, environmental and
social sustainability risks and, if it does, how it
manages or intends to manage those risks.
Refer to the Company’s Annual Report for disclosures
relating to the Company’s material business risks
(including any material exposure to economic,
environmental or social sustainability risks). Refer to
commentary at Recommendations 7.1 and 7.2 for
information on the Company’s risk management
framework.
Principle 8 – Remunerate fairly and responsibly
A listed entity should pay director remuneration sufficient to attract and retain high quality directors and design
its executive remuneration to attract, retain and motivate high quality senior executives and to align their
interest with the creation of value for security holders.
8.1: The board of a listed entity should:
a) have a remuneration committee which:
i.
has at least three members, a majority of
whom are independent directors; and
ii.
is chaired by an independent director, and
disclose:
iii. the charter of the committee;
iv. the members of the committee; and
v. as at the end of each reporting period, the
number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; or
b) if it does not have a remuneration committee,
disclose that fact and the processes it employs
for setting the level and composition of
remuneration for directors and senior executives
and ensuring that such remuneration is
appropriate and not excessive.
The Company has not established a separate
Remuneration Committee as it is considered that the
current size of the Board does not warrant the formal
establishment of a separate committee. The Board as
a whole therefore performs the function of such a
committee which includes setting the Company’s
remuneration structure, determining eligibilities in
relation to incentive schemes, assessing performance
and remuneration of senior management and
determining the remuneration and incentives of the
Board and executives. The Board may obtain external
advice from independent consultants in determining
the Company’s remuneration practices, including
remuneration levels, where considered appropriate.
The board has not implemented any share incentive
arrangements to date, this may be reviewed upon
commencement of operations.
8.2: A listed entity should separately disclose its
policies and practices regarding the remuneration of
non-executive directors and the remuneration of
executive directors and other senior executives.
Non-executive directors’ remuneration is fee based
with the level of remuneration reflective of the
anticipated time commitments and responsibilities of
the position.
CORPORATE GOVERNANCE STATEMENT
Annual Report
Australian Pacific Coal Limited
Page 68
Year Ending 30 June 2022
ABN 49 089 206 986
Corporate Governance Statement
The Board considers the procedures, policies and key
performance indicators used to measure the
performance of key executives and directors. Any
equity based executive remuneration may be made in
accordance
with
thresholds
approved
by
shareholders and developed over time.
Full discussion of the Company’s remuneration
philosophy
and
framework
and
remuneration
received by directors and executives in the current
financial year is contained in the Remuneration
Report section of the Directors’ Report.
8.3: A listed entity which has an equity-based
remuneration scheme should:
a) have a policy on whether participants are
permitted to enter into transactions (whether
through the use of derivatives or otherwise)
which limit the economic risk of participating in
the scheme; and
b) disclose that policy or a summary of it
Where a director or other senior executive uses
derivatives or other hedging arrangements over
vested securities of the Company, this will be
disclosed. There was no equity based renumeration
during the reporting period.
ASX ADDITIONAL INFORMATION
Page 69
Australian Pacific Coal Limited
Annual Report
ASX Additional Information
ABN 49 089 206 986
Year Ending 30 June 2022
Additional information required by the Australian Stock Exchange Limited and not shown elsewhere in this report is as follows.
This information is current as 27 September 2022.
1.
Shareholding
a.
Distribution of Shareholders – Ordinary Securities
Number
Number
Category (size of holding)
of holders
of shares held
1 – 1,000
319
134,620
1,001 – 5,000
382
983,363
5,001 – 10,000
131
1,024,357
10,001 – 50,000
164
3,402,150
50,001 – 100,000
26
1,932,200
100,001 – and over
31
45,505,120
Total
1,053
52,984,810
b.
The number of shareholdings held in less than a marketable parcel of 500 shares (closing price on 27
September 2022) is 351 and they hold 169,072 shares.
c.
The names of the substantial holders in the company as at 27 September 2022 are:
Number
Substantial Holder
of shares
Trepang Services Pty Ltd
21,061,667
Mr Buguo Wang
5,180,000
Jet Arm Limited
5,000,000
d.
Voting Rights
The voting rights attached to each class of equity security are as follows:
Ordinary shares:
—
Each ordinary share is entitled to one vote when a poll is called, otherwise each member present
at a meeting or by proxy has one vote on a show of hands.
Unlisted options:
—
Options do not entitle the holders to vote in respect of the option, nor participate in dividends,
when declared, until such time as the options are exercised and subsequently registered as
ordinary shares.
ASX ADDITIONAL INFORMATION
Annual Report
Australian Pacific Coal Limited
Page 70
Year Ending 30 June 2022
ABN 49 089 206 986
ASX Additional Information
e.
20 Largest Shareholders — Ordinary Shares
Name
Number of Ordinary
Fully Paid Shares
Held
% Held of
Issued
Ordinary
Capital
1.
TREPANG SERVICES PTY LTD
19,770,000
37.31
2.
MR BUGUO WANG
5,163,149
9.74
3.
JET ARM LIMITED
5,000,000
9.44
4.
SAMBOR TRADING PTY LTD
2,653,202
5.01
5.
HALIKOS PTY LTD
1,923,080
3.63
6.
ALLSTATE ASSET CORPORATION PTY LTD
1,829,034
3.45
7.
CITICORP NOMINEES PTY LTD
1,383,789
2.76
8.
MR NICHOLAS THEODORE JAMES PASPALEY
1,291,667
2.44
9.
DAVID MARK CONRY
1,000,000
1.89
10.
10 CHRISTOPHER ST PTY LTD
750,000
1.42
10.
MCORP HOLDINGS PTY LTD
750,000
1.42
11.
MR MARK ALAN ROWE & MRS CHRISTINE LEE ROWE
433,290
0.82
12.
MIBRO (NT) PTY LTD
430,000
0.81
13.
MR DONALD EDGAR HOAR
312,500
0.59
14.
SHEMARIAH PTY LTD
296,635
0.56
15.
MRS REBECCA SUE
258,045
0.49
16.
TANUS FISHERIES PTY LTD
255,000
0.48
17.
MR PETER GRAHAM WELLS
252,159
0.48
18.
MR BOUTROS SAAD & MRS MARIAM SAAD
230,421
0.43
19.
HOFFMAN CAPITAL PTY LTD
151,000
0.28
20.
AG & T THIEL SUPER PTY LTD
150,000
0.28
44,282,971
83.58
f.
Unlisted options
Nil
2.
Stock Exchange Listing
Quotation has been granted for all the ordinary shares of the company on all Member Exchanges of the Australian Stock
Exchange Limited (ASX Code: AQC).
Competent Persons Statement
All exploration results and mineral resources referred to in this Annual Report have previously been announced to the market by the Company
in accordance with the requirements of Chapter 5 of the ASX Listing Rules and the JORC Code 2012, including as to the requirements for a
statement from a Competent Person; and the relevant announcements have been referred to in the body of the Annual Report. The Company
confirms that it is not aware of any new information or data that materially affects that information.
CORPORATE DIRECTORY
Annual Report
Australian Pacific Coal Limited
Page 71
Year Ending 30 June 2022
ABN 49 089 206 986
Corporate Directory
DIRECTORS
Mr David Conry AM
Mr Tony Lalor
Mr Craig McPherson
COMPANY SECRETARY
Mr Craig McPherson
AUDITORS
Hall Chadwick, Chartered Accountants
Level 14, 41 Collins Street
Melbourne VIC 3004
SHARE REGISTRY
Link Market Services Limited
Level 21, 10 Eagle Street
Brisbane QLD 4000
Phone: 1300 554 474
www.linkmarketservices.com.au
REGISTERED OFFICE
Australian Pacific Coal Limited
Level 1/371 Queen Street
Brisbane QLD 4000
Phone: +61 7 3221 0679
Fax: +61 7 3229 9323
www.aqcltd.com