Bowen Coking Coal Ltd Annual Report 2018

FY2018 Annual Report · Bowen Coking Coal Ltd

Loading PDF…

(FORMERLY CABRAL RESOURCES LIMITED)

ABN 72 064 874 620

And its Controlled Entities

Annual Financial Report
30 June 2018

CONTENTS PAGE

Corporate Directory .................................................................................................................. 3

Directors’ Report ...................................................................................................................... 4

Auditor’s Independence Declaration .......................................................................................... 20

Statement of Profit or Loss and Other Comprehensive Income ..................................................... 21

Statement of Financial Position ................................................................................................ 22

Statement of Changes in Equity ............................................................................................... 23

Statement of Cash Flows ......................................................................................................... 24

Notes to the Financial Statements ............................................................................................ 25

Directors’ Declaration ............................................................................................................. 49

Independent Auditors’ Report .................................................................................................. 50

Corporate Information ............................................................................................................ 53

Page 2

CORPORATE DIRECTORY

Directors:

Ariel (Eddie) King (Non-Executive Chairman)
Gerhard Redelinghuys (Managing Director)
Steven Formica (Non-Executive Director)
James Agenbag (Non-Executive Director)

Company Secretary:

Mr Stephen Brockhurst

Registered Office and
Principal place of
Business:

Share Register:

Auditors:

Level 19
1 Eagle Street
BRISBANE QLD 4000
Telephone: +61 7 3360 0837
Facsimile: +61 7 3360 0222

Link Market Services Limited
Level 12, 680 George Street
Sydney NSW 2000

Postal Address
Locked Bag A14
Sydney South NSW 1235

RSM Australia Partners
Level 6
340 Adelaide Street
Brisbane QLD 4000

Securities Exchange
Listing:

Bowen Coking Coal Limited
Australian Securities Exchange Limited (Code: “BCB”)

Company Numbers:

ACN: 064 874 620
ABN: 72 064 874 620

Page 3

DIRECTORS' REPORT

Your Directors present their report on the Bowen Coking Coal Consolidated Entity, consisting of Bowen
Coking Coal Limited (Formerly Cabral Resources Limited, “BCB” or "the Company") and the entities it
controlled at the end of, or during, the year ended 30 June 2018.

DIRECTORS

The names of the Directors of the Company at any time during or since the end of the year are:



Ariel (Eddie) King
Non-Executive Chairman

Gerhard Redelinghuys
Managing Director (appointed 27 September 2017)

James Agenbag
Non-Executive Director (appointed 27 September 2017)

Gregory D’Arcy
Former Non-Executive Director (resigned 27 September 2017)

Steven Formica
Non-Executive Director

PRINCIPAL ACTIVITIES

The principal activities of the Bowen Coking Coal Consolidated Entity consisted of the acquisition,
exploration and development of coal projects with a primary focus on Metallurgical coal.

RESULTS

The loss after tax for the year ended 30 June 2018 was $1,327,448 (30 June 2017: $648,291).

REVIEW OF OPERATIONS

On 28 September 2017 the Company successfully completed a Public Offer pursuant to the Prospectus
lodged on 3 August 2017 to raise $4.6 million through the issue of 200,434,782 fully paid ordinary
shares in the Company at an issue price of 2.3 cents per share. The acquisitions of Coking Coal One Pty
Ltd (formerly named Bowen Coking Coal Pty Ltd) from Cape Coal Pty Ltd and the Comet Ridge Project
(EPC 1230 and MLA 700005) from Acacia Coal Ltd (ASX: AJC) occurred on 28 September 2017. The
Company issued 70,000,000 fully paid ordinary shares to Cape Coal Pty Ltd, and issued Acacia Coal Ltd
17,391,304 fully paid ordinary shares and paid to it the sum of $350,000, in respect of these acquisitions.

Completion of the acquisition of the Cooroorah Project (MDL 453) and the Hillalong Project (EPC 1824)
from Area Coal Pty Ltd, a subsidiary of Australian Pacific Coal Ltd (ASX:AQC), occurred on 2 October
2017. The Company issued 54,347,826 fully paid ordinary shares to Area Coal Pty Ltd in respect of
these acquisitions.

Cooroorah (MDL453, 100%)

During the year, the Company’s main focus has been its 100% owned Cooroorah Project, located
between Coronado Coal’s Curragh mine and the Anglo, Marubeni and Sojitz owned Jellinbah mine in the
Bowen Basin, Central Queensland.

Page 4

Following on from its ongoing exploration at the project, BCB announced in April 2018 an increase of
23% in the Cooroorah Resource estimate, now estimated at 154Mt (68Mt Indicated and 86Mt Inferred,
see Table 1 below).

The estimate also includes a Maiden Resource of 37Mt in the Mammoth seam, and a new shallow open
pit target area in the Burngrove Measures on the Eastern side of the Jellinbah fault. Final rehabilitation
of the drill sites and tracks were completed during the June quarter.

BCB is currently working closely with Xenith Consulting and Xtract Consulting to plan follow-up drilling
at Cooroorah to target an increase in the Mammoth seam Resource. The Company hopes that this
follow up drilling will provide an increase in confidence level to such an extent that it could support the
commencement of a Pre-feasibility study at Cooroorah.

Table 2. Cooroorah Resource estimate (April 2018).

Seam

CASTOR

MAMMOTH

POLLUX

PISCES

TOTAL

Indicated
(Mt)
15

Inferred
(Mt)
5

Total
(Mt)
20

154

In June 2018, BCB announced the outcome of the maiden coal quality analysis for its intersection of the
Mammoth coal seam which appears to have different characteristics to the two lower seams.
Encouraging raw coal quality prompted the Company to engage M Resources, a well-known coal trader
and consultancy which specialises in metallurgical coal supply to steel mills to analyse the coal for coking
coal properties, as hard coking coal trades at a premium price to PCI in the market.

The outcome of this analysis proved that the Mammoth seam hosts an array of highly desirable coal
qualities. The primary coking coal fraction varies between 40% and 45%, with a secondary PCI product
yielding between 45% and 50%. The total laboratory yield is estimated in excess of 90%, making it one
of the highest yielding metallurgical coals in the Bowen Basin.

Coking coal is used to make coke which in turn is used in blast furnaces to make steel. Coke
manufacturers blend various types of coal with different coal qualities which impact the coal’s behaviour
and contribution in the coke-making process. Outstanding qualities such as low ash, low sulphur, low
phosphorus and high fluidity allows the addition of lower quality coking coals to the coke blend, thus
attracting a premium on the standard price.

Initial analysis suggests that the Cooroorah coking product could attract a premium for its very low ash
and high CSN but would be penalised for low fluidity to ultimately end up close to the pricing benchmark
for a hard coking coal 64 CSR product.

Page 5

Table 3. Cooroorah coking coal compared to traded coking coal qualities(M Resources).

The Company engaged John T Boyd Mining Consultants to update the Cooroorah Scoping Study with
the latest resource estimate and coal quality results. The outcome of the study is expected in late August
2018.

Planning for the Cooroorah follow-up exploration is underway through Xenith Consulting, and land owner
engagement and cultural heritage clearance for the envisaged drill sites are in progress.

Mt Hillalong and Hillalong East (100%)

The Mt Hillalong Project (PC 1824) is located in the northern Bowen Basin approximately 105 km west-
southwest of Mackay. The tenement is approximately 48km2 and is located to the west of the Mount
Hillalong Anticline, approximately 16 km northwest of Rio Tinto’s Hail Creek Mine.

Mt Hillalong contains the Rangal coal measures and Moranbah coal measures with initial focus on the
Elphinstone and Hynds seams (Leichardt and Vermont equivalents) within the Rangal measures which
are currently being mined at proximate mines. The seams sub-crop in the tenement and steeply dip to
the west at the limb of the Hillalong anticline.

As such and following shareholder approval being obtained in May 2018, BCB completed the acquisition
of the Hillalong East Project from Rio Tinto Exploration Pty Ltd (“RTX”) (comprising EPCs 1860 and 2141)
located adjacent to the east of the Company’s Mt Hillalong Project (See Figure 1 below, light blue areas).
Tenement transfers have received indicative ministerial approval and are in the process of finalisation.

Under the terms of the Agreement, the Company made a $100,000 cash payment to RTX, issued
30,000,000 ordinary fully paid shares to Cape Coal Pty Ltd, and reimbursed Cape Coal for direct legal
expenses incurred in relation to the Hillalong East Project of $45,439. The Shares issued to Cape Coal
are subject to an ASX-imposed 12 month escrow period from the date of issue.

Page 6

Previous exploration by RTX has determined that the same coal seams from the Moranbah and Rangal
Coal Measures are found at shallower depths on the Hillalong East tenement, ranging from as shallow
as 24 metres to more than 370 metres at thicknesses between 2 and 5.5 metres. Exploration by RTX
has also intersected seams from the Moranbah Measures from 28 metres, which will be investigated
further as a secondary target.

Following the acquisition, BCB engaged Xstract Mining Consultants to consolidate all the historic and Rio
Tinto Exploration data into a geological model and to recommend an exploration plan to advance the
Hillalong East Project.

Xstract estimated an exploration target of between 61Mt and 409Mt of high quality coking coal and low
volatile PCI in both Open Pit and Underground exploration targets for the Rangal and Moranbah
measures. However as there has been insufficient exploration to estimate a Mineral Resource, the
quantity and grade of an exploration target is conceptual in nature and it is uncertain if further
exploration will result in the estimation of a Mineral Resource.

Table 4. Summary of seam intersections in the Rangal Coal Measures by the RTX
exploration program.

Hole

Tenement Seam

FROM

intersection

Thickness
(m)

HILL005 EPC2141

Elphinstone

21.50

25.25

Hynds

102.76

107.36

HILL008 EPC2141

Elphinstone

24.73

Hynds

86.27

28.70

89.40

HILL002 EPC 1824

Elphinstone

319.28

323.85

HILL003 EPC1824

Elphinstone

157.35

163.05

Hynds

172.43

182.03

174.90

185.70

3.75

4.60

3.97

3.13

4.57

5.70

2.47

3.67

The Company is working with its consultants to analyse the most cost-efficient way to advance the
Hillalong exploration program, which will soon commence with site approvals for the drilling program
and land owner engagement. The initial program will focus on testing the areas around the shallow
intersections of the Elphinstone seam for potential open pit extraction.

Isaac River Project

During December the Company entered into an agreement with Aquila Resources to acquire the Isaac
River Project for a cash consideration of $200,000. The Isaac River Project consists of Mineral
Development Licence 444 (“MDL 444”) and Exploration Permit for Coal 830 (“EPC 830”).

BMA’s (BHP Mitsubishi Alliance) Daunia Mine is located to the immediate west, and Peabody’s Moorvale
West resource is located to the immediate north of the Isaac River Project (Figure 2).

The Isaac River Project is prospective for coal from the Leichardt seam, the main target seam in the
Rangal Coal Measures which is extensively mined by numerous operating mines. The target seam was
intersected in several drill holes on MDL 444 between 35m and 142m deep with seam thicknesses
varying between 2m and 5.5m. The Vermont seam was also encountered in several drill holes, but is
not considered a priority target at this stage due to lower quality. However, in the future it may open
up some blending optionality to proximate mines and projects.

Page 7

Indicative coal quality and washability analysis have been conducted on hole (E830041C) only by A&B
Mylec Pty Ltd, which indicated the potential for an 8.9% ash semi-soft coking coal product with a
secondary thermal coal product (6900kcal air dried) at a combined total simulated yield of 87%. Further
quality tests, blending options and washability analysis are planned for 2018.

A section of EPC 830 is overlain by BMA’s Mining Lease 1781 for the Daunia Mine in the south (which
section is excluded from EPC 830). ML 70115, Daunia East also directly abuts MDL 444, as can be seen
in Figures 2. Daunia targets the same seams from the Rangal Coal Measures (Leichhardt and Vermont)
and extracts the seams via open cut mining. Drill holes and seismic lines close to the western boundary
with Daunia have demonstrated the continuation of those seams into Isaac River.

The Board views the Isaac River Project as having potential development synergies with regional mines
which could trigger a fast-tracked development path. Discussions have commenced with potential
partners to investigate development options.

Figure 1. Hillalong Project

Page 8

Figure 2. Isaac River Project

Page 9

Lilyvale 15% JV with Stanmore Coal Ltd (ASX:SMR)

Exploration planning is well under way and expected drilling has been postponed to 2019. Lilyvale is
located directly adjacent to the Kestrel Mine recently acquired by EMR Capital and Adaro Energy from
Rio Tinto. Previous exploration delineated a 33Mt Inferred Resource in the German Creek seam of the
Moranbah Measures which demonstrated very good coking properties at very high yields comparable to
Kestrel’s product.

Divestment of Comet Ridge (100%)

The Company spent a significant amount of time to review study work by the previous owners and to
investigate the best development option for Comet Ridge. Following an approach by Springsure Creek
Coal Pty Ltd (“SCC”) who holds the neighbouring tenements and rail infrastructure concluded that the
development by SCC will be the best suited strategy for Comet Ridge whist still keeping exposure to the
project. The Company announced in May 2018 it had entered into a binding Term Sheet with Springsure
Creek Coal Pty Ltd (SCC) to sell the Comet Ridge Project (EPC1230 & MLA700005) in exchange for a
$100,000 cash payment and a royalty stream of 1.25% of FOR (Free on Rail) revenue from the first
2.8Mt coal produced from Comet Ridge. SCC holds an option to buy the royalty from BCB for $3m, and
BCB has an option to buy all the coal produced from Comet Ridge for trading and blending purposes.

In the event that SCC does not reach this milestone and no royalty has been paid by the end of that 4-
year period, and SCC has not exercised the Royalty Buy-Out, BCB can elect (at its sole discretion) to
buy back the Comet Ridge Project for an amount equal to the capitalised exploration costs, with SCC
also granting BCB a right to access its rail infrastructure for the purposes of loading up to 350,000 tpa
of coal.

The Terms Sheet is subject to certain conditions precedent and BCB will apply to the Land Court to be
replaced by SCC as applicant in the court proceedings related to entering into Compensation and
Conduct Agreements with landowners in respect of the Comet Ridge Project.

Metallurgical Coal Markets
The Board believes that Metallurgical coal is a scarce commodity with strong market fundamentals
demonstrated by the fact that coal is now foreseen to become Australia’s largest export earner, even
exceeding export revenue from iron ore.

Trade tension between the US and China as well as logistical constraints by key suppliers created some
volatility in the markets. Overall the market for metallurgical coal remained strong during the year on
the back of high levels of steel production, especially from China who accounts for around 49% of global
steel production. Demand is expected to remain strong for the commodity in the medium to long term
based on strong growth in Asia, mainly from India. Australian supply is expected to grow from 183Mtpa
in 2017/2018 to 200Mtpa in 2019/20.

The high demand for metallurgical coal supported the FOB price for premium hard coking coal just below
US$200 per tonne most of the year. Analysts forecast an easing of the price in the medium to long term,
although recent transaction pricing for Queensland coking coal mines and tenements implied longer
term prices as high as US$170 per tonne.

EARNINGS PER SHARE

Basic and diluted earnings per share from continuing operations

(0.34)

Basic and diluted earnings per share

(0.34)

2018
(cents)

2017
(cents)

(0.51)

Page 10

DIVIDENDS

The Directors do not recommend the payment of a dividend at this time and no dividend has been paid
or declared during the financial year.

EVENTS SUBSEQUENT TO BALANCE DATE

On 21 September 2018 the Company announced firm commitments for a capital raising to sophisticated
and professional investors for a total of 74,875,000 fully paid ordinary shares at an issue price of $0.016
per share to raise approximately $1.2m before costs. Settlement of this placement is expected to take
place on 27 September 2018 with the shares expected to be issued on 28 September 2018.

There were no other known significant events from the end of the financial year to the date of this report.

DIRECTORS’ INTERESTS

Information on Directors

Particulars of Directors’ interests at the
date of this report

Ordinary
shares

Performa
nce
Shares

Options

5,000,000

Nil

15,000,000

Director / experience

Eddie King - Non-Executive Chairman
BComm, BEng (Mining - Hons)

Mr. King is a qualified mining engineer and holds a Bachelor of
Commerce and Bachelor of Engineering from The University of Western
Australia. Mr. King is currently a representative for CPS Capital. Mr.
King’s past experience includes being manager for an investment
banking firm, where he specialised in the technical and financial
requirements of bulk commodity and other resource projects. Mr. King
was born in the Philippines where he has an extensive network.

Other current directorships
Lindian Resources Limited, European Cobalt Ltd, Drake Resources
Limited and Axxis Technology Group Ltd

Former directorships in last 3 years
None

Length of Service: 3 years 2 months

Steve Formica – Non-Executive Director

8,970,807

Nil

Mr Formica is a successful businessman with over 30 years' experience.
He has been involved in multiple business ventures either as a founding
shareholder, operational Managing Director or as a Non-Executive
Director. Steve is currently a director of both FPG Projects and Viridian
Property Group, both successful property developers.

Other current directorships
Lindian Resources Limited and High Grade Metals Limited (formerly
Quest Minerals Limited)

Former directorships in last 3 years
Enerji Limited

Length of Service: 2 years 10 months

Page 11

Director / experience

Particulars of Directors’ interests at the
date of this report

Ordinary
shares

Performa
nce
Shares

Options

Gregory D’Arcy - Former Non-Executive Director1

500,0002

Nil

3,000,0003

BComm, GradDipAppGeol

From 2008 to July 2016, Mr D’Arcy was the Managing Director of Report
Card Pty Ltd which owns and operates the Australian stock market forum
known as HotCopper. Mr D’Arcy was responsible for expanding the
business, budgeting, making critical decisions, setting timelines and
managing staff. Prior to this role he worked in commercial real estate
in both Perth and Melbourne.

Other current directorships
None

Former directorships in last 3 years
None

Length of Service: 2 years 5 months

Gerhard Redelinghuys – Managing Director4

101,325,0005 26,000,0006

Nil

B. Comm. Acc, Hons, B. Compt, GAICD.

Mr Redelinghuys is the Managing Director of Cape Coal and has 24 years’
experience in financial and project development within the mining
sector. After studying finance at the University of Pretoria in South
Africa, Gerhard joined Price Waterhouse Coopers, before commencing
his employment with EXXARO Resources Ltd (former ISCOR and KUMBA
Resources) in 1995. Since 1995 he has held various senior management
positions in both open cut and underground mining operations in South
Africa. He has held directorships in Australia, including the position of
Managing Director of Exxaro Australia Pty Ltd. In addition to his business
analysis experience, Gerhard has extensive experience in mining project
acquisitions and deal making on an international level. Gerhard was the
owner’s representative on a multi-billion underground coal project in
Queensland. In 2013, Gerhard became a graduate member of the
Australian Institute of Company Directors.

Other current directorships
None

Former directorships in last 3 years
None

Length of Service: 9 months

1 Resigned 27 September 2017.
2 According to final directors interest notice (Appendix 3Z) announced 29 September 2017.
3 According to final directors interest notice (Appendix 3Z) announced 29 September 2017.
4 Appointed 27 September 2017.
5 Gerhard Redelinghuys and James Agenbag have beneficial interests in and are directors of Cape Coal Pty Ltd. Cape Coal Pty Ltd
holds 100,000,000 ordinary shares, 13,000,000 Class A performance shares and 13,000,000 Class B performance shares.
6 Gerhard Redelinghuys and James Agenbag have beneficial interests in and are directors of Cape Coal Pty Ltd. Cape Coal Pty Ltd
holds 100,000,000 ordinary shares, 13,000,000 Class A performance shares and 13,000,000 Class B performance shares.

Page 12

Director / experience

Particulars of Directors’ interests at the
date of this report

Ordinary
shares

Performa
nce
Shares

Options

James Agenbag – Non-Executive Director7

100,000,0008 26,000,0009

Nil

B. Eng, Chemical Engineering.

Mr Agenbag has 14 years’ experience in the mining industry covering all
phases of business and project development, process design, including
the commissioning and optimisation of processing facilities across
multiple commodities. After completing his Chemical Engineering degree
at the University of Stellenbosch in 2003, James worked as a process
design engineer at EPCM companies including GRD Minproc Limited and
DRA Global. In 2008, James moved to Australia to help build DRA’s
Brisbane office. His responsibilities included research and development
of new business and client management in Southern Africa, Australia
and Indonesia. James also has substantial experience in beneficiation
optimisation with emphasis on various technologies including some
technologies where he jointly holds patent rights. James has delivered
technical papers within his area of expertise within the chemical
engineering area. More recently, he has been responsible for the process
engineering discipline across Peabody Energy Australia PCI Pty Ltd coal
projects. James has been accredited with ECSA as a Professional
Engineer. He is a Member of IEAust (Chem), and is an active Member of
the South African and Australian Coal Processing Societies.

Other current directorships
None

Former directorships in last 3 years
None

Length of Service: 9 months

COMPANY SECRETARY

Mr. Brockhurst has over fifteen years of experience in the finance and corporate advisory industry and
has been responsible for the due diligence process and preparation of prospectuses on a number of
initial public offers. His experience includes corporate and capital structuring, corporate advisory, and
company secretarial services, capital raising, ASX and ASIC compliance requirements. Mr. Brockhurst
has served on various boards and is acting as a company secretary for numerous ASX listed and unlisted
companies.

7 Appointed 27 September 2017.
8 Gerhard Redelinghuys and James Agenbag have beneficial interests in and are directors of Cape Coal Pty Ltd. Cape Coal Pty Ltd
holds 100,000,000 ordinary shares, 13,000,000 Class A performance shares and 13,000,000 Class B performance shares.
9 Gerhard Redelinghuys and James Agenbag have beneficial interests in and are directors of Cape Coal Pty Ltd. Cape Coal Pty Ltd
holds 100,000,000 ordinary shares, 13,000,000 Class A performance shares and 13,000,000 Class B performance shares.

Page 13

Meetings of Directors

The number of meetings held during the year and the number of meetings attended by each Director
whilst in office are as follows:

Directors’
meetings

Audit Committee
Meetings

Remuneration Committee
Meetings

No. held while
in office

No.
attended

No. held
while in office

No.
attended

No. held
while in office

No.
attended

Eddie King

Gerhard Redelinghuys

James Agenbag

Gregory D’Arcy

Steve Formica

It is noted that the Directors were able to attend to business of the Company during the year by
circulated resolution and telephone meetings as permitted by the Company’s Constitution in place of
conducting meetings.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

Other than those disclosed in this annual report no significant changes in the state of affairs of the
Company occurred during the financial year.

REMUNERATION REPORT – AUDITED

The Remuneration Report, which has been audited, outlines the key management personnel
remuneration arrangements for BCB in accordance with the requirements of the Corporations Act and
its Regulations.

The remuneration report is set out under the following main headings:



Key management personnel disclosed in this report

Principles used to determine the nature and amount of remuneration

Details of remuneration

Service agreements

Share based compensation

Additional disclosures relating to key management personnel

Page 14

Key management personnel disclosed in this report

Non-executive and executive directors:



Eddie King: Non-Executive Chairman

Gerhard Redelinghuys: Managing Director10

James Agenbag: Non-Executive Director11

Gregory D’Arcy: Non-Executive Director12

Steve Formica: Non-Executive Director

Principles used to determine the nature and amount of remuneration

The Board determines the remuneration of Executive and Non-Executive Directors from time to time.

Executive remuneration and other terms of employment are reviewed annually having regard to
performance, relevant comparative information and independent expert advice. Remuneration packages
are set at levels that are intended to attract and retain Executives capable of managing the Consolidated
Entity’s business activities and operations. Currently, no element of any Director’s remuneration is
dependent on the satisfaction of a performance condition.

Fees and payments to Non-Executive Directors reflect the demands which are made on, and the
responsibilities of, the Directors. Non-Executive Directors’ fees and payments are reviewed annually by
the Board. The Board has also drawn on external sources of information to ensure Non-Executive
Directors’ fees and payments are appropriate and in-line with the market for comparable companies for
time, commitment and responsibilities. Fees for Non-Executive Directors are not linked to the
performance of BCB.

Non-Executive Directors’ fees are determined within an aggregate Directors’ fee pool limit, which is
currently set by the Constitution of the Company at $300,000. This maximum can be changed by
Company shareholders in general meeting.

All Directors receive a superannuation guarantee contribution required by the government, which was
9.5% for the year ended 30 June 2018, and do not receive any other retirement benefits. Some
individuals, however, may choose to sacrifice part of their salary to increase payments towards
superannuation or elect to receive their Directors’ fees by way of consultancy fees for which no
superannuation guarantee contribution applies.

Remuneration paid to all Directors is valued at the cost to the Company and expensed. The value of any
unlisted options granted to Directors is brought to account over the vesting period of the options.

Independent advice on the appropriateness of remuneration packages is obtained should the Board of
Directors consider it necessary. Remuneration packages are based on fixed remuneration, performance
based remuneration and equity based remuneration in the year ended 30 June 2018.

In relation to any element of the remuneration of key management personnel or executives which
consists of securities, the Board has no policy in relation to those persons limiting their exposure to risk
in relation to the securities.

No other element of remuneration for key management personnel or executives was dependent on a
performance condition as the Board determined that these elements were fair and appropriate
remuneration.

10 Appointed 27 September 2017
11 Appointed 27 September 2017
12 Resigned 27 September 2017

Page 15

Details of Remuneration

Details of the remuneration of the Directors, other key management personnel of the Consolidated
Entity and specified executives of the Consolidated Entity for the years ended 30 June 2018 and 30 June
2017 respectively are set out on the following tables:

30 June 2018

Salary, fees
& entitle-
ments

Entitle-
ments
$

Super-
annuation
and other
entitlements
$

Other
transactions
$

Eddie King

48,822

Gerhard Redelinghuys

164,764

3,333

15,653

Total
$

48,822

183,750

James Agenbag

Gregory D’Arcy

Steve Formica

27,000

6,000

44,565

8,00013

35,000

6,000

30,00014

74,565

291,151

3,333

15,653

38,000

348,137

30 June 2017

Super-
annuation
and other
entitlements
$

Entitle-
ments
$

Termination
benefits
$

Salary, fees
& entitle-
ments

60,000

57,000

24,000

141,000

Total
$

60,000

57,000

24,000

141,000

Eddie King

Steve Formica

Gregory D’Arcy

Service Agreements

The Company has entered into an executive services agreement with Redhouse Consulting Pty Ltd,
for Gerhard Redelinghuys’s services on the following material terms:

Position: Managing Director and CEO.

 Commencement Date: 11 October 2017.

 Notice period: The Company must give 3 months’ notice to terminate the agreement other than

Term: Initial period of 12 months.

for cause. The executive must give 3 months’ notice to terminate the agreement.

 Salary: $220,000 per annum (plus superannuation), base salary.
 Other industry standard provisions for senior executive of a public listed company are included

in the agreement.

13 Relates to consultancy provided on an arm’s length basis at commercial rates.
14 Relates to consultancy provided on an arm’s length basis at commercial rates.

Page 16

Share based compensation

No options over ordinary shares in the Company were provided as remuneration to Directors and other
key management personnel of the Consolidated Entity and specified executives of the Company and
Consolidated Entity in this or the previous reporting period.

No ordinary shares in the Company were provided as a result of an exercise of remuneration options to
Directors and other key management personnel of the Consolidated Entity in this or the previous
reporting period.

Additional disclosures relating to key management personnel

The movement during the reporting period in the number of ordinary shares of the Company held
directly, indirectly or beneficially, by each Director or key management personnel, including their
personally-related entities is as follows:

Director

Eddie King

Gerhard
Redelinghuys

James Agenbag

Held at
30 June 2017

2,000,000

Gregory D’Arcy

500,000

Steve Formica

Received
during the
year on the
exercise of
options

Note: Shares held on a post consolidated basis

Other changes

Held at
Resignation

Held at
30 June 2018

3,000,00015

N/A

5,000,000

101,325,00016

N/A

101,325,000

100,000,00017

N/A

100,000,000

500,000

8,970,80718

N/A

8,970,807

15 On-market purchases.
16 Includes on-market purchases and issue to Cape Coal of consideration of purchase rights in respect of Hillalong East project.
17 Issue to Cape Coal of consideration of purchase rights in respect of Hillalong East project.
18 On-market purchases.

Page 17

Options & Performance Shares

Director

Eddie King

Gerhard
Redelinghuys*

James Agenbag*

Gregory D’Arcy

Steve Formica

Held at
30 June 2017

15,000,000

End of Remuneration Report

SHARE OPTIONS

Received on
grant of
options

Other
changes

Held at
Resignation

Held at
30 June 2018

N/A

15,000,000

26,000,00019

26,000,00020

1,780,000

N/A

26,000,000

N/A

26,000,000

N/A

1,780,000

At the date of this report, the unissued ordinary shares of the Company under option are as follows:

Date of Expiry

Exercise Price Number under Option

30 October 2019

$0.04

30 October 2019

$0.02

50,000,000

30,000,000

During the year ended 30 June 2018, no ordinary shares were issued on the exercise of options. No
shares have been issued as a result of the exercise of options since year end.

ENVIRONMENTAL REGULATION

BCB is not aware of any breaches in relation to environmental matters.

LIKELY DEVELOPMENTS AND ANNOUNCEMENTS

The Directors have excluded from this report any further information on the likely developments in the
operations of the Company and the expected results of those operations in future financial years, as the
Directors believe that it would be speculative and prejudicial to the interests of the Company.

INDEMNIFICATION AND INSURANCE OF OFFICERS

During the year, the Company paid premiums in respect of a contact insuring all the directors and
officers of the Company against liabilities, past present and future.

In accordance with normal commercial practice, the disclosure of the total amount of premiums under
and the nature of the liabilities covered by the insurance contract is prohibited by a confidentiality clause
in the contract.

19 Held at appointment. Represents the Class A and Class B Performance Shares issued to Cape Coal Pty Ltd.
20 Held at appointment. Represents the Class A and Class B Performance Shares issued to Cape Coal Pty Ltd.
*Performance Shares

Page 18

CORPORATE GOVERNANCE

In recognising the need for the highest standards of corporate behaviour and accountability, the
Directors of the Company support and have adhered to the principles of Corporate Governance. Refer
to the Company’s Corporate Governance Statement at www.bowencokingcoal.com.au.

NON AUDIT SERVICES

The Board of Directors is satisfied that the provision of non-audit services during the year is compatible
with the general standard of independence for auditors imposed by the Corporations Act 2001. The
directors are satisfied that the services disclosed below did not compromise the external auditor’s
independence for the following reasons:

all non-audit services are reviewed and approved by the Board prior to commencement to
ensure they do not adversely affect the integrity and objectivity of the auditor; and

the nature of the services provided does not compromise the general principles relating to
auditor independence in accordance with APES 110: Code of Ethics for Professional Accountants
set by the Accounting Professional and Ethical Standards Board.

During the year ended, 30 June 2018 no fees were paid to Nexia Sydney Partnership (former auditor)
nor RSM Australia Partners for non-audit services. (2017:Nil)

AUDITOR INDEPENDENCE

Section 307C of the Corporations Act 2001 requires our auditors, RSM Australia Partners to provide the
Directors of the Company with an Independence Declaration in relation to the audit of the Financial
Report. The Directors received the Independence Declaration set out on page 20 for the year ended 30
June 2018.

Signed in accordance with a resolution of the Directors.

Dated: 27 September 2018

Eddie King
Non-Executive Chairman

Page 19

RSM Australia Partners

Level 6, 340 Adelaide Street Brisbane QLD 4000
GPO Box 1108 Brisbane QLD 4001

T +61 (0) 7 3225 7888
F +61 (0) 7 3221 7666

www.rsm.com.au

AUDITOR’S INDEPENDENCE DECLARATION

As lead auditor for the audit of the financial report of Bowen Coking Coal Limited for the year ended 30 June 2018,
I declare that, to the best of my knowledge and belief, there have been no contraventions of:

(i)

(ii)

the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

any applicable code of professional conduct in relation to the audit.

RSM AUSTRALIA PARTNERS

Brisbane, Queensland
Dated: 27 September 2018

Albert Loots
Partner

THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING

RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent
accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.

RSM Australia Partners ABN 36 965 185 036

Liability limited by a scheme approved under Professional Standards Legislation

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME

for the financial year ended 30 June 2018

Other income

Administration expenses

Employee benefits expense

Impairment of loans

Loss before income tax

Income tax benefit

Consolidated

Note

2018
$

2017
$

31,106

13,487

(1,203,367)

(433,040)

(155,187)

(141,000)

(87,738)

(1,327,448)

(648,291)

Loss attributable to owners of the Company

(1,327,448)

(648,291)

Other comprehensive income, net of tax

Total comprehensive loss attributable to members of the
Company

(1,327,448)

(648,291)

Basic and diluted loss per share

(0.34) ¢

(0.51) ¢

The accompanying notes form part of these financial statements.

Page 21

STATEMENT OF FINANCIAL POSITION

as at 30 June 2018

Current assets

Cash and cash equivalents

Trade and other receivables

Other assets

Total current assets

Non-Current assets

Exploration expenditure

Total non-current assets

TOTAL ASSETS

Current liabilities

Trade and other payables

Borrowings

Total current liabilities

TOTAL LIABILITIES

NET ASSETS

Equity

Contributed equity

Reserves

Accumulated losses

TOTAL EQUITY

Consolidated

Note

2018
$

2017
$

1,461,445

66,234

12,098

1,539,777

5,932,212

325,153

31,731

234,882

591,766

7,471,989

591,766

242,672

61,928

4,013

246,685

61,928

7,225,304

529,838

49,830,181

42,064,761

258,294

800

(42,863,171)

(41,535,723)

7,225,304

529,838

The accompanying notes form part of these financial statements.

Page 22

STATEMENT OF CHANGES IN EQUITY

for the financial year ended 30 June 2018

Consolidated

Contributed
equity
$

Note

Reserves
$

Accumulated
losses
$

Total
equity
$

Balance as at 1 July 2016

42,084,401

800 (40,887,432)

1,197,769

Total comprehensive loss for the year

(648,291)

Transactions with owners in their
capacity as owners

Issue of ordinary shares (net)

(19,640)

Balance as at 30 June 2017

42,064,761

800 (41,535,723)

529,838

Balance as at 1 July 2017

42,064,761

800 (41,535,723)

529,838

Total comprehensive loss for the year

(1,327,448)

Transactions with owners in their
capacity as owners

Issue of ordinary shares (net)

Share based payments

7,765,420

257,494

7,765,420

257,494

Balance as at 30 June 2018

49,830,181

258,294 (42,863,171)

7,225,304

The accompanying notes form part of these financial statements.

Page 23

STATEMENT OF CASH FLOWS

for the financial year ended 30 June 2018

Consolidated

Note

2018
$

2017
$

Cash flows from operating activities

Payments to suppliers, employees and creditors (inclusive of
GST)

(1,379,136)

(657,911)

Payments for exploration expenses

(1,173,623)

Interest received

26,560

18,166

Net cash outflows from operating activities

(2,526,199)

(639,745)

Cash flows from investing activities

Payments for exploration assets

(350,000)

(160,000)

Net cash outflows from investing activities

(350,000)

(160,000)

Cash flows from financing activities

Loans to unrelated entities

(19,922)

(87,738)

Proceeds from issue of shares and options

Payments for capital raising costs

4,610,000

(580,323)

(75,349)

Net cash outflows from investing activities

4,009,755

(163,087)

Net increase / (decrease) in cash held

1,133,556

(962,832)

Cash and cash equivalents at 1 July

Coking Coal One cash acquired

325,153

1,287,985

2,736

Cash at 30 June

1,461,445

325,153

The accompanying notes form part of these financial statements.

Page 24

NOTES TO THE FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principals accounting policies adopted in the preparation of these consolidated financial statements
are set out below. These policies have been consistently applied to all the years presented, unless
otherwise stated.

Bowen Coking Coal Limited is a company domiciled in Australia. The financial statements are for the
Consolidated Entity consisting of Bowen Coking Coal Limited and its subsidiaries. The Consolidated Entity
is a for-profit entity and is primarily involved in mineral exploration.

Basis of Preparation

These general purpose financial statements have been prepared in accordance with the Australian
Accounting Standards, other authoritative pronouncements of the Australian Accounting
Standards Board, Urgent Issues Group Interpretations and the Corporations Act 2001.

The financial report has been prepared on an accrual basis and is based on historical costs,
modified, where applicable, by the measurement at fair value of selected non-current assets,
financial assets and financial liabilities.

The presentation currency is Australian dollars.

Compliance with IFRS

The consolidated financial statements of Bowen Coking Coal Limited also comply with
International Financial Reporting Standards (IFRS) as issued by the International Accounting
Standards Board (IASB).

ii.

Going Concern

This report has been prepared on the going concern basis, which contemplates the continuity of
normal business activity and the realisation of assets and settlement of liabilities in the normal
course of business.

The Consolidated Entity incurred a net loss for the year ended 30 June 2018 of $1,327,448 and
incurred net cash outflows from operating activities of $2,526,199. At 30 June 2018, cash and
cash equivalents was $1,461,445.

In considering the above, the Directors have reviewed the Consolidated Entity’s financial position
and are of the opinion that the use of the going concern basis of accounting is appropriate.

The financial report does not contain any adjustments relating to the recoverability and
classification of recorded assets or to the amounts or classification of recorded assets or liabilities
that might be necessary should the Consolidated Entity not be able to continue as a going concern.

Page 25

Principals of Consolidation- Subsidiaries

The consolidated financial statements comprise the financial statements of Bowen Coking Coal
Limited and its subsidiaries at 30 June each year (“the Consolidated Entity”). Subsidiaries are
entities over which the Consolidated Entity has the power to govern the financial and operational
policies generally accompanying a shareholding of more than one half of the voting rights.
Potential voting rights that are currently exercisable or convertible are considered when assessing
control. Consolidated financial statements include all subsidiaries from the date that control
commences until the date that control ceases. The financial statements of subsidiaries are
prepared for the same reporting period as the parent, using consistent accounting policies.

All intercompany balances and transactions, including unrealised profits arising from intragroup
transactions have been eliminated. Unrealised losses are also eliminated unless costs cannot be
recovered.

Minority interests in the results and equity of subsidiaries are shown separately in the consolidated
statement of profit or loss and other comprehensive income and statement of financial position
respectively.

Subsidiaries are accounted for in the parent entity at cost.

Foreign Currency Translation

Functional and Presentation Currency

Items included in the financial statements of each of the Consolidated Entity are measured using
the currency of the primary economic environment in which the entity operates (“the functional
currency”). The consolidated financial statements are presented in Australian dollars, which is
Bowen Coking Coal Limited’s functional and presentation currency.

ii.

Transactions and Balances

Foreign currency transactions are translated into functional currency 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 year end exchange rates of monetary
assets and liabilities denominated in foreign currencies are recognised in profit or loss, except
when they are deferred in equity as qualifying cash flow hedges and qualifying net investment
hedges or are attributable to part of the net investment in a foreign operation.

Foreign exchange gains and losses that relate to borrowings are presented in the statement of
profit or loss and other comprehensive income within finance costs. All other foreign exchange
gains and losses are presented in the statement of profit or loss and other comprehensive income
on a net basis within the other income and other expenses.

Non-monetary items that are measured at their fair value in a foreign currency are translated
using exchange rates at the date when the fair value was determined. Translation differences on
assets and liabilities carried at fair value are reported as part of the fair value gain or loss.

iii.

Consolidated Entity

The results and financial positions of foreign operations (none of which has the currency of a
hyperinflationary economy) that have a functional currency different from the presentation
currency are translated into the presentation currency as follows:

Assets and liabilities for each balance sheet presented are translated at the closing rate at
the date of that balance sheet.



Page 26



Income and expenses for each income statement and statement of profit or loss and other
comprehensive income are translated at average exchange rates (unless this is not a
reasonable approximation of the cumulative effect of the rates prevailing on the transaction
dates, in which case income and expenses are translated at the dates of the transactions).

All resulting exchange differences are recognised in other comprehensive income.

On consolidation, exchange differences arising from the translation of any net investment in
foreign entities are recognised in other comprehensive income.

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated
as assets and liabilities of the foreign operation and translated at the closing rate.

Revenue Recognition

Revenue is recognised at the fair value of consideration received or receivable. Amounts disclosed
as revenue are net of returns, trade allowances and duties and taxes paid. The following specific
recognition criteria must also be met before revenue is recognised:


Interest revenue is recognised as interest accrues using the effective interest method. The
effective interest method uses the effective interest rate which is the rate that exactly
discounts the estimated future cash receipts over the expected life of the financial asset.



Revenue from dividends is recognised when the Consolidated Entity’s right to receive
payment is established.

Income Taxes

The income tax expense for the period is the tax payable on the current period’s taxable income
based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax
assets and liabilities attributable to temporary differences between the tax base of assets and
liabilities and their carrying amounts in the financial statements, and to unused tax losses.

Deferred tax assets are recognised for all differences, between carrying amounts of assets and
liabilities for financial reporting purposes and their respective tax bases, at the tax rates expected
to apply when the assets are recovered or liabilities settled, based on those tax rates which are
enacted or substantively enacted for each jurisdiction. Deferred tax assets are only recognised
for deductible temporary differences and unused tax losses if it is probable that future taxable
amounts will be available to utilise those temporary differences and losses.

Bowen Coking 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.

Page 27

Impairment of Assets

At each reporting date the Consolidated Entity assesses whether there is any indication that
individual assets are impaired. Where impairment indicators exist, the recoverable amount is
determined and impairment losses are recognised in the statement of profit or loss and other
comprehensive income where the asset’s carrying value exceeds its recoverable amount.
Recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For
the purpose of assessing value in use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the assets.

Where it is not possible to estimate the recoverable amount for an individual asset, recoverable
amount is determined for the cash-generating unit to which the asset belongs.

Cash and Cash Equivalents

For presentation purposes of the statement of cash flows, cash and cash equivalents includes cash
on hand, deposits held at call with financial institutions, other short-term, highly liquid
investments with original maturities of three months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant risk of changes in value.

Trade Receivables

Trade receivables are recognised at fair value as the amounts receivable are due for settlement
no more than 30 days from the date of recognition. Collectability of trade debtors is reviewed on
an ongoing basis. Debts which are known to be uncollectible are written off by reducing the
carrying amount directly. An allowance account (provision for impairment of trade receivables)
is raised where there is some doubt over collection.

Investments in Other Financial Assets

The Consolidated Entity classifies its investments in the following categories: financial assets at
fair value through profit or loss, loans and receivables, held-to-maturity investments, and
available-for-sale financial assets. The classification depends on the purpose for which the
investments were acquired. Management determines the classification of its investments at initial
recognition and re-evaluates this designation at each reporting date.

Financial Assets at Fair Value through Profit or Loss

A financial asset is classified in this category if acquired principally for the purpose of selling in
the short term or if so designated by management. The policy of management is to designate a
financial asset if there exists the possibility it will be sold in the short term and the asset is subject
to frequent changes in fair value. Assets in this category are classified as current assets if they
are either held for trading or are expected to be realised within twelve months of the balance
sheet date.

Financial assets at fair value through profit or loss are carried at fair value. Realised and unrealised
gains and losses arising from changes in the fair value are included in the statement of profit or
loss and other comprehensive income in the period in which they arise.

The fair value of investments traded in active markets is determined by reference to quoted
market bid prices at balance date. The fair value of investments not traded in an active market is
determined using valuation techniques including reference to recent arm’s length transactions,
net asset backing and current market value of another similar instrument.

Page 28

ii.

Loan and Receivables

Loans and receivables are non derivative financial assets with fixed or determinable payments
that are not quoted in an active market. They arise when the Consolidated Entity provides money,
goods or services directly to a debtor with no intention of selling the receivable. They are included
in current assets, except for those with maturities greater than twelve months after balance sheet
date which are classified as non-current assets. Loans and receivables are included in receivables
in the statement of financial position.

Receivables are stated at their cost less impairment losses.

iii. Held-to-Maturity Investments

Held-to-maturity investments are non derivative financial assets with fixed or determinable
payments and fixed maturities that the Consolidated Entity’s management has the positive
intention and ability to hold to maturity.

iv. Available for Sale Financial Assets

Available for sale financial assets, comprising principally marketable equity securities, are non
derivatives that are either designated in this category or not classified in any of the other
categories. They are included in non-current assets unless management intends to dispose of the
investment within twelve months.

Available-for-sale financial assets are carried at fair value. Unrealised gains and losses arising
from changes in fair value are recognised in equity. When sold the accumulated fair value
adjustments are included in the statement of profit or loss and other comprehensive income as
gains and losses from investment securities.

Intangible Assets

Exploration and Evaluation Expenditure

Expenditure on acquisition, exploration and evaluation relating to an area of interest is carried
forward where rights to tenure of the area of interest are current and:



It is expected that expenditure will be recouped through successful development and
exploitation of the area of interest or alternatively by its sale; and/or

Exploration and evaluation activities are continuing in an area of interest but at balance
date have not yet reached a stage which permits a reasonable assessment of the existence
or otherwise of economically recoverable reserves.

Where the technical feasibility and commercial viability of extracting a mineral resource have been
demonstrated then any capitalised exploration and evaluation expenditure is reclassified as
capitalised “mine properties in development”. Prior to reclassification, capitalised exploration and
evaluation expenditure is assessed for impairment.

If facts and circumstances suggest that the carrying amount of any recognised exploration and
evaluation assets may be impaired, the entity must perform impairment tests on those assets in
accordance with AASB 136 “Impairment of Assets’. Impairment of exploration and evaluation
assets is to be assessed at a cash generating unit or group of cash generating units level provided
this is no larger than an area of interest. Any impairment loss is to be recognised as an expense
in accordance with AASB 136. Accumulated costs in relation to an abandoned area are written off
to the statement of profit or loss and other comprehensive income in the period in which the
decision to abandon the area is made.

Page 29

Earnings per Share

Basic Earnings per Share

Basic earnings per share is determined by dividing the net result attributable to members of the
Company by the weighted average number of ordinary shares outstanding during the financial
year.

ii.

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.

Employee Benefits

Short-Term Obligations

Liabilities for employee benefits for wages, salaries, annual leave and sick leave represent present
obligations resulting from employees’ services provided to reporting date and are calculated at
undiscounted amounts based on remuneration wage and salary rates that the Consolidated Entity
expects to pay as at reporting date including related on-costs, such as workers compensation
insurance and payroll tax.

ii.

Share Based Payment Benefits

Share based compensation benefits are provided to Directors and employees via share or option
plans in place from time to time.

The fair value of options granted under the Plans is recognised as an employee benefit expense
with a corresponding increase in equity. The fair value is measured at grant date and recognised
over the period during which the employees become unconditionally entitled to the options.

The fair value at grant date is determined using a 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.

The fair value of the options is adjusted to reflect market vesting conditions, but excludes the
impact of any non-market vesting conditions (e.g. profitability or transaction specific targets).
Non-market vesting conditions are included in assumptions about the number of options that are
expected to become exercisable. At each balance sheet date, the entity revises its estimate of the
number of options that are expected to become exercisable. The employee benefit expense
recognised each period takes into account the most recent estimate. The impact of the revision
to original estimates, if any, is recognised in the statement of profit or loss and other
comprehensive income with a corresponding adjustment to equity.

Lease Payments

Leases where the lessor retains substantially all the risks and rewards of ownership of the net
asset are classified as operating leases. Payments under operating leases (net of incentives
received from the lessor) are charges to the statement of profit or loss and other comprehensive
income on a straight line basis over the period of the lease.

Page 30

Trade and other Payables

Trade and other payables represent liabilities for goods and services provided to the Consolidated
Entity prior to year-end and which are unpaid. These amounts are unsecured and have 30 to 60
day payment terms.

Goods and Services Tax

Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST),
except where the amount of GST incurred is not recoverable from the taxation authority. In these
circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of
the expense.

Receivables and payables are stated with the amount of GST included. The net amount of GST
recoverable from, or payable to, the ATO is included as a current asset or liability in the statement
of financial position.

Cash flows are included in the statement of cash flows on a gross basis. The GST components of
cash flows arising from investing and financing activities which are recoverable from, or payable
to, the ATO are classified as operating cash flows.

Contributed Equity

Ordinary shares are classified as equity. Costs attributable to the issue of new shares or options
are shown as a deduction from the equity proceeds, net of any income tax benefit. Costs directly
attributable to the issue of new shares or options associated with the acquisition of a business are
included as part of the purchase consideration.

Fair Value

Fair values may be used for financial asset and liability measurement as well as for sundry
disclosures. Fair values for quoted financial instruments traded in active markets are based on
quoted market prices at the date of the statement of financial position. The quoted market price
for financial assets is the current bid price.

The carrying value less impairment provision of trade receivables and payables are assumed to
approximate their fair values due to their short-term nature. The fair value of financial liabilities
for disclosure purposes is estimated by discounting the future contractual cash flows at the current
market interest rate that is available to the Consolidated Entity for similar financial instruments.

Non-current assets or disposal groups classified as held for sale

Non-current assets and assets of disposal groups are classified as held for sale if their carrying
amount will be recovered principally through a sale transaction rather than through continued use.
They are measured at the lower of their carrying amount and fair value less costs of disposal. For
non-current assets or assets of disposal groups to be classified as held for sale, the must be
available for immediate sale in their present condition and their sale must be highly probable.

An impairment loss is recognised for any initial or subsequent write down on the non-current
assets and assets of disposal groups to fair value less cost of disposal. A gain is recognised for
any subsequent increase in fair value less costs of disposal of non-current assets and assets of
disposal groups, but not in excess of any cumulative impairment loss previously recognised.

Page 31

Non-current assets are not depreciated or amortised while they are classified as held for sale.
Interest and other expenses attributable to the liabilities of the assets held for sale continue to
be recognised. Non-current assets classified as held for sale and the assets of disposal groups
classified as held for sale are presented separately on the face of the statement of financial
position, in current assets. The liabilities of disposal groups classified as held for sale are presented
separately on the face of the statement of financial position, in current liabilities.

Changes in accounting policies and disclosure

In the year ended 30 June 2018, the Consolidated Entity has reviewed all of the new and revised
Standards and Interpretations issued by the AASB that are relevant to its operations and effective
for the current annual reporting period. It has been determined by the Consolidated Entity that
there is no impact, material or otherwise, of the new and revised Standards and Interpretations
on its business and, therefore, no change is necessary to Consolidated Entity accounting policies.

New Standards and Interpretations

AASB 9 Financial Instruments

This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The
standard replaces all previous versions of AASB 9 and completes the project to replace IAS 39
'Financial Instruments: Recognition and Measurement'. AASB 9 introduces new classification and
measurement models for financial assets. A financial asset shall be measured at amortised cost,
if it is held within a business model whose objective is to hold assets in order to collect contractual
cash flows, which arise on specified dates and solely principal and interest. All other financial
instrument assets are to be classified and measured at fair value through profit or loss unless the
entity makes an irrevocable election on initial recognition to present gains and losses on equity
instruments (that are not held-for-trading) in other comprehensive income ('OCI'). For financial
liabilities, the standard requires the portion of the change in fair value that relates to the entity's
own credit risk to be presented in OCI (unless it would create an accounting mismatch). New
simpler hedge accounting requirements are intended to more closely align the accounting
treatment with the risk management activities of the entity. New impairment requirements will
use an 'expected credit loss' ('ECL') model to recognise an allowance. Impairment will be
measured under a 12-month ECL method unless the credit risk on a financial instrument has
increased significantly since initial recognition in which case the lifetime ECL method is adopted.
The standard introduces additional new disclosures. The Consolidated Entity will adopt this
standard from 1 July 2018. The Consolidated Entity has assessed the current impact on financial
assets as nil due to the financial assets already being measured in accordance with the new
standard at 30 June 2018. The Company has assessed the current impact on financial liabilities
as nil due to the financial liabilities at 30 June 2018 (trade and other payables) not being affected
by the Company’s own credit risk. As and when the Company acquires more financial assets and
liabilities, it will account for them in accordance with AASB 9.

Page 32

AASB 15 Revenue from Contracts with Customers

This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The
standard provides a single standard for revenue recognition. The core principle of the standard is
that an entity will recognise revenue to depict the transfer of promised goods or services to
customers in an amount that reflects the consideration to which the entity expects to be entitled
in exchange for those goods or services. The standard will require: contracts (either written,
verbal or implied) to be identified, together with the separate performance obligations within the
contract; determine the transaction price, adjusted for the time value of money excluding credit
risk; allocation of the transaction price to the separate performance obligations on a basis of
relative stand-alone selling price of each distinct good or service, or estimation approach if no
distinct observable prices exist; and recognition of revenue when each performance obligation is
satisfied. Credit risk will be presented separately as an expense rather than adjusted to revenue.

For goods, the performance obligation would be satisfied when the customer obtains control of
the goods. For services, the performance obligation is satisfied when the service has been
provided, typically for promises to transfer services to customers. For performance obligations
satisfied over time, an entity would select an appropriate measure of progress to determine how
much revenue should be recognised as the performance obligation is satisfied. Contracts with
customers will be presented in an entity's statement of financial position as a contract liability, a
contract asset, or a receivable, depending on the relationship between the entity's performance
and the customer's payment. Sufficient quantitative and qualitative disclosure is required to
enable users to understand the contracts with customers; the significant judgments made in
applying the guidance to those contracts; and any assets recognised from the costs to obtain or
fulfil a contract with a customer. The Consolidated Entity will adopt this standard from 1 July 2018.
The Consolidated Entity has assessed the impact as nil due to there being no revenue from
contracts with customers as the Consolidated Entity are mining exploration companies.

New Standards and Interpretations not yet Adopted

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 2018. The Consolidated Entity's assessment of the impact of these
new or amended Accounting Standards and Interpretations, most relevant to the Consolidated
Entity, are set out below.

AASB 16 Leases

This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The
standard replaces AASB 117 'Leases' and for lessees will eliminate the classifications of operating
leases and finance leases. Subject to exceptions, a 'right-of-use' asset will be capitalised in the
statement of financial position, measured at the present value of the unavoidable future lease
payments to be made over the lease term. The exceptions relate to short-term leases of 12
months or less and leases of low-value assets (such as personal computers and small office
furniture) where an accounting policy choice exists whereby either a 'right-of-use' asset is
recognised or lease payments are expensed to profit or loss as incurred. A liability corresponding
to the capitalised lease will also be recognised, adjusted for lease prepayments, lease incentives
received, initial direct costs incurred and an estimate of any future restoration, removal or
dismantling costs. Straight-line operating lease expense recognition will be replaced with a
depreciation charge for the leased asset (included in operating costs) and an interest expense on
the recognised lease liability (included in finance costs).

Page 33

In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be
higher when compared to lease expenses under AASB 117. However, EBITDA (Earnings Before
Interest, Tax, Depreciation and Amortisation) results will be improved as the operating expense
is replaced by interest expense and depreciation in profit or loss under AASB 16. For classification
within the statement of cash flows, the lease payments will be separated into both a principal
(financing activities) and interest (either operating or financing activities) component. For lessor
accounting, the standard does not substantially change how a lessor accounts for leases. The
Consolidated Entity has assessed the impact as nil due to there currently being no leases. As and
when the Consolidated Entity enters into lease agreements, it will account for them in accordance
with AASB 16.

Use of Estimates and Judgements

The preparation of financial statements in conformity with IFRS requires the use of certain critical
accounting estimates. It also requires management to exercise its judgement in the process of
applying the Company’s accounting policies.

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 resource. 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.

Page 34

Consolidated

2018
$

2017
$

31,106

13,487

Consolidated

2018
$

2017
$

275,037

422,242

28,566

180,417

154,035

59,226

83,844

376,959

5,200

9,880

29,948

11,053

1,203,367

433,040

OTHER INCOME

Interest

EXPENSES

Administration

Accounting, legal and compliance costs

Consulting fees

Insurance

Management fees

Marketing

Other

Travel costs

Page 35

INCOME TAX BENEFIT

4.1 Income Tax Benefit

Current tax

Deferred tax

Income tax benefit attributable to (loss) from continuing operations

4.2 Numerical Reconciliation of Income Tax Benefit

to Prima Facie Tax Payable

Consolidated

2018
$

2017
$

(Loss) from ordinary activities before income tax expense

(1,327,448)

(648,291)

Income tax benefit calculated at domestic rate of 27.5% (2017 –
27.5%)

(365,048)

(178,280)

Tax effect of permanent differences:

Non-deductible items

Movement in unrecognised temporary differences

deductible equity raising costs

Income tax adjusted for permanent differences

Tax effect of losses not recognised

Income tax expense

4.3 Tax Losses

6,959

90,162

(30,152)

(44,529)

(67,722)

432,770

(8,582)

(96,700)

96,700

Unused revenue losses for which no deferred tax asset has been
recognised

12,172,105

10,138,363

Unused capital losses for which no deferred tax asset has been
recognised

3,682,968

15,855,073

13,821,331

The Company is of the opinion that tax and capital losses from prior periods will continue to be available
to the Consolidated Entity. These losses have not been recognised as a deferred tax asset as there is
uncertainty that future taxable profits will be available against which the losses can be utilised. The
future income tax benefit will only be obtained if:

a) future assessable income is derived of a nature and of an amount sufficient to enable the benefit

to be realised;

b) the conditions for deductibility imposed by tax legislation continue to be applied with; and

c) no changes in tax legislation adversely affect the Company in realising the benefit.

Page 36

LOSS PER SHARE

Consolidated

2018
cents

2017
cents

Basic and diluted loss per share

(0.34)

(0.51)

Weighted average number of shares used as the
denominator

Weighted average number of ordinary shares used as the
denominator in calculating basic and diluted earnings per share

389,648,811

127,312,898

2018
No.

2017
No.

Loss used in calculating basic and dilutive EPS

(1,327,448)

(648,291)

2018
$

2017
$

6. CASH AND CASH EQUIVALENTS

Cash at bank and on hand

Deposits at call

Consolidated

2018
$

2017
$

411,445

1,050,000

1,461,445

217,700

107,453

325,153

Deposits at call are interest bearing. Deposits at call have a fixed interest rates of 1.50% and 2.05%
respectively and maturity of 3 months.

7. TRADE AND OTHER RECEIVABLES

Current

Other receivables

Consolidated

2018
$

2017
$

66,234

31,731

Due to the short term nature of these receivables, their carrying value is assumed to approximate their
fair value.

Page 37

8. OTHER ASSETS

Current

Bowen Coking coal pre-acquisition and due diligence costs

Other

Prepaid expenses

EXPLORATION EXPENDITURE

Non-Current

Acquisition – Cape Coal Pty Ltd

Deposit – Isaac River Project

Exploration expenditure

Consolidated

2018
$

2017
$

584

11,514

12,098

4,131,531

50,000

1,750,681

5,932,212

165,638

69,244

234,882

On 28 September 2017, the Company completed the acquisition from Cape Coal Pty Ltd (Cape Coal)
of all of the issued capital of Coking Coal One Pty Ltd (formerly Bowen Coking Coal Pty Ltd) (CCO).
The Company has issued to Cape Coal 70,000,000 ordinary fully paid shares, 13,000,000 Class A
Performance Shares and 13,000,000 Class B Performance Shares. On 28 September 2017, CCO
completed the acquisition of MLA 700005 and EPC 1230 (Comet Ridge Project) from Acacia Coal
Limited (ACN 009 092 068) (Acacia Coal). The Company issued 17,391,304 ordinary fully paid shares
to Acacia Coal, and paid the sum of $350,000 in cash. On 28 September 2017, CCO completed the
acquisition of the Cooroorah Project (MDL 453) and Hillalong Project (EPC1824) from Australian
Pacific Coal Ltd. The Company issued 54,347,826 ordinary fully paid shares to Area Coal Pty Ltd, a
subsidiary of Australian Pacific Coal Ltd. The acquisition of Coking Coal One Pty Ltd has been treated
as an asset acquisition via the issue of equity under AASB 2 Share-based Payment (“AASB 2”).

Consideration:

Pre-acquisition costs transferred from other current assets

70,000,000 ordinary shares – Cape Coal Pty Ltd

13,000,000 class A performance shares – Cape Coal Pty Ltd

13,000,000 class B performance shares – Cape Coal Pty Ltd

17,391,304 ordinary shares and $350,000 cash component –

Acacia Coal Limited

54,347,826 ordinary shares - Area Coal Pty Ltd

Stamp duty on tenement acquisitions

165,637

1,610,000

89,700

167,794

750,000

1,250,000

98,400

4,131,531

Page 38

Identifiable assets acquired:

Cash and cash equivalents

Trade and other receivables

Exploration expenditure

Trade and other payables

Consolidated

2018
$

2017
$

2,736

6,141

4,227,331

(104,677)

4,131,531

On 28 September 2017, the Company issued 26,000,000 performance shares which will each convert
to one ordinary share upon completion of the following milestones within 24 months:

Class A:

(i)

(ii)

Class B:

(i)

the Total JORC-Compliant Resource Base being increased, following Completion, by
delineation of a further 30,000,000 tonnes mineral resources of at least inferred category,
or at least 30,000,000 tonnes of the Company’s existing mineral resources being
upgraded to at least the next higher category, in accordance with the JORC Code, in each
case on the Initial BCC Projects only; and
the Company’s Share price achieving a 30 day VWAP of at least 5 cents.

the Total JORC-Compliant Resource Base being increased, following Completion, by
delineation of a further 50,000,000 tonnes mineral resources of at least inferred category,
or at least 50,000,000 tonnes of the Company’s existing mineral resources being
upgraded to the next higher category, in accordance with the JORC Code, in each case
on the Initial BCC Projects only.

No consideration will be payable upon the vesting of the Performance Shares. Based on the above,
the performance share valuations have been calculated as follows:

Class No. of Shares Grant Date

Lapse Date

Fair Value

Total Value

13,000,000

28/9/2017

28/9/2019

$0.0069

$89,700

13,000,000

28/9/2017

28/9/2019

$0.0129

$167,794

Fair value: this was determined with reference to the prevailing share price at the grant date.

Probability: for each performance milestones described above, the Directors assessment of the
probability of achievement and eventually vesting as at the date of acquisition. In determining the
probability of the Consolidated Entity achieving each of the respective milestones for Class A and B
performance shares, which would permit vesting of the performance shares, the Directors took into
account that risk factors that were outlined in the prospectus dated 3 August 2017, at the date of
acquisition.

Page 39

10. TRADE AND OTHER PAYABLES

Current

Trade creditors and accruals

11. BORROWINGS

Current

Other

Consolidated

2018

2017

242,672

61,928

4,013

2018
No

2017
No

2018
$

2017
$

12. CONTRIBUTED EQUITY

Ordinary shares

499,486,810

127,312,898

49,830,181

42,064,761

Movements in share capital

Opening balance 1 July

127,312,898

42,064,761

42,084,401

Placement – 28 September 2017

200,434,782

Cape Coal acquisition – 28 September
2017

Acacia Coal acquisition – 28 September
2017

70,000,000

17,391,304

Area Coal acquisition – 2 October 2017

54,347,826

Cape Coal acquisition – 11 May 2018

30,000,000

Capital raising costs

4,610,000

1,610,000

400,000

1,250,000

549,000

(653,580)

(19,640)

Closing balance 30 June

499,486,810

127,312,898

49,830,181

42,064,761

Ordinary shares

Ordinary shares have the right to receive dividends as declared and, in the event of a winding up of
the Company, to participate in the proceeds from sale of all surplus assets in proportion to the
number of and amounts paid up on shares held. Ordinary shares entitle their holder to one vote,
either in person or proxy, at a meeting of the Company.

Page 40

Capital risk management

The Consolidated Entity’s capital comprises share capital, reserves less accumulated losses amounted
to equity of $7,225,304 at 30 June 2018 (2017: $529,838). The Consolidated Entity manages its
capital to ensure its ability to continue as a going concern and to optimise returns to its shareholders.
The Consolidated Entity was ungeared at year end and not subject to any externally imposed capital
requirements.

Share options

At 30 June 2018, there were 50,000,000 listed options exercisable at $0.04 on or before 30 October
2019 (2017: 50,000,000) and 30,000,000 unlisted options exercisable at $0.02 on or before 30
October 2019 on issue (2017: 30,000,000).

No options were issued, exercised or expired during the financial year.

13. RESERVES

Share Option Reserve

Balance at 1 July

Options issued

Balance at 30 June

Share Based Payments Reserve

Balance at 1 July

Share based payments

Balance at 30 June

Total Reserves

Nature and Purpose of Reserves

i. Share Option Reserve

Consolidated

2018
$

2017
$

800

257,494

800

258,294

800

The share option reserve is used to recognise the fair value of options issued but not exercised.

Page 41

14.

PARENT ENTITY INFORMATION

Current assets

Total assets

Current liabilities

Total liabilities

Shareholders’ equity

Issued capital

Reserves

Retained earnings

Loss for the year

Other comprehensive income

Total comprehensive income

Consolidated

2018
$

2017
$

1,519,139

7,416,154

166,028

591,766

61,928

49,830,181

42,064,761

258,294

800

(42,838,349)

(41,535,723)

7,250,126

529,838

(1,302,626)

(648,291)

(1,302,626)

(648,291)

15.

INVESTMENT IN SUBSIDIARIES

Equity holding

Name of subsidiary

Country of
incorporation

Class of
shares

2018
%

2017
%

Northern Yeelirrie Pty Limited

Australia

Ordinary

Cabral Brazil Pty Limited

Australia

Ordinary

Cabral Metais Ltda

Brazil

Ordinary

Coking Coal One Pty Ltd

Australia

Ordinary

100

-1

100

-1

100

1 Deregistered on 20 November 2016

Page 42

16. REMUNERATION OF AUDITORS

Amounts received, or due and receivable by:

The current auditor of the parent entity (RSM Australia Partners –
Australian Firm)

for auditing and reviewing the financial reports of the entity
or any entity in the Consolidated Entity

The former auditor of the parent entity (Nexia Sydney Partnership
– Australian Firm)

for auditing and reviewing the financial reports of the entity
or any entity in the Consolidated Entity

Consolidated

2018
$

2017
$

22,000

32,236

17. CONTINGENT LIABILITIES

There are no contingent liabilities of the Company as at 30 June 2018 (2017: Nil).

18. COMMITMENTS FOR EXPENDITURE

Exploration commitments within 1 year

Consolidated

2018
$

2017
$

258,252

19. KEY MANAGEMENT PERSONNEL AND RELATED PARTY INFORMATION

19.1 Key Management Personnel Remuneration

Short term employee benefits

Consolidated

2018
$

2017
$

306,804

141,000

Details of Directors’ and key personnel remuneration are set out in the Remuneration Report in the
Directors’ Report.

19.2 Other Transactions with Key Management Personnel

There were no other transactions with key management personnel during the year (2017: nil).

Page 43

20. SEGMENT INFORMATION

Description of Segments

Management has determined the operating segments based on the reports reviewed by those
responsible for decision making which are used to make strategic decisions.

The management team have identified one reportable segment based on geographical factors for the
year ended 2018 being Australia (2017: two segments - one segment in Australia and one segment in
Brazil).

Segment Information Provided to those Responsible for Decision Making

The segment information provided to those responsible for decision making for the reportable segments
for the year ended 30 June 2018 are as follows:

2018

Total segment revenue

Inter-segment revenue

Revenue from external customers

Adjusted EBITDA

Depreciation and amortisation

Impairment

Share of loss from associates

Total segment assets

Total assets includes:

Investment in associates

Exploration and tenements

Additions to non-current assets (other than financial assets and
deferred tax)

Australia
AUD

Total
AUD

(1,358,554)

7,225,304

Total segment liabilities

246,685

Page 44

The segment information provided to those responsible for decision making for the reportable segments
for the year ended 30 June 2017 are as follows:

2017

Total segment revenue

Inter-segment revenue

Revenue from external customers

Adjusted EBITDA

Depreciation and amortisation

Impairment

Share of loss from associates

Total segment assets

Total assets includes:

Investment in associates

Exploration and tenements

Additions to non-current assets (other than financial assets
and deferred tax)

Total segment liabilities

Other Segment Information

Segment Revenue

Australia
AUD

Total
AUD

(574,040)

(87,738)

591,766

61,928

Segment revenue reconciles to total revenue from continuing operations as follows:

Total segment revenue

Intersegment eliminations

Interest revenue

Gain on effectuation of DOCA

2018

2017

31,106

13,487

Total revenue from continuing operations (note 2)

31,106

13,487

ii.

Adjusted EBITDA

The measurement of adjusted EBITDA excludes the non-recurring expenditure from the operating
segment such as restructuring costs, legal expenses and goodwill impairments when the
impairment is the result of an isolated, non-recurring event. Furthermore the measure excludes
the effects of equity-settled share-based payments and unrealised gains/(losses) on financial
instruments. Interest income and expenditure are not allocated to segments, as this type of
activity is driven by a central treasury function in managing the cash position of the Consolidated
Entity.

Page 45

A reconciliation of adjusted EBITDA to operating loss is provided as follows:

Adjusted EBITDA

Impairment

Interest

2018

2017

(1,358,554)

(574,040)

(87,738)

31,106

13,487

Loss from continuing operations

(1,327,448)

(648,291)

iii.

Segment Assets

The amounts provided to those responsible for decision making with respect to total assets are
measured in a manner consistent with that of the financial statements. These assets are allocated
based on the operations of the segment and the physical location of the asset.

Reportable segments’ assets are reconciled to total assets as follows:

Segment assets

Intersegment eliminations

2018

2017

7,225,304

591,766

Total assets as per statement of financial position

7,225,304

591,766

iv.

Segment Liabilities

The amounts provided to those responsible for decision making with respect to total liabilities are
measured in a manner consistent with that of the financial statements. These liabilities are
allocated based on the operations of the segment. Reportable segments’ liabilities are reconciled
to total liabilities as follows:

Segment liabilities

Intersegment eliminations

2018

2017

246,685

61,928

Total liabilities as per statement of financial position

246,685

61,928

Page 46

21. RECONCILIATION OF LOSS FROM CONTINUING OPERATIONS TO NET CASH

OUTFLOW FROM OPERATING ACTIVITIES

Consolidated

2018
$

2017
$

Loss from continuing and discontinued operations

(1,327,448)

(648,291)

Impairment of loans

Changes in Assets and Liabilities

87,738

Decrease/(increase) in trade and other receivables

Decrease/(increase) in other assets

(34,503)

222,784

Decrease/(increase) in exploration expenditure

(1,654,881)

22,446

Increase/(decrease) in trade and other creditors

267,849

(101,638)

Net cash outflows from operating activities

(2,526,199)

(639,745)

22. EVENTS SUBSEQUENT TO BALANCE DATE

There were no other known significant events from the end of the financial year to the date of this report.

23. FINANCIAL INSTRUMENTS

23.1 Financial Risk Management

The Consolidated Entity’s financial instruments consist of deposits with banks, trade receivable and
payables, investments at fair value and loans to and from subsidiaries and associates. Derivative
financial instruments are not currently used by the Consolidated Entity.

Senior executives meet regularly to analyse and monitor the financial risk associated with the financial
instruments used by the Consolidated Entity. The Managing Director and Chief Executive Officer reports
regularly to the Board which appraises the adequacy of the risk management strategies and also creates
policies for risk management.

The Consolidated Entity’s activities expose it to market risk (including foreign exchange risk and interest
rate risk), credit risk and liquidity risk.

Market Risk

Foreign Exchange Risk

The Consolidated Entity has no material exposure to foreign currency risk at the end of the reporting
period.

Page 47

Interest Rate Risk

The Consolidated Entity does not have any exposure to interest rate risk as there were no external
borrowings at 30 June 2018 (2017: nil). Any borrowings were intercompany related and unsecured and
interest free and therefore there is no exposure to interest rate risk associated with these amounts.
Interest bearing assets are all short term liquid assets and the only interest rate risk is the effect on
interest income by movements in the interest rate. There is no other material interest rate risk.

Liquidity Risk

The Consolidated Entity manages liquidity risk by maintaining cash reserves, placing funds on fixed term
deposits with reputable financial institutions, having limited borrowings or debt and having, to the extent
possible, the investments in instruments that are tradeable in highly liquid markets. All trade and other
payables are expected to be paid within one year of balance date.

The Consolidated Entity’s credit risk primarily arises from cash and deposits with Australian ADIs. The
credit risk of financial assets of the Consolidated Entity which have been recognised on the statement
of financial position, other than investments in shares, is generally the carrying amount, net of any
provision for doubtful debts. There is no collateral or security held for those assets at balance date.
There are no financial assets that are past due or impaired.

23.2 Net Fair Value of Financial Assets and Liabilities

The carrying amount of the Consolidated Entity’s financial assets and financial liabilities in the financial
statements approximates their fair values as at balance date.

Page 48

DIRECTORS’ DECLARATION

In the directors' opinion:

1. the financial statements and accompanying notes set out on pages 21 to 48 are in accordance with

the Corporations Act 2001 and:

comply with Accounting Standards and the Corporations Regulations 2001; and

b. give a true and fair view of the Consolidated Entity’s financial position as at 30 June 2018 and of

its performance for the year ended on that date;

2. the financial statements and notes also comply with International Financial Reporting Standards (IFRS),

as disclosed in Note 1(a)(i) to the financial statements;

3. there are reasonable grounds to believe that the Consolidated Entity will be able to pay its debts as

and when they become due and payable

4. the directors have been given the declarations by the chief executive officer and chief financial officer

required by section 295A.

This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on
behalf of the Directors by:

Eddie King
Non-Executive Chairman

Perth, 27 September 2018

Page 49

RSM Australia Partners

Level 6, 340 Adelaide Street Brisbane QLD 4000
GPO Box 1108 Brisbane QLD 4001

T +61 (0) 7 3225 7888
F +61 (0) 7 3221 7666

www.rsm.com.au

INDEPENDENT AUDITOR’S REPORT

To the Members of Bowen Coking Coal Limited

Opinion

We have audited the financial report of Bowen Coking Coal Limited (the Company) and its subsidiaries (the Group),
which comprises the consolidated statement of financial position as at 30 June 2018, the consolidated statement of
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 financial statements, including a summary of significant accounting policies,
and the directors' declaration.

In our opinion the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:

(i) giving a true and fair view of the Group's financial position as at 30 June 2018 and of its financial performance

for the year then ended; and

(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.

Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are
further described in the Auditor's Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the
ethical requirements of the Accounting Professional and Ethical Standards Board's APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.

We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors
of the Company, would be in the same terms if given to the directors as at the time of this auditor's report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial report of the current period. These matters were addressed in the context of our audit of the financial report and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.

THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING

RSM Australia Partners ABN 36 965 185 036

Liability limited by a scheme approved under Professional Standards Legislation

Key Audit Matter
Carrying Value of Capitalised Exploration Expenditure
Refer to Note 9 in the financial statements
The Group has capitalised exploration expenditure
with a carrying value of $5.675m. We determined this
to be a key audit matter due to the significant
management judgment involved in assessing the
carrying value in accordance with AASB 6 Exploration
for and Evaluation of Mineral Resources, including:

 Determination of whether expenditure can be
associated with finding specific mineral
resources, and the basis on which that
expenditure is allocated to an area of interest;

 Assessing whether any indicators of impairment



are present; and

 Determination of whether exploration activities
have progressed to the stage at which the
existence of an economically recoverable mineral
reserve may be determined.

How our audit addressed this matter

Our audit procedures in relation to the carrying value of
capitalised exploration costs included:

 Ensuring that the right to tenure of the areas of

interest was current through confirmation with the
relevant government departments;

 Critically assessing and evaluating management’s

assessment that no indicators of impairment existed;

 Agreeing a sample of the additions to capitalised

exploration expenditure during the year to supporting
documentation, and ensuring that the amounts were
capitalised correctly; and
Through discussions with the Group’s Directors, and
review of the Group’s ASX announcements and other
relevant documentation, assessing management’s
determination that exploration activities have not yet
progressed to the point where the existence or
otherwise of an economically recoverable mineral
resource may be determined.

Acquisition of Coking Coal One Pty Ltd (formerly named Bowen Coking Coal Pty Ltd)
Refer to Note 9 in the financial statements
During the year the Company completed the
acquisition of Coking Coal One Pty Ltd (formerly
named Bowen Coking Coal Pty Ltd) pursuant to the
issue of 70,000,000 ordinary fully paid shares,
13,000,000 Class A Performance Shares and
13,000,000 Class B Performance Shares.

Our audit procedures in relation to the Company’s
accounting for the acquisition of Coking Coal One Pty Ltd
included:

 Reviewing the acquisition agreement to obtain an

understanding of the transaction and the related
accounting considerations;

The Company determined the acquiree did not meet
the definition of a business under AASB 3 Business
Combinations as at the date of the transaction.

We identified the acquisition of Coking Coal One Pty
Ltd as a key audit matter as it is a significant
transaction that occurred during the period and the
judgement involved in determining whether the
acquiree met the definition of a business under AASB
3 Business Combinations.

 Critically evaluating management’s determination
that Bowen Coking Coal Limited was the acquiring
entity and that the acquired entity did not meet the
definition of a business;

 Evaluating the timing and appropriateness of the
accounting treatment and the consideration of the
acquisition based on the agreement; and
 Assessing the compliance of the financial

presentation and disclosures with the requirements of
Australian Accounting Standards.

Other Information
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 2018, but does not include the financial report and the 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.

Page 2 of 3

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.

A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance
Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar2.pdf.
This description forms part of our auditor's report.

Report on the Remuneration Report

Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 14 to 18 of the directors' report for the year ended 30 June
2018.

In our opinion, the Remuneration Report of Bowen Coking Coal Limited, for the year ended 30 June 2018, complies with
section 300A of the Corporations Act 2001.

Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in
accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration
Report, based on our audit conducted in accordance with Australian Auditing Standards.

RSM AUSTRALIA PARTNERS

Brisbane, Queensland
Dated: 27 September 2018

Albert Loots
Partner

Page 3 of 3

CORPORATE INFORMATION

The information contained below is as at 20 September 2018.

NUMBER OF SHAREHOLDERS AND OPTION HOLDERS

As at 20 September 2018, there were 603 shareholders holding a total of 499,486,810 fully paid ordinary
shares.

Options

As at 20 September 2018, there were 50,000,000 Quoted Options exercisable at $0.04 on or before 30 October
2019 held by 67 holders.

As at 20 September 2018, there were 30,000,000 Unquoted Options exercisable at $0.02 on or before 30
October 2019 held by 55 holders.

Performance Shares

As at 20 September 2018, there are 13,000,000 Class A Performance Shares and 13,000,000 Class B
Performance Shares held by 1 holder – Cape Coal Pty Ltd.

Class A Performance Shares convert into Ordinary Shares on a 1:1 ratio upon the delineation of an increase
in JORC-compliant inferred resources of at least 30 million tonnes coal on the Company’s projects, and a 30
day VWAP share price hurdle of 5 cents.

Class B Performance Shares convert into Ordinary Shares on a 1:1 ratio upon the delineation of an increase
in JORC-compliant inferred resources of at least 50 million tonnes coal on the Company’s projects.

The Performance Shares have a term of 24 months from their date of issue, 11 October 2017, being expiration
on 11 October 2019.

NON-MARKETABLE PARCELS

There were no holders of less than a marketable parcel of ordinary shares, amounting to nil ordinary shares.

DISTRIBUTION OF EQUITY SECURITIES

Analysis of number of share and option holders by size of holding:

Fully paid ordinary shares

Range

1,001

5,001

10,001

1,000

5,000

10,000

100,000

100,001 and over

Page 53

Number of holders Number of shares

121

194

267

603

26,456

47,066

21,178

13,404,244

485,987,866

499,486,810

Quoted Options exercisable at $0.04 on or before 30 October
2019

Range

1,001

5,001

10,001

1,000

5,000

10,000

100,000

100,001 and over

Unquoted Options exercisable at $0.02 on or before 30
October 2019

Range

1,001

5,001

10,001

1,000

5,000

10,000

100,000

100,001 and over

Number of holders Number of options

1,289,000

48,211,000

50,000,000

Number of holders Number of shares

1,439,000

28,561,000

30,000,000

No holder has a 20% or more holding in the unquoted Options exercisable at $0.02 on or before 30 October
2019.

VOTING RIGHTS

The relevant conditions about voting rights attaching to each share are set out in Article 9.22 of the
Constitution as follows:

“Subject to any rights or restrictions for the time being attached to any class or classes of shares and to this
constitution:

On a show of hands, each Member present in person and each other person present as a proxy, attorney
or Representative of a Member has one vote; and

On a poll, each Member present in person has one vote for each fully paid share held by the Member
and each person present as proxy, attorney or Representative of a Member has one vote for each fully
paid share held by the Member that the person represents, but a Member is not entitled to vote at a
general meeting in respect of shares which are the subject of a current Restriction Agreement for so
long as any breach of that agreement subsists

Page 54

SUBSTANTIAL SHAREHOLDERS

The Company has the following substantial shareholders as at 20 September 2018:

Name

CAPE COAL PTY LTD

AREA COAL LIMITED

Number of
ordinary
shares held

100,000,000

54,347,826

Percentage
of issued shares

20.02%

10.88%

TWENTY LARGEST SHAREHOLDERS

The names of the twenty largest holders of ordinary fully paid shares are set out below:

Name

1. CAPE COAL PTY LTD

2. AREA COAL LIMITED

3. MRS LILY MAH

4. ACACIA COAL LIMITED

Number of
ordinary
shares held

100,000,000

54,347,826

18,843,478

17,391,304

Percentage
of issued shares

20.02%

10.88%

3.77%

4.19%

5. MR PAUL GABRIEL SHARBANEE

15,500,000

3.10%

6. BNP PARIBAS NOMINEES PTY LTD

12,209,298

2.44%

7. RIO SUPER PTY LTD

10,835,000

8. MR GOH GEOK KHIM

10,000,000

2.17%

2.00%

9. V7 INVESTMENT & DEVELOPMENT

9,000,000

1.80%

10. MRS DENISE JOY SHARBANEE

9,000,000

1.80%

11. STEVSAND INVESTMENTS PTY LTD

12. FIRST ONE REALTY PTY LTD

13. MR TYLER JOHN FORMICA

14. SACCO DEVELOPMENTS AUSTRALIA PTY LIMITED

8,970,807

1.80%

6,347,827

5,500,000

1.27%

1.10%

5,388,427

1.08%

15. MR DAVID JOHN FRANKLYN & MRS LUCILLE CORINNE
FRANKLYN

5,000,000

1.00%

16. MR ARIEL EDWARD KING

17. ROVIGNO PTY LTD

18. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED

19. MISS EUN JOO LEE

20. KALGOORLIE MINE MANAGEMENT PTY LTD

5,000,000

4,879,951

4,355,244

4,000,000

1.00%

0.98%

0.87%

0.80%

311,569,162

63.07%

Page 55

TWENTY LARGEST OPTION HOLDERS ($0.04 OPTIONS)

Name

Number of
options held

Percentage
of issued options

1. MR ARIEL EDWARD KING

2. FIRST INVESTMENTS PARTNERS PTY LTD

3. TANGO88 PTY LTD

4. FIRST ONE REALTY PTY LTD

5. MR GREGORY KENNETH D’ARCY

6. MR JASON YIN

7. MR TYLER JOHN FORMICA

10,000,000

6,260,000

6,000,000

3,900,000

3,500,000

2,231,000

2,000,000

8. LAKE SPRINGS PTY LTD

3,700,000

JOMOT PTY LTD

10. GREENWOOD RESOURCES PTY LTD

11. MR DAVID CHARLES NEESHAM & MRS PAMELA CHRISTINE

NEESHAM

12. MR STEVEN JOHN DIGGERMAN

13. FOUCART PTY LTD

14. MR MARK RICHARD JENSEN

15. MR BRETT JAMES RUDD

16. CINQUE HOLDINGS PTY LTD

17. MR MOHAMED GABR

18. LANTECH DEVELOPMENTS PTY LTD

19. MR EDMUND TECK HWANG LIM

20. MR THOMAS SAMUEL LATAGE LAMBETH & MISS RU YI LI

1,110,000

1,000,000

940,000

800,000

600,000

500,000

462,000

457,143

20.00%

12.52%

12.00%

7.80%

7.00%

4.46%

4.00%

7.40%

2.22%

2.00%

1.88%

1.60%

1.20%

1.00%

0.92%

0.91%

46,460,143

92.91%

RESTRICTED SECURITIES

The Company has the following restricted securities on issue:

Name

ordinary
shares

Performance
shares

Escrow release date

CAPE COAL PTY LTD

100,000,000

26,000,000

24 months from date of ASX re-quotation

ACACIA COAL LIMITED

17,391,304

AREA COAL LIMITED

54,347,826

12 months from date of issue

Page 56

Use of Funds

Between the date of listing on ASX and the date of this report the Company has used the cash and assets in
a form readily convertible to cash that it had at the time of admission in a way consistent with its business
objectives and as set out in the Prospectus dated 3 August 2017.

INTERESTS IN EXPLORATION TENEMENTS

Tenement Number

Project Name

Tenement Location

Bowen Coking Coal
Interest Held

EPC 1824

HILLALONG

BOWEN BASIN, QUEENSLAND

MDL 453

EPC 1687

EPC 2157

EPC 2081

EPC 1230

MLA 7005

EPC2141

EPC 1860

MDL 444

EPC 830

COOROORAH

BOWEN BASIN, QUEENSLAND

LILYVALE

BOWEN BASIN, QUEENSLAND

LILYVALE

BOWEN BASIN, QUEENSLAND

MACKENZIE

BOWEN BASIN, QUEENSLAND

COMET RIDGE

BOWEN BASIN, QUEENSLAND

COMET RIDGE

BOWEN BASIN, QUEENSLAND

HILLALONG EAST

BOWEN BASIN, QUEENSLAND

HILLALONG EAST

BOWEN BASIN, QUEENSLAND

ISAAC RIVER

BOWEN BASIN, QUEENSLAND

ISAAC RIVER

BOWEN BASIN, QUEENSLAND

100%

15%

100%

100%1

100%

1 Acquisition cost and duties paid. Indicative Ministerial Consent for the transfer received, final transfer

underway.

Page 57

COMPANY SECRETARY

Mr Stephen Brockhurst

REGISTERED OFFICE

Level 19, Waterfront Place
1 Eagle Street
BRISBANE QLD 4000

Telephone:

+617 3360 0837

ADMINISTRATION OFFICE

Level 11
216 St Georges Terrace
PERTH WA 6000

Telephone:

+618 9481 0389

Facsimile:

+618 9463 6103

Website:

bowencokingcoal.com.au

SHARE REGISTRAR

Link Market Services Limited
Level 12
680 George Street
Sydney NSW 2000

Postal Address

Locked Bag A14
Sydney South NSW 1235

Telephone:
Facsimile:

+612 8280 7111
+612 9287 0303

DX 1120 Sydney

Website:

www.linkmarketservices.com.au

Email:

registrars@linkmarketservices.com.au

STOCK EXCHANGE QUOTATION

The Company’s shares are quoted only on the Australian Securities Exchange (code “BCB”).

Page 58