ANNUAL REPORT
Contents
Corporate Information
Chairman’s Letter to Shareholders
Review of Operations
Directors' Report
Auditor’s Independence Declaration to the Directors of Cokal Limited
Shareholder Information
Interests in Tenements and Projects
Corporate Governance Statement
Consolidated Statement of Comprehensive Income for the year ended 30 June 2014
Consolidated Statement of Financial Position as at 30 June 2014
Consolidated Statement of Changes in Equity For the year ended 30 June 2014
Consolidated Statement of Cash Flows For the year ended 30 June 2014
Notes to the Financial Statements for the year ended 30 June 2014
Declaration by Directors
Independent Auditor’s Report
Competent Person Statement
1
2
4
15
26
27
30
31
36
37
38
39
40
68
69
The information in this report relating to Mineral Resources is based on information compiled by Tri Yoso who is a
Member of the Australasian Institute of Mining and Metallurgy and a full time employee of Cokal Limited.
Mr Yoso is a qualified geologist and has sufficient experience which is relevant to the style of mineralisation and type
of deposit under consideration and to the activity which he is undertaking, to qualify as a Competent Person as
defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore
Reserves”.
Mr Yoso consents to the inclusion in the report of the matters based on the information, in the form and context in
which it appears.
The information in this report relating to Exploration Results is based on information compiled by Patrick Hanna who
is a fellow of the Australasian Institute of Mining and Metallurgy and is a consultant (through Hanna Consulting
Services) to Cokal Limited.
Mr Hanna is a qualified geologist and has sufficient experience which is relevant to the style of mineralisation and type
of deposit under consideration and to the activity which they are undertaking, to qualify as Competent Persons as
defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore
Reserves”. Mr Hanna consents to the inclusion in the report of the matters based on the information, in the form and
context in which it appears.
Corporate Information
DIRECTORS
Peter Lynch
Pat Hanna
Domenic Martino
Agus Widjojo
COMPANY SECRETARIES
Duncan Cornish
Victor Kuss
REGISTERED OFFICE AND PRINCIPAL
BUSINESS OFFICE
Level 34, Riverside Centre
123 Eagle Street
Brisbane QLD 4000
Phone: + 61 7 3001 4100
Fax: +61 7 3001 4195
COUNTRY OF INCORPORATION
Australia
SOLICITORS
Thomsons Lawyers
Level 16, Waterfront Place
1 Eagle Street
Brisbane QLD 4000
Phone: + 61 7 3338 7500
Fax: +61 7 3338 7599
SHARE REGISTRY
Advanced Share Registry Services
150 Stirling Highway
Nedlands WA 6009
Phone: +61 8 9389 8033
Fax: +61 8 9389 7871
COKAL LIMITED Annual Report 2014 | Page 1 of 69
AUDITORS
Ernst & Young
111 Eagle Street
Brisbane QLD 4000
Phone: +61 7 3011 3333
Fax: +61 7 3011 3100
STOCK EXCHANGE LISTING
Australian Securities Exchange Ltd
ASX Code: CKA
INTERNET ADDRESS
www.cokal.com.au
AUSTRALIAN BUSINESS NUMBER
ABN 55 082 541 437
Chairman’s Letter to Shareholders
Dear Shareholders,
holding out to retain their market share.
Once again it has been a busy
year and I am excited to be
presenting Cokal’s Annual
Report on behalf of the
Board of Directors
and
company management.
This has been our company’s fourth year of operation
since the reverse take-over of AEA in December 2010.
This year marks a major achievement for the company
as we steadily progress towards our goal of becoming
a globally significant player in the metallurgical coal
market.
Cokal has been focused on the development of our
premier project, the Bumi Barito Mineral (BBM)
in the Murung Raya Regency of Central
project
Kalimantan. During the year the company has
concentrated its resources and capital on progressing
this project towards production. While we have other
attractive projects in the same region, the strategy is
to first achieve production at BBM and to then
establish a broader production base
the
progression of the surrounding projects. The ability to
leverage the BBM project’s infrastructure will mean
quicker development and lower capital intensity for
these other projects to follow.
for
It has been a tough year for Coal Markets, and this
was characterised by both the oversupply of product
and the decreasing demand for metallurgical coal.
The combination of
increased supply from new
projects coming online, and the slowdown in steel
demand was
in deteriorating prices
throughout this financial year. The most significant
influence on the steel market was the reduction in
demand caused by a slowdown in the growth of the
Chinese domestic economy.
reflected
As with all commodities, metallurgical coal prices go
up and down in cycles. At current prices, around 50%
of Australian producers are losing money on a cash
cost basis. This cannot be maintained and further
production cuts from the higher cost end of the
production curve will likely bring the market back into
balance. Most market observers are in agreement
that the market in April was over supplied, and
needed about 30Mt of annual capacity to come off
line to allow prices to recover to levels ensuring
healthy margins for most producers. As of early
September 2014, approximately 20Mt of annual
metallurgical coal production has been idled or taken
out of the market. It is expected further reductions in
supply will occur, but in Australia the four majors are
While Chinese steel production remains the dominant
driver of the seaborne metallurgical coal market, the
broader South East Asian market is still demonstrating
its potential to influence demand. New government
policies in India are expected to have a positive impact
on the market looking forward, as economic growth is
pursued
Indian Steel
industry’s higher dependence on imported coking
coal.
in combination with the
The Indonesian economy may yet prove to be the
stand out economy of South East Asia. The completion
of an orderly national election calendar saw a new
congress with a five year term elected, shortly
followed by the Presidential election. While at the
time of writing the President elect, Mr Joko Wijojo,
had yet to be inaugurated, he and his team have
moved quickly to ensure a smooth transition of power
with the encouragement of the outgoing President
SBY. There have been early moves to address a
widening current account deficit and to finalise some
lingering disputes between the national government
and major foreign mining companies. These moves
indicate a much desired pragmatic approach to
ensuring the treasury is funded to implement the
social agenda of the government. It is believed the
incoming
foreign
investment, and that the economic benefits from
mining will be sought via organic growth, rather than
introducing higher & uncompetitive mining taxes.
government will
encourage
coking
seaborne
Despite Indonesia being a new and small entrant into
coal market, exporting
the
approximately 5 Mtpa,
it has an established
knowledge base and a competitive position as the
world’s biggest coal exporting nation. The Coking coal
potential of Indonesia is significant and yet to be
properly developed. Integral to this development is
the creation of an efficient and reliable transportation
chain, and Cokal believes Shallow Draft Barging will be
the key to achieving this outcome.
Indonesia not only has the opportunity to become a
significant player in the Metallurgical market as a
supplier but also as an emerging consumer. Indonesia
currently consumes around 20Mt of steel per annum
while at the same time only producing about 5Mtpa
locally. Major steel producers recently announced
plans to further develop hot metal and rolling capacity
in Indonesia. This reflects the growing confidence in
investment sentiment as the potential of Indonesia’s
competitive manufacturing base and potentially large
growth economy is realised. The population of 250
million makes it the fourth largest in the world, with a
COKAL LIMITED Annual Report 2014 | Page 2 of 61
fast growing middle class and a highly aspirational
young demographic.
As stated above, the company has been focused on
progressing the BBM project towards production.
the Pre-Feasibility Study which was
Following
completed in October 2012, a major exploration
program was undertaken to further define coal
resources discovered in the western KLM area of the
BBM lease. Recently completed, this program resulted
in a major upgrade of the BBM resources. In October
2013 an upgraded Total Coal Resource of 261Mt was
announced, including 10.5Mt of Measured, 13.5Mt
Indicated and 237Mt Inferred resources. In parallel
with the completion of the drilling program, a
Definitive Feasibility Study (DFS) was undertaken
based on the 2Mtpa Open cut project identified in the
Pre-Feasibility Study.
The DFS was completed in February 2014, indicating
the 2Mtpa open cut operation with a ten year mine
life, generates significant value for a relatively low
capital cost. Importantly, the early years of operation
when strip ratios are lower have highly competitive
low cash cost resulting in strong margins available to
pay down debt early in the project’s life. The operating
cost structure is such that even at today’s cyclically
low price, when over half of the metallurgical coal
production is cash negative, the BBM project will have
strong cash margins.
Since the completion of the DFS the company has
worked to finalise financing and gain the
last
remaining approvals needed for commencement of
construction.
financing
from an
Financing arrangements of a conditional proposal for a
international
US$150M debt
consortium headed up by Platinum Partners was
signed in December 2013. Since that time, the parties
have been working
the detail and
documentation with the intention of having the facility
in place at
commencement of project
construction. Platinum have shown their commitment
to the project with the provision of a Bridging loan
facility of US$3.5 million in April 2014 followed with a
further US$5.65 million facility in August 2014.
through
the
Based around our experienced Country Manager, Mr
Garry Kielenstyn, Cokal has assembled a team of some
Indonesia’s best mining talent. This team of
of
technical professionals have been busy preparing the
project for the start of construction by putting in place
necessary management systems to ensure safe,
reliable and environmentally sustainable performance.
The team is complimented by a core of engineering
and
from
respected
consultancy,
Resindo. Resindo oversaw the preparation of the DFS
and they, along with Cokal’s core operations team, will
be responsible for delivering the BBM project on time
and budget with ownership over the process of
construction.
project management
Indonesian
professionals
engineering
I look forward to the year ahead and seeing BBM
through its construction phase and the company
becoming a metallurgical producer centred in the
exciting growth economy that is Indonesia.
Peter Lynch
Chairman
The approval of the Indonesian Transport Minister was
received in December 2013 for the proposed Punarma
Port on the Barito River. The dedicated barge loading
terminal has been designed to integrate with Cokal’s
specialised Shallow Draft Push Barging System,
connecting
for purpose
intermediate stockpile to be constructed in the Kalanis
area.
large ocean going barges
equivalent in size to a hatch on the most used Coal
bulk Carriers are then towed to the transhipment
location at Taboneo offshore from Banjarmasin.
From Kalanis,
the project
to a
fit
The most significant approval was obtained in July
2014 when the Ministry of Forestry granted the Izin
Princip Ijin Pinjam Pakai Kawasan Hutan or “In-
Principal Forestry Permit” for the Integrated BBM
project including the Punarma Port, 55 Km of haul
road, and BBM Mine area. The In-Principal Forestry
Permit was the last major approval needed prior to
the issuance of the “Borrow and Use of Forestry Area
Permit” which allows the company to commence
construction. The requirements for the issuance of
this last permit are procedural in nature and the
company expects this to occur early in the fourth
quarter of 2014.
COKAL LIMITED Annual Report 2014 | Page 3 of 69
Review of Operations
Corporate
Completion of the Definitive Feasibility Study.
On the 13th of February 2014, Cokal announced the completion of a Definitive Feasibility Study for its 60% owned
Bumi Barito Mineral Coal Project, located in Central Kalimantan, Indonesia. The Study has been prepared by Resindo
Resources & Energy Indonesia (“Resindo”) an Indonesian company, experienced in all aspects of successful project
design and development for the Minerals, Mining, Oil and Gas, Power Generation sectors
The study confirmed that the BBM coal mine and associated transport system can be developed as a low capital cost
operation (US$75M) with moderate to medium range operating cost (First 5 years average US$82/product tonne
excluding 7% royalty). The Project has a Net Present Value after tax of US$366M under the DCF financial model
delivered by Cokal using the independent study (based on a consensus of brokers forward prices at the time). The
start of production from BBM is scheduled for 2H 2015.
Platinum Partners Funding Offer
Cokal has received a conditional proposal for a debt financing facility of up to US$150M from an international
consortium led by Platinum Partners. The facility will initially be used to fund Cokal’s 2Mtpa BBM Project.
Cokal has been involved in detailed negotiations on the proposal which is in the form of a non-binding Memorandum
of Understanding and is subject to various terms and conditions including the completion of Technical and Legal Due
Diligence and obtaining the necessary regulatory approvals for the project to proceed.
Discussions with Platinum Partners and their potential consortium members have been proceeding positively and are
focussed on finalising the necessary funding to start construction on the BBM project. Platinum Partners has an
exclusivity agreement with Cokal for these discussions and has shown on on-going commitment to the project and
company by extending bridging loan facilities to minimise delay to project timing.
Shareholders should note that there is no certainty that any agreement will be reached or that any transaction will
eventuate from any current or future discussions or diligence enquiries.
Blumont Placement and US$4M Loan Facility
As announced on 8 July 2013, the Blumont Group Placement raised AU$9.6M. As part of that arrangement
Blumont made available a loan facility of up to US$4M to continue the development work. A further US$4M can be
drawn by mutual agreement. Of the initial US$4M facility a total of US$3.0M had been drawn as of 30 June 2014.
The loan is repayable within 3 years, interest is 5% per annum payable quarterly in arrears and can be capitalised and
repaid at maturity.
Exploration
Six Indonesian Coal Exploration Projects
The Company has acquired a share of the following projects:
•
60% of the shares in companies which own the BBM and Borneo Bara Prima (BBP) projects located in Central
Province, Kalimantan, Indonesia. The BBM project area comprises approximately 15,000ha and the BBP project
comprises approximately 13,050ha.
•
•
75% of the shares in companies which own the Anugerah Alam Katingan (AAK) and Anugerah Alam Manuhing
(AAM) projects are also located in Central Province, Kalimantan, Indonesia. The AAK project area comprises
5,000ha and the AAM project comprises 10,000ha.
75% of the shares in the company PT Silangkop Nusa Raya (SNR) which owns three exploration licences in West
Kalimantan covering an area of approximately 13,000ha.
Furthermore the company has entered into an agreement to acquire 75% of the shares in the company PT Tambang
Benua Alam Raya (TBAR) which own an exploration licence covering an area of approximately 18,850ha. This licence is
adjacent to the company’s BBM project
BBM, BBP, AAK, AAM and TBAR are within the highly prospective Central Kalimantan coking coal basin, with BBP, BBM
and TBAR adjacent to BHP Billiton’s coking coal tenements. SNR is in a highly prospective coking coal area in West
Kalimantan, near the Malaysian border.
COKAL LIMITED Annual Report 2014 | Page 4 of 69
BBM Project
BBM covers an area of 14,980 hectares (ha), immediately adjacent to BHP Billiton’s Juloi tenement, straddling the
Barito River and has numerous outcrops of bright coal. Ongoing drilling in the Eastern Block of BBM indicates
premium coking coal with Crucible Swell Numbers (CSN) values generally 9 or more.
A major drilling program was completed with most of the attention focused on the eastern KLM area of the BBM
lease. The program provided the company with significant results and intersections which formed the basis of the data
set used to develop a reliable geological model for the coal occurrences in the eastern block of the BBM project.
The main focus of the drilling was the ‘J’ seam which is characterised by consistent quality and continuity. The ‘J’ seam
overlies the B. C & D seams by roughly 150 to 200m of undulating sedimentary units. The seam gently folds gently
dipping to the south east. The folding causes the seam to outcrop in two areas of the lease which provide opportunity
for open cut extraction where the strip ratios are low enough to provide economic returns.
While the majority of the drilling program targeted the ‘J’ seam a pattern of more widely spaced holes were deep
holes which intersected the lower B, C & D, seams. The understanding of the potential underground resources of
these seams has improved the overall understanding of the complete geological economic potential and the longer
term possibility of underground mining in the future.
Seam J thickness reached 1.8m towards the northern boundary where the seam continues to display excellent coking
properties. Drilling results indicate the J Seam potential for both open-cut and underground extraction, with
competent sandstone strata covering the coal seam throughout the resource area. The sandstone strength is generally
in excess of 60 Mega Pascals (MPa), similar to the sandstone strata in Australia’s coking coal Bowen Basin, with some
hard bands reach 95 MPa in the BBM tenement. This material is ideal for designing steep open pit walls, as well as for
establishing 200m to 300m wide longwall panels for underground extraction.
A detail mapping survey of coal outcrops commenced in March 2014. The mapping survey found numerous outcrops
of Seams B, C and D close to the Barito River. Channel samples of these coal seams were analysed and confirmed the
continuity and consistency of low ash levels in these seams as indicated by the widely spaced boreholes. It is planned
to continue this detail mapping survey such that the Resource categorization of the B, C and D Seams will be upgraded
form Inferred to Measured Resources in the shallow, low strip ratio areas near the Barito River.
As a result of the drilling program, an update of the JORC Resource statement was announced on the 25 October
2013. In December 2013, Cokal converted their JORC Resource statement to be fully compliant with the 2012 version
of the JORC Code, with the resulting estimates of 10.5 mt of Measured, 13.5 mt of Indicated and 237 mt of Inferred
Resources.
In January 2014, SRK Consultants completed an independent audit of Cokal’s Resource statement. SRK confirmed the
report is fully compliant with the 2012 version of the JORC Code and that the geological model used as the basis of the
estimation is a fair and accurate interpretation of the outcrop and reliable borehole data acquired by Cokal’s
exploration team.
Africa
No major work was conducted in Tanzania or Mozambique during the year. The Company is maintaining a watching
brief on development in the region.
JORC Code Statements
Cokal has primarily conducted exploration activity in the past 12 months and therefore considers itself a mining
exploration entity in accordance with the ASX listing rules. Cokal has not conducted any mining activity in the past 12
months.
In December 2013, Cokal released a Resource Statement for PT Bumi Bartio Minerial (BBM) project which was
compliant with the 2012 version of the JORC Code. The report was independently audited by SRK Consulting and was
deemed to be fully compliant with the 2012 JORC Code. The purpose of the Resource statement was to comply with
the requirements to comply with the new version (2012) of the JORC Code.
The previous BBM Resource Statement had been released in October 2013 and since there had been no additional
geological information, there was minimal differences (~1%) due to rounding of Inferred Resources.
COKAL LIMITED Annual Report 2014 | Page 5 of 69
The Resource Statement for BBM released in December 2013 is current at 30 June and at the time of this annual
report.
Table 1: BBM Coal Resource
Seam
Measured
Indicated
Inferred
Total
Thickness
(m)
1.33
1.35
1.18
1.01
Resources
Resources
(Mt)
10.5
-
-
-
(Mt)
13.5
-
-
-
Resources
(Mt)
31
75
70
61
Resources
(Mt)
55.0
75.0
70.0
61.0
Seam
Name
J
D
C
B
Total
10.5
13.5
237
261.0
Cokal prepared an updated report of the Coal Resources in the BBM East Block. The evaluation of B, C, D and J seams
provides an objective assessment of the Coal Resources in accordance with the Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves (JORC Code), 2012, which is used for the reporting of Mineral
(Coal) Resource estimations to the ASX.
The main exploration activities conducted to date include:
Surface mapping of coal and non-coal outcrops
Shallow drilling using HQ coring for sampling
•
•
• Deep drilling (average 400 metres (m) depth) for determining the continuity of the coal seams across the
BBM East Block.
Based on the data collected from these activities and a minimum seam thickness cut-off of 0.6m, a total Coal Resource
of 261Mt of B, C, D and J seams (Table 1) have been estimated in accordance with the 2012 JORC Code. Of that,
10.5Mt is deemed Measured Resources and 13.5Mt is Indicated Resources. Both Measured and Indicated Resources
have been estimated for the J seam only which has been confirmed as a coking coal from analyses conducted in an
Australian laboratory (Table 3).
The BBM Coal Resource includes Resources which have the potential to be economically extracted using both open pit
and underground mining methods.
The coal seams are generally thicker than 1m and the roof predominantly consists of very hard sandstone (up to 95
Megapascals (MPa)) while the immediate 1m to 2m of roof consists generally of a competent siltstone. This
combination is ideal for extraction of the deeper Coal Resources using underground methods such as thin-seam
longwall mining.
The area covered by the current Coal Resource estimate is 30% of the total area of the BBM Production IUP tenement
license.
The Coal Resource has been confirmed as a metallurgical coal from analyses conducted in an Australian laboratory,
and is comprised of 90% coking coal and 10% PCI/semi-soft coking coal (Tables 2 and 3). Coal quality data in this
report is derived from laboratory analyses of HQ coal cores with a minimum of 90% recovery.
Seam Product
D
D
C
C
B
B
PCI
Coking
PCI
Coking
PCI
Coking
Ash
Volatile
Matter
10.3
14.4
9.3
14.5
Table 2: Coal Quality of B, C and D Seams in BBM
Calorific
Value
8,204
8,287
8,191
8,265
7,676
7,591
5.1
5.1
5.5
5.5
14.0 9.5
12.6 13.8
Total
Sulphur
0.43
0.39
0.41
0.24
0.41
0.23
Fixed
Carbon
83.7
79.7
84.3
79.5
75.6
73.1
Inherent
Moisture
0.9
0.9
1.0
0.5
0.9
0.5
CSN
1.5
9.0
1.0
8.5
1.5
7.5
Relative
Density
1.36
1.33
1.36
1.33
1.40
1.38
Phos-
phorus
0.002
0.002
0.001
0.001
0.004
0.002
COKAL LIMITED Annual Report 2014 | Page 6 of 69
Product Yield
Inherent
Moisture
Raw
Coal
Washed
Coal
100
0.9
81
0.7
Ash
6.5
23.2
5.3
Table 3: Coal Quality of J Seam in BBM
Fixed
Carbon
58.4 –
74.8
Volatile
Matter
15.6 –
18.9
Total
Sulphur
0.31
0.55
–
–
Calorific
Value
6500
8100
18.1
76.0
0.42
8,300
CSN
Relative
Density
Phos-
phorus
–
9
9
1.39
0.009
1.32
N/A
In addition PT Bumi Bartio Minerial (BBM), Cokal has interests in the following coal tenements (Exploration IUP
licenses) in Indonesia:
•
•
•
•
•
PT Borneo Bara Prima (BBP)
PT Anugerah Alam Manuhing (AAK)
PT Anugerah Alam Katingan (AAM)
PT Silangkop Nusa Raya (SNR)
PT Tambang Benua Alam Raya (TBAR)
Exploration activities in these projects has not been of a sufficient level in order to determine Coal Resources in
accordance with the 2012 JORC Code.
Material Differences from Estimations in the Previous Annual Report
The previous Coal Resource reported in Cokal’s 2013 annual report stated a total Resource of 77Mt, comprising 7Mt of
Indicated Resources in the J Seam, and the remainder attributed to Inferred Resources. The current Resource estimate
of 264Mt is largely attributed the exploration drilling across the Eastern Block of BBM project area, which
demonstrated the continuity of the major coal seams (B, C, D and J) in BBM. Additional Inferred Resources were
accumulated using drilling rigs capable of reaching depths of 300m to 400m.
As well, the increase in Measured and Indicated Resources is attributed to close space drilling around the subcrops of
the J Seam across the Eastern Block of BBM. The synclinal and anticlinal nature of the coal seams produced multiple
subcrops/outcrops of the J Seam and subsequently an abundance of shallow coking coal.
Table 4: Difference in Current and Previous Coal Resource Estimates
2013
2014
Measured
Indicated
Inferred
Measured
Indicated
Inferred
Difference
Resources
Resources
(Mt)
(Mt)
Resources
(Mt)
-
-
-
-
-
7
-
-
-
7
10
25
20
15
70
Resources
Resources
(Mt)
10.5
-
-
-
(Mt)
13.5
-
-
-
Resources
(Mt)
31
75
70
61
10.5
13.5
237
+21
+50
+50
+46
+7
Seam
Name
J
D
C
B
Total
COKAL LIMITED Annual Report 2014 | Page 7 of 69
Board of Directors
Peter Lynch
Chairman and Chief Executive Officer,
Mining Engineer
Patrick Hanna
Executive Director, Geologist
Previous President, CEO and Director of
Waratah Coal, also General Manager Oaky
North coal mine.
Vast worldwide coal exploration experience.
Domenic Martino
Non-Executive Director
Lieutenant General (Retired) Agus Widjojo
Non-Executive Director
(Appointed 14 August 2013)
Experienced junior exploration company
director and past CEO of Deloitte Touche
Tohmatsu in Australia.
Well respected amongst Indonesia’s leaders and
is considered a key contributor in the
development of Indonesia’s international ties
on various levels. Currently Chairman of the
Centre for Policy Studies & Strategic Advocacy
(CPSSA), a Jakarta based think tank.
Senior Management
Victor Kuss
Chief Financial Officer /
Joint Company Secretary
Garry Kielenstyn
Country Manager, Indonesia
Financial commercial and corporate experience
junior
international and
with major
companies.
listed
Project, Production, General and Area Manager
experience. Veteran of the Indonesian mining
in
and civil contracting
Kalimantan, living and working in Indonesian
since 1990.
industries, based
COKAL LIMITED Annual Report 2014 | Page 8 of 69
Bumi Barito Mineral Project
One of the most significant achievement during the year was the completion of a definitive feasibility study (DFS) on
the Bumi Barito Mineral (BBM) Project. The DFS focused on a 2 Mtpa direct ship open cut operation which was
identified in the Pre-feasibility study released in October 2014 as the optimum project for the development of
resources contained in BBM.
The DFS was prepared by Resindo
Resources and Energy Indonesia (Resindo)
an Indonesian company, experienced in all
aspects of successful project design and
development for the Minerals, Mining, Oil
sectors
and Gas, Power Generation
(certified
Quality
to
Management).
9001
ISO
and
facilities
associated
The Study has confirmed that the BBM
Mine
and
transport systems can be developed as a
low capital cost operation with moderate
to mid-range operating costs. The formal
risk analysis identified no issues which
could not be managed by reasonable
controls that would prevent the effective
construction and operations of the mine,
supporting facilities and transport chain for
exporting the coal.
The key concern in this area is traditionally the river access for barging, whereupon BBM utilised an expert Barging
consultant and barging contractor to design and manage a solution which is widely used in other regions facing similar
environmental conditions. This coupled with the planned export volumes that do not require a high annual utilisation
of river access to reach target coal levels, together with the development of a deep water river port near Kelanis to
serve as an intermediate stockpile port and buffer for off-shore vessel loading during the Phase 2 expansion, will help
reduce any effects of seasonal variances such as river heights.
Further the study has reviewed and determined the technical solutions and costs are generally consistent with and
found throughout other developed and operating coal mines in Indonesia and no particular concerns ranked highly,
including regulatory or political areas that may affect the development, with the current progress and status of the
BBM permits supporting this position.
The Study also confirmed the availability and experience of a pool of key contractors, fabricators and service providers
with demonstrable capability to undertake the works at the BBM site and who are fully cognisant of the seasonal
conditions, productivity effects and logistics requirements of working in Central Kalimantan.
The marketing study has identified that BBM's hard coking coal properties would command a high value as a blending
feed with significant potential upside based on the final Coal Preparation Plant or Washplant’s configuration which
will be further refined as additional seam material becomes available to tailor the products to the preferred market.
The only significant outstanding item at the time of the Study being issued that affects BBM proceeding to
construction was the final Forestry Department approval. This document received ministerial sign off in July 2014 with
the issuance of the In-Principal forestry permit. The full borrow and use Forestry permit is expected to be issued in the
Fourth Quarter 2014 after Cokal completes a number of pre-requisite activities which are considered procedural in
nature.
BBM Definitive Feasibility Study Outcomes
The BBM Project definitive feasibility study (DFS) was completed in February 2014 but was substantially completed
during the period. The aim of the study was to deliver a fully designed and costed project to a high level of confidence.
The DFS is focused on the initial 2 Million tonnes per annum (Mtpa) with a direct ship start-up phase. All approvals and
government processes have been submitted to allow development of an operation of up to 6Mtpa capacity.
COKAL LIMITED Annual Report 2014 | Page 9 of 69
Mine Design
The DFS mining study was completed by Aseamco a consultancy with extensive Indonesian and Australian experience
working from the geological model comprising the October 2013 JORC update. The mining study was developed by
first using a pit optimiser to rank coal resources in order of their relative cash margins. Overlaying this criteria was to
develop a mining schedule which targeted low in-situ ash resources in the early part of the mine life. This approach
resulted in a schedule which generated product coal early in the project life which not only had the lowest cash cost
but also delayed any capital requirements associated with coal processing to reduce product ash below the target
product specification of 8%.
The mine plan sees early production coming from a single pit extracting the low ash B, C D seams followed by the
opening of three additional pits accessing the J seam and later on the PCI resources of the B, C and D seams. While the
Geological model identified significant potential for underground mining potential the initial project will focus on a
purely low capital cost Open cut operation with a life of ten years. The underground potential would have the effect of
increasing the annual production potential and extending the project life.
Haul Road
A key part of the study was the 55 km haul road linking the BBM Mine site with the dedicated Barge loading facility to
be constructed at Punarma. The haul road has been designed to provide the trucks with a grade optimised route
which allows the coal trucks to maintain high travel speeds, operate efficiently and thereby achieve the lowest unit
cost per tonne kilometre. This includes the final bridge design and geotechnical investigations for both the bridges at
Osom and Babuat rivers. An hydrological review has also been undertaken to confirm bridge design parameters. The
full design covers all cut and fill quantities and identification of certain selected naturally occurring building materials
along the optimum route.
A land usage and ownership survey for the approximate 55 kilometres (km) of haul road has been completed
successfully with positive contributions from the local government and local land owners.
Barge Loading Facility
The Barge loading facility to be located at Punarma has been designed to suit the shallow draft push barging system.
The design is based on proven and successful facilities operating currently in the USA which are characterised by
simple low manning operations with minimal double handling of the coal product. Coal handling was paramount in
the engineering efforts to minimise product depredation and potential hand ability issues. Land acquisition
arrangements for the Purnama Port are underway with the majority of the 150ha site being identified as available and
appropriate for acquisition. Very significant contributions were made by the local community, land owners and local
government to ensure this result.
Goetechnical investigations have been undertaken for both the on-shore and off-shore components.
River Barging
Detailed studies of the river have been completed confirming the practicality of using a river based shallow draft
barging system. A detailed specific push tug and barge combination design to suit the identified navigable channel has
been produced. The shallow draft barging system increases the calendar utilisation of the Barito River which has
proven to be the main impediment for reliable logistics for the existing operators. While this system is an innovation
for Indonesia it forms the basis of bulk material movement for many countries around the world.
COKAL LIMITED Annual Report 2014 | Page 10 of 69
A barging Joint Venture (JV) agreement has been executed with a well-respected and experienced Indonesian barging
company, MDM Meratus Line. MDM has been instrumental in applying their practical knowledge from many years of
experience of commercial operation on the Barito servicing some of the most prestigious coal operation. Their
relationships with well some the world’s best shipyards means the final design and contract outcome will translate to
worlds best practice.
The Local Government has approved the location of the barge loading facility, with the Environmental Approval
allowing 6Mtpa throughput.
River Trans-loading Station and Intermediate stockpile
The study also included a detailed design and costing for the river based trans-loading station to transfer coal from the
river barging system for the upper Barito, to ocean going barges for delivery to offshore customer vessels via floating
crane transhipping systems. The river based trans-loading system has been designed to serve the dual function of
performing the in-loading system of the Intermediate stockpile facility when it is built. This allows the majority of the
capital cost of the intermediate stockpile facility to be delayed enough to be funded out of project cashflows rather
than in advance.
Final selection of the site of the trans-loading stockpile facility is currently being carried out and near completion with
a number of potential sites available
External Relations
BBM Mining Licence Boundary Pegging
After receipt of the Izin Usaha Pertambangan Eksploitasi (Production Mining Permit), Cokal completed the mandatory
requirements to commence installation of permanent boundary pegs at its PT BBM site. The program was presented
to the Regency Mines Department and Cokal was recognised by the Department as the first mining licence holder in
the Regency to fully complete this statutory requirement.
BBM Forestry Permit – Update
During the year PT BBM worked with the National Forestry Government to progress its application to upgrade the
Forestry Permit from Exploration to Exploitation. Cokal received the In-Principal Forestry Permit from the National
Forestry Department for an initial area 1,242 ha. The receipt of the In-Principal approval enabled work to commence
with the pegging of the approved Forestry Permit area (approx. 1,600 pegs to be installed). The boundary pegging is
expected to conclude in Q3 2014. After the pegging has concluded, and the additional administrative documents have
been finalised, Cokal will advise the National Forestry Minister in writing that the requirements of the In-Principal
approval are completed and the full Forestry Permit will be issued. The full Forestry Permit is expected to be awarded
in Q4 2014.
BBM Port Location Approval - Update
The approval of the PT BBM Barge Loading Facility was received from the National Transportation Minister. Now that
the port location has been secured, Cokal has commenced work on obtaining the Port Design Approval permit. The
Port design Approval is required prior to the commencement of construction.
BBM Fuel Farm and Magazine Location and Design Approvals
The PT BBM fuel farm and magazine locations were approved by the Regency Government in Q2 2013. After securing
the location approvals Cokal submitted the design applications for both facilities. The applications were assessed by
the Regency Government and design approval for both facilities was obtained in Q1 2014.
BBP Production Approval Advances – Update
The ugrade of the Izin Usaha Pertambangaan Eksplorasi (Exploration Mining Permit) to Izin Usaha Pertambangan
Eksploitasi (Production Mining Permit) was submitted in Q2 2013. Cokal has worked closely with the Regency
Government during the final year to address addition requirements associated with the finalisation and granting of
the Izin Usaha Pertambangan Eksploitasi (Production Mining Permit) which is expected to be awarded in Q4 2014.
KNR, SNR, AAK, AAM and TBAR Production Approval Advances – Update
During the financial year Cokal continued to work on progressing the Forestry Permits and having these projects listed
on the National Clean and Clear Register. In doing so Cokal has continued to work closely with the Regency and
Provincial Governments to progress the Forestry Permit requirements and with the National Mines Department to
fulfil the clean and Clear list requirements.
COKAL LIMITED Annual Report 2014 | Page 11 of 69
Safety and Health
As Safety & Health are both a key and integral part of our strategy to become a leading force in the metallurgical coal
sector we have taken a number of significant steps during the year including
•
• Mines Department accreditation of Adam Indra, our Safety and Health Manager, as a Wakil Kepala
Teknik Tambang (Deputy Mine Technical Manager) alongside Yoga Suryanegara who was previously
appointed Kepala Teknik Tambang (Mine Technical Manager). This gives us very strong Safety and Health
coverage during exploration, construction and mining activities.
received a formal commendation for both the standard and compliance of our reporting and been
nominated for Best Mine Safety Implementation at IUP Level nationally
In preparation for construction and mining works we have established an emergencies response
management plan in conjunction with ISOS, an international medical and emergency management
company. This includes the establishment of a medical clinic at Krajan and medical evacuation
procedures
•
• Upgraded site facility fire prevention and alert systems and electrical compliance to the relevant
•
•
•
•
•
Indonesian standard
Established a Safety Training system and carried out mine based defensive driving courses, first aid
courses at various levels and specific training courses for all employees on safety health and environment
compliance and safety preparations prior to carrying out activities
Conducted Fire Fighting, Airport Rescue & First Aid training at the local airport in conjunction with the
local government transportation department. We are continuing with regular refresher courses and also
provision of additional safety equipment
Instituted a formalised mobile and heavy equipment mine licence process which tests both theoretical
and practical ability prior to equipment operation on site. Similarly a process which reviews equipment
suitability and standard prior to operatioon on site
Ensured compliance with all government reporting requirements for which we have received a formal
commendation regarding to both standard and compliance of our reporting and been nominated for
Best Mine Safety Implementation at IUP Level nationally
Instituted a regular inspection protocol of equipment and facilities on a regular basis including all water
transport, light vehicles, tools and equipment and mining and construction equipment
• Administratively we established a number of procedures and processes including formalised Health and
Safety policies, objectives and targets, Health and Safety responsibility and accountability matrices.
• A Hazard identification and Risk Assessment Register was established for both current and future
•
activities associated both with exploration, construction and mining
Complete Health, safety and Environmental Induction process for all employees, contractors and visitors
including specific inductions for water transport and site flora and fauna protection. Currently over 450
persons have been inducted
• Health and Safety awareness campaigns carried out on a regular basis including daily and weekly
meetings and the production of an internal safety bulletin
COKAL LIMITED Annual Report 2014 | Page 12 of 69
Environmental
Sound management of the environment is a critical part of Cokal’s strategy to become a global force in the
metallurgical coal sector. In order to establish absolute compliance and develop very high level work practices a
number of key steps have been undertaken during the year including:
•
The updating of the Environment and Sustainability Policy to reflect the company’s transition from exploration
into production.
•
•
•
•
•
•
The commencement of developing the PT BBM Project’s Environmental Management System and the finalisation
and implementation of the Project’s Environmental Management Strategy
The commencement of baseline water and environmental monitoring at the BBM project area.
The continuation of the environmental awareness programme aimed at “grass roots” level and presented in such
a manner that it is easily comprehendable to employees with limited education. Topics include forest burning,
gold sluicing and rubbish disposal which are critical issues in this area.
The establishment of the BBM site nursery, where local provenance tree species and suitable ground cover
species as grown to supply plant stock for the site rehabilitation program. The nursery is currently maintaining a
stocking rate of approx. 5,000 plants.
The commencement of the school based environmental awareness and tree planting program. The program
commenced on World Environment Day and will provide environmental awareness training each month to
different local schools. In addition, the students at each of the schools will identify an area for rehabilitation and
PT BBM will provide plants and materials from the on-site nursery to support the school tree planting program.
This program will continue throughout the life of the PT BBM project and it is hoped that over 5,000 plants will be
planted on an annual basis outside the mining lease boundary through this program.
The removal from the PT BBM site of approx. 200 empty fuel drums and approximately 500 l of waste oil. The
drums and waste oil were taken by a licenced hazardous materials contractor and taken to an approved and
registered disposal facility in Banjarmasin. In addition, an ongoing contract has been established with the
licenced operator to remove drums and waste oil from the PT BBM site on a regular basis to ensure the number
of waste drums and volume of waste oil on site do not reach similar levels again.
Feasibility Studies
The Feasibility Study for the BBP project was submitted to the Regency Mines Department for review. At the
completion of the review Cokal worked closely with the Regency Government to modify some areas of the Report.
The Feasibility Study update was completed during the financial year and was re-submitted to the Regency
Government for final consideration and approval. Cokal has been advised that no additional work is required on the
Feasibility Study and approval of the study by the Regency Government is expected in Q4 2014.
COKAL LIMITED Annual Report 2014 | Page 13 of 69
Community Development
Cokal has continued with the implementation of its Corporate Social Responsibility (CSR) program. To date Cokal has
undertaken the following programs:
•
Cokal has assisted members of the local community in establishing a micro-business that makes cement blocks to
be used during the construction and operation of the PT BBM Project. PT BBM has provided the local business
owners with training in block making and business administration as well as providing some initial materials to
enable the micro-business to become operational. The blocks will be used for a variety of uses on site and it is
expected that the business will
evolve into other concrete based
products that can be purchased
and used by PT BBM.
•
•
•
•
•
•
•
•
Cokal has successfully trialed a fish
farm project at the PT BBM mine
site. Given the success of the
three pond trial, a second micro-
business focused on fish farming
local
will be established with
community
and
management in Q2 2014. Once up
and running the business will be
able to supply a variety of fresh
fish to the Project and also to local
villages.
ownership
Continuation of the sponsorship of
the four teachers at Tumbang
Tuan Junior High School. This school was previously closed and the continuation of the sponsorship allows the
school to remain open.
Cokal lead a five day health and safety training program for the operators of the local airport. This training
covered theoretical and practical training across a wide range of potential scenarios including emergency
response, injury management, firefighting, safety and risk identification as well as lectures regarding general
airport operational safety.
Continuation of the University scholarships program for 12 students across a range of faculties at including
finance, law, agriculture and engineering. The next cohort of students will start in Q3 2014 and this will bring to
total number of scholarships to 24.
Commencement of the University of Palangkaraya mining faculty partnership. This program includes Cokal
providing monthly lectures to the Mining faculty undergraduate program and Cokal providing training and
equipment to support teams from the University in competing in the national Mining Students competition.
Providing support to various cultural, religious and community based activities.
Providing support to the Central Kalimantan Scout Association through the provision of logistics support and
health and safety training.
Continuation with provision of medical and paramedic support to local villages in the vicinity of the PT BBM
Project.
COKAL LIMITED Annual Report 2014 | Page 14 of 69
Directors' Report
Your Directors present their report for the year ended 30
June 2014.
The following persons were Directors of Cokal Limited
(“Group”, “consolidated entity” or “Cokal”) during the
financial year and up to the date of this report, unless
otherwise stated:
Peter Lynch, Chairman and Chief Executive Officer
(Appointed on 24 December 2010)
(Appointed Chief Executive Officer on 5 May 2013
B.Eng (Mining)
Since graduating with a Mining Engineering degree in
1988, Mr Lynch has held various positions, within the
coal industry in Australia, as mining engineer, project
manager, mine manager, general manager and managing
director culminating most recently in the role, from
January 2006 until January 2010, as the President, CEO
and Director of Waratah Coal Inc., a TSX listed company
which was taken over by the Mineralogy Group in
reached a peak market
December 2008, having
capitalisation of CAD300 Million.
Other highlights
include:
• Mining Engineer, 50, over 27 years’ experience mainly
in coal.
• Proven track record
in coal project evaluation,
development and operation.
• Responsible for design and construction of one of
Australia’s best producing longwall projects, Oaky
North.
• Ex-CEO of Waratah Coal responsible for putting the
Galilee basin on the map, visionary development
plan.
• Ex-MD APC, MacArthur Coal operating entity
expanded to 6Mtpa.
• Strong following in Nth American Capital Markets,
WCI.TSX-V.
• Currently a director of WCB Resources Limited (TSX-
V:WCB).
Peter is a member of the Audit Committee.
During the past three years Peter has not served as a
director of an ASX listed company.
Pat Hanna, Executive Director
(Appointed on 24 December 2010)
B. Applied Science (Geology), CP, FAusIMM
Mr Hanna has over 32 years’ experience as a coal
geologist in the areas of exploration and evaluation
including planning, budgeting and managing drilling
programs
Indonesia, gained since
graduating from the University of New South Wales in
1976. Mr Hanna has authored and co-authored
numerous coal industry publications.
• Geologist, 61, over 32 years’ experience all in coal.
in Australia and
• Extensive experience in Indonesian coal.
• Exploration Manager for Riversdale Mining, principal
responsibility for discovery and documentation of
new coking coal basin in Mozambique.
• Ex-member of JORC committee.
• Principal Geologist SRK Australia for 6 years.
• Author of 19 technical publications.
• Reviewed and consulted on over 40 coal projects
globally.
• Highly experienced and respected.
Pat is a member of the Audit Committee.
During the past three years Pat has not served as a
director of an ASX listed company.
Domenic Martino, Non-Executive Director
(Appointed on 24 December 2010)
B. Bus, FCPA
Mr Martino
is a Chartered Accountant and an
experienced director of ASX listed companies. Previously
CEO of Deloitte Touch Tohmatsu in Australia, he has
significant experience in the development of "micro-cap"
companies.
• Former CEO Deloitte Touche Tohmatsu Australia.
• Key player in the re-birth of a broad grouping of ASX
companies including Sydney Gas, Pan Asia, Clean
Global Energy, NuEnergy Capital.
• Strong reputation in China.
• Lengthy track record of operating
in Indonesia,
successfully closed key energy and resources deals
with key local players.
• Proven track record in capital raisings across a range
of markets.
During the past three years Domenic has also served as a
Director of the following ASX listed companies:
• Pan Asia Corporation Limited* (since 24 December
2010)
• Synergy Plus Limited* (since 7 July 2006)
• Australasian Resources Limited* (since 27 November
2003)
• ORH Limited* (since 6 May 2009)
• Clean Global Energy Limited (appointed 9 October
2009, resigned September 2012)
• Coral Sea Petroleum Limited* (appointed 3 August
2012)
• MUI Corporation Limited
(MUI)
(appointed 19
December 2013)*
* denotes current directorship
Domenic is the Chairman of the Audit Committee.
Lt. General (Ret.) Agus Widjojo, Non-Executive
Director (Appointed on 14 August 2013)
COKAL LIMITED Annual Report 2014 | Page 15 of 69
Mr Widjojo graduated from the Indonesian Armed Force
Academy in 1970. He holds a Master’s Degree in Military
Art and Science from the National Security Strategy of
the US army Command and General Staff College,
Leavenworth WA and a Master Degree of Public
Administration from the George Washington University.
He is a well-respected amongst Indonesia’s leaders and is
considered a key contributor in the development of
Indonesia international ties on various levels.
Highlights include:
• Served as a staff officer
International
Commissioner for Control and Supervision in Vietnam
1973 and with the Indonesian Battalion with UNED II
in Sinai in 1975.
in the
• Command of an airborne
infantry battalion and
bridged and Command of TNI Command and Staff
College (SESKO TNI).
• Assistant for General Plans and Strategic Policies of
TNI Command in 1998.
• Vice Chairman of the national Parliament and leading
participant in deliberation leading the reform of
Indonesian armed force in the post-Suharto year and
transition to democracy.
• Vice Chairperson of the Executive Board of Parties for
Governance Reform, a Senior Fellow at CSIS Jakarta, a
member of the advisory Board of the Institute of
Peace and was a deputy of the President Policy
implementation.
• Unit and the
Indonesian representative on the
Indonesia-Timor Commission of Truth and Friendship.
• Chairman of the Centre for Policy Studies and
Strategic Advocacy (CPSSA).
During the past three years Agus has not served as a
director of an ASX listed company.
The following persons were Company Secretaries of
Cokal Limited (“Group”, “consolidated entity” or “Cokal”)
during the financial year and up to the date of this report,
unless otherwise stated:
Victor Kuss, Chief Financial Officer (CFO) and Joint
Company Secretary (Appointed on 5 September
2011) BComm, CA
Victor Kuss
is an experienced CFO with significant
exposure to listed resources companies and has a strong
track record in the successful growth and development of
resources and resource related companies.
Mr Kuss has significant experience in M&A activities and
capital raising. He has also worked extensively in a
number of overseas mining and resources related
operations. Mr Kuss is a Chartered Accountant and has a
Masters in Economics.
B.Bus (Accounting), CA
Duncan
is an accomplished and highly regarded
corporate administrator and manager. He has many
years’ experience in pivotal management roles in capital
raisings and stock exchange
listings for numerous
companies on the ASX, AIM Market of the London Stock
Exchange and the Toronto Stock Exchange.
Highly skilled in the areas of Group financial reporting,
Group regulatory, secretarial and governance areas,
business acquisition and disposal due diligence, he has
worked with Ernst & Young and PricewaterhouseCoopers
both in Australia and the UK.
Duncan is currently Company Secretary and CFO of other
listed companies on the ASX and TSX-V where he has
assisted
is
supported by a small experienced team of accountants
and administrators.
listing and capital raising. He
in their
Interests in Shares and Options
At 30 June 2014, the interests of the Directors in the
shares of Cokal Limited are shown in the table below. No
directors held options as at the date of this report.
Peter Lynch
Pat Hanna
Domenic Martino
Agus Widjojo
Ordinary Shares
56,052,000
25,800,000
37,120,001
-
Principal Activities
The principal activities of the consolidated entity during
the financial year were focused on the identification and
development of coal within the highly prospective
Central Kalimantan coking coal basin in Indonesia and to
explore for coal in Tanzania with JV partner Tanzoz
Resource Company Ltd (Tanzoz).
Operating Results
For the year ended 30 June 2014, the loss for the
consolidated entity after providing for income tax was
$6,464,173 (2013: $6,721,739).
The operating results have been heavily driven by the
exploration and development programs at BBM project.
This will cease as the project moves into the construction
phase.
The current focus is on finalising the funding facility and
commencing construction. More detail on the program is
included separately in the Annual Report particularly in
the ‘Review of Operations’ and ‘Chairman’s Letter to
Shareholders’ sections.
Dividends Paid or Recommended
There were no dividends paid or recommended during
the financial year.
Duncan Cornish, Joint Company Secretary
(Appointed on 24 December 2010)
Review of Operations
COKAL LIMITED Annual Report 2014 | Page 16 of 69
Detailed comments on operations and exploration
programs up to the date of this report are included
in the Annual Report under Review of
separately
Operations.
Review of Financial Condition
Capital Structure
On 8 July 2013 Cokal announced it would issue a private
placement to Singapore
listed private equity group
Blumont Ltd. Under the arrangement Blumont Ltd was
issued 60,057,034 ordinary shares in Cokal at a price of
A$0.16 raising A$9,609,125 before costs. This placement
wascompleted during the year.
On 11 July 2013, 4,000,000 options were issued to
employees at A$0.214 and 7,300,000 options at A$0.25
expiring on 11 July 2017.
At 30 June 2014, the consolidated entity had 471,103,926
ordinary shares and 22,125,000 unlisted options on issue.
Financial Position
The net assets of the consolidated entity have increased
by $3,305,316 from $57,602,800 at 30 June 2013 to
$60,908,116 at 30 June 2014. This increase has largely
resulted from the issue of share capital.
less current
The consolidated entity’s working capital, being current
assets
from
$882,957 in 2013 to $366,284 in 2014. The decrease is
primarily driven a new loan classified as current liability.
liabilities has decreased
Treasury Policy
The consolidated entity does not have a formally
established treasury function. The Board is responsible
for managing the consolidated entity’s finance facilities.
Some goods and services purchased by the consolidated
entity, along with the payments made to the vendors of
the Kalimantan coal projects, are in foreign currencies
(US dollars or Indonesian Rupiah).
The consolidated entity does not currently undertake
hedging of any kind.
Liquidity and Funding
The consolidated entity believes it has sufficient access
to funds(see below) to finance
its operations and
exploration/development activities, and to allow the
consolidated entity to take advantage of favourable
business opportunities, not specifically budgeted for, or
to fund unforeseen expenditure.
Significant Changes in the State
of Affairs
into an
In November 2013,
US$8million loan facility with the Blumont Group Limited
of which US$4million could be drawn immediately and
the remaining balance of the facility is subject to mutual
agreement. US$3million of the facility was drawn during
the year. US$1million remains undrawn and is planned to
be drawn over the financial year ending 30 June 2015.
the Group entered
On 4 December 2013, Cokal received a conditional
proposal for a debt financing facility of US$150million
from an international consortium including Platinum
Partners. The facility will be used to fund Cokal’s 2Mtpa
BBM Project. Cokal Limited subsequently accepted the
proposal. Closing is conditional on satisfaction of various
conditions including diligence, there being no material
adverse
legal
agreements reflecting the commercial terms, all project
approvals being in place and other usual and customary
terms for major project financing in Indonesia.
execution of definitive
changes,
On 29 March 2014, the Group entered into a short term
loan agreement for USD$3.5 million with Platinum
Partners for working capital. At 30 June 2014 Cokal had
fully drawn down US$3,500,000 (AU$3,757,381) of the
bridging
from Platinum Partners.
Subsequent to 30 June 2014 Platinum Partners increased
to
the Bridging Loan Facility
US$9,150,000.
from US$3,500,000
loan provided
on
2013
August
announced
Cokal
the
14
appointment of Lieutenant General (retired) Agus
Widjojo as Non-executive Director. His appointment
provided Coal with a depth of knowledge and experience
in Indonesia to help Cokal to achieve its targets and goals
in creating a successful and progressive coking coal
mining business in Central Kalimantan.
On 13 February 2014, Cokal announced the completion
of a Definitive Feasibility Study for its 60% owned Bumi
in Central
Barito Mineral Coal Project,
Kalimantan, Indonesia. The study has been prepared by
Resindo Resources & Energy (“Resindo”), an Indonesian
company, experienced in all aspects of successful project
design and development for the Minerals, Mining, Oil
and Gas, Power Generation sectors.
located
The study confirmed that the BBM coal mine and
associated transport system can be developed as a low
capital cost operation (US$75M) with moderate to
medium range operating cost (First 5 years average
US$82/product tonne).
the
Significant Events after
Reporting Date
On 14 July 2014, the Group advised that the functional
currency of Cokal Limited is expected to be United States
(US) dollars from Australian dollars effective from 1 July
2014. Consistent with the change, the presentation
currency of the Group will also be expected to be
changed to US dollars. This change means that the
financial information in the Group quarterly reports to
ASX, as well as its half year and annual accounts will be
presented in US dollars.
On 11 August 2014, the Group secured further additional
loan funds of US$5.650 million from a fund managed by
Platinum Partners (Platinum) bringing the total loan for
the project development to date to US$9.150 million.
The additional loan is subject to withhold at the date of
utilisation the aggregate amount of:
a. US$750,000, as a non-refundable work fee payable to
the lender in respect of the facility; and
b. US$150,000, as the borrower's contribution for costs
and expenses as stipulated in the agreement, the
COKAL LIMITED Annual Report 2014 | Page 17 of 69
balance of which amount is refundable on the
repayment date to the extent not utilised by the
lender.
Repayment of the first loan has been extended with the
total loan of US$9.150 million now repayable within 6
months of receiving the additional loan funds. The total
loan can also be rolled over into the BBM project
financing facility once it is in place. The loan the facility is
secured 950 ordinary shares and 46,608,900 preference
shares of Cokal Holdings Pte. Ltd. and for all shares of
Cokal-BBM Pte. Ltd.
On 27 August 2014, 15,000,000 options were issued to
Platinum Partners at A$0.20 expiring on the 27 August
2018 (expiry date can be extended to 27 August 2022 in
certain circumstances). The options are granted as part
consideration for the BBM funding package announced
on 11 August 2014.
Future Developments, Prospects
and Business Strategies
in
the operations of
Likely developments
the
consolidated entity and the expected results of those
operations in subsequent financial years have been
discussed where appropriate in the Annual Report under
Review of Operations.
There are no further developments of which the
Directors are aware which could be expected to affect
the results of the consolidated entity’s operations in
subsequent financial years.
Business Results
The prospects of the Group in developing their properties
in Indonesia may be affected by a number of factors.
These factors are similar to most exploration companies
moving through exploration phase and attempting to get
projects into production. Some of these factors include:
•
Exploration - the results of the exploration activities
at the BBM project and the tenements in Central
Kalimantan may be such that the estimated
resources are insufficient to justify the financial
viability of the projects.
•
•
Regulatory and Sovereign - the Group operates in
Indonesia and deals with local regulatory authorities
in relation to the operation and development of its
properties. The Group may not achieve the required
local
they may be
significantly delayed to enable it to commence
production.
regulatory approvals or
Funding - the Group will require additional funding
to move from the exploration/development phase to
the production phase of the BBM project and the
tenements in Central Kalimantan. There is no
certainty that the Group will have access to available
financial resources sufficient to fund its capital costs
and/or operating costs at that time.
• Development - the Group is involved in developing
greenfield projects in Indonesia which could result in
capital costs and/or operating costs at levels which
do not justify the economic development of the
project.
• Market - there are numerous factors involved with
early stage development of its properties such as the
BBM project, including variance in commodity price
and labour costs which can result in projects being
uneconomical.
Environmental Issues
The consolidated entity is subject to environmental
regulation in relation to its exploration activities in
respective countries. Indonesia where the company’s
main project is located the principal laws are Act No.41 of
1999 regarding Forestry (the Forestry Law), Act No.4 of
2009 regarding Minerals and Coal Mining (the Mining
Law) and Act No. 32 of 2009 regarding Environmental
Environment
Protection
Law). There are no matters that have arisen in relation to
environmental issues up to the date of this report.
and Management
(the
Non-Audit Services
The following non-audit services were provided by the
Cokal’s auditor, Ernst & Young. The Directors are satisfied
that the provision of non-audit services is compatible
with the general standard of independence for auditors
imposed by the Corporations Act 2001. The nature and
scope of each type of non-audit service provided means
that auditor independence was not compromised.
Ernst & Young received the following amounts for the
provision of non-audit services:
Assurance related agreed upon services
Tax compliance services
2014
$
2013
$
-
-
-
-
-
-
Remuneration Report (Audited)
This remuneration report for the year ended 30 June
2014 outlines the remuneration arrangements of the
Group in accordance with the requirements of the
Corporations Act 2001 (the Act) and its regulations. This
information has been audited as required by section
308(3C) of the Act.
The remuneration report details the remuneration
arrangements for key management personnel (KMP) who
are defined as those persons having authority and
responsibility for planning, directing and controlling the
major activities of the Group, directly or indirectly,
including any director (whether executive or otherwise)
of the consolidated entity.
For the purposes of this report, the term “executive”
includes the Executive Chairman, Chief Executive Officer,
directors and other senior management executives of the
Group included in this report.
Remuneration report approval at FY13 AGM
COKAL LIMITED Annual Report 2014 | Page 18 of 69
remuneration
The FY13
received positive
shareholder support at the FY13 AGM with proxy votes of
92% in favour (of shares voted).
report
Remuneration Policy
The performance of the consolidated entity depends
upon the quality of its directors and executives. To
prosper, the consolidated entity must attract, motivate
and retain highly skilled directors and executives.
The Board does not presently have Remuneration and
Nomination Committees. The directors consider that the
consolidated entity is not of a size, nor are its affairs of
such complexity, as to justify the formation of any other
special or separate committees at this time. All matters
which might be dealt with by such committees are
reviewed by the directors meeting as a Board.
and Nomination
in carrying out the functions of the
The Board,
is
Remuneration
the
responsible
compensation arrangements of senior executives and
consultants.
and negotiating
Committees,
reviewing
for
The Board,
in carrying out the functions of the
Remuneration and Nomination Committees, assess the
appropriateness of
the nature and amount of
remuneration of such officers on a periodic basis by
reference to relevant employment market conditions
the overall objective of ensuring maximum
with
stakeholder benefit from the retention of a high quality
Board and executive team. Such officers are given the
opportunity to receive their base remuneration in a
variety of forms including cash and fringe benefits. It is
intended that the manner of payments chosen will be
optimal for the recipient without creating undue cost for
the consolidated entity.
The consolidated entity aims to reward the Executive
Directors and senior management with a level and mix of
remuneration commensurate with their position and
responsibilities within the consolidated entity. The
Board’s policy is to align director and executive objectives
with shareholder and business objectives by providing a
fixed remuneration component and offering short and/or
long-term incentives as appropriate.
In accordance with best practice corporate governance,
the structure of non-executive directors, Executive
Directors and senior management remuneration
is
separate and distinct.
Non-executive Director Remuneration
The Board seeks to set aggregate remuneration at a level
which provides the consolidated entity with the ability to
attract and retain directors of the highest calibre, whilst
incurring a cost which is acceptable to shareholders.
in a general meeting
remuneration as determined by
The Constitution of Cokal Limited and the ASX Listing
Rules specify that the non-executive directors are
the
entitled
to
to be
consolidated entity
apportioned among them
in such manner as the
Directors agree and, in default of agreement, equally.
The aggregate remuneration currently determined by
Cokal Limited is $500,000 per annum. Additionally, non-
executive directors will be entitled to be reimbursed for
properly incurred expenses.
If a non-executive director performs extra services, which
in the opinion of the directors are outside the scope of
the ordinary duties of the director, the consolidated
entity may remunerate that director by payment of a
fixed sum determined by the directors in addition to or
instead of the remuneration referred to above.
However, no payment can be made if the effect would be
to exceed the maximum aggregate amount payable to
non-executive directors. A non-executive director is
entitled to be paid travel and other expenses properly
incurred by them in attending directors’ or general
meetings of Cokal Limited or otherwise in connection
with the business of the consolidated entity.
The remuneration of the sole non-executive director for
the year ending 30 June 2014
in this
Remuneration Report.
is detailed
Executive Directors and Senior Management
Remuneration
The consolidated entity aims to reward the Executive
Directors and senior management with a level and mix of
remuneration commensurate with their position and
responsibilities within the consolidated entity so as to:
•
for consolidated entity and
reward Executives
individual performance;
• align the
interests of executives with those of
shareholders;
•
link reward with the strategic goals and performance
of the consolidated entity; and
• ensure total remuneration is competitive by market
standards.
The remuneration of the Executive Directors and senior
management may from time to time be fixed by the
Board. As noted above, the Board’s policy is to align the
Executive Directors and senior management objectives
with shareholder and business objectives by providing a
fixed remuneration component and offering short and/or
long-term incentives as appropriate.
The level of fixed remuneration is set so as to provide a
base level of remuneration which is both appropriate to
the position and is competitive in the market. Short-term
incentives may be provided in the form of performance
bonuses. Fixed remuneration and short-term incentives
are reviewed annually by the Board, in carrying out the
functions of the Remuneration Committee, and the
process consists of a review of Company-wide and
comparative
individual
remuneration in the market and internal, and where
appropriate, external advice on policies and practices.
performance,
relevant
Senior management are given the opportunity to receive
their fixed remuneration in a variety of forms including
cash and fringe benefits such as motor vehicles and
expense payment plans. It is intended that the manner
of payment chosen will be optimal for the recipient
without creating undue cost for the consolidated entity.
Long-term incentives may be provided in the form of
options and/or the
issue of shares following the
completion of satisfactory time periods of service. The
consolidated entity uses employee continuity of service
future share price to align comparative
and the
COKAL LIMITED Annual Report 2014 | Page 19 of 69
shareholder return and reward for executives.
The remuneration of the Executive Directors and senior
management for the year ending 30 June 2014 is detailed
in this Remuneration Report.
Relationship between Remuneration and Consolidated
Entity Performance
During the financial year, the consolidated entity has
generated losses as its principal activity was exploration
for coal within the Central Kalimantan coking coal basin
in Indonesia.
The following table shows the performances of the
consolidated entity for the last five years:
Year-end
(30 June)
2014
$
2013
$
2012
$
2011
$
2010
$
Share price
0.14
0.16
0.21
0.75
0.18
Basic loss per
share
(1.40)
(1.64)
(1.68)
(1.39)
(2.67)
There were no dividends paid during the year ended 30
June 2014.
As the consolidated entity is still in the exploration and
development stage, the link between remuneration,
consolidated entity performance and shareholder wealth
is tenuous. Share prices are subject to the influence of
coal prices and market sentiment toward the sector, and
as such
increases or decreases may occur quite
independent of executive performance or remuneration.
Employment and Services Agreements
It is the Board’s policy that employment and/or services
agreements are entered into with all Executive Directors,
senior management and employees.
Agreements do not provide
for pre-determining
compensation values or method of payment. Rather the
amount of compensation is determined by the Board in
accordance with the remuneration policy set out above.
KMP are entitled to their statutory entitlements of
accrued annual leave and long service leave together
with any superannuation on termination. No other
termination payments are payable.
to
the
services
Chairman and Chief Executive Officer
Cokal Limited has a services agreement with Petla Trust
and Peter Lynch, the Executive Chairman and CEO. The
Agreement commenced on 24 December 2010. Under
the terms and conditions of the agreement, Petla Trust
has agreed to provide certain corporate management
and other
consolidated entity.
Additionally on the 5th of May 2013, Peter Lynch has
agreed to act as the Chairman and Chief Executive Officer
of Cokal Limited. The agreement with Petla Trust was
amended to allow Peter Lynch to act as Chief Executive
officer and the base fee for provision of the service was
adjusted to $520,000 per annum (exclusive of GST) on
the basis of a minimum of 80% of Peter’s time. The
consolidated entity is also obliged to reimburse Petla
Trust for all reasonable and necessary expenses incurred
by Petla Trust in providing services pursuant to the
agreement.
Both Cokal Limited and Petla Trust are entitled to
terminate the agreement upon giving not less than three
month’s written notice. In the event that Petla Trust is in
breach of the agreement, Cokal Limited may terminate
In
the agreement
addition, Cokal Limited is entitled to terminate the
agreement upon the happening of various events in
respect of Petla Trust’s solvency or other conduct of Petla
Trust or Peter Lynch.
immediately on written notice.
Executive Director
Cokal Limited has a services agreement with Hanna
Consulting Services Pty Ltd and Pat Hanna, Executive
Director. The Agreement commenced on 24 December
2010. Under the terms and conditions of the agreement,
Hanna Consulting Services Pty Ltd has agreed to provide
certain executive and geological management and other
services to the consolidated entity. Additionally, Pat
Hanna has agreed to act as the Executive Director of
Cokal Limited.
Hanna Consulting Services Pty Ltd will receive a base fee
for provision of the services of $240,000 per annum
(exclusive of GST) for a minimum of ten days service per
month. Additional fees of $2,000 per day will be paid for
additional services performed greater than ten days per
month. The consolidated entity is also obliged to
reimburse Hanna Consulting Services Pty Ltd for all
reasonable and necessary expenses incurred by Hanna
Consulting Services Pty Ltd in providing services pursuant
to the agreement.
Both Cokal Limited and Hanna Consulting Services Pty Ltd
are entitled to terminate the agreement upon giving not
less than three month’s written notice. In the event that
Hanna Consulting Services Pty Ltd is in breach of the
agreement, Cokal Limited may terminate the agreement
immediately on written notice. In addition, Cokal Limited
is entitled to terminate the agreement upon the
in respect of Hanna
happening of various events
Consulting Services Pty Ltd’s solvency or other conduct of
Hanna Consulting Services Pty Ltd or Pat Hanna.
for
Senior Management
CFO / Joint Company Secretary
Cokal Limited has an employment agreement with Victor
Kuss,
the position of Chief Financial Officer
commenced on 5th September 2011. He was further
made Joint Company Secretary on the 14th May 2012. Mr
Kuss receives an annual base salary of $265,000,
exclusive of compulsory superannuation contributions.
Mr Kuss is eligible for an annual performance bonus of up
to $100,000, based on the discretion of the CEO, as the
Group is an early stage exploration/development entity.
The employment agreement may be terminated at any
time by
for Cause, being serious
misconduct or the happening of various events in respect
of Mr Kuss’s conduct.
the Company
terminate
The Company may
the employment
agreement without Cause or for permanent disability by
In these
giving three months’ notice to Mr Kuss.
circumstances Mr Kuss will receive three months annual
base salary.
Mr Kuss may terminate the employment agreement by
providing the Company with three months’ notice.
Joint Company Secretary
COKAL LIMITED Annual Report 2014 | Page 20 of 69
Cokal Limited has a services agreement with Corporate
Administration Services Pty Ltd (CAS) and Duncan
Cornish, the Joint Company Secretary. The agreement
commenced on 1 December 2011. Under the terms and
conditions of the agreement, CAS has agreed to provide
certain corporate secretarial, administration and other
services to Cokal Limited. Additionally, Mr Cornish has
agreed to act as the secretary of Cokal Limited.
CAS receives a base fee for provision of the services of
$40,000 (exclusive of GST). If at the request of the
consolidated entity, CAS or Mr Cornish provides
additional services to the consolidated entity, CAS shall
be paid additional remuneration at an hourly rate. The
additional services means the provision of other such
services as may be required by the Company to be
performed from time to time and being within the scope
of CAS’s expertise, including but not limited to corporate
actions, capital
raisings, prospectus management,
extended (>3 days) Company-related corporate travel not
associated with Company Secretarial or administrative
duties (eg. conferences, road shows, site visits etc).The
consolidated entity is also obliged to reimburse CAS for
all reasonable and necessary expenses incurred by CAS in
providing services pursuant to the Agreement.
Both Cokal Limited and CAS are entitled to terminate the
agreement upon giving not less than one month’s written
notice. In the event that a party is in breach of the
agreement either party may terminate the Agreement
immediately on written notice. In addition, Cokal Limited
is entitled to terminate the agreement upon the
happening of various events in respect of CAS’ solvency
or other conduct of CAS or Mr Cornish. CAS is also
entitled to terminate the agreement upon the happening
of various events in respect of Cokal Limited’s solvency.
Indonesian Country Manager
Cokal Limited has an employment agreement with
Gerhardus Kielenstyn for the position of Indonesian
Country Manager which commenced on 1 May 2013. Mr
Kielenstyn receives an annual base salary up to $480,000,
inclusive of benefits.
Mr Kielenstyn is eligible for an annual performance bonus
on the discretion of the CEO, as the Group is an early
stage entity.
The employment agreement may be terminated at any
time by
for Cause, being serious
misconduct or the happening of various events in respect
of Mr Kielenstyn’s conduct.
the Company
(a) Details of Key Management Personnel (KMP)
(i) Directors
Peter Lynch, Chairman and CEO (appointed
Chairman 24 December 2010 and appointed CEO on
the 3 May 2013)
Pat Hanna, Executive Director
(appointed 24 December 2010)
Domenic Martino, Non-Executive Director
(appointed 24 December 2010)
Lt. Gen. (Ret.) Widjojo, Non-Executive Director
(appointed 14 August 2013)
(ii) Senior Management
Vic Kuss, CFO (appointed 5 September 2011) & Joint
Company Secretary (appointed 14 May 2012)
Duncan Cornish, CFO (appointed 24 December
2010, resigned 4 September 2011) & Company
Secretary (appointed 24 December 2010)
Gerhardus Kielenstyn, Indonesia Country Manager
(appointed 1 May 2013)
(b) Remuneration Details
The following table of benefits and payments details, in
respect to the financial years ended 30 June 2014 and
2013, the component of remuneration for each key
management person of the consolidated entity:
Short-Term Benefits
Post-
Employment
Termination
Benefits
Share-based
payments
2014
Salary &
Fees
Cash
Bonus
Other short
-term
benefits
Superannuation
$
$
$
$
$
Equity-
settled
(options)
$
Cash-settled
Total
$
$
%
Remuneration
as options
Directors
Peter Lynch #
Pat Hanna
Domenic Martino
Agus Widjojo ●
Total
Senior Management
Duncan Cornish
Victor Kuss
419,733
288,690
255,833
59,364
1,023,620
40,000
248,804
Gerhardus Kielenstyn*
431,153
Total
719,957
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
16,196
25,000
-
-
16,196
25,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
360,431
274,371
634,802
-
-
-
-
419,733
288,690
255,833
59,364
- 1,023,620
-
-
-
40,000
650,431
705,524
- 1,395,955
0%
0%
0%
0%
0%
55.4%
38.9%
COKAL LIMITED Annual Report 2014 | Page 21 of 69
Short-Term Benefits
Post-
Employment
Termination
Benefits
Share-based
payments
2013
Salary &
Fees
Cash
Bonus
Other short
-term
benefits
Superannuation
$
$
$
$
$
Directors
Peter Lynch #
419,200
-
Jim Middleton ~
539,013
70,000
Pat Hanna
Domenic Martino
420,130
115,000
-
-
Total
1,493,343
70,000
Senior Management
Duncan Cornish
Victor Kuss
40,000
241,334
Gerhardus Kielenstyn*
76,428
Total (restated)^
357,762
-
-
-
-
-
-
-
-
-
-
23,666
3,820
27,486
-
17,843
-
-
17,843
-
25,000
-
25,000
-
-
-
-
-
-
-
-
-
# Fees based on current status of project
* appointed 1 May 2013
~ Resigned 3 May 2013
● appointed 14 August 2013
^ Chris Turvey was not consider as KMP and the comparative has been restated accordingly.
Cash-settled
Total
$
$
%
Remuneration
as options
Equity-
settled
(options)
$
-
115,773
-
-
-
-
-
-
419,200
0%
742,629
15.6%
420,130
115,000
0%
0%
115,773
- 1,696,959
-
793,310
-
-
-
-
40,000
0%
1,083,310
73.2%
80,248
0%
793,310
- 1,203,558
Cash Bonuses, Performance-related Bonuses and Share-
based Payments
KMP and other executives maybe paid cash bonuses or
performance-related bonuses. Options are subject to
continuation of services until agreed expiry date. The
Board resolved to extend the Period of expiry to six
months after ceasing employment for all employee
options holders that have been given notice of
termination of employment between January to June
2014.
Options holdings
Details of share-based payments to KMP and other
executives awarded and vested/unvested during the year
ended 30 June 2014 and 30 June 2013 are detailed in the
table below.
Remun-
eration
type
Grant date
Vesting
date
Number
Exercise
Price
Grant
value
(per
option)
$ #
Percentage
vested /
paid during
year
Percentage
forfeited/
cancelled
during year
Percentage
remaining
as
unvested
%
%
%
Expiry date
Consolidated entity KMP
Victor Kuss
Options
24/08/2011
05/09/2013 3,000,000 $1.10
Victor Kuss
Options
24/08/2011
05/09/2013 2,000,000 $1.50
Victor Kuss
Options
11/07/2013
11/07/2015 5,000,000 $0.25
$0.34
$0.30
$0.09
Jim
Middleton
Jim
Middleton
Gerhardus
Kielenstyn
Gerhardus
Kielenstyn
Options*
29/12/2010
29/12/2011 5,000,000 $0.50
$0.17
Options*
29/12/2010
29/12/2011 5,000,000 $0.75
$0.17
Options
11/07/2013
11/07/2014 2,000,000 $0.214
$0.09
Options
11/07/2013
11/07/2015 2,000,000 $0.214
$0.09
100%
100%
-
-
-
-
-
-
-
-
100%
100%
-
-
-
-
5/09/2015
5/09/2015
100%
11/07/2017
-
-
3/08/2013
3/08/2013
100%
11/07/2017
100%
11/07/2017
COKAL LIMITED Annual Report 2014 | Page 22 of 69
Options holdings (Cont’d)
Remun-
eration
type
Grant date
Vesting
date
Number
Exercise
Price
Grant
value
(per
option)
$ #
Percentage
vested /
paid during
year
Percentage
forfeited/
cancelled
during year
Percentage
remaining
as
unvested
%
%
%
Expiry date
Consolidated entity KMP
Victor Kuss
Options
24/08/2011
05/09/2013 3,000,000
$1.10
Victor Kuss
Options
24/08/2011
05/09/2013 2,000,000
$1.50
$0.34
$0.30
Options*
29/12/2010
29/12/2011 5,000,000
$0.50
$0.17
Jim
Middleton
Jim
Middleton
Options
29/12/2010
29/12/2012 5,000,000
$0.75
$0.17
100%
-
-
-
-
-
-
-
100%
5/09/2015
100%
5/09/2015
-
03/08/2013
-
03/08/2013
# Calculation of value of options granted using the Black-Scholes option pricing model, which takes into account factors such as the option exercise
price, the market price at the date of issue and volatility of the underlying share price and the time to maturity of the option.
*Jim Middleton resigned 3 May 2013 and hence his options expire 3 August 2013 per agreement.
Options holdings of KMP at reporting date include:
Balance
1 July 2013
Granted as
Remuneration
Exercise of
Options
Net Change
Other
Balance
30 June 2014
Total vested
at 30 June
2014
Total vested
and
exercisable at
30 June 2014
Total vested
and
unexercisable
at 30 June
2014
Directors
Peter Lynch
Jim Middleton*
Pat Hanna
Domenic Martino
Senior
Management
Duncan Cornish
Victor Kuss
Gerhardus
Kielenstyn
-
10,000,000
-
-
-
-
-
-
5,000,000
-
-
5,000,000
4,000,000
-
-
-
-
-
-
-
-
(10,000,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,000,000
4,000,000
5,000,000
-
5,000,000
4,000,000
Total
15,000,000
9,000,000
-
(10,000,000)
14,000,000
5,000,000
9,000,000
-
-
-
-
-
-
-
-
Balance
1 July 2012
Granted as
Remuneration
Exercise of
Options
Net Change
Other
Balance
30 June 2013
Total vested at
30 June 2013
Total vested
and
exercisable at
30 June 2013
Total vested
and
unexercisable
at 30 June
2013
Directors
Peter Lynch
Jim Middleton*
Pat Hanna
Domenic Martino
Senior
Management
Duncan Cornish
Victor Kuss
Total (restated)^
5,500,000
11,000,000
2,500,000
3,500,000
100,000
5,000,000
27,600,000
-
-
-
-
-
-
-
-
-
-
-
-
-
(5,500,000)
(1,000,000)
(2,500,000)
(3,500,000)
-
10,000,000
-
10,000,000
-
-
10,000,000
-
-
(100,000)
-
(12,600,000)
-
5,000,000
15,000,000
-
5,000,000
15,000,000
-
5,000,000
15,000,000
-
-
-
-
-
-
-
*resigned 3 May 2013 and his options has expired 3 August 2013
^ Chris Turvey was not considered as KMP and the comparative has been restated accordingly.
These options were not issued based on performance criteria as the Board does not consider this appropriate for a junior
exploration Group. The options were issued to the director and senior management of Cokal Limited to align comparative
shareholder return and reward for director and senior management.
All options were issued by Cokal Limited and entitle the holder to one ordinary share in Cokal Limited for each option exercised.
All options granted as part of remuneration for the year ended 30 June 2014 were granted for nil consideration. Once vested,
options can be exercised at any time up to the expiry date.
The consolidated entity does not currently have a policy prohibiting directors and executives from entering into arrangements
to protect the value of unvested options. No directors or executives have entered into contracts to hedge their exposure to
options awarded as part of their remuneration package.
COKAL LIMITED Annual Report 2014 | Page 23 of 69
Shareholdings
Details of ordinary shares held directly, indirectly or beneficially by KMP and their related parties are as follows:
Directors
Peter Lynch
Jim Middleton *
Pat Hanna
Domenic Martino
Agus Widjojo
Senior Management
Duncan Cornish
Garry Kielenstyn
Victor Kuss
Total
Directors
Peter Lynch
Jim Middleton *
Pat Hanna
Domenic Martino
Senior Management
Duncan Cornish
Garry Kielenstyn
Victor Kuss
Total (restated)^
Balance
1 July 2013
Granted as
Remuneration
On Exercise
of Options
Net Change
Other
Balance
30 June 2014
55,697,000
10,017,000
25,800,000
37,520,001
-
2,600,000
32,000
675,000
132,341,001
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
355,000
(10,017,000)
-
-
(198,785)
-
-
56,052,000
-
25,800,000
37,520,001
-
2,401,215
32,000
675,000
(9,860,785)
122,480,216
Balance
1 July 2012
Granted as
Remuneration
On Exercise
of Options
Net Change
Other
Balance30 June 2013
55,085,000
10,017,000
25,000,000
37,120,001
3,000,000
-
275,000
130,497,001
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
612,000
-
800,000
-
(400,000)
32,000
400,000
1,444,000
55,697,000
10,017,000
25,800,000
37,120,001
2,600,000
32,000
675,000
131,941,001
*resigned 3 May 2013
^ Chris Turvey was not considered as KMP and the comparative has been restated accordingly.
Advances to KMP
Advances to KMP at 30 June 2014 have been included in other receivables. The details of these advances are:
2014
$
-
8,499
-
8,499
2013
$
1,051*
9,654
2,679
13,384
Jim Middleton
Peter Lynch
Pat Hanna
*resigned 3 May 2013
Advances made relate to travel advances and are made in the ordinary course of business. These advances have been repaid
in full at the date of adoption of the director’s report.
Transactions with KMP and their related entities
• During the financial year ended 30 June 2014, Hanna Consulting Services Pty Ltd (of which Pat Hanna is a director)
provided to the Group geological consulting services for various exploration projects, Indonesia, including site
management, geological staff recruitment, preparation of field base camp and geological mapping surveys. Hanna
Consulting Services Pty Ltd received $288,690 (2013: $420,130) for these services during the financial year. The services
were based on normal commercial terms and conditions.
• During the financial year ended 30 June 2014, Petla Trust (of which Peter Lynch is a director) provided to the Group
consulting services. Petla Trust received $419,733 (2012: $419,200) for these services during the financial year. The
services were based on normal commercial terms and conditions.
• During the year ended 30 June 2014, the Group paid consulting fees of $185,784 (2013: $322,432) to PT. Pandu Wira
Sejahtera of which Harun Abidin is a director. Harun is also a director of PT. Anugerah Alam Manuhing, PT. Anugerah
Alam Katingan and PT. Silangkop Nusa Raya. These companies are part of the Cokal group.
COKAL LIMITED Annual Report 2014 | Page 24 of 69
Directors’ Meetings
The number of meetings of Directors (including meetings
of committees of directors) held during the year and the
number of meetings attended by each Director was as
follows:
Board
Audit Committee
Meetings
attended
Number of
meetings
held while in
office
Number of
meetings
held while
in office
Meetings
attended
Peter Lynch
Pat Hanna
Domenic
Martino
Agus
Widjojo
14
14
14
12
14
14
14
10
2
2
2
2
2
2
n/a
n/a
Indemnification and Insurance of
Directors, Officers and Auditor
Each of the current Directors and Secretaries of Cokal
Limited have entered into a Deed with Cokal Limited
whereby Cokal Limited has provided certain contractual
rights of access to books and records of Cokal Limited to
those Directors and Secretaries.
Cokal Limited has insured all of the Directors of the
consolidated entity. The contract of insurance prohibits
the disclosure of the nature of the liabilities covered and
amount of the premium paid. The Corporations Act does
not require disclosure of the
in these
circumstances.
information
of
the
terms
against
To the extent permitted by law, the Company has
agreed to indemnify its auditors, Ernst & Young, as
engagement
part of
third
agreement
an
parties
unspecified amount). No payment has been made to
indemnify Erns t & Young during or since the financial
year.
its
claims
the
arising
from
audit
audit
(for
by
Options
At 30 June 2014, there were 22,125,000 unissued
ordinary shares under options as follows:
•
•
•
•
•
•
1,000,000 unlisted options exercisable at $0.50, on
or before 29 December 2014
1,000,000 unlisted options exercisable at $0.75, on
or before 29 December 2014
1,600,000 unlisted options exercisable at $0.20 on or
before 12 April 2015
1,225,000 unlisted options exercisable at $0.75, on
or before 12 April 2015
550,000 unlisted options exercisable at $1.00 on or
before 29 June 2015
3,000,000 unlisted options exercisable at $1.10 on or
before 5 September 2015
•
•
•
•
2,000,000 unlisted options exercisable at $1.50 on or
before 5 September 2015
450,000 unlisted options exercisable at $0.75 on or
before 12 October 2016
4,000,000 unlisted options exercisable at $0.214 on
or before 11 July 2017
7,300,000 unlisted options exercisable at $0.25 on or
before 11 July 2017
No option holder has any right under the options to
participate in any other share issue of Cokal Limited or
any other entity.
During the year ended 30 June 2014, no ordinary shares
in Cokal Limited were issued as a result of the exercise of
options.
Subsequent to year end, no ordinary shares in Cokal
Limited were issued as a result of the exercise of options.
Proceedings on Behalf of the
Consolidated Entity
No person has applied for leave of Court to bring
proceedings on behalf of the consolidated entity or
intervene in any proceedings to which the consolidated
entity is a party for the purposes of taking responsibility
on behalf of the consolidated entity for all or any part of
those proceedings.
The consolidated entity was not a party to any such
proceedings during the year.
Auditor’s Independence
Declaration
The Auditor’s Independence Declaration forms part of
the Directors’ Report and can be found on page 26.
Corporate Governance
In recognising the need for the highest standards of
corporate behaviour and accountability, the directors of
Cokal Limited support and have adhered to the principles
of corporate governance. Cokal Limited’s Corporate
Governance Statement can be found on page 31.
This report is signed in accordance with a resolution of
the directors.
Cokal Limited
Peter Lynch
Chairman and Chief Executive Officer
Brisbane
24 September 2014
COKAL LIMITED Annual Report 2014 | Page 25 of 69
Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
Auditor’s Independence Declaration to the Directors of Cokal Limited
In relation to our audit of the financial report of Cokal Limited for the financial year ended 30 June
2014, to the best of my knowledge and belief, there have been no contraventions of the auditor
independence requirements of the Corporations Act 2001 or any applicable code of professional
conduct.
Ernst & Young
Brad Tozer
Partner
Brisbane
24 September 2014
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Shareholder Information
Additional information required by the Australian Securities Exchange Ltd and not shown elsewhere in this report is as
follows. The information is current as at 23 September 2014
(a) Distribution of Ordinary Shares and Options
The number of holders, by size of holding, in each class of security is:
Ordinary shares
Unlisted options
Unlisted options
Unlisted options
($0.50 @ 29/12/14)
($0.75 @ 29/12/14)
($0.75 @ 12/4/15
Number
of holders
Number of shares
Number
of
holders
Number
of
options
Number
of
holders
Number
of
options
Number
of
holders
Number of
options
1 – 1,000
324
1,001 –
5,000
5,001 –
10,000
10,001 –
100,000
100,001
and over
164
289
550
219
Total
1,546
281,370
500,594
2,640,960
21,459,254
446,221,748
471,103,926
-
-
-
-
1
1
-
-
-
-
1,000,000
1,000,000
-
-
-
-
1
1
-
-
-
-
1,000,000
1,000,000
-
-
-
1
2
6
-
-
-
75,000
900,000
975,000
Unlisted options
Unlisted options
Unlisted options
Unlisted options
($1.00 @ 29/6/15)
($1.10 @ 05/09/15)
($1.50 @ 05/09/15)
($0.75 @ 12/10/16)
Number of
holders
Number of
options
Number of
holders
Number of
options
Number of
holders
Number of
options
Number of
holders
Number of
options
-
-
-
1
1
2
-
-
-
50,000
500,000
550,000
-
-
-
-
1
1
-
-
-
-
3,000,000
3,000,000
-
-
-
-
1
1
-
-
-
-
2,000,000
2,000,000
-
-
-
-
2
2
-
-
-
-
350,000
350,000
Unlisted options
Unlisted options
Unlisted options
Unlisted options
($0.20 @ 12/04/15)
($0.214 @ 11/07/17)
($0.25 @ 11/07/17)
($0.20 @ 27/08/2022)
Number of
holders
Number of
options
Number of
holders
Number of
options
Number of
holders
Number of
options
Number of
holders
Number of
options
-
-
-
-
1
2
-
-
-
-
1,600,000
1,600,000
-
-
-
-
1
1
-
-
-
-
4,000,000
4,000,000
-
-
-
-
4
4
-
-
-
-
-
-
-
-
-
-
-
-
7,300,000
7,300,000
1
15,000,000
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 –
100,000
100,001 and
over
Total
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 –
100,000
100,001 and
over
Total
The number of shareholders holding less than a marketable parcel (529,286 ordinary shares) is 432 on a share price of $0.140
COKAL LIMITED Annual Report 2014 | Page 27 of 69
Twenty Largest Holders
The names of the twenty largest holders, in each class of quoted security (ordinary shares) are:
Number of shares
1 HOLDEX NOMINEES PTY LTD
2
3
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
4 NATIONAL NOMINEES LIMITED
5 GEBRUN PTY LTD
6
PATRICK JOSEPH HANNA
7 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 3
8 MR PETER ANTHONY LYNCH + MRS LAURA ANNE LYNCH
9 UBS WEALTH MANAGEMENT AUSTRALIA NOMINEES PTY LTD
10 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
11
TJ SMOCK & CO PTY LTD
12 AUSTRALIAN TAILINGS GROUP PTY LIMITED
13 MR THOMAS CLEMENT BAHEN
14 MR SHANE DOHERTY
15 ALBIANO HOLDINGS PTY LTD
16 MR JOHN LANGLEY HANCOCK
17 HARMANIS HOLDINGS PTY LTD
18
P GOURLEY & ASSOCIATES PTY LTD
19 MR HARUN ABIDIN
20 MR CHRISTOPHER WARWICK TURVEY + MRS ALISON LOUISE TURVEY
60,057,034
57,896,354
49,416,808
39,364,623
35,000,000
25,000,000
21,910,228
21,052,000
18,965,000
18,479,391
10,000,000
4,500,000
4,100,000
4,000,000
2,401,215
2,180,000
1,820,000
1,676,726
1,495,000
1,400,000
% of total
shares
12.75
12.29
10.49
8.36
7.43
5.31
4.65
4.47
4.03
3.92
2.12
0.96
0.87
0.85
0.51
0.46
0.39
0.36
0.32
0.3
Top 20
Total Remaining
Substantial shareholders
Substantial shareholders as shown in substantial shareholder notices received by Cokal are:
Name of Shareholder:
Ordinary Shares:
380,714,3794
90,389,547
80.81%
19.19%
Platinum
Platinum Partners Liquid Opportunity
Partners
Value
Arbitrage
Fund
LP &
67,224,810
Blumont Group Ltd
Peter Anthony Lynch & Lara Anne Lynch
BlackRock Group
Domenic Vincent Martino & Sandra Gae Martino
Patrick Joseph Hanna
56,875,000
55,052,000
39,533,945
37,120,001
25,000,000
The Company notes that, as at 16 September 2014, the following shareholders own substantial shareholdings (>= 5.0%) in Cokal:
Name of Shareholder:
HOLDEX NOMINEES PTY LTD
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA
LIMITED
NATIONAL NOMINEES LIMITED
GEBRUN PTY LTD
PATRICK JOSEPH HANNA
Ordinary
Shares:
60,057,034
57,896,354
49,416,808
39,364,623
35,000,000
25,000,000
% of total shares:
12.75
12.29
10.49
8.36
7.43
5.31
COKAL LIMITED Annual Report 2014 | Page 28 of 69
(b) Voting rights
All ordinary shares carry one vote per share without restriction.
Options do not carry voting rights.
(c) Restricted securities
The Group currently has no restricted securities on issue.
(d) On-market buy-back
There is not a current on-market buy-back in place.
(e) Business Objectives
The consolidated entity has used its cash and assets that are readily convertible to cash in a way consistent with its
business objectives.
COKAL LIMITED Annual Report 2014 | Page 29 of 69
Interests in Tenements and Projects
Cokal Limited had the following interests in projects as at 30 June 2014:
Indonesia
Project
Location
% Interest
PT Anugerah Alam Katingan (AAK)
PT Anugerah Alam Manuhing (AAM)
PT Bumi Barito Mineral (BBM)
PT Borneo Bara Prima (BBP)
PT Silangkop Nusa Raya (SNR)
PT Tambang Benua Alam Raya# (TBAR)
#in process of transferring the shares to the Group.
Tanzania
Kalimantan
Kalimantan
Kalimantan
Kalimantan
75%
75%
60%
60%
Kalimantan
75.2%
Kalimantan
75%
Project
Location
% Interest
Joint Venture with Tanzoz (JV1 or Manda)
over tenement number PL 6281
Tanzania
50%
Joint Venture with Tanzoz (JV2)
over tenement number PL 5395 plus additional
tenements identified by the parties
Tanzania
60%
COKAL LIMITED Annual Report 2014 | Page 30 of 69
Corporate Governance Statement
The board of directors of Cokal Limited is responsible for the corporate governance of the consolidated entity. The Board
guides and monitors the business and affairs of Cokal Limited on behalf of the shareholders by whom they are elected and
to whom they are accountable.
Cokal Limited’s Corporate Governance Statement is structured with reference to the Australian Securities Exchange (ASX)
Corporate Governance Council’s (the Council) “Corporate Governance Principles and Recommendations, 2nd Edition”, which
are as follows:
Principle 1
Principle 2
Principle 3
Principle 4
Principle 5
Lay solid foundations for management and oversight
Structure the board to add value
Promote ethical and responsible decision making
Safeguard integrity in financial reporting
Make timely and balanced disclosure
Principle 6
Respect the rights of shareholders
Principle 7
Principle 8
Recognise and manage risk
Remunerate fairly and responsibly
A copy of the eight Corporate Governance Principles and Recommendations can be found on ASX’s website.
The Board is of the view that with the exception of the departures from the ASX Guidelines as set out below, it otherwise
complies with all of the ASX Guidelines.
ASX Principles
and Recommendations
Summary of the Consolidated Entity’s
Position
Principle 2 – Structure the Board to Add Value
Recommendation 2.1 – A majority of the
Board should be independent directors
Recommendation 2.2 – The chair should be
an independent director
Recommendation 2.4 – The board should
establish a nomination committee
While the consolidated entity does not presently comply with this
recommendation, the consolidated entity may consider appointing further
independent directors in the future. The consolidated entity believes that
given the size and scale of
its operations, non-compliance by the
consolidated entity with this recommendation will not be detrimental to
the consolidated entity.
Mr Peter Lynch is the Chairman and was appointed Chief Executive Officer
on the 4th of June 2013. The consolidated entity does not consider Mr
Lynch to be an independent director as defined in the ASX Guidelines on
the basis that he is employed by the Company in an executive capacity and
is a substantial (greater than 5%) shareholder in the Company.
The consolidated entity believes that given the size and scale of its
operations, non-compliance by
this
recommendation will not be detrimental to the consolidated entity.
the consolidated entity with
It is the Board’s view that the Company’s corporate governance principles,
the quality, stature and substantive business knowledge of the members of
the Board of Directors, as well as the Board’s culture of open
communication with the CEO and senior management are conducive to
Board effectiveness with a combined Chairman and CEO position.
The Board’s view is that the consolidated entity is not currently of the size
to justify the formation of a separate nomination committee. The Board
currently performs the functions of a nomination committee and where
necessary will seek advice of external advisors in relation to this role. The
Board shall, upon the consolidated entity reaching the requisite corporate
and commercial maturity, form a nomination committee to assist the Board
in relation to the appointment of Directors and senior management.
COKAL LIMITED Annual Report 2014 | Page 31 of 69
ASX Principles
and Recommendations
Summary of the Consolidated Entity’s
Position
Principle 3 – Promote Ethical and Responsible Decision-making
Recommendation 3.2 – Companies should
establish a policy concerning diversity and
disclose the policy or a summary of that
policy.
include
requirements for the board to establish
measurable objectives for achieving gender
diversity for the board to assess annually
both
in
achieving them.
the objectives and progress
should
policy
The
The Company is committed to workplace diversity and ensuring a diverse
mix of skills amongst its directors, officers and employees.
Due to its size and nature of operations, the Company does not currently
have a Diversity Policy. The Company strives to attract the best person for
the position regardless of gender, age, ethnicity or cultural background.
While the Company does not presently comply with Recommendations 3.2
and 3.3, the Company may consider adopting a Diversity Policy in the future
as it grows in size and complexity. The Company believes that given the
size and nature of
these
its operations, non-compliance with
recommendations will not be detrimental to the consolidated entity.
in each annual
Recommendation 3.3 – Companies should
the
disclose
measurable the measurable objectives for
achieving gender diversity set by the board
in accordance with the diversity policy and
progress towards achieving them.
report
Principle 4 – Safeguard Integrity in Financial Reporting
Recommendation 4.2 – The Audit
Committee should be structured so that it:
- Consists only of non-executive directors
- Consists of a majority of independent
directors
- Is chaired by an independent chair, who is
not chair of the board
- Has at least 3 members
The members of the Audit and Risk Management Committee are Domenic
Martino (Chairman), Peter Lynch and Pat Hanna.
Mr Domenic Martino is a non-executive director and the current Chairman
of the Audit and Risk Management Committee. The consolidated entity
does not consider Mr Martino to be an independent director as defined in
the ASX Guidelines on the basis that he, together with his associated
entities, are in aggregate a substantial (greater than 5%) shareholder in the
consolidated entity.
Mr Peter Lynch is the Chairman and Chief Executive Officer. The
consolidated entity does not consider Mr Lynch to be an independent
director as defined in the ASX Guidelines on the basis that he is employed
by the Company in an executive capacity and is a substantial (greater than
5%) shareholder in the Company.
Mr Pat Hanna is the Executive Director. The consolidated entity does not
consider Mr Hanna to be an independent director as defined in the ASX
Guidelines on the basis that he is employed by the Company in an executive
capacity and is a substantial (greater than 5%) shareholder in the Company.
On the basis of above information, the consolidated entity is of the view
that the current Committee does not consist of a majority of independent
directors. While the consolidated entity does not presently comply with
this Recommendation 4.2, the consolidated entity may consider appointing
further independent Directors in the future. The consolidated entity
believes that given the size and scale of its operations, non-compliance by
the consolidated entity with this Recommendation 4.2 will not be
detrimental to the consolidated entity.
Principle 7 - Recognise and Manage Risk
Recommendation 7.2 – The Board should
require management to design and
implement the risk management and
internal control system to manage the
company’s material business risks and
report to it on whether those risks are being
managed effectively. The board should
disclose that management has reported to it
as to the effectiveness of the company’s
management of its material business risks.
The Board has adopted a Risk Management Policy, which sets out the
Company's risk profile. Under the policy, the Board is responsible for
approving the Company's policies on risk oversight and management and
satisfying itself that management has developed and implemented a sound
system of risk management and internal control.
Under the policy, the Board delegates day-to-day management of risk to
the Management, is responsible for identifying, assessing, monitoring and
managing risks. Management
is also responsible for updating the
Company's material business risks to reflect any material changes, with the
approval of the Board.
COKAL LIMITED Annual Report 2014 | Page 32 of 69
ASX Principles
and Recommendations
Summary of the Consolidated Entity’s
Position
Principle 8 – Remunerate Fairly and Responsibly
Recommendation 8.1 – The board should
establish a remuneration committee
The Board has not established a remuneration committee. The Board
considers that given its size, no efficiencies or other benefits would be
gained by the establishing of such committee. The role of the remuneration
committee is carried out by the full Board. The Board shall, upon the
consolidated entity reaching the requisite corporate and commercial
maturity, form a nomination committee to assist the Board in relation to
the appointment of Directors and senior management.
Board
The Board has adopted a formal Board Charter that
outlines the roles and responsibilities of directors and
senior executives. The Board Charter has been made
publicly available on Cokal Limited's website (Corporate
Governance Policy).
The skills, experience and expertise relevant to the
position of Director held by each Director on office at the
date of the Annual Report is included in the Director’s
Report. Corporate Governance Council Recommendation
2.1 requires a majority of the Board should be
independent Directors. The Corporate Governance
Council defines an
independent director as a non-
executive director who is not a member of management
and who is free of any business or other relationship that
could materially interfere with – or could reasonably be
perceived to materially interfere with – the independent
exercise of their judgement.
In the context of Director independence, “materiality” is
considered from both the Company and the individual
Director perspective.
The determination of materiality requires consideration
of both quantitative and qualitative elements.
An item is presumed to be quantitatively immaterial if it
is equal or less than 10% of the appropriate base amount.
It is presumed to be material (unless there is qualitative
evidence to the contrary) if it is equal to or greater than
10% of the appropriate base amount. Qualitative factors
is
considered
strategically important, the competitive landscape, the
nature of the relationship and the contractual or other
arrangements governing it and other factors which point
to the actual ability of the Director in question to shape
the direction of the Company’s loyalty.
included whether
relationship
a
Factors that may impact on a director’s independence
are considered each time the Board meets.
At the date of this report:
In accordance with
the Council’s definition of
independence above, and the materiality thresholds set
none of the Directors are considered to be independent.
In accordance with the Council’s definition of
independence above, and the materiality thresholds set,
the following Directors are not considered to be
independent:
Name
Position
Reason for Non-compliance
Peter Lynch
Executive Chairman &
Chief Executive Officer
Peter Lynch is employed by the Company in an executive capacity
and is a substantial (greater than 5%) shareholder in the Company.
Pat Hanna
Executive Director
Domenic Martino
Non-Executive Director
Pat Hanna is employed by the Company in an executive capacity and
is a substantial (greater than 5%) shareholder in the Company.
Domenic Martino is a substantial (greater than 5%) shareholder in
the Company.
Cokal Limited considers industry experience and specific
expertise, as well as general corporate experience, to be
important attributes of its Board members. The Directors
noted above have been appointed to the Board of Cokal
Limited due to their considerable industry and corporate
experience.
There are procedures in place, agreed by the Board, to
enable Directors, in furtherance of their duties, to seek
independent professional advice at the Company’s
expense.
date of this report is as follows:
Name
Peter Lynch
Pat Hanna
Domenic Martino
Agus Widjojo
Term in Office
3 year 9 months
3 year 9 months
3 year 9 months
1 year 1 month
The term in office held by each Director in office at the
COKAL LIMITED Annual Report 2014 | Page 33 of 69
Diversity
Audit Committee
The Company is committed to workplace diversity and
ensuring a diverse mix of skills amongst its directors,
officers and employees. The Company strives to attract
the best person for the position regardless of gender,
age, ethnicity or cultural background
Due to its size and nature of operations, the Company
does not currently have a Diversity Policy, however may
consider adopting a Diversity Policy in the future as it
grows in size and complexity.
As at 30 June 2014, the proportion of women in the
whole organisation is a follows:
Board Members
Officers
Other
Male
100%
100%
83%
Female
0%
0%
17%
Trading Policy
The Board has adopted a policy and procedure on dealing
in the Company’s securities by Directors, officers and
employees which prohibits dealing in the Company’s
securities when those persons possess inside information
until it has been released to the market and adequate
time has passed for this to be reflected in the security’s
prices, and during certain pre-determined windows.
The Company’s policy regarding dealings by directors in
the Company’s shares is that directors should never
engage in short term trading and should not enter into
transactions when they are
in possession of price
sensitive information not yet released by the Company to
the market; or for a period of fourteen (14) days prior to
the scheduled (per ASX Listing Rules) release by the
Company of ASX Quarterly Operations and Cash Flow
Reports or such shorter period as may be approved of by
the Chairman after receipt of notice of intention to buy
or sell by a director to other members of the Board.
to
Directors will generally be permitted to engage in trading
the
to due notification being given
(subject
Chairperson and Secretary) for a period commencing one
(1) business day after the release of ASX Quarterly
Operations and Cash Flow Reports to the market and for
a period commencing one (1) business day following the
release of price sensitive information to the market
which allows a reasonable period of time for the
information to be disseminated among members of the
public.
Remuneration and Nomination
Committees
Due to the size and scale of operations, Cokal Limited
does not have separately established Remuneration or
Nomination Committees. The full Board carries out the
functions of Remuneration and Nomination Committees.
The Board has established an Audit Committee. It is the
Board’s responsibility to ensure that an effective internal
control framework exists within the Company. This
includes
internal controls to deal with both the
effectiveness and efficiency of significant business
processes, the safeguarding of assets, the maintenance
of proper accounting records, and the reliability of
financial
non-financial
considerations such as the benchmarking of operational
key performance indicators. The Board has delegated
the responsibility for the establishment and maintenance
of a framework of internal control and ethical standards
for the management of the Company to the Audit
Committee.
information
as well
as
The Committee also provides the Board with additional
assurance
financial
information for inclusion in the financial reports.
reliability of
regarding
the
The members of the Audit Committee at the date of this
report are:
• Domenic Martino (Chairman)
•
•
Peter Lynch
Pat Hanna
For additional details of directors’ attendance at Audit
Committee meetings and to review the qualifications of
the members of the Audit Committee, please refer to the
Directors’ Report.
The Audit Committee Charter has been made publicly
available on the Company’s website.
Risk Management
Material business risks are considered informally as the
Company’s business evolves, since
it commenced
exploration in January 2011, plus formally at each Board
meeting.
The Company has adopted a formal framework for risk
internal compliance and control
management and
systems which cover organisational,
financial and
operational aspects of the Company’s affairs as the
Company’s activities expand. The Board believes the
current approach to risk management is appropriate
given the size and scale of its operations. Further detail
of the Company Risk Management Policies can be found
within the Corporate Governance Policy available on the
Company website (www.cokal.com.au).
Recommendation 7.2 requires that the Board disclose
that management has reported to
it as to the
its
effectiveness of the Company’s management of
material business risks. Business risks are considered
regularly by the Board and management. With the
company about to commence a major new phase of
activity- construction of the BBM project, the Board has
requested that management revamp p the formal risk
include a focus on construction risks.
process to
Therefore as the risk assessment process
is being
updated a formal report to the Board as to the
effectiveness of the management of the Company’s
material business risks has not been provided.at the date
COKAL LIMITED Annual Report 2014 | Page 34 of 69
of this report.
As required by Recommendation 7.3, the Board has
received written assurances from the CEO and CFO that
to the best of their knowledge and belief, the declaration
provided by them in accordance with section 295A of the
Corporations Act is founded on a sound system of risk
management and internal control and that the system is
operating effectively in all material respects in relation to
financial reporting risks.
Performance Evaluation
The full Board, in carrying out the functions of the
Remuneration and Nomination Committees, considers
issues annually and
remuneration and nomination
otherwise as required in conjunction with the regular
meetings of the Board.
During the Reporting Period a CEO performance
evaluation took place. The evaluations were conducted
by the Board on an informal basis.
There is no scheme to provide retirement benefits, other
than
to Non-Executive
Directors.
superannuation,
statutory
The Board is responsible for determining and reviewing
compensation
the Directors
themselves, subject to Cokal Limited’s constitution and
prior shareholder approvals, and the Executive team.
arrangements
for
The consolidated entity does not currently have a policy
of implementing a ban on hedging economic risk of
options.
Continuous Disclosure Policy
Detailed compliance procedures for ASX Listing Rule
disclosure requirements have been adopted by the
consolidated entity.
Cokal Limited’s Continuous
Disclosure Policy can be found within Cokal Limited’s
Corporate Governance Charter on the Cokal Limited
Corporate
website
Governance section.
(www.cokal.com.au)
the
in
Remuneration
Communications
It is the Company’s objective to provide maximum
stakeholder benefit from the retention of a high quality
Board and Executive team by remunerating directors and
key executives fairly and appropriately with reference to
relevant and employment market conditions. To assist in
achieving this objective, the Remuneration Committee
and the Board links the nature and amount of Executive
Director’s and Officer’s emoluments to the consolidated
price
operations
entity’s
performance.
the
expected
remuneration structure are:
•
retention and motivation of key Executives
financial,
The
and
outcomes
share
of
•
•
attraction of quality management
consolidated entity
to
the
performance incentives which allow Executives to
share the rewards of the success of Cokal Limited.
For details on the amount of remuneration and all
monetary and non-monetary components for each of the
five highest paid (Non-Director) Executives during the
period, and for all Directors, please refer to the
Remuneration Report within the Directors’ Report. In
relation to the payment of bonuses, options and other
incentive payments, discretion is exercised by the Board,
having regard to the overall performance of Cokal
Limited and the performance of the individual during the
period.
The consolidated entity has designed a disclosure system
to ensure
it complies with the ASX’s continuous
disclosure rules and that information is made available to
all
effective
communications with shareholders and encouraging
shareholder participation at general
shareholder
meetings.
promoting
investors
equally,
In addition to corporate and project
information
generally available on the Company’s website, in the
Investor Relations section of the Company’s website the
following information is made available:
•
ASX Releases
•
Corporate Presentations
• Quarterly Reports
• Half-yearly and Annual Reports
•
Capital Structure
Other Information
Further information relating to the Company’s corporate
governance practices and policies has been made publicly
available
at:
www.cokal.com.au.
Company’s web
site
the
on
COKAL LIMITED Annual Report 2014 | Page 35 of 69
Consolidated statement of comprehensive
income for the year ended 30 June 2014
Revenue and other income
2
Pre-tenure exploration expenses
Employee benefits expenses
Depreciation expenses
Finance costs
Legal expenses
Administration and consulting expenses
Other expenses
Loss before income tax expense
Income tax expense
Net loss for the year
Other comprehensive income
Total comprehensive loss for the year
4
Loss per share for the loss attributable to owners of Cokal Limited:
Loss per share (cents per share)
Diluted loss per share (cents per share)
7
7
2014
$
2013
$
79,811
2,175,773
-
(138,417)
(3,310,768)
(3,622,621)
(256,807)
(633,062)
(106,390)
(184,125)
(86)
(152,520)
(1,843,556)
(3,714,495)
(393,401)
(1,085,248)
(6,464,173)
(6,721,739)
-
-
(6,464,173)
(6,721,739)
-
-
(6,464,173)
(6,721,739)
Cents
(1.40)
(1.40)
Cents
(1.64)
(1.64)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
COKAL LIMITED Annual Report 2014 | Page 36 of 69
Consolidated Statement of Financial Position
as at 30 June 2014
Current Assets
Cash and cash equivalents
Short term deposits
Accounts receivable
Other current assets
Total Current Assets
Non-Current Assets
Property, plant and equipment
Exploration and evaluation assets
Other non-current assets
Total Non-Current Assets
TOTAL ASSETS
Current Liabilities
Accounts payable
Interest bearing loans
Total Current Liabilities
Non-Current Liabilities
Deferred liability
Interest bearing loans
Total Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
Equity
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
8
8
9
14
12
13
14
15
16
15
16
17
18
19
2014
$
2013
$
2,752,958
916,509
1,955,259
1,858,000
203,860
60,704
159,900
100,117
4,972,781
3,034,526
948,498
954,616
62,811,658
55,729,090
232,023
266,762
63,992,179
56,950,468
68,964,960
59,984,994
849,116
2,151,569
3,757,381
-
4,606,497
2,151,569
138,375
230,625
3,311,972
3,450,347
-
230,625
8,056,844
2,382,194
60,908,116
57,602,800
81,937,141
73,003,471
4,706,240
3,870,421
(25,735,265)
(19,271,092)
60,908,116
57,602,800
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
COKAL LIMITED Annual Report 2014 | Page 37 of 69
Consolidated Statement of Changes in Equity
For the year ended 30 June 2014
At 1 July 2012
73,003,471
2,547,998
(12,549,353)
63,002,116
Issued
capital
$
Reserves
Accumulated
losses
$
$
Total
$
Total comprehensive loss for the financial year
Loss for the year
Transactions with owners in their capacity as owners
Issue of share capital
Costs associated with issue of share capital
Share based payments
-
-
-
-
-
-
-
-
-
-
1,322,423
1,322,423
(6,721,739)
(6,721,739)
(6,721,739)
(6,721,739)
-
-
-
-
-
-
1,322,423
1,322,423
At 30 June 2013
73,003,471
3,870,421
(19,271,092)
57,602,800
Total comprehensive loss for the financial year
Loss for the year
Transactions with owners in their capacity as owners
Issue of share capital
Costs associated with issue of share capital
Share based payments
-
-
9,609,127
(675,457)
-
-
-
-
-
835,819
8,933,670
835,819
(6,464,173)
(6,464,173)
(6,464,173)
(6,464,173)
9,609,127
(675,457)
835,819
9,769,489
-
-
-
-
-
At 30 June 2014
81,937,141
4,706,240
(25,735,265)
60,908,116
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
COKAL LIMITED Annual Report 2014 | Page 38 of 69
Consolidated Statement of Cash Flows
For the year ended 30 June 2014
Cash Flows from Operating Activities
Payments to suppliers and employees
Interest received
Interest paid
Net cash outflow from operating activities
24
Cash Flows from Investing Activities
Payments for plant and equipment
Deposits maturing after three months
Proceeds from sale of tenements
Payments for exploration and evaluation assets
Security deposit receipts / (payments)
Net cash outflow from investing activities
Cash Flows from Financing Activities
Proceeds from issue of shares and options
Transaction costs on share issue
Proceeds from borrowings
Net cash inflow from financing activities
Net (decrease)/increase in cash and cash
equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year *
8
2014
$
2013
$
(6,217,546)
(5,833,288)
79,811
(536,769)
591,402
(86)
(6,674,504)
(5,241,972)
(250,689)
(97,259)
-
(329,971)
12,429,097
1,620,000
(7,082,568)
(22,853,680)
34,739
(47,966)
(7,395,777)
(9,182,520)
9,609,127
(675,457)
6,973,060
15,906,730
-
-
-
-
1,836,449
(14,424,492)
916,509
15,341,001
2,752,958
916,509
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
*Total cash and cash equivalents (including amounts on deposit) at 30 June 2014 was $4,708,217 (2013: $2,774,509)
COKAL LIMITED Annual Report 2014 | Page 39 of 69
Notes to the Financial Statements for the year
ended 30 June 2014
Note 1: Summary of Significant Accounting Policies
(a) General information
The consolidated financial statements of Cokal Limited for the year ended 30 June 2014 were authorised for issue in
accordance with a resolution of the Directors dated 24 September 2014 and covers the consolidated entity (the “Group” or
“Cokal”) consisting of Cokal Limited (the “Company”) and its subsidiaries.
The financial statements are presented in Australian currency.
Cokal Limited (the parent) is a company limited by shares, incorporated and domiciled in Australia, whose shares are publicly
traded on the Australian Securities Exchange.
The nature of the operations and principal activities of the Group are described in the director’s report.
(b) Basis of preparation
The financial statements are general purpose financial statements which have been prepared in accordance with Australian
Accounting Standards and the Corporations Act 2001.
The financial statements also comply with International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board (IASB).
The financial statements have been prepared on a historical cost basis.
(c) Going concern
The financial report has been prepared on a going concern basis which contemplates the continuity of normal business
activities and the realisation of assets and discharge of liabilities in the ordinary course of business. The ability of the Group
to continue to adopt the going concern assumption will depend upon a number of matters including the successful raising in
the future of necessary funding, through debt, equity or farm-out, or the successful exploration and subsequent exploitation
of the Group’s tenements. Should these avenues be delayed or fail to materialize, the Group has the ability to scale back its
activities to help the Group to manage to meet its debts as and when they fall due. Specifically this may require the Group to
re-negotiate or satisfy current borrowings of $3.8 million, through loan extensions (which require lender consent) or funding
from other sources respectively.
The financial report does not include any adjustments relating to the recoverability and classification of recorded asset
amounts or to the amounts and classification of liabilities should the Group be unsuccessful in raising funds on managing its
existing funds to enable it to realise its assets in the ordinary course of business.
(d) New accounting standards and interpretations
(i)
Changes in accounting policy and disclosures
The accounting policies adopted are consistent with those of the previous financial year, except as follows
Reference
Title
AASB 10
AASB 11
AASB 12
Consolidated Financial Statements: AASB 10 establishes a new
control model that applies to all entities. It replaces parts of
AASB 127 Consolidated and Separate Financial Statements
dealing with the accounting for consolidated financial
statements and UIG-112 Consolidation - Special Purpose Entities.
Application
date of
standard
1 January
2013
Impact on the Group
financial report
Application date
for Group
The adoption has not
had a material impact on
the Group
1 July 2013
Joint Arrangements: AASB 11 replaces AASB 131 Interests in
Joint Ventures and UIG-113 Jointly- controlled Entities - Non-
monetary Contributions by Ventures.
1 January
2013
The adoption has not
had a material impact on
the Group
1 July 2013
Disclosure of Interests in Other Entities: AASB 12 includes all
disclosures relating to an entity's interests in subsidiaries, joint
arrangements, associates and structured entities.
1 January
2013
The adoption has not
had a material impact on
the Group except some
additional disclosure
1 July 2013
COKAL LIMITED Annual Report 2014 | Page 40 of 69
Reference
Title
Application
date of
standard
Impact on the Group
financial report
Application date
for Group
AASB 13
Fair Value Measurement: AASB 13 establishes a single source of
guidance for determining the fair value of assets and liabilities.
1 January
2013
AASB 119
Employee Benefits: The main change introduced by this
standard is to revise the accounting for defined benefit plans.
1 January
2013
AASB 2012-2
Amendments to Australian Accounting Standards - Disclosures
- Offsetting Financial Assets and Financial Liabilities
1 January
2013
AASB 2012-5
Amendments to Australian Accounting Standards arising from
Annual Improvements 2009-2011 Cycle
1 January
2013
(Refer note 10)
The adoption has not
had a material impact on
the Group
The adoption has not
had a material impact on
the Group
The adoption has not
had a material impact on
the Group
1 July 2013
1 July 2013
1 July 2013
The adoption has not
had a material impact on
the Group
1 July 2013
AASB 2012-9
Amendment to AASB 1048 arising from the withdrawal of
Australian Interpretation 1039
AASB 1053
AASB 2011-4
Application of Tiers of Australian Accounting Standards: This
standard establishes a differential financial reporting framework
consisting of two tiers of reporting requirements for preparing
general purpose financial statements.
Amendments to Australian Accounting Standards to Remove
Individual Key Management Personnel Disclosure
Requirements [AASB 124]: This amendment deletes from AASB
124 individual key management personnel disclosure
requirements for disclosing entities that are not companies. It
also removes the individual KMP disclosure requirements for all
disclosing entities in relation to equity holdings, loans and other
related party transactions.
1 January
2013
The adoption has not
had a material impact on
the Group
1 July 2013
1 July 2013
The adoption has not
had a material impact on
the Group
1 July 2013
1 July 2013
The adoption has not
had a material impact on
the Group (Refer note
26).
1 July 2013
(ii)
Accounting standards and interpretations issued but not yet effective
Australian accounting standards and interpretations that have recently been issued but not yet effective and had not been
adopted by the Group for the annual reporting year ending 30 June 2014, are outlined in the table below:
Reference
Summary
AASB 9
AASB 2012-3
AASB 2013-3
Financial Instruments: AASB 9 includes requirements for the
classification and measurement of financial assets. It was further
amended by AASB 2010-7 to reflect amendments to the accounting
for financial liabilities.
Amendments to Australian Accounting Standards - Offsetting
Financial Assets and Financial Liabilities AASB 2012-3 adds
application guidance to AASB 132 Financial Instruments:
Presentation to address inconsistencies identified in applying some
of the offsetting criteria of AASB 132.
Amendments to AASB 136 – Recoverable Amount Disclosures for
Non-Financial Assets: AASB 2013-3 amends the disclosure
requirements in AASB 136 Impairment of Assets. The amendments
include the requirement to disclose additional information about
the fair value measurement when the recoverable amount of
impaired assets is based on fair value less costs of disposal.
Application
date of
standard
1 January
2018
1 January
2014
1 January
2014
Impact on the Group
financial report
Application
date for Group
1 July 2018
We do not expect
material impact to
performance and
position of the Group.
1 July 2014
We do not expect
material impact to
performance and
position of the Group.
1 July 2014
We do not expect
material impact to
performance and
position of the Group.
Annual
Improvements
2010–2012 Cycle
Annual Improvements to IFRSs 2010–2012 Cycle:
1 July 2014
This standard sets out amendments to International Financial
Reporting Standards (IFRS) and the related bases for conclusions
and guidance made during the International Accounting Standards
1 July 2014
We do not expect
material impact to
performance and
position of the Group.
COKAL LIMITED Annual Report 2014 | Page 41 of 69
Reference
Summary
Annual
Improvements
2011–2013 Cycle
AASB 1031
AASB 2013-9
Board’s Annual Improvements process.
Annual Improvements to IFRSs 2011–2013 Cycle: This standard
sets out amendments to International Financial Reporting.
Materiality: The revised AASB 1031 is an interim standard that
cross-references to other Standards and the Framework (issued
December 2013) that contain guidance on materiality.
Amendments to Australian Accounting Standards – Conceptual
Framework, Materiality and Financial Instruments: The Standard
contains three main parts and makes amendments to a number
Standards and Interpretations.
Application
date of
standard
1 July 2014
1 January
2014
1 January
2014
Impact on the Group
financial report
Application
date for Group
1 July 2014
1 July 2014
1 July 2014
We do not expect
material impact to
performance and
position of the Group.
We do not expect
material impact to
performance and
position of the Group.
We do not expect
material impact to
performance and
position of the Group.
Amendments to
IAS 16 and IAS 38
Clarification of Acceptable Methods of Depreciation and
Amortisation (Amendments to IAS 16 and IAS 38): IAS 16 and IAS
38 both establish the principle for the basis of depreciation and
amortisation as being the expected pattern of consumption of the
future economic benefits of an asset.
1 January
2016
1 July 2016
We do not expect
material impact to
performance and
position of the Group.
IFRS 15
Revenue from Contracts with Customers: IFRS 15 establishes
principles for reporting useful information to users of financial
statements about the nature, amount, timing and uncertainty of
revenue and cash flows arising from an entity’s contracts with
customers.
1 January
2017
1 July 2017
We are currently
evaluating the impact
of new standard as
the Group is still at
exploration stage.
However we do not
expect material
impact to
performance and
position of the Group.
(e) Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries at reporting
date . Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the
investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an
investee if and only if the Group has:
• Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the
investee)
• Exposure, or rights, to variable returns from its involvement with the investee, and
• The ability to use its power over the investee to affect its returns
When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts
and circumstances in assessing whether it has power over an investee, including:
• The contractual arrangement with the other vote holders of the investee
• Rights arising from other contractual arrangements
• The Group’s voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to
one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the
subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary
acquired or disposed of during the year are included in the statement of comprehensive income from the date the Group
gains control until the date the Group ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of
the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line
COKAL LIMITED Annual Report 2014 | Page 42 of 69
with the Group’s accounting policies. All intra-Group assets and liabilities, equity, income, expenses and cash flows relating
to transactions between members of the Group are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the
Group loses control over a subsidiary, it:
Rights arising from other contractual arrangements
•
• De-recognises the assets (including goodwill) and liabilities of the subsidiary
• De-recognises the carrying amount of any non-controlling interests
• De-recognises the cumulative translation differences recorded in equity
•
•
•
•
Recognises the fair value of the consideration received
Recognises the fair value of any investment retained
Recognises any surplus or deficit in profit or loss
Reclassifies the parent’s share of components previously recognised in OCI to profit or loss or retained earnings, as
appropriate, as would be required if the Group had directly disposed of the related assets or liabilities
(f) Business combinations
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the
aggregate of the consideration transferred measured at acquisition date fair value and the amount of any non-controlling
interests in the acquiree. For each business combination, the Group elects whether to measure the non-controlling interests
in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs
are expensed as incurred and included in administrative expenses.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and
designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the
acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.
If the business combination is achieved in stages, any previously held equity interest is re-measured at its acquisition date
fair value and any resulting gain or loss is recognised in profit or loss. It is then considered in the determination of goodwill.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date.
Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of AASB 139
Financial Instruments: Recognition and Measurement, is measured at fair value with changes in fair value recognised either
in either profit or loss or as a change to OCI. If the contingent consideration is not within the scope of AASB 139, it is
measured in accordance with the appropriate AASB. Contingent consideration that is classified as equity is not re-measured
and subsequent settlement is accounted for within equity.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount
recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and
liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the
Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews
the procedures used to measure the amounts to be recognised at the acquisition date. If the re-assessment still results in an
excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in
profit or loss.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of
impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the
Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or
liabilities of the acquiree are assigned to those units.
Where goodwill has been allocated to a cash-generating unit and part of the operation within that unit is disposed of, the
goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the
gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed
operation and the portion of the cash-generating unit retained
(g) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue
can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the
consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or
duty. The Group has concluded that it is acting as a principal in all of its revenue arrangements since it is the primary obligor
in all the revenue arrangements, has pricing latitude and is also exposed to inventory and credit risks. The specific ecognition
criteria described below must also be met before revenue is recognised:
Sale of goods
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed
COKAL LIMITED Annual Report 2014 | Page 43 of 69
to the buyer, usually on delivery of the goods.
Interest
For all financial instruments measured at amortised cost and interest-bearing financial assets classified as available-for-sale,
interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future
cash payments or receipts over the expected life of the financial instrument or a shorter year, where appropriate, to the net
carrying amount of the financial asset or liability. Interest income is included in finance income in the statement of profit or
loss.
Consultation fee
Consultation fee is recognised when the service is rendered and revenue can be measured reliably.
(h) Income tax
The income tax expense for the year is the tax payable on the current year's taxable income based on the national income
tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences
between the tax base of assets and liabilities and their carrying amounts in the financial statements, and to unused tax
losses.
Deferred tax assets and liabilities are recognised for all temporary differences, between carrying amounts of assets and
liabilities for financial reporting purposes and their respective tax bases, at the tax rates expected to apply when the assets
are recovered or liabilities settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction.
Exceptions are made for certain temporary differences arising on initial recognition of an asset or a liability if they arose in a
transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or
taxable profit.
Deferred tax assets are only recognised for deductible temporary differences and unused tax losses if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are not recognised for temporary differences between the carrying amount and tax bases
of investments in subsidiaries, associates and interests in joint ventures where the parent entity is able to control the timing
of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Current and deferred tax balances relating to amounts recognised directly in other comprehensive income and equity are
also recognised directly in other comprehensive income and equity, respectively.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer
profitable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets
against tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation
authority.
Cokal Limited and its wholly-owned subsidiaries are in the process of implementing the tax consolidation legislation. Cokal
Limited will be the head entity in the tax consolidated Group. These entities will be taxed as a single entity and deferred tax
assets and liabilities have been offset in these consolidated financial statements.
Impairment of assets other than goodwill
(i)
At the end of each reporting year the Group assesses whether there is any indication that individual assets other than
goodwill, are impaired. Where impairment indicators exist, recoverable amount is determined and impairment losses are
recognised in profit or loss 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 asset.
Where it is not possible to estimate recoverable amount for an individual asset, the Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs.
Assets other than goodwill that suffered impairment are tested for possible reverse of the impairment and whenever events
or changes in circumstances indicate that the impairment may have reversed.
Joint venture operations
(j)
The proportionate share of the Group's interests in the assets, liabilities, income and expenses of joint venture operations
have been incorporated in the financial statements under the appropriate headings. Details of joint venture operations are
set out in Note 11.
(k) Cash and cash equivalents
For the purposes of the Statement of Cash Flows, cash and cash equivalents includes cash on hand and at bank, deposits
held at call with financial institutions, other short term, highly liquid investments with 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 and
bank overdrafts.
COKAL LIMITED Annual Report 2014 | Page 44 of 69
(l) Financial instruments – initial recognition and subsequent measurement
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity
instrument of another entity.
(i) Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, as financial assets at fair value through profit or loss, loans and
receivables, held-to-maturity investments, available-for-sale financial assets, or as derivatives designated as hedging
instruments in an effective hedge, as appropriate.
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through
profit or loss, transaction costs that are attributable to the acquisition of the financial asset.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or
convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Group commits
to purchase or sell the asset.
Subsequent measurement
Loans and receivables
This category is the most relevant to the Group. Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. After initial measurement, such financial assets are
subsequently measured at amortised cost using the effective interest rate (EIR) method, less impairment. Amortised cost is
calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the
EIR. The EIR amortisation is included in finance income in the statement of profit or loss. The losses arising from impairment
are recognised in the statement of profit or loss in finance costs for loans and in cost of sales or other operating expenses for
receivables. This category generally applies to trade and other receivables.
De-recognition
A financial asset (or, where applicable, a part of a financial asset or part of a Group of similar financial assets) is primarily de-
recognised (i.e. removed from the Group’s consolidated statement of financial position) when:
•
•
The rights to receive cash flows from the asset have expired; or
The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the
received cash flows in full without material delay to a third party under a ”pass-through” arrangement; and either (a)
the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred
nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset
When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through
arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither
transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the
Group continues to recognise the transferred asset to the extent of the Group’s continuing involvement. In that case, the
Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that
reflects the rights and obligations that the Group has retained.
Impairment of financial assets
The Group assesses, at each reporting date, whether there is objective evidence that a financial asset or a Group of financial
assets is impaired. An impairment exists if one or more events that has occurred since the initial recognition of the asset (an
incurred ‘loss event’) has an impact on the estimated future cash flows of the financial asset or the Group of financial assets
that can be reliably estimated. Evidence of impairment may include indications that the debtors or a Group of debtors is
experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they
will enter bankruptcy or other financial reorganisation and observable data indicating that there is a measurable decrease in
the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.
(ii) Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and
borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of
directly attributable transaction costs.
The Group’s financial liabilities include trade and other payables, loans and borrowings, including bank overdrafts.
COKAL LIMITED Annual Report 2014 | Page 45 of 69
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
(ii) Financial liabilities
Accounts payable
They are subsequently measured at amortised cost using the effective interest method (EIR) due to short term nature.
Loans and borrowings
This is the category most relevant to the Group. After initial recognition, interest-bearing loans and borrowings are
subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the
liabilities are de-recognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an
integral part of the EIR. The EIR amortisation is included in finance costs in the statement of profit or loss.
This category generally applies to interest-bearing loans and borrowings.
De-recognition
A financial liability is de-recognised when the obligation under the liability is discharged or cancelled, or expires. When an
existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an
existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original
liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the
statement or profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial
position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on
a net basis, to realise the assets and settle the liabilities simultaneously.
(m) Property, plant and equipment
Property, plant and equipment are measured on the cost basis less depreciation and impairment losses.
The cost of property, plant and equipment constructed within the Group includes the cost of materials, direct labour,
borrowing costs and an appropriate portion of fixed and variable costs.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it
is probable that future economic benefits associated with the item will flow to the consolidated entity and the cost of the
item can be measured reliably. All other repairs and maintenance are charged to profit or loss during the financial year in
which they are incurred.
Depreciation
The depreciable amount of property, plant and equipment is depreciated over their useful life to the Group commencing
from the time the asset is held ready for use.
The depreciation rates used for each class of assets are:
Class of Fixed Assets
Land
Computer Equipment
Furniture and Office Equipment
Motor Vehicles
Depreciation Rate
nil
33.3% straight line
10 – 33.3% straight line
20% straight line
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting year.
An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are
expected from its use or disposal.
Gains and losses on disposal are determined by comparing proceeds with the carrying amount. The gains and losses are
included in the statement of comprehensive income.
(n) Exploration, evaluation and development expenditure
Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of
interest. Such expenditures comprise net direct costs and an appropriate portion of related overhead expenditure but do
not include overheads or administration expenditure not having a specific nexus with a particular area of interest. These
costs are only carried forward to the extent that they are expected to be recouped through the successful development of
the area or where activities in the area have not yet reached a stage which permits reasonable assessment of the existence
of economically recoverable reserves and active or significant operations in relation to the area are continuing.
COKAL LIMITED Annual Report 2014 | Page 46 of 69
When a technical feasibility and commercial viability of extracting a Coal Resource have been demonstrated then any
capitalised exploration and evaluation expenditure is classified as capitalised mine development. Prior to reclassification,
capitalised exploration and evaluation expense is assessed for impairment.
(o) Exploration, evaluation and development expenditure
A regular review has been undertaken on each area of interest to determine the appropriateness of continuing to carry
forward costs in relation to that area of interest. Accumulated costs in relation to an abandoned area are written off in full
against profit in the year in which the decision to abandon the area is made.
Costs related to the acquisition of properties that contain Coal Resources are allocated separately to specific areas of
interest. These costs are capitalised until the viability of the area of interest is determined.
The stripping costs (the process of mining over burden removal) incurred before production commences are included within
mine development expenditure and subsequently amortised. The stripping costs subsequent to commencement of
production are recorded as production costs.
When production commences, the accumulated costs for the relevant area of interest (mine development and acquired
properties) are amortised over the life of the area according to the rate of depletion of the economically recoverable
reserves.
Costs of site restoration are provided over the life of the facility from when exploration commences and are included in the
costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building
structure, waste removal, and rehabilitation of the site in accordance with clauses of mining permits. Such costs have been
determined using estimates of future costs, current legal requirements and technology on an undiscounted basis.
Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site restoration,
there is uncertainty regarding the nature and extent of the restoration due to community expectations and future
legislation. Accordingly the costs have been determined on the basis that restoration will be completed within one year of
abandoning the site.
Upon disposal, gains and losses on disposal are determined by comparing proceeds with the carrying amount. The gains and
losses are included in the statement of comprehensive income.
(o) Employee benefits
Wages and salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be
settled within 12 months of the end of the reporting year are recognised in respect of employees' services rendered up to
the end of the reporting year and are measured at amounts expected to be paid when the liabilities are settled. Liabilities for
non-accumulating sick leave are recognised when leave is taken and measured at the actual rates paid or payable. In
determining the liability, consideration is given to employee wage increases and the probability that the employee may
satisfy vesting requirements.
(p) Provisions
Provisions for legal claims, service warranties and make good obligations are recognised when the Group has a present legal
or constructive obligation as a result of a past event, it is probable that that an outflow of economic resources will be
required to settle the obligation and the amount can be reliably estimated.
(q) Issued capital
Ordinary shares are classified as equity. Costs directly attributable to the issue of new shares or options are shown as a
deduction from the equity proceeds, net of any income tax benefit.
(r) Share-based payments
The Group provides benefits to employees (including directors) in the form of share-based payment transactions, whereby
employees render services in exchange for shares or options over shares (equity-settled transactions).
The fair value of options granted to employees is recognised as an employee benefit expense with a corresponding increase
in equity (option reserve). The fair value is measured at grant date and recognised over the year during which the employees
become unconditionally entitled to the options. Fair value is determined by an independent valuer using a Black-Scholes
option pricing model. In determining fair value, no account is taken of any performance conditions other than those related
to the share price of Cokal Limited (market conditions).
The cumulative expense recognised between grant date and vesting date is adjusted to reflect the directors’ best estimate
of the number of options that will ultimately vest because of internal conditions of the options, such as the employees
having to remain with the Group until vesting date, or such that employees are required to meet internal performance
targets. No expense is recognised for options that do not ultimately vest because internal conditions were not met. An
expense is still recognised for options that do not ultimately vest because a market condition was not met.
At each subsequent reporting date until vesting the cumulative charge to the statement of comprehensive income is the
product of:
•
The grant date fair value of the award
COKAL LIMITED Annual Report 2014 | Page 47 of 69
•
•
The current best estimate of the number of awards that will vest, taking into account such factors as the likelihood of
employees turnover during the vesting period and the likelihood of non-market performance conditions being met and
The expired portion of the vesting period.
(s) Share-based payments
The charge to the statement of comprehensive income for the year is the cumulative amount as calculated above less the
amounts already charged in previous years. There is a corresponding entry to equity.
Where the terms of options are modified, the expense continues to be recognised from grant date to vesting date as if the
terms had never been changed. In addition, at the date of the modification, a further expense is recognised for any increase
in fair value of the transaction as a result of the change.
Where options are cancelled, they are treated as if vesting occurred on cancellation and any unrecognised expenses are
taken immediately to profit or loss. However, if new options are substituted for the cancelled options and designated as a
replacement on grant date, the combined impact of the cancellation and replacement options are treated as if they were a
modification.
The dilutions effect, if any, of outstanding options is reflected as additional share dilutions in the compilations of diluted
earnings per share.
(s) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit/(loss) attributable to owners of Cokal Limited by the weighted
average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares
during the year.
Diluted earnings per share
Earnings used to calculate diluted earnings per share are calculated by adjusting the amount used in determining basic
earnings per share by the after-tax effect of dividends and interest associated with dilutive potential ordinary shares. The
weighted average number of shares used is adjusted for the weighted average number of shares assumed to have been
issued for no consideration in relation to dilutive potential ordinary shares.
(t) GST
Revenues, expenses and assets are recognised net of GST except where GST incurred on a purchase of goods and services is
not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the
asset or as part of the expense item.
Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable
to, the taxation authority is included as part of receivables or payables in the statements of financial position.
Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows arising from
investing and financing activities, which is recoverable from, or payable to, the taxation authority, are classified as operating
cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation
authority.
(u) Determination and presentation of operating segments
The Group has applied AASB 8 Operating Segments from 1 July 2009. AASB 8 requires a management approach under which
segment information is presented on the same basis as that used for internal reporting purposes. Operating segments are
now reported in a manner that is consistent with the internal reporting to the chief operating decision maker (CODM), which
has been identified by the Group’s CEO and other members of the Board of Directors.
Operating segments that meet the qualification criteria as prescribed by AASB 8 are reported separately. However, an
operating segment that does not meet the qualifications criteria is still reported separately when information about the
segment would be useful to users of the financial statements.
(v) Fair value measurement
The Group measures financial instruments at fair value at each balance sheet date. Fair value is the price that would be
received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or
transfer the liability takes place either:
•
•
In the principal market for the asset or liability, or
In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible to by the Group.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing
COKAL LIMITED Annual Report 2014 | Page 48 of 69
the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic
benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset
in its highest and best use.
(w) Fair value measurement (cont’d)
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to
measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the
fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as
a whole:
•
•
•
Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is
directly or indirectly observable
Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether
transfers have occurred between Levels in the hierarchy by re-assessing categorisation (based on the lowest level input that
is significant to the fair value measurement as a whole) at the end of each reporting year.
(w) Foreign currency translation
Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at
the date of transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of
exchange ruling at the reporting date. The resulted gain or loss on retranslation is included as profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange
rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated
using the exchange rates at the date when the fair value was determined.
The foreign operating results are translated at the average rate transaction and the assets and liabilities are translated at the
exchange rates prevailing at reporting date. Exchange variations resulting from the translation are recognised in the equity.
(x) Operating leases
Operating lease payments are recognised as an operating expense in the statement of comprehensive income on a straight
line basis over the leave term. Operating lease incentives are recognised as a liability when received and subsequently
reduced by allocating lease payments between rental expense and reduction of the liability.
(z) Parent entity financial information
The financial information for the parent entity, Cokal Limited, included in Note 20, has been prepared on the same basis as
the consolidated financial statements, except as follows:
•
•
Investments in subsidiaries and joint venture operations are accounted for at cost, less provision for impairment.
Tax consolidation.
Cokal Limited and its wholly-owned subsidiaries are in the process of implementing the tax consolidation legislation. Cokal
Limited will be the head entity in the tax consolidated Group. These entities will be taxed as a single entity. The stand-alone
taxpayer/separate taxpayer within a Group approach has been used to allocate current income tax expense and deferred tax
expense to wholly-owned subsidiaries that form part of the tax consolidated Group. Cokal Limited has assumed all the
current tax liabilities and the deferred tax assets arising from unused tax losses for the tax consolidated Group via
intercompany receivables and payables because a tax funding arrangement has been in place for the whole financial year.
The amounts receivable/payable under tax funding arrangements are due upon notification by the head entity, which is
issued soon after the end of each financial year. Interim funding notices may also be issued by the head entity to its wholly-
owned subsidiaries in order for the head entity to be able to pay tax instalments. These amounts are recognised as current
intercompany receivables or payables (refer Note 20).
(aa) Accounting estimates and judgments
Critical accounting estimates and judgements
Details of critical accounting estimates and judgements about the future made by management at the end of the reporting
year are set out below:
(i) Key estimates – share-based payments
The Group uses estimates to determine the fair value of equity instruments issued to directors, executives and
employees. Further detail of estimates used in determining the value of share-based payments is included in Note 25.
COKAL LIMITED Annual Report 2014 | Page 49 of 69
(ii) Key estimates – impairment
The Group assesses impairment at each reporting date by evaluating conditions specific to the Group that may lead to
impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. Value-in-
use calculations performed in assessing recoverable amounts incorporate a number of key estimates. No assets are
considered impaired at year end.
(aa) Accounting estimates and judgments
Critical accounting estimates and judgements (cont’d)
(iii) Key judgements – exploration and evaluation assets
The Group performs regular reviews on each area of interest to determine the appropriateness of continuing to carry
forward costs in relation to that area of interest. While there are certain areas of interest from which no reserves have
been extracted, the directors are of the continued belief that such expenditure should not be written off since feasibility
studies in such areas have not yet concluded. Such capitalised expenditure is carried at the end of the reporting year at
$62,811,658 (2013: $55,729,090).
(iv) Taxation
The Group’s accounting policy for taxation requires management’s judgement as to the types of arrangements
considered to be a tax on income in contrast to an operating cost. Judgement is also required in assessing whether
deferred tax assets and certain deferred tax liabilities are recognised on the balance sheet.
Deferred tax assets, including those arising from unrecouped tax losses, capital losses and temporary differences, are
recognised only where it is considered more likely than not that they will be recovered, which is dependent on the
generation of sufficient future taxable profits. Judgements are also required about the application of income tax
legislation. These judgements and assumptions are subject to risk and uncertainty, hence there is a possibility that
changes in circumstances will alter expectations, which may impact the amount of deferred tax assets and deferred tax
liabilities recognised on the balance sheet and the amount of other tax losses and temporary differences not yet
recognised. In such circumstances, some or all of the carrying amounts of recognised deferred tax assets and liabilities
may require adjustment, resulting in a corresponding credit or change to the income statement.
(v) Estimation of useful lives of plant and equipment
The estimation of the useful lives of assets has been based on estimated useful lives as published by the Australian
Taxation Office. In addition, the condition of the assets is assessed at least once per year and considered against the
remaining useful life. Adjustments to useful lives are made when considered necessary.
Note 2: Revenue and Other Income
Revenue
Interest income
- External parties
Total interest income
Other Income
- Profit on sale of tenements
- Consultation fees
Total other income
Total revenue and other income from continuing operations
Note 3: Loss for the Year
Loss before income tax includes the following
specific expenses:
Depreciation on plant and equipment
Pre-tenure exploration expenses
Salaries and wages
Superannuation
Share-based payments (options)
Operating lease expense – minimum lease payment
Interest expense
2014
$
2013
$
79,811
79,811
-
-
-
79,811
591,402
591,402
1,323,233
261,138
1,584,371
2,175,773
2014
$
2013
$
256,807
-
1,367,742
47,175
835,819
453,589
633,062
184,125
138,417
1,158,987
63,014
1,322,423
382,249
86
COKAL LIMITED Annual Report 2014 | Page 50 of 69
Note 4: Income Tax Expenses
The prima facie income tax on the loss is reconciled to the income tax expense as follows:
Prima facie tax benefit (30%) on loss before
income tax
Add tax effect of:
- Not deductible expenses and impact of tax
rate differences
- Deferred tax asset not recognised
Income tax expense
Deferred tax assets
Deductible temporary differences
Carry forward tax losses
Deferred tax liabilities
Assessable temporary differences
Net deferred tax assets not recognised
2014
$
2013
$
(1,939,252)
(2,016,522)
629,743
1,309,509
-
475,410
5,234,745
5,710,155
(852)
5,709,303
703,904
1,312,618
-
749,017
3,669,406
4,418,423
(13,374)
4,405,049
There are no franking credits available to shareholders of Cokal Limited.
The carried forward tax losses and temporary differences not recognised as deferred tax assets as at 30 June 2014 were
$17,446,309 (2013: $12,231,353) and $474,558 (2013: $735,643) respectively.
In order to recoup carried forward losses in future years, either the Continuity of Ownership Test (COT) or Same Business
Test must be passed. The majority of losses are carried forward at 30 June 2014 under COT.
Deferred tax assets which have not been recognised as an asset, will only be obtained if:
(i)
the Group derives future assessable income of a nature and of an amount sufficient to enable the losses to be
realised;
(ii) the Group continues to comply with the conditions for deductibility imposed by the law; and
(iii) no changes in tax legislation adversely affect the Group in realising the losses
Note 5: Dividends and Franking Credits
There were no dividends paid or recommended during the financial year (2013: Nil)
There were no franking credits available to the shareholders of the Group (2013: Nil)
Note 6: Auditors Remuneration
Audit services
Amounts paid/payable to Ernst & Young for audit or
review of the financial statements for the Group
Ernst & Young - Australia
Ernst & Young - Indonesia
Ernst & Young - Singapore
2014
$
2013
$
110,400
31,852
34,005
176,257
85,100
30,000
27,000
142,100
COKAL LIMITED Annual Report 2014 | Page 51 of 69
Note 7: Loss per Share
Loss attributable to owners of Cokal Limited used to calculate basic and
diluted loss per share
Options *
Weighted average number of ordinary shares used as the denominator in
calculating basic loss per share
Adjustments for calculation of diluted earnings per share:
-
Weighted average number of ordinary shares and potential ordinary shares
used as the denominator in calculating diluted loss per share
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
* options are considered anti-dilutive as the Group is loss making.
(6,464,173)
(6,721,739)
2014
Number
2013
Number
460,526,243
411,046,892
-
-
460,526,243
411,046,892
(1.40)
(1.40)
(1.64)
(1.64)
Options could potentially dilute earnings per share in the future. Refer to Note 17 for details of option granted as at 30 June
2014.
Note 8: Cash and Cash Equivalents
2014
$
Cash and bank balances
Cash at bank bear floating and fixed interest rates between 0.10% and 4.31% (2013: between 0.80% and 5.90%).
4,708,217
2013
$
2,774,509
Included in the consolidated statement of cash flows as follows:
Cash and bank balances *
Less: Short term deposits maturing after three
months classified as investing activities
Cash and cash equivalents
* All deposits are short term investments held at commercial banks.
Note 9: Accounts Receivable
Current
Other receivables*
*No receivables balances are past due or impaired at the end of the reporting year.
2014
$
2013
$
4,708,217
2,774,509
(1,955,259)
2,752,958
(1,858,000)
916,509
2014
$
2013
$
203,860
203,860
159,900
159,900
COKAL LIMITED Annual Report 2014 | Page 52 of 69
Note 10: Subsidiaries
a) Interest in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in Note 1.
Percentage Owned
(%)*
Name of entity
Country of
Incorporation
Class of Shares
Jack Doolan Capital Pty Ltd
Cokal Mozambique Pty Ltd
Cokal Holdings Pte. Ltd
Cokal-AAK Pte. Ltd
Cokal-AAM Pte. Ltd
Cokal-BBM Pte. Ltd
Cokal-BBP Pte. Ltd
Cokal Services Pte. Ltd
Cokal Karoo Pte. Ltd
Cokal Manda Pte. Ltd
Cokal-West Kalimantan Pte. Ltd
Cokal-BPR Pte. Ltd
Cokal-TBAR Pte. Ltd
Mining Logistics Pte. Ltd
Cokal-KED Pte. Ltd
Cokal Resources Limited
PT Cokal
PT Bumi Kalimantan Logistik
PT Anugerah Alam Katingan^
PT Anugerah Alam Manuhing^
PT Bumi Barito Mineral^
PT Borneo Bara Prima ^
PT Silangkop Nusa Raya^
PT Tambang Benua Alam Raya#
* the proportion of ownership interest is equal to the proportion of voting power held.
^at reporting date, the capital of companies represents only the contributions from Cokal. Per agreement, the right of non-controlling shareholders’
receiving return is established only when they contribute their share of capital upon completion of Initial Work Program of the projects by Cokal. At
reporting date, the projects are at Initial Work Program and no capital has been contributed by the non-controlling shareholders.
#in process of transferring the shares to the Group.
Australia
Australia
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Tanzania
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
2014
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
75%
75%
60%
60%
75.2%
75%
2013
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
75%
75%
60%
60%
75.2%
75%
b) Financial information of subsidiaries
Financial information of subsidiaries that will have material non-controlling interests are provided below. The balances of
non-controlling interests are not material at 30 June 2014.
Proportion of equity interest held by non-controlling interests:
Name of entity
PT Bumi Barito Mineral (BBM)
PT Borneo Bara Prima (BBP)
Country of incorporation
and operation
Indonesia
Indonesia
Accumulated balances of material non-controlling interest
BBM
BBP
Profit/(loss) allocated to material non-controlling interest:
BBM
BBP
2014
2013
40%
40%
2014
2013
-
-
-
-
40%
40%
-
-
-
-
COKAL LIMITED Annual Report 2014 | Page 53 of 69
Note 10: Subsidiaries (cont’d)
The summarised financial information of these subsidiaries are provided below. This information is based on amounts
before inter-company eliminations.
Summarised statement of profit or loss for 2014
Other operating expenses
Loss before tax
Income tax expense
Profit/(Loss) for the year from continuing operations
Total comprehensive income
Attributable to non-controlling interests
Dividends paid to non-controlling interests
Summarised statement of profit or loss for 2013
Other operating expenses
Loss before tax
Income tax expense
Profit/(Loss) for the year from continuing operations
Total comprehensive income
Attributable to non-controlling interests
Dividends paid to non-controlling interests
Summarised statement of financial position as at 30 June 2014
Property, plant and equipment and exploration and evaluation assets
Cash and other receivables
Trade and other payables
Loan from immediate holding company (non-current)
Total Equity
Attributable to:
Equity holders of parent
Non-controlling interest
Summarised statement of financial position as at 30 June 2013
Property, plant and equipment and exploration and evaluation assets
Cash and other receivables
Trade and other payables
Loan from immediate holding company (non-current)
Total Equity
Attributable to:
Equity holders of parent
Non-controlling interest
Summarised statement of cash flow for 2014
Cash flow from operating activities
Cash flow from investment activities
Cash flow from financing activities
Net increase/(decrease)*
Summarised statement of cash flow for 2013
Cash flow from operating activities
Cash flow from investment activities
Cash flow from financing activities
Net increase/(decrease)*
* Parent entity provides financing for operations.
COKAL LIMITED Annual Report 2014 | Page 54 of 69
BBM
(2,151,897)
(2,151,897)
-
(2,151,897)
(2,151,897)
-
-
BBM
(2,809,898)
(2,809,898)
-
(2,809,898)
(2,809,898)
-
-
BBM
21,860,166
11,772
(332,607)
(27,426,639)
5,887,308
5,887,308
-
BBM
15,317,117
40,550
(751,992)
(18,341,085)
3,735,410
3,735,410
-
BBM
(2,535,602)
(6,567,946)
9,103,548
-
BBM
(3,035,453)
(12,398,409)
15,433,862
-
(
BBP
(79,889)
(79,889)
-
(79,889)
(79,889)
-
-
BBP
(341,329)
(341,329)
-
(341,329)
(341,329)
-
-
BBP
3,704,632
-
(20,184)
(3,917,436)
232,988
232,988
-
BBP
3,447,946
-
(141,265)
(3,459,780)
153,099
153,099
-
BBP
(150,923)
(289,370
440,293
-
BBP
(633,950)
(2,008,345
2,642,295
-
Note 11: Joint Venture Operations
Cokal has JV operations to explore for coal in Tanzania. The JV is with private company, Tanzoz Resource Company Ltd which
has been active in Tanzania since 2007, and currently holds interests in Tanzania for uranium, gold and coal.
Name of entity
Country of Incorporation
Class of Shares
Cokal Karoo Limited^
Cokal Manda Limited^
* the proportion of ownership interest is equal to the proportion of voting power held.
^ the companies have not commenced operation
Tanzania
Tanzania
Ordinary
Ordinary
Percentage Owned
(%)*
30 June
2014
60%
50%
30 June
2013
60%
50%
The Group has executed a JV agreement with Meratus Advance Maritim (MDM), an Indonesian company, to engage in the
ownership of push tugs and barges for shallow river operations. The parties wish to establish a mutually owned limited
company for this operation and the registration of this is in progress. The JV company will have the operations should Cokal
commences production and other conditions precedent take place. Because of this, there has been no liability recognised as
at 30 June 2014.
Note 12: Property, Plant and Equipment
Land
At cost
Computer equipment
At cost
Accumulated depreciation
Furniture and office equipment
At cost
Accumulated depreciation
Motor Vehicles
At cost
Accumulated depreciation
Capital WIP
At cost
Total plant and equipment
2014
$
33,470
33,470
585,272
(364,219)
221,053
604,515
(161,195)
443,319
10,590
(4,765)
5,825
2013
$
33,470
33,470
578,836
(173,411)
405,425
604,515
(97,310)
507,205
10,590
(2,647)
7,943
244,831
573
948,498
954,616
COKAL LIMITED Annual Report 2014 | Page 55 of 69
(a) Movements in carrying amounts
2014
Balance at the beginning of the year
Additions
Disposals
Depreciation expense
Carrying amount at the end of the
year
2013
Balance at the beginning of the year
Additions
Disposals
Depreciation expense
Carrying amount at the end of the
year
Land
33,470
-
-
-
33,470
Land
-
33,470
-
-
33,470
Computer
equipment
$
405,425
6,431
-
(190,803)
221,053
Computer
equipment
$
259,020
265,110
-
(118,705)
405,425
Furniture and
office
equipment
$
507,205
-
-
(63,886)
443,319
Furniture and
office
equipment
$
539,624
30,818
-
(63,237)
507,205
Motor
Vehicles
$
7,943
-
-
(2,118)
5,825
Motor
Vehicles
$
10,126
-
-
(2,183)
7,943
Capital
WIP
573
244,258
244,831
-
573
-
-
573
Total
$
954,616
250,689
-
(256,807)
948,498
Total
$
808,770
329,971
-
(184,125)
954,616
Note 13: Exploration and Evaluation Assets
Non-Current
Exploration and evaluation expenditure capitalised
- exploration and evaluation phases
2014
$
2013
$
62,811,658
55,729,090
Recoverability of the carrying amount of exploration assets is dependent on the successful development and commercial exploitation of coal, or
alternatively, sale of the respective areas of interest.
(a) Movements in carrying amounts
Balance at the beginning of the year
Additions
Disposals
Unsuccessful exploration expenses derecognised
Carrying amount at the end of the year
Commitments for exploration and evaluation expenditure are disclosed in Note 21.
33,306,527
22,857,747
(296,767)
(138,417)
55,729,090
55,729,090
7,082,568
-
-
62,811,658
Note 14: Other Assets
Current
Prepayments
Non-Current
Security deposits
Note 15: Accounts Payable
Current
Sundry payables and accrued expenses
Employee benefits
Deferred liability *
Non-Current
Deferred liability *
* Deferred liability represents deferred benefit on operating lease incentives.
2014
$
2013
$
60,704
100,117
232,023
266,762
2014
$
534,551
253,065
61,500
849,116
2013
$
1,960,764
129,305
61,500
2,151,569
138,375
230,625
COKAL LIMITED Annual Report 2014 | Page 56 of 69
Note 16: Interest Bearing Loans
Current
Platinum Partners facility
Non-Current
Blumont Group facility
Total Interest bearing loans
2014
$
3,757,381
3,311,972
7,069,353
2013
$
-
-
-
Blumont Group Facility
The Group entered into a loan facility agreement with Blumont Group Limited, a shareholder, for US$ 8 million. Under this
facility the Group has drawn down US$3.0 million (AUD 3,311,972) at reporting date.
The loan is repayable within 3 years, interest is 5% per annum, payable quarterly in arrears and can be capitalised and repaid
at maturity. The facility is secured by up to 5% of Cokal’s shares in Cokal Holdings Pte Ltd. If a future placement is made to
Blumont and should the subscription agreement require, the placement funds received from Blumont will be used to repay
the loan. The loan is otherwise on customary terms and conditions for a loan of this nature, size and type.
The loan does contain terms that require that in the event of a capital subscription by Blumont, any subscription monies
would be required to be immediately applied to the repayment of any loan monies and interest outstanding, but
only to the extent of principal and interest outstanding.
Platinum Partners Facility
On 29 March 2014, the Group entered into a short term loan agreement for USD$3.5 million (AUD 3,757,972) with Platinum
Partners for working capital. The loan is subject to withhold at the date of utilisation the aggregate amount of:
a. US$350,000, as a non-refundable work fee payable to the lender in respect of the facility; and
b. US$150,000, as the borrower's contribution for costs and expenses as stipulated in the agreement, the balance of
which amount is refundable on the repayment date to the extent not utilised by the lender.
The loan is repayable in 6 months from the date of the agreement. The loan the facility is secured 950 ordinary shares and
46,608,900 preference shares of Cokal Holdings Pte. Ltd. and for all shares of Cokal-BBM Pte. Ltd.
Interest bearing loans are classified in level 2 of the fair value hierarchy.
Note 17: Issued Capital
471,103,926 authorised and fully paid ordinary
shares (2013: 411,046,892)
The movement in Issued capital is as follows :
At the beginning of the year
Amount received for issue of shares during the year
Share issue from capital raising
Conversion of options to shares
Cost of share issue
At reporting date
(a) Ordinary shares
At the beginning of the year
Shares issued during the year
Share issue from capital raising
At reporting date
2014
$
2013
$
81,937,141
73,003,471
2014
$
73,003,471
9,609,127
-
(675,457)
2013
$
73,003,471
-
-
-
81,937,141
73,003,471
2014
Number
2013
Number
411,046,892
411,046,892
60,057,034
471,103,926
-
411,046,892
COKAL LIMITED Annual Report 2014 | Page 57 of 69
The Group made private placements of total shares of 60,057,034 at a total price of $9,609,125 to Blumont Group Limited.
The placement was completed in five tranches.
Ordinary shares participate in dividends and the proceeds on winding up of the Group in proportion to the number of
shares held. At shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each
shareholder has one vote on a show of hands.
(b) Options
All options on issue at 30 June 2014 were as follows:
Number of options
1,000,000
1,000,000
1,225,000
550,000
3,000,000
2,000,000
450,000
1,600,000
4,000,000
7,300,000
Expiry date
29 December 2014
29 December 2014
12 April 2015
29 June 2015
5 September 2015
5 September 2015
12 October 2015
12 April 2015
11 July 2017
11 July 2017
Exercise price
$0.50
$0.75
$0.75
$1.00
$1.10
$1.50
$0.75
$0.20
$0.21
$0.25
22,125,000
For information relating to the Cokal Limited employee option plan, including details of options issued, exercised and lapsed
during the financial year and the options outstanding at year-end refer to Note 25.
(c) Capital Risk Management
Management controls the capital of the Group in order to provide capital growth to shareholders and ensure the Group can
fund its operations and continue as a going concern.
The Group capital comprises equity as shown in the Statement of Financial Position. There are no externally imposed capital
requirements.
Management effectively manages the Group capital by assessing the Group financial risks and adjusting its capital structure in
response to changes in these risks and the market. These responses include raising the sufficient equity capital when required.
There have been no changes in the strategy adopted by management to control the capital of the Group since the prior year.
Note 18: Reserves
Option Reserve – director, executive and
employee options
2014
$
2013
$
4,706,240
3,870,421
The option reserve records the value of options issued as part of capital raisings, as well as expenses relating to director,
executive and employee share options.
Note 19: Accumulated Losses
Accumulated losses attributable to
members of Cokal Limited at beginning of
the financial year
Loss for the year
Accumulated losses attributable to
members of Cokal Limited at the end of the
financial year
2014
$
2013
$
(19,271,092)
(12,549,353)
(6,464,173)
(6,721,739)
(25,735,265)
(19,271,092)
Note 20: Parent Entity Information
The Corporations Act requirement to prepare parent entity financial statements where consolidated financial statements
are prepared has been removed and replaced by the new regulation 2M.3.01 which requires the following limited
disclosure in regards to the parent entity (Cokal Limited). The consolidated financial statements incorporate the assets,
liabilities and results of the parent entity in accordance with the accounting policy described in Note 1.
COKAL LIMITED Annual Report 2014 | Page 58 of 69
Parent Entity
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Issued capital
Reserves
Accumulated losses
Total shareholder’s equity
Loss for the year
Total comprehensive loss for the year
2014
$
4,941,552
75,575,034
80,516,586
4,086,090
3,311,972
7,398,062
73,118,524
81,937,141
4,706,240
(13,524,857)
73,118,524
(3,220,985)
(3,220,985)
2013
$
2,826,135
64,666,929
67,493,064
903,044
-
903,044
66,550,020
73,003,471
3,870,422
(10,323,873)
66,550,020
(2,560,833)
(2,560,833)
Guarantees
The parent entity has provided an undertaking to financially support the Group’s Singapore subsidiary entities to meet
their liabilities as and when they fall due.
Contractual Commitments
There were no contractual commitments for the acquisition of property, plant and equipment entered into by the parent
entity at 30 June 2014 (2013 – nil).
Contingent liabilities
The parent entity has no contingent liabilities.
Capital commitments
The parent entity has no capital commitments.
Note 21: Commitments
(a) Operating lease commitments
Future minimum rentals payable under non-cancellable operating leases as at 30 June 2013 are as follows:
Payable
- not later than 12 months
- between 12 months and 5 years
- greater than 5 years
447,251
852,466
-
1,299,717
455,531
1,299,717
-
1,755,248
2014
$
2013
$
(b) Future capital expenditure commitments
The Group has certain obligations to expend minimum amounts on capital expenditures including exploration tenements.
These obligations may be varied from time to time and are expected to be fulfilled in the normal course of operations of
the Group.
The commitments to be undertaken are as follows:
Payable
- not later than 12 months
- between 12 months and 5 years
- greater than 5 years
-
-
-
-
264,382
-
-
264,382
COKAL LIMITED Annual Report 2014 | Page 59 of 69
Note 22: Contingent Liabilities and Contingent Assets
The contingent liabilities are in relation to the acquisition of tenements. At 30 June 2014, the Group has further
obligations to make contingent payments of up to US$24.86 million (2013: US$25.25 million) on the achievement of
certain milestones, including the establishment of certain JORC Inferred Coal Resources and the issuance of production
operation IUPs (licences) and production forestry permit.
The Group executed a JV agreement with MDM, an Indonesian Group, to engage in the ownership of push tugs and
barges for shallow river operations. The parties wish to establish a mutually owned company for this operation and the
registration of this is in progress. The JV company will manage the barging operation for the BBM project should
production commence and other conditions precedent take place. Once the JV company is incorporated, Cokal will hold
49% interest by contributing an estimated $11 million (49% ordinary share capital of JV company, Indonesian Rupiah 200
billion).
The directors are not aware of any other significant contingent liabilities or contingent assets at the date of this report.
23: Operating Segments
AASB 8 requires operating segments to be identified on the basis of internal reports that are used by the chief operating
decision makers (CODM) in order to allocate resources to the segment and to assess its performance. The CODM of the
Group are the Board of Directors.
For management purposes, the Group is organised into three main operating segments, which involves the exploration
of coal in Indonesia, Tanzania and Australia. The Singapore was considered separately for corporate services. Discrete
financial information is reported to the Board (Chief Operating Decision Maker) as three segments since acquisition of
Jack Doolan Capital Pty Ltd.
Australia
Indonesia
Singapore
Tanzania
$
$
$
$
Total
$
Segment performance for year ended 30 June 2014
Revenue
Other revenue
Interest revenue
Intersegment income*
Total segment income
Depreciation expenses
Pre-tenure exploration expenses
Other expenses
Total segment expenses
79,270
-
79,270
541
-
541
183,721
73,086
-
4,484,065
4,667,786
-
1,650,173
1,723,259
972,768
(972,768)
-
-
-
-
-
-
-
-
144,315
144,315
8,624
8,624
1,052,579
(972,768)
79,811
256,807
-
6,287,177
6,543,984
Segment net loss before tax
(4,588,516)
(1,722,718)
(144,315)
(8,624)
(6,464,173)
Segment assets and liabilities as at 30 June 2014
Property, plant and equipment
Exploration and evaluation assets
Other segment assets
Total segment assets
458,980
489,518
-
62,811,658
5,141,276
63,528
5,600,256
63,364,704
-
-
-
-
Total segment liabilities
7,606,577
416,267
34,000
Capital expenditure for the year ended 30 June 2014
Property, plant and equipment
Exploration and evaluation assets
3,423
247,268
-
7,082,568
-
-
*Inter segment expense relating to the income is eliminated in Indonesia’s exploration and evaluation assets.
-
-
-
-
-
-
-
948,498
62,811,658
5,204,804
68,964,960
8,056,844
250,691
7,082,568
COKAL LIMITED Annual Report 2014 | Page 60 of 69
23: Operating Segments (cont’d)
Australia
Indonesia
Singapore
Tanzania
Segment performance for year ended 30 June 2013
Revenue
Other revenue
Interest revenue
Intersegment income*
Total segment income
Depreciation expenses
Pre-tenure exploration expenses
Other expenses
Total segment expenses
$
$
1,584,371
590,878
-
2,175,249
-
524
-
524
121,419
62,706
-
7,411,428
7,532,847
-
1,059,539
1,222,245
$
-
511,184
(511,184)
-
-
-
$
-
-
-
-
-
138,417
Total
$
1,584,371
1,102,586
(511,184)
2,175,773
184,125
138,417
91,887
91,887
12,116
8,574,970
150,533
8,897,512
Segment net loss before tax
(5,357,598)
(1,121,721)
(91,887)
(150,533)
(6,721,739)
Segment assets and liabilities as at 30 June 2013
Property, plant and equipment
Exploration and evaluation assets
Other segment assets
Total segment assets
639,280
315,336
-
55,729,090
3,021,102
280,186
3,660,382
56,324,612
Total segment liabilities
1,254,995
1,127,199
Capital expenditure for the year ended 30 June 2013
Property, plant and equipment
Exploration and evaluation assets
212,345
117,626
-
22,719,330
-
-
-
-
-
-
-
-
-
-
-
-
-
954,616
55,729,090
3,301,288
59,984,994
2,382,194
329,971
138,417
22,857,747
*Inter segment expense relating to the income is eliminated in Indonesia’s exploration and evaluation assets.
Note 24: Cashflow Information
(a) Reconciliation of loss after income tax to net cash flow used in operating activities
Loss for the year
Depreciation
Derecognition of capitalised exploration assets
Gain on sale of tenements
Unrealised foreign exchange loss/(gain)
Accrued Interest
Share options expensed
Change in operating assets and liabilities:
- (Increase)/Decrease in accounts
receivables
- Increase/(Decrease) in accounts
payables
Net cash flow used in operating activities
2014
$
(6,464,173)
256,807
-
-
(34,740)
96,293
835,819
2013
$
(6,721,739)
184,125
138,417
(1,323,233)
102,058
-
1,322,423
30,192
435,575
(1,394,702)
(6,674,504)
620,402
(5,241,972)
COKAL LIMITED Annual Report 2014 | Page 61 of 69
Note 25: Share-based Payments
The following share based payment arrangements existed at 30 June 2014.
(a) Share-based payments to directors, executives and employees
During the year ended 30 June 2014 the following options were issued to directors, executives and employees of the
Group:
Employees
• On 11 July 2013, 4,000,000 options were issued to employees at A$0.214 and 7,300,000 options at A$0.25 expiring
on 11 July 2017.
All of these options were issued by Cokal Limited and entitle the holder to one ordinary share in Cokal Limited for each
option exercised. The options were granted for nil consideration. Once vested, options can be exercised at any time up
to the expiry date.
Outstanding at beginning of year
Granted
Forfeited/Cancelled
Exercised
Expired
Outstanding at year-end
Exercisable at year-end
2014
No. of options
Weighted average
exercise price
2013
No. of options
Weighted average
exercise price *
19,225,000
11,300,000
$
0.81
0.24
(10,000,000)
(0.63)
-
-
20,525,000
8,775,000
-
-
0.59
1.03
29,700,000
550,000
(1,100,000)
-
(9,925,000)
19,225,000
7,000,000
$
0.75
0.75
(0.62)
-
(0.30)
0.81
0.75
The options outstanding at 30 June 2014 had a weighted average exercise price of $0.59 (2013: $0.81) and weighted
average remaining contractual life of 2.13 years (2013: 2.02 years).
Pursuant to the Group’s Incentive Option Scheme, if an employee ceases to be employed by the Group then options will
expire three months from the date employment ceases.
The weighted average fair value of the options granted during the year ended 30 June 2014 was $0.09 (2013: $0.06).
This price was calculated by using a Black Scholes options pricing model applying the following inputs:
Weighted average exercise price
Weighted average life of the option
Underlying share price
Expected share price volatility
Risk free interest rate
2014
$0.237
4 years
$0.17
80.187%
3.07%
2013
$0.75
4 years
$0.205
78.125%
2.56%
The expected life of the options has been taken to be the full year of time from grant date to expiry date. The options
pricing model assumes that options will be exercised on or immediately before the expiry date.
The settlement method for the above options is on a 1:1 basis. During the year ended 30 June 2014, no ordinary shares
in Cokal Limited were issued as a result of the exercise of employee options.
The amount included under Employee Benefits Expense in the Statement of Comprehensive Income for the year ended
30 June 2014 is $835,819 (2013: $1,262,423).
(b) Other share-based payments
During the year ended 30 June 2013, the Group issued 1,600,000 unlisted options at $0.20 expiring 12 April 2015 as part
of Investor Relations Services. The grant date fair value of options amounting to $60,000 included under administration
and consulting expenses.
COKAL LIMITED Annual Report 2014 | Page 62 of 69
Note 26: Related Party Disclosure
Transactions between related parties are on normal commercial terms and conditions no more favourable than those
available to other parties unless otherwise stated.
(a) Parent entity
The parent entity and ultimate controlling entity is Cokal Limited, which is incorporated in Australia.
(b) Subsidiaries
Interests and transactions in subsidiaries are disclosed in Note 10.
(c) Key management personnel compensation
The KMP compensation for the year ended are set out below:
Short-term employee benefits
Post-employment benefits
Share-based payments
^ Chris Turvey was not consider as KMP and the comparative has been restated accordingly.
Options holdings of KMP for the year ended are:
Balance
1 July 2013
Granted as
Remuneration
Exercise of
Options
Net Change
Other
Balance
30 June 2014
2014
$
1,759,773
25,000
634,802
2,419,575
2013
(restated)^
$
1,948,591
42,843
909,083
2,900,517
Total vested
at 30 June
2014
Total vested
and
exercisable at
30 June 2014
Total vested
and
unexercisable
at 30 June
2014
Directors
Senior
Management
Total
10,000,000
-
-
(10,000,000)
-
-
-
5,000,000
15,000,000
9,000,000
9,000,000
-
-
-
(10,000,000)
14,000,000
14,000,000
5,000,000
5,000,000
9,000,000
9,000,000
-
-
-
Balance
1 July 2012
Granted as
Remuneration
Exercise of
Options
Net Change
Other
Balance
30 June 2013
Total vested
at 30 June
2013
Total vested
and
exercisable at
30 June 2013
Total vested
and
unexercisable
at 30 June
2013
Directors
Senior
Management
Total (restated)^
22,500,000
5,100,000
27,600,000
-
-
-
-
(12,500,000)
10,000,000
10,000,000
10,000,000
-
-
(100,000)
(12,600,000)
5,000,000
15,000,000
5,000,000
15,000,000
5,000,000
15,000,000
-
-
^ Chris Turvey was not consider as KMP and the comparative has been restated accordingly.
Share options held by KMP under the Senior Executive Plan to purchase ordinary shares have the following expiry dates
and exercise prices:
2014
Number of options
outstanding
2013
Number of options
outstanding
-
-
3,000,000
2,000,000
4,000,000
5,000,000
14,000,000
5,000,000
5,000,000
3,000,000
2,000,000
-
-
15,000,000
Exercise price
Issued date
Expiry date
$0.50
$0.75
$0.10
$1.50
$0.21
$0.25
29 December 2010
29 December 2010
24 August 2011
24 August 2011
11 July 2013
11 July 2013
03 August 2013
03 August 2013
5 September 2015
5 September 2015
11 July 2017
11 July 2017
COKAL LIMITED Annual Report 2014 | Page 63 of 69
Note 26: Related Party Disclosure (Cont’d)
Shareholdings of KMP for the year ended are:
Directors
Senior Management
Total
Directors
Senior Management
Total (restated)^
Balance
1 July 2013
128,634,001
3,307,000
131,941,001
Granted as
Remuneration
-
-
-
On Exercise
of Options
-
-
-
Net Change
Other
(15,262,000)
(198,785)
(15,460,785)
Balance
30 June 2014
113,372,001
3,108,215
116,480,216
Balance
1 July 2012
127,222,001
3,275,000
130,497,001
Granted as
Remuneration
-
-
-
On Exercise
of Options
Net Change
Other
Balance
30 June 2013
-
-
-
1,412,000
32,000
1,444,000
128,634,001
3,307,000
131,941,001
^ Chris Turvey was not consider as KMP and the comparative has been restated accordingly.
Advances to KMP at 30 June 2014 have been included in other receivables. The details of these advances are:
Jim Middleton
Peter Lynch
Pat Hanna
2014
$
-
8,499
-
8,499
2013
$
1,051
9,654
2,679
13,384
Advances made relate to travel advances and are made in the ordinary course of business. These advances have been repaid
in full at the date of adoption of the director’s report.
Transactions with KMP and their related entities for the year ended are:
• During the financial year ended 30 June 2014, Hanna Consulting Services Pty Ltd (of which Pat Hanna is a director)
provided to the Group geological consulting services for various exploration projects, Indonesia, including site
management, geological staff recruitment, preparation of field base camp and geological mapping surveys. Hanna
Consulting Services Pty Ltd received $288,690 (2013: $420,130) for these services during the financial year. The services
were based on normal commercial terms and conditions.
• During the financial year ended 30 June 2014, Petla Trust (of which Peter Lynch is a director) provided to the Group
consulting services. Petla Trust received $419,733 (2013: $419,200) for these services during the financial year. The
services were based on normal commercial terms and conditions.
• During the year ended 30 June 2014, the Group paid consulting fees of $185,784 (2013: $322,432) to PT. Pandu Wira
Sejahtera of which Harun Abidin is a director. Harun is also a director of PT. Anugerah Alam Manuhing, PT. Anugerah
Alam Katingan and PT. Silangkop Nusa Raya.
Note 27: Financial Risk Management
(a) General objectives, policies and processes
In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This
note describes the Group objectives, policies and processes for managing those risks and the methods used to measure
them. Further quantitative information in respect of these risks is presented throughout these financial statements.
There have been no substantive changes in the Group’s exposure to financial instrument risks, its objectives, policies
and processes for managing those risks or the methods used to measure them from previous years unless otherwise
stated in this note.
The Group’s financial instruments consist mainly of deposits with banks, accounts receivable, security deposits and
accounts payable.
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies and,
whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes
that ensure the effective implementation of the objectives and policies to the Group’s finance function. The Group’s
risk management policies and objectives are therefore designed to minimise the potential impacts of these risks on the
results of the Group where such impacts may be material.
The overall objective of the Board is to set polices that seek to reduce risk as far as possible without unduly affecting the
COKAL LIMITED Annual Report 2014 | Page 64 of 69
Group’s competitiveness and flexibility. Further details regarding these policies are set out below:
Note 27: Financial Risk Management (Cont’d)
(b) Credit risk
Credit risk is the risk that the other party to a financial instrument will fail to discharge their obligation resulting in the
Group incurring a financial loss. This usually occurs when debtors fail to settle their obligations owing to the Group. The
Group’s objective is to minimise the risk of loss from credit risk exposure.
The Group’s maximum exposure to credit risk at the end of the reporting year, without taking into account the value of
any collateral or other security, in the event other parties fail to perform their obligations under financial instruments in
relation to each class of recognised financial asset at reporting date, is as follows:
Cash and bank balances
Receivables
Security deposits
Note
8
9
14
2014
$
4,708,217
203,860
232,023
5,144,100
2013
$
2,774,509
159,900
266,762
3,201,171
Credit risk is reviewed regularly by the Board and the Audit Committee.
The Group does not have any material credit risk exposure to any single debtor or Group of debtors under financial
instruments entered into by the Group. No receivables balances were past due or impaired at year end. The credit
quality of receivables that are neither past due nor impaired is good. Bank deposits are held with Macquarie Bank
Limited, National Australia Bank Limited and Australia and New Zealand Banking Corporation Limited.
(c) Liquidity Risk
Liquidity risk is the risk that the Group may encounter difficulties raising funds to meet financial obligations as they fall
due. The object of managing liquidity risk is to ensure, as far as possible, that the Group will always have sufficient
liquidity to meets its liabilities when they fall due, under both normal and stressed conditions.
Liquidity risk is reviewed regularly by the Board and the Audit Committee.
The Group manages liquidity risk by monitoring forecast cash flows and liquidity ratios such as working capital. The
Group’s working capital, being current assets less current liabilities has decreased from $882,957 in 2013 to $366,284
in 2014.
MATURITY ANALYSIS– 2014
Financial Liabilities
Accounts payable
Interest bearing loans
Total
MATURITY ANALYSIS– 2013
Financial Liabilities
Accounts payable
Carrying
Amount
$
Contractual
Cash flows
$
<6 months
6 – 12 months
1 – 3 years
>3 years
$
$
$
$
787,616
7,069,353
7,856,969
787,616
7,469,549
8,257,167
712,718
3,757,381
4,470,099
74,898
-
74,898
-
3,712,168
3,712,168
Carrying Amount
$
Contractual
Cash flows
$
<6 months
6 – 12 months
1 – 3 years
>3 years
$
$
$
$
2,090,069
2,090,069
1,960,762
129,307
-
-
-
-
-
Further information regarding commitments is included in Note 21.
(d) Market Risk
Market risk arises from the use of interest bearing, tradable and foreign currency financial instruments. It is the risk
that the fair value or future cash flows of a financial instrument will fluctuate because of changes in interest rates
(interest rate risk), foreign exchange rates (currency risk) or other market factors (other price risk). The entity does not
have any material exposure to market risk other than as set out below.
(i) Interest rate risk
Interest rate risk arises principally from cash and cash equivalents. The objective of interest rate risk management is to
manage and control interest rate risk exposures within acceptable parameters while optimising the return.
COKAL LIMITED Annual Report 2014 | Page 65 of 69
Note 27: Financial Risk Management (cont’d)
Interest rate risk is managed with a mixture of fixed and floating rate debt. For further details on interest rate risk
refer to the tables below:
Floating interest rate
Fixed interest rate
Non-interest
bearing
Total carrying
amount
2014
$
2014
$
2014
$
2014
$
Weighted
average
effective
interest rate
2014
%
2,752,185
-
-
2,752,185
-
-
-
1,955,259
-
-
1,955,259
-
7,069,353
7,069,353
773
203,860
232,023
436,656
987,491
-
987,491
4,708,217
203,860
232,023
5,144,100
987,491
7,069,353
8,056,844
1.56
-
-
-
8.96
Floating interest
rate
Fixed interest rate
Non-interest
bearing
Total carrying
amount
2013
$
2013
$
2013
$
2013
$
Weighted
average
effective
interest rate
2013
%
912,473
-
-
912,473
-
-
1,641,377
-
-
1,641,377
220,659
159,900
266,762
647,321
-
-
2,382,194
2,382,194
2,774,509
159,900
266,762
3,204,171
2,382,194
2,382,194
5.02
-
-
-
Financial assets
Cash and bank balances
Receivables
Security deposits
Total financial assets
Financial liabilities
Accounts payable
Interest bearing loans
Total financial liabilities
Financial assets
Cash and bank balances
Receivables
Security deposits
Total financial assets
Financial liabilities
Accounts payable
Total financial liabilities
The Group has performed a sensitivity analysis relating to its exposure to interest rate risk. This sensitivity demonstrates
the effect on the current year results and equity which could result from a change in these risks.
At 30 June 2014 the effect on post tax profit and equity as a result of changes in the interest rate for floating interest rate
instruments, with all other variables held constant, would be as follows:
2014
Cash and cash equivalents
Total effect on post tax profit
2013
Cash and cash equivalents
Total effect on post tax profit
Carrying Amount
(interest bearing)
$
Increase in interest rate
by 0.5%
$
Decrease in interest
rate by 0.5%
$
2,752,185
912,473
13,761
13,761
4,562
4,562
(13,761)
(13,761)
(4,562)
(4,562)
COKAL LIMITED Annual Report 2014 | Page 66 of 69
Note 27: Financial Risk Management (cont’d)
(ii) Currency risk
Exposure to foreign exchange risk may result in the fair value or future cash flows of a financial instrument fluctuating
due to movement in foreign exchange rates of currencies in which the Group hold financial instruments which are other
than the AUD functional currency of the Group.
The Group is exposed to currency risk on its cash and cash equivalents held (in US dollars and Indonesian Rupiah) in
Indonesia as well as on purchases made from suppliers in Indonesia and Tanzania.
The Group’s exposure to foreign currency risk and the effect on post tax profit as a result of changes in foreign currency
rates, with all other variables held constant, are as follows:
Consider this for PY as well.
2014
Cash and cash equivalents
Accounts payable
Net exposure
Effect on post profit:
Increase by 10%
Decrease by 10%
2013
Cash and cash equivalents
Accounts payable
Net exposure
Effect on post tax profit:
Increase by 10%
Decrease by 10%
US Dollars
$A
Indonesian
Rupiah
$A
Total
$A
2,604,597
(46,705)
2,557,892
232,536
(284,210)
61,203
(523,593)
(462,390)
42,035
(51,377)
14,568
(225,795)
(211,227)
(19,202)
23,470
151,211
(341,479)
(190,268)
17,297
(21,141)
2,619,165
(272,500)
2,346,665
213,334
(260,740)
212,414
(865,072)
(652,658)
59,332
(72,518)
Note 28: Significant Events after the Reporting Date
On 14 July 2014, the Group advised that the functional currency of Cokal Limited is expected to be United States (US) dollars
from Australian dollars effective from 1 July 2014. Consistent with the change, the presentation currency of the Group will
also be expected to be changed to US dollars. This change means that the financial information in the Group quarterly
reports to ASX, as well as its half year and annual accounts will be presented in US dollars.
On 11 August 2014, the Group secured further additional loan funds of US$5.650 million from a fund managed by Platinum
Partners (Platinum) bringing the total loan for the project development to date to US$9.150 million. The additional loan is
subject to withhold at the date of utilisation the aggregate amount of:
a. US$750,000, as a non-refundable work fee payable to the lender in respect of the facility; and
b. US$150,000, as the borrower's contribution for costs and expenses as stipulated in the agreement, the balance of
which amount is refundable on the repayment date to the extent not utilised by the lender.
Repayment of the first loan has been extended with the total loan of US$9.150 million now repayable within 6 months of
receiving the additional loan funds. The total loan can also be rolled over into the BBM project financing facility once it is in
place. The loan the facility is secured 950 ordinary shares and 46,608,900 preference shares of Cokal Holdings Pte. Ltd. and
for all shares of Cokal-BBM Pte. Ltd.
On 27 August 2014, 15,000,000 options were issued to Platinum Partners at A$0.20 expiring on the 27 August 2018 (expiry
date can be extended to 27 August 2022 in certain circumstances). The options are granted as part consideration for the
BBM funding package announced on 11 August 2014.
COKAL LIMITED Annual Report 2014 | Page 67 of 69
Declaration by Directors
The directors of the Group declare that:
1. The financial statements, comprising the statements of comprehensive income, statements of financial position,
statements of cash flows, statements of changes in equity, and accompanying notes, are in accordance with the
Corporations Act 2001 and:
(a) comply with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) give a true and fair view of the Group’s financial position as at 30 June 2014 and of its performance for the year
ended on that date.
2. The Group has included in the note 1 to the financial statements and explicit and unreserved statement of compliance
with International Financial Reporting Standards.
3.
In the directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as
and when they become due and payable.
4. The remuneration disclosures included in pages 18 to 24 of the directors’ report (as part of audited Remuneration
Report) for the year ended 30 June 2014, comply with section 300A of the Corporations Act 2001.
5. The directors have been given the declarations by the chief executive officer and chief financial officer required by
section 295A of the Corporations Act 2001.
This declaration is signed in accordance with a resolution of the directors.
Cokal Limited
Peter Lynch
Chairman and Chief Executive Officer
Brisbane
24 September 2014
COKAL LIMITED Annual Report 2014 | Page 68 of 69
Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
Independent auditor's report to the members of Cokal Limited
Report on the financial report
We have audited the accompanying financial report of Cokal Limited, which comprises the
consolidated statement of financial position as at 30 June 2014, 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, notes comprising a summary of significant
accounting policies and other explanatory information, and the directors' declaration of the
consolidated entity comprising the company and the entities it controlled at the year's end or from
time to time during the financial year.
Directors' responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal controls as the directors determine are necessary to enable the preparation of
the financial report that is free from material misstatement, whether due to fraud or error. In Note
1(b), the directors also state, in accordance with Accounting Standard AASB 101 Presentation of
Financial Statements, that the financial statements comply with International Financial Reporting
Standards.
Auditor's responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
our audit in accordance with Australian Auditing Standards. Those standards require that we comply
with relevant ethical requirements relating to audit engagements and plan and perform the audit to
obtain reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial report. The procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or
error. In making those risk assessments, the auditor considers internal controls relevant to the entity's
preparation and fair presentation of the financial report in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity's internal controls. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the directors, as
well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
Independence
In conducting our audit we have complied with the independence requirements of the Corporations
Act 2001. We have given to the directors of the company a written Auditor’s Independence
Declaration, a copy of which is included in the directors’ report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Opinion
In our opinion:
a.
the financial report of Cokal Limited is in accordance with the Corporations Act 2001,
including:
i
ii
giving a true and fair view of the consolidated entity's financial position as at 30 June
2014 and of its performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations
2001; and
b.
the financial report also complies with International Financial Reporting Standards as
disclosed in Note 1(b).
Report on the remuneration report
We have audited the Remuneration Report included in pages 18 to 24 of the directors' report for the
year ended 30 June 2014. The directors of the company are responsible for the preparation and
presentation of the Remuneration Report in accordance with section 300A of the Corporations Act
2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of Cokal Limited for the year ended 30 June 2014, complies
with section 300A of the Corporations Act 2001.
Ernst & Young
Brad Tozer
Partner
Brisbane
24 September 2014
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation