2016
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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
Consolidated Statement of Comprehensive Income for the year ended 30 June 2016
Consolidated Statement of Financial Position as at 30 June 2016
Consolidated Statement of Changes in Equity for the year ended 30 June 2016
Consolidated Statement of Cash Flows for the year ended 30 June 2016
Notes to the Consolidated Financial Statements for the year ended 30 June 2016
Declaration by Directors
Independent Auditor’s Report
Competent Person Statement
1
2
4
12
23
24
27
28
29
30
31
32
66
67
The Total Coal Resource estimate was announced on 29 April 2016, titled “Updated JORC Resource Statement for BBM”. The
information in the report relating to Mineral Resources is based on information compiled by Yoga Suryanegara who is a
Member of the Australasian Institute of Mining and Metallurgy and a full time employee of Cokal Limited. Mr Suryanegara 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”.
The Company confirms that it is not aware of any new information or data that materially affects the information included in
the announcement made on 29 April 2016 and that all material assumptions and technical parameters underpinning the
estimates in the announcement made on 29 April 2016 continue to apply and have not materially changed.
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
Patrick Hanna
Domenic Martino
Agus Widjojo
COMPANY SECRETARIES
Duncan Cornish
Victor Kuss
REGISTERED OFFICE AND PRINCIPAL
BUSINESS OFFICE
Bowman House
Level 10, 110 Mary Street
Brisbane QLD 4000
Phone: + 61 7 3212 6299
Fax: +61 7 3212 6250
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
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
COKAL LIMITED Annual Report 2016 | Page 1 of 67
Chairman’s Letter to Shareholders
Dear Shareholders,
Financial year 2016 has been one of
many challenges and changes for Cokal.
These challenges have been met with
strong persistence and determination by
the Board and Management of Cokal Ltd.
Coking coal prices for much of the financial year have
hovered at record lows, levels at which much of the
industry has been loss making. This period of prolonged
depressed pricing has seen some of the industry’s major
players placed into chapter 11 administration or exit their
assets at extreme discounts to their investment value.
Many Australian producers have been faced with the
prospect of having to continue to operate mines which
are loss making to service take-or-pay contracts on rail
and port.
During much of the financial year Cokal was occupied by
the takeover bid as proposed by Indonesian listed Cakra
Mineral Tbk (Cakra).
While the Bid was proceeding the approvals and
government relations team were busy working through
the final details of obtaining the “Borrow and Use of
Forest Area Permit (Ijin Pinjam Pakai Kawasan Hutan
(“IPPKH”)) or “Forestry Permit” for its 60% owned Bumi
Barito Mineral Coal Project (“BBM” or “the Project”),
located in Central Kalimantan. The process for obtaining
the permit was changed in January 2015 by the President
Joko Widodo, by making the Indonesia Indonesian
Investment Coordinating Board (BKPM) responsible for
overseeing the process.
While delivering many advantages over the old Forestry
Ministry administered process there were significant
changes which needed to be created and implemented
which did cause some delays and backlog. Cokal was one
of the first companies to be issued its permit under the
new process in August 2015.
Meanwhile, Cokal received the bidders statement from
Cakra later in the month of August and responded with
our Target statement in short succession. The Cakra Bid
in which many shareholders had expressed interest failed
to meet the closure timing as per the Bid implementation
agreement. And while waiting patiently with continued
re-assurances from Cakra the bid eventually lapsed in
November 2015. This left the company with the task of
pursuing other funding options at a time when the coking
coal market reached its absolute lowest point.
Cokal’s major shareholder and debt provider, Platinum
Partners, showed much patience and support to work
with the company to get through these difficult times.
The company remained in a period of voluntary
suspension until May this year. Coking Coal prices still
remained at record low levels but the team at Cokal with
the continued support of Platinum Partners continued to
work hard on finding a way through the difficult times.
Significant efforts were focused on reducing the ongoing
costs while remaining viable and active in Indonesia’s
fledgling coking coal industry. Indonesia is a country with
significant promise, not only as an emerging economy
and a vibrant democracy, but as a nation which promises
much future and long term importance as a
complementary and good neighbour for Australia. The
bonds between Australia and Indonesia have continued
to strengthen further with both countries working
together to oppose the threats imposed by extremists to
our nations’ shared values of religious tolerance and
democratic freedom.
The reduction in staff numbers and costs have been
made carefully, while our administrative functions have
gradually been shifted to Indonesia built around our core
staff of dedicated long-term employees. Operating
functions in Australia have been replaced through the
upskilling and training of key people in Indonesia.
We have continued to rationalise our assets portfolio
with the sale of interests in several non-core assets AAM,
SNR and KNR. These sales have not only provided some
small amounts of cash but have also reduced liabilities
from the balance sheet, while maintaining our ownership
of our core assets such as BBM and TBAR.
In July shortly, after the close of the financial year, the
company reached agreement with Platinum Partners and
shareholder Blumont to restructure its combined
outstanding debt into a production royalty. The debt had
become one of the most difficult issues in attempting to
close some of the discussions which the company was
undertaking in an effort to provide funding for a pathway
to production for our premier asset, the BBM project.
We are glad to note that not long after we announced
the debt restructure the spot price for coking coal began
to increase very suddenly and significantly. A graph
depicting this movement has been provided at the end of
this letter.
At the time of drafting the annual report, interest in the
Company and its assets has increased significantly. And
while many are predicting the current high spot pricing,
which represents a small segment of the total seaborne
traded market, will not last, there is general consensus
that contract pricing will increase as well. The next
quarterly benchmark pricing discussions are underway,
the outcome holds the first real indication as to where
long-term pricing is headed. Based on this pricing trend,
together with reduced costs of steel and fuel over the
past 12 months, the small team at Cokal is now focused
on revising the Definitive Feasibility Study and looks
forward to the potential of stronger long-term pricing
and its resulting impact on the NPV of the company’s
ready to build fully approved BBM project.
COKAL LIMITED Annual Report 2016 | Page 2 of 68
I would also like to thank the long and dedicated service
of our non-executive director Agus Widjojo, who retried
to assume a very significant appointment bestowed by
the president of Indonesia, our long serving previous CFO
Victor Kuss and more recently Moosa Fense. I am glad to
say these people remain close and helpful friends of the
company available to assist when requested and share
our vision and desire for Cokal to become a safe and
efficient coking coal producer.
In the meantime, I welcome Garry Kielenstyn to his new
role as Chief Operating Officer where he is supported by
Teuku Juliansyah, Chief Financial Officer and the small
but dedicated remaining team of Indonesian technical
professionals.
We thank you for your ongoing support
Peter Lynch
Chairman
The graph shown is the Dalrymple Bay Coal terminal spot pricing for coking coal, courtesy of
Metal Bulletin www.metalbulletin.com.
COKAL LIMITED Annual Report 2016 | Page 3 of 68
Review of Operations
Corporate
Strengthening of Platinum Partners Funding Offer
On 7 April 2016, Cokal announced that it will grant to a fund managed by Platinum Partners, 50 million options with
exercise price of A$0.05 and an exercise period of 4 years from the date of grant for its past forbearance in not calling
a bridging loan extended on 30 January 2015 which was due for repayment on 6 August 2015. The grant of the options
was subject to shareholder approval on or before the next annual general meeting.
However, these options will be cancelled as part of debt restructuring detailed in the subsequent events.
Takeover Proposal made by PT Cakra Mineral Tbk (CKRA)
As announced on 3 March 2015, Cokal Limited received an unsolicited non-binding and incomplete proposal in
relation to a conditional off market takeover bid by PT Cakra Mineral Tbk (CKRA) for all of the ordinary shares of Cokal.
CKRA is an Indonesian Company listed on the Indonesia Stock Exchange (IDX: CKRA). On 27 April 2015 Cakra and Cokal
entered into a Bid Implementation Agreement under which Cakra would make a conditional off market takeover bid
for all the shares in Cokal (Offer).
On 17 August 2015, it was announced that the Group received a Bidder’s Statement from Cakra in relation to its offer
to acquire all of the shares in Cokal. The offer however is subject to Indonesian regulatory approval and to Cakra
raising approximately US$113 million by way of a rights issue. On 28 August 2015, Cokal issued a Target Statement in
response to Cakra’s off market takeover bid.
Cakra’s offer was closed on 15 November 2015. Based on various meetings and discussions with Cakra, Cakra’s earlier
offer was lapsed due to internal commercial issues which emerged during the offer period. Cakra advised that these
issues could be resolved in a timely manner, it was actively taking steps to secure a resolution and that, following
resolution, Cakra intended to make a fresh bid. To date, however, Cakra has not provided any further firm guidance as
to timing for resolution of its commercial issues or any fresh bid.
Cokal remains open to a transaction involving scrip consideration in an Indonesian listed entity either with Cakra or
other parties.
Sale of Non-core Assets and Discussions for Potential Larger Transaction
On 16 May 2016, Cokal announced that it has entered into a non-exclusive Memorandum of Understanding
(“discussions”) with Indonesian company Blackspace to enable discussions and due diligence to be undertaken with
the objective of Blackspace providing funding for the development of Cokal’s Bumi Barito Mineral Coal Project
(“BBM”) and or a possible corporate level transaction.
In addition, Blackspace acquired two of Cokal’s non-core tenements and Cokal has announced the completion of the
sale of its 75.2% interest in PT Silangkop Nusa Raya and PT Ketungau Nusa Raya for US$160,000 and PT. Jinantra Karya
Raya the Indonesian company that recently acquired Cokal’s 75% interest in PT Anugerah Alam Manuhing. Cokal
considers this a sale of isolated non-core tenements located a considerable distance west and north, in another
geological formation, from Cokal’s main tenements located in Central Kalimantan. It was therefore considered
appropriate in the current climate to realize this value and to use the funds for working capital. The sale of AAM and
the planned additional sales of other non-core tenements along with the possible additional development funding has
enabled Cokal to develop a constructive working relationship with a party which shares Cokal’s belief in the potential
and significances of Indonesia’s coal projects. This may in turn enable Cokal to successful restructure its statement of
financial position and start construction on BBM. These initial discussions have received the support of Platinum
Partners, Cokal’s largest shareholder and the debt provider.
Assets
Indonesian Coal Projects
The status of the Company’s ownership in its Indonesian coal projects is summarised:
•
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.
COKAL LIMITED Annual Report 2016 | Page 4 of 67
•
•
•
•
Cokal has entered into an agreement to acquire 75% of the shares in the company PT Tambang Benua Alam Raya
(TBAR) which own an exploration tenement covering an area of approximately 18,850ha. This tenement is
adjacent to the company’s BBM project.
75% of the shares in companies which own the Anugerah Alam Katingan (AAK) project is also located in Central
Province, Kalimantan, Indonesia. The AAK project area comprises 5,000ha. Applications for the Exploration
Forestry Permit (IPPKH) and Clean and Clear Certificates continue to be processed. Following official handover
letter (dated 12 January 2016), AAK IUP is currently on ‘on-hold’ status by Provincial Police Department (Polda
Kalteng). It is being decided by police following their investigations re ‘AAK ownership dispute’ issues. Cokal is an
aggrieved party and will await the outcome of the Police investigation into a period predating Cokal’s interest in
the Project.
Cokal has sold its 75.2% share in the company PT Anugerah Alam Manuhing (the “AAM”).
Cokal has entered into an agreement to sell its 75.2% share in the company PT Silangkop Nusa Raya (SNR) which
owns three exploration licences and in the company PT Ketungau Nusa Raya (KNR) which owns two exploration
licences. The projects are located in West Kalimantan. SNR project covers a total area of approximately 11,705ha
and KNR project covers a total area of 4,300ha. Cokal’s share divestment sale on both of these projects is in
progress.
BBM, BBP, AAK, and TBAR are within the highly prospective Central Kalimantan coking coal basin, and are located
adjacent to Indomet’s extensive coking coal tenements.
Exploration
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.
Cokal has been actively working on BBM project and awaiting for project funding for further construction,
development and production to commence. In January 2016, Cokal’s geologists reviewed the coal quality results from
the outcrop samples acquired during the detail mapping survey of the two open cut pits planned in the vicinity of the
Barito River.
Although the samples were of oxidised coal, the physical attributes of the coal samples had not changed and therefore
these results were deemed by the Competent Person as valid data in determining the confidence in the coal
estimation.
Consequently, on 29 April 2016, Cokal announced and updated JORC Resources Statement for the BBM Project.
Although the total Resource estimate remains at 266.6Mt for BBM the Coal Resources categories of Measured and
Indicated were increased to 19.5Mt Measured and 23.1Mt Indicated Resources. Both open cut pits are now covered
by either Measured or Indicated Coal Resources.
Details of the findings from the Resource Report are summarised in the following.
JORC Code Statements
On 29th of April 2016, Cokal announced and updated JORC Resources Statement for the BBM Project. The updated
Coal Resource statement is only for the Eastern portion of the Bumi Barito Mineral (BBM) coal project.
The highlights of this resources statement report included:
•
•
Coal Resources Statement is in accordance with the JORC Code (2012)
The Resource Report, which was compiled by Cokal’s Competent Person, and is compliant with the 2012 version
of the JORC Code.
Total Resource estimate remains at 266.6Mt for BBM comprising 90% Coking Coal and 10% PCI.
Comprised of 19.5Mt Measured and 23.1Mt Indicated Resources
Re-confirmation of in-ground quality B, C and D seams suitable for Direct-to-ship.
B, C and D coking and PCI product have premium qualities consisting low ash, low sulphur, low moisture and ultra-
low phosphorous.
Low volatile PCI and medium to low volatile coking coal suited to nearby Asian Markets.
Large portion of BBM Resources is amenable to underground mining due to very favourable ground condition.
•
•
•
•
•
•
COKAL LIMITED Annual Report 2016 | Page 5 of 68
The total Resource estimate (266.6Mt) remains unchanged compare to last year BBM coal resource statement,
comprising of 19.5Mt in Measured, 23.1Mt indicated and 224Mt Inferred Coal Resources in accordance with the 2012
JORC Code (see table 1 and 2).
The Coal Resources for BBM have been estimated in accordance with the 2012 version of the JORC Code. 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 both in an Australian and
Indonesian laboratory and is comprised of 90% coking coal and 10% PCI coal.
This updated report demonstrates that after further review of the analytical results for Seams B, C and D outcrop
samples, both coking coal and PCI are suitable for Direct-to-Ship extraction due to very low ash content of the three
seams.
Due to the reliable representative sampling from the outcrop channel samples, the B, C and D Seams have displayed
consistent low ash contents of between 2% and 7% with the average around 4%. This result is in contrast to the higher
ash contents recorded in the nearby borehole samples which are now considered to be most likely highly
contaminated by the use of drill muds and non-coal material which collapsed in the borehole from above the seams. It
is believed that this contamination resulted in the anomalously high ash results for the core samples.
It can be demonstrated that BBM can produce premium quality PCI and coking coals (see Tables 3 and 4). The PCI
product has low Ash (generally between 3% and 7%) as well as low Volatiles (generally below 10%). The high Calorific
Value (7,500 to 8,200Kcal/ Kg), together with the low Sulphur (0.4%) and ultra-low Phosphorus (0.005%), make this
PCI coal a very attractive premium product in the Asian PCI markets, particularly Vietnam.
Similarly, the majority (95%) of the coking coals in BBM have premium qualities including low Ash, low Sulphur and
ultra-low Phosphorus. In the case of Seams B, C and D, the raw ash of the coal in situ ranges from 3% to 7% with a
coke swelling index (CSN) of 9. The Volatiles are generally low (18% to 20%) which is ideal for most Asian steel
producers, particularly in China.
Table 1 BBM Coal Resources by JORC Category and seams
Seam
Name
Seam
Thickness
(m)
Measured
Resources
(Mt)
Indicated
Resources
(Mt)
Inferred
Resources
(Mt)
And seams
1.33
1.34
1.23
1.10
J
D
C
B
Total
10.50
3.53
2.62
2.85
19.50
13.5
3.5
3.1
3.0
23.1
31
70
66
57
224
55.00
77.03
71.72
62.85
266.6
Table 2: BBM Coal Resources by Category and Depth of Cover
Depth Range
(m)
Measured
Resources
(Mt)
Indicated
Resources
(Mt)
Inferred
Resources
(Mt)
Total
Resources
(Mt)
0-50
0-100
0-150
0-200
0-250
0-300
>300m
10.33
17.17
19.31
19.50
19.50
19.50
19.50
3.0
11.3
19.7
22.5
23.0
23.1
23.1
1
9
25
42
67
100
224
14.33
37.47
64.01
84.00
109.52
142.60
266.6
COKAL LIMITED Annual Report 2016 | Page 6 of 68
As part of coal resources evaluation, a 2016 updated report of the BBM Underground Mining Project Central
Kalimantan Indonesia Scoping Study in the BBM East Block is also substantially completed. This Scoping Study report
outlines the concept and rationalization of a proposed underground mine plan for the East Block of BBM.
The remainder Inferred Coal Resources in East BBM for Seams D and J are considered amenable to modern
underground mining extraction methods. The coal seams are generally thicker than 1m and the roof predominantly
consists of very hard sandstone (up to 95Megapascals (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
long-wall mining. The Scoping Study has identified the potential for four (4) large underground mining blocks utilising
the longwall method of extraction of both the ‘D’ and ‘J’ seams.
Product
Seam
COKING
PCI
COKING
PCI
COKING
PCI
D
C
B
Table 3: Seam B, C and D Coal Quality by Type (%adb)
Inherent
Moisture
%
2 – 4.5
2
1.5 – 6
Ash
%
Volatile
Matter
%
Fixed
Carbon
%
Total
Sulphur
%
Calorific
Value
(Kcal/kg)
Relative
Density
(g/cc)
Phos-
phorus
%
2
3
3
15 – 19
75 – 80
0.36
7450 –8200
1.32
0.005
9
85
0.48
8150
1.36
0.001
15 – 20
70 – 80
0.35
7050 – 8050
1.33
0.004
1.5
3.5
9
85
0.44
8250
1.36
0.002
1.5 – 5
1.5
3
7
15 – 19
75 – 80
0.34
7350 – 8150
1.33
0.004
9
80
0.47
7750
1.38
0.005
Table 4: Coal Quality of J Seam (% adb)
Inherent
Moisture
Ash
Volatile
Matter
Fixed
Carbon
Total
Sulphur
1.0
0.7
13.2
17.6
68.2
5.3
18.1
76.0
0.38
0.42
Calorific
Value
Kcal/kg
7,412
8,300
CSN
Relative
Density
Phos-
phorus
9
9
1.39
0.007
1.32
N/A
Product
Yield
Raw
Coal
Washed
Coal
100
81
COKAL LIMITED Annual Report 2016 | Page 7 of 68
Board of Directors
Patrick Hanna
Executive Director, Geologist
Peter Lynch
Mining Engineer
Non-Executive Chairman
(Appointed on 24 June 2016)
Previous President, CEO and Director of
Waratah Coal, also General Manager Oaky
North coal mine.
Domenic Martino
Non-Executive Director
Vast worldwide coal exploration experience.
Lieutenant General (Retired) Agus Widjojo
Non-Executive Director (Appointed 14 August
2013, Resigned 10 May 2016)
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
Manager Corporate
Restructure
Teuku Juliansyah
Chief Financial Officer &
Joint Company Secretary
(Appointed 24 June 2016)
Garry Kielenstyn
Chief Operating Officer
(Appointed 24 June 2016)
Financial commercial and
corporate
experience
with major international
and
junior
listed
companies.
Over 8 years practical experience
in finance roles involving finance
policy and procedure strategy, and
implementation, accounting,
budgeting, auditing and other
financial consulting type of work.
Project, Production, General and
Area Manager
experience.
Veteran of the Indonesian mining
and civil contracting industries,
based in Kalimantan, living and
working
since
1990.
Indonesian
in
Moosa Fense – Chief Financial Officer (Appointed 1 September 2015 and resigned 24 June 2016)
COKAL LIMITED Annual Report 2016 | Page 8 of 68
Bumi Barito Mineral Project
BBM Definitive Feasibility Study Outcomes
The BBM Project definitive feasibility study (DFS) was completed in February 2014. During 2016 further pricing and
delivery enquiries were made to ensure that physical delivery and construction would comply with DFS Schedule. 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.
The additional pricing enquiry related to fuel, construction steel, as well as the availability of suitable pool of
experienced and competent contractors to commence construction in a timely manner. Discussions were principally
held with contractors currently operating in the region who were well acquainted with local conditions, logistics and
supply issues.
Discussions were also held with some small-sized contractors in the area and who are currently operational on small-
scale projects in a competent and efficient manner. The intent is to use local contactors where possible as a part of
Cokal’s Corporate Social Responsibility (CSR) program.
Haul Road
The full length of the 55km haul road has been formally pegged and surveyed in conjunction with the Forestry
Department, local village leaders and villagers
A land usage and ownership survey for the entire length of haul road has been successfully completed with positive
contributions from the local government and local land owners.
Barge Loading Facility
Land acquisition arrangements for the Purnama Port are essentially completed. The 150ha site has been identified as
available and appropriate for acquisition following discussions with local land owners. The land owners and local
citizens are very supportive towards Cokal for the construction and operation to commence as soon as possible in
order to provide employment opportunities of either supply of materials (building sand etc) or direct hire labour.
River Barging
Cokal continues to maintain the relationship with MDM Meratus Line and the selected shipyards keeping them
informed of the current situation. This allows us to continually identify construction “slots” and relative price changes
largely due to the price of steel.
Both MDM Meratus and Cokal are receiving informal enquiries regarding the barging system some of the largest
Indonesian mining companies. While this system is innovative for Indonesia barging companies, it forms the basis of
bulk material movement for many countries around the world and is being recognised as such.
River Trans-loading Station and Intermediate stockpile
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.
Selection of the site of the trans-loading stockpile facility continues to be conducted with a number of potential sites
available.
External Relations
BBM Forestry Permit – Update
On 12 August 2015, Cokal received the Borrow and Use of Forest Area Permit IPPKH (Ijin Pinjam Pakai Kawasan Hutan)
for an initial operational area of 1,242 ha in BBM (Bumi Barito Mineral) Coal Project from the Investment Coordinating
Board (BKPM) Jakarta.
The issuance of the Forestry Permit concludes the final approval process necessary to allow the Company to start
construction and mining.
In addition to the forestry permit, Cokal has an approved mining license and full
environmental approval for up to 6Mtpa of coal extraction.
An Initial area of approximately 1,242 ha has been approved by the Forestry Department covering the operation of
the port, haul road and the initial mine site. In accordance with standard Mining Department practice, the initial
operational area is reviewed by the Department and extended as required to meet the planned mine development.
COKAL LIMITED Annual Report 2016 | Page 9 of 68
Cokal is continuing their efforts to fulfil its obligations under the Forestry Permit, including the plantation of trees
along the Barito riverbanks area (DAS) for total approx. 1,500 ha and located in the same regency. Discussions
continue with the relevant authorities: Management Board of Barito River / BP DAS Barito and Forestry Offices in
Regency and Provincial level. As part of its technical plans, a Social Map will be conducted by Cokal to ensure this DAS
rehabilitation programme is being acknowledged and supported by the surrounding community.
BBM IUP Permit
Following the latest Indonesian regulations on mining permits (PP 77/2014) which stated that regency has no longer
authorities in mining business arrangements, all BBM permitting process will be handed over to Central Mine Office
(ESDM Jakarta). This process is expected to be implemented in Q1-2017.
BBM Port Construction and Operation Approval
The approval of the PT BBM Port Construction and Operation was received from the National Transportation Minister
on 24 February 2015. Commencement of construction and operation of the port is awaiting project financing.
BBP Production Approval Advances – Update
As officially informed by ESDM Jakarta on 15 January 2016, BBP now has obtained its status as Production Mining
Permit (IUP-Operation Production). This will be valid from 22 December 2014 until 03 June 2033.
Safety and Health
As Safety & Health are both a key and integral part of our strategy to become a significant participator in the
metallurgical coal sector, Cokal has implemented significant measures during the year which resulted in the following
outcomes:
Zero LTI and Zero Fatality performances for 2013 – 2016 period.
Again received a formal commendation from the Provincial Government for both the standard and compliance of
reporting with BBM achieving the highest compliance score of the more than 60 IUP’s operating in the Regency.
Regular inspection protocols of equipment and facilities on a regular basis including Work Place Inspection, Camp
& Facility Inspection, Fire Extinguisher Inspection, Fire Alarm Inspection, Vehicle Inspection, Speed Boat
Inspection, Generator House Inspection , Water Treatment Inspection, Road & Bridge Inspection, Clinic Inspection
& Hygiene Inspection. At least 4 times of inspections are conducted in monthly basis.
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 total approx. 570 persons
have been inducted during 2013 – 2016 period.
Health and Safety awareness campaigns carried out on a regular basis including daily and weekly meetings,
including/mainly Safety Talk sessions in all BBM offices (at Krajan Site, Purukcahu, and Jakarta Office).
Providing safety socialisations to local community who access BBM mine area for their farming activities.
Environmental
Sound management of the environment is a critical part of Cokal’s strategy in becoming a global supplier in the
metallurgical coal sector. In developing a high level work practices in order to establish environmental compliance, a
number of key steps have been undertaken during the year including:
The continuation of baseline water and environmental monitoring at the BBM project area. For pH monitoring, it
is conducted on bi-monthly basis. Impacts from seasons (dry season and rainfall season) and also local activities
(illegal mining activities in upstream area) are key factors to this pH condition at BBM site.
The continuation of the environmental awareness programme aimed at “grass roots” level and presented in such
a manner that it is easily comprehendable to surrounding community with limited education. Topics include
forest burning, illegal logging, gold sluicing and rubbish disposal which are critical issues in this area.
The monitoring of an authorised waste storage area. The drums, batteries 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 so that we comply with the maximum on site storage time of 3 months. A Register of
Hazardous material has been established in order to ensure that hazardous material is disposed of correctly.
COKAL LIMITED Annual Report 2016 | Page 10 of 68
Community Development
Cokal continues to implement its Corporate Social Responsibility (CSR) program. To date Cokal has undertaken the
following programs:
Support for Orangutans Release Programme conducted by Borneo Orangutan Survival Foundation (BOSF). From
11-24 April 2016, Orangutans transit cages and accommodation for BOSF dedicated staff were provided on site at
BBM’s Krajan camp during this release programme. There are total 12 OUs released at Betikap Protection Forest
areas (upstream Barito River)approximately 150 kilometres north east of the BBM mine site. Cokal is the only
mining company which supports this programme, and both parties will continue its partnerships, including plans
for supporting HSE trainings and SOPs for BOSF.
Continuation of the sponsorship of the three teachers at Tumbang Tuan Junior High School. This school was
previously established by Cokal in 2012 and the continuation of the sponsorship allows the school to remain
open.
Continuation of the University scholarships program for 12 local students across a range of faculties at
Palangkaraya University including finance, law, agriculture and engineering.
Continuation of the University of Palangkaraya mining faculty partnership. This program includes Cokal providing
regular lectures to the Mining faculty undergraduate program.
Providing support to various cultural, religious and community based activities.
Continuation with provision of medical and paramedic support to local villages in the vicinity of the PT BBM
Project.
COKAL LIMITED Annual Report 2016 | Page 11 of 68
Directors' Report
Your Directors present their report for the year ended 30
June 2016.
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, Executive Chairman
(Appointed on 24 December 2010, Resigned on 24
June 2016)
(Appointed Chief Executive Officer on 5 May 2013,
Resigned on 24 June 2016)
(Appointed as Non-Executive Chairman on 24 June
2016)
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, 52, over 30 years’ experience mainly
in coal.
Proven track record
development and operation.
in coal project evaluation,
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).
Geologist, 62, over 33 years’ experience all in coal.
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.
Patrick is a member of the Audit Committee.
During the past three years Patrick has not served as a
director of another 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)
Peter is a member of the Audit Committee.
Australasian Resources Limited* (since 27 November
During the past three years Peter has not served as a
director of another listed company.
Patrick Hanna, Executive Director
(Appointed on 24 December 2010)
B. Applied Science (Geology), CP, FAusIMM
Mr Hanna has over 33 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.
in Australia and
2003)
ORH Limited* (since 6 May 2009)
Clean Global Energy Limited (appointed 9 October
2009, resigned September 2012)
South Pacific Resources Limited (formally 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.
COKAL LIMITED Annual Report 2016 | Page 12 of 68
Lt. General (Ret.) Agus Widjojo, Non-Executive
Director (Appointed on 14 August 2013, resigned
10 May 2016)
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:
International
Served as a staff officer
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 another 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
and resigned on 1 September 2015), currently
Manager Corporate Restructure (appointed 1 September
2015) BComm, CA
is an experienced CFO with significant
Victor Kuss
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.
Teuku Juliansyah, Chief Financial Officer (CFO) and
Joint Company Secretary (Appointed on 24 June
2016)
Over 8 years practical experience
in finance roles
involving finance policy and procedure strategy, and
implementation, accounting, budgeting, auditing and
other financial consulting type of work.
Duncan Cornish, Joint Company Secretary
(Appointed on 24 December 2010)
B.Bus (Accounting), CA
Duncan
regarded
is an accomplished and highly
corporate administrator and manager. He has many
years’ experience in pivotal management roles in capital
listings for numerous
raisings and stock exchange
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 2016, 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
Patrick Hanna
Domenic Martino
Agus Widjojo
Ordinary Shares
25,920,800
25,800,000
31,920,001
-
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.
Operating Results
For the year ended 30 June 2016, the loss for the
consolidated entity after providing for income tax was
US$30,329,717 (2015: US$13,044,047).
The operating results have been heavily driven by a
US$25.7m (2015:$5.25m) de-recognition of pre-tenure
exploration expenditures.
In addition the other main
driver was loss on sale of tenements US$1.7m (2015: nil).
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.
COKAL LIMITED Annual Report 2016 | Page 13 of 68
Dividends Paid or Recommended
There were no dividends paid or recommended during
the financial year.
Review of Operations
Detailed comments on operations and exploration
programs up to the date of this report are included
separately
in the Annual Report under Review of
Operations.
Review of Financial Condition
Capital Structure
During the year, Cokal did not issue any shares.
At 30 June 2016, the consolidated entity had 499,342,704
ordinary shares and 60,150,000 unlisted options on issue.
Financial Position
The net assets of the consolidated entity have decreased
by US$30,049,101 from US$50,172,612 at 30 June 2015
to US$20,123,511 at 30 June 2016. This decrease has
largely resulted from de-recognition of exploration
expenditures.
less current
The consolidated entity’s working capital, being current
assets
from
(US$7,341,869) in 2015 to (US$14,290,488) in 2016. The
decrease is primarily driven by a reclassification of loan
to current.
liabilities has decreased
for
repayment has been
The full amount of Platinum loan was repayable on 6
August 2015. The extension is still being negotiated and
no demand
received.
Subsequent to year end the Directors announced Cokal
had reached an agreement with Blumont Group and
Platinum Partners for the conversion of all outstanding
loans owing to them to production royalties. The parties
are working to finalise these arrangements at this date.
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
(AU dollars or Indonesian Rupiah).
The consolidated entity does not currently undertake
hedging of any kind.
(see below) to
Liquidity and Funding
The consolidated entity believes it has sufficient access to
its operations and
funds
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.
finance
Significant Changes in the State
of Affairs
As announced on 3 March 2015, Cokal Limited received
an unsolicited non-binding and incomplete proposal in
relation to a conditional off market takeover bid by PT
Cakra Mineral Tbk (CKRA) for all of the ordinary shares of
Cokal. CKRA is an Indonesian Company listed on the
Indonesia Stock Exchange (IDX: CKRA). Cakra's closed on
15 November 2015. Based on various meetings and
discussions with Cakra, Cakra's earlier offer lapsed due to
internal commercial issues which emerged during the
offer period. Cakra advised that these issues could be
resolved in a timely manner, it was actively taking steps
to secure a resolution and that, following resolution,
Cakra intended to make a fresh bid.
for resolution of
To date, however, Cakra has not provided any further
firm guidance as to timing
its
commercial issues or any fresh bid. Cokal remain in
continuing discussions of a confidential and incomplete
nature with Cakra
its capacity and
in relation to
intentions. Cokal remains open to a transaction involving
scrip consideration in an Indonesian listed entity either
with Cakra or other parties.
On 7 April 2016 Cokal announced that it will grant to a
fund managed by Platinum Partners, 50 million options
with an exercise price of A$0.05 and an exercise period of
4 years from the date of grant for its past forbearance in
not calling a bridging loan extended on 30 January 2015
which was due for repayment on 6 August 2015. The
grant of the options is subject to shareholder approval on
or before the next annual general meeting. However,
these options were not issued at 30 June2016.
Significant Events after
Reporting Date
the
a) On 22 July it was announced, Cokal has reached
agreement with Platinum Partners Value Arbitrage
Fund, LP (Platinum) to convert approximately
USD15 million of loans owing by Cokal to various
funds managed by Platinum or its affiliates (the
Platinum Group). Those loans include the Blumont
loan, which was acquired by the Platinum Group.
The agreed conversion terms and conditions are as
follows.
In consideration for the restructuring of the
debt, Platinum will be entitled to a royalty on
coal sold from Cokal’s share of production from
the Bumi Barito Mineral Project (BBM) and PT
Tambang Benua Alam Raya (TBAR) projects.
The royalty will be 1% of the realized selling
price (FOB) (i.e. selling price per tonne x tonnes
sold x 1%) up to a maximum royalty amount of
USD40 million.
Cokal or its related parties will have the right to
buy out the royalty at any time for the amount
of USD40 million less amounts paid on the
royalty at that time.
Cokal will do what is legally possible to attach
the royalty directly to the tenement asset (IUP
not the IUP holding company) or other legal
instrument, so that Platinum is protected
against any forced sale.
The existing security will remain in place to
secure the royalty until replaced by a specific
COKAL LIMITED Annual Report 2016 | Page 14 of 68
royalty security. Platinum and Cokal will work
together to replace the existing security with a
direct royalty security over the IUP licenses to
specifically secure the royalty subject to
appropriate legal advice.
All Shares controlled by Platinum will be
escrowed for 24 months from the date of
conversion unless Cokal finds an alternative
buyer or Platinum finds a buyer acceptable to
Cokal.
All Platinum’s existing Cokal options will not be
exercised or otherwise will be cancelled.
Cokal will issue 75 million new options to
Platinum with a 5 year term and strike price of
AU$ 1.6 cents (A$0.016)
The transaction is subject to any necessary
regulatory approvals or shareholder approvals
required under the Listing Rules.
Formal agreements and documents are being prepared
to give effect to the above.
b) On 22 July it was announced:
- Cokal has made a private placement to Ramornie
Capital Ltd and its associates. The funds raised will
provide working capital for the Company which
will enable it to continue to develop funding
opportunities for its Indonesian projects. The
Company will issue 75 million fully paid ordinary
shares in Cokal Ltd at a price of AU$ 0.016
(USD0.012) per share, raising AU$ 1.2 million
(USD0.9 million). There were no fees payable by
Cokal in relation to the placement.
c) On 8 August 2016 it was announced that Cokal
Limited (ASX:CKA, “Cokal” or “the Company”) is
pleased to announce that due to the interest in the
AU$1.2 million (USD0.9 million) private placement
previously announced on 22 July 2016 it has been
decided to increase the private placement by
AUD0.3 million (USD0.22 million) to AU$1.5 million
(USD1.12 million). The placement will provide
working capital for the Company which will enable
it to continue to develop funding opportunities for
its Indonesian metallurgical coal projects. The
Company will issue 18.75 million fully paid ordinary
shares in Cokal Ltd at a price of AU$0.016
(USD0.012) per share, raising AU$0.3 million
(USD0.22 million). There were no fees payable by
Cokal in relation to the placement. On issue, the
placement shares will rank equally with all other
ordinary shares then on issue.
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
Protection and Management (the Environment Law).
There are no matters that have arisen in relation to
environmental issues up to the date of this report.
Non-audit Services
The following non-audit services were provided by the
Cokal’s Auditor, Ernst & Young. The Directors are
satisfied thkat 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.
No non-audit services provided by Ernst & Young for
current and previous years.
COKAL LIMITED Annual Report 2016 | Page 15 of 68
Remuneration Report (Audited)
This remuneration report for the year ended 30 June
2016 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 FY15 AGM
The FY15
received positive
shareholder support at the FY15 AGM with proxy votes of
63% in favour (of shares voted).
remuneration
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
The Board,
in carrying out the functions of the
Remuneration
is
the
responsible
compensation arrangements of senior executives and
consultants.
and negotiating
Committees,
reviewing
for
in carrying out the functions of the
The Board,
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
to
entitled
consolidated entity
to be
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 AU$500,000 (USD371,300) 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
is
non-executive directors. A non-executive director
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 2016
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
interests of executives with those of
reward Executives
individual performance;
align the
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
COKAL LIMITED Annual Report 2016 | Page 16 of 68
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
and the
future share price to align comparative
shareholder return and reward for executives.
The remuneration of the Executive Directors and senior
management for the year ending 30 June 2016 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)
2016
US$
Share price
0.015
2015
US$
0.10
2014
AU$
0.14
2013
AU$
0.16
2012
AU$
0.21
Basic loss
per share
(6.07)
(2.76)
(1.40)
(1.64)
(1.68)
There were no dividends paid during the year ended 30
June 2016.
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
increases or decreases may occur quite
as such
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.
for pre-determining
Agreements do not provide
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.
Chairman and Chief Executive Officer
Cokal Limited has a services agreement with Petla Trust
and Peter Lynch, the Executive Chairman and CEO
(Resigned 24 June 2016 and appointed as Non-Executive
Chairman on 24 June 2016). 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 services to the
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 AU$520,000 (USD386,000)
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 Patrick 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, Patrick
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 AU$240,000 (USD178,000)
per annum (exclusive of GST) for a minimum of ten days
service per month. Additional
fees of AU$2,000
(USD1,485) 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 Patrick Hanna.
COKAL LIMITED Annual Report 2016 | Page 17 of 68
Kielenstyn receives an annual base salary up to
US$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
Mr Kielynstyn was appointed to the role of Chief
Operating Officer (COO) effective 24th of June 2016.
a) Details of Key Management Personnel (KMP)
(i)
Directors
Peter Lynch, Executive Chairman and CEO
(appointed Chairman 24 December 2010, appointed
CEO on 5 May 2013, resigned as CEO and Executive
Chairman on 24 June 2016)
Non-Executive Chairman (appointed 24 June 2016)
Patrick 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, resigned 10 May 2016)
(ii)
Senior Management
Teuku Juliansyah, CFO (appointed 24 June 2016) &
Joint Company Secretary (appointed 1 September
2015)
Victor Kuss, CFO (appointed 5 September 2011,
resigned 1 September 2015) & Manager Corporate
Restructure (appointed 1 September 2015)
Moosa Fense, CFO (appointed 1 September 2015,
resigned 24 June 2016)
Duncan Cornish, Company Secretary (appointed 24
December 2010)
Gerhardus Kielenstyn, Indonesia Country Manager
(appointed 1 May 2013 – 23 June 2016)
(appointed as COO 24th June 2016)
b) Remuneration Details
The following table of benefits and payments details, in
respect to the financial years ended 30 June 2016 and
2015, the component of remuneration for each key
management person of the consolidated entity:
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 AU$265,000,
exclusive of compulsory superannuation contributions.
Mr Kuss is eligible for an annual performance bonus of up
to AU$100,000 (USD74,260), based on the discretion of
stage
the Group
as
the CEO,
exploration/development entity.
an early
is
Mr Kuss stepped down from the position on 1 September
2015 to focus on strategic matters. The role was fulfilled
by Mr Moosa Fense until 24 June 2016. Mr Fense
received and annual base salary of AU$200,000 and was
remunerated on the basis of hours worked.
On 24 June 2016, in line with the transfer of operations
to Indonesia, Mr Teuku Juliansyah was appointed CFO
and was also appointed Joint Company Secretary on 1
September 2015.
Joint Company Secretary
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
AU$40,000 (exclusive of GST). If at the request of the
consolidated entity, CAS or Mr Cornish provides
additional services to the consolidated entity, CAS shall
be paid additional remuneration at an hourly rate. The
additional services means the provision of other such
services as may be required by the Company to be
performed from time to time and being within the scope
of CAS’s expertise, including but not limited to corporate
actions, capital
raisings, prospectus management,
extended (>3 days) Company-related corporate travel not
associated with Company Secretarial or administrative
duties (eg. conferences, road shows, site visits etc). The
consolidated entity is also obliged to reimburse CAS for
all reasonable and necessary expenses incurred by CAS in
providing services pursuant to the Agreement.
Both Cokal Limited and CAS are entitled to terminate the
agreement upon giving not less than one month’s written
notice. In the event that a party is in breach of the
agreement either party may terminate the Agreement
immediately on written notice. In addition, Cokal Limited
is entitled to terminate the agreement upon the
happening of various events in respect of CAS’ solvency
or other conduct of CAS or Mr Cornish. CAS is also
entitled to terminate the agreement upon the happening
of various events in respect of Cokal Limited’s solvency.
Indonesian Country Manager / COO
Cokal Limited has an employment agreement with
Gerhardus Kielenstyn for the position of Indonesian
Country Manager which commenced on 1 May 2013. Mr
COKAL LIMITED Annual Report 2016 | Page 18 of 68
Short-Term Benefits
Post-
Employment
Termination
Benefits
Share-based
payments
2016
Salary &
Fees
Cash
Bonus
Other short
-term
benefits
Superannuation
US$
US$
US$
US$
US$
Equity-
settled
(options)
US$
Cash-settled
Total
US$
US$
%
Remuneration
as options
Directors
Peter Lynch #
Patrick Hanna #
Domenic Martino
Agus Widjojo ●
Total
Senior Management
Duncan Cornish
Victor Kuss *
Gerhardus Kielenstyn
Teuku Juliansyah
Moosa Fense
Total
174,136
84,944
27,062
42,191
328,333
37,337
125,812
444,647
10,225
82,838
700,859
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13,522
13,104
-
-
-
-
-
-
13,522
13,104
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
94,213
73,548
645
168,406
-
-
-
-
-
-
-
-
-
174,136
84,944
27,062
42,191
328,333
37,337
246,651
518,195
10,870
82,838
895,891
0%
0%
0%
0%
0%
38.2%
14.2%
5.9%
0%
# Fees based on current status of project
● appointed 14 August 2013 and resigned 10 May 2016
* Resigned as CFO on 1 September 2015 and appointed Manager Corporate Restructure
Short-Term Benefits
Post-
Employment
Termination
Benefits
2015
Salary &
Fees
Cash
Bonus
Other short
-term
benefits
Superannuation
US$
US$
US$
US$
US$
Share-based
payments
Equity-
settled
(options)
US$
Cash-settled
Total
US$
US$
%
Remuneration
as options
Directors
Peter Lynch #
Patrick Hanna #
Domenic Martino
Agus Widjojo ●
Total
Senior Management
Duncan Cornish
Victor Kuss *
Gerhardus Kielenstyn
Total
253,982
164,146
117,786
54,416
590,330
33,672
208,502
455,530
697,704
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13,220
-
13,220
21,064
-
21,064
-
-
-
-
-
-
-
-
-
-
-
-
-
-
205,805
103,670
309,475
-
-
-
-
-
-
-
-
-
253,982
164,146
117,786
54,416
590,330
33,672
448,591
559,200
1,041,463
0%
0%
0%
0%
0%
45.9%
18.5%
# Fees based on current status of project
● appointed 14 August 2013
* Resigned as CFO on 1 September 2015 an appointed Manager Corporate Restructure
Advances to KMP
Advances to KMP at 30 June 2016 have been included in
other receivables. The details of these advances are:
Peter Lynch
2016
US$
2,844
2,844
2015
US$
2,844
2,844
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.
Cash Bonuses, Performance-related Bonuses and Share-
based Payments
KMP and other executives may be 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
2016.
COKAL LIMITED Annual Report 2016 | Page 19 of 68
Remun-
eration
type
Grant date
Vesting
date
Number
Exercise
Price
US$
Grant
value
(per
option)
US$
Percentage
vested /
paid during
year
Percentage
forfeited/
cancelled
during year
Percentage
remaining
as
unvested
%
%
%
Expiry date
Consolidated entity KMP
Victor Kuss
Options
11/07/2013
11/07/2015
5,000,000
0.23
Victor Kuss
Options
24/02/2015
24/02/2016
2,500,000
0.10
Victor Kuss
Options
24/02/2015
24/02/2017
2,500,000
0.10
Options
11/07/2013
11/07/2014
2,000,000
0.20
0.09
0.03
0.03
0.09
100%
100%
-
-
Options
11/07/2013
11/07/2015
2,000,000
0.20
0.09
100%
Options
24/02/2015
24/02/2016
2,000,000
0.10
0.03
100%
Options
24/02/2015
24/02/2017
2,000,000
0.10
0.03
Options
24/02/2015
24/02/2017
500,000
0.10
0.03
-
-
Gerhardus
Kielenstyn
Gerhardus
Kielenstyn
Gerhardus
Kielenstyn
Gerhardus
Kielenstyn
Teuku
Juliansyah
-
-
-
-
-
-
-
-
-
-
11/07/2017
24/02/2019
100%
24/02/2019
-
-
-
11/07/2017
11/07/2017
24/02/2019
100%
24/02/2019
100%
24/02/2019
Options holdings
Details of share-based payments to KMP and other
executives awarded and vested/unvested during the year
ended 30 June 2016 and 30 June 2015 are detailed in the
table below:
Balance
1 July 2015
Granted as
Remuneration
Exercise
of
Options
Net Change
Other
Balance
30 June 2016
Total vested
at 30 June
2016
Total vested
and
exercisable at
30 June 2016
Total vested and
unexercisable at
30 June 2016
Directors
Peter Lynch
Patrick Hanna
Domenic Martino
Agus Widjojo ●
Senior Management
Duncan Cornish
Gerhardus Kielenstyn
Teuku Juliansyah
Victor Kuss *
Total
-
-
-
-
-
8,000,000
-
15,000,000
23,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
500,000
(5,000,000)
-
8,000,000
500,000
10,000,000
-
6,000,000
-
7,500,000
-
6,000,000
-
7,500,000
(4,500,000)
18,500,000
13,500,000
13,500,000
-
-
-
-
-
-
-
-
Balance
1 July 2014
Granted as
Remuneration
Exercise
of Options
Net Change
Other
Balance
30 June 2015
Total vested
at 30 June
2015
Total vested
and
exercisable at
30 June 2015
Total vested and
unexercisable at
30 June 2015
Directors
Peter Lynch
Patrick Hanna
Domenic Martino
Agus Widjojo ●
Senior Management
Duncan Cornish
Gerhardus Kielenstyn
Victor Kuss *
Total
-
-
-
-
-
-
-
-
-
4,000,000
10,000,000
14,000,000
-
4,000,000
5,000,000
9,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,000,000
15,000,000
-
-
2,000,000
-
4,000,000
3,000,000
23,000,000
2,000,000
7,000,000
-
-
-
-
-
-
-
● appointed 14 August 2013 and resigned 10 May 2016
* Resigned as CFO on 1 September 2015 an appointed Manager Corporate Restructure
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.
COKAL LIMITED Annual Report 2016 | Page 20 of 68
All options granted as part of remuneration for the year ended 30 June 2016 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.
Shareholdings
Details of ordinary shares held directly, indirectly or beneficially by KMP and their related parties are as follows:
Directors
Peter Lynch
Patrick Hanna
Domenic Martino
Agus Widjojo
Senior Management
Duncan Cornish
Garry Kielenstyn
Teuku Juliansyah
Victor Kuss *
Total
Directors
Peter Lynch
Patrick Hanna
Domenic Martino
Agus Widjojo
Senior Management
Duncan Cornish
Garry Kielenstyn
Victor Kuss *
Total
Balance
1 July 2015
Granted as
Remuneration
On Exercise
of Options
Net Change
Other
Balance
30 June 2016
56,052,000
25,800,000
31,520,001
-
2,401,215
32,000
-
675,000
116,480,216
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(30,131,200)
-
-
-
-
-
-
225,00
25,920,800
25,800,000
31,520,001
-
2,401,215
32,000
-
900,000
(29,906,200)
86,574,016
Balance
1 July 2014
Granted as
Remuneration
On Exercise
of Options
Net Change
Other
Balance
30 June 2015
56,052,000
25,800,000
31,520,001
-
2,401,215
32,000
675,000
116,480,216
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
56,052,000
25,800,000
31,520,001
-
2,401,215
32,000
675,000
116,480,216
* Resigned as CFO on 1 September 2015 and appointed Manager Corporate Restructure
Transactions with KMP and their related entities
During the financial year ended 30 June 2016, 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 US$84,944 (2015: US$164,146) for these services during the financial year. The
services were based on normal commercial terms and conditions.
During the financial year ended 30 June 2016, Petla Trust (of which Peter Lynch is a director) provided to the Group
consulting services. Petla Trust received US$174,136 (2015: US$253,982) for these services during the financial year.
The services were based on normal commercial terms and conditions.
During the year ended 30 June 2016, the Group paid consulting fees of US$nil (2015: US$44,476) 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 2016 | Page 21 of 68
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 2016, 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 23.
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 has been made publicly available
on the Company’s website at: www.cokal.com.au.
This report is signed in accordance with a resolution of
the directors.
Cokal Limited
Peter Lynch
Chairman and Chief Executive Officer
Brisbane
27 September 2016
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
12
12
12
12
12
12
12
7
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
To the extent permitted by law, the Company has
agreed to indemnify its auditors, Ernst & Young, as
part of the terms of its audit engagement agreement
against claims by third parties arising from the audit (for
an unspecified amount). No payment has been made
to
indemnify Ernst & Young during or since the
financial year.
Options
At 30 June 2016, there were 60,150,000 unissued
ordinary shares under options as follows:
350,000 unlisted options exercisable at US$0.77 on
or before 12 October 2016
4,000,000 unlisted options exercisable at US$0.20 on
or before 11 July 2017
5,800,000 unlisted options exercisable at US$0.23 on
or before 11 July 2017
15,000,000 unlisted options exercisable at US$0.19
on or before 27 August 2018
25,000,000 unlisted options exercisable at US$0.10
on or before 6 February 2019
10,000,000 unlisted options exercisable at US$0.10
on or before 24 February 2019
COKAL LIMITED Annual Report 2016 | Page 22 of 68
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
As lead auditor for the audit of Cokal Limited for the financial year ended 30 June 2016, I declare to
the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Cokal Limited and the entities it controlled during the financial year.
Ernst & Young
Andrew Carrick
Partner
27 September 2016
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 22 September 2016
(a) Distribution of Ordinary Shares and Options
The number of holders, by size of holding, in each class of security is:
Number
of
holders
313
139
241
529
269
1 – 1,000
1,001 –
5,000
5,001 –
10,000
10,001 –
100,000
100,001
and over
Total
1,491
Ordinary shares
Number of shares
269,976
426,411
2,217,511
21,706,319
568,472,487
593,092,704
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
Unlisted options
Unlisted options
Unlisted options
Unlisted options
($0.77 @ 12/10/16)
($0.20 @ 11/07/17)
($0.23 @ 11/07/17)
($0.10 @ 24/02/2019)
Number of
holders
Number of
options
Number of
holders
Number of
options
Number of
holders
Number of
options
Number of
holders
Number of
options
-
-
-
-
2
2
-
-
-
-
350,000
350,000
-
-
-
-
1
1
-
-
-
-
4,000,000
4,000,000
-
-
-
-
3
3
-
-
-
-
5,800,000
5,800,000
-
-
-
-
5
5
-
-
-
-
10,000,000
10,000,000
Unlisted options
Unlisted options
($0.19 @ 27/08/2018)
($0.10 @ 06/02/2019)
Number of
holders
Number of
options
Number of
holders
Number of
options
-
-
-
-
1
1
-
-
-
-
15,000,000
15,000,000
-
-
-
-
1
1
-
-
-
-
25,000,000
25,000,000
COKAL LIMITED Annual Report 2016 | Page 24 of 68
Twenty Largest Holders
The names of the twenty largest holders, in each class of quoted security (ordinary shares) are:
Number of shares
% of total shares
1 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
2 HOLDEX NOMINEES PTY LTD
3
4
5
ABN AMRO CLEARING SYDNEY NOMINEES PTY LTD
PATRICK JOSEPH HANNA
BT PORTFOLIO SERVICES LIMITED
6 MRS LAURA LYNCH
7 GEBRUN PTY LTD
8 NARRAWALLEE PROPERTIES PTY LTD
9
10
11
12
13
14
LAGUNA BAY CAPITAL PTY LTD
INKESE PTY LTD
XIN HUA PTY LTD
TJ SMOCK & CO PTY LTD
MR PETER ANTHONY LYNCH + MRS LAURA ANNE LYNCH
CITICORP NOMINEES PTY LIMITED
15 MONAL PTY LIMITED
16 MR MICHAEL CHRISTOPHER HORVATH
17
18
19
20
BRISPOT NOMINEES PTY LTD
SPINITE PTY LTD
BB CAPITAL PTY LTD
BNP PARIBAS NOMINEES PTY LTD
Top 20
Total
Substantial shareholders
Substantial shareholders as shown in substantial shareholder notices received by Cokal are:
Name of Shareholder:
Ordinary Shares:
121,895,319
60,057,034
42,939,694
25,000,000
19,250,000
17,500,000
17,500,000
15,625,000
15,000,000
13,333,333
12,631,200
10,000,000
8,420,800
7,897,397
7,000,000
6,616,500
6,301,613
6,154,676
5,000,000
4,364,104
422,486,670
593,092,704
20.55%
10.13%
7.24%
4.22%
3.25%
2.95%
2.95%
2.63%
2.53%
2.25%
2.13%
1.69%
1.42%
1.33%
1.18%
1.12%
1.06%
1.04%
0.84%
0.74%
71.23%
100%
Platinum
Platinum Partners Liquid Opportunity
Partners
Value
Arbitrage
Fund
LP &
88,109,786
Blumont Group Ltd
Domenic Vincent Martino & Sandra Gae Martino
60,057,034
37,120,001
The Company notes that, as at 2 September 2015, the following shareholders own substantial shareholdings (>= 5.0%) in Cokal:
Name of Shareholder:
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
HOLDEX NOMINEES PTY LTD
ABN AMRO CLEARING SYDNEY NOMINEES PTY LTD
Ordinary Shares:
% of total
shares:
121,895,319
60,057,034
20.55%
10.13%
42,939,694
7.24%
COKAL LIMITED Annual Report 2016 | Page 25 of 68
(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 2016 | Page 26 of 68
Interests in Tenements and Projects
Cokal Limited had the following interests in projects as at 30 June 2016:
Indonesia
Project
Location
% Interest
PT Anugerah Alam Katingan (AAK)
PT Bumi Barito Mineral (BBM)
PT Borneo Bara Prima (BBP)
Kalimantan
Kalimantan
Kalimantan
75%
60%
60%
PT Silangkop Nusa Raya (SNR)*
Kalimantan
75.2%
PT Tambang Benua Alam Raya# (TBAR)
Kalimantan
75%
#in process of transferring the shares to the Group.
*Sale agreement executed for disposal.
Tanzania
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 2016 | Page 27 of 68
Consolidated Statement of Comprehensive
Income for the year ended 30 June 2016
2
12
13
13
5
Revenue and other income
Employee benefits expenses
Depreciation expenses
Finance costs
Legal expenses
Administration and consulting expenses
Exploration expenditure de-recognised
Loss on sale of exploration tenement
Other expenses
Loss before income tax expense
Income tax expense
Net loss for the period
Other comprehensive income
Items may be reclassified to profit or loss in
subsequent periods (net of tax):
Exchange translation differences
Total comprehensive loss for the period
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
2016
US$
2015
US$
425,923
69,300
(1,057,027)
(1,718,508)
(130,923)
(382,116)
(138,988)
(1,388,056)
(25,655,222)
(1,728,233)
(275,075)
(200,940)
(2,863,531)
(415,353)
(1,983,786)
(5,250,000)
-
(681,229)
(30,329,717)
(13,044,047)
-
-
(30,329,717)
(13,044,047)
95,129
-
(30,234,588)
(13,044,047)
Cents
(6.07)
(6.07)
Cents
(2.76)
(2.76)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
COKAL LIMITED Annual Report 2016 | Page 28 of 68
Consolidated Statement of Financial Position as
at 30 June 2016
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 and others
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
2016
US$
2015
US$
462,770
167,655
129,230
-
1,753,213
1,538,595
138,402
232,742
759,655
3,662,952
1,502,019
1,628,081
32,740,312
59,424,333
186,150
191,312
34,428,481
61,243,726
35,188,136
64,906,678
1,157,841
939,821
13,892,302
10,065,000
15,050,143
11,004,821
14,482
72,409
-
3,656,836
14,482
3,729,245
15,064,625
14,734,066
20,123,511
50,172,612
83,622,140
83,622,140
4,851,794
4,571,178
(68,350,423)
(38,020,706)
20,123,511
50,172,612
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
COKAL LIMITED Annual Report 2016 | Page 29 of 68
Consolidated Statement of Changes in Equity
for the year ended 30 June 2016
At 1 July 2015
83,622,140
4,571,178
(38,020,706)
50,172,612
Issued
capital
US$
Reserves
Accumulated
losses
US$
US$
Total
US$
Total comprehensive loss for the year
Loss for the year
Other comprehensive income
Transactions with owners in their capacity as owners
Issue of share capital
Costs associated with issue of share capital
Share based payments
At 30 June 2016
At 1 July 2014
Total comprehensive loss for the 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
-
-
-
-
-
-
-
-
(30,329,717)
(30,329,717)
95,129
-
95,129
95,129
(30,329,717)
(30,234,588)
-
-
185,487
185,487
-
-
-
-
-
-
185,487
185,487
83,622,140
4,851,794
(68,350,423)
20,123,511
81,710,873
3,062,378
(24,976,659)
59,796,592
-
-
2,027,373
(116,106)
-
-
-
-
-
1,508,800
1,911,267
1,508,800
(13,044,047)
(13,044,047)
(13,044,047)
(13,044,047)
2,027,373
(116,106)
1,508,800
3,420,067
-
-
-
-
-
At 30 June 2015
83,622,140
4,571,178
(38,020,706)
50,172,612
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
COKAL LIMITED Annual Report 2016 | Page 30 of 68
Consolidated Statement of Cash Flows
for the year ended 30 June 2016
Cash Flows from Operating Activities
Payments to suppliers and employees
Interest and other income received
Finance costs paid
Net cash outflow from operating activities
24
Cash Flows from Investing Activities
Payments for plant and equipment
Decrease/(increase) in deposits maturing after
three months and restricted deposits
Payments for exploration and evaluation assets
Proceeds from sale of tenements
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 period
Net foreign exchange differences
Cash and cash equivalents at end of period
2016
US$
2015
US$
(2,457,877)
(3,795,296)
425,923
-
(2,031,954)
(5,000)
1,370,940
69,300
(1,815,000)
(5,540,996)
(935,628)
(42,793)
(759,171)
(3,154,690)
150,000
10,028
766,797
-
-
-
-
(1,265,157)
1,753,213
(25,286)
462,770
-
27,230
(4,105,881)
2,027,373
(116,106)
6,965,000
8,876,267
(770,610)
2,593,011
(69,188)
1,753,213
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
COKAL LIMITED Annual Report 2016 | Page 31 of 68
Notes to the Consolidated Financial Statements
for the year ended 30 June 2016
Note 1: Summary of Significant Accounting Policies
(a) General information
The consolidated financial statements of Cokal Limited for the year ended 30 June 2016 were authorised for issue in
accordance with a resolution of the Directors dated 27 September 2016 and covers the consolidated entity (the “Group” or
“Cokal”) consisting of Cokal Limited (the “Company”) and its subsidiaries.
The financial statements are presented in United States Dollars (“USD” or “US$”).
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 principal activities of the Group during the year were focused on the identification and development of coal within the
highly prospective Central Kalimantan coking coal basin in Indonesia.
(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
At 30 June 2016, the current liabilities exceed the current assets by US$14,290,488 (30 June 2015: US$ 7,341,869). 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:
a) Financing arrangement for the evaluation and development activities of BBM project;
b) The successful raising in the future of necessary funding, through debt, equity or farm-out to complete the BBM
project to operational status;
c) Management of short term interest bearing liabilities through BBM project financing, additional debt or equity
raising or modified repayment terms with lenders; and
d) 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 in the short term, however this would require the Group to
renegotiate or satisfy current borrowings of US$13.9 million, through loan extensions (which require lender consent) and
funding from other sources and other arrangements.
Subsequent to year end, on 22 July 2016, Cokal reached an agreement with Platinum Partners Value Arbitrage Fund, LP
(Platinum) to convert approximately US$15 million of loans (including future interest) owing by Cokal to various funds
managed by Platinum or its affiliates (the Platinum Group). Those loans include the Blumont loan, which was acquired by the
Platinum Group. Given that formal agreements and documents are yet to be finalised, there has been no adjustment made
to the loans at 30 June 2016.
The Directors are confident given the current permitting and financing processes undertaken and announced to the market
that the Group will be successful in its endeavours.
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 or managing its
existing funds to enable it to realise its assets and discharge its liabilities in the ordinary course of business.
Specifically, the Group has assessed that AASB 6 Exploration for and Evaluation of Mineral Resources (AASB 6) impairment
indicators exist at 30 June 2016. In such circumstances and given prevailing coal market conditions, the Group may not be able to
recover the full carrying amount of its tenements through sale of its assets. The Group has tested for impairment under AASB 136
Impairment of Assets. As a result the group has recognised impairment to tenements and this is disclosed in Note 13.
COKAL LIMITED Annual Report 2016 | Page 32 of 68
Notes to the Consolidated Financial Statements
for the year ended 30 June 2016
(d) New accounting standards and interpretations
(i)
Changes in accounting policy and disclosures
The Group applied for the first time certain standards and amendments, which are effective for annual periods beginning on
or after 1 July 2015. The group has not early adopted any other standard, interpretation or amendment that has been issued
but is not yet effective.
(ii)
Accounting Standards and Interpretations issued but not yet effective
A number of Australian Accounting Standards and Interpretations have recently been issued but are not yet effective. The
directors have not early adopted any of these new or amended Standards and Interpretations for the year ended 30 June
2016. The directors have not yet fully assessed the impact of these new or amended Standards or Interpretations (to the
extent relevant to the Group). The new standards and interpretations that could potentially impact the Group include the
following:
-
-
-
-
AASB 9: Financial Instruments (effective annual reporting periods commencing on or after 1 January 2018);
AASB 15: Revenue from Contracts with Customers (effective annual reporting periods commencing on or after 1
January 2018; and
Amendments to AASB 11 Joint Arrangements: Accounting for Acquisitions of Interests (effective annual reporting
periods commencing on or after 1 January 2016);
AASB 16: Leases (effective annual reporting periods commencing on or after 1 January 2019).
(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 arrangements with the other vote holders of the investee;
Rights arising from other contractual arrangements; and
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 period 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
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.
COKAL LIMITED Annual Report 2016 | Page 33 of 68
Notes to the Consolidated Financial Statements
for the year ended 30 June 2016
(e) Basis of consolidation (cont’d)
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:
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; and
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.
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 standards. 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.
COKAL LIMITED Annual Report 2016 | Page 34 of 68
Notes to the Consolidated Financial Statements
for the year ended 30 June 2016
(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 received. 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
recognition criteria described below must also be met before revenue is recognised:
Interest
For all financial instruments measured at amortised cost and interest bearing financial assets classified as loans and
receivables, 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 other income.
Sale of goods
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed
to the buyer, usually on delivery of the goods.
Consultation fees
Consultation fees are recognised when the service is rendered and revenue can be measured reliably.
Income tax
(h)
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 in
Australia. Cokal Limited will be the head entity in the tax consolidated Group. Once the tax consolidation is executed, these
entities will be taxed as a single entity and deferred tax assets and liabilities will be offset in these consolidated financial
statements.
COKAL LIMITED Annual Report 2016 | Page 35 of 68
Notes to the Consolidated Financial Statements
for the year ended 30 June 2016
Impairment of non-financial assets other than goodwill
(i)
At the end of each reporting period 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 FVLCD and VIU. For the purpose of assessing VIU, 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 the 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 have previously been impaired are tested for possible reversal of the impairment whenever
events or changes in circumstances indicate that the impairment may have reversed.
Joint venture and joint operations
(j)
A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to
the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which
exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.
The considerations made in determining joint control are similar to those necessary to determine control over subsidiaries.
A joint arrangement can be classified as a joint venture or a joint operation. The classification of a joint arrangement as a
joint venture or a joint operation depends upon the rights and obligations of the parties to the arrangement.
Joint venture and joint operations (cont’d)
(j)
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the
assets, and obligations for the liabilities, relating to the arrangement.
Joint ventures are accounted for using the equity method. The Group does not currently have any joint ventures.
The Group recognises its interest in joint operations as follow:
Assets, including its share of any assets held jointly;
Liabilities, including its share of any liabilities incurred jointly;
Revenue from the sale of its share of the output arising from the joint operation;
Share of the revenue from the sale of the output by the joint operation; and
Expenses, including its share of any expenses incurred jointly.
Details of the Group’s joint arrangements are set out in Note 11.
Cash and cash equivalents
(k)
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.
Financial instruments – initial recognition and subsequent measurement
(l)
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. The Group currently only has receivables.
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.
COKAL LIMITED Annual Report 2016 | Page 36 of 68
Notes to the Consolidated Financial Statements
for the year ended 30 June 2016
(i) Financial assets (cont’d)
Subsequent measurement
Loans and receivables
This category is the most relevant to the Group and generally applies to trade and other receivables. 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 profit or loss in the
statement of comprehensive income. The losses arising from impairment are recognised in profit or loss in the statement of
comprehensive income in finance costs for loans and in cost of sales or other operating expenses for 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.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Accounts payable
Accounts payable are obligations to pay for goods or services that have been acquired in the ordinary course of business
from suppliers and employees. The accounts payable are subsequently measured at amortised cost using the effective
interest method (EIR). Due to their short term nature, the fair value approximates their carrying value.
COKAL LIMITED Annual Report 2016 | Page 37 of 68
Notes to the Consolidated Financial Statements
for the year ended 30 June 2016
(ii) Financial liabilities (cont’d)
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 profit or loss in the statement of comprehensive
income. 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 profit or loss
in the statement of comprehensive income.
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 at cost 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 period 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 period.
An item of property, plant and equipment is de-recognised 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.
COKAL LIMITED Annual Report 2016 | Page 38 of 68
Notes to the Consolidated Financial Statements
for the year ended 30 June 2016
Exploration, evaluation and development expenditure
(n)
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. The
exploration and evaluation expenditure is only carried forward as exploration or evaluation assets 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.
When technical feasibility and commercial viability of extracting a Coal Resource have been demonstrated then any
capitalised exploration and evaluation expenditure is reclassified as capitalised mine development. Prior to reclassification,
capitalised exploration and evaluation expense is assessed for impairment.
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/de-
recognised in full against profit in the period 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 over burden removal) incurred before production commences (development stripping)
are capitalised as part of mine development expenditure and subsequently amortised.
The stripping costs incurred subsequent to commencement of production are referred to as production stripping.
Production stripping is generally considered to create two benefits, being either the production of inventory or improved
access to the coal to be mined in the future. Where the benefits are realised in the form of inventory produced in the period,
the production stripping costs are accounted for as part of the cost of producing those inventories. Where the benefits are
realised in the form of improved access to ore to be mined in the future, the costs are recognised as a non-current asset,
referred to as a ‘stripping activity asset’, if the following criteria are met:
a) Future economic benefits (being improved access to the ore body) are probable;
b) The component of the ore body for which access will be improved can be accurately identified; and
c) The costs associated with the improved access can be reliably measured.
If all of the criteria are not met, the production stripping costs are charged to profit or loss as operating costs as they are
incurred. When production commences, the accumulated costs for the relevant area of interest (mine development and
acquired properties) will be amortised over the life of the area according to the rate of depletion of the economically
recoverable reserves using a units of production method.
Mine rehabilitation costs will be incurred by the Group either while operating, or at the end of the operating life of, the
Group’s facilities and mine properties. The Group assesses its mine rehabilitation provision at each reporting date. The
Group recognises a rehabilitation provision where it has a legal and constructive obligation as a result of past events, and it
is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount of
obligation can be made. The nature of these restoration activities includes: dismantling and removing structures;
rehabilitating mines and tailings dams; dismantling operating facilities; closing plant and waste sites; and restoring,
reclaiming and revegetating affected areas.
The obligation generally arises when the asset is installed or the ground/environment is disturbed at the mining operation’s
location. When the liability is initially recognised, the present value of the estimated costs is capitalised by increasing the
carrying amount of the related mining assets to the extent that it was incurred as a result of the development/construction
of the mine. Any rehabilitation obligations that arise through the production of inventory are recognised as part of the
related inventory item. Additional disturbances which arise due to further development /construction at the mine are
recognised as additions or charges to the corresponding assets and rehabilitation liability when they occur. Costs related to
restoration of site damage (subsequent to start of commercial production) that is created on an ongoing basis during
production are provided for at their net present values and recognised in profit or loss as extraction progresses.
Changes in the estimated timing of rehabilitation or changes to the estimated future costs are dealt with prospectively by
recognising an adjustment to the rehabilitation liability and a corresponding adjustment to the asset to which it relates, if
the initial estimate was originally recognised as part of an asset measured in accordance with AASB 116.
COKAL LIMITED Annual Report 2016 | Page 39 of 68
Notes to the Consolidated Financial Statements
for the year ended 30 June 2016
Exploration, evaluation and development expenditure (cont’d)
(n)
Any reduction in the rehabilitation liability and, therefore, any deduction from the asset to which it relates, may not exceed
the carrying amount of that asset. If it does, any excess over the carrying value is taken immediately to the statement of
profit or loss and other comprehensive income.
If the change in estimate results in an increase in the rehabilitation liability and, therefore, an addition to the carrying value
of the asset, the Group considers whether this is an indication of impairment of the asset as a whole, and if so, tests for
impairment. If, for mature mines, the estimate for the revised mine assets net of rehabilitation provisions exceeds the
recoverable value, then that portion of the increase is charged directly to expense.
Over time, the discounted liability is increased for the change in present value based on the discount rates that reflect
current market assessments and the risks specific to the liability. The periodic unwinding of the discount is recognised in the
statement of profit or loss and other comprehensive income as part of finance costs. For closed sites, changes to estimated
costs are recognised immediately in the statement of profit or loss and other comprehensive income.
The Group recognises neither the deferred tax asset in respect of the temporary difference on the decommissioning liability
nor the corresponding deferred tax liability in respect of the temporary difference on a decommissioning asset.
(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 period are recognised in respect of employees' services rendered up to
the end of the reporting period 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 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) and suppliers (including financiers and consultants) in the
form of share-based payment transactions, whereby employees or suppliers render/provide 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 (share-based payment option reserve). The fair value of options granted to financiers is recognised as finance cost
with a corresponding increase in equity (share-based payment option reserve). Fair value of shares issued to employees and
consultants are recognised as employee benefits and consultancy expenses respectively with a corresponding increase in
share capital. The fair value is measured at grant date and recognised over the period during which the employees/suppliers
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. There are no conditions associated with the options issued to the financiers. 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.
COKAL LIMITED Annual Report 2016 | Page 40 of 68
Notes to the Consolidated Financial Statements
for the year ended 30 June 2016
(r) Share-based payments (cont’d)
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;
- 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.
The charge to the statement of comprehensive income for the period is the cumulative amount as calculated above less the
amounts already charged in previous periods. 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 dilution effect, if any, of outstanding options is reflected as additional share dilutions in the computation 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 period, adjusted for bonus elements in ordinary shares during the
period.
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
AASB 8 Operating segments requires a management approach under which segment information is presented on the same
basis as that used for internal reporting purposes. Operating segments are reported in a manner that is consistent with the
internal reporting to the chief operating decision maker (CODM), which has been identified as 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 qualification criteria is still reported separately when information about the
segment would be useful to users of the financial statements.
COKAL LIMITED Annual Report 2016 | Page 41 of 68
Notes to the Consolidated Financial Statements
for the year ended 30 June 2016
(v) Fair value measurement
The Group did not have any financial assets and liabilities measured at fair value at reporting 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
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.
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 period.
(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 (refer note 1(d)). 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 in 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.
(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 lease 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.
(y) 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 investments in subsidiaries and joint venture operations are accounted for at
cost, less provision for impairment.
COKAL LIMITED Annual Report 2016 | Page 42 of 68
Notes to the Consolidated Financial Statements
for the year ended 30 June 2016
(z) Current versus non-current classification
The Group presents assets and liabilities in the statement of financial position based on current/non-current
classification. An asset is current when it is either:
Expected to be realised or intended to be sold or consumed in the normal operating cycle;
Held primarily for the purpose of trading;
Expected to be realised within 12 months after the reporting period; or
Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after
the reporting period.
All other assets are classified as non-current.
A liability is current when either:
It is expected to be settled in the normal operating cycle;
It is held primarily for the purpose of trading;
It is due to be settled within 12 months after the reporting period; or
There is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period.
The Group classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
(aa) Critical accounting estimates and judgments
Details of critical accounting estimates and judgements about the future made by management at the end of the reporting
period are set out below:
(i)
Impairment of non-financial assets
The Group assesses each reporting period to determine whether any indication of impairment exists. Where an indicator
of impairment exists, a formal estimates of the recoverable amount is made, which is considered to be the higher of the
fair value less costs of disposal (FVLCD) and value in use (VIU). The assessments require the use of estimates and
assumptions such as long term coal prices (considering current and historical prices, price trends and related factors),
discount rates, operating costs, future capital requirements and decommissioning operating performance (which
includes production and sales volumes). These estimates and assumptions are subject to risks and uncertainty.
Therefore, there is a possibility that changes in circumstances will impact this project, which may impact the recoverable
amount of the asset.
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 Group considers any third party offers or Enterprise Value
(EV) that the market participants willing to pay for acquisition of the Group’s shares when forming a view on fair value.
(ii) Exploration and evaluation assets
The application of the Group’s accounting policy for exploration and evaluation expenditure requires judgement to
determine whether future economic benefits are likely, from either exploration or sale, or whether activities have not
yet reached a stage which permits a reasonable assessment of the existence of technically feasible and commercially
viable reserves. The determination of reserves and resources is itself and estimation process that requires varying
degrees of uncertainty depending on how the resources are classified. These estimates directly impact when the Group
defers exploration and evaluation expenditure. The deferral policy requires management to make certain estimates and
assumptions about future events and circumstances, in particular, whether an economically viable extraction operation
can be established. Any such estimates and assumptions may change as new information becomes available. If, after
expenditure is capitalised, information becomes available suggesting that the recovery of the expenditure is unlikely, the
relevant capitalised amount is written off in profit or loss in the statement of comprehensive income in the period when
the new information becomes available.
At reporting date, certain tenements have reached a renewal date or will reach a renewal date in the next 12 months.
These tenements remain current until an official government expiry notice is issued. The directors are of the opinion that
while they are due for renewal, as no expiry notice has been received they remain current. If renewal is not forthcoming,
the amounts capitalised will likely be de-recognised.
COKAL LIMITED Annual Report 2016 | Page 43 of 68
Notes to the Consolidated Financial Statements
for the year ended 30 June 2016
(aa) Critical accounting estimates and judgments (cont’d)
(iii) 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.
(iv) Share-based payments
The Group uses estimates to determine the fair value of equity instruments issued to directors, executives, employees
and suppliers. Further detail of estimates used in determining the value of share-based payments is included in Note 25.
(v) Joint arrangements
Judgement is required to determine when the Group has joint control over an arrangement, which requires an
assessment of the relevant activities and when the decisions in relation to those activities require unanimous consent.
The Group has determined that the relevant activities for its joint arrangements are those relating to the operating and
capital decisions of the arrangement such as approval of the capital expenditure program for each year or terminating
the service providers of the arrangement. The considerations made in determining joint control are similar to those
necessary to determine control over subsidiaries.
Judgement is also required to classify a joint arrangement. Classifying the arrangement requires the Group to assess its
rights and obligations arising from the arrangement. Specifically, the Group considers:
The structure of the joint arrangement – whether its structured through a separate vehicle
When the arrangement is structure through a separate vehicle, the Group also considers the rights and obligations
arising from:
-
-
-
The legal form of the separate vehicle;
The terms of the contractual arrangement; and
Other facts and circumstances (when relevant).
This assessment often requires significant judgement, and a different conclusion on joint control and also whether the
arrangement is a joint operation or a joint venture, may materially impact the accounting.
Per agreement with subsidiary shareholders, the relevant activities including financing of certain entities’ are managed
and controlled by Cokal until the completion of Initial Work Program (refer note 10). The rights of other shareholders to
receive returns and obligations for expenditure are only established when they contribute their share of capital upon
completion of the Initial Work Program by Cokal. Given this, to date it has been determined that Cokal controls these
entities and hence currently consolidates them as subsidiaries. In future periods, however, the accounting treatment of
these entities will be required to be reassessed upon completion of Initial Work Program. This may lead to a change in
accounting if it is then determined that instead of controlling these entities, Cokal now only jointly controls these and
they are joint arrangements. Depending on whether these joint arrangements are classified as joint ventures or joint
operations, this may require either equity accounting (for a joint venture) or recognition of Cokal’s share of the assets,
liabilities, income and expenses of the arrangement (for a joint operation). Directors have not reassessed the impact at
reporting date as the Initial Work Program has not been completed at this date.
COKAL LIMITED Annual Report 2016 | Page 44 of 68
Notes to the Consolidated Financial Statements
for the year ended 30 June 2016
Note 2: Revenue and Other Income
Revenue
Other income
- Interest income from external parties
- Consulting fees
- Sundry
Total revenue and other income from continuing operations
Note 3: Loss for the Period
Loss before income tax includes the following
specific expenses:
Depreciation on plant and equipment
Salaries and wages
Superannuation
Share-based payments (employee options)
Exploration expenditure de-recognised
Loss on sale of exploration tenement
Operating lease expense – minimum lease payment
Finance costs
Interest on borrowings
Facility fees and other borrowing costs
Expense relating to options issued for extension of loan
repayment
2016
US$
-
18,375
400,000
7,548
425,923
2015
US$
-
69,300
-
-
69,300
2016
US$
2015
US$
130,923
403,200
14,628
185,487
25,655,222
1,728,233
246,921
170,466
211,650
-
200,940
653,449
29,331
417,579
5,250,000
-
440,750
168,959
1,634,921
1,059,651
Note 4: Dividends and Franking Credits
There were no dividends paid or recommended during the financial year (30 June 2015: Nil).
There were no franking credits available to the shareholders of the Group (30 June 2015: Nil).
COKAL LIMITED Annual Report 2016 | Page 45 of 68
Notes to the Consolidated Financial Statements
for the year ended 30 June 2016
Note 5: Income Tax
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
2016
US$
2015
US$
(9,098,915)
(3,913,214)
9,003,544
2,380,253
95,371
-
-
7,769,566
7,769,566
1,532,961
-
-
6,293,467
6,293,467
-
-
7,769,566
6,293,467
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 2016 were
US$25,898,555 (30 June 2015: US$20,978,223) and US$nil (30 June 2015: US$nil) respectively.
In order to recoup carried forward losses in future periods, either the Continuity of Ownership Test (COT) or Same Business
Test must be passed. The majority of losses are carried forward at 30 June 2016 under COT.
Deferred tax assets which have not been recognised as an asset, will only be obtained if:
(i)
the Group derives future assessable income of a nature and of an amount sufficient to enable the losses to be
realised;
the Group continues to comply with the conditions for deductibility imposed by the law; and
(ii)
(iii) no changes in tax legislation adversely affect the Group in realising the losses
Note 6: Auditors Remuneration
Audit services
Amounts paid/payable to Ernst & Young for audit or
review of the financial statements for the Group
Ernst & Young - Australia
Ernst & Young - Indonesia
Ernst & Young - Singapore
2016
US$
2015
US$
92,250
33,011
37,941
163,202
109,647
36,564
36,522
182,733
COKAL LIMITED Annual Report 2016 | Page 46 of 68
Notes to the Consolidated Financial Statements
for the year ended 30 June 2016
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)
(30,329,717)
(13,044,047)
2016
Number
2015
Number
499,342,704
472,413,235
-
-
499,342,704
472,413,235
(6.07)
(6.07)
(2.76)
(2.76)
* Options are considered anti-dilutive as the Group is loss making.
Options could potentially dilute earnings per share in the future. Refer to Note 17 for details of option granted as at 30 June
2016.
Note 8: Cash and Cash Equivalents
2016
US$
Cash and bank balances
Cash at bank bear floating and fixed interest rates between 0.10% and 2.78% (2014: between 0. 10% and 3.06%).
Included in the consolidated statement of cash flows as follows:
630,425
2015
US$
3,291,808
Cash and bank balances *
Less: Short term deposits maturing after three
months and restricted bank balance classified
as investing activities**
Cash and cash equivalents
630,425
3,291,808
(167,655)
(1,538,595)
462,770
1,753,213
* All deposits are short term investments held at commercial banks.
**Include restricted deposit of US$ 138,916 (2015: 138,600) can be used only after TBAR production commences.
Note 9: Accounts Receivable
Current
Other receivables*
*No receivable balances are past due or impaired at reporting date.
2016
US$
129,230
129,230
2015
US$
138,402
138,402
COKAL LIMITED Annual Report 2016 | Page 47 of 68
Notes to the Consolidated Financial Statements
for the year ended 30 June 2016
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.
Name of entity
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 (BKL)
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)
Country of
Incorporation
Class of Shares
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
Percentage Owned
(%)*
2016
100%
100%
100%
100%
-
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
75%
-
60%
60%
75.2%
75%
2015
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%
* the proportion of ownership interest is equal to the proportion of voting power held.
^ at reporting date, the capital of these 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 the Initial Work Programs for each
of the projects by Cokal. At reporting date, the Initial Work Programs for these projects have not yet been completed and therefore no capital has
been contributed by the non-controlling shareholders.
# in process of transferring the shares to the Group.
+ Disposed during the year
** Sale agreement executed for disposal of SNR & KNR, whose asset values reduced to likely sale proceeds.
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 2016 and 30 June 2015.
Name of entity
Proportion of equity interest held by non-controlling interests:
Country of incorporation
and operation
Indonesia
Indonesia
PT Bumi Barito Mineral (BBM)
PT Borneo Bara Prima (BBP)
Accumulated balances of material non-controlling interest
BBM
BBP
Profit/(loss) allocated to material non-controlling interest:
BBM
BBP
2016
2015
40%
40%
2016
US$ ^
40%
40%
2015
US$ ^
-
-
-
-
-
-
-
-
^at reporting date, the capital of these 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 the Initial Work Programs for each
of the projects by Cokal. At reporting date, the Initial Work Programs for these projects have not yet been completed and therefore no capital has
been contributed by the non-controlling shareholders.
COKAL LIMITED Annual Report 2016 | Page 48 of 68
Notes to the Consolidated Financial Statements
for the year ended 30 June 2016
Note 10: Subsidiaries (cont’d)
The summarised financial information of these subsidiaries is provided below. This information is based on amounts before
inter-company eliminations.
Summarised statement of comprehensive income for the year ended 30 June 2016
Other operating expenses
Loss before tax
Income tax expense
Profit/(Loss) for the period from continuing operations
Total comprehensive income
Attributable to non-controlling interests
Dividends paid to non-controlling interests
Summarised statement of comprehensive income for the year ended 30 June 2015
Other operating expenses
Loss before tax
Income tax expense
Profit/(Loss) for the period 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 2016
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 2015
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 2016
Cash flow from operating activities
Cash flow from investment activities
Cash flow from financing activities
Net increase/(decrease)
Summarised statement of cash flow for 2015
Cash flow from operating activities
Cash flow from investment activities
Cash flow from financing activities
Net increase/(decrease)
COKAL LIMITED Annual Report 2016 | Page 49 of 68
US$
BBM
(1,513,705)
(1,513,705)
-
(1,513,705)
(1,513,705)
-
-
US$
BBM
(1,511,921)
(1,511,921)
-
(1,511,921)
(1,511,921)
-
-
US$
BBM
27,305,337
421
(438,200)
(35,438,430)
(8,570,872)
(8,570,872)
-
US$
BBM
25,254,874
12,085
(368,727)
(31,955,399)
(7,057,167)
(7,057,167)
-
US$
BBM
(1,444,231)
(723,547)
2,167,778
-
US$
BBM
(1,457,466)
(4,664,782)
6,122,248
-
US$
BBP
(4,126,378)
(4,126,378)
-
(4,126,378)
(4,126,378)
-
-
US$
BBP
(86,541)
(86,541)
-
(86,541)
(86,541)
-
-
US$
BBP
-
-
(226,722)
(4,205,633)
(4,432,355)
(4,432,355)
-
US$
BBP
3,727,502
-
(20,334)
(4,013,145)
(305,977)
(305,977)
-
US$
BBP
(29,258)
(2,350)
31,609
-
US$
BBP
(85,203)
(238,109)
323,312
-
Notes to the Consolidated Financial Statements
for the year ended 30 June 2016
Note 11: Joint Arrangements
Tanzania
Cokal has joint arrangements to explore for coal in Tanzania. The joint arrangements are with a 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
Percentage Owned
(%)*
Cokal Karoo Limited^
Cokal Manda Limited^
* the proportion of ownership interest is equal to the proportion of voting power held.
^ the Group has not undertaken any activities. The expenditures incurred have been fully written down in previous years as they are no longer
recoverable.
Tanzania
Tanzania
Ordinary
Ordinary
2016
60%
50%
2015
60%
50%
Indonesia
The Group has executed a joint arrangement 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 company will have the operations
should Cokal commence production and other conditions precedent are satisfied. At 30 June 2016, no activities to establish
this company had been carried out.
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
2016
US$
2015
US$
31,526
31,526
552,886
(549,609)
3,277
552,957
(255,494)
297,463
9,974
(8,475)
1,499
552,886
(477,615)
75,271
569,392
(214,856)
354,536
9,974
(6,480)
3,494
1,168,254
1,163,254
Total property, plant and equipment
1,502,019
1,628,081
COKAL LIMITED Annual Report 2016 | Page 50 of 68
Notes to the Consolidated Financial Statements
for the year ended 30 June 2016
Note 12: Property, Plant and Equipment (cont’d)
(a) Movements in carrying amounts
2016
Balance at the beginning of the year
Additions
Disposals
Depreciation expense
Carrying amount at the end of the
year
2015
Balance at the beginning of the year
Additions
Disposals
Depreciation expense
Carrying amount at the end of the
year
Land
US$
31,526
-
-
-
31,526
Land
US$
31,526
-
-
-
31,526
Computer
equipment
US$
75,271
-
(27)
(71,967)
3,277
Computer
equipment
US$
208,212
2,981
-
(135,922)
75,271
Furniture and
office
equipment
US$
354,536
-
(112)
(56,961)
297,463
Furniture and
office
equipment
US$
417,562
-
-
(63,026)
354,536
Motor
Vehicles
US$
3,494
-
-
(1,995)
1,499
Motor
Vehicles
US$
5,486
-
-
(1,992)
3,494
Capital WIP
US$
1,163,254
5,000
-
-
1,168,254
Capital WIP
US$
230,607
932,647
-
-
1,163,254
Total
US$
1,628,081
5,000
(139)
(130,923)
1,502,019
Total
US$
893,393
935,628
-
(200,940)
1,628,081
Note 13: Exploration and Evaluation Assets
Non-Current
Exploration and evaluation expenditure capitalised
- exploration and evaluation phases
2016
US$
2015
US$
32,740,312
59,424,333
Recoverability of the carrying amount of exploration and evaluation 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 in
exploration and evaluation (E&E) assets
Balance at the beginning of the period
Additions
Disposals**
Exploration expenditure de-recognised*
Written off
59,424,333
759,171
(1,787,970)
(25,655,222)
-
61,519,643
3,154,690
-
(5,250,000)
-
Carrying amount at the end of the period
59,424,333
* Based on the assessment under AASB 6 at 30 June 2016, Cokal while still maintaining and wishing to pursue all projects (excluding tenements
sold during the period) has decided to focus on the core central Kalimantan tenements which are more likely to be developed in the short term.
Cokal considers, as it is not currently planning to focus on and expend substantive expenditure on further exploration for and evaluation of mineral
resources in the tenements other than PT Bumi Barito Mineral (BBM) neither is any budgeted nor planned that it will write off these E&E assets.
Such exploration expenditure de-recognised primarily relate to PT Borneo Bara Prima (BBP), PT Anugerah Alam Katingan (AAK), PT Silangkop Nusa
Raya (SNR), PT Tambang Benua Alam Raya (TBAR). The remaining carrying value represents PT Bumi Barito Mineral (BBM) project. Management
remains confident that the group will raise additional funding for development of BBM and sufficient data exists to indicate the carrying value of
BBM is likely to be recovered in full from successful development or by sale.
32,740,312
The de-recognition of exploration expenditure is determined using the Fair Value Less Cost to Method (FVLCD) considering the entity as one CGU as
the tenements are at exploration stage. The FVLCD is determined using the Enterprise Value (EV). EV is implied by Cokal’s Market Capitalisation plus
a control provision. The fair value measurement is categorised under Level 1 hierarchy. The excess of recoverable value than the carrying value of
E&E is allocated for de-recognition in the order of planned substantive expenditure on further exploration for and evaluation of mineral resources.
**Disposal represents sale of PT Anugerah Alam Manuhing (AAM) project, a loss of $1,728,233 is recognised in Profit & Loss.
COKAL LIMITED Annual Report 2016 | Page 51 of 68
Notes to the Consolidated Financial Statements
for the year ended 30 June 2016
Note 14: Other Assets
Current
Prepayments
Non-Current
Security deposits
Note 15: Accounts Payable and Others
Current
Sundry payables and accrued expenses
Employee benefits
Deferred liability *
Non-Current
Deferred liability *
2016
US$
-
186,150
2016
US$
852,468
47,446
257,927
1,157,841
14,482
2015
US$
232,742
191,312
2015
US$
696,551
185,343
57,927
939,821
72,409
* Deferred liability represents the unamortised deferred benefit relating to operating lease incentives of USD 57,927 (2015: USD 57,927) which have
not yet been credited to profit or loss and the deposit received for sale of SNR &KNR tenements of USD 200,000 (2015: Nil)
Note 16: Interest Bearing Loans
Current
Platinum Partners facility
Blumont Group facility
Total Current
Non-Current
Blumont Group facility
Total Non-Current
Total Interest bearing loans
2016
US$
2015
US$
10,065,000
3,827,302
13,892,302
-
-
13,892,302
10,065,000
-
10,065,000
3,656,836
3,656,836
13,721,836
Blumont Group Facility
On 5 November 2013, the Group entered into a loan facility agreement with Blumont Group Limited, a shareholder. Under
this facility the Group has drawn down US$3.4 million (30 June 2015: US$3.4m) and no further drawdown is expected under
this facility in the future periods.
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.
Platinum Partners Facility
On 29 March 2014, the Group entered into a short term loan agreement for US$3.5m with Platinum Partners (Platinum) for
working capital. The loan is subject to withhold (prepaid interest) at the date of utilisation the aggregate amount of:
US$600,000, as a non-refundable work fee payable to the lender in respect of the facility; and
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.
On 6 August 2014, the Group entered into an additional short term loan agreement for US$5.65m with Platinum for working
capital. The loan is subject to withhold (prepaid interest) at the date of utilisation the aggregate amount of:
US$500,000, as a non-refundable work fee payable to the lender in respect of the facility; and
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.
COKAL LIMITED Annual Report 2016 | Page 52 of 68
Notes to the Consolidated Financial Statements
for the year ended 30 June 2016
Note 16: Interest Bearing Loans (cont’d)
During the year, Cokal announced the total fund managed by Platinum has extended the term of its bridging loan facility to 6
August 2015. Upon extension the total loan for the project development to date totalled US$10,065,000 including additional
non-refundable working fee for the extension of US$ 915,000. The present intention is that the loan will be refinanced by the
BBM project financing facility once it is in place upon receipt of forestry permit (refer Note 28).
Under the extension agreement, Cokal granted the following options to Platinum:
On 27 August 2014, 15,000,000 options at US$ 0.186 expiring on 27 August 2018; and
On 6 February 2015, 25,000,000 options at US$ 0.101 expiring on 6 February 2019.
The options will be exercisable at any time before expiry. Payment of the exercise price may be satisfied by the holder paying
the exercise price in cash or causing the provider of the bridge loan or project finance to reduce the principal owing by the
amount of the exercise price. Shares issued on exercise of an option rank equally with all other ordinary shares then on issue.
The full amount of Platinum loan was repayable on 6 August 2015. The extension is still being negotiated and no demand for
repayment has been received. As disclosed in Note 2, subsequent to year end the Directors announced Cokal had reached an
agreement with Blumont Group and Platinum Partners for the conversion of all outstanding loans owing to them to
production royalties (refer note 28 for more details). The parties are working to finalise these arrangements at this date.
The loans are secured by 950 ordinary shares and 46,608,900 preference shares of Cokal Holdings Pte. Ltd. and for all shares
of Cokal-BBM Pte. Ltd.
Note 17: Issued Capital
499,342,704 authorised and fully paid
ordinary shares (30 June 2015: 499,342,704)
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
Share issue to consultant and employee
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
Ordinary share issue
At reporting date
During the year there were no shares issued.
-
-
-
-
-
-
2016
US$
2015
US$
83,622,140
83,622,140
2016
US$
83,622,140
-
-
-
-
83,622,140
2016
Number
2015
US$
81,710,873
1,935,100
-
92,273
(116,106)
83,622,140
2015
Number
499,342,704
471,103,926
-
-
499,342,704
27,777,778
461,000
499,342,704
COKAL LIMITED Annual Report 2016 | Page 53 of 68
Notes to the Consolidated Financial Statements
for the year ended 30 June 2016
Note 17: Issued Capital (cont’d)
(b) Options
All options on issue at 30 June 2016 were as follows:
Number of options
Exercise price
US$
Expiry date
Employees:
Platinum:
350,000
4,000,000
5,800,000
10,000,000
15,000,000
25,000,000
60,150,000
0.77
0.20
0.23
0.10
0.19
0.10
12 October 2016
11 July 2017
11 July 2017
24 February 2019
27 August 2018
6 February 2019
For information relating to the Cokal Limited employee option plan, including details of options issued, exercised and
lapsed during the 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 other than shown in note 16.
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
Share based payments option reserve
Translation reserve
2016
US$
6,307,249
(1,455,455)
4,851,794
2015
US$
6,121,762
(1,550,584)
4,571,178
The option reserve records the value of options issued as part of capital raisings, extensions for loans as well as expenses
relating to director, executive and employee share options.
Translation reserve represents the net exchange differences arising from the translation as a result of change in
presentation currency to USD from AU$. The reduction represents the translation reserves relating to AAM transferred to
profit or loss on disposal.
COKAL LIMITED Annual Report 2016 | Page 54 of 68
Notes to the Consolidated Financial Statements
for the year ended 30 June 2016
Note 19: Accumulated Losses
Accumulated losses attributable to members of Cokal
Limited at beginning of the year
Loss for the year
Accumulated losses attributable to members of Cokal
Limited at the end of the year
2016
US$
(38,020,706)
(30,329,717)
(68,350,423)
2015
US$
(24,976,659)
(13,044,047)
(38,020,706)
Note 20: Parent Entity Information
The consolidated financial statements incorporate the assets, liabilities and results of the parent entity in accordance with
the accounting policy described in Note 1.
Parent Entity
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Issued capital
Reserves
Revaluation reserve
Accumulated losses
Total shareholder’s equity
Loss for the year
Total comprehensive loss for the year
2016
US$
537,047
33,703,483
34,240,530
13,993,962
123,057
14,117,019
20,123,511
83,622,140
6,307,249
(3,565,142)
(66,240,736)
20,123,511
(47,663,222)
(47,663,222)
2015
US$
3,444,683
78,304,888
81,749,571
10,491,488
3,656,836
14,148,324
67,601,247
83,622,140
6,121,763
(3,565,142)
(18,577,514)
67,601,247
(5,746,387)
(5,746,387)
Guarantees
The parent entity has set up wholly owned special purpose entities (SPEs) in Singapore to hold ownership interests in
Indonesia and Tanzania entities and provided an undertaking to financially support SPEs 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 2016 (2015 – nil).
Contingent liabilities
The parent entity has no contingent liabilities.
Capital commitments
The parent entity has no capital commitments.
Impairment assessment
At 30 June 2016 the parent entity Cokal Limited recorded its investment and loan in controlled entities at USD80,7million.
Cokal Limited also recorded net assets of USD67.1 million. At 30 June 2016 an impairment assessment was made based
on the Enterprise Value (EV) resulting in an assessed net asset value of USD20.1 million. The directors have determined
this to be fair and reasonable until such time that they are able to obtain funding for the Group’s projects and deliver the
value of the projects. On this basis the directors have made an impairment adjustment of USD47 million to the carrying
values of investments in subsidiaries included in the statement of financial position of Cokal Limited as an individual
entity.
COKAL LIMITED Annual Report 2016 | Page 55 of 68
Notes to the Consolidated Financial Statements
for the year ended 30 June 2016
Note 21: Commitments
2016
US$
2015
US$
(a) Operating lease commitments
Future minimum rentals payable under non-cancellable operating leases as at 30 June 2016 are as follows:
Payable
- not later than 12 months
- between 12 months and 5 years
- greater than 5 years
427,287
189,460
-
616,747
347,977
454,960
-
802,937
Note 22: Contingent Liabilities
The contingent liabilities are in relation to the acquisition of tenements. At 30 June 2016, the Group has further obligations
to make contingent payments of up to US$24.70m (30 June 2015: US$24.70m) 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.
Cokal received the BBM’s forestry permit in August 2015. Per agreement, US$10m final payment for BBM is required to be
paid upon receipt of Forestry Permit (milestone achieved) and other conditions precedent. However, Directors believe
obligation for payment of this liability effective 13 August 2015 is not satisfied until the commencement of BBM
development activities.
The Group executed a joint operating 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 jointly owned company for this operation and
the registration of this is in progress. The jointly owned company will manage the barging operation for the BBM project
should production commence and other conditions precedent take place. Once the jointly owned company is
incorporated, Cokal will hold 49% interest by contributing an estimated US$11 million (49% ordinary share capital of jointly
owned company, Indonesian Rupiah 200 billion).
The directors are not aware of any other significant contingent liabilities at the date of this report.
COKAL LIMITED Annual Report 2016 | Page 56 of 68
Notes to the Consolidated Financial
Statements for the year ended 30 June 2016
23: Operating Segments
AASB 8 requires operating segments to be identified on the basis of internal reports that are used by the CODM in order
to allocate resources to the segment and to assess its performance. As noted earlier, the CODM of the Group are the
Board of Directors. For management purposes, the Group is organised into three main operating segments, which
involves the exploration for coal in Indonesia, Tanzania and Australia. The Singapore entity was considered separately
for corporate services.
Australia
Indonesia
Singapore
Tanzania
US$
US$
US$
US$
Total
US$
Segment performance for the year ended 30 June 2016
Revenue
Other revenue
Interest revenue
Intersegment income*
Total segment income
Depreciation expenses
Finance costs
407,575
17,585
-
425,160
101,550
382,116
(27)
790
-
763
29,373
-
Exploration expenditure de-recognised
-
25,655,222
-
1,591,054
(1,591,054)
-
-
-
-
Other expenses
Total segment expenses
1,297,512
3,158,961
1,781,178
28,843,556
130,906
130,906
-
-
-
-
-
-
-
-
407,548
1,609,429
(1,591,054)
425,923
130,923
382,116
25,655,222
4,587,379
-
30,755,640
Segment net loss before tax
(1,356,018)
(28,842,793)
(130,906)
-
(30,329,717)
Segment assets and liabilities as at 30 June 2016
Property, plant and equipment
Exploration and evaluation assets
Other segment assets
Total segment assets
195,416
1,306,603
-
32,740,312
705,079
900,495
240,726
34,287,641
-
-
-
-
Total segment liabilities
14,067,770
701,882
294,973
Capital expenditure for the year ended 30 June 2016
Property, plant and equipment
Exploration and evaluation assets
-
-
5,000
759,171
-
-
*Inter segment expense relating to the income is eliminated in Indonesia’s exploration and evaluation assets.
-
-
-
-
-
-
-
1,502,019
32,740,312
945,805
35,188,136
15,064,625
5,000
759,171
COKAL LIMITED Annual Report 2016 | Page 57 of 68
Notes to the Consolidated Financial Statements
for the year ended 30 June 2016
23: Operating Segments (cont’d)
Australia
Indonesia
Singapore
Tanzania
US$
US$
US$
US$
Total
US$
Segment performance for year ended 30 June 2015
Revenue
Other revenue
Interest revenue
Intersegment income*
Total segment income
Depreciation expenses
Finance costs
Exploration expenditure de-recognised
Other expenses
Total segment expenses
-
-
-
20,946
1,264,657
-
(1,264,657)
20,946
63,698
-
5,250,000
1,280,001
6,593,699
-
-
-
-
123,676
123,676
48,354
-
48,354
137,242
2,863,531
-
3,395,199
6,395,972
Segment net loss before tax
(6,347,618)
(6,572,753)
(123,676)
Segment assets and liabilities as at 30 June 2015
Property, plant and equipment
Exploration and evaluation assets
Other segment assets
Total segment assets
297,078
-
3,557,604
3,854,682
1,331,003
59,424,333
296,660
61,051,996
-
-
-
-
Total segment liabilities
14,236,898
447,593
49,575
Capital expenditure for the year ended 30 June 2015
Property, plant and equipment
Exploration and evaluation assets
-
-
935,628
3,154,690
-
-
*Inter segment expense relating to the income is eliminated in Indonesia’s exploration and evaluation assets.
Note 24: Cashflow Information
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,333,957
(1,264,657)
69,300
200,940
2,863,531
5,250,000
4,798,876
13,113,347
(13,044,047)
1,628,081
59,424,333
3,854,264
64,906,678
14,734,066
935,628
3,154,690
(a) Reconciliation of loss after income tax to net cash flow used in operating activities
Loss for the year
Depreciation
Exploration expenditure de-recognised
Share options and shares expensed
Loss on sale of exploration tenement
Accrued Interest and finance costs
Property, plant and equipment write off
Non-cash finance cost
Unrealised exchange loss/(gain)
Change in operating assets and liabilities:
- (Increase)/Decrease in accounts
receivables
- Increase/(Decrease) in accounts
payables
Net cash flow used in operating activities
COKAL LIMITED Annual Report 2016 | Page 58 of 68
2016
US$
2015
US$
(30,329,717)
(13,044,047)
130,923
25,655,222
185,487
1,728,233
-
139
382,116
25,286
200,940
5,250,000
417,579
-
1,048,531
-
-
395,694
72,024
47,938
118,333
142,369
(2,031,954)
(5,540,996)
Notes to the Consolidated Financial Statements
for the year ended 30 June 2016
Note 25: Share-based Payments
The following share-based payment arrangements existed at 30 June 2016.
(a) Share-based payments to directors, executives, employees and suppliers
During the period ended 30 June 2016, no options were issued to directors, executives, employees and suppliers of the
Group:
All options issued by Cokal Limited 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 period
Granted
Forfeited/Cancelled
Exercised
Expired
Outstanding at period-end
Exercisable at period-end
30 June 2016
30 June 2015
No. of options Weighted average
No. of options
exercise price
Weighted average
exercise price *
26,150,000
-
(1,000,000)
-
(5,000,000)
20,150,000
14,650,000
$
0.28
-
0.23
-
1.32
0.13
0.19
20,525,000
10,000,000
(4,375,000)
-
-
26,150,000
7,350,000
$
0.59
0.10
(0.69)
-
-
0.28
0.99
The options outstanding at 30 June 2016 had a weighted average exercise price of US$0.17 (2015: US$0.39) and weighted
average remaining contractual life of 1.23 years (30 June 2015: 2.29 years).
Pursuant to the Group’s Incentive Option Scheme, if an employee ceases to be employed by the Group then options will
expire three months from the date employment ceases.
Options to Suppliers
•
On 27 August 2014, 15,000,000 options were issued to Platinum Partners at US$ 0.186 expiring on 27 August 2018,
under the extension agreement.
On 6 February 2015, 25,000,000 options were issued to Platinum Partners at US$ 0.101 expiring on 6 February 2019,
under the extension agreement.
•
The options will be exercisable at any time before expiry. Payment of the exercise price may be satisfied by the holder
paying the exercise price in cash or causing the provider of the bridge loan or project finance to reduce the principal owing
by the amount of the exercise price. Shares issued on exercise of an option rank equally with all other ordinary shares then
on issue.
On 7 April 2016 Cokal Limited announced that it will grant to a fund managed by Platinum Partners, 50 million options with
an exercise price of A$0.05 and an exercise period of 4 years from the date of grant for its forbearance in not calling a
bridging loan extended on 30 January 2015 which was due for repayment on 6 August 2015. The grant is subject to
shareholder approval on or before the next annual general meeting. These options were not issued as of 30 June 2016.
COKAL LIMITED Annual Report 2016 | Page 59 of 68
Notes to the Consolidated Financial
Statements for the year ended 30 June 2016
Note 26: Related Party Disclosure
Transactions between related parties are on normal commercial terms and conditions no more favourable than those
available to other parties unless otherwise stated.
(a) Parent entity
The parent entity and ultimate controlling entity is Cokal Limited, which is incorporated in Australia.
(b) Subsidiaries
Interests and transactions in subsidiaries are disclosed in Note 10.
(c) Key management personnel (KMP) compensation
The KMP compensation for the year ended are set out below:
Short-term employee benefits*
Post-employment benefits
Share-based payments
2016
US$
1,042,714
13,104
168,406
1,224,224
2015
US$
1,301,254
21,064
309,475
1,631,793
* Directors are not salary paid, but their fees are included in the short-term employee benefits. The terms of directors’ services are
described below.
Options holdings of KMP for the year ended are:
Balance
1 July 2015
Granted as
Remuneration
Exercise of
Options
Net Change
Other
Balance
30 June 2016
Total vested
at 30 June
2016
Directors
Senior
Management
-
23,000,000
Total
23,000,000
-
-
-
-
-
-
-
(4,500,000)
-
18,500,000
-
13,500,000
(4,500,000)
18,500,000
13,500,000
13,500,000
Balance
1 July 2014
Granted as
Remuneration
Exercise of
Options
Net Change
Other
Balance
30 June 2015
Total vested
and
exercisable at
30 June 2016
-
13,500,000
Total vested and
unexercisable at
30 June 2016
-
-
-
Total vested and
unexercisable at
30 June 2015
--
--
--
Total vested
at 30 June
2015
-
-
Total vested
and
exercisable at
30 June 2015
-
23,000,000
23,000,000
2,000,000
2,000,000
7,000,000
7,000,000
Directors
Senior
Management
Total
-
-
14,000,000
14,000,000
9,000,000
9,000,000
-
-
-
-
-
-
Share options held by KMP under the Senior Executive Plan to purchase ordinary shares have the following expiry
dates and exercise prices:
2016
Number of options
outstanding
2015
Number of options
outstanding
Exercise price
US$
Issued date
Vesting date
Expiry date
-
-
2,000,000
2,000,000
5,000,000
4,500,000
5,000,000
18,500,000
3,000,000
2,000,000
2,000,000
2,000,000
5,000,000
4,500,000
4,500,000
23,000,000
1.150
1.570
0.230
0.230
0.230
0.100
0.100
24-Aug-11
24-Aug-11
11-Jul-13
11-Jul-13
11-Jul-13
24-Feb-15
24-Feb-15
5-Sep-13
5-Sep-13
11-Jul-14
11-Jul-15
11-Jul-15
24-Feb-16
24-Feb-17
5-Sep-15
5-Sep-15
11-Jul-17
11-Jul-17
11-Jul-17
24-Feb-19
24-Feb-19
COKAL LIMITED Annual Report 2016 | Page 60 of 68
Notes to the Consolidated Financial Statements
for the year ended 30 June 2016
Note 26: Related Party Disclosure (Cont’d)
Shareholdings of KMP for the year ended are:
Directors
Senior Management
Total
Directors
Senior Management
Total
Balance
1 July 2015
113,372,001
3,108,215
116,480,216
Balance
1 July 2014
113,372,001
3,108,215
116,480,216
Granted as
Remuneration
-
-
-
On Exercise
of Options
-
-
-
Granted as
Remuneration
-
-
-
On Exercise
of Options
-
-
-
Net Change
Other
(30,131,200)
225,00
-
Net Change
Other
-
-
-
Balance
30 June 2016
83,240,801
3,333,215
86,574,016
Balance
30 June 2015
113,372,001
3,108,215
116,480,216
Advances to KMP at 30 June 2015 have been included in other receivables. The details of these advances are:
Peter Lynch
2016
US$
2,844
2,844
2015
US$
2,844
2,844
Advances made relate to travel advances and are made in the ordinary course of business under the Group’s normal travel
policies.
Terms of directors’ services:
During the year ended 30 June 2016, Hanna Consulting Services Pty Ltd (of which Pat Hanna is a director) provided to
the Group geological consulting services for various exploration projects in Indonesia including site management,
geological staff recruitment, preparation of field base camp and geological mapping surveys. Hanna Consulting Services
Pty Ltd received US$84,944 (2015: US$164,146) for these services during the year. The services were based on normal
commercial terms and conditions.
During the year ended 30 June 2016, Petla Trust (of which Peter Lynch is a director) provided to the Group consulting
services. Petla Trust received US$174,136 (2015: US$253,982) for these services during the year. The services were
based on normal commercial terms and conditions.
During the year ended 30 June 2016, the Group paid consulting fees of US$nil (2015: US$44,476) 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. The services were based on normal commercial terms and conditions.
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 periods unless otherwise stated
in this note. The Group’s financial instruments consist mainly of deposits with banks, accounts receivable, security
deposits, interest bearing loans and accounts payable.
The Board has overall responsibility for the determination of the Group’s financial 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 financial 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 policies that seek to reduce financial risk as far as possible without unduly
affecting the Group’s competitiveness and flexibility. Further details regarding these policies are set out below.
COKAL LIMITED Annual Report 2016 | Page 61 of 68
Notes to the Consolidated Financial
Statements for the year ended 30 June 2016
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 period, 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
Total
Note
8
9
14
2016
US$
630,425
129,230
186,150
945,805
2015
US$
3,291,808
138,402
191,312
3,621,522
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 period 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 objective 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
table below summarises the maturity profile of the Group’s financial liabilities based on contractual undiscounted
payments:
Carrying
Amount
US$
Contractual
Cash flows
US$
<6 months
6 – 12 months
1 – 3 years
>3 years
US$
US$
US$
US$
MATURITY ANALYSIS– 30 June 2016
Financial Liabilities
Accounts payable
Interest bearing loans
Total
588,753
13,892,302
14,481,055
588,753
13,892,302
14,481,055
588,753
13,892,302
14,481,055
-
-
-
-
-
-
Carrying Amount
US$
Contractual
Cash flows
US$
<6 months
6 – 12 months
1 – 3 years
>3 years
US$
US$
US$
US$
MATURITY ANALYSIS– 30 June 2015
Financial Liabilities
Accounts payable
Interest bearing loans
Total
923,653
13,721,836
14,645,489
923,653
13,952,384
14,876,037
853,628
10,065,000
10,918,628
70,025
-
70,025
-
3,887,384
3,887,384
Further information regarding commitments is included in Note 21.
-
-
-
-
-
-
-
-
-
-
-
-
COKAL LIMITED Annual Report 2016 | Page 62 of 68
Notes to the Consolidated Financial
Statements for the year ended 30 June 2016
Note 27: Financial Risk Management (cont’d)
(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.
Interest rate risk is managed with fixed rate debt. For further details on interest rate risk refer to the tables below:
2016
Floating interest rate
Fixed interest rate
Non-interest
bearing
Total carrying
amount
Weighted
average
effective
interest rate
US$
US$
US$
US$
%
Financial assets
Cash and bank balances
Receivables
Security deposits
Total financial assets
Financial liabilities
Accounts payable
Interest bearing loans
Total financial liabilities
461,735
-
-
461,735
-
-
-
167,655
-
-
167,655
-
13,892,302
13,892,302
1,035
129,230
186,150
316,415
661,161
-
661,161
630,425
129,230
186,150
945,805
661,161
13,892,302
14,553,463
2015
Floating interest
rate
Fixed interest rate
Non-interest
bearing
Total carrying
amount
Financial assets
Cash and bank balances
Receivables
Security deposits
Total financial assets
Financial liabilities
Accounts payable
Interest bearing loans
Total financial liabilities
US$
US$
US$
US$
1,752,570
-
-
1,752,570
-
-
-
1,538,596
-
-
1,538,596
-
13,721,836
13,721,836
642
180,162
191,312
372,116
1,053,990
-
1,053,990
3,291,808
180,162
191,312
3,663,282
1,053,990
13,721,836
14,775,826
1.17
-
-
-
2.75
-
Weighted
average
effective
interest rate
%
1.02
-
-
-
11.99
The Group has performed a sensitivity analysis relating to its exposure to interest rate risk. This sensitivity demonstrates
the effect on the current period results and equity which could result from a change in these risks.
COKAL LIMITED Annual Report 2016 | Page 63 of 68
Notes to the Consolidated Financial Statements
for the year ended 30 June 2016
Note 27: Financial Risk Management (cont’d)
(i) Interest rate risk (cont’d)
At 30 June 2016 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:
2016
Cash and cash equivalents
Total effect on post tax profit
2015
Cash and cash equivalents
Total effect on post tax profit
Carrying Amount
(interest bearing)
US$
Increase in interest rate
by 0.5%
US$
Decrease in interest
rate by 0.5%
US$
461,733
461,733
1,752,570
1,752,570
2,309
2,309
8,763
8,763
(2,309)
(2,309)
(8,763)
(8,763)
(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 US$ functional currency of the Group.
The Group is exposed to currency risk on its cash and cash equivalents held (in AUD and Indonesian Rupiah) in Indonesia
and Australia as well as on purchases made from suppliers in Indonesia and Australia.
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:
2016
Cash and cash equivalents
Accounts payable
Net exposure
Effect on post profit:
Increase by 10%
Decrease by 10%
2015
Cash and cash equivalents
Accounts payable
Net exposure
Effect on post tax profit:
Increase by 10%
Decrease by 10%
AU$
US$
212,787
103,061
315,848
31,585
(31,585)
1,641,265
(341,433)
1,299,832
129,983
(129,983)
Indonesian
Rupiah
US$
54,126
30,161
84,287
8,429
(8,429)
108,450
(154,308)
(45,858)
(4,586)
4,586
Total
US$
266,913
133,222
400,135
40,014
(40,014)
1,749,715
(495,741)
1,253,974
125,397
(125,397)
COKAL LIMITED Annual Report 2016 | Page 64 of 68
Notes to the Consolidated Financial
Statements for the year ended 30 June 2016
Note 28: Significant Events after the Reporting Date
a) On 22 July it was announced, Cokal has reached agreement with Platinum Partners Value Arbitrage Fund, LP (Platinum)
to convert approximately USD15 million of loans owing by Cokal to various funds managed by Platinum or its affiliates
(the Platinum Group). Those loans include the Blumont loan, which was acquired by the Platinum Group.
The agreed conversion terms and conditions are as follows.
In consideration for the restructuring of the debt, Platinum will be entitled to a royalty on coal sold from Cokal’s
share of production from the Bumi Barito Mineral Project (BBM) and PT Tambang Benua Alam Raya (TBAR)
projects.
The royalty will be 1% of the realized selling price (FOB) (i.e. selling price per tonne x tonnes sold x 1%) up to a
maximum royalty amount of USD40 million.
Cokal or its related parties will have the right to buy out the royalty at any time for the amount of USD40 million
less amounts paid on the royalty at that time.
Cokal will do what is legally possible to attach the royalty directly to the tenement asset (IUP not the IUP holding
company) or other legal instrument, so that Platinum is protected against any forced sale.
The existing security will remain in place to secure the royalty until replaced by a specific royalty security. Platinum
and Cokal will work together to replace the existin` security with a direct royalty security over the IUP licenses to
specifically secure the royalty subject to appropriate legal advice.
All Shares controlled by Platinum will be escrowed for 24 months from the date of conversion unless Cokal finds an
alternative buyer or Platinum finds a buyer acceptable to Cokal.
All Platinum’s existing Cokal options will not be exercised or otherwise will be cancelled.
Cokal will issue 75 million new options to Platinum with a 5 year term and strike price of AU$ 1.6 cents (A$0.016)
The transaction is subject to any necessary regulatory approvals or shareholder approvals required under the
Listing Rules.
Formal agreements and documents are being prepared to give effect to the above.
b) On 22 July it was announced:
- Cokal has made a private placement to Ramornie Capital Ltd and its associates. The funds raised will provide working
capital for the Company which will enable it to continue to develop funding opportunities for its Indonesian projects.
The Company will issue 75 million fully paid ordinary shares in Cokal Ltd at a price of AU$ 0.016 (USD0.012) per
share, raising AU$ 1.2 million (USD0.9 million). There were no fees payable by Cokal in relation to the placement.
c) On 8 August 2016 it was announced that Cokal Limited (ASX:CKA, “Cokal” or “the Company”) is pleased to announce
that due to the interest in the AU$1.2 million (USD0.9 million) private placement previously announced on 22 July 2016
it has been decided to increase the private placement by AUD0.3 million (USD0.22 million) to AU$1.5 million (USD1.12
million). The placement will provide working capital for the Company which will enable it to continue to develop
funding opportunities for its Indonesian metallurgical coal projects. The Company will issue 18.75 million fully paid
ordinary shares in Cokal Ltd at a price of AU$0.016 (USD0.012) per share, raising AU$0.3 million (USD0.22 million).
There were no fees payable by Cokal in relation to the placement. On issue, the placement shares will rank equally with
all other ordinary shares then on issue.
COKAL LIMITED Annual Report 2016 | Page 65 of 68
Declaration by Directors
The directors of the Group declare that:
1.
The financial statements, comprising the statement of comprehensive income, statement of financial position,
statement of cash flows, statement 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 2016 and of its performance for the year
ended on that date.
2.
3.
4.
5.
The Group has included in the note 1 to the financial statements and explicit and unreserved statement of compliance
with International Financial Reporting Standards.
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.
The remuneration disclosures included in pages 16 to 21 of the directors’ report (as part of audited Remuneration
Report) for the year ended 30 June 2016, comply with section 300A of the Corporations Act 2001.
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
27 September 2016
COKAL LIMITED Annual Report 2016 | Page 66 of 68
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 2016, 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
2016 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).
Emphasis of Matter - Going Concern
Without qualifying our opinion, we draw attention to Note 1 (c) in the financial report which describes
the principal conditions that raise doubt about the consolidated entity’s ability to continue as a going
concern. As a result of these matters, there is material uncertainty whether the entity will continue as
a going concern, and therefore whether it will realise its assets and extinguish its liabilities in the
normal course of business and at the amounts stated in the financial report. 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 that might be necessary should the entity not
continue as a going concern.
Report on the remuneration report
We have audited the Remuneration Report included in pages 16 to 21 of the directors' report for the
year ended 30 June 2016. The directors of the company are responsible for the preparation and
presentation of the Remuneration Report in accordance with section 300A of the Corporations Act
2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of Cokal Limited for the year ended 30 June 2016, complies
with section 300A of the Corporations Act 2001.
Ernst & Young
Andrew Carrick
Partner
Brisbane
27 September 2016
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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