30 JUNE 2018
ANNUAL
FINANCIAL
REPORT
Cokal Limited ACN 082 254 1437
Annual Financial Report for the year ended 30 June 2018
For personal use only
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 2018
Consolidated Statement of Financial Position as at 30 June 2018
Consolidated Statement of Changes in Equity for the year ended 30 June 2018
Consolidated Statement of Cash Flows for the year ended 30 June 2018
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Declaration by Directors
Independent Auditor’s Report
Competent Person Statement
1
2
3
12
23
24
27
28
29
30
31
32
65
66
The Total Coal Reserve estimate announced on 1st August 2017 is based on information compiled by Robert de Jongh who is
a Member of the Australasian Institute of Mining and Metallurgy and an employee of ASEAMCO Pty Ltd. Mr de Jongh is a
qualified mining engineer and has sufficient experience which is relevant to the style of mineralization 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 Explorations Results, Mineral Resources and Ore Reserves.
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.
Corporate Information
DIRECTORS
Domenic Martino
Patrick Hanna
Garry Kielenstyn
COMPANY SECRETARIES
Louisa Martino
Teuku Juliansyah
REGISTERED OFFICE AND PRINCIPAL
BUSINESS OFFICE
Level 5
56 Pitt street
Sydney NSW 2000
Phone: + 61 2 8823 3179
Fax: +61 2 8823 3188
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 2018 | Page 1
For personal use only
Chairman’s Letter to Shareholders
Dear Shareholders,
Coming out of one of the longest and toughest downturns of the global coal industry, Cokal has been in
negotiations with a number of potential investors for project funding as interest and demand for
metallurgical coal grows worldwide. With the welfare of shareholders in mind, the Board has made difficult
decisions in most cases and rejected many of these offers.
At this point in time, Cokal continues to negotiate with a number of potential joint venture partners in
developing the BBM Project.
During the financial year the Company announced its maiden JORC Reserve Statement for the Eastern
portion of the BBM Project, estimating 20.2MT of open-pit Run-of-Mine, producing 16.9MT of Marketable
Reserves1. The results of the Valmin Report announced in August 2017 confirmed viability of the BBM
Project with the study estimating the Net Present Value of the BBM Project ranges from US$172m to
US$202m with a likely value of US$186m. The total valuation of BBM, TBAR, BBP and AAK is estimated at
US$209m2.
Whilst waiting for a recovery in the coal industry, Cokal challenged itself to small scale production at the
BBM Anak site. The operations provided an excellent opportunity for Cokal to test the mining conditions
and the accessibility of the upper part of the Barito River. The Company has ceased operating BBM Anak,
amalgamating it with BBM PCI, with the introduction of new funding.
During the financial year, Cokal conducted a search for candidates to fill the position of CEO left vacant
since January 2017 with the death of our friend and colleague, Mr Peter Lynch. Mr Jim Coleman, an
experienced mining engineer with a high awareness of the application of shallow river barging systems
from his experience in Mozambique, was appointed in July 2017. Mr Coleman has been incentivised with
the issue of options that vest on production targets, barging and shipping of coal milestones. The Board
looks forward to working closely with Jim to develop the Company’s projects in what will be an exciting
year to come.
During the audit process, the Board was made aware of possible financial irregularities and fraudulent
activity which has impacted the Company’s financial statements for the year ended 30 June 2018. The
Board is currently investigating the irregularities and activities which concern the Company’s Chief Financial
Officer and seven employees and a supplier of barging services to the Company in Indonesia. The Company
notes that amounts are currently still outstanding and payable to this supplier, which will not be paid until
the investigation is complete. Some of the money received by the employees has been repaid and the
Board is confident that with the repayment by employees, and the outstanding amounts owing being
reduced by agreement with the supplier, there will be no financial loss to the Company.
We thank you for your on going support.
Domenic Martino
Chairman
1 Refer ASX Announcement 1st August 2017 – the Company is not aware of any new information or data that materially affects the information
contained in this announcement
2 Refer ASX Announcement 23rd August 2017 – the Company is not aware of any new information or data that materially affects the information
contained in this announcement
COKAL LIMITED Annual Report 2018 | Page 2
For personal use only
Review of Operations
Cokal Limited (ASX: CKA) is an Australian listed company with the objective of becoming a metallurgical coal producer
with a global presence. Cokal has interests in four projects in Central Kalimantan, Indonesia considered prospective for
metallurgical coal.
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. During the year the Company has focussed on the BBM
Project, as discussed further below.
Figure 1: Location of Indonesian Coal Assets
Indonesian Coal Assets
Highlights
Whilst waiting for the recovery of the coal industry, Cokal has been proactive in improving value, and preparing future
developments of, its metallurgical coal assets in Indonesia. These activities include:
• BBM Reserves Statement – an estimation of open cut Coal Reserves in accordance with the JORC Code has
been completed for the BBM Coal project.
• Valmin Study – an independent study of all of Cokal’s assets in accordance with the Valmin Code, indicating,
due to Cokal’s exploration and mining studies, an up-lift in current value to approximately US$209 million3.
• BBM ANAK Project – this small-scale mining operation of PCI coal beside the Barito River continued
throughout the financial year, until in June 2018, when it was amalgamated with BBM PCI, pending funding.
These activities are detailed in the following sections.
3 Refer ASX Announcement 23rd August 2017– the Company is not aware of any new information or data that materially affects the information
contained in this announcement
COKAL LIMITED Annual Report 2018 | Page 3
For personal use only
Review of Operations
Ownership of Indonesian Coal Assets
The status of the Company’s ownership in its Indonesian coal assets is summarised as follows:
•
60% of the shares in companies which own the Bumi Barito Mineral (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 has completed the agreement to acquire 75% of the shares in the company PT Tambang Benua Alam
Raya (TBAR), which owns an exploration tenement covering an area of approximately 18,850ha. This
tenement is located adjacent southeast to the Company’s BBM project.
•
75% of the shares in companies that own the Anugerah Alam Katingan (AAK) project. This project is also
located in Central Province, Kalimantan, Indonesia and comprises 5,000ha. Applications for the Exploration
Forestry Permit (IPPKH) and Clean and Clear Certificates continue to be processed. Following receipt of the
official handover letter (dated 12 January 2016), AAK is currently on ‘on-hold’ status by Provincial Police
Department (Polda Kalteng). The Police have investigated a dispute over the ownership of AAK (pre-dating
Cokal’s interest in the Project). Cokal is an aggrieved party and will await the outcome of the Police
investigation.
Bumi Barito Mineral (BBM) Project
The Bumi Barito Mineral Project (BBM) is located in the Central Province, Kalimantan, Indonesia and comprises
approximately 15,000ha.
During the year the Company has focussed on financing the BBM Project (comprising BBM Anak; small production of
premium low volatile PCI coal, BBM PCI; a small scale initial mine of PCI coal, and BBM Coking Coal; the largest of the
three projects focussing on hard coking coal).
Renjian Offtake Financing
In September 2017 Cokal received a Letter of Intent (LOI) for a Coal Offtake Financing transaction from Renjian
International Trading (Shanghai) Co. Ltd (“Renjian”). As a result of this LOI, Cokal and Renjian undertook detailed
negotiations, with commercial terms substantially agreed and both parties proceeding with binding documentation.
However, on the 16th January 2018, as a consequence of intensive negotiations with Renjian, the outcome from
extensive financial modeling demonstrated the proposed discounts requested by Renjian to secure pre-funding
proved to be unacceptable to Cokal. The Board is of the view that it was in the Company’s and shareholders best
interests not to proceed with the terms as discussed with Renjian.
Domain Term Sheet Signed
On 11th May 2018, Cokal announced that it had signed a Term Sheet for a financing package for the development of its
BBM Coking Coal Project with Domain International Holdings Limited (“Domain”).
Under the Agreement, Domain is to provide Cokal with a debt and equity financing package sufficient to fully fund
development of the BBM Coking Coal Project to a capacity of 2 Mtpa production of coking coal. 4 The Agreement is
not binding until an initial payment of A$1 million is received.
Other Funding Transactions
Subsequent to year end the Company has announced negotiation of two further potential transactions (Aahana and
BMA) for the funding of the BBM Project. Cokal continues to negotiate with potential investors.
4 Refer ASX Announcements 2nd November 2016 and 1st August 2017– the Company is not aware of any new information or data that materially
affects the information contained in this announcement
COKAL LIMITED Annual Report 2018 | Page 4
For personal use only
Review of Operations
BBM ANAK Project
In June 2017, work commenced on the construction of BBM Anak. By July 2017, construction had been completed.
Mining commenced in July 2017, and the first barge of BBM coal was launched on 1st August 2017.
The operation provided an excellent opportunity for Cokal to test the mining conditions and the accessibility of the
upper part of the Barito River. Cokal was the first company to successfully barge coal down the Barito River in that
region and was able to learn a lot about the condition of the river flow and the river channel.
The mining operation also demonstrated that Cokal can produce and deliver a very low ash coal product without the
necessity for a coal beneficiation plant.
Cokal has ceased operating the BBM Anak mine so as to amalgamate this project and the BBM PCI Project with the
new funders.
Tambang Benua Alam Raya (TBAR) Project
On 31st October 2017, Cokal announced that it had reached a commercial settlement with the vendors of PT Tambung
Benua Alam Raya (TBAR) in respect of the Company’s 75% ownership in TBAR. TBAR is the owner of Exploration
License IUP 188.45/204/2012, which covers an area of approximately 18,850ha and is located adjacent to the
southeast of Cokal’s BBM Project. Cokal has now cleared all outstanding vendor matters pertaining to its 75% interest
in TBAR. Cokal owed US$$2,750,000 (approximately AUD$3,500,000) in vendor payments. These amounts were
shown as Contingent Liabilities in the Company’s 2017 annual report. Cokal and the vendors could not agree on the
execution of the respective post completion requirements and have therefore agreed on a substantially discounted
settlement to remove all of these vendor liabilities from Cokal’s 75% interest in TBAR. The settlement provides the
vendors with the ability to participate in the successful development of the TBAR Project through their shareholding in
Cokal. Cokal is now in a position to take control of these requirements and progress the administrative approvals in a
more timely manner.
TBAR, which is on the Clean and Clear (CNC) List, has over 80% of the lease covered by either production or limited
production forestry lease, that is, it is available for exploration subject to the issuance of an exploration forestry
permit.
The application for exploration forestry permit was submited in 2014 and continues to be processed by the
Environment and Forestry Ministry of Indonesia. Following its transfer process from Murung Raya to Provincial
Government, Cokal continues its efforts to acquire regulatory approval for the IUP (exploration license) upgrade
process application to a Production and Operation IUP (equivalent to a mining license).
Cokal’s exploration mapping program to date has defined significant coal potential across the Central, Northern,
Western and Southern Blocks of the TBAR Coal Project. Mapping is yet to be completed in the eastern portion of the
lease. Based on this data 69 coal outcrops ranging from 0.15m to 1.90m have been identified. Interpretation of B, C, D
and J seams have been interpreted to outcrop along 13km of strike, J seam, and 16km of strike B, C and D seams. The
outcrop strike lengths are interpreted to be more extensive than at BBM and indicate potential for a much greater
resource of shallow open cut coal tonnages than delineated at BBM to date.
The Company has been keen to acquire the approvals for the Forestry Permit for Exploration with TBAR, as it intends
to pursue an aggressive exploration and development plan for TBAR in the New Year. The Cokal team has the track
record and experience to complete all administrative approvals and is confident that the exploration and development
plan can commence in the New Year.
COKAL LIMITED Annual Report 2018 | Page 5
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Review of Operations
Figure 4: Geology interpretation of BBM East and TBAR
Borneo Bara Prima (BBP) Project
Cokal owns 60% share in Borneo Bara Prima (BBP) project which covers 13,050Ha in Murung Raya Regency, Central
Kalimantan.
BBP has been granted an Exploration Forestry Permit (IPPKH), and has been confirmed on the Central Government’s
Clean and Clear list. The IUP was transferred to the Central Government where it now awaits approval to be upgraded
to a mining license (Production and Operation IUP).
No exploration activity was conducted on BBP during the period.
Anugerah Alam Katingan (AAK) Project
Cokal has a 75% share of Anugerah Alam Katingan (AAK) projects also located in Central, Kalimantan, Indonesia. The
AAK project area comprises of 5,000ha.
Applications for the Exploration Forestry Permit (IPPKH) and Clean and Clear Certificates continue to be processed.
Cokal continues to monitor the progress of the regulatory upgrade approvals for AAK. No exploration activity was
conducted on AAK during the period.
COKAL LIMITED Annual Report 2018 | Page 6
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Review of Operations
JORC Code Statements
Since June 2016, no further exploration activity was conducted in the field on any of Cokal’s assets. Consequently, the
updated JORC Resources Statement for the BBM Project announced on 29th April 2016, remains current. The total
Resource estimate remains at 266.6Mt for BBM, with the coal resource categories of Measured and Indicated at
19.5Mt Measured and 23.1Mt Indicated respectively, and the balance at Inferred status. 5
On 1st August 2017, Cokal announced its maiden JORC Reserves Statement. The Coal Reserve statement is only for the
Eastern portion of the Bumi Barito Mineral (BBM) coal project.
The highlights of this Reserve statement report included: 6
• Coal Reserve estimate of 20.2Mt of openpit Run-of-Mine (ROM) for BBM, producing 16.9Mt of Marketable
Reserves in accordance with the 2012 JORC Code.
• Reserve estimate comprised of 13.0Mt Proved and 7.2Mt Probable ROM Reserves, (totalling 20.2Mt ROM
coal) for B, C, D and J Seams at US$150/tonne.
• Marketable Coal Reserves comprise 12.8Mt Coking Coal Product at US$150/tonne and 4.1Mt PCI Product at
US$112.50/tonne (totalling 16.9Mt Marketable Coal Reserves).
• B, C and D coking and Premium PCI (low Vol) products have premium qualities consisting low ash, low
sulphur, low moisture and ultra-low phosphorus.
•
Low Volatile PCI and medium to low Volatile Coking Coal suited to nearby Asian markets.
Figure 2: Economic Openpits in Eastern Portion of BBM Tenement
5 Refer ASX Announcements 29th April 2016 – the Company is not aware of any new information or data that materially affects the information
contained in this announcement
6 Refer ASX Announcements 1st August 2017 – the Company is not aware of any new information or data that materially affects the information
contained in this announcement
COKAL LIMITED Annual Report 2018 | Page 7
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Review of Operations
Figure 3: Cross Section through Openpits
The J Seam Reserves (5.5Mt Proved and 3.2Mt Probable Marketable Coal Reserves) is 100% coking coal. In the case of
Seams B, C and D, 3.0Mt Proved and 1.1Mt Probable is Coking Coal Marketable Reserves, while 2.4Mt Proved and
1.7Mt Probable is PCI Marketable Coal Reserves. 7
Economic Reserves were determined by using the Definitive Feasibility Study, that was prepared in 2014 by Resindo,
and recently updated to reflect reduced fuel costs and depreciation of the Rupiah in November 2016. 8
Valmin Report
On 23rd August 2017, Cokal announced the results from an independent study of all of Cokal’s assets in accordance
with the Valmin Code, indicating, due to Cokal’s exploration and mining studies, a significant uplift in the current value
of these assets.
The Valmin Report has confirmed the viability of the BBM mine and associated transport system. 9
•
•
•
The Study estimates the NPV for BBM ranges from US$172million to US$202million with a likely value of
US$186million.
The total valuation for BBM, TBAR, BBP and AAK is estimated at US$209million.
The value of Cokal’s equity interest in the Coal Assets is considered to lie in a range of US$116million to
US$138million, with a likely value of US$127million.
External Relations
Permits
As previously mentioned, Cokal has acquired all regulatory permits to allow for the commencement of coal mining up
to 6mtpa in the BBM coal project. These permits include:
•
IUP Produksi – Mining License
• AMDAL – Environment Permit
•
•
IPPKH – Forestry Permit for Coal Production
Port Construction and Operation Approval
As mentioned above, the application of exploration forestry permit for TBAR continues to be processed by the
Environment and Forestry Ministry.
7 Refer ASX Announcements 1st August 2017 – the Company is not aware of any new information or data that materially affects the information
contained in this announcement
8 Refer ASX Announcements 2nd November 2016 – the Company is not aware of any new information or data that materially affects the information
contained in this announcement
9 Refer ASX Announcements 23rd August 2017 – the Company is not aware of any new information or data that materially affects the information
contained in this announcement
COKAL LIMITED Annual Report 2018 | Page 8
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Review of Operations
Safety and Health
As Safety and Health are both a key and integral part of our strategy to become a significant participator in the
metallurgical coal sector, Cokal continues to implement OH&S procedures to international levels during the year
which resulted in the following outcomes:
•
Zero Lost Time Index (LTI) and Zero Fatality performances for 2013 – 2018 period.
• A repeat of 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 – 2018 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, Puruk Cahu, 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 2018 | Page 9
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Review of Operations
Community Development
Cokal continues to implement its Corporate Social Responsibility (CSR) program. In November 2016, Cokal provided an
intense First Aid Training and Basic Safety Awareness course for over 80 BOSF (Borneo Orangutan Survival Foundation)
personnel. The program was conducted over 3 days and was carried out at international standards. The CEO of BOSF,
Dr Jamartin Sihite, presented a Certificate of Appreciation, noting it was the first time ever that BOSF had presented
such a certificate to a mining company.
Corporate
Magna Convertible Note
On 11th October, 2017, Cokal announced that it had entered into an agreement to raise up to AU$4,000,000 in
funding. The funds were raised for development of BBM PCI, general working capital and corporate purposes.
Subsequently, after receiving Tranche A of AU$2,000,000, on 11th December 2017, Cokal announced that it had
decided not to draw down the second and third tranches of the Magna Convertible Note, totalling A$2,000,000.
Private Capital Raisings
During the financial year, the Company executed two private share placements to assist with working capital for
Cokal.
On 17th July 2017, Cokal announced the placement of 19,444,445 fully paid new ordinary shares to be issued at
AU$0.036 per share to raise AU$700,000. The Placement price of AU$0.036 per share represented a 10% discount to
Cokal’s closing price on 12 July 2017, the last day Cokal shares traded on the ASX prior to announcement of the capital
raising.
On 2nd February 2018, Cokal announced completion of a AU$1,507,300 capital raising by way of placement to
sophisticated and professional investors. The placement was at AU$0.045 per share, representing a 10% discount to
the last traded price of AU$0.05 per share.
Appointment of CEO
During the period from May to June 2018, Cokal conducted a search of candidates to fill the position of CEO left
vacant since January 2017 with the death of our friend and colleague, Mr Peter Lynch. A number of highly worthy
candidates were interviewed and assessed, and the Board finally decided on the appointment of Mr. James Coleman.
Mr Coleman has 50 years of experience in open cut and underground mining including mine management, project
development and operations. He has lead integrated project development in Australia, Mozambique, Thailand, the
Philippines, India and throughout South East Asia.
He has led multi-faceted teams and consortia for large coal projects in developing countries and also specialised in
deep mines in soft saturated strata. Mr Coleman was responsible for the development of Thailand’s 11 million tonnes
per annum coal mine which feeds directly into EGAT’s on-site power station in northern Thailand.
COKAL LIMITED Annual Report 2018 | Page 10
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Review of Operations
As a mining engineer, he has over 50 years’ experience in open cut and underground mining specialising in mine
management, project development and operation using a variety of equipment including extensive application of in-
pit crushing and conveying systems. He designed strategic mine planning to optimise economic returns for various
coal operations. He was also responsible for the development of integrated projects in Australia, Mozambique,
Thailand, The Philippines, India and throughout SE Asia. Mr. Coleman has specific expertise in application of selective
mining systems of low ash high quality coals to minimise dilution.
Mr. Coleman possesses a high awareness in the application of shallow river barging systems to transport coal from
inland projects over long distances. He participated in the successful evaluation of 500 km shallow water barging on
the Zambezi River in Mozambique for the transportation of coking coal from Riversdale’s Benga project to off-shore
mother vessels. This experience is in line with Cokal’s plans to use shallow-river barging on the Barito River for
delivering the coking coal in good condition to the nearby Asian market place.
Through the 1980s and 1990s, he owned and managed a highly successful mining consulting business (Coleman and
Associates) employing some 40 mining professionals and managing operations concurrently throughout Australia and
in five countries including Australian Government aid funded projects in SE Asia.
Mr Coleman is incentivised to grow the Company through the issue of options which vest as follows:
• production of 20,000 tonnes per month of coal (including PCI) for three consecutive months;
• production of 40,000 tonnes per month of coal (including PCI) for three consecutive months;
•
•
commencement of shallow river barging and
first shipment of coking coal from BBM.
Conversion of loans from Northrock and Wintercrest to royalties.
The Group has agreed in principal to the conversion of the Wintercrest and Northrock debt to royalty. Discussions
continue between parties to complete the conditions precedent to the conversion. Documentation is almost finalised
to formalise an extension of 18 months for satisfaction of conditions precedent (refer Note 16).
COKAL LIMITED Annual Report 2018 | Page 11
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Directors' Report
Your Directors present their report for the year ended 30
June 2018.
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:
Domenic Martino, Non-Executive Chairman
(Appointed Director on 24 December 2010 and
Chairman on 27 January 2017)
B. Bus, FCPA
Mr. Martino, 62 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, resigned 4 July 2018)
• Australasian Resources Limited* (since 27 November
2003)
• ORH Limited* (since 6 May 2009)
• South Pacific Resources Limited* (appointed 3 August
2012)
• Skyland Petroleum Group Limited (appointed 19
December 2013)*
* denotes current directorship
Mr. Martino is the Chairman of the Audit Committee.
Patrick Hanna, Non-Executive Director
(Appointed on 24 December 2010)
B. Applied Science (Geology), CPI, FAusIMM
Mr Hanna has over 40 years’ experience as a coal
geologist in the areas of exploration and evaluation
including planning, budgeting and managing drilling
Indonesia, gained since
programs
in Australia and
graduating from the University of New South Wales in
1976. Mr Hanna has authored and co-authored
numerous coal industry publications.
• Geologist, 65, over 40 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.
Mr. Hanna is a member of the Audit Committee.
During the past three years Patrick has not served as a
director of another listed company.
Gerhardus (Garry) Kielenstyn, Executive Director
(Appointed 27 January 2017)
Mr. Kielenstyn, 63 has been a member of the senior
management team in the capacity of Chief Operating
Officer since June 2016 and prior to that was Cokal’s
Indonesian Country Manager / President Director PT
Cokal (PT Cokal is a 100% owned subsidiary of Cokal)
since May 2013.
Mr. Kielenstyn is an expatriate based in Kalimantan, he is
a veteran of the Indonesian mining and civil contracting
industries. His first Indonesian based role was in the 1974
and has been living and working in country since 1990.
His previous roles include:
• Project Manager and Area Manager with Petrosea
Indonesia’s biggest mining and civil
one of
contractors
• Construction Manager, Mining Manager, Operations
Manager, General Manager and Resident Manager
for well recognized Indonesian Mining Companies
such as PT PT Indo Muro Kencana / Straits Resources,
PT Yuga Eka Surya, PT Ganda Multi Energi and PT
Baramulti Sugih Sentosa.
Garry has a strong track record for bringing projects
through construction to production in remote parts of
Indonesia. Importantly he has a long and successful track
record in the Murung Raya regency where Cokal’s
premier Bumi Barito Mineral (BBM) project is located.
COKAL LIMITED Annual Report 2018 | Page 12
For personal use only
Directors' Report
The following person was Chief Executive Officer of Cokal
Limited (“Group”, “consolidated entity” or “Cokal”)
during the financial year and up to the date of this report,
unless otherwise stated:
James (Jim) Coleman, Chief Executive Officer
(Appointed on 27 July 2018)
B. Eng (Hons, Mining), FAusIMM
Mr Coleman, 73 has a proven 45-year track record in
corporate management of operations for large successful
companies
including Riversdale Mining, The Griffin
Group, The Electricity Trust of South Australia, Utah
Development Company, Rio Tinto and BHP.
He has led multi-faceted teams and consortia for large
coal projects in developing countries and also specialised
in deep mines in soft saturated strata. Mr Coleman was
responsible for the development of Thailand’s 14 million
tonnes per annum coal mine which feeds directly into
EGAT’s on-site power station in northern Thailand.
As a mining engineer, he has over 50 years’ experience in
open cut and underground mining specialising in mine
management, project development and operation using a
variety of equipment including extensive application of
in-pit crushing and conveying systems. He designed
strategic mine planning to optimise economic returns for
various coal operations. He was also responsible for the
development of
in Australia,
India and
Mozambique, Thailand, The Philippines,
throughout SE Asia. Mr Coleman has specific expertise in
application of selective mining systems of low ash high
quality coals to minimise dilution.
integrated projects
inland projects over
Mr Coleman possesses a high awareness
in the
application of shallow river barging systems to transport
coal from
long distances. He
participated in the successful evaluation of 500 km
shallow water barging on
in
Mozambique for the transportation of coking coal from
Riversdale’s Benga project to off-shore mother vessels.
This experience is in line with Cokal’s plans to use
shallow-river barging on the Barito River for delivering
the coking coal in good condition to the nearby Asian
market place.
the Zambezi River
Through the 1980s and 1990s, he owned and managed a
highly successful mining consulting business (Coleman
and Associates) employing some 40 mining professionals
and managing operations concurrently
throughout
including Australian
Australia and
Government aid funded projects in SE Asia.
in five countries
The following persons were Chief Financial Officer and
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:
Teuku Juliansyah, Chief Financial Officer (CFO) and
Joint Company Secretary (Appointed on 24 June
2016)
Over 9 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, Resigned 9 August
2017)
B.Bus (Accounting), CA
Mr. Cornish is an accomplished and highly regarded
corporate administrator and manager. He has many
years’ experience in pivotal management roles in capital
raisings and stock exchange
listings for numerous
companies on the ASX, AIM Market of the London Stock
Exchange and the Toronto Stock Exchange.
Highly skilled in the areas of Group financial reporting,
Group regulatory, secretarial and governance areas,
business acquisition and disposal due diligence, he has
worked with Ernst & Young and PricewaterhouseCoopers
both in Australia and the UK.
Mr. Cornish is currently Company Secretary and CFO of
other listed companies on the ASX and TSX-V where he
has assisted in their listing and capital raising. He is
supported by a small experienced team of accountants
and administrators.
Louisa Martino (Youens), Joint Company Secretary
(Appointed on 9 August 2017)
BCom, CA
Ms Martino provides company secretarial and accounting
services to a number of listed entities through Indian
Ocean Capital.
Previously Ms Martino worked for a corporate finance
company, assisting with company compliance (ASIC and
ASX) and capital raisings. She also has experience working
for a government organisation
its Business
Development division where she performed reviews of
business opportunities and prepared business case
analysis for those seeking Government funding.
in
Prior to that, Ms Martino worked for a major accounting
firm in Perth, London and Sydney where she provided
corporate advisory services, predominantly on IPOs and
also performed due diligence reviews.
She has a Bachelor of Commerce from the University of
Western Australia,
is a member of Chartered
Accountants Australia and New Zealand and a member of
the Financial Services Institute of Australasia (FINSIA).
COKAL LIMITED Annual Report 2018 | Page 13
For personal use only
Directors' Report
Interests in Shares and Options
At the date of this report, the interests of the Directors in
the shares of Cokal Limited are shown in the table below.
Ordinary Shares
Options
Domenic Martino
Patrick Hanna
Garry Kielenstyn
31,920,001
25,800,000
-
-
-
9,000,000*
* Options are unlisted:
- 4,000,000 options exercisable at US$0.10 with an expiry date of 24
February 2019;
- 1,000,000 options exercisable at US$0.09 with an expiry date of 22
December 2020 (subject to vesting conditions); and
- 4,000,000 options exercisable at US$0.12 with an expiry date of 22
December 2020 (subject to vesting conditions).
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 2018, the loss for the
consolidated entity after providing for income tax was
US$7,796,143 (2017: US$11,853,745).
The operating results have been heavily driven by
production costs at BBN Anak (2017: de-recognition of
pre-tenure exploration expenditures).
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
in the Annual Report under Review of
separately
Operations.
Review of Financial Condition
Capital Structure
During the year, Cokal issued 52,940,002 shares to raise
US$1.7 million in cash.
At 30 June 2018, the consolidated entity had 713,699,792
ordinary shares and 140,800,000 unlisted options on
issue.
Financial Position
The net assets of the consolidated entity have decreased
by US$2,728,514 from US$9,455,400 at 30 June 2017 to
US$6,726,886 at 30 June 2018. This decrease has largely
resulted from an increase in accounts payable as the
Company is in the process of finalising funding.
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
funds
its operations and
exploration/development activities, and to allow the
consolidated entity to take advantage of favourable
business opportunities, not specifically budgeted for, or
to fund unforeseen expenditure.
finance
Significant Changes in the State
of Affairs
There have been no significant changes in the Group’s
state of affairs during the year ended 30 June 2018.
Significant Events after
Reporting Date
(a) On 27 July 2018 Cokal appointed Mr. James Coleman
the
as Chief Executive Officer.
(b) On 1 August 2018 Cokal announced that it had
signed a term sheet for the development of BBM PCI
from Aahana Global Resources and Investment Pte
Limited (Aahana). Under the agreement, Aahana will
fund capital expenditure at BBM PCI in return for a
40% interest in the joint venture and equivalent
share of profits from the BBM PCI operations.
(c) On 22 August 2018 Krakatau National Resources
(KNR) signed a Memorandum of Understanding
(MOU) with PT Bumi Barito Minerals (PT BBM) for
the supply of coal. This MOU pre-empts a Domestic
Market Obligation (DMO) that will be placed upon
the Company, requiring coal and mineral producing
companies
certain minimum
percentage of its production to the domestic market.
allocate
to
a
(d) On 21 September 2018 Cokal signed a Key Principles
of Agreement with PT Bara Mineral Asri (BMA
Group) to develop and operate PCI and Coking Coal
received
production.
US$1.5 million of US$2.0 million from BMA Group to
secure the transaction.
To date, Cokal has
(e) On 3 August 2018 and 25 September 2018, 150,000
Convertible Notes were converted to 7,591,796
shares.
(f) Subsequent to year end the convertible noteholder
has advised the Company of the requirement to
repay the remainder of the notes outstanding. This
amount totals US$186,251, which has been paid by
the Company.
COKAL LIMITED Annual Report 2018 | Page 14
For personal use only
Directors' Report
(g) The Company is in discussion with Platinum in
respect of an extension to 31 July 2020 for the
completion of the conditions under the Debt
Restructure Transaction (refer Note 16) on the basis
of an issue of 37.5 million new options (4 year term
and exercise price of 1.6 cents), subject to
shareholder approval, and Platinum agreeing not to
exercise 37.5 million of existing options (with an
expiry date of 20 February 2023 and an exercise
price of 1.6 cents, vesting once all Platinum loans
have been released and discharged).
(h) During the audit process, the Board was made aware
of possible financial irregularities and fraudulent
activity which has impacted the Company’s financial
statements for the year ended 30 June 2018.
The Board is currently investigating the irregularities
and activities which concern the Company’s Chief
Financial Officer and seven employees having
received monies from a supplier of barging services
to the Company in Indonesia. The employees have
notified the Board that they have received money
from
approximately
US$150,000.
totalling
supplier
the
In addition, the Company has allegedly been charged
for services not incurred and/or charged non-arm’s
length amounts for services provided by that
supplier. Further investigation is taking place to
confirm whether the Group’s barging expenses have
been validly incurred by the Group, whether the cost
of barging services received represented an arm’s
length price for those services, and the amount of
the payments made and expenses accrued for the
barging services that should be accounted for as
other expenses on the basis they had been
misappropriated.
The Company notes that amounts are currently still
outstanding and payable to this supplier, which will
not be paid until the investigation is complete. Some
of the money received by the employees has been
refunded and the Board is confident that with this,
and the outstanding amounts owing being reduced
by agreement with the supplier, there will be no
financial loss to the Company.
Future Developments, Prospects
and Business Strategies
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.
the operations of
in
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 the 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.
(the
and Management
Environmental Issues
The consolidated entity is subject to environmental
regulation in relation to its exploration activities in
respective countries. Indonesia where the Group’s main
project is located in 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
Environment
Law). There are no matters that have arisen in relation to
environmental issues up to the date of this report.
Non-Audit Services
No non-audit services were provided by Cokal’s auditor,
Ernst & Young during the financial year ended 30 June
2018 (2017: Nil).
Remuneration Report (Audited)
This remuneration report for the year ended 30 June
2018 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.
COKAL LIMITED Annual Report 2018 | Page 15
For personal use only
Directors' Report
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.
Remuneration report approval at FY17 AGM
The remuneration report for the 2017 financial year
received positive shareholder support with proxy votes of
81% in favour (of shares voted).
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.
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 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.
and Nomination
in carrying out the functions of the
The Board,
is
Remuneration
responsible
the
compensation arrangements of senior executives and
consultants.
and negotiating
Committees,
reviewing
for
The Board,
in carrying out the functions of the
Remuneration and Nomination Committees, assess the
the nature and amount of
appropriateness of
remuneration of such officers on a periodic basis by
reference to relevant employment market conditions
with
the overall objective of ensuring maximum
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
is
Directors and senior management remuneration
separate and distinct.
The remuneration of the non-executive directors for the
year ending 30
this
Remuneration Report.
is detailed
June 2018
in
Executive Directors and Senior Management
Remuneration
The consolidated entity aims to reward the Executive
Directors and senior management with a level and mix of
remuneration commensurate with their position and
responsibilities within the consolidated entity so as to:
•
for consolidated entity and
reward Executives
individual performance;
• align the
interests of executives with those of
•
shareholders;
link reward with the strategic goals and performance
of the consolidated entity; and
• ensure total remuneration is competitive by market
standards.
The remuneration of the Executive Directors and senior
management may from time to time be fixed by the
Board. As noted above, the Board’s policy is to align the
Executive Directors and senior management objectives
with shareholder and business objectives by providing a
fixed remuneration component and offering short and/or
long-term incentives as appropriate.
The level of fixed remuneration is set so as to provide a
base level of remuneration which is both appropriate to
the position and is competitive in the market. Short-term
incentives may be provided in the form of performance
bonuses. Fixed remuneration and short-term incentives
are reviewed annually by the Board, in carrying out the
functions of the Remuneration Committee, and the
COKAL LIMITED Annual Report 2018 | Page 16
For personal use only
Directors' Report
process consists of a review of Company-wide and
individual
comparative
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
issue of shares following the
options and/or 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 2018 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
and development within the Central Kalimantan coking
coal basin in Indonesia.
The following table shows the performances of the
consolidated entity for the last four years:
Year-end
(30 June)
2018
US$
Share price
0.03
2017
US$
0.04
2016
US$
0.02
2015
US$
2014
US$
0.10
0.14
Basic (loss)
per share
(1.18)
(1.96)
(6.07)
(2.76)
(1.40)
There were no dividends paid during the year.
As the consolidated entity was still in the exploration and
development stage during the financial year, the link
between remuneration, consolidated entity performance
and shareholder wealth is tenuous. Share prices are
subject to the influence of coal prices and market
sentiment toward the sector, and as such increases or
decreases may occur quite independent of executive
performance or remuneration.
Employment and Services Agreements
It is the Board’s policy that employment and/or services
agreements are entered into with all Executive Directors,
senior management and employees.
Agreements do not provide
for pre-determining
compensation values or method of payment. Rather the
amount of compensation is determined by the Board in
accordance with the remuneration policy set out above.
KMP are entitled to their statutory entitlements of
accrued annual leave and long service leave together
with any superannuation on termination. No other
termination payments are payable.
Executive Directors
Gerhardus Kielenstyn
Cokal Limited has an employment agreement with
Gerhardus Kielenstyn for the position of Indonesian
Country Manager which commenced on 1 May 2013. Mr
Kielenstyn receives an annual base salary up to
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
for Cause, being serious
time by
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 and
Executive Director on 27 January 2017.
Senior Management
CFO / Joint Company Secretary
Mr Teuku Juliansyah was appointed the position of
Indonesian Finance Manager commencing on the 23rd
February 2012. He was further made Joint Company
Secretary on the 1st September 2015.
Mr Juliansyah was appointed to the role of Chief Finance
Officer (CFO) effective 24th of June 2016. The Company
does not have a contract in place with Mr Juliansyah in
his position of CFO.
Mr Juliansyah is eligible for an annual performance bonus
on the discretion of the CEO, as the Group is an early
stage entity
Joint Company Secretary
Up until August 2017, Cokal Limited had 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
the Agreement.
providing
services pursuant
to
COKAL LIMITED Annual Report 2018 | Page 17
For personal use only
Directors' Report
Details of Key Management Personnel (KMP)
(i) Directors
Domenic Martino, Chairman and Non-Executive
Director (appointed Non-Executive Director 24
December 2010, appointed Chairman on 27 January
2017)
Patrick Hanna, Non-Executive Director
(appointed 24 December 2010)
Gerhardus Kielenstyn, Executive Director -
Indonesia Country Manager (appointed 1 May 2013
– 23 June 2016, appointed COO 24th June 2016,
appointed director 27 January 2017)
Peter Lynch, Chairman and CEO (appointed
Chairman 24 December 2010, appointed CEO on 3
May 2013, resigned as CEO on 10 May 2016, ceased
to be a director on 26 January 2017)
(ii) Senior Management
Teuku Juliansyah, CFO (appointed 24 June 2016)
and Joint Company Secretary (appointed 1
September 2015)
Victor Kuss, CFO (appointed 5 September 2011,
resigned 1 September 2015) and Manager
Corporate Restructure (appointed 1 September
2015, ceased during the 2017 financial year)
Duncan Cornish, CFO (appointed 24 December
2010, resigned 4 September 2011) and Company
Secretary (appointed 24 December 2010, resigned 9
August 2017)
Remuneration Details
The following table of benefits and payments details, in
respect to the financial years ended 30 June 2018 and
2017, the component of remuneration for each key
management person of the consolidated entity:
Short-Term Benefits
Post-
Employment
Termination
Benefits
Share-based
payments
2018
Salary &
Fees
Cash
Bonus
Other short
-term
benefits
Superannuation
US$
US$
US$
US$
US$
Directors
Domenic Martino
Patrick Hanna
Gerhardus Kielenstyn
Total
Senior Management
Duncan Cornish**
Teuku Juliansyah
Total
88,692
88,692
437,995
615,379
3,431
170,055
173,486
** Resigned 9 August 2017
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Equity-
settled
(options)
US$
-
-
51,005
51,005
-
-
-
-
-
-
-
-
-
-
Cash-settled
Total
US$
US$
%
Remuneration
as options
-
-
-
-
-
-
-
88,692
88,692
489,000
666,384
3,431
170,055
173,486
0%
0%
10%
8%
-
-
-
Short-Term Benefits
Post-
Employment
Termination
Benefits
Share-based
payments
2017
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 @
Domenic Martino #
Patrick Hanna
13,273
52,938
52,938
Gerhardus Kielenstyn ^
451,858
Total
Senior Management
Duncan Cornish
Victor Kuss *
Teuku Juliansyah
Total
571,007
33,920
-
128,015
161,935
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,633
4,633
-
5,791
1,158
6,949
-
-
-
-
-
-
-
-
-
13,273
52,938
52,938
456,491
575,640
33,920
5,791
129,173
168,884
0%
0%
0%
1%
1%
0%
100%
1%
4%
@ ceased 26 January 2017
# Appointed as Chairman of the Company on 27 January 2017
^ Appointed as Executive Director of the Company on 27 January 2017 and appointed as COO on 24 June 2016
* Resigned during 2017 financial year
COKAL LIMITED Annual Report 2018 | Page 18
For personal use only
Directors' Report
Advances to KMP
Nil advances to Key Management Personnel as at 30 June 2018 (2017: nil) have been made.
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. Remuneration options on issue during the 2018 financial year to KMP were as follows:
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
Gerhardus
Kielenstyn
Gerhardus
Kielenstyn
Gerhardus
Kielenstyn
Gerhardus
Kielenstyn
Gerhardus
Kielenstyn
Gerhardus
Kielenstyn
Teuku
Juliansyah
Options
11/07/2013
11/07/2014 2,000,000
0.20
0.09
Options
11/07/2013
11/07/2015 2,000,000
0.20
0.09
Options
24/02/2015
24/02/2016 2,000,000
0.10
0.03
Options
24/02/2015
24/02/2017 2,000,000
0.10
0.03
Options
22/12/2017
Note 1 1,000,000
0.09
0.02
Options
22/12/2017
Note 2 4,000,000
0.12
0.02
Options
24/02/2015
24/02/2017
500,000
0.10
0.03
-
-
-
-
-
-
-
100%
100%
-
-
-
-
-
-
-
-
-
11/07/2017
11/07/2017
24/02/2019
24/02/2019
100%
22/12/2020
100%
22/12/2020
-
24/02/2019
Note 1: vesting on production of 100,000 tonnes of coal
Note 2: vesting on achieving a consistent production rate for three months of 45,000 tonnes of coal per month
Options holdings
Details of share-based payments to KMP and other executives awarded and vested/unvested during the year ended 30 June
2018 and 30 June 2017 are detailed in the table below:
Balance
1 July 2017
Granted as
Remuneration
Exercise
of Options
Net Change
Other
Balance
30 June 2018
Total vested
at 30 June
2018
Total vested
and
exercisable at
30 June 2018
Total vested and
unexercisable at
30 June 2018
Directors
Domenic Martino
Patrick Hanna
Gerhardus Kielenstyn
Senior Management
Duncan Cornish **
Teuku Juliansyah
Total
-
-
8,000,000
-
500,000
8,500,000
-
-
5,000,000
-
-
5,000,000
-
-
-
-
-
-
(4,000,000)
-
-
9,000,000
-
-
4,000,000
-
-
4,000,000
-
-
-
-
-
-
-
(4,000,000)
500,000
9,500,000
500,000
4,500,000
500,000
4,500,000
-
-
-
-
-
-
Balance
1 July 2016
Granted as
Remuneration
Exercise
of Options
Net Change
Other
Balance
30 June 2017
Total vested
at 30 June
2017
Total vested
and
exercisable at
30 June 2017
Total vested and
unexercisable at
30 June 2017
-
-
-
-
-
-
-
-
-
-
-
8,000,000
-
-
8,000,000
Directors
Domenic Martino #
Patrick Hanna
Gerhardus Kielenstyn
Peter Lynch @
Senior Management
Duncan Cornish
Teuku Juliansyah
Victor Kuss *
Total
** Resigned 9 August 2017
@ ceased 26 January 2017
# Appointed as Chairman of the Company on 27 January 2017
^ Appointed as Executive Director of the Company on 27 January 2017 and appointed as COO on 24 June 2016
* Resigned during 2017 financial year
-
500,000
10,000,000
500,000
10,000,000
18,500,000
18,500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,000,000
-
-
8,000,000
500,000
10,000,000
18,500,000
-
-
500,000
10,000,000
18,500,000
-
-
-
-
-
-
-
COKAL LIMITED Annual Report 2018 | Page 19
For personal use only
Directors' Report
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 issued by Cokal Limited entitle the holder to one ordinary share in Cokal Limited for each option exercised.
All options granted as part of remuneration 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:
Balance
1 July 2017
Granted as
Remuneration
On Exercise
of Options
Net Change
Other
Balance
30 June 2018 ●
Directors
Domenic Martino
Patrick Hanna
Garry Kielenstyn
Senior Management
Duncan Cornish *
Teuku Juliansyah
Total
Directors
Peter Lynch#
Domenic Martino
Patrick Hanna
Garry Kielenstyn
Senior Management
Duncan Cornish
Teuku Juliansyah
Victor Kuss **
Total
37,120,001
25,800,000
-
2,401,215
-
65,321,216
-
-
-
-
-
-
-
-
-
-
-
-
Balance
1 July 2016
Granted as
Remuneration
On Exercise
of Options
Net Change
Other
25,920,800
37,120,001
25,800,000
-
2,401,215
-
900,000
92,142,016
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
37,120,001
25,800,000
-
2,401,215
-
65,321,216
Balance
30 June 2017
25,920,800
37,120,001
25,800,000
-
2,401,215
-
900,000
92,142,016
# Ceased to be a director on 26 January 2017
* Resigned 9 August 2017
** Resigned during 2017 financial year
● If position ceased prior to 30 June 2018, balance as at that date
Transactions with KMP and their related entities
Mr Domenic Martino
•
•
•
As at 30 June 2018 director fees totaling US$148,615 (2017: US$50,896) remain outstanding to Mr Martino.
As at 30 June 2018 a loan of AUD60,000 (US$44,346) (2017: nil) was owing to Mr Martino by the Company. This loan
was provided for working capital purposes, is repayable on demand and does not accrue interest.
As at 30 June 2018, Mr Martino was owed US$67,128 (2017: US$6,420) for expenses paid on the Company’s behalf.
This amount is repayable on demand and does not accrue interest.
• On 9 August 2017 the Company entered into an agreement with Indian Ocean Corporate Pty Ltd, a company of which
Mr Martino is a director, for company secretarial services at a cost of AU$4,000 (excl GST) per month. The services are
based on normal commercial terms and conditions. As at 30 June 2018, company secretarial fees of US$16,000 (2017:
Nil)) remain outstanding. In addition, during the 2018 financial year, Indian Ocean Corporate Pty Ltd has provided
corporate advisory services totaling US$218,483 (2017: nil) and assistance with the preparation of reports, totaling
US$26,422 (2017: nil).
Mr Patrick Hanna
•
•
As at 30 June 2018 director fees totaling US$148,615 (2017: US$50,896) remain outstanding to Mr Hanna.
As at 30 June 2018 a loan of AUD108,500 (US$80,192) (2017: ni) was owing to Mr Hanna by the Company. This loan
was for working capital purposes, is repayable on demand and does not accrue interest.
COKAL LIMITED Annual Report 2018 | Page 20
For personal use only
Directors' Report
Mr Gerhardus Kielenstyn
•
•
As at 30 June 2018 remuneration fees totaling US$51,200 (2017: US$Nil) remain outstanding to Mr Kielenstyn.
As at 30 June 2018 a loan of IDR500,000,000 (US$33,000) and US$90,000 (2017: nil) were owing to Mr Kielenstyn by the
Company. These loans are repayable on demand and do not accrue interest.
Mr Teuku Juliansyah
•
•
As at 30 June 2018 remuneration fees totaling US$37,837 (2017: US$Nil) remain outstanding to Mr Juliansyah.
As at 30 June 2018 the following loans were owing to Mr Juliansyah. Interest on all loans is accrued until repayment.
Principal
Interest rate
per month
Total interest charged
for the Year
Interest repaid during
year
Amount
Outstanding as at 30
June 2018
IDR1,850,000,000
IDR541,895,604
IDR340,000,000
IDR245,000,000
IDR2,731,895,604
(US$ 190,270)
6.5%
7.5%
6.5%
Nil
IDR 1,443,000,000
IDR 841,750,000
IDR 2,451,250,000
IDR 406,421,703
IDR 175,358,108
IDR 772,959,199
IDR 80,600,000
-
-
-
IDR 420,600,000
IDR 245,000,000
IDR 1,930,021,703
(US$ 134,421)
(IDR 1,017,108,108)
((US$ 70,840))
IDR 3,889,809,199
(US$ 270,916)
Given the Company’s financial position during the year, the directors considered the above interest rates arms’ length for an
immediate short-term loan, with no security over the Company’s assets.
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
Number of
meetings
held while
in office
Meetings
attended
Number of
meetings
held while
in office
Meetings
attended
Domenic
Martino
Pat Hanna
Garry
Kielenstyn
8
8
8
8
8
8
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 information in these circumstances.
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.
COKAL LIMITED Annual Report 2018 | Page 21
For personal use only
15,000,000 unlisted options exercisable at US$0.20
on or before 27 August 2018
The consolidated entity was not a party to any such
proceedings during the year.
•
•
•
•
•
•
•
•
•
Directors' Report
Options
At 30 June 2018, there were 140,800,000 unissued
ordinary shares under options as follows:
4,000,000 unlisted options exercisable at US$0.20 on
or before 11 July 2018
5,800,000 unlisted options exercisable at US$0.23 on
or before 11 July 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
1,000,000 unlisted options exercisable at US$0.072
19 September 2020
1,000,000 unlisted options exercisable at US$0.09 on
or before 22 December 2020
4,000,000 unlisted options exercisable at US$0.11 on
or before 22 December 2020
75,000,000 unlisted options exercisable at US$0.01
on or before 20 February 2023
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 2018, 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.
Auditor’s Independence
Declaration
The Auditor’s Independence Declaration forms part of
the Directors’ Report and can be found on page 22.
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
Domenic Martino
Chairman
Sydney, 9 November 2018
COKAL LIMITED Annual Report 2018 | Page 22
For personal use only 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 2018, 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
Brisbane
9 November 2018
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
For personal use only 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 6 November 2018
(a) Distribution of Ordinary Shares and Options
The number of holders, by size of holding, in each class of security is:
Ordinary shares
Number of holders
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
368
123
244
623
468
Number of
shares
269,422
372,452
2,219,856
26,545,871
692,424,527
Total
1,826
721,832,128
Unlisted options
(US$0.072 @
19/09/2020)
Unlisted options
US$0.10 @
(06/02/2019)
Unlisted options
Unlisted options
Unlisted options
Unlisted options
(US$0.10 @
24/02/2019)
US$0.01 @
20/2/2023
US$0.09 @
22/12/2020
US$0.11 @
22/12/2020
No. of
holders
No. of
options
No. of
holders
No. of
options
No. of
holders
No. of
options
No. of
holders
No. of
options
No. of
holders
No. of
options
No. of
holders
No. of
options
1 – 1,000
1,001 –
5,000
5,001 –
10,000
10,001 –
100,000
100,001
and over
Total
-
-
-
-
1
1
-
-
-
-
1,000,000
1,000,000
-
-
-
-
1
1
-
-
-
-
25,000,000
25,000,000
-
-
-
-
5
5
-
-
-
-
-
-
-
-
-
-
-
-
10,000,000
10,000,000
3
3
75,000,000
75,000,000
1
1
1,000,000
1,000,000
1
1
4,000,000
4,000,000
The number of shareholders holding less than a marketable parcel (a total of 13,513 ordinary shares) is 793 on a share price of
AU$0.037
COKAL LIMITED Annual Report 2018 | Page 24
For personal use only
Shareholder Information
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 BNP PARIBAS NOMINEES PTY LTD
2 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
3 WINTERCREST ADVISORS LLC
4 PH CAPITAL PTY LTD
5 MRS LAURA LYNCH
6 GEBRUN PTY LTD
7 MR MICHAEL CHRISTOPHER HORVATH
8 CS THIRD NOMINEES PTY LTD
9
TEKNIKS PUBLICATIONS PTY LIMITED
10 MR STEPHEN RODNEY HARIONO
11 XIN HUA PTY LTD
69,606,201
65,747,188
34,241,293
25,000,000
17,500,000
17,500,000
15,839,207
15,064,445
14,930,000
13,000,000
12,631,200
12
INKESE PTY LTD and MR JAY EVAN DAIS HUGHES
10,950,704
9.64%
9.11%
4.74%
3.46%
2.42%
2.42%
2.19%
2.09%
2.07%
1.80%
1.75%
1.52%
1.50%
1.44%
1.39%
1.35%
1.17%
1.06%
1.04%
10,838,476
10,425,656
10,000,000
9,736,799
8,420,800
7,666,673
7,521,640
7,000,000
383,620,282
721,832,128
0.97%
53.13%
100.00%
13 MR VASILIOS VOTSARIS
14 BNP PARIBAS NOMINEES PTY LTD
15
TJ SMOCK & CO PTY LTD
16 HORVATH INVESTMENTS PTY LTD
17
LANNE PTY LTD
18 BATMAN MANAGEMENT GROUP PTY LTD
19 MR JONATHAN CHARLES COLEMAN
20 MONAL PTY LIMITED
Top 20
Total
Option Holders
The names of holders holding 20% or more of options on issue:
Unlisted options
Unlisted options
(US$0.08 @
19/09/2020)
(US$0.10 @
06/02/2019)
Unlisted options
(US$0.10 @
24/02/2019)
Unlisted
options
(US$0.09 @
22/12/2020)
Unlisted
options
(US$0.12 @
22/12/2020)
Unlisted
options
(US$0.01 @
20/02/2023)
Number of
options
Number of
options
Number of
options
Number of
Options
Number of
Options
Number of
Options
Platinum Partners Credit
Opportunities Master
Fund L.P.
Platinum Partners Value
Arbitrage Fund
Northrock Financial LLC
Vicki Susan Kuss & Victor
Herbert Kuss
Gerhardus Antonius Kielenstyn
-
-
-
-
-
Helbraun Holdings Pty Ltd
1,000,000
Total
Total options in class
1,000,000
1,000,000
25,000,000
-
-
-
-
-
-
-
-
5,000,000
-
-
-
-
-
-
-
-
4,000,000
1,000,000
4,000,000
-
-
-
5,560,783
11,590,365
57,848,852
-
-
-
25,000,000
9,000,000
1,000,000
4,000,000
75,000,000
25,000,000
10,000,000
1,000,000
4,000,000
75,000,000
COKAL LIMITED Annual Report 2018 | Page 25
For personal use only
Shareholder Information
Substantial shareholders
Substantial shareholders as shown in substantial shareholder notices received by Cokal are:
Name of Shareholder:
Ordinary Shares:
Platinum Partners Liquid Opportunities Master Fund, LP and
Platinum Partners Credit Opportunities Master Fund LP
Peter Anthony Lynch (estate) & Lara Anne Lynch
Platinum Partners Value Arbitrage Fund LP &
Wintercrest Advisors LLC
Domenic Vincent Martino & Sandra Gae Martino
70,455,379
56,052,000
50,307,602
37,120,001
The Company notes that, as at 5 September 2018, the following shareholders own substantial shareholdings (>= 5.0%) in Cokal:
Name of Shareholder:
HSBC Custody Nominees
(Australia) Limited
BNP Paribas Nominees Pty Ltd
Ordinary
Shares:
% of total shares:
65,747,188
69,606,201
9.11%
9.64%
(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 2018 | Page 26
For personal use only
Interests in Tenements and Projects
Cokal Limited had the following interests in projects as at 30 June 2018:
Indonesia
Project
Location
% Interest
PT Anugerah Alam Katingan (AAK)
PT Bumi Barito Mineral (BBM)
PT Borneo Bara Prima (BBP)
PT Tambang Benua Alam Raya# (TBAR)
Kalimanta
Kalimanta
Kalimanta
Kalimanta
75%
60%
60%
75%
COKAL LIMITED Annual Report 2018 | Page 27
For personal use only
Consolidated Statement of Comprehensive
Income for the year ended 30 June 2018
2018
US$
652,172
2017
US$
60,516
(1,846,222)
(1,261,480)
(25,239)
(996,198)
(3,808,113)
(639,611)
(75,556)
(650,913)
(41,884)
-
-
(8,796)
(129,449)
(968,608)
-
(9,177,568)
(406,463)
(326,480)
(7,796,143)
(11,853,745)
Revenue and other income
Employee benefits expenses
Depreciation expenses
Arrangement fee
Production expenses
Finance costs
Legal expenses
2
11
22
Administration and consulting expenses
Exploration expenditure de-recognised
12
Other expenses
Loss before income tax expense
Income tax expense
Loss for the period
Other comprehensive income
Items may be reclassified to profit or loss in
subsequent periods (net of tax):
Exchange translation differences
4
-
-
(7,796,143)
(11,853,745)
-
-
Total comprehensive profit/(loss) for the period
(7,796,143)
(11,853,745)
Earnings/(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)
6
6
Cents
(1.18)
(1.18)
Cents
(2.02)
(2.02)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
COKAL LIMITED Annual Report 2018 | Page 28
For personal use only
Consolidated Statement of Financial Position as
at 30 June 2018
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
Convertible notes
Interest bearing loans
Total Current Liabilities
Non-Current Liabilities
Total Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
Equity
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
7
7
8
13
11
12
13
14
15
16
17
18
19
2018
US$
15,502
138,916
23,134
6,849
184,401
2017
US$
28,264
138,916
163,878
6,849
337,907
1,428,811
1,450,895
25,067,202
23,460,617
35,362
35,362
26,531,375
24,946,874
26,715,776
25,284,781
5,461,564
364,108
1,937,079
-
14,163,218
13,892,302
19,988,890
15,829,381
-
-
19,988,890
15,829,381
6,726,886
9,455,400
89,727,054
84,752,154
5,000,143
4,907,414
(88,000,311)
(80,204,168)
6,726,886
9,455,400
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
COKAL LIMITED Annual Report 2018 | Page 29
For personal use only
Consolidated Statement of Changes in Equity
for the year ended 30 June 2018
At 1 July 2017
84,752,154
4,907,414
(80,204,168)
9,455,400
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
Share based payments
At 30 June 2018
At 1 July 2016
Total comprehensive loss for the year
Loss for the year
Other comprehensive income
-
-
-
4,974,900
-
4,974,900
-
-
-
-
92,729
92,729
(7,796,143)
(7,796,143)
-
-
(7,796,143)
(7,796,143)
-
-
-
4,974,900
92,729
5,067,629
89,727,054
5,000,143
(88,000,311)
6,726,886
83,622,140
4,851,794
(68,350,423)
20,123,511
-
-
-
-
-
(11,853,745)
(11,853,745)
-
-
95,129
(11,853,745)
(11,853,745)
Transactions with owners in their capacity as owners
Issue of share capital
Share based payments
1,130,014
-
-
55,620
-
-
1,130,014
55,620
At 30 June 2017
84,752,154
4,907,414
(80,204,168)
9,455,400
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
COKAL LIMITED Annual Report 2018 | Page 30
For personal use only
Consolidated Statement of Cash Flows
for the year ended 30 June 2018
22
24
Cash Flows from Operating Activities
Receipt from customers
Payments to suppliers and employees
Interest received
Finance costs paid
Payment of arrangement fee
Net cash outflow from operating activities
Cash Flows from Investing Activities
Payments for property, plant and equipment
Proceeds from sale of tenements
Proceeds from lease deposit
Receipts from other non-current assets
Net cash outflow from investing activities
Cash Flows from Financing Activities
Proceeds from issue of shares and options
Proceeds from convertible note
Proceeds from borrowings
Net cash inflow from financing activities
Net (decrease)/increase in cash and cash
equivalents
Cash and cash equivalents at beginning of year
7
Net foreign exchange differences
Cash and cash equivalents at end of year
2018
US$
2017
US$
959,263
-
(4,039,122)
(1,813,380)
98
(215,476)
(496,198)
2,643
(8,796)
-
(3,791,435)
(1,819,533)
(3,155)
-
-
(160,000)
136,868
-
133,713
-
28,739
188,739
1,744,476
1,130,014
1,567,177
-
333,307
47,702
3,644,960
1,177,716
(12,762)
(453,078)
28,264
462,770
-
15,502
18,572
28,264
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
COKAL LIMITED Annual Report 2018 | Page 31
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2018
Note 1: Summary of Significant Accounting Policies
(a) General information
The consolidated financial statements of Cokal Limited for the year ended 30 June 2018 were authorised for issue in
accordance with a resolution of the Directors dated 8 November 2018 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 (“US$” or “US$”).
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 2018, the Group’s current liabilities exceed the current assets by US$19,804,489 (30 June 2017: US$15,491,474).
This position is due to:
•
•
The classification of the Group debt with Platinum Partners (refer note 16) of $13,892,302 as a current liability; and
The Group’s arrears of trade and other payables. A significant number of the Group’s creditors are providing informal
financial support to the entity.
On 22 July 2016, Cokal announced it had reached an agreement with Platinum Partners for the conversion of
all outstanding loans owing to them to production royalties. The royalties will be payable on 1% of the realised selling price
of coal (FOB) from the Bumi Barito Mineral Project (BBM) and PT Tambang Benua Alam Raya (TBAR) projects up to a
maximum of US$40 million. Under the arrangement, no minimum royalty is payable and the royalty is only payable as and
when coal is mined and sold.
On 29 April 2017, the Group entered into a Royalty Deed with Platinum Partners (refer note 16) to convert of all outstanding
loans owing to them to production royalties (this formalised the agreement on 22 July 2016). The Royalty Deed is subject to
a number of substantive conditions precedent which were not satisfied at 30 June 2018 or at the date of this report. As a
consequence, the Platinum Partners debt is still due and payable at 30 June 2018.
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:
•
Satisfaction of all conditions precedent and completion of the Royalty Deed with Platinum Partners and the conversion
of all associated debt to a royalty on coal sold;
The successful completion of funding for the Group’s working capital requirements (including the existing working
capital deficiency) during the 2018 financial year;
The continued financial support of management and directors who have provided short term loans to the Group and
continued willingness of creditors to extend payment terms to the Group until such time as cash flow are generated by
the BBM project; and
The successful raising of sufficient funding, through debt, equity or other arrangements (or a combination of
transactions) to progress the development of the larger BBM project, including meeting capital expenditure, tenement
purchase commitments (refer note 22) and working capital requirements, until such time as the project’s is in
production and its revenues from coal sales are sufficient to meet its cash outflows.
•
•
•
Should these avenues be delayed or fail to materialize, the Group has some 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 may result in the Group not
satisfying the condition precedent contained in the Royalty Deed which may require further re-negotiation of the
arrangements with Platinum Partners.
COKAL LIMITED Annual Report 2018 | Page 32
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2018
(c) Going concern (Cont’d)
Importantly, the Group’s significant arrears of trade and other payables means it’s ability to continue as a going concern is
dependent on creditors extending payment terms, providing informal financial support and not demanding payment of
amounts owed to them in excess of the Group’s available funds at the time. At the date of this report, no creditor or lender
of the Group, including a Platinum Partners, have made demands for payment.
On 21 September 2018, Cokal signed a Key Principles of Agreement with PT Bara Mineral Asri (BMA Group) to develop and
operate PCI and Coking Coal production. To date, Cokal has received US$1.5 million of US$2.0 million from BMA Group to
secure the transaction.
On 3 August 2018 and 25 September 2018, 150,000 Convertible Notes were converted to 7,591,796 shares. Subsequent to
year end the convertible noteholder has advised the Company of the requirement to repay the remainder of the notes
outstanding. This amount totals US$186,251, which has been paid by the Company.
The combined impact of the above amounts has enabled the Group to meet its required cash out flows to the date of this
report but the significant arrears of trade and other payable remains.
The Directors are confident given the current permitting and financing processes undertaken and announced to the market
(including the abovementioned Key Principles of Agreement with the BMA Group) that the Group will be successful in its
endeavours to develop the larger BBM project and will satisfy the conditions precedent in the Platinum Partners Royalty
Deed. The directors believe that the commencement of operation at the BBM project (and the forecast generating of
operating cash inflows) in conjunction with planned capital raisings will enable it to satisfy its working capital requirements
(including its arrears of trade and other payables). This being the case, the directors have a reasonable expectation that
given the status of the current permitting and financing processes, the Group’s creditors will continue to extend payment
terms, provide informal financial support and not demand payment of amounts owed to them in excess of the Group’s
available funds.
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 to enable it to
realise its assets and discharge its liabilities in the ordinary course of business.
(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 2017. 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
2018. 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;
AASB 16: Leases (effective annual reporting periods commencing on or after 1 January 2019); and
AASB Interpretation 23: Uncertainty over Income Tax Treatments (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.
•
•
COKAL LIMITED Annual Report 2018 | Page 33
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2018
(e) Basis of consolidation (cont’d)
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.
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) 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.
Consultation fees
Consultation fees are recognised when the service is rendered and revenue can be measured reliably.
(g) Income tax
The income tax expense for the year is the tax payable on the current year's taxable income based on the national income
tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences
between the tax base of assets and liabilities and their carrying amounts in the financial statements, and to unused tax
losses.
Deferred tax assets and liabilities are recognised for all temporary differences, between carrying amounts of assets and
liabilities for financial reporting purposes and their respective tax bases, at the tax rates expected to apply when the assets
are recovered or liabilities settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction.
Exceptions are made for certain temporary differences arising on initial recognition of an asset or a liability if they arose in a
transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or
taxable profit.
Deferred tax assets are only recognised for deductible temporary differences and unused tax losses if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
COKAL LIMITED Annual Report 2018 | Page 34
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2018
(g) Income Tax (cont’d)
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.
(h) Impairment of non-financial assets other than goodwill
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
(i)
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 operations
(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 operations are set out in Note 10.
(k) Cash and cash equivalents
For the purposes of the Statement of Cash Flows, cash and cash equivalents includes cash on hand and at bank, deposits
held at call with financial institutions, other short term, highly liquid investments with maturities of three months or less,
that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
COKAL LIMITED Annual Report 2018 | Page 35
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2018
(l) Financial instruments – initial recognition and subsequent measurement
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity
instrument of another entity.
(i) Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, as financial assets at fair value through profit or loss, loans and
receivables, held-to-maturity investments, available-for-sale financial assets, or as derivatives designated as hedging
instruments in an effective hedge, as appropriate. 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.
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.
COKAL LIMITED Annual Report 2018 | Page 36
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2018
(ii) Financial liabilities (cont’d)
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.
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 2018 | Page 37
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2018
(n) Exploration, evaluation and development expenditure
Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of
interest. Such expenditures comprise net direct costs and an appropriate portion of related overhead expenditure but do
not include overheads or administration expenditure not having a specific nexus with a particular area of interest. 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 2018 | Page 38
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2018
(n) Exploration, evaluation and development expenditure (cont’d)
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 2018 | Page 39
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2018
(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 2018 | Page 40
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2018
(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 2018 | Page 41
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2018
(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 when forming a view
on fair value, or Enterprise Value (EV) that the market participants willing to pay for acquisition of the Group’s shares.
(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 2018 | Page 42
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2018
(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 9). 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 2018 | Page 43
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2018
Note 2: Revenue and Other Income
Revenue
- Sale of coal
Other income
- Interest income from external parties
- Gain on disposal of subsidiary
Total other income
2018
US$
652,074
98
-
652,172
2017
US$
-
2,643
57,873
60,516
Note 3: Dividends and Franking Credits
There were no dividends paid or recommended during the financial year (30 June 2017: Nil).
There were no franking credits available to the shareholders of the Group (30 June 2017: Nil).
Note 4: Income tax
The prima facie income tax on the loss is reconciled to the income tax expense as follows:
Prima facie tax benefit at 27.5% (2017: 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
2018
US$
2017
US$
(2,143,939)
(3,556,124)
2,143,939
3,519,222
-
-
36,602
-
-
10,089,602
-
7,647,338
-
-
10,089,602
7,647,338
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 2018 were
US$37,928,866 (30 June 2017: US$27,839,264) and US$nil (30 June 2017: US$nil) respectively.
In order to recoup carried forward losses in future periods, either the Continuity of Ownership Test (COT) or Same Business
Test must be passed. The majority of losses are carried forward at 30 June 2018 under COT.
Deferred tax assets which have not been recognised as an asset, will only be obtained if:
(i)
the Group derives future assessable income of a nature and of an amount sufficient to enable the losses to be
realised;
(ii) the Group continues to comply with the conditions for deductibility imposed by the law; and
(iii) no changes in tax legislation adversely affect the Group in realising the losses
Note 5: Auditor’s Remuneration
Audit services
Amounts paid/payable to Ernst & Young for audit or
review of the financial statements for the Group
Ernst & Young - Australia
Ernst & Young - Indonesia
Ernst & Young - Singapore
2018
US$
2017
US$
138,000
-
-
138,000
75,323
28,024
30,000
133,347
COKAL LIMITED Annual Report 2018 | Page 44
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2018
Note 6: 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)
2018
Number
2017
Number
(7,796,143)
(11,853,745)
660,704,114
586,568,731
660,704,114
586,568,731
(1.18)
(1.18)
(2.02)
(2.02)
* 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 2018.
Note 7: Cash and Cash Equivalents
Cash and bank balances
Cash at bank bear floating and fixed interest rates between 0.10% and 2.78%
(2017: between 0. 10% and 2.78%).
Included in the consolidated statement of cash flows as follows:
Cash and bank balances *
Less: Short term deposits maturing after three
months and restricted bank balance classified
as investing activities**
Cash and cash equivalents
2018
US$
2017
US$
154,418
167,180
154,418
(138,916)
15,502
167,180
(138,916)
28,264
* All deposits are short term investments held at commercial banks.
**Include restricted deposit of US$ 138,916 (2017: US$138,916) can be used only after TBAR production commences.
Note 8: Accounts Receivable
Current
Other receivables*
*No receivable balances are past due or impaired at reporting date.
2018
US$
23,134
23,134
2017
US$
163,878
163,878
COKAL LIMITED Annual Report 2018 | Page 45
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2018
Note 9: Subsidiaries
a) Interest in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance
with the accounting policy described in Note 1.
Percentage Owned
(%)*
Name of entity
Country of
Incorporation
Class of Shares
Australia
Australia
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Tanzania
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Tanzania
Tanzania
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 Bumi Barito Mineral^ (BBM)
PT Borneo Bara Prima ^ (BBP)
PT Tambang Benua Alam Raya# (TBAR)
Cokal Karoo Limited#
Cokal Manda Limited#
* 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 a return is established only when they contribute their share of capital upon completion of the Initial Work Programs for
each of the projects. At reporting date, the Initial Work Programs for these projects have not yet been completed and therefore there is no right to
a return for non-controlling interests.
# During the 2018 financial year, the Group terminated its joint operations with a private company, Tanzoz Resource Company Ltd. The Company
now owns 100% of the Tanzanian entities. The entities are dormant entities. All capitalised expenditures for these entities has been impaired to
$nil in prior periods. The fair value of the underlying assets, liabilities and contingent liabilities at the acquisition date and 30 June 2018 are $nil.
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
2018
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
75%
60%
60%
75%
100%
100%
2017
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
75%
60%
60%
75%
60%
50%
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 currently material at 30 June 2018 and 30 June 2017 as the right of non-controlling
shareholders’ receiving a return is established only when they contribute their share of capital upon completion of the Initial
Work Programs for each of the projects. At reporting date, the Initial Work Programs for these projects have not yet been
completed and therefore there is no right to a return for non-controlling interests.
COKAL LIMITED Annual Report 2018 | Page 46
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2018
Note 10: Joint Operations
Tanzania
Cokal has terminated its joint operations with a private company, Tanzoz Resource Company Ltd. The Company now owns
100% of the Tanzanian entities.
Name of entity
Country of Incorporation
Class of Shares
Percentage Owned
(%)*
Cokal Karoo Limited^
Cokal Manda Limited^
^ the Group has not undertaken any activities. The expenditures incurred have been fully written down in previous years as they are no longer
recoverable. The fair value of the underlying assets are nil.
Tanzania
Tanzania
Ordinary
Ordinary
2018
100%
100%
2017
60%
50%
Note 11: 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
2018
US$
31,526
31,526
552,886
(551,782)
1,104
552,957
(318,942)
234,015
9,974
(9,974)
-
2017
US$
31,526
31,526
552,886
(551,070)
1,816
552,957
(294,415)
258,542
9,974
(9,974)
-
1,162,166
1,159,011
Total property, plant and equipment
1,428,811
1,450,895
COKAL LIMITED Annual Report 2018 | Page 47
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2018
Note 11: Property, Plant and Equipment (cont’d)
(a) Movements in carrying amounts
2018
Balance at the beginning of the year
Additions
Disposals
Depreciation expense
Carrying amount at the end of the
year
2017
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$
1,816
-
-
(712)
1,104
Computer
equipment
US$
3,277
-
-
(1,461)
1,816
Furniture and
office
equipment
US$
258,542
-
-
(24,527)
234,015
Furniture and
office
equipment
US$
297,463
-
-
(38,921)
258,542
Motor
Vehicles
US$
-
-
-
-
-
Motor
Vehicles
US$
1,499
-
-
(1,499)
-
Capital WIP
US$
1,159,011
3,155
-
-
1,162,166
Capital WIP
US$
1,168,254
-
(9,243)
-
1,159,011
Total
US$
1,405,895
3,155
-
(25,239)
1,428,811
Total
US$
1,502,019
-
(9,243)
(41,881)
1,450,895
Note 12: Exploration and Evaluation Assets
Non-Current
Exploration and evaluation expenditure capitalised
- exploration and evaluation phases
2018
US$
2017
US$
23,460,617
23,460,617
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
32,740,312
Balance at the beginning of the period
Additions1
-
Disposals 2
(102,126)
Exploration expenditure de-recognised3
(9,177,568)
Carrying amount at the end of the period
23,460,617
1. The additions for the year ended 30 June 2018 represent the issuance of 25 million ordinary shares to the vendors of PT
Tambung Benua Alam Raya (TBAR) in full and final satisfaction of all post- completion payments, owing by the Group, in
respect of its acquisition of the Group’s interest in TBAR. The shares were issued to the vendors in February 2018.
25,067,202
1,606,585
-
-
25,067,202
2. Disposal during the year ended 30 June 2017 represents the sale of PT Silangkop Nusa Raya (SNR) project and PT Ketungau
Nusa Raya (KNR) project. A gain of $57,873 is recognised in the statement of comprehensive income in that period.
3. During the year ended, 30 June 2017, the Group recorded an impairment charge of $9,177,568 in respect of the PT Bumi Barito
Mineral (BBM). At that time, the carrying amount of the Group’s exploration and evaluation (“E&E”) assets was the only BBM
project
The Group assessed impairment indicators under AASB 6 Exploration for and Evaluation of Mineral Resources (AASB 6) that
were present during the year ended 30 June 2018 and tested for impairment under AASB 136 Impairment of Assets (AASB
136).
Historically, the Group had determined the recoverable amount of the BBM project using the Fair Value Less Cost of Disposal
(FVLCD) methodology considering the Group as a single cash generating unit (consistent with the Group’s primary focus on the
BBM project and this being the only asset in respect of which E&E is carried forward). The FVLCD was determined using Enterprise
Value (EV). EV is implied by Cokal’s market capitalisation plus a control premium. The fair value measurement is categorised
under Level 2 of the fair value hierarchy (refer note 1 (v)).
During the current year, the Group paid the post completion amounts in respect of the TBAR project. As a consequence:
•
The carrying amount of the Group’s E&E included $23.5 million and $1.6 million for BBM and TBAR respectively; and
•
The Group has two identifiable areas of interest that need to be assessed for impairment.
COKAL LIMITED Annual Report 2018 | Page 48
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2018
Note 12: Exploration and Evaluation Assets (cont’d)
At 30 June 2018, FVCLD of the Group’s two areas of interest was measured with to the Group’s market capitalisation. At that
time, the Group’s market capitalisation exceeds the carrying amount of its net asset.
Given the presence of the two areas of interest, the FVLCD implied by the Group’s EV does not provide a precise evaluation of the
FVLCD of the distinct areas of interest. This being the case, the Group also had reference to an Independent Study of all of Cokal’s
tenement interests prepared in accordance with the Valmin Code as at 30 June 2017 (released on 23 August 2017). The
Independent Study provided an estimate of value (in accordance with the Valmin Code) of BBM and TBAR. The Independent
Study estimated the value of BBM using a discounted cash flow method and assessed the value of TBAR with reference to a
resource multiple ($ per tonne of in-situ resource tonnes). The Valmin Code valuation is a proxy for FVLCD under AASB 136 and
would be categorised under Level 3 of the fair value hierarchy (refer note 1 (v)). Based on the combined impact of the EV
assessment and Independent Study the Group is satisfied no further impairment was required at 30 June 2018.
In addition, given the AASB 6 impairment indicator identified by the Group was associated with its intention and ability to spend
substantial amounts on the continued exploration and evaluation of the areas of interest, the Group’s continued funding issues
(refer note 1(c)) means there is no current indication previously recorded impairments in respect of both BBM and TBAR should
be reversed.
Note 13: Other Assets
Current
Prepayments
Non-Current
Security deposits
Note 14: Accounts Payable and Others
Current
Revenue in advance
Sundry payables and accrued expenses
Director fees owing
Loans payable to directors and
employees #
Employee benefits
Deferred liability (rent incentive)
# These loans payable to directors and employees are non-interest bearing and repayable on demand.
Note 15: Convertible Notes
Current
Fair value of Convertible Notes on issue
Convertible Notes converted to shares
2018
US$
6,849
35,362
2018
US$
307,189
4,370,048
348,430
352,370
40,082
43,445
5,461,564
2018
US$
1,927,730
(1,563,622)
364,108
2017
US$
6,849
35,362
2017
US$
-
1,465,882
101,792
226,396
99,564
43,445
1,937,079
2017
US$
-
-
-
During October 2017 the Company issued 1,577,234 Convertible Notes upon the receipt of US$1,567,177 (AUD$2,000,000)
in cash from MEF I, L.P. (“Magna”). The face value of each Convertible Note is US$1.10. The notes are convertible to a
variable number of ordinary shares at the option of the holder of the notes any time after issue. If not converted the notes
mature and are repayable twelve (12) months after the issue date. The conversion price for each convertible note is the
lower of a fixed price (being AUS$0.10 per share) or a share price each to 90% of the four (4) lowest day VWAPs over the ten
(10) day trading period immediately prior to the conversion. At the time of issuance, the difference between the fair value of
the Convertible Notes being US$1,927,730 and the proceeds received of US$1,567,177 was recorded as a finance cost in the
statement of comprehensive income. As at 30 June 2018, Magna had converted 1,280,000 Convertible Notes to shares, with
297,234 Convertible Notes remaining.
COKAL LIMITED Annual Report 2018 | Page 49
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2018
Note 16: Interest Bearing Loans
Current
Loans payable to employee
Platinum Partners / Northrock facility
Blumont Group / Wintercrest facility
Total Interest bearing loans
2018
US$
2017
US$
270,916
10,065,000
3,827,302
14,163,218
-
10,065,000
3,827,302
13,892,302
Loans payable to employee
During the year the Company entered into the following loans with the Chief Financial Officer.
Principal
Interest rate
per month
Total interest charged
for the Year
Interest repaid during
year
Amount
Outstanding as at 30
June 2018
IDR1,850,000,000
IDR541,895,604
IDR340,000,000
IDR245,000,000
IDR2,731,895,604
(US$ 190,270)
6.5%
7.5%
6.5%
Nil
IDR 1,443,000,000
IDR 841,750,000
IDR 2,451,250,000
IDR 406,421,703
IDR 175,358,108
IDR 772,959,199
IDR 80,600,000
-
-
-
IDR 420,600,000
IDR 245,000,000
IDR 1,930,021,703
(US$ 134,421)
(IDR 1,017,108,108)
((US$ 70,840))
IDR 3,889,809,199
(US$ 270,916)
Given the Company’s financial position during the year, the directors considered the above interest rates arms’ length for an
immediate short-term loan, with no security over the Company’s assets.
Platinum Partners / Northrock Facility
Under terms of various short-term loan facility agreements and a bridging loan facility agreement dated August 2015, the
Group has borrowed a total of US$10.065 million from various subsidiaries of Platinum Partners. At 30 June 2018, the full
amount of the loan is due and payable to Northrock Financial LLC (“Northrock”), being a subsidiary of Platinum Partners.
Blumont Group / Wintercrest Facility
On 5 November 2013, the Group entered into a loan facility agreement with Blumont Group Limited (“Blumont”). Under this
facility, the Group had drawn down US$3.4 million (30 June 2017: US$3.4 million) (the amount owing as at 30 June 2018 and
30 June 2017 includes interest and fees). The loan was repayable on demand on the third (3rd) anniversary of the loan
drawdown date, being 5 November 2016. On 7 April 2016, Wintercrest Advisors LLC (“Wintercrest”), a subsidiary of Platinum
Partners, agreed to Settlement Agreement with Blumont, pursuant to which the Blumont loan was assigned in full to
Wintercrest. As a result, Wintercrest replaced Blumont as the lender under its facility agreement.
Conversion of loans from Northrock and Wintercrest to royalties
On July 2016, Cokal announced it had reached an agreement with Platinum Partners for the conversion of all outstanding
loans owing under the Wintercrest and Norfolk facilities to production royalties. The royalties will be payable on 1% of the
realised selling price of coal (FOB) from the Bumi Barito Mineral Project (BBM) and PT Tambang Benua Alam Raya (TBAR)
projects up to a maximum of US$40 million. Under the arrangement, no minimum royalty is payable and the royalty is only
payable as and when coal is mined and sold.
On 29 April 2017, the Group entered into a Royalty Deed with Wintercrest and Northrock (collectively the “Lenders”) to
convert all outstanding loans owing to them to production royalties. The Royalty Deed is subject to a number of substantive
conditions precedent. The conditions precedent include:
a) The completion of legal and commercial due diligence by the Lenders’;
b) Approval by Cokal’s shareholders;
c) The Lenders being provided security in the form of a first legal charge under a deed of charge, over all of Cokal’s interest in the
BBM and TBAR projects, in a form reasonably satisfactory to the Lenders, to protect the interest of the Lenders in the royalties;
d) Cokal evidencing to the satisfaction of the Lenders (in their sole discretion) it has completed a capital raising (debt, equity or a
combination) to support the production of at least 100 ktpa of coal;
COKAL LIMITED Annual Report 2018 | Page 50
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2018
Note 16: Interest Bearing Loans (cont’d)
e) Cokal evidencing to the satisfaction of the Lenders (in their sole discretion) that:
i. Cokal’s production is not less than 8500 tonnes per month for a period of six (6) consecutive months;
ii. Cokal’s production for three (3)months from the date of first production is not less than the monthly equivalent of
100ktpa;
provided the above three and six month period occur with 18 months of the Group satisfying the condition in (d) above; and
f) The Lenders have received and approved all financial budgets anticipated to meet the production targets in (d) and (e) above.
At 30 June 2018, the Lenders had completed due diligence and shareholder approval received. As such condition (a) and (b)
were satisfied, but all of the other conditions precedent were outstanding. As such, the loans remain in force and repayable
on demand at that time.
As the Group agreed in principal to the conversion of the Wintercrest and Northrock debt to a royalty in July 2016, no
interest expense has been recorded for the year ended 30 June 2018. In the event the Group is not able to satisfy the
conditions precedent in the Royalty Deed, the Lenders may seek to retrospectively charge interest on amounts owing to
them for the period. As such, the Group has determined it appropriate to disclose the debts as interest-bearing liabilities at
30 June 2018. In February 2018, 75,000,000 unlisted options were issued by the Company to the Lenders. These options
vest upon completion of the debt to royalty conversion (refer Note 25).
Note 17: Issued Capital
713,699,792 authorised and fully paid
ordinary shares (30 June 2017:
593,092,704)
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
Share issue from conversion of convertible notes
TBAR debt settlement
Shares issued as payment of creditors
At reporting date
(a) Ordinary shares
At the beginning of the year
Shares issued during the year
Share issue from capital raising
Shares issued on conversion of Convertible
Notes
TBAR debt settlement
Shares issued as payment of creditors
At reporting date
2018
US$
2017
US$
89,787,271
84,752,154
2018
US$
84,752,154
1,744,476
1,563,622
1,606,585
60,217
89,727,054
2018
Number
2017
US$
83,622,140
1,130,014
-
-
-
84,752,154
2017
Number
593,092,704
499,342,704
52,940,002
93,750,000
41,792,086
25,000,000
875,000
713,699,792
-
-
-
593,092,704
During the year there were 52,940,002 fully paid ordinary shares issued raising US$1.7 million. There were two placement
for general corporate purposes in July 2017 and February 2018.
COKAL LIMITED Annual Report 2018 | Page 51
For personal use only
Notes to the Consolidated Financial
Statements for the year ended 30 June 2018
Note 17: Issued Capital (cont’d)
(b) Options
All options on issue at 30 June 2018 were as follows:
Number of options
Employees:
Exercise price
US$
Expiry date
4,000,000
5,800,000
10,000,000
1,000,000
4,000,000
1,000,000
Consultant
Platinum / Northrock:
75,000,000
15,000,000
25,000,000
140,800,000
0.20
0.23
0.10
0.09
0.12
0.08
0.01
0.19
0.10
11 July 2018
11 July 2018
24 February 2019
22 December 2020
22 December 2020
19 September 2020
20 February 2023
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 26.
(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 17.
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
2018
US$
6,455,598
(1,455,455)
5,000,143
2017
US$
6,362,868
(1,455,455)
4,907,413
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.
During the year ended 30 June 2018, Mr Gary Kielenstyn was issued 5,000,000 unlisted options on the following terms:
•
•
1,000,000 options with an exercise price of AUD0.12 and an expiry date of 22 December 2020, vesting when the Company has produced
100,000 tonnes of coal; and
4,000,000 options with an exercise price of AUD0.15 and an expiry date of 22 December 2020, vesting when the Company is
consistently operating at a production rate for three months of 45,000 tonnes of coal per month.
1,000,000 options (with an exercise price of US$0.07 and expiry date of 19 September 2020) were also issued to Helbraun
Holdings Pty Ltd for consulting services provided to the Company.
In addition, the Company issued 75,000,000 options to Platinum /Northrock in accordance with the transaction to convert
loans to production royalties (refer to Note 16). These options do not vest until that transaction is complete and such, have
not been expensed in the 2018 financial year.
Translation reserve represents the net exchange differences arising from the translation as a result of change in
presentation currency to US$ from AUD.
COKAL LIMITED Annual Report 2018 | Page 52
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2018
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
2018
US$
(80,204,168)
(7,796,143)
(88,000,311)
2017
US$
(68,350,423)
(11,853,745)
(80,204,168)
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
2018
US$
144,061
22,113,230
22,257,291
15,529,834
576,236
16,106,070
6,151,221
89,727,054
6,455,595
(3,565,142)
(86,466,286)
6,151,221
(8,371,809)
(8,371,809)
2017
US$
131,241
24,057,253
24,188,494
14,414,916
318,178
14,733,094
9,455,400
84,752,154
6,362,865
(3,565,142)
(78,094,477)
9,455,400
(11,853,471)
(11,853,471)
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 2018 (2017 – nil).
Contingent liabilities
The parent entity has no contingent liabilities.
Capital commitments
The parent entity has no capital commitments.
Impairment assessment
At 30 June 2018, COKAL Limited, the parent entity, performed an impairment assessment of its investments in
subsidiaries and non-current receivables from subsidiaries. As a result of this assessment, the carrying amount of these
assets was impaired by US$5,700,000 (2017: US$11.1 million).
Note 21: Commitments
Operating lease commitments
Future minimum rentals payable under non-cancellable operating leases
as at 30 June 2018 are as follows:
Payable
- not later than 12 months
- between 12 months and 5 years
- greater than 5 years
COKAL LIMITED Annual Report 2018 | Page 53
2018
US$
2017
US$
144,887
259,589
-
404,477
188,927
-
-
188,927
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2018
Note 22: Contingent Liabilities
The Group has a number of contingent liabilities in respect of deferred purchase consideration for the acquisition of its
mining and exploration tenements.
At 30 June 2018, the Group’s contingent liabilities total US$17.95m (30 June 2017: US$20.70m) in respect of its BBM and
PT Borneo Bara Prima (BBP) tenements. The amounts are payable on the achievement of certain milestones, including but
not limited to the establishment of certain JORC Inferred Coal Resources and the issuance of production operation IUPs
(licences) and production forestry permit. During the financial year the Company settled any outstanding contingent
liabilities in respect of TBAR with the issue of 25,000,000 shares to the vendors (refer Note 12).
Payments which may be triggered by the commencement of development at BBM
Deferred purchase consideration
As part of the Group’s acquisition of its interest in the BBM project, it was agreed an amount of $10.0 million would be
payable within 30 days of the issue of the Production/ Operations IUP (mining license granted under the Indonesian New
Mining Law). On 1 May 2013, the Production/Operations IUP was granted but the payment to the vendor was deferred
pending the issuance of the Forestry Production Permit (required to commence the construction and production). On 15
August 2015, Cokal received BBM’s Forestry Production Permit.
On 3 March 2016, the Group executed a variation letter with the vendor whereby the parties agreed the obligation for
$10.0 million payment would triggered when Cokal had sufficient funds to commencement of the construction/
development of the BBM project.
No liability is recognised as at 30 June 2018 (30 June 2017: nil) in respect this deferred purchase consideration as the
Group had not secured funding to commence the construction/development of the BBM project.
As part of the Directors’ consideration of the ability of the Group to continue as a going concern (refer note 1 (c)), the
Directors are aware some or all of the deferred consideration may be triggered by the commencement of the BBM project.
Given the potential uncertainty, the Company engaged with the vendors of the BBM project to clarify its interpretation of
the agreement of 3 March 2016. As part of the negotiations and in good faith, the Company agreed to pay an arrangement
fee of US$996,198 to the vendors for them agreeing to certain clarifications to the agreement of 3 March 2016.
US$496,198 was paid at the time of executing the variation (this amount was paid during the half year ended 31 December
2017) and a further US$500,000 is payable, subject to certain conditions precedent including a capital raising. The full
amount of the arrangement fee of US$996,198 has been recorded as an expense in the statement of comprehensive
income. The clarification to the 3 March 2016 agreement confirmed the Company’s view no further payments, including
the abovementioned US$10.0 million, are due or payable until the Company had entered into a substantial funding
arrangement and/or commenced substantial production. No liability is recognised as at 30 June 2018 in respect this
deferred purchase consideration as the Group had not secured funding to commence the construction/development of the
BBM project.
At this time, the Group does not have sufficient funds to develop the larger BBM project or fund any portion of the
US$10.0 million deferred consideration that may be payable. To the extent monies are required to be paid, the Group will
need to raise capital to fund these payments.
COKAL LIMITED Annual Report 2018 | Page 54
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2018
Note 23: Operating Segments
Segment performance for the year ended 30 June 2018
Australia
US$
Indonesia
Singapore
US$
US$
Total
US$
Revenue
Other revenue
Interest revenue
Intersegment income*
Total segment income
Depreciation expenses
Finance costs
Other expenses
Total segment expenses
-
-
-
-
7,626
434,268
2,238,920
2,680,814
652,074
98
-
652,172
17,613
205,343
5,385,917
5,608,873
-
-
-
-
-
-
158,627
158,627
652.074
98
-
652,172
25,239
639,611
7,783,465
8,448,315
Segment net loss before tax
2,680,814
4,956,702
158,627
7,796,143
Segment assets and liabilities as at 30 June 2018
Property, plant and equipment
Exploration and evaluation assets
Other segment assets
Total segment assets
168,078
-
8,983
1,260,733
25,067,202
207,990
177,061
26,535,925
-
-
2,790
2,790
1,428,811
25,067,202
219,763
26,715,776
Total segment liabilities
15,405,643
4,367,483
215,763
19,988,890
Capital expenditure for the year ended 30 June 2018
Property, plant and equipment
Exploration and evaluation assets
-
-
3,155
1,606,585
*Inter segment expense relating to the income is eliminated in Indonesia’s exploration and evaluation assets.
Segment performance for year ended 30 June 2017
Australia
Indonesia
Singapore
US$
US$
US$
Revenue
Other revenue
Interest revenue
Intersegment income*
Total segment income
Depreciation expenses
Finance costs
Exploration expenditure de-recognised
Other expenses
Total segment expenses
-
2,355
-
2,355
19,713
-
-
827,831
841,544
57,873
288
-
58,161
22,168
8,796
9,177,568
1,779,615
-
-
-
-
-
-
-
-
-
-
-
Total
US$
57,873
2,643
-
60,516
41,881
8,796
9,177,568
78,567
2,686,013
10,998,147
78,567
11,853,742
Segment net loss before tax
(845,189)
(10,929,986)
(78,567)
(11,853,742)
COKAL LIMITED Annual Report 2018 | Page 55
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2018
Note 23: Operating Segments (cont’d)
Segment assets and liabilities as at 30 June 2017
Property, plant and equipment
Exploration and evaluation assets
Other segment assets
Total segment assets
Australia
Indonesia
Singapore
US$
US$
US$
Total
US$
175,704
1,275,191
-
23,460,617
127,632
245,637
303,336
24,981,445
-
-
-
-
1,450,895
23,460,617
377,269
25,284,781
Total segment liabilities
14,334,345
1,422,188
72,848
15,829,881
Capital expenditure for the year ended 30 June 2017
Property, plant and equipment
Exploration and evaluation assets
-
-
-
-
-
-
-
-
*Inter segment expense relating to the income is eliminated in Indonesia’s exploration and evaluation assets.
Note 24: Cashflow Information
(a) Reconciliation of loss after income tax to net cash flow used in operating activities
Profit /(Loss) for the year
Depreciation
Exploration expenditure de-recognised
Share options and shares expensed
Property, plant and equipment write-off
Unrealised exchange loss/(gain)
Change in operating assets and liabilities:
- Decrease in accounts receivables
- Increase in revenue in advance
- Increase in convertible notes
- Increase in accounts payables
2018
US$
2017
US$
(7,796,143)
(11,853,745)
25,329
-
152,947
-
-
307,189
364,108
3,155,135
41,881
9,177,568
55,620
9,243
83,554
109,291
-
-
557,055
Net cash flow used in operating activities
(3,791,435)
(1,819,533)
COKAL LIMITED Annual Report 2018 | Page 56
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2018
Note 25: Share-based Payments
The following share-based payment arrangements existed at 30 June 2018.
(a) Share-based payments to directors, executives, employees and suppliers
During the period ended 30 June 2018, 5,000,000 options were issued to directors and 76,000,000 options issued to
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.
The range of exercise prices for options outstanding at 30 June 2018 was US$0.01 to US$23 (2017: US$0.10 to US $0.23)
and weighted average remaining contractual life of 2.75 years (30 June 2017: 0.47 years).
Outstanding at beginning of period
Granted
Forfeited/Cancelled
Exercised
Expired
Outstanding at period-end
Exercisable at period-end
30 June 2018
No. of options Weighted average
No. of options
exercise price
30 June 2017
Weighted average
exercise price *
19,800,000
81,000,000
-
-
(9,800,000)
140,800,000
60,800,000
US$
0.16
0.02
-
-
0.09
0.07
0.02
20,150,000
-
-
-
(350,000)
19,800,000
19,800,000
US$
0.13
-
-
-
0.77
0.12
0.16
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.
• On 19 September 2018, 1,000,000 options were issued to Helbraun Holdings Pty Ltd at US$ 0.08, expiring on 19
September 2020
• On 20 February 2018, 75,000,000 options were issued to Northrock and Platinum Partners at US$0.01 expiring on 20
February 2023, vesting on conversion of debt to royalty.
Payment of the exercise price may be satisfied by the holder paying the exercise price in cash or causing the provider of the
bridge loan or project finance to reduce the principal owing by the amount of the exercise price. Shares issued on exercise of
an option rank equally with all other ordinary shares then on issue.
COKAL LIMITED Annual Report 2018 | Page 57
For personal use only
Notes to the Consolidated Financial
Statements for the year ended 30 June 2018
Note 26: Related Party Disclosure
Transactions between related parties are on normal commercial terms and conditions no more favourable than those
available to other parties unless otherwise stated.
(a) Parent entity
The parent entity and ultimate controlling entity is Cokal Limited, which is incorporated in Australia.
(b) Subsidiaries
Interests and transactions in subsidiaries are disclosed in Note 9.
(c) Key management personnel (KMP) compensation
The KMP compensation for the year ended are set out below:
Short-term employee benefits*
Post-employment benefits
Share-based payments
2018
US$
788,865
-
51,005
839,870
2017
US$
732,942
-
11,582
744,524
* Directors are not salary paid, but their fees are included in the short-term employee benefits. The terms of directors’ services are described
below. Amounts included, but not paid as at year end are recorded under note 14.
(d) Option holdings of KMP for the year ended
KMP option holdings for the year ended are set out below:
Balance
1 July 2017
Granted as
Remunerati
on
Exercise of
Options
Net Change
Other
Balance
30 June 2018
Total vested
at 30 June
2018
8,000,000 5,000,000
-
500,000
-
-
(4,000,000)
-
9,000,000
500,000
4,000,000
500,000
Total vested
and
exercisable at
30 June 2018
4,000,000
500,000
8,500,000 5,000,000
** Excludes Vic Kuss who resigned at the end of the 2017 financial year.
(4,000,000)
-
9,500,000
4,500,000
4,500,000
Balance
1 July 2016
Granted as
Remuneration
Exercise of
Options
Net Change
Other *
Balance
30 June 2017
Total vested
at 30 June
2017
-
18,500,000
-
-
-
-
8,000,000
(8,000,000)
8,000,000
10,500,000
8,000,000
10,500,000
Total vested
and
exercisable at
30 June 2017
8,000,000
10,500,000
18,500,000
* Gerhardus Kielenstyn was appointed a Director on 27 January 2017. He held 8 million options at the time of appointment.
18,500,000
18,500,000
18,500,000
-
-
-
Share options held by KMP under the Senior Executive Plan to purchase ordinary shares have the following expiry
dates and exercise prices:
2018
Number of options
outstanding
2017
Number of options
outstanding
Exercise price
US$
Issued date
Vesting date
Expiry date
-
-
-
4,500,000
Note 3
1,000,000
4,000,000
9,500,000
2,000,000
2,000,000
5,000,000
4,500,000
5,000,000
-
-
18,500,000
0.230
0.230
0.230
0.10
0.10
0.09
0.12
11-Jul-13
11-Jul-13
11-Jul-13
24-Feb-15
24-Feb-15
22-Dec-17
22-Dec-17
11-Jul-14
11-Jul-15
11-Jul-15
24-Feb-16
24-Feb-17
Note 1
Note 2
11-Jul-17
11-Jul-17
11-Jul-17
24-Feb-19
24-Feb-19
22-Dec-20
22-Dec-20
Note 1: vesting on production of 100,000 tonnes of coal
Note 2: vesting on achieving a consistent production rate for three months of 45,000 tonnes of coal per month
Note 3: held by previous years’ KMP
COKAL LIMITED Annual Report 2018 | Page 58
Directors
Senior
Management **
Total
Directors
Senior
Management
Total
Total vested and
unexercisable at
30 June 2018
-
-
-
Total vested and
unexercisable at
30 June 2017
-
-
-
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2018
Note 26: Related Party Disclosure (Cont’d)
(e) Share holdings of KMP for the year ended
KMP share holdings for the year ended are set out below.
Directors
Senior Management
Total
Directors
Senior Management
Total
(f) KMP Transactions
Balance
1 July 2017
62,920,001
2,401,215
65,321,216
Balance
1 July 2016
88,840,801
3,301,215
92,142,016
Granted as
Remuneration
-
-
-
On Exercise
of Options
-
-
-
Granted as
Remuneration
-
-
-
On Exercise
of Options
-
-
-
Net Change
Other
Net Change
Other
Balance
30 June 2018
62,920,001
2,401,215
65,321,216
Balance
30 June 2017
88,840,801
3,301,215
92,142,016
-
-
-
-
-
-
KMP transactions for the year ended are set out below.
Mr Domenic Martino
•
•
•
As at 30 June 2018 director fees totaling US$148,615 (2017: US$50,896) remain outstanding to Mr Martino.
As at 30 June 2018 a loan of AUD60,000 (US$44,346) (2017: nil) was owing to Mr Martino by the Company. This loan
was provided for working capital purposes, is repayable on demand and does not accrue interest.
As at 30 June 2018, Mr Martino was owed US$67,128 (2017: US$6,420) for expenses paid on the Company’s behalf.
This amount is repayable on demand and does not accrue interest.
• On 9 August 2017 the Company entered into an agreement with Indian Ocean Corporate Pty Ltd, a company of which
Mr Martino is a director, for company secretarial services at a cost of AU$4,000 (excl GST) per month. The services are
based on normal commercial terms and conditions. As at 30 June 2018, company secretarial fees of US$16,000 (2017:
Nil)) remain outstanding. In addition, during the 2018 financial year, Indian Ocean Corporate Pty Ltd has provided
corporate advisory services totaling US$218,483 (2017: nil) and assistance with the preparation of reports, totaling
US$26,422 (2017: nil).
Mr Patrick Hanna
•
•
As at 30 June 2018 director fees totaling US$148,615 (2017: US$50,896) remain outstanding to Mr Hanna.
As at 30 June 2018 a loan of AUD108,500 (US$80,192) (2017: ni) was owing to Mr Hanna by the Company. This loan
was for working capital purposes, is repayable on demand and does not accrue interest.
Mr Gerhardus Kielenstyn
•
•
As at 30 June 2018 remuneration fees totaling US$51,200 (2017: US$Nil) remain outstanding to Mr Kielenstyn.
As at 30 June 2018 a loan of IDR500,000,000 (US$33,000) and US$90,000 (2017: nil) were owing to Mr Kielenstyn by the
Company. These loans are repayable on demand and do not accrue interest.
Mr Teuku Juliansyah
•
As at 30 June 2018 remuneration fees totaling US$37,837 (2017: US$Nil) remain outstanding to Mr Juliansyah.
COKAL LIMITED Annual Report 2018 | Page 59
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2018
Note 26: Related Party Disclosure (Cont’d)
•
As at 30 June 2018 the following loans were owing to Mr Juliansyah. Interest on all loans is accrued until repayment.
Principal
Interest rate
per month
Total interest charged
for the Year
Interest repaid during
year
Amount
Outstanding as at 30
June 2018
IDR1,850,000,000
IDR541,895,604
IDR340,000,000
IDR245,000,000
IDR2,731,895,604
(US$ 190,270)
6.5%
7.5%
6.5%
Nil
IDR 1,443,000,000
IDR 841,750,000
IDR 2,451,250,000
IDR 406,421,703
IDR 175,358,108
IDR 772,959,199
IDR 80,600,000
-
-
-
IDR 420,600,000
IDR 245,000,000
IDR 1,930,021,703
(US$ 134,421)
(IDR 1,017,108,108)
((US$ 70,840))
IDR 3,889,809,199
(US$ 270,916)
Given the Company’s financial position during the year, the directors considered the above interest rates arms’ length for an
immediate short-term loan, with no security over the Company’s assets.
(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.
(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
7
8
7
2018
US$
15,502
23,134
138,916
177,552
2017
US$
28,264
163,878
138,916
310,058
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.
COKAL LIMITED Annual Report 2018 | Page 60
For personal use only
Notes to the Consolidated Financial
Statements for the year ended 30 June 2018
Note 27: Financial Risk Management (cont’d)
(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.
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 2018
Financial Liabilities
Accounts payable
Convertible notes
Interest bearing loans
Total
5,461,564
364,109
14,163,218
19,988,891
5,461,564
-
14,163,218
19,624,782
5,461,564
-
14,163,218
19,624,782
-
-
-
-
-
-
-
-
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 2017
Financial Liabilities
Accounts payable
Interest bearing loans
Total
1,937,079
13,892,302
15,829,381
1,937,079
13,892,302
15,829,381
1,937,079
13,892,302
15,829,381
-
-
-
-
-
-
Further information regarding commitments is included in Note 21.
-
-
-
-
-
-
-
(d) Market Risk
Market risk arises from the use of interest bearing, tradable and foreign currency financial instruments. It is the risk
that the fair value or future cash flows of a financial instrument will fluctuate because of changes in interest rates
(interest rate risk), foreign exchange rates (currency risk) or other market factors (other price risk). The entity does not
have any material exposure to market risk other than as set out below.
(i) Interest rate risk
Interest rate risk arises principally from cash and cash equivalents. The objective of interest rate risk management is to
manage and control interest rate risk exposures within acceptable parameters while optimising the return.
Interest rate risk is managed with fixed rate debt. For further details on interest rate risk refer to the tables below:
2018
Floating interest rate
Fixed interest rate
Non-interest
bearing
Total carrying
amount
Weighted
average
effective
interest rate
Financial assets
Cash and bank balances
Receivables
Security deposits
Total financial assets
Financial liabilities
Accounts payable
Interest bearing loans
Total financial liabilities
US$
15,502
-
-
15,502
-
-
-
US$
US$
US$
-
-
-
-
-
14,163,218
14,163,218
-
23,134
138,916
162,050
5,461,564
-
5,461,564
15,502
39,868
138,916
194,286
5,461,564
14,163,218
19,624,782
%
-
-
-
-
-
-
-
COKAL LIMITED Annual Report 2018 | Page 61
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2018
Note 27: Financial Risk Management (cont’d)
(i) Interest rate risk (cont’d)
2017
Floating interest
rate
Fixed interest rate
Non-interest
bearing
Total carrying
amount
Weighted
average
effective
interest rate
Financial assets
Cash and bank balances
Receivables
Security deposits
Total financial assets
Financial liabilities
Accounts payable
Interest bearing loans
Total financial liabilities
US$
28,264
-
-
28,264
-
-
-
US$
US$
US$
-
-
-
-
-
13,892,302
13,892,302
-
163,878
138,916
302,794
1,937,079
-
1,937,079
28,264
167,652
138,916
331,058
1,937,079
13,892,302
15,829,381
%
-
-
-
-
-
-
-
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.
At 30 June 2018 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:
2018
Cash and cash equivalents
Total effect on post tax profit
2017
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$
154,418
154,418
167,180
167,180
772
772
836
836
(772)
(772)
(836)
(836)
(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.
COKAL LIMITED Annual Report 2018 | Page 62
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2018
Note 27: Financial Risk Management (cont’d)
(i) Currency risk (cont’d)
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:
2018
Cash and cash equivalents
Accounts payable
Net exposure
Effect on post profit:
Increase by 10%
Decrease by 10%
2017
Cash and cash equivalents
Accounts payable
Net exposure
Effect on post tax profit:
Increase by 10%
Decrease by 10%
AUD
US$
1,013
1,137,955
1,138,968
113,897
(113,897)
212,787
103,061
315,848
31,585
(31,585)
SGD
US$
6,108
225,650
231,758
23,176
(23,176)
-
-
-
-
-
Indonesian
Rupiah
US$
4,802
3,135,875
3,140,677
314,068
(314,068)
54,126
30,161
84,287
8,429
(8,429)
Total
US$
11,923
4,499,480
4,511,403
451,141
(451,141)
266,913
133,222
400,135
40,014
(40,014)
COKAL LIMITED Annual Report 2018 | Page 63
For personal use only
Notes to the Consolidated Financial
Statements for the year ended 30 June 2018
Note 28: Significant Events after the Reporting Date
(a) On 27 July 2018 Cokal appointed Mr. James Coleman as Chief Executive Officer.
(b) On 1 August 2018 Cokal announced that it had secured funding for the development of BBM PCI from Aahana Global
Resources and Investment Pte Limited (Aahana). Under the agreement, Aahana will fund capital expenditure at BBM
PCI in return for a 40% interest in the joint venture and equivalent share of profits from the BBM PCI operations.
(c) On 22 August 2018 Krakatau National Resources (KNR) signed a Memorandum of Understanding (MOU) with PT Bumi
Barito Minerals (PT BBM) for the supply of coal. This MOU pre-empts a Domestic Market Obligation (DMO) that will be
placed upon the Company, requiring coal and mineral producing companies to allocate a certain minimum percentage
of its production to the domestic market.
(d) On 21 September 2018 Cokal signed a Key Principles of Agreement with PT Bara Mineral Asri (BMA Group) to develop
and operate PCI and Coking Coal production. To date, Cokal has received US$1.5 million of US$2.0 million from BMA
Group to secure the transaction.
(e) On 3 August 2018 and 25 September 2018, 150,000 Convertible Notes were converted to 7,591,796 shares.
(f) Subsequent to year end the convertible noteholder has advised the Company of the requirement to repay the
remainder of the notes outstanding. This amount totals US$186,251, which has been paid by the Company.
(g) The Company is in discussion with Platinum in respect of an extension to 31 July 2020 for the completion of the
conditions under the Debt Restructure Transaction (refer Note 16) on the basis of an issue of 37.5 million new options
(4 year term and exercise price of 1.6 cents), subject to shareholder approval, and Platinum agreeing not to exercise
37.5 million of existing options (with an expiry date of 20 February 2023 and an exercise price of 1.6 cents, vesting once
all Platinum loans have been released and discharged).
(h) During the audit process, the Board was made aware of possible financial irregularities and fraudulent activity which
have impacted the Company’s financial statements for the year ended 30 June 2018.
The Board is currently investigating the irregularities and activities which concern the Company’s Chief Financial Officer
and seven employees having received monies from a supplier of barging services to the Company in Indonesia. The
employees have notified the Board that they have received money from the supplier totalling approximately $150,000.
In addition, the Company has allegedly been charged for services not incurred and/or charged non-arm’s length
amounts for services provided by that supplier. Further investigation is taking place to confirm whether the Group’s
barging expenses have been validly incurred by the Group, whether the cost of barging services received represented
an arm’s length price for those services, and the amount of the payments made and expenses accrued for the barging
services that should be accounted for as other expenses on the basis they had been misappropriated.
The Company notes that amounts are currently still outstanding and payable to this supplier, which will not be paid
until the investigation is complete. Some of the money received by the employees has been refunded and the Board is
confident that with this, and the outstanding amounts owing being reduced by agreement with the supplier, there will
be no financial loss to the Company.
COKAL LIMITED Annual Report 2018 | Page 64
For personal use only
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 2018 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 15 to 22 of the directors’ report (as part of audited Remuneration
Report) for the year ended 30 June 2018, 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
Domenic Martino
Chairman
Sydney
9 November 2018
COKAL LIMITED Annual Report 2018 | Page 65
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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 Audit of the Financial Report
Qualified Opinion
We have audited the financial report of Cokal Limited (the “Company”) and its subsidiaries (collectively
the “Group”), which comprises the consolidated statement of financial position as at 30 June 2018, the
consolidated statement of comprehensive income, consolidated statement of changes in equity and
consolidated statement of cash flows for the year then ended, notes to the financial statements, including
a summary of significant accounting policies, and the directors' declaration.
In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion section of
our report the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
a)
b)
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2018
and of its consolidated financial performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Qualified Opinion
The Group’s consolidated statement of comprehensive income reports production expenses of
$3,808,113, including barging expenses of $1,285,698, for the year ended 30 June 2018. Our audit
procedures identified accounting irregularities and fraudulent activity in respect of Group’s contracting
with its supplier of barging services in Indonesia. The Group’s own investigation has subsequently
confirmed fraudulent activity by the Group’s Indonesian based Chief Financial Officer. These
investigations continue at the date of this report.
Our audit procedures included agreeing the Group’s recorded barging expenses to bank payments and
other documentation provided in the name of the barging supplier. We were unable to obtain sufficient
appropriate audit evidence as to whether the Group’s barging expenses have been validly incurred by the
Group and whether the amount paid for barging services represented an arm’s length price for those
services. We were also unable to obtain sufficient appropriate audit evidence as to the amount of the
payments made and expenses accrued for the barging services that should be accounted for as other
expenses on the basis they had been misappropriated by the Chief Financial Officer and other Indonesian
based employees that may be implicated in the fraud. Consequently, we were unable to determine
whether any adjustments to production expense and administration expenses for the year ended 30 June
2018 and accounts payable as at 30 June 2018 were necessary.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our qualified opinion.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
For personal use only
Material Uncertainty Related to Going Concern
We draw attention to Note 1 (c) in the financial report, which describes the principal conditions that raise
doubt about the Group’s ability to continue as a going concern. These events or conditions indicate that a
material uncertainty exists that may cast significant doubt on the Group’s ability to 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.
Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial report of the current year. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
opinion on these matters. For the matter below, our description of how our audit addressed the matter is
provided in that context. In addition to the matter described in the Basis for Qualified Opinion and
Material Uncertainty Related to Going Concern sections above, we have determined the matters
described below to be the key audit matters to be communicated in our report.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of material
misstatement of the financial report. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying
financial report.
1. Carrying value of deferred exploration and evaluation
Why significant
How our audit addressed the key audit matter
The carrying value of exploration and evaluation
assets is subjective as it is based on the Group’s
ability, and intention, to continue to explore the
asset. The carrying value may also be impacted
by the results of exploration work indicating that
the mineral reserves and resources may not be
commercially viable for extraction. This creates a
risk that the amounts stated in the financial
report may not be recoverable and as a result
this was a key audit matter for us.
Refer to Note 12 – Exploration and Evaluation
Assets to the financial report for the amounts
held on the consolidated statement of financial
position by the Group as at 30 June 2018 and
related disclosure.
We evaluated the Group’s assessment of the carrying
value of exploration and evaluation assets. In
performing our procedures, we:
(cid:127)
(cid:127)
considered the Group’s right to explore in the
relevant exploration area which included
obtaining and assessing supporting
documentation such as license agreements;
considered the Group’s intention to carry out
significant exploration and evaluation activity in
the relevant exploration area which included
assessment of the Group’s budgeted and planned
cash-flows, enquires with senior management and
directors as to the intentions and strategy of the
Group;
(cid:127) assessed the Group’s ability to finance its planned
future exploration and evaluation activity;
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
For personal use only During the year ended 30 June 2018, the Group
determined that impairment indicators were
present and performed an impairment
assessment with reference to an independent
valuation in accordance with the Valmin code
dated 23 August 2017.
As a result of the impairment assessment, the
Group concluded no additional impairment or
impairment reversal was required.
(cid:127) given the existence of impairment indicators, we
assessed the Group’s methodology for measuring
the recoverable amount of the Group’s PT Bumi
Barito Mineral (BBM) project based on the Group’s
independent valuation prepared in accordance
with the Valmin code;
(cid:127) Performed sensitivity testing on the independent
valuation, prepared in accordance with the
Valmin code, to better align the output with that
required by Australian Accounting Standards;
(cid:127)
considered the Group’s assessment of the
existence and impairment reversal at 30 June
2018; and
(cid:127) assessed the adequacy of the Group’s disclosure
of the Exploration and Evaluation Assets in the
financial report.
2. Recognition and classification on interest bearing liabilities
Why significant
How our audit addressed the key audit matter
Note 16 – Interest Bearing Loans to the financial
report discloses that the Group has significant
loans payable to Northrock Financial LLC and
Wintercrest Advisors LLC (collectively the
“Lenders”), being subsidiaries of Platinum
Partners. The terms of both loans have expired
and the loans are repayable on demand at 30
June 2018. As such, the interest bearing loans
of $13,892,302 are presented as current
liabilities at 30 June 2018.
In April 2017, a Royalty Deed was executed with
the Lenders, pursuant to which the Lenders
agreed to convert the full amount of the Group’s
loans owing to them into a production royalty.
The terms and conditions of the production
royalty are detailed in Note 16 to the financial
report. Conversion of the loans to a production
royalty is subject to a number of substantial
conditions precedent.
We evaluated the recognition, measurement and
disclosure of the Group’s loans payable to the
Lenders at 30 June 2018. In performing our
procedures, we:
(cid:127)
(cid:127)
read the Royalty Deed executed between the
parties and understood the conditions precedent
to the completion of the arrangement between
the parties;
considered the Group’s assessment of its
satisfaction, or otherwise, of the conditions
precedent to the Royalty Deed at 30 June 2018
and subsequent to year end;
(cid:127) obtained confirmation from the Lenders of
amounts owing at 30 June 2018 and the
continuing operation of the Royalty Deed at 30
June 2018;
(cid:127) assessed the adequacy of the Group’s
classification of the interest bearing loans as
current liabilities at 30 June 2018; and
(cid:127) assessed the adequacy of the Group’s disclosure
of the royalty arrangement in the financial report.
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For personal use only At 30 June 2018, the conditions precedent for
conversion of the loan to a production royalty
were not satisfied and as such the interest
bearing loans remained due and payable.
Satisfaction of the conditions precedent and
accounting for the resulting transaction is
expected to have a significant impact on the
amounts recognised on the Group’s statement of
financial position and may have significant
effects on the consolidated statement of
comprehensive income. As a result, the
assessment of whether the conditions precedent
have been satisfied at 30 June 2018 was a key
audit matter.
Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the information
included in the Company’s 2018 Annual Report other than the financial report and our auditor’s report
thereon. We obtained the Directors’ Report that is to be included in the Annual Report, prior to the date
of this auditor’s report, and we expect to obtain the remaining sections of the Annual Report after the
date of this auditor’s report.
Our opinion on the financial report does not cover the other information and we do not and will not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report and
our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or
our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information obtained prior to the date of this
auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or
error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
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For personal use only Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
► Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
► Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
► Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
► Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Group to cease to continue as a going
concern.
► Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in a
manner that achieves fair presentation.
► Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are responsible
for the direction, supervision and performance of the Group audit. We remain solely responsible for
our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
A member firm of Ernst & Young Global Limited
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For personal use only From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Report on the Audit of the Remuneration Report
Qualified Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 15 to 21 of the directors' report for the year
ended 30 June 2018.
Our audit procedures identified accounting irregularities and fraudulent activity in respect of Group’s
contracting with its supplier of barging services in Indonesia. The Company’s own investigation has
subsequently confirmed fraudulent activity by the Group’s Indonesian based Chief Financial Officer. These
investigations continue at the date of this report. We were unable to obtain sufficient appropriate audit
evidence as to the extent to which monies were misappropriated by the Chief Financial Officer and/or
other Indonesian based employees. Consequently, we were unable to determine whether any adjustments
to the remuneration report were necessary.
In our opinion, except for the effects of the matter described above the Remuneration Report of Cokal
Limited for the year ended 30 June 2018, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
Ernst & Young
Andrew Carrick
Partner
Brisbane
9 November 2018
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Liability limited by a scheme approved under Professional Standards Legislation
For personal use only
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