30 JUNE 2019
ANNUAL
FINANCIAL
REPORT
Cokal Limited ACN 082 541 437
Annual Financial Report for the year ended 30 June 2019
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 2019
Consolidated Statement of Financial Position as at 30 June 2019
Consolidated Statement of Changes in Equity for the year ended 30 June 2019
Consolidated Statement of Cash Flows for the year ended 30 June 2019
Notes to the Consolidated Financial Statements for the year ended 30 June 2019
Declaration by Directors
Independent Auditor’s Report
Competent Person Statement
1
2
3
10
21
22
25
26
27
28
29
30
66
67
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. 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
Karan Bangur
COMPANY SECRETARIES
Louisa Martino
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
Mills Oakley
Level 7,
151 Clarence Street
Sydney NSW 2000
Phone: + 61 2 8289 5800
Fax: +61 2 9247 1315
SHARE REGISTRY
Advanced Share Registry Services
110 Stirling Highway
Nedlands WA 6009
Phone: +61 8 9389 8033
Fax: +61 8 9262 3723
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,
This last year has laid the foundations for your Company’s transformation to a coal producer.
Achievements have included:
• The recruitment of a new local team with local geological and mining experience, including some
senior positions filled by experienced mine start-up personnel. The latter not only have extensive
experience in the start-up of mines, but the contacts and reputation to ensure the Company can fulfil
the pre mining requirements both regulatory and technically for the BBM project.
• The restructure of the Jakarta office and the finance operations of the Company with a complete
change of finance personal including the appointment of an Indonesian based, Australian finance and
accounting professional to head up finance and accounting in Jakarta.
• The complete review and reassessment of the feasibility study, which is currently in progress, using the
new local team to provide a number of alternatives to the production and especially the logistical
solutions now available to the Company to develop the BBM project.
• The addition of a major shareholder in Aahana that has provided the Company with a strong local
presence and access to both experienced coal mining personnel as well as reputable and experienced
contractors who have expressed a willingness to work on the BBM project given Aahana’s involvement
as a major stakeholder.
• With Aahana’s assistance the streamlining of our relationships with the local authorities including a
review of all outstanding commitments on our licenses and setting a process for rectification of any
outstanding matters with the relevant government departments.
• The development with Aahana’s assistance of a number of funding alternatives for the development of
the BBM project including the underwriting of the recent rights issue as well as the introduction by
Aahana of further funding options including mine development and production contractors, turnkey
infrastructure builders and commodities trading houses.
Not all of this is easily visible to you, our shareholders, but they are significant in laying the foundations for
what Cokal will become - a stable, growing, metallurgical coal producer with a premium product.
The Company now has in placed an experienced on the ground team and substantial financial avenues to
complete the project at hand.
We thank you for your on going support.
Domenic Martino
Chairman
COKAL LIMITED Annual Report 2019 | Page 2
For personal use only
Review of Operations
Cokal Limited (ASX:CKA; Cokal or the Company) 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, each with known resources of metallurgical coal.
Indonesian Coal Assets
Cokal holds the following Indonesian coal assets:
•
•
•
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 is approximately 15,000ha
and the BBP project is approximately 13,050ha.
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 to and southeast
of 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 has an area of approximately 5,000ha. 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.
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. The Company is focussed on the development of the BBM
Project, as discussed further below.
Figure 1: Location of Cokal Indonesian Coal Assets
COKAL LIMITED Annual Report 2018 | Page 3
For personal use only
Review of Operations
Bumi Barito Mineral (BBM) Project
BBM’s permit covers an area of 14,980ha with multiple seams of high quality metallurgical coal. Almost the entire IUP
contains coal-bearing sediments with open cut mineable areas controlled by three major fault systems. BBM has all
regulatory approvals in place including:
• Mining Licence – 20 years with two further extensions of 10 years each
•
•
•
Environmental approval for a mining rate of 6Mt per annum
Port construction approval (albeit in a different location)
Forestry Permit to commence mining activity
• RKAB approval of its annual plan.
Since all permits for mining are in place, BBM will be the first area to be mined by Cokal.
BBM is dissected by the Barito River, which cuts through the tenement in a north-south trend. Coal analyses from
over 130 outcrops on the west side of the Barito River indicate that it contains premium quality anthracite and PCI
coals. This coal does not currently form part of stated BBM coal resources.
Updated rehabilitation plans were submitted as required by the government. The work plan for 2019 was submitted
(RKAB) during the year. This was approved by the government (Directorate General Minerals and Coal).
During the year the Company developed a five year mine plan which will be implemented over the coming months.
The mine plan includes:
• Refurbishment of the existing 65-man camp at Krajan;
• Construction of roads from Pit 2 and Pit 3 to Krajan port;
• Use of a mining contractor to mine Pit 2 and Pit3;
• Use of second mining contractor for highwall mining;
• Develop Coal Handling Preparation Plant (CHPP) at the Krajan port to prepare coking coal for sale;
• Develop a barge loading facility at Krajan:
• Use shallow draft barges and push boats to deliver coal directly from Krajan.
Tambang Benua Alam Raya (TBAR) Project
TBAR’s exploration authority covers an area of 18,850ha immediately adjacent to and south of Cokal's BBM tenement.
Over 80% of the lease is available for exploration subject to the issuance of an exploration forestry permit. The
application of exploration forestry permit was submitted 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 licence) upgrade process application to a
Production and Operation IUP, equivalent to a mining licence. Progress is being made in this regard through dialogue
with the ombudsman. Now that the Presidential election has been concluded it is expected faster progress can be
made.
Outcrop mapping of four seams over 17km strike indicates a substantial resource of high grade coking coal in this
deposit. These seams correlate to the B, C, D and J seams in the adjacent BBM deposit.
No exploration activity was conducted by Cokal during the year. Further exploration will be proposed as soon as the
transfer to the Provincial Government has been concluded.
COKAL LIMITED Annual Report 2019 | Page 4
For personal use only
Review of Operations
Figure 2: Geological interpretation of BBM East and TBAR
Borneo Bara Prima (BBP) Project
Cokal's BBP project 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 licence
(Production and Operation IUP).
A business licence decree for operation foreign mining production (IUP OP PMA) from capital investment coordination
board centre (BKPM) was received in Q1 2019. Work plans and the budget (RKAB) 2019 have been submitted to the
government (Directorate General Minerals and Coal).
Anugerah Alam Katingan (AAK) Project
Cokal's AAK project covers 5,000ha in Central Kalimantan. 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 year.
Shallow Draft Barging
During the year Cokal identified a source of shallow draft barges and push boats in Vietnam which can operate in 2m
deep water. It is envisaged that four 1,700t barges will form 2 x 2 tows to be pushed by single push boats each with 2
x 1,000HP azimuth thrusters to transport BBM coal from Krajan to Kelanis. It is anticipated that from Kelanis to ships
standing offshore coal will be transported using conventional barges.
No land coal storage is being developed for BBM apart from stockpiles at Krajan. Consideration is being given to
transfer to conventional barges further up river than Kelanis. At this transfer point surges in coal delivery may be
accommodated using moored barges. Some improvements in the river channel will enhance the barging operation.
COKAL LIMITED Annual Report 2019 | Page 5
For personal use only
Review of Operations
JORC Code Statements
Since June 2016 no exploration activity was conducted in the field on any of Cokal’s assets. Consequently the JORC
Resources Statement for the BBM Project announced on 29 April 2016, remains current. The total Resource estimate
remains at 266.6Mt for BBM comprising 19.5Mt Measured and 23.1Mt Indicated Resources respectively and the
balance at Inferred status.
On 1st August 2017 Cokal announced its maiden JORC Reserves Statement. The Coal Reserve statement is only for the
Eastern portion of the BBM coal project and remains valid.
The highlights of this Reserve statement report included:
• Coal Reserve estimate of 20.2Mt of open pit Run-of-Mine (ROM) for BBM, producing 16.9Mt of Marketable
Reserves in accordance with the 2012 JORC Code.
• Reserve estimate comprised 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.
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.
Figure 3: Economic Open pits in Eastern Portion of BBM Tenement
COKAL LIMITED Annual Report 2019 | Page 6
For personal use only
Review of Operations
Figure 4: Cross Section through Open pits
Economic Reserves were determined using the Definitive Feasibility Study prepared in 2014 by Resindo, updated to
reflect reduced fuel costs and depreciation of the Rupiah in November 2016 (see ASX Announcement 2nd November,
2016).
CORPORATE ACTIVITY
BT Bara Ineral Asri (BMA)
Due diligence by PT Bara Mineral Asri (BMA) continued during the year. BMA has advised that it is working towards a
proposal to partner with Cokal for the funding and development of the BBM Mine. The manner of this future
cooperation will now change with the established participation of the Aahana Global Resources and Investment Pte
Ltd.
During the year BMA loaned US$2 million to Cokal to be repaid from the sale of coal when mining commences. This
will be paid at $10/t for coal sales at $100/t or greater and 10%/t for coal sold at less than $100/t.
BMA indicated it will submit a revised proposal for cooperation but so far this has not been received.
Aahana Global Resources and Investment Pte Ltd (AGRI)
During the year Aahana Mineral Resources SDN BHD (AMR), an associate company of Aahana Global Resources &
Investment Pte Ltd (AGRI), completed the acquisition of a substantial shareholding in Cokal Limited. AMR/AGRI is now
the largest single shareholder in Cokal.
In addition, during the year AGRI nominated its first director appointed to the Cokal Limited board, Mr. Karan Bangur.
Mr. Karan Bangur is the CEO of Aahana Global Resources & Investment Pte Ltd and has over 10 years experience in
the South East Asian region in mining and resources companies. He is a most welcome and valuable addition to our
team.
AGRI, under AMR, fully underwrote the Cokal Entitlement Offer to raise approximately AU$5.1 Million that completed
in August 2019.
Further to this AGRI is proceeding with discussions with the Company to arrange a suitable financing package for the
development of the BBM Coking Coal project.
Krakatau National Resources (Krakatau)
Meetings were held with senior management of Krakatau to discuss the future sale to them of both PCI coal and
coking coal. Krakatau indicated its PCI capable blast furnace is being commissioned and will require 10,000t/month
PCI coal month by the end of this year. They requested a 10kg sample of our PCI coal which was provided.
Discussions continue.
COKAL LIMITED Annual Report 2019 | Page 7
For personal use only
Review of Operations
Debt Restructuring – Conversion of Loans to Platinum Partners to a Royalty Arrangement
In November 2018, Cokal concluded and executed an amended agreement with Northrock Financial LLC and
Wintercrest Advisors LLC (the Platinum Entities) in respect of loans outstanding totaling US$13.89 million (Platinum
Loans). The amended agreement confirmed the conversion of the debt owing by the Company into a production
royalty.
On 20 February 2018, the Company issued 75 million Options to the Platinum Entities with an expiry date of 20
February 2023 and an exercise price of 1.6 cents (Existing Platinum Options). Each Existing Platinum Option currently
vests once all the Platinum Loans have been released and discharged. Half of these options have subsequently been
transferred to AGRI as part of its acquisition of a substantial holding in the Company as mentioned above. It has been
agreed that the remaining 37,500,000 options will not be exercised as discussed below.
The amended agreement:
•
•
Confirms that a number of the conditions precedent in respect of the Platinum Loans have been satisfied or
waived by the Platinum Entities and extends the date for meeting the remaining conditions precedent
(subsequent conditions) under the royalty deed for conversion of the balance of the Platinum Loans to 31
July 2020.
Provides that upon the Company issuing New Options (37.5 million options with a 4 year term and exercise
price of 1.6 cents), subject to shareholder approval, and the Platinum Entities agreeing not to exercise 37.5
million of the Existing Platinum Options (once the New options are issued 37.5 million of the Existing
Platinum Options are cancelled), one third of the Platinum Loans will be forgiven. The resolution to issue the
New Options was resolved by shareholders at the Company’s 2018 Annual General Meeting.
On 10 January 2019, 37.5 million New Options (4 year term and exercise price of 1.6 cents) were issued to the
Platinum Entities and consistent with the amended agreement between the Company and the Platinum entities one
third of the Platinum Loans (US$4,630,767 of debt) was forgiven at that time.
Convertible Notes
In October 2017 the Company entered into a Convertible Note Agreement with MEF I, L.P. (“Magna”), whereby Cokal
could raise up to AUD 4,000,000 through the issue of Convertible Notes in three tranches. The first tranche totaling
AUD 2,000,000 was drawn in October 2017, with 1,577,234 Convertible Notes issued. As at 30 June 2018, Magna had
converted 1,280,000 Convertible Notes to shares, with 297,234 Convertible Notes remaining. During the year,
150,000 Convertible Notes were converted to 7,591,796 shares. Redemption of the remaining 147,234 Convertible
Notes occurred in November 2018.
Fraudulent Activity
During the audit of the 2018 annual accounts Cokal was made aware of financial irregularities and fraudulent activity
which impacted the Company’s financial statements for the year ended 30 June 2018. The Company investigated and
rectified the irregularities. After rectification there has been no material financial loss to the Company. New
authorisations and organisation have been put in place to prevent such matters occurring in the future. The Company
requested and received the resignation of the Chief Financial Officer and the Purchasing Officer effective 15
November 2018. Others involved no longer work for Cokal.
Staffing
In July 2018 Cokal Limited appointed a new Chief Executive Officer. Jim Coleman has extensive relevant experience in
all aspects of open cut mining in South East Asia, Africa and Australia, management of mining contractors, shallow
draft barging, community development and achieving targets during mine start-ups.
The organisation of Cokal has been redesigned to be appropriate for the commencement of mining operations and
the exploration of tenements.
The appointed Mine Site Manager, Wisnu Jati, holds the appropriate qualifications to control the mine as required by
Indonesian law. He will be responsible for all activities including safety, mining contractors, short term mine planning,
administration, community relations, logistics (barging) and support for exploration.
COKAL LIMITED Annual Report 2019 | Page 8
For personal use only Review of Operations
Experienced mining engineer Arie Cahyono and geologist Luki Wilianto joined our team in the second half of the year.
Andrew Ichwan was appointed Finance Manager and commenced in January 2019. Andrew is Indonesian with
experience in both Indonesia and Australia. He has a track record working with several ASX listed companies including
Straits Resources Limited and Silverlake Resources Limited dealing with gold, zircon and coal. Andrew is a member of
CPA Australia and holds a Bachelor of Accounting degree from Curtin University.
Former CFO, Vic Kuss, is consulting to provide background knowledge of Cokal’s systems and to assist Andrew to
establish appropriate accounting protocols to ensure timely control of all income and expenditure going forward.
Relocation to New Office in Jakarta
During the year Cokal relocated its Indonesian Jakarta office from suite #1202 to suite #2302 in the same building.
This was part of a necessary restructure to reduce Company overheads, resulting in a saving of approximately
US$20,000 for every quarter in Indonesian office rental payment.
Rights Issue Raised AU$5.1 Million
On 18 June 2019 the Company announced a fully underwritten non-renounceable entitlement offer of one (1) new
share for every eight (8) Cokal shares held, at an issue price of AUD0.05 per new share to raise approximately AUD5.1
million before costs. After the closing date of the entitlement offer, approximately AUD1.7 million had been taken up
by shareholders. The directors placed some of the shortfall with the remainder placed with the Company’s major
shareholder and underwriter, Aahana Global Resources & Investment Pte Ltd.
The funding raised is being used towards current operating costs and initial infrastructure development and upgrading
of existing facilities at the BBM mine site.
In addition to this, the Company is in discussions with prospective investors who are keen to work on long term
offtake and investment based arrangements for sourcing PCI and premium coking coal from the BBM mine.
External Relations
Safety and Health
No activities on site during the year.
Environmental
Sound management of the environment is a critical part of Cokal’s strategy in becoming a global supplier in the
metallurgical coal sector. Work practices will be developed to establish environmental compliance and demonstrate
Cokal's commitment to the environment. These include:
•
•
Baseline water and environmental monitoring at the BBM project area. pH monitoring 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.
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.
• Monitoring of an authorised waste storage area. The drums, batteries and waste oil to be taken by a licenced
hazardous materials contractor to an approved and registered disposal facility in Banjarmasin. In addition, an
ongoing contract will be 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 willbe established in order to ensure that hazardous material is disposed of correctly.
Community Development
Cokal will continue and further develop its Corporate Social Responsibility (CSR) program.
COKAL LIMITED Annual Report 2019 | Page 9
For personal use only Directors' Report
Your Directors present their report for the year ended 30
June 2019.
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, 64 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
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
programs
Indonesia, gained since
graduating from the University of New South Wales in
in Australia and
1976. Mr Hanna has authored and co-authored
numerous coal industry publications.
• Geologist, 67, 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.
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, Resigned 21 August
2019)
Mr. Kielenstyn, 65 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
one of
Indonesia’s biggest mining and civil
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 2019 | Page 10
For personal use only Directors' Report
Karan Bangur, Non-Executive Director
(Appointed on 10 April 2019)
BCom
Mr Bangur, 35 has over a decade of experience in
operating mining and logistics projects in South East Asia.
He is well experienced and familiar with Indonesian
mining and general laws relating to on ground operations
due to his experience in several projects in Indonesia.
Current ongoing and previous projects include:
• Operations of thermal coal mine in Tanah Grogot,
East Kalimantan in capacity of financier.
• Operating fleet of HEMM (Heavy Earth Moving
Equipment) in thermal coal mine project in Tarakan,
North Kalimantan in capacity of owner.
• He currently serves as Managing Director of Aahana
Global Resources & Investment Pte Ltd, which is
primarily an investment and holding Co incorporated
in Singapore 2008- Present.
• He serves as Director in Aahana Mineral Resources
Sdn Bhd, which is the single majority shareholder in
Cokal Ltd. 2019 - Present.
•
•
Previous assignments involve evaluation and planning
of Iron Ore, Bauxite Ore and Graphite concentrate
recovery projects in Indonesia.
Previous projects
include
development in Indonesia and other parts of SE Asia.
logistics and port
• Development and operating Iron Ore tenement in
Malaysia including HEMM fleet management and
rental services.
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, 74 has a proven 51-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 and Rio Tinto.
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
integrated projects
various coal operations. He was also responsible for the
in Australia,
development of
Mozambique, Thailand, The Philippines,
India and
throughout SE Asia. Mr Coleman has specific expertise in
application of selective mining systems for low ash high
quality coals to minimise dilution.
Jim 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 to deliver 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
throughout
and managing operations concurrently
Australia and
including Australian
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, resigned 15 November 2018)
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.
Louisa Martino (Youens), 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
is a member of Chartered
Western Australia,
Accountants Australia and New Zealand and a member of
the Financial Services Institute of Australasia (FINSIA).
COKAL LIMITED Annual Report 2019 | Page 11
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
Karan Bangur
41,688,512
27,900,000
-
-
184,641,719
37,500,000
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 2019, the loss for the
consolidated entity after providing for income tax was
US$1,855,717 (2018: US$7,796,143).
Dividends Paid or Recommended
There were no dividends paid or recommended during
the financial year.
Review of Operations
Detailed comments on operations and exploration
programs up to the date of this report are included
separately
in the Annual Report under Review of
Operations.
Review of Financial Condition
Capital Structure
issued a total of
During the financial year, Cokal
103,142,367 shares. 88,765,000 shares were issued to
raise US$1.6 million in cash (this includes 37.5m options
exercised). 7,591,796 shares were issued on redemption
of 147,234 convertible notes and 6,785,571 shares were
issued on conversion of a loan and in payment of invoices
and salary.
At 30 June 2019, the consolidated entity had 816,842,159
ordinary shares and 96 million unlisted options on issue.
Financial Position
The net assets of the consolidated entity have increased
by US$1,219,834 from US$6,726,886 at 30 June 2018 to
US$7,946,720 at 30 June 2019.
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.
to
Liquidity and Funding
The consolidated entity believes it has sufficient access to
funds
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.
operations
finance
its
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 2019.
Significant Events after
Reporting Date
the
There have been no significant events after reporting
date except for:
•
the Entitlement Offer,
raising
Completion of
AU$5.1 million; and
•
Resignation of Mr Gerhardus (Garry) Kielenstyn as a
director of 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 its 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
regulatory approvals or
local
they may be
significantly delayed to enable it to commence
production.
Funding - the Group will require additional funding
to move from the exploration/development phase to
COKAL LIMITED Annual Report 2019 | Page 12
For personal use only Directors' Report
the production phase of the BBM project and the
tenements in Central Kalimantan. There is no
certainty that the Group will have access to available
financial resources sufficient to fund its capital costs
and/or operating costs at that time.
•
Development - the Group is involved in developing
greenfield projects in Indonesia which could result in
capital costs and/or operating costs at levels which
do not justify the economic development of the
project.
• Market - there are numerous factors involved with
early stage development of its properties such as the
BBM project, including variance in commodity price
and labour costs which can result in projects being
uneconomical.
Environmental Issues
The consolidated entity is subject to environmental
regulation in relation to its exploration activities in
respective countries. Indonesia where the 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 and Management (the Environment Law).
There are no matters that have arisen in relation to
environmental issues up to the date of this report.
Non-Audit Services
No non-audit services were provided by Cokal’s auditor,
Ernst & Young during the financial year ended 30 June
2019 (2018: Nil).
Remuneration Report (Audited)
This remuneration report for the year ended 30 June
2019 outlines the remuneration arrangements of the
Group in accordance with the requirements of the
Corporations Act 2001 (the Act) and its regulations. This
information has been audited as required by section
308(3C) of the Act.
The remuneration report details the remuneration
arrangements for key management personnel (KMP) who
are defined as those persons having authority and
responsibility for planning, directing and controlling the
major activities of the Group, directly or indirectly,
including any director (whether executive or otherwise)
of the consolidated entity.
For the purposes of this report, the term “executive”
includes the Executive Chairman, Chief Executive Officer,
directors and other senior management executives of the
Group.
Remuneration report approval at FY18 AGM
The remuneration report for the 2018 financial year
received positive shareholder support with proxy votes of
98.2% 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.
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.
Non-executive Director Remuneration
The Board seeks to set aggregate remuneration at a level
which provides the consolidated entity with the ability to
attract and retain directors of the highest calibre, whilst
incurring a cost which is acceptable to shareholders.
in a general meeting
remuneration as determined by
The Constitution of Cokal Limited and the ASX Listing
Rules specify that the non-executive directors are
the
entitled
to
consolidated entity
to be
in such manner as the
apportioned among them
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.
.
COKAL LIMITED Annual Report 2019 | Page 13
For personal use only Directors' Report
If a non-executive director performs extra services, which in the opinion of the directors are outside the scope of the
ordinary duties of the director, the consolidated entity may remunerate that director by payment of a fixed sum determined
by the directors in addition to or instead of the remuneration referred to above. However, no payment can be made if the
effect would be to exceed the maximum aggregate amount payable to non-executive directors. A non-executive director is
entitled to be paid travel and other expenses properly incurred by them in attending directors’ or general meetings of Cokal
Limited or otherwise in connection with the business of the consolidated entity.
The remuneration of the non-executive directors for the year ending 30 June 2019 is detailed in this Remuneration Report.
reward Executives for consolidated entity and 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.
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:
•
•
•
•
The remuneration of the Executive Directors and senior management may from time to time be fixed by the Board. As
noted above, the Board’s policy is to align the Executive Directors and senior management objectives with shareholder and
business objectives by providing a fixed remuneration component and offering short and/or long-term incentives as
appropriate.
The level of fixed remuneration is set so as to provide a base level of remuneration which is both appropriate to the position
and is competitive in the market. Short-term incentives may be provided in the form of performance bonuses. Fixed
remuneration and short-term incentives are reviewed annually by the Board, in carrying out the functions of the
Remuneration Committee, and the process consists of a review of Company-wide and individual performance, relevant
comparative remuneration in the market and internal, and where appropriate, external advice on policies and practices.
Senior management are given the opportunity to receive their fixed remuneration in a variety of forms including cash and
fringe benefits such as motor vehicles and expense payment plans. It is intended that the manner of payment chosen will be
optimal for the recipient without creating undue cost for the consolidated entity.
Long-term incentives may be provided in the form of options and/or the issue of shares following the completion of
satisfactory time periods of service. The consolidated entity uses employee continuity of service and the future share price
to align comparative shareholder return and reward for executives.
The remuneration of the Executive Directors and senior management for the year ending 30 June 2019 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 five years:
Year-end (30 June)
Share price (US$)
2019
0.03
Basic (loss) per share (US cents)
(0.26)
2018
0.03
(1.18)
2017
0.04
(1.96)
2016
0.02
(6.07)
2015
0.10
(2.76)
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.
COKAL LIMITED Annual Report 2019 | Page 14
For personal use only Directors' Report
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. Mr Kielenstyn
resigned on 21 August 2019.
Senior Management
Chief Executive Officer
Mr James Coleman was appointed Chief Executive Officer
on 27th of July 2018. The Company has entered into an
employment agreement with Mr Coleman.
The employment agreement may be terminated with 4
months’ notice or at any time with cause.
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 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. Mr Juliansyah resigned on 15th of November
2018.
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, resigned 21
August 2019)
Karan Bangur, Non-Executive Director (appointed
10 April 2019)
(ii)
Senior Management
James Coleman, Chief Executive Officer (appointed
27 July 2018)
Teuku Juliansyah, CFO (appointed 24 June 2016,
resigned 15 November 2018) and Joint Company
Secretary (appointed 1 September 2015, resigned
15 November 2018)
Remuneration Details
The following table of benefits and payments details, in
respect to the financial years ended 30 June 2019 and
2018, the component of remuneration for each key
management person of the consolidated entity:
Short-Term Benefits
Post-
Employment
Termination
Benefits
Share-based
payments
Total
2019
Salary &
Fees
Cash
Bonus
Other short
-term
benefits
Superannuation
Cash-settled
Equity-
settled
(options)
%
Remuneration
as equity
US$
US$
US$
US$
US$
US$
US$
US$
Directors
Domenic Martino
Patrick Hanna
Karan Bangur *
77,760
71,280
30,043
Gerhardus Kielenstyn^
209,630
Total
388,713
Senior Management
James Coleman **
Teuku Juliansyah #
Total
165,000
70,305
235,305
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,349
-
2,349
-
-
-
-
-
-
-
-
44,134
44,134
15,674
-
55,944
-
45,683
-
15,674
45,683
55,944
-
-
-
-
-
-
-
-
77,760
71,280
32,392
253,764
435,196
236,618
115,988
352,606
0%
0%
0%
17%
11%
24%
0%
16%
COKAL LIMITED Annual Report 2019 | Page 15
For personal use only Directors' Report
Short-Term Benefits
Post-
Employment
Termination
Benefits
Share-based
payments
Total
2018
Salary &
Fees
Cash
Bonus
Other short
-term
benefits
Superannuation
Cash-settled
Equity-
settled
(options)
US$
US$
US$
US$
US$
US$
US$
US$
%
Remuneration
as options
Directors
Domenic Martino
Patrick Hanna
88,692
88,692
Gerhardus Kielenstyn ^
437,995
Total
615,379
Senior Management
Duncan Cornish^^
Teuku Juliansyah
Total
3,431
170,055
173,486
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
51,005
51,005
-
-
-
-
-
-
-
-
-
-
88,692
88,692
489,000
666,384
3,431
170,055
173,486
0%
0%
10%
8%
-
-
-
* Appointed as Non-Executive Director on 10 April 2019. In addition to director fees, Mr Bangur receives a fee for services provided to BBM which
are included in the schedule
^ Appointed as Executive Director of the Company on 27 January 2017 and appointed as COO on 24 June 2016. Resigned on 21 August 2019
** Appointed as Chief Executive Officer on 27 July 2018. First three months’ salary was paid in shares, being US$28,686 (2018: US$nil) issued on
20 December 2018.
# Resigned on 15 November 2018
^^ Resigned 9 August 2017
Advances to KMP
Nil advances to Key Management Personnel as at 30 June 2019 (2018: 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. Remuneration options on issue
during the 2019 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
James
Coleman
James
Coleman
James
Coleman
James
Coleman
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
20/12/2018
Note 3 3,000,000
0.03
0.01
Options
Options
Options
20/12/2018
20/12/2018
20/12/2018
Note 4 3,000,000
0.04
0.01
Note 5 3,000,000
0.05
0.01
Note 6 5,000,000
0.07
0.01
-
-
-
-
-
-
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: vesting on achieving a consistent production rate for three months of 20,000 tonnes of coal per month
Note 4: vesting on achieving a consistent production rate for three months of 40,000 tonnes of coal per month
Note 5: vesting upon commencement of shallow river barging
Note 6: vesting upon first shipment of coking coal from BBM
-
-
-
-
-
-
100%
22/12/2020
100%
22/12/2020
100%
22/12/2021
100%
22/12/2021
100%
22/12/2021
100%
22/12/2021
COKAL LIMITED Annual Report 2019 | Page 16
Type text hereFor personal use only Directors' Report
Options holdings
Details of share-based payments to KMP and other executives awarded and vested/unvested during the year ended 30 June
2019 and 30 June 2018 are detailed in the table below:
Balance
1 July 2018
Granted as
Remuneration
Exercise
of Options
Net Change
Other
Balance
30 June 2019
Total vested
at 30 June
2019
Total vested
and
exercisable at
30 June 2019
Total vested and
unexercisable at
30 June 2019
Directors
Domenic Martino
Patrick Hanna
Karan Bangur^^
Gerhardus Kielenstyn
Senior Management
James Coleman *
Teuku Juliansyah***
Total
-
-
-
9,000,000
-
-
-
-
-
500,000
9,500,000
14,000,000
-
14,000,000
-
-
-
-
-
-
-
-
-
-
(4,000,000)
-
-
-
5,000,000
- 14,000,000
-
(4,500,000) 19,000,000
(500,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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
-
-
5,000,000
-
500,000
8,500,000
-
-
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
-
-
-
-
-
-
* Appointed as Chief Executive Officer on 27 July 2018
** Resigned 9 August 2017
*** Resigned 15 November 2018
# 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
^^ Appointed as Non-Executive Director on 10 April 2019
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:
Directors
Domenic Martino
Patrick Hanna
Karan Bangur ~
Garry Kielenstyn
Senior Management
James Coleman **
Teuku Juliansyah***
Total
Balance
1 July 2018
Granted as
Remuneration
On Exercise
of Options
Net Change
Other
Balance
30 June 2019 ●
37,120,001
25,800,000
-
-
-
-
62,920,001
-
-
-
-
1,245,031
-
1,245,031
-
-
-
-
-
-
-
-
-
148,125,000
-
37,120,001
25,800,000
148,125,000
-
-
-
148,125,000
1,245,031
-
212,290,032
COKAL LIMITED Annual Report 2019 | Page 17
For personal use only
Directors' Report
Directors
Domenic Martino
Patrick Hanna
Garry Kielenstyn
Senior Management
Duncan Cornish*
Teuku Juliansyah
Total
Balance
1 July 2017
Granted as
Remuneration
On Exercise
of Options
Net Change
Other
Balance
30 June 2018 ●
37,120,001
25,800,000
-
2,401,215
-
65,321,216
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
37,120,001
25,800,000
2,401,215
-
65,321,216
* Resigned 9 August 2017
** Appointed 27 July 2018
*** Resigned 15 November 2018
● If position ceased during the financial year, balance as at that date
~Appointed as Non-Executive Director of the Company on 10 April 2019
Transactions with KMP and their related entities
Mr Domenic Martino
•
•
•
As at 30 June 2019 director fees totaling US$182,724 (2018: US$148,615) remain outstanding to Mr Martino.
As at 30 June 2019 a loan of US$nil (2018: US$44,346) 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 2019, Mr Martino was owed US$2,242 (2018: US$67,128) 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$4,000 (excl GST) per month. The services are
based on normal commercial terms and conditions. As at 30 June 2019, company secretarial fees of US$nil (2018:
US$16,000)) remain outstanding. In addition, during the 2019 financial year, Indian Ocean Corporate Pty Ltd has
provided corporate advisory services totaling US$69,731 (2018: US$218,483) and assistance with the preparation of
reports, totaling US$46,550 (2018: US$26,422). An amount of US$15,400 was outstanding as at 30 June 2019
Mr Patrick Hanna
•
•
As at 30 June 2019 director fees totaling US$156,622 (2018: US$148,615) remain outstanding to Mr Hanna.
As at 30 June 2019 a loan of AUD108,500 (US$76,981) (2018: US$80,192) was owing to Mr Hanna by the Company. This
loan was for working capital purposes, is repayable on demand and does not accrue interest.
Mr Gerhardus Kielenstyn
•
•
As at 30 June 2019 remuneration fees totaling US$Nil (2018: US$51,200) remain outstanding to Mr Kielenstyn.
As at 30 June 2019 a loan of US$83,041 (2018: US$33,000 and US$90,000) was owing to Mr Kielenstyn by the Company.
These loans are repayable on demand and do not accrue interest.
Mr James Coleman
•
As at 30 June 2019 remuneration totaling US$165,675 (2018: US$nil) remains outstanding to Mr Coleman.
Mr Teuku Juliansyah
•
•
As at 30 June 2019 remuneration fees totaling US$nil (2018: US$37,837) remain outstanding to Mr Juliansyah.
As at 30 June 2019 and 30 June 2018 the following loans were owing to Mr Juliansyah. Interest on all loans was accrued
until repayment.
COKAL LIMITED Annual Report 2019 | Page 18
For personal use only
Directors' Report
2019 financial year
Principal
Interest
rate
per
month
Interest accrued
at beginning of
year
Total interest
charged (incl any
penalty) for the
Year
Amount repaid
during year
Amount
Outstanding as at
30 June 2019
IDR1,850,000,000
6.5%
IDR 601,250,000
IDR 584,914,500
(IDR 3,036,164,500)
IDR541,895,604
7.5%
IDR 312,347,864
IDR 39,838,670
(IDR 894,082,138)
IDR340,000,000
6.5%
IDR 265,200,000
IDR 37,925,000
(IDR 643,125,000)
IDR245,000,000
Nil
-
-
(IDR 245,000,000)
IDR2,976,895,604
(US$ 209,640)
IDR 1,178,797,864
(US$ 83,014)
IDR 662,678,170
(US$ 46,667)
(IDR 4,818,371,638)
((US$ 339,321))
-
-
-
-
-
2018 financial year
Principal
Interest rate
per month
Total interest charged
for the Year
Amount repaid
during year
IDR1,850,000,000
IDR541,895,604
IDR340,000,000
IDR245,000,000
IDR2,976,895,604
(US$ 207,335)
6.5%
7.5%
6.5%
Nil
IDR 1,443,000,000
(IDR 841,750,000)
IDR 487,706,044
(IDR 175,358,108)
IDR 772,959, 199
IDR 265,200,000
-
-
-
IDR 420,600,000
IDR 245,000,000
IDR 2,195,906,044
(US$ 134,421)
(IDR 1,017,108,180)
((US$ 70,840))
IDR 3,889,809,199
(US$ 270,916)
Amount
Outstanding as at
30 June 2018
IDR 2,451,250,000
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 held during the year and the number of meetings attended by each Director was as
follows:
Board
Number of meetings
held while in office
Meetings
attended
Domenic Martino
Pat Hanna
Karan Bangur
Garry Kielenstyn
4
4
2
4
4
4
2
4
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 2019 | Page 19
For personal use only Directors' Report
Options
At 30 June 2019, there were 96,000,000 unissued
ordinary shares under options as follows:
•
•
•
•
•
•
•
•
•
1,000,000 unlisted options exercisable at AU$0.10
on or before 19 September 2020
1,000,000 unlisted options exercisable at AU$0.12
on or before 22 December 2020 (vesting on
production of 100,000 tonnes of coal)
4,000,000 unlisted options exercisable at AU$0.15
on or before 22 December 2020 (vesting on
achieving a consistent production rate for three
months of 45,000 tonnes of coal per month)
75,000,000 unlisted options exercisable at AU$0.016
on or before 16 February 2023 (vesting n all
Platinum loans being released and discharged under
the Debt Restructure Transaction)
1,000,000 unlisted options exercisable at AU$0.045
on or before 20 December 2021
3,000,000 unlisted options exercisable at AU$0.045
on or before 20 December 2021 (vesting upon
production of 20,000 tonnes per month of coal
(including PCI) for three consecutive months)
3,000,000 unlisted options exercisable at AU$0.055
on or before 20 December 2021 (vesting upon
production of 40,000 tonnes per month of coal
(including PCI) for three consecutive months)
3,000,000 unlisted options exercisable at AU$0.07
on or before 20 December 2021 (vesting upon
commencement of shallow river barging)
5,000,000 unlisted options exercisable at AU$0.10
on or before 20 December 2021 (vesting upon first
shipment of coking coal from BBM)
No option holder has any right under the options to
participate in any other share issue of Cokal Limited or
any other entity.
Subsequent to year end, no ordinary shares in Cokal
Limited were issued as a result of the exercise of options.
Proceedings on Behalf of the
Consolidated Entity
No person has applied for leave of Court to bring
proceedings on behalf of the consolidated entity or
intervene in any proceedings to which the consolidated
entity is a party for the purposes of taking responsibility
on behalf of the consolidated entity for all or any part of
those proceedings.
The consolidated entity was not a party to any such
proceedings during the year.
Auditor’s Independence
Declaration
The Auditor’s Independence Declaration forms part of
the Directors’ Report and can be found on page 21.
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, 1 October 2019
COKAL LIMITED Annual Report 2019 | Page 20
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 2019, 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
1 October 2019
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 18 September 2019
(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
357
123
228
553
467
Number of
shares
257,440
352,155
2,056,756
23,118,162
892,609,701
Total
1,728
918,394,214
The number of shareholders holding less than a marketable parcel (a total of 9,999 ordinary shares) is 566 on a share price of
AU$0.05.
Unlisted options
Unlisted options
Unlisted options
Unlisted options
(AU$0.10 @ 19/9/2020)
(AU$0.12 @ 22/12/2020)
(AU$0.15 @ 22/12/2020)
(AU$0.016 @ 22/12/2020)
No. of
holders
No. of
options
No. of
holders
No. of
options
No. of
holder
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
-
-
-
-
1,000,000
1,000,000
-
-
-
-
1
1
-
-
-
-
4,000,000
4,000,000
-
-
-
-
4
4
-
-
-
-
75,000,000
75,000,000
Unlisted options
(AU$0.045 @
20/12/2021)
Unlisted options
Unlisted options
Unlisted options
Unlisted options
(AU$0.045 @
22/12/2021)
(AU$0.055 @
20/12/2021)
(AU$0.07 @
20/12/2021)
(AU$0.10 @
22/12/2021)
No. of
holders
No. of
options
No. of
holders
No. of
options
No. of
holder
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
-
-
-
-
3,000,000
3,000,000
-
-
-
-
1
1
-
-
-
-
3,000,000
3,000,000
No.
of
hold
ers
-
-
-
-
1
1
No. of
options
No. of
holders
No. of
options
-
-
-
-
3,000,000
3,000,000
-
-
-
-
1
1
-
-
-
-
5,000,000
5,000,000
COKAL LIMITED Annual Report 2019 | Page 22
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:
1 AAHANA MINERAL RESOURCES SDN BHD
2 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
3 BNP PARIBAS NOMINEES PTY LTD
4 PH CAPITAL PTY LTD
5 BNP PARIBAS NOMS PTY LTD
6
LE MEYER HOLDINGS LIMITED
7 CITICORP NOMINEES PTY LIMITED
8 MRS LAURA LYNCH
9 GEBRUN PTY LTD
10
TEKNIKS PUBLICATIONS PTY LIMITED
11 XIN HUA PTY LTD
12 HORVATH INVESTMENTS PTY LTD
13 BNP PARIBAS NOMINEES PTY LTD
14 MS KWAI LAN CHIN
15 MR MICHAEL CHRISTOPHER HORVATH
16 MR STEPHEN RODNEY HARIONO
17 BATMAN MANAGEMENT GROUP PTY LTD
18 MR VASILIOS VOTSARIS
19
20
TJ SMOCK & CO PTY LTD
LANNE PTY LTD
Top 20
Total
Option Holders
The names of holders holding 20% or more of options on issue:
Number of shares
% of total shares
184,641,719
20.10%
57,734,227
41,676,211
27,000,000
21,671,020
18,000,000
17,877,293
17,500,000
17,500,000
16,590,000
12,631,200
12,271,799
11,812,500
11,800,000
11,704,207
11,400,000
10,791,007
10,103,026
10,000,000
8,420,800
531,125,009
918,394,214
6.27%
4.54%
2.94%
2.36%
1.96%
1.95%
1.91%
1.91%
1.81%
1.38%
1.34%
1.29%
1.29%
1.27%
1.24%
1.18%
1.10%
1.09%
0.92%
57.83%
100.00%
Unlisted options
Unlisted options
Unlisted options
Unlisted options
(AU$0.10 @ 19/9/2020)
(AU$0.12 @ 22/12/2020)
(AU$0.15 @ 22/12/2020)
(AU$0.016 @ 22/12/2020)
No. of options
No. of options
No. of options
No. of options
HELBRAUN HOLDINGS PTY LTD
1,000,000
-
-
MR GERHARDUS KIELENSTYN
AAHANA MINERAL RESOURCES
SDN BHD
NORTHROCK FINANCIAL LLC
TOTAL
-
-
-
1,000,000
4,000,000
-
-
-
-
Total options in class
1,000,000
1,000,000
4,000,000
-
-
37,500,000
28,924,426
66,424,426
75,000,000
LIGHTGLOW ENTERPRISES PTY LTD
FARINA PTY LTD
TOTAL
Total options in class
Unlisted options
(AU$0.045 @
20/12/2021)
Unlisted options
Unlisted options
Unlisted options
Unlisted options
(AU$0.045 @
22/12/2021)
(AU$0.055 @
20/12/2021)
(AU$0.07 @
20/12/2021)
(AU$0.10 @
22/12/2021)
No. of options
No. of options
No. of options
No. of options
No. of options
1,000,000
-
-
-
-
-
3,000,000
3,000,000
3,000,000
5,000,000
1,000,000
1,000,000
3,000,000
3,000,000
3,000,000
5,000,000
3,000,000
3,000,000
3,000,000
5,000,000
COKAL LIMITED Annual Report 2019 | Page 23
For personal use only
Shareholder Information
Substantial shareholders
Substantial shareholders as shown in substantial shareholder notices received by Cokal are:
Name of Shareholder:
Aahana Mineral Resources Sdn Bhd
Peter Anthony Lynch (estate) & Laura Anne Lynch
Ordinary Shares:
184,641,719
56,052,000
The Company notes that, as at 18 September 2019, the following shareholders own substantial shareholdings (>= 5.0%) in Cokal:
Name of Shareholder:
HSBC Custody Nominees
(Australia) Limited
Ordinary
Shares:
% of total shares:
57,734,227
6.27%
(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 2019 | Page 24
For personal use only
Interests in Tenements and Projects
Cokal Limited had the following interests in projects as at 30 June 2019:
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
n
Kalimanta
n
Kalimanta
n
Kalimanta
n
75%
60%
60%
75%
COKAL LIMITED Annual Report 2019 | Page 25
For personal use only
Consolidated Statement of Comprehensive
Income for the year ended 30 June 2019
Note
2
2
10
21
10
24
4
Revenue from coal sales
Revenue and other income
Employee benefits expenses
Depreciation expenses
Arrangement fee
Production expenses
Finance costs
Legal expenses
Administration and consulting expenses
Licence fees
Write-off property, plant and equipment
Share based payment expense on amendment
of debt to royalty conversion agreement
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
Total comprehensive loss for the period
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
2019
US$
470,109
4,631,743
2018
US$
652,074
98
(1,468,388)
(1,846,222)
(82,657)
(111,386)
(454,867)
(36,450)
(34,557)
(827,175)
(1,549,658)
(1,162,166)
(1,003,561)
(25,239)
(996,198)
(3,808,113)
(639,611)
(75,556)
(650,913)
-
-
-
(226,704)
(406,463)
(1,855,717)
(7,796,143)
-
-
(1,855,717)
(7,796,143)
-
-
(1,855,717)
(7,796,143)
Cents
(0.26)
(0.26)
Cents
(1.18)
(1.18)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
COKAL LIMITED Annual Report 2019 | Page 26
For personal use only
Consolidated Statement of Financial Position as
at 30 June 2019
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
Note
7
7
8
12
10
11
12
13
14
15
16
17
18
2019
US$
127,361
138,916
2,102
17,470
285,849
2018
US$
15,502
138,916
23,134
6,849
184,401
186,831
1,428,811
25,067,202
25,067,202
38,148
35,362
25,292,181
26,531,375
25,578,030
26,715,776
8,369,775
-
5,461,564
364,108
9,261,535
14,163,218
17,631,310
19,988,890
-
-
17,631,310
19,988,890
7,946,720
6,726,886
91,686,061
89,727,054
6,116,687
5,000,143
(89,856,028)
(88,000,311)
7,946,720
6,726,886
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
COKAL LIMITED Annual Report 2019 | Page 27
For personal use only
Consolidated Statement of Changes in Equity
for the year ended 30 June 2019
At 1 July 2018
89,727,054
5,000,143
(88,000,311)
6,726,886
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 2019
At 1 July 2017
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
-
-
-
1,959,007
-
-
-
-
-
1,116,544
1,959,007
1,116,544
(1,855,717)
(1,855,717)
-
-
(1,855,717)
(1,855,717)
-
-
-
1,959,007
1,116,544
3,075,551
91,686,061
6,116,687
(89,856,028)
7,946,720
84,752,154
4,907,414
(80,789,063)
9,455,400
-
-
-
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
At 30 June 2018
89,727,054
5,000,143
(88,000,311)
6,726,886
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
COKAL LIMITED Annual Report 2019 | Page 28
For personal use only
Consolidated Statement of Cash Flows
for the year ended 30 June 2019
Note
21
23
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 lease deposit
Net cash outflow from investing activities
Cash Flows from Financing Activities
Proceeds from issue of shares and options
(Repayment) / Proceeds from convertible note
Proceeds from borrowings
Repayment of 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
2019
US$
2018
US$
162,921
959,263
(3,027,126)
(4,039,122)
976
98
(114,040)
(215,476)
-
(496,198)
(2,977,269)
(3,791,435)
(2,843)
-
(2.843)
(3,155)
136,868
133,713
1,595,822
1,744,476
(186,251)
1,567,177
2,000,000
333,307
(317,600)
-
3,091,971
3,644,960
111,859
15,502
-
(12,762)
28,264
-
127,361
15,502
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
COKAL LIMITED Annual Report 2019 | Page 29
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
Note 1: Summary of Significant Accounting Policies
(a) General information
The consolidated financial statements of Cokal Limited for the year ended 30 June 2019 were authorised for issue in
accordance with a resolution of the Directors dated 30 September 2019 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 2019, the Group’s current liabilities exceed the current assets by US$17,248,643 (30 June 2018: US$19,804,489).
This position is due to:
•
•
The classification of the Group debt with Platinum Partners (refer note 15) of US$9,261,535 as a current liability;
The classification of the Group’s liability with PT Bara Mineral Asri (BMA Group) (refer note 13) of $2,000,000 as a
current liability; and
The Group’s arrears of trade and other payables. A significant number of the Group’s creditors, including the directors,
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 15) to convert all outstanding
loans owing to them to production royalties (this formalised the agreement on 22 July 2016) subject to certain conditions
precedent. During the year ended 30 June 2019, the Company entered into a further agreement with Platinum Partners, the
effect of which confirmed Cokal’s satisfaction with a number of the conditions precedent to the Royalty Deed and extended
the date for meeting all of the remaining conditions precedent (the “Subsequent Conditions”) under the Royalty Deed for
conversion of two-thirds of the Platinum Loans (being $9,261,535) to 31 July 2020. In addition, under the agreement when
Cokal cancels and reissues 37.5 million options to Platinum Partners, one-third of the Group’s debt with Platinum Partners is
discharged and released. The cancellation and reissue of the 37.5 million options occurred on 10 January 2019.
In addition, the Group is in the process of agreeing an arrangement with the BMA Group in respect of the $2.0 million of
funding received from pursuant to the Key Principles of Agreement dated 21 September 2018. It is currently anticipated the
liability will be repaid based on a $ per tonne of coal sold or percentage of coal sales proceeds from the BBM project.
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 as a going concern is impacted by a number of matters including:
•
Satisfaction of the Subsequent Conditions under the Royalty Deed (as amended) with Platinum Partners and the
conversion of the remaining two-thirds of the of the Platinum Loans to a royalty on coal;
Finalisation of the arrangements with the BMA Group in respect of the repayment of the $2.0 million received pursuant
to the Key Principles of Agreement dated 21 September 2018;
•
COKAL LIMITED Annual Report 2019 | Page 30
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
(c) Going concern (Cont’d)
•
•
•
The continued financial support of management and directors who have provided short term loans to the Group and/or
have agreed to not require the Group to pay amounts owing to them until such time as cash flows are generated by the
BBM project or have otherwise agreed to have the amounts payable to them satisfied by way of a share issue (subject
to shareholder approval);
The 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 21) and working capital requirements, until such time as the project 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, should the above matters not be
successfully resolved, the Group may not be able to continue as a going concern.
In the event that the Group is unable to satisfy the Subsequent Conditions to the Royalty Deed, further re-negotiation of the
arrangements with Platinum Partners will be required.
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, including management and the directors, 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 Platinum Partners, have made demands for payment.
During the year the Company completed a placement to raise US$1,172,628 (before issue costs) through the issue of
51,265,000 shares at an issue price of AU$0.032 per share to sophisticated and professional investors and US$423,194 from
the issue of shares on conversion of options at an exercise price of AU$0.016. In addition, post year end, the Company has
completed an Entitlement Issue, raising approximately US$3.5million.
The funds raised from the above placements has enabled the Group to meet its required cash out flows to the date of this
report but arrears of trade and other payables remains.
The Directors are confident given the current permitting and financing processes being undertaken and announced to the
market that the Group will be successful in its endeavours to develop the larger BBM project and will satisfy the Subsequent
Conditions in the Platinum Partners Royalty Deed (as amended). 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. As a result, the financial report has been prepared on a
going concern basis.
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 has not early adopted any other standard, interpretation or amendment that has been issued but is not yet
effective.
COKAL LIMITED Annual Report 2019 | Page 31
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
(ii)
Accounting Standards and Interpretations issued but not yet effective
The Group has adopted all the mandatory new and amended Accounting Standards issued that are relevant to its operations
and effective for the current reporting period. There was no material impact on the financial report as a result of the
mandatory new and amended Accounting Standards adopted.
AASB 9: Financial Instruments
AASB 9 which contains accounting requirements for financial instruments, replacing AASB 139 Financial Instruments:
Recognition and Measurement. The standard contains requirements in the areas of classification and measurement,
impairment, hedge accounting and de-recognition.
Existing financial assets and liabilities of the Company were assessed in terms of the requirements for AASB 9. In this regard
the adoption of AASB 9 will impact on the classification of financial assets and liabilities:
Original measurement category under AASB 139 (i.e. prior to 1 July
2018)
Cash and cash equivalents
Loans and receivables
Financial liabilities at amortised cost
New measurement category under AASB 9 (i.e. from 1 July
2018)
Financial assets at amortised
Financial assets at amortised
Financial liabilities at amortised cost
The changes in classification have not results in any re-measurement adjustments at 1 July 2018. The Company has adopted
AASB 9 retrospectively from 1 July 2018 and has elected not to restate comparative information.
Given the nature of the Company’s business and the nature of its financial assets subject to an expected credit loss (“ECL”)
assessment, there was no material impact arising from the application of the new expected credit loss requirements of AASB
9.
AASB 15: Revenue from Contracts with Customers
AASB 15 Revenue from Contracts with Customers was issued in December 2015 and establishes a five-step model to account
for revenue arising from contracts with customers. Under AASB 15, revenue is recognised at an amount that reflects the
consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. Under
AASB 15, the revenue recognition model will change from one based on the transfer of risk and reward of ownership to the
transfer of control of ownership.
AASB 15 requires entities to exercise judgement, taking into consideration all of the relevant facts and circumstances when
applying each step of the model to contracts with their customers. The standard also specifies the accounting for the
incremental costs of obtaining a contract and the costs directly related to fulfilling a contract. In addition, the standard
requires enhanced and extensive disclosures about revenue to help investors better understand the nature, amount, timing
and uncertainty of revenue and cash flows from contracts with customers.
The Company has adopted AASB 15 using the modified retrospective approach.
Coal Sales: there were no changes identified with respect to the timing or amount of revenue recognition. Revenue from
coal sales is recognised at a point in time when control passes to the buyer. As all performance obligations are satisfied at
that time, there are no remaining performance obligations under the contract. The transaction price is determined at
transaction date and there are no further adjustments to this price.
The Group has not adopted early any other standard, interpretation, or amendment that has been issued, but is not yet
effective.
COKAL LIMITED Annual Report 2019 | Page 32
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
(e) Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries at reporting
date. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the
investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an
investee if and only if the Group has:
•
Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the
investee);
Exposure, or rights, to variable returns from its involvement with the investee; and
The ability to use its power over the investee to affect its returns.
•
•
When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts
and circumstances in assessing whether it has power over an investee, including:
•
•
•
The contractual arrangements with the other vote holders of the investee;
Rights arising from other contractual arrangements; and
The Group’s voting rights and potential voting rights.
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to
one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the
subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary
acquired or disposed of during the period are included in the statement of comprehensive income from the date the Group
gains control until the date the Group ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of
the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line
with the Group’s accounting policies. All intra-Group assets and liabilities, equity, income, expenses and cash flows relating
to transactions between members of the Group are eliminated in full on consolidation.
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.
(e) Revenue recognition
The Group adopted AASB 15 Revenue from Contracts with Customers, as permitted from 1 July 2018. To determine whether
to recognise revenue, the Group follows a 5-step process:
1. Identifying the contract with a customer;
2. Identifying the performance obligations;
3. Determining the transaction price;
4. Allocating the transaction price to the performance obligations; and
5. Recognising revenue when/as performance obligation(s) are satisfied.
The Group’s revenue from contracts with customers is predominately sourced from the sale of coal from its BBM operation.
Sale of coal
The Group has determined that revenue from the sale of coal is recorded when delivered to the customer (being the point
at which control passes to the customer). At this point, the Group has satisfied all its performance obligations under the
sales agreement with the customer. The revenue is recognised at 100% of the sale value, calculated based on the tonnes
supplied at the contracted price per tonne (adjusted for any known quality penalties).
Interest income
Interest revenue is recognised as interest accrues using the effective interest rate method. This is a method of calculating
the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest
rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset
to the net carrying amount of the financial asset.
COKAL LIMITED Annual Report 2019 | Page 33
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
Income tax
(f)
The income tax expense for the year is the tax payable on the current year's taxable income based on the national income
tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences
between the tax base of assets and liabilities and their carrying amounts in the financial statements, and to unused tax
losses.
Deferred tax assets and liabilities are recognised for all temporary differences, between carrying amounts of assets and
liabilities for financial reporting purposes and their respective tax bases, at the tax rates expected to apply when the assets
are recovered or liabilities settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction.
Exceptions are made for certain temporary differences arising on initial recognition of an asset or a liability if they arose in a
transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or
taxable profit.
Deferred tax assets are only recognised for deductible temporary differences and unused tax losses if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are not recognised for temporary differences between the carrying amount and tax bases
of investments in subsidiaries, associates and interests in joint ventures where the parent entity is able to control the timing
of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Current and deferred tax balances relating to amounts recognised directly in other comprehensive income and equity are
also recognised directly in other comprehensive income and equity, respectively.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer
profitable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets
against tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation
authority.
Cokal Limited and its wholly-owned subsidiaries are in the process of implementing the tax consolidation legislation in
Australia. Cokal Limited will be the head entity in the tax consolidated Group. Once the tax consolidation is executed, these
entities will be taxed as a single entity and deferred tax assets and liabilities will be offset in these consolidated financial
statements.
(g) 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.
(h) Joint venture
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.
The Group does not currently have any joint ventures.
COKAL LIMITED Annual Report 2019 | Page 34
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
Joint operations
(i)
Joint operations are joint arrangements in which the parties with joint control have rights to the assets and obligations for
the liabilities relating to the arrangement. The activities of a joint operation are primarily designed for the provision of
output to the parties to the arrangement, indicating that:
The parties have the rights to substantially all the economic benefits of the assets of the arrangement; and
•
• All liabilities are satisfied by the joint participants through their purchases of that output. This indicates that, in
substance, the joint participants have an obligation for the liabilities of the arrangement.
The consolidated financial statements of the Group include its share of the assets and liabilities, revenues and expenses
arising jointly or otherwise from those operations and its revenue derived from the sale of its share of output from the joint
operation. All such amounts are measured in accordance with the terms of each arrangement, which are usually in
proportion to the Group’s interest in the joint operation.
The Group does not currently have any joint operations.
(j) 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.
(k) Financial instruments
Financial Instruments
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.
Recognition and Initial Measurement of financial assets
The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow
characteristics and the Group’s business model for managing them. The Group initially measures a financial asset at its fair
value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. In order for a financial
asset to be classified and measured at amortised cost it needs to give rise to cash flows that are ‘solely payments of principal
and interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at
an instrument level. The Group’s business model for managing financial assets refers to how it manages its financial assets in
order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash
flows, selling the financial assets, or both.
Subsequent Measurement of financial assets
Financial assets at amortised cost (debt instruments) is the most relevant to the Group. The Group measures financial assets
at amortised cost if both of the following conditions are met:
•
•
The financial asset is held within a business model with the objective to hold financial assets in order to collect
contractual cash flows; and
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to
impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
Impairment of financial assets
The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through
profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and
all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate.
The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are
integral to the contractual terms.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily
derecognised (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.
COKAL LIMITED Annual Report 2019 | Page 35
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
Financial instruments (cont’d)
(k)
Financial liabilities
A financial liability is a contractual obligation to deliver cash or another financial asset or to exchange financial assets or
financial liabilities under unfavourable conditions.
Recognition and Initial Measurement of financial liabilities
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and
borrowings or as payables. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings
and payables, net of directly attributable transaction costs. The Group’s financial liabilities include trade and other payables,
loans and borrowings including bank overdrafts, and derivative financial instruments.
Subsequent Measurement of financial liabilities
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 derecognised 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 as finance costs in the statement of profit or
loss.
Derecognition of financial liabilities
A financial liability is derecognised 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 derecognition of the original
liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the
statement of profit or loss.
(l) 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.
(m) 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.
COKAL LIMITED Annual Report 2019 | Page 36
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
(m) Exploration, evaluation and development expenditure (cont’d)
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.
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
COKAL LIMITED Annual Report 2019 | Page 37
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
(m) Exploration, evaluation and development expenditure (cont’d)
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.
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.
COKAL LIMITED Annual Report 2019 | Page 38
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
(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.
(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:
COKAL LIMITED Annual Report 2019 | Page 39
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
(v) Fair value measurement (cont’d)
•
•
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.
(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.
COKAL LIMITED Annual Report 2019 | Page 40
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
(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.
(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 24.
(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.
COKAL LIMITED Annual Report 2019 | Page 41
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
(aa) Critical accounting estimates and judgments (cont’d)
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. 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 2019 | Page 42
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
Note 2: Revenue and Other Income
Revenue
- Sale of coal
Other income
- Interest income from external parties
- Gain on discharge and release of loan
Total other income
2019
US$
2018
US$
470,109
652,074
976
4,630,767
4,631,743
98
-
98
On 29 April 2017, the Group entered into a Royalty Deed with Platinum Partners (refer note 15) to convert all
outstanding loans owing to them to production royalties (this formalised the agreement on 22 July 2016) subject to
certain conditions precedent. In November 2018, the Company entered into a further agreement with Platinum Partners,
the effect of which confirmed Cokal’s satisfaction with a number of the conditions precedent to the Royalty Deed and
extended the date for meeting all of the remaining conditions precedent (the “Subsequent Conditions”) under the
Royalty Deed for conversion of two-thirds of the Platinum Loans (being $9,261,535) to 31 July 2020. In addition, under
the agreement when Cokal cancels and reissues 37.5 million options to Platinum Partners, one-third of the Group’s debt
with Platinum Partners, being $4,630,767, is discharged and released. The cancellation and reissue of the 37.5 million
options occurred on 10 January 2019, at which time one-third of the debt was discharged and released and a
corresponding gain recognised in the Group’s income statements.
The Group previously recognised a share based payment expense for fair value (at grant date) of the 75 million options
granted to Platinum Partners as part consideration for the execution of the Royalty Deed. The Group has recorded a
further share based payment expense of $1,003,561 in respect of the incremental fair value of the 37.5 million new
options granted to Platinum Partners as part of the November 2018 amendment to the Royalty Deed. This expense is
reported separately in the statement of comprehensive income.
Note 3: Dividends and Franking Credits
There were no dividends paid or recommended during the financial year (30 June 2018: Nil).
There were no franking credits available to the shareholders of the Group (30 June 2018: Nil).
COKAL LIMITED Annual Report 2019 | Page 43
For personal use only
Notes to the Consolidated Financial
Statements for the year ended 30 June 2019
Note 4: Income tax
The prima facie income tax on the loss is reconciled to the income tax expense as follows:
Prima facie tax benefit at 27.5% (2017: 30%) on loss before
income tax
Add tax effect of:
- Not deductible expenses and impact of tax rate
differences
- Deferred tax asset not recognised
Income tax expense
Deferred tax assets
Deductible temporary differences
Carry forward tax losses
Deferred tax liabilities
Assessable temporary differences
Net deferred tax assets not recognised
2019
US$
2018
US$
(510,322)
(2,143,939)
510,322
2,143,939
-
-
-
-
-
9,940,760
-
10,089,602
-
-
9,940,760
10,089,602
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 2019 were
US$36,148,760 (30 June 2018: US$37,928,866) and US$nil (30 June 2018:US$nil) respectively.
In order to recoup carried forward losses in future periods, either the Continuity of Ownership Test (COT) or Same Business
Test must be passed. The majority of losses are carried forward at 30 June 2019 under COT.
Deferred tax assets which have not been recognised as an asset, will only be obtained if:
(i)
the Group derives future assessable income of a nature and of an amount sufficient to enable the losses to be
realised;
(ii) the Group continues to comply with the conditions for deductibility imposed by the law; and
(iii) no changes in tax legislation adversely affect the Group in realising the losses
Note 5: Auditor’s Remuneration
Audit services
Amounts paid/payable to Ernst & Young for audit or
review of the financial statements for the Group
Ernst & Young - Australia
Ernst & Young - Indonesia
2019
US$
2018
US$
131,318
7,090
138,408
138,000
-
138,000
COKAL LIMITED Annual Report 2019 | Page 44
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
Note 6: Loss per Share
Loss attributable to owners of Cokal Limited used to calculate basic and
diluted loss per share (USD)
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 (US cents per share)
Diluted loss per share (US cents per share)
* Options are considered anti-dilutive as the Group is loss making.
2019
Number
2018
Number
(1,855,717)
(7,796,143)
725,498,143
660,704,114
725,498,143
660,704,114
(0.26)
(0.26)
(1.18)
(1.18)
Options could potentially dilute earnings per share in the future. Refer to Note 16 for details of option granted as at 30 June 2019.
Note 7: Cash and Cash Equivalents
Cash and bank balances
Cash at bank bear floating and fixed interest rates between 0.10% and 2.5%
(2018: 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
2019
US$
266,277
266,277
(138,916)
127,361
2018
US$
154,418
154,418
(138,916)
15,502
* All deposits are short term investments held at commercial banks.
**Include restricted deposit of US$ 138,916 (2018: US$138,916) can be used only after TBAR production commences.
Note 8: Accounts Receivable
Current
Other receivables*
*No receivable balances are past due or impaired at reporting date.
2019
US$
2,102
2,102
2018
US$
23,134
23,134
COKAL LIMITED Annual Report 2019 | Page 45
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
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.
Name of entity
Country of
Incorporation
Class of Shares
Jack Doolan Capital Pty Ltd
Cokal Mozambique Pty Ltd
Cokal Holdings Pte. Ltd
Cokal-AAK Pte. Ltd
Cokal-AAM Pte. Ltd
Cokal-BBM Pte. Ltd
Cokal-BBP Pte. Ltd
Cokal Services Pte. Ltd
Cokal Karoo Pte. Ltd
Cokal Manda Pte. Ltd
Cokal-West Kalimantan Pte. Ltd
Cokal-BPR Pte. Ltd
Cokal-TBAR Pte. Ltd
Mining Logistics Pte. Ltd
Cokal-KED Pte. Ltd
Cokal Resources Limited
PT Cokal
PT Bumi Kalimantan Logistik (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.
Australia
Australia
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Tanzania
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Tanzania
Tanzania
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Percentage Owned
(%)*
2019
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
75%
60%
60%
75%
100%
100%
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%
^ 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 2019 are $nil.
b) Financial information of subsidiaries
Financial information of subsidiaries that will have material non-controlling interests are provided below. The balances of
non-controlling interests are not currently material at 30 June 2019 and 30 June 2018 as the right of non-controlling
shareholders’ receiving a return is established only when they contribute their share of capital upon completion of the Initial
Work Programs for each of the projects. At reporting date, the Initial Work Programs for these projects have not yet been
completed and therefore there is no right to a return for non-controlling interests.
COKAL LIMITED Annual Report 2019 | Page 46
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
Note 10: Property, Plant and Equipment
Land
At cost
Computer equipment
At cost
Accumulated depreciation
Furniture and office equipment
At cost
Accumulated depreciation
Motor Vehicles
At cost
Accumulated depreciation
Capital WIP
At cost
Capital WIP written off
2019
US$
31,526
31,526
555,731
(551,903)
3,828
552,957
(401,480)
151,477
9,974
(9,974)
-
2018
US$
31,526
31,526
552,886
(551,782)
1,104
552,957
(318,942)
234,015
9,974
(9,974)
-
1,162,166
1,162,166
(1,162,166)
-
1,162,166
Total property, plant and equipment
186,831
1,428,811
COKAL LIMITED Annual Report 2019 | Page 47
For personal use only Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
Note 10: Property, Plant and Equipment (cont’d)
(a) Movements in carrying amounts
2019
Balance at the beginning of the year
Additions
Disposals
Depreciation expense
Amount written off
Carrying amount at the end of the
year
2018
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$
1,104
2,843
-
(121)
-
3,826
Computer
equipment
US$
1,816
-
-
(712)
1,104
Furniture and
office
equipment
US$
234,015
-
-
(82,536)
-
151,479
Furniture and
office
equipment
US$
258,542
-
-
(24,527)
234,015
Motor
Vehicles
US$
-
-
-
-
-
-
Motor
Vehicles
US$
-
-
-
-
-
Capital WIP
US$
1,162,166
-
-
-
(1,162,166)
-
Capital WIP
US$
1,159,011
3,155
-
-
1,162,166
Total
US$
1,428,811
2,843
-
(82,657)
(1,162,166)
186,831
Total
US$
1,405,895
3,155
-
(25,239)
1,428,811
Note 11: Exploration and Evaluation Assets
Non-Current
Exploration and evaluation expenditure capitalised
- exploration and evaluation phases
2019
US$
2018
US$
25,067,202
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
Balance at the beginning of the period
Additions1
Carrying amount at the end of the period
1
25,067,202
-
25,067,202
23,460,617
1,606,585
25,067,202
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.
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 2019 and tested for impairment under AASB 136 Impairment of Assets (AASB
136).
Historically, the Group has 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 year ended 30 June 2018 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 $1.6 million for BBM and TBAR respectively;
The Group has two identifiable areas of interest that need to be assessed for impairment.
At 30 June 2019, the Fair Value less Cost of Disposal (FVCLD) of the Group’s two areas of interest was measured with respect to the
Group’s market capitalisation. At that time, the Group’s market capitalisation exceeded the carrying amount of its net asset.
COKAL LIMITED Annual Report 2019 | Page 48
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
Note 11: Exploration and Evaluation Assets (cont’d)
Given the presence of the two areas of interest, the FVLCD implied by the Group’s Enterprise Value did not provide a precise
evaluation of the FVLCD of the distinct areas of interest. This being the case, the Group also had reference to an Independent
Study of all of Cokal’s tenement interests prepared in accordance with the Valmin Code as at 30 June 2017 (released on 23 August
2017). The Independent Study provided an estimate of value (in accordance with the Valmin Code) of BBM and TBAR. The
Independent Study estimated the value of BBM using a discounted cash flow method and assessed the value of TBAR with
reference to a resource multiple ($ 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
2019.
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 12: Other Assets
Current
Prepayments
Non-Current
Security deposits
Note 13: Accounts Payable and Others
Current
Revenue in advance
Sundry payables and accrued expenses
BMA Group loan
Director fees owing
Loans payable to directors and employees #
Employee benefits
Deferred liability (rent incentive)
2019
US$
2018
US$
17,470
6,849
38,148
35,362
2019
US$
-
5,756,424
2,000,000
348,020
157,209
64,677
43,445
8,369,775
2018
US$
307,189
4,370,048
-
348,430
352,370
40,082
43,445
5,461,564
# These loans payable to directors and employees are non-interest bearing and repayable on demand.
BMA Group loan
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 operations at the BBM Project. Cokal received US$2.0 million loan from BMA Group to secure
the transaction but the BMA Group failed to complete the other funding conditions set out in the Key Principles of
Agreement and has also failed to document the loan arrangement with the Group. Therefore, the Group has assessed the
loan is repayable on demand and has been disclosed at the face value of the amounts received.
At the date of this report, the Group is in the process of agreeing an arrangement with the BMA Group in respect of the $2.0
million of funding received. It is currently anticipated the liability will be repaid based on a $ per tonne of coal sold or
percentage of coal sales proceeds from the BBM project.
COKAL LIMITED Annual Report 2019 | Page 49
For personal use only Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
Note 14: Convertible Notes
Current
Fair value of Convertible Notes on issue
Convertible Notes converted to shares
2019
US$
-
-
-
2018
US$
1,927,730
(1,563,622)
364,108
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$1,567,177 was recorded as a finance cost in the
statement of comprehensive income. As at 30 June 2018, Magna had converted 1,430,000 Convertible Notes to shares, with
the remaining 147,234 Convertible Notes repaid by the Company in November 2018.
Note 15: Interest Bearing Loans
Current
Loans payable to employee
Platinum Partners / Northrock facility
Blumont Group / Wintercrest facility
Total Interest bearing loans
2019
US$
2018
US$
-
270,916
6,710,000
2,551,535
9,261,535
10,065,000
3,827,302
14,163,218
Loans payable to employee
During the previous financial year the Company entered into the following loans with the previous Chief Financial Officer.
Principal
Interest rate
per month
IDR1,850,000,000
IDR541,895,604
IDR340,000,000
IDR245,000,000
IDR2,976,895,604
(US$ 207,335)
6.5%
7.5%
6.5%
Nil
Total interest charged
for the 2018 Financial
Year
Interest repaid during
the 2018 Financial
Year
IDR 1,443,000,000
IDR 841,750,000
Amount
Outstanding as at
30 June 2018
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 2018 financial year, the directors considered the above interest rates
arms’ length for an immediate short-term loan, with no security over the Company’s assets. The loans with the Chief
Financial Officer were repaid and/or set-off against monies determined to be owed to the Group by the previous Chief
Financial Officer during the current financial year. The set-off was agreed as part of the termination of the previous Chief
Financial Officer for his involvement in a fraud associated with purchases from the Group’s former barging contractor.
COKAL LIMITED Annual Report 2019 | Page 50
For personal use only Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
Note 15: Interest Bearing Loans (cont’d)
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 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;
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.
On 20 February 2018, the Company issued 75 million Options to the Platinum Entities with an expiry date of 20 February
2023 and an exercise price of 1.6 cents (Existing Platinum Options). Each Existing Platinum Option currently vests once all
the Platinum Loans have been released and discharged.
In November 2018, Cokal concluded and executed an amended agreement with Northrock Financial LLC and Wintercrest
Advisors LLC (the Platinum Entities) in respect of loans outstanding totalling US$13.89 million (Platinum Loans). The
agreement confirmed Cokal’s satisfaction with or waiver of the conditions precedent (a) to (d) above and extended the date
for meeting all of the remaining conditions precedent, being (e) and (f) (the “Subsequent Conditions”) under the Royalty
Deed for conversion of two thirds of the Platinum Loans to 31 July 2020. In addition, the amended agreement provided that
when Cokal cancels and reissues 37.5 million options to Platinum Partners, one third of the of the Group’s debt with
Platinum Partners is discharged and released. The cancellation and reissue of the 37.5 million options occurred on 10
January 2019, at which time one third of the debt was discharged and released.
As the Group agreed in principal to the conversion of the Wintercrest and Northrock debt to a royalty in July 2016, no
interest expense has been recorded since that date. In the event the Group is not able to satisfy the Subsequent Conditions
in the Royalty Deed (as amended), the Lenders may seek to retrospectively charge interest on amounts owing to them for
the period. As such, the Group has determined it appropriate to disclose the debts as interest-bearing liabilities.
COKAL LIMITED Annual Report 2019 | Page 51
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
2019
US$
2018
US$
91,686,061
89,727,054
2019
US$
89,727,054
1,172,628
423,194
164,970
185,048
13,167
-
91,686,061
2019
Number
2018
US$
84,752,154
1,744,476
-
1,563,622
60,217
-
1,606,585
89,727,054
2018
Number
713,699,792
593,092,704
51,265,000
37,500,000
7,591,796
6,245,031
540,540
-
816,842,159
52,940,002
-
41,792,086
875,000
-
25,000,000
713,699,792
Note 16: Issued Capital
816,842,159 authorised and fully paid
ordinary shares (30 June 2018: 713,699,792)
Movement in Issued Capital
At the beginning of the year
Amount received for issue of shares during the year
Share issue from capital raising
Share issue on conversion of options
Share issue on conversion of convertible notes
Share issue on payment of creditors
Share issue on conversion of loan
TBAR debt settlement
At reporting date
Movement in Issue Capital
(a) Ordinary shares
At the beginning of the year
Shares issued during the year
Share issue from capital raising
Share issue on conversion of options
Share issue on conversion of convertible notes
Share issue on payment of creditors
Share issue on conversion of loan
TBAR debt settlement
At reporting date
-
-
-
-
-
-
-
-
-
-
-
-
(b) Options
All options on issue at 30 June 2019 were as follows:
Number of options
Exercise price
US$
Expiry date
Employees:
1,000,000
4,000,000
3,000,000
3,000,000
3,000,000
5,000,000
1,000,000
1,000,000
Consultant
Platinum / Northrock**
Aahana Mineral Resources SDN
37,500,000
37,500,000
96,000,000
0.08
0.10
0.03
0.04
0.05
0.07
0.07
0.03
0.01
0.01
22 December 2020
22 December 2020
20 December 2021
20 December 2021
20 December 2021
20 December 2021
19 September 2020
20 December 2021
20 February 2023
20 February 2023
For information relating to the Cokal Limited employee option plan, including details of options issued, exercised and lapsed
during the year and the options outstanding at year-end refer to Note 25.
** The parties have agreed, as part of the amended agreement discussed in Note 15, that these options will not be exercised.
COKAL LIMITED Annual Report 2019 | Page 52
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
Note 16: Issued Capital (cont’d)
(c) Capital Risk Management
Management controls the capital of the Group in order to provide capital growth to shareholders and ensure the Group can
fund its operations and continue as a going concern.
The Group capital comprises equity as shown in the Statement of Financial Position. There are no externally imposed capital
requirements other than shown in note 16.
Management effectively manages the Group capital by assessing the Group financial risks and adjusting its capital structure in
response to changes in these risks and the market. These responses include raising the sufficient equity capital when required.
There have been no changes in the strategy adopted by management to control the capital of the Group since the prior year.
Note 17: Reserves
Share based payments option reserve
Translation reserve
2019
US$
7,572,139
(1,455,455)
6,116,687
2018
US$
6,455,598
(1,455,455)
5,000,143
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 US$0.08 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 US$0.10 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 during the 2018 financial year.
In addition the Company issued 75,000,000 options during the 2018 financial year to Platinum/Northrock in accordance
with the transaction to convert loans to production royalties (refer Note 15). These options had no share based payment
value as they were issued on the agreement of future conversion of debt, subject to a number of significant conditions.
During the year ended 30 June 2019, James Coleman was issued 14,000,000 unlisted options as a sign-up bonus on the
following terms. A portion of the value of these options has been expensed in the 2019 financial year.
•
•
•
•
3,000,000 options with an exercise price of US$0.03 and expiry date of 20 December 2021, vesting on production of 20,000 tonnes per
month of coal (including PCI) for three consecutive months;
3,000,000 options with an exercise price of US $0.04 and expiry date of 20 December 2021, vesting on production of 40,000 tonnes per
month of coal (including PCI) for three consecutive months;
3,000,000 options with an exercise price of US $0.05 and expiry date of 20 December 2021, vesting upon commencement of shallow
river barging; and
5,000,000 options with an exercise price of US$0.07 and expiry date of 20 December 2021, vesting upon first shipment of coking coal
from BBM.
1,000,000 options (with an exercise price of US$0.03 and expiry date of 20 December 2021) were also issued to Lightglow
Enterprises for consulting services provided to the company.
Translation reserve represents the net exchange differences arising from the translation as a result of change in
presentation currency to US$ from AUD.
COKAL LIMITED Annual Report 2019 | Page 53
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
Note 18: 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
2019
US$
2018
US$
(88,000,311)
(80,204,168)
(1,855,717)
(7,796,143)
(89,856,028)
(88,000,311)
Note 19: 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
Profit / (Loss) for the year
Total comprehensive profit / (loss) for the year
Guarantees
2019
US$
119,407
18,755,668
18,875,075
10,581,376
721,952
11,303,327
7,571,748
91,686,061
7,572,136
(3,565,142)
(88,121,311)
7,571,748
1,655,025
1,655,025
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)
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 2019 (2018 – nil).
Contingent liabilities
The parent entity has no contingent liabilities.
Capital commitments
The parent entity has no capital commitments.
Impairment assessment
At 30 June 2019, 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$ 4,000,000 (2018: US$5,700,000).
COKAL LIMITED Annual Report 2019 | Page 54
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
Note 20: Commitments
Operating lease commitments
Future minimum rentals payable under non-cancellable operating leases
as at 30 June 2019 are as follows:
Payable
- not later than 12 months
- between 12 months and 5 years
- greater than 5 years
2019
US$
2018
US$
77,297
81,397
-
158,694
144,887
259,589
-
404,477
Note 21: 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 2019, the Group’s contingent liabilities total US$17.95m (30 June 2018: US$17.95m) 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 year ending 30 June 2018, the Company settled any outstanding
contingent liabilities in respect of TBAR with the issue of 25,000,000 shares to the vendors (refer Note 16).
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 US$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 2019 (30 June 2018: 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 at 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 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 for June 2018. 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 2019 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$10.0
million deferred consideration that may be payable. To the extent monies are required to be paid, the Group will need to raise
capital to fund these payments. The directors are not aware of any other significant contingent liabilities or contingent assets at
the date of this report.
COKAL LIMITED Annual Report 2019 | Page 55
For personal use only Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
Note 22: Operating Segments
Segment performance for the year ended 30 June 2019
Australia
Indonesia
Singapore
US$
US$
US$
Total
US$
Sale of coal
Other income
Interest revenue
Intersegment income*
Total segment income
Depreciation expenses
Finance costs
Share based payments
Write-off Capital WIP
Other expenses
Total segment expenses
-
470,109
4,630,767
-
-
-
976
-
4,630,767
471,085
(65,772)
(3,429)
(1,003,561)
-
(1,250,568)
(2,323,330)
(16,885)
(33,021)
-
(1,162,169)
(3,411,469)
(4,623,544)
-
-
-
-
-
-
-
-
-
(10,695)
(10,695)
470,109
4,630,767
976
-
5,101,852
(82,657)
(36,450)
(1,003,561)
(1,162,169)
(4,672,732)
(6,957,569)
Segment net profit /(loss) before tax
2,307,437
(4,152,459)
(10,695)
(1,855,717)
Segment assets and liabilities as at 30 June 2019
Property, plant and equipment
Exploration and evaluation assets
Other segment assets
Total segment assets
106,134
-
(2,788)
103,346
80,697
25,067,202
326,785
25,474,684
-
-
-
-
186,831
25,067,202
323,997
25,578,030
Total segment liabilities
10,624,966
6,846,567
159,777
17,631,310
Capital expenditure for the year ended 30 June 2019
Property, plant and equipment
Exploration and evaluation assets
-
-
2,843
-
*Inter segment expense relating to the income is eliminated in Indonesia’s exploration and evaluation assets.
Australia
Indonesia
Singapore
US$
-
US$
US$
652,074
98
-
652,172
-
-
-
(7,626)
(17,613)
(434,268)
(205,343)
-
-
-
-
-
-
-
-
2,843
-
Total
US$
652,074
98
-
652,172
(25,239)
(639,611)
Segment performance for year ended 30 June 2018
Sale of coal
Interest revenue
Intersegment income*
Total segment income
Depreciation expenses
Finance costs
Other expenses
(2,238,920)
(5,385,917)
(158,627)
(7,783,465)
Total segment expenses
(2,680,814)
(5,608,873)
(158,627)
(8,448,315)
Segment net loss before tax
(2,680,814)
(4,956,702)
(158,627)
(7,796,143)
COKAL LIMITED Annual Report 2019 | Page 56
For personal use only Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
Note 22: Operating Segments (cont’d)
Segment assets and liabilities as at 30 June 2018
Property, plant and equipment
Exploration and evaluation assets
Other segment assets
Total segment assets
Australia
Indonesia
Singapore
US$
US$
US$
Total
US$
168,078
1,260,733
-
25,067,202
8,983
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.
Note 23: Cashflow Information
(a) Reconciliation of loss after income tax to net cash flow used in operating activities
Note
2019
US$
2018
US$
Loss for the year
Non-cash items:
- Depreciation
- Property, plant and equipment write-off
- Share options expensed **
- Share issues in payment of expenses **
- Gain on loan forgiveness
Change in operating assets and liabilities:
- Decrease in accounts receivables
- Increase in other assets
- Increase in revenue in advance
- (Decrease) / Increase in convertible notes
- Increase in accounts payables
Net cash flow used in operating activities
10
10
24
16
2 & 15
(1,855,717)
(7,796,143)
82,657
1,162,166
1,116,544
185,048
(4,630,767)
21,032
(13,407)
(307,189)
(12,887)
25,329
-
92,730
60,217
-
-
-
307,189
364,108
1,275,251
3,155,135
(2,977,269)
(3,791,435)
** The Company issued shares and options in payment of the following (refer notes 16 and 24):
Share options expensed:
- Options issued on discharge and release of Platinum entity loans: US$ 1,003,561 (2018: US$ nil);
- Options issued as a bonus to the CEO US$ 100,078 (2018 issued to Executive Director: US$ 81,604); and
- Options issued to creditors: US$12,905 (2018: US$ 11,126).
Share issues in payment of expenses:
- Shares issued in payment of three month’s CEO’s salary US$28,686 (2018: US$ nil)
- Shares issued in payment of creditors: US$ 156,362 (2018: US$ 60,217);
- Shares issued on conversion of convertible notes: US$164,970 (2018: US$1,563,622);
- Shares issued on conversion of loan: US$ 13,167 (2018: US$ nil); and
- Shares issued in respect of TBAR settlement: US$ nil (2018: US$ 1,606,585).
COKAL LIMITED Annual Report 2019 | Page 57
For personal use only Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
Note 24: Share-based Payments
The following share-based payment arrangements existed at 30 June 2019.
(a) Share-based payments to directors, executives, employees and suppliers
During the period ended 30 June 2019, Nil options were issued to directors and 1,245,031 shares and 14,000,000 options
were issued to executives and employees of the Group.
Options on issue to suppliers as at 30 June 2019 are as follows:
•
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
•
•
•
On 19 September 2018, 1,000,000 options were issued to Helbraun Holdings Pty Ltd at US$0.07, expiring on
19 September 2020
On 20 December 2018, 1,000,000 options were issued to Lightglow Enterprises Pty Ltd at US$0.03, expiring on
20 December 2021
On 10 January 2019, 37,500,000 options were issued to Platinum entities at US$0.01, expiring 10 January 2023.
These were exercised during the year.
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 2019 was US$0.01 to US$0.10 (2018: US$0.01 to US$0.23)
and weighted average remaining contractual life of 3.29 years (30 June 2018: 2.75 years).
Outstanding at beginning of period
Granted
Forfeited/Cancelled
Exercised
Expired
Outstanding at period-end
Exercisable at period-end
30 June 2019
No. of options Weighted average
No. of options
exercise price
30 June 2018
Weighted average
exercise price
140,800,000
52,500,000
-
37,500,000
59,800,000
96,000,000
2,000,000
US$
0.07
0.02
-
0.01
0.14
0.02
0.05
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
Shares issued on exercise of an option rank equally with all other ordinary shares then on issue.
(b) Recognised share based payment expenses
Expense arising from options issued on amendment of debt
to royalty conversion agreement
Expense arising from shares issued as salary expense
Expense arising from shares issued in payment of creditors
Expense recognised for options issued as bonus
Expense arising from options issued in payment of creditors
2019
US$
Effect on
Statement of
Comprehensive
Income
2018
US$
Effect on
Option
Reserve
Effect on
Statement of
Comprehensive
Income
Effect on
Option Reserve
1,003,561
1,003,561
-
-
-
100,078
12,905
28,686
156,362
100,078
12,905
-
-
81,604
11,126
-
-
60,217
81,604
11,126
1,116,544
1,301,592
92,730
152,947
COKAL LIMITED Annual Report 2019 | Page 58
For personal use only Notes to the Consolidated Financial
Statements for the year ended 30 June 2019
Note 25: 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
Termination benefits
Share-based payments
2019
US$
624,018
18,023
45,683
100,078
787,802
2018
US$
788,865
-
-
51,005
839,870
* 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 13.
(d) Option holdings of KMP for the year ended
KMP option holdings for the year ended are set out below:
Balance
1 July 2018
Granted as
Remuneration
Exercise of
Options
Net Change
Other
Balance
30 June
2019
Total vested
at 30 June
2019
Total vested
and
exercisable at
30 June 2019
Total vested
and
unexercisable
at 30 June
2019
Directors
Senior Management
Total
9,000,000
500,000
-
14,000,000
9,500,000 14,000,0000
-
-
-
(4,000,000)
5,000,000
(500,000) 14,000,000
(500,000) 19,000,000
-
-
-
-
-
-
-
-
-
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
Senior Management
Total
8,000,000
500,000
8,500,000
-
-
-
-
-
-
(4,000,000)
-
(4,000,000)
9,000,000
500,000
9,500,000
4,000,000
500,000
4,500,000
4,000,000
500,000
4,500,000
-
-
-
* Gerhardus Kielenstyn was appointed a Director on 27 January 2017. He held 8 million options at the time of appointment.
Share options held by KMP to purchase ordinary shares have the following expiry dates and exercise prices:
2019
Number of options
outstanding
2018
Number of options
outstanding
Exercise price
US$
Issued date
Vesting date
Expiry date
-
-
1,000,000
4,000,000
3,000,000
3,000,000
3,000,000
5,000,000
19,000,000
4,500,000
Note 3
1,000,000
4,000,000
-
-
-
-
9,500,000
0.10
0.10
0.09
0.12
0.03
0.04
0.05
0.07
24-Feb-15
24-Feb-15
22-Dec-17
22-Dec-17
20-Dec-19
20-Dec-19
20-Dec-19
20-Dec-19
24-Feb-16
24-Feb-17
Note 1
Note 2
Note 4
Note 5
Note 6
Note 7
24-Feb-19
24-Feb-19
22-Dec-20
22-Dec-20
20-Dec-21
20-Dec-21
20-Dec-21
20-Dec-21
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
Note 4: vesting on production of 20,000 tonnes per month of coal (including PCI) for three consecutive months
Note 5: vesting on production of 40,000 tonnes per month of coal (including PCI) for three consecutive months
Note 6: vesting upon commencement of shallow river barging
Note 7: vesting upon first shipment of coking coal from BBM
COKAL LIMITED Annual Report 2019 | Page 59
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
Note 25: 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 2018
62,920,001
2,401,215
65,321,216
Balance
1 July 2017
62,920,001
2,401,215
65,321,216
Granted as
Remuneration
-
1,245,031
1,245,031
On Exercise
of Options
-
-
-
Net Change
Other
148,125,000
(2,401,215)
145,723,785
Granted as
Remuneration
-
-
-
On Exercise
of Options
-
-
-
Net Change
Other
-
-
-
Balance
30 June 2019
211,045,001
1,245,031
212,290,032
Balance
30 June 2018
62,920,001
2,401,215
65,321,216
KMP transactions for the year ended are set out below.
Mr Domenic Martino
•
•
•
•
As at 30 June 2019 director fees totaling US$182,724 (2018: US$148,615 remain outstanding to Mr Martino.
As at 30 June 2019 a loan of US$nil (2018:US$44,346) 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 2019, Mr Martino was owed US$2,242 (2018: US$67,128) 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$4,000 (excl GST) per month. The services are
based on normal commercial terms and conditions. As at 30 June 2019, company secretarial fees of US$nil (2018:
US$16,000)) remain outstanding. In addition, during the 2019 financial year, Indian Ocean Corporate Pty Ltd has
provided corporate advisory services totaling US$69,731 (2018: US$218,483) and assistance with the preparation of
reports, totaling US$46,550 (2018: US$26,422).
Mr Patrick Hanna
•
•
As at 30 June 2019 director fees totaling US$156,622 (2018: US$148,615) remain outstanding to Mr Hanna.
As at 30 June 2019 a loan of AUD108,500 (US$76,981) (2018: US$80,192) was owing to Mr Hanna by the Company. This
loan was for working capital purposes, is repayable on demand and does not accrue interest.
Mr Gerhardus Kielenstyn
•
•
As at 30 June 2019 remuneration fees totaling US$nil (2018: US$51,200) remain outstanding to Mr Kielenstyn.
As at 30 June 2019 a loan of US$83,041 (2018: US$33,000 and US$90,000) were owing to Mr Kielenstyn by the
Company. These loans are repayable on demand and do not accrue interest.
Mr James Coleman
•
As at 30 June 2019 remuneration totaling US$165,675 (2018: US$nil) remain outstanding to Mr Coleman.
Mr Teuku Juliansyah
•
As at 30 June 2019 remuneration fees totaling US$nil (2018: US$37,837) remain outstanding to Mr Juliansyah.
COKAL LIMITED Annual Report 2019 | Page 60
For personal use only Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
Note 25: Related Party Disclosure (cont’d)
•
As at 30 June 2019 and 30 June 2018 the following loans were outstanding to Mr Juliansyah. Interest on all loans is
accrued until repayment.
2019 financial year
Principal
Interest
rate
per
month
Interest accrued at
beginning of year
Total interest
charged (incl any
penalty) for the
Year
Amount repaid
during year
IDR1,850,000,000
6.5%
IDR 601,250,000
IDR 584,914,500
(IDR 3,036,164,500)
Amount
Outstanding
as at
30 June 2019
-
IDR541,895,604
7.5%
IDR 312,347,864
IDR 39,838,670
(IDR 894,082,138)
IDR340,000,000
6.5%
IDR 265,200,000
IDR 37,925,000
(IDR 643,125,000)
IDR245,000,000
Nil
-
-
(IDR 245,000,000)
IDR2,976,895,604
(US$ 209,640)
IDR 1,178,797,864
(US$ 83,014)
IDR 662,678,170
(US$ 46,667)
(IDR 4,818,371,638)
((US$ 339,321))
-
-
-
-
2018 financial year
Principal
IDR1,850,000,000
IDR541,895,604
IDR340,000,000
IDR245,000,000
IDR2,976,895,604
(US$ 207,335)
Interest rate
per month
Total interest charged
for the Year
Amount repaid
during year
Amount
Outstanding as at
30 June 2018
IDR 2,451,250,000
6.5%
7.5%
6.5%
Nil
IDR 1,443,000,000
(IDR 841,750,000)
IDR 487,706,044
(IDR 175,358,108)
IDR 772,959, 199
IDR 265,200,000
-
-
-
IDR 420,600,000
IDR 245,000,000
IDR 2,195,906,044
(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.
Note 26: Financial Risk Management
(a) General objectives, policies and processes
In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This
note describes the Group objectives, policies and processes for managing those risks and the methods used to measure
them. Further quantitative information in respect of these risks is presented throughout these financial statements.
There have been no substantive changes in the Group’s exposure to financial instrument risks, its objectives, policies and
processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated
in this note. The Group’s financial instruments consist mainly of deposits with banks, accounts receivable, security
deposits, interest bearing loans and accounts payable.
The Board has overall responsibility for the determination of the Group’s financial risk management objectives and
policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating
processes that ensure the effective implementation of the objectives and policies to the Group’s finance function. The
Group’s financial risk management policies and objectives are therefore designed to minimise the potential impacts of
these risks on the results of the Group where such impacts may be material.
The overall objective of the Board is to set policies that seek to reduce financial risk as far as possible without unduly
affecting the Group’s competitiveness and flexibility. Further details regarding these policies are set out below.
(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:
COKAL LIMITED Annual Report 2019 | Page 61
For personal use only Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
Note 26: Financial Risk Management (cont’d)
Cash and bank balances
Receivables
Security deposits
Total
Note
7
8
7
2019
US$
127,361
2,102
138,916
268,379
2018
US$
15,502
23,134
138,916
177,552
Credit risk is reviewed regularly by the Board and the Audit Committee.
The Group does not have any material credit risk exposure to any single debtor or Group of debtors under financial
instruments entered into by the Group. No receivables balances were past due or impaired at period end. The credit
quality of receivables that are neither past due nor impaired is good. Bank deposits are held with Macquarie Bank
Limited, National Australia Bank Limited and Australia and New Zealand Banking Corporation Limited.
(c) Liquidity Risk
Liquidity risk is the risk that the Group may encounter difficulties raising funds to meet financial obligations as they fall
due. The objective of managing liquidity risk is to ensure, as far as possible, that the Group will always have sufficient
liquidity to meets its liabilities when they fall due, under both normal and stressed conditions
Liquidity risk is reviewed regularly by the Board and the Audit Committee.
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 2019
Financial Liabilities
- Accounts payable
-
- Total
Interest bearing loans
8,369,775
9,261,535
17,631,310
8,369,775
9,261,535
17,631,310
6,369,775
9,261,535
15,631,310
2,000,000
-
2,000,000
-
-
-
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
-
- Total
Interest bearing loans
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
-
-
-
-
-
-
Further information regarding commitments is included in Note 20.
-
-
-
-
-
-
(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:
COKAL LIMITED Annual Report 2019 | Page 62
For personal use only
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
Note 26: Financial Risk Management (cont’d)
(i) Interest rate risk (cont’d)
2019
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$
127,361
-
-
127,361
-
-
-
US$
US$
US$
-
-
-
-
-
9,261,535
9,261,535
-
2,102
138,916
141,018
8,369,775
-
8,369,775
127,361
2,102
138,916
268,379
8,369,775
9,261,535
17,631,310
%
-
-
-
-
-
-
-
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
%
-
-
-
-
-
-
-
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 2019 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:
2019
Cash and cash equivalents
Total effect on post tax profit
2018
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$
266,277
266,277
154,418
154,418
1,331
1,331
772
772
(1,331)
(1,331)
(772)
(772)
(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 2019 | Page 63
For personal use only Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
Note 26: Financial Risk Management (cont’d)
(ii) 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:
2019
Cash and cash equivalents
Accounts payable
Net exposure
Effect on post profit:
Increase by 10%
Decrease by 10%
2018
Cash and cash equivalents
Accounts payable
Net exposure
Effect on post tax profit:
Increase by 10%
Decrease by 10%
AUD
US$
(790)
1,323,000
1,322,210
132,221
(132,221)
1,013
1,137,955
1,138,968
113,897
(113,897)
SGD
US$
-
319,339
319,339
31,934
(31,934)
6,108
225,650
231,758
23,176
(23,176)
Indonesian
Rupiah
US$
128,151
6,727,436
6,855,587
685,559
(685,559)
4,802
3,135,875
3,140,677
314,068
(314,068)
Total
US$
127,361
8,369,775
8,497,136
849,714
(849,714)
11,923
4,499,480
4,511,403
451,141
(451,141)
COKAL LIMITED Annual Report 2019 | Page 64
For personal use only Notes to the Consolidated Financial
Statements for the year ended 30 June 2019
Note 27: Significant Events after the Reporting Date
There have been no significant events after reporting date except for the completion of an Entitlement Offer by the
Company, raising AU$5.1 million and the resignation of Mr Gerhardus (Garry) Kielenstyn as a director of the Company.
COKAL LIMITED Annual Report 2019 | Page 65
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 2019 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 13 to 19 of the directors’ report (as part of audited Remuneration
Report) for the year ended 30 June 2019, 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
1 October 2019
COKAL LIMITED Annual Report 2019 | Page 66
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
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 2019, 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
2019 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
Comparative Information
During the financial 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 subsequently confirmed fraudulent activity by
the Group’s Indonesian based Chief Financial Officer and other Indonesian based employees
(collectively “the implicated employees”). During the half-year ended 31 December 2018, the Group
finalised its investigation of the fraudulent activity resulting in the termination of the implicated
employees.
For the year ended 30 June 2018, the Group’s consolidated statement of comprehensive income
reports production expenses of $3,808,113, including barging expenses of $1,285,698. In
performing our audit procedures for the year ended 30 June 2018, we were unable to obtain
sufficient appropriate audit evidence as to whether the Group’s barging expenses had 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 implicated
employees. 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. Our opinion on the financial report for the year ended 30 June 2018 was
modified accordingly. Our audit opinion on the current year financial report is also modified because
of the possible effects of this matter on the prior period amounts which are presented as comparative
information.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
For personal use only 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.
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 matters 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.
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For personal use only 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 11 – Exploration and Evaluation
Assets to the financial report for the amounts in
the consolidated statement of financial position
as at 30 June 2019 and related disclosure.
At 30 June 2019, the Group determined
impairment indicators were present and
performed an impairment assessment with
reference to an independent valuation and
consideration of the Group’s market
capitalisation.
As a result of the impairment assessment, the
Group concluded no additional impairment or
impairment reversal was required.
We evaluated the Group’s assessment of the carrying
value of exploration and evaluation assets.
In performing our procedures, we:
(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.
(cid:127) 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) 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.
(cid:127) Performed sensitivity testing on the independent
valuation, adjusted as required to align with the
requirements of AASB 136 Impairment.
(cid:127) Considered the Group’s assessment of the
existence of indicators of impairment reversal at
30 June 2019.
(cid:127) Assessed the adequacy of the Group’s disclosure
of the Exploration and Evaluation Assets in the
financial report.
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For personal use only 2. Recognition and classification on interest bearing liabilities
Why significant
How our audit addressed the key audit matter
Note 15 – 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 2019. As such, the interest-bearing loans
of $9,261,535 (2018: $13,892,302) are
presented as current liabilities at 30 June 2019.
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 into a production royalty.
With effect from 10 January 2019, the Group
executed an addendum to the Royalty Deed with
the Lenders. Pursuant to the addendum, the
Lenders agreed to release and discharge the
Group’s liability in respect of one-third of the
loan amounts payable being $4,630,767 and the
Group agreed to issue of 37.5 million
immediately exercisable options to the Lenders.
The release and discharge of one-third of the
liability resulted in a gain in the Statement of
Comprehensive Income for the year of
$4,630,767, partially offset by the recognition
of the share-based payment expense of
$1,003,561.
Due to the significance of the release
transaction and the impact of the status of the
conversion of the unreleased portion of the loan
to a production royalty on the Group’s financial
position and liquidity, this was considered a key
audit matter.
We evaluated the recognition, measurement and
disclosure of the Group’s loans payable to the
Lenders at 30 June 2019 and the recognition of the
gain on release of one-third of the loan amount.
In performing our procedures, we:
(cid:127) Read the Royalty Deed (as amended) executed
between the parties and understood the
conditions precedent to the completion of the
arrangement between the parties.
(cid:127) Considered the Group’s assessment of its
satisfaction, or otherwise, of the remaining
conditions precedent to the Royalty Deed (as
amended) at 30 June 2019 and subsequent to
year end.
(cid:127) Obtained confirmation from the Lenders of
amounts owing at 30 June 2019 and the
continuing operation of the Royalty Deed (as
amended) at 30 June 2019.
(cid:127) Evaluated the Group’s recognition of a gain on
the release and discharge of one-third of the
Group’s liability and the measurement and
recognition of the share-based payment expense
for the issue of 37.5 million immediately
exercisable options for consistency with
Australian Accounting Standards.
(cid:127) Assessed the adequacy of the Group’s
classification of the unreleased portion of the
interest-bearing loans as current liabilities at 30
June 2019.
(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 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.
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:
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For personal use only ► 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.
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.
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For personal use only Report on the Audit of the Remuneration Report
Qualified Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 13 to 19 of the directors' report for the
year ended 30 June 2019.
During the financial 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 subsequently confirmed fraudulent activity by
the Group’s Indonesian based Chief Financial Officer, resulting in the termination of the Chief Financial
Officer. Consequently, we were unable to determine whether any adjustments to the remuneration
report for the year ended 30 June 2018 were necessary. Our audit opinion on the current year
remuneration report is also modified because of the possible effects of this matter on the prior period
amounts which are presented as comparative information.
In our opinion, except for the effects of the matter described above the Remuneration Report of Cokal
Limited for the year ended 30 June 2019, 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
1 October 2019
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For personal use only
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