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LEIGH CREEK ENERGYLimited
For personal use only
C O N T E N T S
The year in review
Chairman’s Letter
Managing Director’s Report
Leigh Creek Energy Project
Directors’ Report
Auditor’s Independence
Corporate Governance Statement
Directors’ Declaration
Auditor’s Independence Declaration
Financial Information
Independent Audit Report
Shareholder Information
Corporate Directory
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Reliable energy for South Australia
Forward looking statements: This report contains forward looking statements which are subject to known and unknown risks, uncertainties
and other factors that could cause the actual results, performance or achievements of the Company to vary materially from those expressed or
implied in such forward looking statements. Leigh Creek Energy Limited does not make any representation or warranty as to the accuracy or
likelihood of fulfilment of any forward looking statement, or any events or results expressed or implied in any forward looking statement. The
forward looking statements reflect views held only as at the date of the Report.
2
For personal use only T H E Y E A R I N R E V I E W
• Successful completion of
• Building of the LCK team
$10M Placement
New key personnel supporting the
Placement of 35,374,969 shares to
Company objectives
investors at an issue price of
$0.30 per share
• Commencement of drilling
Enabling the collection of data
• Strategic partnership with
for modelling and environmental
baseline studies
Shanghai Electric Power
Generation Group
To work towards the generation of
reliable gas fired base load power in
South Australia
• Strategic partnership with
APT Pipelines Limited
Developing conceptual plans for
connection to the east coast gas
markets
1
LEIGH CREEK ENERGY LIMITED ANNUAL REPORT 2016For personal use only C H A I R M A N ’ S L E T T E R
Dear Shareholders,
I am pleased to be able to report that Leigh Creek Energy
Limited (LCK) has reached a number of significant milestones
during the year enabling the progression of the Leigh Creek
Energy Project (LCEP).
We commenced the 2014/15 financial year with the clear
direction of producing methane and then subsequently
fertiliser from the LCEP. However, over the course of the year,
it became apparent that due to changing market conditions
in South Australia that electricity generation should become
a key component of the LCEP. South Australia has seen
a confluence of events that have led to the attractive
commercial position of being able to produce cheap reliable
professional and experienced team who have and continue
to deliver the engineering, environmental, geological, and
community work required. This team has been built up over
the past year to include a number of key personnel, and has
been led by the General Manager Technical Mr Justin Haines.
In addition to the expanding operational team, we maintain
and continue to strengthen the corporate team. We continue
to strengthen the board with members with suitable skill
sets and we are very pleased to have both Mr Greg English
and Mr Murray Chatfield join as Independent Non-Executive
Directors. We will continue to work towards having a board
where there is a majority of Independent Non-Executive
Directors and expect this to occur during the 2016/17 year.
base load power for external customers.
The Company has formed a number of important
relationships over the past 12 months, and I am extremely
pleased to report that in April 2016 the Company signed
a Heads of Agreement with Shanghai Electric Power
Generation Group, to discuss the formation of a joint venture
company to build, own and operate a gas fired power
station in South Australia. This relationship is important for
the Company and the State as the building, owning and
operating of a power station ensures the success of the
LCEP and has the ability to provide cheaper, reliable base
load power to industries and mines in South Australia.
The Company has
formed a number
of important
relationships over the
past 12 months
We have seen the closure of the Pt Augusta Power Station,
the closure of the Leigh Creek Coal mine by Alinta Energy,
the increase in non- base load wind power, and talk of
decommissioning of coal fired power stations in Victoria.
Cumulatively these events have put increased pressure on
the ability of large electricity users in South Australia to be
able to secure base load power without risk of disruption and
at a reasonable price.
Operationally, the Company delivered on two key goals
to certify the coal and gas resources at Leigh Creek. In
January 2016, the Company announced the achievement
of a 2C SPE-PRMS ISG gas resource of 2,963.9 PJ at the
LCEP reported in accordance with the Society of Petroleum
Engineers – Petroleum Resources Management System.
This report followed, and utilised the Geological Modelling
Report announced in December 2015, which had provided
the estimate of the Inferred Coal Resource reported in
accordance with the JORC Code 2012.
The achievement of a gas resource of this size is significant,
particularly in the context of the Eastern Australian Gas
Market. This is an exciting and important milestone in
the development of the LCEP and underpins our original
assumption that the LCEP contains significant quantities of
recoverable gas. The independent gas resource certification
helps accelerate the LCEP development as it provides added
confidence to domestic and international buyers of gas,
investors in LCK and future debt providers.
Whilst the Company was to initially undertake a drill program
in order to certify the resources, we were fortunately able to
access key historical data late last year. This discovery was
important and allowed the project to progress quickly and
efficiently at reduced spend. The operational milestones
that we have reached have been possible due to a diligent,
2
For personal use only C H A I R M A N ’ S L E T T E R
Leigh Creek Energy remains focused
on delivering the LCEP and in the short
term reaching gas demonstration
The Company also announced the signing of a non-binding
I would like to thank all of our shareholders for your
Heads of Agreement with APT Pipelines Limited, a subsidiary
support over the last 12 months and all our employees and
of APA Group. Under this Heads of Agreement, the
contractors for your commitment to the Company and our
Companies have been working together and reviewing the
achievements of the last year and look forward to updating
connection of the LCEP to the eastern Australian
the market of our progress over the next 12 months.
gas markets.
Sincerely,
Mr Justyn Peters
Executive Chairman
The Company continues to maintain a strong relationship
with Archer Exploration regarding the use of the LCEP gas,
electricity and waste heat, and with AET Investments on
the establishment of an ammonium nitrate plant to produce
nitrogen based fertilisers for South Australian farmers who
must now import 100% of their requirements.
At Leigh Creek, we are working closely with Alinta Energy
and the wider Leigh Creek and Copley communities and we
have gained considerable support for the project.
Leigh Creek Energy remains focused on delivering the
LCEP and in the short term reaching gas demonstration. To
reach this goal, significant environmental baseline studies
are required but are yet to be completed. However, this
monitoring is well underway and has been assisted by the
Company’s recent capital raise.
Despite difficult market conditions, the Company raised
$10.77 million through a private placement announced April
2016. This placement, securing our financial position, was
another important step forward for the Company.
As a company we have some very big milestones to both
meet and achieve over the next 12 months. Amongst them
being securing binding off take agreements for electricity and
gas, the furtherance of our relationships with APT, Shanghai
Electric and Archer Exploration, and most importantly the
completion of baseline studies, and approvals permitting the
pre-commercial gas demonstration at Leigh Creek.
3
LEIGH CREEK ENERGY LIMITED ANNUAL REPORT 2016For personal use only
M A N A G I N G D I R E C T O R ’ S R E P O R T
Dear Shareholders,
I am extremely pleased to be able to share with you our
progress and plans with you at this time of rapid growth as
we move quickly towards pre-commercial gas demonstration
The LCEP is advancing rapidly towards pre-commercial gas
demonstration aimed for the March quarter of 2017. We then
aim to head into full field commercial planning, engineering
and to move through the commercial approval process.
and then commercial gas production aimed for 2019. We
Together these factors help support our ambition to create
intend to commence with power generation, for our own
wealth for shareholders, jobs and royalties for South Australia
needs and those of nearby major customers, and then move
and also help enable our local communities as well as
quickly to gas sales via a new pipeline linking us to the major
existing and new businesses.
pipeline system and from there to customers across Eastern
Australia. We are also, now, investigating opportunities to
Year Ended 30 June 2016
produce peaking power so that we can provide electricity to
LCK incurred a loss of $5,366,248 for the year ended
South Australia at times of high demand when wind energy is
30 June 2016 and LCK will pay no dividend.
not despatching at high volumes.
The current year loss is due to pre-development spend on
Our motto ‘Reliable Energy for South Australia’ is important
the LCEP and associated administration and support efforts
to us for many reasons. The State is suffering from high
and was funded by raising equity from shareholders and also
unemployment, high gas prices (recently doubled), high
from the full sell down of shares we owned in ourselves.
power prices (recently almost tripled) and unreliable power
supply. At the same time our expected low power costs and
potential opportunities to consume or sequester carbon
dioxide (CO2) should reduce our environmental footprint.
More widely the East Coast of Australia is expecting gas
shortages due to the impact of the new Liquefied Natural Gas
(LNG) projects in Queensland which have combined to more
than triple gas demand. On the supply side Governments in
many states have acted to restrict new gas developments
either by not supporting clear legal frameworks or on
environmental grounds.
The changing gas and electricity markets place LCK in a
strong position given our certified recoverable gas resource
position of 2,964 PJ (near 3.0 TCF) and our location within
a state with strong government support and at Leigh Creek
with its substantial existing infrastructure.
The comparison with the 2015 year loss of $17.6 million is
problematic as that year incorporated a reverse takeover (at
June 29) which incurred a non-cash charge of $16.7 million
to the profit and loss
We ended the current year with $8,659,369 cash at hand.
Reliable Energy Needed - Electricity
Power prices being offered in South Australia for the period
2017-2019 have near tripled compared to recent years and
power outages are now occasionally occurring.
Southeast Mainland Electricity Prices (A$/MWh)
h
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$
A
160
140
120
100
80
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Future prices
South Australia
NSW
Victoria
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Source: Data from the Australian Energy Regulator.
For personal use only
M A N A G I N G D I R E C T O R ’ S R E P O R T
In South Australia, disruption to
normal power supply is now not
uncommon
South Australia’s dedication to renewable energy (wind
This means that when power is not available in South
and solar) sees it ranked number 1 in Australia in terms of
Australia to meet demand, the State is reliant on the
installed capacity as a share of total capacity. The ageing
interconnector with Victoria. Unfortunately the interconnector
electricity grid across Eastern Australia was designed
itself can go down, due to maintenance or bushfire. The
originally for generally one way flows of electricity originating
interconnect can also fail to provide electricity if Victoria is
from base load power stations and heading towards
suffering a heatwave itself and thus absorbs local electricity
customers.
Electricity supply has also altered. Gas fired peaking stations
generated, leaving nothing for those sweltering in the heat in
Adelaide and surrounding population centres.
can fire up or down quickly. Solar energy ramps up into
Power demand is obviously dependent on weather
the middle of the day, generally at people’s homes when
conditions in terms of variable demand. Variable demand
electricity is not required, and drops off as night falls. Wind
arises from such things as TV’s being turned on in the
energy is available only when there is adequate wind.
evening and air conditioners being switched on during
These factors have put enormous strain on the electricity
network, the poles, wires, substations and transformers –
which ideally need an overhaul to better cope with variable
direction flows. Disruption to normal power supply is now not
uncommon.
summer. The swing between hot day (red), cold day (blue)
and mild day (yellow) power use is dramatic, as shown in
the following graph which highlights instantaneous power
demand across South Australia in MW for a typical 24 hour
period from 4pm in the afternoon through the lows at 4am
and back to 4pm in the afternoon.
Power demand (South Australia)
3100
2900
2700
2500
2300
2100
1900
1700
1500
1300
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Cold day
Mild day
pm
am
pm
16:04 18:28 20:52 23:16 1:40 4:04 6:28 8:52 11:16 13:40 16:04
24 hour period (pm—pm)
Source: Data obtained from the Australian Energy Market Operator
5
LEIGH CREEK ENERGY LIMITED ANNUAL REPORT 2016For personal use only
M A N A G I N G D I R E C T O R ’ S R E P O R T
South Australian manufacturing and mining industries require
Low Emission Energy
reliable power supply at a reasonable price. At this time
we are advancing discussions with major power users and
expect to develop agreements which will allow both parties
to co-ordinate planning ahead of signing electricity supply
agreements.
Our aim is to have a win: win. Large users get a long term
secure supply of electricity at a reasonable price so they
As the world moves to reduce CO2 emissions it is beholden
on LCK to strive to minimise our own environmental footprint.
We are investigating various methods of sequestration
(e.g. in ISG cavities or rapid forest establishment) as well
as consumption of CO2 in fertiliser manufacture or other
products derived from our gas.
can make capital allocation decisions. For LCK long term
Government Support
contracts help support our financing efforts and lock in
margins so we can create annuity streams.
Reliable Energy Needed - Gas
A day does not go by when the wider LCK family does not
celebrate its original decision to focus on opportunities within
South Australia, both because of the tremendous support we
receive in South Australia but also when we see the impacts
The Australian regulator is predicting gas shortages
of the various forms of lack of government support in gas
across the East Coast gas network from late 2018 due to
projects elsewhere.
the impact of high gas demand from the new export LNG
facilities in Queensland.
We feel we are very much in partnership whereby we work
closely with government, as we follow pre-defined and a
Gas prices have doubled in the last few years, from $3:50/GJ
prescribed regulatory process. We operate largely within the
towards around $7:00/GJ and many predict gas prices to rise
Petroleum Act which is clear legislation and provides legal
even further. Spot gas prices during the recent cold weather
certainty for our project.
in Southern Australia exceeded $20:00/GJ.
The government departments we deal with, primarily the
New gas supplies would in normal circumstance limit
Department of State Development, are highly professional,
expected shortages and new developments and or gas
efficient and pro-active. It is not surprising then, that South
exploration would act to secure much needed new gas
Australia is repeatedly named as one of the best destinations
reserves. However, this general supply response to rising
globally for its support of the Petroleum industry as
prices and predicted shortfalls has been hindered by
confirmed in the annual Fraser Institute Surveys (originated
numerous factors:
in Canada).
• Low oil prices have reduced energy company cash flows
Such accolades open doors overseas for LCK and definitely
and harmed balance sheets – with the result of cuts to
aid our financing efforts both with potential shareholders
and with banks (future debt providers). When I share the
LCK story with overseas parties the first question is always
about ‘What level of legal clarity and government support
do we have?’ and I am happy to provide our response. This
contrasts strongly with how other Australian states deal with
the Gas Industry whereby some Australian States are being
named as ‘off-limits for new investment’.
exploration budgets.
• Environmental agitation has increased in specific
jurisdictions, sometimes with government support
(particularly, NSW, Victoria and Queensland) and this has
increased legal uncertainty that has – halted, reduced or
delayed new gas developments.
• Victoria introduced a Moratorium for new onshore oil and
gas exploration.
• Queensland recently introduced tougher environmental
legislation making directors prosecutable ahead
of Companies being found guilty and even placing
shareholders liable for environmental matters.
Our marketing efforts have confirmed strong interest in
new gas supply and we anticipate this will increase as time
unfolds and as we head towards and successfully complete
our pre-commercial gas demonstration.
The Australian regulator is
predicting gas shortages
across the East Coast gas
network from late 2018
6
For personal use only M A N A G I N G D I R E C T O R ’ S R E P O R T
The reliability of power and the price of power
is a critical issue for all South Australians
Community Engagement
Following an extensive community engagement program,
LCK is well known across a wide area of South Australia.
We have the potential to positively impact thousands of
people directly and tens of thousands indirectly in regional
communities.
The reliability of power and the price of power is a critical
issue for all South Australians, but even more so in
communities suffering major job losses such as Whyalla,
Port Augusta and Leigh Creek itself following the closure of
the Leigh Creek Coal mine in November 2015.
We hope to help enable the survival of existing businesses
in these communities as well as enable major investment
decisions to be made by companies in our region who may
like to expand and promote other opportunities for new
industries in the region.
LCK is committed to using suppliers from South Australia and
in particular from the Upper Spencer Gulf Region wherever
possible. It is our hope that this strategy will be proven
effective in the coming year during the construction and
operation of the pre-commercial demonstration facility.
Having effectively provided ongoing information to the
community in the previous year about the LCEP, LCK will
now move to a more formal, structured community
engagement effort as we ensure that we engage with the
community more broadly.
LCEP Location
As you know we operate in and around the Leigh Creek
Coal Field. Although the former coal mine has ceased coal
production, Alinta Energy staff remain at site dedicated to
various tasks including rehabilitation. We therefore interact
with Alinta staff and contractors and I wish to take this
opportunity to thank Alinta for their support of LCK as our
efforts ramp up.
will derive significant benefits in terms of cost and time to
production. Access to the existing rail line would also allow
for the import of supplies and the export of finished goods.
Research and Development
Our commitment to innovation extends beyond being
the first to develop a commercial ISG project in Australia,
which in itself benefits from the interaction of existing oil
industry technology, plant and equipment when configured
appropriately.
We also have the opportunity to best utilise by-products and
waste products in order to maximise financial returns and
minimise our environmental footprint. In particular we aim to
consume or sequester much of our CO2.
It is early on in our R&D investigations but we note that
we should have abundant low cost energy, and waste
heat which if utilised appropriately can support low cost
sequestration of CO2 both underground and also in nurseries
supporting rapid growth trees.
Working Smarter
In addition to our research and development activities,
LCK recognises that it operates in the “new” economy. We
deliberately and constantly look for smart ways to apply
modern technology where there is a potential to improve our
performance. One example of this is the use of virtual reality.
As an aide to our investor relations effort we have
commissioned a virtual reality video using Convergen of
Adelaide.
Interested parties will soon be able to experience a visit to the
LCEP site via full surround virtual reality. They will be able to
experience the following over a period of a few minutes:
•
Inspect the significant established infrastructure at Leigh
Creek; town, airport, railway, sealed roads, optic fibre,
fresh water dam and power to site.
There is existing infrastructure at the site resulting from
the past open cut mining operations. If we can negotiate
long term access to this infrastructure with Alinta then LCK
• Visit the Leigh Creek Coal Field where coal has been
extracted since the 1940’s to see the extent of existing
infrastructure and the altered nature of landforms.
7
LEIGH CREEK ENERGY LIMITED ANNUAL REPORT 2016For personal use only M A N A G I N G D I R E C T O R ’ S R E P O R T
Adnyamathanha People
Conclusion and Thanks
LCK is presently gearing up efforts in support of approvals
and the necessary engineering efforts ahead of commencing
“pre-commercial gas demonstration” at the LCEP. Around
this focus is wide ranging and growing efforts that span such
fields as safety, community engagement, environmental
science, finance, commercial work, investor relations and
many other disciplines.
We are also seeking to add more professionals to the
team and our board and further integrate ourselves in our
community so that our dream of ‘Reliable Energy for South
Australia’ can be realised for the betterment of many.
I wish to take this opportunity to sincerely thank our staff,
contractors, shareholders and the many stakeholders
in our wider community that we touch on a daily basis
for their support of LCK. The company has experienced
rapid growth on all fronts over the last year and is actively
managing further growth. Such success and effort can only
be successful with the hard work and generosity of spirit of
all concerned. Having been at the start of the LCK story it is
simply wonderful to witness the progress and momentum
now gathering.
I look forward to the challenges of the year ahead and to
reporting to you all frequently as tangible progress occurs.
Sincerely,
David Shearwood
Managing Director
LCK acknowledges and respects the culture and history of
the Traditional Owners, being the Adnyamathanha people, of
the lands around the region in which we operate.
LCK is committed to positive engagement with
Adnyamathanha Traditional Land Association (ATLA) and
the participation of indigenous people on the LCEP and
associated infrastructure.
Financing
LCK requires capital until we reach the point of generating
free cash flow. At present, we are analysing options spanning
the spectrum between debt and equity and in this regard I
wish to thank EAS Advisors LLC for their planning efforts and
strategic advice.
The LCEP has many components that are essentially
infrastructure in nature:
• Gas pipeline
• Power generation
• High voltage electricity transmission
• Oxygen plant
These lend themselves to appropriate gearing and indeed
could be built and owned by others.
We have attracted and enjoy our relationship, at present via,
Heads of Agreement with APA Group – Australia’s largest
pipeline owner and also Shanghai Electric Power Generation
Group (Or Shanghai Electric Corp.) - one of the world’s
largest manufacturers of turbines and electricity generation
plant and equipment.
LCK will need additional equity and the vast bulk of this is
intended to come from the proceeds of a farm out of part of
the LCEP. This effort has now commenced and anticipated
to be final after pre-commercial gas demonstration has
occurred.
The Year Ahead 2016/17
Much work is already underway and indeed the milestones
planned require considerable additional internal effort and
external support. Our spend will rise as our key focus is to:
• Operationally – safely conduct pre-commercial gas
demonstration at the LCEP.
• Feasibility – complete commercial scale prefeasibility
studies.
• Planning – add to full field commercial gas development
engineering and approval efforts.
• Widen and deepen our relationship with the communities
in which we operate.
• Widen and deepen our relationship with global capital
providers (debt and equity).
• Sell off, via farm-out, part of the LCEP where we presently
enjoy 100% ownership.
8
For personal use only
L E I G H C R E E K E N E R G Y P R O J E C T
ISG consumes less surface water and
generates less atmospheric pollution
compared to surface gasification
A New Energy Source for South Australia
The LCEP represents a significant new energy source that
can support:
•
reliable power generation in South Australia.
• add to gas supply on the East coast of Australia.
•
feed fertiliser and explosives manufacture (replacing
imports) for South Australia for the State’s farmers and
mining industry.
Our focus has always been power generation first, to meet
our own internal needs ahead of gas sales via a new pipeline.
In the last six months this focus has been augmented to
include power generation for external sales, because:
• We believe this is a profitable and less complicated
initial stage as we are simply adding additional power
generation and working with the players within the
high voltage network to connect into, and interact with,
the system.
• capture, consumption and sequestration of
• There is interest from major customers for reliable long
quantities of CO2.
term base load electricity supply; and
The range, size and timing of the LCEP stages requires
careful consideration as planning progresses.
We expect our present level of certified recoverable gas
resources (2C: 2,963.9 PJ) to be a candidate for upgrade
in early 2017 once the pre-commercial gas demonstration
phase is complete and given that ISG is a replication process
effort and differs from conventional oil and gas projects
which suffer from reservoir risk. Reservoir risk describes the
way petroleum production has a plateau rate and a decline
curve. ISG is simply repeated.
In addition two themes have eventuated over the last year
and have acted to focus our attention, being:
• The problems within the electricity industry in South
Australia are larger than we first imagined – principally
because the closure of coal fuelled base load power
stations at Port Augusta have left the western part of the
State vulnerable to power disruption and some of the
highest electricity prices in the country; and
• Perception is catching up with reality in the gas industry
whereby gas customers are more open to higher prices
and are seeing spot gas prices spiking upwards.
• This stage is a low capital cost effort which should
produce significant cash flows - this gives greater
flexibility to our longer term capital needs.
We have recently commissioned ElectraNet to provide advice
around high voltage electricity transmission, route options,
and advice around connection to the grid and participation
within the National Electricity Market (NEM).
ElectraNet is the largest owner of electricity
transmission assets in South Australia and provides
advice to market participants (generators and load –
being users of electricity).
We have also identified the opportunity to produce peaking
power, being power which swings into times of electricity
supply shortfalls, generally being when wind power is
despatching at low levels at times of high power demand.
Peaking power can start up and cease quickly.
We have recently commissioned CQ Partners to undertake
analysis of historical electricity market data and forecasts
so that we can best determine the initial viability of power
peaking assets.
CQ Partners is a leading advisor to energy participants.
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L E I G H C R E E K E N E R G Y P R O J E C T
Stages of the LCEP
The LCEP comprises many separate major components
with most sequential in terms of timing and thus there are
commercial, engineering and commissioning issues to
be considered as we head towards full field commercial
development. We are now conducting ‘trade off analysis’ and
commencing feasibility studies across many opportunities.
To emphasise the nature of the stepped aspects of the LCEP
we outline details as follows:
Approvals
HoA on sales
Pre-commercial
gas demonstration
Sales
agreements
Feasibility
Financing
Approvals
FID
Capital investment costs
and syngas production
costs are less than surface
gasification
Clearly this is a large workload but is
reflective of the size of recoverable gas
resources in place and the LCEP’s location
within a supportive South Australia
framework and at Leigh Creek which has
significant existing infrastructure.
Construction
Gas and electricity
production
Other products -
fertiliser
Expansion
CO2
management
Stages of the LCEP
The LCEP comprises many separate major components
with most sequential in terms of timing and thus there are
commercial, engineering and commissioning issues to
be considered as we head towards full field commercial
development. We are now conducting ‘trade off analysis’ and
commencing feasibility studies across many opportunities.
To emphasise the nature of the stepped aspects of the LCEP
we outline details as follows:
Clearly this is a large workload but is reflective of the size of
recoverable gas resources in place and the LCEP’s location
within a supportive South Australia framework and at Leigh
Creek which has significant existing infrastructure.
Fertiliser and Explosives
A prefeasibility study will be completed in 2016/17 following
the pre-commercial demonstration project. One of the likely
outcomes is that an attractive pathway in full commercial
operation will be the production of ammonium nitrate.
The bulk of the world’s fertiliser and explosives, by volume,
is based on ammonium nitrate (AN) and these products are
100% imported into South Australia resulted in generally high
prices for end users being farmers, mines and quarries.
AN is usually produced by purchasing methane (CH4) which
is treated to extract hydrogen via a capital and energy
intensive process.
either manufacture AN ourselves or sell hydrogen over a
fence to nearby and captive new AN facilities.
Hydrogen is valuable to us and has a number of potential
end uses, as follows;
• Some can go to power generation – however too much in
the gas fuel mix can negatively impact the ‘wobbe index’
– because hydrogen burns faster than most fuels.
> Hydrogen when burnt to make electricity produces
water as its only waste product.
• Hydrogen can be reacted with carbon monoxide (CO) to
produce additional methane (CH4) – however this requires
additional plant.
• Hydrogen can be consumed within AN manufacture for
fertiliser and explosives sales.
Hydrogen is the smallest of molecules making it difficult and
expensive to transport and therefore we are not considering
its sale or use outside the area of the LCEP itself. Initial
market inquiries indicate a ready market in South Australia for
fertiliser and explosives due to their current 100% imported
and high cost nature.
Initial financial analysis indicates the best way to monetise
excess hydrogen production at the LCEP is to sell hydrogen
over the fence to a new and nearby AN facility, possibly
owned by a third party.
The LCEP will produce significant quantities of hydrogen as
a by-product of the ISG process and if we choose we can
LCK continues to meet with AETI investments regarding
opportunities within the fertiliser area.
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LCEP Description
Geology
Appraisal drilling planned for Q4 2015 was deferred
because of the uncovering of previously unavailable historic
information. The data included geophysical logging, coal
quality data and original coal samples from the target seams
at the LCEP.
The coal samples from the LCEP target coal seams were
utilised for coal gasification testing, which showed that
the Leigh Creek coal was capable of producing ISG Syngas
at the rate of 15.2 GJ/tonne of coal gasified. This
information underpinned the PRMS ISG Gas Resources
certification work.
Assimilation and assessment of drill hole data and testing
of coal samples resulted in a coal geological model and
resource estimate being developed by GeoConsult Pty Ltd
(GeoConsult), resulting in LCK announcing a coal Inferred
Resource of 377 Million Tonnes (Mt) at the LCEP reported in
accordance with the JORC Code (2012).
The estimate is based on:
• A minimum seam thickness of 2m.
• A maximum stone parting thickness of 1m.
•
ISG Resources were limited to a minimum overburden
thickness of 200m.
• Opencut Exploration Targets were limited to a maximum
overburden thickness of 200m.
• Opencut Exploration Targets were limited to a base of
weathering grid model.
• A fixed Relative Density of 1.4, was applied for the
Resource Estimation.
• Points of observation spacing of 4km, (1km past the
last point) were used in the estimation where geological
correlation supported lateral continuity.
• Areas associated with major faulting located on the south
western basin edge (defined by seismic) have been
excluded from Q and V Seam working section Resources.
No faulting exclusions were applied from faults observed
in pit mapping as full seam offsets were not observed.
Tenement block Working
Thickness
Section
(m)
Depth
(m)
Inherent
Ash
Volatiles
Fixed
Density
Moisture (ad%)
(ad%)
(ad%)
Carbon (ad%)
(RD)
Area
(ha)
Volume
Tonnage
(m)
(Mt)
PEL650 – ISG
F G1-G2-H1
2.0-16.0
200-366
15.2-17.1
6.2-20.6
23.9-29.5
33.6-47.5
1.4
159
11,300,000
15.8
WS-G Block 1
Av.7.1
Av. 276
Av. 15.8
Av. 10.8
Av. 27.7
Av. 42.9
PEL650 – ISG
F G1-G2-H1
2.0-7.1
200-301
17.1-17.8
11.6-12.8
27.8-27.9
41.4-42.2
1.4
24
900,000
1.3
WS-G Block 2
Av. 3.68
Av. 245
Av. 17.7
Av. 12.6
Av. 27.9
Av. 41.6
PEL650 – ISG
L1
WS-L1 Block 1
PEL650 – ISG
K2
WS-K2 Block 1
2.0-6.3
Av. 3.68
2.0-6.7
Av. 3.3
200-392
Av. 245
200-413
Av. 307
–
–
–
–
–
–
–
–
1.4
204
6,140,000
8.5
1.4
301
9,970,000
13.9
PEL650 – ISG
Q1-Q2-Q3
2.0-29.9
200-831
20.9-23.0
11.0-11.2
24.9-25.1
40.9-42.3
1.4
1069
170,800,000
239
WS-Q Block 1
Av. 15.97
Av. 477
Av. 22.5
Av. 11.1
Av. 24.9
Av. 41.2
PEL650 – ISG
V1-V2-V3-V4
2.0-13.7
201-866
18.4-18.8
15.9-17.4
25.2-25.4
37.0-37.8
1.4
990
52,800,000
74
WS-V Block 1
Av. 5.4
Av. 517
Av. 18.4
Av. 16.0
Av. 25.3
Av. 37.7
PEL650 – ISG
W1
WS-W1 Block 1
ISG-Project Total
2.0-5.3
Av. 3.4
292-870
Av. 527
Initial PRMS ISG Gas Resources Certification
On 8 January 2016, LCK announced an initial ISG Gas
Resource at the LCEP of:
• 1C 2,747.7 PJ
• 2C 2,963.9 PJ
• 3C 3,303.1 PJ
This was independently assessed and certified by MHA
Petroleum Consultants LLC (MHA) and reported in
accordance with the Society of Petroleum Engineers –
–
–
–
–
1.4
503
17,200,000
24.1
376.6
Petroleum Resources Management System (PRMS). MHA
was provided with the Geological and Modelling Report
prepared in December 2015 by GeoConsult which provided
the estimate of the Inferred Coal Resource reported in
accordance with the JORC Code 2012.
Seismic survey
LCK acquired 18.3 line kilometres of new 2D seismic data
at the LCEP in early 2016. This survey provided valuable
data enabling LCK to select a specific site for the ISG pre-
commercial gas demonstration facility.
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Environment
LCK requires approval from various State government
agencies before commencing Demonstration and
Commercial ISG operations. Of particular relevance is the
Department for State Development’s requirements for an
Environmental Impact Report under the Petroleum and
Geothermal Energy Act, 2000.
To develop the Environmental Impact Report, LCK is currently
undertaking environmental investigations, in accordance with
Environment Protection Authority (EPA) guidelines, to identify
existing environmental conditions to understand existing
impacts and landform modification from historic mining and
related operations in the Leigh Creek Coalfield. A major
part of the investigations is development of a preliminary
Conceptual Site Model to understand relationships between
landforms, groundwater and historic operations and their
current and potential environmental impacts.
In addition to the Environmental Impact Report, LCK is
required to prepare a Statement of Environmental Objectives
(SEO), in which we outline the environmental objectives to
which our ISG activities will conform, and the criteria upon
which the achievement of these objectives will be assessed.
All of these criteria will be based upon baseline information
being gathered in the environmental investigations.
Detailed baseline data collection activities planned or being
undertaken at the Leigh Creek site include:
• Downhole Contaminant of Potential Concern (CoPC)
sampling to determine the presence and levels of
naturally occurring CoPCs.
• Downhole in situ permeability testing throughout the coal
basin sedimentary rocks.
• Shallow water monitoring bores to collect information
about shallow groundwater.
• Pump testing to confirm permeability measurements and
any potential connectivity between stratigraphic horizons.
•
Installation of monitoring wells and water pressure
sensors.
• Flora and Fauna surveys.
• Surface water sampling and monitoring.
• Air quality testing and sampling.
• Soil gas testing and monitoring.
• Fixed real time weather station.
LCK is pleased to have partnered with local South
Australian environmental consultancies in the development
of environmental baseline investigations and approval
documentation.
Local Native Fauna - Budgerigar
Local Native Fauna - Wallabies
Environmental surface water
sampling offsite
12
Conceptual Hydrogeological section of the Telford Basin
For personal use only The Facility will comprise a series of air compressors
feeding the below ground gasifier. Syngas will be extracted
from the gasifier through a production well, after which the
free water will be separated from the gas and measured and
sampled. After gas analysis, the gas and free water will
enter the thermal oxidiser where all components will be safely
destroyed.
The Demonstration Phase activities undertaken during
the year include engineering design of the surface and
belowground equipment. Continuing through 2016 the
Engineering Team will be focussed on finalising the
process design, mechanical design, HAZOP risk assessment
and the specification of piping, valves, instruments and
control systems.
A risk based approach will be employed throughout the
design, fabrication, operation and rehabilitation phases of
the Demonstration to effectively control or mitigate potentially
adverse outcomes.
LCK is continuing to work with the South Australian
regulators, when appropriate, to ensure they are kept
informed of the project’s progress and have sufficient
time and resources to effectively manage the
Demonstration process.
L E I G H C R E E K E N E R G Y P R O J E C T
Drilling
Drilling operations commenced at the Leigh Creek
Energy Project Demonstration site during June 2016. The
drilling program will initially comprise 3 drill holes that will
collect a variety of important information at the preferred
Demonstration Facility site. The data collected will include:
• Baseline environmental samples of rock and water
including CoPCs within the rock and groundwater.
• Groundwater properties including porosity, permeability
and the connectivity between the various coal basin strata
and the surrounding rocks.
• Rock formation properties including geotechnical
information which will be used to assess the stratas
stability during gasification and drilling.
• Coal and overburden samples for detailed gasification
analysis.
The primary objectives of the drilling program are to supply
environmental baseline, groundwater and rock strength
data to inform the approvals and engineering design works.
Additionally, coal and rock samples will be used for additional
gasification test work. Results of this first stage of drilling are
expected to be received through to September 2016.
Further drilling to install additional monitoring wells will be
defined on completion of these initial wells.
Demonstration Facility
LCK has commenced the detailed engineering for the
gasification Demonstration at the Leigh Creek Energy Project
site. The Demonstration Facility is focussed on operating
a single small gasifier to be able to collect gas quality,
environmental and operational data to inform the Commercial
Phase design.
The challenge for LCK is to operate the Demonstration
Facility in a way that safely, quickly and cost effectively
assures the required environmental and operational
outcomes. It will be a very small plant, with a limited
operational life.
Schematic Cross Section of the Telford Basin
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In Situ Gasification (ISG) Process
Surface Coal Gasification and In Situ Gasification
Surface gasification of coal was originally used for making
town gas. The first commercial gasification was used in the
1800’s for industrial and residential heating and lighting.
In gasification, a thermo-chemical process takes place,
rather than burning coal directly, to break down the
coal into its basic chemical constituents. In modern
gasifiers the coal is typically exposed to air or steam and
oxygen under high temperatures and pressures. Under
these conditions, molecules in the coal break apart,
initiating chemical reactions that produce a syngas,
typically a mixture of carbon monoxide, hydrogen and
other gaseous compounds.
ISG and surface gasification can each be used to produce
similar syngas that have identical downstream uses.
Gasifying the coal in situ (underground) allows the
energy extraction from large coal resources that are not
economically or technically recoverable by conventional
mining techniques. The hazards related to conventional
mining are also reduced. Surface disruption is minimised
and handling of solid materials is eliminated i.e. coal and
ash handling at the surface is not required. ISG consumes
less surface water and generates less atmospheric
pollution compared to surface gasification. Capital
investment costs and syngas production costs are also
less than surface gasification.
This description is
provided to assist
stakeholders to
better understand
our business
Core samples will be used
for environmental analysis
Leigh Creek site.
Typical Knock-out Pots used in ISG
Demonstration Facilities (Source: Carbon
Energy 2012 Annual Report).
14
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In Situ Gasification (ISG) Process
What is In Situ Gasification (ISG)?
Whilst ISG technology has been known since the 1800’s, it
was first adopted commercially in the Soviet Union during the
1930’s and remains in use there today at the Angren plant
in Uzbekistan which feeds a power generation plant. Recent
advances in oil and gas technologies (notably directional
drilling and computer-based process control) have combined
to further enhance ISG to become more commercially
attractive.
The ISG process occurs in deep (generally greater than
300m) coal seams (in situ). By creating the right process
conditions (pressure, temperature, presence of oxygen
or air, and sometimes steam) in the coal seam, a series of
chemical reactions occur, which results in the gasification of
the coal. Under this process the solid coal breaks apart into
its component gases to produce a synthetic gas (syngas).
ISG syngas is typically comprised of varying amounts of
hydrogen (H2), carbon monoxide (CO), and methane (CH4)
plus other gaseous compounds.
The process is controlled via the injection of air or oxygen
into the coal seam. These are introduced to the seam via an
injection well that is drilled vertically and then horizontally
into the coal seam. The injection well is connected to
surface facilities including the air, oxygen and steam supply
equipment.
The syngas is extracted through production wells drilled in
the coal seam to the surface where the gas is cleaned for use
in downstream processes or direct sale.
To facilitate flow through the injection well, gasification
zone and production wells, a “link” needs to be created to
enhance the in situ permeability of the coal seam. This is best
achieved by directional drilling which creates a tube shaped
void along which gases can travel.
While the precise method to be utilised at the LCEP will be
finalised during the front end engineering design phase of
the project development work, based on preliminary work, it
is anticipated that the establishment of the channel between
the injection well and the production well will be achieved
by drilling a horizontal hole. Later, heating of the coal at
various locations along the drill hole is likely to utilise the
Continuous Retraction Injection Point (CRIP) method. This
method has been proven at several ISG trial sites and is
widely considered to be the preferred method for efficient
production of syngas from underground coal seams.
In the CRIP process, the production well is drilled vertically
and the injection well is drilled using standard oilfield
directional drilling techniques in order to connect the wells as
shown in Figure below.
Once the channel is established and the coal heated, a
gasification cavity is initiated at the end of the oxygen (or
air) injection well in the horizontal section of the coal seam.
When the coal near the recently created cavity is consumed,
the injection point is retracted, and a new gasification cavity
initiated. In this manner, precise control over the progress of
the gasification is obtained which leads to a more consistent
gas composition.
Once brought to the surface via the production wells the
syngas is first separated and processed and is then available
for use either:
• as feedstock for power stations
•
for sale to gas customers (after separation of methane
from the syngas
• as ammonium nitrate (for the production of fertiliser and
explosives, or
•
for conversion to liquid fuels.
Standard petroleum and chemical industry plant and
equipment is used within surface facilities. Coal gasification
using mined coal has been conducted for over 100 years
allowing a vast body of knowledge to be developed
around cleaning and separating syngas produced by coal
gasification.
The method of processing the syngas will depend upon
the composition of the gas and the end product that the
Company ultimately aims to produce.
ISG Process
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Brief history of ISG
ISG was first proposed in the 1800’s. The most significant
development experience has been gained in the former
Soviet Union commencing in the 1920’s (although interrupted
by the Second World War).
Following the discovery of cheap oil and natural gas
throughout Russia in the 1970’s and 1980’s, the ISG
development operations were generally scaled back as
being unnecessary and uneconomic in comparison to the
abundant cheap natural gas available at the time.
Following the break-up of the former Soviet Union only
Kemerovo, in the Kuzbass region of Russia and the
Yerostigaz station in Angren, Uzbekistan continued to
operate, each producing up to 4 billion cubic metres of
syngas per annum. The Kemerovo operation closed in 1996,
leaving the Yerostigaz operation, located in Angren in Eastern
Uzbekistan which had commenced its operations in 1961 as
the only commercially operating ISG operation
(www.yerostigaz.com). Syngas produced at Angren is used
to produce electricity for the city of Angren.
ASX Listed Carbon Energy Limited announced on the
25 July 2016 that it had ‘received formal confirmation from the
Queensland Government’s Chief Scientist, Dr Geoff Garrett
AO, that Carbon Energy met the key recommendations of the
government appointed Independent Scientific Panel (ISP)
into underground coal gasification.’ Dr Garrett stated ‘ it is
clear that Carbon Energy has contributed to the collective
understanding of UCG and the conditions under which the
operation is likely to be both safe and successful.’
Former Australian Chief Scientist Professor Robin Batterham
has also noted that Carbon Energy had established ‘a world
first scientific demonstration of an emerging technology
from site selection, underground coal gasification with no
deleterious impact and finally rehabilitation to conditions no
worst than what existed at the start’.
In conclusion, whilst the ISG technology is proven, it is yet to
be adopted on a commercial scale in the western economies.
This gives LCK a distinct first mover advantage and the ability
to monetise that advantage in the coming years.
Tenement Schedule
Petroleum and Mineral Tenements
Tenement
Percentage interest
Grant date
Location
Petroleum Exploration Licence 650
Petroleum Exploration Licence Application 582
Petroleum Exploration Licence Application 643
Petroleum Exploration Licence Application 644
Petroleum Exploration Licence Application 647
Petroleum Exploration Licence Application 649
Gas Storage Exploration Licence 662
Mineral Exploration Licence 5596
Mineral Exploration Licence 5597
Coal and Gas Resources
100%
100%
100%
100%
100%
100%
100%
100%
100%
18 November 2014
Leigh Creek
Under Application
Finniss Springs
Under Application
Callabonna
Under Application
Roxby Downs
Under Application
Leigh Creek
Under Application
5 February 2016
17 April 2015
17 April 2015
Oakdale
Leigh Creek
Leigh Creek
Leigh Creek
Tenement
Location
Coal Resource
Coal Resource
Syngas Resource
Syngas Energy
Coal and Syngas
Category 2016
(Mt) 2016
Classification 2016
(Pj) 2016
Resources 2015
Petroleum Exploration
Leigh Creek
Inferred
377
Licence 650
1C
2C
3C
2,747.7
2,963.9
3,303.1
–
–
–
Mineral Resource and Syngas Resource Governance and Disclosures
Mineral Resources are estimated in accordance with the requirements of
the JORC Code, by qualified competent persons who are consultants to
Leigh Creek Energy.
Syngas Resources are estimated in accordance with the requirements
of the Petroleum Resources Management System (PRMS) approved by
the Society of Petroleum Engineers, by qualified petroleum reserves and
resources evaluators who are consultants to Leigh Creek Energy.
The Mineral Resource and Syngas Resource Statements in the 2016
Annual Report are reviewed by qualified consultants described above.
For Mineral Resources, this is the qualified competent person, and for the
Syngas Resource, the qualified petroleum reserves and resource evaluator.
Notes on Coal Resources: For the purposes of ASX Listing Rule 5.23,
Leigh Creek Energy confirms that it is not aware of any new information
or data that materially affects the information included in the 8 December
2015 Resources Statement and that all material assumptions and technical
parameters underpinning the estimates in the Resources Statement
continue to apply and have not materially changed.
The coal resource reported herein, insofar as they relate to mineralisation,
are based on information compiled by Mr Warwick Smyth of GeoConsult
Pty Ltd. Mr Smyth is a Member of the Australasian Institute of Mining and
Metallurgy and the Australian Institute of Geoscientists, who has more than
25 years’ experience in the field of activity being reported. Mr Smyth has
sufficient experience which is relevant to the style of mineralisation and type
of deposit under consideration and to the activity that he is undertaking
to qualify as a Competent Person as defined in the 2012 Edition of the
“Australasian Code for Reporting Exploration Results, Mineral Resources
and Ore Reserves”. Mr Smyth consents to the inclusion in the report of
coal resource estimates based on his information in the form and context in
which it appears.
Notes on Gas Resources: For the purposes of ASX Listing Rule 5.43,
Leigh Creek Energy confirms that it is not aware of any new information
or data that materially affects the information included in the 8 January
2016 Resources Statement and that all material assumptions and technical
parameters underpinning the estimates in the Resources Statement
continue to apply and have not materially changed.
The Gas Resource estimates stated herein are based on, and fairly
represent, information and supporting documentation prepared by Timothy
Hower of MHA Petroleum Consultants LLC, Denver USA. Mr Hower is a
member of the Society of Petroleum Engineers and has consented to the
use of the Resource estimates and supporting information contained herein
in the form and context in which it appears.
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D I R E C T O R S ’ R E P O R T
17
LEIGH CREEK ENERGY LIMITED ANNUAL REPORT 2016For personal use only D I R E C T O R S ’ R E P O R T
Information on continuing Directors
Leigh Creek Energy Limited (‘the Company’ or
‘Leigh Creek Energy’) is a public company incorporated and
domiciled in Australia and listed on the Australian Securities
Daniel Justyn Peters
LLB, BA (Politics/Jurisprudence) GDLP
– Executive Chairman
Exchange.
The Directors present their report on the group which
comprises Leigh Creek Energy Limited and its controlled
entities (‘Group’) for the year ended 30 June 2016.
Directors
The names of the Directors in office at any time during or
since the end of the year are:
Experience & expertise
Mr Peters joined Linc Energy soon after its IPO. At the time
Linc Energy was the world leader in ISG. In his 6 years at
Linc Energy Mr Peters held the positions of General Manager
Environment and Government Relations, General Manager
Business Development, Executive General Manager Nth
Asia and finished as Executive General Manager of Investor
Relations. His experience across a broad range of business
• Daniel Justyn Peters
(appointed 28.11.2014)
units within Linc Energy will prove invaluable in developing
• David Shearwood
(appointed 27.05.2015)
the Leigh Creek Energy project.
• Gregory English
(appointed 22.09.2015)
• Murray Chatfield
(appointed 30.06.2016)
• Peter Williams
(appointed 21.05.2004)
(retired 15.10.2015)
• Christopher Schacht
(appointed 24.01.2008)
(retired 30.10.2015)
Previously Mr Peters was employed at the Queensland EPA
as head of investigations and Compliance and then acting
Director of Central and Northern Regions. He managed the
integration of the environmental regulation of Qld Mining
Industry into the EPA.
Current & former directorships in the last three years
None
Directors have been in office since the start of the financial
year to the date of this report unless otherwise stated.
Date of appointment
Mr Peters was appointed as Executive Chairman
on 27 May 2015.
David Shearwood
B. Eng (Mining Hons) - University of Sydney (1984),
Grad Dip in App Fin (SIA) (2000), Prof Dip HR (AHRI) (2006)
– Managing Director
Experience & expertise
Mr Shearwood has 29 years’ experience as a fund manager,
strategist and investment banker at firms including Macquarie
Bank, Westpac, QBE Insurance, Atom Funds Management,
Du Pont and Rio Tinto. He founded Atom and developed a
captive Australian equities research firm in Bangalore, India,
to support the business in Australia which concentrated on
small company investments. Mr Shearwood has travelled
the world investigating mining, energy and infrastructure
opportunities.
Mr Shearwood was one of the earliest fund managers in
Australia to invest in the ISG industry. He has achieved top
quartile performance as a fund manager and analyst across
various sectors during his career with an emphasis on mining
energy and infrastructure.
Current & former directorships in the last three years
None
Date of appointment
Mr Shearwood was appointed as Managing Director on
27 May 2015.
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Jordan Mehrtens
LLB/LP, BCom(Fin), GDip(Planning)
– Company Secretary
Jordan is a qualified Lawyer, and has other qualifications
in finance and urban and regional planning. Jordan has
worked with the Leigh Creek Energy Project since its
commencement, providing regulatory, compliance and other
analytical advice. Jordan is a member of the Governance
Institute of Australia and Australian Mining and Petroleum
Law Association and performs the secretarial role in the
Company.
D I R E C T O R S ’ R E P O R T
Information on continuing Directors
Gregory D English
LLB, B.Eng (Mining)
– Non-Executive Director
Experience & expertise
Mr English is an experienced and qualified mining engineer
and lawyer with over 25 years of involvement in the
resources industry. As a mining engineer he has worked on
underground and open pit coal mines, including working
as a mining engineer at the Leigh Creek Coalfield where he
lived in the Leigh Creek town. As a lawyer Greg has acted for
numerous oil and gas companies and advised on numerous
gas marketing, gas transportation and similar transactions.
Greg’s experience in the coal industry, and in particular his
knowledge of the Leigh Creek Coalfield, and experience and
contacts in the oil and gas industry is a significant asset to
the Company.
Current & former directorships in the last three years
Archer Exploration Limited, Core Exploration Limited,
West African Gold Limited.
Date of appointment
Mr English was appointed as a non-executive director on
22 September 2015.
Murray Chatfield
B Com Ag (Economics and Marketing), MBA, ACT, MAICD
– Non-Executive Director
Experience & expertise
Mr Chatfield has extensive experience within finance with
nearly 30 years’ experience within investment banking,
hedge funds and corporate finance both in Australia and
internationally. He was a senior Economist with the New
Zealand government before joining Bankers Trust in London.
He then moved into Hedge Funds initially as European
Treasurer and then as a Partner and COO in a Relative
Value Hedge Fund. He was the COO and Partner in a
Australian based fund focussed on Global Macro events.
He has been and is still, actively involved as a Director of
several companies in the Commodity and Marketing areas.
Mr Chatfield’s career covers finance, treasury, accounting,
operational efficiency, risk management (business, market,
tax and regulatory), legal and regulatory compliance and
direct financial market interaction.
Current & former directorships in the last three years
None
Date of appointment
Mr Chatfield was appointed as a non-executive director on
30 June 2016.
Refer to ‘Directors & Executives Remuneration Note (e) on page 24 for shareholding details for Directors.
19
LEIGH CREEK ENERGY LIMITED ANNUAL REPORT 2016For personal use only D I R E C T O R S ’ R E P O R T
PRINCIPAL ACTIVITIES
AFTER REPORTING DATE EVENTS
The principal activity of the Group was pursuing the
The unlisted options issued on 20 July 2016 related to
development of its Leigh Creek Energy Project.
capital raising services provided in May 2016 in accordance
REVIEW OF OPERATIONS AND OPERATING RESULTS
with ASX announcement on 9 May 2016. The cost of these
options were expensed in the financial year ending
The consolidated operating loss of the financial year to 30
30 June 2016.
June 2016 was $5,366,248 (2015: ($17,598,147) primarily
as a result of applying reverse acquisition accounting).
ENVIRONMENTAL ISSUES
Additionally, expenditure incurred on the project capitalised
The Company and subsidiaries are required to comply with
as Exploration expenditure was $1,739,813 (2015: $710,667).
various Commonwealth and State environmental legislation
In relation to cash flow, the stock of treasury shares were
in relation to its planned exploration activities and future
sold in November 2016 providing $3.4m funds and a share
development at the Leigh Creek site.
capital raising was completed in May 2016 providing a further
$9.5m (net of capital raising costs) to provide funding for the
pre-commercial phase.
No notification of any breach of any environmental
regulation has been received in respect of any of the
Company’s prior exploration activities during the year.
On 25 September 2015, Leigh Creek Energy and Archer
Exploration Ltd signed a Heads of Agreement whereby
MEETINGS OF DIRECTORS
Archer will work with the Company to explore synergies on
During the financial year, the number of meetings held at
their respective Leigh Creek projects in South Australia. No
which a Director was eligible to attend and the number
amount has been recorded in the accounts at 30 June 2016.
actually attended by each Director were:
On 15 December 2015, Leigh Creek Energy and APT
Pipelines Ltd signed a non-binding Heads of Agreement
which will allow the development of conceptual plans for the
interconnection of the Leigh Creek Energy Project with the
east coast gas market. No amount has been recorded in the
accounts at 30 June 2016.
On 6 April 2016, Leigh Creek Energy and Shanghai Electric
Power Generation Group signed a Heads of Agreement in
relation to a future power generation plant located at Leigh
M K Chatfield
Creek. No amount has been recorded in the accounts at
30 June 2016.
DIVIDENDS
P L Williams
C Schacht
Director
Board Meetings
Audit Committee
Meetings
Meetings
Meetings
Meetings
Meetings
held
attended
held
attended
D J Peters
D K Shearwood
G D English
11
11
9
1
2
3
11
11
9
1
2
3
3
3
2
-
1
1
3
3
2
-
1
1
The Directors do not recommend the payment of a dividend
and no amount has been paid or declared since the end of
the previous financial year.
LIKELY DEVELOPMENTS, PROSPECTS AND BUSINESS
STRATEGIES
Approval is currently being sought for the pre-commercial
development phase of the project. Successful completion
of the pre-commercial phase may likely lead to interest in
advance transactions over future gas production.
Given the nature of the Company’s business as an
energy development entity and the status of its activities
during 2016, matters dealt with by the Board dictated no
efficiencies or other benefits would be gained by having
separate Audit and Risk Committee meetings on all
occasions in the period under review. Issues relevant to
the integrity of the Company’s financial reporting ordinarily
dealt with by an Audit and Risk Committee were dealt
with by the full Board when expedient. The Company has
standing agenda items at each Board meeting to deal with
audit related matters normally carried out by the Audit
The Group will require further capital to sustain its activities.
and Risk Committee. In appropriate circumstances, the
Board sought independent legal and accounting advice on
CORPORATE GOVERNANCE
pertinent aspects.
The Board of Leigh Creek Energy Limited is committed
to achieving and demonstrating the highest standards
of corporate governance and has adopted practices and
policies in accordance with the ASX Corporate Governance
Recommendations. The Corporate Governance Statement is
20
noted on page 26.
For personal use only
D I R E C T O R S ’ R E P O R T
PROCEEDINGS
The Company is not currently a party to legal proceedings
DIRECTORS’ AND EXECUTIVES’ REMUNERATION –
AUDITED
brought against it or initiated by it at the date of this report.
a) Principles used to determine the nature and
UNISSUED SHARES UNDER OPTIONS
At the date of this report, the unissued ordinary shares of
Leigh Creek Energy Limited under unlisted and listed options
are as follows:
Grant Date
Date of
Expiry
Exercise Number under
Price
Option
14 October 2015
14 October 2019
$0.212
1,000,000
14 October 2015
14 October 2020
$0.25
1,000,000
amount of remuneration
The remuneration policy is designed to align the
objectives of the Key Management Personnel with
shareholder and business objectives by providing a
fixed remuneration package to non-executive Directors
and time based remuneration to Executive Directors.
The Board of Leigh Creek Energy believes the policy to
be appropriate and effective in attracting and retaining
the best Directors and Executives to manage and direct
the Group, as well as create goal congruence between
1 December 2015
31 July 2020
$1.50
2,000,000
Directors, Executives and shareholders.
1 December 2015
30 November 2020
$0.30
10,250,000
The Company’s policy for determining the nature and
6 June 2016
6 June 2018
$0.50
17,687,463
27 June 2016
31 October 2018
$0.20
1,500,000
27 June 2016
31 October 2018
$0.22
1,500,000
27 June 2016
31 October 2018
$0.24
1,500,000
amounts of emoluments of board members and other
Key Management Personnel of the Company is as
follows.
The Company’s Constitution specifies that the total
amount of remuneration of non-executive Directors
27 June 2016
31 October 2018
$0.26
1,500,000
shall be fixed from time to time by a general meeting.
37,937,463
The current maximum aggregate remuneration of
non-executive Directors has been set at $500,000
Listed options (17,687,463) were issued in accordance with
the prospectus for share capital raising in May 2016. For
every 2 ordinary shares acquired, the shareholder would be
issued 1 listed option to be exercised by 6 June 2018.
Previously issued 750,000 unlisted options expiring on
1 November 2015 at an exercise price of $1.727 each, were
not exercised and lapsed on that date.
An additional 2,300,000 unlisted options were issued on 20
per annum. Directors may apportion any amount up
to this maximum amount amongst the non-executive
Directors as they determine. Directors are also entitled
to be paid reasonable travelling, accommodation and
other expenses incurred in performing their duties
as Directors. The remuneration of the Managing
Director is determined by the non-executive Directors
and approved by the Board as part of the terms and
conditions of his employment which are subject to
July 2016 which related to capital raising services provided
review from time to time.
in May 2016 in accordance with ASX announcement on 9
May 2016. The cost of these options were expensed in the
financial year ending 30 June 2016.
During the year ended 30 June 2016, and to the date of this
report no ordinary shares of Leigh Creek Energy Limited were
issued on the exercise of options. None of the options on issue
entitles the holders to participate, by virtue of the options, in
any dividend or share issue of any other corporation.
INSURANCE PREMIUMS AND INDEMNITY
Since the end of the previous year the Company has paid
insurance premiums in respect of Directors’ and Officers’
liability and legal expenses’ insurance contracts.
The terms of the policies prohibit disclosure of details of
the amount of insurance cover, the nature thereof and the
premium paid.
The remuneration of other executive officers and
employees is determined by the Managing Director
subject to the approval of the Board.
Non-executive Director remuneration is by way of fees
and statutory superannuation contributions. Non-
executive Directors do not participate in schemes
designed for remuneration of executives but they
may receive options or bonus payments subject
to shareholder approval and are not provided with
retirement benefits other than salary sacrifice and
statutory superannuation.
The Company’s remuneration structure is based on a
number of factors including the particular experience
and performance of the individual in meeting key
objectives of the Company. The Board is responsible for
assessing relevant employment market conditions and
The Company has indemnified the Directors and Executives
achieving the overall, long term, objective of maximising
of the Company for the costs incurred in their capacity as a
shareholder benefits through the retention of high
director or executive, except where there is a lack of
quality personnel.
good faith.
21
LEIGH CREEK ENERGY LIMITED ANNUAL REPORT 2016For personal use only
D I R E C T O R S ’ R E P O R T
The Company does not presently emphasise payment for
As the Company is developing an energy asset which is not
results through the provision of cash bonus schemes or other
yet in production, in the opinion of the Board, the Company’s
incentive payments based on key performance indicators
earnings and the consequences of the Company’s
of Leigh Creek Energy given the nature of the Company’s
performance on shareholder wealth are not related to the
business as an exploration entity and the current status of its
Company’s remuneration policy.
activities. However, the Board may approve the payment of
cash bonuses from time to time in order to reward individual
executive performance in achieving key objectives as
considered appropriate by the Board.
The Company also has an Employee Share Option Plan,
approved by shareholders, that enables the Board to offer
eligible employees options to acquire ordinary fully paid
shares in the Company. Under the terms of the Plan, options
to acquire ordinary fully paid shares may be offered to the
Voting at 2015 AGM
Of the total valid available votes lodged, Leigh Creek Energy
received 99.91% of “yes” votes on its remuneration report for
the 2015 financial year with the motion carried unanimously
on a show of hands as an ordinary resolution. The Company
did not receive any specific feedback at the AGM on its
remuneration practices.
Use of remuneration consultants
Company’s eligible employees at no cost unless otherwise
The Company did not engage remuneration consultants
determined by the Board in accordance with the terms
during the year.
and conditions of the Plan. The objective of the Plan is
b) Details of remuneration
to align the interests of employees and shareholders by
providing employees of the Company with the opportunity
to participate in the equity of the Company as an incentive to
achieve greater success for the Company and to maximise
the long term performance of the Company.
Details of the nature and amount of each element of the
remuneration of each Key Management Personnel (KMP) of
the Group are shown in the table below:
Short term benefits
Post employment
benefits
Termination
benefits
Share based
payments
Other
Super
Contributions
Termination
payments 2
Options 1
Total
Directors
Year
D J Peters
D K Shearwood
G D English 3
M Chatfield 4
C Schacht 5
P L Williams 6
C Ryan 7
J Linley 8
Executives
P J Staveley 9
J Haines
G Marsden
S Appleyard 10
Total
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
22
Directors
Fees
-
15,000
-
-
38,750
-
-
-
13,222
30,833
11,667
49,166
-
13,687
-
27,500
-
-
-
-
-
-
-
-
Salary and
Wages
325,000
25,000
297,917
22,916
-
-
-
-
-
-
-
-
-
-
-
55,000
259,583
-
206,250
-
250,000
-
-
30,667
-
-
-
-
-
-
-
-
-
-
-
66,641
-
-
-
-
-
79,407
-
-
-
19,636
33,124
-
30,875
3,800
28,302
2,177
3,681
-
-
-
1,256
2,929
1,108
4,670
-
-
-
7,838
24,660
-
19,594
-
23,750
-
-
24,996
63,639
136,186
1,338,750
133,583
33,124
165,684
133,226
46,410
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,997
-
-
-
-
-
-
-
18,598
-
22,595
8,038
-
8,038
-
163,671 11
163,671 11
-
148,877 11
148,877 11
-
-
-
159,288
13,874
-
-
-
-
43,214
-
43,214
-
43,214
-
-
-
363,913
43,800
334,257
25,093
206,102
-
148,877
-
14,478
33,762
172,063
134,351
-
13,687
-
94,335
327,458
79,407
269,058
-
316,964
19,636
33,124
74,261
617,554
13,874
2,186,293
518,332
For personal use only
D I R E C T O R S ’ R E P O R T
Notes
1
In accordance with the Accounting Standards, remuneration includes a proportion of the notional value of the options granted during the
year. The notional value of options is determined as at the issue date and is progressively allocated over the vesting period. The amount
included as remuneration is not indicative of the benefit (if any) that the employee may ultimately realise should the option vest. The
notional value of the options as at the issue date has been determined in accordance with the accounting policy Note 15.
2 The Termination payments aggregate amount of $22,595 represents accumulated leave entitlements payable on resignation of salaried
employees. No other benefits were paid.
3 Mr English was appointed as a Non-Executive Director on 22 September 2015.
4 Mr Chatfield was appointed as a Non-Executive Director on 30 June 2016.
5 Mr Schacht was a Non-Executive Director prior to his resignation on 30 October 2015.
6 Mr Williams was Deputy Chairman prior to his resignation on 15 October 2015.
7 Mr Ryan was a Non-Executive Director prior to his not being reappointed at the 2014 AGM on 20 November 2014.
8 Mr Linley was Managing Director prior to his resignation on 28 May 2015.
9 Mr Staveley was appointed as Chief Executive Officer on 10 February 2016.
10 Mr Appleyard was Company Secretary prior to his resignation on 30 September 2015.
11 Options to be issued to Non-Executive Directors were agreed at the 30 June 2016 board meeting. As the remuneration is approved at the
AGM, these are yet to be approved. Under accounting rules, the options need to be expensed in the financial year using 30 June 2016 as the
provisional grant date. An adjustment to accounting expense is required when/if they are approved at the AGM.
c) Contracts of Service
The employment conditions, tenure and emoluments of the Managing Director and executives are evidenced in writing.
Name
Position
Duration of contract
D J Peters
Executive Chairman
D K Shearwood
Managing Director
3 yrs + 1 yr company option 1
3 yrs + 1 yr company option 2
P J Staveley
J Haines
G Marsden
Notes
CEO
GM Technical
GM Commercial
1 Commenced 26 November 2014.
2 Commenced 27 May 2015.
d) Share-based remuneration
Ongoing
Ongoing
Ongoing
Period of
termination notice
Termination
payment
3 month
3 month
3 month
3 month
3 month
None
None
None
None
None
Unlisted options are granted to Directors and Key Management Personnel as part of their remuneration. The options
are not granted based on performance criteria, but are issued to the relevant Directors and Key Management Personnel
of the Group to increase goal congruence between executives, directors and shareholders. All options refer to options
over ordinary shares of the Company, which are exercisable on a one-for-one basis under the terms of the agreements.
Options granted during this financial year:
Number Granted
Grant date
Number vested
exercise date
Last exercised
Vesting and first
Name
D J Peters
1,000,000
1 December 2015
D K Shearwood
1,000,000
1 December 2015
P J Staveley
J Haines
G Marsden
P L Williams
G D English 2
M Chatfield 2
Total
2,000,000
1 December 2015
2,000,000
1 December 2015
2,000,000
1 December 2015
2,000,000
15 October 2015
-
-
10,000,000
-
-
-
-
-
-
-
-
-
-
31 July 2016 1
31 July 2016 1
31 July 2020
31 July 2020
31 July 2016 1
30 November 2020
31 July 2016 1
30 November 2020
31 July 2016 1
30 November 2020
15 October 2015
14 October 2020
-
-
-
-
Notes
1 Vesting date over four (4) tranches depending on key milestones being achieved.
2 Options to be issued to Non-Executive Directors were agreed at the 30 June 2016 board meeting. As the remuneration is approved at the
AGM, these are yet to be approved. Under accounting rules, the options need to be expensed in the financial year using 30 June 2016 as
the provisional grant date. An adjustment to accounting expense is required when/if they are approved at the AGM.
23
LEIGH CREEK ENERGY LIMITED ANNUAL REPORT 2016For personal use only
D I R E C T O R S ’ R E P O R T
The options were provided at no cost to the recipients. All options expire on the earlier of the expiry date or termination
of the individual‘s employment (excepting retiring directors).
These options issued in previous financial years, lapsed or were forfeited during the current financial year:
Name
P L Williams
Number of options forfeited
Financial year in which those
(lapsed) during the year
options were granted
750,000
2011
e) Other information
Number of Options held by Key Management Personnel
The number of options to acquire ordinary shares in the Company held during the 2016 reporting period by each of the
Group’s Key Management Personnel, including their related parties, is set out below:
Directors
D J Peters
D K Shearwood
G D English 2
M Chatfield 2
P J Staveley
J Haines
G Marsden
Balance
at start
of year
-
-
-
-
-
-
-
Granted as
remuneration
1,000,000
1,000,000
-
-
2,000,000
2,000,000
2,000,000
P L Williams
750,000
2,000,000
-
-
-
25,000 1
-
-
-
-
Total
Notes
750,000
10,000,000
25,000
Other
Exercised
Lapsed
Vested &
exercisable
at the end of
reporting period
Vested &
unexercisable
at the end of
reporting period
Closing
balance
1,000,000
1,000,000
-
25,000
2,000,000
2,000,000
2,000,000
-
-
-
-
-
-
-
-
-
-
25,000
-
-
-
(750,000)
2,000,000
2,000,000
(750,000)
10,025,000
2,025,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1 Mr Chatfield acquired 25,000 listed options as he participated in the share placement in May 2016. In accordance with the prospectus for the
share placement, each shareholder received 1 option for each 2 shares acquired.
2 Options as part of the remuneration package for the Non-Executive Directors have been approved by the board but need to be approved by
shareholders at the AGM.
Number of Shares Held by Key Management Personnel
The number of ordinary shares in the Company during the 2016 reporting period held by each of the Group’s Key
Management Personnel, including their related parties, is set out below:
Balance at start
of year
Granted as
remuneration
Received on
excersise
Other changes 1
Held at the end of
the reporting period
-
186,772
-
-
-
-
-
186,772
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
52,000
-
1,308,914
550,000
-
250,000
2,160,914
-
238,772
-
1,308,914
550,000
-
250,000
2,347,686
Name
D J Peters
D K Shearwood
G D English
M Chatfield
P J Staveley
J Haines
G Marsden
Total
Notes
1 Other changes include purchases during the financial year, new KMP on note disclosure.
24
For personal use only
D I R E C T O R S ’ R E P O R T
In addition to the 238,772 ordinary shares held by
Mr Shearwood, Mr Shearwood has a relevant interest in the
104,767,190 ordinary shares in Leigh Creek Energy Limited
held by Allied Resource Partners Pty Ltd due to
Mr Shearwood owning 20.9% of the issued capital of
Allied Resource Partners Pty Ltd.
At the date of this report there is no known change in the
number of shares held by the Key Management Personnel.
Related party transactions
An amount of $11,667 is receivable from Allied Resources
Partners, in which Executive Chairman Mr Peters and
Managing Director Mr Shearwood have an interest. This is
not subject to any terms, conditions or fixed payment dates.
END OF AUDITED REMUNERATION REPORT
25
LEIGH CREEK ENERGY LIMITED ANNUAL REPORT 2016For personal use only
A U D I T O R ’ S I N D E P E N D E N C E D E C L A R AT I O N
A U D I T O R ’ S I N D E P E N D E N C E
Grant Thornton Audit Pty Ltd continues in office in accordance with
Section 327 of the Corporation Act.
The auditor has not been engaged during the year for any non-audit
services which may have impaired the auditor’s independence. The
auditor’s independence declaration for the year ended 30 June 2016 has
been received and is included in this report.
Signed in accordance with a resolution of the Board.
D J Peters
Director
D K Shearwood
Director
Dated at Adelaide, South Australia this 15th day of August 2016
C O R P O R AT E G O V E R N A N C E S TAT E M E N T
The Board of Directors (the Board) of Leigh Creek
Although the ASX Corporate Governance Council’s
Energy Limited (the Company) is committed to achieving
Recommendations are not mandatory, under listing rule
and demonstrating the highest standard of Corporate
4.10.3 companies are required to provide a statement
Governance.
The Board guides the affairs of the Company on behalf of the
shareholders by whom they are elected and to whom they
are accountable. The Board has responsibility for the overall
disclosing the extent to which they have followed the
recommendations in the reporting period, identifying any
principles which have not been followed with reasons for not
having done so.
Corporate Governance of the Company including its strategic
The Group’s corporate governance statement for the
direction, establishment of goals for its management and
year ended 30 June 2016 is accurate and up to date as at
monitoring the achievement of those goals.
30 June 2016, and was approved by the Board on
The individual Directors recognise that their primary
15 August 2016.
responsibility is to the owners of the Company, its
The statement of revised principles and the Company’s
shareholders, while simultaneously having regard for the
compliance with each principle are set out in the Company’s
interests of all stakeholders and the broader community.
website www.lcke.com.au
The statement outlines the Company’s Corporate
Governance Practices in place during the financial year. The
Company’s statement is made based on the ASX Corporate
Governance Councils Corporate Governance Principles and
Recommendations (3rd Edition).
26
For personal use only D I R E C T O R S ’ D E C L A R AT I O N
The Directors of the company declare that:
1) The financial statements and notes set out on pages 30 to 51 are in accordance
with the Corporations Act 2001, including:
a) complying with Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001;
b) giving a true and fair view of the financial position as at 30 June 2016 and of
the performance of the Group for the year ended on that date.
2) The financial statements and notes set out on pages 30 to 51 comply with
international financial reporting standards as disclosed in note 1.
3) The Managing Director and Chief Finance Officer have each declared that:
a) the financial records of the company for the financial year have been properly
maintained in accordance with section 286 of the Corporations Act 2001;
b) the financial statements and notes for the financial year comply with
Australian Accounting Standards; and
c) the financial statements and notes for the financial year give a true and
fair view.
4)
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.
This declaration is made in accordance with a resolution of the Board of Directors.
D J Peters
Director
D K Shearwood
Director
Dated at Adelaide, South Australia this 15th day of August 2016
27
LEIGH CREEK ENERGY LIMITED ANNUAL REPORT 2016For personal use only A U D I T O R ’ S I N D E P E N D E N C E D E C L A R AT I O N
Level 1,
67 Greenhill Rd
Wayville SA 5034
Correspondence to:
GPO Box 1270
Adelaide SA 5001
T 61 8 8372 6666
F 61 8 8372 6677
E info.sa@au.gt.com
W www.grantthornton.com.au
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF LEIGH CREEK ENERGY LIMITED
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead
auditor for the audit of Leigh Creek Energy Limited for the year ended 30 June 2016, I declare
that, to the best of my knowledge and belief, there have been:
no contraventions of the auditor independence requirements of the Corporations Act 2001
in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
a
b
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
I S Kemp
Partner – Audit & Assurance
Adelaide, 15 August 2016
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context
requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal
entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s
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GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme
applies.
28
24
For personal use only
F I N A N C I A L I N F O R M AT I O N
24
29
LEIGH CREEK ENERGY LIMITED ANNUAL REPORT 2016For personal use only L E I G H C R E E K E N E R GY L I M I T E D A B N 3 1 1 0 7 5 3 1 8 2 2
Statement of Profit or Loss and Other Comprehensive Income for the
financial year ended 30 June 2016
Revenue
Gain on disposal of shares
Depreciation
Employee benefits expense
Occupancy expense
Consulting and legal expenses
Travel expense
Other expenses
Interest paid
Transaction costs
Loss before income tax
Income tax benefit
Loss for the year after income tax
Total other comprehensive income
Total comprehensive (loss) for the year
Earnings per share
Basic (cents per share)
Diluted (cents per share)
Consolidated Group
2016
$
39,213
-
(35,664)
(3,128,846)
(227,069)
(192,088)
(355,958)
(1,463,461)
(2,375)
2015
$
2,319
78,384
(35,547)
(480,821)
(66,394)
(160,014)
(119,223)
(85,175)
(5,632)
-
(16,726,044)
(5,366,248)
(17,598,147)
-
-
(5,366,248)
(17,598,147)
-
-
(5,366,248)
(17,598,147)
(0.02)
(0.02)
(0.13)
(0.13)
Note
2a
6
2b
2c
3
20
20
The accompanying notes form part of these financial statements
30
For personal use only
Consolidated Statement of Financial Position as at 30 June 2016
L E I G H C R E E K E N E R GY L I M I T E D A B N 3 1 1 0 7 5 3 1 8 2 2
Current assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Total current assets
Non-current assets
Property, plant and equipment
Exploration and evaluation expenditure
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Short term loans
Employee entitlements
Total current liabilities
Net assets
Equity
Issued capital
Reserves
Retained losses
Total equity
Note
4
5
6
7
8
9
10
11
12
Consolidated Group
2016
$
2015
$
8,659,369
1,484,627
338,464
16,031
101,618
18,680
9,013,864
1,604,925
112,940
2,450,480
2,563,420
78,570
710,667
789,237
11,577,284
2,394,162
665,711
-
124,519
790,230
358,270
125,438
20,803
504,511
10,787,054
1,889,651
32,361,720
19,493,353
1,395,284
-
(22,969,950)
(17,603,702)
10,787,054
1,889,651
The accompanying notes form part of these financial statements
31
LEIGH CREEK ENERGY LIMITED ANNUAL REPORT 2016For personal use only
Statement of Changes in Equity
for the financial year ended 30 June 2016
L E I G H C R E E K E N E R GY L I M I T E D A B N 3 1 1 0 7 5 3 1 8 2 2
L E I G H C R E E K E N E R GY L I M I T E D A B N 3 1 1 0 7 5 3 1 8 2 2
Share
Capital
$
Retained
Share Option
Losses
Reserve
$
$
Consolidated
Balance 1 July 2015
Total comprehensive income
Total profit or (loss)
Other comprehensive income
Total comprehensive income
Transactions with members in their capacity
as owners:
Subscribed equity net of capital raising costs
Treasury shares sold
Options issued
Total transactions with owners
19,493,353
(17,603,702)
-
-
-
(5,366,248)
-
(5,366,248)
9,442,046
3,426,321
-
12,868,367
-
-
-
-
Total
$
1,889,651
(5,366,248)
-
(5,366,248)
9,442,046
3,426,321
-
-
-
-
-
-
1,395,284
1,395,284
1,395,284
14,263,651
Balance 30 June 2016
32,361,720
(22,969,950)
1,395,284
10,787,054
Consolidated
BALANCE 1 July 2014
Total comprehensive income
Total profit or (loss)
Other comprehensive income
Total comprehensive income
3,841
(5,555)
-
-
-
(17,598,147)
-
(17,598,147)
Transactions with members in their capacity
as owners:
Subscribed equity net of capital raising costs
1,605,400
Leigh Creek Energy minority shareholders
at fair value 29 June 2015
Total transactions with owners
17,884,112
19,489,512
-
-
-
Balance 30 June 2015
19,493,353
(17,603,702)
-
-
-
-
-
-
-
-
(1,714)
(17,598,147)
-
(17,598,147)
1,605,400
17,884,112
19,489,512
1,889,651
The accompanying notes form part of these financial statements
32
For personal use only
Statement of Cash Flows
for the financial year ended 30 June 2016
L E I G H C R E E K E N E R GY L I M I T E D A B N 3 1 1 0 7 5 3 1 8 2 2
L E I G H C R E E K E N E R GY L I M I T E D A B N 3 1 1 0 7 5 3 1 8 2 2
Note
Consolidated Group
2016
$
2015
$
Cash flows from operating activities
Interest and sundry income received
Interest paid
Payments to suppliers and employees
14,760
(2,375)
(4,015,913)
Net cash (used in) / provided by operating activities
16(b)
(4,003,528)
Cash flows from investing activities
Proceeds on disposal of shares
Purchase of shares
Purchase of property, plant & equipment
Proceeds from disposal of assets
Capitalised exploration costs
Net cash (used in) investing activities
Cash flow from financing activities
Issue of shares
Share issue transaction costs
Advances/(Repayments) from related parties
Advances from subsidiary prior to completion
Net cash provided by financing activities
Accounting subsidiary cash acquired upon
completion of reverse takeover
Net increase in cash held
Cash at the beginning of the year
Cash at the end of the year
2,319
-
(907,410)
(905,091)
205,940
(685,002)
-
-
-
-
(53,745)
2,250
(1,755,702)
(710,667)
(1,807,197)
(1,189,729)
14,027,813
1,777,600
(916,907)
(125,438)
-
(172,200)
125,438
374,045
12,985,468
2,104,883
-
1,474,558
7,174,742
1,484,627
8,659,369
1,484,621
6
1,484,627
16(a)
The accompanying notes form part of these financial statements
33
LEIGH CREEK ENERGY LIMITED ANNUAL REPORT 2016For personal use only
N O T E S
L E I G H C R E E K E N E R GY L I M I T E D A B N 3 1 1 0 7 5 3 1 8 2 2
NOTE 1: SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
d) Changes in accounting policy
Recently issued accounting standards to be applied in
The principal activity of the Group was pursuing the
future accounting periods
development of its Leigh Creek Energy Project.
The accounting standards that have not been early
a) General information and statement of compliance
adopted for the year ended 30 June 2016, but will be
The consolidated general purpose financial statements
have been prepared in accordance with the Corporations
Act 2001, Australian Accounting Standards, including
Australian Accounting interpretations, other authoritative
pronouncements of the Australian Accounting Standards
applicable to the Group in future reporting periods are
detailed below. Apart from these standards, we have
considered other accounting standards that will be
applicable in future reporting periods, however they have
been considered insignificant to the Group.
Board (AASB). Compliance with Australian Accounting
i) AASB 2014-4 Amendments to Australian Accounting
Standards ensures that the consolidated financial
Standards – Clarification of Acceptable Methods of
statements and notes of Leigh Creek Energy Limited and
Depreciation and Amortisation.
its controlled entities comply with International Financial
Reporting Standards (IFRS). Leigh Creek Energy is a for-
profit entities for the purposes of preparing the financial
statements. The financial report has been presented in
Australian dollars.
The amendments to AASB 116 prohibit the use of
a revenue-based depreciation method for property,
plant and equipment. Additionally, the amendments
provide guidance in the application of the diminishing
balance method for property, plant and equipment.
The financial report covers Leigh Creek Energy Limited
The amendments to AASB 138 present a rebuttable
and its controlled entities as a consolidated entity
presumption that a revenue-based amortisation
(“Group”). Leigh Creek Energy Limited is a listed public
method for intangible assets is inappropriate. This
company, incorporated and domiciled in Australia.
rebuttable presumption can be overcome (i.e.,
The consolidated financial statements for the year ended
30 June 2016 were approved and authorised for issue in
a revenue-based amortisation method might be
appropriate) only in two (2) limited circumstances:
accordance with a resolution of the Directors on
a. The intangible asset is expressed as a measure
15 August 2016.
b) Overall considerations
The consolidated financial statements have been
prepared on an accruals basis and are based on
historical costs modified by the revaluation of selected
non-current assets, financial assets and financial
liabilities for which the fair value basis of accounting has
been applied.
c) Basis of consolidation
The Group financial statements consolidate those of the
Parent Company and all of its subsidiaries as of 30 June
of revenue, for example when the predominant
limiting factor inherent in an intangible asset is the
achievement of a revenue threshold (for instance,
the right to operate a toll road could be based on a
fixed total amount of revenue to be generated from
cumulative tolls charged); or
b. When it can be demonstrated that revenue and
the consumption of the economic benefits of the
intangible asset are highly correlated.
When these amendments are first adopted for the
year ending 30 June 2017, there will be no material
impact on the transactions and balances recognised
2016. The Parent controls a subsidiary if it is exposed, or
in the financial statements.
has rights, to variable returns from its involvement with
the subsidiary and has the ability to affect those returns
through its power over the subsidiary. All subsidiaries
have a report date of 30 June. The controlled entities are
disclosed in Note 17(a) to the financial statements.
All inter-company balances and transactions between
entities in the consolidated entity, including any
unrealised profits or losses, have been eliminated
on consolidation. Amounts reported in the financial
ii) AASB 2015-2 Amendments to Australian Accounting
Standards – Disclosure Initiative: Amendments to
AASB 101.
The amendments:
- clarify the materiality requirements in AASB
101, including an emphasis on the potentially
detrimental effect of obscuring useful information
with immaterial information
statements of subsidiaries have been adjusted where
- clarify that AASB 101’s specified line items
necessary to ensure consistency with the accounting
in the statement(s) of profit or loss and other
policies adopted by the Group.
comprehensive income and the statement of
financial position can be disaggregated
34
For personal use only
N O T E S
L E I G H C R E E K E N E R GY L I M I T E D A B N 3 1 1 0 7 5 3 1 8 2 2
- add requirements for how an entity should present
In July and August 2015, the AASB reissued AASB
subtotals in the statement(s) of profit and loss and
8, AASB 133 and most of the Australian Accounting
other comprehensive income and the statement of
Standards that incorporate IFRSs to make editorial
financial position
- clarify that entities have flexibility as to the order in
which they present the notes, but also emphasise
that understandability and comparability should be
considered by an entity when deciding that order
- remove potentially unhelpful guidance in IAS 1 for
identifying a significant accounting policy.
changes. The application paragraphs in the
previous versions of AASB 8 and AASB 133 covered
scope paragraphs that appear separately in the
corresponding IFRS 8 and IAS 33. In moving those
application paragraphs to AASB 1057 when
AASB 8 and AASB 133 were reissued in August, the
AASB inadvertently deleted the scope details from
AASB 8 and AASB 133. This amending Standard puts
When these amendments are first adopted for the
the scope details into those Standards, and removes
year ending 30 June 2017, there will be no material
the related text from AASB 1057. There is no change
impact on the financial statements.
to the requirements or the applicability of AASB 8
iii) AASB 2015-2 Amendments to Australian Accounting
and AASB 133.
Standards – Disclosure Initiative: Amendments to
When this standard is first adopted for the year ending
AASB 101 Presentation of Financial Statements
30 June 2017, there will be no material impact on the
The Standard makes amendments arising from the
IASB’s Disclosure Initiative project. The amendments:
• clarify the materiality requirements in AASB
101, including an emphasis on the potentially
detrimental effect of obscuring useful information
with immaterial information
• clarify that AASB 101’s specified line items
in the statement(s) of profit or loss and other
comprehensive income and the statement of
financial position can be disaggregated
• add requirements for how an entity should present
transactions and balances recognised in the financial
statements.
v) AASB 2016-2 Amendments to Australian Accounting
Standards – Disclosure Initiative: Amendments to
AASB 107
This amendment alters AASB 107 Statement of
Cash Flows to require entities preparing financial
statements in accordance with Tier 1 reporting
requirements to provide disclosures that enable
users of financial statements to evaluate changes in
liabilities arising from financing activities, including
both changes arising from cash flows and non-cash
subtotals in the statement(s) of profit and loss and
other comprehensive income and the statement of
changes.
financial position
• clarify that entities have flexibility as to the order in
which they present the notes, but also emphasise
that understandability and comparability should be
considered by an entity when deciding that order
• remove potentially unhelpful guidance in AASB 101
for identifying a significant accounting policy
When this standard is first adopted for the year ending
30 June 2017, there will be no material impact on the
transactions and balances recognised in the financial
statements.
iv) AASB 2015-9 Amendments to Australian Accounting
Standards – Scope and Application Paragraphs
When this standard is first adopted for the year ending
30 June 2018, there will be no material impact on the
transactions and balances recognised in the financial
statements.
vi) AASB 9 Financial Instruments (December 2014)
AASB 9 introduces new requirements for the
classification and measurement of financial
assets and liabilities. These requirements improve
and simplify the approach for classification and
measurement of financial assets compared with the
requirements of AASB 139. The main changes are:
a) Financial assets that are debt instruments will be
classified based on:
i) the objective of the entity’s business model for
This amendment inserts scope paragraphs into
managing the financial assets; and
AASB 8 Operating Segments and AASB 133 Earnings
per Share in place of application paragraph text in
AASB 1057.
ii) the characteristics of the contractual cash flows.
35
LEIGH CREEK ENERGY LIMITED ANNUAL REPORT 2016For personal use only
N O T E S
L E I G H C R E E K E N E R GY L I M I T E D A B N 3 1 1 0 7 5 3 1 8 2 2
b) Allows an irrevocable election on initial recognition
vii) AASB 2014-7 Amendments to Australian Accounting
to present gains and losses on investments in
Standards arising from AASB 9 (December 2014)
equity instruments that are not held for trading in
other comprehensive income (instead of in profit
or loss). Dividends in respect of these investments
that are a return on investment can be recognised
in profit or loss and there is no impairment or
recycling on disposal of the instrument.
Incorporates the consequential amendments arising
from the issuance of AASB 9 (refer (i) above).
When this standard is first adopted for the year ending
30 June 2019, there will be no material impact on the
transactions and balances recognised in the financial
c)
Introduces a ‘fair value through other
comprehensive income’ measurement category for
statements.
viii) AASB 16 Leases
particular simple debt instruments.
• replaces AASB 117 Leases and some lease-
d) Financial assets can be designated and
related Interpretations;
measured at fair value through profit or loss
• requires all leases to be accounted for ‘on-balance
at initial recognition if doing so eliminates or
sheet’ by lessees, other than short-term and low
significantly reduces a measurement or recognition
value asset leases;
inconsistency that would arise from measuring
assets or liabilities, or recognising the gains and
losses on them, on different bases.
• provides new guidance on the application of
the definition of lease and on sale and lease back
accounting;
e) Where the fair value option is used for financial
liabilities the change in fair value is to be accounted
• largely retains the existing lessor accounting
requirements in AASB 117; and
for as follows:
-
the change attributable to changes in credit
risk are presented in Other Comprehensive
Income (‘OCI’)
• requires new and different disclosures
about leases
As this Standard will be first adopted for the year
ending 30 June 2019, the impact has not yet been
-
the remaining change is presented in profit
determined.
or loss
If this approach creates or enlarges an accounting
mismatch in the profit or loss, the effect of the
changes in credit risk are also presented in profit
or loss.
Otherwise, the following requirements have
ix) AASB 15 Revenue from Contracts with Customers
• replaces AASB 118 Revenue, AASB 111
Construction Contracts and some revenue-related
Interpretations:
− establishes a new revenue recognition model
generally been carried forward unchanged from
− changes the basis for deciding whether
AASB 139 into AASB 9:
revenue is to be recognised over time or at a
- classification and measurement of financial
liabilities; and
- derecognition requirements for financial assets
and liabilities.
AASB 9 requirements regarding hedge accounting
represent a substantial overhaul of hedge accounting
that enable entities to better reflect their risk
point in time
− provides new and more detailed guidance
on specific topics (e.g. multiple element
arrangements, variable pricing, rights of return,
warranties and licensing)
− expands and improves disclosures about
revenue
management activities in the financial statements.
As this Standard will be first adopted for the year
Furthermore, AASB 9 introduces a new impairment
ending 30 June 2019, the impact has not yet been
model based on expected credit losses. This model
determined.
makes use of more forward-looking information and
applies to all financial instruments that are subject to
impairment accounting.
There are no other standards that are not yet effective
and that are expected to have a material impact on
the entity in the current or future reporting periods and
When this standard is first adopted for the year ending
on foreseeable future transactions.
30 June 2019, there will be no material impact on the
transactions and balances recognised in the financial
36
statements.
For personal use only
N O T E S
L E I G H C R E E K E N E R GY L I M I T E D A B N 3 1 1 0 7 5 3 1 8 2 2
e) Impairment of Assets
At each reporting date, the group reviews the carrying
values of its assets to determine whether there is any
indication that those assets have been impaired. If such
The resulting accounting estimates will, by definition,
seldom equal the related actual results. The areas
involving significant estimates and assumptions are
listed below:
an indication exists, the recoverable amount of the asset,
• Exploration and Evaluation Expenditure – Note 7
being the higher of the asset’s fair value less costs to
Judgement is required to ensure that the carrying
sell and value in use, is compared to the asset’s carrying
value of Exploration and Evaluation assets does not
value. Any excess of the asset’s carrying value over its
exceed the recoverable amount. Factors considered
recoverable amount is expensed to the statement of
in this judgement are:
profit or loss and other comprehensive income. Where
it is not possible to estimate the recoverable amount of
an individual asset, the group estimates the recoverable
amount of the cash-generating unit to which the
asset belongs.
f) Segment reporting
The Board has considered the requirements of AASB
8 Operating Segments and the internal reports that are
reviewed by the chief operating decision maker (the
Board) in allocating resources and has concluded at this
time that there are no separately identifiable.
g) Goods and Services Tax (GST)
a) the period for which the entity has the right to
explore in the specific area has expired or will
expire in the near future;
b) substantive expenditure on further exploration for
and evaluation of mineral resources in the specific
area is neither budgeted nor planned;
c) exploration for and evaluation of mineral
resources in the specific area have not led to the
discovery of commercially viable quantities of
mineral resources and the entity has decided to
discontinue such activities;
d) sufficient data exists to indicate that, although
Revenues, expenses and assets are recognised net
a development in the specific area is likely to
of the amount of GST, unless the GST incurred is not
proceed, the carrying amount of the exploration
recoverable from the Australian Tax Office. In this case
and evaluation asset is unlikely to be recovered
it is recognised as part of the cost of acquisition of the
in full from successful development or by sale.
asset or as part of the expense.
Receivables and payables in the statement of financial
position are shown inclusive of GST. The net amount
Management has made a judgement that, given
these factors, the balance of Exploration and
Evaluation assets is not impaired.
of GST recoverable from the Australian Tax Office is
• Share based payments – Note 15
included with other receivables in the statement of
The valuation for accounting purposes of Share
financial position.
Cash flows are presented in the cash flow statement on a
GST inclusive basis.
h) Comparative Figures
Based Payments relies on a number of factors that
cannot be accurately measured. These include:
a) the volatility of the LCK share value;
b) the probability that vesting conditions/milestones
Unless otherwise required by an accounting standard
will be met;
comparative information is disclosed in respect of the
c) the probability that the employee will remain
previous corresponding period, including for narrative
employed with the company until the expiry date
and descriptive information. To the extent that items
of the options;
are amended or reclassified comparative amounts are
also amended or reclassified. Prior period errors are
retrospectively corrected in the next financial report
following discovery.
d) the probability that the employee will exercise
their options. Final judgement about vesting of
the options is retained by the Board. Management
has assessed each of these factors and made
i) Critical Accounting Estimates and Judgments
judgements on what factors are used for the
The Directors evaluate estimates and judgments
incorporated into the financial report based on historical
knowledge and best available current information.
Estimates assume a reasonable expectation of future
events and are based on current trends and economic
data, obtained both externally and within the Group.
calculation.
37
LEIGH CREEK ENERGY LIMITED ANNUAL REPORT 2016For personal use only
N O T E S
L E I G H C R E E K E N E R GY L I M I T E D A B N 3 1 1 0 7 5 3 1 8 2 2
NOTE 2: REVENUE AND EXPENSES FROM OPERATIONS
Accounting policy – revenue and expenses recognition
i)
Interest revenue
Interest revenue is recognised on an accrual basis taking into account the interest rates applicable and is recognised at
the time the right to receive payment is established.
ii) Other expenses
Other expenses represents costs incurred for the administration of the business. Costs relating to the project have been
capitalised to Exploration and Evaluation expenditure (as shown in Note 7).
Consolidated Group
a) Revenue
Interest revenue
Sundry income
b. Other expenses
Other expenses includes:
Accounting and audit
Computer costs
Insurance
Investment writedown
Printing & office supplies
Communications costs
Investor relations
Listing & registry fees
Sundry
c) Transaction costs
Details of the reverse acquisition transaction (completed in
year ended 30 June 2015)
Fair value of consideration transferred
Fair value of assets and liabilities assumed
Transaction costs in profit or loss
NOTE 3: INCOME TAX
Accounting policy – income taxes
2016
$
18,283
20,930
39,213
181,688
65,200
62,418
2,650
29,828
304,966
554,460
93,459
168,792
1,463,461
2015
$
2,319
-
2,319
32,546
2,658
4,453
1,140
16,241
8,652
-
14,408
5,077
85,175
-
-
-
18,441,558
(1,715,514)
16,726,044
Deferred taxes are not recognised in the accounts. As the Group has significant carried forward tax losses, it does not have
sufficient taxable temporary differences which will result in taxable amounts against which the unused tax losses can be
utilised.
The amount of benefits which may be realised in the future is based on the assumption that no adverse change will occur
in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to
enable the benefit to be realised and comply with the condition of deductibility imposed by the law.
38
For personal use only
L E I G H C R E E K E N E R GY L I M I T E D A B N 3 1 1 0 7 5 3 1 8 2 2
N O T E S
NOTE 3: INCOME TAX continues
Tax consolidation
Leigh Creek Energy Limited and its wholly owned Australian subsidiaries are part of a tax-consolidated group under
Australian taxation law.
a) Numerical reconciliation of income tax expense
to prima facie tax payable
Loss before income tax
Deemed acquisition cost of subsidiary
Loss from continuing operations
Prima facie tax (benefit) on loss before income tax at 30% (2015: 30%)
Permanent differences:
Entertainment non deductible
Share based payments
Movement in unrecognised tax assets and liabilities
Current year tax loss not recognisable
Aggregate income tax expense
Aggregate income tax expense comprises:
Current taxation expense
Net deferred tax
Consolidated Group
2016
$
2015
$
(5,366,248)
(17,598,147)
-
16,726,044
(5,366,248)
(1,609,874)
6,060
345,823
(607,015)
1,865,006
-
(1,257,992)
1,257,992
-
(872,103)
(261,631)
-
-
12,225
249,406
-
(261,631)
261,631
-
b) Tax losses
Unused tax losses for which no deferred tax asset has been recognised
Revenue losses
Capital losses
14,264,297
34,803
12,399,291
34,803
The Group considers that in the future it will be generating taxable income to
utilise carried forward tax losses, however, it does not meet the recognition criteria.
Additionally, the carried forward tax losses can only be utilised in the future when
taxable income is being generated, if the continuity of ownership test is passed, or
failing that, the same business test is passed.
NOTE 4: CASH AND CASH EQUIVALENTS
Accounting policy – cash and cash equivalents
Cash and cash equivalents include cash on hand and deposits held at call with banks.
Cash at bank and on hand
Term deposit
Total Cash and cash equivalents
8,659,369
-
8,659,369
1,433,083
51,544
1,484,627
39
LEIGH CREEK ENERGY LIMITED ANNUAL REPORT 2016For personal use only
N O T E S
L E I G H C R E E K E N E R GY L I M I T E D A B N 3 1 1 0 7 5 3 1 8 2 2
NOTE 5: TRADE AND OTHER RECEIVABLES
Accounting policy – Trade and other receivables
Trade receivables are recognised initially at fair value. At balance date, no receivables were considered to be
outstanding or impaired.
GST recoverable
Funds on deposit
Prepayments
Related company balance
R&D tax incentive receivable
Other debtors
Total Trade and other receivables
Consolidated Group
2016
$
70,870
110,000
87,494
11,667
43,871
14,562
338,464
2015
$
47,618
50,000
-
-
-
4,000
101,618
An amount of $11,667 is receivable from Allied Resources Partners, in which Executive Chairman Mr Peters and Managing
Director Mr Shearwood have an interest. This is not subject to any terms, conditions or fixed payment dates.
NOTE 6: PROPERTY, PLANT AND EQUIPMENT
Accounting policy – property, plant and equipment
Each class of property, plant and equipment is carried at cost, where applicable, less any accumulated depreciation and
impairment losses.
i) Plant and equipment
Plant and equipment are shown at historical cost less accumulated depreciation and accumulated impairment. Cost
includes expenditure that is directly attributable to the acquisition of the assets.
The carrying amount of plant and equipment is reviewed annually to ensure it is not in excess of the recoverable amount
from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received
from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their
present values in determining recoverable amounts.
ii) Depreciation
Depreciation is calculated using the straight-line method to allocate their cost over their estimated useful lives, as follows:
• Plant and equipment 5-33%
• Office equipment 10-50%
• Motor vehicles 15%
• Leasehold improvement 45%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. Gains and
losses on disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the
carrying amount of the assets (including impairment provision) and are recognised in the profit or loss with Other Income or
Other Expenses.
40
For personal use only
N O T E S
L E I G H C R E E K E N E R GY L I M I T E D A B N 3 1 1 0 7 5 3 1 8 2 2
NOTE 6: PROPERTY, PLANT AND EQUIPMENT continues
Cost
Balance at 1 July 2015
Additions
Disposals
Balance at 30 June 2016
Accumulated depreciation & impairment
Balance at 1 July 2015
Depreciation
Impairment loss
Disposals
Balance at 30 June 2016
Carrying amounts
At 1 July 2015
At 30 June 2016
Consolidated Group
2016
$
2015
$
541,943
53,745
(79,993)
515,695
337,585
35,664
99,285
(69,779)
402,755
112,940
816,488
-
(274,545)
541,943
521,189
35,547
125,788
(219,151)
463,373
78,570
NOTE 7: EXPLORATION AND EVALUATION EXPENDITURE
Accounting policy – exploration and evaluation expenditure
Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only
carried forward to the extent that right of tenure is current and those costs are expected to be recouped through the successful
development of the area (or, alternatively by its sale) or where activities in the area have not yet reached a stage which permits
reasonable assessment of the existence of economically recoverable reserves and operations in relation to the area are continuing.
When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area
according to the rate of depletion of the economically recoverable reserves.
Accumulated costs, in relation to an abandoned area, are written off in full against profit in the period in which the decision to
abandon the area is made.
Balance at opening
Project development & exploration costs
Total exploration and evaluation expenditure
710,667
1,739,813
2,450,480
-
710,667
710,667
During the year the Company applied for R&D Tax Incentives through AusIndustry in relation to eligible research expenditure
incurred during 2015 for the Leigh Creek Energy Project. The tax incentive is provided as a refundable tax credit and has been
credited to Exploration and Evaluation capitalised expenditure.
41
LEIGH CREEK ENERGY LIMITED ANNUAL REPORT 2016For personal use only
N O T E S
NOTE 7: EXPLORATION AND EVALUATION EXPENDITURE continues
The Company’s interests in tenements at the date of this report are as follows:
Tenement
PEL 650
PELA 582
PELA 643
PELA 647
PELA 644
PELA 649
EL 5596
EL 5597
GSEL 662
Location
Leigh Creek
Finniss Springs
Callabonna
Leigh Creek
Roxby Downs
Oakdale
Leigh Creek
Leigh Creek
Leigh Creek
Interest
100%
100%
100%
100%
100%
100%
100%
100%
100%
NOTE 8: TRADE AND OTHER PAYABLES
Trade and other payables consist of the following:
Trade payables
Other payables
Accruals
Total Trade and other payables
NOTE 9: SHORT TERM LOANS
All Short Term Loans were repaid during the financial year:
Related Company balance
Shareholder Loan
Directors loan
Total short term loans
Consolidated Group
2016
$
295,089
246,641
123,981
665,711
-
-
-
-
2015
$
68,269
174,001
116,000
358,270
16,004
102,500
6,934
125,438
The repayment of the loans was not subject to any terms, conditions or interest charges.
NOTE 10: EMPLOYEE BENEFITS
Accounting policy – Employee benefits
Provision is made for the Group’s liability for employee benefits arising from services rendered by employees to reporting date.
These benefits include wages, salaries and annual leave. Where these benefits are expected to be settled within 12 months of
the reporting date, they are measured at the amounts expected to be paid when the liabilities are settled. The provision has been
recognised at the undiscounted amount expected to be paid.
42
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N O T E S
NOTE 10: EMPLOYEE BENEFITS continues
In relation to employee benefits arising for employees directly involved in the exploration project, these indirect
costs have been capitalised to the project.
Liability for annual leave
Total employee benefit liability
NOTE 11: ISSUED CAPITAL
Accounting policy – Share capital
Consolidated Group
2016
$
124,519
124,519
2015
$
20,803
20,803
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares is shown in equity as a
deduction from the proceeds.
The company has granted unlisted options to employees in respect of their employment contracts. The fair value of the options
granted is recognised as an employee benefits expense with a corresponding increase in equity (Share Option Reserve). The fair
value is measured at grant date and recognised over the period during which the employees become unconditionally entitled to
exercise the option. Fair value is determined by the use of a Trinomial option pricing model.
On 9 May 2016, the Company announced that a capital raising had been completed by a private placement of 35,374,969 new
fully paid ordinary shares. The capital raising costs were $1,159,446.
Deemed to be outstanding at beginning of period
215,519,472
19,493,353
Number
$
Treasury stock sold
Capital raising (net of costs)
Balance outstanding at the end of the period
a) Ordinary shares
15,000,000
35,374,969
3,426,321
9,442,046
265,894,441
32,361,720
Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number
of shares held. At the shareholders’ meeting each ordinary share is entitled to one vote when a poll is called, otherwise each
shareholder has one vote on a show of hands.
All unissued shares are ordinary shares of the Company.
b) Treasury stock
On 29 June 2015, ARP TriEnergy Pty Ltd (formerly a shareholder of Leigh Creek Energy Ltd), acquired
Leigh Creek Energy Limited by way of a reverse acquisition. Treasury stock represents the number of shares held by
ARP TriEnergy prior to the reverse acquisition:
Balance at 1 July 2015
Sold during the financial year
Balance at 30 June 2016
Number
15,000,000
Shares
(15,000,000)
Shares
-
Shares
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LEIGH CREEK ENERGY LIMITED ANNUAL REPORT 2016For personal use only
N O T E S
NOTE 11: ISSUED CAPITAL continues
c) Unlisted Options
A number of unlisted options were issued during the financial year. At the date of this report, unissued shares of
the Group under option are:
Expiry date
Exercise price
Number of shares
14 October 2019
$0.212
14 October 2020
31 July 2020
30 November 2020
31 October 2018
31 October 2018
31 October 2018
31 October 2018
$0.25
$1.50
$0.30
$0.20
$0.22
$0.24
$0.26
1,000,000
1,000,000
2,000,000
10,250,000
1,500,000
1,500,000
1,500,000
1,500,000
20,250,000
For options granted to employees, options will expire on the earlier of the expiry date or termination of the
employee’s employment (unless the employee is a retiring director). In addition, the ability to exercise the options
is conditional on the Group achieving a number of operational and financial milestones.
Some options were issued in relation to services provided for the capital raising completed in May 2016. The
expiry date is shown in the table above.
d) Listed Options
A number of listed options were issued as part of the prospectus for the capital raising finalised in May 2016.
At the date of this report, unissued shares of the Group under option are:
Expiry date
Exercise price
Number of shares
6 June 2018
$0.50
17,687,463
All options expire on the expiry date. There are no vesting conditions.
e) Capital Management
Management objectives when managing capital are to ensure that the Group can fund the development of its
operations.
The Group manages the capital structure and makes adjustments to it in light of the forecast cash requirements
of the development programme. To that end, internal capital rationing is complemented by capital raising
activities as required to ensure funding for development activities is in place.
There are no externally imposed capital requirements.
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NOTE 12: RESERVES
Accounting policy - Reserves
The share option reserve is used to recognise the fair value of options granted to employees and consultants but not
exercised. Upon exercise of the options, the proceeds are allocated to share capital.
Share option reserve
A breakdown of the share option reserve is as follows 1:
Directors 2
Employees
Consultants 3
Consolidated Group
2016
$
1,395,284
1,395,284
No of Options
8,000,000
10,250,000
8,300,000
26,550,000
2015
$
-
-
2016
$
487,913
218,453
688,918
1,395,284
1 See also Note 15 Share Based Payment Plans for factors considered in the fair value calculation.
2 Expense relating to options granted for Directors also includes options for GD English and
M Chatfield which AGM approval is required.
3 Options granted to Consultants relate to Investor Relations and Capital Raising consultancy services.
NOTE 13: COMMITMENTS FOR EXPENDITURE
a) Accounting policy - operating leases
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are
charged as expenses in the periods in which they are incurred. The Company does not have any leases over
property, plant or equipment where lease arrangements would be classed as finance leases.
Operating lease commitment
Not longer than 1 year
Longer than 1 year and not longer than 5 years
2016
$
163,577
27,773
The operating lease commitments shown above also include the commitment
to annual payments for tenement leases with the South Australian state government.
The Group has no contingent liabilities at the year end.
b) Accounting policy – capital commitments
Capital commitments relates to expenditure commitments for the
Leigh Creek Energy Project (LCEP) outstanding at balance date.
Leigh Creek Energy Project
790,356
2015
$
5,000
-
-
Additionally, under the terms of tenement registration and renewal, some tenements have commitments to work requirements or
minimum expenditure. The commitment to work requirements at Leigh Creek is included above. In relation to minimum expendi-
ture requirements for two tenements, these are currently being negotiated and therefore, are not disclosed above.
There are no other commitments at balance date for expenditure by the Group.
45
LEIGH CREEK ENERGY LIMITED ANNUAL REPORT 2016For personal use only
N O T E S
NOTE 14: FINANCIAL INSTRUMENTS
Accounting policy – Financial instruments
Recognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions
of the financial instrument, and are measured initially at fair value adjusted by transactions costs, except for those
carried at fair value through profit or loss, which are measured initially at fair value. Subsequent measurement of
financial assets and financial liabilities are described below.
Classification and subsequent measurement
i) Financial assets at fair value through profit and loss (FVTPL)
Financial assets at FVTPL include financial assets that are either classified as held for trading or that meet certain
conditions and are designated at FVTPL upon initial recognition. Assets in this category are measured at fair
value with gains or losses recognised in profit or loss. The fair values of financial assets in this category are
determined by reference to active market transactions.
ii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market and are stated at amortised cost.
Derecognition
Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is
transferred to another party whereby the entity no longer has any significant continuing involvement in the risks
and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are either
discharged, cancelled or expire. The difference between the carrying value of the financial liability extinguished or
transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or
liabilities assumed, is recognised in the profit or loss.
Impairment
At each reporting date, the group assesses whether there is objective evidence that a financial instrument has been
impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is
considered to determine whether impairment has arisen. Impairment losses are recognised in the profit or loss.
a) Financial Risk Management
The Group’s financial instruments consist mainly of deposits with banks, short-term investments, accounts
receivables and payable which are summarised as follows:
Floating interest at call
Non-interest bearing
Within 1 year
Within 1 year
> 1 year
Total
2016
2015
$
$
2016
$
2015
$
2016
$
2015
$
2016
$
2015
$
$Financial Assets
- Cash and cash equivalents
8,659
1,445
- Receivables
Financial assets at fair value
through profit & loss
-
-
-
-
Total Financial Assets
8,659
1,445
Financial Liabilities
Trade and other payables
Total Financial Liabilities
-
-
-
-
12
-
16
28
542
542
40
102
19
161
242
242
-
-
-
-
-
-
-
-
-
-
-
-
8,671
1,485
-
16
102
19
8,687
1,606
542
542
242
242
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N O T E S
NOTE 14: FINANCIAL INSTRUMENTS continues
The group does not hold any derivative instruments.
i) Treasury Risk Management
The risk management of treasury functions is managed by the Board. No efficiencies or other benefits would be
gained by having a separate finance committee.
ii) Finance Risks
The Group’s financial instruments are exposed to a variety of financial risks, being Market risk (Interest rate and
Price risk), Credit risk and Liquidity risk. The Group operates mainly in Australia and as such is not subject to
foreign exchange risk.
Interest rate risk
The Group’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a
result of changes in market interest rates on classes of financial assets and liabilities, is summarised in the table
above. As the Group does not have any bank borrowings the interest rate risk is considered to be minimal.
Sensitivity: At June 30, 2016, if interest rates had changed by -/+ 10 basis points from the year end rates with all
other variables held constant post tax loss and total equity would have been $754 more/less as a result of lower/
higher interest income from term deposits.
Price risk
Price risk relates to the risk that the fair value of a financial instrument will fluctuate because of changes in market
prices largely due to market forces. The Group’s available-for-sale financial assets and fair value through profit
and loss financial assets are subject to price risk. Investments within these two categories of financial assets are
publicly traded on the ASX.
Credit risk
Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of
contract obligation that could lead to a financial loss to the Group. The Group’s maximum exposure to credit risk
is its cash and cash equivalents and receivables as noted in the table above. The group manages its credit risk
by depositing with reputable licenced banks.
Liquidity risk
Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise
meeting its obligations related to financial liabilities. The Group manages liquidity risk by monitoring forecast cash
flows and ensuring that adequate sources of funding are available.
Maturity of the group’s financial liabilities is within 1 year.
NOTE 15: SHARE BASED PAYMENT PLANS
Accounting policy – share based payment plans
Share based compensation benefits are provided to employees of the Company. The fair value of the options
granted under the plan is recognised as an employee benefit expense with a corresponding increase in equity
(Share Option Reserve). The fair value is measured at grant date and recognised over the period during which the
employees become entitled to the underlying shares.
The fair value at issue date is calculated using the Trinomial option pricing model that takes into account the
share price at issue date, the exercise price, the term until expiry, estimate of implied volatility, the vesting and
performance criteria and the non-tradeable nature of the option. At each balance sheet date, the Company revises
its estimate of the number of options that are expected to become exercisable.
47
LEIGH CREEK ENERGY LIMITED ANNUAL REPORT 2016For personal use only
N O T E S
NOTE 15: SHARE BASED PAYMENT PLANS continues
a) Number of options issued to employees during the year
Outstanding at beginning of the year
Forfeited
Issued
Exercised
Consolidated Group
2016
$
750,000
(750,000)
14,250,000
-
2015
$
750,000
-
-
-
14,250,000
750,000
b) Valuation assumptions
Plan 1
Plan 2
Plan 3
Grant date
Number issued
Share price at grant date
Volatility (average)5
Fair value at issue date
Exercise price
Exercisable from
Exercisable to
Notes:
15 October 2015
1 December 2015
1 December 2015
2,000,000
2,000,000
10,250,000
$0.17
70%
$0.08
$0.212 1 , $0.25 2
$0.23
70%
$0.02
$1.50
$0.23
70%
$0.04
$0.30
22 October 2015
31 July 2016 3
31 July 2016 3
14 October 2020 4
31 July 2020
30 November 2020
1 Exercise price for Tranche 1 was the greater of $0.20 and 10% premium to the 5 day VWAP up to 26 May 2015.
2 Exercise price for Tranche 2 was the greater of $0.25 and 20% premium to the 5 day VWAP up to 26 May 2015.
3 Options vest at 25% per year on 31 July 2016, 31 July 2017, 31 July 2018 and 31 July 2019 if vesting conditions (milestones)
are achieved.
4 Tranche 1 expiry date is 14 October 2019, and Tranche 2 expiry date is 14 October 2020.
5 A volatility curve was used for calculations.
NOTE 16: NOTES TO THE STATEMENT OF CASH FLOWS
a) Reconciliation of cash
For the purposes of the statement of cash flows, cash includes cash on hand and in banks and investments in money
market instruments. Cash at the end of the financial year as shown in the statement of cash flows is reconciled to the
related items in the statement of financial position as follows:
Cash on hand
8,659,369
10,069
Accounting subsidiary cash acquired upon completion under
reverse takeover principles
Cash and cash equivalents
-
8,659,369
1,474,558
1,484,627
The weighted average effective interest rate on bank deposits is 1.13% (2015: 2.55%). All deposits are for less than 12 months.
48
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N O T E S
NOTE 16: NOTES TO THE STATEMENT OF CASH FLOWS continues
b) Reconciliation of Cash Flow from Operations with Loss after Taxi) Treasury Risk Management
Consolidated Group
2016
$
2015
$
Loss after income tax
(5,366,248)
(17,598,147)
Cash flows excluded from loss attributable to operating activities:
Non cash transaction costs for the acquisition of subsidiary
company pursuant to reverse acquisition
Non-cash flows in operating loss
Gain disposal shares
Depreciation expense
Share based payments
Change in assets and liabilities
Decrease/(Increase) in receivables / prepayments
Increase/(Decrease) in payables
Increase/(Decrease) in provisions
-
16,726,044
-
35,664
1,152,745
(236,846)
307,441
103,716
(78,384)
35,547
-
(68,280)
78,129
-
Net Cash (used in) / provided by operating activities
(4,003,528)
(905,091)
NOTE 17: PARENT ENTITY DISCLOSURES
a) Investment in controlled entities
Entity
Country of incorporation
Class of share
Bonanza Gold Pty Ltd
ARP TriEnergy Pty Ltd
Australia
Australia
Ordinary
Ordinary
b) Parent entity information
Parent Entity
Asset
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Equity
Issued capital
Share option reserve
Retained earnings
Shareholder equity
Financial performance
Profit (loss) for the year
Other comprehensive income
Total comprehensive income
Interest Held
2016
100%
100%
2015
100%
100%
8,936,167
1,868,783
10,804,950
790,230
-
790,230
1,901,276
78,570
1,979,846
264,332
-
264,332
56,000,502
1,557,434
(47,543,216)
44,033,982
162,150
(42,480,618)
10,014,720
1,715,514
(5,366,248)
-
(2,000,519)
403,451
(5,366,248)
(1,597,068)
The parent entity has capital commitments of $0.8m at balance date for further expenditure at the Leigh Creek project.
Refer to Note 13 for further details of the commitment.
The parent entity has not entered into a deed of cross guarantee nor are there any contingent liabilities at the year end.
49
LEIGH CREEK ENERGY LIMITED ANNUAL REPORT 2016For personal use only
N O T E S
NOTE 18: RELATED PARTY TRANSACTIONS
a) Key management personnel compensation
Total short term employee benefits
Total post-employment benefits
Share based payments
Total Remuneration
Consolidated Group
2016
$
1,435,513
133,226
617,554
2,186,293
2015
$
435,453
69,005
13,874
518,332
b) Other transactions with key management personnel
Transactions between related parties are on normal commercial terms and conditions no more favourable than those
to other parties, unless otherwise stated.
An amount of $11,667 is receivable from Allied Resources Partners, in which Executive Chairman Mr Peters and
Managing Director Mr Shearwood have an interest. This is not subject to any terms, conditions or fixed payment dates.
NOTE 19: AUDITOR’S REMUNERATION
During the year the following fees were paid or payable for services provided by the Auditor of the Group:
Auditing & review services
Other services
NOTE 20: EARNINGS PER SHARE
Accounting policy – Earnings per share
42,830
-
30,000
-
i) Basic earnings per share Basic earnings per share is calculated by dividing the profit (loss) attributable to equity
holders excluding any costs of servicing equity other than ordinary shares, by the weighted average number of
ordinary shares outstanding during the year.
ii) Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic
earnings per share to take into account the weighted average number of shares assuming conversion of all
dilutive potential ordinary shares
Loss used to calculate basic EPS
(5,366,248)
(17,598,147)
Basic earnings per share – cents per share
Diluted earnings per share – cents per share
Weighted average number of shares used as denominator
Weighted average number of ordinary shares outstanding
(0.02)
(0.02)
(0.13)
(0.13)
during the year used in calculating basic EPS
228,247,299
138,331,683
Shares deemed to be issued for no consideration in respect of
share based payments
Listed options issued for no consideration
20,250,000
17,687,463
750,000
-
Weighted average number of shares used in diluted earnings per share
266,184,762
139,061,683
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N O T E S
NOTE 21: MATTERS SUBSEQUENT TO THE END OF THE YEAR
Unlisted options were issued on 20 July 2016 relating to capital raising services provided in May 2016
in accordance with ASX announcement on 9 May 2016. The cost of these options were expensed in the
financial year ending 30 June 2016.
NOTE 22: COMPANY DETAILS
The registered office and principal place of business is:
Leigh Creek Energy Limited
Level 11, 19 Grenfell Street
Adelaide, South Australia 5000
51
LEIGH CREEK ENERGY LIMITED ANNUAL REPORT 2016For personal use only
I N D E P E N D E N T A U D I T R E P O R T
Level 1,
67 Greenhill Rd
Wayville SA 5034
Correspondence to:
GPO Box 1270
Adelaide SA 5001
T 61 8 8372 6666
F 61 8 8372 6677
E info.sa@au.gt.com
W www.grantthornton.com.au
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF LEIGH CREEK ENERGY LIMITED
Report on the financial report
We have audited the accompanying financial report of Leigh Creek Energy Limited (the
“Company”), which comprises the consolidated statement of financial position as at 30 June
2016, the consolidated statement of profit or loss and other comprehensive income, consolidated
statement of changes in equity and consolidated statement of cash flows for the year then ended,
notes comprising a summary of significant accounting policies and other explanatory information
and the directors’ declaration of the consolidated entity comprising the Company and the entities
it controlled at the year’s end or from time to time during the financial year.
Directors’ responsibility for the financial report
The Directors of the Company are responsible for the preparation of the financial report that
gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001. The Directors’ responsibility also includes 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. The
Directors also state, in the notes to the financial report, in accordance with Accounting Standard
AASB 101 Presentation of Financial Statements, the financial statements comply with
International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We
conducted our audit in accordance with Australian Auditing Standards. Those standards require
us to comply with relevant ethical requirements relating to audit engagements and plan and
perform the audit to obtain reasonable assurance whether the financial report is free from
material misstatement.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context
requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal
entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s
acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities.
GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme
applies.
52
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I N D E P E N D E N T A U D I T R E P O R T
2
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s judgement,
including the assessment of the risks of material misstatement of the financial report, whether
due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the
Company’s preparation of the financial report that gives a true and fair view 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 Company’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by the Directors, as well as evaluating the overall presentation of the financial
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the
Corporations Act 2001.
Auditor’s opinion
In our opinion:
a
the financial report of Leigh Creek Energy Limited is in accordance with the Corporations
Act 2001, including:
i
ii
giving a true and fair view of the consolidated entity’s financial position as at 30 June
2016 and of its performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations
2001; and
b
the financial report also complies with International Financial Reporting Standards as
disclosed in the notes to the financial statements.
53
LEIGH CREEK ENERGY LIMITED ANNUAL REPORT 2016For personal use only
I N D E P E N D E N T A U D I T R E P O R T
3
Report on the remuneration report
We have audited the remuneration report included in pages 21 to 25 of the directors’ report for
the year ended 30 June 2016. The Directors of the Company are responsible for the preparation
and presentation of the remuneration report in accordance with section 300A of the
Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report,
based on our audit conducted in accordance with Australian Auditing Standards.
Auditor’s opinion on the remuneration report
In our opinion, the remuneration report of Leigh Creek Energy Limited for the year ended
30 June 2016, complies with section 300A of the Corporations Act 2001.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
I S Kemp
Partner – Audit & Assurance
Adelaide, 15 August 2016
54
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I N D E P E N D E N T A U D I T R E P O R T
S H A R E H O L D E R I N F O R M AT I O N
At the date of this report all the issued securities of the Company comprised ordinary shares, 104,767,190 of which are
escrowed for 2 years from July 3, 2015, otherwise not subject to any restrictions.
SUBSTANTIAL SHAREHOLDERS AT 8 AUGUST 2016
Name
Fully Paid Shares
Ordinary Shares %
Options
Options %
Allied Resource Partners Pty Ltd
104,767,190
CITIC Australia Pty Ltd
17,242,855
39.40
6.48
-
-
-
-
DISTRIBUTION OF SHAREHOLDINGS AT 8 AUGUST 2016
The issued capital of the Company is fully paid ordinary shares (entitling the holders to participate in dividends and
proceeds on winding up of the Company in proportion to the number of shares held) and listed options. On a show
of hands every holder of the shares present at a meeting in person or by proxy is entitled to one vote and upon a poll
each share counts as one vote. Holders of listed options do not have any entitlements to vote or receive dividends.
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
TOTAL
Total Holders
Shares
458
658
320
688
230
2,354
Number of
Shares
241,645
1,732,014
2,545,998
26,941,722
234,433,062
265,894,441
Total Holders
Listed Options
Number Of
Listed Options
0
1
11
96
23
131
0
3,333
93,331
4,116,640
13,474,159
17,687,463
At 8 August 2016 a marketable parcel constituted 2,778 shares. The number of shareholders holding less than a
marketable parcel was 870 (995,392 shares).
TWENTY LARGEST SHAREHOLDERS AT 8 AUGUST 2016
Name
Fully Paid
% of Issued
Ordinary Shares
Capital
Allied Resource Partners Pty Ltd
104,767,190
39.40
Citic Australia Pty Ltd
Mr Richard McGrath
RBC Investor Services Australia Nominees Pty Ltd (BKCust A/C)
One Design & Skiff Sails Pty Ltd (I W Brown Super Fund A/C)
HSBC Custody Nominees (Australia) Limited
UBS Nominees Pty Ltd
JP Morgan Nominees Australia Limited
Mr Nicholas James Redpath
Mr John Brown + Ms Elisabeth Frederico (Joli S/F A/C)
FMS Pty Ltd (SM Appleyard S/F A/C)
National Nominees Limited (DB A/C)
Bart Properties Pty Ltd (Scott Flynn Family A/C)
James St Equities Pty Ltd
Telemark International Pty Ltd
Lawry Super Nominees Pty Ltd (Lawry Family Super Fund A/C)
Citicorp Nominees Pty Ltd
Mr George Hioureas
Ms Nichola Marguerite Clutterbuck
LP Rayner Nominees Pty Ltd
Totals Top 20
Total Remaining Holders Balance
17,242,855
10,557,449
6,700,000
5,167,137
4,621,594
4,499,773
4,104,348
2,528,999
2,020,001
1,711,379
1,666,930
1,666,666
1,577,458
1,424,454
1,413,647
1,342,404
1,070,000
1,029,666
1,020,000
6.48
3.97
2.52
1.94
1.74
1.69
1.54
0.95
0.76
0.64
0.63
0.63
0.59
0.54
0.53
0.50
0.40
0.39
0.38
176,131,950
89,762,491
66.22
33.78
55
LEIGH CREEK ENERGY LIMITED ANNUAL REPORT 2016For personal use only
S H A R E H O L D E R I N F O R M AT I O N
TWENTY LARGEST LISTED OPTION HOLDERS AT 8 AUGUST 2016
Name
Listed Options
% of Options
RBC Investor Services Australia Nominees Pty Ltd (BKCust A/C)
UBS Nominees Pty Ltd
JP Morgan Nominees Australia Limited
Bart Properties Pty Ltd (Scott Flynn Family A/C)
BNP Paribas Nominees Pty Ltd (Global Prime Omni DRP)
National Nominees Limited (DB A/C)
Point One Capital Pty Ltd
BNP Paribas Nominees Pty Ltd (DRP)
Citicorp Nominees Pty Ltd
HSBC Custody Nominees (Australia) Limited – A/C 3
Merrill Lynch (Australia) Nominees Pty Limited
Equipment Company of Australia Pty Limited
Mr Richard Crawford Grooms
Mr Jan-Per Hole
ARK Equities Pty Limited
Mr Christopher Bayliss + Mrs Lynda Bayliss (Bayliss Super Fund A/C)
Jennifer Arnold Pty Limited (The Arnold Super Fund A/C)
Linor Pty Ltd (PE Giblin P/L SBF A/C)
Purflem Super Pty Ltd (Flemming Promotions S/F A/C)
David John Iron (Iron Filings Retirement A/C)
Totals Top 20
Total Remaining Holders Balance
UNISSUED EQUITY SECURITIES
Unlisted options
Listed options
SECURITIES EXCHANGE
The Company is listed on the Australian Securities Exchange.
3,350,000
1,915,000
1,666,666
833,333
833,333
833,333
530,000
367,500
333,333
333,333
333,333
291,666
250,000
221,666
200,000
166,666
166,666
166,666
166,666
150,000
18.94
10.83
9.42
4.71
4.71
4.71
3.00
2.08
1.88
1.88
1.88
1.65
1.41
1.25
1.13
0.94
0.94
0.94
0.94
0.85
13,109,160
4,578,303
74.09
25.91
Number
20,250,000
17,687,463
56
For personal use only
C O R P O R AT E D I R E C T O R Y
Directors
Daniel Justyn Peters
Executive Chairman
David Shearwood
Managing Director
Greg English
Non-Executive Director
Murray Chatfield
Non-Executive Director
Company Secretary
Jordan Mehrtens
Leigh Creek Energy Ltd
ABN 31 107 531 822
PO Box 12
Rundle Mall, Adelaide
South Australia, 5000
Australia
Phone +61 (8) 8132 9100
Facsimile +61 (8) 8231 7574
contactus@lcke.com.au
www.lcke.com.au
Registered & Principal
Business Office
Level 11, 19 Grenfell Street
Adelaide, South Australia 5000
Share Registry
Computershare Registry Services
Pty Ltd
Level 5,115 Grenfell Street
Adelaide, South Australia, 5000
Investor enquiries: 1300 556 161
International: +61 3 9415 4000
Auditors
Grant Thornton Audit Pty Ltd
Level 1, 67 Greenhill Road
Wayville SA 5034
Principal Lawyers
Piper Alderman
Level 16, 70 Franklin Street
Adelaide, South Australia, 5000
Bankers
Commonwealth Bank of Australia
96 King William Street
Adelaide, South Australia 5000
ASX Code
LCK
57
For personal use only
58
For personal use only