A
Annual Report
2013
ANNUAL REPORT 2013 STANMORE COALB
CORPORATE
INFORMATION
DIRECTORS
Neville Sneddon
Nicholas Jorss
Andrew Martin
Stephen Bizzell
Viv Forbes
Chris McAuliffe
JOINT COMPANY SECRETARIES
Duncan Cornish and Doug McAlpine
REGISTERED OFFICE AND
PRINCIPAL BUSINESS OFFICE
Level 11, 10 Market Street
Brisbane QLD 4000
Phone: +61 7 3238 1000
Fax: +61 7 3238 1098
COUNTRY OF INCORPORATION
Australia
SOLICITORS
SHARE REGISTRY
AUDITORS
STOCK EXCHANGE LISTING
Corrs Chambers Westgarth
1 Eagle St
Brisbane QLD 4000
Phone: +61 7 3228 9333
Fax: +61 7 3228 9444
Computershare Investor Services
117 Victoria Street
West End QLD 4101
Phone: 1300 55 22 70
Fax: +61 7 3229 9860
BDO Audit Pty Ltd
Level 10, 12 Creek Street
Brisbane QLD 4000
Phone: +61 7 3237 5999
Fax: +61 7 3221 9227
Australian Securities Exchange Ltd
ASX Code: SMR
INTERNET ADDRESS
www.stanmorecoal.com.au
AUSTRALIAN BUSINESS NUMBER
ABN 27 131 920 968
1
CONTENTS
2
Chairman’s Letter
to Shareholders
4
Company
Snapshot
6
Positive
Prospects
7
Seizing
Opportunities
8
Directors’
Report
53
Financial
Report
19
Project
Summaries
54
Shareholder
Information
38
Remuneration
Report
57
Interests in
Tenements
52
Auditor’s
Independence
Declaration
58
Corporate
Governance
Statement
63
Consolidated Statement
of Profit or Loss and
Other Comprehensive
Income
64
65
Consolidated
Statement of
Financial Position
Consolidated
Statement of Changes
in Equity
66
Consolidated
Statement of
Cash Flows
67
Notes to the
Financial
Statements
101
Declaration
by Directors
102
Independent
Auditor’s
Report
104
Notes
ANNUAL REPORT 2013 STANMORE COAL
2
CHAIRMAN’S LETTER
TO SHAREHOLDERS
Dear Shareholders,
Outlook
The twelve months since I last reported to you have been
turbulent for commodity markets and the junior coal
sector. In response to weakening commodity prices,
institutional investment support for coal exploration
and development companies has contracted and the
general sentiment toward commodity based investments
has softened dramatically. As a result, the significant
progress the Company has made on its two flagship
assets, Belview and The Range, has gone largely
unrecognised.
Commodity markets are inherently cyclical in nature
and the Board believes that the Company’s diversified
portfolio of projects and its large resource base puts it
in a strong position as coal markets recover. Stanmore
Coal is well positioned to manage short term market
volatility as it has substantial cash reserves, a small
but highly skilled management team and no take or pay
liabilities.
Globally, high quality, low cost coal projects are becoming
increasingly difficult to identify and develop. Stanmore
Coal is in the fortuitous position of owning two such
projects.
During the year, the Company continued to improve its
Belview Coking Coal Project (“Belview”) by expanding the
Project’s JORC Resource base and completing further
studies and drilling. Belview has the hallmarks of a
world class coking coal project with excellent coal quality
characteristics and a competitive cost structure. Over the
coming year, management will undertake further work as
we progress towards production, with the aim of further
reducing capital and operating costs and undertaking
necessary studies to further define and de-risk the
project.
The feasibility study completed on The Range
Thermal Coal Project (“The Range”) during the year
confirmed that The Range is an attractive five million
tonnes per annum (Mtpa) high quality, low cost, open cut
thermal coal project. It is geologically benign with low
strip ratios suitable for open cut mining operation. No
further material expenditure is required on the project
until there is certainty around the infrastructure solution
for the Surat Basin.
There is currently excess port capacity in most
Queensland export facilities as a consequence of recent
coal project deferrals. We anticipate that in the medium
term, port capacity will again become constrained and
consequently will be a valuable asset. Stanmore Coal
retains its capacity entitlements in Wiggins Island Coal
Export Terminal Expansion 1 (WEXP1) and is evaluating
opportunities to secure additional low cost port capacity
whilst it is available.
Stanmore Coal believes that the long term fundamentals
of both the coking and thermal coal markets are robust,
based on an expectation of improved long term demand
for high quality coal in emerging economies including
India, China and South East Asia. The Board’s view is that
the operating environment will improve as thermal coal
prices stabilise in the medium term and excess capacity
is eliminated through the combination of continued Asian
demand growth and the rationalisation of excess supply.
We have also recently observed significant improvement
to the coking coal price.
Depressed short term market conditions present
challenges but also opportunities as other organisations
re-evaluate their portfolios and assets are rationalised.
We aim to continue to strengthen the Company through
any continued downturn by selectively adding to our asset
base where acquisitions are logical for us and highly
value accretive.
The Company is also conscious of the need to deliver
its projects with competitive cost structures that will be
profitable during periods of volatility in commodity prices.
In light of weak market conditions Stanmore Coal has
commenced a capital review exercise on both Belview and
The Range with the objective of achieving more accurate
capital pricing and reducing the project capital cost.
At Stanmore Coal, conducting our exploration and
development activities within a safe working environment
for the Company’s employees and other stakeholders is of
utmost importance. I’m pleased to say that the Company’s
lost time injury frequency rate for the year was nil.
The Company operates with a small, highly skilled group
of experienced executives who are focussed on developing
the Company’s assets and getting to production. The
Board thanks the management team and staff for their
loyalty and hard work during a difficult twelve months.
We also thank the shareholders of Stanmore Coal for
their continued support and encourage them to stay with
the Company as it navigates difficult market conditions
in the short term with the expectation of emerging as a
stronger, better business.
Neville Sneddon
Chairman
STANMORE COAL ANNUAL REPORT 2013ANNUAL REPORT 2013 STANMORE COAL
3
4
STANMORE COAL ANNUAL REPORT 2013
COMPANY
SNAPSHOT
Key financials
Market
capitalisation
$30.2m
as at 18 October 2013
Cash
position
$25.9m
as at 30 June 2013
Company
debt
$4m
as at 30 June 2013
Share ownership structure
Institutions
Private holders
21%
20%
22%
Board and management
37%
Sprint Capital
Resources
Project
Coal
type
JORC
marketable
coal reserve1,2
JORC
recoverable
coal reserve1,2
JORC
measured
resource1
JORC
indicated
resource1
JORC
inferred
resource1
Total
JORC
resource1
The Range Thermal
94.2
117.5
18.0
Mackenzie Coking
Belview
Coking
Tennyson Thermal/
Coking
Clifford
Thermal
-
-
-
-
-
-
-
-
-
-
-
-
187.0
25.7
-
-
-
82.0
117.5
322.0
161.0
287.0
143.2
322.0
161.0
-
-
Totals
94.2
117.5
18.0
212.7
682.5
913.2
Additional
exploration target3
low
45
-
204
65
130
444
high
80
-
306
120
195
701
6
STANMORE COAL ANNUAL REPORT 2013
POSITIVE
PROSPECTS
Despite difficult market conditions, Stanmore Coal remains positive about its prospects, with the assets, the resources
and the people to capitalise on opportunities as coal markets recover.
Located in
Queensland’s premier
coal basins
Attractive pipeline
of Queensland
coal projects
Queensland’s Bowen and Surat Basins are major
suppliers of some of the world’s best coking, PCI and
thermal coal. Stanmore Coal is maintaining a strategy
of focusing on opportunities for growth in this region.
Stanmore Coal’s two headline projects are Belview, a deposit
of high quality underground coking coal on an existing rail
line, and The Range, which is at feasibility stage for an open-
cut 5 Mtpa (product) export thermal coal mine. The Company
owns additional tenements prospective for thermal, PCI and
coking deposits in the Bowen and Surat basins.
On the path to
becoming a significant
coal producer
Strong Board and
management team
The first coking coal exports are planned from Belview
in 2017, and The Range is one of the most advanced
northern Surat projects, with the feasibility study and
EIS completed.
With over 150 years of combined coal experience and
significant expertise in developing and operating Queensland
coal mines and infrastructure, Stanmore Coal’s executive
team are well positioned to take the Company forward.
Infrastructure
development parallels
proposed mine
development
Well funded with
a strong, supportive
cornerstone
investor
Stanmore Coal has secured 5 Mtpa of capacity in the
planned WICET Expansion 1 for The Range, and rail and
port capacity for Belview is expected to be available in
line with the development timeline. All assets are located
within close proximity to existing or proposed rail lines
and the Company has no “take or pay” exposure.
A cash position of A$25.9M allows the Company to
selectively continue project development. A low overhead
structure keeps the Company cost-efficient and the
Co-Operation Agreement with Sprint Capital provides
support for future growth opportunities.
ANNUAL REPORT 2013 STANMORE COAL
7
SEIZING
OPPORTUNITIES
To steer the Company through the current downturn in the coal market and ensure Stanmore Coal is well positioned for
future growth, the Board’s strategy for the next 12 months is focused on cost-minimistion and high-value expansion.
Deploying capital judiciously,
where long term value
can be created
Undertaking value
engineering for
key projects
The Company intends to limit drilling activity to that
required for development of key projects, and progress
studies to a point that demonstrates project viability to
attract high quality joint venture partners.
The aim for the coming financial year is to engineer
substantial capital costs out of both The Range and
Belview. Stanmore Coal will work with key contractors
and suppliers to reduce operating and capital costs,
enhance the Company’s ability to finance its projects
and attract the right joint venture partners.
Selectively pursuing
low capital, high-value
expansion opportunities
Minimising
overhead
costs
Disciplined expansion of existing projects will further
enhance project economics via farm-in and joint venture
arrangements. An increasing number of late stage
development assets are becoming available,
which could attract new capital.
While Stanmore Coal already maintains a lean operation
with low overhead costs, the Company will continue to
monitor these costs, as well as maintaining a core team
to deliver strategy and retain the ability to respond
quickly when market conditions improve.
8
STANMORE COAL ANNUAL REPORT 2013
DIRECTORS’
REPORT
Your Directors present their report for the year ended 30 June 2013. The following persons were Directors of Stanmore
Coal Limited during the financial year and up to the date of this report, unless otherwise stated:
Nicholas Jorss
BE (Hons) Civil, MBA, GDip App Fin (Sec Inst)
Neville Sneddon
B. Eng (Mining) (Hons), M. Eng, MAusIMM, Grad AICD
Managing Director
Non-Executive Chairman
Nick Jorss is a founding Director and shareholder of
Stanmore Coal and has over 20 years experience in
investment banking, civil engineering, corporate finance
and project management. In his roles in investment
banking he has been involved in leading advisory
mandates with corporate, government and private equity
clients across industry sectors ranging from resources
to infrastructure. Nick was previously a Director of
Pacific Road Corporate Finance and was an engineer
with Baulderstone Hornibrook prior to that, where he
delivered infrastructure and resource projects over a
period of approximately eight years.
Nick is a founding shareholder and Director of St. Lucia
Resources International, Stanmore Coal and Kurilpa
Uranium and Wingate Capital. He was previously a
Director of Vantage Private Equity Growth, Vantage Asset
Management and WICET Holdings Pty Ltd. During the
past three years Nick has not served as a Director of any
other ASX listed companies.
Nick holds a Bachelor with Honours in Civil Engineering,
a Masters of Business Administration and a Graduate
Diploma of Applied Finance and Investment..
A mining engineer with over 40 years experience in most
facets of the Queensland and NSW resource sectors,
Neville Sneddon brings substantial Board and industry
knowledge to Stanmore Coal. He has developed and
operated both underground and open cut mines working
for Coal & Allied in the Hunter Valley and from 1997
worked in a senior role in the NSW Mines Inspectorate,
covering operations in all forms of mining in the state.
Moving to Queensland in 1999, Neville accepted the
position of Chief Operating Officer with Shell Coal
which was acquired by Anglo American’s Australian
coal operations the following year. Leaving as CEO in
2007, he held several Board positions with mining and
infrastructure companies including Chairman of the
operating company at Dalrymple Bay Coal Terminal near
Mackay and Director of Port Waratah Coal Services, a
major coal export facility at Newcastle.
Neville has also been a member of the Boards of the
Queensland, NSW and National Mining Councils. His
expertise has been sought by several government
committees such as the NSW Mine Subsidence Board,
the NSW Mines Rescue Board, Queensland Ministerial
Coal Mine Safety Advisory Committee and the joint
federal/state advisory committee which is developing
nationally consistent mining safety legislation. Neville is
presently on the Board of Envirogen, Solid Energy Limited
in New Zealand and is the Chairman of CSM Energy.
Neville is Chairman of the Remuneration Committee.
During the past three years Neville has also served as a
Director of the following ASX listed companies:
• Centennial Coal Company Limited (from 19 February
2008 to 17 February 2010)
ANNUAL REPORT 2013 STANMORE COAL
9
Andrew Martin
B.Ec (Hons)
Non-Executive Director
Stephen Bizzell
BCom MAICD
Non-Executive Director
An investment banker with Deutsche Bank, Andrew
Martin offers more than 15 years financial, advisory and
corporate experience within the infrastructure, utilities
and natural resources industries. In recent years, Andrew
has advised on transactions within the power generation,
utilities, gas, water, road, rail and ports sectors.
Holding a Bachelor of Economics (Honours) from the
University of Sydney, Andrew is a founding Director
and shareholder in St Lucia Resources International,
Stanmore Coal and Kurilpa Uranium, which was acquired
by Renaissance Uranium Ltd before its listing.
Andrew is a member of the Audit and Risk Management
and Remuneration Committees.
During the past three years Andrew has also served as a
Director of the following ASX listed companies:
• Renaissance Uranium Ltd*
Stephen Bizzell is Chairman of boutique corporate
advisory and funds management group Bizzell Capital
Partners. Stephen spent his early career in the corporate
finance division of Ernst & Young and the corporate tax
division of Coopers & Lybrand and qualified as a chartered
accountant. He is highly experienced in the fields of
corporate restructuring, debt and equity financing, and
mergers and acquisitions, and has 20 years corporate
finance and public company management experience in
the resources sector in Australia and Canada.
Stephen was previously an Executive Director of Arrow
Energy Ltd from 1999 until its acquisition in 2010 by Royal
Dutch Shell and PetroChina for $3.5 billion. Stephen
was instrumental in Arrow’s corporate and commercial
success and its growth from a junior explorer to a large
integrated energy company.
Stephen is the Chairman of the Audit and Risk Management
Committee and a member of the Remuneration Committee.
During the year ended 30 June 2013, Stephen was
appointed to the Board of Queensland Treasury
Corporation. During the past three years Stephen has also
served as a Director of the following ASX listed companies:
• Apollo Gas Ltd (until takeover in 2011)
• Armour Energy Limited*
• Arrow Energy Ltd (until takeover in 2010)
• Bow Energy Ltd (until takeover in 2012)
• Dart Energy Ltd*
• Diversa Ltd*
• Hot Rock Ltd*
• Renaissance Uranium Ltd*
• Laneway Resources Limited (formerly Renison
Consolidated Mines NL)*
• Titan Energy Services Limited*
*denotes current ASX listed directorship
10
STANMORE COAL ANNUAL REPORT 2013
Viv Forbes
BScApp (Geol), FAusIMM, FSIA
Chris McAuliffe
LLB (Hons), MBA
Non-Executive Director
Non-Executive Director (commenced 17 July 2012)
Viv Forbes is a Bowen Basin pioneer with more than
40 years coal industry experience including government
service, field exploration, mine valuation and acquisition,
financing, development, operations and successful
asset sales. Viv has been involved in various capacities
at Burton Coal, Dalrymple Bay Coal Terminal, South
Blackwater Coal Mine, Tahmoor Coal Mine, Newlands/
Collinsville Coal Mines, MIM, Utah Goonyella/Saraji and
Gold Fields. He has a degree in Applied Science Geology
and is a Fellow of the Australasian Institute of Mining and
Metallurgy.
Chris McAuliffe is co-founder and Managing Director
of Sprint Capital, the Hong Kong based private equity
investment management group with whom Stanmore
recently signed a funding agreement. Chris has more
than 20 years experience in private equity and investment
banking with significant relationships across Asia.
Prior to co-founding Sprint Capital in 2008, Chris was a
Managing Director and co-head of Asia Pacific Industrials
Group at Citigroup in Hong Kong, prior to which he was
a Managing Director and head of Asia Industrials and
Services Group at Credit Suisse in Singapore.
During the past three years Viv has not served as a
Director of any other ASX listed companies.
During the past three years Chris has also served as a
Director of the following listed companies:
Viv is a member of the Remuneration Committee and
stood down from the Audit & Risk Committee on
6 March 2013.
• Asian Bamboo AG* (Germany)
• Xplorer PLC* (London)
• Chaswood Resources Holdings Limited * (SGX)
Chris is a member of the Audit & Risk Committee
(commenced 6 March 2013).
ANNUAL REPORT 2013 STANMORE COAL
11
Doug McAlpine
B.Comm, CA
CFO, Joint Company Secretary
Duncan Cornish
B.Bus (Acc), CA
Joint Company Secretary
Doug McAlpine joined the Company as Chief Financial
Officer on 19 September 2012. On 19 December 2012
Doug was appointed Joint Company Secretary and holds
both positions up to the date of this report.
Doug is an experienced finance executive with 15 years
of accounting and finance experience, 10 of those as CFO
of public companies in Australia. In his previous role as
Chief Financial Officer of Watpac Limited, he played a key
role in the establishment and growth of the company’s
contact mining services business. Prior to that, he held
the roles of Chief Financial Officer and General Manager
of Investments at Ariadne Limited, a listed property and
Investment Company. Doug has had significant exposure
to the coal industry in Queensland, having previously
provided external audit and consulting services to BHP
Billiton and Rio Tinto during his time in the professional
services sector. Doug is an accountant who commenced
his career providing external audit and consulting
services with Arthur Andersen and Ernst & Young.
Duncan Cornish was the Joint Company Secretary of
Stanmore Coal Limited from 19 December 2011 up to the
date of this report.
Duncan is an accomplished and highly regarded corporate
administrator and manager. He has many years of
experience in pivotal management roles in capital raisings
and stock exchange listings for numerous companies on
the ASX, AIM Market of the London Stock Exchange and
the Toronto Stock Exchange. Highly skilled in the areas
of company financial reporting, company regulatory,
secretarial and governance areas, business acquisition and
disposal due diligence, he has worked with Ernst & Young
and PricewaterhouseCoopers both in Australia and the UK.
Duncan is currently Company Secretary and CFO of
other listed companies on the ASX and TSX-V where he
has assisted in their listing and capital raising. He is
supported by a small experienced team of accountants and
administrators.
*denotes current ASX listed directorship
12
Directors’ meetings
The number of meetings of Directors (including meetings of committees of Directors) held during the year and the
number of meetings attended by each Director was as follows:
Board
Audit & Risk
Management Committee
Number of
meetings held
while in office
Meetings
attended
Number of
meetings held
while in office
Meetings
attended
Number of
meetings held
while in office
Remuneration
Committee
Meetings
attended
Neville Sneddon
Nicholas Jorss
Andrew Martin
Stephen Bizzell
Viv Forbes
Chris McAuliffe*
11
11
11
11
11
11
11
11
11
11
11
10
n/a
n/a
2
2
1
1
n/a
n/a
2
2
1
1
1
n/a
1
1
1
1
1
n/a
1
1
1
1
*Chris McAuliffe was appointed to the Board on 17 July 2012.
Interests in shares and options
As at the date of this report, the interests of the Directors in the shares and options of Stanmore Coal Limited are shown
in the table below:
Neville Sneddon
Nicholas Jorss
Andrew Martin
Stephen Bizzell
Viv Forbes
Chris McAuliffe
Ordinary Shares
Unlisted Options
$0.19 @ 31/12/13
Unlisted Options
$0.15 @ 16/1/14
300,000
32,163,375*
31,700,270*
7,372,514
2,088,270
-
-
-
-
2,000,000
-
-
-
-
-
-
525,000
-
*31,700,270 shares are held by St. Lucia Resources International Pty Ltd of which both Nicholas Jorss and Andrew Martin
have interests in trusts which each own > 20% and are both directors.
Principal activities
The principal activities of Stanmore Coal Limited and its subsidiaries (“the Company”, “the Group” or “the Consolidated Entity”)
during the financial year were the identification and development of export quality thermal, coking and PCI coal deposits within the
prime coal bearing regions of Eastern Australia.
STANMORE COAL ANNUAL REPORT 201313
OPERATING AND
FINANCIAL REVIEW
The Board of Directors and management of Stanmore
Coal have worked persistently toward the goal of building
a substantial coal company throughout the 2013 financial
year. Company highlights for the year include:
Company’s Projects and to prudently expand the business
within an environment of realistic asset prices.
Stanmore Coal’s strong future is underpinned by:
• significantly increasing the Company’s resource base
from 498.2 Mt to 913.2 Mt post year end;
•
its diversified portfolio of high quality coking and export
thermal coal projects moving towards production;
• enhancing the Project economics of the Belview Coking
Coal Project via the addition of an adjacent tenement
containing large volumes of shallower coal; and
• finalising a feasibility study for The Range Thermal
Coal Project.
Whilst these are significant milestones, they have
occurred in a year where downward pressure on coal
prices and negative investor sentiment toward junior
resources companies has meant they have failed to
translate into positive movement in the Company’s
share price. Notwithstanding, the Board of Directors and
management are positive about the Company’s prospects.
Stanmore Coal believes that the long term fundamentals of
both the coking and thermal coal markets are robust, based
on an expectation of improved long term demand for high
quality coal in emerging economies including India, China
and South East Asia. The Company’s diversified portfolio
of development and exploration projects puts it in a strong
position to benefit as coal markets recover. The current
downturn in the commodity cycle presents an excellent
opportunity to reduce the capital and operating costs of the
• a large and valuable resource and reserve base
– 94 Mt of Marketable Reserves;
– 913 Mt of JORC Resources1; and
– additional 444–701 Mt of currently identified
Exploration Targets2,3;
• a strong closing cash position at 30 June 2013 of
$24 million; and
• no take or pay liabilities for rail or port access.
Safety
The Group undertook approximately 30,000 hours of
drilling and exploration activity directly and through its
contractors during the 12 month period and reported no
lost time injuries. Whilst an excellent safety performance,
the Group continues to develop and enhance its
occupational health and safety management systems to
ensure it creates a culture where health and safety risks
are identified and resolved in a timely manner and the
potential for harm to employees and other stakeholders
is minimised.
Resources, reserves and exploration targets
At the date of this report the Company has the following Reserves, Resources and Exploration Targets:
Project
Coal
type
JORC
marketable
coal reserve1,2
JORC
recoverable
coal reserve1,2
JORC
measured
resource1
JORC
indicated
resource1
JORC
inferred
resource1
Total
JORC
resource1
The Range
Thermal
94.2
117.5
18.0
Mackenzie
Coking
Belview
Coking
Tennyson
Clifford
Totals
Thermal/
Coking
Thermal
-
-
-
-
-
-
-
-
-
-
-
-
187.0
25.7
-
-
-
82.0
117.5
322.0
161.0
287.0
143.2
322.0
161.0
-
-
94.2
117.5
18.0
212.7
682.5
913.2
Additional
exploration target3
low
45
-
204
65
130
444
high
80
-
306
120
195
701
ANNUAL REPORT 2013 STANMORE COAL14
The Company’s total JORC Resource position increased
by 415 Mt compared with the prior year as a result of the
following initiatives:
• 161 Mt initial JORC Inferred Resource established for
the Tennyson Project as a result of the 18 hole drilling
program completed in October 2012; and
• 227 Mt increase in JORC Inferred Resources for the
Belview Project as a result of the five hole drilling
program completed in June 2013;
• 27 Mt increase in JORC Resources (18 Mt Measured,
3 Mt Indicated and 6 Mt Inferred) for the Range Project
as a result of further refinement to the geological
model as part of completing the bankable feasibility
study for the project.
Financial performance and financial position
For the year ended 30 June 2013, the accounting loss for the Company after the recognition of income tax incentives
received and the provision for future income tax liabilities was $5 million (2012: loss of $7.7 million).
$ mill
Revenue and other income
Employee benefits expenses
Finance costs
Legal expenses
Administration and consulting expenses
Other expenses
Impairment adjustments
Profit/(loss) before income tax benefit/(expense)
Income tax benefit/(expense)
Profit/(loss) after income tax expense
2013
1.7
(3.4)
(1.3)
(0.7)
(1.4)
(1.3)
(0.8)
(7.2)
2.2
(5.0)
2012
0.9
(3.1)
(1.4)
(0.6)
(1.5)
(2.0)
-
(7.7)
-
(7.7)
The Group’s profit result includes recognition of the
following key items of revenue and expense:
• a $1 million non-recurring mark-to-market gain
on financial liabilities associated with financing
arrangements provided by Credit Suisse;
• an impairment adjustment of $0.8 million required
under Australian Accounting Standards against
the carrying value of investment loans to Wiggins
Island Coal Export Terminal (“WICET”) as part of the
Company’s commitments to finance expansion to the
terminal beyond the current WEXP1 expansion project.
• $2.2 million of research and development tax incentives
recognised as a credit to income tax expense;
• $0.9 million of amortisation expense associated with the
Company’s share based compensation arrangements; and
After adjusting for non-cash items and movements in net
working capital, the Company delivered a cash operating
loss of $2.8 million, a significant improvement on the
prior year.
$ mill
Accounting profit/(loss) after income tax expense
Mark-to-market gain on financial instruments
Amortisation of share based payments
Asset impairment adjustments
Net working capital adjustments
Operating cash-flow
2013
(5.0)
(1.0)
0.9
0.8
1.5
(2.8)
2012
(7.7)
-
1.2
-
2.3
(4.2)
STANMORE COAL ANNUAL REPORT 201315
During the year, the Company raised capital of
$23.3 million through the issue of ordinary shares and
convertible notes to Sprint Capital Partners. These amounts
relate to the aggregate $36 million deal agreed with Sprint
Capital Partners in June 2012, with the second portion
of funds received during FY13 pursuant to shareholder
approval received in October 2012. The Company invested
$10.8 million in further exploratory drilling and Project
feasibility studies, $5.1 million to expand the tenement area
of the Belview Coking Coal Project, $3.1 million in early
works and studies as part of the Company’s commitments
to WEXP1 and $1.1 million in guarantees.
$ mill
Net cash at beginning of year
Net cash from operating activities
Net cash from investing activities
Net cash from financing activities
Net increase/(decrease) in cash held
Net cash at end of year
2013
24.0
(2.8)
(20.1)
23.3
0.4
24.4
2012
18.2
(4.2)
(28.3)
38.3
5.8
24.0
The Group ended the year in a strong financial position
with gross assets of $90 million including $24.4 million
of available cash. The Group has a strong current ratio
and total net assets of $75 million at 30 June 2013.
Other than operating trade payables, at 30 June 2013
the Group had senior debt obligations of $4 million and
non-interest bearing convertible notes of $9 million.
The senior debt was repaid in full from cash reserves
on 23 July 2013. Convertible notes can be repaid or
converted into ordinary equity at the Company’s election
from 27 June 2014.
Operational highlights
Expansion of Belview Underground Coking
Coal Project
The acquisition in October 2012 of EPC 1186 for
$5.1 million plus 5.7 million shares has resulted in
significant improvement to potential economics of the
Belview Project. Concept mining studies completed
during the year confirm that the larger, shallower
resource base has reduced both operating costs and
capital intensity. Relocation of the underground access
point to capitalise on shallower coal in the north of the
Project area also means it is now located immediately
adjacent to existing rail infrastructure on the Blackwater
railway line.
Post year end the Company upgraded the Project’s JORC
Inferred Resource to 322 Mt based on drilling activities
completed in June 2013 and has commenced a capital
review exercise with the objective of achieving more
accurate pricing and reducing Project capital intensity.
Completion of The Range Feasibility Study
A Project Feasibility Study (bankable standard
excluding infrastructure) was completed in April 2013
which confirmed that The Range Project is an attractive
5 Mtpa high quality, open cut thermal coal Project
ready for execution upon the delivery of the Surat Basin
Rail. State Government environmental approval for
the Project has been obtained and we expect that the
Mining Lease will be ready for grant by 2014. The Study
demonstrated positive economics under both owner-
operator and contractor cases. Extensive geological
evaluation and testing has been completed with 330
drill holes in the deposit and both the regional and
Project specific geology is well understood. The Project
is a geologically benign, low strip, open cut mining
operation. Similar to the Belview Project, the Company
has commenced a capital review exercise with the
objective of reducing Project capital intensity. No
further material expenditure is required on the Project
until there is certainty around the infrastructure
solution for the Surat Basin.
Extension of thermal coal footprint in the
Surat Basin
The Company completed the acquisition of EPC 1274
and 1276 in the Surat Basin during the year, through
exchange of tenements which required no cash or
equity consideration. The new tenements significantly
increased the Company’s potential resource base in
the Surat Basin, with EPC 1274 and 1276 covering a
combined area of 1,371km2. The Company established
an initial exploration target2 of 130–195 Mt and
commenced a drilling program during the period to test
the primary targets.
ANNUAL REPORT 2013 STANMORE COAL16
Lilyvale – establishment of early stage coking
coal opportunity
Stanmore Coal completed the acquisition of EPC
2157 which doubled the Lilyvale Project area, for total
consideration of A$125,000. In conjunction with Cape
Coal, the Company has now conducted a desktop review
of the Lilyvale Project and identified the German Creek
(or Lilyvale) seam as potentially amenable to underground
extraction based on depth and estimated seam thickness.
The Company is looking to expand the Project resource
base and then intends to undertake further concept
studies to confirm the geological and economic viability
of the resource.
The geology of the Project and surrounding areas is well
understood and not expected to be geologically complex.
Adjacent underground mines at Kestrel (Rio Tinto) and
Gregory Crinum (BHP Mitsubishi Alliance) produce a
low ash, high volatile hard coking coal from the German
Creek seam.
Capital management
In June 2012, the Company executed a subscription and
cooperation agreement with Greatgroup Investments
Limited, an investment vehicle managed by Sprint
Capital, to provide $36 million of capital to the
Company. The funding package provided funds to assist
the Company with satisfying its funding obligations
for WEXP1 and progress its portfolio of development
projects. The funding package consisted of a
$27 million placement of 40 million shares at $0.675
per share and a $9 million placement of zero-coupon
notes which are convertible into 13.4 million shares
at $0.675 per share. 19.2 million shares were placed
to Greatgroup Investments prior to 30 June 2012
with the remainder subject to obtaining shareholder
approval.
Shareholder approval for the balance of the funding
package was obtained in October 2012, resulting in the
issue of a further 20.8 million shares and 13.4 million
convertible notes to Sprint Capital. Cash proceeds of
$23 million were received upon allotment of these
securities. At 30 June 2013 Sprint Capital now holds
shares amounting to just under 20% of the Company’s
issued share capital, and notes which upon conversion
after two years could increase Sprint Capital’s
shareholding in the Company by up to 5%, to an
aggregate shareholding of up to 25% based on issued
share capital after the current raising.
Shareholders also approved Sprint Capital receiving
anti-dilution options to subscribe for new shares
and notes based on a fixed number of Board and
management options which were outstanding and
in-the-money as of the date of capital raising
transaction, and on the exercise (at any time) of the
warrants granted pursuant to the $25m executed Credit
Suisse debt facility.
As a result of a revised early works expenditure profile
in respect of WEXP1, the Company was required to
contribute less capital to that Project than originally
planned during the year ended 30 June 2013. As a
consequence, Stanmore Coal was not required to
draw on the senior debt facility established with
Credit Suisse in the previous year. Post 30 June 2013,
Stanmore Coal renegotiated its ongoing financial
obligations to WEXP1 and concluded that it could
satisfy its ongoing funding obligations from existing
cash reserves. On this basis, the Company repaid the
Credit Suisse loan facility on 23 July 2013 which had
an outstanding net balance at the time of $3.2 million.
Credit Suisse has removed their charges over the
Company’s assets, however the options (exercisable at
51.8 cents) issued to Credit Suisse as part of the facility
fee structure remain in place.
Rail and port infrastructure
Prior to 30 June 2012, Stanmore Coal was one of four
coal companies selected to execute a Capacity
Commitment Deed (CCD) for WEXP1 which provides
it with 5 Mtpa of port capacity for The Range Project.
The signing of CCDs represented a significant
commitment by the coal industry to the development
of the 32.2 Mtpa WEXP1 port facility. However, due to
deteriorating coal market conditions experienced
during the year ended 30 June 2013, the early works
expenditure profile for WEXP1 was decelerated and
the target date for achieving financial close for that
expansion stage was deferred. Post 30 June 2013,
Stanmore Coal has negotiated a one year extension
to its capacity entitlements in WEXP1 and a material
reduction to its financial commitments over that period.
During the coming year, the Company will work with
WICET management to progress WEXP1 toward financial
close and also protect its rights to capacity in future
expansion stages in the port based on the material
financial commitment which the Company has
made to date.
The Range Project is one of the most advanced
projects in the northern Surat Basin and continues
to satisfy the due diligence criteria which are a
pre-requisite for securing capacity on the proposed
Surat Basin Rail system and the existing Moura
system. The Company continues to work with
infrastructure providers to support the delivery of
essential rail infrastructure necessary to support
commercialisation of the Surat Basin, and in
particular The Range Project.
STANMORE COAL ANNUAL REPORT 201317
Regulatory environment
In order to deliver on key strategic objectives, resource
companies require a stable regulatory environment
in which to operate. This includes financial and non-
financial measures such as an internationally competitive
tax system and a transparent path to obtaining approvals
from relevant stakeholder groups.
Pleasingly during the year, the new Queensland State
Government has made progress in reducing inefficiency
inherent in the project approval process and in clarifying
the Government’s policy on alienation of mining within
nominated protection areas. Stanmore Coal believes
that mining activity should be controlled within prime
agricultural areas, but in general, it can coexist with
other land uses.
ANNUAL REPORT 2013 STANMORE COAL18
STANMORE COAL ANNUAL REPORT 2013
KEY PROJECT
OVERVIEW
BELvIEW
Underground coking coal
THE RANGE
Open cut thermal coal
• Adjacent EPC 1186 acquisition reduced initial entry depth and
substantially increased the Project’s resource base
• 322 Mt Initial JORC Inferred Resource and a further significant
exploration target on the back of 5 hole drilling program completed
during FY13
• Mining Lease Application (MLA80199) lodged September 2013
• Concept Study indicates strong Project economics from a single longwall
• Further opportunity exists to reduce capital costs in light of market
conditions
• Pre-feasibility study planned for calendar 2014
• Attractive economics under both owner operator and contractor cases
demonstrated in Feasibility Study completed in April 2013
• FOB (ex-royalty, first 13 years of production) $76.11/tonne is competitive
on a global scale
• 94 Mt JORC Marketable Reserve1, 287 Mt Total JORC Resource
(18 Mt Measured, 187 Mt Indicated + 82 Mt Inferred)
• Well defined geology supporting the development of a 5 Mtpa (product
coal) low strip ratio open cut mine
• High energy, low emission thermal coal is attractive to Asian markets
• EIS approved by the State and is awaiting Federal approval
• Mining lease grant expected in calendar 2014
• Further opportunity to reduce capital costs in light of market conditions
• No material level of expenditure required prior to decision to proceed
LILYvALE (PREvIOUSLY THERESA CREEK)
• Historical geological data indicates the Project area hosts the German
Underground coking coal
CLIFFORD
Open cut thermal coal
Creek seam from 336 m in depth with typical coal thickness of 2.2–2.5 m
• The region is not expected to be geologically complex and the German
Creek seam is mined as a high quality coking coal in adjoining
underground mines
• Initial drilling and concept study planned for calendar 2014
• Close to existing infrastructure
• Large tenement area with the potential to host a substantial thermal
coal deposit suitable for open cut mining
• Initial scout drilling program completed, some follow up drilling of
encouraging drilling targets planned
• Significant infrastructure synergies with The Range
TENNYSON
• Maiden JORC Inferred Resource of 161 Mt
Underground thermal coal
• Additional Exploration Target2 of 65–120 Mt
MACKENzIE
Open cut coking coal
• Acquired EPC1580 under a royalty arrangement with no upfront
consideration, expanding the Project area by 60 sub-blocks
• Upgraded 143 Mt JORC Indicated + Inferred Resource, of which 25.7 Mt
is at Indicated Resource status
• Concept study and yield optimisation work completed in conjunction
with Joint Venture partner Cape Coal
ANNUAL REPORT 2013 STANMORE COAL
19
Project
Summaries
20
BELVIEW UNDERGROUND
COKING COAL PROJECT
TENEMENTS: EPC 1114, 1186; MLA 80199
OWNERSHIP: Stanmore Coal 100%
LOCATION: 6 km east of Blackwater, Bowen Basin
AREA: 120 km2
JORC INFERRED RESOuRCE: 322 Mt
ExPLORATION TARgET2: 204–306 Mt underground prime coking coal
The Company has completed a concept mining study
for the Project based on a single and dual underground
longwall operation. The acquisition of EPC 1186 has
resulted in significant improvement to the underground
mining potential of the Project by providing a larger,
shallower resource base which has reduced both
operating costs and capital intensity.
A five hole drilling program completed during the
year ended 30 June 2013 has allowed a JORC inferred
resource of 322 Mt to be established with clean coal
quality and washability results pending. Initial laboratory
results indicate that the Project has the capacity to
produce an export grade coking coal and a secondary
PCI/high energy thermal coal. The Project will mine
coal seams within the Rangal Coal Measures which are
regionally well understood and down dip from existing
and planned coking coal mines.
Start-up capital requirements for a single longwall
operation were estimated in the Concept Study released
in February 2013. However, the Company is currently
taking further steps to reduce Project capital costs
through a value engineering process. The Company is
also investigating the use of supplier provided finance for
key pieces of plant and equipment to reduce the capital
requirements for Stanmore. The Concept Study also
identified the potential for improved economics through
the potential for a second longwall unit.
The Company intends to undertake further drilling
and studies over the coming year in order to progress
the Project to feasibility stage. Post 30 June 2013, the
Company also lodged its mining lease application which
establishes the framework for obtaining regulatory and
environmental approvals for the Project. First coal is
targeted for 2017.
STANMORE COAL ANNUAL REPORT 201321
ANNUAL REPORT 2013 STANMORE COAL22
THE RANGE
PROJECT
TENEMENTS: EPC 1112, 2030; MLA 55001, 55009, 55010
OWNERSHIP: Stanmore Coal 100%
LOCATION: Surat Basin – 24 km south-east of Wandoan, Surat Basin
AREA: 92 km2
JORC RESOuRCE: Total of 287 Mt high quality open pit thermal coal (18 Mt Measured + 187 Mt Indicated + 82 Mt
Inferred Resource)
JORC MARKETABLE RESERVES1: 94 Mt included within the 287 Mt Resource noted above
A Project Feasibility Study to bankable standard excluding
infrastructure was released in April 2013 and confirms
that The Range Project is an attractive 5 Mtpa high
quality, export grade, open cut thermal coal Project ready
for execution upon the delivery of the Surat Basin Rail.
State environmental approval for the Project has been
obtained and it is expected that the Mining Lease will be
ready for grant in 2014. The Project demonstrates positive
economics under both owner-operator and contractor
cases. Extensive geological evaluation and testing has
been completed with 330 drill holes in the deposit and
both the regional and Project specific geology well
understood. The Project is a geologically benign, low strip
ratio, open cut mining operation.
The feasibility study benchmarked capital and operating
costs against indicative pricing provided by mining
contractors and other OEMs. The Company anticipates
that recent Project deferrals and the moderation of
activity in the mining and construction services sectors
will see considerable scope to further optimise capital
and operating costs when procurement contracts are
ultimately awarded. The Company is currently taking
further steps to reduce Project capital costs through
a combination of value engineering, re-pricing of key
equipment and investigation of vendor finance for some
items of plant.
Surat Basin thermal coal mined at The Range will be high
energy, high quality bituminous thermal coal, with low
emission profiles suitable for Asian markets.
The Project has already attracted the interest of Japanese
off-takers, supported by the Japanese Government
agency NEDO, who under the terms of an exploration
support agreement provided $1.2 million of exploration
funding. As part of this funding agreement, Taiheiyo will
be able to purchase up to a total of 400,000 tonnes of coal
over the first three years of production at The Range for
distribution to its Japanese customers. Taiheiyo has long
standing relationships with Japanese energy utilities and
industrial companies and supplies a number of these
entities with similar Surat Basin coals.
Key metrics – The Range Project
Feasibility Study outputs
Unit costs ($A/product tonne)
Mining and processing cost
Rail, port and overhead costs
Total FOB cost (first 13 years)
Project economics
Capital costs
ROM strip ratio
Source: Feasibility Study, ASX Announcement 29 April 2013.
Owner mining
Contract mining
41.9
34.2
76.1
$599m
6.7:1
51.1
33.7
84.8
$455m
6.7:1
STANMORE COAL ANNUAL REPORT 201323
ANNUAL REPORT 2013 STANMORE COAL24
LILYVALE UNDERGROUND
COKING COAL PROJECT
TENEMENTS: EPC 1687, 2157
OWNERSHIP: Stanmore Coal 85%/Cape Coal 15% (farm-in)
LOCATION: 25 km north-east of Emerald, Bowen Basin
AREA: 13 km2
JORC INFERRED RESOuRCE: N/A
The Lilyvale Project is located 25 km north east of
Emerald and is in close proximity to the Kestrel and
Gregory Crinum operating coking coal mines. The Project
is currently owned 100% by Stanmore Coal but at the
completion of certain milestones, Cape Coal Pty Ltd will
earn a 15% interest.
The Company, in conjunction with Cape Coal, has conducted
a desktop review of the Lilyvale Project and identified the
German Creek (or Lilyvale) seam as potentially amenable to
underground extraction based on depth and estimated seam
thickness. This seam is presently mined as a high quality
coking coal at the adjacent Kestrel and nearby Gregory
Crinum operations. The Project is well located relative to
existing rail infrastructure.
Based on analysis of historical geophysical logs and
bore holes in the surrounding region (including two
cored holes with quality data within the Project area) the
Company estimates that the Lilyvale Project hosts the
German Creek seam from 336 m in depth with a typical
thickness across the Project area of 2.2–2.5 m. The north
of the Project area is estimated to host the shallowest
coal and is contiguous to the Kestrel mine. The geology of
the Project and surrounding areas is well understood and
not expected to be geologically complex.
Adjacent underground mines at Kestrel (Rio Tinto) and
Gregory Crinum (BHP Mitsubishi Alliance) produce a
low ash, high volatile hard coking coal from the German
Creek seam.
STANMORE COAL ANNUAL REPORT 201325
ANNUAL REPORT 2013 STANMORE COAL26
MACKENZIE OPEN CUT
COKING COAL PROJECT
TENEMENT: EPC 2081
OWNERSHIP: Stanmore Coal 95%/Cape Coal 5% (farm-in)
LOCATION: 30 km west of Blackwater, Bowen Basin
AREA: 469 km2
JORC INFERRED RESOuRCE: Total of 143 Mt (25.7 Mt Indicated + 117.5 Mt Inferred)
The Mackenzie Coking Coal Project in the Bowen Basin
is well located for export as it lies on the rail line to
Gladstone. The Project is located between the existing
Ensham and Curragh operating mines and is adjacent to
the Washpool coking coal Project, which is also targeting
the Burngrove Coal Formation.
A total of 80 holes have been drilled in the Project. The
coal sequence comprises two main coal seams being the
Leo and Aquarius seams within the Burngrove Formation.
The seams strike in a general north south direction over
an approximate 27 km strike length, and dip towards the
west at approximately two degrees. The main coal seams
occur at depths of 10–110 m.
Testing and analysis of samples obtained during the 2011
drilling program indicated substantial variability in the
yields achieved across the 27 km strike length. Further
yield analysis and study of processing options has been
undertaken in conjunction with Cape Coal to improve
beneficiation and address metallurgical issues associated
with the deposit.
STANMORE COAL ANNUAL REPORT 201327
ANNUAL REPORT 2013 STANMORE COAL28
TENNYSON UNDERGROUND
THERMAL COAL PROJECT
TENEMENT: EPC 1168
OWNERSHIP: Stanmore Coal 100%
LOCATION: Adjacent to Emerald, Bowen Basin
AREA: 120 km2
JORC INFERRED RESOuRCE: Total of 161 Mt Inferred
ExPLORATION TARgET2: 65–120 Mt
The Company has established a JORC Inferred Resource
of 161 Mt for the Tennyson Project near Emerald in the
Bowen Basin. The 2012 drilling program confirmed the
potential to produce a low ash, high energy export quality
thermal coal utilising underground mining methods from
a depth of 150 m.
Five partially-cored holes have been completed with
each of these holes intersecting the targeted Aries seam.
Clean coal quality analysis to date indicates that the
Aries seam is capable of producing a high yielding, low
ash export thermal product with typical specifications
(air dried) being: Yield >80%, Ash <9%, Energy >6,200kcal/
kg, Sulfur 0.2%. The drilling program has identified the
Corvus seam at 2.6 m in thickness and the Liskeard
seam at 2.1 m in thickness as additional potential
mining targets.
At this point the Company is restricting further
expenditure on the Project while focusing expenditure
on the key coking coal projects outlined earlier. The
Company has recently expanded the Project footprint
through the acquisition of EPC1580 for nil cash
consideration and a small future royalty.
STANMORE COAL ANNUAL REPORT 201329
ANNUAL REPORT 2013 STANMORE COAL30
CLIFFORD OPEN CUT
THERMAL COAL PROJECT
TENEMENTS: EPC 1274, 1276
OWNERSHIP: Stanmore Coal 100%
LOCATION: Adjacent to Wandoan, Surat Basin
AREA: 1,371 km2
TARgET: 130–195 Mt
The Project is in the Surat Basin, located 15 km from the
proposed Surat Basin Rail line and approximately 35 km
from Stanmore Coal’s The Range Project. Tenements
are located adjacent to the 4.5 billion tonne Glencore
Wandoan coal project.
Stanmore Coal believes these tenements to be
prospective for potential open pit coal deposits. A total
of 1,242 historical boreholes have been drilled within a
10 km radius of the tenements which has allowed the
identification of a number of priority target areas within
the tenements.
A drilling program is currently underway with
encouraging initial drilling results confirming the
existence of shallow thermal coal deposits which
may be suitable for open cut extraction. Further
exploration activity is planned to identify and define
the most prospective deposits within the very large
tenement area.
STANMORE COAL ANNUAL REPORT 201331
ANNUAL REPORT 2013 STANMORE COAL32
KERLONG UNDERGROUND
COKING COAL PROJECT
TENEMENTS: EPC 1552, 1769, 2176
OWNERSHIP: Stanmore Coal 100%
LOCATION: 19 km north-east of Moranbah, Bowen Basin
AREA: 41 km2
TARgET: Underground PCI/coking coal
Stanmore Coal is targeting high quality underground
coking/PCI coal at the Kerlong Coking Coal Project
which is 8 km north of the rail line to Dalrymple Bay
Coal Terminal.
Target seams are mined extensively at deposits
such as Burton (Peabody), South Walker Creek (BHP
Mitsubishi), Carborough Downs (Vale) and Coppabella
(Macarthur Coal).
24 km of 2D seismic survey lines have been completed
and have enabled the development of a targeted drilling
program. Drilling to date has intersected the Burton
Rider (1.7 m @ 836 m), Leichhardt (2.6 m @ 871 m) and
Vermont seams (3.6 m @ 916 m).
Based on washability analysis undertaken to date,
achievable products include a primary coking and
secondary export thermal coal.
STANMORE COAL ANNUAL REPORT 201333
ANNUAL REPORT 2013 STANMORE COAL34
NEW CAMBRIA OPEN CUT
PCI COAL PROJECT
TENEMENTS: EPC 1113, 2039, 2371
OWNERSHIP: Stanmore Coal 100%
LOCATION: 20 km east of Blackwater, Bowen Basin
AREA: 123 km2
TARgET: Open cut low volatile PCI coal
The New Cambria Project is targeting the up-thrust
Rangal Coal Measures which contain low-volatile, low
to medium ash PCI coal with open cut mining potential.
High energy coal has been mined historically at the
adjoining Excel Colliery and the Project is located
adjacent to the rail line to Gladstone.
The Company is in receipt of seismic data from the holder
of the overlapping coal seam gas tenure. To date the data
reviewed has not identified any up thrust blocks of coal
sufficiently shallow to be amenable to open cut mining.
STANMORE COAL ANNUAL REPORT 201335
ANNUAL REPORT 2013 STANMORE COAL36
Outlook
Despite the recent coal market weakness, Stanmore
Coal believes that the long term fundamentals of
both the coking and thermal coal markets are strong.
Whilst thermal coal prices remain weak at the time
of writing, coking coal prices have started to rebound
from their recent lows. Australian coal will continue to
play a key role in providing a cost effective raw material
for energy and steel production in the Asian market.
Supplying clean, low emission Australian coal into
Asia helps lift the living standards and public health
outcomes for millions of people in neighbouring
countries.
The Company’s diversified portfolio of development
and exploration projects puts it in a strong position as
coal markets inevitably recover from the current down
cycle. The downturn in the commodity cycle also
presents an excellent opportunity to reduce the capital
and operating costs of the Company’s projects and to
prudently expand the business within an environment
of realistic asset prices.
To this end, the Company is in the process of undertaking
a comprehensive review of the capital cost estimates
for both Belview and The Range and believes that
material capital savings can be achieved through
value engineering, improved contractor pricing and
the selective application of off-balance sheet finance.
Reducing project capital costs to the lowest possible level
will improve the value of the Company’s projects when
attracting strategic partners to assist with procuring
construction funding.
In light of current market conditions, the Company will
restrict its expenditure to exploration and development
activities to projects which demonstrate strong
economics. The Company is also in the process of further
rationalising its already low overhead cost base to ensure
it preserves its cash reserves whilst remaining sufficiently
resourced to respond to opportunities and react as
market conditions improve.
We believe that as other organisations seek to dispose
of non-core assets in the near future, opportunities
will arise to enhance the Company’s existing Projects
and accelerate the Company’s timetable to production.
The Company aims to capitalise on these opportunities
through transaction structures which limit the need for
upfront capital or will identify new sources of capital to
finance these transactions. Stanmore Coal and its team
have a strong history of identifying and capitalising on
opportunities with a limited capital base.
History reflects that many successful new coal projects
and companies are built in difficult market conditions
when large resource company strategies are driven by
short term shareholder expectations. Stanmore Coal
remains committed to delivering its Projects at a low
capital cost and implementing a low cost, highly efficient
operating model.
The Company remains well funded relative to its peers
and has no material financial commitments or take
or pay obligations with respect to rail or port access.
Stanmore Coal has significant flexibility in respect of the
timing of delivering its Projects and introducing strategic
project partners. As market conditions continue to remain
volatile, the Company will maintain a disciplined approach
in order to protect shareholder value and best position
Stanmore Coal to emerge strongly from the current
downturn.
Managing risk
Exploration and evaluation for coal generally involves
a degree of risk as it is inherently uncertain as to
whether capital invested will generate an acceptable
return within a predefined investment horizon.
However the value created for investors through the
successful advancement of the Company’s exploration
assets along the value curve can be substantial. Certain
risks can be mitigated by the Company using safeguards
and appropriate systems, and implementing specific
management actions. However, some risks
may be outside the control of Stanmore Coal and not
capable of mitigation. Recognising the nature of the
Company’s activities, the Board of Directors applies
appropriate governance practices to identify and
address key risks to the business, whilst at the
same time encouraging management to exercise
its entrepreneurial capabilities in delivering the
businesses objectives.
Safety
Safety is of critical importance in the planning,
organisation and execution of Stanmore Coal’s
exploration and development activities. Stanmore Coal
is committed to providing and maintaining a working
environment in which its employees are not exposed to
hazards that will jeopardise an employee’s health and
safety, or the health and safety of others associated with
our business.
Stanmore Coal recognise that safety is both an individual
and shared responsibility of all employees, contractors
and other persons involved with the operation of the
organisation. The Company has a comprehensive Safety
and Health Management system which is designed to
minimise the risk of an uncontrolled safety and health
event and to continuously improving safety culture within
the organisation.
STANMORE COAL ANNUAL REPORT 201337
Regulatory risk
The introduction of the MRRT, Carbon Tax and increased
State Government royalties have adversely impacted
Australia’s global competitiveness and reduced the
attractiveness of Australian coal projects to foreign
investors. The Company has little influence over the
direction and development of government policy.
However, Stanmore Coal’s view is that coal will continue
to play an important role in the global energy mix as part
of sustaining global growth through efficient electricity
generation and steel production. Superior coal quality and
proximity to Asian export markets will continue to make
Queensland coal projects globally competitive.
Forecasting coal prices and foreign exchange rates
Stanmore Coal’s possible future revenues streams
are likely to be linked to export coal prices which are
typically denominated in US$. As the Company is in
the development phase, assumptions regarding future
commodity prices and foreign exchange rates have
a significant influence on the economic viability of
proposed mining operations. During the year ended
30 June 2013, spot prices of thermal and metallurgical
coal materially declined as a result of increased global
supply and lower growth in demand as a consequence of
a contraction in industrial activity, particularly in China.
Whilst it is inherently difficult to reliably predict future
coal prices, Stanmore Coal believes that the long term
supply and demand outlook for high quality thermal and
metallurgical coal is strong and consequently commodity
prices will recover over time. The Company is also of
the view that the recent strong trading of the Australian
dollar at or above parity with the US dollar will not persist
over the long term and Australian dollar revenues will be
positively impacted as the currency reverts to levels close
to the long term historical trend.
In conducting feasibility analysis, the Company applies a
conservative approach in respect of forecasting long term
coal prices and foreign exchange rates, in most cases
adopting broker consensus forecasts.
Identifying and estimating resources
and reserves
The future success of the Company will depend on its
ability to develop coal reserves that are economically
recoverable. Market price fluctuations in the price of
coal, as well as increased production costs or reduced
recovery rates may impact original assessments of coal
reserves and resources. The mining of coal involves
a degree of risk, including that the coal mined may
be of a different quality, tonnage or strip ratio from
that originally estimated. Stanmore Coal undertakes
extensive exploration and coal quality testing prior to
establishing JORC compliant resource and reserve
estimates and to support mining feasibility studies.
The Company engages external experts to assist with
the evaluation of exploration results and relies on third
party competent persons to prepare JORC resource
statements. Economic feasibility modelling of coal
deposits is conducted in conjunction with third party
experts, the results of which are usually subject to
independent third party peer review.
Access to capital
Stanmore Coal’s ability to effectively implement its
business strategy is dependent on the ability to raise
additional capital to finance exploration and development
activities. There can be no assurance that any such equity
or debt funding will be available to the Company on
favourable terms. If adequate funds are not available on
acceptable terms, the Company may not be able to take
advantage of opportunities or progress the development
of its existing assets. At 30 June 2013, the Company
remains well funded with cash reserves expected to be
sufficient to meet the business’s operating costs for at
least the next two years. The Company has no material
financial commitments or take or pay obligations with
respect to rail or port access.
Minimising regulatory and land access risk
The Company’s operations and Projects are subject
to State and Federal laws and regulation regarding
environmental hazards. These laws and regulations
set various standards regulating certain aspects of
health and environmental quality, provide for penalties
and other liabilities for the violation of such standards
and establish, in certain circumstances, obligations to
remediate current and former facilities and locations
where operations are or were conducted. Stanmore Coal
minimises these risks by conducting its activities in an
environmentally responsible manner, in accordance with
applicable laws and regulations and where possible, by
carrying appropriate insurance coverage. The Company
engages experienced consultants and other technical
advisors to provide expert advice where necessary.
The ability to secure and undertake exploration and
development activities within prospective areas is
also reliant upon satisfactory resolution of native title
and management of overlapping tenure. To address
this risk, the Company develops strong, long term
effective relationships with landholders, with a focus on
developing mutually acceptable access arrangements.
The Company takes appropriate legal and technical
advice to ensure it manages its compliance obligations
appropriately.
ANNUAL REPORT 2013 STANMORE COAL38
REMUNERATION
REPORT
(AUDITED)
This report details the nature and amount of remuneration for each Director of Stanmore Coal Limited, and for the
Company’s key management personnel (“KMP”). KMP are defined as those persons who have the authority and
responsibility for planning, directing and controlling the activities of the Company. The Company’s KMP during the year were:
Details of key management personnel
Directors
Neville Sneddon
Nicholas Jorss
Andrew Martin
Stephen Bizzell
Viv Forbes
Chris McAuliffe
Senior Management
Doug McAlpine
Vaughan Wishart
Michael McKee
Wesley Nichols
Non-Executive Chairman
Managing Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director (appointed 17 July 2012)
Chief Financial Officer and Joint Company Secretary
General Manager – Project Development
General Manager – Operations
General Manager – Exploration (ceased employment 24 May 2013)
Stanmore Coal’s business strategy of becoming a coal
producer can only be achieved by identifying and retaining
high calibre employees with appropriate experience
and capability. Developing an appropriate compensation
strategy for the Company’s employees is a key factor
in ensuring employees are engaged and motivated to
improve the Company’s performance over the long term.
The Board’s intention is to maximise stakeholder benefit
from the retention of a high quality Board and Executive
Team without creating an undue cost burden for the
Company.
The Board regularly reviews the appropriateness
of employees’ fixed compensation in light of the
Company’s cost structure and the practices of
its peers. On a comparative basis to the previous
financial year, base remuneration for FY13 increased
as a result of certain employees working for a full
year and changes to base remuneration arrangements
which were agreed at the time employees were
engaged. The Board recognises that in light of current
market conditions the Company’s overhead costs
(including remuneration) must be controlled and
consequently has recently implemented the
following measures:
• reduced headcount across the business, including
within the executive team;
• no further increase to employee base remuneration
arrangements until market conditions substantially
improve; and
• a greater focus on the structure of at-risk compensation
to ensure employee behaviour is appropriately aligned
with enhancing shareholder value.
In the prior year, the Board acknowledged that as the
Company developed and moved into the development
and operating phases for its key assets, a more
comprehensive, structured and transparent approach
to remunerating its employees was required. As a
result, the non-executive Directors took advice from an
independent remuneration consultant regarding the
structure of remuneration plans and the terms on which
incentives are offered to improve the alignment between
company performance and executive remuneration
outcomes. This advice assisted the Board in developing a
remuneration framework which satisfies market practice
around remuneration governance for public companies
and strikes an appropriate balance between fixed and
at-risk compensation for its employees. Shareholders
approved the new scheme at the EGM held on 10 October
2012, which provided that the maximum entitlement an
employee can earn is determined by reference to their
seniority and strategic contribution to the business.
The shareholder approved remuneration arrangements
include tiered participation in a Short Term Incentive
(“STI”) scheme, the Stanmore Coal Director and
Employee Share Plan (Share Plan), a Long Term Incentive
(“LTI”) scheme and the Stanmore Coal Director and
Employee Incentive Plan (Incentive Plan).
STANMORE COAL ANNUAL REPORT 201339
Fixed remuneration
Managing Director and senior management
remuneration
The Consolidated Entity aims to reward the Managing
Director and senior management with a base level of
remuneration which is both appropriate to the position
and competitive in the market. Fixed remuneration is
reviewed annually by the Remuneration Committee
and the Board. The Managing Director reviews all
senior management and employee performance and
remuneration and then makes recommendations to the
Remuneration Committee. The Remuneration Committee
reviews the Managing Director’s performance and
remuneration.
The process consists of a review of Company-wide
and individual performance, relevant comparative
remuneration in the market and internal, and where
appropriate, external advice on policies and practices.
Non-executive Director fixed remuneration
The Board seeks to set aggregate remuneration at a level
which provides the Company with the ability to attract and
retain Directors of the highest calibre, whilst incurring a
cost which is acceptable to shareholders.
The Constitution of Stanmore Coal Limited and the
ASX Listing Rules specify that the non-executive
Directors are entitled to remuneration as determined
by the Consolidated Entity in a general meeting to
be apportioned among them in such manner as the
Directors agree and, in default of agreement, equally. The
maximum aggregate remuneration currently determined
by Stanmore Coal Limited is $350,000 per annum.
Additionally, non-executive Directors are also entitled
to be reimbursed for indirect expenses associated with
execution of their responsibilities (for example travel
costs). Total non-executive Director remuneration for
FY13 was $218,886.
If a non-executive Director performs extra services, which
in the opinion of the Directors are outside the scope of the
ordinary duties of the Director, the Consolidated Entity
may remunerate that Director by payment of a fixed sum
determined by the Directors in addition to or instead
of the remuneration referred to above. However, no
payment can be made if the effect would be to exceed the
maximum aggregate amount payable to non-executive
Directors. A non-executive Director is entitled to be paid
travel and other expenses properly incurred by them in
attending Directors’ or general meetings of Stanmore
Coal Limited or otherwise in connection with the business
of the Consolidated Entity.
The fixed remuneration of non-executive Directors for the
year ending 30 June 2013 is detailed in this Remuneration
Report.
Short term and long term incentive
plan structures
The Board considers that the use of STI and LTI are a
reasonable means of remunerating employees, on the
basis that they:
• encourage share ownership and align, in part,
remuneration with the future growth and prospects of
the Company;
• encourage employees to drive toward the realisation of
shareholder value;
• provide flexibility to the Company to actively manage
the way in which it remunerates and incentivises
employees;
• preserve the Company’s cash resources; and
• contribute toward the attraction and retention of
skilled talent in a competitive employment market.
The tiered structure for remunerating employees through
the shareholder approved STI and LTI and the relevant
remuneration outcomes for the year ended 30 June 2013
are illustrated in the following tables:
ANNUAL REPORT 2013 STANMORE COAL40
Summary of the key terms of the Short Term Incentive Plan
Plan overview
The Board may, from time to time offer to issue Shares as part of its short term incentive
strategy to an eligible employee under the Share Plan. The STI amount for each respective
employee will be assessed and provided on a calendar-year basis with respect to a performance
evaluation and other corporate key performance indicators (KPIs). Payment of the assessed STI
amount may be made as a combination of shares and cash.
Tiered structure
The maximum STI entitlement is calculated by reference to the employee’s seniority in the
business as set out below. To limit the short term financial impact of scheme implementation,
the Board has halved employees’ maximum incentive entitlements in the first year.
• Senior Management – up to 30% of base remuneration (first year 15%)
• Managers – up to 20% of base remuneration (first year 10%)
• Staff – up to 15% of base remuneration (first year 7.5%)
Weighting of criteria Each employee is assessed against personal performance and corporate KPIs in accordance with
the following framework:
Component
Weighting
Discussion
Safety
10–25%
Higher for senior
management
Total Shareholder
Return
10–25%
Higher for senior
management
Payable in the event there are no fatalities and the
Company’s total reportable injury frequency rate (TRIFR)
is maintained in the STI Performance Period at or below
coal industry standards as reported by the Department
of Mines and Energy.
The total shareholder return component is payable
on a sliding scale by reference to the Company’s TSR
performance in the STI Performance Period compared
with the Company’s Competitor Group (a group of 8–10
peers in the resources sector) as follows:
Company TSR position
relative to Competitor Group
Percentage of TSR
component earned
Equal to or greater than
80th percentile
From the 67th up to the
80th percentile
From the 50th up to the
67th percentile
100%
50%
20%
Individual
20–50%
Lower for senior
management
Satisfaction of individual KPIs agreed with the
Managing Director or in the case of the Managing
Director, agreed with the Chairman on an annual basis.
Discretionary
30%
Satisfaction to be determined by the discretion of the
Chairman and Managing Director, by reference to both
individual and the Company’s general performance for
the STI Performance Period.
Summary of the key terms of the Long Term Incentive Plan
Plan overview
The Board may, from time to time, offer to issue incentives as part of its long term incentive
strategy to an eligible employee under the Incentive Plan. Each year, the Board can elect
whether incentives will be issued in the form of options or performance rights. The Board’s long
term intention under the plan is to annually issue premium priced options to employees for nil
consideration, exercisable at a certain future date.
STANMORE COAL ANNUAL REPORT 201341
Summary of the key terms of the Long Term Incentive Plan
Tiered structure
The maximum LTI entitlement is calculated by reference to the employee’s seniority in the business
as set out below. To limit the short term financial impact of scheme implementation, the Board has
halved employees’ maximum incentive entitlements in the first year.
• Senior Management up to 20% of base remuneration (first year 10%)
• Managers up to 15% of base remuneration (first year 7.5%)
• Staff up to 10% of base remuneration (first year 5%)
Other information
The Board’s intention is to issue options that are exercisable at a 34% premium to the prevailing
Stanmore share price prior to the issue that can be exercised within a reasonable time period
from the issue date.
Incentive outcomes for FY13 and FY14
The below table illustrates the remuneration outcomes for both the STI and LTI schemes in the first year of operation
(the year ended 30 June 2013).
Incentive
Award outcome
Discussion
Calendar 2012 – STI
592,162 shares issued to 10 employees for
nil consideration ($121,393 accounting value
on date of issue)
• The Board reduced the maximum entitlement to
STI by 50% in the first year of the scheme
• No STIs were issued to Directors other than the
Tier
Average % award
of maximum
Managing Director (in accordance with shareholder
approval)
FY 2013 – LTI
Senior management
Managers
Staff
30%
36%
36%
• No amount was paid in respect of the total
shareholder return metric given the poor share
price performance over the 12 months ending
December 2012
• The full amount was awarded in respect of the
safety component
1,356,000 options were issued to 10
employees with an exercise price of
$0.48, vesting 30 June 2013 and expiring
30 June 2014.
• The Board reduced the maximum entitlement
to STI by 50% in the first year of the scheme for
those employees who had been awarded options
as part of their employment contracts
Tier
Average % award
of maximum
Senior management
Managers
Staff
50%
50%
50%
2,350,000 performance rights were
issued for nil consideration to six
employees. These rights vest in two
50% tranches contingent on milestones
relating to The Range Project.
• No LTIs were issued to Directors other than
the Managing Director (in accordance with
shareholder approval)
The Board awarded performance rights to key
members of the management team who were
instrumental in progressing The Range Project to
production. 50% of the rights vest on successful
ML grant, with the balance vesting upon achieving
an annualised production rate of 5 Mtpa. Neither
of these criteria had been met at the date of this
report.
At the time of this award, The Range Project was
the Company’s most advanced Project and primary
focus.
ANNUAL REPORT 2013 STANMORE COAL42
The Company does not intend to issue more than an
aggregate of 5% of its share capital, from time to time,
under the plans. The Share Plan and Incentive Plan each
aim to more closely align rewards for performance with
the achievement of the Company’s growth and strategic
objectives for financial year 2013 and beyond.
Fees were paid to an independent remuneration consultant
in the prior year in respect of scheme design and
implementation. No amounts were paid to remuneration
consultants in the year ended 30 June 2013.
Relationship between remuneration
and Consolidated Entity performance
During the financial year, the Consolidated Entity has
generated accounting losses as its principal activity was
the exploration and development of prospective coal
assets within Queensland’s Bowen and Surat Basins.
On 9 December 2009, official quotation of Stanmore Coal
Limited’s shares on the ASX commenced at a price of
$0.20. The share price at the end of the financial year
ended 30 June 2013 was $0.115 (2012: $0.36). Given
the poor performance of the share price there was no
award made under the STI scheme with respect to total
shareholder returns for the year ended 30 June 2013.
There were no dividends paid during the year ended
30 June 2013.
As the Consolidated Entity is still in the exploration and
early development stage, there is not necessarily a direct
relationship between the Consolidated Entity’s financial
performance, improvement to shareholder wealth and
changes to the Company’s remuneration arrangement.
Share prices are subject to the influence of coal prices
and market sentiment toward the sector, and as such
increases or decreases may occur quite independent
of executive performance or remuneration. For the
current year, the quantum of employee remuneration
has been determined with reference to market practice
and the achievement of individual performance criteria
established between the Board, the Managing Director
and the individual employee.
Employment contracts and
consultancy agreements
It is the Board’s policy that employment contracts
or consultancy agreements are entered into with all
Executive Directors, executives and employees.
Contracts do not provide for pre-determining
compensation values or method of payment. Rather
the amount of compensation is determined by the
Remuneration Committee and the Board in accordance
with the Company’s remuneration policies.
The current consultancy agreement with the Joint
Company Secretary has a three month notice period. All
other employment contracts or consultancy agreements
have three months (or less) notice periods. No current
employment contracts contain early termination
clauses. All Non-Executive Directors have received
letters outlining the key terms of their appointment.
The contracts have no specified duration.
Key management personnel are entitled to their statutory
entitlements of accrued annual leave and long service
leave together with any superannuation on termination.
Other termination payments may be negotiated on a case
by case basis.
Managing Director
Stanmore Coal Limited has an Employment Contract
with Mr Nick Jorss for the position of Managing Director
which commenced on 1 January 2012. Mr Jorss’ base
remuneration is $380,000 per annum. Mr Jorss is
eligible to participate in the new STI/LTI scheme which
commenced during the year pursuant to shareholder
approval. Detail of instruments issued under the new
schemes is provided on page 42 of this report. These
include the following unlisted securities which were held
at the date of this report:
• 200,000 unlisted options exercisable at 48 cents,
vesting 30 June 2013 and expiring on 30 June 2014.
These securities were granted as an LTI to Mr Jorss on
12 October 2012 following shareholder approval at the
EGM 10 October 2012.
• On 26 October 2012 500,000 performance rights were
granted following shareholder approval at the EGM
10 October 2012. 50% of these rights vest upon the
grant of the Mining Lease for The Range Project and
the balance of 50% vest upon achieving an annualised
production rate of 5 Mtpa of product coal at The Range
Project. At the date of this report none of these rights
have vested.
Senior Management
Chief Financial Officer
Stanmore Coal Limited has an Employment Contract
with Mr Douglas McAlpine for the position of Chief
Financial Officer which commenced on 19 September
2011. Mr McAlpine receives a salary of $336,000 per
annum. The employment contract may be terminated by
either party by providing three months’ written notice, or
STANMORE COAL ANNUAL REPORT 201343
immediately in the case of gross negligence or serious
misconduct.
Under the terms of the contract, on 19 December 2011,
Mr McAlpine was issued 30,000 ordinary shares as a
sign-on bonus and on 30 September 2011 was granted
1,800,000 unlisted options, expiring 31 March 2016,
exercisable as follows:
• 450,000 at $1.75 (vesting 30 September 2012)
• 450,000 at $2.00 (vesting 30 September 2013)
• 450,000 at $2.25 (vesting 30 September 2014)
• 450,000 at $2.50 (vesting 30 September 2015).
Mr McAlpine is eligible to participate in the new STI/LTI
scheme which commenced during the year pursuant to
shareholder approval. Detail of instruments issued under
the new schemes is provided on page 42 of this report.
These include the following unlisted securities which
were held at the date of this report:
• On 26 October, 2012 450,000 performance rights
were granted. 50% of these rights vest upon the grant
of the Mining Lease for The Range Project and the
balance of 50% vest upon achieving an annualised
production rate of 5 Mtpa of product coal at The
Range Project. At the date of this report none of
these rights have vested.
• Mr McAlpine also holds 163,000 unlisted options
exercisable at 48 cents, vesting 30 June 2013 and
expiring on 30 June 2014. These securities were
granted to Mr McAlpine following shareholder approval
at the EGM 10 October 2012.
General Manager – Operations
Stanmore Coal Limited has an Employment Contract with
Mr Michael McKee for the position of General Manager
– Operations (formerly the Operations Manager) which
commenced on 1 February 2011. Mr McKee receives a
salary of $353,200 per annum. The employment contract
may be terminated by either party by providing three
months’ written notice, or immediately in the case of
gross negligence or serious misconduct.
Under the terms of the contract, on 16 March 2011,
Mr McKee was issued 20,000 ordinary shares and on
27 April 2011 granted 2,000,000 unlisted options,
expiring 31 December 2015, exercisable as follows:
• 500,000 at $1.75 (vesting 27 April 2012)
• 500,000 at $2.00 (vesting 27 April 2013)
• 500,000 at $2.25 (vesting 27 April 2014)
• 500,000 at $2.50 (vesting 27 April 2015).
On 12 October 2012 Mr McKee was issued 250,000
ordinary shares upon being promoted to the role of
General Manager – Operations.
Mr McKee is eligible to participate in the new STI/LTI
scheme which commenced during the year pursuant to
shareholder approval. Detail of instruments issued under
the new schemes is provided on page 42 of this report.
These include the following unlisted securities which
were held at the date of this report:
• On 26 October 2012, 500,000 performance rights
were granted to Mr McKee. 50% of these rights vest
upon the grant of the Mining Lease for The Range
Project and the balance of 50% vest upon achieving an
annualised production rate of 5 Mtpa of product coal
at The Range Project. At the date of this report none of
these rights have vested.
• Mr McKee also holds 175,000 unlisted options
exercisable at 48 cents, vesting 30 June 2013 and
expiring on 30 June 2014. These securities were
granted to Mr McKee following shareholder approval
at the EGM 10 October 2012.
General Manager – Project Development
Stanmore Coal Limited has a consulting agreement with
West End Consulting Pty Ltd (West End) and Vaughan
Wishart, the General Manager – Project Development
(previously Project Development Manager). The Agreement
commenced on 15 October 2009 and was extended
during calendar 2011 for an additional two years, unless
terminated earlier in accordance with the provisions of
the agreement. Under the terms and conditions of the
agreement, West End has agreed to provide certain general
management services to Stanmore Coal Limited.
West End receives a base fee for provision of the services
of $6,500 per week (exclusive of GST) on the basis of
performance of five full days per week. The Consolidated
Entity is also obliged to reimburse West End for all
reasonable and necessary expenses incurred by West
End in providing services pursuant to the West End
Agreement.
Both Stanmore Coal Limited and West End are entitled
to terminate the agreement upon giving not less than
two months’ written notice. In the event that West End
is in breach of the agreement, Stanmore Coal Limited
may terminate the agreement immediately on written
notice. In addition, Stanmore Coal Limited is entitled to
terminate the agreement upon the happening of various
events in respect of West End’s solvency or other conduct
of West End or Vaughan Wishart.
Mr Wishart is eligible to participate in the new STI/LTI
scheme which commenced during the year pursuant to
ANNUAL REPORT 2013 STANMORE COAL44
shareholder approval. Detail of instruments issued under
the new schemes is provided on page 42 of this report.
These include the following unlisted securities which
were held at the date of this report:
• On 26 October 2012, 400,000 performance rights
were granted to Mr Wishart. 50% of these rights vest
upon the grant of the Mining Lease for The Range
Project and the balance of 50% vest upon achieving an
annualised production rate of 5 Mtpa of product coal
at The Range Project. At the date of this report none of
these rights have vested.
• Mr Wishart also holds 150,000 unlisted options
exercisable at 48 cents, vesting 30 June 2013 and
expiring on 30 June 2014. These securities were
granted to Mr Wishart following shareholder approval
at the EGM 10 October 2012.
General Manager Exploration
Stanmore Coal Limited had an Employment Contract
with Mr Wesley Nichols for the position of General
Manager Exploration which commenced on 23 June 2011.
Mr Nichols received a salary of $250,000 per annum.
Following a review by the Board on the exploration plans
for the Company it was determined that the role of
General Manager – Exploration was no longer required.
On 24 May 2013 Mr Nichols was made redundant and
received a negotiated payout post year end.
As a consequence of his termination and in accordance
with the Company policy, all unexercised option
entitlements are cancelled three months after departing
the Company. No options were exercised by Mr Nichols
and as a result the following options were cancelled:
• 400,000 at $1.75 (vesting 4 July 2012)
• 400,000 at $2.00 (vesting 4 July 2013)
• 400,000 at $2.25 (vesting 4 July 2014)
• 150,000 @ $0.48 (vesting 30 June 2013).
STANMORE COAL ANNUAL REPORT 201345
Remuneration details
The following table details the components of remuneration for each key management person of the Company, in respect
of the financial years ending 30 June 2012 and 30 June 2013.
2013
Short-term benefits
Post-
employment
Termi-
nation
benefits
$
Share-based
payments
Total
$
%
Remuneration
as share based
payments
%
Performance-
related
remuneration
Salary
& fees
$
Cash
bonus
$
Super-
annuation
$
Other
short-
term
benefits
$
Equity-
settled
(options)
$
Equity-
settled
(shares)
$
Directors
Neville
Sneddon
Nicholas
Jorss
Andrew
Martin
Stephen
Bizzell
Viv
Forbes
Chris
McAuliffe#
60,000
-
380,000 13,781
40,000
40,000
40,000
37,886
-
-
-
-
Total
597,886 13,781
Senior Management
Doug
McAlpine
Vaughan
Wishart
Michael
McKee
Wesley
Nichols*
327,758 13,272
310,050 11,382
353,200 14,474
221,153
9,630
Total
1,212,161 48,758
-
-
-
-
-
-
-
-
-
-
-
-
-
16,470
-
-
-
-
16,470
16,470
-
16,470
-
-
-
-
-
-
-
-
-
-
-
-
60,000
55,140
20,671
486,062
-
-
-
-
-
-
-
-
40,000
40,000
40,000
37,886
55,140
20,671
703,948
156,545
19,958
534,003
43,432
17,129
381,993
275,045
96,645
755,834
16,470
27,114
188,851
12,928
476,146
49,410
27,114
663,873 146,660 2,147,976
0%
16%
0%
0%
0%
0%
33%
16%
49%
42%
0%
18%
0%
0%
0%
0%
36%
19%
51%
44%
#Chris McAuliffe was appointed to the Board on 17 July 2012.
*Wesley Nichols ceased employment with the Company on 24 May 2013 and is not considered to be key management personnel following that date.
ANNUAL REPORT 2013 STANMORE COAL46
2012
Short-term benefits
Post-
employment
Share-based
payments
Termi-
nation
benefits
$
%
Remuneration
as share based
payments
%
Performance-
related
remuneration
Salary
& fees
$
Cash
bonus
$
Super-
annuation
$
Other
short-
term
benefits
$
Equity-
settled
(options)
$
Equity-
settled
(shares)
$
Total
$
Directors
Neville
Sneddon
Nicholas
Jorss
Andrew
Martin
Stephen
Bizzell
Viv
Forbes
Total
60,000
390,447
35,046
40,000
40,000
565,493
Senior Management
Doug
McAlpine^
Vaughan
Wishart
Michael
McKee
Wesley
Nichols
Duncan
Cornish*
251,077
292,369
271,600
250,000
73,333
Total
1,138,379
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,888
4,954
-
-
12,842
12,467
-
15,531
15,531
-
43,529
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
60,000
398,335
40,000
40,000
40,000
578,335
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
136,629
35,277
435,450
39.5%
3.1%
-
45,000
337,369
13.3%
13.3%
529,996 129,916
947,043
69.7%
324,402
48,315
638,248
58.2%
-
-
73,333
0%
5.1%
3.0%
0%
991,027 258,508 2,431,443
^Doug McAlpine commenced employment on 19 September 2011.
*Duncan Cornish stepped down as Chief Financial Officer on 19 September 2011 and is not considered to be key management personnel following that date.
Cash bonuses, performance-related bonuses
and share-based payments
performance-related bonuses in cash during the year
ended 30 June 2012.
Under the Director and Employee Share Plan and
Director and Employee Incentive Plan approved by
shareholders at the 12 October 2012 Extraordinary
General Meeting, employees and Executive Directors
of the Company may be eligible to receive a
combination of cash, shares and long term options
or performance rights to more closely align rewards
for performance with the achievement of Company
objectives. Pursuant to shareholder approval, the
Share Plan and Incentive plan were first applied in the
financial year ending 30 June 2013. Key management
personnel and other executives were not paid
Details of cash and share-based payments to key
management personnel and other executives during the
year ended 30 June 2013 are detailed in the table below.
Premium-priced options were issued in October 2012 in
respect of long term incentives for employees based on
their level of seniority and strategic contribution. An issue
of shares and payment of cash was made on 11 March 2013
in relation to the short term incentives for each employee
applicable to the calendar year ended 31 December 2012. An
issue of performance rights was made on 25 October 2012
for each applicable employee in relation to development and
production milestones for The Range Project.
STANMORE COAL ANNUAL REPORT 201347
Grant
value
(per
instru-
ment)
$#
%
vested
/paid
during
year
%
expired
during
year
%
forfeited
during
year
%
remaining
as
unvested
Expiry
date
0.068
0.205
n/a
0.30
0.068
0.205
n/a
0.30
0.068
0.205
0%
27%
27%
0%
0%
33%
33%
0%
0%
32%
0.30
100%
n/a
0.30
0.068
0.205
n/a
0.30
0.068
0.205
n/a
0.30
32%
0%
0%
29%
29%
0%
0%
30%
30%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
73%
73%
0%
0%
67%
67%
0%
0%
68%
0%
68%
0%
0%
71%
71%
0%
0%
70%
70%
0%
100%
30/6/14
0%
0%
n/a
n/a
100%
30/6/20
100%
30/6/14
0%
0%
n/a
n/a
100%
30/6/20
100%
30/6/14
0%
0%
0%
n/a
n/a
n/a
100%
30/6/20
100%
30/6/14
0%
0%
n/a
n/a
100%
30/6/20
100%
30/6/14
0%
0%
n/a
n/a
100%
30/6/20
2013
Remuneration
type
Number
Grant
date
Vesting
date
Exercise
price
Consolidated entity key management personnel
W Nichols
W Nichols
W Nichols
W Nichols
Options 150,000 12/10/12
30/6/13
0.48
Shares
63,061
11/3/13
11/3/13
Cash
9,630
11/3/13
Performance
Rights
400,000 12/10/12
n/a
*
n/a
n/a
0
D McAlpine
Options 163,000 12/10/12
30/6/13
0.48
D McAlpine
D McAlpine
Shares
97,358
11/3/13
11/3/13
Cash
13,272
11/3/13
D McAlpine Performance
Rights
450,000 12/10/12
n/a
n/a
0
n/a
*
M McKee
M McKee
M McKee
M McKee
M McKee
N Jorss
N Jorss
N Jorss
N Jorss
V Wishart
V Wishart
V Wishart
V Wishart
Options 175,000 12/10/12
30/6/13
0.48
Shares 105,585
11/3/13
11/3/13
Shares 250,000 12/10/12 12/10/12
Cash
14,474
11/3/13
Performance
Rights
500,000 12/10/12
n/a
*
n/a
n/a
n/a
0
Options 200,000 12/10/12
30/6/13
0.48
Shares 100,835
11/3/13
11/3/13
Cash
13,781
11/3/13
Performance
Rights
500,000 12/10/12
n/a
*
n/a
n/a
0
Options 150,000 12/10/12
30/6/13
0.48
Shares
83,555
11/3/13
11/3/13
Cash
11,382
11/3/13
Performance
Rights
400,000 12/10/12
n/a
*
n/a
n/a
0
#Calculation of value of options granted using the Black-Scholes option pricing model, which takes into account factors such as the option exercise price, the
market price at the date of issue and volatility of the underlying share price and the time to maturity of the option.
*Performance rights vest 50% upon being awarded the Mining Lease at The Range and 50% based on attaining an annualised production rate of
5 Mtpa at The Range.
ANNUAL REPORT 2013 STANMORE COAL48
Details of share-based payments to key management personnel and other executives during the year ended 30 June
2012 are detailed in the table below. A modest amount of shares were awarded to key employees on 23 March 2012 as a
discretionary bonus in recognition for superior performance during the calendar year ended 31 December 2011.
2012
Remuneration
type
Number
Grant
date
Vesting
date
Exercise
price
Grant
value
(per
instru-
ment)
$#
%
vested
/paid
during
year
%
Expired
during
year
%
Forfeited
during
year
%
remaining
as
unvested
Expiry
date
Consolidated entity key management personnel
W Nichols
W Nichols
W Nichols
W Nichols
Options 400,000 20/07/11 04/07/12
$1.75
$0.477
Options 400,000 20/07/11 04/07/13
$2.00
$0.436
Options 400,000 20/07/11 04/07/14
$2.25
$0.401
0%
0%
0%
Shares
25,000 20/07/11
n/a
n/a
$1.160
100%
D McAlpine
Options 450,000 30/09/11 30/09/12
$1.75
$0.214
D McAlpine
Options 450,000 30/09/11 30/09/13
$2.00
$0.191
D McAlpine
Options 450,000 30/09/11 30/09/14
$2.25
$0.171
D McAlpine
Options 450,000 30/09/11 30/09/15
$2.50
$0.155
0%
0%
0%
0%
D McAlpine
Shares
30,000 19/12/11
M McKee
M McKee
Shares
67,606 19/12/11
Shares 106,406 07/02/12
D McAlpine
Shares
17,534 23/03/12
W Nichols
M McKee
V Wishart
Shares
24,763 23/03/12
Shares
61,943 23/03/12
Shares
57,692 23/03/12
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
$0.720
100%
$0.720
100%
$0.930
100%
$0.800
100%
$0.800
100%
$0.800
100%
$0.800
100%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
100% 31/12/15
100% 31/12/15
100% 31/12/15
0%
n/a
100% 31/03/16
100% 31/03/16
100% 31/03/16
100% 31/03/16
0%
0%
0%
0%
0%
0%
0%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
#Calculation of value of options granted using the Black-Scholes option pricing model, which takes into account factors such as the option exercise price, the
market price at the date of issue and volatility of the underlying share price and the time to maturity of the option.
During the year ending 30 June 2013 Mike McKee
was provided with 250,000 ordinary shares for nil
consideration in relation to his promotion to the role of
General Manager Operations.
All options were issued by Stanmore Coal Limited and
entitle the holder to one ordinary share in Stanmore Coal
Limited for each option exercised.
All options granted as part of remuneration for the
years ended 30 June 2013 and 2012 were granted for
nil consideration. Once vested, options can be exercised
at any time up to the expiry date. There is no market
or performance based vesting criteria in respect of
these options.
End of remuneration report
STANMORE COAL ANNUAL REPORT 201349
Indemnification and insurance of
Directors, officers and auditor
Each of the Directors and the Secretaries of Stanmore
Coal Limited have entered into a Deed with Stanmore
Coal Limited whereby Stanmore Coal Limited has
provided certain contractual rights of access to books and
records of Stanmore Coal Limited to those Directors and
Secretary.
Stanmore Coal Limited has insured all of the Directors
of the Consolidated Entity. The contract of insurance
prohibits the disclosure of the nature of the liabilities
covered and amount of the premium paid. The
Corporations Act does not require disclosure of the
information in these circumstances.
Stanmore Coal Limited has not indemnified or insured its
auditor.
Options and performance rights
At the date of this report there were 25,052,000 unissued
ordinary shares under options, 2,350,000 unissued
ordinary shares under performance rights and 13,373,377
unissued ordinary shares under convertibles notes as
follows:
• 3,500,000 unlisted options exercisable at $0.19, on or
before 31 December 2013
• 525,000 unlisted options exercisable at $0.15, on or
before 16 January 2014
• 100,000 unlisted options exercisable at $0.73, on or
before 31 December 2013
• 100,000 unlisted options exercisable at $0.87, on or
before 31 December 2013
• 100,000 unlisted options exercisable at $1.09, on or
before 31 December 2013
• 900,000 unlisted options exercisable at $1.75, on or
before 31 December 2015
• 900,000 unlisted options exercisable at $2.00, on or
before 31 December 2015
• 900,000 unlisted options exercisable at $2.25, on or
before 31 December 2015
• 500,000 unlisted options exercisable at $2.50, on or
before 31 December 2015
• 450,000 unlisted options exercisable at $1.75, on or
before 31 March 2016
• 450,000 unlisted options exercisable at $2.00, on or
before 31 March 2016
• 450,000 unlisted options exercisable at $2.25, on or
before 31 March 2016
• 450,000 unlisted options exercisable at $2.50, on or
before 31 March 2016
• 1,216,000 unlisted options exercisable at $0.48, on or
before 30 June 2014
• 75,000 unlisted options exercisable at $0.25, on or
before 2 April 2015
• 2,766,000 unlisted options exercisable at $0.22, on or
before 4 September 2015
• 11,670,000 unlisted options exercisable at $0.518, on
or before 27 June 2015
• 13,373,377 unlisted convertible notes which can be
converted to ordinary shares not before 27 June 2014
• 2,350,000 unlisted performance rights which vest upon
achieving development and production milestones at
The Range Project. There is no consideration payable
upon vesting.
No option holder, performance right holder or convertible
note holder has any right under the options to participate
in any other share issue of Stanmore Coal Limited or any
other entity.
During the year ended 30 June 2013 there were 1,600,000
fully paid ordinary shares in Stanmore Coal Limited
issued as a result of the exercise of options and nil
fully paid ordinary shares issued as a result of vesting
performance rights.
Changes to capital structure
On 12 October 2012, 292,553 ordinary shares (value
$87,766) were issued to employees of the Company as
part of terms of employment contracts.
On 12 October 2012, 1,216,000 unlisted options were
issued to employees of the Company as part of the LTI
scheme approved by Shareholders at the EGM 10 October
2012. These options have a vesting date of 30 June 2013
and an expiry of 30 June 2014. Employees may convert
their options in a 1 to 1 ratio for ordinary shares of the
Company at a price of $0.48 per option.
On 12 October 2012, 2,350,000 unlisted performance
rights were issued to senior employees of the Company
pursuant to Shareholder approval obtained at the EGM
10 October 2012. The performance rights vest upon the
triggering of certain milestones related to The Range
Project:
• 50% conversion upon grant of Mining Lease
• 50% conversion upon achieving an annualised
production rate of 5 Mtpa for one month.
On 26 October 2012, 20,791,143 ordinary shares were
issued to Greatgroup Investments Limited pursuant to
ANNUAL REPORT 2013 STANMORE COAL50
Shareholder approval obtained at the EGM October 2012.
The shares were priced at $0.675 per security (value
$14,034,021).
On 26 October 2012, 11,670,000 unlisted options were
issued to Credit Suisse AG pursuant to Shareholder
approval obtained at the EGM 10 October 2012. The
options are convertible to ordinary shares of the
Company at a ratio of 1 to 1 at an exercise price of
$0.518 per option. The options have vested and expire
on 27 June 2015.
On 26 October 2012, 13,373,377 unlisted convertible notes
were issued to Greatgroup Investments Limited pursuant
to Shareholder approval obtained at the EGM 10 October
2012. The notes are convertible to ordinary shares of the
Company at a ratio of 1 to 1 at an exercise price of $0.675
per note. The notes cannot be converted prior to 27 June
2014 and have an expiry of 27 June 2015. In addition
the notes can be converted at the election of either the
Company or Greatgroup.
On 26 October 2012, 140,000 unlisted options were
issued to an employee of the Company as part of the
LTI payment for the year commencing 1 July 2012 and
pursuant to Shareholder approval obtained at the EGM
10 October 2012. Prior to 30 June 2013 the employee left
the Company and in accordance with the Incentive Plan
the options have been cancelled.
On 12 November 2012, 5,714,286 ordinary shares (value
$1,314,286) were issued to the vendor as consideration
for the acquisition of EPC 1186.
On 12 November 2012, 20,000 ordinary shares (value
$4,600) were issued pursuant to terms of employment
contracts.
On 26 November, 29 November and 7 December 2012, a
total of 1,600,000 employee options were exercised (value
$308,800 with a strike price of 19.3 cents, resulting in
1,600,000 ordinary shares being issued. 4,750,000 options
(with strike price of 19.3 cents) were not exercised and
expired on 9 December 2012.
On 11 March 2013, 592,162 ordinary shares (value
$121,393) were issued to employees of the Company as
part of the STI payment for the year ending 31 December
2012 and pursuant to Shareholder approval obtained at
the EGM 10 October 2012.
On 3 April 2013, 75,000 unlisted options were issued to
a consultant to the Company as part of the LTI scheme
approved by Shareholders at the EGM 10 October
2012. These options have a vesting date of 2 April 2014
and an expiry of 2 April 2015. Employees may convert
their options in a 1 to 1 ratio for ordinary shares of the
Company at a price of $0.25 per option.
At the date of this report, the Consolidated Entity had
208,469,252 ordinary shares, 25,052,000 unlisted options,
13,373,377 convertible notes and 2,350,000 performance
rights on issue.
After balance date events
Extension to WICET capacity entitlements
The Capacity Commitment Deed executed on 27 June
2012 had an original expiry date of 27 June 2013.
Subsequent to year end, the WEXP1 producers, including
Stanmore Coal, negotiated a one year extension to the
CCD which gives the producers the option to accelerate
the Project or finalise a longer term framework for
protecting their priority rights to future expansions of the
terminal. Stanmore’s contractual rights under the CCD
remain unchanged. As part of the extension Stanmore
Coal also negotiated a reduction to its bonding and
expenditure commitments associated with WEXP1.
Voluntary prepayment and cancellation
of Credit Suisse Facility
Post 30 June 2013, the Company and Credit Suisse AG
agreed to a voluntary prepayment of the facility. The net
outstanding amount of $3.2 million was repaid to Credit
Suisse AG in July 2013 and Credit Suisse AG has released
its security position over the assets and undertakings of
the Company.
There have been no other events since 30 June 2013 that
impact upon the financial report as at 30 June 2013.
Dividends paid or recommended
There were no dividends paid or recommended during the
financial year.
Environmental issues
The Consolidated Entity is subject to environmental
regulation in relation to its exploration activities. There
are no material matters that have arisen in relation to
environmental issues up to the date of this report.
Proceedings on behalf of the
consolidated entity
No person has applied for leave of Court to bring
proceedings on behalf of the Consolidated Entity or
intervene in any proceedings to which the Consolidated
STANMORE COAL ANNUAL REPORT 201351
Auditor’s independence declaration
The Auditor’s Independence Declaration forms part of the
Directors’ Report and can be found on page 52.
Corporate governance
In recognising the need for the highest standards of
corporate behaviour and accountability, the Directors
of Stanmore Coal Limited support and have adhered to
the principles of corporate governance. Stanmore Coal
Limited’s Corporate Governance Statement can be found
on page 58.
This report is signed in accordance with a resolution of
the Directors.
Nicholas Jorss
Managing Director
Brisbane
24 September 2013
Entity is a party for the purposes of taking responsibility
on behalf of the Consolidated Entity for all or any part of
those proceedings.
The Consolidated Entity was not a party to any such
proceedings during the year.
Future developments, prospects
and business strategies
Other than the matters discussed in the Operating and
Financial Review there are no other developments of
which the Directors are aware which could be expected to
affect the results of the Consolidated Entity’s operations
in subsequent financial years, other than information
which the Directors believe comment on, or disclosure of,
would prejudice the interests of the Consolidated Entity.
Non-audit services
The following non-audit services were provided by the
entity’s auditor BDO Audit Pty Ltd. The Directors are
satisfied that the provision of non-audit services is
compatible with the general standard of independence for
auditors imposed by the Corporations Act. The nature and
scope of each type of non-audit service provided means
that auditor independence was not compromised.
BDO Audit Pty Ltd received the following amounts for the
provision of non-audit services:
Tax services: $18,625
ANNUAL REPORT 2013 STANMORE COAL52
AUDITOR’S INDEPENDENCE
DECLARATION
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Level 10, 12 Creek St
Brisbane QLD 4000,
GPO Box 457 Brisbane QLD 4001
Australia
DECLARATION
OF
INDEPENDENCE
BY
DAMIAN
WRIGHT
TO
THE
DIRECTORS
OF
STANMORE
COAL
LIMITED
As
lead
auditor
of
Stanmore
Coal
Limited
for
the
year
ended
30
June
2013,
I
declare
that,
to
the
best
of
my
knowledge
and
belief,
there
have
been
no
contraventions
of:
(cid:127)
(cid:127)
the
auditor
independence
requirements
of
the
Corporations
Act
2001
in
relation
to
the
audit;
and
any
applicable
code
of
professional
conduct
in
relation
to
the
audit.
This
declaration
is
in
respect
of
Stanmore
Coal
Limited
and
the
entities
it
controlled
during
the
period.
D
P
WRIGHT
Director
BDO
Audit
Pty
Ltd
Brisbane,
24
September
2013
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms.
STANMORE COAL ANNUAL REPORT 2013
ANNUAL REPORT 2013 STANMORE COAL
53
Financial
Report
54
SHAREHOLDER
INFORMATION
Additional information required by the Australian Securities Exchange Ltd and not shown elsewhere in this report is as
follows. The information is current as at 31 August 2013.
(a) Distribution of equity securities
The number of holders, by size of holding, in each class of security is:
Ordinary
shares
Unlisted options
($0.19 @ 31/12/13)
Unlisted options
($0.15 @ 16/1/14)
Unlisted options
($0.73 @ 31/12/13)
Number
of holders
Number
of shares
Number
of holders
Number of
options
Number
of holders
Number
of options
Number
of holders
Number
of options
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
159
361
254
859
57,220
1,093,971
1,997,738
29,470,645
100,001 and over
162 175,849,678
Total
1,795 208,469,252
-
-
-
-
3
3
-
-
-
-
3,500,000
3,500,000
-
-
-
1
1
1
-
-
-
-
525,000
525,000
-
-
-
1
-
1
-
-
-
100,000
-
100,000
Unlisted options
($0.87 @ 31/12/13)
Unlisted options
($1.09 @ 31/12/13)
Unlisted options
($1.75 @ 31/12/15)
Unlisted options
($2.00 @ 31/12/15)
Number
of holders
Number
of options
Number
of holders
Number
of options
Number
of holders
Number
of options
Number
of holders
Number
of options
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001 and over
Total
-
-
-
1
-
1
-
-
-
100,000
-
100,000
-
-
-
1
-
1
-
-
-
100,000
-
100,000
-
-
-
-
2
2
-
-
-
-
900,000
900,000
-
-
-
-
2
2
-
-
-
-
900,000
900,000
Unlisted options
($2.25 @ 31/12/15)
Unlisted options
($2.50 @ 31/12/15)
Unlisted options
($1.75 @ 31/03/16)
Unlisted options
($2.00 @ 31/03/16)
Number
of holders
Number
of options
Number
of holders
Number
of options
Number
of holders
Number
of options
Number
of holders
Number
of options
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001 and over
Total
-
-
-
-
2
2
-
-
-
-
900,000
900,000
-
-
-
-
1
1
-
-
-
-
500,000
500,000
-
-
-
-
1
1
-
-
-
-
450,000
450,000
-
-
-
-
1
1
-
-
-
-
450,000
450,000
STANMORE COAL ANNUAL REPORT 201355
Unlisted options
($2.25 @ 31/03/16)
Unlisted options
($2.50 @ 31/03/16)
Unlisted options
($0.48 @ 30/06/14)
Unlisted options
($0.25 @ 02/04/15)
Number
of holders
Number
of options
Number
of holders
Number
of options
Number
of holders
Number
of options
Number
of holders
Number
of options
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001 and over
Total
-
-
-
-
1
1
-
-
-
-
450,000
450,000
-
-
-
-
1
1
-
-
-
-
-
-
-
-
-
-
-
-
450,000
450,000
10
10
1,216,000
1,216,000
-
-
-
1
-
1
-
-
-
75,000
-
75,000
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001 and over
Total
Unlisted options
($0.518 @ 30/06/15)
Unlisted options
($0.675 @ 27/06/15)
Number
of holders
Number of
options
Number of
holders
Number of
options
-
-
-
-
1
1
-
-
-
-
-
-
-
-
-
-
-
-
11,670,000
11,670,000
1 13,373,377
1 13,373,377
The number of shareholders holding less than a marketable parcel (2,778 ordinary shares) is 320 (358,805 ordinary shares).
(b) Twenty largest holders
he names of the twenty largest holders as at 31 August 2013, in each class of quoted security are:
Ordinary shares
1
2
3
4
5
6
7
8
9
10
11
Greatgroup Investments Ltd*
St Lucia Resources
3rd Wave Investors Ltd*
National Nominees Limited
BT Portfolio Services Ltd
Norfolk Enchants Pty Ltd
JH Nominees Australia Pty Ltd
HSBC Custody Nominees (Australia) Limited
Mr Vivian Forbes
Bizzell Nominees Pty Ltd
UBS Wealth Management Australia Nominees Pty Ltd
Number
of shares
41,565,418
31,700,270
18,960,000
8,729,221
3,500,000
3,000,000
2,768,124
2,732,271
2,088,270
2,003,950
1,960,228
% of total
shares
19.94
15.21
9.09
4.19
1.68
1.44
1.33
1.31
1.00
0.96
0.94
ANNUAL REPORT 2013 STANMORE COAL56
12
13
14
15
16
17
18
19
20
Rookharp Pty Ltd
Kabila Investments Pty Ltd
CPS International Holdings Pty Ltd
Citicorp Nominees Pty Limited
JP Morgan Nominees Australia Limited
Mrs Elizabeth Anne Fogarty + Miss Caitlyn Elizabeth Fogarty
Caythorpe Pty Ltd
Citicorp Nominees Pty Limited
CPS International Holdings Pty Ltd
Total of twenty largest holders
Total ordinary shares
*Merged.
Substantial shareholders
Number
of shares
1,879,588
1,768,502
1,571,207
1,541,974
1,455,420
1,300,000
1,265,507
1,262,020
132,501,970
208,469,252
% of total
shares
0.90
0.85
0.75
0.74
0.70
0.62
0.61
0.61
63.56
100.00
Substantial shareholders as shown in substantial shareholder notices received by Stanmore Coal Limited at 31 August
2013 are:
Name of shareholder
Greatgroup Investments Limited
St Lucia Resources International Pty Ltd
VW & AC Pty Ltd*
Olross Investments Pty Ltd*
Raplon Pty Ltd*
3rd Wave Investors Limited
Kinetic Investment Partners Pty Ltd
Ordinary share:
41,565,418
31,700,270
31,700,270
31,700,270
31,700,270
16,786,020
12,887,368
*Relevant interest under s.608(3)(a) Corporations Act 2001 (Cth) by having voting power of above 20% in St Lucia Resources International Pty Ltd,
which holds 31,700,270 shares in Stanmore Coal Limited.
(c) Voting rights
All ordinary shares carry one vote per share without restriction.
Options do not carry voting rights.
(d) Restricted securities
There are no restricted securities on issue at 31 August 2013.
STANMORE COAL ANNUAL REPORT 201357
INTERESTS IN
TENEMENTS
Stanmore Coal Limited held the following interests in tenements as at 31 August 2013:
Tenement
EPC 1112
EPC 1113
EPC 1114
EPC 1168
EPC 1186
EPC 1274
EPC 1276
EPC 1545
EPC 1552
EPC 1567
EPC 1627
EPC 1687
EPC 1769
EPC 1804
EPC 2030
EPC 2039
EPC 2062
EPC 2081
EPC 2176
EPC 2371
MLA 55001
MLA 80199
% Interest
100
100
100
100
100
100
100
100
100
100
100
85
100
100
100
100
100
95
100
100
Application
Application
Grant Date
23/03/2007
23/03/2007
28/02/2008
24/10/2007
12/03/2013
10/09/2008
10/09/2008
20/05/2009
20/05/2009
27/06/2011
12/08/2011
28/07/2011
31/05/2011
27/06/2011
12/10/2010
12/10/2010
09/02/2012
15/10/2010
22/11/2011
28/07/2011
-
Expiry Date
22/03/2017
22/03/2017
27/02/2013
23/10/2015
11/03/2018
09/09/2013
09/09/2013
19/05/2014
19/05/2017
26/06/2016
11/08/2016
27/07/2016
30/05/2016
26/06/2016
11/10/2015
11/10/2015
08/02/2017
14/10/2015
21/11/2016
27/07/2016
-
ANNUAL REPORT 2013 STANMORE COAL58
CORPORATE
GOVERNANCE STATEMENT
The Board of Directors of Stanmore Coal Limited is responsible for the corporate governance of the Consolidated Entity.
The Board guides and monitors the business and affairs of Stanmore Coal Limited on behalf of the shareholders by whom
they are elected and to whom they are accountable.
Stanmore Coal Limited’s Corporate Governance Statement is structured with reference to the Australian Securities
Exchange (ASX) Corporate Governance Council’s (the Council) “Corporate Governance Principles and Recommendations,
2nd Edition”, which are as follows:
Principle 1
Principle 2
Principle 3
Principle 4
Principle 5
Principle 6
Principle 7
Principle 8
Lay solid foundations for management and oversight
Structure the Board to add value
Promote ethical and responsible decision making
Safeguard integrity in financial reporting
Make timely and balanced disclosure
Respect the rights of shareholders
Recognise and manage risk
Remunerate fairly and responsibly
A copy of the eight Corporate Governance Principles and Recommendations can be found on the ASX’s website.
A copy of the Company’s Corporate Governance Charter can be downloaded from the Company’s website
www.stanmorecoal.com.au.
Structure of the Board and Director independence
The skills, experience and expertise relevant to the position of Director held by each Director in office at the date of the
Annual Report is included in the Director’s Report. The Corporate Governance Council defines an independent Director as
a non-executive Director who is not a member of management and who is free of any business or other relationship that
could materially interfere with – or could reasonably be perceived to materially interfere with – the independent exercise
of their judgement.
In the context of Director independence, “materiality” is considered from both the Company and the individual Director
perspective. The determination of materiality requires consideration of both quantitative and qualitative elements. An item
is presumed to be quantitatively immaterial if it is equal to or less than 5% of the appropriate base amount. It is presumed
to be material (unless there is qualitative evidence to the contrary) if it is equal to or greater than 5% of the appropriate
base amount. Qualitative factors considered include whether a relationship is strategically important, the competitive
landscape, the nature of the relationship and the contractual or other arrangements governing it and other factors which
point to the actual ability of the Director in question to shape the direction of the Company’s loyalty. Factors that may
impact on a Director’s independence are considered each time the Board meets.
Stanmore Coal Limited considers industry experience and specific expertise, as well as general corporate experience, to
be important attributes of its Board members. The Directors noted above have been appointed to the Board of Stanmore
Coal Limited due to their considerable industry and corporate experience.
There are procedures in place, agreed by the Board, to enable Directors, in furtherance of their duties, to seek
independent professional advice at the Consolidated Entity’s expense.
Mr Nicholas Jorss is the Managing Director. The Consolidated Entity does not consider Mr Jorss to be an independent
Director as defined in the ASX Guidelines on the basis that he is a Director of St Lucia Resources International Pty Ltd, a
substantial shareholder (greater than 5%) in the Consolidated Entity.
Mr Stephen Bizzell is a non-executive Director and the current Chairman of the Audit and Risk Management Committee.
The Consolidated Entity does not consider Mr Bizzell to be an independent Director as defined in the ASX Guidelines on
the basis that he is a Director of Bizzell Capital Partners Pty Ltd, an entity that partially underwrote a Share Purchase
Plan announced in December 2011 and provides investor relations to the Company.
STANMORE COAL ANNUAL REPORT 201359
Mr Andrew Martin is a non-executive Director. The Consolidated Entity does not consider Mr Martin to be an independent
Director as defined in the ASX Guidelines on the basis that he is a Director of St Lucia Resources International Pty Ltd, a
substantial shareholder (greater than 5%) in the Consolidated Entity.
Mr Chris McAuliffe is a non-executive Director. The Consolidated Entity does not consider Mr McAuliffe to be an
independent Director as defined in the ASX Guidelines on the basis that he is the Managing Director of Sprint Capital,
the investment management group responsible for Greatgroup Investments Limited, who is a substantial shareholder
(greater than 5%) in the Consolidated Entity.
Based on the above, for the purposes of the ASX Corporate Governance Principles and Recommendations, Messrs Jorss,
Bizzell, Martin and McAuliffe are not considered independent Directors.
The term in office held by each Director in office at the date of this report is as follows:
Name
Neville Sneddon
Nicholas Jorss
Andrew Martin
Stephen Bizzell
Viv Forbes
Chris McAuliffe
Term in office
3 year 11 months
5 years 3 months
5 years 3 months
3 year 11 months
3 year 11 months
1 year 2 months
ASx principles and recommendations
The Board is of the view that with the exception of the departures from the ASX Guidelines as set out in the table below, it
otherwise complies with all of the ASX Guidelines.
ASX principles and recommendations
Summary of the Consolidated Entity’s position
Principle 2 – Structure the board to add value
Recommendation 2.1 – A majority of the
Board should be independent Directors
Recommendation 2.4 – The Board should
establish a nomination committee
Messrs Jorss, Bizzell, Martin and McAuliffe are not considered independent
Directors. While the Consolidated Entity does not presently comply with this
recommendation, the Consolidated Entity may consider appointing further
independent Directors in the future. The Consolidated Entity believes
that given the size and scale of its operations, non-compliance by the
Consolidated Entity with this recommendation will not be detrimental to the
Consolidated Entity.
The Board’s view is that the Consolidated Entity is not currently of the size
to justify the formation of a separate nomination committee. The Board
currently performs the functions of a nomination committee and where
necessary will seek advice of external advisors in relation to this role. The
Board shall, upon the Consolidated Entity reaching the requisite corporate
and commercial maturity, approve the constitution of a nomination
committee to assist the Board in relation to the appointment of Directors and
senior management.
Principle 3 – Promote ethical and responsible decision making
Recommendation 3.2 – Companies
should establish a policy concerning
diversity
The Company does not have a formal Diversity Policy, however its approach
to recruitment is driven by identifying the best candidate for all positions
regardless of gender, age, ethnicity and cultural background. Based on
the current scale and complexity of the Company’s operations there is no
set objective to achieve a certain percentage of female employees in the
workforce.
ANNUAL REPORT 2013 STANMORE COAL60
ASX principles and recommendations
Summary of the Consolidated Entity’s position
Principle 4 – Safeguard integrity in financial reporting
Recommendation 4.2 – The audit
committee should be structured so that it:
• Consists only of non-executive directors
• Consists of a majority of independent
Directors
• Is chaired by an independent chair,
who is not chair of the Board
• Has at least three members
Messrs Jorss, Bizzell, Martin and McAuliffe are not considered independent
Directors and consequently the Committee does not consist of a majority
of independent Directors. Whilst the Consolidated Entity does not presently
comply with this Recommendation 4.2, it may consider appointing further
independent Directors in the future. The Consolidated Entity believes
that given the size and scale of its operations, non-compliance by the
Consolidated Entity with this Recommendation 4.2 will not be detrimental to
the Consolidated Entity.
Audit and Risk Management Committee
The Board has established an Audit and Risk Management Committee, which operates under a charter approved by the
Board. It is the Board’s responsibility to ensure that an effective internal control framework exists within the Company.
This includes internal controls to deal with both the effectiveness and efficiency of significant business processes, the
safeguarding of assets, the maintenance of proper accounting records, and the reliability of financial information as
well as non-financial considerations such as the benchmarking of operational key performance indicators. The Board
has delegated the responsibility for the establishment and maintenance of a framework of internal control and ethical
standards for the management of the Company to the Audit and Risk Management Committee.
The Committee also provides the Board with additional assurance regarding the reliability of financial information for
inclusion in the financial reports. All members of the Audit and Risk Management Committee are Non-Executive Directors.
The members of the Audit and Risk Management Committee at the date of this report are:
• Stephen Bizzell (Chairman)
• Andrew Martin
• Chris McAuliffe
For additional details of Directors’ attendance at Audit and Risk Management Committee meetings and to review the
qualifications of the members of the Audit and Risk Management Committee, please refer to the Directors’ Report.
The Audit and Risk Management Charter has been made publicly available on the Company’s website.
Remuneration Committee
The Remuneration Committee, which operates under a charter approved by the Board, is responsible for reviewing the
remuneration policies and practices of the Consolidated Entity and making recommendations to the Board in relation to:
• executive remuneration and incentive plans;
• the remuneration packages for Management, Directors and the Managing Director;
• non-executive Director remuneration;
• the Consolidated Entity’s recruitment, retention and termination policies and procedures for senior management;
•
incentive plans and share allocation schemes;
• superannuation arrangements; and
• remuneration of members of other committees of the Board.
In performing its role, the committee is required to ensure that the remuneration offered is in accordance with prevailing
market conditions, contract provisions reflect market practice and targets and incentives are based on realistic
STANMORE COAL ANNUAL REPORT 201361
performance criteria. The committee will also oversee the application of sound remuneration and employment practices
across the Consolidated Entity and ensure the Consolidated Entity complies with legislative requirements related to
employment practices. All members of the Remuneration Committee are non-executive Directors.
The members of the Remuneration Committee at the date of this report are:
• Viv Forbes
• Neville Sneddon (Chairman)
• Andrew Martin
• Stephen Bizzell
• Chris McAuliffe
For additional details of Directors’ attendance at Remuneration Committee meetings and to review the qualifications of
the members of the Remuneration Committee, please refer to the Directors’ Report.
Nomination Committee
Due to the size and scale of operations, Stanmore Coal Limited does not have a separately established Nomination
Committee. The full Board carries out the functions of the Nomination Committee, operating under a charter approved by
the Board.
Risk management
The Company has developed an appropriate framework for risk management and internal compliance and control
systems which cover organisational, financial and operational aspects of the Company’s affairs. Further detail of the
Company’s Risk Management Policies can be found within the Corporate Governance Charter on the Company’s website.
Recommendation 7.2 requires that the Board disclose that management has reported to it as to the effectiveness of
the Company’s management of its material business risks. Business risks are considered regularly by the Board and
management.
As required by Recommendation 7.3, the Board has received written assurances from the Managing Director and Chief
Financial Officer that to the best of their knowledge and belief, the declaration provided by them in accordance with
section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the
system is operating effectively in all material respects in relation to financial reporting risks.
Performance evaluation
The Remuneration Committee and the Board (in carrying out the functions of the Nomination Committee) considers
remuneration and nomination issues annually and otherwise as required in conjunction with the regular meetings of
the Board.
No formal performance evaluation of the Directors was undertaken during the year ended 30 June 2013.
Remuneration
The Company’s remuneration strategy and the details of compensation paid to Directors and Key Management Personnel
of the Company for the year ended 30 June 2013 are set out in the Company’s Remuneration Report on pages 38 to 48.
The Remuneration Committee is responsible for determining and reviewing compensation arrangements for the Directors
themselves, subject to Stanmore Coal Limited’s constitution and prior shareholder approvals, and the Executive team.
There is no scheme to provide retirement benefits to non-executive Directors.
ANNUAL REPORT 2013 STANMORE COAL62
Continuous disclosure
Detailed compliance procedures for ASX Listing Rule disclosure requirements have been adopted by the Consolidated
Entity. Stanmore Coal Limited’s Obligation of Disclosure Policy can be found within Stanmore Coal Limited’s Corporate
Governance Charter on the Stanmore Coal Limited website (www.stanmorecoal.com.au) in the Corporate Governance
section.
Trading policy
The Board has adopted a policy and procedure on dealing in the Company’s securities by Directors, officers and
employees which prohibits dealing in the Company’s securities when those persons possess inside information until it
has been released to the market and adequate time has passed for this to be reflected in the security’s prices, and during
certain pre-determined windows.
The Company’s policy regarding dealings by Directors in the Company’s shares is that Directors should never engage in
short term trading and should not enter into transactions when they are in possession of price sensitive information not
yet released by the Company to the market; or for a period of fourteen (14) days prior to the scheduled (per ASX Listing
Rules) release by the Company of (ASX) Quarterly Operations and Cash Flow Reports or such shorter period as may be
approved of by the Board of Directors after receipt of notice of intention to buy or sell by a Director to other members of
the Board.
Directors will generally be permitted to engage in trading (subject to due notification being given to the Chairperson
and Secretary) for a period commencing one (1) business day after the release of (ASX) Quarterly Operations and Cash
Flow Reports to the market and for a period commencing one (1) business day following the release of price sensitive
information to the market which allows a reasonable period of time for the information to be disseminated among
members of the public.
gender diversity
At 30 June 2013 the Company has 30% female employees. There are currently no females in the Executive Management
Team. No member of the six person Board of Directors is female. Based on the current scale and complexity of the
Company’s operations there is no set objective to achieve a certain percentage of female employees in the workforce, as
the Board does not currently believe that such an initiative would significantly improve the functions currently performed
by the Board and Executive Management Team, nor enhance the ability of the Company to deliver on its stated objectives.
Stakeholder communications
The Consolidated Entity has designed a disclosure system to ensure it complies with the ASX’s continuous disclosure
rules and that information is made available to all investors equally, promoting effective communications with
shareholders and encouraging shareholder participation at general shareholder meetings. A copy of the Information
Disclosure Program Procedures can be found within Stanmore Coal Limited’s Corporate Governance Charter on
Stanmore Coal Limited’s website (www.stanmorecoal.com.au) in the Corporate Governance section. In addition to
corporate and Project information generally available on the Company’s website, in the Investors section of the Company’s
website the following information is made available:
• ASX releases
• Annual reports
• Quarterly reports
• Presentations
• Media coverage
• Flyers
STANMORE COAL ANNUAL REPORT 201363
CONSOLIDATED STATEMENT OF PROFIT OR
LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2013
Revenue and other income
Employee benefits expenses
Depreciation and amortisation expenses
Finance costs
Legal expenses
Impairment expense
Administration and consulting expenses
Other expenses
Profit/(loss) before income tax expense
Income tax expense
Net profit/(loss) for the year
Other comprehensive income
Items that will not be subsequently reclassified to profit or loss
Items that will be reclassified to profit or loss
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Profit/(loss) for the year is attributable to:
Owners of Stanmore Coal Ltd
Total comprehensive income for the year is attributable to:
Note
2
3,15
3
4
2013
$’000
1,732
(3,441)
(46)
(1,284)
(701)
(787)
(1,359)
(1,317)
(7,203)
2,192
(5,011)
-
-
-
2012
$’000
899
(3,072)
(36)
(1,432)
(607)
-
(1,462)
(1,972)
(7,682)
-
(7,682)
-
-
-
(5,011)
(7,682)
(5,011)
(7,682)
Owners of Stanmore Coal Ltd
(5,011)
(7,682)
Earnings/(loss) per share attributable to the owners of
Stanmore Coal Ltd:
Basic earnings/(loss) per share (cents per share)
Diluted earnings/(loss) per share (cents per share)
Note
8
8
2013
Cents
(2.5)
(2.5)
2012
Cents
(5.3)
(5.3)
The above Consolidated Statement of Profit or Loss and other Comprehensive Income should be read in conjunction with
the accompanying notes.
ANNUAL REPORT 2013 STANMORE COAL64
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
AS AT 30 JUNE 2013
Current assets
Cash and cash equivalents
Restricted cash
Trade and other receivables
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Exploration and evaluation assets
Capitalised development costs
Other non-current assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Other current financial liabilities
Interest bearing loans and borrowings
Total current liabilities
Non-current liabilities
Interest bearing loans and borrowings
Non-interest bearing convertible notes
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity attributable to owners of Stanmore Coal Limited
Note
9
10
11
15
13
14a
14b
15
16
16
17
17
18
19
20
21
2013
$’000
24,360
1,500
500
1,356
27,716
2,073
30,517
20,831
8,921
62,342
90,058
1,905
-
4,040
5,945
-
-
9,027
9,027
14,972
75,086
88,253
3,543
(16,710)
75,086
2012
$’000
23,957
-
1,700
750
26,407
2,116
19,286
15,200
8,785
45,387
71,794
3,324
1,400
-
4,724
-
4,040
-
4,040
8,764
63,030
72,398
2,331
(11,699)
63,030
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
STANMORE COAL ANNUAL REPORT 201365
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2013
Balance at 1 July 2011
Total comprehensive income for the financial year
Profit/(loss) for the year
Other comprehensive income
Transactions with owners in their capacity as owners
Issue of share capital
Costs associated with issue of share capital
Share based payments
At 30 June 2012
Total comprehensive income for the financial year
Profit/(loss) for the year
Other comprehensive income
Transactions with owners in their capacity as owners
Issue of share capital
Costs associated with issue of share capital
Share based payments
At 30 June 2013
Issued
capital
$’000
34,770
-
-
-
38,964
(1,336)
-
37,628
72,398
-
-
-
15,870
(15)
-
15,855
88,253
Accumulated
losses
$’000
(4,017)
-
(7,682)
(7,682)
-
-
-
-
(11,699)
(5,011)
-
(5,011)
-
-
-
-
(16,710)
Option
reserve
$’000
1,248
-
-
-
-
-
1,083
1,083
2,331
-
-
-
-
-
1,212
1,212
3,543
Total
$’000
32,001
-
(7,682)
(7,682)
38,964
(1,336)
1,083
38,711
63,030
(5,011)
-
(5,011)
15,870
(15)
1,212
17,067
75,086
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
ANNUAL REPORT 2013 STANMORE COAL66
CONSOLIDATED STATEMENT
OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2013
Note
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Interest and other finance costs paid
Income taxes (paid)/refunded
Net cash (outflow)/inflow from operating activities
26
Cash flows from investing activities
Payments for property, plant and equipment
Payments for exploration, evaluation and development assets
Loans for finance port infrastructure
Security deposit (payments)/refunds
Net cash (outflow)/inflow from investing activities
Cash flows from financing activities
Proceeds from issue of shares
Proceeds from issue of convertible notes
Capital raising and IPO expenses
Net proceeds from borrowings
Net cash (outflow)/inflow from financing activities
Net increase/(decrease) in cash held
Net cash at beginning of year
Net cash at end of year
9
2013
$’000
1,468
(6,983)
578
(99)
2,192
(2,844)
(3)
(15,901)
(3,146)
(1,057)
(20,107)
14,342
9,027
(15)
-
23,354
403
23,957
24,360
2012
$’000
317
(5,385)
886
-
(4,182)
(113)
(20,295)
(6,213)
(1,743)
(28,364)
37,084
(1,336)
2,573
38,321
5,775
18,182
23,957
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
STANMORE COAL ANNUAL REPORT 201367
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
Note 1: Summary of significant accounting policies
The financial statements of Stanmore Coal Limited for the year ended 30 June 2013 were authorised for issue in
accordance with a resolution of the Directors on 24 September 2013 and cover the Consolidated Entity consisting of
Stanmore Coal Limited and its subsidiaries (“the Company” or “the Group”) as required by the Corporations Act 2001.
The financial statements are presented in the Australian currency.
Stanmore Coal Limited is a company limited by shares, incorporated and domiciled in Australia, whose shares are publicly
traded on the Australian Securities Exchange.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards
and Interpretations issued by the Australian Accounting Standards Board (“AASB”) and the Corporations Act 2001, as
appropriate for for-profit oriented entities.
These financial statements also comply with International Financial Reporting Standards (“IFRS”) as issued by the
International Accounting Standards Board (“IASB”).
The Company is of a kind referred to in ASIC Class Order 98/100 issued by the Australian Securities and Investments
Commission, relating to ‘rounding-off’. Amounts in this financial report and Directors’ Report have been rounded off in
accordance with this Class Order to the nearest thousand dollars, unless otherwise stated.
The financial statements have been prepared on a historical cost basis, except for derivatives, available-for-sale financial
assets and held-for-trading investments that have been measured at fair value. The entity is a for-profit entity for the
purposes of Australian Accounting Standards.
Going concern
The financial statements have been prepared on a going concern basis which contemplates the continuity of normal
business activities and the realisation of assets and discharge of liabilities in the ordinary course of business. The ability
of the Consolidated Entity to continue to adopt the going concern assumption will depend upon a number of matters
including the successful raising in the future of necessary funding through debt, equity or farm-out, or the successful
exploration and subsequent exploitation of the Consolidated Entity’s tenements. Should these avenues be delayed or fail
to materialise, the Group expects to have the ability to scale back its activities to allow the Group to continue as a going
concern and meet its debts as and when they fall due.
Comparatives
When required by Accounting Standards, comparatives have been adjusted to conform to changes in presentation for the
current year end.
(a) Principles of consolidation
The consolidated financial statements comprise the financial statements of Stanmore Coal Limited and its
subsidiaries at 30 June each year. Subsidiaries are entities (including special purpose entities) over which the Group
has the power to govern the financial and operating policies generally accompanying a shareholding of more than
one half of the voting rights. Potential voting rights that are currently exercisable or convertible are considered
when assessing control. Consolidated financial statements include all subsidiaries from the date that control
commences until the date that control ceases. The financial statements of subsidiaries are prepared for the same
reporting period as the parent, using consistent accounting policies.
All intercompany balances and transactions, including unrealised profits arising from intragroup transactions have
been eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment
of the asset transferred.
ANNUAL REPORT 2013 STANMORE COAL68
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated
statement of comprehensive income and statement of financial position respectively. Total comprehensive income
is attributable to owners of Stanmore Coal Limited and non-controlling interests even if this results in the non-
controlling interests having a debit balance.
(b) Business combinations
The acquisition method of accounting is used to account for all business combinations. Consideration is measured
at the fair value of the assets transferred, liabilities incurred and equity interests issued by the Group on acquisition
date. Consideration also includes the acquisition date fair values of any contingent consideration arrangements,
any pre-existing equity interests in the acquiree and share-based payment awards of the acquiree that are required
to be replaced in a business combination. The acquisition date is the date on which the Group obtains control of the
acquiree. Where equity instruments are issued as part of the consideration, the value of the equity instruments is
their published market price at the acquisition date unless, in rare circumstances it can be demonstrated that the
published price at acquisition date is not fair value and that other evidence and valuation methods provide a more
reliable measure of fair value.
Identifiable assets acquired and liabilities and contingent liabilities assumed in business combinations are, with
limited exceptions, initially measured at their fair values at acquisition date. Goodwill represents the excess of
the consideration transferred and the amount of the non-controlling interest in the acquiree over fair value of the
identifiable net assets acquired. If the consideration and non-controlling interest of the acquiree is less than the
fair value of the net identifiable assets acquired, the difference is recognised in profit or loss as a bargain purchase
price, but only after a reassessment of the identification and measurement of the net assets acquired.
For each business combination, the Group measures non-controlling interests at either fair value or at the
non-controlling interest’s proportionate share of the acquiree’s identifiable net assets.
Acquisition-related costs are expensed when incurred. Transaction costs arising on the issue of equity instruments
are recognised directly in equity.
Where the Group obtains control of a subsidiary that was previously accounted for as an equity accounted
investment in associate or jointly controlled entity, the Group remeasures its previously held equity interest in the
acquiree at its acquisition date fair value and the resulting gain or loss is recognised in profit or loss. Where the
Group obtains control of a subsidiary that was previously accounted for as an available-for-sale investment, any
balance on the available-for-sale reserve related to that investment is recognised in profit or loss as if the Group
had disposed directly of the previously held interest.
Where settlement of any part of the cash consideration is deferred, the amounts payable in the future are discounted
to present value at the date of exchange using the entity’s incremental borrowing rate as the discount rate.
Contingent consideration is classified as equity or financial liabilities. Amounts classified as financial liabilities are
subsequently remeasured to fair value at the end of each reporting period, with changes in fair value recognised in
profit or loss.
Assets and liabilities from business combinations involving entities or businesses under common control are
accounted for at the carrying amounts recognised in the Group’s controlling shareholder’s consolidated financial
statements.
(c) Revenue recognition
Revenue is measured at the fair value of consideration received or receivable. Amounts disclosed as revenue are net
of returns, trade allowances, and duties and taxes paid. The following specific recognition criteria must also be met
before revenue is recognised:
Interest
Revenue is recognised as interest accrues using the effective interest method.
STANMORE COAL ANNUAL REPORT 201369
(d) Grants received
Government grant monies received directly or indirectly are brought to account when there is reasonable assurance
that the grant monies will be received and that any attached conditions will be complied with. Grants received
that relate to the creation of assets are recognised as a reduction to the carrying amount of the relevant asset.
Such grants will be recognised as income through reduced depreciation or amortisation charges in respect of the
relevant assets.
(e)
Income tax
The income tax expense for the period is the tax payable on the current period’s taxable income based on the
national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable
to temporary differences between the tax base of assets and liabilities and their carrying amounts in the financial
statements, and to unused tax losses.
Deferred tax assets and liabilities are recognised for all temporary differences, between carrying amounts of assets
and liabilities for financial reporting purposes and their respective tax bases, at the tax rates expected to apply
when the assets are recovered or liabilities settled, based on those tax rates which are enacted or substantively
enacted for each jurisdiction. Exceptions are made for certain temporary differences arising on initial recognition
of an asset or a liability if they arose in a transaction, other than a business combination, that at the time of the
transaction did not affect either accounting profit or taxable profit.
Deferred tax assets are only recognised for deductible temporary differences and unused tax losses if it is probable
that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are not recognised for temporary differences between the carrying amount and
tax bases of investments in subsidiaries, associates and interests in joint ventures where the parent entity is able to
control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse
in the foreseeable future.
Current and deferred tax balances relating to amounts recognised directly in other comprehensive income and
equity are also recognised directly in other comprehensive income and equity, respectively.
Amounts received under the Research & Development Tax Incentive Scheme are treated as an income tax benefit
as it is effectively the monetisation of future tax benefits. These amounts are recognised in the period in which they
are received as there is no reliable method to measure or quantify the potential incentive at the end of the financial
period to which the claim relates.
Stanmore Coal Limited and its wholly-owned subsidiaries have implemented the tax consolidation legislation
for the whole of the financial year. Stanmore Coal Limited is the head entity in the tax consolidated group. These
entities are taxed as a single entity and deferred tax assets and liabilities have been offset in these consolidated
financial statements.
Tax consolidation
Stanmore Coal Limited and its wholly-owned subsidiaries have implemented the tax consolidation legislation
for the whole of the financial year. Stanmore Coal Limited is the head entity in the tax consolidated group. These
entities are taxed as a single entity. The stand-alone taxpayer/separate taxpayer within a group approach has been
used to allocate current income tax expense and deferred tax expense to wholly-owned subsidiaries that form part
of the tax consolidated group. Stanmore Coal Limited has assumed all the current tax liabilities and the deferred
tax assets arising from unused tax losses for the tax consolidated group via intercompany receivables and payables
because a tax funding arrangement has been in place for the whole financial year. The amounts receivable/payable
under tax funding arrangements are due upon notification by the head entity, which is issued soon after the end of
each financial year. Interim funding notices may also be issued by the head entity to its wholly-owned subsidiaries in
order for the head entity to be able to pay tax instalments. These amounts are recognised as current intercompany
receivables or payables.
ANNUAL REPORT 2013 STANMORE COAL70
(f)
Impairment of assets
At the end of each reporting period the Consolidated Entity assesses whether there is any indication that individual
assets are impaired. Where impairment indicators exist, recoverable amount is determined and impairment losses
are recognised in profit or loss where the asset’s carrying value exceeds its recoverable amount. Recoverable
amount is the higher of an asset’s fair value less costs to sell and value in use. For the purpose of assessing value
in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset.
Where it is not possible to estimate recoverable amount for an individual asset, the Consolidated Entity estimates
the recoverable amount of the cash-generating unit to which the asset belongs.
(g) Cash and cash equivalents
For the purposes of the Statement of Cash Flows, cash and cash equivalents includes cash on hand and at bank,
deposits held at call with financial institutions, other short term, highly liquid investments with maturities of three
months or less, that are readily convertible to known amounts of cash and which are subject to an insignificant risk
of changes in value and bank overdrafts.
(h) Restricted cash
Restricted cash includes term deposits which securitise a bank guarantee or other facility provided by an external
third party lender. These amounts are not able to be converted to readily accessible cash without the consent of an
external third party.
(i) Trade receivables
Trade receivables are recognised at original invoice amounts less an allowance for uncollectible amounts and have
repayment terms between 30 and 90 days. Collectability of trade receivables is assessed on an ongoing basis. Debts which
are known to be uncollectible are written off. An allowance is made for doubtful debts where there is objective evidence
that the Group will not be able to collect all amounts due according to the original terms. Objective evidence of impairment
includes financial difficulties of the debtor, default payments or debts more than 180 days overdue. On confirmation that the
trade receivable will not be collectible the gross carrying value of the asset is written off against the associated provision.
From time to time, the Group elects to renegotiate the terms of trade receivables due from customers with which it
has previously had a good trading history. Such renegotiations will lead to changes in the timing of payments rather
than changes to the amounts owed and are not, in the view of the Directors, sufficient to require the derecognition
of the original instrument.
(j) Non-current assets classified as held for sale
Non-current assets classified as held for sale are those assets whose carrying amounts will be recovered
principally through a sale transaction rather than through continuing use and a sale is considered highly probable.
These assets are stated at the lower of their carrying amount and fair value less costs to sell and are not
depreciated or amortised. Interest expenses continues to be recognised on liabilities of a disposal group classified
as held for sale.
An impairment loss is recognised for any initial or subsequent write-down of the asset to fair value less costs to
sell. A gain is recognised for subsequent increases in fair value less costs to sell of an asset but not exceeding any
cumulative impairment losses previously recognised.
(k)
Investments and other financial assets
All investments and other financial assets are initially stated at cost, being the fair value of consideration given
plus acquisition costs. Purchases and sales of investments are recognised on trade date which is the date on which
STANMORE COAL ANNUAL REPORT 201371
the Group commits to purchase or sell the asset. Accounting policies for each category of investments and other
financial assets subsequent to initial recognition are set out below.
Held for trading
Investments held for trading are measured at fair value with gains or losses recognised in profit or loss. A
financial asset is classified as held-for-trading if acquired principally for the purpose of selling in the short term
or if it is a derivative that is not designated as a hedge. Assets in this category are classified as current assets
in the statement of financial position if they are expected to be settled within 12 months, otherwise they are
classified as non-current assets.
Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed
maturities that the Group has the positive intention and ability to hold-to-maturity and are measured at amortised
cost subsequent to initial recognition using the effective interest method. If the Group were to sell other than an
insignificant amount of held-to-maturity investments, the whole category is then reclassified as available-for-sale.
Available-for-sale financial assets
Available-for-sale financial assets comprise investments in listed and unlisted entities and any non-derivatives
that are not classified as any other category of financial assets, and are classified as non-current assets (unless
management intends to dispose of the investment within 12 months of the end of the reporting period). After initial
recognition, these investments are measured at fair value with gains or losses recognised in other comprehensive
income (available-for-sale investments revaluation reserve). Where there is a significant or prolonged decline in
the fair value of an available-for-sale financial asset (which constitutes objective evidence of impairment) the full
amount including any amount previously charged to other comprehensive income is recognised in profit or loss.
On sale, the amount held in available-for-sale reserves associated with an available-for-sale financial asset is
recognised in profit or loss as a reclassification adjustment. Interest on corporate bonds classified as available-for-
sale is calculated using the effective interest rate method and is recognised in finance income in profit or loss.
Reversals of impairment losses on equity instruments classified as available-for-sale cannot be reversed through
profit or loss. Reversals of impairment losses on debt instruments classified as available-for-sale can be reversed
through profit or loss where the reversal relates to an increase in the fair value of the debt instrument occurring
after the impairment loss was recognised in profit or loss.
The fair value of quoted investments are determined by reference to Securities Exchange quoted market bid prices
at the close of business at the end of the reporting period. For investments where there is no quoted market price,
fair value is determined by reference to the current market value of another instrument which is substantially the
same or is calculated based on the expected cash flows of the underlying net asset base of the investment.
Loans receivable
Loans receivable are non-derivative financial assets with fixed or determinable repayment dates that are not traded
in an active market. After initial recognition, such assets are subsequently recognised at amortised cost less
impairment.
Loans and borrowings
After initial recognition, loans and borrowings are subsequently recognised at amortised cost.
Fair values
Fair values may be used for financial asset and liability measurement as well as for sundry disclosures.
ANNUAL REPORT 2013 STANMORE COAL72
Fair values for financial instruments traded in active markets are based on quoted market prices at the end of the
reporting period. The quoted market price for financial assets is the current bid price.
The carrying value less impairment provision of current receivables and payables are assumed to approximate
their fair values due to their short-term nature. The fair value of other financial liabilities for disclosure purposes
is estimated by discounting the future contractual cash flows at the current market interest rate that is available to
the Group for similar financial instruments.
(l) Plant and equipment
Plant and equipment is measured on the cost basis less depreciation and impairment losses.
The cost of fixed assets constructed within the Consolidated Entity includes the cost of materials, direct labour,
borrowing costs and an appropriate portion of fixed and variable costs.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Consolidated Entity
and the cost of the item can be measured reliably. All other repairs and maintenance are charged to profit or loss
during the financial period in which they are incurred.
Depreciation
The depreciable amount of all fixed assets is depreciated over their useful life to the Consolidated Entity
commencing from the time the asset is held ready for use.
The depreciation rates used for each class of assets are:
Class of fixed asset
Plant and equipment
Computer equipment
Furniture and office equipment
Depreciation rate
10–25% straight line
33.3% straight line
5–10% straight line
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
Gains and losses on disposal are determined by comparing proceeds with the carrying amount. The gains and
losses are included in profit or loss.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting
period.
Gains and losses on disposal are determined by comparing proceeds with the carrying amount. The gains and
losses are included in profit or loss.
(m) Derivative financial liabilities
Obligations to settle fees payable to financiers as either cash or shares are reflected as derivative financial liabilities
with changes in fair value recognised directly through profit and loss.
(n) Exploration and evaluation expenditure
Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest.
Such expenditures comprise net direct costs and an appropriate portion of related overhead expenditure but do
not include overheads or administration expenditure not having a specific nexus with a particular area of interest.
These costs are only carried forward to the extent that they are expected to be recouped through the successful
STANMORE COAL ANNUAL REPORT 201373
development of the area or where activities in the area have not yet reached a stage which permits reasonable
assessment of the existence of economically recoverable reserves and active or significant operations in relation to
the area are continuing.
A regular review has been undertaken on each area of interest to determine the appropriateness of continuing
to carry forward costs in relation to that area of interest. Accumulated costs in relation to an abandoned area are
written off in full against profit in the year in which the decision to abandon the area is made.
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.
Costs of site restoration are provided over the life of the facility from when exploration commences and are included
in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment
and building structure, waste removal, and rehabilitation of the site in accordance with clauses of mining permits.
Such costs have been determined using estimates of future costs, current legal requirements and technology on an
undiscounted basis.
Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site
restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations
and future legislation. Accordingly the costs have been determined on the basis that restoration will be completed
within one year of abandoning the site.
(o)
Intangible assets/development costs
Development expenditures on an individual project are recognised as an intangible asset when the Group can
demonstrate:
• the technical feasibility of completing the intangible asset so that it will be available for use or sale;
•
its intention to complete and its ability to use or sell the asset;
• how the asset will generate future economic benefits;
• the availability of resources to complete the asset; and
• the ability to measure reliability the expenditure during development.
Following initial recognition of the development expenditures an asset, the asset is carried at cost less any
accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when
development is complete and the asset is available for use. During the period of development, the asset is tested for
impairment annually.
(p) Trade and other payables
Trade and other payables represent liabilities for goods and services provided to the Group prior to the year end and
which are unpaid. These amounts are unsecured and have 7–60 day payment terms. They are recognised initially at
fair value and subsequently measured at amortised cost using the effective interest method.
(q) Employee benefits
Wages and salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave
expected to be settled within 12 months of the end of the reporting period are recognised in respect of employees’
services rendered up to the end of the reporting period and are measured at amounts expected to be paid when the
liabilities are settled. Liabilities for non-accumulating sick leave are recognised when leave is taken and measured
at the actual rates paid or payable. In determining the liability, consideration is given to employee wage increases
and the probability that the employee may satisfy vesting requirements.
ANNUAL REPORT 2013 STANMORE COAL74
(r) Provisions
Provisions for legal claims, service warranties and make good obligations are recognised when the Consolidated
Entity has a present legal or constructive obligation as a result of a past event, it is probable that that an outflow of
economic resources will be required to settle the obligation and the amount can be reliably estimated.
(s)
Issued capital
Ordinary shares are classified as equity. Costs directly attributable to the issue of new shares or options are shown
as a deduction from the equity proceeds, net of any income tax benefit.
(t) Share-based payments
The Consolidated Entity provides benefits to employees and consultants in the form of share-based payment
transactions, whereby they render services in exchange for shares or options over shares (equity-settled
transactions).
The fair value of shares or options granted to employees and consultants is recognised as an expense with a
corresponding increase in equity. The fair value is measured at grant date and recognised over the period during
which the employees or consultants become unconditionally entitled to the instruments. For options, fair value
is determined by an independent valuer using a Black-Scholes option pricing model. In determining fair value,
no account is taken of any performance conditions other than those related to the share price of Stanmore Coal
Limited (market conditions). The cumulative expense recognised between grant date and vesting date is adjusted
to reflect the Directors’ best estimate of the number of instruments that will ultimately vest because of internal
conditions of the instruments, such as the employees having to remain with the Consolidated Entity until vesting
date, or such that employees are required to meet internal sales targets. No expense is recognised for instruments
that do not ultimately vest because internal conditions were not met. An expense is still recognised for instruments
that do not ultimately vest because a market condition was not met.
Where the terms of options are modified, the expense continues to be recognised from grant date to vesting date as
if the terms had never been changed. In addition, at the date of the modification, a further expense is recognised for
any increase in fair value of the transaction as a result of the change.
Where options are cancelled, they are treated as if vesting occurred on cancellation and any unrecognised expenses
are taken immediately to profit or loss. However, if new options are substituted for the cancelled options and
designated as a replacement on grant date, the combined impact of the cancellation and replacement options are
treated as if they were a modification.
(u) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to owners of Stanmore Coal Limited by the
weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in
ordinary shares issued during the year.
Diluted earnings per share
Earnings used to calculate diluted earnings per share are calculated by adjusting the amount used in determining
basic earnings per share by the after-tax effect of dividends and interest associated with dilutive potential ordinary
shares. The weighted average number of shares used is adjusted for the weighted average number of shares
assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
STANMORE COAL ANNUAL REPORT 201375
(v) GST
Revenues, expenses and assets are recognised net of GST except where GST incurred on a purchase of goods and
services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of
acquisition of the asset or as part of the expense item.
Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or
payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.
Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows
arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority, are
classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the
taxation authority.
(w) Operating segments
The Consolidated Entity applies AASB 8 Operating Segments which requires a management approach under which
segment information is presented on the same basis as that used for internal reporting purposes. Operating
segments are reported in a manner that is consistent with the internal reporting to the chief operating decision
maker (CODM), which has been identified by the Consolidated Entity as the Managing Director and other members
of the Board of Directors.
(x) New and amended standards and interpretations not yet adopted
A number of new standards, amendments and interpretations are effective for annual periods beginning after 1 July
2012, and have not been applied in preparing these financial statements. The Consolidated Entity’s assessment of
the impact of these new or amended Accounting Standards and Interpretations, most relevant to the Consolidated
Entity, are set out below:
(i) AASB 9 Financial Instruments (effective from 1 January 2015)
This standard introduces new classification and measurement models for financial assets, using a single
approach to determine whether a financial asset is measured at amortised cost of fair value. The accounting for
financial liabilities continues to be classified and measured in accordance with AASB 139, with one exception,
being that the portion of a change of fair value relating to the entity’s own credit risk is to be presented in other
comprehensive income unless it would create an accounting mismatch. The Consolidated Entity will adopt this
standard from 1 July 2015 but the impact of its adoption is yet to be assessed by the Consolidated Entity.
(ii) AASB 11 Joint Arrangements (effective 1 January 2013)
This standard is application to annual reporting periods beginning on or after 1 January 2013. The standard
defines which entities qualify as joint ventures and removes the option to account for joint venture using
proportionate consolidation. Joint ventures, where the parties to the agreement have the rights to the net assets
will use equity accounting. Joint operations, where the parties to the agreements have the rights to the assets
and obligations for the liabilities will account for the assets, liabilities, revenues and expenses separately. The
adoption of this standard from 1 July 2013 will not have a material impact on the Consolidated Entity.
In addition to the above, new and amended standards dealing with Consolidated Financial Statements, Separate
Financial Statements and Fair Value Measurement have recently been released. These standards are effective from
1 January 2013. The Consolidated Entity does not plan to adopt these standards early nor has the extent of their
impact been determined.
ANNUAL REPORT 2013 STANMORE COAL76
(y) Accounting estimates and judgments
Critical accounting estimates and judgements
Details of critical accounting estimates and judgements made by management at the end of the reporting period
are set out below:
(i) Key estimates – share-based payments
The Consolidated Entity uses estimates to determine the fair value of equity instruments issued to Directors,
executives and employees. Further detail of estimates used in determining the value of share-based payments
is included in Note 27.
(ii) Key estimates – impairment
The Consolidated Entity assesses impairment at each reporting date by evaluating conditions specific to the
Consolidated Entity that may lead to impairment of assets. Where an impairment trigger exists, the recoverable
amount of the asset is determined. Value-in-use calculations performed in assessing recoverable amounts
incorporate a number of key estimates. At the end of the reporting period the Consolidated Entity held several
loan receivable amounts with the port developer Wiggins Island Coal Export Terminal. The loan relating to the
second expansion phase for $787 was assessed as impaired due to uncertainty around timing and delivery of the
expansion. All other loans to the port developer and all other assets of the Consolidated Entity are considered to
be not impaired at year end.
(iii) Key judgements – exploration & evaluation assets
The Consolidated Entity performs regular reviews on each area of interest to determine the appropriateness
of continuing to carry forward costs in relation to that area of interest. While there are certain areas of interest
from which no reserves have been extracted, the Directors are of the continued belief that such expenditure
should not be written off since feasibility studies in such areas have not yet concluded. Such capitalised
expenditure is carried at the end of the reporting period at $30,517 (2012: $19,286).
(iv) Key judgements – fair value of development costs
Development costs are capitalised in accordance with the accounting policy in Note 1(n). Initial capitalisation
of costs is based on management’s judgement that technological and economic feasibility is confirmed,
usually when a PFS has been completed. In determining the amounts to be capitalised, management makes
assumptions regarding the expected future cash generating potential of the Project, discount rates to be applied
and the expected period of which cashflows are expected to be received. As at 30 June 2013, the carrying
amount of capitalised developments costs was $20,831 (2012: $15,200). This amount relates wholly to The
Range Project located in the Surat Basin.
(v) Key judgements – financial instruments
When the fair value of financial assets and financial liabilities cannot be derived from active markets, the fair
value is determined valuation techniques including the discounted cashflow model. The judgements applied
in development these models relate to inputs such as liquidity risk, credit risk and volatility. Changes in
assumptions about these factors could affect the reported fair value of financial instruments.
(z) Parent entity financial information
The financial information for the parent entity, Stanmore Coal Limited, included in Note 22, has been prepared on
the same basis as the consolidated financial statements, except as follows:
Investments in subsidiaries
Investments in subsidiaries, associates and joint ventures are accounted for at cost.
STANMORE COAL ANNUAL REPORT 201377
Note 2: Revenue and other income
Revenue from continuing operations
Interest received – other persons
Other income
Total revenue and other income
Note 3: Profit/(loss)
Note
2013
$’000
764
968
1,732
Note
2013
$’000
Profit/(loss) before income tax includes the following specific expenses
Depreciation
Plant and equipment
Finance costs
Interest paid – external parties
Borrowing costs
Write-off of capitalised exploration expenditure and
infrastructure funding
Costs of securing infrastructure capacity rights
Share-based payments (shares)
Share-based payments (options)
Superannuation expense
Minimum lease payments made under operating leases
15
27
27
46
305
979
787
-
214
776
125
79
2012
$’000
886
13
899
2012
$’000
36
18
14
-
902
380
1,082
98
76
ANNUAL REPORT 2013 STANMORE COAL78
Note 4: Income tax expense
Reconciliation
Current income tax expense
Deferred income tax expense
Deferred income tax through equity
R&D refund
Income tax expense/benefit
2013
$’000
(6,090)
5,971
119
(2,192)
(2,192)
2012
$’000
(5,462)
5,491
(29)
-
-
The prima facie income tax on the loss is reconciled to the income tax expense as follows:
Prima facie tax benefit (30%) on loss before income tax
(2,160)
(2,304)
Add tax effect of:
Permanent differences
Deferred tax asset not recognised
R&D refund
Income tax expense/(benefit)
Recognised deferred tax assets and liabilities
Deferred tax assets
Unused tax losses
Deductible temporary differences*
Deferred tax liabilities
Assessable temporary differences
Deferred tax
Unrecognised deferred tax assets
Unused tax losses
Deferred tax assets not taken up at 30% (2012: 30%)
14
2,146
(2,192)
(2,192)
14,826
578
15,404
(15,404)
-
11,817
3,545
392
1,912
-
-
9,458
728
10,186
(10,186)
-
11,220
3,366
*At 30 June 2013 there are $283 (2012: $396) of deferred tax assets relating to share issue costs which were recognised in equity.
In order to recoup carried forward losses in future periods, either the Continuity of Ownership Test (COT) or Same
Business Test (SBT) must be passed. There is approximately $61,235 in losses carried forward at 30 June 2013.
Deferred tax assets which have not been recognised as an asset, will only be obtained if:
(i)
the Consolidated Entity derives future assessable income of a nature and of an amount sufficient to enable the losses
to be realised;
(ii)
the Consolidated Entity continues to comply with the conditions for deductibility imposed by the law; and
(iii) no changes in tax legislation adversely affect the Consolidated Entity in realising the losses.
STANMORE COAL ANNUAL REPORT 201379
Note 5: Key management personnel
(a) Total key management personnel compensation
Short-term employee benefits
Post-employment benefits
Termination benefits
Share-based payments
2013
$’000
1,873
66
27
886
2,852
2012
$’000
1,704
56
-
1,250
3,010
Further information regarding the identity of key management personnel and their compensation can be found in the
Audited Remuneration Report contained in the Directors’ Report on pages 38 to 48 of this Annual Report.
(b) Equity instruments
Shareholdings
Details of ordinary shares held directly, indirectly or beneficially by key management personnel and their related parties
are as follows:
Balance
1 July 2012
Granted as
remuneration
On exercise of
options or rights
Net change
other
Balance
30 June 2013
Directors
Neville Sneddon
Nicholas Jorss*
Andrew Martin*
Stephen Bizzell
Viv Forbes
Chris McAuliffe
-
31,762,540
31,700,270
7,372,514
2,088,270
-
Senior Management
Doug McAlpine
47,534
Vaughan Wishart*
31,769,962
Michael McKee
Wesley Nichols^
280,098
49,763
-
100,835
300,000
300,000
-
-
-
-
97,358
83,555
355,585
63,061
-
-
-
-
-
1,000,000
-
-
-
-
-
-
-
-
-
-
58,783
(112,824)
300,000
32,163,375
31,700,270
7,372,514
2,088,270
-
144,892
32,853,517
694,466
-
*Shares are held by St Lucia Resources International Pty Ltd of which Nicholas Jorss, Andrew Martin and Vaughan Wishart are Directors, and each
have interest in trusts which own >20%.
^Wesley Nichols ceased employment with the Company on 24 May 2013, resulting in a nil KMP shareholding at 30 June 2013. The net reduction is
not a result of Mr Nichols selling his shares in the Company.
There were no shares held nominally at 30 June 2013.
ANNUAL REPORT 2013 STANMORE COAL80
Balance
1 July 2011
Granted as
remuneration
On exercise of
options or rights
Net change
other
Balance
30 June 2012
Directors
Neville Sneddon
Nicholas Jorss*
Andrew Martin*
Stephen Bizzell
Viv Forbes
Chris McAuliffe#
Senior Management
Doug McAlpine^
-
31,710,000
31,680,000
7,138,347
2,068,000
-
-
Vaughan Wishart*
31,680,000
Michael McKee
Wesley Nichols
44,143
-
Duncan Cornish**
1,115,771
-
-
-
-
-
-
47,534
57,692
235,955
49,763
-
-
-
-
-
-
-
-
-
-
-
-
-
52,540
20,270
234,167
20,270
-
-
-
31,762,540
31,700,270
7,372,514
2,088,270
-
47,534
32,270
31,769,962
-
-
(1,115,771)**
280,098
49,763
-
*Shares are held by St Lucia Resources International Pty Ltd of which Nicholas Jorss, Andrew Martin and Vaughan Wishart are Directors, and each
have interest in trusts which own >20%.
**Duncan Cornish stepped down as Chief Financial Officer on 19 September 2011 and is not considered to be key management personnel following
that date, resulting in a nil balance key management personnel shareholding at 30 June 2012. The net reduction of 1,105,771 shares during the year
is not a result of Mr Cornish selling his shares in the Company.
^Opening balance on commencement of employment.
#Chris McAuliffe commenced as a Director on 17 July 2012.
There were no shares held nominally at 30 June 2012.
Options holdings
Balance
1 July
2012
Granted as
remuneration
Exercise
of options
Net
change
other
Balance
30 June
2013
Total
vested at
30 June
2013
Total
vested and
exercisable
at 30 June
2013
Total vested
and not
exercisable
at 30 June
2013
Directors
Neville Sneddon
1,350,000
Nicholas Jorss
2,000,000
Andrew Martin
1,000,000
Stephen Bizzell
3,000,000
Viv Forbes
525,000
Chris McAuliffe
-
Senior Management
Doug McAlpine
1,800,000
-
-
-
-
-
-
-
(300,000)
(1,050,000)
(300,000)
(1,700,000)
- (1,000,000)
-
-
-
-
-
-
-
-
-
- (1,000,000) 2,000,000
2,000,000
2,000,000
525,000
525,000
525,000
-
-
-
-
-
-
-
- 1,800,000
-
-
- 2,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Vaughan Wishart 1,000,000
- (1,000,000)
Michael McKee
2,000,000
Wesley Nichols^
1,200,000
-
-
- (1,200,000)
-
^Wesley Nichols ceased employment with the Company on 24 May 2013, resulting in a nil KMP option holding at 30 June 2013.
STANMORE COAL ANNUAL REPORT 201381
Balance
1 July
2011
Granted as
remuneration
Exercise
of options
Net
change
other
Balance
30 June
2012
Total
vested at
30 June
2012
Total
vested and
exercisable
at 30 June
2012
Total vested
and not
exercisable
at 30 June
2012
Directors
Neville Sneddon
1,350,000
Nicholas Jorss
2,000,000
Andrew Martin
1,000,000
Stephen Bizzell
3,000,000
Viv Forbes
525,000
Chris McAuliffe*
Senior Management
Doug McAlpine^
-
-
Vaughan Wishart 1,000,000
Michael McKee^
2,000,000
-
-
-
-
-
-
1,800,000
-
-
Wesley Nichols^
-
1,200,000
Duncan Cornish** 1,000,000
-
-
-
-
-
-
-
-
-
-
-
-
- 1,350,000
1,350,000
1,350,000
- 2,000,000
2,000,000
2,000,000
- 1,000,000
1,000,000
1,000,000
- 3,000,000
3,000,000
3,000,000
525,000
525,000
525,000
-
-
-
- 1,800,000
-
-
-
-
- 1,000,000
1,000,000
1,000,000
- 2,000,000
- 1,200,000
-
-
-
-
- 1,000,000
1,000,000
1,000,000
-
-
-
-
-
-
-
-
-
-
-
^Opening balance on commencement of employment.
*Chris McAuliffe commenced as a Director on 19 July 2012.
**Duncan Cornish stepped down as Chief Financial Officer on 19 September 2011 and is not considered to be key management personnel following that date.
Performance rights
Balance
1 July
2012
Granted as
remuneration
Exercise
of options
Net
change
other
Balance
30 June
2013
Total
vested at
30 June
2013
Total
vested and
exercisable
at 30 June
2013
Total vested
and not
exercisable
at 30 June
2013
Directors
Neville Sneddon
Nicholas Jorss
Andrew Martin
Stephen Bizzell
Viv Forbes
Chris McAuliffe*
Senior Management
Doug McAlpine
Vaughan Wishart
Michael McKee
Wesley Nichols^
-
-
-
-
-
-
-
-
-
-
-
500,000
-
-
-
-
450,000
400,000
500,000
400,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
500,000
-
-
-
-
450,000
400,000
500,000
(400,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
^Wesley Nichols ceased employment with the Company on 24 May 2013, resulting in a nil KMP option holding at 30 June 2013.
*Chris McAuliffe commenced as a Director on 19 July 2012.
No performance rights were issued or held prior to 1 July 2012.
ANNUAL REPORT 2013 STANMORE COAL82
(c) Loans to key management personnel
There were no loans to key management personnel during the year (2012: none).
(d) Other transactions and balances
Other transactions with key management personnel are set out in Note 29 (c). There were no other transactions or
balances with key management personnel during the year.
Note 6: Dividends and franking credits
There were no dividends paid or recommended during the financial year.
There are no franking credits available to the shareholders of Stanmore Coal Limited.
Note 7: Auditor’s remuneration
Audit services
Amounts paid/payable to BDO Audit Pty Ltd for audit or review of the financial
statements for the entity or any entity in the Consolidated Entity
74,500
53,891
2013
$
2012
$
Taxation services
Amounts paid/payable to BDO Audit Pty Ltd for non-audit taxation services
performed for the entity or any entity in the Consolidated Entity:
Preparation of income tax return
Note 8: Earnings per share
18,625
93,125
20,892
74,783
2013
$’000
2012
$’000
Earnings
Loss attributable to owners of Stanmore Coal Limited used to calculate basic
and diluted earnings per share
(5,011)
(7,682)
Weighted average number of ordinary shares used as the denominator in
calculating basic earnings per share
2013
Number ’000
2012
Number ’000
197,925
143,658
Adjustments for calculation of diluted earnings per share: options*
-
-
Weighted average number of ordinary shares and potential ordinary shares
used as the denominator in calculating diluted earnings per share
197,925
143,658
*Options are considered anti-dilutive as the Consolidated Entity is loss making. Options could potentially dilute earnings per share in the future.
Refer to Note 19 (b) for details of options granted as at 30 June 2013.
STANMORE COAL ANNUAL REPORT 2013
83
Note 9: Cash and cash equivalents
Cash at bank and in hand
2013
$’000
24,360
2012
$’000
23,957
Cash at bank bear floating and fixed interest rates between 1% and 4.45% (2012: 1% and 5.15%).
Reconciliation of cash
The above figures are reconciled to the cash at the end of the financial year as
shown in the statement of cash flows as follows:
Balances as above
Balances per statement of cash flows
24,360
24,360
23,957
23,957
Cash and cash equivalents of $24.36 million held at 30 June 2013, includes term deposits of $22.00 million (2012: nil).
These term deposits are at-call and readily available to be converted to cash without restriction.
Note 10: Restricted cash
Restricted cash
2013
$’000
1,500
2012
$’000
Restricted cash of $1.5 million held at 30 June 2013 is an amount held on term deposit to cash-back a bank guarantee.
The bank guarantee is provided by National Australia Bank and relates to the Company’s commitment to WEXP1.
Note 11: Trade and other receivables
Current
GST receivable
Sundry receivables
2013
$’000
338
162
500
2012
$’000
806
894
1,700
No receivables balances are past due or impaired at the end of the reporting period. Sundry receivables reflect interest
receivable in relation to $22 million of term deposits held as at 30 June 2013 with various financial institutions.
ANNUAL REPORT 2013 STANMORE COAL84
Note 12: Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in note 1(a).
Country of
incorporation
Class of
shares
Percentage owned
(%)* 2013
Percentage owned
(%)* 2012
Name
of entity
Mackenzie Coal Pty Ltd
Comet Coal & Coke Pty Ltd
Belview Coal Pty Ltd
Belview Expansion Pty Ltd
(incorporated 7/9/2012)
Brown River Project Pty Ltd
Emerald Coal Pty Ltd
New Cambria Pty Ltd
Kerlong Coking Coal Pty Ltd
Stanmore Surat Coal Pty Ltd
Theresa Creek Coal Pty Ltd
(incorporated 6/6/2013)
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
*The proportion of ownership interest is equal to the proportion of voting power held.
Note 13: Property, plant and equipment
Land deposit
At cost
Plant and equipment
At cost
Accumulated depreciation
Computer equipment
At cost
Accumulated depreciation
Furniture and office equipment
At cost
Accumulated depreciation
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
2013
$’000
1,930
14
(4)
10
91
(62)
29
137
(33)
104
100%
100%
100%
0%
100%
100%
100%
100%
100%
0%
2012
$’000
1,930
14
(2)
12
91
(34)
57
134
(17)
117
Total plant and equipment
2,073
2,116
STANMORE COAL ANNUAL REPORT 201385
Movements in carrying amounts
2013
Balance at the beginning of the year
Additions
Depreciation expense
Carrying amount at the end of the year
2012
Balance at the beginning of the year
Additions
Depreciation expense
Carrying amount at the end of the year
Land
deposit
$’000
1,930
-
-
1,930
Land
deposit
$’000
1,930
-
-
1,930
Plant and
equipment
$’000
Computer
equipment
$’000
Furniture and
office equipment
$’000
Total
$’000
12
-
(2)
10
57
-
(28)
29
117
2,116
3
(16)
104
3
(46)
2,073
Plant and
equipment
$’000
Computer
equipment
$’000
Furniture and
office equipment
$’000
6
7
(1)
12
29
50
(22)
57
74
56
(13)
117
Total
$’000
2,039
113
(36)
2,116
Note 14 (a): Exploration and evaluation expenditure
Non-current
Exploration and evaluation expenditure capitalised
– exploration and evaluation phases
2013
$’000
2012
$’000
30,517
19,286
Recoverability of the carrying amount of exploration and evaluation assets is dependent on the successful development
and commercial exploitation of coal, or alternatively, sale of the respective areas of interest.
Movements in carrying amounts
Balance at the beginning of the year
Additions
Written-off
Carrying amount at the end of the year
Commitments for exploration and evaluation expenditure are disclosed in Note 21.
2013
$’000
19,286
11,231
-
30,517
2012
$’000
14,697
4,589
-
19,286
ANNUAL REPORT 2013 STANMORE COAL
86
Note 14 (b): Capitalised development costs
Non-current
Capitalised development costs
2013
$’000
2012
$’000
20,831
15,200
Recoverability of the carrying amount of development assets is dependent on the successful completion of development
activities, or alternatively, sale of the respective areas of interest.
Movements in carrying amounts
Balance at the beginning of the year
Other additions
Written-off
Carrying amount at the end of the year
Note 15: Other assets
Current
Prepaid insurance
Prepaid borrowing costs
Debt service reserve account#
Non-current
Loans receivable^
Debt service reserve account#
Security deposits
Prepaid borrowing costs
2013
$’000
15,200
5,631
-
20,831
2013
$’000
11
492
853
1,356
8,595
-
326
-
8,921
2012
$’000
4,672
10,528
-
15,200
2012
$’000
16
734
-
750
6,213
1,069
769
734
8,785
^Loans receivable reflects amounts due from third parties in respect of funding provided for port infrastructure development. During the year the
Company impaired a $787,000 loan which related to funding of early studies for a long term future port expansion which is currently not subject to a
formal capacity commitment arrangement. Based on uncertainty around timing of this potential expansion the Company has adopted a conservative
position and fully impaired the loan until there is further clarity around delivery of the future expansion.
#The Company is required to maintain a Debt Service Reserve Account in accordance with the requirements of a debt finance facility. This balance
has been classified as a Current Asset at 30 June 2013 as at balance date the Company had entered into negotiations with Credit Suisse AG to
voluntarily repay the facility. The facility was subsequently repaid in July 2013. Refer Note 17.
STANMORE COAL ANNUAL REPORT 201387
Note 16: Trade and other payables
Current
Trade and other payables
Sundry payables and accrued expenses
Employee benefits
Other current financial liabilities
Other payables
2013
$’000
1,084
785
36
1,905
-
2012
$’000
524
2,738
62
3,324
1,400
Current other payables in the prior year relate to the fair value of the cash-settlement obligation of options granted to Credit
Suisse AGin June 2012. As a consequence of obtaining shareholder approval to settle this obligation via the issuance of
equity at the extraordinary general meeting in October 2012, there is no liability for this obligation at 30 June 2013.
Note 17: Interest bearing loans and liabilities
Current
Interest bearing loan
Non-current
Interest bearing loan
2013
$’000
4,040
2012
$’000
4,040
On 28 June 2012 the Company entered into a facility with Credit Suisse AG to provide funding support for part of an
infrastructure related financing commitment. During the year no additional funding was drawn from Credit Suisse AG and
at 30 June 2013 the Company commenced negotiations with Credit Suisse AG to voluntarily prepay the facility. The facility
was repaid in July 2013 and Credit Suisse AG has fully released their secured charge against the assets and undertakings
of the Company and its subsidiaries. The amount standing in the Debt Service Reserve Account at balance date ($0.8
million) was returned to the Company such that the net cash outflow to prepay the facility was $3.2 million.
Note 18: Non-interest bearing convertible notes
Non-current
Non-interest bearing convertible notes
2012
$’000
2013
$’000
9,027
On 27 June 2012 the Company signed a Subscription and Co-Operation Agreement with Greatgroup which included the
issuance of 13,373,377 convertible notes at a price of 67.5 cents per note (value $9,027,029). The terms of the notes specify
that they cannot be converted (except in the limited case of a change of control) to ordinary shares of the Company by
either party prior to the conversion period which commences on 27 June 2014. Consequently, in the unlikely circumstance
that an event of default occurs prior to the conversion period, it is possible that Greatgroup could enforce its right to
redeem the notes for full cash consideration. This feature is described as a contingent settlement provision in AASB 132
Financial Instruments: Presentation and as such the notes are considered a non-current liability prior to the date the
conversion period commences.
ANNUAL REPORT 2013 STANMORE COAL88
Note 19: Issued capital
208,419,252 fully paid ordinary shares (2012: 179,409,108)
Share issue costs
(a) Ordinary shares
At the beginning of the year
179,409,108
125,676,177
2013
Number
2012
Number
20 July 20111
11 August 20112
14 December 20113
19 December 20114
18 January 20125
27 January 20126
7 February 20127
23 March 20128
29 June 20129
12 October 201210
26 October 201211
12 November 201212
12 November 201213
26 November 201214
11 March 201315
Share issue costs
At reporting date
25,000
1,495,664
19,079,526
97,606
9,756,553
3,736,486
106,406
206,803
19,228,887
-
292,553
20,791,143
5,714,286
20,000
1,600,000
592,162
-
2013
$’000
92,113
(3,860)
88,253
2013
$’000
72,398
87
14,034
1,314
5
309
121
(15)
2012
$’000
76,243
(3,845)
72,398
2012
$’000
34,770
29
1,500
14,119
104
7,220
2,765
82
165
12,980
(1,336)
72,398
208,419,252
179,409,108
88,253
1. On 20 July 2011, 25,000 ordinary shares (value of $29,000) were issued to an employee of the Consolidated Entity.
2. On 11 August 2011, 1,495,664 ordinary shares were issued at an exercise price of $1.0029 (value of $1,500,000) to the vendors of Comet Coke &
Coal Pty Ltd in satisfaction of the third and final payment of the purchase of Comet Coal & Coke Pty Ltd.
3. On 14 December 2011, 19,079,526 ordinary shares were issued pursuant to a placement to investors, raising $14,118,849 before issue costs.
4. On 19 December 2011, 97,606 ordinary shares (value of $104,000) were issued to employees of the Consolidated Entity.
5. On 18 January 2012, 9,756,553 ordinary shares were issued pursuant to a placement to investors, raising $7,219,849 before issue costs.
6. On 27 January 2012, 3,736,486 ordinary shares were issued pursuant a placement to investors, raising $2,765,000 before issue costs.
7. On 7 February 2012, 106,406 ordinary shares were issued to an employee of the Consolidated Entity (value of $81,600).
8. On 23 March 2012, 206,806 ordinary shares (value of $165,442) were issued to employees of the Consolidated Entity.
9. On 29 June 2012, 19,228,887 ordinary shares were issued to Greatgroup Investments Limited, raising $12,979,498 before issue costs.
10. On 12 October 2012, 292,553 ordinary shares (value $87,000) were issued to employees of the Company as part of terms of employment contracts.
11. On 26 October 2012, 20,791,143 ordinary shares were issued to Greatgroup Investments Limited pursuant to Shareholder approval obtained at
the EGM October 2012. The shares were priced at $0.675 per security (value $14,034,021).
12. On 12 November 2012, 5,714,286 ordinary shares (value $1,314,000) were issued to the vendor as consideration for the acquisition of EPC 1186.
13. On 12 November 2012, 20,000 ordinary shares (value $5,000) were issued pursuant to terms of employment contracts.
14. On 26 November, 29 November and 7 December 2012, a total of 1,600,000 employee options were exercised (value $308,800 with a strike price
of 19.3 cents, resulting in 1,600,000 ordinary shares being issued. 4,750,000 options (with strike price of 19.3 cents) not exercised expired on
9 December 2012.
15. On 11 March 2013, 592,162 ordinary shares (value $121,000) were issued to employees of the Company as part of the STI payment for the year
ending 31 December 2012 and pursuant to Shareholder approval obtained at the EGM October 2012.
STANMORE COAL ANNUAL REPORT 201389
Ordinary shares participate in dividends and the proceeds on winding up of the Consolidated Entity in proportion to
the number of shares held. At shareholders meetings each ordinary share is entitled to one vote when a poll is called,
otherwise each shareholder has one vote on a show of hands.
Ordinary shares have no par value and Stanmore Coal Limited does not have a limited amount of authorised capital..
(b) Options and performance rights
For information relating to the Stanmore Coal Limited employee option plan, including details of options issued, exercised
and lapsed during the financial year and the options outstanding at year-end refer to Note 27.
For information relating to the Stanmore Coal Limited performance rights, including details of rights issued, exercised
and lapsed during the financial year and the performance rights outstanding at year-end refer to Note 27.
All options on issue at 30 June 2013 were as follows:
Number of options
3,500,000
525,000
100,000
100,000
100,000
75,000
900,000
900,000
900,000
500,000
450,000
450,000
450,000
450,000
1,216,000
11,670,000
22,286,000
Exercise price
Expiry date
$0.19
31 December 2013
$0.15
16 January 2014
$0.73
31 December 2013
$0.87
31 December 2013
$1.09
31 December 2013
$0.25
2 April 2015
$1.75
31 December 2015
$2.00
31 December 2015
$2.25
31 December 2015
$2.50
31 December 2015
$1.75
$2.00
$2.25
$2.50
$0.48
31 March 2016
31 March 2016
31 March 2016
31 March 2016
30 June 2014
$0.518
27 June 2015
(c) Capital management
The capital of the Consolidated Entity is managed in order to provide capital growth to shareholders and ensure the
Consolidated Entity can fund its operations and continue as a going concern.
The Consolidated Entity’s capital comprises equity as shown in the Statement of Financial Position. There are no
externally imposed capital requirements.
Management manages the Consolidated Entity’s capital by assessing the Consolidated Entity’s financial risks and
adjusting its capital structure in response to changes in these risks and the market. These responses include the
management of share issues and debt.
There have been no changes in the strategy adopted by management to control the capital of the Consolidated Entity since
the prior year other than the need to limit dilution arising from our issuances of capital at low share prices.
ANNUAL REPORT 2013 STANMORE COAL
90
Note 20: Reserves
Option reserve – capital raising
Option reserve – Director, executive and employee options
Option reserve – other options
2013
$’000
286
2,821
436
3,543
2012
$’000
286
2,045
-
2,331
The option reserve records the value of options issued as part of capital raisings, as well as expenses relating to Director,
executive and employee share options.
Note 21: Accumulated losses
Accumulated losses attributable to members of Stanmore Coal Limited at
beginning of the financial year
Losses after income tax
Accumulated losses attributable to members of Stanmore Coal Limited at the
end of the financial year
2013
$’000
(11,699)
(5,011)
(16,710)
2012
$’000
(4,017)
(7,682)
(11,699)
Note 22: Parent entity information
The Corporations Act requirement to prepare parent entity financial statements where consolidated financial statements
are prepared has been removed and replaced by the new regulation 2M.3.01 which requires the following limited
disclosure in regards to the parent entity (Stanmore Coal Limited). The consolidated financial statements incorporate the
assets, liabilities and results of the parent entity in accordance with the accounting policy described in Note 1(a).
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Issued capital
Reserves
Accumulated losses
Total shareholder’s equity
Profit/(loss) for the year
Total comprehensive income for the year
2013
$’000
66,009
23,412
89,421
5,338
9,027
14,365
75,056
88,253
3,539
(16,736)
75,056
(5,196)
(5,196)
2012
$’000
58,431
13,437
71,868
4,724
4,040
8,764
63,104
72,316
2,328
(11,540)
63,104
(7,682)
(7,682)
STANMORE COAL ANNUAL REPORT 201391
Guarantees
No guarantees have been entered into by the parent entity in relation to debts of its subsidiaries (2012: $nil).
Contingent liabilities
The parent entity has no contingent liabilities.
Capital commitments
The parent entity has no capital commitments.
Note 23: Commitments
(a) Future exploration
The Consolidated Entity has certain obligations to expend minimum amounts on exploration in tenement areas. These obligations
may be varied from time to time and are expected to be fulfilled in the normal course of operations of the Consolidated Entity.
The commitments to be undertaken are as follows:
Payable:
Not later than 12 months
Between 12 months and 5 years
Greater than 5 years
2013
$’000
2,322
7,829
-
10,151
2012
$’000
936
9,377
-
10,313
To keep tenements in good standing, work programs should meet certain minimum expenditure requirements. If the minimum
expenditure requirements are not met, the Consolidated Entity has the option to negotiate new terms or relinquish the tenements.
The Consolidated Entity also has the ability to meet expenditure requirements by joint venture or farm-in agreements.
(b) Operating leases
The commitments to be undertaken are as follows:
Payable:
Not later than 12 months
Between 12 months and 5 years
Greater than 5 years
2013
$’000
26
-
-
26
2012
$’000
96
32
-
128
The Consolidated Entity has an operating lease commitment in relation to the lease of commercial office premises. The
lease commenced on 1 November 2010 for a term of three years. The economic entity has provided a bank guarantee of
$25,121 as a security bond on the premises.
ANNUAL REPORT 2013 STANMORE COAL92
(c) Capital commitments
The commitments to be undertaken are as follows:
Payable:
Not later than 12 months
Between 12 months and 5 years
Greater than 5 years
Land acquisitions
2013
$’000
3,100
-
-
3,100
2012
$’000
-
3,100
-
3,100
On 7 April 2011 the Consolidated Entity announced that it had completed an agreement for the right to purchase a key
property at The Range thermal coal Project in the Surat Basin. This agreement gives the Company access to undertake
evaluation and development work as the Project moves to first coal production in 2015. The terms of the acquisition are
confidential but are within normal market expectations and involve a series of staged payments over a number of years.
A completion payment of $3,100,000 in cash is due the earlier of 30 days after the Mining Lease is granted by the
Department of Mines and Energy or 29 November 2013. The Company is in the process of negotiating an extension to the
completion payment date.
WICET port infrastructure
On 27 June 2012 the Company executed a Capacity Commitment Deed (CCD) for 5 Mtpa of port capacity in WEXP1. The
CCD committed the Company to provide $44 million of early works costs for the Project prior to WEXP1 financial close.
The CCD contemplated that financial close would occur on or before 30 June 2013 but due to market conditions this
was not achieved. Subsequent to year end the WEXP1 producers have negotiated a one year extension to the CCD which
gives the producers the option to accelerate the Project or finalise a longer term framework for protecting their priority
rights to future expansions of the terminal. Stanmore’s contractual rights under the CCD remain unchanged. Post
execution of binding take or pay contracts at WEXP1 financial close, early works funding will be converted to an equity
interest in WICET.
Note 24: Contingent liabilities and contingent assets
The Directors are not aware of any other significant contingent liabilities or contingent assets at the date of this report.
Note 25: Operating segments
The Consolidated Entity has identified its operating segments based on the internal reports that are reviewed and used
by the Board of Directors (chief operating decision makers) in assessing performance and determining the allocation
of resources. The Consolidated Entity is managed primarily on a geographic basis, that is, the location of the respective
areas of interest (tenements) in Australia. Operating segments are determined on the basis of financial information
reported to the Board which is at the Consolidated Entity level. The Consolidated Entity does not have any products or
services it derives revenue from.
Accordingly, management currently identifies the Consolidated Entity as having only one reportable segment, being
exploration for coal in Australia. There have been no changes in the operating segments during the year. Accordingly, all
significant operating decisions are based upon analysis of the Consolidated Entity as one segment. The financial results
from this segment are equivalent to the financial statements of the Consolidated Entity as a whole.
STANMORE COAL ANNUAL REPORT 201393
Note 26: Cash flow information
(a) Reconciliation of profit/(loss) after income tax to net cash flow from operating activities
Loss for the year
Depreciation
Revaluation of derivatives
Impairment of loans to secure infrastructure capacity
Borrowing costs
Share-based payments expense
Change in operating assets and liabilities
(Increase)/decrease in trade and other receivables
(Increase)/decrease in other assets
Increase/(decrease) in trade and other payables
Net cash flow from operating activities
(b) Non-cash investing activities
2013
$’000
(5,011)
46
(964)
787
979
990
300
44
(15)
(2,844)
2012
$’000
(7,682)
36
-
-
1,400
1,462
(978)
4
1,576
(4,182)
During the year ended 30 June 2013, 5,714,286 ordinary shares (value $1,314,000) were issued to the vendor as
consideration for the acquisition of EPC 1186.
Note 27: Share-based payments
The following share based payment arrangements existed at 30 June 2013.
(a) Share-based payments to Directors, executives and employees
During the year ended 30 June 2013 the following options were issued to employees and consultants of the Consolidated Entity:
• 1,356,000 unlisted options exercisable at $0.48, on or before 30 June 2014 (vesting 30 June 2013)
• 75,000 unlisted options exercisable at $0.25, on or before 2 April 2015 (vesting 2 April 2014).
All of these options were issued by Stanmore Coal Limited and entitle the holder to one ordinary share in Stanmore Coal
Limited for each option exercised. The options were granted for nil consideration. Once vested, options can be exercised at
any time up to the expiry date. There is no market or performance based vesting criteria in respect of these options.
No. of
options
2013
Weighted average
exercise price
2013 $
No. of
options
2012
Weighted average
exercise price
2012 $
Outstanding at beginning of year
Granted
Forfeited
Exercised
Expired
Outstanding at year-end
Exercisable at year-end
13,400,000
1,431,000
(365,000)
(1,600,000)
(4,750,000)
8,116,000
3,675,000
0.94
0.47
1.20
0.19
0.19
1.43
1.06
10,700,000
3,000,000
(300,000)
-
-
13,400,000
8,750,000
0.63
2.08
1.19
-
-
0.94
0.31
ANNUAL REPORT 2013 STANMORE COAL
94
The options exercisable at 30 June 2013 had a weighted average exercise price of $1.06 (2012: $0.31) and weighted
average remaining contractual life of 1.5 years (2012: 1.8 years). Exercise prices range from $0.15 to $2.50 in respect of
options outstanding at 30 June 2013 (2012: $0.15 to $2.50).
In the year ending 30 June 2013, 1,600,000 options were exercised at a price of $0.19, with a weighted average exercise
price of options exercised of $0.19. (2012: Nil options exercised.)
Pursuant to the Consolidated Entity’s Incentive Option Scheme, if an employee ceases to be employed by the Consolidated
Entity then options will expire three months from the date employment ceases.
The weighted average fair value of the options granted during the year ended 30 June 2013 was $0.10 (2012: $0.28). This
price was calculated by using a Black-Scholes options pricing model applying the following inputs:
Weighted average exercise price
Weighted average life of the option
Weighted average share price
Weighted average expected share price volatility
Weighted average risk free interest rate
2013
$0.47
2012
$2.08
1.73 years
4.48 years
$0.29
58.36%
3.81%
$0.91
58.63%
4.11%
Historical volatility has been the basis for determining expected share price volatility.
The expected life of the options has been taken to be the full period of time from grant date to expiry date. The options
pricing model assumes that options will be exercised on or immediately before the expiry date.
The settlement method for the above options is on a 1:1 basis. During the year ended 30 June 2013, 1,600,000 ordinary
shares (2012: nil) in Stanmore Coal Limited were issued as a result of the exercise of options. The amount paid for the
exercise of options into shares was $308,800 (2012: nil).
During the year ended 30 June 2013, the following shares were granted to key management personnel as share-based
payments:
Grant date
12 October 2012
12 November 2012
11 March 2013
Number
292,553
20,000
592,162
Fair value
87,766
5,000
121,393
The fair value of the shares, as determined by reference to the closing price on the date of grant, was $214,159.
These shares were issued as compensation to Directors and employees of the Group. Further details are provided in the
Directors’ Report.
During the year ended 30 June 2013, the following performance rights were granted to key management personnel as
share-based payments:
Grant date
12 October 2012
Number
2,350,000
Total
fair value
$
705,000
FY13 fair value
amortised
$
193,139
The total fair value of the performance rights, as determined by reference to the closing price on the date of grant, was
$705,000. The amortised cost for the year ended 30 June 2013 was $193,139.
STANMORE COAL ANNUAL REPORT 2013
95
These shares were issued as compensation to Directors and employees of the Group. Further details are provided in the
Directors’ Report.
The amount included in the statement of Comprehensive Income is as follows:
Employee benefits expense
Administration and consulting expense
These amounts have been recognised in equity in the Balance Sheet as follows:
Share capital
Option reserve
(b) Other share-based payments
2013
$’000
956
34
990
2013
$’000
214
776
990
2012
$’000
1,380
82
1,462
2012
$’000
380
1,082
1,462
During the year ended 30 June 2013 $436,000 was recognised as a share base payment expense in relation to the method
to settle options issued to Credit Suisse AG. In the prior year these options were only capable of being cash settled and
therefore valued marked-to-market as a financial liability. Shareholder approval was obtained in October 2012 which
provided the Company with the ability to settle these options by issuing ordinary shares of the Company. Accordingly the
settlement is no longer considered to be a financial liability and the marked-to-market liability at the time of shareholder
approval was reclassified to equity. There were no other share based payments made by the Company (2012: 1,495,664
ordinary shares issued, fair value $1,500,151).
Note 28: Events after balance date
WICET Capacity Commitment Deed extension
The WEXP1 CCD had an expiry of 30 June 2013 and was subsequently extended to 31 August 2014 which includes a
revised, relatively low bonding and expenditure commitment. The extension was executed on 29 August 2013.
Voluntary prepayment and voluntary cancellation of Credit Suisse Facility
The Company and Credit Suisse AG have agreed to a voluntary close out of the facility. The net outstanding amount of
$3.2 million was paid to Credit Suisse AG in July 2013 and Credit Suisse AG has released its security position over the
assets and undertakings of the Company.
There have been no other events since 30 June 2013 that impact upon the financial report as at 30 June 2013.
ANNUAL REPORT 2013 STANMORE COAL96
Note 29: Related party transactions
Transactions between related parties are on normal commercial terms and conditions no more favourable than those
available to other parties unless otherwise stated.
(a) Parent entity
The parent entity and ultimate controlling entity is Stanmore Coal Limited, which is incorporated in Australia.
(b) Subsidiaries
Interests in subsidiaries are disclosed in Note 12.
(c) Key management personnel
Disclosures relating to key management personnel are set out in the Remuneration Report contained in the Directors’
Report and in Note 5.
(d) Transactions with Directors and Director-related entities
During the financial year ended 30 June 2013, Bizzell Capital Partners Pty Ltd provided investor relations services to the
Consolidated Entity. The services were based on normal commercial terms and conditions. Bizzell Capital Partners Pty
Ltd received $209,941 (GST inclusive) (2012: $179,102) for these services during the financial year. As at 30 June 2013 the
Consolidated Entity had an accounts payable amount of $10,106 (2012: $1,141) owing to Bizzell Capital Partners Pty Ltd in
relation to these services.
Note 30: Financial risk management
(a) General objectives, policies and processes
In common with all other businesses, the Consolidated Entity is exposed to risks that arise from its use of financial
instruments. This note describes the Consolidated Entity’s objectives, policies and processes for managing those
risks and the methods used to measure them. Further quantitative information in respect of these risks is presented
throughout these financial statements.
There have been no substantive changes in the Consolidated Entity’s exposure to financial instrument risks, its objectives,
policies and processes for managing those risks or the methods used to measure them from previous periods unless
otherwise stated in this note.
The Consolidated Entity’s financial instruments consist mainly of deposits with banks, trade and other receivables,
security deposits and trade and other payables.
The Board has overall responsibility for the determination of the Consolidated Entity’s risk management objectives and
policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating
processes that ensure the effective implementation of the objectives and policies to the Consolidated Entity’s finance
function. The Consolidated Entity’s risk management policies and objectives are therefore designed to minimise the
potential impacts of these risks on the results of the Consolidated Entity where such impacts may be material.
The overall objective of the Board is to set polices that seek to reduce risk as far as possible without unduly affecting the
Consolidated Entity’s competitiveness and flexibility. Further details regarding these policies are set out below:
STANMORE COAL ANNUAL REPORT 2013
97
(b) Credit risk
Credit risk is the risk that the other party to a financial instrument will fail to discharge their obligation resulting in the
Consolidated Entity incurring a financial loss. This usually occurs when debtors fail to settle their obligations owing to the
Consolidated Entity. The Consolidated Entity’s objective is to minimise the risk of loss from credit risk exposure.
The Consolidated Entity’s maximum exposure to credit risk at the end of the reporting period, without taking into account
the value of any collateral or other security, in the event other parties fail to perform their obligations under financial
instruments in relation to each class of recognised financial asset at reporting date, is as follows:
Cash and cash equivalents
Restricted cash
Receivables
Security deposits and debt service reserve
Loans receivable
2013
$’000
24,360
1,500
500
1,682
8,595
36,637
2012
$’000
23,957
-
1,700
1,838
6,213
33,708
Credit risk is reviewed regularly by the Board and the audit committee.
The Consolidated Entity does not have any material credit risk exposure to any single debtor or group of debtors under
financial instruments entered into by the Consolidated Entity. No receivables balances were past due or impaired at year
end. The credit quality of receivables that are neither past due nor impaired is good. Bank deposits are held with National
Australia Bank Limited, Westpac Banking Corporation and Bank of Queensland Limited.
(c) Liquidity risk
Liquidity risk is the risk that the Consolidated Entity may encounter difficulties raising funds to meet financial obligations
as they fall due. The object of managing liquidity risk is to ensure, as far as possible, that the Consolidated Entity will
always have sufficient liquidity to meets its liabilities when they fall due, under both normal and stressed conditions.
Liquidity risk is reviewed regularly by the Board and the audit committee.
The Consolidated Entity manages liquidity risk by monitoring forecast cash flows and liquidity ratios such as working capital.
The Consolidated Entity’s working capital, being current assets less current liabilities has decreased from $27.896 million in
2012 to $21.771 million in 2013. As outlined Note 1, the ability for the Company to deliver on its strategic objectives is dependent
upon the ability to secure necessary funding through debt, equity or farm-out, or the successful exploration and subsequent
exploitation of the Consolidated Entity’s tenements. Should these avenues be delayed or fail to materialise, the Group has the
ability to scale back its activities to allow the Group to continue as a going concern and meet its debts as and when they fall due.
Maturity analysis – consolidated 2013
Financial liabilities
Trade payables
Other payables
Interest bearing loan
Non-interest bearing
convertible notes
Carrying
amount
$’000
Contractual
cash flows
$’000
<6 months
$’000
6–12 months
$’000
1–3 years
$’000
>3 years
$’000
1,084
821
4,040
9,027
1,084
821
4,040
-
1,084
821
4,040
-
14,972
5,945
5,945
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
ANNUAL REPORT 2013 STANMORE COAL
98
Maturity analysis – consolidated 2012
Financial liabilities
Trade payables
Other payables
Interest bearing loan
Carrying
amount
$’000
Contractual
cash flows
$’000
<6 months
$’000
6–12 months
$’000
1–3 years
$’000
>3 years
$’000
524
4,200
4,040
8,764
524
4,200
4,732
9,456
524
4,200
173
4,897
-
-
173
173
-
-
4,386
4,386
-
-
-
-
Further information regarding commitments is included in Note 23.
(d) Market risk
Market risk arises from the use of interest bearing, tradable and foreign currency financial instruments. It is the risk that
the fair value or future cash flows of a financial instrument will fluctuate because of changes in interest rates (interest
rate risk), foreign exchange rates (currency risk) or other market factors (other price risk). The entity does not have any
material exposure to market risk other than as set out below.
Interest rate risk
Interest rate risk arises principally from cash and cash equivalents. The objective of interest rate risk management is to
manage and control interest rate risk exposures within acceptable parameters while optimising the return.
Interest rate risk is managed with a mixture of fixed and floating rate debt. For further details on interest rate risk refer to
the tables below:
2013
Floating
interest rate
$’000
Fixed
interest rate
$’000
Non-interest
bearing
$‘000
Total carrying amount
as per the statements
of financial position
$‘000
Weighted
average effective
interest rate
%
Financial assets
Cash and cash equivalents
Restricted cash
Receivables
Security deposits, debt
service reserve and
prepayment
Loan receivables
Total financial assets
Financial liabilities
Trade payables
Other payables
Interest bearing loan
Total financial liabilities
2,360
-
-
853
8,595
11,808
-
-
4,040
4,040
22,000
1,500
-
-
-
23,500
-
-
-
-
-
-
500
829
-
1,329
1,084
822
9,027
10,933
24,360
1,500
500
1,682
8,595
36,637
1,084
822
13,067
14,973
4.15
4.10
-
1.46
3.07
-
-
-
2.58
-
STANMORE COAL ANNUAL REPORT 2013
99
2012
Floating
interest rate
$’000
Fixed
interest rate
$’000
Non-interest
bearing
$’000
Total carrying amount
as per the statements
of financial position
$’000
Weighted
average effective
interest rate
%
Financial assets
Cash and cash equivalents
Receivables
Security deposits
Loan receivables
Total financial assets
Financial liabilities
Trade payables
Other payables
Interest bearing loans
Total financial liabilities
-
-
1,742
6,213
7,955
-
-
4,040
4,040
23,957
-
-
-
-
1,700
96
-
23,957
1,796
-
-
-
-
524
4,200
-
4,724
23,957
1,700
1,838
6,213
33,708
524
4,200
4,040
8,764
4.99
-
4.99
4.99
-
-
-
8.58
-
The Consolidated Entity has performed a sensitivity analysis relating to its exposure to interest rate risk. This sensitivity
demonstrates the effect on the current year results and equity which could result from a change in these risks.
At 30 June 2013 the effect on profit and equity as a result of changes in the interest rate would be as follows:
2013
Increase in interest rate by 1%
Decrease in interest rate by 1%
Cash and cash equivalents
Restricted cash
Security deposits
Loans receivable
Interest bearing loan
Tax charge of 30%
After tax increase/(decrease)
Carrying
amount
$’000
24,360
1,500
853
8,595
(4,040)
-
-
Profit
$’000
Other
comprehensive
income
$’000
Profit
$’000
Other
comprehensive
income
$’000%
240
15
9
86
(40)
-
310
-
-
-
(240)
(15)
(9)
(86)
40
-
(310)
-
-
-
The above analysis assumes all other variables remain constant.
ANNUAL REPORT 2013 STANMORE COAL100
2012
Increase in interest rate by 1%
Decrease in interest rate by 1%
Cash and cash equivalents
Security deposits
Loans receivable
Interest bearing loan
Tax charge of 30%
After tax increase/ (decrease)
Carrying
amount
$’000
23,957
1,742
6,213
(4,040)
-
-
Profit
$’000
Other
comprehensive
income
$’000
Profit
$’000
Other
comprehensive
income
$’000%
240
17
62
(40)
-
279
-
-
-
(240)
(17)
(62)
40
-
(279)
-
-
-
The above analysis assumes all other variables remain constant.
(e) Fair values
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for
disclosure purposes.
Stanmore Coal Limited has adopted the amendment to AASB 7 Financial Instruments: Disclosures which requires
disclosure of fair value measurements by level of the following fair value measurement hierarchy:
(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
(b) inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly
(as prices) or indirectly (derived from prices) (level 2); and
(c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).
The following table presents the consolidated entity’s assets and liabilities measured and recognised at fair value at
30 June 2012 and 2013.
2013
Financial liabilities
Other payables
Total financial liabilities
2012
Financial liabilities
Other payables
Total financial liabilities
Level 1
$’000
Level 2
$’000
Level 3
$’000
Level 4
$’000
-
-
-
-
Level 1
$’000
Level 2
$’000
-
-
-
-
-
-
Level 3
$’000
1,400
1,400
-
-
Level 4
$’000
1,400
1,400
The fair values disclosed in the above table have been determined using the probable future cash outflows payable,
discounted to net present value.
The fair values of all remaining financial assets and financial liabilities approximate their carrying value.
STANMORE COAL ANNUAL REPORT 2013101
DECLARATION
BY DIRECTORS
The Directors of the Consolidated Entity declare that:
4. The remuneration disclosures included in pages
1. The financial statements, comprising the statement
of comprehensive income, statement of financial
position, statement of cash flows, statement of
changes in equity, and accompanying notes, are in
accordance with the Corporations Act 2001 and:
(a) comply with Accounting Standards and the
Corporations Regulations 2001; and
(b) give a true and fair view of the Consolidated
Entity’s financial position as at 30 June 2013 and
of its performance for the year ended on that date.
2. The Consolidated Entity has included in the notes to
the financial statements an explicit and unreserved
statement of compliance with International Financial
Reporting Standards.
3.
In the Directors’ opinion, there are reasonable
grounds to believe that the Consolidated Entity will
be able to pay its debts as and when they become due
and payable.
38–48 of the Directors’ Report (as part of the audited
Remuneration Report) for the year ended 30 June
2013, comply with section 300A of the Corporations
Act 2001.
5. The Directors have been given the declarations by
the chief executive officer and chief financial officer
required by section 295A of the Corporations Act 2001.
This declaration is signed in accordance with a resolution
of the Directors.
Nicholas Jorss
Managing Director
Brisbane
24 September 2013
ANNUAL REPORT 2013 STANMORE COAL102
INDEPENDENT
AUDITOR’S REPORT
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Level 10, 12 Creek St
Brisbane QLD 4000,
GPO Box 457 Brisbane QLD 4001
Australia
INDEPENDENT
AUDITOR’S
REPORT
To
the
members
of
Stanmore
Coal
Limited
Report
on
the
Financial
Report
We
have
audited
the
accompanying
financial
report
of
Stanmore
Coal
Limited,
which
comprises
the
consolidated
statement
of
financial
position
as
at
30
June
2013,
the
consolidated
statement
of
profit
or
loss
and
other
comprehensive
income,
the
consolidated
statement
of
changes
in
equity
and
the
consolidated
statement
of
cash
flows
for
the
year
then
ended,
notes
comprising
a
summary
of
significant
accounting
policies
and
other
explanatory
information,
and
the
directors’
declaration
of
the
consolidated
entity
comprising
the
company
and
the
entities
it
controlled
at
the
year’s
end
or
from
time
to
time
during
the
financial
year.
Directors’
Responsibility
for
the
Financial
Report
The
directors
of
the
company
are
responsible
for
the
preparation
of
the
financial
report
that
gives
a
true
and
fair
view
in
accordance
with
Australian
Accounting
Standards
and
the
Corporations
Act
2001
and
for
such
internal
control
as
the
directors
determine
is
necessary
to
enable
the
preparation
of
the
financial
report
that
gives
a
true
and
fair
view
and
is
free
from
material
misstatement,
whether
due
to
fraud
or
error.
In
Note
1,
the
directors
also
state,
in
accordance
with
Accounting
Standard
AASB
101
Presentation
of
Financial
Statements,
that
the
financial
statements
comply
with
International
Financial
Reporting
Standards.
Auditor’s
Responsibility
Our
responsibility
is
to
express
an
opinion
on
the
financial
report
based
on
our
audit.
We
conducted
our
audit
in
accordance
with
Australian
Auditing
Standards.
Those
standards
require
that
we
comply
with
relevant
ethical
requirements
relating
to
audit
engagements
and
plan
and
perform
the
audit
to
obtain
reasonable
assurance
about
whether
the
financial
report
is
free
from
material
misstatement.
An
audit
involves
performing
procedures
to
obtain
audit
evidence
about
the
amounts
and
disclosures
in
the
financial
report.
The
procedures
selected
depend
on
the
auditor’s
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.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms.
STANMORE COAL ANNUAL REPORT 2013
103
Independence
In
conducting
our
audit,
we
have
complied
with
the
independence
requirements
of
the
Corporations
Act
2001.
We
confirm
that
the
independence
declaration
required
by
the
Corporations
Act
2001,
which
has
been
given
to
the
directors
of
Stanmore
Coal
Limited,
would
be
in
the
same
terms
if
given
to
the
directors
as
at
the
time
of
this
auditor’s
report.
Opinion
In
our
opinion:
(a)
the
financial
report
of
Stanmore
Coal
Limited
is
in
accordance
with
the
Corporations
Act
2001,
including:
(i)
giving
a
true
and
fair
view
of
the
consolidated
entity’s
financial
position
as
at
30
June
2013
and
of
its
performance
for
the
year
ended
on
that
date;
and
(ii)
complying
with
Australian
Accounting
Standards
and
the
Corporations
Regulations
2001;
and
(b)
the
financial
report
also
complies
with
International
Financial
Reporting
Standards
as
disclosed
in
Note
1.
Report
on
the
Remuneration
Report
We
have
audited
the
Remuneration
Report
included
in
pages
38
to
48
of
the
directors’
report
for
the
year
ended
30
June
2013.
The
directors
of
the
company
are
responsible
for
the
preparation
and
presentation
of
the
Remuneration
Report
in
accordance
with
section
300A
of
the
Corporations
Act
2001.
Our
responsibility
is
to
express
an
opinion
on
the
Remuneration
Report,
based
on
our
audit
conducted
in
accordance
with
Australian
Auditing
Standards.
Opinion
In
our
opinion,
the
Remuneration
Report
of
Stanmore
Coal
Limited
for
the
year
ended
30
June
2013
complies
with
section
300A
of
the
Corporations
Act
2001.Error!
Unknown
document
property
name.
BDO
Audit
Pty
Ltd
D
P
WRIGHT
Director
Brisbane,
24
September
2013
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms.
ANNUAL REPORT 2013 STANMORE COAL
104
NOTES
Note 1
Marketable reserves note
The Marketable Coal Reserves of 94 Mt is derived from
a JORC compliant run of mine (ROM) Probable Coal
Reserve of 117.5 Mt based on a 14.8% ash product and
predicted yield of 80%. The 94 Mt Marketable Reserve
is included in the 287 Mt total JORC Resource (18 Mt
Measures + 187 Mt Indicated + 82 Mt Inferred Resource).
Note 2
Exploration target note
All statements as to exploration targets of Stanmore
Coal and statements as to potential quality and grade
are conceptual in nature. There has been insufficient
exploration undertaken to date to define a coal Resource
and identification of a Resource will be totally dependent on
the outcome of further exploration. Any statement contained
in this report as to exploration results or exploration targets
has been made consistent with the requirements of the
“Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves (JORC Code)”.
Competent persons statement
The information in this report relating to exploration
results and coal resources is based on information
compiled by Mr Troy Turner who is a member of the
Australasian Institute of Mining and Metallurgy (AusIMM)
and is a full time employee of Xenith Consulting Pty
Ltd. Mr Turner is a qualified geologist and has sufficient
experience that is relevant to the style of mineralisation
and type of deposit under consideration and to the activity
which he is undertaking, to qualify as a Competent
Person as defined in the 2004 Edition of the JORC Code.
Mr Turner consents to the inclusion in this document of
the matters based on the information, in the form and
context in which it appears. The information in this report
relating to coal reserves is based on information compiled
by Mr Richard Hoskings who is a member of Minserve
Pty Ltd. Mr Hoskings is a mining engineer, a Fellow of the
AusIMM and has the relevant experience (30+ years) in
relation to the mineralisation being reported to qualify as
a Competent Person as defined in the “Australasian Code
for Reporting of Exploration Results, Mineral Resources
and Ore Reserves (The JORC Code 2004 Edition)”. Mr
Hoskings consents to the inclusion in the report of the
matters based on the information, in the form and context
in which it appears.
STANMORE COAL ANNUAL REPORT 2013www.stanmorecoal.com.au
Level 11, 10 Market Street
Brisbane QLD 4000
Phone: + 61 7 3238 1000
Fax: +61 7 3238 1098
ASX Code: SMR
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