ANNUAL
REPORT
2017
PLATFORM
ESTABLISHED
FOR PROFIT
GROWTH
As one of the few small ASX-listed coal producers, Stanmore Coal
offers an attractive entry point into the coal sector in Australia
ASX CODE
SMR
SHARE PRICE
A$0.41*
SHARES
251,800,978
MARKET CAP
$103.2M*
*Share price as at 13 September 2017
CONTENTS
2
3
4
6
9
Corporate
Directory
The Stanmore
Story
Chairman's
Letter
34
48
Remuneration
Report
Auditor's Independence
Declaration
49
Financial
Statements
Managing Director's
Report
Corporate Social
Responsibility
96
97
Declaration by
Directors
Independent Auditor's
Report
10
Our
Strategy
102
Shareholders
Information
17
Operation, Development
and Exploration
104
Other
Information
24
Directors'
Report
IB Stanmore's Five-Year
Financial History
11
Our Unique Position in
Australian Coal
14
'Capital Light' a Key
Pillar for Growtn
Photo courtesy of Komatsu Mining Corp.
Other private
37%
22%
Sprint Capital HK
SHARE
OWNERSHIP
3%
Board/Management
Corporates
38%
1
Stanmore Coal Annual Report 2017 CORPORATE
INFORMATION
DIRECTORS
AUDITORS
Neville Sneddon (Chairman)
Dan Clifford (Managing Director)
Chris McAuliffe
Neal O'Connor*
Patrick O’Connor
Stephen Bizzell
Stewart Butel*
COMPANY
SECRETARY
Ian Poole
REGISTERED OFFICE
AND PRINCIPAL
BUSINESS OFFICE
Level 8
100 Edward Street
Brisbane QLD 4000
Phone: + 61 7 3238 1000
Fax: +61 7 3238 1098
BDO Audit Pty Ltd
Level 10, 12 Creek Street
Brisbane QLD 4000
Phone: +61 7 3237 5999
Fax: +61 7 3221 9227
SOLICITORS
Corrs Chambers Westgarth
Level 42, 111 Eagle Street
Brisbane QLD 4000
Phone: + 61 7 3228 9333
Fax: +61 7 3228 9444
SHARE REGISTRY
Link Market Services
Level 15, 324 Queen Street
Brisbane Qld 4000
Phone: 1300 554 474
Fax: +61 2 8280 7662
COUNTRY OF
INCORPORATION
Australia
INTERNET
ADDRESS
stanmorecoal.com.au
STOCK EXCHANGE
LISTING
Australian Securities Exchange
ASX Code: SMR
AUSTRALIAN BUSINESS
NUMBER
27 131 920 968
*Appointed 18 September 2017
2
Stanmore Coal Annual Report 2017 THE STANMORE
STORY
Stanmore is an independent coal company with significant
metallurgical coal resources, positioned in the right commodity
at the right time of the cycle to deliver strong results.
Stanmore is currently producing 1.2 Mtpa of product from our Isaac Plains
Mine and exporting to premium international customers.
The Isaac Plains Complex – which encompasses the operational Isaac Plains
Mine and Isaac Plains East Project under development – provides a unique
opportunity for Stanmore to significantly increase production through our
existing coal handling and processing plant (CHPP) and rail loop infrastructure.
Our strategy involves potentially extending the life of the Isaac Plains Complex
by progressively open-cut mining Isaac Plains and Isaac Plains East, at the
same time going underground through highwalls left by the open-cut. Mining
open-cut and underground simultaneously would increase raw coal availability,
and the existing CHPP can be brought to its full production capacity.
We are calling it our ‘Hub Model’ – producing as many tonnes of high grade
coal as possible through a single CHPP fed by multiple mines to run at
capacity. Fully utilising the existing plant enables more coal to be produced
without investing in additional costly infrastructure. The end result – more coal
at lower cost, and an opportunity for significant cash growth and profitability.
The Isaac Plains Complex represents Stanmore’s platform asset. As well as
providing strong returns to shareholders, our ability to remain capital and
cost disciplined will enable Stanmore to invest in further value accretive
opportunities. Growth is not just ‘for growth’s sake’, it's growth in returns
to shareholders. The model can potentially be replicated at other identified
resources either already owned or acquired in future by Stanmore.
Our position at the front of this emerging industry model puts Stanmore
in a unique position to capitalise on the current marketplace for both the
commodity and assets.
INDEPENDENT COAL
COMPANY
Positioned in right
commodity in the right
time of the cycle
ISAAC PLAINS
OPERATIONAL WITH
DEMONSTRATED
PERFORMANCE
Validation that the
resource, equipment
and plan are right
ISAAC PLAINS COMPLEX
REPRESENTS THE
COMPANY'S PLATFORM
ASSET
Q1/Q2 cost structures
targeted with the right
CHPP feed volumes from
'capital light' open cut and
underground expansions
MULTIPLE ACQUISITION
TARGETS AND INTERNAL
PROJECTS ON WHICH
STANMORE CAN
CAPITALISE
We aim to replicate
our 'hub' approach by
focusing on reliability
and creating value
3
Stanmore Coal Annual Report 2017 CHAIRMAN'S
LETTER
Neville Sneddon
Chairman
Dear Shareholder,
OUR PERFORMANCE
On behalf of the Board, I am pleased to present this
year’s Chairman’s Report in the light of Stanmore's
maturation as a coal producer and our established
platform for future growth. Coupled with extremely
positive operational results in FY17, we have
developed a clear and implementable path to
sustainable growth and profitability that will flow on
to shareholders.
Stanmore is delivering results. Acquiring Isaac
Plains (IP) in 2015 and turning it into a fully
operational mine is a significant achievement,
and the mine is performing strongly. Net Profit
after Tax (NPAT) is $12.0 million for FY17
compared with a loss the previous year. This profit
reflects significant gains in the second half, driven
by improvements to all operational and corporate
areas – $36.7 million gross profit following a
$5.9 million loss first half – a clear indicator
of the mine’s future profitability.
Our balance sheet is strong. No dividend was
declared in FY17.
BUFFER AGAINST PRICE CYCLE
During FY17, Stanmore put in place the disciplines
to ensure we remain flexible and profitable
throughout the coal price cycle. While prices are
difficult to predict, the demand and pricing for
coking coal is forecast to remain relatively strong
over the long term. Economic growth in developing
markets, especially Asia, is pushing up the demand
for steel, and this augurs well for Stanmore as
we seek to produce more coking coal at our Isaac
Plains Complex.
While the price for coking coal continues to
fluctuate since falling to $140/tonne in early 2017
then soaring to $300/tonne owing to inclement
4
Stanmore Coal Annual Report 2017 We have developed a clear and implementable
path to sustainable growth and profitability
that will flow on to shareholders
weather in Australia, Stanmore will continue to
exercise capital discipline to best effect. We intend
to produce more coal at the lowest cost regardless.
and Nomination Committee, we have established a
Health, Safety Environment and Community
Sub-committee.
Sound governance has also required renewal of the
Board to reflect our new phase of development. To
that end we welcome Neal O’Connor and Stewart
Butel as new directors from 18 September 2017.
THANK YOU
On behalf of the Board, I thank the Stanmore
team and our contract partners for their efforts in
FY17, and all investors and stakeholders for your
continuing faith in the company. We look forward
to an outstanding year in FY18.
Neville Sneddon
Chairman
SHORT AND LONG TERM
Stanmore has short, medium and long-term
strategies in place to produce returns for
shareholders. We will optimise our resource
portfolio by continuing to reassess opportunities.
In the medium term, we are confident our as yet
untapped high grade thermal resources in the
Bowen and Surat Basins will find ready markets
into HELE (high efficiency, low emission) coal-
fired power plants throughout Asia. Stanmore
is positioned to take advantage of the ongoing
demand for coking coal and steady rise in demand
for thermal over the next five to 10 years. With this
forecast demand, some major miners exiting coal
creates additional opportunity for Stanmore.
GOOD GOVERNANCE ON BOARD
The Board has recognised the transition of the
business into operations with the appointment of
a new Managing Director and by supporting the
building of the right team with the right skills and
capabilities.
Stanmore’s transition has required a broadening
of our governance activity, and in conjunction with
the Audit and Risk Committee, and Remuneration
5
Stanmore Coal Annual Report 2017 MANAGING
DIRECTOR'S
REPORT
Dan Clifford
Managing Director
YEAR IN FOCUS
Outcomes for Stanmore during the year included:
COMPLETING OUR FIRST FULL
YEAR OF COAL PRODUCTION
AS A COMPANY
VALIDATING OUR INVESTMENT
PLAN with business goals achieved
through improved efficiencies, control
and operational performance
COMMENDABLE TEAMWORK
by Stanmore personnel, our contract
partners and stakeholders to achieve
our production and cost guidance
targets for the year
RAISING AND INVESTING $15M
into pre-strip and other operational
activities to increase efficiencies
SUCCESSFULLY MINIMISING
THE IMPACT OF CYCLONE DEBBIE
ON PRODUCTION
OPERATIONS RECORDING AN
UNDERLYING PROFIT FOR THE
YEAR including a record Q4
Ensuring the health and wellbeing of our people
and the environment remains an underpinning
core value at Stanmore. A 12.46 TRIFR (total
reportable injury frequency rate per million
hours) after two minor injuries in Q4 was very
disappointing. Conversely on the environment,
there was a pleasingly high standard of
rehabilitation of 82ha at Isaac Plains.
Stanmore's growth from a transformational
acquisition the previous year into a reliable, safe,
and consistent producer of metallurgical coal
during FY17 has positioned the company well
to generate cash from existing operations and
continue the development of the Isaac Plains
Complex into an asset of significant value for
our shareholders.
6
Stanmore Coal Annual Report 2017 Now with our sights set on the future, the
performance of our team and the Isaac Plains
asset will enable Stanmore to identify and
execute further value accretive opportunities
PRODUCTION RESULTS
Q4 was the clearest measure of operations
performance. A record quarter for overburden
removal delivered the strongest quarter of ROM
coal mining at 564kt and volumes are projected
to substantially increase with mining starting at
Isaac Plains East, where a shallower coal resource
will enable higher rates of extraction. This led
to a record 392kt of product for the quarter. The
FY18 projection for product coal is in line with that
achieved in FY17 at around 1.2Mt. As there will be
no additional tonnes from highwall mining in FY18,
this implies a stronger outlook in open-cut mining
and coal produced than achieved in FY17.
Total FOB unit costs were $109.91 per tonne in
FY17, including state royalties of $11.11/t.
FY18 projected unit costs are expected to
reduce to A$100 per tonne, from approximately
A$110 per tonne in FY17 through adopting a
conservative pricing curve (particularly impacting
royalties) and cost saving initiatives implemented
by the management team, in addition to higher
sales in FY18 (lower unit costs) to deplete
the 258kt of product coal inventories on hand
at 30 June 2017.
December 2016 to increase pre-strip and product
stockpiles to improve operational efficiencies
was effectively deployed. Ongoing operational
improvements are expected to be reflected in an
improved share price.
STRATEGY SET IN PLACE
Now with our sights set on the future, the
performance of our team and the Isaac Plains
asset will enable Stanmore to identify and execute
further value accretive opportunities.
In FY17, we developed the ‘how to’ of our strategy
to become a significant, long-term coal producer. It
begins with earning the right to grow by achieving
results like those we are seeing at Isaac Plains.
Our focus is very clearly set on fully utilising the
assets we have in hand. Ongoing, the strategy
requires:
• Continuing reliable production at Isaac Plains
• Developing Isaac Plains East’s potential for
subsequent open cut mining
• Completing an assessment of Isaac Plains for
lowest-cost underground mining.
SHARE PRICE
INNOVATION
The share price closed at the financial year end at
34 cps. The additional capital raised at 55 cps in
Innovation comes in many forms. We are seeking
to undertake open cut and underground mining in
7
Stanmore Coal Annual Report 2017 We will seek to make further
significant advances in production,
cost and productivity to drive
strong returns for you the
shareholder
tandem to extend the life of our mines and produce
coal at lowest-cost. Our strategy involves staying
capital light, increasing operational efficiencies,
and maximising the return on our existing assets.
We will consider acquiring new resources that fit
our growth strategy and shedding those that don’t.
Being smaller and more agile will enable us to
acquire mid-size deposits that are too small for
the major miners.
OUTLOOK FOR FY18
Our objective to bring on low-cost production from
Isaac Plains East and other coal source opportunities
to fully feed our infrastructure will create significant
value. With this, we are well positioned in the
metallurgical coal arena with favourable market
conditions and a strengthening balance sheet.
We will seek to make further significant advances
in production, cost and productivity to drive strong
returns for you the shareholder.
quarterly benchmark price was set at US$126/t.
Management’s view is maintained that prices
remain supported in the medium term at levels to
incentivise capital investment decisions to replace
depleting supply sources of coking coal.
IN CONCLUSION
I take this opportunity to thank all our dedicated team
for their contribution to our business and look forward
to a strong year ahead. Stanmore operates to the
highest standards of corporate governance, reporting
via transparent, compliant and efficient processes.
We at Stanmore can see a clear path to profitability.
We are at a point in the business where we have the
right capability and operating disciplines in-house.
Investors and all stakeholders, thank you for your
ongoing support.
Recent upward movements in coking coal indices
provide Stanmore with a more optimistic outlook
for the Q1 FY18 price than anticipated. The June
Daniel Clifford
Managing Director
8
Stanmore Coal Annual Report 2017
CORPORATE SOCIAL
RESPONSIBILITY
Stanmore is focused on a strong people-first culture by ensuring
that we contribute in a positive way to the regions in which we
operate. The company takes a long-term view on sustainability and
believes the communities in which we operate should benefit from
Stanmore’s activities.
HEALTH AND SAFETY
Health and safety is an underlying core value in the business. The focus on
safety leadership and the engagement of our staff and contractors will ensure
that we meet our goal of no injuries and that everybody can return from work
each day safe and healthy.
STANMORE COAL SAFETY STATISTICS
The wellbeing of
our people, the
environment and
communities are
core values at
Stanmore
50,000
40,000
30,000
20,000
10,000
0
s
e
i
r
u
n
j
i
e
l
b
a
d
r
o
c
e
R
20
16
12
8
4
0
Jul 16 Aug 16 Sep 16 Oct 16 Nov 16 Dec 16 Jan 17 Feb 17 Mar 17 Apr 17 May 17 Jun 17
n Site hours worked n Total Recordable Injuries (RHS) n TRIFR (RHS) n O/C coal mining av. TRIFR (RHS)
ENVIRONMENT
We take our commitments to the environment very seriously and operate to reduce
long-term impacts. Our long term objective is to enable the relinquishment of our
mining leases to allow for sustainable land use post mining.
Stanmore monitors impacts on air quality and noise and operates to keep
within strict operating parameters. We ensure we manage mine affected water
effectively by maximise opportunities for consumption on site and by providing
for control through storage and pumping installations.
The company’s site rehabilitation plans are in accordance with an approved
Plan of Operations. We are particularly proud of our achievement in
rehabilitating 82ha in our first full year of operations during FY17 at Isaac
Plains. This was double the total area rehabilitated by the previous owners.
COMMUNITY
Stanmore believes we should earn the right to operate within the local
communities in which we are located. We do this by engaging with the
community, providing economic opportunities, behaving respectfully, caring
for people and the environment and doing what we say we will do. Stanmore
supports local community groups with both direct grants and supply of
supporting resources and personnel.
9
Stanmore Coal Annual Report 2017
OUR
STRATEGY
As one of the few small ASX-
listed coal producers, Stanmore
Coal is well positioned in the
coal sector in Australia.
Strong results are being achieved
and we have a clear strategy moving
forward for our diversified portfolio of
development, exploration properties
and acquisition activity. All resources
are in Queensland’s renowned
Bowen and Surat Coal Basins,
which produce some of the world’s
best coking, PCI and thermal coals.
10
STRATEGY – CURRENT
An important starting point for the year in review is our progression against
strategic imperatives set at the 2017 AGM.
OUR STRATEGIC OBJECTIVES FOR FY17 AND FORWARD WERE:
Time
horizon Internal
External
Short
Establish reliability
and repeatability from
Isaac Plains
✓ Assess potential assets in
proximity to Isaac Plains
Complex
✓
Medium Develop Isaac Plains
East and complete
assessment of Isaac
Plains Underground
Rationalise our portfolio
based on highest value
to shareholders
Pursue realistically
attainable assets with
premium coal quality
Long
Develop portfolio
assets
Assess product mix
strategy
Progress against our short-term objectives has been strong, with our medium
and long term goals also firmly in view. We are achieving reliability and have
established consistent production performance at Isaac Plains Mine. At the
same time we are exploring additional regional open cut and underground
options to further leverage our existing infrastructure at Isaac Plains Complex.
OUR OBJECTIVES PERFORMANCE TO DATE
FY17 guidance
FY17 actual
Isaac Plains
Mining/ Operations
production
at 1.25Mtpa
(downgraded to
1.15Mtpa after
Cyclone Debbie)
Isaac Plans achieved 1.204Mtpa
• With targeted investment into
mining improvement initiatives
($15M from capital raise)
• Generating clear results with
reliability and repeatability
established
FY18 priorities
FY18
production
projected to
be 1.2Mt
Development of
Isaac Plains East
Progress in the June quarter resulted
in recent finalisation of negotiations
with landholders allowing the public
notification process to be triggered
Targeted
potential first
production
Q4 FY18*
Isaac Plains
Underground
3D seismic testing and Pre-Feasibility
Study commenced
Business
decision to
initiate BFS
Assess potential
assets in proximity
to Isaac Plains
Numerous assets have been under
review to rationalise our portfolio for
highest shareholder value
Continuation of
assessments to
fit strategy
*This is subject to no objections during the process and timely processing of approvals.
Stanmore Coal Annual Report 2017 OUR STRATEGY
(continued)
LOOKING FORWARD…
Stanmore is well placed to take full advantage of our favourable position in the
Australian coal industry and deliver outstanding returns for shareholders.
We have the right platform with the right drivers in place and a clear strategy
to capitalise on our low-cost asset and capital light approach.
Having the right commodity with the right expertise and investment to
maximise the resource, means we can continue to achieve consistently high
production with potential for increasing financial returns.
Coupled with our capacity for reliability and repeatability of results achieved,
we remain committed to maintaining our licence to operate. Our track record in
environmental sustainability and the wellbeing of our people and partners is at
the front of our mind. We will continue that drive.
We are cash-generative and geared for growth, positioned to deliver results
at the right time in the cost cycle. The following figure outlines the current
position and clear strategy Stanmore has in place for the short, medium and
long term to maximise total shareholder return:
We have the right
platform with the right
drivers in place and
a clear strategy to
capitalise on our
low-cost asset and
capital light approach.
2017
2018–2019
2020–2025
2025 ONWARDS
CURRENT POSITION
PHASE 1 –SHORT TERM
PHASE 2 – MEDIUM TERM
PHASE 3 – LONG TERM
Platform
acquisition
Maximising
current assets
Right scale of acquisition
with capital discipline
Positioning in
commodity type
Reliability established
Dragline utilisation
IPC CHPP to
3.0Mt product
IPC regional advantage
OC and UG capability
Repeatable
'Hub' model
Integrated coal
company
Operational performance
Business plan
Life of mine plans
Strategic plan
11
Stanmore Coal Annual Report 2017 OUR UNIQUE POSITION
IN AUSTRALIAN COAL
A dragline can provide the lowest cost
means of accessing coal of any open cut
mining method.
The dragline Stanmore took ownership of at Isaac
Plains, along with other operational assets, sets
us apart as an investor option in Australian coal,
distinguishing us from ’those who can’t’ and ’those
who won’t’.
Acquiring the dragline, process plant, rail loop
and existing mine areas all but eliminated
the significant infrastructure costs mining
development companies face to become
operational – the can'ts.
In addition, the opportunity was passed on to us by
larger mining companies because their focus was
on larger investments – the won’ts.
The acquisition has supported Stanmore’s drive
to become a coal producer. Through our ability
to grow and reproduce the model, we have an
opportunity for rapid growth for investors that
both the can’ts and won’ts cannot match, in doing
so, transitioning from a small to a mid-tier coal
producer.
12
Stanmore Coal Annual Report 2017 OUR STRATEGY
(continued)
STRATEGY PHASE 1 – SHORT TERM
PHASE 1 –SHORT TERM
We will use Isaac Plains as the platform to reduce costs, bring
returns to shareholders and grow those returns.
Maximising current assets
In this current phase, we aim to extract maximum value at Isaac Plains by:
• Realising full capacity of process infrastructure (currently under-utilised
at 1.2Mtpa) by choke feeding from multiple mines
IPC CHPP to 3.0Mt product
IPC regional advantage
• Extending the value from Isaac Plains Complex by prolonging its life
through introducing new mines.
Business plan
CAPITAL LIGHT
The strategy presents exciting prospects for profitability, as Stanmore owns
the mines and infrastructure, and Stanmore can potentially access new areas
at lower cost. Keeping production ‘capital light’ will bring us into the lower
quartile of production costs – previously difficult for smaller miners.
OPEN CUT AND UNDERGROUND CAPABILITY
Upon completion of open cut mining at Isaac Plains, Stanmore is looking to
move the dragline to support open cut mining at Isaac Plains East, at the same
time starting underground mining through the highwalls left at Isaac Plains.
Accessing underground through existing highwalls left by open cut mining and
shallower coal at Isaac Plains East will turn Stanmore into a highly profitable
1Q/2Q coal producer (see chart opposite).*
METALLURGICAL COAL FOCUS
We will continue to prioritise production coking coal, leveraging the forecast
strong prices and buyer demand from existing and new customers. This will
maximise profits and shareholder return.
SATELLITE ASSETS
We will focus on projects that can deliver low cost tonnes as a result of lower
capital. This involves seeking new open-cut and underground mines to feed
Isaac Plains. As well as our existing resources, we may acquire additional
resources in the region.
For each mine the dragline develops or extends, a low-cost, longer-life
underground may be developed. Operations will remain capital light by utilising
the dragline for lowest cost open cut mining and the low-capital bord-and-
pillar method for underground mining. The result is a multiplier effect, where
CHPP feed can be maximised.
*This phase in developing our ‘Hub Model’ at Isaac Plains depends on the findings of current studies
on the underground seam at Isaac Plains and obtaining approvals to mine Isaac Plains East.
13
Stanmore Coal Annual Report 2017 OUR STRATEGY
(continued)
MOVING FROM 3Q TO 1Q ON THE COST CURVE IS OUR OBJECTIVE
n Total Cash Cost (Australia)
The first 3 years at Isaac
Plains East are projected to
move Stanmore into the first
quartile of the cost curve
The remaining open-cut reserves at
Isaac Plains are forecast to be extracted
at a cost that is on the border of the
second and third cost curve quartiles
t
/
$
S
U
160
140
120
100
80
60
40
20
0
0
25
50
75
100
125
150
175
200
225
250
275
300
350
Million tonnes
Seabourne Export Metallurgical Curve 2018 (Source: Wood Mackenzie Ltd). Dataset: May 2017)
Currently in the third quartile of operating costs per tonnes produced when benchmarked against fellow Australian mining
operations, Stanmore’s objective is to move into the first quartile in the first three years of operation at Isaac Plains East.
BRINGING CHPP FEED TO CAPACITY AT ISAAC PLAINS
CHPP FEED CAPACITY
1.6Mt
Ú
1.8Mt
+
1.1Mt
3.5Mt
Ú
Isaac Plains
Current
Isaac Plains
East
Isaac Plains
Underground
Short term
strategy
Up to 3.5Mt
ROM
Medium term
strategy
Stanmore’s strategy to transition open cut mining from Isaac Plains to Isaac Plains East then introduce underground
mining at Isaac Plains aims to increase plant feed to capacity.
14
Stanmore Coal Annual Report 2017
‘CAPITAL LIGHT’ A KEY
PILLAR FOR GROWTH
Bord-and-pillar underground mining is just one
way Stanmore will keep operations capital light.
A more traditional method than longwall mining, bord-and-
pillar involves extracting mined material across a horizontal
plane, creating horizontal arrays of rooms and pillars. Raw
coal is extracted in two phases. In the first, "pillars" of
untouched material are left to support the roof overburden,
and open areas or "rooms" are extracted underground; the
pillars may then be partially extracted.
Whereas the efficient longwall mining method requires
significant capital outlay, bord-and-pillar will enable
Stanmore to access coal speedily and profitably for a lower
capital outlay – and, importantly, competitive costs per tonne
providing a clear path to profitability.
Bord-and-pillar underground mining will support
Stanmore’s other strategies to remain capital light,
including:
•
The synergies of continuing to use our existing CHPP,
rail loop and haul roads
• Continuing to utilise our dragline for lowest cost open
cut operations and low-cost underground entry
•
Through lower cost assets others can’t or won’t
operate.
Right: The potential to undertake bord and pillar
underground mining utilising a continuous miner is
being assessed at Isaac Plains. (Top two images provided
courtesy of Komatsu Mining Corp.).
15
Stanmore Coal Annual Report 2017 OUR STRATEGY
(continued)
PHASE 2 – MEDIUM TERM
Right scale of acquisition
with capital discipline
STRATEGY PHASES 2 AND 3 –
MEDIUM AND LONG TERM
Establishing the model at Isaac Plains Complex of one processing
hub fed from multiple mines will form a blueprint for Stanmore to
roll out more hubs at current and future resources.
OC and UG capability
Repeatable 'Hub' model
PHASE 2 – REPLICATION
Medium term, it will involve extending the size and scale of our mining
production. Keys to increasing scale will include:
Life of mine plans
• Replicating the open-cut/underground model while maintaining capital
disciplines.
PHASE 3 – LONG TERM
• Opportunistic development of core portfolio assets, identifying suitable
existing resources and/or acquiring resources that fit the plan
– Shedding resources that don’t fit
Positioning in commodity type
–
Value acquisition of resources from others who can’t or won’t
develop them.
PHASE 3 – DIVERSIFICATION
Intended future growth will position Stanmore as an integrated coal company,
diversified in:
• Regions of operation
• Mining methods
• Commodity type.
LONGER OUTLOOK
As well as coking coal, Stanmore is well positioned in Phases 2 and/or 3
to capitalise on forecast demand for high grade thermal coal to feed HELE
coal-fired power plants in Asia. HELE technologies are available now and, if
deployed, can reduce greenhouse gas emissions from the entire power sector
by around 20%.
Our existing coking and thermal coal resources in the Bowen Basin at Isaac
Plains and Isaac Plains East, Belview, Lilyvale and Mackenzie exploration, and
in the Surat Basin at The Range and Clifford will be supplemented/replaced by
suitable value acquisitions under the Stanmore strategy to maximise returns
for investors.
For current reports on progress at Stanmore’s key resources, see page 17.
Integrated coal
company
Strategic plan
16
Stanmore Coal Annual Report 2017 OPERATION, DEVELOPMENT
AND EXPLORATION
ISAAC PLAINS COMPLEX
Stanmore acquired Isaac Plains in November 2015 and began mining
operations in January 2016. This acquisition has provided the company with
not only an established coking mining operation, but a strategic platform to
potentially commence progression into Isaac Plains East and Isaac Plains
underground projects.
ISAAC PLAINS OPERATION
The run of mine (ROM) strip ratio for FY17 was 13.4:1, representing the build
up to a steady-state operation as pre-strip inventories were established
ahead of mining. Twenty-nine shipments were loaded during the year with
sales totalling 1.020Mt. The contractor mobilised additional equipment and
resources to accelerate pre-strip and improve dragline performance, with
further major overhauls scheduled rolling into the new financial year to further
improve productivity and reliability.
The introduction of short-term, incremental mining of Isaac Plains’ disused
S2 pit highwall enabled Stanmore to supplement open cut mining operations
and increase supply of ROM coal to the existing infrastructure. Total ROM coal
mined by highwall mining methods totalled 0.217Mt.
Open cut dragline and pre-strip operations continued in the northern N1N
and N1S pits for the full year. Total ROM coal mined by conventional open cut
methods totalled 1.521Mt for the full year.
Prime overburden (bcm)
ROM coal produced – open cut (tonnes)
ROM strip ratio (prime)
ROM coal produced – highwall (tonnes)
CHPP feed (tonnes)
Saleable coal produced (tonnes)
Product yield %
Coking
Thermal
Total coal sales (tonnes)
Coking
Thermal
Coal product stockpiles (tonnes)
Average sale price achieved (US$/t)
Average sale price achieved (A$/t)
Reported FOB (including royalty)
000's
Jun 17
22,345
1,521
13.4
217
1,617
1,204
74.5%
55.7%
18.8%
1,020
833
187
258
$102.8
$135.2
$109.91
COAL TYPE
Coking and thermal
LOCATION
7km east of Moranbah
JORC TOTAL RESOURCE
79Mt1
JORC TOTAL ROM
COAL RESERVES
16.4Mt2
JORC TOTAL MARKETABLE
COAL RESERVE
12.9Mt3
OWNERSHIP
100% Stanmore Coal
1
2
3
2017 JORC Resource Estimate
2017 JORC Reserves Estimate
2017 JORC Reserves Estimate
17
Stanmore Coal Annual Report 2017 STANMORE COAL
ASSETS
18
Stanmore Coal Annual Report 2017 OPERATION, DEVELOPMENT AND EXPLORATION
(continued)
The company successfully completed 82ha of rehabilitation during FY17 and
plans to achieve a similar level in FY18.
COAL QUALITY
The mine is currently producing a mid-volatile, weak coking coal known as
semi-soft coking coal, with a secondary thermal coal. The coke oven yield
is substantially higher than the Newcastle SSCC coals, due to lower volatile
matter levels. The coal also displays low impurities levels of sulphur and
alkalis.
The thermal product has a high calorific value, low sulphur and nitrogen
content and excellent handling characteristics and is easy to grind.
Product split (%)
Coking
Thermal
Coking
Isaac Plains
Isaac Plains East*
Inherent moisture (%)
Ash (%)
Volatile matter
Fixed carbon (%)
Total sulphur (%)
Phosphorus (%)
Crucible swell number
Hardgrove grindability index
Calorific value (kcal/kg)
2.5
9.5
25.5
62.5
0.36
0.10
4
-
-
3.1
16.0
23.6
57.3
0.37
0.16
-
65
6,730
2.2
9.5
24.9
63.4
0.4
0.059
4
-
-
*The indicative results from Isaac Plains East deliver a SSCC product slightly higher in rank, with
lower VM content and phosphorous than the present IPM product. This should further broaden
market opportunities for semi-soft coking coal from the Isaac Plains Complex.
COAL SALES AND MARKET OUTLOOK
Stanmore’s reliable supply of quality coking coal has attracted strong customer
support. A total of 790kt of coking coal was shipped during FY17 to Asian steel
mills, reaffirming the performance of the mine the remaining 43kt of coking
coal was shipped into Europe. Thermal coal sales totalled 187kt, consisting of
80kt of low ash coal to Japanese utilities and 107kt of additional sales to other
customers. Total shipped coal sales for the year totalled 1,020kt. Benchmark
coking coal prices rose in the final two quarters of FY17, in line with market
tightness and rising spot prices. Ongoing tightness in the coking coal market is
being observed, with a number of supply disruptions in Queensland providing
further support in the market.
ISAAC PLAINS DEVELOPMENT
The updated JORC compliant open cut Reserve for the Isaac Plains Complex
(Isaac Plains Mine and Isaac Plains East) increases the total open cut mining
life from up to twelve years. This is based on an average production rate of
1.2Mtpa of product coal) until 2025. Production continues with declining annual
tonnage, with completion of reserves by 2029.
The company
successfully completed
82ha of rehabilitation
during FY17 and plans
to achieve a similar
level in FY18
19
Stanmore Coal Annual Report 2017 OPERATION, DEVELOPMENT AND EXPLORATION
(continued)
The Isaac Plains East
Project has been
substantially advanced
in preparation for
development and
operations as an
extension of the existing
Isaac Plains Mine
ISAAC PLAINS EAST
The Isaac Plains East Project has been substantially advanced in preparation
for development and operations as an extension of the existing Isaac Plains
Mine. Results as at 30 June 2017 indicate a significant improvement in
shareholder value through further resource definition, a reduction in mining
costs and development of capital estimates confirming its place in the lowest
cost quartile.
Updated marketable reserves of 8.99Mt at the current product coal mining rate
of 1.2Mtpa provide for an economic mine life of approximately seven years.
These latest reserves models indicated an seven year average prime strip ratio
(bcm/ROM tonnes) of 11:2 , with the first three years at sub 8.8:1 (compared
to the current three year forecast average strip ratio of approximately 14.3:1
within Isaac Plains).
Additional structural and coal washability drill programs and analysis have
confirmed the improved coal rank and yield for the coking product from
Isaac Plains East relative to Isaac Plains. Bankable Feasibility Study (BFS)
activities indicate a saleable product coal mix ~99% coking coal is estimated
at an average life of mine yield of 81%. These findings represent a significant
improvement compared with the existing Isaac Plains Mine.
Studies are ongoing in the BFS to determine the optimal timing and
development growth of the deposit to deliver a lowest cost per tonne operation
matched with varied production levels to generate positive cashflows to
support business growth and expansion opportunities.
Based on current contracted overburden removal and mining costs, the
improved strip ratio at Isaac Plains East is estimated to result in an average
free on board (FOB) cost reduction of around A$15 per product tonne in the
first three years compared to the existing planned three years of Isaac Plains
open cut. Given the nature of the deposit, the BFS detailed mine planning
has identified opportunities to produce higher production levels (~1.7Mtpa)
resulting in significant positive cashflow increases in early years of operation.
Capital infrastructure requirements for the development have been extensively
assessed and refined through the BFS design phase, leveraging heavily off the
existing operational facilities resulting in a minimal risk, low cost capital works
program.
Environmental approvals for the proposed Isaac Plains East Mining Lease area
are well advanced, with the forecast grant of the Mining Lease in Q2 of FY18,
subject to no objections being received. Preparations are being made as part
of BFS and Operational Readiness planning to rapidly deploy contractors for
construction to allow mining to start shortly thereafter.
20
Stanmore Coal Annual Report 2017 OPERATION, DEVELOPMENT AND EXPLORATION
(continued)
Stanmore continued
to progress its
assessment of the
potential underground
extension within the
eastern portion of the
Isaac Plains Mining
Lease
ISAAC PLAINS EXPLORATION
ISAAC PLAINS UNDERGROUND MINING PROJECT
Stanmore has continued assessing a potential underground extension in the
eastern portion of Isaac Plains Mining Lease, an area containing more than
21Mt of JORC Compliant Measured and Indicated Resources. Approximately
7.5Mt ROM (Economically Recoverable Resource) may be extracted, run in
parallel with open cut operations. Extending underground would require
minimal capital expenditure by accessing the existing highwall and surplus
wash plant and rail loadout capacity.
Isaac Plains underground could produce an initial 0.4 Mtpa of ROM coal,
ramping up to over 1Mtpa once the extraction panels commence production.
Current feasibility studies will determine the proposed timing to begin the
underground mine to deliver the lowest cost and optimum value to the entire
Isaac Plains Complex.
While operated and managed separately from Stanmore‘s open-cut mine, Isaac
Plains Underground will share elements of the existing surface operations site
infrastructure, including coal preparation plant, rail transport and some coal
handling.
ISAAC PLAINS COMPLEX RESOURCES AND RESERVES
Project
Ownership %
Primary
coal type
JORC Proved
Reserve
JORC Probable
Reserve
Total JORC
ROM coal
Reserve*^
Isaac Plains
Complex
100%
Coking
13.2 Mt
3.2 Mt
16.4 Mt
Project
Ownership %
Primary coal
type
JORC
Measured
Resource*
JORC
Indicated
Resource*
JORC
Inferred
Resource*
Total JORC
Resource*
Isaac Plains
Complex
100%
Coking
24.9 Mt
30.3 Mt
24.0 Mt
79.2 Mt
Date of
report
Aug 17
Date of
report
Aug 17
*Refer Competent Person Statement page 104
^Refer Reserves Note page 104
21
Stanmore Coal Annual Report 2017 OPERATION, DEVELOPMENT AND EXPLORATION
(continued)
FURTHER DEVELOPMENT
THE RANGE THERMAL COAL PROJECT
A definitive feasibility study covering geology, mining and cost structures
confirmed The Range as a 287 Mtpa high quality, export grade, thermal coal
project. The focus continues supporting delivery of rail and port infrastructure.
Until there is certainty as to timing of the rail solution, Stanmore will continue
with environmental monitoring and other minor on-site activities to maintain
compliance with approvals.
FURTHER EXPLORATION
BELVIEW COKING COAL PROJECT
The Belview Project is a large scale, metallurgical coal project located in the
heart of Queensland’s Bowen Basin. Belview currently hosts a 330Mt JORC
Resource (50Mt Indicated and 280Mt Inferred).
Extensive coal analysis has revealed that maintaining a minimum vitrinite
content is important to ensure the saleable product displays adequate
coking properties. This is achieved by separation at a low density and thus is
accompanied by a low product ash level (typically 6–7.5% (ad)). A washed coking
coal is likely to exhibit low sulphur (0.4–0.55% ad) and moderate phosphorus
(0.07–0.1% ad) with limited plastic properties. The secondary PCI coal has low-
volatile matter, standard ash, low sulphur and moderate phosphorus content.
At a typical ash level of 10–11% (ad) the calorific value is regarded as high
(~7,500 kcal/kg gad). This calorific value level, along with the high carbon
content, indicates a high coke replacement ratio. The variable iron and calcium
content in the ash impact the ash fusion temperature. The HGI is high (~80–87).
Wash and clean coal composite analysis of Belview coal samples indicates that
together these products can be produced at a high overall washed yield, with
an achieved laboratory yield for the main seam (Pollux) of 79%. Under certain
processing scenarios a thermal coal product may also be produced at minimal yields
(5–10%) additional to the PCI product, as a moderate ash (20% ad) with reasonably
high energy content around 6,500 kcal/kg (gad) and attractive HGI of 75–80.
TENEMENTS
EPC 1112, 2030
MLA 55001, 55009, 55010
AREA
90km2
LOCATION
Surat Basin – 24km
south-east of Wandoan
JORC RESOURCE
Total of 287Mt high quality
open pit thermal coal (18Mt
Measured + 187Mt Indicated
+ 82Mt Inferred Resource)
OWNERSHIP
100% Stanmore Coal
TENEMENTS
EP 1114, 1186
AREA
125km2
LOCATION
10km south-east
of Blackwater
JORC TOTAL RESOURCE
330 Mt
OWNERSHIP
100% Stanmore Coal
22
Stanmore Coal Annual Report 2017 OPERATION, DEVELOPMENT AND EXPLORATION
(continued)
LILYVALE COKING COAL PROJECT
The Lilyvale Project is 25km north-east of Emerald and close to the operating
Kestrel South and Gregory-Crinum coking coal mines. The project hosts the
German Creek seam from 336m in depth with a typical thickness across the
project area of 2.2–2.5m. Geologically the project and surrounding areas are
well understood and not expected to be geologically complex.
CLIFFORD THERMAL COAL PROJECT
The Clifford Project covers about 820km2 in Queensland’s highly prospective
Surat Basin. The project is near Stanmore’s The Range, a potential 5 Mt/a open
cut export grade thermal coal project. The Clifford Project adjoins Glencore’s
Wandoan Project and is targeting thermal coal deposits at depths amenable to
open cut mining.
The joint exploration initiative with JOGMEC is playing a key role in the
identification and development of new, long term sources of high quality
thermal coal highly suitable for Japanese electricity generators.
TENEMENTS
EP 1687, 2157
AREA
13km2
LOCATION
25km north-east
of Emerald
OWNERSHIP
85% Stanmore Coal
15% Cape Coal
TENEMENTS
EPC 1274, 1276
AREA
820km2
LOCATION
Surat Basin –
north-west of Wandoan
JORC RESOURCE
630Mt (200Mt Indicated;
430Mt Inferred)
OWNERSHIP
60% Stanmore Coal
40% JOGMEC
23
Stanmore Coal Annual Report 2017 DIRECTORS'
REPORT
YOUR DIRECTORS PRESENT THEIR REPORT FOR THE YEAR ENDED 30 JUNE 2017
DIRECTORS'
REPORT
NEVILLE SNEDDON
DAN CLIFFORD
B. Eng (Mining) (Hons), M. Eng, MAusIMM, Grad AICD
B. Eng (Mining)
NON-EXECUTIVE CHAIRMAN
MANAGING DIRECTOR
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. 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,
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. He is a Non-
Executive Director of CSM Energy Limited, Cobbora
Coal Limited and Solid Energy Limited.
Neville is Chairman of the Remuneration & Nominations
Committee and a member of the Health Safety,
Environment and Community Committee.
During the past three years, Neville has not served as a
Director of any other listed companies.
Dan was appointed as Managing Director and Chief
Executive Officer on 14 November 2016.
Dan has more than 20 years’ experience in the coal
mining industry and has worked in Australia, South
Africa and New Zealand. He has substantial open cut
and underground coal mining experience, including
responsibility for major dragline and longwall operations
under previous employers including Glencore, Anglo Coal,
BHP Billiton and Solid Energy.
Dan was appointed Chief Executive Officer of Solid
Energy New Zealand in 2014 when the company was
facing significant financial pressures and very difficult
market conditions for coal mining companies. During
this period, significant achievements in health and safety
and operational efficiencies were reached. In parallel
with running the operations of Solid Energy, Dan led the
process of an asset sales program.
Dan previously held the position of General Manager of
the Ulan Complex at Glencore in Ulan, New South Wales,
and has held roles with Anglo Coal and BHP in technical,
operational and regional management roles.
Dan is a member of the Health, Safety, Environment and
Community Committee.
During the past three years, Dan has not served as a
Director of any other listed companies.
24
Stanmore Coal Annual Report 2017 DIRECTORS' REPORT
(continued)
CHRIS MCAULIFFE
LLB (Hons), MBA
NON-EXECUTIVE DIRECTOR
PATRICK O’CONNOR
B. Com, FAICD
NON-EXECUTIVE DIRECTOR
Chris McAuliffe is co-founder and Managing Director
of Sprint Capital, a Hong Kong based private equity
investment management group. 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, Chris has also served as a
Director of the following listed companies:
• Asian Bamboo AG (Germany)
(Appointed 03/01/2011 – resigned 17/06/2015)
• Chaswood Resources Holdings Limited (SGX)
(Appointed 30/04/2012 – current)
•
Xplorer PLC (London)
(Appointed 27/06/2013 – current)
Chris is a member of the Audit & Risk Management
Committee and the Remuneration & Nominations
Committee.
Patrick is an experienced non-executive director in a
wide range of industries including mining, oil and gas
exploration, forestry, biotechnology and government
utilities across several international jurisdictions
(Australia, Africa, New Zealand, United Kingdom
and USA).
During the past three years, Patrick has also served as
a Director of the following listed companies:
• Buccaneer Energy Limited
(Appointed 02/12/2013 – resigned 13/03/2015)
• Optiscan Imaging Limited
(Appointed 21/07/2015 – resigned 12/04/2016)
•
•
Tech Mpire Limited
(Appointed 26/07/2016 – resigned 24/02/2017)
TFS Corporation Limited
(Appointed 29/08/2013 – resigned 15/12/2014)
Patrick is Chairman of the Health, Safety, Environment
and Community Committee and a member of the Audit &
Risk Management Committee and the Remuneration &
Nominations Committee.
25
Stanmore Coal Annual Report 2017 DIRECTORS' REPORT
(continued)
STEPHEN BIZZELL
B. Com, MAICD
NICHOLAS JORSS
BE (Hons) Civil, MBA, GDip App Fin (Sec Inst)
NON-EXECUTIVE DIRECTOR
FORMERLY MANAGING DIRECTOR
Nick Jorss was a founding Director and shareholder of
Stanmore Coal Limited.
Nick holds a Bachelor with Honours in Civil Engineering,
a Masters of Business Administration and a Graduate
Diploma of Applied Finance and Investment.
Nick became Executive Deputy Chairman on 14 November
2016 and resigned as a Director on 29 November 2016.
During the past three years, Nick has not served as a
Director of any other listed companies.
VIV FORBES
BScApp (Geol), FAusIMM, FSIA
FORMERLY NON-EXECUTIVE DIRECTOR
Viv has a degree in Applied Science Geology and is
a Fellow of the Australasian Institute of Mining and
Metallurgy.
Viv was a member of the Remuneration & Nominations
Committee.
During the past three years, Viv has not served as a
Director of any other ASX listed companies.
Viv resigned on 30 November 2016.
Stephen is the Chairman of boutique corporate advisory
and funds management group Bizzell Capital Partners
Pty Ltd. He was an Executive Director of Arrow Energy
Ltd from 1999 until its acquisition in 2010 by Shell
and PetroChina for $3.5 billion. He was instrumental
in Arrow’s corporate and commercial success and its
growth from a junior explorer to a large integrated energy
company. He was also a co-founder and director of Bow
Energy Ltd until its $550 million takeover.
Stephen qualified as a Chartered Accountant and early
in his career was employed in the Corporate Finance
division of Ernst & Young and the Corporate Tax division of
Coopers & Lybrand. He has had considerable experience
and success in the fields of corporate restructuring, debt
and equity financing, and mergers and acquisitions. He
has over 20 years’ corporate finance and public company
management experience in the resources and energy
sectors in Australia and Canada with various public
companies.
During the past three years, Stephen has also served as a
Director of the following listed companies:
• Armour Energy Limited
(Appointed 09/03/2012 – current)
• Augend Ltd (formerly Titan Energy Services Ltd)
(Appointed 28/03/2011 – resigned 14/04/2016)
• Diversa Ltd
(Appointed 09/03/2012 – resigned 06/10/2016)
• HRL Holdings Ltd
(Appointed 22/09/2012 – resigned 14/08/2014)
• Laneway Resources Limited
(Appointed 28/06/1996 – current)
• Renascor Resources Limited
(Appointed 01/09/2010 – current)
• UIL Energy Ltd
(Appointed 01/08/2014 – current)
Stephen is the Chairman of the Audit & Risk Management
Committee and a member of the Remuneration &
Nominations Committee.
26
Stanmore Coal Annual Report 2017 DIRECTORS' REPORT
(continued)
COMPANY SECRETARIES
DURING THE PERIOD
IAN POOLE
B. Econ, CA
CHIEF FINANCIAL OFFICER AND COMPANY SECRETARY
Ian was appointed Chief Financial Officer on 8 May 2017
and Company Secretary of Stanmore Coal Limited on
2 June 2017.
Ian has almost 30 years’ experience in financial and
commercial roles in the resources industry in Australia
and the United States. He was Chief Financial Officer
of ASX-listed minerals processing and infrastructure
company, Sedgman Limited between 2010 and 2016. Prior
to this, he worked for Rio Tinto Coal Australia Pty Ltd and
Pasminco Resources.
ANDREW ROACH
B. Com, B. Econ, CA, GDip App Fin, GDip CG
FORMERLY CHIEF FINANCIAL OFFICER AND JOINT
COMPANY SECRETARY
Andrew Roach was appointed Joint Company Secretary
of Stanmore Coal Limited on 6 May 2014 and resigned as
Joint Company Secretary on 2 June 2017.
He held the position of Financial Controller for two years
and was appointed Chief Financial Officer on
4 August 2014. Andrew was appointed Group Manager –
Development on 8 May 2017 and resigned on 2 June 2017.
DUNCAN CORNISH
B. Bus (Acc), CA
FORMERLY JOINT COMPANY SECRETARY
Duncan Cornish held the position of Joint Company
Secretary of Stanmore Coal Limited up to 31 December
2013. He was reappointed on 8 August 2014 before
resigning on 31 July 2017.
27
Stanmore Coal Annual Report 2017 DIRECTORS' REPORT
(continued)
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
Remuneration
& Nominations
Committee
Health, Safety,
Environment
& Community
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
Meetings
attended
Number of
meetings
held while
in office
Meetings
attended
Neville Sneddon
Dan Clifford
Stephen Bizzell
Chris McAuliffe
Patrick O’Connor
Nicholas Jorss
Viv Forbes
12
6
12
12
12
4
4
12
6
12
12
12
4
4
n/a
n/a
8
8
8
n/a
n/a
n/a
n/a
7
8
8
n/a
n/a
8
n/a
8
8
8
n/a
2
7
n/a
8
8
8
n/a
2
2
2
n/a
n/a
2
n/a
n/a
2
2
n/a
n/a
2
n/a
n/a
During FY17 a Board Health, Safety, Environment and Community Committee was formed to give additional attention to
the critical risks now faced by Stanmore in an operational mine environment. These matters were previously handled as
part of the Audit & Risk Management Committee.
INTERESTS IN SHARES, OPTIONS AND OTHER EQUITY INSTRUMENTS
As at the date of this report, the interests of the Directors in the shares, options and other equity instruments of
Stanmore Coal Limited are shown in the table below:
Neville Sneddon
Dan Clifford
Stephen Bizzell
Patrick O’Connor
Chris McAuliffe
Ordinary Shares
Options
Rights
500,000
-
7,372,514
500,000
-
-
-
-
-
-
-
-*
-
-
-
*531,497 Rights not yet issued to Dan Clifford as awaiting AGM approval.
PRINCIPAL ACTIVITIES
The principal activities of Stanmore Coal Limited and its subsidiaries (“the Company”, “the Group” or “the Consolidated
Entity”) was the exploration, development, production and sale of metallurgical and thermal coal in Queensland,
Australia.
28
Stanmore Coal Annual Report 2017 DIRECTORS' REPORT
(continued)
OPERATING AND FINANCIAL REVIEW
The Company reports an operating profit of $12.035 million (2016: loss of $19.746 million) with coal sales revenue delivering
$137.846 million in the financial year (2016: $12.700 million). The profit was driven by the reversal of impairment of the Range
($8.512 million) the recognition of prior year tax losses ($9.326 million) and Isaac Plains Operation performance offset by
recognition of vendor royalties1 ($11.264 million). During the year, the contractor mobilised additional equipment and resources
on the site to accelerate pre-strip and improve dragline performance. Major overhauls for the dragline and wash plant were
conducted during the year or are scheduled for H1 in FY18 to further improve productivity and reliability of these assets.
Highwall mining represented a short term, minimal impact incremental increase to production from the existing disused
S2 pit at the south of the Isaac Plains mining lease. The introduction of incremental highwall mining production provided
benefits to Stanmore in better utilising the significant infrastructure and fixed cost base already in place for the Isaac
Plains open cut mining operations.
Coal sales and other revenue
Cost of sales
Gross margin
Other income and expenses
Finance income
Financial expenses
Profit/(loss) before income tax benefit/(expense)
Income tax benefit/(expense)
Profit/(loss) after income tax expense
UNDERLYING RESULTS
2017
$M
137.846
(107.003)
30.843
(15.100)
0.212
(9.537)
6.418
5.617
12.035
2016
$M
12.700
(24.600)
(11.900)
(5.064)
0.355
(3.137)
(19.746)
-
(19.746)
Underlying results below show the profit/(loss) before income tax of Stanmore had following two items not been included
in FY17 and FY16.
Impairment and partial reinstatement of The Range development project
1.
2. Movement in the fair Value of potential Future Contingent consideration recognised under AASB3 – Business Combinations.
These underlying results are unaudited and not in accordance with IFRS.
Profit/(loss) before income tax expense
ADJUSTMENTS FOR UNDERLYING RESULTS
Movement in impairment of The Range Development Project
Movement in fair value of contingent consideration
Underlying profit/(loss) before income tax expense (non-IRFS measure)
*As the group is not in a tax payable position, no tax movements have been considered.
1
Note 16 Vendor Royalties – Contingent Consideration
Note
10(b)
16
2017
$M
6.418
(8.512)
11,264
9.170
2016
$M
(19.746)
13.883
-
(5.863)
29
Stanmore Coal Annual Report 2017
DIRECTORS' REPORT
(continued)
CASHFLOW
In the year to 30 June 2017, a total net cash inflow was recorded as outlined below. This inflow was largely attributable to
$15.815 million funding drawdown and $14.703 million share issue, partly offset by operating activities outflows relating
to Coal and Overburden inventories $22.381 million.
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
2017
$M
12.080
(17.810)
2.726
30.518
15.435
27.515
2016
$M
15.199
(33.573)
30.454
-
(3.119)
12.080
After adjusting for non-cash items and movements in net working capital, the Company delivered an operating net cash
outflow of $17.810 million.
The summary below of the adjustments from Accounting profit/(loss) highlights that the investment in overburden and
coal stockpiles of $22.381 million is a key driver in negative cash from operating activities.
Accounting profit/(loss) after income tax expense
Depreciation, amortisation and disposal of fixed assets
Gain on bargain purchase
Rehabilitation provision revaluation
Onerous contract revaluation
Contingent consideration revaluation
Unrealised gains/loss on foreign exchange
Impairment of exploration and evaluation expenditure
Impairment of development assets
Non-cash income tax movement
Share-based payments expense
Movement in coal and overburden inventories
Net working capital adjustments
Operating cash flow
2017
$M
12.035
3.918
-
0.387
0.857
11.264
1.029
0.917
(8.512)
(5.406)
(0.134)
(22.381)
(11.573)
(17.810)
2016
$M
(19.746)
1.306
(0.565)
(9.053)
(11.376)
(0.400)
-
-
13.883
-
0.073
(5.079)
(2.616)
(33.573)
The Company ended the year with Total Assets of $163.103 million including $27.515 million of available cash. As
highlighted in Note 13: Borrowings Stanmore also maintains a working capital facility, which currently has an additional
US$10.000 million of available funds. The Company has a strong current ratio and total net assets of $66.818 million at
30 June 2017.
30
Stanmore Coal Annual Report 2017 DIRECTORS' REPORT
(continued)
OPERATIONAL SUMMARY
Thousands
Prime overburden
ROM coal produced – open cut (tonnes)
ROM strip ratio (prime)
ROM coal produced – highwall (tonnes)
CHPP feed (tonnes)
Saleable coal produced (tonnes)
Metallurgical
Thermal
Product yield %
Metallurgical
Thermal
Coal product stockpile (tonnes)
EXPLORATION
2017
22,345
1,521
13.4
217
1,617
1,204
900
304
74.5%
55.7%
18.8%
258
2016
7,396
331
13.7
14
324
231
140
91
71.4%
43.3%
28.0%
74
Stanmore has numerous exploration projects in Queensland, some of these are early stage exploration projects. A
decision was taken in FY16 to record an impairment charge on a number of tenements due to the change in timeframe
for their likely development. In the current market, the Company has assessed that these tenements remain fully
impaired and has accordingly impaired the FY17 expenditure which was required to maintain the tenements in good
standing. Further information on Exploration and evaluation assets is in the Financial Statements at note 10(a)
DEVELOPMENT
Stanmore has a single development asset, The Range, located in the Surat Basin in Queensland. A decision was taken in FY17 to
partially reverse the FY16 impairment charge ($13.883 million) by $8.512 million resulting in a carrying value of $15.700 million
(FY 2016 $7.175 million). A reassessment was undertaken due to the improved outlook for the Surat Basin and improved long
term coal prices. Further information on Capitalised development costs is in the Financial Statements at note 10(b).
OUTLOOK
DEMAND
Stanmore continues to be a reliable supplier of quality coking coal and enjoys strong customer support for Isaac Plains sought
after coking coal. A total of 790kt coking coal was shipped during the year to top tier Asian steel mills, the remaining 43kt
coking coal shipment was to Europe. Thermal coal sales totalled 187kt. Total shipped coal sales for the year totalled 1,020kt.
PRICING
Benchmark coking coal prices rose in the final two quarters of FY17, in line with market tightness and rising spot prices.
Ongoing tightness in the coking coal market is being observed, with many supply disruptions in Queensland providing
further support in the market. A summary of sales is provided below.
Sales tonnes
Total sales
Average sale price
Sales – thermal coal
Sales – semi soft coal
Total/average
2017
kt
187
833
1,020
2016
kt
2017
AUD $'000
2016
AUD $'000
2017
AUD $/t
2016
AUD $/t
68
88
155
17,097
120,749
137,846
4,580
8,120
12,700
91.43
144.96
135.14
67.35
92.27
81.94
31
Stanmore Coal Annual Report 2017 DIRECTORS' REPORT
(continued)
As highlighted above there has been a significant improvement in pricing since the operations commenced in Q4 FY16 with
average semi soft prices improving from A$92.27 to A$144.96, and overall average prices improving from A$81.94 to A$135.14.
ISAAC PLAINS EAST OPEN CUT
The Isaac Plains East Project has been substantially advanced, indicating a significant improvement in shareholder
value through the further refinement in resource definition, a reduction in mining costs and the development of capital
estimates showing it is expected to be a NPV positive project.
Updated marketable reserves of 8.99Mt which will provide for an economic mine life of approximately seven years.
Studies are ongoing in the Bankable Feasibility Study (BFS) to determine the optimal timing and development growth
of the deposit to deliver a lowest cost per tonne operation matched with varied production levels to generate positive
cashflows to support business growth and expansion opportunities.
Preliminary BFS activities indicate an estimated total yield of 81% (80% semi-soft, 1% thermal coal) with a saleable
product coal mix of 98% coking coal and 2% thermal coal.
Capital infrastructure requirements for the development have been extensively assessed and refined, leveraging heavily
off the existing operational facilities resulting in a minimal risk, low cost capital works program.
Environmental Approvals for the proposed Isaac Plains East Mining Lease area are well advanced. It is forecast that,
subject to no objections being received, the mining lease and environmental authorities could be granted in Q2 FY2018.
ISAAC PLAINS UNDERGROUND PROJECT
The Company continued to progress its assessment of the potential underground extension within the eastern portion of
the Isaac Plains Mining Lease. Approximately 7.5Mt ROM of Economically Recoverable Resources may be extracted using
a bord and pillar technique, with underground activity able to run in parallel with Isaac Plains East open cut operations.
When compared to traditional Longwall mining, the Isaac Plains bord and pillar underground opportunity requires lower
capital expenditure utilising access from the existing highwall and surplus capacity within the wash plant and rail loadout
infrastructure.
Isaac Plains underground is targeted to produce an initial 0.4 Mtpa of ROM coal, ramping up to over 1 Mtpa of ROM coal
once the extraction panels commence production.
Isaac Plains Underground is expected to be operated and managed separately from Stanmore open cut mining activities,
while utilising the wash plant and the rail load-out infrastructure.
MANAGING RISK
Stanmore is a producing coal company operating in a volatile pricing market. Factors specific to Stanmore, or those
which impact the market more broadly, may individually or in combination affect the financial and operating performance
of the Company. These events may be beyond the control of the Board or management of Stanmore.
The major risks associated with an investment in the Company are summarised below.
OPERATING RISKS
Stanmore is a single-mine producer and therefore reliant on continued performance of operations at Isaac Plains. There
are numerous operating risks which may result in a reduction in performance that decreases the Company’s ability to
produce high quality coal to meet customer shipping needs. The risks include, but are not limited to, factors such as
weather conditions, machinery failure, critical infrastructure failure or natural disasters.
MARKET RISKS
The key drivers for the business’s financial performance are commodity price and foreign currency markets. Stanmore is not of a
size to have influence on coal prices or the exchange rate for Australian dollars and is therefore a price-taker in general terms.
32
Stanmore Coal Annual Report 2017 DIRECTORS' REPORT
(continued)
Stanmore sells export coal in United States Dollars and is therefore exposed to movements in currency rates. Stanmore
uses forward exchange contracts to hedge a portion of its short-term currency risk where agreed appropriate between
management and the Board.
The market price for Stanmore’s coking coal and thermal coal products is impacted by many factors which could be
favourable or unfavourable for the Company.
GEOLOGICAL RISK
Resource and Reserve estimates are prepared by external experts in accordance with the JORC code for reporting.
The estimates are inherently subjective in some respects therefore there is a risk that the interpretation of data may
not align with the future experienced conditions in the field. Due care is taken with each estimation.
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. The ability to secure and undertake exploration and operational activities within prospective areas is also
reliant upon satisfactory resolution of native title and management of overlapping tenure.
To address these risks, the Company develops strong, long-term effective relationships with landholders, with a focus
on developing mutually acceptable access arrangements as well as appropriate legal and technical advice to ensure it
manages its compliance obligations appropriately. The Company 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. In addition, the Company engages experienced consultants and other technical advisors
to provide expert advice where necessary.
SAFETY
Safety remains of critical importance in the planning, organisation and execution of Stanmore’s exploration and
operational activities. Stanmore 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.
SOVEREIGN RISK
The Company has limited influence over the direction and development of government policy. Successive changes to
the Australian resources policy, including taxation policy, have impacted Australia’s global competitiveness and reduced
the attractiveness of Australian coal projects to foreign investors. The Company’s view is that whilst there is currently a
negative perception of coal, it will continue to play a significant role as an export commodity. Coking coal is critical for
future steel production and thermal coal will continue to play a key role in the global energy mix as part of sustaining
global growth, particularly in developing regions, through efficient electricity generation.
ACCESS TO CAPITAL
At 30 June 2017, the Company remains well funded with cash reserves and an at call working capital facility expected
to be sufficient to meet the business’s operating costs. Stanmore’s ability to effectively continue as a coal producing
business may be dependent upon several factors including the success of the mine operations, or the successful
exploration and subsequent exploitation of the Company’s tenements. Should these avenues be delayed or fail to
materialise, the Company expects to have the ability to successfully raise additional funding through debt, equity or
farm out/sell down to allow the Company to continue as a going concern and meet its debts as and when they fall due.
33
Stanmore Coal Annual Report 2017 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
Non-Executive Chairman
Current Appointee
Dan Clifford
Managing Director
Current Appointee (appointed 14 November 2016)
Chris McAuliffe
Non-Executive Director
Current Appointee
Patrick O’Connor
Non-Executive Director
Current Appointee
Stephen Bizzell
Non-Executive Director
Current Appointee
Viv Forbes
Nick Jorss
Non-Executive Director
Former Appointee (resigned 30 November 2016)
Managing Director
Executive Deputy Chairman
Former Appointee (changed to below position 14 November 2016)
Former Appointee (resigned 29 November 2016)
Senior Management
Ian Poole
Chief Financial Officer
Company Secretary
Current Appointee (appointed 8 May 2017)
Current Appointee (appointed 2 June 2017)
Bernie O’Neill
General Manager Operations Current Appointee (appointed 1 April 2017)
Michael McKee
Chief Operating Officer
Former Appointee (resigned 3 March 2017)
Andrew Roach
Chief Financial Officer
Company Secretary
Former Appointee (moved to non-KMP 8 May 2017)
Former Appointee (resigned 2 June 2017)
REMUNERATION POLICY OVERVIEW
Stanmore’s business strategy of managing an operating coal business 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 considering the Company’s cost
structure and the practices of its peers.
The following describes the Company’s remuneration arrangements for KMP.
FIXED REMUNERATION
MANAGING DIRECTOR AND SENIOR MANAGEMENT REMUNERATION
The Company 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 & Nominations Committee and the Board. The Managing Director reviews all senior management
performance and remuneration and then makes recommendations to the Remuneration & Nominations Committee.
The Remuneration & Nominations Committee reviews the Managing Director’s performance and remuneration.
34
Stanmore Coal Annual Report 2017 DIRECTORS' REPORT
REMUNERATION REPORT (AUDITED) (continued)
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 Company 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 $500,000 per annum, as approved by shareholders at the 2016 Annual General Meeting
(previously $350,000 per annum). Total Non-Executive Director remuneration for FY17 was $213,335 (FY16: $220,000).
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 relating to the business of the Company.
The fixed remuneration of Non-Executive Directors for the year ending 30 June 2017 is detailed in this
Remuneration Report.
SHORT-TERM AND LONG-TERM INCENTIVE PLAN STRUCTURES
The Board considers that the use of Short Term Incentives (STI) and Long-Term Incentives (LTI) are a reasonable means
of remunerating employees, on the basis that they:
•
•
•
•
encourage Senior Management to drive toward the realisation of shareholder value;
provide flexibility to the Company to actively manage the way in which it remunerates and incentivises Senior
Management;
preserve the Company’s cash resources; and
contribute to the attraction and retention of skilled talent in a competitive market.
STI and LTI’s were provided in FY17 for KMP. The STI aligned rewards with key performance outcomes associated with
mining at Isaac Plains. The LTI plan contains links to the Stanmore share price with Rights issued with a threeyear
vesting period for KMP that qualify under the LTI plan rules.
INCENTIVE OUTCOMES FOR FY17 & FY16
The table below illustrates the remuneration outcomes for the STI and LTI schemes.
Incentive
Award outcome
Discussion
FY17 STI
Based on multiple key performance indicators
including TRIFR, Prime overburden, Product
Tonnes FOB cash cost.
The key performance indicators were met to
varying levels resulting in a total accrued payout
percentage of 56% to the only entitled KMP Dan
Clifford. FY17 STI amounts are highlighted below,
but are not due and payable until after the signing
of these Financial Statements.*
*It is noted that all amounts shown as paid to Nick Jorss, Mike McKee and Andrew Roach in the Remuneration Report relate to STI bonuses for the FY16,
finalised and paid in FY17.
35
Stanmore Coal Annual Report 2017 DIRECTORS' REPORT
REMUNERATION REPORT (AUDITED) (continued)
Incentive
Award outcome
Discussion
FY17 LTI
LTI is based on the Absolute Shareholder Total
Return (ASTR) with price targets resulting in the
LTI benefits potentially vesting two financial years
after issue.
Rights are issued annually with vesting periods
of three years, total Rights issued are based on
the performance target tested at the end of three
years i.e. FY19. In the event that no rights vest at
the end of three years, the Rights may be retested
for vesting after four years (FY20) subject to the
escalated performance target. Further details
regarding the standard LTI plant are shown below.
FY16 STI
Stage 1 Incentive – 1/3 of target incentive paid to
key management and staff in December 2015.
Stage 2 incentive – 2/3 of target subject to KPI
weighting for each key management and staff
member.
Range of earned outcomes from 90% to 103% (of
individual entitlement relative to 2/3 of calculated
FY16 target). Payable September 2016.
Across all eligible key management and staff:
• Stage 1 total $260k
• Stage 2 total $518k
• FY16 STI total $778k
During the FY17, Rights were granted or subject
to AGM approval to KMP. as outlined below to Dan
Clifford, Bernie O’Neill, and Andrew Roach.
Total FY16 incentive for key management staff
split into two components. Each key management
personnel were allocated a target incentive value
based on a percentage of their fixed remuneration.
The target ranged from 10% (low) to 75% (high).
Stage 1 incentive – payable as 1/3 of calculated
FY16 incentive amount following completion of
Isaac Plains transaction in November 2015.
Stage 2 incentive – balance 2/3 of calculated
FY16 incentive measures against a range of KPIs
including (but not limited) safety performance,
first coal date, capital overhaul management of
dragline and operating cost performance in June
quarter.
FY16 LTI
Nil
N/A
SHORT TERM INCENTIVE
In the FY17 only Dan Clifford was entitled to a payment under the STI scheme as no other KMP met the employment
related requirements for an STI payment. Mr Clifford’s payment was not paid before year end and is due to be paid after
the signing of these Financial Statements.
LONG TERM INCENTIVE
During the FY17, 381,732 Rights were granted to KMP with a further 531,497 Rights subject to AGM approval. 94,985
Rights remain on issue to KMP due to the resignation of certain KMP, with the addition 531,497 not issued, until
shareholder approval. The FY17 Rights are issued at the maximum amount issuable if stretch targets are reached, all
rights will be payable as cash or shares as decided by the Board upon vesting.
36
Stanmore Coal Annual Report 2017 DIRECTORS' REPORT
REMUNERATION REPORT (AUDITED) (continued)
Below is a summary of the conditions for vesting:
Performance Level
Stretch
Between target and stretch
Target
Between threshold and target
Threshold
Below threshold4
1
2
3
4
Absolute Shareholder Return
Stanmore Coal Limited
Compound Annual Growth Rate (CAGR)
Subject to retest in FY20
ATSR1 of
SMR2 CAGR3
58.74%
>44.22%, <58.74%
44.22%
>25.99%
25.99%
<25.99%
% of stretch/
maximum
vesting
June 19
share price
for vesting
100.00%
Pro-rata
50.00%
$1.20
Pro-rata
$0.90
Pro-Rata
Pro-rata
-
-
$0.60
-
In relation to the FY17 Rights, one retest is available 12 months after the end of the measurement period only if no
vesting occurred in relation the first test following the completion of the measurement period in FY19.
It is a condition of the rights that the KMP must remain employed by Stanmore for the Rights to vest.
GENERAL INCENTIVE AND REMUNERATION CONSULTANTS
The Company does not intend to issue more than an aggregate of 5% of its share capital, from time to time, under the LTI plans.
From time to time, the Remuneration & Nominations Committee seeks and considers advice from external advisors who
are engaged by and report directly to the Remuneration & Nominations Committee. Such advice will typically cover Non-
Executive Director fees, Executive KMP remuneration and advice in relation to equity plans.
The Corporations Act requires companies to disclose specific details regarding the use of remuneration consultants.
The mandatory disclosure requirements only apply to those advisers that provide a ‘remuneration recommendation’ as
defined in the Corporations Act.
During the FY17 the Remuneration & Nominations Committee received recommendations from Godfrey Remuneration
Group, this recommendation was received free from undue influence from any affected KMP, and the directors ensured
this by engaging the consultant independent of any affected KMP. In addition, the recommendation and outcomes were
not discussed or influenced by any KMP’s with the remuneration consultant. The cost of services associated with the
recommendation made by the remuneration consultant totalled $59,700.
In FY16 there were no payments made to remuneration consultants.
RELATIONSHIP BETWEEN REMUNERATION AND COMPANY PERFORMANCE
Revenue ($M)
2017
137.846
2016
12.700
2015
0.859
2014
0.749
2013
1.732
Profit/(loss) attributable to the Group ($M)
12.035
(19.746)
(12.148)
(11.864)
(5.011)
Share price at year end ($/sh)
Basic EPS (c/SH)
Diluted EPS (c/SH)
0.34
5.1
5.1
0.28
(8.9)
(8.9)
0.06
(5.8)
(5.8)
0.11
(5.7)
(5.7)
There were no dividends paid during the FY17 (FY16: nil).
0.13
(2.5)
(2.5)
37
Stanmore Coal Annual Report 2017 DIRECTORS' REPORT
REMUNERATION REPORT (AUDITED) (continued)
EMPLOYMENT CONTRACTS AND CONSULTANCY AGREEMENTS
It is the Board’s policy that employment contracts or consultancy agreements are entered with all Executive Directors
and senior management.
Contracts do not provide for pre-determining compensation values or method of payment. Rather portions of
compensation are discretionary STI and LTI plan awards that are determined by the Remuneration & Nominations
Committee and the Board in accordance with the Company’s remuneration policies.
All other employment contracts or consultancy agreements have either six or three-month (or lower) 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.
KMP are entitled to their statutory entitlements of accrued annual leave and long service leave together with statutory
superannuation on termination.
MANAGING DIRECTOR
Stanmore Coal Limited has an Executive Services Agreement (ESA) with Mr Dan Clifford for the position of Managing
Director which commenced on 14 November 2016. Mr Clifford’s base remuneration is $400,000 per annum plus statutory
superannuation. The ESA provides for termination by either party by providing six month’s written notice, or immediately
in the case of gross negligence or serious misconduct. If employment terminates less than eighteen months from the
commencement date as a consequence of a shareholder acquiring 51% of the Company, the notice period will be twelve
months and no LTI or STI payments/award of equity will be made. Mr Clifford is eligible to participate in the STI and LTI
schemes (the current LTI scheme was approved at the 2016 Annual General Meeting). Detail of instruments issued under
the LTI scheme provided on page 35 of this report.
FORMER – MANAGING DIRECTOR
Stanmore Coal Limited had an Employment Contract with Mr Nicholas Jorss for the position of Managing Director which
commenced on 1 January 2012. Mr Jorss received a salary of $380,000 per annum plus statutory superannuation. Mr
Jorss transferred from the Managing Director Position to Deputy Chairman on 14 November 2016 and resigned from the
Board on 29 November 2016.
SENIOR MANAGEMENT
CHIEF FINANCIAL OFFICER
Stanmore Coal Limited has an Executive Services Agreement (ESA) with Mr Ian Poole for the position of Chief
Financial Officer which commenced on 8 May 2017. Mr Poole receives a salary of $315,000 per annum plus statutory
superannuation effective from 8 May 2017. The ESA provides for termination by either party by providing three month’s
written notice, or immediately in the case of gross negligence or serious misconduct.
Mr Poole is eligible to participate in the STI and LTI schemes (the LTI scheme was approved at the 2016 Annual General
Meeting).
GENERAL MANAGER OPERATIONS
Stanmore Coal Limited has an Executive Services Agreement (ESA) with Mr Bernie O’Neill for the position of General
Manager - Operations which commenced on 1 April 2017. Mr O’Neill receives a salary of $300,000 per annum plus
statutory superannuation. The ESA provides for termination by either party by providing three month’s written notice,
or immediately in the case of gross negligence or serious misconduct.
Mr O’Neill is eligible to participate in the STI and LTI schemes (the LTI scheme was approved at the 2016 Annual General
Meeting). Detail of instruments issued under the LTI scheme is provided on page 35 of this report.
38
Stanmore Coal Annual Report 2017 DIRECTORS' REPORT
REMUNERATION REPORT (AUDITED) (continued)
FORMER – CHIEF FINANCIAL OFFICER
Stanmore Coal Limited had an Employment Contract with Mr Andrew Roach for the position of Chief Financial Officer
which he has held since 4 August 2014. Mr Roach received a salary of $275,000 per annum plus statutory superannuation
(effective 1 October 2016 increased from $250,000 per annum plus statutory superannuation). Mr Roach transferred from
the Chief Financial Officer position to Group Manager – Development on 8 May 2017 and resigned on 2 June 2017.
Mr Roach was previously granted 693,000 unlisted options, expiring 4 September 2017, exercisable as follows:
•
693,000 at $0.22 (vesting 4 September 2015), which were exercised in full during the year, by making a payment of
$152,460 as highlighted in the equity section to the Financial Statements.
Mr Roach was eligible to participate in the STI and LTI schemes (the current LTI scheme was approved at the 2016
Annual General Meeting). Detail of instruments issued under the LTI scheme is provided on page 35 of this report. It
is noted that all issued and non-vested Rights forfeited on 2 June 2017 when Mr Roach resigned from Stanmore Coal
Limited.
FORMER – CHIEF OPERATIONS OFFICER
Stanmore Coal Limited had an Employment Contract with Mr Michael McKee for the position of Chief Operations
Officer (previously General Manager – Operations) which commenced on 1 February 2011 and concluded on 3 March
2017. Mr McKee received a salary of $353,200 per annum plus statutory superannuation. The employment contract was
terminated by Mr McKee by providing written notice.
Mr McKee was previously granted 730,000 unlisted options, expiring 4 September 2017, exercisable as follows:
•
730,000 at $0.22 (vesting 4 September 2015), which were exercised in full during the year, by making a payment of
$160,600 as highlighted in the equity section to the financial statements.
It is noted that all granted and non-vested performance rights expired on 3 March 2017 when Mr McKee resigned from
Stanmore Coal Limited.
39
Stanmore Coal Annual Report 2017 DIRECTORS' REPORT
REMUNERATION REPORT (AUDITED) (continued)
REMUNERATION DETAILS
The following tables detail the components of remuneration for KMP of the Company, for both 30 June 2016 and 2017.
Short-term benefits
Post-employment
Cash
bonus
$
Other short-
term benefits
$
Superannuation
$
Termination
benefits
$
Share-based payments
Equity-settled
(shares)
Equity-settled
(options)
$
Remuneration as
Performance-related
Total
share-based payments
remuneration
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11,755
9,808
-
-
-
-
-
-
74,448
-
-
-
-
21,563
74,448
(31,893)
1,097,459
23,240
4,527
17,352
13,580
58,699
-
19,616
-
-
-
-
19,616
19,616
19,616
39,232
-
-
-
12,228
12,228
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
-
21,504
(53,397)
2,263
(53,397)
(53,397)
(104,531)
14,402
14,402
14,402
14,402
28,804
$
64,167
404,028
480,096
44,167
44,167
16,667
44,167
43,916
74,866
294,096
357,249
770,127
60,000
703,485
40,000
40,000
40,000
40,000
923,485
600,774
429,033
1,029,807
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,960
3,759
7,719
%
5%
(11%)
3%
(18%)
(15%)
-
-
-
-
-
-
-
-
-
-
-
3%
4%
%
40%
29%
3%
15%
24%
-
-
-
-
-
-
-
-
-
-
-
38%
38%
2%
43%
Salary &
fees
$
64,167
230,769
254,770
44,167
44,167
16,667
44,167
-
140,000
194,467
-
-
-
-
698,874
334,467
20,676
68,076
233,385
245,882
568,019
60,000
380,000
40,000
40,000
40,000
40,000
-
-
96,756
138,956
235,712
-
289,467
-
-
-
-
600,000
289,467
353,200
245,416
598,616
209,596
145,840
355,436
30 June 2017
DIRECTORS
Neville Sneddon
Dan Clifford1
Nicholas Jorss2
Patrick O’Connor
Stephen Bizzell
Viv Forbes3
Chris McAuliffe
Total
SENIOR MANAGEMENT
Ian Poole4
Bernie O’Neill5
Andrew Roach6
Michael McKee7
Total
30 June 2016
DIRECTORS
Neville Sneddon
Nicholas Jorss
Patrick O’Connor
Stephen Bizzell
Viv Forbes
Chris McAuliffe
Total
SENIOR MANAGEMENT
Michael McKee
Andrew Roach
Total
1
2
3
4
5
6
7
Commenced 14 November 2016
Changed role 14 November 2016
Resigned 30 November 2016
Commenced 8 May 2017
Commenced 1 April 2017
Changed role (CFO) 8 May 2017
Resigned 3 March 2017
40
Stanmore Coal Annual Report 2017 DIRECTORS' REPORT
REMUNERATION REPORT (AUDITED) (continued)
Short-term benefits
Post-employment
Salary &
fees
$
Cash
bonus
Other short-
term benefits
Superannuation
Termination
benefits
$
Share-based payments
Equity-settled
(options)
$
Equity-settled
(shares)
$
Remuneration as
share-based payments
%
Performance-related
remuneration
%
Total
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,960
3,759
7,719
-
21,504
(53,397)
-
-
-
-
64,167
404,028
480,096
44,167
44,167
16,667
44,167
(31,893)
1,097,459
-
2,263
(53,397)
(53,397)
(104,531)
-
14,402
-
-
-
-
14,402
14,402
14,402
28,804
43,916
74,866
294,096
357,249
770,127
60,000
703,485
40,000
40,000
40,000
40,000
923,485
600,774
429,033
1,029,807
-
5%
(11%)
-
-
-
-
-
3%
(18%)
(15%)
-
2%
-
-
-
-
3%
4%
-
40%
29%
-
-
-
-
-
3%
15%
24%
-
43%
-
-
-
-
38%
38%
41
REMUNERATION DETAILS
The following tables detail the components of remuneration for KMP of the Company, for both 30 June 2016 and 2017.
SENIOR MANAGEMENT
698,874
334,467
21,563
74,448
30 June 2017
DIRECTORS
Neville Sneddon
Dan Clifford1
Nicholas Jorss2
Patrick O’Connor
Stephen Bizzell
Viv Forbes3
Chris McAuliffe
Total
Ian Poole4
Bernie O’Neill5
Andrew Roach6
Michael McKee7
Total
30 June 2016
DIRECTORS
Neville Sneddon
Nicholas Jorss
Patrick O’Connor
Stephen Bizzell
Viv Forbes
Chris McAuliffe
Total
Michael McKee
Andrew Roach
Total
140,000
194,467
11,755
9,808
74,448
$
-
-
-
-
-
-
-
-
-
-
-
-
96,756
138,956
235,712
209,596
145,840
355,436
64,167
230,769
254,770
44,167
44,167
16,667
44,167
20,676
68,076
233,385
245,882
568,019
60,000
380,000
40,000
40,000
40,000
40,000
353,200
245,416
598,616
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
23,240
4,527
17,352
13,580
58,699
19,616
19,616
19,616
39,232
12,228
12,228
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
289,467
19,616
SENIOR MANAGEMENT
600,000
289,467
1
2
3
4
5
6
7
Commenced 14 November 2016
Changed role 14 November 2016
Resigned 30 November 2016
Commenced 8 May 2017
Commenced 1 April 2017
Changed role (CFO) 8 May 2017
Resigned 3 March 2017
Stanmore Coal Annual Report 2017 DIRECTORS' REPORT
REMUNERATION REPORT (AUDITED) (continued)
CASH BONUSES, PERFORMANCE-RELATED BONUSES AND SHARE-BASED PAYMENTS
For the financial year ending 30 June 2017 the following cash performance award accrued.
Nil
Nil
Nil
Nil
Nil
Paid
N/A
Sep 16
N/A
N/A
Sep 16
Sep 16
STI cash award
Dan Clifford
Nicholas Jorss
Ian Poole
Bernie O’Neill
Andrew Roach
Michael McKee
Maximum
STI cap
$
STI
% of STI
% of STI
forfeit
Expected
payment
date
62,500*
35,000
56%
44%
Sep 17
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
*STI Maximum cap for Dan Clifford was $100,000 adjusted to $62,500 based on days worked in FY 2017.
Dan Clifford
Nicholas Jorss
Ian Poole
Bernie O’Neill
Andrew Roach
Michael McKee
Target STI
% of base
salary
FY16 Stage
2 incentive
$
% of Stage
2 incentive
achieved
% of STI
forfeit
N/A
75%
N/A
N/A
60%
60%
N/A
194,467
N/A
N/A
96,756
138,956
N/A
102%
N/A
N/A
98%
99%
N/A
(2%)
N/A
N/A
2%
1%
Note: These bonuses relate to stage 2 FY16 STI bonus which were reported in the FY16 financial statements, but not paid in FY16.
Rights issued to KMP during the year ended 30 June 2017 are outlined below.
Rights
Dan Clifford*
Nicholas Jorss
Ian Poole
Bernie O’Neill
Andrew Roach
Michael McKee
*531,497 Rights not yet issued to Dan Clifford as awaiting AGM approval.
FY17
rights issued
FY17
rights forfeited
Net FY 2017
rights on issue
-
-
-
94,985
286,747
-
-
-
-
-
(286,747)
-
-
-
-
94,985
-
-
42
Stanmore Coal Annual Report 2017 DIRECTORS' REPORT
REMUNERATION REPORT (AUDITED) (continued)
EQUITY INSTRUMENTS
SHAREHOLDINGS
Details of ordinary shares held directly, indirectly or beneficially by KMP and their related parties are as follows:
Balance
1 July 2016
Granted as
remuneration
On exercise
of options
or rights
Net change
other*
Balance
30 June 2017
DIRECTORS
Neville Sneddon
Dan Clifford
Nicholas Jorss
Patrick O’Connor
Stephen Bizzell
Viv Forbes
Chris McAuliffe
SENIOR MANAGEMENT
Ian Poole
Bernie O’Neill
Andrew Roach
Michael McKee
500,000
-
32,263,375
500,000
7,372,514
2,613,270
-
-
-
101,464
635,540
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(32,263,375)
500,000
-
-
-
-
500,000
7,372,514
(2,613,270)
-
-
-
693,000
(794,464)
730,000
(1,365,540)
-
-
-
-
-
-
*Net change other includes shares acquired/disposed in market and shares held on appointment/resignation.
There were no shares held nominally at 30 June 2017.
OPTIONS HOLDINGS
Balance
1 July
2016
Granted as
remuneration
Exercise
of options
Net
change
other
Balance
30 June
2017
Total
vested at
30 June
2017
Total
vested and
exercisable
at 30 June
2017
Total vested
and not
exercisable
at 30 June
2017
DIRECTORS
Neville Sneddon
Dan Clifford
Nicholas Jorss
Patrick O’Connor
Stephen Bizzell
Viv Forbes
Chris McAuliffe
SENIOR MANAGEMENT
Ian Poole
Bernie O’Neill
Andrew Roach
Michael McKee
-
-
-
-
-
-
-
-
-
693,000
730,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(693,000)
(730,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
43
Stanmore Coal Annual Report 2017 DIRECTORS' REPORT
REMUNERATION REPORT (AUDITED) (continued)
RIGHTS
DIRECTORS
Neville Sneddon
Dan Clifford1
Nicholas Jorss
Patrick O’Connor
Stephen Bizzell
Viv Forbes
Chris McAuliffe
SENIOR MANAGEMENT
Ian Poole
Bernie O’Neill2
Andrew Roach3
Michael McKee
Balance
1 July 2016
Granted as
remuneration
Exercise
of options
Net change
other4
Balance
30 June 2017
Total vested/
paid at
30 June 2017
-
-
500,000
-
-
-
-
-
-
450,000
500,000
-
-
-
-
-
-
-
-
94,985
286,747
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(500,000)
-
-
-
-
-
-
(736,747)
(500,000)
-
-
-
-
-
-
-
-
94,985
-
-
-
-
-
-
-
-
-
-
-
-
-
1
2
3
4
Rights totalling 531,497, not yet issued to Dan Clifford as awaiting AGM approval.
Bernie O’Neill had 94,985 Rights accepted and Issued at Balance Date.
Andrew Roach had also issued Rights for the FY17, but due to his resignation these expired as at 2 June 2017.
Net Change other includes shares acquired/disposed in market and shares held on appointment/resignation.
TRANSACTIONS WITH DIRECTORS AND DIRECTOR-RELATED ENTITIES
There were no transactions with Directors or Director-related entities during the year ending 30 June 2017.
LOANS TO KEY MANAGEMENT PERSONNEL
There were no loans to KMP during the year.
END OF REMUNERATION REPORT (AUDITED).
44
Stanmore Coal Annual Report 2017 DIRECTORS' REPORT
(continued)
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 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 RIGHTS
At the date of this report there were nil unissued ordinary shares under options, and 194,985 potential unissued ordinary
shares under Rights as follows:
• Nil unlisted options
•
94,985 unlisted Rights vesting subject to various performance hurdles in 2019 or in the event that no vesting at all
occurs, the Rights may be retested vesting in 2020 subject to escalated performance hurdles and other agreed
conditions.
•
100,000 unlisted rights vesting subject to various performance hurdles in 2020
No Right holder has any right to participate in any other share issue of Stanmore Coal Limited.
During the year ended 30 June 2017 there were 29,303,543 fully paid ordinary shares in Stanmore Coal Limited issued,
including 27,300,000 shares in an professional investor and institutional share issue and 2,003,543 option exercised.
During the year ended 30 June 2017, 381,732 Rights were granted to KMP as part of the Stanmore Coal Limited Rights
Plan. 286,747 Rights issued during FY 2017, were forfeited due to resignation of a KMP.
Finally, 531,497 Rights for Dan Clifford, Managing Director remain unissued and require shareholder approval to be
issued. Estimated expenses for these Rights have been included in the Financial Statements, but as they require
approval they are not currently issued so are not shown in the Rights summary.
CHANGES TO CAPITAL STRUCTURE
At the date of this report, the Consolidated Entity had 251,800,978 ordinary shares, nil unlisted options and 194,985
Rights on issue.
EVENTS AFTER REPORTING DATE
After 30 June 2017 Stanmore s has renewed its finance arrangements between its operating subsidiary Stanmore IP Coal
Pty Ltd and Taurus1. These new arrangements are an important part of Stanmore’s plans for the execution of the Isaac
Plains East Project.
Stanmore is progressing the Bankable Feasibility Study of the Isaac Plains East Project, targeting first production from
Isaac Plains East in Q4 FY18, subject to progressing and receiving the relevant approvals.
The key terms of the finance agreement are:
1
Taurus Mining Finance Fund LP and Taurus Mining Finance Annex Fund LP.
45
Stanmore Coal Annual Report 2017 DIRECTORS' REPORT
REMUNERATION REPORT (AUDITED) (continued)
• Extension of the term of the facilities by 2 years to 15 November 2019
• Bonding Facility increased to US$29.0m
• Revolving Working Capital Facility of US$22.0m
• Establishment fee of 3%
•
•
•
Interest rate on drawn funds of 10.0% (unchanged)
Interest rate on undrawn funds of 2.0% (unchanged)
Increase in royalty payable from 0.8% to 1.0% on proceeds from Isaac Plains Complex
The facilities allow Stanmore to progress the Isaac Plains East Project through the usual study and approvals phase. The
renewal of the facilities on terms similar to the existing terms for a further 2 years addresses any uncertainty around
Stanmore’s funding profile through this important phase and provides clarity through to production. In addition, the
facilities offer a high degree of flexibility, allowing Stanmore to refinance at any time prior to the maturity date.
Stanmore expects to be able to either retire the facility fully within the term from the cashflows of the Isaac Plains East
project or refinance at any time subject to meeting the required criteria of traditional banks as an alternative source of
funds to lower the cost of its finance.
There were no other events after 30 June 2017 that impact upon the financial report as at 30 June 2017.
ROUNDING
The Company is of a kind referred to in ASIC Corporations Instrument 2016/191 and dated 24 March 2016 and, in
accordance with that Class Order, all financial information presented in Australian dollars has been rounded to the
nearest thousand unless otherwise stated.
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 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.
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 2001. The nature and scope of each type of non-audit service provided means that auditor
independence was not compromised.
46
Stanmore Coal Annual Report 2017 DIRECTORS' REPORT
(continued)
BDO Audit Pty Ltd received the following amounts for the provision of non-audit services:
Tax services: $102,424
AUDITOR‘S INDEPENDENCE DECLARATION
The Auditor’s Independence Declaration forms part of the Directors’ Report and can be found on page 48.
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 the Company’s website/ASX platform (http://stanmorecoal.com.au/corporate).
This report is signed in accordance with a resolution of the Directors.
Daniel Clifford
Managing Director
Brisbane
Date: 31 August 2017
47
Stanmore Coal Annual Report 2017
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 T J KENDALL TO THE DIRECTORS OF STANMORE COAL LIMITED
As lead auditor of Stanmore Coal Limited for the year ended 30 June 2017, I declare that, to the best
of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of 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.
T J Kendall
Director
BDO Audit Pty Ltd
Brisbane, 31 August 2017
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. Liability limited by a scheme approved under Professional
Standards Legislation, other than for the acts or omissions of financial services licensees.
48
Stanmore Coal Annual Report 2017
FINANCIAL
STATEMENTS
49
Stanmore Coal Annual Report 2017 CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2017
Revenue
Cost of sales
Gross profit/(loss)
Other income
Pre-production mining expenses
Other expenses
Profit/(loss) before income tax and net finance expenses
Finance income
Financial expenses
Profit/(loss) before income tax expense
Income tax benefit
Net profit/(loss) for the year
Other comprehensive income
Total comprehensive profit/(loss) for the year
Profit/(loss) for the year is attributable to:
Owners of Stanmore Coal Limited
Total comprehensive income/(loss) for the year is attributable
to: Owners of Stanmore Coal Limited
Note
1
2
1
2
2
1
2
3
2017
$’000
137,846
(107,003)
30,843
2,946
–
(18,046)
15,743
212
(9,537)
6,418
5,617
12,035
–
2016
$‘000
12,700
(24,600)
(11,900)
23,459
(6,650)
(21,873)
(16,964)
355
(3,137)
(19,746)
–
(19,746)
–
12,035
(19,746)
12,035
(19,746)
12,035
(19,746)
Earnings/(loss) per share attributable to the
owners of Stanmore Coal Limited:
Basic earnings/(loss) per share (cents per share)
Diluted earnings/(loss) per share (cents per share)
18
18
Cents
5.1
5.1
Cents
(8.9)
(8.9)
The above Consolidated Statement of Profit or Loss and other Comprehensive Income should be read in conjunction with
the accompanying notes.
50
Stanmore Coal Annual Report 2017
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
AS AT 30 JUNE 2017
CURRENT ASSETS
Cash and cash equivalents
Restricted cash
Inventories
Trade and other receivables
Other current assets
Total current assets
NON-CURRENT ASSETS
Trade and other receivables
Property, plant and equipment
Exploration and evaluation assets
Capitalised development costs
Intangible assets
Deferred tax assets
Other non-current assets
Total non-current assets
Total assets
CURRENT LIABILITIES
Trade and other payables
Interest-bearing loans and borrowings
Onerous contracts provision
Rehabilitation provision
Vendor royalties – contingent consideration
Total current liabilities
NON-CURRENT LIABILITIES
Onerous contracts provision
Rehabilitation provision
Vendor royalties – contingent consideration
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Issued capital
Share based payment reserve
Accumulated losses
Total equity attributable to owners of Stanmore Coal Limited
Note
2017
$’000
2016
$‘000
4
5
7
8
8
9
10a
10b
11
3
12
13
14
15
16
14
15
16
19
27,515
85
27,460
16,641
2,279
73,980
-
35,249
27,008
15,700
4,282
6,746
138
12,080
76
5,079
22,285
2,845
42,365
738
33,445
23,584
7,175
4,786
-
181
89,123
163,103
69,909
112,274
22,282
15,601
2,416
1,161
3,089
44,549
19,844
23,717
8,175
51,736
96,285
66,818
113,200
774
(47,156)
66,818
22,552
-
5,153
1,687
-
29,392
21,576
22,221
-
43,797
73,189
39,085
97,368
4,377
(62,660)
39,085
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
51
Stanmore Coal Annual Report 2017
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2017
At 1 July 2015
97,368
(42,914)
4,304
Issued capital
$‘000
Accumulated
losses
$‘000
Share based
payment
reserve
$‘000
TOTAL COMPREHENSIVE INCOME FOR THE
FINANCIAL YEAR
Profit/(loss) for the year
Other comprehensive income
TRANSACTIONS WITH OWNERS IN THEIR
CAPACITY AS OWNERS
Share based payments
At 30 June 2016
-
-
-
-
(19,746)
-
(19,746)
-
97,368
(62,660)
Total
58,758
(19,746)
-
(19,746)
-
-
-
73
4,377
73
39,085
At 1 July 2016
97,368
(62,660)
4,377
39,085
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 shares
Cost associated with issue of share capital
Share based payments reserve
Deferred tax recognised directly in equity
-
-
-
15,454
(751)
-
1,129
12,035
-
12,035
-
-
3,469
-
At 30 June 2017
113,200
(47,156)
-
-
-
-
-
(3,603)
-
774
12,035
-
12,035
15,454
(751)
(134)
1,129
66,818
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
52
Stanmore Coal Annual Report 2017 CONSOLIDATED STATEMENT OF
CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2017
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
Net cash (outflow)/inflow from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant and equipment
Net (payments)/receipts for exploration,
evaluation and development assets
Receipts relating to vendor payments
Payments for other assets
Net cash (outflow)/inflow from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares (net of costs)
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
Note
2017
$’000
2016
$‘000
130,183
(143,507)
212
(4,698)
(17,810)
(8,191)
(2,512)
13,430
-
2,727
14,703
15,815
30,518
15,435
12,080
27,515
6
4
10,993
(38,947)
257
(5,876)
(33,573)
(8,278)
(4,658)
43,416
(26)
30,454
-
-
-
(3,119)
15,199
12,080
The above Consolidated Statement of Profit or Loss and other Comprehensive Income should be read in conjunction with
the accompanying notes.
53
Stanmore Coal Annual Report 2017
NOTES TO THE
FINANCIAL STATEMENTS
ABOUT THIS REPORT
The financial statements of Stanmore Coal Limited for the 1: year ended 30 June 2017 covers the Consolidated Entity
consisting of Stanmore Coal Limited and its subsidiaries (“the Consolidated Entity”) as required by the Corporations Act 2001.
The financial statements are presented in the Australian currency.
Stanmore Coal Limited is a company limited by shares, incorporated and domiciled in Australia, whose shares are
publicly traded on the Australian Securities Exchange.
The principal activities the Company were the exploration, development, production and sale of metallurgical and
thermal coal in Queensland, Australia.
The consolidated general purpose financial report of the Consolidated Entity for the year ended 30 June 2017 was
authorised for issue in accordance with a resolution of the directors on 31 August 2017. The Directors have the power to
amend and reissue the financial report. The financial report is a general purpose financial report which:
• has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting
Standards and other authoritative pronouncements of the Australian Accounting Standards Board (AASB) and
International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board;
•
•
•
is presented in Australian dollars with all values rounded to the nearest thousand dollars ($‘000) unless otherwise
stated, in accordance with ASIC Corporations (Rounding in Financial / Directors Report) Instrument 2016/191;
adopts all new and amended Accounting Standards and Interpretations issued by the AASB that are relevant to the
operations of the Consolidated Entity and effective for reporting periods beginning on or after 1 July 2016. Refer to
note 33 for further details; and
does not early adopt any Australian Accounting Standards and Interpretations that have been issued or amended
but are not yet effective, except for those described in Note 31: Other accounting policies. Refer to Note 31: Other
accounting policies for details on standards not early-adopted.
The financial statements have been prepared on a historical cost basis, except for Vendor Royalties – Contingent Consideration
which has been measured at fair value. The entity is a for-profit entity for the purposes of Australian Accounting Standards.
KEY JUDGEMENTS AND ESTIMATES
In the process of applying the Consolidated Entity’s accounting policies, management has made a number of judgements
and applied estimates of future events. Judgements and estimates which are material to the financial report are found in
the following notes:
Revenue and other income
Property, plant and equipment
Exploration and evaluation assets
Capitalised development costs
Onerous contracts provision
Rehabilitation provision
Vendor royalties – contingent consideration
Share based payments
Page 56
Page 66
Page 68
Page 69
Page 73
Page 74
Page 75
Page 91
Note 1
Note 9
Note 10(a)
Note 10(b)
Note 14
Note 15
Note 16
Note 29
54
Stanmore Coal Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS
(continued)
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 Company
to continue to adopt the going concern assumption will depend upon a number of factors including the continued funding of
the company facilities is required to extend past the current expiry of the Finance facility on 15 November 2017.
To that end, on 29 August 2017 the company has agreed an extension to 15 November 2019 as disclosed in Note 24:
Events after reporting date.
BASIS OF CONSOLIDATION
Subsidiaries are all those entities (including special purpose entities) over which the Company has control. The
Consolidated Entity controls an entity when the Consolidated Entity is exposed, or has the rights, to variable returns from
its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the
entity. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They
are de-consolidated from the date that control ceases.
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. The financial statements of subsidiaries are prepared for the same reporting period as the parent,
using consistent accounting policies.
Non-controlling interests in the results and consolidated equity of subsidiaries are shown separately in the consolidated
statement of profit or loss and other 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.
OTHER ACCOUNTING POLICIES
Significant and other accounting policies that summarise the measurement basis used and are relevant to an
understanding of the financial statements are provided throughout the notes to the financial statements.
FOREIGN CURRENCY TRANSLATION
Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rate ruling
at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at
the rate of exchange ruling at the reporting date. Foreign exchange differences arising on translation are recognised in
profit or loss. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are
translated using the exchange rate as at the date of the initial transaction.
THE NOTES TO THE FINANCIAL STATEMENTS
The notes include information which is required to understand the financial statements and is material and relevant to
the operations, financial position and performance of the Consolidated Entity. Information is considered relevant and
material if for example:
•
•
•
the amount in question is significant because of its size or nature;
it is important for understanding the results of the Consolidated Entity;
it helps to explain the impact of significant changes in the Consolidated Entity’s business for example, acquisitions
and impairment write-downs; or
•
it is related to an aspect of the Consolidated Entity’s operations that is important to its future performance.
55
Stanmore Coal Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS
(continued)
NOTE 1: REVENUE AND OTHER INCOME
REVENUE
Revenue from contracts with customers
Total revenue
OTHER INCOME
Gain on bargain purchase
Rehabilitation provision write back
Onerous contract write-back
Other Income
Total other income
FINANCE INCOME
Interest income
Total finance income
Note
15
14
2017
$’000
137,846
137,846
-
-
-
2,946
2,946
212
212
2016
$‘000
12,700
12,700
565
9,053
11,376
2,465
23,459
355
355
A. DISAGGREGATION OF REVENUE FROM CONTRACT WITH CUSTOMERS
The group recognises revenue from the transfer of goods over time and at a point in time in the following major product
lines and geographical regions.
2017
Sales – thermal coal
Sales – semi soft coal
Total
2016
Sales – thermal coal
Sales – semi soft coal
Total
South-east Asia
AUD '000
Europe
AUD '000
17,097
116,860
133,957
4,580
8,120
12,700
-
3,889
3,889
-
-
-
Total
AUD '000
17,097
120,749
137,846
4,580
8,120
12,700
RECOGNITION AND MEASUREMENT
Revenue is measured at the fair value of consideration received or receivable. Amounts disclosed as revenue are net of
duties and taxes paid. The following specific recognition criteria must also be met before revenue is recognised:
CONTRACTS WITH CUSTOMERS – COAL SALES
GENERAL RECOGNITION
Revenue from the sale of coal is recognised in the profit or loss when the performance obligations of Stanmore Coal have been
met and the ownership of the coal is legally transferred to the buyer. Performance obligations are considered to be met under the
terms of the individual contracts. Typically the transfer of ownership and the recognition of a sale occurs when the coal passes the
ship rail when loading at the port. In the case of coal sold from Isaac Plains, all coal is exported through the Dalrymple Bay Coal
Terminal and all coal sold during the financial year ending 30 June 2017 was on a contracted ‘free on board’ basis.
56
Stanmore Coal Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: REVENUE AND OTHER INCOME (continued)
As is customary with ‘free on board’ contracts, parameters such as coal quality and mass are tested using independent
experts and weightometers as the vessel is being loaded. The bill of lading is only issued upon verification and
confirmation from several parties involved with the logistic and handling process. Once confirmed, the measured
parameters form the basis for calculation of final price on the commercial invoice. All customer contracts specify a
known price and tolerance range for quality parameters prior to the Consolidated Entity committing to the supply of coal
to the customer.
Payment terms for coal customers range from letter of credit basis to up to 45 days, with the majority being settled in
20 days or less from issuance of the commercial invoice. There were no breaches of payment terms noted during the
financial year and contracts recognised as fulfilled and therefore receivable at 30 June 2017 have subsequently been
receipted in July 2017 without issue, noting that final price adjustments payable/receivable from/by customers have not
yet been final invoiced by all customers.
SEMI SOFT QUARTERLY INDEX LINKED PRICE CONTRACTS RECOGNITION
In addition to the general recognition outlined above, sales contracts with Stanmore Coal customers contain quarterly
pricing provisions as is customary in the semi soft coal markets. Sales contracts with regular customers are linked to
the Hunter Valley Semi Soft coking coal index with index adjustments based on the term agreements/relationship, Isaac
Plains Semi Soft variations to the index benchmark, or other contractual reasons.
When the quarterly benchmark prices have not been settled sales invoices are issued and paid based on the provisional
prices from the prior quarters agreed index price. These provisional prices are then adjusted when the final quarterly
benchmark prices are settled.
Where sales volumes have not been fulfilled within the scope of the contract for the previous quarters, the coal sales
in the following quarter can be at the prior quarters price, which means a provisional sales invoice is not issued by
Stanmore. At the end of the annual contract period full year carry over tonnes are discussed between the parties and the
supply of tonnes can be cancelled or carried over to the next annual contract.
KEY JUDGEMENTS
Due to the volatility in the Hunter Valley Semi Soft coal price index, management review the index price at the end
of the quarter and adjust coal sales as required, this quarterly price adjustment is based on the final index price,
which has been agreed with customers. If the price has not yet been signed off on all contracts, management will
make judgements on the risks associated with the customer and adjust the provisional price based on the contract,
and other circumstances surrounding the coal shipments for the quarter. This risk weight price would then be used
rather than the quarterly index price which has not yet been agreed with the customer.
THERMAL COAL CONTRACT SALES
It is noted that Thermal coal sales are not customarily index linked and are settled based on contract prices as agreed
and adjusted by the contract terms. Generally, price and adjustments are finalised and final invoiced within a short
period of time after the coal is ‘free on board’. All thermal sales are sold on letter of credit terms. Where the invoice is
not final allowances are made for expected adjustments based on port and coal sampling reports.
KEY JUDGEMENTS
Where prices are not finalised at the end of a period due to the timing of contractual adjustments, management
will make assessments on the adjustments and provide for the expected impact of the contract adjustments. Price
adjustments are minimal in comparison to the total invoice and are generally not material in nature.
57
Stanmore Coal Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS
(continued)
NOTE 2: COST OF SALES AND OTHER EXPENSES
Note
2017
$’000
2016
$‘000
PRODUCTION COSTS
Mining costs
Processing costs
Transport and logistics
State royalties
Private royalties
Production overheads
Other production costs
Total production costs
PRE-PRODUCTION MINING COSTS
Site establishment
Other pre-production costs
Total pre-production costs
OTHER EXPENSES
Other expenses
Fair value movement – vendor royalty - contingent consideration
Provision for impairment and write-off – exploration asset
Provision for/(reversal of) impairment – development asset
Total other expenses
FINANCIAL EXPENSES
Interest paid – external parties
Interest amortisation unwinding
Movement in foreign currency
Borrowing costs
Total financial expenses
RECOGNITION AND MEASUREMENT
PRODUCTION COSTS
16
10a
10b
14, 15
52,049
14,862
15,640
11,329
1,011
6,575
5,537
107,003
-
-
-
14,377
11,264
917
(8,512)
18,046
4,566
2,043
1,029
1,899
9,537
14,159
1,548
1,624
602
-
1,503
5,164
24,600
1,632
5,018
6,650
7,990
-
-
13,883
21,873
2,085
-
-
1,052
3,137
Production costs are costs incurred directly or indirectly relating to the mining and preparation of coal for sale to third
party customers. Costs have been recognised on an accruals basis at the time the sale is recognised, in line with
movements through inventory and survey information from site. Refer to Inventory in Note 7.
PRE-PRODUCTION MINING COSTS
Pre-production costs relate to those incurred during transition from care & maintenance to operations at the Isaac
Plains Coal Mine. The costs represent all-in costs such as take-or-pay contractual commitments prior to first
commercial production. Items have been recognised when incurred.
58
Stanmore Coal Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
NOTE 2: COST OF SALES AND OTHER EXPENSES (continued)
OTHER EXPENSES
Other expenses include the following specific items:
DEPRECIATION AND AMORTISATION
Depreciation – plant and equipment
Amortisation – intangibles
Sub-total depreciation and amortisation
Acquisition costs on business combination
Vendor reimbursements
EMPLOYEE EXPENSES
Employee – salaries and wages
Employee superannuation
Share-based payments (shares)
Share-based payments (options)
Sub-total employee expenses
Other overhead expenses
Minimum lease payments made under operating lease
Total other expenses
RECOGNITION AND MEASUREMENT
WAGES AND SALARIES, ANNUAL LEAVE AND SICK LEAVE
Note
9
11
2017
$’000
2016
$‘000
2,828
504
3,332
-
1,923
3,092
205
(134)
-
3,163
5,807
152
14,377
1,292
14
1,306
2,538
-
3,077
325
70
3
3,475
518
153
7,990
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.
LEASES
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and
requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or
assets and the arrangement conveys a right to use the asset.
A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all
the risks and benefits incidental to ownership of leased assets, and operating leases, under which the lessor effectively
retains substantially all such risks and benefits.
Finance leases are capitalised. A lease asset and liability are established at the fair value of the leases assets, or if lower,
the present value of minimum lease payments. Lease payments are allocated between the principal component of the
lease liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.
Lease assets acquired under a finance lease are depreciated over the asset’s useful life or over the shorter of the asset’s
useful life and the lease term if there is no reasonable certainty that the consolidated entity will obtain ownership at the
end of the lease term.
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line
basis over the term of the lease.
59
Stanmore Coal Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
(continued)
NOTE 3: INCOME TAX EXPENSE
RECONCILIATION
Current income tax benefit
Deferred income tax expense
Prior period DTA not brought to account
Deferred income tax through equity
Income tax expense/(benefit)
RECONCILIATION – THROUGH EQUITY
Current year share issue expenses
Prior period DTA not brought to account
Income tax expense/(benefit) - equity
2017
$’000
2016
$‘000
(20,870)
24,579
(9,326)
-
(5,617)
(225)
(904)
(1,129)
-
-
-
-
-
-
-
-
The prima facie income tax on the profit/(loss) is reconciled to the income tax expense as follows:
Prima facie tax benefit (30%) on loss before income tax
1,926
(5,924)
Add tax effect of:
– Non-deductable expense
– Deferred tax asset not recognised
– Prior period deferred tax asset recognised
Deferred 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
Gross tax losses
Deferred tax assets not taken up at 30%
1,782
-
(9,325)
(5,617)
20,645
14,912
35,557
(28,811)
6,746
-
-
2,622
3,302
-
-
8,485
12,992
21,477
(21,477)
-
44,493
13,348
Deferred tax assets which have not been recognised as an asset, will only be obtained if:
•
the Consolidated Entity derives future assessable income of a nature and of an amount sufficient to enable the
losses to be realised;
•
the Consolidated Entity continues to comply with the conditions for deductibility imposed by the law; and
• no changes in tax legislation adversely affect the Consolidated Entity in realising the losses.
60
Stanmore Coal Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
NOTE 3: INCOME TAX EXPENSE (continued)
RECOGNITION AND MEASUREMENT
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.
2017
Opening
balance
$’000
Recognition
of prior year
losses
$’000
Recognised
in equity
$’000
Recognised
in profit or
loss
$’000
Closing
balance
$’000
Deferred
tax asset
$’000
Deferred
tax liability
$’000
Provision for rehabilitation
Provision for onerous contracts
7,172
8,019
Property, plant and equipment
(8,780)
Vendor private royalty
Exploration and
development costs
Unrealised FX
Other
Vendor receivable
Provision for impairment
exploration and development
Rail loop benefit
Overburden in ddvance
Prior year yax losses
Total
-
(16,151)
-
556
(3,890)
6,025
(1,436)
-
8,485
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
291
(1,341)
7,463
6,678
7,463
6,678
1,119
(7,661)
(7,661)
3,379
3,379
3,379
-
-
-
-
(1,303)
(17,454)
-
(17,454)
314
330
314
886
(2,517)
(6,407)
314
886
-
(2,396)
3,629
3,629
151
(1,285)
(3,665)
(3,665)
-
-
-
-
(6,407)
-
(1,285)
(3,665)
13,492
13,492
(1,129)
(1,129)
21
20,869
20,869
-
(5,617)
6,746
35,557
(28,811)
61
Stanmore Coal Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS
NOTE 3: INCOME TAX EXPENSE (continued)
Recognition
acquired in
business
combination
$’000
Opening
balance
$’000
-
-
9,930
18,900
330
(11,909)
(16,260)
406
-
-
-
(16,620)
2,574
-
2016
Provision for rehabilitation
Provision for onerous
contracts
Property, plant and
equipment
Exploration and
development costs
Other
Vendor receivable
Provision for impairment
exploration and development
Rail loop benefit
-
(1,320)
Prior year tax losses
12,951
-
Total
-
(1,019)
TAX CONSOLIDATION
Recognition
of prior
year losses
$’000
Recognised
in profit or
loss
$’000
Closing
balance
$’000
Deferred
tax asset
$’000
Deferred
tax liability
$’000
-
-
-
-
-
-
-
-
-
-
(2,758)
(10,881)
7,172
8,019
7,172
8,019
2,799
(8,780)
(8,780)
-
-
-
109
(16,151)
-
(16,151)
150
556
12,730
(3,890)
556
-
3,451
6,025
6,025
-
(3,890)
-
(116)
(1,436)
-
(1,436)
(4,466)
8,485
8,485
-
1,019
-
21,477
(21,477)
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 is 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.
NOTE 4: CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Cash at bank bear floating and fixed interest rates between 1.5% and 1.75%
(2016: 1% and 2.25%).
RECONCILIATION OF CASH
The above figures are reconciled to the cash at the end of the financial year as
shown in the consolidated statement of cash flows as follows:
2017
$’000
27,515
2016
$‘000
12,080
Balances as above
Balances per consolidated statement of cash flows
27,515
27,515
12,080
12,080
62
Stanmore Coal Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
(continued)
RECOGNITION AND MEASUREMENT
For the purposes of the Consolidated 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 original 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.
NOTE 5: RESTRICTED CASH
Restricted cash
2017
$’000
85
2016
$‘000
76
Restricted cash held at 30 June 2017 is held on term deposit to cash-back a bank guarantee.
RECOGNITION AND MEASUREMENT
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.
NOTE 6: CASH FLOW INFORMATION
A. RECONCILIATION OF PROFIT/(LOSS) AFTER INCOME TAX TO NET CASH FLOW FROM OPERATING ACTIVITIES
Profit/(Loss) for the year
Depreciation, amortisation and disposal of fixed assets
Gain on bargain purchase
Rehabilitation provision revaluation
Onerous contract revaluation
Contingent consideration revaluation
Unrealised gains/loss on foreign exchange
Impairment of exploration and evaluation expenditure
Impairment of development assets
Non-cash income tax movement
Share-based payments expense
CHANGE IN OPERATING ASSETS AND LIABILITIES
(Increase)/Decrease in trade and other receivables
(Increase)/Decrease in coal inventory
(Increase)/Decrease in Overburden in advance inventory
(Increase)/Decrease in other assets
Increase/(Decrease) in trade and other payables
Increase/(Decrease) in provisions for onerous contracts
Increase/(Decrease) in rehabilitation provisions
Net cash flow from operating activities
2017
$’000
12,035
3,918
-
387
857
11,264
1,029
917
(8,512)
(5,617)
(134)
6,382
(10,165)
(12,216)
567
(15,023)
(4,469)
970
(17,810)
2016
$‘000
(19,746)
1,306
(565)
(9,053)
(11,376)
(400)
-
-
13,883
-
73
(8,783)
(5,079)
-
(3,398)
18,075
(8,371)
(139)
(33,573)
63
Stanmore Coal Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS
(continued)
(B) NON-CASH INVESTING AND FINANCING ACTIVITIES
There were no non-cash investing or financing activities during the current year.
NOTE 7: INVENTORY
CURRENT
ROM coal stocks
Product coal stocks
Coal stocks
Overburden in advance
Inventories
RECOGNITION AND MEASUREMENT
2017
$’000
12,802
2,442
15,244
12,216
27,460
2016
$‘000
4,754
325
5,079
-
5,079
Inventories are measured at the lower of cost and net realisable value. Net realisable value is the estimate selling price
in the ordinary course of business, less the estimate costs of completion and selling expenses.
The cost of coal inventories is determined using a direct costing basis. Costs include blasting, overburden removal, coal
mining, processing, labour, transport and other costs which are directly related to mining activities at site.
Inventories are classified as follows:
•
•
run of mine material extracted through the mining process and awaiting processing at the coal handling and
preparation plant
product coal which has been processed into final saleable form. Product coal may be held at the site or at port
shared stockpile facilities awaiting delivery to customers
INTERPRETATION 20 – STRIPPING COSTS IN THE PRODUCTION PHASE OF A SURFACE MINE
The Interpretations Committee issued Interpretation 20, effective 1 January 2013. Prior to the issuance of Interpretation
20, the accounting for production stripping costs had been based on general AASB principles. With the recommencement
of Isaac Plains Open cut in 2015 the mining process adopted did not allow for stripping in advance, the mining of coal
immediately followed the removal of overburden and as a result stripping costs were transferred into the coal stockpile
inventory as incurred, where coal stocks existed at the end of the reporting period.
While this accounting policy had been applied in the past due to the mining process adopted there was no effect to the
financial statements in FY16. As a result of mining process changes it is calculated that Interpretation 20 now results in
overburden in advance being created. This means that coal mining and stripping no longer maintain a timing nexus. As
a result of this the stripping process costs of overburden removal will be capitalised separately as Inventory under AASB
102 as directed under Interpretation 20.
In addition, it is noted that while there is currently no non-current deferred stripping costs shown in the Consolidated
statement of financial position, under Interpretation 20 and AASB 116 it is possible that this may occur in the future.
64
Stanmore Coal Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS
(continued)
NOTE 8: TRADE AND OTHER RECEIVABLES
CURRENT
GST receivable
Trade receivables
Vendor receivable
Total current
NON-CURRENT
Vendor receivable
Total non-current
2017
$’000
1,395
14,690
556
16,641
-
-
2016
$‘000
757
11,633
9,895
22,285
738
738
No receivables balances are past due or impaired at the end of the reporting period.
RECOGNITION AND MEASUREMENT
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 Consolidated Entity 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 Consolidated Entity 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 de-
recognition of the original instrument.
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 consolidated statement of financial
position.
Cash flows are included in the consolidated 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.
65
Stanmore Coal Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS
(continued)
NOTE 9: PROPERTY, PLANT AND EQUIPMENT
LAND DEPOSIT
At cost
PLANT AND EQUIPMENT
At cost
Accumulated depreciation
BUILDINGS AND IMPROVEMENTS
At cost
Accumulated depreciation
COMPUTER EQUIPMENT
At cost
Accumulated depreciation
FURNITURE AND OFFICE EQUIPMENT
At cost
Accumulated depreciation
CAPITAL WORK IN PROGRESS
At cost
Accumulated depreciation
Total property plant and equipment
RECOGNITION AND MEASUREMENT
2017
$’000
2016
$‘000
1,946
1,946
31,152
(3,778)
27,374
1,379
(219)
1,160
-
-
-
137
(115)
22
4,747
-
4,747
35,249
30,035
(1,115)
28,920
1,398
(133)
1,265
111
(94)
17
162
(162)
-
1,297
-
1,297
33,445
Property, plant and equipment are 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.
66
Stanmore Coal Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS
NOTE 9: PROPERTY, PLANT AND EQUIPMENT (continued)
Land
Deposit
$’000
Plant and
equipment
$’000
Buildings and
improvements
$’000
Computer
equipment
$’000
Furniture
and office
equipment
$’000
Capital
work in
progress
$’000
Total
$’000
2017
Balance at the beginning of
the year
Additions – through ordinary
course
Capital WIP transfers
Net disposals
WDV transfers – through
ordinary course
Depreciation expense
Carrying amount at the end
of the year
1,946
28,920
1,265
-
-
-
-
-
-
1,768
(586)
(4)
(2,724)
-
-
-
(14)
(91)
1,946
27,374
1,160
2016
Balance at the beginning of
the year
1,946
Additions – through business
combination
Additions – through ordinary
course
Depreciation expense
Carrying amount at the end
of the year
DEPRECIATION
5
22,367
7,651
(1,103)
-
-
-
1,946
28,920
-
1,398
-
(133)
1,265
17
-
-
-
(17)
-
-
13
-
6
(2)
17
-
-
1,297
5,218
33,445
5,218
(1,768)
-
-
-
-
(586)
-
(2,828)
-
35
(13)
22
4,747
35,249
31
-
23
-
-
1,995
23,765
1,297
8,977
(54)
-
(1,292)
-
1,297
33,445
The depreciable amount of all non-mining property fixed assets is depreciated over their useful life to the Consolidated Entity
commencing from the time the asset is held ready for use. Mining property fixed assets are depreciated on a units of production
basis over the life of the economically recoverably reserves. The base for the units of production is drawn from the assets
principle use. Items that are specific to Open cut operations are depreciated over the run of mine open cut coal reserves. Surface
infrastructure that is not specific to a mining method such as the wash plant and loadout facilities utilise the Economically
Recoverable Resources of the Isaac plains Complex which includes an estimate of recoverable underground coal resources.
The depreciation rates used for each class of assets are:
Class of fixed asset
Plant and equipment
Computer equipment
Furniture and equipment
Building and improvements
Depreciation rate
10-25% straight line/units of production
33.3% straight line
5–25% 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.
67
Stanmore Coal Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS
NOTE 9: PROPERTY, PLANT AND EQUIPMENT (continued)
IMPAIRMENT
At the end of each reporting period the Consolidated Entity assesses whether there is any indication that property,
plant and equipment 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.
KEY JUDGEMENTS – PROPERTY, PLANT AND EQUIPMENT
The Consolidated Entity performs regular reviews on property, plant and equipment to determine the
appropriateness of classification and methodology to apply depreciation. The methodology and rate of depreciation is
assessed with reference to residual values and useful lives.
NOTE 10(A): EXPLORATION AND EVALUATION ASSETS
NON-CURRENT
EXPLORATION AND EVALUATION EXPENDITURE CAPITALISED
Exploration and evaluation phases
27,008
23,584
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.
2017
$’000
2016
$‘000
MOVEMENTS IN CARRYING AMOUNTS
Balance at the beginning of the year
Additions and transfers from work in progress
Written-off
Provision for impairment
Carrying amount at the end of the year
MOVEMENTS IN PROVISION FOR IMPAIRMENT AMOUNTS
Balance at the beginning of the year
Provisions (raised)/reversed
Provision for impairment at the end of the year
29,784
4,341
(391)
33,734
(6,726)
27,008
(6,200)
(526)
(6,726)
30,195
2,019
(2,430)
29,784
(6,200)
23,584
(8,630)
2,430
(6,200)
Commitments for exploration and evaluation expenditure are disclosed in Note 22: Commitments.
RECOGNITION AND MEASUREMENT
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 development of the area
68
Stanmore Coal Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
NOTE 10(A): EXPLORATION AND EVALUATION ASSETS (continued)
or where activities in the area have not yet reached a stage which permits reasonable assessment of the existence of
Economically Recoverable Resources 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. Where an uncertainty exists for further
exploration of the area, a provision is raised for the costs of exploration.
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 Resources.
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.
KEY JUDGEMENTS – EXPLORATION AND EVALUATION ASSETS
The Consolidated Entity performs impairment testing on specific exploration assets as required in AASB 6 para 20. During
the FY16 management and the Directors agreed that Exploration costs relating to EPC 1168, EPC 1580, EPC113, EPC 2039
and EPC 2371 were 100% impaired. During FY17 this position was reviewed and the directors are of the view that in the
current market conditions, comparable transactions and other requirements the fair value of these tenements was nil.
The total impairment on these assets is now $6.726 million. An increase of $0.526 million. No specific event has occurred
relating to other exploration and evaluation assets recognised on the Consolidated Statement of Financial Position. At the
end of the reporting period the balance of Exploration and Evaluation Assets is $27.008 million (2016: $23.584 million).
NOTE 10(B): CAPITALISED DEVELOPMENT COSTS
NON-CURRENT
Capitalised development costs
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
Provision for impairment
Carrying amount at the end of the year
MOVEMENTS IN PROVISION FOR IMPAIRMENT AMOUNTS
Balance at the beginning of the year
Provisions (raised)/reversed
Provision for impairment at the end of the year
2017
$’000
2016
$‘000
15,700
7,175
21,058
13
21,071
(5,371)
15,700
(13,883)
8,512
(5,371)
20,108
950
21,058
(13,883)
7,175
-
(13,883)
(13,883)
69
Stanmore Coal Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
NOTE 10(B): CAPITALISED DEVELOPMENT COSTS (continued)
RECOGNITION AND MEASUREMENT
Development expenditures on an individual project are recognised as an intangible asset when the Consolidated Entity
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 as 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.
KEY JUDGEMENTS – CAPITALISATION AND IMPAIRMENT ASSESSMENT OF DEVELOPMENT COSTS
Development costs are capitalised in accordance with the accounting policy above. Initial capitalisation of costs
is based on management’s judgement that technological and economic feasibility is confirmed, usually when
a Feasibility Study 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 cash flows are expected to be received. As at 30 June 2017, the carrying amount
of capitalised developments costs was $15.700 million (2016: $7.175 million). This amount relates wholly to The
Range Project located in the Surat Basin. The Company has partly reversed the prior period provision for impairment
against The Range, this reassessment was undertaken due to the improved outlook for the Surat Basin and
recent market activity in the coal basis. The Company assessed the project on a comparable transaction basis, by
comparing the implied value per resource tonne for project transactions with similar development, coal type and
infrastructure characteristics. This assessment also included adjustments for the relative scale of the projects,
movements in the long-term coal price forecasts and variations in coal quality and its expected pricing. The carrying
value is assessed as carrying value in use less costs to sell and this has been calculated based on comparable
transactions in an active market and has not utilised discounted cash flows. After a range of scenario’s and analysis
were completed it was decided by the directors that the Range project impairment should be reversed by $8.512
million and the book value of $15.700 million, which includes exploration, studies and permitting approvals.
At the December 2016 interim financial report, the carrying value was assessed as $21.065 million. The change in
carrying value between 31 December 2016 and 30 June 2017 was on a comparable transaction basis, by comparing
the implied value per resource tonne for the project transactions with similar development, coal types and
infrastructure characteristics. The assessments reflect the change in coal prices forecasts at the relevant dates as
well as adopting a spot price comparison versus a long-term price forecast at the relevant dates.
70
Stanmore Coal Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS
(continued)
NOTE 11: INTANGIBLE ASSETS
INFRASTRUCTURE INTANGIBLE ASSET
At cost
Accumulated amortisation
MOVEMENTS IN CARRYING AMOUNTS
Balance at the beginning of the year
Additions – through business combination
Additions – through ordinary course
Amortisation expense
Carrying amount at the end of the year
IMPAIRMENT OF ASSETS
2017
$’000
4,800
(518)
4,282
4,786
-
-
(504)
4,282
2016
$‘000
4,800
(14)
4,786
-
4,800
-
(14)
4,786
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.
INTANGIBLE ASSETS
The infrastructure intangible asset relates to future rebates on the cost of coal railings based on an agreement with the
below rail infrastructure owner. The asset was recognised upon acquisition of the Isaac Plains Coal Mine. Receipts of
coal railing rebates are recognised in profit or loss. The estimated useful life of the asset is aligned with the term of the
contractual agreement and is amortised on a straight-line basis over the life in accordance with the anticipated profile of
benefits received.
NOTE 12: TRADE AND OTHER PAYABLES
CURRENT
Trade and other payables
Sundry payables and accrued expenses
Unrealised forward currency
Employee benefits
Total current trade and other payables
2017
$’000
1,254
21,497
(1,047)
578
22,282
2016
$‘000
8,377
13,444
-
731
22,552
71
Stanmore Coal Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
NOTE 12: TRADE AND OTHER PAYABLES (continued)
RECOGNITION AND MEASUREMENT
Trade and other payables represent liabilities for goods and services provided to the Consolidated Entity prior to the year
end and which are unpaid. These amounts are unsecured and have 7 to 60-day payment terms. They are recognised
initially at fair value and subsequently measured at amortised cost using the effective interest method. No assets of the
Consolidated Entity have been pledged as security for the trade and other payables.
After initial recognition, loans and borrowings are subsequently recognised at amortised cost.
NOTE 13: BORROWINGS
INTEREST-BEARING LOANS AND BORROWINGS
Facility loan
Total interest-bearing loans and borrowings
TOTAL FACILITIES
FACILITY A – BANK GUARANTEE FACILITY
Available facility
Facility utilised
Remaining facility
FACILITY B – WORKING CAPITAL FACILITY
Facility available
Facility utilised
Remaining facility
RECOGNITION AND MEASUREMENT
2017
$’000
15,601
15,601
27,942
27,942
-
28,601
15,601
13,000
2016
$‘000
2017
USD ’000
2016
USD ‘000
-
-
40,399
40,399
-
16,159
-
16,159
12,000
12,000
21,493
21,493
-
22,000
12,000
10,000
-
-
30,000
30,000
-
12,000
-
12,000
Interest bearing liabilities are initially recognised at fair value, net of any transactions costs incurred. Interest bearing
liabilities are classified as current liabilities.
The group pays a 2% pa facility fee for all undrawn funds in both the working capital and bank Guarantee facilities, once
utilised the funds attract a 10% fixed interest rate.
At balance date, the Loan facility was due to expire on 15 November 2017, after the balance date the facility was extended
to 15 November 2019. The changes to the facility were:
• Facility A – Bank Guarantee facility was increased to US$29.0 million to meet Isaac Plains East project requirements
• Facility B – Working Capital facility is unchanged at US$22.0 million
Further details on this facility are outlined in Note 23: Contingent liabilities and contingent assets. Note 24: Events after
reporting date highlights the key subsequent matters relating to this facility after 30 June 2017.
The Working Capital facility is denominated in USD and therefore when drawn exposes the group to USD fluctuations these
fluctuations are accounted for as outlined in Foreign currency translation in the section above titled ‘About this report’.
72
Stanmore Coal Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS
(continued)
NOTE 14: ONEROUS CONTRACTS PROVISION
CURRENT
Current onerous contract provision
NON-CURRENT
Non-current onerous contract provision
Total onerous contracts provision
RECONCILIATION OF MOVEMENTS
Opening balance
Additions – business combination recognition
Depletions through settlement
Adjustment - through re-measurement
Unwinding of discount
Closing balance
RECOGNITION AND MEASUREMENT
2017
$’000
2016
$‘000
2,416
5,153
19,844
22,260
26,729
-
(5,326)
(538)
1,395
22,260
21,576
26,729
-
49,800
(11,695)
(11,376)
-
26,729
The provision for onerous contracts relates to the transaction to acquire the Isaac Plains Coal Mine which completed
in November 2015. The Company acquired various long-term contracts necessary for mining activities at Isaac Plains
including rail haulage, port allocations, water supply, electricity supply and accommodation. Based on the initial Isaac
Plains mine plan, a portion of these contracts were estimated to be underutilised and the fixed charges incurred
above the deemed requirement was recognised as an onerous contract liability. The fair value of onerous contracts at
acquisition was estimated by calculating the present value of expected future cash outflows for the onerous portion of
each contract, discounted at a rate reflecting the risk profile of each contract. Excluding the assessed onerous portion
of the contracts already recognised in the consolidated statement of financial position, the minimum payments required
under the identified contracts is approximately $64 million (undiscounted). These payments are expected to be met as
part of normal operational expenditure at Isaac Plains and Isaac Plains East in the coming years.
In the period from acquisition through to 30 June 2017, a number of onerous contracts have been settled through the
ordinary course of business. The onerous position at 30 June 2017 has been re-measured for all contracts having regard to
the latest internal Isaac Plains mine plan. In addition, Coal Reserves within Isaac Plains East and the estimated recoverable
coal resources Isaac Plains Underground have been adjusted based on the latest Economically Recoverable Resources.
KEY ESTIMATES – ONEROUS CONTRACTS
The Consolidated Entity assesses onerous contracts at each reporting date by evaluating conditions specific to each
contract and the then current business plan. Where a contract provides capacity above that required to meet the
business plan or for a longer period than the current extent of the business plan, the contract is deemed onerous
and the onerous portion of the contract is recognised as a liability using an estimate of future onerous cash flows
discounted to a net present value. The release of the maiden JORC reserve for Isaac Plains East in April 2016, and
the subsequent extension to the mine life and planned production of the Isaac Plains Complex reduced the onerous
portion of a number of contracts in the year ended 30 June 2016. Any re-measurement of the assessed level of
onerous contracts is taken through profit or loss in the period in which the assessment is made. During the year a
total of $5.326 million of onerous contracts were settled through payment, with the unwinding of the discount being
$1.395 million and ($0.538 million) taken through consolidated statement of profit or loss for re-measurement.
73
Stanmore Coal Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS
(continued)
NOTE 15: REHABILITATION PROVISION
CURRENT
Current rehabilitation provision
NON-CURRENT
Non-current rehabilitation provision
Total rehabilitation liability
RECONCILIATION OF MOVEMENTS
Opening balance
Additions – business combination
Depletion – rehabilitation works completed
Depletion – re-measurement
Unwinding of discount
Closing balance
RECOGNITION AND MEASUREMENT
2017
$’000
2016
$‘000
1,161
1,687
23,717
24,878
23,908
-
(1,035)
1,357
648
24,878
22,221
23,908
-
33,100
-
(9,192)
23,908
The provision for rehabilitation closure costs relates to areas disturbed during operation of the mine up to reporting
date and not yet rehabilitated. Provision has been made to rehabilitate all areas of disturbance including surface
infrastructure, contouring, topsoiling and revegetation, using internal and external expert assessment of each aspect to
calculate an anticipated cash outflow discounted to a net present value. At each reporting date, the rehabilitation liability
is re-measured in line with the then-current level of disturbances, cost estimates and other key inputs. The amount of
provision relating to rehabilitation of areas caused by mining disturbance is recognised in profit or loss as incurred.
KEY ESTIMATES – REHABILITATION PROVISION
The Consolidated Entity assesses rehabilitation liabilities at each reporting date as there are numerous factors that
may affect the ultimate liability payable. This includes, but is not limited to, the extent and nature of rehabilitation
activity to be undertaken, changes in technology and techniques, changes in discount rates and regulatory impacts.
There may be differences between the future actual expenditure and the assessment made at the balance date.
The provisions at balance date represent management’s best estimate of the present value of rehabilitation cost to
completely rehabilitate the site.
During FY16 the rehabilitation liability relating to the Isaac Plains Coal Mine was recognised upon completion of the
acquisition in November 2015. The rehabilitation obligation at the time of acquisition related to the mine in a care &
maintenance phase. Since completing the acquisition, the Consolidated Entity submitted a plan of operations with the
relevant State government department which was accepted in January 2016. This revised operating plan changes the
assessed value of rehabilitation liability based on the key inputs into the operational timeline and contemporary cost
estimates. The release of the maiden JORC reserve for Isaac Plains East in April 2016, and the subsequent extension
to the mine life of the Isaac Plains Complex has extended the operational timeline for the majority of the rehabilitation
activities. In the FY17 an increase in the rehabilitation provision of $1.357 million (2016: $9.192 million) is recognised in
profit or loss. This increase relates to the increase of the disturbance of the mine during the year.
74
Stanmore Coal Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS
(continued)
NOTE 16: VENDOR ROYALTIES – CONTINGENT CONSIDERATION
CURRENT
Current vendor royalties – contingent consideration
NON-CURRENT
Non-current vendor royalties – contingent consideration
Total vendor private royalty
RECONCILIATION OF MOVEMENTS
Opening balance – vendor royalties – contingent consideration at fair value
Fair value adjustments taken to profit and loss in other income
Fair value adjustments taken to profit and loss in other expenses
Depletions through settlement to other expenses
Re-measurements due to movements in fair value hierarchy level 2 to/from level 3
Total vendor royalties – contingent consideration at fair value
2017
$’000
3,089
8,175
11,264
-
-
14,457
(3,193)
-
11,264
2016
$‘000
-
-
-
400
(400)
-
-
-
-
During the business combination of Isaac Plains in 2016, AASB 3 Business Combinations required the recognition
of Contingent Consideration. The Contingent Consideration relates to a royalty stream payable to the vendors of
Isaac Plains in the event that benchmark Hard Coking Coal prices are above an Australian Dollar equivalent of 160
(adjusted for CPI) and coal is produced and sold from either Isaac Plains or Isaac Plains East. Each royalty is capped
at predetermined amounts for each vendor, reflecting the compensation payments received from each vendor. Once
the price threshold and production requirements are met, the royalty is payable at $2 per product tonne (2015 dollars)
to each of the two vendors of Isaac Plains. Royalties were paid during the FY17 to both vendors and as a result the
remaining cap is $44.542 million (2017 dollars).
As outlined in AASB 13 Fair Value Measurement the remaining Contingent Consideration is estimated to be $11.264
million. This valuation has been performed using a discounted cash flow methodology which was consistent with that
used in FY16. The method used is classed as a level 3 valuation under AASB 13 the following key unobservable inputs are
used in its calculation:
• Hard Coking Coal forward price curve based on a compilation of short term (12 months) prices from Isaac Plains
coal marketing consultants Square Trading Pty Ltd and long-term estimates completed by Wood McKenzie;
• AUD/USD Foreign exchange forward curve estimates are based on market consensus curves; and
• Coal sales based on the current mining plans of the Isaac Plains Complex, including the finalisation of the current
mine, the Isaac Plains East Mine (approval in progress), and the Isaac Plains Underground (unapproved) these
mining volumes, quality, washability and saleability are based on current coal expectations during the exploration
and evaluation phase or these projects and are used to estimate sales volumes subject to the royalty.
As considered in AASB 13 para 93{h(i)} the following unobservable inputs contain sensitivities that would result in
significant changes to the market valuation. There interactions between the sensitivities in the coking coal price and the
USD/AUD foreign exchange rate. As the coal commodity
is currently traded in USD the interaction between the index price and the FX rate could both magnify and mitigate each
other depending on the timing and direction of movements of both indexes.
A matrix is shown below of changes in the Hard-Coking Coal index and the AUD/USD exchange rate. The numbers are
shown in millions and the highlighted number in blue is the current valuation.
75
Stanmore Coal Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS
NOTE 16: VENDOR ROYALTIES – CONTINGENT CONSIDERATION (continued)
USD
Hard coking coal index curve
HCCI
+10%
+5%
Current
(5%)
(10%)
+10%
11.26
16.43
29.73
32.14
32.14
+5%
3.84
11.26
16.86
31.26
32.14
Current
0.77
3.68
11.26
17.15
31.92
The below shows the above as a percentage change in value.
USD
Hard coking coal index curve
HCCI
+10%
+5%
Current
-5%
-10%
+10%
-
45.9%
164.0%
185.3%
185.3%
+5%
(65.9%)
-
49.7%
177.6%
185.3%
Current
(93.1%)
(67.4%)
-
52.3%
183.4%
(5%)
0.00
0.77
3.52
11.26
18.48
(5%)
(100%)
(93.1%)
(68.8%)
-
64.1%
(10%)
0.00
0.00
0.77
3.52
11.26
(10%)
(100%)
(100%)
(93.1%)
(68.8%)
-
The below shows changes in Valuation due to changes to Isaac Pains coal sales volume relating to a non-operating
future mine not being approved for any reason.
Change
Isaac Plains Underground not approved
Isaac Plains East not approved
Both Isaac Plains East and Isaac Plains Underground not approved
Valuation $M
% Change
5.61
10.30
15.91
(50.2%)
(8.6%)
(58.8%)
As at 30 June 2016 the fair value was assessed at $nil and disclosed as a contingent liability.
NOTE 17: 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.
76
Stanmore Coal Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS
NOTE 18: EARNINGS PER SHARE (continued)
NOTE 18: EARNINGS PER SHARE
EARNINGS
Profit/(Loss) attributable to owners of Stanmore Coal Limited used to calculate
basic and diluted earnings per share
Weighted average number of ordinary shares used as the denominator in
calculating basic earnings per share
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
*Options are reviewed based on AASB 133, in the year ended 30 June 2017 there were none outstanding.
RECOGNITION AND MEASUREMENT
BASIC EARNINGS PER SHARE
2017
$’000
2016
$‘000
12,035
(19,746)
2017
Number
'000
2016
Number
‘000
237,638
222,497
-
-
237,638
222,497
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.
NOTE 19: ISSUED CAPITAL
251,800,978 fully paid ordinary shares (2016: 222,497,435)
Share issue costs
Deferred tax recognised through equity
2017
$’000
116,547
(4,476)
1,129
113,200
2016
$‘000
101,246
(3,878)
-
97,368
77
Stanmore Coal Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
NOTE 19: ISSUED CAPITAL (continued)
A. ORDINARY SHARES
ORDINARY SHARES
2017
Number
2016
Number
2017
$’000
2016
$’000
At the beginning of the year
222,497,435
222,497,435
97,368
97,368
ISSUE OF NEW ORDINARY SHARES
7 November 20161
21 December 20162
31 December 20163
10 May 20174
Share issue costs
Deferred tax recognised through equity
185,792
27,300,000
1,124,751
693,000
-
-
-
-
-
-
-
-
41
15,015
246
152
(751)
1,129
-
-
-
-
-
-
At reporting date
251,800,978
222,497,435
113,200
97,368
1.
2.
3.
On 7 November 2016, 185,792 new Ordinary Shares were issued through employees exercising their options at $0.22 per share.
On 21 December 2016, 27,300,000 new Ordinary Shares were issued to Professional investors and institutions investors at $0.55 per share.
On 31 December 2016 funds were received from employees exercising their options. On 3 January 2017, 1,124,751 new Ordinary Shares were issued
to these employees as part of the options at $0.22 per share.
4.
On 10 May 2017 funds were received from an employee exercising 693,000 options at $0.22 per share.
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 RIGHTS
During the FY17, no options held by employees of the company expired due to expiration of the options in accordance
with the terms, 762,457 options were forfeited due to employment ceasing.
During the FY17, no rights held by employees of the company expired due to expiration of the rights in accordance with
the terms, 1,236,747 rights were forfeited due to employment ceasing.
All options on issue at 30 June 2017 were as follows:
Number of options
Nil
Exercise price
Expiry date
Nil
Nil
All Rights on issue at 30 June 2017 were as follows:
Number of rights
Exercise price
Expiry date
Conditions
100,000
94,985
Nil
Nil
30 June 2020
30 June 2019
Targets relating to the approval and commencement of
mining at The Range in the Surat Basin
Share price targets in FY19, if no vesting occurs at FY19
then retested in FY20 see Remuneration Report
*531,497 Rights not yet issued to Dan Clifford as awaiting shareholder approval.
78
Stanmore Coal Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS
NOTE 19: ISSUED CAPITAL (continued)
C. CAPITAL MANAGEMENT
The capital of the Consolidated Entity is managed 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 Consolidated 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.
D. RECOGNITION AND MEASUREMENT
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.
NOTE 20: 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, trade and other payables, borrowings and Vendor Royalty – Contingent Consideration.
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:
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:
79
Stanmore Coal Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS
NOTE 20: FINANCIAL RISK MANAGEMENT (continued)
Cash and cash equivalents
Restricted cash
Receivables
Security deposits and debt service reserve
2017
$’000
27,515
85
16,641
138
44,379
2016
$‘000
12,080
76
23,023
181
35,360
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 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 and Westpac Banking Corporation.
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 & Risk Management 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 increased from
$12.973 million in 2016 to $29.431 million in 2017. As outlined Note 1, the ability for the Company to deliver on its
strategic and operational objectives is dependent upon the mining operations of the Isaac Plains Coal Mine and
supporting funding avenues such as debt, equity or farm-out, or the successful exploration and subsequent exploitation
of the Consolidated Entity’s tenements.
MATURITY ANALYSIS CONSOLIDATED 2017 – FINANCIAL LIABILITIES
2017
FINANCIAL LIABILITIES
Trade payables
Working capital facility
Vendor royalty payment
Other payables
Carrying
amount
$’000
Contractual
cash flows
$’000
<6
months
$’000
6–12
months
$’000
1–3
years
$’000
1,254
15,601
11,264
21,028
49,147
1,254
16,255
11,264
21,028
38,537
1,254
16,255
3,089
21,028
38,537
-
-
1,553
-
-
-
-
-
-
-
>3
years
$’000
-
-
6,622
-
-
80
Stanmore Coal Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
NOTE 20: FINANCIAL RISK MANAGEMENT (continued)
MATURITY ANALYSIS CONSOLIDATED 2016 – FINANCIAL LIABILITIES
2016
FINANCIAL LIABILITIES
Trade payables
Other payables
Carrying
amount
$’000
Contractual
cash flows
$’000
<6
months
$’000
6–12
months
$’000
1–3
years
$’000
>3
years
$’000
8,377
14,175
22,552
8,377
14,175
22,552
8,377
14,175
22,552
-
-
-
-
-
-
-
-
-
Further information regarding commitments is included in Note 23.
D. CURRENCY RISK
The Australian dollar (AUD) is the functional currency of the group and as a result currency exposure arising from the
transactions and balances in currencies other than the AUD
The Group’s potential currency exposures comprise:
COAL SALES DENOMINATED IN USD
Coal sales for export coal are denominated in USD. The Group is therefore exposed to volatility in the USD:AUD exchange
rates, due to the recent stability in the exchange rate it remains the group’s policy not to hedge Foreign exchange risk
relating to coal sales.
BANK GUARANTEE LINE OF CREDIT FACILITIES DENOMINATED IN USD
The line of credit facility utilised by the Group is issued back to back with an Australian Institution. This means that while utilised
as a Financial Guarantee only facility there is no exchange risk and the USD amount varies while the AUD amount is fixed to the
value of the guarantees issued. While this facility limits USD exposure in the event of default on a bank guarantee on issue of the
funds by the respective banks the USD loan would crystallise and a USD exposure would eventuate. It is considered the risk of
such an event is limited in the current environment. If these loans did crystallise the USD currency risk would be assessed at that
time. As noted in below loans in USD currency supply a natural hedge to the USD denominated coal sales.
WORKING CAPITAL FACILITY
The to the extent utilised the working capital facility result in exposure to USD:AUD currency fluctuations, but it is noted
that this facility is a natural partial hedge to the USD denominated coal sales, as fluctuations in the exchange rate result
in opposing fluctuations to current and future outstanding sales. Derivative products are therefore currently not deemed
necessary to reduce foreign exchange risk.
EXPENSES DENOMINATED IN CURRENCIES OTHER THAN AUD
Currently the exposure to such expenses is minimal, but it is noted that equipment purchases, equipment parts and
other mine related expenditure can be in various foreign currencies. When entering major transactions in foreign
currencies it is the policy of the group to assess the currency risk of the transaction and review derivative products or
other methods to offset this risk. Where appropriate these products would be used, but no such transactions occurred in
the 30 June 2017 or 30 June 2016 financial years.
COMMODITY PRICE RISK
The group generally aligns all Semi Soft Coking Coal prices to relevant Newcastle Semi Soft indexes. While Thermal coal
sales are generally sold on the spot market via negotiation with relevant counter parties. The group does not use any
derivative products to mitigate fluctuations in the relevant coal price indexes.
81
Stanmore Coal Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
NOTE 20: FINANCIAL RISK MANAGEMENT (continued)
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 consolidated entity does
not have any material exposure to market risk other than as set out below.
FOREIGN EXCHANGE RISK
Foreign exchange risk (FX risk) arises principally from cash and cash equivalents. The objective of FX risk management
is to manage and control FX risk exposures within acceptable parameters while optimising the return.
FX risk is naturally hedged due to the USD exposure on sales and on the Working Capital Loan facility.
The company has an unsecured non-margined $30.000 million currency hedging facility which matures on 30 September
2017. The facility is used from time to time to transact spot and short term forward USD currency contracts. No
outstanding contracts were in place at 30 June 2017.
At 30 June 2017, the effect on profit and equity as a result of changes in the FX rate would be:
Increase in FX rate by 5
Decrease in FX rate by 5%
2017
Cash and cash equivalents –
USD A/C
Trade receivables – USD
Working capital facility –
USD A/C
Tax charge of 30%
After tax increase/(decrease)
2016
Cash and cash equivalents –
USD A/C
Working capital facility –
USD A/C
Tax charge of 30%
After tax increase/(decrease)
Carrying
amount
$’000
11,910
17,805
(15,601)
-
-
-
-
-
-
Profit
$’000
(737)
(1,102)
966
262
(611)
-
-
-
-
Other
comprehensive
income
$’000
-
-
-
-
-
-
-
-
-
Profit
$’000
815
1,218
(1,067)
(290)
676
-
-
-
-
Other
comprehensive
income
$’000
-
-
-
-
-
-
-
-
-
The above analysis assumes all other variables remain constant.
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 investments. For further details on interest rate
risk refer to the tables below:
82
Stanmore Coal Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
NOTE 20: FINANCIAL RISK MANAGEMENT (continued)
Floating
interest rate
$’000
Fixed
interest rate
$’000
Non-interest
bearing
$’000
Total carrying amount
as per the consolidated
statement of
financial position
$’000
Weighted
average
effective
interest rate
$’000
2017
FINANCIAL ASSETS
Cash and cash equivalents
27,515
Restricted cash
Receivables
Security deposits
-
-
-
Total financial assets
27,515
FINANCIAL LIABILITIES
Trade payables
Working capital facility
Other payables
Total financial liabilities
2016
FINANCIAL ASSETS
-
-
-
-
Cash and cash equivalents
12,080
Restricted cash
Receivables
Security deposits
-
-
-
Total financial assets
12,080
FINANCIAL LIABILITIES
Trade payables
Other payables
Total financial liabilities
-
-
-
-
85
-
-
85
-
15,601
-
15,601
-
76
-
-
76
-
-
-
-
-
16,641
138
16,779
1,254
-
21,028
22,282
-
-
23,023
181
23,204
8,377
14,175
22,552
27,515
85
16,641
138
44,379
1,254
15,601
21,028
37,883
12,080
76
23,023
181
35,360
8,377
14,175
22,552
1.53
2.73
-
-
-
-
10.00
-
1.88
3.11
-
-
-
-
-
-
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 2017, the effect on profit and equity as a result of changes in the interest rate would be as follows:
Increase in interest rate by 1% Decrease in interest rate by 1%
2017
Cash and cash equivalents
Tax charge of 30%
After tax increase/(decrease)
Carrying
amount
$’000
27,515
-
-
Other
comprehensive
income
$’000
-
-
-
Profit
$’000
275
(83)
192
Profit
$’000
(275)
83
(192)
Other
comprehensive
income
$’000
-
-
-
83
Stanmore Coal Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
NOTE 20: FINANCIAL RISK MANAGEMENT (continued)
Increase in interest rate by 1%
Decrease in interest rate by 1%
Carrying
amount
$’000
12,080
Other
comprehensive
income
$’000
-
-
-
Profit
$’000
121
-
121
Other
comprehensive
income
$’000
-
-
-
Profit
$’000
(121)
-
(121)
2016
Cash and cash equivalents
Tax charge of 30%
After tax increase/(decrease)
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:
1. quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
2.
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
3.
inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).
The entity completed level 3 valuations on contingent consideration, which is outlined in Note 16: Vendor Royalties
– Contingent Consideration. The carrying value of a significant portion of all financial assets and financial liabilities
approximate their fair values due to their short-term nature.
FINANCIAL LIABILITIES
Vendor royalties contingent consideration held at fair value
through profit or loss
Total financial liabilities
Level 1
Level 2
-
-
-
-
Level 3
11,264
11,264
There were no other financial assets or liabilities valued at fair value in FY17 or FY16.
84
Stanmore Coal Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS
(continued)
NOTE 21: SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described below:
Principle activities
Country of
incorporation
Class of
shares
Percentage
owned %*
Name of entity
Mackenzie Coal Pty Ltd
Comet Coal & Coke Pty Ltd
Belview Coal Pty Ltd
Belview Expansion Pty Ltd
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
Coal exploration
Australia Ordinary
Coal exploration
Australia Ordinary
Coal exploration
Australia Ordinary
Coal exploration
Australia Ordinary
Coal exploration
Australia Ordinary
Coal exploration
Australia Ordinary
Coal exploration
Australia Ordinary
Coal exploration
Australia Ordinary
Coal exploration
Australia Ordinary
Coal exploration
Australia Ordinary
2017
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
2016
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Stanmore Wotonga Pty Ltd
Coal exploration & mining
Australia Ordinary
Stanmore IP Coal Pty Ltd
Coal mining
Australia Ordinary
Stanmore Bowen Coal Pty Ltd
Coal exploration & mining
Australia Ordinary
Isaac Plains Coal Management Pty Ltd
Coal exploration & mining
Australia Ordinary
Isaac Plains Sales & Marketing Pty Ltd
Coal exploration & mining
Australia Ordinary
*The proportion of ownership interest is equal to the proportion of voting power held.
NOTE 22: 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 Consolidated Entity has certain obligations to expend minimum amounts on exploration in tenement areas. These
obligations are expected to be fulfilled in the normal course of operations.
The commitments to be undertaken are as follows:
PAYABLE
Not later than 12 months
Between 12 months and 5 years
Greater than 5 years
2017
$’000
1,875
998
-
2,873
2016
$‘000
1,885
2,430
-
4,315
85
Stanmore Coal Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS
NOTE 22: COMMITMENTS (continued)
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
2017
$’000
2016
$‘000
63
-
-
63
143
114
-
257
The Consolidated Entity has an operating lease commitment in relation to the lease of commercial office premises. The
lease commenced on 1 December 2013 for a term of four years. The Consolidated Entity has provided a bank guarantee
of $68,153 as a security bond on the premises.
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
2017
$’000
-
3,700
-
3,700
2016
$‘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 coal production. 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 million in cash is due the earlier of 30 days after the Mining Lease is granted by
the Department of Mines and Energy or November 2016. An extension to the payment date from November 2014 to
November 2016 was granted through an agreement with the landholder. An additional extension has been granted by the
land holder to 29 November 2018. Though this extension the purchase price was increased to $3.700 million.
86
Stanmore Coal Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS
(continued)
NOTE 23: CONTINGENT LIABILITIES AND CONTINGENT ASSETS
CONTINGENT ASSET – WICET LOAN
In the 2014 financial year the Company impaired the full balance of the loan provided to third party infrastructure
providers. The loan related to the WEXP1 project in Gladstone and the Company’s participation in the Capacity
Commitment Deed (CCD) which provided certain future access rights in return for a funding commitment from the
Company. The Company provided $8.000 million in loans which were used to fund studies and complete initial dredging
activities in respect of a future expansion to the port site. The CCD expired on 31 August 2014. The Company retains only
those rights which relate to recoupment of loaned amounts as a result of a future port expansion, which may or may not
occur. Based on a range of factors, a new expansion proponent who achieves financial close prior to 31 December 2020
will be required to reimburse the Company for a portion of the loaned amount which, in the opinion of an expert, provides
a benefit to the proponents of that expansion. Until the timing of that future financing event is known, it is difficult to
reliably estimate what portion of the Company’s $8.000 million loan would be repaid.
CONTINGENT LIABILITY – DEBT FINANCE FACILITY
In November 2015, the Company signed a Finance Facility which provides credit support for certain bank guarantees
issued to third parties related to the Isaac Plains Coal Mine, such as rehabilitation bonds and to support major
infrastructure and transport contracts. Given the structure of the arrangement the facility is backed-to-back with a
major financial institution which provides credit support on the Company’s behalf. This arrangement, amongst other
things, avoids foreign currency translation risk as the guarantees issued to third parties are denominated in Australian
dollars. The letters of credit arrangement is off-Consolidated statement of financial position except in circumstances
where the Company is in default under the facility agreement or the underlying infrastructure contract. If a default were
to occur then the debt would convert into a US dollar loan which would result in Consolidated Statement of Financial
Position recognition. At the date of these financial statements there is no default occurring or subsisting.
TOTAL FACILITIES
FACILITY A – BANK GUARANTEE FACILITY
Total available facility
Facility utilised
Total available facility
30 June 2017
$’000
30 June 2016
‘000
30 June 2017
USD $’000
30 June 2016
USD '000
27,942
27,942
-
40,399
40,399
-
21,493
21,493
-
30,000
30,000
-
CONTINGENT LIABILITY – ISAAC PLAINS COMPLEX ROYALTY
On 26 November 2015, the company entered a Royalty Deed and agreed to pay a royalty of 0.8% on:
•
•
the saleable value of all product coal owned by the company and processed through the Isaac Plains infrastructure
any processing or handing fees arising from the treatment of 3rd party coal processed through the Isaac Plains
infrastructure.
On the 29 August 2017, the Company entered into a 2017 Royalty Deed and agreed to pay a revised royalty of 1%.
CONTINGENT LIABILITY – ISAAC PLAINS EAST ACQUISITION
On 4 September 2015, the Company completed the acquisition of MDL 135 and (part) MDL 137 for an initial cash payment
of $2.000 million. The transaction terms include two contingent consideration items, namely:
• A further $2.000 million payable upon grant of a Mining Lease; and
• A royalty capped at $3.000 million payable at $1 per tonne of production for coal that is mined within the new Mining Lease.
87
Stanmore Coal Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
NOTE 23: CONTINGENT LIABILITIES AND CONTINGENT ASSETS (continued)
As these items are dependent on future activities of the Company and government approvals these payments have not
been recognised as provisions in the financial statements of the Consolidated Entity.
The Directors are not aware of any other significant contingent liabilities or contingent assets at the date of this report.
NOTE 24: EVENTS AFTER REPORTING DATE
After 30 June 2017 Stanmore signed an extension of the Finance Facility previously outlined which has a new expiry date
of 15 November 2019. The new terms are outlined in Note 13: Borrowings and Note 23: Contingent liabilities were agreed
and signed and executed on 29 August 2017.
There were no other events after 30 June 2017 that impact upon the financial report as at 30 June 2017.
NOTE 25: KEY MANAGEMENT PERSONNEL
TOTAL KEY MANAGEMENT PERSONNEL COMPENSATION
Short-term employee benefits
Post-employment benefits
Termination benefits
Share-based payments
Total
2017
$’000
2016
$‘000
1,837,072
1,843,519
80,262
86,676
(136,424)
1,867,586
58,848
-
59,925
1,953,292
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 34 to 44 of this annual report.
NOTE 26: AUDITOR’S REMUNERATION
2017
$’000
2016
$‘000
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
134,000
160,631
TAXATION SERVICES
Amounts paid/payable to related entities of BDO Audit Pty Ltd for non-audit
taxation services performed for the entity or any entity in the Consolidated Entity
Total
102,424
236,424
58,811
219,442
NOTE 27: PARENT ENTITY INFORMATION
The Corporations Act 2001 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
regard 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 Group accounting policy. The financial information for the parent entity,
Stanmore Coal Limited, has been prepared on the same basis as the consolidated financial statements, except as follows:
88
Stanmore Coal Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
NOTE 27: PARENT ENTITY INFORMATION (continued)
INVESTMENTS IN SUBSIDIARIES
Investments in subsidiaries, associates and joint ventures are accounted for at cost.
Parent entity
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Issued capital
Share based payment reserve
Accumulated losses
Total shareholders equity
Profit /(loss) for the year
Total comprehensive income for the year
GUARANTEES
2017
$’000
13,099
79,882
92,981
731
28,811
29,542
63,439
113,185
774
(50,520)
63,439
2,672
2,672
2016
$‘000
11,116
38,707
49,823
1,286
-
1,286
48,537
97,352
4,377
(53,192)
48,537
(13,342)
(13,342)
Under the terms of the Secured Financing Facility entered in November 2015, Stanmore Coal Limited has provided
certain guarantees in relation to the arrangements between the Financier and the borrowing entity (Stanmore IP Coal
Pty Ltd). These guarantees relate primarily to payment performance and maintaining the tenure of the Isaac Plains Coal
Mine in good standing.
CONTINGENT LIABILITIES
The parent entity has no contingent liabilities.
CAPITAL COMMITMENTS
The parent entity has no capital commitments.
NOTE 28: 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, “CODM”) in assessing performance and determining the
allocation of resources. The Consolidated Entity is managed primarily on a producing asset versus non-producing asset
basis. Operating segments are determined on the basis of financial information reported to the Board which is at the
Consolidated Entity level. All segments are located within Australia.
Accordingly, management currently identifies the Consolidated Entity as having two reportable segments, the first
being the operation of the Isaac Plains Complex (including the Isaac Plains East project) and the second being all
other exploration and development coal assets. This is in-line with the treatment applied in the prior year’s Financial
Statements.
89
Stanmore Coal Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS
NOTE 28: OPERATING SEGMENTS (continued)
ACCOUNTING POLICIES ADOPTED
Unless otherwise stated, all amounts reported to the Board of Directors, being the CODM with respect to operating
segments, are determined in accordance with accounting policies that are consistent with those adopted in the annual
financial statements of the Consolidated Entity.
INTER-SEGMENT TRANSACTIONS
An internally determined transfer price is set for all intersegment sales and services provided. All such transactions are
eliminated on consolidation into the Consolidated Entity’s financial statements.
SEGMENT ASSETS
Where an asset is used across multiple segments the asset is allocated to the segment that receives most of the economic
value from the assets. In most instances, segment assets are clearly identifiable based on their nature and physical location.
SEGMENT LIABILITIES
Liabilities are allocated to segments where there is a direct nexus between the liability and the operations of the
segment. Borrowings and tax liabilities are generally considered to relate to the whole Consolidated Entity and are not
allocated. Segment liabilities include trade and other payables and certain direct borrowings.
UNALLOCATED ITEMS
The following items of revenue, expenses, assets and liabilities are not allocated to operating segments as they are not
considered core to the operation of any segment:
• Corporate head office costs and salaries of non-site based staff.
MAJOR CUSTOMERS
The Consolidated Entity has several customers to whom it sells export grade coal. The Consolidated Entity supplies one
such external customer who accounts for 25% of external revenue. The next most significant customer accounts for 20%
of external revenue.
RECOGNITION AND MEASUREMENT
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.
2017
SEGMENT REVENUE
External sales
Intersegment sales
Total segment revenue
RECONCILIATION OF SEGMENT REVENUE TO
CONSOLIDATED ENTITY REVENUE
Other revenue
Intersegment elimination
Total group revenue
90
Isaac Plains
Complex
$’000
Exploration and
development
$’000
137,846
-
137,846
-
-
-
-
-
-
-
-
-
Total
$‘000
137,846
-
137,846
-
-
137,846
Stanmore Coal Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS
NOTE 28: OPERATING SEGMENTS (continued)
2017
Isaac Plains
Complex
Exploration and
development
$’000
Segment net profit/(loss) from continuing operations before tax
853
(2,030)
RECONCILIATION OF SEGMENT RESULT TO
CONSOLIDATED ENTITY NET LOSS BEFORE TAX
AMOUNTS NOT INCLUDED IN SEGMENT RESULT BUT
REVIEWED BY THE BOARD
Impairment of exploration assets
Write back impairment of development assets
Unallocated
Net profit/(loss) before tax from continuing operations
Segment assets
RECONCILIATION OF SEGMENT ASSETS TO
CONSOLIDATED ENTITY ASSETS
Intersegment eliminations
Unallocated assets
Total Consolidated Entity assets
SEGMENT LIABILITIES
RECONCILIATION OF SEGMENT LIABILITIES TO
CONSOLIDATED ENTITY ASSETS
Intersegment eliminations
Unallocated liabilities
Total Consolidated Entity liabilities
-
-
-
853
104,967
-
-
-
(917)
8,512
-
5,566
87,104
-
-
-
95,869
25,040
-
-
-
-
-
-
No comparatives given as only one segment reported in 2016.
NOTE 29: SHARE-BASED PAYMENTS
The following share based payment arrangements existed at 30 June 2017.
SHARE-BASED PAYMENTS TO DIRECTORS, EXECUTIVES AND EMPLOYEES
SHARES
During the year ended 30 June 2017, no shares were granted to KMP as share- based payments.
OPTIONS
During the year ended 30 June 2017, no options were granted to KMP as share- based payments.
Total
$‘000
(1,177)
(917)
8,512
-
6,418
192,071
(35,714)
6,746
163,103
120,909
(25,202)
578
96,285
91
Stanmore Coal Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS
NOTE 29: SHARE-BASED PAYMENTS (continued)
2017
Weighted
average
exercise price
$
No. of
options
2016
Weighted
average
exercise price
$
No. of
options
Outstanding at beginning of year
2,766,000
$0.22
4,766,000
$1.02
Granted
Forfeited
Exercised
Expired
Outstanding at year-end
Exercisable at year-end
-
(762,457)
(2,003,543)
-
-
-
-
$0.22
$0.22
-
-
-
-
-
-
(2,000,000)
2,766,000
2,766,000
-
-
-
$2.12
$0.22
$0.22
The options exercisable at 30 June 2017 had a weighted average exercise price of nil (2016: $0.22) and weighted average
remaining contractual life of Nil (2016: 1.2 years). The exercise price was $Nil in respect of all options outstanding at
30 June 2017 (2016: $0.22).
In the year ending 30 June 2017, 2,003,543 options were exercised (2016: nil) for cash consideration of $0.441 million.
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.
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 2017, 2,003,543 options
were exercised (2016: nil) resulting in the issue of 2,003,543 additional shares as a result of the exercise of those options.
RIGHTS
During the year ended 30 June 2017, Rights were granted to KMP as long-term incentive as outlined in the Remuneration
report 381,732 Rights were issued. Due to a clerical error Rights totalling 531,497 which were approved for Dan Clifford at
the 2016 AGM were not issued. As the approval given at the 2016 AGM has expired, these Rights were not issued and now
require re-approval at the 2017 AGM, which will occur after the completion of these Financial Statements. Given that there
exists a shared understanding of the terms and conditions of the rights and services are being performed, the company has
valued and accounted for the rights and this expense will be subject to adjustment once final approval is obtained.
The amount included in profit or loss is as follows:
Employee benefits expense
Administration and consulting expense
2017
$’000
(134)
-
(134)
2016
$‘000
73
-
73
These amounts have been recognised in equity in the Consolidated Statement of Financial Position as follows:
92
Stanmore Coal Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS
NOTE 29: SHARE-BASED PAYMENTS (continued)
Share capital
Share-based payment reserve
2017
$’000
-
134
134
2016
$‘000
-
(73)
(73)
It is noted that a number of Rights were also relinquished by KMP during the year due to the finalisation of their service.
As a result, all non-vested Right costs were written back to profit or loss accounts.
RECOGNITION AND MEASUREMENT
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, options or rights granted to employees and consultants are 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 and rights, 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 or rights 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.
KEY ESTIMATES – SHARE-BASED PAYMENTS
The Consolidated Entity uses estimates to determine the fair value of equity instruments issued to executives and
employees. The estimates include volatility, risk free rates and consideration of satisfaction of performance criteria
for recipients of equity instruments. During the period, no shares or options were issued. Rights were issued as
outlined above and the cost of these rights represents the valuation completed by an independent valuer and the
accounting impact of prior issuances and determinations remains unchanged.
NOTE 30: 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.
93
Stanmore Coal Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS
NOTE 30: RELATED PARTY TRANSACTIONS (continued)
B. SUBSIDIARIES
Interests in subsidiaries are disclosed in Note 21: Subsidiaries.
C. KEY MANAGEMENT PERSONNEL
Disclosures relating to KMP are set out in Note 25: Key Management Personnel and the Remuneration Report contained
in the Directors’ Report.
D. OTHER RELATED PARTY TRANSACTIONS
There were no transactions with other related parties during FY17 (FY16: nil).
NOTE 31: OTHER ACCOUNTING POLICIES
1. 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 Consolidated Entity 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 Consolidated Entity 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 Consolidated Entity 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 Consolidated Entity obtains control of a subsidiary that was previously accounted for as an equity accounted
investment in associate or jointly controlled entity, the Consolidated Entity 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 Consolidated Entity 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 Consolidated Entity had disposed directly of the previously held interest.
Where settlement of any part of the cash consideration is deferred, the amounts payable in 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 Consolidated Entity’s controlling shareholder’s consolidated financial
statements.
94
Stanmore Coal Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS
NOTE 31: OTHER ACCOUNTING POLICIES (continued)
2. 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.
3. 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.
4. NEW AND AMENDED STANDARDS AND INTERPRETATIONS NOT YET ADOPTED
New Accounting Standards and Interpretations not yet mandatory or early adopted Australian Accounting Standards and
Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by
the consolidated entity for the annual reporting period ended 30 June 2017 (with the exception of AASB 15 Revenue from
Contracts with Customers which has been early adopted). The consolidated entity’s assessment of the impact of these
new or amended Australian Accounting Standards and Interpretations, most relevant to the consolidated entity, where
assessed are set out below:
AASB 9 FINANCIAL INSTRUMENTS
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard replaces
all previous versions of AASB 9 and completes the project to replace IAS 39 ‘Financial Instruments: Recognition
and Measurement’. AASB 9 introduces new classification and measurement models for financial assets. A financial
asset shall be measured at amortised cost, if it is held within a business model whose objective is to hold assets
in order to collect contractual cash flows, which arise on specified dates and solely principal and interest. All other
financial instrument assets are to be classified and measured at fair value through profit or loss unless the entity
makes an irrevocable election on initial recognition to present gains and losses on equity instruments (that are not
held-for-trading) in other comprehensive income (‘OCI’). For financial liabilities, the standard requires the portion
of the change in fair value that relates to the entity’s own credit risk to be presented in OCI (unless it would create
an accounting mismatch). New simpler hedge accounting requirements are intended to more closely align the
accounting treatment with the risk management activities of the entity. New impairment requirements will use an
‘expected credit loss’ (‘ECL’) model to recognise an allowance. Impairment will be measured under a 12-month
ECL method unless the credit risk on a financial instrument has increased significantly since initial recognition
in which case the lifetime ECL method is adopted. The standard introduces additional new disclosures. The
consolidated entity will adopt this standard from 1 July 2018 but the impact of its adoption is yet to be assessed by
the consolidated entity.
AASB 16 LEASES
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. When effective, the
Standard will replace current accounting requirements applicable to leases in AASB 117. AASB 16 introduces a single
lessee accounting model that eliminates the requirement for leases to be classified as operating or finance leases. The
main changed introduced by the new standard include: recognition of a right-to-use asset and liability for all leases;
depreciation of right-to-use assets in line with AASB 116 in profit or loss and unwinding of the liability in principal and
interest components; and additional disclosure requirements. The Consolidated Entity will adopt this standard from 1
January 2019 but the impact of its adoption is yet to be assessed by the Consolidated Entity.
5. NEW, REVISED OR AMENDING ACCOUNTING STANDARDS AND INTERPRETATIONS ADOPTED
The consolidated entity has adopted all of the new, revised or amending Accounting Standards and Interpretations issued
by the Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period.
The adoption of these Australian Accounting Standards and Interpretations did not have any significant impact on the
financial performance or position of the consolidated entity, but listed below are the standards applied and any further
information required under these standards.
95
Stanmore Coal Annual Report 2017 DECLARATION
BY DIRECTORS
The Directors of the Consolidated Entity declare that:
4. The remuneration disclosures included in pages
1. The consolidated financial statements, comprising
the consolidated statement of profit or loss and other
comprehensive income, consolidated statement of
financial position, consolidated statement of cash
flows, consolidated statement of changes in equity,
and accompanying notes, are in accordance with the
Corporations Act 2001 and:
34 to 44 of the Directors’ report (as part of audited
Remuneration Report) for the year ended 30 June
2017, 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.
(a) comply with Australian Accounting Standards and
the Corporations Regulations 2001; and
This declaration is signed in accordance with a resolution
of the Directors.
(b) give a true and fair view of the Consolidated
Entity’s financial position as at 30 June 2017 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.
Daniel Clifford
Managing Director
Brisbane
Date: 31 August 2017
96
Stanmore Coal Annual Report 2017
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 Audit of the Financial Report
Opinion
We have audited the financial report of Stanmore Coal Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2017, 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, and notes
to the financial report, including a summary of significant accounting policies and the directors’
declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our 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. Liability limited by a scheme approved under Professional
Standards Legislation, other than for the acts or omissions of financial services licensees.
97
Stanmore Coal Annual Report 2017
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
Vendor Royalty– Contingent consideration
Key audit matter
How the matter was addressed in our audit
The company has recognised a liability for
contingent consideration of $25,185k as at 30 June
2017 as disclosed in note 16 to the financial
statements.
The contingent consideration relates to the
acquisition of the Isaac Plains mine and requires
payment of a royalty to each of the vendors should
the benchmark Hard Coking Coal price exceed
certain levels. The amount payable is capped at the
level of cash received from each of the vendors
under the sale and purchase agreement. The
contingent consideration was a key audit matter due
to the size of this liability class and the judgement
involved in estimating expected selling prices in
future periods.
The valuation of the contingent consideration is
based on forecasts and assumptions within a
model developed by management.
We evaluated and tested key assumptions in this
model by performing, amongst others, the
following procedures:
•
•
•
Providing the model to our internal experts
to assess the reasonableness of the
methodology and assumptions applied in the
model in particular long term hard coking
coal price forecasts and evaluating the
results of their work
Checking the mathematical accuracy of the
model and agreeing the underlying inputs
used within the model to external market
data where available
Examining the cash flow forecasts provided
by management and challenging the
assumptions therein by ensuring consistency
with the stated business and operational
objectives
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. Liability limited by a scheme approved under Professional
Standards Legislation, other than for the acts or omissions of financial services licensees.
98
Stanmore Coal Annual Report 2017 Reversal of impairment on development assets
Key audit matter
How the matter was addressed in our audit
The company carries significant development assets
of $15,700k as at 30 June 2017 as disclosed in note
10(b) to the financial statements.
The carrying value of development assets represent
a significant asset of the company. A provision for
impairment 0f $13,883k was recognised as at 30
June 2016 and during this year $8,512k was
reversed. Assessing whether facts or circumstances
exist to suggest that it was appropriate to reverse,
in part, the prior year impairment, and whether the
carrying amount of this asset exceeds its
recoverable amount was considered a key audit
matter.
This assessment involves significant judgement
applied by management.
We evaluated management’s assessment of the
facts and circumstances that exist to suggest
that the impairment loss recognised in the prior
year may no longer exist or may have decreased.
The valuation model used to support the
carrying value of this asset is based on current
transactional activity in the coal sector.
Our audit procedures included, amongst others:
•
•
•
•
•
Challenging management’s criteria for
selecting comparable transactions to ensure
these were an appropriate basis for
comparison
Providing the model to our internal experts
to assess the reasonableness of the
methodology and assumptions applied in the
model and evaluating the results of their
work
Checking the mathematical accuracy of the
model and agreeing the underlying inputs
used within the valuation model to external
market data, where available
Verifying the tenement licence to
determine that the group has the rights to
tenure and maintains the tenement in good
standing
Assessing the disclosures related to the
impairment reversal by comparing these
disclosures to our understanding of the
matter and the applicable accounting
standards.
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. Liability limited by a scheme approved under Professional
Standards Legislation, other than for the acts or omissions of financial services licensees.
99
Stanmore Coal Annual Report 2017 Accounting for overburden
Key audit matter
How the matter was addressed in our audit
The company has recognised overburden in advance
as part of inventory of $12,216k as at 30 June 2017
as disclosed in note 7 to the financial statements.
We evaluated the accounting treatment applied
for compliance with AASB 102 Inventories and
Interpretation 20.
The company has progressed overburden removal
beyond the immediate mining of coal. This has
resulted in an increase in inventories as directed
under AASB Interpretation 20 Stripping Costs in the
Production Phase of a Surface Mine (Interpretation
20).
This was a key audit matter due to the significant
impact on the inventory value and the required
judgement in the assessment of the work performed
and the timing of when this coal will be mined.
Our audit procedures included, amongst others:
•
•
Obtaining detailed costing records from the
mine and agreeing these to the records of
the mining contractor to verify the volume
of overburden removed, and the cost of
doing so
Checking the amortisation of the
overburden balance has been applied
correctly as coal is mined by cross
referencing the cost and volume of the
overburden removal to the mine plan
Other information
The directors are responsible for the other information. The other information comprises the
information in the Directors’ report and appendix 1 for the year ended 30 June 2017, but does not
include the financial report and the auditor’s report thereon, which we obtained prior to the date of
this auditor’s report, and the Group’s annual report, which is expected to be made available to us
after that date.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
When we read the Group’s annual report, if we conclude that there is a material misstatement therein,
we are required to communicate the matter to the directors and will request that it is corrected. If it
is not corrected, we will seek to have the matter appropriately brought to the attention of users for
whom our report is prepared.
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. Liability limited by a scheme approved under Professional
Standards Legislation, other than for the acts or omissions of financial services licensees.
100
Stanmore Coal Annual Report 2017 Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 34 to 44 of the directors’ report for the
year ended 30 June 2017.
In our opinion, the Remuneration Report of Stanmore Coal Limited, for the year ended 30 June 2017,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit Pty Ltd
T J Kendall
Director
Brisbane, 31 August 2017
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. Liability limited by a scheme approved under Professional
Standards Legislation, other than for the acts or omissions of financial services licensees.
101
Stanmore Coal Annual Report 2017 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 21 August 2017.
DISTRIBUTION OF EQUITY SECURITIES
The number of Ordinary Shares by size of holding is:
100,001 and over
50,001 to 100,000
10,001 to 50,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
Securities
229,245,741
8,385,603
11,776,743
1,454,466
888,821
49,604
% No. of holders
91.04
3.33
4.68
0.58
0.35
0.02
135
107
468
183
299
162
%
9.97
7.90
34.56
13.52
22.08
11.96
251,800,978
100.00
1,354
100.00
The number of shareholders holding less than a marketable parcel is 189 (81,775 ordinary shares).
The number of Unlisted Rights by size of holding is:
100,001 and over
50,001 to 100,000
10,001 to 50,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
% No. of holders
Securities
-
194,985
-
-
-
-
-
100.00
-
-
-
-
194,985
100.00
-
2
-
-
-
-
2
%
-
100.00
-
-
-
-
100.00
SUBSTANTIAL SHAREHOLDERS
Substantial shareholders are shown in shareholder notices received by Stanmore Coal Limited as at 21 August 2017 are:
Name of shareholder
Greatgroup Investments Ltd
3rd Wave Investors Ltd
St Lucia Resources
Brazil Farming Pty Ltd
102
Number of shares
53,393,407
37,311,833
31,700,270
16,143,229
Stanmore Coal Annual Report 2017 SHAREHOLDER INFORMATION
(continued)
RESTRICTED SECURITIES
There are no restricted securities on issue.
20 LARGEST HOLDERS
The names of the 20 largest holders, in each class of quoted security are:
ORDINARY SHARES
GREATGROUP INVESTMENTS LTD
3RD WAVE INVESTORS LTD
ST LUCIA RESOURCES
BRAZIL FARMING PTY LTD
CITICORP NOMINEES PTY LIMITED
LATIMORE FAMILY PTY LTD
ONE MANAGED INVT FUNDS LTD
NERO RESOURCE FUND PTY LTD
MRS NADEZDA KOVIJANIC
BNP PARIBAS NOMS PTY LTD
BRAZIL FARMING PTY LTD
COMMON SENSE PTY LTD
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
M RESOURCES PTY LTD
KABILA INVESTMENTS PTY LTD
GREATGROUP INVESTMENTS LIMITED
PERSHING AUSTRALIA NOMINEES PT Y LTD
INVIA CUSTODIAN PTY LIMITED
TAIHEIYO KOUHATSU INCORPORATED
TOTAL OF 20 LARGEST HOLDERS
TOTAL ORDINARY SHARES
VOTING RIGHTS
All ordinary shares carry one vote per share without restriction.
Options and performance rights do not carry voting rights.
Number of
shares
53,393,407
37,953,821
29,200,270
16,143,229
10,139,229
8,675,800
6,915,000
3,627,318
3,200,973
3,011,030
3,000,000
2,613,270
2,054,331
1,982,792
1,883,402
1,842,502
1,545,388
1,300,000
1,205,000
1,200,000
% of total
shares
21.20
15.07
11.60
6.41
4.03
3.45
2.75
1.44
1.27
1.20
1.19
1.04
0.82
0.79
0.75
0.73
0.61
0.52
0.48
0.48
190,886,762
251,800,978
75.81
100.00
103
Stanmore Coal Annual Report 2017 OTHER
INFORMATION
MARKETABLE RESERVES NOTE
The Isaac Plains Complex Marketable Coal Reserve
of 12.89 Mt is derived from a run of mine (ROM) Coal
Reserve of 16.41 Mt that is JORC compliant based with a
predicted overall yield of 78.5%. The 12.89 Mt Marketable
Reserve is included in the 79.2 Mt JORC Resource
(24.9 Mt Measured + 30.3 Mt Indicated + 24 Mt Inferred
Resource).
The Company confirms that it is not aware of any
new information or data that materially affects the
information included in the announcement made on
24 August 2017 and that all material assumptions and
technical parameters underpinning the estimates in the
announcement made on 24 August 2017 continue to apply
and have not materially changed.
COMPETENT PERSONS STATEMENT
The information in this report relating to coal reserves for
Isaac Plains and Isaac Plains East was announced on 24
August 2017, titled “Isaac Plains Complex JORC Reserve”,
and is based on information compiled by Mr Ken Hill who
is a full-time employee of Xenith Consulting Pty Ltd. Mr
Hill is the Managing Director of Xenith Consulting Pty Ltd,
is a qualified civil engineer, a member of the Australian
Institute of Mining and Metallurgy (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 2012 Edition)”.
The Company confirms that it is not aware of any
new information or data that materially affects the
information included in the announcement made on
24 August 2017 and that all material assumptions and
technical parameters underpinning the estimates in the
announcement made on 24 August 2017 continue to apply
and have not materially changed.
The information in this report relating to coal resources
for Isaac Plains and Isaac Plains East was announced
on 24 August 2017, titled “Isaac Plains JORC Resource”,
and is based on information compiled by on information
compiled by Mr Troy Turner who is a member of the
Australian Institute of Mining and Metallurgy and is a
full-time employee of Xenith Consulting Pty Ltd. Mr Turner
is a qualified geologist and has sufficient experience
which is relevant to the style of mineralisation and type of
deposit under consideration and to the activity which he is
undertaking, to qualify as Competent Person as defined in
the 2012 Edition of the “Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves”.
104
The Company confirms that it is not aware of any
new information or data that materially affects the
information included in the announcement made on
24 August 2017 and that all material assumptions and
technical parameters underpinning the estimates in the
announcement made on 24 August 2017 continue to apply
and have not materially changed.
The information in this report relating to the Clifford
Project exploration results and coal resources is
based on information compiled by Mr Oystein Naess
who is a member of the Australian Institute of Mining
and Metallurgy and is a full time employee of Xenith
Consulting Pty Ltd. Mr Naess is a qualified geologist and
has sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration
and to the activity which he is undertaking, to qualify as
Competent Person as defined in the 2012 Edition of the
“Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves”.
The Company confirms that it is not aware of any new
information or data that materially affects the information
included in the announcements and that all material
assumptions and technical parameters underpinning the
estimates in the announcements continue to apply and
have not materially changed.
The information in this report relating to coal resources
for all other projects was announced on the dates noted
in the table within the Directors’ Report, and is based on
information compiled by Mr Troy Turner who is a full-time
employee of Xenith Consulting Pty Ltd. Mr Turner is a
qualified geologist and a member of the Australian Institute
of Mining and Metallurgy (AusIMM) and has sufficient
experience in relation to the style of mineralisation and
type of deposits 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 2012 Edition)”.
The Company confirms that it is not aware of any new
information or data that materially affects the information
included in the announcements and that all material
assumptions and technical parameters underpinning the
estimates in the announcements continue to apply and
have not materially changed.
Stanmore Coal Annual Report 2017 STANMORE’S FIVE-YEAR
FINANCIAL HISTORY
All figures in $M unless shown otherwise
2017
2016
2015
2014
2013
SUMMARISED FINANCIAL STATEMENTS
Sales revenue
137,846
12,700
859
749
1,732
Operating profit before depreciation and amortisation,
finance costs and income tax
Depreciation and amortisation
EBIT
Finance costs
Income tax (expense)/benefit
Operating profit after income tax attributable to
members of Stanmore Coal Limited
Capital and dividends
19,075
(15,658)
(12,108)
(11,259)
(5,873)
(3,332)
(1,306)
(32)
(81)
15,743
(16,964)
(12,140)
(11,340)
(9,325)
(2,782)
5,617
0
(8)
0
(524)
0
2,192
(46)
(5,919)
(1,284)
12,035
(19,746)
(12,148)
(11,864)
(5,011)
Ordinary shares on issue (number) 000's as at 30 June
251,801
222,497
222,497
209,124
208,419
Paid up ordinary capital as at 30 June
113,200
97,368
97,368
88,359
88,253
Fully-franked dividend per ordinary share declared (cents)
-
-
-
-
-
Financial performance
Share price at year end ($/sh)
Earnings per share (weighted average) (cents)
Return on average ordinary shareholders' equity
Financial position as at 30 June
Total assets
Total liabilities
Net assets
0.34
5.1
23%
0.28
(8.9)
0.06
(5.8)
0.11
(5.7)
(40%)
(19%)
(16%)
0.13
(2.5)
(7%)
163,103
112,274
59,303
71,274
90,058
96,285
73,189
545
556
14,972
66,818
39,085
58,758
70,718
75,086
Net tangible asset backing per ordinary share
$0.63
$0.48
$0.27
$0.34
$0.43
Net debt/(cash) to equity
Total liabilities/total assets
(18%)
59%
(31%)
65%
(26%)
(25%)
1%
1%
(27%)
17%
Stock market capitalisation as at 30 June
85,612
62,299
13,350
23,004
27,095