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STANMORE RESOURCES LIMITED
ANNUAL REPORT 2021
Contents
2
4
6
Chairman’s
Letter
Chief Executive
Officer’s Report
Directors’
Report
20
31
Renumeration
Report (audited)
Auditors’
Independence
Declaration
32
Financial
Statements
89
93
99
Independent
Auditors’ Report
Shareholder
Information
Other
Information
Cover image: In February 2022, Stanmore’s dragline walked across the Peak Downs Highway from
Isaac Plains to commence new open cut operations at Isaac Downs.
Stanmore Annual Report 2021
1
Chairman’s letter
This year has
been a truly
transformative
year for Stanmore,
with the Company
on its way to
becoming one of
the largest global
exporters of
metallurgical coal.
Dear Shareholders,
The start of 2021 was a testing period
for Stanmore and the industry.
The COVID-19 pandemic continued to present challenges
to operations and the global coal market; Australian
metallurgical coal prices were at near all-time lows; and
disruptions to the Asian coal market trade flow persisted. In
the second half of the year, a rebound in industrial activity
as well as tight supply saw a swing in coal prices, reaching
record highs by the end of the year.
Against this backdrop of uncertain and volatile conditions,
we rose to the challenge to significantly reposition
Stanmore as a leading metallurgical coal producer on
a global scale. We undertook significant works to bring
Isaac Downs online with operations to fully commence
in 2022 and we announced the acquisition of BHP’s
80% interest in BHP Mitsui Coal Pty Ltd (BMC).
The Company is progressing well with its transition to Isaac
Downs. Our successful ramp up of operations at Isaac
Downs resulted in record production and sales in H2 2021,
in time to take advantage of the record high metallurgical
coal prices prevailing in the market. Key infrastructure
works, including construction of the new Underpass and
Diversion of Peak Downs Highway are nearing completion.
The coming year will see Stanmore fully transition into
Isaac Downs where the lower strip ratios will further lower
cost and improve operating margins.
We also completed the acquisition of a 50% interest
in Millennium and Mavis Downs Mine in July 2021.
The acquisition represented a low capital investment
opportunity in high quality metallurgical coal, supported
by access to existing critical infrastructure. From a state of
care and maintenance, mining operations rapidly restarted
with first ROM coal produced in Q3 2021 followed by first
coal export in Q4 2021. We look forward to working with our
JV partner and contractors in transforming the Millennium
complex into a successful tier 1 operation.
2 Stanmore Annual Report 2021
Lastly, and most transformative to the Company, is our
successful bid to acquire an 80% interest in BMC. The BMC
mines are top tier de-risked and cash generating operating
assets, backed by experienced people and high-quality
equipment and infrastructure access. The acquisition is
a highly strategic move, resulting in Stanmore having a
portfolio of four mines and three wash-plants within an
approximate 50km radius in the premium Bowen Basin
region. Upon completion of the acquisition, Stanmore will
be positioned as one of the largest global exporters of
metallurgical coal.
Despite carrying out multiple workstreams over the course
of the year, Stanmore remained true to its values. Safety
and wellbeing of our staff and contractors remains the
top priority of the Company. Stanmore’s safety incident
rates remain below industry average. Stanmore has
also implemented effective COVID-19 protocols at the
Isaac Plains Complex throughout the year. In addition to
supporting 40 local community organisations over the year,
we are developing a Reconciliation Action Plan involving
long term strategies to increase Indigenous employment
and business opportunities, in recognition of the need for
reconciliation with the traditional owners of the land on
which the company operates.
Stanmore acknowledges that climate change is a critical
issue and commits to play a part in the transition to a
low carbon world. We aspire to be a responsible and
sustainability driven resources company, to that end we are
developing a comprehensive set of ESG policies to guide
emissions reductions and mitigation initiatives.
The Company is off to a strong start for the next financial
year and is well placed to take advantage of the strong
metallurgical coal prices. Completion of the BMC
acquisition is expected 3 May 2022 and we look forward
to this significant milestone for the Company.
On behalf of the Board, I would like to sincerely thank the
employees, management team, contract partners and
professional advisors of the Company for their unyielding
efforts over past 12 months. I would also like to thank
shareholders for their continued support.
Dwi Suseno
Stanmore Annual Report 2021
3
Chief Executive
Officer’s Report
2021 was a tale
of two halves
for Stanmore.
The Company
overcame a
challenging first
half but ended
the year strongly.
4
Dear Shareholders,
The Company overcame a challenging
first half impacted by the COVID-19
pandemic, historically low coal
prices and operational challenges at
Isaac Plains East but ended the year
strongly with the successful transition
to Isaac Downs, record production and
the transformational agreement to
acquire an 80% interest in BMC.
Production volumes in 1H 2021 were below usual historic
annualised levels of 2.3 – 2.4Mt, impacted by the transition
to Isaac Downs, reduced fleet capacity, La-Nina weather
systems and cost controls at Isaac Plains East. Despite a
challenging first half, we swiftly ramped up operations at
Isaac Downs in 2H 2021 following receipt of mining lease
approval in July and achieved record ROM production at
c.95% of nameplate capacity for the Isaac Plains CHPP.
Monthly feed rates and sales also exceeded historic
levels in the second half, more than offsetting softer
production in 1H 2021.
FOB (free on board) cash cost for the period was A$104/t in
2021, 15% lower than in CY20. In 2H 2021, unit costs were
even lower at A$87/t, representing a 19% improvement on
2H 2020. The lower unit cost outcomes were the result of
lower strip ratios realised from the Isaac Downs transition.
We expect that production rates and unit costs will
continue to improve in the next 2 to 3 years, following the
transition of the dragline to Isaac Downs in Q1 2022 which
will enable mining of a lower strip ratio area.
Strong operational performance, particularly in 2H 2021,
has translated into strong financial performance. Cash flow
from operations was A$127m and underlying EBITDA for
the period increased to A$54m in 2021, 127% higher than
in CY20. The improved result was facilitated by coal price
recovery through the second half of the year, lower FOB
costs and strong production. We expect a tight market with
strong demand to continue with buoyant global industrial
production and tight supply.
Stanmore Annual Report 2021Cash Flow
A$127m
from operations
Underlying EBITDA
A$54m
127% higher than CY20
During the year A$1.65m was invested in the
rehabilitation of the Isaac Plains Complex, 56 hectares
of land was recontoured and 44 hectares was seeded
for re-vegetation. To date, 39% of all disturbed land
at Isaac Plains is already under rehabilitation. We are
committed to integrating this core activity within
our operations to ensure timely and efficient rehabilitation
of the land on which we operate.
Stanmore is acutely focused on safety and ensuring that
the ramp-up of production at Isaac Downs and integration
of BMC is achieved in a safe and efficient way. Stanmore
undertook or managed 754,930 hours of coal mining,
drilling, exploration and mine development activities in
2021 and the Total Reportable Injury Frequency Rate was
7.9 per million hours. This result is below industry averages
and is a testament to the ongoing efforts of our team,
who are committed to maintaining the highest standards
of safety discipline.
The coming financial year will see Stanmore fully transition
into Isaac Downs where the dragline will be uncovering
coal rapidly given the lower strip ratios benefitting us with
lower costs, improved margins and potentially higher
volumes. Stanmore expects to complete the acquisition
of an 80% interest in BMC on 3 May 2022 which will be
a significant milestone for the Company and represent
a step change in scale and operations to see Stanmore
become a significant global metallurgical coal producer. We
look forward to integrating the business into the Stanmore
group and continuing our focus on safety and delivering
high quality products and outcomes for our customers,
staff and stakeholders.
I would like to take the opportunity to acknowledge the
dedication and efforts of our team over the past year. I thank
our employees and contractors for their contribution to
the performance of the business, and my fellow directors
for their guidance. I would also like to thank our traditional
owners, neighbours, customers and shareholders for their
continuing support of Stanmore Resources.
Marcelo Matos
Chief Executive Officer
5
Stanmore Annual Report 2021Directors’ report
The Directors present their report on the consolidated entity consisting of Stanmore Resources Limited and the entities
it controlled at the end of, or during, the year ended 31 December 2021 (referred to in this report as Stanmore Resources
Limited, the company, the group, or the Consolidated Entity).
The group changed its financial year end to 31 December in 2020 to align with its parent entity. As a result, this financial
report which is for a period of 12 months, ended 31 December 2021 (referred to in this report as ‘FY21’), is not entirely
comparable with the comparative reporting period of six months, ended 31 December 2020 (referred to as ‘period ended
31 December 2020’).
DIRECTORS AND COMPANY SECRETARY
Mr Dwi Suseno
Mr Marcelo Matos
Mr Jimmy Lim
Mr Mark Trevan
Mr Richard Majlinder
Ms Mary Carroll (resigned 2 July 2021)
The following persons were the company secretary of Stanmore Resources Limited during the financial year and up to the
date of this report:
Rees Fleming (appointed 22 July 2021)
Tristan Garthe (resigned 22 July 2021)
INFORMATION ON DIRECTORS
The following information is current as at the date of this report.
Dwi Suseno
Chairman and Non-Executive Director (Appointed: 15 May 2020)
Experience and
expertise
Mr Dwi Suseno is the Executive Director and Group CEO of Golden Energy and Resources Limited
(GEAR), a SGX Mainboard listed international mining and resources company. Mr Suseno is
responsible for managing operations for GEAR, including mining, logistics and coal marketing,
as well as leading the strategic initiatives and expansions.
Mr Suseno began his career in Australia, where he was raised and educated, and he has over 26 years
of experience in management, commercial and finance in mining resources as well as oil and gas
related industries in both Australia and internationally. Mr Suseno was previously an Executive Director
and CFO of Straits Corporation Group, which was then part of the SGX-listed coal mining company
Straits Asia Resources Limited. Mr Suseno has previously worked with Baker Hughes Inc. (Fortune
500 NYSE listed oilfield services company), Arthur Andersen Australia and Ernst & Young LLP.
Mr Suseno is a Certified Public Accountant in both Australia and Singapore, graduated with a
Bachelor of Commerce Degree from the University of Western Australia, Graduate Diploma in Tax from
the University of Melbourne’s Law Masters program, as well as a Postgraduate Diploma in Business
from Curtin University. He also holds an executive Masters in Business Administration from the
Kellogg School of Management & Hong Kong University of Science and Technology.
Other current
directorships
Former
directorships
in last 3 years
Nil
Nil
Special
responsibilities
• Member of the Audit and Risk Management Committee
• Member of the Remuneration and Nominations Committee
6
Stanmore Annual Report 2021INFORMATION ON DIRECTORS (CONTINUED)
Marcelo Matos
Chief Executive Director (Appointed: 27 November 2020)
Experience
and expertise
Other current
directorships
Former
directorships
in last 3 years
Special
responsibilities
Mr Marcelo Matos has over 20 years of experience in management, marketing and business
development roles in the mining sector in Australia, Asia, Mozambique and Brazil. Mr Matos worked
for Vale for many years in various senior roles, including as its Chief Marketing and Strategy Officer for
Coal as well as its Managing Director in Australia. Prior to his appointment as Interim Chief Executive
Officer, Mr Matos was the Chief Commercial Officer for M Resources.
Mr Matos holds a Bachelor of Business Administration degree from the Pontifical Catholic University
of Rio de Janeiro (Brazil) and an Executive MBA from IBMEC Business School.
Nil
Nil
• Member of the Health, Safety, Environment and Community Committee
• Member of the Audit and Risk Management Committee
• Member of the Remuneration and Nominations Committee
Jimmy Lim
Non-Executive Director (Appointed: 23 October 2019)
Experience
and expertise
Mr Jimmy Lim has 20 years of experience in finance and investment management in the metals and
mining sector, with extensive industry relationships in Australia and globally. Mr Lim started his career
in Perth with Ernst & Young in Tax, serving natural resources and infrastructure companies of all
sizes before moving into Corporate Finance with Ernst & Young and then KPMG where he continued
advising clients in the natural resources sector. From there, Mr Lim then went on to work for JP
Morgan in Melbourne where he worked on assignments advising and financing some of the largest
companies in the world before moving to Hong Kong with Morgan Stanley and Goldman Sachs, where
he was responsible for coverage of Metals and Mining in Asia excluding China.
Mr Lim is a Fellow of Financial Services Institute of Australasia (FINSIA) and holds an MBA and degrees
in Engineering and Science from the University of Western Australia.
Other current
directorships
Non-Executive Director at American Pacific Borates Limited (ASX:ABR):
appointed 4 February 2021
Former
directorships
in last 3 years
Nil
Special
responsibilities
• Chair of the Remuneration and Nominations Committee
• Member of the Health, Safety, Environment and Community Committee
7
Stanmore Annual Report 2021INFORMATION ON DIRECTORS (CONTINUED)
Mark Trevan
Non-Executive Director (Appointed: 18 May 2020)
Experience
and expertise
Other current
directorships
Former
directorships
in last 3 years
Special
responsibilities
Mr Mark Trevan has extensive experience in the coal mining industry in Queensland and
internationally. Most recently, he was a Director and Deputy Chairman of the Wiggins Island Coal
Export Terminal, a Director and consultant at Caledon Coal Pty Ltd and a Non-Executive Director
of Ncondezi Energy Limited (a London listed, Mozambique focused coal mine development
company). Prior to those appointments, he was the Managing Director of Caledon Resources Plc,
based in Brisbane, where under his management the Cook underground coking coal mine was
recommissioned and the Minyango underground coking coal project was advanced. Mr Trevan also
oversaw the takeover of Caledon by Guandong Rising Asset Management, and the delisting of the
company. Prior to joining Caledon in 2006, Mr Trevan spent 25 years with Rio Tinto in senior executive
roles in the areas of marketing, general commercial, corporate strategy and project feasibility.
Mr Trevan holds a Diploma in Business from the Preston Institute of Technology (now Latrobe
University) and a Graduate Diploma in Applied Finance and Investment from the Securities Institute.
Nil
Nil
• Chair of the Health, Safety, Environment and Community Committee
Richard Majlinder Non-Executive Director (Appointed: 15 May 2020)
Experience
and expertise
Mr Richard Majlinder is the Chief Commercial Officer for Madison Group Enterprises which is
a manufacturer and b2B distributor of technology infrastructure and hardware. Prior to this,
Mr Majlinder held a number of roles at PricewaterhouseCoopers (PwC) including as a Partner
in Private Clients Advisory, leading client projects across mergers and acquisitions, consulting
and financial management.
Mr Majlinder holds a Bachelor of Science (Honours) in Economic History from the London School of
Economics and is a Fellow of the institute of Chartered Accountants in England and Wales, a Member
of the Institute of Chartered Accountants in Australia & New Zealand, and a Member of the Australian
Institute of Company Directors (AICD).
Other current
directorships
Former
directorships
in last 3 years
Nil
Nil
Special
responsibilities
• Chair of the Audit and Risk Management Committee
• Member of the Remuneration and Nominations Committee
8
Directors’ report (CONTINUED)Stanmore Annual Report 2021INFORMATION ON DIRECTORS (CONTINUED)
Mary Carroll
Non-Executive Director (Appointed: 15 May 2020, Resigned: 2 July 2021)
Experience
and expertise
Ms Mary Carroll is the Chief Executive Officer of Capricorn Tourism and Economic Development Ltd
(Capricorn Enterprise). Capricorn Enterprise is a not-for-profit, membership-based organisation
that aims to assist the central Queensland region in tourism and economic development, working
with businesses and government to promote the region. Ms Carroll was also previously a Member
of the Central Queensland University Council (appointed by the Governor in Council), Director of the
Queensland Tourism Industry Council, and the Chair of the Regional Tourism Network in Queensland.
Ms Carroll is a member of the AICD.
Other current
directorships
Former
directorships
in last 3 years
Special
responsibilities
Nil
Nil
Nil
CHIEF FINANCIAL OFFICER
Shane Young
(Appointed: 12 August 2021)
Experience
and expertise
Mr Shane Young has over 21 years of experience in accounting, financial planning and analysis,
commercial, corporate finance, treasury, corporate development, and governance roles in Australia,
the United Kingdom, the Netherlands and the United States. Mr Young has worked for major global
organisations including KPMG, Shell and Peabody, and held various senior roles in the mining industry
over several years, most recently as General Manager Finance at PanAust Limited.
Mr Young is a Chartered Accountant and holds a Bachelor of Commerce (Accounting and Finance)
degree from Monash University. He is a Member of the Chartered Accountants Australia & New
Zealand, a Member of Australia Corporate Treasury Association (Certified Finance and Treasury
Professional), and a graduate of AICD.
Frederick Kotzee
(Appointed: 21 September 2020, Interim Chief Financial Officer:
2 June 2020 to 20 September 2020, Resigned: 12 August 2021)
Experience
and expertise
Mr Kotzee holds a Bachelor of Laws from the University of South Africa and is a qualified Chartered
Accountant (South Africa).
Mr Frederick Kotzee is an experienced Chief Financial Officer (CFO) of listed companies across a range
of industries and commodities. Mr Kotzee served as the CFO of Kidman Resources Limited before the
successful takeover by Wesfarmers Limited. Prior to this, Mr Kotzee was the CFO of Kumba Iron Ore
Limited, a global iron ore miner listed on the Johannesburg Stock Exchange, and a member of the
Anglo American Plc Group. Mr Kotzee has extensive experience in investment banking, joint ventures,
corporate finance and business development.
COMPANY SECRETARY
Rees Fleming
(Appointed: 22 July 2021)
Experience
and expertise
Mr Rees Fleming has over 20 years of experience as a lawyer in both private practice and in-house
roles across shipping, resources, coal mining and sugar industries. Mr Fleming has held General
Counsel and Company Secretarial for listed and large multinational companies.
Mr Fleming holds a Masters of Law (International Shipping) and a Bachelor of Law. He is a practising
legal practitioner and a Graduate of AICD.
9
Stanmore Annual Report 2021COMPANY SECRETARY (CONTINUED)
Tristan Garthe
(Appointed: 16 June 2020, Resigned: 22 July 2021)
Experience
and expertise
Mr Tristan Garthe has worked in a wide range of financial and commercial roles within the coal
mining sector, and the mining industry in general. Mr Garthe’s experience crosses both open cut and
underground mining operations in Australia and Africa. Mr Garthe has held senior positions in finance
and company secretarial roles for listed and international resources companies.
Mr Garthe holds a Master of Business Administration and a Bachelor of Commerce (Accounting and
Finance). He is a Certified Practising Accountant and a Member of the Governance Institute of Australia.
DIRECTORS’ INTERESTS
As at the date of this report, the Directors held no shares, options and other equity instruments in the Consolidated Entity.
MEETINGS OF DIRECTORS
The numbers of meetings of the company’s board of Directors and of each board committee held during the year ended
31 December 2021, and the numbers of meetings attended by each Director were:
Board
Audit & Risk
Management
Remuneration
& Nomination
Health, Safety,
Environment &
Community
Meetings of committees
A
6
6
6
5
5
3
B
6
6
6
6
6
3
A
4
4
–
–
4
–
B
4
4
–
–
4
–
A
–
2
2
–
2
–
B
–
2
2
–
2
–
A
–
4
3
4
–
–
B
–
4
4
4
–
–
Mr Dwi Suseno
Mr Marcelo Matos
Mr Jimmy Lim
Mr Mark Trevan
Mr Richard Majlinder
Ms Mary Carroll
A= Number of meetings attended
B= Number of meetings held during the time the Director held office or was a member of the committee during the year
PRINCIPAL ACTIVITIES
During the year the principal continuing activities of the group consisted of exploration, development, production and sale
of metallurgical coal in Queensland, Australia.
OPERATING AND FINANCIAL REVIEW
Highlights of the group’s operations and results for the year ended 31 December 2021 are described below:
• Net profit after tax of $10.413m (31 December 2020: $(16.120m));
• Underlying EBITDA (Earnings Before Interest, Taxation, Depreciation and Amortisation – a non-IFRS measure) of
$54.448m (31 December 2020: $(13.383m));
•
Isaac Plains Complex operating segment profit of $60.447m (31 December 2020: $1.684m);
• Net cash of $62.859m (31 December 2020: $5.041m);
• Prime overburden removal of 25.003m bcm (31 December 2020: 17.351m bcm);
• US$30m increase to the existing revolving facility with parent entity, GEAR, with US$67.6m debt drawn and outstanding
as at the end of the period; and
•
Isaac Downs mining leases granted and development of the project commenced.
10
Directors’ report (CONTINUED)Stanmore Annual Report 2021OPERATING AND FINANCIAL REVIEW (CONTINUED)
(A) FINANCIAL PERFORMANCE
Revenue from contracts with customers
Cost of sales
Gross profit/(loss)
Other income and expenses
Profit/(loss) before income tax and net finance expenses
Finance income
Financial expenses
Profit/(loss) before income tax benefit/(expense)
Income tax benefit/(expense)
Profit/(loss) after income tax expense
6 months to
31 December
2020
$’000
2021
$’000
382,948
136,309
(312,540)
(142,928)
70,408
(39,316)
31,092
1,803
(17,060)
15,835
(5,422)
10,413
(6,619)
(9,924)
(16,543)
27
(5,438)
(21,954)
5,834
(16,120)
(B) UNDERLYING EBITDA RESULT (UNAUDITED, NON-IFRS MEASURE)
Underlying EBITDA (an unaudited, non-IFRS measure) reflects statutory EBITDA as adjusted to reflect the Directors’
assessment of the result for the ongoing business activities of the Consolidated Entity. The items adjusted are determined
to be non-cash transactions that are unrelated to mining operations. The presentation of non-IFRS financial information
provides stakeholders the ability to compare against prior periods in a consistent manner.
Statutory profit/(loss) before income tax and net finance expenses
Depreciation and amortisation
Earnings before interest, depreciation and amortisation (EBITDA)
Remeasurement of rehabilitation provision
Remeasurement of onerous contracts
Fair value movement – contingent consideration
Underlying EBITDA (non-IFRS measure)
6 months to
31 December
2020
$’000
(16,543)
14,682
(1,861)
36
(1,893)
(9,665)
2021
$’000
31,092
26,761
57,853
–
(1,191)
(2,214)
54,448
(13,383)
The underlying EBITDA of $54.448m for the year ended 31 December 2021 was a $67.831m increase compared to the
underlying EBITDA of $(13.383m) for the 6-month period to 31 December 2020.
The increase in EBITDA was due to an increase in underlying margin of $30/t in the period to 31 December 2021 compared
to $(8)/t in the previous period. The significant increase in margin was a result of a $62/t increase in average sales price
per tonne, combined with a decrease in reportable strip ratio to 9.0x as the company commenced mining in the bulk
sample pit area as part of development activities in Isaac Downs which has a lower strip ratio compared to the Isaac
Plains mining areas. The EBITDA is also impacted by the expenses related to the remaining overburden in advance (OBIA)
inventories for the Isaac Plains (for which mining will cease in the first quarter of 2022), resulting in non-cash inventory
adjustments of $49.253m.
11
Stanmore Annual Report 2021OPERATING AND FINANCIAL REVIEW (CONTINUED)
(B) UNDERLYING EBITDA RESULT (UNAUDITED, NON-IFRS MEASURE) (CONTINUED)
The average Hard Coking Coal index price was US$208.09/t for the year compared to US$110.28/t in prior period. See page
14 for additional pricing information (source: Platts Coal Trader International).
The primary drivers contributing to the Net Profit after Tax (“NPAT”) result include:
• Gross revenue from coal sales increased to $382.9m for the year ended 31 December 2021 from $136.3m in the
6-month period to 31 December 2020. The increase was driven by a $62/t increase in the A$ realised price to an
average of A$177/t from $115/t in the prior period, and an increase in sales of produced coal to 2,165kt in the period
to 31 December 2021 from 1,184kt in the 6-month period to 31 December 2020;
•
Increase in finance costs from $5.438m for the 6-month period to 31 December 2020 to $17.060m for the year ended
31 December 2021. This is primarily due to the increase in utilisation of the existing borrowing facilities to support the
development of the Isaac Downs project, foreign exchanges losses recognised in the period, coupled with initial finance
fees incurred in relation to the announced US$625m debt facility for the acquisition of BHP’s 80% interest in BMC; and
• Underlying non-cash FOB costs includes $49.253m of costs in relation to the reduction of overburden in advance
inventories for the Isaac Plains mining operation, with no corresponding OBIA being recognised for Isaac Downs which
is still a development site.
The variance between underlying EBITDA and cash flow from operations is primarily due to the settlement of contingent
consideration royalties, completion of rehabilitation works and working capital movements, as outlined in the table below:
Underlying EBITDA (non-IFRS measure)
Net financing costs
Settlement of onerous contracts
Completion of rehabilitation works
Settlement of vendor royalties – contingent consideration
Net movement in working capital
Cash flow from operations
6 months to
31 December
2020
$’000
(13,383)
(3,003)
(476)
(3,851)
(284)
5,297
(15,700)
2021
$’000
54,448
(21,982)
(654)
(1,650)
–
97,253
127,415
In the period to 31 December 2021, working capital significantly improved, with a net inflow of $97.253m
(31 December 2020: $5.297m), driven by a reduction in inventories ($55.436m) and an increase in trade payables due
to longer credit period from contractors ($42.801m), offset by timing of sales receipts leading to an increase in current
trade receivables of $31.144m at 31 December 2021. Financing inflows of $79.733m primarily relate to the changes in
the borrowing facilities (see Note 14).
In the year to 31 December 2021, $1.650m (31 December 2020: $3.851m) was invested in rehabilitation at Isaac Plains
Complex. Stanmore Resources Limited integrates this core activity with operations to ensure timely and efficient close
out of rehabilitation.
Overall operational cash flows have increased due to significantly high receipts from coal sales, driven by the increased
sales tonnes and higher average sales price per tonne.
12
Directors’ report (CONTINUED)Stanmore Annual Report 2021OPERATING AND FINANCIAL REVIEW (CONTINUED)
(C) CASH FLOW
In the period to 31 December 2021, total net cash inflows of $57.818m were recorded. The net cash inflow from operating
activities was $127.415m. Cash flows from investing activities were $(138.394m). Of this, $15.356m related to sustaining
capital expenditure for plant and equipment, $28.950m relates to the Loan receivable with MetRes Pty Ltd, and $44.422m
related to the continued investment in Isaac Downs.
At the end of period, US$67.6m was drawn from the revolving facility with the parent company, Golden Energy and
Resources Limited (GEAR). The net inflow from financing activities includes $80.181m drawn down on the group’s various
facilities, primarily offset by the cash outflows for the BMC acquisition deposit (US$30m), the loan issued to MetRes JV
($28.950m), repayment of the short-term loan ($2.693m), repayment of insurance premium funding ($3.874m), and a
further $2.262m paid in relation to the equipment loan to finance the CAT 6060 excavator.
Net cash at beginning of year
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net increase/(decrease) in cash held
Net cash at end of period
6 months to
31 December
2020
$’000
32,244
(15,700)
(13,699)
2,196
(27,203)
5,041
2021
$’000
5,041
127,415
(138,394)
68,797
57,818
62,859
(D) HEALTH, SAFETY, ENVIRONMENT AND COMMUNITY PERFORMANCE
The Consolidated Entity continues to be committed to the current and future performance of the business for the health,
safety and wellbeing of our people, the environment and the communities in which we operate.
The Consolidated Entity undertook or managed 754,930 hours (31 December 2020: 400,819 hours) of coal mining, drilling,
exploration, and mine development activities (directly and through its contractors) during the year, and reported two lost
time injuries (31 December 2020: nil). The rolling 12-month Total Reportable Injury Frequency Rate is 7.9 per million hours
(31 December 2020: 5.9 per million hours), with a rolling 12-month Lost Time Injury Frequency Rate of 2.34 (31 December
2020: nil). The Consolidated Entity is encouraged by the safety performance results for the year, which remain lower than
the industry averages.
The Consolidated Entity supported the communities in which our operations are located with a number of grants,
sponsorships, important community initiatives and events undertaken during the year. 40 local community organisations
received over $109,000 in funding during the year. In addition, significant ‘in-kind’ time was also dedicated to regional
industry bodies and professional groups to enhance local industry and services in the region.
(E) OPERATIONS
The Isaac Plains Complex mined 25,003kbcm of prime overburden compared to 17,351kbcm in the prior 6-month period to
31 December 2020. The reduction was a result of the expected lower strip ratios at the Isaac Downs mining area, coupled
with a focus on ROM coal extraction in the year at the Isaac Plains mine.
Coal mining operations delivered 2,767kt of ROM coal to the CHPP at a prime strip ratio of 9x, compared to 1,491kt and
a strip ratio of 12.0x in the prior 6-month period.
Product coal production was 2,070kt, with the CHPP delivering a total yield of 75.1%. The production split of coking to
thermal coal was 91.6% coking and 8.4% thermal. Yields and product split have improved due to mining improved quality
coal areas, including the Isaac Downs sample pit area.
13
Stanmore Annual Report 2021OPERATING AND FINANCIAL REVIEW (CONTINUED)
(E) OPERATIONS (CONTINUED)
As previously announced, the Isaac Downs mining leases have been granted by the Queensland Government. Mining
of this area initially commenced earlier in the year as part of a Sample Pit area, with the Board having also formally
approved the development of the Isaac Downs Project.
The average sale price achieved for all coal (both metallurgical and thermal) during the period was A$176.7/t, compared to
31 December 2020 of A$115.1/t. The increase in price has been driven by the increases in coal demand after the depths of
the Covid pandemic, particularly across Asian markets.
The average Hard Coking Coal index price was US$208.09/t for the year compared to US$110.28 in the period ended
31 December 2020.
Physicals
Prime overburden (kbcm)
ROM coal produced – Open cut (kt)
ROM strip ratio (prime)
CHPP feed (kt)
ROM stockpile (kt)
Saleable coal produced (kt)
Saleable coal purchased (kt)
14
6 months to
31 December
2020
17,351
1,491
12
1,475
86
1,092
–
2021
25,003
2,767
9
2,757
96
2,070
–
Directors’ report (CONTINUED)Stanmore Annual Report 20210100200300400500600700Jul 17Oct 17Jan 18Apr 18Jul 18Oct 18Jan 19Apr 19Jul 19Oct 19Oct 20Jan 20Apr 20Jul 20Jan 21Apr 21Jul 21Oct 21Jan 22Apr 22Coal Type PriceUS$ per tonne Premium HCC CFR ChinaPremium HCC FOB AustraliaLow Vol PCI6,000k cal/kg NAR FOB Australia
OPERATING AND FINANCIAL REVIEW (CONTINUED)
(E) OPERATIONS (CONTINUED)
Coal sales
- Metallurgical (kt)
- Thermal (kt)
Total gross coal sales (kt)
Product Yield (%)
Coal product stockpiles (kt)
Average sale price achieved (A$/t)
Unit costs of sales (A$/t sold)
FOR cost (A$/t sold)
FOR to FOB cost (ex. State royalty) (A$/t sold)
State royalty (A$/t sold)
FOB cash cost (A$/t sold)
Margin (A$/t sold)
6 months to
31 December
2020
1,129
55
1,184
74
196
115
96
19
8
123
(8)
2021
1,971
194
2,165
75
98
177
106
24
17
147
30
The variance between coal margins and Underlying EBITDA (non-IFRS measure) is due to net corporate overheads as
shown in the table below:
Margin (A$/t sold)
Coal sales (kt)
Coal sales margin ($‘000)
Unallocated corporate overhead ($‘000)
Underlying EBITDA (non-IFRS measure) ($‘000)
6 months to
31 December
2020
(8)
1,184
(9,946)
(3,437)
(13,383)
2021
30
2,165
63,002
(8,554)
54,448
(F) ISAAC DOWNS PROJECT
Isaac Downs is located 10 kilometres south of the existing Isaac Plains operations. Isaac Downs is being operated as a
satellite open cut mining operation utilising the existing Isaac Plains infrastructure with coal washing and train loading
activities undertaken at the existing CHPP, ensuring a capital light approach to this project is maintained.
During the period, the company invested in the establishment of infrastructure (according to conditions established under
the Mineral Resources Act for (MDL137)) at Isaac Downs to undertake a bulk sample pit for testing of proposed product
coal cargoes with key international customers. A new access road has been constructed including a new intersection at
the Peak Downs Highway, as well as the required infrastructure for environmental controls.
As announced on 27 July 2021, the main project has been granted approvals, environmental authority, and approval under
the Environmental Protection and Biodiversity Conservation Act.
15
Stanmore Annual Report 2021OPERATING AND FINANCIAL REVIEW (CONTINUED)
(F) ISAAC DOWNS PROJECT (CONTINUED)
Since this announcement, the Isaac Downs Project has undertaken key infrastructure works, including the Peak Downs
Highway underpass, allowing reduced haulage time and costs between the mining area and the CHPP washplant.
Mining operations within the bulk sample pit are currently taking place at the Isaac Downs area, with the dragline
expected to commence operations at Isaac Downs at the end of the first quarter of 2022. This is the point at which
full scale production will commence from Isaac Downs and the estimated point of completion of the development.
(G) COVID-19 IMPACTS
The Consolidated Entity continues to follow recommendations from Queensland Health and the Australian
Government to provide a COVID-19 safe workplace.
COVID-19 impacts have not been significant to the Consolidated Entity in the period. The company does not expect
any negative impacts to the financial statements nor triggers for any significant uncertainties with respect to events or
conditions which may adversely impact the Consolidated Entity as at the reporting date or subsequently as a result of
the COVID-19 pandemic.
Consistent with the mining industry there has been an increase in absenteeism in early 2022 due to COVID-19 cases.
The company will continue to work with its contractors on protocols to minimise the spread and impacts to operations.
(H) DEBT REFINANCE
On 2 July 2021, the Consolidated Entity signed an amendment to increase the available facility under its existing finance
facility with its parent entity, GEAR, from US$40m to US$70m.
The increase in the facility was primarily to ensure the progression of the Isaac Downs project together with the Mavis
and Millennium acquisition, as it substantially satisfies the company’s short to medium term debt requirements and
allowed a seamless transition from Isaac Plains East to Isaac Downs now that the Mining Lease has been obtained.
INVESTMENT IN METRES INCORPORATED JOINT VENTURE
(I)
On 13 July 2021, the Consolidated Entity announced the completion of the Millennium and Mavis Downs Mine acquisition from
Peabody Energy Australia, via MetRes Pty Ltd, the 50/50 joint venture between Stanmore Resources Limited and M Resources.
Auger mining commenced in August 2021, in line with operational schedules, with MetRes having reached the milestone
of its first coal shipment within five months from acquisition.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS
(A) OPERATIONS
Financial Year 2022 is expected to be a truly transformational year for the company. As well as the transition of its mining
operations from Isaac Plains to Isaac Downs, the Consolidated Entity announced on 8 November 2021 that it has executed
a definitive agreement with BHP to acquire BHP’s 80% interest in the BMC (BHP Mitsui Coal Pty Ltd) joint venture.
At the same time, Stanmore Resources Limited announced its intention to fund the acquisition with a combination of debt
and equity, and has since announced on 7 January 2022 that it has successfully executed documentation with certain
financiers in respect of a US$625m debt facility.
Stanmore Resources Limited is well placed to take advantage of the high coal sales prices in the first quarter of 2022,
due to the lagging effect on sales pricing of certain fixed pricing sales contracts.
(B) EXPLORATION AND DEVELOPMENT
On 16 February 2022, the Consolidated Entity announced an decrease to the coal and reserves under the relevant
Australasian Code for Reporting Exploration Results and Ore Reserves (JORC Code). The total Recoverable Coal Reserves
across all tenements formally declared and published are now 160.0Mt, and the total Marketable Coal Reserves are 125.4Mt.
The Consolidated Entity will continue to monitor and assess the opportunities to develop or monetise its existing portfolio
of assets in the Bowen Basin and explore acquisition opportunities where it makes financial and commercial sense to do so.
16
Directors’ report (CONTINUED)Stanmore Annual Report 2021LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS (CONTINUED)
(C) MANAGING RISKS
The Consolidated Entity is a producing coal group operating in a volatile pricing market. Factors specific to the
Consolidated Entity, or those which impact the market more broadly, may individually or in combination impact the
financial and operating performance of the Consolidated Entity. These events may be beyond the control of the Board
or management of Stanmore Resources.
The major risks associated with an investment in the Consolidated Entity are summarised below. The Consolidated Entity
identifies and actively manages the material risks as part of its risk management governance framework and internal
control systems.
(i) Safety risks
Safety remains of critical importance in the planning, organisation and execution of the group’s exploration and
operational activities. The group is committed to providing and maintaining a working environment in which all associated
with our business are not exposed to hazards that will jeopardise their health and safety.
(ii) Operating risks
The group has historically been a single-mine producer and, therefore, reliant on continued performance of operations at the
Isaac Plains Complex. As a result, numerous operating risks were highlighted which may result in a reduction in performance
that decreases the group’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.
The group has also previously identified a limited remaining life at Isaac Plains and Isaac Plains East.
The timely mining assent for Isaac Downs received in Q3 2021 has ensured the availability of mining areas to ensure
continuity of coal flows to meet contracted obligations. The Consolidated Entity continues to mitigate risks by identifying
potential additional mining opportunities at Isaac Plains, Isaac Plains East and Isaac Plains Underground.
The group’s announcement on 8 November 2021 that is has executed an agreement with BHP to acquire BHP’s 80% interest
in the BMC joint venture will also reduce the risk regarding the reliance on the performance of the Isaac Plains Complex.
(iii) Market risks
The key drivers for the business’ financial performance are commodity price and foreign currency markets. The group 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.
The group sells export coal in United States Dollars and is therefore exposed to movements in currency rates. The group
may from time to time use mechanisms to hedge a portion of its currency risk where deemed appropriate by management
and the Board. The market price for Stanmore Resource’s products is impacted by many factors which could be favourable
or unfavourable for the group.
In order to diversify its customer base and to minimise the reliance on key customers, the group is continuing to work on
identifying new customers and markets in 2022 where it makes financial sense to do so.
(iv) Geological risks
Resource and Reserve estimates are prepared by external experts in accordance with the JORC Code 2012 and JORC
Code 2004 (as applicable) for reporting.
Coal reserves are estimated using various assumptions regarding loss and dilution, drilling depth and other geotechnical
constraints. Reserves are sensitive to cost and revenue assumptions used due to geological structure of deposits, which
means that all other factors being the same, if the cost assumption is lower or the price assumption is higher, more
reserves are estimated. Some of the deposits are more sensitive to the cost and revenue assumptions used than others
due to the characteristics and geological structure of those deposits. Due care is taken with each estimation, but is
expected to change as more detailed planning is undertaken.
17
Stanmore Annual Report 2021LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS (CONTINUED)
(C) MANAGING RISKS (CONTINUED)
(v) Regulatory and land access risks
The group’s operations and projects are subject to State and Federal laws and regulations regarding mining,
environmental protection, land access and native title. These laws and regulations regulate the conduct of mining
operations, set requirements in relation to landholder compensation, environmental protection and certain aspects of
health, and provide for penalties and other consequences for the breach of such laws.
There is also an obligation to rehabilitate areas impacted by mining activities, which includes the group providing financial
assurances in respect of the likely costs and expenses that may be incurred when taking action to rehabilitate areas
impacted by mining activities. The Mineral and Energy Resources (Financial Provisioning) Act 2018 has changed the
method by which such financial assurance is calculated but the cost of this change to the group has not been material.
The rehabilitation provision recorded in these accounts closely mirrors these obligations.
In order to undertake exploration and production activities, it is first necessary to apply for and obtain necessary
government permits, leases and approvals that authorise such activities. To secure such exploration and mining approvals,
or to undertake activities within the area of a granted mining tenement, native title, land access and overlapping tenure
are matters that need to be addressed.
The group seeks to develop strong, long-term effective relationships with landholders and other stakeholders, with a focus
on developing mutually acceptable compensation and access arrangements. The group seeks to minimise these risks by
conducting its activities in an environmentally responsible manner, in accordance with applicable laws and regulations. In
addition, the group engages experienced lawyers, consultants and other technical advisors to provide expert advice where
necessary to ensure it manages its compliance obligations appropriately.
(vi) Climate change risks
The operations of the Consolidated Entity are focused on the production of coal for use in the steel making industry.
Considering the nature of the industry in which the Consolidated Entity operates, both physical and transitional climate
changes risks have the potential to impact the company’s assets, production and the markets where our product is sold.
Transitional risks being those climate change risks associated with the transition to the lower-carbon economy and include
policy, legal technology and market related risks, and physical risks being those which have direct financial implications to
the Consolidated Entity. Physical risks refer to risks that are event-driven (such as weather events like cyclones, fires and
floods) or are ‘chronic’ risks which are those that are caused by longer-term shifts in climate patterns (including sustained
movement in temperature).
There is an increasing interest by stakeholders regarding the potential risks and opportunities to our business and the
broader sector as a result of shifts towards a lower-carbon economy. Climate change is a complex risk that requires
action at all levels of society. It can heighten existing physical and non-physical risks and introduce new ones that can
affect business performance in the near and long terms. We continue to work with the industry on this important topic
and develop our response to the Taskforce on Climate Related Financial Disclosures (TCFD) framework to improve our
disclosure and tracking of climate-related risks and opportunities.
The Consolidated Entity also has a role to play in mitigating emissions generated by its operations. Business and
operational risks associated with changes caused by climate change and the measures that will be taken to mitigate
those risks and overall emissions are considered during the group’s business planning cycle.
18
Directors’ report (CONTINUED)Stanmore Annual Report 2021LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS (CONTINUED)
(C) MANAGING RISKS (CONTINUED)
(vii) Indigenous engagement
As part of the Isaac Downs approval process, it was recognised that increased collaboration was required with the
traditional owners of the land on which the company operates, the Barada Barna people.
Through a process of facilitation and recognition of the need for reconciliation, the company is dedicated to developing
a working and collaborative relationship with the Barada Barna people. The company has committed to developing a
Reconciliation Action Plan working committee. This process will not only strengthen ties with the Barada Barna people,
but pave the way for true reconciliation within the broader meaning.
The company and the Barada Barna people have developed a Native Title Consent Agreement and reviewed a Cultural
Heritage Management Plan. Further, the company aims to facilitate and implement a Reconciliation Action Plan process
that develops long-term strategies including increasing Indigenous employment and business opportunities which will
enable the Barada Barna people to become more involved in the company and encourage a strong working relationship
between both parties.
(viii) Sovereign risks
The group 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 competitiveness and reduced the
attractiveness of Australian coal projects to foreign investors. The group’s view is 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.
(ix) Access to capital
At 31 December 2021 the group remains well funded with cash reserves and a revolving finance facility expected to be
sufficient to meet the business’ operating costs. The group’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 development of the group’s tenements. Should these avenues be delayed or fail to materialise, the group
may need to raise additional funding through debt, equity or farm out/sell down to allow the group to continue as a
going concern and meet its debts as and when they fall due.
There is no guarantee that additional funding through debt will be available, or if it is, there is no guarantee that such
new funding will be on terms acceptable to the group. Global credit markets have been severely constrained in the
past, and the ability to obtain new funding or refinance may in the future be significantly reduced. Increasingly, financial
institutions have made public statements in relation to their unwillingness to finance certain types of coal mines and
coal- fired power stations.
If the group is unable to obtain sufficient funding, either due to banking and capital market conditions generally, or due to
factors specific to the coal sector, the group may not have sufficient cash to meet its ongoing capital requirements or the
ability to expand its business.
Following the on-market takeover by Golden Investments in 2020, the group has been able to access funding through
our parent entity, GEAR. See details of the debt refinance on page 16 of this report. As at the date of this report, GEAR
has a credit rating of B1 by rating agency Moody’s and B+ by rating agency Fitch. This has reduced the risk the group
may not have access to capital. Any present risk is still being actively monitored by Stanmore Resources Limited.
In respect of the BMC transaction, Stanmore Resources Limited has also signed definitive agreements with certain
financiers for a US$625 million senior debt facility, demonstrating the group’s ability to access funds when required.
Stanmore Resources Limited continues to explore a number of avenues in relation to working capital initiatives.
(x) Access to insurance cover
There is a risk that the policies of financial institutions with respect to the funding of coal projects may, in the future,
extend to an unwillingness to provide insurance products to coal producers and associated companies on terms that
are currently provided to such companies. This could result in a material increase in the cost to Stanmore Resources
of obtaining appropriate levels of insurance or Stanmore Resources being unable to secure adequate insurance cover.
19
Stanmore Annual Report 2021Remuneration report (audited)
This report details the nature and amount of remuneration for each Director of Stanmore Resources Limited and its
controlled entities, 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 Consolidated Entity.
The Consolidated Entity’s Directors and KMP during 2021 were:
Non-executive and executive Directors (see pages 6 to 9 for details about each Director)
Mr Dwi Suseno
Mr Marcelo Matos
Mr Jimmy Lim
Mr Mark Trevan
Mr Richard Majlinder
Ms Mary Carroll (until 2 July 2021)
Other key management personnel
Name
Position
Mr Frederick Kotzee
Chief Financial Officer (until 12 August 2021)
Mr Jon Romcke
Mr Leandro Pires
Mr Shane Young
General Manager Development
General Manager Operations
Chief Financial Officer (from 12 August 2021)
(A) REMUNERATION POLICY OVERVIEW
The Consolidated Entity’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
compensations strategy for the Consolidated Entity’s employees is a key factor in ensuring employees are engaged and
motivated to improve the group’s performance over the long term. The Board’s intention is to maximise stakeholder benefit
by the retention of 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 group’s cost structure
and the practices of its peers.
The Board formally reviews Board and senior executive performance on an annual basis.
The following describes the Consolidated Entity’s remuneration arrangements for KMP.
(B) ELEMENTS OF REMUNERATION
(i) Fixed annual remuneration (FR)
Chief Executive Officer and Senior Management fixed remuneration
The Consolidated Entity aims to reward the CEO 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
and Nominations Committee and the Board. The CEO reviews all senior management performance and remuneration and
then makes recommendations to the Remuneration and Nominations Committee.
The Remuneration and Nominations Committee reviews the performance and remuneration of the management team.
The process consists of a review of company and individual performance, relevant comparative remuneration both in
the market and internally, and, where appropriate, external advice on policies and remuneration practices.
20
Directors’ report (CONTINUED)Stanmore Annual Report 2021(B) ELEMENTS OF REMUNERATION (CONTINUED)
(i) Fixed annual remuneration (FR) (continued)
Non-Executive Director fixed remuneration
The Board seeks to aggregate remuneration at a level which provides the Consolidated Entity with the ability to attract
and retain Directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders.
The Constitution of Stanmore Resources 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 Resources Limited’s shareholders is $750,000 per annum (31 December 2020: $750,000 p.a.).
The Non-Executive Director’s fee was $50,000 per annum (31 December 2020: $50,000 p.a.). Committee fees were
$10,000 per annum for the Chair and $5,000 per annum for members. The Board, at the recommendation of the
Remuneration and Nomination Committee after undertaking a benchmarking remuneration review, determined to increase
the Non-Executive Director’s Fees to $113,000 per annum, fees for the Chair of a committee to $22,600 per annum and
$11,300 per annum for members of a committee.
In addition, the Board also determined to pay to the Non-Executive Directors a once off fee in recognition of the significant
additional work performed with respect to the acquisition of the BMC assets.
The maximum aggregate fees paid is within the Shareholder’s annual agreed limit.
The total Non-Executive Director remuneration for the year was $541,033 (31 December 2020: $126,731).
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 Resources Limited or otherwise relating to the business of the group.
The fixed remuneration of Non-Executive Directors for the year ending 31 December 2021 is detailed in this
Remuneration Report.
(ii) 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 Senior Management, 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.
For the year ended 31 December 2021, performance targets for STI and LTI were formalised and agreed by the Board.
For the 6-month financial period to 31 December 2020, no formal STI and LTI performance targets were set, due to the
shortened performance period.
(iii) Incentive outcomes
As noted previously, the STI for the period ended 31 December 2020 was based on the Board’s discretion, after considering
management’s performance, and no LTI scheme was in place for the period.
21
Stanmore Annual Report 2021(B) ELEMENTS OF REMUNERATION (CONTINUED)
The incentive outcomes for the STI and LTI scheme for the year ended 31 December 2021 are shown below.
(iv) Short-term incentives
Incentive
Award structure
Outcome/discussion
FY21 STI
FY21 STI
Preconditions: zero fatalities/company can
fund STI
Preconditions (achieved): zero fatalities/
company can fund STI
Based on multiple key performance indicators:
TRIFR*/HPIFR**/ROM T/FOB cash costs/Working
Capital
The key performance indicators were met
to varying levels, resulting in a total accrued
payout of 122% of target. All KMP met
eligibility requirements. FY21 STI amounts
are highlighted below.
TRIFR refers to ‘Total Recordable Injury Frequency Rate’
*
** HPIFR refers to ‘High Potential Injury Frequency Rate’
In FY21, all KMP were entitled to a payment under the STI scheme. The FY21 STI is due to be paid in late February 2022.
The STI for the year ended 31 December 2021 is ultimately subject to Board discretion, based on management
performance, and calculated in line with the STI and LTI targets for the financial year, and is shown below:
Target STI
FY21
Target STI
December 2020
Base of
Salary
%
Target
Amount
$
Awarded
$
Base of
Salary
%
Base of
Salary
%
Target
Amount
$
Awarded
$
Base of
Salary
%
Jon Romcke
Marcelo Matos
Leandro Pires
Shane Young
40%
50%
40%
40%
141,312
172,337
271,360
330,938
135,168
164,844
152,000
185,372
49%
61%
49%
49%
39%
52%
39%
–
67,275
91,887
23,803
–
51,750
70,667
17,852
–
30%
40%
30%
–
(v) Long-term incentives
Incentive
Award structure
Outcome/discussion
FY21 LTI
LTI is based on the Relative Total Shareholders
Return (TSR) and Working Average Cost of Capital
(WACC) performance measures, relative to a fixed
measurement point.
Due to the expected impact of the Group’s
proposed acquisition of BHP’s 80% interest in
the BMC joint venture, the current LTIP award
structure was not applied for the current period.
The Board have approved a discretionary cash LTIP
award for eligible members for the period up to the
expected acquisition date during Q2 2022.
As at 31 December 2021, 144,898 (FY19 and FY20) rights remain in relation to previously disclosed LTIP scheme.
22
Directors’ report (CONTINUED)Stanmore Annual Report 2021(B) ELEMENTS OF REMUNERATION (CONTINUED)
KMP*
FY
No. of
Rights
Vesting
date**
Jon Romcke
FY20
36,342
30-Jun-22
Jon Romcke
FY19
108,556
30-Jun-21
Target
30%
30%
Salary package
value at Stretch***
($)
207,000
191,7111
Price****
($)
1.42
0.88
Value of
Rights*****
($)
0.37
0.45
144,898
KMP employed as at 31 December 2021
Retest available after 12 months if no Rights have vested on vesting date
*
**
*** Stretch target based on 2x Target %
**** Based on the 10-day VWAP of shares in the 24 hours following the release of the annual results
***** Accounting value of rights issued
Below is a summary of the performance conditions for vesting for FY20 Rights granted:
Total
Value
($)
13,447
48,850
62,297
Performance Level
Stretch
Between Target and Stretch
Target
Between Threshold and Target
Threshold
Below Threshold****
Absolute Total Shareholder Return
Stanmore Resources Limited
*
**
*** Compound Annual Growth Rate (CAGR)
**** Subject to retest in FY23 at CAGR
ATSR* of SMR**
CAGR***
% of Stretch/
Max. Vesting
June 2022 Share
Price for Vesting
20%
>15%<20%
15%
>10%<15%
10%
<10%
100%
Pro-rata
50%
Pro-rata
0%
0%
$2.46
Pro-rata
$2.17
Pro-rata
$1.90
$0.00
Below is a summary of the performance conditions for vesting for FY19 Rights granted:
Performance Level
Stretch
Between Target and Stretch
Target
Between Threshold and Target
Threshold
Below Threshold****
Absolute Total Shareholder Return
Stanmore Resources Limited
*
**
*** Compound Annual Growth Rate (CAGR)
**** Subject to retest in FY22 at CAGR
ATSR* of SMR**
CAGR***
% of Stretch/
Max. Vesting
June 2022 Share
Price for Vesting
36.24%
>26.23%<36.24%
26.23%
>14.33%<26.23%
14.33%
<14.33%
100%
Pro-rata
50%
Pro-rata
0%
0%
$2.20
Pro-rata
$1.75
Pro-rata
$1.30
$0.00
In relation to the Rights, one retest is available 12 months after the end of the measurement period only if no vesting
occurred in relation to the first test following the completion of the measurement period. The FY19 Rights noted above did
not meet conditions for vesting, and will be subject to a retest in FY22.
The Consolidated Entity does not intend to issue more than an aggregate of 5% of its share capital, from time to time,
under the LTI plans.
23
Stanmore Annual Report 2021(B) ELEMENTS OF REMUNERATION (CONTINUED)
(vi) General incentive and remuneration consultants
From time to time, the Remuneration and Nominations Committee seeks and considers advice from external advisors
who are engaged by and report directly to the committee. Such advice will typically cover Non-Executive Director fees,
Executive KMP and advice in relation to equity plans.
The Corporations Act 2001 requires companies to disclose specific details regarding the use of remuneration consultants.
The mandatory disclosure requirements only apply to those advisers that provide a ‘remuneration recommendation’ as
defined in the act.
No advice was sought during the period under review.
(C) LINK BETWEEN REMUNERATION AND PERFORMANCE
(i) Statutory performance indicators
Profit/(loss) attributable to the Group ($’000)
2021
10,413
December
2020*
June
2020
(16,120)
34,893
2019
91,598
2018
5,966
Revenue ($’000)
382,948
136,309
364,485
403,059
208,081
Share price at period end ($/Share)
1.035
0.81
Basic earnings per share (c/Share)
Diluted earnings per share (c/Share)
Shareholder dividends paid (c/Share)
* 6-month period to 31 December 2020
3.9
3.9
–
(6)
(6)
–
0.78
13.2
13.2
11
1.425
35.1
35.6
5
0.87
2.4
2.3
–
It is the Board’s policy that employment contracts or consultancy agreements are entered into with all Non-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 and Nominations
Committee and the Board in accordance with the company’s remunerations 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 or termination.
(ii) Chief Executive Officer
Stanmore Resources Limited has an Executive Service Agreement (ESA) with Mr Marcelo Matos for the position of Chief
Executive Officer which commenced on 27 November 2020. Mr Matos received a base remuneration of $542,000 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 serious misconduct or bankruptcy.
Mr Matos is eligible to participate in the STI and LTI schemes. Under the ESA, the target annual STI is 50% of base
remuneration. The target LTI is 50% of base remuneration.
24
Directors’ report (CONTINUED)Stanmore Annual Report 2021
(C) LINK BETWEEN REMUNERATION AND PERFORMANCE (CONTINUED)
(iii) Senior management
General Manager Operations
Stanmore Resources Limited has an ESA with Mr Leandro Pires for the position of General Manager Operations which
commenced on 26 October 2020. For the period to 31 December 2021, Mr Pires received a base remuneration of $338,000
(31 December 2020: $330,000) 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 serious misconduct or bankruptcy.
Mr Pires is eligible to participate in the STI and LTI schemes. The target annual STI is 40% of base remuneration, and the
target LTI is 40% of base remuneration.
General Manager Development
Stanmore Resources Limited has an ESA with Mr Jon Romcke for the position of General Manager Development which
commenced on 21 August 2017. For the period to 31 December 2021, Mr Romcke received a base remuneration of
$353,000 (31 December 2020: $345,000) per annum plus statutory superannuation. The ESA provides for termination by
either party by providing two month’s written notice, or immediately in the case of serious misconduct or bankruptcy.
Mr Romcke is eligible to participate in the STI and LTI schemes. The target annual STI is 40% of base remuneration, and the
target LTI is 40% of base remuneration.
Chief Financial Officer (Appointed 12 August 2021)
Stanmore Resources Limited has an ESA with Mr Shane Young for the position of Chief Financial Officer which
commenced on 12 August 2021. For the period to 31 December 2021, Mr Young received a base remuneration of $380,000
(31 December 2020: nil) 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 serious misconduct or bankruptcy.
Mr Young is eligible to participate in the STI and LTI schemes. The target annual STI is 40% of base remuneration, and the
target LTI is 40% of base remuneration.
Chief Financial Officer (Resigned 12 August 2021)
Stanmore Resources Limited had an ESA with Mr Frederick Kotzee for the position of Chief Financial Officer which
commenced on 21 September 2020. For the period to 31 December 2021, Mr Kotzee received a base remuneration of
$342,000 (31 December 2020: $380,000) per annum plus statutory superannuation. On 12 May 2021, Mr Kotzee resigned
from his position and finished with the company on 12 August 2021.
Prior to his resignation, Mr Kotzee was eligible to participate in the STI and LTI schemes. The maximum annual STI was 39%
(Stretch) of his remuneration package, and the maximum LTI was 30% of his remuneration package at Target performance
and a further 30% of his remuneration package at Stretch performance.
25
Stanmore Annual Report 2021(D) REMUNERATION DETAILS
The following table details the components of remuneration for KMP of the company, for both the year ended 31 December
2021 and the 6-months to 31 December 2020.
Short-term employee benefits
Post-
employment
benefits
Cash salary
and Fees
$
Cash bonus
$
Other non-
monetary
benefits
$
Super-
annuation
$
LTIP
$
Total
$
–
212,817
540,763
132,689
22,823
142,962
–
–
–
–
327,405
10,440
–
–
–
–
–
–
–
–
23,120
13,269
2,177
14,296
–
–
–
212,817
384,427
1,286,155
–
–
–
145,958
25,000
157,258
2021
Directors
Mr Dwi Suseno1
Mr Jimmy Lim
Mr Marcelo Matos
Mr Mark Trevan
Ms Mary Carroll2
Mr Richard Majlinder
Sub-total Directors
1,052,054
327,405
10,440
52,862
384,427
1,827,188
Senior Management
Mr Jon Romcke
Mr Frederick Kotzee3
Mr Leandro Pires
Mr Shane Young4
Sub-total Senior
Management
Total Director and Senior
Management remuneration
353,280
169,749
212,917
337,920
147,615
–
277,944
185,372
13,729
38,997
1,373
–
22,703
15,895
24,789
10,423
211,968
–
168,960
63,333
771,429
267,809
810,986
406,743
1,051,732
633,065
54,099
73,810
444,261
2,256,967
2,103,786
960,470
64,539
126,672
828,688
4,084,155
1.
Mr Suseno is a nominee from Golden Investments. Any remuneration in relation to his role as Director of multiple GEAR entities is paid for by GEAR with
no apportionment to the Consolidated Entity
2. Ms Carroll resigned, effective 2nd July 2021
3. Mr Kotzee resigned, effective 12 August 2021
4. Mr Young commenced, effective 12 August 2021
26
Directors’ report (CONTINUED)Stanmore Annual Report 2021(D) REMUNERATION DETAILS (CONTINUED)
Short-term employee benefits
Post-employment benefits
Cash
salary and
Fees
$
Cash
bonus
$
Other non-
monetary
benefits
$
Super-
annuation
$
Termination
benefits
$
Share
based
payments
Cash
settled
(Rights)
$
2020
Directors
Mr Jimmy Lim
Mr Marcelo Matos
Mr Mark Trevan
Ms Mary Carroll
Mr Richard Majlinder
32,500
193,067
29,505
24,587
31,963
–
70,667
–
–
–
–
4,768
–
–
–
–
10,626
2,803
2,336
3,037
Sub-total Directors
311,622
70,667
4,768
18,802
Senior Management
Mr Jon Romcke
Mr Frederick Kotzee
Mr Leandro Pires
185,769
167,762
62,192
80,924
31,148
17,852
Mr Craig McCabe
150,329
48,280
Mr Brendan Schilling
60,577
160,558
8,192
17,238
63,674
–
6,226
120,126
452
2,075
–
–
–
11,681
11,681
4,172
6,103
5,424
10,847
778
Total
$
32,500
279,128
32,308
26,923
35,000
405,859
284,600
330,717
84,668
206,787
183,000
–
–
–
–
–
–
–
–
–
–
99,761
–
–
–
–
–
–
–
–
–
–
–
182,667
50,000
467,746
3,976
–
12,946
795,379
259,116
128,879
50,686
286,404
50,000 1,570,464
1,107,001
329,783
133,647
69,488
286,404
50,000
1,976,323
Mr Bernie O’Neill
Mr Ian Poole
Sub-total Senior
Management
Total Director and
Senior Management
remuneration
(E) ADDITIONAL STATUTORY INFORMATION
(i) Cash bonuses, performance-related bonuses and share-based payments
For the financial year ending 31 December 2021, the details of the STIP and LTIP incentives awarded and payable are
shown on page 22.
Current Rights on issue to KMP (FY21 and FY20) are outlined below:
Jon Romcke
145,366
72,683
36,341
36,342
FY20 Rights
issued
FY20 Rights
vested
FY20 Rights
forfeited
Net FY20
Rights
Jon Romcke
217,113
108,557
–
108,557
FY19 Rights
issued
FY19 Rights
vested
FY19 Rights
forfeited
Net FY19
Rights
27
Stanmore Annual Report 2021(E) ADDITIONAL STATUTORY INFORMATION (CONTINUED)
(ii) Equity instruments – shareholdings
Details of ordinary shares held directly, indirectly or beneficially by KMP and their related parties are as follows.
Balance at
1 January 2021
Granted as
remuneration
Bonus issue
Exercise of
Rights
Net Change
Other*
Balance
FY21
Jon Romcke**
1,104
–
–
–
–
1,104
*
**
The net change in shareholding for all KMP relates to the sale of shares on market
Shares held directly and beneficially
(iii) Equity instruments – options
The Consolidated Entity had no Options on issue at 31 December 2021.
(iv) Equity instruments – rights
Details of Rights held directly, indirectly, or beneficially by KMP and their related parties are as follows:
Jon Romcke
Opening
balance
144,898
Rights
issued
–
Rights
vested
Rights
forfeited
Closing
balance
Vesting
FY22*
Vesting
FY23**
–
–
144,898
108,556
36,342
*
**
Following the on-market takeover by Golden Investments, the Rights granted in FY19 have vested at 50%, with the balance subject to relevant vesting
criteria set prior to change of control
Following the on-market takeover by Golden Investments, the Rights granted in FY20 have vested at 50%, with 25% lapsed and the remaining 25% to
vest subject to relevant vesting criteria set prior to change of control
(v) Other transactions with key management personnel
There were no transactions with Directors or Director-related entities during the year ended 31 December 2021.
(vi) Loans given to key management personnel
There were no loans to KMP during the year ended 31 December 2021.
End of Remuneration Report
INSURANCE OF OFFICERS AND INDEMNITIES
(A) INSURANCE OF OFFICERS
Each of the Directors and the Company Secretary of Stanmore Resources have entered into a deed whereby the company
has provided certain contractual rights of access to books and records of Stanmore Resources to those Directors and the
Company Secretary. The company has insured all its Directors and Executive Officers. The contract of insurance prohibits
the disclosure of the nature of the liabilities covered and amount of the premium paid. The Corporations Act 2001 does
not require disclosure of the information in these circumstances.
(B) INDEMNITY OF AUDITORS
To the extent permitted by law, the company has agreed to indemnify its auditors, Ernst & Young, as part of its terms
of its audit engagement agreement against claims by third parties arising from the audit. The company has made no
payment to indemnify Ernst & Young during or since the financial year.
28
Directors’ report (CONTINUED)Stanmore Annual Report 2021INSURANCE OF OFFICERS AND INDEMNITIES (CONTINUED)
SHARES UNDER OPTION
At the date of this report, there were nil unissued ordinary shares under Options and 144,898 potential unissued ordinary
shares under Rights as follows:
(a) 108,556 unlisted Rights vesting subject to various performance hurdles in 2021 or, in the event that no vesting at
all occurs, the Rights may be retested vesting in 2022, subject to escalated performance hurdles and other agreed
conditions; and
(b) 36,342 unlisted Rights vesting subject to various performance hurdles in 2022 or, in the event that no vesting
at all occurs, the Rights may be retested vesting in 2023, subject to escalated performance hurdles and other
agreed conditions.
No Right holder has any right to participate in any other share issue of Stanmore Resources Limited.
During the year ended 31 December 2021, there were 270,417,381 fully paid ordinary shares in Stanmore Resources Limited
on issue.
During the year ended 31 December 2021, no new Rights were granted to KMP as part of the Stanmore Resources Limited
Rights Plan, and no Rights were forfeited. During the 6-month period ended 31 December 2020, no Rights were forfeited
and none vested.
CHANGES TO CAPITAL STRUCTURE
At the date of this report, the Consolidated Entity had 270,417,381 ordinary shares (inclusive of 11,040 employee shares),
nil unlisted options and 144,898 Rights on issue.
EVENTS SINCE THE END OF THE FINANCIAL YEAR
No events have occurred since 31 December 2021, other than those disclosed within Note 27.
ROUNDING OF AMOUNTS
The company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Report) Instrument 2016/191,
relating to the ‘rounding off’ of amounts in the directors’ report. Amounts in the directors’ report have been rounded off
in accordance with the instrument to the nearest thousand dollars unless otherwise stated.
DIVIDENDS PAID OR RECOMMENDED
No dividend has been declared for the financial year.
ENVIRONMENTAL REGULATION
The Consolidated Entity is subject to environmental regulation in respect of its operating and 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 COMPANY
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the company, or to intervene in any proceedings to which the company is a party, for the purpose of taking
responsibility on behalf of the company for all or part of those proceedings.
The company was not a party to any such proceedings during the year.
29
Stanmore Annual Report 2021Directors’ report
(CONTINUED)
AUDIT AND NON-AUDIT SERVICES
The board of Directors has considered the position and, in accordance with advice received from the audit committee, is
satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors
imposed by the Corporations Act 2001. The Directors are satisfied that the provision of non-audit services by the auditor, as set
out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:
• all non-audit services have been reviewed and approved by the audit committee prior to commencement to ensure
they do not adversely affect the integrity and objectivity of the auditor, and
• none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of
Ethics for Professional Accountants.
During the year the following fees were paid or payable for non-audit services provided by Ernst & Young, the auditor of
the Consolidated Entity:
Taxation services
Ernst & Young Australian firm:
Tax advisory services
Total remuneration for taxation services
Other services
Ernst & Young Australian firm:
Transaction due diligence services
Total remuneration for other services
Total remuneration for non-audit services
6 months to
31 December
2021
$
2020
$
146,825
146,825
387,469
387,469
534,294
24,910
24,910
13,940
13,940
38,850
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out
on page 31.
CORPORATE GOVERNANCE
In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of Stanmore
Resources Limited support and have adhered to the principles of corporate governance. Stanmore Resources Limited’s
Corporate Governance Statement can be found on the company’s website and ASX platform (www.stanmore.net.au/
corporate-governance).
This report is made in accordance with a resolution of Directors.
Mr Marcelo Matos
Director
Brisbane
16/02/2022
30
Stanmore Annual Report 2021Auditor’s Independence Declaration
31
Stanmore Annual Report 2021A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Ernst & Young111 Eagle StreetBrisbane QLD 4000 AustraliaGPO Box 7878 Brisbane QLD 4001Tel: +61 7 3011 3333Fax: +61 7 3011 3100ey.com/au Auditor’s Independence Declaration to the Directors of Stanmore Resources Limited As lead auditor for the audit of the financial report of Stanmore Resources Limited for the financial year ended 31 December 2021, I declare to the best of my knowledge and belief, there have been: a.No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; b.No contraventions of any applicable code of professional conduct in relation to the audit; and c.No non-audit services provided that contravene any applicable code of professional conduct in relation to the audit. This declaration is in respect of Stanmore Resources Limited and the entities it controlled during the financial year. Ernst & Young Tom du Preez Partner 16 February 2022 30Consolidated statement of profit or loss
Revenue from contracts with customers
Cost of sales
Gross profit/(loss)
Other expenses
Other income
Operating profit/(loss)
Finance income
Finance costs
Finance costs – net
Share of net (loss) of joint ventures
Profit/(loss) before income tax
Income tax (expense)/benefit
Profit/(loss) for the year/period
Profit/(loss) is attributable to:
Note
2
3(b)
3(b)
3(a)
3(c)
3(c)
23(b)
4
6 months to
31 December
2020
$’000
2021
$’000
382,948
136,309
(312,540)
(142,928)
70,408
(42,133)
5,226
33,501
1,803
(17,060)
(15,257)
(2,409)
15,835
(5,422)
10,413
(6,619)
(21,671)
11,747
(16,543)
27
(5,438)
(5,411)
–
(21,954)
5,834
(16,120)
Owners of Stanmore Resources Limited
10,413
(16,120)
Earnings per share for profit/(loss) attributable to the ordinary
equity holders of the company:
Basic earnings/(loss) per share (cents per share)
Diluted earnings/(loss) per share (cents per share)
20
20
Cents
Cents
3.9
3.9
(6.0)
(6.0)
The above consolidated statement of profit or loss should be read in conjunction with the accompanying notes.
32
Stanmore Annual Report 2021
Consolidated statement of comprehensive income
Profit/(loss) for the period
Other comprehensive income for the year/period
Total comprehensive income/(loss) for the year/period
Total comprehensive income/(loss) for the period is attributable to:
6 months to
31 December
2020
$’000
(16,120)
–
(16,120)
2021
$’000
10,413
–
10,413
Owners of Stanmore Resources Limited
10,413
(16,120)
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
33
Stanmore Annual Report 2021Consolidated statement of financial position
Note
2021
$’000
31 December
2020
$’000
5
7
8
12
7
9
10
10
10
11
12
62,859
52,408
11,748
60,742
–
5,041
21,264
67,184
5,599
5,520
187,757
104,608
15,000
64,903
88,758
43,220
21,848
2,015
21,571
257,315
445,072
–
64,819
44,336
41,141
17,298
2,519
20,048
190,161
294,769
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Current tax receivables
Total current assets
Non-current assets
Trade and other receivables
Property, plant and equipment
Capitalised development costs
Exploration and evaluation
Mine properties
Intangible assets
Other non-current assets
Total non-current assets
Total assets
34
Stanmore Annual Report 2021Note
2021
$’000
31 December
2020
$’000
LIABILITIES
Current liabilities
Trade and other payables
Borrowings
Lease liabilities
Derivative financial instruments
Current tax liabilities
Employee benefit obligations
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Employee benefit obligations
Provisions
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Issued capital
Share based payment reserves
Retained earnings
13
14
15
16
18
17
14
15
18
17
4
21
32
Total equity attributable to the owners of Stanmore Resources Limited
Total equity
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
83,492
97,075
180
6,121
6,285
2,537
5,659
201,349
6,739
450
54
43,150
30,443
80,836
282,185
162,887
121,747
2,337
38,803
162,887
162,887
40,692
19,421
117
–
–
811
9,497
70,538
9,104
612
60
34,231
27,786
71,793
142,331
152,438
121,725
2,323
28,390
152,438
152,438
35
Stanmore Annual Report 2021Consolidated statement of changes in equity
Balance at 1 July 2020
Loss for the period
Total comprehensive loss for the period
Transactions with owners in their capacity as owners:
Share-based payments
Balance at 31 December 2020
Balance at 1 January 2021
Profit for the period
Total comprehensive profit for the period
Transactions with owners in their capacity as owners:
Deferred tax recognised directly in equity
Share-based payments
21(a)
21(a)
Issued
capital
$’000
Retained
earnings
$’000
Note
Share based
payment
reserve
$’000
Total
$’000
121,725
44,510
2,348
168,583
–
–
–
21(a)
(16,120)
(16,120)
–
–
(16,120)
(16,120)
–
(25)
(25)
121,725
28,390
2,323
152,438
Issued
capital
$’000
Retained
earnings
$’000
Note
Share based
payment
reserve
$’000
Total
$’000
121,725
28,390
2,323
152,438
–
–
22
–
22
10,413
10,413
–
–
–
–
–
–
14
14
10,413
10,413
22
14
36
Balance at 31 December 2021
121,747
38,803
2,337
162,887
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
36
Stanmore Annual Report 2021Consolidated statement of cash flows
Operating activities
Receipts from customers
GST refunds
Payments to suppliers and employees
Interest received
Interest and other finance costs paid
Income tax received/(paid)
Net cash inflow (outflow) from operating activities
Investing activities
Payments for property, plant and equipment
Payments for capitalised development, exploration and evaluation assets
Payments for mine property assets
Payments of vendor royalties
Payments for loan receivable principal
Payments for refundable security bonds
Payment for acquisition of Joint Venture
6 months to
31 December
2020
$’000
2021
$’000
Note
369,953
27,714
116,751
14,827
(257,331)
(148,967)
1,803
(23,786)
9,062
127,415
(15,355)
(44,422)
(1,791)
(4,122)
(28,950)
(41,345)
(2,409)
6
17
24
27
(3,030)
4,692
(15,700)
(9,996)
(3,513)
(190)
–
–
–
–
Net cash (outflow) from investing activities
(138,394)
(13,699)
Financing activities
Proceeds from borrowings
Repayment of borrowings
Benefit of principal lease liability
Payments for financial securities
Net cash inflow from financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at end of year
5(c)
5(a)
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
79,733
(9,297)
(116)
(1,523)
68,797
57,818
5,041
62,859
19,609
(3,553)
1
(13,861)
2,196
(27,203)
32,244
5,041
37
Stanmore Annual Report 2021Notes to the financial statements
1. BASIS OF PREPARATION OF FULL YEAR REPORT
The financial statements of Stanmore Resources Limited for the reporting period ended 31 December 2021 covers the
Consolidated Entity consisting of Stanmore Resources Limited and its subsidiaries as required by the Corporations Act 2001.
The group had changed its financial year to 31 December to align with its parent entity. As a result, the results presented
in this financial report, which is for a period of 12 months ended 31 December 2021, are not entirely comparable with the
comparative period stated, being the 6-month period 1 July 2020 to 31 December 2020.
The financial statements are presented in the Australian currency.
Stanmore Resources 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 of the Consolidated Entity are the exploration, development, production and sale of metallurgical
coal in Queensland, Australia.
The consolidated general-purpose financial report of the Consolidated Entity for the period ended 31 December 2021
was authorised for issue in accordance with a resolution of the Directors on 16/02/2022. 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, the 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 (IASB);
•
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 January 2021. Refer
to Note 1(i) or 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 1(i)(i)
The financial statements have been prepared on a historical cost basis, except for Vendor Royalties – Contingent
Consideration and Derivative Financial Instruments which have been measured at fair value. The Consolidated Entity
is a for-profit entity for the purposes of Australian Accounting Standards.
(A) KEY JUDGEMENTS AND ESTIMATES
In the process of applying the Consolidated Entity’s accounting policies, managements 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:
Note 2: Revenue
Note 10: Capitalised development costs
Note 10: Mine properties
Note 10: Exploration and evaluation
Note 17: Onerous contracts provision
Note 17: Rehabilitation provision
Note 17: Vendor royalties – contingent consideration
Note 32: Share-based payments
38
Page 40
Page 54
Page 56
Page 56
Page 61
Page 61
Page 62
Page 82
Stanmore Annual Report 20211. BASIS OF PREPARATION OF FULL YEAR REPORT (CONTINUED)
(B) GOING CONCERN
As disclosed in the Directors’ report, the group is in the process of transitioning its core mining operations from Isaac
Plains and Isaac Plains East during Q1 2022 to Isaac Downs where full scale production is scheduled to commence once
the Drag Line has been walked across and initial development activities are completed.
In addition to this, the group has also announced the acquisition of 80% of the shares in BMC from BHP which will be
funded through a combination of debt and equity.
In respect of the BMC transaction, at the date of this report, the group has signed definitive agreements with certain
financiers for a US$625 million senior debt facility. As announced by Stanmore Resources Limited on 8 November
2021, the Group is proposing to part fund the balance of the completion payment for the BMC transaction through an
entitlement offer. Further details of the proposed entitlement offer are expected to be announced after key conditions
precedent for the transaction have been substantially progressed.
In respect of the existing operations and transition from Isaac Plains and Isaac Plains East, the Directors have considered
projected cash flow information for the 12 months from the date of the approval of these financial statements under
multiple scenarios (which includes the ability to slow or defer spending), including conservative pricing forecasts and
the group’s access to undrawn working capital facilities as disclosed in Note 14. On 16 February 2022, the group has
also extended the GEAR facility maturity date by another year to 30 June 2023.
Based on the above, the group is expected to continue to operate within the available cash levels and is confident in
its ability to complete the required capital and debt to be raised to continue to fund the ongoing operations and complete
the BMC transaction. The company is also in the process of assessing raising further debt to assist with future capital
development and has capacity under the ASX Listing Rules to raise further funds through the issue or placement
of securities.
Accordingly, the financial statements have been prepared on a going concern basis which contemplates the continuity
of normal business activities and the realisation of assets and discharge of liabilities in the ordinary course of business.
(C) DEBT FACILITY
On 2 July 2021, the Consolidated Entity signed an amendment to increase the available facility under its existing finance
facility with its parent entity, GEAR, from US$ 40m to US$70m.
The increase in the facility was primarily to ensure the progression of the Isaac Downs project together with the Mavis
and Millennium acquisition, as it substantially satisfies the company’s short to medium term debt requirements and
allows a seamless transition from Isaac Plains East to Isaac Downs now that the Mining Lease has been obtained.
As at 31 December 2021, US$67.6m (A$93.2m) has been drawn down under this facility.
(D) COVID-19
These impacts are not significant to the Consolidated Entity and will not negatively impact the financial statements or
trigger any significant uncertainties with respect to events or conditions which may adversely impact the Consolidated
Entity as at the reporting date or subsequently as a result of the Coronavirus (COVID-19) pandemic.
There is no impact on the going concern of the Consolidated Entity as a result of the above.
(E) BASIS OF CONSOLIDATION
Subsidiaries are all those 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.
39
Stanmore Annual Report 20211. BASIS OF PREPARATION OF FULL YEAR REPORT (CONTINUED)
(E) BASIS OF CONSOLIDATION (CONTINUED)
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.
(F) 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.
(G) 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.
(H) 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.
(I)
NEW AND AMENDED STANDARDS AND INTERPRETATIONS ADOPTED BY THE
CONSOLIDATED ENTITY
The group has applied all the standards and amendments for the first time for their annual reporting period commencing
1 January 2021. These amendments had no impact on the financial statements of the Group.
(i) Early adoption of AASB 2020-3 Annual Improvements 2018-2020 and Other Amendments
The group has chosen to early adopt AASB 2020-3: Amendments to Australian Accounting Standards – Annual
Improvements 2018-2020 and Other Amendments, in relation to changes made to AASB 116. As a result, discreet revenues
and operating costs of the Isaac Downs Bulk Sample Pit are to be recognised within the consolidated statement of profit or
loss. There is no previously measured pre-production revenues that required restatement in the prior period.
2. REVENUE
Revenue from contracts with customers
Total revenue
40
6 months to
31 December
2020
$’000
136,309
136,309
2021
$’000
382,948
382,948
Stanmore Annual Report 2021Notes to the financial statements (CONTINUED)2. REVENUE (CONTINUED)
(A) DISAGGREGATION OF REVENUE FROM CONTRACTS WITH CUSTOMERS
The group recognises revenue from the transfer of goods at a point in time in the following major product lines and
geographical regions:
Revenue from external customers
Metallurgical coal/Asia
Metallurgical coal/Europe
Thermal coal/Asia
Total segment revenue
2021
$’000
31 December
2020
$’000
296,293
58,388
28,267
382,948
121,930
10,725
3,654
136,309
(B) RECOGNITION AND MEASUREMENT
Revenue is recognised when the control of the goods is passed to the customer. The amount of revenue recognised is the
consideration the Consolidated Entity is entitled to receive in exchange for transferred goods to the customer.
(i) Contracts with customers – coal sales
General recognition
Revenue from the sale of coal is recognised in the profit or loss when performance obligations have been met, which is
deemed to be when control of the coal has been transferred from the Consolidated Entity to the customer. Typically, the
transfer of control and the recognition of a sale occurs when the coal passes the ship rail when loading at the port, unless
the sale is made on stockpile at which point the transfer of control will occur when the sales agreement is exercised.
All coal is shipped through the Dalrymple Bay Coal Terminal and all coal sold during the year ended 31 December 2021
was on a contracted ‘free on board’ basis.
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.
Coking Coal Quarterly Index Linked Price Contracts recognition
Coking Coal Sales contracts with Stanmore Resources customers generally contain quarterly pricing provisions as is
customary in the coking coal markets. Sales contracts with regular customers are linked to the relevant coking coal
index with index adjustments based on the term agreements/relationship, Isaac Plains specific 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 are
at the prior quarters’ price. 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.
Due to the volatility in the coking coal price indices, management reviews the index price at the of the quarter. Coal sales
are then adjusted, 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. The risk weighted price would then be used rather than the quarterly index price
which has not yet been agreed with the customer.
41
Stanmore Annual Report 20212. REVENUE (CONTINUED)
(B) RECOGNITION AND MEASUREMENT (CONTINUED)
(i) Contracts with customers – coal sales (continued)
Thermal coal contracts sales
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’.
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.
3. OTHER INCOME AND EXPENSE ITEMS
(A) OTHER INCOME
6 months to
31 December
2020
$’000
(36)
1,893
9,665
225
11,747
6 months to
31 December
2020
$’000
83,374
16,551
21,700
9,944
1,213
7,311
2,835
2021
$’000
602
1,191
2,154
1,279
5,226
2021
$’000
164,705
24,602
47,151
36,570
5,128
27,848
6,536
312,540
142,928
Revaluation in rehabilitation provision
Onerous contract re-measurement
Fair value movement – vendor royalty – contingent consideration
Other income
Note
17
17
17
(B) BREAKDOWN OF COST OF SALES AND OTHER EXPENSES
Mining costs
Processing costs
Transport and logistics
State royalties
Private royalties
Production overheads
Other production costs
Total cost of sales
42
Stanmore Annual Report 2021Notes to the financial statements (CONTINUED)
3. OTHER INCOME AND EXPENSE ITEMS (CONTINUED)
(B) BREAKDOWN OF COST OF SALES AND OTHER EXPENSES (CONTINUED)
Other expenses
Total other expenses
Other expenses include the following specific items:
Employee benefits expenses
Salaries and wages
Employee superannuation
Share-based payments
Total employee benefits expenses
Depreciation and amortisation
Plant and equipment
Mine properties
Intangibles
Right of use asset
6 months to
31 December
2020
$’000
21,671
21,671
2021
$’000
42,133
42,133
6 months to
31 December
2020
$’000
3,219
185
(35)
3,369
6 months to
31 December
2020
$’000
6,529
7,838
252
63
2021
$’000
6,346
424
14
6,784
2021
$’000
15,135
10,986
504
136
Total depreciation and amortisation
26,761
14,682
Other overhead expenses
Short term lease payments
Other overhead expenses
Total other overhead expenses
6 months to
31 December
2020
$’000
174
3,446
3,620
2021
$’000
221
8,367
8,588
43
Stanmore Annual Report 2021
3. OTHER INCOME AND EXPENSE ITEMS (CONTINUED)
(C) FINANCE INCOME AND COSTS
Finance income
Interest
Finance income
Finance costs
Interest paid – external parties
Interest amortisation unwinding
Movement in foreign currency, including derivatives
Borrowing costs
Interest charge – lease liability
Finance costs expensed
Net finance costs
6 months to
31 December
2020
$’000
27
27
406
1,697
2,408
898
29
5,438
5,411
2021
$’000
1,803
1,803
5,416
1,570
7,534
2,484
56
17,060
15,257
(D) RECOGNITION AND MEASUREMENT
(i) Cost of sales
Cost of sales 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 accrual basis at the time the sale is recognised, in line with movements
through inventory and survey information from site. Refer to Note 18 on page 63.
(ii) Wages and salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be wholly 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. They are measured at amounts expected to be paid when the liabilities are settled.
Expenses for sick leave are recognised when leave is taken and measured at the actual rates paid or payable.
Where the group has liabilities that are not expected to be settled wholly within 12 months after the end of the reporting
period, such as long service leave, these obligations are measured at the present value of the expected future payments
to be made in respect of the services provided by employees up to the end of the reporting period. Consideration is given
to expected future wage and salary levels, experience of employee departures and periods of service. Expected future
payments are discounted using market yields at the end of the reporting period of high-quality corporate bonds with
terms and currencies that match, as close as possible, the estimated future cash flows.
(iii) Leases
The leases recognised in Other Expenses relate to short-term lease obligations where the entity has adopted the
recognition exemption. Lease payments for short-term leases are charged to profit or loss on a straight-line basis over
the term of the lease, net of any incentives.
44
Stanmore Annual Report 2021Notes to the financial statements (CONTINUED)4.
INCOME TAX EXPENSE
(A) INCOME TAX EXPENSE
Current income tax (benefit)
Prior year adjustments
Deferred income tax expense/(benefit)
Income tax expense
6 months to
31 December
2020
$’000
(10,372)
–
4,538
(5,834)
2021
$’000
9,368
(6,603)
2,657
5,422
(B) NUMERICAL RECONCILIATION OF INCOME TAX EXPENSE TO PRIMA FACIE TAX PAYABLE
Prima facie tax expense (30%) on profit/(loss) before income tax
Add tax effect of:
Non-deductible expenses
Accounting distribution – MetRes Pty Ltd
Prior period taxes over/(under) recognised
Income tax expense/(benefit)
(c) Deferred tax balances
The balance comprises temporary differences attributable to:
Deductible temporary differences
Taxable temporary differences
Net deferred tax liabilities
Deferred tax assets will only be recognised when:
6 months to
31 December
2020
$’000
(6,586)
3
–
749
(5,834)
2021
$’000
4,751
8
723
(60)
5,422
6 months to
31 December
2020
$’000
2021
$’000
18,815
(49,258)
(30,443)
17,981
(45,767)
(27,786)
• the Consolidated Entity derives future assessable income of a nature of an amount sufficient to enable the losses to
be realised;
• the Consolidated Entity continues to comply with the conditions of deductibility imposed by the law; and
• no changes in tax legislation aversely affect the Consolidated Entity in realising the losses.
45
Stanmore Annual Report 20214.
INCOME TAX EXPENSE (CONTINUED)
(D) 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 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 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.
Opening
balance
$ ‘000
Recognised in
profit or loss
$ ‘000
7,974
988
(5,306)
4,157
502
(3,814)
(129)
3,631
(756)
(14,776)
(392)
(482)
(10,373)
(1,545)
(12,463)
2,245
5,297
129
–
151
14,776
Closing
balance
$ ‘000
7,582
506
(15,679)
2,612
(32,720)
2,747
1,483
–
3,631
(605)
–
Deferred
tax asset
$ ‘000
Deferred
tax liability
$ ‘000
7,582
506
–
2,612
–
2,747
1,737
–
3,631
–
–
–
–
(15,679)
–
(32,720)
–
(254)
–
–
(605)
–
(27,786)
(2,657)
(30,443)
18,815
(49,258)
Exploration and development costs
(20,257)
31 December 2021
Provision for rehabilitation
Provision for onerous contracts
Property, plant and equipment
Vendor private royalty
Unrealised FX
Other
Vendor receivable
Provision for impairment –
exploration and development
Rail loop benefit
Overburden in advance
TOTAL
46
Stanmore Annual Report 2021Notes to the financial statements (CONTINUED)4.
INCOME TAX EXPENSE (CONTINUED)
(D) RECOGNITION AND MEASUREMENT (CONTINUED)
Opening
balance
$ ‘000
Recognised in
profit or loss
$ ‘000
31 December 2020
Provision for rehabilitation
Provision for onerous contracts
Property, plant and equipment
Vendor private royalty
8,989
1,609
(5,470)
6,795
Exploration and development costs
(18,529)
Unrealised FX
Other
Vendor receivable
Provision for impairment –
exploration and development
Rail loop benefit
Overburden in advance
426
(2,626)
(1,284)
3,631
(832)
(15,957)
(1,015)
(621)
164
(2,638)
(1,728)
76
(1,188)
1,155
–
76
1,181
Closing
balance
$ ‘000
7,974
988
(5,306)
4,157
(20,257)
502
(3,814)
(129)
3,631
(756)
(14,776)
(27,786)
Deferred
tax asset
$ ‘000
Deferred
tax liability
$ ‘000
7,974
988
–
4,157
–
502
729
–
3,631
–
–
–
–
(5,306)
–
(20,257)
–
(4,543)
(129)
–
(756)
(14,776)
17,981
(45,767)
TOTAL
(23,248)
(4,538)
(i) Tax consolidation
Stanmore Resources Limited and its wholly owned subsidiaries have formed a tax consolidated group and are taxed as
a single entity. Stanmore Resources Limited is the head entity of the tax consolidated group. 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 Resources 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 as a tax funding arrangement.
5. CASH AND CASH EQUIVALENTS
Current assets
Cash at bank and in hand
2021
$’000
31 December
2020
$’000
62,859
5,041
(A) RECONCILIATION TO CASH FLOW STATEMENT
The above figures reconcile to the amount of cash shown in the consolidated statement of cash flows at the end of the
financial year as follows:
Balances as above
Balances per consolidated statement of cash flows
2021
$’000
62,859
62,859
31 December
2020
$’000
5,041
5,041
47
Stanmore Annual Report 20215. CASH AND CASH EQUIVALENTS (CONTINUED)
(B) RECOGNITION AND MEASUREMENT
For the purposes of the consolidated statement of cash flows, cash and cash equivalents includes (1) cash on hand and
at bank; (2) deposits held at call with financial institutions; (3) 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.
(C) RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
Chattel
mortgage
$ ‘000
Lease
liabilities
$ ‘000
Short-
term loan
$ ‘000
11,373
–
(2,730)
–
467
9,110
729
–
(116)
–
17
630
2,693
–
(2,693)
–
–
–
Working
capital
facility
$ ‘000
12,983
75,795
Insurance
premium
funding
facility
$ ‘000
1,476
3,938
–
(3,874)
4,386
–
–
–
Total
$ ‘000
29,254
79,733
(9,413)
4,386
484
93,164
1,540
104,444
Net debt as at 1 January 2021
Cash inflows
Cash outflows
Foreign exchange movements
Non-cash changes
Net debt as at 31 December 2021
Net debt as at 1 July 2020
12,469
823
–
–
Chattel
mortgage
$ ‘000
Lease
liabilities
$ ‘000
Short-
term loan
$ ‘000
Working
capital
facility
$ ‘000
Insurance
premium
funding
facility
$ ‘000
Total
$ ‘000
13,292
19,610
–
3,727
2,693
13,189
–
–
–
(2,251)
(3,553)
(206)
–
(95)
2,693
12,983
1,476
29,254
Cash inflows
Cash outflows
Non-cash changes
–
(1,302)
206
Net debt as at 31 December 2020
11,373
1
–
(95)
729
48
Stanmore Annual Report 2021Notes to the financial statements (CONTINUED)6. CASH FLOW INFORMATION
(A) CASH GENERATED FROM OPERATIONS
Reconciliation of profit/(loss) after income tax to net cash flow
from operating activities
Profit/(loss) for the period
Adjust for non-cash items:
Depreciation and amortisation and disposal of fixed assets
Non-cash employee benefits expense – share-based payments
Loss joint ventures
Non-cash movement in onerous contracts
Non-cash movement in rehabilitation provisions
Non-cash movement in contingent considerations
Foreign exchange loss
Forward foreign exchange contracts
Change in operating assets and liabilities:
(Increase)/decrease in trade and other receivables
(Increase)/decrease in inventories
(Increase)/decrease in prepayments
(Increase)/decrease in income taxes receivable
(Decrease)/increase in deferred tax liabilities
Increase/(decrease) in trade and other payables
Increase/(decrease) in provisions for onerous contracts
Increase/(decrease) in rehabilitation provisions
Increase/(decrease) in contingent considerations
Increase/(decrease) in provisions for employee benefits
6 months to
31 December
2020
$’000
2021
$’000
10,413
(16,120)
26,761
14
2,409
(951)
(602)
(1,028)
4,853
6,121
(17,194)
55,436
(13,798)
11,805
2,679
40,739
(654)
(1,307)
–
1,719
14,682
(25)
–
(1,595)
468
(8,508)
–
–
(16,549)
11,680
(2,732)
(5,680)
4,538
8,778
(476)
(3,851)
(284)
(26)
Net cash inflow/(outflow) from operating activities
127,415
(15,700)
Cash flows are included in the consolidated statement of cash flows on a gross basis and the GST components of cash
flows arising from investing and financing activities are classified as operating cash flows.
49
Stanmore Annual Report 2021
7. TRADE AND OTHER RECEIVABLES
Current
Trade receivables at amortised cost
GST receivable
Other receivables
Loans to related parties
Non-current
Loans to related parties
6 months to
31 December
2020
$’000
2021
$’000
35,783
6,156
233
10,236
52,408
15,000
15,000
19,030
1,957
277
–
21,264
–
–
During the period, the company provided MetRes Pty Ltd, a 50% owned Joint Venture (see Note 24), with a secured, total
finance facility up to A$50m, including a working capital debt facility of A$15m to the Joint Venture to cover initial working
capital requirements, and an additional A$35m debt facility as required. The loan is fully secured against the underlying
property, plant & equipments, and mine properties of the Joint Venture. A total of $28.95m was drawn as at 31 December
2021, less an offsetting cash prepayment of $3.714m.
(A) RECOGNITION AND MEASUREMENT
Trade and other receivables are held for collection of contractual cash flows where those cash flows represent solely
payments of principal and interest are measured at Amortised Cost. Interest income from these financial assets is included
in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly
in profit or loss and presented in other gains/(losses), together with foreign exchange gains and losses. Impairment losses
are presented as separate line item in the Statement of Profit or Loss and Comprehensive Income.
Impairment
(i)
The Consolidated Entity assesses on a forward-looking basis the expected credit loss associated with its debt instruments
carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase
in credit risk.
For trade receivables, the group applies the simplified approach permitted by AASB 9 which requires expected lifetime
losses to be recognised from initial recognition of the receivables. Loans to related parties are assessed using the general
approach required by AASB 9 for the assessment of expected credit losses. Management has determined that assessment
of expected credit loss associated with trade receivables is immaterial.
50
Stanmore Annual Report 2021Notes to the financial statements (CONTINUED)8.
INVENTORIES
Current assets
ROM coal inventories
Product coal stocks
Overburden in advance
2021
$’000
31 December
2020
$’000
3,423
8,325
–
11,748
3,546
14,385
49,253
67,184
(A) RECOGNITION AND MEASUREMENT
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:
• overburden in advance material extracted through the pre-strip mining process and includes blasting activities;
• run of mine material (ROM) extracted through the mining process and awaiting process at the coal handling and
preparation plant; and
• 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.
(B) INTERPRETATION 20 – STRIPPING COSTS IN THE PRODUCTION PHASE OF A SURFACE MINE
In open pit mining operations, overburden and other waste materials must be removed to allow extractions of the coal
minerals underneath. Previously, the costs of overburden removal are capitalised separately as Inventory under AASB 102,
to the extent that a future benefit from the stripping activity is expected to be realised from future coal extraction. In the
current year, Isaac Downs was in development within mining from the bulk sample pit and ongoing development which
is scheduled to be completed in the coming months.
51
Stanmore Annual Report 20219. PROPERTY, PLANT AND EQUIPMENT
Plant and equipment
At cost
Accumulated depreciation
Buildings and improvements
At cost
Accumulated depreciation
Furniture and office equipment
At cost
Accumulated depreciation
Right of use asset
At cost
Accumulated depreciation
Capital work in progress
At cost
2021
$’000
31 December
2020
$’000
95,979
(43,885)
52,094
3,141
(856)
2,285
132
(121)
11
735
(223)
512
89,788
(29,020)
60,768
2,366
(587)
1,779
137
(123)
14
718
(87)
631
10,001
10,001
64,903
1,627
1,627
64,819
(A) RECOGNITION AND MEASUREMENT
Property, plant and equipment is measured at cost less accumulated depreciation and impairment losses, if any. 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, 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.
52
Stanmore Annual Report 2021Notes to the financial statements (CONTINUED)9. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
(A) RECOGNITION AND MEASUREMENT (CONTINUED)
(i) Movements in carrying amounts
Year ended 31 December 2021
Opening net book amount
Additions
Transfers
Depreciation charge
Closing net book amount
Plant and
equipment
$’000
Buildings and
improvements
$’000
Furniture
and office
equipment
$’000
Right of
use asset
$’000
Capital work
in progress
$’000
Total
$’000
60,768
–
6,184
(14,858)
52,094
1,779
–
775
(269)
2,285
14
–
5
(8)
11
631
17
–
(136)
512
1,627
64,819
15,338
15,355
(6,964)
–
–
(15,271)
10,001
64,903
Period ended 31 December 2020
Plant and
equipment
$’000
Buildings and
improvements
$’000
Furniture
and office
equipment
$’000
Right of
use asset
$’000
Capital work
in progress
$’000
Opening net book amount
54,976
1,583
Additions
Disposals
Transfers
Depreciation charge
Closing net book amount
–
–
12,227
(6,435)
60,768
–
–
289
(93)
1,779
15
–
–
–
(1)
14
788
–
(94)
–
(63)
631
Total
$’000
62,891
8,614
(94)
–
5,529
8,614
–
(12,516)
–
(6,592)
1,627
64,819
(ii) Revaluation, depreciation methods and useful lives
The carrying amount of all non-mining property fixed assets, except land, is depreciated over their useful life from the
time the asset is held ready for use. Property, plant and equipment are depreciated on a units of production basis over
the life of the economically recoverable resources. The base for the units of production is drawn from the assets principal
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 was plant and loadout facilities utilise the Economically
Recoverable Resources of Isaac Plains Complex, which includes an estimate of recoverable underground coal reserves.
The depreciation rates used for each class of assets are:
• Plant and equipment
5-25% straight line/units of production
• Furniture and office equipment
5-25% straight line
• Buildings and improvements
5-10% straight line
• Right-of-use asset
18% straight line
The group assesses at each reporting date whether there is an indication that an asset (or Cash Generating Unit – CGU)
may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the group estimates
the asset’s or CGU’s recoverable amount. The recoverable amount is the higher of an asset’s or CGU’s Fair Value Less Cost
of Disposal and its Value in Use. The recoverable amount is determined for an individual asset, unless the asset does not
generate cash inflows that are largely independent of those from other assets or groups of assets, in which case, the asset
is tested as part of a larger CGU to which it belongs. If the carrying amount of an asset or CGU exceeds its recoverable
amount, the asset/CGU is considered impaired and is written down to its recoverable amount.
53
Stanmore Annual Report 20219. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
(A) RECOGNITION AND MEASUREMENT (CONTINUED)
(ii) Revaluation, depreciation methods and useful lives (continued)
The group bases its impairment calculation on detailed budgets and forecasts which are prepared separately for each of
the group’s CGUs to which the individual assets are allocated, based on the life-of-mine plans. The estimated cash flows
are based on expected future production, metal selling prices, operating costs and forecast capital expenditure. As part
of the Group’s impairment assessment, the Group considers the expected future demand for its product, impact of known
climate policies and potential policy responses to climate change. Based on the Group’s research, demand for its product
will continue over the life of the CGU.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses
are recognised in profit or loss in the period which they arise.
(iii) Right-of-use asset
At the inception of a contract, the Consolidated Entity assesses whether a contract contains a lease based on
whether the contract conveys the right to use or control the use of an identified asset for a period of time in exchange
for consideration.
At the commencement date of the lease, the Consolidated Entity recognises a lease liability and a corresponding right-of-
use asset. The lease liability is initially recognised at present value of lease payments to be made over the lease term. The
lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, and
are discounted using the interest rate determined using the lessee’s incremental borrowing rate. The right-of-use asset
is initially measured at cost which includes any direct costs, and subsequently measured at costs less any depreciation
and impairment.
The right-of-use asset is depreciated to the earlier of the useful life of the asset or the lease term using the straight-line
method and is recognised in the Statement of Profit or Loss in depreciation and amortisation.
The unwind of the financial charge on the lease liability is recognised in the Statement of Profit or Loss in financial
expenses based on the lessee’s incremental borrowing rate.
10. CAPITALISED DEVELOPMENT, EXPLORATION AND MINE PROPERTIES
Capitalised development costs
Cost
Exploration and evaluation assets
Cost
Accumulated impairment
Mine properties
Cost
Accumulated depreciation
54
2021
$’000
31 December
2020
$’000
88,758
88,758
55,325
(12,105)
43,220
64,164
(42,316)
21,848
153,826
44,336
44,336
53,246
(12,105)
41,141
48,627
(31,329)
17,298
102,775
Stanmore Annual Report 2021Notes to the financial statements (CONTINUED)10. CAPITALISED DEVELOPMENT, EXPLORATION AND MINE PROPERTIES (CONTINUED)
Year ended 31 December 2021
Opening net book amount
Additions
Depreciation charge
Closing net book amount
Period ended 31 December 2020
Opening net book amount
Transfers
Additions
Depreciation charge
Provision for impairment
Closing net book amount
Capitalised
development costs
$’000
Exploration and
evaluation assets
$’000
Mine
properties
$’000
44,336
44,422
–
88,758
41,141
2,079
–
43,220
17,298
15,536
(10,986)
21,848
Capitalised
development costs
$’000
Exploration and
evaluation assets
$’000
Mine
properties
$’000
Total
$’000
102,775
62,037
(10,986)
153,826
Total
$’000
314
43,550
472
–
–
44,336
93,075
(43,550)
3,721
–
(12,105)
41,141
24,946
118,335
–
190
(7,838)
–
17,298
–
4,383
(7,838)
(12,105)
102,775
(A) RECOGNITION AND MEASUREMENT – CAPITALISED DEVELOPMENT
Capitalised Development expenditure includes costs transferred from Exploration and Evaluation 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 reliably the expenditure during development.
Following recognition, the asset is carried at cost less any accumulated impairment losses. Once the development phase
is complete and production begins, the costs are transferred from Capitalised Development Costs to Mine Properties
where they are amortised over the life of the development project.
(i) Key judgements
Initial capitalisation of costs is based on management’s judgement that technical and economic feasibility is confirmed.
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.
In respect of the development costs incurred at Isaac Downs, full scale production is set to commence upon completion
of the development in the first quarter of 2022, and once the dragline has been walked across costs would be reclassified
to Mine properties and amortisation will commence.
As at 31 December 2021, the carrying amount of Capitalised Development costs was $88.758m (31 December 2020: $44.336m).
55
Stanmore Annual Report 202110. CAPITALISED DEVELOPMENT, EXPLORATION AND MINE PROPERTIES (CONTINUED)
(B) RECOGNITION AND MEASUREMENT – EXPLORATION AND EVALUATION
Exploration and evaluation expenditure incurred is capitalised on an area of interest basis. Such expenditures comprise
net direct costs and an appropriate portion of related overhead expenditure. These costs are carried forward to the extent
that they are expected to be recouped through the successful development of the area or where activities in the area have
not yet reached a stage which permits reasonable assessment of the existence of economically recoverable resources
and active or significant operations in relation to the area are continuing.
A regular review is 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 against profit
in the period 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 the technical feasibility and commercial viability is demonstrated, the accumulated costs for the relevant area of
interest are transferred to capitalised development costs.
(i) Key judgements
The Consolidated Entity performs impairment testing on specific exploration assets as required in AASB 6 para. 20.
The accumulated impairment on these exploration and evaluation assets remained unchanged at $12.105m.
(C) RECOGNITION AND MEASUREMENT – MINE PROPERTIES
Mining property assets include costs transferred from Capitalised Development following start of production, and the
rehabilitation asset capitalised to offset rehabilitation provisions when disturbance occurs. Following transfer from
Capitalised Development, all subsequent development costs are capitalised to the extent that commercial viability
conditions continue to be satisfied.
The costs associated with mine properties are amortised based on a units of production method.
(i) Key judgements
Due to the expectation that saleable coal will be produced as a result of the initial mine development, management
judgement is required in relation to when a mine is considered to have started production, and therefore transferred to
Mine Properties and depreciated. As a result of this exercise, no costs have been transferred during the financial year.
The Consolidated Entity assesses at the end of each period whether there are any impairment indicators in relation
to Mine Property assets. As a result of this assessment, no impairment indicators were noted for this financial year.
11. INTANGIBLE ASSETS
Infrastructure intangible asset
Gross value
Year ended 31 December 2021
Opening net book amount
Amortisation charge
Closing net book amount
56
2021
$’000
31 December
2020
$’000
2,015
2,519
Infrastructure
$’000
2,519
(504)
2,015
Stanmore Annual Report 2021Notes to the financial statements (CONTINUED)11. INTANGIBLE ASSETS (CONTINUED)
Period ended 31 December 2020
Opening net book amount
Amortisation charge
Closing net book amount
Infrastructure
$’000
2,771
(252)
2,519
(A) IMPAIRMENT OF INTANGIBLE ASSETS
At the end of each reporting period, the Consolidated Entity assesses whether there is any indication that individual assets
are impaired. Where impairment indicators exist, recoverable amount is determined, and impairment losses are recognised
in profit or loss where the asset’s carrying value exceeds its recoverable amount. Recoverable amount is the higher of an
asset’s fair value less costs to sell and value in use. For the purpose of assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset. Where it is not possible to estimate recoverable amount for an
individual asset, the Consolidated Entity estimates the recoverable amount of the CGU to which the asset belongs.
(B) INTANGIBLE ASSETS
The intangible asset relates to future rebates on the cost of coal railings based on an agreement with the below rail
infrastructure owner. Receipts of coal railing rebates are recognised in profit or loss as a credit against the cost incurred.
The estimated useful life of the asset is aligned with the term of the contractual agreement and is amortised on a
straight-line basis in accordance with the anticipated profile of benefits received.
12. OTHER ASSETS
Other current assets
Prepayments
BMC Deposit
Other non-current assets
Term deposits
Security bonds
Other
2021
$’000
31 December
2020
$’000
19,397
41,345
60,742
3,710
15,915
1,946
21,571
5,599
–
5,599
3,711
14,391
1,946
20,048
(A) RECOGNITION AND MEASUREMENT
Other current assets related to BMC deposits and operational costs paid in advance of the period to which the
Consolidated Entity will receive the benefit from those goods and services.
Non-current assets relate to cash security bond payments made to key operational suppliers, and term deposits with
the Consolidated Entity’s banking provider which are secured against the Consolidated Entity’s bank guarantee facilities.
The increase in the period is due to the Consolidated Entity making a deposit payment of US$30m (A$41.345m) in relation
to the recently announced acquisition of 80% of the BMC joint venture from BHP, as well as $12.845m of financing fees
prepaid in relation to the US$625m BMC financing loan.
57
Stanmore Annual Report 202113. TRADE AND OTHER PAYABLES
Current liabilities
Trade and other payables
Statutory liabilities
2021
$’000
31 December
2020
$’000
83,389
103
83,492
40,588
104
40,692
(A) RECOGNITION AND MEASUREMENT
Trade and other payables represent liabilities for goods and services provided to the Consolidated Entity prior to the
period end and which are unpaid. 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.
14. INTEREST BEARING LOANS AND BORROWINGS
Chattel Mortgage
Revolving facility
Short-term loan
Insurance premium funding
2021
31 December 2020
Current
$’000
Non-current
$’000
Total
$’000
Current
$’000
Non-current
$’000
Total
$’000
2,371
93,164
–
1,540
6,739
9,110
2,269
9,104
11,373
–
–
–
93,164
12,983
–
1,540
2,693
1,476
–
–
–
12,983
2,693
1,476
Total interest-bearing loans and borrowings
97,075
6,739 103,814
19,421
9,104
28,525
(A) FINANCING ARRANGEMENTS
The following table details the group’s financing facilities, available and used:
2021
$’000
31 December
2020
$’000
5,354
(3,588)
1,766
96,472
(93,164)
3,308
5,284
(3,588)
1,696
51,935
(12,983)
38,952
Facility A – Bank guarantee facility – NAB
Facility A – Total available facility
Facility A – Facility utilised
Available facility
Facility B – Revolving facility – GEAR
Facility B – Total available facility
Facility B – Facility utilised
Available facility
58
Stanmore Annual Report 2021Notes to the financial statements (CONTINUED)14. INTEREST BEARING LOANS AND BORROWINGS (CONTINUED)
(A) FINANCING ARRANGEMENTS (CONTINUED)
Facility C – Chattel mortgage – 6060
Facility C – Total loan amount
Facility C – Loan balance outstanding
Facility C – Total loan
Facility D – Short team loan
Facility D – Total loan amount
Facility D – Loan balance outstanding
Facility D – Total loan
Facility E – Insurance and premium funding
Facility E – Total funding amount
Facility E – Funding balance outstanding utilised
Facility E – Total funding
2021
$’000
31 December
2020
$’000
13,684
9,111
9,111
–
–
–
3,938
1,540
1,540
13,684
11,373
11,373
2,693
2,693
2,693
3,727
1,476
1,476
(B) RECOGNITION AND MEASUREMENT
Interest bearing liabilities are initially recognised at fair value, net of any transaction costs incurred. They are subsequently
measured at amortised cost using the effective interest method.
The Consolidated Entity has an arrangement for a $5m bank guarantee facility with its existing financial services
provider (Facility A).
The Consolidated Entity has also a finance facility with GEAR in respect to a US$70m secured loan facility (Facility B).
The key terms of the US$70m facility are:
• US$70m facility until 30 June 2022;
• upfront commitment fee of 2.0%;
•
•
interest rate on drawn funds of 8.0% per annum; and
interest rate on undrawn funds of 2.0% per annum.
As at 31 December 2021, US$67.6m (A$93.164m) has been drawn down under this facility (31 December 2020:
US$10m, A$12.983m).
In 2019, the Consolidated Entity entered into an equipment loan facility (Facility C) with Caterpillar Financial Australia
Limited to acquire a 600-tonne excavator from Hastings Deering (Australia) Limited. The term of the loan facility is five
years and the Consolidated Entity pays 4.55% p.a. fixed interest on the Chattel Mortgage facility to Caterpillar Financial
Australia Limited, who subsequently holds security over the excavator. The Chattel Mortgage facility is denominated in A$.
During the prior period, the Consolidated Entity entered into a short-term loan agreement for $2.693m (Facility D) with
a related party. The loan was undertaken under market conditions and was repaid in full on 4 January 2021.
The Consolidated Entity enters into short-term agreements to access financing for the annual insurance premiums.
The facility is fully repaid in during the relevant insurance periods (Facility E).
59
Stanmore Annual Report 202115. LEASE LIABILITY
Lease liabilities current
Lease liabilities non-current
Total lease liability
2021
$’000
31 December
2020
$’000
180
450
630
117
612
729
(A) RECOGNITION AND MEASUREMENT
The lease liability recognised relates to property leases recognised under AASB 16 Leases. Refer to Note 9 on page 52 for
the recognition and measurement policy for lease liabilities.
Reconciliation of movements
Opening balance
Depletions through settlement
Remeasurement against right-of-use asset
Unwinding discount
Closing balance
16. DERIVATIVE FINANCIAL INSTRUMENTS
Derivative financial instruments
Total derivative financial instruments
2021
$’000
31 December
2020
$’000
729
(172)
17
56
630
823
(29)
(94)
29
729
2021
$’000
6,121
6,121
31 December
2020
$’000
–
–
(A) RECOGNITION AND MEASUREMENT
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. The accounting for subsequent changes in fair value depends
on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.
17. PROVISIONS
Onerous contracts provision
Rehabilitation provision
Vendor Royalties – Contingent consideration
2021
31 December 2020
Current
$’000
Non-current
$’000
Total
$’000
Current
$’000
Non-current
$’000
Total
$’000
395
2,559
2,705
5,659
1,291
1,686
35,856
38,415
6,003
8,708
43,150 48,809
615
1,868
7,014
9,497
2,676
3,291
24,711
26,579
6,844
13,858
34,231
43,728
60
Stanmore Annual Report 2021Notes to the financial statements (CONTINUED)17. PROVISIONS (CONTINUED)
(A) RECONCILIATION OF MOVEMENTS
Movements in each class of current provision during the financial year, other than employee benefits, are set out below:
2021
Opening balance
Additions – current period disturbance
Adjustments through remeasurement
Depletions through settlement
Unwinding of discount via profit and loss
Closing balance
2020
Opening balance
Additions – current period disturbance
Adjustments through remeasurement
Depletions through settlement
Unwinding of discount via profit and loss
Closing balance
Onerous contracts
provision
$’000
Rehabilitation
provision
$’000
3,291
–
(1,191)
(654)
240
1,686
26,579
13,745
(602)
(1,650)
343
38,415
Vendor
Royalties
$’000
13,858
–
(2,154)
(4,122)
1,126
8,708
Onerous contracts
provision
$’000
Rehabilitation
provision
$’000
Vendor
Royalties
$’000
5,362
–
(1,893)
(476)
298
3,291
29,962
190
36
(3,851)
242
26,579
22,650
–
(9,665)
(284)
1,157
13,858
Total
$’000
43,728
13,745
(3,947)
(6,426)
1,709
48,809
Total
$’000
57,974
190
(11,522)
(4,611)
1,697
43,728
(B) ONEROUS CONTRACTS PROVISION
(i) Recognition and measurement
The Consolidated Entity assesses onerous contracts at each reporting date by evaluating conditions specific to each
contract and the 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. 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 ended 31 December 2021 a total of $654,000 of onerous contracts were settled through payment, with the
unwinding of the discount being $240,000 and $1.191m through consolidated statement of profit or loss for re-measurement.
(C) REHABILITATION PROVISION
(i) Recognition and measurement
The provision for rehabilitation closure costs relates to areas disturbed during the 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 am 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 disturbance, cost estimates and other key inputs. The amount
of provision relating to rehabilitation of areas caused by mining disturbance is capitalised against Mine Properties as
incurred, to the extent there is a future economic benefit, otherwise the re-measurement is recognised in the profit or loss.
Any unwinding discounting is recognised in the profit or loss.
61
Stanmore Annual Report 202117. PROVISIONS (CONTINUED)
(C) REHABILITATION PROVISION (CONTINUED)
(i) Recognition and measurement (continued)
The Consolidated Entity assesses rehabilitation liabilities at each reporting date as there are numerous factors that may
affect the ultimate liability payable. This includes 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 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 the year ended 31 December 2021, a decrease in the rehabilitation provision of $1.650m was recognised due to the
rehabilitation works completed at Isaac Plains Complex (31 December 2020: $3.851m). Clearing has continued in line with
mining operations of $13.745m. A corresponding asset is recognised in Mine Properties.
The discount rate used in the calculation of the provision at 31 December 2021 equalled 1.81% (31 December 2020: 0.98%).
(D) VENDOR ROYALTIES – CONTINGENT CONSIDERATION
(i) Recognition and measurement
During the business combination of Isaac Plains in 2015, AASB 3 Business Combination 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 Australia Dollar equivalent of 160 (adjusted for CPI)
and coal is produced and from either Isaac Plains or Isaac Plains East. Each royalty is capped at predetermined amount
for 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.
As part of the historical acquisition of the Isaac Downs mining rights, a royalty stream is payable to the vendors in the
event that benchmark Hard Coking Coal prices are above an Australia Dollar equivalent of 170 (adjusted for CPI) and
coal is produced from Isaac Downs mining area. The royalty is capped at a predetermined amount, and once the price
threshold and production requirements are met, the royalty is payable at $1 per product tonne (2018 dollars) to the vendor.
Royalties across all royalty streams were paid during the year ended 31 December 2021 to the vendors and, as a result,
the remaining cap is $17.2m.
(ii) Key judgements and estimates
The valuation above was performed using a discounted cash flow methodology which was consistent with that used in the
previous financial year. The method used is classed as a level 3 valuation under AASB 13. The following key unobservable
inputs are used in its calculation:
• Hard Coking Coal price curve based on a compilation of short-term (12 months) price from the Group’s coal marketing
agent M Resources Pty Ltd, and long-term estimates by Wood McKenzie;
• A$/US$ 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 Isaac Plains mine, the Isaac
Plains East mine (commenced July 2018), and the Isaac Downs mine.
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. Interactions between the sensitivities in the coking coal price and the US$/A$
foreign exchange rate. As the coal commodity is currently traded in US$, the interaction between the index price and the
foreign exchange rate could both magnify and mitigate each other depending on the timing and direction of movements
of both indexes.
62
Stanmore Annual Report 2021Notes to the financial statements (CONTINUED)17. PROVISIONS (CONTINUED)
(D) VENDOR ROYALTIES – CONTINGENT CONSIDERATION (CONTINUED)
A matrix is shown below of changes in the Hard Coking Coal index and the A$/US$ exchange rate. The numbers are
shown in millions and the highlighted number in blue is the current valuation:
e
v
r
u
c
x
e
d
n
I
X
F
+10%
+5%
Current
–5%
–10%
+10%
8.708
8.708
8.708
8.708
8.708
Hard Coking Coal Index curve
+5%
8.708
8.708
8.708
8.708
8.708
Current
7.289
8.708
8.708
8.708
8.708
Below shows the previous matrix as a percentage change in value:
e
v
r
u
c
x
e
d
n
I
X
F
+10%
+5%
Current
–5%
–10%
Hard Coking Coal Index curve
+10%
+5%
–
–
–
–
–
–
–
–
–
–
Current
–16.3%
–
–
–
–
–5%
3.334
7.289
8.708
8.708
8.708
–5%
–61.7%
–16.3%
–
–
–
–10%
3.334
3.334
6.763
8.708
8.708
–10%
–61.7%
–61.7%
–22.3%
–
–
(E) OTHER PROVISIONS
Provisions for legal claims, service warranties and make good obligation are recognised when the Consolidated Entity has
a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic resources
will be required to settle the obligation, and the amount can be reliably estimated.
18. PROVISION FOR EMPLOYEE BENEFITS
2021
31 December 2020
Current
$’000
Non-current
$’000
Total
$’000
Current
$’000
Non-current
$’000
Total
$’000
431
1,812
294
2,537
–
–
54
54
431
1,812
348
2,591
217
300
294
811
–
–
60
60
217
300
354
871
Provision for annual leave
Provision for STI bonus
Provision for long service leave
Total employee benefit obligations
(A) RECOGNITION AND MEASUREMENT
Refer to Note 3(d)(ii) for accounting policies.
63
Stanmore Annual Report 2021
19. DIVIDENDS AND FRANKING CREDITS
(A) DIVIDENDS
(i) Ordinary shares
Dividends provided for or paid during the year
(ii) Dividends not recognised at the end of the reporting period
No dividend proposed for 31 December 2021
(B) FRANKED CREDITS
Franking credits available for subsequent reporting
periods based on a tax rate of 30.0% (2021 – 30.0%)
20. EARNINGS PER SHARE
(A) BASIC EARNINGS PER SHARE
Basic earnings per share (cents)
6 months to
31 December
2020
$’000
–
2021
$’000
–
6 months to
31 December
2020
$’000
–
2021
$’000
–
Consolidated entity
6 months to
31 December
2020
$’000
2021
$’000
2,693
7,539
2021
$’000
3.9
31 December
2020
$’000
(6.0)
Basic earnings per share is calculated by dividing the profit attributable to the owners of Stanmore Resources Limited
by the weighted average number of ordinary shares outstanding during the financial period.
(B) DILUTED EARNINGS PER SHARE
Diluted earnings per share (cents)
6 months to
31 December
2020
$’000
(6.0)
2021
Cents
3.9
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 ordinary shares.
64
Stanmore Annual Report 2021Notes to the financial statements (CONTINUED)20. EARNINGS PER SHARE (CONTINUED)
(C) WEIGHTED AVERAGE NUMBER OF SHARES USED AS THE DENOMINATOR
Weighted average number of ordinary shares used as the
denominator in calculating basic earnings per share
Adjustments for calculation of diluted earnings per share:
Earnings per share
6 months to
31 December
2020
Number
2021
Number
270,417,000
270,417,000
Weighted average number of long-term incentive rights issued
145,000
145,000
Weighted average number of ordinary and potential ordinary shares
used as the denominator in calculating diluted earnings per share
270,562,000
270,562,000
21. EQUITY SECURITIES ISSUED
(A) SHARE CAPITAL
Ordinary shares
Fully paid
(i) Movements in ordinary shares:
Details
Opening balance 1 July 2020
Balance 31 December 2020
Opening balance 1 January 2021
Balance 31 December 2021
6 months to
31 December
2020
Shares
2021
Shares
270,417,381
270,417,381
270,417,381
270,417,381
2021
$’000
121,725
121,725
Number of shares
(thousands)
270,417
270,417
270,417
270,417
6 months to
31 December
2020
$’000
121,725
121,725
Total
$’000
121,725
121,725
121,725
121,725
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 Resources Limited does not have a limited amount of authorised capital.
The shares issued as part of the Employee shares issued are subject to a trading lock of three years, or until such time as
the employee resigns from the Consolidated Entity – these are referred to as deferred shares. As at 31 December 2021,
11,040 deferred shares were still subject to trading lock. Excluding 11,040 deferred shares, there are 270,404,133 tradable
shares. The difference between the original issued shares under the Employee shares relate to employees that have left
the Consolidated Entity and had the holding lock removed from their shares.
(ii) Options
As at 31 December 2021, no options were held by or issued to employees of the Consolidated Entity (31 December 2020: nil).
65
Stanmore Annual Report 202121. EQUITY SECURITIES ISSUED (CONTINUED)
(A) SHARE CAPITAL (CONTINUED)
(iii) Rights issue
All rights on issue at 31 December 2021 are shown below:
No. of
shares
108,556
36,342
Exercise
price
End of measurement
period
Conditions
Nil
Nil
30 June 2021
30 June 2022
Share price targets based on ASTR CAGR in FY20. If no vesting
occurs in FY21, then retest in FY22. See note 30 for further details.
Share price targets based on ASTR CAGR in FY21. If no vesting
occurs in FY22, then retest in FY23. See note 30 for further details.
(B) 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 oversees the Consolidated Entity’s capital by assessing the 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 period.
(C) 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.
22. FINANCIAL RISK MANAGEMENT
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 instruments.
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 to these risks on the results of the Consolidated Entity where such impacts may be material.
The overall objective of the Board is to set policies that seek to reduce risk as possible without unduly affecting the
Consolidated Entity’s competitiveness and flexibility. Further details regarding these policies are set out below.
66
Stanmore Annual Report 2021Notes to the financial statements (CONTINUED)22. FINANCIAL RISK MANAGEMENT (CONTINUED)
(A) CREDIT RISK
Credit risk is the risk that the other party to a financial instrument will fail to discharge their obligation, resulting in the
Consolidated Entity incurring a financial loss. This usually occurs when debtors fail to settle their obligations owing to
the Consolidated Entity. The Consolidated Entity’s objective is to minimise the risk of loss from credit risk exposure.
The Consolidated Entity’s maximum exposure to credit risk at the end of the reporting period, without taking into account
the value of any collateral or other security, in the event other parties fail to perform their obligations under financial
instruments in relation to each class of recognised financial asset at reporting date, is as follows:
Cash and cash equivalents
Term deposits
Trade and other receivables
Security bonds
Loans to related parties
Credit risk exposure
2021
$’000
62,859
3,710
52,408
15,915
28,950
2020
$’000
5,041
3,711
21,264
14,391
–
163,842
44,407
Credit risk is reviewed regularly by the Board and the Audit and Risk Management Committee.
The Consolidated Entity’s credit risk exposure is influenced by mainly by the individual characteristics of each customer.
Given the Consolidated Entity trades predominately with recognised, credit worthy third parties, the credit risk is
determined to be low. The group assessed the expected credit losses in relation to trade and other receivables in the
current and prior years to be immaterial and no low allowance has been recorded. Bank deposits are held with the National
Australia Bank Limited. The National Australia Bank has a long-term credit rating with rating agency S&P of AA-.
(B) 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 objective of managing liquidity risk is to ensure that the Consolidated Entity will always have sufficient
liquidity to meet its liabilities when they fall due, under both normal and stressed conditions. Liquidity risk is reviewed
regularly by the Board and the Audit and 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 decreased from
$34.070m at 31 December 2020 to $(13.592)m at 31 December 2021, primarily due to the presentation of the Group’s
finance facility being presented within current liabilities.
67
Stanmore Annual Report 202122. FINANCIAL RISK MANAGEMENT (CONTINUED)
(B) LIQUIDITY RISK (CONTINUED)
(i) Maturities of financial liabilities
The tables below analyse the group’s financial liabilities into relevant maturity groupings based on their contractual maturities:
31 December 2021
Financial liabilities
Trade payables
Other payables
Lease liabilities
Contingent consideration –
vendor royalties payable
Chattel mortgage
Revolving facility
Short term loan
Insurance premium funding
Derivative financial instruments
Carrying
amount
$’000
Contractual
cash flows
$’000
Less than
6 months
$’000
Between
6 and 12
months
$’000
Between 1
and 3 years
$’000
Over 3
years
$’000
90,446
90,446
90,446
107
630
8,708
9,110
93,164
–
1,540
6,121
107
737
10,890
9,839
93,164
–
1,599
6,121
107
89
2,001
1,365
–
–
1,599
6,121
–
–
91
1,230
1,365
93,164
–
–
–
–
–
386
4,890
5,461
–
–
–
–
–
–
171
2,769
1,647
–
–
–
–
Total financial liabilities
209,826
212,903
101,728
95,850
10,737
4,587
31 December 2020
Financial liabilities
Trade payables
Other payables
Lease liabilities
Contingent consideration –
vendor royalties payable
Chattel mortgage
Revolving facility
Short term loan
Insurance premium funding
Carrying
amount
$’000
Contractual
cash flows
$’000
Less than
6 months
$’000
Between
6 and 12
months
$’000
Between 1
and 3 years
$’000
Over 3
years
$’000
40,588
40,588
40,588
104
729
13,858
11,373
12,983
2,693
1,476
104
909
14,946
12,569
12,983
2,707
1,491
104
85
3,716
1,365
–
2,707
1,491
–
–
87
3,667
1,365
12,983
–
–
–
–
–
–
369
368
4,046
5,461
3,517
4,378
–
–
–
–
–
–
Total financial liabilities
83,804
86,297
50,056
18,102
9,876
8,263
Further information regarding commitments is included in Note 25 on page 76.
68
Stanmore Annual Report 2021Notes to the financial statements (CONTINUED)22. FINANCIAL RISK MANAGEMENT (CONTINUED)
(C) CURRENCY RISK
The Australian dollar (A$) is the functional currency of the Consolidated Entity and, as a result, currency exposure arises
from transactions and balances in currencies other than the A$.
The Consolidated Entity’s potential currency exposures comprise:
(i) Coal sales denominated in US$
Coal sales for export coal are denominated in US$. The Consolidated Entity is therefore exposed to volatility in the US$:A$
exchange rates.
The Consolidated Entity generally aligns all coking coal prices to relevant coking coal indexes, while thermal coal sales are
generally sold on the spot market via negotiation with relevant counter parties. The Consolidated Entity does not use any
derivative products to mitigate fluctuations in the relevant coal price indexes.
(ii) Revolving finance facility
On 2 July 2021, the Consolidated Entity signed an amendment to increase the available facility under its existing
finance facility with its parent entity, GEAR, from US$ 40m to US$70m, with US$67.6m (A$93.164m) drawn down as at
31 December 2021.
As noted above, the Consolidated Entity coal sales are denominated in US$, which provides a natural economic hedge in
relation to adverse foreign currency movements that affect the drawn down facility position, and the current policy is not
to hedge foreign exchange risk.
(iii) Expenses denominated in currencies other than A$
Currently, the exposure to such expenses is minimal, but it is noted that 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 Consolidated Entity 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 current or prior
financial years.
As at 31 December 2021, the effect on profit or loss as a result of changes in the foreign exchange rates would be:
31 December 2021
Cash and cash equivalents – US$
Trade receivables – US$
Revolving facility – US$
Derivative financial instruments – US$
Tax charge of 30%
After tax increase/(decrease)
Decrease in FX
rate by 5%
Increase in FX
rate by 5%
Carrying amount
$’000
Profit or loss
$’000
Profit or loss
$’000
51,028
35,444
(93,164)
(4,441)
–
–
2,551
1,772
(4,658)
(222)
167
(390)
(2,551)
(1,772)
4,658
222
(167)
390
69
Stanmore Annual Report 202122. FINANCIAL RISK MANAGEMENT (CONTINUED)
(C) CURRENCY RISK (CONTINUED)
31 December 2020
Cash and cash equivalents – US$
Trade receivables – US$
Revolving facility – US$
Tax charge of 30%
After tax increase/(decrease)
Decrease in FX
rate by 5%
Increase in FX
rate by 5%
Carrying amount
$’000
Profit or loss
$’000
Profit or loss
$’000
4,670
19,543
(12,984)
–
–
246
1,029
(683)
(177)
415
(222)
(931)
618
160
(375)
(D) MARKET RISK
Market risk arises from the use of interest bearing, tradable and foreign currency financial instruments. It is a 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 (price risk). The Consolidated Entity does not have
any material exposure to market risk.
(E) INTEREST RISK
Interest rate risk arises principally from cash and cash equivalents. The objective of interest rate risk management is to
manage and control interest 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:
31 December 2021
FINANCIAL ASSETS
Floating
interest
rate
$’000
Fixed
interest
rate
$’000
Non-
interest
bearing
$’000
Total
carrying
amount
$’000
Weighted
average effective
interest rate
%
Cash and cash equivalents
62,859
Restricted cash
Receivables
Security deposits
Total financial assets
FINANCIAL LIABILITIES
Trade and other payables
Other payables
Vendor royalties – contingent consideration
Derivative financial instruments
Lease liabilities
Chattel Mortgage
Revolving facility
Insurance premium fundings
Total financial liabilities
62,859
32,660
–
3,710
28,950
–
–
–
–
–
630
9,110
93,164
1,540
–
–
38,459
57,260
95,719
62,859
3,710
67,409
57,260
191,238
83,390
83,390
107
8,708
6,121
–
–
–
107
8,708
6,121
630
9,110
93,164
1,540
104,444
98,326
202,770
–
–
–
–
–
–
–
–
–
–
–
–
0.30%*
0.48%**
9%***
–
–
–
–
–
–
–
4.47%
8%
–
–
0.3% based on cash rate of 0.1% plus 0.2% margin per NAB
Same as period ended 31 December 2020: no change to rates on term deposits
*
**
*** MetRes utilised interest rate
70
Stanmore Annual Report 2021Notes to the financial statements (CONTINUED)22. FINANCIAL RISK MANAGEMENT (CONTINUED)
(E) INTEREST RISK (CONTINUED)
31 December 2020
FINANCIAL ASSETS
Cash and cash equivalents
Restricted cash
Receivables
Security deposits
Total financial assets
FINANCIAL LIABILITIES
Trade payables
Chattel Mortgage
Vendor royalties – contingent consideration
Lease liabilities
Other payables
Revolving facility
Short term loan facility
Insurance premium fundings
Total financial liabilities
Floating
interest
rate
$’000
Fixed
interest
rate
$’000
Non-
interest
bearing
$’000
Total
carrying
amount
$’000
Weighted
average effective
interest rate
%
5,041
–
–
–
–
3,711
–
–
–
–
21,264
14,391
5,041
3,711
21,264
14,391
5,041
3,711
35,655
44,407
–
–
–
–
–
–
–
–
–
–
40,588
40,588
11,373
–
–
–
12,983
2,693
1,476
–
13,858
729
104
–
–
–
11,373
13,858
729
104
12,983
2,693
1,476
28,525
55,279
83,804
0.30%
0.48%
–
–
–
–
4.55%
–
–
–
8%
5.5%
2.3%
–
The Consolidated Entity has performed a sensitivity analysis relating to its exposure to interest rate risk. This sensitivity
demonstrates the effect on the current period’s results and equity which could result from a change in these risks.
71
Stanmore Annual Report 202122. FINANCIAL RISK MANAGEMENT (CONTINUED)
(E) INTEREST RISK (CONTINUED)
As at 31 December 2021, the effect on profit and equity as a result of changes in the interest rate would be as follows:
31 December 2021
Cash and cash equivalents
Tax charge of 30%
After tax increase/(decrease)
31 December 2020
Cash and cash equivalents
Tax charge of 30%
After tax increase/(decrease)
Carrying
amount
$’000
62,859
–
–
Carrying
amount
$’000
5,041
–
–
Increase in interest rate by 1%
Decrease in interest rate by 1%
Profit or loss
$’000
Equity
$’000
Profit or loss
$’000
629
(189)
440
629
(189)
440
(629)
189
(440)
Equity
$’000
(629)
189
(440)
Increase in interest rate by 1%
Decrease in interest rate by 1%
Profit or loss
$’000
Equity
$’000
Profit or loss
$’000
50
(15)
35
50
(15)
35
(50)
15
(35)
Equity
$’000
(50)
15
(35)
(F) FAIR VALUES
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for
disclosure purposes. AASB 9 Financial Instruments: Disclosure which requires disclosure of fair value measurements
by level of the following fair value measurement hierarchy:
a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
b) inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly
(as prices) or indirectly (derived from prices) (level 2); and
c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).
The Consolidated Entity completed a level 3 valuation on contingent consideration (Note 17(d)). The carrying value of a
significant portion of all financial assets and financial liabilities approximate the fair values due to their short-term nature.
There were no transfers between the levels during the period.
31 December 2021
Vendor royalties contingent consideration held at fair value through profit or loss
Derivative financial instruments held at fair value through profit or loss
Total financial liabilities
31 December 2020
Vendor royalties contingent consideration held at fair value through profit or loss
Total financial liabilities
Level 1
$’000
Level 2
$’000
Level 3
$’000
–
–
–
–
8,708
6,121
6,121
–
8,708
Level 1
$’000
Level 2
$’000
–
–
–
–
Level 3
$’000
13,858
13,858
There were no other financial assets or liabilities carried at fair value as at 31 December 2021. The carrying amount of all
other financial assets and financial liabilities measured at amortised costs approximates their fair value.
72
Stanmore Annual Report 2021Notes to the financial statements (CONTINUED)23. INTERESTS IN OTHER ENTITIES
(A) MATERIAL SUBSIDIARIES
The group’s principal subsidiaries at 31 December 2021 are set out below. Unless otherwise stated, they have share capital
consisting solely of ordinary shares that are held directly by the group, and the proportion of ownership interests held equals
the voting rights held by the group. The country of incorporation or registration is also their principal place of business.
Place of business/
country of
incorporation
Ownership interest
held by the group
2021
%
2020
%
Name of entity
Principal activities
Comet Coal & Coke Pty Limited
Coal exploration
Belview Coal Pty Ltd
Mackenzie Coal Pty Limited
Stanmore Coal Custodians 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
Coal exploration
Trustee of Stanmore
Employee Share Trust
Coal exploration
Coal exploration
Coal exploration
Coal exploration
Coal exploration
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Stanmore Wotonga Pty Ltd
Coal exploration and mining
Australia
Stanmore IP Coal Pty Ltd
Coal mining
Australia
Stanmore IP South Pty Ltd
Coal exploration and mining
Australia
Stanmore Bowen Coal pty Ltd
Coal exploration and mining
Australia
Isaac Plains Coal Management Pty Ltd
Coal exploration and mining
Australia
Isaac Plains Sales & Marketing Pty Ltd
Coal exploration and mining
Australia
Stanmore SMC Holdings Pty Ltd
Coal exploration and mining
Australia
Stanmore Green Pty Ltd
Renewable energy
Australia
*
Previously Bowen River Coal Pty Ltd
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
–
–
(B) INTERESTS IN JOINT ARRANGEMENTS
Set out below are the significant farm in arrangements of the group as at 31 December 2021. The proportion of ownership
interest is the same as the proportion of voting rights held.
Name of entity
MetRes Pty Ltd
Clifford Joint Venture
Lilyvale Joint Venture
Mackenzie Joint Venture
% ownership
interest
Place of business/
country of incorporation
2021
%
2020
%
Nature of relationship
Australia
Australia
Australia
Australia
50
60
85
95
–
60
85
95
Joint venture
Farm in arrangement
Farm in arrangement
Farm in arrangement
73
Stanmore Annual Report 202123. INTERESTS IN OTHER ENTITIES (CONTINUED)
(B) INTERESTS IN JOINT ARRANGEMENTS (CONTINUED)
During the period, the group purchased 50% of the issued shares in an incorporated joint venture, MetRes Pty Ltd (the JV),
totalling $2.408m as at 31 December 2021.
MetRes Pty Ltd is deemed to be a joint venture under relevant accounting standards, and will be accounted for by using
the equity method.
24. INTERESTS IN JOINT ARRANGEMENTS
The group has a 50% interest in MetRes Pty Limited, a joint venture between Stanmore Resources Limited and
M Resources to acquire the Millennium and Mavis Downs Mine. The group’s interest in MetRes Pty Limited is accounted
for using the equity method in the consolidated financial statements. Summarised financial information of the joint
venture, based on its IFRS financial statements, and reconciliation with the carrying amount of the investment in the
consolidated financial statements are set out below:
Summarised balance sheet
Current assets
Other current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity
The position above is inclusive of the following:
• Cash and cash equivalents – $8,718k
• Current financial liabilities excluding accounts payable – $41,235k
• Non-Current financial liabilities excluding accounts payable and provision – $2,502k
Group’s share in equity – 50%
Goodwill
Carrying amount
Summarised statement of comprehensive income
Revenue from contracts with customers
Cost of sales
Depreciation and amortisation
Interest expense
74
2021
$’000
23,484
11,245
36,876
(65,192)
(15,827)
(9,414)
2021
$’000
–
–
–
2021
$’000
8,103
(21,040)
(5,117)
(1,563)
Stanmore Annual Report 2021Notes to the financial statements (CONTINUED)
24. INTERESTS IN JOINT ARRANGEMENTS (CONTINUED)
Profit/(Loss) before tax
Income tax expense
Income tax expense
Loss for the year
Total comprehensive income for the year
Group’s share of profit/(loss) for the year
2021
$’000
(19,617)
(5,885)
(13,732)
(13,732)
(2,409)
The Group’s full share of losses is $6.865m for the period to 31 December 2021, of which $4.456m is unrecognised as the
losses that exceed the Group’s investment in MetRes Pty Ltd.
The joint venture had no other contingent liabilities or commitments as at 31 December 2021 for which the Group is
jointly liable.
(A) RECOGNITION AND MEASUREMENT
A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights
to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which
exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.
The group’s investment in its joint venture is accounted for using the equity method. Under the equity method, the
investment in a joint venture is initially recognised at cost. The carrying amount of the investment is adjusted to recognise
changes in the group’s share of net assets of the joint venture since the acquisition date. Goodwill relating to the joint
venture is included in the carrying amount of the investment and is not tested for impairment separately.
The statement of profit or loss reflects the group’s share of the results of operations of the joint venture. Any change in
OCI of those investees is presented as part of the Group’s OCI. In addition, when there has been a change recognised
directly in the equity of the joint venture, the Group recognises its share of any changes, when applicable, in the statement
of changes in equity. Unrealised gains and losses resulting from transactions between the group and the joint venture are
eliminated to the extent of the interest in the joint venture.
The aggregate of the group’s share of profit or loss of a joint venture is shown on the face of the statement of profit or
loss outside operating profit and represents profit or loss after tax and non-controlling interests in the subsidiaries of the
joint venture. If The Group’s share of losses of a joint venture equals or exceeds its interest in the joint venture, the Group
discontinues recognising its share of further losses.
After the entity’s interest is reduced to zero, additional losses are provided for, and a liability is recognised, only to the
extent that the entity has incurred legal or constructive obligations or made payments on behalf of the joint venture.
If the joint venture subsequently reports profits, the Group will resume recognising its share of those profits only after
its share of the profits equals the share of losses not recognised.
The financial statements of the joint venture are prepared for the same reporting period as the group. When necessary,
adjustments are made to bring the accounting policies in line with those of the group.
After application of the equity method, the group determines whether it is necessary to recognise an impairment loss on
its investment in its joint venture. At each reporting date, the group determines whether there is objective evidence that
the investment in the joint venture is impaired. If there is such evidence, the group calculates the amount of impairment
as the difference between the recoverable amount of the associate or joint venture and its carrying value, and then
recognises the loss within ‘Share of profit of a joint venture’ in the statement of profit or loss.
Upon loss of significant influence over the joint control over the joint venture, the group measures and recognises any
retained investment at its fair value. Any difference between the carrying amount of the joint venture upon loss of joint
control and the fair value of the retained investment and proceeds from disposal is recognised in profit or loss.
75
Stanmore Annual Report 202125. COMMITMENTS
(A) EXPLORATION AND MINING
The commitments to be undertaken are as follows:
Payable
Within one year
Later than one year but not later than five years
Later than five years
6 months to
31 December
2020
$’000
818
1,994
395
3,207
2021
$’000
244
788
12
1,044
The Consolidated Entity has certain obligations to spend minimum amounts on exploration and mining tenement areas.
These obligations are expected to be fulfilled in the normal course of operations.
(B) LOW VALUE LEASES
The commitments to be undertaken are as follows:
Payable
Within one year
Later than one year but not later than five years
(C) CAPITAL COMMITMENTS
The commitments to be undertaken are as follows:
Payable
Within one year
6 months to
31 December
2020
$’000
2021
$’000
10
6
16
10
6
16
6 months to
31 December
2020
$’000
2021
$’000
8,213
7,257
The Consolidated Entity has non-cancellable, open purchase orders for committed capital works.
(i) Land acquisitions
On 7 April 2011, the Consolidated Entity announced that it had completed an agreement for the right to purchase The
Range thermal coal project in the Surat Basin. Variations to this agreement have been negotiated such that final payment
and transfer of title is due 30 days after the Mining Lease is granted by the Department of Natural Resources, Mines and
Energy, or an earlier date by agreement. The final payment is indexed to land valuation movements with reference to
comparable properties, with a reference price of $3.7m based at 2014. The agreement gives the group access to undertake
evaluation and development work as the project moves through the approval process and, ultimately. development and
production. The terms of the acquisition are within normal market expectations.
76
Stanmore Annual Report 2021Notes to the financial statements (CONTINUED)25. COMMITMENTS (CONTINUED)
(C) CAPITAL COMMITMENTS (CONTINUED)
(ii) Isaac Plains Complex royalty
On 26 November 2015, the Consolidated Entity established a finance facility with Taurus to fund the acquisition of and
re-start of mining at the Isaac Plains Complex and agreed to a 0.8% royalty payable on:
• the saleable value of all product coal owned by the group at that time and processed through the Isaac Plains
infrastructure; and
• any processing or handling fees arising from the treatment of third-party coal processed through the Isaac
Plains infrastructure.
The royalty payable increased to 1% during 2017 and this finance facility has since been cancelled (see Note 14 on
page 58), but the royalty streams stay on foot and associated costs are included within cost of sales as private royalties
(Note 3 on page 42).
(iii) Isaac Plains east landholder agreement
On 20 July 2017, the Consolidated Entity completed a land holder compensation agreement for access to MLA 70016, MLA
70017, MLA 70018, and MLA 70019. The compensation agreement includes the following contingent consideration item:
• a royalty of $0.60/product tonne sold (increasing by 2.5% p.a.) from July 2018 when the published Hard Coking Coal
Price for any quarter is greater than US$200/t (increasing by 2.5% p.a.) from July 2017.
26. CONTINGENT LIABILITIES AND CONTINGENT ASSETS
(A) CONTINGENT LIABILITIES
Utility providers
Other
2021
$’000
3,377
211
3,588
31 December
2020
$’000
3,377
211
3,588
(B) CONTINGENT ASSETS
The group had no contingent assets at 31 December 2021 (2020: nil).
27. EVENTS OCCURRING AFTER THE REPORTING PERIOD
(A) INTENDED ACQUISITION OF 80% OF BMC JOINT VENTURE AND ASSOCIATED DEBT FACILITY
As announced on 8 November 2021, Stanmore Resources Limited has executed a definitive agreement with BHP to
acquire BHP’s 80% interest in the BMC (BHP Mitsui Coal Pty Ltd) joint venture. Consideration for the acquisition comprises
of US$1.2bn cash with a potential follow-up payment of up to US$150m after two years, the value of which is dependent
on the prevailing coal price exceeding certain targets.
Completion of the acquisition is anticipated to occur during the second quarter of 2022, subject to certain conditions precedent.
Stanmore Resources Limited intends to fund the acquisition with a combination of debt and equity, and announced on
7 January 2022 that Stanmore have signed a definitive agreement, through its wholly owned subsidiary Stanmore SMC
Holdings Pty Ltd, with certain financiers in respect of a US$625m debt facility.
The debt facility is an amortising loan note facility which matures five years from first utilisation, and is secured against all
the assets of Stanmore SMC Holdings and its 100% subsidiary Dampier Coal (the “Borrower Group”). The security includes
Dampier Coal’s 80% shareholding in BMC, however, the security does not extend to BMC’s assets and operations and there
is no recourse to Stanmore Resources Limited’s existing assets and operations, all of which sit outside the Borrower Group.
77
Stanmore Annual Report 202127. EVENTS OCCURRING AFTER THE REPORTING PERIOD (CONTINUED)
(B) ISAAC DOWNS MINING SERVICE AGREEMENT
As announced on 19 January 2022, ESPA Pacific were awarded the Isaac Downs Open-cut mining services contract,
with a current value of $564m.
Awarding of this contract marks a major milestone in moving to full production at the Isaac Downs Mine, following
completion of all regulatory approvals in the third quarter of 2021.
In conjunction of the awarding of this contract, Stanmore Resources Limited will transition to an owner-operator model
for the Coal Handling and Preparation Plant (CHPP).
(C) EXTENSION OF GEAR LOAN FACILITY REPAYMENT TERMS
As announced on 16 February 2022, the group have extended the GEAR facility maturity date by another year to 30 June
2023. All other terms of the agreement remain unchanged as a result of the extension.
28. KEY MANAGEMENT PERSONNEL
Total key management personnel compensation:
Total key management personnel compensation
Short term employee benefits
Post employment benefits
Termination benefits
Long term benefits
6 months to
31 December
2020
$
2021
$
3,128,795
1,609,933
126,672
–
828,688
79,988
286,404
–
4,084,155
1,976,325
29. REMUNERATION OF AUDITORS
During the year the following fees were paid or payable for services provided by the auditor of Stanmore Resources
Limited, its related practices and non-related audit firms:
Statutory audit services
Amounts paid/payable to Ernst & Young for audit or review of the
financial statements for the entity or any entity in the group
Amounts paid/payable to BDO Audit Pty Ltd for audit or review of
the financial statements for the entity or any entity in the group
6 months to
31 December
2020
$
2021
$
122,451
105,000
–
93,069
122,451
198,069
78
Stanmore Annual Report 2021Notes to the financial statements (CONTINUED)29. REMUNERATION OF AUDITORS (CONTINUED)
Other assurance services required to be performed by the group’s auditor
Amounts paid/payable to Earnst & Young for other assurance
services for the entity or any entity in the group
Taxation services
Amounts paid/payable to related entities of Ernst & Young for non-audit
taxation services performed for the entity or any entity in the group
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 group
Other services
Amounts paid/payable to related entities of Ernst & Young for other
non-audit services performed for the entity or any entity in the group
Amounts paid/payable to related entities of BDO Audit Pty Ltd for other
non-audit services performed for the entity or any entity in the group
6 months to
31 December
2020
$
–
–
2021
$
5,000
5,000
6 months to
31 December
2020
$
2021
$
146,825
24,910
–
57,276
146,825
82,186
6 months to
31 December
2020
$
2021
$
387,469
13,940
–
14,300
387,469
28,240
79
Stanmore Annual Report 202130. PARENT ENTITY FINANCIAL 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
disclosure in regard to the parent entity, Stanmore Resources Limited. The consolidated financial statements incorporate
the assets, liabilities and results of the parent entity in accordance with the Consolidated Entity’s accounting policy.
The financial information for the parent entity has been prepared on the same basis as the consolidated financial
statements, except as follows:
•
investments in subsidiaries, associates and joint ventures are accounted for at cost.
(A) SUMMARY FINANCIAL INFORMATION
The individual financial statements for the parent entity, Stanmore Resources Limited, show the following aggregate amounts:
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Issued capital
Share-based reserve
Retained earnings
Total shareholders’ equity
Profit/(loss) for the year/period
Total comprehensive income/(loss)
2021
$’000
6,351
88,833
95,184
10,321
7,400
17,721
121,747
2,337
(38,176)
85,908
(8,446)
(8,446)
31 December
2020
$’000
7,082
84,388
91,470
986
21,977
22,963
121,725
2,323
(55,541)
68,507
6,849
6,849
(B) GUARANTEES
Under the terms of the Secured Financing Facility entered into in November 2015, Stanmore Resources 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.
(C) CONTINGENT LIABILITIES AND CONTINGENT ASSETS
The parent entity did not have any contingent liabilities or contingent assets as at 31 December 2021 or 31 December 2020.
(D) CAPITAL COMMITMENTS
The parent entity did not have any capital commitments as at 31 December 2021 or 31 December 2020.
80
Stanmore Annual Report 2021Notes to the financial statements (CONTINUED)31. SEGMENT INFORMATION
The Consolidated Entity has identified is 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 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 Isaac Downs bulk sample pit),
and the second being all other exploration and development coal assets and corporate.
(A) DESCRIPTION OF SEGMENTS
(i) Accounting policies adopted
Unless otherwise stated, all amount 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.
(ii) 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.
(iii) 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.
(iv) Unallocated items
Coal trading, corporate, marketing and infrastructure functions which are managed on a group basis are not allocated to
an operating segment.
The Consolidated Entity’s income taxes are managed on a group basis and are not allocated to reportable segments.
(v) 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 33% of revenue. The next most significant customer accounts for 16% of revenue.
(B) SEGMENT RESULTS
The segment information for the reportable segments for the year ended 31 December 2021 is as follows:
Isaac Plains
Complex
$’000
Exploration and
Development
$’000
Unallocated
operations
$’000
Adjustments
and eliminations
$’000
31 December 2021
Total segment revenue
Segment operating result
Depreciation and amortisation
Net finance expense
Income tax expense
Net profit/(loss) after tax
Total segment assets
Total segment liabilities
382,948
60,477
(25,726)
(15,622)
–
19,129
360,944
268,043
–
–
–
–
–
–
43,223
–
–
(2,624)
(1,035)
365
(5,422)
(8,716)
57,766
24,826
Total
%
382,948
57,853
(26,761)
(15,257)
(5,422)
10,413
–
–
–
–
–
–
(16,856)
445,077
(10,678)
282,191
81
Stanmore Annual Report 202131. SEGMENT INFORMATION (CONTINUED)
(B) SEGMENT RESULTS (CONTINUED)
The segment information provided to the CODM for the reportable segments for the period ended 31 December 2020 is
as follows:
Isaac Plains
Complex
$’000
Exploration and
Development
$’000
Unallocated
operations
$’000
Adjustments
and eliminations
$’000
31 December 2020
Total segment revenue
Segment operating result
Depreciation and amortisation
Net finance expense
Income tax expense
Net profit/(loss) after tax
Total segment assets
Total segment liabilities
136,309
1,684
(14,682)
(5,411)
–
(18,409)
237,298
121,409
–
–
–
–
–
–
41,141
–
–
(3,545)
–
–
5,834
2,289
15,630
9,710
Total
%
136,309
(1,861)
(14,682)
(5,411)
5,834
(16,120)
700
294,769
11,212
142,331
32. SHARE-BASED PAYMENTS
The following share-based payment arrangements existed at 31 December 2021. Share-based payments to Directors,
executives and employees.
(A) SHARES
During the year ended 31 December 2021, there were no shares granted to eligible employees (31 December 2020: nil).
(B) RIGHTS
The amount recognised as share-based payment expense in the consolidated statement of profit or loss and other
comprehensive income is as follows:
Share-based payments
31 December
2021
$’000
31 December
2020
$’000
14
(35)
These amounts have been recognised in equity in the consolidated statement of financial position as follows:
Shared based payment reserve
31 December
2021
$’000
31 December
2020
$’000
14
25
(C) OPTIONS
During the year ended 31 December 2021, no options granted to eligible employees as share-based payments
(31 December 2020: nil).
82
Stanmore Annual Report 2021Notes to the financial statements (CONTINUED)32. SHARE-BASED PAYMENTS (CONTINUED)
(D) RECOGNITION AND MEASUREMENT
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 of the instruments. In determining fair value, no account
is taken of any performance conditions other than those related to the share price of Stanmore Resources 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 targets.
During the year ended 31 December 2021, no rights were granted to employees as long-term incentive. The terms and
conditions of previous grants are as follows:
Grant
date
Measurement
date
Exercise
price
Balance at
start of the
period
Granted
during the
period
Exercised
during the
period
Forfeited
during the
period
Balance at
end of the
period
05/11/2018
30/06/2021
24/10/2019
30/06/2022
–
–
219,066
89,905
308,971
–
–
–
–
–
–
(110,510)
108,556
(53,563)
36,342
(164,073)
144,898
(i) Performance rights pricing model
The fair value of performance rights granted under the previous LTI program was based on the Absolute Shareholder Total
Return (ASTR), measured using a Monte Carlo Simulation model incorporating the probability of the performance hurdles
being met. The following table lists the inputs to the models used for the periods ended 30 June 2020 and 30 June 2019,
prior to the modification following change of control:
Performance hurdle
Grant date
Vesting date
Fair value at grant date
Share price
Exercise price
Dividend yield
Tranche 1
(issued in FY19)
ASTR
5 November 2018
31 July 2021
$0.45
$0.94
$0.00
0%
Tranche 2
(issued in FY20)
ASTR
24 October 2019
31 July 2022
$0.37
$1.13
$0.00
4.47%
Expected measurement period
30 June 2021 – 30 June 2022
30 June 2022 – 30 June 2023
Risk-free interest rate
Expected volatility
2.09%
60%
0.73%
50%
(ii) Key estimates
The Consolidated Entity uses estimates to determine the fair value of equity instruments issued to Directors, executives
and employees. The estimates include volatility, risk free rates and consideration of satisfaction of performance criteria
for recipients of equity instruments.
83
Stanmore Annual Report 202133. 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 is Stanmore Resources Limited, a company incorporated in Australia. The ultimate parent company
of the Consolidated Entity is PT Sinarindo Gerbangmas.
(B) SUBSIDIARIES
Interests in subsidiaries are set out in Note 23.
(C) KEY MANAGEMENT PERSONNEL COMPENSATION
Disclosures relating to KMP are set out in Note 28.
(D) TRANSACTIONS WITH OTHER RELATED PARTIES
During the year, the Consolidated Entity has negotiated an increase to the financing agreements with its parent entity,
GEAR. These negotiations were deemed to be on market terms, and further details are shown within Note 14.
M Resources Pty Ltd continues to exclusively manage Stanmore Resources Limited’s global sales contract and
relationships. M Resources Pty Ltd is also a minority shareholder of the group, and fees totalling $5.454m were incurred
for the year ended 31 December 2021 (31 December 2020: $1.227m) for services provided on market terms.
During the year, the Company provided MetRes Pty Ltd, a 50% owned Joint Venture, with a secured, total finance facility
of up to A$50m. See Note 7 for further information.
34. DEED OF CROSS GUARANTEE
Stanmore Resources Limited and its wholly owned subsidiaries (as shown in note 23) with the exception of Stanmore SMC
Holdings Pty Ltd, are parties to a deed of cross guarantee under which each company guarantees the debts of the others.
By entering into the deed, the wholly-owned entities have been relieved from the requirement to prepare a financial report
and directors’ report under ASIC Corporations (Wholly-owned Companies) Instrument 2016/785.
(A) CONSOLIDATED STATEMENT OF PROFIT OR LOSS, STATEMENT OF COMPREHENSIVE INCOME AND
SUMMARY OF MOVEMENTS IN CONSOLIDATED RETAINED EARNINGS
The above companies represent a ‘closed group’ for the purposes of the instrument, and as there are no other parties
to the deed of cross guarantee that are controlled by Stanmore Resources Limited, they also represent the ‘extended
closed group’.
Set out below is a consolidated statement of profit or loss, a consolidated statement of comprehensive income and a
summary of movements in consolidated retained earnings for the year ended 31 December 2021 of the closed group
consisting of Stanmore Resources Limited and its wholly owned subsidiaries, excluding Stanmore SMC Holdings Pty Ltd.
84
Stanmore Annual Report 2021Notes to the financial statements (CONTINUED)34. DEED OF CROSS GUARANTEE (CONTINUED)
(A) CONSOLIDATED STATEMENT OF PROFIT OR LOSS, STATEMENT OF COMPREHENSIVE INCOME AND
SUMMARY OF MOVEMENTS IN CONSOLIDATED RETAINED EARNINGS (CONTINUED)
Consolidated statement of comprehensive income
Revenue from continuing operations
Other income
Cost of sales of goods
Other expenses from ordinary activities
Employee benefits expense
Depreciation and amortisation expense
Finance costs
Share of net profits of associates and joint ventures accounted for using the equity method
Profit before income tax
Income tax expense
Profit for the period
Other comprehensive income
Other comprehensive income for the period, net of tax
Total comprehensive income for the period
Summary of movements in consolidated retained earnings
Retained earnings at the beginning of the financial year
Profit for the period
Retained earnings at the end of the financial year
2021
$’000
382,948
4,623
(312,540)
(14,666)
(6,784)
(26,761)
(7,604)
(2,409)
16,807
(5,714)
11,093
–
11,093
28,389
11,093
39,482
85
Stanmore Annual Report 2021
2021
$’000
62,859
52,409
11,748
47,897
174,913
15,000
88,758
43,223
21,849
21,572
64,426
2,015
256,843
431,756
34. DEED OF CROSS GUARANTEE (CONTINUED)
(B) CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Set out below is a consolidated statement of financial position as at 31 December 2021 of the closed group.
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets at amortised cost
Total current assets
Non-current assets
Receivables
Capitalised development costs
Exploration and evaluation
Mine properties
Other financial assets
Property, plant and equipment
Intangible assets
Total-non-current assets
Total assets
86
Stanmore Annual Report 2021Notes to the financial statements (CONTINUED)
34. DEED OF CROSS GUARANTEE (CONTINUED)
(B) CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)
Current liabilities
Trade and other payables
Borrowings
Lease liabilities
Derivative financial instruments
Current tax liabilities
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Total equity
2021
$’000
75,137
97,076
180
6,121
6,285
6,407
191,206
6,739
450
26,590
43,205
76,984
268,190
163,566
121,747
2,337
39,482
163,566
87
Stanmore Annual Report 2021
Directors’ declaration
The Directors’ of the Consolidated Entity declare that:
(a) The consolidated financial statements, comprising the consolidated statement of profit or loss, consolidated statement
of comprehensive income, consolidated balance sheet, consolidated statement of changes in equity and consolidated
statement of cash flows, and accompanying notes are in accordance with the Corporations Act 2001, and:
(i) comply with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements, and
(ii) give a true and fair view of the consolidated entity’s financial position as at 31 December 2021 and of its
performance for the financial year ended on that date, and
(b) The Consolidated Entity has included in the notes to the Financial Statements an explicit and unreserved statement
of compliance with International Financial Reporting Standards;
(c) In the Directors’ opinion, there are reasonable grounds to believe that the Consolidate Entity will be able to pay its
debts as and when they become due and payable;
(d) The remuneration disclosures included on pages 20 to 28 of the Directors’ report (as part of audited Remuneration
Report) for the year ended 31 December 2021 comply with section 300A of the Corporations Act 2001; and
(e) The Directors have been given the declarations by the CEO and CFO required by section 295A of the Corporations
Act 2001.
This declaration is made in accordance with a resolution of the Directors.
Mr Marcelo Matos
Director
Brisbane
16/02/2022
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Stanmore Annual Report 2021
Independent auditor’s report
Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
Independent Auditor’s Report to the Members of Stanmore Resources
Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Stanmore Resources Limited (the Company) and its
subsidiaries (collectively the Group), which comprises the consolidated statement of financial position
as at 31 December 2021, the consolidated statement of profit or loss and other comprehensive
income for the year ended 31 December 2021, consolidated statement of changes in equity and
consolidated statement of cash flows for the year then ended, notes to the financial statements,
including a summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
a. Giving a true and fair view of the consolidated financial position of the Group as at 31 December
2021 and of its consolidated financial performance for the year ended on that date; and
b. 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 auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the
financial report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
89
Stanmore Annual Report 2021
Independent auditor’s report
(CONTINUED)
Vendor Royalty – Contingent Consideration Liability
Why significant
How our audit addressed the key audit matter
The Group recognised contingent consideration
at 31 December 2021 of $8.7 million, relating
predominantly to its acquisition of Isaac Downs
in July 2018.
As detailed in note 17 to the financial report,
the contingent consideration is a production-
based royalty, payable when benchmark hard
coking coal prices exceed a threshold coal price.
The carrying amount of the royalty payable is
estimated based on forecast hard coking coal
prices, foreign exchange rates and production
volumes, capped at a maximum amount payable
as determined within the Royalty Deed.
The contingent consideration is a key audit
matter due to: the size of the liability; the
judgement involved in forecasting hard coking
coal prices, foreign exchange rates and
production volumes; and the profit and loss
volatility that can result from movements in
these key input assumptions.
Our audit procedures included the following:
• Assessed the methodology used to
recognise and measure the liability for
consistency with Australian Accounting
Standards and the requirements of the
Royalty Deed.
• Tested the mathematical accuracy of the
model used to calculate the liability.
• Compared the production volumes used in
the model to the Board approved budget and
life-of-mine model for the Isaac Downs mine.
•
In conjunction with our valuation specialists,
evaluated the forecast coal prices and
foreign exchange rates used to measure the
liability with reference to market prices
(where available) and broker consensus
data.
• Assessed the adequacy of the disclosures
made in the financial statements, including
disclosure of significant judgements and
estimates adopted by management.
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the
information included in the Company’s 2021 annual report other than the financial report and our
auditor’s report thereon. We obtained the directors’ report and the shareholder information that is to
be included in the annual report, prior to the date of this auditor’s report, and we expect to obtain the
remaining sections of the annual report after the date of this auditor’s report.
Our opinion on the financial report does not cover the other information and we do not and will not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report
and our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information obtained prior to the date of this
auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
90
Stanmore Annual Report 2021
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
►
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
► Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
► Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
► Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Group to
cease to continue as a going concern.
► Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
91
Stanmore Annual Report 2021
Independent auditor’s report
(CONTINUED)
► Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 20 to 28 of the directors’ report for the
year ended 31 December 2021.
In our opinion, the Remuneration Report of Stanmore Resources Limited for the year ended 31
December 2021, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Ernst & Young
Tom du Preez
Partner
Brisbane
16 February 2022
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
92
Stanmore Annual Report 2021A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation ► Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated to the directors, we determine those matters that were of most significance in the audit of the financial report of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the audit of the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 20 to 28 of the directors’ report for the year ended 31 December 2021. In our opinion, the Remuneration Report of Stanmore Resources Limited for the year ended 31 December 2021, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Ernst & Young Tom du Preez Partner Brisbane 16 February 2022
Shareholder information
A. DISTRIBUTION OF EQUITY SECURITIES
The number of Ordinary Shares by size of holding as at 8 April 2022 are:
Range
100,001 and over
10,001 – 100,000
5,001 – 10,000
1,001 – 5,000
1 – 1000
TOTAL
Ordinary shares
Shares
Securities
885,040,645
13,518,093
1,456,137
1,234,806
132,017
901,381,698
%
98.19%
1.50%
.16%
.14%
.01%
100%
No. of
holders
108
403
196
458
360
%
7.08%
26.43%
12.85%
30.03%
23.61%
1,525
100.00%
The number of shareholders holding less than a marketable parcel of 297 securities ($1.685 on 8 April 2022) is 168 and
they hold 4,580 securities.
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Stanmore Annual Report 2021Shareholder information
(CONTINUED)
B. SUBSTANTIAL HOLDERS
The names of the twenty largest holders of quoted equity securities as at 8 April 2022 are listed below:
Ordinary shares
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
LATIMORE FAMILY PTY LTD
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