REY RESOURCES LIMITED
A.B.N. 84 108 003 890
ANNUAL REPORT 2021
CONTENTS
Page
Corporate Directory ..................................................................................................................................................... 2
Company Profile .................................................................................................................................................... 3
Chairman’s Message .............................................................................................................................................. 4
Business Performance and Outlook ....................................................................................................................... 5
Annual Reserves and Resources Statement .......................................................................................................... 9
Director’s Report ................................................................................................................................................. 11
Auditor’s Independence Declaration ................................................................................................................... 27
Consolidated statement of profit or loss and other comprehensive income ...................................................... 28
Consolidated statement of financial position ..................................................................................................... 29
Consolidated statement of changes in equity ...................................................................................................... 30
Consolidated statement of cash flows ................................................................................................................. 31
Note to the consolidated financial statements .................................................................................................... 32
Directors’ Declaration .......................................................................................................................................... 60
Independent Audit Report ................................................................................................................................... 61
ASX Additional Information .................................................................................................................................. 66
Tenement Schedule .............................................................................................................................................. 69
1
CORPORATE DIRECTORY
Directors
Ms Min Yang
Mr Wei Jin
Mr Geoff Baker
Mr Dachun Zhang
Mr Louis Chien
Company Secretary
Mr William Kuan
Non‐Executive Chairman
Managing Director
Non‐Executive Director
Independent Non‐Executive Director
Alternate Director to Non‐Executive Chairman, Ms Min Yang
Registered Office
Suite 2, 3B Macquarie Street
Sydney NSW 2000
Tel +61 (02) 9251 9088
Fax +61 (02) 9251 9066
Share Registry
Boardroom Pty Limited
Level 12, 225 George Street
Sydney NSW 2000
GPO Box 3993
Sydney NSW 2001
Auditor
ShineWing Australia
Level 14, 12 Creek Street
Brisbane QLD 4000
Securities Exchange
Australian Securities Exchange (ASX)
ASX Code: REY
Website
www.reyresources.com
2
COMPANY PROFILE
Rey Resources Limited (“Rey” or “Company”) is an ASX‐listed company (ASX: REY) focused on exploring
and developing energy resources in Western Australia’s Canning Basin.
Rey holds 100% interest in EP487 (the “Derby Block”) and 20% interest in two prospective Canning Basin
petroleum exploration permits ‐ EP457 and EP458 (the “Fitzroy Blocks”). Rey also holds 100% interest in
EP104, Retention Licence R1 and Production Licence L15 (together the “Lennard Shelf Blocks”). Also through
the financial year Rey acquired a 20% equity interest currently in Southernpec (Australia) Pty Ltd which
holds significant interests in the Surat Gas Project located in Surat Basin, Queensland.
Rey has participated and completed a series of exploration works on these permits, including two deep
conventional oil wells in Canning Basin, more than 100km of new seismic line acquisition, 2300+km vintage
seismic line reprocessing and multiple regional geology studies. Rey has planned integrated exploration
activity for future Canning Basin development.
Rey also holds coal tenements in the Canning Basin, some contiguous with the Fitzroy Blocks, including
those hosting the major Duchess Paradise Coal Project.
Rey has an experienced Board and management team and is committed to continue developing its
energy assets to deliver maximum value to its shareholders.
3
CHAIRMAN’S MESSAGE
Dear Shareholders,
It is my pleasure to deliver Rey’s Annual Report for the year ended 30 June 2021. We continually focus on
maximising the value of our coal and oil and gas exploration projects in Canning Basin in WA during this
financial year.
In early 2021, we were pleased to announce the farmout of Fitzroy Blocks with Origin Energy. It is a
milestone achievement where future development includes an optional well. During the year, we planned
new seismic over EP487 to better identify the drilling location for future well commitment. The farmout
of EP487 is also actively discussed with several parties. We also planned new regional technical studies
and engineering studies for Lennard Shelf Blocks to re access the existing wells.
The Surat Project investment made in early 2021 gives Rey potential access to Queensland gas production.
The flow testing work was completed in June 2021 with encouraging results. The project potentially will
bring healthy cash flow to Rey to fund other permit development. Rey is assessing further investment in
the project in order to achieve a bigger production potential.
Through the year Rey continued negotiations with the Walalakoo community for the Duchess Paradise
Coal Project in Western Australia. The negotiations have been referred by DMIRS to the NNTT for
mediation. Rey is working with the Walalakoo community to settle the protocol and terms for a future co
existing agreement.
I would like to thank all shareholders for their support and understanding. I also want to thank our staff
and management team for their work over the past year and look forward to the next exciting year.
Min Yang
Non‐executive Chairman
4
BUSINESS PERFORMANCE AND OUTLOOK
OIL & GAS
1. Canning Basin – the Fitzroy Blocks (EP457 and EP458)
1.1 Background
Equity interests in the Fitzroy Blocks (EP457 and EP458) are currently:
Rey (Rey Oil & Gas Pty Ltd)
Buru
Origin Energy
20%
40%
40%
(including 6.66% free carried to production)
(Operator)
Rey holds a total 20% participating interest in the two blocks, but only has a 13.336% funding obligation
until commercial production. This is due to a Funding Agreement whereby Buru Energy Ltd free carries
6.664% of Rey's 20% participating interest.
2
The Fitzroy Blocks (comprising a combined area in excess of 5,000 km
) are located over parts of the
southern flank of the Fitzroy Graben. The Fitzroy Blocks straddle three major trends:
•
•
•
the Ungani conventional oil trend (“Ungani Trend”);
the Laurel Basin‐Centred Gas Accumulation, conventional and unconventional gas; and
the Goldwyer oil and gas unconventional shale.
The Ungani Trend includes identified leads and prospects in an area of prospectivity of at least 120
kilometres by 40 kilometres (over one million acres or 4,800 km2). This extends diagonally, north‐west to
south‐east, across the Fitzroy Blocks. The conventional dolomite reservoir oil discovery by Buru in 2011 at
Ungani (located 15 kilometres north‐west of EP457) on the trend running through the Fitzroy Blocks is a
significant regional discovery event. Commercial production was established by Buru at Ungani in mid‐
2015.
Although Prospective (recoverable) Resources of the Laurel Formation within the Fitzroy Blocks have
not been assessed by drilling to date, the formation extends across part of the Fitzroy Blocks. A wet gas
accumulation has been identified immediately east of the Fitzroy Blocks which has the characteristics
of a Basin‐Centred Gas Accumulation.
The Goldwyer Shale Formation is characterised as a thick, regionally extensive organic rich “Bakken”
shale analogue. The play type is regarded as highly prospective and clearly extends across part of the
Fitzroy Blocks, although is believed to be at considerable depth.
1.2 Work program during the year
After several months of negotiation, a farmin agreement has been executed with Origin Energy for
proposed 500km new 2D seismic and one optional well before 2024. Both Rey and Buru assigned 50% of
its participant interests to Origin. Buru will continue to carry 6.66% of Rey’s expenditure over the two
permits until commercial production. The join in of Origin strengthen the future development of Canning
Basin.
By the date of this report, the preparation work of proposed seismic has been completed. The relative
budget has been approved by the JV participant as well. The seismic is expected to start in September or
October 2020 and conducted by Terrex. The purpose of the seismic is to increase the density of current
vintage seismic in the two permits. The seismic result will be used to confirm the location of the optional
well.
5
2. Canning Basin ‐ the Derby Block (EP487)
2.1 Background
The Derby Block (EP487) is a large petroleum exploration permit of approximately 5,000 km2. It occurs to
the north‐west of Rey’s interests in the Fitzroy Blocks. The Derby Block is considered to be predominantly
a Wet Laurel Basin Centred Gas play (“BCG”) which is regionally extensive throughout the Canning Basin
and has been the subject of exploration in the Canning Basin by other parties in 2015, resulting in
encouraging flow tests by Buru Energy at Valhalla and Asgard (please refer various BRU ASX releases
including releases dated 20 January 2016 and 18 April 2016).
Rey is holding 100% of the equity interest in the Derby Block through the following subsidiaries:
Rey Lennard Shelf Pty Ltd
Rey Derby Block Pty Ltd
50%
50%
2.2 Work program during the year
60km new 2D seismic has been planned during the report period. The seismic will be located at middle
north part of the permit which is the south part of Butler Prospects. The purpose of the seismic is to
increase the density of southern part of Butler and identify a suitable location for the commitment well
drilling. Rey plan to start the seismic before wet season of 2021 or early 2021.
The environmental plan is under process since July 2021 and the seismic contractor has been contacted
the discussed for the planned work.
3. Lennard Shelf Blocks – EP104, R1 and L15
3.1 Background
Rey holds 100% interest in the Lennard Shelf Blocks which comprises EP104, a Retention Lease (R1) and
one Production License (L15). The Lennard Shelf Blocks are situated north of Rey’s existing interests in the
Canning Basin petroleum exploration license EP487 and covering a total area of approximately 1,145 km2
and considered prospective for conventional oil and tight gas.
6
3.2 Work Program during the year
In early 2021, Rey started a regional geology study over EP104, R1 and L15 and completed in June. The
study result shows the possible that the traps of Stokes Bay and Point Tornment is bigger than what has
been mapped currently. A new resources estimation has also been conducted for R1 during the report
period, a bigger resource has been confirmed initially. A resources report is under preparation and will be
published once completed.
Rey also works with contractors for the oil disposal for the tank found in West Kora tank farm. Two site
visits have been completed and the transportation plan has been drafted. An extension has been
approved by DMIRS to transport the waste oil to professional handle facility by end of September.
An engineering study is under progress for the re‐access to Stokes Bay‐1 and Point Tornment‐1. Rey has
plan to reopen the two wells in near future to test the gas production potential that was never been tested,
especially Stokes Bay‐1 which contains 2.23% of Hydrogen recorded during logging as published on The
APPEA Journal.
4. Surat Gas Project
4.1 Background
Surat Gas Project includes 7 production licences in Surat Basin, Queensland. The project has good gas
production history and still has potential to produce quick. Southernpec Australia Pty Ltd hold 53.75%
interests of the project. Rey invested in Southernpec Australia since December 2020 to fund the proposed
flow testing work. By end of the report period, Rey holds a 20% interest in Southernpec Australia.
4.2 Work program during the year
During the reporting period, Rey invested $700,000 to fund the operation of Southernpec Australia
including proposed flow testing of 4 wells and payable government charges.
The proposed 4 well of Avondale‐1, Avondale‐2, Avondale‐4 and Deepwater‐1 for the flow testing located
in PL28 and PL69. Avondale gas field is the major identified gas production area of the assets which
contained 5 wells. Avondale‐1/2/4 were the production wells since 1980s and total of over 12Pj has been
produced. The Deepwate‐1 located in PL69 that was drilled in 2000s. The 4 wells was shut in in 2012 before
the end of the production life. All the 4 wells still has good production potential in short term after relative
integrity work. There are pipelines connected all 4 wells to Kincora Gas Processing Plant and gas trading
hub. The flow testing work was started in early June and completed by end of June 2021. Final result has
been received that Avondale‐2 and Deepwater‐1 has been confirmed of possible of production with initial
flow rate of 1.1Tj/day in total. Southernpec is now discussing with JV partner of the assets for other works
before production including pipeline integrity and well head connection. The gas processing agreement is
also under discussion with JV partner.
COAL
The Duchess Paradise Coal Project (“Duchess Paradise Project”) is a proposed bituminous thermal coal
operation of up to 3 million tonnes per annum in the Canning Basin, north Western Australia. A Definitive
Feasibility Study (“DFS”) of the Project was completed in June 2011 and the first phase update of the DFS
has been completed in 2018.
Rey continue the negotiation with Nyikina Mangala People for the co existing agreement for future mining
activity. The negotiation has been referred to National Native Title Tribunal. The first mediation meeting
7
has been called during the report period for the negotiation protocol and co existing agreement term
sheet. Rey will continue the negotiation with NM people in the following financial year.
CORPORATE
On 21 December 2020, a binding letter of agreement had been executed between Rey, Buru Fitzroy Pty
Ltd (“Buru”) and Origin Energy West Pty Ltd (“Origin”) pursuant to which both Buru and Rey will farmout
20% of their respective participating interest in each of EP457 and EP458 to Origin. On 15 April 2021, a
formal farm‐in agreement had been executed between the parties and Origin is now interested in 40% in
each of the tenements.
The Company also announced on 21 December 2020 that it has signed a term sheet with Southernpec
(Australia) Pty Ltd (“SouthnA”) and Southernpec Holdings Pty Ltd pursuant to which the Company could
acquire up to 75% equity interest in SouthnA in three stages. SouthnA holds significant interests in 7
conventional gas production licences in Surat Gas Project located at Surat Basin in Queensland. As at the
date of this report, the Company holds 20% equity interest in SouthnA and the parties agreed to extend
the commencement date of stage two investment to 30 September 2021.
On 30 April 2021, the Company announced that Ms Wanyan Liu, a substantial shareholder of the
Company, agreed to increase the loan facility amount by $4 million to a total of $12.5 million and to extend
the maturity date to 31 October 2022. As at the balance sheet date, a total of $9.5 million loan facility had
been drawn down by the Company.
The Company also announced on 18 June 2021 that ASF Group Limited has agreed to extend the maturity
date of its $2 million loan facility by one year to 31 October 2022.
Subsequent to the financial year end on 22 July 2021, the Company announced the extension of its on‐
market buyback program for a further 12 months from 5 August 2021. During the year ended 30 June
2021, the Company bought back 232,900 shares at an average price of $0.22 per share.
8
ANNUAL RESERVES AND RESOURCES STATEMENT
Mineral Resources and Ore Reserves Comparison
The Company reviews its coal Mineral Resources and Ore Reserves at least annually in accordance with ASX
Listing Rule 5.21. The date of reporting is 30 June each year to coincide with the release of the Company’s Annual
Report. If there are any material changes to its coal Mineral Resources and/or Ore Reserves over the course
of the year, the Company is required to promptly report these changes as they occur.
During the report period, Rey continued the review of the JORC resources of Duchess Paradise P1‐seam
which was impacted by the surrendered tenement of E04/1386. An updated JORC resources in accordance
with JORC 2012 is expected to be reported to ASX once the assessment work is completed. Rey also
continued the review of withdrawn Ore Reserves for Duchess Paradise P1 seam and assess the impact of
the surrendered tenement during the report period.
As a result, the Company is not in a position to report the outcome of its annual review of Ore Resources
and Reserves in this Annual Report.
Oil and Gas Resources and Reserves
The Company reviews its Oil and Gas Reserves and Contingent Resources at least annually in accordance with
ASX Listing Rule 5.39 and 5.40. The date of reporting is 30 June each year to coincide with the release of its Annual
Report. If there are any material changes to its Oil and Gas Reserves and Contingent Resources over the course
of the year, the Company is required to promptly report these changes as they occur.
EP487 (Derby Block)
An estimate of the gross Prospective Potential Recoverable Resource estimate (Tcf gas recoverable) of
the BCG play in the Derby Block (onshore portion) was provided by independent consultant 3D GEO in
June 2017. The Company’s 100% interest in these Prospective Potential Recoverable Resources (unrisked,
probabilistic estimate) of the Derby Block BCG play is provided in Table 2 below.
Prospective Potential Recoverable Resources SPE PRMS (2011)3
Gas in place
Recoverable Gas
Recoverable Condensate
Recoverable BOE
Tcf1
Tcf1
MMbbl2
MMBOE4
P901
68.0
9.4
239
1,852
P501
169.6
28.4
707
5,283
P102
412.9
81.1
2,066
15,096
Table 2: Rey Resources’ 100% attributable interest in the gross Prospective Potential Recoverable
Resources estimate of the Laurel BCG in EP487 (estimate prepared by 3D‐GEO June 2017).
1 Tcf‐ trillion cubic feet.
2 MMbbl‐ million barrels.
3 SPE PRMS (2011) ‐ Society of Petroleum Engineers Petroleum Resource Management System (2011).
4 MMBOE‐ million barrels oil equivalent. Calculated using ratio of 6.22 billion cubic feet of gas equivalent
to 1 million barrels of crude oil.
Prospective Resources are the estimated quantities of petroleum that may be potentially recovered by the
application of a future development project and relate to undiscovered accumulations. These estimates
have both an associated risk of discovery and a risk of development. Further exploration, appraisal and
evaluation is required to determine the existence of a significant quantity of potentially moveable
hydrocarbons.
During the report period, Rey reviewed the resources of EP487 in August 2021 with third party consultant,
3D GEO. The results indicate that no adjustment is required to the resources of EP487 initially released in
June 2017.
9
L15
A review of Rey’s oil Reserves and contingent Resources for the West Kora Oilfield in L15 and Point
Torment Gas Discovery in R1 was conducted by Rey in August 2021. The review shows no changes are
required. Detailed Resources of R1 and Reserves of West Kora Oilfield in L15 and and Point Torment Gas
Discovery in R1 are listed in Table 3 below:
Table 3: Estimated Remaining Petroleum Reserves and Contingent Resources West Kora Oilfield
West Kora Oilfield Recoverable Oil
West Kora Oilfield Recoverable
Contingent Resources
Point Torment Gas Discovery
Recoverable Contingent Resources
1 Mstb – Thousand stock tank barrels of oil.
2 BCF – billion cube feet
Mstb1
Mstb
BCF2
1P
67
1C
13.2
2.41
2P
238
2C
60.7
3P
593
3C
226.4
4.725
8.42
(Point Torment Gas Resources in R1 was initially estimated by Energetica Consulting in September 2015,
refer to Key ASX releases dated on 30 September 2015. West Kora oilfield reserves and contingent
resources in L15 was estimated by ERCE in May 2019, refer to Doriemus ASX releases dated on 9 May 2019)
Governance Arrangements and Internal Controls
The Resources and Reserves reported have been generated by independent external consultants who
are experienced in best practice modelling and estimation methods. The consultants have also
undertaken reviews of the quality and suitability of the underlying information used to generate the
applicable estimations. In addition, Rey management carries out regular reviews of internal processes
and external contractors that have been engaged by the Company.
Competent Persons Statements
Oil and Gas Reserves and Resources
The oil and gas technical information quoted in this Annual Report has been compiled and/or assessed
by Mr Keith Martens who is a self‐employed consulting professional geologist, and a continuous Member
of the Petroleum Exploration Society of Australia since 1999. Mr Martens has a BSc degree in
geology/geophysics and has over 35 years’ experience in the petroleum industry.
The oil and gas Reserves and prospective Resources quoted in this Annual Report has been compiled
and/or assessed by Mr. Keven Asquith who is a qualified petroleum reserves and resources evaluator. Mr
Asquith is Director of 3D‐GEO Pty Ltd and has over 30 years of geotechnical experience in the Petroleum
Industry, as well as seven years of Project Management in the Government Sector. His experience includes
four years at ESSO Resources Canada, 16 years at BHP Petroleum in Melbourne and the 14 years
consulting at 3D‐GEO. Keven has an Honours BSc in Geology and a Diploma in Project Management. He
has been a member of the American Association of Petroleum Geologists for over 30 years.
The Company confirms that the form and context in which the information is presented has not been
materially modified and it is not aware of any new information or data that materially affects the
information included in the relevant market announcements, as detailed in the body of this
announcement. The Oil and Gas section of this Annual Mineral Resources and Reserves Statement is based
on and fairly represents information and supporting documentation prepared by competent persons and
has been approved as a whole by Mr Martens. Mr Martens has consented to the inclusion in this report
of the matters based on the information in the form and context in which they appear.
10
DIRECTORS’ REPORT
The Directors of Rey Resources Limited (“Rey” or “the Company”) present their report together with the
consolidated financial statements of the Company and its controlled entities (“the Group”) for the
financial year ended 30 June 2021.
1. DIRECTORS
The Directors of the Company at any time during or since the end of the financial year are:
Ms Min Yang
Mr Wei Jin
Mr Geoff Baker
Mr Dachun Zhang
Mr Louis Chien
Non‐Executive Chairman
Managing Director
Non‐Executive Director
Independent Non‐Executive Director
Alternate Director to Non‐Executive Chairman, Ms Min Yang
Details of Directors’ qualifications, experience, special responsibilities and directorships of other listed
companies can be found on pages 12 to 14.
11
2.
INFORMATION ON DIRECTORS AND OFFICERS
Directors
Current
Min Yang
Appointed on
13 September 2012
Designation and
Independence
status
Chairman
Non‐Executive
Experience, expertise and qualifications
Directorships of other listed
companies during the last
three years
Special
responsibilities
during the year
Min Yang has extensive business connections and has over 30
years of hands‐on experience dealing with private and state‐
owned enterprises in the Asia‐Pacific region. Over the years, Ms
Yang has proven her unique business insight and expertise in the
identification, incubation and realisation of real asset investment
opportunities.
Wei Jin
Appointed Non‐
Executive Director
on 2 December
2013. Appointed
Managing Director
on 1 July 2016.
Geoff Baker
Appointed on
13 September 2012
Managing
Director
in Science from China University of
Wei Jin holds PhD
Geosciences. He has over 20 years’ professional experience
covering exploration, mineral
industry construction and
operation, as well as international mineral trading activities in
Australia, China, Russia and Mongolia.
Director
Non‐Executive
Qualifications – BCom, LLB, MBA
For the past 35 years Geoff Baker has been active in Asia and
China working in law and conducting an advisory practice in
in the region. As an
assisting companies doing business
experienced lawyer qualified to practice in Australia and Hong
Kong, Mr Baker provides valuable assistance to international
operations and in particular to the negotiation, structuring and
implementation of joint venture and commercial agreements.
ASF Group Limited
(September 2005, ongoing)
ActiveEX Limited (May
2012, ongoing)
Key Petroleum Limited
(January 2014, ongoing)
BSF Enterprise PLC
(appointed 5 September
2018, ongoing)
None
ASF Group Limited
(November 2006, ongoing)
ActiveEX Limited
(appointed February
2013. Resigned June
2017 and re‐appointed
August 2017, ongoing)
Key Petroleum Limited
(January 2014, ongoing)
BSF Enterprise PLC
(appointed 5 September
2018, ongoing)
Non‐Executive
Chairman
Member, Audit
and Risk
Management
Committee
Member, Audit
and Risk
Management
Committee
Member, Audit
and Risk
Management
Committee
12
Directors
Designation and
Independence
status
Current
Dachun Zhang
Appointed on 1 July
2013
Director
Non‐Executive
Independent
Experience, expertise and qualifications
Directorships of other listed
companies during the last
three years
Special
responsibilities
during the year
Mr Zhang has a Bachelor’s Degree from Poznan University,
Poland and a Master’s Degree from the University of Wales, UK
and was conferred the qualification of Senior Economist in
Shipping Management by the Ministry of Communications of
China.
None
Chairman, Audit
and Risk
Management
Committee
Mr Zhang was most recently Executive Director and President of
China Merchants Group, as well as the Chairman of Merchants
International Co. Ltd (a listed Hong Kong company). Previously
his career was with COSCO (a Chinese company and one of the
world’s largest shipping groups) where he held the positions of
Executive Vice‐Chairman and President of COSCO (Hong Kong)
Group Ltd, as well as Vice‐Chairman of two Hong Kong listed
companies: COSCO Pacific Co. Ltd and COSCO International
Holdings Co. Ltd.
Mr Zhang, a resident of Victoria, Australia brings extensive
international experience and Chinese business relationships to
the Board of Rey.
13
Designation and
Independence
status
Alternate
Director
Directors
Current
Louis Chien
Appointed Alternate
Director to Non‐
Executive Chairman,
Ms Min Yang on 11
January 2016.
Experience, expertise and qualifications
Mr Chien was born in Shanghai, China, grew up and was
educated in the United States, and is now based in Australia. He
has 20+ years of corporate experience based in Australia, the
United States and Singapore and has held various engineering
and finance leadership positions within The Procter & Gamble
Company (P&G). He has managed organisations across the
Americas, Europe and Asia‐Pacific, and is currently a director of
ASX listed ASF Group Limited.
Mr Chien holds a Master of Business Administration in finance
from Kelley School of Business, Indiana University, and two
bachelor degrees in Architecture, all attained in the United
States.
Directorships of other listed
companies during the last
three years
Special
responsibilities
during the year
ASF Group Limited (May
None
2015, ongoing)
ActivEX Limited (appointed
Alternate Director to Ms
Min Yang on 20 April 2020,
ongoing)
14
3. COMPANY SECRETARY
Mr William Kuan was appointed to the position of Company Secretary on 1 July 2020. Mr Kuan holds
a Master Degree in International Accounting. He is a Fellow of CPA Australia and an Associate of The
Chartered Governance Institute (formerly ICSA) in the UK and The Hong Kong Chartered Governance
Institute (formerly HKICS). Mr Kuan has extensive experience in accounting, corporate finance and
company secretarial areas. He is currently a Director and Company Secretary of ASF Group Limited, a
substantial shareholder of the Company. Prior to joining ASF, he was company secretary for a number
of diverse Hong Kong listed companies.
4. DIRECTORS’ ATTENDANCE AT MEETINGS
The number of Directors’ meetings and number of meetings attended by each of the Directors of the
Company during the financial year are:
Director
Min Yang
Wei Jin
Geoff Baker
Dachun Zhang
Louis Chien
Meetings
A
3
3
3
3
1
B
3
3
3
3
3
A ‐ Number of meetings attended.
B ‐ Number of meetings held during the time the Director held office.
The Company has established an Audit and Risk Management Committee, comprising one Executive
and three Non‐Executive Directors, with independent Non‐Executive Director Mr Dachun Zhang as
Chair. The number of Audit and Risk Management Committee meetings and number of meetings
attended by each of the members of the Committee during the financial year are:
Director
Min Yang
Wei Jin
Geoff Baker
Dachun Zhang
Meetings
A
2
2
2
2
B
2
2
2
2
A ‐ Number of meetings attended.
B ‐ Number of meetings held during the time the Director held office.
15
5. DIRECTORS’ INTERESTS IN SECURITIES IN REY RESOURCES LIMITED
The relevant interest of each Director in the ordinary shares of Rey Resources Limited at the date of
this report is set out as below:
Ordinary shares
Options over ordinary shares
Min Yang
Geoff Baker
Dachun Zhang
Wei Jin
Louis Chien
200,000
200,000
777,414
200,000
Nil
6. REMUNERATION REPORT – AUDITED
Nil
Nil
Nil
Nil
Nil
Performance
Rights
Nil
Nil
Nil
Nil
Nil
This remuneration report outlines the Director and executive remuneration arrangements for Rey in
accordance with the requirements of the Corporations Act 2001 and its associated Regulations. The
information in the report has been audited as required by Section 308(3C) of the Act.
6.1 Principles of compensation
For the purpose of this report Key Management Personnel (“KMP”) are defined as those persons
having authority and responsibility for planning, directing and controlling the major activities of the
Company and the Group, directly or indirectly, including any Director (whether executive or
otherwise) of the Company. The officers listed as KMP below are included in the report. The report
will provide an explanation of Rey’s remuneration policy and structure, details of remuneration paid
to KMP (including Directors), an analysis of the relationship between Company performance and
executive remuneration payments, details of share‐based payments, key terms of executive
employment contracts and details of independent external advice received in relation to KMP
remuneration, if any.
2021 Key Management Personnel
The KMP of Rey during the year ended 30 June 2021 were:
Non Executive
Min Yang
Geoff Baker
Dachun Zhang
Louis Chien
Executive
Wei Jin
Non‐Executive Chairman (appointed 13 September 2012)
Non‐Executive Director (appointed 13 September 2012)
Independent Non‐Executive Director (appointed 1 July 2013)
Alternate Director to Ms Min Yang (appointed 11 January 2016)
Managing Director (appointed Non‐Executive Director 2 December
2013, appointed Managing Director 1 July 2016)
16
6. REMUNERATION REPORT – AUDITED (continued)
6.1 Principles of compensation (continued)
Remuneration policy
The successful performance of the Company is dependent on the quality and performance of Directors
and executives, so the focus of the remuneration policy is to attract, retain and motivate highly
competent people to these roles.
Four broad principles govern the remuneration strategy of the Company:
1. To set demanding levels of performance for KMP and to align their remuneration with the
achievement of clearly defined targets.
2. To provide market competitive remuneration and conditions in the current market for high quality
Directors and executives.
3. To align remuneration with the creation of shareholder value and the achievement of Company
strategy, objectives and performance.
4. To be able to differentiate reward based on performance, in particular acknowledging the
contribution of outstanding performers.
The Company seeks to provide fixed remuneration at the median level of the markets in which it
competes for talent, and to provide the opportunity for a higher than median level of variable reward
for those individuals who make an outstanding contribution to the success of the business.
The Board is responsible for matters relating to the remuneration of the Directors, senior executives
and employees of the Company, including making recommendations in relation to the remuneration
framework of the Company and the fees and remuneration paid to Directors and executives.
The Board seeks independent remuneration advice from time to time, and refers to relevant market
survey data for the purposes of external comparison. Further details have been included in section
6.5.
Hedging policy
The Company’s Securities Trading Policy prohibits all Directors and employees from entering into
arrangements to protect the value of unvested Long Term Incentive (“LTI”) awards. The prohibition
includes entering into contracts to hedge their exposure to unvested share rights and options awarded
as part of their remuneration package.
17
6. REMUNERATION REPORT – AUDITED (continued)
6.1 Principles of compensation (continued)
Executive remuneration components
Executive remuneration is structured so that it supports the key remuneration principles outlined
above, and is intended to motivate executives towards achievement of the annual objectives and
longer term success of the Company. A Total Fixed Remuneration (“TFR”) is paid which considers
external market comparisons and individual performance. Performance linked compensation is
available through the short term and long term incentive plans outlined below.
Fixed remuneration
Executives receive an annualised TFR from which they must have deducted statutory superannuation.
They may elect to salary sacrifice further superannuation contributions and other benefits such as a
motor vehicle. Accommodation assistance and medical insurance may be provided for employees
from overseas or interstate where it is necessary to be able to attract key talent. A review of TFR is
undertaken each year and reflects market movements and individual performance.
Short term incentive
The objective of the short term incentive (“STI”) plan is to align the achievement of the Company’s
annual targets with the performance of those executives who have key responsibility for achieving
those targets.
Long term incentive
Executives are eligible to participate in the Rey Resources Limited Executive Incentive Rights Plan
(“EIRP”), which was first adopted by shareholders on 23 November 2011 and most recently re‐
approved at the Company’s 2018 Annual General Meeting. The EIRP aligns the reward of the
participants with the long term creation of shareholder value.
The EIRP enables participants to be granted rights to acquire shares subject to the satisfaction of
certain vesting conditions which will be determined by the Board from time to time. Subject to
adjustments for any bonus issues of shares and capital reorganisations, one share will be issued on
the exercise of each right which vests or becomes exercisable. No amount is payable by employees in
respect of the grant or exercise of rights.
The EIRP has been designed to deliver benefits based on the value of shares when performance and
service conditions are satisfied. The benefits may be provided in cash or a combination of cash and
shares.
No EIRP was granted during the year.
18
6. REMUNERATION REPORT – AUDITED (continued)
6.1 Principles of compensation (continued)
Relationship between Company performance and remuneration
The objective of the Company’s remuneration structure is to reward and incentivise the executives so
as to ensure alignment with the interests of the shareholders. The remuneration structure also seeks
to reward executives for their contribution in a manner that is appropriate for a company at this stage
of its development. As outlined elsewhere in this Report, the remuneration structure incorporates
fixed, annual at risk and long term incentive components.
For shareholders, the key measure of value is Total Shareholder Return (“TSR”). Other than general
market conditions, the key drivers of value for the Company and a summary of performance are
provided in the table following.
At this stage in the development of the Company, successful execution of the below drivers is the
mechanism through which shareholder wealth will be created.
The only relevant financial measure at this point is the Rey share price for which the history is
presented below. Absolute TSR performance is the basis for long term incentive awards under the
EIRP.
Rey Closing Share Price as at 30 June
2021
0.27
2020
0.31
2019
0.31
2018
0.32
2017
0.2
Consequences of performance on shareholder wealth
Loss ($’000)
Dividends declared
Total shareholder return (TSR)%
2021
(1,323)
‐
(13%)
2020
(1,880)
‐
2019
(8,923)
‐
2018
(1,049)
‐
0%
(3%)
60%
2017
(559)
‐
38%
Non‐Executive Director fees
The policy on Non‐Executive Director (“NED”) fees is to apply a remuneration framework in order to
attract and retain highly capable NEDs and also in accordance with governance best practice. A fixed
annual fee is paid in cash.
An aggregate fee limit for NED fees of $400,000 was approved at the 2010 Annual General Meeting
and no change is currently proposed.
NED fees comprise a fixed annual fee, with no participation in any performance rights plan.
The original annual cash fees payable to each NED were as follows: Ms Yang $48,000 per annum
payable to her related entity, Luxe Hill Limited; Mr Baker $60,000 per annum payable to his related
entity, Gold Star Industry Ltd; Mr Zhang $25,000 per annum payable to his related entity, AMI
Corporation Pty Ltd. From April 2020 onwards, fees paid to each NED had been reduced by 50% of the
original fees.
19
6. REMUNERATION REPORT – AUDITED (continued)
6.2 Directors’ and executive officers’ remuneration
The table below sets out the remuneration of the Group’s KMP for the years ended 30 June 2020 and
30 June 2021.
Short Term Benefits
Post‐
employment
Benefits
Other
Long Term
employee
benefit 1
Share
Based
Payments
Termination
Benefits
Total
Cash
salary/
Fees
$
Annual
Incentive
Non‐
monetary
Super
LSL & AL
Rights
/Options
Termination
Payments
$
$
$
$
$
$
$
M Yang ‐ Non‐Executive Chairman ‐ Appointed 13 September 2012
2021
2020
24,000
42,000
‐
‐
‐
‐
‐
‐
G Baker ‐ Non‐Executive Director ‐ Appointed 13 September 2012
2021
2020
30,000
52,500
‐
‐
‐
‐
D Zhang ‐ Non‐Executive Director ‐ Appointed 1 July 2013
2021
2020
12,500
21,875
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
24,000
42,000
30,000
52,500
12,500
21,875
W Jin ‐ Managing Director ‐ Appointed Non‐Executive Director 2 December 2013, appointed Managing Director 1 July 2016
2021
2020
60,002
105,001
‐
‐
‐
‐
5,700
9,975
‐
‐
Z Ou ‐ Non‐Executive Director ‐ Appointed 22 September 2016 and resigned 8 April 2020
2021
2020
‐
41,746
‐
‐
‐
‐
‐
3,966
L Chien ‐ Alternate Director ‐ Appointed 11 January 2016
2021
2020
TOTAL
2021
‐
‐
126,502
‐
‐
‐
‐
‐
‐
‐
‐
5,700
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
2020
1 In accordance with his contract Wei Jin does not accrue long term employee benefits.
263,122
13,941
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
65,702
114,976
‐
45,712
‐
‐
132,202
277,063
6.3 Equity instruments
No share rights were granted during the financial year.
No options and rights over ordinary shares in the Company were granted during the financial year.
20
6. REMUNERATION REPORT – AUDITED (continued)
6.4 Key employment contract
The table below summarises the key contractual provisions of the executive KMP.
Name and
Position
Wei Jin
Contract
Term
Ongoing
Termination by Company
Termination by Executive
3 months’ notice or payment in lieu.
3 months’ notice or payment in lieu.
Non‐Executive Directors are engaged by a letter of appointment for a term as stated in the
Constitution of the Company. They may resign from office by notice to the Chairman. Non‐Executive
Directors receive annual fees. There are no post‐employment benefits.
6.5 Remuneration Consultant
The Board may seek advice on remuneration matters for the KMP and Non‐Executive Directors from
independent external advisors. Such advisors are appointed and directly engaged by the Chairman.
No external advisors were engaged on remuneration matters for the 2021 financial year.
6.6 Movements in share holdings
Movements in shares
The movement during the reporting period in the number of ordinary shares in the Company held by
each KMP, including their related parties, is as follows:
2021
Directors
Min Yang1
Geoff Baker2
Wei Jin3
Dachun Zhang4
Louis Chien
Total
Held at 1
July 2020
Received as
compensation
Received on
exercise of
options/rights
Other
changes
Held at 30
June 2021
200,000
200,000
200,000
777,414
‐
1,377,414
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
200,000
200,000
200,000
777,414
‐
1,377,414
1. The shares are held by Luxe Hill Ltd, of which Min Yang is a director and shareholder.
2. The shares are held by Gold Star Industry Ltd, of which Geoff Baker is a director and
shareholder.
3. The shares are held by Renown Capital Holdings Ltd, of which Wei Jin is a director and
shareholder.
4. The shares are held by Greenhouse Investment (VIC) Pty Ltd ATF AMF Superannuation Fund.
Dachun Zhang is a director of Greenhouse Investment (VIC) Pty Ltd and a beneficiary of the
AMF Superannuation Fund.
21
6. REMUNERATION REPORT – AUDITED (continued)
6.7 Movements in Option holdings
No KMP held or were issued options during the 2021 reporting period.
6.8 Movement in Share right holdings
No KMP held or were issued share rights during the 2021 reporting period.
7. PRINCIPAL ACTIVITIES
The principal activity of Rey is exploring for and developing energy resources in Western Australia’s
Canning Basin. The Company holds 20% interest in petroleum permits EP457 & 458 in joint venture
with Buru and Origin, 100% interest in the Derby Block EP487 and petroleum exploration permit
EP104, retention licence R1 and production licence L15. Rey also holds 100% interests in Duchess
Paradise Coal Project.
Rey also holds 20% equity interest in Southernpec (Australia) Pty Ltd which holds significant interests
in the Surat Gas Project located at Surat Basin, Queensland.
8. RESULTS FOR THE YEAR AND REVIEW OF OPERATIONS
Oil and Gas
Fitzroy Blocks (EP457 & EP458)
Rey successfully farmout the Fitzroy Blocks with Buru to Origin Energy during the report period. Both
Rey and Buru assigned 50% of its participant interests to Origin. Buru will continue to carry 6.66% of
Rey’s expenditure over the two permits until commercial production. The join in of Origin strengthen
the future development of Canning Basin.
By the date of this report, the preparation work of proposed seismic has been completed. The relative
budged has also been approved by JV too. The seismic is expected to start in September or October
2021 and conducted by Terrex. The purpose of the seismic is to increase density of current vintage
seismic in the two permits. The seismic result will be used to confirm the location of the optional well.
Derby Block (EP487)
60km new 2D seismic has been planned during the report period. The seismic will be located at middle
north part of the permit which is the south part of Butler Prospects. The purpose of the seismic is to
increase the density of southern part of Butler and identify a suitable location for the commitment
well drilling. Rey plan to start the seismic before wet season of 2021 or early 2022.
The environmental plan is under process since July 2021 and the seismic contractor has been
contacted the discussed for the planned work.
22
8. RESULTS FOR THE YEAR AND REVIEW OF OPERATIONS (continued)
Lennard Shelf Blocks (EP104, R1, L15)
In early 2021, Rey started a regional geology study over EP104, R1 and L15 and completed in June. The
study result shows the possible that the traps of Stokes Bay and Point Tornment is bigger than what
has been mapped currently. A new resources estimation has also been conducted for R1 during the
report period, a bigger resources has been confirmed initially. A resources report is under preparation
and will be published once completed.
Rey also works with contractors for the oil disposal for the tank found in West Kora tank farm. Two
site visit has been done and the transportation plan has been drafted. An extension has been approved
by DMIRS to transport the waste oil to professional handle facility by end of September.
An engineering study is under progress for the re‐access to Stokes Bay‐1 and Point Tornment‐1. Rey
has plan to reopen the two wells in near future to test the gas production potential that was never
been tested, especially Stokes Bay‐1 which contains 2.23% of Hydrogen recorded during logging as
published on The APPEA Journal.
Coal
Duchess Paradise Project
The Duchess Paradise Coal Project (“Duchess Paradise Project”) is a proposed bituminous thermal coal
operation of up to 3 million tonnes per annum in the Canning Basin, north Western Australia. A
Definitive Feasibility Study (“DFS”) of the Project was completed in June 2011 and the first phase
update of the DFS has been completed in 2018.
Rey continue the negotiation with Nyikina Mangala People for the co existing agreement for future
mining activity. The negotiation has been referred to NNTT. The first mediation meeting has been
called during the report period for the negotiation protocol and co existing agreement term sheet.
Rey will continue the negotiation with NM people in the following financial year.
Corporate
On 21 December 2020 a binding letter of agreement had been executed between Rey, Buru Fitzroy
Pty Ltd (“Buru”) and Origin Energy West Pty Ltd (“Origin”) pursuant to which both Buru and Rey will
farmout 20% of their respective participating interest in each of EP457 and EP458 to Origin. On 15
April 2021, a formal farm‐in agreement had been executed between the parties and Origin is now
interested in 40% in each of the tenements.
The Company also announced on 21 December 2020 that it has signed a term sheet with Southernpec
(Australia) Pty Ltd (“SouthnA”) and Southernpec Holdings Pty Ltd pursuant to which the Company will
acquire up to 75% equity interest in SouthnA in three stages. SouthnA holds significant interests in 7
conventional gas production licences in Surat Gas Project located at Surat Basin in Queensland. As at
the date of this report, the Company holds 20% equity interest in SouthnA and the parties agreed to
extend the commencement date of stage two investment to 30 September 2021.
23
8. RESULTS FOR THE YEAR AND REVIEW OF OPERATIONS (continued)
On 30 April 2021, the Company announced that Ms Wanyan Liu, a substantial shareholder of the
Company, agreed to increase the loan facility amount by $4 million to a total of $12.5 million and to
extend the maturity date to 31 October 2022. As at the balance sheet date, a total of $9.5 million loan
facility had been drawn down by the Company.
The Company also announced on 18 June 2021 that ASF Group Limited has agreed to extend the
maturity date of its $2 million loan facility by one year to 31 October 2022.
Subsequent after the financial year end on 22 July 2021, the Company announced the extension of its
on‐market buyback program for a further 12 months from 5 August 2021. During the year ended 30
June 2021, the Company bought back 232,900 shares at an average price of $0.22 per share.
Financial review
Net loss of the Group after income tax for the year ended 30 June 2021 was $1,323,000, a decrease
of approximately 30% compared with the loss of $1,880,000 for the last year.
Losses for the year was mainly attributed to the finance costs of $1,008,000, which was principally
interest accrued for the loans granted by ASF and Liu. As at the balance sheet date, the Group had
undrawn loan facilities of $5 million from Ms Wanyan Liu and ASF Group Ltd.
9. DIVIDENDS
No dividend has been paid or declared by the Company during the financial year ended 30 June 2021
(2020: nil) and the Directors do not recommend the payment of a dividend in respect of the financial
year ended 30 June 2021.
10. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Other than as noted elsewhere in this report, there have been no significant changes in the state of
the affairs of the Company up to and including the date of this report.
11. LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS
Future information about the likely developments in the operations of the Group and the expected
results of those operations in future financial years has not been included in this report because
disclosure of the information would be likely to result in unreasonable prejudice to the Group.
12. PERFORMANCE RIGHTS OVER UNISSUED SHARES
Performance rights on Issue
As at the date of this report there were no performance rights on issue.
Performance rights vested, forfeited or lapsed
No performance rights were vested and converted to shares during the year.
24
13. OPTIONS OVER UNISSUED SHARES
Options on Issue
During the financial year and as at the date of this report there are no options on issue.
14. ENVIRONMENTAL DISCLOSURE
The Group’s operations are subject to various laws governing the protection of the environment in
areas such as protection of water quality, waste emission and disposal, environmental impact
assessments, exploration rehabilitation and use of ground water. In particular, some operations are
required to be licensed to conduct certain activities under the environmental protection legislation in
the state in which they operate and such licences include requirements specific to the subject site.
So far as the Directors are aware, there have been no material breaches of the Company’s licences
and all exploration and other activities have been undertaken in compliance with the relevant
environmental regulations.
15. INDEMNITIES AND INSURANCE
The Group has in place Deeds with each of the Directors whereby the Group has agreed to provide
certain indemnities to each Director to the extent permitted by the Corporations Act and to use its
best endeavours to obtain and maintain Directors’ and Officers’ indemnity insurance, subject to such
insurance being available at reasonable commercial terms.
The Group has not given an indemnity or entered into an agreement to indemnify, or paid or agreed
to pay insurance premiums in respect of any person who is or has been an auditor of the Company or
a related body corporate during the year and up to the date of this report.
16. SUBSEQUENT EVENTS
No other matter or circumstance has arisen since 30 June 2021 that has significantly affected, or may
significantly affect the Group’s operations, the results of those operations, or the Group’s state of
affairs in future financial years.
17. PROCEEDINGS ON BEHALF OF THE COMPANY
At the date of this report, there are no proceedings brought on behalf of the Company under section
237 of the Corporations Act 2001.
18. ROUNDING
The Group is of a kind referred to in Australian Securities and Investments Commission (ASIC) Class
Order 2016/191. In accordance with that Class Order, amounts contained in the consolidated financial
statements and Directors’ report have been rounded off to the nearest one thousand dollars, unless
specifically stated to be otherwise.
19. NON‐AUDIT SERVICES
There were no non‐audit services provided by ShineWing Australia during this financial year.
25
20. AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration is set out on page 27 and forms part of the Directors’ report
for the financial year ended 30 June 2021.
Signed in accordance with a resolution of Directors.
Min Yang
Non‐Executive Chairman
Sydney, Australia
29 September 2021
26
Take the lead
AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE
CORPORATIONS ACT 2001 TO THE DIRECTORS OF REY RESOURCES
LIMITED
As lead auditor, I declare that, to the best of my knowledge and belief, during the year ended 30 June
2021 there have been:
i. no contraventions of the auditor independence requirements as set out in the Corporations Act
2001 in relation to the audit, and
ii. no contraventions of any applicable code of professional conduct in relation to the audit.
ShineWing Australia
Chartered Accountants
Yang (Bessie) Zhang
Partner
Brisbane, 29 September 2021
Brisbane
Level 14
12 Creek Street
Brisbane QLD 4000
T + 61 7 3085 0888
Melbourne
Level 10
530 Collins Street
Melbourne VIC 3000
T + 61 3 8635 1800
Perth
Level 25
108 St Georges Terrace
Perth WA 6000
T + 61 8 6184 5980
Sydney
Level 8
167 Macquarie Street
Sydney NSW 2000
T + 61 2 8059 6800
ShineWing Australia ABN 39 533 589 331. Liability limited by a scheme approved under Professional
Standards Legislation. ShineWing Australia is an independent member of ShineWing International Limited.
sw-au.com
27
Rey Resources Limited
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2021
in thousands of dollars
Note
4
13
6
5
7
Other income
Impairment of exploration and evaluation assets
Administrative expenses
Loss from operations
Finance costs
Loss before income tax
Income tax expense
Loss for the year attributable to owners of the
company
Other comprehensive income
Total comprehensive loss for the year,
attributable to owners of the Company
Loss per share
30 June
2021
67
‐
(382)
(315)
(1,008)
(1,323)
30 June
2020
223
(692)
(702)
(1,171)
(709)
(1,880)
‐
‐
(1,323)
(1,880)
‐
‐
(1,323)
(1,880)
Basic and diluted (cents per share)
8
(0.62)
(0.89)
The notes on pages 32‐59 are an integral part of these consolidated financial statements
28
Rey Resources Limited
Consolidated statement of financial position
As at 30 June 2021
In thousands of dollars
Note
2021
2020
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Total current assets
Non‐current assets
Property, plant and equipment
Financial assets
Exploration and evaluation expenditure
Total non‐current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Employee benefits
Loans and borrowings
Total current liabilities
Non‐current liabilities
Loans and borrowings
Provisions
Total non‐current liabilities
Total liabilities
Net assets
EQUITY
Share capital
Accumulated losses
9a
10
11
12
13
14
15
21d
21d
16
17
Total equity attributable to equity holders of the
Company
The notes on pages 32‐59 are an integral part of these consolidated financial statements
36
47
3
86
3
700
37,230
37,933
38,019
65
11
‐
76
10,411
3,321
13,732
13,808
24,211
175
18
3
196
3
‐
36,432
36,435
36,631
67
5
770
842
6,931
3,272
10,203
11,045
25,586
86,537
(62,326)
86,589
(61,003)
24,211
25,586
29
Rey Resources Limited
Consolidated statement of changes in equity
For the year ended 30 June 2021
in thousands of dollars
Balance at 30 June 2019
Loss for the year
Other comprehensive income
Total comprehensive loss for the year
Transactions with owners recorded directly in equity:
Contributions by and distributions to owners
Share buy back
Balance at 30 June 2020
Loss for the year
Other comprehensive income
Total comprehensive loss for the year
Transactions with owners recorded directly in equity:
Contributions by and distributions to owners
Share buy back
Balance at 30 June 2021
Share capital
86,597
Accumulated Losses
(59,123)
‐
‐
‐
(8)
86,589
‐
‐
‐
(52)
86,537
(1,880)
‐
(1,880)
‐
(61,003)
(1,323)
‐
(1,323)
‐
(62,326)
Total
27,474
(1,880)
‐
(1,880)
(8)
25,586
(1,323)
‐
(1,323)
(52)
24,211
The notes on pages 32‐59 are an integral part of these consolidated financial statements
30
Rey Resources Limited
Consolidated statement of cash flows
For the year ended 30 June 2021
in thousands of dollars
Note
30 June
2021
30 June
2020
9b
12
Cash flows from operating activities
Cash paid to suppliers and employees
Government Subsidy
Net cash used in operating activities
Cash flows from investing activities
Proceeds sale of Investments
Investment in financial assets
Payments for exploration expenditure
Net cash used in investing activities
Cash flows from financing activities
Share buy back
Proceeds from loans and borrowings
Repayment of loans and borrowings
Finance costs
Net cash inflow from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
9a
The notes on pages 32‐59 are an integral part of these consolidated financial statements.
(378)
35
(343)
‐
(700)
(749)
(1,449)
(51)
4,780
(2,040)
(1,036)
1,653
(139)
175
36
(730)
39
(691)
264
‐
(878)
(614)
(8)
1,810
‐
(350)
1,452
147
28
175
31
Rey Resources Limited
Notes to the consolidated financial statements
For the year ended 30 June 2021
1.
REPORTING ENTITY
Rey Resources Limited (the “Company”) is a company domiciled in Australia. The address of the
Company’s registered office is Suite 2, 3B Macquarie Street, Sydney NSW 2000. The consolidated financial
statements of the Company as at and for the financial year ended 30 June 2021 comprise the Company
and its subsidiaries (together referred to as “Rey” or the “Group”). The Group is a for‐profit entity and is
primarily involved in mineral and oil and gas exploration and project evaluation.
2.
BASIS OF PREPARATION
Statement of compliance
(a)
The consolidated financial statements are general purpose financial statements which have been
prepared in accordance with Australian Accounting Standards (including the Australian Interpretations)
adopted by the Australian Accounting Standards Board (“AASB”), and the Corporations Act 2001. The
consolidated financial statements comply with International Financial Reporting Standards (“IFRS”) and
interpretations issued by the International Accounting Standards Board (“IASB”). The accounting policies
detailed below have been consistently applied to all of the years presented unless otherwise stated.
The consolidated financial statements were authorised for issue by the Board of Directors on 29
September 2021.
The outbreak of the Novel Coronavirus (“COVID‐19”) was declared as a ‘Global Pandemic’ by the World
Health Organisation on 11 March 2020, developments throughout 2021 has caused great uncertainty for
the oil, gas and coal industry and the global and Australian economy. This uncertainty has created risks and
conditions that the Group has not encountered before. As a result, there has been a continual assessment
of the impacts of COVID‐19 on the financial statements arising from this major global risk.
Going concern
(b)
The consolidated financial statements have been prepared on a going concern basis which contemplates
the continuity of normal business activities and the realisation of assets and the settlement of liabilities
in the ordinary course of business.
For the year ended 30 June 2021 the Group incurred a loss after tax of $1,323,000 and incurred operating
and investing cash outflows of $1,792,000. As at 30 June 2021 the Group had cash of $36,000, available
standby loan facilities from ASF Group Limited of $2 million and Wanyan Liu of $3 million, a net working
capital of $17,000 and net assets of $24,211,000 as at 30 June 2021. The Group also has exploration
expenditure commitments of $1,054,000 for the next financial year.
The Group has prepared a cashflow forecasts for the period to 30 September 2022. The cashflow forecast
reflects:
The need to raise additional funding during the forecast period;
That ASF Group Limited and Wanyan Liu will not call their loans owing from the Group in advance
of the loan maturity date; and
The need to defer or farm out the Group’s share of certain petroleum interests to meet committed
and forecast expenditures.
32
Rey Resources Limited
Notes to the consolidated financial statements
For the year ended 30 June 2021
2.
BASIS OF PREPARATION (Continued)
Rey is pursuing funding alternatives in the form of debt and equity, including discussions with existing
shareholders, and with third parties for farmout certain petroleum interests.
The Directors believe that sufficient funding will be sourced, the repayment of loans extended, the loans
will not be recalled and farm out parties will be sourced in the timeframes required and therefore the
adoption of the going concern basis of preparation is appropriate. The requirement to raise the necessary
funding to meet its commitments and secure farm out parties, or defer expenditure, is a material
uncertainty that may cast significant doubt as to whether the Group will be able to continue as a going
concern.
These conditions indicate the existence of a material uncertainty which may cast significant doubt on the
Group's ability to continue as a going concern and to be able to pay its debts as and when they fall due,
and therefore the Group may be unable to realise its assets and extinguish its liabilities in the normal
course of business and at the amounts stated in the consolidated financial statements.
Basis of measurement
(c)
The consolidated financial statements have been prepared on the historical cost basis.
Functional and presentation currency
(d)
These consolidated financial statements are presented in Australian dollars, which is the Company’s
functional currency.
The Company is of a kind referred to in ASIC Corporations Instrument 2016/191 and in accordance with
that Class Order, all financial information presented in Australian dollars has been rounded to the nearest
thousand dollars unless otherwise stated.
Critical accounting estimates and judgements
(e)
The Directors evaluate estimates and judgements incorporated into these consolidated financial
statements based on historical knowledge and best available current information. Estimates assume a
reasonable expectation of future events and are based on current trends and economic data, obtained
both externally and within the Group. The resulting accounting estimates will, by definition, seldom equal
the related actual results.
Following is a summary of the key assumptions concerning the future, and other key sources of estimation
and accounting judgements at the reporting date that have not been disclosed elsewhere in these
consolidated financial statements.
(i) Exploration and evaluation expenditure
The application of the Group's accounting policy for exploration and evaluation expenditure requires
judgement in determining whether it is likely that future economic benefits will be realised, which may
be based on assumptions about future events or circumstances. Estimates and assumptions may change
if new information becomes available. If after expenditure is capitalised information becomes available
suggesting that the recovery of expenditure is unlikely, the amount capitalised is written off in the profit
and loss in the period when the new information becomes available.
33
Rey Resources Limited
Notes to the consolidated financial statements
For the year ended 30 June 2021
2.
BASIS OF PREPARATION (Continued)
(ii) Impairment of assets
The determination of fair value and value in use requires management to make estimates and
assumptions about expected production and sales volumes, coal prices (considering current and historical
prices, price trends and related factors), foreign exchange rates, coal resources and reserves, operating
costs, closure and rehabilitation costs and future capital expenditure. These estimates and assumptions
are subject to risk and uncertainty; hence there is a possibility that changes in circumstances will alter
these projections, which may impact the recoverable amount of the assets. In such circumstances, some
or all of the carrying amount of the assets may be further impaired or the impairment charge reduced
with the impact recorded in the statement of profit or loss.
(iii) Rehabilitation
The rehabilitation provision has been created based on a third party quotation adjusted by discount and
annual inflation rates, which management believes is a reasonable basis upon which to estimate the
future liability.
These estimates are reviewed regularly to take into account any material changes to the assumptions,
however actual rehabilitation costs will ultimately depend upon the future market prices for the necessary
decommissioning works and the timing of when the rehabilitation costs are incurred. Timing is dependent
upon when the mines/wells ceases to produce at economically viable rates, which in turn, will depend
upon future commodity prices, which are inherently uncertain.
(iv) Income taxes
The Group is subject to income taxes in Australia. Significant judgement is required in determining the
provision for income taxes. There are transactions and calculations undertaken during the ordinary course
of business for which the ultimate tax determination is uncertain. The Group estimates its tax liabilities
based on the Group's understanding of the tax law. Where the final tax outcome of these matters is
different from the amounts that were initially recorded, such differences will impact the current and
deferred income tax assets and liabilities in the period in which such determination is made.
(v) Investment in Surat Gas Project
As disclosed in Note 12, the Group holds 20% equity interest in Southernpec (Australia) Pty Ltd
(“SouthnA”). Notwithstanding the 20% equity interest, the Group has assessed that the investment is not
an associate company at this stage. The Group does not have board representation at SouthnA at the
balance date; therefore, no significant influence. Such assessment requires judgements.
34
Rey Resources Limited
Notes to the consolidated financial statements
For the year ended 30 June 2021
3.
SIGNIFICANT ACCOUNTING POLICIES
Basis of consolidation
(a)
The consolidated financial statements comprise the financial statements of Rey Resources Limited and its
subsidiaries.
Subsidiaries
(i)
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or
has rights to, variable returns from its involvement with the entity and has the ability to affect those
returns through its power over the entity. The financial statements of subsidiaries are included in the
consolidated financial statements from the date on which control commences until the date on which
control ceases.
Transactions eliminated on consolidation
(ii)
Intercompany transactions, balances and unrealised gains and expenses on transactions between
companies of the Group are eliminated in preparing the consolidated financial statements.
Loss of control
(iii)
On the loss of control, the Group de‐recognises the assets and liabilities of the subsidiary, any non‐
controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit
arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous
subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently that
retained interest is accounted for as an equity accounted investee or as a financial asset depending on
the level of influence retained.
Joint arrangements
(iv)
Joint arrangements are defined as the contractually agreed sharing of control of an arrangement, which
exists only when decisions about relevant activities require unanimous consent of the parties sharing
control. These arrangements may be accounted for as a joint venture or a joint operation.
A joint venture, which is an arrangement in which the Group has joint control, whereby the Group has
rights to the net assets of the arrangement, rather than the rights to its assets and obligation for its
liabilities. Interests in joint ventures are accounted for using the equity method.
A joint operation is an arrangement in which the parties with joint control have rights to the assets and
obligations for the liabilities relating to that arrangement. In respect of its interest in a joint operation, a
joint operator the Group recognises its relative share of its assets, liabilities, revenues and expenses.
Interest in unincorporated mining ventures assets and liabilities
(v)
The Group has interest in unincorporated mining ventures and represents the right to the assets and
obligation to the liabilities of these unincorporated ventures. Such interest is accounted in accordance
with respective accounting policy. The Group's interest is primarily related to exploration and evaluation
assets and is accounted for as per the policy stated in Note 2(e).
35
Rey Resources Limited
Notes to the consolidated financial statements
For the year ended 30 June 2021
3.
SIGNIFICANT ACCOUNTING POLICIES (Continued)
Foreign currency
(b)
Transactions in foreign currencies are translated to Australian dollars being the functional currencies of
Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities
denominated in foreign currencies at the reporting date are retranslated to the functional currency at the
exchange rate at that date. The foreign currency differences arising on retranslation are recognised in
profit or loss.
(c) Non derivative financial instruments
Recognition and initial measurement
(i)
Trade receivables are initially recognised when they are originated. All other financial assets and financial
liabilities are initially recognised when the Group becomes a party to the contractual provisions of the
instrument. A trade receivable without a significant financing component is initially measured at the
transaction price.
(ii)
Classification and subsequent measurement
Subsequent measurement of financial assets
For the purpose of subsequent measurement, financial assets are classified into the following categories
upon initial recognition:
financial assets at amortised cost
financial assets at fair value through profit or loss (FVPL)
Classifications are determined by both:
The entity’s business model for managing the financial asset
The contractual cash flow characteristics of the financial assets
All income and expenses relating to financial assets that are recognised in profit or loss are presented
within finance costs, finance income or other financial items, except for impairment of trade receivables
which is presented within other expenses.
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are not
designated as FVPL):
they are held within a business model whose objective is to hold the financial assets and collect its
contractual cash flows
the contractual terms of the financial assets give rise to cash flows that are solely payments of
principal and interest on the principal amount outstanding
36
Rey Resources Limited
Notes to the consolidated financial statements
For the year ended 30 June 2021
3.
(c)
SIGNIFICANT ACCOUNTING POLICIES (Continued)
Non derivative financial instruments (continued)
After initial recognition, these are measured at amortised cost using the effective interest method.
Discounting is omitted where the effect of discounting is immaterial. The Group’s cash and cash
equivalents, trade and most other receivables fall into this category of financial instruments.
Financial assets at fair value through profit or loss (FVPL)
Financial assets that are held within a business model other than ‘hold to collect’ or ‘hold to collect and
sell’ are categorised at fair value through profit and loss. Further, irrespective of business model, financial
assets whose contractual cash flows are not solely payments of principal and interest are accounted for
at FVPL. All derivative financial instruments fall into this category, except for those designated and
effective as hedging instruments, for which the hedge accounting requirements apply.
Refer Note 22 for summary of the classification of the Group’s financial assets and financial liabilities.
Derecognition
(iii)
Financial assets
The Group derecognises a financial asset when the contractual rights to the cash flows from the financial
asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which
substantially all of the risks and rewards of ownership of the financial asset are transferred or in which
the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does
not retain control of the financial asset.
The Group enters into transactions whereby it transfers assets recognised in its statement of financial
position, but retains either all or substantially all of the risks and rewards of the transferred assets. In
these cases, the transferred assets are not derecognised.
Financial liabilities
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled,
or expire. The Group also derecognises a financial liability when its terms are modified and the cash flows
of the modified liability are substantially different, in which case a new financial liability based on the
modified terms is recognised at fair value.
Share capital
(iv)
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary
shares and share options are recognised as a deduction from equity, net of any tax effects.
37
Rey Resources Limited
Notes to the consolidated financial statements
For the year ended 30 June 2021
3.
SIGNIFICANT ACCOUNTING POLICIES (Continued)
(d)
Property, plant and equipment
Recognition and measurement
(i)
Items of property, plant and equipment are measured at cost less accumulated depreciation and
accumulated impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self‐
constructed assets includes the cost of materials and direct labour, any other costs directly attributable
to bringing the assets to a working condition for their intended use, the costs of dismantling and removing
the items and restoring the site on which they are located and capitalised borrowing costs. Purchased
software that is integral to the functionality of the related equipment is capitalised as part of that
equipment.
When parts of an item of property, plant and equipment have different useful lives, they are accounted
for as separate items (major components) of property, plant and equipment.
The gains and losses on disposal of an item of property, plant and equipment are determined by
comparing the proceeds from disposal with the carrying amount of property, plant and equipment and
are recognised net within other income/other expenses in profit or loss.
Subsequent costs
(ii)
The cost of replacing a component of an item of property, plant and equipment is recognised in the
carrying amount of the item if it is probable that the future economic benefits embodied within the
component will flow to the Group, and its cost can be measured reliably. The carrying amount of the
replaced part is derecognised. The costs of the day‐to‐day servicing of property, plant and equipment are
recognised in profit or loss as incurred.
(iii) Depreciation
Depreciation is based on the cost of an asset less its residual value. Significant components of individual
assets are assessed and if a component has a useful life that is different from the remainder of that asset,
that component is depreciated separately.
Depreciation is recognised in profit or loss on a straight‐line basis over the estimated useful lives of each
component of an item of property, plant and equipment. Leased assets are depreciated over the shorter
of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership
by the end of the lease term.
The estimated depreciation rates for the current and comparative years are as follows:
Class of Fixed Asset
Equipment
Depreciation Rate
8% ‐ 33%
Depreciation methods, useful lives and residual values are reviewed at each financial year‐end and
adjusted if appropriate.
38
Rey Resources Limited
Notes to the consolidated financial statements
For the year ended 30 June 2021
3.
SIGNIFICANT ACCOUNTING POLICIES (Continued)
Exploration and development assets
(e)
Exploration, evaluation and development expenditure incurred is accumulated in respect of each
identifiable area of interest.
At the end of each reporting period, the capitalised exploration and evaluation expenditure is assessed
for impairment. This expenditure is only 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 that permits reasonable assessment of the existence of economically recoverable
reserves.
An exploration and evaluation asset is recognised in relation to an area of interest if the following
conditions are satisfied:
(a) The rights to tenure of the area of interest are current;
(b) At least one of the following conditions is also met:
(i)
the exploration and evaluation expenditures are expected to be recouped through successful
development and exploitation of the area of interest, or alternatively, by its sale; and
(ii) exploration and evaluation activities in the area of interest have not at the end of the reporting
period reached a stage which permits a reasonable assessment of the existence or otherwise of
economically recoverable reserves, and active and significant operations in, or in relation to, the
area of interest are continuing.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to
carry forward costs in relation to that area of interest.
Accumulated costs in relation to an abandoned area are written off in full against profit in the year in
which the decision to abandon the area is made.
Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of
interest are demonstrable, the exploration and evaluation assets attributable to that area of interest are
first tested for impairment and then reclassified to mining tenements or mine development assets. Then
the accumulated costs for the relevant area of interest are amortised over the life of the area according
to the rate of depletion of the economically recoverable reserves.
Costs of the site restoration are provided over the life of the facility from when production commences
and are included in the costs of that stage. Site restoration costs include the dismantling and removal of
plant, equipment and building structures, waste removal, and rehabilitation of the site in accordance with
clauses of the mining permits. Such costs are determined using estimates of future costs, current legal
requirements and technology on an undiscounted basis. Any changes in the estimates for costs are
accounted on a prospective basis. In determining the costs of site restoration, there may be uncertainty
regarding the nature and extent of the restoration due to community expectations and future legislation.
39
Rey Resources Limited
Notes to the consolidated financial statements
For the year ended 30 June 2021
3.
SIGNIFICANT ACCOUNTING POLICIES (Continued)
Impairment of assets
(f)
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are
tested annually for impairment, or more frequently if events or changes in circumstances indicate that they
might be impaired. Other assets are tested for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment loss is recognised immediately
in profit or loss for the amount by which the asset's carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset's fair value less costs to sell and value in use.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash inflows which are largely independent of the cash inflows from other assets or
groups of assets (cash generating units, "CGUs"). For the purposes of goodwill impairment testing, CGUs to
which goodwill has been allocated are aggregated so that the level at which impairment is tested reflects
the lowest level at which goodwill is monitored for internal reporting purposes. The goodwill acquired in a
business combination, for the purpose of impairment testing, is allocated to CGUs that are expected to
benefit from the synergies of the combination.
Non‐financial assets other than goodwill that suffered an impairment are reviewed for possible reversal
of the impairment at the end of each reporting period.
Non‐derivative financial assets
(i)
In assessing collective impairment the Group uses historical trends of the probability of default, timing of
recoveries and the amount of loss incurred, adjusted for management’s judgement as to whether current
economic and credit conditions are such that the actual losses are likely to be greater or less than
suggested by historical trends.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the
difference between its carrying amount and the present value of the estimated future cash flows
discounted at the asset’s original effective interest rate. Losses are recognised in profit or loss and
reflected in an allowance account against receivables. Interest on the impaired asset continues to be
recognised through the unwinding of the discount. When a subsequent event causes the amount of
impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.
Employee benefits
(g)
Provision is made for the Group’s liability for employee benefits arising from services rendered by
employees to balance sheet date. Employee benefits that are expected to be settled within one year have
been measured at the amounts expected to be paid when the liability is settled, plus related on‐cost.
Employee benefits payable later than one year have been measured at the present value of the estimated
future cash outflows to be made for those benefits.
Short‐term employee benefits
(i)
Short‐term employee benefit obligations are measured on an undiscounted basis and are expensed as the
related service is provided. A liability is recognised for the amount expected to be paid under short‐term
cash bonus or profit‐sharing plans if the Group has a present legal or constructive obligation to pay this
amount as a result of past service provided by the employee and the obligation can be estimated reliably.
40
Rey Resources Limited
Notes to the consolidated financial statements
For the year ended 30 June 2021
3.
SIGNIFICANT ACCOUNTING POLICIES (Continued)
(h)
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of
GST incurred is not recoverable from the Australian Tax Office. In these circumstances GST is recognised
as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables
in the balance sheet are shown inclusive of GST.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component
of investing and financing activities, which are disclosed as operating cash flows.
Income tax
(i)
Income tax expense comprises current and deferred tax. Current and deferred tax is recognised in profit
or loss except to the extent that it relates to a business combination, or items recognised directly in equity
or in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax
rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect
of previous years. Current tax payable also includes any tax liability arising from the declaration of
dividends.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax
is not recognised for:
temporary differences on the initial recognition of assets or liabilities in a transaction that is not a
business combination and that affects neither accounting nor taxable profit or loss.
temporary differences related to investments in subsidiaries and associates and jointly controlled
entities to the extent that it is probable that they will not reverse in the foreseeable future taxable
temporary differences arising on the initial recognition of goodwill.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when
they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax
liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable
entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis
or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences,
to the extent that it is probable that future taxable profits will be available against which they can be
utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is
no longer probable that the related tax benefit will be realised.
41
Rey Resources Limited
Notes to the consolidated financial statements
For the year ended 30 June 2021
3.
SIGNIFICANT ACCOUNTING POLICIES (Continued)
The Company and its wholly‐owned Australian resident entities are part of a tax‐consolidated group. As a
consequence, all members of the tax‐consolidated group are taxed as a single entity. The head entity
within the tax‐consolidated group is Rey Resources Limited. Current income tax expense / benefit,
deferred tax liabilities and deferred tax assets arising from temporary differences of the members of the
tax‐consolidated group are recognised in the separate financial statements of the members of the tax‐
consolidated group using the ‘separate taxpayer within the group’ approach by reference to the carrying
amounts of assets and liabilities in the separate financial statements of each entity and the tax values
applying under tax consolidation.
Earnings per share
(j)
The Group presents basic and diluted earnings per share data for its ordinary shares. Basic earnings per
share is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by
the weighted average number of ordinary shares outstanding during the period, adjusted for own shares
held. Diluted earnings per share is determined by adjusting the profit or loss attributable to ordinary
shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares
held, for the effects of all dilutive potential ordinary shares, which comprise share options and share
performance rights granted to employees.
Segment reporting
(k)
An operating segment is a component of the Group that engages in business activities from which it may
earn revenues and incur expenses, including revenues and expenses that relate to transactions with any
of the Group’s other components. All operating results are reviewed regularly by the Group’s Chief
Operating Decision maker (CODM). The CODM, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Board of Directors.
Segment capital expenditure is the total cost incurred during the period to acquire property, plant and
equipment, and exploration and evaluation expenditure other than goodwill.
Provisions
(l)
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive
obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be
required to settle the obligation. Provisions are determined by discounting the expected future cash flows
at a pre‐tax rate that reflects current market assessments of the time value of money and the risks specific
to the liability. The unwinding of the discount is recognised as finance cost.
Other income
(m)
Other income primarily relates to sundry deposits and recognised on receipt in the bank account or when
the right to receive payment is established.
Finance income and finance costs
(n)
Borrowing costs that are not directly attributable to the acquisition, construction or production of a
qualifying asset are recognised in profit or loss using the effective interest method.
Foreign currency gains and losses are reported on a net basis as either finance income or finance cost
depending on whether foreign currency movements are in a net gain or net loss position.
42
Rey Resources Limited
Notes to the consolidated financial statements
For the year ended 30 June 2021
3.
SIGNIFICANT ACCOUNTING POLICIES (Continued)
Changes in significant accounting policies
(o)
No new Australian Accounting Standards and Interpretations that have been issued but are not yet
effective have been applied in the preparation of these consolidated financial statements. Such standards
are not expected to have a material impact on the consolidated entity's financial statements on initial
application.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been
early adopted.
4.
OTHER INCOME
in thousands of dollars
Other income/(expense)
Gain on disposal of investment
Government Subsidy *
Others
* Cash flow boost payment
5.
FINANCE COSTS
in thousands of dollars
Finance costs
Bank charges
Interest on loans
6.
LOSS FOR THE YEAR
in thousands of dollars
Corporate and administration overheads
Employee benefits (see below)
Depreciation and amortisation
Insurance premiums
Legal costs
Other expenses (incl travel expense)
Employee benefits expense consists of:
Salaries and fees
Superannuation
2021
2020
‐
67
‐
67
159
50
14
223
2021
2020
2
1,006
1,008
2
707
709
2021
2020
163
109
‐
2
19
89
382
97
12
109
314
242
1
15
126
4
702
218
24
242
43
Rey Resources Limited
Notes to the consolidated financial statements
For the year ended 30 June 2021
7.
INCOME TAX EXPENSE
in thousands of dollars
2021
2020
Income tax recognised in profit or loss
Current tax expenses
Deferred tax expenses
Income tax expenses
‐
‐
‐
‐
‐
‐
‐
‐
Reconciliation of prima facie tax on accounting loss before tax to income tax (benefit) / expense
in thousands of dollars
Accounting loss before tax
At statutory income tax rate of 26% (2020: 27.5%)
Non‐deductible expenses
Tax losses for which no deferred tax asset was recognised
Income tax benefit
2021
2020
(1,323)
(1,880)
(344)
(18)
362
‐
(517)
(16)
533
‐
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
in thousands of dollars
2021
2020
2021
2020
Statement of financial
position
Profit or loss
Deferred tax liabilities
Exploration and evaluation expenditure
Other
Gross deferred tax liability
Deferred tax assets
Tax loss carry forwards
Other
Gross deferred tax asset
Net deferred tax asset
(9,571)
(1)
(9,572)
8,695
877
9,572
‐
(9,904)
(1)
(9,905)
8,994
911
9,905
‐
333
‐
333
(299)
(34)
(333)
‐
(28)
3
(25)
(60)
85
25
‐
44
Rey Resources Limited
Notes to the consolidated financial statements
For the year ended 30 June 2021
7.
INCOME TAX EXPENSE (Continued)
Tax losses
At 30 June 2021, the Group has tax losses arising in Australia of $85,881,104 (2020: $83,721,067) that are
available for offset against future taxable income. The Group has not recognised a deferred tax asset in
relation to these tax losses (other than an offset to the deferred tax liability) as realisation of the benefit
is not regarded as probable. Additionally, the ability of the Group to utilise these tax losses will depend
on whether the Group is determined to pass the Australian Tax Office rules of continuity of ownership
test, or failing that, the same business test.
Tax consolidation
Rey Resources Limited and its 100% owned Australian resident subsidiaries formed a tax‐consolidated
Group with effect from 1 July 2009. The first consolidated income tax return for the Group was filed for the
tax year ended 30 June 2010. Rey Resources Limited is the head entity of the tax‐consolidated group.
8. LOSS PER SHARE
in thousands of dollars
2021
2020
Earnings
Earnings used in calculating basic and diluted
earnings per share attributable to the owners of
the company
Number of ordinary shares
Weighted average number of ordinary shares
outstanding during the year used in calculating
basic and diluted loss per share
Basic loss per Share (cents per share)
(1,323)
(1,880)
2021
2020
212,011,021
(0.62)
212,176,887
(0.89)
Diluted loss per Share (cents per share)
(0.62)
(0.89)
Calculation of loss per share
Basic loss per share is calculated as loss for the period attributable to shareholders of $1,323,000 (2020:
$1,880,000) divided by the weighted average number of ordinary shares of 212,011,021 (2020:
212,176,887). The diluted loss per share for the year ended 30 June 2021 and 2020 was the same as the
basic loss per share as there were no dilutive instruments outstanding.
45
Rey Resources Limited
Notes to the consolidated financial statements
For the year ended 30 June 2021
9a.
CASH AND CASH EQUIVALENTS
in thousands of dollars
Cash at bank and in hand
Cash and cash equivalents
2021
2020
36
36
175
175
The Group’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are
disclosed in note 22.
9b.
RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES
in thousands of dollars
Note
2021
2020
(1,323)
(1,880)
Cash flows from operating activities
Loss for the period
Adjustments for:
Depreciation
Impairment of capitalised exploration expenditure
Change in fair value of investment
Government grant receivable
Finance costs
Other non‐cash item
11
12
5
Decrease in trade and other receivables
Decrease / (increase) in prepayments
(Decrease) / increase in trade and other payables
Decrease in employee benefits
Net cash used in operating activities
‐
‐
‐
‐
1,006
‐
(317)
(29)
‐
(2)
5
(343)
9c.
CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES
in thousands of dollars
ASF Loan
Liu Loan
Balance at 1 July 2019
Net cash (used in)/from financing activities
Interest payable
Balance at 1 July 2020
Net cash (used in)/from financing activities
Interest payable
1,835
90
168
2,093
(1,540)
86
3,699
1,720
189
5,608
3,892
272
1
692
159
11
357
8
(652)
2
13
(43)
(11)
(691)
Total
5,534
1,810
357
7,701
2,352
358
Balance at 30 June 2021
639
9,772
10,411
46
Rey Resources Limited
Notes to the consolidated financial statements
For the year ended 30 June 2021
10.
TRADE AND OTHER RECEIVABLES
in thousands of dollars
Current
Other receivables
11.
PROPERTY, PLANT AND EQUIPMENT
in thousands of dollars
Equipment
At cost
Accumulated depreciation
Total Equipment
Movements in carrying amounts:
in thousands of dollars
Balance as at 1 July
Additions
Disposals
Depreciation expense
Balance as at 30 June
12.
FINANCIAL ASSETS
in thousands of dollars
Measured at FVPL
Investment in Norwest Energy NL at 1
Changes in fair value of investment 1
Disposal of investment 1
Investment in Southernpec (Australia) Pty Ltd 2
2021
2020
47
47
18
18
2021
2020
181
(178)
3
181
(178)
3
2021
2020
3
‐
‐
‐
3
4
‐
‐
(1)
3
2021
2020
‐
‐
‐
700
700
106
159
(265)
‐
‐
1. The financial asset at FVTPL is an investment in Norwest Energy NL. Fair value represents the market
value of the financial assets at balance date. On 5 June 2015, Rey subscribed for $250,000 of Norwest
Energy NL (Norwest) shares at a price of $0.004712 per share. This financial asset is initially measured at
fair value plus transaction costs that are directly attributable to its acquisition or issue. These assets are
subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are
recognised in profit or loss. In January 2020, the Company disposed of all its shareholding of 53,056,027
shares in Norwest Energy NL (ASX:NWE) for $0.005 per share for a total consideration of $265,280 (before
costs)/$264,405 (after costs).
47
Rey Resources Limited
Notes to the consolidated financial statements
For the year ended 30 June 2021
12.
FINANCIAL ASSETS (Continued)
2. Pursuant to a term sheet signed on 18 December 2020 between the Company, Southernpec (Australia)
Pty Ltd (“SouthnA”) and Southernpec Holdings Pty Ltd (“SouthnH”, SouthnA’s parent entity), the Company
will acquire up to 75% equity interest in SouthnA in three stages of which 10% for $400,000 under the first
stage was paid in December 2020. The parties further entered into a Supplementary Terms Sheet in May
2021 for the modification of second stage investment and the subscription of additional 10% equity interest
in SouthnA by the Company for $300,000, which was paid in May 2021. Further investment could be made
if all conditions to commence the second stage are satisfied or waived. If the Group decides to withdraw
from the transaction, pursuant to the Supplementary Terms Sheet, SouthnH will have an option to acquire
from the Company those 20% equity interests for $700,000 within 90 days. Refer to the Company’s
announcements dated 21 December 2020 and 17 May 2021 for details of the transaction.
SouthnA holds significant interests in 7 conventional gas production licences in Surat Gas Project located
at Surat Basin in Queensland. As at the balance sheet date, the Company holds 20% equity interest in
SouthnA. Notwithstanding the 20% equity interest, the Group has assessed that the investment is not an
associate company at this stage. The Group does not have board representation at SouthnA at the balance
date; therefore, no significant influence. As a result, the investment is accounted for as financial assets
measured at fair value. For further information refer to note 22.
13.
EXPLORATION AND EVALUATION EXPENDITURE
Working
Interests
Exploration and evaluation
expenditures carried
forward
in thousands of dollars
2021
2020
2021
2020
100%
20%
100%
100%
100%
100%
100%
40%
100%
100%
100%
100%
in respect of:
Duchess Paradise 1
EP457 and EP458 2
EP104 3
R1 3
L15 3
EP487 4
Costs carried forward
Movements in carrying amount:
in thousands of dollars
Opening balance
Current year expenditure capitalised
Impairment 1
Adjustment of restoration provision for L15, R1
Others
21,590
4,648
2,971
868
3,390
3,763
37,230
2021
36,432
749
‐
49
‐
37,230
21,514
4,370
2,944
660
3,281
3,663
36,432
2020
35,912
1,198
(692)
‐
14
36,432
48
Rey Resources Limited
Notes to the consolidated financial statements
For the year ended 30 June 2021
13.
EXPLORATION AND EVALUATION EXPENDITURE (Continued)
1. Exploration and evaluation expenditure recognised in Duchess Paradise (coal project) is held solely by the Group.
Tenement E04/1386 was surrendered and fully impaired in financial year 2020. The project has currently two
tenements including E04/1519 and E04/1770. E04/1519 will be expired on 19 April 2022.
2. Exploration and evaluation expenditure recognised on EP457 and EP458 tenements (Petroleum project) under
joint venture agreement with Buru Energy Limited. This amount includes the Group’s proportionate share of
exploration assets held by the respective joint venture entities. On 21 December 2020, a binding letter of agreement
had been executed between Rey, Buru and Origin pursuant to which both Buru and Rey will farm‐out 20% of their
respective participating interest in each of EP457 and EP458 to Origin. On 15 April 2021, a formal farm‐in agreement
was executed between the parties and Origin now holds 40% interests in each of the tenements. Origin shall elect
by 5 January 2024 whether to carry and fund the first $6m for one exploration well to be drilled on the Permits. If
Origin elects to drill the well, the drilling needs to be completed by 5 January 2025 or such later date agreed by the
parties. If Origin elects not to drill the well, it can choose to either withdraw from the Joint Ventures (and assign the
Farmin Interests back equally to Buru and Rey) or remain in the Joint Ventures and assign a 10% interest in the
Permits back to each of Buru and Rey.
3. Acquisition costs and the exploration and evaluation expenditure recognised on EP104, R1 and L15 (Petroleum
projects) which are held solely by the Group. EP104 will be expired on 29 July 2022.
4. Exploration and evaluation expenditure recognised on EP487 (Petroleum project) which is held solely by the
Group.
Management expect to extend the right of tenure for tenements approaching expiry.
14.
TRADE AND OTHER PAYABLES
in thousands of dollars
2021
2020
Unsecured liabilities
Sundry payables and accrued expenses
65
65
67
67
The Group’s exposure to currency and liquidity risk related to trade and other payables is disclosed in
note 22.
15.
EMPLOYEE BENEFITS
in thousands of dollars
Employee benefits
Current
Non‐current
2021
2020
11
‐
11
5
‐
5
49
Rey Resources Limited
Notes to the consolidated financial statements
For the year ended 30 June 2021
16.
PROVISION
in thousands of dollars
Restoration provision (L15, R1)
2021
3,321
3,321
2020
3,272
3,272
The restoration provision relates to the West Kora 1 well and disused production facilities in Production
License L15, which was estimated based upon converting the well to a water well following confirmation
from the pastoral lease owner and removing the tank farm and restoring the site back to its original
condition.
The provision has been calculated on an assumption that management expects that the cash out flow will
not be incurred until approximately 2029.
17.
ISSUED CAPITAL
in thousands of dollars
211,927,539 (2020: 212,160,439) fully paid ordinary
shares
2021
2020
86,537
86,589
86,537
86,589
The Company does not have a limited amount of authorised capital and issued shares do not have a par
value.
Ordinary shares participate in the proceeds on winding up of the parent entity in proportion to the
numbers of shares held.
Movements in shares on issue
On issue at beginning of the year
Share buy back
On issue at the end of the year
2021
2020
Number
212,160,439
(232,900)
211,927,539
$’000
86,589
(52)
86,537
Number
212,188,439
(28,000)
212,160,439
$’000
86,597
(8)
86,589
During the year ended 30 June 2021, a total of 232,900 shares were bought back at a cost of $51,531 and
cancelled. On 22 July 2021, the Company announced the extension of the on‐market buyback program
for a further 12 months from 5 August 2021.
50
Rey Resources Limited
Notes to the consolidated financial statements
For the year ended 30 June 2021
18.
COMMITMENTS AND CONTINGENTS
Exploration expenditure commitments
The commitments are required in order to maintain the Group’s interests in good standing with the
DMIRS. It includes commitment for both mineral exploration tenements and also the company’s share in
petroleum exploration permits in which it has joint venture interests. These obligations may be varied
from time to time, subject to approval by the DMIRS.
In thousands of dollars
Year 1
Year 2‐5
Total
Mineral
101
Petroleum
953
0
101
6,239
7,192
Total
1,054
6,239
7,293
Contingent
Other than those disclosed in the ‘Business Performance and Outlook’ section in this Report in relation to
the native title negotiation for the Duchess Paradise Coal Project, as at 30 June 2021 and 2020 there are
no contingent liabilities.
19.
INTERESTS IN SUBSIDIARIES
Consolidated subsidiaries
Country of incorporation
Blackfin Pty Limited
Gulliver Productions Pty Limited
Humitos Pty Limited
Rey Derby Block Pty Limited
Rey Derby Port Operations Pty Limited
Rey Surat Gas Pty Ltd (formerly Rey Derby
Pty Ltd)
Rey Lennard Shelf Pty Limited
Rey Oil and Gas Pty Limited
Rey Royalty Chile Pty Limited
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
20.
MINING VENTURE INTERESTS
Ownership Interest
2020
100%
100%
100%
100%
100%
100%
2021
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
The Group has interest in unincorporated mining venture (commonly referred as “joint venture
agreements”). Those agreements have been entered into with third parties. Details of the agreements are
disclosed below.
Assets employed by these unincorporated mining ventures are accounted for as based on applicable
accounting standards. The Group’s expenditure in respect of them is brought to account initially as
capitalised exploration expenditure (refer note 13) and disclosed distinctly from capitalised exploration
costs incurred on the Group’s 100% owned projects.
51
Rey Resources Limited
Notes to the consolidated financial statements
For the year ended 30 June 2021
20.
MINING VENTURE INTERESTS (continued)
Rey/Buru/Origin Joint Venture
On 18 March 2013, the Company entered into an agreement with Buru Energy Limited (“Buru”) and
Mitsubishi Corporation pursuant to which the Company acquired an additional 15% interest in exploration
permits EP457 and EP458 in the Canning Basin, Western Australia.
On 10 December 2018, the Company announced that, pursuant to a transaction entered into between
Buru and Diamond Resources (Barbwire) Pty Limited (“DRB”) whereby Buru will increase its interests in
these permits from 37.5% to 60%, Rey (via its wholly owned subsidiary Rey Oil and Gas Pty Limited) has
exercised its pre‐emptive rights under the permit joint operating agreements and entered into a parallel
agreement with DRB to increase its current interests in each of the EP457 and EP458 permits from 25%
to 40% for a total cash consideration of $480,000.
On 21 December 2020, a binding letter of agreement had been executed between Rey, Buru Fitzroy Pty Ltd
(“Buru”) and Origin Energy West Pty Ltd (“Origin”) pursuant to which both Buru and Rey will farmout 20%
of their respective participating interest in each of EP457 and EP458 to Origin. On 15 April 2021, a formal
farm‐in agreement had been executed between the parties and Origin is now interested in 40% in each of
the tenements.
The current interest in the two exploration permits, known as “The Fitzroy Blocks”, are:
Rey Oil and Gas Pty Ltd
Buru Fitzroy Pty Ltd
Origin Energy West Pty Ltd
20%
40%
40%
(of which a 6.66% interest is free carried to production)
(Buru Energy Limited, operator)
As a result of the farm‐in agreement, the Group has significant influence over the unincorporated mining
venture interest over the exploration permits. The total amount of the Group’s capitalised exploration
and evaluation expenditure under this joint venture agreement at the reporting date was $4,648,000
(2020: $4,370,000).
21.
RELATED PARTIES
Parent entity
(a)
The ultimate parent entity within the Group is Rey Resources Limited.
Subsidiaries
(b)
Interests in subsidiaries are set out in note 19.
KMP compensation
(c)
Disclosures relating to compensation of the KMP compensation comprised:
Individual Directors’ and executives’ compensation disclosures
in dollars
Short term benefits
Post‐employment benefits
2021
126,502
5,700
132,202
2020
263,122
13,941
277,063
52
Rey Resources Limited
Notes to the consolidated financial statements
For the year ended 30 June 2021
21. RELATED PARTIES (Continued)
Information regarding individual Directors’ and executives’ compensation and some equity instruments
disclosures as required by Corporations Regulations 2M.3.03, is provided in the Remuneration Report
section of the Directors’ report.
Apart from the details disclosed in this note, no Director has entered into a material contract with the
Company or the Group since the end of the previous financial year and there were no material contracts
involving Directors’ interests existing at year‐end.
Loans to KMP and their related parties
There were no loans given to KMP and their related parties.
(d)
Transactions with related parties
in dollars
ASF Group Limited
Service fees
Loan granted (inclusive of interest) 1
Current
Non current
Wanyan Liu
Loan granted (inclusive of interest) 2
Current
Non current
2021
2020
75,000
639,431
‐
639,431
9,771,693
‐
9,771,693
105,000
2,092,947
‐
2,092,947
5,608,123
770,082
4,838,041
1. An unsecured loan of $3.8 million was granted by ASF Group Ltd, a substantial shareholder of the
Company, with maturity date on 31 December 2019 and interest bearing at 12% per annum. On 31
December 2019, the Company announced that it has agreed with ASF to reduce the facility amount
from $3.8 million to $2 million and to extend the maturity date of the loan facility from 31 December
2019 to 31 March 2020. Subsequently the maturity date was further extended to 31 October 2022.
As at 30 June 2021, $639,431 representing accrued interests remain outstanding and the total $2
million loan facility remains available for draw down.
2. An unsecured loan of $500,000 was granted by Wanyan Liu (“Liu”), a substantial shareholder of the
Company, with maturity date on 31 March 2021 and interest bearing 12% per annum (“First Liu
Loan”). On 18 April 2019, the Company entered into another loan agreement with Liu for the granting
of $3 million additional loan (“Second Liu Loan”), with maturity date on 31 December 2020 and
interest bearing at 12% per annum payable quarterly by cash. On 17 July 2019, the Company entered
into a new loan agreement with Liu pursuant to which Liu agreed to grant a further loan facility of $3
million (“Third Liu Loan”) to the Company maturing 31 December 2021 and interest bearing 12% per
annum. On 25 June 2020, the Company announced that Liu agreed to increase the Second Liu Loan
from $3 million to $5 million and extend the maturity date from 31 December 2020 to 31 October
2021. On 30 April 2021, the Company announced that Liu agreed to consolidate the aforesaid three
loan facilities and to increase the loan facility amount by $4 million to a total of $12.5 million and
extend the maturity date to 31 October 2022.
As at 30 June 2021. A total of $9.5 million had been drawn down by the Company.
53
Rey Resources Limited
Notes to the consolidated financial statements
For the year ended 30 June 2021
22.
FINANCIAL RISK MANAGEMENT AND FAIR VALUE OF FINANCIAL INSTRUMENTS
Categories of financial instruments
The Group’s financial instruments consist mainly of cash and cash equivalents, trade and other
receivables, investment, trade and other payables, and loan and borrowings.
The totals for each category of financial instruments, measured in accordance with AASB 9 as detailed in
the accounting policies to these financial statements, are as follows:
in thousands of dollars
2021
2020
Financial assets measured at amortised cost
‐ Cash and cash equivalents
‐ Trade and other receivables
Financial assets measured at FVPL
‐ Investment in SouthnA
Total financial assets
Financial liabilities measured at amortised cost
Trade and other payables
Total financial liabilities
36
47
700
783
65
65
175
18
‐
193
67
67
Trade and other receivables: analysis of age of financial asset
The aging of trade and other receivables at the reporting date that were not impaired was as follows:
Neither past due nor impaired
Financial risk management framework
2021
47
2020
18
The Board of Directors has overall responsibility for the establishment and oversight of the risk
management framework.
The Group does not use any form of derivatives for speculative purposes. The Group is not at a level of
exposure that requires the use of derivatives to hedge its exposure.
The main risks the Group is exposed to through its financial instruments are liquidity risk and market risk
which includes interest rate risk.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument
fails to meet its contractual obligations, and arises principally from the Group’s cash and cash equivalents,
and trade and other receivables.
The carrying amount of financial assets represents the maximum credit exposure.
The Group limits its exposure to credit risk in respect of cash and cash equivalents and other deposits with
banks by only dealing with reputable banks with high credit ratings.
54
Rey Resources Limited
Notes to the consolidated financial statements
For the year ended 30 June 2021
22.
FINANCIAL RISK MANAGEMENT AND FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
In respect of trade and other receivables, the Group has no significant concentration of credit risk with
respect to any single counter party or group of counter parties. The Group is not exposed to any significant
credit risk as there were no trading operations during the year.
At 30 June 2021 and 30 June 2020, there was no impairment loss allowance and there were no receivables
past due but not impaired.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have
sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without
incurring unacceptable losses or risking damage to the Group’s reputation.
The Group manages liquidity risk by maintaining adequate cash reserves from funds raised in the market,
by continuously monitoring forecast and actual cash flows and ensuring that adequate uncommitted
funding is available and maintained.
The following are the expected maturities of financial assets and the contractual maturities of financial
liabilities, including estimated interest payments and excluding the impact of netting agreements:
2021
in thousands of dollars
Carrying
amount
Expected /
contractual
cash flows
6 months
or less
6‐12
months
1‐2
years
2‐5
years
More
than 5
years
Financial liabilities
Trade and other payables
Loans from shareholders
65
10,411
10,476
65
10,411
10,476
65
272
337
‐
‐
‐ 10,139
‐ 10,139
‐
‐
‐
‐
‐
‐
2020
in thousands of dollars
Carrying
amount
Expected /
contractual
cash flows
6 months
or less
6‐12
months
1‐2
years
2‐5
years
More
than 5
years
Financial liabilities
Trade and other payables
Loans from shareholders
Currency risk
67
7,701
7,768
67
7,792
7,859
67
181
248
‐
680
680
‐
6,931
6,931
‐
‐
‐
‐
‐
‐
The Group is not exposed to currency risk at the reporting date because the Group holds no financial
assets or liabilities denominated in foreign currency.
Interest rate risk
The Group is exposed to interest rate risk which is the risk that a financial instrument’s fair value or future
cash flows will fluctuate as a result of changes in market interest rates on interest‐bearing financial
instruments.
55
Rey Resources Limited
Notes to the consolidated financial statements
For the year ended 30 June 2021
22.
FINANCIAL RISK MANAGEMENT AND FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
At the reporting date, the Group had the following mix of financial assets exposed to interest rate risk.
in thousands of dollars
Variable rate instruments
Cash and cash equivalents
2021
2020
36
36
175
175
At the reporting date, the Group had a total of $14.5 million term loan facilities from shareholders. Due
to the fixed interest rate of the loans, the Group is not exposed to interest rate fluctuations.
Cash flow sensitivity analysis for variable rate instruments
A change of 100 basis points in interest rates at the reporting date would have increased or decreased
profit or loss by $0 (2020: $0).
Fair values
Financial assets measured at FVTL
The Group accounts for its investment in SouthnA as financial assets measured at FVPL. The reporting
date, fair value of the investment approximates to the cost as it is a recent transaction completed within
12 month with a unrelated party.
The investment is categorised into Level 3 fair value hierarchy as defined in AASB 13 Fair value
measurement. Techniques which use inputs that have significant effect on the recorded fair value that
are not based on observable market date.
in thousands of dollars
2021
Level 1
Level 2
Level 3
Total
‐ Investment in SouthnA
‐
‐
700
700
During the year ended 30 June 2020 and 21, there were no transfers between Level 1 and Level 2 or
transfer into or out of Level 3.
Other financial assets and liabilities
The carrying amounts of other financial assets and financial liabilities are assumed to approximate their
fair values due to their short‐term nature.
56
Rey Resources Limited
Notes to the consolidated financial statements
For the year ended 30 June 2021
23.
OPERATING SEGMENTS
The Group operates in two segments, mineral exploration and development and petroleum exploration in
one geographical location, Western Australia. The consolidated financial results from these segments are
equivalent to the financial statements of the Group.
Operating segment information
Consolidated
Revenue
Total
Reportable
segment
revenue
Other income/
(expense)
Impairment of
assets
Finance costs
Administration
cost
Profit/(loss)
before income
tax benefit
income tax
benefit
Loss after
income tax
benefit
Assets
Other Assets
Segment
assets
Total assets
Liability
Other
liabilities
Segment
liabilities
Total
Liabilities
Capital
Expenditure
Mineral
2021
$'000
Mineral
2020
$'000
Petroleum
2021
$'000
Petroleum
2020
$'000
Corporate
2021
$'000
Corporate
2020
$'000
Total
2021
$'000
Total
2020
$'000
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
14
(692)
‐
‐
(678)
‐
(678)
‐
‐
‐
‐
‐
‐
‐
‐
‐
700
‐
‐
‐
‐
‐
‐
‐
‐
‐
21,590
21,590
21,514
21,514
15,640
16,340
14,918
14,918
‐
60
‐
209
‐
60
‐
(1,008)
‐
(709)
‐
(1,008)
‐
223
(692)
(709)
(375)
(702)
(375)
(702)
(1,323)
(1,202)
(1,323)
(1,880)
‐
‐
‐
‐
(1,323)
(1,202)
(1,323)
(1,880)
89
‐
89
199
‐
199
789
199
37,230
38,019
36,432
36,631
‐
‐
‐
‐
‐
‐
‐
‐
10,487
7,773
10,487
7,773
3,321
3,272
‐
‐
3,321
3,272
3,321
3,272
10,487
7,773
13,808
11,045
76
99
673
1,099
‐
‐
749
1,198
57
Rey Resources Limited
Notes to the consolidated financial statements
For the year ended 30 June 2021
24.
AUDITORS REMUNERATION
in dollars
Audit services
Auditors of the Company
KPMG Australia:
Audit and review of financial reports
Other assurance services
ShineWing Australia:
Audit and review of financial reports
Other assurance services
25.
SUBSEQUENT EVENTS
2021
2020
‐
‐
61,500
‐
61,500
‐
5,693
50,000
‐
55,693
On 22 July 2021, the Company announced the extension of its on‐market buyback program for a further 12
months from 5 August 2022.
No other matter or circumstance that is not already disclosed in these financial statements has arisen since
30 June 2021 that has significantly affected, or may significantly affect the Group’s operations, the results
of those operations, or the Group’s state of affairs in future financial years.
58
Rey Resources Limited
Notes to the consolidated financial statements
For the year ended 30 June 2021
26.
PARENT ENTITY DISCLOSURES
As at, and throughout, the financial year ended 30 June 2021 the parent entity of the Group was Rey
Resources Limited.
in thousands of dollars
2021
2020
A. Result of parent entity
Loss for the year
Total comprehensive loss for the year
B. Financial position of the parent entity
Total current assets
Total non‐current assets
Total assets
Total current liabilities
Total non‐current liabilities
Total liabilities
Net assets
(1,315)
(1,315)
90
39,293
39,383
60
10,422
10,482
28,901
(2,871)
(2,871)
191
37,848
38,039
841
6,931
7,772
30,267
Total equity of the parent entity comprising of:
Share capital
Accumulated losses
Total equity
86,537
(57,636)
28,901
86,589
(56,322)
30,267
Parent entity contingencies
C.
Other than those disclosed in note 18, no contingent liabilities of the parent entity.
Parent entity capital commitments
D.
As at 30 June 2021 and 2020, the parent entity has not entered into any material contractual agreements
for the acquisition of property, plant or equipment.
Parent entity guarantees in respect of the debts of its subsidiaries
E.
As at 30 June 2021 and 2020, there are no guarantees entered into by the parent entity.
59
Rey Resources Limited
Directors’ Declaration
For the year ended 30 June 2021
The Board of Directors of Rey Resources Limited declares that:
(a)
The consolidated financial statements and the accompanying notes are in accordance with the
Corporations Act 2001, including:
giving a true and fair view of the financial position as at 30 June 2021 and performance of the
Group for the financial year ended on that date; and
complying with Australian Accounting Standards (including the Australian Accounting
Interpretations), the Corporations Regulations 2001 and other mandatory professional
reporting requirements.
(b)
(c)
The Directors draw attention to note 2(a) of the consolidated financial statements, which includes
a statement of compliance with the International Financial Reporting Standards.
There are reasonable grounds to believe that the Company will be able to pay its debts as and
when they fall due.
The Board of Directors has received the declaration by the Managing Director and Financial Controller
required by Section 295A of the Corporations Act 2001 for the financial year ended 30 June 2021.
Signed in accordance with a resolution of the Directors.
Min Yang
Non‐Executive Chairman
Sydney, Australia
29 September 2021
60
Take the lead
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF REY RESOURCES LIMITED
Report on the Audit of the Consolidated Financial Statements
Opinion
We have audited the consolidated financial statements of Rey Resources Limited (the “Company”) and its
subsidiaries (the “Group”) which comprises the consolidated statement of financial position as at 30 June 2021, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in
equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated
financial statements, including a summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying consolidated financial statements of the Group are in accordance with the
Corporations Act 2001, including:
a. giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial performance
for the year then ended, 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 Statements 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 & 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 consolidated financial statements 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.
Material Uncertainty Related to Going Concern
We draw attention to Note 2(b) in the consolidated financial statements, which indicates that the Group incurred a
net loss of $1,323,000 and had operating and investing cash outflows totalling $1,792,000 for the year ended 30
June 2021. As stated in Note 2(b), these conditions, along with other matters as set forth in Note 2(b), indicate that
a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern.
Our opinion is not modified in respect of this matter.
Brisbane
Level 14
12 Creek Street
Brisbane QLD 4000
T + 61 7 3085 0888
Melbourne
Level 10
530 Collins Street
Melbourne VIC 3000
T + 61 3 8635 1800
Perth
Level 25
108 St Georges Terrace
Perth WA 6000
T + 61 8 6184 5980
Sydney
Level 8
167 Macquarie Street
Sydney NSW 2000
T + 61 2 8059 6800
ShineWing Australia ABN 39 533 589 331. Liability limited by a scheme approved under Professional
Standards Legislation. ShineWing Australia is an independent member of ShineWing International Limited.
sw-au.com
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the consolidated financial statements of the current period. These matters were addressed in the context of our
audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Key Audit Matter
How the matter was addressed during the audit
Exploration and Evaluation Expenditure (Note
13)
Our audit procedures included:
Take the lead
As at 30 June 2021, the Group has $37 million
exploration and evaluation expenditure (E&E
Expenditure) capitalised as assets.
The E&E Expenditure must be assessed for
impairment when facts and circumstances suggest
that the carrying amount of an exploration and
evaluation asset may exceed its recoverable
amount in accordance with AASB 6 Exploration for
and Evaluation of Mineral Resources.
E&E Expenditure was a key audit matter due to the
size of the balances, being 98% of the Group’s total
assets. And the level of judgement required to be
applied to prepare the impairment assessment.
• Evaluating the Group’s accounting policy to
recognise E&E Expenditure using the criteria in the
accounting standard AASB 6 Exploration for and
Evaluation of Mineral Resources;
• Reviewing the position paper, prepared by
management, to identify if any impairment indicators
have been identified for the E&E Expenditure and
whether the carrying value is appropriate;
• Assessing independently if there are facts,
circumstances or impairment indicators which
suggest that the carrying amount of the Group’s E&E
Expenditure may exceed its recoverable amount in
accordance with AASB 6 Exploration for and
Evaluation of Mineral Resources;
• Considering whether the Group’s right to explore in
the relevant exploration areas is valid. This included
obtaining and assessing relevant documentation
such as contracts and legal documents on the
Group’s rights to explore;
• Considering the Group’s intention to continue to
carry out exploration and evaluation activity in the
relevant exploration area which included assessing
the Group’s cash-flow forecasts and the strategy of
the Group;
• Obtaining project and corporate budgets and
evaluating the Group’s ability to fund continued E&E
activities and its capacity to secure additional funding
when necessary;
• Testing the Group’s additions to E&E Expenditure for
the year by evaluating a statistical sample of
recorded expenditure for consistency to underlying
records and the capitalisation requirements of the
accounting standards;
• Testing the mathematical accuracy of the cash flow
models used in the impairment test;
• Assessing the discount rates, commodity prices and
other key assumptions to internal and external data,
with involvement from our valuation specialists; and
• Evaluating the adequacy of the related disclosures in
the financial statements including those made with
respect to judgements and estimates.
62
Take the lead
Information Other than the Consolidated Financial Statements and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the information included in
the Group’s annual report for the year ended 30 June 2021, but does not include the consolidated financial
statements and our auditor’s report thereon.
Our opinion on the consolidated financial statements does not cover the other information and accordingly we do
not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the consolidated
financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Consolidated Financial Statements
The directors of the Company are responsible for the preparation of the consolidated financial statements that give
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 consolidated financial
statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the directors are responsible for assessing the ability of the
Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations,
or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements 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 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 these
consolidated financial statements.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and
maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the consolidated financial statements, 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 consolidated
63
Take the lead
financial statements 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 consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the consolidated financial statements. 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 with the directors, we determine those matters that were of most significance in
the audit of the consolidated financial statements of the current period 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.
64
Take the lead
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 16 to 22 of the directors’ report for the year ended 30
June 2021.
In our opinion, the Remuneration Report of Rey Resources Limited for the year ended 30 June 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.
ShineWing Australia
Chartered Accountants
Yang (Bessie) Zhang
Partner
Brisbane, 29 September 2021
65
ASX ADDITIONAL INFORMATION
Additional Shareholder Information
Additional information required by the Australian Securities Exchange Listing Rules and not disclosed
elsewhere in this Annual Report is set out below. The information was current as at 27 September
2021.
Corporate Governance Statement
ASX Listing Rule 4.10.3 requires ASX listed companies to report on the extent to which they have
followed the Corporate Governance Principles and Recommendations (“ASX Principles”) released by
the ASX Corporate Governance Council. The ASX Principles require the Board to consider the
development and adoption of appropriate corporate governance policies and practices founded on
the ASX Principles. For the 2021 financial year and to the date of this report, the Company followed
and reports against the 4th Edition of the ASX Principles. The Company’s 2021 Corporate Governance
Statement is available from the Company’s website at http://reyresources.com/corporate/corporate‐
governance/
Substantial Shareholders
An extract of the Company’s register of substantial shareholders (being those shareholders who held
5% or more of the issued capital of the Company and who have provided substantial shareholding
notices to the Company) is set out below:
Shareholder
ASF GROUP LIMITED
MISS WANYAN LIU
MERCHANT CENTRAL LIMITED
NEWAY ENERGY INTERNATIONAL LIMITED
MRS YINXIN HE
START GRAND GLOBAL LIMITED
MISS MEI CHI JOYCE LEE
START LINK INVESTMENTS LIMITED
Number of shares
Percentage held
34,666,667
34,068,800
25,114,286
14,450,580
12,970,000
12,361,500
12,092,553
10,959,614
16.358%
16.076%
11.850%
6.819%
6.120%
5.833%
5.706%
5.171%
66
Top 20 Shareholders
The 20 largest shareholders of the Company are listed below:
Name
ASF GROUP LIMITED
MISS WANYAN LIU
MERCHANT CENTRAL LIMITED
NEWAY ENERGY INTERNATIONAL LIMITED
MRS YINXIN HE
START GRAND GLOBAL LIMITED
MISS MEI CHI JOYCE LEE
START LINK INVESTMENTS LIMITED
JADE SILVER INVESTMENTS LIMITED
XIAO HUI ENTERPRISES LIMITED
BNP PARIBAS NOMS PTY LTD
MR JIARONG HE
MR HAITAO GENG
TONG HENG HOLDINGS LIMITED
JADE SILVER INVESTMENTS LTD
MR WEICHENG HE
FOREVER GRAND GROUP LIMITED
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BROWNSTONE INTERNATIONAL PTY LTD
Number of Shares
Percentage Held %
34,666,667
34,068,800
25,114,286
14,450,580
12,970,000
12,361,500
12,092,553
10,959,614
9,352,056
6,959,404
6,695,102
6,228,491
3,000,000
1,846,126
1,480,000
1,311,738
1,150,837
1,095,281
1,020,357
1,000,000
16.358%
16.076%
11.850%
6.819%
6.120%
5.833%
5.706%
5.171%
4.413%
3.284%
3.159%
2.939%
1.416%
0.871%
0.698%
0.619%
0.543%
0.517%
0.481%
0.472%
TOTAL TOP 20 SHAREHOLDERS
197,823,392
93.345%
67
Distribution of Equity Securities
There were 754 holders of less than a marketable parcel of ordinary shares (being 502,014 shares on
27 September 2021).
The number of shareholders by size of holding is set out below:
Fully Paid Ordinary Shares
Size of Holding
1 ‐ 1,000
1,001 ‐ 5,000
5,001 ‐ 10,000
10,001 ‐ 100,000
100,001 and over
TOTALS
Voting Rights
Number of holders
Number of shares
555
375
131
134
43
1,238
152,493
1,016,898
997,164
3,714,480
206,046,504
211,927,539
For all ordinary shares, voting rights are on a show of hands whereby every member present in person
or by proxy shall have one vote and upon a poll, each share shall have one vote.
On‐market Share Buy‐back
On 8 July 2020, the Company announced an on‐market share buy‐back of up to 10% of its issued share
capital on market over a 12‐month period. A total of 232,900 shares were bought back under the share
buy‐back program.
On 22 July 2021, the Company announced the extension of its on‐market share buy‐back program for a
further 12‐month period from 5 August 2021. To the date of this Annual Report, no shares were
bought back under the current share buy‐back program.
Securities Exchange
The Company is listed on the Australian Securities Exchange (ASX code: REY).
68
Tenement Schedule
The tenement schedule for the Group as at the date of this report is tabulated below:
Licence
Type
EL
EL
MA
EP
EP
EP
EP
L
R
EP
Licence No.1
Grant Date
Expiry Date
Holder
Area (Ha) Percentage
E04/1519
20/04/2006
19/04/2022
Blackfin Pty Ltd
11,386
E04/1770
4/03/2009
3/03/2023
Blackfin Pty Ltd
6,834
Held
100%
100%
M04/0453
Pending
Pending
Blackfin Pty Ltd
12,964
100%
EP457
24/10/2007
05/01/2026
EP458
24/10/2007
05/01/2026
EP4872
14/03/2014
13/12/2025
Rey Oil and Gas Pty Ltd /
Buru / Origin
Rey Oil and Gas Pty Ltd /
Buru / Origin
Rey Lennard Shelf Pty
Ltd
251,737
20%
292,050
20%
505,840
50%
EP4872
14/03/2014
13/12/2025
Rey Derby Block Pty Ltd
505,840
50%
L153
R13
01/04/2010
21/03/2031
11/10/2016
10/10/2022
EP1043
30/01/2015
29/07/2022
Gulliver Productions Pty
Ltd
Gulliver Productions Pty
Ltd
Gulliver Productions Pty
Ltd
16,400
100%
24,516
100%
73,596
100%
EL:
Exploration Licence
MA: Mining Lease Application
EP: Exploration Permit Petroleum
L:
R:
Production Licence
Retention Licence
1.
2.
3.
All licences are located in Western Australia
Royalties attaching to EP487: Rey Lennard Shelf Pty Ltd may, at its election, on the grant of a
production licence on EP487, either: grant Backreef Oil Pty Ltd a 1% royalty on sales proceeds
from future production from its former interest in EP487 or pay $2 million to Backreef.
Royalties attaching to L15, R1 and EP104: Gulliver granted Key Petroleum Ltd and Indigo Oil Pty
Ltd a 25% and 0.5% royalty respectively over the three blocks.
69