A YEAR OF
TRANSFORMATION
ANNUAL REPORT
Contents
Chairman’s Letter
Chief Executive Officer’s Report
Resources and Additional Exploration Targets
Operations Review
Directors and Management
Directors’ Report
Consolidated Statement of Financial Position
2
4
9
11
18
20
40
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Lead auditor’s independence declaration under
Section 307C of the Corporations Act 2001
Independent Auditors’ Report to the Members
of Tigers Realm Coal Limited
Shareholder Information
Consolidated Statement of Comprehensive Income 41
Corporate Directory
Consolidated Statement of Changes in Equity
42
43
44
89
90
91
93
95
Tigers Realm Coal Limited
Tigers Realm Coal Limited (Tigers Realm Coal, TIG, or the Company) is an ASX-listed coking
coal company.
The Company is developing two coking coal projects, Amaam and Amaam North in the
Chukotka Autonomous Okrug of far eastern Russia, both within 35km of port access and
close to targeted North Asian steel markets.
Tigers Realm Coal is aiming to become a significant participant in the seaborne coking
coal market through the development of its projects. The Company is focused on delivering
superior returns to our shareholders through the acquisition, exploration, development and
operation of high quality coking coal deposits and mines. Tigers Realm Coal is committed to
creating long term sustainable benefits for the communities and regions in which it operates.
The Company’s head office is located in Melbourne with a regional office in Moscow.
Our Values
Four core values underpin everything we do:
(cid:129) Integrity – being honest
and open in the way we
communicate and work.
Doing what we say we
will do.
(cid:129) Delivery – Empowering
our people to excel.
Consistently delivering
on our plans and goals.
(cid:129) Respect – treating our
people, communities
and stakeholders
with respect and
understanding.
(cid:129) Care – for our people
and the environment. An
overriding commitment
to ensuring our people
finish work each day
without suffering injury
or harm. Minimising
our impact on the
environment.
2012
highlights
Amaam on track. Potential for developing a large
scale, low cost producer of coking coal on Asia’s
doorstep confi rmed
Amaam North acquisition a potential game changer.
Low capital, low cost, early production opportunity
nearby Amaam
Outstanding resource growth potential defi ned
– 1Bt combined coking coal resource and
exploration target
Streamlined strategy executed and experienced
and focussed management team in place
Outlook for coking coal strong
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 1
Dear Shareholders
2012 was a year of transformation
for Tigers Realm Coal. Following
a comprehensive review of the
Company’s assets and resources
during the year, our project
portfolio was rationalised and
efforts re-focussed towards
maximising value from the
exceptional opportunity
presented by the Amaam
project in Far East Russia.
The Amaam North licence was acquired early in the
year and the Colombian projects which failed to meet
our expectations in respect to resource scale and low
cost open pit mining options were exited mid year.
We continued to progress Pre-Feasibility Studies for
the development of a large scale coking coal mine at
Amaam while simultaneously assessing opportunities
for lower capital, early production potential within the
greater Bering Basin. On this front there have been
some exciting developments.
At the newly acquired Amaam North licence, geological
assessment has identified an area of shallow, thick, clean
coal seams with excellent potential for the development
of a low capital, low cost operation utilising existing
seasonal port infrastructure at nearby Beringovsky.
Drilling and study work is currently underway to
fully assess this opportunity.
Late in 2012, Mr Craig Parry, a founder and current
shareholder of the Company was appointed Chief
Executive Officer and Mr Craig Wiggill, a highly
experienced coal industry executive with global
project development, operations and coal marketing
expertise joined the Tigers Realm board as a
Non-executive Director and senior advisor.
Corporate costs were also streamlined to reflect the
single project/country strategy going forward.
The Company firmly believes that the rationalisation
of its project portfolio and corporate structure is
consistent with its obligations and desire to maximise
value for shareholders.
Successful capital raisings of $9.7M and $21.2M were
completed in August 2012 and February 2013 to fund
ongoing resource definition drilling and Pre-Feasibility
Studies at Amaam, and to rapidly progress work
on fast track production options presented by the
Amaam North licence acquisition.
Operationally the business in Russia has progressed
very well and in line with plan. The last twelve months
has been a year of intensive field and technical study
activities aimed at advancing Amaam and Amaam
North along the development timeline towards first
production in 2015. Pre-Feasibility Studies, resource
definition and expansion continue apace at both projects.
Chairman’s
letter
PAGE 2
At Amaam (exploration increased total resources
by 40% to 412Mt, with 63Mt upgraded from Inferred
to Indicated Resource status), the majority of work
required for the Pre-Feasibility Study (PFS) into
developing a large scale coking coal mine and related
infrastructure has been completed. Although delivery
of the final PFS document is not expected until March
2013, study work completed to date has confirmed
the strong economics defined in the initial Scoping
Study for the project.
Permitting for mine and transport infrastructure
progressed well. A Discovery Certificate for the Amaam
deposit was awarded by the Russian subsoil agency,
Rosnedra in May 2012 and a mining licence application
was approved for part of the Amaam deposit in March
2013. The Russian Federal Agency for Marine and River
Transport included the Company’s proposal for the
construction of a sea port terminal at Arinay Lagoon in
the Russian Federation Planning Scheme in March 2013.
Acquisition of the Amaam North licence in January
is considered to be of high strategic value to the
development of the proposed large scale Amaam
project. Located only 30km from Amaam and 30km
from existing port infrastructure at Beringovsky,
Amaam North effectively doubles the size of our
landholdings and significantly increases the scale
of the Company’s activities and potential resource
endowment in the highly prospective Bering Coal Basin.
Most importantly, with an Exploration Target of
30–430Mt and the presence of shallow dipping
thick, (10–11m) low ash coal seams, potential exists
for the development of an earlier, low capital, low cost,
direct shipping operation through the existing port
infrastructure at Beringovsky. Following an intensive
drilling program in January-February 2013, where six
holes yielded coking coal with an average thickness
of 8m close to surface, a PFS is currently underway
to define production options.
Coking coal stands alone amongst the bulk
commodities as being supply constrained and we
continue to believe the outlook for coking coal in
the near and long term remains strong. Some highly
respected commodity analysts are forecasting long
term coking coal prices of over US$200/t, being
the incentive price required to attract sufficient
investment in production capacity to keep up with
demand growth. Large scale, long life, low capital
intensity and low operating cost projects such as
Amaam and Amaam North, which are close to the
key end use markets in North Asia and have an
infrastructure solution are rare.
Tigers Realm Coal has some of the world’s best
undeveloped coking coal assets in its project portfolio
and after a year of transformation and very significant
progress in 2012 I am confident that 2013 will be an
exciting and defining year as the Company continues
to define the world class attributes of the Amaam
project and drives towards producer status.
On behalf of the Board of Directors, I would like to
thank our shareholders, partners and stakeholders
for their patience and support, and our highly valued
employees for their dedication and hard work.
The Board and management welcome your
comments at: IR@tigersrealmcoal.com.
Sincerely
Antony Manini Executive Chairman
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 3
As a founder and shareholder of
Tigers Realm Coal I am excited
by the opportunity of leading the
company in the development of
what I believe are two of the best
undeveloped coking coal deposits
in the world. Amaam and Amaam
North, in Chukotka Province, Far
Eastern Russia are both large and
contain high quality, open pittable
coking coal, located within 35km
of an existing port at Beringovsky,
and a new deep water port site,
Arinay. Key Asian markets are
only 8 shipping days away.
CHIEF
EXECUTIVE
OFFICER’S
REPORT
PAGE 4
2012 has been a busy year for the Tigers Realm Coal
team and we expect an even greater level of activity
in 2013 as we work to progress two projects through
feasibility studies and into production in the shortest
possible timeframes. We continue to progress the large
scale, long life, low operating cost, 5Mtpa Amaam
coking coal project with the Pre-Feasibility Study due for
completion by the end of March 2013 and production
targeted for 2017. At Amaam North we have discovered
a major new coking coal deposit with an Exploration
Target of 30–430Mt. Drilling has confirmed the
presence of thick, low ash coking coal seams only a
short distance to an existing coal sea port. This coal
is shallow dipping and is expected to have low strip
ratio, open pit mining potential. The confirmation of
a Resource at Amaam North in coming months will
enable us to rapidly advance studies on a starter project
with production rates targeted at 0.5Mtpa to 1Mtpa
utilising the existing Beringovsky port only 35km
trucking distance away. Based on data available at
the present time we expect much of the Amaam North
coal to be of direct shipping quality, being on average
less than 7% ash. Coal of this quality is unlikely to need
washing and the low strip ratio and thick seams of up
to 11 meters suggest that the project has the potential
for low cost and high margin operations. Ongoing studies
also suggest that the initial development of a 1Mtpa
operation at Amaam North will have low capital costs
due to the low strip ratio, minor pre-strip, the option
to truck the short distance to port and the presence
of an existing coal port requiring limited upgrade work.
Much of the drilling and study work we undertake in
2013 will focus on the rapid advancement of this starter
project at Amaam North with a target of development
in 2014–15 and first coal on ship in 2015, subject to
permitting and approvals being achieved on time.
Looking beyond the projects currently being examined
the company will look at options to capitalise on the
greater exploration potential of the Amaam and Amaam
North projects. Longer term, with two large, highly
prospective, coking coal basins located only 30km
apart, containing potentially over 1Bt of coking coal we
have the option of planning for an integrated production
hub with the two deposits linked by rail which then
connects to the Arinay sea port the Company intends
to develop.
I am very excited about these developments. We now
have two complementary projects that are set to drive
shareholder returns over coming months and years.
Amaam North has the potential to deliver production
in a relatively short time frame and at strong operating
margins whilst also delivering longer term expansion
capacity as the deposit is drilled out and the resource
base grows. Amaam has the potential to deliver longer
term production growth at a scale that would make
Tigers Realm Coal a globally significant exporter of
coking coal.
Resources – Increased size
and confidence
The Company had a very successful year increasing
the size of the resource at Amaam and the confidence
level, with a significant portion upgraded from Inferred
to Indicated status. In addition, our confidence in the
prospectivity of Amaam North was confirmed with
the delineation of a major new Exploration Target of
30-430Mt by an independent consulting geologist
and the successful discovery of a major coking coal
deposit from our first round of drilling at just one of
the numerous targets at the project. We will now
quickly convert drilling success at Amaam North
into a resource and undertake a feasibility study
on the project in 2013.
Key highlights include:
(cid:129) Amaam Resource Upgrade – Total Inferred Resource
was increased by 40% from 294Mt at the beginning
of 2012 to 412Mt Total Inferred and Indicated
Resource by December.
(cid:129) Some 63Mt of the Amaam Resource was upgraded
to Indicated status.
(cid:129) Exploration target for Amaam of 130–225Mt
including 10–25Mt of Cretaceous coal identified
in additional seams below the main host sequence
outside the existing Resource envelope.
(cid:129) Exploration target for Amaam North of 30–430Mt.
A drilling program commenced in January 2013
on one of the several targets (Project F) at Amaam
North resulting in the discovery of a coking coal
deposit characterised by thick seams of low ash
coking coal.
Amaam Pre-Feasibility Study
In 2011 the Company completed a scoping study and
took the decision to progress with the Amaam Coking
Coal Project Pre-Feasibility Study (“PFS”). This study
commenced in early 2012 and continues with multiple
work streams in progress, targeted for completion
in March 2013. The Amaam PFS is examining the
practical options for each facet of the integrated
mining, coal washing, logistics and port operations.
The key objectives of the study are:
(cid:129) Set the scope of work to be detailed during the
Bankable Feasibility Study; and
(cid:129) Determine the potential for early production
of unwashed coal via the Beringovsky Port.
Key aspects of the PFS are:
(cid:129) Expand the existing resource base and increase
the level of confidence.
(cid:129) Mining and pit optimization studies focussed
on determining optimal pit depth and stripping
ratios, estimating ROM open pit reserves, optimal
production rates, PFS mine and project designs
and project capital and operating cost estimation.
(cid:129) Preliminary underground mining studies to estimate
underground tonnages and mining costs.
(cid:129) Conduct clean coal and coke quality test-work to
determine a range of potential yields and product
coals and the optimal yield and product mix in
concert with marketing studies.
(cid:129) Conduct coal logistics studies to assess all transport
options and confirm the feasibility of year round
shipping from Arinay Lagoon.
(cid:129) Coal handling and preparation plant (CHPP) studies
to determine process flowsheets and preliminary
plant design.
(cid:129) Geotechnical, hydrogeology and hydrology studies.
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 5
CHIEF EXECUTIVE OFFICER'S REPORT (CONTINUED)
(cid:129) The PFS works will include the first stage of the
Environmental and Social Impact Assessment.
(cid:129) Infrastructure studies have assessed: power
generation options; fuel storage and handling;
accommodation including requirements during
construction; and offices, workshops, warehousing.
(cid:129) Capital and operating cost estimates and financial
assessments.
(cid:129) A comprehensive risk assessment is being
undertaken to identify key risk areas to be addressed
in the Bankable Feasibility Study (“BFS”). In concert
with the financial modelling of the potential project
options, the risk assessment will be used to select
the go forward case for the BFS.
(cid:129) Identify those parts of the operation to potentially
expand with the future development of Amaam North.
Permitting – Discovery Certificate
awarded, Mining Licence application
submitted and approved by
Rosnedra, and Port approval
progressing well
The company continued to successfully progress
through key permitting processes and all are on track.
Key highlights include:
(cid:129) In May 2012 the Russian Federal Subsoil Agency
(Rosnedra) granted the Company a Discovery
Certificate for the Amaam deposit. The Discovery
Certificate confirms TIG, through its Russian
operating company Northern Pacific Coal Company,
to be the successful licensee of the Amaam
exploration tenement, and was required for
TIG to apply for an Exploration and Extraction
(mining) Licence.
(cid:129) In August 2012 the Company submitted an
application for a Mining Licence over a part of the
Amaam deposit in the north eastern flank of Area 3.
This area covers approximately 40% of Area 3
which has an Inferred Resource of 154Mt out of
a Total Inferred and Indicated Resource for Amaam
of 412Mt. In February 2013 the Company was
advised that Rosnedra had approved its Mining
Licence application over the area and that Rosnedra
had commissioned the provincial mining licencing
authority – Subsoil Resources Management
Administration of Chukotka (Chukotnedra) – to
execute, register and issue the Mining Licence
for this part of the Amaam Licence. The issue of
this first Mining Licence is expected in Q1 2013.
(cid:129) Conversion of a part of the Exploration Licence
to a Mining Licence will confirm the Company’s
tenure over the deposit for up to 25 years. Upon
conversion of the Amaam Exploration Licence
to a Mining Licence the Company will move from
40% to 60% ownership of the Amaam deposit.
On completion of the Bankable Feasibility Study
the Company will move to 80% ownership.
(cid:129) The port permitting process continues to progress
well. The Company received formal endorsement
from the regional Chukotka government and written
confirmation of support for the proposed sea port
coal terminal development from the Federal Ministry
of Transport in June 2012. Work on planning
documentation for the sea port continued, including
completion of drilling for engineering-geological
surveys at the Arinay Lagoon and the receipt
of an Administrative Resolution from the Anadyr
Municipality to support the development of planning
documentation for the sea port. In February 2013
the Company was advised that the Russian Federal
Marine and Sea Transport Agency has included
TIG’s proposal for the construction of a port at
PAGE 6
Arinay Lagoon in the Russian Federation Territory
Planning Scheme. This completes a major step
in the port permitting process. The proposal
is now awaiting approval by the Russian Federal
Government. Simultaneously the company is
progressing environmental and engineering studies
to enable federal regulatory bodies to provide
construction approvals.
Corporate
In 2012 we took a number of corporate decisions
with the aim of enhancing our goal of maximising
shareholder wealth creation. We have created a leaner,
more focussed company, with a strong commitment
to exploiting the options that controlling a potential
1Bt high quality coking coal resource offers.
Highlights included:
(cid:129) Following a comprehensive Strategic Review, the
Company decided to exit the Landazuri Project
in Columbia. The review showed that Landazuri
did not meet our exploration and resource targets
constraining its potential to support low cost open
pit mining. With a focus on maximising shareholder
value it was decided that the Company concentrate
on rapidly advancing the development of Amaam
and Amaam North.
(cid:129) In August 2012 we completed a capital raising for
$9.67M to enable the completion of further drilling
and technical studies at the Amaam Coking Coal
Project which resulted in an upgrade in resource
confidence with the transfer of 63Mt to Indicated
status and an increase in Total Inferred and
Indicated Resource to 412Mt.
(cid:129) The Board decided in November 2012 to make
a number of Board and management changes
to position the company for the development
of its Russian projects and lower overheads.
(cid:129) In February 2013 the Company completed a
placement raising $21.2M to enable the fast
tracking of the low capex/opex Amaam North
production option and to provide funding for
completion of key elements of the Bankable
Feasibility Study for Amaam.
Health, Safety, Environment
& Community
I am pleased to report that during 2012, our ongoing
focus on safety at our operations resulted in continued
improvement in this aspect of our business. At the
Amaam Project, implementation of the Tigers Realm
Coal’s HSEC Management System was a priority for
the company. HSEC activities focussed on the
implementation of controls to manage the project’s
HSEC risks and ensure the successful completion of the
drilling and baseline studies programs. The Project has a
detailed Management Plan and Induction Program that
addresses the controls for the significant HSEC risks for
the Project and Emergency Response procedures.
During the year, in conjunction with Golder Associates,
significant progress was made on the development
of the Project’s Environmental and Social Impact
Assessment (ESIA) to meet Russian requirements and
International Finance Corporation (IFC) Performance
Standards on Environmental and Social Sustainability.
The Preliminary ESIA for the Amaam Project was
completed in December.
Tigers Realm Coal continued throughout the year
to deliver on its commitment to regular and open
engagement with Project stakeholders including
Government authorities; communities located outside
of the project area; non-governmental, public
and community-based organisations; commercial
organisations and business associations; Project
employees and the media.
Doing Business in Russia
Russia continues to open its doors to direct foreign
investment and importantly for Tigers Realm Coal
continues to encourage investment and development
of the far east of the country. Russia consistently
emphasised that its future growth lies in large part
to the east and that it will need greater access to foreign
capital markets. Hence we have seen the development
of several initiatives to foster business relations with
Asia and encourage economic growth in Russia’s east.
Examples include the establishment of two major sovereign
funds targeting ties with Asia and foreign investors.
The US$10 billion Russian Direct Investment Fund has
been established in partnership between the Russian
Federal Government and China Investment Corporation
to focus on co-investment with foreign entities to
encourage their entry into Russia. The Far East and
Baikal Regional Development Fund is a US$3 billion
fund established to support development of private
projects in eastern parts of Russia including Chukotka.
Russia has also taken steps to integrate further with
the global economy and business community, having
joined the World Trade Organisation in 2012 and
hosted the APEC Convention and Summit in Vladivostok
in September 2012.
In addition to these practical and positive steps to
encourage foreign investment the Russian Federal
Government under President Putin has stated that its
objective is to rapidly improve its standing as a place
to do business and is seeking to quickly progress to
the top 20 countries in the World Bank rankings of
favourability for doing business. I have no doubt Russia
will get there and already the level of successful foreign
investment across all sectors is increasing dramatically.
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 7
CHIEF EXECUTIVE OFFICER'S REPORT (CONTINUED)
In every respect Tigers Ream Coal continues to see
Russia and specifically Chukotka as favourable places
to do business. We have been pleased with the strong
level of interest in our projects from Government at all
levels and we appreciate their strong support in helping
us pass our projects through the various permitting
processes. I continue to believe we are at the front end
of a major push by mineral sector investors, including
Chinese and Western entities, into this great frontier
for mineral exploration and discovery.
(cid:129) Complete coal quality test work
(cid:129) Pre and Bankable Feasibility Studies
(cid:129) Progression through the permitting process
(cid:129) Delineation of a plan to accelerate the project
into production in the shortest possible timeframe,
for low capital outlay utilising existing transport
infrastructure
Outlook
The long term market fundamentals for coking coal
continue to remain strong. We are seeing further supply
side challenges in areas of slated future supply growth
such as Mozambique and Mongolia, whilst the aging
mines of Australia’s Bowen Basin continue to come
under increasing cost pressures. With continued strong
growth in emerging economies and an improvement in
global economic conditions, increases in steel demand
are set to continue for the foreseeable future. This has
led major commodity research organisations such as
CRU and Wood Mackenzie to reiterate their forecasts
for strong growth in coking coal prices both in the short
and long term. Wood Mackenzie forecasts a long term
coking coal price of over US$200/t is required to
incentivise the capital investment needed to bring on
enough production to meet current demand growth.
Large scale, long life, low capital intensity and low
operating cost coking coal projects such as Amaam
and Amaam North, which have port and rail infrastructure
solutions readily available and that are close to the
growing North Asian steel markets are the scarcest
of things.
I believe Tigers Realm Coal has two of the best
coking coal projects on the planet and is well placed
to capitalise on this strong outlook for the seaborne
coking coal market.
I look forward to the year ahead as we progress rapidly
from explorer to developer. Our major goals for 2013 are:
Amaam North
With the discovery of a new coking coal deposit
containing thick low ash coking coal we now aim
to advance the project through to completion of
feasibility studies in early 2014 and on into first
production by mid-2015. Over the course of 2013
milestones will include:
(cid:129) Ongoing drilling followed by announcement of an
initial resource
Amaam
(cid:129) Completion and delivery of the Pre-Feasibility Study
by end Q1 2013
(cid:129) Obtain the Mining Licence at the Amaam tenement
(cid:129) Obtain government approval to undertake detailed
port design
(cid:129) Completion of outstanding licence drilling
commitments
(cid:129) Complete critical path items for the Amaam
Bankable Feasibility Study
News flow from this work will be substantial and
Shareholders can look forward to the regular
announcement of results as they come to hand.
Should Amaam North deliver on its potential then
by the end of 2013 Tigers Realm Coal will be a very
different company – with two world class coking coal
projects, one with near term development potential
and a second with longer term potential for production
at levels that will see the Company become a major
force in the coking coal business.
In conclusion, the Company has made excellent
progress in advancing Amaam and Amaam North
during the course of 2012 and is well advanced down
the path to production. With the discovery of a major
new coking coal deposit at Amaam North that has the
potential to provide the Company with a low capital
and operating cost early production option, and the
progress made in the growth and development of the
large scale Amaam project, I firmly believe that 2013
will be a year of great importance and change for
Tigers Realm Coal and I look forward to updating
you on our progress.
To our shareholders, thank you for the continued
support of the Company.
Craig Parry Chief Executive Officer
PAGE 8
RESOURCES AND ADDITIONAL EXPLORATION TARGETS
Amaam Resource Estimate
The following tables detail the Amaam Resource Estimate. Totals below may not sum due to rounding.
Indicated ResourcesC for the Amaam Project (100% basis):
Area
Area 2
Area 3
Area 4EC
Total (rounded)
Open Pit1 (Mt) Underground2 (Mt)
Total (Mt)
0
36.3
25.7
62
0
0.2
0.3
0.5
0
36.5
26.0
62.5
Inferred ResourcesB for the Amaam Project (100% basis):
Area
Area 2
Area 3
Area 4EC
Total (rounded)
Open Pit1 (Mt) Underground2 (Mt)
Total (Mt)
8
108
124
240
0
9
101
109
8
117
224
349
Total Indicated and Inferred Resources for the Amaam Project (100% basis):
Area
Area 2
Area 3
Area 4EC
Total (rounded)
Coal Quality by Depth (air dried basis):
Mt
Relative density g/cm3
Air dried moisture %
Ash %
Volatile matter %
Fixed Carbon %
Sulphur %
Open Pit1 (Mt) Underground2 (Mt)
Total (Mt)
8
145
150
302
0
9
101
110
Open Pit1
Underground2
302
1.58
1.0
32.8
23.9
42.3
1.2
110
1.61
1.1
33.7
24.5
40.7
0.7
8
154
250
412
Total
412
1.59
1.1
33.1
24.0
41.8
1.1
Calorific value kcal/kg
5,559
5,518
5,548
Coal Quality by Area (air dried basis):
Area 2
Area 3
Area 4EC
Mt
Relative density g/cm3
Air dried moisture %
Ash %
Volatile matter %
Fixed Carbon %
Sulphur %
Calorific value kcal/kg
8.0
1.59
0.9
34.1
22.3
42.7
1.3
5,417
154
1.59
0.9
34.1
22.3
42.7
1.3
5,417
1. Assumes coal seams greater 0.3m to a depth of 400m
2. Assumes coal seams greater than 1.2m to a depth below 400m from surface
250
1.59
1.1
32.4
25.1
41.3
1.0
Total
412
1.59
1.1
33.0
24.1
41.8
1.1
5,630
5,550
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 9
RESOURCES AND ADDITIONAL EXPLORATION TARGETS (CONTINUED)
Amaam and Amaam North Exploration TargetsD
The tables below outline the additional Exploration TargetD by area for the Project’s two Licences, Amaam
and Amaam North. The total Exploration TargetD is 160 Mt to 660Mt, comprising an Exploration TargetD
of 130 Mt to 230 Mt tonnes at Amaam and an Exploration TargetD of 30 Mt to 430 Mt tonnes at Amaam
North. Totals below may not sum due to rounding.
Exploration TargetD Amaam and Amaam North Licences
Amaam Middle Chukchi
Open Pit1 (Mt) Underground2 (Mt)
Total (Mt)
Area 1
Area 2
Area 3
Area 4EC
Area 4W
Total (rounded)
Amaam Cretaceous
Total (rounded)
2 to 3
21 to 33
3 to 10
1 to 5
50 to 79
80–130
0
0
3 to 10
1 to 5
36 to 56
40–70
Open Pit3 (Mt) Underground4 (Mt)
2 to 6
8 to 19
Amaam North Middle Chukchi
Open Pit5 (Mt) Underground5 (Mt)
Total (rounded)
20 to 220
0 to 65
Amaam North Lower Chukchi
Open Pit5 (Mt) Underground6 (Mt)
Total (rounded)
All Areas
Total (rounded)
5 to 80
5 to 65
Open Pit1 (Mt) Underground2 (Mt)
110–440
50–220
1. Assumes coal seams greater 0.3m to a depth of 400m
2. Assumes coal seams greater than 1.2m below 400m depth
3. Assumes coal seams of 1.5m to a depth of 50m
4. Assumes coal seams of 1.5m from 50 to 200m depth
5. Assumes coal seams greater 0.3m to a depth of 250m
6. Assumes coal seams greater than 1.2m from 250 to 400m depth
2 to 3
21 to 33
6 to 20
2 to 10
86 to 135
120–200
Total (Mt)
10 to 25
Total (Mt)
20 to 285
Total (Mt)
10 to 145
Total (Mt)
160–660
Competent Persons Statement The information compiled in this Presentation relating to Exploration Results or Mineral Resources is based on
information provided by TIG and complied by Neil Biggs, who is a member of the Australasian Institute of Mining and Metallurgy and who is
employed by Resolve Geo Pty Ltd. Neil has sufficient experience which is relevant to the style of mineralization and type of deposit under
consideration and to the activity he is undertaking to qualify as a Competent Person as defined in the JORC Code. Neil Biggs consents to the
inclusion in the Presentation of the matters based on his information in the form and context which it appears.
Note B – Inferred Resources According to the commentary accompanying the JORC Code, “the Inferred category is intended to cover
situations where a mineral concentration or occurrence has been identified and limited measurements and sampling completed, but where
the data are insufficient to allow the geological and/or grade continuity to be confidently interpreted. Commonly, it would be reasonable to
expect that the majority of Inferred Mineral Resources would upgrade to Indicated Mineral Resources with continued exploration. However,
due to the uncertainty of Inferred Mineral Resources, it should not be assumed that such upgrading will always occur. Confidence in the
estimate of Inferred Mineral Resources is usually not sufficient to allow the results of the application of technical and economic parameters to
be used for detailed planning. For this reason, there is no direct link from an Inferred Resource to any category of Ore Reserves. Caution
should be exercised if this category is considered in technical and economic studies.”
Note C – Indicated Resources According to the commentary accompanying the JORC Code “An ‘Indicated Mineral Resource’ is that part of a
Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a reasonable
level of confidence. It is based on exploration, sampling and testing information gathered through appropriate techniques from locations such
as outcrops, trenches, pits, workings and drill holes. The locations are too widely or inappropriately spaced to confirm geological and/or grade
continuity but are spaced closely enough for continuity to be assumed. An Indicated Mineral Resource has a lower level of confidence than
that applying to a Measured Mineral Resource, but has a higher level of confidence than that applying to an Inferred Mineral Resource.”
Note D – Exploration Target The exploration target is based on drilling and associated exploration studies undertaken so far. The potential
quality of the exploration target is conceptual in nature, and there has been insufficient exploration to date to define a mineral resource within
the meaning of the 2004 edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" ("JORC
Code"). Furthermore, it is uncertain if further exploration at its exploration target will result in the determination of a mineral resource.
PAGE 10
The Amaam Coking Coal Project consists of two tenements:
Amaam and Amaam North.
CHUKOTKA PROVINCE
AMAAM PROJECT
13 days
8 days
13 days ex Canada
32 days ex USA
OPERATIONS
REVIEW
ANADYR
BERINGOVSKY
AMAAM PROJECT
Amaam will be one of the most
competitive suppliers into Asia
Significant freight differential
set to benefit Amaam buyers
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 11
OPERATIONS REVIEW (CONTINUED)
Amaam Tenement
2012 Highlights:
(cid:129) Completed a total of 14,747m drilling
(cid:129) Inferred Resources increased from 294Mt to 412Mt
(cid:129) 63Mt converted to Indicated Status
(cid:129) Exploration target of 130-225Mt including 10-25Mt
of Cretaceous coal identified in additional seams
below the main host sequence outside the existing
Resource envelope
(cid:129) Award of a Discovery Certificate, a pre-requisite
for a Mining Lease application
(cid:129) Application for a Mining Licence (Area 3) submitted
(cid:129) Application submitted to Federal Government
for approval to commence port design
(cid:129) Significant progress on the Pre-Feasibility Study,
with work completed on coal quality and washability,
CHPP flow sheet, design and engineering of coal
transport, port facilities and associated infrastructure,
environmental controls, geotechnical pit slope
assessment, open pit mining operations and early
production scenarios utilising the existing port
at Beringovsky
(cid:129) Coal quality testwork indicates Amaam coal has
high CSN, high vitrinite and reactive content
(>90%), and strong fluidity
Amaam Tenement Overview
The Amaam tenement comprises the tenement
Licence No. AND 13867 TP. The Licence was
extended in September 2011 by three years to
December 2014 by the Russian licensing authority.
The Amaam tenement is 231km2, measuring
approximately 32km east-west and 9km north-south.
The Amaam tenement is located in the Beringovsky
Basin of the Chukotka Autonomous Okrug (District)
in far eastern Russia, approximately 230km south of
the regional capital of Anadyr and the administrative
centre of Ugolnye Kopi, and some 40km to the south
of the existing coal mining operations of Nagornaya
and its supporting town at Beringovsky.
The tenement is located 30km from the Bering Sea
coast and a proposed deep water port site.
The Chukotka Provincial Government is supportive
of regional development and TIG enjoys a favourable
fiscal regime including a 20% corporate tax rate and
accelerated tax depreciation. A federal government
royalty of RUB57/tonne (approximately US$2/tonne)
is applied to sales of coking coal. North Pacific Coal
Company (NPCC) management has well established
relationships with the Provincial Government and
extensive experience in regulatory approval processes.
Western mining companies have operated successfully
in Chukotka since 2002, including Kinross Gold
Corporation. Kinross Gold Corporation’s Kupol gold
mine has been in production since May 2008.
Tigers Realm Coal holds a 40% interest in the Amaam
tenement through a shareholding in Eastshore Coal
Holding Limited (Eastshore), which owns 100%
of NPCC, the Russian incorporated licence holder.
Tigers Realm Coal’s joint venture partner in Eastshore is
Bering Coal Investment (Bering), a Cyprus incorporated
company. Agreements between Bering and Eastshore
grant Tigers Realm Coal the right to appoint the majority
of the board of directors of Eastshore.
TIG has a conditional right to subscribe for an
additional 40% shareholding in Eastshore in two
tranches as follows:
Tranche 1: an additional 20% interest in Eastshore
(taking TIG’s interest to 60%) for the nominal value
of such shares upon a licence being issued that
grants NPCC (or another Eastshore subsidiary) the
right to explore and extract coal from Amaam (NPCC
currently holds a geological study licence that permits
exploration but not production); and
Tranche 2: a further 20% interest in Eastshore
(taking TIG’s interest to 80%) upon completion
of a BFS and cancellation of all loans made by TIG
and its subsidiaries to Eastshore (TIG is funding
exploration and development expenditure by way of
loans to Eastshore). TIG is required to fund all work
on the Amaam Project through to completion of the
BFS. Upon achieving the milestones described above,
TIG will have the right to increase its shareholding in
Eastshore to 80% and Bering will own the remaining
20%. Following completion of the BFS, TIG and
Bering are required to fund the development of the
Amaam tenement in proportion to their respective
shareholdings in Eastshore.
Amaam Tenement Geology
The Amaam tenement area has a long history of
exploration with the first geological survey of the
area conducted in 1935/36. Exploration in the area
commenced in the late 1940’s when a Russian
program of mapping, channel sampling and trenching
indicated the presence of coal seams with coking
potential. From 2008 to 2010, NPCC completed a
diamond drilling exploration program of 28 drill holes
(totalling 7,478m) mostly in Area 3.
PAGE 12
TIG commenced exploration activities in 2010 and
completed 7,720m of drilling during the 2010/2011
Russian winter drilling season and 14,413m during
the 2011/2012 season across the entire tenement,
predominantly in Areas 3 and 4. During November
and December 2012 (the start of the 2012/2013
season) TIG drilled 3,606m.
The Amaam Project is a multi-seam, moderate dipping
deposit within a synclinal basin. Coal is in the Middle
Chukchi formation, and is divided into four main areas
by north-west trending faults. To date, exploration
activities have identified that the highest tonnages
of coal are within Areas 3 and 4.
Amaam Tenement Development Plan
TIG has continued the Studies component of the
development of a large scale, open pit mine, coal
handling and preparation plant (CHPP), and associated
site, transport and port infrastructure. Preliminary
technical studies (currently being updated by the
Amaam PFS) concluded the potential mine would
have conventional truck and shovel operations with
in-pit overburden disposal.
The studies proposed a base case conceptual mine
plan as follows:
(cid:129) Production rate of 10Mtpa ROM coal (inclusive
The Company’s development plans for Amaam include
the completion of a Pre-Feasibility Study in March 2013,
followed by the completion of a Bankable Feasibility
Study and a two to three year construction period.
Amaam Pre-Feasibility Study
During 2012, detailed study works for the Amaam
Coking Coal Project Pre-Feasibility Study (“PFS”)
progressed. The Amaam PFS is examining various
options for each facet of the integrated mining, coal
washing, logistics and port operations. The key
objectives are to:
a) Set the scope of work to be detailed during the
Bankable Feasibility Study;
b) Confirm the feasibility of year round shipping
operations;
c) Conduct clean coal and coke quality test-work; and
d) Identify those parts of the operation to potentially
expand with the future development of Amaam North.
Key consultants appointed to undertake the studies
include:
(cid:129) Ausenco Sandwell – infrastructure and port
(cid:129) Minarco Mineconsult – mining
(cid:129) AB Mylec – coal quality
of dilution)
(cid:129) Pearson Laboratories – coal quality
(cid:129) Stripping ratio of 12:1 (BCM waste:ROM t)
(cid:129) Aker Arctic – port operations management
(cid:129) Coking coal production of 5.3Mtpa for 20+ years
(cid:129) Royal Haskoning – maritime logistics
(cid:129) A project development cost of US$1,448m with site
operating costs of US$47/t ROM coal and US$88/t
saleable coal (excluding royalties).
(cid:129) Cetco Carolina – CHPP engineering
(cid:129) Golder – ESIA
(cid:129) SRK – Environmental Controls
Amaam
Tenement
Geological
Plan
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 13
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 9
OPERATIONS REVIEW (CONTINUED)
Status of key PFS work streams
completed or in progress during
2012 include:
(cid:129) Resolve Pty Ltd completed the Amaam Resource
Model which resulted in 63Mt being upgraded
to Indicated status and the Total Inferred and
Indicated Resource upgraded to 412Mt.
(cid:129) Minarco completed preliminary pit optimisations
and assessments of production rate, mining dilution
and pit development strategy.
(cid:129) The drop-shatter – wet-tumble – washability
program was completed.
(cid:129) Clean coal compositing and test work commenced
during the quarter and was 50% complete
by end December.
(cid:129) AB Mylec progressed work on the assessment
of the practical CHPP Ash-Yield relationships across
the deposit.
(cid:129) Cetco Carolina finalised the proposed Process Flow
Diagram and General Arrangement Layout of the
CHPP and submitted capital cost estimates.
(cid:129) Design and engineering of the Coal Transport,
Port Facilities and Infrastructure by Ausenco was
completed, with Draft Capital and Operating Cost
Estimates submitted to the Company for review.
(cid:129) SRK completed their draft report addressing the
environmental controls for the project.
(cid:129) The Geotechnical pit slope assessment report
was completed.
(cid:129) Early Production Scenarios assessments continued.
Achieved
Target
Actual
Comment
Amaam – project milestones
Delineate initial resource
Interim resource upgrade 2011
Resource upgrade 2011
Interim resource upgrade 2012
Resource upgrade 2012
(cid:51)
(cid:51)
(cid:51)
(cid:51)
(cid:51)
Pre-Feasibility Study
Completion of 2012/13
drilling program
Resource Upgrade 2013
Permitting
Q4–10
Q2–11
Q4–11
Q2–12
Q3–12
Q1–13
Q2–13
Q2–13
Q4–10
Q2–11
Q4–11
Q2–12
Q4–12
68 Mt Inferred Resource
177 Mt Inferred Resource
294 Mt Inferred Resource
406 Mt Inferred Resource
412 Mt Total Indicated (63Mt) and
Inferred Resource
TIG achieved an important permitting milestone in being awarded a Discovery Certificate for the Amaam deposit.
Receipt of the Discovery Certificate enabled TIG’s 40% owned Russian company NPCC to apply for an
Exploration and Extraction (mining) Licence which was done in the September quarter.
Achieved
Target
Actual
Comment
Amaam – permitting milestones
Exploration licence – 3 year
extension
Registration of Amaam deposit
Application for Discovery
Certificate
Award of Discovery Certificate
Application for Mining Licence
(Area 3)
Award of Mining Licence
(Area 3)
(cid:51)
(cid:51)
(cid:51)
(cid:51)
(cid:51)
PAGE 14
Q3–11
Q3–11
3 year extension to December 2014
Q1–12
Q1–12
Q2–12
Q3–12
H1–13
Q4–11
Registered with Chukotnedra
Q1–12
Q2–12
Prerequisite for Mining Lease application
Q3–12
Primary tenure for mining
In February 2013 Rosnedra approved the mining
licence application and commissioned the provincial
mining licencing authority, Chukotnedra, to execute,
register and issue the mining licence. Through
conversion of the Amaam Exploration License to an
Exploration and Extraction (mining) License, NPCC
will confirm legal tenure over the deposit for a period
up to 25 years. Upon conversion of the license TIG
will move from 40% to 60% ownership of the Amaam
coking coal project. TIG’s ownership level of the
Amaam project will increase to 80% upon completion
of a Bankable Feasibility Study.
TIG’s in country Russian team has made good
progress on the preparation of documentation to
be submitted to the Russian Ministry of Transport
and Prime Minister’s Department for approval to
move to the detailed design phase for the Arinay
Port within the deep water Arinay Lagoon, 30km
from the Amaam deposit. TIG’s Russian team plans
on submitting key initial documents with regional
government support in the coming months.
Achieved
Target
Actual
Comment
Arrinay Port – permitting milestones
Base-line environmental
assessment
Apply for approval to
commence port design
Approval to commence
detailed port design
(cid:51)
(cid:51)
Q4–11
Q4–11
Q1–12
Q1–12
H1–13
Environment and Community
During 2012, significant progress was made in
developing and implementing Tigers Realm Coal’s HSEC
Management System. Key areas of focus included:
(cid:129) Policy, Commitment, Leadership and Management
Review
(cid:129) Risk Management
(cid:129) Legal Requirements and Other Commitments
(cid:129) Roles, Responsibilities, Accountability and Authority
(cid:129) Training, Competence and Awareness
(cid:129) Emergency & Crisis Preparedness and Response
(cid:129) Incident Management
(cid:129) Inspections, Measuring and Monitoring
(cid:129) Corrective Action and Preventive Action
(cid:129) Audit and Assessment
At the Amaam Project, implementation of the above
system elements was a priority. HSEC activities
focussed on the implementation of controls to
manage the project’s HSEC risks and ensure the
successful completion of the drilling and baseline
studies programs. Safety audits were completed on
all rigs and vehicles prior to the commencement of
work. An audit of the site aviation service provider
was also completed. The Project has a detailed
Management Plan and Induction Program that
addresses the controls for the significant HSEC risks
for the Project and Emergency Response procedures.
During the year, in conjunction with Golder Associates,
significant progress was made on the development
of the Project’s Environmental and Social Impact
Assessment (ESIA) to meet Russian requirements and
International Finance Corporation (IFC) Performance
Standards on Environmental and Social Sustainability.
The Preliminary ESIA for the Amaam Project was
completed in December.
Environmental baseline studies implementation
and priority plans were developed with management,
Golder and our Russian field consultants for the 2012
and 2013 field seasons, with the 2012 component
subsequently completed. The baseline studies plan
complement the work completed at Amaam in 2011.
Regular engagement with Project stakeholders
was completed in 2012. Stakeholders include
Government authorities at the national, regional and
local levels; communities located in the project area;
non-governmental, public and community-based
organisations; commercial organisations and business
associations; Project employees and the media.
To ensure a consistent message regarding the
Project, as well as meeting IFC requirements, a
number of Project documents have been prepared
in both Russian and English and made available to
Stakeholders. These include the Project Stakeholder
Engagement Plan (SEP) which builds on early
engagement activities completed for the Project,
including a formal agreement between NPCC,
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 15
OPERATIONS REVIEW (CONTINUED)
the District of Anadyr and the Chukotka Regional
Public Organisation Association of Indigenous
Minorities of the North, Siberia and Far East, which
sets out a strategy for ongoing management of
community relations. The overall objective of the SEP
is to detail how NPCC will engage with stakeholders
through the course of the Project. The SEP is a
working document that will be revised during the
development of the Project, with the final version
integrated into the ESIA. The Background Information
Document (BID) for the Project was also developed
during the year. Stakeholder consultation during
the baseline studies phase of the Project is based
primarily on the BID. The BID is a simple, non-technical
document that explains the project and the ESIA
process and is aligned with the SEP.
Amaam North Tenement
In January 2012, TIG made an important strategic
step in relation to consolidating the Company’s
position in the highly prospective Bering Coal Basin
through the acquisition of 80% of Amaam North
– a coal deposit only 30km to the north of Amaam.
The Amaam North tenement increases the Company’s
total landholding in the Bering Coal Basin to 709km2,
and offers the potential to significantly increase Tigers
Realm Coal’s coking coal endowment in this emerging
coal basin in far eastern Russia, close to the Bering
Sea coast and key Asian markets.
Under the terms of the agreement completed in
January 2012, the Company paid US$400,000 for an
80% interest in the Russian company which owns the
Amaam North exploration license, Beringpromugol LLC,
by acquiring 80% of Cyprus company Rosmiro
Investments Limited from its current owner BS Chuchki
Investments LLC (BSCI). TIG is also required to fund
all project expenditure until the completion of a
Bankable Feasibility Study. After completion of a
Bankable Feasibility Study, each joint venture party
is required to contribute to further project expenditure
on a pro-rata basis. BSCI is also entitled to receive a
royalty of 3% gross sales revenue from coal produced
from within the Amaam North license.
The Amaam North and Amaam deposits are located
within separate structural blocks of the Bering Coal
Basin. The Bering Coal Basin covers an area of
approximately 7,500km2 and extends from north
of Beringovsky (Nargornaya mine) to the southern
coast line. The primary coal host sequence at Amaam
North and Amaam is the Middle Chukchi Formation
of Palaeogene age. However substantial outcrop
(up to 10.85m) has been mapped in units beneath
the Middle Chukchi Formation at Amaam North.
The coal formation at Amaam North is synclinal in
structure with longitudinal and cross cutting faults,
moderate dips at the margins, flatter dips along the
axis. Mapping of the deposit has identified multiple
coal exposures, 30 of which are >2m true seam
thickness. Based on outcrop sampling, cumulative
coal thicknesses within the Middle Chukchi Formation
are expected to be similar to Amaam.
Available information indicates the coal at Amaam
North is a high volatile A bituminous coal based
on the ASTM classification standard. TIG considers
Amaam North to be prospective for mid and high
volatile coking coals.
In the December quarter 2012, Tigers Realm Coal
announced an Exploration Target for Amaam North
of 30Mt-430Mt. Drilling rigs were mobilised in late
December to commence a 3000m drill program with
early success achieved in six of the first seven holes,
with an average of 8m thick coking coal intersected
close to surface:
Amaam North
Geological
Plan
PAGE 16
– AL13001: Cumulative coal thickness of 9.28m,
34m below surface
Key parameters highlighting this potential opportunity
at Amaam North are:
– AL13002: Cumulative coal thickness of 10.89m,
42m below surface
– AL08001: Cumulative coal thickness of 9.27m,
21m below surface
– AL13011: Cumulative coal thickness of 8.4m,
67m below surface
– AL13003: Cumulative coal thickness of 5.4m,
59.5m below surface
– AL13009: Cumulative coal thickness of 3m,
50m below surface
Tigers Realm believes the shallow, thick Lower Chukchi
coal seams are highly prospective and there is a strong
likelihood of the Exploration Target being converted to a
Resource in coming months given the drilling success
reported in this and earlier announcements. Based on the
conversion anticipated, initial studies indicate the Lower
Chukchi coal seams may provide excellent potential for
low capital cost, low operating cost, open pit production.
1. Thick near surface seams which should allow
Resources to be defined with low metreage,
low cost drilling programs.
2. Likely low stripping ratios (the Lower Chukchi
outcrop and recently completed holes indicate
local shallow dips of 10–15 degrees).
3. Presence of thick, low ash seams indicating
potential for a direct shipping product.
4. The project is located approximately 35km from the
existing Beringovsky coal port and transport by truck
to the port on winter roads is readily achievable.
5. The Beringovsky port which is currently operating
for the nearby Nagornaya mine is underutilised.
It has historically shipped up to 900,000 tonnes
of coal per summer shipping season.
These concepts are currently being analysed
in greater detail as part of the Amaam PFS.
Amaam North
– Holes drilled
to date and
planned
drill holes
Amaan North Project
Current Drilling Results 18/02/13
Completed Drill Hole
Planned Drill Hole
Mapped Coal Outcrop
Projected Subcrop Line
Achieved
Target
Actual
Comment
Amaam North – project milestones
Project acquisition
Announcement of exploration
target
Start drilling program
(cid:51)
(cid:51)
(cid:51)
H1–12
Q4–12
H1–12
Acquired an 80% interest
Q4–12
30–430Mt Exploration Target
Jan 13
Jan 13
First 6 holes yield average 8m coal
close to surface
Completion of drilling
Coal quality analysis
Initial Resource estimate
Feasibility study
Q1–13
Q2–13
Q2–13
Q1–14
Targeting low capex/opex production
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 17
TIG’s management team has
significant experience in all facets
of exploring, developing, operating
and financing large scale natural
resources projects. The team
has a balanced set of skills in the
areas of geology, mining operations,
infrastructure and regulatory,
environmental and financial affairs.
All senior operational managers have worked previously
in the minerals and mining sector and are well equipped
to manage both the development project and the third
party contractor workforce that will be involved in the
construction of TIG’s mining operations.
Members of TIG’s management team are either
employed directly by TIG or seconded from Tigers
Realm Minerals (TRM). In addition, under a services
agreement, TRM agrees to provide certain services
to TIG, including business development, company
secretarial and legal services.
Biographies of the management team are:
Mr Antony Manini
Executive Chairman (1)
BSc(Hons), FAusIMM, FSEG
Mr Manini has over 24 years of global resource industry
experience across a diverse range of commodities in over
20 countries. His experience includes 14 years with the
Rio Tinto Group and 8 years with Oxiana Limited (now OZ
Minerals Limited) covering various technical, commercial,
senior management and executive roles in exploration,
project evaluation, project development and business
development. Mr Manini is a founder of TRM and TIG
and has been Managing Director of TRM since inception
of TRM. He holds an Honours Degree in Geology and is
a Fellow of the Australian Institute of Mining and Metallurgy
and the Society of Economic Geologists.
directors and
management
Mr Craig Parry
Chief Executive Officer (2)
BSc (Hons), MAusIMM
Mr Parry is an exploration and business development
geologist who has worked internationally across a broad
range of commodities with Tigers Realm Coal (TIG),
Tigers Realm Minerals, G-Resources Group Limited, Oxiana
Limited (now OZ Minerals Limited), Rio Tinto Limited and
RSG Consulting Pty Ltd over the past 14 years.
He is a founder of TIG and has been responsible for TIG’s
business development activities since inception, including
the acquisition of the Amaam Project.
Mr Parry has held a number of executive roles in the
resources industry, including Business Development
Manager for G-Resources Group Limited responsible
for mergers and acquisitions and Principal Geologist –
New Business at Oxiana Limited responsible for strategy
and business development initiatives in bulk and energy
commodities. At Rio Tinto Limited, Mr Parry led exploration
programs for iron ore, copper, diamonds, coal and bauxite
in Australia, Asia and South America and was Principal
Geologist for the Kintyre Uranium project Pre-Feasibility Study.
Mr Parry is a graduate of The University of New South Wales,
holds a Bachelor of Science (Applied Geology) with first
class Honours and the University Medal. He is a Member
of the AusIMM.
Mr Owen Hegarty
Non-Executive Director (3)
BEc(Hons), FAusIMM
Mr Hegarty has over 40 years’ experience in the global
mining industry, including 25 years with the Rio Tinto group
where he was Managing Director of Rio Tinto Asia and
also Managing Director of the Australian Copper and gold
business. He was the founder and Chief Executive Officer
of Oxiana Limited (now OZ Minerals Limited) which grew
from a small exploration company to a multi-billion dollar,
base and precious metals explorer, developer and producer.
Mr Hegarty is Executive Vice-Chairman of Hong Kong
listed G-Resources Group Limited, a gold mining company,
and an Advisor to CST Mining Group Limited also a
Hong Kong listed mining company with a copper focus.
He is a Non-Executive Director of Fortescue Metals Group
Limited, a Director of the AusIMM, a member of a number
of Government and industry advisory groups. He is a
Founding Patron of CEEC (Coalition for Eco-Efficient
Comminution) – a not-for-profit organisation aimed at
increasing energy efficiencies in mining and minerals
processing. Mr Hegarty is Chairman of TRM and Chairman
of EMR Capital, a private equity investment manager
focused on resources.
(1)
(2)
(3)
PAGE 18
Mr Brian Jamieson
Independent Non-Executive Director (4)
FCA
Mr Jamieson was Chief Executive of Minter Ellison
Melbourne from 2002 until he retired at the end of 2005.
Prior to joining Minter Ellison, he was with KPMG for over
30 years holding the positions of Chief Executive Officer
Australia, Managing Partner and Chairman of KPMG Melbourne.
He was also a KPMG Board Member in Australia and Asia
Pacific and a member of the KPMG USA Management
Committee. Mr Jamieson is a fellow of the Institute of
Chartered Accountants in Australia. Mr Jamieson is a
Non-executive Chairman of Mesoblast Limited, Non-Executive
Chairman of Sigma Pharmaceuticals Limited, Non-executive
Director of Tatts Group Limited and Non-executive Director
of Oz Minerals Ltd. Mr Jamieson is a Deputy Chairman and
Treasurer of the Bionics Institute and a Director and
Treasurer of the Sir Robert Menzies Foundation.
Mr Craig Wiggill
Non-Executive Director (5)
BSc Engineering (Mechanical and Industrial) University
of Witwatersrand
Mr Wiggill has extensive experience in the global mining
industry including over 23 years in the coal sector, the
majority of such being within the Anglo American Plc group.
His most recent executive role was as CEO – Coal Americas
at Anglo Coal, where he established and developed the
Peace River operation in Canada and co-managed the joint
venture projects at Cerrejón and Guasaree. He has also held
leadership roles covering commercial, trading and marketing
responsibility, corporate strategy and business development
for Anglo American. In addition to corporate and advisory
work for a number of companies in the mining industry,
he is currently Chairman at Forbes & Manhattan Coal Corp
(TSX:FMC).
Mr David Forsyth
Company Secretary (6)
FCIS, FCPA
Mr Forsyth has over 40 years experience in the engineering,
project development and mining field. His most recent
positions were with Oxiana Limited (now OZ Minerals
Limited), where he was Company Secretary and Manager
Administration from 1996 to 2008.
Mr Leonid Skoptsov
General Director–NPCC–Russia (7)
Mr Skoptsov has more than 20 years of resource exploration,
development and operational experience in Russia. He became
a Director of Ovoca Gold Plc in June 2006 and later became
Chief Executive Officer from 2006 to 2009. Mr Skoptsov was
also Chairman of OAO Pervaya Gornorudnaya Companiya, a
zinc-lead asset developer, from 2001 to 2005 and Chairman
of OAO Volganeft, a mid-tier oil producer in Russia which was
successfully sold to Russneft, from 2000 to 2004.
Mr Peter Balka
Chief Operating Officer (TRM Secondee) (8)
B.E (Mining Eng), MAUSIMM
Mr Balka is a mining engineer with over 25 years of extensive
experience in open cut and underground mining operations,
project management, feasibility studies and due diligence.
Most recently Mr Balka worked for 4 years with OZ Minerals
Limited (formerly Oxiana Limited) as Group Mining Engineer,
managing feasibility studies and providing engineering services
and oversight to the operations including those at Prominent
Hill, Sepon, Golden Grove, Century and Rosebery. Prior to
this, Mr Balka held key technical and management roles
with AMC Consultants Pty Ltd, Newcrest Limited and BHP
Billiton Limited, for the feasibility studies and development
of Prominent Hill, Ridgeway, Cannington, Callie open cut and
underground, Iron Duke – Whyalla, Gosowong and Tarnagulla.
His international experience also includes projects in Russia,
Indonesia, India, New Zealand and Africa.
Mr David George
Manager Investor Relations (9)
B.E (Chemical Engineering) M.Comm
Mr George has some 24 years experience as Head of
Resources Equities Research and lead analyst coverage
responsibilities with a number of major and mid-tier investment
banks, including JP Morgan and Deutsche Bank. He has
extensive relationships with domestic and international
institutional investment funds.
(4)
(5)
(6)
(7)
(8)
(9)
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 19
DIRECTORS' REPORT
For the year ended 31 December 2012
The Directors present their report together with the financial report of the Group, being Tigers Realm Coal Limited (“the Company”
or “TIG”) and its subsidiaries, for the year ended 31 December 2012.
1. Directors and Company Secretary
The Directors of the Company at any time during or since the end of the period are:
Name,
qualifications and
independence
status
Mr Antony Manini
Executive
Chairman
BSc(Hons),
FAusIMM,
FSEG
Mr Owen Hegarty
Non-executive
Director
BEc(Hons),
FAusIMM
Mr Brian Jamieson
Independent
Non-executive
Director
FCA
Mr Craig Wiggill
Non-executive
Director
BSc Eng.
Experience, special responsibilities and other directorships
Mr Manini has over 25 years of global resource industry experience across a diverse range of commodities
in over 20 countries. His experience includes 14 years with Rio Tinto and 8 years with Oxiana Limited
(now OZ Minerals Limited) covering various technical, commercial, senior management and executive roles
in exploration, project development and business development. As a foundation member of the Oxiana Limited
executive team he was responsible for establishing and managing the company’s highly successful exploration
and resources group and closely involved in the discovery and/or acquisition and development of Oxiana
Limited/OZ Limited’s four operating mines. Mr Manini is a founder of Tigers Realm Minerals Limited
(“TRM”) and TIG and has been Managing Director of TRM since inception of TRM. He holds an Honours
Degree in Geology and is a Fellow of the Australian Institute of Mining and Metallurgy and the Society
of Economic Geologists. Mr Manini was appointed as Executive Chairman on 12 November 2012 and as
a Director and Chairman on 8 October 2010. Mr Manini is a member of the Audit, Risk and compliance
Committee and of the Nomination and Remuneration Committee. He holds no other directorships with
ASX listed entities.
Mr Hegarty has over 40 years’ experience in the global mining industry, including 25 years with the
Rio Tinto group where he was Managing Director of Rio Tinto Asia and also Managing Director of the
Australian copper and gold business. He was the founder and Chief Executive Officer of Oxiana Limited
(now OZ Minerals Limited) which grew from a small exploration company to a multi-billion dollar, base and
precious metals explorer, developer and producer. Mr Hegarty is Executive Vice Chairman of Hong Kong
listed G Resources Group Limited, a gold mining company and Executive Vice Chairman of CST Mining
Group Limited, also a Hong Kong listed mining company with a copper focus. He is a Non-executive Director
of Fortescue Metals Group Limited, a Director of the AusIMM, a member of the South Australian Minerals
and Petroleum Experts Group, and a Director of the WA based Mining Hall of Fame Foundation – a mining
educational foundation. He is a Founding Patron of CEEC (Coalition of Eco-Efficient Communication)
– a not-for-profit organisation aimed at increasing energy efficiencies in mining and minerals processing.
He is also Chairman of TRM. Mr Hegarty was appointed a Director on 8 October 2010 and is a member
of the Audit, Risk and Compliance Committee and of the Nomination and Remuneration Committee.
In the past three years Mr Hegarty was a director of Range River Gold Limited (from July 1994 to June 2010)
an ASX listed entity.
Mr Jamieson was Chief Executive of Minter Ellison Melbourne from 2002 until he retired at the end of 2005.
Prior to joining Minter Ellison, he was with KPMG for over 30 years holding the positions of Chief Executive
Officer Australia, Managing Partner and Chairman of KPMG Melbourne. He was also a KPMG Board Member
in Australia and Asia Pacific and a member of the KPMG USA Management Committee. Mr Jamieson is
a fellow of the Institute of Chartered Accountants in Australia. Mr Jamieson is a Non-executive Chairman
of Mesoblast Limited, Non-Executive Chairman of Sigma Pharmaceuticals Limited, Non-executive Director
of Tatts Group Limited and Non-executive Director of Oz Minerals Ltd. Mr Jamieson is a Deputy Chairman
and Treasurer of the Bionics Institute and a Director and Treasurer of the Sir Robert Menzies Foundation.
Mr Jamieson was appointed as a Non-executive Director of the Company on 25 February 2011 and is Chairman
of the Audit, Risk and Compliance Committee and of the Nomination and Remuneration Committee.
Mr Wiggill has extensive experience in the global mining industry including over 23 years in the coal sector,
the majority of such being within the Anglo American Plc group. His most recent executive role was as CEO
– Coal Americas at Anglo Coal, where he established and developed the Peace River operation in Canada
and co-managed the joint venture projects at Cerrejón and Guasaree. He has also held leadership roles
covering commercial, trading and marketing responsibility, corporate strategy and business development
for Anglo American. In addition to corporate and advisory work for a number of companies in the mining
industry, he is currently Chairman at Forbes & Manhattan Coal Corp (TSX:FMC). Mr Wiggill was appointed
as a Non-executive Director of the Company on 20 November 2012. He holds no other directorships with
ASX listed entities.
PAGE 20
Name,
qualifications and
independence
status
Mr David Forsyth
Company
Secretary
FCIS, FCPA
Former Director
Mr Martin Grant
MSc, BSc (Hons)
Experience, special responsibilities and other directorships
Mr Forsyth has over 40 years’ experience in the engineering, project development and mining field. His most
recent position was with Oxiana Ltd, now Oz Minerals Limited, where he was Company Secretary and Manager
Administration from 1996 to 2008. Mr Forsyth joined TRM as Director and Company Secretary in 2009.
Mr Forsyth was appointed a Company Secretary of the Company on 8 October 2010.
Mr Grant has over 20 years’ experience in the resources industry. In the 7 years prior to joining the Company,
Mr Grant held a number of senior roles in the international coal sector, including Chief Development Officer
for BHP Billiton Energy Coal and Vice President Business Development for BHP Billiton Mitsubishi Alliance,
the world’s largest seaborne supplier of hard coking coal. Prior to specialising in coal, Mr Grant was a senior
corporate finance advisor with UBS and Goldman Sachs. During this time, he worked on numerous mining
merger and acquisition transactions, including BHP Limited’s merger with Billiton plc. Mr Grant has a
background in minerals exploration and holds a Master’s degree in Mineral Economics from the Colorado
School of Mines. Mr Grant was appointed a Director on 7 March 2011, and resigned as CEO and Managing
Director on 12 November 2012. He holds no other directorships with ASX listed entities.
The Directors have been in office since the start of the period to the date of this report unless otherwise stated.
2. Directors’ meetings
The number of Directors’ meetings (including meeting of committees of Directors) and number of meetings attended by each
of the Directors of the Company during the financial year are:
Attendance at meetings
Directors’ meetings
Meeting of committees of Directors
Nomination and
Remuneration
Audit, Risk &
Compliance
A
9
9
9
2
7
B
9
9
9
2
6
A
4
4
4
–
–
B
4
4
4
–
–
A
6
6
6
–
–
B
6
6
6
–
–
Mr Antony Manini
Mr Owen Hegarty
Mr Brian Jamieson
Mr Craig Wiggill
(appointed 20 November 2012)
Mr Martin Grant
(resigned 12 November 2012)
A = Number of meetings held during the time the Director held office
B = Number of meetings attended
3. Principal activities
The principal activity of the Group is the identification, exploration, and development of international coal deposits.
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 21
DIRECTORS' REPORT (CONTINUED)
For the year ended 31 December 2012
4. Operating and financial review
The operating loss after income tax of the Group for the
year ending 31 December 2012 was $18,410 thousand
(2011: profit of $12,841 thousand). As at 31 December
2012 the Group had a cash position of $8,528 thousand
(2011: $21,030 thousand). The Group had no bank debt.
Operating activities incurred cash outflows from operations
for the year of $3,546 thousand (2011 $8,530 thousand).
There were cash outflows from investing activities of
$18,145 thousand (2011 $9,859 thousand) for the year.
5. Significant changes
in the state of affairs
(cid:129) On 18 January 2012 the Group completed the acquisition
of Amaam North tenement in far eastern Russia by acquiring
an 80% interest in Rosmiro Investments Limited for
US$400 thousand.
(cid:129) On 3 May 2012 the Group announced a 38% increase in the
Inferred Resources at Amaam up to 406MT of coking coal.
(cid:129) On May 14 2012 the Group was granted a Discovery
Certificate for the Amaam deposit by the Russian Federal
Subsoil Agency.
(cid:129) On 19 June 2012 the Group announced that as a
consequence of completing a strategic review of the Group’s
exploration projects it decided not to continue with the
Landazuri Project in Colombia and had withdrawn from
the farm-in option agreements relating to the Landazuri
tenements in Colombia, and would be discontinuing
operations in Colombia.
(cid:129) On 11 July 2012 the Company concluded a placement
of fully paid ordinary shares to raise gross proceeds of
$8,923,408 at a price of $0.18 per share. The placement
price represented a 5% discount to the volume weighted
average price over the five days trading up to and including
6 July 2012. The proceeds have been applied towards
additional drilling and technical studies at the Amaam
Coking Coal Project, including resource infill drilling, large
diameter coal quality drilling and/or bulk sampling and
various condition studies to support detailed engineering
design activities. Proceeds have also been used to fund
drilling of scout holes at the highly prospective Amaam
North tenement to test the seam thickness and coal quality,
and for corporate costs and working capital for the period
to June 2013.
(cid:129) On 10 August 2012 the Company completed a Share
Purchase Plan for shareholders in Australia and New Zealand.
The Share Purchase Plan raised gross proceeds of $753,500
through the issue of fully paid ordinary shares at an issue
price of $0.16 per share. The proceeds have been applied
towards additional drilling and technical studies at the
Amaam Coking Coal Project.
PAGE 22
(cid:129) In November 2012 the Company commenced a programme
to perform 5,800 metres of drilling at Amaam to enable
the upgrading of resource information and provide key
inputs for the future bankable feasibility study. In addition
the Company plans to complete an 800 metre drilling
programme at Amaam North.
(cid:129) An upgrade of the Amaam coking coal resource was
announced on 4 December 2012. Initial resource drilling
completed at Amaam has upgraded 63 million tonnes
of Inferred Resource to Indicated Resource. The total
Indicated and Inferred Resources at Amaam have increased
to 412 million tonnes, of which 302 million tonnes lies
within an open pit domain.
6. Events subsequent
to reporting date
On 22 February 2013 the Company concluded a placement
of 106,000,000 fully paid ordinary shares to raise gross
proceeds of approximately $21,200 thousand at a price of
$0.20 per share. The placement price represents a 7.3%
discount to the volume weighted average price over the five
days trading up to and including 19 February 2013. The
placement is organised in two tranches, with the initial
tranche of $12,500 thousand being fully completed, with
62,733,452 shares issued on 1 March 2013. The second
tranche of $8,700 thousand for 43,266,548 is subject to
shareholder approval, which will be sought at the Annual
General Meeting on 23 April 2013. As part of the placement
the Directors subscribed for 1,500,000 shares. These
shares are also subject to shareholder approval which
will be sought at the Annual General Meeting.
Other than the events noted above, there has not arisen
in the interval between the end of the financial year and
the date of this report any item, transaction or event of
a material nature likely, in the opinion of the Directors of
the Company, to affect significantly the operations of the
Group, the result of those operations, or the state of affairs
of the Group, in future financial years.
7. Dividends paid or recommended
The Directors do not recommend the payment of a dividend
and no amount has been paid or declared by way of a
dividend to the date of this report.
8. Likely developments
The Group will continue minerals exploration on the
tenements in Russia held by entities in which it has
a controlling interest or significant influence.
Further information about 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.
9. Directors’ interests
The relevant interest of each Director in the shares or
options over such instruments issued by the companies
within the Group and other related bodies corporate, as
notified by the directors to the ASX in accordance with
S205G(1) of the Corporations Act 2001, at the date of
this report is as follows:
Tigers Realm Coal Limited
Ordinary
shares
Options over
ordinary shares
19,437,183
9,131,000
16,212,114
5,315,500
771,528
2,000,000
–
–
A. Manini
O. Hegarty
B. Jamieson
C. Wiggill
Under the terms of his appointment as a Non-executive
director, Mr Wiggill will receive a grant of 1,000,000 options
in the Company, subject to shareholders approval which
will be sought at the Company’s Annual General Meeting
on 23 April 2013. These options will vest 12 months after
grant date with an exercise price of 50 cents and will expire
after 5 years.
10. Share Options
Options granted to directors and executives of the Company
During or since the end of the financial year, the Company
granted options for no consideration over unissued shares
in the Company to the following directors and to the five
most highly remunerated officers of the Company as part
of their remuneration:
DIRECTORS
AJ Manini
OL Hegarty
B. Jamieson
MA Grant
EXECUTIVES
C Parry
P Balka
D George
D Forsyth
P Smith
B Stockdale
J Brooker
Number of
options granted
1,500,000
1,000,000
1,000,000
2,049,877
8,000,000
1,280,000
750,000
246,000
729,000
370,000
286,000
Details on options over ordinary shares in the Company
that were granted as compensation for no consideration
to each key management person, including the five most
highly remunerated executives of the company, during the
reporting period and details on options that vested during
the reporting period are disclosed in the Remuneration
report. There have been 1,611,000 options granted since
the end of the financial year, which are included in the
number of options outlined above.
Unissued shares under options
At the date of this report unissued shares of the Group
under option are as follows:
Expiry date
Exercise price
23 November 2015
20 December 2015
17 March 2016
2 May 2016
17 October 2016
22 February 2017
28 March 2017
14 May 2017
12 July 2017
27 July 2017
12 November 2017
12 November 2017
12 November 2017
12 November 2017
15 February 2018
15 February 2018
15 February 2018
0.078
0.195
0.425
0.425
0.415
0.500
0.750
0.320
0.250
0.500
0.250
0.500
0.750
1.000
0.250
0.260
0.340
Number of
shares
15,587,650
10,000,000
1,000,000
250,000
250,000
2,109,000
3,500,000
250,000
250,000
300,000
2,000,000
2,000,000
2,000,000
2,000,000
750,000
450,000
2,982,000
45,678,650
All unissued shares are ordinary shares of the Company.
Details of the terms and conditions of options granted under
the Staff Option Plan as part of the Group’s Long Term
Incentive Plan are outlined in the Remuneration report,
and are included in note 26 to the Financial Statements.
The options do not entitle the holder to participate in any
share issue of the Company.
No shares have been issued by the Group during or since
the end of the financial year as a result of the exercise
of options.
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 23
DIRECTORS' REPORT (CONTINUED)
For the year ended 31 December 2012
11. Remuneration report – audited
This remuneration report sets out the remuneration information for Tigers Realm Coal Limited’s Non-executive Directors,
executive Directors and other key management personnel.
(a) Details of key management personnel
Name
Directors
Position
Commencement Date
Antony Manini
Executive Chairman
8 October 2010
Owen Hegarty
Director (Non-executive)
8 October 2010
Brian Jamieson
Craig Wiggill
Martin Grant
Senior Executives
Craig Parry
Peter Balka
David George
David Forsyth
Paul Smith
Independent Director
(Non-executive)
25 February 2011
Director (Non-executive)
20 November 2012
Chief Executive Officer and
1 February 2011
Resigned 12 November 2012
Managing Director
7 March 2011
Chief Executive Officer
12 November 2012
Chief Operating Officer
1 January 2011
Manager Investor Relations
5 October 2012
Company Secretary
8 October 2010
Chief Financial Officer
17 October 2011
Ceased 30 November 2012
(b) Changes to key management personnel
(c) Principles used to determine the nature
Directors
In November 2012 Mr Craig Wiggill was appointed
as a Non-executive Director.
In November 2012 Mr Martin Grant resigned
as Chief Executive Officer and Managing Director.
In November 2012 the Chairman, Mr Antony Manini
was appointed to the position of Executive Chairman.
Executives
In October 2012 Mr David George was appointed
as Manager Investor Relations.
In November 2012 Mr Craig Parry was appointed as Chief
Executive Officer, replacing Mr Martin Grant who resigned
as Chief Executive Officer and Managing Director.
In November 2012 the Chief Financial Officer, Mr Paul Smith
ceased employment with the Company.
and amount of remuneration
This remuneration report sets out information about the
remuneration of Tigers Realm Coal Limited’s Directors and
its key management personnel for the financial year ended
31 December 2012.
Key management personnel have authority and responsibility
for planning, directing and controlling the activities
of the Group, including Directors of the Company and
other executives. Key management personnel comprise
the Directors of the Company and senior executives for
the Group.
The Board is committed to clear and transparent
disclosure of the Company’s remuneration arrangements.
The Company’s remuneration policy is designed to ensure
that it enables the Company to attract and retain valued
employees, motivate senior executives and executive
Directors to pursue the long term growth and success of
the Company, demonstrate a clear relationship between
performance and remuneration and have regard for
prevailing market conditions.
PAGE 24
(cid:129) Short Term Incentive (“STI”), which is at-risk remuneration.
This is an annual incentive award based on the achievement
of pre-determined company and individual objectives.
These short-term incentives are available to executives
and other eligible participants. Cash incentives (bonuses)
are payable in February each year; and the
(cid:129) Long Term Incentive (‘LTI’) Program under which
employees, at the discretion of the Board, are offered
options over ordinary shares in the Company under
the Company’s Option Plan.
The Company made initial grants of options to certain senior
executives as part of their individual employment contracts.
For the STI element of remuneration a performance
framework has been developed for KMP and other senior
executives under the STI programme. Key Performance
Indicators (“KPI”) are developed for each individual, which
are reassessed regularly to ensure they remain current and
applicable as the Group’s operations develop. Individual
performance against these KPIs is assessed annually
by the individual’s manager or the Managing Director,
and are subject to Board discretion.
The performance framework develops individual KPIs
in the following proportions:
(cid:129) 30% Group related KPIs, (these are specific to Health, Safety
& Environmental, Project, and Corporate objectives); and
(cid:129) 70% Individual KPIs tailored to the role and objectives
of each senior executive.
For the LTI element of remuneration, options granted under
the Company’s Option Plan, and any project completion
bonuses are granted at the Company’s discretion, and are
approved by the Board in advance. The number of Options
an executive is offered is a function of their level in the
Group. Further details of the Option Plan are included
in note 26.
The following table shows the relative proportions of
remuneration packages of the Executive Directors and
Senior Executives, including executive Key Management
Personnel (‘KMP’), during the year ended 31 December
2012, that are linked to performance and those that are
fixed. The STI and LTI components of each of the Senior
Executive’s remuneration are contingent upon the
achievement of the performance criteria.
(d) Consequence of performance
on shareholder wealth
The Directors are committed to developing and maintaining
a remuneration policy and practices that are targeted at
the achievement of corporate values and goals and the
maximisation of shareholder value.
In considering the Group’s performance and benefits
for shareholder wealth, when determining compensation
for key management personnel the Remuneration and
Nomination Committee and the Board have regard to the
geological finds and the progress of operations based on
goals set by the Remuneration and Nomination Committee
and the Board throughout the year. In addition, the Board
has regard to the following indices in respect of the
financial year and previous financial years.
Net profit/(loss)
attributable to
equity holders of
the parent ($
thousand)
Closing share price
($)
2012
2011
$(19,779)
$17,643
$0.16
$0.27
(e) Remuneration policy and structure
for senior executives
The objective of the Group’s executive remuneration policy
is to ensure reward for performance is competitive and
appropriate for the results delivered. The structure aligns
executive reward with achievement of strategic objectives
and the creation of wealth for shareholders, and conforms
to market practice for delivery of reward. The executive
remuneration structure is market competitive and
complementary to the reward strategy for the Group.
The structure provides a mix of fixed and variable
remuneration, and a blend of short-term and long-term
incentives. As executives gain seniority within the Group,
the balance of this mix shifts to a higher proportion of
“at-risk” rewards.
The Company’s remuneration policy and structure for
its senior executives comprises three main components:
(cid:129) Fixed Remuneration, which is the total base salary and
includes employer superannuation contributions. The fixed
remuneration reflects the job level, role, responsibilities,
knowledge, experience and accountabilities of the individual
executive and is set at a level which is competitive, aligned
with the business needs and based on current market
conditions in the mining industry and countries in which
the Company does business; and
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 25
DIRECTORS' REPORT (CONTINUED)
For the year ended 31 December 2012
11. Remuneration report – audited (CONTINUED)
Fixed Annual
Remuneration
(including
super annuation
contributions)
%
At Risk – STI
as percentage
of Total
Remuneration
%
At Risk – LTI
as percentage
of Total
Remuneration*
%
At Risk – Total
as percentage
of Total
Remuneration*
%
23.8
73.7
42.4
66.3
71.8
46.2
86.9
39.1
73.6
68.8
55.3
59.6
0.0
0.0
0.0
13.6
28.2
9.9
0.0
15.8
12.2
15.7
3.8
20.1
76.2
26.3
57.6
20.1
0.0
43.9
13.1
76.2
26.3
57.6
33.7
28.2
53.8
13.1
45.1
60.9
14.2
15.5
40.9
20.3
26.4
31.2
44.7
40.4
2012
Executive Directors
Antony Manini, Executive Chairman
Martin Grant, MD & CEO
(resigned 12 November 2012)
Other key management personnel
Craig Parry, CEO
Peter Balka COO
David George
David Forsyth, Company Secretary
Paul Smith, CFO
(ceased employment 30 November 2012)
2011
Executive Directors
Martin Grant, MD & CEO
Other key management personnel
Paul Smith, CFO
Peter Balka
David Forsyth, Company Secretary
Ben Stockdale
* Since the LTI is provided exclusively by way of options, the percentages disclosed also reflect the value of remuneration consisting of options,
based on the value of options expensed during the year.
The Options Scheme prohibits executives from entering into arrangements to protect the value of unvested LTI Plan awards.
The prohibition includes entering into contracts to hedge their exposure to options awarded as part of their remuneration package.
(f) Senior executives’ employment arrangements
The remuneration arrangements for senior executives are formalised in employment contracts. Each of these agreements provide
for the payment of performance-related cash bonuses under the STI programme and participation, where eligible, in the Company
Option Plan under the LTI Program. The employment contract outlines the components of remuneration paid to key management
personnel but does not prescribe how remuneration levels are modified year to year.
Remuneration levels are reviewed each year to take into account cost-of-living changes, any change in the scope of the role
performed by the senior executive and any changes required to meet the principles of remuneration policy.
The employment contracts with Directors and senior executives have no fixed term. Other than the provisions relating to vesting
of LTI grants in certain circumstances, the employment contracts contain no termination benefits other than payments in lieu
of notice and redundancy payments. The notice periods and redundancy payments vary for the individuals and depending upon
the period of service.
PAGE 26
The remuneration and other terms of employment for key management personnel are formalised in their employment contracts.
The key provisions of the employment contracts for key management personnel are set out in the table below:
Length of
contract
and expiry
date where
applicable
Base
Salary
Super-
annuation
Short-term
incentive
Long-term
incentive
Open ended
$300,000
$27,000
Open ended
$253,843
$48,000
Open ended
$229,358
$20,642
Maximum
cash bonus
of 50%
of base salary
Maximum
cash bonus of
30% of total
remuneration
Maximum
cash bonus
of 20% of
base salary
Participates
in Company
Share Option
Plan
Participates
in Company
Share Option
Plan
Participates
in Company
Share Option
Plan
Termination
due to
serious
misconduct
Employee-
initiated
termination
No notice
required
3 months
notice
No notice
required
1 months
notice
No notice
required
3 months
notice
Employer-
initiated
termination
3 months
notice or
payment in
lieu of notice
1 months
notice or
payment in
lieu of notice
3 months
notice or
payment in
lieu of notice
Open ended
$258,750
$23,250
$420,000
$37,800
Four years to
1 February
2015
Maximum
cash bonus
of 30% of total
remuneration
Maximum
cash bonus
of 50% of
base salary
Participates
in Company
Share Option
Plan
Participates
in Company
Share Option
Plan
1 months
notice or
payment in
lieu of notice
12 months
notice or
payment in
lieu of notice
No notice
required
1 months
notice
No notice
required
6 months
notice
Open ended
$326,900
$25,000
Maximum
cash bonus
of 30% of
base salary
Participates
in Company
Share Option
Plan
3 months
notice or
payment in
lieu of notice
No notice
required
3 months
notice
Name &
Role
Craig Parry
Chief
Executive
Officer
Peter Balka
Chief
Operating
Officer
David
George
Manager
Investor
Relations
David
Forsyth
Company
Secretary
Martin Grant
CEO &
Managing
Director
(resigned
12/11/12)
Paul Smith
Chief
Financial
Officer
(ceased
30/11/12)
(g) Remuneration of Executive and Non-executive Directors
On appointment to the Board, all Executive and Non-executive Directors enter into service agreements with the Company in the
form of a Letter of Appointment. The letter summarises the Board Policies and terms, including compensation, relevant to the
office of Director.
Executive and Non-executive Director remuneration is reviewed annually by the Board. Non-executive Directors receive a base
fee for being a Director and may receive additional fees for either chairing or being a member of a Board committee, working on
special committees, and/or serving on special committees and/or special boards. Non-executive Directors’ fees are determined
within an aggregate Directors’ fee pool limit, which has been established at $1,000,000. Executive Director remuneration is
formalised in a contract in the same manner as senior executives, (refer section 11(f) above).
Non-executive Directors receive a fixed fee consisting of a base fee rate and nine percent superannuation contributions.
No retirement or other long term benefits are provided to any Director other than superannuation to those Directors who are
also employees resident in Australia at the rate of nine per cent. The Non-executive Directors can claim reimbursement of
out-of-pocket expenses incurred on behalf of the Company. The base fee for Directors is presently $75,000 per annum, with the
Executive Chairman receiving $100,000 per annum. No remuneration paid to NEDs during the financial year was results based.
Mr Wiggill was appointed as a Director of the Company effective 20 November 2012. In accordance with Mr Wiggill’s terms of
appointment, Mr Wiggill was issued 1,000,000 Options in the Company subject to approval at the Annual General Meeting in
2013. These options have been issued at an exercise price $0.50 cents and vest 12 months after the AGM date. All the options
have a five year expiry from grant date.
In addition the Company has signed a 12 month Consultancy Agreement to the value of GBP 50,000 with Thukela Resources Ltd,
Mr Wiggill’s nominated consultancy company. An amount of $6,502 was paid to Mr Wiggill under that Consultancy Agreement
during the year ended 31 December 2012.
On 12 November 2012 the Chairman, Mr Antony Manini was appointed to the role of Executive Chairman, following the resignation
of Mr Martin Grant as Managing Director and CEO.
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 27
DIRECTORS' REPORT (CONTINUED)
For the year ended 31 December 2012
11. Remuneration report – audited (CONTINUED)
(h) Directors’ and executive officers’ remuneration
Details of the nature and amount of each major element of remuneration of each Director of the Company, and the key
management personnel (as defined in AASB 124 Related Party Disclosures) are set out in the following tables.
Key management personnel of the Group and other executives of the Company and the Group
2012
Short-term
Post
employ-
ment
Other
long-term
Share-
based
payments
Cash
Salary
and fees
$
Non-
Monetary
Benefits(1)
$
STI cash
bonus(2)
$
Super-
annuation
$
Long
Service
Leave
$
Termin-
ation
benefits
$
LTI(3)
$
Proportion
of remun-
eration
comprising
options
%
Total
Remun-
eration
$
Name
2012
Non-executive Directors
AJ Manini4
OL Hegarty
B Jamieson
C Wiggill6
Sub total
Executive Directors
AJ Manini4
MA Grant5
86,575
75,000
75,000
8,659
245,234
13,425
372,960
Other key management personnel
25,167
261,062
19,461
96,679
297,667
1,331,655
C Parry
P Balka
D George
D Forsyth
P Smith7
Total key
management
personnel
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6,750
6,750
–
13,500
–
22,967
2,083
61,500
37,500
8,200
22,600
1,373
8,701
–
22,917
92,300
109,041
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
291,466
378,041
185,529
267,279
185,935
267,685
–
8,659
662,930
921,664
27,978
41,403
375,900
275,337
1,047,164
–
–
–
–
37,052
64,302
90,554
450,616
–
29,034
100,316
228,296
205,735
79,624
605,943
581,635
1,273,791
3,388,422
77.1%
69.4%
69.5%
0.0%
67.6%
26.3%
57.6%
20.1%
0.0%
43.9%
13.1%
1. Includes the value of fringe benefits and other allowances.
2. Paid in February 2013 in respect of FY12.
3. In accordance with the requirements of the Accounting Standards, remuneration includes a proportion of the fair value of equity compensation
granted or outstanding during the year (i.e. options granted under LTIP that remained unvested as at 31 December 2012). The fair value of equity
instruments is determined as at the grant date and is progressively allocated over the vesting period. The amount included as remuneration
is not necessarily related to or indicative of the benefit (if any) that senior executives may ultimately realise should the equity instruments vest.
The fair value of the options at the date of their grant has been determined in accordance with AASB 2 Share-based Payments.
4. Appointed as Executive Chairman from 12 November 2012.
5. Resigned 12 November 2012, LTI remuneration forfeited.
6. Appointed 20 November 2012.
7. Ceased employment 30 November 2012, LTI remuneration forfeited.
PAGE 28
Key management personnel of the Group and other executives of the Company and the Group
2011
Short-term
Post
employ-
ment
Other
long-term
Share-
based
payments
Cash
Salary
and fees
$
Non-
Monetary
Benefits(1)
$
STI cash
bonus(2)
$
Super-
annuation
$
Long
Service
Leave
$
Termin-
ation
benefits
$
LTI(3)
$
Proportion
of remun-
eration
comprising
options
%
Total
Remun-
eration
$
Name
2011
Non-executive Directors
AJ Manini
OL Hegarty
B Jamieson
Sub total
34,041
17,742
17,742
69,525
Executive Directors
MA Grant
D Forsyth
385,000
131,618
Other key management personnel
227,636
78,750
96,300
988,829
P Balka
P Smith
B Stockdale
Total key
management
personnel
Other Group executives
–
–
–
–
–
–
–
–
–
–
–
–
–
–
169,063
9,900
59,900
14,100
35,400
3,404
2,298
2,298
8,000
34,650
11,846
34,836
6,250
8,667
288,363
104,249
N Amaya
L Skoptsov
201,375
207,588
1,629
–
J Brooker
244,286
34,847
41,395
24,761
36,405
–
–
–
–
–
–
–
–
–
–
–
–
–
–
8,747
13,891
–
–
–
–
–
–
–
–
–
–
–
–
–
280,579
318,024
155,748
175,788
159,173
179,213
595,500
673,025
483,249
1,071,962
106,048
259,412
59,091
381,463
16,345
115,445
35,698
176,065
1,295,931
2,677,372
88.2%
88.6%
88.8%
45.1%
40.9%
15.5%
14.2%
20.3%
30,917
275,316
11.2%
–
241,096
29,670
359,099
–
8.3%
1. Includes the value of fringe benefits and other allowances
2. Paid in February 2012 in respect of FY11
3. In accordance with the requirements of the Accounting Standards, remuneration includes a proportion of the fair value of equity compensation
granted or outstanding during the year (i.e. options granted under LTIP that remained unvested as at 31 December 2011). The fair value of equity
instruments is determined as at the grant date and is progressively allocated over the vesting period. The amount included as remuneration
is not necessarily related to or indicative of the benefit (if any) that senior executives may ultimately realise should the equity instruments
vest. The fair value of the options at the date of their grant has been determined in accordance with AASB 2 Share-based Payments.
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 29
DIRECTORS' REPORT (CONTINUED)
For the year ended 31 December 2012
11. Remuneration report – audited (CONTINUED)
(i) Analysis of bonuses included in remuneration
Details of the vesting profile of short-term incentive (STI) cash bonuses awarded as remuneration to each Executive Director
of the Company, the key management personnel (as defined in AASB 124 Related Party Disclosures) and the five highest paid
executives of the Company and the Group are set out in the following table.
2012
Executive Director
MA Grant
Executives
C Parry
P Balka
D George
D Forsyth
P Smith
B Stockdale
L Skoptsov
J Brooker
2011
Executive Directors
MA Grant
D Forsyth
Executives
P Balka
P Smith
B Stockdale
N Amaya
L Skoptsov
J Brooker
Short-term incentive bonuses
Included in
remuneration
$ (A)
Vested in year
%
Forfeited in
year
% (B)
–
–
61,500
8,200
22,600
–
61,250
57,744
–
169,063
9,900
59,900
14,100
35,400
41,395
24,761
36,405
0%
100%
0%
74%
86%
91%
0%
87%
80%
0%
78%
55%
76%
60%
95%
86%
47%
77%
100%
26%
14%
9%
100%
13%
20%
100%
22%
45%
24%
40%
5%
14%
53%
23%
A. Amounts included in remuneration for the financial year represent the amount that vested in the financial year based on the achievement
of personal goals and the satisfaction of specified performance criteria. No amounts vest in future financial years in respect of the STI bonus
scheme for the 2012 financial year.
B. The amounts forfeited are due to the performance or service criteria not being met in relation to the current financial year.
PAGE 30
(j) Share Options
Details on options over ordinary shares in the Company that were granted as compensation for no consideration to each key
management person, including the five most highly remunerated executives of the company and Group, during the reporting
period and details on options that vested during the reporting period were as follows:
Number
of options
granted
during
year Grant date
Fair value
of option
at grant
date
$
Exercise
price per
option
$
Vesting
date start
Vesting
date finish
Expiry
date
Option
vesting
performance
hurdle
$
Options
vested in year
No. %
2012
Directors
AJ Manini
1,500,000
28/03/12
OL Hegarty
1,000,000
28/03/12
B Jamieson
1,000,000
28/03/12
0.127
0.127
0.127
0.750
28/03/12
28/03/14
28/03/17
0.750
28/03/12
28/03/14
28/03/17
0.750
28/03/12
28/03/14
28/03/17
Executives
C Parry
2,000,000
12/11/12
0.058
0.250
12/11/12
12/11/13
12/11/17
2,000,000
12/11/12
0.045
0.500
12/11/12
12/11/13
12/11/17
2,000,000
12/11/12
2,000,000
12/11/12
0.038
0.032
0.750
12/11/12
12/11/14
12/11/17
1.000
12/11/12
12/11/14
12/11/17
2,049,877
01/02/12
0.144
0.400
01/02/12
01/02/13
01/02/17
M Grant
P Balka
562,000
22/02/12
D Forsyth
103,000
22/02/12
P Smith
229,000
22/02/12
0.160
0.160
0.160
0.500
22/02/12
22/02/14
22/02/17
0.500
22/02/12
22/02/14
22/02/17
0.500
22/02/12
22/02/14
22/02/17
500,000
22/10/12
0.063
0.195
22/10/12
22/10/13
22/10/17
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.750
0.000
0.000
0.000
0.234
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
17/10/11
B Stockdale
120,000
22/02/12
250,000
14/05/12
L Skoptsov
560,000
22/02/12
J Brooker
286,000
22/02/12
0.157
0.160
0.130
0.160
0.160
2011
Directors
0.415
17/10/11
17/10/12
17/10/16
0.000 500,000 100
0.500
22/02/12
22/02/14
22/02/17
0.320
14/05/12
14/05/13
14/05/17
0.500
22/02/12
22/02/14
22/02/17
0.500
22/02/12
22/02/14
22/02/17
0.000
0.750
0.000
0.000
B Jamieson*
1,000,000
17/03/11
0.292
0.425
17/03/11
29/08/12
17/03/16
0.625
Executives
M Grant
P Smith
2,039,000
01/02/11
500,000
17/10/11
B Stockdale*
250,000
02/05/11
0.259
0.157
0.285
0.500
01/02/11
01/02/12
01/02/16
0.415
17/10/11
17/10/12
17/10/16
0.425
02/05/11
29/08/12
02/05/16
0.625
0.000
0.625
* The performance period for these Options granted in 2011 were extended for a further 12 month period.
The fair values of the extension to the Option is $0.14 per option.
The amounts of these share options have been fair valued at the date of grant using an independent valuation firm.
It is a vesting condition that the holder remains an employee at the time of vesting.
Further details of the Option Plan are included in note 26.
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 31
DIRECTORS' REPORT (CONTINUED)
For the year ended 31 December 2012
11. Remuneration report – audited (CONTINUED)
(k) Analysis of Movement in Share Options
The movement during the reporting period, by value, of options over ordinary shares in the Company held by each key management
person and each of the five named Company executives and relevant Group executives.
Value of
options granted
during year
$
Value of options
exercised
in year
$
Value of
options lapsed
in year
$
Remuneration
consisting of
options for
the year
%
2012
Directors
AJ Manini
OL Hegarty
B Jamieson
C Wiggill
Key Management Personnel
C Parry
M Grant
P Balka
D George
D Forsyth
P Smith
Other
L Skoptsov
B Stockdale
2011
Directors
B Jamieson
Key Management Personnel
M Grant
P Smith
B Stockdale
378,537
231,519
141,000
–
346,000
295,182
129,676
–
87,495
68,140
89,600
55,200
292,200
528,101
78,500
71,250
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
823,283
–
–
–
146,640
–
–
–
–
–
–
77.1
69.4
69.5
–
57.6
26.3
20.1
0.0
43.9
13.1
10.8
25.8
88.8
53.5
14.2
20.3
No shares were issued as a result of the exercise of options during the year ended 31 December 2012.
For details on the valuation of options, including models and assumptions used, refer to note 26.
PAGE 32
(l) Analysis of options over equity instruments granted as compensation
Details of vesting profiles of the options over ordinary shares in the Company granted as remuneration to each key management
person and each of the named Company executives and relevant Group executives are detailed below.
Options granted
Number
Grant date
Vested
in year
Forfeited
in year
Vesting date
start
Vesting date
finish
Directors
A Manini
4,631,000
23/11/10
3,000,000
20/12/10
1,500,000
28/03/12
O Hegarty
2,315,500
23/11/10
2,000,000
20/12/10
1,000,000
28/03/12
B Jamieson
1,000,000
17/03/11
1,000,000
28/03/12
Executives
C Parry
2,000,000
2,000,000
2,000,000
2,000,000
12/11/12
12/11/12
12/11/12
12/11/12
M Grant
2,039,000
01/02/11
2,049,877
01/02/12
P Balka
694,650
23/11/10
D George
D Forsyth
P Smith
B Stockdale
1,000,000
20/12/10
562,000
22/02/12
–
–
1,852,400
23/11/10
1,000,000
20/12/10
103,000
500,000
229,000
500,000
250,000
120,000
250,000
22/02/12
22/02/12
22/10/12
02/05/11
22/02/12
14/05/12
L Skoptsov
560,000
22/02/12
This marks the end of the Remuneration Report.
17/10/11
500,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
23/11/10
29/08/13
20/12/10
29/08/13
28/03/12
28/03/14
23/11/10
29/08/13
20/12/10
29/08/13
28/03/12
28/03/14
17/03/11
29/08/12
28/03/12
28/03/14
12/11/12
12/11/12
12/11/12
12/11/12
12/11/13
12/11/13
12/11/14
12/11/14
2,039,000
01/02/11
01/02/12
2,049,877
01/02/12
01/02/13
–
–
–
–
–
–
–
500,000
229,000
500,000
–
–
–
–
23/11/10
29/08/13
20/12/10
29/08/13
22/02/12
22/02/14
–
–
23/11/10
29/08/13
20/12/10
29/08/13
22/02/12
22/02/14
17/10/11
17/10/12
22/02/12
22/02/14
22/10/12
22/10/13
02/05/11
29/08/12
22/02/12
22/02/14
14/05/12
14/05/13
22/02/12
22/02/14
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 33
DIRECTORS' REPORT (CONTINUED)
For the year ended 31 December 2012
12. Corporate Governance Statement
The Board of Directors are responsible for the corporate
governance of the Company. The Board guides and
monitors the business affairs of the Company on behalf of
the shareholders by whom they are elected and to whom
they are accountable. The company has adopted systems
of control and accountability as the basis for administration
of corporate governance. The Board is committed to
administering the policies and procedures with openness
and integrity, pursuing the highest standards of corporate
governance commensurate with the Company’s needs.
To the extent that they are appropriate and applicable the
Company has adopted the Principles of Good Corporate
Governance Recommendations incorporating the 2010
Amendments as published by the ASX Corporate Governance
Council. As the Company’s activities develop in size, nature
and scope, the Board will consider on an ongoing basis
its corporate governance structures and whether they are
sufficient given the Company’s size and nature of operations.
The Company and its controlled entities together are
referred to as the Group in this statement.
A description of the Group’s corporate governance
practices are set out below. These corporate governance
practices have been in place since the Company was listed
on the ASX on 29 August 2011. Copies of the corporate
governance documents mentioned in this statement are
available on the Company’s website.
Principle 1: Lay solid foundations
for management and oversight
Role of the Board
The Board’s primary role is the protection and enhancement
of long-term shareholder value. To fulfil this role, the Board
is responsible for the overall corporate governance of the
Group. The Board exercises its powers and performs its
obligations in accordance with the provisions of the
Company’s constitution and the Corporations Act 2001.
The Board is responsible for:
(cid:129) charting the direction, policies, strategies and financial
objectives of the Company and ensuring appropriate
resources are available;
(cid:129) monitoring the implementation of these policies and
strategies and the achievement of financial objectives;
(cid:129) monitoring compliance with control and accountability
systems, regulatory requirements and ethical standards;
(cid:129) ensuring the preparation of accurate financial reports
and statements;
(cid:129) reporting to shareholders and the investment community
on the performance and state of the Company; and
(cid:129) reviewing on a regular and continuing basis:
– executive succession planning (in particular the CEO); and
– executive development activities.
PAGE 34
Day to day management of the Group’s affairs and the
implementation of the corporate strategy and policy
initiatives are formally delegated by the Board to the CEO
and senior executives as set out in the Group’s Delegation
Policy, which is available on the Company’s website. These
delegations of authority are reviewed on a regular basis.
Board committees
The Board has established two committees to assist in the
execution of its duties and to allow detailed consideration
of complex issues. Current committees of the Board are
the Nomination and Remuneration Committee and the
Audit, Risk and Compliance Committee. The committee
structure and membership is reviewed regularly.
Each committee has its own written charter setting out
its role and responsibilities, composition, structure, and
meeting requirements. These charters are subject to
regular review and are available on the Company website.
All matters determined by committees are submitted to
the full Board as recommendations for Board decisions.
Minutes of committee meetings are tabled at subsequent
board meetings. Additional requirements for specific
reporting by the committees to the Board are addressed
in the charter of the individual committee.
Management Performance Evaluation
The Board, in conjunction with the Nomination and
Remuneration Committee, is responsible for approving
the performance objectives and measures for the CEO
and other senior executives and providing input into the
evaluation of performance against them. The performance
evaluation process for senior executives and management
has been established. In accordance with that process
a performance evaluation of senior executives and
management has been completed for the 2012
financial year.
Principle 2: Structure of the Board
Composition of the Board
The names of the Directors of the Company in office at the
date of this report, specifying which are independent, are
set out in the Directors’ report. At the date of this report the
Board consists of one independent Non-executive Director,
two Non-executive Directors, and one executive Chairman.
The composition of the Board is determined in accordance
with the following principles outlined in the Board Charter:
(cid:129) a minimum of three Directors;
(cid:129) the intention that the majority of Directors will be
independent within two years of listing on the ASX; and
(cid:129) the Board is required to undertake an annual performance
evaluation and consider the appropriate mix of skills required
by the Board to maximise its effectiveness and its contribution
to the Group.
The Board considers the mix of skills and diversity of Board
members when assessing the composition of the Board.
At the date of this report the Board does not meet
the Good Corporate Governance Recommendations
(“Recommendations”) in that the majority of Directors
should be independent, and that the Chairman should be
independent. Given the start-up nature of the Company
and the experience of the Directors, the Board considers
the composition of the Board, and the non-independent
status of the Chairman to be appropriate at this time, and
is taking steps to increase the number of independent
Directors on the Board.
Director Independence
The Board has adopted specific principles in relation to
Directors’ independence. These state that when determining
independence, a Director must be a non-executive and the
Board should consider whether the Director:
(cid:129) is a substantial shareholder of the Company or an officer
of, or otherwise associated directly with, a substantial
shareholder of the Company;
(cid:129) is or has been employed in an executive capacity by the
Company of any other Group member, within three years
before commencing to serve on the Board;
(cid:129) within the last three years has been a principal of a material
professional advisor or a material consultant to the Company
or any other Group member, or an employee materially
associated with the service provided;
(cid:129) is a material supplier or customer of the Company or any
other Group member, or an officer of or otherwise associated
directly or indirectly with a material supplier or customer;
Orientation Program
The orientation program provided to new Directors and
senior executives enables them to actively participate
in Board decision making as soon as possible. It ensures
that they have a full understanding of the Group’s financial
position, strategies operations, culture, values and risk
management policies. Directors have the opportunity
to visit the Group’s business operations and meet with
management to gain a better understanding of the Group’s
operations. The Group also supports Directors to undertake
continuing education relevant to the discharge of their
obligations as Directors of the Group.
Nomination and Remuneration Committee
The Nomination and Remuneration Committee consists of
two Non-executive Directors, one of whom is independent,
and the Executive Chairman. The Committee has a
documented charter, approved by the Board which
is available on the Company’s website. Details of the
qualifications of members of the Nomination and
Remuneration Committee and their attendance at meetings
of the Committee are set out in the Directors’ Report. The
Chairman of the Committee is Mr Brian Jamieson, an
independent Non-executive Director.
The Nomination and Remuneration Committee operates in
accordance with its charter, and the main responsibilities
of the nomination activities of the Committee are to:
(cid:129) review and make recommendations to the Board relating
to the remuneration of the Directors and the CEO;
(cid:129) assess the necessary and desirable competencies
(cid:129) has a material contractual relationship with the Company or
other Group member other than a Director of the Company.
of Board members;
Family ties and cross-directorships may be relevant
in considering interests and relationships which may
compromise independence, and should be disclosed
by Directors to the Board.
The Board regularly reviews the independence of each
Director in light of interests disclosed and will disclose any
change to the ASX, as required by the ASX Listing Rules.
Independent Professional Advice
All Directors may obtain independent professional
advice, at the Company’s cost, in carrying out their duties
and responsibilities. Prior approval from the Chairman
or the Board is required before seeking independent
professional advice.
Chairman
The Board elects one of the Non-executive Directors to
be Chairman. The Chairman is responsible for leading
the Board, ensuring Directors are properly briefed in all
matters relevant to their role and responsibilities, facilitating
Board discussions and managing the Board’s relationship
with the Company’s senior executives. The Recommendations
note that the Chairman should be an independent Director;
however this recommendation is currently not satisfied.
The current Chairman is Mr Antony Manini, who has been
Chairman since 8 October 2010. The role of Chairman
became an Executive role on 12 November 2012. The
role of the Chairman is separate from that of the Chief
Executive Officer. The CEO is responsible for implementing
Group strategies and policies.
(cid:129) review Board succession planning;
(cid:129) make recommendations to the Board regarding the
appointment and re-election of Directors and the CEO;
(cid:129) oversee succession planning, selection and appointment
practices for management and employees of the Group;
(cid:129) develop a process for the evaluation of the performance
of the Board, its committees and Directors; and
(cid:129) consider strategies to address Board diversity and the
Company’s performance in respect of the Company’s
Diversity Policy.
The Committee is also responsible for considering and
articulating the time needed to fulfil the role of Chairman
and Non-executive Directors. One new Non-executive
Director, Mr Craig Wiggill has been appointed during the
year ended 31 December 2012.
A performance evaluation of the Board, its committees and
the Directors has not taken place during the financial year
ended 31 December 2012. The Board considers that due
to the size of the Company and of the Board, the start-up
nature of the Company, and the relatively short “Public”
life of the Board, a formal review of performance is not
appropriate at this point in time.
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 35
DIRECTORS' REPORT (CONTINUED)
For the year ended 31 December 2012
12. Corporate Governance Statement
(CONTINUED)
Principle 3: Promote ethical and
responsible decision making
Code of Conduct
The Company has developed a Code of Conduct which has
been endorsed by the Board and applies to all Directors,
employees and contractors. The Code of Conduct is regularly
reviewed and updated as necessary to ensure it reflects
the highest standards of behaviour, professionalism and
business ethics necessary to maintain confidence in the
Group’s integrity.
In summary the Code of Conduct requires that at all times
all Group personnel act with utmost integrity, objectivity
and in compliance with the letter and the spirit of the law
and Group policies.
Whistleblowers Policy
The Company’s Whistleblowers Policy encourages employees
and contractors to report concerns in relation to illegal,
unethical or improper conduct without fear of reprisal
if it is reported in good faith. The Company commits to
absolute confidentiality and fairness in all matters raised.
Securities Trading
Directors and employees are allowed to purchase and
sell shares in the Group provided they comply with the
provisions of the Group’s Securities Trading Policy. The
trading policy prohibits Directors and employees and their
associates from trading in Group securities when they are
in possession of price sensitive information which is not
publicly available or during “blackout” periods.
Directors and restricted employees must seek prior written
approval before undertaking any trading in Company
securities. The Directors and employees must also advise
the Company Secretary if they intend to enter into,
or have entered into, a margin lending or other security
arrangement affecting Company securities. The Company
Secretary will advise the ASX of any transactions conducted
by Directors in relation to the Company securities. A
register of interests is maintained which record security
holdings in the Company by Directors and employees.
Workplace Diversity
The Board is committed to having an appropriate blend of
diversity on the Board, and in the Group’s senior executive
positions. The Group values diversity and recognises the
benefits it can bring to the Group’s ability to achieve its
goals. The Group has adopted a diversity policy which
outlines the Group’s diversity objectives in relation to
gender, age, cultural background and ethnicity. The Policy
includes a requirement for the Company to implement
measureable objectives within two years from incorporation
to achieve gender diversity, and for the Board to assess
annually both the objectives and the Group’s progress
in achieving them. The Group has not established these
measurable gender objectives at 31 December 2012.
PAGE 36
As at 31 December 2012, women comprised 24% (2011:
25%) of employees throughout the Group, and occupied
no senior management positions. There are currently no
female members of the Board.
Copies of the Code of Conduct, the Whistleblowers Policy,
the Diversity Policy and the Securities Trading Policy are
available on the Company’s website.
Principle 4: Safeguard integrity
in financial reporting
Audit, Risk and Compliance Committee
The Audit, Risk and Compliance Committee consists of two
Non-executive Directors, of whom one is independent, and
the Executive Chairman. The Chairman of the Committee
is an independent Non-executive Director, and is not Chair
of the Board. The membership of the Committee does not
fully meet the Good Corporate Governance Recommendations
(“Recommendations”) in that the Committee does not
consist of a majority of independent Directors. Given the
size of the Group and the Board, and the start up nature
and straight forward structure of the Group, the Directors
consider that the Audit, Risk and Compliance Committee
is of sufficient size, independence and technical expertise
to discharge its mandate effectively.
All members of the Committee are financially literate and
have an appropriate understanding of the mining industry.
The Chairman, Mr Jamieson has relevant qualification and
experience by virtue of being a Chartered Accountant, a
former partner of a major accounting firm, and is a director
on other ASX listed companies.
The Audit, Risk and Compliance Committee has a
documented charter, approved by the Board. All members
should be Non-executive Directors, and the Chairman
should be independent. Details of the qualifications of
members of the Audit, Risk and Compliance Committee
and their attendance at meetings of the Committee are
set out in the Directors’ report. The Charter is available on
the Company website and includes requirements for the
Committee to consider the selection and appointment of
the external auditor, and for the rotation of external audit
engagement partners.
The main responsibilities of the Committee are to:
(cid:129) review, assess and make recommendations to the Board
on annual and half-year financial reports and all other
financial information released to the market;
(cid:129) assist the Board in reviewing the effectiveness of the
Group’s internal control environment covering;
– effectiveness and efficiency of operations;
– reliability of financial reporting; and
– compliance with applicable laws and regulations.
(cid:129) oversee the effective operation of the risk management
framework;
(cid:129) recommend to the Board the appointment, removal and
remuneration of the external auditors, and review the terms
of their engagement, the scope and quality of the audit and
assess the performance of the auditor;
(cid:129) consider the independence and competence of the
external auditor on an ongoing basis; and
(cid:129) review and approve the level of non-audit services
provided by the external auditors and ensure that
it does not adversely impact on auditor independence.
In fulfilling its responsibilities, the Audit, Risk and
Compliance Committee:
determined that the services provided, and the amount
paid for those services, are compatible with the general
standard of independence for auditors imposed by the
Corporations Act 2001. The Committee has examined
detailed material provided by the external auditor and
by management and has satisfied itself that the standards
of auditor independence and associated issues are fully
complied with.
(cid:129) receives regular reports from management and the
external auditor;
The roles of lead partner and review audit partner are
rotated every five years.
(cid:129) meets with the external auditor at least twice a year
without management being present, or more frequently
if necessary;
(cid:129) reviews the processes in place to support the CEO and
CFO certification to the Board;
(cid:129) reviews any significant disagreements between the auditors
and management, irrespective of whether any have been
resolved; and
(cid:129) provides the external auditors with a clear line of direct
communication at any point in time to either the Chair
of the Audit, Risk and Compliance Committee or the
Chairman of the Board.
The Committee has authority, within the scope of its
responsibilities, to seek any information it requires from
any employee or external party.
CEO and CFO certification
The Chief Executive Officer and the Chief Financial Officer
have declared in writing to the Board in accordance with
Section 295 of the Corporations Act 2001 that the financial
records of the Company for the financial year have been
properly maintained, the Company’s financial reports for
the financial year ended 31 December 2012 comply with
accounting standards and present a true and fair view of
the Company’s financial condition and operational results.
The statement is required annually.
The Board has received and is satisfied with certification
provided by the CEO and CFO that the Group’s risk
management and internal control systems are sound
and operating effectively in all material aspects in relation
to financial reporting risks for the financial year ended
31 December 2012.
External auditor
The role of the external auditor is to provide an independent
opinion that the financial reports are true and fair and
comply with applicable accounting standards.
The Company and the Committee policy is to appoint
external auditors who clearly demonstrate quality and
independence. KPMG has provided an independence
declaration to the Board for the financial year ended
31 December 2012. The Committee has considered the
nature of the non–audit and assurance related services
provided by the external auditor during the year and
The external auditor will attend the annual general meeting
and will be available to answer shareholder questions about
the conduct of the audit and the preparation and content
of the audit report.
Principle 5: Make timely and
balanced disclosure
The Company has established written policies and
procedures on information disclosure that focus on
continuous disclosure of any information concerning the
Group that a reasonable person would expect to have a
material effect on the price of the Company’s securities.
All information disclosed to the ASX is posted on the
Company’s website as soon as it is disclosed to the ASX.
The Company Secretary is responsible for communications
with the ASX and compliance with the continuous disclosure
requirements in the ASX Listing Rules. This role also oversees
and coordinates information disclosure to analysts, brokers,
shareholders, media and to the general public.
The Company’s continuous disclosure policy is available
on the Company’s website.
Principle 6:
Shareholder communications
The Company places a high priority on communications
with shareholders and aims to provide all shareholders
with comprehensive, timely and equal access to balanced
information about Group activities so that they can make
informed investment decisions and provide undivided
support to the Group. Principal communications to
investors are through the provision of the annual report,
financial statements, and market announcements.
The Company website enables users to provide feedback
and has an option for shareholders to register their email
address for direct email updates on Group matters.
The Company’s communications policy is available on the
Company’s website.
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 37
DIRECTORS' REPORT (CONTINUED)
For the year ended 31 December 2012
12. Corporate Governance Statement
13. Indemnification and insurance
(CONTINUED)
of Officers
The Company provides insurance to cover legal liability and
expenses for the Directors and Executive Officers of the
Company. The Directors and Officers Liability Insurance
provides cover against all costs and expenses that may be
incurred in defending civil or criminal proceedings that fall
within the scope of the indemnity and that may be brought
against the Officers in their capacity as Officers. Disclosure
of the nature of the liability cover and the amount of the
premium is subject to a confidentiality clause under the
insurance policy.
The Company has entered into an agreement with the
Directors and certain Officers to indemnify these individuals
against any claims and related expenses, which arise as a
result of their work in their respective capacities.
The Company has not provided any insurance or indemnity
for the auditor of the Company.
14. Environmental Regulation
and Performance
The Group operations are subject to significant environmental
regulation in respect of its exploration activities. There have
been no reports of breaches of environmental regulations
during the financial year to 31 December 2012, or to the
date of this report.
15. Audit and non-audit services
The Company may decide to employ the auditor on
assignments additional to their statutory audit duties where
the auditor’s expertise and experience with the Company
are important. Details of the amounts paid or payable to
KPMG, the Group’s auditor for audit and non-audit services
provided during the year are set out below.
The Board of Directors has considered the position and, in
accordance with the advice received from the Audit, Risk
and Compliance Committee, is satisfied that the provision
of the non-audit services is compatible with the general
standard of independence imposed by the Corporations
Act 2001. The Directors are satisfied that the provision
of non-audit services by the auditor, as set out in note 38,
did not compromise the auditor independence requirements
of the Corporations Act 2001 for the following reasons:
(cid:129) all non-audit services have been reviewed by the Board
to ensure they do not impact the impartiality and objectivity
of the auditor; and
(cid:129) none of the services undermine the general principles
relating to auditor independence as set out in APES 110
‘Code of Ethics for Professional Accountants’.
Principle 7: Recognise and manage risk
The Board is responsible for satisfying itself that management
has developed and implemented a sound system for risk
management and internal control. The Board regards
managing the risks that affect the Group’s businesses
as a fundamental activity, as they influence the Group’s
performance, reputation and success. Detailed work on
the management of risk is delegated to the Audit, Risk
and Compliance Committee and reviewed by the Board.
The Committee recommends any actions it deems
necessary to the Board for its consideration.
The Committee is responsible for ensuring that there
are adequate policies in relation to risk management,
compliance and internal control systems. The Committee
monitors the Company’s risk management by overseeing
management’s actions in the evaluation, management,
monitoring and reporting of material operational, financial,
compliance and strategic risks. The Board and the
Committee receive regular reports from management
on the effectiveness of the Group’s management of
material business risks. The Company has adopted
a Risk Management Policy which is available on the
Company’s website.
Principle 8: Remunerate fairly
and responsibly
The Nomination and Remuneration Committee operates
in accordance with its charter which is available on the
Company website. The Nomination and Remuneration
Committee advises the Board on remuneration and
incentive policies and practices generally, and makes
specific recommendations on remuneration packages
and other terms of employment for executive Directors,
other senior executives and Non-executive Directors.
The Nomination and Remuneration Committee is chaired
by an independent Director and has three members as
recommended, however the Committee does not consist
of a majority of independent Directors. Given the size
of the Group and the Board, and the start-up nature
and straightforward structure of the Group, the Directors
consider the impact of this to be minimal, and the current
structure to be sufficient.
The structure of the remuneration of Non-executive
Directors is distinguished from that of executive Directors
and senior executives, however, Board members are
entitled to options as set out in this Annual Report having
regard to the size of the Company’s management team
and the minimal fees paid.
The Nomination and Remuneration Committee also
assumes responsibility for overseeing succession planning.
Further information on Directors’ and executives’
remuneration, including principles used to determine
remuneration, is set out in the Remuneration Report
which forms a part of the Directors’ report. Details
of the qualifications of members of the Nomination and
Remuneration Committee and their attendance at meetings
of the Committee are set out in the Directors’ report.
PAGE 38
Details of the amounts paid to the auditor, KPMG, and its related practices for audit and non-audit services provided during
the year are set out below.
AUDIT SERVICES:
Audit and review of financial reports (KPMG Australia)
Audit and review of financial reports (Overseas KPMG firms)
OTHER AUDITORS – NON-KPMG FIRMS
Audit and review of financial reports
SERVICES OTHER THAN STATUTORY AUDIT
Other assurance services
Investigating accountants report services
Other services
Taxation compliance services (KPMG Australia)
Taxation compliance services (Overseas KPMG firms)
TOTAL SERVICES PROVIDED
31 December
2012
$
31 December
2011
$
240,000
55,071
295,071
24,912
319,983
315,000
66,392
381,392
–
381,392
–
828,510
20,000
6,015
26,015
28,500
33,338
890,348
345,998
1,271,740
16. Proceedings on behalf of the Company
No person has applied for leave of any Court to bring proceedings on behalf of the Company or intervene in any proceedings to which
the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.
17. Lead Auditor’s Independence Declaration
The lead auditor’s independence declaration is set out on page 90 and forms part of the Directors’ report for the year ended
31 December 2012.
This report is made in accordance with a resolution of the Directors
Dated at Melbourne this 8th day of March 2013.
Signed in accordance with a resolution of the Directors:
Antony Manini
Chairman
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 39
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2012
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Prepayments
Other current assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Deferred exploration, evaluation and development
Property, plant and equipment
Intangible assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Employee benefits
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Deferred tax liabilities
Royalty agreement liability
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Share capital
Reserves
Retained earnings/(accumulated losses)
Total equity attributable to equity holders of the Company
Non-controlling interest
TOTAL EQUITY
Note
14
16
17
18
19
20
21
22
23
24
25(a)
25(b)
31 December
2012
$’000
31 December
2011
$’000
8,528
907
1,960
44
21,030
2,127
4,078
–
11,439
27,235
18,619
4,168
108,657
131,444
142,883
1,300
605
1,905
21,996
12,330
34,326
36,231
14,289
3,859
110,224
128,372
155,607
2,806
503
3,309
20,101
16,872
36,973
40,282
106,652
115,325
73,565
2,922
(2,722)
73,765
32,887
64,406
2,440
17,057
83,903
31,422
106,652
115,325
The notes on pages 44 to 88 are an integral part of these consolidated financial statements.
PAGE 40
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2012
CONTINUING OPERATIONS
Other income
Exploration and evaluation expenses
Share based payments
Administrative expenses
Gain/(loss) on revaluation of royalty agreement liability
RESULTS FROM OPERATING ACTIVITIES
Net foreign exchange gain/(loss)
Finance income
NET FINANCE INCOME/(EXPENSE)
PROFIT/(LOSS) BEFORE INCOME TAX
Income tax (expense)/benefit
PROFIT/(LOSS) FROM CONTINUING OPERATIONS
DISCONTINUED OPERATION
(Loss) from discontinued operation (net of tax)
PROFIT/(LOSS) FOR THE PERIOD
OTHER COMPREHENSIVE INCOME
Foreign currency translation differences for foreign operations
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD
OPERATING PROFIT IS ATTRIBUTABLE TO:
Owners of the Company
Non-controlling interest
PROFIT/(LOSS) FOR THE PERIOD
TOTAL COMPREHENSIVE INCOME IS ATTRIBUTED TO:
Owners of the Company
Non-controlling interest
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD
EARNINGS/(LOSS) PER SHARE (CENTS PER SHARE)
basic earnings/(loss) per share (cents)
diluted earnings/(loss) per share (cents)
EARNINGS/(LOSS) PER SHARE (CENTS PER SHARE)
– CONTINUING OPERATIONS
basic earnings/(loss) per share (cents)
diluted earnings/(loss) per share (cents)
* Refer note 8.
The notes on pages 44 to 88 are an integral part of these consolidated financial statements.
31 December
2012
$’000
Note
31 December
2011
Restated*
$’000
9
26
10
23
11
11
12
8
13
13
13
13
19
(44)
(859)
(6,693)
4,228
(3,349)
(137)
365
228
(3,121)
(2,250)
(5,371)
(13,039)
(18,410)
(377)
(18,787)
(19,779)
1,369
(18,410)
(20,156)
1,369
(18,787)
(5.10)
(5.10)
(1.74)
(1.74)
29,085
(1,050)
(1,692)
(4,134)
(6,757)
15,452
(595)
654
59
15,511
(1,383)
14,128
(1,287)
12,841
1,906
14,747
17,643
(4,802)
12,841
19,549
(4,802)
14,747
5.77
5.42
6.19
5.82
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 41
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2012
Share
Capital
$’000
Retained
Earnings
$’000
Notes
Share
based
payments
reserve
$’000
Foreign
Exchange
Reserve
$’000
Non-
controlling
Interest
$’000
Total
$’000
Total
$’000
BALANCE AS AT 1 JANUARY 2012
64,406
17,057
1,768
672
83,903
31,422
115,325
TOTAL COMPREHENSIVE
INCOME PROFIT OR (LOSS)
Other comprehensive income
Foreign currency translation
differences for foreign operations
Total other comprehensive income
Total comprehensive income
for the period
TRANSACTIONS WITH OWNERS,
RECORDED DIRECTLY IN EQUITY
Issue of ordinary shares
Costs of raising equity
Share based payment transactions
Acquisition of subsidiary with
non-controlling interests
25
25
24
24
26
–
–
–
–
(19,779)
–
–
(19,779)
9,677
(518)
–
–
–
–
–
–
–
–
–
–
–
–
–
859
–
859
–
(19,779)
1,369
(18,410)
(377)
(377)
(377)
(377)
–
–
(377)
(377)
(377)
(20,156)
1,369
(18,787)
–
–
–
–
–
9,677
(518)
859
–
10,018
73,765
–
–
–
96
96
9,677
(518)
859
96
10,114
32,887
106,652
Total transactions with owners
9,159
BALANCE AT 31 DECEMBER 2012
73,565
(2,722)
2,627
295
Notes
Share
Capital
$’000
13,181
Share
based
payments
reserve
$’000
Retained
Earnings
$’000
Foreign
Exchange
Reserve
$’000
Non-
controlling
Interest
$’000
Total
$’000
(586)
76
(1,234)
11,437
–
Total
$’000
11,437
25
25
24
24
26
36
–
–
–
–
59,870
(8,645)
–
–
51,225
64,406
17,643
–
–
17,643
–
–
–
–
–
17,057
–
–
–
–
–
–
1,692
–
1,692
1,768
–
17,643
(4,802)
12,841
1,906
1,906
1,906
1,906
–
–
1,906
1,906
1,906
19,549
(4,802)
14,747
–
–
–
–
–
672
59,870
(8,645)
1,692
–
52,917
83,903
–
–
–
59,870
(8,645)
1,692
36,224
36,224
36,224
89,141
31,422
115,325
BALANCE AS AT 1 JANUARY 2011
TOTAL COMPREHENSIVE
INCOME PROFIT OR (LOSS)
Other comprehensive income
Foreign currency translation
differences for foreign operations
Total other comprehensive income
Total comprehensive income
for the period
TRANSACTIONS WITH OWNERS,
RECORDED DIRECTLY IN EQUITY
Issue of ordinary shares
Costs of raising equity
Share based payment transactions
Acquisition of subsidiary with
non-controlling interests
Total transactions with owners
BALANCE AT 31 DECEMBER 2011
The notes on pages 44 to 88 are an integral part of these consolidated financial statements.
PAGE 42
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2012
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from customers
Cash paid to suppliers and employees
Income taxes paid
31 December
2012
$’000
31 December
2011
$’000
Note
–
–
(3,534)
(8,530)
(12)
–
NET CASH FROM (USED IN) OPERATING ACTIVITIES
15
(3,546)
(8,530)
CASH FLOWS FROM INVESTING ACTIVITIES
Exploration and evaluation expenditure
Acquisition of property, plant and equipment
Disposal of discontinued operation, net of cash disposal
Acquisition of a subsidiary (net of cash acquired)
Cash acquired in a business combination
36
(14,311)
(3,411)
(43)
(380)
–
(8,221)
(1,924)
–
–
286
NET CASH FROM (USED IN) INVESTING ACTIVITIES
(18,145)
(9,859)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds of issue of shares
Share issue costs
Repayment of loans to related parties – TRM
Loans made to associated entities
NET CASH FROM (USED IN) FINANCING ACTIVITIES
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at beginning of the period
Effects of exchange rate changes on cash and cash equivalents
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
14
The notes on pages 44 to 88 are an integral part of these consolidated financial statements.
9,677
(518)
–
–
9,159
(12,532)
21,030
30
8,528
55,500
(8,764)
(5,250)
(2,071)
39,415
21,026
4
–
21,030
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 43
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2012
1. Reporting entity
Tigers Realm Coal Limited (the “Company” or “TIG”) is a
company domiciled in Australia. The address of the Company’s
registered office is Level 7, 333 Collins St, Melbourne, 3000.
The consolidated financial statements of the Company as
at and for the year ended 31 December 2012 comprise
the Company and its subsidiaries (together referred to as
the “Group”) and the Group’s interest in jointly controlled
entities. The Group is a for-profit entity and primarily is
involved in coal exploration and mining development.
2. Basis of preparation
(a) Statement of compliance
The consolidated financial statements are general purpose
financial statements which have been prepared in accordance
with Australian Accounting Standards (AASBs) adopted by
the Australian Accounting Standards Board (AASB) and
the Corporations Act 2001. The consolidated financial
statements comply with International Financial Reporting
Standards (IFRSs) adopted by the International Accounting
Standards Board (IASB).
The consolidated financial statements were authorised
for issue by the Board of Directors on 8 March 2013.
(b) Basis of measurement
The consolidated financial statements have been prepared
on the historical cost basis except for certain financial
assets and liabilities which are carried at fair value and
share based payment expenses which are recognised
at fair value. Cost is based on the fair values of the
consideration given in exchange for assets.
(c) Going concern basis of accounting
The consolidated financial report has been prepared on a
going concern basis, which assumes 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 31 December 2012 the Group had a
net loss of $18,410 thousand (2011 profit: $12,841 thousand)
and had net equity of $106,652 thousand (2011: $115,325
thousand). As at 31 December 2012 the Group had cash
and cash equivalents of $8,528 thousand (2011: $21,030
thousand). The Group had current assets of $11,439
thousand (2011 $27,235 thousand) and current liabilities
of $1,905 thousand (2011: $3,309 thousand).
During the year ended 31 December 2012 the cash outflow
from operations was $3,546 thousand (2011: outflows of
$8,530 thousand). There were cash outflows from investing
activities of $18,145 thousand for the year (2011: outflows
of $9,859 thousand).
During the year ended 31 December 2012 the Company
completed the following fund raising activities to meet its
working capital requirements:
(cid:129) On 11 July 2012 the Company concluded a placement
of fully paid ordinary shares to raise gross proceeds
of $8,923 thousand at a price of $0.18 per share.
PAGE 44
(cid:129) On 10 August 2012 the Company completed a Share
Purchase Plan for shareholders in Australia and New
Zealand. The Share Purchase Plan raised gross proceeds
of $754 thousand through the issue of fully paid ordinary
shares at an issue price of $0.16 per share.
On 22 February 2013 the Company concluded a two tranche
placement of 106,000,000 fully paid ordinary shares to
raise gross proceeds of approximately $21,200 thousand
at a price of $0.20 per share. The placement price represents
a 7.3% discount to the volume weighted average price over
the five days trading up to and including 19 February 2013.
The placement is organised in two tranches, with the initial
tranche of $12,500 thousand being fully completed, with
62,733,452 shares issued on 1 March 2013. The second
tranche of $8,700 thousand for 43,266,548 shares is subject
to shareholder approval, which will be sought at the Annual
General Meeting on 23 April 2013. As part of the placement
the Directors subscribed for 1,500,000 shares. These
shares are also subject to shareholder approval which
will be sought at the Annual General Meeting.
The Directors are satisfied with the Group’s current
financing position and are of the view that the continued
application of the going concern basis of accounting is
appropriate due to the following factors:
(cid:129) Management has reviewed the Group’s consolidated
cashflow requirements and has satisfied themselves that
there are adequate support in place to meet the planned
corporate activities and working capital requirements for
at least 12 months following the date of this report;
(cid:129) In the event that exploration and operating activities
exceed the planned cashflow forecasts, or continue
beyond 12 months following the date of this report, the
Group has the ability to raise additional funds, pursuant
to the Corporations Act 2001;
(cid:129) The ability of the Group to scale back certain parts
of their exploration activities if required; and
(cid:129) The Group retains the ability, if required, to wholly or
in part dispose of interests in mineral exploration and
development assets.
The Directors believe that current cash on hand plus the
proceeds from the capital raising completed subsequent
to year end will be sufficient to:
(cid:129) Fund corporate expenses and other general working capital
requirements through to at least 31 March 2014;
(cid:129) Fund the completion of the Amaam pre-feasibility study; and
(cid:129) Complete further drilling and technical studies at its
Amaam Project and at its Amaam North Project.
The ability of the Group to fund the ongoing working
capital requirements of the Group beyond 31 March 2014
is uncertain. A material uncertainty exists in regards to
the ability of the Group to continue to operate as a going
concern beyond 31 March 2014 and, therefore, whether it
will be able to realise its assets and extinguish its liabilities
in the normal course of business and at the amounts stated
in the financial report. There can be no assurance that the
Group will be able to obtain or access additional funding
when required, or that the terms associated with the
funding will be acceptable to the Directors. If the Group is
unable to obtain such additional funding, it may be required
to reduce the scope of its operations, which could adversely
affect its business, financial condition and operating results.
(d) Functional and presentation currency
These consolidated financial statements are presented
in Australian dollars, which is the Company’s functional
currency. Each entity in the Group determines its own
functional currency and the items included in the financial
statements of each entity are measured using that
functional currency.
The Company is of a kind referred to in ASIC Class Order
98/100 dated 10 July 1998 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.
(e) Use of estimates and judgements
The preparation of financial statements in conformity
with accounting standards issued by the AASB requires
management to make judgements, estimates and assumptions
that affect the application of accounting policies and the
reported amounts of assets, liabilities, income and
expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on
an on-going basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised
and in any future periods affected.
Information about assumptions and estimation uncertainties
that have a significant risk of resulting in a material
adjustment within the next financial period and that have
the most significant effect on the amounts recognised in the
financial statements are described in the following notes:
(cid:129) note 17 – deferred exploration, evaluation and development
(cid:129) note 19 – intangible assets (goodwill and mineral rights)
(cid:129) note 23 – royalty agreement liability
Information about critical judgements in applying accounting
policies that have the most significant effect on the amounts
recognised in the financial statements are described in the
following notes:
(cid:129) note 3(a)(i) business combinations
(cid:129) note 36 – acquisition of business
3. Significant accounting policies
The accounting policies set out below have been applied
consistently to all periods presented in these consolidated
financial statements, and have been applied consistently
by the Group entities.
Certain comparative amounts in the consolidated statement
of comprehensive income have been re-presented as if an
operation discontinued during the current year had been
discontinued from the start of the comparative period.
(a) Basis of consolidation
(i)
Business combinations
Business combinations are accounted for using the
acquisition method as at the acquisition date, which is the
date on which control is transferred to the Group. Control
is the power to govern the financial and operating policies
of an entity so as to obtain benefits from its activities.
In assessing control, the Group takes into consideration
potential voting rights that currently are exercisable.
The acquisition method of accounting is used to account
for all business combinations, including business
combinations involving entities or businesses under
common control, regardless of whether equity instruments
or other assets are acquired. Cost is measured as the fair
value of the assets given, equity instruments issued or
liabilities incurred or assumed at the date of exchange.
Acquisition costs are as expensed as incurred, and
included in profit and loss.
Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date, irrespective
of the extent of any minority interest. The excess of the
cost of acquisition over the fair value of the Group’s share
of the identifiable net assets acquired is recorded as
goodwill. If the cost of acquisition is less than the Group’s
share of the fair value of the identifiable net assets of the
subsidiary acquired, the difference is recognised directly in
the income statement, but only after a reassessment of the
identification and measurement of the net assets acquired.
Where settlement of any part of cash consideration is
deferred, the amounts payable in the future are discounted
to their present value as at the date of exchange. The
discount rate used is the Group’s incremental borrowing
rate, being the rate at which a similar borrowing could be
obtained from an independent financier under comparable
terms and conditions.
Any contingent consideration payable is recognised at fair
value at the acquisition date. If the contingent consideration
is classified as equity, it is not re-measured and settlement
is accounted for in equity. Otherwise, subsequent changes
to the fair value of the contingent consideration are
recognised in profit or loss.
Subsequent to acquisition date, transactions with
non-controlling interests that do not result in a loss of
control are accounted for as transactions with equity
owners of the Group. Any difference between the amount
of the adjustment to the non-controlling interest and any
consideration paid or received is recognised as a separate
reserve within equity.
If the business combination is achieved in stages, the
acquisition date fair value of the Group’s previously held
equity interest in the acquiree is re-measured to fair value
at the acquisition date through profit or loss.
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 45
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2012
3. Significant accounting policies
(b) Foreign currency
(CONTINUED)
(i)
Foreign currency transactions
Acquired mineral rights comprise identifiable exploration
and evaluation assets including mineral reserves and
mineral resources acquired as part of a business combination
are recognised at fair value at the date of acquisition.
The acquired mineral rights will be reclassified as mine
property and development from commencement of
development and amortised when commercial production
commences on a unit of production basis over the
estimated economic reserve of the mine.
The Group has applied estimates and judgements in
order to determine the fair value of assets acquired and
liabilities and contingent liabilities assumed by way
of a business combination.
The assets, liabilities and contingent liabilities recognised
at acquisition date are recognised at fair value. In
determining fair value the consolidated entity has
utilised valuation methodologies including discounted
cash flow analysis. The assumptions made in performing
this valuation include assumptions as to discount rates,
foreign exchange rates, commodity prices, the timing of
development, capital costs, and future operating costs.
Any significant change in key assumptions may cause the
acquisition accounting to be revised including recognition
of goodwill or a discount on acquisition. Additionally, the
determination of the acquirer and the acquisition date also
require significant judgement to be made by the Group.
Acquisitions of non-controlling interests are accounted for
as transactions with owners in their capacity as owners
and therefore no goodwill is recognised as a result of such
transactions. The adjustments to non-controlling interests
are based on a proportionate amount of the net assets
of the subsidiary.
(ii)
Subsidiaries
Subsidiaries are entities controlled by the Group. The
financial statements of subsidiaries are included in the
consolidated financial statements of the Group from the
date that control commences until the date that control
ceases. The accounting policies of subsidiaries have been
changed when necessary to align them with the policies
adopted by the Group. Losses applicable to the non-
controlling interests in a subsidiary are allocated to the
non-controlling interests even if doing so reduces the
non-controlling interests below zero.
(iii)
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised
income and expenses arising from intra-group transactions,
are eliminated in preparing the consolidated financial
statements. Unrealised gains arising from transactions with
equity accounted investees are eliminated to the extent of
the Group’s interest in the investee. Unrealised losses are
eliminated in the same way as unrealised gains, but only
to the extent that there is no evidence of impairment.
Transactions in foreign currencies are translated to the
respective 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
gain or loss on monetary items is the difference between
amortised cost in the functional currency at the beginning
of the period, adjusted for effective interest and payments
during the period, and the amortised cost in foreign currency
translated at the exchange rate at the end of the year.
Non-monetary assets and liabilities denominated in foreign
currencies that are measured at fair value are retranslated
to the functional currency at the exchange rate at the date
that the fair value was determined. Non-monetary items in
a foreign currency that are measured in terms of historical
cost are translated using the exchange rate at the date of
the transaction. Foreign currency differences arising on
the retranslation are recognised in profit or loss, except for
differences arising from the retranslation of available-for-sale
equity instruments, a financial liability designated as a
hedge of the net investment in a foreign operation that
is effective, or qualifying cash flow hedges, which are
recognised in other comprehensive income.
(ii)
Foreign operations
The assets and liabilities of foreign operations, including
goodwill and fair value adjustments arising on acquisition,
are translated to the functional currency at exchange rates
at reporting date. The income and expenses of foreign
operations are translated to Australian dollars at exchange
rates at the dates of the transactions.
Foreign currency differences are recognised in other
comprehensive income, and presented in the foreign
currency translation reserve in equity. However, if the
operation is a non-wholly-owned subsidiary, then the
relevant proportional share of the translation difference is
allocated to the non-controlling interests. When a foreign
operation is disposed of such that control is lost, the
cumulative amount in the translation reserve related to
that foreign operation is reclassified to profit or loss as
part of the gain or loss on disposal. When the Group
disposes of only part of its interest in a subsidiary that
includes a foreign operation while retaining control, the
relevant portion of the cumulative amount is reattributed
to non-controlling interests. When the Group disposes of
only part of its investment in an associate or joint venture
that includes a foreign operation while retaining significant
influence or joint control, the relevant proportion of the
cumulative amount is reattributed to non-controlling
interests. When the Group disposes of only part of its
investment in an associate or joint venture that includes
a foreign operation while retaining significant influence
or joint control, the relevant proportion of the cumulative
amount is reclassified to profit or loss.
PAGE 46
When the settlement of a monetary item receivable from
or payable to a foreign operation is neither planned nor
likely in the foreseeable future, foreign exchange gains and
losses arising from such a monetary item are considered
to form part of a net investment in a foreign operation and
are recognised in other comprehensive income, and are
presented in the translation reserve in equity.
(c) Financial instruments
(i)
Non-derivative financial assets
The Group initially recognises loans and receivables and
deposits on the date that they are originated. All other
financial assets (including assets designated at fair value
through profit or loss) are recognised initially on the trade
date at which the Group becomes a party to the
contractual provisions of the instrument.
The Group derecognises a financial asset when the
contractual rights to the cash flows from the asset
expire, or it transfers the rights to receive the contractual
cash flows on the financial asset in transaction in which
substantially all the risks and rewards of ownership of the
financial asset are transferred. Any interest in transferred
financial assets that is created or retained by the Group
is recognised as a separate asset or liability.
Financial assets and liabilities are offset and the net
amount presented in the statement of financial position
when, and only when, the Group has a legal right to offset
the amounts and intends either to settle on a net basis or
to realise the asset and settle the liability simultaneously.
The Group has the following non-derivative financial
assets: trade and other receivables.
(cid:129) Trade and other receivables
Trade and other receivables are financial assets with fixed
or determinable payments that are not quoted in an active
market. Such assets are recognised initially at fair value
plus any directly attributable transaction costs.
(cid:129) Cash and cash equivalents
Cash and cash equivalents comprise cash balances
and call deposits with an original maturity of three months
or less.
(ii)
Non-derivative financial liabilities
The Group initially recognises non-derivative financial
liabilities on the trade date, which is the date that the Group
becomes a party to the contractual provisions of the
instrument. The Group derecognises a financial liability
when its contractual obligations are discharged or
cancelled or expired.
The Group has the following non-derivative financial
liabilities: trade and other payables.
(cid:129) Trade and other payables
Liabilities are recognised for amounts to be paid in the
future for goods and services provided to the Group prior
to the end of the reporting period and are stated at amortised
cost. The amounts are unsecured and are usually paid
within 30 days of recognition.
(iii)
Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental
costs directly attributable to the issue of ordinary shares
are recognised as a deduction from equity, net of any
tax effects.
(d) Property, plant and equipment
(i)
Recognition and measurement
Items of property, plant and equipment are measured at
cost less accumulated depreciation and impairment losses.
Cost includes expenditure that is directly attributable to the
acquisition of the asset.
(ii)
Subsequent costs
The cost of replacing part 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 part 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 recognised in profit or loss on a straight-line
basis over the estimated useful lives of each part of an item
of property, plant and equipment.
The estimated useful lives for the current and comparative
periods are as follows:
(cid:129) Land & buildings
20 years
(cid:129) Plant & equipment
5 – 10 years
(cid:129) Fixtures & fittings
5 – 10 years
Depreciation methods, useful lives and residual values
are reviewed at each reporting date and adjusted
if appropriate.
(e)
Intangible assets
(i)
Exploration, evaluation and development assets
Exploration, evaluation and development costs, including
the costs of acquiring licences, are capitalised as deferred
exploration, evaluation and development assets on an area
of interest basis. Costs incurred before the Group has
obtained the legal rights to explore an area are recognised
in the income statement.
Exploration, evaluation and development assets are only
recognised if the rights to the area of interest are current
and either:
(cid:129) the expenditures are expected to be recouped through
successful development and exploitation of the area of
interest or, alternatively, by its sale; or
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 47
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2012
3. Significant accounting policies
(CONTINUED)
(cid:129) activities in the area of interest have not, at the reporting
date, 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.
Exploration, evaluation and development costs, including
the costs of acquiring licences, are capitalised as deferred
exploration, evaluation and development assets are
assessed for impairment if:
Goodwill is measured at cost less accumulated impairment
losses. Goodwill is not amortised, however its carrying
value is assessed annually against its recoverable amount,
as explained below under note 3(f) Impairment. Gains and
losses on the disposal of an entity include the carrying
amount of goodwill relating to the entity sold. Goodwill is
allocated to cash-generating units for the purpose of
impairment testing.
(iv)
Other intangible assets
Other intangible assets that are acquired by the Group and
have finite useful lives are measured at cost less accumulated
amortisation and accumulated impairment losses.
(cid:129) sufficient data exists to determine technical feasibility and
commercial viability; and
(v)
Subsequent expenditure
(cid:129) facts and circumstances suggest that the carrying amount
exceeds the recoverable amount.
Expenditure which no longer satisfies the above policy
is written off. In addition, a provision is raised against
expenditure where the Directors are of the opinion that
the carried forward net cost may not be recoverable under
the above policy. The increase in the provision is taken to
the profit or loss for the year.
In the event that an area of interest is abandoned or if the
Directors consider the expenditure to be of reduced value,
any expenditure carried forward in respect of that area is
written off in the period in which the decision to abandon
is made, firstly against any existing provision for that
expenditure, with any remaining balance being charged
to earnings. Each area of interest is reviewed at the end
of each accounting period and accumulated costs are
written off to the extent that they are not expected to
be recoverable in the future.
Expenditure is not carried forward in respect of an area of
interest/mineral resource unless the Group’s right to tenure
to that area of interest is current.
(ii)
Mineral Rights
Acquired mineral rights comprise identifiable exploration
and evaluation assets including mineral reserves acquired
as part of a business combination and are recognised at
fair value at the date of acquisition. The mineral rights will
be reclassified as mine property and development from
commencement of development and amortised when
commercial production commences on a unit of production
basis over the estimated economic reserve of the mine.
The mineral rights are subject to impairment testing in
accordance with the Group’s policy for exploration,
evaluation and development assets.
(iii)
Goodwill
Goodwill that arises upon the acquisition of subsidiaries
is included in intangible assets. For the measurement
of goodwill at initial recognition refer note 3(a)(i)
(business combinations).
Subsequent expenditure is capitalised only when it increases
the future economic benefits embodied in the specific
asset to which it relates. All other expenditure is recognised
in the profit or loss as incurred.
(vi)
Amortisation
Except for goodwill and mineral rights, intangible assets are
amortised on a straight line basis in profit or loss over the
estimated useful lives, from the date they are available for use.
The estimated useful lives for the current and comparative
years for computer software is three to five years.
Amortisation methods, useful lives and residual values are
reviewed at each reporting date and adjusted if appropriate.
(f)
Impairment
(i)
Non-derivative financial assets (including receivables)
A financial asset is assessed at each reporting date to
determine whether there is any objective evidence that it is
impaired. A financial asset is considered to be impaired if
objective evidence indicates that a loss event has occurred
after the initial recognition of the asset, and that the loss
event had a negative effect on the estimated future cash
flows of that asset that can be measured reliably.
All impairment losses are recognised in profit or loss. 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 original effective interest
rate. Individually significant financial assets are tested for
impairment on an individual basis. The remaining financial
assets are assessed collectively in groups that share similar
credit risk characteristics.
An impairment loss is reversed if the reversal can be related
objectively to an event occurring after the impairment loss
was recognised. For financial assets measured at amortised
cost, the reversal is recognised in profit or loss.
PAGE 48
(ii)
Non-financial assets
(i)
Restoration and rehabilitation provision
The carrying amounts of the Group’s non-financial assets
except for exploration, evaluation and development assets
and mineral rights, are reviewed at each reporting date to
determine whether there is any indication of impairment.
If any such indication exists then the asset’s recoverable
amount is estimated. For goodwill and intangible assets
that have indefinite lives or that are not yet available for
use, the recoverable amount is estimated at each reporting
date. For exploration, evaluation and development assets
and mineral rights an impairment assessment takes place
when facts and circumstances suggest that the carrying
amount may exceed its recoverable amount.
The recoverable amount of an asset or cash generating unit
is the greater of its value in use and its fair value less costs
to sell. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset.
For the purpose of impairment testing, assets are grouped
together into the smallest groups of assets that generates
cash inflows from continuing use that are largely independent
of the cash inflows of other assets or groups of assets
(the “cash-generating unit”). The goodwill acquired in
a business combination, for the purpose of impairment
testing, is allocated to cash-generating units that are
expected to benefit from the synergies of the combination.
An impairment loss is recognised if the carrying amount
of an asset exceeds its recoverable amount. Impairment
losses are recognised in profit or loss. Impairment losses
recognised in respect of cash-generating units are allocated
first to reduce the carrying value of any goodwill allocated
to the units and then to reduce the carrying amount of the
other assets in the unit (group of units) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed.
In respect of other assets, impairment losses recognised
in prior periods are assessed at each reporting date for any
indications that the loss has decreased or no longer exists.
An impairment loss is reversed if there has been a change
in the estimates used to determine the recoverable amount.
An impairment loss is reversed only to the extent that the
asset’s carrying amount does not exceed the carrying
amount that would have been determined, net of depreciation
or amortisation, if no impairment loss had been recognised.
(g) Provisions
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 the current
market assessments of the time value of money and the time
value of money and the risks specific to the liability. The
unwinding of the discount is recognised as a finance cost.
The Group has obligations to restore and rehabilitate certain
areas of property. Provisions for the cost of rehabilitation
programs are recognised at the time that environmental
disturbance occurs (or is acquired). On an ongoing
basis, additional disturbances will be recognised
as a rehabilitation liability.
(h) Employee benefits
(i)
Short term employee benefits
Liabilities for employee benefits for wages, salaries and
annual leave that are expected to be settled within twelve
months of the reporting date represent obligations resulting
from employee’s services provided to reporting date, and are
calculated at undiscounted amounts based on remuneration
wage and salary rates that the Company expects to pay as
at the reporting date, including related on-costs, such as
workers’ compensation insurance and payroll tax.
A liability is recognised for the amount expected to be paid
under short-term incentive bonus 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.
(ii)
Share-based payment transactions
Equity-based compensation is recognised as an expense
in respect of the services received, or as capitalised
exploration expenditure as appropriate.
The fair value of options granted is recognised as an asset
or expense with a corresponding increase in equity. The fair
value is measured at grant date and recognised over the
period during which the employees became unconditionally
entitled to the options. The fair value at grant date is
independently determined using an option pricing model
that takes into account the exercise price, the term of the
options, the vesting and performance criteria, the impact
of dilution, the non-tradable nature of the option, the share
price at grant date and expected volatility of the underlying
share, the expected dividend yield and the risk-free interest
rate for the term of the option.
(i) Revenue recognition
Revenue is recognised in the income statement when
the significant risks and rewards of ownership have been
transferred to the buyer. No revenue is recognised if there
are significant uncertainties regarding recovery of the
consideration due.
Revenues are recognised at fair value of the consideration
received net of the amount of GST. Exchanges of goods or
services of the same nature and value without any cash
consideration are not recognised as revenue.
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 49
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2012
3. Significant accounting policies
(CONTINUED)
(j) Finance income and finance costs
Finance income comprises interest income on funds
loaned to equity accounted investees and funds invested.
Interest income is recognised as it accrues in profit and
loss, using the effective interest rate 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.
(k) Lease payments
Payments made under operating leases are recognised
in profit or loss on a straight-line basis over the term of
the lease. Lease incentives received are recognised as
an integral part of the total lease expense, over the term
of the lease.
(l)
Income Tax
(i)
Income tax
Income tax expense comprises current and deferred tax.
Income tax expense is recognised in profit or loss except
to the extent that it relates to items recognised directly
in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable
income 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.
In determining the amount of current and deferred tax
the Group takes into account the impact of uncertain tax
positions and whether additional taxes and interest may
be due. The Group believes that its accruals for tax liabilities
are adequate for all open tax years based on its assessment
of many factors, including interpretations of tax law and
prior experience. This assessment relies on estimates and
assumptions and may involve a series of judgements about
future events. New information may become available that
causes the Group to change its judgement regarding the
adequacy of existing tax liabilities; such changes to tax
liabilities will impact tax expense in the period that such
a determination is made.
Deferred tax is recognised using the balance sheet method,
providing for 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 the following temporary
differences: the initial recognition of assets or liabilities in
a transaction that is not a business combination and that
affects neither accounting nor taxable profit, and differences
relating to investments in subsidiaries to the extent that it is
probable that they will not reverse in the foreseeable future. In
addition, deferred tax is not recognised for 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 the 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 the temporary difference 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.
(ii)
Tax consolidation
The Company and its wholly-owned Australian resident
entity 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 Tigers Realm Coal Limited.
(iii)
Goods and services tax
Revenue, expenses and assets are recognised net of the
amount of goods and services tax (GST), except where
the amount of GST incurred is not recoverable from the
taxation authority. In these circumstances, the GST is
recognised as part of the cost of acquisition of the asset
or as part of the expense.
Receivables and payables are stated with the amount of
GST included. The net amount of GST recoverable from,
or payable to, the ATO is included as a current asset or
liability in the balance sheet. Cash flows are included
in the statement of cash flows on a gross basis. The GST
components of cash flows arising from investing and
financing activities which are recoverable from, or payable
to, the ATO are classified as operating cash flows.
PAGE 50
(m) Earnings per share
The Group presents basic and diluted earnings per share
(EPS) data for its ordinary shares. Basic EPS is calculated
by dividing the profit or loss attributable to ordinary equity
holders of the Company by the weighted average number
of ordinary shares outstanding during the period. Diluted
EPS is determined by adjusting the profit or loss attributable
to ordinary shareholders and the weighted average number
of ordinary shares outstanding for the effects of all dilutive
potential ordinary shares, which comprise share options
granted to employees.
(n) Segment reporting
The Group determines and presents operating segments
based on the information that internally is provided to the
Chief Executive Officer, who is the Group’s chief operating
decision maker.
An operating segment is a component of the Group that
engages in business activities which incur expenses. An
operating segment’s expenditures are reviewed regularly
by the Chief Executive Officer to make decisions about
resources to be allocated to the segment and assess its
performance, and for which discrete financial information
is available.
Segment expenditure that is reported to the Chief Executive
Officer includes items directly attributable to a segment as
well as those that can be allocated on a reasonable basis.
Unallocated items comprise mainly corporate assets (primarily
the Company’s headquarters) and head office expenses.
Segment capital expenditure is the total cost incurred
during the period on exploration and evaluation, and to
acquire property, plant and equipment and intangible
assets other than goodwill.
(o) Discontinued operations
Classification as a discontinued operation occurs upon
disposal or when the operation meets the criteria to be
classified as held for sale or distribution, if earlier. When
an operation is classified as a discontinued operation,
the comparative statement of comprehensive income is
re-presented as if the operation had been discontinued
from the start of the comparative year.
4. New standards and
interpretations not yet adopted
A number of new standards, amendments to standards and
interpretations are effective for annual periods beginning
after 1 January 2013, and have not been applied in
preparing these consolidated financial statements. Those
which may be relevant to the Group are set out below.
The Group does not plan to adopt these standards early.
(a) AASB 9 Financial Instruments (2010),
AASB 9 Financial Instruments (2009)
AASB 9 (2009) introduces new requirements for the
classification and measurement of financial assets.
Under AASB 9 (2009) financial assets are classified and
measured based on the business model in which they are
held and the characteristics of their contractual cash flows.
AASB (2010) introduces additions relating to financial
liabilities. The IASB currently has an active project that
may result in limited amendments to the classification
and measurement requirements of AASB9 and add new
requirements to address impairment of financial assets
and hedge accounting.
AASB 9 Financial Instruments becomes mandatory for the
Group’s 2015 consolidated financial statements and could
change the classification and measurement of financial
assets. The Group does not plan to adopt this standard
early and the extent of the impact has not been determined.
(b) AASB 12 Disclosure of Interests in
Other Entities (2011)
AASB 12 brings together into a single standard all
the disclosure requirements about an entity’s interests
in subsidiaries, joint arrangements, associates and
unconsolidated structured entities. The Group is currently
assessing the disclosure requirements for its interests in
subsidiaries in comparison with the existing disclosures.
AASB 12 requires the disclosure of information about
the nature, risks and financial effects of these interests.
AASB 12 is mandatory for the Group’s 2013 consolidated
financial statements.
(c) AASB 13 Fair Value Measurement (2011)
AASB 13 provides a single source of guidance on
how fair value is measured, and replaces the fair value
measurement guidance that is currently dispersed
throughout the Australian Accounting Standards. Subject
to limited exceptions, AASB 13 is applied when fair value
measurements or disclosures are required or permitted
by other AASBs. The Group is currently reviewing its
methodologies in determining fair values (refer Note 5).
AASB 13 is mandatory for the Group’s 2013 consolidated
financial statements.
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 51
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2012
5. Determination of fair values
6. Financial risk management
A number of the Group’s accounting policies and
disclosures require the determination of fair value for
financial assets and liabilities. Fair values have been
determined for measurement and/or disclosure purposes
based on the following methods. Where applicable, further
information about the assumptions made in determining
fair values is disclosed in the notes specific to that asset
or liability.
(a) Trade and other receivables
The fair value, which is determined for disclosure purposes,
is calculated based on the present value of future cash
flows, discounted at the market rate of interest at the
reporting date.
(b) Non-derivative financial liabilities
Fair value, which is determined for disclosure purposes, is
calculated based on the present value of future principal
and interest cash flows, discounted at the market rate of
interest at the reporting date.
(c) Royalty Agreement liability
(a) Risk management framework
The Board of Directors has overall responsibility for the
establishment and oversight of the risk management
framework. The Board has established the Audit, Risk
and Compliance Committee, which is responsible for
developing and monitoring the Group’s risk management
policies. The committee reports regularly to the Board.
The Group has established a Risk Management Policy
to provide a framework for the management of risk within
the Group. The Group’s risk management policies are
established to identify and analyse the risks faced by
the Group, to set appropriate risk limits and controls,
and to monitor risks and adherence to limits.
The Group has exposure to the following risks from its
operations and use of financial instruments:
(cid:129) Credit risk
(cid:129) Liquidity risk
(cid:129) Market risk
(cid:129) Operational risk
The fair value of option liabilities is determined using the
Black Scholes option valuation methodology, adjusted
for the level of risk assumed in the option. The fair values
of the royalty agreement liability are based on a discounted
cash flow estimate for the underlying mining project which
included various assumptions about the life of the mine
including commodity prices, exchange rates, grade of
resources, capital expenditure, operating costs, production
recovery rates, depreciation rates, and tax rates; and is
discounted at the Group’s cost of equity at the reporting date.
This note presents information about the Group’s exposure
to each of the above risks, its objectives, policies and
processes for measuring and managing risk, and the
management of capital. Further quantitative disclosures are
included throughout these consolidated financial statements.
(i)
Credit risk
Credit risk is the risk of financial loss to the Group if a
counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from the Group’s
receivables from customers and investment securities.
(d) Share-based payment transactions
(ii)
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.
Equity-based compensation is recognised as an expense
in respect of the services received, or as capitalised
exploration expenditure as appropriate.
The fair value of options granted is recognised as an
expense with a corresponding increase in equity. The fair
value is measured at grant date and recognised over the
period during which the employees become
unconditionally entitled to the options.
The fair value is measured using a Black-Scholes or
Monte-Carlo Simulation Model. Measurement inputs
include value on measurement date, exercise price of
the instrument, expected volatility (based on comparable
companies), expected life of the instruments, expected
dividends and the risk free interest rate. Service conditions
attached to the transactions are not taken into account in
determining fair value.
PAGE 52
(iii) Market risk
Market risk is the risk that changes in market prices, such
as foreign exchange rates, interest rates, commodity prices
and equity prices will affect the Group’s income or the value
of its holdings of financial instruments. The objective of
market risk management is to manage and control market
risk exposures within acceptable parameters, while
optimising the return. For the Group currency risk arises
from transactions in foreign currencies, predominantly
US Dollars (USD), Russian roubles (RUB) and Colombian
Pesos (COP). For the Group interest rate risk arises from the
exposure to Australian cash deposit rates relating to cash
and cash equivalents. For the Group commodity price risk
arises from the valuation of the Royalty Agreement Liability.
7. Segment reporting
The Group has three reportable segments, as described
below, which are the Group’s main mineral exploration
projects. The Group has identified these segments based
on the internal reports used and reviewed by the Group’s
Chief Executive Officer, (the chief operating decision
maker) in assessing the performance and determining
the allocation of resources.
The accounting policies used by the Group in reporting
segments internally are the same as those contained
in note 3 to the accounts and in the prior period. The
activities of the Group are managed in three reportable
operating segments.
(iv)
Operational risk
Amaam Project
Operational risk is the risk of direct or indirect loss arising
from a wide variety of causes associated with the Group’s
processes, personnel, technology and infrastructure and from
external factors other than credit, liquidity and market risks
such as those arising from legal and regulatory requirements
and generally accepted standards of corporate behaviour.
Operational risks arise from all of the Group’s operations.
The Group’s objective is to manage operational risk so as
to balance the avoidance of financial losses and damage
to the Group’s reputation with overall cost effectiveness.
The primary responsibility for the development and
implementation of controls to address operational risk
is assigned to the Group’s senior management. This
responsibility is supported by the development of the
Group Policies and Code of Conduct.
(b) Capital management
The Company and Group’s objectives when managing
capital are to safeguard the Group’s ability to continue as
a going concern, so as to maintain a strong capital base
sufficient to maintain future exploration, evaluation and
development of its projects. In order to maintain or adjust
the capital structure, the Group may return capital to
shareholders, or issue new shares. The Group’s focus
has been to raise sufficient funds through equity to fund
exploration and evaluation activities and currently has
no external borrowings.
The Board has not set a target for employee ownership
of the Company’s ordinary shares.
The Board has not yet set a debt to capital target for
the Group.
Neither the Company nor any of its subsidiaries are subject
to externally imposed capital requirements.
The Amaam Project is located in the
Bering Basin in Chukotka province,
Russia and consists of the Amaam
tenement and the Amaam North
tenement.
Landazuri Project The Landazuri Project in Colombia was
(Discontinued)
located 200 km NNE of Bogota. This
segment was discontinued in June 2012
when the Group withdrew from the Project.
Other
Consists of corporate and office
expenses primarily incurred at the
Group’s Melbourne offices, and other
costs, including the costs of closing
and liquidating non-operating entities
(Indonesia and Spain).
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 53
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2012
7. Segment reporting (CONTINUED)
Management monitors the expenditure outlays of each segment for the purpose of cost control and making decisions about
resource allocation. The Group’s administration and financing functions are managed on a group basis and are not allocated
to the reportable segments.
Amaam Project
$’000
Landazuri
Project
(Discontinued)
$’000
Other
$’000
Total
$’000
19
–
–
19
133,637
16,496
(23,170)
–
(667)
–
(667)
121,935
121,023
(22,081)
–
365
384
(13,031)
(7,569)
(20,600)
(8)
(27)
(35)
(13,039)
(7,231)
(20,251)
–
–
–
–
(1)
(1,287)
11,930
6,685
(313)
718
134,355
255
(731)
16,751
(23,901)
654
(2)
654
(8,160)
(3)
(5,555)
(7,509)
712
134,577
712
128,420
(1,016)
(23,410)
(1,286)
(6,207)
31 DECEMBER 2012
TOTAL SEGMENT REVENUE
(INCLUDING INTEREST REVENUE)
SEGMENT EXPENSE
Depreciation and amortisation
SEGMENT RESULT
SEGMENT ASSETS
Segment assets include:
Additions to non-current assets
SEGMENT LIABILITIES
31 DECEMBER 2011
TOTAL SEGMENT REVENUE
(INCLUDING INTEREST REVENUE)
SEGMENT EXPENSE
Depreciation and amortisation
SEGMENT RESULT
SEGMENT ASSETS
Segment assets include:
Additions to non-current assets
SEGMENT LIABILITIES
PAGE 54
THE RECONCILIATION OF THE SEGMENT RESULT TO THE PROFIT/(LOSS) BEFORE
INCOME TAX IS AS FOLLOWS:
SEGMENT RESULT
Net foreign exchange gain/(loss)
Gain on fair value of investment
Gain/(loss) on revaluation of royalty agreement liability
Elimination of discontinued operation
RESULT BEFORE INCOME TAX
31 December
2012
$’000
31 December
2011
$’000
(20,251)
(137)
–
4,228
13,039
(3,121)
(7,509)
(595)
29,085
(6,757)
1,287
15,511
THE RECONCILIATION OF THE SEGMENT ASSETS TO TOTAL ASSETS IS AS FOLLOWS:
SEGMENT ASSETS
Cash and cash equivalents
TOTAL ASSETS PER CONSOLIDATED STATEMENT OF FINANCIAL POSITION
134,355
8,528
142,883
134,577
21,030
155,607
Geographical information
The Group manages its business on a worldwide basis but holds assets in two geographic segments, Europe & Russia, and Australasia.
In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of the
segment. Segment assets are based on the geographical location of the assets.
Europe & Russia
Americas
Australasia
TOTAL
2012
2011
Revenues
$’000
19
–
365
384
Non-current
assets
$’000
131,160
–
284
131,444
Revenues
$’000
Non-current
assets
$’000
–
–
654
654
116,695
11,615
62
128,372
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 55
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2012
8. Discontinued operation
In June 2012 following the completion of a strategic review of the Group’s exploration project portfolio, the Group withdrew from
the farm-in option agreements relating to the tenements underlying the Landazuri Project, effectively ending its involvement in
operations in Colombia. This will enable the Group to focus its resources on the Amaam project in Russia, which management
expects will deliver greater shareholder value.
The Group has ceased all operations in Colombia, and is in the process of liquidating its corporate entity in Colombia. The Landazuri
segment was not a discontinued operation or classified as held for sale as at 31 December 2011 and the comparative statement
of comprehensive income has been restated to present the discontinued operation separately from continuing operations.
RESULTS OF DISCONTINUED OPERATION
Revenue
Expenses
RESULTS FROM OPERATING ACTIVITIES
Tax
RESULTS OF OPERATING ACTIVITIES, NET OF TAX
Impairment adjustment for discontinued operation
Tax on impairment of discontinued operation
LOSS FOR THE YEAR
Basic loss per share (cents)
Diluted loss per share (cents)
2012
$’000
–
(197)
(197)
–
(197)
(12,842)
–
(13,039)
(3.36)
(3.36)
2011
$’000
–
(1,287)
(1,287)
–
(1,287)
–
–
(1,287)
(0.42)
(0.42)
The loss from the discontinued operation of $13,039 thousand (2011: loss of $1,287 thousand) is attributable entirely to the
owners of the company. Of the loss from continuing operations of $5,371 thousand (2011: profit of $14,128 thousand), a loss
of $6,740 thousand is attributable to the owners of the Company (2011: profit of $18,930 thousand). There is an unrecognised
deferred tax asset of $3,912 thousand (2011: $386 thousand) which arises as a result of the discontinuation of the
Landazuri Project.
CASH FLOWS FROM (USED IN) DISCONTINUED OPERATION
Net cash from/(used in) operating activities
Net cash from/(used in) investing activities
Net cash flows for the period
EFFECT OF CLOSURE ON THE FINANCIAL POSITION OF THE GROUP
Property, plant and equipment
Fixed assets
Prepayments
Deferred exploration, evaluation and development
Net assets and liabilities
Consideration received, satisfied in cash
Cash and cash equivalents disposed of
Net cash outflow
2011
$’000
(1,286)
(5,584)
(6,870)
2012
$’000
(197)
(1,504)
(1,701)
(1)
(498)
(3)
(12,340)
(12,842)
–
(43)
(43)
PAGE 56
9. Other income
Gain on fair value of investment
Other income
OTHER INCOME
10. Expenses
Administration expenses
Wages and salaries, including superannuation contributions
Contractors and consultants fees
Corporate travel costs
Accounting and audit fees
Other
TOTAL ADMINISTRATION EXPENSE
11. Finance income/(expenses)
Finance income/(expense)
Net foreign exchange gain/(loss)
FINANCE EXPENSE
Finance income – external interest income
Finance income – related party interest income receivable
FINANCE INCOME
NET FINANCE INCOME/(EXPENSE)
Note
36
31 December
2012
$’000
31 December
2011
$’000
–
19
19
29,085
–
29,085
31 December
2012
$’000
31 December
2011
Restated
$’000
(2,803)
(1,461)
(920)
(303)
(1,206)
(6,693)
(137)
(137)
365
–
365
228
(811)
(1,608)
(270)
(502)
(943)
(4,134)
(595)
(595)
482
172
654
59
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2012
12. Income tax expense
A reconciliation between tax expense and the product of accounting profit multiplied by Australia’s domestic tax rate for the years
ended 31 December 2012 and 2011 is set out below
Profit/(loss) before tax from continuing operations
Loss before tax before tax from discontinued operations
Income tax using the domestic corporation tax rate of 30%
CHANGES IN INCOME TAX EXPENSE DUE TO:
Effect of tax rates in foreign jurisdictions
Exempt income – fair value gain on investment
Exempt income – other
Non-deductible expenses-royalty liability
Non-deductible expenses-other
Other – accrued interest
Current period tax losses for which no deferred tax asset was
recognised
TOTAL INCOME TAX EXPENSE (BENEFIT) ON PRE-TAX NET PROFIT
CURRENT TAX EXPENSE
DEFERRED TAX EXPENSE
TOTAL INCOME TAX EXPENSE
31 December
2012
$’000
31 December
2011 Restated
$’000
(3,121)
(13,039)
(16,160)
(4,848)
(707)
–
(176)
(423)
4,220
217
3,967
2,250
12
2,238
2,250
15,511
(1,287)
14,224
4,267
(4,187)
(2,908)
–
676
192
–
3,343
1,383
–
1,383
1,383
Unrecognised deferred tax assets
Net deferred tax assets have not been recognised in respect of the following:
Tax losses
TOTAL TAX ASSETS NOT RECOGNISED
11,380
11,380
3,354
3,354
The tax losses incurred in Australia do not expire under current tax legislation. In the overseas jurisdictions the tax losses can be
carried forward for varying periods. Deferred tax assets have not been recognised for deductible temporary differences or carried
forward tax losses where it is not probable that future taxable profit will be available against which the Group can utilise the benefits.
13. Earnings/(loss) per share
EARNINGS/(LOSS) PER SHARE
Basic earnings/(loss) per share – cents
Diluted earnings/(loss) per share – cents
EARNINGS/(LOSS) PER SHARE – CONTINUING OPERATIONS
Basic earnings/(loss) per share – cents
Diluted earnings/(loss) per share – cents
31 December
2012
cents
31 December
2011
cents
Note
a
b
a
b
(5.10)
(5.10)
(1.74)
(1.74)
5.77
5.42
6.19
5.82
PAGE 58
(a) Basic earnings/(loss) per share
The calculation of basic earnings per share (EPS) at 31 December 2012 was based on the loss attributable to ordinary equity
holders of the Company of $19,779 thousand (2011: profit of $17,643 thousand) and a weighted average number of ordinary
shares outstanding during the period ended 31 December 2012 of 387,940,517 (2011: 306,024,788).
(b) Diluted earnings/(loss) per share
The calculation of diluted earnings per share at 31 December 2012 is the same as basic earnings per share. The Company had
issued 41,496,650 options over ordinary share. The options over ordinary share could potentially dilute basic earnings per share
in the future; however, they have been excluded from the calculation of diluted earnings per share because they are anti-dilutive
for the reporting period.
14. Cash and cash equivalents
Bank balances
CASH AND CASH EQUIVALENTS
All cash and cash equivalents are available for use by the Group.
15. Reconciliation of cash flows from operating activities
CASH FLOWS FROM OPERATING ACTIVITIES
Profit/(loss) for the period
Adjustments for non-cash items:
Unrealised foreign exchange
Share based payments
Interest income
Exploration and evaluation expenditure
Gain on fair value of investment
Administration expenditure
Discontinued operation
Loss on revaluation of royalty agreement liability
Income tax expense/(benefit)
CHANGES IN WORKING CAPITAL
(Increase )/decrease in trade and other receivables
(Increase )/decrease in prepayments
(Decrease)/increase in trade and other payables
NET CASH FROM (USED IN) FROM OPERATING ACTIVITIES
31 December
2012
$’000
31 December
2011
$’000
8,528
8,528
21,030
21,030
31 December
2012
$’000
31 December
2011
$’000
(18,410)
12,841
137
859
–
44
–
197
12,842
(4,228)
2,238
(6,321)
907
2,426
(558)
(3,546)
595
1,693
(172)
–
(29,085)
–
–
6,757
1,383
(5,988)
(73)
(4,078)
1,609
(8,530)
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 59
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2012
16. Trade and other receivables
Other receivables
Receivables due from related parties – TRM
Current
Note
31
31 December
2012
$’000
31 December
2011
$’000
907
–
907
907
1,705
422
2,127
2,127
17. Deferred exploration, evaluation and development
COST
Opening balance
Expenditure incurred
Discontinued operation
EXPLORATION, EVALUATION AND DEVELOPMENT
Impairment
31 December
2012
$’000
31 December
2011
$’000
14,289
16,670
(12,340)
18,619
–
6,157
8,132
–
14,289
–
TOTAL EXPLORATION, EVALUATION AND DEVELOPMENT
18,619
14,289
The Group’s accounting policy is to capitalise expenditure on exploration, evaluation and development on an area of interest basis.
The recoverability of the carrying amounts of exploration and evaluation assets is dependent on the successful development and
commercial exploitation or sale of the respective area of interest.
The Landazuri Project in Colombia has been discontinued, and as a consequence the deferred exploration, evaluation and
development relating to Landazuri has been taken to the profit or loss (refer note 8).
PAGE 60
18. Property, plant and equipment
31 DECEMBER 2012
Cost
AS AT 1 JANUARY 2012
Additions
Disposals
Transfers
Effect of movement in exchange rates
AS AT 31 DECEMBER 2012
Depreciation and impairment
AS AT 1 JANUARY 2012
Depreciation charge for the period
Disposals
Effect of movement in exchange rates
AS AT 31 DECEMBER 2012
NET BOOK VALUE:
AT 31 DECEMBER 2012
31 DECEMBER 2011
Cost
AS AT 1 JANUARY 2011
Additions
Disposals
Effect of movement in exchange rates
AS AT 31 DECEMBER 2011
Depreciation and impairment
AS AT 1 JANUARY 2011
Depreciation charge for the period
Disposals
Effect of movement in exchange rates
AS AT 31 DECEMBER 2011
NET BOOK VALUE:
AT 31 DECEMBER 2011
Land &
Buildings
$’000
Plant&
Equipment
$’000
Fixtures &
Fittings
$’000
3,828
–
(498)
(97)
62
33
1,032
(2)
97
1
1
239
–
–
–
Total
$’000
3,862
1,271
(500)
–
63
3,295
1,161
240
4,696
–
(428)
–
–
(428)
(3)
(88)
1
(1)
(91)
–
(9)
–
–
(9)
(3)
(525)
1
(1)
(528)
2,867
1,070
231
4,168
–
3,828
–
–
3,828
–
–
–
–
–
3,828
–
33
–
–
33
–
(3)
–
–
(3)
30
–
1
–
–
1
–
–
–
–
–
1
–
3,862
–
–
3,862
–
(3)
–
–
(3)
3,859
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 61
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2012
19. Intangible assets
Note
Goodwill
$’000
Mineral Rights
$’000
Other
$’000
Total
$’000
31 DECEMBER 2012
Cost
AS AT 1 JANUARY 2012
Additions
Additions – acquisition of subsidiary
Effect of movement in exchange rates
AS AT 31 DECEMBER 2012
Amortisation and impairment
AS AT 1 JANUARY 2012
Amortisation charge for the period
AS AT 31 DECEMBER 2012
NET BOOK VALUE:
AT 31 DECEMBER 2012
31 DECEMBER 2011
Cost
AS AT 1 JANUARY 2011
Additions
Acquisition of Eastshore
36
Effect of movement in exchange rates
AS AT 31 DECEMBER 2011
Amortisation and impairment
AS AT 1 JANUARY 2011
Amortisation charge for the period
AS AT 31 DECEMBER 2011
NET BOOK VALUE:
AT 31 DECEMBER 2011
20,227
89,951
46
110,224
–
–
(384)
19,843
–
–
–
–
531
(1,709)
88,773
–
–
–
7
–
–
7
531
(2,093)
53
108,669
–
(12)
(12)
–
(12)
(12)
19,843
88,773
41
108,657
–
–
19,258
969
20,227
–
–
–
–
–
85,641
4,310
89,951
–
–
–
–
46
–
–
46
–
–
–
–
46
104,899
5,279
110,224
–
–
–
20,227
89,951
46
110,224
Other intangible assets consist of computer software.
On 18 January 2012 the Group completed the acquisition of an additional Bering Basin coking coal tenement in far eastern Russia
at Amaam North. This Amaam North tenement is 30 kilometres north of the Group’s existing tenement at Amaam. The Group has
acquired an 80% interest in Rosmiro Investments Limited which, through its wholly owned subsidiary Beringpromugol LCC, holds
the Amaam North tenement, for consideration of $385 thousand (US$400 thousand). This acquisition has resulted in the
addition of $531 thousand of mineral rights.
The Mineral Rights acquired as part of business combinations will be amortised (as an expense) in the consolidated statement
of comprehensive income over the life of the relevant areas of interest from the commencement of commercial production.
The mineral rights intangible asset will be subject to impairment testing in accordance with the Group’s accounting policy
for exploration, evaluation and development assets.
In 2011 Goodwill was accounted for as a direct result of the transaction which took place on 6 May 2011, whereby Tigers Realm
Coal (Cyprus) Pty Ltd (“TRC Cyprus”), Eastshore Coal Holding Ltd (“Eastshore”), Bering Coal Investments Ltd (“Bering”) and
Siberian Tigers International Corporation (“Siberian”) executed a series of agreements in relation to the management of Eastshore,
CJSC Northern Pacific Coal Company (“NPCC”) and the Russian subsoil licenses being the Dalniy Subsoil License (Russian subsoil
license numbered AND 13868 TP) and the Zapadniy Subsoil License (Russian subsoil license numbered AND 13867 TP).
As a result of these agreements TRC Cyprus became entitled to appoint the majority of the members of the board of Eastshore
(i.e. three out of five), providing it with the power to govern the financial and operating policies of Eastshore so as to obtain the
benefits from Eastshore’s activities. As a result the Group has consolidated Eastshore and its subsidiary NPCC, from 6 May 2011.
PAGE 62
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the identifiable assets acquired
and liabilities and contingent liabilities assumed of the acquired subsidiary at the date of acquisition. Refer to note 36 which relates
to the business combination for support regarding the calculation of goodwill.
Applying AASB 3 Business Combinations, the fair value of the consideration has been measured as the fair value of TIG’s existing
40% equity interest in Eastshore as at 6 May 2011, plus the fair value of loans made by TIG to Eastshore as at 6 May 2011, plus
the fair value as at 6 May 2011 of TIG’s 40% attributable share of the option inherent in the Eastshore Transaction, whereby Bering
may choose to fund its proportion of the expenditure after completion of the bankable feasibility study or have its interest diluted
in return for a royalty stream.
(i)
Impairment testing for goodwill
Goodwill is allocated to the Group’s cash generating units (CGUs) identified according to the Group’s operating segments for
impairment testing purposes.
Segment
Amaam Project
Landazuri Project (Discontinued)
31 December
2012
$’000
31 December
2011
$’000
19,843
20,227
–
–
19,843
20,227
In assessing whether an impairment adjustment is required for the carrying value of an asset, its carrying value is compared
with its recoverable amount. The recoverable amount is the higher of the asset’s fair value less costs to sell and value in use. It is
management’s intention to continue to develop the Amaam Project. Consequently, unless indicated otherwise, the recoverable
amount used in assessing asset impairment is the value in use.
The Group estimates the value in use of the Amaam Project using a discounted cash flow model. The calculation of value in use is
most sensitive to a number of assumptions, including short and long term commodity prices, foreign exchange rates, production
volumes, capital expenditure, operating costs and discount rates. These assumptions can change over short periods of time which
can have a significant impact on the carrying value of assets.
Detailed development plans are constructed by management for each project utilising detailed life of mine plans based on
estimated production volumes and operating costs. Management believes that no reasonably possible change in the assumptions
would cause the carrying amount of goodwill and other non-current assets to exceed their recoverable amount.
The future cash flows are adjusted for risks specific to the asset and discounted using a pre-tax discount rate of 15.97% (2011:
15.7%). This discount rate is derived from the Group’s post-tax weighted average cost of capital. Management also believes that
currently, there is no reasonably possible change in the discount rate, estimated coking coal price, and future operating costs
which would reduce the Group’s excess of recoverable amount over the carrying amounts of the individual CGUs to zero.
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 63
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2012
20. Trade & other payables
Payables due to related parties – TRM
Other trade payables and accrued expenses
Current
21. Employee Benefits
Annual Leave
Provision for annual bonus
22. Deferred Tax Liabilities
The balance comprises temporary differences attributable to:
Exploration and evaluation assets
Mineral rights acquired
Effect of movements in exchange rates
TOTAL DEFERRED TAX LIABILITIES RECOGNISED
Deferred tax liabilities to be settled in within 12 months
Deferred tax liabilities to be settled after 12 months
TOTAL DEFERRED TAX LIABILITIES RECOGNISED
MOVEMENT IN DEFERRED TAX LIABILITY
At beginning of period
Exploration and evaluation assets
Mineral rights acquired
Accrued interest
Effects of movement in exchange rates
AT END OF PERIOD
31 December
2012
$’000
31 December
2011
$’000
–
1,300
1,300
1,300
1,300
82
523
605
4,348
17,128
520
21,996
–
21,996
21,996
20,101
2,237
–
–
(342)
166
2,640
2,806
2,806
2,806
24
479
503
2,111
17,128
862
20,101
–
20,101
20,101
62
2,111
17,128
(62)
862
21,996
20,101
The Group offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current
tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.
PAGE 64
23. Royalty Agreement Liability
Opening balance of royalty agreement liability
Fair value adjustment to royalty agreement liability
Effect of movement in exchange rates
TOTAL ROYALTY AGREEMENT LIABILITY RECOGNISED AT END OF YEAR
31 December
2012
$’000
31 December
2011
$’000
16,872
(4,228)
(314)
12,330
9,532
6,757
583
16,872
The royalty agreement liability arose as a consequence of the shift in control of Eastshore to TRC Cyprus on 6 May 2011 and the
resulting consolidation of Eastshore and its 100% owned subsidiary, NPCC.
Applying AASB 3 Business Combinations the fair value of the consideration for Eastshore is measured as the fair value of TIG’s
existing 40% equity interest in Eastshore at 6 May 2011, and in addition, the fair value of the option inherent in the Bering Royalty
Agreement, whereby Bering may choose to fund its proportion of the expenditure after completion of the bankable feasibility study
or to have its interest diluted in return for a royalty stream.
With regards to the Bering Royalty Agreement, prior to 6 May 2011, TRC Cyprus held a 40% interest in Eastshore and had a right
to subscribe for shares equivalent to an additional 40% interest in two tranches subject to achievement of certain milestones, the
final milestone being completion of a bankable feasibility study in respect of the area of the Russian Subsoil Licenses or any other
subsoil license issued to Eastshore or its controlled subsidiaries (“the Eastshore Group”). If Bering fails to fund its proportion
of expenditure after completion of the bankable feasibility study, its remaining 20% shareholding may be diluted in exchange
for a maximum royalty of 2% of gross sales revenue from the sale of coal produced from the area of a license held by a member
of the Eastshore Group.
The option inherent in the Bering Royalty Agreement whereby Bering may choose to fund its proportion of expenditure after
completion of the bankable feasibility study or to have its interest diluted in return for a royalty stream, is deemed to be part
of the consideration for TIG obtaining control of Eastshore. As such, the option is recorded as consideration at fair value in relation
to the acquisition.
TIG has used the Black and Scholes formula to value the royalty agreement liability, based on the parameters set out in the
table below:
Valuation Date
Expiry Date
Current price (US$m) (a)
Exercise price of option (US$m) (b)
Time to expiration (days)
Volatility (%/100) (c)
Risk free rate (%/100) (d)
31 December 2012
31 December 2011
1 January 2014
1 January 2014
31.30
36.66
366
80%
2.54%
30.29
37.33
732
80%
1.90%
(a) 20% of the value of the Amaam Project, post 3% royalty
(b) Net Present Value of Bering royalty stream
(c) Estimated share price volatility based on volatility of comparable public companies.
(d) 20 Year US bond yield
At 31 December 2012 the fair value of the liability was revalued to $12,330 thousand (2011: $16,872 thousand). This resulted
in a profit being taken to the statement of comprehensive income for the year ended 31 December 2012 of $4,228 thousand
(2011: loss of $6,757 thousand). The fair value was recalculated based on information available at 31 December 2012. The Bering
option will be re-valued at each future balance date with any resulting movement being recognised as a gain or loss in the
statement of comprehensive income.
Due to the inherent uncertainties arising from Bering’s option to dilute its interest in return for a royalty stream after the completion
of the bankable feasibility study, management cannot reliably estimate the timing of any expected outflows of cash if any.
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 65
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2012
24. Share capital
(i)
Movements in shares on issue:
No of shares
Issue price $
OPENING BALANCE AT 1 JANUARY 2011
Issue of ordinary shares
Issue of ordinary shares – Initial Public Offer
244,200,000
44,739,170
75,000,000
ORDINARY SHARES CLOSING BALANCE AT 31 DECEMBER 2011
363,939,170
363,939,170
49,574,472
4,709,375
418,223,017
OPENING BALANCE 1 JANUARY 2012
Issue of ordinary shares – placement
Issue of ordinary shares – Share Purchase Plan
CLOSING BALANCE AT 31 DECEMBER 2012
LESS COSTS OF RAISING EQUITY
Opening balance
Costs incurred in the period
Closing balance
CLOSING SHARE CAPITAL BALANCE AT 31 DECEMBER 2012
0.50
0.50
0.18
0.16
$’000
13,181
22,370
37,500
73,051
73,051
8,923
754
82,728
(8,645)
(518)
(9,163)
73,565
The Company does not have authorised capital or par value in respect of its issued shares. All issued share are fully paid.
All shares rank equally with regard to the Company’s residual assets.
The holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one vote
per share at meetings of the Company.
Issue of ordinary shares
On 11 July 2012 the Company concluded a placement of fully paid ordinary shares to raise gross proceeds of $8,923,408
at a price of $0.18 per share. The placement price represented a 5% discount to the volume weighted average price over
the five days trading up to and including 6 July 2012.
On 10 August 2012 the Company completed a Share Purchase Plan for shareholders in Australia and New Zealand.
The Share Purchase Plan raised gross proceeds of $753,500 through the issue of fully paid ordinary shares at an issue
price of $0.16 per share.
PAGE 66
(ii)
Movements in options on issue:
OPENING BALANCE
AS AT 1 JANUARY 2011
Issue of options
Issue of options
Issue of options
Issue of options
CLOSING BALANCE
AS AT 31 DECEMBER 2011
OPENING BALANCE
AS AT 1 JANUARY 2012
Issue of options
Issue of options
Issue of options
Issue of options
Issue of options
Issue of options
Issue of options
Issue of options
Issue of options
Issue of options
Issue of options
Options forfeited
CLOSING BALANCE
AS AT 31 DECEMBER 2012
(iii)
Capital Management
Date of issue Number of options
Exercise price $
Expiry date
26,782,300
1 February 2011
2,039,000
0.500
1 February 2016
17 March 2011
1,000,000
2 May 2011
17 October 2011
250,000
750,000
0.425
0.425
17 March 2016
2 May 2016
0.415
17 October 2016
30,821,300
30,821,300
1 February 2012
2,049,877
0.400
1 February 2017
22 February 2012
2,909,000
0.500
22 February 2017
28 March 2012
3,500,000
0.750
28 March 2017
14 May 2012
12 July 2012
27 July 2012
22 October 2012
250,000
250,000
300,000
500,000
0.320
0.250
0.500
14 May 2017
12 July 2017
27 July 2017
0.195
22 October 2017
12 November 2012
2,000,000
0.250
12 November 2017
12 November 2012
2,000,000
0.500
12 November 2017
12 November 2012
2,000,000
0.750
12 November 2017
12 November 2012
2,000,000
1.000
12 November 2017
(7,083,527)
41,496,650
Management controls the capital of the Group in order to maintain stable cash reserves, manage capital raising requirements,
and ensure that the Group can fund its operations and continue as a going concern. The Group’s debt and capital includes
ordinary share capital and current and financial liabilities. There is no non-current external debt. There are no externally
imposed capital requirements.
Management effectively manages the Group’s capital by assessing the Group’s cashflow and capital requirements and responds
to those needs. These responses include management of capital projects, acquisition of mineral licences, reduction of expenditure,
and sourcing of further funds.
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 67
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2012
25. Reserves and accumulated losses
(a) Reserves
31 December
2012
$’000
31 December
2011
$’000
Note
Share based payments reserve
Foreign currency translation reserve
TOTAL RESERVES
MOVEMENTS
SHARE BASED PAYMENTS RESERVE
Opening balance
Share options expense arising during the year
26
Closing balance
FOREIGN CURRENCY TRANSLATION RESERVE
Opening balance
Currency translation differences arising during the year
Closing balance
Share based payments reserve
2,627
295
2,922
1,768
859
2,627
672
(377)
295
1,768
672
2,440
76
1,692
1,768
(1,234)
1,906
672
The share based payments reserve is used to recognise the value of options issued but not exercised.
Foreign currency translation reserve
The foreign currency translation reserve records exchange differences arising on translation of foreign controlled entities.
(b) Retained earnings/(accumulated losses)
Retained earnings/(accumulated losses) at the beginning of the year
Net profit/(loss) attributable to members of the Company
RETAINED EARNINGS/(ACCUMULATED LOSSES) AT THE END OF THE YEAR
31 December
2012
$’000
31 December
2011
$’000
17,057
(19,779)
(2,722)
(586)
17,643
17,057
PAGE 68
26. Share based payments
(a) Recognised share based payment expense
31 December
2012
$’000
31 December
2011
$’000
Expense arising from equity settled share based payment transactions
859
1,692
(b) Description of share-based payment arrangements
In 2010 the Company established the Staff Option Plan as part of the Group’s Long Term Incentive Plan to assist in the attraction,
motivation and retention of senior executives and employees and to encourage their personal commitment to the Company.
The plan forms a necessary part of the competitive packages offered by the Company in-light of the markets in which it operates.
The plan also creates an ownership mindset among participants and ensures business decisions and strategic planning has
regard to the Company’s long term performance and growth. There a number of different performance hurdles, exercise prices
and vesting conditions dependent on the individual’s position held. There have been no cancellations or modification to the Staff
Option Plan since it was established in 2010.
The Staff Option Plan offers individuals the opportunity to acquire options over fully paid ordinary shares in the Company. Share
options granted under the plan carry no dividend or voting rights. When exercised, each option is convertible into one ordinary
share subject to satisfying vesting conditions and performance criteria. The shares when issued rank pari passu in all respects
with previously issued fully paid ordinary shares. Option holders cannot participate in new issues of capital which may be offered
to shareholders prior to exercise.
A fair value of these options is assessed at grant date using a Monte Carlo simulation model in accordance with AASB2 Share-based
Payments. The options vest and expire at dates set out in the terms of the grant. The options cannot be transferred and are not
quoted on the ASX.
(c) Summary of options granted under the Option Plan
The options outstanding at 31 December 2012 have an exercise price in the range of $0.078 to $1.00 (2011: $0.078 to $0.500).
The weighted average remaining contractual life for options outstanding at 31 December 2012 is 3.51 years (2011: 3.97 years).
The weighted average fair value of options granted during the year was $0.091 (2011: $0.250). There are 250,000 vested and
exercisable options at 31 December 2012 (2011: nil vested and nil exercisable). No options were exercised in 2012 or 2011.
Movements in outstanding options
2012
2011
Weighted
Average
Exercise Price
$
0.166
0.579
0.372
–
0.308
0.415
Number of
Options
30,821,300
17,758,877
(7,083,527)
–
41,496,650
250,000
Weighted
Average
Exercise Price
$
0.122
0.461
–
–
0.166
–
Number of
Options
26,782,300
4,039,000
–
–
30,821,300
–
Balance at the beginning of the year
Granted
Forfeited
Exercised
BALANCE AT THE END OF THE YEAR
VESTED AND EXERCISABLE AT YEAR END
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2012
26. Share based payments (CONTINUED)
Details of the share options outstanding at 31 December 2012 are detailed below:
Granted – 23 November 2010
Granted – 20 December 2010
Granted – 1 February 2011
Granted – 17 March 2011
Granted – 2 May 2011
Granted – 17 October 2011
Granted – 22 February 2012
Granted – 28 March 2012
Granted – 14 May 2012
Granted – 12 July 2012
Granted – 27 July 2012
Granted – 12 November 2012
Granted – 12 November 2012
Granted – 12 November 2012
Granted – 12 November 2012
2012
2011
Weighted
Average
Exercise Price
$
0.078
0.195
Number of
Options
15,587,650
10,000,000
Number of
Options
16,782,300
10,000,000
–
–
2,039,000
Weighted
Average
Exercise Price
$
0.078
0.195
0.500
0.425
0.425
0.415
1,000,000
250,000
750,000
1,000,000
250,000
250,000
2,109,000
3,500,000
250,000
250,000
300,000
2,000,000
2,000,000
2,000,000
2,000,000
0.425
0.425
0.415
0.500
0.750
0.320
0.250
0.500
0.250
0.500
0.750
1.000
0.320
BALANCE AT THE END OF THE YEAR
41,496,650
30,821,300
0.166
The share options originally granted prior to the Initial Public Offer on 29 August 2011 were granted with a performance period
of 12 months from the date of the IPO, with the ability for the Directors to extend the performance period for a further 12 month
period. The Directors have extended the performance period of these options for a further 12 month period to 29 August 2013.
As a consequence of this decision these share options have been revalued in accordance with accounting standard requirements.
The inputs for the measurement of the fair values of these share options is included in note 26(d) below.
(d)
Inputs for the measurement of grant date fair values
The grant date fair values of the options granted through the Staff Option Plan utilised a Monte Carlo simulation model which allows
for incorporation of the performance hurdles that must be met before the share based payment vests to the holder. Expected
volatility is estimated by considering historic average share price volatility. As the Company listed on 29 August 2011 there is
insufficient daily share price data to undertake meaningful historic price volatility analysis of the Company’s shares. Therefore
share price volatility has been based on the historical volatility of a group of comparable companies, based on their principal
activities, for volatility estimation purposes. The volatility rate used on all valuations has been 80%. The expected dividend yield
used in the valuation process has been 0%. The early exercise provision has been measured using a sell multiple of two times the
exercise price. The post-vesting withdrawal rate used in the valuation of the options is 0%. The risk free rate is derived from the
yield on Australian Government Bonds of appropriate terms. All options granted under the Staff Option Plan are for a five year term.
PAGE 70
The inputs used in the measurement of the fair values at grant date of the options granted under the Staff Option Plan
are outlined below:
Fair value at
grant date
Share price
at grant
date
Exercise
price
Perfor-
mance
hurdle
Perfor-
mance
period
Option
Grant Date
23 Nov 2010
(extension)
20 Dec 2010
(extension)
1 Feb 2011
17 Mar 2011
(extension)
2 May 2011
(extension)
17 Oct 2011
1 Feb 2012
22 Feb 2012
28 Mar 2012
14 May 2012
12 Jul 2012
27 Jul 2012
22 Oct 2012
12 Nov 2012
12 Nov 2012
12 Nov 2012
12 Nov 2012
$0.071
$0.027
$0.052
$0.021
$0.259
$0.292
$0.014
$0.285
$0.014
$0.157
$0.144
$0.160
$0.127
$0.130
$0.081
$0.055
$0.063
$0.058
$0.045
$0.038
$0.032
$0.115
$0.165
$0.115
$0.165
$0.500
$0.500
$0.165
$0.500
$0.165
$0.330
$0.310
$0.325
$0.310
$0.250
$0.180
$0.155
$0.140
$0.140
$0.140
$0.140
$0.140
$0.078
$0.078
$0.195
$0.195
$0.500
$0.425
$0.425
$0.425
$0.425
$0.415
$0.400
$0.500
$0.750
$0.320
$0.250
$0.500
$0.195
$0.250
$0.500
$0.750
$1.000
A
A
A
A
A
A
A
A
A
C
B
D
D
B
A
A
E
C
C
D
D
Expiry date
23 Nov 2015
23 Nov 2015
20 Dec 2015
20 Dec 2015
1 Feb 2016
17 Mar 2016
17 Mar 2016
2 May 2016
2 May 2016
17 Oct 2016
1 Feb 2017
22 Feb 2017
28 Mar 2017
F
G
F
G
H
F
G
F
G
H
H
I
I
H 14 May 2017
H
I
H
12 Jul 2017
27 Jul 2017
22 Oct 2017
H 22 Nov 2017
H 22 Nov 2017
I
I
22 Nov 2017
22 Nov 2017
Risk free
interest rate
5.27%
2.62%
5.34%
2.62%
5.23%
5.32%
2.63%
5.25%
2.64%
4.13%
3.27%
3.76%
3.71%
2.77%
2.33%
2.55%
2.65%
2.68%
2.68%
2.68%
2.68%
Note
A. Performance hurdle: options vest if share price exceeds 125% of IPO (i.e. $0.625) price during performance period.
B. Performance hurdle: options vest if share price exceeds 150% of IPO (i.e. $0.750) price during performance period.
C. Performance hurdle: options vest 12 months after grant date.
D. Performance hurdle: options vest 24 months after grant date.
E. Performance hurdle: options vest if share price exceeds 150% of weighted average share price in pricing period (i.e.$0.234).
F. Performance period: 12 months after Initial Public Offer date.
G. Performance period: 24 months after Initial Public Offer date.
H. Performance period: 12 months after grant date.
I. Performance period: 24 months after grant date.
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 71
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2012
27. Financial instruments
The Group holds the following financial instruments:
FINANCIAL ASSETS
Cash and cash equivalents
Trade and other receivables
FINANCIAL LIABILITIES – CURRENT
Trade and other payables
(a) Credit risk
Exposure to credit risk
31 December
2012
$’000
31 December
2011
$’000
8,528
907
9,435
21,030
2,127
23,157
1,300
2,806
Management monitors the exposure to credit risk on an ongoing basis. The maximum exposure to credit risk on financial assets
which have been recognised on the balance sheet are generally the carrying amount, net of any provisions. Current receivables
net of provision for doubtful receivables are not overdue or in default. The Company does not require collateral in respect of
financial assets.
The Group has treasury policies in place for deposit transactions to be conducted with financial institutions with a minimum credit
rating. At reporting date, cash is held with reputable financial institutions which all meet the Company’s minimum credit rating
required by the approved treasury policy.
Carrying amount
Cash and cash equivalents
Trade and other receivables
Geographical information
The Group’s maximum exposure to credit risk for Trade and other receivables
at the reporting date by geographical region was:
Europe and Russia
Americas
Australasia
Counterparty information
The Group’s maximum exposure to credit risk for Trade and other receivables
at the reporting date by type of counterparty was:
Related party
Other
2012
$’000
8,528
907
9,435
871
–
36
907
–
907
907
2011
$’000
21,030
2,127
23,157
1,347
312
468
2,127
422
1,705
2,127
PAGE 72
Impairment losses
The ageing of the Group’s Trade and other receivables at the reporting date was:
Not past due
Past due 0-30 days
Past due 31-120 days
Past due 121 days to one year
More than one year
Gross
2012
$’000
907
–
–
–
–
907
Impaired
2012
$’000
–
–
–
–
–
–
Gross
2011
$’000
2,127
–
–
–
–
2,127
Impaired
2011
$’000
–
–
–
–
–
–
There was no provision for impairment at 31 December 2012 (2011: $nil); therefore there has been no movement in the provision
for impairment for the year ended 31 December 2012.
(b) Liquidity risk
Exposure to liquidity risk
Management monitors the exposure to liquidity risk on an on-going basis. Prudent liquidity risk management implies maintaining
sufficient cash reserves to meet the on-going operational requirements of the business. It is the Group’s policy to maintain
sufficient funds in cash and cash equivalents. Furthermore, the Group monitors its cash requirements and raises appropriate
funding as and when required to meet such planned expenditure.
The following are the contractual maturities of financial liabilities.
31 DECEMBER 2012
NON-DERIVATIVE FINANCIAL
LIABILITIES
Trade and other payables
31 DECEMBER 2011
NON-DERIVATIVE FINANCIAL
LIABILITIES
Trade and other payables
Carrying
amount
$’000
Con-
tractual
cashflows
$’000
6 mths
or less
$’000
6-12
mths
$’000
1-2 yrs
$’000
2-5 yrs
$’000
More
than 5 yrs
$’000
1,300
1,300
1,300
1,300
1,300
1,300
2,806
2,806
2,806
2,806
2,806
2,806
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly
different amounts.
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2012
27. Financial instruments (CONTINUED)
(c) Market risk
(i)
Currency risk
Exposure to currency risk
Management monitors the exposure to currency risk on an ongoing basis. The Group operates internationally and are exposed
to foreign exchange risk arising from various currencies, primarily with respect to the US dollar and the Russian Rouble (‘RUB’).
In 2011 the Group was also exposed to foreign exchange risk from the Colombian Peso (‘COP’).
The Group’s exposure to foreign currency risk was as follows:
USD
2012
’000
2,007
–
(23)
1,984
–
1,984
RUB
2012
’000
28
910
(929)
9
–
9
USD
2011
’000
5,536
–
–
5,536
–
5,536
RUB
2011
’000
21
1,347
(1,979)
(611)
–
(611)
COP
2011
’000
120
311
(313)
118
–
118
Cash and cash equivalents
Receivables
Trade and other payables
Gross exposure
Forward exchange contracts
Net exposure
Exchange rates used
The following significant exchange rates were applied during the year relative to 1AUD:
AUD
USD 1
RUB 1
COP 1
Sensitivity analysis
Average rate
Reporting date spot rate
2012
0.9658
0.0310
0.0005
2011
0.9687
0.0329
0.0005
2012
0.9640
0.0316
0.0005
2011
0.9827
0.0305
0.0005
A strengthening of the AUD, as indicated below, against the USD, RUB and COP at 31 December 2012 would have decreased
profit and loss by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Group
considered to be reasonably possible at the end of the reporting period. The analysis assumes that all other variables, in particular
interest rates, remain constant.
31 DECEMBER 2012
USD (10% movement)
RUB (10% movement)
COP (10% movement)
31 DECEMBER 2011
USD (10% movement)
RUB (10% movement)
COP (10% movement)
(ii)
Market price risk
Strengthening
Weakening
Equity
$’000
Profit or loss
$’000
Equity
$’000
Profit or loss
$’000
220
1
–
615
(68)
13
220
1
–
615
(68)
13
(180)
(180)
(1)
–
(503)
56
(11)
(1)
–
(503)
56
(11)
Management monitors the exposure to commodity price risk on an on-going basis. The Group does not have any direct commodity
price risk relating to its financial assets or liabilities.
PAGE 74
(iii)
Interest rate risk
Exposure to interest rate risk
Management monitors the exposure to interest rate risk on an ongoing basis. The Group’s exposure to interest rate risk relates
primarily to its cash and cash deposits. At the reporting date the interest rate profile of the company’s and the Group’s interest
bearing financial instruments was:
Fixed rate instrument
Financial assets
Financial liabilities
Variable rate instruments
Financial assets
Cash and cash equivalents
Financial liabilities
Interest rates used
The following significant interest rates have been applied.
2012
Australian cash deposit rate
2011
Australian cash deposit rate
Sensitivity analysis
Carrying amount
2012
$’000
2011
$’000
–
–
–
8,528
–
8,528
–
–
–
21,030
–
21,030
Average rate
%
Reporting date
spot rate
%
3.64
3.00
4.69
4.25
An increase in interest rates, as indicated below, at balance dates would have increased equity and profit and loss by the amounts
shown below. This analysis is based on interest rate variances that the Group considered to be reasonably possible at the end of
the reporting period. The analysis assumes that all other variables, in particular exchange rates, remain constant. A reduction in
the interest rates would have had the equal but opposite effect to the amounts shown below, on the basis that all other variables
remain constant.
31 DECEMBER 2012
Australian cash deposit rate (100 basis points increase)
31 DECEMBER 2011
Australian cash deposit rate (100 basis points increase)
(d) Fair values
Group
Equity
$’000
Profit or loss
$’000
17
25
17
25
The fair values of financial assets and liabilities are the same as their carrying amounts shown in the statement of
financial position.
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2012
28. Operating Leases
Leases as lessee
NON-CANCELLABLE OPERATING LEASE RENTALS ARE PAYABLE IN:
Less than one year
Between one and five years
More than five years
LEASE EXPENSE RECOGNISED IN PROFIT OR LOSS
Operating lease expense
The Group leases office space under operating leases.
29. Exploration expenditure commitments
31 December
2012
$’000
31 December
2011
$’000
162
–
–
162
–
–
123
55
2
180
–
–
In order to maintain current rights of tenure to exploration tenements, the Group is required to perform minimum exploration work
to meet the minimum expenditure requirements. The minimum exploration work required to be performed to maintain tenure in
the exploration licences granted in Russia is the performance of a minimum number of drilling metres to be performed over the
life of each exploration licence. These obligations are expected to be fulfilled in the normal course of operations. Mining interests
may be relinquished or joint ventured to reduce this amount. The various country governments have the authority to defer, waive
or amend the minimum expenditure requirements.
There are no other commitments as at reporting date.
30. Contingencies
The Directors are of the opinion that there are no contingent liabilities or contingent assets as at 31 December 2012, and none
were incurred in the interval between the year-end and the date of this report.
31. Related parties disclosure
(a)
Identity of related parties
The Group has a related party relationship with its subsidiaries (refer note 33), key management personnel (‘KMP”) (refer note 32)
and Tigers Realm Minerals Limited (“TRM”). TRM is a related party as TRM is a substantial shareholder of the Company and as
the Group transacted with TRM in the reporting period. Pursuant to a services agreement dated 27 May 2011, TIG has a services
agreement with TRM for the provision of services including the secondment of staff and the provision of office accommodation.
As a result of the 6 May 2011 event that took place in relation to the control of Eastshore Coal Holdings Limited (formerly Zinodol
Coal Holdings Limited), this particular entity is no longer equity accounted for but consolidated along with its 100% owned
subsidiary Northern Pacific Coal Corporation (NPCC).
PAGE 76
(b) Other related party transactions
Transactions
value period
ended
31 December
2012
$
Balance
outstanding as
at
31 December
2012
$
Transactions
value period
ended
31 December
2011
$
Balance
outstanding as
at 31 December
2011
$
(1,778,472)
(27,500)
(3,648,587)
(165,817)
–
207,270
(6,502)
–
–
–
–
–
–
–
–
–
421,749
421,749
4,369,585
–
Note
(i)
(ii)
(iii)
(iv)
In AUD
GROUP
TRM services provided
Prepayment to TRM
Payment to Director
Trade receivable from TRM
Shares issued to TRM
Notes
(i) The Group has a payable to TRM. This outstanding balance is priced on an arms-length basis and is expected to be settled in cash within
12 months of the reporting date. These balances are unsecured.
(ii) The Group has a prepayment to TRM for services under the service agreement. This prepayment balance is priced on an arms-length basis
and is expected to be utilised within 12 months of the reporting date. These balances are unsecured.
(iii) The Company has signed a 12 month Consultancy Agreement to the value of GBP 50,000 with Thukela Resources Ltd, the nominated
consultancy company of the Director, Mr Craig Wiggill. This amount represents the amount paid in full for services provided under that
Consultancy Agreement.
(iv) On 12 August 2011 the Company issued 8,739,170 ordinary shares to settle the outstanding payable to TRM of $4,369,585 prior
to the Company listing on the ASX.
32. Key Management Personnel Disclosures
The following were key management personnel of the Company at any time during the reporting period and unless otherwise
indicated were key management personnel for the entire period.
Name
Position
Commencement Date
Non-executive Directors
Owen Hegarty
Brian Jamieson
Director (Non-executive)
8 October 2010
Independent Director
(Non-executive)
25 February 2011
Craig Wiggill
Director (Non-executive)
20 November 2012
Executive Directors
Antony Manini
Martin Grant
Senior Executives
Craig Parry
Peter Balka
David George
David Forsyth
Paul Smith
Executive Chairman
8 October 2010
Managing Director and
Chief Executive Officer
7 March 2011
1 February 2011
Resigned 12 November 2012
Chief Executive Officer
12 November 2012
Chief Operating Officer
1 January 2011
Manager Investor Relations
5 October 2012
Company Secretary
8 October 2010
Chief Financial Officer
17 October 2011
Ceased 30 November 2012
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 77
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2012
32. Key Management Personnel Disclosures (CONTINUED)
(a) Compensation of key management personnel
The key management personnel compensation included in “Administration expenses” (see Note 10) “Deferred exploration,
evaluation and development” (see Note 17) and “Share-based payments” (see Note 26) and is as follows:
Short-term employee benefits
Post-employment benefits
Long-term employment benefits
Termination benefits
Share-based payments
2012
$
2011
$
1,423,955
1,277,192
109,041
104,249
–
581,635
–
–
1,273,791
1,295,931
3,388,422
2,677,372
(b) Key management personnel compensation disclosures
Information regarding individual Directors’ and executives, compensation and some equity instrument disclosures as permitted
by Corporation Regulation 2M.3.03 and 2M.6.04 are provided in the Remuneration Report; Section 11 of the Directors’ Report.
(c) Key management personnel and director transactions
A number of key management persons hold positions in TRM that result in them having control or significant influence over
the financial or operating policies of TRM. The terms and conditions of those transactions with TRM were no more favourable
than those available, or which might reasonably be expected to be available, on similar transactions with non-key management
personnel related entities on an arms-length basis.
The aggregate value of transactions and outstanding balances relating to transactions with TRM are disclosed in Note 31(b) above.
PAGE 78
(d) Movements in options
The movement during the reporting period in the number of options over ordinary shares in Tigers Realm Coal Limited shares held
directly, indirectly, or beneficially by the key management personnel and their related entities are set out below.
Held at
1 January
Granted
as remun-
eration
Exercised
during year
Forfeited
during year
Held at
31 December
Total Exer cisable
Not
exer cisable
Vested at 31 December
Name
2012
Directors
AJ Manini
C Parry1
P Balka
D George1
D Forsyth
P Smith3
2011
Directors
AJ Manini
7,631,000 1,500,000
OL Hegarty
4,315,500 1,000,000
B Jamieson
1,000,000 1,000,000
C Wiggill1
–
–
–
–
–
–
–
–
–
–
9,131,000
5,315,500
2,000,000
–
–
MA Grant2
2,039,000 2,049,877
– 4,088,877
Other key management personnel
2,852,400 8,000,000
1,694,650
562,000
–
–
2,852,400
103,000
–
–
–
–
–
–
–
–
10,852,400
2,256,650
–
2,955,400
500,000
729,000
– 1,229,000
–
7,631,000
OL Hegarty
4,315,500
–
–
B Jamieson
MA Grant
D Forsyth
– 1,000,000
–
2,039,000
2,852,400
–
Other key management personnel
P Smith
P Balka
–
500,000
1,694,650
–
B Stockdale
–
250,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7,631,000
4,315,500
1,000,000
2,039,000
2,852,400
500,000
1,694,650
250,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1. Appointed during the year ended 31 December 2012.
2. Resigned during the year ended 31 December 2012.
3. Employment ceased during the year ended 31 December 2012.
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 79
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2012
32. Key Management Personnel Disclosures (CONTINUED)
(e) Movements in shares
The movement in the number of Tigers Realm Coal Limited shares held directly, indirectly, or beneficially by the key management
personnel and their related entities are set out below.
Balance at
1 January
Acquisitions
Sales
Other Changes
Balance at
31 December
2012
Directors
AJ Manini
OL Hegarty
B Jamieson
C Wiggill1
MA Grant2
Other key management personnel
C Parry1
P Balka
D George1
B Stockdale
D Forsyth
P Smith3
Other executives
L Skoptsov
2011
Directors
AJ Manini
OL Hegarty
B Jamieson
MA Grant
D Forsyth
Other key management personnel
P Smith
P Balka
B Stockdale
Other executives
N Amaya
L Skoptsov
17,703,631
1,733,552
13,434,336
2,777,778
400,000
371,528
–
–
200,000
280,000
3,553,055
520,006
404,197
93,750
–
–
–
–
9,042,061
72,500
–
–
–
–
17,657,183
46,448
9,934,336
3,500,000
–
–
8,942,061
400,000
200,000
100,000
–
–
324,197
80,000
–
–
–
–
50,000
–
1. Appointed during the year ended 31 December 2012.
2. Resigned during the year ended 31 December 2012.
3. Employment ceased during the year ended 31 December 2012.
PAGE 80
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(480,000)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
19,437,183
16,212,114
771,528
–
–
4,073,061
497,947
–
–
9,114,561
–
–
17,703,631
13,434,336
400,000
200,000
9,042,061
–
404,197
–
50,000
–
33. Group entities
Significant subsidiaries
PARENT ENTITY
Tigers Realm Coal Limited
SUBSIDIARIES
TR Coal International Limited
Tigers Realm Coal (Cyprus) Pty Ltd
Tigers Realm Coal Finance (Cyprus) Pty Ltd
Eastshore Coal Holding Pty Limited
Northern Pacific Coal Company
Rosmiro Investments Limited
Beringpromugol LLC
Beringtranscoal LLC
TR Coal Holdings Spain SL
Tigers Realm Coal Spain, SL
Tigers Coal Singapore No. 1 PTE Limited
PT Tigers Realm Coal Indonesia
1. Currently in liquidation.
2. Liquidated in the period.
Ownership Interest
Note
Country of
Incorporation
2012
2011
Australia
Australia
Cyprus
Cyprus
Cyprus
Russia
Cyprus
Russia
Russia
Spain2
Spain
Singapore1
Indonesia1
19
19
100%
100%
100%
40%
40%
80%
80%
46%
–
100%
100%
100%
100%
100%
–
40%
40%
–
–
–
100%
100%
100%
100%
Eastshore Coal Holding Pty Limited and its 100% owned subsidiary Northern Pacific Coal Corporation (NPCC), have been
consolidated from 6 May 2011. A series of agreements were executed on this date, which resulted in TRC Cyprus being entitled
to appoint the majority of the members of the board of Eastshore (i.e. three out of five), which in turn provided it with the power
to govern the financial and operating policies of Eastshore so as to obtain the benefits from Eastshore’s activities. As a result
the Group has consolidated Eastshore and its subsidiary NPCC, from 6 May 2011.
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2012
34. Parent entity disclosures
As at, and throughout the financial year ended 31 December 2012 the parent entity of the Group was Tigers Realm Coal Limited.
Information relating to the parent entity follows.
RESULTS OF PARENT ENTITY
(Loss) for the period
Total comprehensive income
FINANCIAL POSITION OF PARENT ENTITY
Current assets
Total assets
Current liabilities
Total liabilities
NET ASSETS
TOTAL EQUITY OF THE PARENT ENTITY COMPRISING
Share capital
Reserves
Retained earnings/(loss)
TOTAL EQUITY
31 December
2012
$’000
31 December
2011
$’000
(494)
(494)
6,373
74,412
–
–
(1,286)
(1,286)
–
65,355
–
–
74,412
65,355
73,565
2,627
(1,780)
74,412
64,406
1,768
(820)
65,355
Contingent liabilities of the parent entity
The parent entity has contingent liabilities arising from its guarantees to each creditor of Tigers Realm Coal International Limited
under the Deed of Cross Guarantee as discussed in note 35.
Capital commitments of the parent entity
There is no capital expenditure contracted for by the parent entity but not recognised as liabilities.
35. Deed of cross guarantee
Pursuant to ASIC Class Order 98/1418 (as amended) dated 13 August 1998, the wholly-owned subsidiaries listed below are relieved
from the Corporations Act 2001 requirements for preparation, audit and lodgement of financial reports, and directors’ reports.
It is a condition of a Class Order that the Company and each of the subsidiaries enter into a Deed of Cross Guarantee. The effect
of the Deed is that the Company guarantees to each creditor payment in full of any debt in the event of winding up of any of
the subsidiaries under certain provisions of the Corporations Act 2001. If a winding up occurs under other provisions of the Act,
the Company will only be liable in the event that after six months any creditor has not been paid in full. The subsidiaries have
also given similar guarantees in the event that the Company is wound up.
The entities subject to the Deed of Cross Guarantee are:
(cid:129) Tigers Realm Coal Limited; and
(cid:129) TR Coal International Limited.
The Deed of Cross Guarantee was established on 22 November 2012.
PAGE 82
A consolidated statement of comprehensive income and consolidated statement of financial position, comprising the Company
and controlled entities which are a party to the Deed, after eliminating all transactions between parties to the Deed of Cross
Guarantee for the year ended 31 December 2012 is set out below.
Statement of comprehensive income and retained earnings
CONTINUING OPERATIONS
Other income
Exploration and evaluation expenses
Share based payments
Administrative expenses
Loss on revaluation of Royalty Option Liability
RESULTS FROM OPERATING ACTIVITIES
Net foreign exchange gain/(loss)
Finance income
NET FINANCE INCOME/(EXPENSE)
GAIN/(LOSS) BEFORE INCOME TAX
Income tax (expense)/benefit
GAIN/(LOSS) FROM CONTINUING OPERATIONS
DISCONTINUED OPERATION
Loss from discontinued operation (net of tax)
GAIN/(LOSS) AFTER INCOME TAX
OTHER COMPREHENSIVE INCOME
Foreign currency translation differences for foreign operations
Income tax on other comprehensive income
TOTAL COMPREHENSIVE GAIN/(LOSS) FOR THE PERIOD
Retained earnings at beginning of year
Transfers to and from reserves
RETAINED EARNINGS AT END OF YEAR
GAIN/(LOSS) IS ATTRIBUTABLE TO:
Owners of the Company
GAIN/(LOSS) FOR THE PERIOD
31 December
2012
$’000
–
–
(859)
(6,994)
–
(7,853)
(27)
1,459
1,432
(6,421)
–
(6,421)
(13,039)
(19,460)
–
–
(19,460)
(5,319)
–
(24,779)
(24,779)
(24,779)
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 83
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2012
35. Deed of cross guarantee (CONTINUED)
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Prepayments
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Related party receivables
Deferred exploration, evaluation and development
Property, Plant and Equipment
Intangible assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Employee provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Deferred tax liabilities
Royalty agreement liability
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Share capital
Reserves
Retained earnings
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
31 December
2012
$’000
6,923
36
360
7,319
40,489
2,776
244
41
43,550
50,869
346
361
707
–
–
–
707
50,162
73,565
1,376
(24,779)
50,162
PAGE 84
36. Acquisition of business
There were no business combinations completed during the year ended 31 December 2012.
Prior Period
On 6 May 2011, Tigers Realm Coal (Cyprus) Pty Ltd (“TRC Cyprus”), Eastshore Coal Holding Ltd (“Eastshore”), Bering Coal
Investments Ltd (“Bering”) and Siberian Tigers International Corporation (“Siberian”) executed a series of agreements in relation
to the management of Eastshore, CJSC Northern Pacific Coal Company (“NPCC”) and the Russian subsoil licenses being the
Dalniy Subsoil License (Russian subsoil license numbered AND 13868 TP) and the Zapadniy Subsoil License (Russian subsoil
license numbered AND 13867 TP). As a result of these agreements TRC Cyprus is entitled to appoint the majority of the members
of the board of Eastshore (i.e. three out of five), providing it with the power to govern the financial and operating policies of Eastshore
so as to obtain the benefits from Eastshore’s activities. As a result the Group has consolidated Eastshore and its subsidiary NPCC
from 6 May 2011. Two of the agreements may give rise to future royalty obligations for Eastshore as follows:
(cid:129) Bering Royalty Agreement: Prior to 6 May 2011, TRC Cyprus held a 40% interest in Eastshore and had a right to subscribe for
shares equivalent to an additional 40% interest in two tranches subject to achievement of certain milestones, the final milestone
being completion of a bankable feasibility study in respect of the area of the Russian Subsoil Licenses or any other subsoil license
issued to Eastshore or its controlled subsidiaries (“the Eastshore Group”). If Bering fails to fund its proportion of expenditure after
completion of the bankable feasibility study, its remaining 20% shareholding will be diluted in exchange for a maximum royalty of
2% of gross sales revenue from the sale of coal produced from the area of a license held by a member of the Eastshore Group.
(cid:129) Siberian Royalty Agreement: Under this agreement, Siberian is entitled to a royalty of 3% of gross sales revenue from the sale
of coal produced from the area of the Zapadniy Subsoil License. The royalty payable under the Siberian Royalty Agreement is
in substance a “finder’s fee” payable to Siberian in compensation for originating the project. Accordingly, it will be accounted
for as an acquisition related cost under AASB 3 Business Combinations and recognised as an expense in the period incurred.
Further, as the royalty is contingent on the sale of coal produced from the area of the Zapadniy Subsoil License, it will not be
given accounting recognition until such sales occur or it is subject to early settlement by mutual agreement between the parties.
The Group has accounted for the acquisition of control of Eastshore as a business combination effective 6 May 2011. In accounting
for the business combination, the Group has recognised and measured the fair value of the consideration, the fair value of the
assets acquired and liabilities and contingent liabilities assumed, and the resulting non-controlling interest, at that date.
Under AASB 3 Business Combinations, the fair value of the consideration is measured as:
(a) the fair value of the Group’s existing 40% equity interest in Eastshore at 6 May 2011, which has been valued at $29,085
thousand, as the acquisition date fair value of the acquirer’s interest in the acquiree is substituted for the consideration when
no consideration is paid; and,
(b) the fair value of loans made by TIG to Eastshore as at 6 May 2011 valued at $14,322 thousand; and,
(c) the fair value of the option inherent in the Bering Royalty Agreement whereby Bering may choose to fund its proportion of expenditure
after completion of the bankable feasibility study or to have its interest diluted in return for a royalty stream, (“Bering Option”) valued
at $9,533 thousand at 6 May 2011. The Bering Option was subsequently re-valued to $16,872,332 as at 31 December 2011.
The movement consisted of $6,757 thousand being reflected in the statement of comprehensive income and $583 thousand
in the foreign currency translation reserve which represented the revaluation of the 6 May 2011 value.
The Group’s existing 40% equity interest in Eastshore had a carrying value of nil and accordingly its re-measurement to fair value
as part of the consolidation of the Eastshore group, which as at 6 May 2011 comprised Eastshore and its controlled entity, NPCC,
resulted in the recognition of a profit in the consolidated financial statements. Additionally the fair value of the assets, liabilities and
contingent liabilities of Eastshore and its controlled entity, NPCC the related deferred tax impacts and the non-controlling interest
of 60% held by Bering measured as its proportionate interest in the fair value of the identifiable assets, liabilities and contingent
liabilities of Eastshore and its controlled entity NPCC, were recognised in the consolidated financial statements. Any excess of the
fair value of the consideration over the fair value of the assets acquired and liabilities and contingent liabilities assumed (including
related deferred tax impacts), after taking into account the non-controlling interest therein, was recognised as goodwill. The loan
balances receivable from NPCC at 6 May 2011, were eliminated in the consolidated financial statements as post consolidation
of Eastshore and its controlled entity, NPCC, these balances were intra-group balances within the Group.
The net effect of the above transactions is an increase in net assets of $69,906 thousand, an increase in retained earnings of
$29,085 thousand (excluding the fair value adjustment of $6,757 thousand that took place on 31 December 2011) and recognition
of a non-controlling interest of $36,224 thousand ($31,422 thousand as at 31 December 2011). The majority of the increase in
net assets is attributable to mineral rights (an intangible asset) which will be amortised (as an expense) in the consolidated statement
of comprehensive income over the life of the relevant areas of interest from the commencement of commercial production.
The mineral rights intangible asset will be subject to impairment testing in accordance with the Group’s accounting policy for
exploration, evaluation and development assets. Any movements in the fair value of the option inherent in the Bering Royalty
Agreement between 6 May 2011 and its expiry will be recognised in profit or loss.
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 85
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2012
36. Acquisition of business (CONTINUED)
The fair values of identifiable assets and liabilities of Eastshore and its subsidiaries as at the date of acquisition were:
Carrying Value
acquisition date
$’000
Fair Value at
acquisition date
$’000
ASSETS
Cash and cash equivalents
Other current assets
Trade and other receivables
Property, plant and equipment
Exploration, evaluation and development
Mineral rights (including exploration, evaluation and development)
TOTAL ASSETS
LIABILITIES
Trade and other payables
Deferred tax liabilities
TOTAL LIABILITIES
TOTAL IDENTIFIABLE NET ASSETS AT FAIR VALUE
Gain on fair value of business acquired
Interest-bearing liabilities
Royalty agreement liability
Royalty agreement liability recognised by Eastshore Group
Non-controlling interest in Bering Option liability
Sub-total: Royalty agreement liability
CONSIDERATION
Cash paid
TOTAL CONSIDERATION
Non-controlling interest in assets acquired
Fair value of identifiable net assets
Total consideration
Goodwill
Non-controlling interest in consideration (Royalty agreement liability)
Non-controlling interest in net assets acquired
Net non-controlling interest
The cash flow on acquisition is as follows:
Net cash acquired with the subsidiary
Cash paid
NET CONSOLIDATED CASH INFLOW
PAGE 86
286
399
1,903
19
8,936
–
11,543
(572)
(642)
(1,214)
286
399
1,903
19
–
85,641
88,248
(572)
(17,770)
(18,342)
69,906
29,085
14,322
9,533
(5,720)
3,813
47,220
–
47,220
41,944
(69,906)
47,220
19,258
(5,720)
41,944
36,224
286
–
286
From the date of acquisition, Eastshore and its subsidiaries contributed nil to the Group revenue and a $278 thousand gain to the
overall Group gain of $12,841 thousand. If the acquisition of Eastshore and its subsidiaries had been completed at the beginning
of the annual reporting period, the consolidated statement of comprehensive income would have included nil revenue and a loss
of $5 thousand.
The fair values are based on a discounted cash flow estimate for the Amaam Project at the date of acquisition which included
various assumptions about the life of the mine including commodity prices, exchange rates, grade of resources, capital expenditure,
operating costs, production recovery rates, depreciation rates, and tax rates.
The fair value of the Bering Option liability was determined via Black and Scholes option valuation methodology and was also
impacted by the level of risk assumed in the agreement. The Bering Option has the characteristics of a put option over the
balancing 20% of the shares in NPCC.
The fair value of the Bering Option liability will be re-valued at each reporting date and the adjustment recognised in the profit or loss.
The deferred tax liability balance arises as a result of the requirement to recognise the difference between the fair value of the
assets and liabilities acquired and their tax bases.
The goodwill will be tested annually for impairment and if evident, the impairment will be recognised in the profit or loss.
There were nil transaction costs in relation to this acquisition.
37. Subsequent events
Subsequent to 31 December 2012 the following events have occurred which are items, transactions or events considered to be of
a material or unusual nature, which in the opinion of the Directors of the Company, are likely to affect significantly the operations
of the Group, the results of those operations, or the state of affairs of the Group, in future financial years:
(cid:129) On 22 February 2013 the Company concluded a placement of 106,000,000 fully paid ordinary shares to raise gross proceeds
of approximately $21,200 thousand at a price of $0.20 per share. The placement price represents a 7.3% discount to the volume
weighted average price over the five days trading up to and including 19 February 2013. The placement is organised in two tranches,
with the initial tranche of $12,500 thousand being fully completed, with 62,733,452 shares issued on 1 March 2013. The second
tranche of $8,700 thousand for 43,266,548 is subject to shareholder approval, which will be sought at the Annual General Meeting
on 23 April 2013. As part of the placement the Directors subscribed for 1,500,000 shares. These shares are also subject to
shareholder approval which will be sought at the Annual General Meeting. These proceeds will be used to fund drilling and
technical studies at Amaam, for drilling and technical studies at Amaam North, and for corporate costs and working capital
for the period to March 2014.
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 87
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2012
38. Auditors’ Remuneration
AUDIT SERVICES:
Audit and review of financial reports (KPMG Australia)
Audit and review of financial reports (Overseas KPMG firms)
OTHER AUDITORS – NON-KPMG FIRMS
Audit and review of financial reports
SERVICES OTHER THAN STATUTORY AUDIT
Other assurance services
Investigating accountants report services
Other services
Taxation compliance services (KPMG Australia)
Taxation compliance services (Overseas KPMG firms)
31 December
2012
$’000
31 December
2011
$’000
240
55
295
25
320
–
20
6
26
315
66
381
–
381
829
29
33
891
TOTAL SERVICES PROVIDED
346
1,272
PAGE 88
DIRECTORS' DECLARATION
For the year ended 31 December 2012
1.
In the opinion of the Directors of Tigers Realm Coal Limited (‘the Company’):
(a) the consolidated financial statements and the Remuneration report, identified within the Directors’ report, are in accordance
with the Corporations Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 31 December 2012 and of its performance for the
financial year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
2. There are reasonable grounds to believe that the Company and the group entities identified in note 35 will be able to meet any
obligations or liabilities to which they are or may become subject to by virtue of the Deed of Cross Guarantee between the Company
and those group entities pursuant to ASIC Class Order 98/1418.
3. The Directors have been given the declarations required by Section 259A of the Corporations Act 2001 from the chief executive
officer and the chief financial officer for the financial year ended 31 December 2012.
4. The Directors draw attention to note 2(a) to the consolidated financial statements, which includes a statement of compliance
with International Financial Reporting Standards.
Signed in accordance with a resolution of the Directors:
Dated at Melbourne this 8th day of March 2013.
Antony Manini
Chairman
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 89
LEAD AUDITOR'S INDEPENDENCE DECLARATION
Under Section 307C of the Corporations Act 2001
PAGE 90
INDEPENDENT AUDITOR'S REPORT
To the Members of Tigers Realm Coal Limited
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 91
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
For the year ended 31 December 2012
PAGE 92
SHAREHOLDER INFORMATION
1. Top 20 Shareholders as at 6 March 2013
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Tigers Realm Minerals Pty Ltd
Professor Bruce Nathaniel Gray
JP Morgan Nominees Australia Limited
Lodestone Equities Limited
Shimmering Bronze Pty Limited
Namarong Investments Pty Ltd
Nefco Nominees Pty Ltd
Antman Holdings Pty Limited
Foremost Management Services Pty Limited
Pine Ridge Holdings Pty Ltd
HSBC Custody Nominees (Australia) Limited
AJM Investco Pty Limited
HSBC Custody Nominees (Australia) Limited – A/C 2
Professor Bruce Nathaniel Gray
GP Securities Pty Ltd
UBS Wealth Management Australia Nominees Pty Ltd
Swerdna Nominees Pty Ltd
Asipac Group Pty Limited
Virtual Menu Pty Ltd
Sennen Trove Pty Ltd
Number of
Shares
119,832,920
54,025,609
18,942,510
16,666,667
15,712,114
14,570,241
12,700,000
11,867,943
8,924,694
8,333,334
7,706,106
7,569,240
7,441,680
6,000,000
5,789,240
5,494,884
5,360,000
4,506,278
4,275,000
4,167,499
% of Total
24.92%
11.23%
3.94%
3.47%
3.26%
3.03%
2.64%
2.47%
1.86%
1.73%
1.60%
1.57%
1.55%
1.25%
1.20%
1.14%
1.11%
0.94%
0.89%
0.87%
TOTAL FOR TOP 20:
339,885,959
70.67%
2. Voting rights of ordinary shares
On a show of hands one vote for each shareholder, and
On a poll, one vote for each fully paid ordinary share
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 93
SHAREHOLDER INFORMATION (CONTINUED)
For the year ended 31 December 2012
3. Distribution of Shareholders and Shareholdings as at 6 March 2013
Holding & Distribution
No. of Holders
Securities
1 to 1000
1001 to 5000
5001 to 10000
10001 to 1000000
1000001 and Over
TOTAL
16
66
74
400
237
793
3,740
212,007
627,284
17,949,502
462,163,936
480,956,469
%
0.00
0.04
0.13
3.74
96.09
100.00
4. Tigers Realm Coal Substantial Shareholders as at 6 March 2013
Tigers Realm Minerals Pty Ltd
Bruce N Gray
No. of Shares
% of Total
119,832,920
68,358,943
24.92%
14.21%
5. Shareholdings of less than a marketable parcel as at 6 March 2013
34 holders holding a total of 33,421 shares
6. Restricted Securities as at 6 March 2013
141,994,989 Ordinary Shares in Escrow until 29 August 2013
15,798,900 Unlisted options in Escrow until 29 August 2013
7. Unquoted Securities as at 6 March 2013
45,678,650 Unlisted options on issue
8. Compliance with Listing rule 1.3.2 (b)
The Company confirms that it used its cash, and assets in a form readily convertible to cash, from the time of admission
on 29 August 2011 to 31 December 2012 in a way consistent with its business objectives.
PAGE 94
CORPORATE DIRECTORY
DIRECTORS
Antony Manini (Chairman)
Owen Hegarty
Brian Jamieson
Craig Wiggill
COMPANY SECRETARY
David Forsyth
PRINCIPAL & REGISTERED OFFICE
Level 7, 333 Collins St
Melbourne, Victoria, 3000
Tel: 03 8644 1300
Fax: 03 9620 5444
Email: investorrelations@tigersrealmcoal.com
AUDITORS
KPMG
147 Collins Street
Melbourne, Victoria 3000
BANKERS
ANZ Banking Group Limited
100 Queen St,
Melbourne, Victoria 3000
LEGAL ADVISORS
Clayton Utz
Level 18, 333 Collins St
Melbourne, Victoria 3000
TIGERS REALM COAL ANNUAL REPORT 2012 PAGE 95
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PAGE 96
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