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Reply S.p.A.2018
ANNUAL
REPORT
A
Tigers Realm Coal Annual Report 2018 CONTENTS
1
6
Highlights
2018
Resources and Additional
Exploration Targets
3
8
Chairman’s
Letter
Operations
Review
4
20
Chief Executive
Officer’s Report
Financial
Report
OUR COMPANY
OUR VALUES
Four core values underpin everything we do
+ Respect – treating our people, communities and
stakeholders with respect and understanding.
+ 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.
+ Integrity – being honest and open in the way we
communicate and work. Doing what we say we will do.
+ Delivery – empowering our people to excel.
Consistently delivering on our plans and goals
Tigers Realm Coal Limited
Tigers Realm Coal Limited (Tigers Realm Coal, TIG,
or the Company) is an ASX-listed company producing
coking and thermal coals from its operation on the eastern
seaboard of Russia. TIG’s aim is to continue growing to
become a significant producer of coking coal supplying
the seaborne market.
The Company is focused on the exploration, development
and operation of its high-quality coking coal deposits and
mine on the eastern seaboard of Russia and is committed to
creating long term sustainable benefits for the communities
and region in which it operates.
The Company’s two coking coal projects, Amaam and
Amaam North in the Chukotka Autonomous Okrug (District)
of the Russian Far East are both within approximately
35km of port access and close to targeted North Asian
steel markets.
In 2018, the Company completed its second full year of
operations at Phase 1 of Project F, Amaam North, exporting
coal to customers in Japan, Taiwan, China, Korea, Cambodia
and Vietnam. Project F Phase 1 is a low operating and
capital cost starter project that will produce up to 750ktpa
of thermal and coking coal. This lays the foundation for
development of Project F Phase 2, planned to be a 1+Mtpa
operation producing predominantly semi-hard coking coal.
Ultimately, the Company believes Project F has the potential
to achieve production up to and in excess of 2Mtpa.
The Company’s principal and registered office is located
in Melbourne, the Russian head office being in Moscow.
ABN 50 146 732 561
HIGHLIGHTS 2018
+ Coal mined increased by 131%
to 576kt and coal sold by 138%
to 393kt.
+ Average gross margin of coal sold
increased from A$24.06 to A$57.39
per tonne.
+ Coal mined comprised of 311kt of
thermal coal and 265kt of semi soft
coal mined with a stripping ratio of
3.3: 1 (down from 3:8:1 in 2017).
+ Sale of thermal coal increased
by 74% to 214kt and metallurgical
coal by 326% to 179kt, customers
being steel makers, industrial and
energy users of coal in China,
Japan, Taiwan, Korea, Cambodia
and Vietnam.
+ Sales revenue increased by 228% to
A$52.2 million (“M”).
+ EBITDA improved by A$20.9m from
A$(5.6)M to A$15.3M, net profit
improving by A$18.0M to A$10.9M.
+ Net cash generated from operations
in 2018 improved by A$15.0M to
A$8.0M.
+ TRIFR (Total Reportable Injury
Frequency Rate) reduced to 3.7
per one million man hours from 4.5
in 2017 on the back of no reported
injuries in the second half of 2018.
+ Repaid in full the 2018 one-year
RUB 600M Sberbank working
capital facility in accordance with the
facility’s terms.
+ Signed and drew down on RUB 900
mln one year working capital facility
signed with Sberbank in December.
+ TIG was granted an Exploration
and Mining licence over Zvonkoye
deposit which is valid through 2038.
The Zvonkoye deposit is an eastern
extension of the coal basin running
through the Fandyushkinskoye
Mining Licence.
+ Mining and haulage capabilities
were increased by further
investment in mining and haulage
equipment comprising an excavator,
bulldozers, a front-end loader and
four haulage trucks. Port logistics
and handling capabilities improved
with the purchase of a coal crusher
and commencement of construction
of two 500 tonne barges.
1
Tigers Realm Coal Annual Report 2018 WE LOOK FORWARD WITH
OPTIMISM TO DELIVERING
SIMILAR GROWTH IN 2019 AND
TO FURTHER DEVELOPING OUR
LONG TERM GOAL OF BEING A
SUSTAINABLE, PROFITABLE AND
SIGNIFICANT SUPPLIER OF COAL
INTO THE GLOBAL MARKET.
2
Tigers Realm Coal Annual Report 2018
CHAIRMAN’S LETTER
The Company has continued to work
with all stakeholders to develop a
sustainable business creating value for
our shareholders, whilst being careful
about our environmental impact and
respectful of the communities within
which we work.
On behalf of the Board I would like
to thank management and staff
for their efforts and achievements
throughout 2018 as well as express
my appreciation for the continued
and ongoing support that we have
received from our customers and other
stakeholders. We look forward with
optimism to delivering similar growth
in 2019 and to further developing our
long-term goal of being a sustainable,
profitable and significant supplier of
coal into the global market.
Craig Wiggill
Chairman
Dear Shareholders,
I would like to take this opportunity to
thank all involved in our progression to
date for your ongoing support.
2018 saw the further implementation
of our plans for the development of
our mining operations in the Amaam
coal basin. The increases achieved
in production and sales from Amaam
North, together with an expansion of
our core customer base have been
well received by our stakeholders, who
have provided strong encouragement
to continue along our strategic growth
path. There is good market support for
our product, both in the metallurgical
as well as industrial and thermal
sectors, and many customers look
forward to the source diversification
options that we will bring as we grow
our business.
The past year has seen changes
in our management team with the
appointment of Dmitry Gavrilin as Chief
Executive Officer and Dale Bender as
Chief Financial Officer. Both Dmitry and
Dale have experience in the natural
resource sector and an understanding
of building new operations within
the region of the Russian Far East.
Accordingly, I am confident we are
well-placed to reap the benefits of the
investments the Company has made,
and which it will continue to make, in
our operational footprint in Chukotka.
Growth in both coal production and
sales revenue were achieved as a
result of mining and product quality
improvements, better logistics and
coal stockpile management processes
and, perhaps most importantly, a
developing operational mining team
under the leadership of our Deputy
General Director - Mining Operations,
Sergey Efanov. This performance
over 2018 has served to build our
readiness for the next proposed stage
of expansion which we aim to present.
3
Tigers Realm Coal Annual Report 2018 CHIEF EXECUTIVE OFFICER’S REPORT
to our customers and which in turn
manifested in an improvement in
pricing for our products.
We have undertaken an assessment
of key areas of our operations and our
human resource needs, addressing
those areas where we need to
strengthen the breadth and depth of
knowledge. With our strengthened
team and the knowledge gained
throughout the initial two years of
mining and shipping operations, we
are challenging prior expectations with
respect to the limits of our capacity.
As we have from the beginning
of our operations, throughout the
year we continued our commitment
to maintaining a safe working
environment, managing to improve our
overall safety performance relative to
the previous year, incurring only one
recordable injury despite a significant
growth in operations. That said, our
objective in this area is always zero,
and we will continue our emphasis
on workplace health and safety during
the new year.
Learning has and will be continued
to be encouraged not only within
the company but also within the
community in which we operate. In
2018, we increased support of the
local community, encouraging the
younger members of the local and
indigenous community to focus
on their formal education and their
appreciation of the community and
environment in which they live.
In 2018, the Company supported the
development of cultural awareness
of the Minority Indigenous People
of Chukotka, with a broad range
of initiatives culminating in a
memorandum of Understanding with
the Association of the Local Minority
Indigenous People of Chukotka
in November, providing a guiding
framework for our relationship with the
indigenous population as we continue
to grow our operations.
Our focus on achieving a more
comprehensive understanding of
the current and potential impact of
our operations on the environment
in which we operate has been an
important aspect of our development
and will remain embedded as a
priority in our strategic development
plans. We recognise that working with
and for the benefit of the community
and environment in which we operate
is a core element of a sustainable
business.
During 2018 we obtained the
Zvonkoye Exploration and Mining
licence, extended the Amaam
North exploration licence through
to 2025 and continued preparation
for exploratory drilling works both at
Amaam North and Amaam.
The weather issues encountered
during the latter half of the loading
season highlighted the need to focus
on the effectiveness and efficiency
of our activities and specifically our
port operations, with a focus on barge
capacity loading facilities in 2019. We
aim to address these issues through
a combination of capital investments
and improved operational practices.
Finally, I would like to take this
opportunity to thank the Board for
giving me the opportunity to play
an integral role in the exciting times
ahead for the Company. By continuing
to build our team and strengthening
our stakeholder relationships, we look
forward to developing our assets’
full potential.
Dmitry Gavrilin
Chief Executive Officer
I am pleased to present my report
on TIG’s achievements and
performance in 2018. Our Company
underwent significant operational
growth and improved performance
throughout 2018.
During 2018, we significantly ramped
up mining and sales volumes, reaping
the rewards from investments made
throughout the period from the TIG
shareholder rights issuance in 2016
through to 2018. We grew ROM
production by 327 thousand tonnes
(“kt”) or 131% to 576kt and sales
volumes by 228kt or 138% to 393kt.
The Company achieved its first net
profit of A$10.9 million and first cash
surplus from operations of A$8.0
million, both major milestones in the
Company’s development.
TIG has been on a steep learning
curve. We have learnt this year from
experiences ranging from the impact
of blizzards and rapid snow melts
on mining and haulage operations,
to managing the port operations
in various rough weather and
sea conditions. We have focused
on identifying our core business
processes and those processes in
the logistics chain specifically, which
require improvement and which will be
addressed in 2019. We have improved
our coal quality management and
stockpiling processes, enabling us
to deliver tighter coal specifications
4
Tigers Realm Coal Annual Report 2018
THE COMPANY ACHIEVED ITS FIRST
NET PROFIT OF A$10.9 MILLION
AND FIRST CASH SURPLUS FROM
OPERATIONS OF A$8.0 MILLION,
BOTH MAJOR MILESTONES IN THE
COMPANY’S DEVELOPMENT.
Tigers Realm Coal Annual Report 2018
5
RESOURCES AND ADDITIONAL EXPLORATION TARGETS
Coal Resources for Amaam North – Project F (100% Basis)
Resource Category
Measured C – coking
Indicated B – coking
InferredA – coking
IndicatedB – thermal
InferredA – thermal
Total (Mt)
Tonnage (Mt)
109.8
Relative
Density
1.44
Note: Coal qualities on an air dried basis.
Open Pit (Mt)
21.5
46.3
14.0
3.4
1.3
86.5
Underground (Mt)
-
5.7
17.6
-
-
23.3
Ash
(%)
16.9
Inherent
Moisture
(%)
1.16
Volatile
Matter
(%)
26.6
Fixed
Carbon
(%)
55.3
Gross
Calorific
Value
(kcal/kg)
6,770
Total (Mt)
21.5
52.0
31.6
3.4
1.3
109.8
Total
Sulphur
(%)
0.28
The Amaam North Project F Coal Resources are based on a Coal Resource Estimate prepared by SRK in December 2015 prior
to the commencement of mining and depleted by 0.75 million tonnes mined in 2017-18.
Coal ReservesE for Amaam North – Project F (100% Basis)
Coal Type
Coking
Thermal
Total (Mt)
Recoverable Reserves (Mt)
Marketable Reserves (Mt)
Proved
9.1
-
9.1
Probable
7.8
3.7
11.5
Total
16.9
3.7
20.6
Proved
5.8
-
5.8
Probable
5.8
3.7
9.5
Total
11.6
3.7
15.3
The Amaam North Project F Coal Reserves are based on a Coal Reserve Estimate prepared by MEC Mining in April 2016 prior to
the commencement of mining and depleted by 0.75 million tonnes mined in 2017-18.
Coal Resources for Amaam (100% Basis)
Resource Category
Measured C – coking
Indicated B – coking
Inferred A – coking
Total (Mt)
Open Pit (Mt)
3
89
336
428
Underground (Mt)
-
2
91
93
Tonnage (Mt)
521
Relative
Density
1.62
Note: Coal qualities on an air dried basis.
Ash
(%)
33.6
Inherent
Moisture
(%)
1.69
Volatile
Matter
(%)
23.3
Fixed
Carbon
(%)
39.1
Gross
Calorific
Value
(kcal/kg)
5,114
Total (Mt)
3
91
427
521
Total
Sulphur
(%)
0.84
The Amaam Coal Resource Estimate was prepared by Resolve Coal in July 2015.
Exploration TargetsD for Amaam and Amaam North (100% Basis)
Amaam North (Mt)
90 to 370
Amaam (Mt)
25 to 40
Total (Mt)
115 to 410
6
Tigers Realm Coal Annual Report 2018 Notes to Resources,
Reserves and Additional
Exploration Targets
The company is not aware of any new information
or data that materially affects the information
included in this report and at the time of this report
all material assumptions and technical parameters
underpinning the estimates continue to apply and
have not materially changed. Coal Resources and
Coal Reserves are reported in 100% terms (unless
otherwise stated). Coal Resources are reported
inclusive of the Coal Resources that have been
converted to Coal Reserves (i.e. Coal Resources
are not additional to Coal Reserves).
Competent Persons Statement – Amaam
The information compiled in this announcement
relating to exploration results, exploration targets or
Coal Resources at Amaam is based on information
provided by TIG and compiled by Neil Biggs, who
is a member of the Australasian Institute of Mining
and Metallurgy and who is employed by Resolve
Coal Pty Ltd, and has sufficient experience which
is relevant to the style of mineralisation and type of
deposit under consideration and to the activity he
is undertaking to qualify as a Competent Person
as defined in the 2012 Edition of the ‘Australasian
Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves’. Neil Biggs consents
to the inclusion in the report of the matters based
on his information in the form and context in which
it appears.
Competent Persons Statement –
Amaam North
The Amaam North Project F Coal Resources are
based on a Coal Resource Estimate prepared by
SRK in December 2015, undertaken prior to the
commencement of mining and extensive grade
control drilling in and adjacent to the current
area of open pit working. SRK’s estimate has
been reduced by 0.35 million tonnes Measured
Resource (Coking) and 0.4 million tonnes
Indicated Resource (Thermal) to reflect the
0.75 million tonnes of coal mined during 2017
and 2018, the first two years of production. The
sales comprised a mix of thermal and coking
coal to different customers. Subsequent to the
preparation of the December 2015 Resource
Estimate additional exploration drilling has
also taken place. There are indications that a
detailed examination of all data now available
may potentially lead to the interpretation of a
modified geological structure, including steeper
seam dips, across some parts of the resource
area, particularly to the east and possibly the
north of the current areas planned for working.
The Company is preparing to perform a Coal
Resource and Reserves Update in the second
half of 2019, after which the Coal Resources and
Reserves, as reflected herein, will be updated and
amended as required.
The information presented in this report relating to
Coal Resources is based on information compiled
and modelled by Anna Fardell, Consultant
(Resource Geology) of SRK Consulting (UK)
Ltd, who is a Fellow of the Geological Society of
London; and reviewed by Keith Philpott, Corporate
Consultant (Coal Geology) of SRK Consulting
(UK) Ltd, who is a Fellow and Chartered Geologist
of the Geological Society of London. Keith has
worked as a geologist and manager in the coal
industry for over 40 years and has sufficient
experience relevant to the style of mineralisation
and type of deposit under consideration and
to the activity he is undertaking to qualify as
a Competent Person as defined in the 2012
edition of the ‘Australasian Code for Reporting
of Exploration Results, Mineral Resources and
Ore Reserves’. Keith Philpott consents to the
inclusion in the report of the matters based on his
information in the form and context in which
it appears.
The information in this report relating to the
Project F Reserve Estimate is based on
information compiled by Maria Joyce, a consultant
to Tigers Realm Coal Ltd. and a Competent
Person who is a Chartered Engineer of the
Australasian Institute of Mining and Metallurgy.
Maria Joyce is a full-time employee of BHP. Maria
Joyce has sufficient experience that is relevant
to the style of mineralisation, type of deposit
under consideration and to the activity being
undertaken to qualify as a Competent Person as
defined in the 2012 Edition of the ‘Australasian
Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves’. Maria Joyce
consents to the inclusion in the report of the
matters based on her information in the form
and context in which it appears.
Note A – Inferred Resources
According to the commentary accompanying
the JORC Code an ‘Inferred Mineral Resource’ is
that part of a Mineral Resource for which quantity
and grade (or quality) are estimated on the basis
of limited geological evidence and sampling.
Geological evidence is sufficient to imply but
not verify geological and grade (or quality)
continuity. It is based on exploration, sampling
and testing information gathered through
appropriate techniques from locations such as
outcrops, trenches, pits, workings and drill holes.
An Inferred Mineral Resource has a lower level
of confidence than that applying to an Indicated
Mineral Resource and must not be converted to
an Ore Reserve. It is reasonably expected that
the majority of Inferred Mineral Resources could
be upgraded to Indicated Mineral Resources with
continued exploration.
Note B – Indicated Resources
According to the commentary accompanying
the JORC Code an ‘Indicated Mineral Resource’
is that part of a Mineral Resource for which
quantity, grade (or quality), densities, shape
and physical characteristics are estimated with
sufficient confidence to allow the application of
modifying factors in sufficient detail to support
mine planning and evaluation of the economic
viability of the deposit. Geological evidence is
derived from adequately detailed and reliable
exploration, sampling and testing gathered
through appropriate techniques from locations
such as outcrops, trenches, pits, workings and
drill holes, and is sufficient to assume geological
and grade (or quality) continuity between
points of observation where data and samples
are gathered. An Indicated Resource may be
converted to a Probable Ore Reserve
Note C – Measured Resources
According to the commentary accompanying the
JORC Code a ‘Measured Mineral Resource’ is
that part of a Mineral Resource for which quantity,
grade (or quality), densities, shape, and physical
characteristics are estimated with confidence
sufficient to allow the application of Modifying
Factors to support detailed mine planning and final
evaluation of the economic viability of the deposit.
Geological evidence is derived from detailed and
reliable exploration, sampling and testing gathered
through appropriate techniques from locations
such as outcrops, trenches, pits, workings and
drill holes, and is sufficient to confirm geological
and grade (or quality) continuity between points of
observation where data and samples are gathered.
A Measured Mineral Resource has a higher level of
confidence than that applying to either an Indicated
Mineral Resource or an Inferred Mineral Resource.
It may be converted to a Proved Ore Reserve or
under certain circumstances to a Probable
Ore Reserve.
Note D – Exploration Target
According to the commentary accompanying the
JORC Code an Exploration Target is a statement
or estimate of the exploration potential of a mineral
deposit in a defined geological setting where
the statement or estimate, quoted as a range of
tonnes and a range of grade (or quality), relates to
mineralisation for which there has been insufficient
exploration to estimate a Mineral Resource.
Any such information relating to an Exploration
Target must be expressed so that it cannot be
misrepresented or misconstrued as an estimate
of a Mineral Resource or Ore Reserve. The terms
Resource or Reserve must not be used in this
context.
Note E – Reserves
According to the commentary accompanying
the JORC Code a ‘Reserve’ is the economically
mineable part of a Measured and/or Indicated
Mineral Resource. It includes diluting materials
and allowances for losses, which may occur when
the material is mined or extracted and is defined
by studies at Pre-Feasibility or Feasibility level as
appropriate that include application of Modifying
Factors. Such studies demonstrate that, at the
time of reporting, extraction could reasonably
be justified.
7
Tigers Realm Coal Annual Report 2018 OPERATIONS REVIEW
Overview of TIG’s Russian Coal Project at the Amaam Coking Coal Field
Tigers Realm Coal Ltd’s (ASX: TIG)
(“TIG” or “the Company”) strategy is
to become a significant supplier of
coking coal to the seaborne market via
the progressive development of the
Amaam Coal Field.
The Amaam Coking Coal Field
comprises two large coal resource
deposits in the Far East of the
Russian Federation:
• Amaam North: a large coal basin, of
which the Project F licence area is
currently in the production expansion
phase. The results from Amaam
North’s operations potentially will
support the further development of
the Amaam Coking Coal Field as a
whole; and
• Amaam: a potentially large-scale
coking coal project, with estimated
production capacity in excess
of 5Mtpa, requiring a significant
investment in infrastructure to
support its development.
The Amaam and Amaam North
licences cover an area of approximately
709 km2, located in the Chukotka
Autonomous Okrug (District) of
Russia, approximately 230 km south
of the regional capital of Anadyr and
approximately 35 km to the south east
of Beringovsky township and port,
including TIG’s wholly-owned coal
terminal and port infrastructure.
Amaam North is comprised of:
• Exploration Licence No. AND
01203 TP (Levoberezhny “Left
Bank” Licence), being the broader
exploration licence from which the
following Exploration and Extraction
(Mining) Licences have been carved
out to date;
• Mining Licence No. AND 15813 TE
(Fandyushkinskoye Field – “Project
F”); and
• Mining Licence No AND 01314 TE
(“Zvonkoye”), issued in 2018 for a
20-year term.
In 2018, TIG generated its first
positive net cash inflow from
operations of A$8.0 million and net
profit of A$ 10.9 million, solely on
the back of Amaam North Project F
operational performance.
Amaam North’s further development
contemplates the expansion of
mining & logistics capabilities and
the construction of a coal handling &
processing plant (“CHPP”) in order to
maximise the resource base’s value.
Amaam has the potential to be a
significant mining operation. The
company’s Pre-Feasibility Study
defined an operation potentially
producing up to 6.5Mtpa of high-
quality coking coal from a combination
of open pit and underground mining
over a preliminarily estimated 20-year
mine life.
8
Tigers Realm Coal Annual Report 2018
Tigers Realm Coal Annual Report 2018
9
OPERATIONS REVIEW
continued
The Amaam coal deposit is currently
comprised of the following licences:
• Exploration Licence No. AND
012787 TP;
• Exploration and Extraction (Mining)
Licence No. AND 01278 TE
(“Zapadny”); and
• Exploration and Extraction (Mining)
Licence No. AND 01288 TE
(Nadezhny).
Amaam is expected to require
significant investment in infrastructure,
including a CHPP and logistics
infrastructure.
The ability to optimally integrate the
Amaam project into the overall Amaam
Coking Coal Field development
and maximise the extent to which
investment is made both in processing
capacity and logistics infrastructure is
currently under review.
TIG’s strategy is focused on the
managed development of the Amaam
Coking Coal Field, currently envisaged
in three stages:
Stage 1
Development of Amaam North up
to a 1.0+ Mtpa primarily coking
coal operation shipped through the
Beringovsky Port, split into 2 phases:
• Phase One: up to 0.75 Mtpa utilising
existing infrastructure and mining
and haulage fleet;
• Phase Two: 1.0+ Mtpa, including
construction of a CHPP, an upgrade
of mine and port infrastructure, and
increasing mining and haulage
fleet capacity.
Stage 2:
Amaam North production increases
up to 2 Mtpa.
Stage 3:
Development of Amaam, including
the establishment of an all year-round
logistics channel capable of servicing
expanded production and processing
capacity.
TIG currently is assessing the
possibility of increasing expected
Stage 2 Amaam North coal production
and sales volumes. Management is
optimistic that a material increase is
achievable. These plans, however,
have not yet been finalized. An update
will be provided upon achieving an
appropriate stage of progress.
Operations Update
Health and Safety
The health and safety of our team and
those in our operational footprint is
and will always be at the forefront of
our considerations. During 2018, we
built on the health and safety culture
established in 2017, implementing
a number of new and expanding on
existing processes and practices
aimed at maximising both workplace
health and safety as well as the health
and safety of the community at large.
The number of minor incidents fell
throughout the year, the second half of
2018 being incident-free.
Workplace health and safety is
premised on information and
awareness, monitoring and feedback.
In 2018, we continued and expanded
the Take 5 – STOP hazard analysis
system, enforcement of a zero alcohol
and drugs tolerance regime, and
expanded on staff updates, training
and awareness reviews.
The company continued HSE
inductions for all new employees in
addition to supplementary HSE reviews
for existing employees. HSE risk
assessments and incident follow-up
procedures were further expanded this
year, emphasising working conditions
throughout our operations, including
but not limited to:
• road safety culture and traffic
management measures considering
the effect of weather and road
conditions, driver health and well-
being, equipment condition and
incident follow-up actions;
• staff well-being: the role of staff
scheduling, rest and the effects of
fatigue and diet
• workplace organisation and safety;
• guidance and awareness: weekly
safety briefings, cautioning and
informative signage on all objects;
• the continued evolution of mine
rescue team operational guidelines;
and
• safety passports maintained to
ensure active awareness of the
importance which safety plays in
the execution of daily activities.
TIG’s cumulative Total Reportable
Injury Frequency Rate (“TRIFR”)
decreased to 3.7 per million hours
worked, down from 4.5 at the end of
2017, with one reportable incident
during 2018, down from two in 2017.
Based on lessons learnt during
2018, the organisation at site was
restructured to facilitate clearer lines
of control, authority and responsibility
in order to increase the emphasis on
a safety culture in the workplace and
in conjunction with other measures
will lay the cornerstone of future staff
safety and well-being.
Environment and Community
Relations
Environment
A successful business is founded
on sustainable operations and
development. TIG places a strong
emphasis on developing sustainable
and effective operational performance,
sustainability being pursued both
through awareness of and striving for
the achievement of high-performance
standards that are achievable with
minimal effect on the environment in
and around our operations.
In 2018, focus was placed on the
following areas in which our operations
may influence the surrounding
environment:
• water and waste water;
• overburden removal, its storage
and use;
• waste by-products and their
destruction/recycling and reuse; and
• coal dust.
10
Tigers Realm Coal Annual Report 2018
During 2018, waste overburden
removed was, where possible,
recycled and utilised in the ongoing
maintenance and enhancement of
the pit to port and pit to dump road
infrastructure. Furthermore, 25 tonnes
of waste overburden was used by the
local administration for use in its own
programmes during 2018.
Camp, pit and road water management
programmes were implemented during
2018, appropriately enhanced water
run-off and drainage measures and
independent laboratory monitoring
on a monthly basis for the effects of
waste water release and other effects
of the mining and production process
on mine camp well-water and the
Fandyushinskaya and Povorotnaya
Rivers. The results of all tests
undertaken to date have
been positive.
An assessment of waste by-products
of the mining, production and support
operations was made with a view to
identifying recycling opportunities. The
recycling of paper products, worn tyres
for use on the barge fleet as protectors
and oils used by our mobile fleet
reused for heating fuel being just some
examples of recycling efforts during
the year. All production waste recycled
was done so strictly in accordance
with the relevant regulations.
On a monthly basis, soils under and
around the coal stockpiles and waste
dumps are tested in order to monitor
environmental regulation compliance.
A tanker was also acquired to water
down the transport road, minimising
the effect of excessive dust blow
off the haulage road during the
summer months.
In September, an independent
environmental impact study was
commenced, evaluating the potential
effect of the coal stockpiles and
operations at the Beringovksy Port
on the Bering Sea ecosystem. Stage
one of this process comprises taking
necessary base comparative samples
to assess the current soil content,
works continuing in 2019.
Tigers Realm Coal Annual Report 2018
11
OPERATIONS REVIEW
continued
Community
In 2018, TIG played a leading role in a
number of events and initiatives aimed
at supporting the local community, in
particular the indigenous population.
• Senior Citizens’ Day: supporting the
younger generation’s interaction
with the older generation, a vitally
important aspect of knowledge,
experience and cultural transfer.
During 2018, TIG participated in and/or
supported the following local initiatives/
events encouraging the support of
local cultural heritage and the role of
education in the local community:
• Eynev 2018 Festival: In August, in
conjunction with the “Association of
the Minority Indigenous Chukotkan
People”, TIG played a significant
role in the organisation of the Eynev
Festival, a celebration of the culture
and heritage of the local indigenous
people;
• various joint programmes aimed
at supporting local families and
educators in developing life critical
knowledge including the importance
of education in general career
awareness and development
programmes and awareness of the
environment in which they live; and
The importance which TIG places on
the local community was underlined
by its participation in November in
the 17th Annual Conference of the
Regional Organisation “Association
of the Indigenous Chukotkan
People”, playing a leading role in
the round table discussion on the
“Development of the Far East Trade
Zone and the Indigenous People”.
TIG’s Chief Executive Officer, Dmitry
Gavrilin, and Deputy General Director
- Mining Operations, Sergey Efanov,
represented TIG and spoke about
the Company’s development plans,
ecological and environmental safety,
HR policy and other subjects relevant
to ongoing sustainable operational
development in the region. Upon
conclusion of the round table
discussions, an agreement was
signed by TIG and the Association,
supporting the coordinated assistance
and support of the Indigenous
Chukotkan People.
Licencing and Exploration
Activities
The coal realisation pipeline
commences with the identification
and realisation of coal resources
and reserves.
During 2018, licensing activities
focused on:
• receipt of discovery certificate for the
Zvonkoye licence area;
• issuance of the Zvonkoye Mining
and Exploration Licence and
subsequent commencement of
geological exploration project
design works; and
• extension of the Amaam North
exploration licence No.AND 01203
TP to 2025.
As at 31 December 2018, TIG has the following licences in effect:
Licence Holder
Amaam North
BPU1
BPU1
BPU1
Amaam
NPCC2
NPCC2
NPCC2
Site
Licence No.
Licence Type
Expiry Date
“Project F”
“Zvonkoye”
“Levobrezhny”
AND 15813 TE
AND 01314 TE
AND 01203 TP
“Zapadny”
AND 01278 TE (formerly AND 01225 TE)
“Nadezhny”
AND 01288 TE
Mining
Mining
Exploration
Mining
Mining
“General”
AND 01277 TP (formerly AND 13867 TP)
Exploration
Dec 2034
Sep 2038
Dec 2025
Mar 2033
July 2037
Dec 20192
1LLC Beringpromugol (“BPU”), wholly owned Tigers Realm Coal Limited (“TRC”) subsidiary. 2AO Northern Pacific Coal Company (“NPCC”), 80% beneficially owned
by TRC. 3Planned to be extended in 2019.
12
Tigers Realm Coal Annual Report 2018 IN 2018, TIG PLAYED A LEADING
ROLE IN A NUMBER OF EVENTS
AND INITIATIVES AIMED AT
SUPPORTING THE LOCAL
COMMUNITY, IN PARTICULAR
THE INDIGENOUS POPULATION.
Tigers Realm Coal Annual Report 2018
13
OPERATIONS REVIEW
continued
Amaam North Snapshot
During 2018, TIG produced 576kt of
coal mined, a 131% increase over
the 249kt of coal mined in 2017
and coal sales volumes of 393kt,
representing a 138% increase over
2017 sales of 165kt. Coal shipments
were materially impacted by unusually
poor loading conditions during the
shipping season, primarily in the latter
stages. This reinforced to management
the necessity to identify the capital
investments and process improvements
needed to achieve substantially higher
throughput capacity, including but
not limited to fleet management and
optimisation of productivity rates,
enhancement of the haulage road,
multiple dock loading points and
investment in port loading infrastructure
both on the land (stackers) and
the water (barges), submitting an
application to expand the legal size of
barges permitted to operate within the
Beringovsky harbour area.
Mining Operations
In 2018 TIG faced a number of issues
which new mines encounter as they
expand the open cut mine both in
its breadth and depth. Mining and
haulage operations are run on a two
twelve-hour shift per day basis.
Coal mining commenced in the central
and western zones of the Project F
licence area, mining deeper down
to the 115 and 110 benches in the
central and western pit zones, after
commencing at the 135 and 150 bench
levels at the start of 2018. Mining in
the western zone commenced after
the construction of the necessary
infrastructure, including a road spur
from the western zone to the pit to
waste dump road.
14
Tigers Realm Coal Annual Report 2018
Coal mined to date has primarily
been from the upper sections of
Seam 4, the proportion of semi-soft
coal to oxidised coal increasing from
approximately 10% in the first quarter
of 2018 to between 60-90% at the end
of October as mining moved deeper,
until switching mining operations to
the eastern flank of the existing pits in
November, when again the proportion
fell to an average of 10% for the last
two months of 2018 as the upper,
oxidised sections of the seam
were mined.
Initial mine planning did not identify
the extent of faulting and deformation
present in certain sections of the
strike. Consequently, data from actual
mining results was used to modify the
mine development plan throughout
the course of 2018. However, despite
this, 1,900kbcm of waste overburden
was removed at a stripping ratio of
3.3bcm:t, in line with expectations.
In 2019, mining operations will initially
focus on the eastern pit and to a lesser
extent on the central pit. Early mining
at the eastern pit indicates greater
challenges than had been identified
in the exploratory drilling phase. These
include the steepness of the dipping,
greater faulting and seam deformation.
Haulage Operations
Haulage operations centre around our
fleet of Scania trucks. At the beginning
of 2018, we had thirteen 28t trucks
each with a daily haulage capacity
of approximately 200t. In June the
haulage fleet was augmented by a
further two trucks and another two that
were delivered in September, bringing
the total fleet to seventeen by year end.
Due to capital repairs required on three
trucks, the effective maximum haulage
capacity peaked at fourteen trucks per
day during 2018.
Peak haulage rates were achieved in
August and September with monthly
haulage in excess of 60kt. Lower
haulage rates in May and October
occurred primarily due to spring
thaws and blizzards and weather
related logistics issues impacting port
activities in general and specifically the
delivery and installation of spare parts
and tyres on a timely basis. Mining and
haulage rates improved in the second
half of November subsequent to
the commencement of unloading
inbound freight.
The key learnings from 2018 were to
maintain the condition of the road to
minimise fleet wear and tear, focus on
fleet management practices, continue
the emphasis on road safety culture
and driving conditions to minimise
traffic related incidents and improve
our logistics capabilities to ensure
sufficient spare parts and tyres are on
the ground as and when required.
Sales and Marketing
TIG’s three primary products during
2018 were:
• thermal coal (with CV ranging from
5300 kcal/kg to 6000 kcal/kg (NAR);
• semi-soft coking coal; and
• high ash semi-soft coking coal.
The high ash semi-soft was a new
product in 2018 which helped TIG
to build on strategically important
relationships with steel producers.
TIG thermal coals were targeted at
smaller industrial users with port
restrictions (i.e., buyers who require
delivery in smaller vessels like those
utilised by TIG).
The semi-soft coal was sold to
Japanese, Korean and Chinese
steel makers.
TIG’s shipping season commenced
later than anticipated in June due
to the combined effect of a delay in
opening the new Customs post and
some ice flows remaining longer than
anticipated. We closed our shipping
season officially on 23 November. For
the year ended 31 December 2018,
TIG sold 393kt of coal, comprised of
214kt of thermal and 179kt of semi soft
coals. This is an increase of 138% on
2017 total sales of 165kt.
The Company’s sales efforts effectively
commenced at the start of 2018, with
preparation for the 2018 shipping
season. The initial focus was on
working with the team at Beringovsky
to increase the stockpile footprint,
and stockpiling practices with the
objective of enhancing quality control
procedures. These objectives were
generally achieved, with all cargoes
meeting contract coal quality
requirements.
The pricing of TIG’s coal products
is highly correlated with the relevant
market indices for the various product
qualities, adjusted for freight differential
given the location and size of the
vessels able to be currently serviced
at the Beringovsky port (handymax
and supramax). In general, due to the
smaller relative size of the vessels,
despite our geographic advantage,
the cost of shipping from our port to
Northern Asian markets is up to US$
10 - 12 per tonne higher than similar
products from Australia shipped in
larger vessels.
TIG has worked closely throughout
2018 with the port operator,
shipping companies, agents and
end customers to achieve good
shipping performance. The Company
views overall sales and marketing
performance in 2018 as being positive,
specifically in relation to:
• expansion of TIG’s markets and
customer base;
• the expansion of TIG’s product
range to include a technically
acceptable high ash semi-soft coal;
• satisfactory completion of several
new trial cargoes;
• retention and expansion of
relationships developed in 2017;
• attraction of new and strategically
important customers both for semi
soft and thermal coals;
• improvement of coal handling and
loading processes at the port;
• improvement of product quality
control;
15
Tigers Realm Coal Annual Report 2018
OPERATIONS REVIEW
continued
Summary Key Sales Indicators
No. of sales contracted
Thermal coal 5
Semi-soft coal 5
Contractual quality terms
achieved
New end user customers
(sales kt) in 2018
All cargoes
All cargoes
2 Japanese general
industrial
2 steel majors
(Japan and Korea)
Expansion in 2018 of sales to
existing 2017 end user customers
1 repeat cargo to Taiwan
Repeat cargoes to
steel majors in Japan
and China
Unsatisfied demand
1 Japanese cement mill
-
*One vessel had both thermal and semi-soft coal loaded.
• port stockpile expansion; and
• further experience gained from its
second year of operations which will
form the basis of expected further
investments in resources as well as
enhancing operational performance.
In January 2019, the Company has
already commenced the process of
meeting with key strategic partners to
discuss 2018 performance and plans
for the 2019 shipping season. TIG’s
products are becoming well accepted
in the market. In particular, demand for
our semi-soft coking coal (including
new trial cargoes) is likely to exceed
supply in 2019.
The Company would like to take the
opportunity to thank all customers,
logistics agents and shipping
companies with whom we have worked
closely to date and it believes it is well
placed to build further during 2019
on the sales, marketing and logistics
relationships established to date.
Beringovsky port operations
The 2018 shipping season effectively
commenced with preparations
undertaken in the second quarter of
2018. In June the Customs checkpoint
upgrade was completed and fully
commissioned, albeit later than
expected due to weather conditions. In
addition to a delayed commencement
to the shipping season, the last two
months of the season were severely
impaired by prevailing weather
conditions. However, when weather
and loading conditions were workable,
port performance achieved expected
productivity levels.
Plans were put in place to expand
and improve the coal stockpiles at the
Beringovsky Port Coal Terminal, both
increasing coal stockpile capacity
from 220-250kt to 350-380kt as well
as stockpiling methods. Coal was
analysed and stockpiled to facilitate,
as necessary, any blending activities
required. Port operations were more
customer than mine focused as
compared to 2017.
Throughout the season TIG had an
average of seven 100t barges available
for vessel loading. Daily loading rates
fluctuated between 770t per day and
940 t per day. Daily loading rates were
influenced by a number of factors
including parallel loading for the first
time, general cargo loading obligations
and the weather itself.
Depending on weather conditions, the
size of the vessel and its draft during
loading, all three currently available
anchorage points were used to effect
loading in 2018. Due to ice conditions
at the port, loading commenced
later than expected and by the end
of June TIG had loaded 28kt when it
was expected to have loaded 75kt,
increasing the challenge of achieving
our objective of between 440kt and
495kt of coal shipped during 2018.
Extended, unexpected storm
conditions were experienced at the
start of August, the end of September
and October and throughout the last
weeks of the season in November.
The extent of the storms throughout
the season, the subsequent need to
dredge the harbour of silt after each
storm and the prevailing wind and
swell conditions all influenced the
ability to load our coal products and
unload general cargo, including spare
parts and tyres.
Due to the ongoing adverse weather
conditions, certain equipment and
spare parts were required to be
unloaded at Anadyr, the nearest open
port. To enable the safe transportation
of the equipment, spares & tyres,
TIG is required to wait for adequate
freezing to occur before land-based
transportation is possible.
At the end of October, 3,500 tonnes
of diesel fuel for the winter season
were delivered by tanker and stored
at the Beringovsky fuel farm. Diesel
generators are our primary source of
electricity, in addition to being used for
our mining equipment and barges.
The primary learnings from 2018
port operations are the necessity to
increase loading capacity and optimise
port operations to effectively utilise that
time when weather permits the safe
loading of our coal onto vessels for
delivery to our customers. To this end,
amongst other planned acquisitions
and process enhancements, the
company entered into an agreement
for the construction and delivery of
two 500t barges. The barges are
expected to be commissioned and in
operation by the first half of the 2019
shipping season.
The Company is also reconsidering the
way in which operations at the port are
undertaken, including the performance
of land-based coal handling operations
and stevedoring activities. The
agreement with the incumbent service
provider is also part of an overall
port management and performance
process review.
16
Tigers Realm Coal Annual Report 2018 2018 Beringovsky Port Operations:
TIG coal loaded
TIG coal shipped
Beringovsky port
loading capacity
Average productivity
per barge
Average loading days
per barge
Lost barge capacity
due to weather
June
July
Aug
Sept
Oct
Nov
Total
29
111
-
5
98
6.2
99
99
7.8
93
110
7
49
44
7
12
42
7
393
393
952
943
864
942
812
770
kt
kt
# of
barges
kt/
day
days
5.9
19.1
14.7
14
8.2
2.8
days
8.8
9.5
13.1
14.8
22.8
20.21
Tigers Realm Coal Annual Report 2018
17
OPERATIONS REVIEW
continued
Amaam Overview
TIG holds an 80% interest in the
Amaam tenement and licences
covering 231km2, measured
approximately 32km east-west and
9km north-south, the tenement located
30km from the Bering Sea coast.
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.
With the company’s primary focus
on Amaam North, operational activity
during 2018 at Amaam was limited to
undertaking further exploratory drilling
and licencing activities. During 2018
exploratory drilling was undertaken,
preparatory geological work being
performed as part of future drilling and
geological interpretive activities.
Government Relations
As has been the case since the
initiation of TIG’s activities in the
region, the Federal and Chukotka
District Governments continued their
positive support of our projects and
the economic development of the Far
East of Russia in general.
The company’s projects are located
within the Chukotka Advanced
Development Zone (ADZ), established
by the Russian Government in order
to promote the development of and
investment in the Russian Far East.
In 2018, the Company continued to
benefit from advantageous customs
and employment regulations, in
addition to exemptions and reductions
in various taxes and duties for the
first five to ten years of the project’s
operations.
The Company continued its active
support of and participation in the
Eastern Economic Forum held in
Vladivostok. In September, our new
Chief Executive Officer made a number
of presentations on the Company’s
positive experiences working in
Russia, the stage of our development,
and performance to date. The forum
was well attended by Russian and
international representatives of
government and industry. Several of
TIG’s existing and potential customers
also participated.
Corporate Activities
In December 2018, TIG’s wholly
owned subsidiary LLC Beringpromugol
(“BPU”) repaid the outstanding
balance of the RUB 600 million
working capital financing obtained in
2017. Furthermore, BPU continued
and expanded its relationship with
Sberbank, Russia’s largest commercial
bank, and has signed a new working
capital facility (“2019 WC Facility”) with
the following key terms:
• RUB 900 million (A$18.5 million),
to be drawn down no later than
September 2019;
• nominal interest rate of between
10.2% and 11.2%;
• security for the facility comprises
the pledge of TIG owned mining
fleet and the provision of cross
guarantees by TIG’s Russian
subsidiaries;
• repayment schedule from
September through December 2019;
and
• a covenant requiring three of TIG’s
major shareholders maintaining their
existing shareholdings above certain
minimum levels throughout the
facility’s term.
The 2019 WC Facility is aimed at
providing support to short-term
liquidity prior to the commencement
of our 2019 shipping season. As of
31 December 2018, RUB 74 million
(A$1.516 million) were drawn down,
the unused balance of the facility being
RUB 826 million (A$16.825 million).
18
Tigers Realm Coal Annual Report 2018 FINANCIAL REPORT
20
42
49
50
51
52
Directors’
Report
Corporate Governance
Statement
Consolidated Statement
of Financial Position
Consolidated Statement
of Comprehensive Income
Consolidated Statement
of Changes in Equity
Consolidated Statement
of Cash Flows
53
97
98
99
104
106
Notes to the Consolidated
Financial Statements
Directors’
Declaration
Auditor’s Independence
Declaration
Independent
Auditor’s Report
Shareholder
Information
Corporate
Directory
19
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Directors’ report
For the year ended 31 December 2018
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 2018.
1.
Directors, Alternate Director and Company Secretary
The Directors of the Company at any time during or since the end of the financial year are:
Name
qualifications and
independence
status
Mr Craig
Wiggill
Independent
Chairman
BSc Eng.
Experience, special responsibilities and other directorships
Mr Wiggill was appointed Independent Chairman of the Company on 1 October 2015. Mr Wiggill has served
as a Non-Executive Director of the Company since being appointed 20 November 2012. Mr Wiggill joined the
Nomination and Remuneration Committee commencing 10 December 2015. Mr Wiggill has extensive
experience in the global mining industry including over 25 years in the coal sector, the majority of his experience
being within the Anglo- American Plc group. Mr Wiggill is currently the Chairman (non-executive) at Buffalo
Coal Corp (CVE: BUF) which has its operating entities in South Africa. In addition, he is the Chairman (non-
executive) of globalCOAL, a company registered in London, the principal activities of which are the
development of standardised contracts for the international coal market and the provision and management of
screen-based brokerage services for the trading of physical and financial coal contracts. His most recent
executive role was as Chief Executive Officer (“CEO”) – Coal Americas at Anglo Coal, where he established
and developed the Peace River operation in Canada and co-managed joint venture projects at Cerrejón and
Guasare. He has also held leadership roles covering commercial, trading and marketing responsibilities,
corporate strategy and business development for Anglo American. He holds no other directorships with ASX
listed entities.
Dr Bruce Gray
Non-executive
Director
MB, BS, MS,
PhD, FRACS
Dr Gray was appointed as a Non-Executive Director of the Company on 1 October 2015. Prior to this, Dr Gray
had been appointed as a Non-Executive Director of the Company on 25 October 2013, resigning on 28 March
2014. Dr Gray established and operated two highly successful start-up businesses in the medical sector. Prior
to that he was Professor at the University Western Australia and has held numerous administrative positions
with regional, national and international organisations. He has published more than 200 articles in the global
scientific press and has received numerous awards for contributions in the medical field and for Australian
entrepreneurship. Dr Gray currently manages a private investment fund. Dr Gray has been a member of the
Nomination and Remuneration Committee since 8 September 2016. He holds no other directorships with ASX
listed entities.
Mr Owen
Hegarty
Independent
Non-executive
Director
BEc (Hons),
FAusIMM
Mr Hegarty has more than 40 years’ experience in the mining industry. He had 24 years with the Rio Tinto
Group, then founded and led Oxiana Ltd, now OZ Minerals Limited, for 12 years. He is a founder of Tigers
Realm Coal Ltd. He founded and is currently Executive Chairman of EMR Capital, a mining private equity firm.
Through to the end of 2016, he was Vice Chairman and Non-Executive Director of Fortescue Metals Group Ltd.
Mr Hegarty has received a number of awards recognising his service to the mining industry and presently serves
on a number of Government and industry advisory groups. Mr Hegarty was appointed a Director of the Company
on 8 October 2010 and is Chairman of the Audit, Risk and Compliance Committee and of the Nomination and
Remuneration Committee. Mr Hegarty is a Non-Executive Director of ASX listed Highfield Resources Ltd. He
holds no other directorships with ASX listed entities.
20
Tigers Realm Coal Annual Report 2018
4
Tigers Realm Coal Limited
Directors’ report
For the year ended 31 December 2018
1.
Directors, Alternate Director and Company Secretary
Name
qualifications and
independence
status
Mr Ralph
Morgan
Non-executive
Director
BA, MPhil
Experience, special responsibilities and other directorships
Mr Morgan was appointed Non-Executive Director of the Company on 1 April 2014. Mr Morgan is a partner
at Baring Vostok Capital Partners Group Limited (“BVCP”) with responsibility for investment projects in the
Russian Federation (“Russia”), the Commonwealth of Independent States (“CIS”) and Mongolia. Prior to
BVCP, Mr Morgan was Managing Director at Goldman Sachs in the Global Natural Resources Group from
2009 to 2012 and was responsible for the investment banking division’s advisory work with natural resource
clients in Russia and CIS. From 2004 to 2008, Mr Morgan was a Managing Director and Chief Operating
Officer at PJSC MMK Norilsk Nickel and prior to that role he was a partner with the Moscow office of
McKinsey and Company. Mr. Morgan is a Non-Executive Director of PJSC Magnitogorsk Iron & Steel Works
and a Director of the U.S.-Russia Business Council. Mr Morgan holds a BA (Political Science, Yale
University) and MPhil (Russian and East European Studies, Oxford University). Mr Morgan is a member of
the Nomination and Remuneration Committee and the Audit, Risk and Compliance Committee. He holds no
other directorships with ASX listed entities.
Mr Tagir
Sitdekov
Non-executive
Director
MBA
Mr Sitdekov was appointed a Non-Executive Director of the Company on 1 April 2014. Mr Sitdekov is
currently a First Deputy General Director of Russia Direct Investment Fund (“RDIF”) and has been involved
in the Russian private equity market for over 11 years. Mr Sitdekov’s most recent executive role was as
Managing Director at A-1, a direct investment arm of Alfa Group, Russia’s largest private conglomerate. Mr
Sitdekov has participated in a number of landmark private equity transactions across a range of industries.
From 2003 to 2005 he was CFO at power generating company OJSC Sochi TES (a subsidiary of RAO Unified
Energy System of Russia) and prior to that role he was a Senior Consultant at Creditanstalt Investment Bank
for 2 years. Mr Sitdekov holds an MBA (University of Chicago Booth School of Business, London). Mr
Sitdekov is a member of the Audit, Risk and Compliance Committee. He holds no other directorships with
ASX listed entities.
The Directors have all been in office since the start of the financial year to the date of this report.
Alternate Director
Mr Nikolay
Ishmetov
Alternate
Director
MSc in Finance
Mr Ishmetov was appointed as an alternate director to Tagir Sitdekov on 1 July 2017.
Mr Ishmetov is currently a Senior Associate at RDIF and has been involved in the Russian private equity
market for over 7 years. Mr Ishmetov has been serving for over 6 years as an alternate director on the Board
of Directors of MD Medical Group, a leading healthcare operator in Russia. Prior to joining RDIF, Mr
Ishmetov worked in the M&A department of Societe Generale, where he participated in a number of cross
border M&A deals in various sectors.
Company Secretary
Mr Forsyth has over 40 years’ experience in engineering, project development and mining. 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 Tigers Realm Minerals Pty Ltd as Director and
Company Secretary in 2009. Mr Forsyth was appointed Company Secretary on 8 October 2010.
Mr David
Forsyth
Company
Secretary
FGIA, FCIS,
FCPA
5
21
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2018
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:
Directors’ meetings
Meetings of committees of Directors
Nomination and
Remuneration
Audit, Risk &
Compliance
A
9
9
9
9
9
9
B
9
8
9
9
6
9
A
3
3
3
3
-
-
B
3
3
3
3
-
-
A
6
-
6
6
6
-
B
6
-
5
6
3
-
Mr Craig Wiggill
Dr Bruce Gray
Mr Owen Hegarty
Mr Ralph Morgan
Mr Tagir Sitdekov
Mr Nikolay Ishmetov*
A = Number of meetings held
B = Number of meetings attended
* The number of meetings attended by the Alternate Director in his capacity as a standing invitee. Mr Ishmetov is not obliged to
attend.
3.
Principal activities
The principal activities of the Group are the identification, exploration, development, mining and sale of coal from deposits in the
Far East of the Russian Federation.
4.
Operating and financial review
Business Strategies and Group Objectives
The Group’s objectives encompass the development of the Amaam Coking Coal Field, comprising its two, well-located, large
coking coal projects in the Far East of Russia:
•
•
Amaam North: a low-cost starter project providing a fast track to production and earnings, leveraging infrastructure
investments made to date and supporting the development of the entire Amaam Coking Coal Field; and
Amaam: a large-scale coking coal project, with estimated production capacity of up to 6.5 million tonnes per annum
(“Mtpa”) of production from dedicated new infrastructure.
Amaam North
Amaam North, and specifically the Fandyushkinskoye Field Licence AND 15813 TE area (“Project F”), a part of Amaam North,
has progressed significantly from the initial Resource announcement in July 2013. An Amaam North Project F Feasibility Study
Update, doubling mine life and reserves, was completed in April 2016, subsequent to which a non-renounceable rights issuance was
successfully completed in 2016, the primary use of proceeds being for the development of Project F Phase One. After completing
the necessary initial construction works in the second half of 2016, commercial mining commenced in January 2017.
During the year ended 31 December 2018, the Company achieved a production level of 576 thousand tonnes (“kt”), of which 528kt
were delivered to our Beringovsky Port and Coal Terminal (“Beringovsky Port”). Coal sales for the year ended 31 December 2018
were 393kt.
The Project F Feasibility Study Update of 2016 forecasted production and sales of 500kt and 600kt in 2018 and 2019, respectively.
Based on 2018 actual results and expected 2019 operational and logistical performance, the Company currently expects coal mined
and coal sold in the year ended 31 December 2019 to be within the range of 680kt to 750kt and 650kt to 720kt, respectively.
22
6
Tigers Realm Coal Annual Report 2018 23
Tigers Realm Coal Limited Directors’ report (continued) For the year ended 31 December 2018 7 4.Operating and financial reviewBusiness Strategies and Group Objectives (continued) Amaam North Phase Two is planned to increase coal production and sales to in excess of one million tonnes per annum, via the upgrade of mine site infrastructure, the Beringovsky Port and supplemented by the construction of a coal handling and preparation plant (“CHPP”). The Group has, during 2018, commenced a reassessment of the size, nature and timing of the Company’s expansion and business development programme, the process expected to be completed by the end of 2019. Amaam Amaam is a core asset of the Group, being a potentially long-life project with capacity for up to 6.5Mtpa of high-quality coking coal product from a combination of open pit and underground mining over an estimated 20-year life of mine. It involves the construction of a CHPP and associated infrastructure. A Preliminary Feasibility Study was released in April 2013 and subsequently the Group has completed further drilling and exploration activities, updated the resource estimate and obtained two long-term (20 year) Extraction and Exploration Licences over parts of the deposit, whilst also extending the Exploration Licence. The Company continues to be compliant with all relevant licence terms. Further details on the current status of the Group’s licences are disclosed below in Significant Business Risks: Licenses, Permits and Titles. Amaam Coking Coal Field– World Location Map Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2018
4.
Operating and financial review (continued)
Operating Performance
Key Operating Indicators for the years ended 31 December 2018 (“2018”) and 2017 (“2017”):
Operating Indicators
(rounded to the nearest thousand tonnes, unless otherwise stated)
Results for 2018
Results for 2017
Coal mined
Overburden removed
Stripping ratio
Coal stocks at 31 December
Coal sales
Thermal coal sales
Semi soft coal sales
Employees at 31 December
*Full time equivalent staff
Key Financial Indicators
Revenue from the sale and shipment of coal
Cost of coal sold
Gross Margin on coal sold
EBITDA*
Profit / (loss) before income tax
576
1,900 bcm
3.3:1
268
393
214
179
208*
249
943 bcm
3.8:1
85
165
123
42
178*
Results for 2018
Results for 2017
(A$ ‘000s unless
otherwise stated)
(A$ ‘000s unless
otherwise stated)
52,277
(31,337)
20,940
15,269
10,918
15,926
(13,039)
2,887
(5,696)
(6,987)
Average free on board Beringovsky (“FOB”) coal sales price
A$109.37 (US$79.20)
A$85.71 (US$66.78)
Average cost of coal mined and sold per tonne
A$35.51 (US$25.71)
A$38.76 (US$30.09)
Average cost of port handling and stevedoring costs per tonne sold
A$14.53 (US$10.52)
A$22.89 (US$17.72)
Total FOB cost of coal sold**
A$51.98 (US$37.63)
A$61.65 (US$47.81)
*Earnings before interest tax, depreciation and amortisation is calculated as the result before net finance costs and income tax
expense, adjusted for depreciation of property, plant and equipment.
** 2018 includes A$1.94 (US$1.39) per tonne of other FOB costs of coal sold.
During the year ended 31 December 2018, the Group’s second coal shipping season, the Group realised 393kt of coal sales (165kt
in 2017) and generated A$52.277 million in total revenue from the sale and shipment of coal (For the year ended 31 December
2017: A$15.926 million).
The Group generated A$8.017 million of cash from operations for the year ended 31 December 2018 (For the year ended 31
December 2017, A$7.007 million net cash outflow was incurred). Cash outflows of A$4.994 million on investing activities were
incurred for the year ended 31 December 2018 (For the year ended 31 December 2017: A$6.923 million). The Group’s net profit
for the year ended 31 December 2018 was A$10.880 million (For the year ended 31 December 2017: net loss of A$7.107 million).
The improvement in operational performance was driven by the 131% increase in coal production and 138% increase in sales during
2018 over 2017, as a result of which a gross margin of A$20.940 million was contributed to the results from operations for the year
ended 31 December 2018 (For the year ended 31 December 2017: A$2.887 million).
24
8
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2018
4.
Operating and financial review (continued)
Operating Performance
The average margin per tonne of coal sold during the year ended 31 December 2018 was A$57.39 (US$41.57) (For the year
ended 31 December 2017: A$24.06 (US$18.97)), the weighted average FOB sales price per tonne of coal mined and sold (“FOB/
t”) being A$109.37 (US$79.20) (For the year ended 31 December 2017: A$96.75 (US$79.21)). The primary factors influencing
the FOB/t sales price and margins during the year ended 31 December 2018 include, but are not limited to:
◊
◊
◊
◊
◊
◊
◊
◊
General coal market conditions;
Product Mix: The proportion of semi-soft coal relative to thermal coal sold in 2018 was greater than in 2017;
Product delineation with both on spec and high ash semi-soft coal sold in addition to thermal coal;
Expansion of the breadth of markets and range of customers into which and to whom our coal products were sold;
Focus on maintaining understandable and reliable coal quality management procedures from pit to port;
The positive effect of repeat business and overall development of customer relationships;
Influence of weather on loading conditions, loading capability and laycan times. Demurrage of A$1.633 million was
incurred in 2018, primarily in respect of the last two cargoes of the shipping season, where upon sailing, 14kt of semi soft
and 24kt of high-ash semi soft coals were unable to be loaded due to poor weather-related loading conditions;
Timing and ability to ship coal mined. Contract breakage costs of A$0.692 million were incurred in the latter stages of
the shipping season as the opportunity was taken to sell a higher valued cargo of semi soft coal in lieu of a lower value
thermal coal cargo previously contracted.
Other significant operational activities during the year ended 31 December 2018 included but are not limited to:
A long-term rental agreement with Rosmorport, the Russian government-controlled owner of core port infrastructure, was
signed for the rent of certain infrastructure integral to operations at the Beringovsky Port. The rental agreement is for 49
years with annual payments of RUB 3.590 million (A$ 0.073 million), the total contract value being RUB 175.914 million
(A$ 3.584 million);
In June 2018, the customs checkpoint upgrade at the Beringovsky Port was completed and commissioned;
Investments in our fleet, including two Scania haulage trucks received at the end of June 2018 and two more in September
2018, a Liebherr bulldozer and excavator, a Komatsu Bulldozer D375A-5D, a Komatsu mobile coal crusher and a Hyundai
R1200-9 excavator;
An agreement for the construction of two 500 tonne barges to be used in the Beringovsky Port to increase port loading
capacity in 2019 was executed in September 2018. The barges are contracted for delivery to Beringovsky Port at the end
of the first half of 2019;
There were a number of activities associated with TIG’s licences during 2018, the details of which are disclosed in Section
4:”Licence Update”.
In December 2018, TIG’s wholly owned subsidiary LLC Beringpromugol (“BPU”) repaid the outstanding balance of the
RUB 600 million working capital financing obtained in 2017 (“2018 WC Facility”). Furthermore, BPU signed a new
working capital facility (“2019 WC Facility”) with Sberbank Russia with the following key terms:
RUB 900 million (A$18.336 million), to be drawn down no later than September 2019;
Nominal interest rate of between 10.2% and 11.2%, dependent upon compliance with certain terms and
conditions;
Security comprising the pledge of TIG owned mining fleet, security over promissory notes acquired and
the provision of cross guarantees by TIG’s other Russian subsidiaries;
Loan repayment schedule from September through December 2019; and
Covenants in respect of the levels of lending able to be attained by BPU, various profitability and sundry
covenants ordinarily expected in such financing. Furthermore, there is a covenant in respect of the
requirement of three of TIG’s major shareholders to retain their shareholdings at or above certain minimum
levels throughout the term of the facility.
9
25
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2018
4.
Operating and financial review (continued)
Financial Position
Cash balances
The Group’s cash balance increased by A$1.543 million over the year to A$3.554 million at 31 December 2018 (For the year ended
31 December 2017: Decrease of A$15.098 million to A$2.011 million). This increase in 2018 arose primarily from cash generated
from operating activities, offset by further investment in the Company’s mining and logistics infrastructure of A$4.859 million and
the utilisation/repayment of the 2018 WC Facility.
As of 31 December 2018, the Company has RUB 825.606 million (A$16.821 million) in unused, available credit lines (A$11.964
million as at 31 December 2017).
Inventory on hand
The lower of cost and net realisable value of the Group’s inventories on hand at 31 December 2018 is A$17.231 million (31 December
2017: A$4.929 million), including A$8.801 million in coal inventories, A$4.985 million in fuel and oils and A$3.445 million of other
consumables. Management performs a regular review of the recoverability of inventories, including coal inventories on hand, to assess
the Company’s ability to recover their cost. Accordingly, a provision of A$0.830 million was recognised for the recoverability of coal
stocks at 31 December 2018 (At 31 December 2017: A$0.850 million), primarily in respect of 67kt (At 31 December 2017: 22.2kt) of
coal stocks maintained at the Company’s interim coal stockpile, requiring further processing prior to commercial realisation.
Non-current assets
The Company performs, at a minimum, twice annually a review for the existence of conditions indicating either the necessity to
perform an impairment review or to consider the necessity to reverse previously recognised write-downs. Management have concluded
that in 2018 neither further asset write-downs nor reversal of prior period write-downs recorded as a result of impairment testing
performed in prior periods will be recognised. Refer to Note 9 to the consolidated financial statements for further details.
Finance Leases
During the year ended 31 December 2018, the Group executed a number of finance lease agreements with equipment vendors for
the acquisition of four haulage trucks, an excavator and a bulldozer. The cost of the property, plant and equipment was RUB 73.882
million (A$1.505 million). The value of the finance leases, after advance payments of RUB 5.753 million (A$0.117 million), was
RUB 65.194 million (A$1.328 million) upon inception and RUB 54.629 million (A$1.113 million) at 31 December 2018.
During the year ended 31 December 2018, the Group also executed a number of finance lease agreements with domestic Russian
finance providers for the acquisition of a Komatsu D375A bulldozer, a Hyundai R1200-9 excavator and a Komatsu mobile coal
crusher. The cost of the property, plant and equipment was RUB 146.058 million (A$2.976 million). The value of the finance leases,
after advance payments of RUB 28.167 million (A$0.574 million), was RUB 112.669 million (A$2.296 million) upon inception
and RUB 99.541 million (A$2.028 million) at 31 December 2018.
The Komatsu mobile coal crusher was delivered to Anadyr Port in October 2018. As weather did not permit the on-shipment and
unloading of the equipment prior to the closure of the Beringovsky Port for shipping, the equipment remains in Anadyr and is
expected to be delivered to Beringovsky Port in the first half of 2019.
Lapse of Options
During the year ended 31 December 2018, 3,361,000 and 22,407,000 options, respectively, lapsed or were forfeited and have been
removed from the Company’s option register.
Options Granted
In the year ended 31 December 2018, no options were granted. In the year ended 31 December 2017, 37,074,000 options were granted,
of which 12,605,000 with an exercise price of A$0.08, vesting period of 24 months and an expiry period of five years from grant date
and 24,469,000 with an exercise price of A$0.13, vesting period of 36 months and an expiry period of five years from grant date.
Significant Business Risks
TIG’s annual budget and related activities are subject to a range of assumptions and expectations all of which contain various levels
of uncertainty. TIG adopted a risk management framework in order to identify, analyse, treat and monitor the risks applicable to the
Group. The risks are reviewed at least twice a year by the Audit, Risk and Compliance Committee and, following each review, are
formally reported and discussed by the Board. Risks are analysed and reported using risk registers.
Detailed below are risk areas identified as at the date of the Directors’ Report which may affect TIG’s future operating and financial
performance and the approach to managing them.
Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2018
4.
Operating and financial review (continued)
Country Risk
Russia.
TIG’s projects are located in Russia. Investing in Russia involves greater risk than investing in some other markets. Operating in
this jurisdiction may expose TIG to a range of significant country specific risks including general economic, regulatory, legal, social
and political conditions. These and other country specific risks may affect TIG’s ability wholly or in part to operate its business in
Uncertainty in the Estimation of Mineral Resources
Estimating the quantity and quality of Mineral Resources is an inherently uncertain process and the Mineral Resources stated, as
well as any Mineral Resources or Reserves TIG states in the future, are and will be estimates, and may not prove to be an accurate
indication of the quantity or quality of coal that TIG has identified or that it will be able to extract.
Project Assessment and Development Risk
A Feasibility Study on the Project F section of the Amaam North licence area was completed in November 2014 and consequently
updated and announced in April 2016 (“ANFSU”). The Company commenced commercial operations in the year ended 31
December 2017. The long-term mine development principles outlined in the ANSFU will be subject to significant macroeconomic
and company specific risks, the mitigation of which is essential to the ANSFU’s realisation.
TIG is at the preliminary stage of determining the economic and technical viability of the Amaam project, TIG having completed a
Feasibility Study (“AFS”) in 2013. There is a risk that more detailed studies in relation to the Amaam project may disprove
assumptions or conclusions reached in the AFS, may reveal additional challenges or complexities and may indicate initial cost
estimates as being incorrect. TIG must complete a number of steps prior to making a final investment decision with respect to the
project, conduct definitive feasibility studies, convert Resources to Reserves, obtain government approvals and permits and obtain
adequate and appropriate financing.
If TIG decides to proceed to production, the process of developing and constructing the Amaam project will be subject to further
uncertainties, including the timing and cost of construction, the receipt of required government permits and the availability of
financing for the projects. There is a risk that unexpected challenges or delays will arise, or that coal quality and quantity results
will differ from the estimates on which TIG’s cost estimates are based, increasing the costs of production and/or resulting in lower
sales.
Operational Risks
The projects may be subject to operational, technical or other difficulties, including those arising as a result of unforeseen events
outside the control of the Company, any or all of which may negatively impact the amount of coal produced, delay coal deliveries
or increase the estimated cost of production, any or all which may have an adverse impact on the Company’s business and financial
condition. These risks include:
•
•
•
•
General Economic Risks: TIG’s ability to obtain funding for the projects, financial performance and ability to execute its
business strategy will be impacted by a variety of global economic, political, social, stock market and business conditions.
Deterioration or an extended period of adversity in any of these conditions could have an adverse impact on TIG’s
financial position and/or financial performance.
Coal Market and Demand: TIG intends to earn future profits from the production and sale of coal and a decline in prices
or lower demand for coal than expected by TIG may adversely impact the feasibility of the Company’s development and
mine plans, and the economic viability of the projects. There is commodity price risk, with the Company, when valuing
its projects, having adopted long-term sales price estimates in accordance with independent third-party external forecasts,
validated against long-term market expectations.
Exchange Rate Variations: Significant changes in the Australian/US Dollar, US Dollar/Russian Rouble and the Australian
Dollar/Russian Rouble exchange rates may have a significant impact on TIG’s ability to fund the capital expenditure
required to construct these projects.
Product Quality: For Project F Amaam North, the coal quality test work conducted has to date confirmed over the project’s
life the main product as a semi-hard type coking coal with low sulphur and low phosphorus levels. TIG has also conducted
initial coal quality analysis on a number of drill cores recovered from Amaam. In the absence of extended coke test work,
no guarantee can be given as to the quality of coking coal that could ultimately be produced at Amaam. If the quality of
the Amaam coking coal is lower than currently anticipated, TIG’s prospects, value, project and financial condition may
be materially adversely affected.
26
10
11
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2018
4.
Operating and financial review (continued)
Country Risk
TIG’s projects are located in Russia. Investing in Russia involves greater risk than investing in some other markets. Operating in
this jurisdiction may expose TIG to a range of significant country specific risks including general economic, regulatory, legal, social
and political conditions. These and other country specific risks may affect TIG’s ability wholly or in part to operate its business in
Russia.
Uncertainty in the Estimation of Mineral Resources
Estimating the quantity and quality of Mineral Resources is an inherently uncertain process and the Mineral Resources stated, as
well as any Mineral Resources or Reserves TIG states in the future, are and will be estimates, and may not prove to be an accurate
indication of the quantity or quality of coal that TIG has identified or that it will be able to extract.
Project Assessment and Development Risk
A Feasibility Study on the Project F section of the Amaam North licence area was completed in November 2014 and consequently
updated and announced in April 2016 (“ANFSU”). The Company commenced commercial operations in the year ended 31
December 2017. The long-term mine development principles outlined in the ANSFU will be subject to significant macroeconomic
and company specific risks, the mitigation of which is essential to the ANSFU’s realisation.
TIG is at the preliminary stage of determining the economic and technical viability of the Amaam project, TIG having completed a
Feasibility Study (“AFS”) in 2013. There is a risk that more detailed studies in relation to the Amaam project may disprove
assumptions or conclusions reached in the AFS, may reveal additional challenges or complexities and may indicate initial cost
estimates as being incorrect. TIG must complete a number of steps prior to making a final investment decision with respect to the
project, conduct definitive feasibility studies, convert Resources to Reserves, obtain government approvals and permits and obtain
adequate and appropriate financing.
If TIG decides to proceed to production, the process of developing and constructing the Amaam project will be subject to further
uncertainties, including the timing and cost of construction, the receipt of required government permits and the availability of
financing for the projects. There is a risk that unexpected challenges or delays will arise, or that coal quality and quantity results
will differ from the estimates on which TIG’s cost estimates are based, increasing the costs of production and/or resulting in lower
sales.
Operational Risks
The projects may be subject to operational, technical or other difficulties, including those arising as a result of unforeseen events
outside the control of the Company, any or all of which may negatively impact the amount of coal produced, delay coal deliveries
or increase the estimated cost of production, any or all which may have an adverse impact on the Company’s business and financial
condition. These risks include:
•
•
•
•
General Economic Risks: TIG’s ability to obtain funding for the projects, financial performance and ability to execute its
business strategy will be impacted by a variety of global economic, political, social, stock market and business conditions.
Deterioration or an extended period of adversity in any of these conditions could have an adverse impact on TIG’s
financial position and/or financial performance.
Coal Market and Demand: TIG intends to earn future profits from the production and sale of coal and a decline in prices
or lower demand for coal than expected by TIG may adversely impact the feasibility of the Company’s development and
mine plans, and the economic viability of the projects. There is commodity price risk, with the Company, when valuing
its projects, having adopted long-term sales price estimates in accordance with independent third-party external forecasts,
validated against long-term market expectations.
Exchange Rate Variations: Significant changes in the Australian/US Dollar, US Dollar/Russian Rouble and the Australian
Dollar/Russian Rouble exchange rates may have a significant impact on TIG’s ability to fund the capital expenditure
required to construct these projects.
Product Quality: For Project F Amaam North, the coal quality test work conducted has to date confirmed over the project’s
life the main product as a semi-hard type coking coal with low sulphur and low phosphorus levels. TIG has also conducted
initial coal quality analysis on a number of drill cores recovered from Amaam. In the absence of extended coke test work,
no guarantee can be given as to the quality of coking coal that could ultimately be produced at Amaam. If the quality of
the Amaam coking coal is lower than currently anticipated, TIG’s prospects, value, project and financial condition may
be materially adversely affected.
11
27
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2018
4.
Operating and financial review (continued)
Capital Management
The nature of the Company’s Project F mining operations is such that coal production continues throughout the year, whilst sales
are only realised during the Beringovsky Port shipping season, which historically commences in June and continues as late as
November. The length of the shipping season is limited and unpredictable, resulting in the necessity to engage equipment vendors
and other suppliers in the first half of the calendar year prior to the generation of operating cashflows from coal sales, impacting
both on the nature, level and timing of funding required for capital investments.
The Company is therefore required to ensure that its liquidity levels are managed in between shipping seasons. Consideration is also
given to the extent and timing of capital expenditures and the related forward funding commitments contracted, prior to the
commencement of the shipping season, necessary to achieve the Company’s forecasted production targets. The Company obtained
short-term working capital facility in December 2018 of up to RUB 900 million (A$18.336 million), to be drawn down no later than
30 September 2019 and settled not later than 27 December 2019. This financing is one of a number of measures available to address
any liquidity and funding shortfalls. (At 31 December 2017, working capital facility of up to RUB 600 million (A$13.308 million).
Amaam North’s expansion, as outlined in the ANFSU, will require further investment so as to upgrade the Beringovsky Port and
construct a CHPP. Management conducted preliminary discussions during 2018 with potential financial partners which are ongoing
in 2019.
TIG’s Amaam project is at the pre-development stage and will require additional drilling, evaluation and feasibility study work
prior to a development decision. Should TIG proceed to develop the Amaam project upon completion of further definitive studies,
significant capital expenditure will be required.
Licenses, Permits and Titles
TIG requires certain licenses, permits and approvals to develop the Amaam North and Amaam projects. There are three main
approvals required to commence the construction and operation of a mining project in Russia. These are a) an Exploration and
Extraction Licence (Mining Licence); b) a Construction Permit; and c) a Commissioning Permit. Due to the current stage of the
Amaam project, the majority of the required licences, permits and approvals to construct and operate have not yet been applied for.
For Amaam North Project F, a Mining Licence was granted in December 2014 and work has been completed in obtaining all relevant
Construction and Commissioning Permits. In addition to these mining related approvals, other approvals are required for the
project’s development. These permits include for the construction and commissioning of the CHPP, construction of the haulage
road from the mine site to the port and its development and for capital upgrades to be completed at the Beringovsky Port.
There are also a number of conditions and regulatory requirements that TIG must satisfy with respect to its tenements to maintain
its interests in those tenements in good standing, including meeting specified drilling and reporting commitments.
There is a risk that TIG may fail to obtain or be delayed in obtaining the licences, permits and approval, or meet the conditions
required to maintain its interests in the tenements. In the event that TIG fails to obtain, or delays occur in obtaining such licenses,
permits and approvals or there arises a failure to meet tenement licence commitments, such events may adversely affect TIG’s
ability to proceed with the projects as currently planned.
Licence Update
TIG was granted Exploration and Mining licence (“the Zvonkoye Mining Licence”) No AND 01314 TE in September 2018 over
the previously disclosed Zvonkoye deposit, geographically located next to and an eastern extension of the existing
Fandyushkinskoye Mining Licence. The Zvonkoye Mining Licence is for a tenure of 20 years, ending in 2038. The Licence provides
for an initial period of further drilling and on its basis, TIG will develop and have approved a Mining and Excavation Plan
(“TPRM”), outlining the expected mining approach and volumes from the Licence area. This process is expected to take up to a
maximum of three years.
The existing Amaam North exploration licence No AND 01203 was extended in December 2018 until 2025. During the licence
term, TIG has certain annual exploratory drilling obligations, including but not limited to 1,500m through March 2019 and 14,010m
in total over the course of seven years.
During the December quarter, project works commenced in respect of the Amaam Zapadny licence No AND 012785 TE and are
expected to be completed in the second half of 2019.
28
12
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2018
5.
Significant changes in the state of affairs
In the opinion of the Directors, except as disclosed in the review of operations, there were no further significant changes in the
Group’s state of affairs during the year ended 31 December 2018 not otherwise reflected in the accompanying consolidated financial
statements.
6.
Events subsequent to reporting date
On 18 February 2019, the Company entered into an agreement in accordance with which 100kt of thermal coal is to be sold to JFE
Shoji Trade Corporation on CFR Incoterms during 2019, with a provisional pricing mechanism established, to be adjusted upon
confirmation of coal qualities and final shipping terms. A prepayment of US$3.000 million was received in March 2019 on the
aforementioned agreement.
On 20 March 2019, the Company executed term sheets with its two largest beneficial shareholders, namely BV Mining Holding
Limited through its affiliate BV Mining Investment Limited, and Dr. Bruce Gray, through a controlled entity, in accordance with
which each will make available to the Group an unsecured non-revolving loan facility of up to US$2.5 million (“Shareholder Loan
Facility”), providing total shareholder funding of up to US$5 million. Each Shareholder Loan Facility will have a one-year tenure
and incur interest at 12% per annum, payable quarterly. The loan agreements are expected to be executed substantially on the
aforementioned terms during April 2019.
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 (Year ended 31 December 2017: Nil).
8.
Likely developments
Mining activities will continue at the Amaam North Project, with 2019 production forecasted to be between 680kt and 750kt, whilst
sales volumes are currently forecast to be in the range of 650kt to 720kt for 2019.
Ongoing enhancement of the port, road and other mine infrastructure is expected during 2019 and Amaam North Phase Two
expansion and funding alternatives will continue to be investigated further. The Group will also progress exploration, appraisal and
development of its Amaam project.
9.
Environmental regulation
The Group’s exploration, development and mining activity in Russia is subject to Federal and Regional Environmental regulation.
The Group is committed to meeting or exceeding its regulatory requirements and has systems in place the ensure compliance with
the relevant Environmental regulation. The Directors are not aware of any breach of these regulations during the period covered by
this report.
13
29
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2018
10.
Directors’ interests
The relevant interest of each Director and Alternate 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:
C Wiggill
B Gray
O Hegarty
R Morgan (1)
T Sitdekov
N Ishmetov
Tigers Realm Coal Limited
Ordinary shares
1,200,000
379,333,637
30,412,029
-
-
-
Options over ordinary shares
1,500,000
-
1,500,000
500,000
1,500,000
-
(1) R Morgan’s holding of 500,000 options is after the transfer of 1,000,000 options to B. V. Mining Holding Limited during 2014
11.
Share Options
Options granted to directors and executives of the Company
The option plan offers individuals the opportunity to acquire 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.
During the year ended 31 December 2018, there were no options issued, 3,361,000 options forfeited and 22,407,000 lapsed , bringing
options issued over ordinary shares in the Company to 33,669,000 at 31 December 2018 (For the year ended 31 December 2017:
37,074,000 options issued to executives and employees and 274,000 options forfeited and 1,665,000 lapsed, thus bringing the
options issued over ordinary shares in the Company to 59,437,000 at 31 December 2017).
Unissued shares under options
Unissued shares under options as of the date of this report are detailed in Note 24 to the consolidated financial statements.
30
14
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2018
12.
Remuneration report – audited
This remuneration report, which forms part of the directors’ report, sets out the remuneration information for Tigers Realm Coal
Limited’s non-executive directors and other key management personnel (“KMP”) for the financial year ended 31 December 2018.
(a)
Details of key management personnel
Name
Position
Commencement Date
Chairman (Non-Executive)
20 November 2012
Directors
Craig Wiggill
Bruce Gray
Owen Hegarty
Ralph Morgan
Director (Non-executive)
Director (Non-executive)
Director (Non-executive)
Tagir Sitdekov
Nikolay Ishmetov
Director (Non-executive)
Alternate Director for Mr Sitdekov
1 October 2015
8 October 2010
1 April 2014
1 April 2014
1 July 2017
Senior Executives
Dmitry Gavrilin
Dale Bender
Peter Balka (1)
Denis Kurochkin (2)
Scott Southwood
Sergey Efanov
David Forsyth
Chief Executive Officer (“CEO”)
Chief Financial Officer (“CFO”)
Interim Chief Executive Officer
Chief Financial Officer
General Manager Marketing
General Manager Operations, Project F
Company Secretary
1 June 2018
1 October 2018
1 January 2011
21 July 2014
13 October 2013
15 November 2017
8 October 2010
(1)
Ceased his employment as Interim CEO from 31 May 2018, after which and until his resignation effective 31 August
2018, acted in his capacity as Chief Operating Officer
(2)
Ceased his employment as CFO effective from 31 May 2018.
(b)
Changes to key management personnel
Directors
There were no changes to either Directors or to the Alternate Director during 2018.
Executives
On 31 May 2018, Peter Balka resigned as Interim CEO, resuming his role as Chief Operating Officer until his departure on 31
August 2018.
On 1 June 2018, Dmitry Gavrilin commenced his tenure as CEO.
On 31 May 2018, Denis Kurochkin, CFO, completed his tenure and was subsequently replaced by Dale Bender effective 1 October
2018.
There were no other changes during 2018.
15
31
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2018
12.
(c)
Remuneration report – audited (continued)
Principles used to determine the nature and amount of remuneration
KMP have authority and responsibility for planning, directing and controlling the Group’s activities and include the Company’s
Directors and Senior executives.
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 and motivate senior
executives 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.
(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.
When determining compensation for KMP, the Nomination and Remuneration Committee and the Board have regard to funding,
resource development, project advancement and development, and other objectives, based on goals set by the Nomination and
Remuneration Committee and the Board throughout the year. In addition, the Board has regard to the following financial indices in
respect of the financial year and previous four financial years.
Net profit / (loss) attributable to equity
holders of the parent (A$ million)
2018
2017
2016
2015
2014
$10.959
$(6.213)
$(10.511)
$(86.170)
$(29.629)
Closing share price (A$)
$0.04
$0.057
$0.073
$0.03
$0.12
(e)
Remuneration policy and structure for senior executives
The objective of the Group’s executive remuneration policy is to ensure reward for performance is market 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 structure provides a mix of fixed and variable
remuneration and for the variable, or “at-risk”, remuneration 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:
•
•
•
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.
Compensation levels are reviewed each year by the Nomination and Remuneration Committee 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 the remuneration policy. The review process considers individual and overall performance of the Group.
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 and are at the discretion of the Board. The STI is an at-risk bonus provided in the form of cash, which
is payable subsequent to Board ratification of recommendations made by the Nomination and Remuneration Committee
each year.
Long-Term Incentive (“LTI”) Program is at-risk remuneration. Under the LTI Program employees, at the discretion of the
Board, are offered options over ordinary shares in the Company under the Company’s Option Plan.
For KMP other than the CEO and General Manager Marketing, the target remuneration mix in the current year is 50% fixed, and
50% at risk. The target remuneration-mix for 2019 and beyond is currently the subject of review and approval.
32
16
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2018
12.
(e)
Remuneration report – audited (continued)
Remuneration policy and structure for senior executives (continued)
For the STI element of remuneration, a performance framework has been developed for KMP and other executives under the STI
programme. Key Performance Indicators (“KPIs”) 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 CEO and is subject to Board
discretion. The performance framework develops individual KPIs in the following proportions:
•
•
30% Group related KPIs, (these are Health, Safety & Environmental specific, Project, and Corporate objectives); and
70% Individual KPIs tailored to the role and objectives of each senior executive.
For the LTI element of remuneration, any options granted under the Company’s Option Plan, are approved by the Board in advance.
Further details of the Option Plan are included in Note 24 to the consolidated financial statements. The Company may make initial
grants of options to certain senior executives as part of their individual employment contracts. It is a vesting condition that the
holder of options remains an employee or director at the time of vesting.
Other than the provisions relating to vesting of LTI grants in certain circumstances and a benefit which accrued to the interim CEO
upon termination of his employment, 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.
The remuneration and other terms of employment for key management personnel are formalised in their employment contracts and
services contracts.
(f)
Employment contracts
The Group has entered into employment arrangements with each senior executive, other than the General Manager Marketing, who
is engaged on an external contractor basis, which are open-ended contracts with no expiry date. These contracts are capable of
termination on three months’ notice. The Group retains the right to terminate a contract immediately by making a payment equal to
three months’ pay in lieu of notice. No notice is required for termination due to serious misconduct. The senior executives are also
entitled to receive on termination of employment their statutory and contractual entitlements of accrued annual and long service
leave, together with any superannuation benefits.
Employment contracts 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 maximum cash bonus payable under the STI programme
is up to 50% of total remuneration for senior executives, and up to 85% of base salary for the CEO.
Employment contracts may outline the components of compensation but does not prescribe how compensation levels are modified
year to year. The Nomination and Remuneration Committee reviews and makes any recommendations to the Board annually on
compensation levels, assessing the necessity or otherwise of any changes required so as to meet the principles of the Group’s
compensation policy.
(g)
Remuneration of Executive and Non-Executive Directors
On appointment to the Board, 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. The
service agreements with Directors have no fixed term.
Non-executive Director remuneration is reviewed annually by the Board. Non-executive Directors are eligible for a fixed 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 A$1,500,000.
In addition to being eligible for a fixed base fee, non-executive Directors are eligible for 9.50 per cent in superannuation
contributions. No retirement or other long-term benefits are provided to any Director other than superannuation. Non-Executive
Directors can claim reimbursement of out-of-pocket expenses incurred on behalf of the Company. During the year ended 31
December 2018, the base fee for Directors was $30,000 per annum. The Alternate Director is not entitled to any directors fees. The
Chairman is entitled to A$100,000 per annum and a per diem of the AUD equivalent of British Pounds Sterling (“GBP”) 1,000 is
payable whilst travelling in respect of the Group’s business. In addition to the base fee, A$20,000 per annum is also payable to the
Director who performs the duties of Chairman of the Audit, Risk and Compliance Committee. With the exception of the independent
Chairman, all directors waived their director fee entitlements for the year ended 31 December 2018.
17
33
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2018
12.
(h)
Remuneration report – audited (continued)
Details of the remuneration of the Group’s key management personnel
Details of the nature and amount of each major element of remuneration of each Director of the Company, and the key management
personnel (as defined in AASB 124 Related Party Disclosures) are set out in the following tables.
Short – term
Post-employment
Share -
based
payments
Cash
Salary and
fees
A$
Non-
Monetary
Benefits
(1)
A$
STI
cash
bonus
(2)
A$
Super-
annuation
A$
Termin-
ation
benefits
A$
LTI (3)
A$
Total
Remun-
eration
A$
Proportion
of remun-
eration
comprising
options
%
Name
2018
Non-executive Directors
C Wiggill
B Gray
O Hegarty
R Morgan
T Sitdekov (8)
131,458
-
-
-
-
Sub total
131,458
Other key management
personnel
D Gavrilin (5)
265,314
-
-
-
-
-
-
-
-
-
-
-
-
-
12,511
-
-
-
-
12,511
274,313
38,818
62,710
143,797
187,200
84,000
296,289
-
-
-
-
-
95,774
24,300
-
-
23,400
10,080
63,307
1,313,623
38,818
216,861
-
-
-
-
-
-
-
-
P Balka (4)
D Bender (7)
D Kurochkin (6)
S Southwood
D Forsyth
S Efanov
Sub total
personnel
1.
2.
3.
Total key management
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(12,208)
-
(12,047)
37,805
29,099
55,231
143,969
-
-
-
-
143,969
361,088
325,223
62,710
131,750
248,405
123,179
414,827
97,880
1,667,182
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
15.22%
23.53%
13.31%
1,445,081
38,818
216,861
12,511
97,880
1,811,151
Includes the value of fringe benefits and other allowances.
In respect of 2018.
In accordance with the requirements of Accounting Standards, remuneration includes a proportion of the fair value of equity
compensation granted or outstanding during the year (i.e. options granted under the LTI programme that remained unvested as at 31
December 2018). The fair value of equity instruments is determined 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. All options granted under the LTI programme are equity settled.
Ceased as Interim CEO effective 31 May 2018 and as Chief Operating Officer from 31 August 2018
Commenced as CEO effective 1 June 2018.
Ceased as CFO effective 31 May 2018.
Commenced as CFO effective 1 October 2018.
N Ishmetov, Alternate to T Sitdekov, received no remuneration for the year ended 31 December 2018.
4.
5.
6.
7.
8.
34
18
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2018
12.
(h)
Remuneration report – audited (continued)
Details of the remuneration of the Group’s key management personnel
Short – term
Post-employment
Share -
based
payments
Cash
Salary and
fees
A$
Non-
Monetary
Benefits
(1)
A$
STI
cash
bonus
(2)
A$
Super-
annuation
A$
Termin-
ation
benefits
A$
LTI (3)
A$
Total
Remun-
eration
A$
Proportion
of remun-
eration
comprising
options
%
Name
2017
Non-executive Directors
C Wiggill
B Gray
O Hegarty
R Morgan
T Sitdekov (6)
135,395
-
-
-
-
Sub total
135,395
Other key management
personnel
P Balka
414,126
D Kurochkin
S Southwood
D Forsyth
S Efanov (5)
A Nikolaev (4)
379,734
162,902
101,500
34,686
179,877
-
-
-
-
-
-
-
-
-
-
-
-
19,000
-
-
-
-
19,000
62,307
87,778
-
-
-
-
-
53,084
21,129
8,478
8,765
-
-
-
-
-
-
-
-
-
-
-
-
3,878
158,273
-
3,878
3,878
3,878
-
3,878
3,878
3,878
15,512
169,907
21,672
21,047
12,650
7,995
8,709
585,883
453,865
196,681
117,973
52,160
19,117
-
198,994
19,117
72,073
1,605,556
2.45%
0.00%
100%
100%
100%
3.70%
4.64%
6.43%
6.78%
16.70%
0.00%
-
-
-
-
-
-
-
Sub total
1,272,825
62,307
179,234
Total key management
personnel
1.
2.
3.
1,408,220
62,307
179,234
19,000
19,117
87,585
1,775,463
Includes the value of fringe benefits and other allowances.
In respect of 2017.
In accordance with the requirements of Accounting Standards, remuneration includes a proportion of the fair value of equity
compensation granted or outstanding during the year (i.e. options granted under the LTI programme that remained unvested as at 31
December 2017). The fair value of equity instruments is determined 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. All options granted under the LTI programme are equity settled.
Ceased as General Manager Project F on 31 August 2017.
Commenced as General Manager Operations Project F on 15 November 2017.
N Ishmetov, Alternate to T Sitdekov, received no remuneration for the year ended 31 December 2017.
4.
5.
6.
During the years ended 31 December 2018 and 2017, other than the remuneration detailed above, key management personnel were
neither entitled to nor did they receive loans or other benefits.
19
35
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2018
12.
(i)
Remuneration report – audited (continued)
Analysis of performance related elements of remuneration
The following table shows the relative proportions of remuneration packages of the KMP during the year ended 31 December 2018,
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.
Name
2018
Other key management personnel
Dmitry Gavrilin, CEO (6)
Peter Balka, Interim CEO (5)
Dale Bender, CFO (8)
Denis Kurochkin, CFO (7)
Scott Southwood, General Manager Marketing
David Forsyth, Company Secretary
Sergey Efanov, General Manager Project F (4)
2017
Other key management personnel
Peter Balka, Interim CEO
Denis Kurochkin, CFO
Scott Southwood, General Manager Marketing
David Forsyth, Company Secretary
Sergey Efanov, General Manager Project F (4)
Anatoly Nikolaev, General Manager Project F (3)
Fixed Annual
Remuneration
(including
superannuation
contributions)
%
At Risk - STI
as percentage
of Total
Remuneration
2
%
At Risk - LTI
as percentage
of Total
Remuneration
1
%
At Risk -
Total
as percentage
of Total
Remuneration
%
73.5
92.5
100.0
100.0
75.4
68.0
71.4
81.3
83.7
82.8
86.0
66.5
100.0
26.5
7.5
-
-
9.4
8.5
15.3
15.0
11.7
10.8
7.2
16.8
-
-
-
-
-
15.2
23.5
13.3
3.7
4.6
6.4
6.8
16.7
-
26.5
7.5
-
-
24.6
32.0
28.6
18.7
16.3
17.2
14.0
33.5
-
1
2
3
4
5.
6.
7.
8.
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.
Bonuses in respect of 2018 results were approved by the Board of Directors on 26 February 2018.
Ceased as General Manager Project F on 31 August 2017.
Commenced as General Manager Project F on 15 November 2017.
Ceased as Interim CEO effective 31 May 2018 and as Chief Operating Officer from 31 August 2018
Commenced as CEO effective 1 June 2018.
Ceased as CFO effective 31 May 2018.
Commenced as CFO effective 1 October 2018
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.
36
20
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2018
12.
(j)
Remuneration report – audited (continued)
Analysis of bonuses included in remuneration
During and in respect of the years ended 31 December 2018 and 2017, there were A$216,861 and A$179,234, respectively, in
short-term incentive (STI) cash bonuses awarded as remuneration to key management personnel.
Share Options granted as remuneration
(k)
During the year ended 31 December 2018, there were no options granted (For the year ended 31 December 2017: 37,074,000
options, of which 15,672,000 were granted to key management personnel). Further details of the Option Plan are included in Note
24 to the consolidated financial statements.
During the year ended 31 December 2018, no options vested. For the year ended 31 December 2017: 2,000,000 options over ordinary
shares in the Company vested as follows:
Number of
options
vested
during year Grant date
Fair value
of option at
grant date
A$
Exercise
price per
option
A$
Vesting
date
start
Vesting date
finish
Expiry
date
Option
vesting
performance
hurdle
A$
2017
Directors
C Wiggill
O Hegarty
R Morgan
T Sitdekov
500,000
500,000
500,000
500,000
11/06/2015
11/06/2015
11/06/2015
11/06/2015
0.035
0.035
0.035
0.035
0.23
0.23
0.23
0.23
11/06/2015 11/06/2017 11/06/2020
11/06/2015 11/06/2017 11/06/2020
11/06/2015 11/06/2017 11/06/2020
11/06/2015 11/06/2017 11/06/2020
0.000
0.000
0.000
0.000
There were no options granted to key management personnel during the year ended 31 December 2018. During the year ended 31
December 2017, the following options were granted to members of key management personnel:
Number of
options
granted
during year Grant date
Fair value
of option at
grant date
A$
Exercise
price per
option
A$
Vesting
date
start
Vesting date
finish
Expiry
date
Option
vesting
performance
hurdle
A$
2017
Executives
P Balka
P Balka
D Kurochkin
D Kurochkin
D Forsyth
D Forsyth
S Southwood
S Southwood
S Efanov
S Efanov
1,736,000
3,371,000
1,713,000
3,325,000
648,000
1,258,000
842,000
1,633,000
1,231,000
2,390,000
18/10/2017
18/10/2017
18/10/2017
18/10/2017
18/10/2017
18/10/2017
18/10/2017
18/10/2017
18/10/2017
18/10/2017
0.031
0.030
0.031
0.030
0.031
0.030
0.031
0.030
0.031
0.030
0.08
0.13
0.08
0.13
0.08
0.13
0.08
0.13
0.08
0.13
18/10/2017 18/10/2019 18/10/2022
18/10/2017 18/10/2020 18/10/2022
18/10/2017 18/10/2019 18/10/2022
18/10/2017 18/10/2020 18/10/2022
18/10/2017 18/10/2019 18/10/2022
18/10/2017 18/10/2020 18/10/2022
18/10/2017 18/10/2019 18/10/2022
18/10/2017 18/10/2020 18/10/2022
18/10/2017 18/10/2019 18/10/2022
18/10/2017 18/10/2020 18/10/2022
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
21
37
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2018
Remuneration report – audited (continued)
Analysis of Movement in Share Options, by value
12.
(m)
person.
Other Key Management Personnel
2018
Directors
C Wiggill
B Gray
O Hegarty
R Morgan
T Sitdekov (1)
P Balka
D Forsyth
D Kurochkin
S Southwood
S Efanov
2017
Directors
C Wiggill
B Gray
O Hegarty
R Morgan
T Sitdekov
P Balka
D Forsyth
D Kurochkin
S Southwood
A Nikolaev
S Efanov
statements.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
154,946
57,828
152,853
75,092
-
109,861
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(64,000)
(65,000)
(82,570)
(16,445)
(127,000)
(89,920)
(16,480)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.0
0.0
0.0
0.0
0.0
0.0
0.0
23.4
0.0
16.0
12.9
2.4
100.0
100.0
100.0
100.0
18.6
16.3
17.1
13.9
0.0
33.5
(1) N Ishmetov, alternate to T Sitdekov, neither holds nor is entitled to options in the Company.
For details on the valuation of options, including models and assumptions used, refer to Note 24 to the consolidated financial
Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2018
12.
(l)
Remuneration report – audited (continued)
Analysis of movement in Share Options
The movement during the reporting period in the number of options over ordinary shares of Tigers Realm Coal Limited shares held
directly, indirectly, or beneficially by the key management personnel and their related entities are set out below.
The movement during the reporting period, by value, of options over ordinary shares in the Company held by each key management
Held at
1 January
Granted as
remun-
eration
Exerci
-sed
during
year
Forfeited/
Lapsed
during
year
Vested at 31 December
Held at 31
December
Total
Exercisable
Not exer-
cisable
Value of options
granted during year
Value of options
exercised in year
A$
A$
Value of options
lapsed in year
A$
Remuneration
consisting of options
for the year
%
Name
2018
Directors
C Wiggill
B Gray
O Hegarty
R Morgan (1)
2,500,000
-
2,500,000
500,000
T Sitdekov (2)
1,500,000
Other key management
personnel
P Balka
D Forsyth
D Kurochkin
S Southwood
S Efanov
10,510,000
3,895,000
7,038,000
3,975,000
3,621,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,000,000)
-
(1,000,000)
-
-
-
-
-
-
-
1,500,000
1,500,000
-
1,500,000
500,000
1,500,000
-
1,500,000
500,000
1,500,000
(10,510,000)
-
-
-
(143,000)
3,752,000
1,846,000
1,846,000
(7,038,000)
-
-
-
-
-
3,975,000
1,500,000
1,500,000
3,621,000
-
-
-
-
-
-
-
-
-
-
-
(1)
R Morgan’s holding of 500,000 options is after the transfer of 1,000,000 options to B. V. Mining Holding Limited during
2014
(2) N Ishmetov, alternate to T Sitdekov, neither holds nor is entitled to options in the Company.
Held at
1 January
Granted as
remun-
eration
Exerci
-sed
during
year
Forfeited/
Lapsed
during
year
Vested at 31 December
Other Key Management Personnel
Held at 31
December
Total
Exercisable
Not exer-
cisable
Name
2017
Directors
C Wiggill
B Gray
O Hegarty
R Morgan
T Sitdekov
2,500,000
-
3,500,000
500,000
1,500,000
-
-
-
-
-
Other key management
personnel
P Balka
D Forsyth
D Kurochkin
S Southwood
A Nikolaev
S Efanov
5,965,000
2,092,000
2,000,000
1,500,000
-
-
5,107,000
1,906,000
5,038,000
2,475,000
-
3,621,000
2,500,000
2,500,000
2,500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,000,000)
2,500,000
2,500,000
-
-
500,000
500,000
1,500,000
1,500,000
(562,000)
10,510,000
5,403,000
(103,000)
3,895,000
1,989,000
-
-
-
-
7,038,000
2,000,000
3,975,000
1,500,000
-
3,621,000
-
-
-
2,500,000
500,000
1,500,000
5,403,000
1,989,000
2,000,000
1,500,000
-
-
-
-
-
-
-
-
-
-
-
-
38
22
23
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2018
12.
(m)
Remuneration report – audited (continued)
Analysis of Movement in Share Options, by value
The movement during the reporting period, by value, of options over ordinary shares in the Company held by each key management
person.
Value of options
granted during year
A$
Value of options
exercised in year
A$
Value of options
lapsed in year
A$
Remuneration
consisting of options
for the year
%
2018
Directors
C Wiggill
B Gray
O Hegarty
R Morgan
T Sitdekov (1)
Other Key Management Personnel
P Balka
D Forsyth
D Kurochkin
S Southwood
S Efanov
2017
Directors
C Wiggill
B Gray
O Hegarty
R Morgan
T Sitdekov
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Other Key Management Personnel
P Balka
D Forsyth
D Kurochkin
S Southwood
A Nikolaev
S Efanov
154,946
57,828
152,853
75,092
-
109,861
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(64,000)
-
-
(65,000)
-
-
(82,570)
(16,445)
-
-
-
-
-
(127,000)
-
-
(89,920)
(16,480)
-
-
-
0.0
0.0
0.0
0.0
0.0
0.0
0.0
23.4
0.0
16.0
12.9
2.4
100.0
100.0
100.0
100.0
18.6
16.3
17.1
13.9
0.0
33.5
(1) N Ishmetov, alternate to T Sitdekov, neither holds nor is entitled to options in the Company.
For details on the valuation of options, including models and assumptions used, refer to Note 24 to the consolidated financial
statements.
23
39
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2018
12.
(n)
Remuneration report – audited (continued)
Analysis of options over equity instruments granted as compensation
Option vesting profiles over the Company’s ordinary shares granted as remuneration to each KMP and executive are detailed below:
Options granted
Number
Grant date
Vested in year
Forfeited/ Lapsed
in year
Vesting date
start
Vesting date
finish
Directors
C Wiggill
O Hegarty
R Morgan (1)
T Sitdekov
Executives
P Balka
D Forsyth
D Kurochkin
S Southwood
S Efanov
1,000,000
1,000,000
500,000
1,000,000
1,000,000
500,000
500,000
1,000,000
500,000
718,000
1,291,000
1,291,000
422,222
1,051,500
1,051,500
1,736,000
3,371,000
143,000
541,000
541,000
197,778
382,000
382,000
648,000
1,258,000
194,815
1,000,000
1,000,000
1,713,000
3,325,000
750,000
750,000
842,000
1,633,000
1,231,000
2,390,000
03/05/13
11/06/15
11/06/15
03/05/13
11/06/15
11/06/15
11/06/15
04/06/14
11/06/15
15/02/13
19/12/14
19/12/14
17/04/15
17/04/15
17/04/15
18/10/17
18/10/17
15/02/13
19/12/14
19/12/14
17/04/15
17/04/15
17/04/15
18/10/17
18/10/17
17/04/15
17/04/15
17/04/15
18/10/17
18/10/17
17/04/15
17/04/15
18/10/17
18/10/17
18/10/17
18/10/17
(1,000,000)
-
-
(1,000,000)
-
-
-
-
-
(718,000)
(1,291,000)
(1,291,000)
(422,222)
(1,051,500)
(1,051,500)
(1,736,000)
(3,371,000)
(143,000)
-
-
-
-
-
-
-
(194,815)
(1,000,000)
(1,000,000)
(1,713,000)
(3,325,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
03/05/13
11/06/15
11/06/15
03/05/13
11/06/15
11/06/15
11/06/15
04/06/14
11/06/15
15/02/13
19/12/14
19/12/14
17/04/15
17/04/15
17/04/15
18/10/17
18/10/17
15/02/13
19/12/14
19/12/14
17/04/15
17/04/15
17/04/15
18/10/17
18/10/17
17/04/15
17/04/15
17/04/15
18/10/17
18/10/17
17/04/15
17/04/15
18/10/17
18/10/17
18/10/17
18/10/17
03/05/14
11/06/16
11/06/17
03/05/15
11/06/16
11/06/17
11/06/17
04/06/15
11/06/17
15/02/15
19/12/15
28/02/16
17/04/15
17/05/16
17/04/17
18/10/19
18/10/20
15/02/15
19/12/15
28/02/16
17/05/15
17/04/16
17/04/17
18/10/19
18/10/20
17/05/15
17/04/16
17/04/17
18/10/19
18/10/20
17/04/16
17/04/17
18/10/19
18/10/20
18/10/19
18/10/20
(1) R Morgan’s holding of 500,000 options is after the transfer of 1,000,000 options to B. V. Mining Holding Limited during 2014
13.
Indemnification and insurance 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 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 not provided any insurance or indemnity for the auditor of the Company.
Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2018
14.
Rounding and ASIC relief
The Company is of a kind referred to in ASIC Corporations (Rounding in Financials/Directors’ Reports) Instrument 2016/191, dated
24 March 2016, and in accordance with that Corporations Instrument amounts in the Directors’ Report have been presented in
Australian dollars and rounded to the nearest thousand dollars, unless otherwise indicated.
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 Deloitte, the Group’s auditor,
for audit and non-audit services provided during the year are outlined in Note 35 to the consolidated financial statements.
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
35, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:
• all non-audit services have been reviewed and approved by the Board to ensure they do not impact the integrity and
• none of the services undermine the general principles relating to auditor independence as set out in APES 110 ‘Code of
objectivity of the auditor; and
Ethics for Professional Accountants’.
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
17.
Auditor’s Independence Declaration
The auditor’s independence declaration is included on page 98 and forms part of the Directors’ report for the year ended 31
proceedings.
December 2018.
This report is made in accordance with a resolution of the Directors
Dated at Melbourne this 20th day of March 2019.
Signed in accordance with a resolution of the Directors:
__________________________________
Owen Hegarty
Director
40
24
25
Tigers Realm Coal Annual Report 2018
Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2018
14.
Rounding and ASIC relief
The Company is of a kind referred to in ASIC Corporations (Rounding in Financials/Directors’ Reports) Instrument 2016/191, dated
24 March 2016, and in accordance with that Corporations Instrument amounts in the Directors’ Report have been presented in
Australian dollars and rounded to the nearest thousand dollars, unless otherwise indicated.
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 Deloitte, the Group’s auditor,
for audit and non-audit services provided during the year are outlined in Note 35 to the consolidated financial statements.
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
35, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:
• all non-audit services have been reviewed and approved by the Board to ensure they do not impact the integrity and
objectivity of the auditor; and
• none of the services undermine the general principles relating to auditor independence as set out in APES 110 ‘Code of
Ethics for Professional Accountants’.
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.
Auditor’s Independence Declaration
The auditor’s independence declaration is included on page 98 and forms part of the Directors’ report for the year ended 31
December 2018.
This report is made in accordance with a resolution of the Directors
Dated at Melbourne this 20th day of March 2019.
Signed in accordance with a resolution of the Directors:
__________________________________
Owen Hegarty
Director
25
41
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Corporate governance statement
The Board of Directors are responsible for the Company’s corporate governance. 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 (“Recommendations”) 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.
This Corporate Governance Statement is current as at 20 March 2019 and has been approved by the Board. A description of the
Group’s corporate governance practices are set out below. Where changes have occurred during the 2018 year, the dates of these
changes are shown. 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:
•
•
•
•
•
•
charting the direction, policies, strategies and financial objectives of the Company and ensuring appropriate resources are
available;
monitoring the implementation of these policies and strategies and the achievement of financial objectives;
monitoring compliance with control and accountability systems, regulatory requirements and ethical standards;
ensuring the preparation of accurate financial reports and statements;
reporting to shareholders and the investment community on the performance and state of the Company; and
reviewing on a regular and continuing basis:
o
o
executive succession planning; and
executive development activities.
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 had 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 necessity for and structures and memberships of the respective committees are 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. Performance evaluations of senior executives and management were completed for the 2018 financial year. The Company
approved bonuses to senior executives in respect of the 2018 financial year in February 2019. Refer to Section 12 of the Directors’
Report for details.
42
26
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Corporate governance statement (continued)
Principle 2: Structure of the Board
Composition of the Board
The names of the Company’s Directors 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 four Non-Executive Directors and one Non-Executive Chairman.
The composition of the Board is determined in accordance with the following principles outlined in the Board Charter:
•
•
•
a minimum of three Directors;
the intention that as the Group develops the majority of Directors will be independent; and
the requirement for the Board is 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 in that the majority of
Directors should be independent. Currently two of the five Directors are independent, Craig Wiggill and Owen Hegarty. On 6
February 2018, the Board reviewed the independence of Owen Hegarty and approved a change in his status to that of independent
rather than non-independent.
Given the developmental nature of the Company and the experience of the Directors, the Board considers the composition of the
Board to be appropriate at this time. In due course, consideration will be given to increasing the number of independent Directors
on the Board.
Board Skills
The Nomination and Remuneration Committee is responsible for developing and implementing processes to identify and assess
necessary and desirable competencies and characteristics for Board members.
The Board considers that collectively the Directors have the necessary skills, knowledge and experience to direct the Company as
outlined in the following Skills Matrix:
Experience and Competencies
Professional Qualifications
Coal Industry Experience
Engineering
Strategy, leadership and risk management
Finance/Economics
Commercial, trading and marketing
Financial analysis and capital markets experience
Corporate Governance and regulatory
Project development and construction
Stakeholder communication and engagement
Safety, environment and social responsibility
Director Independence
The Board has adopted specific principles in relation to Directors’ independence. These state that when determining independence,
a Director must be Non-Executive and the Board should consider whether the Director:
•
•
•
•
•
is a substantial shareholder of the Company or an officer of, or otherwise associated directly with, a substantial shareholder
of the Company;
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;
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;
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; and
has a material contractual relationship with the Company or other Group member other than a Director of the Company.
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.
27
43
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Corporate governance statement (continued)
Director Independence (continued)
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 its Non-Executive Directors to be the 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. The current Chairman, Mr Craig Wiggill satisfies the independence recommendation. The role of the
Chairman is separate from that of the CEO. The CEO is responsible for implementing Group strategies and policies.
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 three Non-Executive Directors and the Chairman, who is independent.
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 Owen Hegarty.
The Nomination and Remuneration Committee operates in accordance with its charter, and the main responsibilities of the
nomination activities of the Committee are to:
•
•
•
•
•
•
•
review and make recommendations to the Board relating to the remuneration of the Directors and the CEO;
assess the necessary and desirable competencies of Board members;
review Board succession planning;
make recommendations to the Board regarding the appointment and re-election of Directors and the CEO;
Copies of the Code of Conduct, Whistleblowers’ Policy, the Diversity Policy and the Securities Trading Policy are available on the
oversee succession planning, selection and appointment practices for management and employees of the Group;
develop a process for the evaluation of the performance of the Board, its committees and Directors; and
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.
A performance evaluation of the Board, its committees and the Directors was completed for 2018. The outcomes of the evaluation
were discussed and considered by all the Directors and specific performance goals were agreed upon for the coming year.
44
28
29
Tigers Realm Coal Limited
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 all Group personnel at all times act with utmost integrity, objectivity and in
compliance with the letter and the spirit of the law and Group policies.
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
Whistleblowers’ Policy
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
Group has not established specific measurable gender and diversity objectives due to the start-up nature of its situation in the
exploration and development of coking coal projects. However, the Group remains committed to recruiting the best candidates for
roles at all levels within the Group at every operation. As at 31 December 2018, women comprised 17 % (31 December 2017: 17%)
of employees throughout the Group. There are currently no female members of the Board.
Company’s website.
Principle 4: Safeguard integrity in financial reporting
Audit, Risk and Compliance Committee
The Audit, Risk and Compliance Committee currently consists of three Non-Executive Directors and the Chairman, who is
Independent. The Chairman of the Committee is a Non-Executive Director. The membership of the Committee does not fully meet
the Good Corporate Governance Recommendations in that the Committee does not consist of a majority of independent Directors,
with two of the four Directors being independent. Given the size of the Group and the Board, 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 Owen Hegarty has relevant qualifications with a Bachelor of Economics (Hons) and experience by virtue of being a director on
other ASX listed companies. Mr Ralph Morgan has relevant qualifications, holding a BA (Political Science, Yale University) and
MPhil (Russian and East European Studies, Oxford University) and relevant experience gained through being a board member of
PJSC Magnitogorsk Iron & Steel Works, where he serves on the Audit Committee and the Committee for Nominations and
Remuneration and previously as an executive Board member at PJSC MMK Norilsk Nickel. Mr Tagir Sitdekov has relevant
qualifications with an MBA (University of Chicago Booth School of Business, London) and experience as a CFO at power
generating company OJSC Sochi TES (a subsidiary of RAO Unified Energy System of Russia), and prior to that role he was a
Senior Consultant at Creditanstalt Investment Bank for 2 years.
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
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 all Group personnel at all times 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
Group has not established specific measurable gender and diversity objectives due to the start-up nature of its situation in the
exploration and development of coking coal projects. However, the Group remains committed to recruiting the best candidates for
roles at all levels within the Group at every operation. As at 31 December 2018, women comprised 17 % (31 December 2017: 17%)
of employees throughout the Group. There are currently no female members of the Board.
Copies of the Code of Conduct, 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 currently consists of three Non-Executive Directors and the Chairman, who is
Independent. The Chairman of the Committee is a Non-Executive Director. The membership of the Committee does not fully meet
the Good Corporate Governance Recommendations in that the Committee does not consist of a majority of independent Directors,
with two of the four Directors being independent. Given the size of the Group and the Board, 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 Owen Hegarty has relevant qualifications with a Bachelor of Economics (Hons) and experience by virtue of being a director on
other ASX listed companies. Mr Ralph Morgan has relevant qualifications, holding a BA (Political Science, Yale University) and
MPhil (Russian and East European Studies, Oxford University) and relevant experience gained through being a board member of
PJSC Magnitogorsk Iron & Steel Works, where he serves on the Audit Committee and the Committee for Nominations and
Remuneration and previously as an executive Board member at PJSC MMK Norilsk Nickel. Mr Tagir Sitdekov has relevant
qualifications with an MBA (University of Chicago Booth School of Business, London) and experience as a CFO at power
generating company OJSC Sochi TES (a subsidiary of RAO Unified Energy System of Russia), and prior to that role he was a
Senior Consultant at Creditanstalt Investment Bank for 2 years.
29
45
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Corporate governance statement (continued)
Principle 4: Safeguard integrity in financial reporting
Audit, Risk and Compliance Committee
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:
•
•
•
•
•
•
review, assess and make recommendations to the Board on annual and half-year financial reports and all other financial
information released to the market;
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.
o
o
o
oversee the effective operation of the risk management framework;
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;
consider the independence and competence of the external auditor on an ongoing basis; and
review and approve the level of non-audit services provided by the external auditors and ensure that they do not adversely
impact on auditor independence.
In fulfilling its responsibilities, the Audit, Risk and Compliance Committee:
•
•
•
•
•
receives regular reports from management and the external auditor;
meets with the external auditor at least twice a year without management being present, or more frequently if necessary;
reviews the processes in place to support the CEO and CFO certification to the Board;
reviews any significant disagreements between the auditors and management, irrespective of whether any have been
resolved; and
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
Principle 7: Recognise and manage risk
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, and
that the Company’s financial reports for the financial year ended 31 December 2018 comply with accounting standards and present
a true and fair view of the Company’s financial condition and operational results. The statement is required both annually and semi-
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 operated effectively in all material aspects in relation to financial reporting risks for the
financial year ended 31 December 2018.
Tigers Realm Coal Limited
Corporate governance statement (continued)
Principle 4: Safeguard integrity in financial reporting
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. Deloitte
has provided an independence declaration to the Board for the financial year ended 31 December 2018. The Committee has
considered the nature of the non–audit and assurance related services provided by the external auditor during the year and determined
that 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 have been fully complied with.
The roles of lead partner and audit quality review partner are rotated every five years.
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. The Company also has in place a policy to monitor media sources. This role also oversees
and coordinates information disclosure to 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.
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, corporate, 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.
In relation to risk management the Committee regularly reviews the adequacy and effectiveness of the Company’s risk management
framework including assessment of any material exposure to economic, environmental and social sustainability risks, how it
manages or intends to manage and plans for managing each identified risk. It also reviews the processes it employs for evaluating
and continually improving the effectiveness of its risk management and internal control processes.
46
30
31
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Corporate governance statement (continued)
Principle 4: Safeguard integrity in financial reporting
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. Deloitte
has provided an independence declaration to the Board for the financial year ended 31 December 2018. The Committee has
considered the nature of the non–audit and assurance related services provided by the external auditor during the year and determined
that 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 have been fully complied with.
The roles of lead partner and audit quality review partner are rotated every five years.
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. The Company also has in place a policy to monitor media sources. This role also oversees
and coordinates information disclosure to 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.
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, corporate, 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.
In relation to risk management the Committee regularly reviews the adequacy and effectiveness of the Company’s risk management
framework including assessment of any material exposure to economic, environmental and social sustainability risks, how it
manages or intends to manage and plans for managing each identified risk. It also reviews the processes it employs for evaluating
and continually improving the effectiveness of its risk management and internal control processes.
31
47
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Corporate governance statement (continued)
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 a Non-Executive Director and has four members, three being the
recommended size. 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.
Tigers Realm Coal Limited
Consolidated statement of financial position
As at 31 December 2018
Investments in restricted financial instruments
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Other assets
Total current assets
Non-current assets
Inventories
Property, plant and equipment
Total non-current assets
Total assets
Current Liabilities
Trade and other payables
Lease liability
Bank loans payable
Royalty liability
Employee benefits
Total current liabilities
Non-current liabilities
Trade and other payables
Lease liability
Royalty liability
Provision for site restoration costs
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
(Accumulated losses)
Non-controlling interest
Total equity
Total equity attributable to equity holders of the Company
12
14
16
15
16
17
18
21
19
22
20
18
21
22
23
Note
31 December
31 December
2018
A$’000
2017
A$’000
3,554
2,586
15,772
1,103
935
27
23,977
1,459
19,523
20,982
44,959
6,246
2,223
1,516
638
1,316
11,939
196
2,526
7,602
156
10,480
22,419
22,540
2,011
2,898
4,929
1,453
861
85
12,237
-
15,600
15,600
27,837
3,767
739
1,357
86
1,137
7,086
140
1,757
5,292
64
7,253
14,339
13,498
173,747
21,662
(152,985)
42,424
(19,884)
22,540
173,747
22,693
(163,944)
32,496
(18,998)
13,498
The notes on pages 53 to 96 are an integral part of these consolidated financial statements.
48
32
33
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Consolidated statement of financial position
As at 31 December 2018
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Investments in restricted financial instruments
Other assets
Total current assets
Non-current assets
Inventories
Property, plant and equipment
Total non-current assets
Total assets
Current Liabilities
Trade and other payables
Lease liability
Bank loans payable
Royalty liability
Employee benefits
Total current liabilities
Non-current liabilities
Trade and other payables
Lease liability
Royalty liability
Provision for site restoration costs
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
(Accumulated losses)
Total equity attributable to equity holders of the Company
Non-controlling interest
Total equity
Note
31 December
2018
A$’000
31 December
2017
A$’000
12
14
16
15
16
17
18
21
19
22
20
18
21
22
23
3,554
2,586
15,772
1,103
935
27
23,977
1,459
19,523
20,982
44,959
6,246
2,223
1,516
638
1,316
11,939
196
2,526
7,602
156
10,480
22,419
22,540
2,011
2,898
4,929
1,453
861
85
12,237
-
15,600
15,600
27,837
3,767
739
1,357
86
1,137
7,086
140
1,757
5,292
64
7,253
14,339
13,498
173,747
21,662
(152,985)
42,424
(19,884)
22,540
173,747
22,693
(163,944)
32,496
(18,998)
13,498
The notes on pages 53 to 96 are an integral part of these consolidated financial statements.
33
49
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Consolidated statement of comprehensive income
For the year ended 31 December 2018
Note
31 December
2018
A$’000
31 December
2017
A$’000
Revenue from the sale and shipment of coal
Mining and related costs of coal sold
Transhipment and other port costs
Sales commissions
Gross margin on coal sold
Other income
Administrative and other operating expenses
Share based payments
Exploration and evaluation expenses
Change in provisions for current assets
Royalty expenses
Results from operating activities
Net foreign exchange gain/(loss)
Finance income
Finance costs
Net finance costs
Profit/(Loss) before income tax
Income tax expense
Net Profit/(Loss)
Other comprehensive income/(loss)
Items that may subsequently be reclassified to the profit or
loss
Foreign currency translation differences for foreign operations
Total comprehensive income/(loss) for the period
Net Profit/(Loss) is attributable to:
Owners of the Company
Non-controlling interest
Net Profit/(Loss)for the period
Total comprehensive income/(loss) attributable to:
Owners of the Company
Non-controlling interest
Total comprehensive income/(loss) for the period
Earnings/(Loss) per share (cents per share)
basic
diluted
7
7
8
24
16
22
10
11
11
The notes on pages 53 to 96 are an integral part of these consolidated financial statements.
50
52,277
(14,657)
(16,609)
(71)
20,940
88
(5,690)
(324)
(354)
(369)
(2,384)
11,907
566
10
(1,565)
(989)
15,926
(9,271)
(3,768)
-
2,887
68
(5,766)
(126)
(65)
(812)
(2,126)
(5,940)
(670)
5
(382)
(1,047)
10,918
(6,987)
(38)
10,880
(120)
(7,107)
(2,162)
8,718
10,959
(79)
10,880
9,604
(886)
8,718
0.61
0.61
(32)
(7,139)
(6,213)
(894)
(7,107)
(7,102)
(37)
(7,139)
(0.35)
(0.35)
34
Tigers Realm Coal Annual Report 2018 0
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T
Tigers Realm Coal Annual Report 2018
Tigers Realm Coal Limited
Consolidated statement of cash flows
For the year ended 31 December 2018
Cash flows from operating activities
Cash receipts from customers
Interest income received
Cash paid to suppliers and employees
Exploration and evaluation expenditure
Interest and financing costs paid
Income taxes paid
Net cash generated/(used) in operating activities
Cash flows from investing activities
Acquisition of property, plant and equipment
Acquisition of restricted financial instruments
Proceeds from the disposal of restricted financial instruments
Proceeds from the disposal of property, plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Repayment of finance lease liabilities
Proceeds from borrowings
Repayment of borrowings
Security deposit
Net cash used in financing activities
Net movement 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
Note
31 December
2018
A$’000
31 December
2017
A$’000
54,396
13
(44,851)
(111)
(1,376)
(54)
8,017
(4,859)
(948)
813
-
(4,994)
(1,919)
13,421
(12,640)
-
(1,138)
1,885
2,011
(342)
3,554
13,983
8
(20,465)
(65)
(429)
(39)
(7,007)
(6,020)
(948)
-
45
(6,923)
(2,655)
1,365
-
658
(632)
(14,562)
17,109
(536)
2,011
13
12
Non-cash investing activities for the year ended 31 December 2018: Finance leases
During the year ended 31 December 2018, the Group executed a number of finance lease agreements with equipment vendors for
the acquisition of 4 haulage trucks, an excavator and a bulldozer. The cost of the property, plant and equipment was RUB 73.882
million (A$1.505 million). The value of the finance lease, after advance payments of RUB 5.753 million (A$0.117 million), was
RUB 65.194 million (A$1.328 million) upon inception.
During the year ended 31 December 2018, the Group executed a number of finance lease agreements with domestic Russian finance
providers for the acquisition of a Komatsu D375A bulldozer, a Hyundai R1200-9 excavator and a Komatsu mobile coal crusher.
The cost of the property, plant and equipment was RUB 146.058 million (A$2.976 million). The value of the finance lease, after
advance payments of RUB 28.167 million (A$0.574 million), was RUB 112.669 million (A$2.296 million) upon inception.
Non-cash investing activities for the year ended 31 December 2017: Finance leases
During the year ended 31 December 2017, the Group executed a number of finance lease agreements with equipment vendors for
the acquisition of five haulage trucks, three excavators and a bulldozer. The cost of the property, plant and equipment was RUB
107.522 million (A$2.347 million). The value of the finance lease, after advance payments of RUB 21.050 million (A$0.473
million), was RUB 82.227 million (A$1.843 million) upon inception.
The notes on pages 53 to 96 are an integral part of these consolidated financial statements.
52
36
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2018
1.
Reporting entity
Tigers Realm Coal Limited (the “Company” or “TIG”) is domiciled in Australia. During the year ended 31 December 2018, the
Company’s registered office continued to be located at 151 Wellington Parade South, Melbourne Victoria, 3002. The consolidated
financial statements of the Company as at and for the year ended 31 December 2018 comprise the Company and its subsidiaries
(together referred to as the “Group”). The Group is a for-profit entity and primarily involved in coal exploration and evaluation,
mining and sales activities.
2.
(a)
Basis of preparation
Statement of compliance
These consolidated financial statements are general purpose financial statements which have been prepared in accordance with
Australian Accounting Standards and Interpretations issued 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 20th March 2019.
(b)
Basis of preparation
The consolidated financial statements have been prepared on the historical cost basis except for certain financial instruments which
are carried at fair value and share based payment expenses which are recognised at fair value. Historical cost is based on the fair
values of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation
technique. Further details on how the Group estimates fair values of an asset or a liability are included in Note 5.
The Company is of a kind referred to in ASIC Corporations (Rounding in Financials/Directors’ Reports) Instrument 2016/191,
dated 24 March 2016, and in accordance with that Corporations Instrument amounts in the financial statements have been presented
in Australian dollars and rounded to the nearest thousand dollars, unless otherwise indicated.
(c)
Significant accounting judgements, estimates and assumptions
The application of the Group’s accounting policies, which are described in Note 3, requires management to make judgements,
estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual
results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing 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 that have the most significant effect on the amounts recognised in the financial statements and
estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial period are
described in the following notes:
•
Going concern basis of accounting
Note 3
•
•
Note 16
Inventories
Note 22
Royalty liability
37
53
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2018
3.
Significant accounting policies
The accounting policies set out below and in the related notes, have been applied consistently to all periods presented in these
consolidated financial statements and consistently throughout the Group.
(a)
Going concern basis of accounting
The consolidated annual financial statements have been prepared on the 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 2018, the Group generated a net profit of A$10.880 million (2017: Net loss of A$7.107 million),
net cash inflows from operating activities of A$8.017 million (net cash outflows for year ended 31 December 2017: A$7.007
million).
As at 31 December 2018, the Group had cash and cash equivalents of A$3.554 million (31 December 2017: A$2.011 million) and
net current assets of A$12.038 million (31 December 2017: Net current assets of A$5.151 million). As of 31 December 2018, the
Company has RUB 825.606 million (A$16.821 million) in unused, available credit lines (A$11.964 million as at 31 December
2017).
Based on the Group’s forecasted cash flows, the Group will have a surplus of liquidity throughout the twelve-month period from
the date of signing these consolidated annual financial statements. The achievement of the Group’s forecast is primarily dependent,
amongst other matters, upon:
•
•
the Group’s ability to secure financing necessary to address temporary cash shortfalls expected to arise during the period
through 20 March 2020, primarily resulting from the seasonality of the Group’s operations and plans for further discretionary
capital investment in the expansion of operating capacity. Management have engaged and continue to engage potential
providers of funding. Based on the actual achievements to date, including the renewal of the working capital loan with
Sberbank, the execution of unsecured short-term shareholder financing facilities and the servicing of any and all financing
obtained to date of signing these consolidated financial statements, the Group reasonably expects it will be able to raise that
funding necessary and within the timeframe needed; and
the successful implementation of the production, pit to port haulage, shipping and coal loading and sales and other key
assumptions applied in determining the Group’s expected future cashflows, which include but are not limited to the following:
•
•
•
•
Actual coal quality being consistent with that indicative quality identified in mine planning and testing performed to
date and incorporated into the sales budget;
Actual coal prices achieved are at or in excess of those prices utilised in management forecasting;
Actual mining and production levels being achieved and implemented within the expected cost levels, structure and
timing;
Coal loading and shipments are realised within the forecast scheduling parameters, which are subject to a number of
factors including but not limited to barge availability, transhipment efficiency and unpredictable weather conditions;
•
Compliance with ongoing drilling obligations in accordance with the terms of the Amaam and Amaam North licences;
• Macroeconomic factors including commodity (specifically coal) prices, exchange rates and the financial markets; and
•
Compliance with those terms and conditions of the Sberbank loan referred to in Note 19, including but not limited to
maintaining adequate liquidity and compliance with the relevant loan settlement terms and other covenants.
After making enquiries, and considering the uncertainties described above, the Directors are of the view that the continued
application of the going concern basis of accounting is appropriate due to the following factors:
•
The quality of coal required to realise the volume of production and sales contemplated in the Group’s forecasts is
sufficiently verified for its reasonableness by coal mining activities conducted to date. This, in conjunction with recent and
forecast current thermal and coking coal prices, provides management with a reasonable basis to conclude that receipts
from coal sales will meet those expectations reflected in cash flow forecasts;
Commercial mining operations continue in line with expectations and where necessary, mining expectations have been
amended to reflect the most recent coal mining results. With the exception of a materially adverse unforeseen event
transpiring, there have been no indicators in the coal production process to date, which would suggest coal qualities and
volumes and the cost of production being materially different than those assumptions utilised in the cash flow forecasts
through 20 March 2020;
Licence Compliance obligations for both the Amaam and Amaam North tenements have been planned for and are expected
to be achieved with minimal risk of non-compliance with licence terms and conditions. There is, therefore, a reasonable
expectation that the Group will continue to be compliant with licence drilling obligations and that no material sanctions
arising from any licence breaches will be levied;
•
•
54
38
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2018
3.
(a)
Significant accounting policies (continued)
Going concern basis of accounting
•
•
•
•
Coal shipments have been forecasted after consideration of actual port operating performance through 31 December 2018,
anticipated increased coal loading capacity achievable through the completion of port infrastructure acquisitions and those
climactic and other conditions which would be reasonably expected to occur and influence the Group’s shipping
capabilities. The occurrence of materially adverse conditions in excess of reasonable conditions may influence the Group’s
ability to meet the expected shipping schedules;
The Group retains the right to develop the Amaam North project only upon the existence of those internal and
macroeconomic conditions supporting its justification, including but not limited to a favourable coking coal price outlook,
allowing the Group to raise that additional funding required to finance the capital investment and operational requirements
of the Amaam North development plan making it commercially viable;
There are no indicators that the Group will not be able to service the Sberbank loan as and when required and remain
compliant with the loan’s covenants through to the loan’s settlement; and
There is no indication that the Group will not be able to obtain that funding which is necessary to maintain the Group’s
liquidity position through to 20 March 2020.
Accordingly, the Directors have determined that it is appropriate for the Group to continue to adopt the going concern basis in
preparing this financial report.
(b)
(i)
Basis of consolidation
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to affect those returns through power over the entity. 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 (NCI) in a subsidiary are allocated to the non-controlling interests even if doing
so reduces the non-controlling interests below zero.
All intra-group balances and transactions, and any unrealised gains and losses arising from intra-group transactions, are eliminated
in preparing the consolidated financial statements.
(ii)
Business combinations
Business combinations are accounted for using the acquisition method. The consideration transferred in a business combination is
measured at fair value, which is calculated as the sum of the acquisition-date fair values of assets transferred by the Group, liabilities
incurred by the Group to the former owners of the acquiree and the equity instruments issued by the Group in exchange for control
of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred. The Group measures goodwill at the
acquisition date as:
•
•
•
•
the fair value of the consideration transferred; plus
the recognised amount of any non-controlling interests in the acquiree; plus
if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree; less
the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are
generally recognised in the profit or loss.
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, settlement being accounted for in equity. Otherwise, subsequent changes to the fair value of the
contingent consideration are recognised in profit or loss.
39
55
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2018
3.
(b)
(ii)
Significant accounting policies (continued)
Basis of consolidation
Business combinations
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.
The assets, liabilities and contingent liabilities recognised at the 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.
(iii) Non-controlling interests
For each business combination, the Group elects to measure any NCI in the acquiree either:
•
•
at fair value; or
at their proportionate share of the acquiree’s identifiable net assets, which are generally at fair value.
Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as transactions with owners
in their capacity as owners and are recorded in an equity reserve called “Other Reserve”. Adjustments to non-controlling interests
are based on a proportionate amount of net assets of the subsidiary. No adjustments are made to goodwill and no gain or loss is
recognised in profit or loss.
(iv)
Loss of control
When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any related NCI and
other components of equity. Any resulting gain or loss is recognised in profit or loss. Any interest retained in the former subsidiary
is measured at fair value when control is lost
(c)
Foreign currency
(i)
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.
(ii)
Foreign currency transactions
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.
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.
56
40
Tigers Realm Coal Annual Report 2018
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2018
3.
(c)
Significant accounting policies (continued)
Foreign currency
(iii)
Foreign operations
(d)
(i)
For the purpose of presenting these consolidated financial statements, the assets and liabilities of foreign operations, including
goodwill and fair value adjustments arising on acquisition, are translated to the Company’s functional currency at exchange rates
at the reporting date. The income and expenses of foreign operations are translated to Australian dollars at average exchange rates
for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the
transactions are used.
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 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.
Financial Instruments
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 transactions 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, 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.
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.
Refer to Note 14 for details of trade and other receivables and Note 15 for Investments in restricted financial instruments
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with an original maturity of three months or less from
the acquisition date that are subject to insignificant risk of changes in their fair value and are used by the Group in the
management of its short-term commitments.
(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
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.
Finance leases
Finance leases to be paid in accordance with a payment schedule based on the contractual agreements.
41
57
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2018
3.
(e)
(f)
(i)
Significant accounting policies (continued)
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.
Intangible assets
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. In the year ended 31 December 2015 all mineral rights were written-down. Details of the policy on assessing
the carrying value of non-current assets are disclosed in Note 9.
(ii)
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(b)(ii) (business combinations).
Goodwill is measured at cost less accumulated impairment losses. Goodwill is not amortised, however its carrying value is assessed
annually against its recoverable amoun. 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. In the year ended
31 December 2015 all goodwill was written-down. Details of the policy on assessing the carrying value of non-current assets are
disclosed in Note 9.
(iii)
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.
(iv)
Subsequent expenditure
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 profit or loss as incurred.
(v)
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 life 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.
(g)
Impairment of 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.
58
42
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2018
3.
(h)
Significant accounting policies (continued)
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. The probability of an
outflow of economic benefits is one of the key criteria in determining the recognition and measurement of legal and constructive
obligations:
•
If the likelihood of an outflow of economic resources is remote, neither disclosure of a contingency nor the recognition
of a provision is made;
If the likelihood of an outflow of economic resources is possible, a contingent liability is disclosed in the financial
statements, unless the acquisition method of accounting for business combinations in Note 3(b)(ii) are applied and a
liability equivalent to the fair value of the future outflows of economic benefits is able to be determined; or
If the likelihood of an outflow of economic resources is probable, a provision is recognised.
•
•
Provisions are determined by assessing the present value of the expected future outflow of economic benefits. The discounting of
the expected (probable) future cash flows 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 charge.
(i)
Leases
Assets held under other leases are classified as operating leases and are not recognised in the Group’s statement of financial
position.
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.
(j)
Exploration and evaluation costs
Exploration and evaluation expenditure comprises costs directly attributable to:
•
•
•
•
•
Research and analysing exploration data;
Conducting geological studies, exploratory drilling and sampling;
Examining and testing extraction and treatment methods;
Compiling pre-feasibility and definitive feasibility studies; and
Exploration and evaluation costs, including the costs of acquiring licences.
Exploration and evaluation expenditure is charged against profit and loss as incurred, except for expenditure incurred after a decision to
proceed to development is made, in which case the expenditure is capitalised as an asset.
(k)
Goods and services tax
Revenue, expenses and assets are recognised net of the amount of goods and services and similar value added taxes (VAT in Russia and
GST in Australia), except where the amount of VAT/GST incurred is not recoverable from the taxation authority. In these circumstances,
the VAT/GST is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated excluding the amount of VAT/GST included. The net amount of VAT/GST recoverable from, or
payable to, the relevant tax authorities 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 VAT/GST components of cash flows arising from investing and financing activities which are
recoverable from, or payable to, the relevant tax authorities are classified as operating cash flows.
(l)
Other significant accounting policies
Significant accounting policies that summarise the measurement and recognition basis used and which are relevant to an
understanding of the financial statements are provided throughout the notes to the financial statements.
43
59
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2018
4.
(a)
Application of new and revised accounting standards
New and amended standards adopted
The Group has adopted the following new and revised standards and interpretations issued by AASB that a relevant to their
operations and effective for the current year
Standard/Interpretation
AASB 9 Financial Instruments
AASB 15 Revenue from Contracts with Customers
AASB 2016-5 Amendments to Australian Accounting Standards - Classification and Measurement of Share-based
Payment Transactions
AASB 2016-6 Amendments to Australian Accounting Standards – Applying AASB 9 Financial Instruments with
AASB 4 Insurance Contracts, AASB 2017-3 Amendments to Australian Accounting Standards – Clarifications to
AASB 4
AASB 2017-1 Amendments to Australian Accounting Standards – Transfers of Investment Property, Annual
Improvements 2014-2016 Cycle and Other Amendments
AASB 2017-5 Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and
AASB 128 and Editorial Corrections
In the current year, the Group has applied AASB 15 Revenue from Contracts with Customers (as amended in April 2016) which is
effective for an annual period that begins on or after 1 January 2018. AASB 15 introduced a 5-step approach to revenue recognition.
Far more prescriptive guidance has been added in AASB 15 to deal with specific scenarios. The Group’s accounting policies for
its revenue streams are disclosed in detail in Note 7 below. Apart from providing more extensive disclosures for the Group’s
revenue transactions, the application of AASB 15 has not had a significant impact on the financial position and/or financial
performance of the Group.
The application of above other standards and amendments has had no impact on the Group's consolidated financial statements.
The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective for the year
ended 31 December 2018.
60
44
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2018
4.
(b)
Application of new and revised accounting standards
Standard and interpretations in issue not yet adopted
A number of new standards, amendments to standards and interpretations are issued but not yet effective for annual periods
beginning after 1 January 2018 and have not been applied in preparing these consolidated financial statements.
Standard/Interpretation
AASB 16 Leases
AASB 2017-4 Amendments to Australian Accounting Standards – Uncertainty over Income Tax
Treatments
AASB 17 Insurance Contacts
AASB 2017-6 Amendments to Australian Accounting Standards – Prepayment Features with
Negative Compensation
AASB 2017-7 Amendments to Australian Accounting Standards – Long-term Interests in Associates
and Joint Ventures
AASB 2018-1Amendments to Australian Accounting Standards – Annual Improvements 2015–2017
Cycle
AASB 2018-6 Amendments to Australian Accounting Standards – Definition of a Business
AASB 2018-7 Amendments to Australian Accounting Standards – Definition of Material
Effective for annual
reporting periods
beginning on or after
Applicable to annual
reporting periods
beginning on or after 1
January 2019
Applicable to annual
reporting periods
beginning on or after 1
January 2019
Applicable to annual
reporting periods
beginning on or after 1
January 2019
Applicable to annual
reporting periods
beginning on or after 1
January 2019
Applicable to annual
reporting periods
beginning on or after 1
January 2019
Applicable to annual
reporting periods
beginning on or after 1
January 2019
Applicable to annual
reporting periods
beginning on or after 1
January 2020
Applicable to annual
reporting periods
beginning on or after 1
January 2020
AASB 16 will change how the Group accounts for leases previously classified as operating leases under AASB 117, which were
off-balance sheet. On initial application of AASB 16, for all leases (except as noted below), the Group will recognise right-of-use
assets and lease liabilities in the consolidated statement of financial position, initially measured at the present value of the future
lease payments.
For short-term leases (lease term of 12 months or less) and leases of low-value assets (such as personal computers and office
furniture), the Group will opt to recognise a lease expense on a straight-line basis as permitted by AASB 16.
As at 31 December 2018, the Group has non-cancellable operating lease commitments of A$3.716 million, as disclosed in Note
26. A preliminary assessment indicates that A$3.656 million relates to leases other than short-term leases and leases of low-value
assets, and hence the Group will recognise a right-of-use asset and a corresponding lease liability of A$0.623 million.
The directors of the Company do not anticipate that the application of other standards and amendments will have a material impact
on the Group's consolidated financial statements.
45
61
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2018
5.
Determination of fair values
A number of the Group’s accounting policies and disclosures require the determination of fair value for financial assets and
liabilities.
When measuring the fair value of an asset or liability, the Group uses market observable data as far as possible. Fair values are
categorised into different levels in a fair value hierarchy based on inputs used in valuation techniques as follows:
•
•
•
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e.
as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or liability might be categorised in different levels of the fair value hierarchy,
then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input
that is significant to the entire measurement.
The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change
occurred.
(a)
Non-derivative financial assets and 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. Short-term receivables with no stated interest rate are
measured at the original invoice amount if the effect of discounting is immaterial. Fair value is determined at initial recognition
and, for disclosure purposes, at each annual reporting date.
Further information about the assumptions made in measuring fair values is included in Note 25.
62
46
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2018
6.
Segment reporting
The Group has two reportable segments, as described below, which are the Group’s main mineral mining and 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 performance and determining the allocation of resources.
The accounting policies used by the Group in reporting segments internally are the same as the Group accounting policies. For the
year ended 31 December 2018, the activities of the Group are managed in two reportable operating segments outlined below,
consistent with how they were managed in the 2017 financial year:
Amaam North Project
Amaam Project
Other
The Amaam North Project is located in the Bering Basin in the Chukotka province,
Russia and consists of the Amaam North tenement. The Project also includes
infrastructure assets associated with the Beringovsky Port and Coal Terminal.
The Amaam Project is in the Bering Basin in the Chukotka province, Russia and
consists of the Amaam tenement.
Consists of corporate and office expenses primarily incurred at the Group’s
Moscow and Melbourne offices. This is not a reportable segment.
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 included in “Other”, which
is not a reportable segment.
31 December 2018
Revenue from the shipment and sale of
coal
Interest and other income
Cost of coal sold
Change in provisions for current assets
Depreciation and amortisation
Exploration and evaluation expenses
Royalty expenses
Finance costs
Other segment expenses
Net foreign exchange gain
Segment result
Segment assets
Segment liabilities
31 December 2017
Revenue from the shipment and sale of
coal
Interest and other income
Cost of coal sold
Change in provisions for current assets
Depreciation and amortisation
Royalty expense
Finance costs
Other segment expenses
Net foreign exchange gain / (loss)
Segment result
Segment assets
Segment liabilities
Amaam North
Project
A$’000
Amaam
Project
A$’000
Total
Reportable
Segments
A$’000
Other
A$’000
Total
A$’000
52,277
88
(31,337)
(369)
(306)
(85)
(2,384)
(1,565)
(4,208)
520
12,631
-
-
-
-
-
(269)
-
-
(111)
-
(380)
52,277
88
(31,337)
(369)
(306)
(354)
(2,384)
(1,565)
(4,319)
520
12,251
-
-
-
-
-
-
-
-
(1,379)
46
(1,333)
52,277
88
(31,337)
(369)
(306)
(354)
(2,384)
(1,565)
(5,698)
566
10,918
40,809
70
40,879
4,080
44,959
(22,106)
(188)
(22,294)
(125)
(22,419)
15,926
68
(13,039)
(812)
(279)
(2,126)
(382)
(4,376)
77
(4,943)
26,238
(14,052)
-
-
-
-
-
-
-
(174)
-
(174)
35
(3)
15,926
68
(13,039)
(812)
(279)
(2,126)
(382)
(4,550)
77
(5,117)
26,273
(14,055)
-
5
-
-
-
-
-
(1,128)
(747)
(1,870)
1,564
(284)
15,926
73
(13,039)
(812)
(279)
(2,126)
(382)
(5,678)
(670)
(6,987)
27,837
(14,339)
47
63
Tigers Realm Coal Annual Report 2018 64
Tigers Realm Coal Limited Notes to the consolidated financial statements For the year ended 31 December 2018 48 6. Segment reporting (continued) Geographical information The Group manages its business on a worldwide basis but primarily holds non-current assets in one geographic segment, Russia. 2018 2017 Revenues Non-current assets Revenues Non-current assets A$’000 A$’000 A$’000 A$’000 Asia 52,277 - 15,578 - Russia 88 20,982 416 15,600 Total 52,365 20,982 15,994 15,600 Customer information Included in revenues from the sale and shipment of coal are revenues of A$45.378 million (2017: A$14.375 million) which arose from sales to customers from whom at least 10% of the total revenues from the shipping and sale of coal were individually derived. No other single customers contributed 10% or more to the Group’s revenue in either 2018 or 2017. 7. Revenue 31 December 2018 31 December 2017 A$’000 A$’000 Revenue from thermal coal sales 20,017 9,820 Revenue from semisoft coal sales 23,000 4,290 Revenue from shipment of coal 9,260 1,816 Total revenue from the sale and shipment of coal 52,277 15,926 Other income 88 68 Total revenue 52,365 15,994 Recognition and measurement: Revenue Revenue from the sale of coal is recognised when all the following conditions have been satisfied: (a) the parties to the contract have approved the contract (in writing, orally or in accordance with other customary business practices) and are committed to perform their respective obligations; (b) the Company can identify each party’s rights regarding the goods or services to be transferred; (c) the Company can identify the payment terms for the goods or services to be transferred; (d) the contract has commercial substance (ie the risk, timing or amount of the entity’s future cash flows is expected to change as a result of the contract); and (e) it is probable that the Company will collect the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer. In evaluating whether collectability of an amount of consideration is probable, the Company considers only the customer’s ability and intention to pay that amount of consideration when it is due. The amount of consideration to the Company will be entitled may be less than the price stated in the contract if the consideration is variable because a price concession may be offer ed to the customer. Revenue is recognised when (or as) the Company satisfies a performance obligation by transferring a promised good or service to a customer. An asset is transferred when (or as) the customer obtains control of that asset. Revenue is measured at the fair value of the consideration received or receivable, reflecting contractually defined terms of payment and excluding taxes, levies or duties collected on behalf of the government/ other statutory bodies. Coal products are sold in accordance with internationally recognised shipping terms (INCO terms), primarily on either free on board (“FOB”), Beringovsky Port or cost and freight (“CFR”) terms. Where sales are made on the FOB basis, the satisfaction of the performance obligation in respect of coal delivery is achieved after the time the goods have been delivered on board the vessel. Sales made in accordance with CFR terms differ to FOB as the Company is obliged to pay for the cost of shipping and other costs necessary to bring the product to the destination port. In CFR sales, the performance obligations arise from the delivery of coal on board the vessel and provision of shipping services to the customer. Preliminary volume and quality of coal shipped are independently measured upon loading the vessel at the Beringovsky Port. Coal sales contracts include terms in accordance with which the sales price is defined with reference to the initial coal quality parameters, as adjusted for the results of coal quality tests performed upon delivery of the product to the destination port. If coal does not meet minimum standards, the shipment may be either rejected or an adjustment made up or down to the initial contract price. Accordingly, the Company recognises revenue on coal sales at the earlier of when loaded on to the vessel or when the coal quality tests at the destination port affirm both the mass and quality characteristics, dependent upon the specific terms of each sales agreement. Revenue from the shipment of coal is recognised at the point of delivery on shore at the destination port. Advances received from the customers are reported as customer’s deposits unless the above conditions are satisfied. Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2018
8.
Administrative and other operating expenses
Wages, salaries and other personnel costs
Contractors and consultants’ fees
Legal fees and compliance costs
Depreciation expense
Repairs and maintenance
Port operating expenses
Accounting and audit fees
Office accommodation costs
Transportation and freight costs
Travel
IT and communication costs
Insurance
Other
9.
Carrying value of non-current assets
Amaam North Project CGU
31 December
2018
A$’000
31 December
2017
A$’000
(2,585)
(707)
(264)
(306)
(10)
(313)
(250)
(220)
(19)
(257)
(58)
(100)
(601)
(5,690)
(2,242)
(1,124)
(907)
(279)
-
(18)
(244)
(166)
(2)
(191)
(97)
(100)
(396)
(5,766)
During the year ended 31 December 2018, the carrying value of non-current assets of the Amaam North Project CGU, net of
accumulated depreciation, increased by A$3.923 million to A$19.523 million (As of 31 December 2017: A$15.600 million) (refer
to Note 17 for details).
As at 31 December 2018, the Group concluded that due to:
•
•
•
•
Continued realisation of Phase One of the Amaam North Feasibility Study Update’s principles;
Profits generated from the coal sales realised during 2018;
The absence of significant adverse changes in mid and long-term coal price forecasts; and
The completion of the asset procurement and infrastructure development activities in 2018 sufficient to advance expected
production and sales volumes in 2019,
there is no necessity to recognise further impairment losses for the Amaam North Project CGU and accordingly the assets are
measured at their carrying value.
Management also believe that until both production and sales levels and related financial performance assumptions currently
included in deriving the Amaam North CGU’s positive recoverable amount are verified by sufficient observable indications of the
ability to achieve these assumptions on an ongoing basis, there is no necessity for the reversal of impairment losses recognised in
prior periods.
Methodology
The Group assessed the recoverable amount of Amaam North Project CGU primarily through determining its value-in-use. The
Group estimates the value-in-use of the Amaam North Project CGU using a discounted cash flow model for the life of the project.
The projected cash flows are for a period in excess of five years and represent management’s estimate of the life of mine.
Amaam Project CGU
During the year ended 31 December 2018, there were minimal activities undertaken at the Amaam Project CGU, there being no
additions to the carrying value of non-current assets, their carrying value remaining at $Nil as at 31 December 2018. As the
development of the Amaam Project is not expected in the foreseeable future, as at 31 December 2018, the Group concluded that
there are no indications that asset write-downs recognised in prior periods for Amaam Project CGU require reversal.
49
65
Tigers Realm Coal Annual Report 2018 66
Tigers Realm Coal Limited Notes to the consolidated financial statements For the year ended 31 December 2018 50 9.Carrying value of non-current assets10.Income tax expenseA reconciliation between tax expense and accounting profit multiplied by Australia’s domestic tax rate for the years ended 31December 2018 and 2017 is set out below:31 December 2018 31 December 2017 A$’000 A$’000 Profit/(Loss) before tax from continuing operations 10,918 (6,987) Income tax expense/(benefit) using the domestic corporation tax rate of 30% 3,275 (2,096) Changes in income tax expense due to: Effect of tax rates in foreign jurisdictions (1,041) 1,033 Non-deductible royalty expenses 287 258 Tax deductible expenses not recognised for accounting purposes -(317)Assessable imputed interest income 80 80 Non-assessable income (3,338) - Non-deductible expenses-other - 106Adjustments to prior periods’ assessable income - 44Current period tax losses for which no deferred tax asset was recognised 775 1,002 Total income tax expense on pre-tax net profit 38 120 Recognition and measurement: Non-current assets The carrying amounts of the Group’s non-financial assets excluding goodwill are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. For goodwill the recoverable amount is estimated at each reporting date. 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 generate 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 recognised in respect of cash-generating units are allocated first to reduce the carrying value of any goodwill allocated to the cash generating units and then to reduce the carrying amount of the other assets in the cash generating 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. Tigers Realm Coal Annual Report 2018 67
Tigers Realm Coal Limited Notes to the consolidated financial statements For the year ended 31 December 2018 51 10.Income tax expense (continued)31 December 2018 31 December 2017 A$’000 A$’000 Current tax expense 38 120 Deferred tax (benefit) - - Total income tax expense 38 120 Unrecognised deferred tax assets 31 December 2018 A$’000 31 December 2017 A$’000 Net deferred tax assets not recognised in respect of tax losses 23,722 23,845 Recognition and measurement: Income taxes Income tax expense comprises current and deferred tax. Current and deferred tax is recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity, or in comprehensive income. Current tax Current tax is the expected tax payable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Tigers Realm Coal Annual Report 2018 68
Tigers Realm Coal Limited Notes to the consolidated financial statements For the year ended 31 December 2018 52 10.Income tax expense (continued)Recognition and measurement: Income taxes (continued) Deferred tax Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. 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. Tax exposure 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. 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. The tax losses incurred in Australia do not expire under current tax legislation. In overseas jurisdictions, tax losses can be carried forward for varying periods. As at 31 December 2018 and 2017, no deferred tax assets have been recognised for carried forward tax losses as it is not probable that future taxable profit will be available against which the Group can utilise the benefits. Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2018
11.
Earnings / (Loss) per share
Earnings / (Loss) per share
Basic earnings / (loss) per share – cents
Diluted earnings / (loss) per share – cents
31 December
2018
Cents
31 December
2017
cents
a
b
0.61
0.61
(0.35)
(0.35)
Basic earnings / (loss) per share
(a)
The calculation of basic earnings per share (EPS) at 31 December 2018 was based on the profit attributable to ordinary equity
holders of the Company of A$10.959 million (At 31 December 2017: loss of A$6.213 million) and a weighted average number of
ordinary shares outstanding during the period ended 31 December 2018 of 1,791,669,870 (For the year ended 31 December 2017:
1,791,669,870).
Diluted profit / (loss) per share
(b)
The calculation of diluted earnings per share at 31 December 2018 is the same as basic earnings per share. The Company had issued
33,669,000 options over ordinary shares, which have been excluded from the calculation of diluted earnings per share because they
are anti-dilutive for the reporting period.
12.
Cash and cash equivalents
Bank balances
31 December
2018
A$’000
31 December
2017
A$’000
3,554
3,554
2,011
2,011
All cash and cash equivalents are available for use by the Group.
13.
Reconciliation of profit/(loss) for the year to net cash flows from operating activities
Cash flows from operating activities
Profit/ (Loss) for the period
Foreign exchange gain
Share based payments
Royalty expenses
Depreciation expensed
Change in provisions for current assets
Income tax expense
Movements in working capital
Change in trade and other receivables
Change in inventory
Change in other assets
Change in prepayments
Change in employee provisions
Change in trade and other payables
Net cash generated/(used) in operating activities
31 December
2018
A$’000
31 December
2017
A$’000
10,880
11
324
2,384
2,797
369
38
16,803
312
(12,220)
58
350
179
2,535
8,017
(7,107)
15
126
1,996
279
812
81
(3,798)
(1,541)
(4,010)
(80)
(998)
369
3,051
(7,007)
53
69
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2018
14.
Trade and other receivables
Trade and other receivables
VAT and GST receivable
15.
Investments in restricted financial instruments
Alfa Bank promissory notes
31 December
2018
A$’000
31 December
2017
A$’000
226
2,360
2,586
1,184
1,714
2,898
31 December
2018
A$’000
31 December
2017
A$’000
935
935
861
861
On 26 December 2018, the Company acquired six promissory notes issued by Alfa Bank, a leading Russian commercial bank, with
a nominal value of RUB 7,650,000 (A$0.156 million) as a condition precedent to the completion of the Sberbank loan. These
promissory notes are at call after their maturity on 30 January 2019 and accrue interest at the rate of 6.45% per annum. The
promissory notes’ fair value approximates their nominal value and accordingly are measured at their fair value. The promissory
notes are pledged as collateral to the Sberbank loan and are therefore effectively not redeemable until such time as all amounts due
to Sberbank have been settled. For further details of the Sberbank loan, refer to Note 19.
On 21 December 2017, the Group acquired twelve promissory notes issued by Alfa Bank as a condition precedent to the completion
of the Sberbank loan. These promissory notes were at call after their maturity on 31 January 2018 and accrued interest at the rate
of 5.9% per annum. The promissory notes were redeemed throughout the course of 2018 in accordance with the terms of the
Sberbank loan.
16.
Inventories
Coal inventories: net of provision of A$0.830 million for recognition of
inventories at the lower of cost and their net realisable value (At 31
December 2017: A$ 0.850 million)
Fuel: net of provision of A$0.032 (At 31 December 2017 Nil)
Other consumables: net of provision of A$0.266 million (At 31 December
2017 A$0.417 million)
Current
Non-current
31 December
2018
A$’000
31 December
2017
A$’000
8,801
4,985
3,445
17,231
15,772
1,459
17,231
2,386
462
2,081
4,929
4,929
-
4,929
Management performs a regular review of the recoverability of inventories, including coal stocks, to assess the Company’s ability
to recover the cost of inventories on hand. Accordingly, a provision of A$0.830 million was recognised for the recoverability at 31
December 2018 of 67kt of non-current inventories of coal stockpiled at the Company’s interim coal stockpile, requiring further
processing prior to commercial realisation.
70
54
Tigers Realm Coal Annual Report 2018
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2018
14.
Trade and other receivables
15.
Investments in restricted financial instruments
Trade and other receivables
VAT and GST receivable
Alfa Bank promissory notes
31 December
31 December
2018
A$’000
2017
A$’000
226
2,360
2,586
1,184
1,714
2,898
31 December
31 December
2018
A$’000
2017
A$’000
935
935
861
861
On 26 December 2018, the Company acquired six promissory notes issued by Alfa Bank, a leading Russian commercial bank, with
a nominal value of RUB 7,650,000 (A$0.156 million) as a condition precedent to the completion of the Sberbank loan. These
promissory notes are at call after their maturity on 30 January 2019 and accrue interest at the rate of 6.45% per annum. The
promissory notes’ fair value approximates their nominal value and accordingly are measured at their fair value. The promissory
notes are pledged as collateral to the Sberbank loan and are therefore effectively not redeemable until such time as all amounts due
to Sberbank have been settled. For further details of the Sberbank loan, refer to Note 19.
On 21 December 2017, the Group acquired twelve promissory notes issued by Alfa Bank as a condition precedent to the completion
of the Sberbank loan. These promissory notes were at call after their maturity on 31 January 2018 and accrued interest at the rate
of 5.9% per annum. The promissory notes were redeemed throughout the course of 2018 in accordance with the terms of the
Sberbank loan.
16.
Inventories
31 December
31 December
2018
A$’000
2017
A$’000
Coal inventories: net of provision of A$0.830 million for recognition of
inventories at the lower of cost and their net realisable value (At 31
December 2017: A$ 0.850 million)
Fuel: net of provision of A$0.032 (At 31 December 2017 Nil)
Other consumables: net of provision of A$0.266 million (At 31 December
2017 A$0.417 million)
Current
Non-current
8,801
4,985
3,445
17,231
15,772
1,459
17,231
Management performs a regular review of the recoverability of inventories, including coal stocks, to assess the Company’s ability
to recover the cost of inventories on hand. Accordingly, a provision of A$0.830 million was recognised for the recoverability at 31
December 2018 of 67kt of non-current inventories of coal stockpiled at the Company’s interim coal stockpile, requiring further
processing prior to commercial realisation.
2,386
462
2,081
4,929
4,929
-
4,929
54
71
Tigers Realm Coal Limited Notes to the consolidated financial statements For the year ended 31 December 2018 55 16.InventoriesRecognition and measurement: Inventories Inventories are valued at the lower of cost and net realisable value and upon initial recognition on the weighted average cost basis. The cost of raw materials and consumable stores is the purchase price. The cost of partly-processed and saleable products is generally the cost of production, including: •labour costs, materials and contractor expenses which are directly attributable to the extraction and processing of ore;•the depreciation of mining properties and leases and of property, plant and equipment used in the extraction and processingof ore; and•production overheads.Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are periodically assessed for the existence of slow moving and obsolete stocks and adjustments to the recoverable amount recognised as necessary. Tigers Realm Coal Annual Report 2018
6
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Tigers Realm Coal Annual Report 2018
73
Tigers Realm Coal Limited Notes to the consolidated financial statements For the year ended 31 December 2018 57 17.Property, plant and equipment (continued)Recognition and measurement: Property, plant and equipment Items of property, plant and equipment are measured at cost less accumulated depreciation and cumulative impairment losses. Cost includes expenditure that is directly attributable to the acquisition or construction of an asset. Once an undeveloped mining project has been determined as commercially viable and approval to mine has been given, expenditure other than that on land, buildings, fixtures and fittings, plant and equipment and capital work in progress is capitalised under “Mine Infrastructure”. Ore reserves may be declared for an undeveloped mining project before its commercial viability has been fully determined. Development costs incurred after the commencement of production are capitalised to the extent they are expected to give rise to a future economic benefit. 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. Depreciation Property, plant and equipment is depreciated over the lesser of its useful life or over the remaining life of the mine where there is no reasonable alternative use for the asset. The useful lives and residual values for material assets and categories of assets are reviewed annually and changes are reflected prospectively. Depreciation commences when an asset is available and ready for its intended use. The major categories of property, plant and equipment are depreciated on a straight-line basis, except for mining assets, which are depreciated on a units of production basis. Straight-line basis Assets within operations for which production is not expected to fluctuate significantly from one year to another or which have a physical life shorter than the related mine are depreciated on a straight-line basis. The estimated useful lives are as follows: •Buildings10 – 20 years •Plant & equipment3 – 10 years •Fixtures & fittings3 – 10 years Units of production basis For mining assets, consumption of the economic benefits of the asset is linked to production. These assets are depreciated on the lesser of the respective assets’ useful lives and the life of the ore body in respect of which the assets are being used. Where the useful life of the assets is greater than the life of the ore body for which they are being utilised, depreciation is determined on a units of production basis. In applying the units of production method, depreciation is normally calculated based on production in the period as a percentage of total expected production in current and future periods based on ore reserves and other mineral resources. Tigers Realm Coal Annual Report 2018 74
Tigers Realm Coal Limited Notes to the consolidated financial statements For the year ended 31 December 2018 58 17.Property, plant and equipment (continued)18.Trade and other payables31 December 2018 31 December 2017 A$’000 A$’000 Trade payables and accrued expenses 6,251 3,796 Taxes payable 191 111 6,442 3,907 Current 6,246 3,767 Non-current 196 140 6,442 3,907 Recognition and measurement: Property, plant and equipment Stripping Costs In open pit mining operations, overburden and other waste materials must be removed to access ore from which minerals can be extracted economically. The process of removing overburden and waste materials is referred to as stripping. Stripping costs during the development of a mine (or pit), before production commences, are generally expensed as incurred except when capitalised as part of the cost of construction of the mine (or pit) and subsequently amortised over the life of the mine (or pit) on a units of production basis only where the below criteria are all met: •it must be probable that there will be an economic benefit in a future accounting period because the stripping activity hasimproved access to the orebody;•it must be possible to identify the “component” of the orebody for which access has been improved; and•it must be possible to reliably measure the costs that relate to the stripping activity.Production phase stripping can give rise to two benefits: the extraction of ore in the current period and improved access to ore which will be extracted in future periods. When the cost of stripping which has a future benefit is not distinguishable from the cost ofproducing current inventories, the stripping cost is allocated to each of these activities based on a relevant production measure using a life-of-component strip ratio. The ratio divides the tonnage of waste mined for the component for the period either by the quantityof ore mined for the component or by the quantity of minerals contained in the ore mined for the component. Stripping costs for thecomponent are deferred to the extent that the current period ratio exceeds the life of component ratio.Tigers Realm Coal Annual Report 2018 75
Tigers Realm Coal Limited Notes to the consolidated financial statements For the year ended 31 December 2018 59 19.Bank loans payable31 December 2018 31 December 2017 A$’000 A$’000 Bank loans payable 1,516 1,357 1,516 1,357 Movement in bank loans: 31 December 2018 31 December 2017 A$’000 A$’000 Opening balance of bank loans 1,357 - Borrowings during the year 13,421 1,365 Repayment of borrowings (12,640) - Net effect of movement in exchange rates (622) (8) Total bank loans at end of the year 1,516 1,357 On 28 December 2018, the Group entered into a non-revolving credit line to be settled by no later than 27 December 2019, in accordance with which it borrow up to RUB 900 million (A$18.336 million). As of 31 December 2018, RUB 74.393 million (A$1.516 million) has been drawn down. The interest on outstanding balances accrues at between 10.2% and 11.2% per annum and a fee for unused facilities accrues at 0.5% per annum. The loan was secured by a pledge over moveable tangible assets with a carrying value as at 31 December 2018 of A$2.700 million (RUB 132.545million) on 28 February 2019. The outstanding balance is also secured by cross guarantees provided by the Company’s Russian subsidiaries and the subordination of intragroup loans. An arrangement fee of RUB 5.4 million (A$0.110 million) was paid to activate the loan and is amortised over the period during which the loan is available for drawdown, through 30 September 2019. As an integral component of the agreement, the Group is required to guarantee interest payments under the loan by acquiring a promissory note which is also pledged as collateral to the bank. The Group acquired Alfa Bank promissory notes to the value of RUB 45.9 million (A$0.935 million) to this end, the details of which are disclosed in Note 15. The loan has a number of covenants which are generally expected in such transactions, which the company is required to comply with until the settlement of all outstanding amounts. On 22 December 2017, the Group entered into a RUB 600 million (A$13.308 million) non-revolving credit line to be settled by no later than 21 December 2018. As of 31 December 2017, RUB 61.157 million (A$1.357 million) was drawn down. Interest on outstanding balances accrued at 9.9% per annum and a fee for unused facilities accrues at 0.5% per annum. The loan was secured by a pledge over moveable tangible assets with a carrying value as at 31 December 2017 of A$2.479 million. The outstanding balance was secured by cross guarantees provided by Russian subsidiaries and subordination of intragroup loans. Throughout 2018, the balance of this loan was drawn down, the outstanding balance was fully repaid in December 2018. An arrangement fee of RUB 3 million (A$0.067 million) was paid to activate the loan and is amortised over the period during which the loan was available for drawdown, through 31 August 2018. Recognition and measurement: Loans payable and financing costs Loans payable are recorded at their fair value after consideration of their terms and conditions. Any fees and commissions associated with the execution of loans payable are amortised over the term in respect to which they relate. These fees include, but are not limited to, arrangement fees and fees on unused and available credit lines. Interest on unpaid balances is accrued as incurred. Tigers Realm Coal Annual Report 2018 76
Tigers Realm Coal Limited Notes to the consolidated financial statements For the year ended 31 December 2018 60 20.Employee Benefits31 December 2018 31 December 2017 A$’000 A$’000 Provision for annual leave 260 242 Provision for salary and related costs payable 359 434 Provision for other employment benefits 104 162 Provision for bonuses 593 299 1,316 1,137 21.Lease Liability31 December 2018 31 December 2017 A$’000 A$’000 Lease expenditure contracted and provided for: Payable not later than one year 2,931 1,126 Payable later than one year, not later than five years 3,000 2,113 5,931 3,239 Future finance charges (1,182) (743) Total lease liabilities 4,749 2,496 Current 2,223 739 Non-current 2,526 1,757 4,749 2,496 Movement in finance lease liabilities are as follows 31 December 2018 31 December 2017 A$’000 A$’000 Opening balance of finance lease liability 2,496 2,839 New finance lease agreements entered during the year 4,530 2,316 Finance lease payments (1,919) (2,655) Net effect of movement in exchange rates (358) (4) Total finance lease liability recognised at end of year 4,749 2,496 Recognition and measurement: 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 resulting from past service provided by the employee, and the obligation can be estimated reliably. Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2018
21.
Lease Liability (continued)
The terms and conditions of finance leases are as follows:
Currency
Effective
interest rate
Year of
maturity
Value at inception
Carrying
amount
31 December 2018
Vendor finance lease liabilities
RUB
Russian Financing Company
lease liabilities
RUB
13.10%-
20.24%
19.36%-
21.55%
2020-2022
RUB 255,563
RUB 133,766
2021
RUB 140,837
RUB 99,541
Vendor finance leasing in 2018
During the year ended 31 December 2018, the Group executed a number of finance lease agreements with equipment vendors
for the acquisition of 4 haulage trucks, an excavator and a bulldozer. The cost of the property, plant and equipment was RUB
73.882 million (A$1.505 million). The value of the finance lease, after advance payments of RUB 5.753 million (A$0.117
million), was RUB 65.194 million (A$1.328 million) upon inception and RUB 54.629 million (A$1.113 million) at 31 December
2018.
Russian Finance Company finance leasing in 2018
During the year ended 31 December 2018, the Group executed a number of finance lease agreements with domestic Russian
finance providers for the acquisition of a Komatsu D375A bulldozer, a Hyundai R1200-9 excavator and a Komatsu mobile coal
crusher. The cost of the property, plant and equipment was RUB 146.058 million (A$2.976 million). The value of the finance
lease, after advance payments of RUB 28.167 million (A$0.574 million), was RUB 112.669 million (A$2.296 million) upon
inception and RUB 99.541 million (A$2.028 million) at 31 December 2018.
The Komatsu mobile coal crusher were delivered to Anadyr Port in October 2018. As weather did not permit the on-shipment of
the equipment to Beringovsky, the equipment remains in Anadyr and is expected to be delivered to Beringovsky in the first half
of 2019.
Vendor finance leasing in 2017
During the year ended 31 December 2017, the Group executed a number of finance lease agreements with equipment vendors
for the acquisition of five haulage trucks, three excavators and a bulldozer. The cost of the property, plant and equipment was
RUB 107.522 million (A$2.347 million). The value of the finance lease, after advance payments of RUB 21.050 million (A$0.473
million), was RUB 82.227 million (A$1.843 million) upon inception and RUB 74.656 million (A$1.660 million) at 31 December
2017.
61
77
Tigers Realm Coal Annual Report 2018 78
Tigers Realm Coal Limited Notes to the consolidated financial statements For the year ended 31 December 2018 62 21.Lease Liability (continued)22.Royalty Liability31 December 2018 31 December 2017 A$’000 A$’000 Opening balance of royalty agreement liability 5,378 3,681 Royalty expenses 2,384 2,126 Payments made during the year (85) (130) Effect of movement in exchange rates 563 (299) Total royalty agreement liability at year end 8,240 5,378 Current 638 86 Non-current 7,602 5,292 8,240 5,378 The Group entered into a number of royalty agreements as part of obtaining interests in the Amaam North and Amaam Projects. These royalty agreements are dependent upon the performance of a number of conditions precedent, the realisation of which may result in royalty payments of between 1.5% and 3%, with a cap placed on total royalty payments of US$25 million. Recognition and measurement: Finance leases Assets held by the Group under leases which transfer to the Group substantially all the risks and rewards of ownership are classified as finance leases. On initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.These finance lease commitments relate to the acquisition of mobile fleet used in the early development stage and subsequently in mining activities at Project F Amaam North and is based on the cost of the assets. Assets held by the Group under leases which transfer to the Group substantially all the risks and rewards of ownership are classified as finance leases. On initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Finance lease related interest and other charges are recognised in the statement of comprehensive income. Tigers Realm Coal Annual Report 2018 79
Tigers Realm Coal Limited Notes to the consolidated financial statements For the year ended 31 December 2018 63 22. Royalty Liability (continued) Amaam North Royalty Liability Following the raising of funds and commencement of Amaam North Project F Phase One, the Group concluded it is probable that an outflow of resources embodying economic benefits will be required to settle royalty obligations and accordingly a provision was required for the obligations under existing royalty agreements. While the amount of provision recognised represents the best estimate of the expenditure required to settle the obligations under existing royalty agreements, this estimate is based on estimates of possible outcomes and financial effect, which were determined by the application of management’s judgement on a number of key assumptions used in determining the amount of provision, including: • the discount rate used; • the probability of revenue cash flows from successful implementation of Project F Phase One and commencement of Phase Two; • the likelihood of achieving forecast coal sales prices; and • the forecast for Australian Dollar to US Dollar exchange rate. Amaam Royalty Liability No liability was recognised at 31 December 2018 (31 December 2017: Nil) in relation to Amaam Project royalty arrangements due to the impact of coal price forecasts on the ability to realise the project on a commercially viable basis. Recognition and measurement: Royalty liabilities The Group, from time to time, enters into legal agreements with various parties as a result of which there will be future outflows of economic benefits, including obligations which arise from the execution and realisation of sales agreements (“Royalty Agreement”). In applying the recognition and measurement criteria outlined above in respect of provisions in Note 3(h) to royalty agreements, management perform an assessment of the probability of the outflow of economic benefits, which it has deemed to be influenced by the following factors and circumstances, when assessing the disclosure, recognition and measurement of Royalty Agreement obligations: •Existence of a licence which provides the legal capacity to mine and sell product which is the subject of Royalty Agreements; •The performance of a feasibility study or other similar project assessment which provides an indication of the economic benefits accruing to the Group from implementing a project or part thereof, incorporating the consideration of macroeconomic factors and project specific assumptions on income and expenditures; •General macroeconomic conditions (including but not limited to financial and commodity markets -specifically the market for coal); •Economic resources are in place which enable the realisation of a plan to extract and sell ore, as defined in a feasibility study (as amended and updated). Economic resources include both financial, human & other resources necessary to realise strategic plans; •Board approves the decision to commence those activities necessary to develop and mine ore with the view of commencing commercial production; and •Actual operations confirm those assumptions upon which the decision made to commence mining operations were made (including the ability to realise any sales agreements executed). As noted above, where the likelihood of an outflow of economic benefits is deemed to be remote, no disclosures are made. Where possible, disclosure is made of a contingent liability and where probable a provision is recognised and measured. Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2018
23.
Share capital
Share Capital
Costs of raising equity
(i) Movements in shares on issue:
Opening balance at 1 January 2017
Movements in 2017
Opening balance at 1 January 2018
Movements in 2018
31 December
2018
A$’000
188,197
(14,450)
173,747
31 December
2017
A$’000
188,197
(14,450)
173,747
No of shares
Issue price
A$
A$’000
1,791,669,870
-
1,791,669,870
-
-
-
188,197
-
188,197
-
188,197
Closing share capital balance at 31 December 2018
1,791,669,870
The Company does not have authorised capital or par value in respect of its issued shares. All issued shares are fully paid. All
shares rank equally with regard to the Company’s residual assets.
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share
at meetings of the Company.
(ii) Movements in options on issue:
During the year ended 31 December 2018 no options were granted, 3,361,000 lapsed and 22,407,000 were forfeited, resulting in
options on issue at 31 December 2018 of 33,669,000.
24.
(a)
Share based payments
Recognised share-based payment expense
31 December
2018
A$’000
31 December
2017
A$’000
Expense arising from equity settled share-based payment transactions
324
126
(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 are a number of different performance hurdles, exercise prices and vesting
conditions dependent on the individual’s position held. It is a vesting condition that the holder of options remains an employee or
director at the time of vesting. There have been no cancellations or modification to the Staff Option Plan since it was established
in 2010.
80
64
Tigers Realm Coal Annual Report 2018
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2018
24.
(b)
Share based payments (continued)
Description of share-based payment arrangements
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 the 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 2018 have an exercise price in the range of A$0.08 to A$0.50 (31 December 2017: A$0.08
to A$0.60). The weighted average remaining contractual life for options outstanding at 31 December 2018 is 3.92 years (31
December 2017: 3.63 years). There were no options granted during the year ended 31 December 2018 (For the year ended 31
December 2017: 37,074,000) the fair value of options granted during the year ended 31 December 2017 was A$0.031. There are
10,634,000 vested and exercisable options at 31 December 2018 (31 December 2017: 22,363,000). There were no options exercised
during the years ended 31 December 2018 and 31 December 2017.
Movements in outstanding options
2018
2017
Balance at the beginning of the year
Granted
Forfeited/lapsed
Exercised
Balance at the end of the year
Vested and exercisable at year end
Number of
Options
59,437,000
-
(25,768,000)
-
33,669,000
10,634,000
Weighted
Average
Exercise Price
A$
Number of
Options
Weighted
Average
Exercise Price
A$
0.242
-
0.186
0.256
0.260
24,302,000
37,074,000
(1,939,000)
-
59,437,000
22,363,000
0.318
0.113
0.587
0.242
0.238
Details of share options outstanding at 31 December 2018 are detailed below:
2018
Date of issue
Number of
Options
4 June 2014
19 December 2014
19 December 2014
17 April 2015
17 April 2015
11 June 2015
11 June 2015
18 October 2017
18 October 2017
Balance at the end of the year
2,000,000
797,000
797,000
1,520,000
1,520,000
2,000,000
2,000,000
15,203,000
7,832,000
33,669,000
Average
Exercise Price
A$
0.500
0.230
0.170
0.230
0.170
0.500
0.230
0.080
0.130
0.242
2017
Number of
Options
Average
Exercise Price
2,000,000
2,544,000
2,544,000
3,957,000
3,957,000
2,000,000
2,000,000
24,469,000
12,605,000
59,437,000
A$
0.500
0.230
0.170
0.230
0.170
0.500
0.230
0.080
0.130
0.242
65
81
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2018
24.
Share based payments (continued)
(c)
Summary of options granted under the Option Plan
During the year to 31 December 2018, no options were issued, 3,361,000 options lapsed, 22,407,000 were forfeited and no options
exercised, bringing the options issued over ordinary shares in the Company to 33,669,000 as at 31 December 2018.
(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 assumptions underlying the Black-Scholes
methodology to produce 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 for those options issued since February 2013. Prior to that date, due to the lack of sufficient share price history (TIG was
listed on 29 August 2011) the share price volatility was based on the historical volatility of a group of comparable companies,
based on their principal activities, for volatility estimation purposes. The expected dividend yield used in the valuation process has
been nil. 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 nil. The risk-free rate is derived from the yield on Australian Government
Bonds of appropriate terms.
The inputs used in the measurement of the fair values at the grant date of the options granted under the Staff Option Plan and
outstanding at 31 December 2018 are outlined below:
Option Grant
Date
4 June 2014
19 Dec 2014
19 Dec 2014
17 Apr 2015
17 Apr 2015
11 Jun 2015
11 Jun 2015
18 Oct 2017
18 Oct 2017
Fair value
at grant
date (A$)
Share price
at grant
date (A$)
Exercise
price
Perfor-
mance
hurdle
Perfor-
mance
period
Expiry date
Risk free
interest rate
$0.043
$0.030
$0.036
$0.049
$0.061
$0.021
$0.035
$0.031
$0.030
$0.140
$0.099
$0.099
$0.130
$0.130
$0.100
$0.100
$0.060
$0.060
$0.500
$0.230
$0.170
$0.230
$0.170
$0.500
$0.230
$0.080
$0.130
A
A
C
A
B
A
B
A
B
D
D
F
D
E
D
E
D
E
4 June 2019
28 Feb 2019
28 Feb 2019
17 Apr 2020
17 Apr 2020
11 Jun 2020
11 Jun 2020
18 Jun 2022
18 Jun 2022
2.69%
2.32%
2.32%
1.84%
1.84%
2.09%
2.09%
2.32%
2.32%
Note
A.
B.
C.
D.
E.
F.
Performance hurdle: options vest 12 months after grant date.
Performance hurdle: options vest 24 months after grant date.
Performance hurdle: options vest 437 days after grant date.
Performance period: 12 months after grant date.
Performance period: 24 months after grant date.
Performance period: 437 days after grant date.
82
66
Tigers Realm Coal Annual Report 2018
83
Tigers Realm Coal Limited Notes to the consolidated financial statements For the year ended 31 December 2018 67 24.Share based payments (continued)25.Risk management and financial instruments(a)Risk management frameworkThe Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. TheBoard has established the Audit, Risk and Compliance Committee, which is responsible for developing and monitoring the Group’srisk 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. TheGroup’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limitsand 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:•Credit risk•Liquidity risk•Market risk•Operational riskThis 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 riskCredit risk is the risk of financial loss to the Group if a counterparty to a financial instrument fails to meet its contractualobligations and arises principally from the Group’s receivables from customers.(ii)Liquidity riskLiquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’sapproach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet itsliabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damageto the Group’s reputation.(iii)Market riskMarket risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, commodity prices andequity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of marketrisk 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), and RussianRoubles (RUB). For the Group interest rate risk arises from the exposure to Australian cash deposit rates relating to cashand cash equivalents. For the Group commodity price risk affects the valuation of the Royalty Agreement Liability, as theliability is determined starting with the value of the Amaam project, with its value determined using a Discounted Cash-Flow model.Recognition and measurement: Share based payments Equity-based compensation is recognised as an expense in respect of the services received. 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 the grant date and recognised over the period during which the employees became unconditionally entitled to the options. The fair value at the 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. Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2018
25. Risk management and financial instruments (continued)
(iv) Operational risk
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
historically has been to raise sufficient funds through equity to fund exploration and evaluation activities. In December 2018, the
Group raised its second working capital facility, a fixed interest rate working capital Russian Rouble denominated loan, detailed
further in Note 19 and has a number of finance lease obligations detailed further in Note 21.
The Board has not set a target for employee ownership of the Company’s ordinary shares and has not yet set a debt to capital target
for the Group.
Russian Law provides that Russian subsidiaries in the Group need to maintain a level of net assets higher than their charter capital.
As of 31 December 2018, all Russian subsidiaries are in compliance with this requirement. Management monitors this requirement
and act accordingly when required.
Neither the Company nor remaining subsidiaries are subject to any externally imposed capital requirements.
(c)
Financial instruments
The Group holds the following financial instruments:
31 December
2018
A$’000
31 December
2017
A$’000
Financial assets
Cash and cash equivalents
Investments in restricted financial instruments
Trade and other receivables
Financial liabilities
Trade and other payables
Bank loans payable
Finance lease liability
84
3,554
935
2,586
7,075
6,442
1,516
4,749
12,707
2,011
861
2,898
5,770
3,907
1,357
2,496
7,760
68
Tigers Realm Coal Annual Report 2018
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2018
25.
(d)
Risk management and financial instruments (continued)
Accounting classifications and fair values
The following table shows the carrying amounts of financial assets and liabilities.
31 December 2018
Financial assets not measured at fair value
Cash and cash equivalents
Investment in restricted financial instruments
Trade and other receivables
Financial liabilities not measured at fair value
Trade and other payables
Bank loans payable
Finance lease liability
31 December 2017
Financial assets not measured at fair value
Cash and cash equivalents
Investment in restricted financial instruments
Trade and other receivables
Financial liabilities not measured at fair value
Trade and other payables
Bank loans payable
Finance lease liability
Loans &
Receivables
Carrying amount
Other financial
liabilities
A$’000
Total
3,554
935
2,586
7,075
-
-
-
-
-
-
-
-
6,442
1,516
4,749
12,707
3,554
935
2,586
7,075
6,442
1,516
4,749
12,707
Loans &
Receivables
Carrying amount
Other financial
liabilities
A$’000
Total
2,011
861
2,898
5,770
-
-
-
-
-
-
-
-
3,907
1,357
2,496
7,760
2,011
861
2,931
5,803
3,907
1,357
2,496
7,760
(e)
Credit risk
Exposure to credit risk
Management monitors the exposure to credit risk on an ongoing basis. The maximum exposure to credit risk on financial assets
which have been recognised on the balance sheet are generally the carrying amount, net of any provisions. Current receivables net
of provision for doubtful receivables are not overdue or in default. The Group does not require collateral in respect of financial
assets.
The Group has treasury policies in place for deposit transactions to be conducted with financial institutions with a minimum credit
rating. At the reporting date, cash is held with reputable financial institutions which all meet the Group’s minimum credit rating
required by the approved treasury policy.
Cash and cash equivalents
Investment in restricted financial instruments
Trade and other receivables
Carrying amount
2018
A$’000
3,554
935
2,586
7,075
2017
A$’000
2,011
861
2,898
5,770
69
85
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2018
25. Risk management and financial instruments (continued)
Geographical information
The Group’s maximum exposure to credit risk for Trade and other
receivables at the reporting date by geographical region was:
Asia and the Russian Federation
Australasia
Counterparty information
The Group’s maximum exposure to credit risk for Trade and other
receivables at the reporting date by type of counterparty was:
Coal customers
Other
Impairment losses
The ageing of the Group’s trade and other receivables at the reporting date was:
Carrying amount
2018
A$’000
2,586
-
2,586
2018
A$’000
346
2,240
2,586
2017
A$’000
3,759
-
3,759
2017
A$’000
1,144
2,615
3,759
Not past due
Past due 0-30 days
Past due 31-120 days
Past due 121 days to one year
More than one year
Gross
2018
A$’000
Impaired
2018
A$’000
Gross
2017
A$’000
Impaired
2017
A$’000
2,586
-
-
-
-
2,586
-
-
-
-
-
-
3,759
-
-
-
-
3,759
-
-
-
-
-
-
There was no provision for impairment at 31 December 2018 (At 31 December 2017: $Nil).
86
70
Tigers Realm Coal Annual Report 2018
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2018
25. Risk management and financial instruments (continued)
(f)
Liquidity risk
Exposure to liquidity risk
Management monitors the exposure to liquidity risk on an on-going basis. Prudent liquidity risk management implies maintaining
sufficient cash reserves to meet the on-going operational requirements of the business. It is the Group’s policy to maintain sufficient
funds in cash and cash equivalents. Furthermore, the Group monitors its cash requirements and raises appropriate funding as and
when required to meet such planned expenditure.
The following are the contractual maturities of financial liabilities.
31 December 2018
Non-derivative financial
liabilities
Trade and other payables
Bank loan payable
Finance lease liability
31 December 2017
Non-derivative financial
liabilities
Trade and other payables
Bank loan payable
Finance lease liability
Contractual cashflows
Carrying
amount
A$’000
Total
A$’000
6 months
or less
A$’000
6-12
months
A$’000
1-2 years
A$’000
2-5 years
A$’000
More
than 5
years
A$’000
6,442
1,516
4,749
12,707
6,492
1,684
5,931
14,107
3,907
1,357
2,496
7,760
3,907
1,480
3,238
8,625
6,176
84
640
6,900
3,767
67
317
4,151
70
1,600
2,291
3,961
-
1,413
808
2,221
70
-
2,026
2,096
176
-
974
1,150
70
-
1,125
1,195
70
-
988
1,058
-
-
-
-
-
-
-
-
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different
amounts.
(g) 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 is exposed to
foreign exchange risk arising from various currencies, primarily with respect to the US Dollar and the Russian Rouble.
The Group’s exposure to foreign currency risk was as follows:
Cash and cash equivalents
Receivables
Investment in restricted promissory notes
Trade and other payables
Bank loan payable
Finance lease liability
Net exposure
2018
2017
USD
A$’000
RUB
A$’000
USD
A$’000
RUB
A$’000
1,636
346
-
(1,995)
-
-
(13)
1,911
2,239
935
(4,211)
(1,516)
(4,749)
(5,391)
117
1,144
-
(976)
-
-
285
1,789
1,754
861
(2,554)
(1,357)
(2,495)
(2,002)
71
87
Tigers Realm Coal Annual Report 2018
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2018
25.
(g)
(i)
Risk management and financial instruments (continued)
Market risk
Currency risk
Exchange rates used
The following significant exchange rates were applied during the year relative to one Australian dollar:
Average rate
2018
1.3390
0.0214
2017
1.3049
0.0224
Reporting date
spot rate
2018
1.4174
0.0204
2017
1.2809
0.0222
USD
RUB
Sensitivity analysis
A weakening of the AUD, as indicated, against the USD and RUB at 31 December 2018 would have the impact in equity and profit
or 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 2018
USD (10% movement)
RUB (10% movement)
31 December 2017
USD (10% movement)
RUB (10% movement)
(ii)
Market price risk
Strengthening
Weakening
Equity
A$’000
Profit or
loss
A$’000
Equity
A$’000
Profit or
loss
A$’000
(1)
(599)
32
(222)
(1)
(599)
32
(222)
1
490
(10)
170
1
490
(10)
170
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.
(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:
Carrying amount
Fixed rate instrument
Financial assets
Financial liabilities
Variable rate instruments
Cash and cash equivalents
Financial liabilities
88
2018
A$’000
935
(4,749)
(3,814)
3,554
(1,516)
2,038
2017
A$’000
861
(3,853)
(2,992)
2,011
-
2,011
72
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2018
25.
(iii)
Risk management and financial instruments (continued)
Interest rate risk (continued)
Interest rates used
The following significant interest rates have been applied.
2018
Australian cash deposit rate
2017
Australian cash deposit rate
Sensitivity analysis
Average
rate
%
Reporting date
spot rate
%
1.50
1.50
1.50
1.50
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 2018
Australian cash deposit rate (100 basis points increase)
31 December 2017
Australian cash deposit rate (100 basis points increase)
Group
Equity
A$’000
Profit or loss
A$’000
6
3
6
3
26.
Operating Leases
Leases as lessee
Non-cancellable operating lease rentals are payable in:
31 December
2018
A$’000
31 December
2017
A$’000
Less than one year
Between one and five years
More than five years
Lease expense recognised in profit or loss
Operating lease expense
208
309
3,199
3,716
220
220
50
139
493
682
162
162
The Group leases office space in Melbourne, Australia and Moscow, Russia in addition to land and port infrastructure on site in
Chukotka under operating leases.
73
89
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2018
27.
Expenditure commitments
Exploration expenditure commitments
In order to maintain current rights of tenure to exploration tenements, the Group is required to perform minimum exploration work
to meet its licence obligations. In the Russian Federation, this minimum exploration work is defined by the performance of a
minimum number of drilling metres 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
and state governments have the authority to defer, waive or amend the minimum expenditure requirements. As of and for the year
ended 31 December 2018, the Group is in compliance with those exploration obligations defined in the respective licences.
Port and other commitments
Subsequent to the termination of the agreement with the Seaport of Anadyr in December 2018, there are no port commitments as
of 31 December 2018 (At 31 December 2017: A$11.167 million).
Other commitments of A$3.428 million (At 31 December 2017: A$1.159 million) are comprised primarily of A$2.763 million in
commitments to Liaoyo Group Co Ltd for the construction of two 500 tonne barges. Construction is expected to be completed by
the end of the second quarter of 2019.
28. Contingencies
Under the terms of the ASIC Class Order 98/1418, the Company has entered into an approved deed of cross guarantee of liabilities
with the subsidiary identified in Note 33.
29. Related parties’ disclosure
During the years ended 31 December 2018 and 2017, the Group has a related party relationship with its subsidiaries (refer Note
31) and key management personnel (refer Note 30).
There were no transactions with other related parties during the years ended 31 December 2018 and 2017.
It is the Group’s policy that where transactions are undertaken with related parties, they are done so on an arm’s length basis.
30. Key Management Personnel Disclosures
(a)
Compensation of key management personnel
The key management personnel compensation included in “Administration expenses” (see Note 8) and “Share-based payments”
(see Note 24) is as follows:
Short-term employee benefits
Post-employment benefits
Termination benefits
Share-based payments
2018
A$
1,700,760
12,511
-
97,880
1,811,151
2017
A$
1,649,761
19,000
19,117
87,585
1,775,463
(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 is provided in the Remuneration Report in Section 12 of the Directors’ Report.
90
74
Tigers Realm Coal Annual Report 2018
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2018
30.
(c)
Key Management Personnel Disclosures (continued)
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.
Note
Balance at
1 January
Acquisitions
Sales
Other
Changes
Balance at
31 December
2018
Directors
C Wiggill
B Gray
O Hegarty
R Morgan
T Sitdekov
1,200,000
378,001,865
30,412,029
-
-
Other key management personnel
D Kurochkin
S Southwood
P Balka
D Forsyth
D Gavrilin
D Bender
2017
Directors
C Wiggill
B Gray
O Hegarty
R Morgan
T Sitdekov
617,390
136,700
3,481,080
19,267,673
-
-
1,200,000
378,001,865
30,191,006
-
-
Other key management personnel
D Kurochkin
S Southwood
P Balka
D Forsyth
S Efanov
A Nikolaev
617,390
136,700
3,481,080
19,267,673
-
-
-
1,331,772
-
-
-
-
-
606,730
-
-
-
-
-
221,023
-
-
-
-
-
-
-
-
-
-
-
-
-
(227,760)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Note
Balance at
1 January
Acquisitions
Sales
-
-
-
-
-
-
-
-
-
-
-
1,200,000
379,333,637
30,412,029
-
-
389,630
136,700
4,087,810
19,267,673
-
-
Other
Changes
Balance at
31 December
-
-
-
-
-
-
-
-
-
-
-
1,200,000
378,001,865
30,412,029
-
-
617,390
136,700
3,481,080
19,267,673
-
-
75
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Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2018
31. Group entities
Significant subsidiaries
Parent entity
Tigers Realm Coal Limited
Subsidiaries
TR Coal International Limited
Tigers Realm Coal (Cyprus) Pty Ltd
Greaterbay Larnaca Finance (Cyprus) Pty Ltd
Eastshore Coal Holding Limited
Telofina Holdings Ltd2
Rosmiro Investments Limited
Anadyrsky Investments Limited
Northern Pacific Coal Company
Beringpromugol LLC
Beringtranscoal LLC3
Port Ugolny LLC
Bering Ugol Investments LLC
Tigers Realm Coal Spain, SL1
Tigers Coal Singapore No. 1 PTE Limited1
1 Currently in liquidation.
2
3 Merged into Beringpromugol LLC effective 11 March 2018.
Founded in 2017
Country of
Incorporation
Ownership Interest
2017
2018
Australia
Australia
Cyprus
Cyprus
Cyprus
Cyprus
Cyprus
Cyprus
Russia
Russia
Russia
Russia
Russia
Spain
Singapore
100%
100%
100%
80%
100%
100%
100%
80%
100%
N/A
100%
100%
100%
100%
100%
100%
100%
80%
100%
100%
100%
80%
100%
100%
100%
100%
100%
100%
32. Parent entity disclosures
As at and throughout the financial year ended 31 December 2018, 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
Accumulated losses
Total equity
Contingent liabilities of the parent entity
31 December
2018
A$’000
31 December
2017
A$’000
(324)
(324)
31,567
31,567
-
-
31,567
173,747
7,053
(149,233)
31,567
(146)
(146)
31,567
31,567
-
-
31,567
173,747
6,729
(148,909)
31,567
The parent entity has contingent liabilities arising from its guarantees to each creditor of TR Coal International Limited under the
Deed of Cross Guarantee as discussed in Note 33.
Capital commitments of the parent entity
There is no capital expenditure contracted for by the parent entity not recognised as liabilities.
92
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Tigers Realm Coal Annual Report 2018
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2018
33.
Deed of cross guarantee
Pursuant to ASIC Class Order 98/1418 (as amended) dated 13 August 1998, the wholly-owned subsidiary listed below is 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 the subsidiary 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 the subsidiary 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 subsidiary has also given similar guarantees
in the event that the Company is wound up.
The entities subject to the Deed of Cross Guarantee are:
•
•
Tigers Realm Coal Limited; and
TR Coal International Limited.
The Deed of Cross Guarantee was established on 22 November 2012.
A consolidated statement of comprehensive income and consolidated statement of financial position, comprising the Company and
controlled entity 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 2018 is set out below.
Statement of comprehensive income and retained earnings
31 December
2018
A$’000
31 December
2017
A$’000
Depreciation expense
Share based payments
Administrative expenses
Results from operating activities
Net foreign exchange gain /(loss)
Finance income
Net finance income /(expense)
Loss before income tax
Income tax (expense)
Net Loss
Other comprehensive income
Foreign currency translation differences for foreign operations
Income tax on other comprehensive income
Total comprehensive loss for the period
Accumulated losses at beginning of year
Accumulated losses at end of year
(1)
(324)
(1,027)
(1,352)
46
-
46
(1,306)
-
(1,306)
-
-
(1,306)
(182,822)
(184,128)
-
(126)
(1,003)
(1,129)
(745)
5
(740)
(1,869)
-
(1,869)
-
-
(1,869)
(180,953)
(182,822)
77
93
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2018
33.
Deed of cross guarantee (continued)
Current Assets
Cash and cash equivalents
VAT and other receivables
Prepayments
Total current assets
Non-current assets
Property, plant and equipment
Related party receivables
Total non-current assets
Total assets
Current Liabilities
Trade and other payables
Employee provisions
Total current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
(Accumulated losses)
Total equity
31 December
2018
A$’000
31 December
2017
A$’000
15
12
52
79
2
34,750
34,752
34,831
331
29
360
360
148
-
68
216
-
19,607
19,607
19,823
74
-
74
74
34,471
19,749
173,747
44,852
(184,128)
173,747
28,824
(182,822)
34,471
19,749
94
78
Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2018
34. Non-controlling interest
No change in the non-controlling interests in the Amaam project (Eastshore Coal Holding Limited and Northern Pacific Coal
Company) occurred during the years ended 31 December 2018 and 2017.
Completion of transaction with Partners
During 2017, the Group acquired the remaining 20% interest in the Amaam North project from its partners, terminated the
shareholders agreement of January 2012 and in parallel restructured the related royalty arrangements, as a result of which the
royalty obligations were capped at US$25 million, to be payable no later than 20 years from the date of the completion.
The primary consequences of the completion in respect of the Amaam North Project were:
•
The Group acquired its partner’s 20% interest in the Amaam North project; and
• The existing royalty structure was redefined as a result of which the royalties payable to the Group’s partner are reduced
from a maximum of 5% of coal sales revenue, as follows:
◊
For annual coal sales in excess of 100,000 tonnes per year, annual payments are 1.5% of gross sales revenues for
the first five years, 2.25% of gross sales revenues for the three subsequent years, and 3% of gross sales revenues
thereafter;
◊ Under certain circumstances, TIG may elect to pay up to 50% of the amount due for any year in TIG shares;
◊
◊
Total royalty payments are capped at US$25 million and are accrued and payable for a period of no more than 20
years from the date of executing the documentation to realise the heads of agreement (“HOA”); and
Irrespective of the amount paid, annual payments will cease after 2037.
The abovementioned transaction also implemented amendments to the Amaam shareholders’ agreement (“SHA”) to simplify the
processes governing the Amaam Project partners’ decision to develop and mine coal at the Amaam Project and corporate reporting
and board processes, work program approval and other management processes.
The effect of the aforementioned transaction was the reduction in the Group’s general reserves by A$12.273 million, being the
carrying value of the non-controlling interest acquired at the date of closing.
35. Auditors’ Remuneration
Details of the amounts paid to the auditor, Deloitte, and its affiliated entities for audit and non-audit services provided during the
year are set out below.
31 December
2018
A$
31 December
2017
A$
Audit services:
Audit and review of financial reports –Deloitte Australia
Audit and review of financial reports - Deloitte Overseas
Services other than statutory audit
Other services
Taxation compliance and advisory services – Deloitte Australia
Taxation compliance services and advisory services – Deloitte
Overseas
Total Services Provided
121,800
115,900
237,700
12,400
24,700
37,100
274,800
122,100
118,700
240,800
29,400
32,600
62,000
302,800
79
95
Tigers Realm Coal Annual Report 2018
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2018
36. Events after the reporting period
On 18 February 2019, the Company entered into an agreement in accordance with which 100kt of thermal coal is to be sold to JFE
Shoji Trade Corporation on CFR Incoterms during 2019, with a provisional pricing mechanism established, to be adjusted upon
confirmation of coal qualities and final shipping terms. A prepayment of US$3.000 million was received in March 2019 on the
aforementioned agreement.
On 20 March 2019, the Company executed term sheets with its two largest beneficial shareholders, namely BV Mining Holding
Limited through its affiliate BV Mining Investment Limited, and Dr. Bruce Gray, through a controlled entity, in accordance with
which each will make available to the Group an unsecured non-revolving loan facility of up to US$2.5 million (“Shareholder Loan
Facility”), providing total shareholder funding of up to US$5 million. Each Shareholder Loan Facility will have a one-year tenure
and incur interest at 12% per annum, payable quarterly. The loan agreements are expected to be executed substantially on the
aforementioned terms during April 2019.
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Tigers Realm Coal Annual Report 2018 Tigers Realm Coal Limited
Directors’ declaration
For the year ended 31 December 2018
1.
In the opinion of the Directors of Tigers Realm Coal Limited (‘the Company’):
(a)
the attached consolidated financial statements and notes that are set out on pages 49 to 96 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 2018 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.
There are reasonable grounds to believe that the Company and the group entities identified in Note 33 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.
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 2018.
The Directors also draw attention to Note 2(a) to the consolidated financial statements, which includes a
statement of compliance with International Financial Reporting Standards.
2.
3.
4.
Signed in accordance with a resolution of the Directors:
Dated at Melbourne this 20th day of March 2019.
________________________________________________
Owen Hegarty
Director
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97
Tigers Realm Coal Annual Report 2018 Deloitte Touche Tohmatsu
ABN 74 490 121 060
Level 23, Riverside Centre
123 Eagle Street
Brisbane, QLD, 4000
Australia
Phone: +61 7 3308 7000
www.deloitte.com.au
The Board of Directors
Tigers Realm Coal Limited
151Wellington Parade South
East Melbourne
VIC 3002
20 March 2019
Dear Board Members,
Tigers Realm Coal Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of Tigers Realm Coal Limited.
As lead audit partner for the audit of the financial statements of Tigers Realm Coal Limited for the
financial year ended 31 December 2018, I declare that to the best of my knowledge and belief, there
have been no contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely,
DELOITTE TOUCHE TOHMATSU
Colin Brown
Partner
Chartered Accountants
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), its global network of member firms, and their related entities. DTTL (also referred to as
“Deloitte Global”) and each of its member firms and their affiliated entities are legally separate and independent entities. DTTL does not provide services to clients.
Please see www.deloitte.com/about to learn more.
Deloitte is a leading global provider of audit and assurance, consulting, financial advisory, risk advisory, tax and related services. Our network of member firms in
more than 150 countries and territories serves four out of five Fortune Global 500®companies. Learn how Deloitte’s approximately 286,000 people make an impact
that matters at www.deloitte.com.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
98
82
Tigers Realm Coal Annual Report 2018 Deloitte Touche Tohmatsu
ABN 74 490 121 060
Level 23, Riverside Centre
123 Eagle Street
Brisbane, QLD, 4000
Australia
Phone: +61 7 3308 7000
www.deloitte.com.au
Independent Auditor’s Report to the Members of
Tigers Realm Coal Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Tigers Realm Coal Limited (the “Company”) and its subsidiaries
(the “Group”), which comprises the consolidated statement of financial position as at 31 December
2018, the consolidated statement of comprehensive income, the consolidated statement of changes in
equity and the consolidated statement of cash flows for the year then ended, and notes to the financial
statements, including a summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
(i)
giving a true and fair view of the Group’s financial position as at 31 December 2018 and of its
financial performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), its global network of member firms, and their related entities. DTTL (also referred to as
“Deloitte Global”) and each of its member firms and their affiliated entities are legally separate and independent entities. DTTL does not provide services to clients.
Please see www.deloitte.com/about to learn more.
Deloitte is a leading global provider of audit and assurance, consulting, financial advisory, risk advisory, tax and related services. Our network of member firms in
more than 150 countries and territories serves four out of five Fortune Global 500®companies. Learn how Deloitte’s approximately 286,000 people make an impact
that matters at www.deloitte.com.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
83
99
Tigers Realm Coal Annual Report 2018 Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
Key Audit Matters
How the scope of our audit responded to the
Key Audit Matter
Availability of future funding
Note 3 explains how the directors have
determined that it is appropriate for the
Group to continue to adopt the going
concern basis in preparing the financial
report. However, the directors concluded
that the Group’s ability to continue is
dependent, amongst other matters, on the
Group having a continued appropriate level
of funding from its existing lenders and/or
other sources for at least the next twelve
months from the date of this report.
This assessment involves a consideration of
future events and significant judgment on
the ability to generate future cash flows.
Estimation of
the amount of royalty
obligations in relation to Amaam and
Amaam North Projects
As disclosed in Note 23, the Group has
entered
royalty
into a number of
arrangements as part of obtaining interests
in the Amaam and Amaam North Projects.
including
identifying
Management is required to make a number
of judgements to estimate the amount of the
obligation,
an
appropriate methodology, the probability
and timing of expected future cash flows
from the revenue derived from the sale of
coal produced and the discount rate. As the
estimate is sensitive to these judgments,
in key
there
assumptions can have a significant impact
on the estimate and therefore reported
results.
is a risk that changes
Our procedures included, but were not limited to:
cash
temporary
inquiring of management and the directors
in relation to events and conditions that
may impact the assessment of the Group’s
ability to raise the funding required to
shortfalls
address
expected to arise during the next twelve
months from the date of this report;
evaluating management’s plans for future
actions in relation to its ability to raise
funding from its existing lenders and/or
other sources and whether such plans are
feasible,
challenging the assumptions contained in
in
management’s cash
relation to the Group’s ability to continue
as a going concern; and
assessing the appropriateness of the
disclosure in Note 3 to the financial
statements.
forecast
flow
Our procedures included, but were not limited to:
assessing the Group’s methodology to
estimate the amount of the obligation,
obtaining an understanding of the key
processes associated with the preparation
of the model supporting the estimate and
challenging its appropriateness;
assessing in conjunction with our valuation
experts, the reasonableness of key market
assumptions including forecast long-term
coal prices, foreign exchange rate forecasts
and
the discount rate applied. This
consideration
assessment
into
financial
forecasts
institutions and market analysts;
performing an assessment of the historical
accuracy
the
management; and
assessing the appropriateness of the
disclosures in the notes to the financial
statements.
third party
forecasting
from
took
by
of
100
84
Tigers Realm Coal Annual Report 2018
Other Information
The directors are responsible for the other information. The other information comprises the Directors’
Report, Corporate Governance Statement and Shareholder Information, which we obtained prior to the
date of this auditor’s report, the other information also includes the following documents which will be
included in the annual report (but does not include the financial report and our auditor’s report
thereon): Highlights 2018, Chairman’s Letter, Chief Executive Officer’s Report, Resources and
Additional Exploration Targets and Operations Review.
Our opinion on the financial report does not cover the other information and accordingly we do not and
will not express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent
with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially
misstated.
If, based on the work we have performed on the other information that we obtained prior to the date
of this auditor’s report, we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this regard.
When we read the Highlights 2018, Chairman’s Letter, Chief Executive Officer’s Report, Resources and
Additional Exploration Targets and Operations Review, if we conclude that there is a material
misstatement therein, we are required to communicate the matter to the directors and use our
professional judgement to determine the appropriate action.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or
the override of internal control.
85
101
Tigers Realm Coal Annual Report 2018
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Auditing Standards.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express
an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
DELOITTE TOUCHE TOHMATSU
Colin Brown
Partner
Chartered Accountants
Brisbane, 20 March 2019
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention
in our auditor’s report to the related disclosures in the financial report or, if such disclosures
are inadequate, to modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditor’s report. However, future events or conditions may cause
the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group’s audit. We remain
solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in paragraph 12 of the Directors’ Report for the
year ended 31 December 2018.
In our opinion, the Remuneration Report of Tigers Realm Coal Limited, for the year ended 31 December
2018, complies with section 300A of the Corporations Act 2001.
102
86
87
Tigers Realm Coal Annual Report 2018
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express
an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
DELOITTE TOUCHE TOHMATSU
Colin Brown
Partner
Chartered Accountants
Brisbane, 20 March 2019
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Tigers Realm Coal Annual Report 2018
Tigers Realm Coal Limited
SHAREHOLDER INFORMATION
1. Top 20 Shareholders as at 15 February 2019
Number of
shares
% of
Total
BV MINING HOLDING LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA)
LIMITED
559,421,427
31.22%
356,198,222
19.88%
RDIF INVESTMENT MANAGEMENT LLC
NAMARONG INVESTMENTS PTY LTD
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