ANNUAL REPORT 2019
C
Annual Report 2019Tigers Realm Coal Tigers Realm Coal
Annual Report 2019
CONTENTS
Highlights 2019
Chairman’s Review
Chief Executive Officer’s Report
Reserves and Resources
Operations Review
Financial Report
1
2
4
6
8
15
OUR
COMPANY
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 operations in the Chukotka
Autonomous Okrug (District) on Russia’s
east coast.
TIG’s aim is to become a significant
producer of coking coal supplying the
seaborne markets in Asia. The Company
is focused on the further exploration and
development of its high-quality coking
coal deposits and is committed to creating
sustainable benefits for the communities
and region in which it operates.
The Company is developing two coking
coal projects. The Amaam North project
has been operational for 3 years
supplying unwashed coal products
to the North Asian steel and thermal
coal markets through our own port
at Beringovsky, some 35km from the
mining operation. The immediately
adjacent Amaam project remains in a
pre-development stage but contains both
significant reserves of quality coking coal
as well being close to a potential deep
water port which would allow an extended
shipping season plus potential direct
loading of coal cargo.
In 2019, the Company achieved annual
production of 750 kt. Additionally, we
mined our millionth tonne of coal from
the basin and commenced transhipment
operations using our own fleet of four
500-tonne barges. Other achievements
during the year included continued
further development of our pit-to-port
coal haulage road in order to improve
safety conditions and reduce wear
and tear on our fleet of haulage trucks
together with the further expansion of our
on-site camp to improve living conditions
for our personnel.
Going forward in 2020, TIG will be focused
on detailed design and engineering works
for a Coal Handling and Processing Plant
(CHPP). In this endeavour we will involve
coal processing and engineering experts
from leading firms in Australia, Great
Britain and Russia. This work will lay the
foundation for development of Amaam
North Phase Two, the expansion of
operations to increase annual run of mine
production levels to 1.5+Mtpa with the
ability to ship washed coal.
The Company’s registered office is located
in Melbourne, Australia. Management is
principally located in our offices in Moscow
and on site in Chukotka.
ABN 50 146 732 561
Annual Report 2019Tigers Realm Coal Tigers Realm Coal
Annual Report 2019
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.
HIGHLIGHTS
2019
– Mining volumes increased year-on-
– With its increased mining capacity,
year by 30% from 576kt to 750kt and
consisted of 506kt of thermal (63%
increase from last year’s 311kt) and
244kt of metallurgical (8% reduction
from 265kt in 2018).
– Sales volumes increased by 48% from
393kt to 581kt.
– TIG commenced transhipment
operations using its newly acquired
fleet of four 500-tonne barges and now
has operational control of the full cycle
from pit to vessel.
– New equipment brought to site
enabled increasing total mining
capacity to 750kt.
TIG has completed Phase One of the
Amaam North development strategy.
– Substantial improvement to the road
was made in 2019. The next step is
completing the culverts which will
prevent erosion during the flood
period and generally make the
road more stable.
– The Company is in material
compliance with its licence
obligations.
– TIG’s intrinsic value was further
enhanced in 2019 as a result of
its continued demonstration of its
ability to mine, transport & market
commercially viable volumes of
thermal and metallurgical coal from
Amaam North deposit.
– In December 2019 TIG announced
a 13:4 Accelerated Renounceable
Entitlement Offer (the Offer)
priced at A$0.01 in order to raise
A$58.2 million (US$40.0 million).
The Offer closed on 5 February 2020
with a Shortfall of A$13 million
(US$9 million). Dr. Bruce Gray,
one of TIG’s largest shareholders,
placed a bid into the Shortfall
Bookbuild for substantially all of
the shortfall. His bid is subject
to shareholder approval at an
Extraordinary General Meeting to be
held on 21 April 2020. Should his bid
receive shareholder approval, TIG
will have succeeded in raising the
full A$58.2 million (US$40.0 million)
through the Offer.
1
Annual Report 2019Tigers Realm Coal Tigers Realm Coal
Annual Report 2019
CHAIRMAN’S
REVIEW
Craig Wiggill
Chairman
Dear Shareholders,
The TIG team achieved a number of
significant milestones during 2019,
the primary achievement being the
completion of Phase One of our
Amaam North development strategy
which took us to an annual production
of 750kt. We added to our mining
and transport fleet with capital spend
early in the year and commissioned
this equipment soon after the opening
of the shipping season. Substantial
improvements were made to the
main haulage road to the port,
new workshops were initiated,
and extension works continued to
make the camp both bigger and better.
The operational team at site was further
developed with mining, managerial
and marine focused skill sets.
Notwithstanding these achievements,
2019 also brought a number of serious
challenges to TIG. The Company was
badly affected by the dramatic decrease
in internationally traded coal prices
and a significant increase in shipping
freight rates which, together with a
change in product mix arising from in-pit
geological conditions and port operator
underperformance during the shipping
season, had a marked effect on our
revenue and arising cash flow situation.
Despite the implementation of mining
cost reduction measures along with the
optimization of our site operations, TIG,
as a result, faced a severe threat to its
ability to service its working capital loans
and other cash commitments.
In order to meet all obligations and
provide the Company near-term
liquidity, TIG obtained bridge financing
from its two largest shareholders and
then followed this in December 2019
with a 13:4 Accelerated Renounceable
Entitlement Offer priced at A$0.01 per
share to raise A$58.2m (US$40M).
In February 2020, TIG successfully
completed the institutional and retail
components of its Offer followed by
the Shortfall Bookbuild. The Offer
received strong support from existing
shareholders. The institutional and
retail components of the offer together
raised A$45.2m with A$13m of
shortfall bookbuild which is subject
to shareholder approval.
TIG is now focused on the construction
and financing of a modular CHPP to
enable the Company to sell a higher-
value product of consistent quality into
the Semi-Hard coking coal (SHCC)
2
Annual Report 2019Tigers Realm Coal Tigers Realm Coal
Annual Report 2019
markets. This SHCC product will allow
TIG to receive significantly higher
average prices than those currently
being achieved for the basket of
unwashed coal products, but most
importantly, it will allow TIG to reduce
the effect of the price volatility in the
thermal coal market in particular.
The Company continues to work
with all stakeholders to develop a
successful business creating value
for our shareholders, whilst being
careful about our environmental impact
and respectful of the communities
within which we work. The onset of
the COVID-19 global pandemic has
brought with it a tremendous degree
of uncertainty in relation to mining
and shipping operations as well as
the seaborne market demand for
our product. The remote location
of our mining operations and the
relative isolation of our workforce are
both advantageous as well as risk
enhancing. As such we need careful
evaluation, working together with
both local and state authorities, as
to decisions on potential temporary
suspension of mining and shipping.
The global commodity and mining
markets are deeply disrupted currently,
and future market direction is difficult
to predict. Whilst the potential for
a negative impact to our business
exists in the short to medium term,
the scenario of a market rebalance
could well bring with it opportunity
for the furtherance of our long-term
development strategy. We will continue
to monitor the situation closely and will
make every effort to take the measures
necessary to minimize negative
impacts of this crisis on our business
while ensuring the health and safety
of our people.
On behalf of the Board, I would like to
thank our team for their contribution
to the Company and its shareholders,
who have been consistently supportive
as we build ourselves towards our goal
of being a profitable coal supplier into
the global market.
Craig Wiggill
Chairman
3
Annual Report 2019Tigers Realm Coal CHIEF
EXECUTIVE
OFFICER’S
REPORT
Dmitry Gavrilin
Chief Executive Officer
2019 was for TIG a year of growth,
expansion and a year during which
the Company faced many challenges
associated with coal market trends that
affected the mining sector in general
and the Company in particular.
As well as increasing mining volumes
year-on-year by 30% and shipping
volumes by 48%, significant progress
was made during 2019, particularly
in the following areas:
• acquiring four 500-tonne barges and
obtaining all relevant port licences,
thus enabling increased transhipment
capacity and eliminating our
dependence on an outside
contractor to tranship our coal;
• expanding our camp to
accommodate 132 staff and
generally improving living conditions
which we expect to enable us to
continue improving staff retention;
• substantially improving road
conditions which will enhance
the safety of our people, increase
haulage capacity and reduce wear
and tear on our haulage fleet;
• preparing design and engineering
works for a Coal Handling and
Processing Plant (CHPP) with
support from leading coal process
experts and engineers from Australia,
Great Britain and Russia.
Notwithstanding the above
achievements, from the coal
market perspective 2019 was a
very challenging year. The market
weakened during the second half of
2019 as general economic conditions
worsened, driven by weaker growth
and trade tensions between China
and the United States. Chinese
domestic production growth, coupled
with the resumption of import quotas
designed to maintain imports at
2017 levels, reduced demand for
seaborne exports from Far East Russia,
Indonesia and Australia.
During the 2019 Shipping Season TIG
shipped 12 export coal vessels with
total volume of 554kt together with 27kt
for Chukotka local boilers resulting in
total sold tonnage of 581kt. Four of the
export cargos were of coking coal, two
of which were standard SSCC and two
high-ash SSCC cargos.
TIG continued to focus on quality
control and the building of long-term
customer relations. As a result, we
experienced no quality-related claims
during the year while continuing to
ship increased volumes to several
key customers with whom we have
developed a robust and beneficial
working relationship.
As a result of our focus on quality, we
experienced no quality-related claims during
the year while continuing to ship increased
volumes to several key customers with whom
we have developed a robust and beneficial
working relationship.
4
Annual Report 2019Tigers Realm Coal I would like to thank the Board for their
constructive approach to working with
our team, our staff for their dedication
and our shareholders for their
continued support.
Dmitry Gavrilin
Chief Executive Officer
The Company continues to work on
managing the impact of its operations
on the local environment. We continue
to engage and support the local
community on a range of issues.
Local and indigenous community
representatives from Alkatvaam,
Beringovsky and Anadyr visited our
operations throughout the year and
are informed about our operations
and future plans. In 2019, TIG played
a leading role in a number of events
and initiatives aimed at supporting and
educating the local community.
In addition to the normal challenges
any business faces, we are also
confronting the impact of the COVID-19
global pandemic. We, of course,
understand that it could potentially
severely impact our business. Due to
the seasonal nature of our sales, we do
not yet have a clear view of the extent
to which measures which may be taken
to deal with COVID-19 could affect
our operations. We have implemented
all the measures recommended by
healthcare authorities and will continue
to do so as they evolve.
5
Annual Report 2019Tigers Realm Coal
RESERVES AND RESOURCES
Coal Resources for Amaam North – Project F (100% Basis)
Resource Category
MeasuredC – Coking
IndicatedB – Coking
InferredA – Coking
IndicatedB – Thermal
InferredA – Thermal
Total (Mt)
Tonnage (Mt)
109.0
Relative
Density
1.44
NB: Coal qualities on an air dried basis.
Open Pit (Mt)
21.5
46.2
14.0
2.7
1.3
85.7
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
51.9
31.6
2.7
1.3
109.0
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 1.5 million tonnes of coal mined during 2017-2019.
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
4.1
11.9
Total
16.9
4.1
21.0
Proved
6.0
-
6.0
Probable
5.8
3.9
9.7
Total
11.8
3.9
15.7
The Amaam North (Project F) Coal Reserves are based on a Coal Reserve Estimate prepared by MEC Mining in February 2020.
Coal Resources for Amaam (100% Basis)
Resource Category
MeasuredC – Coking
IndicatedB – Coking
InferredA – Coking
Total (Mt)
Open Pit (Mt)
3
89
336
428
Underground (Mt)
-
2
91
93
Tonnage (Mt)
521
Relative
Density
1.62
NB: 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
The Amaam Coal Resource Estimate was prepared by Resolve Coal in July 2015.
Exploration TargetsD for Amaam and Amaam North (100% basis)
Total (Mt)
3
91
427
521
Total
Sulphur
(%)
0.84
Amaam North (Mt)
90 to 370
Amaam (Mt)
25 to 40
Total (Mt)
115 to 410
6
Annual Report 2019Tigers Realm Coal NOTES TO RESERVES
AND RESOURCES
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 percent 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 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 0.4 million tonnes
Measured Resource (Coking), by 0.1 million
tonnes Indicated Resource (Coking) and 0.95
million tonnes Indicated Resource (Thermal)
to reflect the 1.5 million tonnes of coal sales
during 2017-2019. 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 2020, 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 (Kazakhstan) 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 Christofer Catania,
General Manager Operations of MEC Mining
and a Competent Person who is a Chartered
Engineer of the Australasian Institute of
Mining and Metallurgy. Christofer Catania
is a full time employee of MEC Mining and
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’. Christofer
Catania consents to the inclusion in the report of
the matters based on his 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
Annual Report 2019Tigers Realm Coal Tigers Realm Coal
Annual Report 2019
OPERATIONS
REVIEW
Tigers Realm Coal Ltd’s (ASX: TIG) strategy
is to become a significant supplier of coking
coal to the seaborne market via the progressive
development of the Amaam Coking Coal Field.
Overview of TIG’s
Russian Coal Project
Tigers Realm Coal Ltd’s (ASX: TIG)
strategy is to become a significant
supplier of coking coal to the seaborne
market via the progressive development
of the Amaam Coking Coal Field.
The Amaam Coking Coal Field
comprises two large coal resource
deposits in the Far East of the
Russian Federation:
• Amaam North (TIG 100% interest):
a large coal basin, of which
Fandyushkinskoye Field is currently
in the production expansion phase.
In December 2019, Rosnedra, the
Russian natural resource licencing
authority, approved a Mining and
Excavation Plan (“TPRM”) for the
integrated development of the
Fandyushkinskoye and Zvonkoye
licence areas. The 2020 mine plan
already includes production from
both areas;
• The results from Amaam North’s
operations potentially will support the
further development of the Amaam
Coking Coal Field; and
• Amaam Coal Deposit (TIG interest –
80%) a potentially large-scale coking
coal project, which will enable TIG
to increase overall production to
5Mtpa. Expansion to this production
level will, however, require significant
investment in infrastructure.
The Amaam and Amaam North
licences cover an area of about 709
sq. km in the Chukotka Autonomous
Okrug (District) of Russia. Our current
operations are located approximately
230km south of the regional capital of
Anadyr and approximately 35km to the
south east of Beringovsky township
and 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;
8
Annual Report 2019Tigers Realm Coal KEYSouthYakutsk BasinKuzbassBasinBritishColumbiaBowenBasinTIG ProjectNorth AsianMarketMajor coking coal basinsRailroad directionsSea directionsTIG projects2,000–5,000kmrailroads to ports1,100kmrailroads to ports~ 35km to port115–250km railroads to portsand 13 days shipping8 days shipping1,100km railroads to portsand 14 days shipping Tigers Realm Coal
Annual Report 2019
• Mining Licence No. AND 15813 TE
(Fandyushkinskoye Field); and
Stage 2: Amaam North production
increases up to 2Mtpa.
• Mining Licence No AND 01314 TE
(“Zvonkoye”), issued in 2018 for a
20-year term.
Within just three years from the start
of work at Amaam North TIG has
progressed from an exploration
company to a coal producer,
exporting and competing on the
global seaborne market.
TIG operates its own infrastructure
with coal haulage along its own 35km,
all-season pit to port road, and during
the upcoming navigation period will
start transhipment operations in the
port itself with our four newly acquired
500-tonne barges.
Amaam North’s further development
contemplates the expansion of
mining & logistics capabilities and the
construction of a CHPP in order to
maximise the resource base’s value.
TIG’s strategy with respect to developing
the Amaam Coking Coal Field is
currently envisaged in three stages:
Stage 1: Development of Amaam North
up to a 1.5+Mtpa primarily coking
coal operation shipped through the
Beringovsky Port, split into 2 phases:
• Phase One: up to 0.75Mtpa utilizing
existing infrastructure and mining and
haulage fleet (completed);
• Phase Two: 1.5+Mtpa, with 225kt
oxidised and 1.275Mt through CHPP
to get 830kt of washed coal with 65%
yield, an upgrade of mine and port
infrastructure, and increasing mining
and haulage fleet capacity.
Stage 3: Development of Amaam.
TIG has successfully completed Phase
One and is working on implementing
Phase Two to increase Amaam North
coal production and sales volumes.
In order to achieve this next strategic
objective at the Amaam North deposit,
TIG is focussed on acquiring the
processing capacity to enable the
Company to sell a higher-value product
of consistent quality into the Semi-Hard
coking coal (SHCC) markets. This
SHCC product will allow TIG to achieve
significantly higher average prices than
those currently being achieved for the
basket of unwashed coal products.
To optimise capital spending and
arrange suitable financing, TIG is
evaluating the option of a modular
plant design for which it is expected
that design & engineering works will be
completed in 2020. The first module
of 150tph is targeted for delivery and
commissioning to allow the first SHCC
product to be sold during the 2021
shipping season.
In terms of funding options for the
plant the management and board are
determining the best financing structure
based on a number of instruments such
as equity, project, trade and vendor
finance. Expected capital costs for the
CHPP module will be available upon
completion of the detailed design
and engineering.
Management is optimistic that a material
increase in production is achievable.
In order to obtain sufficient geological
evidence of the additional mineable
coal required to increase production,
TIG will need to perform further drilling
& exploration.
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.
Operations Update
2019 has been a year of significant
growth for TIG. Mining volumes
increased year-on-year from 576kt to
750kt and shipping volumes increased
from 393kt to 581kt. For the first time
TIG transshipped coal with its own new
500-tonne barges.
• Following the new equipment brought
to site, TIG’s annual mining capacity
was increased to 750kt.
• By acquiring four 500-tonne barges,
obtaining all relevant port licences
and gaining experience in barges
operations, TIG has put in place 700kt
of its own transshipment capacity.
• Substantial improvement to the road
was made in 2019. TIG has been
investing in other site infrastructure
related projects including
warehouses, camp, repair workshops
as well as its our fuel farm.
• TIG’s intrinsic value was further
enhanced in 2019 as a result of
its continued demonstration of its
increased ability to mine, transport &
market commercially viable volumes
of thermal and metallurgical coal.
9
Annual Report 2019Tigers Realm Coal Environment &
Stakeholder Relations
Environment
The Company continues to work on
managing the impact of its operations
on the local environment.
In 2019, we sharpened our focus areas
in which our operations may influence
the surrounding environment, such as:
• Water (port operations and coal
haulage);
• Overburden removal, its storage
and use;
• Waste by-products and their
destruction/recycling and reuse; and
• Coal dust.
During 2019, TIG continued developing
water management programs covering
the camp, pit and haulage road to
make sure no waste escapes into local
rivers and sea. The effectiveness of
these programs is regularly monitored
through laboratory testing.
An assessment of waste products
was made with a view to identifying
recycling opportunities. Some
examples of recycling efforts during
the year are:
• paper products;
• worn tyres are used on the barge
fleet as protectors; and
• oil used by our mobile fleet is used
for heating.
All production waste was recycled
in accordance with regulatory
requirements.
On a monthly basis, soils under and
around the coal stockpiles and waste
dumps are tested in order to monitor
environmental regulation compliance.
Additionally, a tanker was acquired to
water the transport road, minimising
the effect of excessive dust blow
off the haulage road during the
summer months.
OPERATIONS
REVIEW continued
Health and Safety
Health and safety are at the forefront
of our considerations. During 2019 the
company continued to improve and
support its workplace safety culture.
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 plans
in the execution of daily activities.
TIG’s cumulative Total Reportable Injury
Frequency Rate (“TRIFR”) increased
to 4.0 compared with 3.7 per million
hours worked in 2018 as port operating
procedures were still being refined.
Based on lessons learnt during
2019, the Company is committed to
continuously improve its safety systems
and performance via the development
of a site safety culture that puts controls
in place for all potential hazards.
10
Annual Report 2019Tigers Realm Coal
Stakeholder Relations
Our operations are located in a remote
part of the Russian Federation, and
our activities need to complement the
requirements of local communities and
their future plans and aspirations.
We place a priority on
attracting employees
from the local
community whenever
possible and providing
them with training
opportunities.
In September 2019, TIG signed an
Agreement of Cooperation with the
Chukotka Government and Agency for
Far East Investment & Export Support
to facilitate further development of
TIG’s assets through improvements
of local infrastructure including fuel
farm, airport, haulage road and
internet connection.
In 2019, TIG played a leading role in a
number of events and initiatives aimed
at supporting the local community:
• TIG sponsored the Chukotkan
cultural and sports festival “Einev”;
• TIG participated in several projects
for children in 2019: Company
employees went to school to
talk about mining professions:
it sponsored the Beringovsky
basketball team’s trip to the
regional tournament of the School
Basketball League and supported
the organization of the children’s
theatre “Kergav”;
• In July TIG took over the cost to
clean the Beringovsky coast to
celebrate Fisherman Day;
• “Eco-patrol” is one of the projects
offered by the association of
Chukotka indigenous peoples and
sponsored by TIG to help monitoring
seacoast from waste and disposals;
• Senior Citizens’ day: supporting the
younger generation’s interaction
with the older generation, a vitally
important aspect of knowledge,
experience and cultural transfer.
Licencing &
Exploration Activities
The Company is in compliance with
material licence obligations.
During 2019, licencing activities for
Amaam North focused on issuance
and State approval of the:
• Zvonkoye Mining and Exploration
Licence and subsequent
commencement of geological
exploration project design works; and
• Mining and Excavation Plan (“TPRM”)
for the integrated development of the
Fandyushkinskoye and Zvonkoye
licence areas;
• Preliminary Mining Parameters
(TEO Konditsy) for development
of Amaam deposit licence areas
AND 01278 (Zapadny) and AND
01288 (Nadezhny) was completed
and approved in September 2019.
Following this approval, TIG will
develop and approve a Mining
and Excavation Plan (“TPRM”) for
Zapadny licence area, outlining the
expected mining approach and
volumes from the licence area;
• In December 2019, TIG submitted
all documentation required to renew
the Amaam exploratory licence
AND 01277 TP.
As at 31 December 2019, TIG has the following licences in effect:
Site
Licence No.
Licence Type
Expiry Date
Licence Holder
Amaam North
BPU1
BPU1
BPU1
Amaam
NPCC2
NPCC2
NPCC2
Amaam North ‘Fandyushkinskoye’
Amaam North ‘Zvonkoye’
Alkatvaam – Levoberezhny
AND 15813 TE
AND 01314 TE
Mining
Mining
AND 01203 TP
Exploration
‘Zapadny’
AND 01278 TE (formerly AND 01225 TE)
‘Nadezhny’
AND 01288 TE
Mining
Mining
General
AND 01277 TP (formerly AND 13867 TP)
Exploration
1. LLC Beringpromugol (‘BPU’), wholly owned TIG subsidiary.
2. JSC Northern Pacific Coal Company (‘NPCC’), 80% beneficially owned by TIG.
3. TIG applied for renewal in December 2019. Licence expected to be received in 1Q 2020.
Dec 2034
Sep 2038
Dec 2025
Mar 2033
July 2037
Dec 20193
11
Annual Report 2019Tigers Realm Coal OPERATIONS
REVIEW continued
Amaam North Snapshot
Mining volumes increased year-on-year by 30% from 576kt to 750kt comprised
of 506kt of thermal (63% increase from last year’s 311kt) and 244kt of coking
(8% reduction from 265kt in 2018).
Mining Operations
ROM coal mined
Coal delivered to Beringovsky Port
Coal sold
Total coal stocks
Waste mined
ROM strip ratio
The Company made significant
investments in mining equipment
to enable expanded output. These
investments included:
• additional heavy equipment for
overburden removal (three 100-tonne
dump trucks, one 7 m3 excavator) to
drive mining efficiency;
• 100-tonne bulldozer to enable
stripping somewhat harder
overburden;
• upgrades to in-house maintenance
facilities; and
• repair workshops and spare parts
warehouses for heavy machinery.
At the same time TIG has faced two
major challenges in 2019:
• In the first half of the year the strip
ratio was significantly higher than
expected;
• Coal mix was also worse than
budgeted.
The stripping ratio by the end of
2019 decreased to 4.1 in Q4 with
3,501kbcm of waste overburden
removed at an average stripping ratio
of 4.7bcm:t in 2019, which was slightly
above expectations.
Driven by investments in new, larger
pit equipment, TIG’s monthly ROM
production reached 110kt per month by
the end of the December, an increase
of 200% over the average monthly
12
kt
kt
kt
kt
Kbcm
bcm:t
Q1
77
66
0
344
494
6.4
Q2
143
143
45
442
705
4.9
Q3
242
223
400
284
1,116
4.6
Q4
288
212
136
436
1,186
4.1
2019
Total
750
644
581
436
3,501
4.7
production of 37kt for the first half of
2019 prior to the arrival of the new
equipment. Average monthly ROM
coal mined in Q4 2019 increased
by 102% compared to Q4 2018 from
48kt to 96kt per month.
Coal has been mined throughout all
sections of Fandyushkinskoye field.
The proportion of metallurgical coal to
thermal was approximately 33% to 67%
totaling 750kt of 2019 production.
Haulage Operations
TIG carried out construction works
included new culverts and river
crossings as well as road water
run-off discharge to improve
road performance.
Haulage operations centre around our
fleet of Scania trucks. At the beginning
of 2019, we had 17 trucks each with a
daily haulage capacity of approximately
200t. In June the haulage fleet was
enlarged by a further 6 trucks, 3 trucks
were impaired and written off during H1
2019, bringing the total fleet to 20 by
year end. Road improvement and new
trucks allowed us to increase average
monthly transportation volumes from
56kt in H2 2018 to 90kt in H2 2019,
a 61% increase.
Peak haulage rates were achieved in
November and December with monthly
haulage of about 110kt.
The Company continued to improve
the condition of the road and its fleet
management practices, the emphasis
being on road safety culture and driving
conditions to minimise traffic related
incidents. TIG improved its logistics
capabilities to ensure sufficient spare
parts and tyres are on the ground as
and when required.
Sales and Marketing
During the 2019 Shipping Season TIG
shipped 12 export vessels with total
volume of 554kt of coal and 27kt for
Chukotka local boilers resulting in
total sold tonnage of 581kt. Four of the
export cargos were comprised of coking
coal – two SSCC and two high-ash
SSCC cargos.
TIG continued to focus on quality
control and building long-term customer
relations. As a result of our focus on
quality, we experienced no quality-
related claims during the year while
continuing to ship increased volumes
to several key customers with whom we
have developed a robust and beneficial
working relationship.
The coal market weakened during
the second half of 2019 as general
economic conditions worsened, driven
by weaker growth and trade tensions
between China and the USA. Chinese
domestic production growth, coupled
with the resumption of import quotas
Annual Report 2019Tigers Realm Coal designed to maintain imports at 2017
levels, reduced demand for seaborne
exports from Far East Russia, Indonesia
and Australia.
FOB Australian hard coking coal spot
prices dropped from over $200/mt
earlier in the year to around $120/mt at
the low point in Q4 2019. FOB Australian
semisoft coking coal prices fell from
over $120/mt in Q2 2019 to $77/mt
over the same period. TIG supplied its
low ash semisoft at prices linked to Q3
2019 benchmark settlements, which
provided some insulation from these
price decreases.
The price of thermal coal fell throughout
2019, continuing a downward trajectory
since August 2018. In the Asian region
this was primarily driven by increased
domestic Chinese supply and imposition
of Chinese import restrictions.
There remains relatively strong demand
for TIG SSCC – both its standard 9.5%
ash and higher ash products. The 9.5%
ash SSCC is being primarily sold into
Japan, while the higher ash SSCC is
seeing demand from China and Korea.
The retention of TIG’s coal coking
properties, even at higher ash levels,
has enabled sales of SSCC with ash
as high as 15%.
In terms of thermal coal, production in
2019 was mostly of higher ash material
with CV below 5500 kcal/kg NAR.
Irrespective of the annual import quotas
imposed on some Chinese ports, this
coal was sold into China as there was
demand for Russian high ash thermal
coal in preference to Australian.
TIG was impacted by higher freight rates
at the end of the season, driven by the
resumption of Brazilian iron ore exports,
strong demand for smaller vessels for
cargos to Vietnam (which has doubled
coal imports this year) and a need to
position vessels late in the year at repair
ports to refit and prepare the vessels for
new IMO low sulphur fuel regulations.
2019 Beringovsky
Port Operations
In 2019, the Company acquired four
500-tonne barges and obtained all
relevant port licences, thus enabling
an increase in transhipment capacity
to 700kt and eliminating the Company’s
dependence on an outside contractor
to tranship coal. TIG now has
operational control over the full cycle
from pit to vessel.
During 2019, TIG also began preparing
port infrastructure for the 2020 shipping
season by upgrading repair shops
and personnel accommodations as
well as preparatory work to obtain all
necessary licences.
Key figures for TIG port operations are set out in the table below:
Coal transshipped
Number of barges in use
Number of weather working days per month
kt
units
days
June
45
7
13.4
July
163
9
27.3
Aug
153
11
17.0
Sept
84
11
12.8
Oct
55
11
11.8
Nov
81
11
4.1
Total
581
86.4
13
Annual Report 2019Tigers Realm Coal
OPERATIONS
REVIEW continued
Amaam Overview
TIG holds an 80% interest in the
Amaam tenement and licences
covering the area of 231km2, 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 coal formation and is divided
into four main areas by north-west
trending faults.
With the company’s primary focus on
Amaam North, there was no operational
activity during 2019 at Amaam other
than preparatory geological and project
work being performed as part of future
drilling activities.
Corporate Activities
During the second quarter of 2019
TIG executed and fully drew down on
two one-year loans of US$2.5 million
each with Bruce Gray and an entity
affiliated with BV Mining Holding Limited
(“BVMHL”). These loans provided support
for TIG’s investment in mining and
transhipment capacity.
As part of cash liquidity management,
the Company obtained further
US$15 million of short-term funding
from two of its major shareholders,
BV Mining Holding Limited (through
BV Mining Investment Limited) and
Dr Bruce Gray (through Pine Ridge
Holdings Pty Ltd). The funding was
comprised of independent loan
agreements, which have been provided
by each of the shareholders.
The shareholder loans were used to
prepay amounts owing under a Sberbank
working capital loan agreement and
provided additional working capital,
whilst the Company explored longer term
financing arrangements.
In December TIG launched a 13:4
Accelerated Renounceable Entitlement
Offer priced at A$0.01 per share to raise
A$58.2m (US$40M). In February 2020,
TIG successfully completed the
institutional and retail components of its
Offer followed by the Shortfall Bookbuild.
As of 27 February 2020, a total of
A$45.2 million (US$31.1 million) has
been raised through the Entitlement
Offer. Should the issuance of shares
to Dr. Gray through the Shortfall
Bookbuild be approved at the
extraordinary general meeting, the
total capital raise will increase to
A$58.2 million (US$40.0 million).
The proceeds from the Entitlement
Offer will be used as follows:
• US$20.5 million to settle the
existing Shareholder Debt,
including interest;
• up to US$5.0m for early
repayment of leasing obligations
with an effective interest rate
higher than 15% per year;
• up to US$6.5 million for
capital expenditures at the
mine and port;
• up to US$2.0 million for licence
compliance drilling; and
• up to US$6.0 million for
working capital.
14
Annual Report 2019Tigers Realm Coal Tigers Realm Coal
Annual Report 2019
FINANCIAL
REPORT
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
Notes to the Consolidated Financial Statements
Directors’ Declaration
Auditor’s Independence Declaration
Independent Auditor’s Report
Shareholder Information
Corporate Directory
16
38
45
46
47
48
49
92
93
94
99
101
15
Tigers Realm Coal Limited
Directors’ report
For the year ended 31 December 2019
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 2019.
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
Experience, special responsibilities and other directorships
Mr Craig
Wiggill
Independent
Chairman
BSc Eng.
Mr Wiggill was appointed Independent Chairman 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 also 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. He holds no other directorships with ASX listed entities.
16
4
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2019
Directors, Alternate Director and Company Secretary
1.
Name
qualifications and
independence
status
Experience, special responsibilities and other directorships
Mr Ralph
Morgan
Non-executive
Director
BA, MPhil
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 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 the last 10 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 Vice-President at RDIF and has been involved in the Russian private equity market for over 8
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
17
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2019
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
28
28
28
28
28
28
B
28
28
26
28
21
24
A
3
3
3
3
-
-
B
3
3
3
2
-
-
A
6
-
6
6
6
6
B
6
-
6
6
4
4
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.
Review of Operations
Business Strategies and Group Objectives
The Group’s objectives encompass the development of the Amaam Coking Coal Deposits, comprising its two, well-located, large
coking coal projects in the Far East of the Russian Federation.
Amaam North: a low-cost starter project providing a fast track to production and earnings, utilising existing
infrastructure and supporting development of the entire Amaam Coking Coal Field; and
Amaam: a large coal resource which will enable scaling TIG production up to 5 million tonnes per annum (“Mtpa”)
from dedicated new infrastructure.
Amaam North
Development of Amaam North started with development of the Fandyushkinsky Field licence AND 15813 TE area (“Project F”),
a part of Amaam North. A Project F Feasibility Study Update was completed in April 2016, subsequent to which the Group raised
funds via a non-renounceable rights issuance, the primary use of proceeds being on the development of Project F. After
completing the necessary initial construction works in the second half of 2016, commercial mining commenced in January 2017.
In September 2018, TIG was granted Exploration and Mining licence No AND 01314 TE over the Zvonkoye deposit,
geographically located next to an eastern extension of Project F. As further discussed below in Licenses, Permits and Titles,
during 2019, TIG applied for a Mining and Excavation Plan (“TPRM”) for the integrated development of the Fandyushkinskoe
Field and Zvonkoye license areas, which was approved in December 2019. The Group plans to start production from both areas in
2020.
Further development of Amaam North, which includes an upgrade of mine site infrastructure, the Beringovsky Port and Coal
Terminal and supplemented by the construction of a coal handling and preparation plant (“CHPP”), will enable the Group to
produce and sell higher-value coal and is expected to increase coal production and sales up to 1.5Mtpa. The Group is currently
considering various strategies on the Company’s further expansion and business development programme and expects to conclude
on these matters during the first half of 2020.
18
6
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2019
4.
Review of operations
Business Strategies and Group Objectives (continued)
Amaam
Amaam is a potential long-life project of the Group with capacity to enable TIG to increase production up to 5Mtpa of high-
quality coking coal product over an estimated 20-year life of mine. The Company currently holds an Exploration Licence over the
Amaam deposit and two long-term (20 year) Extraction and Exploration Licences over parts of the deposit. 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
Operating Performance
Key Operating Indicators for the year ended 31 December 2019 (“2019”) and 2018 (“2018”):
Operating Indicators
(rounded to the nearest thousand tonnes, unless otherwise stated)
Coal mined
Overburden removed
Stripping ratio
Total saleable coal stocks at 31 December
Total coal sales, of which:
- Thermal coal sales
- Semi soft coal sales
Employees as at 31 December*
*Full time equivalent staff
Results for 2019
Results for 2018
750
3,501 bcm
4.7:1 bcm/t
576
1,900 bcm
3.3:1 bcm/t
291
581
388
193
282
268
393
214
179
208
7
19
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2019
4.
Review of operations
Operating performance (continued)
Key Financial Indicators
(in A$ ‘000s unless otherwise stated)
Revenue from coal sales
Cost of coal sold
Gross Margin on coal sold
EBITDA*
Net (loss)/profit before tax
Average coal sales price
Results for 2019
Results for 2018
50,141
(45,601)
4,540
(7,743)
(18,784)
52,277
(31,337)
20,940
15,269
10,918
A$76.7 (US$53.38)
A$109.37(US$79.20)
Average cost of coal mined and sold per tonne
A$47.49 (US$33.03)
A$35.51 (US$25.71)
Average cost of port handling and stevedoring costs per tonne sold
A$16.19 (US$11.26)
A$14.53 (US$10.52)
Total free on board (“FOB”) cost of coal sold**
A$64.26 (US$44.69)
A$51.98 (US$37.63)
*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.
** Includes other costs of coal sold of A$0.58 per tonne in 2019 (A$1.94 per tonne in 2018).
During the year ended 31 December 2019, the Company achieved a production level of 750 thousand tonnes (“kt”), of which
644kt were delivered to Beringovsky Port and Coal Terminal (576kt and 528kt, respectively in 2018). During the year ended 31
December 2019, the Group sold 581kt (393kt in 2018) and generated A$50.141 million in total revenue from the sale and
shipment of coal (For the year ended 31 December 2018: A$52.277 million).
The Group had A$20.069 million net cash outflow from operations for the year ended 31 December 2019 (For the year ended 31
December 2018, A$8.017 million net cash was generated). Cash outflows of A$4.977 million on investing activities were incurred
for the year ended 31 December 2019 (A$4.994 million was incurred for the year ended 31 December 2018). The Group’s net loss
for the year ended 31 December 2019 was A$18.828 million (For the year ended 31 December 2018: net profit of A$10.880
million).
During 2019, operational performance was enhanced by coal production and sales increases of 30% and 48%, respectively.
Unfortunately, the impact of increased coal production and sales was more than offset by a 29% decrease in average realized FOB
sales price as coal prices, in general, and thermal coal prices, in particular, fell precipitously during 2019 and the Group
experienced higher than anticipated ash content. Revenue was additionally impacted by underperformance at the port, resulting in
decreased loading capacity. During the period FOB cost of coal sold on a per tonne basis also increased by 23%. The increase in
per tonne costs were due largely to a 42% increase in the stripping ratio from 3.3 to 4.7, partially offset by increased efficiencies
resulting from the use of larger equipment which began working in July 2019. The combined effect of these main factors resulted
in a gross margin of A$4.540 million for the year ended 31 December 2019 (For the year ended 31 December 2018: A$20.940
million).
20
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Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2019
4.
Review of operations (continued)
Operating Performance (continued)
The average margin per tonne of coal sold during the year ended 31 December 2019 was A$12.44 (US$8.69) (for the year ended
31 December 2018: A$57.39 (US$41.57)), the weighted average FOB sales price per tonne (“FOB/t”) being A$76.76 (US$53.38)
(for the year ended 31 December 2018: A$109.37 (US$79.20)).
Driven by investments in new, larger pit equipment, TIG’s monthly coal production reached 110kt per month by the end of
December 2019, an increase of 200% over the average monthly production of 37kt for the first half of 2019 prior to the arrival of
the new equipment. Average monthly coal mined in the fourth quarter of 2019 increased by 102% compared to fourth quarter of
2018 from 48kt to 97kt per month. The proportion of semi-soft coking coal to thermal coal was approximately 33% to 67%
totalling 750k tonnes of production during 2019.
Significant investments in mining and port assets totalling A$26,366 million during the year ended 31 December 2019 included:
Four 500t transshipment barges – two newly built and two that have been in service at another port for two years and are
nearly identical to the new barges – all were acquired to build TIG’s own independent transshipment capacity;
Three 100t Komatsu dump trucks, a 100t Komatsu bulldozer, Komatsu loader and excavators to drive mining
efficiency;
Six additional haulage trucks acquired to increase coal transport capacity from the mine to port; and
Two additional Liebherr loaders.
Other events of noted during the year, other than the Entitlement Offer discussed separately below, included:
On 1 January 2019, the Group recognised right of use assets and a related lease liability in respect of the agreement with
Rosmorport executed in March 2018, in accordance with which the Group leases three general cargo piers, a coal pier
and a breakwater pier for 49 years from the date of signing. The cost of the right of use asset and commensurately the
lease liability upon initial recognition was RUB 23.593 million (A$0.532 million). The value of the right of use lease
liability at 31 December 2019 is RUB 23.533 million (A$0.544 million);
In April 2019 TIG obtained two loan facilities of US$2.5 million each (US$5 million in total) from two of its
shareholders, BV Mining Holding Limited (through BV Mining Investment Limited) and Dr Bruce Gray (through Pine
Ridge Holding Pty Ltd);
In October 2019 TIG obtained additional funding of US$15 million from BV Mining Holding Limited (through BV
Mining Investment Limited) and Dr Bruce Gray (through Pine Ridge Holding Pty Ltd); and
On 18 December 2019, TIG launched a 13:4 Accelerated Renounceable Entitlement Offer at a price of A$0.01 per share
in order to raise up to US$40M (A$58.2M). Refer to further details in Events subsequent to reporting date section
below.
Financial Position
Cash balances
The Group’s cash balance increased by A$1.162 million over the year to A$4.716 million at 31 December 2019. This increase arose
primarily from proceeds from the accelerated component of the Entitlement Offer, offset by operational losses and further
investment in the Company’s mining and logistics infrastructure of A$6.026 million (31 December 2018: A$4.859 million).
As of 31 December 2019, the Company has no unused, available credit lines (RUB 825.606 million (A$16.821 million) as at 31
December 2018).
Inventory on hand
The lower of cost and net realisable value of the Group’s inventories on hand at 31 December 2019 is A$28.805 million (31
December 2018: A$17.231 million), including A$11.999 million of coal stocks, A$3.900 million in fuel and oils and A$12.906
million of other consumables. Management performs a regular review of the recoverability of inventories, including coal stocks, to
assess the Company’s ability to recover the cost of coal inventories on hand. Accordingly, a provision of A$4.432 million was
recognised for the recoverability of coal stocks at 31 December 2019 (At 31 December 2018 A$0.830 million), primarily in respect
of 145kt (At 31 December 2018: 67kt) of coal stock maintained at the Company’s interim coal stockpile, which requires processing
prior to commercial realisation.
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Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2019
4.
Review of operations (continued)
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, as a result of which
management have concluded that in 2019 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.
Three haulage trucks with carrying value of A$0.460 million were written off during the year ended 31 December 2019 as a result
of damage arising from accidents for which repairs to restore them to their previous operational condition were assessed as not
economically justifiable.
Finance Leases
During the year ended 31 December 2019, the Group executed a number of finance lease arrangements to finance the acquisition
of six haulage trucks, a heavy bulldozer, a grader, three 100-tonne dump trucks and four 500-tonne barges. The cost of the
property, plant & equipment was A$16.210 million. The value of the finance leases, after advance payments of A$3.170 million,
was upon inception A$13.040 million and A$11.033 million at 31 December 2019
On 1 January 2019, the Group recognised right of use of assets and a related lease liability in respect of the agreement with
Rosmorport executed in March 2018, in accordance with which the Group leases three general cargo piers, a coal pier and a
breakwater pier for 49 years from the date of signing. The cost of the right of use of assets and commensurately, the lease liability
upon initial recognition was RUB 23.593 million (A$0.532 million). The value of the right of use lease liability at 31 December
2019 is RUB 23.533 million (A$0.544 million).
Other financial liabilities
The Company entered into sale and lease-back agreement with Universal Leasing Company with respect to two 500-tonne
transhipment barges. TIG received RUB 192.486 million (A$4.373 million) under this arrangement, which were included in other
financial liabilities.
Options
During the year ended 31 December 2019, no options were granted. During the year ended 31 December 2019, 5,323,000 options,
respectively, lapsed or were forfeited and have been removed from the Company’s option register.
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.
Country Risk
TIG’s projects are located in Russia. 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 the Russian Federation.
Uncertainty in estimation of Mineral Resources and Reserves
Estimating the quantity and quality of Mineral Resources is an inherently uncertain process and the Mineral Resources and
Reserves 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 of coal that TIG has identified or that it will be able to extract.
22
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Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2019
4.
Review of operations (continued)
Project Assessment and Development Risk
The process of developing and constructing Amaam North (including the CHPP) will be subject to many 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.
Mining and development operations can be affected by force majeure circumstances, environmental considerations and cost
overruns for unforeseen events. Any event that impacts on the production rates potentially may reduce the quantity of coal mined
and thereby reduce the amount of coal available for sale.
Events that could adversely impact on production rates include, but are not limited to geotechnical and geological conditions;
equipment availability, utilisation rates and failure; development rates at which relevant coal seams are exposed; weather
(including flooding) and natural disasters; unexpected maintenance or technical problems; depletion of TIG’s reserves; increased
or unexpected reclamation costs; and interruptions due to transportation delays; interruptions to supplies of required materials and
services; and the actions of potential contractors engaged by TIG to operate its projects (including any breach of contract or other
action outside TIG’s control).
TIG is at the preliminary stage of determining the economic and technical viability of the Amaam Licence. To date TIG has
completed a Preliminary Feasibility Study (PFS) and subsequent resource updates on the Amaam project. There is a risk that the
more detailed studies in relation to the Amaam project may disprove assumptions or conclusions reached in the PFS, may reveal
additional challenges or complexities and may indicate the cost estimates are incorrect. In addition, TIG must proceed through a
number of steps before making a final investment decision with respect to the projects, conducting definitive feasibility studies,
converting Resources to Reserves, obtaining government approvals and permits and obtaining adequate financing.
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, 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. The Company faces commodity price risk 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.
Climate-related risks
The introduction of new and/or more stringent carbon pricing mechanisms in Russia, Australia and/or Group’s key coal importing
countries such as China and Japan may reduce the cost competitiveness of coal as an energy source. Further, changes in
government policy relating to either coal consumption or energy generation in large Asian economies could impact the longer-
term outlook for global coal demand. Changes in the longer-term global coal demand outlook could have an impact on the
Group’s future coal revenues and the recoverability of undeveloped coal reserves.
11
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Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2019
4.
Review of operations (continued)
Capital Management
The nature of the Company’s mining operations is such that coal production continues throughout the winter season, whilst sales
are only realised during the Beringovsky Port shipping season. The shipping season historically commences in June and port
operations may continue as late as November. The length of the shipping season is limited, resulting in the necessity of engaging
vendors in the first half of the calendar year prior to the generation of operating cashflows from coal sales. This seasonality
significantly impacts both on the nature, level and timing of required funding.
The Company, therefore, must ensure that its liquidity levels are managed during the period between shipping seasons.
Consideration is also required of the extent and timing of capital expenditures and the related forward funding commitments
necessary to achieve the Company’s expected development levels.
The Company announced in March 2019 agreement with its two largest shareholders, Dr Bruce Gray (Dr. Gray) and Baring
Vostok Mining Holdings Limited, through its affiliated entity Baring Vostok Mining Investments Limited (BVMHL), the terms in
accordance with which each shareholder made available to the Group unsecured non-revolving loan facilities up to US$2.5
million, up to US$5.0 million in total, each with a one-year tenor and incurring interest at 12% per annum.
In October 2019, the Company entered into additional financing agreements with Dr. Gray and BVMHL in accordance with
which each shareholder made available to the Group unsecured non-revolving loan facilities up to US$7.5 million, up to US$15.0
million in total, each one having a repayment date at 31 January 2020 and incurring interest at 20% per annum. The facilities in
the amount of US$15.0 million were fully drawn down by the middle of November 2019. The funds were utilized as follows:
RUB 687 million (A$15.880million) to repay the outstanding balance of a working capital facility provided by
Sberbank in an original amount of RUB 900 million (A$18.336 million) and
Additional working capital to enable the Company to settle other obligations as and when they came due.
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 Company has not yet applied for the majority of the required licences, permits and approvals to construct and
operate the mine.
For Project F Amaam North, the Mining Licence was granted in December 2014 and work has been completed in obtaining all
relevant Construction and Commissioning Permits. In December 2019 Rosnedra, the Russian natural resource licensing authority,
approved a Mining and Excavation Plan (“TPRM”) for the integrated development of the Fandyushkinskoe and Zvonkoye license
areas. The 2020 mine plan already includes production from both areas. Consequently, future references to Amaam North will
refer to the unified development of both license areas.
In addition to specific mining-related approvals, other approvals are required for the development of Amaam North. Such
approvals relate to the CHPP, road development from the Amaam North mine site to Beringovsky Port and Coal Terminal and for
the capital upgrades to be completed at the Beringovsky Port and Coal Terminal.
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 in obtaining such licenses,
permits and approvals occur, and 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.
Feasibility Studies of Amaam deposit development for licence areas АНД 01278 (Zapadny) and АНД 01288 (Nadezhny) was
completed and approved in September 2019. Following this approval, TIG will develop and have approved a Mining and
Excavation Plan (“TPRM”) for Zapadny licence area, outlining the expected mining approach and volumes from the licence area.
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 financial period ended 31 December 2019 not otherwise reflected in the accompanying
consolidated financial statements.
24
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Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2019
6.
Events subsequent to reporting date
Entitlement Offer
As previously discussed, on 18 December TIG launched a 13:4 Accelerated Renounceable Entitlement Offer at a price of A$0.01
per share in order to raise up to US$40M. The Offer has received strong support from TIG’s three largest shareholders,
representing 68% of outstanding shares prior to the Offer. The retail component of the Offer closed on 5 February 2020. The
Shortfall Bookbuild closed on 12 February with all 1.34 billion shortfall shares taken up.
Amongst the bids received into the Bookbuild, was a bid from Hanate Pty Ltd, an entity associated with director and substantial
shareholder, Dr Bruce Gray, for approximately 1.3 billion Shortfall Shares. The issue of shares to Hanate Pty Ltd will therefore be
subject to shareholder approval for the purposes of ASX Listing Rule 10.11 and section 611, item 7 of the Corporations Act 2001
(Cth). The extraordinary general meeting in respect of the necessary shareholder approvals is expected to be held in April 2020.
As of 27 February 2020, a total of A$45.2 million (US$31.1 million) has been raised through the Entitlement Offer. Should the
issuance of shares to Dr. Gray through the Shortfall Bookbuild be approved at the extraordinary general meeting, the total capital
raise will increase to A$58.2 million (US$40.0 million). The proceeds from the Entitlement Offer will be used as follows:
• US$20.5 million to settle the existing Shareholder Debt, including interest;
• up to US$5.0m for early repayment of leasing obligations with an effective interest rate higher than 15% per year;
• up to US$6.5 million for capital expenditures at the mine and port;
• up to US$2.0 million for license compliance drilling; and
• up to US$6.0 million for working capital.
Coal Handling and Processing Plant
On 31 January 2020, TIG announced significant progress in the design & engineering works for a coal handling and processing
plant (CHPP). In particular, the Company announced that it expects to produce a semi-hard coking coal product with a CHPP
yield of about 65%. The Company’s primary outside coal process expert is AB Mylec (Australia). The Company is focused on
employing a modular plant option which it aims to be able to bring on-line so as to ship its first semi-hard product during the 2021
shipping season. The Company’s ability to do so, however, will be subject to its ability to secure sufficient financing.
7.
Dividends paid or recommended
The Directors do not recommend the payment of a dividend and no amount has been paid or declared by way of a dividend to the
date of this report.
8.
Likely developments
In 2020, mining activities will continue at Amaam North, with production expected to be between 520kt and 600kt, whilst sales
volumes are currently forecast to be in the range of 620kt to 700kt.
Ongoing enhancement of port, road and other mine infrastructure is expected during 2020. Amaam North expansion and funding
alternatives will continue to be investigated further. The Group will 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 to 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
25
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2019
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:
Tigers Realm Coal Limited
Ordinary shares
5,100,000
1,718,047,035
60,412,029
-
-
-
Options over ordinary shares
1,500,000
-
1,500,000
500,000
500,000
-
C Wiggill
B Gray
O Hegarty
R Morgan
T Sitdekov
N Ishmetov
11.
Share Options
Options granted to directors, executives and employees 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 2019, there were no options issued, 3,594,000 options lapsed and 1,729,000 forfeited,
bringing options issued over ordinary shares in the Company to 28,346,000 at 31 December 2019 (For the year ended 31
December 2018: no options issued and 22,407,000 options lapsed and 3,361,000 options forfeited, thus bringing the options
issued over ordinary shares in the Company to 33,669,000).
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.
26
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Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2019
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 2019.
(a)
Details of key management personnel
Name
Directors
Craig Wiggill
Bruce Gray
Owen Hegarty
Ralph Morgan
Tagir Sitdekov
Nikolay Ishmetov
Senior Executives
Dmitry Gavrilin
Dale Bender
Scott Southwood
Sergey Efanov
David Forsyth
Position
Commencement Date
Chairman (Non-Executive)
Director (Non-executive)
Director (Non-executive)
Director (Non-executive)
Director (Non-executive)
Alternate Director for Mr Sitdekov
Chief Executive Officer
Chief Financial Officer
General Manager Marketing
General Manager Operations
Company Secretary
20 November 2012
1 October 2015
8 October 2010
1 April 2014
1 April 2014
1 July 2017
1 June 2018
1 October 2018
13 October 2013
15 November 2017
8 October 2010
(b)
Changes to key management personnel
Directors
There were no changes to either Directors or to the Alternate Director during 2019.
Executives
There were no changes to Executives during 2019.
On 31 May 2018, Peter Balka resigned as Interim Chief Executive Officer, resuming his role as Chief Operating Officer until his
departure on 31 August 2018.
On 1 June 2018, Dmitry Gavrilin commenced his tenure as Chief Executive Officer.
On 31 May 2018, Chief Financial Officer, Denis Kurochkin completed his tenure and was subsequently replaced by Dale Bender
effective 1 October 2018.
15
27
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2019
12.
(c)
Remuneration report – audited (continued)
Principles used to determine the nature and amount of remuneration
KMP are those persons having 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 financial
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)
2019
2018
2017
2016
2015
$(18.715)
$10.959
$(6.213)
$(10.511)
$(86.170)
Closing share price (A$)
$0.01
$0.04
$0.057
$0.073
$0.03
(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 Remuneration and Nomination 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, CFO, General Manager Marketing and the GM operations, the target remuneration mix in the
current year is 50% fixed, and 50% at risk (15% STI and 35% LTI). For the CEO and CFO, the LTI element of remuneration was
determined at the time of initial appointment, reflected in their employment agreements. The target remuneration mix for 2020
and beyond is currently the subject of review and approval. The General Manager Marketing is engaged on a contract basis, being
eligible to participate in both the Company’s STI and LTI programmes in accordance with the terms of the Company’s
remuneration policy.
28
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Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2019
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 senior 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 accrue to the 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.
The 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.
The employment contract outlines 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
employment contracts 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, all resident non-executive Directors receive 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 2019, the base fee for Directors was $30,000 per annum. 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$20,000 per annum is also payable to the Director who performs the duties of Chairman of
the Audit, Risk and Compliance Committee. With the exception of the independent Chairman, all directors waived their director
fee entitlements for the year ended 31 December 2019.
17
29
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2019
12.
(h)
Remuneration report – audited (continued)
Details of the remuneration of the Group’s key management personnel
Details of the nature and amount of each major element of remuneration of each Director of the Company, and the key
management personnel (as defined in AASB 124 Related Party Disclosures) are set out in the following tables.
Short – term
Cash
Salary and
fees
A$
Non-
Monetary
Benefits
(1)
A$
STI
cash
bonus
(2)
A$
Post-
employment
Share -
based
payments
Super-
annuation
A$
LTI (3)
A$
Total
Remun-
eration
A$
Proportion
of remun-
eration
comprising
options
%
152,895
-
-
-
-
152,895
346,498
185,332
94,039
389,490
1,482,571
1,635,466
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12,639
-
-
-
-
12,639
-
-
-
-
-
-
-
-
-
-
-
-
-
-
26,649
20,521
38,986
165,534
-
-
-
-
165,534
467,212
346,498
211,981
114,560
428,476
86,156
1,568,727
12,639
86,156
1,734,261
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
12.57%
17.91%
9.10%
Name
2019
Non-executive Directors
C Wiggill
B Gray
O Hegarty
R Morgan
T Sitdekov
Sub total
D Bender
S Southwood
D Forsyth
S Efanov
Sub total
Total key management
personnel
1.
2.
3.
Other key management personnel
D Gavrilin
467,212
Includes the value of fringe benefits and other allowances.
In respect of 2019.
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 2019). 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.
During the year ended 31 December 2019, other than the remuneration detailed above, key management personnel were neither
entitled to nor did they receive loans or other benefits.
30
18
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2019
Remuneration report – audited (continued)
Details of the remuneration of the Group’s key management personnel
Short – term
Cash
Salary
and fees
A$
Non-
Monetary
Benefits
(1)
A$
STI
cash
bonus
(2)
A$
Post-
employment
Share -
based
payments
Super-
annuation
A$
LTI (3)
A$
Total
Remun-
eration
A$
Proportion
of remun-
eration
comprising
options
%
12.
(h)
Name
2018
Non-executive Directors
C Wiggill
B Gray
O Hegarty
R Morgan
T Sitdekov
Sub total
131,458
-
-
-
-
131,458
Other key management personnel
D Gavrilin (5)
265,314
-
-
-
-
-
-
-
P Balka (4)
D Bender (7)
D Kurochkin(6)
S Southwood
D Forsyth
S Efanov
Sub total
Total key management
274,313
38,818
62,710
143,797
187,200
84,000
296,289
-
-
-
-
-
1,313,623
38,818
216,861
-
-
-
-
-
-
95,774
24,300
-
-
23,400
10,080
63,307
12,511
-
-
-
-
12,511
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(12,208)
-
(12,047)
37,805
29,099
55,231
143,968
-
-
-
-
143,968
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%
personnel
1.
2.
3.
12,511
38,818
216,861
1,445,081
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.
1,811,151
97,880
4. Ceased as Interim Chief Executive Officer effective 31 May 2018 and as Chief operating Officer from 31 August 2018
5. Commenced as Chief Executive Officer effective 1 June 2018.
6. Ceased as Chief Financial Officer effective 31 May 2018.
7. Commenced as Chief Financial Officer effective 1 October 2018
19
31
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2019
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 Executive Directors and KMP during the year
ended 31 December 2019, 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
2019
Other key management personnel
Dmitry Gavrilin, CEO
Dale Bender, CFO
Scott Southwood, General Manager Marketing
David Forsyth, Company Secretary
Sergey Efanov, General Manager Project F
2018
Other key management personnel
Dmitry Gavrilin, CEO
Peter Balka, Interim CEO
Dale Bender, CFO
Denis Kurochkin, CFO
Scott Southwood, General Manager Marketing
David Forsyth, Company Secretary
Sergey Efanov, General Manager Project F
Fixed Annual
Remuneration
(including
superannuation
contributions)
%
At Risk - STI
as percentage
of Total
Remuneration
%
At Risk - LTI
as percentage
of Total
Remuneration
(1)
%
At Risk -
Total
as percentage
of Total
Remuneration
%
100.0
100.0
87.4
82.1
90.9
73.5
92.5
100.0
100.0
75.4
68.0
71.4
-
-
-
-
-
26.5
7.5
-
-
9.4
8.5
15.3
-
-
12.6
17.9
9.10
-
-
-
-
15.2
23.5
13.3
-
-
12.6
17.9
9.10
26.5
7.5
-
-
24.6
32.0
28.6
1
Since the LTI is provided exclusively by way of options, the percentages disclosed also reflect the value of remuneration consisting of
options, based on the value of options expensed during the year.
The Options Scheme prohibits executives from entering into arrangements to protect the value of unvested LTI Plan awards. The
prohibition includes entering into contracts to hedge their exposure to options awarded as part of their remuneration package.
32
20
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2019
12.
(j)
Remuneration report – audited (continued)
Analysis of bonuses included in remuneration
During and in respect of the years ended 31 December 2019 and 2018, there were Nil and A$216,861, respectively, in short-term
incentive (STI) cash bonuses awarded as remuneration to key management personnel.
(k)
Share Options granted as remuneration
During the year ended 31 December 2019 and 2018, there were no options granted to key management personnel. Further details
of the Option Plan are included in Note 24 to the consolidated financial statements.
During the year ended 31 December 2019, 2,721,000 options over ordinary shares vested (For the year ended 31 December 2018
no options vested) as follows:
Number of
options
vested
during year Grant date
Fair value
of option at
grant date
A$
Exercise
price per
option
A$
Vesting
date
start
Vesting date
finish
Expiry
date
Option
vesting
performance
hurdle
A$
2019
Executives
S Southwood
D Forsyth
S Efanov
842,000
648,000
1,231,000
18/10/2017
18/10/2017
18/10/2017
0.031
0.031
0.031
0.08
0.08
0.08
18/10/2017 18/10/2019 18/10/2022
18/10/2017 18/10/2019 18/10/2022
18/10/2017 18/10/2019 18/10/2022
0.000
0.000
0.000
21
33
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2019
Remuneration report – audited (continued)
12.
(l) 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.
Name
Held at
1 January
Granted as
remun-
eration
Exerci-
sed
during
year
Forfeited/
Lapsed
during
year
Held at 31
December
Vested at 31 December
Total
Exercisable
Not exer-
cisable
2019
Directors
C Wiggill
B Gray
O Hegarty
R Morgan
T Sitdekov
1,500,000
-
1,500,000
500,000
1,500,000
Other key management personnel
D Forsyth
3,752,000
S Southwood
3,975,000
S Efanov
3,621,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,000,000)
-
-
-
-
-
1,500,000
1,500,000
-
-
1,500,000
1,500,000
500,000
500,000
500,000
500,000
(1,082,000)
2,670,000
1,412,000
-
-
3,975,000
2,342,000
3,621,000
1,231,000
1,412,000
2,342,000
1,231,000
-
-
-
-
-
-
-
-
Name
Held at
1 January
Granted as
remun-
eration
Exerci
-sed
during
year
Forfeited/
Lapsed
during
year
Held at 31
December
Vested at 31 December
Total
Exercisable
Not exer-
cisable
2018
Directors
C Wiggill
B Gray
O Hegarty
R Morgan
T Sitdekov
2,500,000
-
2,500,000
500,000
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
1,500,000
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
-
-
-
-
-
-
-
-
-
-
-
34
22
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2019
12.
Remuneration report – audited (continued)
(m) 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 during year
A$
Value of options
lapsed during year
A$
Remuneration
consisting of options
for the year
%
2019
Directors
C Wiggill
B Gray
O Hegarty
R Morgan
T Sitdekov
Other Key Management Personnel
D Forsyth
S Southwood
S Efanov
2018
Directors
C Wiggill
B Gray
O Hegarty
R Morgan
T Sitdekov
Other Key Management Personnel
P Balka
D Forsyth
D Kurochkin
S Southwood
S Efanov
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(43,000)
-
(35,706)
-
-
(64,000)
-
-
(65,000)
-
-
(82,570)
(16,445)
-
-
-
0.0
0.0
0.0
0.0
0.0
0.0
25.6
17.2
14.4
0.0
0.0
0.0
0.0
0.0
0.0
0.0
23.4
0.0
16.0
12.9
For details on the valuation of options, including models and assumptions used, refer to Note 24.
23
35
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2019
Remuneration report – audited (continued)
12.
(n) 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 during
year
Forfeited/ Lapsed
during year
Vesting date
start
Vesting date
finish
Directors
C Wiggill
O Hegarty
R Morgan
T Sitdekov
Executives
D Forsyth
S Southwood
S Efanov
1,000,000
500,000
1,000,000
500,000
500,000
1,000,000
500,000
541,000
541,000
382,000
382,000
648,000
1,258,000
750,000
750,000
842,000
1,633,000
1,231,000
2,390,000
11/06/15
11/06/15
11/06/15
11/06/15
11/06/15
04/06/14
11/06/15
19/12/14
19/12/14
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
648,000
-
-
-
842,000
-
1,231,000
-
-
-
-
-
-
(1,000,000)
-
(541,000)
(541,000)
-
-
-
-
-
-
-
-
-
-
11/06/15
11/06/15
11/06/15
11/06/15
11/06/15
04/06/14
11/06/15
19/12/14
19/12/14
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
11/06/16
11/06/17
11/06/16
11/06/17
11/06/17
04/06/15
11/06/17
19/12/15
28/02/16
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
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.
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.
36
24
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Tigers Realm Coal Limited
Directors’ report (continued)
Directors’ report (continued)
For the year ended 31 December 2019
For the year ended 31 December 2019
15.
15.
Audit and non-audit services
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
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,
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.
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
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
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
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
auditor, as set out in Note 35, did not compromise the auditor independence requirements of the Corporations Act 2001 for the
following reasons:
following reasons:
• all non-audit services have been reviewed and approved by the Board to ensure they do not impact the integrity and
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
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
none of the services undermine the general principles relating to auditor independence as set out in APES 110 ‘Code of
Ethics for Professional Accountants’.
Ethics for Professional Accountants’.
16.
16.
Proceedings on behalf of the Company
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
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
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.
proceedings.
17.
17.
Auditor’s Independence Declaration
Auditor’s Independence Declaration
The auditor’s independence declaration is included on page 81 and forms part of the Directors’ report for the year ended 31
The auditor’s independence declaration is included on page 93 and forms part of the Directors’ report for the year ended 31
December 2019.
December 2019.
This report is made in accordance with a resolution of the Directors
This report is made in accordance with a resolution of the Directors
Dated at Melbourne this 27th day of February 2020.
Dated at Melbourne this 27th day of February 2020.
Signed in accordance with a resolution of the Directors:
Signed in accordance with a resolution of the Directors:
__________________________________
__________________________________
Owen Hegarty
Owen Hegarty
Director
Director
25
25
37
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2019
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 27 February 2020 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 2019 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.
38
26
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2019
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.
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
39
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2019
Corporate Governance Statement (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;
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 2019. The outcomes of the evaluation
are being considered by all Directors and specific performance goals are being agreed for the coming year.
40
28
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2019
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 2019, women comprised 17 % (31
December 2018: 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
member of the Audit Committee of PJSC Magnitorgorsk Iron & Steel Works and Board experience with 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
41
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2019
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;
o
o
o
oversee the effective operation of the risk management framework;
effectiveness and efficiency of operations;
reliability of financial reporting; and
compliance with applicable laws and regulations.
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
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 2019 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 2019.
42
30
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2019
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 2019. 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 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
43
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2019
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.
44
32
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Consolidated statement of financial position
As at 31 December 2019
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
Advances received
Lease liability
Loans payable
Royalty liability
Other financial liabilities
Employee benefits
Total current liabilities
Non-current liabilities
Trade and other payables
Lease liability
Royalty liability
Other financial liabilities
Provision for site restoration
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
2019
A$’000
31 December
2018
A$’000
12
14
16
15
16
17
18
24
21
19
22
23
20
18
21
22
23
24
4,716
10,196
28,805
2,936
-
20
46,673
-
41,100
41,100
87,773
13,976
3,186
5,197
29,393
690
779
1,263
54,484
134
9,234
13,296
2,889
403
25,956
80,440
7,333
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
173,108
25,660
(171,700)
27,068
(19,735)
7,333
173,747
21,662
(152,985)
42,424
(19,884)
22,540
The notes on pages 49 to 91 are an integral part of these consolidated financial statements.
33
45
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Consolidated statement of comprehensive income
For the year ended 31 December 2019
Note
31 December
2019
A$’000
31 December
2018
A$’000
Revenue from coal sales
Mining and related costs of coal sold
Transhipment and other port costs
Sales commissions
Gross margin on coal sold
Administrative and other operating expenses
Share based payments
Exploration and evaluation expenses
Change in provisions for inventories
Write off of property, plant and equipment
Royalty expense
Other income
Results from operating activities
Net foreign exchange gain
Finance income
Finance costs
Net finance (costs)
(Loss)/Profit before income tax
Income tax expense
Net (Loss)/Profit
Other comprehensive income
Items that may subsequently be reclassified to the profit or
loss
Foreign currency translation differences for foreign operations
Total comprehensive (loss)/income for the period
Net (Loss)/ Profit is attributable to:
Owners of the Company
Non-controlling interest
Net (Loss)/ Profit for the period
Total comprehensive (loss)/ income attributable to:
Owners of the Company
Non-controlling interest
Total comprehensive (loss)/income for the period
(Loss)/Earnings per share (cents per share)
basic (loss)/earnings per share (cents)
diluted (loss)/earnings per share (cents)
7
8
25
16
17
22
10
11
11
The notes on pages 49 to 91 are an integral part of these consolidated financial statements.
46
50,141
(27,592)
(18,009)
-
4,540
(8,991)
(248)
(310)
(3,363)
(460)
(6,304)
294
(14,842)
932
6
(4,880)
(3,942)
52,277
(14,657)
(16,609)
(71)
20,940
(5,690)
(324)
(354)
(369)
-
(2,384)
88
11,907
566
10
(1,565)
(989)
(18,784)
10,918
(44)
(18,828)
(38)
10,880
4,012
(14,816)
(18,715)
(113)
(18,828)
(14,965)
149
(14,816)
(1.05)
(1.05)
(2,162)
8,718
10,959
(79)
10,880
9,604
(886)
8,718
0.61
0.61
34
Annual Report 2019Tigers Realm Coal
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47
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
Consolidated statement of cash flows
For the year ended 31 December 2019
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 (used)/generated 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
Net cash used in investing activities
Cash flows from financing activities
Advances received for shares issuance
Repayment of lease liabilities
Proceeds from other financial liabilities
Repayment of other financial liabilities
Proceeds from borrowings
Repayment of borrowings
Net cash generated/(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
Non-cash investing activities
Note
31 December
2019
A$’000
31 December
2018
A$’000
50,057
-
(65,025)
(343)
(4,350)
(408)
(20,069)
(6,026)
-
1,049
(4,977)
3,240
(7,249)
4,373
(480)
46,141
(20,445)
25,580
534
3,554
628
4,716
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
12
During, the year ended 31 December 2019, the Group executed a number of finance lease arrangements with equipment vendors,
Russian banking institutions and Russian financing companies for the acquisition of various mining and port equipment. The additions
to the property, plant & equipment under these arrangements were RUB 730.248 million (A$16.210 million) (2018: RUB 193.952
(A$4.145 million).
On 1 January 2019, following the adoption of AASB 16 Leases, the Group recognised right of use assets and a related lease liability in
respect of the agreement with Rosmorport executed in March 2018, in accordance with which the Group leases three general cargo
piers, a coal pier and a breakwater pier for 49 years from the date of signing. The cost of the right of use asset and commensurately the
lease liability upon initial recognition was RUB 23.593 million (A$0.481 million).
The notes on pages 49 to 91 are an integral part of these consolidated financial statements.
48
36
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
1.
Reporting entity
Tigers Realm Coal Limited (the “Company” or “TIG”) is domiciled in Australia. During the year ended 31 December 2019, the
Company’s registered office was 151 Wellington Parade South, East Melbourne, 3002, Australia and its principal office was 29
1st Brestkaya Street, Moscow, 125407, the Russian Federation. The consolidated financial statements of the Company as at and
for the year ended 31 December 2019 comprise the Company and its subsidiaries (together referred to as the “Group”). The
Group is a for-profit entity and primarily is 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 27th February 2020.
(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 these consolidated 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:
Note 3 –
Note 9 – Impairment of non-current assets
Note 22 – Royalty liability
Going concern basis of accounting
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 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 2019, the Group incurred a net loss of A$18.828 million (2018: net profit of A$10.880
million) and had net cash outflows from operating activities of A$20.069 million (2018: net cash inflows of A$8.017 million).
As at 31 December 2019, the Group had cash and cash equivalents of A$4.716 million (31 December 2018: A$3.554 million)
and net current liabilities of A$7.811 million (31 December 2018: net current assets of A$12.038 million). As of 31 December
2019, the Company has no unused, available credit lines (A$16.821 million as at 31 December 2018).
37
49
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
3.
Significant accounting policies (continued)
(a)
Going concern basis of accounting
Due to the seasonality of the Group’s sales and receipt of the related receivables, the Directors and management have taken the
following steps to ensure the Group has sufficient funding to meet its operating and capital expenditures as they fall due:
On 18 December 2019, the Group launched a 13 to 4 accelerated renounceable entitlement offer of ordinary shares at
A$0.01 per share (“Entitlement Offer”). The Group planned to raise A$58.229 million and to utilize proceeds to
settle existing shareholders’ loan and to finance planned capital expenditures and working capital. As disclosed in
Note 37, the Entitlement Offer closed on 5 February 2020. Entitlements not taken up by close of the Entitlement
Offer were offered for sale in a shortfall bookbuild and the Group received a bid for majority of the shortfall
bookbuild from Hanate Pty Ltd, an entity associated with the Group’s director and substantial shareholder, Dr Bruce
Gray. The issuance of shares to Hanate Pty Ltd require shareholders’ approval, and an extraordinary general meeting
of shareholders is expected to be held in April 2020.
As at 31 December 2019, the Group had received A$3.186 million (included in advances received) and as at the date
of these consolidated annual financial statements the Group received a further A$42.004 million from the issuance of
shares relating to the Entitlement Offer. As stated above, the receipt of the remaining A$13.039 million is subject to
shareholders’ approval. In addition, as disclosed in Note 19, the Group offset A$27.890 million of the proceeds to
settle the majority of existing loans from shareholders outstanding as at 31 December 2019.
Management continue to hold discussions with certain customers over the receipt of pre-export financing and as such
funding has been received in prior periods, they are confident that similar funding arrangements will be agreed in the
first quarter of 2020.
Based on the Group’s forecast 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 obtain shareholders’ approval to issue shares to Hanate Pty Ltd and to secure further advance
financing from customers within the timeframe needed, which in addition to funds raised to date, will address temporary
cash shortfalls expected to arise during the period through to 28 February 2021; 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 and commensurately 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 shipments being realised within the forecast scheduling parameters, which are subject to a number of factors
including but not limited to barge availability, transhipment efficiency and weather conditions;
Compliance with ongoing drilling obligations in accordance with the terms of the Amaam and Amaam North
licences; and
Macroeconomic factors including the commodity (specifically coal) prices, exchange rates and the financial
markets;
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 sales of coal will meet those expectations reflected in cash flow forecasts;
Commercial mining operations continue in line with expectations. 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 28 February 2021;
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;
38
50
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
3.
(a)
Significant accounting policies (continued)
Going concern basis of accounting
Coal shipments have been forecast after consideration of actual port operating performance through 31 December 2019
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 which support its justification, including but not limited to favourable coking coal price
outlook, which would allow the Group to raise that additional funding required to finance the capital investment and
operational requirements of the development plan making it commercially viable;
There is no indication that the Group will not be able to obtain the remaining amount of funding which is necessary to
maintain the Group’s liquidity position through to 28 February 2021.
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)
Basis of consolidation
(i)
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.
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.
39
51
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
3.
(b)
(ii)
Significant accounting policies (continued)
Basis of consolidation
Business combinations
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 judgements 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.
(iii)
Foreign operations
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.
52
40
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
3.
Significant accounting policies (continued)
(c)
Foreign currency
(iii)
Foreign operations
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.
(d)
Financial instruments
(i)
Non-derivative financial assets
The Group initially recognises loans and receivables and deposits on the date that they are originated. All other financial assets
(including assets designated at fair value through profit or loss) are recognised initially on the trade date at which the Group
becomes a party to the contractual provisions of the instrument.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the
rights to receive the contractual cash flows on the financial asset in 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.
(e)
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.
41
53
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
3.
(f)
(i)
Significant accounting policies (continued)
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 amount, as explained below in Note 3(g) Impairment. Gains and losses on the disposal
of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-generating units
for the purpose of impairment testing. 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.
54
42
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
3.
Significant accounting policies (continued)
(h)
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
For short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets, the Group
recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another
systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.
(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 consolidated financial statements are provided throughout the notes to the consolidated financial
statements.
43
55
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
4.
Application of new and revised accounting standards
(a)
New and amended standards adopted
The Group has adopted all the following new and revised Standards and Interpretations issued by the Australian Accounting
Standards Board (the AASB) that are relevant to its operations and effective for an accounting period that begins on or after 1
January 2019:
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
In the current year, the Group has applied AASB 16 Leases which is effective for an annual period that begins on or after 1
January 2019. AASB 16 changed how the Group accounts for leases previously classified as operating leases under AASB 117,
which were off-balance sheet. As a result of application of AASB 16, on 1 January 2019, the Group recognised right of use
assets and a related lease liability in respect of the agreement with Rosmorport executed in March 2018, in accordance with
which the Group leases three general cargo piers, a coal pier and a breakwater pier for 49 years from the date of signing. The
cost of the right of use asset and commensurately the lease liability upon initial recognition was RUB 23.593 million (A$0.532
million).
The application of other Standards and amendments has had no impact on the Group’s consolidated financial report.
The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective
(b)
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 2020 and have not been applied in preparing these consolidated financial statements.
Standard/Interpretation
Effective for annual reporting periods
beginning on or after
AASB 2018-6 Amendments to Australian Accounting Standards – Definition of a
Business
Applicable to annual reporting periods
beginning on or after 1 January 2020
AASB 2018-7 Amendment to Australian Accounting Standards – Definition of
Material
Applicable to annual reporting periods
beginning on or after 1 January 2020
AASB 2019-1 Amendments to Australian Accounting Standards – References to
the Conceptual Framework
Applicable to annual reporting periods
beginning on or after 1 January 2020
AASB Conceptual Framework for Financial Reporting
Applicable to annual reporting periods
beginning on or after 1 January 2020
AASB 2019-3 Amendments to Australian Accounting Standards – Interest Rate
Benchmark Reform
Applicable to annual reporting periods
beginning on or after 1 January 2020
AASB 2019-5 Amendments to Australian Accounting Standards – Disclosure of
the Effect of New IFRS Standards Not Yet Issued in Australia
Applicable to annual reporting periods
beginning on or after 1 January 2020
AASB 2014-10 Amendments to Australian Accounting Standards – Sale or
Contribution of Assets between an investor and its Associate or Joint Venture;
Applicable to annual reporting periods
beginning on or after 1 January 2022
The directors of the Company do not anticipate that the application of these amendments will have a material impact on the
Group's consolidated financial statements.
56
44
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
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 26.
45
57
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
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 2019, the activities of the Group are managed in two reportable operating segments outlined
below, consistent with how they were managed in the prior periods:
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 2019
Revenue from the shipment and sale of
coal
Finance and other income
Cost of coal sold
Change in provisions for inventories
Exploration and evaluation expenses
Royalty expense
Finance costs
Other segment expenses
Segment result
Segment assets
Segment liabilities
31 December 2018
Revenue from the shipment and sale of
coal
Finance and other income
Cost of coal sold
Change in provisions for current assets
Depreciation and amortisation
Exploration and evaluation expenses
Royalty expense
Finance costs
Other segment expenses
Segment result
Segment assets
Segment liabilities
58
Amaam North
Project
A$’000
Amaam
Project
A$’000
Total
Reportable
Segments
A$’000
Other
A$’000
Total
A$’000
50,141
300
(45,601)
(3,363)
-
(6,304)
(4,880)
(5,474)
(15,181)
87,591
(80,311)
52,277
98
(31,337)
(369)
(306)
(85)
(2,384)
(1,565)
(3,698)
12,631
40,809
(22,106)
-
-
-
-
(310)
-
-
-
(310)
131
(129)
-
-
-
-
-
(269)
-
-
(111)
(380)
70
(188)
50,141
300
(45,601)
(3,363)
(310)
(6,304)
(4,880)
(5,474)
(15,491)
87,722
(80,440)
52,277
98
(31,337)
(369)
(306)
(354)
(2,384)
(1,565)
(3,819)
12,251
40,879
(22,294)
-
-
-
-
-
-
-
(3,293)
(3,293)
51
-
-
-
-
-
-
-
-
-
(1,333)
(1,333)
4,080
(125)
50,141
300
(45,601)
(3,363)
(310)
(6,304)
(4,880)
(8,767)
(18,784)
87,773
(80,440)
52,277
98
(31,337)
(369)
(306)
(354)
(2,384)
(1,565)
(5,142)
10,918
44,959
(22,419)
46
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
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, being
Russia.
2019
2018
Revenues
A$’000
Non-current
assets
A$’000
Revenues (interest
and other income)
A$’000
Non-current
assets
A$’000
47,949
2,192
50,141
-
41,100
41,100
52,277
88
52,365
-
20,982
20,982
Asia
Russia
Total
Customer information
Included in revenues from the sale and shipment of coal are revenues of A$48.649 million (2018: A$45.378 million) which
arose from sales to customers from whom at least 10% of the total revenues from the shipping and sale of coal were
individually derived. No other single customers contributed 10% or more to the Group’s revenue in either 2019 or 2018.
7.
Revenue
Revenue from thermal coal sales
Revenue from semisoft coal sales
Revenue from shipment of coal
31 December
2019
A$’000
31 December
2018
A$’000
22,776
21,822
5,543
50,141
20,017
23,000
9,260
52,277
47
59
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
7.
Revenue (continued)
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 which 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), 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 acheived 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. However, in CFR sales contracts the performance obligations arise from the delivery of coal on board the vessel and the
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 then 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.
8.
Administrative and other operating expenses
Wages, salaries and other personnel costs
Contractors and consultants’ fees
Port operating expenses
Depreciation expense
Taxes and charges
Legal fees and compliance costs
Bank charges
Travel
Office accommodation costs
Accounting and audit fees
IT and communication costs
ASX listing fees
Insurance
Other
60
31 December
2019
A$’000
31 December
2018
A$’000
(3,587)
(898)
(612)
(474)
(441)
(422)
(398)
(302)
(266)
(265)
(118)
(109)
(48)
(1,051)
(8,991)
(2,585)
(707)
(313)
(306)
(24)
(264)
(70)
(257)
(220)
(250)
(58)
(77)
(100)
(459)
(5,690)
48
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
9.
Carrying value of non-current assets
Amaam North Project CGU
During the year ended 31 December 2019, with the operational development of Amaam North CGU, the carrying value of non-
current assets of Amaam North Project CGU, net of accumulated depreciation, increased by A$21.577 million to A$41.100
million (As of 31 December 2018 A$19.523 million) (refer to Note 17 for details).
As at 31 December 2019, the Group concluded that due to:
the absence of significant adverse changes in mid and long-term coal price forecasts; and
the maintaining of the asset procurement and infrastructure development activities in 2019 sufficient to advance
expected production and sales volumes in 2020,
there is no necessity to recognise further impairment losses for the Amaam North Project CGU and accordingly the non-current
assets are measured at their carrying value.
Management also believe that at this stage of Amaam North’s development, 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.
Amaam Project CGU
During the year ended 31 December 2019, 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 2019. As the
development of the Amaam Project is not expected in the foreseeable future, as at 31 December 2019, the Group concluded
that there are no indications that asset write-downs recognised in prior periods for the Amaam Project CGU require reversal.
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.
Recognition and measurement: Non-current assets
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.
49
61
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
10.
Income tax expense
A reconciliation between tax expense and accounting profit multiplied by Australia’s domestic tax rate for the years ended 31
December 2019 and 2018 is set out below:
(Loss)/Profit before tax
Income tax (credit)/expense using the domestic
corporation tax rate of 30%
Changes in income tax expense due to:
Effect of tax rates in foreign jurisdictions
Non-deductible loss resulting from change in royalty
agreement liability
Assessable imputed interest income
Non-deductible expenses/(non-assessable income)
Current period tax losses for which no deferred tax asset was
recognised
Total income tax expense on pre-tax net profit
Current tax expense
Deferred tax (credit)
Total income tax expense
Unrecognised deferred tax assets
31 December
2019
A$’000
31 December
2018
A$’000
(18,784)
(5,635)
2,223
711
80
2,056
609
44
10,918
3,275
(1,041)
287
80
(3,338)
775
38
31 December
2019
A$’000
31 December
2018
A$’000
44
-
44
38
-
38
31 December
2019
A$’000
31 December
2018
A$’000
Net deferred tax assets not recognised in respect of tax losses
26,868
23,722
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.
Recognition and measurement: Income taxes
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.
62
50
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
10.
Income tax expense (continued)
Deferred tax
Recognition and measurement: Income taxes (continued)
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 2019 and 2018, 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.
51
63
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
11.
(Loss)/Earnings per share
(Loss)/Earnings per share
Basic (loss)/earnings per share – cents
Diluted (loss)/earnings per share – cents
31 December
2019
Cents
31 December
2018
cents
a
b
(1.05)
(1.05)
0.61
0.61
Basic (loss)/earnings per share
(a)
The calculation of basic (loss)/earnings per share at 31 December 2019 was based on the loss attributable to ordinary equity
holders of the Company of A$18.715 million (At 31 December 2018: profit of A$10.959 million) and a weighted average
number of ordinary shares outstanding during the period ended 31 December 2019 of 1,791,669,870 (For the year ended 31
December 2018: 1,791,669,870).
Diluted (loss)/earnings per share
(b)
The calculation of diluted (loss)/earnings per share at 31 December 2019 and 2018 is the same as basic (loss)/earnings per
share. As at 31 December 2019, the Company had 28,346,000 outstanding options over ordinary shares (31 December 2018:
33,669,000 options), which have been excluded from the calculation of diluted earnings per share because they are anti-dilutive
for the reporting period.
12. Cash and cash equivalents
Bank balances
Cash and cash equivalents
31 December
2019
A$’000
31 December
2018
A$’000
4,716
4,716
3,554
3,554
All cash and cash equivalents are available for use by the Group. As of 31 December 2019, A$2.575 million was cash in
transit.
13. Reconciliation of loss for the year to net cash flows from operating activities
Cash flows from operating activities
(Loss)/Profit for the period
Foreign exchange (loss)/gain
Share based payments
Royalty expense
Depreciation expense
Change in provisions for current assets
Write off of property, plant and equipment
Income tax expense
Movements in working capital
Change in trade and other receivables
Change in inventory
Change in other assets
Change in prepayments
Change in employee provisions
Change in trade and other payables
Net cash (used)/generated in operating activities
64
31 December
2019
A$’000
31 December
2018
A$’000
25
22
10
(18,828)
(932)
248
6,304
6,166
3,363
460
44
(3,175)
(7,610)
(15,270)
8
(1,833)
(53)
7,864
(20,069)
10,880
11
324
2,384
2,797
369
-
38
16,803
312
(12,220)
58
350
179
2,535
8,017
52
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
14.
Trade and other receivables
Trade and other receivables
VAT and GST receivable
15.
Investment in restricted financial instruments
Alfa Bank promissory notes
31 December
2019
A$’000
31 December
2018
A$’000
3,311
6,885
10,196
226
2,360
2,586
31 December
2019
A$’000
31 December
2018
A$’000
-
-
935
935
On 26 December 2018, the Company acquired 6 promissory notes with a nominal value of RUB 7,500,000 (A$0.156 million)
each, issued by Alfa Bank, a leading Russian commercial bank, as a condition precedent to the completion of the Sberbank
loan. These promissory notes were at call after their maturity on 30 January 2019 and accrued interest at the rate of 6.45% per
annum. The promissory notes’ fair value approximated their nominal value and accordingly were measured at their fair value.
The promissory notes were pledged as collateral to the Sberbank loan and were redeemed throughout the course of 2019 in
accordance with the terms of the Sberbank loan. For further details of the Sberbank loan, refer to Note 19.
16.
Inventories
Coal inventories: net of provision of A$4.432 million for recognition of
inventories at the lower of cost and their net realisable value (At 31
December 2018: A$ 0.830 million)
Fuel: net of provisions of A$0.006 million (At 31 December 2018 0.032
million)
Other consumables: net of provisions of A$0.391 million (At 31
December 2018 A$0.266 million)
Current
Non-current
31 December
2019
A$’000
31 December
2018
A$’000
11,999
3,900
12,906
28,805
28,805
-
28,805
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$4.432 million was recognised for the
recoverability of coal stocks at 31 December 2019, of which A$3.887 million was in respect of 145kt of coal stock maintained
at the Company’s interim coal stockpile, requiring further processing prior to commercial realisation and A$545 million in
respect of thermal coal for which the estimated net realisable value is below is cost.
53
65
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
16.
Inventories
Inventories are valued at the lower of cost and net realisable value and upon initial recognition on the weighted average cost
Recognition and measurement: Inventories
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 processing
of 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.
66
54
Annual Report 2019Tigers Realm Coal
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T
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
17.
Property, plant and equipment (continued)
During the year ended 31 December 2019, three Scania haulage trucks with a carrying value of RUB 21.244 million (A$0.460
million) were written-off due to their present condition.
As disclosed in detail in Note 4, on 1 January 2019, the Group recognised right of use assets and a related lease liability in
respect of the agreement with Rosmorport. The right of use asset and commensurately the lease liability upon initial recognition
was RUB 23.593 million (A$0.532 million).
As disclosed in Note 21, the Group leases various mining and port equipment. The carrying value of these assets as at 31
December 2019 is RUB 858.425 million (A$19.843 million) (31 December 2018: RUB 310.521 million (A$6.339 million)).
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:
Buildings
Plant & equipment
Fixtures & fittings
Units of production basis
10 – 20 years
3 – 10 years
3 – 10 years
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.
68
56
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
17.
Property, plant and equipment (continued)
Stripping Costs
Recognition and measurement: Property, plant and equipment (continued)
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 has
improved 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
of producing 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
quantity of ore mined for the component or by the quantity of minerals contained in the ore mined for the component. Stripping
costs for the component are deferred to the extent that the current period ratio exceeds the life of component ratio.
18. Trade & other payables
Trade payables and accrued expenses
Taxes payable
Current
Non-current
Total
31 December
2019
A$’000
31 December
2018
A$’000
14,052
58
14,110
13,976
134
14,110
6,251
191
6,442
6,246
196
6,442
57
69
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
19. Loans payable
Shareholders’ loans payable
Bank loans payable
Opening balance of loans
Borrowings during the year
Repayment of borrowings
Other changes
Net effect of movement in exchange rates
Total loans at end of the year
Shareholders’ loans
31 December
2019
A$’000
31 December
2018
A$’000
29,393
-
29,393
-
1,516
1,516
31 December
2019
A$’000
31 December
2018
A$’000
1,516
46,141
(20,445)
722
1,459
29,393
1,357
13,421
(12,640)
-
(622)
1,516
In June 2019, the Company executed term sheets with its two largest shareholders, Dr Bruce Gray and BV Mining Holding
Limited, through its affiliated entity BV Mining Investment Limited, in accordance with which each shareholder made available
to the Group unsecured non-revolving loan facilities up to US$2.5 million, up to US$5.0 million in total, each with a one-year
tenor and incurring interest at 12% per annum. The facilities in the amount of A$7.122 million (US$5.0 million) were fully
drawn down as of 30 June 2019
In October 2019, the Company executed additional term sheets with Dr Bruce Gray and BV Holding Limited, through its
affiliated entity BV Mining Investment Limited, in accordance with which each shareholder made available to the Group
unsecured non-revolving loan facilities up to US$7.5 million, up to US$15.0 million in total, each one having repayment date at
31 January 2020 and incurring interest at 20% per annum. The facilities in the amount of A$22.151 million (US$15.0 million)
were fully drawn down by the middle of November 2019.
As described in Note 3, the Group launched the Entitlement Offer on 18 December 2019. Both Dr Bruce Gray and BV Holding
Limited agreed to take part in this Entitlement Offer, and in accordance with conditions of term sheets elected to set-off
outstanding principal and interest amounts against their obligations to pay for the shares they agreed to purchase under the
Entitlement Offer. As further disclosed in Note 37, on 2 January 2020, following the issuance of shares to BV Holding Limited,
the loan payable to BV Holding Limited was settled in full. On 2 January 2020, A$13.138 million out of A$14.641 million loan
payable to Dr Bruce Gray was settled, following the issuance of share to Dr Bruce Gray. The remaining balance of A$1.503
million is expected to be settled in April 2020.
Bank loans
On 28 December 2018, the Group entered into a non-revolving credit line with Sberbank which was to be settled by no later than
27 December 2019, in accordance with which it could borrow up to RUB 900 million (A$18.336 million). As of 31 December
2018, RUB 74.393 million (A$1.516 million) had been drawn down. The interest on outstanding balances accrued at between
10.2 and 11.2% per annum and a fee for unused facilities accrued 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. The registration of the pledge over the moveable assets was completed by 28 February 2019. Furthermore, the
outstanding balance was 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 was amortised over the period during
which the loan was available for drawdown, through 30 September 2019. As an integral component of the agreement, the Group
acquired Alfa Bank promissory notes to the value of RUB 45.9 million (A$0.935 million) and provided it as a collateral to
Sberbank to guarantee interest payments, the details of which are disclosed in Note 15.
In the period from 27 September 2019 through 25 November 2019 the Company fully settled the RUB 900 million (A$18.336
million) credit facility ahead of schedule. The interest paid amounted to RUB 61.2 million (A$1.359 million).
70
58
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
19.
Loans payable (continued)
Recognition and measurement: Loans payable and financing costs
Loans payable are recorded at their fair value after consideration of their terms and conditions. Any fees and commissions
associated with the execution of loans payable are amortised over the term in respect to which they relate. These fees include,
but are not limited to, arrangement fees and fees on unused and available credit lines. Interest on unpaid balances is accrued as
incurred.
20. Employee Benefits
Provision for annual leave
Provision for salary and related costs payable
Provision for other employment benefits
Provision for bonuses
31 December
2019
A$’000
31 December
2018
A$’000
650
580
33
-
1,263
260
359
104
593
1,316
Recognition and measurement: Employee benefits
Liabilities for employee benefits for wages, salaries and annual leave that are expected to be settled within twelve months of the
reporting date represent obligations resulting from employee’s services provided to reporting date and are calculated at
undiscounted amounts based on remuneration wage and salary rates that the Company expects to pay as at the reporting date,
including related on-costs, such as workers’ compensation insurance and payroll tax.
A liability is recognised for the amount expected to be paid under short-term incentive bonus plans if the Group has a present legal
or constructive obligation to pay this amount resulting from past service provided by the employee, and the obligation can be
estimated reliably.
59
71
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
21. Lease Liability
Lease expenditure contracted and provided for:
Payable not later than one year
Payable later than one year, not later than five years
Payable later than five years
Future finance charges
Total lease liabilities
Current
Non-current
Movement in lease liabilities are as follows:
Opening balance of lease liability
New lease agreements entered during the year
Lease payments
Net effect of movement in exchange rates
Total lease liability recognised at end of year
31 December
2019
A$’000
31 December
2018
A$’000
7,332
11,128
3,662
22,122
(7,691)
14,431
5,197
9,234
14,431
2,931
3,000
-
5,931
(1,182)
4,749
2,223
2,526
4,749
31 December
2019
A$’000
31 December
2018
A$’000
4,749
16,210
(7,249)
721
14,431
2,496
4,530
(1,919)
(358)
4,749
The Group leases directly from vendors, Russian banking institutions and Russian financing companies various mining and port
equipment with a carrying amount of A$19.844 million (31 December 2018: A$7.178 million) under finance lease arrangements
expiring within one to four years.
As disclosed in detail in Note 4, on 1 January 2019, the Group recognised right of use assets and a related lease liability in
respect of the agreement with Rosmorport expiring in 2067 (included in other lease liabilities in the table below).
The key terms of the finance lease arrangements are as follows:
Vendor lease liabilities
Banking institution lease liabilities
Russian Financing Company lease liabilities
Other lease liabilities
Currency Effective interest
rate
Year of
maturity
RUB
RUB
RUB
RUB
15.9-22.65%
2020-2023
13.22-24.43%
19.36-30.44%
15.2%
2023
2024
2067
72
60
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
21. Lease Liability (continued)
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.
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.
22. Royalty Liability
Opening balance of royalty liability
Royalty expense
Payments made during the year
Effect of movement in exchange rates
Closing balance of royalty liability
Current
Non-current
31 December
2019
A$’000
31 December
2018
A$’000
8,240
6,304
(618)
60
13,986
690
13,296
13,986
5,378
2,384
(85)
563
8,240
638
7,602
8,240
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% of the FOB coal sales revenue by the Amaam North and Amaam projects,
respectively. Total royalty payments in relation to the Amaam North Project is capped to US$25 million.
Amaam North Royalty Liability
Following the raising of funds and commencement of coal production on Project F, Amaam North, 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;
the likelihood of achieving forecast coal sales prices; and
the forecast for Australian Dollar to US Dollar exchange rate.
61
73
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
22. Royalty Liability (continued)
Amaam Royalty Liability
No liability was recognised at 31 December 2019 (31 December 2018: Nil) in relation to Amaam Project royalty arrangements as
the development of the Amaam Project is not expected in the foreseeable future.
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.
23. Other financial liabilities
Current other financial liabilities
Non – current other financial liabilities
Movement other financial liabilities are as follows
31 December
2019
A$’000
779
2,889
3,668
31 December
2018
A$’000
-
-
-
31 December
2019
A$’000
31 December
2018
A$’000
Opening balance of other financial liabilities
New other financial liabilities during the year
Payments
Net effect of movement in exchange rates
Total other financial liabilities recognised at end of year
-
4,373
(480)
(225)
3,668
74
-
-
-
-
-
62
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
23. Other financial liabilities (continued)
In December 2019 the Group has entered to a sale and lease-back agreement with Universal Leasing Company for its two 500
tonne barges. As the Group has a substantive repurchase option with respect to the underlying asset under these agreements, the
Group concluded these transactions represent, in substance, a financing arrangement. Accordingly, all amounts received from
Universal Leasing Company were included in other financial liabilities.
The key terms of the finance lease arrangements are as follows:
Universal Leasing Company
RUB
18.11%
2024
Currency Effective interest
rate
Year of
maturity
Recognition and measurement: Sale and leaseback transactions
The Group, from time to time, enters into legal agreements with various parties whereby it transfers an asset to another entity (the
buyer-lessor) and leases that asset back.
The Group applies the requirements for determining when a performance obligation is satisfied in AASB 15 “Revenue from
Contracts with Customers” to determine whether the transfer of an asset is accounted for as a sale of that asset.
If the transfer of an asset by the Group satisfies the requirements of AASB 15 to be accounted for as a sale of the asset, then the
Group measures the right-of-use asset arising from the leaseback at the proportion of the previous carrying amount of the asset that
relates to the right of use retained by the seller-lessee. The Group recognises the amount of any gain or loss that relates to the rights
transferred to the buyer-lessor.
If the transfer of an asset by the Group does not satisfy the requirements of AASB 15 to be accounted for as a sale of the asset, the
Group continues to recognise the transferred asset and recognises a financial liability equal to the transfer proceeds.
24.
Share capital
Share Capital
Costs of raising equity
(i) Movements in shares on issue:
31 December
2019
A$’000
188,197
(15,089)
173,108
31 December
2018
A$’000
188,197
(14,450)
173,747
No of shares
Issue price
A$
A$’000
Opening balance at 1 January 2018
Movements in 2018
Opening balance at 1 January 2019
Movements in 2019
1,791,669,870
-
1,791,669,870
-
-
-
Closing share capital balance at 31 December 2019
1,791,669,870
188,197
-
188,197
-
188,197
63
75
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
24.
Share capital (continued)
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 2019, no options were granted, 5,323,000 lapsed and none were forfeited, resulting in
options on issue at 31 December 2019 of 28,346,000.
(iii) Entitlement offer
On 18 December 2019, the Group launched a 13 to 4 accelerated renounceable entitlement offer of ordinary shares at A$0.01 per
share. The Group planned to raise A$58.229 million and to utilize proceeds to settle existing shareholders’ loan and to finance
planned capital expenditures and working capital. As disclosed in Note 37, the Entitlement Offer closed on 5 February 2020, as a
result of which the Group raised A$45.191 million. Entitlements not taken up by close of the Entitlement Offer were offered for
sale in a shortfall bookbuild and the Group received a bid for majority of the shortfall bookbuild from Hanate Pty Ltd, an entity
associated with the Group’s director and substantial shareholder, Dr Bruce Gray. The issuance of shares to Hanate Pty Ltd
require shareholders’ approval, and an extraordinary general meeting of shareholders is expected to be held in April 2020.
As at 31 December 2019, the Group had received A$3.186 million (included in advances received) and as at the date of these
consolidated annual financial statements the Group received a further A$42.004 million from the issuance of shares relating to
the Entitlement Offer. As stated above, the receipt of the remaining A$13.039 million is subject to shareholders’ approval.
25.
(a)
Share based payments
Recognised share-based payment expense
31 December
2019
A$’000
31 December
2018
A$’000
Expense arising from equity settled share-based payment transactions
248
324
(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.
76
64
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
25.
Share based payments (continued)
(b)
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 for no consideration and 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.
The 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 2019 have an exercise price in the range of A$0.08 to A$0.50 (2018: A$0.08 to
A$0.50). The weighted average remaining contractual life for options outstanding at 31 December 2019 is 2.2 years (31
December 2018: 3.92 years). There were no options granted during the year ended 31 December 2019 (year ended 31 December
2018: Nil). There are 14,242,000 vested and exercisable options at 31 December 2019 (31 December 2018: 10,634,000). There
were no options exercised during the years ended 31 December 2019 and 31 December 2018.
Movements in outstanding options
2019
2018
Number of
Options
Weighted
Average
Exercise Price
A$
Number of
Options
Weighted
Average
Exercise Price
A$
Balance at the beginning of the year
Granted
Forfeited/lapsed
Exercised
Balance at the end of the year
Vested and exercisable at year end
33,669,000
-
(5,323,000)
-
28,346,000
14,242,000
0.256
-
0.286
0.158
0.093
59,437,000
-
(25,768,000)
-
33,669,000
10,634,000
0.242
-
0.186
0.256
0.260
Details of share options outstanding at 31 December 2019 are detailed below:
2019
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
-
-
-
1,488,000
1,488,000
2,000,000
2,000,000
7,266,000
14,104,000
28,346,000
Average
Exercise Price
A$
-
-
-
0.230
0.170
0.500
0.230
0.080
0.130
0.223
2018
Number of
Options
Average
Exercise Price
2,000,000
797,000
797,000
1,520,000
1,520,000
2,000,000
2,000,000
7,832,000
15,203,000
33,669,000
A$
0.500
0.230
0.170
0.230
0.170
0.500
0.230
0.080
0.130
0.242
65
77
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
25.
Share based payments (continued)
(c)
Summary of options granted under the Option Plan
During the year to 31 December 2019, no options were issued, 3,594,000 options lapsed, 1,729,000 options forfeited and no
options exercised, bringing the options issued over ordinary shares in the Company to 28,346,000 as at 31 December 2019.
(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 2019 are outlined below:
Option Grant
Date
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
17 Apr 2015
17 Apr 2015
11 Jun 2015
11 Jun 2015
18 Oct 2017
18 Oct 2017
$0.049
$0.061
$0.021
$0.035
$0.031
$0.030
$0.130
$0.130
$0.100
$0.100
$0.060
$0.060
$0.230
$0.170
$0.500
$0.230
$0.080
$0.130
A
B
A
B
A
B
C
D
C
D
C
D
17 Apr 2020
17 Apr 2020
11 Jun 2020
11 Jun 2020
18 Jun 2022
18 Jun 2022
1.84%
1.84%
2.09%
2.09%
2.32%
2.32%
Note
A.
B.
C.
D.
Performance hurdle: options vest 12 months after grant date.
Performance hurdle: options vest 24 months after grant date.
Performance period: 12 months after grant date.
Performance period: 24 months after grant date
Equity-based compensation is recognised as an expense in respect of the services received.
Recognition and measurement: Share based payments
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.
78
66
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
26. Risk management and financial instruments
(a)
Risk management framework
The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. The
Board has established the Audit, Risk and Compliance Committee, which is responsible for developing and monitoring the
Group’s risk management policies. The committee reports regularly to the Board.
The Group has established a Risk Management Policy to provide a framework for the management of risk within the Group. The
Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk
limits and controls, and to monitor risks and adherence to limits.
The Group has exposure to the following risks from its operations and use of financial instruments:
Credit risk
Liquidity risk
Market risk
Operational risk
This note presents information about the Group’s exposure to each of the above risks, its objectives, policies and processes for
measuring and managing risk, and the management of capital. Further quantitative disclosures are included throughout these
consolidated financial statements.
(i)
Credit risk
Credit risk is the risk of financial loss to the Group if a counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Group’s receivables from customers.
(ii)
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s
approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage
to the Group’s reputation.
(iii) Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, commodity prices and
equity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market
risk management is to manage and control market risk exposures within acceptable parameters, while optimising the
return. For the Group currency risk arises from transactions in foreign currencies, predominantly US Dollars (USD), and
Russian Roubles (RUB). For the Group interest rate risk arises from the exposure to Australian cash deposit rates relating
to cash and cash equivalents. For the Group commodity price risk affects the valuation of the Royalty Agreement
Liability.
(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.
67
79
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
26. Risk management and financial instruments (continued)
(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 a bank loan, 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.
The Board 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. Management closely monitor 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:
Financial assets
Cash and cash equivalents
Investments in restricted financial instruments
Trade and other receivables
Financial liabilities
Trade and other payables
Loans payable
Leases liabilities
Other financial liabilities
31 December
2019
A$’000
31 December
2018
A$’000
4,716
-
10,196
14,912
14,110
29,393
14,431
3,668
61,602
3,554
935
2,586
7,075
6,442
1,516
4,749
-
12,707
80
68
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
26. Risk management and financial instruments (continued)
(d)
Accounting classifications and fair values
The following table shows the carrying amounts of financial assets and liabilities.
31 December 2019
Financial assets not measured at fair value
Cash and cash equivalents
Trade and other receivables
Financial liabilities not measured at fair value
Trade and other payables
Loans payable
Lease liabilities
Other financial liabilities
31 December 2018
Financial assets not measured at fair value
Cash and cash equivalents
Investment in restricted financial instruments
Trade and other receivables
Financial liabilities not measured at fair value
Trade and other payables
Bank loans payable
Lease liabilities
Loans &
Receivables
Carrying amount
Other financial
liabilities
A$’000
Total
4,716
10,196
14,912
-
-
-
-
-
-
-
-
14,110
29,393
14,431
3,668
61,602
4,716
10,196
14,912
14,110
29,393
14,431
3,668
61,602
Loans &
Receivables
Carrying amount
Other financial
liabilities
A$’000
Total
3,554
935
2,586
7,075
-
-
-
-
-
-
-
-
6,442
1,516
4,749
12,707
3,554
935
2,586
7,075
6,442
1,516
4,749
12,707
(e)
Credit risk
Exposure to credit risk
Management monitors the exposure to credit risk on an ongoing basis. The maximum exposure to credit risk on financial assets
which have been recognised on the balance sheet are generally the carrying amount, net of any provisions. Current receivables
net of provision for doubtful receivables are not overdue or in default. The Group does not require collateral in respect of
financial assets.
The Group has treasury policies in place for deposit transactions to be conducted with financial institutions with a minimum
credit rating. At the reporting date, cash is held with reputable financial institutions which all meet the Group’s minimum credit
rating required by the approved treasury policy.
Cash and cash equivalents
Investment in restricted financial instruments
Trade and other receivables
Carrying amount
2019
A$’000
4,716
-
10,196
14,912
2018
A$’000
3,554
935
2,586
7,075
69
81
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
26. Risk management and financial instruments (continued)
Geographical information
The Group’s maximum exposure to credit risk for Trade and other receivables at the reporting date by geographical region was:
Asia and the Russian Federation
Australia
Carrying amount
2019
A$’000
10,196
-
10,196
2018
A$’000
2,586
-
2,586
Counterparty information
The Group’s maximum exposure to credit risk for Trade and other receivables at the reporting date by type of counterparty was:
Coal customers
Other
2019
A$’000
3,311
6,885
10,196
2018
A$’000
346
2,240
2,586
Impairment losses
The ageing of the Group’s Trade and other receivables at the reporting date was:
Not past due
Past due 0-30 days
Past due 31-120 days
Past due 121 days to one year
More than one year
Gross
2019
A$’000
Impaired
2019
A$’000
Gross
2018
A$’000
Impaired
2018
A$’000
10,196
-
-
-
-
10,196
-
-
-
-
-
-
2,586
-
-
-
-
2,586
-
-
-
-
-
-
There was no provision for impairment at 31 December 2019 (At 31 December 2018: A$Nil).
82
70
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
26. 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 2019
Non-derivative financial
liabilities
Trade and other payables
Loans payable
Lease liabilities
Other financial liabilities
31 December 2018
Non-derivative financial
liabilities
Trade and other payables
Bank loan payable
Lease liabilities
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$’000
14,110
29,393
14,431
3,668
61,602
14,110
29,393
18,572
5,365
67,440
13,976
29,393
2,393
276
46,038
6,442
1,516
4,749
12,707
6,492
1,684
5,931
14,107
6,176
84
640
6,900
-
-
4,853
1,140
5,993
70
1,600
2,291
3,961
-
-
5,334
1,277
6,611
134
-
5,992
2,672
8,798
70
-
2,026
2,096
176
-
974
1,150
-
-
-
-
-
-
-
-
-
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly
different amounts.
(g) Market risk
(i)
Currency risk
Exposure to currency risk
Management monitors the exposure to currency risk on an ongoing basis. The Group operates internationally and is exposed to
foreign exchange risk arising from various currencies, primarily with respect to the US Dollar (“USD”) and the Russian Rouble
(”RUB”).
The Group’s exposure to foreign currency risk was as follows:
Cash and cash equivalents
Trade and other receivables
Investment in restricted promissory notes
Trade and other payables
Loans payable
Lease liabilities
Other financial liabilities
Net exposure
USD
2019
A$’000
RUB
2019
A$’000
USD
2018
A$’000
RUB
2018
A$’000
2,927
1,791
-
(4,010)
(29,393)
-
-
(28,685)
1,363
8,405
-
(10,100)
-
(14,431)
(3,668)
(18,431)
1,636
346
-
(1,995)
-
-
-
(13)
1,911
2,239
935
(4,211)
(1,516)
(4,749)
-
(5,391)
71
83
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
26. Risk management and financial instruments (continued)
(g) Market risk
(i)
Currency risk
Exchange rates used
The following significant exchange rates were applied during the year relative to one Australian dollar:
Average rate
2019
1.4384
0.0222
2018
1.3390
0.0214
Reporting date
spot rate
2019
1.4273
0.0225
2018
1.4174
0.0204
USD
RUB
Sensitivity analysis
A weakening of the AUD, as indicated, against the USD and RUB at 31 December 2019 would have the impact in equity and
profit or loss by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Group
considered to be reasonably possible at the end of the reporting period. The analysis assumes that all other variables, in particular
interest rates, remain constant.
Strengthening
Weakening
Equity
A$’000
Profit or
loss
A$’000
Equity
A$’000
Profit or
loss
A$’000
2,608
1,676
(1)
(599)
2,608
1,676
(1)
(599)
(3,187)
(2,048)
1
490
(3,187)
(2,048)
1
490
31 December 2019
USD (10% movement)
RUB (10% movement)
31 December 2018
USD (10% movement)
RUB (10% movement)
(ii) Market price risk
Management monitors the exposure to commodity price risk on an on-going basis. The Group does not have any direct
commodity price risk relating to its financial assets or liabilities.
(iii)
Interest rate risk
Exposure to interest rate risk
Management monitors the exposure to interest rate risk on an ongoing basis. The Group’s exposure to interest rate risk relates
primarily to its cash and cash deposits. At the reporting date the interest rate profile of the company’s and the Group’s interest-
bearing financial instruments was:
Fixed rate instrument
Financial assets
Financial liabilities
Variable rate instruments
Cash and cash equivalents
Financial liabilities
Carrying amount
2019
A$’000
-
(47,492)
(47,492)
4,716
-
4,716
2018
A$’000
935
(4,749)
(3,814)
3,554
(1,516)
2,038
84
72
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
26. Risk management and financial instruments (continued)
(iii)
Interest rate risk (continued)
Interest rates used
The following significant interest rates have been applied.
2019
Australian cash deposit rate
2018
Australian cash deposit rate
Sensitivity analysis
Average
rate
%
Reporting date
spot rate
%
1.50
1.50
1.50
1.50
An increase in interest rates, as indicated below, at balance dates would have increased equity and profit and loss by the
amounts shown below. This analysis is based on interest rate variances that the Group considered to be reasonably possible at
the end of the reporting period. The analysis assumes that all other variables, in particular exchange rates, remain constant. A
reduction in the interest rates would have had the equal but opposite effect to the amounts shown below, on the basis that all
other variables remain constant.
31 December 2019
Australian cash deposit rate (100 basis points increase)
31 December 2018
Australian cash deposit rate (100 basis points increase)
27.
Expenditure commitments
Exploration expenditure commitments
Group
Equity
A$’000
Profit or loss
A$’000
6
6
6
6
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 2019, the Group is in compliance with those exploration obligations defined in the respective
licences.
Lease commitments
Lease commitments includes those lease commitments which have not been recognised in the statement of financial position due
to their inherent size or duration. As of 31 December 2019, the Group had A$0.1 million operating lease commitments in respect
of various assets including land upon which mining, haulage and port operations are undertaken, through to the offices in
Moscow and Melbourne.
Other commitments
Other commitments of A$5.054 million are primarily comprised of A$2.059 million commitments to Mortransniiproject for the
port project works (At 31 December 2018: A$3.428 million comprised primarily of A$2.763 million in commitments to Liaoyo
Group Co Ltd for the construction of two 500 tonne barges).
73
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Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
28. Contingencies
Deed of cross guarantee
Under the terms of the ASIC Corporations (Wholly-owned Companies) Instrument 2016/785, the Company has entered into an
approved deed of cross guarantee of liabilities with the subsidiary identified in Note 33.
Tax contingencies in the Russian Federation
Russian tax legislation is subject to varying interpretations and changes, which can occur frequently. Management’s
interpretation of such legislation as applied to the transactions and activities of the Group may be challenged by the relevant
regional and federal authorities. Recent changes to the tax rules and regulations to the Advanced Social and Economic
Development Territory, of which the Group’s subsidiaries - Beringpromugol LLC and Port Ugolny LLP are residents, introduced
additional criteria, which will be required to be met by the entities to be able to continue applying reduced rates on certain taxes
and payments to government agencies. Management is currently assessing the impact of this change and believes the Group has
adequately provided for tax liabilities based on its interpretation of the applicable tax legislation. However, the relevant
authorities may have differing interpretations, and the effect on the financial report could be significant if such interpretations are
realised.
29. Related parties’ disclosure
(a)
Identity of related parties
Balances and transactions between the company and its subsidiaries, which are related parties, have been eliminated on
consolidation and are not disclosed in this note. The remuneration of key management personnel disclosed in Note 30.
As disclosed in Note 19, during 2019 entered in 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 made available to the Group an unsecured non-revolving loan facility of up to US$10 million
(“Shareholder Loan Facility”), providing total shareholder funding of up to US$20 million. The facilities under these term sheets
were fully drawn down by the middle of November 2019 and the outstanding loan payable amount at 31 December 2019 was
A$29.393 million. During the year ended 31 December 2019, the Group paid interest of A$0.246 million in relation to these
loans and also reimbursed to Dr Bruce Gray A$0.087 million of legal fees incurred by him in relation to provision of the loan
facility.
There were no transactions with other related parties during the years ended 31 December 2019 and 2018.
It is the Group’s policy that where transactions are undertaken with related parties, they are done so on an arm’s length basis.
30. Key Management Personnel Disclosures
(a)
Compensation of key management personnel
The key management personnel compensation included in “Administration expenses” (see Note 8) and “Share-based payments”
(see Note 25) is as follows:
Short-term employee benefits
Post-employment benefits
Termination benefits
Share-based payments
2019
A$
1,635,466
12,639
-
86,156
1,734,261
2018
A$
1,700,760
12,511
-
97,880
1,811,151
(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.
86
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Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
30. Key Management Personnel Disclosures (continued)
(c)
Movements in shares
The movement in the number of Tigers Realm Coal Limited shares held directly, indirectly, or beneficially by the key
management personnel and their related entities are set out below.
Balance at
1 January
Acquisitions
Sales
Other
Changes
Balance at
31 December
2019
Directors
C Wiggill
B Gray
O Hegarty
R Morgan
T Sitdekov
1,200,000
403,631,641
30,412,029
-
-
Other key management personnel
S Southwood
D Forsyth
D Gavrilin
D Bender
136,700
19,267,673
-
-
-
614,720
-
-
-
-
-
-
-
-
-
-
-
-
(136,700)
Balance at
1 January
Acquisitions
Sales
2018
Directors
C Wiggill
B Gray
O Hegarty
R Morgan
T Sitdekov
1,200,000
402,299,869
30,412,029
-
-
Other key management personnel
D Kurochkin
S Southwood
P Balka
D Forsyth
D Gavrilin
D Bender
617,390
136,700
3,481,080
19,267,673
-
-
-
1,331,772
-
-
-
-
-
606,730
-
-
-
(227,760)
-
-
-
-
-
-
-
-
-
-
-
-
Other
Changes
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,200,000
404,246,361
30,412,029
-
-
-
19,267,673
-
-
Balance at
31 December
1,200,000
403,631,641
30,412,029
-
-
389,630
136,700
4,087,810
19,267,673
-
-
75
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Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
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 Ltd
Rosmiro Investments Limited
Anadyrsky Investments Limited
Northern Pacific Coal Company
Beringpromugol LLC
Port Ugolny LLC
Bering Ugol Investments LLC
Tigers Realm Coal Spain, SL1
Tigers Coal Singapore No. 1 PTE Limited1
1.
Liquidated in 2019.
Country of
Incorporation
Ownership Interest
2018
2019
Australia
Australia
Cyprus
Cyprus
Cyprus
Cyprus
Cyprus
Cyprus
Russia
Russia
Russia
Russia
Spain
Singapore
100%
100%
100%
80%
100%
100%
100%
80%
100%
100%
100%
N/A
N/A
100%
100%
100%
80%
100%
100%
100%
80%
100%
100%
100%
100%
100%
32. Parent entity disclosures
As at and throughout the financial year ended 31 December 2019, 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 (loss)
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 deficit)
Total equity
Contingent liabilities of the parent entity
31 December
2019
A$’000
31 December
2018
A$’000
(248)
(248)
31,567
31,567
-
-
31,567
173,747
7,301
(149,481)
31,567
(324)
(324)
31,567
31,567
-
-
31,567
173,747
7,053
(149,233)
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.
88
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Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
33. Deed of cross guarantee
Pursuant to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785, 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 2019 is set out below.
Statement of comprehensive income and retained earnings
Depreciation expense
Share based payments
Administrative expenses
Results from operating activities
Net foreign exchange gain
Finance expense
Finance income
Net finance (expense)/income
(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 deficit at beginning of year
Accumulated deficit at end of year
31 December
2019
A$’000
31 December
2018
A$’000
-
(248)
(1,060)
(1,308)
79
(441)
93
(269)
(1,577)
-
(1,577)
-
-
(1,577)
(184,128)
(185,705)
(1)
(324)
(1,027)
(1,352)
46
-
-
46
(1,306)
-
(1,306)
-
-
(1,306)
(182,822)
(184,128)
77
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Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
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
Advances received
Loan payables
Employee provisions
Total current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
(Accumulated deficit)
Total equity
31 December
2019
A$’000
31 December
2018
A$’000
630
150
42
822
1
67,180
67,181
68,003
677
3,186
29,393
33
33,289
33,289
34,714
173,108
47,311
(185,705)
15
12
52
79
2
34,750
34,752
34,831
331
-
-
29
360
360
34,471
173,747
44,852
(184,128)
34,714
34,471
90
78
Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Notes to the consolidated financial statements
For the year ended 31 December 2019
34. Non-controlling interest
No change in the non-controlling interests in the Eastshore and the Amaam project occurred during the years ended 31 December
2019 and 2018.
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.
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
31 December
2019
A$
31 December
2018
A$
138,004
143,713
281,717
-
-
-
281,717
121,800
115,900
237,700
12,400
24,700
37,100
274,800
37.
Events after the reporting period
The Entitlement Offer launched on 18 December 2019 (refer to Notes 3, 24 and 19 for further details) closed on 5 February 2020,
as a result of which the Group raised A$45.190 million. Entitlements not taken sup by close of the Entitlement Offer were offered
for sale in a shortfall bookbuild and the Group received a bid for majority of the shortfall bookbuild from Hanate Pty Ltd, an
entity associated with the Group’s director and substantial shareholder, Dr Bruce Gray. The issuance of shares to Hanate Pty Ltd
require shareholders’ approval, and an extraordinary general meeting of shareholders is expected to be held in April 2020.
As at 31 December 2019, the Group had received A$3.186 million (included in advances received) and as at the date of these
consolidated financial statements the Group received a further A$42.004 million from the issuance of shares relating to the
Entitlement Offer. As stated above, the receipt of the remaining A$13.039 million is subject to shareholders’ approval.
On 2 January 2020, following the issuance of shares to BV Holding Limited, the loan payable to BV Holding Limited was settled
in full. On 2 January 2020, A$13.138 million out of A$14.641 million loan payable to Dr Bruce Gray was settled, following the
issuance of share to Dr Bruce Gray. Total amount of existing loans from shareholders settled amounted to A$27.890 million.
79
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Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
Tigers Realm Coal Limited
Directors’ declaration
Directors’ declaration
For the year ended 31 December 2019
For the year ended 31 December 2019
1.
1.
In the opinion of the Directors of Tigers Realm Coal Limited (‘the Company’):
In the opinion of the Directors of Tigers Realm Coal Limited (‘the Company’):
(a)
(a)
the attached consolidated financial statements and notes that are set out on pages 45 to 91 are in
the attached consolidated financial statements and notes that are set out on pages 33 to 79 are in
accordance with the Corporations Act 2001, including:
accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 31 December 2019 and of its
(i) giving a true and fair view of the Group’s financial position as at 31 December 2019 and of its
performance for the financial year ended on that date; and
performance for the financial year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting
(ii) complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001; and
Interpretations) and the Corporations Regulations 2001; and
(b)
(b)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
become due and payable.
2.
2.
3.
3.
4.
4.
There are reasonable grounds to believe that the Company and the group entities identified in Note 32 will be
There are reasonable grounds to believe that the Company and the group entities identified in Note 32 will be
able to meet any obligations or liabilities to which they are or may become subject to by virtue of the Deed of
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 Corporations (Wholly owned
Cross Guarantee between the Company and those group entities pursuant to ASIC Corporations (Wholly owned
Companies) Instrument 2016/785.
Companies) Instrument 2016/785.
The Directors have been given the declarations required by Section 259A of the Corporations Act 2001 from the
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 2019.
chief executive officer and the chief financial officer for the financial year ended 31 December 2019.
The Directors also draw attention to Note 2(a) to the consolidated financial statements, which includes a
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.
statement of compliance with International Financial Reporting Standards.
Signed in accordance with a resolution of the Directors:
Signed in accordance with a resolution of the Directors:
Dated at Melbourne this 27th day of February 2020.
Dated at Melbourne this 27th day of February 2020.
________________________________________________
________________________________________________
Owen Hegarty
Owen Hegarty
Director
Director
92
80
80
Annual Report 2019Tigers Realm Coal
93
Annual Report 2019Tigers Realm Coal 94
Annual Report 2019Tigers Realm Coal 95
Annual Report 2019Tigers Realm Coal 96
Annual Report 2019Tigers Realm Coal 97
Annual Report 2019Tigers Realm Coal 98
Annual Report 2019Tigers Realm Coal Tigers Realm Coal Limited
SHAREHOLDER INFORMATION
1. Top 20 Shareholders as at 21 February 2020
Number of
shares
% of Total
1 BV MINING HOLDING LIMITED
2,377,541,065
37.67%
HSBC CUSTODY NOMINEES (AUSTRALIA)
LIMITED INVESTMENT
2
3 RDIF MANAGEMENT LLC
NAMARONG INVESTMENTS PTY LTD
PINE RIDGE HOLDINGS PTY LTD
4
5
1,567,324,178
1,036,224,898
429,048,474
181,922,857
6 SHIMMERING BRONZE PTY LIMITED
59,912,029
7 CO-INVESTMENT PARTNERSHIP I LP
51,811,415
J P MORGAN NOMINEES AUSTRALIA PTY
LIMITED
FOREMOST MANAGEMENT SERVICES –
SUPER A/C
8
9
32,555,480
21,468,970
24.84%
16.42%
6.80%
2.88%
0.95%
0.82%
0.52%
0.34%
10 ANTMAN HOLDINGS PTY LTD
21,428,772
0.34%
11 MR. STEPHEN ALEXANDER CHING
12 MASIK ENTERPRISES PTE LTD
13 ASIPAC GROUP PTY LTD
CANCELER PTY LTD
SENNEN TROVE P/L
14
15
21,300,000
20,000,000
18,846,246
18,269,063
15,046,133
0.34%
0.32%
0.30%
0.29%
0.24%
16 MR. ANDREW JOHN KEMPSON
14,451,451
0.23%
AJM INVESTCO PTY LTD
17
13,839,807
0.22%
18 REGENT PACIFIC GROUP LTD
12,700,000
19 CO-INVESTMENT PARTNERSHIP II CV
10,362,282
0.20%
0.16%
20
HSBC CUSTODY NOMINEES (AUSTRALIA)
LIMITED -A/C 2
Total for Top 20
9,910,280
5,933,963,400 94.03%
0.16%
87
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Annual Report 2019Tigers Realm Coal
Tigers Realm Coal Limited
SHAREHOLDER INFORMATION (CONTINUED)
2. Voting rights of ordinary shares
On a show of hands one vote for each shareholder, and
On a poll, one vote for each fully paid ordinary share.
3.
Distribution of Shareholders and Shareholdings as at 21 February 2020
Holding and
Distribution
1 to 1000
1001 to 5000
5001 to 10000
10001 to 100000
100001 and Over
Total
No. of Holders
Securities
%
38
32
50
340
351
811
4,510
108,774
436,741
16,188,622
6,293,981,365
6,310,720,012
.00
.00
.01
.25
99.74
100.00
4.
Tigers Realm Coal Substantial Shareholders as at 21 February 2020
Holder
BV Mining Holding Limited
Bruce N Gray
Limited Liability Company and co-investors*
Namarong Investments Pty Ltd
No. of Shares
% of Total
2,377,541,065
1,718,047,035
37.67%
27.22%
1,098,398,595
17.41%
429,048,474
6.80%
*Including CO-INVESTMENT PARTNERSHIP I LP, CO-INVESTMENT PARTNERSHIP
II CV
5. Shareholdings of less than a marketable parcel as at 21 February 2020
349 holders holding a total of 7,469,908 shares.
6. Unquoted Securities as at 21 February 2020
28,346,000 Unlisted options on issue.
100
88
Annual Report 2019Tigers Realm Coal
101
Annual Report 2019Tigers Realm Coal 2 Tigers Realm Coal Limited Corporate Directory DIRECTORS Craig Wiggill (Chairman) Owen Hegarty Bruce Gray Ralph Morgan Tagir Sitdekov Nikolay Ishmetov (Alternate for Tagir Sitdekov) COMPANY SECRETARY David Forsyth REGISTERED OFFICE 151 Wellington Parade South, East Melbourne, Victoria, 3002 Tel: +61 3 8644 1300 PRINCIPAL OFFICE 29, 1st Brestskaya Street, Moscow, Russian Federation, 125047 Tel: +7 495 646 83 53 Email: ir@tigersrealmcoal.com AUDITORS Deloitte Touche Tohmatsu 123 Eagle Street, Brisbane, Queensland, 4000 BANKERS Commonwealth Bank of Australia Limited 727 Collins Street, Melbourne, Victoria, 3008 Tigers Real Coal Limited
151 Wellington Parade South
East Melbourne Victoria 3002
T +61 3 8644 1300
tigersrealmcoal.com
Annual Report 2019Tigers Realm Coal