354a2a8447caf5e7c73a14.pdf
Annual Report 2015
Corporate Directory
Acacia Coal Limited ACN: 009 092 068
ABN: 13 009 092 068
Directors
Mr Kym Livesley Non-Executive Chairman Mr Gavin May Managing Director
Mr Michael Mulroney Non-Executive Director Ms Amanda Ward Non-Executive Director
Company Secretary
Mr Robert Waring
Registered and Principal Office
Suite 1902, Level 19 Tower A, The Zenith 821 Pacific Highway
Chatswood NSW 2067 Australia
Tel: 1300 222 625
Fax: +61 2 9475 0869
Web: www.acaciacoal.com Email: [email protected]
Stock Exchange
Australian Securities Exchange (ASX Limited) Home Exchange Sydney
Securities
Code:
AJC Quoted Shares AJC AI Unlisted Options
Share Registry
Boardroom Pty Limited Level 12, 225 George Street Sydney NSW 2000 Australia
GPO Box 3993
Sydney NSW 2001 Australia
Tel: +61 2 9290 9600
Fax: +61 2 9279 0664
Email: [email protected] www.boardroomlimited.com.au
Auditors
Rothsay Chartered Accountants Level 1, Lincoln House
4 Ventnor Avenue, West Perth, WA 6005 Australia PO Box 8716, Perth Business Centre, WA 6849
Tel: +61 8 9486 7094
Contents
Corporate Directory ifc
Chairman's Letter 1
Review of Operations 3 Directors' Report 8 Audit Independence Report 17
Statement of Comprehensive Income 18
Statement of Financial Position 19 Statement of Changes in Equity 20
Statement of Cash Flows 21
Notes to the Financial Statements 22
Directors' Declaration 38
Independent Audit Report 39 Supplementary Information 41
About Acacia Coal
Acacia Coal is a publicly listed company on the Australian Securities Exchange (ASX), and is involved in coal exploration and mine development.
Our prime objective is to identify, acquire and exploit opportunities in coal resources to provide coal for the export market.
Current activities are focused on coal tenement EPC 1230 Comet Ridge, which is located in the Bowen Basin in Central Queensland, and in which the Company has a 100% interest.
In accordance with ASX Listing Rule 4.10.3, Acacia Coal's Corporate Governance Statement can be found on its website at www.acaciacoal.com/overview.html
- Acacia Coal Limited | Annual Report 2015
Chairman's Letter
Dear Shareholder
It is my pleasure to present, on behalf of the Board of Directors of Acacia Coal Limited (Acacia Coal), the Annual Report for the Company for the 2014-15 financial year.
Working closely with Acacia Coal's management team, your Board is continuing to refine its strategy to guide the Company in its transition from the exploration stage to mine development. Acacia Coal continues to have a relatively-strong cash position compared to its outgoings and compared to many of its peers. The Company's
management team is experienced in developing projects in what continue to be difficult financial times for the industry.
Since I wrote to you in the 2014 Annual Report, Acacia Coal has continued to advance its target project, Comet Ridge (EPC 1230) in the Bowen Basin in Central
Queensland, towards mine commencement by completing additional drilling to obtain further material for research and development (R&D) metallurgical testing, by the further development of mine plans and coal processing options, by concluding environmental studies, and advancing the approval process by lodging a Mining Lease Application (MLA) and an Environmental Authority Application in March 2015. The Comet Ridge MLA
is currently being progressed through the numerous Government Departments.
The Company continues to hold registered caveats preventing the transfer or assignment of the Springsure Creek Coal MLAs that are directly associated with the Comet Ridge Project. In September 2014 Bandanna Energy Limited was placed under Voluntary Administration and in October 2014 its subsidiary, Springsure Creek Coal Pty Ltd, was placed into Receivership.
It is my pleasure to present, on behalf of the Board of
Directors of Acacia Coal Limited, the Annual Report for the Company for the 2014-15 financial year.
Acacia Coal continues to protect its interests in the Triumph Creek Infrastructure MLA, which is located over the Company's Comet Ridge Project and is adjacent to the Comet Ridge MLA area. Legal proceedings are on foot in both the Supreme Court and the Land Court of Queensland, seeking to maintain such caveats.
Coal prices remain in the doldrums. Acacia Coal has maintained its cost-cutting measures and the Company is in a relatively-strong position in this current, difficult market. Acacia Coal continues to explore opportunities, corporate and asset-based, that may arise as a consequence of the difficult market conditions currently being expressed in the coal sector.
I thank the Directors and Officers of the Company for their efforts over the last year. We are confident it will be a positive year ahead.
Yours sincerely
Kym Livesley
Chairman
28 September 2015
During the 2014-15 financial year Acacia Coal continued to maintain
its frugal spending of shareholders' funds, but at the same time advance the Comet Ridge Project as far as possible in this difficult cycle of low coking and thermal coal prices.
Review of Operations
Acacia Coal's primary objective has not changed, i.e. to achieve an approved project that is able to commence without delay once confidence returns to the coal market.
Managing Director's Report
The team at Acacia Coal Limited (Acacia Coal) has maintained drive and enthusiasm pursuing the approval
of the Comet Ridge (EPC 1230) Project despite the current negative sentiment being experienced by the coal industry. The Company continues to balance frugal spending of shareholders' funds and simultaneously advancing the Comet Ridge Project. Acacia Coal's primary objective has
not changed, i.e. to achieve an approved project that is able to commence without delay once confidence returns to the coal market.
The Company's management team is very experienced, having been involved in the coal industry for more than 40 years, and has witnessed a number of price cycles.
The current cycle low, after the record highs over the 2008-10 period, is probably the worst dip the coal sector
has experienced in living memory. The oversupply-against- demand imbalance that is forcing spot coking and thermal prices to eight-year lows is causing market grief in a number of areas. However, it is the negative sentiment spread across the political and community arena that is compounding the lack of confidence in the future of coal, especially thermal coal. At a community level, people are hearing that the Australian coal industry is in structural decay and that environmental protection must overweigh the economic benefits of coal mining; that a choice needs to be made between coal mining and environmental protection. The reality is that coal mining and environmental protection have successfully co-existed for years and a responsible balance is the key. The other reality that is not understood or clearly communicated is that:
-
Australian coal is still in strong demand, demonstrated by the record 2014-15 coal exports in excess of 400 million tonnes; and
-
coal remains a cheap and reliable fuel source for more than 70% of Australia's electricity generation.
There is a disconnect between coal as a commodity that has propelled forward the Australian, and first world countries', standard/s of living, and the belief that coal could be replaced in the short-to-medium term and at the same time not experience any economic hardship. This is not reality.
Review of Operations
Acacia Coal achieved a major milestone with the completion of the Comet Ridge Project environmental studies and lodgement of the Environmental Impact Management Report in support of the Mining Lease Application.
Comet Ridge Project
Mining Lease Application Lodged
During the year, Acacia Coal achieved a major milestone with the completion of the Comet Ridge Project environmental studies, and lodgement of the Environmental Impact Management Report
in support of the Mining Lease Application (MLA 700005) and the Environmental Authority Application. The MLA was lodged on 27 March 2015. This substantial document can be found on the Company's website. Subsequent to this lodgement,
the Comet Ridge MLA is being progressed through the numerous Government Departments, including the Queensland Departments of Natural Resources and Mines, and Environment and Heritage Protection (DNRM and DEHP), and the Australian Government Department of Environment (DOE).
Triumph Creek Infrastructure While Acacia Coal has been buoyed by the progress of the Comet Ridge MLA, the move by the Company's
partner in the Triumph Creek Train Loading Infrastructure, Bandanna Energy Limited (Bandanna Energy), to Voluntary Administration was disappointing. In September 2014 Bandanna Energy was placed under Voluntary Administration and in October 2014 its subsidiary, Springsure Creek Coal, which intended to develop the Triumph Creek Infrastructure, was placed into Receivership.
The uncertainty of the Springsure Creek Coal Triumph Creek Train Loading Infrastructure lease applications over Acacia Coal's EPC 1230, which critically link the Comet Ridge Project to the rail infrastructure, has been a major distraction to the progress of the Comet Ridge Project. For the past year, in order to protect its interests, the Company has held registered Caveats preventing the transfer or
assignment of two of the Springsure Creek Coal MLAs that are directly associated with the Comet Ridge Project. Whilst uncertainty exists,
Acacia Coal continues to protect its interests in the Triumph Creek Infrastructure MLA and legal proceedings continue in the
Supreme Court and the Land Court of Queensland, seeking to maintain such Caveats.
Coal Dry Processing Research and Development
The challenge of establishing an economic mining operation of the Fair Hill coal seams relies on the ability to remove a significant quantity of waste rock from the heavily-banded high ash coal
by a low-cost dry process prior to expensive wet washing in a conventional coal preparation plant. Investigations have been
focused on testing and proving the hypothesis that the Company can develop mining and processing techniques that enable a low-capital, low-operating cost and a low-risk, shallow, open-cut operation capable of producing a semi-hard coking coal at Comet Ridge.
A number of findings of the trial processing of the 23 tonne sample of Triumph Seam coal were not expected, but were positive. The information gained and the results of the testing have allowed the Company to plan the final stage of the research and development testing of the problematic Fair Hill seam coal. Following the conclusion of the bulk sample-testing programme, Acacia Coal is confident that it will be able to correlate the laboratory testing with actual mining scale performance and have a preferred dry process option. Specifically, the purpose of the bulk sampling was to:
-
understand seam breakout characteristics and sizing during ROM handling;
-
process a bulk sample through a scaled-up drop shatter and screening process;
-
correlate laboratory drop shatter results with a simulated mining operation; and
-
produce a marketable coking coal sample from the combined dry / wet process bulk sample.
Acacia Coal Tenement Plan
Acacia Coal has invested considerable efforts in the investigation and testing of
a number of innovative process alternatives used in other applications but untested
in traditional coal operations.
The testing has progressed from bore core studies to the recent 23 tonne sample 'run of mine' (ROM) coal of Triumph Seam recovered from the shallow sub-crop
within the area of the proposed Triumph Pit. The bore core laboratory drop shatter testing was up-scaled to measure actual operational performance by processing the 23 tonne bulk sample of ROM coal from the Triumph Seam.
Corporate Strategy
The Company is mindful of the depressed coal market when considering its future. The Board's strategy has always been to progress Comet Ridge to an approved coal project, thereby creating a marketable asset from the exploration and funds invested at Comet Ridge. To-date, more than $4 million has been spent on exploration, environmental studies, approvals and the MLA. Nominal additional costs should result in the granting of a Mining Lease in 2016.
At the 2014-15 financial year-end Acacia Coal had cash of $2.29 million, which is sufficient to finalise the Mining
Lease approval and maintain the current planned activities through to 2017. The Company's management team continues to look for opportunities in a distressed coal market and has conducted due diligence on a number
of assets. However, to-date, no value-adding acquisitions for shareholders have been identified. In the meantime, the Company has taken steps to reduce costs both
at management and Board levels, and continues tight controls on expenditure.
It is a difficult time for participants and stakeholders in the resource sector; this includes shareholders, employees, local landowners and businesses. Despite the pessimism, Acacia Coal would like to thank the shareholders and local landowners for their support, in the knowledge that the Company is determined to survive this market cycle and create value for all.
Review of Operations
JORC Resources Tables as at July 2014
Resources by Seam
Depth
Increment
0 -30 metres
30- 50 metres
Total
0 -50m
|
Seam
|
Inferred
(Mt)
|
Indicated
(Mt)
|
Measured
(Mt)
|
Total (Mt)
|
Inferred
(Mt)
|
Indicated
(Mt)
|
Measured
(Mt)
|
Total (Mt)
|
Inf, Ind & Measured
|
|
Triumph
|
2
|
0.9
|
1.3
|
4.2
|
7
|
1.4
|
0.7
|
9.1
|
13.3
|
|
Fair Hill
|
6
|
2.7
|
5.5
|
14.2
|
29
|
4.4
|
0
|
33.4
|
47.6
|
|
Total
|
8
|
4
|
7
|
18
|
36
|
6
|
1
|
43
|
61
|
Note: Totals are subject to rounding
Resources by Depth Increment
|
Mining Method
|
Depth Interval
(m)
|
Measured
(mt)
|
Indicated
(mt)
|
Measured + Indicated (Mt)
|
Inferred
(Mt)
|
|
Open cut
|
BOW - 30
|
6.8
|
3.6
|
10.4
|
8
|
|
Open cut
|
30 - 50
|
0.7
|
5.8
|
6.5
|
36
|
|
Total
|
7.5
|
9.4
|
16.9
|
44
|
|
Total Resources
|
8
|
9
|
17
|
40
|
Notes:
-
BOW = Base of Weathering
-
Fair Hill Plies: A, C1, D2, D3, E, F, H2, M1 & M2. Triumph Plies T1, T2, T3 & T4.
-
In situ density calculated from laboratory RD using Preston and Sanders formula at 6% moisture.
-
For further information, refer to Appendix A, JORC Code 2012 Edition Table 1
-
The whole JORC Competent Persons Report can be found on the Acacia Coal website: www.acaciacoal.com
JORC Competent Person's Compliance Statement
The information in this report that relates to the mineral resources is based on information evaluated by Rob Dyson, who is a Fellow of The Australasian Institute of Mining and Metallurgy (AusIMM). Rob Dyson is a fulltime employee of McElroy Bryan Geological Services Pty Ltd. He is a qualified Geologist, and has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration, and the activity that he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the 'The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves' (the JORC Code). Rob Dyson consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
Gavin May
Managing Director
At 30 June 2015 Acacia Coal had a cash balance of
$2.29 million, which is sufficient to finalise the Comet Ridge Mining Lease approval and maintain the current planned activities through to 2017.
The Company's management team continues to look for opportunities in a distressed coal market.
Acacia Coal Limited | Annual Report 2015 7
DIRECTORS' REPORT
Directors' Report
Your Directors present their Report on Acacia Coal Limited (the Company) and Controlled Entities (collectively the Group Entity) for the financial year ended 30 June 2015.
DIRECTORS
The following were Directors of the Company at any time during the reporting period and, unless otherwise indicated, were Directors for the entire period:
Mr Kym Livesley Non-Executive Chairman Appointed 28 May 2013 Mr Gavin May Managing Director Appointed 23 May 2011
Mr Michael Mulroney Non-Executive Director Appointed 5 November 2010 Ms Amanda Ward Non-Executive Director Appointed 12 November 2010
PRINCIPAL ACTIVITIES
The principal activities of the Group Entity during the course of the financial year were the exploration and project development of its coal tenement in the Bowen Basin in Queensland.
RESULTS
The consolidated loss of the Group for the financial year ended 30 June 2015 was $213,562 (2014: loss $6,163,382).
DIVIDEND
No dividends have been paid by the Company during the financial year ended 30 June 2015, nor have the Directors recommended that any dividends be paid.
REVIEW OF OPERATIONS
A detailed Review of Operations can be found commencing on page 2.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
During the year the Company continued its exploration and other work on the process of establishing a mining operation at its Comet Ridge coal tenement in Queensland.
EVENTS SUBSEQUENT TO BALANCE DATE
No other matters or circumstances, not otherwise dealt with in the Financial Statements, have arisen since the end of the financial year or to the date of this Report that significantly affected, or may significantly affect, the operations of the Group Entity, the results of the Group Entity or the state of affairs of the Group Entity in the financial years subsequent to the financial year ended 30 June 2015.
LIKELY DEVELOPMENTS
The Company intends to position itself to become a significant coal explorer and hopefully a developer of economic coal assets in Queensland. Further exploration, resource development studies and the grant of a mining lease are hoped to lead the Company to the commencement of coal mining at Comet Ridge.
ENVIRONMENTAL REGULATION
ACACIA COAL LIMITED || ANNUAL REPORT 2015 PAGE 5
The Company's operations and projects will be subject to State and Federal laws and regulation regarding environmental hazards. These laws and regulations set various standards regulating certain aspects of health and environmental quality, and provide for penalties and other liabilities for the violation of such standards, and establish, in certain circumstances, obligations to remediate current and former facilities and locations where operations are, or were, conducted. Significant liability could be imposed on the Company for damages, clean-up costs, or penalties in the event of certain discharges into the environment, for environmental damage caused by previous owners of properties acquired by the Company or its subsidiaries, or for non-compliance with environmental laws or regulations. The Company proposes to minimise these risks by conducting its activities in an environmentally-responsible manner, in accordance with applicable laws and regulations, and where possible, by carrying appropriate insurance coverage.
ACACIA COAL LIMITED || ANNUAL REPORT 2015 PAGE 6
DIRECTORS' REPORT
Kym Livesley
LLB
Appointed to the Board Experience
- Independent - Non-Executive Chairman
-
-
PARTICULARS OF DIRECTORS AND COMPANY SECRETARY DIRECTORS
Interest in Shares and Options 1
Directorships held in other listed entities in the past three years
28 May 2013 (appointed as Chairman on 1 June 2013)
Mr Livesley has over 30 years of experience as a corporate lawyer and joined Gadens Lawyers as a Partner in 2002 where he is currently the Global Head of the firm's Energy and Resources group. Mr Livesley has worked in Australia and South-East Asia (particularly Indonesia, Malaysia, Singapore and Hong Kong), and has been involved in projects for clients throughout South-East Asia, Japan, China and Europe. His practice, while corporate in nature, has a strong emphasis in the energy and resources, and industrial sectors. Mr Livesley's areas of expertise are: mergers and acquisitions; corporate / commercial advice; capital raisings, IPOs, listing on foreign stock exchanges, directors' duties and corporate governance; takeovers; major projects; advising on risk management, regulatory compliance, environmental issues and implementation; and native title, Aboriginal land rights and cultural heritage issues. He is considered to be an Independent Director of Acacia Coal Limited, although Gadens Lawyers has performed legal work for the Company.
Gavin May
BSc (Geology), GAICD
- Managing Director
Appointed to the Board - 23 May 2011
Experience - Mr May is a coal Executive with over 30 years of experience in the Australian and international coal industry. He was formerly the CEO of ASX-listed company Gloucester Coal Ltd, a Director of Noble Resources Australia Limited, and the COO of Toronto and Hong Kong dual-listed South Gobi Resources Limited.
Interest in Shares and Options 1 - 17,000,000 Ordinary Shares, and 16,000,000 Unlisted Options with an
exercise price of $0.02 each and an expiry date of 5 December 2018.
-
-
Directorships held in other listed entities in the past three years
- Nil
Michael Mulroney
B App Sc (Geol), MBA, MAusIMM Appointed to the Board Experience
-
Independent - Non-Executive Director
Interest in Shares and Options 1
Directorships held in other listed entities in the past three years
5 November 2010
Mr Mulroney has over 30 years of experience in the natural resources and finance sectors. He has spent 12 years as a Geologist and mining company Executive in a broad range of commodities throughout Australia and South- East Asia, and over 11 years with investment bank NM Rothschild and Sons (Australia) Limited. Mr Mulroney is a senior executive in a large Australian gold mining company and was the Managing Director of Venturex Resources Limited until February 2015, and has held senior roles in resource banking and investment banking companies, with extensive experience in project finance, and mergers and acquisitions in the global resources sector. Mr Mulroney formerly held senior roles in the Argonaut Capital Limited group. He is considered to be an Independent Director of Acacia Coal Limited, although Mr Mulroney performed the duties of Acting Chief Executive Officer during periods where the Company did not have a Managing Director.
-
1,126,641 Ordinary Shares.
-
Venturex Resources Limited (Managing Director from February 2012 until February 2015).
Acacia Coal Limited | Annual Report 2015 9
DIRECTORS' REPORT
Directors' Report
Amanda Ward
B Bus CPA JP
- Independent from 14 September 2015 - Non-Executive Director
Appointed to the Board - 12 November 2010
Experience - Ms Ward has more than 14 years of experience in finance and accounting, with a strong focus in the mining industry. She is the Director and Principal of her own accounting practice in Sydney specialising in all areas that are unique to a diverse range of businesses. Ms Ward also acts as the CFO for a group of privately-owned companies focused in the coal mining industry in Queensland. She is now considered to be an Independent Director of Acacia Coal Limited, as from 14 September 2015 Ms Ward ceased to be the representative of a former Substantial Shareholder.
Interest in Shares and Options 1 - Nil
Directorships held in other listed entities in the past three years
- Nil
COMPANY SECRETARY
Robert Waring
BEc, CA, FCIS, FFin, FAICD, MAusIMM
Appointed - 26 September 2011
Experience - Mr Waring has over 40 years of experience in financial and corporate roles, including 25 years in Company Secretarial roles for ASX-listed companies, and 20 years as a Director of ASX-listed companies. He is a Director of Oakhill Hamilton Pty Ltd, which provides Company Secretarial and corporate advisory services to a range of listed and unlisted companies. Mr Waring has significant coal industry experience, having served as the Company Secretary of Gloucester Coal Ltd for six years.
Note: 1 Interest in Shares and Options refers to the relevant interest of each Director in the shares or options over shares issued by the companies within the Group Entity and other related body corporate as notified by the Directors to the Australian Securities Exchange in accordance with Section 205G (1) of the Corporations Act 2001, as at the date of this Report.
DIRECTORS' MEETINGS
The following table sets out the numbers of meetings of the Company's Directors held during the year ended 30 June 2015, and the number of meetings attended by each Director. During this year there were four Board Meetings, one Nomination and Remuneration Committee Meeting, and two Audit and Risk Management Committee Meetings. The number of meetings attended by each Director during the financial year is as follows:
Board Nomination and Remuneration Audit and Risk Director Held Attended Held Attended Held Attended
|
Kym Livesley
|
4
|
4
|
1
|
1
|
2
|
2
|
|
Gavin May
|
4
|
4
|
1
|
1
|
*
|
*
|
|
Michael Mulroney
|
4
|
4
|
1
|
1
|
2
|
2
|
|
Amanda Ward
|
4
|
4
|
1
|
1
|
2
|
2
|
* Mr May is not a member of the Audit and Risk Management Committee.
REMUNERATION REPORT
The Remuneration Report is set out under the following main headings:
A Principles used to determine the nature and amount of remuneration B Details of remuneration (Audited)
C Service Agreements and Employment Contracts of Directors and Key Management Personnel D Share-based payments
ACACIA COAL LIMITED || ANNUAL REPORT 2015 PAGE 7
E Performance income as a proportion of total remuneration F Payments to persons before taking office (Audited)