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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Conti.Coal | LSE:COOL | London | Ordinary Share | AU000000CCC1 | ORD NPV (DI) |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 1.10 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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ABN 13 009 125 651 Appendix 4E Preliminary Final Report For the year ended 30 June 2014 Results for announcement to market in accordance with ASX Listing Rule 4.3A CORPORATE DIRECTORY Directors and Officers Country of Incorporation Paul D'SYLVA Australia (Interim Executive Chairman) Registered Office Peter LANDAU Ground Floor (Interim Executive Director) 1 Havelock Street Lars SCHERNIKAU WEST PERTH WA 6005 (Non-Executive Director) Telephone: +61 8 9488 5220 Connie MOLUSI Facsimile: +61 8 9324 2400 (Non-Executive Director) Principal Place of Business Company Secretary 9th Floor Fredman Towers Jane FLEGG 13 Fredman Drive Share Registry SANDTON SOUTH AFRICA 2196 Computershare Ltd Telephone: +27 11 881 1420 Level 2, Reserve Bank Building Facsimile: +27 11 881 1423 45 St Georges Terrace Home Exchange PERTH WA 6000 Australian Securities Exchange Telephone: +61 8 9323 2000 Level 40, Central Park Facsimile: +61 8 9323 2033 152-158 St George's Terrace Auditors Perth WA 6000 BDO Audit (WA) Pty Ltd Telephone: +61 8 9224 0000 38 Station Street Facsimile: +61 8 9381 1322 SUBIACO WA 6008 ASX Code: CCC Telephone: +61 8 6382 4600 AIM Code: COOL Facsimile: + 61 8 6382 4601 Email: admin@conticoal.com Website: www.conticoal.com Results for announcement to the market 2013 2014 Variance $'000 $'000 % Revenue from ordinary up from 62,230 to 68,715 (10%) activities Loss from continuing down from (34,573) to (24,818) (28%) operationsafter tax attributable to members Net loss attributable to down from (35,720) to (24,818) (28%) members Dividends Dividends/distributions Amount per security Franked amount per security Final dividend - - Interim dividend - - The directors recommend that no dividend be paid for the year ended 30 June 2014 nor have any amounts been paid or declared by way of dividend since the end of the previous financial year. Audit This report is based on financial statements which are in the process of being audited. Other significant information needed by an investor to make an informed assessment of the Group's Financial Performance and Financial Position See attached preliminary final report. Commentary on results for the period A commentary on the results for the period is contained within the financial statements that accompany this announcement. This information should be read in conjunction with Continental Coal's attached preliminary final report. Forward Looking Statement This document includes certain statements that may be deemed "forward-looking statements" and information. All statements in this document, other than statements of historical facts, that address future production, reserve potential, exploration drilling, exploitation activities and events or developments that the Company expects to take place in the future are forward-looking statements and information. Although the Company believes the expectations expressed in such forward-looking statements and information are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements and information. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, exploitation and exploration successes, drilling and development results, production rates and operating costs, continued availability of capital and financing and general economic, market or business conditions. Investors are cautioned that any such statements are not guarantees of future performance and actual results or developments may differ materially from those stated. Review of Operations Principal Activities The principal activity of the Group during the year ended 30 June 2014 was the acquisition, exploration, development and operation of thermal coal mines and properties in South Africa. There were no significant changes in the nature of the activities of the Group during the financial year. Overview During the year ended 30 June 2014 the Group continued its program of establishing itself as a successful thermal coal mining, production, exploration and development Group in Southern Africa focusing on the ramp up of its flagship Penumbra Coal Mine and advancing the De Wittekrans coal project with the granting of its mining right in September 2013. Reserve and Resource Statement The Group's Coal Resource and Reserve Statements are as follows: Group Resources Statement - July 2014 PROJECT RESOURCE PROJECT GROSS TOTAL PROJECT CONTINENTAL'S CATEGORY TONNES TONNES ATTRIBUTABLE IN SITU IN SITU INTEREST (GTIS) (t) (TTIS) (t) Vlakvarkfontein Measured 8,703,480 6,803,316 44% Penumbra 8,421,911 7,134,875 74% De Wittekrans 52,330,387 47,097,100 74% Wesselton II 4,201,199 3,570,800 74% Leiden 4,309,133 3,862,500 74% Total Measured 77,966,110 68,468,591 Vlakplaats Indicated 38,176,346 34,258,000 37% Project X 2,969,951 2,672,000 56% Penumbra 6,725,373 6,052,000 74% De Wittekrans 73,733,941 66,358,000 74% Vaalbank 8,809,511 7,928,000 52% Wesselton II 5,112,340 4,344,000 74% Leiden 1,996,754 179,500 74% Total Indicated 137,524,216 121,791,500 Vlakplaats Inferred 16,276,680 12,190,000 37% Wolvenfontein 36,725,119 31,200,000 74% Project X 11,687,034 10,517,000 56% De Wittekrans 66,618,671 59,940,000 74% Knapdaar 42,064,528 35,750,000 74% Vaalbank 13,937,555 12,540,000 52% Wesselton II 8,648,522 7,330,000 74% Mooifontein 3,092,970 2,620,000 74% Leiden 12,057,828 10,851,400 74% Kweneng (1) 2,159,000 2,051,050 100% Total Inferred 213,267,907 184,989,450 GRAND TOTAL RESOURCES 428,758,233 375,249,541 Notes: 1. JORC compliant. These coal resources and coal reserves (excluding Kweneng) have been defined in accordance with the 2007 South African Code for Reporting of Mineral Resources and Mineral Reserves Code (SAMREC Code). The SAMREC Code requires the use of the South African National Standard : South African Guide to the Systematic Evaluation of Coal Resources and Coal Reserves (SANS10320:2004) when classifying and reporting coal resources and reserves. SANS10320:2004 uses the principle of relative distances from boreholes with quality data for the classification of coal resources. This standard was utilised by the Company's consultants in calculating the project resources. The above coal resource and coal reserve estimates are also in compliance with and to the extent required by the 2012 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves published by the Joint Ore Reserves Committee of The Australasian Institute of Mining, Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (JORC Code). Similarly to the SAMREC Code, the JORC Code uses the principle of relative distances from boreholes with quality data for the classification of coal resources. The SAMREC Code distances are narrower than those required by the JORC Code, and hence, by reporting to SAMREC, the requirements of the JORC Code have also been met Coal Mine and Processing Operations Health and Safety The Group maintains a strong health and safety culture across all of its coal mining and processing operations and continues to improve its health and safety initiatives and policies across all of its operations. During the financial year, eleven Dressing Station Case ("DSC") accidents were reported at the Company's mining and processing operations - ten DSC accidents were reported at the Penumbra Underground Mine and one at the Vlakvarkfontein Open Cast Mine and one Medical Treatment Incident (MTI) was reported at the Penumbra Underground Mine. All the accidents were relatively minor with no material impacts and their causes have been addressed. Operational Performance Year ended 30 June Year ended 30 June 2014 2013 Run of Mine (ROM)Production Vlakvarkfontein 1,382,487 1,526,469 Ferreira 247,129 559,107 Penumbra 498,176 143,299 Total ROM Production 2,127,792 2,228,875 Feed to Plant Ferreira 269,670 627,329 Penumbra 491,424 143,299 Total Plant Feed 761,094 770,628 Export Yields Ferreira 72% 70.4% Penumbra 57.2% 36.8% Domestic Sales 1,401,080 1,315,701 Export Sales 523,906 453,582 Total Coal Sales 1,924,986 1,769,283 Total ROM coal production for the year ended 30 June 2014 of 2,127,792t was achieved with a full 12 months production at the Vlakvarkfontein Coal Mine, 6 months production at the Ferreira Coal Mine until end of life and ramp up production from the Penumbra Coal Mine. Feed to the Delta Processing Operations for the year ended 30 June 2014 was 761,094t. The feed from the Penumbra Coal Mine has steadily increased during the year and is line with the ramp up of the Penumbra Coal Mine. Export yields at the Penumbra Coal Mine have shown a steady increase during the past 12 months with the average yield of 57.2% recorded for the ended 30 June 2014. Domestic sales from the Vlakvarfontein Coal Mine have increased on a year-end basis comparable to year ended 30 June 2013. 1. Vlakvarkfontein Coal Mine Vlakvarkfontein Coal Mine produced 1,382,487t ROM for the year ended 30 June 2014, achieving its target production at a cost of ZAR 90.00/t (US$8.50/t) the year ended 30 June 2014. An average strip ratio of 2.22:1 was achieved for the year ended 30 June 2014. Total thermal coal sales for the year ended 30 June 2014 were 1,149,216t to Eskom and 251,861t non-select. 2. Ferreira Coal Mine Ferreira Coal Mine produced 247,129t ROM for the year ended June 2014, before its end of life in December 2013, with export yields averaging 72%. Inventory clean-up at the Ferreira Coal Mine was completed in the first Quarter of 2014. The rehabilitation work will commence upon finalisation of the closure plan and appointing contractors. 3. Penumbra Coal Mine The Penumbra Coal Mine delivered 498,176t ROM for the year ended 30 June 2014 comparable to the revised forecast of 500,000t at a FOB cost of ZAR 841.13 (US$79.40) per sales tonne. During the initial ramp up stage the Company encountered stone rolls that are displacing the coal seam in the current mining area and this is impacting on the production rate and the delivered yield due to added contamination. Management, in conjunction with mining consultants, have been reviewing the planned production lay-out in order to mitigate the impact of the stone rolls on the production rate of the continuous miners. As procedures are implemented the ROM and yield are increasing with the month of June 2014 producing 58,013t which is on track to the targeted 70,000t per month. Additional exploration drilling is currently being carried out to ascertain the extent of the stone rolls with the view to revising the production plan. Export yields at the Penumbra Coal Mine averaged 57.2% for the year ended 30 June 2014. The yield is expected to improve to the planned 62% with the increase in production and the mitigation of the additional contamination caused by the stone rolls. For the year ended 30 June 2014 ROM mining costs averaged ZAR 165.95/t (US$15.50/t) and FOB export sales tonnes costs averaged ZAR 748.24/t (US$70.35/ t). Total FOB costs will reduce in the coming months given the forecast increase in production. The Company received ZAR 10.1 million revenue for the year ended 30 June 2014 from the ABSA forward hedging contract at the Penumbra Coal Mine. 2. DEVELOPMENT PROJECT 3. 1. De Wittekrans Coal Project The De Wittekrans Development Project (De Wittekrans) is a potential underground export and domestic thermal coal mining project at a pre-development stage. Optimisation work on previous feasibility studies has identified the opportunity to develop De Wittekrans into a major mining operation with the potential to produce ~3.6Mtpa of ROM over the LOM. A mining right was granted in September 2013 and the Integrated Water Use License (IWUL) application was submitted, the Company awaits approval. With mining right successfully executed in May 2014, the Company now has 12 months to commence mining operations, however should the IWUL not be received within this 12 month period the mining right can be delayed. During the last quarter of the year ended 30 June 2014 two sites were selected for mining and these are now being evaluated as to which site will be selected for the first phase of mining. 3. EXPLORATION PROJECTS 4. 1. Botswana Coal Projects The Company is in advanced discussions in respect of the two remaining Prospecting licenses (PL 340/2008 and PL 341/2008). PL341 has been transferred and the transfer documents for PL340 have been submitted to the Botswana Ministry of Minerals, Energy. 2. Vlakplaats Vlakplaats is a 50:13:36 joint venture between the Company, Big Match Trading 34 (Pty) Ltd and Korea Resources Corporation. Therefore the Company only has an effective interest of 37% in the project. A Prospecting Right has been granted for this project. Vlakplaats is considered a non-core asset and the Company will retain the Prospecting Right in good standing while it evaluates divestment opportunities. 3. Other non-core assets Project X, Vaalbank, Leiden.Knapdaar, Wolvenfontein, Wesselton II,Mooifontein have all been considered as non-core assets which the Company will keep in good standing order while it evaluates divestment opportunities 4. CORPORATE 5. 1. Bridge Finance and Recapitalisation In February 2014 the Group executed a binding term sheet with UK corporate advisory firm Empire Equity Limited ("Empire Equity") to provide $5 million bridge funding and undertake a broader recapitalisation and restructure of the Group and its financial arrangements. The Group received the $5 million bridge funding from Empire Equity and made key payments to current creditors and negotiated a 3 month standstill period to recapitalize the Group. The standstill period was subsequently extended to 15 October 2014. Empire Equity and/or its nominees (the "Investors") have invested in 7.5 million unsecured convertible promissory notes ("Notes") with a face value of A$1.00 at a discounted issue price of A$0.6667 per Note and with a maturity date of 4 months redeemable upon successful completion of the Groups recapitalization. The Investors will receive a 6% fee on the Investment Amount as well as 70 million options, subject to shareholder approval, for providing the $5 million. A condition to providing the funding was the restructure of the Board which occurred on 13 February 2014. The Investors also undertook to assist the Group in undertaking a rights issue with the proceeds to be used to settle amounts owed by the Group to various existing convertible note holders , loans and royalty holders, repay bridging finance, reduce the Group's other borrowings, provide funds towards the development of the Company's advanced coal mining projects and provide working capital. Subsequent to year ended 30 June 2014 the Group announced a fully underwritten non-renounceable rights issue prospectus to raise approximately A$35.1m by way of the issue of up to 7,035,234,408 new shares at an offer price of $0.005 per new share. 2. Proposed listing on the Johannesburg Stock Exchange The proposed listing has been postponed until such time as the recapitalisation of the Company has been completed. 3. ASX and Aim share trading suspension As at the date of this report Continental's securities on both the ASX and AIM markets continue to be suspended. In line with the timetable disclosed in the fully underwritten non-renounceable rights issue prospectus the Group anticipates lifting of the suspension of Continentals securities on ASX and AIM at completion of the Rights Issue on or about 2 October 2014. Competent Persons Statement The information in this report that relates to Coal Resources on Vlakvarkfontein, Vlakplaats and Wolvenfontein is based on resource estimates completed by Dr. Philip John Hancox. Dr. Hancox is a member in good standing of the South African Council for Natural Scientific Professions (SACNASP No. 400224/04) as well as a Member and Fellow of the Geological Society of South Africa. He is also a member of the Fossil Fuel Foundation, the Geostatistical Association of South Africa, the Society of Economic Geologists, and a Core Member of the Prospectors and Developer Association of Canada. Dr. Hancox has more than 12 years' experience in the South African Coal and Minerals industries and holds a Ph.D from the University of the Witwatersrand (South Africa). The information in this report that relates to Coal Resources on Penumbra, De Wittekrans, Knapdaar, Leiden and Wesselton II is based on coal resource estimates completed by Mr. Nico Denner, a full time employee of Gemecs (Pty) Ltd. Mr. Denner is a member in good standing of the South African Council for Natural Scientific Professions (SACNASP No. 400060/98) as well as a Member and Fellow of the Geological Society of South Africa. He has more than 15 years' experience in the South African Coal and Minerals industries. The information in this report that relates to Coal Resources on Project X and Vaalbank is based on coal resource estimates completed by Mr. Coenraad van Niekerk, a full time employee of Gemecs (Pty) Ltd. Mr. van Niekerk is a member in good standing of the South African Council for Natural Scientific Professions (SACNASP No. 400066/98) as well as a Member and Fellow of the Geological Society of South Africa. He has more than 38 years' experience in the South African Coal and Minerals industries. The information in this report that relates to Coal Resources on Mooifontein is based on coal resource estimates completed by Mr. Dawie van Wyk, a full time employee of Geocoal services (Pty) Ltd. Mr. van Wyk is a member in good standing of the South African Council for Natural Scientific Professions (SACNASP No. 401964/83) as well as a Member and Fellow of the Geological Society of South Africa. He has more than 30 years' experience in the South African Coal and Minerals industries. The Coal Reserves on Vlakvarkfontein, and is based on reserve estimates completed by Eugène de Villiers. Mr. de Villiers is a graduated mining engineer (B.Eng) Mining from the University of Pretoria and is professionally registered with the Engineering Council of South Africa (Pr.eng no - 20080066). He is also a member of the South African Institute of Mining and Metallurgy (SAIMM Membership no. 700348) and the South African Coal Managers Association (SACMA Membership no. 1742). Mr. de Villiers has been working in the coal industry since 1993 and has a vast amount of production and mine management as well as project related experience. CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2014 Note Consolidated 2014 2013 $'000 $'000 Operating sales revenue 2 68,715 62,230 Operating expenses (58,714) (55,181) Depreciation & amortisation (7,022) (4,190) Cost of sales 3 (65,736) (59,371) Gross profit 2,979 2,859 Other income 2 1,962 4,130 Administration expenses 3 (7,629) (11,533) Finance expenses 3 (27,215) (13,888) Impairment expenses 3 (2,208) (28,126) Marketing expenses (225) (266) Other expenses 3 (1,339) (2,618) Loss before income tax (33,676) (49,442) Income tax benefit 356 1,101 Loss after income tax from continuing (33,320) (48,341) operations Loss from discontinued operation - (1,147) Loss for the year (33,320) (49,488) Net profit/(loss) is attributable to: Owners of Continental Coal Limited (24,818) (35,720) Non-controlling interests (8,502) (13,768) (33,320) (49,488) Loss per share for loss from continuing operations attributable to the ordinary equity holders of the Company: Basic loss per share 4 (0.004) (6.56) (cents per share) Diluted loss per share 4 (0.004) (6.56) (cents per share) The above Consolidated Income Statement should be read in conjunction with the Notes to the Financial Statements. CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2014 Note Consolidated 2014 2013 $'000 $'000 Loss for the year (33,320) (49,488) Other Comprehensive Income/(Loss) Items that may be reclassified to profit or loss Exchange differences on translation of (1,932) (6,052) foreign operations Changes in the fair value of cashflow - 3,087 hedges, net of tax Other comprehensive loss for the year, - (2,965) net of tax Total comprehensive loss for the year (35,252) (52,453) Total comprehensive income/(loss) is attributable to: Owners of Continental Coal Limited (25,926) (38,177) Non-controlling interests (9,326) (14,276) (35,252) (52,453) Total comprehensive loss for the period attributable to owners of Continental Coal Limited arises from: Continuing operations (25,926) (37,030) Discontinued operations - (1,147) (25,926) (38,177) The above Consolidated Statement of Other Comprehensive Income should be read in conjunction with the Notes to the Financial Statements. CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2014 Note Consolidated 2014 2013 $'000 $'000 ASSETS CURRENT ASSETS Cash and cash equivalents 5 2,989 4,496 Trade and other receivables 6 4,681 7,744 Inventories 7 1,167 4,862 17,102 Non-current assets classified as held for - sale TOTAL CURRENT ASSETS 8,837 17,102 NON-CURRENT ASSETS Trade and other receivables 6 2,473 2,981 Other assets 2,472 1,658 Derivative financial instruments 7,050 2,400 Exploration expenditure 10 47,417 54,363 Development expenditure 11 65,105 76,344 Property, plant and equipment 12 12,628 11,933 Deferred tax assets 13 4,081 3,022 TOTAL NON-CURRENT ASSETS 141,226 152,701 TOTAL ASSETS 150,063 169,803 CURRENT LIABILITIES Trade and other payables 14 7,451 12,459 Deferred revenue 15 - 5,859 Income tax payable 451 1,115 Provisions 4,601 296 Borrowings 16 68,902 18,531 Derivative financial instruments 80 228 Other financial liabilities 17 4,419 3,633 Provision for rehabilitation 19 3,173 3,759 TOTAL CURRENT LIABILITIES 89,077 45,880 NON-CURRENT LIABILITIES Deferred revenue 15 - 5,467 Borrowings 16 22,865 52,141 Other financial liabilities 17 6,633 6,984 Deferred tax liability 18 19,511 23,009 Provision for rehabilitation 19 8,787 9,594 TOTAL NON-CURRENT LIABILITIES 57,796 97,195 TOTAL LIABILITIES 146,873 143,075 NET ASSETS 3,190 26,728 EQUITY Issued capital 20 246,533 236,032 Reserves (1,905) (2,838) Accumulated losses (234,239) (198,987) Capital and reserves attributable to 10,389 34,207 owners of Continental Coal Limited Amounts attributable to non-controlling (7,198) (7,479) interests TOTAL EQUITY 3,190 26,728 The above Consolidated Statement of Financial Position should be read in conjunction with the notes to the Financial Statements. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2014 Share Accumulated Foreign Other Hedging Option Share Shares Total Non- Total Capital losses Currency Reserve Reserve Reserve Based and Controlling Ordinary Translation Payment Options Interest Reserve Reserve to be Issued $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Balance at 1 220,015 (164,739) (19,190) (9,944) (508) - 30,798 - 56,433 8,089 64,522 July 2012 Loss for the - (35,720) - - - - - - (35,720) (13,768) (49,488) year Exchange - - (4,741) - - - - - (4,741) (1,311) (6,052) differences on translation of foreign operations Cashflow - - - - 2,284 - - - 2,284 803 3,087 hedges, net of tax Total - (35,720) (4,741) - 2,284 - - - (38,177) (14,276) (52,453) comprehensive loss for the year Transactions with owners in their capacity as owners: Shares issued 16,117 - - - - - - - 16,117 - 16,117 during the year Transaction (100) - - - - - - - (100) - (100) costs Options issued - - - - - - 701 - 701 - 701 Transfers - 1,472 - (1,472) - - - - - - - Transactions - - - (766) - - - - (766) (1,026) (1,792) with non-controlling interests Dividends paid - - - - - - - - - (266) (266) Balance at 30 236,032 (198,987) (23,931) (12,182) 1,776 - 31,499 - 34,207 (7,479) 26,728 June 2013 Loss for the - (35,252) - - - - - - (24,818) (8,502) (33,320) year Exchange - - (3,716) - - - - - (3,716) (824) (4,540) differences on translation of foreign operations Cashflow - - - - 4,650 - - - 4,650 - 4,650 hedges, net of tax Total - (35,252)) (3,716) - 4,650 - - - (25,926) (9,326) (35,252) comprehensive loss for the year Transactions with owners in their capacity as owners: Shares issued 10,501 - - - - - - - 10,501 - 10,501 during the year Transaction - - - - - - - - - - - costs Options issued - - - - - - - - - - - Transfers - - - - - - - - - - - Transactions - - - - - - - - - 2,128 2,128 with non-controlling interests Dividends paid - - - - - - - - - - - Balance at 30 246,533 (234,239) (27,647) (12,182) 6,426 - 34,499 - 10,389 (7,198) 3,190 June 2014 The above Consolidated Statement of Changes in Equity should be read in conjunction with the notes to the Financial Statements. CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2014 Consolidated 2014 2013 $'000 $'000 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers 64,836 58,505 Payments to suppliers and employees (60,864) (70,488) Interest received 676 249 Other income 121 2,196 Proceeds on settlement of commodity hedges 1,018 336 Income tax paid (1,126) (1,080) Net cash (used in)/provided by operating 2,127 (10,282) activities CASH FLOWS FROM INVESTING ACTIVITIES Payment for additional ownership interest in - (8,839) subsidiary Exploration expenditure (326) (660) Development costs (5,190) (20,393) Purchase of property, plant and equipment (2,036) (6,675) Proceeds on disposal of property, plant and - 1,092 equipment Payments in relation to SIOC transaction - (331) Proceeds from sale of Vanmag - 8,696 Payments for purchase of other assets (6) (642) Net cash (used in) investing activities (7,558) (27,752) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares, net of - 8,597 transaction costs Interest and borrowing costs (117) (1,227) Proceeds from borrowings 5,908 26,890 Repayment of borrowings (1,886) (3,537) Payment to fund Penumbra standby facility - (1,930) Payment of finance related royalty - (533) Dividends paid - (266) Net cash provided by financing activities 3,924 27,994 Net (decrease)/increase in cash held (1,507) (10,040) Effect of the exchange rate changes on the (1,042) balance of cash held in foreign currencies at the beginning of the financial year Cash at beginning of financial year 4,496 14,595 Cash at end of financial year 2,989 3,513 The above Consolidated Statement of Cash Flows should be read in conjunction with the Notes to the Financial Statements. Note 1: Basis of the Preparation of the Preliminary Final Report The preliminary final report has been prepared in accordance with the ASX Listing rule 4.3A and the disclosure requirements of ASX Appendix 4E. This report has been prepared in accordance with Australian Accounting Standards, Urgent Issues Group Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. As such this preliminary final report does not include all the notes of the type included in an annual financial report and accordingly, should be read in conjunction with the annual report for the year ended 30 June 2013, and with any public announcements made by Continental Coal Limited during the reporting period in accordance with the disclosure requirements of the Corporations Act 2001. The accounting policies have been consistently applied, unless otherwise stated. The preliminary report has been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business Note 2: Revenue and other income Consolidated 2014 2013 $'000 $'000 Revenue from continuing operations * Export coal sales 38,735 35,508 * Eskom coal sales 26,673 25,941 * Other coal sales 3,307 781 Total revenue from continuing operations 68,715 62,230 Other income * Foreign exchange gain 64 200 * Recovery of costs 27 2,196 * Interest received 676 502 * Net gain on fair values of derivative 147 777 financial instruments (note 13e) * Realised gains on commodity hedges 1,018 336 * Gain on debt settlement - 119 * Miscellaneous income 30 - Total other income 1,962 4,130 Note 3: Expenses (a) Loss before income tax includes the following specific expenses: Cost of sales * Mining 26,836 35,221 * Export costs 8,541 6,405 * Processing 4,773 5,265 * Materials handling 4,395 3,813 * Indirect costs 3,727 3,324 * Administration costs 3,024 2,641 * Stock on hand movement 3,571 - * Mining royalties 873 1,153 * Depreciation & amortisation 7,022 4,190 * Bought in coal 2,974 - Total cost of sales 65,736 59,371 Finance costs - Interest and borrowing costs 8,436 4,546 - Share based payments 100 - - Royalty expense 745 3,639 - Convertible note interest accretion 870 2,047 - EDF interest 13,451 623 - Other borrowing costs 3,613 3,033 Total finance costs 27,215 13,888 Impairment - Impairment of exploration expenditure (ii) 2,208 26,661 - Impairment of property, plant, and equipment - 1,465 (iii) Total impairment 2,208 28,126 Administration & Other Expenses - Employee related costs 2,994 3,769 - Key management personnel 688 1,543 - Pre feasibility costs in relation to other 214 62 projects - Consultants 942 2,083 - Share based payments 100 429 - Loss on debt settlement - 626 - Legal fees 671 582 - Occupancy 183 276 - Foreign exchange loss 1,932 1,122 - Depreciation & amortisation 349 216 i. The impairment charge of $2,208,000 recognised in the year ended 30 June 2014 relates to the carrying values of Vaalbank. The impairment charge of $26,661,000 recognised in the year ended 30 June 2013 relates to the carrying values of Project X, Vlakplaats, and Wesselton 2. Note 4: Loss per Share (EPS) Consolidated 2014 2013 $'000 $'000 (a) Basic loss per share From continuing operations attributable to (0.004) (6.56) owners of Continental Coal Limited From discontinued operation attributable to - (0.22) owners of Continental Coal Limited (0.004) (6.78) (b) Reconciliation of loss used in calculating loss per share Loss for the year from continuing operations (24,818) (34,573) attributable to owners of Continental Coal Limited From discontinued operation attributable to - (1,147) owners of Continental Coal Limited Loss used to calculate basic EPS (24,818) (35,720) Loss used in the calculation of dilutive EPS (24,818) (35,720) No. No. (c) Weighted average number of shares used as the denominator Weighted average number of ordinary shares 697,009,056 526,964,473 outstanding during the year used in calculating basic EPS Weighted average number of ordinary shares 697,009,056 526,964,473 outstanding during the year used in calculating dilutive EPS (d) Diluted earnings per share The Group's potential ordinary shares were not considered dilutive, and as a result, diluted EPS is the same as basic EPS. (e) Potential ordinary shares that could dilute EPS in the future Weighted average number of ordinary shares 697,009,056 526,964,473 (basic) Effect of share options on issue 126,130,027 162,130,027 Effect of conversion of debt to equity shares 36,000,000 - issued post year end Weighted average number of ordinary shares 859,139,083 689,094,500 (diluted) at 30 June Note 5: Cash and Cash Equivalents Consolidated 2014 2013 $'000 $'000 Cash at bank and in hand 2,989 4,496 2,989 4,496 Reconciliation of cash Cash at the end of the financial year as shown in the Consolidated Statement of Cash Flows is reconciled to items in the Consolidated Statement of Financial Position as follows: Cash and cash equivalents 2,989 4,496 Bank overdrafts - (983) 2,989 3,513 Note 6: Trade and Other Receivables Consolidated 2014 2013 $'000 $'000 CURRENT Trade receivables (a) 2,547 4,588 Other receivables (b) 1,304 1,012 Prepayments 830 151 Restricted cash (c) - 1,993 Total current receivables 4,681 7,744 NON-CURRENT Other receivables (d) 2,473 2,981 Total non-current receivables 2,473 2,981 2014 a. The Group's trade receivables are generally settled within 30 days. No interest is charged on outstanding balances. b. The majority of other receivables relates to VAT recoverable by the South African subsidiary and deposits. 2013 c. The majority of the restricted cash balance relates to the Penumbra equity standby facility of ZAR 17,500,000 ($1,930,000) funded by the Group. d. As part of the transaction to secure SIOC as the Group's Black Economic Empowerment (BEE) partner during the 2012 year, the Group transferred ZAR 75,000,000 (approximately $9,180,000) of its intercompany loan balance to the new BEE partner. The effect of this transfer was to increase the Group's external receivables and borrowings by the same amount. The receivable balance at year end is inclusive of principal and accrued interest at 3% per annum. It is denominated in South African Rand, and its fair value has been determined using a 16.5% discount rate and a repayment date of 30 June 2022 (2012: 16.6% discount rate and repayment date of 30 June 2017). An increase in the discount of $838,000 (2012: unwinding of discount of $162,000) has been recognised within transactions with non-controlling interests within equity and not in the Consolidated Income Statement. Note 7: Inventories Consolidated 2014 2013 $'000 $'000 CURRENT Coal stockpiles 1,167 4,862 Total coal stockpiles 1,167 4,862 Note 8: Other Assets NON-CURRENT Mining rehabilitation fund 2,472 1,658 2,472 1,658 As approved by the Department of Mineral Resources in South Africa, the Group makes monthly contributions to a Liberty investment product to fund future environmental rehabilitation work at the Group's Vlakvarkfontein and Penumbra Mines. The Liberty investment products consist primarily of money market accounts. These investments are not available for general purposes of the Group and are classified as restricted funds. All income earned on these funds is re-invested Note 9: Controlled Entities Controlled Entities Consolidated Country of Percentage Owned (%)* Incorporation 30 June 30 June 2014 2013 Subsidiaries of Continental Coal Limited ("CCC"): Continental Coal Ltd ("CCL SA") South Africa 74 74 Subsidiaries of Continental Coal Ltd Tsimpilo Trading 45 (Pty) Limited South Africa 100 100 Ayoba Taboo Trading 137 (Pty) Ltd South Africa 100 100 Idada Trading 310 (Pty) Ltd South Africa 70 70 Kebragen (Pty) Ltd South Africa 75 75 City Square Trading 437 (Pty) Ltd South Africa 100 100 Ntshovelo Mining Resources (Pty) Ltd South Africa 50 50 (i) Ultimatum Challenge Trading (Pty) Ltd South Africa 50 50 (ii) Mashala Resources (Pty) Ltd South Africa 100 100 Subsidiaries of Mashala Resources (Pty) Ltd Namib Drilling (Pty) Ltd South Africa 100 100 Wessleton Opencast (Pty) Ltd South Africa 100 100 BW Mining (Pty) Ltd South Africa 100 100 Copper Sunset Trading 148 (Pty) Ltd South Africa 100 100 Mandla Coal Resources (Pty) Ltd South Africa 100 100 Penumbra Coal Mining (Pty) Ltd South Africa 100 100 Mashala Hendrina Coal Pty Ltd (Pty) South Africa 100 100 Ltd) Weldon Investments (Pty) Ltd Botswana 100 100 * Percentage of voting power is in proportion to ownership Ntshovelo - 60% economic interest even though 50% equity interest. Ultimatum Challenge Trading - 63% economic interest even though 50% equity interest. Note 10: Exploration Expenditure Consolidated 2014 2013 $'000 $'000 NON-CURRENT Exploration expenditure capitalised - Exploration and evaluation phases - direct 40,893 45,957 - Exploration and evaluation phases - indirect 6,524 8,406 Total exploration expenditure 47,417 54,363 Mineral rights held by South African subsidiary Project name Prospecting Current holder of Holder of right once Date or mining mining or transaction is Granted right prospecting right completed reference Vlakvarkfontein MP 300 MR Ntshovelo Mining Ntshovelo Mining 2 February Resources (Pty) Ltd Resources (Pty) Ltd 2010 Vaalbank MP 1689 PR Misty Sea Trading Kebragen (Pty) Ltd 16 April 262 (Pty) Ltd 2008 Project X MP 1640 PR Misty Sea Trading Idada Trading 310 16 April 262 (Pty) Ltd (Pty) Ltd 2008 Vlakplaats MP 1520 PR Ultimatum Challenge Ultimatum Challenge 15 July Trading (Pty) Ltd Trading (Pty) Ltd 2008 Wolvenfontein Ultimatum Challenge Ultimatum Challenge 15 July Trading (Pty) Ltd Trading (Pty) Ltd 2008 Ferreira MP 345 MR Mashala Resources Mashala Resources 19 May 2010 (Pty) Ltd (Pty) Ltd Knapdaar MP 1494 PR Mashala Resources Mashala Resources 5 February (Pty) Ltd (Pty) Ltd 2008 Leiden MP 401 PR Mashala Resources Mashala Resources 17 October (Pty) Ltd (Pty) Ltd 2006 Mooifontein MP 713 PR Mashala Resources Mashala Resources 17 October Ptn 13 & 16 (Pty) Ltd (Pty) Ltd 2009 Wesselton II MP 231 MR Mashala Resources Mashala Resources 19 February (Pty) Ltd (Pty) Ltd 2009 Penumbra MP 247 MR Penumbra Coal Mining Penumbra Coal Mining 19 May 2010 (Pty) Ltd (Pty) Ltd De Wittekrans MP 97 PR Mashala Hendrina Mashala Hendrina 26 April Coal (Pty) Ltd Coal (Pty) Ltd 2006 MP 365 MR Botswana Weldon Investments Weldon Investments 1 April (Pty) Ltd (Pty) Ltd 2009 Note 11: Development Expenditure Consolidated 2014 2013 $'000 $'000 NON-CURRENT - Development expenditure at cost 85,932 89,903 - Accumulated depreciation (20,827) (13,559) Total development expenditure 65,105 76,344 The Development expenditure relates mainly to the mining infrastructure assets and the environmental assets for closure costs in relation to the Penumbra, Vlakvarkfontein, and Ferreira mines. Recoverability of the carrying amount of development assets is dependent on the successful development and commercial exploration or sale of the respective mining permits. Note 12: Property, Plant & Equipment Consolidated 2014 2013 $'000 $'000 PLANT AND EQUIPMENT Plant and equipment at cost 15,162 14,251 Accumulated depreciation (2,534) (2,318) Net book amount 12,628 11,933 Note 13: Deferred Tax Assets Deferred tax asset Tax losses available for set off against 4,081 2,045 future taxable income Other - 977 4,081 3,022 Note 14: Trade and Other Payables CURRENT Unsecured liabilities Trade payables 6,477 8,997 Sundry payables and accrued expenses 974 2,670 Accrued interest - 792 7,451 12,459 Note 15: Deferred Revenue In previous financial years the Group received USD $20m sales proceeds in advance of the delivery of coal in accordance with the coal prepayment facility with EDF Trading. The prepayment facility was secured over all assets of the Group's South African mining interests apart from Penumbra. During the year ended 30 June 2014 the EDF coal prepayment facility was restructured into a financial loan repayable through 24 monthly instalments commencing in July 2014. EDF has retained its security over the Group's South African mining interests. During the year ended 30 June 2014, approximately $2,5m (2013: $5m) of the deferred revenue balance was earned and recognised on the delivery of coal to EDF Trading prior to the restructure. Consolidated 2014 2013 $'000 $'000 Deferred revenue - current - 5,859 Deferred revenue - non-current - 5,467 Total deferred revenue - 11,326 Note 16: Borrowings Consolidated 2014 2013 $'000 $'000 CURRENT Bank overdraft - secured - 983 Convertible Note - unsecured (a) 1,114 932 Convertible Note - unsecured (b) 106 100 Convertible Note - unsecured (c) 5,309 4,510 Convertible Note - unsecured (d) 11,190 9,589 Convertible Note - unsecured (e) 3,800 2,000 Other loans - unsecured (f) 847 160 Related party working capital facility (g) - 257 Bank debt - secured (h) 26,000 - EDF loan (i) 15,536 - Bridge funding (k) 5,000 - 68,902 18,531 NON-CURRENT Bank debt - secured (h) - 25,034 Related party loans - unsecured (j) 22,698 26,856 Other facilities 167 251 22,865 52,141 a. The parent entity issued $1,000,000 of convertible notes on 5 November 2010. The notes are convertible at the option of the holder based upon the share price at the time of conversion. At inception, the conversion rate was $0.80. On 5 November 2011 the conversion rate was reset to the higher of $0.60 or the 15 day VWAP prior to the first anniversary date. On 5 November 2012 the conversion rate was reset to the higher of $0.55 or the 15 day VWAP prior to the first anniversary date. On 5 November 2013 the conversion rate was reset to the higher of $0.55 or the 15 day VWAP prior to first anniversary date. Interest is payable bi-annually at a rate of 10% per annum either in cash or in shares at a 5% discount to the 30 day VWAP at the option of the holder. All stated conversion rates have been adjusted for the 10:1 equity consolidation that occurred on 26 August 2011. The convertible notes matured on 5 November 2013. Refer to details of standstill arrangements below. b. The parent entity issued $100,000 of convertible notes on 26 November 2010. The notes are convertible at the option of the holder based upon the share price at the time of conversion. Interest is payable bi-annually at a rate of 10% per annum. The convertible notes matured on 26 November 2013. Refer to details of standstill arrangements below. c. The parent entity issued $4,900,000 of convertible notes on 26 November 2010. At inception, the conversion rate was $0.80. On 26 November 2011 the conversion rate was reset to the higher of $0.60 or the 15 day VWAP prior to the first anniversary date. On 26 November 2012 the conversion rate was reset to the higher of $0.55 or the 15 day VWAP prior to the first anniversary date. On 26 November 2013 the conversion rate was reset to the higher of $0.55 or the 15 day VWAP prior to first anniversary date. Interest is payable bi-annually at a rate of 10% per annum either in cash or in shares at a 5% discount to the 30 day VWAP at the option of the holder. The notes are convertible at the option of the holder based upon the share price at the time of conversion. Interest is payable annually at a rate of 10% per annum either in cash or in shares at a 5% discount to the 30 day VWAP at the option of the holder. All stated conversion rates have been adjusted for the 10:1 equity consolidation that occurred on 26 August 2011. The convertible notes matured on 26 November 2013. Refer to details of standstill arrangements below. Note 16: Borrowings (cont'd) d. The parent entity issued $10,000,000 of convertible notes on 25 February 2011. The notes are convertible at a fixed rate of $0.80 at the option of the holder. Interest is payable annually at a rate of 10% per annum either in cash or in shares at a 5% discount to the 30 day VWAP at the option of the holder. The maturity date of the convertible note is 25 February 2014. Refer to details of standstill arrangements below. e. The parent entity issued $3,800,000 of convertible notes in March 2013. The notes are convertible at the option of the holder based upon the share price at the time of conversion. The conversion rate is the lesser of 80% of the VWAP over the 10 days prior to conversion or 125% of the VWAP over the 10 days prior to note execution date. The convertible notes matured in September 2013 and are secured over all assets of the Australian parent company Continental Coal Ltd. Refer to details of standstill arrangements below. f. Loans are interest bearing at 10% per annum and were due to be repaid on or before 30 June 2013. Refer to details of standstill arrangements below. g. The working capital facility has been provided by Stonebridge Trading 36 Pty Ltd, a Group with a non-controlling interest in the Group. The facility is interest free with no set term of repayment. h. The Group's initial drawdown of the ABSA Capital project finance facility occurred 12 December 2012, providing the Group with funding to meet outstanding capital development costs and underground mine equipment costs in relation to Penumbra. During the year ended 30 June 2014 the facility of the ZAR 253,000,000 was fully drawn down. The facility is denominated in South African Rand and is repayable in escalating amounts during the second month of each quarter commencing August 2014 and concluding November 2019. The percentage of the facility to be repaid each calendar year is as follows: 2014 - 2%; 2015 - 11.28%; 2016 - 15.64%; 2017 - 21.32%; 2018 - 24.88%; and 2019 - 24.88%. The facility is secured over all assets of Penumbra Coal Mining (Pty) Ltd ("Penumbra"), including project bank accounts, trade and other debtors, property and equipment, contractual rights to licences/permits, and Witbank farms. The facility is guaranteed by Continental Coal Ltd ("CCC"), the Group's South African subsidiary Continental Coal Ltd ("CCL"), and Mashala Resources (Pty) Ltd. Additionally, Mashala has provided its shareholding in Penumbra and its inter-company loan receivable from Penumbra as security for the facility. Half of the drawdown bears interest at JIBAR at drawdown date; the remaining half is fixed with interest rate swaps. The Group received notice from ABSA that a default event had occurred in March 2014. The directors are working with ABSA to rectify the default as part of the recapitalisation process. i. During the year ended 30 June 2014, the EDF coal prepayment facility was restructured into a financial loan repayable through 24 monthly instalments commencing in July 2014. The loan bears interest at 10% per annum and interest will be capitalised until June 2014. Executing binding legal agreements for this restructure are dependent on the recapitalisation of the Group and EDF being provided a second ranking security over the Penumbra underground coal mine and its assets. EDF has retained its security over the Group's South African mining interests (apart from Penumbra). j. Related party borrowings of $22,698,000 relate to ZAR 140,000,000 received from SIOC-cdt, the Group's South African BEE partner during the 2012 financial year, and ZAR 75,000,000 transferred from the Group's inter-Group loan to SIOC-cdt during the 2012. The loan is repayable (pro-rata with the inter-company loan payable to the parent entity) as and when the Group has the necessary cash available having regard to the foreseeable cash flow requirements of the Group with reference to its budgeted expenditure requirements. In effect, the SIOC financing (26%) can not be paid until pro rata distributions are also repaid to the parent entity (74%). Note 16: Borrowings (cont'd) k. On 14 February 2014, the Group executed a binding term sheet with UK corporate advisory firm Empire Equity Limited ("Empire Equity") to provide $5 million bridge funding and undertake a broader recapitalisation and restructure of the Group and its financial arrangements. The Group received the $5 million bridge funding from Empire Equity and made key payments to current creditors. Empire Equity and/or its nominees (the "Investors") have invested in 7.5 million unsecured convertible promissory notes ("Notes") with a face value of A$1.00 at a discounted issue price of A$0.6667 per Note and with a maturity date of 4 months redeemable upon successful completion of the Groups recapitalization. The Investors will receive a 6% fee on the Investment Amount as well as 70 million options, subject to shareholder approval, for providing the $5 million. Refer to details of standstill arrangements below. Standstill arrangements On 10 February 2014 the Company negotiated a 90 day standstill period, subsequently extended to 15 October 2014, with these parties and certain trade and other creditors of the Company. The Company must meet the specified recapitalisation milestones to ensure the standstill arrangements are in place during the standstill term. Note 17: Other Financial Liabilities During a previous financial year, the Group recorded a royalty liability in relation to a USD $1 per tonne royalty payable on all coal produced by the Group's South African mining operations, capped at 15,000,000 tonnes. The royalty is payable based on coal produced attributable to the parent company, therefore the royalty is only payable on 74% of total coal produced based on the parent company's shareholding in Continental Coal Ltd South Africa. The royalty arises from a financing arrangement entered into in a prior financial year. Accordingly, the expense in relation to the royalty of $4,419,458 (2013: $3,639,000) is considered to be a financing cost and is included within financing expenses in the Consolidated Income Statement. Consolidated 2014 2013 $'000 $'000 Current Royalty liability 4,419 3,633 4,419 3,633 Non-current Royalty liability 6,633 6,984 6,633 6,984 Note 18: Deferred Tax Liability Consolidated 2014 2013 $'000 $'000 Non-current Deferred tax arising on business 19,511 23,009 combinations 19,511 23,009 The deferred tax liability arises in relation to the difference between the carrying amount of exploration and development expenditure for accounting purposes and the cost base of the assets for tax purpose in accordance with the requirements of Australian Accounting Standard AASB 112 Income Taxes. The Group does not have a tax payable in relation to the deferred tax liability at 30 June 2014 or 30 June 2013 and as anticipated the deferred tax liability has reduced as the development expenditure is amortised. Note 19: Provision for Rehabilitation The Group's provision for rehabilitation relates to environmental liability for Vlakvarkfontein, Ferreira, and Penumbra. South African mining companies are required by law to undertake rehabilitation work as part of their ongoing operations. The expected timing of the cash outflows in respect of the provision is on the closure of the mining operations. Management has assessed that no environmental liability exists for the other projects as only exploration activities have been performed and rehabilitation has taken place as damages were incurred Consolidated 2014 2013 $'000 $'000 Current Mining rehabilitation fund 3,173 3,759 3,173 3,759 Non-current Mining rehabilitation fund 8,787 9,594 8,787 9,594 Note 20: Issued capital Consolidated 2014 2013 $'000 $'000 781,692,712 (2013: 684,104,446) fully paid 246,533 236,032 ordinary shares 246,533 236,032 a. Movement 2014 No. $'000 Balance at 1 July 2013 684,104,446 236,032 16/10/13 - Convertible note interest settled in 5,000,000 155 shares 28/11/13 - To director in accordance with 1,000,000 20 employment contract 06/12/13 - Convertible note interest and extension 15,588,266 326 fee 30/06/14 - Collateral shares in relation to 76,000,000 1,520 bridging loan Balance at 30 June 2013 781,692,712 246,533 b. Movement 2013 No. $'000 Balance at 1 July 2012 430,742,398 220,015 02/07/12 - Conversion of debt to equity 6,038,647 398 09/07/12 - Conversion of debt to equity 9,113,001 963 03/09/12 - Conversion of debt to equity 10,000,000 309 20/09/12 - Conversion of debt to equity 8,370,540 335 05/10/12 - Conversion of debt to equity 7,259,390 360 18/10/12 - To convertible note holder as upfront 1,537,796 60 coupon payment in relation to new convertible note provided to the Group 02/11/12 - Conversion of debt to equity 6,830,602 335 02/11/12 - To convertible note holder as upfront 409,837 20 coupon payment in relation to new convertible note provided to the Group 22/11/12 - Conversion of debt to equity 9,213,762 335 22/11/12 - To convertible note holder as upfront 552,826 20 coupon payment in relation to new convertible note provided to the Group 30/11/12 - To consultants as consideration for 1,000,000 45 corporate advisory services provided to the Group 06/12/12 - To consultants as consideration for 273,771 22 corporate advisory services provided to the Group 06/12/12 - To lender as consideration for new 2,000,000 88 borrowings facility provided to the Group 06/12/12 - To the investor as consideration for 6,741,573 297 finance facility provided to the Group 07/12/12 - Conversion of debt to equity 8,581,237 335 07/12/12 - To consultants as consideration for 514,875 20 capital raising services provided to the Group 07/12/12 - To consultants as consideration for 1,000,000 43 corporate advisory services provided to the Group 18/12/12 - To convertible note holder as upfront 939,346 35 coupon payment in relation to new convertible note provided to the Group 10/01/13 - To convertible note holder as 939,346 35 consideration for convertible note facility provided to the Group 10/01/13 - Conversion of debt to equity 8,575,006 557 24/01/13 - Placement 7,500,000 440 Note 20: Issued capital (cont'd) b. Movement 2013 No. $'000 22/02/13 - Conversion of debt to equity 10,000,000 570 01/03/13 - Conversion of debt to equity 5,000,000 250 06/03/13 - Placement 10,000,000 486 15/03/13 - Royalty settlement 5,603,666 288 21/03/13 - Conversion of debt to equity 5,681,818 250 25/03/13 - To consultants as consideration for 2,000,000 130 corporate advisory services provided to the Group 09/04/13 - Placement 5,000,000 233 15/04/13 - Royalty settlement 6,199,228 265 29/04/13 - Conversion of outstanding directors' 5,485,781 548 fees to equity 01/05/13 - To director in accordance with 1,000,000 45 employment contract 08/05/13 - Placement 100,000,000 8,000 Share issue costs including valuation of - (100) derivatives Balance at 30 June 2013 684,104,446 236,032 c. Ordinary shares Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Group in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting of the Group, in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote. d. Options Information relating to share options outstanding at the end of the financial year is as follows: Grant Date Date of Expiry Exercise Price Number of Options 24/06/2013 30/06/2015 $0.50 65,679,1341 16/05/2012 15/05/2015 $0.2216 12,500,000 15/03/2013 15/05/2016 $0.06 15,000,000 16/05/2012 16/07/2016 $0.20 8,000,000 18/11/2011 23/08/2016 $0.368 13,950,893 06/12/2012 06/12/2017 $0.057 6,000,000 18/12/2012 18/12/2017 $0.05382 5,000,000 126,130,027 1 Listed Options Note 21: Segment Reporting a. Description of segments Management has determined that the operating segments are based on the reports reviewed by the Board of Directors that are used to make strategic decisions. The Board of Directors are as disclosed in the Directors' Report. The Board of Directors considers the business from both a commodity type and geographical perspective and has identified three reportable segments. b. Segment information provided to the Board of Directors The segment information provided to the Board of Directors for the reportable segments is as follows: 2014 Coal SA Coal Corporate Consolidated Botswana Costs $'000 $'000 $'000 $'000 Total segment revenue and 70,204 - 473 70,677 other income Segment gross profit 2,979 - - 2,979 Adjusted EBITDA 3,822 - (3,812) 9,904 Depreciation 7,371 - - 7,372 Impairment 2,208 - - 2,208 Total segment assets at 30 145,484 1,147 3,432 150,063 June 2014 Total segment liabilities 105,581 - 41,292 146,873 at 30 June 2014 2013 Coal SA Coal Corporate Consolidated Botswana Costs $'000 $'000 $'000 $'000 Total segment revenue and 65,010 - 1,350 66,360 other income Segment gross profit 2,859 - - 2,859 Adjusted EBITDA 2,320 - (5,844) (3,524) Depreciation 4,406 - - 4,406 Impairment 28,126 - - 28,126 Total segment assets at 30 163,828 1,200 4,775 169,803 June 2013 Total segment liabilities 106,448 - 36,627 143,075 at 30 June 2013 Accounting Policies Segment revenues and expenses are those directly attributable to the segments and include any joint revenue and expenses where a reasonable basis of allocation exists. Segment assets include all assets used by a segment and consist principally of cash, receivables, plant and equipment and exploration and development expenditure. While most such assets can be directly attributed to individual segments, the carrying amount of certain assets used jointly by two or more segments is allocated to the segments on a reasonable basis. Segment liabilities consist principally of payables, employee benefits, accrued expenses, provisions and borrowings. Segment assets and liabilities do not include deferred income taxes. Intersegment Transfers Segment revenues, expenses and results include transfers between segments. The prices charged on intersegment transactions are the same as those charged for similar goods to parties outside of the economic entity at an arms' length. These transfers are eliminated on consolidation. Compliance Statement: 1. This report is based on the financial statements to which one of the following applies: The financial statements have The financial statements have been audited. been supplied to review. The financial statements are The financial statements have X in the process of being not yet been audited or audited or subject to review. reviewed. 2. The entity has a formally constituted audit committee. ____________________________ PETER LANDAU Executive Director Date: 31 August 2014
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