Wrap Text
Half-year Financial Report 31 December 2013
The Waterberg Coal Company Limited
(formerly Range River Gold Limited)
(Incorporated in Australia)
(Registration number ABN 64 065 480 453)
ASX: WCC | JSE: WCC | ISIN: AU000000WCC9
(“WCC” or “the Company”)
ABN 64 065 480 453
Note to shareholders: this file excludes the BDO Auditors' report due to formatting requirements by the JSE Limited. The report is available in the pdf file published on WCC’s website at http://www.waterbergcoal.com.au/
Half-year Financial Report
31 December 2013
CONTENTS PAGE NO
Directors’ Report 2
Auditor’s Independence Declaration 5
Consolidated Statement of Profit or Loss and Other Comprehensive Income 6
Consolidated Statement of Financial Position 7
Consolidated Statement of Changes in Equity 8
Consolidated Statement of Cash Flows 9
Notes to the Consolidated Financial Statements 10
Directors’ Declaration 21
Independent Auditor’s Report 22
CORPORATE DIRECTORY
Directors Share Registry
Mr. Brian McMaster (Executive Chairman) Australia
Mr. Jonathan Hart (Executive Director) Automic Registry Services Pty Ltd
Mr. Stephen Miller (Executive Director) Level 1
Mr. Scott Funston (Executive Director) 7 Ventnor Ave
Mr. Daniel Crennan (Non-Executive Director) West Perth, WA 6005
Dr. Mathews Phosa (Non-Executive Director) Telephone: + 618 9324 2099
Facsimile: + 618 9321 2337
Company Secretary
Mr. Jonathan Hart South Africa
Computershare Investor Services Pty Ltd
Registered Office and Principal Place of 70 Marshall Street
Business Johannesburg 2001
Level 1
330 Churchill Avenue Auditors
Subiaco, WA 6008 BDO Audit (WA) Pty Ltd
Australia 38 Station Street
Telephone: + 618 9200 4243 Subiaco, WA 6008
Facsimile: + 618 9200 4469
Stock Exchange Listing
JSE Sponsor The Waterberg Coal Company Limited shares
The Standard Bank of South Africa Limited are listed on the Australian Securities
Exchange and the Johannesburg Stock
Exchange, the home branch being Melbourne
ASX and JSE code: WCC
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The Waterberg Coal Company Limited
DIRECTORS’ REPORT
The directors of The Waterberg Coal Company Limited (the “Group” or “Waterberg Coal”) submit the financial
report of the consolidated entity for the half-year ended 31 December 2013. In order to comply with the
provisions of the Corporations Act 2001, the directors report as follows:
Directors
The names of directors who held office during or since the end of the half-year and until the date of this report
are as below. Directors were in office for this entire period unless otherwise stated.
Mr Brian McMaster Executive Chairman
Mr Jonathan Hart Executive Director
Mr Stephen Miller Executive Director
Mr Scott Funston Executive Director
Mr Daniel Crennan Non-Executive Director
Dr Mathews Phosa Non-Executive Director (appointed 28 October 2013)
Results
The loss after tax for the half year ended 31 December 2013 was $21,943,804 (31 December 2012 profit of
$22,115,087).
Review of Operations
During the period, the Group, a party to the Waterberg Coal Project Joint Venture, continued to progress
matters relating to the proposed development of an opencast mining operation to produce 10 million tonnes
per annum of coal (product) to Eskom, the South African parastatal power utility.
The material matters attended to during the period include as follows:
Updated Resource Statement
An updated Independent Competent Persons Resource Statement was released to the market on 24 October
2013 reflecting the increased borehole database following the completion of the 2013 drilling programme on
the four farms covered by the Mining Right (Smitspan, Massenberg, Hooikraal and Minnasvlakte), and the two
farms held under Prospecting Rights (Vetleegte and Swanepelpan).
The resource statement for the Waterberg Coal Project now stands at 3.88 billion tonnes of coal with coal in
the measured category of 2.07 billion tonnes (Table 1). This represents a substantial increase in the coal
resource for the Waterberg Coal Project. Previously, SRK Consulting (December 2012) declared a Coal
Resource of 1.183 billion tonnes on the two farms Smitspan and Massenberg, of which 1.004 billion tonnes
was in the Measured category. The Resource Statement was prepared on behalf of the Waterberg Coal Joint
Venture Parties (WCJVP) by Gemecs (Pty) Limited in their capacity as Independent Competent Persons. For
more detailed information on the Independent Competent Persons Resource Statement please refer to the
ASX announcement dated 24 October 2013.
Table 1 – Coal Resource on all six Waterberg Coal Project Properties under both Prospecting Permit and
Mining Right
Coal
Resource 1 Ash Vol % CV (Mj/kg) TS %
Resource Classification IM % (ad)
% (ad) (ad) (ad) (ad)
(Mt)
Measured 2,070.3 57.9 2.2 17.6 10.51 0.96
Indicated 8,56.3 59.4 2.3 17.2 9.96 1.00
Inferred 956.7 58.9 2.2 17.5 10.26 1.03
Total Resources 3,883.3 58.5 2.2 17.5 10.33 0.99
Coal Resource 1 based on minimum thickness cut-off of 0.5m
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The Waterberg Coal Company Limited
Interaction with Lenders
WCJVP mandated The Standard Bank of South Africa Limited (SBSA), to arrange project finance for The
Waterberg Coal Project. Pursuant to this mandate, SBSA has now appointed Independent Technical
Consultants to review all technical matters on behalf of the project financiers.
Water Use License (IWULA)
The Environmental work for the IWULA submission was completed during the period.
Stakeholder engagement
Generally, throughout the period, regular and productive engagement by the Project technical team with
project strategic stakeholders was ongoing. These discussions included, inter-alia, Eskom, the Department of
Water Affairs, and Transnet Freight Rail for the timely delivery of services to the project.
South Australian Tenements
The Company continues to hold 3 exploration tenements in the Gawler Craton of South Australia which are
highly prospective for gold and copper-gold mineralisation. The Gawler Craton is host to large copper-gold
deposits such as Olympic Dam and Prominent Hill to the east, and gold deposits such as Challenger,
Tarcoola and Tunkillia in the west.
During the period the Company compiled and validated exploration data relating to the tenements and is
assessing the prospectivity of targets within the license holdings. The Company has designed work
programmes to test these targets however these work programmes have not been carried out to date. The
Company is considering its strategy with regards to these tenements.
Corporate Activities
On 24 September 2013, Waterberg Coal advised the market that it had entered into a loan agreement with
FSE whereby WCC would advance up to A$3 million to be used for FSE’s project finance obligations in
relation to The Waterberg Coal Project. The loan is unsecured and non-interest bearing.
On 30 September 2013, WCC completed its secondary listing on the Alternate Exchange (AltX) division of
JSE Limited (“JSE”). On 3 December 2013, Waterberg Coal transferred from the AltX of the JSE to the main
board, under the coal sector.
On 10 October 2013; the Group informed the market that its off-market takeover bid for all the ordinary shares
in FSE had closed. At the conclusion of the offer, WCC’s shareholding in FSE is 45.88%.
On 28 October 2013, Dr Mathews Phosa joined the WCC Board as a Non-Executive Director.
On 28 November 2013, the Company held its annual general meeting and all resolutions, the subject of the
notice were passed.
On 4 December 2013, The Standard Bank of South Africa Limited was appointed as JSE Sponsor.
On 18 December 2013, the Company using its placement capacity raised A$2 million for working capital
purposes.
Dividends
No dividend is recommended nor has one been declared or paid since the end of the financial period.
Subsequent Events
Letter of Intent
On 6 February 2014, Waterberg Coal announced that it had entered into a Letter of Intent with Ardbel, a joint
venture between ELB engineering services and the DRA group, which collectively are the pre-eminent
materials handling and engineering services provider to the mining sector in South Africa as its preferred
Engineering, Procurement and Construction contractor for the proposed development of the Waterberg Coal
Project.
Feasibility Study
Also on 6 February 2014, Waterberg Coal announced that the WCJVP completed a Feasibility Study (Study)
into the development of an opencast mining operation to produce 10 million tonnes of coal (Product) per
annum for Eskom for an initial term of 30 years. WCJVP confirmed that all material assumptions underpinning
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The Waterberg Coal Company Limited
the production target as stated in the competent person statement announcement continue to apply and have
not materially changed. However, Waterberg Coal in satisfaction of ASX Listing Rules 5.16 and 5.17 included
other assumptions relating to the relevant production target in this announcement.
Investec
As announced on 18 February 2014, Investec Emerging Companies Fund (Investec) were issued 6,200,000
and 7,440,000 free attaching unlisted options in Waterberg Coal (with an exercise price of ZAR 1.78 and an
expiry date of 31 December 2014) for an investment of ZAR 11,036,000 (approximately AUD $1,103,000).
There are no other significant events subsequent to the end of the period.
Auditor’s Independence Declaration
Section 307C of the Corporations Act 2001 requires our auditors, BDO, to provide the directors of the Group
with an Independence Declaration in relation to the review of the half-year financial report. This
Independence Declaration is set out on page 5 and forms part of this directors’ report for the half-year ended
31 December 2013.
This report is signed in accordance with a resolution of the Board of Directors made pursuant to s.306(3)(a) of
the Corporations Act 2001.
Stephen Miller
Executive Director
14 March 2014
Note: 1 Please note that this information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the
JORC Code 2013 on the basis that the information has not materially changed since it was last reported.
Note 2: Competent Person Statement
Gemecs (Pty) Limited was commissioned by the Waterberg Coal Project Joint Venture Partners, to undertake an Updated Independent Persons Geological
Report for the Sekoko Waterberg Coal Project.
The Coal Resources were estimated in accordance with the South African code for the Reporting of Exploration Results, Mineral Resources and Mineral
Reserves (“SAMREC Code”), Australasian Code for Reporting of Exploration Results. Mineral Resources and Ore Reserves (“the JORC Code”) and South
African National Standard (SANS 10320:2004) guidelines.
The information in this announcement that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr
Coenraad D van Niekerk, Pr.Sci.Nat (Reg. No 400066/98), M.Sc Hons (Geology), MDP, an employee of Gemecs (Pty) Limited, who is a Fellow of the
Geological Society of South Africa. Mr Niekerk is a mining geologist with 38 years’ experience in the mining industry, sufficient experience relevant to the
style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the
2004 Edition of the Joint Ore Reserves Committee (JORC) “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”.
Mr Niekerk consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
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5
The Waterberg Coal Company Limited
Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the half-year ended 31 December 2013
Note 2013 2012
Continuing operations $ $
Interest revenue 7,905 21,597
Administration expenses (315,870) (72,004)
Public company costs (268,536) (72,266)
Accounting & audit fees (52,904) (36,365)
Employee benefit expense - (3,655)
Consultants & Directors fees (1,191,229) (103,500)
Legal fees (557,519) (60,631)
Finance costs 2 (12,161,202) -
Share of loss of associate 7 (163,340) -
Share based payment expense 12 (7,045,631) -
Other expenses (195,478) (600)
Loss before income tax (21,943,804) (327,424)
Income tax expense - -
Net loss from continuing operations (21,943,804) (327,424)
Discontinued operations
Profit from discontinued operations after tax 13 - 22,442,511
Other comprehensive income
Items that may be reclassified to profit or loss:
Foreign currency translation 1,120,379 -
Other comprehensive income for the period, net of tax 1,120,379 -
Total comprehensive (loss) / profit for the period (20,823,425) 22,115,087
(Loss) / Profit for the period attributable to:
Owners of The Waterberg Coal Company Limited (21,278,627) 22,115,087
Non-controlling interests (665,177) -
(21,943,804) 22,115,087
Comprehensive (loss) / profit for the period
attributable to:
Owners of The Waterberg Coal Company Limited (20,551,675) 22,115,087
Non-controlling interests (271,750) -
(20,823,425) 22,115,087
Earnings/(loss) per share profit attributable to the
ordinary equity holders of the Group:
Basic (loss)/earnings per share (cents per share) (9.93) 0.06
Diluted (loss)/earnings per share (cents per share) (9.93) 0.06
The above Consolidated Statement of Profit or Loss and other Comprehensive Income should be read in conjunction with the
accompanying notes.
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The Waterberg Coal Company Limited
Consolidated Statement of Financial Position
as at 31 December 2013
cvc
31 Dec 30 June
Note 2013 2013
$ $
Current Assets
Cash and cash equivalents 3 7,346,366 8,439,558
Trade and other receivables 4 652,794 279,504
Total Current Assets 7,999,160 8,719,062
Non-Current Assets
Exploration and evaluation expenditure 25,300,144 25,291,518
Property, plant & equipment 5 4,345,235 -
Other receivables 4 2,414,855 500,000
Other financial assets - 7,880,000
Interest in joint operation 6 56,152,478 -
Investment in associate 7 21,786,660 21,950,000
Total Non-Current assets 109,999,372 55,621,518
Total Assets 117,998,532 64,340,580
Current Liabilities
Trade and other payables 8 5,773,201 1,328,646
Other liabilities 399,143 464,515
Financial liabilities at fair value 9 48,407,410 40,730,245
Borrowings 10 15,558,028 1,500,000
Total Current Liabilities 70,137,782 44,023,406
Non-Current Liabilities
Borrowings 10 18,572,155 2,764,393
Total Non-Current Liabilities 18,572,155 2,764,393
Total Liabilities 88,709,937 46,787,799
Net Assets 29,288,595 17,552,781
Equity
Contributed equity 11 46,126,645 32,139,838
Reserves 12,013,828 4,241,245
Accumulated losses (40,106,929) (18,828,302)
Capital and reserves attributable to owners of The
Waterberg Coal Company Limited 18,033,544 17,552,781
Non-controlling interest 11,255,051 -
Total Equity 29,288,595 17,552,781
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
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The Waterberg Coal Company Limited
Consolidated Statement of Changes in Equity
for the half-year ended 31 December 2013
Foreign
Share based Non-
currency Total
payment controlling
Contributed Accumulated translation Equity/(Net deficiency)
reserve interests
Equity (Losses) reserve
$ $ $ $ $ $
Balance at 1 July 2013 32,139,838 (18,828,302) 4,241,245 - - 17,552,781
Loss for the period - (21,278,627) - - (665,177) (21,943,804)
Other comprehensive loss
Foreign currency translation - - - 726,952 393,427 1,120,379
Total comprehensive loss for the period - (21,278,627) - 726,952 (271,750) (20,823,425)
Transactions with owners in their capacity as owners:
Shares issued, net of transaction costs 2,959,933 - - - - 2,959,933
Shares issued on acquisition 11,026,874 - - - - 11,026,874
Share based payments - - 7,045,631 - - 7,045,631
Non-controlling interest on acquisition of subsidiary - - - - 11,526,801 11,526,801
Balance at 31 December 2013 46,126,645 (40,106,929) 11,286,876 726,952 11,255,051 29,288,595
Balance at 1 July 2012 82,523,237 (108,240,479) 1,264,000 - - (24,453,242)
Net comprehensive income for the period - 22,115,087 - - - 22,115,087
Total comprehensive loss for the period - 22,115,087 - - - 22,115,087
Transactions with owners in their capacity as owners:
Capital reduction (82,523,237) 82,523,237 - - - -
Shares issued, net of transaction costs 3,429,207 - - - - 3,429,207
Balance at 31 December 2012 3,429,207 (3,602,155) 1,264,000 - - 1,091,052
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
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The Waterberg Coal Company Limited
Consolidated Statement of Cash Flows
for the half-year ended 31 December 2013
2013 2012
$ $
Cash flows from operating activities
Payments to suppliers and employees (2,223,505) (459,112)
Facility fees paid (645,900) -
Interest received 134,786 21,597
Net cash outflow from operating activities (2,734,619) (437,515)
Cash flows from investing activities
Cash acquired on acquisition of subsidiary 75,789 -
Expenditure on exploration (2,417,942) (6,184)
Settlement of DOCA - (2,277,577)
Net cash outflow from investing activities (2,342,153) (2,283,761)
Cash flows from financing activities
Loans advanced (356,224) (750,000)
Loans received 2,058,000 -
Proceeds from issue of shares 2,563,500 3,700,000
Payments for share issue costs (81,067) (270,793)
Proceeds from shares not yet issued/allotted - 300,000
Net inflow from financing activities 4,184,209 2,979,207
Net increase/(decrease) in cash & cash equivalents held (892,563) 257,931
Cash & cash equivalents at beginning of period 8,439,558 433,294
Net foreign exchange differences (200,629) -
Cash and cash equivalents at end of period 7,346,366 691,225
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
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The Waterberg Coal Company Limited
Notes to the Consolidated Financial Statements
for the half-year ended 31 December 2013
CORPORATE INFORMATION
The consolidated financial statements of The Waterberg Coal Company Limited (the “Group”) for the
half-year ended 31 December 2013 was authorised for issue in accordance with a resolution of the
directors on 14 March 2014.
The Waterberg Coal Company Limited is a company limited by shares incorporated in Australia whose
shares are publicly traded on the Australian Securities Exchange. The registered office of The
Waterberg Coal Company Limited is Level 1, 330 Churchill Ave, Subiaco, Western Australia 6008,
Australia.
The nature of the operations and principal activities of the Group are described in the Directors’
Report.
1. Statement of significant accounting policies
(a) Basis of preparation
These general purpose financial statements for the half-year reporting period ended 31 December
2013 have been prepared in accordance with Australian Accounting Standard 134 Interim Financial
Reporting and the Corporations Act 2001.
These half-year financial statements do not include all the notes of the type normally included in
annual financial statements and therefore cannot be expected to provide as full an understanding of
the financial performance, financial position and financing and investing activities of the consolidated
entity as the full financial statements. Accordingly, these half-year financial statements are to be read
in conjunction with the annual financial statements for the year ended 30 June 2013 and any public
announcements made by The Waterberg Coal Company Limited during the half-year reporting period
in accordance with the continuous disclosure requirements of the Corporations Act 2001.
The accounting policies adopted are consistent with those of the previous financial year and
corresponding interim reporting period, unless otherwise stated.
The half-year report has been prepared on an accruals basis and is based on historical costs.
The following standards for first time use annual reporting periods beginning on or after 1 July 2013
have been reviewed by the Group in the half-year ended 31 December 2013:
- AASB 10 Consolidated Financial Statements, AASB 11 Joint Arrangements, AASB 12
Disclosure of Interests in Other Entities and AASB 127 Separate Financial Statements
- AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting
Standards arising from AASB13
- AASB 119 Employee Benefits (September 2011) and AASB 2011-10 Amendments to
Australian Accounting Standards arising from AASB 119 (September 2011)
It has been determined by the Group that there is no impact, material or otherwise, of the above
standards on its business and, therefore, no change is necessary to the Group accounting policies.
The Group has also reviewed all new Standards and Interpretations that have been issued but are not
yet effective for the half-year ended 31 December 2013. As a result of this review the Directors have
determined that there is no impact, material or otherwise, of the new and revised Standards and
Interpretations on its business and, therefore, no change necessary to the Group’s accounting
policies.
Asset Acquisition
On 23 September 2013, the off-market takeover bid for all the ordinary shares in Firestone Energy
Limited, a company listed on the ASX, closed. At the conclusion of the offer, WCC’s shareholding in
Firestone is 45.88%. The acquisition was essentially to acquire Firestone Energy Limited’s share of
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The Waterberg Coal Company Limited
the coal project in the Waterberg locality in South Africa, with no infrastructure or personnel. The
consideration payable 1.25 Waterberg shares for every two shares held in Firestone Energy Limited.
As the acquisition of Firestone Energy Limited is not deemed a business acquisition, the transaction
must be accounted for as a share based payment for the net assets acquired.
When an asset acquisition does not constitute a business combination, the assets and liabilities are
assigned a carrying amount based on their relative fair values in an asset purchase transaction and no
deferred tax will arise in relation to the acquired assets and assumed liabilities as the initial recognition
exemption for deferred tax under AASB 112 applies. No goodwill will arise on the acquisition and
transaction costs of the acquisition will be included in the capitalised cost of the asset.
Going Concern
This report has been prepared on the going concern basis, which contemplates the continuity of
normal business activity and the realisation of assets and settlement of liabilities in the normal course
of business.
The Group incurred a net loss after tax for the half-year ended 31 December 2013 of $21,943,804 and
experienced net cash outflows from operating activities of $2,734,619 and net cash outflows for
investing activities of $2,342,153. At 31 December 2013, the Group had a net current liability position
of $62,138,622. The cash and cash equivalents balance at the date of issuing this report is
$6,838,615. The Directors recognise the need to raise additional funds via equity raisings for future
exploration activities.
The Company is continuing to discuss with investment groups for the purpose of completing
further capital raisings to continue the Company's exploration program and development activities on
the Waterberg Coal Project. Discussions with various groups have been ongoing with the result that
the Company is near completion of fundraising approximately $2.4 million subsequent to the reporting
date. The Company is in continued discussions, some of which are reaching their final stages, with
investment groups, especially in South Africa, which could lead to further equity raises in the near
future.
In considering the above, the Directors have reviewed the Group’s financial position and are of the
opinion that the use of the going concern basis of accounting is appropriate as they believe the Group
will be successful in securing additional funds through an equity issue.
Should the Group not obtain funds through an equity issue, there is significant uncertainty whether the
Group will continue as a going concern and therefore whether it will realise its assets and extinguish
its liabilities in the normal course of business and at the amounts stated in the financial report.
The financial report does not contain any adjustments relating to the recoverability and classification of
recorded assets or to the amounts or classification of recorded assets or liabilities that might be
necessary should the Group not be able to continue as a going concern.
(b) Comparatives
Where required by Australian Accounting Standards, comparatives have been adjusted to conform to
changes in presentation for the current financial period.
(c) Significant Estimates
Control
The directors have concluded that the group controls Firestone Energy Limited, even though it holds
less than half of the voting rights of this subsidiary. This is because the group is the largest
shareholder with a 45.88% equity interest and two of three seats on the board of the company.
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The Waterberg Coal Company Limited
2. Finance Costs
31 Dec 31 Dec
2013 2012
$ $
Financial liabilities at fair value 1,887,535 -
Interest expense 2,567,060 -
Net loss on financial assets and liabilities at fair value through
profit and loss 7,706,607 -
12,161,202 -
3. Cash and cash equivalents
31 Dec 30 June
2013 2013
$ $
Cash at bank and in hand 473,486 1,475,043
1
Restricted cash 6,872,880 6,964,515
7,346,366 8,439,558
1
Included in the cash balance is $6,872,880 (30 June 2013: $6,964,515) held as a security deposit on
the $35 million convertible note facility (Note 9). The deposit is subject to a put/call option of $6.5m
and will be released to the Group on conversion or repayment of the facility after 18 months from the
date of the draw down (10 April 2013). The Group is not entitled to interest revenue until 18 months
from the date of the draw down.
4. Trade & Other Receivables
31 Dec 30 June
2013 2013
$ $
Current
GST receivable 133,253 112,837
Interest receivable 26,264 166,667
Prepayments 353,277 -
Other receivables 140,000 -
652,794 279,504
Receivables are non-interest bearing and are generally on 30 day terms. A provision is recognised
when there is objective evidence that the individual trade receivable is impaired. The receivables
credit risk has been reviewed and assessed as immaterial as the counterparties are recognised and
reputable companies. None of the current receivable is impaired nor past due.
Non-current
Advances to Sekoko Coal Pty Ltd 893,816 500,000
Environmental rehabilitation bond 1,521,039 -
2,414,855 500,000
The Group agreed to provide Sekoko Coal Pty Ltd with an unsecured loan of $893,816 for expenditure
on the Waterberg Coal Project. The loan is non-interest bearing and will be repayable once the project
generates revenue.
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The Waterberg Coal Company Limited
5. Property, plant & equipment
31 Dec 30 June
2013 2013
$ $
Opening balance at beginning of the period - -
Additional property, plant & equipment expenditure - -
1
Property, plant & equipment acquired on acquisition of subsidiary 4,345,235 -
Depreciation - -
4,345,235 -
1
On 23 September 2013, the off-market takeover bid for all the ordinary shares in Firestone Energy
Limited (Firestone) closed (Note 15). At the conclusion of the offer, WCC’s shareholding in Firestone
is 45.88%.
6. Interest in joint venture
31 Dec 30 June
2013 2013
$ $
Opening balance at beginning of the period - -
Additional costs - -
Interest in joint venture acquired on acquisition of subsidiary 1
(Exploration and Evaluation Expenditure) 56,152,478 -
56,152,478 -
1
On 23 September 2013, the off-market takeover bid for all the ordinary shares in Firestone Energy
Limited (Firestone) closed (Note 15). At the conclusion of the offer, WCC’s shareholding in Firestone
is 45.88%. The Group is a participant with Sekoko Coal (Pty) Ltd in a coal project in the Waterberg
locality in South Africa.
7. Investment in associate
31 Dec 30 June
2013 2013
$ $
Investment in Sekoko Coal Pty Ltd 21,950,000 21,950,000
Share of loss of associate (163,340) -
21,786,660 21,950,000
In June 2013 the Group acquired a 25% interest in Sekoko Coal Pty Ltd, resulting in a 10% indirect
interest in the Waterberg Coal Project.
8. Trade & other payables
31 Dec 30 June
2013 2013
$ $
Trade creditors 2,616,111 1,307,646
Other creditors and accruals 3,157,090 21,000
5,773,201 1,328,646
Trade creditors, other creditors and goods and services tax are non-interest bearing and generally
payable on 30 day terms. Due to the short term nature of these payable, their carrying value is
assumed to approximate their fair value.
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The Waterberg Coal Company Limited
9. Financial liabilities
31 Dec 30 June
2013 2013
$ $
Convertible note facility at fair value 48,407,410 40,730,245
48,407,410 40,730,245
In March 2013, the Group entered into a convertible facility agreement with the Standard Bank of
South Africa (‘SBSA’) to obtain a $35,000,000 loan facility. The facility is due for repayment in 18
months from the utilisation date (10 April 2013) or the lenders can elect to convert the loan to shares in
the Group at any time within the 18 months or be repaid in cash under certain circumstances, for
example early repayment of the facility by the Company. The notes incur interest at 12% + LIBOR.
If SBSA elects to convert the facility into shares the formula is 2.1 times the facility amount at a
discount equivalent to 20% of the 30 day VWAP before the election to convert. As SBSA can elect to
convert the facility at any time within 18 months, under Australian Accounting Standards the total
amount repayable must recognised as a current liability.
10. Borrowings
31 Dec 30 June
2013 2013
$ $
Current
Unsecured loans carried at amortised cost
1
Loan payable - Sekoko Coal Pty Ltd 7,407,059 -
2
Loan payable – Celtic Capital Pty Ltd 3,532,500 1,500,000
3
Loan payable – Jason & Lisa Peterson 750,001 -
4
Convertible note – David Stephens 1,104,075 -
5
Other loans payable 2,764,393 -
15,558,028 1,500,000
1
Interest is charged at the South African prime rate of 8.5% (30 June 2013: 8.5%). The loan is
unsecured. The Group holds a 25% interest in Sekoko Coal Pty Ltd (Note 7).
2
The loan is repayable within twelve months from 31 December 2013 and interest is charged at a
fixed rate of 45%.
3
The loan is repayable within twelve months from 31 December 2013 and interest is charged at a
fixed rate of 50%.
4
The facility is due for repayment in 12 months from the utilisation date (6 December 2013) or the
lender can elect to convert the loan to shares in the Group at any time within the 12 months or be
repaid in cash under certain circumstances, for example early repayment of the facility by the Group.
The notes incur interest at 12% + LIBOR.
5
The loans payable are non-interest bearing and are repayable within twelve months from 31
December 2013. Included in the amount is $174,973 (30 June 2013: $174,973) owing to Resource
Venture Capital Partners, a company of which Stephen Miller is a related party.
Non-current
Loans carried at amortised cost
Loans payable - 2,764,393
1
Convertible note 18,572,155 -
18,572,155 2,764,393
1
Balance arises as a result of the Firestone Energy Ltd acquisition (Note 15). The total face value of
the notes is $22.145 million and the maturity date 31 January 2017. They bear interest at a fixed rate
of 8% per annum. The notes can be converted at any time before the maturity date at a conversion
price of $0.025. They are secured over the assets of the Group.
14
The Waterberg Coal Company Limited
11. Contributed Equity
31 Dec 30 June
2013 2013
$ $
Issued and paid up capital
Ordinary Shares fully paid 46,126,645 32,139,838
Movement in ordinary shares on issue
No of shares $
At 1 July 2013 177,005,123 32,139,838
Shares issued via private placement 8,192,978 1,540,500
Shares issued via public offering 7,502,500 1,500,500
Shares issued on acquisition of subsidiary 71,792,189 11,026,874
Costs of issue - (81,067)
At 31 December 2013 264,492,790 46,126,645
At 1 July 2012 2,178,187,039 82,523,237
Shares issued via private placement 140,000,000 700,000
Shares issued via public offering 150,000,000 3,000,000
Consolidation of capital at 1 for 60 (2,141,885,817) (82,523,237)
Costs of issue - (270,793)
At 31 December 2012 326,301,222 3,429,207
12. Share Based Payments
Share based payment transactions recognised as interest in joint venture on the statement of financial
position, operating expenses on the statement of comprehensive income or capital raising expenses in
equity were as follows:
31 Dec 31 Dec
2013 2012
$ $
Operating expenses
Employee share based payments (i) 4,703,024 -
Share based payments to suppliers (ii) 2,342,607 -
7,045,631 -
Asset acquisition
Share based payments to vendors (iii) 11,026,874 -
Capital raising expenses
Share based payments to suppliers (iv) 56,000 -
15
The Waterberg Coal Company Limited
Operating expenses
(i) The table below summarises options granted to Directors during the half-year period:
Balance at Granted Exercised Forfeited Balance at Exercisable
Grant Expiry Exercise start of the during the during the during the end of the at end of
Director Date date price period period period period period the period Value ($)
Number Number Number Number Number Number
B McMaster 28/11/13 31/12/16 $0.30 - 20,000,000 - - 20,000,000 - 1,959,593
S Miller 28/11/13 31/12/16 $0.30 - 20,000,000 - - 20,000,000 - 1,959,593
D Crennan 28/11/13 31/12/16 $0.30 - 3,000,000 - - 3,000,000 - 293,939
J Hart 28/11/13 31/12/16 $0.30 - 3,000,000 - - 3,000,000 - 293,939
S Funston 28/11/13 31/12/16 $0.30 - 2,000,000 - - 2,000,000 - 195,960
48,000,000 48,000,000 4,703,024
Weighted average exercise price $0.30 $0.30
The weighted average of the fair value of the options issued at the grant date is $0.098.
(ii) The table below summarises options granted to suppliers during the half-year period:
Balance at Granted Exercised Forfeited Balance at Exercisable at
Expiry Exercise
Grant Date start of the during the during the during the end of the end of the Value ($)
date price
period period period period period period
Number Number Number Number Number Number
11/12/13 31/12/16 $0.30 - 27,000,000 - - 27,000,000 - 2,342,607
Weighted average exercise price $0.30 $0.30
The weighted average of the fair value of the options issued at the grant date is $0.087.
(iii) Acquisition of asset
During the financial year 1,148,632,708 shares were issued to shareholders of Firestone Energy
Limited (Note 15). The fair value of the shares of $11,026,874 was determined by reference to the
market value Firestone shares held on the Australian Securities Exchange on the date the takeover
was completed.
(iv) Capital raising expenses
During the period, the Group issued 280,000 shares to Celtic Capital Pty Ltd for capital raising
services performed. The fair value of the shares of $56,000 was determined by reference to the
market value on the Australian Securities Exchange at the date of the transaction.
13. Profit from Discontinued Operations
31 Dec 31 Dec
2013 2012
$ $
Settlement of DOCA debts - 22,442,511
- 22,442,511
On 24 July 2012, the recapitalisation of the Group and the effectuation of the DOCA were completed
and control of the Group passed to the Directors. The Group’s secured creditors released and
discharged any security granted to them by the Group and all conditions precedent under the DOCA
were satisfied or waived; resulting in a profit on settlement of DOCA debts of $22,442,511.
16
The Waterberg Coal Company Limited
14. Fair Value Measurement of Financial Instruments
Financial Instruments Measured at Fair Value
The financial instruments recognised at fair value in the consolidated statement of financial position
have been analysed and classified using a fair value hierarchy reflecting the significance of the inputs
used in making the measurements.
The fair value of current Trade and Other Receivables and Trade and Other Payables is equal to their
carrying value due to their short term nature.
The fair value hierarchy consists of the following levels:
. quoted prices in active markets for identical assets or liabilities (Level 1);
. inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (as prices) or indirectly (derived from prices) (Level 2); and
. inputs for the asset or liability that are not based on observable market data (unobservable inputs)
(Level 3).
Level 1 Level 2 Level 3 Total
$000 $000 $000 $000
31 December 2013
Financial assets/(liabilities)
Financial assets and liabilities at fair
value through profit and loss:
Convertible notes – David Stephens
(Note 10) - (1,104,075) - (1,104,075)
Convertible notes – SBSA (Note 9) - (48,407,410) - (48,407,410)
- (49,511,485) - (49,511,485)
Level 1 Level 2 Level 3 Total
$000 $000 $000 $000
30 June 2013
Financial assets/(liabilities)
Financial assets and liabilities at fair
value through profit and loss:
Convertible notes - (40,730,245) - (40,730,245)
Other financial asset (convertible note) - 5,000,000 - 5,000,000
Other financial asset (listed
investment) 2,880,000 - - 2,880,000
2,880,000 (35,730,245) - (32,850,245)
In determining the fair values of unlisted investments included in Level 2 of the hierarchy, valuation
techniques such as those using comparisons to similar investments for which market observable
prices are available have been adopted.
Derivative instruments are included in Level 2 of the hierarchy with the fair values being determined
using valuation techniques incorporating observable market data relevant to the hedged position.
No transfers between the levels of the fair value hierarchy occurred during the current or previous
reporting periods.
17
The Waterberg Coal Company Limited
The following table presents the changes in level 2 instruments for the period ended 31 December
2013:
Financial liabilities:
Convertible notes
adjusted at fair
value
2013
$
Opening balance 1 July 2013 40,730,245
Issues/additions (net) 1,074,633
Losses recognised in finance expense (Note 2) 7,706,607
Closing balance 31 December 2013 49,511,485
Financial assets:
Convertible notes
adjusted at fair
value
2013
$
Opening balance 1 July 2013 5,000,000
Issues/additions (net) -
1
Acquisition of subsidiary (5,000,000)
Closing balance 31 December 2013 -
1
As a result of an off-market takeover bid (Note 15), Firestone Energy Limited is a now a controlled
entity and is no longer carried as a financial instrument.
The following table presents the changes in level 1 instruments for the period ended 31 December
2013:
Financial assets:
Financial assets
adjusted at fair
value
2013
$
Opening balance 1 July 2013 2,880,000
Issues/additions (net) -
1
Acquisition of subsidiary (2,880,000)
Closing balance 31 December 2013 -
1
As a result of an off-market takeover bid (Note 15), Firestone Energy Limited is a now a controlled
entity and is no longer carried as a financial instrument.
18
The Waterberg Coal Company Limited
15. Asset Acquisition
On 23 September 2013, the off-market takeover bid for all the ordinary shares in Firestone Energy
Limited, a company listed on the ASX, closed. At the conclusion of the offer, WCC’s shareholding in
Firestone is 45.88%. The acquisition was essentially to acquire Firestone Energy Limited’s share of
the coal project in the Waterberg locality in South Africa, with no infrastructure or personnel.
The consideration payable 1.25 Waterberg shares for every two shares held in Firestone Energy
Limited.
Details of the fair value of the assets and liabilities acquired as at 23 September 2013 are as follows:
Purchase consideration comprises: $
Existing shares held 2,880,000
Ordinary shares acquired via takeover (1,148,632,708 shares) 11,026,874
Total consideration 13,906,874
Net assets acquired: $
Cash and cash equivalents 75,789
Trade and other receivables 1,564,255
Property, plant and equipment 4,345,235
Interest in joint operation 56,152,478
Trade and other payables (3,624,251)
Borrowings (33,388,530)
Non-controlling Interest at fair value (11,218,102)
Total 13,906,874
16. Dividends
No dividends have been paid or provided for during the period (2012: nil).
17. Commitments and Contingencies
The Group’s subsidiary Utafutaji Trading 75 (Pty) Ltd is due to make further payments to purchase the
mining tenement properties Swanepoelpan and Massenberg as follows:
Swanepoelpan . 5,000,000 rand (A$537,317) in February 2014
. 17,679,479 rand (A$1,899,896) in June 2014
Massenberg . 17,250,000 rand (A$1,853,742) in February 2014
. 17,250,000 rand (A$1,853,742) in August 2014
The February 2014 payments are being renegotiated.
There have been no other significant changes to commitments or contingencies since 30 June 2013.
19
The Waterberg Coal Company Limited
18. Subsequent Events
Letter of Intent
On 6 February 2014, Waterberg Coal announced that it had entered into a Letter of Intent with Ardbel,
a joint venture between ELB engineering services and the DRA group, which collectively are the pre-
eminent materials handling and engineering services provider to the mining sector in South Africa as
its preferred Engineering, Procurement and Construction contractor for the proposed development of
the Waterberg Coal Project.
Feasibility Study
On 6 February 2014, Waterberg Coal announced that the WCJVP completed a Feasibility Study
(Study) into the development of an opencast mining operation to produce 10 million tonnes of coal
(Product) per annum for Eskom for an initial term of 30 years. WCJVP confirmed that all material
assumptions underpinning the production target as stated in the competent person statement
announcement continue to apply and have not materially changed. However, Waterberg Coal in
satisfaction of ASX Listing Rules 5.16 and 5.17 included other assumptions relating to the relevant
production target in this announcement.
Investec
As announced on 18 February 2014, Investec Emerging Companies Fund (Investec) were issued
6,200,000 and 7,440,000 free attaching unlisted options in Waterberg Coal (with an exercise price of
ZAR 1.78 and an expiry date of 31 December 2014) for an investment of ZAR 11,036,000
(approximately AUD $1,103,000).
There are no other significant events subsequent to the end of the period.
20
The Waterberg Coal Company Limited
DIRECTORS’ DECLARATION
In the opinion of the directors of The Waterberg Coal Company Limited (‘the Group’):
1. The financial statements and notes thereto, as set out on pages 6 to 20, are in accordance
with the Corporations Act 2001 including:
a. complying with Accounting Standard AASB 134: Interim Financial Reporting
Corporations Regulations 2001 and other mandatory professional reporting
requirements; and
b. giving a true and fair view of the consolidated entity’s financial position as at 31
December 2013 and of its performance for the half-year then ended on that date; and
2. there are reasonable grounds to believe that the Group will be able to pay its debts as and
when they become due and payable.
This declaration is signed in accordance with a resolution of the Board of Directors made pursuant to
s.303(5)(a) of the Corporations Act 2001
Stephen Miller
Executive Director
14 March 2014
Date: 14/03/2014 12:50:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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