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Financial report for the half-year ended 31 December 2014
COAL OF AFRICA LIMITED
(Incorporated and registered in Australia)
Registration number ABN 008 905 388
ISIN AU000000CZA6
JSE/ASX/AIM share code: CZA
("CoaL or the "Company" or the "Group")
FINANCIAL REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2014
CORPORATE DIRECTORY
REGISTERED OFFICE Suite 8, 7 The Esplanade
Mt Pleasant, Perth, WA 6153
Telephone: +61 8 9316 9100
Facsimile: +61 8 9316 5475
Email: perth@coalofafrica.com
SOUTH AFRICAN OFFICE South Block
Summercon Office Park
Cnr Rockery Lane and Sunset Avenue
Lonehill
Telephone: +27 10 003 8000
Facsimile: +27 11 388 8333
BOARD OF DIRECTORS Non-executive
Bernard Pryor (Chairman)
Andrew Mifflin (appointed 12 December 2014)
David Murray (resigned 12 December 2014)
Khomotso Mosehla
Peter Cordin
Rudolph Torlage
Thabo Mosololi (appointed 12 December 2014)
Executive
David Brown
Michael Meeser
COMPANY SECRETARY Tony Bevan
AUSTRALIA UNITED KINGDOM SOUTH AFRICA
AUDITORS Deloitte Touche Tohmatsu N/A Deloitte & Touche
240 St Georges Terrace Deloitte Place
Perth WA 6000 Building 1
Australia The Woodlands
20 Woodlands Drive
Woodmead 2052
South Africa
BANKERS National Australia Bank Limited Investec Bank plc ABSA Bank
Level 1, 1238 Hay Street 2 Gresham Street The Podium
West Perth WA 6005 London EC2V 7QP Norton Rose Building
Australia United Kingdom 15 Alice Lane
Sandton South Africa
AUSTRALIA UNITED KINGDOM SOUTH AFRICA
BROKERS Euroz Securities Limited Investec Bank plc N/A
Level 18, Alluvion 2 Gresham Street
58 Mounts Bay Road London EC2V 7QP
Perth WA 6000 United Kingdom
Australia
Mirabaud
21 St James' Street
London SW1Y 4JP
United Kingdom
LAWYERS Squire Patton Boggs (AU) Squire Patton Boggs (UK) Edward Nathan
Sonnenbergs
LLP
Level 21 2 Park Lane 150 West Street
300 Murray Street Leeds Sandton
Perth WA 6000 LS3 1 ES Johannesburg 2196
Australia United Kingdom South Africa
NOMAD/ N/A Investec Bank plc Investec Bank Limited
CORPORATE 2 Gresham Street 100 Grayston Drive
SPONSOR London EC2V 7QP Sandown 2196
United Kingdom Johannesburg
South Africa
DIRECTORS' REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2014
The Directors of Coal of Africa Limited ("CoAL" or "the Company") submit herewith the financial report of Coal of Africa
Limited and its subsidiaries ("the Group") for the half-year ended 31 December 2014. All amounts expressed in US Dollars
unless stated otherwise.
In order to comply with the provision of the Corporations Act 2001, the directors report as follows:
Directors
The names of the directors of the company during or since the end of the half-year are:
Bernard Pryor* (Chairman) Rudolph Torlage*
Andrew Mifflin* Thabo Mosololi*
David Murray* David Brown**
Peter Cordin* Michael Meeser**
Khomotso Mosehla*
* - Non-executive director
** - Executive director
The above named directors held office during and since the end of the half-year except for:
David Murray – resigned 12 December 2014
Andrew Mifflin – appointed 12 December 2014
Thabo Mosololi – appointed 12 December 2014
Michael Meeser – resigned 13 February 2015***
*** - Mr Meeser will remain with the Company for a period of three months until the end of April 2015
Review of Operations
Principal activity and nature of operations
The principal activity of the Company and its subsidiaries is the exploration and development of coking and thermal coal
properties in South Africa.
The Company's principal coking and thermal coal assets and projects include:
- The development phase Vele Colliery, a coking and thermal coal project;
- The Makhado Project, a coking and thermal coal project, which is awaiting the granting of a New Order Mining Right
("NOMR");
- Three exploration stage coking and thermal coal projects, namely Chapudi, Generaal and Mopane, in the
Soutpansberg Coalfield (the GSP project); and
- The Mooiplaats Colliery currently on care and maintenance and subject to a formal sale process.
The Company's focus on safety continued and no lost time incidents ("LTIs") were recorded during the six months (FY2014
H2: 1 LTI).
Vele Colliery
During the period an historic Biodiversity Offset Agreement ("BOA") was signed by the Department of Environmental Affairs
("DEA"), South African National Parks Board ("SANparks") and CoAL to the value of R55 million (USD4.7 million) over a 25 year
period. The BOA is intended to promote the development of Mapungubwe so that it benefits the environment, the local
economy and resident communities and provides an appropriate framework to manage the interface between mining
operations and the Mapungubwe World Heritage Site, located approximately 30 km from the mine.
The BOA is based on the ecosystem approach to biodiversity management, promoting the integrated management of land,
water and natural capital and enhance co-operation between the three parties towards the conservation and sustainable
development of the Mapungubwe World Heritage Site, safeguarding its integrity and ensuring that the negative impacts of
development are avoided or minimised. It is the first of its kind in the mining industry.
The Company previously submitted applications to amend the colliery's Environmental Authorisation ("EA") to include the
proposed plant modifications. These applications were approved by the DEA in early CY2015. Subsequent to the receipt of
the amended approval, an intention to object was lodged with the regulatory authority. The Company has also submitted
applications to amend and renew Vele's Integrated Water Use Licence ("IWUL") and CoAL is confident these will be received
during H1 CY2015. The current Vele Colliery IWUL is valid until March 2016. Further approvals will be required with respect
to a stream diversion, a process which the company envisages commencing shortly. The Company has delayed the
commencement of the plant modification construction pending the receipt of these approvals, which also gives the Company
further time to assess the outlook for coal prices.
The Front-End Engineering Design ("FEED") process for the Vele Colliery plant modification project undertaken by Sedgman
South Africa was completed during the period. Changes to the plant modification design have resulted in a shortened
construction period with the improvements resulting in the simultaneous production of semi-soft coking coal and thermal coal
and the next stage of detailed design will commence upon project go ahead which is envisaged to be shortly after the receipt
of the approvals applied for.
Makhado Coking Coal Project
As required under South African mining legislation, a minimum 26% black economic empowerment ("BEE") shareholding is
required for mining and exploration projects. CoAL previously signed a Memorandum of Agreement to enable a Broad Based
Black Economic Empowerment consortium comprising seven local communities to acquire a 20% interest in the Makhado
Project and during the period the Company continued the process of identifying suitable BEE shareholders to acquire a
further 6% interest in the project. These transactions were formalised subsequent to 31 December 2014 and will ensure that
the Makhado Project has the requisite ownership structure.
During the December 2014 period an interim court interdict was issued against the Makhado Project seeking to halt any
mining or construction activity on the site. The Company as one of the respondents has commenced work with the other
respondents to set aside the interim interdict. CoAL does not anticipate that this process will impede on the delivery timetable
for the mine to come into commercial production during CY2019 as no construction or mining activities are anticipated
during CY2015.
Greater Soutpansberg Project (MbeuYashu)
During the reporting period the Company continued to engage with stakeholders, in particular communities, in relation to the
Greater Soutpansberg Project which comprises the Generaal, Chapudi and Mopane projects.
Current and future funding
During the reporting period CoAL shareholders approved a two stage equity placement of up to 695 million shares for
GBP0.055 raising approximately USD64.9 million. The amount was calculated using an indicative exchange rate of GBP1:USD1.70
which had weakened 8.6% to GBP1:USD1.55 at the end of the half year, resulting in the revised expected proceeds of USD60
million. The 8.4% weakening of the ZAR:USD exchange rate between August and December 2014 offsets the decline in the
GBP:USD exchange rate as the Company's future expenses are predominantly Rand denominated. The required regulatory
approvals for stage 1 were received during November 2014 resulting in the issue of 295 million CoAL shares to select book-
build participants.
During December 2014 the Company announced that it had agreed with all selected participants to split the second stage of
the placement into two parts. This stage was previously conditional on receipt from a South African participant, TMM
Holdings (Pty) Ltd, of confirmation that it had received sufficient funding to fulfil its second stage funding commitment. The
second stage of the equity placement was completed during December 2014 with the issue of 300 million ordinary shares
and the third stage will result in a further 144 million shares being issued, anticipated to be completed by April 2015.
Financial review
The loss for the six months under review amounted to USD0.8 million, or 0.07 cents per share compared to a loss of USD46.3
million, or 4.42 cents per share for the prior corresponding period.
The loss for the period under review of USD0.8 million (H1 2013: USD46.3 million) includes non-cash credits of USD16.9 million (H1
2013: charges of USD30.2 million) as follows:
- Mooiplaats impairment loss of nil (USD16.5 million in the six months ended 31 December 2013);
- net foreign exchange profit of USD17.7 million (2013: loss of USD12.5 million) arising from the translation of inter-group loan
balances, borrowings and cash due to changes in the ZAR:AUD exchange rate during the period;
- depreciation of USD0.3 million (2013: USD0.7 million) and amortisation of USD0.5 million (2013: USD0.5 million) contributed further to
the non-cash charges.
As at 31 December 2014, the Company had cash and cash equivalents of USD20.6 million compared to cash and cash
equivalents of USD2.1 million at 30 June 2014.
Authorised and issued share capital
CoAL had 1,599,368,613 fully paid ordinary shares in issue as at 31 December 2014. The holders of ordinary shares are
entitled to one vote per share and are entitled to receive dividends when declared.
Dividends
No dividends were declared or paid during the six months.
Highlights and events after the reporting period
- The Company received the amended and updated Environmental Authorisation for the Vele Colliery. The application for
the amendment and extension of the Integrated Water Use License for the colliery is still to be received, following which
the Company will make a decision as to the timing of the start of the plant modification at the colliery.
- Subsequent to 31 December 2014, the Company extended the date on an non-exclusive basis for which Blackspear
Capital ("Blackspear"), a wholly owned subsidiary of Blackspear Holdings (Pty) Ltd are required to fulfil the conditions
precedent for the sale of Mooiplaats until April 2015, and while the delay is unwelcome it will not impact on the ability of
the Company to continue with the finalisation of its turnaround strategy.
- On 13 February 2015 Michael Meeser, Executive Director and Chief Financial Officer, resigned but will remain with the Company
until the end of April 2015.
- Subsequent to 31 December 2014, the Company formalised the Makhado Project BEE structuring ensuring that the
project complies with South African mining legislation.
Rounding off of amounts
The Company is a company of the kind referred to in ASIC Class Order 98/100, date 10 July 1998, and in accordance with
that Class Order amounts in the directors' report and the half-year financial report are rounded off to the nearest thousand
dollars, unless otherwise indicated.
Auditor's Independence Declaration
The auditor's independence declaration is included on page 26 of the half-year report.
DIRECTORS' REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2014
The half-year report set out on pages 8 to 26, which has been approved on the going concern basis, was approved by the
board on 12 March 2015 and was signed on its behalf by:
Bernard Robert Pryor David Hugh Brown
Chairman Chief Executive Officer
12 March 2015 12 March 2015
Dated at Johannesburg, South Africa, this 12th day of March 2015.
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE HALF-YEAR ENDED 31 DECEMBER 2014
Six months Six months
ended ended
31 Dec 2014 31 Dec 2013
Note USD'000 USD'000
Continuing operations
Revenue 2 60
Cost of sales - (76)
Gross loss 2 (16)
Depreciation and amortisation (790) (1,286)
Foreign exchange profit/(loss) 4 14,292 (12,564)
Employee benefits expense (2,532) (4,116)
Other expenses 4 (10,761) (5,759)
Take or pay port obligation - (1,549)
Operating lease expenses (114) (174)
Other income 249 388
Operating profit/(loss ) 346 (25,076)
Interest income 250 371
Finance costs (716) (285)
Loss before tax (120) (24,990)
Income tax credit/(charge) - -
Net loss for the period from continuing operations (120) (24,990)
Operations held for sale
Loss for the period from operations held for sale 8 (707) (21,306)
LOSS FOR THE PERIOD (827) (46,296)
Other comprehensive loss, net of income tax
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations (42,665) (3,672)
Total comprehensive loss for the period (43,492) (49,968)
Loss for the period attributable to:
Owners of the parent (827) (46,296)
Non-controlling interests - -
(827) (46,296)
Total comprehensive loss attributable to:
Owners of the parent (43,492) (49,968)
Non-controlling interests - -
(43,492) (49,968)
Loss per share 11
From continuing operations and operations held for sale
Basic and diluted (cents per share) 0.07 4.42
From continuing operations
Basic and diluted (cents per share) 0.01 2.38
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2014
31 Dec 2014 30 June 2014
Note USD'000 USD'000
ASSETS
Non-current assets
Development, exploration and evaluation assets 7 245,060 271,711
Property, plant and equipment 15,639 17,413
Intangible assets 12,919 15,488
Other receivables 1,963 2,245
Other financial assets 1,448 1,607
Restricted cash 12 1,888 5,153
Deferred tax assets 2,454 2,694
Total non-current assets 281,371 316,311
Current assets
Inventories 251 528
Trade and other receivables 924 1,902
Other financial assets 673 610
Cash and cash equivalents 12 20,417 2,017
22,265 5,057
Assets associated with discontinued operations 8 21,300 23,030
Total current assets 43,565 28,087
Total assets 324,936 344,398
LIABILITIES
Non-current liabilities
Deferred consideration - -
Provisions 7,113 4,643
Total non-current liabilities 7,113 4,643
Current liabilities
Deferred consideration 9 24,266 29,800
Trade and other payables 4,175 15,083
Borrowings 10 - 6,372
Provisions 176 2,447
Current tax liabilities 1,369 1,583
29,986 55,285
Liabilities associated with discontinued operations 8 4,024 4,150
Total current liabilities 34,010 59,435
Total liabilities 41,123 64,078
NET ASSETS 283,813 280,320
EQUITY
Issued capital 6 981,395 935,891
Accumulated deficit (712,340) (790,964)
Reserves 14,183 134,818
Equity attributable to owners of the parent 283,238 279,745
Non-controlling interests 575 575
TOTAL EQUITY 283,813 280,320
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE HALF-YEAR ENDED 31 DECEMBER 2014
Issued Accumulated Share- Capital Foreign Attributable Non- Total
capital deficit based profits currency to owners of controlling equity
payment reserve translation the parent interests
reserve reserve
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Balance at 1 July 2014 935,891 (790,964) 82,464 91 52,263 279,745 575 280,320
Total comprehensive loss for the period - (827) - - (42,665) (43,492) - (43,492)
Loss for the period – continuing operations - (120) - - - (120) - (120)
Loss for the period – operations held for sale - (707) - - - (707) - (707)
Other comprehensive loss, net of tax - - - - (42,665) (42,665) - (42,665)
935,891 (791,791) 82,464 91 9,598 236,253 575 236,828
Shares issued for capital raising 47,811 - - - - 47,811 - 47,811
Share issue costs (2,307) - - - - (2,307) - (2,307)
Share based payments - - 1,481 - - 1,481 - 1,481
Share options expired - 79,451 (79,451) - - - - -
Balance at 31 December 2014 981,395 (712,340) 4,494 91 9,598 283,238 575 283,813
Balance at 1 July 2013 935,891 (707,535) 82,438 91 31,008 341,893 575 342,468
Total comprehensive loss for the period - (46,296) - - (3,672) (49,968) - (49,968)
Loss for the period – continuing operations - (24,990) - - - (24,990) - (24,990)
Loss for the period – operations held for sale - (21,306) - - - (21,306) - (21,306)
Other comprehensive loss, net of tax - - - - (3,672) (3,672) - (3,672)
935,891 (753,831) 82,438 91 27,336 291,925 575 292,500
Share based payments - - 2,028 - - 2,028 - 2,028
Balance at 31 December 2013 935,891 (753,831) 84,466 91 27,336 293,953 575 294,528
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE HALF-YEAR ENDED 31 DECEMBER 2014
Six months Six months
ended ended
31 Dec2014 31 Dec2013
USD'000 USD'000
Cash Flows from operating activities
Receipts from customers 883 23,490
Payments to employees and suppliers (18,856) (45,573)
Cash used in operations (17,973) (22,083)
Interest received 191 495
Interest paid (656) (177)
Income taxes paid - -
Net cash used in operating activities (18,438) (21,765)
Cash Flows from investing activities
Purchase of property, plant and equipment (20) -
Decrease in restricted cash 4,073 -
Payments for exploration and evaluation assets (72) (1,624)
Increase in other financial assets (985) 3,428
Payments for development assets (692) (4,038)
Net cash generated from / (used in) investing activities 2,304 (2,234)
Cash Flows from financing activities
Proceeds from the issue of shares and options, net of costs 47,811 -
Share issuance costs (2,307) -
Repayment of borrowings (6,124) (12,355)
Repayment of deferred consideration (6,590) -
Proceeds from borrowings - 10,664
Finance lease repayments - (54)
Net cash generated by/(used in) financing activities 32,790 (1,745)
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 16,656 (25,744)
Cash and cash equivalents at the beginning of the half-year 2,099 29,938
Foreign exchange differences 1,796 30
Cash and cash equivalents at the end of the half-year 12 20,551 4,224
The accompanying notes are an integral part of these condensed consolidated financial statements
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR REPORT
FOR THE HALF-YEAR ENDED 31 DECEMBER 2014
1. SIGNIFICANT ACCOUNTING POLICIES
Statement of compliance
The half-year financial report is a general purpose financial report prepared in accordance with the Corporations Act
2001 and AASB 134: 'Interim Financial Reporting'. Compliance with AASB 134 ensures compliance with International
Financial Reporting Standard IAS 34 'Interim Financial Reporting'. The half-year report does not include notes of the
type normally included in an annual financial report and should be read in conjunction with the most recent annual
financial report.
Basis of preparation
The condensed consolidated financial statements have been prepared on the basis of historical cost, except for the
revaluation of financial instruments. Cost is based on the fair values of the consideration given in exchange for assets.
All amounts are presented in United States dollars, unless otherwise noted.
The company is a company of the kind referred to in ASIC Class Order 98/100, dated 10 July 1998, and in accordance
with that Class Order amounts in the directors' report and the half-year financial report are rounded off to the nearest
thousand dollars, unless otherwise indicated.
The accounting policies and methods of computation adopted in the preparation of the half-year financial report are
consistent with those adopted and disclosed in the company's 2014 annual financial report for the financial year ended
30 June 2014, except for the impact of the Standard and Interpretations described below. These accounting policies
are consistent with the Australian Accounting Standards and with International Financial Reporting Standards ("IFRS").
The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting
Standards Board ("the AASB") that are relevant to their operations and effective for the current reporting period.
New and revised Standards and amendments thereof and Interpretations effective for the current half-year that are
relevant to the Group include:
- AASB 1031 'Materiality' (2013)
- AASB 2012-3 'Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial
Liabilities'
- AASB 2013-3 'Amendments to AASB 136 – Recoverable Amount Disclosures for Non-Financial Assets'
- AASB 2013-9 'Amendments to Australian Accounting Standards' – Part B: 'Materiality'
- AASB 2014-1 'Amendments to Australian Accounting Standards'
- Part A: 'Annual Improvements 2010-2012 and 2011-2013 Cycles'
- Part C: 'Materiality'
Impact of the application of AASB 1031 'Materiality' (2013)
The revised AASB 1031 is an interim standard that cross-references to other Standards and the Framework for the
Preparation and Presentation of Financial Statements (issued December 2013) that contain guidance on materiality.
The AASB is progressively removing references to AASB1031 in all Standards and Interpretations, and once all these
references have been removed, AASB 1031 will be withdrawn. The adoption of AASB 1031 does not have any
material impact on the disclosures or the amounts recognised in the Group's condensed consolidated financial
statements.
Impact of the application of AASB 2012-3 'Amendments to Australian Accounting Standards – Offsetting
Financial Assets and Financial Liabilities'
The Group has applied the amendments to AASB 132 for the first time in the current year. The amendments to AASB
132 clarify the requirements relating to the offset of financial assets and financial liabilities. Specifically, the
amendments clarify the meaning of 'currently has a legally enforceable right of set-off' and 'simultaneous realisation
and settlement'.
As the Group does not have any financial assets and financial liabilities that qualify for offset, the application of the
amendments has had no impact on the disclosures or on the amounts recognised in the Group's condensed
consolidated financial statements.
Impact of the application of AASB 2013-3 'Amendments to AASB 136 – Recoverable Amount Disclosures for
Non-Financial Assets'
The Group has applied the amendments to AASB 136 for the first time in the current year. The amendments to AASB
136 remove the requirement to disclose the recoverable amount of a cash-generating unit ("CGU") to which goodwill
or other intangible assets with indefinite useful lives had been allocated when there has been no impairment or
reversal of impairment of the related CGU. Furthermore, the amendments introduce additional disclosure requirements
applicable to when the recoverable amount of an asset or a CGU is measured at fair value less costs of disposal.
These new disclosures include the fair value hierarchy, key assumptions and valuation techniques used which are in
line with the disclosure required by AASB 13 'Fair Value Measurements'.
The application of these amendments does not have any material impact on the disclosures in the Group's condensed
consolidated financial statements.
Impact of the application of AASB 2013-9 'Amendments to Australian Accounting Standards' – Part B:
'Materiality'
This amending standard makes amendments to particular Australian Accounting Standards to delete references to
AASB 1031, at the same time it makes various editorial corrections to Australian Accounting Standards as well. The
adoption of amending standard does not have any material impact on the disclosures or the amounts recognised in
the Group's condensed consolidated financial statements.
Impact of the application of AASB 2014-1 'Amendments to Australian Accounting Standards'
Part A: 'Annual Improvements 2010-2012 and 2011-2013 Cycle'
The Annual Improvements 2010-2012 Cycle include a number of amendments to various AASBs, which are
summarised below.
The amendments to AASB 2 (i) change the definitions of 'vesting condition' and 'market condition'; and (ii) add
definitions for 'performance condition' and 'service condition' which were previously included within the definition of
'vesting condition'. The amendments to AASB 2 are effective for share-based payment transactions for which the grant
date is on or after 1 July 2014.
The amendments to AASB 3 clarify that contingent consideration that is classified as an asset or a liability should be
measured at fair value at each reporting date, irrespective of whether the contingent consideration is a financial
instrument within the scope of AASB 9 or AASB 139 or a non-financial asset or liability. Changes in fair value (other
than measurement period adjustments) should be recognised in profit and loss. The amendments to AASB 3 are
effective for business combinations for which the acquisition date is on or after 1 July 2014.
The amendments to AASB 8 (i) require an entity to disclose the judgements made by management in applying the
aggregation criteria to operating segments, including a description of the operating segments aggregated and the
economic indicators assessed in determining whether the operating segments have 'similar economic characteristics';
and (ii) clarify that a reconciliation of the total of the reportable segments' assets to the entity's assets should only be
provided if the segment assets are regularly provided to the chief operating decision-maker.
The amendments to the basis for conclusions of AASB 13 clarify that the issue of AASB 13 and consequential
amendments to AASB 139 and AASB 9 did not remove the ability to measure short-term receivables and payables
with no stated interest rate at their invoice amounts without discounting, if the effect of discounting is immaterial. As
the amendments do not contain any effective date, they are considered to be immediately effective.
The amendments to AASB 116 and AASB 138 remove perceived inconsistencies in the accounting for accumulated
depreciation/amortisation when an item of property, plant and equipment or an intangible asset is revalued. The
amended standards clarify that the gross carrying amount is adjusted in a manner consistent with the revaluation of
the carrying amount of the asset and that accumulated depreciation/amortisation is the difference between the gross
carrying amount and the carrying amount after taking into account accumulated impairment losses.
The amendments to AASB 124 clarify that a management entity providing key management personnel services to a
reporting entity is a related party of the reporting entity. Consequently, the reporting entity should disclose as related
party transactions the amounts incurred for the service paid or payable to the management entity for the provision of
key management personnel services. However, disclosure of the components of such compensation is not required.
The 'Annual Improvements 2011-2013 Cycle' include a number of amendments to various AASBs, which are
summarised below.
The amendments to AASB 3 clarify that the standard does not apply to the accounting for the formation of all types of
joint arrangement in the financial statements of the joint arrangement itself.
The amendments to AASB 13 clarify that the scope of the portfolio exception for measuring the fair value of a group of
financial assets and financial liabilities on a net basis includes all contracts that are within the scope of, and accounted
for in accordance with, AASB 139 or AASB 9, even if those contracts do not meet the definitions of financial assets or
financial liabilities within AASB 132.
The amendments to AASB 140 clarify that AASB 140 and AASB 3 are not mutually exclusive and application of both
standards may be required. Consequently, an entity acquiring investment property must determine whether:
a) the property meets the definition of investment property in terms of AASB 140; and
b) the transaction meets the definition of a business combination under AASB 3.
Part C – 'Materiality'
This amending standard makes amendments to particular Australian Accounting Standards to delete their references
to AASB 1031, which historically has been referenced in each Australian Accounting Standard. The adoption of
amending standard does not have any material impact on the disclosures or the amounts recognised in the Group's
condensed consolidated financial statements
2. GOING CONCERN
These consolidated financial statements have been prepared on the going concern basis, which contemplates the
continuity of normal business activities and the realisation of assets and the settlement of liabilities in the normal
course of business.
The Consolidated Entity has incurred a net loss after tax for the half year ended 31 December 2014 of USD0.827 million
(31 December 2013: loss of USD46.2 million), including realised and unrealised foreign exchange gains of USD14.3 million
(2013: losses of USD12.6 million) and depreciation and amortisation charges of USD0.790 million (2013: USD1.2 million). During
the six month period under review net cash outflows from operating activities (including once-off items totalling USD12.5
million) were USD18.4 million (31 December 2013 net outflow: USD21.8 million). As at 31 December 2014 the Consolidated
Entity had a net current liability position of USD7.7 million (30 June 2014: net current liabilities of USD50.2 million), excluding
assets and liabilities classified as held for sale.
These conditions indicate that there is a material uncertainty relating to the ability of the Consolidated Entity to
continue as a going concern.
In the six month period under review the Consolidated Entity has made the following areas of progress with regard to
its ability to continue as a going concern:
- Progressed negotiations to sell the Mooiplaats and Holfontein projects currently held for sale.
- Progressed negotiations with Rio Tinto for the continued deferral of the USD23.5 million liability.
- Received the first two tranches of the equity funding in November and December 2014.
The ability of the Consolidated Entity to continue as a going concern and to pay its debts as and when they fall due is
dependent on:
i. The successful conclusion of negotiations with Rio Tinto with respect to the continued deferral of the USUSD23.5
million liability in order to match the Consolidated Entities available cash resources.
ii. The timely receipt of the third tranche of equity funding of USD12 million anticipated in April 2015.
iii. The successful conclusion and receipt of funds from the sale of the Mooiplaats Colliery anticipated to be received
within the next 12 months.
iv. The continual review by the Directors of the quantum and timing of all discretionary expenditures including
exploration and development costs, and wherever necessary, these costs will be minimised or deferred to suit the
Consolidated Entity's cash flow from operations.
At the date of this report and having considered the above factors, the Directors are confident that the Consolidated
Entity will be able to continue as a going concern.
In the event that the Consolidated Entity does not achieve successful outcomes in relation to the matters set out
above, significant uncertainty would exist as to the ability of the Consolidated Entity to continue as a going concern
and, therefore, the Consolidated Entity may be unable to realise its assets and discharge its liabilities in the normal
course of business.
The financial report for the half year ended 31 December 2014 does not include adjustments relating to the
recoverability and classification of recorded asset amounts, or to the amounts and classification of liabilities that might
be necessary should the Consolidated Entity not continue as a going concern.
3. SEGMENT INFORMATION
AASB 8 requires operating segments to be identified on the basis of internal reports about components of the Group
that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to
assess its performance.
Information reported to the Group's Chief Executive Officer for the purposes of resource allocation and assessment of
performance is more specifically focused on the stage within the mining pipeline that the operation finds itself in.
The Group's reportable segments under AASB 8 are therefore as follows:
- Exploration;
- Development;
- Mining (discontinued operation); and
- Corporate.
The Exploration segment is involved in the search for resources suitable for commercial exploitation, and the
determination of the technical feasibility and commercial viability of resources. As at 31 December 2014, projects
within this reportable segment include:
- the Makhado Project and
- the Chapudi, Generaal and Mopane projects in the Soutpansberg Coalfield (collectively the GSP Project).
The Development segment is engaged in establishing access to and commissioning facilities to extract, treat and
transport production from the mineral reserve, and other preparations for commercial production. As at 31 December
2014 projects included within this reportable segment include one coking coal project, namely the Vele Colliery, in the
early operational and development stage.
The Mining segment was involved in day to day activities of obtaining a saleable product from the mineral reserve on a
commercial scale and includes the Mooiplaats Colliery. As of 30 June 2013 the Mooiplaats Colliery has been classified
as a discontinued operation and is currently on care and maintenance with the Company seeking to dispose of its
thermal assets (refer Note 8).
The Corporate segment is involved in the administrating and managing of day to day activities throughout the group
(including a treasury function).
The following is an analysis of the Group's results by reportable operating segment for the half-years under review:
For the six months ended 31 December 2014
Continuing operations Discontinued
operations
Exploration Development Corporate Total Mining
Revenue 2 - - 2 -
Cost of sales - - - - (248)
Gross loss 2 - - 2 (248)
Depreciation and amortisation (37) (33) (720) (790) -
Foreign exchange profit/(loss) (3,151) - 17,443 14,292 3
Employee benefits expense (63) (225) (2,244) (2,532) (180)
Other expenses (109) (3,396) (7,256) (10,761) (280)
Take or pay port obligation - - - - -
Operating lease expenses (4) - (110) (114) (9)
Other income 4 - 245 249 6
Operating profit/(loss ) (3,358) (3,654) 7,358 346 (708)
Interest income - 31 219 250 59
Finance costs (413) (43) (260) (716) (58)
Loss before tax (3,771) (3,666) 7,317 (120) (707)
For the six months ended 31 December 2013
Continuing operations Discontinued
operations
Exploration Development Corporate Total Mining
Revenue - - 60 60 1,778
Cost of sales - - (76) (76) (2,817)
Gross loss - - (16) (16) (1,039)
Depreciation and amortisation (7) (33) (1,246) (1,286) -
Impairment - - - - (15,849)
Foreign exchange profit/(loss) - (2) (12,562) (12,564) 146
Employee benefits expense - (296) (3,820) (4,116) (2,821)
Other expenses (139) (831) (4,789) (5,759) (2,599)
Take or pay port obligation - - (1,549) (1,549) -
Operating lease expenses - - (174) (174) (87)
Other income - - 388 388 751
Operating profit/(loss ) (146) (1,162) (23,768) (25,076) (21,498)
Interest income - - 371 371 192
Finance costs (3) (34) (248) (285) -
Loss before tax (149) (1,196) (23,645) (24,990) (21,306)
The following is an analysis of the Group's assets by reportable operating segment:
31 Dec 2014 30 June 2014
USD'000 USD'000
Exploration 125,656 145,995
Development 119,404 135,991
Corporate 58,576 39,382
Total assets – continuing operations 303,636 321,368
Mining – discontinued operation 21,300 23,030
Total assets 324,936 344,398
4. RESULTS FOR THE PERIOD
Loss for the period from continuing operations has been arrived at after charging or (crediting):
31 Dec 2014 31 Dec 2013
USD'000 USD'000
Foreign exchange profit/(loss)
Unrealised 16,175 (12,534)
Realised (1,883) (30)
14,292 (12,564)
Other expenses
Other expenses for the six months ended 31 December 2014 includes USD1.4 million related to the share option expense
in connection with the Investec working capital facility as well as USD2.6 million relating to the signing of the BOA and the
subsequent recording of the liability.
5. DIVIDENDS
No dividend has been paid or is proposed in respect of the half-year ended 31 December 2014 (2013: None).
6. ISSUED CAPITAL
During the reporting period CoAL shareholders approved a two stage equity placement of up to 695 million shares for
GBP0.055. The required regulatory approvals for stage 1 were received during November 2014 resulting in the issue
of 295 million CoAL shares to select book-build participants.
During December 2014 the Company announced that it had agreed with all selected participants to split the second
stage of the placement into two parts. This stage was previously conditional on receipt from a South African
participant, TMM Holdings (Pty) Ltd, of confirmation that it had received sufficient funding to fulfil its second stage
funding commitment. The second stage of the equity placement was completed during December 2014 with the issue
of 300 million ordinary shares and the third stage will result in a further 144 million shares being issued, anticipated to
be completed by April 2015.
31 December
2014
USD'000
1,599,368,613 (2013: 1,048,368,613) fully paid ordinary shares 981,395
Movements in issued capital
Opening balance 935,891
Shares issued for capital raising, net of costs 45,504
981,395
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
Options
The following unlisted options to subscribe for ordinary fully paid shares are outstanding at 31 December 2014:
Number issued Exercise price Expiry date
2,500,000 AUSD1.20 9 November 2015
1,441,061 AUSD1.40 30 September 2015
2,670,000 ZAR7.60 30 June 2016
3,500,000 GBP0.25 30 November 2015
3,932,928 ZAR1.75 30 June 2017
4,125,000 ZAR2.00 30 June 2018
20,000,000* ZAR1.32 21 October 2018
* Issued to Investec as part of the short-term bridging facility and vest six months after granting.
7. DEVELOPMENT, EXPLORATION AND EVALUATION ASSETS
31 Dec 2014
USD'000
Development, exploration and evaluation assets comprise:
Exploration and evaluation assets 125,656
Development assets 119,404
Balance at end of period 245,060
A reconciliation of development, exploration and evaluation assets is presented below:
Exploration and evaluation assets
Balance at beginning of period 139,991
Additions 170
Foreign exchange differences (14,505)
Balance at end of period 125,656
Development assets
Balance at beginning of period 131,720
Additions 640
Foreign exchange differences (12,956)
Balance at end of period 119,404
Development assets have been allocated for impairment testing purposes to the Vele Project.
The recoverable amount of this cash-generating unit is determined based on a discounted cash flow valuation to
which a resource multiple which ascribes value to the resources outside of the mine plan is added.
The model, which was developed as at 30 June 2014, uses cash flow projections in nominal ZAR terms based on
management estimates and a post-tax nominal ZAR denominated weighted average cost of capital of 16.75% for the
year ended June 2014. The projected post-tax, nominal, ZAR-denominated cash flows were prepared for a period of
18 years, from 1 July 2014 to 30 June 2032.
For the purposes of assessing the impairment of the cash generating unit as at 31 December 2014, the model
originally developed at 30 June 2014 has been subjected to various sensitivity analyses to assess the effect on the
recoverable value of reasonable changes to the macroeconomic key assumptions and the timings of the major cash flows.
The Directors believe that any reasonably possible change in the key assumptions on which recoverable amount is
based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the cash
generating unit.
Recoverability of the carrying value of interests in exploration and development assets is subject to the successful
development and exploitation of the exploration and development properties or alternatively, the sale of these
tenements at amounts at least equal to the book values. The ability of the Consolidated Entity to fund the successful
development and exploitation of the exploration and development properties is dependent on the going concern
assumptions set out in Note 2 'Going Concern'.
8. DISCONTINUED OPERATIONS
31 Dec 2014 30 June 2014
USD'000 USD'000
Carrying amounts of
Holfontein Investments Proprietary Limited ('Holfontein') - -
Langcarel Proprietary Limited ('Mooiplaats') 17,276 18,880
17,276 18,880
Assets associated with discontinued operations
Holfontein - -
Mooiplaats 21,300 23,030
21,300 23,030
Liabilities associated with discontinued operations
Holfontein - -
Mooiplaats 4,024 4,150
4,024 4,150
17,276 18,880
Holfontein
The Company has signed an Option Agreement to dispose of the asset. The option grants the holder an exclusive
right to purchase the Holfontein equity and claims for ZAR50.0 million (USUSD4.8 million) for one year which can be
extended on payment of further option fees.
The option holder paid ZAR5.0 million (USUSD0.5 million) in December 2013 and further payment of ZAR2.5 million
(USUSD0.21 million) during the six months ended December 2014 to extend the option period until end CY2015.
Mooiplaats
The Company is seeking to dispose of its thermal assets which include the Mooiplaats Colliery. The Company
expects to recover the carrying value through the disposal of the project.
The major classes of assets and liabilities of Mooiplaats at the end of the reporting period are as follows:
Assets classified as held for sale
Property, plant and equipment 17,310 18,229
Other financial assets 2,720 2,266
Restricted cash 279 1,474
Inventories 842 929
Trade and other receivables 15 50
Cash and cash equivalents 134 82
21,300 23,030
Liabilities classified as held for sale
Provisions 2,727 2,932
Trade payables and accrued expenses 1,297 1,218
4,024 4,150
Net assets of Mooiplaats 17,276 18,880
The loss for the half-year from the discontinued operations is analysed as follows:
Six months Six months
ended ended
31 Dec 2014 31 Dec 2013
USD'000 USD'000
Revenue - 1,778
Other gains 69 1,501
69 3,279
Expenses (776) (24,585)
Loss before tax (707) (21,306)
Attributable income tax credit - -
Loss for the period from operations held for sale (attributable to owners of the parent) (707) (21,306)
Cash flows from discontinued operations held for sale
Net cash outflows from operating activities (412) (3,479)
Net cash outflows from investing activities 436 329
Net cash outflows from financing activities - (12,409)
Net cash outflows 24 (15,559)
These operations have been classified and accounted for as discontinued operations since 30 June 2013.
9. DEFERRED CONSIDERATION
The liability owing to Rio Tinto was reduced during the half-year on the payment of USD6.3 million while discussions
continued on the settlement of the remaining balance of USD23.5 million.
Notwithstanding that the Company is currently in negotiations with Rio Tinto to defer the payments, the payable has
been reflected as current in the balance sheet as at 31 December 2014, as no formal agreement to defer the payment
has been reached yet.
The Company is confident that they will be successful in negotiating the deferment of the payment.
10. BORROWINGS
The Investec working capital facility of ZAR67.5 million (USD5.8 million) was settled in full, in accordance with its terms,
on 11 November 2014.
11. LOSS PER SHARE
Six months Six months
ended ended
31 Dec 2014 31 Dec 2013
Cents per share Cents per share
Basic loss per share
From continuing operations 0.01 2.38
From discontinued operations 0.06 2.04
0.07 4.42
11.1 Basic loss per share
USD'000 USD'000
Loss for the period attributable to owners of the parent (827) (46,296)
Loss for the period from operations held for sale 707 21,306
Loss used in the calculation of basic loss per share from continuing
operations (120) (24,990)
'000 shares '000 shares
Weighted number of ordinary shares
Weighted average number of ordinary shares for the purposes of basic
loss per share 1,182,035 1,048,368
11.2 Diluted loss per share
Diluted loss per share is calculated by dividing loss attributable to owners of the Company by the weighted average
number of ordinary shares outstanding during the period plus the weighted average number of diluted ordinary shares
that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
As at 31 December 2014, 18,168,989 options (31 December 2013 – 21,987,489 options) and the 20 million options
issued to Investec were excluded from the computation of the loss per share as their impact is anti-dilutive.
Headline loss per share (In line with JSE Listings Requirements)
The calculation of headline loss per share at 31 December 2014 was based on the headline loss attributable to
ordinary equity holders of the Company of USD0.8 million (2013: USD29.8 million) and a weighted average number of
ordinary shares outstanding during the period ended 31 December 2014 of 1,182,035,280 (2013: 1,048,368,613).
The adjustments made to arrive at the headline loss are as follows:
Six months Six months
ended ended
31 Dec 2014 31 Dec 2013
USD'000 USD'000
Loss for the period attributable to ordinary shareholders 827 46,296
Adjust for:
Impairment losses - (16,453)
Headline earnings 827 29,843
Headline loss per share (cents per share) 0.07 2.85
12. CASH AND CASH EQUIVALENTS
31 Dec 2014 30 Jun 2014
USD'000 USD'000
Bank balances 20,417 2,017
Bank balances associated with discontinued operations (refer Note 8) 134 82
20,551 2,099
Restricted cash 1,888 5,153
Restricted cash associated with discontinued operations (refer Note 8) 279 1,474
2,167 6,627
13. CONTINGENT LIABILITIES
In accordance with normal industry practice, the Company has agreed to provide financial support to its controlled
entities.
The Group has contingent liabilities as listed below:
Ferret Mining Proprietary Limited
During the period, Ferret's 26% shareholding in Mooiplaats Mining Limited was re-instated. Although they are not
entitled to any assets or claims in the Mooiplaats group, they are entitled to receive ZAR10.0 million (USUSD1.0 million)
upon the successful disposal of the Mooiplaats Colliery. This has been taken into account in determining the fair value
less costs to sell of the Mooiplaats Colliery.
There are no other significant contingent liabilities as at 31 December 2014.
14. EVENTS SUBSEQUENT TO REPORTING DATE
- The Company received the amended and updated Environmental Authorisation for the Vele Colliery. The
application for the amendment and extension of the Integrated Water Use License for the colliery is still to be
received, following which the Company will make a decision as the timing of the start of the plant modification at
the colliery.
- Subsequent to reporting period end, the Company extended the date on a non-exclusive basis for which
Blackspear are required to fulfil the conditions precedent for the sale of Mooiplaats until April 2015, and while the
delay is unwelcome it will not an impact of the ability of the Company to continue with the finalisation of its
turnaround strategy.
- On 13 February 2015 Michael Meeser, Executive Director and Chief Financial Officer, resigned but will remain with the
Company until the end of April 2015.
- Subsequent to 31 December 2014, the Company formalised the Makhado Project BEE structuring ensuring that
the project complies with South African mining legislation.
15. KEY MANAGEMENT PERSONNEL
Remuneration arrangement of key management personnel are disclosed in the annual financial report.
16. FINANCIAL INSTRUMENTS
This note provides information about how the Group determines fair values of various financial assets and financial
liabilities.
16.1 Fair value of the Group's financial assets and financial liabilities that are measure at fair value on a recurring basis
Some of the Group's financial assets and financial liabilities are measured at fair value at the end of each reporting
period. The following table gives information about how the fair values of these financial assets and financial liabilities
are determined (in particular, the valuation technique(s) and inputs used).
Relationship
Valuation of
technique(s) Significant unobservable
Financial assets/ Fair value and key unobservable inputs to fair
financial liabilities Fair value as at hierarchy input(s) input(s) value
31 Dec 30 Jun
2014 2014
1. Other financial Assets - Assets - Level 2 Value N/A N/A
assets – Unlisted USD1.1m USD0.9m certificate
Investments obtained from
investment
institution
2. Other financial Assets - Assets - Level 1 Quoted prices N/A N/A
assets – Listed USD0.3m USD0.7m in an active
Investments market
DIRECTORS' DECLARATION
The Directors declare that in the directors' opinion,
1. The condensed financial statements and notes of the consolidated entity are in accordance with the
following:
a. complying with accounting standards and the Corporations Act 2001; and
b. giving a true and fair view of the consolidated entity's financial position as at 31 December 2014 and
of its performance for the half-year ended on that date.
2. There are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors, made pursuant to section 303(5)
of the Corporations Act 2001.
On behalf of the Directors
Bernard Robert Pryor David Hugh Brown
Chairman Chief Executive Officer
12 March 2015 12 March 2015
Dated at Johannesburg, South Africa, this 12th day of March 2015.
Date: 13/03/2015 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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