Killara Resources Limited and Controlled Entities (ABN 68 132 204 561) Half-year Report 31 December 2014 For personal use only
Killara Resources Limited
and Controlled Entities (ABN 68 132 204 561)
Half-year Report
31 December 2014
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Half-year Report 31 December 2014
CORPORATE DIRECTORY
CHAIRMAN Matthew Driscoll
EXECUTIVE DIRECTORS Reza Zulkarnaen Wim Zulkarnaen
NON-EXECUTIVE DIRECTOR Robert Kipp
COMPANY SECRETARY Leah Watson
PRINCIPAL PLACE OF BUSINESS & REGISTERED OFFICE
Australia
Level 3 North building
333 Collins Street
MELBOURNE VIC 3000
Telephone: +61 3 9629 3898
Facsimile: +61 3 9629 4898
Indonesia
12th Floor, Ratu Plaza Office Tower
Jl. Jend Surdiman 9
JAKARTA 10270
AUDITORS
Grant Thornton
Australia
SHARE REGISTRAR
Boardroom Pty Limited
GPO Box 3993
SYDNEY NSW 2001
Telephone: (within Australia) 1300 737 760
(outside Australia) +61 2 9290 9600
Facsimile: +61 2 9290 9655
STOCK EXCHANGE LISTING
Australian Securities Exchange
(Home Exchange: Melbourne, Victoria)
Code: KRA
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CONTENTS PAGE
Directors’ report 2
Auditor’s independence declaration 9
Consolidated statement of profit or loss and other comprehensive income 10
Consolidated statement of financial position 11
Consolidated statement of changes in equity 12
Consolidated statement of cash flows 13
Notes to the condensed interim consolidated financial statements 14
Directors’ declaration 20
Independent auditor’s review report 21
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DIRECTORS’ REPORT
The Directors of Killara Resources Limited (“Killara”) present their report together with the financial statements of the Consolidated Entity, being Killara Resources Limited (“the Company”) and its Controlled Entities (“the Group”) for the half-year ended 31 December 2014.
Directors
The names of the Company’s directors in 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.
Matthew Driscoll Executive Chairman
Robert Kipp Non-Executive Director (changed from Executive Director 19 June 2014)
Reza Zulkarnaen Executive Director
Wim Zulkarnaen Executive Director
Review of operations and financial results
Killara specialises in exploration for precious metals, energy and base metal resources, with an emphasis on sustainable mining practices and community engagement.
Our mission is to be globally recognised as a leader in the delivery of sought after minerals and energy solutions whilst employing profitable and sustainable mining practices with the collaboration of local communities and government.
The loss of the Company after providing for income tax amounted to $3,882,748 for the half‐year (2013: $507,398 net loss after tax); this is mainly due to the impairment of PT Borneo Emas Hitam (“BEH”) assets during the period amounting to $3,813,807.
Contributed equity increased by $75,000 less capital raising costs from $12,898,680 to $12,972,066 as a result of a private placement during the period. Details of contributed equity are disclosed in note 10 to the financial statements. The proceeds from the capital-raising have been used to meet short-term expenditure needs.
In the half year accounts Killara reports a deficiency of assets of $2.3 million dollars. This is due to the provisioning of impairment against both the value of Killara’s coal assets and its receivable assets in relation to its Indonesian operations. The provisioning is a conservative view and is consistent with accounting standards and the advice of Killara’s Auditors. Where a detailed valuation is provided in the future, the provision for impairment will be adjusted accordingly. It is the intention of Killara directors to undertake a detailed valuation as soon as possible.
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DIRECTORS’ REPORT (continued)
Review of operations and financial results (continued)
Killara’s Indonesian Project - PT Borneo Emas Hitam (KRA 80% interest)
In May 2013 Killara acquired an 80% interest in PT Borneo Emas Hitam. Its location is shown below.
Figure 1: Map of Indonesia and project location
Killara completed the acquisition of an 80% interest in PT Borneo Emas Hitam, a producing Indonesian coal mine. Killara paid US$2.2 million for the interest and also acquired an option over a 60% interest in PT Pagun Taka, a prospective coal deposit in Central Kalimantan, Indonesia, which the Board has decided not to pursue.
Key commercial terms of the agreement were:
Killara to pay US$2.2 million for 80% of BEH;
• Killara will hold 49% of the share capital directly and 31% via a Share Pledge Agreement with
PT Rukis Capital Investment (“PT Rukis”);
• Operational control moves immediately to Killara;
• Killara nominated personnel to join the BEH board, with Killara gaining majority
representation;
• Killara will pay an additional US$3.00 per tonne above a minable reserve threshold of
733,333 tonnes ensuring that the cost of acquisition remains at US$3.00 per tonne; and
• Minable reserve estimates are subject to an independent technical assessment.
Location & permitting
BEH received formal approval for the production permit, i.e. IUP (Izin Usaha Pertambangan) No. 540/005/IUP-OP/MB-PBAT/1/2011 which is listed as ‘clean and clear’ by Indonesia’s department of Energy and Mineral Resources and covers a 1,002ha area in the Tenggarong district, Kutai Kartanegara regency, East Kalimantan province, Indonesia. The mining license had an automatic right for renewal, the renewal application was lodged within the stipulated time frame and manner prescribed and an extension duly issued. The extension period provides for a further term of four years under new permit No. 540/042/IUP-OP/MB-PBAT/XII/2013 that will expire in December 2017.
This successful application and granting of the IUP with the Bupati of Kutai Kartanegara secures a further four year coal production license for the BEH project.
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DIRECTORS’ REPORT (continued)
Review of operations and financial results (continued)
Killara’s Indonesian Project (continued)
Location & permitting (continued)
Tenggarong is three hours travel by car, using provincial roads from Balikpapan. The district is a large coal producer, with all concessions adjoining BEH either in operation or previously subject to mining. Forestry is classified as Areal Penggunaan Lain (Other Land Use Area) which does not require a permit from the Indonesian Ministry of Forestry for exploration or mining activities.
Figure 2 - BEH Project Location
Exploration
• Drilling contractor PT Reka Indo Internusa completed the exploration program on the Eastern
Block at Killara’s PT Borneo Emas Hitam (BEH) coal concession in East Kalimantan. The
program focuses on an additional target (East Expansion) east of the two short term production
targets (Pit 11 and Pit 4) which have been subject to land compensation. Drilling at Pit 11 and
Pit 4 is complete along with geological modelling.
• In addition to that based on this drilling campaign 4 coal seams were found on the undeveloped
area of the Eastern Block.
• Result from drilling to date are within expectations of the Killara geological team. 113 of the 114
holes drilled have intersected target seams. All intervals are apparent thickness and were
adjusted to geophysical log results.
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DIRECTORS’ REPORT (continued)
Review of operations and financial results (continued)
Killara’s Indonesian Project (continued)
Exploration (continued)
Figure 3 - Borehole locations, Land Compensation and Mined Out/Dump Areas
• The BEH concession is divided into 3 (three) blocks which are the eastern block, the central
block and the western block. Killara’s priority for this concession is on the eastern block based
on outcrop and drilling data.
• The current program has focused on the eastern block of the concession, with three short term
production targets (Pit 4, 6 and 8) which have been subject to land compensation previously.
Picture 4 and 5 Core Drilling Activities
Production
• Killara Resources engaged Berkah Ciwi Lestari Kaltim (BCLK) for the production phase of
operations, inclusive of overburden removal and coal extraction. Total coal production for the
period ended 31 March 2014 was 4,557.43 tons. Production of coal stopped in early March due
to issues with the coal contractor. As at the end of the period production had not recommenced
with the board deciding to terminate the contractor agreement in accordance with the terms of
the contractor agreement. This was done in April 2014.
• Drilling plans have been completed by Killara’s independent consultant & drilling contractor PT
Reka Indo Internusa (RII) for the commencement of drilling programs in the Western area of the
concession.
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DIRECTORS’ REPORT (continued)
Review of operations and financial results (continued)
Killara’s Indonesian Project (continued)
Production (continued)
Picture 6. Pit4E mining activities
Picture 7. Crushing activity at the stockpile area
• Production, which commenced in January 2014, has resulted in the extraction of 4,557.43 tons of
coal. The total tonnage produced is lower than anticipated due to factors outside the control of
Killara.
• The production delays experienced with the contractor PT Berkah Ciwi Lestari Kaltim (BCLK) has
resulted in the termination of their services.
• Killara sold its maiden barge of 3,883.941 metric tons of coal from its Borneo Emas Hitam (BEH)
concession located in East Kalimantan, Indonesia to Glencore International AG (Glencore). This
first sale represents a pivotal moment in the history of Killara as it achieves the significant turning
point, with Killara moving from coal explorer to producer.
• Killara is reviewing plans to engage directly in the production process with discussions continuing
with coal traders. If funding of the BEH project via an advance coal sales agreement is successful
BEH will resume its coal production based on the completed mine design at strip ratio of 18.71 that
indicates 230,630.20 minable tons of coal from the Eastern area of BEH concession.
• The general operating conditions for small miners have been rigorously challenging over the past
12 months, principally due to reduced operating margins from lower coal sale prices together with
general subdued share market conditions in the junior mining sector. In order to preserve cash
resources, whilst management work towards bringing BEH back into production, the Board has
embarked on a cost review of all activities.
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DIRECTORS’ REPORT (continued)
Review of operations and financial results (continued)
Killara’s Indonesian Project (continued)
Production (continued)
Picture 8 and 9. Barging Activities
Project pipeline and business strategy
Killara has a very well developed network of business contacts in the Republic of Indonesia and Australia through which it has been, and continues to be, offered a range of resource projects for potential acquisition. Evaluation of these opportunities is on-going.
Over the following three years it is Killara’s objective to acquire a range of mineral resource projects ranging from greenfield opportunities which can add significant upside value, partially developed exploration projects which have had some preliminary exploration work undertaken but require more intensive exploration programs to define the resource and fully functional production projects with produce positive cash flow for Killara.
Despite the continued upward demand for thermal coal Killara is aware of the potential risks. These include but not limited to sovereign risk, commodity price risk and currency risk. Whilst these external factors may pose a threat in Killara’s ability to achieve its strategic objectives, it does have risk mitigating strategies to reduce any potential impacts. Shareholders and potential investors should always remain cognisant that such risks remain as part of the normal aspects of being a mining company.
Corporate
On 23 September 2014 Killara completed a placement of 7,500,000 fully paid ordinary shares at a price of $0.001 each raising a total of $75,000. Events subsequent to reporting date
On 28 January 2015, the Directors agreed to vary the loan agreement dated 29 August 2013 and extend the loan term to 31 May 2015. The Directors are not aware of any other matters or circumstances that have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years.
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DIRECTORS’ REPORT (continued)
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the Auditor’s Independence Declaration as required under s307C of the Corporations Act 2001 is included on page 9 of this financial report and forms part of this Directors Report.
This report is signed in accordance with a resolution of the Board of Directors made pursuant to section 306(3) of the Corporations Act 2001.
Matthew Driscoll
Chairman
On behalf of the board of Directors.
Dated this 11th day of March 2015
COMPETENT PERSONS STATEMENT
Exploration or technical information in this release has been prepared by Mr Ansar Bayanta ST, MTM, who at the time of writing was a full time employee of Killara Resources Limited and a Member of the Australian Institute of Mining and Metallurgy. Mr Bayanta has sufficient experience which is relevant to the style of mineralisation under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” (the JORC Code). Mr Bayanta consents to the release being issued in the form and context in which it appears.
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Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies.
Auditor’s Independence Declaration
To The Directors of Killara Resources Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead
auditor for the review of Killara Resources Limited for the half-year ended 31 December
2014, I declare that, to the best of my knowledge and belief, there have been:
a No contraventions of the auditor independence requirements of the Corporations
Act 2001 in relation to the review; and
b No contraventions of any applicable code of professional conduct in relation to the
review.
GRANT THORNTON AUDIT PTY LTD Chartered Accountants
B. A. Mackenzie
Partner - Audit & Assurance
Melbourne, 11 March 2015
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CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE HALF-YEAR ENDED 31 DECEMBER 2014
Notes 31 December
2014 $
31 December
2013 $
Revenue
Interest revenue 102,965 89,256
Other income 3,273 3,000
Employee benefits expenses (60,077) (453,058)
Equity-based payments (61,806) (28,751)
Occupancy expenses (35,775) 1,150
Depreciation expense (6,451) (7,329)
Consultancy expenses (162,755) (26,469)
Legal and compliance expenses (16,808) 8,092
Exploration expenses incurred (981) (15,939)
Administration expenses 169,474 33,848
Impairment of assets 6,7,8,9 (3,813,807) -
Write-off of exploration and evaluation assets 6 - (111,198)
Loss before income tax (3,882,748) (507,398)
Income tax expense - -
Net loss for the period (3,882,748) (507,398)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations 4,629 (65,940)
Other comprehensive loss for the period, net of tax 4,629 (65,940)
Total comprehensive loss for the period (3,878,119) (573,338)
Loss for the period attributable to:
Owners of the Company (3,109,188) (504,602)
Non-controlling interest (773,560) (2,796)
(3,882,748) (507,398)
Total comprehensive loss attributable to:
Owners of the Company (3,104,559) (570,542)
Non-controlling interest (773,560) (2,796)
(3,878,119) (573,338)
Basic loss per share (cents per share) (3.01) (0.41)
Diluted loss per share (cents per share) (3.01) (0.41)
The accompanying notes form part of these financial statements.
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The accompanying notes form part of these financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2014
Notes 31 December 2014 $
30 June 2014 $
CURRENT ASSETS
Cash and cash equivalents 47,825 28,650
Trade and other receivables 149,262 139,197
Inventories – coal stockpile 7 53,731 68,060
TOTAL CURRENT ASSETS 250,818 235,907
NON-CURRENT ASSETS
Trade and other receivables 8 1,595 1,465,544
Mine properties 9 - 1,951,816
Plant and equipment 19,521 24,800
Other non-current assets 157,879 157,156
TOTAL NON-CURRENT ASSETS 178,995 3,599,316
TOTAL ASSETS 429,813 3,835,223
CURRENT LIABILITIES
Trade and other payables 1,591,225 1,457,581
Borrowings 10 1,043,222 852,205
Provisions 21,764 21,019
TOTAL CURRENT LIABILITIES 2,656,211 2,330,805
NON-CURRENT LIABILITIES
Provisions 45,904 41,899
TOTAL NON-CURRENT LIABILITIES 45,904 41,899
TOTAL LIABILITIES 2,702,115 2,372,704
NET ASSETS (2,272,302) 1,462,519
EQUITY
Issued capital 11 12,972,066 12,898,680
Reserves 1,336,510 1,626,784
Accumulated losses (15,676,118) (12,923,195)
Total equity attributable to owners of the Company (1,367,542) 1,602,269
Non-controlling interest (904,760) (139,750)
TOTAL EQUITY (2,272,302) 1,462,519 For
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE HALF-YEAR ENDED 31 DECEMBER 2014
Attributable to owners of Killara Resources Limited Non-controlling interest
Total equity
Issued capital Accumulated losses Equity based
payment reserve FX reserve
Total
$ $ $ $ $ $ $
Balance at 1 July 2013 12,655,252 (11,670,050) 2,000,946 (4,936) 2,981,212 1,078 2,982,290
Reported loss for the period - (504,602) - - (504,602) (2,796) (507,398)
Reported other comprehensive expense - - - (65,940) (65,940) - (65,940)
Equity settled transactions - - 28,751 - 28,751 - 28,751
Shares issued during the period 253,000 - - - 253,000 - 253,000
Capital raising costs (9,572) - - - (9,572) - (9,572)
Options expired or lapsed - 376,880 (376,880) - - - -
Non-controlling interests on acquisition of subsidiary
- - - - - (337) (337)
Total comprehensive loss - (504,602) - (65,940) (570,542) (2,796) (573,338)
Balance at 31 December 2013 12,898,680 (11,797,772) 1,652,817 (70,876) 2,682,849 (2,055) 2,680,794
Balance at 1 July 2014 12,898,680 (12,923,195) 1,693,779 (66,995) 1,602,269 (139,750) 1,462,519
Reported loss for the period - (3,109,188) - - (3,109,188) (773,560) (3,882,748)
Reported other comprehensive income - - - 4,629 4,629 - 4,629
Equity settled transactions - - 61,806 - 61,806 - 61,806
Shares issued during the period 75,000 - - - 75,000 - 75,000
Capital raising costs (1,614) - - - (1,614) - (1,614)
Expiry/lapse of employees options and performance shares
- 356,265 (356,265) - - - -
Foreign exchange movement on opening balances
- - (444) - (444) 8,550 8,106
Total comprehensive loss - (3,109,188) - 4,629 (3,104,559) (773,560) (3,878,119)
Balance at 31 December 2014 12,972,066 (15,676,118) 1,398,876 (62,366) (1,367,542) (904,760) (2,272,302)
The accompanying notes form part of these financial statements.
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CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 31 DECEMBER 2014
31 December
2014 $
31 December
2013 $
Operating activities
Payments to suppliers and employees (165,035) (608,569)
Payments for exploration and evaluation - (458,957)
Interest received 701 6,765
Interest paid - (8,654)
Net cash used in operating activities (164,334) (1,069,415)
Investing activities
Purchase of plant and equipment - (3,803)
Net cash used in investing activities - (3,803)
Fiancing activities
Proceeds from issue of share capital 75,000 253,000
Payment for share issue costs (1,614) (9,573)
Proceeds from borrowings 109,749 504,741
Proceeds from related entity loans - 26,357
Proceeds from employee loans 936 6,235
Net cash provided by financing activities 184,071 780,760
Net change in cash and cash equivalents 19,737 (292,458)
Cash and cash equivalents at beginning of period 28,650 589,002
Exchange differences on cash and cash equivalents (562) 1,125
Cash and cash equivalents at end of the period 47,825 297,669
The accompanying notes form part of these financial statements.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2014
1. CORPORATE INFORMATION
The interim consolidated financial statements of Killara Resources Limited and its subsidiaries (the “Company” or the “Group”) for the six months ended 31 December 2014 were authorised for issue in accordance with a resolution of the Directors on 11 March 2015.
Killara Resources Limited is a company limited by shares, incorporated in Australia, whose shares are publicly traded on the Australian Securities Exchange (“ASX”). The Group’s principal activity is the exploration and mining of coal in Indonesia.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The condensed interim consolidated financial statements (‘the interim financial statements’) of the Group are for the six (6) months ended 31 December 2014 and are presented in Australian Dollar ($AUD), which is the functional currency of the Parent Company. These general purpose interim financial statements have been prepared in accordance with the requirements of the Corporations Act 2001 and AASB 134 Interim Financial Reporting. They do not include all of the information required in annual financial statements in accordance with Australian Accounting Standards, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 30 June 2014 and any public announcements made by the Group during the half-year in accordance with continuous disclosure requirements arising under the Australian Securities Exchange Listing Rules and the Corporations Act 2001.
Significant accounting policies
The interim financial statements have been prepared in accordance with the same accounting policies adopted in the Group’s last annual financial statements for the year ended 30 June 2014.
The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these interim financial statements.
3. ESTIMATES
When preparing the half-year financial statements, management undertakes a number of judgements, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses. The actual results may differ from the judgements, estimates and assumptions made by management, and will seldom equal the estimated results. The judgements, estimates and assumptions applied in the interim financial statements, including the key sources of estimation uncertainty were the same as those applied in the Group’s last annual financial statements for the year ended 30 June 2014.
4. GOING CONCERN
The financial statements have been prepared on the going concern basis, which assumes continuity of normal business activities and the realisation of assets and settlement of liabilities in the normal course of business.
The Group incurred a loss of $3,882,748 for the half-year ended 31 December 2014 (2013: $507,398) and operating cash outflows of $164,334 (year ended 30 June 2014: $1,636,527). As at 31 December 2014, the Group had a cash balance of $47,825 (year ended 30 June 2014: $28,650) and a working capital deficit of $2,428,743 (year ended 30 June 2014: $2,123,980).
The ability of the Company and the Group to continue to pay its debts as and when they fall due is dependent upon the Company successfully realising the value of its mineral properties, and raising additional capital as required.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2014
4. GOING CONCERN (continued)
The Directors believe it is appropriate to prepare these accounts on a going concern basis because:
• the Directors are currently looking at all commercial options in relation to its PT Borneo Emas Hitam (East Kalimantan) coal project, whether that be a sale of the asset or the recommencement of production;
• the Directors plan to raise additional funds as and when it is required. In light of the Group’s current exploration and development projects, the Directors believe that the additional capital required can be raised in the market;
• two directors have provided a loan facility of up to $1,300,000, for which $256,778 is undrawn as at 31 December 2014; and
• the Directors have an appropriate plan to contain certain operating and exploration expenditure if appropriate funding is unavailable.
The ability of the Group to continue as a going concern is principally dependent upon the successful result of the plans detailed above. These conditions indicate a material uncertainty that may cast significant doubt about the ability of the Group to continue as a going concern.
Based on cash flow forecasts and other factors referred to above, the directors are satisfied that the going concern basis of preparation is appropriate.
Should the Group be unable to continue as a going concern it may be required to realise its assets and extinguish its liabilities other than in the normal course of business and at amounts different to those stated in the financial statements. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or to the amount and classification of liabilities that might result should the Group be unable to continue as a going concern and meet its debts as and when they fall due.
5 SEGMENT REPORTING
The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors. The Board of Directors has determined that segment reporting does not apply for the current reporting period, and the information in this report is reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
Internal reporting does not include operating segments, but the need for operating segments is monitored by the Group’s chief operating decision maker (the Board of Directors) and strategic decisions are made on the basis of consolidated operating results.
There were no Group revenues from external customers during the period (half-year ending 31 December 2013: $Nil) and its non-current assets are divided into the following geographical areas:
31 December 2014
30 June 2014
Non-current Assets
Non-current Assets
$ $
Australia (Domicile) 29,404 32,144
Indonesia 149,591 3,567,172
Total 178,995 3,599,316
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2014
31 December
2014
$
31 December
2013
$
6. LOSS BEFORE INCOME TAX EXPENSE
The following revenue and expense items are relevant in explaining the
financial performance for the half-year:
Write-off project costs
- Ora Banda (Orinda) tenements - 111,198
- 111,198
Impairment losses
- Impairment of loans to related party 1,358,311 -
- Impairment of other debts 413,994 -
- Impairment of stockpile 20,834 -
- Impairment of mine property 2,020,668 -
3,813,807 -
31 December
2014 $
30 June 2014
$
7. INVENTORIES - STOCKPILE
Inventories – stockpile 74,565 68,060
Provision for impairment (20,834) -
53,731 68,060
In recognition of factors such as the continuing drop in world coal prices, an impairment charge has been made against the carrying value of the stockpile.
8. NON-CURRENT TRADE AND OTHER RECEIVABLES
Non-current
Loans to related parties (a) 1,358,311 1,086,208
Loans to related parties, provision for impairment (a) (1,358,311) -
- 1,086,208
Other debtors 415,589 379,336
Other debtors, provision for impairment (413,994) -
1,595 1,465,544
All of the Group’s trade and other receivables have been reviewed for indicators of impairment in relation to the Indonesian operations, and a provision for impairment has been raised accordingly.
(a) In May 2013, the Company acquired an Indonesian Company, PT Borneo Emas Hitam (“BEH”). As a result of the
acquisition, the Company recognised receivables of $1,341,966. At 31 December 2014, $1,772,305 of the non-current receivables relates to receivables in relation to BEH (30 June 2014: $1,464,088). The receivables are from entities who have a direct holding in BEH and the Company expected to recover the receivables through future profits from the BEH project. As at 31 December 2014 the Company is still in the process of obtaining confirmation from the Indonesian Government for the conversion of BEH from a domestic investment company to a foreign investment company (“Pemanaman Modal Asing” or “PMA company”).
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Half-year Report 31 December 2014
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2014
8. NON-CURRENT TRADE AND OTHER RECEIVABLES (Continued)
The recoverability of the receivables is dependent upon the successful commercialisation of the PT Borneo Emas Hitam Project, and due to the presence of indicators of impairment (refer Note 9), a provision for impairment has been raised in relation to these receivables during the half-year ended 31 December 2014.
31 December
2014 $
30 June 2014
$
9. MINE PROPERTIES
Mine properties – at cost 2,033,716 1,964,419
Accumulated amortisation and provision for impairment (2,033,716) (12,603)
- 1,951,816
The following tables show the movements in mine properties:
(a) Gross carrying amount
1 July 2014 to 31 December
2014
$
1 July 2013 to 30 June 2014
$
Cost at beginning of period 1,964,419 -
Transferred from Exploration and Evaluation Assets - 1,971,971
Additions - 127,352
Change in rehabilitation provision - (108,630)
Change in post mining provision - 25,155
Net exchange differences 69,297 (51,429)
At reporting date 2,033,716 1,964,419
(b) Amortisation and impairment
Balance at beginning of period (12,603) -
Amortisation expense - (12,905)
Impairment loss recognised in profit or loss (2,020,668) -
Net exchange differences (445) 302
At reporting date (2,033,716) (12,603)
At the end of the period the Directors reviewed the carrying value of the mine properties, and in recognition of factors such as the continuing drop in world coal prices, meant that the group could no longer carry the value of Indonesian mine properties at the current carrying value. Accordingly, an impairment charge has been made against the carrying value of the mine properties.
10. BORROWINGS
On 29 August 2013, the Group entered into an agreement with Directors whereby the Directors would provide a loan facility of up to $600,000. This was extended to a loan of $1,300,000 during the year ended 30 June 2014. During the half-year, amounts drawn down on this facility amount to $109,748 (half-year to 31 December 2013: $504,741), and the balance of $1,043,222 at 31 December 2014 includes interest payable of $148,745. The loan bears interest at the rate of 12% per annum and is repayable within one year. The proceeds from the loan have been used to meet short-term expenditure needs. No repayments of the loan, except for some interest payments, have been made to the date of this report.
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Half-year Report 31 December 2014
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2014
11. ISSUED CAPITAL AND RESERVES
During the six months ended 31 December 2014, 7,500,000 shares were issued to private investors for cash, corresponding to 5.6% of total shares issued. Each share has the same right to receive dividends and the represents one vote at the shareholders’ meeting of Killara Resources Limited.
Company
31 December 2014
Company
30 June 2014
$ $
132,484,378 (30 June 2014:124,984,378) Issued and fully paid ordinary shares 12,972,066 12,898,680
(a) Movements in ordinary shares on issue $
Number
At 1 July 2014 12,898,680 124,984,378
Shares issued 75,000 7,500,000
Capital raising costs (1,614) -
At 31 December 2014 12,972,066 132,484,378
(b) Movements in options Number
Number
At the beginning of the reporting period 22,000,000 38,000,000
Options expired during the period (6,000,000)
(16,000,000)
At reporting date 16,000,000 22,000,000
(c) Movements in performance share rights
At the beginning of the reporting period 9,000,000 -
Performance share rights A issued in October & November 2013 expiring 27 November 2015 -
4,000,000
Performance share rights B issued in October & November 2013 expiring 30 June 2016 -
4,000,000
Performance share rights C issued in October & November 2013 expiring 31 October 2016 -
4,000,000
Performance share rights forfeited during the period (1,500,000) (3,000,000)
At reporting date 7,500,000 9,000,000
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2014
11. ISSUED CAPITAL AND RESERVES (continued)
The details of other reserves are as follows:
Equity-based payments reserve
$
Foreign currency translation reserve
$
Total
$
Balance at 1 July 2014 1,693,779 (66,995) 1,626,784
Equity-based payments 61,806 - 61,806
Options expired or lapsed (341,510) - (341,510)
Performance share rights forfieted (14,755) (14,755)
Other comprehensive income / (loss) (444) 4,629 4,185
Balance at 31 December 2014 1,398,876 (62,366) 1,336,510
Balance at 1 July 2013
2,000,946
(4,936)
1,996,010
Equity-based payments 28,751 - 28,751
Options expired or lapsed (376,880) - (376,880)
Other comprehensive income - (65,940) (65,940)
Balance at 31 December 2013 1,652,817 (70,876) 1,581,941
12. CONTINGENT LIABILITIES
In the opinion of the directors, there has been no material change in contingent liabilities since the last annual reporting date.
13. EVENTS SUBSEQUENT TO REPORTING DATE
On 28 January 2015, the Directors agreed to vary the loan agreement dated 29 August 2013 and extend the loan term to 31 May 2015.
The Directors are not aware of any other matters or circumstances that have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years.
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Half-year Report 31 December 2014
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DIRECTORS’ DECLARATION
In the opinion of the directors of Killara Resources Limited,
1. The consolidated financial statements and notes of Killara Resources Limited are in accordance with the
Corporations Act 2001, including:
a. giving a true and fair view of financial position as at 31 December 2014 and of its performance for the half-
year ended on that date; and.
b. complying with Accounting Standard AASB 134: Interim Financial Reporting, and
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.
Signed in accordance with a resolution of the Board of Directors made pursuant to section 303(5) of the Corporations Act
2001.
Mr Matthew Driscoll Chairman
11 March 2015
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Correspondence to:
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Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies.
Independent Auditor’s Review Report
To the Members of Killara Resources Limited
We have reviewed the accompanying half-year financial report of Killara Resources Limited
(“Company”), which comprises the statement of financial position as at 31 December 2014,
and the statement of profit or loss and other comprehensive income, statement of changes
in equity and statement of cash flows for the half-year ended on that date, notes comprising
a statement or description of accounting policies, other explanatory information and the
directors’ declaration.
Directors’ responsibility for the half-year financial report
The directors of Killara Resources Limited are responsible for the preparation of the half-
year financial report that gives a true and fair view in accordance with Australian Accounting
Standards and the Corporations Act 2001 and for such controls as the directors determine is
necessary to enable the preparation of the half-year financial report that is free from material
misstatement, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express a conclusion on the half-year financial report based on our
review. We conducted our review in accordance with the Auditing Standard on Review
Engagements ASRE 2410 Review of a Financial Report Performed by the Independent
Auditor of the Entity, in order to state whether, on the basis of the procedures described,
we have become aware of any matter that makes us believe that the half-year financial report
is not in accordance with the Corporations Act 2001 including: giving a true and fair view of
the Killara Resources Limited financial position as at 31 December 2014 and its
performance for the half-year ended on that date; and complying with Accounting Standard
AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the
auditor of Killara Resources Limited, ASRE 2410 requires that we comply with the ethical
requirements relevant to the audit of the annual financial report.
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A review of a half-year financial report consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in accordance
with Australian Auditing Standards and consequently does not enable us to obtain assurance
that we would become aware of all significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
Independence
In conducting our review, we complied with the independence requirements of the
Corporations Act 2001.
Conclusion
Based on our review, which is not an audit, we have not become aware of any matter that
makes us believe that the half-year financial report of Killara Resources Limited is not in
accordance with the Corporations Act 2001, including:
a giving a true and fair view of the Company’s financial position as at 31 December
2014 and of its performance for the half-year ended on that date; and
b complying with Accounting Standard AASB 134 Interim Financial Reporting and
Corporations Regulations 2001.
Material uncertainty regarding going concern
Without qualification to the conclusion expressed above, we draw attention to Note 4 to the
financial statements which notes net operating cash outflows of $164,334 for the half-year
ended 31 December 2014 and a closing cash balance of $47,825. This condition, along with
other matters set forth in Note 4, indicate the existence of a material uncertainty which may
cast significant doubt about the company’s ability to continue as a going concern and
therefore, the company may be unable to realise its assets and discharge its liabilities in the
normal course of business, and at the amounts stated in the financial report.
GRANT THORNTON AUDIT PTY LTD Chartered Accountants
B. A. Mackenzie
Partner - Audit & Assurance
Melbourne, 11 March 2015
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