31 October 2014
Kangaroo Resources Limited
ABN: 38 120 284 040
ASX Code: KRL
SEPTEMBER 201 4 QUARTERLY AC TIVITIES REPO RT
ACTIVITIES REPORT
HIGHLIGHTS
Favorable verdict issued in outstanding legal case.
Good progress being made by BAYAN on new TABANG Coal Haul Road and Senyiur
Port facilities.
Further reductions to monthly outgoings pending commencement of production operations.
Further progress made with additional licenses & permits to enable selected PAKAR North projects to be brought into production in 2016.
Direct Presidential elections held in Indonesia & new President, Vice President and
Cabinet Ministers already in place ( as at 26 Oct 2014) Cash at bank $2.818 million.
CORPORATE
Chimaera & Empire v Kangaroo Resources legal case
The original claim against the Company was for over $28 million. The Supreme Court of Victoria delivered its decision on 16th September 2014 and has ordered the Company to pay a portion of the unpaid expenses incurred by the Plaintiffs in 2010/2011, which equates to $19,831 plus $3,019 in interest. The Plaintiffs' claims were otherwise dismissed.
As part of the same proceedings, the Company was successful in its counter-claim, and the Plaintiffs are required to repay to the Company an amount of US$750,000 that the Company paid to the Plaintiffs during their engagement, plus US$37,520 in interest. The Company will also seek to recover its legal costs in defending the case.
BCBCS (White Energy) v Bayan Resources legal case
The Company continues to be involved in the proceedings between PT Bayan Resources Tbk and BCBCS in Western Australia. The Company is taking no active part in the proceedings. It remains involved for the purpose of challenging the costs orders that were made against it.
Financial
Cash at bank at the end of the Q3 was ~ AU$2.818 million.
While preparing select PAKAR North projects for commencement of production in 2016, the Company has continued to reduce its quarterly cash outgoings throughout 2014 and will continue to review options to tighten budgets even further in 2015 through the:-
Reduction in non-essential expenditure
Reduction in manpower levels
Disposal of under-utilized and surplus assets,
Further reduction of Company debt & associated interest costs.
New Regulations
There has been no further developments or clarifications from the government in Q3 regarding the new regulations on foreign ownership of mining concessions.
PAKAR COAL PROJECT (TA, TJ, DE, OM, SA, CA, BS, AU & SK)
Work is ongoing towards updating and renewing mining exploration licenses and permits and obtaining other necessary permits and approvals to enable mining operations to commence at PAKAR North in 2016.
Processing of applications by the various authorities proved to be slower than expected during Q3 mainly due to the Presidential Elections and associated changes in government ministries and departments. A new Cabinet was appointed in October.
New Infrastructure now connects BAYAN's TABANG projects and the Company's PAKAR projects to a new port at Senyiur on the Kedang Kepala river. This Capex project has been fully funded by BAYAN. Construction of the new infrastructure comprising a new
69Km haul road and river port facility has been ongoing throughout 2014. Trial cargoes have already been carried out and the initial facilities are scheduled to be fully operational and dispatching TABANG coal in early 2015.
Commercial arrangements are being negotiated with Bayan to ensure proportion of the overall infrastructure capacity will be allocated for PAKAR coal scheduled to come on stream during 2016.
MAMAHAK COAL PROJECT (MCM, MEL, MBE & BKL)
Labor and equipment resources have been significantly reduced at MCM in order to minimize monthly costs.
67,300 tonnes of product coal (and 4,200 tonnes of bedding coal) remain in stockpile on site and will be barged to BCT and sold as soon as river levels normalize and allow barging to recommence.
Once the coal has been barged and sold, further reductions to project debt and site costs will be made. Production and exploration at MCM will remain suspended until coal markets improve significantly.
2
GRAHA PANCA KARSA COAL PROJECT (GPK)
Forestry land usage permit is expected to be issued shortly.
The Company is preparing a budget and work plan to carry out a pre-production drilling program to optimise initial mining areas within the initial permitted forestry usage area.
Funding for this initial work program will be through a loan facility from Kangaroo
Resources backed by Bayan Group.
Discussions have been held with neighbouring operational mines with a view to sharing haul road and port infrastructure facilities to reduce capex outlays and construction delays.
Commencement of production operations at GPK will be timed to coincide with an improvement in coal markets.
Options are being reviewed to address foreign investment restrictions that would apply when the Company elects to transfer its commercial rights into equity.
MT RUBY PROJECT
The Company is in discussion with an interested 3rd party regarding disposal of this
Australian exploration tenement.
LIST OF MINING TENEMENTS HELD AT 30 JUNE 2014
Queensland, Australia
Kangaroo Minerals Limited - Mt RUBY Exploration Lease - 100% (Equity)
East Kalimantan, Indonesia
PT Mamahak Coal Mining - 99% (Equity via KOJ) PT Bara Karsa Lestari - 99% (Equity via KOJ)
PT Mahakam Energi Lestari - 99% (Equity via KOJ)
PT Mahakam Bara Energi - 99% (equity via KOJ)
PT Tiwi Abadi - 99% (currently pending share transfer from BAYAN to KRL) PT Tanur Jaya - 99% (Equity)
PT Dermaga Energi - 99% (Equity) PT Orkida Makmur - 99% (Equity) PT Sumber Api - 99% (Equity)
PT Cahaya Alam - 99% (currently pending share transfer from BAYAN to KRL) PT Bara Sejati - 99% (currently pending share transfer from BAYAN to KRL)
PT Apira Utama - 99% (currently pending share transfer from BAYAN to KRL) PT Silau Kencana - 99% (Equity)
PT Graha Panca Karsa - 84.82% (commercial interest currently pending conversion to
equity, with a further obligation to transfer 8% to a third party after equity transfer)
3
GLOSSARY
CORPORATE
Company - Kangaroo Resources Limited (ASX - KRL) BAYAN - PT BAYAN Resources Tbk
TABANG - 3 BAYAN concessions on the northern boundary of PAKAR North
KML - Kangaroo Minerals Pty Limited
WEC - White Energy Company Limited (ASX - WEC)
PMA - Perusahaan Model Asing (local term used for a foreign investment company) BCT - Balikpapan Coal Terminal
MAMAHAK
KOJ - PT Karsa Optima Jaya (the holding company for MCM, MEL, MBE & BKL) MCM - PT Mamahak Coal Mining
BKL - PT Bara Karsa Lestari
MEL - Mahakam Energi Lestari
MBE - Mahakam Bara Energi
Long Hubung - Current Port location on Mahakam River for MAMAHAK projects
PAKAR (NORTH)
TA - PT Tiwi Abadi (currently pending share transfer from BAYAN to KRL) TJ - PT Tanur Jaya
DE - PT Dermaga Energi
PAKAR (SOUTH)
OM - PT Orkida Makmur
SA - PT Sumber Api
CA - PT Cahaya Alam (currently pending share transfer from BAYAN to KRL) BS - PT Bara Sejati (currently pending share transfer from BAYAN to KRL)
AU - PT Apira Utama (currently pending share transfer from BAYAN to KRL)
SK - PT Silau Kencana
PAKAR (NORTH & SOUTH)
SAU - PT Sumber Aset Utama
Senyiur - Proposed port location on Kedang Kepala River for PAKAR projects
GRAHA PANCA
GPK - PT Graha Panca Karsa
Further information: Ian Ogilvie Managing Director T | +61 8 9322 4994
E | [email protected]
W| www.kangarooresources.com
DISCLAIMER: The information concerning production targets in this announcement are not intended to be forecasts. They are internally generated goals set by the board of directors of Kangaroo Resources Limited. The ability of the company to achieve these targets will be largely determined by the company's ability to secure adequate funding, implement mining plans, resolve logistical & permitting issues associated with mining and enter into off take arrangements with reputable third parties.
It is common practice for a company to comment on and discuss its exploration in terms of target size and type. The information above relating to the exploration target should not be misunderstood or misconstrued as an estimate of Mineral Resources or Ore Reserves. Hence the terms Resource(s) or Reserve(s) have not been used in this context. The potential
quantity and grade is conceptual in nature, since there has been insufficient exploration to define a Mineral Resource. It is
uncertain if further exploration will result in the determination of a Mineral Resource.
4
Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report
Appendix 5B
Rule 5.5
Mining exploration entity and oil and gas exploration entity quarterly report
Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10, 01/05/2013
Name of entity
KANGAROO RESOURCES LIMITED
ABN Quarter ended ("current quarter")
38 120 284 040 30 September 2014
Consolidated statement of cash flows
Cash flows related to operating activities
1.1 Receipts from product sales and related debtors
1.2 Payments for (a) exploration & evaluation
(b) development
(c) production
(d) administration
1.3 Dividends received
1.4 Interest and other items of a similar nature received
1.5 Interest and other costs of finance paid
1.6 Income taxes paid
1.7 Other (provide details if material)
Net Operating Cash Flows
+ See chapter 19 for defined terms.
01/05/2013 Appendix 5B Page 1
Appendix 5B
Mining exploration entity and oil and gas exploration entity quarterly report
1.13 Total operating and investing cash flows
(brought forward)
|
(1,544)
|
7,277
|
Cash flows related to financing activities
1.14 Proceeds from issues of shares, options, etc.
1.15 Proceeds from sale of forfeited shares
1.16 Proceeds from borrowings
1.17 Repayment of borrowings
1.18 Dividends paid
1.19 Other (provide details if material)
Net financing cash flows
|
-
-
1,509
-
-
-
|
-
-
5,314 (12,750)
-
-
|
Cash flows related to financing activities
1.14 Proceeds from issues of shares, options, etc.
1.15 Proceeds from sale of forfeited shares
1.16 Proceeds from borrowings
1.17 Repayment of borrowings
1.18 Dividends paid
1.19 Other (provide details if material)
Net financing cash flows
|
1,509
|
(7,436)
|
Net increase (decrease) in cash held
1.20 Cash at beginning of quarter/year to date
1.21 Exchange rate adjustments to item 1.20
1.22 Cash at end of quarter
|
(35)
2,711
142
|
(159)
2,976
1
|
Net increase (decrease) in cash held
1.20 Cash at beginning of quarter/year to date
1.21 Exchange rate adjustments to item 1.20
1.22 Cash at end of quarter
|
2,818
|
2,818
|
Payments to directors of the entity, associates of the directors, related entities of the entity and associates of the related entities
Current quarter
$A'000
1.23 Aggregate amount of payments to the parties included in item 1.2
1.24 Aggregate amount of loans to the parties included in item 1.10
439
NIL
1.25 Explanation necessary for an understanding of the transactions
The amount above includes payments to Directors and their associated companies.
Non-cash financing and investing activities
2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows
NIL
2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest
NIL
+ See chapter 19 for defined terms.
Appendix 5B Page 2 01/05/2013
Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report
Financing facilities available
Add notes as necessary for an understanding of the position.
3.1 Loan facilities
3.2 Credit standby arrangements
Estimated cash outflows for next quarter
4.1 Exploration and evaluation
4.2 Development
4.3 Production
4.4 Administration
Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.
+ See chapter 19 for defined terms.
01/05/2013 Appendix 5B Page 3
Appendix 5B
Mining exploration entity and oil and gas exploration entity quarterly report
Changes in interests in mining tenements and petroleum tenements
6.1 Interests in mining tenements and petroleum tenements relinquished, reduced or lapsed
6.2 Interests in mining tenements and petroleum tenements acquired or increased
Issued and quoted securities at end of current quarter
Description includes rate of interest and any redemption or conversion rights together with prices and dates.
7.5 +Convertible debt securities (description)
+ See chapter 19 for defined terms.
Appendix 5B Page 4 01/05/2013
Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report
7.6 Changes during quarter
(a) Increases through issues (b) Decreases through securities matured, converted
7.12 Unsecured notes (totals only)
Compliance statement
1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 5).
2 This statement does /does not* (delete one) give a true and fair view of the matters disclosed.
Sign here: ............................................................ Date: 31 October 2014
Company secretary
Print name: Michael Loh
Notes
1 The quarterly report provides a basis for informing the market how the entity's
activities have been financed for the past quarter and the effect on its cash position.
+ See chapter 19 for defined terms.
01/05/2013 Appendix 5B Page 5
Appendix 5B
Mining exploration entity and oil and gas exploration entity quarterly report
An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.
2 The "Nature of interest" (items 6.1 and 6.2) includes options in respect of interests in mining tenements and petroleum tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement or petroleum tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.
3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities.
4 The definitions in, and provisions of, AASB 6: Exploration for and Evaluation of
Mineral Resources and AASB 107: Statement of Cash Flows apply to this report.
5 Accounting Standards ASX will accept, for example, the use of International Financial Reporting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.
== == == == ==
+ See chapter 19 for defined terms.
Appendix 5B Page 6 01/05/2013