COCKATOO COAL LIMITED
and its controlled entities
A.B.N. 13 112 682 158
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED
30 JUNE 2016
COCKATOO COAL LIMITED
and its controlled entities
CONTENTS
Page
Overview 1
Chairman's Report 2
Operating and Financial Review 3
Statement of Corporate Governance 11
Directors' Report 12
Lead Auditor's Independence Declaration 26
Consolidated Statement of Profit or Loss and Other Comprehensive Income 27
Consolidated Statement of Changes in Equity 29
Consolidated Statement of Financial Position 30
Consolidated Statement of Cash Flows 31
Notes to the Consolidated Financial Statements 32
Directors' Declaration 72
Independent Auditor's Report 73
Additional Stock Exchange Information 75
Corporate Directory 77
OVERVIEW
Corporate and Financial Summary
-
Cockatoo and three associated companies enter voluntary administration effective 16th November 2015
-
Administrators place Baralaba mine into care and maintenance on 8th February 2016
-
Deed of Company Arrangement (DOCA) executed on 15 March 2016 which, upon effectuation, extinguished all pre existing major liabilities of the Company, including all take-or-pay agreements
-
DOCA effectuated on 30 May 2016 and the Company handed back to the control of the Directors
-
All shareholders retained their shares
-
$100m debt facility provided by Liberty Metals & Mining Holdings, LLC under the DOCA
-
10 billion new ordinary shares issued under the DOCA
-
New $35.5 million fully cash backed bank guarantee facility entered into with ANZ
-
Mining activities to remain in care and maintenance until 2017
-
Impairment of $64.3m on mining assets due to new mine planning and forecasts indicating a lower carrying value
-
Impairment of $6.8m on exploration assets as a result of a review of tenenment holdings
-
New mine plans being developed
Operating Summary
-
Construction of the new train load out facility and balloon loop
-
Commenced construction of the Dawson Highway Overpass
-
Queensland Land Court recommended that the Company's Environmental Authority amendment application to increase production at the Baralaba North Mine be approved. ML 80201 granted on 16th June 2016
-
Divestment of EPC882 to focus on core assets
-
Mining and exploration activities went into care and maintenance during the administration process on 8th February 2016
-
469,932 tonnes of coal produced at the Baralaba mine during the full year
-
668,299 tonnes of coal sold during the full year
-
Continued strong health & safety performance
CHAIRMAN'S REPORT
After what has been another difficult year, Cockatoo Coal Limited (Cockatoo) has now emerged from voluntary administration having been recapitalised, reorganised and reverted to shareholders' and directors' control. The directors and executive management are now firmly focused on returning the Baralaba North mine to production and the Company to profitability.
It is important that Cockatoo shareholders understand that our major asset, the Baralaba North mine, remains in good order and subject to approval of a new mine plan, is now capable of producing our PCI metcoal product at competitive costs.
The crisis the Company faced this year was due to a number of factors, including the sustained fall in coal prices resulting from imbalances in global supply and demand. The impact of these significantly lower coal prices were compounded by (i) the delay and uncertainty in receiving the required permits to increase production above 1 Mtpa; (ii) the corresponding pressure of our 'take-or-pay' contracts, particularly for rail and port charges; and (iii) the cancellation of the Company's bank guarantee facility.
In the absence of higher prices and without a clear pathway to alternate funding in the absence of the ANZ facility, it appeared inevitable that the Company's financial position would not be sustainable within the 2016 financial year which left the Board with few options but to place the Company into voluntary administration.
Following their appointment, the Administrators ran a thorough and lengthy asset sales process contacting more than 100 parties of which 32 signed confidentiality agreements and were provided access to an online data room. The process resulted in a recapitalisation proposal from a major shareholder, Liberty Metals & Mining Holdings, LLC, being recommended by the Administrators. Importantly, this proposal provided for all shareholders to retain their shares and subsequently, a Deed of Company Arrangement was agreed with creditors and the administration was terminated on 30 May 2016. Control of Cockatoo was returned to its directors on behalf of shareholders, although the Company is yet to resume trading on the Australian Stock Exchange. The Company is now working to have trading resumed as soon as possible.
Regrettably, the process of administration and placement of the mine on care and maintenance has been trying on all of the Company's stakeholders, particularly our employees and their families. However, we now look forward to re-starting the mine in 2017 and providing a safe, secure and profitable operation for all returning and new employees and the community of Baralaba. As a reflection of our commitment to this mine and the community, we are proposing to rename the company Baralaba Coal Company Limited.
Finally, I would like to thank the core group of remaining employees for the tireless efforts in shepherding the Company through such challenging times.
These efforts will continue in the year ahead to restore the commercial viability of Cockatoo and its return to trading on the Australian Stock Exchange as quickly as possible.
Mr Peter Richards
Chairman