TIDMPDZ
RNS Number : 7381K
Prairie Mining Limited
26 September 2016
PRAIRIE MINING LIMITED
ANNUAL FINANCIAL REPORT
30 JUNE 2016
ABN 23 008 677 852
CORPORATE DIRECTORY
DIRECTORS: SHARE REGISTRIES:
Mr Ian Middlemas Chairman Australia:
Mr Benjamin Stoikovich Computershare Investor
Director and CEO Services Pty Ltd
Ms Carmel Daniele Non-Executive Level 11
Director 172 St Georges Terrace
Mr Thomas Todd Non-Executive Perth WA 6000
Director Tel: 1300 557 010
Mr Mark Pearce Non-Executive Int: +61 8 9323 2000
Director Fax: +61 8 9323 2033
Mr Todd Hannigan Alternate
Director United Kingdom:
Computershare Investor
COMPANY SECRETARY: Services UK
Mr Dylan Browne The Pavilions
Bridgewater Road
PRINCIPAL OFFICES: Bristol BS13 8AE
London: Telephone: +44 370 702
38 Jermyn Street 0003
London SW1Y 6DN
United Kingdom STOCK EXCHANGE LISTINGS:
Australia:
Poland: Australian Securities Exchange
Ul. Wspolna Home Branch - Perth
35 lok. 4 2 The Esplanade
00-519 Warsaw Perth WA 6000
ASX Code: PDZ - fully paid
Australia (Registered Office): ordinary shares
Level 9, BGC Centre
28 The Esplanade United Kingdom:
Perth WA 6000 London Stock Exchange -
Main Board
Tel: +61 8 9322 6322 10 Paternoster Square
Fax: +61 8 9322 6558 London ECM 7LS
LSE Code: PDZ - fully paid
AUDITOR: ordinary shares
Ernst & Young
Poland:
SOLICITORS: Warsaw Stock Exchange
DLA Piper Ksi ca 4
00-498 Warsaw
BANKERS: WSE Code: PDZ - fully
Australia and New Zealand paid ordinary shares
Banking
CONTENTS
Directors' Report
Consolidated Statement of Profit or
Loss and other Comprehensive Income
Consolidated Statement of Financial
Position
Consolidated Statement of Changes in
Equity
Consolidated Statement of Cash Flows
Notes to and Forming Part of the Financial
Statements
The following sections are available in the full
version of the Annual Financial Report on Prairie
Mining Limited's website: www.pdz.com.au
Notes to and Forming Part of the Financial
Statements
Directors' Declaration
Auditor's Independence Declaration
Independent Auditor's Report
The Directors of Prairie Mining Limited present their report on
the Consolidated Entity consisting of Prairie Mining Limited
("Company" or "Prairie") and the entities it controlled at the end
of, or during, the year ended 30 June 2016 ("Consolidated Entity"
or "Group").
DIRECTORS
The names and details of the Group's Directors in office at any
time during the financial year or since the end of the financial
year are:
Current Directors:
Mr Ian Middlemas Chairman
Mr Benjamin Stoikovich Director and CEO
Ms Carmel Daniele Non-Executive Director (appointed 21 September 2015)
Mr Thomas Todd Non-Executive Director
Mr Mark Pearce Non-Executive Director
Mr Todd Hannigan Alternate Director
Former Directors:
Mr Anastasios Arima Executive Director (resigned 21 September 2015)
Mr Emil Morfett Non-Executive Director (appointed 21 September
2015, resigned 31 July 2016)
Mr John Welborn Non-Executive Director (resigned 21 September 2015)
Unless otherwise stated, Directors held their office from 1 July
2015 until the date of this report.
CURRENT DIRECTORS AND OFFICERS
Mr Ian Middlemas B.Com, CA
Chairman
Mr Middlemas is a Chartered Accountant, a member of the
Financial Services Institute of Australasia and holds a Bachelor of
Commerce degree. He worked for a large international Chartered
Accounting firm before joining the Normandy Mining Group where he
was a senior group executive for approximately 10 years. He has had
extensive corporate and management experience, and is currently a
Director with a number of publicly listed companies in the
resources sector.
Mr Middlemas was appointed a Director of the Company on 25
August 2011. During the three year period to the end of the
financial year, Mr Middlemas has held directorships in Cradle
Resources Limited (May 2016 - present), Paringa Resources Limited
(October 2013 - present), Berkeley Energia Limited (April 2012 -
present), Syntonic Limited (April 2010 - present), Salt Lake Potash
Limited (January 2010 - present), Equatorial Resources Limited
(November 2009 - present), WCP Resources Limited (September 2009 -
present), Sovereign Metals Limited (July 2006 - present), Papillon
Resources Limited (May 2011 - October 2014), Sierra Mining Limited
(January 2006 - June 2014) and Decimal Software Limited (July 2013
- April 2014).
Mr Benjamin Stoikovich B.Eng, M.Eng, M.Sc, CEng, CEnv
Director and CEO
Mr Stoikovich is a mining engineer and professional corporate
finance executive. He has extensive experience in the resources
sector gained initially as an underground Longwall Coal Mining
Engineer with BHP Billiton where he was responsible for underground
longwall mine operations and permitting, and more recently as a
senior executive within the investment banking sector in London
where he gained experience in mergers and acquisitions, debt and
off take financing.
He has a Bachelor of Mining Engineering degree from the
University of NSW; a Master of Environmental Engineering from the
University of Wollongong; and a M.Sc in Mineral Economics from
Curtin University. Mr Stoikovich also holds a 1st Class Coal Mine
Managers Ticket from the Coal Mine Qualifications Board (NSW,
Australia) and is a registered Chartered Engineer (CEng) and
Chartered Environmentalist (CEnv) in the United Kingdom.
Mr Stoikovich was appointed a Director of the Company on 17 June
2013. During the three year period to the end of the financial
year, Mr Stoikovich has not held any other directorships in listed
companies.
Ms Carmel Daniele B.Ec, CA
Non-Executive Director
Ms Carmel Daniele is the founder and Chief Investment Officer of
CD Capital in London. Ms Daniele has over 20 years of global
natural resources investment experience, ten of which was spent
with Newmont Mining/Normandy Mining and acquired companies. As a
Senior Executive (Corporate Advisory) at Newmont she structured
cross-border M&As including the three-way merger between
Franco-Nevada, Newmont and Normandy. Post-merger Ms Daniele
structured the divestment of various non-core mining assets around
the world for the merchant banking arm, Newmont Capital. Ms Daniele
started off her career at Deloitte Touche Tohmatsu. Prior to
setting up CD Capital in London in 2006, Ms Daniele was an
investment advisor to RAB Capital's Special Situations Fund on
sourcing and negotiating natural resource private equity
investments. Ms Daniele holds a Master of Laws (Corporate &
Commercial) and Bachelor of Economics from the University of
Adelaide and is a Fellow of the Institute of Chartered
Accountants.
Ms Daniele was appointed a Director on 21 September 2015. During
the three year period to the end of the financial year, Ms Daniele
has not held any other directorships in listed companies.
Mr Thomas Todd B.Sc (Hons), CA
Non-Executive Director
Mr Todd was the Chief Financial Officer of Aston Resources from
2009 to November 2011. Prior to Aston Resources, Mr Todd was Chief
Financial Officer of Custom Mining, where his experience included
project acquisition and funding of project development for the
Middlemount project to the sale of the company to Macarthur Coal. A
graduate of Imperial College, Mr Todd holds a Bachelor of Physics
with first class Honours. He is a Chartered Accountant (The
Institute of Chartered Accountants in England and Wales) and a
graduate of the Australian Institute of Company Directors.
Mr Todd was appointed a Director on 16 September 2014. During
the three year period to the end of the financial year, Mr Todd has
been an alternate director in Paringa Resources Limited (May 2014 -
Present).
Mr Mark Pearce B.Bus, CA, FCIS, FFin
Non-Executive Director
Mr Pearce is a Chartered Accountant and is currently a Director
of several listed companies that operate in the resources sector.
He has had considerable experience in the formation and development
of listed resource companies. Mr Pearce is also a Fellow of the
Institute of Chartered Secretaries and Administrators and a Fellow
of the Financial Services Institute of Australasia.
Mr Pearce was appointed a Director of the Company on 25 August
2011. During the three year period to the end of the financial
year, Mr Pearce has held directorships in Salt Lake Potash Limited
(August 2014 - present), Syntonic Limited (April 2010 - present),
Equatorial Resources Limited (November 2009 - present), WCP
Resources Limited (September 2009 - present), Sovereign Metals
Limited (July 2006 - present) and Decimal Software Limited (July
2013 - April 2014).
Mr Todd Hannigan B.Eng (Hons)
Alternate Director for Mr Thomas Todd
Mr Hannigan was the Chief Executive Officer of Aston Resources
from 2010 to 2011. During this time, the company significantly
progressed the Maules Creek project, including upgrades to the
project's resources and reserves, completion of all technical and
design work for the Definitive Feasibility Study, negotiation of
two major project stake sales and joint venture agreements,
securement of port and rail access and progression of planning
approvals to final stages. Mr Hannigan has worked internationally
in the mining and resources sector for over 18 years with Aston
Resources, Xstrata Coal, Hanson PLC, BHP Billiton and MIM.
Mr Hannigan was appointed as Alternate for Mr Thomas Todd on 16
September 2014. During the three year period to the end of the
financial year, Mr Hannigan has held a directorship in Paringa
Resources Limited (May 2014 - Present).
Mr Dylan Browne B.Com, CA, AGIA
Company Secretary
Mr Browne is a Chartered Accountant and Associate Member of the
Governance Institute of Australia who commenced his career at a
large international accounting firm and has since worked in the
corporate office of a number of listed companies that operate in
the resources sector. Mr Browne was appointed Company Secretary of
the Company on 25 October 2012.
PRINCIPAL ACTIVITIES
The principal activities of the Group during the financial year
consisted of the exploration and development of resource projects.
No significant change in nature of these activities occurred during
the year.
OPERATING AND FINANCIAL REVIEW
Operations
Highlights during, and subsequent to, the financial year end
include:
(i) Cash in excess of $18 million at 30 June 2016, placing the
Company in an excellent position to complete its planned
development activities for the Jan Karski Mine at the Lublin Coal
Project ("Project");
(ii) Coal Markets continue to improve with global coal prices
improving by 30% in 2016 and are forecast to recover further over
the medium to long term. Coal is set to remain critical to Poland's
economy, currently providing over 80% of the country's energy needs
and providing critical raw materials for the steel industry;
(iii) A Pre-Feasibility Study ("PFS") was completed during the
year confirming the robust economics and technical viability of the
Project to be developed as an ultra-low cost supplier of hard coal
into major European markets;
(iv) Development funding - preliminary discussions with
strategic partners, EPC contractors, global project finance banks
and potential offtakers have now commenced following the excellent
results of the PFS published in the year;
(v) Completed an investment agreement ("Investment Agreement")
with CD Capital Natural Resources Fund III LP ("CD Capital") for an
investment in Prairie's 100% owned subsidiary, PDZ Holdings Pty Ltd
("PDZ Holdings"), of up to A$83 million to upgrade, expand and
develop the Project, and included the issue of non-interest bearing
convertible loan notes ("Convertible Notes") with an aggregate
principal amount of $15 million to CD Capital, exchangeable for
ordinary shares of Prairie at $0.335 per share;
(vi) Secured a three year exclusive right to apply and be
granted a mining concession for the Project following the approval
of geological documentation by the Polish Ministry of Environment
("MoE");
(vii) Completed the admission of the Company's ordinary shares
on the main market of the London Stock Exchange and the main market
of the Warsaw Stock Exchange. Following the admissions, Prairie has
enjoyed high volumes and good liquidity on the Warsaw Stock
Exchange which has highlighted the strong local market support for
the Company; and
(viii) Prairie completed a number of significant work streams in
relation to the ongoing mining concession application including
completion of a draft Deposit Development Plan ("DDP"), substantial
progress on the Environmental and Social Impact Assessment
("ESIA"); commencement of local land rezoning amendments in the
Project mine area, continued with the land acquisition process
aimed at securing access to the planned surface infrastructure
sites for Project development, lodged application for power grid
connection at the project and progressed with planning the railway
spur line connection to the national railway network.
Jan Karski Mine at the Lublin Coal Project
Completion of Pre-Feasibility Study
In March 2016, the Company completed a PFS at the Project,
confirming the robust economics and technical viability of the
Project to be developed as an ultra-low cost supplier of hard coal
into major European markets. Please refer to announcement released
by the Company on 8 March 2016.
CD Capital to Invest up to $83m in Prairie's Project
On 21 September 2015, Prairie completed an investment agreement
with CD Capital to raise up to $83 million. CD Capital have
committed to be a key strategic funding partner in the upgrading,
expansion and development of the Project.
The transaction was approved by shareholders on 21 September
2015 and is structured in three tranches as follows:
-- a private placement by PDZ Holdings (a wholly-owned
subsidiary of Prairie which indirectly holds the LCP) of
non-interest bearing Convertible Notes with an aggregate principal
amount of $15 million to CD Capital, exchangeable for ordinary
shares of Prairie at $0.335 per share;
-- on the conversion of the Convertible Notes, the grant of
unlisted options in Prairie with an exercise price of A$0.60 per
option ("CD Options") for a further $13 million once exercised;
and
-- a priority right for CD Capital to invest a further A$55
million in any future funding conducted by Prairie.
The receipt by PDZ Holdings of the initial $15 million is being
used to fund the de-risking of the Project towards a construction
decision. The completion of the transaction will fully fund all
required works up to a positive mine development decision at the
Project, including the completion of a DFS and all required
permitting.
CD Capital securing rights to provide $55 million as part of any
future Prairie fund raising provides a solid platform for Prairie
to progress project financing for the successful development of the
LCP, which has now commenced.
Under the investment agreement, CD Capital has currently
appointed Ms Carmel Daniele to the Board of Prairie.
CD Capital is a global natural resources private equity fund
with a proven track record of successfully identifying and
investing in world-class mining and resource assets at the growth
equity stage. CD Capital unlocks value in high quality mining
projects through a strategic hands-on approach to development and
has a long term investment horizon. CD Capital's underlying
investor base is made up of professional institutional investors
with strong representation from endowments and foundations.
Approval of Geological Documentation
On 1 July 2015, Prairie announced that it had secured the
Exclusive Right to apply for, and consequently be granted, a mining
concession for the Project. This follows the approval by Poland's
MoE of Prairie's previously submitted geological documentation and
is in accordance with the terms of the Polish Geological and Mining
Law (2011) ("GML"). Geological documentation is a resource estimate
prepared according to the standards prescribed in the Polish
resource reporting code and follows the successful completion of
all required exploration works by Prairie under its concession
commitments with the MoE.
As a result of its geological documentation being approved,
Prairie is now the only entity that can lodge a mining concession
application over the LCP within the next three (3) years. The
Company is advancing technical and environmental feasibility
programs for the LCP in accordance with standards of international
best practice and intends to submit the mining concession
application for the Project in mid-2017.
The approved Geological Documentation covers an area comprising
all four of the original exploration concessions granted to Prairie
(K-4-5, K-6-7, K-8 and K-9) and includes the full extent of the
targeted resources within the mine plan for the Project. As part of
its application for the approval of Geological Documentation,
Prairie relinquished a small area to the north of the K-9
concession as the coal within this region has been deemed not of
mineable thickness. In addition, Prairie's geological documentation
does not include the Sawin-Zachod concession which may be added at
a later date.
London Stock Exchange and Warsaw Stock Exchange Listings
In September 2015, the Company completed the admission of its
ordinary shares on the main market of the London Stock Exchange and
on the main market of the Warsaw Stock Exchange. Following the
admissions, Prairie has enjoyed high volumes and good liquidity on
the Warsaw Stock Exchange which has highlighted the strong local
market support for the Company.
Divestment of Prairie Downs Metals Project ("BMP")
Subsequent to the end of the year, Prairie altered the terms of
the farm-in agreement ("Farm-In Agreement") with Marindi Metals
Limited ("Marindi"). Under the terms of the Farm-In Agreement,
Marindi can earn a 100% interest in the BMP by electing to pay
Prairie $0.5 million in cash (which Prairie received on 27 May
2015), $0.325 million on or before 30 September 2016 and $0.325
million on or before 31 March 2017, with Prairie retaining a 2.5%
Net Smelter Royalty.
The Farm-In Agreement allows Prairie to focus 100% of its time,
energy and resources on the Polish coal operations.
Results of Operations
The net loss of the Consolidated Entity for the year ended 30
June 2016 was $6,761,400 (2015: $5,152,146). Significant items
contributing to the current year loss and the substantial
differences from the previous financial year include:
(i) Exploration and Evaluation expenses of $4,830,109 (2015:
$7,301,685), which is attributable to the Group's accounting policy
of expensing exploration and evaluation expenditure incurred by the
Group subsequent to the acquisition of rights to explore and up to
the commencement of a bankable feasibility study for each separate
area of interest. As a direct result of exploration and evaluation
activities conducted during the year, the Group achieved key
milestones including (i) approval of geological documentation and
securing a three year exclusive right to apply for a mining
concession at the LCP; (ii) confirming the robust economics and
technical viability of the Project to be developed as an ultra-low
cost supplier of hard coal into major European markets; (iii)
announcement of a maiden ore reserve for the Project; (iv)
announcing an update coal resource estimate for the Project; and
(v) continued progression of the DDP, ESIA and spatial planning
process for the Project;
(ii) Business development expenses of $1,219,309 (2015:
$1,301,836) which includes expenses in relation to the Group's
investor relations activities including, costs in relation to the
admission of the Company's shares on the London Stock Exchange and
Warsaw Stock Exchange in 2016 and other business development costs
incurred during the year include brokerage fees, travel costs,
attendances at conferences and consultant costs;
(iii) Non-cash share-based payment expenses of $1,723,271 (2015:
$1,576,867) due to incentive securities issued to key management
personnel and other key employees and consultants of the Group as
part of the long-term incentive plan to reward key management
personnel and other key employees and consultants for the long term
performance of the Group. The expense results from the Group's
accounting policy of expensing the fair value (determined using an
appropriate pricing model) of incentive securities granted on a
straight-line basis over the vesting period of the options and
rights. The slight decrease in share-based payment expenses in 2016
compared to 2015 is attributable to lower fair values of incentive
securities being issued to key employees and consultants of the
Group;
(iv) Non-cash gain on the derecognition of available-for-sale
financial assets of nil (2015: $9,593,775). At 1 July 2014, the
Company held 10.0 million fully paid ordinary shares in Papillon
Resources Limited ("Papillon") (ASX:PIR). During the prior year,
Papillon implemented a scheme of arrangement by which B2Gold Corp
(TSX:BTO) ("B2Gold") acquired all of the issued shares in Papillon
("Scheme"). In consideration for the Scheme, Prairie received 0.661
B2Gold shares for every Papillon share held. As a result of the
Scheme, the Company was required to derecognise the Papillon
available-for-sale asset. The Company subsequently recognised the
B2Gold shares as a held-for-trading (fair value through profit and
loss) financial asset;
(v) Other income of $1,765,429 (2015: $1,823,851) which is the
result of the non-cash fair value gain of $1,132,966 (2015: fair
value loss of 1,063,846) on the B2Gold financial assets at fair
value through profit and loss due to the appreciation in the B2Gold
share price and fair value during the year. A further non-cash fair
value gain of $632,463 (2015: nil) is attributable to the fair
value movement of the conversion right of the Convertible Notes
accounted as a financial liability at fair value through profit and
loss. In 2016, the Group recognised nil income (2015: $1,323,851)
on the net gain on sale of available-for-sale financial assets, as
in 2016 the Group derecognised the Papillon available-for-sale
asset as discussed in point (iii) above. In 2016 the Company
received nil (2015: $500,000) as a result of the Farm-In Agreement
with Marindi; and
(vi) An income tax expense of $nil (2015: $4,410,000) as a
result of the sell down and derecognition of available-for-sale
assets that occurred in 2015.
Financial Position
At 30 June 2016, the Company had cash reserves of $18,063,119
(2015: $2,076,409) placing it in an excellent position to conduct
its planned development activities at the Project.
At 30 June 2016, the Company had net assets of $17,815,760
(2015: $9,399,258), an increase of 90% compared with the previous
year. This is consistent with and largely attributable to the
receipt of $15 million pursuant to the CD Capital Investment
Agreement, the sale of and increase in value of the held-for-sale
B2Gold listed securities held by the Company during the year. These
gains have been offset by the current year's net loss after
tax.
Business Strategies and Prospects for Future Financial Years
Prairie's strategy is to create long-term shareholder value by
continuing to explore and develop the LCP in Poland.
To date, the Group has not commenced production of any minerals.
To achieve its objective, the Group currently has the following
business strategies and prospects:
-- a Definitive Feasibility Study will commence after all
Project options have been suitably examined and an ultimate "go
forward" case has been selected;
-- continue the mining concession process for the Project,
having been granted the 3 year Priority Right, including the
rezoning of land for mining use, the completion of a DDP and ESIA
for the Project and submission of these to the relevant authorities
for approval. Once approved the Company will apply for a mining
concession for the Project;
-- continue financing discussions with strategic partners, EPC
contractors, global project finance banks and potential offtakers
following the excellent results of the PFS published in the
year;
-- continuation of other required Project permitting activities
including spatial planning and land acquisition;
-- review of new business opportunities that may compliment and
/ or add synergies to the Company's existing Project;
-- continued development activity across the Project
specifically aimed at improving knowledge of hydrogeological
conditions and confirming the definitive shaft site location;
and
-- conduct additional exploration at the Sawin-Zachod exploration concession.
All of these activities are inherently risky and the Board is
unable to provide certainty of the expected results of these
activities, or that any or all of these likely activities will be
achieved. The material business risks faced by the Group that could
have an effect on the Group's future prospects, and how the Group
manages these risks, include the following:
-- The Company's activities will require further capital in
future years - The Company currently has cash in excess of $18
million which places it in an excellent position to conduct its
current planned exploration and development activities. However,
the ability of the Company to finance capital investment in future
years for the development, construction and future operation of the
Project is dependent, among other things, on the Company's ability
to raise additional future funding either through equity or debt
financing. Any failure to obtain sufficient future financing may
result in delaying or indefinite postponement of any future
development or construction of the Project or even a loss of
property interest (in the future). The key items in respect of
which the Company would require further funding in future years
would be for the development and construction of the mine at the
Project. In this regard however, and pursuant to the CD Capital
investment agreement, CD Capital has a first right to invest a
further $55 million in any future fund raise conducted by the
Company. There is however no guarantee that CD Capital would take
up this right in the future and there is a risk that the Company's
obligation to offer CD Capital a first right of refusal on any
future fund raising could prejudice the Company's ability to raise
funds from investors other than CD Capital. However, the Company
considers that it would not be necessary to undertake such
development actions until it has secured financing to do so and the
timing for commencement of such actions would accordingly depend on
the date that such financing is secured. If, in the unlikely event
that future financing cannot be secured, the Group has the
flexibility and ability to significantly reduce its ongoing
expenditure.
Furthermore, the Company's board of directors has a successful
track record of fundraising for natural resources projects,
including large scale coal projects, and has completed successful
financing transactions with strategic partners, large institutional
fund managers, off-take partners and traders and project finance
lenders. There is however no guarantee that the then prevailing
market conditions will allow for a future fundraising or that new
investors will be prepared to subscribe for ordinary shares or at
the price at which they are willing to do so in the future. Failure
to obtain sufficient future financing may result in delaying or
indefinite postponement of appraisal and any development of the
Project in the future, a loss of the Company's personnel and
ultimately a loss of its interest in the Project if it were unable
to successfully apply for a mining concession for the Project
before the expiry of the Priority Right. There can be no assurance
that additional future capital or other types of financing will be
available, if needed, or that, if available, the terms of such
future financing will be favourable to the Company;
If the Company obtains debt financing in the future, it will be
exposed to the risk of leverage and its activities could become
subject to restrictive loan and lease covenants and undertakings.
If the Company obtains future equity financing other than on a pro
rata basis to existing Shareholders, the future percentage
ownership of the existing Shareholders may be reduced, Shareholders
may then experience subsequent dilution and/or such securities may
have preferred rights, options and pre-emption rights senior to the
Ordinary Shares. There can be no assurance that the Company would
be successful in overcoming these risks in the future or any other
problems encountered in connection with such financings;
-- Risk of further challenges by Bogdanka - In April 2015 the
MoE issued a decision approving geological documentation for the
Project. During administrative proceedings related to the approval
of the Company's geological documentation, Lubelski Wegiel Bogdanka
("Bogdanka") filed a motion to be admitted as a party to these. On
25 June 2015, the MoE issued its final decision rejecting
Bogdanka's application to be admitted as a party to the proceedings
relating to the approval of geological documentation. This means
that the MoE decision approving the Company's geological
documentation is final - providing the Company with a three year
priority right to apply for a mining concession for the LCP and
confirms that the Company's geological documentation complies with
the legal requirements of the Polish Geological Mining Law.
Furthermore in 2014, Bogdanka submitted a mining concession
application over the Company's K-6-7 exploration concession. In
September 2015, the MoE rejected Bogdanka's mining concession
application over the K-6-7 concession which confirmed that
Bogdanka's application was inadmissible. Bogdanka subsequently
filed a case to reconsider with the MoE which was further rejected
by the MoE confirming the Company's security of tenure and
exclusive right to apply for a mining concession for the K-6-7
concession. In December 2014, Bogdanka appealed this final decision
by the MoE with a regional administrative court, which was rejected
by that court, in March 2016.
Bogdanka has since made a further appeal to the Supreme
Administrative Court with no court hearing being scheduled to date.
The Supreme Administrative Court has no authority to grant Bogdanka
a concession but it may however cancel the MoE's original rejection
decision. If the Supreme Administrative Court does cancel the MoE
decision, the MoE will be required to re-assess Bogdanka's mining
concession application. These proceedings do not relate to the
Prairie's valid and existing priority right to apply for a mining
concession over the K-6-7 area. As discussed above Bogdanka has in
the past raised several appeals challenging the Company's title to
the exploration concessions comprising the Project and to actions
by government departments in the approval process for the Project.
There is therefore no guarantee that Bogdanka will not seek to file
further appeals to future decisions taken by government departments
in the course of the Project development timeline;
-- The Company has limited operating history - The Company has a
limited operating history on which it can base an evaluation of its
prospects. Despite this, members of the Company's Board of
Directors and management team have considerable experience in the
exploration, appraisal, funding development and mining of coal
projects both globally and within the Lublin Coal Basin. The future
success of the Company is dependent upon a number of factors,
including the successful: (i) completion of positive technical and
feasibility studies which demonstrates that mining of coal can be
economically undertaken at the Project; (ii) design, construction
and commissioning of the infrastructure required for the Project;
(iii) progression of permitting including acquiring a mining
concession for the Project and the maintenance of title for
Project; and (iv) identification of, and agreement with, strategic
partners, offtakers and other financiers to fund and assist with
the future development and operation of mining at the Project. The
prospects of the Company must be considered in light of the risks,
expenses and difficulties frequently encountered by companies in
their early stage of development, particularly in the mineral
exploration sector, which has a high level of inherent
uncertainty;
-- Operations conducted in an emerging market - The Company's
operations are located in Poland and will be exposed to related
risks and uncertainties associated with this jurisdiction. Changes
in mining or investment policies, laws or regulations (or the
application thereof) or shifts in political attitude in Poland, in
particular to mining, use of coal, and foreign ownership of coal
projects may adversely affect the operation or profitability of the
Company. The Company continues to consult with the various levels
of Government but there can be no assurances that the future
political developments in Poland will not directly impact the
Company's operations or its ability to attract funding for its
operations. The Company also competes with many other companies in
Poland, including companies with established mining operations.
Some of these companies have greater financial resources and
political influence than the Company and, as a result, may be in a
better position to compete with or impede the Company's current or
future activities;
-- The Company may be adversely affected by fluctuations in coal
prices - The price of coal can fluctuate widely and is affected by
numerous factors beyond the control of the Company. Coal prices are
currently depressed from previous levels and there is no guarantee
that they will recover. Future production, if any, from the
Company's mineral properties and its profitability will be
dependent upon the price of coal being adequate to make these
properties economic. The Company currently does not engage in any
hedging or derivative transactions to manage commodity price risk.
As the Company's operations change, this policy will be reviewed
periodically going forward; and
-- Global financial conditions may adversely affect the
Company's growth and profitability - Many industries, including the
mineral resource industry, are impacted by these market conditions.
Some of the key impacts of the current financial market turmoil
include contraction in credit markets resulting in a widening of
credit risk, devaluations and high volatility in global equity,
commodity, foreign exchange and precious metal markets, and a lack
of market liquidity. The exploration and any development of the
Company's exploration properties will require substantial funding.
Due to the current nature of the Company's activities, a slowdown
in the financial markets or other economic conditions may adversely
affect the Company's growth, or rate of growth, and ability to fund
its activities. If these increased levels of volatility and market
turmoil continue, the Company's activities could be adversely
impacted and the trading price of the Company's shares could be
adversely affected.
EARNINGS PER SHARE
2016 2015
Cents Cents
---------------------------------- ------- -------
Basic and diluted loss per share (4.52) (3.81)
---------------------------------- ------- -------
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Group's operations are subject to various environmental laws
and regulations under the relevant government's legislation. Full
compliance with these laws and regulations is regarded as a minimum
standard for all operations to achieve.
Instances of environmental non-compliance by an operation are
identified either by external compliance audits or inspections by
relevant government authorities.
There have been no significant known breaches by the Group
during the financial year.
DIVIDS
No dividends were paid or declared since the start of the
financial year. No recommendation for payment of dividends has been
made (2015: nil).
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no significant changes in the state of affairs of the
Group during the year other than the following:
(i) On 1 July 2015, the Company announced that it had secured a
three year exclusive right to apply and be granted a mining
concession for the Project following the approval of its geological
documentation by the Polish MoE;
(ii) In September 2015, the Company commenced trading of its
shares on the main boards of the London Stock Exchange and Warsaw
Stock Exchange;
(iii) On 21 September 2015, following shareholder approval, the
Company completed an investment agreement with CD Capital for an
investment in PDZ Holdings to raise up to A$83 million to upgrade,
expand and develop the Project;
(iv) On 21 September 2015, in accordance with the investment
agreement with CD Capital, the Company appointed CD Capital's
nominee directors, Ms Carmel Daniele and Mr Emil Morfett, as
Non-Executive Directors of the Company. As a result of CD Capital
director appointments, Mr Welborn and Mr Arima resigned as
directors of the Company;
(v) On 8 March 2016, the Company announced the results from a
PFS on the Project which confirmed the robust economics and
technical viability of the Project to be developed as an ultra-low
cost supplier of hard coal into major European markets; and
(vi) On 29 March 2016, the Company announced that a Warsaw
administrative court had rejected Lubelski W giel BOGDANKA's
administrative complaints against MoE regarding the Project which
confirmed Prairie's security of tenure and exclusive right to take
the K-6-7 concession, as part of the Project, through to mining
production.
SIGNIFICANT EVENTS AFTER BALANCE DATE
(i) On 13 July 2016, Mr Janusz Jakimowicz resigned from his
position as President of the PD Co sp z o.o. Management Board;
(ii) On 31 July 2016, Mr Emil Morfett resigned as a
non-executive director of the Company; and
(iii) On 12 September 2016, Prairie altered the terms of the
Farm-In Agreement with Marindi allowing Marindi to earn a 100%
interest in the BMP by electing to pay Prairie $0.5 million in cash
(which Prairie received on 27 May 2015), $0.325 million in cash on
or before 30 September 2016 and $0.325 million in cash on or before
31 March 2017.
Other than as outlined above, at the date of this report, there
are no matters or circumstances, which have arisen since 30 June
2016 that have significantly affected or may significantly
affect:
-- the operations, in financial years subsequent to 30 June 2016, of the Consolidated Entity;
-- the results of those operations, in financial years
subsequent to 30 June 2016, of the Consolidated Entity; or
-- the state of affairs, in financial years subsequent to 30
June 2016, of the Consolidated Entity.
DIRECTORS' INTERESTS
As at the date of this report, the Directors' interests in the
securities of the Company are as follows:
Interest in securities at the
date of this report
----------------------------------------
Ordinary Options(2) Performance
Shares(1) Rights(3)
------------------------ ----------- ------------- ------------
Mr Ian Middlemas 10,600,000 - -
Mr Benjamin Stoikovich - 3,000,000 2,500,000
Ms Carmel Daniele(4) - - -
Mr Thomas Todd 2,800,000 1,400,000(5) -
Mr Mark Pearce 3,000,000 - -
Mr Todd Hannigan 3,146,398 1,400,000(5) -
------------------------ ----------- ------------- ------------
Notes:
(1) "Ordinary Shares" means fully paid Ordinary Shares in the capital of the Company.
(2) "Options" means an option to subscribe for one Ordinary Share in the capital of the Company.
(3) "Performance Rights" means Performance Rights issued by the
Company that convert to one Ordinary Share in the capital of the
Company upon vesting of various performance conditions.
(4) As founder and controller of CD Capital, Ms Daniele has an
interest in the Convertible Notes and the right of CD Capital to
acquire 44,776,119 Ordinary Shares and 21,388,060 $0.60 CD Options
which may result in the issue of an additional 21,388,060 Ordinary
Shares.
(5) On 11 September 2014, 1,400,000 Unlisted Options were issued
to T2 Resources Pty Ltd, a Company in which Messrs Todd and
Hannigan are directors and shareholders.
SHARE OPTIONS AND PERFORMANCE RIGHTS
At the date of this report the following options and rights have
been issued over unissued Ordinary Shares of the Company:
-- 1,600,000 Unlisted Options exercisable at $0.35 each on or before 30 June 2017;
-- 4,460,000 Unlisted Options exercisable at $0.45 each on or before 30 June 2017;
-- 765,000 Unlisted Options exercisable at $0.60 each on or before 30 June 2017;
-- 1,400,000 Unlisted Options exercisable at $0.45 each on or before 30 June 2018;
-- 9,397,000 Performance Rights with various vesting conditions
and expiry dates between 30 June 2017 and 31 December 2020; and
-- Pursuant to the Investment Agreement, CD Capital has the
right to acquire 44,776,119 Ordinary Shares (on conversion of the
Convertible Notes) and 21,388,060 $0.60 CD Options which may result
in the issue of an additional 21,388,060 Ordinary Shares.
During the year ended 30 June 2016, nil Ordinary Shares have
been issued as a result of the exercise of Unlisted Options, and
3,649,000 Ordinary Shares have been issued as a result of the
conversion of 3,649,000 Performance Rights. Subsequent to year end
and up until the date of this report, nil Ordinary Shares have been
issued as a result of the exercise of Unlisted Options, and nil
Ordinary Shares have been issued as a result of the conversion of
Performance Rights.
INDEMNIFICATION AND INSURANCE OF OFFICERS AND AUDITORS
The Constitution of the Company requires the Company, to the
extent permitted by law, to indemnify any person who is or has been
a Director or officer of the Company or Group for any liability
caused as such a Director or officer and any legal costs incurred
by a Director or officer in defending an action for any liability
caused as such a Director or officer.
During or since the end of the financial year, no amounts have
been paid by the Company or Group in relation to the above
indemnities.
During the financial year, an annualised insurance premium was
paid to provide adequate insurance cover for directors and officers
against any potential liability and the associated legal costs of a
proceeding.
To the extent permitted by law, the Company has agreed to
indemnify its auditors, Ernst & Young, as part of the terms of
its audit engagement agreement against claims by third parties
arising from the audit (for an unspecified amount). No payment has
been made to indemnify Ernst & Young during or since the
financial year.
REMUNERATION REPORT (AUDITED)
This Remuneration Report, which forms part of the Directors'
Report, sets out information about the remuneration of Key
Management Personnel ("KMP") of the Group.
Details of Key Management Personnel
Details of the KMP of the Group during or since the end of the
financial year are set out below:
Directors
Mr Ian Middlemas Chairman
Mr Benjamin Stoikovich Director and CEO
Ms Carmel Daniele Non-Executive Director (appointed 21 September 2015)
Mr Thomas Todd Non-Executive Director
Mr Mark Pearce Non-Executive Director
Mr Todd Hannigan Alternate Director
Former Directors
Mr Anastasios Arima Executive Director (resigned 21 September 2015)
Mr Emil Morfett Non-Executive Director (appointed 21 September
2015, resigned 31 July 2016)
Mr John Welborn Non-Executive Director (resigned 21 September 2015)
Other KMP
Mr Janusz Jakimowicz President of the PD Co sp z o.o. Management
Board (resigned 13 July 2016)
Mr Artur Kluczny Vice President of the PD Co sp z o.o. Management Board
Mr Hugo Schumann Executive - Corporate Development (ceased 31 December 2015)
Mr Dylan Browne Company Secretary
Unless otherwise disclosed, the KMP held their position from 1
July until the date of this report.
Remuneration Policy
The Group's remuneration policy for its KMP has been developed
by the Board taking into account the size of the Group, the size of
the management team for the Group, the nature and stage of
development of the Group's current operations, and market
conditions and comparable salary levels for companies of a similar
size and operating in similar sectors. In addition to considering
the above general factors, the Board has also placed emphasis on
the following specific issues in determining the remuneration
policy for KMP:
(a) the Group is currently focused on undertaking exploration,
appraisal and development activities;
(b) risks associated with small cap resource companies whilst
exploring and developing projects; and
(c) other than profit which may be generated from asset sales,
the Company does not expect to be undertaking profitable operations
until sometime after the commencement of commercial production on
any of its projects.
Executive Remuneration
The Group's remuneration policy is to provide a fixed
remuneration component and a performance based component (short
term incentive and long term incentive). The Board believes that
this remuneration policy is appropriate given the considerations
discussed in the section above and is appropriate in aligning
executives' objectives with shareholder and business
objectives.
Fixed Remuneration
Fixed remuneration consists of base salaries, as well as
employer contributions to superannuation funds and other non-cash
benefits. Non-cash benefits may include provision of car parking
and health care benefits.
Fixed remuneration is reviewed annually by the Board. The
process consists of a review of company and individual performance,
relevant comparative remuneration externally and internally and,
where appropriate, external advice on policies and practices.
Performance Based Remuneration - Short Term Incentive
("STI")
Some executives are entitled to an annual cash incentive payment
upon achieving various key performance indicators ("KPI's"), as set
by the Board. Having regard to the current size, nature and
opportunities of the Company, the Board has determined that these
KPI's will include measures such as successful commencement and/or
completion of exploration activities (e.g. commencement/completion
of exploration programs within budgeted timeframes and costs),
establishment of government relationship (e.g. establish and
maintain sound working relationships with government and
officialdom), development activities (e.g. completion of
infrastructure studies and commercial agreements), corporate
activities (e.g. recruitment of key personnel and representation of
the company at international conferences) and business development
activities (e.g. corporate transactions and capital raisings).
These measures were chosen as the Board believes they represent the
key drivers in the short and medium term success of the Project's
development. On an annual basis, subsequent to year end, the Board
assesses performance against each individual executive's KPI
criteria. During the 2016 financial year, and due to market
conditions a total cash incentive payment sum of nil (2015:
$213,465) was paid, or is payable, to KMP.
Performance Based Remuneration - Long Term Incentive
The Group has adopted a long-term incentive plan ("LTIP")
comprising the "Prairie Employee and Contractors Performance Rights
Plan" (the "Plan") to reward KMP and key staff (including eligible
employees and contractors) for long-term performance. Shareholders
approved the Plan in November 2013 at an Annual General Meeting of
Shareholders. On 21 September 2015, shareholders approved an
amendment to the Plan.
The Plan provides for the issuance of unlisted performance share
rights ("Performance Rights") which, upon satisfaction of the
relevant performance conditions attached to the Performance Rights,
will result in the issue of an Ordinary Share for each Performance
Right. Performance Rights are issued for no consideration and no
amount is payable upon conversion thereof.
To achieve its corporate objectives the Company needs to attract
and retain its key staff, whether employees or contractors.
Performance Rights granted to eligible participants under the Plan,
will assist with the Company's employment strategy and will:
(a) enable the Company to recruit, incentivise and retain KMP
and other eligible employees and contractors to assist with the
completion of feasibility studies for the LCP to achieve the
Company's strategic objectives;
(b) link the reward of eligible employees and contractors with
the achievements of strategic goals and the long term performance
of the Company;
(c) align the financial interests of eligible participants of
the Plan with those of Shareholders; and
(d) provide incentives to eligible employees and contractors of
the Plan to focus on superior performance that creates Shareholder
value.
Performance Rights granted under the Plan to eligible
participants will be linked to the achievement by the Company of
certain performance conditions as determined by the Board from time
to time. These performance conditions must be satisfied in order
for the Performance Rights to vest. The Performance Rights also
vest where there is a change of control of the Company. Upon
Performance Rights vesting, Ordinary Shares are automatically
issued for no consideration. If a performance condition of a
Performance Right is not achieved by the expiry date then the
Performance Right will lapse.
During the financial year, Performance Rights were granted (and
were on issue) to certain KMP and other employees with the
following performance conditions:
(a) Tranche 1 - Achievement of Geological Documentation
Milestone on or before 30 September 2015;
(b) Tranche 2 - Achievement of Mine Permit and Definitive
Feasibility Study on or before 30 June 2017;
(c) Tranche 3 - Award of Mine Permit Milestone on or before 31 December 2017;
(d) Tranche 4 - Decision to Commence Construction Milestone on
or before 31 December 2018; and
(e) Tranche 5 - Initial Production Milestone on or before 31 December 2020.
In addition, the Group may choose to provide unlisted incentive
options ("Unlisted Options") to some KMP as part of their
remuneration and incentive arrangements in order to attract and
retain their services and to provide an incentive linked to the
performance of the Group. The Board's policy is to grant Unlisted
Options to KMP with exercise prices at or above market share price
(at the time of agreement). As such, any Unlisted Options granted
to KMP are generally only of benefit if the KMP performed to the
level whereby the value of the Group increased sufficiently to
warrant exercising the unlisted Options granted.
Other than service-based vesting conditions (if any), there are
generally no additional performance criteria attached to any
Unlisted Options granted to KMP, as given the speculative nature of
the Group's activities and the small management team responsible
for its running, it is considered that the performance of the KMP
and the performance and value of the Group are closely related.
The Company prohibits executives entering into arrangements to
limit their exposure to Unlisted Options and Performance Rights
granted as part of their remuneration package.
Non-Executive Director Remuneration
The Board's policy is for fees to Non-Executive Directors to be
no greater than market rates for comparable companies for time,
commitment and responsibilities. Given the current size, nature and
risks of the Company, Unlisted Options may also be used to attract
and retain Non-Executive Directors. The Board determines payments
to the Non-Executive Directors and reviews their remuneration
annually, based on market practice, duties and accountability.
Independent external advice is sought when required.
The maximum aggregate amount of fees that can be paid to
Non-Executive Directors is subject to approval by shareholders at a
General Meeting. Director's fees paid to Non-Executive Directors
accrue on a daily basis. Fees for Non-Executive Directors are not
linked to the performance of the economic entity. However, to align
Directors' interests with shareholder interests, the Directors are
encouraged to hold shares in the Company and given the current
size, nature and opportunities of the Company, Non-Executive
Directors may receive Unlisted Options in order to secure and
retain their services.
Relationship between Remuneration of KMP and Shareholder
Wealth
During the Company's exploration and development phases of its
business, the Board anticipates that the Company will retain
earnings (if any) and other cash resources for the exploration and
development of its resource projects. Accordingly, the Company does
not currently have a policy with respect to the payment of
dividends and returns of capital. Therefore there was no
relationship between the Board's policy for determining, or in
relation to, the nature and amount of remuneration of KMP and
dividends paid and returns of capital by the Company during the
current and previous four financial years.
The Board did not determine, and in relation to, the nature and
amount of remuneration of the KMP by reference to changes in the
price at which shares in the Company traded between the beginning
and end of the current and the previous four financial years.
Discretionary annual cash incentive payments are based upon
achieving various non-financial key performance indicators as
detailed under "Performance Based Remuneration - Short Term
Incentive" and are not based on share price or earnings. However,
as noted above, certain KMP may receive Unlisted Options in the
future which generally will be of greater value to KMP if the value
of the Company's shares increases sufficiently to warrant
exercising the Unlisted Options.
Relationship between Remuneration of KMP and Earnings
As discussed above, the Company is currently undertaking
exploration and development activities, and does not expect to be
undertaking profitable operations (other than by way of material
asset sales, none of which is currently planned) until sometime
after the successful commercialisation, production and sales of
commodities from one or more of its projects. Accordingly the Board
does not consider earnings during the current and previous four
financial years when determining, and in relation to, the nature
and amount of remuneration of KMP.
Emoluments of Directors and Executives
Details of the nature and amount of each element of the
emoluments of each Director and KMP of Prairie Mining Limited are
as follows:
Short-term benefits
-------------- ---------------- ------------ ---------- -------------
Cash Living
Salary Incentive Allow-ance Post-employment Share-based Perfor-mance
& fees Payments $ benefits payments Total related
$ $ $ $ $ %
-------------- ------ ---------- ---------- ----------- ---------------- ------------ ---------- -------------
Directors
Ian Middlemas 2016 36,000 - - 3,420 - 39,420 -
2015 36,000 - - 3,420 - 39,420 -
--------------------- ---------- ---------- ----------- ---------------- ------------ ---------- -------------
Benjamin
Stoikovich 2016 452,718 - - - 276,999 729,717 38.0%
2015 432,531 164,204 - - 175,712 772,447 44.0%
--------------------- ---------- ---------- ----------- ---------------- ------------ ---------- -------------
Carmel
Daniele(1) 2016 - - - - - - -
Emil
Morfett(1,2) 2016 30,147 - - - - 30,147 -
Anastasios
Arima(3) 2016 11,174 - - 1,062 - 12,236 -
2015 79,167 - - 7,521 - 86,688 -
--------------------- ---------- ---------- ----------- ---------------- ------------ ---------- -------------
Thomas Todd 2016 20,000 - - 1,900 - 21,900 -
2015 15,889 - - 1,509 359,800 377,198 95.4%
John
Welborn(3) 2016 4,470 - - 425 - 4,895 -
2015 23,219 - - 2,206 - 25,425 -
--------------------- ---------- ---------- ----------- ---------------- ------------ ---------- -------------
Mark Pearce 2016 20,000 - - 1,900 - 21,900
2015 23,219 - - 2,206 - 25,425 -
--------------------- ---------- ---------- ----------- ---------------- ------------ ---------- -------------
Todd Hannigan 2016 - - - - - - -
2015 - - - - - - -
-------------- ------ ---------- ---------- ----------- ---------------- ------------ ---------- -------------
Other KMP
Janusz
Jakimowicz 2016 332,504 - 49,437 - 592,433 974,374 60.8%
2015 331,983 - 48,061 - 456,122 836,166 54.5%
--------------------- ---------- ---------- ----------- ---------------- ------------ ---------- -------------
Artur Kluczny 2016 131,776 - - - 146,081 277,857 52.6%
2015 77,343 - - - 122,229 199,572 61.2%
Hugo
Schumann(4) 2016 79,767 - - - 283,500 363,267 78.0%
2015 141,828 49,261 - - 68,287 259,376 45.3%
--------------------- ---------- ---------- ----------- ---------------- ------------ ---------- -------------
Dylan
Browne(5) 2016 102,177 - - - 64,151 166,328 38.6%
2015 - - - - 25,640 25,640 100.0%
--------------------- ---------- ---------- ----------- ---------------- ------------ ---------- -------------
Total 2016 1,220,733 - 49,437 8,707 1,363,164 2,642,041
2015 1,161,179 213,465 48,061 16,862 1,207,790 2,647,357
===================== ========== ========== =========== ================ ============ ========== =============
Notes:
(1) Ms Daniele was appointed on 21 September 2015. During the
year Ms Daniele waived her Non-Executive Director remuneration and
directed that it be paid to Mr Morfett.
(2) Mr Morfett was appointed on 21 September 2015 and resigned on 31 July 2016.
(3) Messrs Arima and Welborn resigned on 21 September 2015.
(4) Mr Schumann resigned 31 December 2015
(5) Mr Browne was appointed 25 October 2012. For the period 1
July 2015 to 30 September 2015, Mr Browne provided services as the
Company Secretary through a services agreement with Apollo Group
Pty Ltd ('Apollo'). For the period 1 July 2015 to 30 September 2015
Apollo was paid, or was payable, $62,000 (2015: 296,000) for the
provision of a fully serviced office and administrative, accounting
and company secretarial services to the Group. Please refer to the
"Employment Contracts with Directors and KMP" section below for
further details on Mr Browne's consultancy agreement with the
Company.
Options and Performance Rights Granted to KMP
Details of Unlisted Options and Performance Rights granted as
part of remuneration by the Company to each KMP of the Group during
the financial year is as follows:
Grant
Date
Exercise Fair
Grant Price Value(1)
Expiry Vesting Number Number
2016 Security Date Date Date $ $ Granted Vested
----------------- ---------- ---------- ----------- ----------- ---------- ---------- ---------- -------------
Director
Benjamin
Stoikovich Rights 2-Oct-15 30-Jun-17 30-Jun-17 - 0.3150 1,000,000 -
Rights 2-Oct-15 31-Dec-17 31-Dec-17 - 0.3150 1,000,000 -
Rights 2-Oct-15 31-Dec-18 31-Dec-18 - 0.3150 500,000 -
Other KMP
Janusz
Jakimowicz Rights 2-Oct-15 31-Mar-16 31-Mar-16 - 0.3150 1,000,000 1,000,000(3)
Artur Kluczny Rights 2-Oct-15 31-Mar-16 31-Mar-16 - 0.3150 180,000 180,000(3)
Rights 2-Oct-15 31-Dec-17 31-Dec-17 - 0.3150 200,000 -
Rights 2-Oct-15 31-Dec-18 31-Dec-18 - 0.3150 250,000 -
Hugo Schumann Rights 2-Oct-15 31-Mar-16 31-Mar-16 - 0.3150 50,000 50,000(3)
Rights 2-Oct-15 31-Dec-17 31-Dec-17 - 0.3150 300,000 -
Rights 2-Oct-15 30-Jun-17 30-Jun-17 - 0.3150 300,000 -
Rights 2-Oct-15 31-Dec-18 31-Dec-18 - 0.3150 250,000 -
Dylan Browne Rights 2-Oct-15 30-Jun-17 30-Jun-17 - 0.3150 200,000 -
Rights 2-Oct-15 31-Dec-17 31-Dec-17 - 0.3150 200,000 -
Rights 2-Oct-15 31-Dec-18 31-Dec-18 - 0.3150 150,000 -
---------- ---------- ----------- ----------- ---------------------------- ---------- ---------- -------------
Notes:
(1) For details on the valuation of the Unlisted Options and
Performance Rights, including models and assumptions used, please
refer to Note 18 to the financial statements.
(2) Each Unlisted Option or Performance Right converts into one
Ordinary Share of Prairie Mining Limited.
(3) Converted to shares on 16 March 2016.
Details of the values of Unlisted Options granted, exercised or
lapsed for each KMP of the Group during the 2016 financial year are
as follows:
Value
of Options
Value Value Value included Remuneration
of Options of Options of Options in remuneration for the
Granted exercised lapsed report year that
during during during for the consists
the Year(1) the year the year year of options
2016 $ $ $ $ %
--------------------- -------------- ------------- ------------ ----------------- -------------
Director
Benjamin Stoikovich - - -(2) $42,184 5.80%
--------------------- -------------- ------------- ------------ ----------------- -------------
Notes:
(1) For details on the valuation of the Unlisted Options,
including models and assumptions used, please refer to Note 18.
(2) On 21 September 2015, shareholders approved to cancel
1,500,000 unlisted options exercisable at $0.60 each on or before
30 June 2017, previously issued to the Company's Chief Executive
Officer, in return for the issue of 2,500,000 performance rights
with various vesting conditions and expiry dates between 30 June
2017 and 31 December 2018.
Employment Contracts with Directors and KMP
Mr Stoikovich has signed an appointment letter with an effective
appointment date of 17 June 2013, under the terms of which he
agrees to serve as a Director of the Company. Mr Stoikovich's
appointment letter is terminable, pursuant to the Company's
Constitution, by giving the Company notice in writing. Mr
Stoikovich receives a fixed fee of GBP25,000 per annum pursuant to
this appointment letter.
Windellama Capital Limited, a company of which Mr. Stoikovich is
a director and shareholder, has a consulting agreement with the
Company to provide project management and capital raising services
(CEO services) related principally to the Lublin Coal Project.
The contract with Windellama Capital Limited commenced
effectively from 9 July 2015 (previously Cordeaux Capital Limited).
Under this agreement, Windellama Capital Limited is paid a fixed
fee of GBP200,000 per annum and an annual incentive payment of up
to GBP80,000 payable upon the successful completion of key project
milestones as determined by the Board. In addition, Windellama
Capital Limited will be entitled to receive a payment incentive of
GBP112,500 in the event of a change of control clause being
triggered with the Company. The consulting contract may be
terminated by either Windellama Capital Limited or the Company by
giving six months' notice. No amount is payable to Windellama in
the event of termination of the contract arising from negligence or
incompetence in regard to the performance of services specified in
the contract.
Mr Jakimowicz, President PD Co sp z o.o. has a consultancy
agreement with the company dated 4 February 2013. The contract
specifies the duties and obligations to be fulfilled by the
President of PD Co sp z o.o. The contract may be terminated by
either party by giving three months' notice. Mr Jakimowicz receives
a consulting fee of $26,150, Management Board (PD Co sp. z o.o.)
fees of PLN4,400 and an in-country living allowance of PLN11,630
per month.
Mr Kluczny, was appointed as Vice-President PD Co sp z o.o on 25
November 2014. He has a consultancy agreement with the company
dated 12 December 2013 and amended effective 1 November 2014, which
provides for a consulting fee of PLN26,600 per month for strategic
advisory services. The contract may be terminated by either party
by giving three months' notice. Mr Kluczny also receives a fixed
Management Board (PD Co sp. z o.o.) fee of PLN4,400 per month.
Mr Dylan Browne, Company Secretary, has a letter of appointment
dated 1 October 2015 confirming the terms and conditions of his
appointment. Mr Browne's appointment letter is terminable pursuant
to the Company's Constitution. Mr Browne receives a fee of GBP6,000
per annum pursuant to this appointment letter. In addition Candyl
Limited ('Candyl'), a company of which Mr Browne is a director and
shareholder, has a consultancy agreement with the Company, which
specifies the duties and obligations to be fulfilled by Mr Browne
as the Company Secretary. Either party may terminate the agreement
with three months written notice. No amount is payable in the event
of termination for material breach of contract, gross misconduct or
neglect. Candyl receives an annual consultancy fee of
GBP63,000.
Loans from Key Management Personnel
No loans were provided to or received from Key Management
Personnel during the year ended 30 June 2016 (2015: Nil).
Other Transactions
Apollo Group Pty Ltd, a Company of which Mr Mark Pearce is a
Director and beneficial shareholder, was paid or is payable
$217,000 (2015: $296,000) for the provision of serviced office
facilities and administration services. The amount is based on a
monthly retainer due and payable in advance, with no fixed term,
and is able to be terminated by either party with one month's
notice. This item has been recognised as an expense in the
Statement of Profit or Loss and other Comprehensive Income. At 30
June 2016, $12,500 (2015: $22,000) was included as a current
liability in the Statement of Financial Position.
Equity instruments held by KMP
Option and Performance Right holdings of Key Management
Personnel
Vested
and
Held exercise-
Held Options at able
at Exercised/ 30 at 30
1 July Granted Rights Net Other June June
2016 2015 as Remuner-ation Converted Change 2016 2016
------------------- ---------- ------------------ ------------ --------------- ------------- -------------
Directors
Ian Middlemas - - - - - -
Benjamin
Stoikovich 4,500,000 2,500,000(1) - (1,500,000)(1) 5,500,000 3,000,000
Carmel Daniele -(2) - - - - -
Emil Morfett -(2) - - - - -
Anastasios
Arima 1,500,000 - - - 1,500,000(3) 1,500,000(3)
Thomas Todd 1,400,000 - - - 1,400,000 -
John Welborn - - - - -(3) -(3)
Mark Pearce - - - - - -
Todd Hannigan 1,400,000 - - - 1,400,000 -
Other KMP
Janusz Jakimowicz 3,400,000 1,000,000 (2,000,000) - 2,400,000 -
Artur Kluczny 750,000 630,000 (455,000) - 925,000 -
Hugo Schumann 1,050,000 900,000 (50,000) - 1,900,000(3) 1,050,000(3)
Dylan Browne 575,000 550,000 - (250,000)(4) 875,000 325,000
------------------- ---------- ------------------ ------------ --------------- ------------- -------------
Notes:
(1) On 21 September 2015, shareholders approved to cancel
1,500,000 unlisted options exercisable at $0.60 each on or before
30 June 2017, previously issued to the Company's Chief Executive
Officer, in return for the issue of 2,500,000 performance rights
with various vesting conditions and expiry dates between 30 June
2017 and 31 December 2018
(2) As at date of appointment
(3) As at date of resignation
(4) Expiry of Unlisted Options exercisable at $0.25 on or before 30 June 2016
Shareholdings of Key Management Personnel
Held at Options Exercised/ Held at
2016 1 July 2015 Granted as Remuneration Rights Converted Net Other Change 30 June 2016
--------------------- ------------- ------------------------ ------------------- ----------------- --------------
Directors
Ian Middlemas 10,000,000 - - 600,000(1) 10,600,000
Benjamin Stoikovich (-) - - - (-)
Carmel Daniele -(2) - - - -
Emil Morfett -(2) - - - -
Anastasios Arima 2,910,000 - - (500,000)(3) 2,410,000(4)
Thomas Todd 2,800,000 - - - 2,800,000
John Welborn 4,500,000 - - - 4,500,000(4)
Mark Pearce 3,000,000 - - - 3,000,000
Todd Hannigan 3,146,398 - - - 3,146,398
Other KMP
Janusz Jakimowicz 1,541,931 - 2,000,000 - 3,451,931
Artur Kluczny 20,000 - 455,000 95,238(1) 570,238
Hugo Schumann - - 50,000 - 50,000(3)
Dylan Browne - - - - -
--------------------- ------------- ------------------------ ------------------- ----------------- --------------
Notes:
(1) On market purchases
(2) As at date of appointment.
(3) Off-market transfer as part of the full and final settlement
of divorce proceedings in accordance with the Family Court of
WA.
(4) As at date of resignation.
End of Remuneration Report
DIRECTORS' MEETINGS
The number of meetings of Directors held during the year and the
number of meetings attended by each Director was as follows (there
were no Board committees during the financial year):
Board Meetings
Number eligible to attend Number attended
-------------------- ------------------------- ---------------
Ian Middlemas 2 2
Benjamin Stoikovich 2 2
Carmel Daniele 1 1
Emil Morfett 1 1
Thomas Todd 2 2
Anastasios Arima 1 1
John Welborn 1 1
Mark Pearce 2 2
Todd Hannigan - -
-------------------- ------------------------- ---------------
NON-AUDIT SERVICES
Non-audit services provided by our auditors, Ernst & Young
and related entities, are set out below. The Directors are
satisfied that the provision of non-audit services is compatible
with the general standard of independence for auditors imposed by
the Corporations Act. The nature and scope of each type of
non-audit service provided means that auditor independence was not
compromised.
2016 2015
$ $
------------------------------------------------------------------------------- ----- ------
Preparation of income tax return 8,000 8,000
Professional fees in relation to the London and Warsaw Stock Exchange listings - 19,703
------------------------------------------------------------------------------- ----- ------
8,000 27,703
=============================================================================== ===== ======
DIVIDS
No dividends have been declared, provided for or paid in respect
of the financial year ended 30 June 2016 (2015: nil).
AUDITOR'S INDEPENCE DECLARATION
The lead auditor's independence declaration for the year ended
30 June 2016 has been received and can be found on page 20 of the
Directors' Report.
Signed in accordance with a resolution of the Directors.
Benjamin Stoikovich
Director
23 September 2016
Forward Looking Statements
This release may include forward-looking statements. These
forward-looking statements are based on Prairie's expectations and
beliefs concerning future events. Forward looking statements are
necessarily subject to risks, uncertainties and other factors, many
of which are outside the control of Prairie, which could cause
actual results to differ materially from such statements. Prairie
makes no undertaking to subsequently update or revise the
forward-looking statements made in this release, to reflect the
circumstances or events after the date of that release.
Competent Person Statements
The information in this report that relates to Exploration
Results, Coal Resources, Coal Reserves, Mining, Coal Preparation,
Infrastructure, Production Targets and Cost Estimation was
extracted from Prairie's announcement dated 8 March 2016 entitled
'Pre-Feasibility Study Confirms LCP as One of the Lowest Cost
Global Coal Suppliers Into Europe' which is available to view on
the Company's website at www.pdz.com.au.
The information in the original announcement that related to
Coal Reserves, Mining, Coal Preparation, Infrastructure, Production
Targets and Cost Estimation is based on, and fairly represents,
information compiled or reviewed by Mr Stephen Newson, a Competent
Person who is a Chartered Engineer and Fellow of the Institute of
Materials, Minerals and Mining (UK) and has a 1st Class Mine
Manager's Certificate of Competency. Mr Newson is employed by
independent consultants Golder Associates (UK). Mr Newson has
sufficient experience that is relevant to the style of
mineralisation and type of deposit under consideration and to the
activity being undertaken 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 information in the original announcement that related to
Exploration Results and Coal Resources is based on, and fairly
represents, information compiled or reviewed by, Mr Samuel
Moorhouse, a Competent Person who is a Chartered Geologist and is
employed by independent consultants Royal HaskoningDHV UK Limited.
Mr Moorhouse has sufficient experience that is relevant to the
style of mineralisation and type of deposit under consideration and
to the activity being undertaken 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'. Mr Moorhouse consents to the inclusion in the report of
the matters based on their information in the form and context in
which it appears.
Prairie confirms that: a) it is not aware of any new information
or data that materially affects the information included in the
original announcement; b) all material assumptions and technical
parameters underpinning the Coal Resource, Coal Reserve, Production
Target, and related forecast financial information derived from the
Production Target included in the original announcement continue to
apply and have not materially changed; and c) the form and context
in which the relevant Competent Persons' findings are presented in
this presentation have not been materially modified from the
original announcement.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
FOR THE YEARED 30 JUNE 2016
Notes 2016 2015
$ $
--------------------------------------------- -------- ------------ -------------
CONTINUING OPERATIONS
Revenue 2(a) 309,969 34,912
Other income 2(b) 1,765,429 1,823,851
Gain on the derecognition
of available-for-sale financial
assets 7 - 9,593,775
Exploration and evaluation
expenses (4,830,109) (7,301,685)
Employment expenses 3(a) (289,008) (175,372)
Administration and corporate
expenses (310,083) (285,947)
Occupancy expenses (465,018) (489,131)
Share-based payment expenses 3(a) (1,723,271) (1,576,867)
Business development expenses (1,219,309) (1,301,836)
Other expenses 3(b) - (1,063,846)
Loss before income tax (6,761,400) (742,196)
Income tax expense 4 - (4,410,000)
--------------------------------------------- -------- ------------ -------------
Net loss for the year (6,761,400) (5,152,146)
============================================= ======== ============ =============
Net loss attributable to members
of Prairie Mining Limited (6,761,400) (5,152,146)
============================================= ======== ============ =============
Other comprehensive income
Items that may be reclassified
subsequently to profit or
loss:
Changes in fair value of available-for-sale
financial assets - (3,642,124)
Deferred tax on available-for-sale
financial assets 4 - 1,096,845
Net realised gain on available-for-sale
financial assets transferred
to other income - (1,323,851)
Deferred tax on sale of available-for-sale
financial assets 4 - 397,155
Gain on derecognition of available-for-sale
financial assets transferred
to other income 7 - (9,593,775)
Deferred tax on gain on derecognition
of available-for-sale financial
assets 4 - 2,916,000
Exchange differences on translation
of foreign operations 10,230 38,121
Total other comprehensive
income/(loss) for the year,
net of tax 10,230 (10,111,629)
--------------------------------------------- -------- ------------ -------------
Total comprehensive loss for
the year, net of tax (6,751,170) (15,263,775)
============================================= ======== ============ =============
Total comprehensive loss attributable
to members of Prairie Mining
Limited (6,751,170) (15,263,775)
============================================= ======== ============ =============
Basic and diluted loss per
share from continuing operations
(cents per share) 14 (4.52) (3.81)
The above Consolidated Statement of Profit or Loss and other
Comprehensive Income should be read in conjunction with the
accompanying notes.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2016
2016 2015
Notes $ $
------------------------------- ------ ------------- -------------
ASSETS
Current Assets
Cash and cash equivalents 13(b) 18,063,119 2,076,409
Trade and other receivables 5 265,635 197,878
Other financial assets 6 - 7,569,754
Total Current Assets 18,328,754 9,844,041
------------------------------- ------ ------------- -------------
Non-current Assets
Other financial assets 7 - -
Property, plant and equipment 98,140 58,097
Exploration and evaluation
assets 8 530,000 530,000
Total Non-current Assets 628,140 588,097
------------------------------- ------ ------------- -------------
TOTAL ASSETS 18,956,894 10,432,138
------------------------------- ------ ------------- -------------
LIABILITIES
Current Liabilities
Trade and other payables 9 805,313 1,032,880
Other financial liabilities 10 335,821 -
------------------------------- ------ ------------- -------------
Total Current Liabilities 1,141,134 1,032,880
------------------------------- ------ ------------- -------------
TOTAL LIABILITIES 1,141,134 1,032,880
------------------------------- ------ ------------- -------------
NET ASSETS 17,815,760 9,399,258
=============================== ====== ============= =============
EQUITY
Contributed equity 11 51,298,932 36,649,571
Reserves 12 3,043,493 2,620,683
Accumulated losses (36,526,665) (29,870,996)
------------------------------- ------ ------------- -------------
TOTAL EQUITY 17,815,760 9,399,258
=============================== ====== ============= =============
The above Consolidated Statement of Financial Position should be
read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
AS AT 30 JUNE 2016
Share- Foreign
Based Currency
Ordinary Available-For-Sale Payments Translation Accumulated Total
Shares Reserve Reserve Reserve Losses Equity
$ $ $ $ $ $
------------------------- ----------- ------------------- ------------ ------------- ------------- -------------
Balance at 1
July 2015 36,649,571 - 2,597,720 22,963 (29,870,996) 9,399,258
Net loss for
the year - - - - (6,761,400) (6,761,400)
Other comprehensive
income:
Exchange differences
on translation
of foreign operations - - - 10,230 - 10,230
Total comprehensive
income/(loss)
for the period - - - 10,230 (6,761,400) (6,751,170)
Transactions
with owners recorded
directly in equity
Issue of ordinary
shares 321,248 - - - - 321,248
Share issue costs (4,900) - - - - (4,900)
Issue of Convertible
Note (Note 11) 15,000,000 - - - - 15,000,000
Recognition of
Conversion right
attached to Convertible
Note (Note 11) (968,284) (968,284)
Costs to issue
convertible note (903,663) - - - - (903,663)
Transfer from
share-based payments 1,204,960 - (1,204,960) - - -
Lapse of performance
Rights - - (8,356) - 8,356 -
Lapse of Unlisted
Options - - (97,375) - 97,375 -
Recognition of
share-based payments - - 1,723,271 - - 1,723,271
------------------------- ----------- ------------------- ------------ ------------- ------------- -------------
Balance at 30
June 2016 51,298,932 - 3,010,300 33,193 (36,526,665) 17,815,760
========================= =========== =================== ============ ============= ============= =============
Balance at 1
July 2014 34,864,888 10,149,750 1,051,658 (15,158) (24,718,850) 21,332,288
Net loss for
the year - - - - (5,152,146) (5,152,146)
Other comprehensive
income:
Changes In fair
value of
available-for-sale
financial assets - (3,642,124) - - - (3,642,124)
Deferred tax
available-for-sale
financial assets - 1,096,845 - - - 1,096,845
Net realised
gain on
available-for-sale
financial assets
transferred to
other income - (1,323,851) - - - (1,323,851)
Deferred tax
on sale of
available-for-sale
financial assets - 397,155 - - - 397,155
Gain on derecognition
of available-for-sale
financial assets
transferred to
other income - (9,593,775) - - - (9,593,775)
Deferred tax
on gain on
de-recognition
of available-for-sale
financial assets - 2,916,000 - - - 2,916,000
Exchange differences
on translation
of foreign operations - - - 38,121 - 38,121
Total comprehensive
income/(loss)
for the period - (10,149,750) - 38,121 (5,152,146) (15,263,775)
Transactions
with owners recorded
directly in equity
Issue of ordinary
shares 1,768,133 - - - - 1,768,133
Share issue costs (14,255) - - - - (14,255)
Exercise of Unlisted
Options 30,805 - (30,805) - - -
Recognition of
share-based payments - - 1,576,867 - - 1,576,867
------------------------- ----------- ------------------- ------------ ------------- ------------- -------------
Balance at 30
June 2015 36,649,571 - 2,597,720 22,963 (29,870,996) 9,399,258
========================= =========== =================== ============ ============= ============= =============
The above Consolidated Statement of Changes in Equity should be
read in conjunction with the accompanying notes
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2016
Notes 2016 2015
$ $
------------------------------------- ----- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees (7,304,600) (9,265,398)
Interest received from third
parties 254,470 58,667
Proceeds from retirement of
performance bonds - 22,111
NET CASH FLOWS USED IN OPERATING
ACTIVITIES 13(a) (7,050,130) (9,184,620)
------------------------------------- ----- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for plant and equipment (76,600) (37,896)
Proceeds from sale of listed
securities 8,702,720 6,459,932
Proceeds from Farm-In Agreement - 500,000
NET CASH FLOWS FROM IN INVESTING
ACTIVITIES 8,626,120 6,922,036
------------------------------------- ----- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares - 1,768,133
Payments for share issue costs (16,135) (5,327)
Proceeds from issues of convertible
note 15,000,000 -
Payments for issue of convertible
note (566,735) -
------------------------------------- ----- ----------- -----------
NET CASH FLOWS FROM FINANCING
ACTIVITIES 14,417,130 1,762,806
------------------------------------- ----- ----------- -----------
Net increase/(decrease) in
cash and cash equivalents 15,993,120 (499,778)
Net foreign exchange differences (6,410) 1,887
Cash and cash equivalents at
beginning of year 2,076,409 2,574,300
------------------------------------- ----- ----------- -----------
CASH AND CASH EQUIVALENTS AT
THE END OF THE YEAR 13(b) 18,063,119 2,076,409
===================================== ===== =========== ===========
The above Consolidated Statement of Cash Flows should be read in
conjunction with the accompanying notes
The following sections are available in the full
version of the Annual Financial Report on Prairie
Mining Limited's website: www.pdz.com.au
Notes to and Forming Part of the Financial
Statements
Directors' Declaration
Auditor's Independence Declaration
Independent Auditor's Report
Ben Stoikovich Artur Kluczny
Chief Executive Group Executive
Officer - Poland
+44 207 478 3900 +48 22 351 73 80 info@pdz.com.au
This information is provided by RNS
The company news service from the London Stock Exchange
END
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