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Prairie Mining Ltd (PDZ)

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Friday 27 September, 2019

Prairie Mining Ltd

Annual report to shareholders

RNS Number : 8886N
Prairie Mining Limited
27 September 2019
 

 

PRAIRIE MINING LIMITED

 

 

2019

 

ANNUAL REPORT | ROCZNY RAPORT

 

 

ABN 23 008 677 852

 

CORPORATE DIRECTORY d" cellspacing="0" cellpadding="0">

DIRECTORS:
Mr Ian Middlemas                  Chairman
Mr Benjamin Stoikovich        Director and CEO
Ms Carmel Daniele               Non-Executive Director
Mr Thomas Todd                    Non-Executive Director
Mr Mark Pearce                      Non-Executive Director
Mr Todd Hannigan                 Alternate Director

Mr Dylan Browne                   Company Secretary

PRINCIPAL OFFICES:

PD Co sp. z. o.o. (Warsaw):

Ul. Wspolna, 35 lok. 4

00-519 Warsaw

Karbonia S.A. (Czerwionka - Leszczyny):

Ul. 3 Maja 44,

44-230 Czerwionka - Leszczyny

 

London:
Unit 3C, 38 Jermyn Street
London SW1Y 6DN
United Kingdom

 

Australia (Registered Office):
Level 9, BGC Centre
28 The Esplanade
Perth   WA   6000
Tel:      +61 8 9322 6322
Fax:     +61 8 9322 6558

SOLICITORS:

Poland:
DLA Piper Wiater sp.k.

United Kingdom:
DLA Piper UK LLP

Australia:
DLA Piper Australia

 

AUDITOR:

Poland:
Ernst & Young Audyt Polska sp. z. o.o.

Australia:
Ernst & Young - Perth

 

BANKERS:

Poland:
Bank Zachodni WBK S.A. - Santander Group

Australia:
Australia and New Zealand Banking Group Ltd

 

SHARE REGISTRIES:

Poland:
Komisja Nadzoru Finansowego (KNF)
Plac Powstańców Warszawy 1, skr. poczt. 419
00-950 Warszawa
Tel: Tel: +48 22 262 50 00

United Kingdom:
Computershare Investor Services PLC
The Pavilions, Bridgewater Road
Bristol BS99 6ZZ
Tel: +44 370 702 0000

Australia:
Computershare Investor Services Pty Ltd
Level 11, 172 St Georges Terrace
Perth WA 6000
Tel: +61 8 9323 2000


STOCK EXCHANGE LISTINGS:

Poland:
Warsaw Stock Exchange - GPW Code: PDZ

United Kingdom:
London Stock Exchange (Main Board) - LSE Code: PDZ

Australia:
Australian Securities Exchange - ASX Code: PDZ

 

CONTENTS | ZAWARTOŚĆ

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


The following sections (as well as all illustrations and figures) are available in the full version of the 2019 Annual Report on the Company's website at http://www.pdz.com.au/company-reports

Notes to and Forming Part of the Financial Statements

Directors' Declaration

Auditor's Independence Declaration

Independent Auditor's Report

Corporate Governance

Mineral Resources and Ore Reserves Statement

ASX Additional Information

 

The Company also advises that an Appendix 4G (Key to Disclosures: Corporate Governance Council Principles and Recommendations), 2019 Corporate Governance Statement and Notice of Annual General Meeting/Proxy Form have been released today and are also available on the Company's website.

 

DIRECTORS' REPORT

30 JUNE 2019

 

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 2019 ("Consolidated Entity" or "Group").

 

OPERATING AND FINANCIAL REVIEW

 

Operations

 

Highlights during, and since the end of the financial year include:

 Debiensko Mine (Premium Hard Coking Coal)

·      In December 2016, following the acquisition of Debiensko, Prairie applied to the Ministry of Environment to amend the 50-year Debiensko mining concession to extend the time stipulated in the mining concession for first production of coal from 2018 to 2025. In January 2019, Prairie received a final "second instance" decision from the MoE that has denied the amendment application which the Company believes is fundamentally flawed and fails to comply with Polish and international law.

·      Whilst the 50-year Debiensko mining concession remains in place and despite Prairie holding a valid environmental consent decision enabling mine construction, the actions of the Polish government have effectively blocked any pathway to production for Prairie at Debiensko. Prairie will continue to take relevant actions to pursue its legal rights regarding the Debiensko concession.

 

Jan Karski Mine (Semi-Soft Coking Coal)

·      During the year, an Appeal Court in Warsaw overturned the District Court's injunction that was previously awarded in Prairie's favour preventing the MoE from granting a mining usufruct or exploration/mining concession to another party except Prairie. Prairie believes that the Appeal Court's decision is fundamentally flawed and will therefore continue to take relevant actions to pursue its legal rights regarding Jan Karski.

 

Possible Co-operation between Prairie and JSW

·      Mr Daniel Ozon, CEO of JSW, was dismissed in June 2019, following his appointment in 2017. Mr Włodzimierz Hereźniak has since been appointed as JSW's new CEO.

·      There has been no communication or discussion with JSW since Daniel Ozon's dismissal. The Company will continue to comply with its continuous disclosure obligations and will make announcements to the market as required.

 

Corporate

·      Prairie remains in a financially strong position with cash reserves of A$7 million on hand.

·      In February 2019, the Company formally notified the Polish Government that there exists an investment dispute between Prairie and the Government that has arisen out of certain measures taken by Poland in breach of the Energy Charter Treaty and the Australia-Poland Bilateral Investment Treaty. Prairie will strongly defend its position and continue to take relevant actions to pursue its legal rights regarding both the Debiensko and Jan Karski projects, including pursuing claims against Poland under the relevant international treaties.

Debiensko Mine

The Debiensko Mine ("Debiensko"), is a hard coking coal project located in the Upper Silesian Coal Basin in the south west of the Republic of Poland. It is approximately 40 km from the city of Katowice and 40 km from the Czech Republic.

Debiensko is bordered by the Knurow-Szczyglowice Mine in the north west and the Budryk Mine in the north east, both owned and operated by Jastrzębska Spółka Węglowa SA ("JSW"), Europe's leading producer of hard coking coal.

The Debiensko mine was historically operated by various Polish mining companies until 2000 when mining operations were terminated due to a major government led restructuring of the coal sector caused by a downturn in global coal prices. In early 2006 New World Resources Plc ("NWR") acquired Debiensko and commenced planning for Debiensko to comply with Polish mining standards, with the aim of accessing and mining hard coking coal seams. In 2008, the Polish Ministry of Environment ("MoE") granted a 50-year mine license for Debiensko.

In October 2016, Prairie acquired Debiensko with a view that a revised development approach would potentially allow for the early mining of profitable premium hard coking coal seams, whilst minimising upfront capital costs.

Update on Debiensko Concession

In December 2016, following the acquisition of Debiensko, Prairie applied to the MoE to amend the 50-year Debiensko mining concession.

The purpose of the concession amendment was to extend the time stipulated in the mining concession for first production of coal from 2018 to 2025. During the year, Prairie has now received a final "second instance" decision from the MoE that has denied the Company's amendment application. Despite Prairie holding a valid environmental consent decision enabling mine construction, the actions of the Polish government have effectively blocked any pathway to production for Prairie therefore making it impossible for the Company to continue with development at Debiensko.

Jan Karski Mine

 

The Jan Karski Mine ("Jan Karski") is a large scale semi-soft coking coal project located in the Lublin Coal Basin in south east Poland. The Lublin Coal Basin is an established coal producing province which is well serviced by modern and highly efficient infrastructure, offering the potential for low capital intensity mine development. Jan Karski is situated adjacent to the Lubelski Węgiel BOGDANKA S.A.'s ("Bogdanka") coal mine which has been in commercial production since 1982 and is the lowest cost hard coal producer in Europe.

 

With the use of modern exploration techniques including latest drill results, Prairie has affirmed the capability of the project to produce high value ultra-low ash semi-soft coking coal ("SSCC"), known as Type 34 coal in Poland whilst confirming Jan Karski as a globally significant SSCC / Type 34 coking coal deposit with the potential to produce a high value ultra-low ash SSCC with a coking coal product split of up to 75%.

 

Key benefits for the local community and the Lublin and Chelm regions associated with the development, construction and operation of Jan Karski have been recognised as the following:

 

·      creation of 2,000 direct employment positions and 10,000 indirect jobs for the region once operational;

·      increasing skills of the workforce through the implementation of International Standard training programmes;

·      stimulating the development of education, health services and communications within the region; and

·      building a mine that creates new employment for generations to come and career paths for families to remain in the region.

Positive Rulings in Supreme Administrative Court

Poland's Supreme Administrative Court has finally and fully rejected Bogdanka's administrative complaints against Poland's MoE regarding the refusal of Bogdanka's 2013 application for a mining concession over the K-6-7 deposit at Jan Karski.

This Supreme Administrative Court decision is final, cannot be appealed and has upheld the 2016 Regional Administrative Court decision that confirms the original 2015 decision, which denied Bogdanka's mining concession application. It has been concluded that granting a mining concession to Bogdanka would be a serious violation of the provisions of Poland's Geological and Mining Law ("GML") and would be contrary to the rule of law as embodied in the Polish constitution.

In a second ruling, the Supreme Administrative Court has upheld the 2016 Regional Administrative Court decision that obliged the MoE to approve Prairie's submitted Addendum No.3 for the K-6-7 deposit. Addendum No.3 is a detailed resource estimate for the K-6-7 deposit according to Polish geological reporting standards and is based on the results of Prairie's exploration program at the deposit.

The Court's ruling has been passed back to the MoE, and the Company is now waiting on the MoE to reassess the original decision taking into account the court's verdict.

The Supreme Administrative Court's rulings re-affirm, beyond doubt, that Bogdanka's 2013 claims over K-6-7 are without merit and inadmissible.

Injunction against Poland's Ministry of Environment has been over-turned

In April 2018, Prairie filed a civil law claim against the MoE due to its failure to grant Prairie a mining usufruct agreement over the Jan Karski concessions in order to protect the Company's security of tenure over the project.

The Company had been awarded the Priority Right to apply for a mining concession at Jan Karski in 2015 following its full compliance with Poland's GML.

Subsequent to Prairie's filing of the civil law claim discussed above, the Polish District Court granted Prairie an injunction preventing the MoE from granting prospecting, exploration or mining concessions and concluding usufruct agreements with any other party until full court proceedings were concluded.

In April 2019, an Appeal Court in Warsaw overturned the District Court's decision and lifted the injunction. Prairie believes that the Appeal Court's decision is fundamentally flawed. The Appeal Court's decision is further evidence of the unfair and inequitable treatment faced by Prairie as a foreign investor in Poland and these and other measures directed against Prairie by the Polish government, with respect to the Company's permitting process and licenses, have blocked Prairie's pathway to any future production from Jan Karski. The Company is therefore considering all actions necessary to pursue its legal rights regarding Jan Karski.

Corporate

 

Possible Co-Operation between Prairie and JSW

During the year, Prairie and JSW signed an extension to a Non-Disclosure Agreement ("NDA"), with the term of the NDA now ending on 28 September 2019, in order to discuss a deal structure and commercial terms for any co-operation or transaction and for the adaption of mine plans for both Debiensko and Jan Karski to align with JSW's development concepts and to maximise potential synergies at Debiensko.

In June 2019, Mr Daniel Ozon, CEO of JSW, was dismissed following his appointment in 2017. Mr Włodzimierz Hereźniak has since been appointed as the new CEO of JSW. There has been no communication or discussion with JSW since Daniel Ozon's dismissal. The Company will continue to comply with its continuous disclosure obligations and will make announcements to the market as required.

 

Dispute with the Polish Government

In February 2019 Prairie formally notified the Polish government that there exists an investment dispute between Prairie and the Polish government.

Prairie's notification calls for prompt negotiations with the government to amicably resolve the dispute and indicates Prairie's right to submit the dispute to international arbitration in the event the dispute is not resolved amicably. The dispute arises out of certain measures taken by Poland in breach of the Energy Charter Treaty and Australia-Poland Bilateral Investment Treaty. The Company remains open to resolving the dispute with the Polish government amicably. As of the date of this report, no amicable resolution of the dispute has occurred, since the Polish government has declined to participate in substantive discussions related to the dispute.

Prairie can confirm that it is taking all necessary actions to pursue its legal rights regarding its investments in Poland.

Prairie will continue to update the market in relation to this matter as required.

Results of Operations

 

The net loss of the Consolidated Entity for the year ended 30 June 2019 was $3,550,672 (2018: $19,382,454). Significant items contributing to the current year loss and the substantial differences from the previous financial year include:

 

(i)    Non-cash exploration expenditure impairment expense of $2,721,198 (2018: nil) has been recognised during the year following an Appeal Court in Warsaw decision which overturned the District Court's injunction that was previously awarded in Prairie's favour which prevented the MoE from granting a mining usufruct or exploration/mining concession to another party except Prairie at Jan Karski. Furthermore, a final "second instance" decision was received by the Company from the MoE that denied the Debiensko Mining Concession amendment application which was submitted in 2016. The Company believes that these actions and others by the Polish Government are evidence of the discriminatory treatment faced by Prairie as a foreign investor in Poland with respect to Debiensko and Jan Karski effectively blocked any pathway to production for Prairie at both Jan Karski and Debiensko. For this and other reasons, Prairie has formally notified the Polish government that there exists an investment dispute between Prairie and the Polish Government that has arisen out of certain measures taken by Poland in breach of the Energy Charter Treaty and the Australia-Poland Bilateral Investment Treaty. Accordingly, the Company has recognised an impairment expense for the total amount of exploration and evaluation assets previously capitalised; and

 

(ii)   Non-cash fair value loss of nil (2018: $9,884,328) attributable to the conversion right of the original CD Capital convertible loan note ("Loan Note 1") accounted for as a financial liability at fair value through profit and loss which was derecognised during the prior year following the conversion of Loan Note 1. The instrument was a non-cash derivative liability which was settled during the prior year via the issue of 44,776,120 Ordinary Shares and 22,388,060 unlisted options exercisable at $0.60 each on or before 30 May 2021 ("CD Options") to CD Capital pursuant to the investment agreement completed in September 2015.

 

In 2018, the Company did not pay any cash to settle the liability with the Company's cash reserve unaffected by the derecognition of the conversion right

 

The commercial intentions of both CD Capital and the Company were to always enter into an equity type arrangement however to be in compliance with the accounting standards, the conversion right has, up and until derecognition, been accounted for as a financial liability with the non-cash fair value movements being recognised in profit and loss.

 

(iii)  Exploration and Evaluation expenses of $3,319,878 (2018: $6,774,136), 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;

 

(iv)  Business development expenses of $408,948 (2018: $738,097) which includes expenses in relation to the Group's investor relations activities, including brokerage fees, public relations, digital marketing, travel costs, attendances at conferences and business development consultant costs;

 

(v)   Non-cash share-based payment reversal of $1,599,118 (2018: expense $1,316,624) 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/reversal 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 change from an expense in 2018 to a reversal in 2019 is attributable to the forfeiture of 3.1 million unvested performance rights following the impairment of exploration and evaluation, it was deemed that the performance rights with vesting conditions milestones relating to Debiensko and Jan Karski are now unachievable resulting in a $3.4 million being reversed from the reserve to profit and loss;

 

(vi)  Revenue of $557,400 (2018: $826,883) consisting of interest income of $203,160 (2018: $333,291) and the receipt of $354,170 (2018: $493,592) of gas and property lease income derived at Debiensko; and

 

(vii) Other income of $1,945,800 (2018: nil) relating to the gain on extinguishment of the contingent consideration related to the Karbonia acquisition following the receipt of a final "second instance" decision from the MoE that denied the Mining Concession amendment application at Debiensko which was a condition for Prairie to pay the contingent consideration.

 

Financial Position

 

At 30 June 2019, the Company had cash reserves of $6,628,371 (2018: $11,022,333) placing it in a strong financial position.

 

At 30 June 2019, the Company had net assets of $7,308,588 (2018: $12,445,698), a decrease of 42% compared with the previous year. This is largely attributable to the net loss for the year.

 

Business Strategies and Prospects for Future Financial Years

 

Prairie's strategy is to create long-term shareholder. This is likely to now include pursuing various claims against Poland through international arbitration.

 

As discussed throughout this report, various measures directed against Prairie by the Polish government in breach of Polish and international law with respect to the Company's permitting process and licenses, have blocked Prairie's pathway to any future production from its Polish projects.

 

To achieve its objective, the Group currently has the following business strategies and prospects:

·       Continue to assess its options for international arbitration in relation to the investment dispute between Prairie and the Polish Government that has arisen out of certain measures taken by Poland in breach of the Energy Charter Treaty, and the Australia-Poland Bilateral Investment Treaty;

·       To continue to work with Prairie's lawyers (including international arbitration legal experts) to prepare submissions and finalise funding arrangements for the international arbitration claim(s);

·       Continue to assess corporate options for Prairie's investments in Poland; and

·       Identify and assess other suitable business opportunities in the resources sector.

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. Furthermore, Prairie will continue to take all necessary actions to pursue the Company's legal rights regarding its investments in Poland, if and as required.  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:

·       Litigation risk - All industries, including the mining industry, are subject to legal and arbitration claims. Specifically, in February 2019, the Company formally notified the Polish Government that there exists an investment dispute between Prairie and the Government that has arisen out of certain measures taken by Poland in breach of the Energy Charter Treaty and the Australia-Poland Bilateral Investment Treaty. Prairie will strongly defend its position and continue to take relevant actions to pursue its legal rights regarding both the Debiensko and Jan Karski projects, including pursuing claims against Poland under the relevant international treaties. There is no certainty that any claim, should it be made in the future, will be successful. 

·       Co-operation between Prairie and JSW may not occur - The Company and JSW have previously been in discussions for over 18 months in relation to a co-operation transaction however in June 2019 Mr Daniel Ozon, CEO of JSW, was dismissed following his appointment in 2017. Following his dismissal there has been no communication or discussion between Prairie and JSW. Any transaction(s), should it/they occur, may be subject to a number of conditions including, but not limited to, obtaining positive evaluations and expert opinions, necessary corporate approvals, consents and approvals related to funding, consents from Poland's Office of Competition and Consumer Protection (UOKiK) if required, and any other requirements that may relate to the strategy, objectives and regulatory regimes applicable to the respective issuers, and which could also prevent a transaction from occurring or even completing. 

·       The Company may be adversely affected by fluctuations in foreign exchange - Current and planned activities are predominantly denominated in Stirling and/or Euros and the Company's ability to fund these activates may be adversely affected if the Australian dollar continues to fall against these currencies. The Company currently does not engage in any hedging or derivative transactions to manage foreign exchange risk. As the Company's operations change, this policy will be reviewed periodically going forward.

·       The Company may not successfully acquire new projects - the Company may pursue and assess other new business opportunities in the resources sector. These new business opportunities may take the form of direct project acquisitions, joint ventures, farm-ins, acquisition of tenements/permits, or direct equity participation. The Company's success in its acquisition activities depends on its ability to identify suitable projects, acquire them on acceptable terms, and integrate the projects successfully, which the Company's Board is experienced in doing. However, there can be no guarantee that any proposed acquisition will be completed or be successful. If a proposed acquisition is completed the usual risks associated with a new project and/or business activities will remain.

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:

Directors:

Mr Ian Middlemas                  Chairman

Mr Benjamin Stoikovich        Director and CEO

Ms Carmel Daniele               Non-Executive Director  

Mr Thomas Todd                    Non-Executive Director

Mr Mark Pearce                      Non-Executive Director

Mr Todd Hannigan                 Alternate Director

 

Unless otherwise stated, Directors held their office from 1 July 2018 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 Constellation Resources Limited (November 2017 - present), Apollo Minerals Limited (July 2016 - present), Paringa Resources Limited (October 2013 - present), Berkeley Energia Limited (April 2012 - present), Salt Lake Potash Limited (January 2010 - present), Equatorial Resources Limited (November 2009 - present), Piedmont Lithium Limited (September 2009 - present), Sovereign Metals Limited (July 2006 - present), Odyssey Energy Limited (September 2005 - present), Cradle Resources Limited (May 2016 - July 2019) and Syntonic Limited (April 2010 - June 2017).

 

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 was 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 held a directorship 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 Constellation Resources Limited (July 2016 - present), Apollo Minerals Limited (July 2016 - present), Salt Lake Potash Limited (August 2014 - present), Equatorial Resources Limited (November 2009 - present), Sovereign Metals Limited (July 2006 - present), Odyssey Energy Limited (September 2005 - present), Piedmont Lithium Limited (September 2009 - August 2018) and Syntonic Limited (April 2010 - October 2016).

 

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 (Chartered Secretary) who is currently Company Secretary for a number of ASX and European listed companies that operate in the resources sector. He commenced his career at a large international accounting firm and has since been involved with a number of exploration and development companies operating in the resources sector, based from London and Perth, including Apollo Minerals Limited, Berkeley Energia Limited and Papillon Resources Limited. Mr Browne successfully listed Prairie on the Main Board of the London Stock Exchange and the Warsaw Stock Exchange in 2015 and recently oversaw Berkeley's listings on the Main Board LSE and the Madrid, Barcelona, Bilboa and Valencia Stock Exchanges. 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 Debiensko and Jan Karski. No significant change in nature of these activities occurred during the year.

 

EARNINGS PER SHARE

 


2019
Cents


2018
Cents

(1.63)

(10.99)

 

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.

DIVIDENDS       

No dividends were paid or declared since the start of the financial year. No recommendation for payment of dividends has been made (2018: 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 18 January 2019, the Company announced that Poland's Supreme Administrative Court had finally and fully rejected Bogdanka's appeal against Poland's MoE regarding the rejection of Bogdanka's 2013 application for a mining concession over the K-6-7 deposit at the Jan Karski;

(ii)      On 18 January 2019, the Company announced that it had received a final "second instance" decision from the MoE denying the Company's amendment application to extend the time stipulated in the Debiensko mining concession for first production of coal from 2018 to 2025. Prairie will strongly defend its position and continue to take relevant actions to pursue its legal rights regarding the Debiensko concession.

(iii)     On 13 February 2019, the Company announced that it had formally notified the Polish government that there exists an investment dispute between Prairie and the Government. Prairie's notification calls for prompt negotiations with the government to amicably resolve the dispute, and indicates Prairie's right to submit the dispute to international arbitration in the event the dispute is not resolved; and

(iv)     On 9 April 2019, the Company announced that an Appeal Court in Warsaw overturned the Civil Court's injunction that was previously awarded in Prairie's favour preventing the MoE from granting a mining usufruct or exploration/mining concession to another party except Prairie. Prairie believes that the Appeal Court's decision is fundamentally flawed and will continue to take relevant actions to pursue its legal rights regarding Jan Karski.

SIGNIFICANT EVENTS AFTER BALANCE DATE

At the date of this report, there are no matters or circumstances, which have arisen since 30 June 2019 that have significantly affected or may significantly affect:

·         the operations, in financial years subsequent to 30 June 2019, of the Consolidated Entity;

·         the results of those operations, in financial years subsequent to 30 June 2019, of the Consolidated Entity; or

·         the state of affairs, in financial years subsequent to 30 June 2019, 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 Shares1

Options2

Performance Rights3

Mr Ian Middlemas

10,600,000

-

-

Mr Benjamin Stoikovich

1,492,262

-

2,100,000

Ms Carmel Daniele4

44,776,120

22,388,060

-

Mr Thomas Todd

2,800,000

-

-

Mr Mark Pearce

3,000,000

-

-

Mr Todd Hannigan

3,504,223

-

-

Notes:

1   "Ordinary Shares" means fully paid Ordinary Shares in the capital of the Company.

2   "Incentive 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 indirect interest in the Ordinary shares and Options. CD Capital also hold the right to acquire 5,711,804 Ordinary shares through the issue of a $0.46 convertible note (Loan Note 2).

SHARE OPTIONS AND PERFORMANCE RIGHTS

At the date of this report the following Incentive Options and Performance Rights have been issued over unissued Ordinary Shares of the Company:

·       200,000 Incentive Options exercisable at $0.50 each on or before 31 March 2020;

·       900,000 Incentive Options exercisable at $0.60 each on or before 31 March 2020;

·       700,000 Incentive Options exercisable at $0.80 each on or before 31 March 2020;

·       22,388,060 CD Options exercisable at $0.60 each on or before 30 May 2021;

·       9,425,000 Performance Rights with various vesting conditions and expiry dates between 31 December 2019 and 31 December 2020; and

·       Convertible loan note with a principal amount of $2,627,430, convertible into 5,711,805 ordinary shares at a conversion price of $0.46 per share with no expiry date (Loan Note 2).

During the year ended 30 June 2019, no Ordinary Shares have been issued as a result of the exercise/conversion of Incentive Options, CD options, Performance Rights and Loan Note 2. Subsequent to year end and up until the date of this report, no Ordinary Shares have been issued as a result of the exercise/conversion of CD options, Performance Rights and Loan Note 2.

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

Mr Thomas Todd                    Non-Executive Director

Mr Mark Pearce                      Non-Executive Director

Mr Todd Hannigan                 Alternate Director

 

Other KMP

Mr Miroslaw Taras                 Group Executive - Poland

Mr Simon Kersey                   Chief Financial Officer

Mr Dylan Browne                   Company Secretary

 

Unless otherwise disclosed, the KMP held their position from 1 July 2018 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 Company's development. On an annual basis, and subsequent to year end, the Board assesses performance against each individual executive's KPI criteria. During the 2019 financial year, no cash incentive (2018: $134,361) 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 grant of Performance Rights and/or Incentive Options to reward KMP and key employees and contractors for long-term performance of the Company. Shareholders approved the renewal of a Performance Rights Plan" (the "Plan") in 17 August 2017.

To achieve its corporate objectives, the Group needs to attract, incentivise, and retain its key employees and contractors. The Board believes that grants of Performance Rights and/or Incentive Options to KMP will provide a useful tool to underpin the Group's employment and engagement strategy.

(i)            Performance Rights

The Group has a Plan that provides for the issuance of unlisted 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.

 

The Plan enables the Group to: (a) recruit, incentivise and retain KMP and other key employees and contractors needed to achieve the Group's business objectives; (b) link the reward of key staff with the achievement of strategic goals and the long-term performance of the Group; (c) align the financial interest of participants of the Plan with those of Shareholders; and (d) provide incentives to participants 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, 900,000 Performance Rights were granted to certain KMP. 1,100,000 Performance Rights previously granted to KMP were forfeited during the financial year.

(ii)           Incentive Options

The Group has also chosen to issue Incentive Options to some KMP and key employees and contractors as part of their remuneration and incentive arrangements in order to attract and retain their and to provide an incentive linked to the performance of the Company.

The Board's policy is to grant Incentive Options to KMP with exercise prices at or above market share price (at the time of agreement). As such, any Incentive 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 Incentive Options granted.

Other than service-based vesting conditions (if any), there are generally no additional performance criteria attached to any Incentive 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 Incentive Options and Performance Rights granted as part of their remuneration package.

 

During the financial year, no Incentive Options were granted to KMP and key employees.  No Incentive Options were exercised by KMP during the financial year. No Incentive Options previously granted to KMP lapsed during the financial year.

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, Incentive 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 Incentive Options in order to secure and retain their services.

Fees for the Chairman were set at $36,000 per annum (2018: $36,000) (excluding post-employment benefits).

Fees for Non-Executive Directors' were set at $20,000 per annum (2018: $20,000) (excluding post-employment benefits). These fees cover main board activities only. Non-Executive Directors may receive additional remuneration for other services provided to the Company, including but not limited to, membership of committees.

During the 2019 financial year, no Incentive Options or Performance Rights were granted to Non-Executive Directors.

The Company prohibits Non-Executive Directors entering into arrangements to limit their exposure to Incentive Options granted as part of their remuneration package.

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 Incentive 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 Incentive 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.

Remuneration of Directors and other KMP

Details of the nature and amount of each element of the remuneration of each Director and other KMP of Prairie Mining Limited are as follows:

 



Short-term benefits


Post-employment benefits
$

Non-Cash
Share-based payments
$




Total
$


Perfor-mance related
%



Salary & fees
$

Cash Incentive Payments
$

Directors








Ian Middlemas

2019

36,000

-

3,420

-

39,420

-


2018

36,000

-

3,420

-

39,420

-

Benjamin Stoikovich

2019

453,972

-

-

(325,050)

128,922

19.2


2018

436,396

134,361

-

75,003

645,760

32.4

Carmel Daniele1

2019

-

-

-

-

-

-


2018

-

-

-

-

-

-

Thomas Todd

2019

20,000

-

1,425

-

21,425

-


2018

20,000

-

1,900

-

21,900

-

Mark Pearce

2019

20,000

-

1,900

-

21,900

-


2018

20,000

-

1,900

-

21,900


Todd Hannigan

2019

-

-

-

-

-

-


2018

-

-

-

-

-

-

Other KMP








Miroslaw Taras

2019

119,698

-

-

(203,689)

(83,991)

-


2018

117,213

-

-

72,582

189,795

38.2

Simon Kersey

2019

290,566

-

-

(118,936)

171,630

-


2018

278,927

-

-

107,455

386,382

27.8

Dylan Browne2

2019

-

-

-

(80,134)

(80,134)

-


2018

118,393

-

-

14,133

132,526

10.7

Total

2019

940,236

-

6,745

(727,809)

219,172



2018

1,026,929

134,361

7,220

269,173

1,437,683


Notes:

1   During the year Ms Daniele waived her Non-Executive Director remuneration. 

2   Company Secretary services are provided through a services agreement with Apollo Group Pty Ltd ("Apollo Group") a company of which Mr Mark Pearce is a Director and beneficial shareholder of. During the year, Apollo Group was paid or is payable A$240,000 (2018: A$150,000) for the provision of serviced office facilities and administrative, accounting, company secretarial and transaction services to the Group.

Options and Performance Rights Granted to KMP

Details of the value of Incentive Options and Performance Rights granted, exercised or lapsed for KMP of the Group during the year ended 30 June 2019 are as follows:

 

2019

No. of rights granted

No. of rights vested

No. of rights lapsed

Value of rights granted1
$

Value of rights lapsed
$

Value of rights included in remuneration
$

Other KMP







Benjamin Stoikovich

500,000

-

(2,100,000)

165,000

(930,880)

(325,050)

Miroslaw Taras

250,000

-

(1,050,000)

93,750

(460,250)

(203,689)

Simon Kersey

-

-

(660,000)

-

(336,600)

(118,936)

Dylan Browne

150,000

-

(475,000)

56,250

(209,750)

(80,134)

 

Details of Incentive 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:

2019

Security

Grant
Date

Expiry Date

Vesting Date

Exercise Price

$

Grant Date Fair Value1

$

Number Granted

Number Vested

Other KMP









Benjamin Stoikovich

Rights

5 Jun 19

30 Sep 20

-2

-

0.330

500,000

-

Miroslaw Taras

Rights

12 Apr 19

30 Sep 20

-2

-

0.375

250,000

-

Dylan Browne

Rights

12 Apr 19

30 Sep 20

-2

-

0.375

150,000

-

Notes:

1   For details on the valuation of the Incentive Options and Performance Rights, including models and assumptions used, please refer to Note 19 to the financial statements.

2   Vest on satisfaction of the Strategic Investor Milestone.

 

There were no Incentive Options granted or exercised by any KMP of the Group during the 2019 financial year.

Employment Contracts with Directors and KMP

Mr Stoikovich has an appointment letter dated 21 June 2018, 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. Under the updated appointment letter, Mr Stoikovich receives a fixed fee of £25,000 per annum.

During the financial year, Selwyn Capital Limited, a company of which Mr Stoikovich is a director and shareholder, had a consulting agreement with the Company to provide project management and capital raising services (CEO services) related to Debiensko and Jan Karski. Under this agreement, Selwyn Capital Limited ("Selwyn") is paid a fixed annual consultancy fee of £225,000 per annum and an annual incentive payment of up to £100,000 payable upon the successful completion of key project milestones as determined by the Board. In addition, Selwyn, is entitled to receive a payment incentive worth the aggregate fixed yearly directors fees and consultancy fee in the event of a change of control clause being triggered with the Company. The consulting contract can be terminated by either Selwyn Limited or the Company by giving twelve months' notice. No amount is payable to Selwyn 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 Taras, was appointed as Group Executive - Poland on 13 October 2016. He has a consultancy agreement with the Company dated 1 March 2015 and amended effective 1 September 2015, which provides for a consulting fee of PLN22,500 per month for strategic advisory services. The contract may be terminated by either party by giving one months' notice. Mr Taras also receives a fixed Management Board fee for PD Co sp. z o.o. (Jan Karski) of PLN4,400 per month.

Mr Simon Kersey, Chief Financial Officer, is engaged under a consultancy deed with Cheyney Resources Limited ("Cheyney") dated 1 April 2017. The agreement specifies the duties and obligations to be fulfilled by Mr Kersey as the Chief Financial Officer. The Company may terminate the agreement with six months written notice. No amount is payable in the event of termination for material breach of contract, gross misconduct or neglect. Cheyney receives an annual consultancy fee of £160,000 and will be eligible for a cash incentive of up to £50,000 per annum to be paid upon successful completion of KPIs. In addition, Cheyney, will be entitled to receive a payment incentive worth six months of the annual consultancy fee in the event of a change of control clause being triggered with the Company.

Mr Browne, Company Secretary, has a services agreement with the Company to provide corporate and financial services with the Company.  Either party may terminate the agreement by giving one month written notice. Under the services agreement, Mr Browne receive cash and/or incentive securities in the Company. Mr Browne is also entitled to receive a fee worth $100,000 in the event of a change of control clause being triggered with the Company.

Loans from Key Management Personnel


No loans were provided to or received from Key Management Personnel during the year ended 30 June 2019 (2018: 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 $240,000 (2018: $150,000) for the provision of serviced office facilities and administration services. The amount is based on a monthly retainer of $20,000 (2018: $12,500) 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 2019, $20,000 (2018: $12,500) was included as a current liability in the Statement of Financial Position.

 

As founder and controller of CD Capital, Ms Daniele has an interest in 22,388,060 $0.60 CD Options (which may result in the issue of an additional 22,388,060 Ordinary Shares) and an interest for CD Capital to convert Loan Note 2 into 5,711,804 Ordinary shares through the issue of the $0.46 convertible note.

 

Equity instruments held by KMP

Incentive Option and Performance Right holdings of Key Management Personnel

2019

Held at
1 July 2018

Granted as Remuner-ation

Options Exercised/
Rights Converted

Net Other Change

Held at
30 June 2019

Vested and exercise-  able at 30 June 2019

Directors







Ian Middlemas

-

-

-

-

-

-

Benjamin Stoikovich

2,100,000

500,000

-

(500,000)1

2,100,000

-

Carmel Daniele2

22,388,060

-

-

-

22,388,060

22,388,060

Thomas Todd

-

-

-

-

-

-

Mark Pearce

-

-

-

-

-

-

Todd Hannigan

-

-

-

-

-

-

Other KMP







Miroslaw Taras

1,050,000

250,000

-

(450,000)1

850,000

-

Simon Kersey

660,000

-

-

-

660,000

-

Dylan Browne

475,000

150,000

-

(150,000)1

475,000

-

Notes:

1     Forfeiture of Performance Rights on 31 December 2018 following the performance condition not being achieved prior to the expiry date.

2     As founder and controller of CD Capital, Ms Daniele is deemed to have an interest in the CD Options.

Shareholdings of Key Management Personnel

2019

Held at
1 July 2018

Granted as Remuneration

Options Exercised/
Rights Converted

Held at
30 June 2019

Directors






Ian Middlemas

10,600,000

-

-

-

10,600,000

Benjamin Stoikovich

1,500,000

-


(7,738)1

1,492,262

Carmel Daniele2

44,776,120

-

-

-

44,776,120

Thomas Todd

2,800,000

-

-

-

2,800,000

Mark Pearce

3,000,000

-

-

-

3,000,000

Todd Hannigan

3,504,223

-

-

-

3,504,223

Other KMP






Miroslaw Taras

150,000

-

-

-

150,000

Simon Kersey

-

-

-

-

-

Dylan Browne

-

-

-

-

-

Notes:

1   Loss of shares following the Beaufort Securities Limited ("Beaufort") administration proceedings and the inability of administrators to fully reconcile the ordinary shares (held as depository receipts) Mr Stoikovich formerly held in the Beaufort account. Mr Stoikovich now holds these ordinary shares in an alternative broking account. Mr Stoikovich is likely to receive compensation from the UK government for the loss of these shares but the amount and timing of receipt of compensation is currently unknown.

2   As founder and controller of CD Capital, Ms Daniele is deemed to have an interest in the 44,776,120 Ordinary Shares issued to CD Capital on conversion of Loan Note 1 in 2018.

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:

 


Board Meetings


Number eligible to attend

Number attended

Ian Middlemas

2

2

Benjamin Stoikovich

2

2

Carmel Daniele

2

1

Thomas Todd

2

2

Mark Pearce

2

2

Todd Hannigan (Alternate director to Mr Todd)

-

-

 

There were no Board committees during the financial year. The Board as a whole currently performs the functions of an Audit Committee, Risk Committee, Nomination Committee, and Remuneration Committee, however this will be reviewed should the size and nature of the Company's activities change.

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.

 


2019

$

2018

$

Preparation of income tax return

11,000

11,124

DIVIDENDS

No dividends have been declared, provided for or paid in respect of the financial year ended 30 June 2019 (2018: nil).

AUDITOR'S INDEPENDENCE DECLARATION

The lead auditor's independence declaration for the year ended 30 June 2019 has been received and can be found on page 18 of the Directors' Report.

 

Signed in accordance with a resolution of the Directors.

 

 

 

 

Benjamin Stoikovich

Director

 

26 September 2019

 

 

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 was extracted from Prairie's announcement dated 21 February 2018 entitled "Drill Results Affirm Jan Karski's Status As A Globally Significant Semi-Soft (Type 34) Coking Coal Project" which is available to view on the Company's website at www.pdz.com.au.

The information in the original announcement that relates to Exploration Results is based on, and fairly represents information compiled or reviewed by Mr Jonathan O'Dell, a Competent Person who is a Member of The Australasian Institute of Mining and Metallurgy. Mr O'Dell is a part time consultant of the Company. Mr O'Dell has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'.

Prairie confirms that: a) it is not aware of any new information or data that materially affects the information included in the original announcements; b) all material assumptions and technical parameters of the Exploration Results included in the original announcements 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 announcements. 

 

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2019

Audit Ind dec



 

2019

 

2018



$

$





Revenue


557,330

826,883

Other income


1,945,080

-

Exploration and evaluation expenses


(3,319,878)

(6,774,136)

Employment expenses


(426,446)

(539,471)

Administration and corporate expenses


(298,200)

(380,021)

Occupancy expenses


(506,410)

(595,103)

Business development expenses


(408,948)

(738,097)

Share-based payment (expenses)/reversal


1,599,118

(1,316,624)

Exploration expenditure impairment expense


(2,721,198)

-

Other expenses


28,880

18,443

Non-cash fair value movements


-

(9,884,328)

Loss before income tax


(3,550,672)

(19,382,454)

Income tax expense


-

-

Net loss for the year


(3,550,672)

(19,382,454)





Net loss attributable to members of Prairie Mining Limited


(3,550,672)

(19,382,454)





Other comprehensive income




Items that may be reclassified subsequently to profit or loss:




Exchange differences on translation of foreign operations


47,067

368,311

Total other comprehensive income/(loss) for the year, net of tax


47,067

368,311

Total comprehensive loss for the year, net of tax


(3,503,605)

(19,014,143)





Total comprehensive loss attributable to members of Prairie Mining Limited


(3,503,605)

(19,014,143)





Basic and diluted loss per share from (cents per share)


(1.63)

(10.99)

 

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 2019

 



 

2019

 

2018



$

$

ASSETS




Current Assets




Cash and cash equivalents


6,628,371

11,022,333

Trade and other receivables           


827,478

953,528

Total Current Assets


7,455,849

11,975,861





Non-current Assets




Property, plant and equipment


2,371,028

2,363,151

Exploration and evaluation assets


-

2,656,968

Total Non-current Assets


2,371,028

5,020,119





TOTAL ASSETS


9,826,877

16,995,980





LIABILITIES




Current Liabilities




Trade and other payables


1,050,862

865,265

Provisions


286,006

532,820

Other financial liabilities


-

1,891,573

Total Current Liabilities


1,336,868

3,289,658





Non-Current Liabilities




Provisions


1,181,421

1,260,624

Total Non-Current Liabilities


1,181,421

1,260,624





TOTAL LIABILITIES


2,518,289

4,550,282





NET ASSETS


7,308,588

12,445,698





EQUITY




Contributed equity


75,491,413

75,525,800

Reserves


2,031,423

3,583,474

Accumulated losses


(70,214,248)

(66,663,576)

TOTAL EQUITY


7,308,588

12,445,698

 

The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2019

 

 


Contributed Equity

Share- Based Payments Reserve

Foreign Currency Translation Reserve

Accumulated Losses

Total
Equity


$

$

$

$

$







Balance at 1 July 2018

75,525,800

2,486,718

1,096,756

(66,663,576)

12,445,698

Net loss for the year

-

-

-

(3,550,672)

(3,550,672)

Other comprehensive income:






Exchange differences on translation of foreign operations

-

-

47,067

-

47,067

Total comprehensive income/(loss) for the period

-

-

47,067

(3,550,672)

(3,503,605)







Share issue costs

(34,387)

-

-

-

(34,387)

Forfeiture of unvested Performance Rights

-

(1,266,881)

-

-

(1,266,881)

Reversal of share-based payments


(2,158,464)



(2,158,464)

Recognition of share-based payments

-

1,826,227

-

-

1,826,227

Balance at 30 June 2019

75,491,413

887,600

1,143,823

(70,214,248)

7,308,588







Balance at 1 July 2017

58,477,713

1,529,894

728,445

(47,640,922)

13,095,130

Net loss for the year

-

-

-

(19,382,454)

(19,382,454)

Other comprehensive income:






Exchange differences on translation of foreign operations

-

-

368,311

-

368,311

Total comprehensive income/(loss) for the period

-

-

368,311

(19,382,454)

(19,014,143)







Conversion right of Loan Note 1

8,283,582

-

-

-

8,283,582

Share issue costs

(43,000)

-

-

-

(43,000)

Issue of convertible note (note 12(a))

2,627,430

-

-

-

2,627,430

Convertible note issue costs

(27,418)

-

-

-

(27,418)

Issue of CD Options

6,207,493

-

-

-

6,207,493

Expiry of vested Incentive Options

-

(359,800)

-

359,800

-

Forfeiture of unvested Performance Rights

-

(1,194,000)

-

-

(1,194,000)

Recognition of share-based payments

-

2,510,624

-

-

2,510,624

Balance at 30 June 2018

75,525,800

2,486,718

1,096,756

(66,663,576)

12,445,698

 

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 2019

 


Note

 

2019

 

2018



$

$

CASH FLOWS FROM OPERATING ACTIVITIES




Payments to suppliers and employees     


(4,979,226)

(9,589,237)

Proceeds from property and gas sales


433,426

504,702

Interest received from third parties


218,838

370,106

NET CASH FLOWS USED IN OPERATING ACTIVITIES

15(a)

(4,326,962)

(8,714,429)





CASH FLOWS FROM INVESTING ACTIVITIES




Payments for plant and equipment            


-

(65,450)

Proceeds from sale of property


3,346

495,008

NET CASH FLOWS FROM IN INVESTING ACTIVITIES


3,346

429,558





CASH FLOWS FROM FINANCING ACTIVITIES




Proceeds from issue of shares


-

-

Payments for share issue costs


(70,346)

(92,469)

Proceeds from issues of convertible note


-

2,627,430

Payments for issue of convertible note


-

(54,611)

NET CASH FLOWS FROM FINANCING ACTIVITIES


(70,346)

2,480,350





Net increase/(decrease) in cash and cash equivalents


(4,393,962)

(5,804,521)

Net foreign exchange differences


-

-

Cash and cash equivalents at beginning of year


11,022,333

16,826,854

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR

15(b)

6,628,371

11,022,333

 

The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.

 

- ENDS -


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