The Group’s objectives encompass the development of the Amaam Coking Coal Field, comprising its two, well-located, large coking coal projects in the Far East of Russia:
• Amaam North: a low-cost starter project providing a fast track to production and earnings, utilising existing infrastructure and supporting development of the entire Amaam Coking Coal Field; and
• Amaam: a large-scale coking coal project, with estimated production capacity of up to 6.5Mtpa of production from dedicated new infrastructure.
Amaam North, and specifically Fandyushkinsky Field Licence AND 15813 TE area (“Project F”), a part of Amaam North, has progressed significantly from the initial Resource announcement in July 2013 and the Preliminary Feasibility Report completed in September 2013, to a Feasibility Study in November 2014 and Project F Feasibility Study Update announced in April 2016. Subsequently, a non-renounceable rights issuance was successfully completed, the primary use of proceeds targeting the implementation of Phase One of Project F. Mining activities including overburden removal commenced in December 2016.
Project F Phase One production is initially estimated to reach approximately 250,000t per annum in the 2016-2017 production cycle, with sales expected to commence in mid-2017. Production is expected to potentially rise to 600,000t per annum in the 2017-2018 production cycle. Project F Phase Two includes the upgrade of Beringovsky Port’s capacity and the construction of a CHPP, with production and sales forecast to increase to approximately 1,000,000t per annum. Phase Two requires a significant further capital investment, for which the Group currently is assessing alternative financing solutions.
Amaam is a core asset of the Group, being a potentially long life project with capacity for up to 6.5Mtpa of high quality coking coal product from a combination of open pit and underground mining over an estimated 20 year life of mine. It involves the construction of a coal handling and preparation plant (“CHPP”) and associated infrastructure, a coal terminal with loading facilities on the nearby Arinay Lagoon and an all-weather 25km rail line or road to connect them. A Feasibility Study was released in April 2013 and since then the Group has completed further drilling and exploration activities, updated the resource estimate and obtained Exploration Licence extensions through to 2019, which enables the Company to continue its resource drilling programs, feasibility studies and works required to convert its Coal Resource to Extraction and Mining Licences.
SHAREHOLDER INFORMATION
1. Top 20 Shareholders as at 13 March 2017
Number of shares
% of Total
SHAREHOLDER INFORMATION (Continued)
3. Distribution of Shareholders and Shareholdings as at 13 March 2017
Holding and Distribution No. of Holders Securities %
1-1000 30 0.00%
1001-5000 49
5001-10000 59
10001-100000 379
100001 & over 345
Tigers Realm Coal Limited
Directors’ report (continued)
For the year ended 31 December 2016
4. Operating and financial review (continued)
Operating Performance
During the year ended 31 December 2016 the Group had no income from coal sales and minimal operating income, primarily from Beringovsky Port operations. Operating expenditure of $0.174 million relating to stripping of waste was incurred, with no commercial coal inventory produced in December 2016. Operating expenses include costs incurred in Beringovsky Port, exploration and evaluation costs, mining related expenses and administration, staff and corporate costs.
During the year ended 31 December 2016, operational highlights were:
• Completed 2015-2016 winter drilling programme;
• Completed and released Amaam North, Project F reserves update on 12 April 2016;
• Completed and released the Project F Phase One Feasibility Study on 22 April 2016;
• On 29 June 2016, TIG signed two heads of agreements (HOAs) with its joint venture partners - one in relation to the Amaam North Project, the other in relation to the Amaam Project. The new conditions described in the HOAs will improve Amaam North Project’s value and fundability and simplify ongoing corporate and approval processes for the Amaam Project, work continuing on the implementation of the HOAs as of 31 December 2016, completion expected to take place in the second quarter of the 2017 calendar year;
• Successfully completed the fully underwritten non-renounceable rights issuance (“RI” or “Entitlement Offer”) in September 2016. Further details of the Entitlement Offer are in Note 21 to the consolidated financial statements;
• Submitted an application to take part in a closed tender for coal supply to Chaunskaya Power Station in Pevek for 2016-2018. As part of this, coal tests were completed and certificates of the mined coal in compliance with GOST (Russian Federal Government Technical Standards) standards were received. TIG has now pre-qualified for future tenders. Following additional larger scale coal testing planned to be undertaken in 2017, this will allow TIG to participate in tenders from 2017 onwards;
• Completed mine development works in December 2016, including construction of the road from the port to the open pit, upgrading, procuring and constructing other new and existing infrastructure (including construction of workshop, office and laboratory in addition to upgrade of existing accommodation camp and expanding the mobile fleet); and
• Commenced mining activities in the second half of December 2016, performing an excavation of an initial waste pre‐strip.
The Group’s net loss for the year ended 31 December 2016 was $12.744 million (for the year ended 31 December 2015: loss of $107.970 million). Despite an improvement in short-term coal prices in the second half of 2016, longer-term macroeconomic and Company specific conditions have not sufficiently improved to recognise a reversal of either Amaam North or Amaam write-downs. Accordingly, neither further asset write-downs nor reversal of prior period write-downs were recorded as a result of impairment testing performed during the year ended 31 December 2016 (During the year ended 31 December 2015, $160.407 million in write-downs were recognised).
As at 31 December 2016 the Group had a cash position of $17.109 million (December 2015: $7.074 million). The Group had no bank debt. For the year ended 31 December 2016 the Group incurred cash outflows from operations of $9.195 million (for the year ended 31 December 2015 $11.888 million). Cash outflows for the year ended 31 December 2016 from investing activities totalled $2.274 million (for the year ended 31 December 2015 $2.938 million).
Notwithstanding the asset write-down in the year ended 31 December 2015, TIG’s shareholders continued to show their support for the Group’s potential through supporting the Entitlement Offer completed in September 2016, the primary use of the funds being for the implementation of Phase One of the Project F Feasibility Study Update announced in April 2016.
Financial Position
The Group’s cash balance increased by $10.035 million over the year to $17.109 million at 31 December 2016, primarily from the receipt of Entitlement Offer proceeds of $23.062 million.
Finance Leases
On 19 July 2016, the Group executed two finance lease arrangements to acquire 8 Scania trucks. The value of the trucks subject to the finance leases was Russian Rubles (“RUB”) 81.165 million (A$1.837 million).
The value of advance payments made was RUB 28.407 million (A$0.643 million) and total lease payments from inception through to 2020 are RUB 103.599 million (A$2.346 million). The acquisition cost of the coal haulage trucks was RUB 81.165 million (A$1.837 million).
Likely developments
Mining activities will continue at the Amaam North Project, with sales commencing in the first half of 2017 and production expected to increase up to 600Kt by 2019. Ongoing enhancement of port, road and other mine infrastructure is expected during 2017 and Project F Phase Two funding alternatives will be investigated. The Group will further progress exploration, appraisal and development of its Amaam project.
More facts and figures as well in the report
TIG Price at posting:
6.0¢ Sentiment: Buy Disclosure: Held
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