Prospectus For the offer of up to 75,000,000 Shares at an issue price of 20 cents each to raise up to $15,000,000. Oversubscriptions may be accepted through the issue of up to a further 15,000,000 Shares to raise up to an additional $3,000,000 This Prospectus is important and requires your immediate attention. It should be read in its entirety. If you do not understand any part of this Prospectus, or you are in doubt as to how to deal with it, you should consult your accountant, stockbroker, solicitor or other professional adviser. THE SECURITIES OFFERED BY THIS PROSPECTUS SHOULD BE CONSIDERED SPECULATIVE APAC COAL LIMITED A.C.N. 126 296 295 SPONSORING BROKER AND LEAD MANAGER: NOVUS CAPITAL LTD APAC COAL APAC Coal Limited
Transcript
Prospectus
For the offer of up to 75,000,000 Shares at an issue price of 20 cents each to raise up to $15,000,000. Oversubscriptions may be accepted through the issue of up to a further 15,000,000 Shares to raise up to an additional $3,000,000
This Prospectus is important and requires your immediate attention. It should be read in its entirety. If you do not understand any part of this Prospectus, or you are in doubt as to how to deal with it, you should consult your accountant, stockbroker, solicitor or other professional adviser.
THE SECURITIES OFFERED BY THIS PROSPECTUS
SHOULD BE CONSIDERED SPECULATIVE
APAC COAL LIMITED A.C.N. 126 296 295
SPONSORING BROKER AND LEAD MANAGER:
NOVUS CAPITAL LTD
APAC COALAPAC Coal Limited
DirectorsPaul Piercy (Chairman and Non Executive Director)Koh Teng Kiat (Managing Director)Sam di Giacomo (Non Executive Director) Maurice Drew (Non Executive Director)Shyun Kon (Non Executive Director)
Company SecretaryDarren Crawte
Sponsoring Broker and Lead ManagerLevel 24 Royal Exchange Building56 Pitt StreetSydney NSW 2000Telephone: 61 2 9375 0100Toll Free: 1800 450 444Facsimile: 61 2 9247 4844
Indonesian SolicitorsSoebagjo Jatim DjarotPlaza DM,17th FloorJalan Jenderal Sudirman kav. 25Jakarta 12920, Indonesia
Principal OfficeLevel 2, 47 Colin StreetWest Perth Western Australia 6005Telephone +61 8 9321 3514Facsimile +61 8 9321 3523Website www.apaccoal.com
Australian SolicitorsSteinepreis Paganin Lawyers & ConsultantsLevel 4, Next Building16 Milligan StreetPerth Western Australia 6000
Registered Office47 Colin StreetWest Perth Western Australia 6005Telephone +61 8 9321 3514Facsimile +61 8 9321 3523
Independent GeologistCorvidae Pty Ltd as trustee for the Ravensgate Unit Trust trading as “Ravensgate”49 Ord StreetWest Perth Western Australia 6005
Share RegistrySecurity Transfer Registrars Pty Ltd770 Canning HighwayApplecross Western Australia 6153Telephone +61 8 9315 2333Facsimile +61 9315 2233E-mail [email protected] www.securitytransfer.com.au
Investigating Accountants and AuditorDeloitte Touche TohmatsuWoodside PlazaLevel 14240 St Georges TerracePerth Western Australia 6000
Corporate Directory Contents
Important Notes 2
Letter from the Chairman 3
Section 1: Investment Highlights and Risk Factors 4
Section 2: Summary of the Offer 5
Section 3: Company Overview 8
Section 4: Industry Overview 14
Section 5: Exploration Programme 16
Section 6: The Company and its Directors 17
Section 7: Independent Geologist’s Report 19
Section 8: Solicitors’ Report 43
Section 9a: Financial Information 49
Section 9b: Investigating Accountants’ Report 59
Section 10: Material Risk Factors 61
Section 11: Additional Information 65
Section 12: Material Contracts 71
Section 13: Definitions 75
Directors’ Statement, Authorisation and Consent 76
Application Form 77
APAC Coal Limited A.C.N. 126 296 295
PROSPECTUS 2008
PAGE 1
Important Dates
Lodgement of Prospectus with ASIC and ASX 4 April 2008
Applications Open 12 April 2008
Applications Close 15 May 2008
Intended Allotment date 21 May 2008
Despatch of Holding Statements 21 May 2008
Intended Date of Listing on ASX 5 June 2008
These dates are indicative only and subject to change. The Company reserves the right to vary all or any dates without prior notice.
IMPORTANT NOTICEThis Prospectus was lodged with the ASIC and ASX on 4 April 2008 and is dated 4 April 2008. Neither the ASIC nor ASX take
responsibility for the contents of this Prospectus. No Shares will be issued on the basis of this Prospectus later than 13 months
after the date of this Prospectus.
This Prospectus has been prepared in its entirety by APAC and is in its entirety based on the available information and facts and
circumstances known to APAC as at the date of this document. The Directors of APAC authorise the distribution of this document.
No director, employee, agent, adviser or consultant will have liability for any statement, opinion, information or matters (express or
implied) arising out of or contained in, or for omissions from, the information provided in this Prospectus.
The pictures and photographs shown within this document do not necessarily depict the actual project land in its present form
given the constant change of the land as part of the development process.
This document is important and should be read in its entirety. Your investment decision in relation to this Issue should be based
upon the information contained in this Prospectus and disclosures made to the market by the Company. If in doubt, you should
consult your stockbroker, solicitor or accountant or other professional adviser without delay. Neither the Company nor any of
its Directors or any other party associated with the preparation of this Prospectus guarantee that any specific objective of the
Company will be achieved or that any particular performance of the Company or of its Shares (including the Shares offered by this
Prospectus) will be achieved.
Up To Date Information
Information contained in this Prospectus (and any supplementary Prospectus) may change from time -to -time. If any change will
be materially adverse a supplementary Prospectus will be issued. However, if the change will not be materially adverse to the Offer,
a supplementary Prospectus may not be issued.
Investors Outside Australia
This Prospectus does not, and is not intended to, constitute an offer in any place or jurisdiction, or to any person to whom it would
not be lawful to make such an offer. It is the responsibility of investors outside Australia to obtain any necessary approvals for the
allotment and issue of Shares pursuant to this Prospectus.
Currency
Unless otherwise stated, all dollar amounts in this Prospectus are stated in Australian dollars.
DISCLAIMERNo person is authorised to give any information or to make any representation in connection with this Issue, which is not contained
in this Prospectus. Any information or representation not so contained may not be relied upon as having been authorised by the
Company in connection with this Issue.
This Prospectus does not constitute an offer in any place in which, or to any person to whom, it would not be lawful to make
such an offer.
PAGE 2
APAC Coal Limited PROSPECTUS 2008
PAGE 3
Important Notes
Definitions
Certain words and terms used in this Prospectus have defined meanings which appear in Section 13 of this Prospectus.
Exposure Period
This Prospectus will be made generally available during the Exposure Period by being posted on the Company’s website at
www.apaccoal.com. In addition, copies of the Prospectus will be available on request to members of the public by contacting the
Company on +61-8 9321 3514.
The purpose of the Exposure Period is to enable this Prospectus to be examined by market participants prior to the raising of
funds. Potential investors should be aware that such examination may result in the identification of deficiencies in the Prospectus
and, in those circumstances, any Application and subscription money that has been received will be dealt with in accordance with
Section 724 of the Corporations Act.
Electronic / Paper Prospectus
This Prospectus is available in electronic form at the Company’s website at www.apaccoal.com or in paper form by contacting the
Company. A paper copy of the Prospectus will be sent free of charge on request during the period of the Offer.
Any person accessing the electronic version of this Prospectus for the purposes of becoming a Shareholder must be an Australian
resident and must only access the Prospectus from within Australia.
Foreign Jurisdictions
This Prospectus, whether in electronic or paper form, does not constitute an offer of Shares in any jurisdiction where, or to any
person to whom, it would not be lawful to make such an offer. Access to this Prospectus by persons outside of Australia is not
permitted.
Any recipient of this Prospectus residing outside Australia should consult their professional advisors on requisite compliance
requirements. It is the responsibility of any overseas Applicant to ensure compliance with all laws of any country relevant to their
Application. The return of a duly completed Application will be deemed to be a representation and warranty by the Applicant that
there has been no breach of such laws. The Company is entitled to refuse an Application for Shares under this Prospectus if it
believes the Applicant did not receive an Offer in Australia.
Applications
Applications for Shares can only be made by completing the Application Form in full, in accordance with the instructions in this
Prospectus. The Company will not accept Application Forms electronically or by facsimile.
The Application Form may only be distributed attached to a complete and unaltered copy of the Prospectus. The Application Form
included with this Prospectus contains a representation that the investor had personally received the complete and unaltered
Prospectus prior to completing the Application Form.
The Company will not accept a completed Application Form if it has reason to believe that the Applicant has not received a
complete paper copy or electronic copy of the Prospectus or if it has reason to believe that the Application Form or electronic copy
of the Prospectus has been altered or tampered with in any way.
Privacy
In submitting an Application Form, an Applicant will be required to provide certain personal information on the Application Form for
the purposes of enabling so that the Company to can register that Applicant as the holder of a Share, to enter relevant information
in the Company’s register of members and to enable the Company to contact that Applicant. At all times, personal information
may be required to be disclosed by the Company to the Australian Taxation Office, or other government authorities or agencies
as required by law. Such information may be disclosed to an Applicant’s accountants, financial advisors and others where the
Applicant’s authority has been received. All personal information so collected will be collected, used and stored by the Company for
the purposes required by the Corporations Act or for direct and permitted communication by the Company with the Applicant.
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APAC Coal Limited PROSPECTUS 2008
PAGE 3
Letter from the Chairman
This Prospectus contains an Offer of up to 75,000,000 Shares at 20 cents each to raise up to $15,000,000 (before costs). The
Company is prepared to accept further subscriptions of up to $3,000,000 by the issue of a further 15,000,000 Shares. This finance
will mostly fund the development of the Company’s coal assets in Indonesia.
On behalf of the Directors, I am pleased to extend an invitation to you to become a Shareholder in APAC, a company that was
incorporated and registered in Western Australia on 29 June 2007 under the Corporations Act, and will become part of Magnus
Energy, a Singapore listed group, with a market capitalisation in excess of $90 million as at 31 March 2008.
Magnus Energy will be the major shareholder in APAC subsequent to this capital-raising via the sale of its two subsidiaries, PT
Deefu and PT Batubara, to APAC. The Company will then have access to considerable resources of Indonesian coal, which is
favoured internationally for its superior environmental and production properties. Magnus Energy will be retaining its Shares for at
least two years and will be providing considerable expertise to the Company in the form of staff and other resources.
Through its two subsidiaries, APAC will hold the exploration rights and the rights to mine 68,360 ha of land in the province of East
Kalimantan, which is home to the bulk of Indonesia’s minable coal reserves. The intention is to produce thermal coal from the new
mine which is currently in pre-production phase. Coal will be sold principally in the domestic energy market with the intent to enter
the international export market very quickly. The mine keeps good company with other successful coal mines as neighbours.
This Offer is made at a time when both the Australian and Indonesian coal industries are thriving. A steady growth in demand for
coal within Indonesia itself, together with China and India, augers well for coal producers in the region generally and for APAC
specifically.
China projects its demand for coal will exceed three billion tonnes by 2010 with a possible predicted shortfall of 100 million tonnes.
There is evidence to suggest that China has become a net importer of coal and that coal prices there are set to increase. This is
good news for Australian coal producers, and for other regional coal producing countries such as Indonesia. Furthermore, there
has also been impressive growth in demand for coal resources in Indonesia, as explained in this Prospectus in more detail.
Our strategy is to be among the industry’s most efficient and cost competitive thermal coal producers with a mining operation
focused on sustainable growth in production and handling capacity while maximising the long-term potential of our coal
concessions in East Kalimantan, Indonesia. In the medium to long-term, the Company will also seek to develop a diversified
resources group of companies with the ability to explore and develop opportunities in other selected mining projects, as well as
provide integrated procurement, marketing and infrastructure services to third party resource companies.
The Board members look forward to welcoming you as a new Shareholder and we look forward to a successful and rewarding
future for the Company.
Yours sincerely
Paul Piercy
Chairman
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APAC Coal Limited PROSPECTUS 2008
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Section 1: Investment Highlights
APAC’s major shareholder will be Magnus Energy, a leading company in the energy sector with strategic holdings in oil, gas and
coal. Magnus Energy has Australian offices in Western Australia, South Australia and the Cooper Plains of Queensland. It was the
first company listed on the Singapore stock exchange to own producing oil concessions in China, and owns a subsidiary that is a
major operator in equipment supply to the oil and gas sector. Furthermore, Magnus Energy is part of a joint venture that holds a
petroleum exploration licence in South Australia. A new gas field was discovered in 2005 through exploration under the licence.
Potential investors can rest assured that APAC has sound backing from Magnus Energy which intends to remain as a principle
investor in APAC and will retain a medium to long-term holding in the interest of nurturing its investment.
Investment Highlights
• APAC’s proposed subsidiary, PT Batubara has entered into a Work Agreement for Coal Mining Enterprises (CCOW) with the
Government of Indonesia to explore, mine and extract coal from an area of approximately 68,360 ha in East Kalimantan,
Indonesia.
• The 30-year CCOW (commencing on the date that mining operations commence) has a relatively low stripping ratio of
around six.
• The Concession has the approval and support of the Minister of Mines in Jakarta, and national concessions such as this one
override local concessions approved by local district councils in Indonesia. Support on a federal level means that the mine is
also open to foreign ownership and investment.
• The Concession contains JORC compliant resources of approximately 5.1 million tonnes of coal. Of this resource, 1.4 million
tonnes is inferred and 3.7 million tonnes are indicated. The resource has been established over an area of 890ha (to a depth
of 100m), which represents approximately 1.3% of the total Concession.
• Production will begin after the fundraising phase. There are in-situ coal off-takers who may buy the coal as soon as production
commences.
• The PT Batubara Concession is located in an area with established infrastructure including access roads, stock-pile areas and
a loading jetty. The convenience of the location translates into significant savings on the cost of coal production.
• APAC’s medium to long term corporate strategy for growth following the listing on ASX and establishment of mining operations
includes, inter alia, other acquisitions of producing mines with track records of profitability.
• To ensure the Company attracts the best professionals to realise our corporate objectives and visions, APAC is committed to
developing a strong, quality and competent management team under the guidance of the Board of Directors whose members
have the relevant industry experience and come from varied backgrounds.
Risk Factors
An investment in the Company and subscription for Shares is also subject to a number of risk factors. A non-exhaustive list of
these risk factors is set out in Section 11 of this Prospectus. All potential investors should read this section carefully before making
a decision to subscribe to this Offer of Shares.
The key risks associated with making an investment in the Company include exploration and production risks, cost price risk,
environmental impact constraints and stockmarket conditions.
PAGE 4
Typical lease areas.
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APAC Coal Limited PROSPECTUS 2008
PAGE 5
Section 2: Summary of the Offer
2.1 The Offer
By way of this Prospectus, the Company seeks to raise up to $15,000,000 by offering for subscription up to 75,000,000 Shares
at an issue price of 20 cents each, payable in full on Application.
The Directors reserve the right to accept a further $3,000,000 in oversubscriptions pursuant to the issue of a further 15,000,000
Shares at $0.20 each. The maximum amount which may be raised under this Prospectus is $18,000,000.
The Shares offered under this Prospectus will rank equally with the existing Shares on issue.
2.2 Purpose of the Offer and Use of Funds
The proceeds raised from the Offer will be used predominantly to fund the development of the Company’s coal assets in Indonesia
and to provide working capital. The proceeds from the Offer will also be used to fund the costs associated with the Offer and the
corporate overheads of the Company. The Company will also consider new project acquisitions and joint ventures as they arise.
The following table illustrates the proposed application of proceeds from the Offer, together with the Company’s existing cash
resources, over a two year calendar period based on three levels of fundraising and assuming successful exploration and
evaluation results:
Table 1: Proposed Application of Funds
Minimum Subscription Full Subscription Full Oversubscriptions
AUD’000 AUD’000 AUD’000
Sources of Funds
Funds on hand 654 654 654
Proceeds from the Offer 7,000 15,000 18,000
Total Funds Available 7,654 15,654 18,654
Uses of Funds
Mine development costs 4,000 7,650 10,000
Corporate costs 1,000 1,350 1,500
Cash costs of the offer 850 1,350 1,538
Total Application of Funds 5,850 10,350 13,038
Cash remaining for working capital 1,804 5,304 5,616
TOTAL 7,654 15,654 18,654
The above table is a statement of current intentions as of the date of this Prospectus. As with any budget, intervening events and
new circumstances have the potential to affect the ultimate way funds will be applied. The Board reserves the right to alter the way
funds are applied on this basis.
PAGE 5
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APAC Coal Limited PROSPECTUS 2008
PAGE 7
2.3 Capital Structure
The capital structure of the Company immediately following the issue of Shares under this Prospectus, based on the stated
assumptions, will be as follows1:
Table 2: Capital Structure
Minimum subscription
% Full Subscription
% Full Oversubscriptions
%
Current Shares on Issue 13,800,002 6 13,800,002 5 13,800,002 5
2.1 Terms of Reference .................................................................................................................................................24
2.2 Qualifications, Experience and Independence..........................................................................................................24
2.3 Principal Sources of Information ..............................................................................................................................24
2.4 Background Information ..........................................................................................................................................24
6 RAVENSGATE SITE VISIT .............................................................................................................................................31
Table 2. Boundary co-ordinates of the Bekoso-Lempesu block (“Project” area) ........................................................................26
Table 3. Summary of coal outcrop measurements (PTBSS) ......................................................................................................29
Table 4. Co-ordinates of the coal outcrops (PTBSS) .................................................................................................................29
Table 5. Coal quality assay results of drillcore (PTBSS)..............................................................................................................30
Table 7. Drillhole collar positions verified by Ravensgate ...........................................................................................................32
Table 8. Matters relating to the Resource - sampling techniques and data ................................................................................33
Table 9. Matters relating to the Resource - estimation and reporting of Mineral Resources........................................................37
Table 10. Mineral Resource statement APAC Coal Project ........................................................................................................40
LIST OF FIGURES
Figure 1. Map of Kalimantan showing the city of Balikpapan.....................................................................................................25
Figure 2. Generalised stratigraphic column of the project area ..................................................................................................27
Figure 3. Map showing Ravensgate’s validation of drillhole and outcrop positions.....................................................................31
Figure 4. Photograph taken by Ravensgate geologist of B seam outcrop .................................................................................32
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APAC Coal Limited PROSPECTUS 2008
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1. SUMMARY
Corvidae Pty Limited as Trustee for Ravensgate Unit Trust (trading as and hereinafter referred to as Ravensgate) was requested to
prepare an Independent Geologist’s Report on the coal assets of APAC Coal Limited (APAC) located in East Kalimantan, Sumatra
Province, Indonesia.
APAC Coal Limited (APAC) intends to acquire exploration rights to a total concession area of 683.6 km2 and holds coal mining
rights by way of contract ‘PKP2B’, issued by the Indonesian government, over an area of 111 km2 (within the concession) in the
Pasir district of East Kalimantan.
It is intended that this report will be included in a Prospectus prepared by APAC Coal Limited. The purpose of the Prospectus is
to offer for subscription up to 75,000,000 ordinary shares at an issue price of 20 cents per share to raise a total of $15,000,000
before costs of the issue for the purposes of listing APAC on the Australian Securities Exchange.
Ravensgate understands that in June 2006 Magnus Energy acquired a 68.4% beneficial interest in PT Batubara Selaras Sapta
(PTBSS). PTBSS were a coal mining and marketing enterprise which held a 30-year coal mining concession in the Pasir District
in East Kalimantan.
Exploration undertaken by contractors on behalf of PTBSS delineated an 8.9km2 area known as the Bekoso-Lempesu block,
which comprises approximately 1% of the total mine concession as having the best coal potential, based on coal quality. This
report deals mainly with the exploration results within the Bekoso-Lempesu block which will hereafter be referred to as the project
area.
The project area lies in the northern part of the Barito Sub-basin and Pasir Sub-basin. These basins are underlain by Jurassic
Cretaceous ultrabasic rocks and the Jurassic Pitap Formation. These are overlain by the Tanjung-Kuaro, Berai, Pamaluan, and
Warukin Formations and covered by Quaternary alluvium. Research indicates that coal is formed mainly in the Tanjung-Kuaro,
Pamaluan and Warukin Formations within the basins.
PTBSS undertook an exploration program within the project area in 2006. The exploration work program included 32 diamond drill
holes for 2,465m at a spacing of between 200m and 500m apart. The work program is summarised in an exploration and mining
feasibility report (PT Batubara Selaras Sapta, 2006) which was supplied by APAC Coal Limited.
PTBSS identified two potentially economic and open pittable coal seams within the project area. Exploration data collected by
PTBSS indicates that the upper seam (A seam) has a thickness ranging from 2.19m to 2.88m and the lower seam (B seam) has
a thickness ranging from 3.95 to 8.13 metres.
Assay results from drillcore and outcrop samples indicate that the ash content of the coal seams is relatively high and the calorific
value is relatively low. On the basis of data collected PTBSS classified the coal seams within the project area as sub-bituminous.
Ravensgate reviewed the documentation relating to the exploration work and undertook a site visit which included the verification
of outcrop and drillhole positions initially recorded by PTBSS within the project area. Ravensgate is satisfied that the quality of work
undertaken by PTBSS is acceptable for the calculation of a mineral resource that complies with the JORC Code and that PTBSS’s
conclusions relating to the physical and chemical characteristics of the two coal seams are sound.
PTBSS estimated a non-JORC compliant Resource Estimate for the coal seams. In terms of the guidelines laid down by the
Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code) and the ASX Listing
rule 5.6, a report which includes a statement relating to ‘mineral resources’ or ‘ore reserves’ must be prepared in accordance with
Appendix 5A (the JORC Code) of the listing rules.
Ravensgate, therefore, recommended that APAC appoint a Competent Person to calculate and classify a JORC compliant
Resource Estimate for the coal seams within the project area using the exploration data generated by PTBSS and reviewed by
Ravensgate. APAC subsequently commissioned Ravensgate to conduct this work.
The calculation of a Resource Estimate involves consideration of various factors which impact the level of confidence of the
Resource Estimate. These factors are analysed and a degree of risk is assigned to each factor; low, moderate or high risk.
The factors are broadly grouped into two sections; those pertaining to the sampling techniques used and the data itself, and those
pertaining to the estimation and reporting of Mineral Resources.
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APAC Coal Limited PROSPECTUS 2008
PAGE 23
Under sampling techniques and data, the influence of the following factors is considered, and the risk rating applied to the APAC
Resources estimated to a vertical cut-off of 100m Mineral Resource cut-off of minimum seam thickness of 0.5m
The Mineral Resources as stated have been estimated by Andre Wulfse BSc (Hons), Pr Sci Nat, MSAIMM; Principal Consultant of
Ravensgate, for APAC Coal Limited on September 26, 2007 and peer reviewed by Stephen Hyland. Ravensgate is an independent
consultancy based in Perth, Western Australia which specialises in geological modelling and resource estimation. This resource
estimation has been carried out to professional industry and best practice standards and is compiled by a Qualified and Competent
Person, in terms of the rules of the ASX, and the JORC Code, December 2004.
8. EXPLORATION PHILOSOPHY AND BUDGET
Current Resource Area (8.9km2 )
Additional drilling will be done to assess resources around the defined production target. Infill drilling will be undertaken within the currently defined resource area. The aim of the drilling is to improve the overall confidence in the mineral resource with a view to upgrading the resource classification. Deeper drilling is also planned in order to assess the coal continuity below the existing target zones. Further drilling will facilitate the proper and correct conversion of the mineral resources to ore reserves. The current resource area represents approximately 1% of the total available mining area available for future production expansion.
Total Concession Area
APAC plan further exploration work in the area outside of the current resource area.
Preliminary planning includes:
Review of existing 1:25,000 geological maps
Geological mapping and sampling of coal outcrops associated trenching and pitting
Reverse Circulation and Diamond drilling accompanied by downhole geophysical logging of diamond holes
Mineral Resource and Ore Reserve estimation
APAC believe that as exploration of the total Concession proceeds it will extend the production capability and ultimately will deliver a significantly larger resource than is the subject of the IPO.
APAC provided Ravensgate with a preliminary exploration and development philosophy and budget. The proposed two year budget makes provision for the following:
Further geological surveys, Resource Upgrades, feasibility study and Reserve Estimates – US$600,000
Land Compensation for mining the current resource area – US$800,000
Office, Base Camp and workshop construction – US$750,000
Road Construction – US$2,500,000
Purchase of heavy duty equipment and construction of Crusher, Conveyor Belt and Jetty – US$3,000,000
The total preliminary capital expenditure proposed by APAC amounts to US$7,650,000.
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APAC Coal Limited PROSPECTUS 2008
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9. CONCLUSIONS AND RECOMMENDATIONS
Exploration work carried out by PTBSS has identified two potentially economic coal seams within the project area. Assay results
from drillcore and outcrop samples indicate that the ash content of the coal seams is relatively high and the calorific value is
relatively low. On the basis of data collected PTBSS classified the coal seams within the project area as sub-bituminous.
Ravensgate reviewed the documentation relating to the exploration work and undertook a site visit which included the verification
of outcrop and drillhole positions initially recorded by PTBSS within the project area. Ravensgate is satisfied that the quality of
work undertaken by PTBSS is acceptable and their conclusions relating to the physical and chemical characteristics of the two
coal seams within the project are sound.
PTBSS estimated a non-JORC compliant resource estimate for the coal seams. To comply with the requirements of the JORC
Code, Ravensgate were commissioned to undertake an Independent Resource Estimate for the coal seams within the project
area in September 2007.
Based on this work, Ravensgate concluded that the proposed APAC leases contain coal resources that rank as sub-bituminous.
Ravensgate is of the opinion that the confidence and reliability of the resource within the 8.9 km2 project area is high enough for
the resource to be classified as Indicated in accordance with JORC guidelines. Following a preliminary feasibility study and the
application of technical and financial factors, this classification could be converted to an Ore Reserve. The preliminary feasibility
study by PTBSS which was based upon the Non-JORC compliant Resource should be updated in the light of the findings of the
Resource Estimate report.
While the geological structure is well understood and Ravensgate considers the geological loss factors to be relatively low,
it considers that further drilling in the vicinity of Drillholes A-14 and A-22, where interburden within the B seam is evident, is
required.
The resource estimate is based upon ‘raw’ coal analysis and it is Ravensgate’s opinion that the overall calorific value of the coal
could be improved by coal washing, which has the added advantage of decreasing the sulphur content of the coal.
Ravensgate is of the opinion that the resource could be increased and the confidence improved by additional drilling, particularly
in areas affected by interburden. Furthermore, there is potential for defining significant additional coal resources outside of the
8.9 km2 area.
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APAC Coal Limited PROSPECTUS 2008
PAGE 43
10. GLOSSARYash content percentage of a coal sample remaining after incineration to a constant weight under standard
conditions
calorie quantity of heat required to raise 1 gram of water from 15° to 16° Celsius
calorific value heat of combustion of a unit quantity of a substance
coal readily combustible rock containing carbonaceous material formed from plant remains that have been compacted, indurated, chemically altered, and metamorphosed by heat and pressure during geologic time
conchoidal having elevations and depressions
density mass of coal per unit volume
dry-air basis calculations done on the basis that a sample has no moisture
fixed carbon matter remaining after determination of moisture, volatile matter and ash
floor rock immediately underlying a coal bed
high-ash coal coal containing more than 15% total ash on an as-received basis
high-sulphur coal coal containing 3% or more total sulphur on an as-received basis
kilogram-calorie (kcal) metric unit of heat equal to 1,000 gram-calories
low-ash coal coal containing less than 8% total ash on an as-received basis
low-sulphur coal coal containing 1% or less total sulphur on an as-received basis
inherent moisture moisture entrapped in the coal and removed by heating to 220°F
moisture content percentage of moisture (water) in coal
parting layer or stratum of non-coal material in a coal bed which does not exceed the thickness of coal in either the directly underlying or overlying benches
quality aspect of coal relating to its suitability for use for a particular purpose
roof the rock immediately overlying a coal bed
seam a bed of coal lying between a roof and floor
specific gravity ratio of the mass of a unit column of coal to the mass of an equal volume of water at 4°C
sub-bituminous coal whose properties range from those of lignite to those of bituminous coal, used primarily for fuel and steam-electric power generation
sulphur content the quantity of sulphur in coal expressed in percent or parts per million
total moisture all moisture present in coal, sum of moisture lost in drying and residual moisture of a sample
volatile matter non-moisture products which are given off as gas and vapour during heating
11. REFERENCESReport on Coal Exploration Bekoso and Lempesu Prospects, Pasir Belengkong sub district, Pasir District, East Kalimantan PKB 2 B no. 717/20.01/DJB/1999 11th October 1999. Prepared for PT Batubara Selaras Sapta Coal and Mining Industry, Jakarta 2006
www.magnusenergy.com.sg retrieved on 7th June 2007
Preliminary Feasibility Study on Railway Coal Transportation in Kalimantan, Indonesia. March 2002. Report prepared by Institute of Energy Economics, Japan
Laporan Eksplorasi Batubara PK2B No 7177/20.01/DJB/1999. 11 Oktober 1999, PT Batubara Selaras Sapta. Jakarta 2006
Laporan Studi Kelayakan Pertambangan Batu Bara PK2B No 717/20.01/DJB/1999. 11 Oktober 1999, PT Batubara Selaras Sapta. Jakarta 2006
Independent Resource Review on the APAC Coal Project, East Kalimantan for APAC Coal Limited. Report prepared by
Ravensgate, September 2007
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APAC Coal Limited PROSPECTUS 2008
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19 March 2008
Our ref: 00026/70355.002/FFF-ta
The Board of Directors
APAC Coal Limited
Level 2, 47 Colin Street
WEST PERTH WA 6005
Dear Sirs,
RE : LAWYERS’ REPORT ON TENEMENTS
This report has been prepared by Soebagjo, Jatim, Djarot (“SJD”) at the request of APAC Coal Limited (“APAC”) in relation to the
proposed initial public offering (“IPO”) and proposed listing on ASX Limited (“ASX”) of the shares in APAC.
1. General
1.1 Background
In Indonesia, mining rights may be in the form of:
(1) Contracts of Work (Kontrak Karya) between the Government of the Republic of Indonesia and an Indonesian incorporated
company owned by the foreign investor(s) (Penanaman Modal Asing), or an Indonesian incorporated company wholly
owned by Indonesians and Indonesian companies (Penanaman Modal Dalam Negeri); or an Indonesian incorporated
company wholly owned by the Government of Indonesia (Badan Usaha Milik Negara) or an Indonesian incorporated
cooperatives (Koperasi).
(2) Mining Rights (Kuasa Pertambangan - KP), which are issued to a Cooperative Economic Enterprises (Koperasi),
Indonesian-incorporated companies which are 100% Indonesian-owned (Perseroan Terbatas Biasa) as well as limited
partnerships where the partners are all Indonesian entities (Commanditaire Vennootschap) (“General Indonesian
Entities”).
APAC identified PT Batubara Selaras Sapta (“PT BSS”) a company holding a Perjanjian Karya Pengusahaan Pertambangan
Batu Bara - Coal Contract of Works (the “CCOW”) and will acquire an indirect 100% interest in PT BSS through what will
be its wholly owned subsidiary in Indonesia, PT Deefu Chemical Indonesia (“PT DCI”).
1.2 Scope of Report
SJD was instructed by APAC to conduct the following legal due diligence review:
(1) licensing, with a view to confirming the current status of the CCOW and key licenses of PT BSS;
(2) litigation, with a view to confirming that no proceedings had been commenced against PT BSS and PT DCI which could
jeopardize PT BSS’ ownership of the CCOW and PTDCI’s ownership/control over PT BSS respectively; and
(3) corporate, with a view to confirming the due incorporation and current corporate status of PT DCI and PT BSS.
Soebagjo, Jatim, DjarotAttorneys at law
Plaza DM, 17th Floor In association withJalan Jenderal Sudirman kav. 25Jakarta 12920, Indonesia Blake Dawson Waldron, AustraliaPhone: +62-21-5704074, 5704075, 5229765Fax: +62-21-5704071, 5229752
Section 8: Solicitors’ Report
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APAC Coal Limited PROSPECTUS 2008
PAGE 45
2. Mining Rights
2.1 Legal Background
The principal legislation regulating coal mining activities in Indonesia are: (a) Law No. 11 of 1967 regarding Mining Main
Provisions (“Law No. 11/1967”) and (b) Government Regulation No. 32 of 1969 as subsequently amended by Government
Regulation No. 75 of 2001 regarding The Implementation of Law No. 11 of 1967 (“Mining Implementation Regulations”)
and Government Regulation No. 27 of 1980 concerning Classification of Minerals (“Minerals Classification Regulations”)
and Decree of the President of the Republic of Indonesia No. 75 of 1996 regarding Material Provisions of Coal Contract of
Works (“Presidential Decree No. 75/1996”).
Law No. 11/1967 regulates mining activities in several key ways. These include the definition of minerals into three
classifications, describing who is eligible to mine minerals in each classification and providing a system for how this mining
can be carried out. Pursuant to the Minerals Classification Regulation, Coal classified as one of strategic minerals that can be
mined and traded by a private party by way of:
a. the awarding of mining concession by the Government of the Republic of Indonesia (“GOI”) in the form of Mining Rights
(Kuasa Pertambangan – “KP Rights”); and
b. the hiring by the GOI of a private party as the contractor for coal mining operations pursuant to a Coal Contract of Works
(“CCOW Rights”) signed between the GOI and the private party.
In general, KP Rights are exclusively reserved for Indonesians and Indonesian companies. The Board of Directors, Board of
Commissioners and formal management of a company which holds KP Rights must be Indonesian nationals.
CCOW Rights are reserved for:
(a) Indonesian incorporated companies owned by the foreign investor(s);
(b) Indonesian incorporated companies wholly owned by Indonesians and Indonesian companies;
(c) Indonesian incorporated companies wholly owned by the GOI; and
(d) Indonesian incorporated cooperatives.
Under the CCOW scheme, coal mining operations comprise of 5 (five) main stages/periods (General Survey Period,
Exploration Period, Feasibility Study Period, Construction Period and Operating Period). The term for coal mining operations
under a CCOW scheme is 30 (thirty) years after the commencement date of the Operating Period which is the date of
commencement of the first mining operation. The Operating Period, and therefore, the Concession term has not commenced
in respect of PT BSS.
2.2 Mining Rights issued to PT BSS and the Status of the CCOW
On the 20 November 1997, a CCOW was executed and signed by and between the GOI and PT BSS (the “PT BSS CCOW”).
PT BSS in the CCOW was legally awarded a Concession (as Contractor) to conduct coal mining operations in the area
designated located in the Districts of Batusopang, Pasir Belengkong and Tanah Grogot, Pasir Regency, East Kalimantan
Province.
(1) The current status of the PT BSS CCOW can be summarized as follows:
a. PT BSS is now in the Exploration Period (while the CCOW provides for completion of the Exploration Period on 24
December 2005, pursuant to the Decision of the Minister of Energy and Mineral Resources No. 45.K/30/DJB/2008
dated 13 March 2008, the Exploration Period has been extended until 4 February 2009).
b. To the best of our knowledge except as otherwise stated herein, PT BSS has complied with the required obligations
under the CCOW to date except for payment of the Land and Building Tax which we are informed (by PT BSS) is
currently being settled.
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APAC Coal Limited PROSPECTUS 2008
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(2) PT BSS has complied with its obligation to pay Deadrent/Fixed Retribution to the GOI for the years 2004, 2005, 2006
and 2007 in accordance with the terms and conditions of the CCOW.
(3) Pursuant to the CCOW and to the said Decision of 45.K/30/DJB/2008, PT BSS has been and is still a valid and legal
holder of the Concession (as Contractor) to conduct coal mining operations in the area designated in the CCOW located
in the Districts of Batusopang, Pasir Belengkong and Tanah Grogot, Pasir Regency, East Kalimantan Province.
3. Court Searches
3.1 Basis of inquiries
This section 3 is based upon inquiries made (only) to the district courts with jurisdiction over the domicile of PT BSS and PT
DCI as stated in their respective Articles of Association.
3.2 Search Results
In 2005, PT BSS and PT DCI were involved in litigation/legal proceedings at the Central Jakarta District Court being essentially
a claim by the Plaintiffs (1st Plaintiff and 2nd Plaintiff, Roosanawati and Happy Nugroho Priyadi respectively) against the
Defendants (the Defendants for this purpose being the then shareholders of PT BSS) in respect to a payment claimed by the
Plaintiffs as due to them from the Defendants.
Pursuant to a Settlement Agreement dated 12 July 2007, the 1st Plaintiff and the Defendants agreed to settle the matter and
confirmed that there shall be no execution arising post settlement. The Settlement Agreement also provides a waiver by the 1st
Plaintiff of its rights to file legal suits either in the present or in the future regarding the legal dispute. The said settlement was
reported to and acknowledged by the Central Jakarta District Court and the High Court of DKI Jakarta Province pursuant to
the Letter dated 12 July 2007.
The above dispute has not effected the licenses/permits of PT BSS.
Other than documents related to the aforementioned legal proceedings, we have not seen any documents evidencing other
litigation/legal proceedings.
4. Corporate
4.1 PT DCI
(1) PT DCI’s Status of Incorporation & Current Legal Entity Status
By virtue of the Decree of the Ministry of Justice of the Republic of Indonesia (presently renamed to the Ministry of Law
and Human Rights of the Republic of Indonesia – “MOJ”) No. C-01338.HT.01.01.TH.2001 dated 29 May 2001 regarding
Ratification by the MOJ on the establishment of the Company, the Company was validly incorporated as a Limited Liability
Company as of 29 May 2001 in accordance with the provisions of Article 7 of the Indonesian Company Law.
As stipulated by Letter of Approval No. 123/V/PMA/2006 dated 5 July 2006 issued by the Chairman of the Indonesian
Investment Coordinating Board (Badan Koordinasi Penanaman Modal - “BKPM”), the Company currently has the
status of Limited Liability Company operating within the framework of Indonesia’s Foreign Capital Investment regime
(Perusahaan Penanaman Modal Asing - “PT PMA”) in accordance with the provisions of the Indonesian Company Law
and the Indonesian Foreign Investment Law.
(2) PT DCI’s Current Capital Structure and Shareholding
Pursuant to: (a) Deed No. 01 dated 12 July 2006 made before Arman Lany, S.H., Notary in Jakarta which has been
approved by the Ministry of Law and Human Rights of the Republic of Indonesia by virtue of its Decree No. C-23490
HT.01.04.TH.2006 dated 10 August 2006 and registered on 21 June 2007 in the Registry of Companies at PT DCI’s
Registration Office of the Central Jakarta Municipality with PT DCI’s Registration Certificate No. 090515440796 and
Registration Agenda No. 7048/RUB.09.05/X/2006 and (b) Deed No. 16 dated 21 August 2007 made before Ny. Djumini
Setyoadi, S.H., Mkn, Notary in Jakarta which has been reported to MOJ pursuant to MOJ Letter of Report Receipt No.
W7-HT.01.10-12467 dated 7 September 2007, PT DCI’s current capital structure and shareholding are as follows:
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APAC Coal Limited PROSPECTUS 2008
PAGE 47
Authorized, Issued & Paid-Up Capital : IDR 3,000,000,000 (three billion Indonesian Rupiah) divided into 3,000
(three thousand) shares, each with a nominal value of IDR1,000,000 (one
million Indonesian Rupiah).
Shareholder’s Name Number of Shares Nominal Value(Indonesian Rupiah)
%
ANTIG INVESTMENTS PTE LTD 2,160 2,160,000,000 72
ADVANCE ASSETS MANAGEMENT LTD 840 840,000,000 28
TOTAL 3,000 3,000,000,000 100
(3) PT DCI’s Board of Directors (“BOD”) & Board of Commissioners (“BOC”)
Pursuant to resolution adopted by PT DCI’s shareholders by way of circular resolution dated 21 May 2007 as stipulated in
the Deed No. 39 dated 31 May 2007 made by Djumini Setyoadi, S.H., Notary in Jakarta), PT DCI’s BOD and BOC since
21 May 2007 are as follows:
BOD:
President Director : ALWIE HANDOYO
Director : RUDY SANTOSO
BOC:
President Commissioner : ZULKIFLI HAZALI
Commissioner : YUSMAN
In accordance with the provisions of Articles 10 and 13 of PT DCI’s Articles of Association, the tenure of the
aforementioned members of PT DCI’s BOD & BOC is 5 (five) years from 21 May 2007 as the date of their appointment
by the Shareholders as detailed above, without prejudice to the rights of the Shareholders to terminate them from time to
time.
4.2 PT BSS
(1) PT BSS’ Status of Incorporation & Current Legal Entity Status
By virtue of the MOJ Decree No. C2-17.409.HT.01.01.TH.95 dated 29 December 1995 regarding Ratification by the MOJ
on the Establishment of the Company, the Company has been validly incorporated and consequently obtained the status
of a Limited Liability Company as of 29 December 1995 in accordance with the provisions concerning limited liability
Companies regulated in the Indonesian Commercial Code being the prevailing regulations at the time of incorporation of
the Company.
Based on the above, the Company is and has been, since its incorporation, a limited liability legal entity in Indonesia.
(2) PT BSS’ Capital Structure & Shareholding
Pursuant to:
(a) Deed No. 11 dated 4 January 1993 made by Rizam Fadilah Tajudin, S.H., substitute of Mohamad Said Tadjoedin,
S.H., Notary in Jakarta as subsequently amended by: (i) Deed No. 163 dated 23 August 1993 made by Mohamad
Said Tadjoedin, S.H., Notary in Jakarta, (ii) Deed No. 3 dated 1 November 1993 made by Mohamad Said Tadjoedin,
S.H., substitute of Haji Abdul Kadir Usman, S.H., Notary in Jakarta, (iii) Deed No. 91 dated 13 June 1994 made by
Rizam Fadilah Tajudin, S.H., substitute of Haji Abdul Kadir Usman, S.H., Notary in Jakarta, (iv) Deed No. 28 dated
5 December 1995, made by Purbandari, S.H., substitute of Haji Abdul Kadir Usman, S.H., Notary in Jakarta, all of
which have been: (1) ratified by the MOJ by virtue of its Decree No. C2-17.409.HT.01.01.TH.95, dated 29 December
1995; and (2) published in the Supplement No. 10030 of the State Gazette of the Republic of Indonesia (“State
Gazette”) No. 80 dated 5 October 2004;
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APAC Coal Limited PROSPECTUS 2008
PAGE 47
(b) Deed No. 1 dated 1 May 2006 made by Mohamad Rifat Tadjoedin, S.H., Notary in Jakarta which has been reported
to the MOJ as stipulated by MOJ Letter of Report Receipt No. C-22342.HT.01.04.TH.2006 dated 31 July 2006
and Deed No. 13 dated 7 March 2007 made by Mohamad Rifat Tadjoedin, S.H., Notary in Jakarta which has been
reported to MOJ as stipulated by MOJ Letter of Report Receipt No. W7-HT.01.10-3707 dated 26 March 2007;
and
(c) Deed No. 3 dated 3 August 2007 made before Ny. Djumini Setyoadi, S.H., Mkn, Notary in Jakarta which has been
reported to MOJ pursuant to MOJ Letter of Report Receipt No. W7-HT.01.10-12267 dated 31 August 2007;
PT BSS’s current capital structure and shareholding are as follows:
Authorized, Issued & Paid-Up Capital : IDR 3,500,000,000 (three billion and five hundred million Indonesian
Rupiah) divided into 3,500 (three thousand and five hundred) shares, each
with a nominal value of IDR1,000,000 (one million Indonesian Rupiah).
Shareholder’s Name Number of Shares Nominal Value(Indonesian Rupiah)
%
PT DEEFU CHEMICAL INDONESIA 3,325 3,325,000,000 95
JAKE PISON HAWILA 175 175,000,000 5
TOTAL 3,500 3,500,000,000 100
The above capital structure and shareholding have been approved by the GOI pursuant to Letter No. 6307/30/DJB/2007
dated 10 October 2007 issued by Directorate General of Mineral, Coal & Geothermal – Department of Energy and Mineral
Sources of the Republic of Indonesia in accordance with the terms and conditions of PT BSS’ Coal Mining Concession as
stipulated in the CCOW, but has not been registered at the Registry of Companies as the administrative process required
by Law No. 1 of 1995 regarding Limited Liability Companies (“Law No. 1/1995”) being the prevailing law at that time.
On 16 August 2007, Law No. 1/1995 was replaced entirely with Law No. 40 of 2007 (“Law No. 40/2007”), which
stipulates that changes in capital structure and shareholding are deemed to be legally effective at the time of notification
of such changes to the MOJ. Accordingly, PT BSS’ capital structure and shareholding as described above may now
be deemed legally effective. Under Law No. 1/1995, however, these changes would require registration at the Registry
of Companies. Therefore for added certainty, PT BSS could nevertheless still effect the aforementioned registration at
the Registry of Companies. It is our understanding that procedures are currently underway to effect the aforementioned
changes in capital structure and shareholding by registration.
(4) PT BSS’ Board of Directors (“BOD”) & Board of Commissioners (“BOC”)
Pursuant to resolution adopted by PT BSS’ shareholders by way of circular resolution dated 21 May 2007 as stipulated
in the Deed No. 47 dated 31 May 2007 made by Djumini Setyoadi, S.H., Notary in Jakarta, PT BSS’ BOD and BOC since
21 May 2007 is comprised of:
BOD:
President Director : RUDY SANTOSO
Director : YUSMAN
BOC:
Commissioner : ZULKIFLI HAZALI
In accordance with the provisions of Articles 10 and 13 of PT BSS’ AOA, the tenure of the aforementioned members of
PT BSS’ BOD & BOC is 5 (five) years from 21 May 2007 being the date of their appointment by the Shareholders detailed
above, without prejudice to the rights of the Shareholders to terminate them from time to time.
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APAC Coal Limited PROSPECTUS 2008
PAGE 49
5. Assumptions
This report has been prepared with the following assumptions:
(1) that where we have been provided with copies of documents, that copy is an exact and complete reproduction of, and
conforms with, the original of the document and the original of the document still exists;
(2) that no document provided to us has been varied, cancelled or superseded by some other document or agreement or
action of which we are not aware;
(3) that all signatories, dates of and any stamp duty or other marking on all documents provided to us (whether copies or
originals) are authentic;
(4) that where a document was provided to us in draft form, it was executed or will be executed in the form of that draft;
(5) except as specifically stated in this Report, all documents provided to us are within the capacity and power of, and
have been or will be validly authorized, executed and delivered by each party to them, and constitute valid and binding
obligations of those parties under all applicable laws;
(6) except as specifically stated in this Report, each document provided to us, which is a contract or agreement, is
enforceable in accordance with its terms;
(7) the details revealed by searches of public registers maintained by governmental or other regulatory authorities (and/or
information provided to us by such authorities) are up to date at the date of such search/information provided and (as
applicable) have been properly and accurately recorded in those registers by those authorities; and
(8) all material information and documentation have been provided to us and is true and complete not misleading in any
way.
(9) where APAC / PT BSS has advised us of a matter, such advise is accurate (the phrase ‘to the best of our knowledge’ as
used herein indicates, information provided to us, inter-alia, by APAC / PT BSS).
6. Consent
This Report is based on the laws of the Republic of Indonesia. Any opinions expressed with respect to matters which may be
subject to or governed by the law of any other jurisdiction should be verified and confirmed by lawyers competent to advise
in those jurisdictions.
This report may not be disclosed to any party outside of APAC without the prior written consent of Soebagjo, Jatim, Djarot.
Yours faithfully,
Soebagjo, Jatim, Djarot
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APAC Coal Limited PROSPECTUS 2008
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Section 9a: Financial InformationTHERE ARE TWO SECTIONS WITHIN SECTION 9
Introduction
This section provides an overview of the Historical Balance Sheet of APAC Coal Limited at 31 December 2007 and the Pro Forma
Historical Consolidated Balance Sheet as at that date to show the effect on APAC’s financial position of the proposed equity raising
and certain other transactions expected to occur on or around the date of the Prospectus.
The Historical Balance Sheet as at 31 December 2007 and the Pro Forma Historical Consolidated Balance Sheet as at that
date have been prepared in accordance with the recognition and measurement principles prescribed in Australian Accounting
Standards and the basis of preparation and the accounting policies adopted by APAC as set out in Note 1.
APAC was incorporated on 29 June 2007.
HISTORICAL BALANCE SHEET AND PRO FORMA HISTORICAL CONSOLIDATED BALANCE SHEETS AS AT 31 DECEMBER 2007 Pro Forma Historical Historical Notes Company Consolidated
$ $
Current assets
Cash assets 3 269,981 14,228,134
Trade and other receivables 17,470 26,533
Other assets 4 170,199 -
Total current assets 457,650 14,254,667
Non –current assets
Exploration expenditure 5 - 378,484
Property, plant and equipment 6 - 24,766
Total non current assets - 403,250
Total assets 457,650 14,657,917
Current liabilities
Trade and other payables 7 89,740 40,690
Total current liabilities 237,043 40,690
Non current liabilities
Borrowings 8 - 367,949
Total non current liabilities - 367,949
Total liabilities 237,043 408,639
Net assets 220,607 14,249,278
Equity
Issued capital 9 2 14,274,023
Other contributed equity 270,000 -
Reserves 10 11,088 35,738
Accumulated losses (60,483) (60,483)
Total equity 220,607 14,249,278
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APAC Coal Limited PROSPECTUS 2008
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1. Significant accounting policies
The significant policies which have been adopted in the preparation of the Historical Balance Sheet and Pro Forma Historical
Consolidated Balance Sheet (Historical Financial Information) are shown below:
(a) Basis of preparation
The Historical Financial Information has been prepared in accordance with the recognition and measurement, but not all of the
disclosure requirements of applicable Australian Accounting Standards. The Pro Forma Historical Consolidated Balance Sheet
has been prepared based on the Historical Balance Sheet at 31 December 2007 and the assumption that the Pro Forma
transactions set out in Note 2 had occurred at that date.
The Historical Financial Information has been prepared on the basis of historical cost. Cost is based on the fair values of the
consideration given in exchange for assets.
(b) Basis of consolidation
The Historical Balance Sheet incorporates the balance sheets of the Company and entities controlled by the Company (its
subsidiaries) (referred to as ‘the Group’). Control is achieved where the Company has the power to govern the financial and
operating policies of an entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the period are included in the consolidated income statement from
the effective date of acquisition or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line
with those used by other members of the Group.
All intra-group transactions, balances, income and expenses are eliminated in full on consolidation. In the separate financial
statements of the Company, intra-group transactions (‘common control transactions’) are generally accounted for by
reference to the existing (consolidated) book value of the items. Where the transaction value of common control transactions
differ from their consolidated book value, the difference is recognised as a contribution by or distribution to equity participants
by the transacting entities.
Minority interests in the net assets (excluding goodwill) of consolidated subsidiaries are identified separately from the Group’s
equity therein. Minority interests consist of the amount of those interests at the date of the original business combination and
the minority’s share of changes in equity since the date of the combination. Losses applicable to the minority in excess of
the minority’s interest in the subsidiary’s equity are allocated against the interests of the Group except to the extent that the
minority has a binding obligation and is able to make an additional investment to cover the losses.
(c) Business combinations
Acquisitions of subsidiaries and businesses are accounted for using the purchase method. The cost of the business
combination is measured as the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred
or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly
attributable to the business combination. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the
conditions for recognition under AASB 3 ‘Business Combinations’ are recognised at their fair values at the acquisition date,
except for non-current assets (or disposal groups) that are classified as held for sale in accordance with AASB 5 ‘Non-current
Assets Held for Sale and Discontinued Operations’, which are recognised and measured at fair value less costs to sell.
Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the
business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities
recognised. If, after reassessment, the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and
contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in profit or loss.
The interest of minority shareholders in the acquiree is initially measured at the minority’s proportion of the net fair value of the
assets, liabilities and contingent liabilities recognised.
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APAC Coal Limited PROSPECTUS 2008
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The restructure of APAC and PTDCI was deemed to be a transaction of no economic substance and accordingly, the
provisions of AASB 3 Business Combinations did not apply. The Company has determined to account for the restructure and
combination based on the existing book values of the entities involved in the combination as the Company considers that the
combination does not have economic substance. The assets, liabilities and contingent liabilities of the combining entities were
therefore stated at the book value at the deemed date of the restructure and combination for the preparation of the Pro Forma
Historical Consolidated Balance Sheet, being 31 December 2007.
(d) Cash and cash equivalents
Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are
readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
(e) Employee benefits
A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave, long service leave,
and sick leave when it is probable that settlement will be required and they are capable of being measured reliably.
Liabilities recognised in respect of employee benefits expected to be settled within 12 months, are measured at their nominal
values using the remuneration rate expected to apply at the time of settlement.
Liabilities recognised in respect of employee benefits which are not expected to be settled within 12 months are measured as
the present value of the estimated future cash outflows to be made by the Group in respect of services provided by employees
up to reporting date.
Defined contribution plans
Contributions to defined contribution superannuation plans are expensed when incurred.
(f) Financial assets
Investments are recognised and derecognised on trade date where the purchase or sale of an investment is under a contract
whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially
measured at fair value, net of transaction costs except for those financial assets classified as at fair value through profit or loss
which are initially measured at fair value.
Subsequent to initial recognition, investments in subsidiaries are measured at cost in the company financial statements.
Subsequent to initial recognition, investments in associates are accounted for under the equity method in the consolidated
financial statements and the cost method in the company financial statements.
Other financial assets are classified into the following specified categories: financial assets ‘at fair value through profit or loss’,
‘held-to-maturity investments’, ‘available-for-sale’ financial assets, and ‘loans and receivables’. The classification depends on
the nature and purpose of the financial assets and is determined at the time of initial recognition.
Loans and receivables
Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active
market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective
interest method less impairment.
Interest is recognised by applying the effective interest rate.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest
income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts
through the expected life of the financial asset, or, where appropriate, a shorter period.
Income is recognised on an effective interest rate basis for debt instruments other than those financial assets ‘at fair value
through profit or loss’.
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APAC Coal Limited PROSPECTUS 2008
PAGE 53
Impairment of financial assets
Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at each balance
sheet date. Financial assets are impaired where there is objective evidence that as a result of one or more events that occurred
after the initial recognition of the financial asset the estimated future cash flows of the investment have been impacted. For
financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount
and the present value of estimated future cash flows, discounted at the original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception
of trade receivables where the carrying amount is reduced through the use of an allowance account. When a trade receivable
is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are
credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.
(g) Financial instruments issued by the company
Debt and equity instruments
Debt and equity instruments are classified as either liabilities or as equity in accordance with the substance of the contractual
arrangement.
Transaction costs on issue of equity instruments
Transaction costs arising on the issue of equity instruments, including new shares and options, are recognised directly in
equity as a reduction of the proceeds of the equity instruments to which the costs relate. Transaction costs are the costs that
are incurred directly in connection with the issue of those equity instruments and which would not have been incurred had
those equity instruments not been issued.
(h) Foreign currency
The individual balance sheets of each entity in the Group are presented in the currency of the primary economic environment
in which the entity operates (its functional currency). For the purpose of the Historical Financial Information, the results and
financial position of each entity are expressed in Australian dollars, which is the functional currency of APAC.
In preparing the financial information of the individual entities, transactions in currencies other than the entity’s functional
currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each
balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the balance
sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates
prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost
in a foreign currency are not retranslated.
Exchange differences are recognised in profit or loss in the period in which they arise except for:
• exchange differences which relate to assets under construction for future productive use, which are included in the cost
of those assets where they are regarded as an adjustment to interest costs on foreign currency borrowings;
• exchange differences on transactions entered into in order to hedge certain foreign currency risks; and
• exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither
planned or likely to occur, which form part of the net investment in a foreign operation, and which are recognised in the
foreign currency translation reserve and recognised in profit or loss on disposal of the net investment.
On consolidation, the assets and liabilities of the Group’s foreign operations are translated into Australian dollars at exchange
rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the
period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the
transactions are used. Exchange differences arising, if any, are classified as equity and transferred to the Group’s translation
reserve. Such exchange differences are recognised in profit or loss in the period in which the foreign operation is disposed.
Goodwill and fair value adjustments arising on the acquisition of a foreign are treated as assets and liabilities of the foreign
entity and translated at exchange rates prevailing at the reporting date.
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APAC Coal Limited PROSPECTUS 2008
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(i) Impairment of other tangible and intangible assets
At each reporting date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether
there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount
of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate
cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit
to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also
allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for
which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually
and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying
amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in profit or
loss immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the
carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating
unit) in prior years. A reversal of an impairment loss is recognised in profit or loss immediately.
(j) Income tax
Current tax
Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit
or tax loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by
reporting date. Current tax for current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid (or
refundable).
Deferred tax
Deferred tax is accounted for using the balance sheet liability method. Temporary differences are differences between the tax
base of an asset or liability and its carrying amount in the balance sheet. The tax base of an asset or liability is the amount
attributed to that asset or liability for tax purposes.
In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised to
the extent that it is probable that sufficient taxable amounts will be available against which deductible temporary differences
or unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not recognised if the
temporary differences giving rise to them arise from the initial recognition of assets and liabilities (other than as a result of a
business combination) which affects neither taxable income nor accounting profit. Furthermore, a deferred tax liability is not
recognised in relation to taxable temporary differences arising from the initial recognition of goodwill.
Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries, branches
and associates, and interests in joint ventures except where the Group is able to control the reversal of the temporary
differences and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets
arising from deductible temporary differences associated with these investments and interests are only recognised to the
extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary
differences and they are expected to reverse in the foreseeable future.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the asset and
liability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted or substantively
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APAC Coal Limited PROSPECTUS 2008
PAGE 55
enacted by reporting date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would
follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets
and liabilities.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the
company/Group intends to settle its current tax assets and liabilities on a net basis.
Current and deferred tax for the period
Current and deferred tax is recognised as an expense or income in the income statement, except when it relates to items
credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity, or where it arises
from the initial accounting for a business combination, in which case it is taken into account in the determination of goodwill
or excess.
(k) Exploration expenditure
Exploration, evaluation and development expenditure incurred may be accumulated in respect of each identifiable area of
interest. These costs are carried forward only if they relate to an area of interest for which rights of tenure are current and in
respect of which:
(i) such costs are expected to be recouped through successful development and exploitation or from sale of the area; or
(ii) exploration and evaluation activities in the area have not, at balance date, reached a stage which permit a reasonable
assessment of the existence or otherwise of economically recoverable reserves, and active operations in, or relating to,
the area are continuing.
Accumulated costs in respect of areas of interest which are abandoned are written off in full against profit or loss in the year
in which the decision to abandon the area is made. A regular review is undertaken of each area of interest to determine the
appropriateness of continuing to carry forward costs in relation to that area of interest.
Notwithstanding the fact that a decision not to abandon an area of interest has been made, based on the above, the
exploration and evaluation expenditure in relation to an area may still be written off if considered appropriate to do so.
(l) Property, plant and equipment
Plant and equipment are stated at cost less accumulated depreciation and impairment. Cost includes expenditure that is
directly attributable to the acquisition of the item. In the event that settlement of all or part of the purchase consideration
is deferred, cost is determined by discounting the amounts payable in the future to their present value as at the date of
acquisition.
Depreciation is calculated on a straight line basis so as to write off the net cost or other revalued amount of each asset over
its expected useful life to its estimated residual value. Leasehold improvements are depreciated over the period of the lease
or estimated useful life, whichever is the shorter, using the straight line method. The estimated useful lives, residual values and
depreciation method are reviewed at the end of each annual reporting period, with the effect of any changes recognised on
a prospective basis.
(m) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is
probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the
obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at
reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using
the cashflows estimated to settle the present obligation, its carrying amount is the present value of those cashflows.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the
receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable
can be measured reliably.
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APAC Coal Limited PROSPECTUS 2008
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(n) Revenue
Dividend and interest revenue
Dividend revenue from investments is recognised when the shareholder’s right to receive payment has been established.
Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial
asset to that asset’s net carrying amount.
(o) Share-based payments
Equity-settled share-based payments with employees and others providing similar services are measured at the fair value
of the equity instrument at the grant date. Fair value is measured by use of a binomial model. The expected life used in the
model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions,
and behavioural considerations.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis
over the vesting period, based on the Group’s estimate of shares that will eventually vest.
Equity-settled share-based payment transactions with other parties are measured at the fair value of the goods and services
received, except where the fair value cannot be estimated reliably, in which case they are measured at the fair value of the
equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.
For cash-settled share-based payments, a liability equal to the portion of the goods or services received is recognised at the
current fair value determined at each reporting date.
(p) Goods and services tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:
i. where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of
acquisition of an asset or as part of an item of expense; or
ii. for receivables and payables which are recognised inclusive of GST.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables.
2. ASSUMPTIONS USED IN THE PREPARATION OF THE PRO FORMA HISTORICAL CONSOLIDATED BALANCE SHEET
The Pro Forma Historical Consolidated Balance Sheet as at 31 December 2007 has been prepared to show the financial
effects on APAC as if the following transactions had taken place at 31 December 2007:
(a) The issue of 13,800,000 shares at an issue price of 5 cents per share to raise $690,000 before costs of $86,951. As at 31
December 2007, $270,000 had been received and recorded as other contributed equity, costs of $86,951 were included
in other assets of which $35,839 of costs remained unpaid and were included in trade payables;
(b) The issue of 75,000,000 shares at an issue price of 20 cents per share to raise $15,000,000 before costs of the issue of
$1,450,000. As at 31 December 2007, $83,248 of costs were included in other assets and $30,187 of costs remained
unpaid and were included in trade payables;
(c) The payments and recognition in equity as a reduction of the proceeds received of the total costs of the offer via cash
payment ($1,300,436), issue of shares ($75,000) and issue of options ($24,650);
(d) The issue of 200,000,000 shares to effect the restructure and combination of APAC and PTDCI (refer Note 11); and
(e) Repayment of amounts owed to Magnus Energy at 31 December 2007 of $147,303.
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APAC Coal Limited PROSPECTUS 2008
PAGE 57
Minimum Subscription
As set out in Section 2.7 of the Prospectus, the minimum subscriptions to be raised pursuant to the Prospectus is $7,000,000.
The Pro Forma Historical Consolidated Balance Sheet has been prepared based on the assumption that the full $15,000,000 of
subscriptions will be achieved. If the minimum subscription is achieved, the cash and issued capital disclosed in the Pro Forma
Historical Consolidated Balance Sheet would be reduced by $7,000,000 and $7,640,000 respectively.
Pro Forma Historical Historical Company Consolidated
31/12/2007 31/12/2007
$ $
3 CASH 269,981 14,228,134
Reconciliation of movements in cash
Balance at 31 December 2007 269,981Proceeds from issue of seed capital on 25 March 2008 420,000Payment of seed capital share issue expenses (35,839)Proceeds from issue of shares pursuant to the Prospectus 15,000,000Repayment of loans from Magnus Energy (147,303)Payment of share issue expenses pursuant to the Prospectus (1,300,436)
Acquisition of cash from subsidiary 21,731
14,228,134
4 PREPAYMENTS 170,199 -
Balance at 31 December 2007 170,199Seed capital share issue expenses transferred to equity (86,951)
IPO share issue expenses transferred to equity (83,248)
-
5 EXPLORATION EXPENDITURE
Exploration expenditure, at cost - 378,484
The ultimate recoupment of exploration costs carried forward in relation to mining tenements acquired and subsequent exploration and evaluation expenditure is dependent on the successful development and commercial exploitation or sale of the area of interest at an amount at least equal to the carrying value.
6 PROPERTY, PLANT & EQUIPMENTPlant and equipment at cost - 24,766
7 TRADE AND OTHER PAYABLES 237,043 40,690
Balance at 31 December 2007 237,043Payment of seed capital share issue expenses (35,839) Payment of IPO share issue expenses (30,187)Repayment of loans from Magnus Energy (147,303)
Payables acquired from subsidiary 16,975
40,690
Payments to Magnus Energy represent temporary working capital advances from Magnus Energy to fund the IPO. The advances are interest free and will be repaid from the proceeds of the IPO.
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APAC Coal Limited PROSPECTUS 2008
PAGE 57
Pro Forma Historical Historical Company Consolidated
31/12/2007 31/12/2007
$ $
8 BORROWINGS
Non CurrentLong term loan from parent entity - 367,949
Long terms loans represent loans from Magnus Energy to PTDCI group which will accrue interest at a rate of 5.33% per annum from the date of listing until 30 June 2011 when the balance will become repayable.
9 ISSUED CAPITAL
Ordinary shares 2 14,274,023
Reconciliation of movement in issued and paid up capital No. $
Incorporation shares at $1 each 2 2Issue of shares to seed capital investors at 5 cents each on 25/03/08 (i) 13,800,000 690,000Seed capital share issue expenses - (86,951)Issue of shares to effect the restructure of APAC and PTDCI 200,000,000 49,119Issue of IPO shares pursuant to this Prospectus at 20 cents each 75,000,000 15,000,000Issue of broker shares at 20 cents each 375,000 75,000Share issue expenses (ii) - (1,453,147)
289,175,002 14,274,023
(i) $270,000 of seed capital was received prior to 31 December 2007 and was classified as other contributed equity(ii) The deferred tax asset attributable to the above issue expenses has not been recognised as it does meet the
recognition requirements of AASB 112 Income Taxes. Pro Forma Historical Historical Company Consolidated
31/12/2007 31/12/2007 $ $
10 RESERVES 11,088 35,738
Balance at 31 December 2007 11,088 Issue of broker options 24,650
35,738
11 ACQUISITION OF SUBSIDIARIES
The restructure of APAC and PTDCI was deemed to be a transaction of no economic substance and accordingly, the provisions of AASB 3 Business Combinations did not apply. The Company has determined to account for the restructure and combination based on the existing book values of the entities involved in the combination as the Company considers that the combination does not have economic substance. The assets, liabilities and contingent liabilities of the combining entities were therefore stated at the book value at the deemed date of the restructure and combination for the preparation of the Pro Forma Historical Consolidated Balance Sheet, being 31 December 2007.
The book values of the assets and liabilities of PTDCI as at 31 December 2007were as follows: $Cash assets 21,731Other receivables 9,063Exploration expenditure 378,484Plant and equipment 24,766Deferred tax asset -Trade and other payables (16,975)
Borrowings (367,950)
Net assets 49,119
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APAC Coal Limited PROSPECTUS 2008
PAGE 59
12 RELATED PARTY TRANSACTIONS AND INTERESTS
A Directors
The directors of the Company since the date of incorporation (29 June 2007) to the date of this Prospectus and the interests those Directors held, directly or indirectly, in the Company’s shares and options as at the date of this Prospectus are as follows:
Shares Options No. No.
Paul Piercy - 2,000,000
TK Koh - 1,300,000
Sam di Giacomo - 1,000,000
Maurice Drew - 1,000,000
Shyun Kon (appointed 19 March 2008) - 1,000,000
Umar bin Abdul Hamid (resigned 30 January 2008) - -
Ian Macpherson (resigned 6 September 2007) - -
- 6,300,000
5,300,000 options were issued on 31 October 2007 and 1,000,000 were issued on 19 March 2008 and are exercisable at 25 cents each on or before 31 October 2010. The options vest immediately and the fair value of the options of $11,080 has been recorded in Accumulated Losses and Reserves as at 31 December 2007.
The directors may also elect to subscribe for shares pursuant to this Prospectus.
B Transactions with Directors and Director Related Entities
Directors were granted the options in Note 12a as part of their conditions of employment.
TK Koh, is also a director of Magnus Energy.
C Directors’ Remuneration
As at the date of the Prospectus, the Company has agreed to pay the following annual remuneration to Directors as follows:
$Paul Piercy 50,000TK Koh 120,000Sam di Giacomo 30,000Maurice Drew 30,000Shyun Kon 30,000
The fees as disclosed above will only accrue from the date the Company achieves a listing on ASX.
TK Koh’s remuneration is the subject of an agreement with Magnus Energy, a company of which Mr Koh is also a director. This agreement is discussed further in Note 11D. The fees are payable directly to Magnus Energy.
As at the date of this Prospectus, Messrs Piercy and di Giacomo are contracted to provide services in relation to the management of the listing of the Company on ASX. Each have a monthly retainer of $4,500 per month to manage the initial public offering. Upon listing, the fees as disclosed above will replace the current arrangements for Messrs Piercy and di Giacomo.
D Transactions with Ultimate Parent
On 19 March 2008, the Company entered into a Management Agreement with Magnus Energy pursuant to which Magnus Energy agreed to provide the services of TK Koh as Managing Directors and Adeline Wong as Chief Financial Officer in addition to general administrative services.
The initial term of the agreement is for 12 months with either party being able to terminate with 3 months written notice. Under the agreement, the Company will pay Magnus $10,000 per month for the services of TK Koh and $5,000 per month for general financial and administrative services.
13 COMMITMENTS, CONTINGENT ASSETS AND LIABILITIES
The Directors are not aware of any commitments, contingent assets or liabilities.
14 EVENTS SUBSEQUENT TO REPORTING DATE
The Directors are not aware of any circumstances or matter that has arisen since 31 December 2007 which has significantly affected , or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group, in future financial years, other than those set out in Note 2 with regard to Pro Forma transactions.
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APAC Coal Limited PROSPECTUS 2008
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Section 9b: Investigating Accountants’ ReportTHERE ARE TWO SECTIONS WITHIN SECTION 9
The DirectorsAPAC Coal LimitedLevel 241-47 Colin StreetWest PerthWA 6005
4 April 2008
Dear Sirs
Investigating Accountants’ Report on Historical Financial Information
We have prepared this Investigating Accountants’ Report (“Report”) for inclusion in a Prospectus to be dated on or about 4 April 2008 relating to the initial public offering (“Offer”) of up to 75,000,000 ordinary shares at an issue price of 20 cents per share in APAC Coal Limited ( “APAC”) to raise $15,000,000 before costs associated with the Offer.
References to APAC and other terminology used in this Report have the same meaning as defined in Section 13 ‘Definitions’ of the Prospectus in which this Report appears.
Scope
You have requested that Deloitte Touche Tohmatsu prepare a Report covering the following financial information:
(i) the Historical Balance Sheet of APAC as at 31 December 2007 as set out in Section 9 of the Prospectus;
(ii) the Pro Forma Historical Consolidated Balance Sheet of APAC as at 31 December 2007 as set out in Section 9a of the Prospectus which assumes completion of the proposed Pro Forma transactions as set out in Note 2 of Section 9a of the Prospectus as at that date;
(iii) notes to and forming part of the Historical Balance Sheet and Pro Forma Historical Consolidated Balance Sheet of APAC as at 31 December 2007 as set out in Section 9a of the Prospectus
together we refer to the above hereafter as the “Historical Financial Information”.
The Historical Financial Information has been extracted from the unaudited 31 December 2007 management accounts of APAC and PT Deefu Chemical Indonesia.
The Directors of APAC are responsible for the preparation of the Historical Financial Information which has been prepared in accordance with the recognition and measurement principles prescribed in Australian Accounting Standards and the basis of preparation and the accounting policies adopted by APAC as described in Note 1 of Section 9a of the Prospectus. This includes responsibility for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the Historical Financial Information.
For the purposes of this Report, we have reviewed the Historical Financial Information of APAC in order to state whether, on the basis of the procedures described, anything has come to our attention that would indicate that the Historical Financial Information is not presented fairly in accordance with the recognition and measurement principles prescribed in Australian Accounting Standards and the basis of preparation and the accounting policies adopted by APAC as described in Note 1 of Section 9a of the Prospectus.
Our review of the Historical Financial Information has been conducted in accordance with Australian Auditing Standard AUS 902 “Review of Financial Reports”. We made such enquiries and performed such procedures as we, in our professional judgement, considered reasonable in the circumstances including:
Deloitte Touche TohmatsuABN 74 490 121 060
Woodside PlazaLevel 14240 St Georges TerracePerth WA 6000GPO Box A46Perth WA 6837 Australia
Liability limited by a scheme approved under Professional Standards Legislation.
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APAC Coal Limited PROSPECTUS 2008
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• Analytical procedures applied to the Historical Financial Information;
• Review of workpapers, accounting records and other documents;
• Review of the Pro Forma transactions reflected in the Pro Forma Historical Consolidated Balance Sheet of APAC as at 31 December 2007 as set out in Note 2 of Section 9a of the Prospectus;
• Comparison of consistency in the application of the recognition and measurement principles in Australian Accounting Standards and the accounting policies adopted by APAC as set out in Note 1 of Section 9a of the Prospectus; and
• Interviews with and enquiries of the management and the Directors of APAC and its advisors.
These procedures do not provide all the evidence that would be required in an audit, thus the level of assurance provided is less than given in an audit. We have not performed an audit and accordingly, we do not express an audit opinion.
Statement
Based on our review, which is not an audit, nothing has come to our attention that causes us to believe that:
• the Historical Balance Sheet and notes thereto of APAC as set out in Section 9a of the Prospectus do not present fairly the historical financial position of APAC as at 31 December 2007;
• the Pro Forma Historical Consolidated Balance Sheet and notes thereto of APAC as set out in Section 9a of the Prospectus which assumes completion of the proposed Pro Forma transactions as set out in Note 2 of Section 9a of the Prospectus as at that date, do not present fairly the Pro Forma financial position of APAC as at 31 December 2007
in accordance with the recognition and measurement principles prescribed in Australian Accounting Standards and the basis of preparation and the accounting policies adopted by the APAC as described in Note 1 of Section 9a of the Prospectus.
Subsequent events
Apart from the matters dealt with in this Report, and having regard to the scope of our Report, to the best of our knowledge and belief no material transactions or events outside of the ordinary course of business of APAC arising after 31 December 2007 have come to our attention that would require comment on, or adjustment to, the information in our Report or that would cause such information to be misleading or deceptive.
Independence or Disclosure of interest
Deloitte Touche Tohmatsu does not have any interest in the outcome of this issue other than in the preparation of this report and other services in relation to the offer for which normal professional fees will be received.
Yours faithfully
DELOITTE TOUCHE TOHMATSU
AT RichardsPartnerChartered Accountants
'Deloitte' refers to the Australian partnership of Deloitte Touche Tohmatsu and its subsidiaries. Deloitte, one of Australia s leading professional services firms, provides audit, tax, consulting, and financial advisory services through around 3000 people across the country. Focused on the creation of value and growth, and known as an employer of choice for innovative human resources programs, we are dedicated to helping our clients and our people excel. For more information, please visit Deloitte s web site at www.deloitte.com.au.
Deloitte refers to one or more of Deloitte Touche Tohmatsu (a Swiss Verein), its member firms or their respective subsidiaries and affiliates. As a Swiss Verein (association), neither Deloitte Touche Tohmatsu nor any of its member firms has any liability for each other s acts or omissions. Each of the member firms is a separate and independent legal entity operating under the names Deloitte, Deloitte & Touche, Deloitte Touche Tohmatsu, or other, related names. Services are provided by the member firms or their subsidiaries and affiliates and not by the Deloitte Touche Tohmatsu Verein.
Liability limited by a scheme approved under Professional Standards Legislation.
Confidential - this document and the information contained in it are confidential and should not be used or disclosed in any way without our prior consent.
In the opinion of the Directors, the following contracts to which the Company is a party are or may be material to a potential
investor in the Company.
12.1 Work Agreement for Coal Mining Enterprises (CCOW)
As detailed in the Solicitors’ Report contained in Section 8, the Company has agreed the principal terms to acquire a 30 year right
to mine the PT Batubara Concession. The CCOW is dated 20 November 1997 and commences on the day mining activities start.
Refer to the Solicitors’ Report in Section 8 for further information in respect of the CCOW.
12.2 Share Sale Agreement – PT Batubara
As at the date of this Prospectus, PT Deefu holds 95% of the issued share capital of PT Batubara.
The Company, PT Deefu and the holder of the remaining 5% of the issued share capital of PT Batubara (Minority Shareholder)
have entered into a Share Sale Agreement pursuant to which the Minority Shareholder agrees to sell and PT Deefu agrees to
acquire the remaining 5% of the issued share capital of PT Batubara (Minority Interest).
The sale and purchase of the Minority Interest is conditional upon the satisfaction or waiver of the following conditions precedent:
(a) PT Deefu completing a financial and legal due diligence on PT Batubara;
(b) the agreements outlined in Section 12.3 becoming unconditional;
(c) the Company raising the minimum subscription pursuant to the Offer and obtaining conditional approval from ASX to having
its securities admitted to the Official List; and
(d) PT Deefu obtaining all necessary regulatory and shareholder approvals to purchase the Minority Interest (together, the
Conditions Precedent).
As consideration for the acquisition of the Minority Interest, the Company (on behalf of PT Deefu) has agreed to issue 10,000,000
Shares to the Minority Shareholder. Settlement of the sale and purchase of the Minority Interest will occur 5 Business Days after
the satisfaction of the Conditions Precedent and will take place contemporaneously with completion of the agreements outlined
in Section 12.3.
The Share Sale Agreement contains standard warranties and representations on behalf of the Vendors for an agreement of this
nature.
12.3 Share Sale Agreements – PT Deefu
As at the date of this Prospectus, Antig Investments Pte Ltd (a wholly owned subsidiary of Magnus Energy) holds 72% of the
issued share capital of PT Deefu and the remaining 28% is held by Advance Assets Management Ltd (together, the Vendors);
The Company has entered into Share Sale Agreements with the Vendors pursuant to which the Vendors have agreed to sell and
the Company has agreed to acquire 100% of the issued share capital of PT Deefu (PT Deefu Acquisition).
The PT Deefu Acquisition is conditional upon the satisfaction or waiver of the following conditions precedent:
(a) the Company completing a financial and legal due diligence on PT Deefu;
(b) the agreement outlined in Section 12.2 becoming unconditional;
(c) the Company raising the minimum subscription pursuant to the Offer and obtaining conditional approval from ASX to having
its securities admitted to the Official List; and
(d) the Company obtaining all necessary regulatory and shareholder approvals to complete the Acquisition (together, the
Conditions Precedent).
As consideration for the PT Deefu Acquisition, the Company has agreed to issue 190,000,000 Shares to the Vendors. Settlement
of the PT Deefu Acquisition will occur 5 Business Days after the satisfaction of the Conditions Precedent and will take place
contemporaneously with completion of the agreement outlined in Section 12.2.
The Share Sale Agreements contain standard warranties and representations on behalf of the Vendors for agreements of this nature.
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APAC Coal Limited PROSPECTUS 2008
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12.4 Management and Consultancy Agreement
On 19 March 2008, the Company entered into a Management and Consultancy Agreement with Magnus Energy pursuant to which
Magnus Energy agreed to provide the services of Koh Teng Kiat as Managing Director (MD Services), and general administrative
services (together, the Administrative Services).
The initial term of the agreement is 12 months and the Company will pay Magnus Energy a fee of $10,000 per month for the MD
Services and $5,000 per month for the Administrative Services (together the Services Fee). The Services Fee will be reviewed
every 6 months.
The Company may at its sole discretion terminate the Management and Consultancy Agreement in the following manner:
(a) by giving not less than three months’ written notice and payment to Magnus Energy of the equivalent fee payable over a 3
month period as if the agreement had not been terminated (or the equivalent fee payable over a 6 month period if no notice
period);
(b) by giving one month’s written notice if at any time:
(i) Magnus Energy goes into liquidation; or
(ii) Magnus Energy and/or a Mr T. K. Koh commits any serious or persistent breach of the agreement or demonstrates
incompetence with regard to the performance of their duties under the agreement, is of unsound mind commits or
becomes guilty of any gross misconduct or refuses or neglects to comply with any lawful, reasonable direction or order
given to him by the Company; or
(c) summarily without notice if at any time Magnus Energy or a Mr TK Koh is convicted of any major criminal offence, by giving
notice effective immediately and without payment of any fees other than any fees accrued to the date of that termination.
The Company or Magnus Energy may terminate the Management and Consultancy Agreement if at any time the Company
commits any serious or persistent breach of any of the provisions contained in the agreement or by giving three months’ written
notice to the Company.
The Management and Consultancy Agreement otherwise contains clauses that are considered to be on ordinary commercial
terms.
12.5 Loan Agreement
As at 31 December 2007, Magnus Energy had advanced 3,047,365,089 Indonesian Rupiah to PT Deefu (Advance Funds).
PT Deefu, Magnus Energy and the Company (acting as guarantor) have entered into a Loan Agreement on 19 March 2008
(Execution Date) in relation to the repayment of the Advance Funds and any further funds provided by Magnus Energy to PT
Deefu during the term of the Loan Agreement (together, the Outstanding Monies).
Interest on the Outstanding Monies accrues daily from the Execution Date at a rate of 5.33% per annum and these amounts shall
be capitalised into the loan until such time as all Outstanding Monies are repaid by PT Deefu to Magnus Energy.
PT Deefu must repay all Outstanding Monies (together with any interest) on or before 30 June 2011. As guarantor, the Company
guarantees to Magnus Energy the performance and observance by PT Deefu of all of its obligations under the Loan Agreement.
12.6 Mandate Letter with Novus Capital
On 25 January 2008, the Company appointed Novus Capital as Lead Manager and Sponsoring Broker to the Offer to assist the
Company, on a best endeavours basis, to arrange and co-ordinate the capital raising process pursuant to the Offer.
Novus Capital will also act as corporate advisor to the Company following the listing of the Company on ASX.
The remuneration payable by the Company pursuant to the terms of the Mandate Letter is as follows:
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APAC Coal Limited PROSPECTUS 2008
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(a) a commission equal to 5% of the total funds raised pursuant to the Offer;
(b) an issue management fee of $15,000 per month until the Company is listed on ASX; and
(c) an IPO management fee of 1.25% of the total funds raise pursuant to the Offer.
In addition to the above remuneration, the Company will also issue one (1) Share and one (1) Option for every $40 raised under
the Offer to Novus Capital (or nominee). The Options will be unlisted and have an exercise price of $0.25 each and expire 3 years
after the Company is admitted to the Official List.
12.7 Employee Incentive Scheme
As an incentive to the Company’s employees and its subsidiaries, the Company has adopted a scheme called the APAC Coal
Employee Incentive Scheme (Employee Incentive Scheme). At the date of this Prospectus 6,300,000 Options have been
granted under the Employee Incentive Scheme to Directors of the Company.
The purpose of the Employee Incentive Scheme is to give employees, Directors, executive officers and consultants of the
Company and its subsidiaries an opportunity, in the form of Options, to subscribe for Shares (Employee Options). The Directors
consider the Employee Incentive Scheme will enable the Company to retain and attract skilled and experienced employees, board
members and executive officers and provide them with the motivation to make the Company more successful.
12.7.1 Brief Overview of the Employee Incentive Scheme
A summary of the terms and conditions of the Employee Incentive Scheme is set out below:
(a) Participants
Those eligible to participate in the Employee Incentive Scheme include:
• full-time or part-time employees of the Company;
• Directors; or
• consultants and any persons who are concerned, or take part in the management, of the Company or any subsidiary,
(together, Eligible Persons).
An Eligible Person may nominate an associate acceptable to the Board to be issued with the Employee Options.
(b) Terms of Options
There is no issue price for the Employee Options. The exercise price for the Employee Options will be determined by the Directors
in their absolute discretion.
Shares issued on exercise of Employee Options will rank equally with the Shares on issue.
Employee Options may not be transferred without the approval of the Board. Quotation of Employee Options on ASX will not be
sought. However, in the event that the Company is listed on ASX, it will apply for Quotation of Shares issued on the exercise of
Employee Options.
(c) Restrictions on Issue of Employee Options
The Board may not offer Employee Options under the Employee Incentive Scheme if the total number of Shares which would
be issued were each Employee Option accepted, together with the number of Shares in the same class or Options to acquire
such Shares issued pursuant to all employee or executive share schemes during the previous five years, exceeds 5% of the total
number of issued shares in that class as at the date of the offer. Employee Options may only be issued or exercised within the
limitations imposed by the Corporations Act and the Listing Rules.
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APAC Coal Limited PROSPECTUS 2008
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(d) Exercise of Employee Options
Employee Options may be exercised at any time after two years from the date of grant of the Employee Options.
If an Eligible Person leaves the employment of the Company:
i) 2 years or more after the Employee Options are issued; or
ii) because of retirement at or after 55 years of age, disablement, retrenchment, death or any other circumstances approved
by the Board,
(together, the Ceasing Date), the Employee Options may be exercised within 30 days (or 3 months in the case of death) of the
Ceasing Date, or any longer period permitted by the Board. If not exercised in that time, the Employee Options will lapse. If an
Eligible Person leaves the employment of the Company or its subsidiaries earlier than 2 years after the Employee Options are
issued and (ii) above does not apply, the Employee Options will immediately lapse unless the directors in their absolute discretion
agree otherwise.
If an Eligible Person acts fraudulently, dishonestly or in breach of obligations to the Company or any subsidiary then, at the Board’s
discretion, Employee Options issued for that person will lapse. Unexercised Employee Options will automatically lapse five years
after they are issued.
(e) Participation in Future Issues
The holders of Employee Options may only participate in new issues, including bonus issues, if they have exercised the Employee
Options at that time and provided such exercise is permitted by the terms of the Employee Option.
If there is a bonus issue to Shareholders, the number of shares over which the Employee Option is exercisable may be increased by the
number of shares which the holder of the Employee Option would have received if the Employee Option had been exercised before
the record date for the bonus issue. In the event that a pro rata issue (except a bonus issue) is made to the holders of the underlying
securities in the Company, the exercise price of the Employee Options may be reduced in accordance with Listing Rule 6.22.
(f) Capital Reconstruction
In the event of any reconstruction (including consolidation, subdivision, reduction or return) of the issued capital of the Company,
all rights of the Employee Option holder will be changed to the extent necessary to comply with the Listing Rules applying to the
reconstruction of capital, at the time of the reconstruction.
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APAC Coal Limited PROSPECTUS 2008
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Section 13: Definitions
Definitions
A$ or $ means the currency of Australia.APEC means Asia-Pacific Economic Cooperation.Applicant means a person making an Application.Application means a valid application made to subscribe for a specified number of Shares.Application Form means an application form attached to or accompanying this Prospectus.ASEAN means the Association of Southeast Asian Nations.ASIC means the Australian Securities & Investments Commission.ASTC means ASX Settlement and Transfer Corporation Limited (ACN 008 504 532), being
the Securities Clearing House of ASX.ASX means ASX Limited (ACN 008 624 691).Board means the board of Directors of the Company.CCOW means a Work Agreement for Coal Mining Enterprise.CHESS means Clearing House Electronic Sub-register System.Closing Date means 15 May 2008 (or such other date as determined by the Directors).Company or APAC means APAC Coal Limited (ACN 126 296 295).Constitution means the constitution of the Company.Corporations Act means the Corporations Act 2001 (Commonwealth).Director means a director of the Company.Director Options means Options granted to Directors as detailed in Section 11.3.Employee Option means an Option granted to persons pursuant to the Employee Incentive Scheme
on the terms and conditions set out in Section 12.7.Employee Incentive Scheme means the APAC Coal Employee Incentive Scheme as detailed in Section 12.7.Exposure period means the period of 7 days (or longer as ASIC may direct) from the date of
lodgement of the Prospectus with ASIC.Indicated resources means that part of a coal deposit for which quality can be estimated with a
reasonable level of confidence, as defined in the JORC Code.Inferred resources means that part of a coal deposit for which quality can only be estimated with a low
level of confidence, as defined in the JORC Code.Issue means the issue of Shares under this Prospectus.JORC means the Joint Ore Reserves Committee of The Australasian Institute of Mining and
Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia.JORC Code means a code prepared by the Joint Ore Reserves Committee of The Australasian
Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia which defines criteria for public reporting of ore and coal resources and reserves.
KP means Kuasa Pertambangan (or Mining Rights).Listing Rules means the listing rules of ASX.Magnus Energy means Magnus Energy Group Limited, a company incorporated in Singapore.Novus Capital, or Novus means Novus Capital Limited, the sponsoring broker and lead manager to the Offer,
set out in Section 2.1.Offer means the offer of Shares pursuant to this Prospectus.Official List means the official list of ASX.Option means an option to acquire a Share.Optionholder means the holder of an Option.Prospectus means this Prospectus dated 4 April 2008PT Batubara means PT Batubara Selaras Sapta.PT Batubara Concession, or Concession means the concession over which PT Batubara has the right to mine.PT Deefu or PTDCI means PT Deefu Chemical Indonesia.Quotation means official quotation by ASX in accordance with the Listing Rules.Share means a fully paid ordinary share in the capital of the Company.Shareholder means a holder of a Share.US$ means the currency of the United States of America.WST means Western Standard Time, Perth Western Australia.
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APAC Coal Limited PROSPECTUS 2008
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Directors Statement, Authorisation and Consent
The Directors state that they have made all reasonable enquiries and on that basis have reasonable grounds to believe that any
statements made by the Directors in this Prospectus are not misleading or deceptive. With respect to any statements made in the
Prospectus other than by Directors, the Directors have made reasonable enquiries and on that basis have reasonable grounds to
believe that persons making those statements were competent to make such statements, those persons have given their consent
to the statements being included in this Prospectus in the form and context in which they are included and have not withdrawn
their consent before lodgement of this Prospectus.
This Prospectus is issued by the Company and its issue has been authorised by a resolution of the Directors.
This Prospectus has been signed on behalf of the Directors in accordance with a resolution of the Directors.
Dated: 4 April 2008
Paul Piercy
Chairman
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APAC Coal Limited PROSPECTUS 2008
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(Minimum 10,000 Shares and thereafter in multiples of 5,000 Shares)
in APAC Coal Limited or such lesser number of Shares which may be allocated to me/us by the
Directors.
I/We lodge full application monies of:
A$ For the above Shares
Full name (PLEASE PRINT)
Joint Applicant #2 or <designated account>
Joint Applicant #3 or <designated account>
Postal Address (PLEASE PRINT)
Street Number Street
Suburb/Town State Post code
Contact Name Telephone number – Business hours
Telephone number – After hours
CHESS HIN (where applicable)
Tax File Number, ABN or Exemption Applicant #2 Applicant #3
CHEQUE DETAILSDrawer Bank BSB Amount of cheque
Declaration and Statements:
By lodging this Application Form:
I/We declare that all details and statements made by me/us are complete and accurate;
I/We agree to be bound by the terms and conditions set out in the Prospectus and by the Constitution of the Company;
I/We acknowledge that the Company will send me/us a paper copy of the Prospectus and any Supplementary Prospectus (if applicable) free of charge if I/we request so during the currency of the Prospectus;
I/We authorise the Company to complete and execute any documentation necessary to effect the issue of Shares to me/us; and
I/We have received personally a copy of the Prospectus accompanied by or attached to this Application Form or a copy of the Application Form or a direct derivative of the Application Form before applying for Shares.
I/We acknowledge that returning the Application Form with the application monies will constitute my/our offer to subscribe for Shares in APAC Coal Limited and that no notice of acceptance of the application will be provided.
TO MEET THE REQUIREMENTS OF THE CORPORATIONS ACT, THIS FORM MUST NOT BE HANDED TO ANY PERSON UNLESS IT IS ATTACHED TO OR ACCOMPANIED BY THE PROSPECTUS DATED 4 APRIL 2008 AND ANY RELEVANT SUPPLEMENTARY PROSPECTUS.
(See application instructions overleaf). This Application Form relates to the Offer of Shares in APAC Coal Limited pursuant to the Prospectus dated 4 April 2008.
Application Form Share Registrar’s use
Broker reference- stamp only
Broker code Adviser code
APAC COAL
Before completing this Application Form, you should read the Prospectus dated 4 April 2008 and the instructions overleaf. No Shares will be issued pursuant to the Prospectus later than 13 months after the date of the Prospectus.
PLEASE READ CAREFULLY ALL INSTRUCTIONS ON THE REVERSE OF THIS FORM
I/We apply for:
Shares at $0.20 per Share = A$
TEA
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APAC Coal Limited PROSPECTUS 2008
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Instructions to Applicants
APPLICATION FORMS
Please complete all parts of the Application Form using BLOCK LETTERS. Use correct forms of registrable name (see below). Applications using the wrong form of name may be rejected. Current CHESS participants should complete their name and address in the same format as they are presently registered in the CHESS system.
Insert the number of Shares you wish to apply for. The application must be for a minimum of 10,000 Shares and thereafter in multiples of 5,000 Shares. The applicant(s) agree(s) upon and subject to the terms of the Prospectus to take any number of Shares equal to or less than the number of Shares indicated on the Application Form that may be allotted to the applicants pursuant to the Prospectus and declare(s) that all details of statements made are complete and accurate.
No notice of acceptance of the application will be provided by the Company prior to the allotment of Shares. Applicants agree to be bound upon acceptance by the Company of the application.
Please provide us with a telephone contact number (including the person responsible in the case of an application by a company) so that we can contact you promptly if there is a query in your Application Form. If your Application Form is not completed correctly, it may still be treated as valid. There is no requirement to sign the Application Form. The Company’s decision as to whether to treat your application as valid, and how to construe, amend or complete it, shall be final.
PAYMENT
Applications for Shares must be accompanied by the application money of 20 cents per Share (in Australian currency). Cheques should be made payable to “APAC Coal Limited – Share Issue Account” and crossed “Not Negotiable”.
LODGING OF APPLICATIONS
Completed Application Forms and cheques must be:
Posted to: APAC Coal Limited
c/- Security Transfer Registrars
770 Canning Highway, Applecross WA 6153
Applications must be received by no later than 5.00pm WST on the Closing Date 15 May 2008.
BROKER SPONSORED APPLICANTS
The Company intends to become an Issuer Sponsored participant in the ASX CHESS System. This enables a holder to receive a statement of holding rather than a certificate. If you are already a Broker Sponsored participant in this system, you may complete this section or forward a signed Application Form to your sponsoring broker for completion prior to lodgement. Otherwise, leave this box blank and your Shares will automatically be Issuer Sponsored on allotment.
TAX FILE NUMBERS
The collection of tax file number (“TFN”) information is authorised and the tax laws and the Privacy Act strictly regulate its use and disclosure. Please note that it is not against the law not to provide your TFN or claim an exemption, however, if you do not provide your TFN or claim an exemption, you should be aware that tax will be taken out of any unfranked dividend distribution at the maximum tax rate.
If you are completing the application with one or more joint applicants, and you do not wish to disclose your TFN or claim an exemption, a separate form may be obtained from the Australian Taxation Office to be used by you to provide this information to the Company. Certain persons are exempt from providing a TFN. For further information, please contact your taxation adviser or any Taxation Office.
CORRECT FORM OF REGISTRABLE TITLE
Note that only legal entities are allowed to hold securities. Applications must be in the name(s) of a natural person(s), companies or other legal entities acceptable to NAME OF COMPANY. At least one full given name and the surname are required for each natural person. The name of the beneficiary or any other non-registrable name may be included by way of an account designation if completed exactly as described in the example of the correct forms of registrable names below:
TYPE OF INVESTOR CORRECT FORM OF REGISTRATION
INCORRECT FORM OF REGISTRATION
Individual Use given names in full, not initials
Mr John Alfred Smith J A Smith
Company Use the company’s full title, not abbreviations
ABC Pty Ltd ABC P/L or ABC Co
Joint holdings Use full and complete names
Mr Peter Robert Williams & Ms Louise Susan Williams
Peter Robert & Louise S Williams
Trusts Use trustee(s) personal name(s), Do not use the name of the trust
Mrs Susan Jane Smith<Sue Smith Family A/C>
Sue Smith Family Trust
Deceased Estates Use the executor(s) personal name(s)
Ms Jane Mary Smith & Mr Frank William Smith <Estate John Smith A/C>
Estate of Late John Smith, or John Smith Deceased
Minor (a person under the age of 18) Use the name of a responsible adult with an appropriate designation
Mr John Alfred Smith <Peter Smith A/C>
Master Peter Smith
Partnerships Use the partners’ personal names. Do not use the name of the partnership
Mr John Robert Smith & Mr Michael John Smith <John Smith and Son A/C
John Smith and Son
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APAC Coal Limited PROSPECTUS 2008
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(Minimum 10,000 Shares and thereafter in multiples of 5,000 Shares)
in APAC Coal Limited or such lesser number of Shares which may be allocated to me/us by the
Directors.
I/We lodge full application monies of:
A$ For the above Shares
Full name (PLEASE PRINT)
Joint Applicant #2 or <designated account>
Joint Applicant #3 or <designated account>
Postal Address (PLEASE PRINT)
Street Number Street
Suburb/Town State Post code
Contact Name Telephone number – Business hours
Telephone number – After hours
CHESS HIN (where applicable)
Tax File Number, ABN or Exemption Applicant #2 Applicant #3
CHEQUE DETAILSDrawer Bank BSB Amount of cheque
Declaration and Statements:
By lodging this Application Form:
I/We declare that all details and statements made by me/us are complete and accurate;
I/We agree to be bound by the terms and conditions set out in the Prospectus and by the Constitution of the Company;
I/We acknowledge that the Company will send me/us a paper copy of the Prospectus and any Supplementary Prospectus (if applicable) free of charge if I/we request so during the currency of the Prospectus;
I/We authorise the Company to complete and execute any documentation necessary to effect the issue of Shares to me/us; and
I/We have received personally a copy of the Prospectus accompanied by or attached to this Application Form or a copy of the Application Form or a direct derivative of the Application Form before applying for Shares.
I/We acknowledge that returning the Application Form with the application monies will constitute my/our offer to subscribe for Shares in APAC Coal Limited and that no notice of acceptance of the application will be provided.
TO MEET THE REQUIREMENTS OF THE CORPORATIONS ACT, THIS FORM MUST NOT BE HANDED TO ANY PERSON UNLESS IT IS ATTACHED TO OR ACCOMPANIED BY THE PROSPECTUS DATED 4 APRIL 2008 AND ANY RELEVANT SUPPLEMENTARY PROSPECTUS.
(See application instructions overleaf). This Application Form relates to the Offer of Shares in APAC Coal Limited pursuant to the Prospectus dated 4 April 2008.
Application Form Share Registrar’s use
Broker reference- stamp only
Broker code Adviser code
APAC COAL
Before completing this Application Form, you should read the Prospectus dated 4 April 2008 and the instructions overleaf. No Shares will be issued pursuant to the Prospectus later than 13 months after the date of the Prospectus.
PLEASE READ CAREFULLY ALL INSTRUCTIONS ON THE REVERSE OF THIS FORM
I/We apply for:
Shares at $0.20 per Share = A$
TEA
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E
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APAC Coal Limited
Instructions to Applicants
APPLICATION FORMS
Please complete all parts of the Application Form using BLOCK LETTERS. Use correct forms of registrable name (see below). Applications using the wrong form of name may be rejected. Current CHESS participants should complete their name and address in the same format as they are presently registered in the CHESS system.
Insert the number of Shares you wish to apply for. The application must be for a minimum of 10,000 Shares and thereafter in multiples of 5,000 Shares. The applicant(s) agree(s) upon and subject to the terms of the Prospectus to take any number of Shares equal to or less than the number of Shares indicated on the Application Form that may be allotted to the applicants pursuant to the Prospectus and declare(s) that all details of statements made are complete and accurate.
No notice of acceptance of the application will be provided by the Company prior to the allotment of Shares. Applicants agree to be bound upon acceptance by the Company of the application.
Please provide us with a telephone contact number (including the person responsible in the case of an application by a company) so that we can contact you promptly if there is a query in your Application Form. If your Application Form is not completed correctly, it may still be treated as valid. There is no requirement to sign the Application Form. The Company’s decision as to whether to treat your application as valid, and how to construe, amend or complete it, shall be final.
PAYMENT
Applications for Shares must be accompanied by the application money of 20 cents per Share (in Australian currency). Cheques should be made payable to “APAC Coal Limited – Share Issue Account” and crossed “Not Negotiable”.
LODGING OF APPLICATIONS
Completed Application Forms and cheques must be:
Posted to: APAC Coal Limited
c/- Security Transfer Registrars
770 Canning Highway, Applecross WA 6153
Applications must be received by no later than 5.00pm WST on the Closing Date 15 May 2008.
BROKER SPONSORED APPLICANTS
The Company intends to become an Issuer Sponsored participant in the ASX CHESS System. This enables a holder to receive a statement of holding rather than a certificate. If you are already a Broker Sponsored participant in this system, you may complete this section or forward a signed Application Form to your sponsoring broker for completion prior to lodgement. Otherwise, leave this box blank and your Shares will automatically be Issuer Sponsored on allotment.
TAX FILE NUMBERS
The collection of tax file number (“TFN”) information is authorised and the tax laws and the Privacy Act strictly regulate its use and disclosure. Please note that it is not against the law not to provide your TFN or claim an exemption, however, if you do not provide your TFN or claim an exemption, you should be aware that tax will be taken out of any unfranked dividend distribution at the maximum tax rate.
If you are completing the application with one or more joint applicants, and you do not wish to disclose your TFN or claim an exemption, a separate form may be obtained from the Australian Taxation Office to be used by you to provide this information to the Company. Certain persons are exempt from providing a TFN. For further information, please contact your taxation adviser or any Taxation Office.
CORRECT FORM OF REGISTRABLE TITLE
Note that only legal entities are allowed to hold securities. Applications must be in the name(s) of a natural person(s), companies or other legal entities acceptable to NAME OF COMPANY. At least one full given name and the surname are required for each natural person. The name of the beneficiary or any other non-registrable name may be included by way of an account designation if completed exactly as described in the example of the correct forms of registrable names below:
TYPE OF INVESTOR CORRECT FORM OF REGISTRATION
INCORRECT FORM OF REGISTRATION
Individual Use given names in full, not initials
Mr John Alfred Smith J A Smith
Company Use the company’s full title, not abbreviations
ABC Pty Ltd ABC P/L or ABC Co
Joint holdings Use full and complete names
Mr Peter Robert Williams & Ms Louise Susan Williams
Peter Robert & Louise S Williams
Trusts Use trustee(s) personal name(s), Do not use the name of the trust
Mrs Susan Jane Smith<Sue Smith Family A/C>
Sue Smith Family Trust
Deceased Estates Use the executor(s) personal name(s)
Ms Jane Mary Smith & Mr Frank William Smith <Estate John Smith A/C>
Estate of Late John Smith, or John Smith Deceased
Minor (a person under the age of 18) Use the name of a responsible adult with an appropriate designation
Mr John Alfred Smith <Peter Smith A/C>
Master Peter Smith
Partnerships Use the partners’ personal names. Do not use the name of the partnership
Mr John Robert Smith & Mr Michael John Smith <John Smith and Son A/C
