Australian Pacific Coal : Annual Report

About this update from Australian Pacific Coal Limited

AUSTRALIAN PACIFIC COAL LIMITED ABN 49 089 206 986 ANNUAL REPORT - 30 JUNE 2024 Annual Report Australian Pacific Coal Limited Year Ending 30 June 2024 ABN 49 089 206 986 TABLE OF CONTENTS Chairman and CEO's Report i Review of Operations iv Annual Financial Report viii - Directors' Report 2 - Remuneration Report 5 - Auditor's Independence Declaration 12 - Statement of Profit or Loss and Other Comprehensive Income 14 - Statement of Financial Position 15 - Statement of Changes in Equity 16 - Statement of Cash Flows 17 - Notes to the Financial Statements 18 - Consolidated entity disclosure statement 49 - Directors' Declaration 50 - Independent Audit Report 51 Corporate Governance Statement 56 ASX Additional Information 68 Corporate Directory 70 Annual Report Australian Pacific Coal Limited TOC Year Ending 30 June 2024 ABN 49 089 206 986 CEO & CHAIRMAN'S REPORT Dear Shareholders, The substantial achievements delivered in FY23 continued into FY24 as Australian Pacific Coal Limited (ASX: AQC) surged towards restarting underground mining at the Dartbrook coal mine in NSW's Hunter Valley. The number of major milestones reached during FY24 reflects the high levels of operational, corporate and financial activity across all aspects of our business. The Board and Management had four key objectives for FY24: Dewater, restore and refurbish the Hunter Tunnel Secure sufficient restart capex funding and procure necessary equipment Commence refurbishment of the train load out facility and Coal Handling and Preparation Plant (CHPP) Achieve first coal to surface We have successfully achieved each of these goals, with a US$60 million (A$90 million) capex restart funding debt package secured in January 2024, completion of the Hunter Tunnel restoration in August 2024, first coal to surface in September 2024, and refurbishment of the train load out facility and CHPP underway. With limited new coal mines being sanctioned in NSW, Dartbrook, via AQC, represents one of the few opportunities where investors can access world-class resources and infrastructure with excellent proximity to port and rail facilities on a pre-production basis. Safety, Environment and People Safety remains our highest priority and we are pleased to report that there were no recordable injuries or reportable environmental incidents in the 12 months to 30 June 2024. As activity levels increase at Dartbrook, we are committed to working with our Joint Venture partner to drive positive safety and environmental outcomes for our people and the community. In July 2024, following a period of negotiation, Dartbrook executed a four-year Greenfields Enterprise Agreement with the Mining and Energy Union (MEU). The Agreement provides the necessary framework for the planned employment for future mining and processing activities at Dartbrook. The Agreement, approved by the Fair Work Commission ("FWC") in September 2024, will facilitate the transition from restoration to production as the workforce shifts from specialist contractors to operational personnel. Restart Capex Funding Secured Following the substantial de-risking of the mine and the streamlining of the operating joint venture in FY23, AQC launched a comprehensive domestic and international program to source a debt funding package to provide restart capex for the Dartbrook project. In January 2024, AQC announced details of a US$60 million (A$92 million) debt facility provided by Vitol Asia Pte Ltd, a leading global energy and commodities company. The facility covers forecast restart expenditure at Dartbrook through to commercial production, including equipment acquisitions and completion of remediation works, and the acquisition of additional mining systems during ramp-up to achieve full capacity. The Dartbrook JV also entered into a Coal Sales and Marketing Agreement with Vitol for all Dartbrook coal production, including assigning coal Marketing Rights to Vitol for the life of the mine (including any extensions). Page i Australian Pacific Coal Limited Annual Report CEO & Chairman's report ABN 49 089 206 986 Year Ending 30 June 2024 CEO & CHAIRMAN'S REPORT Dartbrook Restart Gains Momentum The major focus of the Dartbrook restart project in FY24 was the Hunter Tunnel. This key piece of infrastructure, which passes under the New England Highway, is critical to our ability to operate the mine as it connects the proposed underground mining panels with the above ground CHPP and rail loadout. As reported last year, the tunnel was successfully dewatered and more than 70 megalitres of water was removed safely without incident. Thereafter, restoration and refurbishment work made rapid progress. Major workstreams included roof and rib support, ventilation systems, roof and wall shotcreting, installation of services pipelines, and tunnel fit-out. Work on the Hunter Tunnel was completed in August 2024. Procurement made rapid progress once funding was secured. Orders for essential equipment for mining operations were immediately confirmed. The first phase of the restart plan requires two Continuous Mining Units (CMU) and both units have been received. The first CMU is operating underground and the second CMU to follow once refurbishment, assembly and testing are complete. A third CMU has now been secured. The 4 km conveyor system, which transports Run of Mine (ROM) coal from the underground storage facility to the surface via the Hunter Tunnel, was successfully commissioned with first coal to the surface achieved in September 2024. On the surface, installation of the new hydraulic system for the train load out facility is nearing completion. Prior to commencing refurbishment works on the CHPP, a detailed study is being undertaken to assess all requirements and establish a work program which is planned to commence in the first quarter of CY2025. First Coal Produced to Surface With the key elements of the mining and transportation chain in place and operational, Dartbrook achieved a major milestone in early September 2024 when it successfully produced ROM coal to surface - the first time the mine had produced coal since it was placed in care and maintenance in 2006. This landmark event signalled the start of the ramp-up period to bring the mine into commercial production. During this period, the focus will be on optimising systems, equipment, operations and maintenance procedures, as well as the recruitment and training of permanent employees for the production phase. The Dartbrook JV is targeting commercial production before the end of CY2024 with the intention of producing unwashed (bypass) coal initially while refurbishment of the CHPP wet plant is completed. Importantly, in September 2024 we received confirmation that coal from Dartbrook conforms to NEWC 6000 specifications which will ensure we can market Dartbrook thermal product to customers in key Asian export markets once refurbishment of the CHPP is complete. Testing for metallurgical applications is ongoing and results will be provided to the market in due course. The ability to produce metallurgical coal would provide Dartbrook with product optionality and marketing flexibility. Looking Ahead While we have made great progress over the past 18 months, there is still much to do in FY25. We are close to finalising a number of key operating agreements, chiefly Port and Rail access, and we are in the process of finalising a US$30 million Working Capital facility to facilitate growth as we ramp up production. We will continue to optimise the mine plan to maximise Dartbrook's production potential, accelerating where possible, while remaining focused on safety and reliability. Completion of the CHPP refurbishment in the first half of CY2025 will be an important milestone, opening key export markets for Dartbrook product. Looking further ahead, we have commenced work on the MOD8 submission to extend mining operations at Dartbrook by an additional six years to December 2033. Based on work done to date, we anticipate being in a Page ii Australian Pacific Coal Limited Annual Report CEO & Chairman's report ABN 49 089 206 986 Year Ending 30 June 2024 CEO & CHAIRMAN'S REPORT position to make a formal submission to the NSW Department of Planning, Housing and Infrastructure (DPHI) before the end of CY2024. Finally, we would like to thank our employees, shareholders, partners and advisers for their hard work and commitment towards restarting production at Dartbrook. We are excited about bringing this world class coal mine back to life after lying dormant for 18 years and we are optimistic about the future potential of Australian Pacific Coal. Ayten Saridas John Robinson Managing Director & CEO Chairman Page iii Australian Pacific Coal Limited Annual Report CEO & Chairman's report ABN 49 089 206 986 Year Ending 30 June 2024 REVIEW OF OPERATIONS DARTBROOK COAL MINE Dartbrook Mine is located approximately 10 kilometres (km) north-west of Muswellbrook and 4.5 km south-west of the village of Aberdeen in New South Wales (NSW) (see Figure 1). Dartbrook operated as an underground longwall coal mine from 1993 until December 2006, when it was placed in care and maintenance by the previous owner, Anglo Coal (Dartbrook Management) Pty Ltd (ACDM). The mine was acquired by Australian Pacific Coal (AQC) (ASX-AQC) in 2016 and the mine has remained in care and maintenance. Dartbrook Mine is an unincorporated Joint Venture (Dartbrook Joint Venture) between Australian Pacific Coal Limited (via subsidiaries) and Tetra Resources Pty Ltd (Tetra, via subsidiaries). Dartbrook Operations Pty Ltd is the appointed operating management company, and the Mine Operator under Section 5 of the Work Health and Safety (Mines and Petroleum Sites) Regulation 2022 (NSW). Dartbrook is managed in accordance with Development Consent DA 231-7-2000 (Development Consent) granted on 28 August 2001 under the Environmental Planning and Assessment Act 1979 (EP&A Act). DA 231-7-2000 originally allowed for underground longwall mining and associated surface activities to be carried out until 5 December 2022. In February 2018, AQC lodged an application to modify DA 231-07-2000 (MOD7) to provide further operational options for Dartbrook (in addition to those already approved) including the recommencement of mining via bord and pillar methodology within the Kayuga Seam and to extend the approval period under DA 231-07-2000 by 5 years (i.e. to 5 December 2027). DA 231-07-2000 (MOD7) was determined by the NSW Independent Planning Commission (IPCN) on 9 August 2019. The IPCN approved the proposed recommencement of mining activities but not the proposed five-year extension to the consent approval period. Without the extension to operate under DA 231-07-2000 for a further five years it was impractical to recommence mining at Dartbrook. In November 2019, an appeal was lodged against the IPCN determination of MOD7 in the NSW Land and Environment Court. The MOD7 application was the subject of a conciliation conference conducted pursuant to Section 34 of the Land and Environment Court Act 1979 (LEC Act). AQC entered into a Section 34 agreement with the Minister for Planning and Public Spaces on 21 December 2021 with the approval granted on 11 March 2022. This agreement gave effect to MOD7 and extended the approved duration of mining operations until 5 December 2027. Refurbishment and recommissioning works commenced at Dartbrook in 2022. Coal to surface was achieved on 4 September 2024 and a commissioning period is currently underway. Commercial production at Dartbrook is anticipated before the end of the 4 th quarter of calendar year 2024. Production will ramp up over the first two years towards an initial target of approximately 2.4 million tonnes per annum (Mtpa) of Run of Mine (ROM) coal. During this reporting period, key milestone achieved include: Zero reportable environmental incidents and zero Lost Time and Disabling injuries. AQC raised $12 million during September-October 2023 via a $4 million Institutional Placement and a 1 for 4.75 Accelerated Non-Renounceable Entitlement Offer (ANREO) that raised $8 million. In December 2023, AQC successfully completed a placement that raised $3.625 million in new funds and converted $3.375 million of short-term shareholder loans and accrued lease payments to equity. A US$60 million (A$92 million) senior debt facility for Dartbrook restart capex was executed in January 2024, covering forecast restart expenditure through to commercial production, including ramp-up. A Coal Sales and Marketing Agreement was signed with Vitol Asia Pte Ltd for all Dartbrook coal production, including coal Marketing Rights for the life of the mine (including any extensions). Page iv Australian Pacific Coal Limited Annual Report Review of Operations ABN 49 089 206 986 Year Ending 30 June 2024 REVIEW OF OPERATIONS Following the successful dewatering of the Hunter Tunnel in FY23, works undertaken in FY24 included re-supporting of roof and ribs, bolting and mesh construction, shot-creting, and construction of drainage, pumping, water management, electrical and ventilation restoration. New 4 km conveyor system was delivered, assembly commenced. Installation of the new hydraulic system for the train load-out facility is nearing completion. A detailed study of the Coal Handling & Processing Plant (CHPP) was conducted in preparation for the refurbishment program. Continued to optimise the Mine Plan schedules and designs to improve yields, coal quality and products. Dartbrook Community Consultative Committee met quarterly and continued to provide active and positive communications to neighbours and stakeholders. Subsequent to the end of the reporting period, key milestones achieved include: Dartbrook executed a four-year Greenfields Enterprise Agreement with the Mining and Energy Union (MEU) in July 2024 which was subsequently approved by the Fair Work Commission in September 2024. The first Continuous Miner Unit (CMU) was sent underground and a bulk sample was cut and sent for lab analysis in July 2024. Refurbishment and restoration of the Hunter Tunnel was completed in August 2024. New 4 km conveyor system to convey ROM coal to the surface stockpile was commissioned First coal was produced from in-seam to the surface stockpile in early September 2024. Ramp up of manning and production continues during September and will continue through 2025 Confirmation in September 2024 that washed Dartbrook coal will conform to NEWC 6000 specifications. Page v Australian Pacific Coal Limited Annual Report Review of Operations ABN 49 089 206 986 Year Ending 30 June 2024 REVIEW OF OPERATIONS On the 28 October 2022, (2022 No649), the NSW Government under the Environment Planning and Assessment Act 1979, implemented a State Environmental Planning Policy (SEPP) Resources and Energy Amendment (Dartbrook Mine) 2022 to prohibit open cut mining on the land, being defined as the Authority 256 boundary. Refer to Figure 1 Highlighted Dartbrook area. In addition, all the Dartbrook mining tenure was renewed from pending status to all current and approved with the mining leases extended to 2043 (ML 1456 & 1497) and 2033 (ML 1381), refer to (Table 1 - Tenure Summary Table). This is a considerable milestone as the project has now achieved tenure security and with this success will be highly valued and considered when the application for a further extension of the current Development Consent conditions (MOD 8) for an additional 6 years is prepared and processed. This will be a priority once production is underway and the approval will be assessed by the Department of Planning & Environment. The Dartbrook mine is in a safe and operational readiness state with a professional workforce ready to transit into production. Figure 1 Regional Locality Page vi Australian Pacific Coal Limited Annual Report Review of Operations ABN 49 089 206 986 Year Ending 30 June 2024 REVIEW OF OPERATIONS OTHER PROJECTS In Queensland, the Company holds interests in the Matuan Downs Bentonite Project and a Joint Venture interest on tenements with Blackwood Resources. The Company will continue to assess potential development or divestment opportunities in relation to these assets. MINING TENEMENT SUMMARY Name Number Status Expiry Date Interest Held Dartbrook Project, Hunter Valley NSW AUTH 256 AUTH 256 Granted 16/12/2025 100% EL 4574 EL 4574 Granted 13/08/2024 100% EL 4575 EL 4575 Granted 13/08/2027 100% EL 5525 EL 5525 Granted 22/09/2027 100% CL 386 CL 386 Granted 19/12/2033 100% ML 1381 ML 1381 Granted 19/12/2033 100% ML 1456 ML 1456 Granted 27/09/2043 100% ML 1497 ML 1497 Granted 5/12/2043 100% Matuan Downs Bentonite Project, Alpha Mantuan ML 70360 Granted 31 /03/2033 100% Table 1 Tenure Summary Table Name Number Status Interest Held Blackwood Joint Venture, Miles QLD Bungaban Creek EPC 1955 Granted 10% # Quondong EPC 1987 Granted 10% # The Company's 100% owned subsidiary Mining Investments One Pty Ltd holds a 10% interest in each of the following Blackwood Resources Pty Ltd JV tenements. Page vii Australian Pacific Coal Limited Annual Report Review of Operations ABN 49 089 206 986 Year Ending 30 June 2024 Australian Pacific Coal Limited ABN 49 089 206 986 Annual Financial Report - 30 June 2024 Page viii

View stock analysis, news, and events for Australian Pacific Coal Limited