INDOCHINE MINING LIMITED INDOCHINE MINING LIMITED (Subject to Deed of Company Arrangement)
Cl- Ferrier Hodgson, Level 28, 108 St Georges Terrace, Perth WA 6000 Tel. 08 9214 1444, Fax: 08 9214 1400
ind; chineJndochine Mining Limited (Subject to Deed of Company Arrangement)
Half-Year Report 31 Decem ber 2014
Contents
Directors' Report 3
Statemen t of Profit or Loss and Other Comprehensive Income 7
Statement of Financial Position 8
Statemen t of Changes in Equity 9
Statement of Cash Flows 10
Notes to the Financial Statements 11
Directors' Declaration 21
Auditor's Independence Declaration 22
Independent Auditor's Report 23
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Indocbinc Mining Limited (Subject to Deed of Company Arrangement)
Half-Year Report 31 December 2014
DIRECTORS' REPORT
Your Directors submit the financial report of the consolidated group for the half-year ended 31 December 2014.
On 27 March 2015, the directors of Indochine M ining Limited (Jndochine or the Company) resolved to place the Company into Voluntary Administration at which point the powers of Directors were passed to the appointed Administrators .
Mr Mat1in Jones, Mr Darren Weaver and Mr Benjamin Johnson, all partners of Ferrier Hodgson, were appointed on 27 March 2015 asjoint and several admin istrators of the Company.
On 13 May 2015, at the second creditors meeting, a Deed of Company Arrangement (DOCA) proposed by Kandahar Holdings Pty Limited (Kandahar) pursuant to Part 5.3A of the Corporations Act 200 I was approved by the creditors. The DOCA was executed on 4 June 2015 and lodged with the Australian Securities and Investment Commission. Further details on the key terms of the DOCA can be found under Note I b)
On 17 June 2015, the former Chief Executive Officer (CEO) and a creditor of the Company Mr Stephen Promnitz commenced proceedings in the Federal Court of Australia seeking relief in the form of:
an order setting aside the Kandahar DOCA executed on 4 June 2015 that was approved at the second creditors meeting of the Company held on 13 May 2015; and
an order requ iring that a further meeting of the Company's creditors be held at which meeting those creditors are to be afforded an opportunity to consider and vote upon the merits of a proposal for a DOCA propounded by Second Floor Gold Ltd.
On 17 August 2015, Justice Foster of Federal Court of Australia in New South Wales wholly dismissed the proceedings filed by Mr Promn itz and awarded the legal and incidental costs incurred by the Company against the plaintiff.
The key terms of the Kandahar DOCA, amongst others, include a condition precedent requiring the Deed Administrator to call a meeting of shareholders to approve the recapitalisation proposal under the DOCA.
In order to comply with th is condition precedent, the Company is required to prepare the accounts and financial reports for the half year ended 31 December 2014 and for the year ended 30 June 2015.
Directors
The names of Directors who held office during or since the end of the interim period ending 31 December 2014 and until the date of this report are noted below. Directors were in office for this entire period unless otherwise stated.
Dermott McVeigh - Non-Executive Chairman (Appointed 31 July 2014, resigned 3 November 2015)
Craig Dawson - Non-Executive Director
Keith Murray- Non-Execut ive Director (Appointed 20 October 2014) Gavan H Farley - Non-Executive Director (Resigned 30 October 2014) Hugh Thomas - Non -Executive Director (Resigned 30 July 2014) Robert Thomson - Non-Executive Director (Resigned 30 July 2014)
Review of Operations
lndochine, during the December half year, saw significant changes to the board with Mr Hugh Thomas, Mr Robert Thomson and Mr Stephen Promnitz stepping down as Chairman, Non-Executive Director and Ch ief Executive Officer, respectively, of the Company and Mr Dermott McVeigh being appointed as Non-Executi ve Chairman. During the period, the Company also appointed Sir Samuel Jonah, KBE, as adviser to assist with fund raising and continuing development of the Mt Kare Gold and Silver Project.
ind,.. chine
lndochine Mining Limited (Subject to Deed of Company Arrangement)
Half-Year Report 31 December 2014
The head office of the Company was relocated from Sydney to Perth in order to be closer to key strategic partners and mining experts.
The Landowner Investigation Study (LIS) was completed and registered with the Papua New Guinea Mineral Resource Authority (MRA) and workshopped with the PNG national government, provincial governments of Enga and Hela and local governments in both the provinces.
The Landowner Investigation Report (LIR), required under the Lands Act 1996, was completed in September 2014. Th is UR is derived from the LIS and is the framework that sets out the distribution of financial benefits to the customary clans and landowners identified in the LIS and is the precursor to the application for a Mining Lease.
Subsequent to the completion of the UR and prior to the Warden's Hearing that was scheduled for 10 December 2014, the Company's wholly owned subsidiary was served with a number of injunctions. The proceedings substantively sought the same reliet:namely the weightings of rights of landowning clans or subclans in some of the areas covered under the LIS and injunctive orders to restrain the Minister for Lands from registering the UR and the Minister for Mining to renew the Explorat ion Licence (EL) 1093.
The injunctive order restraining the renewal of the Mount Kare Gold/Silver Project EL 1093 by the MRA was discharged by the PNG National Court of Justice and the Mining Warden's Hearing was successfully completed on 6 May 2015.
The injunctive order restraining the Minister for Lands registering the UR was dealt through mediation involving all parties to the injunction with the process mediated by the PNG National Court of Justice accredited mediators. The mediation was successfully conducted at Mt Kare between 18 July and 20 July 201 5 in the presence of:
Justice Kandakasi of the PNG National Court of Justice, Deputy Magistrate Mark Pupaka and the appointed mediator, Mr Craig Jones;
Plaintiffs and their lawyers;
Defendants and their lawyers; and
all Landowner clans identified in the LIR.
Following the mediation at site, the parties then re-convened at Mt Kare on 17 August 2015 to complete the vetting of all clan members identified in the LI R.The Company is pleased to announce that the mediation was successfully completed with all clans signing the Agreement in the presence of the Mediators, which now enables the Company to complete the registration of the UR with the Lands Department under the Lands Act.
With all legal and community challenges havi ng been positively dealt with, the Company is now awaiting a final outcome of its application to renew EL 1093, which incorporates the Mt Kare Gold Project. However, it should be noted that under PNG Mining Act 1992, section I 12, the current exploration licence that reached expiry on 28 August 2014 continues to be in full force unti Ithe renewal application has been determined.
In respect of Cambodian tenements, the Company was officially advised on IO September 20 I 4 that 12 tenements in the Ratanakiri Province (EL 749, 750-755, 757, 758, 760-762) that were under application for the third extension under ministerial discretion since 3 I May 2014 were not renewed by the Minister for Mines and Energy in Cambodia.
During the period. the secured loan facility was renegotiated with the secured lender. As a resu lt, the term was extended to 31 December 2014 and the loan was increased by $1.15 million. As at 31 December, the secured loan facility available to the Company was $3.25 million, of which $2.86 million, including accrued interest, was drawn down. The term of the secured loan was further extended to 28 February 2015. On 30 January 2015, the Company entered into an agreement to extend the loan term to 30 April 2015 and to increase the loan facility amount to $3.75 million. Under this agreement, the secured lender has also agreed to potential conversion of amounts owed under the secured loan to ordinary shares in the Company. The conversion is at the discretion of the secured lender at a price of $0.0098 per share, which was set at 85% of the volume weighted average price for the 5 trading days preceding 30 January 2015. Subsequent to the Company being placed into Voluntary Administration, the loan facility of $3.75 million extended until 30 April 2015 has been frozen and the secured creditor's rights preserved under the DOCA. A new facility of $1.25 million has been
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