for personal use only - asx2013/10/29 · in may 2012, the company announced the discovery of a...

Annual Report 2013

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Annual Report 2013

The Chairman’s Perspective 3

Managing Director’s Report and Review of Operations 5

Corporate Governance Statement 16

Directors’ Report 21

Auditor’s Independence Declaration 36

Financial Statements 37

Directors’ Declaration 71

Independent Auditor’s Report 72

Shareholder Information 74

Corporate Directory 76

CONTENTS

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1Carabella Resources Limited

CarabElla haS madE ExCEllENT prOgrESS TOwardS COal prOduCTiON iN 2014.bluff aNd grOSvENOr wEST prESENT aTTraCTivE dEvElOpmENT prOjECTS fOCuSSEd ON high qualiTy mETallurgiCal COal ExpOrTS.

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2 Annual Report 2013

Company Profile

Carabella Resources is an ASX-listed coal exploration and development company with projects located in Queensland’s Bowen Basin.

The Company is focused on the development of the Bluff ultra-low volatile PCI project located in central Queensland near the town of Blackwater. Bluff is currently in feasibility following the completion of a Concept Study in May 2013. A Mining Lease Application and Environmental Authority application were lodged in February 2013. Subject to receiving all necessary approvals, Carabella plans to commence mining activities at Bluff in H1 2014. At full capacity, Bluff is expected to produce approximately 1.2Mtpa of high quality ultra-low volatile PCI coal.

Carabella is also progressing its large scale Grosvenor West hard coking coal project located near Moranbah in the Bowen Basin. Grosvenor West is currently in feasibility and forms part of Carabella’s longer term development plans. When in production, Grosvenor West is expected to produce approximately 3.8Mtpa of premium hard coking coal and thermal coal.

In addition to its development assets, Carabella holds a broad exploration tenement portfolio in Queensland. The Company’s tenement holding covers a total area of approximately 3,300km2 and is prospective both for metallurgical and thermal coal.

2013 Highlights

• Feasibility study for Bluff advanced, completion expected in Q4 2013

•Sub-block adjoining Bluff tenement acquired December 2013

•Concept Study for Bluff completed May 2013

•High quality, ultra-low volatile PCI development with mining operations planned for 2014

•Competitive costs for production of approximately 1.2Mtpa

•Grosvenor West hard coking coal project progressed into feasibility

› EIS program well advanced

› Significantly improved cost structure for planned open cut mining operation

•Strong cash position

› $10.2 million cash with no debt as at 30 June 2013

› Strategic review of tenement holdings completed

› Extensive overhead reduction program implemented

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ThE ChairmaN’S pErSpECTivE

Carabella is well positioned to progress the development of the bluff project as a small scale mine in a proven coal district. grosvenor west was progressed into feasibility with significant improvements in project costs. Significant attention was also directed at reducing costs and carefully managing the Company’s cash position.

Dear Shareholders,

In mid-2012, Carabella Resources embarked on the transition from explorer to mine developer. In a period that has been marked by continuing uncertainty in the mining sector and in the global economy, Carabella is well positioned to progress the development of the Bluff Project as a small scale mine in a proven coal district.

To have brought the Bluff Project to this point represents exceptional progress. In May 2012, the Company announced the discovery of a shallow, high quality PCI deposit located close to other PCI mines in the Blackwater region. Just 17 months later, the Company is in a position where it has a mining opportunity with attractive economics, to develop and bring into production within the next year.

The fundamental strengths of the Bluff Project were set out in the Concept Study, completed in May this year. Having acquired the adjoining tenement, the Company was able to delineate a resource of 21.5Mt giving an expected mine life of 10 years or more with production at full capacity of approximately 1.2Mt per annum. Testing to date has indicated that Bluff will produce a high quality, ultra-low volatile PCI coal that is highly sought after by steel makers.

The Feasibility Study will further add to the confidence in the Project. Detailed mine planning and design, contractor selection, logistics and marketing studies are expected to be completed by the end of calendar year 2013. In addition, the Company has engaged with a number of parties interested in funding the Project.

While there is a strong focus on bringing the Bluff Project into production, our management team has also advanced the other significant asset in our portfolio, Grosvenor West. During the year, the Grosvenor West Project was progressed into feasibility with significant improvements in the Project costs. Work was progressed on study planning, project optimisation, engagement with key stakeholders and progression of the environmental approvals process. Grosvenor West is a premium quality hard coking coal project located within close proximity to necessary logistics infrastructure.

Bluff and Grosvenor West provide an attractive growth platform for Carabella over the medium term focused on the metallurgical coal sector, where we believe the market outlook remains attractive.

Significant attention was also directed at reducing costs and carefully managing the Company’s cash position, which at $10.2 million as at the end of June 2013, remains strong.

I would like to acknowledge the unstinting dedication and contribution of my fellow directors throughout the year and on behalf of the Board extend my appreciation to the management and employees led by Anthony Quin, for their hard work and commitment in times of significant change.

Your Board wishes to thank you, our shareholders for supporting the Company through challenging market conditions. We look forward to your continuing support as we progress the growth of Carabella.

Andrew AmerCHAIRMAN


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TENEmENT OvErviEw

Tenement Coal Type Area (km2) Interest

Mabbin Creek Coking / Thermal 929 100%

Mabbin North Coking / Thermal 6 100%

Pretoria Hill Coking / Thermal 410 50%

Bell Lagoon Coking / Thermal 390 100%

Bluff PCI 44 100%

Burnett Thermal 594 100%

Pingine Thermal 920 100%

Project Highlights

Bluff • ULVPCI• Feasibility• Approximately

1.2Mtpa product

Grosvenor West • HCC/Thermal• Feasibility• 3.8Mtpaproduct

Mabbin Creek • CokingCoal/Thermal• 1,735km2

• Expandedexploration

Burnett • Thermal• 594km2

• ExplorationPlanning

Pingine • Thermal• 920km2

• ExplorationPlanning


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maNagiNg dirECTOr’S rEpOrT aNd rEviEw Of OpEraTiONS

I am pleased to report the progress Carabella has made during the 2013 year to progress from coal exploration and development to becoming a producer of high quality metallurgical coal for the export market. Our two key projects, Bluff and Grosvenor West, were materially advanced during the year. Both projects are wholly owned by Carabella.

The Bluff Project is now in Feasibility and is scheduled to commence mining operations in the first half of CY 2014 subject to the outcomes of the Feasibility Study, funding and receipt of the necessary approvals. The Bluff Project is planned to be approximately 1.2Mtpa open cut mining operation producing 100% ultra-low volatile PCI coal. The Project has low capital costs and competitive operating costs, is well located adjacent to rail infrastructure and can be developed in a timely manner from an approvals perspective.

A Mining Lease application (MLA 80194) and Environmental Authority application (EA) were lodged for the Bluff Project in February 2013. Environmental studies have largely been completed in support of the EA.

The Grosvenor West Project was also progressed into Feasibility during the year and the environmental study program supporting the Environmental Impact Statement is well advanced. Grosvenor West is a large scale, premium quality hard coking coal project which is attractively located close to infrastructure in an established mining region. The technical studies undertaken for Grosvenor West resulted in a materially improved value proposition through cost reductions and higher production rates. Grosvenor West is planned to produce typically 3.8Mtpa of product coal. A Mining Lease application (MLA 70480) for Grosvenor West was lodged in September 2012.

Our strategy is to develop the smaller scale Bluff Project to provide a platform for further growth through Grosvenor West, greenfield exploration of Carabella’s other tenements including Mabbin Creek and Burnett, and through acquisition of other tenements where value adding opportunities are identified. Our focus remains on coal opportunities that are located close to infrastructure in established mining regions. I would like to thank the Carabella team and our contractors for their hard work during the year in progressing our exploration and development program.

Health, Safety, Environment and Community Engagement

Carabella continues to focus on its health and safety systems and standards to ensure the health and safety of our employees and contractors. I am pleased to report that there were no lost time injuries at Carabella sites during the year while managing extensive drilling programs at both Grosvenor West and Bluff.

From a community perspective, we have been actively engaged with the Bluff community and those in neighbouring areas as we progress the Bluff Project through its approvals processes. Our focus is to ensure that we build strong and lasting relationships with all stakeholders in the area so that we can be a valued member of the communities in which we operate.

We also remain committed to sound environmental management. Carabella had no environmental incidents in its site activities during the year. Our present focus is on completing the environmental studies program for the Bluff Project. We will continue to develop our environmental management systems as we progress from exploration to coal production.

i am pleased to report the progress Carabella has made during the 2013 year to progress from coal exploration and development to becoming a producer of high quality metallurgical coal for the export market. Our focus remains on coal opportunities that are located close to infrastructure in established mining regions.


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Managing Director’s report anD review of operations continued

Corporate

Carabella managed its cash resources carefully during the year and had $10.2 million in cash at 30 June 2013 with no borrowings or other major commitments. In response to difficult market conditions, significant overhead rationalisation was undertaken during the year to reduce costs. The cost reduction program included lower employee numbers, significant reductions in contractor rates and tenement expenditures and lower drilling commitments.

During the year, Carabella undertook a detailed review of its tenement holdings in Queensland. The decision was made to relinquish Maroon and to sell the nearby Rathdowney tenement. This decision was based on management's assessment of the limited development potential for both tenements. Carabella also elected not to take up the grant of the Beechal Creek tenement (EPC 2119) in the Eromanga Basin given its location, lack of infrastructure and large expenditure commitments.

Carabella acquired the sub-block (CLER 3158A) adjacent to Bluff in December 2012. The acquisition was a key step in enabling Carabella to unlock the full value potential of the Bluff Project.

Outlook

The 2013 year was challenging in terms of coal price weakness and investor sentiment towards listed coal companies. However, Carabella is focused on the medium term outlook for coal and we continue to see robust market fundamentals, particularly in the metallurgical coal sector. Demand for PCI and hard coking coal will be driven by growth in steel demand in countries such as India, China and other developing economies. Australia remains very well positioned in terms of coal resources and proximity to key markets to capture a large proportion of the growth in coal demand in those countries.


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Bluff Project (MLA 80194)

KEy aTTribuTES• HighqualityopencutULVPCIproject

•Planned mining operations commencing H1 2014

•Competitive operating costs and low capital costs

• 10 or more years mine life

•Well located adjacent to infrastructure

The Bluff tenement (EPC2121) is located approximately 20km east of Blackwater in Central Queensland. The tenement is ideally located adjacent to the Gladstone railway line and is approximately 260km from the port of Gladstone. Several historical mines are located to the north of Bluff. A number of established mining operations are also located nearby including Jellinbah, Yarrabee, Blackwater, Cook and Curragh.

Initial drilling on Bluff identified a shallow coal resource in the north eastern corner of the tenement. The coal mineralisation was found to extend beyond the Bluff boundary and into the neighbouring tenement. In December 2012, Carabella acquired the neighbouring sub-block (CLER 3158A) enabling an optimised mine plan to be developed, maximising the amount of recoverable coal.

Over 60 holes have been drilled in the Bluff deposit. The extensive drilling has enabled Carabella to gain a solid understanding of the Project's geology. Locally, the

Jellinbah fault to the west has upthrust the Rangal Coal Measures near to the surface. The majority of the Bluff resource is within four main seams of the Rangal Measures. Drilling has intersected these seams from as shallow as 35m with cumulative thickness of up to 17m.

bluff prOjECT COal SEam ThiCKNESSES

Seam Thickness (m)

Seam Range Typical

Aries 1 - 4 2

Pollux 2 - 8 4.8

Orion 2 - 4 2.5

Pisces 2 - 2.5 2.2

Carabella has delineated a JORC* compliant resources estimate of 21.5Mt at Bluff, which is sufficient to underpin the proposed open cut operation at the site. Additional drilling will be undertaken to further improve resource delineation and to test for potential extensions to the south and east.

bluff jOrC rESOurCE* (july 2013)

Resources (Mt)

Category 0-150m 150-300m 0-300m

Indicated 7.9 3.3 11.2

Inferred 2.9 7.4 10.3

Total Resources 10.8 10.7 21.5

The Bluff project was progressed into feasibility in May 2013 on the back of a successful Concept Study. The proposed operation at Bluff envisages the development a competitive open cut mine involving terrace mining. Similar mining methods have been successfully employed in nearby operations such as Jellinbah, Yarrabee and Baralaba.

bluff CONCEpT STudy paramETErS

Mining Parameters

Saleable Production Approximately 1.2Mtpa

Product Mix 100%ULVPCI

Overburden to Coal Ratio ~9:1

Total Yield >85%

Mine Life 10+ years

First Coal 1H 2014

CAPEX $32.5m

Total FOB Cost (C1) $96/t

* The estimate has been prepared in accordance with the JORC 2004 Code.


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Bluff is expected to have a mine life of 10 years or more producing approximately 1.2MtpaofULVPCIcoal.Theoperation will have a relatively low strip ratio of ~9:1 over life of mine. The anticipated coal processing yields are high at more than 85%. This is due to the significant portion of bypass coal found in the main Pollux seam. A contractor based operation is proposed for Bluff which will minimise the upfront capital cost required. Studies have also been undertaken to assess the potential for an underground mining extension once open cut operations have been completed.

As part of the drilling program, eight core holes have been drilled to enable detailed coal quality and washability analysis.TheresultsconfirmthatahighqualityULVPCIcoal can be produced. The expected specification of the Bluff product is set out below.

bluff COal qualiTy

Product Quality (adb)

Ash (%) 10

VolatileMatter(%) 13.5

Fixed Carbon (%) 75

Total Sulphur (%) 0.65

Total Phosphorus (%) 0.07

Chlorine (%) <0.05

CV(Kcal/kg) 7,500

The feasibility study is well advanced and expected to be completed in Q4 2013. Commercial discussions with mining contractors and other site service providers have been ongoing. Negotiations to secure port and rail capacity are also being progressed.

A Mining Lease Application and Environmental Authority (EA) application were submitted in February 2013. Key studiesarewelladvancedinsupportoftheEA.Grant of the Mining Lease and EA are expected in early 2014. Subject to funding, this would allow mining activities to commence in H1 2014.

Bluff Drilling Map

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0.25 0 0.25 0.5 0.75 1

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Scale: 1:15,000

710500 712000 713500 715000

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Grosvenor West (MLA 70480)

KEy aTTribuTES• Premium quality hard coking coal product with

thermal coal co-product

• Located close to existing rail and port infrastructure

• Adjacent to long established mining operations

• Large scale, open cut mine plan

• Competitive mining costs

The Grosvenor West Project (MLA70480) is located in the northern Bowen Basin near the town of Moranbah. It is also located close to major metallurgical coal mines operated by BHP Mitsubishi Alliance (BMA), Peabody Energy and Anglo American. The project is located approximately 5km from major rail corridors that connect to the coal ports of Dalrymple Bay and Abbot Point.

Grosvenor West has a JORC compliant resource of 141Mt comprising five coal seams in the Moranbah Coal Measures. The average cumulative seam thickness is approximately 10.5m with the main seams being the 4.9m thick GL seam and the 3m thick GLB seam. The seams occur at depth between 80m to 180m and gently dip from west to the east.

Grosvenor West was progressed into feasibility in September 2012 as a large scale open cut mining operation. The decision to progress the Project into feasibility followed detailed evaluation of mining options to deliver competitive capital and operating costs. The preferred mining method involves the use of bucket wheel excavator systems (BWE) for bulk overburden removal, supplemented with a truck and excavator fleet. This approach delivers substantial improvement in overall project economics through reducing the cost of overburden removal and by increasing coal production rates. BWEs are especially suited to Grosvenor West given the thick but soft tertiary overburden that is present.

grOSvENOr wEST fEaSibiliTy paramETErS

Feasibility Parameters

ROM Production 5.5Mtpa

Total Yield 70%

Saleable Production 3.8Mtpa

Product mix 2/3 Premium HCC1/3 Export Thermal

Mine life 18 years

Mineable Resource Upto90Mt

First Coal 2016

Full Production 2018

Total FOB Cost (C1) $110/t

CAPEX $500m

Grosvenor West has an average strip ratio of 12:1 and an overall yield of 70%. The Grosvenor West hard coking coal will be a premium quality product. In particular, the Coke Strength after Reaction (CSR) value of 71% places the coke strength amongst the highest in the world. The quality parameters of the Grosvenor West HCC product are detailed below.

grOSvENOr wEST COal qualiTy

Clean Coal Parameters Unit10%

Ash ProductThermal

Co-product

Inherent Moisture % adb 1.5 2.0

Ash % adb 10.0 25.0

VolatileMatter % adb 27.5 20.5

Fixed Carbon % adb 61.0 52.8

Total Sulphur % adb 0.60 0.44

Phosphorous % adb 0.011 –

CSN adb 7-8 –

Roga Index adb 80 –

Max. Fluidity ddpm 4,000 –

Max. Dilatation % 150 –

Vitrinite % 67 –

Mean Romax % 1.07 –

CalorificValue Kcal/KgGAD 7,620 6,150


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grOSvENOr wEST COal qualiTy

Coke Test Parameters GL Seam GLB Seam

Coke yield (dry %) 76.2 76.6

Mean coke size (mm) 63.2 59.6

CRI (mean of 2 tests) 17.4 15.3

CSR (mean of 2 tests) 71.3 71.2

ASTM Stability Factor (%) 53.4 56.7

Environmental studies were advanced during the year with the Terms of Reference for the Environmental Impact Study issued by the Queensland Department of Environment and Heritage Protection in October 2012. Post wet season surveys were completed including ecology (flora and fauna), aquatic surveys, surface water modelling and soils and land surveys.

The Feasibility study program for Grosvenor West will be progressed in parallel with the development of the Bluff project providing Carabella with a strong growth program in the medium term, focussed on production of high quality hard coking coal and PCI for the export market.

Bell Lagoon (EPC 2188)

Location: 20-30km northwest of town of Moranbah

Area: 390km2

Project description:

Potential thermal coal

Envisaged mine type:

Open cut and underground

Targets: Two potential target areas identified

Exploration program:

Initial exploration planning phase

Carabella owns 100% of Bell Lagoon (EPC 2188) which covers an area of approximately 390km2. Bell Lagoon is located to the north of the Peak Downs Highway approximately 41km west of Moranbah. The tenement is located immediately to the west of Carabella’s Mabbin Creek tenement and the Pretoria Hill tenement.

The target sequence is a unit of similar stratigraphic age to the Collinsville Coal Measures and Blair Athol type deposits. Previous exploration has been undertaken predominantly by BHP Billiton Minerals Pty Ltd as a part of the broader Wyena Project targeting high volumes of thick seam high-grade energy coal.

Carabella is in initial planning stages for an exploration program in Bell Lagoon.

Mabbin Creek (EPC 1069) and Mabbin North (EPC 2216)

Location: Northwest of Moranbah

Area: 935km2


Potential for multiple coking coal and thermal coal exploration targets with possibility for centralised infrastructure (CHPP / stockpiles / rail loops) hub



Targets: Rugby Coal Measures


Seismic survey and drilling undertaken over initial target area

Mabbin Creek and Mabbin North are the broader tenement area encompassing the Grosvenor West Project. The Mabbin Creek tenement comprises 291 sub-blocks. Five target areas have been identified in the Mabbin Creek tenement targeting coal deposits in the Rugby Coal Measures. During the year, an exploration program was advanced on the southern-most target located near the Grosvenor West Project. The program included 26km of 2D seismic surveying together with three drill holes. Further work was suspended to enable the Company to focus its exploration and development efforts on the Bluff Project. Nonetheless, Carabella intends to recommence exploration activities covering the identified targets as soon as resources are available.


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Pretoria Hill (EPC 2135) (50% owned by Carabella)

Location: 5-15km northwest of town of Moranbah

Area: 410km2


Potential for coking and thermal coal exploration targets close to the Grosvenor West Project



Targets: Target generation phase


Regional data review, planning for seismic analysis and scout drilling programs

Exploration program: Pretoria Hill (50% owned with U&DMining)isadjacenttotheMabbinCreektenement.The main targets of exploration at Pretoria Hill are coal deposits in the Rugby Coal Measures. Carabella has been exploring for Rugby type coal deposits in the adjacent Mabbin Creek tenement. These activities indicated potential for similar deposits at Pretoria Hill.

Limited historical exploration in the region has been undertaken by a number of companies for both coal and minerals. Carabella has undertaken a detailed desktop study on the tenement incorporating previous exploration results. This data has been applied to determine target areas for future exploration of Pretoria Hill. During the year,CarabellaprogresseddiscussionswithU&DMiningtowards development of a joint exploration program for the tenement.

Burnett (EPC 1175)

Location: 180km south of Gladstone

Area: 594km2


Potential for export thermal coal


Open cut

Targets: Northern and central areas of the tenement


Drilling program has been developed

Carabella owns 100% of the Burnett tenement (EPC1175) which is located in central Queensland within the Mulgildie Basin. The tenement comprises 191 sub-blocks and covers a total area of 594km2. Burnett is also adjacent to a number of tenements held by Whitehaven Coal Limited. An existing railway line runs north-south through the tenement approximately 180km to the Port of Gladstone.

The Monto Coal Project is located immediately to the north of Burnett. This project is reported to have a Coal Resource of over 300Mt.

Carabella has identified an exploration target* of 50Mt – 420Mt at Burnett. Regional data suggests that coal produced from Burnett would likely be of export thermal coal quality. During the year, Carabella undertook geological modelling of possible coal bearing areas to identify potential targets for future drilling. Based upon a review of historical drilling data, a number of prospective areas were identified in the northern and central areas of the tenement in the Mulgildie Coal Measures, Hutton Sandstone and Evergreen formation. The forward drilling program has been developed on the basis of the modelling work and is intended to be progressed as part of Carabella’s broader planned exploration program.

* Exploration Target statement: The potential quantity and grade of the Exploration Targets identified here in are conceptual in nature, and there has been insufficient exploration to date to define a mineral resource in accordance with the JORC Code. Furthermore, it is uncertain if further exploration at its Exploration Targets will result in the determination of a mineral resource.


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Pingine (EPC 2124)

Location: 40km east of town of Quilpie

Area: 920km2


Potential for multiple thermal coal exploration targets


Large scale open cut and underground thermal

Targets: Target generation phase


Initial exploration planning phase

EPC 2124 is located in the Quilpie district of south-west Queensland, approximately 40km east of the town of Quilpie and 100km west of Charleville. It comprises 300 sub-blocks and has been subjected to limited previous coal exploration.

Coal has been intersected in the Winton Formation in some boreholes in the tenement. To date, the thickest intersection encountered has been eight banded coal seams occurring over an interval of 14.0m from a depth of 60.5m.

Based on desktop studies for Pingine undertaken during the year, Carabella believes there is potential for thermal coal resources to be identified in the tenement. The forward exploration program includes scout drilling, core sampling and testing, geophysical surveying and resource modelling.


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Other Tenements

The Maroon tenement (EPC 2120) was relinquished in June 2013 and Rathdowney tenement (EPC 1249) was sold in August 2013. A review was undertaken of both tenements’ development potential and they were assessed as having limited prospectively and were not aligned with Carabella’s development strategy.

The Department of Natural Resources and Mines offered Carabella Resources the grant of Beechal Creek (EPC 2119) in July 2013. The EPC has been in application since 21 May 2010. The EPC expenditure obligations were considered excessive and the offer was declined on 29 August 2013.

Resource Statement*

JORC Compliant Resources Statement for Bluff deposit

Measured Indicated Inferred Total

– 11.2Mt 10.3Mt 21.5Mt

JORC Compliant Resources Statement Grosvenor West


67.3Mt 41.6Mt 32.0Mt 141.0Mt

JORC Compliant Resources Statement for Burnett


– – 3.4Mt 3.4Mt

The resource estimates reported changed from those reported in the 2012 Annual Report for the following reasons:

• Bluff – A JORC Resource for Bluff was delineated during the year. This was based on extensive drilling on the deposit, detailed quality analysis and resource modelling.

• Rathdowney and Maroon – The Rathdowney tenement was sold and the Maroon tenement was relinquished.

COmpETENT pErSON’S STaTEmENT

Bluff Resource

The information presented in this Annual Report relating to exploration results, coal resources and exploration targets is based on information compiled by Mr Mal Blaik of JB Mining Services. Mr Blaik is a qualified Geologist, a member of the Australasian Institute of Mining and Metallurgy and has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking, to qualify as a Competent Person as defined in the Australasian Code for Reporting of Mineral Resources and Ore Reserves published by the Joint Ore Reserves Committee (JORC Code). Mr Blaik has given his consent for the inclusion of this information, and has reviewed all statements pertaining to this information in the form and context in which it appears.

Grosvenor West & Burnett Resource

The information presented in this Annual Report relating to exploration results, coal resources and exploration targets is based on information compiled by Mr Bruce Robertson who is a member of the Australian Institute of Mining and Metallurgy and is an employee of the Carabella Resources Limited. Mr Robertson is a qualified mining engineer and has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking, to qualify as a Competent Person as defined in the Australasian Code for Reporting of Mineral Resources and Ore Reserves published by the Joint Ore Reserves Committee (JORC Code). Mr Robertson has given his consent for the inclusion of this information, and has reviewed all statements pertaining to this information in the form and context in which it appears.

* The estimate has been prepared in accordance with the JORC 2004 Code.


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bOard Of dirECTOrS

Anthony has 14 years of experience in a number of senior leadership positions with BHP Billiton, most recently as Chief Development Officer of BHP Billiton Metallurgical Coal. During this time he saw the business generate impressive growth in the resource base, recordcoalshipmentsandgrowthinEBITtoinexcessofUS$4.7billion.Anthonyhasheldasimilar position in BHP Energy Coal business, as well as strategic and commercial roles with BHP Billiton PLC and BHP Billiton Limited.

Anthony has also previously served as a director of Newcastle Coal Infrastructure Group Pty Limited and BHP Billiton Innovation Limited. He holds a Bachelor of Economics (Hons) and is a Graduate of the Australian Institute of Company Directors.

Anthony Quin Managing Director

Andrew has had extensive board and senior management experience in resources, heavy manufacturing and energy organisations across Asia Pacific. He has also had extensive experience working with multinational companies at a strategic level. Andrew also adds a significant corporate governance capability to Carabella’s Board at a time when the Company is growing rapidly and needing to respond to opportunities quickly as they arise.

Andrew is a Fellow of the Australian Institute of Company Directors (AICD), member of AICD Law Committee and a member of the Professional Conduct Tribunal of the Institute of Chartered Accountants in Australia (ICAA).

Andrew is currently a director of Mackay Sugar Limited and past director of Delta SBD Limited – mining and mining services as well as former managing director of AMOCO Australia.Andrew Amer

Chairman

Simon is a founding director of Helmsec Global Capital Limited and has almost 20 years ofinvestmentbankingexperienceinAustralia,UKandAsia.Simonhasanequitycapitalmarkets and mergers and acquisitions background and has considerable experience assisting “small and mid cap” companies to raise capital, with a primary focus on companies operating in the mining and resources sectors. Prior to joining Helmsec, Simon spent many years with Macquarie Bank and HSBC working in equity and structured finance, and mergers and acquisitions for a range of Australian and offshore clients.

Simon is a founding Director and Shareholder of Carabella. He is also a director of Helmsec, Estrella Resources Limited and Genex Power Limited.

Simon Kidston Non Executive Director


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Michael spent the first part of his working career as an investment banker with three globally recognised investment banks. Subsequent to transitioning into mainstream corporate management in the early nineties, Michael has held a number of senior executive positions on the Boards of publicly listed companies on each of the London, Johannesburg and Australian Securities Exchanges. In these roles he developed expertise in the management and running of listed companies and an intimate working knowledge of the regulatory, legal and governance environments in which listed companies operate. In recent periods, Michael has also been actively involved in a number of capital markets transactions with Australian resources companies

MichaelisaformerRhodesScholar,hasanOxfordUniversitypostgraduatedegreeinmanagement studies, and is a Fellow of the Australian Institute of Management and a Member of the Australian Institute of Company Directors.

Michael is a founding Director and Shareholder of Carabella and is also a current director of Stratum Metals Limited and Genex Power Limited.

Michael Addison Non Executive Director

Allan has more than 30 years’ experience in technical and operational roles in the mining industry, including project development and management of both large and small open cut coal mining operations.

Allan was previously the Managing Director and Chief Executive Officer of OGL Resources Limited. Prior to that, Allan held the position of Executive General Manager Operations at Macarthur Coal Limited where he was responsible for operations at the Coppabella and Moorvale mines and the Middlemount Mine as a member of the joint venture Project Steering Group. Allan was instrumental in the successful development of the Middlemount Mine which commenced operations in 2011.

Before joining Macarthur Coal, Allan was Technical Services Manager for Anglo Coal at the Drayton Mine and has held a number of roles with Thiess Pty Ltd including Project Development Manager for NSW Mining and Mining Manager at Mt Owen.

Allan is a member of the Mine Managers Association of Australia and the Australasian Institute of Mining and Metallurgy, and is a Graduate member of the Australian Institute of Company Directors.

Allan Fidock Non Executive Director


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COrpOraTE gOvErNaNCE STaTEmENT

This Corporate Governance Statement sets out the Company’s current compliance with the ASX Corporate Governance Council’s Corporate Governance Principles and Best Practice Recommendations (Best Practice Recommendations). The Best Practice Recommendations are not mandatory. However, the Company is required to provide a statement in this and all future annual reports disclosing the extent to which the Company has followed the Recommendations.

Principle 1: Lay solid foundations for management and oversight1.1 Companies should establish the functions reserved for the board and those delegated to senior

executives and disclose those functions.The Company’s Corporate Governance plan includes a Board Charter, which discloses the specific responsibilities and functions of the Board and provides that the Board shall delegate responsibility for the day-to-day operations and administration of the Company to the Managing Director. The Board Charter also specifically outlines the role of the Company’s Directors. Each function and its responsibility are outlined in the Board Charter which is available on the Company’s website.

1.2 Companies should disclose the process for evaluating the performance of senior executives.The Board will monitor the performance of senior management, including measuring actual performance against planned performance.

The Board Charter sets out the process to be followed in evaluating the performance of senior executives. Each senior executive is required to participate in a formal review process which assesses individual performance against predetermined objectives

1.3 Companies should provide the information indicated in the Guide to reporting on Principle 1.The Board Charter is publicly available on the Company’s website. The Board Charter discloses the specific responsibilities of the Board and provides that the Board shall delegate responsibility for the day-to-day operations and administration of the Company to the Managing Director. The Board Charter also specifically outlines the roles of the Company’s Chairman, individual Directors and Managing Director.

Internal milestones and project outcomes have been set for the organisation and the Managing Director assesses the executive’s performance against these measures. The Board will review the Managing Director’s performance on the anniversary of appointment.

Principle 2: Structure the board to add value2.1 A majority of the board should be independent directors. The Board is currently comprised of five Directors, one of whom is the Managing Director

Of the four Non-Executive Directors, three are considered independent directors, Mr Andrew Amer and Mr Michael AddisonandMrFidock.MrKidstonisnotconsideredanindependentdirectorasaresultofhisnon-controllinginterest in Helmsec which was a material professional advisor to the Company within the last 3 years.

The majority of the Company’s Directors are independent.

2.2 The chair should be an independent director. The Chairman of the Board is Mr Andrew Amer who is considered to be an independent Non-Executive Director.

2.3 The roles of chair and chief executive officer should not be exercised by the same individual. The Company has a separate Chairman and Managing Director. The Managing Director is responsible for the day

to day operations and administration of the Company.

2.4 The board should establish a nomination committee. Matters relating to nominations are considered as part of the Remuneration and Nomination Committee Meetings.

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2.5 Companies should disclose the process for evaluating the performance of the board, its committees and individual directors.The performance of the Board and the various Board committees as and when established is to be evaluated by the Chairman. The performance of each committee is measured against the scope and responsibilities detailed in their respective charters.

A formal review of the Board’s performance was undertaken during the 2012 financial year and it is intended that this process will be repeated in the current financial year. The review included an assessment of the following areas:

•Strategy and Planning

•Board Structure and roles

•Meeting Processes

•Performance Monitoring

•Board and Director Responsibilities

•Board Culture and Relationships

2.6 Companies should provide the information indicated in the Guide to reporting on Principle 2.A description of the skills, experience and time in office of each of the Directors is contained in the Director’s Report for the Financial year ending 30 June 2013.

Mr Allan Fidock joined the Board in February 2013 and provides skills and experience in the development and operation of coal projects. With this appointment the Board is of the view that it is now structured to provide the appropriate leadership and strategic guidance to the Company.

The Board, Board Committees or individual Directors may seek independent external professional advice as considered necessary at the expense of the Company, subject to prior consultation with the Chairperson.

Prior to the appointment of Mr Fidock, the Board undertook a thorough evaluation of the skills and experience of each director and the contribution each makes to the Company. This evaluation identified the need to appoint a director with experience in the development and operation of coal projects. An external advisor was appointed to undertake a search process for a prospective director with the requisite skills resulting in the appointment of Mr Fidock. The Board considered that Mr Fidock had the ability to contribute to the ongoing effectiveness of the Board, to exercise sound business judgment, to commit the necessary time to fulfil the requirements of the role effectively and to contribute to the development of the strategic direction of the Company. The policy for the appointment of new directors is set out in the Company’s Board Charter which is publicly available on the Company’s website.

Principle 3: Promote ethical and responsible decision-making3.1 Companies should establish a code of conduct and disclose the code or a summary of the

code as to: • the practices necessary to maintain confidence in the company’s integrity

• the practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders

• the responsibility and accountability of individuals for reporting and investigating reports of unethical practices.

The Company’s Corporate Governance plan includes the following policies and charters which provide a framework for decisions and actions in relation to ethical conduct in employment.

•Board Charter

•Audit and Risk Management Committee Charter

•Remuneration Committee Charter

•Securities Trading Policy

•Continuous Disclosure Policy

•The Company’s Obligations to Stakeholders

• CodeofConductforDirectorsandKeyOfficers

•Sustainability (formerly the Health Safety Environment and Community Committee) Charter

All of the Company’s Corporate Governance Policies and Charters are publicly available on the Company’s website.

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CORPORATE GOVERNANCE STATEMENT continued

3.2 Companies should establish a policy concerning diversity and disclose the policy or a summary of that policy. The policy should include requirements for the board to establish measurable objectives for achieving gender diversity for the board to assess annually both the objective and progress in achieving them

The Board recognises that a diverse and inclusive workforce not only benefits employees but benefits the Company as a whole. Carabella is yet to develop a diversity policy but believes that a gender diverse workplace is aligned with the strategic objectives of the Company. A policy for gender diversity will be developed at an appropriate stage in the company’s development.

3.3 Companies should disclose in each annual report the measurable objectives for achieving gender diversity set by the board in accordance with the diversity policy and progress towards achieving them.

A policy for gender diversity will be developed at an appropriate stage in the company’s development.

3.4 Companies should disclose in each annual report the proportion of women employees in the whole organization, women in senior executive positions and women on the board.

At the date of this report, Carabella has 11 persons employed, two of these are women. There are no women in senior executive roles and no women on the board. The Company Secretary is a woman.

3.5 Companies should provide the information indicated in the Guide to reporting on Principle 3.

Principle 4: Safeguard integrity in financial reporting4.1 The board should establish an Audit Committee. The Company has established an Audit and Risk Management Committee and a copy of the policy titled “Charter

of the Audit and Risk Management Committee” is publicly available on the Company’s website.

4.2 The Audit and Risk Management Committee should be structured so that it: • consists only of non-executive directors

• consists of a majority of independent directors

• is chaired by an independent chair, who is not chair of the board

• has at least three members.

The Audit and Risk Management Committee currently has two members who are non-executive directors. The committee is chaired by Mr Addison who is not Chairman of the Board. Mr Amer is the other member of the Committee. As such the majority of the members of the committee are independent. The Board considers that the size of the audit committee is appropriate for this stage of the company’s development. As the Company expands and the complexity of the Company increases, the composition of the Committee will be reviewed.

4.3 The Audit and Risk Management Committee should have a formal charter. The Company’s Corporate Governance plan includes a formal charter for the Audit and Risk Management

Committee.

4.4 Companies should provide the information indicated in the Guide to reporting on Principle 4. The Committee meets, as a minimum, twice a year and at least once each year with the Company’s Auditors. The

Committee has powers under the Company’s Audit and Risk Management Charter including unrestricted access to the Company’s external auditors and all Company records for the purposes of carrying out its responsibilities under the Charter. The Committee will recommend to the Board procedures for the selection and appointment of external auditors and for the rotation of external auditor partners. Details surrounding the meetings of the Committee held in the last 12 months are contained separately in the Company’s annual report.

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Principle 5: Make timely and balanced disclosure5.1 Companies should establish written policies designed to ensure compliance with ASX Listing

Rule disclosure requirements and to ensure accountability at a senior executive level for that compliance and disclose those policies or a summary of those policies.

The Company has a continuous disclosure program/policy in place designed to ensure compliance with the ASX Listing Rule on continuous disclosure and to ensure accountability at a senior executive level for compliance and factual presentation of the Company’s financial position. Continuous disclosure is considered at each board meeting, with management advising the board of any issues arising that may or may not require disclosure. All senior executives are aware of the requirements of disclosure.

5.2 Companies should provide the information indicated in Guide to Reporting on Principle 5. The continuous disclosure policy of the Company is set out on the Company’s website.

Principle 6: Respect the rights of shareholders6.1 Companies should design a communications policy for promoting effective communication with

shareholders and encouraging their participation at general meetings and disclose their policy or a summary of that policy.

The Company’s Corporate Governance plan includes a shareholder communications strategy, which aims to ensure that the shareholders are informed of all major developments affecting the Company’s state of affairs. This is contained within the Company’s policies titled “Code of Conduct – the Company’s Obligations to Stakeholders” and “Corporate Governance Policy – Continuous Disclosure”.

6.2 Companies should provide the information indicated in the Guide to reporting on Principle 6. The shareholder communication policy of the Company is set out in the Company’s policies titled “Code of

Conduct – the Company’s Obligations to Stakeholders” and “Corporate Governance Policy – Continuous Disclosure” which are publicly available on the Company’s website.

Principle 7: Recognise and manage risk7.1 Companies should establish policies for the oversight and management of material business

risks and disclose a summary of those policies. The Board in conjunction with the Audit and Risk Management Committee determines the Company’s “risk

profile” and is responsible for overseeing and approving risk management strategy and policies, internal compliance and internal control.

The Company has established procedures for the oversight and management of material business risks. The Audit and Risk Management Charter of the Company is set out on the Company’s website.

7.2 The board should require management to design and implement the risk management and internal control system to manage the company’s material business risks and report to it on whether those risks are being managed effectively. The board should disclose that management has reported to it as to the effectiveness of the company’s management of its material business risks.

The responsibility for undertaking and assessing risk management and internal control effectiveness is delegated to management by the Board in conjunction with oversight by the Board and the Audit and Risk Management Committee. The Board and Audit and Risk Management Committee are required to assess risk management and associated internal compliance and control procedures and will be responsible for ensuring the process for managing risks is integrated within business planning and management activities.

A comprehensive risk matrix has been developed by management to identify and monitor the risks inherent to the Company.

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CORPORATE GOVERNANCE STATEMENT continued

7.3 The board should disclose whether it has received assurance from the chief executive officer (or equivalent) and the chief financial officer (or equivalent) that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks.

Reports on the oversight of risk management are to be provided by the Managing Director and Chief Financial Officer to the Board and the Audit and Risk Management Committee.

For the year ending 30 June 2013, the Board has received written assurance from the Managing Director and the Chief Financial Officer in accordance with S 295A of the Corporations Act.

7.4 Companies should provide the information indicated in Guide to Reporting on Principle 7. Risk management is considered an inherent part of the decision making process of the Board. Issues presented to

the Board for consideration are accompanied by a risk assessment and analysis.

Principle 8: Remunerate fairly and responsibly8.1 The board should establish a remuneration committee. The Board has established a separate Remuneration Committee.

8.2 The remuneration committee should be structured so that it:•Consists of a majority of independent directors

• Is chaired by an independent chair

• Has at least 3 members

The Remuneration committee consists of 3 members and is chaired by Mr Addison, an independent chair. Two of the members of the committee are considered independent.

8.3 Companies should clearly distinguish the structure of non-executive directors’ remuneration from that of executive directors and senior executives.

The Remuneration Committee distinguishes the structure of non-executive directors’ remuneration from that of executive directors and senior executives. The Company’s Constitution and the Corporations Act also provides that the remuneration of non-executive directors will be not be more than the aggregate fixed sum determined by a general meeting.

The Board is responsible for determining the remuneration of the executive director (without the participation of the affected director).

8.4 Companies should provide the information indicated in the Guide to reporting on Principle 8. It is the intention that the Remuneration Committee meets twice a year. A copy of the Remuneration Committee

Charter is available on the Company’s website. The members of the Remuneration Committee are currently Mr AndrewAmer,MrMichaelAddisonandMrSimonKidston.

A summary of the Company’s policy on prohibiting transactions in associated products which operate to limit the risk of participating in unvested entitlements under any equity based remuneration scheme is contained within the Remuneration Committee Charter

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dirECTOrS’ rEpOrT

Your directors present their report on the consolidated entity (referred to hereafter as the “Group”) consisting of Carabella Resources Limited (the “Company”, “Carabella Resources”) and the entities it controlled at the end of, or during, the year ended 30 June 2013.

DirectorsThe following persons were directors of Carabella Resources during the whole of the financial year and up to the date of this report, unless otherwise stated:

•A R Amer

•M J Addison

• SRKidston

•A Fidock (appointed 5 February 2013)

•A J Quin

Principal activitiesDuring the year the principal continuing activity of the Group consisted of coal resource exploration and development.

Review of operations and activitiesDuring the year, Carabella Resources focused on development of its two key projects, the Bluff PCI Project near Blackwater and the Grosvenor West hard coking coal project near Moranbah. Exploration activities were also advanced on other tenements in the Company’s portfolio.

The Bluff Project is a 1.2Mtpa ultra low volatile PCI coal development project with an anticipated mine life of ten years or more. In December 2012 Carabella Resources acquired an additional sub-block CLER 3158A, adjacent to the eastern boundaries of the Bluff EPC 2121, where significant coal occurrence has been found. The Project’s JORC Resources estimate was upgraded in July 2013 to 21.5Mt. The Mining Lease Application (MLA 80194) and Environmental Authority (EA) application were lodged in February 2013. The environmental studies program is on schedule and it is expected that the supporting documentation for the EA will be submitted in October 2013. Grant of the EA and Mining Lease is scheduled for the end of Q1 2014.

Referral documentation under the Commonwealth Environment Protection and Biodiversity Conservation (EPBC) Act 1999 was lodged with the Commonwealth Department of Sustainability, Environment, Water, Population and Community (SEWPAC) in July 2013 and is currently under review. The Project has not been declared a Controlled Action at this time.

The Concept Study for the Bluff Project was completed in May 2013 and indicated the Project has attractive economics and upside potential under a range of market scenarios. The Project’s strengths include its high quality ultra low volatile PCI coal, low capital and competitive operating costs and close proximity to key infrastructure. The Project was advanced into the Feasibility Study phase in May 2013. Subject to funding, the outcome of the Feasibility Study and the necessary approvals being granted, mining activities at Bluff are planned to commence in H1 2014. Carabella is currently advancing funding discussions focussing on asset level funding opportunities to raise capital for the Project.

The Grosvenor West Project was also advanced into Feasibility Study phase in August 2012 based on a large scale open cut mining operation (5.5Mtpa ROM) utilising bucket wheel excavator, truck and excavator systems. The Project has a JORC Resources estimate of 141Mt. Coal quality testing and washability analysis has confirmed Grosvenor West hard coking coal is a premium HCC. The Feasibility Study is planned to be finalised during the development of the Bluff Project. “A mining lease application (MLA 70480) for Grosvenor West was lodged in September 2012. The environmental study program was progressed following commencement of the Environmental Impact Study in February 2012 and issuance of the Terms of Reference in October 2012. Engineering and infrastructure studies were advanced together with social impact assessment studies.”

In addition to the Bluff and Grosvenor West Projects Carabella Resources holds a 100% interest in five other coal exploration tenements located in Queensland’s prospective Bowen, Mulgildie and Eromanga coal bearing basins. The Pingine tenement (EPC 2124) in the Eromanga Basin was granted in April 2013. The Company also holds a 50% share of Pretoria Hill, a coal exploration tenement next to Carabella’s Mabbin Creek tenement in the Bowen Basin.

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Directors’ report continued

Carabella has identified five prospective coal targets in the Mabbin Creek tenement in the Back Creek Group of coal measures. Exploration activities were undertaken on the southern-most target with three holes drilled and 25km of seismic surveying completed. Further exploration is planned on each of these targets.

Exploration studies on the Burnett tenement (EPC 1175) also continued. A review of historical drilling and seismic data and subsequent modelling of the structural setting has identified a number of prospective drilling targets. Carabella’s current exploration target is between 50Mt and 420Mt and a future drilling program has been developed. The Burnett tenement has potential for export grade thermal coal and is located close to the coast being around 180km from the Port of Gladstone.

The potential quantity and grade of the Exploration Targets identified here-in are conceptual in nature, and there has been insufficient exploration to date to define a mineral resource in accordance with the JORC Code. Furthermore, it is uncertain if further exploration at its Exploration Targets will result in the determination of a mineral resource.

The Company’s coal interests cover a total area of approximately 3,300 km2. The Maroon tenement (EPC 2120) was relinquished in June 2013 and Rathdowney tenement (EPC 1249) was sold in August 2013. A review was undertaken of both tenements’ development potential and they were assessed as having limited prospectively and were not aligned with Carabella’s development strategy.

As at 30 June 2013, the Company had no borrowings and a cash balance of $10,186,000. A number of significant cost management measures were implemented during the year including reductions to corporate overheads and contractor rates, expenditure deferral on some tenements and reduced drilling activities. Employee numbers were also reduced during the year. The operating loss after income tax of the Group for the year was $8,100,000 (2012: loss $7,212,000). The loss reflects the nature of the Group’s principal activity.

Significant changes in the state of affairsNo significant changes in the state of affairs of the Group occurred during the financial year. The Company continues to focus on coal exploration and development activities.

DividendThe directors do not recommend the payment of a dividend. No dividend was paid during the year.

Matters subsequent to the end of the financial yearThe Department of Natural Resources and Mines offered Carabella Resources the grant of the Beechal Creek tenement (EPC 2119) located in the Eromanga Basin in July 2013. The EPC has been in application since 21st May 2010. The EPC expenditure obligations were considered excessive in view of the tenement’s location, lack of infrastructure and limited medium term development potential. The offer was therefore declined on 29th August 2013.

At the date of this report there are no other matters or circumstances which have arisen since 30 June 2013 that have significantly affected, or may significantly affect:

•The Group’s operations in future financial years; or

•The results of those operations in future financial years; or

•The Group’s state of affairs in future financial years.

Likely developments and expected results from operationsThe Company plans to expand from coal exploration and development into mining operations in the current financial year. Subject to the outcomes of the Feasibility Study, approvals being granted and the raising of sufficient funds the Bluff Project is planned to commence mining in H1 2014. The Bluff Project is forecast to produce typically 1.2Mtpa of ultra low volatile PCI coal by open cut mining. Options also exist to develop an underground bord and pillar operation at a later stage. The Project’s indicated capital cost and operating costs are competitive and generate attractive economics notwithstanding current market conditions.

Exploration and development activities will continue on the other coal tenements held by the Company. Carabella will also look to acquire additional tenements where value adding opportunities are identified.

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Environmental regulationThe Group is subject to significant environmental regulation in respect of its exploration activities in Australia and is committed to undertaking all its operations in an environmentally responsible manner.

To the best of the Directors’ knowledge, the Group has adequate systems in place to ensure compliance with the requirements of all environmental legislation and the Directors are not aware of any breach of those requirements during the financial year and up to the date of the Directors’ report.

Information on directorsMr Andrew Amer, Chairman MSc MBA FAICD

Date of appointment: 14 February 2011

Expertise and experienceAndrew has extensive senior management and board level experience across heavy manufacturing, chemicals and resources organisations across Australia and Asia Pacific, including China. His areas of expertise cover strategy, marketing, operations, corporate governance and risk management.

Andrew is a director of Mackay Sugar Limited and has held previous directorships on the publicly listed boards of Delta SBD Limited and Ainsworth Game Technology Limited. He was vice-chairman of the BP Amoco Yizheng Chemicals joint venture YAFCO in China and spent a 5 year period as Managing Director of Amoco Australia. Andrew is a Fellow of the Australian Institute of Company Directors (AICD) where he is a Member of the NSW AICD Council and AICD Law Committee. Andrew is also a member of the Professional Conduct Tribunal of the Institute of Chartered Accountants in Australia (ICAA).

AndrewhasaBachelor’sandMastersofScienceinchemistryfromMacquarieUniversityandanMBAinStrategy,Finance and Marketing from the Macquarie Graduate School of Management where he was nominated for the Allen KnottMedalforbestscholar.HeisalsoapastmemberoftheMacquarieUniversityCouncil.

Special responsibilitiesAndrew is a member of the Audit and Risk Management Committee, and is Chairman of the Remuneration Committee and the Sustainability Committee.

Other current directorshipsDirector of Mackay Sugar Limited (unlisted public company).

Former directorships in the last 3 yearsDelta SBD Limited (ASX listed company).

Interest in shares and options1,000,000 options over ordinary shares in Carabella Resources.

Mr Michael Addison, Non-executive director BScEng (Civil) MPhil (Oxon) (Management Studies) FAIM MAICD

Date of appointment: 28 April 2010

Expertise and experienceMichael spent the first part of his working career as an investment banker with three globally recognised investment banks. Subsequent to transitioning into mainstream corporate management in the early nineties, Michael has held a number of senior executive positions on the boards of publicly listed companies on each of the London, Johannesburg and Australian Securities Exchanges.

In these roles he developed deep expertise in the management and running of listed companies and a knowledge of the regulatory, legal and governance environments in which listed companies operate. In recent periods, Michael has also been actively involved in a number of capital markets transactions with Australian resources companies, and most recently acted as a corporate advisor to the ASX Listing of Endocoal Limited. Michael is a former Rhodes Scholar, hasanOxfordUniversitypostgraduatedegreeinManagementStudiesandisaFellowoftheAustralianInstituteofManagement and a Member of the Australian Institute of Company Directors.

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Special responsibilitiesMichael is the Chairman of the Audit and Risk Management Committee and is a member of the Remuneration Committee.

Other current directorshipsStratum Metals Limited (ASX listed company).

Genex Power Limited (unlisted public company).

Former directorships in the last 3 yearsNone.

Interest in shares and options7,000,000 ordinary shares in Carabella Resources.

2,214,286 options over ordinary shares in Carabella Resources.

100,000 contracts for difference in respect of ordinary shares in Carabella Resources.

Mr Simon Kidston, Non-executive director BCom Grad Dip App Fin

Date of appointment: 28 April 2010

Expertise and experienceSimon is a founding director of Helmsec Global Capital Limited and has almost 20 years of investment banking experience inAustralia,UKandAsia.SimonhasanequitycapitalmarketsandM&Abackgroundandhasconsiderableexperienceassisting “small and mid-cap” companies in raising capital, with a primary focus on companies operating in the mining and resources sectors. Prior to joining Helmsec, Simon spent a number of years with Macquarie Bank and HSBC working in equity and structured finance, and mergers and acquisitions for a range of Australian and offshore clients.

SimonholdsaBachelorofCommercedegreefromGriffithUniversityandhasaGraduateDiplomainAppliedFinanceand Investment from the Securities Institute of Australia. Simon was a founding director of Endocoal Limited, a junior coal explorer which listed on the ASX in April 2010.

Special responsibilitiesSimon is a member of the Remuneration Committee.

Other current directorshipsHelmsec Global Capital Limited (unlisted public company).

Estrella Resources Limited (ASX listed company).

Genex Power Limited (unlisted public company).

Former directorships in the last 3 yearsEndocoal Limited (ASX listed company until its takeover in April 2013).

Interest in shares and options2,423,000 ordinary shares in Carabella Resources.

2,065,873 options over ordinary shares in Carabella Resources.

Mr Allan Fidock, Non-executive director Ass Dip Applied Science, MBus, GAICD, MMAA, AusIMM

Date of appointment: 5 February 2013

Expertise and experienceAllan has over 30 years’ experience in the Australian coal mining industry including senior management roles as Executive General Manager Operations and member of the Executive Leadership Group at Macarthur Coal Limited and as CEO of Middlemount Coal Pty Ltd. Allan has also held senior technical and operational roles at Anglo Coal and Thiess Pty Ltd. At Macarthur, Allan was instrumental in the successful development of the Middlemount Mine which has approval to operate and export approximately 4Mtpa of PCI and semi hard coking coal after commencing operations in 2011.

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Allan has been actively involved in broader aspects of the coal sector including as a Director of Australian Coal Research Limited and as an Alternate Director of the Queensland Resources Council for Macarthur Coal.

Allan has an Associate Diploma in Applied Science, a Master of Business, is a registered Mine Manager and a Member of the Australian Institute of Company Directors and Australian Institute of Mining and Metallurgy.

Special responsibilitiesAllan is a member of the Sustainability Committee.

Other current directorshipsNone.

Former directorships in the last 3 yearsOGL Resources Limited (ASX listed company).

Interest in shares and options68,831 ordinary shares in Carabella Resources.

Mr Anthony Quin, Managing director BEc (Hons) GAICD

Date of appointment: 10 October 2011

Expertise and experienceAnthony has 14 years of experience in a number of senior leadership positions with BHP Billiton, most recently as Chief Development Officer of BHP Billiton Metallurgical Coal. During this time he saw the business generate impressive growthintheresourcebase,recordcoalshipmentsandgrowthinEBITtoinexcessofUS$4.7billion.Anthonyhashelda similar position in BHP Energy Coal business, as well as strategic and commercial roles with BHP Billiton PLC and BHP Billiton Limited.

Anthony has also previously served as a director of Newcastle Coal Infrastructure Group Pty Limited and BHP Billiton Innovation Limited. He holds a Bachelor of Economics (Hons) and is a Graduate of the Australian Institute of Company Directors.

Special responsibilitiesAnthony is a member of the Sustainability Committee.

Other current directorshipsNone.

Former directorships in the last 3 yearsNone.

Interest in shares and options – 3,500,000 options over ordinary shares in Carabella Resources

Meetings of directorsThe numbers of meetings of the Company’s Board of Directors and of each Board committee held during the year ended 30 June 2013, and the numbers of meetings attended by each director were:

Full Meetings of Directors

Meetings of Audit and Risk Management Committee

Meetings of Remuneration Committee

Meetings of Sustainability Committee

A B A B A B A B

A R Amer 15 15 2 2 2 2 2 2

M J Addison 15 15 2 2 2 2 – –

SRKidston 15 15 – – 2 2 – –

A J Quin 15 15 – – – – 2 2

A Fidock 6 6 – – – – – –

A = Number of meetings attended.B = Number of meetings held during the time the director held office or was a member of the committee during the year.

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Information on company secretaryMs Kylie Anderson, Company secretary BSc MBA (Int. Bus.) MPA MAICD

Date of appointment: 11 July 2011

Expertise and experienceKyliehasheldseniorfinancialandcompanysecretarialroleswithanumberofcompaniesintheresourcessectorincludingFelixResources,TheRioTintoGroup,andKentorGoldLimited.Kyliespecialisesinprovidingcorporateadvisory services to listed mining companies in the areas of corporate governance and corporate transactions.

KylieholdsthedegreesofBachelorofScience,aMastersofBusinessAdministrationmajoringinInternationalBusinessand a Masters of Professional Accounting and is a Member of the Australian Institute of Company Directors.

Remuneration Report (Audited)This remuneration report sets out remuneration information for Carabella Resources non-executive directors, executive directors and other key management personnel of the Group and the Company.

Directors and executives disclosed in this report

Name Position Date of joining Date of leaving

Non-executive and executive directors – see pages 26 to 32

Other key management personnel

W J Beatty Executive manager – Sustainability and People 14 March 2011 –

B W Robertson Executive manager – Technical Services and Planning 3 May 2011 –

G J Taggart Chief Financial Officer 8 July 2013 –

J G W Ebertson Chief Financial Officer (Acting) 11 July 2011 30 November 2012

Role of the remuneration committeeThe Remuneration Committee is a committee of the Board. It is primarily responsible for making recommendations to the Board on:

• Non-executive director fees;

•Executive remuneration (directors and other executives); and

•The over-arching executive remuneration framework and incentive plan policies.

Principles used to determine the nature and amount of remunerationNon-executive directorsFees and payments to non-executive directors reflect the demands which are made on, and the responsibilities of, the directors. Non-executive directors’ fees and payments are reviewed annually by the Board. The Chairman’s fees are determined separately to the fees of non-executive directors based on comparative roles in the external market. The Chairman does not participate in any discussions relating to determination of his own remuneration.

The current base fees were last reviewed with effect from 1 July 2011. The board has referenced the fees to external sources and companies of a similar size and nature and considers that the fees are appropriate for the activities undertaken. Directors are not paid any additional fees for being a member or chairman of the Board’s sub-committees.

The following fees have applied:

Base fees (inclusive of superannuation)From 1 July 2011

$

Chairman 100,000

Other non-executive directors 72,000

The aggregate directors’ fee pool limit approved by shareholders currently stands at $500,000 per annum.

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An exertion bonus was paid to the non-executive directors in FY2013 and related to work undertaken in FY2012. During the FY2012, the directors were required to contribute significantly more time and effort to Carabella Resources in order to consider potential corporate actions.

Executive payThe executive pay and reward framework currently has three elements:

•Base pay (including other remuneration such as superannuation);

• Variablecompensation–shorttermincentives;and

• Long-term equity based incentives.

The combination of these currently comprises the executives’ total remuneration.

Base pay (including other remuneration benefits such as superannuation)Base pay is structured as a total employment cost package which may be delivered as a mix of cash and prescribed non-financial benefits at the executives’ discretion. Executives are offered a competitive base pay. Base pay for senior executives is reviewed annually to ensure the executive’s pay is competitive with the market. An executive’s pay is also reviewed on promotion. Base pay for the executive director is reviewed annually to ensure the executive’s pay is competitive with the market.

Variable compensation – short-term incentives (STI)The objective of the STI program is to link the achievement of the groups operational targets with the compensation received by key management personnel charged with meeting those targets. The total potential STI is set at a level so as to provide sufficient incentive to achieve operational targets and such that the cost to the group is reasonable in the circumstances. These incentives can be delivered either in the form of share options or as a cash bonus.

A moderate bonus was paid to the Managing Director and selected executives in FY2013 for performance in the FY2012. The remuneration committee deemed that the Managing Director and executives had made significant progress in relation to the exploration and development activities on the Group’s assets.

Long-term equity based incentivesThe Company’s Employee Share Option Plan was detailed in the Company’s prospectus dated 22 November 2010 and forms part of the Company’s long-term incentive plan.

Details of remunerationThe Board reviews executive packages annually by reference to comparable information from industry sectors and other listed companies in similar industries.

Amounts of remunerationDetails of the remuneration of the directors and the key management personnel (as defined in AASB 124 Related Party Disclosures) of Carabella Resources are set out in the following tables.

The Remuneration Committee has determined that no short term incentives will be paid for performance relating to the FY2013.

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Remuneration of directors and key management personnel of Carabella Resources for 2013

Short-term benefits

Bonus /exertion

payment1

Post-employment

benefitsShare-based

payment

Name

Cash salary and fees

$

Super-annuation

$Options

$Total

$A

%B

%

Non-executive directors

A R Amer 91,743 12,500 9,382 371,262 484,887 – 77

M J Addison 66,055 12,500 7,070 – 85,625 – –

SRKidston 66,055 12,500 7,070 – 85,625 – –

A R Fidock(appointed 5 February 2013)

27,015 – 2,431 – 29,446 – –

Sub-total non-executive directors 250,868 37,500 25,953 371,262 685,583

Executive directors

A J Quin 384,225 40,000 15,949 1,356,021 1,796,195 – 75

Key management personnel

W J Beatty 304,585 25,000 15,949 187,125 532,659 – 35

B W Robertson 375,016 25,000 15,949 238,459 654,424 – 36

J G W Ebertson (employment terminated 30 November 2012) 70,997 25,000 15,949 – 111,946 – –

Sub-total executive directors and key management personnel 1,134,823 115,000 63,796 1,781,605 3,095,224 – –

Total key management personnel compensation (Group) 1,385,691 152,500 89,749 2,152,867 3,780,807 – –

1. An explanation of bonuses is provided on the previous page.

A. Proportion of remuneration that is performance related remuneration.B. Percentage of remuneration that is share-based payment.

Share-based paymentsThe assessed fair value at grant date of options granted to the directors and key management personal are allocated equally over the period from grant date to vesting date, and the amount is included in the remuneration tables above. Fair values at grant date are independently determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option.

The expense recognised in the current year relates to options granted in previous periods. There were no options granted to directors and key management personnel in the current year.

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Share based payments for directors and key management personnel for 2013

Executive Grant date Number of

options

Grant date fair value

$

Exercise price

$

Share price at grant

date$

Vesting date Expiry date


Andrew Amer 14 Feb 11 200,000 188,400 1.94 1.94 14 Feb 13 4 Feb 14

14 Feb 11 150,000 126,450 2.33 1.94 14 Feb 13 14 Feb 14

14 Feb 11 150,000 114,000 2.72 1.94 14 Feb 13 14 Feb 14

6 Sep 11 500,000 474,482 2.00 1.98 6 Sep 13 6 Sep 14

Sub-total non-executive directors 1,000,000 903,332

Executive directors

Anthony Quin1 10 Oct 11 3,500,000 2,678,606 2.00 1.68 30 Sep 13 30 Sep 13


William Beatty 14 Mar 11 490,000 464,992 2.00 1.98 6 Sep 13 6 Sep 14

Bruce Robertson 3 May 11 590,000 59,889 2.00 1.98 6 Sep 13 6 Sep 14

Sub-total executive directors and key management personnel 4,580,000 3,703,487

Total key management personnel compensation (Group) 5,580,000 4,606,819

1. A condition of 2,000,000 options vesting on 30 September 2013 will not be met. As at 30 June 2013 the expectation was that this performance condition would be met.

The share price at 30 June 2013 was 19 cents. As such the directors and key management personnel will not receive any benefit from the options granted in previous periods unless the share price improves to such an extent that it is greater than the exercise price prior to expiry.

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Remuneration of directors and key management personnel of Carabella Resources Limited for 2012

Short-term benefits

Bonus /exertion payment

Post-employment

benefitsShare-based

payment

Name

Cash salary and fees

$

Super-annuation

$Options

$Total

$A

%B

%


A R Amer 83,289 – 7,496 214,718 305,503 – 63

M J Addison 66,055 18,349 7,596 – 92,000 – –

SRKidston 66,055 18,349 7,596 – 92,000 – –

R Gazzard (resigned 30 August 2011) 11,009 – 991 – 12,000 – –

Sub-total non-executive directors 226,408 36,698 23,679 214,718 501,503

Executive directors

A J Quin (appointed 10 October 2012) 279,490 – 11,831 980,793 1,272,114 – 77

A R Amer1 34,527 – 3,107 – 37,634 – –

M F Jakeman (resigned 30 August 2011) 219,350 – 10,374 – 229,724 – –


W J Beatty 297,678 – 15,775 243,006 556,459 – 44

B W Robertson 309,320 – 15,775 277,005 602,100 – 46

J W G Ebertson 27,324 – 2,459 – 29,783 – –

D J Begley (resigned 31 July 2012) 303,823 – 15,775 – 453,141 – 29

B C Robinson (resigned 8 May 2012) 219,214 – 14,181 133,543 350,254 33

G L Wallis (resigned 9 May 2012) 264,390 – 15,775 116,859 514,261 46

J D Warat (resigned 29 August 2011) 47,500 – 2,629 234,096 50,129 –

Sub-total executive directors and key management personnel 2,002,616 – 107,681 1,985,302 4,095,599 – –

Total key management personnel compensation (Group) 2,229,024 36,698 131,360 2,200,020 4,597,102 – –

1. A R Amer held the position of Executive Director for the period 30 August 2012 to 10 October 2012.

A. Proportion of remuneration that is performance related remuneration.B. Percentage of remuneration that is share-based payment.

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Service agreements On appointment to the Board, all non-executive directors enter into a service agreement with the Company in the form of a letter of appointment. The letter summarises the Board policies and terms including compensation relevant to the office of director.

Remuneration and other terms of employment for the managing director, chief financial officer and other key management personnel are also formalised in service agreements. Some agreements include the provision of car allowances and participation, when eligible, in the Carabella Resources Employee Option Plan. Other major provisions of the agreements relating to remuneration are set out below.

NameEmployment Status

Employment Term

Notice Period (Months)

Eligible for STI

Base salary including superannuation Termination benefit

A J Quin Current Unlimited 6 Yes $400,000 6 months base salary + pro-rated STI

W J Beatty Current Unlimited 4 No $320,360 4 months base salary

B W Robertson Current Unlimited 4 No $390,792 4 months base salary

G J Taggart (appointed 7 July 2013)

Current Unlimited 3 No $300,000 3 months base salary

Voting and comments made at the company’s 2012 Annual General MeetingCarabella Resources did not receive more than 75% votes in favour of its remuneration report for the 2012 financial year. Notwithstanding the fact that shareholders did not raise any issues in relation to the remuneration report at the Annual General Meeting (AGM) of the Company where the resolution was considered, the Board recognises that, along with most other resources and small cap companies, Carabella Resources suffered a decline in its share price over the course of the financial year under difficult trading conditions.

Toward the end of FY2012 and in early 2013, the Company reacted to the declining market conditions and undertook significant organisational restructuring, reducing the number of executives and staff and resulting in a 32% reduction in total cash remuneration paid to key management personnel from FY2012 to FY2013. It should also be noted that individualDirectorsandKeyManagementPersonnelhavesufferedasignificantreductioninremunerationrelatingtothe value of their long term incentive options resulting from the decline in the Company’s share price. These declines in remuneration are in the face of considerable increases in individual work load following the significant organisational restructuring and reduction in the number of executives and staff.

The Board will continue to monitor the progress of the Company’s Projects and exploration activities in relation to the appropriateness of the remuneration of the Directors and key management personnel.

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Consequences of performance on shareholder wealthIn considering the Group’s performance and benefits for shareholder wealth, the Board has regard to the following indices in respect of the financial year ended June 2013 and the previous financial year. The Company listed on the ASX on 17 December 2010.

2013 2012 2011

EPS (cents) (5.32) (5.20) (6.38)

Dividends (cents per share) – – –

Net loss ($’000) (8,100) (7,212) (5,704)

Share price at 30 June 2013 (cents) 19 60 187

OptionsOptions granted under the Plan carry no dividend or voting rights. When exercisable, each option is convertible into one ordinary share.

Details of options over ordinary shares in the Company provided as remuneration to each director of Carabella Resources and each of the key management personnel of the parent entity and the Group are set out below

Options provided during the year to directors and key management personnel as remunerationNo options were granted during the year to directors and key management.

Shares provided on exercise of remuneration options

No options were exercised by any of the directors or key management personnel during the year under review.

This is the end of the audited remuneration report.

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Share OptionsThe total of all unissued ordinary shares of Carabella Resources under option at the date of this report are as follows:

Grant date Vesting date Expiry date Exercise price Number of options

12/05/2010 12/05/2010 12/05/2015 0.25 5,000,000

14/05/2010 14/05/2010 14/05/2015 0.25 3,000,000

25/05/2010 25/05/2010 25/05/2015 0.25 1,000,000

15/09/2010 15/09/2010 15/09/2015 0.25 100,000

24/09/2010 24/09/2010 24/09/2015 0.25 511,111

14/12/2010 14/12/2010 14/12/2015 0.25 1,500,000

07/06/2010 07/06/2010 07/06/2015 0.25 2,000,000

17/12/2010 17/12/2012 17/12/2013 0.50 135,000

17/12/2010 17/12/2012 17/12/2013 0.60 135,000

17/12/2010 17/12/2012 17/12/2013 0.70 135,000

17/12/2010 17/12/2012 17/12/2013 0.80 135,000

04/01/2011 04/01/2013 04/01/2014 0.50 18,750

04/01/2011 04/01/2013 04/01/2014 0.60 18,750

04/01/2011 04/01/2013 04/01/2014 0.70 18,750

04/01/2011 04/01/2013 04/01/2014 0.80 18,750

14/02/2011 14/02/2013 14/02/2014 1.94 200,000

14/02/2011 14/02/2013 14/02/2014 2.33 150,000

14/02/2011 14/02/2013 14/02/2014 2.72 150,000

14/03/2011 06/09/2013 06/09/2014 2.00 490,000

21/03/2011 06/09/2013 06/09/2014 2.00 220,000

11/04/2011 06/09/2013 06/09/2014 2.00 80,000

14/04/2011 06/09/2013 06/09/2014 2.00 160,000

14/04/2011 06/09/2013 06/09/2014 2.00 80,000

18/04/2011 06/09/2013 06/09/2014 2.00 510,000

26/04/2011 06/09/2013 06/09/2014 2.00 10,000

04/11/2011 04/11/2013 04/11/2014 2.00 20,000

02/05/2011 06/09/2013 06/09/2014 2.00 180,000

03/05/2011 06/09/2013 06/09/2014 2.00 590,000

16/05/2011 06/09/2013 06/09/2014 2.00 200,000

15/08/2011 30/01/2014 30/01/2015 2.00 160,000

06/09/2011 06/09/2013 06/09/2014 2.00 680,000

10/10/2011 30/09/2013 10/10/2014 2.00 3,500,000

20/12/2012 07/02/2013 24/04/2014 0.50 10,000,000

31,106,111

No option holder has any right under the options to participate in any other share issue of the Company or of any other entity.

Shares issued on the exercise of optionsNo options were exercised during the year.

Insurance of officersDuring the financial year Carabella Resources paid a premium of $67,364 to insure the directors and secretary of the Company.

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The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of the entity, and any other payments arising from liabilities incurred by the officers in connection with such proceedings, other than where such liabilities arise out of conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else or to cause detriment to the Company.

Non-audit servicesThe Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and experience with the Company are important.

Details of amounts paid or payable to the auditor for audit and non-audit services provided during the year are set out below.

The Board, in accordance with the advice received from the Audit and Risk Management Committee, is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:

• all non-audit services have been reviewed by the Audit and Risk Management Committee to ensure they do not impact the impartiality and objectivity of the auditor, and

• none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants.

During the year the following fees were paid or payable for non-audit services provided by the auditor of the parent entity, its related practices and non-related audit firms:

Consolidated

2013$

2012$

Taxation services

Tax compliance services 30,345 44,022

Total remuneration for non-audit services 30,345 44,022

Proceedings on behalf of the CompanyNo person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings.

No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001.

Auditors’ independence declarationA copy of the auditors’ independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 36.

Rounding of amountsThe Company is of a kind referred to in Class Order 98/100 issued by the Australian Securities and Investments Commission, relating to the ‘rounding off’ of amounts in the directors’ report. Amounts in the directors’ report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar.

AuditorGrant Thornton Audit Pty Ltd continues in office in accordance with section 327 of the Corporations Act 2001.

This report is made in accordance with a resolution of the directors.

A R Amer CHAIRMANBrisbane, 30 September 2013

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COmpETENT pErSON’S STaTEmENT

Bluff Resources Estimate

July 2013 Resources (Mt)

Category 0-150m 150-300m 0-300m

Indicated 7.9 3.3 11.2

Inferred 2.9 7.4 10.3

Total Resources 10.8 10.7 21.5

Grosvenor West Resource Estimate

Resources (Mt)


67.3Mt 41.6Mt 32.0Mt 141.0Mt

The information presented in this announcement relating to coal resources at Bluff is based on information compiled by Mr Mal Blaik of JB Mining Services. The reporting is in compliance with the 2004 JORC Code. Mr Blaik is a qualified Geologist, a member of the Australasian Institute of Mining and Metallurgy and has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking, to qualify as a Competent Person as defined in the Australasian Code for Reporting of Mineral Resources and Ore Reserves published by the Joint Ore Reserves Committee (JORC Code). Mr Blaik has given his consent for the inclusion of this information, and has reviewed all statements pertaining to this information in the form and context in which it appears.

The information presented in this announcement relating to exploration targets at Burnett is based on information compiled by Mr Bruce Robertson who is a member of the Australian Institute of Mining and Metallurgy and is an employee of the Carabella Resources Limited. Mr Robertson is a qualified mining engineer and has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking, to qualify as a Competent Person as defined in the Australasian Code for Reporting of Mineral Resources and Ore Reserves published by the Joint Ore Reserves Committee (JORC Code). Mr Robertson has given his consent for the inclusion of this information, and has reviewed all statements pertaining to this information in the form and context in which it appears.

The information presented in this announcement relating to coal resources for Grosvenor West is based on information compiled by Mr Bruce Robertson who is a member of the Australian Institute of Mining and Metallurgy and is an employee of the Carabella Resources Limited. Mr Robertson is a qualified mining engineer and has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking, to qualify as a Competent Person as defined in the Australasian Code for Reporting of Mineral Resources and Ore Reserves published by the Joint Ore Reserves Committee (JORC Code). Mr Robertson has given his consent for the inclusion of this information, and has reviewed all statements pertaining to this information in the form and context in which it appears.

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audiTOr’S iNdEpENdENCE dEClaraTiON

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fiNaNCial STaTEmENTS

Directors’ Report 21

Auditor’s Independence Declaration 36

Consolidated Statement of Profit or Loss and Other Comprehensive Income 38

Consolidated Statement of Financial Position 39

Consolidated Statement of Changes in Equity 40

Consolidated Statement of Cash Flows 41

Notes to the Financial Statements

1. Summary of significant accounting policies 42

2. Financial risk management 49

3. Critical accounting estimates and judgments 51

4. Segment information 51

5. Revenue 52

6. Income tax expense 53

7. Cash and cash equivalents 54

8. Trade and other receivables 54

9. Assets classified as held for sale and discontinued operations 54

10. Property, plant and equipment 55

11. Exploration and evaluation assets 56

12. Investment accounted for using the equity method 56

13. Other assets 56

14. Trade and other payables 56

15. Provisions 57

16. Contributed equity 57

17. Reserves and accumulated losses 59

18. Directors and key management personnel disclosures 60

19. Remuneration of auditors 63

20. Contingent liabilities 63

21. Commitments for expenditure 64

22. Related parties 65

23. Subsidiaries 65

24. Events occurring after reporting date 65

25. Reconciliation of loss after income tax to net cash outflow from operating activities 66

26. Loss per share 66

27. Share-based payments 67

28. Parent entity information 70

29. Entity details 70

Directors’ Declaration 71

Independent Auditor’s Report 72For

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CONSOlidaTEd STaTEmENT Of prOfiT Or lOSS aNd OThEr COmprEhENSivE iNCOmEfor the year ended 30 June 2013

Consolidated

Notes2013

$’0002012$’000

Revenue from continuing operations 5 681 1,401

Corporate overhead expenses (1,143) (1,402)

Depreciation expenses 10 (340) (262)

Employee benefits expenses (1,995) (2,694)

Impairment of tenements 11 (1,534) –

Infrastructure costs expensed – (373)

Non-executive directors’ remuneration (314) (287)

Professional services expenses (921) (1,205)

Share based payments expense 17(a) (2,735) (1,746)

Loss before income tax (8,302) (6,568)

Tax benefit 6 295 208

Loss from continuing operations (8,007) (6,360)

Discontinued operations

Loss from discontinued operations after tax 9 (93) (852)

Loss for the year (8,100) (7,212)

Other comprehensive income

Other comprehensive income for the year, net of tax – –

Total comprehensive loss for the year attributable to members of Carabella Resources Limited

(8,100) (7,212)

Cents Cents

Loss per share

Basic and diluted loss per share

Loss from continuing operations (5.26) (4.59)

Loss from discontinued operations (0.06) (0.61)

Total (5.32) (5.20)

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

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CONSOlidaTEd STaTEmENT Of fiNaNCial pOSiTiONas at 30 June 2013

Consolidated

Notes2013

$’0002012$’000

ASSETS

Current assets

Cash and cash equivalents 7 10,186 24,966

Trade and other receivables 8 590 873

Assets held for sale 9 20 2,441

Total current assets 10,796 28,280

Non-current assets

Property, plant and equipment 10 936 1,283

Exploration and evaluation assets 11 40,356 31,197

Investment accounted for using the equity method 12 700 700

Other assets 13 454 697

Total non-current assets 42,446 33,877

Total assets 53,242 62,157

LIABILITIES

Current liabilities

Trade and other payables 14 1,100 5,306

Provisions 15 116 256

Total current liabilities 1,216 5,562

Total non-current liabilities – –

Total liabilities 1,216 5,562

Net assets 52,026 56,595

EQUITY

Issued capital 16 66,121 66,121

Reserves 17 7,330 3,799

Accumulated losses (21,425) (13,325)

Total equity 52,026 56,595

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

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CONSOlidaTEd STaTEmENT Of ChaNgES iN EquiTyfor the year ended 30 June 2013

Notes

Issuedcapital

$’000

Share based payment

reserve$’000

Accumulated losses$’000

Total$’000

Balance at 30 June 2011 43,097 2,053 (6,113) 39,037

Total comprehensive income: Loss for the year – – (7,212) (7,212)

Transactions with owners in their capacity as owners:

Contributions of equity, net of transaction costs 16(a) 23,024 – – 23,024

Share-based payments 17(a) – 1,746 – 1,746

Balance at 30 June 2012 66,121 3,799 (13,325) 56,595

Total comprehensive income: Loss for the year – – (8,100) (8,100)

Transactions with owners in their capacity as owners:

Contributions of equity, net of transaction costs – – – –

Share-based payments 17(a) – 3,531 – 3,531

Balance at 30 June 2013 66,121 7,330 (21,425) 52,026

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

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CONSOlidaTEd STaTEmENT Of CaSh flOwSfor the year ended 30 June 2013

Consolidated

Notes2013

$’0002012$’000

Cash flows from operating activities (continuing operations)

Receipts in the course of operations (inclusive of goods and services tax) – 1,417

Payments to suppliers (inclusive of goods and services tax) (4,146) (3,924)

Interest received 651 1,401

Refund of security deposits 233 —

Net cash outflows from operating activities (continuing operations) (3,262) (1,106)

Cash flows from operating activities (discontinued operations)

Receipts in the course of discontinued operations (inclusive of goods and services tax) 9 195 –

Payments to suppliers of discontinued operations (inclusive of goods and services tax) (199) –

Net cash outflows from operating activities (discontinued operations) (4) –

Total cash flows from operating activities 25 (3,266) (1,106)

Cash flows from investing activities (continuing operations)

Payments for exploration assets (13,854) (22,725)

Net cash outflows from investing activities (continuing operations) (13,854) (22,725)

Cash flows from investing activities (discontinued operations)

Proceeds of assets sold/held for sale 2,339 (1,956)

Net cash inflows from investing activities (discontinued operations) 2,339 (1,956)

Total cash flows from investing activities (11,515) (24,681)

Cash flows from financing activities (continuing operations)

Proceeds from share issue – 24,047

Payment of share issue costs – (1,551)

Net cash inflows from financing activities (continuing operations) – 22,496

Net (decrease)/increase in cash and cash equivalents (14,781) (3,291)

Cash and cash equivalents at the beginning of the financial year 24,966 28,257

Cash and cash equivalents at the end of the financial year 7 10,186 24,966

The above consolidated statement of cash flow should be read in conjunction with the accompanying notes.

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NOTES TO ThE fiNaNCial STaTEmENTSfor the year ended 30 June 2013

1. Summary of significant accounting policiesCarabella Resources is a for profit company domiciled in Australia. The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the consolidated entity comprising Carabella Resources and its subsidiaries.

The financial statements are presented in Australian dollars which is the Group’s functional and presentation currency.

The Financial Report was authorised for issue by the directors on 30 September 2013

(a) Basis of preparationThese general purpose financial statements have been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Australian Accounting Interpretations and the Corporations Act 2001.

New standard and interpretation adoptedAASB 2011-9 requires entities to group items presented in Other Comprehensive Income on the basis of whether they are potentially re-classifiable to profit or loss subsequently, and changes the title of ‘statement of comprehensive income’ to ‘statement of profit or loss and other comprehensive income’.

The adoption of the new and revised Australian Accounting Standard and Interpretation has had no significant impact on the Group’s accounting policies or the amounts reported at the current year end period.

Compliance with IFRSThe consolidated financial statements of the Group comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

Historical cost conventionThese financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets, financial assets and liabilities (including derivative instruments) at fair value through profit or loss, certain classes of property, plant and equipment, and investment property.

Going concernThe annual financial report has been prepared on a going concern basis which assumes the continuity of normal business including successful exploration and the ability to raise funds when required and the realisation of assets and discharge of liabilities in the ordinary course of business. Having carefully assessed the uncertainties relating to the likelihood of continued exploration success and the ability to secure additional funding and the Group’s ability to effectively manage its expenditures and cash flows from operations, the directors believe that the Group will continue to operate as a going concern for the next 12 months from the date of signing of this report and therefore it is appropriate to prepare the financial statements on a going concern basis.

In the event that the assumptions underpinning the basis of preparation do not occur as anticipated, there is uncertainty whether the Group will continue to operate as a going concern. If the Group is unable to continue as a going concern it may be required to realise its assets and extinguish its liabilities other than in the normal course of business and at amounts different to those stated in the financial statements.

Critical accounting estimatesThe preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3.F

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(b) Principles of consolidationThe consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Carabella Resources at 30 June 2013. Carabella Resources and its subsidiaries together are referred to in these financial statements as the Group or the consolidated entity.

SubsidiariesSubsidiaries are all those entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealisedlossesarealsoeliminatedunlessthetransactionprovidesevidenceoftheimpairmentoftheassettransferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

(c) Segment reportingOperating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Managing Director that makes strategic decisions.

(d) Income taxesThe income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the assets and settle the liability simultaneously. Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

Tax consolidationThe Company and its wholly-owned Australian subsidiaries have formed an income tax consolidation group under tax consolidation legislation. Each entity in the Group recognises its own current and deferred tax assets and liabilities. Such taxes are measured using the ‘stand-alone taxpayer’ approach to allocation. Current tax liabilities/(assets) and deferred tax assets arising from unused tax losses and tax credits in the subsidiaries are immediately transferred to the head entity. The Group notified the Australian Tax Office that it had formed an income tax consolidated group to apply from 3 February 2011. The tax consolidated group has entered a tax funding arrangement whereby each company in the Group contributes to the income tax payable by the Group in proportion to their contribution to the Group’s taxable income. Differences between amounts of net tax assets and liabilities derecognised and the net amounts recognised pursuant to the funding arrangement are recognised as current intercompany receivables or payables.

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Notes to the FiNaNcial statemeNts continuedfor the year ended 30 June 2013

(e) Exploration expenditurePre-licence costs are recognised in the income statement as incurred.

Exploration, evaluation and development expenditure, including the costs of acquiring licences, are capitalised on a project by project basis. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage which permits reasonable assessment of the existence of economically recoverable reserves.

Expenditure deemed to be unsuccessful is recognised in the income statement immediately.

Exploration, evaluation and development assets are assessed for impairment if facts and circumstances suggest that the carrying amount exceeds the recoverable amount.

The recorded cost of mineral exploration interests is based on cash paid, the assigned value of share consideration and exploration and development costs incurred.

(f) Acquisitions of assetsThe purchase method of accounting is used for all acquisitions of assets. Cost is measured as the fair value of the assets given up, shares issued or liabilities undertaken at the date of acquisition plus incidental costs directly attributable to the acquisition.

(g) Recoverable amount of non-current assetsThe recoverable amount of an asset is the net amount expected to be recovered through the cash inflows and outflows arising from its continued use and subsequent disposal.

Where the carrying amount of a non-current asset is greater than its recoverable amount, the asset is written down to its recoverable amount. The decrement in the carrying amount is recognised as an expense in the net profit or loss in the reporting period in which the recoverable amount write-down occurs.

(h) Property, plant and equipmentAll property, plant and equipment is stated at historical cost, including costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management, less depreciation, and any impairment.

Depreciation is calculated on a straight line basis to write off the net cost or revalued amount of each item of property, plant and equipment over its expected useful life to the entity. Estimates of remaining useful lives are made on a regular basis for all assets, with annual reassessments for major items. The expected useful lives are as follows:

Camp Amenities 10 years

IT equipment 3 years

Office furniture and fit out 5 years

Low value assets expensed in year of purchase

(i) Cash and cash equivalentsCash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.

(j) Issued capitalOrdinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

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(k) Interests in joint venturesThe consolidated Group’s interest in joint venture entities are brought to account using the equity method of accounting in the consolidated financial statements. The parent entity’s interests in joint venture entities are brought to account at cost. Details of the Group’s interests are shown in Note 12.

Where the Group contributes assets to the joint venture or if the Group purchases assets from the joint venture, only the portion of the gain or loss that is attributable to the Group’s share of the joint venture shall be recognised. The Group however will recognise the full amount of any loss when the contribution results in a reduction in the net realisable value of current assets or an impairment loss.

(l) ImpairmentThe carrying amounts of assets, other than inventories, derivatives and deferred tax assets are reviewed at each reporting date to determine if there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated, as discussed below.

An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the income statement, unless an asset has previously been re-valued, in which case the impairment loss is recognised as a reversal to the extent of that previous revaluation with any excess recognised through the income statement.

Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to cash-generating units and then to reduce the carrying amount of the other assets in the cash-generating unit on a pro-rata basis.

When a decline in the fair value of an available-for-sale financial asset has been recognised directly in equity and there is objective evidence that the asset is impaired, the cumulative loss that had been recognised directly in equity is recognised in the income statement even though the financial asset has not been derecognised. The amount of the cumulative loss that is recognised in the income statement is the difference between the acquisition cost and current fair value, less any impairment loss on that financial asset previously recognised in the income statement.

An impairment loss is reversed if there has been an indication that the impairment loss no longer exists and there has been a change in the estimates used to determine the recoverable amount. An impairment loss in respect of goodwill is not reversed. An impairment loss in respect of assets other than goodwill is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment had been recognised.

(m) Trade and other creditorsThese amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and which are unpaid. These amounts are unsecured and usually have 30 day payment terms.

(n) Goods and Services Tax (“GST”)Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the statement of financial position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.

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(o) Earnings per shareBasic earnings per share

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.

Diluted earnings per shareDiluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

(p) RevenueRevenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances, rebates and amounts collected on behalf of third parties.

The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Group’s activities as described below. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

Revenue is recognised for the major business activities as follows:

Sales RevenueSales revenue represents the revenue earned from the provision of goods and rendering of services to parties external to the consolidated entity and Company. Sales revenue is only recognised when the significant risks and rewards of ownership of the goods, including possession, have passed to the buyer and for services when a right to be compensated has been attained.

Interest IncomeInterest income is recognised on a time proportion basis using the effective interest method.

(q) Employee benefitsShort-term obligationsLiabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees’ services up to the end of the reporting period and measured at the amounts expected to be paid when the liabilities are settled. The liability for annual leave is recognised in the provision for employee benefits.

Other long-term employee benefit obligationsThe liability for long service leave and annual leave which is current and not able to be unconditionally deferred in which the employees render the related service is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the end of the reporting period on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. At current balance sheet date there are no long-term liabilities for these benefits.

Share-based paymentsShare-based compensation benefits are provided to employees via the Carabella Resources Employee Option Plan. Information relating to this scheme is set out in Note 27.

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The fair value of options granted under the Carabella Resources Employee Option Plan is recognised as an employee benefits expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the options granted, and the impact of any non-vesting conditions but excludes the impact of any service and non-market performance vesting conditions.

Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.

When the options are exercised the proceeds received net of any directly attributable transaction costs are credited directly to equity.

(r) Business combinationsThe acquisition method of accounting is used to account for all business combinations. The consideration transferred for the acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date.

The excess of the consideration transferred over the fair value of the Group’s share of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase.

(s) Operating leasesPayments made under operating leases are expensed on a straight-line basis over the term of the lease, except where an alternative basis is more representative of the pattern of benefits to be derived from the leased property. Lease incentives are recognised in the income statement as the integral part of total lease expense spread over the lease term.

(t) Rounding of amountsThe Company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments Commission, relating to the ‘rounding off’ of amounts in the financial statements. Amounts in the financial statements have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, the nearest dollar.

(u) New accounting standards and interpretations adoptedAt the date of authorisation of these financial statements, certain new accounting standards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been adopted early by the Group.

Management anticipates that all of the relevant pronouncements will be adopted in the Group’s accounting policies for the first period beginning after the effective date of the pronouncement. Information on new standards, amendments and interpretations that are expected to be relevant to the Group’s financial statements is provided below.

Certain other new standards and interpretations have been issued but are not expected to have a material impact on the Group’s financial statements.

(i) AASB 9 Financial Instruments, AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 and AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) (effective from 1 January 2015). AASB 9 Financial Instruments addresses the classification, measurement and derecognition of financial assets and financial liabilities. The standard is not applicable until 1 January 2015 but is available for early adoption. When adopted, this standard is expected to have no impact on the Group’s financial statements.

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(ii) AASB 13 Fair Value Measurement. AASB 13 does not affect which items are required to be fair-valued, but clarifies the definition of fair value and provides related guidance and enhanced disclosures about fair value measurements. It is applicable for annual periods beginning on or after 1 January 2013. The Group’s management have yet to assess the impact of this new standard.

(iii) Amendments to AASB 119 Employee Benefits. The AASB 119 Amendments include a number of targeted improvements throughout the Standard. The main changes relate to defined benefit plans. They:

• eliminate the ‘corridor method’, requiring entities to recognise all gains and losses arising in the reporting period in other comprehensive income;

• streamline the presentation of changes in plan assets and liabilities;

• enhance the disclosure requirements, including information about the characteristics of defined benefit plans and the risks that entities are exposed to through participation in them.

The amended version of AASB 119 is effective for financial years beginning on or after 1 January 2013. The Group does not have any defined benefit plans. Therefore, these amendments will have no significant impact on equity.

(iv) AASB 20 Accounting for stripping costs in the production phase of a surface mine will be adopted by the Company during the production phase. The new interpretation, applicable from 1 January 2013, sets out when production stripping should lead to the recognition of an asset, and how this asset should be initially and subsequently measured.

Consolidation StandardsA package of consolidation standards are effective for annual periods beginning or after 1 January 2013. Information on these new standards is presented below. The Group’s management has yet to assess the impact of these new and revised standards on the Group’s consolidated financial statements.

(i) AASB 10 Consolidated Financial Statements. AASB 10 supersedes the consolidation requirements in AASB 127 Consolidated and Separate Financial Statements and Interpretation 112 Consolidation – Special Purpose Entities. It revised the definition of control together with accompanying guidance to identify an interest in a subsidiary. However, the requirements and mechanics of consolidation and the accounting for any non-controlling interests and changes in control remain the same.

(ii) AASB 11 Joint Arrangements. AASB 11 supersedes AASB 131 Interests in Joint Ventures. It aligns more closely the accounting by the investors with their rights and obligations relating to the joint arrangement. It introduces two accounting categories (joint operations and joint ventures) whose applicability is determined based on the substance of the joint arrangement. In addition, AASB 131’s option of using proportionate consolidation for joint ventures has been eliminated. AASB 11 now requires the use of the equity accounting method for joint ventures, which is currently used for investments in associates.

(iii) AASB 12 Disclosure of Interests in Other Entities. AASB 12 integrates and makes consistent the disclosure requirements for various types of investments, including unconsolidated structured entities. It introduces new disclosure requirements about the risks to which an entity is exposed from its involvement with structured entities.

(iv) Consequential amendments to AASB 127 Separate Financial Statements and AASB 128 Investments in Associates and Joint Ventures. AASB 127 Consolidated and Separate Financial Statements was amended to AASB 127 Separate Financial Statements which now deals only with separate financial statements. AASB 128 brings investments in joint ventures into its scope. However, AASB 128’s equity accounting methodology remains unchanged.

(v) Parent entity financial informationThe financial information for the parent entity, Carabella Resources, disclosed in Note 28 has been prepared on the same basis as the consolidated financial statements.F

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2. Financial risk managementThe Group’s financial risk management approach seeks to minimise potential adverse effects due to the unpredictability of financial markets.

The Group does not actively engage in the trading of financial assets for speculative purposes nor does it write options. The most significant financial risks to which the Group is exposed are credit risk, liquidity risk and interest rate risk.

The Group holds the following financial instruments:

Consolidated

2013$’000

2012$’000

Financial assets

Cash and cash equivalents 10,186 24,966

Trade and other receivables 590 873

10,776 25,839

Financial liabilities

Trade and other payables 1,100 5,306

1,100 5,306

Financial risk management is carried out by the Group’s finance function. The Managing Director has been delegated the authority for designing and implementing financial risk management processes.

Credit riskCredit risk is the risk of loss from a counter-party failing to meet its financial obligations to the Company.

The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets is the carrying amount of those assets, net of any provision for doubtful debts, as disclosed in the balance sheet and notes to the financial statements.

Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions. For bank and financial institutions, only independently rated parties with a minimum rating of ‘A’ are accepted.

The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (if available).

Consolidated

2013$’000

2012$’000

Cash at bank and short-term bank deposits

A-1+ rating 10,186 24,966

Other than cash and cash equivalents, the most significant other financial assets are trade and other receivables. The Company does not have any material credit risk exposure to any single debtor or group of debtors under financial instruments entered into by the Group. There were no debts over 30 days at balance date that require impairment provisions. F

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Liquidity riskPrudent liquidity risk management implies maintaining sufficient cash and marketable securities to meet obligations when due.

The Group manages liquidity risk by continuously monitoring forecast and actual cash flows. The Group has financed its operations through capital raisings.

Maturities of financial liabilities

The table below analyses the Group’s financial liabilities into relevant maturity groupings.

Contractual maturities of financial liabilities

Less than 6 months

$’000

6 – 12months

$’000

Between1 and 2 years

$’000

Between2 and 5 years

$’000

Over5 years

$’000

Total contractual cash flows

$’000

Carrying amount

$’000

At 30 June 2013

Trade and other payables 1,100 – – – – – 1,100

At 30 June 2012

Trade and other payables 5,306 – – – – – 5,306

Cash flow and fair value interest rate riskAs the Group has no interest-bearing borrowings, the Group’s income and operating cash flows are not materially exposed to changes in market interest rates.

Interest rate riskInterest rate risk is managed by constant monitoring of interest rates. The Group’s interest rate exposure is limited to its cash and cash equivalent assets. The table below illustrates the sensitivity of interest to a reasonably possible change in interest rates of +/- 1%. These changes are considered to be reasonably possible based on observation of current market conditions.

Profit for the year $’000

+1% -1%

30 June 2013 102 (102)

30 June 2012 250 (250)

Fair value measurementsThe fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. The net fair value of financial assets and financial liabilities approximates their carrying values as disclosed in the balance sheet and notes to the financial statements.

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3. Critical accounting estimates and judgmentsThe directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Group.

Key judgments(i) Carrying value of exploration and evaluation expenses

The Group has capitalised exploration expenditure of $40,356,000 (2012: $31,197,000). This amount includes costs directly associated with exploration. These costs are capitalised until assessment of the tenement is complete and the results have been evaluated. These costs include an allocation of employee remuneration, materials, rig costs and payments to contractors. The expenditure is carried forward until such a time as the area of interest moves into the development phase, is abandoned, sold or sub-blocks relinquished. The ultimate recovery of the carrying value of exploration expenditure is dependent upon the successful development and commercial exploitation or, alternatively, sale of the interests in the tenements.

(ii) Valuation of options

AASB 2 requires the calculation of the fair value of performance rights or options granted to staff and for that amount to be expensed to the profit or loss (with corresponding credit to the share-based payment reserve) over the estimated life from grant date to vesting date. This necessitates the estimate of vesting date where vesting is subject to vesting conditions or otherwise.

Where applicable, the assessed fair value at grant date of share-based payments are determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the rights or option offer period, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the share or option offer period.

4. Segment information Identification of reportable segmentsThe Group has only one reporting segment following the divestment of the accommodation business in July 2012.

Description of segmentsThe consolidated entity had reportable operating segments until July 2012 as follows:

(a) Exploration

(b) Accommodation

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Accounting policies and inter-segment transactionsUnlessotherwisestated,allamountsreportedtotheManagingDirector,beingthechiefdecisionmakerwithrespecttooperating segments, are determined in accordance with accounting policies that are consistent to those adopted in the annual financial statements of the Group.

2013Exploration

$’000Accommodation1

$’000Consolidated

$’000

Revenue

Sales revenue – 195 195

Interest 681 – 681

Total segment revenue 681 195 876

Total group revenue 681 195 876

Segment result (7,962) (93) (8,055)

Reconciliation of segment result to group loss before tax:

Depreciation (340) – (340)

Loss for the year before tax (8,302) (93) (8,395)

Segment assets 53,242 – 53,242

Segment liabilities 1,216 – 1,216

2012

Revenue

Sales revenue – 1,403 1,403

Interest 1,401 – 1,401

Total segment revenue 1,401 1,403 2,804

Inter-segment sales elimination – (115) (115)

Total group revenue 1,401 1,288 2,689

Segment result (6,306) (789) (7,095)

Reconciliation of segment result to group loss before tax:

Depreciation (262) (63) (325)

Loss for the year before tax (6,568) (852) (7,420)

Segment assets 59,631 2,526 62,157

Segment liabilities 5,481 81 5,562

1. The accommodation segment was sold in July 2012.

5. Revenue

Consolidated

2013$’000

2012$’000

Interest 681 1,401

681 1,401For

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6. Income tax expenseConsolidated

2013$’000

2012$’000

(a) Numerical reconciliation of income tax expense to prima facie tax payable

Loss from operations before income tax benefit/(expense) (8,395) (7,420)

Tax at the Australian tax rate of 30% (2012: 30%) (2,518) (2,226)

Tax effect of amounts which are not deductible (taxable) in calculating taxable income:

Share based payments 821 524

Entertainment 1 1

Donations 1 –

Prior year adjustment (82) –

R&DTaxOffset (301) (208)

Net adjustment to deferred tax assets and liabilities for tax losses and temporary differences not recognised

(2078) (1,909)

Property, plant and equipment 39 –

Accruals (136) 228

Capital raising costs S40-880 deduction 96 (19)

Expenses taken to equity (223) (223)

Exploration expenditure (2,754) (6,976)

Deferred tax asset not recognised on tax losses 4,759 8,691

Income tax expense (295) (208)

Weighted average income tax rate (3.5%) (2.8%)

Income tax expense recognised directly in equity – –

(b) Unrecognised net deferred tax assets

Unusedtaxlossesforwhichnodeferredtaxassethasbeenrecognised 54,146 39,089

Temporary differences for which no net deferred tax asset has been recognised in the statement of financial position for the following items:

Property, plant and equipment 131 –

Accruals 493 945

Capital raising costs prior year S40-880 deduction 506 186

Expenses taken to equity 1,489 2,233

Exploration expenditure (40,376) (31,197)

16,389 11,256

Potential tax effect at 30% 4,917 3,377

The above deferred tax liability has not been recognised as there are sufficient tax losses for which no deferred tax asset has been recognised to offset the potential deferred tax liability.

Deferred tax assets which have not been recognised as an asset, will only be obtained if:

(i) the economic entity derives future assessable income of a nature and of an amount sufficient to enable the losses to be realised;

(ii) the economic entity continues to comply with the conditions for deductibility imposed by the law; and

(iii) no changes in tax legislation adversely affect the economic entity in realising the losses.

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(c) Tax consolidation legislationThe parent entity and its 100% subsidiaries have entered into a legally binding tax sharing agreement in accordance with Australian Law. The entities now form a Tax Group in Australia. The accounting policy in relation to this legislation is set out in Note 1(d).

The entities have also entered into a tax funding agreement under which the wholly-owned entities fully compensate Carabella Resources for any current tax payable assumed and are compensated by Carabella Resources for any current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to Carabella Resources under the tax consolidation legislation. The funding amounts are determined by reference to the amounts recognised in the wholly-owned entities financial statements.

The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head entity, which is issued as soon as practicable after the end of each financial year. The head entity may also require payment of interim funding amounts to assist with its obligations to pay tax instalments. The funding amounts are recognised as current intercompany receivables or payables.

(d) Franking creditsThe Group has no franking credits available.

7. Cash and cash equivalents

Consolidated

2013$’000

2012$’000

Cash at bank and in hand 10,186 24,966

(a) Risk exposureThe Group’s exposure to interest rate risk is discussed in Note 2. The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of cash and cash equivalents mentioned above.

8. Trade and other receivables

Consolidated

2013$’000

2012$’000

Current

Incometaxreceivable–R&DTaxOffset 295 208

Other debtors 295 665

590 873

9. Assets classified as held for sale and discontinued operations

Consolidated

2013$’000

2012$’000

Current assets

Inventory – 41

Exploration tenement held for sale 20 –

Property, plant and Equipment held for sale – 2,400

Current assets held for sale 20 2,441

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The Rathdowney exploration tenement (EPC 1249) was sold by the Company in August 2013. The tenement location and low prospectivity for development should a coal resource be defined justified its divestment.

The Clermont Hotel Motel and surrounding properties were sold during July 2012 for a total of $2,400,000 in cash. The operating loss of Central Queensland Accommodation Holdings Pty Ltd for the year is summarised as follows:

Consolidated

2013$’000

2012$’000

Revenue 195 1,288

Corporate overhead expenses (114) (505)

Cost of goods sold (51) (398)

Depreciation expenses (4) (63)

Employee benefits expenses (36) (353)

Profit on disposal of assets – 158

Impairment written down – (600)

Professional services expenses (83) (379)

Loss for the year from discontinued operations (93) (852)

10. Property, plant and equipment

Consolidated

Land and Buildings

$’000

Field and IT Equipment

$’000

Office furniture

and fit out$’000

Work in progress

$’000

Low value assets

$’000Total$’000

At 1 July 2012 – 761 522 – – 1,283

Additions – – – – –

Transfers 252 (252) – – –

Disposals – (7) (7)

Depreciation charge (43) (153) (144) – – (340)

At 30 June 2013 209 349 378 – – 936

At 30 June 2013

At Cost 252 636 720 – – 1,608

Accumulated depreciation (43) (287) (343) – – (672)

Net book amount 209 349 378 – – 936

At 1 July 2011 1,048 154 660 56 18 1,936

Additions 1,395 446 5 227 – 2,073

Transfer – 283 – (283) – –

Transfer to assets held for sale (2,400) – – – – (2,400)

Depreciation charge (43) (122) (143) – (18) (326)

At 30 June 2012 – 761 522 – – 1,283

At 30 June 2012

At Cost – 898 720 – – 1,618

Accumulated depreciation – (137) (198) – – (335)

Net book amount – 761 522 – – 1,283

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11. Exploration and evaluation assets

Consolidated

Note2013

$’0002012$’000

Mineral properties – cost 40,356 31,197

Reconciliation

Balance at the beginning of the year 31,197 7,945

Asset transferred for sale 9 (20) –

Impairment of exploration assets (1,534) –

Capitalised exploration/additions 10,713 23,252

Balance at the end of the year 40,356 31,197

Impairment of exploration assets comprises $724,000 for the fair value adjustment of the Rathdowney tenement (sold in August 2013) and an $810,000 write off for the Maroon tenement (relinquished in June 2013).

12. Investment accounted for using the equity method

Consolidated

2013$’000

2012$’000

Investment in joint venture 700 700

Carabella Resources has executed a Heads of Agreement with Endocoal Limited to associate themselves into an unincorporated 50/50 joint venture with the focus being on the exploration and assessment of minerals at the Pretoria Hill tenement.

13. Other assets

Consolidated

2013$’000

2012$’000

Security deposits 454 697

14. Trade and other payables

Consolidated

2013$’000

2012$’000

Trade payables 581 4,081

Sundry payables and accrued expenses 519 1,225

1,100 5,306

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15. Provisions

Consolidated

2013$’000

2012$’000

Employee benefits 116 256

Reconciliation of Provisions

Balance at beginning of year 256 144

Additional provisions 632 273

Usedduringtheyear (772) (161)

Balance at end of year 116 256

16. Contributed equity

Consolidated Consolidated

2013Shares

2012Shares

2013$

2012$

(a) Share capital

Ordinary shares – Fully paid 152,361,547 152,361,547 66,120,620 66,120,620

152,361,547 152,361,547 66,120,620 66,120,620

(b) Ordinary sharesOrdinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held.

On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.

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(c) OptionsAt balance date 31,106,111 options over ordinary shares of Carabella Resources were on issue.

Grant date Vesting date Expiry date Exercise price Number of options

12/05/2010 12/05/2010 12/05/2015 0.25 5,000,000

14/05/2010 14/05/2010 14/05/2015 0.25 3,000,000

25/05/2010 25/05/2010 25/05/2015 0.25 1,000,000

15/09/2010 15/09/2010 15/09/2015 0.25 100,000

24/09/2010 24/09/2010 24/09/2015 0.25 511,111

14/12/2010 14/12/2010 14/12/2015 0.25 1,500,000

07/06/2010 07/06/2010 07/06/2015 0.25 2,000,000

17/12/2010 17/12/2012 17/12/2013 0.50 135,000

17/12/2010 17/12/2012 17/12/2013 0.60 135,000

17/12/2010 17/12/2012 17/12/2013 0.70 135,000

17/12/2010 17/12/2012 17/12/2013 0.80 135,000

04/01/2011 04/01/2013 04/01/2014 0.50 18,750

04/01/2011 04/01/2013 04/01/2014 0.60 18,750

04/01/2011 04/01/2013 04/01/2014 0.70 18,750

04/01/2011 04/01/2013 04/01/2014 0.80 18,750

14/02/2011 14/02/2013 14/02/2014 1.94 200,000

14/02/2011 14/02/2013 14/02/2014 2.33 150,000

14/02/2011 14/02/2013 14/02/2014 2.72 150,000

14/03/2011 06/09/2013 06/09/2014 2.00 490,000

21/03/2011 06/09/2013 06/09/2014 2.00 220,000

11/04/2011 06/09/2013 06/09/2014 2.00 80,000

14/04/2011 06/09/2013 06/09/2014 2.00 160,000

14/04/2011 06/09/2013 06/09/2014 2.00 80,000

18/04/2011 06/09/2013 06/09/2014 2.00 510,000

26/04/2011 06/09/2013 06/09/2014 2.00 10,000

04/11/2011 04/11/2013 04/11/2014 2.00 20,000

02/05/2011 06/09/2013 06/09/2014 2.00 180,000

03/05/2011 06/09/2013 06/09/2014 2.00 590,000

16/05/2011 06/09/2013 06/09/2014 2.00 200,000

15/08/2011 30/01/2014 30/01/2015 2.00 160,000

06/09/2011 06/09/2013 06/09/2014 2.00 680,000

10/10/2011 30/09/2013 10/10/2014 2.00 3,500,000

20/12/2012 07/02/2013 24/04/2014 0.50 10,000,000

31,106,111

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(d) Capital risk managementThe Group’s objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can continue to provide returns for shareholders, benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

The capital structure of the Group includes cash, cash equivalents and equity attributable to equity holders comprising of contributed equity, reserves and accumulated losses. In order to maintain or adjust the capital structure, the Company may issue new shares or adjust the level of activities undertaken by the Company.

There are no externally imposed capital requirements.

The Group monitors capital on the basis of cash flow requirements for operational, and exploration and evaluation expenditure. The Group has no borrowings at 30 June 2013 (2012: $nil).

The Group’s strategy for capital risk management is unchanged from prior years.

17. Reserves and accumulated losses

Consolidated

2013$’000

2012$’000

(a) Reserve

Share-based payments reserve 7,330 3,799

Movements:

Balance 1 July 3,799 2,053

Share based payments expense 2,735 2,962

Capitalised 897 –

Reversal of fair value previously recognised on forfeited options (101) (1,216)

Balance 30 June 7,330 3,799

(b) Accumulated losses

Balance 1 July (13,325) (6,113)


Balance 30 June (21,425) (13,325)

Nature and purpose of reservesShare based payments reserve

The share-based payments reserve is used to recognise:

a. the grant date fair value of options issued to directors, employees and contractors but not exercised.

b. the grant date fair value of performance rights issued to directors, employees and contractors.

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18. Directors and key management personnel disclosures

Consolidated

2013$’000

2012$’000

(a) Directors and key management personnel compensation

Short-term benefits 1,386 2,229

Bonus/exertion payments 152 37

Post-employment benefits 90 131

Share-based payments 2,153 2,200

3,781 4,597

(b) Equity instrument disclosures relating to directors and key management personnel(i) Options provided as remuneration and shares issued on exercise of such options

Details of options provided as remuneration and shares issued on the exercise of such options, together with terms and conditions of the options, can be found in the remuneration report on page 32.

(ii) Option holdings

The number of options over ordinary shares in the Company held during the financial year by each director of Carabella Resources and key management personnel of the Group, including their personally related parties, are set out below.

2013

Name

Balance at the start of

the year

Granted during the

year as compensation

Exercised during

the year

Options forfeited

during the year

Balance at the end of

the year

Vested and exercisable

at the end of the year

Directors of Carabella Resources Limited

A R Amer 1,000,000 – – – 1,000,000 –

SRKidston 2,065,873 – – – 2,065,873 –

M J Addison 2,214,286 – – – 2,214,286 –

A R Fidock (appointed 5 February 2013)

– – – – – –

A J Quin 3,500,000 – – – 3,500,000 –

Key management personnel of the Group

W J Beatty 490,000 – – – 490,000 –

B W Robertson 590,000 – – – 590,000 –

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2012

Name


the year

Granted during the

year as compensation

Exercised during

the year

Options forfeited

during the year


the year

Vested and exercisable

at the end of the year

Directors of Carabella Resources

A R Amer 500,000 500,000 – – 1,000,000 –

SRKidston 2,065,873 – – – 2,065,873 –

RVGazzard 500,000 – – (500,000) – –

M J Addison 2,214,286 – – – 2,214,286 –

A J Quin – 3,500,000 – – 3,500,000 –

M F Jakeman 2,000,000 – – – 2,000,000 –


W J Beatty – 490,000 – – 490,000 –

B W Robertson – 590,000 – – 590,000 –

J W G Ebertson – 120,000 – – 120,000 –

D J Begley 390,000 100,000 – – 490,000 –

B C Robinson – 230,000 – (230,000) – –

G L Wallis – 490,000 – – 490,000 –

(iii) Share holdings

The number of ordinary shares in the Company held during the financial year by directors of Carabella Resources and key management personnel, including their personally related parties, are set out below. There were no shares granted during the reporting period as compensation.

2013

Name


the year

Received during the

year on the exercise of

options

Acquired during

the year


the year


SRKidston 2,423,000 – – 2,423,000

M J Addison 7,000,000 – – 7,000,000

A Fidock (appointed 5 February 2013) – – 68,831 68,831


W J Beatty 6,250 – – 6,250

B W Robertson – – 50,407 50,407

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2012

Name


the year

Received during the

year on the exercise of

options

Changes during

the year


the year


SRKidston 2,423,000 – – 2,423,000

M J Addison 7,000,000 – – 7,000,000

M F Jakeman 3,328,929 – – 3,328,929


W J Beatty 6,250 – – 6,250

D J Begley (resigned July 2012) 6,250 – – 6,250

B C Robinson 83,335 – – 83,335

J D Warat 41,900 – – 41,900

(c) Other transactions with directors and key management personnelTransactions with related parties are at arm’s length both in terms of prevailing market prices and commercial terms. Related party transactions involved the following directors and key management personnel:

• SRKidston*

Aggregate amounts of other transactions with directors and their director-related entities:

Consolidated

2013$’000

2012$’000

Equity raising fees – 1,551

Advisory fees* 60 60

Total other transactions with directors and director related entities 60 1,611

* DuringtheyearSRKidstonwasadirectorofHelmsecGlobalCapitalLimited.FeeshavebeenpaidtoHelmsecGlobalCapitalLimited by way of a monthly retainer fee for advisory services.

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19. Remuneration of auditorsDuring the year the following fees were paid or payable for services provided by the auditor, its related practices and non-related audit firms:

Consolidated

2013$’000

2012$’000

Grant Thornton

Audit services

Audit and review of financial reports 44 80

Other services

Taxation services 30 44

Total remuneration of Grant Thornton 74 124

It is the Group’s policy to employ Grant Thornton on assignments additional to their statutory audit duties where Grant Thornton’s expertise and experience with the Group are important. These assignments are principally tax advice and due diligence services. It is the Group’s policy to seek competitive tenders for all major consulting projects.

20. Contingent liabilitiesOn 20 December 2012, the Company entered into a Binding Term Sheet with Mr C Wallin to purchase the rights to sub-block CLER 3158A which is adjacent to the Company’s tenement at Bluff.

The terms of the transaction required that Mr Wallin be issued 10,000,000 unlisted options over the Company’s shares at an exercise price of $0.50 per share, expiring after 12 months in exchange for a list of due diligence material held by Mr Wallin in relation to sub-block CLER 3158A. This requirement was satisfied on 7 February 2013 and the options were issued to Mr Wallin.

The purchase price for the acquisition was $9.4 million to be paid in CLR shares as follows:

•Stage 1 Issues – on signing of the Definitive Document and satisfaction of all conditions precedent (Stage 1 Milestone), the Company will issue Mr Wallin 5,875,000 shares in the Company.

•Stage 2 Issues – on the fifth anniversary of the Stage 1 Milestone or the commencement of mining on the Mining Lease, whichever is the earlier, the Company will issue to Mr Wallin 11,750,000 shares in the Company.

•Stage 3 Issue – on the date of production for the first 1 Mt product coal from the Mining Lease, the Company will issue to Mr Wallin 5,875,000 shares in the Company.

The definitive documents were signed on 16 September 2013.

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21. Commitments for expenditure(a) Exploration commitmentsCommitments for payments under exploration permits for minerals in existence at the reporting date but not recognised as liabilities payable are as follows:

Consolidated

2013$’000

2012$’000

Within one year 1,967 1,144

Later than one year but not later than 5 years 2,484 2,347

Later than 5 years – –

Commitments not recognised in the financial statements 4,451 3,491

So as to maintain current rights to tenure of various exploration tenements, the Group will be required to outlay amounts in respect of tenement exploration expenditure commitments. These outlays, which arise in relation to granted tenements, are noted above. The outlays may be varied from time to time, subject to approval of the relevant government departments, and may be relieved if a tenement is relinquished.

Exploration commitments total $4,451,000 (2012: $3,491,000). They are calculated on the assumption that each tenement will be held for its full term. However commitments will in fact decrease materially as exploration advances and ground that is shown to be un-prospective is progressively surrendered. Expenditure commitments on prospective ground will be met out of existing funds, joint ventures, farm-outs, and new capital raisings.

(b) Capital commitmentsThere was no capital expenditure contracted for at the reporting date.

Consolidated

2013$’000

2012$’000

Within one year – 1,106

Later than one year and not later than five years – –

Later than five years – –

– 1,106

(c) Operating lease commitmentsThe Group leases property and equipment under non-cancellable operating leases expiring within 1 to 5 years. On renewal, the terms of the leases may be renegotiated.

Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:

Consolidated

2013$’000

2012$’000

Within one year 534 659

Later than one year and not later than five years 787 1,152

Later than five years – –

1,321 1,811

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22. Related parties(a) SubsidiariesInterests in subsidiaries are set out in Note 23.

(b) Key management personnelDisclosures relating to key management personnel are set out in Note 18.

(c) Transactions with other related partiesDisclosures relating to transactions with other related parties are set out in Note 18.

(d) Transactions with joint venture partiesDisclosures relating to transactions with other related parties are set out in Note 12.

23. SubsidiariesThe consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in Note 1(b):

Equity holding

Name of entityCountry of

incorporationClass of

shares2013

%2012

%

Central Queensland Accommodation Holdings Pty Ltd Australia Ordinary 100 100

CLR Infrastructure Pty Ltd Australia Ordinary 100 100

Bluff Coal Company Pty Ltd (formerly Grosvenor West Assets Pty Ltd) Australia Ordinary 100 100

Grosvenor West Management Pty Ltd Australia Ordinary 100 100

Grosvenor West Marketing Pty Ltd Australia Ordinary 100 100

24. Events occurring after reporting dateThe Department of Natural Resources and Mines offered Carabella Resources the grant of EPC 2119, Beechal Creek area, in July 2013. The EPC has been in application since 21 May 2010. The EPC expenditure obligations were considered excessive and the offer was declined on 29 August 2013.

At the date of this report there are no other matters or circumstances which have arisen since 30 June 2013 that have significantly affected, or may significantly affect:

• the Group’s operations in future financial years, or

• the results of those operations in future financial years, or

• the Group’s state of affairs in future financial years.

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25. Reconciliation of loss after income tax to net cash outflow from operating activities

Consolidated

2013$’000

2012$’000

Loss after income tax (8,100) (7,212)

Depreciation (continuing operations) 336 326

Depreciation (discontinued operations) 4 –

Write-off of Infrastructure costs – (373)

Exploration costs written off – 600

Profit on disposal of assets – (158)

Share based payments 2,735 1,746

Impairment of tenements 1,534 –

Loss on disposal of assets held for sale (discontinued operations) 89 –

Change in operating assets and liabilities:

Change in trade and other receivables for continuing operations 525 (233)

Decrease in inventory – 30

Change in trade and other payables (continuing operations) (191) 4,168

Change in trade and other payables (discontinued operations) (199) –

Net cash outflow from operating activities (3,266) (1,106)

26. Loss per share

Consolidated

2013Cents

2012Cents

(a) Basic and diluted loss per shareLoss from continuing operations attributable to ordinary equity holders (5.26) (4.59)

Loss from discontinued operations attributable to ordinary equity holders (0.06) (0.61)

Total loss attributable to ordinary equity holders (5.32) (5.20)

Consolidated

2013$’000

2012$’000

(b) Reconciliation of losses used in calculating loss per shareBasic and diluted earnings per share

Loss from continuing operations (8,007) (6,360)

Loss from discontinued operations (93) (852)

Total loss from operations (8,100) (7,212)

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2013Number

2012Number

(c) Weighted average number of shares used as the denominatorWeighted average number of ordinary shares used as the denominator in calculating basic earnings per share

152,361,547 138,556,400

Adjustments for calculation of diluted earnings per share:

Options (refer Note 26(d)). – –

Weighted average number of ordinary shares and potential ordinaryshares used as the denominator in calculating diluted earnings per share

152,361,547 138,556,400

(d) Information concerning the classification of securitiesOptionsOptions on issue are not included in the calculation of diluted earnings per share because they are not dilutive for the year ended 30 June 2013. These options could potentially dilute basic earnings per share in the future. Details relating to options are set out in Note 27.

27. Share-based payments(a) Employee option planThe Company’s Employee Share Option Plan was detailed in the Company’s Prospectus dated 22 November 2010 and forms part of the Company’s long term incentive plan. The Employee Option Plan is designed to provide long-term incentivesforemployeestodeliverlong-termshareholderreturns.Undertheplan,participantsaregrantedoptionswhich only vest if certain performance standards are met. Participation in the plan is at the Board’s discretion and no individual has a contractual right to participate in the plan or to receive any guaranteed benefits. In some cases the grant date of the options may occur after the employees to whom the equity instruments were granted have begun rendering services. In these situations the Company using the Black Scholes method estimates the grant date fair value of the equity instruments for the purpose of recognising the services received during the period between service commencement date and grant date. Once the grant date has been established, the Company revises the earlier estimate so that the amounts recognised for services received in respect of the grant are ultimately based on the grant date fair value of the equity instruments.

Options are granted under the plan for no consideration and do not carry any dividend or voting rights. When exercisable, each option is convertible into one ordinary share.

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Set out below are summaries of options granted under the employee option plan:

Grant date Expiry dateExercise price

$

Balance at start of year

Number

Granted during year

Number

Exercised during year

Number

Cancelled during

yearNumber

Balance at end of year

Number

Exercisable at end of

yearNumber

07/06/2010 07/06/2015 $0.25 2,000,000 – – – 2,000,000 –

17/12/2010 17/12/2013 $0.50 135,000 – – – 135,000 –

17/12/2010 17/12/2013 $0.60 135,000 – – – 135,000 –

17/12/2010 17/12/2013 $0.70 135,000 – – – 135,000 –

17/12/2010 17/12/2013 $0.80 135,000 – – – 135,000 –

04/01/2011 04/01/2014 $0.50 18,750 – – – 18,750 –

04/01/2011 04/01/2014 $0.60 18,750 – – – 18,750 –

04/01/2011 04/01/2014 $0.70 18,750 – – – 18,750 –

04/01/2011 04/01/2014 $0.80 18,750 – – – 18,750 –

14/02/2011 14/02/2014 $1.94 200,000 – – – 200,000 –

14/02/2011 14/02/2014 $2.33 150,000 – – – 150,000 –

14/02/2011 14/02/2014 $2.72 150,000 – – – 150,000 –

21/03/2011 06/09/2014 $2.00 220,000 – – – 220,000 –

14/03/2011 06/09/2014 $2.00 490,000 – – – 490,000 –

11/04/2011 06/09/2014 $2.00 80,000 – – – 80,000 –

14/04/2011 06/09/2014 $2.00 160,000 – – – 160,000 –

18/04/2011 06/09/2014 $2.00 510,000 – – – 510,000 –

26/04/2011 06/09/2014 $2.00 10,000 – – – 10,000 –

02/05/2011 06/09/2014 $2.00 180,000 – – – 180,000 –

03/05/2011 06/09/2014 $2.00 590,000 – – – 590,000 –

16/05/2011 06/09/2014 $2.00 200,000 – – – 200,000 –

06/09/2011 06/09/2014 $2.00 680,000 – – – 680,000 –

14/04/2011 06/09/2014 $2.00 80,000 – – – 80,000 –

10/10/2011 10/10/2014 $2.00 3,500,000 – – – 3,500,000 –

04/11/2011 04/11/2014 $2.00 140,000 – – (120,000) 20,000 –

15/08/2011 30/01/2015 $2.00 160,000 – – – 160,000 –

Total 10,115,000 – – (120,000) 9,995,000 –

Weighted average exercise price 1.586 – – – 1.581 –

The weighted average remaining contractual life of share options outstanding at the end of the period was 1 year (2012: 1.9 years). The weighted average fair value of the options issued was $1.581 (2012: $0.833).

Fair value of options grantedThe assessed fair value at grant date of options granted to the individuals is allocated equally over the period from grant date to vesting date. Fair values at grant date are independently determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option.

Due to the Company’s relatively short history of share transactions the future volatility of a similar listed entity to Carabella Resources was used.

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(b) Other optionsSet out below are summaries of options granted outside of the employee option plan:

Grant date Expiry dateExercise price

$

Balance at start of year

Number

Granted during year

Number

Exercised during year

Number

Expiredduring

yearNumber

Balance at end of year

Number

Exercisable at end of

yearNumber

12/05/2010 12/05/2015 0.25 5,000,000 – – – 5,000,000 –

14/05/2010 14/05/2015 0.25 3,000,000 – – – 3,000,000 –

25/05/2010 25/05/2015 0.25 1,000,000 – – – 1,000,000 –

15/09/2010 15/09/2015 0.25 100,000 – – – 100,000 –

24/09/2010 24/09/2015 0.25 511,111 – – – 511,111 –

14/12/2010 14/12/2015 0.25 1,500,000 – – – 1,500,000 –

07/02/2013 24/04/2014 0.50 – 10,000,000 – – 10,000,000 –

Total 11,111,111 10,000,000 – – 21,111,111 –

Weighted average exercise price 0.250 – – – 0.370 –

The model inputs for options granted during the year ended 30 June 2013 included:

(a) grant date: 7 February 2013

(b) options are granted as consideration for purchasing the rights to sub-block CLER 3158A which is adjacent to the Company’s tenement at Bluff

(c) exercise price: $0.500

(d) expiry date: 24 April 2014

(e) share price at grant date: $0.370

(f) expected price volatility of the Company’s shares: 68.133%

(g) expected dividend yield: 0%

(h) risk-free interest rate: 3.04%

(c) Expenses arising from share-based payment transactionsTotal expense arising from share-based payment transactions recognised during the period were as follows:

Consolidated

2013$’000

2012$’000

Options under employee option plan (granted) 2,735 1,746

Options under employee option plan (not yet granted) – –

Options outside of the employee option plan – –

2,735 1,746

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28. Parent entity information The following information relates to the parent entity, Carabella Resources. The information presented has been prepared using accounting policies that are consistent with those presented in Note 1.

Consolidated

2013$’000

2012$’000


Other comprehensive income, net of tax – –

Total comprehensive loss for the year (8,007) (6,194)

Financial position of the parent entity at the end of the year:

Current assets 10,796 27,514

Non-current assets 42,446 35,645

Total assets 53,242 63,159

Current liabilities 1,216 5,481

Non-current liabilities – –

Total liabilities 1,216 5,481

Issued capital 66,121 66,121

Accumulated losses (21,425) (12,242)

Share based payment reserve 7,330 3,799

Total equity 52,026 57,678

Contingent liabilitiesRefer to Note 20 for any contingent liabilities at 30 June 2013.

Exploration commitmentsCarabella Resources has the following exploration commitments, which are included in the Group’s exploration commitments as detailed in Note 21.

Consolidated

2013$’000

2012$’000

Within one year 1,967 1,144

Later than one year but not later than 5 years 2,484 2,347

Later than 5 years – –

Commitments not recognised in the financial statements 4,451 3,491

Capital commitmentsThere were no capital expenditure contracts entered into by the Carabella Resources at 30 June 2013.

29. Entity detailsThe registered office and principal place of business of the Company is:

Level 1, 1 Breakfast Creek RoadNewstead QLD 4006

Phone: (07) 3135 9900

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dirECTOrS’ dEClaraTiON

In the directors’ opinion:

(a) the financial statements and notes set out on pages 37 to 70 are in accordance with the Corporations Act 2001, including:

(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements, and

(ii) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2013 and of its performance for the financial year ended on that date, and

(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable, and

(c) the financial statements and notes comply with International Financial Reporting Standards as issued by the International Accounting Standards Board.

The directors have been given the declarations by the chief executive officer and the chief financial officer required by section 295A of the Corporations Act 2001.

This declaration is made in accordance with a resolution of the directors.

A R AmerCHAIRMAN

Brisbane, 30 September 2013

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iNdEpENdENT audiTOr’S rEpOrT

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SharEhOldEr iNfOrmaTiONfor the year ended 30 June 2013

The shareholder information set out below was applicable as at 8 October 2013.

1. Class of equity securities

Class of securities Number of holders

Ordinary shares 1,793

Unlistedoptions 51

2. Voting rights of equity securitiesThe voting rights attaching to each class of equity securities are set out below:

(a) Ordinary shares

On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

(b) Options

No voting rights.

3. Distribution of equity securitiesAnalysis of numbers of equity security holders by size of holding:

Class of equity security – ordinary shares.

Holders No. of shares %

1 – 1,000 189 107,807 0.068

1,001 – 5,000 450 1,421,622 0.898

5,001 – 10,000 346 2,818,068 1.781

10,001 – 100,000 676 23,716,562 14.988

100,001 – 9,999,999,999 132 130,172,488 82.264

Totals 1,793 158,236,547 100.000

There were 340 holders of less than a marketable parcel of ordinary shares based on the market price at 7 October 2013. The holders had an aggregate of 372,364 shares. Based on the closing price at 7 October 2013 of $0.21 an unmarketable parcel is one of 2,380 or fewer shares.

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4. Twenty largest quoted equity security holdersThe names of the twenty largest holders of quoted equity securities are listed below:

Holder name Number heldPercentage (%)

of quoted shares

HSBCCUSTODYNOMINEES(AUSTRALIA)LIMITED 27,745,741 17.53

CITICORP NOMINEES PTY LIMITED 22,255,387 14.07

INVIACUSTODIANPTYLIMITED<TRANSGLOBALMMCORPA/C> 7,540,000 4.77

JPMORGANNOMINEESAUSTRALIALIMITED 6,648,909 4.20

MR CHRISTOPHER IAN WALLIN 5,875,000 3.71

RIVONIAPTYLTD<RIVONIASUPERFUNDA/C> 3,492,529 2.21

RIVONIAPTYLIMITED<ADDISONFAMILYA/C> 3,400,000 2.15

HELMSECGLOBALMARKETSLIMITED 3,000,000 1.90

DRWANFUHUANG 2,576,611 1.63

WAVENETINTERNATIONALLIMITED 2,546,724 1.61

KFTCAPITALPTYLIMITED<GUNDIMAINEA/C> 2,423,000 1.53

ROCKYRISESPTYLIMITED 2,278,809 1.44

FULCRUMRESOURCESLIMITED 2,067,178 1.31

ILWELLA PTY LTD 1,654,954 1.05

NATIONAL NOMINEES LIMITED 1,496,583 0.95

MRSMIKAKOMURAKAMI-LATIMORE 1,425,000 0.90

MRPAULCLIFFORDADDISON 1,343,922 0.85

J D MINERALS PTY LIMITED 1,280,915 0.81

GJNHOLDINGSPTYLIMITED<PATTERSONBUSINESSA/C> 1,217,973 0.77

ILWELLA PTY LTD 1,000,000 0.63

101,269,235 64.00

Total Quoted Ordinary Shares 158,236,547 100.00

5. Restricted securitiesThe Company has no restricted securities.

6. Unquoted equity securities

Holder name Number of issue Number of holders

Unquotedoptions 31,106,111 51

7. Substantial holders of Issued Ordinary SharesSubstantial holders in the Company are set out below as 7 October 2013.

Class of restricted securities Number Percentage (%)

Republic Investment Mgt 10,586,235 6.7%

Northcape Capital 8,973,429 5.7%

8. Stock exchangeThe Company’s shares are only listed only on the ASX.

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COrpOraTE dirECTOry

DirectorsAndrew Amer (Chairman)

Michael Addison (Non-executive Director)

SimonKidston(Non-executiveDirector)

Allan Fidock (Non-executive Director)

Anthony Quin (Managing Director)

Company SecretaryKylieAnderson

Principal registered office in AustraliaLevel 1, 1 Breakfast Creek RoadNewstead QLD 4006Phone: (07) 3135 9900

Share registryBoardroom Pty LtdLevel7,207KentStreetSydney NSW 2000Phone: (02) 9290 9600

AuditorGrant Thornton Audit Pty Ltd

BankersANZ Banking Corporation

Stock exchange listingCarabella Resources Limited shares are listed on the Australian Securities Exchange (ASX Code: CLR).

Website addresswww.carabellaresources.com.au

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Carabella Resources LimitedRifle Media RM-1248

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www.carabellaresources.com.au

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for personal use only - asx2013/10/29 · in may 2012, the company announced the discovery of a...

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