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FSE
FSE
FSE - Firestone Energy Limited - Reviewed Half-yearly financial statements for
the period ended 31 December 2011
FIRESTONE ENERGY LIMITED
(Incorporated in Australia)
(Registration number ABN 058 436 794)
Share code on the JSE Limited: FSE
Share code on the ASX: FSE
ISIN: AU000000FSE6
(SA company registration number 2008/023973/10)
("FSE" or "the Company")
ABN 71 058 436 794
Reviewed Half-yearly financial statements for the period ended 31 December 2011
DIRECTORS` REPORT
Your directors present their financial report on the group (referred to
hereafter as the group) consisting of Firestone Energy Limited and the entities
it controlled at the end of, or during the period to the half-year ended 31
December 2011.
Directors
The names of the Directors of Firestone Energy Limited throughout the reporting
period and at the date of this report are:
Timothy Tebeila (Appointed as Director 30 November 2011, and Chairman on 15
December 2011)
Non Executive Director (Chairman)
David Perkins
Non Executive Director (Deputy Chairman)
Pius Kasolo
Non Executive Director
Benjamin Mphahlele (Appointed 6 October 2011)
Non Executive Director
Kobus Terblanche (Appointed 6 October 2011)
Non Executive Director
Sizwe Nkosi (Resigned 25 November 2011)
Non Executive Director
Colin McIntyre (Resigned 24 January 2012)
Non Executive Director
Note: Directors were in office for the entire period unless otherwise stated.
Results of Operations
The net loss from continuing operations for the six months to 31 December 2011
amounted to $2,231,562 (half-year ended 31 December 2010: $2,363,693).
Review of Operations
During the half year ended 31 December 2011 the Company made significant
progress on key issues affecting the progress of the Waterberg Coal Project.
In September 2011 the Company announced that it had been granted the Mining
Right Approval over the Smitspan, Hooikraal, Massenberg and Minnasvlakte farms.
The execution of these approvals in August 2011, albeit later than expected, has
given the project a 30 year right to mine the above mentioned properties.
The Company made further progress with its off-taker, ESKOM, to negotiate
increased tonnages and extend the supply period. Negotiations on the Memorandum
of Understanding "MoU" are continuing and the Company is confident that the MoU
will be concluded with a positive outcome for Firestone.
The Company announced in the September quarter that it had offered an
exclusivity period to a major multinational power company for them to conduct a
due diligence on the Waterberg Coal Project. The Board of Firestone was
confident that the multinational power company would make an offer to Firestone
for the development of the Smitspan project. On 7 March 2012 Firestone announced
that The TATA Power Company (Ltd) had made an offer to acquire a 30% interest in
the Waterberg Coal Project.
The Company continues to progress the transfer of the section 11 mining right to
the incorporated JV. However this transfer is complex and requires a substantial
reorganisation of the existing Firestone corporate structure. The Company has
sought the assistance of expert consultants to ensure that the section 11
transfer is effected properly and as expeditiously as possible. It is expected
that the section 11 application will be lodged during the second quarter of
2012.
In addition from a funding perspective the Company raised $1.8m by way of a
private placement of approximately 150m shares at $0.012 per share to Linc
Energy Limited who now hold approximately 9.6% of Firestone. During the period
under review Sekoko Resources Pty Ltd, Firestone`s JV partner, funded a portion
of Firestones operational expenditure.
The Company is currently evaluating various proposals with regard to short term
funding for the Firestone Group. Once the board has finished with their review
and selected its preferred financing option, an announcement will be made to the
market.
On a Corporate level the Company appointed Mr David Knox as the CEO in the
September quarter in order that he may have single point accountability f or the
Waterberg Coal Project. Mr Tim Tebeila was firstly appointed as a Non executive
Director of Firestone in November 2011 and further as the Chairman on 15
December 2011, at the same time Mr David Perkins was appointed to the role of
Non Executive Deputy Chairman of Firestone.
The Company appointed two highly experienced and credentialed directors Mr Ben
Mphahlele and Mr Kobus Terblanche to the roles of Non Executive Directors of
Firestone in October 2011. Mr Sizwe Nkosi resigned from the Board in November
2011.
Post Balance Date Events
Offer from Cornerstone Investor
The Firestone and Sekoko joint venture (JV) has received a formal offer from The
Tata Power Company Ltd (Tata) to invest in the JV. If Firestone accepts the
offer and if all of the conditions precedent are satisfied, the ownership
interests of the JV will be adjusted so that Tata will hold 30% of the Project.
The proposed investment offer is based on 100% of the JV`s Waterberg Coal
Project being valued at ZAR1.045 billion (approximately AUD 130 million).
The highly conditional offer proposes that Tata enters into a new joint-venture
arrangement with Firestone and Sekoko to develop the Waterberg Coal Project and
envisages acquiring a 30% interest in the JV in two stages, being:
- an interim funding stage during which Tata will provide debt funding to the
Waterberg Coal Project that will be converted into equity upon completion of the
final stage; and
- a final funding stage during which Tata will subscribe for shares in the JV
company.
The Board is currently reviewing the offer and will communicate its findings and
proposed further actions to shareholders in a future announcement.
Auditor`s Independence Declaration
A copy of the auditor`s independence declaration as required under Section 307C
of the Corporations Act is set out below and forms part of this report.
This report is made in accordance with a resolution of directors.
Dated at Perth this 15th day of March 2012.
Signed in accordance with a resolution of the Directors.
Timothy Tebeila
Chairman
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the Half-Year Ended 31 December 2011
Note December December
2011 2010
$ $
Continuing operations
Interest revenue 27,854 36,030
Other income 12,917 4,023
Occupancy costs (13,800) (55,962)
Legal fees (176,456) (497,465)
Administration costs (286,670) (218,027)
Travel and accommodation (65,793) (23,798)
Directors fees (130,004) (130,000)
Employee & consultant costs (6,530) (39,822)
Listing and share registry costs (118,916) (135,270)
Finance costs 2 (1,474,164) (1,303,402)
Loss before income tax (2,231,562) (2,363,693)
Income tax expense - -
Loss from continuing operations (2,231,562) (2,363,693)
Loss for the half-year attributable to
the members of Firestone Energy Limited (2,231,562) (2,363,693)
Other comprehensive income for the half-year
Foreign currency translation reserve (10,200,250) (2,124,377)
Total comprehensive income for the
half-year attributable to the members of
Firestone (12,431,812) (4,488,070)
Energy Limited
Loss per share
Loss per share on loss from continuing
operations attributable to the ordinary
equity holders of the company
Basic loss per share (cents per share) (0.08) (0.10)
For JSE requirements, the Headline Earnings per Share ("HEPS") has been
calculated to be the equivalent of the basic loss per share as displayed above.
The above consolidated statement of comprehensive income should be read in
conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2011
Note December June
2011 2011
$ $
Current assets
Cash and cash equivalents 4 883,636 1,892,188
Trade and other receivables 19,634 47,067
Prepayments 5,776 15,043
Total current assets 909,046 1,954,298
Non-current assets
Property, plant and equipment 4,788,576 5,374,513
Interest in joint venture 8 76,911,782 85,197,758
Receivables 968,168 108,618
Total non-current assets 82,668,526 90,680,889
Total assets 83,577,572 92,635,187
Current liabilities
Trade and other payables 2,384,713 3,432,033
Payable to JV partner 9 3,029,559 -
Convertible note 3 8,688,525 1,330,587
Total current liabilities 14,102,797 4,762,620
Non-current liabilities
Convertible note 3 12,139,521 20,372,463
Total non-current liabilities 12,139,521 20,372,463
Total liabilities 26,242,318 25,135,083
Net assets 57,335,254 67,500,104
Equity
Issued capital 7 75,402,271 73,135,309
Reserves (6,320,788) 3,879,461
Accumulated losses (11,746,229) (9,514,666)
Total Equity 57,335,254 67,500,104
The above consolidated statement of financial position should be read in
conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the Half-Year Ended 31 December 2011
Issued Accumulated Foreign
capital losses currency
translation
reserve
$ $ $
Balance at 1 July 2011 73,135,309 (9,514,666) (202,184)
Comprehensive income for
the half-year
Loss for the half-year - (2,231,562) -
Foreign currency translation reserve - - (10,200,250)
Total comprehensive income
for the half-year - (2,231,562) (10,200,250)
Transactions with owners in
their capacity as owners:
Issue of shares, net of
transaction costs 1,966,962 - -
Conversion of convertible notes 300,000 - -
Total transactions with owners 2,266,962 - -
Balance at 31 December 75,402,271 (11,746,228) (10,402,434)
2011
Share Total
based
payment
reserve
$ $
Balance at 1 July 2011 4,081,645 67,500,104
Comprehensive income for
the half-year
Loss for the half-year - (2,231,562)
Foreign currency translation reserve - (10,200,250)
Total comprehensive income for the half-year - (12,431,812)
Transactions with owners in their capacity as owners:
Issue of shares, net of transaction costs - 1,966,962
Conversion of convertible notes - 300,000
Total transactions with owners - 2,266,962
Balance at 31 December 4,081,645 57,335,254
2011
The above consolidated statement of changes in equity should be read in
conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
For the Half-Year Ended 31 December 2011
Issued Accumulated Foreign
capital losses currency
translation
reserve
$ $ $
Balance at 1 July 2010 62,704,850 (4,752,372) 2,128,620
Comprehensive income for
the half-year
Loss for the half-year - (2,363,693) -
Foreign currency translation reserve - - (2,124,377)
Total comprehensive income
for the half-year - (2,363,693) (2,124,377)
Transactions with owners in
their capacity as owners:
Conversion of convertible
notes 1,400,000 - -
Total transactions with owners 1,400,000 - -
Balance at 31 December 64,104,850 (7,116,065) 4,243
2010
Share Total
based
payment
reserve
$ $
4,081,645 64,162,743
Balance at 1 July 2010
Comprehensive income for the half-year
Loss for the half-year - (2,363,693)
Foreign currency translation reserve - (2,124,378)
Total comprehensive income for the half-year - (4,488,071)
Transactions with owners in their capacity as owners:
Conversion of convertible notes - 1,400,000
Total transactions with owners - 1,400,000
Balance at 31 December 4,081,645 61,074,673
2010
The above consolidated statement of changes in equity should be read in
conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Half-Year Ended 31 December 2011
December December
Note 2011 2010
$ $
Cash flows from operating activities
Payments to suppliers and employees (509,961) (883,917)
Interest paid (256,629) (69,233)
Interest received 27,854 36,030
Net cash used in operating activities (738,736) (917,120)
Cash flows from investing activities
Project expenditure - JV`s (1,038,795) (1,909,339)
Acquisition of surf ace rights - JV`s - (2,232,441)
Payments to acquire fixed assets (1,635) -
Sale of office plant and equipment - 3,545
Net cash used in investing activities (1,040,430) (4,138,235)
Cash flows from financing activities
Proceeds from issue of shares 1,966,962 -
Proceeds from the issue of convertible
notes - 4,676,920
Transaction cost - (116,920)
Repayment of borrowings (1,196,034) -
Net cash from financing activities 770,928 4,560,000
Net decrease in cash and cash equivalents (1,008,238) (495,355)
Cash and cash equivalents at 1 July 1,892,188 2,130,542
Effect of exchange rate differences on
the balance of cash held in foreign currencies (314) (28,137)
Cash and cash equivalents at 31
December 4 883,636 1,607,050
The above consolidated statement of cash flows should be read in conjunction
with the accompanying notes.
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the Period Ended 31 December 2011
1 Basis of preparation of half-year financial report
These general purpose financial statements for the half-year reporting period
ended 31 December 2011 have been prepared in accordance with Accounting Standard
AASB 134 Interim Financial Reporting and the Corporations Act 2001.
These half-year financial statements do not include all the notes of the type
normally included in annual financial statements. Accordingly, these financial
statements are to be read in conjunction with the annual financial statements
for the year ended 30 June 2011 and any public announcements made by Firestone
Energy Ltd during the half-year reporting period in accordance with the
continuous disclosure requirements of the Corporations Act 2001.
The accounting policies adopted are consistent with those of the previous
financial year and corresponding interim reporting period unless otherwise
stated.
Impact of standards issued but not yet applied by the entity
There have been no new accounting standards, or amendments to, that would have
any impact on the group.
Going Concern
The financial report has been prepared on the going concern basis, which
contemplates the continuity of normal business activity and the realisation of
assets and the settlement of liabilities in the normal course of business.
The Group has incurred a comprehensive loss after tax for the half-year ended 31
December 2011 of $2,231,562 (2010 half-year: $2,363,693) and experienced net
cash outflows from operating activities of $738,736 (2010 half-year: $917,120).
There is a working capital deficit at 31 December 2011 of $13,193,751 (30 June
2011: $2,808,322).
The Company is currently in negotiation for a further working capital facility.
Further to this, as seen in the statement of financial position, Firestone has
the aid of JV partner Sekoko Resources in assisting with project funding.
The Company is also currently in negotiation with the convertible noteholders
with a view to restructure the loan and potentially convert some of the
outstanding liability into equity. The Board is confident that this negotiation
will progress to a satisfactory conclusion.
However, the Directors recognise that the ability of the Group to continue as a
going concern and to pay its debts as and when they fall due is dependent on the
ability to secure further working capital by the issue of additional equities,
debt, or entering into negotiations with third parties regarding farm out of
assets.
The Directors believe that at the date of signing the financial report there are
reasonable grounds to believe that having regard to matters set out above, the
group will be able to raise sufficient funds to meet its obligations as and when
they fall due.
December December
2011 2010
$ $
2. Expenses - Finance Costs
Interest expense 1,145,634 976,329
Amortisation of transaction costs 328,530 327,073
Total finance costs 1,474,164 1,303,402
December June
2011 2011
$ $
3. Borrowings
Loans carried at amortised cost
Convertible notes (face value)* 25,000,000 24,700,000
Conversions (3,700,000) (3,400,000)
Transaction costs - carrying amount (606,507) (927,537)
20,693,493 20,372,463
Other borrowings 134,553 1,330,587
Total borrowings 20,693,493 20,372,463
*The total draw-down facility of $25 million has now been fully utilised. These
notes have a maturity date of 3 years from the date of issue and can be
converted at any time before the maturity date bearing interest at a fixed rate
of 10% per annum. The effective interest rate on the liability will also be 10%.
The notes commence maturing in October 2012, with an amount of $8,553,973
classified as current in the statement of financial position.
For convertible notes issued prior to 13 July 2010 the conversion price will be
$0.04, all notes issued subsequent to that date will have a conversion price set
to the higher of $0.02 or the 7.5% discount to the 5day VWAP.
4. Cash & Cash Equivalents
Cash at bank 883,636 1,892,188
5. Dividends
No dividend has been paid during or is recommended for the financial period
ended 31 December 2011.
6. Commitments and Contingencies
There have been no significant changes to commitments or contingencies since 30
June 2011.
31 December
2011
Shares $
7. Issued Capital
Reconciliation of movement in issued capital
attributable to equity holders of the Company.
Movements in Ordinary Shares
At 1 July 2011 - Opening Balance 2,781,314,361 73,135,309
18 Jul - Share Placement Plan 12,025,000 226,414
3 Aug - Note conversion 15,000,000 300,000
8 Sept - Placement (Linc Energy) 150,336,423 1,804,037
Share issue costs (63,489)
Ordinary shares at 31 December 2011 2,958,675,784 75,402,271
Movements in Options
At 1 July 2011 - Opening Balance 305,162,267 4,081,645
18 Jul - Issued as free attaching 6,012,500 -
Options at 31 December 2011 311,174,767 4,081,645
The unlisted options on issue as at 31 December 2011 are as follows:
Number Under Option Expiry Exercise Price
30,000,000 30 Nov 2012 $0.05
110,000,000 30 May 2013 $0.06
96,904,767 30 June 2013 $0.06
25,875,000 30 June 2014 $0.06
48,395,000 31 May 2014 $0.04
311,174,767
No option holder has any right under the options to participate in any other
share issue of the Company
31 December
2010
Shares $
Reconciliation of movement in issued capital
attributable to equity holders of the Company.
Movements in Ordinary Shares
At 1 July 2010 - Opening Balance 2,331,300,464 62,704, 850
4 Oct - Note conversion 30,000,000 600,000
8 Nov - Note conversion 39,411,766 800,000
Ordinary shares at 31 December 2010 2,400,712,230 64,104,850
Movements in Options
At 1 July 2010 - Opening Balance 262,779,767 4,081,645
Options at 31 December 2010 262,779,767 4,081,645
8. Interest in Joint Venture
The Company has previously entered into a Joint Venture Agreement (T1) with
Sekoko Coal (Pty) Ltd for a coal project in the Waterberg locality in South
Africa comprising the Olieboomfontein and Vetleegte properties. An amendment was
later made to the Joint Venture agreement, to allow Checkered Flag (a wholly
owned subsidiary) to earn up to an interest of 60% in the T1 Joint Venture, in
which it had a full participation at 31 December 2011.
In addition to T1, Lexshell Trading (a wholly owned subsidiary) entered into a
second Joint Venture Agreement (T2) with Sekoko Coal (Pty) Ltd for a coal
project in the Waterberg locality in South Africa, comprising the Smitspan,
Hooikraal, Massenberg and Minnasvlakte properties. An addendum was later made to
include additional properties Duikerfontein and Swanepoelpan (T3). At 31
December Firestone Energy had completed its performance conditions and was
entitled to 60% in the project.
Half-year ended Year ended
Dec 2011 June 2011
$ $
Opening balance 85,197,758 75,849,117
Acquisition of properties via equity - 5,400,000
Project costs 319,576 9,603,304
Foreign exchange movements (8,605,552) (5,654,663)
76,911,782 85,197,758
Closing balance
The above amounts include Joint Venture agreements T1, T2 and T3. The balance
represents total amounts capitalised as exploration and evaluation expenditure.
9. Related Party Transactions
During the period, there has been a significant change with Non-Executive
Directors. Newly appointed directors shall be remunerated consistently with the
past directors, as disclosed in the 30 June 2011 financial statements.
Firestones JV partner, Sekoko Coal, is now considered a related party due to the
appointment of common director Tim Tebeila. At 31 December Firestone had a
payable of $3,029,559 owing to Sekoko, relating to Firestone`s share of JV
expenditure.
There are no other material changes to related parties since 30 June 2011.
10. Segment Information
Management has determined that the consolidated group has one reportable
segment, being coal exploration in South Africa. As the Company is focused on
mineral exploration, the Board monitors the consolidated group based on actual
versus budgeted exploration expenditure incurred by area of interest.
This internal reporting framework is the most relevant to assist the Board with
making decisions regarding the consolidated group and its ongoing exploration
activities, while also taking into consideration the results of exploration work
that has been performed to date.
Segment information provided to the Board:
December December
2011 2010
$ $
Revenue from external sources - -
Reportable segment loss (168,160) (510,864)
Reportable segment assets 81,573,995 81,754,574
A reconciliation of reportable segment loss to operating loss before income tax
is provided as follows:
December December
2011 2010
$ $
Total loss for reportable segment (168,160) (510,864)
Unallocated:
Interest revenue 27,386 36,030
Other income 2,376 4,023
Occupancy costs (13,800) (55,962)
Legal fees (176,456) (140,746)
Administration costs (133,685) (218,551)
Directors fees (130,004) (130,000)
Employee & Consultant costs (67,388) (77,336)
Listing and share registry costs (118,916) (135,270)
Travel & accommodation (54,779) (23,275)
Finance cost (1,398,136) (1,111,742)
Loss before income tax from continuing operations (2,231,562) (2,363,693)
11. Events occurring after Balance Date
Offer from Cornerstone Investor
The Firestone and Sekoko joint venture (JV) has received a formal offer from The
Tata Power Company Ltd (Tata) to invest in the JV. If Firestone accepts the
offer and if all of the conditions precedent are satisfied, the ownership
interests of the JV will be adjusted so that Tata will hold 30% of the Project.
The proposed investment offer is based on 100% of the JV`s Waterberg Coal
Project being valued at ZAR1.045 billion (approximately AUD 130 million).
The highly conditional offer proposes that Tata enters into a new joint-venture
arrangement with Firestone and Sekoko to develop the Waterberg Coal Project and
envisages acquiring a 30% interest in the JV in two stages, being:
- an interim funding stage during which Tata will provide debt funding to the
Waterberg Coal Project that will be converted into equity upon completion of the
final stage; and
- a final funding stage during which Tata will subscribe for shares in the JV
Company.
The Board is currently reviewing the offer and will communicate its findings and
proposed further actions to shareholders in a future announcement.
With exceptions to the above, there have been no other matters or circumstances
that have arisen since 31 December 2011 that have significantly affected, or may
significantly affect:
(i) The consolidated entity`s operations in future financial years, or
(ii) The results of those operations in future financial years, or
(iii) The consolidated entity`s state of affairs in future financial years.
DIRECTORS` DECLARATION
The Directors of the Company declare that:
1. The consolidated financial statements and notes are in accordance with the
Corporations Act 2001 and:
a. comply with Accounting Standard AASB 134: Interim Financial Reporting,
Corporations Regulations 2001 and any other mandatory professional reporting
requirements; and
b. give a true and f air view of the consolidated entity`s financial position as
at 31 December 2011 and of its performance for the half -year then ended on that
date.
2. in the Directors` opinion there are reasonable grounds to believe that the
Company will be able to pay its debts as and when they become due and payable.
This declaration is made in accordance with a resolution of the Board of
Directors.
Dated at Perth this 15th day of March 2012.
Timothy Tebeila
Chairman
15 March 2012
The Directors
Firestone Energy Limited
Suite B9, 431 Roberts Road
SUBIACO WA 6008
Dear Sirs,
DECLARATION OF INDEPENDENCE BY WAYNE BASFORD TO THE DIRECTORS OF
FIRESTONE ENERGY LIMITED
As lead auditor for the review of Firestone Energy Limited for the half-year
ended 31 December 2011, I declare that to the best of my knowledge and belief,
there have been:
- no contraventions of the auditor independence requirements of the Corporations
Act 2001 in relation to the review; and
- no contraventions of any applicable code of professional conduct in relation
to the review.
This declaration is in respect of Firestone Energy Limited and the entities it
controlled during the period.
Wayne Basford
Director
BDO Audit (WA) Pty Ltd
Perth, Western Australia
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association
of independent entities which are all members of BDO (Australia) Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and
BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent
member firms. Liability limited by a scheme approved under Professional
Standards Legislation (other than for the acts or omissions of financial
services licensees) in each State or Territory other than Tasmania.
INDEPENDENT AUDITOR`S REVIEW REPORT
TO THE MEMBERS OF FIRESTONE ENERGY LIMITED
Report on the Half-Year Financial Report
We have reviewed the accompanying half-year financial report of Firestone Energy
Limited, which comprises the consolidated statement of financial position as at
31 December 2011, and the consolidated statement of comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash
flows for the half-year ended on that date, notes comprising a summary of
significant accounting policies and other explanatory information, and the
directors` declaration of the consolidated entity comprising the disclosing
entity and the entities it controlled at the half-year`s end or from time to
time during the half-year.
Directors` Responsibility for the Half-Year Financial Report
The directors of the disclosing entity are responsible for the preparation of
the half-year financial report that gives a true and fair view in accordance
with Australian Accounting Standards and the Corporations Act 2001 and for such
internal control as the directors determine is necessary to enable the
preparation of the half-year financial report that is free from material
misstatement, whether due to fraud or error.
Auditor`s Responsibility
Our responsibility is to express a conclusion on the half-year financial report
based on our review. We conducted our review in accordance with Auditing
Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed
by the Independent Auditor of the Entity, in order to state whether, on the
basis of the procedures described, we have become aware of any matter that makes
us believe that the half-year financial report is not in accordance with the
Corporations Act 2001 including: giving a true and fair view of the consolidated
entity`s financial position as at 31 December 2011 and its performance for the
half-year ended on that date; and complying with Accounting Standard AASB 134
Interim Financial Reporting and the Corporations Regulations 2001. As the
auditor of Firestone Energy Limited, ASRE 2410 requires that we comply with the
ethical requirements relevant to the audit of the annual financial report.
A review of a half-year financial report consists of making enquiries, primarily
of persons responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially less in scope
than an audit conducted in accordance with Australian Auditing Standards and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Independence
In conducting our review, we have complied with the independence requirements of
the Corporations Act 2001. We confirm that the independence declaration required
by the Corporations Act 2001, which has been given to the directors of Firestone
Energy Limited, would be in the same terms if given to the directors as at the
time of this auditor`s report.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association
of independent entities which are all members of BDO (Australia) Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and
BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent
member firms. Liability limited by a scheme approved under Professional
Standards Legislation (other than for the acts or omissions of financial
services licensees) in each State or Territory other than Tasmania.
Conclusion
Based on our review, which is not an audit, we have not become aware of any
matter that makes us believe that the half-year financial report of Firestone
Energy Limited is not in accordance with the Corporations Act 2001 including:
(a) giving a true and fair view of the consolidated entity`s financial position
as at 31 December 2011 and of its performance for the half-year ended on that
date; and
(b) complying with Accounting Standard AASB 134 Interim Financial Reporting and
Corporations Regulations 2001.
Emphasis of Matter
Without modifying our conclusion, we draw attention to Note 1 in the half-year
financial report which indicates that Firestone Energy Limited incurred a net
cash outflow from operating activities of $738,736 (2010 half-year: $917,120)
and has a working capital deficiency of $13,193,751 (30 June 2011: $2,808,322).
Firestone Energy Limited is in the process of developing a mine and requires
significant equity raising or loan funds in order to develop the area of
interest and fund working capital. These conditions, along with other matters as
set forth in Note 1, indicate the existence of a material uncertainty which may
cast significant doubt about the consolidated entity`s ability to continue as a
going concern and therefore, the consolidated entity may be unable to realise
its assets and discharge its liabilities in the normal course of business.
BDO Audit (WA) Pty Ltd
Wayne Basford
Director
Perth, Western Australia
Dated this 15th day of March 2012
CORPORATE DIRECTORY
DIRECTORS SOLICITORS TO THE COMPANY
Tim Tebeila Ashurst
Non Executive Director (Chairman) Lev el 36, Grosvenor Place
225 George Street
David Perkins Sydney NSW 2000
Non Executive Director (Deputy Chairman)
SHARE REGISTRY
Pius Kasolo
Non Executive Director Computershare Investor Services
Level 2, Reserve Bank Building
Benjamin Mphahlele 45 St Georges Terrace
Non Executive Director PERTH WA, 6000
Ph 08 9323 2000
Kobus Terblanche Fax 08 9323 2033
Non Executive Director
AUDITORS
COMPANY SECRETARY BDO Audit (WA) Pty Ltd
38 Station Street
Jerry Monzu SUBIACO WA 6008
REGISTERED OFFICE STOCK EXCHANGE LISTING
Suite B9, 431 Roberts Road Securities of Firestone Energy
SUBIACO, WA 6008 Limited are dual listed on the
Australian Stock Exchange and the
Johannesburg Stock Exchange.
Telephone: (08) 9287 4600
Facsimile: (08) 9287 4655 ASX & JSE CODE:
"FSE"
Johannesburg
15 March 2012
Sponsor
River Group
Date: 15/03/2012 16:44:41 Produced by the JSE SENS Department.
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