TIDMPDZ

RNS Number : 8879R

Prairie Mining Limited

11 March 2021

PRAIRIE MINING LIMITED

Interim Financial Report for the Half-Year Ended 31 December 2020

ABN 23 008 677 852

COR PORATE DIRECTORY

 
 DIRECTORS:                                 BANKERS: 
  Mr Ian Middlemas Chairman                  National Australia Bank Ltd 
  Mr Benjamin Stoikovich Director            Australia and New Zealand Banking 
  and CEO                                    Group Ltd 
  Ms Carmel Daniele Non-Executive 
  Director                                   SHARE REGISTRIES: 
  Mr Thomas Todd Non-Executive               Australia: 
  Director                                   Computershare Investor Services 
  Mr Mark Pearce Non-Executive               Pty Ltd 
  Director                                   Level 11, 172 St Georges Terrace 
                                             Perth WA 6000 
                                             Tel: +61 8 9323 2000 
  Mr Dylan Browne Company Secretary 
                                             United Kingdom: 
  PRINCIPAL OFFICES:                         Computershare Investor Services 
  London:                                    PLC 
  Unit 3C, 38 Jermyn Street                  The Pavilions, Bridgewater Road 
  London SW1Y 6DN                            Bristol BS99 6ZZ 
  United Kingdom                             Tel: +44 370 702 0000 
  Tel: +44 207 487 3900 
                                             Poland: 
  Australia (Registered Office):             Komisja Nadzoru Finansowego (KNF) 
  Level 9, 28 The Esplanade                  Plac Powstańców Warszawy 
  Perth WA 6000                              1, skr. poczt. 419 
  Tel: +61 8 9322 6322                       00-950 Warszawa 
  Fax: +61 8 9322 6558                       Tel: +48 22 262 50 00 
 
  PD Co sp. z. o.o. (Warsaw):                STOCK EXCHANGE LISTINGS: 
  Wiejska 17/11                              Australia: 
  00-480 Warszawa                            Australian Securities Exchange 
                                             - ASX Code: PDZ 
 
  Karbonia S.A. (Czerwionka - Leszczyny):    United Kingdom: 
  Ul. 3 Maja 44,                             London Stock Exchange (Main Board) 
  44-230 Czerwionka - Leszczyny              - LSE Code: PDZ 
 
  SOLICITORS:                                Poland: 
  Thomson Geer                               Warsaw Stock Exchange - GPW Code: 
                                             PDZ 
  AUDITOR: 
  Ernst & Young - Perth 
 
 
 CONTENTS 
 Directors' Report 
 Directors' Declaration 
 Consolidated Statement of Profit or Loss and other Comprehensive 
  Income 
 Consolidated Statement of Financial Position 
 Consolidated Statement of Changes in Equity 
 Consolidated Statement of Cash Flows 
 Notes to the Consolidated Financial Statements 
 To view the following sections, please refer to the full version 
  of the Interim Financial Report on our website at www.pdz.com.au 
  : 
 Auditor's Independence Declaration 
 Independent Auditor's Review Report 
 

DIRECTORS REPORT

The Directors of Prairie Mining Limited present their report on the Consolidated Entity consisting of Prairie Mining Limited ("Company" or "Prairie") and the entities it controlled during the half-year ended 31 December 2020 ("Consolidated Entity" or "Group").

DIRECTORS

The names and details of the Company's Directors in office at any time during the half-year and until the date of this report are:

Directors:

   Mr Ian Middlemas                               Chairman 
   Mr Benjamin Stoikovich                    Director and CEO 
   Ms Carmel Daniele                            Non-Executive Director 
   Mr Thomas Todd                                Non-Executive Director 
   Mr Mark Pearce                                   Non-Executive Director 
   Mr Todd Hannigan                             Alternate Director (resigned 5 February 2021) 

Unless otherwise shown, all Directors were in office from the beginning of the half-year until the date of this report.

OPERATING AND FINANCIAL REVIEW

Operations

Highlights during, and subsequent to, the half-year include:

-- International arbitration claims (Claim) against the Republic of Poland under both the Energy Charter Treaty and the Australia-Poland Bilateral Investment Treaty (Treaties) ongoing during the period with the proceedings having now been constituted and a quantum expert being appointed by the Company.

Prairie alleges that the Republic of Poland has breached its obligations under the Treaties through its actions to block the development of the Company's Jan Karski and Debiensko mines in Poland.

The Republic of Poland's actions have deprived Prairie of the entire value of its investments in Poland.

The Claim for damages may include but is not limited to the value of Prairie's historical expenditure in developing both the Jan Karski and Debiensko mines, lost profits and damages, which is linked to the net present value of both mines, and accrued interest related to any damages.

-- The Company's Claim against the Republic of Poland will be prosecuted through an established and enforceable legal framework with both parties agreeing to apply the United Nations Commission on International Trade Law Rules (UNCITRAL) to the proceedings.

-- The Company is well funded to pursue the Claim with the US$12.3 million Litigation Funding Agreement (LFA) in place and currently being drawn down to cover legal, tribunal and external expert costs and defined operating expenses associated with the Claim.

-- The Company completed a Share Purchase Plan (SPP) to raise A$4 million (before costs) for working capital requirements and business development opportunities.

-- Prairie continues its efforts to identify and assess other suitable new business opportunities, focused on the resources sector. The Company will make announcements to the market as appropriate.

Dispute with Polish Government

The Company's Claim against the Republic of Poland is being prosecuted through an established and enforceable legal framework, with Prairie and Poland agreeing to apply the UNCITRAL rules to the proceedings .

During the half-year, the proceedings for the Claim were constituted while the Company appointed a quantum expert, considered other expert proposals and continued with document collation for the Claim.

Prairie's claim for compensation may include, but will not be limited to:

-- The value of Prairie's historic expenditure in developing both the Jan Karski (Jan Karski) and Debiensko (Debiensko) mines;

-- Lost profits and damages that the Company has suffered as a result of Poland's acts and omissions, which is linked to the considerable Net Present Value of both mines at the time of Poland's international treaty breaches; and

-- Accrued interest related to any damages award and all costs associated with pursuing the Claims to Arbitration.

In March 2017, Prairie released the results of a JORC compliant Scoping Study for Debiensko prepared by independent international mining consultancy Royal HaskoningDHV. The Scoping Study demonstrated the technical viability and robust economics for the fully permitted Debiensko mine to be a large scale, lowest cost and long life premium hard coking coal supplier. Further details of the Scoping Study care contained in the Company's announcement dated 16 March 2017.

In March 2016, Prairie released the results of a JORC compliant Pre-Feasibility Study (PFS) for Jan Karski prepared by independent international mining consultancies Golder Associates and Royal HaskoningDHV. The PFS demonstrated the technical viability and robust economics of Jan Karksi to be developed as a large-scale long life strategic coal supplier. Further details about the PFS are contained in the Company's announcement dated 8 March 2016.

The Company is not able to make any further comment in relation to the potential quantum of any claim for compensation at this point. Please refer to ASX announcements dated 26 April 2018, 28 May 2018, 18 January 2019, 13 February 2019, 4 April 2019 and 31 December 2019 for further details regarding the Company's dispute with the Republic of Poland.

In July 2020, the Company announced it had executed a LFA for US$12.3 million with LCM. The facility is currently being drawn down to cover legal, tribunal and external expert costs and defined operating expenses associated with the Claim.

In September 2020, Prairie announced that it had formally commenced with the Claim by serving the Notices of Arbitration against the Republic of Poland.

Prairie's dispute alleges that the Republic of Poland has breached its obligations under the applicable Treaties through its actions to block the development of the Company's Jan Karski and Debiensko mines in Poland which effectively deprives Prairie of the entire value of its investments in Poland.

In February 2019, Prairie formally notified the Polish Government that there exists an investment dispute between Prairie and the Polish Government. Prairie's notification called for prompt negotiations with the Government to amicably resolve the dispute and indicated Prairie's right to submit the dispute to international arbitration in the event of the dispute not being resolved amicably. The Company remains open to resolving the dispute with the Polish Government amicably. However, as of the date of this report, no amicable resolution of the dispute has occurred, since the Polish Government has declined to participate in discussions related to the dispute and accordingly the Company has formerly submitted its Claim as discussed above.

Prairie's investment dispute with the Republic of Poland is not unique, with international media widely reporting that the political environment and investment climate in Poland has deteriorated since the change in Government in 2015. As a result, there are a significant number of International Arbitration claims being bought against Poland in the natural resources and energy sectors with damages claims ranging from US$120 million to over US$1.3 billion and includes Bluegas NRG Holding (Gas), Lumina Copper (Copper) and InvEnergy (wind farms).

Corporate

Busines s Development

A number of opportunities have been reviewed during the half-year, and the Company will continue in its efforts to identify and acquire suitable new business opportunities. The Company is currently focusing on new opportunities in the resources sector.

However, no agreements have been reached or licences granted and the Company is not able to assess the likelihood or timing of a successful acquisition or grant of any opportunities.

Share Purchase Plan

During the half-year , the Company completed a SPP to raise $4 million before costs for working capital requirements and business development opportunities.

Results of Operations

The net loss of the Consolidated Entity for the half-year ended 31 December 2020 was $242,096 (31 December 2019: $2,333,168). Significant items contributing to the current half-year loss and the substantial differences from the previous half-year include to the following:

(i) Arbitration related expenses of $1,367,071 (31 December 2019: nil) relating to the Claim against the Republic of Poland. This has been offset by the arbitration funding income of $1,339,120 (31 December 2019: nil);

   (ii)        Sale of land rights at Debiensko of 601,016 (31 December 2019: nil); 

(iii) Exploration and evaluation expenses of $749,104 (31 December 2019: $1,813,627), which is attributable to the Group's accounting policy of expensing exploration and evaluation expenditure incurred by the Group subsequent to the acquisition of rights to explore and up to the commencement of a bankable feasibility study for each separate area of interest;

(iv) Business development expenses of $119,746 (31 December 2019: $105,477) which includes expenses relating to the Group's review of new business and project opportunities plus also investor relations activities during the six months to 31 December 2020 including public relations, digital marketing, travel costs, attendances at conferences and business development consultant costs;

(v) Non-cash share-based payment reversal of $548,745 (31 December 2019: $60,189) due to incentive securities issued to key management personnel and other key employees and consultants of the Group as part of the long-term incentive plan to reward key management personnel and other key employees and consultants for the long-term performance of the Group. The expense results from the Group's accounting policy of expensing the fair value (determined using an appropriate pricing model) of incentive securities granted on a straight-line basis over the vesting period of the options and rights. During the half-year ended 31 December 2020, 6.23 million unvested performance rights lapsed with $661,876 being reversed from the reserve to profit and loss; and

(vi) Revenue of $166,442 (31 December 2019: $243,563) consisting of interest revenue of $11,052 (31 December 2019: $43,283) and the receipt of $155,390 (31 December 2019: $191,280) of gas and property lease income derived at Debiensko.

Financial Position

At 31 December 2020, the Group had cash reserves of $5,763,797 (30 June 2020: $2,566,518), and the US$12.3 million arbitration facility (US$10.8 million available at 31 December 2020) placing it in a good financial position to continue with the Claim and with its business development activities.

At 31 December 2020, the Company had net assets of $7,034,850 (30 June 2020: $3,998,552) an increase of approximately 76% compared with 30 June 2020. This is largely attributable to the increase in cash reserves, following the completion of the $4 million SPP, and the decrease in trade payables.

Business Strategies and Prospects for Future Financial Years

Prairie's strategy is to create long-term shareholder value. This includes pursuing the Claim against the Republic of Poland through international arbitration and the successful identification of other suitable business opportunities.

As discussed throughout this half-year report, various measures directed against Prairie by the Polish government in breach of Polish and international law with respect to the Company's permitting process and licenses, have blocked Prairie's pathway to any future production from its Polish projects.

To achieve its objective, the Group currently has the following business strategies and prospects:

-- Continue to enforce its rights through an established and enforceable legal framework in relation to international arbitration for the investment dispute between Prairie and the Polish Government that has arisen out of certain measures taken by Poland in breach of the Treaties;

   --       Continue to assess corporate options for Prairie's investments in Poland; and 
   --       Identify and assess other suitable business opportunities in the resources sector. 

All of these activities are inherently risky and the Board is unable to provide certainty of the expected results of these activities, or that any or all of these likely activities will be achieved. Furthermore, Prairie will continue to take all necessary actions to preserve the Company's rights and protect its investments in Poland, if and as required. The material business risks faced by the Group that could have an effect on the Group's future prospects, and how the Group manages these risks, include the following:

-- Litigation risk - All industries, including the mining industry, are subject to legal and arbitration claims. Specifically and as noted above, the Company is proceeding with it its Claim against the Republic of Poland, will strongly defend its position and will continue to take all relevant actions to pursue its legal rights regarding both the Debiensko and Jan Karski projects. There is however no certainty that the Claim will be successful. If the Claim is unsuccessful, then this may have a material impact on the value of the Company's securities .

-- The Company may be adversely affected by fluctuations in foreign exchange - Current and planned activities are predominantly denominated in Stirling and/or Euros and the Company's ability to fund these activates may be adversely affected if the Australian dollar continues to fall against these currencies. The Company currently does not engage in any hedging or derivative transactions to manage foreign exchange risk. As the Company's operations change, this policy will be reviewed periodically going forward.

-- The Company may not successfully acquire new projects - the Company may pursue and assess other new business opportunities in the resources sector. These new business opportunities may take the form of direct project acquisitions, joint ventures, farm-ins, acquisition of tenements/permits, or direct equity participation. The Company's success in its acquisition activities depends on its ability to identify suitable projects, acquire them on acceptable terms, and integrate the projects successfully, which the Company's Board is experienced in doing. However, there can be no guarantee that any proposed acquisition will be completed or be successful. If a proposed acquisition is completed the usual risks associated with a new project and/or business activities will remain.

SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD

On 5 February 2021, Mr Todd Hannigan resigned as an Alternate Director to Mr Thomas Todd.

Other than as disclosed above, there were no significant events occurring after balance date requiring disclosure.

AUDITOR'S INDEPENCE DECLARATION

Section 307C of the Corporations Act 2001 requires our auditors, Ernst and Young, to provide the Directors of Prairie Mining Limited with an Independence Declaration in relation to the review of the half-year financial report. This Independence Declaration is on page 17 and forms part of this Directors' Report.

Signed in accordance with a resolution of the Directors.

BEN STOIKOVICH

Director

10 March 2021

DIRECTORS' DECLARATION

In accordance with a resolution of the Directors of Prairie Mining Limited, I state that:

In the reasonable opinion of the Directors and to the best of their knowledge:

(a) the attached financial statements and notes thereto for the period ended 31 December 2020 are in accordance with the Corporations Act 2001, including:

(i) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and

(ii) giving a true and fair view of the financial position of the Group as at 31 December 2020 and of its performance for the half-year ended on that date; and

(b) The Directors Report, which includes the Operating and Financial Review, includes a fair review of:

(i) important events during the first six months of the current financial year and their impact on the half-year financial statements, and a description of the principal risks and uncertainties for the remaining six months of the year; and

(ii) related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Group during that period, and any changes in the related party transactions described in the last annual report that could have such a material effect; and

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

On behalf of the Board

BEN STOIKOVICH

Director

10 March 2021

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE HALF-YEARED 31 DECEMBER 2020

 
                                                Note        Half-Year       Half-Year 
                                                                Ended           Ended 
                                                          31 December     31 December 
                                                                 2020            2019 
                                                                    $               $ 
---------------------------------------------  ------  --------------  -------------- 
 
 Revenue                                        4 (a)         166,442         234,563 
 Other income                                   4 (b)       1,940,136               - 
 Exploration and evaluation expenses                        (749,104)     (1,813,627) 
 Employment expenses                                        (154,363)       (192,985) 
 Administration and corporate expenses                      (176,623)       (137,227) 
 Occupancy expenses                                         (330,512)       (283,195) 
 Share-based payment reversal                                 548,745          60,189 
 Business development expenses                              (119,746)       (105,477) 
 Arbitration related expenses                             (1,367,071)               - 
 Other expenses                                                     -        (95,409) 
 Loss before income tax                                     (242,096)     (2,333,168) 
 Income tax expense                                                 -               - 
---------------------------------------------  ------  --------------  -------------- 
 Net loss for the period                                    (242,096)     (2,333,168) 
=============================================  ======  ==============  ============== 
 
 Net loss attributable to members of 
  Prairie Mining Limited                                    (242,096)     (2,333,168) 
=============================================  ======  ==============  ============== 
 
 Other comprehensive income 
 Items that may be reclassified subsequently 
  to profit or loss: 
 Exchange differences on translation 
  of foreign operations                                      (91,391)           5,977 
---------------------------------------------  ------  --------------  -------------- 
 Total other comprehensive income for 
  the period                                                 (91,391)           5,977 
---------------------------------------------  ------  --------------  -------------- 
 Total comprehensive loss for the period                    (333,487)     (2,327,191) 
=============================================  ======  ==============  ============== 
 
 Total comprehensive loss attributable 
  to members of Prairie Mining Limited                      (333,487)     (2,327,191) 
=============================================  ======  ==============  ============== 
 
 Basic and diluted loss per share (cents 
  per share)                                                   (0.11)          (1.07) 
 

The above Consolidated Statement of Profit or Loss and other Comprehensive Income should be read in conjunction with the accompanying notes.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2020

 
                                           31 December        30 June 
                                                  2020 
                                                     $           2020 
                                  Note                              $ 
-------------------------------  ------  -------------  ------------- 
 
 ASSETS 
 Current Assets 
 Cash and cash equivalents                   5,763,797      2,566,518 
 Trade and other receivables        5          857,767      1,631,500 
 Total Current Assets                        6,621,564      4,198,018 
-------------------------------  ------  -------------  ------------- 
 
 Non-Current Assets 
 Property, plant and equipment      6        2,185,862      2,438,254 
 Total Non-Current Assets                    2,185,862      2,438,254 
-------------------------------  ------  -------------  ------------- 
 
 TOTAL ASSETS                                8,807,426      6,636,272 
-------------------------------  ------  -------------  ------------- 
 
 LIABILITIES 
 Current Liabilities 
 Trade and other payables                      658,058      1,601,109 
 Other financial liabilities      7 (a)        530,432        271,195 
 Provisions                       8 (a)         93,316        257,562 
 Total Current Liabilities                   1,183,623      2,129,866 
-------------------------------  ------  -------------  ------------- 
 
 Non-Current Liabilities 
 Other financial liabilities      7 (b)         23,859        166,981 
 Provisions                       8 (b)        466,911        340,873 
-------------------------------  ------  -------------  ------------- 
 Total Non-Current Liabilities                 490,770        507,854 
-------------------------------  ------  -------------  ------------- 
 
 TOTAL LIABILITIES                           1,772,576      2,637,720 
-------------------------------  ------  -------------  ------------- 
 
 NET ASSETS                                  7,034,850      3,998,552 
===============================  ======  =============  ============= 
 
 EQUITY 
 Contributed equity                 9       79,395,073     75,476,543 
 Reserves                          10          996,389      1,636,525 
 Accumulated losses                       (73,356,612)   (73,114,516) 
-------------------------------  ------  -------------  ------------- 
 TOTAL EQUITY                                7,034,850      3,998,552 
===============================  ======  =============  ============= 
 

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-YEARED 31 DECEMBER 2020

 
                                      Contributed   Share-based        Foreign    Accumulated         Total 
                                           Equity      Payments       Currency         Losses        Equity 
                                                        Reserve    Translation 
                                                                       Reserve 
                                                $             $              $              $             $ 
-----------------------------------  ------------  ------------  -------------  -------------  ------------ 
 
 Balance at 1 July 2020                75,476,543       548,745      1,087,780   (73,114,516)     3,998,552 
 Net loss for the period                        -             -              -      (242,096)     (242,096) 
 Other comprehensive income 
  for the half-year 
 Exchange differences 
  on translation of foreign 
  operations                                    -             -       (91,391)              -      (91,391) 
-----------------------------------  ------------  ------------  -------------  -------------  ------------ 
 Total comprehensive income/(loss) 
  for the period                                -             -       (91,391)      (242,096)     (333,487) 
 
 Issue of shares                        4,020,000                                                 4,020,000 
 Share issue costs                      (101,470)             -              -              -     (101,470) 
 Lapse of performance 
  rights                                        -     (661,876)              -              -     (661,876) 
 Recognition of share-based 
  payments                                      -       113,131              -              -       113,131 
-----------------------------------  ------------  ------------  -------------  -------------  ------------ 
 Balance at 31 December 
  2020                                 79,395,073             -        996,389   (73,356,612)     7,034,850 
===================================  ============  ============  =============  =============  ============ 
 
 Balance at 1 July 2019                75,491,413       887,600      1,143,823   (70,214,248)     7,308,588 
 Effect of adoption of 
  AASB 16                                       -             -              -       (95,137)      (95,137) 
 Balance at 1 July 2020 
  - restated                           75,491,413       887,600      1,143,823   (70,309,385)     7,213,451 
 Net loss for the period                        -             -              -    (2,333,168)   (2,333,168) 
 Other comprehensive income 
  for the half-year 
 Exchange differences 
  on translation of foreign 
  operations                                    -             -          5,977              -         5,977 
-----------------------------------  ------------  ------------  -------------  -------------  ------------ 
 Total comprehensive income/(loss) 
  for the period                                -             -          5,977    (2,333,168)   (2,327,191) 
 
 
 Lapse of performance 
  rights                                        -     (286,450)              -              -     (286,450) 
 Recognition of share-based 
  payments                                      -       226,261              -              -       226,261 
-----------------------------------  ------------  ------------  -------------  -------------  ------------ 
 Balance at 31 December 
  2019                                 75,491,413       827,411      1,149,800   (72,642,553)     4,826,071 
===================================  ============  ============  =============  =============  ============ 
 

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-YEARED 31 DECEMBER 2020

 
                                                  Half-Year       Half-Year 
                                                      Ended           Ended 
                                                31 December     31 December 
                                                       2020            2019 
                                                          $               $ 
--------------------------------------  ---  --------------  -------------- 
 
 Cash flows from operating activities 
 Payments to suppliers and employees            (1,457,652)     (2,368,792) 
 Proceeds from property lease and 
  gas sales                                         146,728         191,280 
 Interest revenue from third parties                 10,706          56,810 
 Net cash outflow from operating 
  activities                                    (1,300,218)     (2,120,702) 
-------------------------------------------  --------------  -------------- 
 
 Cash flows from investing activities 
 Payments for property, plant and                   (2,310)               - 
  equipment 
 Proceeds from sale of land rights                  878,569               - 
 Payments for arbitration related                 (426,236)               - 
  expenses 
--------------------------------------  ---  --------------  -------------- 
 Net cash inflow from investing                     450,023               - 
  activities 
 
 Cash flows from financing activities 
 Proceeds from issue of shares                    4,020,000               - 
 Payments for share issue costs                   (109,540)               - 
 Receipts from Arbitration Funding                  253,235               - 
 Payments for lease liabilities                   (113,673)       (179,882) 
 Net cash inflow/(outflow) from 
  financing activities                            4,050,022       (179,882) 
-------------------------------------------  --------------  -------------- 
 
 Net increase/(decrease) in cash 
  and cash equivalents                            3,199,827     (2,300,584) 
 Foreign exchange movements                         (2,548)               - 
 Cash and cash equivalents at the 
  beginning of the period                         2,566,518       6,628,371 
 Cash and cash equivalents at the 
  end of the period                               5,763,797       4,327,787 
===========================================  ==============  ============== 
 

The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF-YEARED 31 DECEMBER 2020

   1.         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 
   (a)        Statement of Compliance 

The interim consolidated financial statements of the Group for the half-year ended 31 December 2020 were authorised for issue in accordance with the resolution of the Directors.

This general purpose condensed financial report for the interim half-year reporting period ended 31 December 2020 has been prepared in accordance with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001.

This interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report of Prairie Mining Limited for the year ended 30 June 2020 and any public announcements made by the Group and its controlled entities during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

   2.         BASIS OF PREPARATION AND CHANGES TO THE GROUP'S ACCOUNTING POLICIES 
   (a)        Basis of Preparation of Half-Year Financial Report 

The consolidated financial statements have been prepared on the basis of historical cost. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars.

The Group has updated the classification of expenses to make the Statement of Profit or Loss and other Comprehensive Income more relevant to users of the financial report. This has resulted in the reclassification of some items in the prior year, however, has not impacted the reported loss for the year or earnings per share.

   (b)        New Standards, interpretations and amendments thereof, adopted by the Group 

The accounting policies and methods of computation adopted in the preparation of the consolidated half-year financial report are consistent with those adopted and disclosed in the company's annual financial report for the year ended 30 June 2020, other than as detailed below.

In the current period, the Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the "AASB") that are relevant to its operations and effective for annual reporting periods beginning on or after 1 July 2020.

New and revised Standards and amendments thereof and Interpretations effective for the current half-year that are relevant to the Group include:

   --           AASB 2018-6 Amendments to Australian Accounting Standards - Definition of a Business 
   --           AASB 2018-7 Amendments to Australian Accounting Standards - Definition of Material 

-- 2019-1 Amendments to Australian Accounting Standards - References to the Conceptual Framework

   --           Conceptual Framework and Financial Reporting 

The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

   (c)        Issued standards and interpretations not early adopted 

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective have not been adopted by the Company for the reporting period ended 31 December 2020. Those which may be relevant to the Company are set out in the table below, but these are not expected to have any significant impact on the Company's financial statements:

 
 Standard/Interpretation                              Application      Application 
                                                    Date of Standard     Date for 
                                                                         Company 
 AASB 2020-2 Amendments to Australian Accounting       1 January         1 July 
  Standards - Annual Improvements 2018-2020 and           2022             2022 
  Other Amendments (AASB 1, 3, 9, 116, 137 & 
  141) 
                                                  ------------------  ------------ 
 AASB 2020-1 Amendments to Australian Accounting       1 January         1 July 
  Standards - Classification of Liabilities as            2023             2023 
  Current or Non-Current 
                                                  ------------------  ------------ 
 
   3.         SEGMENT INFORMATION 

AASB 8 requires operating segments to be identified on the basis of internal reports about components of the Consolidated Entity that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance.

The Consolidated Entity operates in one segment, being mineral exploration. This is the basis on which internal reports are provided to the Chief Executive Officer for assessing performance and determining the allocation of resources within the Consolidated Entity.

 
                                                   Half-Year       Half-Year 
                                                    ended 31           Ended 
                                                    December 
                                                        2020 
                                                           $     31 December 
                                                                        2019 
                                                                           $ 
-----------------------------------------  ---  ------------  -------------- 
  4. REVENUE AND OTHER INCOME 
  (a) Revenue 
 Interest Income                                      11,052          43,283 
 Gas and property lease revenue                      155,390         191,280 
----------------------------------------------  ------------  -------------- 
                                                     166,442         234,563 
 =============================================  ============  ============== 
  (b) Other income 
 Arbitration finance facility income               1,339,120               - 
 Sale of land rights at Debiensko                    601,016               - 
-----------------------------------------  ---  ------------  -------------- 
                                                   1,940,136               - 
=========================================  ===  ============  ============== 
 
                                                                     30 June 
                                                 31 December            2020 
                                                        2020 
                                                           $               $ 
-----------------------------------------  ---  ------------  -------------- 
  5. TRADE AND OTHER RECEIVABLES 
 Trade receivables                                   250,680         229,758 
 Arbitration finance facility receivable             254,708         906,036 
 Accrued interest                                      2,654           2,308 
 Deposits/prepayments                                202,692         292,392 
 GST and other receivables                           147,033         201,006 
----------------------------------------------  ------------  -------------- 
                                                     857,767       1,631,500 
 =============================================  ============  ============== 
 
 
                                               Land and Buildings   Plant and  Right-of-use assets 
                                                                    equipment                           Total 
                                                                $           $                    $          $ 
  6. PROPERTY, PLANT AND EQUIPMENT 
Carrying amount at 1 July 2020                          1,997,596      58,099              382,559  2,438,254 
Additions                                                       -       2,310                    -      2,310 
Depreciation and amortisation                            (26,019)    (17,851)            (109,303)  (153,173) 
Foreign exchange differences                            (101,495)        (34)                    -  (101,529) 
---------------------------------------------  ------------------  ----------  -------------------  --------- 
Carrying amount at 31 December 2020                     1,870,082      42,524              273,256  2,185,862 
=============================================  ==================  ==========  ===================  ========= 
 - at cost                                              1,896,101     324,332              601,164  2,821,597 
 - accumulated depreciation and amortisation             (26,019)   (281,808)            (327,908)  (635,735) 
 
 
                                                       30 June 
                                         31 December      2020 
                                                2020 
                                                   $         $ 
---------------------------------  ---  ------------  -------- 
  7. OTHER FINANCIAL LIABILITIES 
  (a) Current: 
 Lease liability                             277,389   271,195 
 Deferred other income (1)                   253,043         - 
                                             530,432   271,195 
 =====================================  ============  ======== 
 
  (b) Non-Current: 
 Lease liability                              23,859   166,981 
                                              23,859   166,981 
 =====================================  ============  ======== 
 

Notes:

(1) Upfront contractual deposit amounts received for the sale of land rights at Debienkso.

 
                                                             30 June 
                                               31 December      2020 
                                                      2020 
                                                         $         $ 
---------------------------------------  ---  ------------  -------- 
  8. PROVISIONS 
  (a) Current Provisions: 
 Provisions for the protection against 
  mining damage at Debiensko (1)                    52,104   230,332 
 Annual leave provision                             41,212    27,230 
                                                    93,316   257,562 
 ===========================================  ============  ======== 
 
  (b) Non-Current Provisions: 
 Provisions for the protection against 
  mining damage at Debiensko (1)                   466,911   340,873 
                                                   466,911   340,873 
 ===========================================  ============  ======== 
 

Notes:

(1) As Debiensko was previously an operating mine, the Group has provided for the pay out of mining land damages to a surrounding land owner who has made a legitimate claim under Polish law prior to 1 January 2018.

 
                                                     31 December      30 June 
                                                            2020 
                                                               $         2020 
                                              Note                          $ 
-------------------------------------------  -----  ------------  ----------- 
  9. CONTRIBUTED EQUITY 
  (a) Issued and Unissued Capital 
 228,355,089 (30 June 2020: 212,275,089)       9 
  fully paid ordinary shares                   (b)    70,587,568   66,669,038 
 Loan Note 2 exchangeable into fully 
  paid ordinary shares at $0.46 per share, 
  net of transaction costs (1)                         2,600,012    2,600,012 
 Issue of CD Options (2)                               6,207,493    6,207,493 
-------------------------------------------  -----  ------------  ----------- 
 Total Contributed Equity                             79,395,073   75,476,543 
===========================================  =====  ============  =========== 
 

Notes:

(1) On 2 July 2017, Prairie and CD Capital completed an investment of US$2.0 million (A$2.6 million) in the form of the non-redeemable, non-interest-bearing convertible Loan Note 2. The Loan Note 2 is convertible into ordinary shares of Prairie at an issue price of A$0.46 per share.

Other key terms of the Loan Note 2 include the following:

   --             Loan Note 2 is non-interest bearing; 

-- Loan Note 2 is only repayable in an event of breach of the terms of the Loan Note 2 agreements;

   --             Loan Note 2 cannot be converted until after 1 April 2018 by either party; 

-- Prairie has the right, whilst no Event of Default exists, to convert all or part of the outstanding principal amount of Loan Note 2 into shares at the conversion price of $0.46 per share:

o in the event of an unconditional takeover of the Company (acquisition of a relevant interest in at least 50% of Prairie shares pursuant to a takeover bid or by an Australian court approving a merger by way of a scheme of arrangement); or

o at any time after 1 April 2018 provided that the 30 day VWAP of Prairie's shares exceeds the conversion price of $0.46 per share.

-- Loan Note 2 does not provide CD Capital with any right to participate in any new issues of securities.

-- CD Capital has the right to convert all or part of the outstanding principal amount of the Notes into shares at the conversion price of $0.46 per share provided that:

   o     Loan Note 1 has been converted into Prairie shares; and 
   o     The CD Options have been exercised into Prairie shares. 

-- If the Company reorganises its capital structure, such as by subdividing or consolidating the number of its shares, conducts a pro-rata offer to existing shareholders or distributes assets or securities to Shareholders, then the conversion price of $0.46 of Loan Note 2 will be adjusted so that the number of Prairie shares received by CD Capital on conversion of Loan Note 2 is the same as if Loan Note 2 were converted prior to relevant event.

-- The occurrence of an Event of Default entitles CD Capital to declare the principal amount of the Loan Note 2 immediately due and payable and exercise any other rights or remedies (including bringing proceedings) against the Company.

-- Each of the following events is an "Event of Default" in relation to the Loan Note 2:

o If any representation or warranty made by Prairie is false or misleading which is reasonably likely to be a Material Adverse Effect, and if such breach is capable of remedy, it is not remedied within 45 days;

o If the Company breaches a covenant or condition of the Notes or associated agreements which is a Material Adverse Effect, and if such breach is capable of remedy, it is not remedied within 45 days;

   o     An Insolvency Event occurs (i.e. winding up) in relation to the Group; 
   o     If the Group ceases to carry on a business; or 

o If the Group does not maintain the listing and trading of its shares on at least one of the ASX, LSE or WSE.

-- CD Capital may assign, transfer or encumber in whole or in part (in amounts of at least A$1 million) its rights under Loan Note 2 to any third party by giving written notice to Prairie provided the third party has provided a deed of assumption. Assignment of Loan Note 2 will not result in the assignment of the rights and obligations under the subscription agreement or investment agreement from Loan Note 1.

   --             A Material Adverse Effect means a material adverse effect on: 

o the Company or PDZ Holding's ability to perform any of their obligations under Loan Note 2, the and all other Transaction Document;

   o     the validity or enforceability of a Transaction Document; or 

o the assets, business, condition (financial or otherwise), prospects or operations of the Group.

   --             An Insolvency Event in relation to the Group means: 
   o     An order being made, or the Group passing a resolution, for its winding up. 

(2) On 25 May 2018, following conversion of Loan Note 1 the company issued the CD Options, which are exercisable at $0.60 each on or before 30 May 2021. The options are freely transferable provided the transfer complies with the Corporations Act 2001.

   (b)        Movements in fully paid ordinary shares during the past six months 
 
 
 
  Date                Details                         Number of Ordinary Shares                $ 
------------------  ---------------------------  ------------------------------  --------------- 
 
 1 Jul 2020          Opening Balance                                212,275,089       66,669,038 
 23 Sep 2020         Issue of shares                                 16,080,000        4,020,000 
 Jul 20 to Dec 20    Share issue expenses                                     -        (101,470) 
 31 Dec 2020         Closing Balance                                228,355,089       70,587,568 
==================  ===========================  ==============================  =============== 
                                                                   31 December 2020      30 June 
                                                                                  $         2020 
                                                      Note                                     $ 
-----------------------------------------------  -------------  -------------------  ----------- 
  10. RESERVES 
 Share-based payments reserve                        10 (a)                       -      548,745 
 Foreign currency translation reserve                                       996,389    1,087,780 
                                                                            996,389    1,636,525 
===============================================  =============  ===================  =========== 
 
 
   (a)        Movements in share-based payments reserve during the past six months 
 
                                                      Number of 
                                                    Performance 
 Date             Details                                Rights           $ 
---------------  -------------------------------  -------------  ---------- 
  1 Jul 20        Opening Balance                     6,225,000     548,745 
 Jul 20 to Dec    Lapse of unvested Performance 
  20               Rights                           (6,225,000)   (661,876) 
 Jul 20 to Dec 
  20              Share-based payments expense                -     113,131 
 31 Dec 20        Closing Balance                             -           - 
===============  ===============================  =============  ========== 
 

The Company also has other unlisted securities (not accounted for as share-based payments) on issue which includes the following:

   --    22,388,060 CD Options exercisable at $0.60 each expiring 30 May 2021; and 

-- A convertible loan note with a principal amount of $2,627,430, convertible into 5,711,805 ordinary shares at a conversion price of $0.46 per share with no expiry date (Loan Note 2).

   11.       CONTINGENT ASSETS AND LIABILITIES 

There have been no changes to contingent assets or liabilities since the date of the last annual report.

   12.       FINANCIAL INSTRUMENTS 

The Group's financial assets and liabilities, which comprise of cash and cash equivalents, trade and other receivables, trade and other payables and other financial liabilities, may be impacted by foreign exchange movements. At 31 December 2020 and 30 June 2020, the carrying value of the Group's financial assets and liabilities approximate their fair value.

   13.       DIVIDENDS PAID OR PROVIDED FOR 

No dividend has been paid or provided for during the half-year (31 December 2019: nil).

   14.       SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD 

On 5 February 2021, Mr Todd Hannigan resigned as an Alternate Director to Mr Thomas Todd

Other than as disclosed above, there were no significant events occurring after balance date requiring disclosure.

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END

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March 11, 2021 02:00 ET (07:00 GMT)

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