Australian regulator queried Tigers Realm Coal over Russian Arctic project

Bob Burton

A little less than two weeks ago Tigers Realm Coal – a small Australian company with big plans to build a controversial coal project in the Russian Arctic – revealed a A$171.8 million writedown in the value of its two coal assets.

A few days later Australia’s corporate regulator, the Australian Securities Investment Commission (ASIC), issued a media release in which it “welcomed the decision” by the Australian Stock Exchange-listed company to writedown the asset value of its Amaam coal project.

The media release – which went unreported at the time – went on to state that:

“ASIC had previously made enquiries to Tigers regarding the value of the Amaam project in Tigers’ 31 December 2014 financial report as part of its financial reporting surveillance program. ASIC raised a number of concerns with Tigers, including the deterioration in forecast coking coal prices.”

ASIC also noted that back in early November 2014 it had specifically alerted directors and auditors the valuation of assets was one of its “areas of focus” for financial reports for the period to December 31 2014.

ASIC’s November 7 2014 media release said that it:

“encourages preparers and auditors of financial reports to carefully consider the need to impair goodwill and other assets. ASIC continues to find impairment calculations that use unrealistic cash flows and assumptions, as well as material mismatches between the cash flows used and the assets being tested for impairment.

Fair values attributed to financial assets should also be based on appropriate models, assumptions and inputs.

Particular focus should be given to assets of companies in extractive industries and mining support services, as well as asset values that may be affected by digital disruption.” [emphasis added]

Why Tigers Realm Coal didn’t writedown the value of its Amaam project in its December 2014 statements remains unexplained.

Bob Burton is the Editor of CoalWire, a weekly bulletin on global coal industry developments. (You can sign up for it here.) Bob Burton’s Twitter feed is here.