Operating Segments Identification of reportable segments

2014

$ Tax at the domestic rates applicable to profits in the countries where the Group operates (12,846,961) (19,671,269) Add (less) tax effect of:

! Non-deductible expenses 9,209,600 8,165

! Black hole project (71,720) (71,720)

! Unrealised gains on financial liabilities - (579,429)

! Income not subject to tax (1,578,087) -

! Deferred tax assets not recognised 5,288,118 20,336,791

Income tax attributable to entity 950 22,538

The above reconciliation is prepared by aggregating separate reconciliations for each national jurisdiction.

The Australia, Singapore and Mongolia corporate tax rates were 30% (2014: 30%), 17% (2014: 17%) and 25% (2014:

25%) respectively for the year ended 30 June 2015.

b) Accumulated tax losses

The Group had accumulated tax losses as at 30 June 2015 of $60,804,814 and $12,053,482 for Australia and Mongolia respectively (2014: Australia - $51,877,165 and Mongolia - $10,916,312). No net deferred tax asset has been recognised on the basis that utilisation of tax losses is not currently considered probable.

The taxation losses will be realisable only if:

i. the Group derives future assessable income of a nature and of an amount sufficient to enable the benefit from the losses and deductions to be realised;

ii. the Group continues to comply with the conditions for deductibility imposed by the law; and

iii. no changes in tax legislation adversely affect the Group in realising the benefit from the deductions for the losses.

Note 7 Operating Segments Identification of reportable segments

The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors (chief operating decision-makers) in assessing performance and determining the allocation of resources.

The Group is managed primarily on the basis of product category and service offerings as the diversification of the Group's operations inherently have notably different risk profiles and performance assessment criteria. Operating segments are therefore determined on the same basis.

Reportable segments disclosed are based on aggregating operating segments, where the segments are considered to have similar economic characteristics and are also similar with respect to the following:

! the products sold and/or services provided by the segment;

! the geographical location of the segment; and

! any external regulatory requirements.

Performance is measured based on segment profit before income tax, as included in the internal financial reports.

Types of products and services by reportable segment

The principal products and services of each of these operating segments are as follows:

Segment Activities

Australia Coal exploration and development activities within Australia.

Mongolia Coal exploration and extraction activities within Mongolia including the transition from developer to producer

Basis of accounting for purposes of reporting by operating segments a) Accounting policies adopted

All amounts reported to the Board of Directors, being the chief operating decision-makers with respect to operating segments, are determined in accordance with accounting policies that are consistent to those adopted in the annual financial statements of the Group.

A number of inter-segment transactions, receivables, payables or loans occurred during the period, or existed at balance date. In addition, corporate re-charges were allocated to the reporting segments.

b) Segment assets

Where an asset is used across multiple segments, the asset is allocated to the segment that receives the majority of economic value from the asset. In the majority of instances, segment assets are clearly identifiable on the basis of their nature and physical location.

c) Segment liabilities

Liabilities are allocated to segments where there is direct nexus between the incurrence of the liability and the operations of the segment. Borrowings and tax liabilities are generally considered to relate to the Group as a whole and are not allocated. Segment liabilities include trade and other payables, and certain direct borrowings.

d) Segment performance

Australia Mongolia Unallocated Total

2015

$

2014

$

2015

$

2014

$

2015

$

2014

$

2015

$

2014

$ Reconciliation of segment net loss to consolidated net loss after tax:

Administration and operating costs - - (2,227,084) (2,401,442) - - (2,227,084) (2,401,442)

Exploration permits for coal rent (784,850) (800,492) - - - - (784,850) (800,492)

Interest revenue 10,967 93,865 9,498 18,203 - - 20,465 112,068

Other revenue 1,187 665,278 - - - 4,877,271 1,187 5,542,549

Withholding tax expense - (1,034,251) - (2,000,000) - - - (3,034,251)

Employee costs - - - - (2,914,910) (2,838,790) (2,914,910) (2,838,790)

Exploration deposit write-off - - - (2,066,867) - - - (2,066,867)

Other costs - 2,422,186 (927,708) (38,655,492) (14,935,785) (36,233,306) (15,863,493)

Reversal of impairment/(Impairment) of exploration and evaluation assets 563,353 (44,220,177) (847,801) - - - (284,448) (44,220,177)

Loss on disposal of subsidiary (1,000,313) - - - - - (1,000,313) -

Share of profit of associated company 98,350 - - - - - 98,350 -

Income taxes - - (950) (22,538) - - (950) (22,538)

Net loss after tax per Statement of Comprehensive Income (1,111,306) (45,295,777) (644,151) (7,400,352) (41,570,402) (12,897,304) (43,325,859) (65,593,433)

e) Segment assets and liabilities

Australia Mongolia Unallocated Total

2015

$

2014

$

2015

$

2014

$

2015

$

2014

$

2015

$

2014

$ Segment assets

Plant and equipment 153,100 200,665 128,987,449 70,569,376 - - 129,140,549 70,770,041

Exploration and evaluation assets 48,984,850 52,000,000 9,588,638 27,392,258 - - 58,573,488 79,392,258

Trade and other receivables 297,542 983,885 5,611,479 2,056,520 - - 5,909,021 3,040,405

Cash and cash equivalents

189,847 8,800,284 497,140 340,687 - -

686,987 9,140,971

Intangible assets 32,797 37,280 384,459 293,530 - - 417,256 330,810

Investment in an associate 1,390,404 - - - - - 1,390,404 -

Other assets 418,707 556,790 1,808,113 1,447,569 - - 2,226,820 2,004,359

Total assets per Statement of Financial Position 51,467,247 62,578,904 146,877,278 102,099,940 - - 198,344,525 164,678,844

Segment Liabilities

Trade and other payables 16,319,663 6,517,182 16,599,927 5,812,792 - - 32,919,590 12,329,974

Borrowings 42,819,386 25,629,895 95,040,759 78,564,843 - - 137,860,145 104,194,738

Other liabilities - 168 - 28,132 - - - 28,300

Provisions 53,696 - 1,015,547 660,152 - 130,151 1,069,243 790,303

Total liabilities per Statement of Financial Position 59,192,745 32,147,245 112,656,233 85,065,919 - 130,151 171,848,978 117,343,315

f) Cash flow information

The following table details the Group's trade and other receivables exposure to credit risk (prior to collateral and other credit enhancements) with ageing analysis and impairment provided for. Amounts are considered as 'past due' when the debt has not been settled, within the terms and conditions agreed between the Group and the customer or counter party to the transaction. Receivables that are past due are assessed for impairment by ascertaining solvency of the debtors and are provided for where there is objective evidence indicating that the debt may not be fully repaid to the Group.

At 30 June 2015, the ageing analysis of receivables is as follows:

Gross Group does not hold any financial assets with terms that have been renegotiated, but which would otherwise be past due or impaired.