Bathurst Resources Addresses ASX Compliance Query on Financial Reporting
BATHURST RESOURCES LIMITED. (BRL) Share Update August 2024 Monday 5th
Bathurst Resources Responds to ASX Compliance Query
Bathurst Resources Ltd (ASX: BRL) has issued a detailed response to the Australian Securities Exchange (ASX) regarding a compliance query on the use of 'consolidated cash' in its financial reports.
Instant Summary:
- Clarification on the use of 'consolidated cash' in financial reports.
- 65% of BT Mining's cash not readily available for BRL's use without unanimous approval.
- Explanation of the joint venture agreement conditions.
- BRL's stance on non-IFRS financial information presentation.
Background Information
The ASX raised concerns about the use of 'consolidated cash' in Bathurst Resources' 2024 First Half Results Presentation. The term was used to represent 100% of BRL's cash and 65% of BT Mining Limited's (BTM) cash.
ASX's query focused on whether 65% of BTM's cash was readily available for BRL's use as of 31 December 2023 and 31 January 2024. Bathurst Resources clarified that the cash was not readily available due to the need for unanimous approval from all BTM shareholders for any dividend distribution.
ASX's Questions and BRL's Responses
Bathurst Resources provided detailed responses to the ASX's questions:
- 65% of BTM's cash was not readily available for BRL's use on the specified dates.
- Unanimous approval from all BTM shareholders is required for any dividend distribution.
- The joint venture agreement explicitly requires unanimous approval for activities affecting BTM, including dividend payments.
- BRL believes that the use of 'consolidated cash' provides a combined operating view of BRL and BTM, enhancing the reader's understanding of their financial position.
- BRL does not consider the term 'consolidated cash' to be misleading, as it is clearly explained in the financial statements.
- BRL ensures that all disclosures clarify that 'consolidated cash' is a non-IFRS measure.
The clarification provided by Bathurst Resources is crucial for investors to understand the company's financial position accurately. The use of 'consolidated cash' as a non-IFRS measure aims to present a comprehensive view of BRL and BTM's operations. However, the need for unanimous approval for dividend distribution from BTM may raise concerns about liquidity and cash flow flexibility for BRL.
Investor Reaction:
Analysts are likely to have mixed reactions to this announcement. While the clarification provides transparency, the restriction on accessing BTM's cash may be viewed as a limitation. Investors may need to reassess their positions based on the company's cash flow dynamics and joint venture agreements.
Conclusion:
Investors should carefully review Bathurst Resources' financial disclosures and consider the implications of the joint venture agreement on the company's liquidity. Staying informed about future updates and strategic decisions by BRL will be essential for making well-informed investment choices.