September 13, 2018
The future of Moreton Resources’ proposed Kingaroy coal mine is in doubt following the company’s failure this week to shake off an $8.1 million tax debt.
A statement to the ASX on Thursday said the company’s four projects – which include the proposed Kingaroy mine – could be sold off or become part of a joint venture (see below).
Moreton Resources was hit with the claim by the Australian Taxation Office in July 2016.
It was a hangover from then-Cougar Energy’s failed underground coal gasification (UCG) project near Coolabunia which was shut down by the State Government after a well failed in March 2010.
The ATO had been seeking repayment of $1,003,455.22 for a 2012 research and development tax offset, and $7,182,269.41 for a 2013 R&D offset, both linked to the UCG project.
It is believed interest has been accruing against these original amounts owed to the ATO.
Moreton disputed the company owed the money and appealed to the Administrative Appeals Tribunal (AAT).
However, the AAT has now ruled that the activities claimed by Moreton Resources were not research and development, as defined by the 1997 Income Tax Assessment Act.
The tribunal upheld a decision by Innovation and Science Australia that UCG was a known and proven technology.
In a statement to the ASX on Wednesday, Moreton executive chairman Jason Elks said the company would “likely” appeal the AAT’s ruling, although no decision had yet been made by the Board.
“There are arrangements in place with the ATO which provide the company with time to have its rights determined through the appeals process before any monies become due and payable,” he said.
But the Moreton statement said a Federal Court appeal “could take months, if not years to resolve”.
“General interest provisions continue to accrue against the total sum owed to the ATO, and the Board will make an informed decision regarding the appeal over the coming weeks,” the statement continued.
“They will seek to minimise the cost to the company, including considering part payments of the debt, even if the appeal is lodged, to possibly minimise any future risk.”
In October last year, Mr Elks told the ASX that Moreton had entered into a binding agreement with the ATO should there be an adverse ruling.
Under this plan, 30 per cent of the debt would be paid within 90 days of an adverse ruling, 20 per cent within 180 days, 20 per cent within 270 days, 20 per cent within 360 days and the remainder within 450 days.
He said then that Moreton would not appeal any decision unless the company believed there had been fundamental errors in law or evidence had been misinterpreted.
Bowen Basin Coal Pty Ltd had agreed to act as guarantor for Moreton based upon a $20 million valuation of Moreton Resources’ Mackenzie coal asset near Blackwater.
On Thursday, recently appointed Moreton CEO Terry Bourke advised the ASX the company was considering various alternatives for its four major projects – which includes the Kingaroy mine.
These alternatives included “joint venture and sale”.
The statement said it had fielded “several approaches pertaining to its asset portfolio” and corporate and legal advisers had been appointed to consider and implement “strategic alternatives”.
However, Mr Bourke’s statement advised “there can be no assurance that a transaction will emerge”.
“In the meantime, Moreton remains focused on delivering value for all shareholders,” the statement continued.
The advisers appointed by Moreton are Aitken Murray Capital Partners (AMCP), Longreach Capital and Corrs Chambers Westgarth.
“AMCP/Longreach will be issuing invitations to express interest to a range of selected parties in the very near future. Interested parties are welcome to contact Angus Aitken or Darren Martin to seek inclusion in the process,” the statement concluded.
Moreton Resources requested a halt to trading in its shares on Monday ahead of the AAT announcement.