TIDMPOL
RNS Number : 2448L
Polo Resources Limited
21 December 2018
This announcement contains inside information as defined in
Article 7 of the EU Market Abuse Regulation No 596/2014 and has
been announced in accordance with the Company's obligations under
Article 17 of that Regulation.
21 December 2018
Polo Resources Limited
("Polo" or the "Company")
RESULTS FOR THE YEARED 30 JUNE 2018
Polo Resources Limited (AIM: POL), the multi-sector investment
company with interests in oil, gold, coal, copper, phosphate,
lithium, iron and vanadium, today announces results for the year
ended 30 June 2018.
Financial Summary:
-- Group net assets as at 30 June 2018 increased by 28% to USD60.28 million
(30 June 2017: USD47.22 million)
-- Combined total of cash, receivables, payables, listed and unlisted equity investments of
USD62.0 million as of 14 December 2018 (30 June 2018: USD60.28
million).
-- Net Asset Value per share as at 14 December 2018 was approximately 15.73 pence per share
(30 June 2018: 14.70 pence per share).
-- Listed and unlisted investments at marked to market value,
cost and valuation amounted to USD54.53 million (30 June 2018:
USD52.92 million).
Chairman's Statement
Introduction
The year under review is one that has seen mixed results unfold
within Polo's portfolio, however, sector sentiment across the
natural resources arena has generally been positive. For example,
during this reporting period, the price of oil rose from over USD40
per barrel (Brent crude) to circa USD70 which has delivered
positive results for our oil and gas investment exposure. The US
economy has seen bullish growth of 2.3% during 2017 which has
lifted consumer confidence and helped stimulate demand across the
commodity markets, especially within the US steel market which has
seen steel production edge up by 5% during 2017.
The well documented trade disputes between countries still pose
some risks to commodity demand, however, the International Monetary
Fund anticipates global GDP growth to be 3.7% in 2019, which
provides some comfort ahead as we advance into our next reporting
period.
Portfolio Overview
Hibiscus Petroleum Berhad ("Hibiscus")
On 10 March 2016, Hibiscus Petroleum Berhad (HIBI:MK) acquired a
package of geographically focused producing fields and its
associated infrastructure in the North Sea, United Kingdom ("UK"),
collectively known as the Anasuria Cluster. Since the acquisition
of Anasuria, Hibiscus has recorded ten consecutive quarters of
profitability for the fourth quarter ended 30 June 2018. More
recently, the introduction of the North Sabah assets as part of the
overall business portfolio has reinforced Hibiscus' financial
stability.
Hibiscus carried out significant activities in 2018 which
included: i) Completion of the acquisition of a 50% participating
interest in the North Sabah Enhanced Oil Recovery Production
Sharing Contract ("North Sabah PSC") in Malaysia and commencement
of operations of this second producing asset effective 1 April 2018
under the operatorship of the company; ii) In the U.K. North Sea,
technical work on the opportunities around the Anasuria Cluster
(Hibiscus' first producing asset in which it has a 50%
participating interest) increased the volume of reserves, and a
well was drilled in the Central North Sea; iii) In October 2018
Hibiscus acquired a 50% participating interest in two discovered
fields in Blocks 15/13a and 15/13b in the Central North Sea
(together, "Marigold & Sunflower Blocks") which are currently
non-producing - marking a second major asset in the U.K. North
Sea.
Each of the above activities has involved the deployment of
capital and technical resources of the company and from third
parties with a view to value accretion. These projects have also
increased the scale and profile of Hibiscus, Malaysia's first
listed, pure play independent oil and gas exploration and
production company. Hibiscus remains committed to achieving its
Mission 2021 of achieving 100 million barrels ("mmbbls") of net
proved and probable oil reserves and net production of 20,000
barrels ("bbls") per day.
Hibiscus Petroleum Today - Including events "Post the Reporting
Period"
A. Increased Value, Scale and Market Awareness:
Hibiscus' market capitalisation has increased by approximately
RM600 million (USD144.5 million), or by about 54%, over the past 12
months. As at close of trading on 3 December 2018, the company had
a market capitalisation of approximately RM1.715 billion (USD0.413
billion). Trading liquidity has also been high. Both factors have
contributed to the company's shares being added to the MSCI Global
Small Cap Index effective 30 November 2018, underscoring increasing
international market awareness of Hibiscus.
B. Improving Financial Performance:
For the current twelve-month period, i.e. from 1 July 2017 to 30
June 2018 (FY2018), Hibiscus posted revenue of RM394.3 million
(USD93.8 million), up from RM261.3 million (USD62.18) achieved in
the corresponding 12 month period in the previous financial year
ended 30 June 2017 (FY2017). Hibiscus achieved profit after
taxation of RM203.7 million (USD48.48) in FY2018 compared to
RM106.1 million (USD25.25 million) in FY2017.
The financial health of the company has been improving. As of 30
September 2018, total cash balances stood at RM302 million (USD72.7
million), total assets have increased to RM2.2 billion (USD0.53
billion), net assets per share stood at 70 sen and Hibiscus
continues to operate without debt.
C. Anasuria Cluster Update:
Any increase in the value of a public company share price should
normally be driven by fundamental value creation at the level of
the assets owned by the public company. For Hibiscus Petroleum, two
activities at our North Sea Anasuria asset have recently
contributed towards increasing the valuation of the company.
1) Technical work completed on the asset has enabled independent
experts to increase our net proven and probable ("2P Oil Reserves")
to 24.4 mmbbls (as of 1 July 2018 - LEAP Energy Partners) from 20.2
mmbbls (projected by RPS Energy as of 1 March 2016). Given
production of 2.5 mmbbls during the intervening period, this
upgrade signifies that 6.7 mmbbls were added to net reserves.
2) In addition to technical work in the office, Hibiscus also
carried out value-accreting activities offshore. In mid-2018, the
existing GUA-P2 ("GUA-P2 ST") well was side tracked into a nearby,
untapped compartment of the Forties reservoir containing a gross
recoverable oil volume of approximately 1.5 mmbbls. This
represented the company's first major capital project in the North
Sea. Upon completion of the sidetrack, Hibiscus' net daily
production from the Anasuria Cluster increased by more than
33%.
In October 2018, the Anasuria Cluster was contributing an
average of 4,229 bbls/day net to Hibiscus, compared to an average
of 3,197 bbls/day in FY2017.
Hibiscus will continue to drive towards its target of delivering
an average net production of 5,000 bbls/day by the end of FY2020
(as announced on 9 November 2017). In this respect, a water
injection well has been sanctioned on the Cook Field with the aim
of re-pressurising the reservoir. In this manner, Hibiscus hopes to
improve the Recovery Factor from this field thus extending the
economic life and lowering future unit operating costs.
Hibiscus is also working towards the sanctioning of a further
drilling project (within the fields at Anasuria). Apart from
arresting natural decline, Hibiscus hopes that this proposed well
will enhance production.
D. North Sabah PSC Update:
Results disclosed in the first quarter of financial year 2019
("Q12019") represented the second quarter of reporting by the
company of the operations and contribution of the North Sabah PSC,
having completed the acquisition of a 50% participating interest in
March 2018. The significance of this acquisition - the first in
Malaysia for the company - is that it has provided Hibiscus with
oil-production footprints on two different continents.
Prior to the completion of this transaction, Hibiscus produced
approximately a net of 1.0 mmbbls of crude oil per annum, solely
from the Anasuria Cluster. Thus, Hibiscus was subject to business
risks concentrated around the performance of a single asset.
Periods of unplanned shutdown impacted revenues and profitability,
sometimes, significantly. The North Sabah PSC has mitigated this
risk substantially. Revenues and profits are now delivered across
two geographies. In addition, the combined annual production has
increased by approximately 2.0 mmbbls, or two-thirds that of total
current production.
To further enhance production from the North Sabah PSC,
Petroliam Nasional Berhad ("PETRONAS") had in August 2018, approved
the St Joseph Infill Drilling project through the Milestone
Review-4 maturation process, leading to the submission of a Field
Development Plan in November 2018. This project entails the
drilling of three infill producers, utilising a triple splitter
wellhead on the St Joseph Jacket-A ("SJJT-A") platform. From an
estimated ultimate recovery ("EUR") of a gross of 2.8 million stock
tank barrels of oil, the project is expected to add approximately
gross 2,600 bbls/day of oil at peak production. This infill
drilling programme will require minimal modification of topside
facilities at the SJJT-A platform.
The total capital commitment to this project is anticipated to
be approximately RM142.5 million (USD34.31 million), which will be
shared equally with Hibiscus' joint venture partner, Petronas
Carigali Sdn Bhd ("Petronas Carigali"). Drilling is expected to
commence in April 2019 and first oil production expected in June
2019.
Additional projects are also being matured that will increase
production in the mid-term.
E. Company Wide Internal Efficiencies:
Against a backdrop of volatile oil prices, Hibiscus believes
that a disciplined approach to safe operations and cost management
can contribute to improved overall operational performance. The
company's objective is to (as safely as practically possible)
minimise operating expenditure per barrel of oil equivalent
("OPEX/boe") as it is critical for the long term sustainability of
our business.
We have seen oil prices which have been higher and lower than
currently being experienced. While crude oil prices may fluctuate,
Hibiscus' business sustainability depends how it maintains
stability in its cost structure. In addition, Hibiscus recognises
that unit operating costs are a function of the volumes of oil (and
gas) produced and thus, it is extremely important to keep its
production uptime levels relatively high. Subject to being able to
maintain current operational trends, being prudent in general and
administration expenditure and efficient in the execution of
projects, Hibiscus will be able to remain cashflow positive and
continue to operate as a sustainable business.
F. Outlook:
In summary, Hibiscus:
-- is working towards achieving net production of 5,000 bbls/day
at the Anasuria Cluster by the end of FY2020.
-- intends to deliver total oil production attributable to
Hibiscus in FY2019 of approximately 2.7 mmbbls to 3.0 mmbbls,
barring unforeseen circumstances. Total offtakes in FY2019 are
expected to rise to approximately 10 (or 11), compared to an
average of four per year, previously. This increase in the number
of offtakes will help smoothen the average selling price per barrel
of oil over the financial year.
-- is focused on managing costs amidst volatility in global oil
prices and is striving to maintain its OPEX/boe at a level below
USD20/boe. This compares with an average selling price of crude oil
achieved by the company of USD65.69/bbl for FY2018 and USD76.36/bbl
for Q12019.
-- has increased the combined 2P Oil Reserves of the company to
approximately 46 mmbbls with the addition of the North Sabah PSC
and a recent upgrade of reserves at the Anasuria Cluster;
-- is commencing engineering and technical studies costing
approximately USD5 million and working towards the submission of a
field development plan (for the Marigold & Sunflower Blocks) to
the relevant authorities for approval in about 18 months.
GCM Resources Plc ("GCM")
Our investee company GCM has made very significant progress in
its pursuit of potential development partners for its integrated
coal mine and power project, located in Bangladesh adjacent to the
rural township of Phulbari. Working under the previously reported
agreement with China Gezhouba Group International Engineering Co.
Ltd ("CGGC") in July 2017 CGGC delivered a technical
pre-feasibility study for a 2,000MW power plant located at the mine
site. Subsequently CGGC and GCM agreed a Contract Framework
Agreement and a Joint Development Framework giving CGGC the
exclusive right for the engineering, procurement, construction, and
commissioning of the proposed power plant. Throughout 2018 GCM also
had ongoing discussions with Power Constructions Corporation of
China Ltd ("PowerChina") which is a state-owned key enterprise of
People's Republic of China and a world-leading integrated
engineering construction group.
Post the Reporting Period:
In November PowerChina delivered a "Power Plant Prefeasibility
Assessment Report" confirming that by utilising the latest highly
energy efficient ultra-supercritical power plant design, 6,000MW
can be generated from the mine's thermal coal production. This is a
large value-adding step for the integrated Phulbari Coal and Power
Project as it confirms both the enormous scale of power production
and the domestic market off-take for the mine's full thermal coal
production, i.e. the locks in the most significant revenue stream
needed to support the mine's feasibility.
Also, in November 2018 GCM announced that it had secured a
GBP1.2 million increase to its existing short-term loan facility
with Polo Resources Limited. These funds will be used to further
progress joint venture arrangements with development partners.
Bangladesh is on a General Election footing with the election
scheduled for 30 December 2018 and in the meantime GCM and its
development partners are working towards a formal proposal to be
discussed with the newly elected Government of Bangladesh in the
early part of 2019.
Celamin Holdings Limited ("Celamin") (Formerly known as Celamin
Holdings NL)
Celamin continues to focus on recovery of its 51% shareholding
in CPSA, the operating company responsible for development of the
Chaketma Project. As reported earlier, Celamin's joint venture
partner, Tunisian Mining Services ("TMS") had fraudulently taken
possession of Celamin's shareholding in CPSA and the matter had
been referred to a sole arbitrator appointed by the International
Court of Arbitration of the International Chamber of Commerce.
In April 2017, Celamin announced that it was successful in
obtaining a conservatory seizure order from the President of the
Tribunal of First Instance of Tunisia against all shares that TMS
owns in the capital of CPSA, (being the 49% of CPSA previously held
by TMS as well as the 51% fraudulently taken from Celamin by TMS),
remains in place. This Seizure Order prevents TMS from dealing with
any of these shares and subject to any application by TMS for
removal of the order, will remain in place until enforcement of the
final arbitral award.
On 1 December 2017, Celamin announced that it had received a
favourable arbitration decision and TMS has been ordered to return
Celamin's 51% shareholding in CPSA and to pay damages and costs in
excess of USD4 million ("Final Award").
During the course of the arbitration the sole arbitrator issued
interim orders to maintain the status quo pending the arbitrator's
final decision. These orders are intended to prevent any disposal
of CPSA's shares and assets, including the Chaketma exploration
permit, and to ensure that Celamin will be informed of any CPSA
activity relating to the Chaketma permit. These interim orders
followed an Emergency Order issued for the same purpose. Celamin
has applied for exequatur of these Orders with the Court of Appeal
of Tunis and these proceedings are continuing.
On 15 June 2018, Celamin's shares were reinstated to trading on
ASX following more than three years of suspension after the
fraudulent transfer of Celamin's interest in the Chaketma Project.
During the period of suspension, Celamin conducted a number of
placements to sophisticated investors and others in order to have
sufficient working capital to pursue legal proceedings for the
recovery of Celamin's interest in the Chaketma Project. A total of
AUD2,452,775 (USD1,790,453) was raised through share placements in
July 2017, January 2018, and February 2018. Celamin had a negative
cash flow from operating activities of AUD1,896,771 (USD1,385,529)
(2017: AUD1,285,815 USD939,609) which is largely due to legal
expenditure where various processes are being pursued to resolve
the ongoing dispute with TMS.
In addition to the current enforcement process underway to
recover its interest in the Chaketma Phosphate Project, Celamin
continues to review other new opportunities in Tunisia consistent
with its strategy to build a portfolio of resource assets to add
shareholder value.
Post the Reporting Period:
In July 2018 Celamin was granted two exploration permits in
Tunisia - Djebba and Zeflana. Both are prospective for zinc and
lead. The grant of the Djebba and Zeflana exploration permits
provide Celamin with a foot hold on some of Tunisia's most
prospective ground for base metals. Celamin was able to secure the
grant of these new exploration permits projects at a time of high
zinc prices, including one that hosts a significant zinc deposit.
Initial work programs on the permits will involve a compilation of
historical data and reconnaissance ground-work to help set the
first phase of exploration on both permits.
On 28 September 2018, Celamin announced that the Swiss Supreme
Court had declared inadmissible TMS' annulment application to set
aside the Final Award. The Swiss Supreme Court has further ordered
TMS to pay the Court's cost of approximately AUD21,500 (USD15,711),
plus an additional indemnity to Celamin for its legal costs in the
amount of approximately AUD24,000 (USD17,389).
The decision of the Swiss Supreme Court is final, no further
appeals or challenges are available against the Final Award before
the Swiss Courts. Celamin has applied for enforcement of the Final
Award in Tunisia by way of application to the Tunisian Court of
Appeal. Upon enforcement, the Final Award may be executed against
TMS in the same manner as any Tunisian Court decision.
On 8 October 2018, Celamin announced a partially underwritten
Share Purchase Offer ("SPP Offer") to raise up to AUD673,005
(USD491,966). The company also announced a Bonus Options Offer to
be made to shareholders on a 1 for 2 basis as well as a Placement
Offer to sophisticated, institutional or professional investors to
raise up to a further AUD250,000 (USD182,696).
On 14 November 2018, Celamin announced that the Top Up Placement
("TUP") as contemplated by Celamin's Prospectus lodged with ASIC
and ASX on 15 October 2018 successfully raised AUD336,502
(USD242,975), before costs, through the issue of 13,460,090 new
fully paid up ordinary shares in Celamin at the same price per
share as the SPP Offer that closed on 7 November 2018 (refer to CNL
ASX Release dated 9 November 2018). Polo's interest in CNL
following the SPP Offer and subsequent TUP stands at 26,214,915
shares representing 20.53% of CNL's Fully Paid Ordinary Shares.
The capital raised pursuant to the SPP Offer and the Placement
Offer will be used to fund ongoing legal proceedings for recovery
of Celamin's interest in the Chaketma Project, exploration programs
on Celamin's new exploration permits in Tunisia prospective for
zinc and lead, working capital and costs associated with the
Offers.
PRISM Diversified Ltd ("PRISM")
In January this year, Ironstone Resources was renamed to PRISM
Diversified Ltd. to denote the company's transition from resource
development to commercial production, anticipated within 24 months.
PRISM - an acronym for "Peace Region Innovative & Sustainable
Manufacturing" - represents the company's brand and focus on
sustainable resource development coupled with the production of
critically important commodities.
Production of Carbonyl Iron Powder, Cobalt and Vanadium:
PRISM is continuing to advance its multi-faceted Clear Hills
Project in north western Alberta, Canada. After entering into a
strategic agreement with a Canadian-based firm that has developed
and globally deployed its commercial vapour metal deposition
technology, PRISM will produce high-purity and high-value metal
powders used in expanding markets, including the additive
manufacturing industry (3D printing). The agreement establishes the
parameters for both firms to work collaboratively in the
development of a 10,000 tonne per year carbonyl iron powder
production plant (with cobalt and vanadium co-products) in NW
Alberta. Carbonyl iron powders, in select markets, can sell for
upwards of USD10,000 per tonne.
Production of Lithium Carbonate from lithium-rich formation
brines:
With the burgeoning demand for lithium and vanadium "electric
metals" needed for batteries for use in electric cars, consumer
electronics and renewable energy storage, the spotlight has grown
on companies like PRISM. In addition to owning a significant
resource of vanadium pentoxide in the Clear Hills (2.45 billion
pounds contained), the company holds the mineral rights to lithium,
and other performance elements such as potash, bromine and boron in
the Devonian-age reservoirs that underlie its permits. These
carbonate reservoirs, that typically produce oil and gas, also
contain significant amounts of formation waters with elevated
concentrations of lithium, a key component of rechargeable
batteries.
PRISM, having determined there is excellent development of
multi-stacked porous lithium brine-bearing reefs underlying and in
close proximity to its Clear Hills permits, acquired 1.4 million
acres of new mineral permits in early 2018. The company now
controls the largest mineral tenure for lithium-bearing brines in
Alberta. The key to commercialisation of lithium brines is
developing and deploying lithium "direct-extraction" technology to
produce a lithium concentrate for further refining into
battery-grade lithium carbonate. PRISM has entered into an
agreement with a western-Canadian based water processing specialist
firm to co-develop the required technology, dubbed "LiREC(R)" to
separate the lithium from the reservoir fluids by adapting their
existing patented technology. PRISM anticipates it will commence
field trials of its LiREC(R) system in Q2 2019, in advance of
completing its pre-feasibility study and preliminary economic
assessment by the end of the year.
Funding Arrangements:
PRISM is planning a capital raise program targeting USD10
million in equity/debt in Q1 2019 to support the ongoing
development of its commercial carbonyl powder and lithium carbonate
projects. New operating subsidiaries of PRISM may be created for
each project, with PRISM's shareholders retaining a major interest
in each entity. The company is exploring options for public
listings of PRISM and/or its subsidiary companies.
Blackham Resources Limited ("Blackham")
The Matilda-Wiluna Gold Operation ('Operation') is located in
Australia's largest gold belt which stretches from Norseman to
Wiluna and passes through Kalgoorlie and Leinster. Over the last
seven years, Blackham has consolidated the entire Wiluna Goldfield
within one tenement package covering over 1,100km(2) . This
consolidated tenement package has historically produced over 4.4
million ounces. In October 2016, Blackham produced first gold from
the Operation.
The Expansion Preliminary Feasibility Study ("Expansion PFS")
published on 30 August 2017, confirmed the robust economics for a
+200kozpa long mine life operation. Key outcomes were life-of-mine
AISC of AUD1,058/oz, IRR 123% and NPV8 of AUD360 million before tax
at an AUD1,600/oz gold price. Blackham continues to work on options
to optimise and enhance the expansion plan.
Gold production during the year was 70,565oz, with demonstrably
stronger performance for the six months to 30 June 2018 as
demonstrated by an increase in production of 31% on the previous
half. This was driven by lower open pit mining strip ratios, higher
mill grade and continuous improvements made by the processing team
to the plant. Mill throughput improved in each successive quarter
of FY2018, with record throughput achieved in the June 2018 quarter
(535kt milled).
Blackham recorded a loss for the year ended 30 June 2018 of
AUD20.0 million (USD14.46 million). AUD14.4 million (USD10.42
million) of the loss was incurred in the first half of the year
which was mostly impacted by low gold production at the
Matilda-Wiluna Gold Operation, where production and mill feed head
grade was hampered by 43% of mill feed being sourced from low grade
stockpiles.
Operationally, the company had gross profits from operations of
AUD4.8 million (USD3.47 million) before non-cash depreciation and
amortisation charges. There was an AUD5.6 million (USD4.05 million)
coming from the second half of the year, completely turning around
the first half's performance.
Cash flows from operating activities were AUD6.2 million
(USD4.48 million), of which AUD8.3 million (USD6 million) came from
the six months ending 30 June 2018.
In November 2017, Blackham successfully switched to an owner
operator air leg mining method to mine the Golden Age orebody. The
air leg mining method is considered a lower risk method and has
resulted in lower tonnes being mined at a higher grade. Golden Age
has consistently generated cash and is forecast to continue doing
so.
Production guidance for FY2019 is 77k-89koz at an AISC of
AUD1,250-AUD1,450/oz. FY2019 AISC is expected to be higher than
Life of Mine AISC, particularly in the September quarter, due to
the investment required to strip new mining areas in the Matilda
Mine, increase stockpiles and to maintain a high mill
throughput.
Post the Reporting Period:
Blackham announced on 31 October 2018 an increased Ore Reserve
estimate for the Operation of 26Mt at 1.8g/t for 1.53Moz of gold as
at 30 June 2018. Blackham continues to progressively assess the
Operation's Resource base total of 96Mt at 2.2g/t for 6.7Moz (58%
Indicated), with further conversion expected into reserves.
Blackham is well funded as it enters a significantly lower risk
period of production, initially targeting 250oz of oxide gold
production over the next 3.5 years with expected stripping ratio of
less than half of recent levels (7:1 vs 16.5:1) providing a
meaningful step change in project economics. This, in conjunction
with continued access to high grade ore zones that are supported by
extensive grade control drilling and which will provide ongoing
mill supply and continued growth in high grade stockpiles, is
expected to deliver a period of strong operational cash flows.
Weatherly International Plc ("Weatherly") (In
Administration)
Weatherly has a diverse portfolio of base metal production and
development assets with multiple low capital spend growth
opportunities. These include the Tschudi Mine, the Otjihase and
Matchless mines (together, "Central Operations") and the Berg Aukas
project in Namibia.
For the quarter ended 31 March 2018, Weatherly reported Tschudi
copper cathode production of 4,161 tonnes, bringing year to date
production to 13,005 tonnes Cu, being 2% ahead of nameplate,
Tschudi C1 costs increased to USD5,608 per tonne for the quarter,
due largely to strengthening of the Namibia dollar and that
dewatering in the open pit mine continued to be managed.
In April 2018, Weatherly announced that it had retained advisers
to evaluate strategic options for the company following operational
challenges at its key asset, the Tschudi open pit copper mine, in
Namibia. The 2016/2017 year began on the back foot with Tschudi
needing to recover from the high groundwater inflow rates
encountered in the open pit in the last quarter of the previous
year. These inflow rates far exceeded the worst case scenarios
foreseen within the Bankable Feasibility Study, making it
impossible to prepare for these excessive inflows in advance and
making it equally impossible to provide the required volumes of ore
from the pits to the crushing and stacking plant in the short term.
As described in Weatherly's Interim Results announced on 19 March
2018, open pit groundwater inflows in the Tschudi open pit, and the
costs of dealing with them, continued to increase as pit mining
proceeded to greater depths. However, the flow rates were managed
adequately, to ensure a reliable supply of ore for stacking.
On 26 April 2018, Weatherly announced that it has engaged Numis
Securities Limited ("Numis") and Treadstone Resource Partners
("Treadstone") as its financial advisers to lead a review of
strategic alternatives for the company and its assets where all
opportunities for maximising shareholder value would be considered
(the "Strategic Review").
The scope of the options considered under the Strategic Review
included, but were not limited to, the sale of the entire issued,
and to be issued, share capital of the company; the restructuring
of the company's debt; the disposal of certain company asset(s); or
the raising of capital via equity issuance.
The position of the Tschudi mine remained fundamentally
uncertain as a result of further significant water ingress in May
2018. Whilst water levels were stabilised, it was not possible for
Weatherly to assess the length of time required before full mining
operations could be recommenced, nor the full financial impact be
assessed during this time. On 1 June 2018, Weatherly announced that
as a result of this material uncertainty, Orion Mine Finance
(Master) Fund I LP ("Orion) had confirmed to Weatherly, in writing,
that they were unlikely to permit further drawdowns under the
existing uncommitted loan facility with Orion, details of which
were announced by Weatherly on 28 July 2017. Weatherly's Directors
considered that no further reliance could be placed on Orion
supporting the company financially and therefore sought to
temporarily suspend the company's shares from trading on AIM and
seek advice in relation to administration. Subsequently, on the
same day, the company announced the appointment of Simon Kirkhope
and Andrew Johnson of FTI Consulting LLP ("FTI") as administrators
to the company.
On 13 June 2018, Weatherly announced that it had concluded the
acquisition of a further 65% interest in China Africa Resources
Namibia Limited ("CARN"). Weatherly now has a 90% interest in CARN,
which owns 100% of the high-grade Berg Aukas underground
zinc-lead-vanadium project near Grootfontein, Namibia.
Post the Reporting Period:
On 31 July 2018 the Administrators' Statement of Proposals were
released by Weatherly and can be found at the following
website:
https://www.fticonsulting-emea.com/cip/weatherly-international-plc
On 7 August 2018, Strand Hanson Limited, Weatherly's Nominated
Adviser and Broker resigned and in light of the Administrators'
Statement of Proposals, Weatherly did not seek the services of
another Nominated Adviser and, as a result, the company was
delisted from AIM the following month.
On 8 October 2018, Weatherly announced that following
significant operational progress at Weatherly's Tschudi mine, the
company has restarted the process of reviewing its strategic
options (the "Process"). The Process is being led by Numis and
Treadstone. This follows Weatherly's announcement on 1 June 2018,
detailing the appointment of Administrators.
Weatherly reports that since June 2018 there have been material
improvements to the dewatering capabilities and a strategy enabling
stable path to growth has been implemented.
The scope of the options being considered by Weatherly include,
but are not limited to, the sale of certain subsidiaries of
Weatherly, or the disposal of certain assets of the company (or of
its subsidiary undertakings).
Polo's current portfolio includes:
Petroleum assets:
-- Hibiscus Petroleum Limited (8.75%)
-- Regalis Petroleum Limited (12.66%)
Coal and power assets:
-- GCM Resources Plc (17.83%)
-- Universal Coal Resources Pte Ltd (redeemable convertible note)
Phosphate asset:
-- Celamin Holdings NL (20.53%)
Lithium, iron and vanadium:
-- PRISM Diversified Ltd (19.5%)
Gold assets:
-- Blackham Resources Limited (1.53%) (diluted following a rights issue)
-- Nimini Holdings Limited (90%)
Copper asset:
-- Weatherly International Plc (5.2%)
Various liquid short-term investments.
It was announced in our Annual Report for the year ended June
2017, that the Company had amended its investment strategy. This
was predicated on the Board's belief that growth in Asia and the
Pacific will remain strong and that the Company's strategy should
be to focus more on direct and indirect investments in this
geographical location. This change in investment policy was
supported by analyses undertaken by multilateral organisations. For
example, the Asian Development Bank states that economic activity
in Asia will continue to grow, with the region expecting to
contribute to about 60% of global growth in the next couple of
years. Moving forward, the Company's strategy continues to be to
make direct and indirect investments in a portfolio of businesses
and assets with at least the majority of their operations or early
stage companies that intend to have at least the majority of their
operations in Asia Pacific. Moving forward, the company therefore
maintains that its strategy will be to make direct and indirect
investments in a portfolio of businesses, assets and early stage
companies that have, or intend to have, at least the majority of
their operations in Asia Pacific.
Summary
Polo's exposure to a basket of commodities that span bulk and
precious metals, agri minerals and speciality metals that are
commonplace in the new electric vehicle revolution, provide our
shareholders with a good pricing and demand variance as the world
moves into a new age that is looking for less dependence on
hydrocarbons. On power generation, our exposure to the Bangladesh
power sector, helps us retain a significant interest in a
traditional and reliable sector of the energy market along with our
oil and gas investments. By ensuring that we retain a balanced
portfolio of commodity assets we can continue to offer our
shareholders risk mitigation exposure to the broader commodity
market.
The outlook moving into 2019 looks promising as we see stable
economic growth continue to drive the demand for commodities in
which we have investment exposure. Our focus for the period ahead
is to look for investment opportunities that are entering
investment horizons that offer positive shareholder returns.
To conclude, I would like to take this opportunity to thank all
our shareholders and partners for their continued support.
Datuk Michael Tang, PJN
Executive Chairman
20 December 2018
For further information, please contact:
Polo Resources Limited
- Kudzayi Denenga, Investor Relations +27 (0) 787 312 919
Allenby Capital Limited (Nominated
adviser & broker)
- John Depasquale +44 (0)20 3328 5657
Blytheweigh (Public relations)
- Julia Tilley, Jane Lenton, Fergus
Cowan +44 (0) 207 138 3204
About the Company
Polo Resources Limited is a multi-sector investment company
focused on investing in undervalued companies and projects with
strong fundamentals and attractive growth prospects. For complete
details on Polo, refer to: www.poloresources.com.
CAUTIONARY STATEMENT
The AIM Market of the London Stock Exchange Plc does not accept
responsibility for the adequacy or accuracy of this release. No
stock exchange, securities commission or other regulatory authority
has approved or disapproved the information contained herein. All
statements, other than statements of historical fact, in this news
release are forward-looking statements that involve various risks
and uncertainties, including, without limitation, statements
regarding the future plans and objectives of Polo. There can be no
assurance that such statements will prove to be accurate,
achievable or recognizable in the near term.
Actual results and future events could differ materially from
those anticipated in such statements. These and all subsequent
written and oral forward-looking statements are based on the
estimates and opinions of management on the dates they are made and
are expressly qualified in their entirety by this notice. Polo
assumes no obligation to update forward-looking statements should
circumstances or management's estimates or opinions change.
The Company's exploration and investment activities may also be
affected by a number of risks, including legal, political,
environmental, economic, financing, permitting, commodity,
exploration and development and other market risks which are normal
to the industry and referenced in greater detail in the Company's
2018 Annual Report for the period ending 30 June 2018, which may be
found on the Company's website at profile on
www.poloresources.com.
Investment Update
Oil and Gas
Hibiscus Petroleum Berhad (HIBI: MK)
-- Oil and Gas, United Kingdom and Australia
-- 8.75% equity interest
Anasuria Hibiscus UK Limited (AHUK") has been a joint operator
of the Anasuria Cluster since 10 March 2016. Prior to this, Shell
had been the operator of Anasuria. The five discovered oil fields
within Anasuria Hibiscus' licence boundaries include Guillemot A,
Teal, Teal South, Cook and Kite. The Guillemot A, Teal, Teal South
and Cook fields have the necessary infrastructure installed and
have been producing to the Anasuria FPSO since the late 1990's.
Hibiscus' activities on the North Sabah PSC in FY2018 were
primarily focused on completing the acquisition transaction.
Hibiscus has only recently immersed its self in the day-to-day
operations of the North Sabah PSC fields and is motivated by their
potential. Net 2C Resources are estimated to be 29.2 million
barrels and, in this respect, the management team at SEA Hibiscus
is maturing several projects to convert some of these 2C Resources
into producible 2P Reserves.
The North Sabah PSC comprises of four producing oil fields and
associated infrastructure; i.e. St Joseph, South Furious, SF30, and
Barton oilfields which are located in a key hydrocarbon province in
Malaysia and have delivered reliable production since coming on
stream in 1979. The PSC also contains pipeline infrastructure and
the Labuan Crude Oil Terminal, an onshore processing plant and oil
export terminal. The North Sabah PSC also provides long-term
production rights until 2040. Given the readily available
infrastructure, Hibiscus expects that to begin to observe an
increase in production volumes and a reduction in unit production
costs by financial year ending 30 June 2020.
Hibiscus produces crude oil and sells it in cargoes. From the
Anasuria FPSO facility, Hibiscus sells its crude oil in cargoes of
approximately 250,000 barrels. BP Oil International Limited
("BPOI") has been appointed to lift its cargoes and to market them
to refineries in the region. The parent organisation of BPOI is BP
plc, a global energy company. To date, BPOI has successfully
marketed all cargoes at competitive prices.
In North Sabah, oil is lifted from the Labuan Crude Oil Terminal
(which is operated by Hibiscus). Cargoes from Labuan are sold in
parcels of approximately 300,000 barrels directly to the Trafigura
Group, a large global commodities trader.
Hibiscus is pleased with both oil trading arrangements in
Anasuria and in North Sabah. Its counter-parties are reputable and
have a large pool of clients. Working with major global players
also ensures transparency and allows Hibiscus to gradually develop
business relationships with some of the largest oil traders.
Operational performance of the Anasuria Cluster
Metric Units FY2018(1) FY2017(2)
Jul 2017 Jul 2016
- Jun 2018 - Jun 2017
------------ ------------
Average uptime % 76 85
--------- ------------ ------------
Av. daily oil
production rate bbl/day 2,705 3,197
--------- ------------ ------------
Av. daily gas
export rate(3) boe/day 240 356
--------- ------------ ------------
Average daily
oil equivalent
production rate boe/day 2,945 3,552
--------- ------------ ------------
Total oil sold bbl 791,823 1,128,868
--------- ------------ ------------
Total gas exported
(sold) MMscf 523 779
--------- ------------ ------------
Av. realised
oil price USD/bbl 60 48
--------- ------------ ------------
Av. OPEX/ boe USD/boe 23 15
--------- ------------ ------------
Notes: Bbl barrel.
(1) Financial year Boe barrels of oil
ended 30 June 2018. equivalent.
(2) Financial year Mmscf million standard
ended 30 June 2017. cubic feet.
(3) Conversion rate OPEX operational expenditure.
of 6,000 scf/boe.
The average uptime and daily oil equivalent production rate in
FY2018 reduced by 11% and 15%, respectively, compared to FY2017.
The primary reason for this reduction was the execution of a 30 day
planned turnaround of the Anasuria FPSO, which entailed a full
shutdown of production operations during the period commencing
mid-September 2017. The turnaround covered critical maintenance
work undertaken to improve the reliability of the topside
facilities and to ensure a safe working environment for the
company's personnel offshore.
Production was also impacted by an unplanned, temporary failure
of a gas compression facility on board the Anasuria FPSO. This
failure affected gas lift operations on the Guillemot A field.
These planned and unplanned events had an unfavourable effect on
the average oil production rate and further resulted in increased
operating costs for the financial year. Thus, the average unit
production cost (OPEX/boe) also increased to USD23.46/boe in FY2018
from USD15.12/boe compared to FY2017.
Over the past two years, the operating company has been able to
conduct at least one cargo offtake per quarter. However, the cargo
from the Anasuria FPSO, scheduled for delivery in the final quarter
of FY2018, was deferred by several days before being conducted on 2
July 2018 (2 days post-closing of the quarter). This deferment
ensured the overall safety and smooth running of operations at the
Anasuria Cluster whilst the drilling of the GUA-P2 side-track well
on the Guillemot A field was ongoing. The reduction of one offtake
for the financial year thus resulted in total oil sold in FY2018
declining by approximately 30% to 0.8 million barrels compared to
FY2017.
Anasuria Reserves Upgrade:
Hibiscus commissioned LEAP Energy to undertake an independent
evaluation of in-place and recoverable hydrocarbons in the Anasuria
Cluster attributable to AHUK. In a report dated 23 August 2018,
LEAP Energy stated that, based on their evaluation, the 2P Reserves
net to AHUK have increased to 24.4 MMbbls as of 1 July 2018.
This recent estimate by LEAP Energy represents a net 4.2 MMbbls
or 20.8% increase in 2P reserves when compared to the 20.2 MMbbls
forecasted by RPS Energy Consultants Limited (RPS Energy) as of 1
March 2016. Given that AHUK's production in the interim period
between 1 March 2016 and 1 July 2018 was approximately 2.5 MMbbls
of oil, then the net addition to the company's 2P Reserves since
the acquisition of its participating interest in the Anasuria
Cluster is 6.7 MMbbls.
Operational performance of North Sabah fields since taking-over
operatorship of this asset as well as for the prior 15 months.
Metric Unit FY2018 FY2017
Apr - Jan - Oct - Jul - Apr - Jan -
Jun 2018(1) Mar 2018 Dec 2017 Sep 2017 Jun 2017 Mar 2017
--------- ------------- ---------- ---------- ---------- ---------- ----------
Av. uptime % 96 96 93 88 92 95
--------- ------------- ---------- ---------- ---------- ---------- ----------
Av. gross
oil production bbl/day 15,954 15,167 14,866 14,048 14,614 14,992
--------- ------------- ---------- ---------- ---------- ---------- ----------
Av. net
oil production bbl/day 5,903 5,710 5,500 5,198 5,407 5,547
--------- ------------- ---------- ---------- ---------- ---------- ----------
Total oil
sold bbls 623,544 287,019 586,657 287,850 593,086 587,228
--------- ------------- ---------- ---------- ---------- ---------- ----------
Av. realised
oil price(2,3) USD/bbl 73.26 71.44 67.2 55.8 56.93 59.41
--------- ------------- ---------- ---------- ---------- ---------- ----------
Av. OPEX/bbl
(unit production
cost) USD/bbl 8.15 12.92 18.5 15.25 11.75 10.81
--------- ------------- ---------- ---------- ---------- ---------- ----------
Reserves and resource estimates for SEA Hibiscus' entitlement in
the North Sabah PSC
Units Net
Remaining Reserves
(2P)(4) MMstb 15.1
------- -----
Contigent Resources
(2C)(5) MMstb 29.2
------- -----
Notes:
(1) Figures are provisional and may change subject to the PSC
Statement audit for the period April to June 2018.
(2) For quarterly periods between January 2017 to March 2018,
the average realised oil price is the weighted
average price of all the Labuan crude sales from various parties during the quarter.
(3) For April to June 2018, the average realised oil price
represents the weighted average price of all Labuan crude sales
from SEA Hibiscus.
(4) Based on SEA Hibiscus' net entitlement, as reported in the
Annual Review of Petroleum Resources (ARPR) as of 1 January 2018
for the PSC life.
(5) Based on SEA Hibiscus' net entitlement, derived by
independent technical valuer, RISC Operations Pty Ltd, as of 1
January 2018 for the PSC life.
MMstb - million stock tank barrel.
Operational risk assessments conducted jointly by Shell and SEA
Hibiscus determined that SEA Hibiscus was ready to fully operate
the asset, effective 31 March 2018. Thus, on 2 April 2018, Hibiscus
announced the completion of the North Sabah PSC transaction.
Since Hibiscus took over the operatorship of the North Sabah
PSC, the asset has demonstrated a relatively high average uptime,
peaking at 96%. The company is also encouraged that the average
daily oil production rate has been gradually increasing over the
course of FY2018. Average OPEX/boe has also been demonstrating a
decreasing trend.
Production Licence P.198, UK Central North Sea:
Hibiscus recently concluded a strategic 50% acquisition of
participating interests in new discovered oilfields offshore in the
UK. The stake in Production Licence No. P.198 Blocks 15/13a and
15/13b increases the company's aggregate contingent oil resources
to 68.5 million barrels, advancing it further towards achievement
of our target of producing 20,000 barrels of oil per day and 100
million barrels of proven and probable oil reserves by 2021. The
blocks consist of two discovered oil fields with a total of 30
MMbbl of net 2C Resources.
VIC/L31 and VIC/P57, Australia:
As operator of the West Seahorse field with proven and probable
reserves under the VIC/L31 production licence, as well as the
additional exploration opportunities under the VIC/P57 exploration
licence, Australia holds significant potential for Hibiscus' future
development plans.
Financial Performance
For the current twelve-month period, i.e. FY2018, Hibiscus
posted revenue of RM394.3 million (USD93.8 million), up from
RM261.3 million (USD61.18 million) achieved in the corresponding
twelve-month period in the previous financial year ended 30 June
2017 (FY2017). Hibiscus achieved profit after taxation of RM203.7
million (USD48.48 million) in FY2018 compared to RM106.1 million
(USD25.25 million) in FY2017.
Hibiscus completed the acquisition of 50% participating
interests in the North Sabah PSC on 31 March 2018 ("Completion
Date"). This acquisition together with the performance of the
Anasuria Cluster were the main drivers of Hibiscus' financial
performance.
From Completion Date to 30 June 2018, the North Sabah PSC
contributed RM181.9 million (USD43.29 million) to revenue and
RM96.9 million (USD23.06 million) to gross profit from the sale of
crude oil. From this segment, 623,544 barrels of crude oil were
sold in two cargoes, at an average realised price of
USD73.26/bbl.
Hibiscus' financial performance over the last five financial
years/periods.
Statutory Financial 30 Jun 2018 30 Jun 2017 30 Jun 30 Jun 31 Dec 2013
Year/Period 2016 2015
End
No. of months 12 months 12 months 12 months 18 months 9 months
------------ ------------ ---------- ---------- ------------
Activity Production (Mature Fields) Exploration Centric
Centric
-------------------------------------- ------------------------
Revenue (RM
million) 394.3 261.3 81.7 15.6 13.3
------------ ------------ ---------- ---------- ------------
EBITDA/(LBITDA)
(RM million) 334.1 156.5 (17.2) (67.0) 13.9
------------ ------------ ---------- ---------- ------------
PAT/(LAT) (RM
million) 203.7 106.1 (60.0) (74.2) 12.1
------------ ------------ ---------- ---------- ------------
Net asset per
Share (RM) 0.63 0.51 0.45 0.55 0.73
------------ ------------ ---------- ---------- ------------
Debt (RM million) - - - - -
------------ ------------ ---------- ---------- ------------
The acquisition of the North Sabah PSC has added significant
scale to Hibiscus' operations. It has enlarged its portfolio of
development and production assets and more importantly, it has
provided a second positive cash flow stream after the Anasuria
Cluster. This additional asset has also increased the company's
capabilities and widened its geographical footprint to now cover
the United Kingdom, Australia and Malaysia.
On 14 December 2018, Hibiscus' share price closed at MYR1.03
with a market capitalisation of USD391.04 million (MYR/USD =
0.23904).
Regalis Petroleum Limited
-- Oil, Republic of Chad
-- 12.66% equity interest
Polo's interest in the private and independent oil and gas
company, Regalis Petroleum Limited ("Regalis") increased to 13.67%
following an in-specie distribution by Polo's 42% owned associate,
Signet Petroleum Nigeria Limited and transfers from other Signet
shareholders.
Regalis has interests in three highly prospective onshore
exploration blocks in the Republic of Chad. Regalis completed a
5,349 kilometre airborne gravity/magnetic survey over Blocks DOA
and WD2-2008 which are on trend with existing and recent
Glencore/Caracal discoveries.
However, Polo has recorded an impairment charge of USD14.8
million in the previous financial year on the carrying value of its
investment in Regalis as no further progress has been made by
Regalis in pursuing its exploration strategy.
Coal
GCM Resources Plc (AIM: GCM)
-- Coal and Power Project, Bangladesh
-- 17.83% equity interest
In its Annual Report 2017 GCM announced two realisations that
significantly changed its direction. Firstly, working with
Bangladesh-based power consultants, GCM's team realised that
utilising the latest highly energy efficient ultra-supercritical
power plant technology the Phulbari coal mine is capable of
supporting up to 6,000MW power generation. Previously it believed
the mine would support 4,000MW but this was based on earlier
studies which incorporated subcritical boiler technology with lower
energy efficiency. This increase of 2,000MW (50%) for the same
annual thermal coal production is a huge value add for the Phulbari
Coal and Power Project ("the Project"), given the Government of
Bangladesh ("Government) aims to deliver a major step-jump in the
Country's electricity generation. This led GCM's management team to
a second realisation being it needed to shift strategic focus from
pursuing approval of the coal mine's Scheme of Development to
pursuing approval of an integrated coal mine and power plant
development delivering 6,000MW in line with the need of the
Government and people of Bangladesh for large-scale affordable
electricity. As a measure of this need, the Government is targeting
an increase in power generation from some 12,000MW currently to
57,000MW by 2041, with 70% of the power from gas and coal.
GCM has made solid progress towards securing potential
development partners for the 6,000MW with most or all power plants
planned to be located at the mine-mouth to maximise synergy with
mine development and minimise costly coal handling and transport
requirements. In this way GCM believes it will become the cheapest
and most reliable electricity provider in Bangladesh.
Working under an MOU with world renowned China Gezhouba Group
International Engineering Co Limited ("CGGC"), CGGC delivered in
July 2017 a technical pre-feasibility study for a 2,000MW power
plant located at the mine site. Subsequently CGGC and GCM agreed a
Contract Framework Agreement and a Joint Development Framework
giving CGGC the exclusive right for the engineering, procurement,
construction, and commissioning of the proposed power plant.
Throughout 2018 GCM has also been in discussion with Power
Constructions Corporation of China Ltd ("PowerChina") which is a
state-owned key enterprise of People's Republic of China and a
world-leading integrated engineering construction group.
Post the Reporting Period:
In November 2018 PowerChina delivered a technical prefeasibility
study for mine mouth power plants generating the remaining 4,000MW
necessary to consume the Phulbari coal mine's planned full thermal
coal production. Significantly the PowerChina report included due
diligence that independently confirmed the Phulbari coal mine's
capability of supporting 6,000MW.
Immediately following delivery of the power plant technical
prefeasibility study, GCM and PowerChina signed an MOU setting out
the steps towards a future Joint Development Agreement, obtaining
approval from the Government of Bangladesh and subsequent
development of both the mine and power plants (4,000MW PowerChina
with 2,000MW being covered in the separate agreement with CGGC).
The MOU also states intention that equity holdings of the coal mine
and power plants shall be agreed in the future Joint Development
Agreement and targets submitting a formal proposal to the new
Government of Bangladesh early in 2019. Although PowerChina has
expressed its interest to participate in coal mine development, GCM
is still considering other potential partners with specific coal
mine development experience.
Funding arrangements:
GCM announced in November 2017 that it had successfully raised
GBP2 million (GBP1.8 million net of costs) at 34.4p per New
Ordinary Share in an institutionally underwritten Offer. This
resulted in a total of 5,813,953 New Ordinary Shares being allotted
to satisfy the Offer which means the Company will have 88,175,650
ordinary shares of 10p each in issue. No Ordinary Shares are held
in treasury.
GCM announced in November 2018 that it had secured a GBP1.2
million increase to its existing short-term loan facility of GBP1.1
million with Polo Resources Limited bringing the total loan
facility to GBP2.3 million. The original GBP1.1 million has already
been utilised and this latest amount will be drawn down in equal
quarterly instalments of GBP300,000 and will be used in progressing
joint venture arrangements with development partners and
preparation of a joint submission to
the Government of Bangladesh.
On 14 December 2018, GCM's share price closed at GBP0.2375 with
a market capitalisation of USD29.46 million (GBP/USD =
1.26416).
Universal Coal Resources Pte Ltd
-- Coal Project, Indonesia
-- Redeemable convertible note
In May 2016, Polo's subsidiary, PIL, entered into a secured SGD5
million (USD3.79 million) nominal value 15% redeemable convertible
note ("Note") with Universal Coal Resources Pte Ltd
("Universal").
Universal is incorporated in Singapore and itself had entered
into a conditional agreement to acquire an indirect 75% interest in
PT Transcoal Minergy Coal Project ("TCM"), a company incorporated
in Indonesia, from a Pan Asia Corporation Ltd. (ASX: PZC)
subsidiary.
Universal was targeting a Singapore Stock Exchange Catalist
Board listing and the Note entitles Polo to convert the principal
outstanding plus any accrued interest into not less than 20% of the
share capital of Universal as enlarged by such a conversion at any
time up to 18 months from draw-down, or earlier upon the receipt of
approval in principle to list. The Note is repayable 18 months from
draw-down unless previously converted.
Pursuant to the terms of the Note, a key action for Universal
was to obtain approval from Pan Asia's shareholders for the
disposal of TCM to Universal within three months from the date of
the Note. As at the date hereof, this approval has not been
obtained and a default of the terms of the Note remains. PIL has
served notice on Universal and the parties who provided security,
namely PZC and Mr. Boelio Muliadi, and is currently in discussions
with them on a without prejudice basis for an amicable resolution,
in parallel with PZC's endeavours to dispose TCM to an
investor.
PZC announced that it is progressing the potential cash sale of
its interests in TCM and that Polo will be repaid from the proceeds
of sale. The transaction is still subject to certain conditions
precedent including due diligence, approval from PZC shareholders
and any approvals required from regulatory and other bodies. The
due diligence period has been extended to 31 March 2018.
TCM Coal Project:
TCM is the owner of a Production Operation Mining Business
Licence for a mining concession in South Kalimantan Province,
Indonesia. Their focus is the development of a two million tonnes
per annum underground mine delivering a high quality Bituminous
Coal saleable product of some 6,200 kcal/kg specific energy (GAR -
Gross as Received). The current JORC Resource of 129 Mt (measured,
indicated and inferred) has been derived from the southern area of
the concession and there is potential to upgrade and increase the
resource base through drilling the northern area. TCM's production
permit extends to April 2028. Further drilling and a full final
feasibility study are required to be completed and forestry
approval obtained prior to commencement of mine development. The
TCM Coal Project will utilise existing coal transportation
infrastructure including a 50 kilometre haul road to the river port
at Batulicin, a major coal shipping centre.
Phosphate
Celamin Holdings NL (ASX: CNL)
-- Phosphate, Tunisia
-- 20.53% equity interest
Celamin continues to focus on restitution of its interest in
Chaketma Phosphates SA ("CPSA"), the operating company responsible
for development of the Chaketma Project. The Chaketma Project is a
potential large scale phosphate development asset, which comprises
six prospects over a total area of 56km(2) . It hosts a total JORC
compliant Inferred Resource of 130Mt at 20.5% P O , confirmed from
drilling at only two of the project's six prospects.
On 3 July 2018, the company appointed Simon Eley as Chief
Executive Officer. Simon has been tasked with leading the recovery
of the Chaketma Phosphate Project following the arbitration success
announced in December 2017, the engagement of a local partner in
Tunisia and the review and acquisition of new project
opportunities. Simon replaces Tim Markwell, who served as Acting
CEO since January 2018. Tim remains as a Non-Executive Director of
the company.
In relation to the dispute between its wholly owned subsidiary
Celamin Limited and its joint venture partner TMS in relation to
the fraudulent purported transfer to TMS of Celamin's 51% interest
in the joint venture company CPSA, the consolidated entity will
continue to pursue all available legal and other avenues in order
to secure the preservation and recognition of Celamin's rights,
including restitution of its shares in CPSA and compensation for
damages suffered.
The full details of the background of the dispute can be found
at www.celaminnl.com.au and the Celamin's Annual Report for the
year ended 30 June 2018.
Celamin also continues to review other new opportunities in
Tunisia consistent with its strategy to build a portfolio of
resource assets to add shareholder value.
Funding arrangements:
In July 2017, Celamin successfully raised AUD1,050,000 (USD0.810
million) through a share placement to its major shareholders, Polo
and African Lion 3 Fund, and clients of Patersons Securities
Limited.
On 10 January 2018, the company secured a capital raising of
AUD1,551,750 (USD1,133,452) to provide funding to pursue
enforcement of the Final Award for recovery of its interest in
Chaketma Phosphate, other legal actions in Tunisia, and for general
working capital purposes. Under the placement agreement, Polo
acquired a further 1,320,000,000 ordinary shares in Celamin for a
total consideration of AUD330,000 (USD237,025).
On 4 June 2018, the company completed a consolidation of its
issued capital on a one for one-hundred basis. The consolidation
was approved by shareholders at the company's Annual General
Meeting held on 28 May 2018. On 15 June 2018, the suspension of
trading in the securities of the company was lifted.
Post the Reporting Period:
On 8 October 2018, Celamin announced a partially underwritten
SPP Offer to raise up to AUD673,005 (USD491,966). The company also
announced a Bonus Options Offer to be made to shareholders on a 1
for 2 basis, and a Placement Offer to sophisticated, institutional
or professional investors to raise up to a further AUD250,000
(USD182,696).
The capital raised under the SPP Offer and the Placement Offer
will be used to fund ongoing legal proceedings for recovery of
Celamin's interest in the Chaketma Project, exploration programs on
Celamin's new exploration permits in Tunisia prospective for zinc
and lead, working capital and costs associated with the Offers.
On 14 November 2018, Celamin announced that the Top Up Placement
("TUP") as contemplated by Celamin's Prospectus lodged with ASIC
and ASX on 15 October 2018 successfully raised AUD336,502
(USD242,975), before costs, through the issue of 13,460,090 new
fully-paid ordinary shares in Celamin at the same price per share
as the SPP Offer that closed on 7 November 2018 (refer to CNL ASX
Release dated 9 November 2018). Polo's interest in CNL following
the SPP Offer and subsequent TUP stands at 26,214,915 shares
representing 20.53% of CNL's Fully Paid Ordinary Shares. Under the
terms of the Bonus Options Offer, Polo is eligible to receive
12,394,628 CNL Share Options representing 19.44% of the total
Options issued.
Tunisian Zinc Permits Granted
In July 2018, Celamin was granted two new exploration permits in
Tunisia prospective for Zinc and Lead. The Djebba and Zeflana
permits cover 32 kilometres in the Atlas Zinc-Lead Province that
runs through the north of the country.
Since the grant of the exploration permits, Celamin has acquired
the report on the mining study completed in 1989 by Montreal-based
consultancy, Le Groupe SIDAM-Minorex, for the Office National des
Mines ("ONM") in Tunisia and engaged CSA Global to review this
study to enable announcement of the historical resource
estimate.
The mining study, titled "Etude de faisabilité preliminaire de
l'exploitation du gite plomb-zincifere de Djebba" (Pre-feasibility
study on mining the Djebba Zinc-Lead deposit) documents historical
resource estimates and mining studies for the deposit completed in
the period 1986-89. The study was based on drilling completed by
ONM at the historical Djebba mine site which was used to estimate
and report the historical resource of 2.7 Mt at 6.1% Zn and 3.3%
Pb(1) .
Better results from the historical ONM drilling include:
-- S-30bis 16.6m at 8.36% Zn & 1.8% Pb from 66.1m
-- MDJ2 10.45m at 17.52% Zn & 1.57% Pb from 21.85m
-- MDJ7 8.55m at 9.55% Zn & 0.81% Pb from 32.85m
Celamin cautions that this resource estimate is a historical
estimate and was not reported in accordance with the JORC Code. A
Competent Person has not done sufficient work to classify the
historical estimate as a Mineral Resource and/or Ore Reserve in
accordance with the JORC Code and it is uncertain that following
evaluation and/or further exploration work that the historical
estimate will be able to be reported as a Mineral Resource or Ore
Reserve in accordance with the JORC Code.
ASX Listing Rule 5.12 specifies the additional information that
must be provided in a market announcement that contains historical
estimates. This information is contained in the Annexure to
Celamin's 31 October 2018 Release together with further details on
the historic mineral resource estimate.
Reporting of the historical estimate is considered material as
it provides an indication of the presence of potentially economic
mineralisation on the property. Although it can only be considered
a qualitative indication at this time, it provides an indication of
the prospectivity of the area and supports investment in further
exploration.
Subsequent to the 1989 study, additional drilling and other
exploration work was completed at Djebba by ONM (1992),
ONM-Metallgesellschaft (1993-94), VSX-listed Consolidated Global
Minerals Ltd (2001-04), and AIM-listed Maghreb Minerals
(2002-2008). Celamin is in the process of acquiring, compiling, and
assessing the available data and reports for this subsequent
work.
Celamin will now focus on validation of the historical resource
based on confirmatory drilling and target generation work to define
new targets for drill testing as this style of mineralisation can
be extensive and form large deposits.
This is a very encouraging outcome and one that underpins
Celamin's continued presence in Tunisia. While Celamin awaits the
return of its interest in Chaketma, the company will concentrate on
completing the confirmatory work required on the resource as well
as target generation on both the Djebba and Zeflana projects.
Link to map
http://www.rns-pdf.londonstockexchange.com/rns/2448L_1-2018-12-21.pdf
Figure 1. Location of granted permits, Djebba and Zeflana and
recent applications
Planned Work Programme
Celamin is in the process of acquiring, compiling, and assessing
all the available historical data. A full assessment will not be
possible until all data has been obtained, and a detailed planned
work program will be formulated at that time.
Celamin is focused on exploration of the Djebba trend, not just
the historical resource area. Celamin will bring an exploration
model to bear that is based on work completed in Tunisia in the
2000s by CSA Global Ltd based on targeting deposits in Neogene
basins in northern Tunisia. This setting has many analogies with
the Himalayan foreland in Yunnan that hosts the giant Jinding
deposit.
The Djebba work program is therefore expected to be two-pronged,
with validation of the historical resource based on confirmatory
drilling, and target generation work to define new targets for
drill testing. The latter is expected to include geological
mapping, geochemical and geophysical surveys.
The extent of the actual work programs and the amount of
drilling completed will be subject to market conditions and funding
for the proposed programs.
As noted in figure 1, Celamin has lodged applications for larger
permits covering the geological trends of both the Djebba and
Zeflana permits. The applications areas are expected to improve the
possibility of delineating extensions to the mineralisation at both
locations.
For further information on the Djebba and Zeflana permits,
including past ownership and historical data, please refer to ASX
releases 17 July 2018 and 31 October 2018 which can be found at
http://www.celaminnl.com.au/.
On 14 December 2018, Celamin's share price closed at AUD0.028
with a market capitalisation of USD2.58 million (AUD/USD =
0.72279).
(1) Celamin cautions that this resource estimate is a historical
estimate and was not reported in accordance with the JORC Code. A
competent person has not done sufficient work to classify the
historical estimate as a mineral resource and/or reserve in
accordance with the JORC Code and it is uncertain that following
evaluation and/or further exploration work that the historical
estimate will be able to be reported as a mineral resource or ore
reserve in accordance with the JORC Code.
Lithium, Iron, Vanadium and Precious Metals
PRISM Diversified Ltd (formerly Ironstone Resources)
-- Lithium, Iron, Vanadium and Precious Metals, Canada
-- 19.5% equity interest
With development starting in 2007 under Ironstone Resources'
tutelage, the Clear Hills Project will serve as the locus for the
long-term production of iron, vanadium, lithium and aggregate
products to support the growing demand in the aerospace and
automotive industries for high-purity iron powder products, and
vanadium and lithium electric metals to meet the demands of
renewable energy storage projects.
Production of Lithium Carbonate from lithium-rich formation
brines
In early 2018, Ironstone Resources was renamed to PRISM
Diversified Ltd. to mark the company's entry into its
commercialization stage of development.
Through three diamond core drilling programs, a resource of 557
million tonnes of mineralized material has been defined (182
million tonnes contained iron and 2.45 billion pounds of contained
vanadium pentoxide), with the results reported in a NI 43-101
technical resource report (July 2012) released by SRK Consulting
(Canada) Inc. on behalf of Ironstone Resources.
In early 2017, PRISM determined that its iron deposit would be
amenable for the production of carbonyl iron powder using a
commercially-proven process, with secondary recovery of vanadium
and possibly cobalt.
Lithium-rich brines in Devonian-age oil and gas reservoirs
underlie PRISM's Clear Hills permits supported by several regional
studies and government reports. The company is currently evaluating
the formation brines to determine the most effective method to
extract, concentrate and refine the lithium into battery-grade
lithium carbonate for use in rechargeable batteries for electric
automobiles and consumer products. PRISM has aligned itself with a
Canadian water processing company with expertise in the rapid and
real-time extraction of impurities from water including minerals
such as lithium.
After successful preliminary tests revealed the efficient
concentration of lithium from a reservoir brine sample on PRISM's
permit using the leading-edge patented technology, the company
quadrupled its permit-holdings in the Peace Region and now hold a
100% undivided interest in 1.91 million acres (776,322 hectares),
the largest contiguous block of metallic and industrial mineral
permits held in Alberta today.
In conjunction with HATCH Associates, the company conducted an
extensive research and development program to fine-tune and scale a
novel process - dubbed as the HICS Process - for upgrading oolitic
ironstone into high-grade iron metallics to be sold as alternative
iron units into the US steel industry or to support steel
production in western Canada. Further commercialisation work will
be conducted after carbonyl iron powder operations commence,
anticipated in 2020.
The overlying overburden is comprised of bentonite-rich
expandable clays for potential use in the production of
light-weight expandable clay aggregates (LECA), or which can be
manufactured into a variety of environmentally-friendly building
and road construction products.
The Clear Hills Project is situated in the heart of Peace
Country, 200 kms north of the city of Grande Prairie in
northwestern Alberta. The region hosts a near-surface polymetallic
iron-vanadium deposit that extends along the eastern flanks of the
Clear Hills.
Investment Update
Through implementation of PRISM's price protection mechanism in
the latter half of 2017, Polo's interest is currently 19.5%.
Gold
Blackham Resources Limited (ASX: BLK)
-- Gold, Western Australia
-- Coal, Southwest Australia
-- Combined direct and indirect 1.53% equity interest (diluted following a rights issue)
The Matilda-Wiluna Gold Operation ('Operation') is located in
Australia's largest gold belt which stretches from Norseman to
Wiluna and passes through Kalgoorlie and Leinster. Over the last
seven years, Blackham has consolidated the entire Wiluna Goldfield
within one tenement package covering over 1,100km(2) . This
consolidated tenement package has historically produced over 4.4
million ounces. In October 2016, Blackham produced first gold from
the Operation.
Production
Gold production in the financial year was 70,565oz, with
demonstrably stronger performance for the six months to 30 June
2018. The second half of the year saw a 31% increase in production
on the previous half. This was driven by lower open pit mining
strip ratios, higher mill grade and continuous improvements made by
the processing team to the plant. Mill throughput improved in each
successive quarter of FY18 with record throughput achieved in the
Jun'18 quarter (535kt milled).
Mining during the six months to December 2017 involved extensive
stripping, enabling access to higher grade zones in the M4 and
Galaxy pits during the second half of the year. In the six months
to December 2017, geotechnical incidents and related mine
sequencing issues experienced resulted in a high proportion of mill
feed from low grade stockpiles (454,000t at 0.7g/t). This compared
to low grade stockpile feed of only 24,000t at 0.7g/t in the second
half of the year.
The successful move in November 2017 to an owner operator with
predominately air leg mining method has significantly de-risked
mining of the Golden Age Underground orebody. The air leg mining
method is considered a lower-risk method and has resulted in lower
tonnes being mined at a higher grade. Golden Age has consistently
generated cash and is forecast to continue to do so.
Production, Cost and Capital Guidance for FY19
Production guidance for FY2019 is 77k-89koz at an AISC of
AUD1,250-AUD1,450/oz. FY2019 AISC is expected to be higher than
Life of Mine AISC, particularly in the September quarter, due to
the investment required to strip new mining areas in the Matilda
Mine, increase stockpiles and to maintain a high mill
throughput.
Exploration and Resource Definition Drilling
During the year, Blackham completed several projects aimed at
increasing its gold reserves and ongoing exploration drilling
targeted at new oxide deposits to extend the current free milling
mine life. Reserves at 30 June 2018 are currently being
re-estimated and will be published imminently.
In the six months to June 2018, Blackham's exploration team
concentrated on further delineating free-milling open pit reserves
over the 4km strike at the Wiluna mine. Blackham believes the
Wiluna free-milling material is an attractive feed stock for the
current operating mill and has fast tracked mining approvals to
access these mining areas in FY2019.
The Lake Way drill programme was completed in the June 2018
quarter and is aligned with Blackham's strategy to extend the free
milling life to five years. Results from the RC and diamond
drilling programmes confirm extensions to shallow high grade
mineralisation south of the planned pit cutback.
Blackham remains focused on extending the life of the Golden Age
underground in line with the recent exploration success close to
existing mine access. Results released in June 2018 identified high
grade extensions at Golden Age, confirming that mineralisation is
open both down plunge and down dip and future mining is planned to
increasingly target the extensions defined from this drilling.
Wiluna Expansion Study
The Expansion Preliminary Feasibility Study ("Expansion PFS")
published on 30 August 2017, confirmed the robust economics for a
+200kozpa long mine life operation. Key outcomes were life-of-mine
AISC of AUD1,058/oz, IRR 123% and NPV8 of AUD360m before tax at an
AUD1,600/oz gold price.
The Expansion Definitive Feasibility Study ("DFS) is well
advanced with the bulk of expenditure already incurred. Processing
optimisation studies continue with a view to further de-risking the
expansion opportunity. Work over the June 2017 quarter focused on
improvements to the floatation circuit. Wiluna oxide/transition
open pit mining is expected to commence in the first quarter of
this year, further de-risking the geology and mining risks prior to
committing further capital to the sulphide processing plant.
Resources and Reserves
Post reporting period, Blackham announced an increased Ore
Reserve estimate for the Operation of 26Mt at 1.8g/t for 1.53Moz of
gold as at 30 June 2018. Blackham continues to progressively assess
the Operation's Resource base total of 96Mt at 2.2g/t for 6.7Moz
(58% Indicated), with further conversion expected into reserves.
There are currently 3.2Moz at 4.6g/t Au in underground resources
sitting outside of Reserves.
Results
The loss after tax for the financial year was AUD20,027,000
(USD14,482,421) (2017: AUD6,844,000 (USD4,949,206)). Net assets at
the end of the year were AUD103,126,000 (USD74,578,303) (2017:
AUD86,325,000 (USD62,489,358)).
Equity Placements
On 19 February 2018, Blackham announced that it had raised gross
proceeds of AUD35.9 million (USD26 million) through a placement of
898 million shares at a price of AUD0.04 per share.
Other equity financing
The Australian Special Opportunity Fund facility was terminated
on 17 January 2018. A total of AUD2.4 million (USD1.74 million) was
drawn down over the term of the facility.
Debt financing
Blackham refinanced its non-amortising term loan with Orion Fund
JV Limited ("Orion"), via a new, secured AUD14.3 million (USD10.44
million) financing arrangement with its key mining contractor, MACA
Limited.
The Orion Term Loan was fully repaid in February 2018. The
company has a separate fully drawn Project Financing Facility of
AUD23 million (USD16.52 million) that remains in place with Orion,
which was reduced to AUD15.5 million (USD11.27 million) by 30 June
2018.
Events subsequent to reporting date:
Convertible Security Funding Agreement
On 25 September 2018, Blackham announced the execution of an
agreement with an entity managed by The Lind Partners ("Lind"), a
New York based institutional fund manager, for up to AUD23 million
(USD16.52 million) in total capital. The initial funding commitment
of AUD7.5 million (USD5.42 million) is to be funded within 20
business days of execution.
Lind's initial AUD7.5 million (USD5.42 million) investment will
be provided as a Secured Convertible Note with a 24 month term, the
proceeds of which will be used, along with Blackham's current cash,
to fully repay the short term secured debt owed to Orion Fund JV
Limited. With the Orion debt fully repaid, Blackham will be able to
re-direct operational cash flows to expand its reserves and
finalise the Wiluna Expansion DFS.
Controlled Placement Agreement
During July 2018, Blackham entered into a Controlled Placement
Agreement ("CPA") with Acuity Capital. The CPA provides Blackham
with up to AUD10 million (USD7.29 million) of standby equity
capital over the coming 27 month period. Importantly, Blackham
retains full control of all aspects of the placement process,
having sole discretion as to whether or not to utilise the CPA, the
quantum of shares issued, the minimum issue price of shares and the
timing of each placement tranche (if any). There are no
requirements on Blackham to utilise the CPA and Blackham may
terminate the CPA at any time, without cost or penalty. If Blackham
does decide to utilise the CPA, Blackham is able to set a floor
price (at its sole discretion) and the final issue price will be
calculated as the greater of that floor price set by Blackham and a
10% discount to a Volume Weighted Average Price over a period of
Blackham's choosing (again at the sole discretion of Blackham).
On 14 December 2018, Blackham's share price closed at AUD0.042
with a market capitalisation of USD40.76 million (AUD/USD =
0.72279).
Nimini Holdings Limited
-- Gold Project, Sierra Leone
-- Equity interest: 90% Polo Resources and 10% Plinian Capital
Polo's Annual Report 2017 explained that given the lack of
progress in negotiating an acceptable Mine Development Agreement
("MDA") with the Government of Sierra Leone ('GoSL") for Nimini's
Komahun Gold Project (the "Nimini Project") it was forced to take a
hardline approach to minimise costs which included suspending
payment of all government fees. Furthermore, as Sierra Leone was
heading to a General Election on 7 March 2018 it was felt the best
chance of obtaining an acceptable MDA would come post the election
with a new President, Parliament and local councils in place.
Unfortunately, despite the considerable lobbying efforts by our
in-country representative who is a Director of our local subsidiary
Nimini Mining Limited, the Nimini Project's mining licence was
cancelled at the end of August 2018. This came a month after a
blanket move by the GoSL cancelling over 30 mining licences at
which time the GoSL cited it was facing serious revenue generation
challenges. Its main revenue stream historically has come from the
mining sector but it found many mining companies had either left or
suspended operations. Ironically GoSL's logic in cancelling these
mining leases was that it would create opportunities for other
potential investors in its fledgling mining industry.
Polo is both disappointed and perplexed by the GoSL's action in
cancelling the Nimini Project's mining licence and has written to
the President and the Minister of Mines and Mineral Resources
appealing for the decision to be reversed. The Cancellation Letter
was directed at the non-payment of fees and lack of mine
development and paid no attention to Polo's significant investment
in the Nimini Project, the fact that it remains in the best
position to develop the Nimini Project having done mining studies
based on a very significant geological database and the fact that
it was the GoSL itself that acknowledged the need for an MDA to
assist Nimini develop the Komahun Gold Project. This is witnessed
by the exhaustively negotiated MDA agreement of 2013, signed off by
the then Minister of Mines and Mineral Resources but subsequently
withdrawn as it was poised to be ratified by parliament and by the
fact it was the GoSL that invited Nimini to renegotiate the MDA in
2015. After these negotiations failed on several subsequent
occasions the GoSL continued to invite Nimini for discussions
regarding the MDA, with the most recent being instigated by the
Chief of Staff (State House) instigating a meeting between Nimini
and the GoSL's Chief Negotiator on 19th of June 2017.
While Polo awaits the outcome of its appeal against the mining
licence cancellation it has pointed out to the GoSL that Nimini and
Polo reserve their rights to full reimbursement of all costs
expended on the Komahun Gold Project and reserve their rights to
benefit from any future cashflows over the entire productive life
of the Komahun Gold Project.
Faced with the mounting risks and uncertainty surrounding
development of the Nimini Project, Polo began recording impairments
on the carrying value of its investment which at this point is USD3
million now based solely on the value of the very considerable
Nimini Project database.
Copper
Weatherly International Plc (AIM; WTI)
-- Copper, Namibia
-- 5.2% equity interest
Weatherly International has restarted the process of reviewing
its strategic options following the appointment of Simon Kirkhope
and Andrew Johnson of FTI Consulting as joint administrators of the
company in June 2018. This follows the implementation of a recovery
plan for its Tschudi copper mine in Namibia, following significant
water ingress in May 2018. Since the appointment of the joint
administrators in June, there have been material improvements to
the dewatering capabilities and a strategy enabling stable path to
growth has been implemented.
The strategic review process is being led by financial advisors
Numis and Treadstone, and the scope of the options being considered
by Weatherly include, but are not limited to, the sale of certain
subsidiaries of Weatherly, or the disposal of certain assets of the
company.
Weatherly has a diverse portfolio of base metal production and
development assets with multiple low capital spend growth
opportunities. These include the Tschudi Mine, the Otjihase and
Matchless mines (together, "Central Operations") which were placed
on care and maintenance in September 2015 and the Berg Aukas
project in Namibia. Key highlights of Weatherly's main assets are
provided below.
Tschudi
-- Producing copper mine located in Tsumeb, northern Namibia
-- Currently running at 17ktpa (the SX-EW plant's minimum design capacity)
-- Ore Reserves (1) of 15.6Mt at 0.89% Cu for 138.2kt and
Mineral Resources(1) of 51.0Mt at 0.76% Cu for 387.7kt
-- Materially improved dewatering capabilities and strategy enabling stable path to growth
-- Strong Resource base could support further production
enabling potential mine life extensions
-- Underexplored project area
-- Modern processing facilities and robust infrastructure base
Central Operations
-- Three underground mines and an 800ktpa copper concentrator,
currently on care and maintenance
-- The operations were in production until September 2015,
producing high quality concentrate sought after for blending
-- Mineral Resources(2) of 4.40Mt at 2.27% Cu for 99.7kt
(Otjihase) and 1.34Mt @ 2.40% for 31.8Kt (Matchless)
-- Otjihase and Matchless mines represent a significant low
capital intensity restart opportunity with substantial cash flow
enhancing opportunities including:
o Capital realisation through optimised design
o Improvement of exploration target through expansion and access
to neigbouring compartments
o Backfill optimisation to increase recovery
Berg Aukas
-- Past-producing zinc-lead-vanadium project located near Tsumeb, Namibia
-- Shafts and access development to 800m depth
-- Ore Reserves(3) of 1.69Mt at 11.16% Zn, 2.76% Pb and 0.23%
V(2) O(5) (Cut off 5% Zn eq) and Mineral
-- Resources(3) of 1.26Mt at 15.47% Zn, 3.84% Pb and 0.33% V(2) O(5) (Cut off 3.0% Zn)
-- Significant value enhancing opportunities including:
o Shaft stripping / decline addition options allowing for larger
equipment and mill expansion
o Unlocking value from metal recovery from stock of historical
tailings
o Favourable vanadium pricing environment
Notes
(1) Total as at 30 June 2017. 100% basis.
(2) 100% basis. Mineral Resource statement for the Otjihase Mine
is declared in terms of the JORC Code (2012
Edition) with an effective date of 31 March 2018. Matchless
estimated tonnage based on Bara polygonal calculation.
(3) As at April 2013.
Financial Review
The purpose of this review is to provide a further analysis of
the Group's consolidated 2018 results and the main factors that
affected this financial performance. The Financial Review should be
read in conjunction with the financial statements and associated
notes.
During the year, the Group recorded a loss on ordinary
activities after taxation of USD7.60 million (2017: USD6.45
million). This loss was mainly attributable to a total impairment
charge of USD4.0 million written down against Weatherly
International Plc, Verolube Inc and Celamin Holdings Ltd.
The Group balance sheet strengthened with net assets expanded by
28% to USD60.28 million from the previous financial year (2017:
USD47.22 million).
Basic loss per share for the year ended 30 June 2018 was USD2.44
cents (2017: USD2.07 cents). It should be noted that this figure is
not necessarily indicative of a weakening financial performance as
such variances are in the very nature of a natural resource
investment company whose strategic focus extends beyond a single
reporting year.
Focus sectors for our portfolio of investments in this reporting
period centre largely on investments across the oil & gas,
gold, and coal sectors. In the 2017/18 financial year, the Board
has continued to support the on-going development of its key assets
and acquired new investments.
In January 2018, Polo acquired a further 1,320,000,000 ordinary
shares in Celamin for a total consideration of AUD330,000 (USD0.254
million) by way of a share placement.
During the year under review, Polo's investment in Hibiscus
Petroleum Berhad, a company listed on the Main Market of Bursa
Malaysia Securities Berhad, continued with its uptrend in the share
price. As of 14 December 2018, the share price of Hibiscus closed
at MYR1.03 (30 June 2017: MYR0.41).
The Board of Polo is still sensitive to the impact of current
market sentiment towards junior exploration-stage resource
companies and of the correction in the prices of many commodities,
such as gold, copper and oil during the reporting period under
review. Whilst these factors have combined to create a difficult
operating environment across the board for junior resource
companies, Polo's strategy of developing a broad-based portfolio of
projects and investments capable of delivering positive shareholder
returns has enabled the Company to retain the financial flexibility
to optimise asset value over the medium and longer-terms.
Financial Position
The Directors have reviewed the Group's budgets for 2019, as
well as longer-term financial cash flow projections and have
considered a range of different scenarios together with their
associated risks and uncertainties, and the impact of these
scenarios on the Group's cash balances. Additionally, the Directors
have assessed the likelihood of future funding requirements. Based
on these activities, the Directors are satisfied that the Group
maintains a healthy financial position from the date of the signing
of these financial statements, enabling Polo to take a flexible
approach to the acquisition and disposal of investments.
As at 14 December 2018, the Group had a net position of cash,
receivables and short term investments of USD13.41 million (30 June
2018: USD15.02 million). Listed and unlisted investments at marked
to market value, cost and valuation amounted to USD54.53 million
(30 June 2018: USD52.92 million). The combined total of cash,
receivables, payables, listed and unlisted investments was USD62.0
million as of 14 December 2018 (30 June 2018: USD60.28 million)
which is equivalent to a Net Asset value of approximately 15.73
pence per Polo share (30 June 2018: 14.70 pence per share).
Outlook
Polo continues to investigate potential investments and will
allocate financial resources to investments on the basis of
anticipated future returns.
Although all natural resource investments remain vulnerable to
near-term market instabilities, I remain positive about the
longer-term fundamentals of the resource sector and am particularly
focused on achieving near-term returns which in turn will
strengthen our financial position. The Company will continue to
keep shareholders advised as and when developments are
confirmed.
I would like to thank all our shareholders, partners and
advisers for their continuous and unwavering support.
Datuk Michael Tang, PJN
Executive Chairman
Group Statement of Comprehensive Income
for the year ended 30 June 2018
Year ended Year ended
30 June 2018 30 June 2017
$ 000's $ 000's
(Loss) on sale of investments - (4)
Investment income 241 59
Impairment of AFS investments (2,749) (325)
Administrative & Exploration
expenses (2,291) (2,284)
Share options expensed (216) -
Expensed exploration costs - (454)
Impairment of exploration
and evaluation costs - (2,026)
Group operating (loss) (5,015) (5,034)
-------------- --------------
Share of associates results (785) (1,799)
Impairment of associate (1,250) -
Other loan provision (916) -
Finance revenue 370 383
Other income - -
(Loss) before taxation (7,596) (6,450)
Income tax expense - -
Retained (loss) for the year (7,596) (6,450)
-------------- --------------
Other comprehensive income
Gain on market value revaluation
of available for sale investments 20,334 1,713
Currency translation differences 107 (559)
-------------- --------------
Other comprehensive income
for the year net of taxation 20,441 1,154
-------------- --------------
Total comprehensive income
for the year 12,845 (5,296)
-------------- --------------
Retained (loss) for the year
attributable to:
Equity holders of the parent (7,596) (6,202)
Non-controlling interests - (248)
-------------- --------------
(7,596) (6,450)
-------------- --------------
Total comprehensive income
for the year attributable
to:
Equity holders of the parent 12,867 (5,009)
Non-controlling interests (22) (287)
-------------- --------------
12,845 (5,296)
-------------- --------------
(Loss) per share (US cents)
Basic (2.44) (2.07)
Diluted (2.44) (2.06)
Group Statement of Financial Position
as at 30 June 2018
30 June 2018 30 June 2017
$ 000's $ 000's $ 000's $ 000's
ASSETS
Non-current assets
Tangible assets 2,475 2,475
Interest in associates 2,134 3,084
Available for sale investments 43,971 27,662
Trade and other receivables 3,941 3,757
-------------- -------------
Total non-current assets 52,521 36,978
Current assets
Trade and other receivables 3,004 3,961
Available for sale investments 6,816 5,501
Cash and cash equivalents 1,260 4,010
-------------- -------------
Total current assets 11,080 13,472
----------- --------
TOTAL ASSETS 63,601 50,450
LIABILITIES
Current liabilities
Trade and other payables (3,320) (3,230)
-------------- -------------
TOTAL LIABILITIES (3,320) (3,230)
NET ASSETS 60,281 47,220
----------- --------
EQUITY
Equity contribution 306,714 306,714
Retained earnings (280,215) (273,073)
Available for sale investment
reserve 19,674 (682)
Foreign exchange reserve 17,234 17,127
Share based payments
reserve 216 454
-------------- -------------
63,623 50,540
Non-controlling interest (3,342) (3,320)
----------- --------
TOTAL EQUITY 60,281 47,220
----------- --------
These financial statements were approved by the Board of Directors
on 20 December 2018 and signed on its behalf by:
Datuk Michael Tang Kian Meng Cheah
Executive Chairman Non-Executive Director
Group Statement of Cash Flows
for the year ended 30 June 2018
Year ended Year ended
30 June 2018 30 June 2017
$ 000's $ 000's
Cash flows from operating activities
Operating (loss) (5,015) (5,034)
(Increase) in trade and other
receivables (513) (1,512)
Increase/(decrease) in trade and
other payables 90 (21)
(Increase) in available for sale
investments (39) (1,608)
Foreign exchange loss/(gain) 1 (11)
Share options expensed 216 -
Impairment of AFS investments 2,749 325
Loss on sale of PPE - 51
Depreciation & impairment - 2,026
-------------- --------------
Net cash (outflow) from operating
activities (2,511) (5,784)
-------------- --------------
Cash flows from investing activities
Finance revenue 370 383
Equity purchases in associates (530) -
Loan (advanced) to third party (184) (154)
Net cash inflow from investing
activities (344) 229
-------------- --------------
Cash flows from financing activities
Issue of ordinary share capital - -
Net cash inflow from financing - -
activities
-------------- --------------
Net (decrease) in cash and cash
equivalents (2,855) (5,555)
Cash and cash equivalents at beginning
of year 4,010 9,615
Exchange gain on cash and cash
equivalents 105 (50)
-------------- --------------
Cash and cash equivalents at end
of year 1,260 4,010
-------------- --------------
Group Statement of Changes in Equity
for the year ended 30 June 2018
Equity Available Foreign Share Retained Total Non-controlling Total
contribution for sale currency based earnings interest equity
investment translation payment
reserve reserve reserve
Group $ 000's $ 000's $ 000's $ 000's $ 000's $ 000's $ 000's $ 000's
As at 1 July
2016 306,714 (2,434) 17,686 908 (267,325) 55,549 (3,033) 52,516
(Loss) for
the year - - - - (6,202) (6,202) (248) (6,450)
Gain on market
value
revaluation
of available
for sale
investments - 1,752 - - - 1,752 (39) 1,713
Currency
translation
differences - - (559) - - (559) - (559)
------------- ----------- ------------ --------- ---------- -------- ---------------- --------
Total
comprehensive
income - 1,752 (559) - (6,202) (5,009) (287) (5,296)
Share options
expired - - - (454) 454 - - -
------------- ----------- ------------ --------- ---------- -------- ---------------- --------
Total
contributions
by and
distributions
to owners of
the Company - - - (454) 454 - - -
As at 30 June
2017 306,714 (682) 17,127 454 (273,073) 50,540 (3,320) 47,220
------------- ----------- ------------ --------- ---------- -------- ---------------- --------
(Loss) for
the year - - - - (7,596) (7,596) - (7,596)
Gain on market
value
revaluation
of available
for sale
investments - 20,356 - - - 20,356 (22) 20,334
Currency
translation
differences - - 107 - - 107 - 107
------------- ----------- ------------ --------- ---------- -------- ---------------- --------
Total
comprehensive
income - 20,356 107 - (7,596) 12,867 (22) 12,845
Share options
expired - - - (454) 454 - - -
Share options
charge - - - 216 - 216 - 216
Total
contributions
by and
distributions
to owners of
the Company - - - (238) 454 216 - 216
As at 30 June
2018 306,714 19,674 17,234 216 (280,215) 63,623 (3,342) 60,281
------------- ----------- ------------ --------- ---------- -------- ---------------- --------
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR PGGGWPUPRUMG
(END) Dow Jones Newswires
December 21, 2018 02:39 ET (07:39 GMT)
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