TIDMPOL
RNS Number : 7174X
Polo Resources Limited
20 December 2019
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.
20 December 2019
Polo Resources Limited
("Polo" or the "Company")
RESULTS FOR THE YEARED 30 JUNE 2019
Polo Resources Limited (AIM: POL), the multi-sector investment
company with interests in oil, gold, coal, copper, phosphate,
lithium, iron and vanadium, today announces its audited results for
the year ended 30 June 2019.
Financial Summary:
-- Group net assets as at 30 June 2019 were USD60.16 million (30 June 2018: USD60.28 million).
-- Combined total of cash, receivables, payables, listed and
unlisted equity investments of USD53.80 million as at 13 December
2019 (30 June 2019: USD60.16 million).
-- Net Asset Value per share as at 13 December 2019 were
approximately 13.07 pence per share (30 June 2019: 15.19 pence per
share).
-- Listed and unlisted investments at marked to market value,
cost and valuation amounted to USD46.99 million as of 13 December
2019 (30 June 2019: USD52.62 million).
Chairman's Statement
Introduction
Although several investment opportunities were examined during
the period under review, the Polo Board has taken the decision to
focus on supporting our current investee companies. This was deemed
to be a prudent approach given the lack of suitable investment
opportunities and the erratic behaviour of commodity prices driven
by a world economy that was suffering the impact of the on-going
US-China trade war. Whilst talks aimed at resolving the trade war
seem to have recently been successful and it now appears a trade
agreement between the US and China has been reached, the Polo Board
remains particularly cautious in assessing new investment
opportunities, until such time global markets have settled, the
impact of the US and China trade deal has stabilised and tariff
rates on commodities become certain.
During our reporting period we have seen three of our investee
companies Hibiscus Petroleum Berhad, GCM Resources Plc and Celamin
Holdings Limited make significant value accretive progress, which
we consider will be able to make positive growth contributions to
the net asset value of our investment portfolio as we move forward.
However, whilst we have seen success in one area of our portfolio,
we have seen our portfolio impaired by the falling into
administration of Weatherly International Plc, difficulties in
recovering debt in regards to Nimini Holdings Limited and the
difficulties Blackham Resources Limited has been experiencing as it
attempts to expand its gold production and reduce its AISC (all-in
sustaining cost).
Portfolio Overview
Hibiscus Petroleum Berhad ("Hibiscus")
Hibiscus is Malaysia's first listed independent oil and gas
exploration and production company. The company's significant
cashflow and profitability is based on 50% ownership of the
Anasuria Cluster of producing wells in the U.K North Sea
("Anasuria") and its 50% participating interest in the 2011 North
Sabah Enhanced Oil Recovery Production Sharing Contract ("North
Sabah PSC"). It's excellent track record as operator for these
production joint-ventures is reflected in it receiving safety
performance awards for both Anasuria and North Sabah PSC. The
company also received the award for "Highest returns to
shareholders over three years" at the Edge Billion Ringgit Club
Corporate Awards 2019.
Careful management of costs to maintain low operational
expenditure and the delivery of production enhancement projects
have been key towards obtaining a low unit production cost
structure. In addition, the company continues to operate
debt-free.
The company continues to operate debt-free with its activities
and acquisitions to-date funded through a combination of equity and
internally generated funds. It has been foreshadowed that in the
near future it shall undertake further fundraising activities to
ensure smooth execution of projects and opportunities aimed at
further enhancing production and value.
Summary of Activities
Significant activities in the 2018-19 period included: i)
Completion of the acquisition of a 50% participating interest in
North Sabah PSC and assumption of operating responsibility; ii)
Technical work at Anasuria increased the volume of reserves, and
the company signed deals for a side--track well and a water
injection well both aimed at maximising recovery; iii) The
acquisition of 50% participating interest in the Marigold and
Sunflower Blocks also located in the U.K North Sea. These blocks
are discovered fields which the company aims to bring to First Oil
by 2023 and describes as a "game-changer" and iv) Post the
reporting period, the acquisition of 100% interest in Blocks 15/18d
and 15/19b also located in the North Sea. The blocks include the
Crown Discovery which consists of 2C contingent resources that
range between 4 to 8 million barrels of oil, subject to an
independent 3(rd) party expert assessment.
Exploration - Australia
Hibiscus operates the VIC/L31 production licence and VIC/P57
exploration licence in Australia's Bass Strait. The company has
also recently exercised an option to acquire non-operated interests
in the VIC/P74 exploration licence in the same area. With the West
Seahorse discovered oilfield within the VIC/L31 production licence
and exciting exploration opportunities in these licences, Australia
holds significant potential for Hibiscus' future development
plans.
Financial Performance
Hibiscus' financial performance was bolstered by having its
first full year contribution from the North Sabah PSC asset and
higher overall production from Anasuria. For the financial year
ended 30 June 2019 ("FY2019"), revenue was RM988.3 million
(USD236.86 million), representing an increase of 151% compared to
that achieved in FY2018. Net cash generated from operating
activities in FY2019 was RM496.1 million (USD118.9 million) and
Profit after taxation ("PAT") was RM230.0 million (USD 55 million),
up 13%.
Despite volatility in the price of crude oil which fluctuated
between a high of USD86.29 per barrel to a low of USD50.47 per
barrel, Earnings Before Interest, Taxes, Depreciation and
Amortisation ("EBITDA") for FY2019 surged to RM549.4 million
(USD142.45 million), an increase of 64% when compared to that for
FY2018. This was underpinned by the sale of some 3.3 MMbbls of
crude oil across both assets against a production target of between
2.7 and 3.0 MMbbls. It is noted that recent capital expenditure
projects not only successfully led to increased production, but
also improved geological and reservoir understanding.
Post the reporting period, the quarterly financial results for
the period ended 30 September 2019 ("Q1 FY2020"), showed a revenue
and PAT of RM159.3 million (USD38.21 million) and RM16.2 million
(USD3.89 million) respectively, from the sale of 0.6 MMbbls of oil.
EBITDA for the period was RM77.1m (USD18.49 million) with a strong
EBITDA margin of 48.4%. Overall, despite a softer oil market and
the effects of higher maintenance activities in the quarter,
Hibiscus remained profitable.
Hibiscus remains debt-free, and its unrestricted cash balance
was RM179.4m (USD43.03m) as at 30 September 2019.
GCM Resources Plc ("GCM")
GCM is on track to provide the cheapest long-term large-scale
coal-fired electricity supply in Bangladesh and the country's
position regarding coal-fired power was reinforced recently by the
Bangladesh Government Power Secretary in an interview with the
Thomson Reuters Foundation. He stated that Bangladesh's economy is
growing fast and it needs energy and that they had no choice but to
utilise coal for power generation.
The Phulbari coal mine's Scheme of Development remains a key
driver, however, the ultimate deliverable requires the mine being
captive to 6,000 MW of state-of-the-art highly energy efficient
Ultra-Supercritical power plants ("the Project"). The mine's
viability would then become dependent on coal supply agreements
with these power plants and vice-versa, the power plants' viability
is linked to the success of the coal mining operation. GCM already
has in place strict environmental management plans for the planned
mining operation, and has stated it will ensure these power plants
also operate to the highest possible environmental standards and in
particular that they will avail of leading-edge flue gas cleaning
systems to protect air quality and cooling systems that minimise
water consumption.
GCM had previously reported signing a Joint Development
Framework Agreement and Contract Framework Agreement with China
Gezhouba Group International Engineering Co Limited ("CGGC") for
constructing of one of the required three power plant phases (each
being 2,000MW mine-mouth power generation) to be implemented over a
ten-year period matching the mine's coal production ramp-up to 15
mtpa name-plate production.
During the reporting year GCM addressed the shortfall in power
generation necessary to underpin the captive coal mine's viability
by entering into Joint Venture Agreements ("JVA's") with Power
Construction Corporation of China Ltd ("PowerChina"), another China
state-owned key enterprise that is a world-renowned megacorporation
spanning engineering construction and power generation.
The JVA's were the culmination of a Project site visit with
senior PowerChina officials, their completion of a prefeasibility
study and due diligence for 4,000MW mine-mouth power generation.
Working under the JVA's GCM and PowerChina have prepared the
detailed proposals for the 4,000MW Phases I and II power plants,
complete with a competitive power tariff.
In order to complete its proposal for the Government of
Bangladesh the company is also seeking to bring in a strategic mine
development partner. To this end in July 2019, post the reporting
period, GCM signed an MOU with both China Nonferrous Metal
Industry's Foreign Engineering and Construction Co., Ltd. ("NFC")
and PowerChina focussed on the mine development. NFC are in the
process of completing their due diligence studies. Once these
studies are completed, the parties will move to firm up the
business relationship and submit the comprehensive captive coal
mine and power plants proposal to the Government.
The arrangements with PowerChina also carry an obligation to
facilitate the inclusion of the Project in the One Belt, One Road
Initiative of the People's Republic of China, and assist with
financing the power plants.
Celamin Holdings Limited ("Celamin")
Celamin's goal is development of Chaketma Phosphate Project
("Chaketma") in Tunisia and exploration and evaluation work on the
newly granted Djebba and Zeflana zinc permits, also in Tunisia.
However, the company's principal activity this financial year has
been legal action against joint venture partner TMS to recover its
shareholding in the joint venture company CPSA and to establish
long-term ownership and control of CPSA.
On 5 April 2019 the Court of Appeal in Tunisia made orders in
favour of Celamin enforcing the International Arbitration Final
Award ordering TMS to return Celamin's 51% interest in CPSA and pay
damages and costs plus interest. TMS' appeal against this decision
was rejected by the Tunisian Court of Cassation, refer to the
company's announcement of 23 September 2019 which also noted
damages amounted to circa USD4.4 million.
There are no further legal avenues available to TMS to otherwise
delay the return of the company's interest in Chaketma or payment
of damages. The company has initiated measures to ensure compliance
with the court orders, including a move to seize TMS assets, and is
hopeful the process will also result in it securing 100% of
Chaketma.
The company has subsequently recommenced discussions with
contractors aimed at completing the Chaketma Definitive Feasibility
Study encompassing a Stage 1: Rock Phosphate Concentrate Production
and a Stage 2: Integrated Fertilizer/Phosphoric Acid Project.
PRISM Diversified Ltd ("PRISM")
PRISM Diversified Ltd. ("PRISM"), formerly Ironstone Resources
Ltd., is a private Canadian corporation positioning itself to
become a leading, vertically integrated supplier of specialty
metals and metallic powders used in many fast growing high-tech and
industrial manufacturing applications. PRISM is expected to enter
the market by offering competitive pricing due to very low energy
costs in Alberta where the company operates - an unrivalled
advantage.
PRISM's initial range of products will include atomised iron
powders, carbonyl iron powders, and vanadium pentoxide that all
command high market value and strong global demand. These metal
powders are used in a growing number of high-tech applications,
such as additive manufacturing (3D printing), battery
manufacturing, powder metallurgy, water treatments, and as
high-purity iron inputs in pharmaceutical and food industry,
The main asset of the company is its Clear Hills Iron/Vanadium
Project, located in northwest Alberta and advantageously close to
major infrastructure and population centres. Clear Hills holds an
indicated resource of 557 million tonnes of iron, (with an average
grade of 33% of iron) and 2.45 million pounds of contained vanadium
(as vanadium pentoxide), with a further inferred resource of 96
million tonnes of iron, with an average grade of 33% (Source:
NI43-101 Report, SRK Consulting, July 2012). In addition to iron
and vanadium, the ore is known to contain cobalt and gold. PRISM's
poly-metallic resource has the potential to supply its industrial
materials for many decades.
PRISM's land tenure, an asset in itself, exceeds 1.91 million
acres (7,763 sq km) of mineral permits and leases, the largest
metallic and mineral land holding in Alberta.
Funding arrangements:
PRISM is currently looking to raise approximately CAD3.5 million
(USD2.63 million) to complete its PFS/BFS Studies in 2020 BFS for
Iron Carbonyl Powder (ICP) production with an aim of commercial
production commencing early 2022.
Blackham Resources Limited ("Blackham")
The Wiluna Gold Operation ("Operation") is located in
Australia's largest gold belt which stretches from Norseman in the
south through Kalgoorlie and Leinster to Wiluna in the north. The
company is currently transitioning to a low capex, low risk
sulphide mining and tailings treatment operation targeting
100koz-120koz per annum production. It is also focused on a debt
reduction and balance sheet enhancement program.
During the year, Blackham experienced a number of challenges.
Gold production in the second half of FY2019 was weak and impacted
by: lower than required total mining movements and an inability to
maintain high grade stockpiles; lower metallurgical recoveries due
to processing partially refractory transitional ores; and
significant concurrent investment in Matilda and Wiluna open
pits.
Gold production during the year was 65,406oz and gold sold was
64,919oz at AUD1,656/oz, however, the AISC was AUD1,760/oz. There
were forward gold sales contracts in place at 30 June 2019 for
18,500oz of at an average price of AUD1,805/oz, maturing by
calendar year end.
During the year, the company faced a number of funding
challenges but received strong support from its key
stakeholders.
On 12 September 2019, Blackham announced a capital raising of up
to AUD7 million (before costs) that will provide funding for key
mine development work programs that will underpin Blackham's FY2020
production. Blackham also received AUD2.8 million cash in January
2019 from the sale of 20% interest in the Wiluna Cobalt-Nickel
Project.
On 8 October 2019, the Lake Way Transaction completed with
Blackham receiving AUD7 million cash and up to a further AUD10
million contribution to be received towards Williamson open pit
pre-production mining activities, see announcement dated 8 October
2019. An initial non-refundable deposit of AUD3 million was
received in July 2019.
Results
At the end of FY2019, the company had AUD4.2 million in cash and
bullion.
Net debt was AUD11.8 million comprised of the loan payable to
MACA AUD10.3 million, Lind Convertible Security AUD5.3 million and
leases AUD0.4 million.
The loss after tax was AUD73.161 million. The FY2019 result
included asset impairment charges of AUD45 million, which also
broadly brings the book value of assets back into line with
Blackham's market capitalisation. Blackham's net assets at the end
of FY2019 were AUD62.177 million.
Blackham's production guidance for FY2020 is 70k-80koz at an
AISC of AUD1,550-AUD1,750/oz and will be focused on free milling
ore bodies prior to Blackham transitioning to Stage 1 of its
Sulphide Expansion Project, which is planned to commence production
during FY2021. Based on Blackham's September 2019 Quarterly and
October 2019 results turnaround it seems the company is well on the
way to achieving its FY2020 targets.
For the September 2019 Quarter, gold production was 17,565oz at
ASIC AUD1,519/oz with the September monthly production being
7,220oz at ASIC AUD1,025/oz and the October monthly production
7,611oz at ASIC AUD1,266/oz.
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.
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. High groundwater inflow rates encountered in the
open pit far exceeded the worst case scenarios foreseen within the
Bankable Feasibility Study.
On 26 April 2018, Weatherly announced that it had 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").
On 1 June 2018, Weatherly announced that as a result of this
material uncertainty, Orion Mine Finance (Master) Fund I LP
("Orion") had confirmed they were unlikely to permit further
drawdowns under the existing uncommitted loan facility with Orion.
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 as administrators
to the company.
Following the appointment of the Administrators and the
subsidiary board changes, the position of the Tschudi mine
stabilised and the Administrators extended the Numis and Treadstone
engagement to act as Merger and Acquisition Advisers ("M&A
Advisers") to recommence the sales process effective 24 September
2018. Despite over 90 parties being contacted and a number of
indicative offers received, no sale was forthcoming and
arrangements with Numis and Treadstone ceased in December 2018.
It is understood further expressions of interest have been
received for both share sales and asset sales via direct
third-party introductions. However, at this time it is not clear
whether a potential transaction will be structured as a business
and assets sale or the sale of the shares of OML - the subsidiary
that owns and operates the Tschudi mine.
Nimini Holdings Limited ("Nimini") (Gold, Sierra Leone)
Polo's Annual Report 2018 explained that 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. Polo remains disappointed by the Government of Sierra Leone's
action in cancelling the mining licence and has written to the
President and the Minister of Mines and Mineral Resources ("MoM")
appealing for the decision to be reversed. Polo has also suspended
any further expenditure on the Project. Nimini Holdings Ltd and its
Sierra Leone subsidiaries have since been dissolved during
2018-19.
In the meantime, following the termination of the Operator
Agreement with our joint venture partner Plinian and under the
terms and conditions of this agreement and other supplementary
agreements Polo is pursuing recovery of a loan amounting to
USD4,182,717.28 (with interest calculated to 22 July 2019) from
Plinian Guernsey Limited ("Plinian Guernsey"), a company owned by
Plinian Capital Limited ("Plinian Capital") and both controlled by
Bradford A. Mills.
Efforts by the Company to recover this outstanding loan
including demand letters from Polo and the Company's lawyers to the
principals of Plinian Capital and Plinian Guernsey have been
futile.
Polo was notified that the "sole shareholder" of Plinian
Guernsey had voluntarily put Plinian Guernsey in liquidation and
that as an identified "potential stakeholder", Polo was invited to
provide "proof of debt owed". Polo has responded to the joint
voluntary liquidators as well as informed them that, as noted in an
RNS made by West African Minerals Corporation on 11 February 2016,
Plinian Guernsey had transferred its assets to Plinian Capital,
which in Polo's view may otherwise have been used to repay sums
outstanding under agreements with Polo. The directors of Polo have,
in the interest of prudence, provided a full impairment against the
recoverability of the outstanding loan.
Details of the agreements with Plinian were contained in a Polo
RNS on 22 March 2012 entitled "Appointment of Plinian Capital
Limited as Operator of Nimini Gold Project - Plinian Acquires 10
per cent Interest for USD2.5 million". Amongst others, Polo
announced that it had provided Plinian Guernsey a loan amounting to
USD2.5 million, accruing interest at 3% above LIBOR per annum, and
that Plinian Capital was appointed operator of the project.
While Polo views the actions of Plinian as an intentional
manoeuvre to evade liability, the door remains open to negotiating
a settlement pending the preparation to commence court proceedings
against Plinian Guernsey and its principals to pursue the recovery
of the outstanding sums on behalf of its shareholders.
Universal Coal Resources Pte Ltd ("Universal")
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.
The company failed to list on the Singapore Stock Exchange and
is now considering other areas of asset realisation, including
repayment of the loan note by way of asset transfers. Efforts are
continuing to resolve the matter.
Polo's current portfolio includes:
Petroleum assets:
-- Hibiscus Petroleum Limited (8.75%)
-- Regalis Petroleum Limited (12.66%)
Coal and power assets:
-- GCM Resources Plc (17.74% )
-- Universal Coal Resources Pte Ltd (redeemable convertible note)
Phosphate asset:
-- Celamin Holdings Limited (18.55% )
Lithium, iron and vanadium:
-- PRISM Diversified Ltd (19.13% )
Gold assets:
-- Blackham Resources Limited (0.47% ) (diluted following a rights issue and new share issue)
Copper asset:
-- Weatherly International Plc (5.2%)
Various liquid short-term investments.
Equity Market Outlook
Heading into 2020, there will be both macro and micro value
catalysts that will impact on Polo. Firstly, the conclusion of
US-China trade talks is likely to feature as a positive development
by investors that should filter down into creating positive market
sentiment and thus lifting stock market valuations across the
board. Polo hopes to benefit from improving investor sentiment
trade talk agreements are set to deliver. However, being listed on
the London market, Polo is also exposed to the economic events
related to the U.K departure from the European Union and to date we
are still unsure as to the outcome of BREXIT and the impact good or
bad it is likely to have on both investment in the U.K and across
the U.K equity market. The combination of these two macro-economic
events to date still remains unclear and only serves to fuel
uncertainty. During the reporting period we saw our equity price
rise to 4.8p in February 2019 as the market picked up on the
significance of the joint venture news announced by GCM. Overall,
we have seen a modest gain of 4.6% in our equity price during the
reporting period.
Commodity Exposure and Value Catalysts:
Oil
In terms of commodity exposure, we now consider Polo's net asset
value to be largely driven by the oil price and the impact that
will have on Hibiscus earnings moving forward. For the period under
review the price of oil (Brent Crude) has averaged circa USD62 a
barrel and we see known market factors that could serve to hinder
this price stability moving forward.
Lithium, Iron, Vanadium and Precious Metals
We hold a 19.5% interest in Prism which gives Polo access to the
electric vehicles metals market. Prism's Clear Hills (NI 43-101
compliant) and Peace River Arch projects, located in Alberta
Canada, have high concentrations of lithium in underlying carbonate
reservoirs. Lithium hydroxide, battery grade, CIF China, Japan and
Korea prices have been dampened over the last 12 months from highs
of USD21.00 per kg to USD12.00 per kg. Industry commentators
believe the lithium market has now bottomed out and a recovery
should begin to take place during 2020. Naturally the uptake of
electric vehicles and off grid energy storage and electronics are
key drivers for lithium. We see the desire by all governments to
lower greenhouse gas emissions to be a geopolitical and policy
factor that heading into the next ten years should see a
transformational level of demand for lithium where Polo via our
investment in Prism offers shareholders good exposure to this
important metal.
Iron Ore
Also, through our investment in Prism, Polo has investment
exposure to iron ore. The iron ore price hit USD120 a tonne in July
2019 but has since come off to USD88 a tonne. Once again, we see
the result of trade talks between the US and China as being a
catalyst to global economic growth where steel production can be
considered a barometer by which to measure the health of the global
economy.
Gold, Zinc and Phosphate
We have through Blackham minor exposure to the gold price which
during the period traded above USD1,500 an ounce. Polo also has
through our investment in Celamin, exposure to the zinc market.
There is widespread consensus that we are in the midst of a
tightening of the market for Zinc, which has seen the price rise to
USD3,000 a metric tonne and moving into 2020 the price of zinc is
trading at over USD2,000 a metric tonne. Celamin also gives Polo
access to Phosphate. Rock phosphate prices improved during the back
end of 2018, with prices reaching just over USD100 a metric tonne
but have since come off to circa USD77 a metric tonne in what has
been a market that has seen quite a steep decline in pricing during
2019.
Summary
The year under review is largely one that has been characterised
by the significant progress Hibiscus, GCM and Celamin have made on
various operational and corporate fronts. The Polo board believes
that the past reporting period has been one where strong value
creating foundations have been made which places the Company's
growth stronger for 2020 where we see work undertaken across our
portfolio delivering a number of positive outcomes for value
creation on a micro front and we hope that can be matched and
complimented by events on a macro front.
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
19 December 2019
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
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, please refer to: www.poloresources.com
CAUTIONARY STATEMENT
The AIM Market of the London Stock Exchange 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
2019 Annual Report for the period ending 30 June 2019, 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
Hibiscus Petroleum has activities in the following principal
areas:
1. Anasuria Hibiscus: Hibiscus Petroleum's investments and
operations in the U.K, consisting of (i) the Anasuria Cluster, a
producing asset, and (ii) Marigold and Sunflower fields, a
development asset, both located offshore in the United Kingdom
Continental Shelf ("UKCS").
Anasuria Cluster: Hibiscus Petroleum's investment in 50%
interest in the License No. P013 containing the Guillemot A, Teal
and Teal South producing fields, 19.3% participating interests in
the License No. P185 containing the Cook producing field, 50%
interest in the Anasuria Floating, Production, Storage and
Offloading vessel ("FPSO"). and 50% interest in the Anasuria
Operating Company Limited ("AOCL"). The company jointly operates
the producing fields under License No.P013 and the Anasuria FPSO
via AOCL.
Marigold and Sunflower fields: Hibiscus Petroleum's investment
in 50% interest in two blocks under License No. P198; (i) Block
15/13a, containing the Marigold discovered oilfield, and (ii) Block
15/13b, containing the Sunflower discovered oilfield. This includes
the management of operations to develop these fields towards
production.
Crown: Hibiscus Petroleum's investment in 100% interest in 100%
interest in Blocks 15/18d and 15/19b (Licence P2366), also in the
North Sea, in close proximity to the Marigold and Sunflower, and
includes the Crown discovered field.
2. North Sabah: Hibiscus Petroleum's investment in 50%
participating interests in the 2011 North Sabah EOR PSC, which
includes the management of operations relating to the production of
petroleum from four existing oil fields, namely St Joseph, South
Furious, SF30 and Barton and existing pipeline infrastructure, the
Labuan Crude Oil Terminal ("LCOT"), and all other equipment and
assets relating to the PSC.
3. VICL/31, VICP/57, 3D Oil: Hibiscus Petroleum's operations in
the production licence VIC/L31 for the West Seahorse field and
other exploration prospects in Australia within exploration permit
VIC/P57, and investment in 3D Oil.
Sales and Customers
In FY2019, the fields operated or jointly-operated by Hibiscus
produced a combined total of approximately 20.2 MMbbl of gross
liquids (oil and water). Of this, the total amount of oil produced
net to Hibiscus was approximately 2.9 MMbbl of oil. The company's
goal in FY2019 was to sell 2.7 to 3.0 MMbbl of oil from its two
producing assets. The company exceeded this target and have sold
approximately 3.3 MMbbl of crude oil across both producing assets,
with seven offtakes originating from the North Sabah PSC, and a
further five offtakes coming from the Anasuria Cluster.
For the Anasuria Cluster, Hibiscus sells its crude oil in
cargoes of approximately 250,000 bbl net to Hibiscus from the
Anasuria FPSO facility. AOCL has appointed BP Oil International
Limited ("BPOI") to lift its cargoes and to market them to
refineries in the region. The parent organisation of BPOI is BP, a
global energy company. To date, BPOI has successfully marketed all
the company's cargoes at competitive prices.
In the North Sabah PSC, oil is lifted from the LCOT, and is sold
in parcels of approximately 300,000 bbl directly to the Trafigura
Group, a large global commodities trader.
Hibiscus is pleased with both its oil trading arrangements in
the North Sabah PSC and Anasuria Cluster. The company's
counter-parties are reputable and have a large pool of clients.
Working with major global players also ensures transparency and
allows the company to gradually develop business relationships with
some of the largest oil trading organisations.
The company's operated offshore fields deliver oil, gas and
water from offshore reservoirs, which are then separated using its
on-site processing facilities. For Anasuria, this is performed at
the FPSO whilst this is performed at the LCOT for North Sabah. In
the Anasuria field, produced gas is used as fuel gas for the
company's machinery supporting operations, for gas lift operations
to enhance production and the remaining volume is exported via
pipelines to the U.K mainland and sold as one of the cleaner
sources of primary energy. In Malaysia, most of the produced gas
from the North Sabah fields is reinjected back into the various
reservoirs as part of pressure maintenance or gas lift operations.
The remaining volumes are used as fuel gas with minimal volumes
flared. Water produced from these fields is treated to reduce the
oil-in-water content. The treated water is subsequently released
into the sea.
The company's drilling programme on the Anasuria and North Sabah
assets is providing a firm foundation to increase production
momentum. Hibiscus is targeting a combined net production of 12,000
bbl/day for both assets by end of 2020 as it strives towards its
goal of achieving 20,000 bbl/day as part of its 2021 Mission.
Hibiscus has also commenced the evaluation of development options
for the Marigold and Sunflower oilfields which have the potential
to significantly raise future production.
Hibiscus will consider entering into an appropriate hedging
programme after carefully assessing prevailing market
conditions.
Anasuria Cluster
The Anasuria Cluster delivers production that generates positive
cashflow with future infield development opportunities and
exploration upside.
The average uptime in FY2019 increased by 12% compared to
FY2018. This is primarily due to a 30-day planned offshore
turnaround of the Anasuria FPSO conducted between September and
October 2017 (2017 Offshore Turnaround). That activity directly
contributed to a lower average uptime in FY2018 but may have also
indirectly resulted in improved performance of the offshore
facilities in the subsequent months.
The average daily oil equivalent production rate in FY2019
increased by 15% when compared to FY2018. This is a result of
higher average uptime as well as the incremental oil and gas
production from the GUA-P2 Side-Track well that was completed in
September 2018. As a result, the average OPEX/boe reduced by 22% to
USD18/boe in FY2019 compared to FY2018.
In FY2019, the Anasuria Hibiscus operating segment recorded an
EBITDA of RM281.3 million (USD67.42 million), or 71% margin over
revenue, compared to EBITDA of RM107.4 million (USD25.7 million)
(52% margin over revenue) in FY2018. There were five crude oil
offtakes in FY2019, with a total of 1,349,170 bbl sold at an
average realised oil price of USD66.60/bbl. Revenue attained was
RM396.3 million (USD94.98 million). In FY2018, 791,822 bbl were
sold in three offtakes at an average oil price of USD60.11/bbl,
resulting in a revenue of RM207.4 million (USD49.71 million). The
higher revenue and improved operational performance in FY2019 were
the main drivers for the EBITDA level to improve by 162% in FY2019
compared to FY2018.
After acquiring the assets, the Anasuria technical team has been
focusing on understanding the asset and have been working towards
improving daily operational performance and identifying a portfolio
of viable production enhancement projects and gradually executing
them safely in a manner that is disciplined from a capital
allocation perspective.
Project Project Description Status Actual Completion
GUA-P2 Side-Track Re-enter the existing Completed Sept 2018
GUA-P2 well to side-track
the wellbore
to unlock additional volumes
of oil
------------------------------ ---------- ------------------
GUA-P1 Side-Track Re-enter the existing Completed Aug 2019
GUA-P1 well to side-track
the wellbore
to unlock additional volumes
of oil
------------------------------ ---------- ------------------
Cook Water Injection Drill 1 water injection Completed 0ct 2019
well in the Cook field
for reservoir
re-pressurisation and
install water injection
pipeline to the
Anasuria FPSO
------------------------------ ---------- ------------------
Figure 1: Production Enhancement Projects in Anasuria
Anasuria Reserves Upgrade:
Hibiscus commissioned LEAP Energy to undertake an independent
evaluation of in-place and recoverable hydrocarbons in the Anasuria
Cluster attributable to Anasuria Hibiscus. 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 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 as of 1 March 2016. Given that Anasuria
Hibiscus' 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. The
reserves upgrade by an independent expert demonstrates that the
company's efforts to extend the life of the Anasuria Cluster and
unlock value from its assets.
North Sabah PSC
FY2019 represents the first full financial year of the company's
operatorship of the North Sabah PSC. As operator, SEA Hibiscus is
responsible for the day-to-day operations, maintenance, and conduct
of production enhancement activities carried out on the asset.
The average uptime and net oil production rate in FY2019 reduced
by 2% and 12%, respectively, when compared to FY2018. A key
operational activity in FY2019 was a planned offshore maintenance
campaign, which was mostly carried out from October to December
2018 (Q2 FY2019). During this period, various facilities were
required to be shut down for inspection and maintenance work, thus
impacting the uptime and production metrics for the year.
Despite this decline, the average operating expenditure per bbl
(OPEX/bbl), or unit production cost, for the North Sabah PSC of
USD14.6/bbl in FY2019 is fairly consistent with the USD13.5/bbl
achieved in FY2018.
In FY2019, the segment recorded a revenue of RM586.8 million
(USD140.63 million) from seven crude oil offtakes. A total of
1,958,150 bbl of crude oil were sold, at an average realised oil
price of USD72.81/bbl. In FY2018, from the Completion Date (31
March 2018) to 30 June 2018, two crude oil offtakes were sold at an
average realised oil price of USD73.26/bbl, which contributed to a
revenue of RM181.9 million (USD43.60 million).
The sale of the seven cargoes at a relatively high average
realised oil price was the main driver for the segment recording an
EBITDA of RM294.6 million (USD70.60 million) and EBITDA margin over
revenue of 50% in FY2019.
Reserves and Contingent Resources Assessment:
The North Sabah PSC constitutes Hibiscus' second producing
asset, providing the company with another revenue stream after the
Anasuria Cluster. It has enabled Hibiscus to strengthen its
technical and operating capabilities, profitability and balance
sheet. The acquisition of this asset is part of the company's
strategy to grow shareholder value by focusing on unlocking
potential from mature, late-life oil and gas fields.
In January 2019, Hibiscus announced a summary of the reserves
and contingent resources prepared by RISC in respect of the North
Sabah Fields.
SEA Hibiscus had on 1 November 2018, appointed RISC to undertake
an independent audit and provide an assessment of the reserves and
contingent resources within the North Sabah Fields.
As of 31 December 2018, the 2P Reserves and the gross 2C
Resources of oil in the North Sabah Fields were estimated to be
55.3 MMstb and 85.7 MMstb respectively. (On 12 October 2016,
Hibiscus Petroleum had disclosed gross 2P Reserves and gross 2C
Resources as of 1 January 2016 of 62 MMstb and 79 MMstb
respectively, derived by independent technical valuer, RISC
Operations Pty Ltd).
RISC is an independent oil and gas consultancy specialising in
reserve and resource evaluation, field development and valuation,
technical advice and due diligence. RISC has reviewed the reserves/
resources within the North Sabah Fields in accordance with the
Society of Petroleum Engineers' internationally recognised
Petroleum Resource Management System (SPE-PRMS), and applied
economic cut-offs.
Hibiscus has recently embarked on a series of production
enhancement projects that have been identified to realise the
considerable potential within the North Sabah PSC fields.
Project Project Description Status Target Completion
St Joseph Infill Drill 3 infill Completed Aug 2019
Drilling oil producing wells
------------------------ -------------------- ------------------
SF30 Infill Drilling Drill 3 infill Execution commenced Nov 2019
oil producing wells in Aug 2019
------------------------ -------------------- ------------------
SF30 Water Flood Drill 1 water injection Execution expected Dec 2019
Phase 1 well for reservoir to start in Nov
re-pressurisation 2019
------------------------ -------------------- ------------------
Figure 2: Production Enhancement Projects in the North Sabah PSC
in 2019
Marigold and Sunflower fields
In October 2018 Hibiscus announced the acquisition of a 50%
interest in Blocks 15/13a ("Marigold") and 15/13b ("Sunflower"),
expanding its footprint in the UKCS. This acquisition of a
development asset will allow the company to make a step change in
scale as well as be a platform for Hibiscus to build internal
technical and project management capability. Several project
delivery milestones have been imposed on Hibiscus by the regulatory
authorities in the U.K and the company is determined to positively
progress this opportunity.
The gross resources for Blocks 15/13a and 15/13b have been
classified by AGR in accordance with resource definitions presented
in the Society of Petroleum Engineer's Petroleum Resources
Management System. Based on AGR's gross estimates of the Blocks as
of September 2018, the 2C oil resources of the Blocks net to
Anasuria Hibiscus (50% participating interest) are 30.0 MMstb. Once
a development plan is approved and successfully implemented, up to
30.0 MMstb of 2C may potentially be converted to 2P, which is
expected to be added to Hibiscus portfolio, contributing to íts
mission of achieving its 2021 mission of 100 MMbbls in proven and
probable reserves.
Thirty-four development scenarios were studied to determine the
optimum solution for development of the Marigold and Sunflower
resources and select the concept that provided the best balance of
cost, value and risk. The selected concept is to drill and complete
subsea wells that are tied back to a FPSO via flexible flowlines
and umbilicals. This concept provided the highest project value
with the lowest execution and commercial risk. It will also
facilitate a phased development approach to further mitigate
project risks. The project is expected to proceed in two phases to
mitigate subsurface uncertainties and minimise capital outlay
required to achieve first oil production.
It is anticipated that in phase 1 of the development, three
Marigold wells will be drilled, completed and tied back to the FPSO
via a production manifold. Additional wells in Marigold, along with
wells in the Sunflower discovered field and the recently acquired
Crown discovered field (pending acquisition completion), could be
developed in a second project phase. It is envisaged that wells in
these fields will also be tied back to the FPSO.
In addition, there may be near field opportunities that could be
monetised through an area-wide development.
Crown
Post the reporting period, on 12 December 2019, pursuant to the
earlier disclosures made by Hibiscus on 17 July 2019 and 7 October
2019, the company announced that Anasuria Hibiscus had completed
the acquisition of North Sea Blocks 15/18d and 15/19b ("License
P2366" or "Blocks"), from United Oil & Gas PLC ("United") and
Swift Exploration Limited ("Swift") (collectively referred to as
"Sellers") for a total cash consideration of up to USD5
million.
Completion of the acquisition occurred pursuant to the receipt
of approval from the United Kingdom's Oil and Gas Authority ("OGA")
for the assignment of License P2366 to Anasuria Hibiscus from the
Sellers and the appointment of AHUK as Exploration Operator on 4
December 2019. In accordance with the terms of the conditional Sale
& Purchase Agreement executed on 7 October 2019 ("SPA"), a
further USD0.9 million has been paid upon achieving completion of
the acquisition.
The Blocks are located offshore in the United Kingdom sector of
the North Sea, approximately 250km northeast of Aberdeen. The
Blocks include the Crown Discovery which consists of 2C contingent
resources that range between 4 to 8 million barrels of oil, subject
to an independent 3rd party expert assessment. The Blocks are
located 12km south-east of Marigold field, which together with the
Sunflower field, was acquired by Anasuria Hibiscus in October
2018.
United and Swift were awarded License P2366 as part of the OGA's
30(th) Licencing Round, in August 2018, and they each hold 95% and
5% participating interest respectively.
VIC/L31, VIC/P57 and VIC/P74, Australia
Hibiscus has interests in two licences located in the prolific
oil and gas producing province of the Bass Strait of Australia. The
company also has a 11.68% interest in 3D Oil Limited ("3D Oil"), a
company listed on ASX. Through 3D Oil, Hibiscus has indirect
exposure to two additional exploration licences.
A production license, VIC/L31, containing the West Seahorse
field, was granted by the Australian authorities to Hibiscus for an
indefinite period from 5 December 2013. Hibiscus is in the process
of evaluating field development options with a view to recommencing
field development activities once an economically viable
development solution is identified. VIC/P57 is a joint arrangement
which is in the exploration stage.
Post the reporting period, on 26 July 2019, Hibiscus announced
that its associate company, 3D Oil, was awarded the VIC/P74 permit
in the offshore Gippsland Basin by the National Offshore Petroleum
Titles Administrator. The 1,006km(2) permit is located on the
southern side of the Gippsland Basin. Hibiscus has exercised an
option that was secured prior to the permit award, to farm-in to
VIC/P74 by acquiring a 50% non-operated interest in the permit on a
ground floor basis. The primary work programme ("First Exploration
Phase"), which consists of the first three years since permit
award, is the 1,006km(2) of recently reprocessed 3D seismic and
geophysical and geological studies. The gross cost for the First
Exploration Phase is estimated to be AUD1.2 million. During this
phase, 3D Oil will remain as the operator.
On 20 August 2019, Hibiscus announced that a Dividend Policy had
been established through which Hibiscus may issue dividend payments
to reward shareholders for their continuous support. The Dividend
Policy, which describes the company present intention and the
various considerations that are required to declare any dividends,
can be found on their website
(https://www.hibiscuspetroleum.com/dividendpolicy/).
On 13 December 2019, Hibiscus' share price closed at MYR0.94
with a market capitalisation of USD359.13 million (MYR/USD =
0.24055).
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
-- 17.74% equity interest
GCM Resources plc ("GCM") is now committed to a strategy of
developing the Phulbari coal deposit as a captive large-scale open
pit mining operation supporting 6,000MW of highly energy efficient
Ultra-Supercritical power generation developed in three stages over
a ten year period to suit the build-up in coal production to the
nameplate 15 mtpa (collectively defines "the Project"). GCM's
business model to deliver the Project primarily involves forming
Joint Venture Agreements with various internationally renowned
companies to assist with the necessary Government of Bangladesh
approvals and assist with both financing and development of the
coal mine and power plants. The business model also factors in
consultants in both China and Bangladesh to provide crucial
guidance and lobbying support.
Although the Phulbari coal mine's Scheme of Development
submitted to the Government of Bangladesh in 2005 and still awaits
approval, this document did not portray the mine as "captive" with
an ultimate deliverable to the Government being 6,000MW of
reliable, low-cost power. To this end the company's business model
now views the Project as being four integrated "Business Units"
being the captive coal mine and the three 2,000MW power projects
that will be commissioned in line with the ramp-up to the nameplate
15 mtpa coal production. The coal mine's viability will be
underpinned by the coal supply agreements with the three power
projects. In turn the power projects' viability will be underpinned
by the competitively priced and reliably supplied coal from the
Phulbari coal mine.
While the Bangladesh Government remains committed to a rapid
expansion of its energy sector, including the increase of
coal-based power generation, GCM equally remains committed to
delivery of the country's lowest coal-based power tariff at a
production rate that will make a significant positive impact on
Bangladesh's industrial development and competitiveness in
international markets
While GCM began the last reporting year strengthening its
relationship with CGGC and closing out with a Joint Development
Framework Agreement for the initial 2,000MW Phase of mine-mouth
power plant(s), this reporting year began with building a working
relationship with PowerChina. GCM viewed PowerChina as the logical
partner for development of the remaining 4,000MW necessary for
viability of the planned Phulbari coal mine.
The company recognised the assistance by Dyani Corporation
Limited and extended its consultancy agreement for the pursuit of
additional international recognised partners for mine development
and the additional power plants. These efforts resulted in GCM
agreeing in September 2018 for PowerChina to undertake a
prefeasibility study and other due diligence for the remaining
4,000MW mine-mouth power plants.
The success of the prefeasibility study resulted in GCM entering
into a Joint Venture Agreement ("JVA") and a definitive
Engineering, Procurement and Construction ("EPC") Contract with
PowerChina in January 2019 for the next 2,000MW mine-mouth power
plant (2x1,000MW units) phase. In March 2019, GCM entered into a
second JVA with PowerChina for the final 2,000MW mine-mouth power
plant phase, thus completing the 4,000MW PowerChina package and
shoring up the 6,000MW required ensure the Project's viability.
Post the reporting year, GCM progressed with two further key
success arrangements:
The first is an MOU signed in July 2019 with China Nonferrous
Metal Industry's Foreign Engineering and Construction Co., Ltd.
("NFC") and PowerChina aimed at forming a strategic partnership to
jointly develop the company's proposed Phulbari coal mine. Under
the terms of this arrangement NFC is undertaking due diligence,
including a review of the mine plan and financial model, and the
parties will jointly pursue the necessary government approvals.
The second is a Consultancy Agreement signed In September 2019
with DG Infratech Pte Ltd, a Bangladeshi controlled company
("DGI"), whereby DGI will provide the company with advisory,
management, lobbying and consultancy services for the Project's
approval and development stages. DGI and its parent company have a
solid record in developing large-scale engineering construction and
power sector related projects in Bangladesh.
Funding arrangements:
To finance its operations during the year, on 30 November 2018,
GCM agreed an amendment to the short-term loan facility with Polo
Resources Limited ("Polo") (the "Polo Loan Facility"). The Polo
Loan Facility was increased by GBP1,200,000 to GBP2,300,000 and
provides that the lender has the option to convert all or part of
the balance of the Polo Loan Facility at a conversion price of 11
pence per share, subject to Polo's maximum holding not exceeding
30% of the company's enlarged share capital.
As at the date of this report, GCM had fully drawn down on the
increased Polo Loan Facility and the company currently has
approximately GBP315k in available cash resources. In addition the
company has received a non-binding commitment from Polo, whereby
Polo has confirmed its willingness to enter into an agreement to
increase the Polo Loan Facility by an additional GBP1,200,000 from
the end of January 2020 should alternative financing not be secured
by then (the "Agreed Facility Increase") which, at the Group's
current cash burn levels, would provide sufficient financing for at
least the following 12 months.
On 13 December 2019, GCM's share price closed at GBP0.125 with a
market capitalisation of USD16.28 million (GBP/USD = 1.32005).
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.
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
-- 18.55% equity interest
Chaketma Phosphate Project
The Chaketma Phosphate Permit, operated by CPSA, 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 @ 20.5% P O , confirmed from
drilling at only two of the project's six prospects. It is located
210km by road south-west of Tunis and is just 35km from the nearest
railhead and close to existing road and power infrastructure.
On 8 April 2019, Celamin published a presentation on ASX. The
presentation includes the legal matters in relation to the
fraudulent transfer to TMS of Celamin's 51% interest in CPSA. The
presentation also includes the potential application of exciting
new processing technology and also details regarding its Zinc and
Lead prospects. The full details of the presentation can be found
at
https://www.asx.com.au/asxpdf/20190408/pdf/44446yzcr9kc2b.pdf.
Following enforcement allowing Celamin to recover control of the
Chaketma Phosphate Project Celamin plans to:
-- Introduce an international partner to facilitate funding discussions;
-- Commence a feasibility study to determine the viability of
producing either rock phosphate or chemical fertiliser. Celamin is
contemplating these development options all in the backdrop of a
rising rock phosphate price.
Djebba Zinc-Lead Project, Tunisia - Historical Resource
Estimate:
In July 2018 Celamin was granted two new exploration permits in
Tunisia prospective for Zinc and Lead. The Djebba and Zeflana
permits cover 32kms 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.
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.
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://celaminnl.com.au/
Completion of Share Purchase Plan, Bonus Options Offer and Top
Up Placement:
On 9 November 2018, Celamin announced that it had successfully
raised AUD622,500 from existing shareholders via the Share purchase
plan, representing 92% of the maximum amount able to be raised by
the SPP. Furthermore, pursuant to the Top-up Placement as announced
on 14 November 2018, the company raised a total of AUD311,639.
On 20 November 2018, the company issued a total of 63,772,811
Options expiring 18 May 2020 exercisable at AUD0.05 as a result of
the 1 for 2 Bonus Options Offer which was announced to the market
on 8 October 2018.
On 20 December 2018 following shareholder approval at the
Celamin's Annual General Meeting held on 26 November 2018, pursuant
to the Top-up Placement as announced on 14 November 2018, the
company raised an additional AUD24,863.
On 14 February 2019, Celamin raised a total of AUD250,000
pursuant to the Placement Offer as contemplated by the Prospectus
lodged with ASIC and ASX on 15 October 2018, the Supplementary
Prospectus lodged with ASIC and ASX on 6 December 2018 and the
Second Supplementary Prospectus lodged with ASIC and ASX on 1
February 2019 to sophisticated investors.
On 19 June 2019, the company announced that following an
exercise of unlisted options, the company raised a total of
AUD180,125.
On 13 December 2019, Celamin's share price closed at AUD0.12
with a market capitalisation of USD12.35 million (AUD/USD =
0.68920).
(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)
-- Atomised Iron Powders, Carbonyl Iron Powders, Vanadium, Canada
-- 19.13% equity interest
In early 2018, Ironstone Resources Ltd. was rebranded and
renamed to PRISM Diversified Ltd. to mark the company's transition
and focus on manufacturing of metallurgical powders rather than
iron metallics. PRISM is an acronym for Peace Region Innovative
& Sustainable Manufacturing, which is also the company's
mission and brand statement.
Looking for alternative ways to capitalize on its asset, it
became apparent that manufacturing of highly sought metallurgical
powders such as carbonyl iron powders, atomized iron powders and
vanadium pentoxide could provide faster route to cash-flow while
reducing its CAPEX significantly. Technologies used to manufacture
metal powders are readily available and have existed for decades -
it is a matter of fine-tuning its process flow sheet and
determining its palette of products.
In order to facilitate the extraction/processing/production
plan, PRISM sourced and engaged an internationally recognized
engineering firm - DRA Global which has experience in this segment
of the iron world and they will work in affiliation with a proven
expert in advanced vapour metallurgy, who is credited with numerous
process patents - Dmitri Terekhov, PhD, President of Vapour
Metallurgy Innovations Inc. ("VMI"). DRA Global in conjunction with
VMI will be conducting a Pre-Feasibility Study ("PFS") and Bankable
Feasibility Study ("BFS") (with an off-ramp after the PFS) to
create an iron powders and vanadium production facility. The
deposit is anticipated to produce 30,000 tonnes per annum of iron
powder, although the modular operation can be easily expanded to
meeting the growing global demand for metal powders.
As a part of this restructuring and re-positioning of the
company, PRISM has implemented certain changes to the Management
and Board of Directors. Dr. Elena Clarici has been appointed as a
CEO, and former CEO Mr. Barry Caplan will continue to serve the
company in a consultant capacity as well as to remain on the Board
of Directors. Dr Elena Clarici is a seasoned mining professional
with some 25 years of mining investment and corporate experience.
During this time she held a number of senior positions at various
financial institutions in the City of London, focusing principally
on investment management in natural resources and emerging markets.
Elena currently serves on a number of Boards of mining companies.
Originally trained as a mining engineer she gained her PhD in
Artificial Intelligence in Mining from Royal School of Mines,
Imperial College, London, U.K.
Additional management and Board changes include the resignation
of Mr. James Masleck as CFO and from the Board of Directors. The
Chairman, Carl Berdahl has assumed an Acting CFO position, while
the company's accountant Ms Linda Warner has been appointed as
Corporate Secretary and Financial Controller.
PRISM is currently looking to raise approximately C$3.5 million
(USD2.63 million) to complete its PFS/BFS Studies in 2020 for Iron
Carbonyl Powder ("ICP") production with an aim of commercial
production commencing early 2022.
Gold
Blackham Resources Limited (ASX: BLK)
-- Gold, Western Australia
-- Coal, Southwest Australia
-- Combined direct and indirect 0.47% equity interest (diluted
following a rights issue and new share issue)
The Matilda-Wiluna Gold Operation is located in Australia's
largest gold belt. The Operation encompasses four large gold
systems surrounding the township of Wiluna that has historically
produced of 4.4Moz of gold. In October 2016, Blackham produced
first gold from the Operation.
Highlights
Since publishing the Blackham 2018 Annual Report, the company
has delivered the following results:
-- Consistent year-on-year throughput and processing plant performance.
-- Extensive development and mining of free-milling Wiluna open
pits with benefits delivered into FY2020.
-- Continued replenishment and extensions of high-grade ore from the Golden Age Underground.
-- Commenced mining at the Williamson open pit mine with
dedicated project funding secured via the sale of certain assets to
Salt Lake Potash.
-- Exploration success at Williamson, Lake Way and Golden Age North.
-- Defined low cost capital pathway to deliver value as the
company transitions to its sulphide operations.
-- Re-structured Management and Board of Directors.
Operations
Gold production during the year was 65,406oz. Although gold
production was below expectations in the Mar'19 and Jun'19
quarters, the significant investment in mining development during
this period will deliver benefits over the next six months.
Free milling gold is now being accessed from several pits and
the company remains focused on improving costs and production. The
near-term operational focus is on mining the company's highest
margin reserves, by providing steady continuous feed of high-grade
ore though the process plant and improving mill availability and
utilisation, while also implementing appropriate cost cutting
initiatives and operational improvements.
Table 1 - FY2019 Gold Production Statistics
Units 30 June 30 June 2018
2019
Mining
------------------------------ ----------- ---------- -------------
Open pit strip ratio Waste/ore 9.1 8.6
----------- ---------- -------------
Total ore mined (UG and open
pit) t 1,938,606 1,696,842
----------- ---------- -------------
Total mined grade g/t 1.3 1.5
----------- ---------- -------------
Total mined contained ounces oz 79,785 81,283
----------- ---------- -------------
Processing
------------------------------ ----------- ---------- -------------
Tonnes processed t 1,807,931 1,835,057
----------- ---------- -------------
Grade processed g/t 1.3 1.4
----------- ---------- -------------
Plant recovery % 85 87
----------- ---------- -------------
Gold produced oz 65,406 70,565
------------------------------ ----------- ---------- -------------
All-in sustaining costs A$/oz 1,760 1,629
----------- ---------- -------------
Production, Cost and Capital Guidance for FY2020
Production guidance for FY2020 is 70k-80koz @ an AISC of
AUD1,550-AUD1,750/oz. Forecast FY2020 AISC includes approximately
AUD11 million of sustaining capital expenditure, mostly comprising
the construction of a new tailings storage facility, which will
provide storage capacity for the ongoing operations. Non-sustaining
capital expenditure outside of the Stage 1 Sulphide Expansion
Project, which includes refurbishment of the Rod Mill to increase
plant throughput, is forecast to be AUD5 million over the year.
Mining
In October 2018, Blackham advised it has commenced open pit
mining at Wiluna of its recently defined free milling ore. It has
been 10 years since open pit mining last took place at the Wiluna
Mine. Recommencement of mining at the Wiluna Mine is expected to
increase plant feed grade, reduce haulage costs and significantly
reduces mine sequencing risks due to more mining areas. Mining of
the Wiluna free milling pits will significantly reduce both
geological and mining risks associated with the larger sulphide
pits prior to recommissioning the Wiluna plants sulphide
circuit.
In line with the mine plan adopted at the start of the year, the
remaining open pits at Matilda will be mined concurrently with the
Wiluna open. All the Wiluna open pits are located within 3kms of
the plant, significantly lowering haulage costs
Mining at Williamson open pit commenced in September 2019 and
total earth movement will increase in the December 2019 quarter,
commensurate with pre-stripping required to access the Williamson
ore body (targeted for the second half of FY20). Pre-stripping
activities will also occur in the December 2019 quarter for a
further cut-back at the Wiluna Golden Age North open pit mine.
Waste rock from this mining area will be used in the construction
of the new tailings storage facility, and high-grade ore supply
from this mining area will also become available in the second half
of FY20.
Resource summary
The Matilda-Wiluna Gold Operation's gold Resources of 93Mt @
2.1g/t for 6.4Moz are to JORC 2012 standard and are all within a
20km radius of the Wiluna Gold Plant. 66Mt @ 1.7g/t for 3.7Moz (57%
of total resources) are in the Measured and Indicated Resource
category. For more information on the resource please refer to
Blackham's ASX announcement dated 27 September 2019.
Reserves
The Matilda-Wiluna Gold Operation's gold Reserves of 25Mt @
1.7g/t for 1.4Moz are to JORC 2012 standard and are all within a
20km radius of the Wiluna Gold Plant. Free-milling Reserves total,
whereas the remaining reserves are focussed on the Sulphide
Expansion Project. For more information on the reserve please refer
to Blackham's ASX announcement dated 27 September 2019.
Resource and Reserve Definition Drilling
During the year, Blackham completed several projects aimed at
strengthening and lengthening its gold reserves and ongoing
exploration drilling targeted at new oxide deposits, to extend the
current free milling mine life. The company completed 23,551.4m of
resource definition drilling during the period, comprising 181 RC
holes for 21,858m and 13 DD holes for 1,693.4m.
In the twelve months to 30 June 2019, Blackham's exploration
team concentrated on further delineating free-milling open pit
reserves over the 4km strike at the Wiluna mine. Revised mining and
metallurgical studies confirmed that oxide and transitional ores at
Wiluna are amenable to CIL processing, leading to infill drilling
targeted at Wiluna free-milling pits that have been mined through
FY2019.
Blackham remains focused on extending the life of the Golden Age
underground mine in line with recent exploration success. From
February to May 2019, Blackham completed surface RC and underground
diamond drilling programmes. Results released to the market
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. Please refer to Blackham's ASX releases dated
19 February 2019 "Excellent Drill Results Extend Both Open Pit and
Underground Mining at Golden Age", 15 May 2019 "High-Grade
Extensions to Golden Age", and 19 September 2018 "Additional Wiluna
High Grade Free-Milling Mineralisation".
Surface RC drilling above the underground Golden Age workings
have confirmed the continuity of the mineralised structure over a
600m strike and to a depth of 370m, with mineralisation remaining
open, both laterally and down-dip.
Metallurgical test work indicates mineralisation at Golden Age
North is also free-milling, consistent with the Golden Age
underground. Mining of a further cutback on the Golden Age North
pit is scheduled to commence in the latter half of 2019.
Wiluna Expansion Studies
The Expansion PFS published on 30 August 2017, confirmed the
robust economics for a +200kozpa long mine life operation. This
study confirmed the Wiluna Expansion opportunity is capital
efficient with economies of scale significantly reducing unit
operating costs.
On 28 February 2019, Blackham provided an update on its
Expansion Studies, detailing a staged approach that allows an
initial low capital cost expansion to enable production from its
reserves. The Stage 1 Expansion targets 100-120kozpa production
with costs well below its current free milling operation and long
mine life. The initial Stage 1 focuses on the production of a gold
concentrate predominantly from the Wiluna underground with
flexibility to also process its free milling and tailings Reserves.
The Stage 1 Expansion will allow Blackham to focus on its highest
margin Reserves.
The overall target is to be in a position to commit to the Stage
1 Expansion during the December 2019 quarter.
Wiluna Cobalt-Nickel Project ("Wilconi")
On 20 December 2018, A-Cap Energy Limited ("ACB") entered into a
binding term sheet with Blackham to acquire up to 75% of the Wiluna
Nickel-Cobalt project via a staged Farm-in and Joint Venture
Agreement ('JVA'). The project covers 40km of strike of the
"Perseverance Ultramafics" sequence, which hosts world class nickel
projects including Mt Keith, Cosmos, Venus, Perseverance and
Honeymoon Well. In January 2019, ACB acquired an initial interest
of 20% for cash consideration of AUD2.8 million (USD1.9 million) to
Blackham.
During the September 2019 quarter ACB completed a resource
upgrade that confirms a large Nickel - Cobalt Resource of 78.8
million tonnes. Please refer to the ACB's ASX announcement dated 17
September 2019 for further details.
Salt Lake Potash
On 23 July 2019, Blackham announced that it had agreed to sell
its Lake Way tenements, cancel its brine royalty and provide
certain water rights to Salt Lake Potash Limited (ASX: SO4) ("Salt
Lake Potash") for AUD10 million cash, whilst retaining certain gold
mining rights for both those tenements and Salt Lake Potash's
neighbouring tenements ("Lake Way Transaction"). The Lake Way
transaction does not restrict Blackham's mining activities as it
progresses towards Stage 1 of its Sulphide Expansion Project.
Salt Lake Potash and Blackham also identified a mutual
opportunity for Salt Lake Potash to utilize part of the pre-strip
material from Blackham's proposed Williamson Pit development for
the construction of the Salt Lake Potash's on-lake evaporation
ponds. Salt Lake Potash will contribute up to AUD10 million to the
pre-strip of the Williamson open pit mine, allowing Blackham to
expedite the mining of the Williamson open pit and also provide
Salt Lake Potash with suitable construction material for its Lake
Way Sulphate of Potash project.
Convertible Security Funding Agreement
On 25 September 2018, Blackham announced the execution of an
agreement with an entity managed by The Lind Partners, a New York
based institutional fund manager, ("Lind").
Lind's AUD7.5 million investment was provided as a Secured
Convertible Note, the proceeds of which were used, along with
Blackham's cash, to fully repay the short term secured debt owed to
Orion Fund JV Limited. The convertible note was repaid on 2
September 2019.
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 of standby equity capital over the coming
29-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).
Pursuant to the abovementioned Controlled Placement Agreement,
Blackham issued 25,000,000 collateral shares to Acuity Capital
Investment Management ATF Acuity Capital Holdings Trust on 26
September 2018.
Debt financing and working capital facility
During the year and subsequent to reporting date, the company
entered into a working capital facility with MACA that will assist
Blackham to progress towards its transition to the Stage 1
Expansion Sulphide Development, targeting 120kozpa gold production
and long mine life.
Pursuant to the working capital facility, MACA will provide
Blackham with working capital of up to AUD19 million until 29
February 2020, which will be provided to Blackham in the form of
extended payment terms for amounts payable to MACA under its mining
services contract ("Working Capital Facility"). The Working Capital
Facility has been provided within the company's existing security
arrangements, but is separate to the AUD14.3 million secured loan
previously provided by MACA, against which Blackham will continue
to make payments in accordance with the agreed schedule, with the
balance having reduced to AUD10.3 million as at 30 June 2019.
Capital Raising
On 11 April 2019, Blackham announced that it had raised gross
proceeds of AUD25.8 million through a placement of 1.7 billion
shares at a price of AUD0.015 per share.
On 12 September 2019, Blackham announced a capital raising of up
to AUD7 million (before costs) that will provide funding for key
mine development work programs that will underpin Blackham's FY2020
production, including pre-production activities at the Williamson
open pit, a new tailings storage facility, rod mill refurbishment,
and for general working capital. The capital raising comprises of a
AUD4 million placement to a small number of targeted international
and domestic institutional and professional investors at a price of
AUD0.01 per share and a share purchase plan to existing
shareholders for up to a further AUD3 million, at the same price as
the Placement.
On 13 December 2019, Blackham's share price closed at AUD0.011
with a market capitalisation of USD33.41 million (AUD/USD =
0.68920).
Nimini Holdings Limited
-- Gold Project, Sierra Leone
Polo's Annual Report 2018 explained that 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 ("ML") was cancelled at the end of
August 2018. This came a month after a blanket move by the
Government of Sierra Leone ("GoSL") cancelling over 30 mining
licences at which time the GoSL cited it was facing serious revenue
generation challenges.
Note that Nimini had earlier taken the decision to suspend all
payments to the GoSL (including the annual ML fee). Nimini wrote to
the GoSL explaining that it was forced to take this drastic action
because the GoSL was not acting in good faith with the Mine
Development Agreement ("MDA") negotiations. The MDA is crucial to
development of Nimini's Komahun Gold Project as it defines the
fiscal terms.
Polo remains disappointed by the GoSL's action in cancelling the
Nimini Project's mining licence and wrote directly to the President
and the Minister of Mines and Mineral Resources appealing for the
decision to be reversed.
Nimini Holdings Ltd and its Sierra Leone subsidiaries have since
been dissolved during 2018-19.
In the meantime, following the termination of the Operator
Agreement with our joint venture partner Plinian and under the
terms and conditions of this agreement and other supplementary
agreements Polo is pursuing recovery of some USD4,182,717.28 (with
interest calculated to 22 July 2019)) from Plinian.
Copper
Weatherly International Plc (AIM; WTI)
-- Copper, Namibia
-- 5.2% equity interest
Weatherly International is 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.
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) 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 2019 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.
For the year ended 30 June 2019, the Group recorded a loss on
ordinary activities after taxation of USD4.19 million (2018:
USD7.60 million). The loss was largely due to provision of a full
impairment of USD4.18 million against the recoverability of the
outstanding loan from Plinian Guernsey, impairment charge of
USD2.45 million against Prism Diversified Ltd (formally Ironstone
Resources Ltd) and an impairment reversal of USD2.4 million against
the carrying value of GCM Resources Plc. During the financial year
the gain of fair value movement of the Group's financial
investments was USD4.83 million.
The Group remained prudent in managing its administrative
expenditure which stood at USD2.26 million compared to USD2.29
million in the previous financial year.
Basic loss per share for the year ended 30 June 2019 was USD1.34
cents (2018: USD2.44 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.
Financial Position
The Directors have reviewed the Group's budgets for 2019-2020,
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 13 December 2019, the Group had a net position of cash,
receivables and short term investments of USD11.97 million (30 June
2019: USD11.71 million). Listed and unlisted investments at marked
to market value, cost and valuation amounted to USD46.99 million
(30 June 2019: USD52.62 million). The combined total of cash,
receivables, payables, listed and unlisted investments was USD53.80
million as of 13 December 2019 (30 June 2019: USD60.16 million)
which is equivalent to a Net Asset value of approximately 13.07
pence per Polo share (30 June 2019: 15.19 pence per share).
Outlook
Polo's investment exposure is now primarily centered around the
energy sector and we are mindful of the growing importance climate
change and the desire by all governments to reduce their CO(2)
emissions is having on investors in terms of their investment
decision focus and policy when it comes to investing in the
hydrocarbon sector. Polo has always taken the view that we have to
offer our shareholders a balanced investment portfolio. In the case
of both Hibiscus and GCM we are mindful of the environmental
footprint of both these investee companies. Whilst there is a
global desire to reduce CO(2) and greenhouse gasses and for the
world to transit much faster towards renewable energy, the
transition will naturally take some time. In the mean-time
industries still demand the supply of petroleum to support the day
to day workings of the global economy and where in the foreseeable
future Polo will remain committed to supporting Hibiscus which is a
best in class oil and gas company recognised by a number of
external verifications.
In the case of GCM we are confident that the development of
Phulbari will see the latest highly energy efficient coal fired
power generation plants being designed and built and that these
will operate to the highest possible environmental standards. In
particular these power plants will use leading-edge flue gas
cleaning systems to protect air quality and cooling systems that
minimise water consumption. We also envisage applicable CO(2)
recovery systems will be incorporated as soon as the technology is
available.
Polo remains focussed on supporting our current investee
companies as our key priority heading into 2019. I would like to
thank all our shareholders, partners and advisers for their
continuous and unwavering support.
Datuk Michael Tang, PJN
Executive Chairman
19 December 2019
Group Statement of Comprehensive Income
for the year ended 30 June 2019
Year ended Year ended
30 June 2019 30 June 2018
$ 000's $ 000's
(Loss) on sale of financial (895) -
investments
Gain on fair value movement
of financial investments 4,828 -
Investment income 134 241
Impairment of financial investments (2,450) (2,749)
Administrative & Exploration
expenses (2,263) (2,291)
Share options expensed (213) (216)
Group operating (loss) (859) (5,015)
-------------- --------------
Share of associates results (1,572) (785)
Reversal of/(Impairment) of
associate 2,400 (1,250)
Other loan provision (4,180) (916)
Finance revenue 457 370
Loss on disposal of subsidiary (436) -
(Loss) before taxation (4,190) (7,596)
Income tax expense - -
Retained (loss) for the year (4,190) (7,596)
-------------- --------------
Other comprehensive income
Gain on market value revaluation
of available for sale investments - 20,334
Currency translation differences 423 107
-------------- --------------
Other comprehensive income
for the year net of taxation 423 20,441
-------------- --------------
Total comprehensive income
for the year (3,767) 12,845
-------------- --------------
Retained (loss) for the year
attributable to:
Equity holders of the parent (4,186) (7,596)
Non-controlling interests (4) -
-------------- --------------
(4,190) (7,596)
-------------- --------------
Total comprehensive income
for the year attributable
to:
Equity holders of the parent (3,763) 12,867
Non-controlling interests (4) (22)
-------------- --------------
(3,767) 12,845
-------------- --------------
(Loss) per share (US cents)
Basic (1.34) (2.44)
Diluted (1.34) (2.44)
Group Statement of Financial Position
as at 30 June 2019
30 June 2019 30 June 2018
$ 000's $ 000's $ 000's $ 000's
ASSETS
Non-current assets
Tangible assets - 2,475
Interest in associates 3,083 2,134
Financial investments 45,672 43,971
Trade and other receivables - 3,941
-------------- -------------
Total non-current assets 48,755 52,521
Current assets
Trade and other receivables 7,289 3,004
Financial investments 3,868 6,816
Cash and cash equivalents 550 1,260
-------------- -------------
Total current assets 11,707 11,080
----------- --------
TOTAL ASSETS 60,462 63,601
LIABILITIES
Current liabilities
Trade and other payables (300) (3,320)
-------------- -------------
TOTAL LIABILITIES (300) (3,320)
NET ASSETS 60,162 60,281
----------- --------
EQUITY
Equity contribution 306,714 306,714
Retained earnings (264,727) (280,215)
Available for sale investment
reserve - 19,674
Foreign exchange reserve 17,657 17,234
Share based payments
reserve 429 216
-------------- -------------
60,073 63,623
Non-controlling interest 89 (3,342)
----------- --------
TOTAL EQUITY 60,162 60,281
----------- --------
These financial statements were approved by the Board of Directors
on 19 December 2019 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 2019
Year ended Year ended
30 June 2019 30 June 2018
$ 000's $ 000's
Cash flows from operating activities
Operating (loss) (859) (5,015)
Decrease/(increase) in trade and
other receivables 24 (513)
(Decrease)/increase in trade and
other payables (80) 90
(Increase) in available for sale
investments (1,203) (39)
Foreign exchange (gain)/loss (5) 1
Share options expensed 213 216
Impairment of AFS investments 2,450 2,749
Net cash inflow/(outflow) from
operating activities 540 (2,511)
-------------- --------------
Cash flows from investing activities
Finance revenue 6 370
Equity purchases in associates (121) (530)
Loan (advanced) to third party (1,156) (184)
Net cash (outflow) from investing
activities (1,271) (344)
-------------- --------------
Cash flows from financing activities
Issue of ordinary share capital - -
Net cash inflow from financing - -
activities
-------------- --------------
Net (decrease) in cash and cash
equivalents (731) (2,855)
Cash and cash equivalents at beginning
of year 1,260 4,010
Exchange gain on cash and cash
equivalents 21 105
-------------- --------------
Cash and cash equivalents at end
of year 550 1,260
-------------- --------------
Group Statement of Changes in Equity
for the year ended 30 June 2019
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
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
------------- ----------- ------------ --------- ---------- -------- ---------------- --------
(Loss) for
the year - - - - (4,186) (4,186) (4) (4,190)
Currency
translation
differences - - 423 - - 423 - 423
------------- ----------- ------------ --------- ---------- -------- ---------------- --------
Total
comprehensive
income - - 423 - (4,186) (3,763) (4) (3,767)
Share options
charge - - - 213 - 213 - 213
Total
contributions
by and
distributions
to owners of
the Company - - - 213 - 213 - 213
Transfer to
retained
earnings - (19,674) - - 19,674 - - -
Eliminated
on disposal
of subsidiary - - - - - - 3,435 3,435
As at 30 June
2019 306,714 - 17,657 429 (264,727) 60,073 89 60,162
------------- ----------- ------------ --------- ---------- -------- ---------------- --------
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 PGGPUPUPBGQU
(END) Dow Jones Newswires
December 20, 2019 11:07 ET (16:07 GMT)
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