TIDMAEX
RNS Number : 0509O
Aminex PLC
30 September 2019
30 September 2019
AMINEX PLC
2019 HALF-YEARLY REPORT
Aminex PLC ("Aminex" or "the Group" or "the Company") announces
its unaudited half-yearly report for the six months ended 30 June
2019.
REPORTING PERIOD HIGHLIGHTS
-- Equity issue of US$2.18 million after transaction expenses successfully completed
-- Reprocessing of 2D seismic over Kiliwani North Development Licence
-- 20% cost savings on like-for-like gross administrative expenses
-- Further remedial work planned for Kiliwani North-1 to
stimulate production - no production in the period
-- Loss for the period of US$2.19 million (30 June 2018: loss of US$2.36 million)
POST PERIOD
-- Satisfaction of all conditions precedent within Aminex's and
ARA Petroleum Tanzania Limited's ("APT") control for the Ruvuma
Farm-Out
-- Binding heads of terms signed with ARA Petroleum LLC which
will enable US$3 million to be paid in instalments to Aminex
pending completion of the Ruvuma Farm-Out
-- APT and Aminex to accelerate the Ruvuma work programme
-- Submission with the Tanzania Petroleum Development
Corporation ("TPDC") for the Nyuni Area PSA to be granted a Second
Extension Period with amended work commitments
Aminex CEO, Tom Mackay, commented:
"We are encouraged that the delays the Company has experienced
over the past eighteen months in being able to pursue our
operations programme in Tanzania appear to be finally coming to an
end and there is now firm evidence of a gradual unlocking of the
approvals processes in country.
Having successfully pared back our administrative expense,
through the year to date, we have been able to advance a modest
technical and operational planning work programme on both our KNDL
and Ruvuma permits in what has been both a difficult and
transitional period for your Company. We continue to see
significant potential in our assets in Tanzania and look forward to
being in a position to deliver value for shareholders, from a
low-cost base, which we have worked tirelessly to achieve this
year"
For further information:
Aminex PLC +44 20 3198 8415
Tom Mackay, Chief Executive
Officer
Max Williams, Chief Financial
Officer
John Bell, Chairman
Corporate Brokers +353 1 679 7788
Davy - Brian Garrahy
Camarco (Financial PR) +44 20 3757 4980
Billy Clegg
James Crothers
INTERIM MANAGEMENT REPORT
Chief Executive's Review
Aminex PLC's results for the six months ended 30 June 2019 are
set out below.
The Company reports a loss for the period of US$2.19 million (30
June 2018: US$2.36 million). More information is provided in the
Financial Review.
The year to date has seen major changes to your Company's
management with Mr John Bell replacing Mr Keith Phair as Chairman
in February and the unfortunate departure of my predecessor, Mr Jay
Bhattacherjee, due to ill health in May. In addition, a number of
Board changes have been announced with Mrs Linda Beal joining the
Board as an Independent Non-Executive Director and Audit and Risk
Committee Chair in January and, subsequent to the reporting period,
the replacement of Mr Sultan Al-Ghaithi with Mr Robert Ambrose in
September, as one of the two nominated Non-Executive Directors
appointed by our major investor and shareholder, Eclipse
Investments LLC.
The Board changes have coincided with the ongoing hiatus within
the upstream energy sector in Tanzania, due to the continuing
review by the Attorney General, on behalf of the President, of the
extant Production Sharing Agreements ("PSAs") in country and the
associated delays in granting licence extensions and resolving
other long standing issues with other operators.
These delays have necessitated a thorough review of Aminex's
running costs, both in London and in Tanzania, and we are pleased
to report a reduction of 20% in the current half year costs from
those incurred in the corresponding period in 2018 with further
cost reductions expected as the changes made unwind through the
remainder of 2019.
We have recently seen positive movements in Tanzania that
suggest the review process is coming to a conclusion and the
approval processes will be unlocked in the near future and these
movements provide us with encouragement that the long awaited
farm-out of Ruvuma ("the Farm-Out") and the Ntorya Field appraisal
and development project with ARA Petroleum Tanzania Limited ("APT")
will shortly conclude.
This encouragement comes at a time when Aminex and APT have
satisfied all the conditions precedent for the Farm-Out that are
within our control and we are fully engaged with the Tanzanian
authorities to complete the transaction as soon as is practicable.
As a result of this progress, Aminex recently announced that the
Company and APT will advance works so that drilling of the
Chikumbi-1 well can commence as soon as practicable following the
satisfaction of the remaining conditions. Since the period end, on
24 September 2019, Aminex and ARA Petroleum LLC (the parent company
of APT) ("ARA") have signed a binding Heads of Terms whereby ARA
has agreed to provide a US$3 million advance in instalments to the
Company, ahead of Completion of the Farm-Out, which provides the
Company with financial flexibility pending Completion. The monies
advanced will be offset against the first tranche of the cash
consideration payable to Aminex on Completion of the Farm-out. The
second tranche of the cash consideration of US$2 million, which was
initially due to the Company 180 days after Completion, will now be
payable to the Company upon Completion, together with the interim
expenses since the Effective Date of the Farm-Out, 15 March 2018.
The long stop date for Completion of the Farm-Out has been extended
to 30 June 2020, although the Company and APT do not expect to
require this extended period to satisfy the remaining conditions of
the Farm-Out. In the unlikely event of Completion having not
occurred by 30 June 2020, the advance will convert to an
interest-bearing secured loan, repayable by 30 June 2021.
Kiliwani North and Kiliwani South - Kiliwani North Development
Licence ("KNDL")
As a result of reservoir pressure decline and
compartmentalisation, the Kiliwani North-1 well has not produced
during the period. Aminex undertook preliminary remedial work to
repair the downhole safety valve in late 2018 which resulted in
temporary gas flow. The well has produced approximately 6.5 BCF of
gas to date. Aminex is preparing a remedial work programme intended
to establish fluid levels in the wellbore, reservoir pressure and
to unload potential fluid using foam treatment technology which has
been used successfully in the North Sea. If successful, this
operation is expected to re-establish gas production from the well.
The Company has accordingly sought approvals from the Tanzania
Petroleum Development Corporation ("TPDC") to perform the operation
and has commenced sourcing appropriate equipment.
As previously advised, following a re-interpretation of existing
seismic in 2018, the Company identified the Kiliwani South
prospect, estimated by management to contain a mean 57 BCF
un-risked GIIP, as reviewed by RPS Energy Consultants Limited
("RPS") in their February 2018 CPR. Kiliwani South is accounted for
as an exploration and evaluation asset.
In preparation for acquiring 3D seismic over the licenced
acreage comprising the shallow-water areas adjacent to Songo Songo
Island, which will include 3D seismic over the Kiliwani North and
Kiliwani South structures, Aminex has completed, during the
reporting period, the reprocessing of select 2D seismic data and is
currently remapping the results. In order to benefit from economies
of scale, the Company plans to acquire 3D seismic over part of the
Kiliwani North Development Licence and multiple leads on the
adjacent Company-held Nyuni Area acreage as part of the same
programme. After processing and interpretation of the proposed 3D
seismic data, Aminex expects to high-grade prospective drilling
locations on both the Kiliwani North and Kiliwani South structures
with the intention, on the back of drilling success, to deliver
near term gas to the Songo Songo Island Gas Processing Plant
("SSIGPP").
Recent changes have provided us with some encouragement that
progress can at last be made with respect to resolving the
outstanding receivables of US$7.61 million for previous gas sales
from KNDL and related interest.
Ruvuma PSA
Aminex has continued the well design and planning for the
Chikumbi-1 exploration well during the reporting period, although
the main focus has been on completing the Ruvuma Farm-Out with APT.
The conditions precedent within the two parties' control have now
been satisfied and Completion is conditional upon receipt of
governmental approvals and the grant of an extension to the Mtwara
Licence. The Farm-Out, with a net carry to Aminex of up to US$35
million, is expected to fully fund Aminex through to full field
development of the Ntorya gas field and to relieve Aminex of all
its development capital requirements associated with the field. The
work programme for the Ntorya field is expected to include the
acquisition, processing and interpretation of new 2D and 3D seismic
data and the drilling of multiple wells, including the forthcoming
Chikumbi-1 well. Chikumbi-1 has been designed to delineate the
Cretaceous Ntorya gas field and to test the deeper Jurassic
Chikumbi prospect and fulfil one of the outstanding exploration
well obligations on the licence.
The Company submitted a development plan for the Ntorya
appraisal area and applied for the grant of a 25-year development
licence in September 2017. Review and approval of the Development
Licence application remains with the Tanzanian authorities pending
negotiation of gas terms and a gas sales agreement.
Nyuni Area PSA
The First Extension Period to the Nyuni Area PSA was granted in
December 2016 for a four-year term but in the reporting period the
Tanzanian authorities advised the Company that the effective start
date for the licence period was to be back-dated to October 2015.
Accordingly, the First Extension Period is now due to expire on 27
October 2019. The Board concluded that the carrying value of the
Nyuni asset was impaired and full provision was made at 31 December
2018 and expenditure in the reporting period has also been charged
to the Income Statement.
In July 2019, Aminex submitted an application to the TPDC to
enter the Second Extension Period of three years together with a
request for an amendment to the work programme obligation for the
licence area. If successful, the number of blocks retained under
the licence will reduce to five, from the current ten blocks under
licence. The proposed amended work programme and associated
commitment is being supported by the TPDC and awaits the approval
of both the Petroleum Upstream Regulatory Authority ("PURA") and
the Minister of Energy. Aminex remains focused on projects which
will deliver commercial gas to the Tanzanian markets in the near
term and Aminex believes the Nyuni Area acreage offers considerable
upside exploration potential to complement the development projects
at Ntorya and Kiliwani North. The proposed acreage to be retained
lies in the shallow water areas adjacent to the Kiliwani North
Development Licence which will require the acquisition of 3D
seismic to move shallow water targets to drill ready status.
Tanzania has embarked on a large industrialisation development
programme which has seen the planning and construction of numerous
facilities along existing gas delivery infrastructure either
directly connected to or in close proximity to Aminex's Tanzanian
assets and which are expected to increase local gas demand
significantly in the near future. In addition, it has been reported
that discussions have been held between Tanzanian government
officials and their counterparts in neighbouring countries to
explore the possibility of securing a long-term supply of gas from
Tanzania and adding to future gas demand in the East African
region. These positive developments in the Tanzanian gas sector
bode well for the commercialisation of Aminex's assets in the
future.
Tom Mackay
Chief Executive
30 September 2019
Financial Review
Financing and Future Operation
In February 2019 Aminex raised US$2.37 million before expenses
through the placing of new Ordinary Shares. The funds were raised
to accelerate development over Aminex's shelfal interests,
financing the reprocessing of the existing 2D seismic, planning for
the acquisition of new 3D seismic and to help transition Kiliwani
South from a prospect to a drill-ready target.
Subsequent to the period end, Aminex recently announced that the
Company and APT will advance works so that drilling of the
Chikumbi-1 well can commence as soon as practicable following the
satisfaction of the remaining conditions. Aminex and ARA have
signed a binding heads of terms whereby ARA has agreed to provide a
US$3 million advance in instalments to the Company, ahead of
Completion of the Farm-Out ("Advance"), which provides the Company
with financial flexibility pending Completion. The parties will
agree and sign a fully termed agreement as soon as possible.
The Board believes the Farm-Out provides the Group with an
excellent opportunity to participate in an accelerated development
programme for the Ntorya field with the support of ARA.
Revenue Producing Operations
Revenues from continuing operations amounted to US$0.14 million
(30 June 2018: US$0.34 million). The revenues during the first six
months of 2019 relate to the provision of technical and
administrative services to joint venture operations as there was no
production from Kiliwani North-1. This compares with gas revenues
of US$0.05 million for the first six months of 2018, together with
oilfield services amounting to US$0.29 million. Plans to remediate
production from the well are set out in the Chief Executive's
Review. Cost of sales was US$0.39 million (30 June 2018: US$0.80
million). The cost of sales for Kiliwani North operations amounted
to US$0.25 million (30 June 2018: US$0.47 million) and included the
continuing remediation plans and work as well as general licence
costs. There was no depletion charge for Kiliwani North production
(30 June 2018: US$0.04 million). The balance of the cost of sales
amounting to US$0.14 million (30 June 2018: US$0.29 million)
related to the oilfield services operations. Accordingly, there was
a gross loss of US$0.25 million for the period compared with a
gross loss of US$0.46 million for the comparative period.
Group administrative expenses, net of costs capitalised against
projects, were US$1.78 million (30 June 2018: US$1.87 million). The
expenses for the current period include the impact of certain
non-cash charges, mainly: a share-based payment charge of US$0.14
million relating to options granted in February and June 2019 (30
June 2018: US$0.58 million for options granted in January 2018); an
increased depreciation charge of US$0.12 million on other assets
following the adoption of IFRS 16: "Leases" (30 June 2018: US$0.01
million); and expected credit loss charge of US$0.16 million (30
June 2018: nil). After adjusting for the impact of the certain
one-off charges and the recharges to joint venture partners, the
Group's gross administrative expenses for the period under review
were US$2.05 million, a reduction of approximately 20% from the
gross administrative expenses of US$2.54 million for the six months
ended 30 June 2018. The reduction reflects the initial phase of
cost savings which have continued into the second half of the year.
Management has continued to maintain strict expenditure controls
and, where possible, to reduce overhead costs. In accordance with
the Board's decision to provide in full against the carrying value
of the Nyuni assets as at 31 December 2018, the additions to the
Nyuni exploration and evaluation asset in the period has been fully
impaired and an amount of US$0.17 million was charged to the income
statement (30 June 2018: nil). The Group's resulting net loss from
operating activities was US$2.20 million (30 June 2018: loss of
US$2.33 million).
Finance costs of US$0.04 million related to the decommissioning
interest charge (30 June 2018: US$0.03 million).
Finance income amounted to US$0.05 million comprising foreign
exchange gains of US$0.04 million (30 June 2018: nil) and deposit
interest of US$0.01 million (30 June 2018: US$0.01 million).
The Group's net loss for the period amounted to US$2.19 million
(30 June 2018: loss of US$2.36 million).
Balance Sheet
The Group's investment in exploration and evaluation assets
increased from US$58.53 million at 31 December 2018 to US$58.85
million at 30 June 2019. The increase reflected ongoing well
planning for Chikumbi-1 and the planning for 2D and 3D seismic
acquisition programmes in conjunction with APT prior to the
completion of the Ruvuma Farm-Out and the expected transfer of
operatorship, as well as licence expenses for the Ruvuma PSA and
the reprocessing of 2D seismic data and remapping of Kiliwani
South. The Directors reviewed and have concluded that there is no
impairment to the Ruvuma and Kiliwani South assets. This opinion
takes into account ongoing discussions with the Tanzanian
authorities for the extension to the Mtwara Licence, the grant of a
development licence for Ntorya under the Ruvuma PSA and the
geological and geophysical work conducted on Kiliwani South. The
Directors also considered the current status of the Nyuni Area
Licence and negotiations with the Tanzanian authorities to enter a
Second Extension Period with an amended work programme: the
Directors concluded that the Nyuni asset is still impaired and have
therefore maintained a full provision against the carrying value.
The carrying value of property, plant and equipment has increased
from US$2.39 million at 31 December 2018 to US$2.87 million at 30
June 2019. The increase relates predominantly to the
reclassification of operating leases in accordance with IFRS 16:
"Leases" as disclosed in Note 1 to the financial statements in the
2018 Annual Report, Aminex has recognised and capitalised
right-of-use assets with a net book value of US$0.60 million as at
1 January 2019. Current assets amounted to US$10.20 million (31
December 2018: US$9.90 million) with trade and other receivables of
US$8.17 million (31 December 2018: US$8.04 million), which as
operator includes joint venture parties' interests in gas revenues,
and cash and cash equivalents of US$2.03 million (31 December 2018:
US$1.86 million).
Trade payables amounted to US$11.01 million compared with
US$10.52 million at 31 December 2018. This balance included amounts
payable to the TPDC and joint venture partners for their profit
shares from invoiced gas sales. Payables also include VAT and
excise tax payable on gas receivables. Non-current liabilities
amounting to US$1.14 million include the non-current
decommissioning provision which increased during the period by
US$0.03 million from US$0.70 million at 31 December 2018 to US$0.73
million, the increase relating to the unwind discount charge during
the period. Non-current liabilities also include long-term lease
liabilities of US$0.42 million following the recognition of
right-of-use assets and lease liabilities in accordance with IFRS
16: Leases.
Total equity has increased by US$0.16 million between 31
December 2018 and 30 June 2019 to US$59.77 million (31 December
2018: US$59.61 million). The net movement comprises an increase in
issued capital and share premium of US$2.36 million, a net decrease
of US$0.67 million to the share option reserve, a reduction in the
foreign currency translation reserve of US$0.02 million and the
movement of US$1.55 million in retained earnings arising on the
loss of US$2.19 million for the period, the transaction expenses of
US$0.17 million for the issue of shares, offset by the release from
the share option reserve of US$0.82 million to retained earnings
following the expiry of certain share options during the
period.
Cash Flows
Net cash outflows due to operating activities was US$1.35
million during the period (30 June 2018: US$2.62 million). There
was an increase in debtors of US$0.10 million primarily arising on
the increase in the gross receivables from the TPDC and an increase
in creditors of US$0.30 million. Net cash outflows from investing
activities amounted to US$0.71 million (30 June 2018: US$0.95
million). Expenditure on exploration and evaluation assets in the
current period amounted to US$0.71 million, relating to payments
for well planning services for Chikumbi-1 to be drilled on the
Ruvuma PSA acreage, seismic reprocessing over Kiliwani South,
together with continuing costs on all Tanzanian licence interests.
The Group received net proceeds of US$2.18 million from the issue
of share capital in the period. Net cash and cash equivalents for
the six months ended 30 June 2019 therefore increased by US$0.12
million compared with a decrease of US$3.58 million for the
comparative half-year period. The balance of net cash and cash
equivalents at 30 June 2019 was US$2.03 million (30 June 2018:
US$2.65 million).
Related Party Transactions
On 11 July 2018, Ndovu Resources Limited, a subsidiary company,
entered into a related party transaction through a farm-out
agreement with The Zubair Corporation LLC which, through its
affiliate company, Eclipse Investments LLC, is a significant
shareholder in Aminex PLC. The effective date of the transaction
will be 15 March 2018. On 4 January 2019, the Company announced
that shareholders approved the Farm-Out of a 50% interest in the
Ruvuma PSA to The Zubair Corporation at an extraordinary general
meeting. The Farm-Out constitutes a related party transaction.
Subsequent to the farm-out agreement being signed, The Zubair
Corporation has assigned its interest in the agreement to ARA
Petroleum Tanzania Limited. The transaction remains subject to
completion, including receipt of various approvals. Since 30 June
2019, Aminex has entered into a further related party transaction
with another affiliate company of The Zubair Corporation, ARA
Petroleum LLC, which will provide bridge financing of up to US$3
million prior to the completion of the Farm-Out.
On 7 February 2019, the Company raised $2.37 million before
expenses in a placing through the issue of 127,226,781 new ordinary
shares at a price of Stg 1.45p per share. Eclipse Investments LLC,
a substantial shareholder and a related party, subscribed for
26,525,198 new ordinary shares in the placing.
Other than the above, there have been no new material related
party transactions in the period and there were no material changes
in the related parties set out in Note 26 to the Financial
Statements contained in the 2018 Annual Report that could have had
a material effect on the financial position or performance of the
Group during the six-month period.
Going Concern
Cash and cash equivalents totalled US$2 million as at 30 June
2019.
The financial statements of the Group are prepared on a going
concern basis.
The Directors have given careful consideration to the Group's
ability to continue as a going concern through review of cash flow
forecasts prepared by management for the period to 30 September
2020, review of the key assumptions on which these are based and
sensitivity analysis. The Directors have taken into account the
Farm-Out, which is an assignment of a 50% interest in the Ruvuma
PSA to APT, for which shareholder approval was obtained at an
extraordinary general meeting held on 4 January 2019. While the
conditions precedent within the control of Aminex and APT have been
satisfied, the Farm-Out remains subject to the extension of the
Mtwara Licence and certain government approvals. On 24 September
2019, Aminex and ARA entered into a binding heads of terms whereby
ARA has agreed to provide a US$3 million advance in instalments to
the Company, prior to the Completion of the Farm-Out.
The Directors have a reasonable expectation that the Group will
be able to complete the Farm-Out with APT, although there is no
certainty that the Farm-Out will complete. Based on the binding
head of terms for the advance, the Directors concluded that the
Group would have sufficient resources to continue as a going
concern and meet its obligations as and when they fall due for a
period of not less than 12 months from the date of approval of the
condensed consolidated financial statements and consequently the
condensed consolidated financial statements have been prepared on a
going concern basis.
However, there is no certainty that the Farm-Out with APT will
complete as it remains subject to the extension of the Mtwara
Licence and certain government approvals. This matter indicates the
existence of a material uncertainty that may cast significant doubt
on the entity's ability to continue as a going concern. As a
consequence of the Farm-Out not completing, the Group may be unable
to realise its assets and discharge its liabilities in the normal
course of business. The condensed consolidated financial statements
have been prepared on a going concern basis and do not include any
adjustments that would be necessary if this basis were
inappropriate.
Principal Risks and Uncertainties
The Group's strategic objectives for its principal activities,
being the production and development of and the exploration for oil
and gas reserves, are only achievable if certain risks are managed
effectively. The Board has overall accountability for determining
the type and level of risk it is prepared to take. The Board is
assisted by the Audit and Risk Committee, which oversees the
process for review and monitoring of risks, and the implementation
of mitigation actions, by management. The Audit and Risk Committee
reviews management's findings regularly and reports to the Board
accordingly. Assessment of risks is made under four categories:
Strategic Risks, Operational Risks, Compliance Risks and Financial
Risks.
Aminex has reviewed and assessed the principal risks and
uncertainties at 30 June 2019 and concluded that the principal
risks identified at 31 December 2018 and disclosed on pages 22 and
23 of the 2018 Annual Report are still appropriate. The following
are considered to be the key principal risks facing the Group over
the next six months although there are other risks which may impact
the Group's performance:
-- Lack of exploration, appraisal and development drilling success
-- Ability to complete the Ruvuma Farm-Out
-- Ability to secure other financing for Group operations
-- Ability to meet licence work commitments
-- Delayed or non-payment of receivables from the TPDC
-- Delay in approval of Mtwara Licence extension, Ntorya
development licence and Nyuni Area Second Extension Period with
amended work commitments
-- Political and fiscal uncertainties
Forward Looking Statements
Certain statements made in this half-yearly financial report are
forward-looking statements. Such statements are based on current
expectations and are subject to a number of risks and uncertainties
that could cause actual events or results to differ materially from
the expected future events or results referred to in these
forward-looking statements.
Statement of the Directors in respect of the Half-Yearly
Financial Report
Each of the directors who held office at the date of this
report, confirm their responsibility for preparing the half-yearly
financial report in accordance with the Transparency (Directive
2004/109/EC) Regulations 2007 (as amended), the Transparency Rules
of the Central Bank of Ireland and the Disclosure and IAS 34
Interim Financial Reporting, as adopted by the EU and to the best
of each person's knowledge and belief:
-- the condensed consolidated financial statements comprising
the condensed consolidated income statement, the condensed
consolidated statement of comprehensive income, the condensed
consolidated balance sheet, the condensed consolidated statement of
changes in equity, the condensed consolidated statement of
cashflows and the related explanatory notes have been prepared in
accordance with IAS 34 Financial Reporting as adopted by the
EU.
-- The Interim Management Report includes a fair review of the information required by:
(a) Regulation 8(2) of the Transparency (Directive 2004/109/EC)
Regulations 2007, being an indication of important events that have
occurred during the first six months of the financial year and
their impact on the condensed set of financial statements; and a
description of the principal risks and uncertainties for the
remaining six months of the year; and
(b) Regulation 8(3) of the Transparency (Directive 2004/109/EC)
Regulations 2007, being related party transactions that have taken
place in the first six months of the current financial year and
that have materially affected the financial position or performance
of the entity during that period; and any changes in the related
party transactions described in the last annual report that could
do so.
On behalf of the Board
T.A. MACKAY M.V. WILLIAMS
Chief Executive Officer/Director Chief Financial Officer/Director
30 September 2019
Aminex PLC
CONDENSED CONSOLIDATED INCOME STATEMENT
for the six months ended 30 June 2019
Notes Unaudited Unaudited Audited
6 months 6 months Year ended
ended ended 31 December
30 June 2019 30 June 2018 2018
US$'000 US$'000 US$'000
Continuing operations
Revenue 2 142 340 617
Cost of sales 2 (390) (804) (2,017)
Gross loss (248) (464) (1,400)
Administrative expenses (1,783) (1,870) (3,636)
Impairment against exploration
and evaluation assets (170) - (43,474)
-------------- -------------- -------------
Loss from operating
activities (2,201) (2,334) (48,510)
Finance income 4 50 7 65
Finance costs 5 (39) (32) (64)
-------------- -------------- -------------
Loss before tax (2,190) (2,359) (48,509)
Income tax expense 6 - - -
Loss for the period 2 (2,190) (2,359) (48,509)
-------------- -------------- -------------
Loss per share
Basic and diluted (US
cents) 7 (0.06) (0.07) (1.33)
-------------- -------------- -------------
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2019
Unaudited Unaudited Audited
6 months ended 6 months Year ended
30 June 2019 ended 31 December
US$'000 30 June 2018 2018
US$'000 US$'000
Loss for the period (2,190) (2,359) (48,509)
Other comprehensive income
Items that are or may be
reclassified subsequently
to profit or loss:
Currency translation differences 17 203 124
Total comprehensive expense
for the period attributable
to the equity holders of
the Company (2,173) (2,156) (48,385)
---------------- -------------- -------------
Aminex PLC
CONDENSED CONSOLIDATED BALANCE SHEET
At 30 June 2019
Unaudited Unaudited Audited
30 June 30 June 31 December
2019 2018 2018
Notes US$'000 US$'000 US$'000
Assets
Non-current assets
Exploration and evaluation
assets 8 58,848 100,710 58,534
Property, plant and equipment 9 2,870 2,406 2,393
Total non-current assets 61,718 103,116 60,927
Current assets
Trade and other receivables 10 8,173 9,806 8,043
Cash and cash equivalents 11 2,028 2,650 1,860
--------- ------------- ------------
Total current assets 10,201 12,456 9,903
--------- ------------- ------------
TOTAL ASSETS 71,919 115,572 70,830
--------- ------------- ------------
Equity
Issued capital 69,206 69,062 69,062
Share premium 124,481 122,267 122,267
Other undenominated capital 234 234 234
Share option reserve 2,039 2,710 2,710
Foreign currency translation
reserve (2,001) (1,939) (2,018)
Retained earnings (134,193) (86,499) (132,649)
--------- ------------- ------------
Total equity 59,766 105,835 59,606
--------- ------------- ------------
Liabilities
Non-current liabilities
Long-term lease liabilities 345 - -
Decommissioning provision 732 668 700
Other long-term liabilities 70 - -
--------- ------------- ------------
Total non-current liabilities 1,147 668 700
--------- ------------- ------------
Current liabilities
Trade and other payables 12 11,006 9,069 10,524
Total current liabilities 11,006 9,069 10,524
--------- ------------- ------------
Total liabilities 12,153 9,737 11,224
--------- ------------- ------------
TOTAL EQUITY AND LIABILITIES 71,919 115,572 70,830
--------- ------------- ------------
Aminex PLC
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2019
Attributable to equity shareholders of the Company
Foreign
currency
Share translation
Share Share Other undenominated option reserve Retained Total
capital premium capital reserve fund earnings equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
At 1 January 2018 69,062 122,267 234 2,540 (2,142) (84,551) 107,410
Comprehensive
income
Loss for the period - - - - - (2,359) (2,359)
Currency
translation
differences - - - - 203 - 203
Transactions with
shareholders of
the Company
recognised
directly in equity
Share based payment
charge - - - 581 - - 581
Share option
reserve
transfer - - - (411) - 411 -
At 30 June 2018 69,062 122,267 234 2,710 (1,939) (86,499) 105,835
Comprehensive
income
Loss for the period - - - - - (46,150) (46,150)
Currency
translation
differences - - - - (79) - (79)
At 31 December
2018 as
previously
reported 69,062 122,267 234 2,710 (2,018) (132,649) 59,606
Comprehensive
income
Adjustment on
adoption
of IFRS 16 (Note
1) - - - - - 5 5
Adjusted at 1
January
2019 69,062 122,267 234 2,710 (2,018) (132,644) 59,611
Loss for the period - - - - - (2,190) (2,190)
Currency
translation
differences - - - - 17 - 17
Transactions with
shareholders of
the Company
recognised
directly in equity
Shares issued 144 2,214 - - - (174) 2,184
Share based payment
charge - - - 144 - 144
Share option
reserve
transfer - - - (815) - 815 -
---------- ---------- -------------------- --------- ------------- ------------ ----------
At 30 June 2019
(unaudited) 69,206 124,481 234 2,039 (2,001) (134,193) 59,766
---------- ---------- -------------------- --------- ------------- ------------ ----------
Aminex PLC
CONDENSED CONSOLIDATED STATEMENT OF CASHFLOWS
for the six months ended 30 June 2019
Unaudited Unaudited Audited
6 months 6 months Year ended
ended ended 31 December
30 June 2019 30 June 2018 2018
US$'000 US$'000 US$'000
Operating activities
Loss for the financial period (2,190) (2,359) (48,509)
Depreciation and depletion 121 45 58
Share based payment charge 144 581 581
Finance income (3) (7) (65)
Finance costs 39 32 64
Impairment of exploration and evaluation
assets 170 - 43,474
Impairment of financial assets 164 - -
Loss on disposal of fixed asset - - 2
(Increase)/decrease in trade and
other receivables (95) (1,029) 566
Increase in trade and other payables 298 114 1,365
------------- ------------- ------------
Net cash used in operating activities (1,352) (2,623) (2,464)
------------- ------------- ------------
Investing activities
Acquisition of property, plant
and equipment (3) (22) (26)
Expenditure on exploration and
evaluation assets (711) (938) (1,941)
Interest received 3 7 8
------------- ------------- ------------
Net cash outflows from investing
activities (711) (953) (1,959)
------------- ------------- ------------
Financing activities
Proceeds from the issue of share
capital 2,358 - - -
Payment of transaction costs on
issue of share capital (174) - -
Net cash inflows from financing
activities 2,184 - -
------------- ------------- ------------
Net increase / (decrease) in cash
and cash equivalents 121 (3,576) (4,423)
Cash and cash equivalents at 1
January 1,860 6,226 6,226
Foreign exchange gain 47 - 57
------------- ------------- ------------
Cash and cash equivalents at end
of the financial period 2,028 2,650 1,860
------------- ------------- ------------
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2019
1. Basis of preparation
The condensed consolidated financial statements included in this
Half-Yearly Financial Report have been prepared in accordance with
IAS 34 "Interim Financial Reporting" as adopted by the EU. They do
not include all of the information required for full annual
statutory financial statements and should be read in conjunction
with the audited consolidated financial statements of Aminex PLC as
at and for the year ended 31 December 2018.
The financial information presented herein does not amount to
statutory financial statements that are required by Part 6 of
Chapter 4 of the Companies Act 2014 to be annexed to the annual
return of the Company. The statutory financial statements for the
financial year ended 31 December 2018 were annexed to the annual
return and filed with the Registrar of Companies. The audit report
on those statutory financial statements was unqualified and
included an emphasis of matter paragraph relating to going
concern.
The financial statements have been prepared on the historical
cost basis, as modified for the measurement of certain financial
instruments at fair value through profit or loss. These financial
statements are presented in US Dollars ("USD") which is the
currency of the primary economic environment in which the Group
operates and are rounded to the nearest thousand, unless otherwise
stated. Terms used in this condensed set of consolidated financial
statements are defined in the Glossary on page 64 contained in the
2018 Annual Report and Accounts.
These condensed financial statements do not include all
information and disclosures required in the annual financial
statements and should be read in conjunction with the Group's
consolidated annual financial statements as of 31 December 2018.
The financial information contained in the condensed financial
statements has been prepared in accordance with the accounting
policies set out in the 2018 Annual Report and Accounts, except for
the adoption of new IFRS requirements as described below.
IFRS 16: "Leases" ("IFRS 16") has been adopted and is effective
for the financial year beginning as of 1 January 2019. The Group
has changed its accounting policies as a result of adopting IFRS
16. The new accounting policy and the impact of adopting this
accounting standard have been disclosed under basis of preparation
- changes to accounting policies.
A number of other changes to IFRS became effective for the
financial year beginning on 1 January 2019, however they have no
significant impact on the results and the Group did not have to
change its accounting policies or make retrospective adjustments as
a result of adopting these amendments.
These condensed consolidated financial statements were
authorised for issue by the Board of Directors on 30 September
2019.
(i) Going concern
Cash and cash equivalents totalled US$2 million as at 30 June
2019.
The financial statements of the Group are prepared on a going
concern basis.
The Directors have given careful consideration to the Group's
ability to continue as a going concern through review of cash flow
forecasts prepared by management for the period to 30 September
2020, review of the key assumptions on which these are based and
sensitivity analysis. The Directors have taken into account the
Farm-Out, which is an assignment of a 50% interest in the Ruvuma
PSA to APT, for which shareholder approval was obtained at an
extraordinary general meeting held on 4 January 2019. While the
conditions precedent within the control of Aminex and APT have been
satisfied, the Farm-Out remains subject to the extension of the
Mtwara Licence and certain government approvals. On 24 September
2019, Aminex and ARA entered into a binding heads of terms whereby
ARA has agreed to provide a US$3 million advance in instalments to
the Company, prior to the Completion of the Farm-Out.
The Directors have a reasonable expectation that the Group will
be able to complete the Farm-Out with APT, although there is no
certainty that the Farm-Out will complete. Based on the binding
head of terms for the advance, the Directors concluded that the
Group would have sufficient resources to continue as a going
concern and meet its obligations as and when they fall due for a
period of not less than 12 months from the date of approval of
the
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2019
1. Basis of preparation (continued)
(i) Going concern (continued)
condensed consolidated financial statements and consequently the
condensed consolidated financial statements have been prepared on a
going concern basis.
However, there is no certainty that the Farm-Out with APT will
complete as it remains subject to the extension of the Mtwara
Licence and certain government approvals. This matter indicates the
existence of a material uncertainty that may cast significant doubt
on the entity's ability to continue as a going concern. As a
consequence of the Farm-Out not completing, the Group may be unable
to realise its assets and discharge its liabilities in the normal
course of business. The condensed consolidated financial statements
have been prepared on a going concern basis and do not include any
adjustments that would be necessary if this basis were
inappropriate.
(ii) Use of judgements and estimates
The preparation of the condensed consolidated financial
statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimates are revised and in any future periods
affected.
The significant judgements made by management in applying the
Group's accounting policies and the key sources of estimation
uncertainty were the same as those described in the last annual
financial statements, except for new significant judgements and key
sources of estimation uncertainty related to the application of
IFRS 16: "Leases".
Changes in significant accounting policies
On 1 January 2019, the Group applied IFRS 16 for the first time.
The nature and effect of the changes as a result of the adoption of
the new accounting standard are described below.
Several other amendments and interpretations apply for the first
time in 2019, but do not have a material impact on the condensed
consolidated financial statements of the Group.
IFRS 16: "Leases"
IFRS 16 has been adopted by applying the modified retrospective
approach from 1 January 2019; consequently, the comparatives for
the 2018 reporting period have not been restated, as permitted
under the specific transitional provisions in IFRS 16. The
reclassifications and the adjustments arising from the new leasing
rules are recognised in the opening balance sheet on 1 January
2019.
IFRS 16 introduces a single on-balance sheet lease accounting
model for leases. The Group, as lessee, has recognised lease
liabilities in relation to leases previously identified as
operating leases in accordance with IAS 17: "Leases" and IFRIC 4
Determining Whether an Arrangement Contains a Lease. These lease
liabilities were measured at 1 January 2019 at the present value of
the remaining lease payments payable after that date. The
associated right-of-use assets have been recognised as at 1 January
2019 on a retrospective basis as if IFRS 16 had always been
applied. The Group has applied the practical expedient permitted by
the standard for contracts entered into before the transition date,
the Group has relied on its assessment made when applying IAS 17
and IFRIC 4 Determining Whether an Arrangement Contains a Lease.
Contracts have not been reassessed to determine if a contract is,
or contains, a lease at the date of initial application.
The Group has elected not to recognise right-of-use assets and
lease liabilities for leases which have low value, or short-term
leases with a duration of 12 months or less. The payments
associated with such leases are charged directly to the income
statement on a straight-line basis over the lease term.
In addition, the Group will no longer recognise provisions for
operating leases that it assesses to be onerous. Instead, the Group
will include the payments due under the lease in its lease
liability.
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2019
1. Basis of preparation (continued)
IFRS 16: "Leases" (continued)
Transition
The impacts of adoption on the affected balance sheet lines were
as follows:
Audited Unaudited Unaudited
Adjustment
31 December on adoption 1 January
2018 of IFRS 16 2019
US$'000 US$'000 US$'000
Property, plant and equipment 2,393 604 2,997
Trade and other receivables 8,043 (70) 7,973
Trade and other payables (10,524) (122) (10,646)
Long-term lease liabilities - (407) (407)
Total equity 5
-------------
A reconciliation of the operating lease commitments disclosed at
31 December 2018 to the total lease liabilities recognised upon
initial application of IFRS 16 is presented below:
US$'000
Operating lease commitments at 31 December 2018 689
Effect of discounting at weighted average incremental
borrowing rate of 4.6% (65)
Impact of other IFRS 16 transition adjustments (47)
--------
Lease liabilities recognised at 1 January 2019 577
--------
Accounting policy for leases
The Group enters into operating leases in respect of leases of
various office properties. Lease liabilities are initially measured
at the present value of lease payments unpaid at the commencement
date. Lease payments are discounted using the incremental borrowing
rate (being the rate that the lessee would have to pay to borrow
the funds necessary to obtain an asset of similar value in a
similar economic environment with similar terms and conditions),
unless the rate implicit in the lease is available. The Group
currently uses the incremental borrowing rate as the discount rate
for all of its leases. For the purposes of measuring the lease
liability, lease payments comprise fixed payments and variable
lease payments based on an index or rate.
Right-of-use assets are measured at cost, which comprises the
initial measurement of the lease liability, plus any lease payments
made prior to lease commencement, initial direct costs incurred and
the estimated cost of restoration or decommissioning; less any
lease incentives received. Right-of-use assets are depreciated over
the lease term.
Lease repayments made are allocated to capital repayment and
interest so as to produce a constant periodic rate of interest on
the remaining lease liability balance.
Right-of-use assets are presented within property, plant and
equipment. Lease liabilities are presented under non-current
liabilities unless due within 12 months of the reporting date, in
which case they are included under trade and other payables in
current liabilities. In the cash flow statement, lease repayments
(both the principal and interest portion) are presented within cash
used in operating activities.
Leases of low-value items (such as office equipment) and
short-term leases (where the lease term is 12 months or less, which
include the rental of drilling rigs) are expensed on a
straight-line basis to the income statement.
The Group does not have any activities as a lessor.
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2019
1. Basis of preparation (continued)
Previous accounting policy for leases
Previously, the Group recognised operating lease expense on a
straight-line basis over the term of the lease, and recognised
assets and liabilities only to the extent that there was a timing
difference between actual lease payments and the expense
recognised.
Measurement of fair values
Management uses the fair value hierarchy, levels 1, 2 and 3 (as
set out on page 56 of the 2018 Annual Report), for determining and
disclosing the fair values of financial instruments by valuation
technique. The carrying value of the Group's financial instruments
are considered by management to reflect fair value given the
short-term nature of these.
2. Segmental disclosure - continuing operations
An operating segment is a component of the Group that engages in
business activities from which it may earn revenues and incur
expenses, including revenues and expenses that relate to
transactions with any of the Group's other components.
The Group considers that its operating segments consist of (i)
Producing Oil and Gas Properties, (ii) Exploration Activities and
(iii) Oilfield Services. These segments are those that are reviewed
regularly by the Chief Executive Officer (Chief Operating Decision
Maker) to make decisions about resources to be allocated to the
segment and assess its performance and for which discrete financial
information is available. However, the Group further analyses these
by region for information purposes. Segment results include items
directly attributable to the segment as well as those that can be
allocated on a reasonable basis. Unallocated items comprise mainly
head office expenses, cash balances and certain other items. The
Group's revenue is derived from contracts with customers. The
timing of revenue streams depends on the following for products and
services:
Producing oil and gas assets
The Group satisfies its performance obligation by transferring a
nominated volume of gas to its customer. The title to gas transfers
to a customer when the customer takes physical possession of the
gas at the contracted delivery point. The gas needs to meet certain
agreed specifications. The Group generates all its revenue under
this segment from the TPDC, the operator of the Songo Songo Island
Gas Processing Plant, under a gas sales agreement.
Oilfield services
Revenue for services is recognised as services are rendered to
the customer. All services rendered by the Group relate to jointly
controlled operations to which the Group is a party and the terms
of the services provided are subject to service contracts.
The IFRS 8 operating segments as follows (i) Producing Oil and
Gas Properties, (ii) Exploration Activities and (iii) Oilfield
Services are the disaggregation of revenue from customers as
required by IFRS 15.
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2019
2. Segmental disclosure - continuing operations (continued)
Operating segment results - 30 June 2019 (unaudited)
Tanzania Tanzania UK Unallocated
Producing Corporate
oil and Exploration Oilfield Aminex
gas properties activities services Group Total
30 June 30 June 30 June 30 June 30 June
2019 2019 2019 2019 2019
US$'000 US$'000 US$'000 US$'000 US$'000
Revenue - - 142 - 142
Cost of sales (249) - (141) - (390)
Gross loss (249) - 1 - (248)
Depreciation - - (121) (121)
Administrative
expenses (328) - (401) (933) (1662)
Impairment
against
exploration and
evaluation
assets - (170) - - (170)
---------------- -------------- ----------- ------------ ---------
Loss from
operating
activities (577) (170) (400) (1,054) (2,201)
Finance costs (26) (6) - (7) (39)
Finance income - - - 3 3
Foreign exchange
gains - - - 47 47
---------------- -------------- ----------- ------------ ---------
Loss before tax (603) (176) (400) (1,011) (2,190)
Taxation - - - - -
---------------- -------------- ----------- ------------ ---------
Loss for the
period (603) (176) (400) (1,011) (2,190)
---------------- -------------- ----------- ------------ ---------
Segment assets 7,855 59,149 - 4,915 71,919
Segment
liabilities (5,660) (2,450) - (4,043) (12,153)
Capital
expenditure
additions - 484 - 3 487
---------------- -------------- ----------- ------------ ---------
Other material
non-cash
items
Share based
payments
(Note 3) - - - (144) (144)
Unwinding of
discount
on
decommissioning
provision (Note
5) (26) (6) - - (32)
---------------- -------------- ----------- ------------ ---------
Operating segment results - 30 June 2018 (unaudited)
Tanzania Tanzania UK Unallocated
Producing Corporate
oil and Exploration Oilfield Aminex
gas properties activities services Group Total
30 June 30 June 30 June 30 June 30 June
2018 2018 2018 2018 2018
US$'000 US$'000 US$'000 US$'000 US$'000
Revenue 47 - 293 - 340
Cost of sales (511) - (293) - (804)
Gross loss (464) - - - (464)
Depreciation - - - (11) (11)
Administrative expenses (457) - (1,180) (222) (1,859)
Impairment against
exploration and evaluation - - - - -
assets
Loss from operating
activities (921) - (1,180) (233) (2,334)
Finance costs (12) (20) - - (32)
Finance income - - 7 7
Foreign exchange gains - - - - -
---------------- -------------- ----------- ------------ --------
Loss before tax (933) (20) (1,180) (226) (2,359)
Taxation - - - - -
---------------- -------------- ----------- ------------ --------
Loss for the period (933) (20) (1,180) (226) (2,359)
---------------- -------------- ----------- ------------ --------
Segment assets 8,568 104,133 577 2,294 115,572
Segment liabilities 909 8,162 483 183 9,737
Capital expenditure
additions - 1,123 26 - 1,149
---------------- -------------- ----------- ------------ --------
Other material non-cash
items
Share based payments
(Note 3) 84 - 497 - 581
Unwinding of discount
on decommissioning
provision (Note 5) 12 20 - - 32
---------------- -------------- ----------- ------------ --------
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2019
3. Share based payments
Aminex PLC operates an Executive Share Option Scheme ("the
Scheme"). Under the terms of the Scheme, certain Directors and
employees of Aminex PLC and its subsidiary companies are entitled
to subscribe for Ordinary Shares in Aminex PLC at the market value
on the date of the granting of the options, subject to a maximum
aggregate of 10% of the issued Ordinary Share capital of Aminex
PLC.
Options are granted at market price, in accordance with the
Scheme rules, with reference to the average closing price for the
fourteen days prior to the grant of options. Options granted before
and during 2010 will expire at a date no later than 10 years after
their grant date. These Options generally vest if employees remain
in service for 3 years from the date of grant and Directors'
options vest immediately. No options were granted between 2011 and
2015. Options granted in 2016 and 2018 vested immediately and will
expire at a date no later than 3 years after their grant date.
Options granted in 2019 vest immediately and will expire at a date
either 5 years or 10 years after their date of grant, as detailed
below.
The following expenses have been recognised in the income
statement arising on share-based payments and included within
administrative expenses:
Unaudited Unaudited Audited
6 months 6 months year ended
ended ended 31 December
30 June 30 June 2018
2019 2018 US$'000
US$'000 US$'000
Share-based payment charge 144 581 581
The fair values of options granted in the period in accordance
with the terms of the Aminex PLC Executive Share Option Scheme were
calculated using the following inputs into the binomial
option-pricing model:
Date of grant 20 June 2019 14 February
2019
Contractual life 5 years 10 years
Exercise price Stg 0.86 Stg 1.45
pence pence
Market price Stg 0.86 Stg 1.45
pence pence
Number of options granted (immediate
vesting) 17,000,000 6,411,000
Expected volatility 75% 92%
Vesting conditions Immediate Immediate
Fair value per option Stg 0.38 Stg 0.77
pence pence
Expected dividend yield - -
Risk-free rate 0.001% 0.001%
------------- ------------
The binomial option-pricing model is used to estimate the fair
value of the Company's share options because it better reflects the
possibility of exercise before the end of the options' life. The
binomial option-pricing model also integrates possible variations
in model inputs such as risk-free interest rates and other inputs,
which may change over the life of the options.
On 30 June 2019, there were options outstanding over 90,411,000
(31 December 2018: 178,250,000) Ordinary Shares which are
exercisable at prices ranging from Stg 0.86 pence to Stg 9 pence
per share and which expire at various dates up to 2029.
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2019
4. Finance income
Unaudited Unaudited Audited
6 months 6 months year ended
ended ended 31 December
30 June 30 June 2018
2019 2018 US$'000
US$'000 US$'000
Deposit interest income 3 7 8
Foreign exchange gain 47 - 57
---------- ---------- -------------
50 7 65
---------- ---------- -------------
5. Finance costs
Unaudited Unaudited Audited
6 months 6 months year ended
ended ended 31 December
30 June 30 June 2018
2019 2018 US$'000
US$'000 US$'000
Other finance costs - decommissioning
provision interest charge 32 32 64
Lease finance costs 7 - -
39 32 64
---------- ---------- -------------
6. Tax
The Group has not provided any tax charge for the six-month
periods ended 30 June 2019 and 30 June 2018 or for the year ended
31 December 2018. The Group's operating divisions have accumulated
losses which are expected to exceed profits earned by operating
entities for the foreseeable future.
7. Loss per share from continuing activities
The profit or loss per Ordinary Share is calculated using a
numerator of the profit or loss for the financial period and a
denominator of the weighted average number of Ordinary Shares in
issue for the financial period. The diluted profit per Ordinary
Share is calculated using a numerator of the profit for the
financial period and a denominator of the weighted average number
of Ordinary Shares outstanding and adjusted for the effect of all
potentially dilutive shares, including the share options and share
warrants, assuming that they have been converted.
The calculations for the basic and diluted earnings per share of
the financial periods ended 30 June 2019, 30 June 2018 and the year
ended 31 December 2018 are as follows:
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2019 2018 2018
Numerator for basic and diluted
earnings per share:
Loss for the financial period
(US$'000) (2,190) (2,359) (48,509)
---------- ---------- -------------
Weighted average number of shares:
Weighted average number of ordinary
shares ('000) 3,744,121 3,643,458 3,643,458
---------- ---------- -------------
Basic and diluted loss per share
(US cents) (0.06) (0.07) (1.33)
---------- ---------- -------------
There is no difference between the basic loss per Ordinary Share
and the diluted loss per Ordinary Share for the financial period
ended 30 June 2019, 30 June 2018 and the year ended 31 December
2018 as all potentially dilutive Ordinary Shares outstanding were
anti-dilutive. There were 90,411,000 share options in issue at 30
June 2019 and 178,250,000 share options in issue at 30 June 2018
and 31 December 2018.
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2019
8. Exploration and evaluation assets
Cost US$'000
At 1 January 2019 107,089
Additions 484
---------
At 30 June 2019 107,573
---------
Provisions for impairment
At 1 January 2019 48,555
Increase in impairment provision 170
---------
48,725
Net book value
At 30 June 2019 58,848
---------
At 31 December 2018 58,534
---------
The Group does not hold any property, plant and equipment within
exploration and evaluation assets.
The additions to exploration and evaluation assets during the
period relate mainly to own costs capitalised for geological,
geophysical and administrative ("GG&A") work and licence
maintenance costs, along with training and licence fees under the
respective PSAs.
The Directors have considered the licence, exploration and
appraisal costs incurred in respect of its exploration and
evaluation assets, which comprise the Ruvuma PSA, the Nyuni Area
PSA and ongoing exploration work on Kiliwani South within the
Kiliwani North Development Licence. These assets are carried at
historical cost except for provisions against the Nyuni Area PSA,
the cost of seismic acquired over relinquished blocks and obsolete
stock. These assets have been assessed for impairment and in
particular with regard to the remaining licence terms, likelihood
of renewal, likelihood of further expenditures and ongoing acquired
data for each area, as more fully described in the Operations
Report.
Ruvuma PSA
In September 2017, Aminex applied for a 25-year development
licence for Ntorya following the successful testing of the Ntorya 2
appraisal well. In July 2018, Aminex announced it had signed a
binding Farm-Out to farm-out 50% of the Ruvuma PSA to The Zubair
Corporation ("Zubair"), a related party of the Group. In return for
a 50% interest in the Ruvuma PSA, Zubair will pay cash
consideration of US$5.0 million in two tranches and a net US$35.0
million carry for Aminex's 25% interest on the development
programme, expected to be through to production. The Farm-Out
remains subject to conditions precedent including approval by the
Tanzanian authorities and the award of the Mtwara Licence
extension. An associate of Zubair, APT, will become operator under
the Ruvuma PSA and is required to drill the Chikumbi-1 well,
acquire at least 200 km(2) of 3D seismic over the Ntorya Prospect
and implement an early production system (or proceed directly to a
full production system as may be required). The purpose of the
Farm-Out is to accelerate development of and production from the
Ntorya field. The Board has a reasonable expectation that the
Farm-Out will be completed no later than the long stop date of 30
June 2020.
The Directors are satisfied that there are no indicators of
impairment but recognise that future realisation of these oil and
gas assets is dependent on further successful exploration,
appraisal and development activities and the subsequent economic
production of hydrocarbon reserves.
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2019
8. Exploration and evaluation assets (continued)
Nyuni Area PSA
In December 2016, the Tanzanian authorities granted an extension
to the Nyuni Area Licence. Aminex believes that the four-year
extension period should have started from the date of grant in
December 2016 and sought clarification from the TPDC.
Aminex received notification in the period from the Tanzanian
authorities that the Nyuni Area Licence period is to end in October
2019, the Company currently is unable to progress the work
programme and, therefore, the Directors fully impaired the carrying
cost of the Nyuni exploration asset as at 31 December 2018 and
provided an impairment against all related expenditure during the
reporting period.
In accordance with the terms of the Nyuni Area PSA, Aminex has
applied in July 2019 for the Licence to be extended into the Second
Extension Period with a request for an amendment to the work
programme obligations for the licence area.. The proposal is
supported by the TPDC, which has submitted the proposal as licence
holder to the Ministry of Energy.
Kiliwani South
Kiliwani South, located within the Kiliwani North Development
Licence acreage, has been identified as a potential lead and the
Company is planning to acquire 3D seismic over it as part of a
larger programme over sections of the Nyuni Area Licence. The
Directors are satisfied with work planned on the Licence that there
are no indicators of impairment.
9. Property, plant and equipment
Development
property
- Tanzania Other Total
assets
US$'000 US$'000 US$'000
Cost
At 1 January 2019 8,205 68 8,273
Adoption of IFRS 16 - right
of use asset cost - 843 843
Additions in the period - 3 3
Exchange rate adjustment - (6) (6)
At 30 June 2019 8,205 908 9,113
------------ --------- --------
Depreciation and depletion
At 1 January 2019 5,839 41 5,880
Adoption of IFRS 16 - right
of use asset accumulated
depreciation - 239 239
Charge for the period - 121 121
Exchange rate adjustment - 3 3
At 30 June 2019 5,839 404 6,243
------------ --------- --------
Net book value
At 30 June 2019 2,366 504 2,870
------------ --------- --------
At 31 December 2018 2,366 27 2,393
------------ --------- --------
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2019
9. Property, plant and equipment (continued)
As a result of the adoption of IFRS 16: "Leases", the Group has
recognised a right-of-use asset (see Note 1). As at 30 June 2019,
"Other assets" comprises right-of-use lease asset US$490,000 (31
December 2018: US$ nil), plant and equipment US$14,000 (31 December
2018: US$20,000), fixtures and fittings US$ nil (31 December 2018:
US$1,000) and leasehold property US$ nil (31 December 2018:
US$6,000).
Development property - Tanzania
Following the award of the Kiliwani North Development Licence by
the Tanzanian Government in April 2011, the carrying cost relating
to the development licence was reclassified as a development asset
under property, plant and equipment, in line with accounting
standards and the Group's accounting policies. Production from the
Kiliwani North-1 well commenced on 4 April 2016 and depletion is
calculated with reference to the remaining reserves of 1.94 BCF,
which were ascribed to the field as at 1 January 2018 in an
independent reserves and resources report prepared by RPS in
February 2018. The report also identified a contingent resource of
30.8 BCF in addition to the reserves. The well has produced
approximately 6.4 BCF of gas to date. Production from the Kiliwani
North-1 well in 2018 was intermittent and following a well
intervention to open the sub-surface safety valve, further
remediation is planned for the remainder of 2019. The well did not
produce during the period.
A plan to remediate the faulty valve was developed and, later in
2018, an independent contractor was engaged to troubleshoot and
remediate the valve. The initial work was successful with a small
amount of gas flowed to the plant and further work is planned. The
Company has identified the possibility of perforating a lower and
potentially gas saturated section of the reservoir, analysis of
which indicates the possibility of providing up to 8 BCF of
additional resource from the same well. The plans for 3D seismic
acquisition over Kiliwani North would aid in identifying further
drilling or side-track opportunities required to drain the
remainder of the structure.
Considering the ongoing remediation work and the reserves and
resources ascribed to the Kiliwani North-1 well the Directors are
satisfied no impairment charge is required against the carrying
value. In accordance with IAS 36, the Group conducted an impairment
test as at 30 June 2019 on a value in use basis. This did not
result in an impairment. The key estimates and judgements used in
the impairment test included discount rate, production volumes,
timing of the commencement of gas production, remediation work on
the gas well being successful, the cost of remediation work and a
fixed gas price in line with the Kiliwani North gas sales
agreement. Once the remediation work on the Kiliwani North-1 well,
discussed above, is complete, it is expected that the results will
reduce the key estimation uncertainties currently used in the
impairment test, particularly around the success of planned
remediation work and the volume and timing of gas production. This
will provide a clearer understanding of the likelihood for
producing the remaining reserves and potential resources assigned
to the well and therefore impact on the sensitivity of inputs used
for future impairment tests.
10. Trade and other receivables
Trade and other receivables amounted to US$8.17 million at the
period end (31 December 2018: US8.04 million). Included in trade
and other receivables is an amount of US$7.61 million (31 December
2018: US$7.41 million) due from the TPDC for the gross receivables
due to the partners in jointly controlled operations for gas sales
from Kiliwani North. Aminex's net share of the receivable is
US$3.14 million (31 December 2018: US3.04 million). On 11 April
2018, the Company received formal notification from the TPDC of
certain claims amounting to US$5.97 million for liabilities arising
on revenues from gas sales, of which Aminex's share is estimated to
be US$2.73 million. Aminex has advised the TPDC that it does not
agree with nor accept the payments sought and no provision has been
made in the financial statements beyond amounts Aminex had already
accrued. The TPDC has delayed settling its trade receivable balance
while discussions continue. Aminex maintains that the trade
receivables balance is payable in full. In accordance with IFRS 9,
Aminex calculated its expected credit loss based on its exposure to
credit risk on its trade receivables at the end of the period and
recognised an impairment on trade receivables of US$164,000 charged
to administrative expenses in the income statement.
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2019
11. Cash and cash equivalents
Unaudited Unaudited Audited
6 months 6 months year ended
ended ended 31 December
30 June 30 June 2018
2019 2018 US$'000
US$'000 US$'000
Cash at bank and in hand 2,028 2,650 1,860
Included in cash and cash equivalents is an amount of US$0.32
million (31 December 2018: US$0.52 million) held on behalf of
partners in jointly controlled operations.
12. Trade and other payables
Trade and other payables amounted to US$11.01 million at the
period end (31 December 2018: US$10.52 million). Included in trade
and other payables are amounts due from gas sales and are payable
on receipt of gas revenues from the TPDC.
13. Commitments, guarantees and contingent liabilities
Commitments
In accordance with the relevant PSA, Aminex has a commitment to
contribute its share of the following outstanding work
programmes:
(a) Following the grant of the first extension to the Nyuni Area
PSA, Tanzania, the terms of the licence require the acquisition of
700 kilometres of 3D seismic over the deep-water sector of the
licence, and the drilling of four wells, on the continental shelf
or in the deep-water, by October 2019. In accordance with the terms
of the Nyuni Area PSA, Aminex has applied in July 2019 for the
licence to be extended into the Second Extension Period with a
request for an amendment to the work programme obligations for the
licence area.. The proposal is supported by the TPDC, which has
submitted the proposal as licence holder to the Ministry of
Energy.
(b) The Ruvuma PSA, Tanzania, originally comprised two licences.
The Mtwara Licence was extended to December 2017 and Aminex is in
discussions for, and has a reasonable expectation of, receiving a
further extension on the licence. Two wells are required to be
drilled, one of which is expected to be the Chikumbi-1 location.
The Company has previously sought an extension to the Lindi
Licence, for which there remains a two-well commitment, and is
currently seeking a new Lindi PSA.
Guarantees and contingent liabilities
(a) Under the terms of the Addendum to the Ruvuma PSA, Ndovu
Resources Limited, a subsidiary company of Aminex PLC, has provided
security to the TPDC for up to 15% of the profit share of the
Kiliwani North Development Licence to guarantee the amended
four-well drilling commitment under the Ruvuma PSA. For each well
drilled the security interest will be reduced by 3% for the first
well and 4% thereafter.
(b) The Company guarantees certain liabilities and commitments
of subsidiary companies from time to time, including the
commitments of Ndovu Resources Limited under the Nyuni Area PSA.
These are considered to be insurance arrangements and are accounted
for as such i.e. they are treated as a contingent liability until
such time as it becomes probable that the Company will be required
to make payment under the guarantee in which case a liability is
recognised.
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2019
13. Commitments, guarantees and contingent liabilities (continued)
Guarantees and contingent liabilities (continued)
(c) On 11 April 2018, Ndovu Resources Limited received formal
notification from the TPDC of certain claims amounting to US$5.97
million with regard to unpaid royalties and amounts due under
profit share arrangements which it proposes to offset against the
trade receivable balance owing by the TPDC to Aminex (see Note 10).
Of the amount claimed, Aminex has already accrued for the
liabilities it considers appropriate based on its own calculations
of amounts due as at 30 June 2019. Aminex has advised the TPDC that
it does not accept the balance of the claims, which include
computational inaccuracies. No further provision has been made in
the financial statements for the additional amounts claimed as the
Directors believe the claims are without merit and are satisfied
that the US$7.61 million included in trade receivables as owing
from the TPDC will be fully recovered.
(d) As disclosed on page 45 in Note 1 Statement of Accounting
Policies of the 2018 Annual Report, the Group is subject to various
tax and regulatory audits from time to time in the ordinary course
of business. Audits are currently being performed by the Tanzania
Revenue Authority. No assessment has been raised and the Company
continues to provide information for the audit.
14. Related party transactions
On 4 January 2019, the Company announced that shareholders
approved the Farm-Out of a 50% interest in the Ruvuma PSA to The
Zubair Corporation at an extraordinary general meeting. The
Farm-Out constitutes a related party transaction.
On 7 February 2019, the Company raised $2.37 million before
expenses in a placing through the issue of 127,226,781 new ordinary
shares at a price of Stg 1.45p per share. Eclipse Investments LLC,
a substantial shareholder and a related party, subscribed for
26,525,198 new ordinary shares in the placing.
15. Post balance sheet events
Subsequent to the period end, Aminex recently announced that the
Company and APT, a related party of Aminex, will advance works so
that drilling of the Chikumbi-1 well can commence as soon as
practicable following the satisfaction of the remaining conditions.
Aminex and ARA have signed a binding Heads of Terms whereby ARA has
agreed to provide a US$3 million advance in instalments to the
Company, ahead of Completion of the Farm-Out ("Advance"), which
provides the Company with financial flexibility pending Completion.
The parties will agree and sign a fully termed agreement as soon as
possible. The Advance will be offset against the first tranche of
the cash consideration payable to Aminex on Completion of the
Farm-Out The second tranche of the cash consideration of US$2
million, which was initially due to the Company 180 days after
Completion, will now be payable to the Company upon Completion. The
long stop date for Completion of the Farm-Out has been extended to
30 June 2020, although the Company and APT do not expect to require
this extended period to satisfy the remaining conditions of the
Farm-Out. If Completion has not occurred by 30 June 2020, the
Advance will convert to an interest-bearing secured loan, repayable
by 30 June 2021.
16. Statutory information
The financial information to 30 June 2019 and 30 June 2018 is
unaudited and does not constitute statutory financial information.
The information given for the year ended 31 December 2018 does not
constitute the statutory accounts within the meaning of Part 6 of
Chapter 4 of the Companies Act 2014. The statutory accounts for the
year ended 31 December 2018 have been filed with the Registrar of
Companies in Ireland. This announcement will be made available at
the Company's registered office at Paramount Court, Corrig Road,
Sandyford Business Park, Dublin 18 and at the office of the
Aminex's UK subsidiary company, Aminex Petroleum Services Ltd., at
Kings Buildings, 16 Smith Square, London SW1P 3JJ.
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
IR PGUAUBUPBPGB
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