TIDMAEX
RNS Number : 6167A
Aminex PLC
30 September 2020
30 September 2020
2020 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
2020.
REPORTING PERIOD HIGHLIGHTS
-- Extension granted to the Mtwara Exploration Licence over the Ntorya Location
-- Satisfaction of all conditions precedent to the Ruvuma
Farm-Out within the control of Aminex and ARA Petroleum Tanzania
Limited ("APT") with the settlement of the capital gains tax
liability and receipt of the tax clearance certificate, the paying
of which was supported by ARA Petroleum LLC ("ARA") with Loan
funding of US$2 million
-- Loss for the period of US$1.15 million (30 June 2019: loss of
US$2.19 million), down by 50% from prior period comparative
-- Significant reduction to running costs with 50% cost savings
on like-for-like gross administrative expenses
-- Submission with the Tanzania Petroleum Development
Corporation ("TPDC") for the Nyuni Area PSA to be granted a Second
Extension Period with amended work commitments
POST PERIOD
-- Funding agreement signed with ARA to advance interim costs of US$1.97 million
-- Extension of the Ruvuma Farm-Out long stop date to 15 October 2020
Aminex CEO, Robert Ambrose, commented:
"As reported earlier this morning, despite the payment of all
taxes due on the Farm-Out in May this year we still await
Government approval to the transaction. APT has agreed to extend
the long stop one last time to 15 October 2020 and we remain
hopeful that approval will be obtained by that date. The Group is
very thankful to ARA, who continue to show support for the Company
through the Additional Funding Agreement to advance up to US$1.97
million."
For further information:
Aminex PLC +44 20 3198 8415
Robert Ambrose, Chief Executive
Officer
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 2020 are
set out below.
The Company reports a loss for the period of US$1.15 million (30
June 2019: US$2.19 million). Further information is provided in the
Financial Review.
The Company's year so far has been dominated by the need to
close the Farm-Out which unfortunately has still not happened and
is proving a great disappointment for all involved. All other
requirements for the Farm-Out were fulfilled such that ARA and
Aminex agreed a number of extensions to the Long Stop Date in order
to allow time for the Tanzanian authorities to grant their
approval. As this approval is not yet forthcoming ARA have agreed a
final extension to 15 October 2020. Aminex remains hopeful that
Tanzanian Government approval of the Farm-Out and transfer of
operatorship will be obtained by 15 October 2020. However, if such
outstanding conditions have not been satisfied by 15 October 2020,
APT will have the right to terminate the Farm-Out Agreement.
The Company continues to receive excellent support from its
cornerstone investor, The Zubair Corporation, including the Advance
funding from the Farm-Out consideration agreed in November 2019
with ARA which allowed Aminex to borrow US$3 million. A further
funding agreement of US$2 million was signed and advanced in May
this year from the US$5 million Farm-Out consideration to help
settle the Capital Gains Tax liability of US$2.2 million, assessed
by and paid to the Tanzania Revenue Authority. Most recently, ARA
have demonstrated their continued support throughout these delays
with a further funding agreement, subject to certain conditions,
for the advance of the interim period costs of up to US$1.97
million, otherwise payable on conclusion of the Farm-Out.
Regarding other matters, earlier in the year my predecessor Tom
Mackay stepped down from his position as Interim Chief Executive
Officer leading to my appointment in his place. I was also pleased
to welcome to the Board Charles Santos as Chairman, whose
international experience will be of extreme value to the
Company.
Also, during the period, I was replaced as an Eclipse appointee
on the Board by Harald van Dongen and, similarly, Ola Fjeld was
replaced by Jan Gunnar Opsal. John Bell, who served as Chairman to
the Board and Linda Beal, who was a Non-Executive Director stood
down. We also welcome Tom Mackay back to the Board as a
Non-Executive Director.
During the period, significant cost cutting has continued across
the Company with all costs reviewed and eliminated wherever
possible in addition to key employees and Directors all accepting
voluntary salary reductions. The effect of these actions are clear
to see in the results for the first six months of the year, with
administrative expenses reduced significantly and the loss for the
period down 50% to US$1.15 million when compared to the same period
last year. Our G&A costs are now minimal for a company that has
to comply with all the operational and regulatory compliance
required of it.
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. The well has produced approximately 6.4 BCF of
gas to date, from a compartment estimated to contain approximately
10 BCF. Estimated gas resources have been independently audited by
RPS Energy, who show the Kiliwani North structure to contain
approximately 31 BCF (gross mean GIIP).
Aminex undertook preliminary remedial work to repair the
downhole safety valve in late 2018 which resulted in the flow of a
small volume of gas, to the gas facility, before the well quickly
ceased flow, likely due to fluid build-up in the wellbore. Aminex
has prepared a perforation strategy for a lower zone within the
reservoir and an alternative remedial work programme intended to
establish fluid levels in the wellbore, reservoir pressure and to
unload potential fluid using foam treatment. The Company is working
with the TPDC on agreed methods to handle wellbore fluids which
will potentially be unloaded during operations on the well.
Agreement and planning will be required prior to undertaking
operations.
As previously advised, the Company has identified the Kiliwani
South prospect, estimated by management to contain a mean 57 BCF
un-risked GIIP. The prospect has been 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, generally comprising the shallow-water areas adjacent to
Songo Songo Island, Aminex has completed, in 2019, the reprocessing
of select 2D seismic data and has incorporated the results into a
remapping exercise which confirmed the interpretation of
compartments in Kiliwani North and the robustness of the Kiliwani
South structure. 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 identify a potential side-track and new 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").
The Company hopes to resolve the outstanding receivables of
US$7.61 million for previous gas sales from KNDL and related
interest.
Ruvuma PSA
Aminex, jointly with ARA Petroleum Tanzania Limited ("APT"), has
progressed tendering and procurement strategies 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. The 1-year licence extension was received
during April 2020, which reduced the size of the Mtwara licence to
the same area as the Ntorya location area. Further 1-year licence
extensions can be sought to allow the Company to finalise
operations and to collect data required for the submission of the
Development Plan. The Farm-Out, with a net carry to Aminex of up to
US$35 million, is intended to fully fund Aminex's cost share
through to full field development of the Ntorya gas field and is
likely to relieve Aminex of 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 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 a deeper Jurassic exploration target and the drilling of the
well will fulfil one of the outstanding exploration well
obligations on the licence.
Under the terms of the Mtwara licence extension, the Company,
through the Ruvuma PSA Joint Venture, is committed to acquire 200
square kilometres (surface coverage) of 3D seismic, drill the
Chikumbi-1 exploration well, complete the negotiation of the Gas
Terms for the Ruvuma PSA with the TPDC and using the data gathered
from Chikumbi-1 and the seismic acquisition, prepare and submit an
application for a Development Licence for the Ntorya Location area.
It is acknowledged by all parties that the full work programme is
unlikely to be completed during this extension period and the
Company will therefore apply for an additional extension(s) as
necessary and as permissible under the current legislation.
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 expired 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, it is expected that 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 generally 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. The Company remains optimistic
that the proposed extension and work programme will be accepted and
approved in the near future.
Tanzania has an energy deficit and has embarked on further
industrialisation development programmes 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.
Robert Ambrose
Chief Executive
30 September 2020
Financial Review
Revenue Producing Operations
Revenues from continuing operations amounted to US$0.30 million
(30 June 2019: US$0.14 million). The revenues during the first six
months of 2020 relate to the provision of technical and
administrative services to joint venture operations as there was no
production from the Kiliwani North-1 well for the period. The Group
has recognised no gas revenue since production ceased at the
Kiliwani North-1 well. 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 2019: US$0.39 million). The cost of sales
for Kiliwani North operations amounted to US$0.09 million (30 June
2019: US$0.25 million) and included the continuing remediation
plans and work as well as general licence costs. There was no
depletion charge for Kiliwani North as the period saw no production
(30 June 2019: US$ nil). The balance of the cost of sales amounting
to US$0.30 million (30 June 2019: US$0.14 million) related to the
oilfield services operations. Accordingly, there was a gross loss
of US$0.09 million for the period compared with a gross loss of
US$0.25 million for the comparative period.
Group administrative expenses, net of costs capitalised against
projects, were US$0.61 million (30 June 2019: US$1.78 million),
down by US$1.17 million. The reduction in expenses predominantly
reflects the cost saving initiatives implemented by the Company
during 2019 and the first six-months of 2020 in response to the
ongoing delays in completion of the Farm-Out transaction on the
Ruvuma PSA. Cost savings were recognised during the year in respect
to Directors' fees, employment costs, advisors' fees, office and
travel costs. Adjusting for amounts capitalised against projects
and one-offs, gross administrative expenditure has been reduced by
approximately 50%. This has assisted the Company in weathering the
economic downturn as a result of the global COVID-19 pandemic and
oil price fall that have both had an adverse effect of the
industry. The Company is continuing with further cost reduction
initiatives given the current delays in the completion of the
Farm-Out and the uncertainty that remains in respect to the global
pandemic.
The Company recognised an impairment during the year in respect
to its Nyuni exploration and evaluation assets. Following the
Board's decision to provide in full against the carrying value of
the Nyuni asset in 2018, additions to the Nyuni exploration and
evaluation asset in the period have been fully impaired and an
amount of US$0.37 million was charged to the income statement (30
June 2019: US$0.17 million). The Group recognised an impairment
charge of US$0.09 million in the period reflecting its exposure to
credit risk on its trade receivables. The Group's resulting net
loss from operating activities was US$1.15 million (30 June 2019:
loss of US$2.20 million).
Finance costs amounted to US$0.08 million (30 June 2019: US$0.04
million), comprising US$0.04 million (30 June 2019: US$nil) related
to accrued interest expense on the US$2.0 million Loan funding
received in May 2020 from ARA, US$0.03 million (30 June 2019:
US$0.03 million) for the decommissioning interest charge and
US$0.01 million (30 June 2019: US$0.01 million) for the finance
charge in relation to finance leases. Finance income amounted to
US$0.08 million related to foreign exchange gains on monetary
assets (30 June 2019: US$0.04 million).
The Group's net loss for the period amounted to US$1.15 million
(30 June 2019: loss of US$2.19 million).
Balance Sheet
The Group's investment in exploration and evaluation assets
increased from US$48.97 million at 31 December 2019 to US$49.55
million at 30 June 2020. 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, specifically in relation to the tendering and
procurement strategies for the Chikumbi-1 exploration well during
the reporting period. Other expenditure related to the reprocessing
of 2D seismic data and remapping of Kiliwani South and general
licence maintenance expenses on the Ruvuma PSA and 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 the granting by the Tanzanian authorities of the
extension to the Mtwara Exploration Licence in respect to the
Ntorya Location and the identified Ntorya asset development
programme, the Farm-Out of the Ruvuma PSA, which will secure
significant investment into the project, 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. All
subsequent exploration and evaluation expenditure on the Nyuni Area
PSA continues to be impaired as incurred accordingly.
The carrying value of property, plant and equipment has
decreased from US$1.96 million at 31 December 2019 to US$1.87
million at 30 June 2020. The decrease relates predominantly to the
depreciation of right of use assets recognised in property, plant
and equipment in accordance with IFRS 16: "Leases" as disclosed in
Note 1 to the financial statements in the 2019 Annual Report.
Current assets amounted to US$11.35 million (31 December 2019:
US$8.56 million) with trade and other receivables of US$10.41
million (31 December 2019: US$7.87 million), which as operator
includes joint venture parties' interests in gas revenues, and cash
and cash equivalents of US$0.93 million (31 December 2019: US$0.69
million). The increase includes the US$2.2 million payment during
the period for the capital gains tax in relation to the Farm-Out
transaction, which will be reclassified to non-current assets on
completion of the Farm-Out.
Current liabilities amounted to US$15.93 million compared with
US$11.72 million at 31 December 2019. This balance included amounts
payable to the TPDC and joint venture partners for their profit
shares from invoiced gas sales, along with related VAT and excise
tax payable on the gas receivables invoices. Current liabilities
also consists of the US$2.0 million Loan received from ARA in May
2020 (see Note 13), and US$2.7 million of the US$3.0 million
Advance from ARA, classified under trade and other payables.
Non-current liabilities amounting to US$0.95 million (31 December
2019: US$1.00 million) include the non-current decommissioning
provision which increased during the period by US$0.04 million from
US$0.76 million at 31 December 2019 to US$0.80 million, the
increase relating to the unwind of the discount charge during the
period. Non-current liabilities also include long-term lease
liabilities of US$0.01 million following the recognition of
right-of-use assets and lease liabilities in accordance with IFRS
16: Leases.
Total equity has decreased by US$0.89 million between 31
December 2019 and 30 June 2020 to US$45.89 million (31 December
2019: US$46.77 million). A net decrease of US$0.95 million to the
share option reserve, a reduction in the foreign currency
translation reserve of US$0.08 million and the net movement of
US$0.14 million in retained earnings arising on the loss of US$1.15
million for the period, offset by the release from the share option
reserve of US$1.29 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$2.49
million during the period (30 June 2019: US$1.35 million). This was
predominantly in relation to the US$2.17 million taxation paid in
relation to the capital gains tax paid in relation to the Farm-Out.
There was also an increase in debtors of US$0.21 million primarily
arising on the increase in the gross receivables from the TPDC and
an increase in creditors of US$0.05 million. Net cash inflows from
investing activities amounted to US$0.76 million (30 June 2019:
cash outflow US$0.71 million). US$1.71 million was received in the
period from ARA against the Advance. Expenditure on exploration and
evaluation assets in the current period amounted to US$0.95
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. Net cash inflows from financing
activities was US$1.90 million. The Group received proceeds from
borrowings of US$2.00 million from the Loan funding from ARA,
offset by payment of lease liabilities of US$0.11 million. Net cash
and cash equivalents for the six months ended 30 June 2020
therefore increased by US$0.16 million compared with a decrease of
US$1.19 million for the comparative half-year period. The balance
of net cash and cash equivalents at 30 June 2020 was US$0.93
million (30 June 2019: US$2.03 million).
Related Party Transactions
On 6 May 2020, the Company entered into a US$2.0 million loan
with ARA Petroleum LLC ("the Loan"), which, through its associated
company, Eclipse Investments LLC, is a significant shareholder in
Aminex PLC (see note 13), to finance the payment of the US$2.2
million capital gains tax bill in relation to the Completion of the
Farm-Out to APT. The Loan is intended to be repaid by offset of the
cash consideration due under the Farm-Out of US$5.0 million. The
Loan bears interest at 13.77% p.a.. The Loan is secured, with
security in the form of a pledge of Aminex PLC's holding in shares
in Tanzoil N.L., a wholly-owned subsidiary of the Company, that
indirectly holds the Group's assets in Tanzania. Interest accrued
on the loan during the period was US$38,000 (see Note 5).
On 12 November 2019, the Company entered into a Funding
Agreement with ARA Petroleum LLC, a related party of the Group, to
provide a US$3.0 million advance in instalments to the Company,
ahead of Completion of the Farm-Out ("Advance"). The Advance will
be offset against the first tranche of the cash consideration
payable to Aminex on Completion of the Farm-Out. As Completion did
not occur by 30 June 2020, the Advance converted to an
interest-bearing secured loan on 1 July 2020, repayable by 30 June
2021. During the first six months of 2020, an additional US$1.7
million of the Advance had been received with US$2.7 million
recognised as a current liability at 30 June 2020.
Going Concern
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
2021, 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 and which has
a long stop date of 15 October 2020. While the conditions precedent
within the control of Aminex and APT have been satisfied, the
Farm-Out remains subject to certain Government approvals. Under the
terms of the Farm-Out Agreement, on completion the Group will
receive US$5 million in cash consideration plus payment for interim
costs incurred on the Ruvuma PSA since 15 March 2018, the effective
date of the Farm-Out. Aminex has received US$2.7 million as an
Advance and US$2 million as a Loan from APT, as of 30 June 2020.
The US$5 million Farm-Out cash consideration will settle the APT
Advance and Loan immediately on Completion. On 30 September 2020,
Aminex and ARA entered into a funding arrangement whereby ARA has
agreed, subject to certain conditions, to advance up to US$1.97
million to the Company that would otherwise have been payable to
the Company as interim period costs under the Farm-Out
Agreement.
Trade receivables of US$8.0 million, of which Aminex's net share
is US$3.3 million, have not been taken into account in the cash
flow forecast due to the claims for certain amounts by the TPDC,
set out in Note 10 to the financial statements. Although this trade
receivable is due, the TPDC continue to delay payment until a
resolution is reached in respect of the claims and the Directors
consider it prudent not to take this receivable amount into
consideration of the Group's ability to continue as a going
concern.
As disclosed in Note 14, the Group received a tax assessment
from the TRA of US$2.2 million in relation to a tax audit related
to 2013 to 2015 which is excluded from the cash forecast as any
cash outflow during the going concern period is considered remote.
If the tax assessment finding went against the Group it is likely
additional funding would be required to settle any potential
liability. The Group implemented further cost cuts during the first
half of 2020 to reduce its general and administrative expenditure
and preserve cash in response to depressed market conditions due to
COVID-19 and the oil price fall.
Based on the expectation that either the Farm-Out will close by
15 October 2020 or ARA will advance the interim costs of US$1.97
million under the funding arrangement and not call for repayment of
the US$5 million already advanced against the Farm-Out, and certain
other mitigating actions can be taken, 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 will complete
by 15 October 2020, as it remains subject to Tanzanian Government
approval, or that ARA will advance the US$1.97 million of interim
costs and the Company can renegotiate the terms of the US$5 million
of existing funding that will be due to ARA. If the Farm-Out does
not complete and ARA do not advance the US$1.97 million of interim
costs and do not renegotiate the terms of the existing US$5 million
funding the Group will need to seek additional funding.
Furthermore, if the Farm-Out does not complete by 15 October 2020
the Group will need to either seek additional funding for its
Ruvuma work commitments or renegotiate the work commitments under
the licence extension granted in April 2020. In addition,
development of the Group's other assets in Tanzania will require
the sourcing of additional funding. This includes the Nyuni Area
PSA where the Group has applied for the licence to be extended on a
revised work programme, as disclosed in Note 14. The Kiliwani North
Development Licence has no work programme commitments. There
remains significant uncertainty as regards the ability of Aminex to
raise funds in the current market conditions due to the COVID-19
pandemic and the depressed oil price. These may result in the
Company having to raise funds at whatever terms are available at
the time.
These matters indicate the existence of a material uncertainty
that may cast significant doubt on the Company's ability to
continue as a going concern. If the Farm-Out does not complete, and
the Group cannot raise additional funding to meet its US$5.0
million debt liabilities to ARA, licence commitments or potential
tax assessment, or the Group is unable to renegotiate or defer
commitments on its borrowings, licence interests, or realise other
mitigating actions, the Group will be unable to realise its assets
and discharge its liabilities in the normal course of business.
The 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 2020 and concluded that the principal
risks identified at 31 December 2019 and disclosed on pages 23 to
25 of the 2019 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:
-- 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 the Nyuni Area Second Extension Period with amended work commitments
-- Political and fiscal uncertainties
-- Lack of exploration, appraisal and development drilling success
-- The ongoing impact of the COVID-19 pandemic
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
ROBERT AMBROSE CHARLES SANTOS
Chief Executive Officer/Director Chairman/Director
30 September 2020
Aminex PLC
CONDENSED CONSOLIDATED INCOME STATEMENT
for the six months ended 30 June 2020
Notes Unaudited Unaudited Audited
6 months 6 months Year ended
ended ended 31 December
30 June 2020 30 June 2019 2019
US$'000 US$'000 US$'000
Continuing operations
Revenue 2 300 142 357
Cost of sales 2 (391) (390) (806)
Gross loss (91) (248) (449)
Administrative expenses (610) (1,783) (2,411)
Impairment against exploration
and evaluation assets 8 (365) (170) (10,928)
Impairment against property,
plant and equipment
assets - - (809)
Expected credit losses
of trade receivables 10 (87) - (582)
Loss from operating
activities (1,153) (2,201) (15,179)
Finance income 4 79 50 30
Finance costs 5 (77) (39) (82)
-------------- -------------- -------------
Loss before tax (1,151) (2,190) (15,231)
Income tax expense 6 - - -
Loss for the period 2 (1,151) (2,190) (15,231)
-------------- -------------- -------------
Loss per share
Basic and diluted (US
cents) 7 (0.03) (0.06) (0.41)
-------------- -------------- -------------
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2020
Unaudited Unaudited Audited
6 months ended 6 months Year ended
30 June 2020 ended 31 December
US$'000 30 June 2019 2019
US$'000 US$'000
Loss for the period (1,151) (2,190) (15,231)
Other comprehensive income
Items that are or may be
reclassified subsequently
to profit or loss:
Currency translation differences (79) 17 (162)
Total comprehensive expense
for the period attributable
to the equity holders of
the Company (1,230) (2,173) (15,393)
---------------- -------------- -------------
Aminex PLC
CONDENSED CONSOLIDATED BALANCE SHEET
At 30 June 2020
Unaudited Unaudited Audited
30 June 30 June 31 December
2020 2019 2019
Notes US$'000 US$'000 US$'000
Assets
Non-current assets
Exploration and evaluation
assets 8 49,553 58,848 48,967
Property, plant and equipment 9 1,871 2,870 1,959
Total non-current assets 51,424 61,718 50,926
Current assets
Trade and other receivables 10 10,414 8,173 7,869
Cash and cash equivalents 11 932 2,028 694
--------- ------------- ------------
Total current assets 11,346 10,201 8,563
--------- ------------- ------------
TOTAL ASSETS 62,770 71,919 59,489
--------- ------------- ------------
Equity
Issued capital 69,206 69,206 69,206
Share premium 124,481 124,481 124,481
Other undenominated capital 234 234 234
Share option reserve 1,318 2,039 2,264
Foreign currency translation
reserve (2,259) (2,001) (2,180)
Retained earnings (147,095) (134,193) (147,234)
--------- ------------- ------------
Total equity 45,885 59,766 46,771
--------- ------------- ------------
Liabilities
Non-current liabilities
Long-term lease liabilities 96 345 174
Decommissioning provision 797 732 764
Other long-term liabilities 61 70 65
Total non-current liabilities 954 1,147 1,003
--------- ------------- ------------
Current liabilities
Trade and other payables 12 13,727 11,006 11,510
Short-term lease liabilities 204 - 205
Borrowings 13 2,000 - -
Total current liabilities 15,931 11,006 11,715
--------- ------------- ------------
Total liabilities 16,885 12,153 12,718
--------- ------------- ------------
TOTAL EQUITY AND LIABILITIES 62,770 71,919 59,489
--------- ------------- ------------
Aminex PLC
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2020
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$'000
At 1 January 2019 69,062 122,267 234 2,710 (2,018) (132,644) 59,611
Comprehensive income
Loss for the period - - - - - (2,190) (2,190)
Currency translation
differences
Transactions with
shareholders of
the Company
recognised
directly in equity - - - - 17 - 17
Shares issued 144 2,214 - - - (174) 2,184
Share based payment
charge - - - 144 - - 144
Share option reserve
transfer - - - (815) - 815 -
At 30 June 2019 69,206 124,481 234 2,039 (2,001) (134,193) 59,766
Comprehensive income
Loss for the period - - - 225 - (13,041) (12,816)
Currency translation
differences - - - - (179) - (179)
At 31 December
2019 as previously
reported
Comprehensive income 69,206 124,481 234 2,264 (2,180) (147,234) 46,771
Loss for the period - - - - - (1,151) (1,151)
Currency translation
differences - - - - (79) - (79)
Transactions with
shareholders of
the Company
recognised
directly in equity
Shares issued - - - - - - -
Share based payment
charge - - - 344 - - 344
Share option reserve
transfer - - - (1,290) - 1,290 -
---------- ---------- -------------------- --------- ------------- ------------ ---------
At 30 June 2020
(unaudited) 69,206 124,481 234 1,318 (2,259) (147,095) 45,885
---------- ---------- -------------------- --------- ------------- ------------ ---------
Aminex PLC
CONDENSED CONSOLIDATED STATEMENT OF CASHFLOWS
for the six months ended 30 June 2020
Unaudited Unaudited Audited
6 months 6 months Year ended
ended ended 31 December
30 June 2020 30 June 2019 2019
US$'000 US$'000 US$'000
Operating activities
Loss for the financial period (1,151) (2,190) (15,231)
Depreciation and depletion 115 121 240
Equity-settled share-based payments 344 144 369
Finance income - (3) (30)
Finance costs 77 39 82
Impairment of exploration and evaluation
assets 365 170 10,928
Impairment of property, plant and
equipment - - 809
Impairment of financial assets - 164 -
Expected credit loss charge 87 - 582
Taxation paid (2,168) - -
Increase in trade and other receivables (205) (95) (1,125)
Increase in trade and other payables 45 298 680
------------- ------------- ------------
Net cash used in operating activities (2,491) (1,352) (2,696)
------------- ------------- ------------
Investing activities
Acquisition of property, plant
and equipment (2) (3) (4)
Expenditure on exploration and
evaluation assets (948) (711) (1,448)
Advances on farm out 1,705 - 1,000
Interest received - 3 4
------------- ------------- ------------
Net cash inflows / (outflows) from
investing activities 755 (711) (448)
------------- ------------- ------------
Financing activities
Proceeds from the issue of share
capital - - 2,358 2,358
Payment of transaction costs on
issue of share capital - (174) (174)
Payment of lease liabilities (105) - (232)
Proceeds from Borrowings 2,000 - -
Net cash inflows from financing
activities 1,895 2,184 1,952
------------- ------------- ------------
Net increase / (decrease) in cash
and cash equivalents 159 121 (1,192)
Cash and cash equivalents at 1
January 694 1,860 1,860
Foreign exchange gain 79 47 26
------------- ------------- ------------
Cash and cash equivalents at end
of the financial period 932 2,028 694
------------- ------------- ------------
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2020
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 2019. The financial
information contained in the condensed financial statements has
been prepared in accordance with the accounting policies set out in
the 2019 Annual Report and Accounts.
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 2019 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 70 contained in the
2019 Annual Report and Accounts.
These condensed consolidated financial statements were
authorised for issue by the Board of Directors on 30 September
2020.
(i) Going concern
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
2021, 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 and which has
a long stop date of 15 October 2020. While the conditions precedent
within the control of Aminex and APT have been satisfied, the
Farm-Out remains subject to certain Government approvals. Under the
terms of the Farm-Out Agreement, on completion the Group will
receive US$5 million in cash consideration plus payment for interim
costs incurred on the Ruvuma PSA since 15 March 2018, the effective
date of the Farm-Out. Aminex has received US$2.7 million as an
Advance and US$2 million as a Loan from APT, as of 30 June 2020.
The US$5 million Farm-Out cash consideration will settle the APT
Advance and Loan immediately on Completion. On 30 September 2020,
Aminex and ARA entered into a funding arrangement whereby ARA has
agreed, subject to certain conditions, to advance up to US$1.97
million to the Company that would otherwise have been payable to
the Company as interim period costs under the Farm-Out
Agreement.
Trade receivables of US$8.0 million, of which Aminex's net share
is US$3.3 million, have not been taken into account in the cash
flow forecast due to the claims for certain amounts by the TPDC,
set out in Note 10 to the financial statements. Although this trade
receivable is due, the TPDC continue to delay payment until a
resolution is reached in respect of the claims and the Directors
consider it prudent not to take this receivable amount into
consideration of the Group's ability to continue as a going
concern.
As disclosed in Note 14, the Group received a tax assessment
from the TRA of US$2.2 million in relation to a tax audit related
to 2013 to 2015 which is excluded from the cash forecast as any
cash outflow during the going concern period is considered remote.
If the tax assessment finding went against the Group it is likely
additional funding would be required to settle any potential
liability. The Group implemented further cost cuts during the first
half of 2020 to reduce its general and administrative expenditure
and preserve cash in response to depressed market conditions due to
COVID-19 and the oil price fall.
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2020
1. Basis of preparation (continued)
(i) Going concern (continued)
Based on the expectation that either the Farm-Out will close by
15 October 2020 or ARA will advance the interim costs of US$1.97
million under the funding arrangement and not call for repayment of
the US$5 million already advanced against the Farm-Out, and certain
other mitigating actions can be taken, 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 will complete
by 15 October 2020, as it remains subject to Tanzanian Government
approval, or that ARA will advance the US$1.97 million of interim
costs and the Company can renegotiate the terms of the US$5 million
of existing funding that will be due to ARA. If the Farm-Out does
not complete and ARA do not advance the US$1.97 million of interim
costs and do not renegotiate the terms of the existing US$5 million
funding the Group will need to seek additional funding.
Furthermore, if the Farm-Out does not complete by 15 October 2020
the Group will need to either seek additional funding for its
Ruvuma work commitments or renegotiate the work commitments under
the licence extension granted in April 2020. In addition,
development of the Group's other assets in Tanzania will require
the sourcing of additional funding. This includes the Nyuni Area
PSA where the Group has applied for the licence to be extended on a
revised work programme, as disclosed in Note 14. The Kiliwani North
Development Licence has no work programme commitments. There
remains significant uncertainty as regards the ability of Aminex to
raise funds in the current market conditions due to the COVID-19
pandemic and the depressed oil price. These may result in the
Company having to raise funds at whatever terms are available at
the time.
These matters indicate the existence of a material uncertainty
that may cast significant doubt on the Company's ability to
continue as a going concern. If the Farm-Out does not complete, and
the Group cannot raise additional funding to meet its US$5.0
million debt liabilities to ARA, licence commitments or potential
tax assessment, or the Group is unable to renegotiate or defer
commitments on its borrowings, licence interests, or realise other
mitigating actions, the Group will be unable to realise its assets
and discharge its liabilities in the normal course of business.
The 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 2019 Annual
Report and Accounts.
(iii) Changes in accounting policies
The following accounting standards, amendments and
interpretations, which had no significant impact on these financial
statements, became effective in the current reporting period on
adoption by the EU through the European Financial Reporting
Advisory Group ('EFRAG'):
IFRS 3 (amendments) 'Definition of a Business': The IASB
effective date is 1 January 2020 and the amendment is yet to be
endorsed by the EU. The amendment provides clearer application
guidance to help companies distinguish between a business and a
group of assets when applying IFRS 3 'Business Combinations'. The
amendment also clarifies that applying the classification of a
business would not be appropriate if substantially all of the fair
value of the gross assets acquired is concentrated in a single
identifiable asset or group of similar identifiable assets. This
amendment is not expected to have an impact on the Group's
consolidated financial statements.
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2020
1. Basis of preparation (continued)
(iii) Changes in accounting policies (continued)
IAS 1 and IAS 8 (amendments) 'Definition of Material': The IASB
effective date is 1 January 2020 and the amendment has been
endorsed by the EU. The amendment revises the definition of
material stating that 'information is material if omitting,
misstating or obscuring it could reasonably be expected to
influence the decisions that the primary users of general purpose
financial statements make on the basis of those financial
statements, which provide financial information about a specific
reporting entity'. This amendment is not expected to have an impact
on the Group's consolidated financial statements.
IFRS 9, IAS 39 and IFRS 7 (amendments) 'Interest Rate Benchmark
Reform': The IASB effective date is 1 January 2020 and the
amendment has been endorsed by the EU. The amendment requires that
for interest rate hedges affected by Interbank Offered Rate
('IBOR') reform, the interest rate benchmark is not altered when
considering whether a forecast transaction is highly probable, or
whether there is an economic relationship between the hedged cash
flow and the hedging instrument. This amendment is not expected to
have an impact on the Group's consolidated financial
statements.
(iv) Future accounting pronouncements
At the date of these financial statements the standards and
interpretations listed below were issued but not yet effective. The
adoption of these standards may result in future changes to
existing accounting policies and disclosures. The Company is
currently evaluating the impact that these standards will have on
results of operations and financial position:
IFRS 17 'Insurance Contracts': The IASB effective date is 1
January 2021 and the standard is yet to be endorsed by the EU. IFRS
17 will replace IFRS 4 'Insurance Contracts' and applies to all
types of insurance contracts as well as to certain guarantees and
financial instruments with discretionary participation features.
This standard is not expected to have an impact on the Group's
consolidated financial statements.
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2020
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 Aminex Group 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 Tanzanian Petroleum Development Company
("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 2020
2. Segmental disclosure - continuing operations (continued)
Operating segment results - 30 June 2020 (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
2020 2020 2020 2020 2020
US$'000 US$'000 US$'000 US$'000 US$'000
Revenue - - 300 - 300
Cost of sales (91) - (300) - (391)
Gross loss (91) - - - (91)
Depreciation (29) - - (86) (115)
Administrative
expenses (101) - (97) (384) (582)
Impairment
against
exploration and
evaluation
assets - (365) - - (365)
---------------- -------------- ----------- ------------ ---------
Loss from
operating
activities (221) (365) (97) (470) (1,153)
Finance costs (26) (6) - (45) (77)
Finance income - - - - -
Foreign exchange
gains - - - 79 79
---------------- -------------- ----------- ------------ ---------
Loss before tax (247) (371) (97) (436) (1,151)
Taxation - - - - -
---------------- -------------- ----------- ------------ ---------
Loss for the
period (247) (371) (97) (436) (1,151)
---------------- -------------- ----------- ------------ ---------
Segment assets 6,973 49,720 - 6,077 62,770
Segment
liabilities (6,030) (4,763) - (6,092) (16,885)
Capital
expenditure
additions - 950 - 50 1,000
---------------- -------------- ----------- ------------ ---------
Other material
non-cash
items
Share based
payments
(Note 3) - - - (344) (344)
Unwinding of
discount
on
decommissioning
provision (Note
5) (26) (6) - - (32)
---------------- -------------- ----------- ------------ ---------
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) (1,662)
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)
---------------- -------------- ----------- ------------ ---------
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2020
3. Share based payments
Aminex PLC operates or operated the following share option
schemes:
-- Executive Share Option Scheme ("ESOS"). Under the terms of
the ESOS, 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. Options are granted at market price, in accordance
with the ESOS 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. No options were granted between
2011 and 2015. Options granted in 2016 and 2018 vest immediately
and will expire at a date no later than 3 years after their grant
date. Of the options granted since 2018, those issued in February
and June 2019, and February 2020 vest immediately, and the options
granted in November 2019 and January 2020 vest in tranches subject
to the achievement of certain market and non-market performance
conditions. The options granted in 2020 will expire at a date
either 5 years or 7 years after their date of grant, as detailed
below. The ESOS expired on 10 May 2020 and therefore no further
share options will be granted pursuant to the ESOS.
-- Old Restricted Share Plan ("Old RSP"). On 1 May 2020, 151
million share options were issued to certain Directors under the
Old RSP. These share options were subsequently forfeited by those
Directors in June 2020, surrendering and waiving all their rights
to the share option grant and consequently no charge in the
six-month period to 30 June 2020 has been recognised in relation to
such grant. The Old RSP was terminated by the Board on 1 July 2020
and therefore no further share options will be granted pursuant to
the Old RSP.
-- New Restricted Share Plan ("New RSP"). The New RSP was
adopted by the Board on 1 July 2020 and approved by shareholders of
the Company at its AGM on 29 July 2020. As at the date of
reporting, no share options have been granted under the New
RSP.
The fair value of the grant date is measured using a recognised
valuation methodology for the pricing of financial instruments i.e.
the Black-Scholes method.
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 2019
2020 2019 US$'000
US$'000 US$'000
Share-based payment charge 344 144 369
The fair value of options granted under the ESOS for Directors
and staff in the period were calculated using the following inputs
into the Black-Scholes method (previously the fair value of options
were estimated using the binomial option-pricing model):
Date of grant 4 February 27 January 2020
2020
Contractual life 5 years 7 years
Exercise price Stg 1.02 pence Stg 0.97 pence
Market price Stg 1.02 pence Stg 0.97 pence
Number of options granted (immediate
vesting) 1,200,000 3,000,000
Expected volatility 70% 70%
Vesting conditions Immediate Market and non-market
Fair value per option Stg 0.58 pence Stg 0.58 pence
Expected dividend yield - -
Risk-free rate 0.001% 0.001%
--------------- ----------------------
On 30 June 2020, there were options granted under the ESOS
outstanding over 159,711,000 (31 December 2019: 182,261,000)
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. The weighted average remaining contractual life
of the options outstanding is 4.73 years (31 December 2019: 4.46
years). The average share price for the six months ended 30 June
2020 was Stg0.80pence/EUR0.00876 (year ended 31 December 2019:
Stg1.13pence/EUR0.01243).
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2020
4. Finance income
Unaudited Unaudited Audited
6 months 6 months year ended
ended ended 31 December
30 June 30 June 2019
2020 2019 US$'000
US$'000 US$'000
Deposit interest income - 3 4
Foreign exchange gain/(loss) 79 47 26
---------- ---------- -------------
79 50 30
---------- ---------- -------------
5. Finance costs
Unaudited Unaudited Audited
6 months 6 months year ended
ended ended 31 December
30 June 30 June 2019
2020 2019 US$'000
US$'000 US$'000
Interest expense 38 - -
Lease finance costs 7 7 18
Other finance costs - decommissioning
provision interest charge 32 32 64
77 39 82
---------- ---------- -------------
6. Tax
The Group has not provided any tax charge for the six-month
periods ended 30 June 2020 and 30 June 2019 or for the year ended
31 December 2019. 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 2020, 30 June 2019 and the year
ended 31 December 2019 are as follows:
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2020 2019 2019
Numerator for basic and diluted
earnings per share:
Loss for the financial period
(US$'000) (1,151) (2,190) (15,231)
---------- ---------- -------------
Weighted average number of shares:
Weighted average number of ordinary
shares ('000) 3,770,685 3,744,121 3,757,787
---------- ---------- -------------
Basic and diluted loss per share
(US cents) (0.03) (0.06) (0.41)
---------- ---------- -------------
There is no difference between the basic loss per Ordinary Share
and the diluted loss per Ordinary Share for the financial period
ended 30 June 2020, 30 June 2019 and the year ended 31 December
2019 as all potentially dilutive Ordinary Shares outstanding were
anti-dilutive. There were 159,711,000 share options in issue at 30
June 2020, 90,411,000 share options in issue at 30 June 2019, and
182,261,000 share options in issue at 31 December 2019.
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2020
8. Exploration and evaluation assets
Cost US$'000
At 1 January 2020 108,450
Additions 951
---------
At 30 June 2020 109,401
---------
Provisions for impairment
At 1 January 2020 59,483
Increase in impairment provision 365
---------
At 30 June 2020 59,848
---------
Net book value
At 30 June 2020 49,553
---------
At 31 December 2019 48,967
---------
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 following three CGUs; the
Ruvuma PSA, the Nyuni Area PSA and 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 and the Lindi Licence exploration expenditure, cost
of seismic acquired over relinquished blocks and obsolete
stock.
In accordance with its accounting policies each CGU is evaluated
annually for impairment, with an impairment test required when a
change in facts and circumstances, in particular with regard to the
remaining licence terms, likelihood of renewal, likelihood of
further expenditures and ongoing acquired data for each area,
result in an indication of impairment.
Tanzania developments
Production Sharing Agreement Review
The Tanzanian Government passed three new laws in July 2017,
affecting the mining and energy sectors - the Natural Wealth and
Resources (Permanent Sovereignty) Act; the Written Laws
(Miscellaneous Amendments) Act; and the Natural Wealth and
Resources Contracts (Review and Re-Negotiation of Unconscionable
Terms). This new legislation includes the right of the Tanzanian
authorities to renegotiate 'unconscionable terms' in agreements. A
special advisory committee was formed in November 2017 to probe for
flaws in the law and policies governing the gas subsector and
recommend how the nation can benefit from the revenues accruing
from the gas subsector. During 2019, this review remained ongoing
as the Tanzanian authorities continue to review a number of PSAs.
Based on the Board's current understanding of this new legislation
and given the existing terms and conditions of our PSAs it is
unclear whether there will be any material impact on Aminex's
operations in Tanzania. Until the results of the PSA review are
known there is insufficient data to consider the new laws or the
PSA review as an indicator of impairment.
New Upstream Petroleum Regulations
In December 2019, the Government of Tanzania released new
regulations in respect to the upstream petroleum industry. These
regulations were:
1. Petroleum (Reconnaissance and Tendering) Regulations
2. Petroleum (Cost Recovery Accounting) Regulations, and
3. Upstream Petroleum Authority (Annual Levy, Fees and
Charges)
A key change relates to the ringfencing of exploration costs.
Section 5(1) of the new Petroleum (Cost Recovery Accounting)
Regulations states that "Recoverable contract expenses shall be
ring fenced based on exploration licence or development licence as
stipulated in the Act." The change in regulations is an indication
of impairment of Lindi exploration costs under the Ruvuma PSA and
therefore management conducted an impairment test during the year
on the asset that resulted in impairment (see below).
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2020
8. Exploration and evaluation assets (continued)
Ruvuma PSA
The Ruvuma PSA, comprised two exploration licences; Mtwara and
Lindi. In July 2018, Aminex announced it had signed a binding
Farm-Out Agreement to farm-out 50% of the Ruvuma PSA to The Zubair
Corporation LLC ("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 plus payment for interim costs
incurred on the Ruvuma PSA since 15 March 2018, the effective date
of the Farm-Out, 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 approval by the
Tanzanian authorities. In April 2020, the Group received a one-year
extension to the Mtwara Licence in respect to the Ntorya Location.
Although the extension is over the smaller Ntorya Location area,
this is not considered an indicator of impairment as the area
corresponds to the identified Ntorya asset development programme
and the extension satisfied one of the remaining conditions
precedent to the Farm-Out. The extension is effective from 17 April
2020. During the one year extension period the Group is committed
to undertake acquiring 200 km(2) of 3D seismic (minimum expenditure
of US$7 million), drill the Chikumbi-1 exploration well (minimum
expenditure of US$15 million), complete the negotiation of the Gas
Terms for the Ruvuma PSA with the TPDC and, using the data gathered
from the Chikumbi-1 and seismic acquisition, prepare and submit an
application for a Development Licence for the Ntorya Location area.
It is acknowledged by the Group that the full work programme is
unlikely to be completed during this one year extension period and
therefore the Group will apply for an additional extension(s) as
necessary and as permissible under the current legislation. An
associate of Zubair, ARA Petroleum Tanzania Limited ("APT"), will
become operator under the Ruvuma PSA. The purpose of the Farm-Out
is to accelerate development of and production from the Ntorya
field.
The Lindi licence expired in January 2017. Ordinarily, the
expiry of an exploration licence would be an indicator of
impairment, however, the Ruvuma PSA states that there is no
ringfencing of exploration costs between licences and therefore the
cost pool for the Lindi Licence is recoverable from the Mtwara
Licence under the Ruvuma PSA. During 2019, the Tanzanian Government
published regulations that stated exploration costs would be ring
fenced by Licence and the Directors have taken the view that,
although the Ruvuma PSA contains an economic stabilisation clause,
this change has created uncertainty of recoverability of the Lindi
exploration costs. Consequently, the carrying cost of the Lindi
Licence, which amounts to US$10.4 million, was fully impaired in
2019.
The Directors are satisfied that following the impairment
assessment of the Ruvuma PSA there are no indicators of impairment
during the period following the granting of the Mtwara Licence
extension over the Ntorya Location area in April 2020 and the
identified Ntorya asset development programme, supported by the
Farm-Out that provides the necessary funding for the development of
the asset. The Directors recognise that future realisation of the
Ruvuma PSA assets is dependent on the completion of the Farm-Out
and further successful exploration, appraisal and development
activities and the subsequent economic production of hydrocarbon
reserves.
Nyuni Area PSA
Aminex fully provided for the Nyuni Area PSA exploration asset
in 2018 following confirmation from the Tanzanian authorities that
the Nyuni Licence period ended in October 2019, coupled with the
communication from the Tanzania Ministry of Energy to withhold all
work on the licence, pending a review of the Nyuni Area PSA. The
Company was unable to progress the work programme and, therefore,
the Directors concluded that the carrying cost of the Nyuni asset
should be fully impaired. The status of the Nyuni asset remained
the same at 30 June 2020 and the Directors maintain their position.
Expenditure during the year is capitalised and then immediately
impaired to the income statement as impairment against exploration
and evaluation assets.
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2020
8. Exploration and evaluation assets (continued)
Kiliwani South
Kiliwani South, located within the Kiliwani North Development
Licence acreage, has been identified as a potential lead. In
February 2019, the Group raised approximately US$2.4 million gross
to provide funding for the reprocessing of some of the existing 2D
seismic in the area and to prepare a 3D seismic programme over the
Kiliwani North Development Licence area in order to advance the
potential drilling of a Kiliwani South location and assessing the
remaining potential in the Kiliwani North structure (inclusive of
the Kiliwani North-1 well). During the year, Aminex conducted the
reprocessing of select 2D seismic data. Remapping of the
reprocessed data in combination with a fresh look at the regional
data has identified multiple structural and stratigraphic leads
across the licence which are ideally located in shallow waters and
in close proximity to existing offtake infrastructure, meaning that
a discovery could be rapidly monetised with relatively low-cost
drilling and tie-backs. The Directors are satisfied that, following
an assessment of the Kiliwani South asset, with the work planned on
the Licence there are no indicators of impairment.
9. Property, plant and equipment
Development
property Right of
- Tanzania use assets Other assets Total
US$'000 US$'000 US$'000 US$'000
Cost
At 1 January 2020 8,205 875 66 9,146
Additions in the period - 48 2 50
Disposals - (148) - (148)
Exchange rate adjustment - (47) (4) (51)
At 30 June 2020 8,205 728 64 8,997
------------ ------------- --------------- --------
Depreciation and depletion
At 1 January 2020 6,648 485 54 7,187
Charge for the period - 111 4 115
Disposals - (148) - (148)
Exchange rate adjustment - (24) (4) (28)
At 30 June 2020 6,648 424 54 7,126
------------ ------------- --------------- --------
Net book value
At 30 June 2020 1,557 304 10 1,871
------------ ------------- --------------- --------
At 31 December 2019 1,557 390 12 1,959
------------ ------------- --------------- --------
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 there has been no
commercial production from the well since March 2018. The Company
is working with the TPDC on agreed methods to handle wellbore
fluids which will potentially be unloaded during operations on the
well. Following a successful well intervention to open the
sub-surface safety valve carried out in December 2018, Aminex has
since experienced delays awaiting final approval to carry out a
remedial work programme. Aminex has prepared a perforation strategy
for a lower zone within the reservoir and an alternative remedial
work programme intended to establish fluid levels in the wellbore,
reservoir pressure and to unload potential fluid using foam
treatment.
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2020
9. Property, plant and equipment (continued)
In accordance with IAS 36, the Group conducted an impairment
test as at 30 June 2020 on a value-in-use basis. The
cash-generating unit for the purpose of impairment testing is the
Kiliwani North-1 well. A financial model of the forecast discounted
cash flow is employed for the value-in-use calculation of the
well.
Key assumptions that represent the key sensitivities in the
value-in-use calculation include discount rate, production volumes,
timing of the commencement of gas production, remediation work on
the gas well being successful and the cost of the proposed
remediation work. Key assumptions used in the impairment test
included sensitivities reflecting potential extended delays of 1 or
2 years in conducting remediation work, application of risk factors
to reserves recoveries of up to 80% resulting in production of 1.0
BCF (2019: 0.8 BCF), reflecting the specific degree of risk
associated with the preferred option of perforation of the lower
zone, and sensitivities to the discount rate of 15% (2019: 15%). A
5% increase in the discount rate would not result in an
impairment.
Considering the proposed remediation work programmes and the
potential reserves and resources ascribed to the Kiliwani North-1
well the Directors are satisfied no impairment charge is required
against the carrying value. Once the remediation work on the
Kiliwani North-1 well, described above, is complete, it is expected
that the results will reduce the key estimation uncertainties
currently used in the impairment test, particularly associated with
the success of the planned work programme 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.
Right of use asset
All right of use assets relate to leases the Group has entered
into in respect of various office properties. All leases are
accounted for by recognising a right-of-use asset and a lease
liability except for:
-- Leases of low value assets; and
-- Leases with a duration of 12 months or less.
Right of use assets of US$304,000 (31 December 2019: US$361,000)
relate to an office lease located in the UK and US$48,000 (31
December 2019: US$29,000) located in Tanzania. All other assets are
located in the UK. The Group recognised rent expense from
short-term leases of US$12,000 for the six months ended 30 June
2020.
10. Trade and other receivables
Trade and other receivables amounted to US$10.41 million at the
period end (31 December 2019: US$7.87 million). The increase
largely relates to an increase in amounts owing from the Group's
partners in joint operations. Included in trade and other
receivables is an amount of US$8.01 million due from the TPDC for
gas sales from Kiliwani North and related late payment interest (31
December 2019: US$7.80 million). Aminex's net share of the
receivable is US$3.34 million (31 December 2019: US$3.23 million).
On 11 April 2018, the Company received formal notification from the
TPDC requesting payment of certain amounts totalling 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. Of the
amount claimed, Aminex has already accrued for the liabilities it
considers appropriate based on its own calculations of amounts due
as at 31 December 2019. Aminex has advised the TPDC that it does
not accept the balance of the claims, which include computational
inaccuracies. The TPDC has delayed settling its trade receivable
balance while discussions continue. In accordance with IFRS 9,
Aminex calculated an expected credit loss ("ECL") based on its
exposure to credit risk on its trade receivables at the end of the
period and recognised an additional impairment on trade receivables
of US$0.15 million (31 December 2019: US$1.26 million), with a
charge to the income statement of US$87,000 (31 December 2019:
US$582,000), reflecting Aminex's share after adjusting for the
share related to partners in joint operations of US$64,000. The ECL
is calculated on the full amount of US$8.01 million due to the
Group for gas sales and late payment interest; any actual credit
loss would be reduced by the liability due to the Group's joint
venture partners in respect of amounts due.
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2020
11. Cash and cash equivalents
Unaudited Unaudited Audited
6 months 6 months year ended
ended ended 31 December
30 June 30 June 2019
2020 2019 US$'000
US$'000 US$'000
Cash at bank and in hand 932 2,028 694
Included in cash and cash equivalents is an amount of US$0.01
million (31 December 2019: US$0.32 million) held on behalf of
partners in jointly controlled operations.
12. Trade and other payables
Trade and other payables amounted to US$13.73 million at the
period end (31 December 2019: US$11.51 million). Included in other
payables for the Group and Company is US$2.70 million in relation
to the Advance Funding Agreement ("Advance") entered into between
the Group and ARA Petroleum LLC, a related party of the Group (see
Note 15), on 12 November 2019 (31 December 2019: US$1.00 million).
The Advance provides a US$3.00 million advance in instalments to
the Company, ahead of Completion of the Farm-Out. The Advance will
be offset against the first tranche of the cash consideration
payable to Aminex on Completion of the Farm-Out. The Advance
converted to an interest-bearing secured loan on 1 July 2020, at an
interest rate of three-month USD LIBOR plus 3.5%, repayable by 30
June 2021.
Amounts due to partners in Joint operations, VAT payable and
other payables include amounts arising on gas sales and are payable
on receipt of gas revenues from the TPDC.
The Directors consider that the carrying amounts of trade
payables approximate their fair value.
13. Borrowings
On 6 May 2020, Aminex PLC entered into a US$2.0 million loan
with ARA Petroleum LLC ("the Loan"), a related party of the Group
(see Note 15), to finance the payment of the capital gains tax bill
in relation to the Completion of the Farm-Out to APT.
The Loan is intended to be repaid by offset of the cash
consideration due under the Farm-Out of US$5.0 million. The Loan
bears interest at 13.77% p.a.. The Loan is secured, with security
in the form of a pledge of Aminex PLC's holding in shares in
Tanzoil N.L., a wholly-owned subsidiary of the Company, that
indirectly holds the Group's assets in Tanzania.
The Farm-Out is expected to complete in the next twelve months
and therefore the Loan has been classified as short-term.
US$'000
At 31 December 2019 (audited) -
Proceeds from Secured Loan 2,000
Loan repayments -
At 30 June 2020 (unaudited) 2,000
--------
During the six-month period to 30 June 2020, the loan had
accrued interest of US$38,000. No interest was repaid in the
period.
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2020
14. 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 applied in July 2019 for the licence
to be extended into the Second Extension Period of three years 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 in April 2020 for a period of
one-year. Two wells are required to be drilled, one of which is
expected to be the Chikumbi-1 location. During the one year
extension period the Group is committed to undertake acquiring 200
km2 of 3D seismic (minimum expenditure of US$7 million), drill the
Chikumbi-1 exploration well (minimum expenditure of US$15 million),
complete the negotiation of the Gas Terms for the Ruvuma PSA with
the TPDC and, using the data gathered from the Chikumbi-1 and
seismic acquisition, prepare and submit an application for a
Development Licence for the Ntorya Location area. It is
acknowledged by the Group that the full work programme is unlikely
to be completed during this one year extension period and therefore
the Group will apply for an additional extension(s) as necessary
and as permissible under the current legislation. The Lindi Licence
expired in January 2017 and although the Company has previously
sought an extension to the Lindi Licence, for which there remains a
two-well commitment, it is unlikely it will pursue such
extension.
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.
(c) On 11 April 2018, Ndovu Resources Limited received formal
notification from the TPDC of certain claims amounting to US$5.97
million against the Kiliwani North Development Licence 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 2020. Aminex has advised the TPDC that it does not accept the
balance of the claims, which include computational inaccuracies.
The Group has received legal advice in country that supports its
position and this has been provided to the TPDC. 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$8.01 million included
in trade receivables as owing from the TPDC is recoverable.
(d) As part of the US$3 million advance funding arrangement
("Advance") entered into with ARA Petroleum LLC, a related party of
the Company, in November 2019, the Company agreed to grant a pledge
over its shareholding in its wholly owned subsidiary, Tanzoil NL,
as security in the event the Farm-Out has not completed by 30 June
2020 and such advance funding converts to an interest-bearing loan
on 1 July 2020. The pledge was entered into on 20 July 2020.
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2020
14. Commitments, guarantees and contingent liabilities (continued)
Guarantees and contingent liabilities (continued)
(e) As part of the US$2 million Loan entered into with ARA
Petroleum LLC, a related party of the Company, on 6 May 2020 (see
Note 13), the Company agreed to extend the pledge over its
shareholding in its wholly owned subsidiary, Tanzoil NL, provided
as security on the Advance, to also cover the Loan. The pledge was
entered into on 20 July 2020.
Tanzanian Tax Assessment
On 28 February 2020, following the conclusion of the TRA audit
of Ndovu Resources Limited ("NRL"), the Group's Tanzanian wholly
owned subsidiary, for taxation years 2013 to 2015, the TRA issued a
tax assessment in respect of these taxation years. The following
matters were raised in the assessments:
Principal Interest Total
US$'000 US$'000 US$'000
Area
Withholding tax on payments
Withholding made to non-residents for services
tax performed outside of Tanzania 242 182 424
VAT Output VAT on imported services 191 156 347
Withholding
tax Withholding tax on deemed interest 797 664 1,461
1,230 1,002 2,232
---------- --------- --------
NRL considers these claims without technical merit in tax law
and, with the assistance of an in-country tax advisor, has
submitted an objection to the TRA findings. At this stage it is
unclear whether NRL will be successful in its objections and
therefore the amount or timing of potential cash outflow remains
uncertain. Provision has been made for amounts NRL has ceded or
where management determine the likelihood of success through the
objection or appeals process is unlikely.
15. Related party transactions
On 6 May 2020, the Company entered into a US$2.0 million loan
with ARA Petroleum LLC ("the Loan"), which, through its associated
company, Eclipse Investments LLC, is a significant shareholder in
Aminex PLC (see note 13), to finance the payment of the capital
gains tax bill in relation to the Completion of the Farm-Out to
APT. The Loan is intended to be repaid by offset of the cash
consideration due under the Farm-Out of US$5.0 million. The Loan
bears interest at 13.77% p.a.. The Loan is secured, with security
in the form of a pledge of Aminex PLC's holding in shares in
Tanzoil N.L., a wholly-owned subsidiary of the Company, that
indirectly holds the Group's assets in Tanzania. Interest accrued
on the loan during the period was US$38,000 (see Note 5).
On 12 November 2019, the Company entered into a Funding
Agreement with ARA Petroleum LLC, a related party of the Group, to
provide a US$3.0 million advance in instalments to the Company,
ahead of Completion of the Farm-Out ("Advance"). The Advance will
be offset against the first tranche of the cash consideration
payable to Aminex on Completion of the Farm-Out. As Completion did
not occur by 30 June 2020, the Advance converted to an
interest-bearing secured loan on 1 July 2020, repayable by 30 June
2021. During the first six months of 2020, an additional US$1.7
million of the Advance had been received with US$2.7 million
recognised as a current liability at 30 June 2020.
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2020
16. Post balance sheet events
On 20 July 2020, a pledge was entered into with ARA Petroleum
LLC, as security for the US$3 million Advance Funding and US$2
million Loan (see Note 13) provided to the Company. The form of the
pledge is over the Company's holding in shares in Tanzoil N.L., a
wholly-owned subsidiary of the Company, that indirectly holds the
Group's assets in Tanzania.
On 24 July 2020, John Bell, Chairman and Linda Beal, senior
non-executive Director, stepped down. Robert Ambrose was appointed
interim Executive Chairman.
On 18 August 2020, Charles Santos was appointed non-executive
Chairman and Tom Mackay a non-executive Director. Robert Ambrose
ceased being interim Executive Chairman.
On 30 September 2020, Aminex and ARA entered into an Additional
Funding Agreement ("AFA") whereby ARA will advance up to US$1.97
million to the Company that would otherwise have been payable to
the Company as interim period costs under the Farm-Out Agreement.
Such advance will allow the Company to consider and pursue
alternative options for the Group and its assets. Such advance from
ARA will be interest-bearing at a rate of 13.77% per annum and will
be repayable upon written demand by ARA.
On 30 September 2020, the long stop date for Completion of the
Farm-Out has been extended to 15 October 2020.
17. Statutory information
The financial information to 30 June 2020 and 30 June 2019 is
unaudited and does not constitute statutory financial information.
The information given for the year ended 31 December 2019 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 2019 have been filed with the Companies
Registration Office 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.
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END
IR SDAFFSESSEFU
(END) Dow Jones Newswires
September 30, 2020 07:30 ET (11:30 GMT)
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