TIDMPOL
RNS Number : 9648Z
Polo Resources Limited
20 December 2017
This Annual Report contains inside information as defined in
Article 7 of the EU Market Abuse Regulation No 596/2014 and has
been announced in accordance with the Company's obligations under
Article 17 of that Regulation.
20 December 2017
Polo Resources Limited
("Polo" or the "Company")
RESULTS FOR THE YEARED 30 JUNE 2017
Polo Resources Limited (AIM: POL), the multi-sector investment
company with interests in oil, gold, coal, copper, phosphate,
lithium, iron and vanadium, today announces results for the year
ended 30 June 2017.
Financial Summary:
-- Combined total of cash, receivables, payables, listed and unlisted equity investments of
USD59.91 million as of 15 December 2017 (30 June 2017: USD47.22
million).
-- Net Asset Value per share as at 15 December 2017 was
approximately 14.31 pence per share (30 June 2017: 11.68 pence per
share).
-- Listed and unlisted investments at marked to market value,
cost and valuation amounted to USD46.81 million (30 June 2017:
USD33.22 million).
Investment Highlights:
-- Hibiscus Petroleum Berhad (HIBI: MK) (Oil & Gas, UK and Australia) ("Hibiscus")
o Following the oil price slump in 2015, Hibiscus successfully
transitioned from a negative cashflow exploration company to a
positive cashflow production company with its acquisition of a 50
per cent interest in the North Sea Anasuria Cluster of producing
oil and gas fields. Hibiscus reported six consecutive quarters of
profitability and is well positioned for further growth as oil
prices recover.
o The Anasuria Cluster achieved an average daily oil and gas
production rate of 3,552 boe (net to Hibiscus) for the 2016-17
financial year. Improved revenue and efficiencies enabled Hibiscus
to post a profit after tax of USD24 million (RM106.1 million).
o Operational improvement program is underway to increase
production and availability of supporting facilities (circa 19
years production life).
o Post Polo's reporting period in November 2017, Hibiscus
announced that Petronas unconditionally consented to Hibiscus
acquiring Shell's entire 50 per cent participating interests in the
2011 North Sabah Enhanced Oil Recovery Production Sharing Contract
("PSC"). Shell's interest includes operator responsibilities which
would be transferred to Hibiscus.
o The North Sabah PSC, located in a key hydrocarbon province in
Malaysia, comprises four producing oil fields and associated
infrastructure being pipelines, the Labuan Crude Oil Terminal, an
onshore processing plant and oil export terminal. The oil field has
been producing since 1979 with production rights up to 2040 and is
expected to deliver 18,000 barrels/day, providing Hibiscus an
immediate second revenue stream.
o Polo holds a 9.22 per cent equity interest in Hibiscus. On 15
December 2017, Hibiscus' share price closed at MYR0.83 with a
market capitalisation of USD314.22 million (MYR/USD4.078).
-- Blackham Resources (ASX:BLK) (Gold, Australia) ("Blackham")
o Blackham successfully achieved first gold pour from the
Matilda Gold Project on schedule, in October 2016.
o In the first quarter of 2017, Matilda encountered above
average rainfall, lower than planned mill grades and lower than
expected underground ore extraction. Gold production was 39,413oz
for the 8.5 months ore processing period, one-third lower than the
original mine plan. Nevertheless, management anticipates cashflow
positive operations from the fourth quarter with the open pits
delivering higher grade ore at lower stripping ratios and the
underground mine adopting air leg mining, allowing it to
selectively mine narrow and irregular ore zones.
o Continued exploration drilling into post reporting period saw
total resource expanding to 65Mt @ 3.1g/t for 6.5Moz (27 per cent
increase).
o Post Polo's reporting period, in November 2017, Blackham
announced refinancing the Matilda - Wiluna Operation with an agreed
initial AUD60M Funding Package with Pacific Road Capital and a
renounceable entitlement offer to shareholders of two shares for
every seven shares held to potentially raise a further
AUD12.3M.
o Independent due diligence confirms the Project's sound
technical aspects and supports the Expansion Definitive Feasibility
Study to be delivered by June 2018 with the objective of optimising
scale of operations and economic performance.
o Polo holds a combined direct and indirect equity interest of
5.72 per cent in Blackham. On 15 December 2017, Blackham's share
price closed at AUD0.105 with a market capitalisation of USD28.9
million (AUD/USD1.305).
-- Nimini Holdings Limited (Gold, Sierra Leone) ("Nimini")
o Nimini's Komahun Gold Project continues to experience
difficulty in negotiating an acceptable Mine Development Agreement
("MDA") with the Government of Sierra Leone.
o Given the lack of progress with the MDA and an impending
general election scheduled for March 2018, Nimini adopted a
strategy to restrict its activity and minimise costs. Significant
steps taken include: termination of all staff; termination of the
Operator Agreement with Plinian Capital; and suspension of all
government fees pending an acceptable MDA.
o Polo holds a 90 per cent equity interest in Nimini.
-- Weatherly International Plc (AIM: WTI) (Copper, Namibia) ("Weatherly")
o Weatherly experienced technical and financial setbacks at the
Tschudi operation: 2016-17 Financial Year copper cathode production
dropped to 14,759 tonnes, 13 per cent below the 17,000 tonnes per
annum nameplate production. Financial year C1 unit costs were
USD5,288 per tonne, significantly above the C1 USD4,100--4,200 cost
guidance and below the full year average copper spot price of
$5,384 per tonne.
o Financial predicament caused by copper price falling
significantly below the prevailing during funding and construction
(project reached commercial production 1(st) October 2015), and
reduced copper production as a result of technical issues being
higher than anticipated ground water inflows affecting open pit
operations and slower than planned copper leach rates.
o Post Polo's reporting period, Weatherly saw the re-attainment
of its nameplate copper cathode production level (expected to be
maintained at reduced C1 unit costs) and the recovery of copper
price with the November 2017 average being $6,827 per tonne.
o Weatherly secured a further rescheduling of debt repayments
due to Orion Mine Finance (Master) Fund I LP ("Orion") and
undertook certain copper and currency hedges out to March 2018.
Orion is Weatherly's largest shareholder.
o On 12 December 2017, Weatherly announced that it has entered
into a binding agreement to purchase 100 per cent of the Kitumba
copper project in Zambia from ASX-listed Intrepid Mines Limited for
a total consideration of AUD5.75 million. Orion agreed that a
recent loan it provided can also be used to fund the acquisition
which is still subject to certain conditions precedent including
Intrepid shareholder approval and any regulatory approvals required
in Zambia and Australia.
o The Kitumba deposit is contained within a granted mining
license valid until 2029 and consists of a JORC-compliant measured
and indicated resource of 24.9Mt at a copper grade of 2.32 per cent
containing 578,000 tonnes of copper. Included within this resource
is a JORC-compliant mining reserve of 21.9Mt at a copper grade of
2.20 per cent Cu containing 492,000 tonnes of copper. The wider
project area covers more than 900 square kilometres and also
includes four exploration licenses.
o The Kitumba acquisition fits Weatherly's strategy for growth
through developing and operating profitable medium-scale base
metals mines in lower-risk parts of Africa. The Company is
confident their experienced mine development and operating team has
the capability to rapidly advance the project towards construction
and production in the near term.
o Polo holds a 5.2 per cent equity interest in Weatherly. On 15
December 2017, Weatherly's share price closed at GBP0.0104 with a
market capitalisation of USD14.82 million (GBP/USD0.745).
-- Ironstone Resources Limited (Lithium, Iron Ore, Vanadium,
Precious Metals, Canada) ("Ironstone")
o Ironstone is one of the largest contiguous metallic and
industrial mineral permit holders in Alberta, Canada. Mineral
holdings include iron and vanadium poly-metallic ore, lithium-rich
formation brines and bentonite clays.
o High-Value Carbonyl Iron Powder and Vanadium Production:
following positive results from preliminary testing of Ironstone's
ore in early 2017, agreement was made with a Canadian-based firm to
develop a 10,000 tonne per year carbonyl iron powder production
plant (with a vanadium co-product) in NW Alberta. This firm has a
solid track record having developed and globally deployed
commercial vapour metal deposition technology to produce
high-purity and high-value metal powders used in high-end
applications.
o Lithium Carbonate Production from Formation Brines: following
the discovery of excellent development of multi-stacked porous
lithium brine-bearing reefs underlying its Clear Hills permits,
Ironstone entered into an agreement with a western-Canadian based
water processing specialist firm to co-develop the required
technology to separate the lithium from the reservoir fluids by
adapting their existing patented technology.
o Polo's interest in Ironstone is currently 19.5 per cent.
-- GCM Resources Plc (AIM: GCM) (Coal and Power, Bangladesh) ("GCM")
o GCM's planned integrated coal mine and mine-mouth power
project ("Phulbari Project") in North-West Bangladesh can now
support some 6,000MW (previously 4,000MW) based on the latest
energy efficient ultra-supercritical power plant technology and a
high quality 572Mt (JORC 2004 compliant) thermal and metallurgical
coal deposit.
o GCM is pursuing potential partners who may assist in
delivering Government approvals and in November 2016 signed an MOU
with the world-renowned China Gezhouba Group International
Engineering Co Limited ("CGGC") which includes investment and
operation in power and coal mining in its diverse project
portfolio.
o The initial focus under the MOU is mine-mouth power generation
and CGGC, with support by GCM's team, delivered a Technical
Pre-Feasibility Study for a 2,000MW located at the mine site in
July 2017. The next step is for the parties to agree a framework of
cooperation for moving forward with the power plant(s) and
presenting the Phulbari Project as a major power producer that will
meet Bangladesh Government expectations.
o Post the reporting period, GCM announced in November 2017 that
it had successfully raised GBP2 million (GBP1.8 million net of
costs) at 34.4p per share.
o Polo holds a 19.84 per cent equity interest in GCM. On 15
December 2017, GCM's share price closed at GBP0.2575 with a market
capitalisation of USD30.5 million (GBP/USD0.745).
-- Universal Coal Resources Pte Ltd (Coal, Indonesia) ("Universal")
o Universal is a company incorporated in Singapore, which, in
turn, has entered into a conditional agreement to acquire an
indirect 75 per cent interest in PT Transcoal Minergy Coal Project
("TCM"), a company incorporated in Indonesia, from a Pan Asia
Corporation Ltd. (ASX: PZC) subsidiary ("PZC"). Polo's subsidiary,
Polo Investments Limited ("PIL"), holds a secured S$5,000,000
nominal value 15 per cent redeemable convertible note ("Note") from
Universal.
o Pursuant to the terms of the Note, Universal was required to,
amongst others matters, deliver the approval of the shareholders of
Pan Asia for the disposal of TCM to Universal. As at the date
hereof, this approval has not been obtained and a default of the
terms of the Note remains. PIL has served notice on Universal and
the parties who provided security, namely PZC and Mr. Boelio
Muliadi, and is currently in discussions with them on a without
prejudice basis for an amicable resolution, in parallel with PZC's
endeavours to dispose TCM to an investor.
o TCM has a mining concession in South Kalimantan Province,
Indonesia. Their focus is the development of a two million tonnes
per annum underground mine delivering a high quality Bituminous
Coal saleable product of some 6,200 kcal/kg specific energy (GAR -
Gross as Received). There is the potential to upgrade and increase
the current JORC Resource of 129 Mt (measured, indicated and
inferred).
-- Celamin Holdings NL (ASX: CNL) (Phosphate, Tunisia) ("Celamin")
o Celamin's wholly-owned subsidiary, Celamin Limited, remains in
dispute with its joint venture partner, Tunisian Mining Services
("TMS"), regarding ownership and control of CPSA (the Chaketma
Phosphate Project operating company) and is pursuing various legal
processes to resolve this situation.
o Post Polo's reporting period, on 1 December 2017, Celamin
announced a favourable arbitration decision and TMS has been
ordered to return Celamin's 51 per cent shareholding in CPSA and
pay damages and costs in excess of USD4 million. Celamin is also
continuing with various legal actions in Tunisia including the
criminal proceedings and debt recovery actions previously announced
by Celamin.
o In July 2017, Celamin successfully raised AUD1,050,000 through
a share placement to its major shareholders, Polo and African Lion
3 Fund, and clients of Patersons Securities Limited.
o The Chaketma Phosphate Project is based on a 130Mt Inferred
Resource @ 20.5% P(2) O(5) . At the time the dispute arose CPSA had
been fully funded to complete a DFS.
o Polo holds a 34.14 per cent equity interest in Celamin.
Celamin requested a voluntary trading suspension of its shares on
the ASX on 4 March 2015 and the suspension remains.
Datuk Michael Tang, Executive Chairman of Polo, said:
"The period under review has seen a renewed confidence returning
to the resources sector. 2017 saw a considerable improvement in
commodity prices and much greater stability in the oil price. This
has undoubtedly enabled companies to act with greater confidence
and optimism as they look to deliver their respective
strategies.
"We are confident that this trend will continue into the coming
year as the demand for commodities remains strong, especially given
the global infrastructure and local power requirements combined
with a push for a "greener future". The Board is confident that we
are well positioned for the coming year and is looking forward to
that improved sentiment and the progress that the companies in our
portfolio are making."
For further information, please contact:
Polo Resources Limited
- Kudzayi Denenga, Investor
Relations +27 (0) 787 312 919
Allenby Capital Limited (Nominated
adviser & joint broker)
- John Depasquale / James
Thomas +44 (0)20 3328 5657
Liberum Capital (Broker)
- Henry Freeman +44 (0) 20 3100 2000
Blytheweigh (Public relations)
- Tim Blythe / Nick Elwes
/ Camilla Horsfall +44 (0) 207 138 3204
About the Company
Polo Resources Limited is a multi-sector investment company
focused on investing in undervalued companies and projects with
strong fundamentals and attractive growth prospects. For complete
details on Polo, refer to: www.poloresources.com.
CAUTIONARY STATEMENT
The AIM Market of the London Stock Exchange Plc does not accept
responsibility for the adequacy or accuracy of this release. No
stock exchange, securities commission or other regulatory authority
has approved or disapproved the information contained herein. All
statements, other than statements of historical fact, in this news
release are forward-looking statements that involve various risks
and uncertainties, including, without limitation, statements
regarding the future plans and objectives of Polo. There can be no
assurance that such statements will prove to be accurate,
achievable or recognizable in the near term.
Actual results and future events could differ materially from
those anticipated in such statements. These and all subsequent
written and oral forward-looking statements are based on the
estimates and opinions of management on the dates they are made and
are expressly qualified in their entirety by this notice. Polo
assumes no obligation to update forward-looking statements should
circumstances or management's estimates or opinions change.
The Company's exploration and investment activities may also be
affected by a number of risks, including legal, political,
environmental, economic, financing, permitting, commodity,
exploration and development and other market risks which are normal
to the industry and referenced in greater detail in the Company's
2017 Annual Report for the period ending 30 June 2017, which may be
found on the Company's website at profile on
www.poloresources.com.
Chairman's Statement
Introduction
The period under review has seen an increased confidence in the
sectors that Polo's investments operate.
Commodity prices have been stronger and oil price has been much
more stable and reached a level which has seen a considerable
increase in both corporate and operational activity. The gold price
has also remained strong and the consensus view is this is expected
to continue in the year ahead. Those commodities that are required
for greener industries (renewables and electric vehicles) are also
undoubtedly in demand given the paradigm shift to a cleaner
environment and a move away from "ICE" vehicles towards EVs. Whilst
the focus may be on "green" there is still an undoubted requirement
for "traditional" resources.
Polo's portfolio encompasses an exposure to a selection of these
trends.
Portfolio Overview
Hibiscus Petroleum Berhad ("Hibiscus")
Hibiscus has successfully transformed from a cashflow negative
exploration company to a cashflow positive production company
through its acquisition of a 50 per cent interest in the North Sea
Anasuria Cluster of oil and gas fields. The Anasuria asset has
allowed Hibiscus to significantly grow its balance sheet, levels of
profitability and cash reserves, operational capability, market
capitalisation and institutional shareholder base. Importantly,
Hibiscus has demonstrated growth at current oil prices (reporting
six consecutive quarters of profitability) and is now positioned
for much stronger growth as oil prices recover.
Post Polo's reporting period, in December 2017, Hibiscus
announced that Petronas unconditionally consented to Hibiscus
acquiring Shell's entire 50 per cent participating interest in the
2011 North Sabah Enhanced Oil Recovery Production Sharing Contract
("PSC"). This transaction is aligned with Hibiscus Petroleum's
over-arching growth strategy. In the first instance, it provides
Hibiscus with a producing asset, located in a safe jurisdiction,
that is cashflow positive at current oil prices and also secures a
second, independent cash flow stream. Hibiscus has been able to
lock-in the purchase consideration of this proposed transaction at
a price that it considers to be affordable. There are multiple
production enhancement opportunities that have been identified
which have the potential to convert a large proven and probable
contingent (2C) resources base into a proven and probable (2P)
reserves base. The proposed transaction comes with Operatorship and
a partnership with Petronas, a reputable global player and
Malaysia's national oil corporation.
In November 2016, our investee company GCM Resources Plc ("GCM")
the developer of the integrated Phulbari Coal and power project,
located in Bangladesh, signed a Memorandum of Understanding ("MOU")
with China Gezhouba Group International Engineering Co. Ltd
(CGGCINTL) a specialist engineering company. The MOU sets out the
process to investigate the feasibility of a joint venture for the
development of mine-mouth coal fired power plants generating up to
2,000 MW at the Phulbari mine development site. CGGC, with support
by GCM's team, delivered in July this year a Technical
Pre-Feasibility Study for the 2,000MW power plant.
Blackham Resources Limited ("Blackham")
Blackham has made very significant progress achieving first gold
pour in October 2016 at its flagship Matilda Gold Project, having
taken the Project from completion of a Definitive Feasibility Study
("DFS") in February 2016. Unfortunately, during March 2017 open pit
mining operations were severely affected by above average rainfall
and in the following months gold production was impacted by lower
than planned mill grades and lower than expected underground ore
extraction. These technical problems appear to have been resolved
in the September 2017 quarter and Blackham expects a return to
cashflow positive operations.
Post the Polo reporting period, on 30 August 2017, Blackham
announced the successful results of the Expansion Preliminary
Feasibility Study ("PFS") which aims to optimise scale of
operations, targeting an annual gold production of over 200,000 ozs
and delivering improved project economics. In November 2017,
Blackham announced it had taken a major step towards completion of
refinancing with an agreed initial AUD60M funding package with
Pacific Road Capital. Extensive due diligence was carried out as
part of the funding, which provides an independent verification
that the project remains technically sound.
Celamin Holdings NL ("Celamin")
Celamin remains committed to pursuing a return of its interests
in CPSA (the Chaketma Phosphate Project operating company) and the
Chaketma Project. Post Polo's reporting period on 1 December 2017
Celamin announced a favourable arbitration decision and its local
partner TMS has been ordered to return Celamin's 51 per cent
shareholding in CPSA and pay damages and costs in excess of USD4
million. Celamin is also continuing with various legal actions in
Tunisia including criminal proceedings and debt recovery. The
Chaketma Phosphate Project is a world class asset and Celamin
believes it is best placed to manage the Project to ensure that the
development proceeds.
Weatherly International Plc ("Weatherly")
Although Weatherly experienced technical and financial setbacks
at its Tschudi open pit heap leach SX/EW copper mine during the
reporting period which resulted in copper cathode production
dropping to 14,759 tonnes (13 per cent below the 17,000 tonnes per
annum nameplate production) by the end of the September Quarter
2017 the operation was back on track. The rising copper price is
also good news for Weatherly as it will foster a return to
profitability and help it service its considerable loan with Orion
Mine Finance (Master) Fund I LP. Orion is now Weatherly's largest
shareholder and has rescheduled the loan repayment several
times.
On 12 December 2017, Weatherly announced that it has entered
into a binding agreement to purchase 100 per cent of the Kitumba
copper project in Zambia from ASX-listed Intrepid Mines Limited for
a total consideration of AUD5.75 million. The acquisition is still
subject to certain conditions precedent, however, it does fit well
with Weatherly's strategy for growth through developing and
operating profitable medium-scale base metals mines in Africa.
The Kitumba project area covers over 900 square kilometres and
involves four exploration licences and a mining lease. The
JORC-compliant measured and indicated resource is 24.9Mt at a
copper grade of 2.32 per cent containing 578,000 tonnes of copper
and the current mining reserve is 21.9Mt at a copper grade of 2.20
per cent Cu containing 492,000 tonnes of copper.
Ironstone Resources Ltd ("Ironstone")
Ironstone continues to advance its multi-faceted Clear Hills
Project in northwestern Alberta, Canada. In early 2017, Ironstone
entered into an agreement with a Canadian-based firm that has
developed and globally deployed its commercial vapour metal
deposition technology to produce high-purity and high-value metal
powders used in high-end applications. The agreement establishes
the parameters for both firms to work collaboratively in the
development of a 10,000 tonne per year carbonyl iron powder
production plant (with a vanadium co-product) in NW Alberta.
Carbonyl iron powders, in select markets, can sell for upwards of
USD10,000 per tonne.
Ironstone also determined there was excellent development of
multi-stacked porous lithium brine-bearing reefs underlying its
Clear Hills permits. Key to commercialization of lithium brines is
deploying pre-concentration technology and they have entered into
an agreement with a western-Canadian based water processing
specialist firm to co-develop the required technology to separate
the lithium from the reservoir fluids by adapting their existing
patented technology.
Polo's current portfolio includes:
Gold assets:
-- Blackham Resources Limited (5.72%)
-- Nimini Holdings Limited (90%)
Petroleum assets:
-- Hibiscus Petroleum Limited (9.22%)
-- Regalis Petroleum Limited (12.66%)
Coal and power assets:
-- GCM Resources Plc (19.84%)
-- Universal Coal Resources Pte Ltd (redeemable convertible note)
Lithium, iron and vanadium:
-- Ironstone Resources Limited (19.5%)
Phosphate asset:
-- Celamin Holdings NL (34.14%)
Copper asset:
-- Weatherly International Plc (5.2%)
Various liquid short-term investments.
Given the market conditions, the Company has amended its
investment policy, as we announced in our Annual Report for the
year ended June 2016 and which was ratified at the Company's Annual
General Meeting in January 2017. The Board believes that growth in
Asia and the Pacific will remain strong and that the Company's
strategy should be to focus more on direct and indirect investments
in this geographical location. This change in investment policy is
supported by analyses undertaken by multilateral organisations. As
an illustration of this, the Asian Development Bank states that
economic activity in Asia will continue to grow, with the region
expecting to contribute to about 60 per cent of global growth in
the next couple of years. Moving forward, the Company's strategy
will be to make direct and indirect investments in a portfolio of
businesses and assets with at least the majority of their
operations or early stage companies that intend to have at least
the majority of their operations in Asia Pacific.
Summary
We are entering the new year with a renewed confidence that the
markets in which we and our portfolio companies operate are well
placed to ride on the industry trends that are emerging. The Board
believes that this optimism will be reflected well in our
portfolio's value.
To conclude, I would like to take this opportunity to thank all
our shareholders and partners for their continued support.
Datuk Michael Tang, PJN
Executive Chairman
20 December 2017
Investment Update
Gold
Blackham Resources Limited (ASX: BLK)
-- Gold, Western Australia
-- Coal, Southwest Australia
-- Combined direct and indirect 5.72 per cent equity interest
Blackham's principal achievements during the financial year
included refurbishing and commissioning Stage 1 of the Wiluna Gold
Plant, establishing a new tailings facility; commissioning a new
power station; recruiting staff and appointing contractors; and
commencing both open pit and underground mining operations and
delivering first gold production from the Matilda Gold Project.
Mine Plan
The start-up mine plan focused on free-milling open pit
resources providing the base load feed to the Wiluna Gold Plant,
augmented by extraction of high grade open pit and shallow
underground quartz reef deposits. Continuing exploration and grade
control drilling further improved project economics and a revised
plan was announced at the end of the September 2016 Quarter:
DFS Revised Mine Plan
-------------------- --------------- ------------------
Mining Inventory(1) 8.3Mt @ 2.9g/t 9.3Mt @ 2.9g/t
for 767,000oz for 873,000oz
-------------------- --------------- ------------------
Reserves(1) 6.1Mt @ 2.5g/t 7.0Mt @ 2.5g/t
for 481,000oz for 560,000oz
-------------------- --------------- ------------------
Initial Life of 7.3 years 8.3 years
Mine
-------------------- --------------- ------------------
Average Annual 101,000ozpa 103,000ozpa
Production(2)
-------------------- --------------- ------------------
C1 Cash Costs(3) A$850/oz A$800/oz
-------------------- --------------- ------------------
ASIC Costs(4) A$1,160/oz A$1,120/oz
-------------------- --------------- ------------------
1) at A$1,600/oz
2) Average production over the first 5 years
3) C1 Cash Costs include all mining, processing and general
& administration costs over the first 5 years
4) ASIC includes C1 Cash Costs plus royalties, refining cost
& sustaining capital over the first 5 years
With gold production planned to commence in the December 2016
Quarter, the 2017 Financial Year production was forecast to be
60,000 to 70,000ozs.
Production Performance
Blackham delivered against all key mining and mineral processing
milestones culminating in the first gold pour on schedule in
October 2016. Commercial production was officially announced in
January 2017 following three months of commissioning and at this
juncture the Matilda Gold Project was on track to deliver against
plan.
Unfortunately, as series of events in the March 2017 Quarter
impacted the operation forcing Blackham to significantly revise
down its 2017 Financial Year production guidance to between 40,000
and 45,000ozs (actual 39,413ozs), i.e. a one-third reduction
against plan. Contributing factors were:
-- Well above average rainfall which severely hampered open pit operations
-- Lower than planned mill grades
-- Lower than planned underground ore extraction
Lower than expected gold production also hit the Project's
financial position with All-in-Sustaining Costs (AISC) blowing out
to AUD2,002/oz for the March 2017 Quarter. Although June 2017
Quarter AISC reduced to AUD1,758/oz with a cost reduction trend
extending beyond Polo's reporting period through the September 2017
Quarter, the ASIC is still above the AUD1,120/oz mine plan ASIC
guidance.
Dec'16 Mar'17 Jun'17 REPORTING Sept
Qtr Qtr Qtr PERIOD TOTAL '17 Qtr
----------------- -------- -------- -------- -------------- ---------
Total Milled
(t) 211,200 338,000 416,100 965,300 379,467
----------------- -------- -------- -------- -------------- ---------
Mill Feed
Grade (g/t)
Au 1.5 1.5 1.3 1.4 1.4
----------------- -------- -------- -------- -------------- ---------
Overall
Plant Recovery 88.5% 93.7% 91.7% 91.7% 91.5%
----------------- -------- -------- -------- -------------- ---------
Gold produced
(oz) 8,773 14,920 15,720 39,413 15,619
----------------- -------- -------- -------- -------------- ---------
In the September 2017 Quarter, Blackham reported that it was
expecting lower stripping ratios and mining costs for most of 2018
Financial Year:
-- Open pits are expected to be cash flow positive in the
December 2017 Quarter driven by a move in to higher grade
areas;
-- Underground mining at Golden Age is already cash flow
positive with a record production for the September 2017 Quarter of
6,302ozs (42,300t @ 4.7g/t) driven by a move from long-hole stoping
to air leg mining allowing selective mining in variable orebody
conditions. Geological and mining studies are continuing for Golden
Age which has been planned to deliver 60kt @ 6.4g/t for 12,000oz
over the 2018 Financial Year.
Resource
At the beginning of the current reporting period the Matilda
Gold Project Resource stood at 48Mt @ 3.3g/t for 5.1Moz of gold
(Measured, Indicated and Inferred). In October 2017 Blackham
announced its exploration program had expanded the total resource
to 65Mt @ 3.1g/t for 6.5Moz (27 per cent increase).
Expansion Preliminary Feasibility Study (PFS)
Post the Polo reporting period in August 2017 Blackham announced
the successful results of the Expansion PFS for the Matilda -
Wiluna Gold Operation which is supported by the 6.5Moz expanded
resource and builds in the ability to treat both oxide and sulphide
ore. The PFS demonstrates robust economics and improved economies
of scale supporting the Operation's expansion to over 200,000 oz
annual gold productions. The next stage is to complete the
Expansion Definitive Feasibility Study ("DFS") by the end of the
June 2018 Quarter and it is anticipated this will lead to
optimizing scale of operations and economic performance.
Expansion PFS highlights:
INITIAL GOLD PRODUCTION: 1.47Moz gold over initial
9 years
---------------------------- ---------------------------
OPEN PIT MINING INVENTORY: 15Mt @ 2.3g/t for 1.1Moz
---------------------------- ---------------------------
UNDERFROUND MINING 4Mt @ 4.7g/t for 608koz
INVENTORY:
---------------------------- ---------------------------
EXPANDED PROCESSING Up to 3.3Mtpa
CAPACITY:
---------------------------- ---------------------------
GOLD PRODUCTION AVERAGE: 207,000ozpa (first 6 years
after expansion)
---------------------------- ---------------------------
LOM ALL-IN-SUSTAINING A$1,058/oz of US$836/oz
COSTS:
---------------------------- ---------------------------
PROJECTED CASH FLOWS: $571M
---------------------------- ---------------------------
INITIAL CAPEX: $114M
---------------------------- ---------------------------
NPV 8%: $360M *
---------------------------- ---------------------------
IRR: 123% *
---------------------------- ---------------------------
* assumes A$1,600/oz gold price before corporate and tax
Funding
In August 2016, Blackham announced that it had raised proceeds
of AUD25 million through a placement of 25 million shares at a
price of AUD1 per share.
In February 2017, Blackham completed a capital placement of
AUD35 million from predominantly institutional investors. The funds
were used to accelerate project expansion studies.
Other funding arrangements:
Post the Polo reporting period in August 2017, Blackham
announced a funding arrangement which provides an ability to draw
up to AUD72M from the Australian Special Opportunity Fund. This
facility was designed to allow time for Blackham to choose the
optimal funding solution to manage its balance sheet and fund the
Expansion DFS.
In November 2017 Blackham announced it had taken a major step
towards completion of refinancing the Matilda - Wiluna Operation
with an agreed initial AUD60M Funding Package with Pacific Road
Capital. This funding arrangement followed an extensive due
diligence process by Pacific Road Capital which is a further
verification of the Project's technical fundamentals. Blackham is
also offering shareholders an opportunity to participate at the
Funding Package share price through a renounceable entitlement
offer of two shares for every seven shares held to potentially
raise a further AUD12.3M.
The full details of Blackham's announcements can be found at
http://blackhamresources.com.au/.
Nimini Holdings Limited
-- Gold Project, Sierra Leone
-- Equity interest: 90 per cent Polo Resources and 10 per cent Plinian Capital
Nimini Holdings Limited's ("Nimini") Komahun Gold Project (the
"Project") continues to experience difficulty in negotiating an
acceptable Mine Development Agreement ("MDA") with the Government
of Sierra Leone ('GoSL"). This situation is exasperated by the fact
that the Government and its agencies are now largely focused on the
general elections which will be held in Sierra Leone on 7 March
2018 to elect the President, Parliament and local councils.
Given the lack of progress with the MDA and impending election,
Nimini has adopted a strategy to restrict its activity and minimise
costs until the new Sierra Leone government comes to power. To this
end several significant steps have been taken including: the
termination of all staff at the end of February this year; the
termination of the Operator Agreement with Plinian Capital;
suspension of all government fees pending issuing of an acceptable
MDA; and Nimini is now represented in Sierra Leone by local
Directors appointed to the in-country subsidiaries.
The extensive database for the Project is secure and Nimini is
confident of mobilising appropriately experienced personnel when
required.
Oil and Gas
Hibiscus Petroleum Berhad (HIBI: MK)
-- Oil and Gas, United Kingdom and Australia
-- 9.22 per cent equity interest
From its establishment in 2011 Hibiscus has grown to become a
successful oil and gas exploration and production company with a
healthy balance of producing assets and exploration opportunities.
This success is largely due to its management team making the right
strategic decisions at the right time. Consider that the company
was launched during a period of very high oil prices (exceeding
USD100 per Barrel) and as a consequence their early success came in
a speculative market which appreciated acquisition of high
potential exploration assets and thrived on the news from
subsequent exploration programs.
Oil and gas exploration is an expensive undertaking and by the
end of 2014 the company found itself facing a serious oil price
slump with just one well yielding a discovery out of seven wells
drilled in offshore Norway, the Sultanate of Oman and Australia.
While the market's appetite for investment in exploration had waned
in line with the dropping oil price, Hibiscus also realised it was
a prime time to look for production assets at the right price that
would not only transform the company from a negative cashflow
exploration focus to a positive cashflow production focus but also
position it for growth as oil prices recovered.
Hibiscus' joint venture (50:50) with Ping Petroleum Limited in
the acquisition of North Sea Anasuria Cluster of oil and gas fields
from Shell and Esso subsidiaries was a game changer for the company
as can be seen from the financial performance over the past five
years. For the 2016-17 financial year, Hibiscus posted a profit
after tax of RM106.1 million (USD24 million) driven by improved
revenue and efficiencies from the Anasuria.
Production Bias Exploration Centric
----------------------- ------------------------ --------------------------------------
(RM Million) Year ended Year ended 18 months 9 months Year ended
30 June 30 June ended ended 31 March
2017 2016 30 June 31 December 2013
2015 2013
Revenue 261.3 81.7 15.6 13.3 8.5
Profit/(loss)
before
taxation 62.0 (56.3) (75.8) 10.7 (3.9)
Profit/(loss)
after taxation 106.1 (60.0) (74.2) 12.1 (4.2)
Shareholders'
equity 742.4 584.3 511.7 370.1 241.3
Total assets 1,319,6 1,269.2 551.0 388.7 370.2
Borrowings - - - - -
Basic earnings/(loss)
per share
(sen) 7.51 (5.66) (9.68) 2.63 (0.96)
Net assets
per share
(RM) 0.51 0.45 0.55 0.73 0.55
----------------------- ----------- ----------- ---------- ------------- -----------
Financial Performance for the past five years.
-----------------------------------------------------------------------------------------
As a further measure of the transformation consider that
Hibiscus' share of the acquisition cost was USD52.5 million with
USD30 million being paid by the time of deal closure (March 2016
Quarter) and the remaining $22.5 million paid from internally
generated funds and finally settled in the September 2017
Quarter.
Operational Performance
It is recognised that although the Anasuria Cluster still has
some 19 years production life remaining, it is nevertheless a
mature asset and that it will decline over time. Hibiscus has spent
the first year of joint operations focused on understanding the
asset and the scope for operational improvement. This resulted in
work to improve the availability of supporting facilities,
including the floating production storage and offloading vessel
(FPSO). Through improved maintenance scheduling the facilities
availability is planned to remain above 80 per cent which has
largely been the case.
Anasuria Quarterly Production
Units Mar*-Jun Jul-Sept Oct-Dec Jan-Mar Apr-Jun Jul
2016 2016 2016 2017 2017 16 -Jun
17
------------------------- ----------- --------- --------- --------- --------- --------- ----------
Av. daily
production
rate bbl/day 2,971 3,032 3,934 2,617 3,204 3,197
Av. daily
gas export
rate(1) boe/day 236 374 474 257 317 356
Av. daily
oil equivalent
production
rate boe/day 3,206 3,406 4,408 2,873 3,522 3,552
Total oil
sold bbl 460,000 271,576 298,909 273,419 284,963 1,128,867
Total gas
exported (sold) mmscf 172 206 262 138 173 779
Av. realised
oil price USD/bbl 40.1 45.2 41.7 52.95 50.46 -
Av. gas price USD/mmbtu 1.2(2) 1.3(2) 1.7(2) 2.1(2) 1.6(2) -
/3.1(3) /3.3(3) /4.2(3) /4.9(3) /3.9(3)
Av. OPEX per
boe USD/boe 23.1 18.4 13.0 15.1 13.98 15.1
Av. uptime/availability
of Anasuria
facilities % 88 82 98 76 84 85
------------------------- ----------- --------- --------- --------- --------- --------- ----------
Notes: (1) Conversion Prices are quoted
All figures are rate of 6,000 in United States
net to Anasuria scf/boe. Dollars.
Hibiscus. (2) For Cook Field. Bbl barrel
* Anasuria Hibiscus (3) For Guilemont Boe barrels of
took over joint-operatorship A, Teal and Teal oil equivalent
from 10 March South Fields. Mmscf million
2016. Source: Anasuria standard cubic
Two offtakes Operating Company feet
in the period Limited. Numbers Mmbtu million
March - June 2016. may be subject British thermal
to rounding adjustments. units
Prices are quoted
in United States
Dollars.
Acquisitions
In October 2016, Hibiscus Petroleum (via its wholly owned
subsidiary SEA Hibiscus) entered into a conditional sale and
purchase agreement with Shell to acquire Shell's fifty percent
interests in: the 2011 North Sabah Enhanced Oil Recovery Production
Sharing Contract ("PSC"); and the joint operating agreement between
Shell and Petronas in relation to the PSC. In May 2017, Hibiscus
Petroleum further announced that Petronas had approved the
assignment of Shell's interest in the PSC to Hibiscus. However, the
approval is subject to certain conditions which are currently under
review. Post the reporting period, Hibiscus announced in December
2017 that Petronas had now given its unconditional consent to the
assignment of Shell's interest in the PSC to Hibiscus.
The USD25 million acquisition will result in Hibiscus Petroleum
being the operator of four producing oil fields offshore Sabah, the
Labuan Crude Oil Terminal and all other equipment and assets
related to the PSC. The oil field has been producing since 1979,
has production rights up to 2040 and will deliver some 18,000
barrels/day.
Exploration Assets - Australia
Given the expected capital requirements for low risk identified
projects within the Anasuria Cluster and potentially further
capital requirements for execution of projects in North Sabah
(subject to Malaysian regulatory approvals), Hibiscus suggests it
may defer investment in its offshore Australian assets for a
minimum of three years in favour of more attractive investment
options within their portfolio of opportunities.
Investment Update
In July 2016, Polo's subsidiary, Polo Investments Limited
("PIL"), increased its interest in Hibiscus to 10.20 per cent
(since diluted to 9.22 per cent) via the subscription of 48.9
million new shares at an issue price of MYR0.18 per share. This
increase in shareholding makes PIL the second largest shareholder
of Hibiscus after the Hibiscus management team.
Regalis Petroleum Limited
-- Oil, Republic of Chad
-- 12.66 per cent equity interest
Polo's interest in the private and independent oil and gas
company, Regalis Petroleum Limited ("Regalis") increased to 13.67
per cent following an in-specie distribution by Polo's 42 per cent
owned associate, Signet Petroleum Nigeria Limited and transfers
from other Signet shareholders.
Regalis has interests in three highly prospective onshore
exploration blocks in the Republic of Chad. Regalis completed a
5,349 kilometres airborne gravity/magnetic survey over Blocks DOA
and WD2-2008 which are on trend with existing and recent
Glencore/Caracal discoveries.
However, Polo has recorded an impairment charge of USD14.7
million on the carrying value of its investment in Regalis as no
further progress has been made by Regalis in pursuing its
exploration strategy.
Coal
GCM Resources Plc (AIM: GCM)
-- Coal and Power Project, Bangladesh
-- 19.84 per cent equity interest
Polo remains a strong supporter of AIM traded GCM Resources Plc
("GCM") which over the reporting period has been working to refine
the implementation strategy for the Phulbari Coal and Power Project
("the Project") based on a world class deposit of 572Mt (JORC 2004
compliant) thermal and metallurgical coal in North-West
Bangladesh.
In November 2016, GCM signed an MOU with the world-renowned
China Gezhouba Group International Engineering Co Limited ("CGGC")
which includes investment and operation in power and coal mining in
its diverse project portfolio. The initial focus under the MOU is
mine-mouth power generation and CGGC, with support by GCM's team,
delivered in July this year a Technical Pre-Feasibility Study for a
2,000MW power plant located at the mine site. This power plant
capitalises on synergies with mine development and operation and
avoids costly coal transport and handling requirements.
While GCM has been waiting for the Bangladesh Government's
approval to develop the Project, there have been step-jump
improvements in coal-fired power plant efficiency which also add
enormous value to the Project and increase benefits for Bangladesh.
Utilising this latest energy efficient power plant technology
combined with the low cost, high production open pit coal mine, the
Project is on track to be a reliable and competitively priced power
producer supplying up to 6,000MW to the national grid for over 30
years.
The Bangladesh Government continues to prioritise power
generation expansion as it works towards taking the country to
middle-income status. It now has a long-term aim of having 57,000MW
installed by 2041 with 20,000MW being coal-fired. In this context,
the Project at full production and power generation could deliver
some 30 per cent of the Government's coal-fired power generation
target.
GCM and CGGC are in discussion to agree a framework of
cooperation for moving forward with the power plant(s) and
presenting the Project as a major power producer that will meet
Bangladesh Government expectations.
Funding arrangements:
Post the reporting period, GCM announced in November 2017 that
it had successfully raised GBP2 million (GBP1.8 million net of
costs) at 34.4p per New Ordinary Share in an institutionally
underwritten Offer. This resulted in a total of 5,813,953 New
Ordinary Shares being allotted to satisfy the Offer which means the
Company will have 88,175,650 ordinary shares of 10p each in issue.
No Ordinary Shares are held in treasury.
Universal Coal Resources Pte Ltd
-- Coal Project, Indonesia
-- Redeemable convertible note
In May 2016, Polo's subsidiary, PIL, entered into a secured
S$5,000,000 nominal value 15 per cent redeemable convertible note
("Note") with Universal Coal Resources Pte Ltd ("Universal").
Universal is incorporated in Singapore and itself had entered
into a conditional agreement to acquire an indirect 75 per cent
interest in PT Transcoal Minergy Coal Project ("TCM"), a company
incorporated in Indonesia, from a Pan Asia Corporation Ltd. (ASX:
PZC) subsidiary.
Universal was targeting a Singapore Stock Exchange Catalist
Board listing and the Note entitles Polo to convert the principal
outstanding plus any accrued interest into not less than 20 per
cent of the share capital of Universal as enlarged by such a
conversion at any time up to 18 months from draw-down, or earlier
upon the receipt of approval in principle to list. The Note is
repayable 18 months from draw-down unless previously converted.
Pursuant to the terms of the Note, a key action for Universal
was to obtain approval from Pan Asia's shareholders for the
disposal of TCM to Universal within three months from the date of
the Note. As at the date hereof, this approval has not been
obtained and a default of the terms of the Note remains. PIL has
served notice on Universal and the parties who provided security,
namely PZC and Mr. Boelio Muliadi, and is currently in discussions
with them on a without prejudice basis for an amicable resolution,
in parallel with PZC's endeavours to dispose TCM to an
investor.
TCM Coal Project:
TCM is the owner of a Production Operation Mining Business
Licence for a mining concession in South Kalimantan Province,
Indonesia. Their focus is the development of a two million tonnes
per annum underground mine delivering a high quality Bituminous
Coal saleable product of some 6,200 kcal/kg specific energy (GAR -
Gross as Received). The current JORC Resource of 129 Mt (measured,
indicated and inferred) has been derived from the southern area of
the concession and there is potential to upgrade and increase the
resource base through drilling the northern area. TCM's production
permit extends to April 2028. Further drilling and a full final
feasibility study are required to be completed and forestry
approval obtained prior to commencement of mine development. The
TCM Coal Project will utilise existing coal transportation
infrastructure including a 50 kilometre haul road to the river port
at Batulicin, a major coal shipping centre.
Lithium, Iron, Vanadium and Precious Metals
Ironstone Resources Limited
-- Lithium, Iron, Vanadium and Precious Metals, Canada
-- 19.5 per cent equity interest
Ironstone, headquartered in Calgary, Alberta is in advanced
development of its Clear Hills Project located in the Peace Region
of NW Alberta. Featuring a large compliant poly-metallic iron and
vanadium resource, quality infrastructure, high value commodities,
top tier partners and local and institutional support - the Clear
Hills Project stands apart from traditional iron concentrate
producers.
Ironstone's strategic plan includes a sequence of initiatives to
be undertaken to advance its Clear Hills Project through conducting
several feasibility study ("FS") stages commencing in late 2018,
which are highlighted below.
High-Value Carbonyl Iron Powder and Vanadium Production:
With the global demand for refined metal powders accelerating
for use in powder metallurgy, metal injection molding and additive
manufacturing (3D printing) applications, Ironstone has determined
that targeting this burgeoning market for specialty metal powders
offers Ironstone a near-term, low-risk, cash-flowing opportunity
with high returns on investment. This will provide Ironstone the
necessary runway to continue to develop its longer-term
high-strength steel production plans.
After contacting one of the largest and most successful metal
refining companies in the world, a sample of Ironstone's Clear
Hills poly-metallic ore was sent to their pilot plant for process
suitability analysis. The test was positive and in early 2017
Ironstone entered into an agreement with the Canadian-based firm
that has developed and globally deployed its commercial vapour
metal deposition technology to produce high-purity and high-value
metal powders used in high-end applications. The agreement
establishes the parameters for both firms to work collaboratively
in the development of a 10,000 tonne per year carbonyl iron powder
production plant (with a vanadium co-product) in NW Alberta.
Carbonyl iron powders, in select markets, can sell for upwards of
USD10,000 per tonne.
Upon Ironstone successfully closing its current capital raise
programme of up to USD5 million by end of Q4 2017, a comprehensive
feasibility study, at an estimated cost of approximately C$3
million, will be conducted during 2018 leading to a final
investment decision to build and equip a production facility in
2019 with operations to commence in the latter part of the
year.
Lithium Carbonate Production from Formation Brines:
In recognition of Alberta's potential to host significant
lithium resources within its Devonian age oil and gas aquifers,
Ironstone undertook an extensive evaluation of Alberta's formation
waters (brines) lithium potential, while concurrently seeking an
effective water-processing technology suited to the extraction of
lithium. In early 2017, Ironstone mapped the potential reservoir
development underlying its Clear Hills permits and determined that
there was excellent development of multi-stacked porous lithium
brine-bearing reefs.
In addition, Ironstone entered into an agreement with a
western-Canadian based water processing specialist firm to
co-develop the required technology to separate the lithium from the
produced reservoir fluids by adapting their existing patented
technology.
A budget of approximately C$1 million has been established to
develop and adapt the existing technology to extract lithium and
deploy the technology in a pilot test at a well production facility
in Q2 2018. Further development work on refining the lithium
extract into the final battery-grade lithium carbonate will also be
undertaken during the pilot testing period. Federal and provincial
R&D support is anticipated to underwrite up to 50 per cent of
the ongoing commercialization development expenses.
Capital Raise Programme:
Ironstone, in conjunction with Golden Gate Asset Management of
Vancouver, BC, have commenced a capital raise program targeting a
minimum of USD5 million to be raised in late 2017, followed by
sourcing up to USD30 million (debt/equity) to support the
development of a commercial carbonyl iron powder ("CIP") plant in
Clear Hills, Alberta in 2019.
It is anticipated that a new operating subsidiary of Ironstone
will be created offering up to 40 per cent equity for an investment
of a minimum of USD15 million, which is expected to be non-dilutive
to Ironstone's shareholders.
Investment Update
Polo Resources Limited interest in Ironstone is currently 19.5
per cent.
Phosphate
Celamin Holdings NL (ASX: CNL)
-- Phosphate, Tunisia
-- 34.14 per cent equity interest
Celamin remains in dispute with its joint venture partner,
Tunisian Mining Services ("TMS"), regarding ownership and control
of CPSA (operating company for the Chaketma Phosphate Project) and
is pursuing various legal processes to resolve this situation. The
matter which principally involved TMS fraudulently taking Celamin's
51 per cent shareholding in CPSA had been referred to a sole
arbitrator appointed by the International Court of Arbitration of
the International Chamber of Commerce.
Post the Polo reporting period, Celamin announced on 1 December
2017 that it had received a favourable arbitration decision and TMS
has been ordered to return Celamin's 51 per cent shareholding in
CPSA and to pay damages and costs in excess of USD4 million.
During the course of the arbitration the sole arbitrator issued
interim orders to maintain the status quo pending the arbitrator's
final decision. These orders are intended to prevent any disposal
of CPSA's shares and assets, including the Chaketma exploration
permit, and to ensure that Celamin will be informed of any CPSA
activity relating to the Chaketma permit. These interim orders
followed an Emergency Order issued for the same purpose. Celamin
has applied for exequatur of these Orders with the Court of Appeal
of Tunis and these proceedings are continuing.
In April 2017, Celamin announced that it was successful in
obtaining a conservatory seizure order from the President of the
Tribunal of First Instance of Tunisia against all shares that TMS
owns in the capital of CPSA, (being the 49 per cent of CPSA
previously held by TMS as well as the 51 per cent fraudulently
taken from Celamin by TMS), remains in place. This Seizure Order
prevents TMS from dealing with any of these shares and subject to
any application by TMS for removal of the order, will remain in
place until enforcement of the final arbitral award.
Celamin is also continuing with various legal actions in Tunisia
including the criminal proceedings and debt recovery actions as
previously announced by Celamin. The full details of the dispute
can be found at www.celaminnl.com.au.
The Chaketma Phosphate Project is based on a 130Mt Inferred
Resource @ 20.5% P(2) O(5.) Just prior to the dispute CPSA was well
funded and gearing up for additional exploration drilling to refine
the resource and a Definitive Feasibility Study.
Other Activities:
Celamin's Board continued to review new project opportunities,
including new projects in Tunisia, and potential transactions with
a view to identifying projects and/or transactions that have the
ability to add shareholder value. As a result, Celamin has secured
an exclusive option on two exploration permits in South-West
Tunisia prospective for potash and salt and has also made other
applications for base metal exploration permits.
Funding arrangements:
On 30 May 2017, Celamin announced a capital raising for a total
AUD1,050,000 through share placement with options split three ways
to raise AUD350,000 each from its major shareholders Polo and
African Lion 3, and sophisticated investor clients of Patersons
Securities Limited. The raising was completed in July 2017 and full
details can be found on the Celamin website.
Copper
Weatherly International Plc (AIM; WTI)
-- Copper, Namibia
-- 5.2 per cent equity interest
Weatherly International Plc's ("Weatherly") core asset is the
Tschudi open pit heap leach SX/EW copper mine. Production at its
Otjihase and Matchless underground mines ("Central Operations") has
been suspended from 2015 when the copper price dropped below
USD5,000/tonne. The Central Operations have potential as copper
price recovers but remain in project development status. Tschudi
open pit operation is based on:
o Resources (JORC): 49.7Mt at 0.8% Cu (0.3% Cu cut off)
o Open Pit Reserve: 22.7Mt at 0.85% Cu
o Mine life: 9 years
o Processing rate: 2.6MT/year ore
o Mining Strip Ratio: 6.3 to 1 (average over life of mine)
o Plant Design Capacity: 17,000 tonnes per annum copper
cathode
During the June 2016 Quarter the Tschudi open pit mine
encountered unexpected excessive groundwater inflows that
negatively impacted mine production and Weatherly's ability to
maintain scheduled copper production rates. This serious problem
was brought under control during the reporting period. Then in the
March 2017 Quarter Weatherly advised that cathode production had
dropped to 24 per cent below nameplate due to slower than expected
leach rates for ore stacked during the late 2016 to early 2017
period. This resulted in the financial year ending June 2017
production guidance being revised down to 14,500 to 15,000 tonnes
of copper cathode.
Tschudi Production Performance
For the full 2017 Financial Year, cathode production was 14,759
tonnes, within the revised guidance range but 13 per cent below the
17,000 tonnes per annum nameplate for Tschudi. Financial year C1
unit costs were USD5,288 per tonne, within the revised guidance
range of USD5,250 to $5,350 per tonne and the full year average
copper spot price was $5,384 per tonne.
PRODUCTION Sep-16 Dec-16 Mar-17 Jun-17 2016-17 Sep-17
Qtr Qtr Qtr Qtr TOTAL Qtr
-------------------- ------- ------- ------- ------- -------- -------
Total Ore + Waste
(kt) 5,703 5,546 5,117 6,051 22,417 6,314
-------------------- ------- ------- ------- ------- -------- -------
Ore Tonnes stacked
(kt) 670 702 563 726 2,661 666
-------------------- ------- ------- ------- ------- -------- -------
Ore Stacked grade
(%) 0.89 0.88 0.86 0.99 0.91 0.78
-------------------- ------- ------- ------- ------- -------- -------
Copper Cathode
(t) 3,641 4,496 3,236 3,386 14,759 4,105
-------------------- ------- ------- ------- ------- -------- -------
C1 Cost (US$/t) 5,073 4,222 5,907 6,344 5,288 5,402
-------------------- ------- ------- ------- ------- -------- -------
Av. Spot Copper
Price (US$/t) 4,775 5,278 5,838 5,668 5,384 6,351
-------------------- ------- ------- ------- ------- -------- -------
Weatherly continues to experience lower heap leach rates than
were anticipated in the Bankable Feasibility Study and continues to
compensate for this by exposing ore faster in the pit and stacking
higher volumes of copper metal in ore, which together result in a
higher C1 cost in the short to medium term. Weatherly continues to
extend the heap leach pad area to provide additional time for the
leaching of copper and has now completed the construction of four
new leach pads. Investigations continue into how leach rates can be
improved are being assisted by an independent consultant.
Meanwhile copper cathode production levels improved through the
September 2017 Quarter, leading to a reduction in C1 unit costs of
production. Nameplate production levels were re-attained by the end
of the Quarter, and are expected to be maintained going
forward.
Open pit groundwater inflows will continue to increase as pit
mining proceeds to deeper elevations, but the flow rates are being
managed adequately to ensure a reliable supply of ore for
stacking.
Financing:
While C1 net direct cash cost and copper spot price give an
indication of performance, the Weatherly balance sheet is far more
complex with the most significant issue being an inability to
service a debt of some USD90 million. This predicament is a direct
result of reduced revenues driven by: falling copper price which at
its low point (January 2016) was 30 per cent below that prevailing
during funding and construction (Project reached Commercial
Production 1(st) October 2015); and reduced copper production
driven by the recent technical problems being higher than
anticipated ground water inflows affecting open pit operations and
more recently slower than planned copper leach rates.
Post the Polo reporting period in August 2017 Weatherly
announced that debt repayments due to Orion Mine Finance (Master)
Fund I LP ("Orion") have been rescheduled and that it has certain
copper and currency hedges in place out to March 2018. Orion is
Weatherly's the largest shareholder and holds 24.6 per cent of the
stock and has rescheduled the debt several times.
On 12 December 2017, Weatherly announced that it has entered
into a binding agreement to purchase 100 per cent of the Kitumba
copper project in Zambia from ASX-listed Intrepid Mines Limited
("Intrepid").
The key terms of the transaction are up-front consideration of
AUD 4.75 million in cash upon transaction completion, plus deferred
consideration of AUD 0.5 million upon a Decision to Mine and a
further AU$ 0.5 million upon achieving Commercial Production. The
transaction is subject to certain conditions precedent including
Intrepid shareholder approval and any regulatory approvals required
in Zambia and Australia. Weatherly has obtained a waiver from Orion
Mine Finance to use part of the uncommitted USD10m loan announced
on 28 July 2017 to fund the transaction to the extent that
Weatherly is unable to fund it through operating cash flows.
The advanced Kitumba copper development project hosts a
JORC-compliant measured and indicated resource of 24.9Mt at a
copper grade of 2.32 per cent containing 578,000 tonnes of copper.
Included within this resource is a JORC-compliant reserve of 21.9Mt
at a copper grade of 2.20 per cent Cu containing 492,000 tonnes of
copper.
The Kitumba deposit is contained within a granted mining license
valid until 2029, while the wider project area also includes four
exploration licenses, with a combined current mining and
exploration tenure area covering more than 900 square
kilometres.
To date an estimated USD30 million or more has been spent on
exploration, drilling, metallurgical test work and other studies
for Kitumba, and the purchase includes a fully established
exploration camp on site. The development of the Kitumba mine is
also already environmentally permitted based on the development
plan proposed by Intrepid.
This transaction is consistent with Weatherly's stated strategy
of pursuing growth through developing and operating profitable
medium-scale base metals mines in lower-risk parts of Africa.
The Kitumba project is an excellent fit for the project
development and operational mining capabilities of Weatherly in the
Southern African region, and Weatherly is confident in its ability
to rapidly advance the project towards construction and production
in the near term.
Zambia is a well-established mining jurisdiction and is the
second-largest producer of copper in Africa. Weatherly has solid
capabilities built up while operating in adjacent Namibia for over
ten years, and members of the Board and senior management team have
extensive experience working in the Zambian mining sector. As a
result, Weatherly is well placed to work constructively and
transparently with the Zambian authorities to maximise the benefits
of the Kitumba deposit for all stakeholders.
It is encouraging that Weatherly is making progress in solving
the operational problems and that the spot copper price is over
USD6,700/tonne and predicted to continue to rise, however, the
company still maintains its position that it is unlikely to
generate sufficient surplus cash to meet all loan repayments when
due and that it will continue to work closely with Orion. More
details on the technical and financial issues can be found at:
http://weatherlyplc.com/.
Financial Review
The purpose of this review is to provide a further analysis of
the Group's consolidated 2017 results and the main factors that
affected this financial performance. The Financial Review should be
read in conjunction with the financial statements and associated
notes.
During the year, the Group recorded a loss on ordinary
activities after taxation of USD6.45 million (2016: loss of USD31.2
million). This loss was mainly attributable to a charge of USD2.48
million against the evaluation and exploration assets of its 90 per
cent owned Nimini Gold project in Sierra Leona. For the year under
review total impairment of USD0.325 million was written down
against Regalis Petroleum Limited and Verolube Inc. It should be
noted that this figure is not necessarily indicative of a weakening
financial performance as such variances are in the very nature of a
natural resource investment company whose strategic focus extends
beyond a single reporting year.
Polo reported a decrease of 21.9 per cent in its Group
administrative expenses to USD2.28 million (2016: USD2.92 million).
This is reflective of Polo's focus on prudent financial management
and use of available resources during the current difficult
economic environment, and will continue with this approach in the
current year to 30 June 2018.
Basic loss per share for the year ended 30 June 2017 was USD2.07
cents (2016: basic loss per share of USD10.64 cents).
Focus sectors for our portfolio of investments in this reporting
period centre largely on investments across the oil & gas,
gold, and coal sectors. In the 2016/17 financial year, the Board
has continued to support the on-going development of its key assets
and acquired new investments.
In July 2016, Polo Investments Limited, a wholly owned
subsidiary of Polo increased its stake in Hibiscus Petroleum
Berhad, a company listed on the Main Market of Bursa Malaysia
Securities Berhad to 10.20 per cent via the subscription of 48.9
million new shares at an issue price of MYR0.18 per share. As of 15
December 2017, the share price of Hibiscus closed at MYR0.83.
Also in July 2016, Polo has accepted a cash offer by
International Petroleum Holding B.V. to acquire its 1.95 per cent
equity interest consisting of 5.5 million ordinary shares in Equus
Petroleum plc. The offer has resulted in a net cash payment to Polo
of approximately CAD$1.37 million and a loss on disposal of
US$4,000.
In May 2017, Celamin announced an equity fund raising of up to
1,050 million ordinary fully paid shares at an issue price of
AUD0.001 with attaching three year options on a 1:2 basis
exercisable at AUD0.002 each to raise AUD1,050,000. Polo
participated in the share placement to subscribe for 350,000,000
shares and 175,000,000 options for AUD350,000. The raising was
completed in July 2017.
The Board of Polo is still sensitive to the impact of current
market sentiment towards junior exploration-stage resource
companies and of the correction in the prices of many commodities,
such as gold, copper and oil during the reporting period under
review. Whilst these factors have combined to create a difficult
operating environment across the board for junior resource
companies, Polo's strategy of developing a broad-based portfolio of
projects and investments capable of delivering positive shareholder
returns has enabled the Company to retain the financial flexibility
to optimise asset value over the medium and longer-terms.
Financial Position
The Directors have reviewed the Group's budgets for 2018, as
well as longer-term financial cash flow projections and have
considered a range of different scenarios together with their
associated risks and uncertainties, and the impact of these
scenarios on the Group's cash balances. Additionally, the Directors
have assessed the likelihood of future funding requirements. Based
on these activities, the Directors are satisfied that the Group
maintains a healthy financial position from the date of the signing
of these financial statements, enabling Polo to take a flexible
approach to the acquisition and disposal of investments.
As at 15 December 2017, the Group had a net position of cash,
receivables and short term investments of USD16.33 million (30 June
2017: USD17.23 million). Listed and unlisted investments at marked
to market value, cost and valuation amounted to USD46.81 million
(30 June 2017: USD33.22 million). The combined total of cash,
receivables, payables, listed and unlisted investments was USD59.91
million as of 15 December 2017 (30 June 2017: USD47.22 million)
which is equivalent to a Net Asset value of approximately 14.31
pence per Polo share (30 June 2017: 11.68 pence per share).
Outlook
Polo continues to investigate potential investments and will
allocate financial resources to investments on the basis of
anticipated future returns.
Although all natural resource investments remain vulnerable to
near-term market instabilities, I remain positive about the
longer-term fundamentals of the resource sector and am particularly
focused on achieving near-term returns which in turn will
strengthen our financial position. The Company will continue to
keep shareholders advised as and when developments are
confirmed.
I would like to thank all our shareholders, partners and
advisers for their continuous and unwavering support.
Datuk Michael Tang, PJN
Executive Chairman
Group Statement of Comprehensive Income
for the year ended 30 June 2017
Year ended Year ended
30 June 30 June
2017 2016
$ 000's $ 000's
(Loss)/gain on sale
of investments (4) 25
Investment income 59 900
Impairment of AFS investments (325) (15,685)
Administrative & Exploration
expenses (2,284) (2,917)
Share options expensed - (727)
Expensed exploration
costs (454) (1,275)
Impairment of exploration
and evaluation costs (2,026) (13,000)
Group operating (loss) (5,034) (32,679)
----------- -----------
Share of associates
results (1,799) (822)
Negative goodwill written-off - 1,615
Finance revenue 383 692
Other income - 37
(Loss) before taxation (6,450) (31,157)
Income tax expense - -
Retained (loss) for
the year (6,450) (31,157)
----------- -----------
Other comprehensive
income
Gain on market value
revaluation of available
for sale investments 1,713 2,289
Currency translation
differences (559) (162)
----------- -----------
Other comprehensive
income for the year
net of taxation 1,154 2,127
----------- -----------
Total comprehensive
income for the year (5,296) (29,030)
----------- -----------
Retained (loss) for
the year attributable
to:
Equity holders of the
parent (6,202) (29,723)
Non-controlling interests (248) (1,434)
----------- -----------
(6,450) (31,157)
----------- -----------
Total comprehensive
income for the year
attributable to:
Equity holders of the
parent (5,009) (27,596)
Non-controlling interests (287) (1,434)
----------- -----------
(5,296) (29,030)
----------- -----------
(Loss) per share (US
cents)
Basic (2.07) (10.64)
Diluted (2.06) (10.49)
Group Statement of Financial Position
as at 30 June 2017
30 June 2017 30 June 2016
$ 000's $ 000's $ 000's $ 000's
ASSETS
Non-current assets
Tangible assets 2,475 4,598
Interest in associates 3,084 4,883
Available for sale
investments 27,662 25,452
Trade and other
receivables 3,757 3,603
-------------- -------------
Total non-current
assets 36,978 38,536
Current assets
Trade and other
receivables 3,961 2,449
Available for sale
investments 5,501 5,167
Cash and cash equivalents 4,010 9,615
-------------- -------------
Total current assets 13,472 17,231
--------- --------
TOTAL ASSETS 50,450 55,767
LIABILITIES
Current liabilities
Trade and other
payables (3,230) (3,251)
-------------- -------------
TOTAL LIABILITIES (3,230) (3,251)
NET ASSETS 47,220 52,516
--------- --------
EQUITY
Equity contribution 306,714 306,714
Retained earnings (273,073) (267,325)
Available for sale
investment reserve (682) (2,434)
Foreign exchange
reserve 17,127 17,686
Share based payments
reserve 454 908
-------------- -------------
50,540 55,549
Non-controlling
interest (3,320) (3,033)
--------- --------
TOTAL EQUITY 47,220 52,516
--------- --------
These financial statements were approved by the
Board of Directors on 20 December 2017 and signed
on its behalf by:
Datuk Michael Tang Kian Meng Cheah
Executive Chairman Non-Executive Director
Group Statement of Cash Flows
for the year ended 30 June 2017
Year ended Year ended
30 June 30 June
2017 2016
$ 000's $ 000's
Cash flows from operating
activities
Operating (loss) (5,034) (32,679)
(Increase) in trade and
other receivables (1,512) (1,442)
Increase/(decrease) in
trade and other payables (21) 1
(Increase) in available
for sale investments (1,608) (8,771)
Foreign exchange (gain)/loss (11) (5)
Share options expensed - 727
Impairment of AFS investments 325 15,685
Loss on sale of PPE 51 -
Depreciation & impairment 2,026 13,731
----------- -----------
Net cash (outflow) from
operating activities (5,784) (12,753)
----------- -----------
Cash flows from investing
activities
Finance revenue 383 692
Other income - 37
Taxation paid - -
Loan (advanced) to third
party (154) (131)
Net cash inflow from investing
activities 229 598
----------- -----------
Cash flows from financing
activities
Issue of ordinary share - -
capital
Net cash inflow from financing - -
activities
----------- -----------
Net (decrease) in cash
and cash equivalents (5,555) (12,155)
Cash and cash equivalents
at beginning of year 9,615 21,550
Exchange gain on cash
and cash equivalents (50) 220
----------- -----------
Cash and cash equivalents
at end of year 4,010 9,615
----------- -----------
Group Statement of Changes in Equity
for the year ended 30 June 2017
Equity Available Foreign Share Retained Total Non-controlling Total
contribution for currency based earnings interest equity
sale translation payment
investment reserve reserve
reserve
Group $ 000's $ 000's $ 000's $ 000's $ 000's $ 000's $ 000's $ 000's
As at 1
July 2015 303,059 (4,723) 17,848 2,413 (239,834) 78,763 (1,715) 77,048
(Loss) for
the year - - - - (29,723) (29,723) (1,434) (31,157)
Gain on
market value
revaluation
of available
for sale
investments - 2,289 - - - 2,289 - 2,289
Currency
translation
differences - - (162) - - (162) - (162)
------------- ----------- ------------ -------- ---------- --------- ---------------- ---------
Total
comprehensive
income - 2,289 (162) - (29,723) (27,596) (1,434) (29,030)
Share based
payments - - - 727 - 727 - 727
Share options
expired - - - (2,232) 2,232 - - -
Shares issued 3,655 - - - - 3,655 - 3,655
------------- ----------- ------------ -------- ---------- --------- ---------------- ---------
Total
contributions
by and
distributions
to owners
of the Company - - - (1,505) 2,232 4,382 - 4,382
Non-controlling
interest
arising
on business
combination - - - - - - 116 116
As at 30
June 2016 306,714 (2,434) 17,686 908 (267,325) 55,549 (3,033) 52,516
------------- ----------- ------------ -------- ---------- --------- ---------------- ---------
(Loss) for
the year - - - - (6,202) (6,202) (248) (6,450)
Gain on
market value
revaluation
of available
for sale
investments - 1,752 - - - 1,752 (39) 1,713
Currency
translation
differences - - (559) - - (559) - (559)
------------- ----------- ------------ -------- ---------- --------- ---------------- ---------
Total
comprehensive
income - 1,752 (559) - (6,202) (5,009) (287) (5,296)
Share options
expired - - - (454) 454 - - -
Total
contributions
by and
distributions
to owners
of the Company - - - (454) 454 - - -
As at 30
June 2017 306,714 (682) 17,127 454 (273,073) 50,540 (3,320) 47,220
------------- ----------- ------------ -------- ---------- --------- ---------------- ---------
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR KMMZZFGDGNZM
(END) Dow Jones Newswires
December 20, 2017 09:01 ET (14:01 GMT)
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