TIDMSVE
RNS Number : 8155V
Starvest PLC
31 October 2014
Friday 31 October 2014
Starvest Plc ("Starvest" or "the Company")
Results for the year ended 30 September 2014
Chairman's statement
I am pleased to present my thirteenth annual statement to
Shareholders for the year ended 30 September 2014.
Results for the year
Following the previous tough years of 2011, 2012 and 2013, in
the last nine months, we have begun to see the signs of a change
for the better. However, this has not been as a result of an upturn
in the market generally but as a consequence of our investments in
oil and gas, for many of our portfolio companies exploring for
gold, iron ore and other such minerals have continued to find it
difficult to raise essential cash and so have seen share price
falls in what has become a harsh environment for early stage
mineral explorers.
At the balance sheet date, more than 70% of the portfolio value
was attributed to oil stocks on which we comment in the portfolio
review.
Investing policy
The Company's investing policy is reproduced below of this
report and made available on our website, www.starvest.co.uk.
Trading portfolio valuation
A detailed review of the portfolio companies follows below. Our
commentary focuses on the exploration areas in which our investee
companies are involved as well as on other investments; the
Company's interests include gold, iron ore, coal and oil and
gas.
Shareholder information
The Company's shares are traded on AIM.
Announcements made to the London Stock Exchange are sent to
those who register at the Company's website, www.starvest.co.uk
where historic reports and announcements are also available.
Annual general meeting
We will hold our annual general meeting at 11.30 am on Thursday
11 December 2014 at the City office of Grant Thornton UK LLP, our
Nominated Adviser, at 30 Finsbury Square, London EC2A 1AG, when we
look forward to meeting those Shareholders able to attend.
R Bruce Rowan
Chairman & Chief Executive
30 October 2014
Investing policy statement
About us
The Board has managed the Company as an investment company since
January 2002. Collectively, the Board has a wealth of experience
over many years of investing in small company new issues and
pre-IPO opportunities in the natural resources and mineral
exploration sectors.
Company objective
The Company is established as a source of early stage finance to
fledgling businesses, to maximise the capital value of the Company
and to generate benefits for Shareholders in the form of capital
growth and modest dividends.
Investing strategy
Natural resources: Whilst the Company has no exclusive
commitment to the natural resources sector, the Board sees this as
having considerable growth potential in the medium term.
Historically, investments were generally made immediately prior to
an initial public offering, on AIM or ISDX and in the aftermarket.
As the nature of the market has changed since 2008, it is more
likely that the future investment portfolio will include a spread
of companies that generally have moved beyond the IPO stage but
remain in the early stages of identifying a commercial resource
and/or moving towards development with the appropriate finance.
Investment size: Initial investments are for varying amounts but
usually in the range of GBP100,000 - GBP300,000. These companies
are invariably not generating cash, rather they have a constant
requirement to raise new equity in order to continue exploration
and development. Therefore, after appropriate due diligence, the
Company may provide further funding support and make later market
purchases, so that the total investment may be greater than
GBP300,000.
High risk: The business is inherently high risk and of a
cyclical nature dependent upon fluctuations in world economic
activity which impacts on the demand for minerals. However, it
offers the investor a spread of investments in an exciting sector,
which the Board believes will continue to offer the potential of
significant returns for the foreseeable future.
Lack of liquidity: The investee companies, being small, almost
invariably lack share market liquidity, even if they are quoted on
AIM, ISDX, ASX, or TSX-V. Therefore, in the early years it is
rarely possible to sell an investment at the quoted market price
with the result that extreme patience is required whilst the
investee company develops and ultimately attracts market interest.
If and when an explorer finds a large exploitable resource, it may
become the object of a third party bid, or otherwise become a much
larger entity; either way an opportunity to realise cash is
expected to follow.
Success rate: Of the 25 to 30 investments held at any one time,
it is expected that no more than five will prove to be 'winners';
from half of the remainder we may expect to see modest share price
improvements. Overall, the expectation is that in time Shareholder
returns will be acceptable if not substantial. Accordingly, the
Board is unable to give any estimate of the quantum or timing of
returns.
Profit distribution: When profits have been realised and
adequate cash is available, it is the intention of the Board to
recommend the distribution of up to half the profits realised.
Other matters: The Company currently has investments in the
following companies, which themselves are investment companies:
Equity Investors plc; Equity Resources plc and Guild Acquisitions
plc.
The Company takes no part in the active management of investee
companies, although directors of the Company are also non-executive
directors on the boards of seven such companies, with one director
being the executive chairman of an eighth.
Review of trading portfolio
Introduction
During the year to 30 September 2014, the portfolio comprised
interests in the companies commented on below.
The tough trading and fundraising conditions of the past three
years have taken a toll on some of the businesses in which Starvest
is invested to such an extent that, as at 30 September 2014, the
portfolio had been transformed with most of the value now in oil
and gas exploration ventures.
Transactions
During the year the Company sold its stake in Centamin plc, an
interest that arose from the sale in 2011 of the interest in Sheba
Exploration UK plc; otherwise there were no sales.
Additional investments were made in Alba Mineral Resources plc
in addition to which loans were advanced to Goldcrest Resources
plc. The former investee company, Woburn Energy plc, withdrew from
the market. In addition, our interest in Silvermere Energy plc was
repeatedly diluted so we no longer have an interest in the
successor company.
Trading portfolio valuation
When reporting in previous years, attention was drawn to the
continuing adverse conditions in our chosen market for early stage
mineral exploration stocks. The year to September 2014 has been no
better with a continuing steady decline in market prices.
Against this background, we continue to value our portfolio of
investments conservatively at the lower of cost or bid price or
lower directors' valuation, where we believe those facts of which
we are aware cast doubt on the market prices or where the Company's
interest is of such a size as to inhibit selling into a depressed
market. We attribute no value to those of our investments that do
not enjoy a market quote.
This cautious approach has proved to be appropriate in these
difficult times; these provisions total GBP351,000 (2013:
GBP196,000).
A detailed review of the portfolio companies follows. Whilst the
portfolio contains investments in companies that have made real
progress during the year, there are many, particularly smaller
companies, that have struggled for one or more reasons. Raising new
finance, which is essential to progress in any mineral exploration
business, has proved to be very tough; two have effectively failed
this year.
Our commentary focuses on those companies that have become our
core portfolio but also includes others which may well rebound; we
remain resolved to allow our investments time to mature; most
certainly this proved to be appropriate with the companies for
which a takeover offer was received in previous years and when we
generated substantial profits.
This year, we have seen a dramatic rise in Nordic Energy plc,
but also to our interests in the Horse Hill companies, Alba Mineral
Resources plc and Regency Mines plc. Added to this, we have a small
interest in CAP Energy plc as well as an interest in Kuwait Energy
plc. We give more detail in our investment commentary below. This
somewhat dramatic change in our fortunes has led us to change the
presentation of our investee companies in the report this year.
Whilst the net asset value has increased substantially during
the year by GBP1.68m to GBP4.41m, the loss before taxation has
decreased from GBP1.01m to GBP356k. In addition;
-- we have no debt, but a bank overdraft facility only;
-- we continue to believe that we are in a strong position to
benefit from an upturn in markets which must surely come!
-- the fundamentals have not changed: the world is becoming more
affluent with an increasing number of people expecting
refrigerators, motor cars, air conditioning, laptop computers and
all other tools of 21(st) Century living.
Financial Reporting Standards (FRS102)
To date we have prepared our financial statements under UK
Generally Accepted Accounting Standards (UK GAAP). However, with
effect from 1 October 2015 we will be required to adopt FRS 102
("New UK GAAP"). The significant impact of this change will be on
the valuation of the Company's investments. To date, we have been
able to carry all our investments at the lower of cost or current
value. However, under the new accounting standard, we will be
required to mark-to-market all our investments. Based on the
closing prices at 30 September 2014, the investments (and hence net
assets of the group) will rise by GBP2,298,507.
Company statistics
The Company considers the following statistics to be its Keys
Performance Indicators (KPIs) and is satisfied with the results
achieved in the year given the uncertain market conditions.
30 September 30 September Change
2014 2013 %
at BID values at BID values
as adjusted as adjusted
* Trading portfolio value GBP4.15m GBP2.52m 64.68%
* Company asset value net of debt GBP4.41m GBP2.73m 61.54%
* Net asset value per share 11.87p 7.44p 59.54%
* Closing share price 5.88p 5.62p 4.62%
* Share price discount to net asset value 50% 24%
* Market capitalisation GBP2.18m GBP2.09m 4.31%
These values include unrealised gains on elements of the trading
portfolio that are not reflected in the financial statements.
Since the year end, values have fluctuated; as at the close of
business on 24 October 2014, the asset value net of debt was
GBP3.61m
Review of the current market
We and our investee companies have endured yet another tough
year; extreme short termism leading to lower prices and/or greater
volatility has become the norm. It is clear that many private
investors upon whom we and our investee companies have relied have
withdrawn their support or, at best, are awaiting a recognisable
upturn in world-wide economic fortunes; this is compounded in that
few institutional investors have an appetite for small early stage
projects.
World markets continue to be volatile. For instance, in the past
two years the gold price has been as high as $1,795 per oz but has
also been as low as $1,192; at the present time it is approximately
$1,200, down $100 from a year ago. Only those with a sound business
plan and cost control will succeed in such volatile markets.
Then there is iron ore which is in plentiful supply but with
Australia the dominant exporter. Prices have fallen from $130/t to
as low as $79/t.
However, demand for raw materials continues to fall. Although
there may be timing issues, we expect demand to recover to be
followed by prices. Meanwhile, opportunities for junior explorers
to realise value and generate cash are few.
In spite of all the gloom and doom, the strengthening of the US$
has been and will be a factor in determining world commodity
prices.
Patience is the key as we continue to await a recovery.
Interests in Gold exploration
We have endured another tough year! The Company has investments
in six gold explorers. With one exception only, the closing share
prices have declined during the past year by as much as 80%. During
this time, the gold price has mostly been approximately $1,300 per
oz but has recently traded nearer to $1,200 and we have probably
not yet seen the bottom of the cycle.
Our interests are in the following six companies:
Ariana Resources plc
www.arianaresources.com
Comment: Despite the continuing gold price fluctuations, Ariana
offers interesting potential once planned cash flow materialises
from its Red Rabbit operations as is expected during the fourth
quarter 2014. Importantly, the cash generated will enable Ariana to
pursue its wider interests.
Against this background, surely a share price re-rating is due,
if not overdue!
What they are doing:
-- With earn-in contributions from Turkish construction company
Proccea towards its eventual 50% stake on production start-up,
Ariana's interest in Red Rabbit, where it has a resource of 450,000
oz Au, has been reduced. However, production is expected to be at
the rate of approximately 21,000 oz Au per annum for the first five
years with a mine life of eight years. The capital required having
been raised, an estimated cash cost of up to $611 with a payback of
2.4 years is expected.
-- In addition to Red Rabbit, Ariana has a JORC (Joint Ore
Reserves Committee) resource of 1,162,000 oz Au in the Artvin
province in north-east Turkey. This project is now being advanced
through a Joint Venture agreement with Eldorado Gold Corporation
(TSX:ELD, NYSE: EGO); Ariana has a 49% interest in the project.
-- Ariana also has a 3.7% interest in Tigris Resources with
exploration interests in the south-east of Turkey.
Goldcrest Resources plc
www.goldcrestresourcesplc.com
Goldcrest has had a challenging year. A year ago, all the
indications were that Goldcrest was expecting to be admitted to AIM
by the end of 2013 and to raise sufficient cash to commence
exploration at its two properties in north-east Ghana over which it
held purchase options. We continue to await a news announcement
with a full explanation.
The Company website indicates that it is intending to take
advantage of its early-mover position to explore a highly
prospective portfolio of gold projects covering over 700km(2) on
the under-explored Bole-Nangodi gold belt of Ghana, Africa's 2nd
largest gold producer. Goldcrest's aim is to build a focused gold
exploration company based around its two existing projects, Zamsa
and Fumbisi.
Greatland Gold plc
www.greatlandgold.com
Comment: In common with many other such companies, the share
price continues to be at little more than 1/8(th) of the AIM
admission price. Some progress towards realising value would
doubtless help a re-rating.
Background information: Greatland has been conducting early
stage exploration for gold since 2006 having been admitted to AIM
that year. Having made progress on two properties, Warrentinna and
Lisle, Greatland has entered into farm-in agreements with larger
entities which will earn an increasing percentage share of the
projects in exchange for expenditure incurred.
Recent developments:
-- Several new targets identified at its Western Australian
projects including an exciting new 'Nova' style nickel sulphide
licence;
-- Ernest Giles airborne magnetics outlines multiple additional
gold targets;Work on the Firetower project, the subject of a
farm-in agreement with Unity Mining, continues apace; Following a
review of licences, reductions have been made to the licence areas
at Bromus, and Warrentinna. The Lackman Rock licence has been
disposed of.
-- Robust nickel sulphide target defined at Bromus in southern
Western Australia, a project covering approximately 112 square
kilometres where a review of detailed airborne geophysics has
defined a 4.5km long nickel sulphide prospective ultramafic unit in
the central parts of the project area with coherent elevated
surface geochemistry to 2,690ppm Ni. Recent field work has
confirmed flow textured ultramafic lithologies are present and no
previous exploration activities for nickel sulphides are apparent
despite proximity to other deposits. This represents a sizeable
nickel sulphide target at surface which can be explored with common
geochemical, electromagnetic and drilling techniques.
Future plans:
-- Drilling at Ernest Giles scheduled for Q4;
-- A ground EM survey has been outlined for Bromus which is
scheduled to be carried out during Q4.
KEFI Minerals plc
www.kefi-minerals.com
Comment: KEFI has all the appearance of a company on the move.
The share price is beginning to respond to recent news, especially
from Tula Kapi in Ethiopia.
Background information: In Saudi Arabia it has a 40% interest
with a local construction company, ARTAR, in a JV partnership which
has enabled KEFI to gain accelerated attention from the notoriously
slow Saudi licensing authorities in granting exploration licences;
30 have been applied for of which four have been granted. A
resource of 495,000 oz Au has been confirmed.
Meanwhile, KEFI seized the opportunity to acquire the Tulu Kapi
project in Ethiopia formerly held by Nyota Minerals Limited. This
100%-owned project has recently announced a reserve of 1.0m oz Au
and a JORC compliant reserve totalling 1.9m oz Au. The mining
licence has been re-activated.
Future plans: Plans for a mine at Tula Kapi are taking shape to
include the assembly of a bank syndicate and agreement of plans for
project finance for as much as $130m with a view to commencement of
mine construction in early 2015. In Saudi Arabia, application for a
mining licence at Jibal Qutman is to be made.
Minera IRL Limited
www.minera-irl.com
Minera's activities are now focused on the flagship Ollachea
gold project, the company having announced the sale of its interest
in the Argentinian Don Nicholas for $11.5m.
Minera, listed on the AIM, Lima and Toronto TSX markets, now
focuses its activities entirely on Peru where it operates the
100%-owned Corihuarmi gold mine, and is developing the Ollachea
underground mine while also exploring a number of other gold
prospects. Expected lower production, grades and revenues from
Corihuarmi have recently impacted on Minera's significant financing
requirement for the Ollachea development. The total capital cost of
Ollachea is estimated at $220m, but the scheduled production over
an initial mine life of nine years is 930,000 oz leading to an
operating cost of $507 per oz. Minera has an offer of finance from
Macquarie Bank for $70m towards construction of the mine and
discussions with other providers continue.
Red Rock Resources plc
www.rrrplc.com
Background information: Red Rock was launched on to AIM in
mid-July 2005 by Regency Mines, see below, with a portfolio of
exploration licences of properties in Western Australia.
What they are doing:
Red Rock is an early stage exploration company with a diverse
range of projects in Colombia, Greenland, Kenya and Ivory Coast, as
well as interests in Australia. These include:
-- a 50% interest in a producing gold mine in Colombia, although
this is in the process of being sold;
-- a direct interest of 15% in tenements in Kenya prospective
for gold, with the prospect of a further 45% on completion of a
bankable feasibility study, plus a 33% interest in the holder of
the remaining interest; a JORC estimate shows a 1.193m oz
resource;
-- newly acquired during 2014, an interest in tenements in the
Ivory Coast prospective for gold.
In addition to its interests in gold, Red Rock has other
interests as follows:
-- a 60% interest in an iron ore project in Greenland with a
JORC resource; an offer for a partial sale has been received but
did not complete;
-- an interest Jupiter Mines Limited which has a major interest
in a South African manganese producer as well as other assets in
Western Australia; www.jupitermines.com
-- an interest in ASX quoted Resource Star Limited which, whilst
retaining its mineral exploration interests in Australia and
Malawi, has announced an option to acquire an Australian based
cloud services provider, www.resourcestar.com.au
-- a small interest in Regency Mines plc, see below.
Interests in Iron Ore
Beowulf Mining plc
www.beowulfmining.com
Beowulf is the developer of natural resources projects in
Sweden, and is dual-listed on the AIM and the Stockholm AktieTorget
markets. During the past year, Beowulf has been progressing its
major fully-owned Kallak iron ore project whilst also undertaking
exploration drilling on its Ballek copper-gold project in a joint
venture partnership with Australian Energy Ventures.
The Kallak North and South deposits were designated as an area
of National Interest by the Swedish Geological Society. This was
followed by an application for an Economic Concession mining
licence for Kallak North still under review. Meanwhile, an
exploration permit for Agasjiegge2, adjacent to Kallak, has been
granted.
The latest assay results obtained from the current year's
drilling campaign have returned the highest grades over the longest
intersections seen since Beowulf started exploration on the Kallak
ore-body.
Beowulf's determination to achieve a full JORC assessment of its
Kallak resource by this year-end with the aim of establishing its
options for mine development, has advanced against a background of
weakening world iron ore prices, the market's unease caused by the
collapse of the larger Swedish peer group Northland Resources, its
own drilling cost budget overruns and of Sami reindeer herder and
activist protests delaying licensing applications.
Despite these frustrations, Beowulf continues to enjoy vital
local and governmental support in its aim to create new employment
opportunities and economic activity for Northern Sweden, as well as
being secure in the knowledge that the superior quality of its
resource and its proximity to its eventual European steel-making
clientele, must remain strongly to its advantage. Sweden is the
largest iron ore producer in the EU with over 26 million tonnes
produced in 2012 but Kallak's resource potential has been estimated
at more than ten times this level, and with a likely 30 years of
production.
Meanwhile Beowulf has an attractive range of other assets
including the Grundtrask gold project, the Majves iron oxide copper
gold (IOCG) project and the Munka licence area in northern Sweden,
which covers approximately 800 hectares and hosts Sweden's largest
drill-confirmed deposit of molybdenum.
International Mining & Infrastructure Corporation plc
www.imicplc.com
The African continent is known to be rich in iron ore resources
with the largest untapped iron ore bodies found in West and Central
Africa. Of three major iron ore clusters, one includes Cameroon,
Gabon and the Republic of Congo. It is in Cameroon that IMIC has
its interest having successfully bid GBP120 million for Afferro
Mining with its Nkout and Ntem projects being the most advanced.
This acquisition represents a significant multiple of IMIC's own
capitalisation and met with initial scepticism in the market.
The Nkout resource is seen to be a world class asset with 2.5
billion tonnes of indicated and inferred resource with a high grade
product of up to 70% Fe, while Cameroon is seen as one of the West
African countries with a more stable environment for
development.
IMIC'ssuccess marks a significant extension of its original
objectives which were focused on providing infrastructure solutions
for West African iron ore development projects.
Comment: IMIC enjoys support from its strategic partner, the
privately held African and Iron Ore Group (AIOG), as well as from
Chinese interests in assuring access to supply sources for its
future iron ore requirements. With its Cameroon mining and
infrastructure project and with first production planned for three
years hence now added to its Guinea infrastructure work, IMIC has
become a major player in West Africa.
Interests in Oil and Gas
What a change has come about in one year! It was two years ago
that we became one of the founding shareholders in Nordic Energy
plc which has since become a major constituent in the Company
portfolio. Our interests in the sector comprise stakes in the
following five companies:
Alba Mineral Resources plc
www.albamineralresources.com
Alba is a UK-based exploration company with an overall strategy
to develop a portfolio of well-researched, promising and
prospective exploration interests but it has recently changed its
focus having taken a 5% stake in Horse Hill Developments Limited, a
company with a 65% interest in drilling for oil and gas in Surrey
at Horse Hill, just to the north of Gatwick Airport
www.horsehilldev.co.uk.
Horse Hill Developments has received full planning approvals and
landowner agreements to construct an exploratory well site, to
include plant, buildings and equipment, for the drilling of one
borehole and the subsequent short-term conventional testing for
hydrocarbons.
Drilling is currently being carried out with the first of three
expected signs of oil having been found.
Otherwise, Alba has projects prospective for:
-- uranium in Mauretania;
-- gold, nickel and base metals in western Ireland; work on its
JV agreement with Teck Resources has been financed by Teck towards
its ultimate 75% interest by mid-2015.
CAP Energy plc
www.capenergy.co.uk
CAP Energy plc is an independent upstream oil and gas company
focused on the exploration, production, and development of
conventional hydrocarbons in sub-Saharan Africa.
-- The company has 30% interests in Blocks 1 and Block 5B
offshore Guinea-Bissau and a 44.1% interest in Block Djiffere
offshore Senegal;
-- The company's strategy is to acquire under-explored, but
highly prospective, exploration acreage in the sub-Saharan
region;
-- During the 6 months to June 2014, CAP Energy has invested
over $3 million (GBP1.9 million) in exploration;
-- 3700 Km 2D survey of Senegal Block Djiffere were completed
with the interpretation due H2 2014;
-- Adjacent blocks operated by Cairn Energy currently being
drilled: first results due imminently;
-- Guinea Bissau 2D survey with Virtual Drilling analysis
reveals significant leads in Block 5B;
-- 3D survey of Guinea Bissau Block 5B: preparations being finalised;
-- A move to AIM is planned.
Kuwait Energy plc
www.kec.com
The Company's interest in Kuwait Energy arises from it having
been a major founding shareholder in Concorde Oil and Gas plc in
2006, which was subsequently taken over by Kuwait Energy. After
much delay, Kuwait Energy has announced an intention of seeking a
listing on the London Stock Exchange which, we are advised, may
come as soon as fourth quarter 2014.
Kuwait Energy operates in the Middle East and North Africa
(MENA) region where it has significant participation interests
ranging from 15% to 100% across its 55 exploration, development and
producing leases, providing a balance of risk diversification with
significant upside exploration potential. Kuwait Energy currently
operates 30 of these 55 leases.
Kuwait Energy recently announced a 12.6% year on year revenue
increase.
Until Kuwait Energy obtains a quotation, the cost remains fully
provided for and so is carried in the Company's books at Zero.
Nordic Energy plc
www.nordicenergyplc.com
Comment: A year ago, we wrote: "The Directors of the Company all
have significant experience in the oil and gas sector, specifically
in the Nordic region and believe that significant opportunities
exist and that their expertise and extensive contacts will assist
them in the identification, evaluation and funding of appropriate
investment opportunities." And so it has proved to be if the share
price is anything to go by!
Nordic was formed in 2012 and admitted to trading on ISDX in
November of that year; Starvest contributed core funding for an
initial 42% stake.
What they are doing:
Nordic isfocussed on oil and gas opportunities in Denmark,
Norway, and the North Sea sectors of the Netherlands and the UK
where it holds licence 1/13 in the Danish sector, the largest
exploration and production licence in the Danish North Sea,
covering an area of 3,600 sq. km; the licence is located
approximately 50 km from the edge of the Central Graben, where
existing production and multiple discoveries are located, and 100
km from the Siri Area which has a number of tertiary fields.
A CPR which was delivered in June 2014 identified multiple
drilling targets to be followed by farm-out discussions with major
players.
Future plans: Nordic plans to apply for new licences, is in the
process of strengthening its Board and technical team as well as
making a move to AIM which is in prospect for Q4 2014.
Regency Mines plc
www.regency-mines.com
Regency has varied interests in mineral exploration ventures but
we include a comment here in view of its stakes in the following
oil and gas exploration ventures:
-- A direct stake in the Horse Hill oil and gas project;
www.horsehilldev.co.uk, see the comment under Alba above;
-- An indirect stake in Horse Hill by virtue of its interest in
Alba Mineral Resources plc, see above;
-- A newly acquired 25% interest in a West Virginia shallow oil
project located in Ritchie WV, with drilling due to commence Q4
2014.
Background information: Regency came to AIM in 2005 with a
portfolio of exploration properties in Australia since when it
transferred some to Red Rock Resources plc, see above, and
continued to deal with others as well as take stakes in other
mineral exploration ventures, hence these oil ventures. We provide
further comment on Regency in the other investments section
below.
Interests in Coal Mining and Power Generation
Oracle Coalfields plc
www.oraclecoalfields.com
Background information: Six years ago the Company was attracted
by the exciting opportunity of entering a fledgling market seeking
to develop a newly discovered major coal resource and which offered
the potential of resolving a critical shortage of indigenous energy
that was seriously restricting the economic development of the host
country, Pakistan. This led to the creation of, and our investment
in Oracle Coalfields. However Pakistan's inherent political and
economic risks tended to undermine investor confidence in
supporting the longer-term major development needs of the project
which were having to be met by periodic recourse to the equity
market.
Meanwhile, Management's determination to realise its Block VI
1.4 billion tonne Thar Coalfields lignite mine project had been
noticed and appreciated by the Chinese who were embarking on a
major investment exercise in wide areas of Pakistan's national
infrastructure. The 4.2 million tonnes per annum coal mine project
was soon enhanced by adding a planned integrated 600MW power plant
adjacent to the mine, resulting in a likely total realisation cost
of some US$1.3 billion: Engineering Procurement and Construction
(EPC) Framework Agreements have been signed with SEPCO, a leading
Chinese power and construction group, for the combined projects.
SEPCO has proposed a financing structure to potentially securitise
up to 85% of these contracts which would be financed by State-owned
Sinosure, the China Export & Credit Insurance Corporation, and
certain Chinese banks.
Comment: While the Chinese involvement has materially de-risked
the project, this has undoubtedly also ensured and accelerated its
realisation, a fact well recognised by the Pakistani authorities
who have been facing increasing unrest among the population over
the lengthy disruptions caused by regular electricity power cuts.
Oracle's local standing has meanwhile reached levels far beyond
those normally attributed to a junior AIM stock.
Future plans: The path to project completion remains long and
complex with the initial production not expected before 2017.
Other Investments
The first two companies in this section are best described as
'diversified mineral exploration and development specialists'.
Regency Mines plc
www.regency-mines.com
"We add value to our assets by joint venture, acquisition and
disposal of mineral resource interests in addition to being an
active investor in the mineral resources corporate market.", a
quote from the Regency website.
Comment: The significance of the Mambare nickel project in Papua
New Guinea with the associated technological breakthrough by Direct
Nickel should not be overlooked. But in the short term, the
striking of oil at Horse Hill (www.horsehilldev.co.uk) is expected
to provide some immediate relief to the share price which has
suffered over the past year so that Regency has had no option but
to raise the cash required, at very low prices, to pursue its
operations. We hope that Regency has turned the corner!
Regency has a variety of interests including:
-- 10.29% of Red Rock Resources plc: www.rrrplc.com, see Gold
Exploration above, which it floated on AIM in 2005;
-- Having put its Fraser Range tenements in Western Australia
into an Australian listed company, RAM Resources Limited,
(ASX:RMR), Regency now holds 7.28%; in addition Regency has a 13.5%
carried interest in the Fraser West project as a whole:
www.ramresources.co.au;
-- 6.78% interest in Direct Nickel Limited, an Australian
developer of a game changing nickel processing technology,
www.directnickel.com;
-- 9.39% interest in Alba Mineral Resources plc, see Oil &
Gas above: www.albamineralresources.com;
-- with the support of the Sudanese government, a 51% interest
in IMRAS exploring for agro-minerals in Sudan;
-- 5% interest in Horse Hill Developments Limited:
www.horsehilldev.co.uk, more fully described in the Oil and Gas
section of this report;
-- 50% of Oro Nickel Vanuatu, which itself holds the Mambare
property in Papua New Guinea with a JORC resource of 162.6 mt
nickel grading 0.94% with 1.53 mt of contained nickel plus cobalt,
from 3% only of the tenement; there is also potential for base
metals, gold and geothermal resources. Work on the project was
first begun in 1960 since when Anaconda Nickel Inc held the licence
until acquired by Regency in 2006. The potential is massive given
that only 3% of the target plateau has been drill tested to date;
it could be the world's largest nickel laterite deposit.
Sunrise Resources plc
www.sunriseresourcesplc.com
Background information: Sunrise was admitted to AIM in 2005
initially with a portfolio of diamond exploration assets from
Tertiary Minerals plc. Tertiary remains a major shareholder.
The company's strategy is to acquire, explore and develop
mineral projects in stable, democratic and mining friendly
jurisdictions - targeting advanced projects which have the
potential to generate a sustaining cash flow as well as near-drill
stage projects where there is potential for significant mineral
discovery. The barite project and the diamond project are
respectively examples of this two-pronged strategy with a focus on
countries that have low levels of corruption and political
risk.
The company's objective is to develop profitable mining
operations to sustain the Company's wider exploration efforts and
create value for shareholders through the discovery of world-class
deposits.
Sunrise is exploring for:
-- diamonds in Western Australia;
-- barites in South West Ireland; there is no major mine supplier outside of China;
-- gold in Western Australia where it has two projects, and has
an active project programme to generate new exploration projects in
Australia and Nevada, USA, where it has recently staked claims over
the Strike Copper Project, the County Line Diatomite Project and
the Garfield Gold-Silver-Copper Project and has now acquired an
interest in the Bay State Silver Project.
Through the cost sharing arrangement with Tertiary, Sunrise has
the services of their five full time employees who also oversee a
range of carefully selected and experienced consultants and
contractors as and when work requires.
Guild Acquisitions plc
Guild has a mixture of assets including stakes in Starvest
investee companies Goldcrest Resources plc and Equity Resources
plc. Guild does not maintain a website. ISDX ticker: GACQ
Marechale Capital plc
www.marechalecapital.com
Unlike the Company's other investments, Marechale is not
involved in the mineral exploration business but an interest was
acquired some years ago when it was an adviser to companies quoted
on what became PLUS Markets and more recently, ISDX. Today it
describes itself as an investment banking and corporate finance
business, using its established relationships and sector
specialisation to raise capital and refinance high growth companies
and funds in the retail, leisure, renewable energy and
infrastructure sectors.
The Company also holds investments in the following companies to
which little value is attributed: Agricola Resources plc; Alpha
Universal Management plc; Carpathian Resources Limited; Equity
Investors plc; Equity Resources plc; Fundy Minerals Limited;
Gippsland Limited; Goliath Resources Inc.; Kincora Copper Limited;
Treslow Limited. Equity Resources plc, a small investment company,
holds investments in Regency Mines plc and Red Rock Resources plc,
see above.
Profit and loss account
for the year ended 30 September 2014
Year ended Year ended
30 September 30 September
2014 2013
GBP GBP
Turnover 262,940 -
Cost of sales (194,801) -
------------------------------------------- ------------- -------------
Gross profit 68,139 -
Administrative expenses (206,837) (206,702)
Amounts written off trade investments (220,101) (802,394)
------------------------------------------- ------------- -------------
Operating loss (358,799) (1,009,096)
Interest receivable 2,475 1,835
Loss on ordinary activities before
taxation (356,324) (1,007,261)
Tax on loss on ordinary activities - 127
------------------------------------------- ------------- -------------
Loss on ordinary activities after taxation (356,324) (1,007,134)
------------------------------------------- ------------- -------------
Loss per share - basic and diluted (0.96) pence (2.7) pence
------------------------------------------- ------------- -------------
There are no recognised gains and losses in either year other
than the result for the year.
All operations are continuing.
Balance sheet
As at 30 September 2014
30 September 30 September
2014 2013
GBP GBP
--------------------------------------- ------------ ------------
Current assets
Debtors 100,184 37,200
Trade investments 1,855,061 2,258,662
Cash at bank and in hand 239,540 257,556
--------------------------------------- ------------ ------------
2,194,785 2,553,418
Creditors - amounts falling due within
one year (44,350) (46,659)
--------------------------------------- ------------ ------------
Net current assets 2,150,435 2,506,759
--------------------------------------- ------------ ------------
Share capital and reserves
Called-up share capital 394,173 394,173
Share premium account 2,118,396 2,118,396
Profit and loss account (362,134) (5,810)
--------------------------------------- ------------ ------------
Equity shareholders' funds 2,150,435 2,506,759
--------------------------------------- ------------ ------------
Cash flow statement
for the year ended 30 September 2014
Year ended Year ended
30 September 30 September
2014 2013
GBP GBP
------------------------------------------- ------------- -------------
Net cash outflow from operating activities (20,491) (227,360)
Returns on investment and servicing
of finance:
Interest received 2,475 1,835
2,475 1,835
------------------------------------------- ------------- -------------
Taxation recovered/(paid) - 284,045
------------------------------------------- ------------- -------------
(Decrease)/increase in cash in the
year (18,016) 58,520
------------------------------------------- ------------- -------------
Loss per share
The basic loss per share is derived by dividing the loss for the
year attributable to ordinary shareholders by the weighted average
number of shares in issue.
Year ended Year ended
30 September 30 September
2014 2013
GBP GBP
------------------------------------ ------------- -------------
Loss for the year (356,324) (1,007,134)
------------------------------------ ------------- -------------
Weighted average number of Ordinary
shares of GBP0.01 in issue 37,117,259 37,117,259
Loss per share - basic and diluted (0.96) pence (2.7) pence
------------------------------------ ------------- -------------
The weighted average number of shares in issue excludes
outstanding options exercisable at 15 pence per share as they are
out of the money.
In view of the loss for the year, the options have no dilutive
effect.
The financial information set out above does not constitute
statutory accounts as defined in the Companies Act 2006.
The balance sheet at 30 September 2014, the profit and loss
account and the cash flow statement for the year then ended have
been extracted from the Company's statutory financial statements
upon which the auditor's opinion is unqualified and does not
include any statement under Section 498 of the Companies Act 2006.
These statements were approved and signed on 30 October 2014.
Copies of the report and financial statements will be posted to
Shareholders on 13 November 2014 and will be available for a period
of one month thereafter from the Company Secretary at the following
address: 67 Park Road, Woking, Surrey GU22 7DH or by email at
emali@starvest.co.uk
Alternatively, the report may be downloaded from the Company's
website, www.starvest.co.uk
Enquiries to:
Bruce Rowan, Chairman 020 7486 3997 or John Watkins, Finance
Director 07768 512404; john@starvest.co.uk
Colin Aaronson or Ed Thomas - Grant Thornton UK LLP 020 7383
5100.
END
This information is provided by RNS
The company news service from the London Stock Exchange
END
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