TIDMSTG
RNS Number : 1440A
Stellar Resources PLC
24 September 2015
24 September 2015
Stellar Resources plc
("Stellar" or the "Company")
Interim Results for the six months ended 30 June 2015
Stellar Resources plc announces its interim results for the six
months ended 30 June 2015.
Overview
Stellar Resources Plc has a strong balance sheet with no debt
and current assets, including cash, as at 30 June 2015 amounting to
GBP1,370,000.
The Company recently announced the renewal of the Crown Estate
("Crown") Mines Royal Exploration Option ("Option") over the
Dolgellau Gold-Belt for a period of six years to Gold Mines of
Wales (Operations) Limited ("GMOW"). Previous extensions of the
Option have only been granted for a period of one year, and the
Option will be subject to review by the Crown of GMOW's progress
and activities every two years.
Stellar Resources owns 49% of Gold Mines of Wales Limited, which
in turn owns 100% of GMOW, the UK entity that holds the exclusive
Option from the Crown Estate over 107 km2 of exploration area. The
Option granted to GMOW is akin to what is known as an exploration
licence in other jurisdictions, in that it gives GMOW the exclusive
right to explore for gold and other minerals within the licence
area for the specific period.
The Company also eagerly awaits flow testing results from the
Horse Hill-1 well in the Weald Basin just north of Gatwick
Airport.
Horse Hill Developments Limited ("HHDL") is planning to perform
a flow test later in 2015 to test the Portland Sandstone, in order
to establish the feasibility of a commercial development of the oil
estimated to be in place in the reservoir. HHDL is progressing the
required regulatory application with the Environment Agency.
Investments
Investment in Gold Mines of Wales:
(49% interest in Gold Mines of Wales Limited)
GMOW - 2015 Activities
Option Renewal
On 17 August 2015, the Company announced the renewal of the
Crown Estate ("Crown") Mines Royal Exploration Option ("Option")
over the Dolgellau Gold-Belt for a period of six years to Gold
Mines of Wales (Operations) Limited ("GMOW"). Previous extensions
of the Option have only been granted for a period of one year, and
the Option will be subject to review by the Crown of GMOW's
progress and activities every two years.
The previously granted Option of one year covered an area of 124
km2 of the gold-belt. In the Option renewal dated 14 August 2015
(but commencing 10 February 2015), the Crown opted to exclude an
area of approximately 17 km2 incorporating the former Gwynfynydd
mine. Whilst potentially prospective for gold exploration, this
area is difficult to explore due to dense forestation.
Under its renewed Option, GMOW retains 107 km2 of exploration
area. This most importantly includes the Clogau St Davids mine, the
most significant historical producer within the area covered by the
Option, as well as the prospective southern area of the gold-belt
(62 km2). The granted Option also covers 45 km2 of the gold-belt
northern area, which is geologically prospective but vastly
unexplored.
The six year Option period now provides GMOW with a firm base on
which to drive both regional and near mine (Clogau) exploration. A
consultation process was undertaken with a number of exploration
service providers. GMOW is assessing operational and technical
options to advance the project. Dr Simon Dominy, Director of
Operations for GMOW and Dr Ian Platten, Consulting Geologist have
made a number of site visits to the project area.
Work programme
January 2015 saw the appointment of Dr Simon Dominy to GMOW as
Director of Operations. Dr Dominy has extensive experience in the
Dolgellau gold-belt, both at Clogau and Gwynfynydd, as well as on
numerous other high-nugget narrow vein projects globally.
During the first half of 2015, extensive work has been
undertaken as to the best options and approaches for regional
exploration. A number of independent exploration contractors were
contacted with regard to assisting with the regional programme. An
exploration programme and budget are in preparation. Dr Dominy and
Dr Platten have undertaken a number of site visits in H1 2015 to
review exploration approaches both regionally and at Clogau.
At Clogau, regular visits have been undertaken underground to
check the status of the workings, which remain in a relatively good
condition. Any future activities at Clogau would initially need to
include safety and infrastructure works, followed by surveying,
mine mapping and sampling, computer modelling and diamond
drilling.
As of September 2015, SRK Exploration Services Ltd ("SRKES") of
Cardiff have been appointed as exploration contractors for the
project. SRKES, in conjunction with GMOW, are currently undertaking
detailed planning of an initial 12 month regional exploration
programme. The programme will include geological interpretation and
mapping to produce targets for follow-up. Various exploration
techniques may be applied, including remote sensing, geophysical
and geochemical methodologies. SRKES will produce a Competent
Persons Report before the end of 2015 in support of the programme.
It is expected that after logistical preparations are complete,
SRKES will commence the physical on-the-ground works before the end
of 2015.
GMOW is working with its environmental consultants,
Environmental Systems Ltd ("ENVSYS"), to commence environmental
impact ("EIS") and conceptual planning studies. ENVSYS is
conveniently based in Aberystwyth, Wales and is thus
well-positioned to support the activities within the Option
Agreement area. Studies are expected to commence in October
2015.
Initial discussions have been held with Professor Tom Blenkinsop
of the School of Earth and Ocean Sciences at Cardiff University,
Wales with regard to a joint research programme. Such a programme
would aim to resolve the small-scale controls on high-grade gold
pocket localisation, and thus ultimately assist with exploration
targeting and mining. Discussions are on-going.
Investment in Horse Hill Developments Limited:
(10% interest in HHDL)
The Company currently owns a 10% interest in a special purpose
company, Horse Hill Developments Limited, which is the operator and
65% interest holder in two Petroleum Exploration and Development
Licences ("PEDL") PEDL 137 and 246 in the northern Weald Basin
between Gatwick Airport and London.
The PEDL137 licence covers 99.29 square kilometres (24,525
acres) to the north of Gatwick Airport in Surrey and contains the
Horse Hill-1 ("HH-1") discovery and several other exploration
leads. PEDL246 covers an area of 43.58 square kilometres (10,769
acres) and lies immediately adjacent and to the east of
PEDL137.
The HH-1 well is located approximately 7.5 kilometres southeast
of the producing Brockham oil field and approximately 15 kilometres
southwest of the Palmers Wood oil field. The pre-drill primary
target reservoir horizons were the Portland Sandstone, which is
productive in the Brockham oil field, and the Corallian Formation,
which is the producing horizon in the Palmers Wood oil field.
Secondary targets for the well included the Triassic, which is
productive in the nearby Wessex Basin and has previously tested gas
in the Weald Basin, and the Greater Oolite Formation.
In May 2015, an independent oil in place ("OIP") review of the
Upper Portland Sandstone discovery by the Xodus Group was released,
which saw initial OIP estimates substantially increased to 21.0
million barrels, ("mmbbl", Best Estimate, P50).
The estimated gross oil in place in the Portland Sandstone at
the various stages of evaluation is tabulated in Table 1 below.
Table 1: Gross estimated discovered oil initially in place in
Portland Sandstone at Horse Hill (mmbbl)
Source Date Low (P90) Best High Mean
(P50) (P10)
------------------ ------------- ---------- ------- ------- -----
Company Internal 24 October
estimate 2014 1.5 3.1 4.8 n/a
------------------ ------------- ---------- ------- ------- -----
Company Internal 17 December
estimate 2014 5.7 8.2 12.1 n/a
------------------ ------------- ---------- ------- ------- -----
Xodus Group 11 May 2015 14.3 21.0 30.4 21.8
------------------ ------------- ---------- ------- ------- -----
n/a = not available
HHDL is planning to perform a HH-1 flow test later in 2015 to
test the Portland Sandstone, in order to establish the feasibility
of a commercial development of the oil estimated to be in place in
the reservoir. HHDL is progressing the required regulatory
application with the Environment Agency.
During drilling of HH-1 it was also noted that the Kimmeridge
limestones and surrounding shale contained oil. Following the
completion of the drilling of the well, extensive geochemical
analysis was conducted which showed the Kimmeridge formation was
mature for oil generation.
Nutech Inc. ("Nutech"), an industry specialist in tight
reservoir analysis, was contracted to conduct further detailed
petrophysical evaluation of the electric logs. This work resulted
in the announcement in April 2015 of a potentially significant play
with estimated gross OIP of over 150 mmbbl per square mile
(gross).
The results of the work by Nutech have subsequently been
independently verified in May 2015 by Schlumberger, one of the
world's leading oil and gas service companies, using their
proprietary modelling developed in tight reservoirs in the USA and
applied extensively in the USA and elsewhere. Schlumberger's
estimate of OIP in the Kimmeridge, Oxford and Lias mudstones and
limestones is approximately 255 mmbbl per square mile (gross). If
confirmed, this largely unconventional play in the Kimmeridge opens
up large areas of the Weald Basin that may have potential for oil
production, not limited to the PEDL137 and PEDL246 licences where
Horse Hill is located.
(MORE TO FOLLOW) Dow Jones Newswires
September 24, 2015 10:12 ET (14:12 GMT)
In June 2015, Nutech calculated that the total Jurassic shale
plus tight conventional reservoir section contained in the 55
square miles of PEDL137 and PEDL246 is a Best Estimate, or P50, OIP
of 9,245 mmbbl. The most significant oil in place within the
Jurassic section is contained within the shales and tight
conventional reservoir limestone sequences of the Kimmeridge, with
a calculated Best Estimate, or P50, total Kimmeridge OIP of 5,230
mmbbl.
Again, in August 2015, Schlumberger independently verified
Nutech's Horse Hill OIP estimates contained in PEDL137 and PEDL246.
Schlumberger estimated a Mean OIP of 10,993 mmbbl, with Kimmeridge
OIP of 8,262 mmbbl. Schlumberge's OIP estimates are therefore 19%
higher than Nutech's in total over the two Horse Hill licences and
58% higher in the Kimmeridge.
All of the reviews and reports mentioned above state that the
hydrocarbon volumes estimated should not be construed as
recoverable resources or reserves.
Other Investments:
In January 2014, Stellar acquired an initial 20% shareholding in
Boletus Resources Limited ("Boletus"), a special purpose company
for developing the Bengkulu Coal Project. Since the time of the
original investment in Boletus, the price of coal globally and
domestically in Indonesia has fallen significantly, so much so that
the board have decided not to make any further investments in
Boletus at this time and remain a minority investor in this special
purpose company. This decision may change in the future should the
coal prices improve back to the levels of earlier this year.
In the meantime, Boletus have reviewed their options with the
lease owner of the Bengkulu Coal Project to ascertain if a
commercially viable coal operation is indeed possible. At this
stage it is not deemed viable.
Financial Results
During the period, the Group made a loss before taxation of
GBP121,000 (6 months ended 30 June 2014: loss GBP213,000, 12 months
ended 31 December 2014: loss GBP560,000). There was a weighted loss
per share of 0.02p (30 June 2014: loss per share 0.03p, 31 December
2014: loss per share 0.08p).
Current assets including cash at 30 June 2015 amounted to
GBP1,370,000 (30 June 2014: GBP1,855,000; 31 December 2014:
GBP1,456,000).
Outlook
The Board is confident that the investments made by the Company
are both encouraging and potentially rewarding. We will look to
realise this potential over the future years in addition to
continuing to review other investment opportunities.
The Board would like to take this opportunity to thank our
shareholders, staff and consultants for their continued
support.
Donald Strang
Chairman
For further information please contact:
Stellar Resources
plc
Donald Strang, Executive
Chairman
Emma Priestley, Director +44 (0) 20 7440 0640
Cairn Financial Advisers
LLP
James Caithie / Sandy
Jamieson +44 (0) 20 7148 7900
Public Relations:
Square 1 Consulting
Ltd
David Bick / Mark
Longson +44 (0) 20 7929 5599
Glossary:
bbl = barrels of oil
bopd = barrels of oil per day
discovery = a petroleum accumulation for which one or several
exploratory wells have established through testing, sampling and/or
logging the existence of a significant quantity of potentially
moveable hydrocarbons
electric logs = tools used within the wellbore to measure the
rock & fluid properties of the surrounding formations
HH-1 = Horse Hill-1 well
MD = measure depth
mmbbl = million barrels of oil
PEDL = Petroleum Exploration and Development Licence
play = a set of known or postulated oil or gas accumulations
sharing similar geologic properties
reserves = those quantities of petroleum anticipated to be
commercially recoverable by application of development projects to
known accumulations from a given date forward under defined
conditions
reservoir = a subsurface rock formation containing an individual
natural accumulation of moveable petroleum
water cut = the volumetric proportion of a field's produced
fluids that is water
Condensed interim statement of comprehensive income
6 months 6 months Year to
to to
30 June 30 June 31 December
2015 2014 2014
Unaudited Unaudited Audited
Notes GBP'000 GBP'000 GBP'000
Continuing operations
Revenue - - 3
Cost of sales - - -
---------- ---------- ------------
Gross profit - - 3
Share based payments - - -
Administrative costs (80) (213) (465)
---------- ---------- ------------
Operating (loss) (80) (213) (462)
---------- ---------- ------------
(Loss) on available for
sale asset - - (17)
Finance expense - - -
Share of loss of associate (41) - (81)
---------- ---------- ------------
(Loss) before tax (121) (213) (560)
Taxation - - -
---------- ---------- ------------
(Loss) for the period (121) (213) (560)
---------- ---------- ------------
Other comprehensive income
Transfer to income statement - - -
of available for sale
reserve
Total Comprehensive Income
for the year attributable
to the owners of the
parent company (121) (213) (560)
---------- ---------- ------------
Loss per share:
Basic and diluted loss
per share 2 (0.02) (0.03) (0.08)
Condensed interim statement of financial position
30 June 30 June 31 December
2015 2014 2014
Unaudited Unaudited Audited
Notes GBP'000 GBP'000 GBP'000
ASSETS
Non-current assets
Available for sale assets 750 521 750
Investment in Associate 318 440 359
----------- ----------- ------------
1,068 961 1,109
----------- ----------- ------------
Current assets
Trade and other receivables 826 825 852
Cash and cash equivalents 544 1,030 604
----------- ----------- ------------
1,370 1,855 1,456
Total assets 2,438 2,816 2,565
----------- ----------- ------------
EQUITY
Equity attributable to
equity holders of the
parent
Share capital 15,188 15,185 15,188
Share premium account 31,432 31,367 31,432
Share based payment reserve 100 130 100
Retained earnings (44,340) (43,902) (44,219)
----------- ----------- ------------
Total equity 2,380 2,780 2,501
LIABILITIES
Current liabilities
Trade and other payables 58 36 64
----------- ----------- ------------
Total liabilities 58 36 64
Total equity and liabilities 2,438 2,816 2,565
----------- ----------- ------------
(MORE TO FOLLOW) Dow Jones Newswires
September 24, 2015 10:12 ET (14:12 GMT)
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