TIDMPOL
RNS Number : 1563J
Polo Resources Limited
28 March 2018
This Interim 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.
28 March 2018
Polo Resources Limited
("Polo" or the "Company")
INTERIM RESULTS FOR THE SIX MONTHSED 31 DECEMBER 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 six
months ended 31 December 2017.
Financial Summary:
-- Total Net Assets for the six months ended 31 December 2017
were USD61.81 million representing
an increase of 30.9% (30 June 2017: USD47.22 million).
-- Total Net Assets of USD61.45 million as of 21 March 2018 (31
December 2017: USD61.81 million).
-- Net Asset Value per share as at 21 March 2018 was
approximately 14.06 pence per share, USD/GBP = 0.7134 (31 December
2017: 14.69 pence per share, USD/GBP = 0.7412).
Chairman's Statement
Introduction
The confidence that we saw at the year-end has continued into
the first half of the year. One of the prevalent themes we are
seeing is an increased focus on greener materials or those
commodities that are associated with electric vehicles or the
renewable energy sectors. Polo's portfolio has benefited from this
sentiment whilst we are continuing to appreciate the value inherent
in the more traditional sectors. We are actively engaging to ensure
that Polo's portfolio is at the forefront of the both the emerging
and traditional markets.
Portfolio Overview
Hibiscus Petroleum Berhad ("Hibiscus")
Hibiscus Petroleum's indirect wholly subsidiary, Anasuria
Hibiscus UK ("AHUK") has been involved in the joint operations of
the Anasuria asset for circa 21 months. During this period, the
joint operating company has applied itself towards improving
operational performance, average uptime and average daily oil
production. The delivery of several production enhancement projects
conducted at the Anasuria Cluster has ensured that wells and
facilities are performing at their expected levels. Hibiscus is now
focusing on the drilling of the GUA-P2 side-track well by the end
of June 2018 which should unlock 1.01 million barrels from current
29.2 million barrels 2P reserves, moving Hibiscus closer to its
target of achieving production of 5,000 barrels of oil per day by
2020 from the Anasuria Cluster.
Hibiscus is also working towards the completion of the North
Sabah acquisition by 31 March 2018, which will represent a
significant milestone and introduce a second cash generating
business segment to the company. Post completion, Hibiscus
Petroleum's efforts will immediately focus on lowering unit
production costs. Hibiscus will also be undertaking a range of
activities to ensure a seamless integration of the North Sabah
operations with their existing work processes.
Subject to the successful completion of the North Sabah
transaction, operating both the North Sabah and AHUK assets
concurrently will allow Hibiscus to amortize a substantial portion
of its overheads over two assets. This will finally reflect itself
in an improvement of the PAT metric of the company and allow
gradual reap of the economic benefits of scale.
With the overall rebound in oil prices that began in 2016 we
have seen Hibiscus' production based revenue commensurately rise.
It is, therefore, exciting that on 7 March 2018 Hibiscus announced
a JV it is involved with (78.3%) has received a 5-year renewal of
an exploration permit in the inshore area of the Gippsland Basin of
Southeast Australia which contains prospective areas for gas. Work
is planned to identify drilling targets and assess the potential
for additional gas.
GMC Resources Plc
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 a Technical Pre-Feasibility Study for the
2,000MW power plant in July 2017.
Post the reporting period, on 9 and 21 March 2018, GCM announced
a Joint Development Framework Agreement and Contract Framework
Agreement, respectively, with its strategic partner CGGC.
The Joint Development Framework Agreement outlines the parties'
roles and responsibilities in pursing approval of the Phulbari Coal
and Power Project, including a commitment by CGGC (or its affiliate
or investment partner) to invest up to 30% in the power plant,
subject to approval by Chinese authorities, with GCM holding the
balance of interest. Under the agreement, CGGC undertakes to
facilitate financing for the proposed power plant with GCM's
assistance.
The Contract Framework Agreement awards CGGC the exclusive right
for the engineering, procurement, construction, and commissioning
of the proposed 2,000MW mine-mouth thermal power plant, for an
agreed initial estimated cost of USD3.8bn which shall be subject to
adjustments when the parties finalise a full engineering,
procurement, construction and commissioning contract.
Blackham Resources Limited ("Blackham")
Recent operations at Blackham's Matilda-Wiluna Operation have
demonstrated a turnaround following the extensive waste stripping
that occurred during the 2017 calendar year with Blackham reporting
record processing plant throughput and gold production (December
2017 to February 2018 inclusive). Since late December 2017, there
has been a step change in project economics by way of a
significantly lower waste material strip ratio, with higher mined
ore grades and a build-up of high grade stockpiles to mitigate the
risks of lower gold production caused by unforeseen mining
interruptions. High grade ore zones accessed from November 2017 (M4
pit) and December 2017 (Galaxy pit) will continue to provide feed
during 2018, underpinning anticipated high grade production and
positive cash flows.
Following the completion of the Entitlement Offer in February
2018, Blackham is well funded as it enters into a period of
production, which will initially focus on free milling gold
production with an expected stripping ratio of less than half of
recent levels (7:1 vs. 16:5:1 year to date) for the current mine
free milling mine plan, providing a significant step change in
project economics. This, in conjunction with continued access to
high grade ore zones that are supported by extensive grade control
drilling, will provide ongoing mill supply and continued growth in
high grade stockpiles and is expected to deliver a period of strong
operational cash flows.
Weatherly International Plc ("Weatherly")
Weatherly's principal asset is the Tschudi open pit mine
producing refined copper cathode on site. Other assets include the
Otjihase underground copper mine and concentrator and the Matchless
West underground copper mine both of which are on care and
maintenance while the project development activity is underway.
Weatherly also owns 25% of China Africa Resources Namibia ("CARN"),
a private Namibian company which owns the high-grade Berg Aukas
underground zinc-lead-vanadium project. On 5 February 2018 it
announced that it had signed an agreement to purchase a further 65%
of CARN subject to regulatory approval. On 12 December 2017,
Weatherly announced that it had entered into an agreement to
purchase the Kitumba copper development project in Zambia. The
transaction has subsequently been approved by the vendor's
shareholders and is only subject to regulatory approval.
Celamin Holdings NL ("Celamin")
Celamin is focused on the restitution of its interests in CPSA
(the Chaketma Phosphate Project operating company) and the Chaketma
Project. On 1 December 2017 Celamin announced a favourable
arbitration decision and its local partner TMS has been ordered to
return Celamin's 51% 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.
Subsequent to the end of the December 2017 quarter and following
the announcement of the arbitration success, Celamin announced a
successful capital raising of AUD1.55 million (USD1.19 million) in
a placement. Under the agreement, Polo acquired a further
1,320,000,000 ordinary shares in Celamin for a total consideration
of AUD330,000 (USD0.254 million) giving it an interest in
approximately 25.1% of Celamin's issued ordinary share capital. The
funds will be used by Celamin to pursue enforcement of the final
arbitration award, other legal actions in Tunisia and for general
working capital purposes.
PRISM Diversified Ltd ("PRISM")
The Clear Hills Project was identified in 2007 as having
potential for long-term production of iron, vanadium, lithium and
aggregate products to support the growing demand in the aerospace
and automotive industries for high-purity iron powder products, and
the growing demands from renewable energy storage projects for
vanadium and lithium electric metals.
In early 2017, PRISM (formerly Ironstone Resources) determined
that its iron deposit would be amenable for the production of
carbonyl iron powder using a commercially-proven process, with
secondary recovery of vanadium and possibly cobalt. After several
positive tests at a Canadian pilot facility, PRISM is planning to
conduct a comprehensive feasibility study with its technology
provider, expected to commence in Q2 2018. Carbonyl iron powders,
in select markets, can sell for upwards of USD12,000 per tonne.
Regional studies and government reports support the presence of
lithium-rich brines contained within Devonian-age oil and gas
reservoirs underlie the Clear Hills Project permits. PRISM has
aligned itself with a Canadian water processing company with
expertise in the rapid and real-time extraction of impurities from
water including minerals such as lithium. After successful
preliminary tests revealed the efficient concentration of lithium
from a reservoir brine sample on PRISM's permit using the
leading-edge patented technology, the company quadrupled its
permit-holdings in the Peace Region and now holds a 100% undivided
interest in 1.88 million acres, the largest contiguous block of
metallic and industrial mineral permits held in Alberta today.
Further feasibility work on PRISM's lithium potential will be
conducted throughout 2018 including a technology demonstration
pilot.
Polo's current portfolio includes:
Petroleum assets:
-- Hibiscus Petroleum Limited (8.75%)
-- Regalis Petroleum Limited (12.66%)
Coal and power assets:
-- GCM Resources Plc (19.84%)
-- Universal Coal Resources Pte Ltd (redeemable convertible note)
Gold assets:
-- Blackham Resources Limited (1.62%) (diluted following a rights issue)
-- Nimini Holdings Limited (90%)
Copper asset:
-- Weatherly International Plc (5.2%)
Phosphate asset:
-- Celamin Holdings NL (25.1%)
Lithium, iron and vanadium:
-- PRISM Diversified Ltd (19.5%)
Various liquid short-term investments.
Given 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% 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.
We are encouraged by the continued confidence shown within the
natural resource sector during the period. Commodity prices saw a
recovery and activities in the sector are increasing. We have a
portfolio of investments that is benefiting from this. We are also
seeing an increased emphasis on those commodities that are focused
on a greener future, an area that we have an exposure.
Given the current trends and the portfolio that we currently
have, the Board is confident that Polo is well positioned. We look
forward to providing further updates to our shareholders on our
progress and further investing activities.
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
28 March 2018
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 +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.
Investment Update
Oil and Gas
Hibiscus Petroleum Berhad (HIBI: MK)
-- Oil and Gas, United Kingdom and Australia
-- 8.75% equity interest
Hibiscus is a joint-operator of the Anasuria Cluster of
producing fields via the Anasuria Operating Company Ltd ("AOC"), a
Joint-Operating Company between Hibiscus (50%) and Ping Petroleum.
The asset infrastructure is laid over a distance of approximately
25km from Cook Field in the north to Guillemot A Field in the
south, and includes the Kite Discovery, Teal Field, Teal South
Field and the Anasuria FPSO.
Anasuria Hibiscus has entered into a long-term marketing and
offtake agreement for the sale of crude oil with BP Oil
International ("BPOI"). Whilst AOC produces oil daily, the company
only sells its oil in cargoes of 250,000 barrels. Using their
global network, BPOI identifies a potential customer, locks in a
competitive price for the cargo and arranges the 'lifting' of the
oil via tanker to the client refinery.
On 11 October 2017, Hibiscus announced its audited financial
statements for the period ended 1 July 2017 which showed a revenue
of RM261 million and a profit after tax of RM106 million. These
results were delivered against a background of challenging sector
conditions and realised oil prices (for Brent crude oil bench mark)
that ranged between USD38 and USD53 per barrel ("bbl") during the
period.
For the six months ended 31 December 2017 ("1H2018"), Hibiscus
reported that adjusted 1H2108 profit after tax rose 125% to RM21.8
million (USD5.58 million) from RM9.7 million (USD2.48 million) in
the six months ended 31 December 2016. The 1H2018 profit after tax
growth was driven by higher oil prices achieved from crude oil sold
during the period. Hibiscus also reported that it has delivered
eight consecutive quarters of profitability since it acquired the
Anasuria Cluster, its first producing asset, almost two years
ago.
Anasuria Hibiscus sold 274,644 bbls of crude oil at an average
realised oil price of USD62.93 per bbl in the quarter ended 31
December 2017, compared to 298,909 bbls at an average realised oil
price of USD51.54 per bbl achieved in the corresponding quarter.
Hibiscus Petroleum targets to execute further production
enhancement projects in 2018 and 2019 which is expected to increase
its production at Anasuria Cluster to 5,000 bbl/day.
An overview of operational performance since March 2016 is
provided below:
Units Mar Jul-Sept Oct-Dec Jan-Mar Apr-Jun Jul Oct-Dec
- Jun 2016 2016 2017 2017 - Sep 2017
2016 2017
------------- ----------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Av.
daily
production
rate bbl/day 2,971 3,032 3,934 2,617 3,204 2,576 2,071
------------- ----------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Av.
daily
gas
export
rate(@) boe/day 236 374 474 257 317 156 141
------------- ----------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Av.
daily
oil
equivalent
production
rate boe/day 3,206 3,406 4,408 2,873 3,522 2,731 2,212
------------- ----------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Av.
realised
oil
price USD/bbl 40.14 45.21 41.70 52.95 50.46 51.54 62.93
------------- ----------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Av. USD/mmbtu 1.19(1) 1.33(1) 1.73(1) 2.11(1) 1.60(1) 1.58(1) 2.35(1)
gas /3.08(2) /3.30(2) /4.16(2) /4.94(2) /3.88(2) /3.86(2) /5.23(2)
price
------------- ----------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Av.
OPEX
per
boe USD/boe 23.13 18.39 12.97 15.12 13.98 23.61 34.33
------------- ----------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Av.
uptime % 88 82 98 76 84 70 57
------------- ----------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
@ Conversion rate of 6,000 scf/boe.
(1) For Cook field.
(2) For Guillemot A, Teal and Teal South fields.
Hibiscus reports that the lower average time recorded in the
December 2017 quarter is primarily to the planned Offshore
Turnaround project that commenced in mid-September 2017 and was
completed in mid-October 2017. The impact of the Offshore
Turnaround was a sixteen-day period of complete shutdown of the
Anasuria FPSO in October 2017 for planned maintenance activities.
In addition, operations were also affected by two unplanned events
that occurred during the quarter:
-- A temporary interruption in production of the Cook-P1 well
which also affected gas lift operations on the Guillemot A field;
and,
-- A temporary failure of gas compression facility on board the
Anasuria FPSO which again affected gas lift operations on the
Guillemot A field.
All technical issues have been resolved and Hibiscus reports
that wells and facilities are performing at the expected level.
Hibiscus is working towards a production recovery plan to ensure
targeted cumulative production volumes for the year can be
achieved.
Meanwhile Hibiscus continues to grow its producing assets
through the purchase of participating interests in the 2011 North
Sabah Oil Recovery Production Sharing contract ("PSC"); and, the
joint operating agreement between Shell and Petronas Carigali in
relation to the PSC. Shell's interest includes operator
responsibilities which would be transferred to Hibiscus. In
December 2017, Hibiscus announced that it has received Petronas
Carigali's unconditional consent under the joint operating
agreement to the assignment of Shell's 50% interest in the PSC
effective 31 March 2018.
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.
Post the reporting period on 7 March 2018 Hibiscus announced
that a JV it is involved with (78.3%) had received a 5-year renewal
of exploration permit "VIC/P57" located in the northwest part of
the offshore Gippsland Basin of Southeast Australia. The company
reports that this permit contains prospective areas for gas and
covers shallow water coastal areas with proximity to infrastructure
and an undersupplied gas market. A work programme has been designed
to de-risk and identify mature to drill-ready prospects and at the
same time assess the potential for additional gas.
On 21 March 2018, Hibiscus' share price closed at MYR0.84 with a
market capitalisation of USD340 million (MYR/USD = 0.2552).
Regalis Petroleum Limited
-- Oil, Republic of Chad
-- 12.66% equity interest
Polo's interest in the private and independent oil and gas
company, Regalis Petroleum Limited ("Regalis") increased to 13.67%
following an in-specie distribution by Polo's 42% 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 kilometre 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% 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 a Technical Pre-Feasibility Study for a 2,000MW power
plant located at the mine site in July 2017. This power plant
capitalises on synergies with mine development and operation and
avoids costly coal transport and handling requirements.
CGGC is an internationally recognised engineering company with
infrastructure projects across the world. Its parent, China
Gezhouba Group Corporation (en.gzbgj.ceec.net.cn) is a core member
of China Energy Engineering Group Co Ltd, a super central
state-owned enterprise, and employs approximately 40,000
people.
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% of the Government's coal-fired power generation
target.
Post the reporting period, on 09 and 21 March 2018, GCM
announced a Joint Development Framework Agreement and Contract
Framework Agreement, respectively, with its strategic partner
CGGC.
The Joint Development Framework Agreement outlines the parties'
roles and responsibilities in pursing approval of the Phulbari Coal
and Power Project, including a commitment by CGGC (or its affiliate
or investment partner) to invest up to 30% in the power plant,
subject to approval by Chinese authorities, with GCM holding the
balance of interest. Under the agreement CGGC undertakes to
facilitate financing for the proposed power plant with GCM's
assistance.
The Contract Framework Agreement awards CGGC the exclusive right
for the engineering, procurement, construction, and commissioning
of the proposed 2,000MW mine-mouth thermal power plant, for an
agreed initial estimated cost of USD3.8bn which shall be subject to
adjustments when the parties finalise a full engineering,
procurement, construction and commissioning contract.
Funding arrangements:
In November 2017, GCM announced that it had successfully raised
GBP2 million (GBP1.8 million net of costs) (USD2.51 million) at
34.4 pence 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 10 pence each in
issue. No Ordinary Shares are held in treasury.
On 21 March 2018, GCM's share price closed at GBP0.32 with a
market capitalisation of USD39.6 million (GBP/USD = 1.4018).
Universal Coal Resources Pte Ltd
-- Coal Project, Indonesia
-- Redeemable convertible note
In May 2016, Polo's subsidiary, PIL, entered into a secured S$5
million (USD3.79 million) nominal value 15% 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% 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% 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.
PZC announced that it is progressing the potential cash sale of
its interests in TCM and that Polo will be repaid from the proceeds
of sale. The transaction is still subject to certain conditions
precedent including due diligence, approval from PZC shareholders
and any approvals required from regulatory and other bodies. The
due diligence period has been extended to 31 March 2018.
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.
Gold
Blackham Resources Limited (ASX: BLK)
-- Gold, Western Australia
-- Coal, Southwest Australia
-- Combined direct and indirect 1.62% equity interest (diluted following a rights issue)
Blackham recorded a loss for the half year ended 31 December
2017 of AUD14.4 million. The result was mostly impacted by low gold
production at the Matilda-Wiluna Gold Project. Production and mill
feed head grade was hampered by 43% of mill feed being sourced from
low grade stockpiles. Gold production is expected to increase to
40,000-45,000 ounces during the second half of FY18 and beyond, due
to high grade ore from the M4 and Galaxy open pits being available
to feed the process plant on a continuous basis, followed by the M1
and M2 open pits coming into production.
Gold sold during the half-year was 30,999oz @ AUD1,615/oz. No
forward hedge contracts were in place as at 31 December 2017.
The extensive waste stripping that occurred during the 2017
calendar year has provided access to high grade zones in both the
Galaxy and M4 open pits, in November and December respectively,
with consistent high grade ore expected to be mined at widths up to
40m. Mining at M4 and Galaxy is expected to underpin strong
cashflows in 2018. This also resulted in record monthly gold
production in both Jan'18 and Feb'18 of 6,498oz and 6,713oz,
respectively and a significant reduction in "All In Sustaining
Costs" which reduced 21% from AUD1,158/oz in January 2018 to
AUD912/oz in February 2018.
Grade control drilling has now been completed for the entire M4
pit at 10m x 5m spacing, meaning that both the Galaxy and M4 pits
have been grade control drilled to the base of the design pits and
hence are significantly de-risked. Grade control drilling ore
models have been reconciled within 2% of milled grade. The grade
control drilling programme is ongoing and will underpin mine
scheduling allowing the continuation of high grade stockpiles.
The Golden Age underground mine was cash flow positive for the
half-year, which is expected to continue. During December 2017 and
January 2018, the Golden Age underground grade mined increased
significantly to 9.2g/t and 10.0g/t respectively.
Gold Production and Plant Performance
Record mill throughput was achieved through the plant during the
December quarter with throughput increasing 17% from the September
quarter. Both the crushing and milling circuits achieved record
throughput during the month of January 2018.
Gold Production
Sep17 quarter Dec17 quarter Half-year Jan18 month
------------------- -------------- -------------- ---------- ------------
Total Milled
(t) 379,400 443,272 822,672 163,104
------------------- -------------- -------------- ---------- ------------
Mill Feed
Grade (g/t)
Au 1.4 1.1 1.3 1.4
------------------- -------------- -------------- ---------- ------------
Overall
Plant Recovery 91.5% 92.3% 91.8% 91.2%
------------------- -------------- -------------- ---------- ------------
Gold produced
(oz) 15,619 14,922 30,541 6,498
------------------- -------------- -------------- ---------- ------------
All-In Sustaining
costs ($/oz) $2,236 $1,882 $2,063 $1,158
------------------- -------------- -------------- ---------- ------------
Mill feed head grade was hampered by 43% of mill feed being
sourced from low grade stockpiles. However, access to high grade
ore from M4 and Galaxy pits was achieved late in the half-year,
which resulted in record monthly gold production of 6,498oz being
achieved during January 2018.
Gold production is expected to increase to 40,000-45,000 ounces
during the second half of FY18 and beyond, due to high grade ore
from the M4 and Galaxy open pits being available to feed the
process plant on a continuous basis, followed by the M1 and M2 open
pits coming into production.
Reserves and Exploration Drilling
Resources increased to 65Mt @ 3.1g/t Au for 6.5 million ounces
during the half-year.
Reserves increased to 15Mt @2.5g/t Au for 1.2 million ounces, an
increase of 115% in one year.
Commenced building high grade stockpiles with 51kt @ 1.6g/t Au
as at 31 December 2017, which is expected to continue to grow.
Current reserves and mine plan support 3.5 years of free milling
ore operations targeting gold production of 250koz, with further
extensions and targets being pursued.
Drilling to focus on identifying additional oxide mineralisation
as well as increasing the 1.2Moz of gold reserves (currently 15Mt @
2.5g/t) by converting more of Blackham's very large resource base
(65Mt @ 3.1g/t for 6.5Moz) to reserves.
Expansion Study
The Expansion Preliminary Feasibility Study published by
Blackham on 30 August 2017 confirmed the robust economics for a
+200kozpa long mine life operation. However, this has apparently
been deferred as a result of the refinancing in February 2018 with
the immediate aim being improving Blackham's financial performance
through a focus on free milling gold production and expanding the
free milling gold mining reserves.
Funding
In November 2017 Blackham moved to secure an AUD60 million
funding package through arrangements with Pacific Road Capital.
This package included a renounceable rights issue to raise some
AUD12.3 million at an issue price of 12 cents per new share.
Despite announcing Pacific Road Capital had completed a due
diligence study in the lead up, the company was confronted with a
falling share price and on 20 December 2017 announced the
cancellation of the funding package. Subsequently in January 2018
Blackham announced efforts for a significant recapitalising
targeting AUD36 million via an entitlements issue and that also
agreement had been reached with major lenders for loan repayment
deferral. On 15 February 2018 it announced the recapitalisation
exercise had been successful.
Polo elected to not participate in the recent fundraising and
now holds a combined direct and indirect equity interest of 1.62%
in Blackham (diluted following a rights issue). On 21 March 2018,
Blackham's share price closed at AUD0.083 with a market
capitalisation of USD80.9 million (AUD/USD = 0.7698).
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% Polo Resources and 10% 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 continue to be focused on the
general elections which now require a run-off second phase election
scheduled for late Sierra Leone on 27 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 throughout 2017
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.
Copper
Weatherly International Plc (AIM; WTI)
-- Copper, Namibia
-- 5.2% 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 since 2015 when the copper price dropped below
USD5,000/tonne. The Central Operations have potential as the 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
Tschudi production for the half year to 31 December 2017 was
8,844 tonnes Copper Cathode with a particularly strong second
quarter of 4,739 tonnes of copper cathode or 11.5% above nameplate.
This outcome was assisted by some short-term benefits from
relatively-fast leaching of additional oxide ore mined from an
interim pit pushback bringing forward some leaching output. The
grade of this additional oxide ore was lower, reducing the tonnage
of contained copper metal stacked in the quarter.
Production C1 costs for the half year to 31 December 2017 were
USD4,944 per tonne. This is a significant C1 cost reduction
compared to Quarter Ended March 2017 US$5,907 per tonne and Quarter
Ended June 2017 USD6,344 per tonne.
Copper prices continued to rise throughout 2017 ending the
calendar year at USD7,155 per tonne and averaging USD6,521 per
tonne in the half year to 31 December 2017.
Revenue after royalties for the 6 month period was USD47.7
million, 26% higher than the comparable period in 2016 reflecting
the increase in copper price. Tschudi's costs before interest,
depreciation and impairments were USD37.1m with the result that
Tschudi generated earnings before interest and depreciation
(EBITDA) of USD10.6 million. However, this still led to an
operating loss of USD0.5 million. This compares to a loss of USD6.7
million in comparable period in 2016. Weatherly states that with
the support of Orion to defer loan repayments, Tschudi can generate
sufficient surplus funds for the Group and parent company to remain
as a going concern.
Tschudi Production Performance
Quarter Quarter Quarter Quarter
ended Mar-17 ended Jun-17 ended Sep-17 ended Dec-17
---------------- -------------- -------------- -------------- --------------
Total (Ore
+ Waste)
Mined (000
tonnes) 5,117 6,051 6,314 5,869
---------------- -------------- -------------- -------------- --------------
Ore Tonnes
stacked
(000 tonnes) 563 726 666 733
---------------- -------------- -------------- -------------- --------------
Ore Stacked
grade (per
cent) 0.86 0.99 0.78 0.65
---------------- -------------- -------------- -------------- --------------
Copper Cathode
Produced
(tonnes) 3,236 3,386 4,105 4,739
---------------- -------------- -------------- -------------- --------------
C1 Cost
(US$/t) 5,907 6,344 5,402 4,551
---------------- -------------- -------------- -------------- --------------
Last year Weatherly announced that it was experiencing lower
leach rates for mixed and sulphide ore than were anticipated in the
BFS and has compensated 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
has expanded the heap leach pad area to provide additional time for
the leaching of copper and has now completed the construction of
seven new leach pads. Forced aeration of some panels has commenced
as part of ongoing testing of how leach rates for mixed and
sulphide ore may be improved under modified operating conditions
designed to increase bacterial activity in the heap. However it is
expected to take to the end of the financial year until any firm
conclusions can be drawn.
Open pit groundwater inflows, and the costs of dealing with
them, continue to increase as pit mining proceeds to greater
depths, but the flow rates are being managed adequately to ensure a
reliable supply of ore for stacking. Updated estimates of likely
water inflow rates for the pit stages currently being mined have
been produced by independent consultants from Strategic Water
Management WA and RPS. Work is underway in order to quantify the
impact of the costs of dealing with these inflows upon the economic
reserve and life of mine.
While the strong December quarter demonstrates the capacity of
the Tschudi SXEW plant to operate at well above nameplate levels
when leaching rates provide sufficient copper into solution, full
year production is not expected to exceed its nameplate producing
capacity of 17,000 tpa copper cathode.
Otjihase Project
Ojtihase and Matchless remained on care and maintenance over the
6 month period.
Kitumba
On 12 December 2017, Weatherly announced that it had entered
into a binding agreement to purchase 100% of the Kitumba copper
project in Zambia from ASX-listed Intrepid. One of the conditions
precedent for Weatherly's acquisition of the Kitumba Project was
Intrepid shareholder approval and this was obtained on 2 February
2018. The remaining conditions precedent for completion of the
acquisition are regulatory approval from the Zambian Ministry of
Mines and Minerals Development and from the Zambian Competition and
Consumer Protection Commission.
The key terms of the transaction are consideration of AUD4.75
million (USD3.66 million) in cash upon completion, plus deferred
consideration of AUD0.5 million (USD0.38 million) upon a "Decision
to Mine" and a further AUD0.5 million (USD0.38 million) upon
achieving "Commercial Production". Weatherly has obtained a waiver
from Orion to use part of the uncommitted USD10 million loan
announced on 28 July 2017 to fund the transaction to the extent
that the Company is unable to fund it through operating cash
flows.
Previous development plans for Kitumba were based on large scale
and high capital cost development of the entire resource from the
outset, and also included a decision to follow a relatively complex
processing route using Pressure Oxidation to oxidise the sulphide
minerals so that all of the contained copper could be leached and
electro-won on site to produce copper cathode only.
Weatherly intends to pursue a two-phase development approach
focussed initially on a Phase 1 development zone of
higher-confidence and higher-grade mineralisation within the
overall resource at Kitumba. The underground mine plan will be
revised to focus on this Phase 1 development area, with capital
expenditure reduced to suit a Phase 1 mining production rate of
0.75 to 1.0 Mtpa of ore.
Further, Weatherly intends to evaluate a lower risk and lower
cost processing route utilising a combination of flotation and
atmospheric leaching plus solvent-extraction and electro-winning to
produce both copper concentrates and copper cathode.
To assist with this work, Weatherly engaged The MSA Group
("MSA") to provide an updated JORC-compliant Mineral Resource
Estimate using a 2% Cu cut-off grade. MSA have completed that work
and the Measured & Indicated Mineral Resource estimate at a 2%
Cu cut-off grade comprises 9.5Mt at 3.6% Cu, containing 342,000
tonnes of copper, with 5.3Mt at 4.04% Cu classified as Measured,
and 4.2Mt at 3.05% Cu classified as Indicated.
Weatherly believes that the change to a phased development
approach focussed initially on high-confidence high-grade ore and
the changed processing route will together significantly improve
the financial metrics of Kitumba, and will allow a fast-track to
financing and production.
Berg Aukas
On 5 February 2018, Weatherly announced that it had entered into
a binding agreement to buy Hong Kong East China Non-Ferrous Mineral
Resources Co Ltd's ("ECE") 65% of CARN, to increase the Group's
interest in CARN from 25% to 90%. CARN is a private Namibian
company which owns 100% of the high-grade Berg Aukas underground
zinc-lead-vanadium project near Grootfontein. Weatherly will
purchase all of ECE's shares in CARN for a cash consideration of
US$600,000, which is still subject to regulatory approval in
Namibia. Following such approval being granted the full
consideration will become immediately payable to ECE. The Company
expects to fund the transaction through operating cash flow but in
the event that it cannot, Weatherly has obtained a waiver from
Orion Mine Finance to use part of the uncommitted USD10 million
loan announced on 28 July 2017 to fund the transaction.
In 2014, China Africa Minerals plc published a PFS for Berg
Aukas which indicated the following key parameters.
-- JORC-compliant Mineral Resource Estimate of 1.23Mt @ 15.47%
Zn, 3.84% Pb and 0.33% V(2) O(5) (Indicated classification) using a
cut-off grade of 3.0% Zn
-- JORC-compliant Ore Reserve Estimate of 1.7Mt @ 11.16% Zn,
2.76% Pb and 0.23% V(2) O(5) (Probable classification) at a 5% Zn
equivalent cut-off included within the resource
-- Post-Tax NPV10 of USD29 million
-- Post-Tax IRR of 25%
The 2014 PFS was based on assumed prices of US$2,000/tonne for
zinc and lead. Vanadium, present in the mineral descloisite, has a
limited market and so the PFS assumed no credit was received for
the vanadium content.
Prices for all three of these commodities have improved markedly
since that time, and Weatherly has initiated an update of the PFS
to examine the impact of these improved prices and updated capital
and operating cost estimates on the Project's key financial
metrics.
On 21 March 2018, Weatherly's share price closed at GBP0.014
with a market capitalisation of USD20.8 million (GBP/USD =
1.4018).
Phosphate
Celamin Holdings NL (ASX: CNL)
-- Phosphate, Tunisia
-- 25.1% 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% shareholding in CPSA had been referred to a sole arbitrator
appointed by the International Court of Arbitration of the
International Chamber of Commerce.
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% of CPSA previously held
by TMS as well as the 51% 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.
On 1 December 2017, Celamin announced that it had received a
favourable arbitration decision and TMS has been ordered to return
Celamin's 51% 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.
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:
In July 2017, Celamin successfully raised AUD1,050,000 (USD0.810
million) through a share placement to its major shareholders, Polo
and African Lion 3 Fund, and clients of Patersons Securities
Limited.
Subsequent to the end of the December 2017 quarter and following
the announcement of the arbitration success, Celamin announced a
successful capital raising of AUD1.55 million (USD1.19 million) in
a placement. Under the agreement, Polo acquired a further
1,320,000,000 ordinary shares in Celamin for a total consideration
of AUD330,000 (USD0.254 million) giving it an interest in
approximately 25.1% of Celamin's issued ordinary share capital. The
funds will be used by Celamin to pursue enforcement of the final
arbitration award, other legal actions in Tunisia and for general
working capital purposes.
Lithium, Iron, Vanadium and Precious Metals
PRISM Diversified Ltd (formerly Ironstone Resources)
-- Lithium, Iron, Vanadium and Precious Metals, Canada
-- 19.5% equity interest
PRISM Diversified ("PRISM"), headquartered in Calgary, Alberta
is advancing the development of its Clear Hills Project located in
the Peace Region of NW Alberta. Featuring a large compliant
poly-metallic iron and vanadium resource and lithium-bearing
brines, quality infrastructure, high value commodities, top tier
partners and local and institutional support - the Clear Hills
Project is designed to produce valuable commodities for the
advanced manufacturing and renewable energy industries.
PRISM's strategic plan includes two significant initiatives to
be undertaken in parallel through 2018, to advance its Clear Hills
Project through its pre-feasibility and feasibility study (FS)
stages in 2018, which are highlighted below.
Refined High-Purity Metal Powders - Iron, Vanadium and
Cobalt
With the global demand for refined metal powders accelerating
for use in powder metallurgy, metal injection molding and additive
manufacturing (3D printing) applications, PRISM has determined that
targeting this burgeoning market for specialty metal powders offers
the Company a near-term, low-risk, cash-flowing opportunity with
high returns on investment. This will provide PRISM 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 PRISM's Clear Hills
poly-metallic ore was sent for process suitability analysis to
their pilot plant. Subsequent to receiving positive results from a
preliminary test on the Company's ore in early 2017, PRISM entered
into an agreement with this 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 a multitude of metallurgical 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 cobalt and vanadium
co-products) in NW Alberta. Carbonyl iron powders, in select
markets, can sell for upwards of USD12,000 per tonne. In addition
to producing refined iron powders, recovery of vanadium pentoxide
powder will be determined using complementary technologies
developed by PRISM's technology partner.
PRISM will be conducting a pre-feasibility study and a
preliminary economic assessment (PEA) in Q2 2018 with the results
to be reported in a pre-feasibility (PFS) report by Q3 this year.
Following the PFS, a full feasibility study (FS) will be conducted,
with completion anticipated by end of 2018 or Q1 2019.
Production of Lithium Carbonate from Clear Hills lithium-rich
formation brines
With the burgeoning demand for lithium and vanadium "electric
metals" needed for batteries for use in electric cars, consumer
electronics and renewable energy storage, the spotlight has grown
on companies like PRISM. In addition to owning a significant
resource of vanadium pentoxide in the Clear Hills (2.45 billion
pounds contained), the company holds the mineral rights to lithium,
and other performance elements such as potash, bromine and boron,
in the Devonian-age reservoirs that underlie its permits. These
carbonate reservoirs, that typically produce oil and gas, also
contain significant amounts of formation waters with elevated
concentrations of lithium, a key component of rechargeable
batteries.
PRISM 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, the Company 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 underlying its existing Clear Hills land
position.
Since solar evaporation, used in South America to concentrate
lithium, is untenable in northern climates, a key element in
commercializing lithium production from formation brines is to
rapidly and economically pre-concentrate the lithium within a short
time period prior to refining the lithium into its marketable
carbonate form. PRISM has been working with a Canadian company with
expertise in remediating waste and production waters, and has
successfully demonstrated that its patented "direct-extraction"
technology is well-suited to pre-concentrating lithium in brines,
achieving a concentration factor of 26.5.
Based on the success of its direct-extraction tests, PRISM
acquired an additional 1.4 million acres (580,000 Ha) of metallic
and industrial mineral permits prospective for the production of
lithium-bearing formation water (brine) in NW Alberta in late 2017.
PRISM now holds the largest contiguous blocks of mineral permits in
the province (1.88 million acres), which feature well-developed oil
and gas infrastructure that produce high volumes of formation brine
suitable for direct-extraction of lithium.
Starting in Q2 2018, PRISM will be undertaking its
pre-feasibility level of work, culminating in a PFS report and a
PEA by Q3 2018. A pilot demonstration of the technology is expected
to be conducted in Q3 this year, leading to the development of a
full feasibility study, to be completed in Q1 2019.
An exclusive license is being negotiated between the companies
to implement the technology to process PRISM's Clear Hills brines,
in addition to seeking potential third-party licensing
opportunities. The jointly-developed process will be known as
LiREC(R) .
Capital Raise Program
PRISM, is undertaking a capital raise program targeting C$10
million (USD7.63 million) in new equity by end of Q1 2018, to
support the ongoing development of its commercial carbonyl powder
and lithium carbonate projects. It is anticipated new operating
subsidiaries of PRISM will be created for each project, with
PRISM's shareholders retaining a major interest in each entity.
Investment Update
Through implementation of PRISM's price protection mechanism in
the latter half of 2017, Polo's interest is currently 19.5%.
Financial Position
The Group reported an operating loss of USD993,000 for the six
months to 31 December 2017
(31 December 2016: UD$1.02 million). As at 21 March 2018, the
Group had a net position of cash, receivables and short term
investments of USD16.77 million (31 December 2017: USD16.81
million). Listed and unlisted investments at marked to market
value, cost and valuation amounted to USD47.80 million (31 December
2017: USD48.13 million). The combined total of cash, receivables,
payables, listed and unlisted investments was USD61.45 million as
of 21 March 2018 (31 December 2017: USD61.81 million) which is
equivalent to a Net Asset value of approximately 14.06 pence per
Polo share, USD/GBP = 0.7134 (31 December 2017: 14.69 pence per
share, USD/GBP = 0.7412).
The Directors have reviewed the Group's budget 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
Company's cash balances. Additionally, the Directors have assessed
the likelihood of future funding requirements. Based on these
activities, the Directors are satisfied that the Company 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.
Outlook
Polo will continue to look at further investment opportunities
that fit the Company's investment strategy. The companies we are
invested in are across a broad range of commodities including old
industry as well as new industry. We believe that we have a well
balance portfolio which will deliver returns for shareholders.
Whilst looking to deliver this, we are taking into account the need
to progress into the new greener sector whilst allowing for the
requirements of the more traditional resources. Polo will continue
to actively manage its portfolio taking into account these
trends.
Although all natural resource investments remain vulnerable to
near-term market instabilities, I remain confident 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
Polo Resources Limited
("Polo", "Polo Resources" or the "Company")
Unaudited Interim Results for the six months ended 31 December
2017
POLO RESOURCES LTD
CONSOLIDATED INCOME STATEMENT
FOR THE 6 MONTHSED 31 DECEMBER 2017
6 months 6 months Year ended
ended 31 ended 31 30 June
December December 2017
2017 2016
Note (unaudited) (unaudited) (audited)
$ 000's $ 000's $ 000's
(Loss) on sale of
investments - (4) (4)
Investment income 50 15 59
Impairment of AFS
investments - - (325)
Administrative & exploration
expenses (1,041) (1,040) (2,284)
Expensed exploration
costs - - (454)
Impairment of exploration
and evaluation costs - - (2,026)
Currency exchange
(loss)/gain (2) 5 -
Group operating (loss) (993) (1,024) (5,034)
------------- ------------- -----------
Share of associates
results (768) (333) (1,799)
Finance revenue 177 80 383
(Loss) before taxation (1,584) (1,277) (6,450)
Income tax expense - - -
Retained (loss) for
the financial period (1,584) (1,277) (6,450)
------------- ------------- -----------
Attributable to:
Equity holders of
the parent (1,583) (1,276) (6,202)
Non-controlling interests (1) (1) (248)
------------- ------------- -----------
(1,584) (1,277) (6,450)
------------- ------------- -----------
Earnings per share: 2
Basic earnings per
share (US cents) (0.51) (0.41) (2.07)
Diluted earnings per
share (US cents) (0.50) (0.40) (2.06)
POLO RESOURCES LTD
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE 6 MONTHSED 31 DECEMBER 2017
6 months 6 months Year ended
ended 31 ended 31 30 June
December December 2017
2017 2016
(unaudited) (unaudited) (audited)
$ 000's $ 000's $ 000's
Retained (loss) for
the period (1,584) (1,277) (6,450)
Gain on market value
revaluation of available
for sale investments 16,114 4,341 1,713
Currency translation
differences 64 (249) (559)
Other comprehensive
income for the period
net of taxation 16,178 4,092 1,154
------------- ------------- -----------
Total comprehensive
income 14,594 2,815 (5,296)
------------- ------------- -----------
POLO RESOURCES LTD
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2017
31 December 31 December 30 June
2017 2016 2017
Note (unaudited) (unaudited) (audited)
$ 000's $ 000's $ 000's
Non-current assets
Tangible assets 2,475 5,256 2,475
Interest in associates 3 3,140 4,550 3,084
Available for sale
investments 4 42,519 29,558 27,662
Trade and other receivables 3,843 3,678 3,757
Total non-current
assets 51,977 43,042 36,978
-------------- ------------- -----------
Current assets
Trade and other receivables 3,788 2,959 3,961
Available for sale
investments 4 6,758 6,528 5,501
Cash and cash equivalents 2,416 6,359 4,010
-------------- ------------- -----------
Total current assets 12,962 15,846 13,472
-------------- ------------- -----------
Total Assets 64,939 58,888 50,450
-------------- ------------- -----------
Current Liabilities
Trade and other payables (3,125) (3,557) (3,230)
-------------- ------------- -----------
Total Liabilities (3,125) (3,557) (3,230)
-------------- ------------- -----------
Net Assets 61,814 55,331 47,220
============== ============= ===========
Shareholders' equity
Share capital - - -
Share premium 306,714 306,714 306,714
Share based payment
reserve 454 908 454
Foreign exchange
reserve 17,191 17,437 17,127
Available for sale
investments reserve 15,451 2,355 (682)
Retained earnings (274,656) (269,049) (273,073)
Minority interest (3,340) (3,034) (3,320)
-------------- ------------- -----------
Total Equity 61,814 55,331 47,220
============== ============= ===========
POLO RESOURCES LTD
CONSOLIDATED CASH FLOW STATEMENT
FOR THE 6 MONTHSED 31 DECEMBER 2017
6 months 6 months Year ended
ended 31 ended 31 30 June
December December 2017
2017 2016
(unaudited) (unaudited) (audited)
Cash flows from operating $ 000's $ 000's $ 000's
activities
Operating (loss) (993) (1,024) (5,034)
Decrease/(Increase) in
trade and other receivables 173 (510) (1,512)
(Decrease)/Increase in
trade and other payables (105) 306 (21)
(Increase) in available
for sale investments - (1,122) (1,608)
Foreign exchange (gain)/
loss 2 (5) (11)
Share options expensed - - -
Impairment of AFS investments - - 325
Loss on sale of PPE - - 51
Depreciation and impairment - - 2,026
------------- ------------- -----------
Net cash (outflow) from
operating activities (923) (2,355) (5,784)
------------- ------------- -----------
Cash flows from investing
activities
Finance revenue 177 80 383
(Payments) to purchase - (716) -
of tangible assets
Receipts/(Payments) for (824) - -
investments in associates
Loan (advanced) to third
party (87) (75) (154)
Net cash (outflow) from
investing activities (734) (711) 229
------------- ------------- -----------
Cash flows from financing
activities
Issue of ordinary share - - -
capital
Net cash (outflow) from - - -
financing activities
------------- ------------- -----------
Net (decrease) in cash
and cash equivalents (1,657) (3,066) (5,555)
Cash and cash equivalents
at beginning of period 4,010 9,615 9,615
Exchange gain/(loss)
on cash and cash equivalents 63 (190) (50)
------------- ------------- -----------
Cash and cash equivalents
at end of period 2,416 6,359 4,010
------------- ------------- -----------
POLO RESOURCES LTD
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited)
FOR THE 6 MONTHSED 31 DECEMBER 2017
Available
for Foreign Share
sale currency based Non-
Equity investment translation payment Retained Controlling Total
Contribution reserve reserve reserve earnings Total Interest Equity
Group $ 000's $ 000's $ 000's $ 000's $ 000's $ 000's $000's $ 000's
(unaudited)
As at
1 July
2017 306,714 (682) 17,127 454 (273,073) 50,540 (3,320) 47,220
(Loss)
for the
period - - - - (1,583) (1,583) (1) (1,584)
Gain/(Loss)
on market
value
revaluation
of available
for sale
investments - 16,133 - - - 16,133 (19) 16,114
Transfer - - - - - - - -
to income
statement
Currency
translation
differences - - 64 - - 64 - 64
-------------- ------------ ------------- --------- ---------- -------- ------------- --------
Total
Comprehensive
income - 16,133 64 - (1,583) 14,614 (20) 14,594
Share - - - - - - - -
capital
issued
Share
options
expired
Total - - - - - - - -
contributions
by and
distributions
to owners
of the
Company
As at
31 December
2017 306,714 15,451 17,191 454 (274,656) 65,154 (3,340) 61,814
-------------- ------------ ------------- --------- ---------- -------- ------------- --------
Available
for Foreign Share
sale currency based Non-
Equity investment translation payment Retained Controlling Total
Contribution reserve reserve reserve earnings Total Interest equity
Group $ 000's $ 000's $ 000's $ 000's $ 000's $ 000's $000's $ 000's
(unaudited)
As at
1 July
2016 306,714 (2,434) 17,686 908 (267,325) 55,549 (3,033) 52,516
(Loss)
for the
period - - - - (1,276) (1,276) (1) (1,277)
Gain/(Loss)
on market
value
revaluation
of available
for sale
investments - 4,341 - - - 4,341 - 4,341
Transfer
to income
statement - 448 - - (448) - - -
Currency
translation
differences - (249) - - (249) - (249)
-------------- ------------ ------------- --------- ---------- -------- ------------- --------
Total
Comprehensive
income - 4,789 (249) - (1,724) 2,816 (1) 2,815
Share - - - - - - - -
capital
issued
Share
options
expired
Total - - - - - - - -
contributions
by and
distributions
to owners
of the
Company
As at
31 December
2016 306,714 2,355 17,437 908 (269,049) 58,365 (3,034) 55,331
-------------- ------------ ------------- --------- ---------- -------- ------------- --------
POLO RESOURCES LTD
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited)
(continued)
FOR THE 6 MONTHSED 31 DECEMBER 2017
Equity Available Foreign Share Retained Total Non- Total
Contribution for currency based earnings Controlling equity
sale translation payment Interest
investment reserve reserve
reserve
Group $ 000's $ 000's $ 000's $ 000's $ 000's $ 000's $000's $ 000's
(audited)
As at 1
July 2016 306,714 (2,434) 17,686 908 (267,325) 55,549 (3,033) 52,516
(Loss) for
the period - - - - (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 - - -
Share issued - - - - - - - -
-------------- ------------ ------------- --------- ---------- -------- ------------- --------
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
-------------- ------------ ------------- --------- ---------- -------- ------------- --------
POLO RESOURCES LTD
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE 6 MONTHSED 31 DECEMBER 2017
1. Basis of preparation
The consolidated financial statements have been prepared under
the historical cost convention and on a going concern basis and in
accordance with International Financial Reporting Standards and
IFRIC interpretations adopted for use in the European Union
("IFRS") and those parts of the BVI Business Companies Act
applicable to companies reporting under IFRS.
The financial information for the period ended 31 December 2017
has not been audited or reviewed in accordance with the
International Standard on Review Engagements 2410 issued by the
Auditing Practices Board. The figures were prepared using
applicable accounting policies and practices consistent with those
adopted in the statutory accounts for the period ended 30 June 2017
and as expected to be adopted in the statutory accounts for the
year ending 30 June 2018. The figures for the period ended 30 June
2017 have been extracted from the accounts for the period ended 30
June 2017, which are available on the Company's website at
www.poloresources.com, and contain an unqualified audit report.
The financial information contained in this document does not
constitute statutory financial statements. In the opinion of the
directors the financial information for this period fairly presents
the financial position, results of operations and cash flows for
this period.
Statement of compliance
These condensed consolidated interim financial statements have
been prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union with the
exception of International Accounting Standard ('IAS') 34 - Interim
Financial Reporting. Accordingly the interim financial statements
do not include all of the information or disclosures required in
the annual financial statements and should be read in conjunction
with the Group's 2017 annual financial statements.
Basis of consolidation
The consolidated financial statements comprise the financial
statements of Polo Resources Limited and its controlled entities.
The financial statements of controlled entities are included in the
consolidated financial statements from the date control commences
until the date control ceases.
The financial statements of subsidiaries are prepared for the
same reporting period as the parent company, using consistent
accounting policies. All inter-company balances and transactions
have been eliminated in full.
Foreign currencies
(a) Functional and presentation currency
The functional currency of each entity is determined after
consideration of the primary economic environment of the entity.
The group's presentational currency is US Dollar ($).
(b) Group companies
The results and financial position of all the group entities are
translated into the presentation currency as follows:
-- Assets, liabilities and equity for each balance sheet
presented are translated at the closing rate at the date of that
balance sheet;
-- Income and expenses for each income statement are translated at average exchange rates; and
-- All resulting exchange differences are recognized as a separate component of equity.
(c) Rates of exchange
US$ to one unit of foreign currency were as follows:
Average Average
As at for the As at 30 for the
31 December 6 months June 2017 period
2017 to 31 December to 30 June
2017 2017
Pound Sterling 1.34912 1.31813 1.29687 N/A
Australian
Dollar 0.78049 0.77916 0.76627 N/A
Canadian
Dollar 0.79659 0.79253 0.76776 N/A
Singapore
Dollar 0.74801 0.73647 0.72434 N/A
-------------- ---------------- ------------ ------------
POLO RESOURCES LTD
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE 6 MONTHSED 31 DECEMBER 2017
2. Earnings per share
The calculation of earnings per share is based on the (loss)
after taxation divided by the weighted average number of shares in
issue during the period:
6 Months 6 Months
ended 31 ended 31
December December
2017 2016
(unaudited) (unaudited) Year 30
June 2017
(audited)
Net (loss) after
taxation ($000's) (1,584) (1,277) (6,450)
Weighted average
number of ordinary
shares used in calculating
basic earnings per
share (millions) 311.79 311.79 311.79
------------- ------------- ------------
Basic (loss) per
share (expressed
in US cents) (0.51) (0.41) (2.07)
------------- ------------- ------------
Weighted average
number of ordinary
shares used in calculating
fully diluted earnings
per share (millions) 313.79 315.79 313.79
------------- ------------- ------------
Diluted (loss) per
share (expressed
in US cents) (0.50) (0.40) (2.06)
------------- ------------- ------------
Diluted earnings per share are calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. The company
has one category of dilutive potential ordinary shares, namely
share options. For share options, a calculation is done to
determine the number of shares that could have been acquired at
fair value (determine as the average period market share price of
the company's shares) based on the monetary value of the
subscription rights attached to outstanding share options. The
number of shares calculated as above is compared with the number of
shares that would have been issued assuming the exercise of the
share options.
3. Interest in associates
2017
$ 000's
Group
At beginning of the period 3,084
Investments in associates
- equity purchases 824
Share of associates' loss
for the period (768)
As at 31 December 2017 3,140
-----------
The breakdown of the carrying values and fair
values at the balance sheet date of the Group's
interest in listed and unlisted associates
is as follows:
Non-current assets Carrying Fair Value
Value
$ 000's $ 000's
GCM Resources Plc (listed) 2,507 5,813
Celamin Holdings NL (listed) 633 7,227
3,140 13,040
--------- -----------
The breakdown of the fair values as at 21
March 2018 of the Group's interest in listed
and unlisted associates is as follows:
Non-current assets Fair Value
$ 000's
GCM Resources Plc (listed) 7,847
Celamin Holdings NL (listed) 17,288
25,135
-----------
Polo acquired 1,320,000,000 ordinary
shares in Celamin Holdings NL via a
share placement which was completed
in Feb 2018.
4. Available for sale investments
Group - Listed & Unlisted $ 000's
Investments
At 1 July 2017 33,163
Acquired during the period -
Disposal during the period -
Realised gain / (loss) on -
disposal
Movement in market value 16,114
--------
At 31 December 2017 49,277
--------
The available for sale investments
splits are as below:
Non-current assets - listed 32,767
Non-current assets - unlisted 9,752
Current assets - listed 5,961
Current assets - unlisted 797
--------
49,277
--------
Available-for-sale investments comprise investments in unlisted
and listed securities (which are traded on regulated stock markets)
and which are held by the Group as a mix of strategic and short
term investments.
5. Events after the end of the reporting period
There are no events after the end of the reporting period to
disclose.
6. Financial information
The financial information set out above does not constitute the
Group's statutory accounts for the period ended 30 June 2017, but
is derived from those accounts. Statutory accounts for the period
have been delivered to the shareholders, and the auditors made an
unqualified report thereon.
A copy of this interim financial report is available on the
Company's website: www.poloresources.com
Corporate Information
Registered number 1406187 registered in British Virgin Islands
Directors Datuk Michael Tang - Executive Chairman
Gary Lye - Non-Executive Director
Kian Meng Cheah - Non-Executive Director
Registered Office Craigmuir Chambers
Road Town, Tortola
British Virgin Islands VG 1110
Email: info@poloresources.com
Website: www.poloresources.com
Auditors Chapman Davis LLP
2 Chapel Court
London SE1 1HH, United Kingdom
Nominated Advisor Allenby Capital Limited
5 St. Helen's Place
London EC3A 6AB
United Kingdom
Broker Liberum Capital Limited
Ropemaker Place, Level 12
25 Ropemaker Street
London EC2Y 9LY, United Kingdom
Principal Banker Barclays Bank PLC
Barclays House
Victoria Street
Douglas, Isle of Man, IM99 1AJ
Registrars Computershare Investor Services (Jersey) Limited
Queensway House
Hilgrove Street
St Helier
Jersey JE1 1ES, Channel Islands
Depositary Interest Computershare Investor Services Plc
The Pavilions
Bridgwater Road
Bristol BS99 6ZY, United Kingdom
Solicitors for BVI Law Solicitors for United Kingdom Law
Harney Westwood & Riegels LLP Dentons UKMEA LLP
Third Floor, 7 Ludgate Broadway One Fleet Place
London EC4V 6DX London EC4M 7WS
United Kingdom United Kingdom
Walkers Solicitors for Australian Law
171 Main Street Hunt & Humphry
PO Box 92, Road Town 15 Colin Street, West Perth 6005
Tortola VG1110 Western Australia
British Virgin Islands
Solicitors for Canadian Law
Borden Ladner Gervais LLP
Scotia Plaza, 40 King Street West, 44th Floor
Toronto, Ontario, M5H 3Y4
Canada
This information is provided by RNS
The company news service from the London Stock Exchange
END
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