Final announcement for the year to 31 March 2014
Final announcement for the year to 31 March 2014
Your directors submit the audited financial statements of Aorere Resources Limited for the 12 months to 31 March 2014. The trading result for the period was a loss of $46,000 (2013 loss $471,000).
|Results for announcement to the market|
|Reporting Period||Year ended 31 March 2014|
|Previous Reporting Period||Year ended 31 March 2013|
|Revenue from ordinary activities||2014:
|Profit (loss) from ordinary activities after tax attributable to security holder||2014: $(46,000), 2013: $(471,000)||-|
|Net profit (loss) attributable to security holders||2014:
|Interim/Final Dividend||Amount per security||Imputed amount per security|
|It is not proposed to pay a dividend for the reporting period||N/A||N/A|
|Record Date||Not Applicable|
|Dividend Payment Date||Not Applicable|
revenue received increased during the year.|
The gain on disposal of available-for-sale assets was $145,000 for the year. compared to a loss of $9,000 the previous year.
There have been no major changes or trends in the Group’s business subsequent to 31 March 2014.
Aorere Resources Ltd does not operate any dividend or distribution reinvestment plan.
Aorere Resources Ltd has not gained or lost control over any entities during the year.
It is again with pleasure I can report on the activities of Aorere Resources Limited for the year to 31 March. The last 12 months has been a period of consolidation and positioning of the company for future growth. The consolidation has been due to the following factors:
1 To allow the company to identify local projects that will provide the impetus for growth over the next 2-3 years.
2 The delay in Chatham Rock Phosphate (CRP) securing their Mining Permit which put back project time frames by several months.
We had planned a Share Purchase Plan in July-August 2013 but the directors felt that we may not get the support required to progress the mineral projects identified due to the funds that had been invested in CRP by people who are shareholders of both companies. We were also aware the mineral sector was not in a growth phase and so decided to wait a further 12 months for this cycle to move forward.
A positive outcome for Aorere over the last six months has been the Farm-Out Agreement of the Kotuku petroleum permit and subsequent listing of Mosman Oil and Gas Limited on the AIM market of the London Stock Exchange. We subsequently entered into an arrangement with Mosman, increasing our shareholding in the company by a further£150,000 when Aorere shares were issued to the equivalent amount at 1.12 cents per share. This was a significant premium on the prevailing market share price of Aorere.
During the financial year, equity funds rose from $4.5 million to $5.1 million predominantly due to the issuing of shares and gains in the value of our investment in Mosman.
Regarding the General Election in September, we hope any incoming government will recognise the importance of the extraction industries to New Zealand’s economic future and that environmental safeguards now in place effectively safeguard our natural environment.
We have now identified some new projects which we believe have considerable potential. Our strategy for these prospects is to fund the exploration and potentially open these projects to joint venture participation.
We would like to continue the model used with CRP which is to build exploration companies from these new projects and yet to be identified prospects. We also believe there are opportunities to farm-in to existing mineral and petroleum programmes as well as apply for new permits directly with New Zealand Petroleum and Minerals.
2014 is proving to be a very active year with a number of our investments involved in exciting developments.
Chatham Rock Phosphate
Chatham Rock Phosphate is our major investment, being worth $3.5 million at market value and it represents about 52.6% of our total assets.
The company has achieved a number of key milestones including:
• submitting its application for a marine consent with the Environmental Protection Authority in May. This starts a six-month process involving public hearings with a decision due in November. CRP withdrew its earlier draft marine consent mid-way through 2013 after delays in receiving its mining permit, as the company did not have the resources to undertake both mining and environmental consenting processes simultaneously.
• progressing towards a London AIM listing and allied capital raising in June-July to fund the company’s operations through the next year. In April CRP completed a $2.1 million rights issue, with a substantial bonus element. It was well received and, with underwriting, was fully subscribed. In June 2013 the company raised $1.5 million in an Initial Public Offering and later in the year raised more capital through issues to qualified investors. CRP has now raised $27.5 million over four years, and despite very difficult capital markets.
• receipt of a mining permit in December. The process took longer than anticipated as CRP waited for a new minerals permitting law to come into force and then for New Zealand Petroleum and Minerals to assess the application.
• applying for additional prospecting areas to the west and east of the granted permit. (see map below). The company also commissioned an independent estimation of the rock phosphate result, which concluded a contained 23.4 Mt of phosphorite, with a further 8 to 12 Mt that could be incorporated in the resource total with further sampling.
Over the past year CRP has refined its marine consent application and undertaken considerable consultation with interested parties. The company has also developed a spatial planning process that identifies areas of the ocean with high biodiversity or resource potential, and supports development decisions that balance conservation and economic values. This is a new way of looking at how the oceans could be managed, with the best available data used to identify areas to set aside for environmental protection and others that could be made available to harvest their resources. It’s an extension to the work the fishing industry did to establish the more narrowly focused benthic protection areas.
An advantage to the delay has been being able to learn from observing the Trans Tasman Resources experience as the first to apply for a marine consent under the new EEZ legislation.
Concurrently with the consenting process, CRP is working with its technical partner Royal Boskalis on mining method and ship design, prior to starting the two-year ship conversion process with a target date for starting operations in 2017.
Petroleum Creek (Kotuku)
During the past year Aorere converted its interest in the onshore West Coast oil prospect into approximately 16.7% of AIM listed Mosman Oil and Gas Limited, which in turn holds the oil interest. This shareholding has a present market value of $2.5million at 12p and represents about 36% of Aorere’s total assets.
We believe there is real potential for the Petroleum Creek/Kotuku permit and look forward to its further development with the benefit of Mosman’s knowledge and sector expertise.
Mosman, a Perth-based oil exploration and development company, has awarded the drilling contract for the June drilling programme to Drill Force New Zealand. The programme comprises two wells plus two contingent wells, including the planned Crestal-1 and Crossroads-1 wells.
The company completed its listing on the AIM market in the United Kingdom in March, and a £1.5 million placement at 8p per share with Aorere investing £150,000. This, together with the shares received through the divestment of the Petroleum Creek (Kotuku) permit last year, brings Aorere’s total shareholding to 10,238,700 shares. Aorere also holds a royalty for 2% of net sales revenue deriving from the permit.
As part of the listing process, a competent person’s report found:
• The permit has hydrocarbon potential in deeper structural and stratigraphic plays to the west and north of the Kotuku seeps where the hydrocarbon kitchens are mapped.
• The permit has the ingredients to suggest accumulations of oil could be present, particularly at deeper levels. The project area is dominated by the Kotuku anticline, and 22 leads and prospects have been mapped over the feature. The shallow nature of many of the structures mapped is favourable for cost effective drilling.
The report also sets out the “prospective resources” at the permit. These suggest, in terms of unrisked recoverable oil within four reservoirs at the permit there is a:
• 90% probability of 4.8 MSTB (million stock tank barrels)
• 50% probability of 15.6 MSTB
• 10% probability of 59.2 MSTB
These represent quantities of petroleum estimated to be potentially recoverable from oil and gas deposits identified on the basis of indirect evidence but which have not yet been drilled. This represents a higher risk than contingent resources since the risk of discovery is also added. For prospective resources to become classified as contingent resources, hydrocarbons must be discovered, the accumulations must be further evaluated and an estimate of quantities that would be recoverable under appropriate development projects prepared.
Nevertheless, the Aorere board is excited by the potential for the permit and its investment in Mosman and will watch further developments arising from its 2014 work programme on the permit with interest.
Asian Mineral Resources
Asian Mineral Resources’ Ban Phuc Nickel Mine (BPNM) in northern Vietnam has now been operating for a year, after commissioning in May 2013. The construction of the Ban Phuc mine was completed on-time and budget began commercial production of the processing plant on schedule.
Mining activity started in early May, focusing on development within the massive sulphide vein (“MSV”) with construction activities substantially completed by June, and all key facilities ready for commissioning. Trucking of concentrate to the Port of Hai Phong began in August and by September the plant performance had shown good results with the expectation to transfer to full operational phase by the end of October.
On 19 November, the vessel MV Rich Glory departed the Port of Hai Phong, with 5,000 wet metric tonnes of BPNM nickel concentrate at an average nickel grade of 9.5%. The shipment was the first export sale of nickel concentrate for BPNM and also from Vietnam. A second shipment of 5,500 wet metric tonnes took place during December making a total of 10,500 wet metric tonnes sold for the year.
The mine will produce an average of 360,000 tonnes of ore per annum, higher than earlier budgeted, and is expected to improve overall project returns. The mining license was successfully amended to allow for these increased excavation rates.
The focus for the current year is to obtain licences to enable further exploration and analyse opportunities to extend the life of the mine within the high grade areas so AMR can leverage the 30% additional installed capacity at its processing plant. Work is also progressing on developing a smelter that should reduce the export tariff and significantly improve returns.
King Solomon Mines
The company is focused on the sale of Sonid North, its principal project in Inner Mongolia. The state of the commodities market has made it difficult to achieve an early sale.
KSM sold of its office building in Huhhot, Inner Mongolia, China for RMB 1.6 million (A$294,000), compared with a carrying value of A$262,000 and continues to assess the prospectivity of the remaining projects in Inner Mongolia, and the funding needed to advance these to sale, joint venture or to attract further funds to expand the projects.
It is also reviewing a number of minerals opportunities as potential acquisitions. The KSM board believes it will be successful in moving its focus to a new minerals opportunity.
Aorere has 8% of Fiji oil explorer Akura, which holds granted oil exploration licences and applications.
Akura has recently signed an agreement with an Australian group to fund oil exploration in Fiji worth A$3 million. A new company is being set up to hold the licences owned 35% by Akura and 65% by the yet to be identified Australian company.
Research and exploration by Akura has shown Fiji to have a high potential for the discovery of oil in onshore anticline traps associated with natural gas seepage, some dominated by butane. The main anticline target in the Nadi area has a projected length of 24 km, of which 12 km is coincident with natural gas seepage and such structures are capable of producing in excess of 100 million barrels of oil.
To complement our Mosman and CRP investments, your directors are assessing a small number of New Zealand based minerals prospects. These are still at an early stage and our focus is to provide development expertise and capital.
After a comparatively quiet period, we believe Aorere now has considerable momentum and prospects are exciting on a number of fronts. The coming months offer significant opportunities for wealth creation with your investment.