Your directors submit the unaudited financial statements of Aorere Resources Limited for the six months to 30 September 2014. The trading result for the period was a loss of $203,000 (2013 $81,000 loss).
Aorere is starting to show the results of its new lease of life, with a year of positive milestones.
Firstly, thank you to all shareholders who subscribed to our share purchase plan which raised $659,000. Most of the proceeds have been invested in an increased (8.9%) shareholding in Chatham Rock Phosphate (CRP), currently worth about $2.5 million: an investment we continue to consider highly strategic.
The past 12 months have been transformational with some long term investments. We have also made some initial forays into new investments offering significant promise.
Chatham Rock Phosphate
CRP has now completed the formal marine consent hearings, subject to any final requests for information from the Decision Making Committee. The Committee is focusing particularly on CRP’s proposed draft conditions and the company is still hoping for a decision before Christmas.
CRP has made a strong case with its key messages being:
- the proposal involves very limited environmental risks in a small area;
- there are economic, strategic and environmental benefits;
- it will not harm any other industry or resource user in New Zealand’s economy
- the few material environmental risks can be managed by conditions;
- the proposed impact is miniscule compared with fishing, which should be taken into account in considering the application
- the models are based on significant data which will be further validated; and
- Benthic Protected Areas should be replaced by more refined protected areas.
In summary, the project offers new environmental benefits for New Zealand’s farming industry, by using a low cadmium, low carbon footprint, low run-off, organic product. It will create a new industry with strong ties to agriculture – New Zealand’s most important export earner. CRP’s product will enhance security of supply and reduce exposure to political risk to New Zealand’s biggest industry.
CRP has raised more than $6 million since August, a total of more than $33 million over the past four years, and is still looking to list its shares on an international market in 2015.
Mosman Oil and Gas
We currently hold an 11.3% shareholding in Mosman, the Perth-based London AIM-listed company. We acquired this shareholding (worth about $4.4 million at current prices, and acquired for $1.2 million) in exchange for our West Coast Kotuku oil seeps prospect. Mosman has been evaluating the results of three wells it has drilled, commissioned seismic tests over the area and applied for four new New Zealand permits including acreage adjacent to existing permits.
Mosman has purchased additional assets including Trident Energy, which holds three offshore and onshore Australian oil interests.
The company has had an active year. Its share price has fluctuated dramatically on extremely high daily volumes at times. This has been partly influenced by an active investor programme in London and reactions to regular announcements about its activities.
Currently, Mosman has a total of seven permits or accepted permit applications in New Zealand and Australia. In addition, four new applications have been made in New Zealand as part of the recent 2014 Block Offer.
Petroleum Creek Project, New Zealand - The Petroleum Creek Project is a 143.6 km2 low cost onshore exploration project located near Greymouth in the South Island, in the southern extension of the proven Taranaki oil system. The project has a Mean Unrisked Recoverable Prospective Resource of 26.6 million barrels. In the first month of drilling, oil was discovered at Cross Roads-1 well which declared an oil discovery in June 2014 and at Crestal-1 which declared an oil discovery in July 2014. The current focus is on the appraisal of existing discoveries and additional exploration.
Officer Basin Project, Australia (Application) - Mosman has a 25% investment in the Officer Basin Project, a 22,527 km2 large land holding with significant exploration potential, which lies in one of the more explored parts of the Basin with road access. The project area is in the Western Australian part of the Officer Basin and offers both conventional and unconventional potential with hydrocarbon shows reported and all elements of a petroleum system are present.
Amadeus Basin Projects, Australia - Mosman owns two granted Permits and one application in the Amadeus Basin in Central Australia which total of 5,458 km2. The Amadeus Basin is considered one of the most prospective onshore areas in the Northern Territory of Australia for both conventional and unconventional oil and gas, and hosts the producing Mereenie, Palm Valley and Surprise fields.
Otway Basin Project, Australia - Mosman owns 30% of VIC/P62 in the Otway Basin. The permit was recently renewed and is in relatively shallow water. The 70% permit holder funded a 3D seismic survey in 2013. Within the Otway Basin there is commercial production both onshore and offshore.
Asian Mineral Resources
Our investment in Asian Mineral Resources (AMR) dates back to 2000. While it has had its ups and downs, it was encouraging, on a visit to Vietnam in October, to see the fruits of the company’s long-term plan to become a nickel producer.
AMR is TSX.V listed, is profitable, employs over 500 people and is said to be the largest tax payer in Hanoi. It has come a long way from being effectively a privately owned exploration company with little cash and few prospects of finding any. Aorere was the catalyst that made the difference, funding the company for several years, introducing substantial investors, and arranging the TSX.V listing.
AMR is one of the few new sources of nickel sulphide supply globally and is now developing what it calls a new nickel district in Vietnam. After starting commercial production from its Ban Phuc nickel mine and processing facility in mid-2013, it is now achieving annual production of more than 6,400 tonnes of nickel and 3,200 tonnes of copper concentrate, plus a cobalt by-product. The cash flow from Ban Phuc production is allowing AMR to develop further nickel deposits in the same area. The company has a number of mine expansion projects, as well as several advanced-stage exploration targets within trucking distance of the processing facility.
AMR has recently appointed a new operations manager and also upgraded its website at www.asianmineralres.com. It is developing a smelter project that will enhance the project’s economics and reduce the tariffs required by the Vietnamese government.
King Solomon Mines (KSO)
KSO continues to assess a number of mineral opportunities as potential acquisitions and recently
announced the appointment of Simon O’Loughlin and Simon Taylor to the Board. It also announced the resignation of Fu La.
On 16 October 2014, KSO announced the sale of two exploration licences containing the Naogaoshandu and Marmot projects. The exploration licences were transferred to a creditor as settlement of 301,000 RMB ($56,000 at the prevailing exchange rate) in outstanding debts.
More recently, KSO announced a renounceable rights issue at $0.002 per share, underwritten by Taylor Collison Limited, which will raise up to A$919,188 before costs. Aorere Resources has been significantly diluted by recent share issues but is still represented on the Board by Chris Castle.
Akura holds certain oil and gas leases in Fiji that are presently in the process of being renegotiated. Not a lot more can be revealed at present. Aorere holds 7.5% of Akura and has Board representation.
Over recent months we have built a platform of future prospects for our portfolio of investments. We are encouraged by CRP’s marine consent process and by the activity generated by Mosman. Both companies will potentially experience exciting developments over the next few months.
It is highly gratifying to see AMR finally earning profits, with dividends a possibility at some stage. KSM is showing some hopeful future signs and Akura also holds promise.
We remain positive about future prospects for all of our current investments. In addition we are continuing to investigate other New Zealand-based minerals projects which offer great promise.
Chris Castle Dene Biddlecombe
Managing director Chairman
To read the report in full - click here
Aorere chairman outlines new projects goal
The proposal by Aorere Resources Ltd (NZX: AOR) to take up new resource projects in New Zealand could see the company advancing them for joint ventures.
Company chairman Dene Biddlecombe said in the company’s latest annual report that the unnamed projects being examined were considered to have strong potential.
He cited the successful progression of the Kotuku oil seeps prospect near Greymouth by Mosman Oil & Gas Ltd, which farmed in on the property and then took it over after making Aorere a significant shareholder.
Success with this project, which has happened since the annual report’s reporting period, has not only enhanced Mosman but also Aorere.
Biddlecombe said the year to March 31 had been a period of consolidation for the company and had allowed Aorere to identify local projects that could provide the impetus for growth over the next two to three years.
Aorere is a significant shareholder in Chatham Rock Phosphate Ltd (NZAX: CRP) which experienced a delay in the securing of its mining permit to recover phosphate nodules from the Chatham Rise seabed.
Biddlecombe said directors were aware when CRP began to advance Chatham Rise that the mineral sector was ceasing to be in a growth phase. So, the company decided to wait for the business cycle to move forward - with the Mosman Oil deal a positive result.
As a result, for the financial year, Aorere’s equity funds rose from $4.5 million to $5.1 M predominantly through the issuing of shares in Mosman and gains in the value of the company’s investment in that AIM-listed oil explorer.
Biddlecombe said that of the September general election, Aorere hoped an incoming government will recognize the importance of the extraction industries to New Zealand’s economic future.
Annual report. (391.5 kilobytes)
Aorere Resources Limited
Cell: +64 21 558 185
Dear Aorere Resources shareholder,
This announcement was released to NZX earlier today.
Interim Report to 30 September 2013
Directors: Dene Biddlecombe (Chair), Chris Castle, Jill Hatchwell, Linda Sanders, Denis Kelly
Contacts: +64 (3) 525 9170 or +64 (21) 558 185 or firstname.lastname@example.org
Headquarters: Level 1, 93 The Terrace, Wellington, NZ
Postal: PO Box 231, Takaka 7142, NZ
Registered office: 1232 State Highway 60, Onekaka, Golden Bay 7172, NZ
Share registry: Link Market Services, 138 Tancred St, Ashburton
Auditors: BDO, Tower Building, 50 Customhouse Quay, Wellington
Legal Advisers: Duncan Cotterill, Tower Building 50 Customhouse Quay, Wellington
Bankers: ANZ Banking Group (New Zealand) Ltd, 215-229 Lambton Quay, Wellington
Your directors submit the unaudited financial statements of Aorere Resources Limited for the six months to 30 September 2013. The trading result for the period was a loss of $229,000 (2012 loss $484,000).
2013 is proving a transformational year with some long term investments progressing well and some prospective investments offering significant promise.
Chatham Rock Phosphate
Mining Licence - Chatham is our most significant investment and continues to make strong progress towards its goal of extracting rock phosphate nodules from the seabed in 400 metre waters on New Zealand’s Chatham Rise in the Exclusive Economic Zone.
Our focus over the period under review has been attaining a Mining Licence from the Government agency New Zealand Petroleum and Minerals. We had initially expected approval shortly after the passing of the new Crown Minerals Act in late May. However, the process has proved longer and more complex than we anticipated so the Chatham Board decided to focus on achieving that licence before submitting its Marine Consent application.
The team has worked to satisfy the requirements of the new regime. As the first of this type under the new Crown Minerals Act, NZP&M has undertaken a robust assessment process, but it has taken considerably longer than we expected. Chatham is continuing to make good headway in gaining the Mining Licence and at the time of writing is confident it is close to getting over the line, with the final few outstanding issues close to being resolved.
Marine Consent - The additional time and cost involved in the Mining Licence process has meant the Marine Consent time line has been pushed into 2014, with plans to submit the formal application in the first quarter of the new year. The centrepiece of this application is a comprehensive Environmental Impact Assessment, comprising well over 1200 pages and including more than 30 reports produced by a variety of experts.
Chatham produced a near-final version in early July before deciding to hold off formally submitting it. Since then, the team has worked to further improve it – especially building in feedback from peer-reviews and ongoing consultation. The consultation has been very valuable as it has raised questions the team has been able to address and has helped hone the messages central to the proposals.
Capital raising, Consultation and Conferences - Capital raising has continued with an Initial Public Offering in the New Zealand market in June which raised around $1.5 million and gained another 125 local shareholders. Chatham has also raised further capital among international investors, primarily private equity funds and high net worth individuals.
In total, the company has raised $24.5 million over the past three years, with many original Chatham and Aorere investors continuing to support the various capital raisings. The boards of both companies are grateful for your continued support.
The Edison Group provided an update of operations in September, which assessed Chatham’s value above $2, based on an analysis of the business plan.
Chatham has continued to engage with stakeholders, including meetings with Labour MPs, another visit to the Chatham Islands and environmental groups. The team presented at conferences both internationally – including its third Underwater Mining Institute forum – and in New Zealand, where the team spoke to the Australasian Institute of Mining and Metallurgy, the Institute of Chartered Accountants and a Mining Summit targeting international investors.
The focus ahead
Once Chatham receives the Mining Licence, directors will be talking to a range of investors to raise the capital needed to fund the Environmental Consent process. Based on the current business plan, Chatham anticipates receiving its Marine Consent in the third quarter of 2014. During that period, Chatham will continue to work with its technical partner Royal Boskalis on ship design prior to starting the two-year ship conversion process with a target date for starting operations of the second half of 2016.
Asian Mineral Resources
Asian Mineral Resources Limited’s Ban Phuc nickel mine in northern Vietnam was formally opened at the end of June. Operations at the underground mine re-commenced on 10 May and, with the commissioning of the processing plant, production ramped up over the ensuing months to a target run-rate of more than 6,600 tpa nickel, 3,300 tpa copper, and 200 tpa cobalt contained in concentrate.
After a 13-year involvement in this project, it is satisfying to see the company finally become a producer.
While events – the 2008 global financial crisis and the imposition of an onerous tariff - conspired against us achieving the returns we had initially hoped for and caused significant dilution of our investment, it remains a significant milestone. It was pleasing to note the mine was constructed with zero lost time injuries – a world-class achievement.
AMR continues to focus on progressing opportunities to expand production, including extensions to the Ban Phuc massive sulphide vein, and selected higher-grade portions of the disseminated sulphide deposit. This will enable AMR to 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.
Oil and Gas – Kotuku
In September, Aorere and Perth-based Mosman Oil and Gas announced plans to drill two onshore wells this summer at the Kotuku prospect on the West Coast. This follows approval from New Zealand Petroleum and Minerals to change conditions relating to Petroleum Exploration Permit 38526 over the Kotuku oil seeps near Greymouth.
The two-well programme is intended to provide sufficient data to establish an oil discovery and feasibility of commercial development. Mosman has indicated additional areas of the West Coast of interest for future investment. The new programme brings drilling ahead of the seismic testing with the plan to drill two exploration wells within the next 12 months, after which the permit holders will acquire seismic followed by another, perhaps deeper, exploration well.
In April, Aorere agreed to sell its interest in the permit to Mosman subsidiary Petroleum Creek. Aorere gained a 40% shareholding in Petroleum Creek and Mosman committed to fund the current work programme for the permit.
Mosman can exercise a call option to acquire Aorere’s Petroleum Creek shares by paying $900,000 in cash or in Mosman shares. In either case, Aorere has a 2% royalty over all petroleum obtained from the permit. Mosman brings extensive international experience in the oil and gas exploration sector and is backed by European, Australian and Asian investors.
Akura is a private company incorporated in Fiji with 38 shareholders, and 1.5 million shares on issue. Aorere holds 8% of Akura which has a strategic tenement holding in Fiji, with ~6,000 km2 as granted oil exploration licences and ~8,000 km2 as applications.
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 of which is 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.
Akura has entered into an agreement with Tavuni Capital, a Sydney-based capital services group, in relation to capital raising of F$1 to 3 million to acquire the onshore seismic data, select drill sites and complete feasibility studies for drilling.
King Solomon Mines
KSO is focused on the sale of Sonid North, its principal project in Inner Mongolia. The continuing difficult state of the commodities market has made it difficult to achieve an early sale.
KSO directors continue to review a number of minerals opportunities as potential acquisitions and they believe that the company will be successful in moving its focus to a new minerals opportunity.
A rigorous cost reduction approach is being applied by the company to minimise expenditure.
We are currently assessing a some exciting new opportunities. It is too early to discuss these in any detail but your board considers them to offer significant potential.
Our focus of identifying and developing New Zealand based minerals and oil prospects is presenting some interesting possibilities.
Change in Auditor
We can also advise that Crowe Horwath has resigned from the office of auditor of the company. We thank Crowe Horwath for their assistance over their time as auditor. The Board has appointed BDO as the new auditor of the company.
On behalf of the Board
Dene Biddlecombe Chris Castle
Chairman Managing Director
27 November 2013