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
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