Interim Report 6 months to 30 September 2016
/The interim report to shareholders for the six months to 30 September 2016 isavailable as PDF (link)
Financial results
Your directors submit the unaudited financial statements of Aorere Resources Limited for the six months to 30 September 2016. The trading result for the period was a loss of $521,000 (2015 - $149,000 loss). The increased loss arises after writing off the costs relating to the scoping, financing and acquisition of the Nevada gold project. Depending upon the outcome of that initiative some of these costs may be reversed and capitalised.
Operations Report
As at 28 November 2016, the market value of our portfolio comprised the following investments.
Portfolio
| Portfolio Analysis | ||
|---|---|---|
| Asian Minerals | 261,332 | 0.02 |
| Chatham Rock | 370,766 | 0.03 |
| Minor Investments | 30,025 | 0.00 |
| Akura | 9,855 | 0.00 |
| Cash | 132,070 | 0.01 |
| Accruals | (10,000) | (0.00) |
| 794,038 | 0.07 | |
Not included in the schedule above is a significant investment (in terms of both time and money) that has been committed by Aorere in putting together a deal whereby, Aorere could end up acquiring an investment in the various Nevada based gold assets presently held by American Innovative Minerals (“AIM”).
The outcome of this project is expected to be known within a matter of weeks. There are two possible outcomes – one being that we were not able to secure the finance to exercise the option to buy AIM for USD2 million. The other outcome, which is still achievable, is that we have secured enough financial backing, not only to acquire the AIM assets but to also fund the work programme required to increase the size of the gold resources to a substantially larger number than historically measured. This outcome will likely be very positive for Aorere and its shareholders. Negotiations with funding providers are ongoing.
Earlier this week we announced that Aorere Resources’ proposed Nevada gold investment is showing three times the gold resources previously estimated, following updated resource modelling.
Aorere announced today a significant increase in the Mineral Resource estimate to 1,069,000 ounces at a gold grade of 6.3 grams per tonne on a combined indicated and inferred basis.
The company has also secured an extension for the exclusive purchase agreement until the end of January 2017.
The discussion below deals with our existing portfolio.
Chatham Rock Phosphate
Chatham Rock Phosphate (“CRP”) remains the investment that we are most involved with operationally and it presently represents 46.7% of our assets. We are also the third largest shareholder in CRP with 5% and in conjunction with AOR and CRP directors the second largest holder with 8.5%.
CRP was granted a mining permit in 2013 to develop New Zealand’s only significant source of environmentally friendly pastoral phosphate fertiliser and is now preparing for a revised environmental consent application.
CRP’s role is focused on delivering a secure and sustainable local supply of low-cadmium phosphate that will reduce fertiliser run-off into waterways, produce healthier soils and shrink fertiliser needs over time.
The resource has an estimated gross value of $5 to $7 billion, representing one of New Zealand’s most valuable mineral assets and is of huge strategic significance because phosphate is essential to maintain New Zealand’s high agricultural productivity. Local and international investors have contributed more than $40 million to develop the project’s financial viability, environmental benefits and impacts, technical and logistical requirements, local and international product uses.
CRP proposes to extract up to 1.5 million tonnes of phosphate nodules from the top half metre of sand on identified parts of an 820km2 area on the Chatham Rise, 450km off the west coast of New Zealand, in waters of 400m. The earlier environmental consenting process has established extraction would have no material impact on fishing yields or profitability, marine mammals or seabirds.
In progressing plans to submit a new application, CRP is working with government officials to seek improvement in the permitting process and iwi, academic, industry and central government input to ensure New Zealand can benefit from an environmentally superior phosphate source.
Progress is continuing to achieve a Toronto Stock Exchange listing, to provide a more useful share-trading platform for overseas shareholders and facilitate the capital raising needed for the consenting process and beyond.
CRP is also seeking to own other sustainable rock phosphate sources, to move from being a single project company.
Asian Mineral Resources
Our investment in Asian Mineral Resources (AMR) dates back to 2000.
AMR is TSX.V listed, was profitable in cash flow terms, employed until recently over 500 people and was said to be the largest tax payer in Hanoi. It came 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 mined the Ban Phuc nickel deposit for the last three years at an accelerated production rate and has now exhausted the high grade massive sulphide deposit. The surrounding disseminated sulphide deposit is not economic to mine so, a decision was made to transition the operation into care and maintenance. Management are now continuing to secure the operational assets and establish on-site detailed care and maintenance compliance and reporting protocols and processes.
AMR has commenced review and interpretation of its low level exploration activities which includes field mapping, trenching and soil sampling. Following the assimilation and interpretation of this new information AMR will be in a position to revise the project ranking and priorities of its 26 initial exploration prospects.
Further design planning and analysis of the Ban Phuc disseminated resource will continue with AMR looking to conclude a preliminary economic assessment level report by end of QTR 2 2017.
Akura
Akura holds certain oil and gas leases in Fiji that are presently in the process of being renegotiated. Aorere holds 7.5% of Akura and has board representation.
The Future
We hold stakes in two companies that still have significant forward momentum. Depending on the outcome of the present Nevada gold negotiations we may have a new project, or we may not, in which case we will focus on supporting both Chatham and the new Asian Minerals.
Chris Castle, Managing director
Peter Liddle, Chairman
22 December 2016
Results for announcement to the market for 6 months to 30 September 2014
/Financial Results
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).
Operations Report
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
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.
The Future
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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