TIDMAEX
RNS Number : 4599N
Aminex PLC
30 September 2021
30 September 2021
2021 HALF-YEARLY REPORT
Aminex PLC ("Aminex" or "the Group" or "the Company") announces
its unaudited half-yearly report for the six months ended 30 June
2021.
REPORTING PERIOD HIGHLIGHTS
-- Loss for the period of US$1.59 million (30 June 2020: loss of
US$1.15 million), an increase of 38% on the same period last
year
-- Continued reduction in overheads (before one-offs and
exceptional items) with like-for-like expenditure down over 20%
compared with the same six-month period in 2020
POST PERIOD
-- Ministry of Energy of Tanzania granted a two-year licence
extension under the Ruvuma PSA, effective from 15 August 2021
-- Seismic acquisition contract for approximately 338 km(2) of
3D seismic awarded by the Ruvuma joint venture to Africa
Geophysical Services Limited following an extensive tendering
exercise by the operator
-- Significant progress in negotiations with the Tanzania
Petroleum Development Corporation on Kiliwani North gas sales
receivables
Charles Santos, Executive Chairman of Aminex commented:
"We are excited that the Ntorya gas development is entering a
period of operational activity by acquiring 3D seismic and well
execution, representing significant steps towards monetising this
large gas resource into existing infrastructure and an established
market in Tanzania. Moreover, we want to recognise the steadfast
and efficient efforts of APT in moving the Ruvuma project forward.
Finally, we are appreciative of the continued support of the
Tanzanian Ministry of Energy most recently demonstrated by its
granting of a two-year license extension for the Ruvuma PSA and of
the TPDC for their continued constructive negotiations regarding
the outstanding Kiliwani receivables."
For further information:
Aminex PLC +44 20 3198 8415
Charles Santos, Executive
Chairman
Davy +353 1 679 7788
Brian Garrahy
Camarco +44 20 3757 4980
Billy Clegg / James Crothers
/ Daniel Sherwen
INTERIM MANAGEMENT REPORT
Executive Chairman's Review
Aminex PLC's results for the six months ended 30 June 2021 are
set out below.
The Company reports a loss for the period of US$1.59 million (30
June 2020: US$1.15 million). Further information is provided in the
Financial Review.
The Company is pleased to report that ARA Petroleum Tanzania
Limited ("APT") has made meaningful progress on the Ruvuma project
within the last two months. APT has secured a two-year license
extension under the Ruvuma PSA from the Ministry of Energy of
Tanzania and awarded the Seismic Acquisition Contract. The seismic
acquisition operations are scheduled to commence imminently. APT
efficiently completed the procurement process and secured highly
competitive acquisition rates that benefit the project with
considerable financial savings. The Ntorya gas development is
entering a period of operational activity by acquiring 3D seismic
and well execution, representing significant steps towards
monetising this large gas resource into existing infrastructure and
an established market in Tanzania. APT has demonstrated focused
determination and commitment to move the project forward, for which
the Company is pleased.
The Company can also report that our negotiations with the
Tanzania Petroleum Development Corporation ("TPDC") have made
substantial progress in seeking resolution of the outstanding
payments for past gas sales from the Kiliwani North development
licence. The Company appreciates the TPDC's constructive approach
to the negotiations and believes that both parties agree that these
matters need to be resolved satisfactorily and swiftly to benefit
the local gas industry and enable Tanzania to secure further
investment and upstream gas development.
The Company believes that these developments together with other
positive developments in-country represent a strong commitment by
the Tanzanian authorities to create an attractive investment
climate to enable the success of their oil and gas industry, giving
us much hope about the future success of our Tanzanian
endeavours.
We continued to cut costs and reduce corporate overheads,
including reducing General and Administrative costs ("G&A").
Although the Company saw an increase in G&A expenditure during
the period compared to the same period in 2020, this increase
represents the one-off associated costs of actions taken during the
period to realise further cost savings. On a like-for-like basis,
the cost savings made in the period compared to the same period in
2020 are over 20%. I am happy to report the Company still targets a
reduction in gross G&A costs (before one-off costs and
exceptional items) to less than GBP1 million per annum by 2022,
representing a 75% reduction from 2018 levels. Through making these
initiatives the Company has established an appropriate structure of
capabilities and competencies that match the current requirements
of the business with a more flexible approach that de-risks our
business and can help create or attract strategic
opportunities.
Aminex continues to focus on a non-operating strategy. The Board
believes that this focus will allow it to ultimately improve
shareholder value. Having successfully identified a farm-in partner
on its key Ruvuma asset, the Company continues to actively seek
various options for its other assets that will align with its
strategy of reducing risk, securing investment and reducing
costs.
Kiliwani North and Kiliwani South - Kiliwani North Development
Licence ("KNDL")
As a result of reservoir pressure decline and
compartmentalisation, the Kiliwani North-1 well has not produced
during the period. The well has produced approximately 6.5 BCF of
gas to date, from a compartment estimated to contain approximately
10 BCF. Estimated gas resources have been independently audited by
RPS, who show the Kiliwani North structure to contain approximately
31 BCF (gross mean GIIP).
Aminex undertook preliminary remedial work to repair the
downhole safety valve in late 2018 which resulted in the flow of a
small volume of gas, to the gas facility, before the well quickly
ceased flow, likely due to fluid build-up in the wellbore. Aminex
has prepared a perforation strategy for a lower zone within the
reservoir and an alternative remedial work programme intended to
establish fluid levels in the wellbore, reservoir pressure and to
unload potential fluid using foam treatment.
The Company is working with the TPDC on agreed methods to handle
wellbore fluids which will potentially be unloaded during
operations on the well. Agreement and planning will be required
prior to undertaking operations, including resolution on the
outstanding receivables of US$8.34 million for previous gas sales
from KNDL and related late payment interest. As stated above, the
past year has seen a series of constructive meetings held between
the Company and the TPDC where substantial progress has been made
in reaching a resolution for amounts due for past gas sales.
Ruvuma PSA
Aminex completed the Farm-Out of 50% of its participating
interest in the Ruvuma PSA to ARA Petroleum Tanzania Limited
("APT") in October 2020, retaining a 25% non-operated interest.
Upon completion, APT assumed operatorship of the Ruvuma PSA and the
Group secured a US$35.0 million carry for its 25% participating
interest in the Ruvuma PSA. It is expected that the carry, which is
equivalent to US$140.0 million of gross field expenditure, will see
the Company to potentially significant volumes of production. The
Farm-Out includes a full carry for a minimum work programme
including the drilling and testing of the Chikumbi-1 well, the
acquisition of 3D seismic over a minimum of 200 km(2) within the
Ntorya Location area, and further production wells and
infrastructure as required to propel the project to its estimated
P50 production level of approximately 140 MMcf/d (gross project
levels), as shown in an io Ntorya commercialisation study. The
completion of the Farm-Out is the culmination of many successful
years of exploration and evaluation work by Aminex, who recognised
the underlying value and opportunities that could be gained in the
Ruvuma basin.
During the period the operator, APT, completed the tendering
process for the new high-resolution 3D seismic acquisition and
performed a re-interpretation of the existing 2D seismic dataset
and considers the Ntorya gas reservoir to be the product of a
stacked, high-energy, channelised sand system. Their revised
mapping and internal management estimates suggest a mean risked gas
in place ("GIIP") for the Ntorya accumulation of 3,024 Bcf, in
multiple lobes to be tested and a mean risked recoverable gas
resource of 1,990 Bcf, which will be appraised by the planned
seismic and drilling programme. In August, the Ruvuma joint venture
was granted a two-year Licence extension, effective from 15 August
2021, over the Mtwara Licence in respect of the Ntorya Location.
During the two-year extension period the operator APT is committed
to undertake acquiring 200 km(2) of 3D seismic (minimum expenditure
of US$7.0 million), drill the Chikumbi-1 exploration well (minimum
expenditure of US$15.0 million) and complete the negotiation of the
Gas Terms for the Ruvuma PSA with the TPDC and, using the data
gathered from the Chikumbi-1 and seismic acquisition, prepare and
submit an application for a Development Licence for the Ntorya
Location area. In September 2021, the Ruvuma joint venture
announced award of the seismic acquisition contract to Africa
Geophysical Services Limited ("AGS"). The award follows an
extensive tendering exercise conducted by APT for the seismic
programme during which the joint venture was able to take advantage
of favourable market conditions securing a lumpsum contract
considerably below the joint venture's expected budget for the
activity. AGS intends to commence activities in the Ntorya location
from October 2021. The acquisition will consist of approximately
338 km(2) of 3D seismic data
focusing on the area of primary interest. AGS will mobilise,
weather permitting, and focus on the proposed location for the
Chikumbi-1 well ("CH-1") to acquire as much data as possible before
the start of the rainy season with the programme re-commencing
after that with no additional cost to joint venture partners.
Nyuni Area PSA
The First Extension Period to the Nyuni Area PSA expired on 27
October 2019. The Board concluded that the carrying value of the
Nyuni asset was impaired and full provision was made at 31 December
2018 and subsequent expenditure, including in the reporting period,
has also been charged to the Income Statement.
In July 2019, Aminex submitted an application to the TPDC to
enter the Second Extension Period of three years together with a
request for an amendment to the work programme obligation for the
licence area. The proposed number of blocks to be retained under
the licence would reduce to five, from the current ten blocks under
licence. Although the proposed amended work programme and
associated commitment is being supported by the TPDC and PURA, the
Company continues in negotiations with the Minister of Energy.
Aminex remains focused on projects which will deliver commercial
gas to the Tanzanian markets in the near term and Aminex believes
the Nyuni Area acreage offers considerable upside exploration
potential to complement the development projects at Ntorya and
Kiliwani North. The proposed acreage to be retained generally lies
in the shallow water areas adjacent to the Kiliwani North
Development Licence, an area with existing gas infrastructure,
which will require the acquisition of 3D seismic to move shallow
water targets to drill ready status.
Tanzania has an energy deficit and has embarked on further
industrialisation development programmes which has seen the
planning and construction of numerous facilities along existing gas
delivery infrastructure either directly connected to or in close
proximity to Aminex's Tanzanian assets and which are expected to
increase local gas demand significantly in the near future. In
addition, it has been reported that discussions have been held
between Tanzanian Government officials and their counterparts in
neighbouring countries to explore the possibility of securing a
long-term supply of gas from Tanzania and adding to future gas
demand in the East African region. These positive developments in
the Tanzanian gas sector bode well for the commercialisation of
Aminex's assets in the future.
Charles Santos
Chief Executive
30 September 2021
Financial Review
Revenue Producing Operations
Revenues from continuing operations amounted to US$0.09 million
(30 June 2020: US$0.30 million). Group revenues during the first
six months of 2021 are derived from the provision of technical and
administrative services to joint venture operations.
Cost of sales was US$0.31 million (30 June 2020: US$0.39
million). The cost of sales for Kiliwani North operations amounted
to US$0.20 million (30 June 2020: US$0.09 million) and included
ongoing commercial discussions with the TPDC on recovery of the
TPDC gas sales receivables as well as general licence related
maintenance costs. There was no depletion charge for Kiliwani North
as the period saw no production (30 June 2020: nil). The balance of
the cost of sales amounting to US$0.11 million (30 June 2020:
US$0.30 million) related to the oilfield services operations and
minor non-operated costs related to the Group's interest in the
Ruvuma PSA. Accordingly, there was a gross loss of US$0.22 million
for the period compared with a gross loss of US$0.09 million for
the comparative period.
Group administrative expenses, excluding depreciation and net of
costs capitalised against projects, were US$0.82 million (30 June
2020: US$0.58 million), an increase of US$0.24 million. The
increase in expenses during the period reflects one-off costs
related to the implementation of cost saving actions including
legal and redundancy costs. The cost saving initiatives implemented
by the Company, which commenced in 2019, included savings in
respect of Directors' fees, employment costs, advisors' fees,
office and travel related costs. Initially in response to the
ongoing delays in completion of the Farm-Out transaction on the
Ruvuma PSA, this has enabled the Company to weather the economic
downturn as a result of the global COVID-19 pandemic and oil price
fall during 2020 both of which have had an adverse effect for the
industry. Management maintains strict expenditure controls and
continues to seek cost saving solutions and efficiencies across the
Group. The Company forecasts by 2022, these cost-saving efforts
will reduce gross general and administrative expenditure (before
one-off costs and exceptional items) to less than GBP1 million per
annum, representing a 75% reduction from 2018 levels. Depreciation
charged in the period was US$0.11 million (30 June 2020: US$0.11
million) and related predominantly to right of use assets.
In accordance with IFRS 9, the Group calculated an expected
credit loss based on its exposure to credit risk on its trade
receivables at the end of the period and recognised an impairment
on trade receivables of US$0.09 million (30 June 2020: US$0.09
million). This expected credit loss ("ECL") reflected the continued
delays by the TPDC to settle amounts due as discussions continue in
respect of amounts claimed by the TPDC. The ECL is calculated on
the full amount of US$8.34 million due to the Group for gas sales
and interest on late payment, with an equivalent reduction in the
liability due to JV partners representing their share of the
provision.
The Group recognised an impairment during the six-month period
against exploration and evaluation assets. The impairment
recognised against exploration and evaluation assets of US$0.30
million (30 June 2020: US$0.37 million) relates to expenditure
incurred on the Nyuni Area PSA predominantly related to own costs
for geological, geophysical and administrative work and licence
maintenance costs, along with training and licence fees. All
expenditure on the Nyuni Licence Area continues to be impaired
immediately to the income statement upon recognition following the
full impairment of the Nyuni Area Licence in 2018. The Group's
resulting net loss from operating activities was US$1.54 million
(30 June 2020: loss of US$1.15 million).
Finance costs amounted to US$0.05 million (30 June 2020: US$0.08
million), comprising US$0.04 million (30 June 2020: US$0.03
million) for the decommissioning interest charge and finance costs
of US$0.01 million related to foreign exchange losses on monetary
assets (30 June 2020: gain of US$0.08 million). The Group incurred
no interest expense in the six-month period (30 June 2020: US$0.04
million) as the Group became debt-free on the completion of the
Farm-Out and the subsequent settlement of the $5.0 million loan
funding from ARA. In the comparative six-month period the Group
also recognised a US$0.03 million charge for the finance charges on
finance leases.
The Group's net loss for the period amounted to US$1.59 million
(30 June 2020: loss of US$1.15 million).
Balance Sheet
The Group's investment in exploration and evaluation assets
increased from US$42.89 million at 31 December 2020 to US$42.93
million at 30 June 2021. The increase of US$0.04 million reflected
exploration and evaluation expenditure on the Kiliwani South CGU.
In accordance with the Group's accounting policy, the Group will
not record subsequent expenditure for its share of costs that are
carried by APT in relation to the Ruvuma PSA asset. The Group is
carried for US$35.0 million of development expenditure on the
Ruvuma PSA, and that carry stood at US$34.2 million at 30 June 2021
with expenditure in the period related to the operator establishing
operations in Tanzania, remapping of existing seismic and
progressing the acquisition of 3D seismic.
The carrying value of property, plant and equipment has
decreased from US$1.11 million at 31 December 2020 to US$1.00
million at 30 June 2021. The decrease relates predominantly to the
depreciation of right of use assets recognised in property, plant
and equipment. Current assets amounted to US$8.11 million (31
December 2020: US$9.00 million) with trade and other receivables of
US$7.62 million (31 December 2020: US$8.55 million), which as
operator includes joint venture parties' interests in gas revenues,
and cash and cash equivalents of US$0.49 million (31 December 2020:
US$0.45 million). The decrease in current assets of US$0.89 million
predominantly related to payment of interim period costs by ARA
related to the Ruvuma PSA Farm-Out due following the completion of
the Farm-Out.
Current liabilities amounted to US$11.36 million compared with
US$10.66 million at 31 December 2020. This balance included amounts
payable to the TPDC and joint venture partners for their profit
shares from invoiced gas sales, along with related VAT and excise
tax payable on the gas receivables invoices. The increase in
current liabilities predominantly relates to expenditures on
operated Tanzania gas assets and legal and redundancy costs
incurred as a result of cost saving initiatives. Non-current
liabilities amounting to US$0.92 million (31 December 2020: US$0.97
million) include the non-current decommissioning provision which
increased during the period by US$0.04 million from US$0.87 million
at 31 December 2020 to US$0.91 million, the increase relating to
the unwind of the discount charge during the period, offset by the
transfer of other long-term liabilities of US$0.67 million to
current liabilities. Non-current liabilities also include long-term
lease liabilities of US$0.01 million (31 December 2020: US$0.03
million) following the recognition of right-of-use assets and lease
liabilities in accordance with IFRS 16: Leases.
Total equity has decreased by US$1.59 million between 31
December 2020 and 30 June 2021 to US$39.77 million (31 December
2020: US$41.36 million). A net decrease of US$0.56 million to the
share option reserve, an increase in the foreign currency
translation reserve of US$0.01 million and the net movement of
US$1.03 million in retained earnings arising on the loss of US$1.59
million for the period, offset by the release from the share option
reserve of US$0.56 million to retained earnings following the
expiry of certain share options during the period.
Cash Flows
Net cash inflows due from operating activities was US$0.38
million during the period (30 June 2020: cash outflow of US$2.49
million). This was predominantly in relation to receipt of the
interim costs from ARA under the terms of the Ruvuma PSA Farm-Out.
This resulted in a decrease in debtors of US$1.01 million.
Creditors increased in the period by US$0.41 million predominantly
as a result of third-party costs on the Group's operated assets and
costs incurred in cost saving initiatives. Net cash outflows from
investing activities amounted to US$0.19 million (30 June 2020:
cash inflow US$0.76 million) related to expenditure on the Group's
exploration and evaluation assets, relating mostly to payments for
general licence maintenance of the Nyuni Area and Kiliwani South
gas assets. Net cash outflows from financing activities were
US$0.14 million (30 June 2020: cash inflow US$1.90 million) due to
payments of lease liabilities. Net cash and cash equivalents for
the six months ended 30 June 2021 therefore increased by US$0.05
million compared with an increase of US$0.16 million for the
comparative half-year period. The balance of net cash and cash
equivalents at 30 June 2021 was US$0.49 million (30 June 2020:
US$0.93 million).
Related party transactions
There have been no material changes in the related party
transactions affecting the financial position or the performance of
the Group in the period since publication of the 2020 Annual Report
other than those disclosed in Note 15 to the condensed consolidated
financial statements.
Going Concern
The financial statements of the Group are prepared on a going
concern basis.
The Directors have given careful consideration to the Group's
ability to continue as a going concern through review of cash flow
forecasts prepared by management for the period to 30 September
2022, review of the key assumptions on which these forecasts are
based and the sensitivity analysis. The forecasts reflect the
Group's best estimate of expenditures and receipts for the period.
The forecasts are regularly updated to enable continuous monitoring
and management of the Group's cash flow and liquidity risk. The
forecasts indicate that, taking account of the agreement between
the Group and ARA to enter into a loan of US$1.7 million, the Group
is required to source additional funding during the 12-month period
to have sufficient capital resources for a period of 12 months from
the date of approval of this annual report. It is the expectation
of the Board that the Group will source this funding via an equity
placement under its disapplication authority. The ARA loan
agreement is not yet executed and, whilst the Board fully
anticipate its completion, such funding is not guaranteed by ARA
under the terms of the loan agreement.
As part of its analysis in making the going concern assumption,
the Directors have considered the range of risks facing the
business on an ongoing basis, as set out in the risk section of the
2020 Annual Report that remain applicable to the Group. The
principal assumptions made in relation to the going concern
assessment relate to the proposed US$1.7 million loan from ARA,
historic gas sales to the TPDC, capital commitments on its operated
assets in Tanzania and the ongoing objection to a tax assessment in
Tanzania.
Trade receivables of US$8.3 million, of which Aminex's net share
is US$3.5 million, have not been taken into account in the cash
flow forecast due to the claims for certain amounts by the TPDC,
set out in Note 14 to the financial statements. Although this trade
receivable is due, the TPDC continue to delay payment until a
resolution is reached in respect of the claims and the Directors
consider it prudent not to take this receivable amount into
consideration of the Group's ability to continue as a going
concern. Any recovery of funds from the TPDC for past gas
receivables and related late payment interest would assist the
Group's working capital position.
As disclosed in Note 14, the Group received a tax assessment
from the TRA of US$2.2 million in relation to an audit covering the
period from 2013 to 2015 which is excluded from the cash forecast
as any cash outflow during the going concern period is considered
unlikely based on legal advice and the timeframes for tax cases in
Tanzania. Additionally, development of the Group's other assets in
Tanzania is excluded from the cash forecast as negotiations
continue with the Tanzanian authorities on the three-year extension
for the Nyuni PSA, including a revised work programme, as disclosed
in Note 14, and consequently any capital expenditure in the period
is unlikely to arise. However, a risk exists that the Group loses
its objection to the tax assessment or is unable to renegotiate or
defer commitments on its operated Licence interests during the
period. Additional funding would be required to meet these
potential liabilities. There remains significant uncertainty as
regards the ability of Aminex to raise funds, if required, in the
current market conditions due to the COVID-19 pandemic during the
going concern period. This may result in the Company having to
raise funds at whatever terms are available at the time.
These circumstances indicate that a material uncertainty exists
that may cast significant doubt on the Group's ability to continue
to apply the going concern basis of accounting. As a result of
their review, and despite the aforementioned material uncertainty,
the Directors have confidence in the Group's forecasts and have a
reasonable expectation that the Group will continue in operational
existence for the going concern assessment period and have
therefore used the going concern basis in preparing these
consolidated financial statements.
Principal Risks and Uncertainties
The Group's strategic objectives for its principal activities,
being the production and development of and the exploration for oil
and gas reserves, are only achievable if certain risks are managed
effectively. The Board has overall accountability for determining
the type and level of risk it is prepared to take. The Board is
assisted by the Audit and Risk Committee, which oversees the
process for review and monitoring of risks, and the implementation
of mitigation actions, by management. The Audit and Risk Committee
reviews management's findings regularly and reports to the Board
accordingly. Assessment of risks is made under four categories:
Strategic Risks, Operational Risks, Compliance Risks and Financial
Risks.
Aminex has reviewed and assessed the principal risks and
uncertainties at 30 June 2021 and concluded that the principal
risks identified at 31 December 2020 and disclosed on pages 24 to
25 of the 2020 Annual Report are still appropriate. The following
are considered to be the key principal risks facing the Group over
the next six months although there are other risks which may impact
the Group's performance:
-- Ability to secure other financing for Group operations
-- Ability to meet licence work commitments
-- Delayed or non-payment of receivables from the TPDC
-- Delay in approval of the Nyuni Area Second Extension Period with amended work commitments
-- Political and fiscal uncertainties
-- Lack of exploration, appraisal and development drilling success
-- The ongoing impact of the COVID-19 pandemic
Forward Looking Statements
Certain statements made in this half-yearly financial report are
forward-looking statements. Such statements are based on current
expectations and are subject to a number of risks and uncertainties
that could cause actual events or results to differ materially from
the expected future events or results referred to in these
forward-looking statements.
Statement of Directors Responsibilities
In respect of the Half-Yearly Financial Report
Each of the directors who held office at the date of this
report, confirm their responsibility for preparing the half-yearly
financial report in accordance with the Transparency (Directive
2004/109/EC) Regulations 2007 (as amended) and the Disclosure and
IAS 34 Interim Financial Reporting, as adopted by the EU and to the
best of each person's knowledge and belief:
-- the condensed consolidated financial statements comprising
the condensed consolidated income statement, the condensed
consolidated statement of comprehensive income, the condensed
consolidated balance sheet, the condensed consolidated statement of
changes in equity, the condensed consolidated statement of
cashflows and the related explanatory notes have been prepared in
accordance with IAS 34 Financial Reporting as adopted by the
EU.
-- The Interim Management Report includes a fair review of the information required by:
(a) Regulation 8(2) of the Transparency (Directive 2004/109/EC)
Regulations 2007, being an indication of important events that have
occurred during the first six months of the financial year and
their impact on the condensed set of financial statements; and a
description of the principal risks and uncertainties for the
remaining six months of the year; and
(b) Regulation 8(3) of the Transparency (Directive 2004/109/EC)
Regulations 2007, being related party transactions that have taken
place in the first six months of the current financial year and
that have materially affected the financial position or performance
of the entity during that period; and any changes in the related
party transactions described in the last annual report that could
do so.
On behalf of the Board
Charles Santos
Executive Chairman /Director
30 September 2021
Aminex PLC
CONDENSED CONSOLIDATED INCOME STATEMENT
for the six months ended 30 June 2021
Notes Unaudited Unaudited Audited
6 months 6 months Year ended
ended ended 31 December
30 June 2021 30 June 2020 2020
US$'000 US$'000 US$'000
Continuing operations
Revenue 2 86 300 384
Cost of sales (308) (391) (803)
Gross loss (222) (91) (419)
Administrative expenses (1,020) (610) (1,401)
Impairment against exploration
and evaluation assets 8 (302) (365) (690)
Impairment against property,
plant and equipment
assets - - (729)
Expected credit losses
of trade receivables 10 - (87) (424)
Loss from operating
activities (1,544) (1,153) (3,663)
Finance income 4 - 79 -
Finance costs 5 (48) (77) (310)
-------------- -------------- -------------
Loss before tax (1,592) (1,151) (3,973)
Income tax expense 6 - - (2,168)
Loss for the period 2 (1,592) (1,151) (6,141)
-------------- -------------- -------------
Loss per share
Basic and diluted (US
cents) 7 (0.04) (0.03) (0.16)
-------------- -------------- -------------
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2021
Unaudited Unaudited Audited
6 months ended 6 months Year ended
30 June 2021 ended 31 December
US$'000 30 June 2020 2020
US$'000 US$'000
Loss for the period (1,592) (1,151) (6,141)
Other comprehensive income
Items that are or may be
reclassified subsequently
to profit or loss:
Currency translation differences (7) (79) 44
Total comprehensive expense
for the period attributable
to the equity holders of
the Company (1,599) (1,230) (6,097)
---------------- -------------- -------------
Aminex PLC
CONDENSED CONSOLIDATED BALANCE SHEET
At 30 June 2021
Unaudited Unaudited Audited
30 June 30 June 31 December
2021 2020 2020
Notes US$'000 US$'000 US$'000
Assets
Non-current assets
Exploration and evaluation
assets 8 42,927 49,553 42,887
Property, plant and equipment 9 998 1,871 1,108
Total non-current assets 43,925 51,424 43,995
Current assets
Trade and other receivables 10 7,623 10,414 8,551
Cash and cash equivalents 11 491 932 449
--------- ------------- ------------
Total current assets 8,114 11,346 9,000
--------- ------------- ------------
TOTAL ASSETS 52,039 62,770 52,995
--------- ------------- ------------
Equity
Issued capital 69,206 69,206 69,206
Share premium 124,481 124,481 124,481
Other undenominated capital 234 234 234
Share option reserve 769 1,318 1,327
Foreign currency translation
reserve (2,143) (2,259) (2,136)
Retained earnings (152,782) (147,095) (151,748)
--------- ------------- ------------
Total equity 39,765 45,885 41,364
--------- ------------- ------------
Liabilities
Non-current liabilities
Long-term lease liabilities 9 96 32
Decommissioning provision 909 797 874
Other long-term liabilities - 61 67
Total non-current liabilities 918 954 973
--------- ------------- ------------
Current liabilities
Trade and other payables 12 11,245 13,727 10,467
Short-term lease liabilities 111 204 191
Borrowings 13 - 2,000 -
Total current liabilities 11,356 15,931 10,658
--------- ------------- ------------
Total liabilities 12,274 16,885 11,631
--------- ------------- ------------
TOTAL EQUITY AND LIABILITIES 52,039 62,770 52,995
--------- ------------- ------------
Aminex PLC
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2021
Attributable to equity shareholders of the Company
Foreign
currency
Share translation
Share Share Other undenominated option reserve Retained Total
capital premium capital reserve fund earnings equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
At 1 January 2020 69,206 124,481 234 2,264 (2,180) (147,234) 46,771
Comprehensive income
Loss for the period - - - - - (1,151) (1,151)
Currency translation
differences
Transactions with
shareholders of
the Company
recognised
directly in equity - - - - (79) - (79)
Shares issued - - - - - - -
Share based payment
charge - - - 344 - - 344
Share option reserve
transfer - - - (1,290) - 1,290 -
At 30 June 2020 69,206 124,481 234 1,318 (2,259) (147,095) 45,885
Comprehensive income
Loss for the period - - - 9 - (4,653) (4,644)
Currency translation
differences - - - - 123 - 123
At 31 December
2020 as previously
reported
Comprehensive income 69,206 124,481 234 1,327 (2,136) (151,748) 41,364
Loss for the period - - - - - (1,592) (1,592)
Currency translation
differences - - - - (7) - (7)
Transactions with
shareholders of
the Company
recognised
directly in equity
Shares issued - - - - - - -
Share based payment - - - - - - -
charge
Share option reserve
transfer - - - (558) - 558 -
---------- ---------- -------------------- --------- ------------- ------------ ---------
At 30 June 2021
(unaudited) 69,206 124,481 234 769 (2,143) (152,782) 39,765
---------- ---------- -------------------- --------- ------------- ------------ ---------
Aminex PLC
CONDENSED CONSOLIDATED STATEMENT OF CASHFLOWS
for the six months ended 30 June 2021
Unaudited Unaudited Audited
6 months 6 months Year ended
ended ended 31 December
30 June 2021 30 June 2020 2020
US$'000 US$'000 US$'000
Operating activities
Loss for the financial period (1,592) (1,151) (6,141)
Depreciation and depletion 112 115 242
Equity-settled share-based payments - 344 690
Finance costs 48 77 310
Impairment of exploration and evaluation
assets 302 365 690
Impairment of property, plant and
equipment - - 729
Expected credit loss charge 87 87 424
Capital gains tax on Farm Out - - 2,168
Decrease / (increase) in trade
and other receivables 1,013 (205) 436
Increase / (decrease) in trade
and other payables 409 45 (37)
------------- ------------- ------------
Net cash generated from / (used
in) operating activities 379 (323) (489)
------------- ------------- ------------
Tax paid - (2,168) (2,168)
Net cash inflows / (outflows) from
operating activities 379 (2,491) (2,657)
Investing activities
Acquisition of property, plant
and equipment - (2) (62)
Expenditure on exploration and
evaluation assets (186) (948) (1,308)
Advances on farm out - 1,705 2,000
Net cash (outflows) / inflows from
investing activities (186) 755 630
------------- ------------- ------------
Financing activities
Proceeds from the issue of share
capital - - - -
Payment of transaction costs on
issue of share capital - - -
Payment of lease liabilities (141) (105) (183)
Proceeds from Borrowings - 2,000 2,000
Net cash (outflows) / inflows from
financing activities (141) 1,895 1,817
------------- ------------- ------------
Net increase / (decrease) in cash
and cash equivalents 52 159 (210)
Cash and cash equivalents at 1
January 449 694 694
Foreign exchange (loss) / gain (10) 79 (35)
------------- ------------- ------------
Cash and cash equivalents at end
of the financial period 491 932 449
------------- ------------- ------------
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2021
1. Basis of preparation
The condensed consolidated financial statements included in this
Half-Yearly Financial Report have been prepared in accordance with
IAS 34 "Interim Financial Reporting" as adopted by the European
Union. They do not include all of the information required for full
annual statutory financial statements and should be read in
conjunction with the audited consolidated financial statements of
Aminex PLC as at and for the year ended 31 December 2020. The
financial information contained in the condensed financial
statements has been prepared in accordance with the accounting
policies set out in the 2020 Annual Report and Accounts.
The financial information presented herein does not amount to
statutory financial statements that are required by Part 6 of
Chapter 4 of the Companies Act 2014 to be annexed to the annual
return of the Company. The statutory financial statements for the
financial year ended 31 December 2020 were annexed to the annual
return and filed with the Registrar of Companies. The audit report
on those statutory financial statements was unqualified and
included an emphasis of matter paragraph relating to going
concern.
The financial statements have been prepared on the historical
cost basis, as modified for the measurement of certain financial
instruments at fair value through profit or loss. These financial
statements are presented in US Dollars ("USD") which is the
currency of the primary economic environment in which the Group
operates and are rounded to the nearest thousand, unless otherwise
stated. The preparation of the Half-Yearly Financial Report
requires the Directors to make judgements, estimates and
assumptions that affect the application of policies and reported
amounts of certain assets, liabilities, revenues and expenses
together with disclosure of assets and liabilities. Estimates and
underlying assumptions relevant to these financial statements are
the same as those described in the last annual financial
statements. Terms used in this condensed set of consolidated
financial statements are defined in the Glossary on page 70
contained in the 2020 Annual Report and Accounts.
These condensed consolidated financial statements were
authorised for issue by the Board of Directors on 30 September
2021.
The Interim Report has not been audited or formally reviewed by
the Company's Auditor in accordance with the
International Standards on Auditing (ISAs) (Ireland) or
International Standards on Review Engagements (ISREs).
(i) Going concern
The financial statements of the Group are prepared on a going
concern basis.
The Directors have given careful consideration to the Group's
ability to continue as a going concern through review of cash flow
forecasts prepared by management for the period to 30 September
2022, review of the key assumptions on which these forecasts are
based and the sensitivity analysis. The forecasts reflect the
Group's best estimate of expenditures and receipts for the period.
The forecasts are regularly updated to enable continuous monitoring
and management of the Group's cash flow and liquidity risk. The
forecasts indicate that, taking account of the agreement between
the Group and ARA to enter into a loan of US$1.7 million, the Group
is required to source additional funding during the 12-month period
to have sufficient capital resources for a period of 12 months from
the date of approval of this annual report. It is the expectation
of the Board that the Group will source this funding via an equity
placement under its disapplication authority. The ARA loan
agreement is not yet executed and, whilst the Board fully
anticipate its completion, such funding is not guaranteed by ARA
under the terms of the loan agreement.
As part of its analysis in making the going concern assumption,
the Directors have considered the range of risks facing the
business on an ongoing basis, as set out in the risk section of the
2020 Annual Report that remain applicable to the Group. The
principal assumptions made in relation to the going concern
assessment relate to the proposed US$1.7 million loan from ARA,
historic gas sales to the TPDC, capital commitments on its operated
assets in Tanzania and the ongoing objection to a tax assessment in
Tanzania.
Trade receivables of US$8.3 million, of which Aminex's net share
is US$3.5 million, have not been taken into account in the cash
flow forecast due to the claims for certain amounts by the TPDC,
set out in Note 14 to the financial statements. Although this trade
receivable is due, the TPDC continue to delay payment until a
resolution is reached in respect of the claims and the Directors
consider it prudent not to take this receivable amount into
consideration of the Group's ability to continue as a going
concern. Any recovery of funds from the TPDC for past gas
receivables and related late payment interest would assist the
Group's working capital position.
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2021
1. Basis of preparation (continued)
(i) Going concern (continued)
As disclosed in Note 14, the Group received a tax assessment
from the TRA of US$2.2 million in relation to an audit covering the
period from 2013 to 2015 which is excluded from the cash forecast
as any cash outflow during the going concern period is considered
unlikely based on legal advice and the timeframes for tax cases in
Tanzania. Additionally, development of the Group's other assets in
Tanzania is excluded from the cash forecast as negotiations
continue with the Tanzanian authorities on the three-year extension
for the Nyuni PSA, including a revised work programme, as disclosed
in Note 14, and consequently any capital expenditure in the period
is unlikely to arise. However, a risk exists that the Group loses
its objection to the tax assessment or is unable to renegotiate or
defer commitments on its operated Licence interests during the
period. Additional funding would be required to meet these
potential liabilities. There remains significant uncertainty as
regards the ability of Aminex to raise funds, if required, in the
current market conditions due to the COVID-19 pandemic during the
going concern period. This may result in the Company having to
raise funds at whatever terms are available at the time.
These circumstances indicate that a material uncertainty exists
that may cast significant doubt on the Group's ability to continue
to apply the going concern basis of accounting. As a result of
their review, and despite the aforementioned material uncertainty,
the Directors have confidence in the Group's forecasts and have a
reasonable expectation that the Group will continue in operational
existence for the going concern assessment period and have
therefore used the going concern basis in preparing these
consolidated financial statements.
(ii) Use of judgements and estimates
The preparation of the condensed consolidated financial
statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimates are revised and in any future periods
affected.
The significant judgements made by management in applying the
Group's accounting policies and the key sources of estimation
uncertainty were the same as those described in the 2020 Annual
Report and Accounts.
(iii) New and amended Standards adopted by the Group
A number of amended standards became effective for the financial
year beginning on 1 January 2021; however, the Group did not have
to change its accounting policies or make retrospective adjustments
as a result of adopting these amended standards.
(iv) Impact of Standards issued but not yet adopted by the Group
IFRS 17 Insurance Contracts is effective subsequent to the
period end and is being assessed to determine whether there is a
significant impact on the Group's results or financial
position.
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2021
2. Segmental disclosure - continuing operations
An operating segment is a component of the Group that engages in
business activities from which it may earn revenues and incur
expenses, including revenues and expenses that relate to
transactions with any of the Group's other components.
The Group considers that its operating segments consist of (i)
Producing Oil and Gas Properties, (ii) Exploration Activities and
(iii) Oilfield Services. These segments are those that are reviewed
regularly by the Chief Operating Decision Maker to make decisions
about resources to be allocated to the segment and assess its
performance and for which discrete financial information is
available. However, the Group further analyses these by region for
information purposes. Segment results include items directly
attributable to the segment as well as those that can be allocated
on a reasonable basis. Unallocated Aminex Group items comprise
mainly head office expenses, cash balances and certain other
items.
The Group's revenue is derived from contracts with customers.
The timing of revenue streams depends on the following for products
and services:
Producing oil and gas assets
The Group satisfies its performance obligation by transferring a
nominated volume of gas to its customer. The title to gas transfers
to a customer when the customer takes physical possession of the
gas at the contracted delivery point. The gas needs to meet certain
agreed specifications. The Group generates all its revenue under
this segment from the Tanzania Petroleum Development Corporation
("TPDC"), the operator of the Songo Island Gas Processing Plant,
under a gas sales agreement.
Oilfield services
Revenue for services is recognised as services are rendered to
the customer. All services rendered by the Group relate to jointly
controlled operations to which the Group is a party and the terms
of the services provided are subject to service contracts.
The IFRS 8 operating segments as follows (i) Producing Oil and
Gas Properties, (ii) Exploration Activities and (iii) Oilfield
Services are the disaggregation of revenue from customers as
required by IFRS 15.
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2021
2. Segmental disclosure - continuing operations (continued)
Operating segment results - 30 June 2021 (unaudited)
Tanzania Tanzania UK Unallocated
Producing Corporate
oil and Exploration Oilfield Aminex
gas properties activities services Group Total
30 June 30 June 30 June 30 June 30 June
2021 2021 2021 2021 2021
US$'000 US$'000 US$'000 US$'000 US$'000
Revenue - - 86 - 86
Cost of sales (200) (22) (86) - (308)
Gross loss (200) (22) - - (222)
Depreciation - - - (112) (112)
Administrative
expenses (115) - (97) (696) (908)
Impairment
against
exploration and
evaluation
assets - (302) - - (302)
---------------- -------------- ----------- ------------ ---------
Loss from
operating
activities (315) (324) (97) (808) (1,544)
Finance costs (13) (22) - (3) (38)
Finance income - - - - -
Foreign exchange
gains - - - (10) (10)
---------------- -------------- ----------- ------------ ---------
Loss before tax (328) (346) (97) (821) (1,592)
Taxation - - - - -
---------------- -------------- ----------- ------------ ---------
Loss for the
period (328) (346) (97) (821) (1,592)
---------------- -------------- ----------- ------------ ---------
Segment assets 6,539 43,029 - 2,471 52,039
Segment
liabilities (6,402) (3,185) - (2,687) (12,274)
Capital
expenditure
additions - 342 - - 342
---------------- -------------- ----------- ------------ ---------
Other material
non-cash
items
Share based - - - - -
payments
(Note 3)
Unwinding of
discount
on
decommissioning
provision (Note
5) (13) (22) - - (35)
---------------- -------------- ----------- ------------ ---------
Operating segment results - 30 June 2020 (unaudited)
Tanzania Tanzania UK Unallocated
Producing Corporate
oil and Exploration Oilfield Aminex
gas properties activities services Group Total
30 June 30 June 30 June 30 June 30 June
2020 2020 2020 2020 2020
US$'000 US$'000 US$'000 US$'000 US$'000
Revenue - - 300 - 300
Cost of sales (91) - (300) - (391)
Gross loss (91) - - - (91)
Depreciation (29) - - (86) (115)
Administrative expenses (101) - (97) (384) (582)
Impairment against
exploration and evaluation
assets - (365) - - (365)
Loss from operating
activities (221) (365) (97) (470) (1,153)
Finance costs (26) (6) - (45) (77)
Finance income - - - - -
Foreign exchange gains - - - 79 79
---------------- -------------- ----------- ------------ ---------
Loss before tax (247) (371) (97) (436) (1,151)
Taxation - - - - -
---------------- -------------- ----------- ------------ ---------
Loss for the period (247) (371) (97) (436) (1,151)
---------------- -------------- ----------- ------------ ---------
Segment assets 6,973 49,720 - 6,077 62,770
Segment liabilities (6,030) (4,763) - (6,092) (16,885)
Capital expenditure
additions - 950 - 50 1,000
---------------- -------------- ----------- ------------ ---------
Other material non-cash
items
Share based payments
(Note 3) - - - (344) (344)
Unwinding of discount
on decommissioning
provision (Note 5) (26) (6) - - (32)
---------------- -------------- ----------- ------------ ---------
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2021
3. Share based payments
Aminex PLC operates or operated the following share option
schemes:
-- Executive Share Option Scheme ("ESOS"). Under the terms of
the ESOS, certain Directors and employees of Aminex PLC, and its
subsidiary companies, are entitled to subscribe for Ordinary Shares
in Aminex PLC at the market value on the date of the granting of
the options. Options are granted at market price, in accordance
with the ESOS rules, with reference to the average closing price
for the fourteen days prior to the grant of options. Options
granted in 2016 and 2018 vest immediately and will expire at a date
no later than 3 years after their grant date. All options granted
in this period have now expired. Of the options granted since 2018,
those issued in February and June 2019, and February 2020 vest
immediately, and the options granted in November 2019 and January
2020 vest in tranches subject to the achievement of certain market
and non-market performance conditions. The options granted in 2020
will expire at a date either 5 years or 7 years after their date of
grant. The ESOS expired on 10 May 2020 and therefore no further
share options will be granted pursuant to the ESOS.
-- Old Restricted Share Plan ("Old RSP"). On 1 May 2020, 151
million share options were issued to certain Directors under the
Old RSP. These share options were subsequently cancelled by those
Directors in June 2020, surrendering and waiving all their rights
to the share option grant. Consequently, in line with the Group's
accounting policy, the options are deemed to fully vest on the date
of cancellation. The Old RSP was terminated by the Board on 1 July
2020 and therefore no further share options will be granted
pursuant to the Old RSP.
-- New Restricted Share Plan ("New RSP"). The New RSP was
adopted by the Board on 1 July 2020 and approved by shareholders of
the Company at its AGM on 29 July 2020. As at the date of
reporting, no share options have been granted under the New
RSP.
The fair value of the grant date is measured using a recognised
valuation methodology for the pricing of financial instruments i.e.
the Black-Scholes method. The following expenses have been
recognised in the income statement arising on share-based payments
and included within administrative expenses:
Unaudited Unaudited Audited
6 months 6 months year ended
ended ended 31 December
30 June 30 June 2020
2021 2020 US$'000
US$'000 US$'000
Share-based payment charge - 344 690
No share options were granted in the period.
On 30 June 2021, there were options granted under the ESOS
outstanding over 72,111,000 (31 December 2020: 112,111,000)
Ordinary Shares which are exercisable at prices ranging from Stg
0.86 pence to Stg 1.56 pence per share and which expire at various
dates up to 2029. The weighted average remaining contractual life
of the options outstanding is 5.63 years (31 December 2020: 4.22
years). The average share price for the six months ended 30 June
2021 was Stg0.71pence/EUR0.00852 (year ended 31 December 2020:
Stg0.76pence/EUR0.00843).
4. Finance income
Unaudited Unaudited Audited
6 months 6 months year ended
ended ended 31 December
30 June 30 June 2020
2021 2020 US$'000
US$'000 US$'000
Foreign exchange gain/(loss) - 79 -
---------- ---------- -------------
- 79 -
---------- ---------- -------------
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2021
5. Finance costs
Unaudited Unaudited Audited
6 months 6 months year ended
ended ended 31 December
30 June 30 June 2020
2021 2020 US$'000
US$'000 US$'000
Interest expense - 38 160
Lease finance costs 3 7 12
Other finance costs - decommissioning
provision interest charge
Foreign exchange loss 35 32 102
10 - 36
48 77 310
---------- ---------- -------------
6. Tax
The Group has not provided any tax charge for the six-month
periods ended 30 June 2021 and 30 June 2020. For the year ended 31
December 2020, a capital gains tax charge of US$2.17 million was
recognised in relation to the completion of the Farm-Out in order
to receive Tanzanian tax clearance for the transaction. The Group's
operating divisions have accumulated losses which are expected to
exceed profits earned by operating entities for the foreseeable
future.
7. Loss per share from continuing activities
The profit or loss per Ordinary Share is calculated using a
numerator of the profit or loss for the financial period and a
denominator of the weighted average number of Ordinary Shares in
issue for the financial period. The diluted profit per Ordinary
Share is calculated using a numerator of the profit for the
financial period and a denominator of the weighted average number
of Ordinary Shares outstanding and adjusted for the effect of all
potentially dilutive shares, including the share options and share
warrants, assuming that they have been converted.
The calculations for the basic and diluted earnings per share of
the financial periods ended 30 June 2021, 30 June 2020 and the year
ended 31 December 2020 are as follows:
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2021 2020 2020
Numerator for basic and diluted
earnings per share:
Loss for the financial period
(US$'000) (1,592) (1,151) (6,141)
---------- ---------- -------------
Weighted average number of shares:
Weighted average number of ordinary
shares ('000) 3,770,685 3,770,685 3,770,685
---------- ---------- -------------
Basic and diluted loss per share
(US cents) (0.04) (0.03) (0.16)
---------- ---------- -------------
There is no difference between the basic loss per Ordinary Share
and the diluted loss per Ordinary Share for the financial period
ended 30 June 2021, 30 June 2020 and the year ended 31 December
2020 as all potentially dilutive Ordinary Shares outstanding were
anti-dilutive. There were 119,611,000 share options in issue at 30
June 2021, 159,711,000 share options in issue at 30 June 2020, and
159,561,000 share options in issue at 31 December 2020.
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2021
8. Exploration and evaluation assets
Cost US$'000
At 1 January 2021 103,060
Additions 342
---------
At 30 June 2021 103,402
---------
Provisions for impairment
At 1 January 2021 60,173
Increase in impairment provision 302
---------
At 30 June 2021 60,475
---------
Net book value
At 30 June 2021 42,927
---------
At 31 December 2020 42,887
---------
The Group does not hold any property, plant and equipment within
exploration and evaluation assets.
The additions to exploration and evaluation assets during the
period relate mainly to own costs capitalised for geological,
geophysical and administrative ("GG&A") work and licence
maintenance costs, along with training and licence fees under the
respective PSAs.
The Directors have considered the licence, exploration and
appraisal costs incurred in respect of its exploration and
evaluation assets, which comprise the following three CGUs; the
Ruvuma PSA, the Nyuni Area PSA and exploration work on Kiliwani
South within the Kiliwani North Development Licence. These assets
are carried at historical cost except for provisions against the
Nyuni Area PSA and the Lindi Licence exploration expenditure, cost
of seismic acquired over relinquished blocks and obsolete
stock.
In accordance with its accounting policies each CGU is evaluated
annually for impairment, with an impairment test required when a
change in facts and circumstances, in particular with regard to the
remaining licence terms, likelihood of renewal, likelihood of
further expenditures and ongoing acquired data for each area,
result in an indication of impairment.
Ruvuma PSA
The Ruvuma PSA comprised two exploration licences; Mtwara and
Lindi.
On 22 October 2020, the Group completed the Ruvuma Farm-Out. On
completion, the Group, through its wholly owned subsidiary, Ndovu
Resources Limited, transferred a 50% interest in, and operatorship
of, the Ruvuma PSA to APT, a related party of the Group. Following
completion of the Farm-Out, the Group now holds a 25% interest in
the Ruvuma PSA with a US$35.0 million carry to potentially
significant volumes of production. The Farm-Out includes a full
carry for a minimum work programme including the drilling and
testing of the Chikumbi-1 well, the acquisition of 3D seismic over
a minimum of 200 km(2) within the Ntorya Location area, and further
production wells and infrastructure as required to propel the
project to its estimated P50 production level of approximately 140
MMcf/d (gross project levels), as shown in an io Ntorya
commercialisation study. The full carry for Aminex's share of costs
up to US$35.0 million in respect of its 25% interest implies a
potential expenditure during the carry period of up to US$140.0
million on a gross field basis.
A two-year Licence extension, effective from 15 August 2021, was
received over the Mtwara Licence in respect to the Ntorya Location.
Although the extension is over the smaller Ntorya Location area,
this is not considered an indicator of impairment as the area
corresponds to the identified Ntorya asset development programme.
During the two-year extension period the operator is committed to
undertake acquiring 200 km(2) of 3D seismic (minimum expenditure of
US$7.0 million), drill the Chikumbi-1 exploration well (minimum
expenditure of US$15.0 million) and complete the negotiation of the
Gas Terms for the Ruvuma PSA with the TPDC and, using the data
gathered from the Chikumbi-1 and seismic acquisition, prepare and
submit an application for a Development Licence for the Ntorya
Location area.
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2021
8. Exploration and evaluation assets (continued)
The Farm-Out has secured funding for the next phase of
development for the Ruvuma PSA CGU, for which the Group will be
carried for its share up to US$35.0 million, equivalent to US$140.0
million gross field expenditure. The Carry balance as at 30 June
2021 was US$34.2 million. There is a clear development plan for the
asset outlined by the new operator, ARA Petroleum Tanzania Limited
("APT"), with the support of the JV partners. During the period APT
completed the tendering process for the new high-resolution 3D
seismic acquisition and performed a re-interpretation of the
existing 2D seismic dataset and considers the Ntorya gas reservoir
to be the product of a stacked, high-energy, channelised sand
system. Their revised mapping and internal management estimates
suggest a mean risked gas in place ("GIIP") for the Ntorya
accumulation of 3,024 Bcf, in multiple lobes to be tested and a
mean risked recoverable gas resource of 1,990 Bcf, which will be
appraised by the planned seismic and drilling programme. Post
period, approval was received from the Tanzanian authorities to
issue the seismic acquisition contract and it was duly signed
between the parties (see Note 16).
The Directors recognise that future realisation of the Ruvuma
PSA assets is dependent on the further successful exploration,
appraisal and development activities and the subsequent economic
production of hydrocarbon reserves.
Nyuni Area PSA
Aminex fully provided for the Nyuni Area PSA exploration asset
in 2018 following confirmation from the Tanzanian authorities that
the Nyuni Licence period ended in October 2019, coupled with the
communication from the Tanzania Ministry of Energy to withhold all
work on the licence, pending a review of the Nyuni Area PSA. The
Company was unable to progress the work programme and, therefore,
the Directors concluded that the carrying cost of the Nyuni asset
should be fully impaired. The status of the Nyuni asset remained
the same at 30 June 2021 and the Directors maintain their position.
Expenditure during the year is capitalised and then immediately
impaired to the income statement as impairment against exploration
and evaluation assets.
Kiliwani South
Kiliwani South, located within the Kiliwani North Development
Licence acreage, has been identified as a potential lead. In
February 2019, the Group raised approximately US$2.4 million gross
to provide funding for the reprocessing of some of the existing 2D
seismic in the area and to prepare a 3D seismic programme over the
Kiliwani North Development Licence area in order to advance the
potential drilling of a Kiliwani South location and assessing the
remaining potential in the Kiliwani North structure (inclusive of
the Kiliwani North-1 well). During 2020, Aminex conducted the
reprocessing of select 2D seismic data. Remapping of the
reprocessed data in combination with a fresh look at the regional
data has identified multiple structural and stratigraphic leads
across the licence which are ideally located in shallow waters and
in close proximity to existing offtake infrastructure, meaning that
a discovery could be rapidly monetised with relatively low-cost
drilling and tie-backs.
The Directors are satisfied that, following an assessment of the
Kiliwani South asset, with the work planned on the Licence there
are no indicators of impairment.
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2021
9. Property, plant and equipment
Development
property Right of
- Tanzania use assets Other assets Total
US$'000 US$'000 US$'000 US$'000
Cost
At 1 January 2021 8,205 799 132 9,136
Additions in the period - - - -
Disposals - - (4) (4)
Exchange rate adjustment - 9 2 11
At 30 June 2021 8,205 808 130 9,143
------------ ------------- --------------- --------
Depreciation and depletion
At 1 January 2021 7,377 567 84 8,028
Charge for the period - 101 11 112
Disposals - - - -
Exchange rate adjustment - 5 - 5
At 30 June 2021 7,377 673 95 8,145
------------ ------------- --------------- --------
Net book value
At 30 June 2021 828 135 35 998
------------ ------------- --------------- --------
At 31 December 2020 828 232 48 1,108
------------ ------------- --------------- --------
Development property - Tanzania
Following the award of the Kiliwani North Development Licence by
the Tanzanian Government in April 2011, the carrying cost relating
to the development licence was reclassified as a development asset
under property, plant and equipment, in line with accounting
standards and the Group's accounting policies. Production from the
Kiliwani North-1 well commenced on 4 April 2016 and depletion is
calculated with reference to the remaining reserves of 1.94 BCF,
which were ascribed to the field as at 1 January 2018 in an
independent reserves and resources report prepared by RPS in
February 2018. The report also identified a contingent resource of
30.8 BCF in addition to the reserves. The well has produced
approximately 6.4 BCF of gas to date. Production from the Kiliwani
North-1 well in 2018 was intermittent and there has been no
commercial production from the well since March 2018. The Company
is working with the TPDC on agreed methods to handle wellbore
fluids which will potentially be unloaded during operations on the
well. Following a successful well intervention to open the
subsurface safety valve carried out in December 2018, Aminex has
since experienced delays awaiting final approval to carry out a
remedial work programme. Aminex has also communicated with the TPDC
that it will not commence any remediation programme until the long
outstanding receivables for previous gas sales are resolved (see
Note 10).
Aminex has prepared a perforation strategy for a lower zone
within the reservoir and an alternative remedial work programme
intended to establish fluid levels in the wellbore, reservoir
pressure and to unload potential fluid using foam treatment. In
accordance with IAS 36, the Group conducted an impairment test as
at 30 June 2021 on a value-in-use basis. The cash-generating unit
for the purpose of impairment testing is the Kiliwani North-1 well.
A financial model of the forecast discounted cash flow is employed
for the value-in-use calculation of the well. Key judgements that
represent the key sensitivities in the value-in-use calculation
include discount rate, production volumes, timing of the
commencement of gas production, remediation work on the gas well
being successful and the cost of the proposed remediation work. Key
assumptions used in the impairment test included sensitivities
reflecting potential extended delays in conducting remediation
work, application of risk factors to reserves recoveries of up to
80% resulting in production of 1.0 BCF (30 December 2020: 1.0 BCF),
reflecting the specific degree of risk associated with the
preferred option of perforation of the lower zone, and
sensitivities to the discount rate of 15% (2019: 15%).
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2021
9. Property, plant and equipment (continued)
Considering the proposed remediation work programmes, progress
with ongoing discussions on commercial matters with the TPDC and
the potential reserves and resources ascribed to the Kiliwani
North-1 well the Directors are satisfied no additional impairment
charge is required against the carrying value. A 5% increase in the
discount
rate would result in an additional impairment of US$109,000 and
a further year's delay in production would increase the impairment
by US$110,000 although the Directors consider the current
production delay assumption sufficient.
Once the remediation work on the Kiliwani North-1 well,
described above, is complete, and a resolution is reached on the
past outstanding gas sales receivables and commercial matters, it
is expected that the results will reduce the key estimation
uncertainties currently used in the impairment test, particularly
associated with the success of the planned work programme and the
volume and timing of gas production. This will provide a clearer
understanding of the likelihood for producing the remaining
reserves and potential resources assigned to the well and therefore
impact on the sensitivity of inputs used for future impairment
tests.
Right of use asset
All right of use assets relate to leases the Group has entered
into in respect of various office properties. All leases are
accounted for by recognising a right-of-use asset and a lease
liability except for:
-- Leases of low value assets; and
-- Leases with a duration of 12 months or less.
Right of use assets of US$104,000 (31 December 2020: US$193,000)
relate to an office lease located in the UK and US$31,000 (31
December 2020: US$40,000) located in Tanzania. All other assets are
located in the UK. The Group recognised rent expense from
short-term leases of US$12,000 for the six months ended 30 June
2021 (30 June 2020: US$12,000).
10. Trade and other receivables
Trade and other receivables amounted to US$7.62 million at the
period end (31 December 2020: US$8.55 million). The decrease
largely relates to payments received from ARA, a related party of
the Group, in respect to interim period costs due following
completion of the Ruvuma PSA Farm-Out. Included in trade and other
receivables is an amount of US$8.34 million due from the TPDC for
gas sales from Kiliwani North and related late payment interest (31
December 2020: US$8.16 million). Aminex's net share of the
receivable is US$3.50 million (31 December 2020: US$3.41 million).
On 11 April 2018, the Company received formal notification from the
TPDC requesting payment of certain amounts totalling US$5.97
million for liabilities arising on revenues from gas sales, of
which Aminex's share is estimated to be US$2.73 million. Of the
amount claimed, Aminex has already accrued for the liabilities it
considers appropriate based on its own calculations of amounts due
as at 30 June 2021. Aminex has advised the TPDC that it does not
accept the balance of the claims, which include computational
inaccuracies. The TPDC has delayed settling its trade receivable
balance while discussions continue. In accordance with IFRS 9,
Aminex calculated an expected credit loss ("ECL") based on its
exposure to credit risk on its trade receivables at the end of the
period and recognised an additional impairment on trade receivables
of US$0.15 million (31 December 2020: US$2.29 million), with a
charge to the income statement of US$87,000 (31 December 2020:
US$424,000), reflecting Aminex's share after adjusting for the
share related to partners in joint operations of US$65,000. The ECL
is calculated on the full amount of US$8.34 million due to the
Group for gas sales and late payment interest; any actual credit
loss would be reduced by the liability due to the Group's joint
venture partners in respect of amounts due.
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2021
11. Cash and cash equivalents
Unaudited Unaudited Audited
6 months 6 months year ended
ended ended 31 December
30 June 30 June 2020
2021 2020 US$'000
US$'000 US$'000
Cash at bank and in hand 491 932 449
Included in cash and cash equivalents is an amount of US$0.01
million (31 December 2020: US$3,000) held on behalf of partners in
jointly controlled operations.
12. Trade and other payables
Trade and other payables amounted to US$11.25 million at the
period end (31 December 2020: US$10.47 million). The increase in
trade and other payables predominantly relates to expenditures on
operated Tanzania gas assets and legal and redundancy costs
incurred as a result of cost saving initiatives. Included in trade
and other payables for the Group are amounts due to partners in
Joint operations, VAT payable and other payables include amounts
arising on gas sales and are payable on receipt of gas revenues
from the TPDC.
The Directors consider that the carrying amounts of trade
payables approximate their fair value.
13. Borrowings
At 30 June 2021, the Group had no outstanding borrowings (31
December 2020: nil; 30 June 2020: US$2.0 million).
On 6 May 2020, Aminex PLC entered into a US$2.0 million loan
with ARA Petroleum LLC ("the Loan"), a related party of the Group
(see Note 15), to finance the payment of the capital gains tax bill
in relation to the Completion of the Farm-Out to APT. Loan
repayments of US$5.0 million during the second half of 2020
represented the cash consideration due under the Farm-Out at
completion, on 22 October 2020, which was offset against the US$3.0
million Advance and US$2.0 million Loan provided by ARA, a related
party of the Group (see Note 15). Interest of US$160,000 accrued
during 2020 on the Advance and Loan and was offset against the
first instalment of the interim costs due on completion of the
Farm-Out from ARA. Consequently, the Loan repayments and interest
paid in 2020 were non-cash transactions.
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2021
14. Commitments, guarantees and contingent liabilities
Commitments
In accordance with the relevant PSA, Aminex has a commitment to
contribute its share of the following outstanding work
programmes:
(a) Following the grant of the first extension to the Nyuni Area
PSA, Tanzania, the terms of the licence require the acquisition of
700 kilometres of 3D seismic over the deep-water sector of the
licence, and the drilling of four wells, on the continental shelf
or in the deep-water, by October 2019. In accordance with the terms
of the Nyuni Area PSA, Aminex applied in July 2019 for the licence
to be extended into the Second Extension Period of three years with
a request for an amendment to the work programme obligations for
the licence area. The proposal is supported by the TPDC, which has
submitted the proposal as licence holder to the Ministry of
Energy.
(b) The Ruvuma PSA, Tanzania, originally comprised two licences.
The Mtwara Licence was extended in April 2020 for a period of
one-year, and post period, in August 2021, the licence was extended
for a further two years (see Note 16). Two wells are required to be
drilled, one of which is expected to be the Chikumbi-1 location.
The Ruvuma PSA operator is committed to undertake acquiring 200
km(2) of 3D seismic (minimum expenditure of US$7 million), drill
the Chikumbi-1 exploration well (minimum expenditure of US$15
million), complete the negotiation of the Gas Terms for the Ruvuma
PSA with the TPDC and, using the data gathered from the Chikumbi-1
and seismic acquisition, prepare and submit an application for a
Development Licence for the Ntorya Location area.
Guarantees and contingent liabilities
(a) Under the terms of the Addendum to the Ruvuma PSA, Ndovu
Resources Limited, a subsidiary company of Aminex PLC, has provided
security to the TPDC for up to 15% of the profit share of the
Kiliwani North Development Licence to guarantee the amended
four-well drilling commitment under the Ruvuma PSA. For each well
drilled the security interest will be reduced by 3% for the first
well and 4% thereafter.
(b) The Company guarantees certain liabilities and commitments
of subsidiary companies from time to time, including the
commitments of Ndovu Resources Limited under the Nyuni Area PSA.
These are considered to be insurance arrangements and are accounted
for as such i.e. they are treated as a contingent liability until
such time as it becomes probable that the Company will be required
to make payment under the guarantee in which case a liability is
recognised.
(c) On 11 April 2018, Ndovu Resources Limited received formal
notification from the TPDC of certain claims amounting to US$5.97
million against the Kiliwani North Development Licence with regard
to unpaid royalties and amounts due under profit share arrangements
which it proposes to offset against the trade receivable balance
owing by the TPDC to Aminex (see Note 10). Of the amount claimed,
Aminex has already accrued for the liabilities it considers
appropriate based on its own calculations of amounts due as at 30
June 2021. Aminex has advised the TPDC that it does not accept the
balance of the claims, which include computational inaccuracies.
The Group has received legal advice in country that supports its
position and this has been provided to the TPDC. With reference to
the prejudicial exemption in IAS 37, Aminex will not disclose any
further information about the assumptions for any provision. The
disclosure of such information is believed to be detrimental to
Aminex in connection with ongoing discussions. The Directors
believe the claims are without merit and are satisfied that the
US$8.34 million included in trade receivables as owing from the
TPDC is recoverable.
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2021
14. Commitments, guarantees and contingent liabilities (continued)
Tanzanian Tax Assessment
On 28 February 2020, following the conclusion of the TRA audit
of Ndovu Resources Limited ("NRL"), the Group's Tanzanian wholly
owned subsidiary, for taxation years 2013 to 2015, the TRA issued a
tax assessment in respect of these taxation years. The following
matters were raised in the assessments:
Principal Interest Total
US$'000 US$'000 US$'000
Area
Withholding tax on payments
Withholding made to non-residents for services
tax performed outside of Tanzania 242 182 424
VAT Output VAT on imported services 191 156 347
Withholding
tax Withholding tax on deemed interest 797 664 1,461
1,230 1,002 2,232
---------- --------- --------
NRL considers these claims without technical merit in tax law
and, with the assistance of an in-country tax advisor, has
submitted an objection to the TRA findings. At this stage it is
unclear whether NRL will be successful in its objections and
therefore the amount or timing of potential cash outflow remains
uncertain. Provision has been made for amounts NRL has ceded or
where management determine the likelihood of success through the
objection or appeals process is unlikely.
15. Related party transactions
On 5 May 2020, the Company entered into a US$2.0 million loan
with ARA Petroleum LLC ("the Loan"), which, through its associated
company, Eclipse Investments LLC, is a significant shareholder in
Aminex PLC, to finance the payment of the capital gains tax bill in
relation to the Completion of the Farm-Out to APT. The Loan was
repaid in full by offset of the cash consideration due under the
Farm-Out of US$5.0 million at completion on 22 October 2020. The
Loan bears interest at 13.77% p.a. The Loan is secured, with
security in the form of a pledge of Aminex PLC's holding in shares
in Tanzoil N.L., a wholly-owned subsidiary of the Company, that
indirectly holds the Group's assets in Tanzania. Interest accrued
on the loan during the year was US$125,000 and was settled in full
on the completion of the Farm-Out from the interim costs.
On 20 July 2020, a pledge was entered into with ARA Petroleum
LLC, as security for the US$3 million Advance Funding and US$2
million Loan provided to the Company. The form of the pledge is
over the Company's holding in shares in Tanzoil N.L., a
wholly-owned subsidiary of the Company, that indirectly holds the
Group's assets in Tanzania. As a result of the completion of the
Ruvuma PSA Farm-Out to APT, and the subsequent repayment of the
US$2 million Loan and the US$3 million Advance from the cash
consideration due under the transaction, the pledge has been
terminated.
On 22 October 2020, the Group completed the Farm-Out of the
Ruvuma PSA, a related party transaction, to ARA Petroleum Tanzania
Limited ("APT"), through its associated company, Eclipse
Investments LLC, is a significant shareholder in Aminex PLC. On
completion the interim costs of US$1.97 million became due in six
equal monthly instalments commencing on the date of completion.
US$0.99 million was paid during the year, and US$0.33 million was
outstanding at 31 December 2020.
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2021
16. Post balance sheet events
On 28 July 2021, Sultan Al-Ghaithi was appointed non-executive
Director of the Company.
On 17 August 2021, the Ruvuma joint venture, which the Group has
a 25% non-operated participating interest in, received a two-year
Licence extension, effective from 15 August 2021, over the Mtwara
Licence in respect to the Ntorya Location.
In September 2021, the Ruvuma joint venture, awarded the seismic
acquisition contract to Africa Geophysical Services Limited. The
acquisition will consist of approximately 338 km(2) of 3D seismic
data focusing on the area of primary interest.
Since 30 June 2021, the Group has received a further US$0.33
million of Interim Costs due from ARA Petroleum LLC, a related
party of the Group (see Note 15), under the Farm-Out. The
outstanding balance as at 30 September 2021 is nil.
17. Statutory information
The financial information to 30 June 2021 and 30 June 2020 is
unaudited and does not constitute statutory financial information.
The information given for the year ended 31 December 2020 does not
constitute the statutory accounts within the meaning of Part 6 of
Chapter 4 of the Companies Act 2014. The statutory accounts for the
year ended 31 December 2020 have been filed with the Companies
Registration Office in Ireland. This announcement will be made
available at the Company's registered office at Paramount Court,
Corrig Road, Sandyford Business Park, Dublin 18 and at the office
of the Aminex's UK subsidiary company, Aminex Petroleum Services
Ltd., at Kings Buildings, 16 Smith Square, London SW1P 3JJ.
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END
IR SEAFUUEFSEFU
(END) Dow Jones Newswires
September 30, 2021 02:00 ET (06:00 GMT)
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