TIDMAEX
RNS Number : 2535B
Aminex PLC
30 September 2022
30 September 2022
2022 HALF-YEARLY FINANCIAL REPORT
Aminex PLC ("Aminex" or "the Group" or "the Company") announces
its unaudited half-yearly report for the six months ended 30 June
2022.
REPORTING PERIOD HIGHLIGHTS
-- Successful placing in April 2022 raised US$4.2 million
(GBP3.3 million) before expenses, to fund the Company to expected
receipt of revenue projected for end of 2024
-- Substantial progress on all aspects of Ruvuma operations,
including 3D seismic acquisition, Chikumbi-1 well planning and
commercial negotiations with Government of Tanzania
-- Agreement reached in April 2022 with subsidiary of Orca
Energy Group Inc, PanAfrican Energy Tanzania ("PAET"), for PAET to
acquire approximately 12.5km(2) of high-resolution 3D seismic data
over the Kiliwani North Development Licence at no cost to Aminex
and its partners
-- Loss for the period of US$1.27 million (30 June 2021: loss of
US$1.59 million), a decrease of 20% on the same period last
year
POST PERIOD
-- Ruvuma 3D seismic full acquisition of data expected to be
completed by 8 October 2022, with processing and interpretation
continuing into early 2023
-- Spudding of Chikumbi-1 remains on schedule for November 2022
-- KNDL 3D seismic acquisition programme expected to be completed before year end
Charles Santos, Executive Chairman of Aminex commented:
"The fully subscribed placement in April was an extremely
important event, ensuring a solid financial foundation for the
Company through to expected cash flows from Ruvuma. We are
delighted that all activities on Ruvuma, operational and
commercial, continue to progress under the efforts of the operator,
APT. Finally, we look forward to completion of the 3D seismic
acquisition programme by PAET over the core area of the KNDL, which
will provide valuable data to the Company."
For further information:
Aminex PLC +44 203 355 9909
Charles Santos, Executive
Chairman
Davy +353 1 679 6363
Brian Garrahy
Shard Capital +44 20 7186 9952
Damon Heath
INTERIM MANAGEMENT REPORT
Executive Chairman's Review
Aminex PLC's results for the six months ended 30 June 2022 are
set out below.
The Company reports a loss for the period of US$1.27 million (30
June 2021: US$1.59 million). Further information is provided in the
Financial Review.
It is clear from numerous government statements and actions that
Tanzania is seeking to expand its energy production to achieve
further industrialisation. This national effort has seen the
planning and construction of multiple facilities along existing gas
delivery infrastructure either directly connected to or in
proximity to our Tanzanian assets, which are expected to increase
local gas demand significantly soon. In addition, it has been
reported that Tanzania is exploring the possibility of supplying
gas to its neighbours in the East African region. These
developments bode well for the future commercialisation of our
assets.
Our non-operating corporate strategy is essentially a de-risking
strategy that enables the Company to take advantage of the growing
Tanzania demand for natural gas while avoiding the potential risks
and pitfalls that might undermine a Company of our size. The core
of this de-risking strategy is:
1. The Ruvuma Farm-out
2. Significant cost-cutting
3. The payment of money owed to the Company (the Kiliwani receivables)
4. Funds from our recent equity placing to cover our running
costs (before one-off and exceptional items) until receipt of
Ruvuma revenue, planned for the end of 2024
We have successfully implemented this strategy, making Aminex a
stronger company with a low-cost base, an entirely carried position
on its most important asset, Ruvuma, and sufficient funding to take
the Company through until cash flow.
Ruvuma PSA
It is essential to remind shareholders that the Farm-Out
completed with ARA Petroleum Tanzania Limited ("APT") in October
2020 potentially carries the Company to material levels of
production and revenue without the need to return to shareholders
for any additional funding for the development of the Ntorya field.
The Company holds a 25% interest in the Ruvuma PSA with a US$35
million carry of its share of costs. The carry, equivalent to
US$140 million of gross field expenditure, is expected to see the
Company through to potentially significant volumes of gas
production with commensurate revenues. The Farm-Out represents the
culmination of many successful years of exploration and evaluation
work by Aminex, which recognised the underlying value and
opportunities in the Ruvuma Basin. Multiple parties, including both
commercial and Tanzanian government entities, have recently
recognised this value in the effort to acquire Scirocco's 25%
interest in Ruvuma. Our non-operating position in Ruvuma is the
cornerstone of the Company's de-risking strategy.
Substantial progress has been made on Ruvuma: The 3D seismic
survey is now 80% complete, with the drilling and testing of
Chikumbi-1 and the integration of the seismic and well results to
formulate a Field Development Plan ("FDP") for the Ntorya gas-field
expected in the coming months. The 3D seismic acquisition effort is
projected to be completed by the end of the first week of October
2022 and s pudding of Chikumbi-1 remains on schedule for November
2022 . The current operations represent a significant step towards
monetising this extensive gas resource through production into
existing infrastructure and transportation to established power and
industrial markets in Tanzania. Since acquiring operatorship, APT
has demonstrated focused determination and commitment to moving the
project forward.
Kiliwani North and Kiliwani South - Kiliwani North Development
Licence ("KNDL")
As reported earlier, Orca Energy Group Inc., via its subsidiary
PanAfrican Energy Tanzania ("PAET"), will acquire some 12.5 km(2)
of new 3D seismic data over part of the KNDL that borders the Songo
Songo field to the west as part of their planned full-field survey.
PAET has awarded its seismic contract and the 3D survey is expected
to be completed by the end of this year, at no cost to the Company.
The incursion into the KNDL should provide valuable data to improve
structural mapping and refine the prospectivity of the Kiliwani
North and South structures, allowing the Company to determine more
effectively potential new drill and infill drill opportunities.
The Company will pursue farm-in partners to fund and operate the
asset once our assessment of the 3D survey is complete.
Notwithstanding the delays caused by late payment for gas, the
outstanding commercial terms to be agreed upon, and the move to a
non-operator strategy, the Kiliwani North and Kiliwani South assets
remain fully impaired.
Nyuni Area PSA
As mentioned in our Annual Report for 2021, although we believe
the Nyuni Area acreage offers upside exploration potential to
complement the development projects at Ntorya and Kiliwani North,
the significant risks of exploration and the lack of a farm-out
partner give us little alternative but to return the licence to the
Ministry. We have recently commenced this process with the relevant
authorities in Tanzania.
Cost Cutting
Wherever possible, we will continue to cut costs and reduce
corporate overheads. We have successfully reduced the Company's
gross G&A costs (before one-off costs and exceptional items) by
75% from 2018 levels. Through these initiatives, the Company has
established an appropriate structure of capabilities and
competencies that match the current business requirements with a
more flexible approach that de-risks our business and can help
create or attract strategic opportunities.
Outlook and Funding
On 1 April 2022, we announced the fully subscribed share
placement raising approximately $4.2 million (GBP3.3 million),
representing a significant development for the Company. The funding
is an essential pillar in our effort to de-risk and anchor value.
The funds ensure a solid financial foundation for the Company
through to the expected commencement of cash flow receipts from
sales of Ruvuma gas.
Charles Santos
Executive Chairman
30 September 2022
Financial Review
Revenue Producing Operations
Revenues from continuing operations amounted to US$0.03 million
(30 June 2021: US$0.09 million). Group revenues during the first
six months of 2022 are derived from the provision of technical and
administrative services to joint venture operations.
Cost of sales was US$0.13 million (30 June 2021: US$0.31
million). The cost of sales for Kiliwani North operations amounted
to US$0.09 million (30 June 2021: US$0.20 million) and included
general licence related maintenance costs. There was no depletion
charge for Kiliwani North as the period saw no production (30 June
2021: US$ nil). The balance of the cost of sales amounting to
US$0.04 million (30 June 2021: US$0.11 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$0.10 million for the period compared with a gross
loss of US$0.22 million for the comparative period.
Group administrative expenses, excluding depreciation and net of
costs capitalised against projects, were US$0.83 million (30 June
2021: US$0.91 million), a decrease of US$0.08 million. The decrease
in expenses during the period reflects the cost saving initiatives
implemented by the Company, which commenced in 2019, included
savings in respect of employment costs, advisors' fees and office
related costs. Management maintains strict expenditure controls and
continues to seek cost saving solutions and efficiencies across the
Group. As the Company forecasted in 2022, these cost-saving efforts
have reduced gross general and administrative expenditure (before
one-off costs and exceptional items) to less than US$1.5 million
per annum, representing a 75% reduction from 2018 levels.
Depreciation charged in the period was US$0.02 million (30 June
2021: US$0.11 million) and related predominantly to depreciation of
accounting software and hardware.
Following the settlement with TPDC of past gas sales receivables
from Kiliwani North Development Licence the Group does not expect a
credit loss on its trade receivables at the end of the period (30
June 2021: US$0.09 million).
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$0.22
million (30 June 2021: US$0.30 million) is related to expenditure
incurred on Kiliwani South Area of US$0.02 million (30 June 2021:
US$ nil) and US$0.20 million (30 June 2021: US$ 0.30 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$1.17 million (30 June 2021: loss of US$1.54 million).
Finance costs amounted to US$0.10 million (30 June 2021: US$0.05
million), comprising US$0.05 million (30 June 2021: US$0.04
million) for the decommissioning interest charge and finance costs
of US$0.03 million related to foreign exchange losses on monetary
assets (30 June 2021: gain of US$0.01 million). The Group incurred
interest expense in the six-month period of US$0.02 million (30
June 2021: US$ nil) as the Group became debt-free on the completion
of the issue of new ordinary shares in April 2022 and the
subsequent settlement of the $0.45 million carry advance loan
facility from ARA. In the comparative six-month period the Group
also recognised a US$ nil charge for the finance charges on finance
leases (30 June 2021 US$0.003).
The Group's net loss for the period amounted to US$1.27 million
(30 June 2021: loss of US$1.59 million).
Balance Sheet
The Group's investment in exploration and evaluation assets
increased from US$38.13 million at 31 December 2021 to US$38.28
million at 30 June 2022. The increase of US$0.15 million reflected
exploration and evaluation expenditure on the Kiliwani South CGU
and additions to the Ruvuma PSA CGU offset by the impairment of
US$0.02 on the Kiliwani South CGU as this asset has continued to be
fully impaired. 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, 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$0.04 million at 31 December 2021 to US$0.01
million at 30 June 2022. The decrease relates predominantly to the
depreciation of right of use assets recognised in property, plant
and equipment and the disposal of fixed assets due to the
termination of the London office lease in January 2022. Current
assets amounted to US$7.83 million (31 December 2021: US$6.05
million) with trade and other receivables of US$1.44 million (31
December 2021: US$1.36 million), which as operator includes joint
venture parties' interests in gas revenues, and cash and cash
equivalents of US$6.39 million (31 December 2021: US$4.68 million).
The increase in current assets of US$1.78 million predominantly
related to the placing of new ordinary shares partially offset by
the payment of the carry advance loan facility with ARA Petroleum
LLC and other suppliers.
Current liabilities amounted to US$9.11 million compared with
US$9.85 million at 31 December 2021. 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 decrease in
current liabilities predominantly relates to expenditures on
operated Tanzania gas assets, repayment of the carry advance loan
facility with ARA Petroleum LLC and legal costs incurred during the
period. Non-current liabilities amounting to US$1.67 million (31
December 2021: US$1.62 million) include the non-current
decommissioning provision which increased during the period by
US$0.05 million from US$1.62 million at 31 December 2021 to US$1.67
million, the increase relating to the unwind of the discount charge
during the period.
Total equity has increased by US$2.59 million between 31
December 2021 and 30 June 2022 to US$35.34 million (31 December
2021: US$32.75 million). A net increase of US$ 3.95 million to the
share capital, US$0.01 million to the share option reserve, an
increase in the foreign currency translation reserve of US$0.11
million and the net movement of US$1.27 million in retained
earnings arising on the loss of US$1.27 million for the period.
Cash Flows
Net cash outflows from operating activities were US$1.38 million
during the period (30 June 2021: cash inflow of US$0.38 million).
This was predominantly in relation to the receipt from TPDC of past
gas sales net of certain amounts due to TPDC. This resulted in a
decrease in debtors of US$1.07 million and a decrease in creditors
of US$0.80 million as well as the settlement of third-party costs
on the Group's operated assets. Net cash outflows from investing
activities amounted to US$0.37 million (30 June 2021: cash outflow
US$0.19 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 inflows from financing activities were US$3.48
million (30 June 2021: cash outflow US$0.14 million) due to
proceeds from the issue of new shares offset by the repayment of
ARA facility loan of $0.45 million and interest of US$0.02 million.
Net cash and cash equivalents for the six months ended 30 June 2022
therefore increased by US$1.74 million compared with an increase of
US$0.05 million for the comparative half-year period. The balance
of net cash and cash equivalents at 30 June 2022 was US$6.39
million (30 June 2021: US$0.49 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 2021 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
2023, 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 with the equity placement announced on 1
April 2022 for approximately US$4.2 million, settlement of the ARA
Loan plus accrued interest of approximately US$470,000 in aggregate
and subject to the principal assumptions noted below, the Group and
Company would have adequate resources to continue as a going
concern for the foreseeable future, that is a period of not less
than 12 months from the date of approval of the consolidated
financial statements.
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
2021 Annual Report that remain applicable to the Group. The
principal assumptions made in relation to the going concern
assessment relate to the capital commitments on its operated assets
in Tanzania, the reservation of rights made by the TPDC in respect
of certain claims that the Directors consider are without merit and
the ongoing objections to the tax assessments in Tanzania (see Note
14).
As disclosed in Note 14, the Group received tax assessments from
the TRA of (a) US$2.2 million in relation to a tax audit covering
the period from 2013 to 2015; (b) US$1.6 million in relation to a
tax audit covering the period from 2016 to 2018; and (c) US$3.3
million in relation to a corporate income tax audit covering the
period from 2016 to 2018, all of which are 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 and
consequently any capital expenditure in the period is unlikely to
arise. However, a risk exists that the Group loses its objections
to the tax assessments 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. 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 2022 and concluded that the principal
risks identified at 31 December 2021 and disclosed on pages 24 to
26 of the 2021 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 meet licence work commitments
-- Ability to secure other financing for Group operations
-- Adverse and unexpected tax assessments in Tanzania
-- Political and fiscal uncertainties
-- Lack of exploration, appraisal and development drilling success
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 2022
Aminex PLC
CONDENSED CONSOLIDATED INCOME STATEMENT
for the six months ended 30 June 2022
Notes Unaudited Unaudited Audited
6 months 6 months Year ended
ended ended 31 December
30 June 30 June 2021 2021
2022 US$'000 US$'000
US$'000
Continuing operations
Revenue 2 26 86 143
Cost of sales (129) (308) (292)
Gross loss (103) (222) (149)
Administrative expenses (849) (1,020) (2,821)
Impairment against exploration
and evaluation assets 8 (215) (302) (5,966)
Impairment against property,
plant and equipment
assets - - (872)
Expected credit losses
of trade receivables 10 - - 1,315
Loss from operating
activities (1,167) (1,544) (8,493)
Finance income 4 - - 16
Finance costs 5 (99) (48) (81)
---------- -------------- -------------
Loss before tax (1,266) (1,592) (8,558)
Income tax expense 6 - - -
Loss for the period 2 (1,266) (1,592) (8,558)
---------- -------------- -------------
Loss per share
Basic and diluted (US
cents) 7 (0.03) (0.04) (0.23)
---------- -------------- -------------
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2022
Unaudited Unaudited Audited
6 months 6 months Year ended
ended ended 31 December
30 June 2022 30 June 2021 2021
US$'000 US$'000 US$'000
Loss for the period (1,266) (1,592) (8,558)
Other comprehensive income
Items that are or may be
reclassified subsequently
to profit or loss:
Currency translation differences (110) (7) (55)
Total comprehensive expense
for the period attributable
to the equity holders of
the Company (1,376) (1,599) (8,613)
-------------- -------------- -------------
Aminex PLC
CONDENSED CONSOLIDATED BALANCE SHEET
At 30 June 2022
Unaudited Unaudited Audited
30 June 30 June 31 December
2022 2021 2021
Notes US$'000 US$'000 US$'000
Assets
Non-current assets
Exploration and evaluation
assets 8 38,275 42,927 38,125
Property, plant and equipment 9 13 998 37
Total non-current assets 38,288 43,925 38,162
Current assets
Trade and other receivables 10 1,438 7,623 1,365
Cash and cash equivalents 11 6,394 491 4,685
--------- ------------- ------------
Total current assets 7,832 8,114 6,050
--------- ------------- ------------
TOTAL ASSETS 46,120 52,039 44,212
--------- ------------- ------------
Equity
Issued capital 73,160 69,206 69,206
Share premium 124,481 124,481 124,481
Other undenominated capital 234 234 234
Share option reserve 781 769 769
Foreign currency translation
reserve (2,301) (2,143) (2,191)
Retained earnings (161,014) (152,782) (159,748)
--------- ------------- ------------
Total equity 35,341 39,765 32,751
--------- ------------- ------------
Liabilities
Non-current liabilities
Long-term lease liabilities - 9 -
Decommissioning provision 1,668 909 1,615
Other long-term liabilities - - -
Total non-current liabilities 1,668 918 1,615
--------- ------------- ------------
Current liabilities
Trade and other payables 12 9,111 11,245 9,846
Short-term lease liabilities - 111 -
Borrowings 13 - - -
Total current liabilities 9,111 11,356 9.846
--------- ------------- ------------
Total liabilities 10,779 12,274 11,461
--------- ------------- ------------
TOTAL EQUITY AND LIABILITIES 46,120 52,039 44,212
--------- ------------- ------------
Aminex PLC
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2022
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$'000
At 1 January 2021 69,206 124,481 234 1,327 (2,136) (151,748) 41,364
Comprehensive
income
Loss for the period - - - - - (1,592) (1,592)
Currency translation
differences
Transactions with
shareholders of
the Company
recognised
directly in equity - - - - (7) - (7)
Shares issued - - - - - - -
Share based payment - - - - - - -
charge
Share option reserve
transfer - - - (558) - 558 -
At 30 June 2021 69,206 124,481 234 769 (2,143) (152,782) 39,765
Comprehensive
income
Loss for the period - - - - - (6,966) (6,966)
Currency translation
differences - - - - (48) - (48)
At 31 December
2021 as previously
reported
Comprehensive
income 69,206 124,481 234 769 (2,191) (159,748) 32,751
Loss for the period - - - - - (1,266) (1,266)
Currency translation
differences - - - - (110) - (110)
Transactions with
shareholders of
the Company
recognised
directly in equity
Shares issued 3,954 - - - - - 3,954
Share based payment
charge - - - 12 - - 12
Share option reserve - - - - - - -
transfer
---------- ---------- -------------------- --------- ------------- ------------ ---------
At 30 June 2022
(unaudited) 73,160 124,481 234 781 (2,301) (161,014) 35,341
---------- ---------- -------------------- --------- ------------- ------------ ---------
Aminex PLC
CONDENSED CONSOLIDATED STATEMENT OF CASHFLOWS
for the six months ended 30 June 2022
Unaudited Audited
6 months Unaudited Year ended
ended 6 months 31 December
30 June ended 2021
2022 30 June 2021 US$'000
US$'000 US$'000
Operating activities
Loss for the financial period (1,266) (1,592) (8,558)
Depreciation and depletion 22 112 209
Equity-settled share-based payments 12 - -
Finance income - - (16)
Finance costs 99 48 81
Impairment of exploration and evaluation
assets 215 302 5,966
Impairment of property, plant and
equipment - - 872
Expected credit loss charge - 87 (1,315)
Capital gains tax on Farm Out - - -
(Increase) / decrease in trade
and other receivables (73) 1,013 8,530
(Decrease) / increase in trade
and other payables (392) 409 (883)
--------- ------------- ------------
Net cash generated (used in) /
by operating activities (1,383) 379 4,886
--------- ------------- ------------
Tax paid - - -
Net cash (outflows) / inflows
from operating activities (1,383) 379 4,886
Investing activities
Acquisition of property, plant
and equipment (1) - (3)
Expenditure on exploration and
evaluation assets (365) (186) (901)
Net cash (outflows) / inflows
from investing activities (366) (186) (904)
--------- ------------- ------------
Financing activities
Proceeds from the issue of share
capital 3,954 - - -
Payment of transaction costs on
issue of share capital - - -
Payment of lease liabilities - (141) (212)
Proceeds from Borrowings - - 450
Payment of borrowings (450) - -
Payment of interest on borrowings (19) - -
Net cash inflows / (outflows)
from financing activities 3,485 (141) 238
--------- ------------- ------------
Net increase / (decrease) in cash
and cash equivalents 1,736 52 4,220
Cash and cash equivalents at 1
January 4,685 449 449
Foreign exchange (loss) / gain (27) (10) 16
--------- ------------- ------------
Cash and cash equivalents at end
of the financial period 6,394 491 4,685
--------- ------------- ------------
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2022
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 2021. The
financial information contained in the condensed financial
statements has been prepared in accordance with the accounting
policies set out in the 2021 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 2021 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 68
contained in the 2021 Annual Report and Accounts.
These condensed consolidated financial statements were
authorised for issue by the Board of Directors on 30 September
2022.
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
2023, 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 with the equity placement announced on 1
April 2022 for approximately US$4.2 million, settlement of the ARA
Loan plus accrued interest of approximately US$470,000 in aggregate
and subject to the principal assumptions noted below, the Group and
Company would have adequate resources to continue as a going
concern for the foreseeable future, that is a period of not less
than 12 months from the date of approval of the consolidated
financial statements.
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
2021 Annual Report that remain applicable to the Group. The
principal assumptions made in relation to the going concern
assessment relate to the capital commitments on its operated assets
in Tanzania, the reservation of rights made by the TPDC in respect
of certain claims that the Directors consider are without merit and
the ongoing objections to the tax assessments in Tanzania (see Note
14).
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2022
1. Basis of preparation (continued)
(i) Going concern (continued)
As disclosed in Note 14, the Group received tax assessments from
the TRA of (a) US$2.2 million in relation to a tax audit covering
the period from 2013 to 2015; (b) US$1.6 million in relation to a
tax audit covering the period from 2016 to 2018; (c) US$3.3 million
in relation to a corporate income tax audit covering the period
from 2016 to 2018, all of which are 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 and consequently any
capital expenditure in the period is unlikely to arise. However, a
risk exists that the Group loses its objections to the tax
assessments 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. 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 2021 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 2022
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 (Executive
Chairman) 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 has historically generated 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 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 are 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 2022
2. Segmental disclosure - continuing operations (continued)
Operating segment results - 30 June 2022 (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
2022 2022 2022 2022 2022
US$'000 US$'000 US$'000 US$'000 US$'000
Revenue - - 26 - 26
Cost of sales (97) (6) (26) - (129)
Gross loss (97) (6) - - (103)
Depreciation - - - (22) (22)
Administrative
expenses (84) - (97) (646) (827)
Impairment against
exploration and
evaluation
assets - (215) - - (215)
---------------- ----------------- --------------- ---------------- -----------
Loss from operating
activities (181) (221) (97) (668) (1,167)
Finance costs (10) (43) - (19) (72)
Finance income - - - - -
Foreign exchange gains - - - (27) (27)
---------------- ----------------- --------------- ---------------- -----------
Loss before tax (191) (264) (97) (714) (1,266)
Taxation - - - - -
---------------- ----------------- --------------- ---------------- -----------
Loss for the period (191) (264) (97) (714) (1,266)
---------------- ----------------- --------------- ---------------- -----------
Segment assets 2,137 38,394 - 5,606 46,137
Segment liabilities (3,827) (3,480) - (3,472) (10,779)
Capital expenditure
additions - 365 - 1 366
---------------- ----------------- --------------- ---------------- -----------
Other material
non-cash
items
Share based payments - - - - -
(Note 3)
Unwinding of discount
on decommissioning
provision (Note 5) (10) (43) - - (53)
---------------- ----------------- --------------- ---------------- -----------
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)
---------------- -------------- ----------- ------------ ---------
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2022
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 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 2019
and 2020 will expire at a date either 5, 7 or 10 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.
-- 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.
On 6 January 2022, the Company granted a total of 62 million
share options to Directors and employees. Charles Santos was
awarded 30 million options over Ordinary Shares and 6 million
options over Ordinary Shares were awarded to each of Tom Mackay and
James Lansdell, with the remaining 20 million awarded to employees.
The exercise price is Stg0.60p, with 50% vesting on the date of
grant, 25% six months after the grant date and the remaining 25%
twelve months after the grant date. The exercise period shall not
exceed five years from date of grant.
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 2021
2022 2021 US$'000
US$'000 US$'000
Share-based payment charge 12 - -
The fair value of options granted under the New RSP for
Directors and staff in the period were calculated using the
following inputs into the Black-Scholes method (previously the fair
value of options were estimated using the binomial option-pricing
model):
Date of grant 6 January 2022
Contractual life 1 year
Exercise price Stg 0.6 pence
Market price Stg 0.6 pence
Number of options granted 62,000,000
Expected volatility 90.4%
Vesting conditions Non-market
Fair value per option Stg 0.3 pence
Expected dividend yield -
Risk-free rate 0.001%
---------------
On 30 June 2022, there were options granted under the ESOS and
the New RSP outstanding over 131,861,000 (31 December 2021:
72,111,000) Ordinary Shares which are exercisable at prices ranging
from Stg 0.60 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 2.90 years (31
December 2021: 4.63 years). The average share price for the six
months ended 30 June 2022 was Stg0.83pence/EUR0.00994 (year ended
31 December 2021: Stg0.61pence/EUR0.00705).
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2022
4. Finance income
Unaudited Unaudited Audited
6 months 6 months year ended
ended ended 31 December
30 June 30 June 2021
2022 2021 US$'000
US$'000 US$'000
Foreign exchange gain/(loss) - - 16
------------ ------------ -------------
- - 16
------------ ------------ -------------
5. Finance costs
Unaudited Unaudited Audited
6 months 6 months year ended
ended ended 31 December
30 June 30 June 2021
2022 2021 US$'000
US$'000 US$'000
Interest expense 19 - -
Lease finance costs - 3 5
Other finance costs - decommissioning
provision interest charge
Foreign exchange loss 53 35 76
27 10 -
99 48 81
---------- ---------- -------------
6. Tax
The Group has not provided any tax charge for the six-month
periods ended 30 June 2022 and 30 June 2021. 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 2022, 30 June 2021 and the year
ended 31 December 2021 are as follows:
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2022 2021 2021
Numerator for basic and diluted
earnings per share:
Loss for the financial period
(US$'000) (1,266) (1,592) (8,558)
---------- ---------- -------------
Weighted average number of shares:
Weighted average number of ordinary
shares ('000) 4,123,557 3,770,685 3,770,685
---------- ---------- -------------
Basic and diluted loss per share
(US cents) (0.03) (0.04) (0.23)
---------- ---------- -------------
There is no difference between the basic loss per Ordinary Share
and the diluted loss per Ordinary Share for the financial period
ended 30 June 2022, 30 June 2021 and the year ended 31 December
2021 as all potentially dilutive Ordinary Shares outstanding were
anti-dilutive. There were 178,611,000 share options in issue at 30
June 2022, 119,611,000 share options in issue at 30 June 2021 and
119,611,000 share options in issue at 31 December 2021.
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2022
8. Exploration and evaluation assets
US$'000
Cost
At 1 January 2022 104,264
Additions 365
---------
At 30 June 2022 104,629
---------
Provisions for impairment
At 1 January 2022 66,139
Increase in impairment provision 215
---------
At 30 June 2022 66,354
---------
Net book value
At 30 June 2022 38,275
---------
At 31 December 2021 38,125
---------
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 amount for exploration and evaluation assets represents
active exploration projects. These will ultimately be written off
to the Income Statement as exploration costs if commercial reserves
are not established but are carried forward in the Balance Sheet
whilst the determination process is not yet completed and there are
no indications of impairment having regard to the indicators in
IFRS 6.
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 2022
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
2022 was US$33.6 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 2021, the 3D
seismic mobilised in October and the target to drill the Chikumbi-1
well was set for November 2022. In June 2021, it was reported that
APT had reinterpreted existing 2D seismic which resulted in an
upward revision of risked mean GIIP to 3.024 TCF (8.236 TCF
unrisked mean GIIP). During the period, seismic acquisition
operations commenced, conducted by Africa Geophysical Services
Limited, and are expected to be completed by mid-October 2022. Post
period, seismic acquisition has continued, an addendum to the
Ruvuma PSA has been agreed in principle with the Government of
Tanzania setting out the fiscal terms for the production of gas,
and negotiations for a gas sales agreement for the sale of Ruvuma
gas commenced between APT and the Tanzania Petroleum Development
Corporation.
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 2022 and the Company has commenced the process
to hand back the licence to the Ministry. Therefore, 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
The Kiliwani South CGU, located within the Kiliwani North
Development Licence acreage, was previously identified as a
potential lead. The Kiliwani South prospect was estimated by
management to contain a mean 57 BCF un-risked GIIP and the prospect
has been reviewed by RPS in their February 2018 CPR.
During 2021, the Group proposed no work programme and allocated
no budget towards the future development of the Kiliwani South CGU.
This was due to no agreement reached with the Ministry of Energy on
the work commitments over the Nyuni Area PSA and the delay to
agreeing commercial terms on the Kiliwani North Development
Licence. The Group previously considered any future drilling on the
Licence would be dependent upon improved seismic resolution of the
target structures that would result from the acquisition and
interpretation of a 3D seismic survey, which would only be economic
if conducted over both the KNDL and immediately adjacent areas
within the Nyuni Area PSA. In line with the requirements of IFRS 6
this is an indicator of impairment. During the period, the Group
reached an agreement with Pan African Energy Tanzania ("PAET") to
utilise their 3D seismic campaign over the adjacent producing Songo
Songo field to receive approximately 12.5km(2) of valuable new
high-resolution 3D coverage over the Kiliwani North Development
Licence ("KNDL"), at no cost to the Kiliwani North joint venture.
The data to be acquired over KNDL will be valuable in identifying
fault trends, improving reservoir definition and improving the
understanding of the Kiliwani North and South structures. Post
period, PAET confirmed that it was targeting completion of the
acquisition programme before year end. Notwithstanding this
progress, the Directors concluded that the carrying value of the
Kiliwani South asset should be fully impaired. Any reversal of the
impairment would be dependent on an established development
programme for the area, including a seismic and drilling programme
where an assessment of the carrying value of the CGU would be
reviewed.
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2022
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 2022 8,249 741 113 9,103
Additions in the period - - 1 1
Disposals - - (23) (23)
Exchange rate adjustment - (73) (11) (84)
At 30 June 2022 8,249 668 80 8,997
------------ ------------- --------------- --------
Depreciation and
depletion
At 1 January 2022 8,249 729 88 9,066
Charge for the period - 11 11 22
Disposals - - (23) (23)
Exchange rate adjustment - (72) (9) (81)
At 30 June 2022 8,249 668 67 8,984
------------ ------------- --------------- --------
Net book value
At 30 June 2022 - - 13 13
------------ ------------- --------------- --------
At 31 December 2021 - 12 25 37
------------ ------------- --------------- --------
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.
During 2021, although the Group and TPDC reached agreement on
the settlement of past outstanding gas sales and related amounts
due to the TPDC, certain rights were reserved by both parties over
areas that remain unresolved related to commercial terms over
production from the area (see Note 14). Prior to any development of
the Kiliwani North Development Licence taking place, agreement
needs to be reached on commercial terms. During 2021, the KN-1 well
remained idle, no progress was made with the TPDC on remediation of
the well as discussions continued to focus on commercial terms over
the Licence, the Group is transitioning to a non-operator focus,
following the successful Farm-Out of the Ruvuma PSA, and the Group
proposed no work programme and allocated no budget over the KNDL
for 2022. The Directors concluded that these all indicated the
asset was impaired. During the period, the Group reached an
agreement with Pan African Energy Tanzania ("PAET") to utilise
their 3D seismic campaign over the adjacent producing Songo Songo
field to receive approximately 12.5km(2) of valuable new
high-resolution 3D coverage over the Kiliwani North Development
Licence ("KNDL"), at no cost to the Kiliwani North joint venture.
The data to be acquired over KNDL will be valuable in identifying
fault trends, improving reservoir definition and improving the
understanding of the Kiliwani North and South structures. Post
period, PAET confirmed that it was targeting completion of the
acquisition programme before year end.
In accordance with IAS 36, the Group conducted an impairment
test as at 31 December 2021 on a value-in-use basis. The
cash-generating unit for the purpose of impairment testing is the
Kiliwani North-1 well. The Company employs a financial model of the
forecast discounted cash flow to calculate the assets value-in-use.
However, as key judgements for the 2021 impairment test concluded
no production, the value in use calculation was nil.
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2022
9. Property, plant and equipment (continued)
Consequently, the Directors have concluded that the Kiliwani
North CGU is fully impaired as at 31 December 2021 and an
additional impairment has been recognised for the six months ended
30 June 2022.
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
-- Leases with a duration of 12 months or less.
Right of use assets of US$ nil (31 December 2021: US$12,000)
relate to an office lease located in the UK. The UK property lease
expired during the period. The Group recognised rent expense from
short-term leases of US$ nil for the six months ended 30 June 2022
(30 June 2021: US$12,000).
10. Trade and other receivables
Trade and other receivables amounted to US$1.44 million at the
period end (31 December 2021: US$1.37 million). The increase,
during the period, is predominantly related to receivables due from
joint venture partners and VAT receivable. The decrease from 30
June 2021 of $6.19 million predominantly relates to the settlement
reached in November 2021 with the TPDC for US$6.77 million of past
gas sales over production from the Kiliwani North-1 well and the
agreement by the Group to waive the late payment interest accrued
of US$1.57 million.
11. Cash and cash equivalents
Unaudited Unaudited Audited
6 months 6 months year ended
ended ended 31 December
30 June 30 June 2021
2022 2021 US$'000
US$'000 US$'000
Cash at bank and in hand 6,394 491 4,685
Included in cash and cash equivalents is an amount of
US$1,157,000 (31 December 2021: US$1,157,000) held on behalf of
partners in jointly controlled operations.
12. Trade and other payables
Trade and other payables amounted to US$9.11 million at the
period end (31 December 2021: US$9.85 million). The decrease in
trade and other payables predominantly relates to the repayment of
a short-term loan of $450,000 from ARA Petroleum LLC in April 2022
and the reduction of the Tanzania supplier provision after payment
settlement. 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.
The Directors consider that the carrying amounts of trade
payables approximate their fair value.
13. Borrowings
At 30 June 2022, the Group had no outstanding borrowings (31
December 2021: US$0.45 million; 30 June 2021: US$ nil).
On 14 December 2021, the Company signed a US$1.7 million carry
advance loan facility with ARA Petroleum LLC ("the Loan"), which,
through its associated company, Eclipse Investments LLC, is a
significant shareholder in Aminex PLC. The Loan bears interest at
13.77% per annum. On 29 December 2021, US$450,000 was drawn down
against the loan agreement. On 20 April 2022, US$450,000 and
interest of US$19,278 was repaid to ARA from the share placement
proceeds.
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2022
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. Despite the Group having
commenced the process to return the Nyuni Area licence to the
Tanzanian authorities it is acknowledged that only part of the
seismic acquisition commitment and none of the drilling commitment
under the licence has been undertaken.
(b) The Ruvuma PSA, Tanzania, originally comprised two licences.
The Mtwara Licence was extended in August 2021 for a further two
years (see Note 8). 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. The agreed amounts claimed were offset as part of the
settlement agreement signed in October 2021 between the Group and
the TPDC. As part of the settlement agreement, both parties
reserved certain rights including the TPDC reserving its rights in
relation to unpaid royalties and profit share arrangements. Aminex
has advised the TPDC that it does not accept the balance of the
claims, which TPDC estimates to be US$4.18 million (Aminex's net
share is equal to US$2.74 million). The Group has received legal
advice in country that supports its position, and this has been
provided to the TPDC. The Directors believe these claims are
without merit and do not consider it appropriate at this stage to
provide for these claims.
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2022
14. Commitments, guarantees and contingent liabilities (continued)
Tanzanian Tax Assessments
On 28 February 2020, following the conclusion of the TRA audit
of Ndovu Resources Limited ("NRL"), the Group's Tanzanian wholly
owned subsidiary, for taxation years 2013 to 2015, the TRA issued a
tax assessment in respect of these taxation years. The following
matters were raised in the assessments:
Principal Interest Total
US$'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
---------- --------- --------
On 3 June 2022, following the conclusion of the TRA audit of NRL
for taxation years 2016 to 2018, the TRA issued a tax assessment in
respect of these taxation years. The following material matters
were raised in the assessments:
Principal Interest Total
US$'000 US$'000 US$'000
Area
VAT VAT on Ruvuma Farm-Out 1,221 233 1,454
Pay As
You Earn
(PAYE) PAYE on Director's fees 92 45 137
1,313 278 1,591
---------- --------- --------
On 28 June 2022, following the conclusion of the TRA corporate
income tax audit of NRL for taxation years 2016 to 2018, the TRA
issued a tax assessment in respect of these taxation years. The
following matters were raised in the assessments:
Principal Interest Total
US$'000 US$'000 US$'000
Area
Corporate Under declaration of revenue
tax for 2016 365 145 510
Corporate Under declaration of revenue
tax for 2017 1,438 394 1,832
Corporate Under declaration of revenue
tax for 2018 772 143 915
2,575 682 3,257
---------- --------- --------
NRL considers all of the above claims to be without technical
merit in tax law and with the assistance of an in-country tax
advisor, has submitted objections 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.
Aminex PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2022
15. Related party transactions
On 6 January 2022, the Company granted 42 million share options
to Directors. Charles Santos was awarded 30 million options over
Ordinary shares and 6 million options were awarded to each of Tom
Mackay and James Lansdell. James Lansdell is Deputy General Counsel
at The Zubair Corporation and an Eclipse Investments LLC
representative, a related party. The exercise price is Stg0.60p,
with 50% vesting on the date of grant, 25% six months after the
grant date and the remaining 25% twelve months after the grant
date. The exercise period shall not exceed five years from date of
grant.
During the period, the Company raised US$4,164,000
(GBP3,304,000) (inclusive of the sums received in July 2022) before
expenses in a placing through the issue of 440,482,181 new ordinary
shares at a price of Stg 0.75p per share. Eclipse Investments LLC,
a substantial shareholder and a related party, subscribed for
84,375,514 new ordinary shares in the placing. The $450,000 carry
advance loan facility with ARA Petroleum LLC provided to the
Company on 29 December 2021, and its accrued interest during the
period of $19,000, were repaid in full by offset against the cash
received from Eclipse Investments LLC for the placing shares.
16. Post balance sheet events
On 7 July 2022, the Company received the balance owed of
$210,000 (GBP175,550) for the placing of the new shares. All funds
have been received in full.
17. Statutory information
The financial information to 30 June 2022 and 30 June 2021 is
unaudited and does not constitute statutory financial information.
The information given for the year ended 31 December 2021 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 2021 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 20-22 Wenlock Road, London, N1 7GU.
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END
IR FLFIAASIAFIF
(END) Dow Jones Newswires
September 30, 2022 02:00 ET (06:00 GMT)
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