Power Capital Global Ltd Trading Update (4268A)

TIDMPCGB

RNS Number : 4268A

Power Capital Global Ltd

19 February 2014

POWER CAPITAL GLOBAL LIMITED

("Power Capital" or "the Company")

Trading Update

Power Capital Global Limited (AIM:PCGB), the Asia based natural resources trading and logistics group, today announces a trading update in respect of the year ended 31 December 2013.

Summary

Notwithstanding a restructuring of our main coal off-take agreement which was completed in September 2013, traded Indonesian thermal coal volumes have been disappointingly low in the second half of 2013. This has severely hampered the ability of the Company to further expand its commodity trading activities in the past six months and has also had an adverse impact on the Company's working capital. Steps are in place to resolve these issues ahead of our full year 2013 reporting which we expect to release by the end of May 2014.

Indonesia

The Company announced in March 2013 that its 51% joint venture company, PCG Coal (Indonesia) Limited ("PCI"), had entered into an off-take agreement (the "Agreement") with PT Perdana Maju Utama ("PMU") for one million metric tonnes of thermal coal. PCI has since provided advance payments under the Agreement of US$2 million (the "Advance").

PCI traded approximately 10,700 metric tonnes of thermal coal on trial barge shipments in early August 2013. Coal quality was in line with specification but delivered volume was below expectation. Subsequently, PCI renegotiated certain terms of the Agreement and in September 2013 signed an addendum under which PMU is permitted to sell its mined concession thermal coal direct to third party customers rather than PCI but is required to compensate PCI at a rate of US$3.2 per metric tonne sold, with minimum committed monthly sales of 50,000 metric tonnes. The cost of PMU coal delivered in August was set-off in full against the Advance.

PMU sold 57,800 metric tonnes of coal in September 2013 and effected commission and Advance repayments to PCI totalling approximately US$185,000, reducing the Advance outstanding to approximately US$1.6 million. The Company understands that, since the end of September, due to wet weather conditions in East Kalimantan, limited sales of thermal coal have been completed by PMU. PCI invoiced PMU in accordance with the addendum to the Agreement for its minimum contract payment of US$160,000 in each of October, November and December 2013 (of which the October and November invoices have been settled in full and the December invoice is partially settled). PMU has confirmed it will continue making monthly payments to PCI on the basis of a minimum 50,000 metric tonnes per month until such time as the equivalent of one million metric tonnes of PMU coal has been sold and the Advance has been fully repaid.

The Company continues to source alternate off-take opportunities in Indonesia and is in advanced negotiations for further off-take agreements. Any such agreements would be subject to appropriate financing being in place.

The Company has made no material progress in further developing a vertically integrated tin dredging and smelting operation in Bangka, Indonesia. The next step in the development of this business opportunity is to commence cassiterite dredging operations and, for this stage of works to commence, the Company will need to secure additional funding.

TSI

The Company is disappointed to report that it has made no progress in its efforts to hold constructive discussions with the management and owners of TSI Holdings Limited ("TSI"). The Company will now progress formal redress over the current default on loan repayments from TSI using all forms of recourse available to it. The amount outstanding under the TSI facility (excluding accrued interest) is US$1 million and the Company will make appropriate provision against this sum in its full year 2013 financial results.

Mongolia

The Company has a 1.4% equity stake in Asia Pacific Investment Partners Limited ("APIP"). APIP continues to progress well with its plan to secure a stock exchange listing either in the later part of this year or early 2015. APIP re-organised its mineral exploration and mining subsidiary assets into a standalone corporate entity at the end of 2013 and this was subsequently de-merged from APIP through a distribution of its shares by way of a dividend in specie. A suitable strategic and financial partner is now being sought to advance its mineral exploration program.

Corporate Matters

The Company continues to benefit from financial support from Kolarmy Technology INC ("Kolarmy"), a related party company, in the form of a loan facility. The existing facility was extended from US$3 million to US$6 million in June 2013 and this is currently drawn by approximately US$4.8 million as at the date of this announcement.

Working capital in the Company is currently low but, with the recommencement of the trading cashflow under the Agreement this month, is sufficient to cover the Company's monthly costs and, subject to the continued payments due being forthcoming each month under the amended Agreement, the directors believe there are sufficient cashflows to meet the Company's working capital requirements in the short term. In addition, the Company has the ability to draw down a further U$1.2 million under the current terms of the Kolarmy facility but it is the directors' preference not to increase the Company's liabilities unless it is to invest in new, revenue-enhancing, initiatives.

The directors will provide further updates as and when appropriate.

 
 Further information 
 
 Power Capital Global 
  Limited 
 Simon Dewhurst                    Tel: +852 3695 5150 
 
 Northland Capital Partners 
  Limited 
 Edward Hutton/Luke Cairns         Tel: +44 (0)20 7382 1100 
 
 GTH Communications Limited 
 Toby Hall/Suzanne Johnson-Walsh    Tel: +44 (0) 20 7822 7493 / 
                                     +44 7713 341072

This information is provided by RNS

The company news service from the London Stock Exchange

END

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