REG - Aminex PLC - 2022 Half-Yearly Financial Report
30/09/2022 07:01
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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 (£3.3
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 12.5km² 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 END
· 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 spudding 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 (£3.3 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 ended 6 months ended Year ended
30 June 2022 30 June 2021 31 December 2021
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 ended 6 months ended Year ended
30 June 2022 30 June 2021 31 December 2021
US$'000 US$'000 US$'000
Loss for the period (1,266) (1,592) (8,558)
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss:
Currency translation differences (110) (7) (55)
Total comprehensive expense for the period attributable to the equity holders
of the Company
(1,376) (1,599) (8,613)
Aminex PLC
CONDENSED CONSOLIDATED BALANCE SHEET
At 30 June
2022
Notes Unaudited Unaudited 30 June Audited
30 June 2021 31 December 2021
2022 US$'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
Share premium Other undenominated capital Share option reserve Foreign currency translation reserve fund Retained earnings Total equity
Share capital
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
At 1 January 2021 69,206 124,481 234 1,327 (2,136) (151,748) 41,364
Comprehensive income
Loss for the period - - - - - (1,592) (1,592)
Currency translation differences
Transactions with shareholders of the Company recognised directly in equity - - - - (7) - (7)
Shares issued - - - - - - -
Share based payment charge - - - - - - -
Share option reserve transfer - - - (558) - 558 -
At 30 June 2021 69,206 124,481 234 769 (2,143) (152,782) 39,765
Comprehensive income
Loss for the period - - - - - (6,966) (6,966)
Currency translation differences - - - - (48) - (48)
At 31 December 2021 as previously reported
Comprehensive income 69,206 124,481 234 769 (2,191) (159,748) 32,751
Loss for the period - - - - - (1,266) (1,266)
Currency translation differences
- - - - (110) - (110)
Transactions with shareholders of the Company recognised directly in equity
Shares issued 3,954 - - - - - 3,954
Share based payment charge - - - 12 - - 12
Share option reserve transfer - - - - - - -
At 30 June 2022 (unaudited) 73,160 124,481 234 781 (2,301) (161,014) 35,341
Aminex PLC
CONDENSED CONSOLIDATED STATEMENT OF CASHFLOWS
for the six months ended 30 June 2022
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 June 2022 30 June 2021 31 December 2021
US$'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 oil and gas properties Corporate Aminex
Exploration activities Oilfield services Group
Total
30 June 2022 30 June 2022 30 June 2022 30 June 30 June 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 oil and gas properties Corporate Aminex Group
Exploration activities Oilfield services
Total
30 June 2021 30 June 2021 30 June 2021 30 June 30 June 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 ended 6 months ended year ended
30 June 30 June 31 December 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/€0.00994 (year ended 31 December 2021:
Stg0.61pence/€0.00705).
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 ended 6 months ended year ended
30 June 30 June 31 December 2021
2022 2021 US$'000
US$'000 US$'000
Foreign exchange gain/(loss) - - 16
- - 16
5. Finance costs
Unaudited Unaudited Audited
6 months ended 6 months ended year ended
30 June 30 June 31 December 2021
2022 2021 US$'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 ended 6 months ended Year
30 June 30 June ended
2022 2021 31 December 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 38,275
At 30 June 2022
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 12.5km² 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 - Tanzania
Right of 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 12.5km² 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$1.57 million.
11. Cash and cash equivalents
Unaudited Unaudited Audited
6 months ended 6 months ended year ended
30 June 30 June 31 December 2021
2022 2021 US$'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 Withholding tax on payments made to non-residents for services 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 tax Under declaration of revenue for 2016 365 145 510
Corporate tax Under declaration of revenue for 2017 1,438 394 1,832
Corporate tax Under declaration of revenue 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 (£3,304,000) (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 (£175,550)
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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