REG - Aminex PLC - Final Results and Annual Report 2021

AminexAnnouncement

11/04/2022 07:00

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RNS Number : 9279H  Aminex PLC  11 April 2022

11 April 2022

 

FINAL RESULTS for year ended 31 december 2021 AND ANNUAL REPORT

 

Aminex PLC ('Aminex' or the 'Company') is pleased to announce its audited
financial results for the year ended 31 December 2021.

 

Highlights

 

Outlook:

•    Successfully raised approximately £3.3 million (approximately
US$4.4 million) before expenses to fund the Company to the expected receipt of
revenue from first gas production at the Ntorya field, currently projected for
end of 2024

•    Company debt-free on the completion of the recent equity raise

•    ARA Petroleum Tanzania Limited ("APT") continue to progress
operations at Ruvuma PSA, with Chikumbi-1 drilling planned for November 2022
 

•    Agreement reached with Pan African Energy Tanzania ("PAET") to
utilise their high-resolution 3D seismic campaign, targeting a mid-year start,
to receive approximately 12.5km² of valuable new high-resolution 3D coverage
over KNDL, at no cost to the Kiliwani North joint venture

 

During 2021:

•    Ruvuma joint venture granted a two-year extension to its licence
under the Ruvuma PSA from the Ministry of Energy of Tanzania allowing for the
completion of the acquisition of the 3D seismic survey, the drilling and
testing of the Chikumbi-1 well, and the design and submission to the
authorities of a Field Development Plan to grant a 25-year Development Licence

•    APT progressed the seismic programme on the Ruvuma PSA and completed
the tendering process of an extensive 3D seismic programme with mobilisation
of crew and equipment

•    Ruvuma PSA Farm-Out Carry of US$35 million covered Aminex for all
2021 Ruvuma costs

•  Receipt of outstanding monies owed for past gas sales to the Tanzania
Petroleum Development Corporation, resulting in a net cash inflow to the
Company of approximately US$1.85 million

•    Reduction in gross G&A costs (before one-off costs and
exceptional items) to below US$1.5 million per annum in 2022, representing a
75% reduction from 2018 levels

•    Loss for the year of US$8.56 million (2020: loss of US$6.14 million)

 

The Annual Report may be viewed on the Company's website www.aminex-plc.com
(http://www.aminex-plc.com/) by clicking on the following link:

 

Aminex PLC Annual Report 2021
(http://admin.aminex-plc.com/uploadfiles/Aminex%20PLC%202021%20Annual%20Report%20and%20Accounts.pdf)

 

The Company will announce details of the Annual General Meeting in due course.
 

 

Paper copies of the Annual Report together with the Notice of Annual General
Meeting, including the Form

of Proxy, will be mailed shortly to those shareholders who have elected to
receive paper copies.

 

The Executive Chairman's Statement from the Annual Report follows below:

 

Executive Chairman's Statement

 

Dear Shareholder,

 

As I wrote last year, we live in unprecedented and complex times. Just two
years ago, in April 2020, energy prices were at historic lows; COVID-19
significantly impacted the oil and gas industry, forcing energy companies to
review their operations, in some instances retrenching and, most importantly,
cutting costs. Today, energy prices, already rising as the world exits from
the pandemic with disrupted supply chains and the lack of investment in new
oil and gas projects, face another significant crisis, the invasion of Ukraine
and the sanctions taken against Russian oil and gas exports. These crises have
pushed energy prices close to historic highs, causing a reassessment of the
importance of fossil fuels, particularly natural gas, which had been ignored
by many.

 

Although the macro-political uncertainty and conflicting policies around
hydrocarbons continue to cloud the energy picture, we believe that the demand
for gas globally will continue to grow. We also see positive changes regarding
the development of natural gas in Tanzania, witnessing firsthand these changes
in our successful negotiations with the government over the outstanding
Kiliwani receivables. In four months, we negotiated a settlement of the
four-year outstanding receivables, thanks in large part to the willingness of
the Tanzanian authorities to finally resolve the matter.

 

Moreover, Tanzania has an energy deficiency and has embarked on further
industrialisation development programmes which has seen the planning and
construction of numerous facilities along existing gas delivery infrastructure
either directly connected to or in close proximity to our Tanzanian assets and
which are expected to increase local gas demand significantly in the near
future. In addition, it has been reported that discussions have been held
between Tanzanian Government officials and their counterparts in neighbouring
countries to explore the possibility of securing a long-term supply of gas
from Tanzania and adding to future gas demand in the East African region.
These positive developments in the Tanzanian gas sector bode well for the
commercialisation of our assets in the future.

 

Non-Operating Strategy

 

The global developments and positive changes in Tanzania have confirmed the
importance of our strategy to move from an operating to a non-operating
business, which has enabled us to de-risk while anchoring shareholder value.

 

Our non-operating corporate strategy rests on four pillars: (i) our successful
completion of the Ruvuma Farm-Out to ARA Petroleum Tanzania Limited ("APT"), a
highly competent and well-funded Operator; (ii) our significant cost-cutting,
which has reduced our operating expenses by nearly 75 percent over the past
four years; (iii) our successful negotiation of the Kiliwani receivables and
(iv) receipt of funds from our recent equity placing which are forecast to
cover our running costs (before one-off and exceptional items) until receipt
of Ruvuma revenue, planned for the end of 2024. This de-risking strategy has
made Aminex a stronger company with a low-cost base and entirely carried
position on Ruvuma, providing a solid financial position until the
commencement of cash flow receipts from Ruvuma. It will also allow the Company
to utilise its solid financial position to grow further.

 

Ruvuma PSA

 

It is essential to remind shareholders that the Farm-Out completed with APT in
October 2020 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. It is expected
that the carry, which is equivalent to US$140.0 million of gross field
expenditure, will 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 that could be
gained in the Ruvuma Basin. This non-operating position has become a
cornerstone of the Company's de-risking strategy.

 

2022 will see important progress on Ruvuma with the completion of the 3D
seismic survey, 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. 2022 will therefore be a significant year for Aminex and
we eagerly await the spudding of Chikumbi-1 in November 2022. The current
operations represent a significant step towards monetising this extensive gas
resource through production into existing infrastructure and transportation to
an established power and industrial market in Tanzania. APT, since acquiring
operatorship, has demonstrated both focused determination and commitment to
move the project forward.

 

Kiliwani North and Kiliwani South - Kiliwani North Development Licence
("KNDL")

 

During the year, the Company settled its outstanding dispute over payments for
past gas sales from the Kiliwani North Development Licence with the Tanzania
Petroleum Development Corporation ("TPDC"). The Company appreciates the TPDC's
constructive negotiations and satisfactory resolution of the matter.

 

As set out in more detail in the Operations Report, following the Company's
transition to a non-operator strategy any development of the KNDL is dependent
on the identification of an experienced partner to operate the asset and the
securing of additional funding through a farm-out. The Company has been
actively pursuing farm in partners to fund and operate the asset but in light
of the delays, caused by late payment for gas, the outstanding commercial
terms to be agreed, coupled with the move to a non-operator strategy, the
Kiliwani North and Kiliwani South assets have been impaired during the year.
We will update shareholders with progress on any farmout in due course. We are
however, pleased to report that Orca Energy, via its subsidiary PanAfrican
Energy Tanzania ("PAET"), will acquire some 13 km2 new 3D seismic data over
part of the KNDL that borders the Songo Songo field to the west as part of
their new full-field survey.

 

Nyuni Area PSA

 

Two years have passed since Aminex, through its wholly owned subsidiary, Ndovu
Resources Limited, first notified the Tanzanian Ministry of Energy of its
willingness to move into the Second Extension Period, and there is still no
agreement on terms. The First Extension expired on 27 October 2019.  Given
the dramatic and unprecedented global factors over the past two years that
have negatively impacted the energy investment climate and fossil fuel
projects, including Nyuni, a farm-out partner is essential in order to provide
the necessary funding and to mitigate the associated risks. Accordingly, we
have sought partners over the past 18 months, to participate in the
exploration and development of Nyuni but these approaches have failed to
produce any interest in the project, reinforcing the present PSA's lack of
perceived commercial

viability. 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

 

We continued to cut costs and reduce corporate overheads, including reducing
General and Administrative costs ("G&A"). Although the Company saw an
increase in G&A expenditure during the period compared to the same period
in 2020, this increase represents the one-off associated costs of actions
taken during the period to realise further cost savings. On a like-for-like
basis, the cost savings made in the period compared to the same period in 2020
are over 30%. I am happy to report the Company reduction in gross G&A
costs (before one-off costs and exceptional items) to below $1.5 million per
annum in 2022, representing a 75% reduction from 2018 levels. Through making
these initiatives, the Company has established an appropriate structure of
capabilities and competencies that match the current requirements of the
business with a more flexible approach that derisks our business and can help
create or attract strategic opportunities.

 

Outlook and Funding

 

On 1 April 2022, we announced the fully subscribed placement for approximately
$4.4 million. This represents an important development for the Company and 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 Ruvuma. We look forward to the
completion of the 3D seismic survey and the drilling of the Chikumbi-1 well
later this year. We are thankful for the participation of all the investors,
including our largest shareholder, Eclipse.

 

Finally, I would like to thank our existing shareholders for their continued
support and patience and hope that our operations in 2022 will finally reward
us all with success on Ntorya.

 

Yours sincerely,

 

Charles Santos

Executive Chairman

 

Ends

 

 

 

 

 For further information:

 Aminex PLC                          +44 20 3198 8415
 Charles Santos, Executive Chairman

 Davy                                +353 1 679 6363
 Brian Garrahy

 Shard Capital Partners              +44 207 186 9952
 Damon Heath

 

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