Results for the year ended 30 September 2011
Thursday 27 October 2011
Results for the year ended 30 September 2011
Chairman's statement
I am pleased to present my tenth annual statement to Shareholders for the year
ended 30 September 2011.
Results for the year
I am pleased to report a profit for the year after taxation of £2.06m, or 5.1
pence per share. Other highlights are:
* investment sales of £3.79m, including three investee company takeovers;
* a gross profit from investment sales of £3.16m, five times cost;
* profit before taxation of £2.82m; £2.06m post taxation;
* elimination of bank borrowings, and
* resumption of dividend payments.
Trading portfolio valuation
A year ago, when reporting on the year to 30 September 2010, I drew attention to
the continuing adverse conditions in our chosen market for early stage mineral
exploration stocks. The year to September 2011 has been a year of two parts:
during the three months to 31 December 2010, we enjoyed a substantial recovery
when we declared a net asset value of £10.44m; during the subsequent nine months
we have suffered a steady decline ending the year at £6.62m. However, this
remains 58% above the value a year earlier.
Following the challenges of the past years, we continue to value our portfolio
investments conservatively at the lower of cost or bid price or lower directors'
valuation where we believe those facts of which we are aware cast doubt on the
market prices or where the Company's interest is of such a size as to inhibit
selling into a depressed market. This cautious approach has proved to be
appropriate in these difficult times; these discounts total £605,000 (2010:
£450,000).
A detailed review of the portfolio companies follows below. Whilst the
portfolio contains investments in a number of companies that have made real
progress during the year, there are many, particularly smaller companies, that
have struggled for one or more of several reasons, such as an inability to raise
new capital to finance continued exploration, not having the good fortune to
target a mineral currently in demand, finding minerals but not in commercially
viable quantities and/or market preference for short term cash generating
opportunities which most of our holdings do not. It is worth reminding
ourselves that much of our portfolio does not enjoy institutional support but is
reliant on the private investor.
Our commentary focuses on the 'winners' but does not exclude others, some of
which may well rebound; we remain resolved to allow our investments time to
mature; most certainly this proved to be appropriate with the companies for
which a takeover offer was received this year.
The key performance indicators are set out on the following page.
Company statistics
 30 September 2011 30 September 2010 Change
 at BID at BID %
  values as adjusted  values as adjusted
* Trading portfolio value £5.47m £4.57m 20%
* Company asset value net of £6.62m £4.19m 58%
debt
* Net asset value - fully 17.57p 11.28p 56%
diluted per share
* Closing share price 13.0p 7.75p 68%
* Share price discount to net 26% 31.3%
asset value
* Market capitalisation £4.77m £2.84m 68%
These values include unrealised gains on elements of the trading portfolio that
are not reflected in the financial statements.
Since the year end values have increased slightly; as at 21 October 2011, the
net asset value was £6.84m.
Review of the current market
I have no intention of making speculative statements regarding the future; we
live in a changeable world, one in which there can be no certainty of tomorrow!
However, within the portfolio we continue to hold investments which we
anticipate will make further improvement in more settled times. These include
companies with interests in gold, iron ore, nickel, coal and manganese as well
as other minerals which, short of a complete worldwide economic collapse, will
continue to be much in demand from developing countries whose people
increasingly expect to enjoy the mobile telephones, refrigerators, motor cars
and other benefits of 21(st) century life that we take for granted.
The challenge for the explorers is to raise sufficient cash to move towards
production and therefore revenue or to manage their operations within the
constraints of the cash available to them.
The state of the world economy and markets for natural resources will continue
to overshadow us, but we continue to believe that the prospects in the medium to
long term are encouraging. As always, we will continue to contain our overheads
to the minimum, seek to use our limited cash resources to best advantage and
otherwise be patient as we await a full recovery.
Dividends
Against the background of the interim profit declared at 31 March 2011, the
Directors resumed dividend payment on 15 June 2011 with an interim payment of
0.25 pence per share. At the forthcoming annual general meeting, it is the
intention of the Directors to recommend the payment of a final dividend of 0.5
pence per share making a total of 0.75 pence for the full year. This is
equivalent to a yield of 7% on the closing price on 21 October 2011.
For the future, your Board will keep the matter under review but presently
intends to declare an interim dividend payable in June 2012.
Investment policy
The Company investment policy is reproduced below and made available on its
website, www.starvest.co.uk. In the past investments were predominantly in
early stage ventures; now where funds are available your Company will be looking
either to support existing investee companies or take positions in selected
later stage ventures where mineral resources have been confirmed and where
shorter term returns are expected.
Shareholder information
The Company's shares are traded on AIM and PLUS.
Announcements made to the London Stock Exchange are sent to those who register
at the Company website, www.starvest.co.uk where historic reports and
announcements are also available.
Annual general meeting
We will hold our annual general meeting at 3.00 pm on Tuesday 6 December 2010 at
St Stephen's Club, Queen Anne Gate, London SW1 when we look forward to meeting
those Shareholders able to attend.
R Bruce Rowan
Chairman & Chief Executive
26 October 2011
Investing policy statement
About us
The Board has managed the Company as an investment company since January 2002.
Collectively, the Board has a wealth of experience over many years of investing
in small company new issues and pre-IPO opportunities in the natural resources
and mineral exploration sectors.
Company objective
The Company is established as a source of early stage finance to fledgling
businesses, to maximise the capital value of the Company and to generate
benefits for Shareholders in the form of capital growth and modest dividends.
Investing strategy
Whilst the Company has no exclusive commitment to the natural resources sector,
the Board sees this as having considerable growth potential for the foreseeable
future. Historically, investments were generally made immediately prior to an
initial public offering, at IPO on the AIM or PLUS markets and in the
aftermarket. As the nature of the market has changed since 2008, it is more
likely that the future investment portfolio will include a spread of up to forty
companies that generally have moved beyond the IPO stage but remain in the early
stages of identifying a commercial resource and/or moving towards development
with the appropriate finance.
Initial investments are for varying amounts but usually in the range £100,000 -
£300,000. These companies are invariably not generating cash, rather they have
a constant requirement to raise new equity cash in order to continue exploration
and development. Therefore after appropriate due diligence, the Company may
provide further funding support and make later market purchases so that the
total investment may be greater than £300,000.
The business is inherently high risk and of a cyclical nature dependent upon
fluctuations in world economic activity which impacts on the demand for
minerals.
The investee companies, being small, almost invariably lack share market
liquidity, even if they are quoted on AIM, PLUS, ASX, TSX or TSX-V. Therefore,
in the early years it is rarely possible to sell an investment at the quoted
market price with the result that extreme patience is required whilst the
investee company develops and ultimately attracts market interest. If and when
an explorer finds a large exploitable resource, it may become the object of a
third party bid, or otherwise become a much larger entity; either way an
opportunity to realise cash is expected to follow.
Of the thirty to forty investments held at any one time, it is expected that
more than five will prove to be 'winners'; from half of the remainder we may
expect to see modest share price improvements. Overall, the expectation is that
in time Shareholder returns will be acceptable if not substantial.
Accordingly, the Board is unable to give any estimate of the quantum or timing
of returns. That stated, when profits have been realised and adequate cash is
available, it is the intention of the Board to recommend the distribution of up
to half the profits realised.
The Company currently has investments in the following companies which
themselves are investment companies: Equity Resources plc, Guild Acquisitions
plc; Addworth plc and International Mining & Infrastructure Corporation plc.
The Company takes no part in the active management of investee companies,
although directors of the Company are also non-executive directors on the boards
of seven such companies, with one director being the executive chairman of an
eighth.
Review of trading portfolio
Introduction
During the year to 30 September 2011, the portfolio comprised interests in the
companies commented on below.
The tough trading and fundraising conditions of the past two years have taken a
toll on some of the businesses in which Starvest is invested to such an extent
that as at 30 September 2011:
* eight portfolio companies accounted for 87% of the portfolio value; all of
these companies are mineral exploration ventures on which we comment first;
in every case, the year end valuation exceeds original cost;
* the next six investments account for a further 11% of the portfolio value;
* the remainder, amounting to 2% only, include both mineral exploration
ventures as well as other businesses which are all valued below cost; we
hope that some in this final grouping will recover and will yet surprise us.
Transactions
During the year, three investee companies received takeover offers:
* Belmore Resources (Holdings) plc with exploration interests in Ireland
received a cash offer from Lundin Mining; a warrant to subscribe for further
shares was first exercised;
* Sheba Exploration (UK) plc with exploration interests in Ethiopia received
an offer consisting of a mix of cash and shares in Centamin Egypt Limited;
* having sold a part of the holding of Franconia Minerals Corporation in the
previous year, the balance was sold following an agreed takeover approach
from Duluth Metals Limited.
These three investments had each been held for seven years and yielded a
substantial return on the initial modest outlay; they are good examples of the
Starvest investment philosophy.
* In addition, a part of the holding in Beowulf Mining plc was sold at
substantial profit, and a small re-purchase has been made subsequently.
Additional investments were made in the following mineral exploration ventures:
Ariana Resources plc, Oracle Coalfields plc, Regency Mines plc, Red Rock
Resources plc. A further subscription was made to a placing from Guild
Acquisitions plc.
Mineral exploration ventures accounting for 87% of portfolio value
Ariana Resources plc - AIM ticker: AAU
Website: www.arianaresources.co.uk
Ariana Resources is an exploration and development company focused on epithermal
gold-silver and porphyry copper-gold deposits in Turkey, using its first mover
advantage in the country's recent exploration boom to build up an impressive
portfolio of prospective licences. Its flagship assets are its Sindirgi and
Tavsan gold projects in western Turkey, forming the Red Rabbit 50/50 joint
venture with US$8 million Turkish buy-in partner Procea Construction with useful
international industry experience in developing mine process plants. Red Rabbit
is scheduled to commence production in late 2012 after a further US$18 million
capital spend to be shared between the partners.
Ariana meanwhile has further exploration projects in the same area and in July
acquired from KEFI Minerals four properties including the Kizilcukur and
Muratdag projects, leading Ariana to target a significant 1 million oz gold
resource base for the whole Red Rabbit area. In addition to its own pipeline of
exploration projects Ariana has a 49% joint venture agreement with 11%
shareholder European Goldfields, targeting the highly prospective Artvin
Province of north-eastern Turkey, and has a 13% investment in private company
Tigris Resources opening up the little-explored south-eastern region of Turkey.
With £1.45 million of cash in hand at mid-year and an additional £1 million of
equity funding since raised, backed up by a £5 million Standby Equity
Distribution Agreement arranged earlier in the year, Ariana would seem to be
adequately funded for its promising ongoing activities. Furthermore Turkey, with
its now well-established mining industry and an estimated 2.5% of the world's
industrial mineral resources, is seen as a politically stable country with a
favourable tax regime, so with the gold price having attained new highs,
Ariana's potential is increasingly attractive.
Beowulf Mining plc - AIM ticker: BEM
Website: www.beowulfmining.com
Beowulf Mining's focus in the past year has been on increasing and accelerating
its exploration activities in Northern Sweden, where it has separate projects
covering iron ore, gold, copper, uranium and molybdenum. With already a JORC
inferred resource of 150 million tonnes of iron ore for its 100%
owned Ruoutevare project, this is now being dwarfed by its 100% owned Kallak
project for which a maiden JORC assessment is awaited imminently with
expectations of exceeding that of Ruoutevare very significantly. Being
therefore eager to establish just how large its overall iron ore resources are,
Beowulf is planning a further major infill drilling programme on Kallak in two
phases with some 7,000 metres in late 2011 and a further 50,000 metres from the
second quarter 2012 onwards. Beowulf has also been granted a further new
exploration licence over 2,219 hectares adjoining the Kallak licence area. For
its other interests, further drilling is also planned in 2012 of some 3,000
metres on the Ballek copper-gold project where Beowulf is in 50/50 joint venture
with the Australian company Energy Ventures.
Beowulf shares have performed strongly but with volatile price movements over
the past year, governed by variable factors including positive company news-
flow, buoyant iron ore prices, severe winter conditions in Sweden leading to a
lengthy suspension of drilling activity and more recently market reluctance to
support those mining companies with major development fund-raising in prospect.
Beowulf, with its significant and broad asset portfolio and further resource
determination news awaited, remains with a very strong base for seeking future
development capital.
Centamin Egypt Limited - LSE ticker: CEY; TSX ticker: CEE
Website: www.centamin.com.au
Our shareholding in the Australian gold miner Centamin Egypt was acquired in
July 2011 through the combined cash and share offer under Centamin's recent
take-over of Sheba Exploration; we have retained the shares in the Starvest
portfolio for Centamin's prospects as a significant gold producer. While the
take-over was completed against a background of political change and unrest in
Egypt, Centamin has not encountered any governmental restrictions on gold ore
shipments from its flagship Sukari mine situated in the Eastern Desert, while
continuing to receive international spot prices thereon. Sukari nonetheless has
suffered from some disruption in its local supplies but still expects to produce
some 200,000 oz in 2011, some 20% below initial forecasts. It nonetheless
targets to raise this within three years to an ultimate 500,000 oz per year
level with an investment of some US$265 million that it expects to meet out of
its own income generation.
Despite the unhindered production reassurances from Centamin, the shares have
almost halved in value over the last year, and at their present £1 billion
capitalisation level look well placed for recovery or even a predatory take-
over.
Greatland Gold plc - AIM ticker: GGP
Website: www.greatlandgold.com
Greatland Gold has gold projects in Tasmania and Western Australia. It has
recently announced a major development in concluding a farm-in agreement with
Unity Mining Limited (ASX) in respect of the Tasmanian Firetower licences where
it expects further drilling to lead to an improvement in the inferred JORC-
compliant resource of 90,000 oz. of gold. The deal provides for Unity Mining to
spend A$2m to earn 51% and a further A$5m to earn 24%.
Exploration continues at Warrentinna and Forester in Tasmania, first mined early
last century and which has yielded a substantial amount of high grade gold at
surface; and the East Lisle project where the Company will seek to determine the
bedrock source of the 250,000 oz of gold reputedly produced in the past from
alluvial workings in the area.
Initial exploration at the Western Australia Lackman Rock and Ernest Giles
licences was encouraging with further drilling planned.
KEFI Minerals plc - AIM ticker: KEFI
Website:Â www.kefi-minerals.com
KEFI Minerals is an exploration company seeking world-class mineral deposits in
the well-endowed and under-explored Tethyan Mineral Belt of Turkey and in
prolifically mineralised and incredibly diverse geological structure of the
Arabian Shield which makes up almost half of the Kingdom of Saudi Arabia. KEFI
is also widening its interests by reviewing a possible re-opening of the now
closed Tioutit gold-copper mine in Morocco and its associated tailings re-
treatment project.
In Saudi Arabia KEFI enjoys a distinct first-mover advantage through being a
first non-Saudi explorer engaged on Arabian Shield work, and has recently been
granted a mineral exploration licence for the Selib North project, for which
KEFI will be operator in a 40/60 joint venture with local construction
conglomerate Avtar. The licence covers favourable fault structures and quartz
carbonate veined alteration zones as well as containing evidence of hard rock
and alluvial workings for gold. In addition, KEFI has two other exploration
licences awaiting final sign-off and a further seventeen applications now in
process, most of which it expects to be granted.
With gold production in Morocco a possibility within the short-term, linked with
the exciting news-flow anticipated from Saudi Arabia, we expect KEFI's potential
to be appropriately recognised by the market.
Oracle Coalfields plc - PLUS ticker: ORCP
Website:Â www.oraclecoalfields.com
The emergence of Oracle Coalfields as the first developer of local coal mining
and ultimately as a major UK investor in Pakistan has continued in 2011 and was
reinforced by its move from PLUS Markets to AIM in April of this year,
accompanied by a £3 million over-subscribed equity placement, attracting new
institutional support. Oracle enjoys notable status in Pakistan as a key
contributor to the future national economy in its role as first mover in the
development of the Thar Desert lignite coal resource in the south-east Sindh
Province where it has a 66sq km Block VIÂ with a JORC-compliant measured resource
of 1.4 billion tonnes of which 371 million tonnes is proven reserves; the Thar
Desert region has an estimated total resource of 175 billion tonnes. With all
coal being currently imported at sharply increasing cost, indigenous oil and gas
supplies in decline and the serious power supply deficit worsening with regular
electricity power cuts of between 6 to 8 hours a day, it is inevitable that the
demand for Thar coal is rapidly increasing. Oracle is targeting its first
production by mid-2013, a likely 2 year minimum advantage over its future
rivals, and will target a minimum annual production rate of 5 million tonnes by
end 2014.
Pakistan might be seen to be a risky investment area, but coal mining will
become vital, no matter who holds the political reins, while ensuring a
considerable saving of foreign exchange.
Oracle has strengthened its Board and Management team and appointed Citibank as
its financial adviser and lead bank for a serial fund raising programme
commencing in early 2012 with a likely overall target of US$500 million. Off-
take Memoranda of Understanding have been signed with local consumers in the
cement and power industries. A Definitive Feasibility Study is due for imminent
issue and the Bankable Feasibility Study will follow by early next year.
Against this promising yet challenging background, it is disappointing to note
that the Oracle share price has fallen sharply from its AIM listing level.
Regency Mines plc - AIM ticker: RGM
Website: www.regency-mines.com
Regency Mines has mineral exploration interests in Australia and Papua New
Guinea where the principal metal target is nickel. The joint venture with
Direct Nickel Limited for the use of their patented technology to extract nickel
at the Mambare Plateau in PNG has been formalised and drilling is now taking
place. In addition, the JV has been granted a licence to explore for geothermal
heat over 1,473 km2, the objective being to significantly lower the cost of
operating a future mine.
Aside from nickel in PNG, Regency has the potential for copper, gold and other
minerals in Queensland where it recently carried out extensive VTEM survey at
its Bundarra ground.
During the last year, Regency acquired an 11% stake in Oracle Coalfields plc,
see above.
However, the potential star of its portfolio must be its continuing 21% interest
in sister company Red Rock Resources plc, see below, to which management
continues to devote considerable attention.
Red Rock Resources plc - AIM ticker: RRR
Website: www.rrrplc.com
Since Red Rock Resources came to AIM in 2005, it has been transformed from a
small early stage Australian mineral exploration venture to become a £37m market
capitalisation venture with a variety of interests:
* gold mining in Columbia's Frontino gold belt where it now holds 51% of
Mineras Four Points SA to which it provides expertise and finance and is
close to generating positive cash flow from an upgraded producing mine;
* a 26.9% interest in Resource Star Limited, ASX quoted,
www.resourcestar.com.au to which it disposed of its Australian and Malawian
uranium and rare earth interests and more recently its interest in Cue
Resources Limited, TSX-V, www.cue-resources.com;
* a hugely successful iron ore and manganese steel feed venture through
Jupiter Mines Limited, ASX quoted, www.jupitermines.com into which Red Rock
disposed of its Australian iron ore and manganese interests; Red Rock holds
continues to hold a 4% equity interest in Jupiter Mines which has a JORC
compliant resource at its Mt Ida magnetite deposit which it expects to bring
into production as early as 2014; Red Rock enjoys the benefit of a 1.5%
gross production royalty;
* a joint venture exploring for iron ore in Greenland with North American
Mining Associates Limited; this correlates with the iron-rich rocks hosting
the Mary River Iron Ore project of northern Baffin Island, Canada;
* an equity interest in Kansai Mining Corporation Limited,
www.kansaimining.com; the earlier indication of an offer did not
materialise; meanwhile, gold exploration in the Migori greenstone belt Kenya
continues; a consultant was recently appointed to prepare a scoping study on
the Migori tailings;
* an equity interest in its associate, Regency Mines plc, engaged in a nickel
venture with Direct Nickel Limited in Papua New Guinea.
Red Rock declared a pre-tax profit of £2.3m for the six months to 31 December
2010. As the market comes to understand the potential, we anticipate further
share price increases during the coming year.
Mineral exploration ventures accounting for 11% of portfolio value
Alba Mineral Resources plc - AIM ticker: ALBA
Website: www.albamineralresources.com
Alba holds a portfolio of mineral properties and interests in Mauretania and
Ireland, where projects are at different stages of development ranging from
early exploration targets to more advanced drill-ready projects. Activities
have been severely restricted due to difficulties in obtaining requisite
finance.
Assay results for the single hole drilled in 2010 at the Irish Limerick licence
were encouraging and a joint venture partner is being sought, as yet
unsuccessfully even though the licence area is considered to be very
prospective.
In Mauretania, Alba's 50% owned local subsidiary holding a fully paid-up current
uranium licence in the north of the country had this withdrawn by the Mining
Authorities for undisclosed reason. Â Discussions with a third party lead Alba to
believe that the permit will be recovered, in which case funds will be needed to
commence early exploration activities in the licence area. Based on previous
prospecting results for this area, Alba believes it to be prospective for
uranium, base metals and gold, and is seeking to attract joint venture partners
to develop further licensing awards. But until essential capital is found,
progress will remain stunted.
Equity Resources plc - PLUS ticker: EQRP
Equity Resources has had a slow year. Its share price rose on the back of its
holdings in Red Rock Resources plc and Regency Mines plc, see above, but then
stayed at a high level unsupported by current asset values. Therefore, we have
valued the holding at net asset value.
The company's recently announced 2011 results show continuing modest
improvement.
Gippsland Limited - Sydney ASX ticker: GIP
Website:Â www.gippslandltd.com.au
Perth Australia based and Sydney ASX listed, Gippsland is an international
resource company primarily operating in the Middle East and focused on the
Arabian Nubian Shield region which in recent times has yielded a number of
world-scale projects particularly in regard to gold, copper, and volcanic
massive sulphide. Its Australian interests are confined to its 40% interest in
the Heemskirk tin project in Tasmania.
The development of the 44.5 million tonne Abu Dabbab tantalum/tin feldspar
deposit, located in the Central Eastern Desert in Egypt, will result in the
creation of one of the world's foremost sources of tantalum, a metal vital to
the electronics and aerospace industries. The project is managed under a 50/50
partnership agreement between an Egyptian State company and a Gippsland local
subsidiary. With a minimum 2 million tonne mill feed-rate per annum yielding
650,000 lb of tantalum, a mine life of up to 20 years is envisaged scheduled to
commence in February 2012.
Being adjacent to and serving as an eventual back-up to Abu Dabbab on its final
completion, Gippsland's 50% interest in the 98 million tonne Nuweibi
tantalum/niobium/feldspar deposit will continue to provide significant returns
in the following years. Further exploration drilling will be undertaken on
Nuweibi and in the Wadi Allaqi region in the south western part of Egypt,
historically known to have been producing alluvial gold many centuries B.C.
Gold and copper prospects have attracted Gippsland's 100%-owned subsidiary
Nubian Resources to Eritrea where it holds prospecting and exploration licences
in the Adobha region in the north western part of the country.
Gippsland's ability to finance its future exploration work across its broad
licence portfolio has still to be established. Last year's decision to
relinquish its AIM listing and rely solely on its ASX presence, risks having
reduced its sources of future funding.
International Mining & Infrastructure Corporation plc - AIM ticker: IMIC
Website: www.indiastarenergy.co.uk - this site remains current
International Mining and Infrastructure Corporation has switched its
geographical emphasis from India to Africa, to better represent its existing
investments and its intended revised investment strategies which are to be
redirected towards the mining sector and infrastructure projects. At a recent
AGM, it was agreed that while Africa would be the principal focus, targets
elsewhere in the world could always be considered.
The company presently has three principal investments:
* Trillium North Minerals, quoted in Toronto on the TSX, involved in
exploration and development project participations in Canada.
* Rainy Mountain Royalty Corporation, involved in exploration primarily in
Ontario, and a 50% partner in the Hamlin project where Xstrata Copper have
been recently undertaking a four core hole drilling programme under an earn-
in arrangement and identified wide zones of copper mineralisation.
* New Fuels International Ltd, a Seychelles-based company specialising in the
creation and development of renewable bio-fuels and bio-energy projects in
selected African countries, replicating bio-fuel models developed in Brazil
and using sugar cane as a base feedstock.
The company has announced that its intended investment targets will be iron ore
and other metals, as well as mining and associated infrastructure projects for
delivering the mined product to market.
Minera IRL Limited - AIM ticker: MIRL
Website: www.minera-irl.com
Minera IRLÂ is a Jersey registered company focused on precious metals mining,
development and exploration in Latin America, and listed on the Lima and Toronto
markets as well as on London's AIM. It consists of the Corihuarmi gold mine and
Ollachea gold project in Peru, and Don Nicolas gold project in Patagonia with a
significant range of exploration licences. The result is a substantial mining
group in the South American context.
Corihuarmi, located in Central Peru at a 5,000 metre altitude, is producing
consistently in excess of 30,000 oz gold a year, with an expected mine life to
mid-2015. Oilachea, located in southern Peru, is seen as the flagship project,
planned as a low cost mechanised underground mine with over 115,000 oz gold a
year as an ultimate production target, with a mine life expectancy of 10 years,
and with full production attained by the Corihuarmi completion date. Don
Nicolas, located in the Santa Cruz Province of Argentina, adds high-grade
epithermal power to the Minera story with back-up from an extensive land
position in some highly prospective licensed areas under the lead of the
Escondido project.
Minera is expected to be producing 175,000oz gold by 2015 and with cash and cash
equivalents as at mid-2011 of over US$24 million it is well placed to support
extensive exploration and project development work planned in the near term.
The completion of the Don Nicolas feasibility report expected by the year-end,
the completion of the Oilachea bankable feasibility study in the second half of
2012, and continuing positive exploration drilling results, should further
enhance Minera's potential.
Sunrise Resources plc, formerly Sunrise Diamonds plc - AIM ticker: SRES
Website:Â www.sunrisediamonds.com
Sunrise Resources is a multi-commodity exploration company with projects in
Canada (gold), Ireland (barite), Australia and Finland (diamonds). Originally
formed in 2005 to continue the diamond exploration activities of parent company
Tertiary Minerals in Finland, Sunrise decided to broaden its commodity interests
and geographic focus in response to the then low level of investor interest in
the diamond sector. This change led to the Derryginagh barite project in south-
west Ireland and an option to purchase the historic Long Lake gold mine
near Sudbury, Ontario with a claim area prospective for nickel, copper and
platinum.
Sunrise exploration work has concentrated on these two later projects. Drilling
at Long Lake has determined that gold mineralisation extends near surface beyond
that mined prior to the mine's closure in 1939 and confirmed that mineralisation
continues at depth below the mine workings. A diamond drilling programme of 10
holes for 1000 metres has been completed; analytical results are awaited.
Further evaluation work on the adjacent claim area is being undertaken as a
possible extension to the Copper Cliff dyke system which has produced over 200
million tonnes of nickel-copper-PGM ore. At Derryginagh a concept study on the
development of an underground mine producing at least 50,000 tonnes of barite a
year has shown positive results and a drilling programme for its further
evaluation is envisaged. Meanwhile, drilling is also planned to commence on the
Cuin, Western Australia.
Although now valued at a sharp discount to its original AIM admission price in
2005 Sunrise has an interesting range of projects to develop, inevitably subject
to raising further funds.
The remainder accounting for 2% of the portfolio value
Agricola Resources plc - PLUS ticker: AGRI
Website: www.agricolaresources.com
Agricola Resources is currently focused on gold exploration in Morocco, where it
holds two prospective licences at Ain Kerma and Toufrite in the south of the
country. The former project potentially hosts both low-grade bulk tonnage and
high-grade strata-bound gold deposits with many gold-bearing quartz veins
identified. While Agricola aims to seek an eventual AIM admission, the
attendant raising of fresh equity would require it to expand first on its
existing portfolio base which its present limited temporary loan fiinancing
provided by 5.9% shareholder Beowulf Mining plc would be unable to cover.
Various projects both in and outside Morocco have been and are currently being
examined, but the PLUS Market listing remains suspended pending finalisation of
these studies.
CAP Energy Limited - PLUS ticker: CAPP - suspended
Website: www.capenergy.co.uk
PLUS-listed but currently suspended CAPÂ Energy was established to invest in
smaller oil and gas exploration and production assets, particularly focused on
North America with five producing properties in Oklahoma and Texas. Its
strategy is threefold: generate income to more than cover its corporate
overheads; participate in progressively larger projects to generate higher
margins than realisable from buying into smaller projects; and to move up to AIM
once a larger asset base is achieved.
With 2010 revenues limited to a mere £4.6 million and resulting in a loss of
£0.2 million, CAP Energy has found it difficult to progress without higher
production and without being able to offer attraction for the injection of new
funds to enable expansion, with the result that it was obliged in June to seek
the suspension of its shares from trading, which persists to date.
Carpathian Resources Ltd - Sydney ASX ticker: CPN
Website: www.carpathian.com.au
Carpathian Resources is an Australian ASX-quoted oil and gas explorer and
producer with a focus on Central Europe and primary concentration on the Czech
Republic. Its activities cover the exploration, production and sale of oil and
natural gas, operating retail outlets and convenience stores, along with
interests in outdoor mobile advertising, and satellite and cable television.
Its main production interests are 50% participations in the Janovice gas block
in northern Moravia and the Krasna oil field. Faced with increasing losses on
static trading volumes, the company is in the process of refocusing,
reconstituting its board of directors, instituting an improved framework of
corporate governance and planning recapitalisation. Its rationalisation has
been evidenced by the recent sale of two retail outlets owned in Florida, USA.
The board has indicated that it is seeking acquisitions further afield such as
in Russia and Kazakstan but clearly would need to raise new capital for any new
investments. A 15% stake in Carpathian has been recently acquired by Singapore-
based Somap International, more commonly associated with ship-breaking.
Concorde Oil & Gas plc
Concorde, absorbed several years ago by Middle East private company Kuwait
Energy, remains reliant on the latter's intention to go public with a London
quote which would then enable shareholders to receive the new Kuwait Energy
shares in a realisable exchange for their outstanding minority Concorde
interest. The planned Kuwait Energy listing had already been mooted last year
but, owing to the market downturn, was deferred, although the listing is now
thought to be imminent. Concorde shareholders have yet to be given any
indication of the exchange terms proposed for their shares and the likely
valuation that can then be placed on their holdings. Starvest has maintained a
full provision against the historical investment cost of the Concorde holding.
Kuwait Energy is a fast-growing substantial oil and gas exploration and
production venture currently operating in Egypt, Iraq, Yemen, Oman, Ukraine,
Latvia, Russia, and Pakistan, with production of some 15,000 bbl a day, some 50
million of proven and probable reserves, and operating twenty oil and gas
leases. A listing on the Kuwait exchange is also planned. Profitable since its
inception in 2005, Kuwait Energy has the potential to redeem previous Concorde
disappointment.
Fundy Minerals Limited
Website: www.fundyminerals.com
New Brunswick-based Fundy Minerals has followed up its withdrawal from West
African gold and diamond exploration activities by relinquishing its PLUS
Markets listing, in both cases costs having proved prohibitive for its
restricted finances. Therefore, Fundy has returned more realistically to
concentrate solely on its Canadian gold, diamond and base metals exploration
operations and the development of mineral properties. The exploitation of its
high-grade limestone deposit in New Brunswick should start to reverse the record
of losses that Fundy has had difficulty in containing so far.
Kincora Copper Limited, formerly Brazilian Diamonds Limited - Toronto TSX
ticker: KCC
Website: www.kincoracopper.com
Kincora Copper is a development stage resource company previously engaged in the
acquisition, exploration and development of kimberlite and alluvial diamond
properties in Brazil, known as Brazilian Diamonds at the time Starvest
originally invested. In July, Brazilian Diamonds acquired from AIM-listed Origo
Partners the latter's interest in private company Kincora Group, as a result of
which Origo became a 34.8% shareholder. Kincora was then renamed Kincora
Copper, having acquired through Origo a 75% interest in the Mongolian Bronze Fox
copper-gold prospect, located close to the world-class OyuTolgoi copper deposit
and to the Chinese border.
Kincora Copper will focus on the development of Bronze Fox as its flagship
project and on acquiring other copper and gold exploration and development
projects in Mongolia. Origo personnel will continue to manage the exploration
work and thereby maintaining Origo's interest in Mongolian developments.
Meanwhile in August Kincora Copper acquired the outstanding 25% of Bronze Fox
and its 22,000 hectares of highly prospective target zones, in exchange for 20%
of Kincora Copper shares.
Kincora Copper looks well positioned with the backing of Origo to establish
itself as a first tier copper and gold explorer and consolidator in Mongolia.
Kincora Copper shares are traded on the Toronto TSX Venture Exchange.
Rare Earths and Metals plc, formerly Lisungwe plc -PLUS ticker: REMP
Website: www.rareearthsandmetals.com
A year ago, the survival of 'Lisungwe' was uncertain. In the event, a new
management team and a change of name coupled with the disposal of the Malawian
subsidiary and the raising of new funds have given the company a new lease of
life. The focus now is on a joint venture exploration licence at Chikangawa in
Malawi prospective for various rare earth elements. We await the results of
exploration.
Companies with other interests
Alpha Universal Management plc, formerly Lotus Resources plc - PLUS ticker:
AUNP
Alpha Universal Management was formed in December 2010 out of the cash remaining
in Lotus Resources following the disposal for cash of its main subsidiary Lotus
Minerals Mongolia, which had had no revenue in the previous year. The resultant
cash shell was then re-named and a new investment strategy adopted whereby the
specialist knowledge of its investment managers would be applied to investing
for its own account or for that of its clients in opportunistic situations,
including notably distressed debt market cases.
In the current economic climate, the acquisition of debt portfolios and of other
discounted assets should present increasing levels of opportunity. However,
this necessitated an early capital reorganisation by which every 50 existing Old
shares were consolidated into one New Ordinary share of 10p and one new Deferred
share of 40p. The Deferred shares should to all intents and purposes be treated
as being of nil value and likely to be cancelled in due course.
Guild Acquisitions plc - PLUS ticker:Â GACQ
Guild Acquisitions is an investment trading company established to grow early-
stage small to medium sized companies by injecting seed capital, management
support, and access to further funds from capital markets. A successful modest
placing occurred in June but with the current uncertainty in the markets, new
investments have been held in abeyance awaiting clearer signs that a sustained
improving trend is under way, at which stage neglected undervalued bargains
should be clearly available for the taking.
Its investments include a 20.63% interest in Equity Resources plc, see above.
Marechale Capital plc - AIM ticker: MAC
Website:Â www.marechalecapital.com
Marechale Capital is an investment banking and corporate finance business using
its established long-standing relationships to raise capital for quoted or
unquoted high growth companies emanating from the leisure, renewable energy and
infrastructure sectors.
In addition to the above, Starvest has interests in the following quoted and
unquoted companies, none of which are deemed to have significant value at this
present time: Addworth plc - general investment holding company; Silvermere
Energy plc, formerly Chalkwell Investments plc; Goliath Resources Inc - Pink
Sheets OTC ticker - GHRI; Treslow Limited - a copper-nickel prospect near
Armstrong in North West Ontario, Canada; Woburn Energy plc - AIM ticker: WBN
Website: www.woburnenergy.com.
Profit and loss account
for the year ended 30 September 2011
   Year ended 30  Year ended 30
September 2011 September 2010
   £  £
Operating income   3,788,942  640,044
Direct costs   (629,896)  (237,713)
------------------------ -----------------------
Gross profit   3,159,046  402,331
Administrative expenses   (228,798)  (182,760)
Amounts written off trade   (104,725)  (257,953)
investments
------------------------ -----------------------
Operating profit/(loss) Â Â 2,825,523 Â (38,382)
Interest receivable   1,877  8,083
Interest payable   (1,837)  (18,063)
------------------------ -----------------------
Profit/(loss) on ordinary   2,825,563  (48,362)
activities before taxation
Tax on profit/(loss) on   (762,418)  9,385
ordinary activities
------------------------ -----------------------
Profit/(loss) on ordinary   2,063,145  (38,977)
activities after taxation
------------------------ -----------------------
Earnings/(loss) per share - 5.6 pence (0.1) pence
basic
5.1 pence (0.1) pence
Earnings/(loss) per share -
fully diluted
------------------------ -----------------------
There are no recognised gains and losses in either year other than the result
for the year.
All operations are continuing.
Balance sheet
As at 30 September 2011
   30 September 2011  30 September 2010
   £  £
Current assets
Debtors 27,710 33,514
Trade investments 3,368,759 2,795,770
Cash at bank and in hand 1,893,536 -
------------------- ------------------
   5,290,005  2,829,284
Creditors - amounts falling due within   (867,008)  (377,639)
one year
------------------- ------------------
Net current assets   4,422,997  2,451,645
------------------- ------------------
Share capital and reserves
Called-up share capital 390,173 390,173
Share premium account 2,100,396 2,100,396
Profit and loss account   1,932,428  (38,924)
------------------- ------------------
Equity shareholders' funds   4,422,997  2,451,645
------------------- ------------------
Cash flow statement
for the year ended 30 September 2011
   Year ended  Year ended
 30 September 2011 30 September 2010
£ £
Net cash inflow from operating   2,317,308  333,851
activities
Returns on investment and servicing of
finance:
Interest received   1,877  8,083
Interest paid   (1,837)  (18,063)
------------------- ------------------
40 (9,980)
------------------- ------------------
Taxation recovered/(paid) 9,490 (9,490)
------------------- ------------------
Dividend paid (91,793) -
------------------- ------------------
Financing:
Issue of new shares   -  92,000
Short term loan repaid   -  (100,000)
------------------- ------------------
- (8,000)
------------------- ------------------
Increase in cash in the year 2,235,045 306,381
------------------- ------------------
The financial information set out above does not constitute statutory accounts
as defined in the Companies Act 2006.
The balance sheet at 30 September 2011, the profit and loss account, and the
cash flow statement for the year then ended have been extracted from the
Company's statutory financial statements upon which the auditor's opinion is
unqualified and does not include any statement under Section 498 of the
Companies Act 2006.( )
The Directors will place a resolution before the Annual General Meeting to be
held on Tuesday 6 December 2011 to recommend payment of a dividend amounting to
0.75 pence per share of which 0.25 pence per share was paid on 15 June 2011
(2010: NIL).
Copies of the report and financial statements will be posted to Shareholders no
later than 9 November 2011 and will be available for a period of one month
thereafter from the Company Secretary at the following business address: 67 Park
Road, Woking, Surrey, GU22 7DH, email:Â email@starvest.co.uk
Alternatively, the report may be downloaded from the Company's website,
www.starvest.co.uk.
Enquiries to:
* Bruce Rowan, telephone 020 7486 3997
* John Watkins, telephone 07768 512404, or to john@starvest.co.uk
* Gerry Beaney, Colin Aaronson or David Hignell, Grant Thornton Corporate
Finance, telephone 020 7383 5100
euters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Starvest plc via Thomson Reuters ONE
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