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Altona Energy Plc (ANR)

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Wednesday 27 March, 2019

Altona Energy Plc

Interim Results

Embargoed until 7am                                                                                   27 March 2019

Altona Energy plc

(“Altona” or “the Company”)

Interim Results

Altona (NEX: ANR.PL), is an emerging energy company focused on developing its coal assets located in South Australia. The Company, which also has interests in mining for industrial metals in China, announces its unaudited interim results for the six months ended 31 December 2018.

Operational Highlights (Pre and Post Period End)

  • Underground Coal Gasification project in South Australia being evaluated

  • Possible investment in a Chinese vanadium mine under consideration

  • Restructured board focused on shareholder value and corporate governance

  • £500,000 loan note subscribed for by joint venture partner, Sino-Aus Energy Ltd

  • Total assets are £11.2 million, with £19.8 million of tax losses which could be applied against future profits

Qinfu Zhang, Executive Chairman of Altona, commented, “Following a challenging 2018, the current board of Altona is focused on the creation of value for shareholders. This is being approached in two ways; firstly, by the re-evaluation of our existing coal assets in Australia, with the view to gaining the necessary licences during the course of 2019, which will allow us to start the coal extraction within the next two years; and secondly, through the investment in a Chinese vanadium mining company, which the board is currently considering, and which is dependent upon the Chinese government granting the necessary permit to allow the deal to progress.”

For further information, please visit www.altonaenergy.com or contact:

Altona Energy plc
Qinfu Zhang, Executive Chairman

+44 (0) 7795 168 157
Alfred Henry Corporate Finance Ltd (NEX Corporate Adviser)
Jon Isaacs / Nick Michaels


+44 (0) 20 3772 0021
Leander (Financial PR)
Christian Taylor- Wilkinson

+44 (0) 7795 168 157

Company Information

Altona is an exploration company focused on the evaluation and development of its significant coal resource exceeding 7 billion tonnes (1.3 billion tonnes historic JORC compliant) in the northern portion of the Permian Arckaringa Basin in South Australia.  Through its wholly owned Australian subsidiary Arckaringa Energy Pty Ltd, Altona holds a 100% interest in three exploration licences covering 1,944 sq. kms in the northern portion of the Permian Arckaringa Basin in South Australia including three coal deposits – Westfield (EL5676), Wintinna (EL5677) and Murloocoppie (EL5678).  All three deposits lie close to the Adelaide to Darwin railroad and the Stuart Highway.

The Company is currently evaluating an investment in a Chinese vanadium mining company.

The Company was admitted to trading on AIM on 10 March 2005 and transferred its listing to NEX Exchange Growth Market on 1 February 2019.  A copy of its admission documents dated 4 March 2005 can be accessed on its website, www.altonaenergy.com.  This website is where items can be inspected under Rule 75 of the NEX Rules for Issuers.

EXECUTIVE CHAIRMAN’S STATEMENT

The six-month period under review from 1 July 2018 was a challenging period for the Company as is set out in recent announcements. With these issues now resolved the board of Altona is now fully focused on achieving shareholder value. The challenges referred to include a third-party pyrolysis licencing agreement entered into in August 2018, and which the board is no longer pursuing as it falls outside the core interest of the business and its current management.

However, at the Company’s Arckaringa project, in South Australia, where Altona owns the mining exploration licences to three sizeable tenements, progress was made with the receipt of a licence to construct water wells from the environmental regulator. The Company has been reviewing its strategy going forward which has included reassessing the extensive geological and hydrological data base at its disposal. Based on this data and other historical information and experience a cogent cost effective and achievable plan for the development of the coal assets is being formulated.

In October, the Company proposed and subsequently executed a capital reorganisation of the shares, resulting in a thousand to one consolidation. The current board believes that this action has been partly responsible for the significant decline in the share price in the latter part of 2018 and first month of 2019 and is also confusing for shareholders. The new Board, in conjunction with its advisors, is considering whether remedial action is required and would have the desired effect to bring the share price more closely in-line with its original value.

Financial Review

The financial loss of the Group for the six months ended 31 December 2018 was £366,000 (H1 2017: £258,000).  Cash in bank at 31 December 2018 was £19,000 and the Company has total assets of £11,173,000, which includes £11,074,000 of intangible exploration and evaluation costs.

The Group has in excess of £19.8 million of tax losses carried forward which it hopes to be able to be offset against future profits.

An Australian Government Resource Development Grant of the order of AUD104,000 is being actively sought.

Following the board changes subsequent to period end, the current board and management are implementing policies and procedures to dramatically improve the financial stewardship of the Company moving forward.

Post Balance Sheet Events

Following a requisition for a general meeting on 14 December 2018, the shareholders met on 14 January and voted against the resolutions to remove Qinfu Zhang and Ma Chi from the board. Subsequently, Nick Lyth, Chief Executive and Henry Kloepper, Non-Executive Director resigned from the board with immediate effect on 24 January 2019. At the Company AGM on 25 January 2019, shareholders voted against the re-election of Timothy Jones and Robert Hales, as Non-Executive Chairman and Non-Executive Director respectively.

Qinfu Zhang resumed his role as Executive Chairman of the Company and Philip Sutherland, who had resigned his role as Operations Director (Australia) in December 2018, was re-appointed to the board as Non-Executive Director on 1 March to continue his key role as Company representative in South Australia. Christian Taylor-Wilkinson was appointed Non-Executive Director on 1 February, as well as being reappointed as financial PR consultant to Altona, a role his company Leander, had carried out between 2014 and 2018. A highly experienced UK non-executive director has provisionally accepted a position on the board, conditional to funding being received by Altona.

Alfred Henry Corporate Finance Ltd was appointed as Corporate Adviser on 1 February, following the Company’s change in listing from AIM to NEX Exchange Growth Market on the same day.

Also, on 1 February, the Company announced that its long-term joint venture partner, Sino-Aus Energy Group Ltd (Sino-Aus), had subscribed £500,000 for a convertible unsecured loan note, due to be redeemed on 31 July 2020. Sino-Aus is in the process of obtaining a permit from the Chinese government to transfer the funds out of China.

Arckaringa UCG Project

The board has revived its focus on its coal assets in South Australia and is currently in meetings with the Mining and Energy Department of the South Australian government to assess the Company’s requirements for 2019. Further, the Company is monitoring the successes of Leigh Creek Energy, which owns the neighbouring mining tenements, and which has now commenced its commercial underground coal gasification (“UCG”) project. Leigh Creek Energy, which is listed on the Australian Stock Exchange (“ASX”) has seen its share price rise by almost 200% since it announced its successful syngas test burn in October 2018. Whilst Altona faces a more challenging environment with its own tenements, the board is positive that a similar achievement can be made in the long-term.

With this in mind, the board is reviewing its position with the South Australian government as to the Petroleum Exploration Licence Application (“PELA”) 604, a licence which covers the majority of the mining tenements the Company owns, and which is currently owned by Tri Star Energy, an American mining company. Primarily, the board is reviewing whether it can work around PELA 604 (in the non-overlapping areas of the tenements) or acquire the Licence from Tri Star Energy or, enter a co-operative agreement with Tri Star Energy or, request the South Australian government to not grant PELA 604 (the application was lodged by Tri-Star on 14 March 2016 and remains under consideration by the regulator) and grant the Company PELA 666, which was filed by Altona on 25 October 2016 and covers the same geographical area.

Sino-Aus remains committed to its AUD30 million investment into the Arckaringa project, conditional upon the correct licences being granted.

Possible Vanadium Mine Investment

As announced on 14 January 2019, the Company is evaluating an investment into a Chinese vanadium mining company, in which Qinfu Zhang and his business associates own a 40% stake. The process is following the strict regulations set by the Chinese government, the first of which is for the company to obtain a permit to allow it to enter into a joint venture agreement with a non-Chinese company. Whilst this process is being negotiated, the company is conducting a detailed exploration survey which will be followed by a JORC evaluation report.

The mine’s main product is Vanadium Pentoxide (V2O5) which is currently in very high demand in many industries, including steel strengthening, energy storage in industrial batteries, thermal imaging equipment, nano-fibre applications and as a catalyst in many industrial chemical reactions.

A representative of Altona’s board will visit the mine in April to meet with the company and commence due diligence. While the investment cannot move forward until a permit from the Chinese government has been granted, the board and its advisers are establishing a plan of action so it can move forward quickly, upon a successful issue of the required permit.

Outlook

The Company is focused on two potentially significant projects; coal-to-syngas in South Australia, through is its Arckaringa licences, and vanadium in China, through a possible joint venture agreement and investment. The board is aware that both projects require the granting of licences and permits from third parties and that much work will need to be done to bring either to fruition. However, following the poor strategic decisions of 2018, the board realises that the need for a successful investment must be achieved in order to start returning value to shareholders and, with this in mind, is fully committed to both projects.

Qinfu Zhang

Executive Director

26 March 2019

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE HALF YEAR ENDED 31 DECEMBER 2018

Notes Unaudited
Half-year ended
31 Dec 2018
Unaudited
Half-year ended
31 Dec
2017
Audited
Year
ended
30 June
2018
£’000 £’000 £’000
Total administrative expenses and loss from operations (366) (258) (645)
Finance income - - -
Loss before taxation (366) (258) (645)
Tax 3 - - -
Loss for the financial period (366) (258) (645)
Other comprehensive income
Exchange differences on translating foreign operations maybe subsequently reclassified to profit or loss (148) (258) (575)
Total comprehensive profit/(loss) attributable to the equity holders of the parent (514) (516) (1,220)
Loss per share
- Basic and diluted 4 (23.51p) (21.85p) (63.05p)

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS AT 31 DECEMBER 2018

Unaudited
31 Dec 2018
£’000
Unaudited
31 Dec
2017
£’000
Audited
30 June 2018
£’000
ASSETS
Non-current assets
Intangible assets 11,074 11,541 11,219
Other receivables 3 3 3
Total Non-current assets 11,077 11,544 11,222
Current assets
Trade and other receivables 77 23 38
Cash and cash equivalents 19 756 391
Total Current assets 96 779 429
Total assets 11,173 12,323 11,651
LIABILITIES
Current liabilities
Trade and other payables 5 127 60 91
Total Current liabilities 127 60 91
Total liabilities 127 60 91
NET ASSETS 11,046 12,263 11,560
Capital and reserve attributable to the equity holders of the Parent
Share capital 1,427 1,427 1,427
Share premium 18,692 18,692 18,692
Merger reserve 2,001 2,001 2,001
Foreign exchange reserve 1,263 1,727 1,411
Retained losses (12,337) (11,584) (11,971)
TOTAL EQUITY 11,046 12,263 11,560

CONSOLIDATED STATEMENT OF CASHFLOWS

FOR THE HALF YEAR ENDED 31 DECEMBER 2018

Unaudited
Half-year ended
31 Dec
2018
Unaudited
Half-year ended
31 Dec
2017
Audited
Year
ended
30 June
2018
£’000 £’000 £’000
Operating activities
Loss before taxation (366) (258) (645)
Finance income - - -
Share based payments - - -
Foreign exchange on loans to controlled entities - 2 -
(Increase)/ decrease in receivables (39) (9) (24)
Increase / (decrease) in payables and provisions 36 (42)                (11)
Cash used in operations (369) (307) (680)
Income tax benefit received - - -
Net cash outflow used in operating activities (369) (307) (680)
Investing activities
Interest received - - -
Net cash outflow from investing activities - - -
Financing activities
Proceeds from issue of shares - 1,048 1,095
Costs of issue - (46)
Net cash inflow from financing activities - 1,048 1,049
Increase/decrease in cash and cash equivalents in period/ year (369) 741               369
Cash and cash equivalents at beginning of period / year  391  15 15
Effect of exchange rate changes on cash and cash equivalents (3) -                    7
Cash and cash equivalents at end of period / year 19 756 391

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE HALF YEAR ENDED 31 DECEMBER 2018

Share capital Share premium Merger reserve Foreign exchange reserve Retained losses Total shareholders’ equity
£’000 £’000 £’000 £’000 £’000 £’000
Balance at 30 June 2016 892 18,178 2,001 1,986 (11,326) 11,731
Total comprehensive loss for the period - - - (259) (258) (517)
Issue of share capital 535 514 - - - 1,049
Balance at 31 December 2017 1,427 18,692 2,001 1,727 (11,584) 12,263
Total comprehensive loss for the period - - - (316) (387) (703)
Balance at 30 June 2018 1,427 18,692 2,001 1,411 (11,971) 11,560
Total comprehensive loss for the period - - - (148) (366) (514)
Issue of share capital - - - - - -
Balance at 31 December 2018 1,427 18,692 2,001 1,263 (12,337) 11,046

NOTES TO THE INTERIM REPORT

FOR THE HALF YEAR ENDING 31 DECEMBER 2018

1.         GENERAL INFORMATION

Altona Energy Plc (the “Company”) is a company registered in England and Wales.  The condensed consolidated interim financial statements of the Company for the six months ended 31 December 2018 comprise the result of the Company and its subsidiaries (together referred to as the “Group”) and have been prepared in accordance with the NEX Exchange Growth Market Rules for Issuers. As permitted, the Company has chosen not to adopt IAS 34 “Interim Financial Statement” in preparing these interim financial statements.

The consolidated interim financial information for the period 1 July 2018 to 31 December 2018 is unaudited. In the opinion of the Directors the condensed interim financial information for the period presents fairly the financial position, and results from operations and cash flows for the period in conformity with the generally accepted accounting principles consistently applied. The condensed interim financial information incorporates unaudited comparative figures for the interim period 1 July 2017 to 31 December 2017 and extracts from the audited financial statements for the year to 30 June 2018.

The financial information contained in this interim report does not constitute statutory accounts as defined by section 435 of the Companies Act 2006.

The comparatives for the full year ended 30 June 2018 are not the Company’s full statutory accounts for that year. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditor’s report on those financial statements was unqualified but did include a reference to the uncertainties surrounding going concern, to which the auditors drew attention by way of emphasis of matter and did not contain a statement under s498 (2) – (3) of Companies Act 2006. The interim report has not been audited or reviewed by the Company’s auditor. The key risks and uncertainties and critical accountancy estimates remain unchanged from 30 June 2018 and the accountancy policies adopted are consistent with those used in the preparation of its financial statements for the year ended 30 June 2018.

3.         TAXATION

The Group has recognised a £Nil tax credit (31 December 2017: £nil and 30 June 2018: £nil) in respect of the concession for research and development tax credits available to the Group. No current taxation has been provided due to losses in the period.

4.         LOSS PER SHARE

The basic loss per share is derived by dividing the loss for the period attributable to ordinary shareholders by the weighted average number of shares in issue.

Unaudited
31 Dec 2018
Unaudited
31 Dec 2017
Audited
30 June 2018
Loss for the period (£’000) (366) (258) (645)
Weighted average number of shares – expressed in thousands 1,559 1,181 1,023
Basic loss per share – expressed in pence (23.51p) (21.85p) (63.05p)

As the inclusion of the potential ordinary shares would result in a decrease in the loss per share they are considered to be anti-dilutive and, as such, the diluted loss per share calculation is the same as the basic loss per share.

5.         TRADE AND OTHER PAYABLES

Unaudited
31 Dec 2018
£’000
Unaudited
31 Dec 2017
£’000
Audited
30 June 2018
£’000
Trade payables 60 22 54
Accruals and other payables 67 38 37
127 60 91

6.         POST REPORTING DATE EVENTS

There were no material post reporting date events.


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