INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUN...
25/09/2008
GB00B23JN426/GBP/PLUS-exn
ORACLE COALFIELDS PLC ("Oracle Coalfields" or "the Company")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2008
HIGHLIGHTS
* Drilling has defined a JORC Compliant Measured Resource of 1.4 billion tonnes and a Proved
Reserves of 371 million tonnes at the Block VI licence, Thar Coalfield, Tharparkar, Province of
Sindh, Pakistan
* Coal is of lignite quality and suitable for combustion in power generation
* Work programme for a Bankable Feasibility Study on the Block VI licence planned to commence in
fourth Quarter 2008.
* Private placing completed in June 2008 with Orbis Equity Partners Limited raising GBP453,750
* Chairman, Shahrukh Khan, presented at a World Bank and International Finance Corporation
Investor Roundtable on Pakistan's Power Sector in Washington D.C. during July 2008
CHAIRMAN'S STATEMENT
The first six months of the year have been of great significance to the development of Oracle
Coalfields. The most notable milestone that we have achieved has been the completion of the
exploration work programme at Block VI of the Thar Coalfield, which has enabled the licence to be
taken to the internationally recognised JORC (Joint Ore Reserve Committee) status.
Prior to the Block VI licence being awarded to our 80% owned Pakistan subsidiary, Sindh Carbon
Energy Ltd, there was a substantial amount of work carried out by the China North East Geological
Survey Bureau ("CNGB") contracted by the Sindh Coal Authority, which in 2006 completed a 35
borehole drilling programme. Accordingly, the seven borehole drilling programme that we undertook
validated all historic drilling results, and enabled our UK-based independent coal consultants,
Dargo Associates Ltd, to define a 1.423 billion measured JORC resource and a proved JORC reserve
of 371 million tonnes across the prospective mine area at Block VI. In February-April 2008, a
series of seven boreholes were drilled to depths of 200-240m, four of which were openholed to
100m, the other three being fully cored. The drilling was carried out by Deep Rock Drilling (Pvt)
Ltd. of Karachi and the geophysical logging was performed by Geoscience Associates of Lahore.
These boreholes were logged using calliper, density, resistivity and radioactivity sondes. The
results of the drilling programme have confirmed the presence of the main lignite seam of 2-7m
thickness, with a total lignite thickness in the seven boreholes of 20-30 meters. The overburden
thickness and lignite thickness confirm the findings of the CNGB drilling. These results validate
the CNGB borehole data and can now be used together with this recent drilling by us to enable a
lignite resource/reserve assessment to be made. The mining area at our licensed block at Thar is
amenable to opencast mining.
As discussed previously, the coal at the Block VI licence is of a lignite quality, ensuring that
it is most suited to combustion in power generation. Further coal tests were carried out by TES
Bretby Ltd in the UK, and the Fuel Research Centre, part of Pakistan Council of Scientific and
Industrial Research (PCSIR), Karachi, which confirmed the coal quality is suitable for power
generation and industry, especially for the cement sector. Rock samples were tested by Strata
Surveys Ltd of the UK. It is intended that we will undertake an integrated coal mine and power
plant project, giving due consideration to the benefits that a partner on the power plant side
could bring to the project.
Since announcing the JORC classifications for Block VI in May 2008 we have been working on the
strategy to take the licence forward toward production. Accordingly, we will now be working
towards the completion of a Bankable Feasibility Study ("BFS"), the work for which is planned to
start in the fourth Quarter of 2008. Work for the BFS will commence with subcrop drilling,
followed by hydrogeology and geotechnical and geophysical reports and mine design. An independent
Environmental Impact Assessment will also be commissioned complying with World Bank guidelines and
Equator Principals and power plant study. We look forward to keeping investors regularly updated
on the progress of the BFS.
Meanwhile, it is planned that drilling will recommence at the Indus East licence in the first
quarter of 2009, and a drilling programme is in the process of being mapped out. Three boreholes
have so far been drilled out of the 12 boreholes planned in the licence area. The drilling was
carried out by Deep Rock Drilling (Pvt) Ltd. and the geophysical logging was performed by
Geoscience Associates. Up to 300 meters depth drilling was carried out in each of the boreholes
of which 100 meters of non-core drilled depth and the rest core drilled up to the final depth.
The cumulative lignite thickness encountered ranged between 2.28 meters to 4.62 meters in two of
the boreholes. Two boreholes were geophysically logged using spontaneous potential (SP) and
single point resistance (SPR), natural gamma and gamma-gamma density. The log suite was
restricted as logging could only take place in the cased part of the boreholes; the surrounding
sediments were not self supporting. The deposit is deep and can only be mined by underground
methods. Coal samples were also taken and analysed by PCSIR in Karachi. Due to the acquisition of
the exploration licence for Block VI, Thar Coalfield, the drilling activities were moved to Thar
but with the intention of returning to Indus East to complete the original exploration programme.
In June 2008, we raised GBP453,750 through a placing of 5,500,000 shares with Orbis Equity
Partners Ltd ("Orbis") at 8.25p. Additionally, 5,500,000 warrants have been issued to the
investors that took part in the placing through Orbis and are exercisable at 14p in whole or in
part at any time until 31 May 2010. The response to the placing far exceeded our expectations and
is testament to the progress the company has made to date and the strategy that the Company has in
place, particularly to bring the Thar project into development.
Pakistan is aware of the importance that its indigenous coal resources will play in easing the
strains on the existing electrical capacity within the country, and this was highlighted by the
World Bank and International Finance Corporation Investor Roundtable in Washington D.C. in July
2008, which was instigated to develop Pakistan's strategy for power generation. Notable political
figures from Pakistan were present, including the Prime Minister, His Excellency, Yousuf Raza
Gilani, and His Excellency the Chief Minister, Government of Sindh, Syed Qaim Ali Shah as well as
international financial institutions and companies with interest in mining and energy. On the
invitation of the World Bank to attend the Investor Roundtable, I had the opportunity to present
the Company and our plans for the future development of Block VI, Thar Coalfield to the high level
delegation of the Government of Pakistan at the Roundtable. It was evident at the Investors'
Roundtable that the government of Pakistan has a real urgency to bring the Thar coalfield into
production and become the key fuel for electricity in the country.
PAKISTAN POWER MARKET
As per our previous commentary, Pakistan continues to experience widespread power shortages across
the country. Over 2006-2007, Pakistan generated 19,420 MW of electricity, of which 37% was
generated by natural gas and less than 1% was generated by coal. Current total installed
generating capacity is expected to be enlarged to some 82,000 MW by 2025. Coal's contribution to
the total generating capacity is expected to rise to 17%, comparing favourably with oil and gas,
which are expected to see a decrease in their market share.
INTERNATIONAL COAL MARKET
The first half of 2008 saw gains for the coal sector of 60%, although more recently the sector has
pulled back, giving back the bulk of the gains seen during the first half of the year. China
continues to have an unrelenting demand for coal, being both the world's largest producer and
consumer. In 2007, China's demand for coal increased by 9%, and this year the Transportation
Association of China has forecast the country's consumption will increase by a further 5.3% to
2.76 billion tons. Notably, coal powers 80% of China's electricity supply.
Both during, and in the run up to the summer Olympic Games in Beijing, China slashed its coal
production, restricted consumption and substantially reduced electrical output from coal-fired
power stations. Available statistics show that coal imports were cut by 36% from May to June, and
that coal imports in June were down 32% year-on-year. However, now that the Olympic Games have
been completed, those power stations that had temporary restrictions on their output will now
return to their original output prior to the Games, and seek to stockpile coal ahead of the
ensuing winter. There is likelihood that China will become a net importer of coal to ensure its
economic growth continues.
In addition to China's demand for coal for power plants, steel, and cement, there is also a
substantial demand from India, which has substantially reduced its export of coal this year.
Meanwhile, Australia has been the victim of severe flooding in many of its mines, and Vietnam is
anticipated to reduce its exports by up to a third this year.
In light of the global demand for coal, most notably from China and India, coupled with the
curtailing of exports from key producers such as Indonesia, Vietnam, and Australia, we foresee
prices for coal strengthening with an increased global demand. In summation, the outlook for coal
prices remains positive.
FINANCIALS
The financial results for the six months to 30 June 2008 show a loss of GBP 194,948 (2007:
GBP108,558). The basic loss per share was 0.1788p. The loss is attributable to the development of
the Company's coal licences in Pakistan and administrative expenses.
OUTLOOK
I believe that the outlook for Oracle Coalfields is most positive, and that the Company is placed
to deliver further growth for shareholders. We have now been listed on PLUS for a little over a
year, and in that time have achieved a great deal, the value of which has been reflected in the
more than doubling of the share price. Having taken our flagship property, Block VI, to a JORC
classification, the focus is now on working diligently towards completing a Bankable Feasibility
Study, the work for which is planned to commence in fourth Quarter of 2008. I look forward to
keeping shareholders regularly updated on the Company's progress, and would like to take this
opportunity to thank our shareholders for their patience and support, and also our local partners
in Pakistan for their invaluable support in our progress in Pakistan.
Shahrukh Khan,
Chairman,
25 September, 2008
ORACLE COALFIELDS PLC GROUP OF COMPANIES
UNAUDITED RESULTS FOR THE 6 MONTHS TO 30 JUNE 2008
INCOME STATEMENT
6 MONTHS TO 6 MONTHS TO
30/06/2008 30/06/2007
£ £
CONTINUING OPERATIONS
Revenue - -
Administrative expenses (199,280) (108,912)
_________ _________
OPERATING LOSS (199,280) (108,912)
Finance costs - -
Finance income 4,332 354
_________ _________
LOSS BEFORE TAX (194,948) (108,558)
Taxation - -
_________ _________
LOSS FOR THE PERIOD (194,948) (108,558)
_________ _________
Basic loss per share (0.1788p) (0.2150p)
Diluted loss per share (0.1510p)
Notes
1. The financial information for the period ended 30 June 2008 has not been audited and does
not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985, it
has however been subject to a review by the company's auditors.
2. Basic loss per share has been calculated using the weighted average number of shares of
109,060,071 (2007 - 50,604,395). Diluted loss per share has been calculated using the weighted
average number of shares of 129,140,071 (2007 - Nil).
3. The Directors of the issuer accept full responsibility for this announcement.
The Directors of the Issuer accept responsibility for this announcement.
ENQUIRIES:
ORACLE COALFIELDS PLC
SHAHRUKH KHAN, CHAIRMAN
TELEPHONE: +44 (0) 1366 500722
EMAIL: INFO@ORACLECOALFIELDS.COM
CORPORATE ADVISERS
ST HELEN'S CAPITAL PLC
BARRY HOCKEN, DIRECTOR
TELEPHONE: 020 7628 5582
EMAIL: BARRY.HOCKEN@STHELENSCAPITAL.COM
Oracle Coalfields PLC
Oracle Coalfields plc
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