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Starvest plc (SVE)

  Print      Mail a friend       Annual reports

Thursday 28 October, 2010

Starvest plc

Results for the year ended 30 September 2010

Thursday 28 October 2010

Results for the year ended 30 September 2010

Chairman's statement

I  am pleased to present my ninth  annual statement to Shareholders for the year
ended 30 September 2010.

Results for the year
Since  September 2009 when I reported a  modest recovery, the Company's fortunes
have  been severely  challenged by  continuing adverse  conditions in our chosen
market for early stage mineral exploration stocks.  In short, 2009-2010 has been
another tough year!

Whereas  in the year to September 2009, the Company declared a profit before tax
of £44,692, this year shows a loss of £48,362.  This loss is due entirely to the
need  for prudence in assessing the book  values of many of our smaller investee
companies resulting in a net write down for the year of £257,953.

In  spite of  the real  challenges, there  have been  successes during  the year
  * a significant reduction in bank borrowings;
  * investment sales of £640,044 used to fund operating expenses and to reduce
    the bank overdraft;
  * a gross profit from investment sales of £402,331, representing 169% of cost;
  * the exercise of options by directors leading to the injection of new cash
    amounting to £92,000.

Trading portfolio valuation
The  past year has  been extremely challenging.   From September 2009 we saw the
portfolio  value steadily decline to a low point  of £2.37 million at the end of
July  2010.  However, in the final two months of this financial year, we enjoyed
a  strong 75% recovery amounting to  £2.20 million so as  to end the year with a
portfolio value of £4.57 million.

The  final valuation  net of  all liabilities  at £4.19  million shows  a modest
improvement compared with £4.02 million at 30 September 2009.

Following  the challenges of  2008 and 2009, 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.

A  detailed review  of the  portfolio companies  follows.  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 ours are  not.  It is worth  reminding ourselves that much of our
portfolio  does not  enjoy institutional  support but  is reliant on the private

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

Where  we are able to do so, we will  continue to take profits so as to generate
cash to cover overheads and reduce reliance on bank finance.

Company statistics
                                    30 September 2010   30 September 2009 Change
                                               at BID              at BID      %
                                   values as adjusted  values as adjusted

  * Trading portfolio value                    £4.57m              £4.72m (3.2%)

  * Company asset value net of                 £4.19m              £4.02m   4.2%

  * Net asset value - fully                    11.28p              10.72p   5.2%
    diluted per share

  * Closing share price                         7.75p              11.75p  (34%)

  * Share price                               (31.3%)                  9%
    (discount)/premium to net
    asset value

  * Market capitalisation                      £2.84m              £4.10m  (31%)

We  continue to make what we believe to be a realistic and conservative estimate
of  the values  of companies  within the  portfolio.  The values at 30 September
2009 and  2010 are based on  bid prices or  the Directors' valuation, if lower.
With  one exception,  discounts below  bid price  are applied  where the Company
holds  a  substantial  interest  in  the  investee company or where the investee
company constitutes a large part of the Company portfolio; these discounts total
£450,000;  the single exception is  that no discount is  applied to the value of
one  investee company  where the  shares are  actively traded  and the Company's
interest is under 2%.

These  values include unrealised gains on elements of the trading portfolio that
are not reflected in the financial statements.

So  far, the recovery has continued into the  new financial year so that the net
asset value as at 22 October 2010 stood at £5.37m or 14.37 pence per share fully
diluted  representing a 28% increase.  In  addition, since 30 September £438,000
has  been  raised  from  the  sale  of  investments  so  that when settlement is
completed the bank overdraft will be cleared.

Review of the current market
The  flat  performance  since  September  2009 masks  the  fact  that within the
portfolio  we have investments which have increased substantially and show every
sign  of being real  winners; in these  we anticipate further improvement during
the coming year.  These include companies with interests in gold, iron ore, coal
and  manganese as well as other minerals much in demand.  On the other hand, the
portfolio contains thirteen mineral exploration and other investments which have
performed poorly, two of which have been written down to zero this year.

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.

Owing  to  the  overall  loss  and  depletion  of  cash  resources it is not the
Directors'  intention to recommend the payment of a dividend this year.  For the
future, your Board will keep the matter under review.

Investment policy
As  required  by  AIM,  your  Company  has  established and recently revised its
investment    policy    reproduced    below    and   made   available   on   its
website,  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,   where   historic  reports  and
announcements are also available.

Annual general meeting
We will hold our annual general meeting at 3.00 pm on Monday 13 December 2010 at
St  Ethelburga's, Bishopsgate, London EC2 when  we look forward to meeting those
Shareholders able to attend.

R Bruce Rowan
Chairman & Chief Executive
27 October 2010

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

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 approaching
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

Review of trading portfolio

As  at  30 September  2010, 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 2010:
  * eight portfolio companies accounted for 75% 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;
  * of the next eight investments one deteriorated during the year but has
    recovered since the year end; otherwise they have held their own, showing
    small share price improvements which are expected to continue into the
    current year as the businesses progress; collectively these account for a
    further 21% of the portfolio value;
  * the remainder amounting to 4% 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 may well yet surprise us.

In  order to reduce the  bank overdraft and provide  funds for overheads, during
the  year  the  Company  raised  £640,044  before costs by selling the following
  * a small equity holding in Beowulf Mining plc, but retained a convertible
    loan note which was subsequently converted to equity;
  * a part of the holding in Ariana Resources plc; and
  * approximately two thirds of the holding in Franconia Minerals Corporation
    yielding a substantial return on the initial investment.

Mineral exploration ventures accounting for 75% of portfolio value

Ariana Resources plc - AIM ticker: AAU

Ariana Resources is an exploration and development company focused on epithermal
gold-silver  and porphyry copper-gold deposits in Turkey where it is exploring a
portfolio of prospective licences in western Turkey selected on the basis of its
in-house  geological  and  remote-sensing  database  and in its Greater Pontides
joint venture with European Goldfields.

Ariana's  flagship assets are its Sindirgi and  Tavsan gold projects in the WAVE
Province  in western Turkey, and  which form the Red  Rabbit Project in a 50/50
joint  venture with Turkish  partner Proccea Construction  signed in July.  This
agreement  has  significantly  de-risked  the  development project by committing
Proccea  to funding  it for  a total  of US$8  million.  A further US$25 million
funding   requirement   for   the   later   outstanding  construction  and  mine
commissioning  costs will be met by a credit facility.  Work is under way on the
Bankable  Feasibility and Environmental Impact  studies with completion expected
by the third quarter 2011.

Meanwhile  the Greater Pontides JV has delivered significant exploration results
from  what is seen as a highly prospective region taking Ariana's total resource
inventory to 401,000 oz. of gold equivalent with further increases expected.

With  an established mining industry and  2.5% of the world's industrial mineral
resources,  Turkey is seen as a politically stable country with a favourable tax
regime  so that with the  gold price attaining new  highs, Ariana's potential is
increasingly attractive.

Belmore Resources (Holdings) plc - PLUS ticker: BEL

Belmore  Resources is a mineral exploration  company focusing solely on projects
in  the  Republic  of  Ireland,  priority  being  given  to its zinc exploration
properties  in  County  Clare,  where  it  has  a  current  100% interest in ten
prospecting licences covering 360 sq km.  Under a joint venture agreement Lundin
Mining  as  operator  of  the  drilling  programme  has the right to earn a 70%
interest  in  these  licences  by  expending  14.7 million Euros over the coming
years.   Lundin  has  accelerated  an  active  programme with four drilling rigs
currently  in  operation,  three  working  on  the  main Kilbricken Prospect and
intersecting  thick  high-grade  zinc-lead-silver  sulphide mineralisation.  The
company  is optimistic  that the  project will  define an  economic deposit with
Lundin  proposing to accelerate aggressively the exploration programme by adding
two further drilling rigs.

Beowulf Mining plc - AIM ticker: BEM

Beowulf Mining's focus is on the exploration and development of mineral deposits
in  Northern Sweden,  where it  has separate  projects covering  iron ore, gold,
copper,  uranium  and  molybdenum.   Its  shares  are  quoted  on  both  AIM and
Stockholm's AktieTorget market.

Beowulf's  focus has been on its  100%-owned adjacent projects of Ruoutevare and
Kallak  where its drilling  programme has been  accelerated so as  to define the
quantity  and  quality  of  iron  ore  already  established  and to allow a JORC
compliant  resource to  be obtained.   A further  sale and royalty agreement was
concluded  in July with Canadian Tasman Metals  in respect of its three iron ore
claims  adjoining Kallak.  Beowulf is targeting total iron ore JORC resources in
excess  of 500 million  tonnes by  early 2011.  By  April 2010 it had obtained a
Letter  of Intent  from the  Chinese resource  importer Hua Dong Corporation for
shipment of eventual production.

Meanwhile under the company's Ballek Project joint venture agreement, Australian
Energy Ventures ("EVE") has obtained a 50% earn-in interest through sole-funding
and  completing 1,600 metres  of diamond  drilling.  Ballek  has a JORC inferred
resource of 47,000 tonnes of copper and 52,000 ounces of gold.

Beowulf  raised £1,000,000 in March 2010 and a further £400,000 in October 2010
to  finance the acceleration of its drilling programme on Kallak and to meet its
increasing  working capital needs.  First complete  assay results for an initial
15 hole  diamond drilling programme recently completed for the Kallak North iron
ore  deposit have confirmed extended  iron mineralisation with several 100 metre
sections  having  over  30% Fe.   As  a  result  3,500 metres of further diamond
drilling  are planned  over 35 holes  at Kallak  South with  first assay results
expected by the end of 2010 to be followed by a JORC classification.

Meanwhile,  Beowulf  is  actively  seeking  complementary  assets  to add to its
quality portfolio.

Franconia Minerals Corporation - Toronto TSX-V: FRA

Franconia  Minerals, an Alberta-formed corporation,  is focused on the discovery
and  development of  the Birch  Lake copper-nickel-platinum-palladium project in
the  highly prospective Duluth complex in north-east Minnesota, positioned to be
one  of the world's largest PGM resources  and to be developed as an underground
mining operation.

The  project consists of  three deposits (Birch  Lake, Maturi, and Spruce Road),
with latest estimates giving an indicated resource of 131 million tonnes plus an
inferred 37 million tonnes for Birch Lake, 120 million tonnes at Maturi and 124
million  tonnes  at  Spruce  Road.   The  project has more recently attracted an
increasing  amount of investor interest, enabling Starvest to reduce its holding
significantly at a good profit.

Greatland Gold plc - AIM ticker: GGP

Greatland  Gold has three gold projects in Tasmania, consisting of the Firetower
project in the North with an initial inferred JORC-compliant resource of 90,000
oz.  of gold; Warrentinna and Forester, 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
In addition, Greatland has two gold projects in Western Australia, the 200 sq km
Lackman  Rock site, and  the Ernest Giles  project from which  the first results
have  been  received  of  the  maiden  drilling program, which encountered large
alteration systems which could host major mineralisation.

The company owns 100% of all projects in its portfolio.  Its main focus has been
on  Firetower, and deciding whether  to mine an existing  resource or whether to
enlarge the resource before building a mine.  Greatland's aim to become a stand-
alone  producer remains  on course  but will  require the raising of significant
extra capital to bring Firetower into production.

Oracle Coalfields plc - PLUS ticker: ORCP

Oracle Coalfields is an emerging coal developer in Pakistan with an 80% interest
in a JORC compliant measured resource of 1.4 billion tonnes of which 371 million
tonnes  is proved located  in Block V1  of the Thar  Desert project in the Sindh
province.   Its planned mine-site  lies some 380 km  east of Karachi, well above
sea-level  and  recent  severe  flooding  in  Sindh and further distant from the
insecurity  of the north western frontier region.  Oracle benefits from past and
ongoing  major infrastructure  investment undertaken  by the Pakistan Government
which has been eager to open up the Thar Desert region with an estimated lignite
coal  resource of 175 billion tonnes as a cornerstone of the economic and social
development of the nation's economy.
Work  on a  bankable feasibility  study is  due for  completion by early 2011.
Furthermore,  the mine development project will be linked to the construction of
a  mine-mouth 300MWe power plant.   Initial mine production  is planned for late
2011, and  while the  mine design  will allow  for an  annual production of 3.5
million  tonnes, this will only be achieved in 2014, by when the completed power
plant will call for 2.5 million tonnes, with 1.0 million tonnes intended for the
local  cement  industry,  presently  dependent  on  imported  coal.   Oracle has
contracted  with the  Karachi Electricity  Company (KESC)  as the  planned power
plant  developer and operator, and with Lucky Cement, as the country's principal
cement manufacturer and exporter, as the off-takers of such production.

Pakistan   suffers  from  critical  shortages  of  electricity  resulting  in  a
proliferation  of disruptive  power cuts  which stunt  the growth of the vibrant
economy.   With such a  major indigenous yet  unexploited coal resource to hand,
the  Pakistan Government sees Oracle as opening  up the door to establishing the
Thar  Desert as a major  development magnet for new  foreign investment and as a
key  trigger  point  and  source  of  pride   for  the future development of the
country's economy and its re-edification.

Oracle  is currently assessing the benefits of  a near-term admission to the AIM

Red Rock Resources plc - AIM ticker: RRR

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 £40m market
capitalisation powerhouse with a variety of interests:
  * gold mining in Columbia's Frontino gold belt in partnership with Mineras
    Four Points SA to which it provides much needed expertise and finance with
    options to acquire a controlling interest and expecting to generate near
    term cash flow from a producing mine now being upgraded; a recent sample
    indicated gold at 45.3 grams per tonne, broadly consistent with historic
  * gold exploration in the Migori greenstone belt, Kenya, in partnership with
    Kansai Mining Corporation at its Mid Migori Mining 1.2m oz indicated
    resource expected to build a 2-3m oz resource base to be followed by
  * a 26.9% interest in Resource Star Limited, ASX quoted, to which it disposed of its Australian and Malawian
    uranium and rare earth interests; re-listed by Red Rock in 2010;
  * a hugely successful iron ore and manganese joint venture alongside
    Pallinghurst Resources,, which is building a major
    steel feed venture through Jupiter Mines Limited, ASX quoted, into which Red Rock disposed of its Australian iron ore
    and manganese interests; Red Rock holds 83m shares in Jupiter Mines which
    expects to have established a 400 mt JORC 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;
  * an equity interest in uranium explorer Cue Resources Limited, www.cue-;
  * an equity interest in Kansai Mining Corporation Limited, where a cash takeover has been announced  which, if
    completed, will net a profit of C$10m.

Red  Rock declared a pre-tax  profit of £3.2m for  the six months to 31 December
2009 and  has indicated  that a  maiden dividend  may not  be far  away.  As the
market understands the potential, we expect further share price increases in the
coming year.

Regency Mines plc - AIM ticker: RGM

Regency  Mines  has  mineral  exploration  interests  in Australia and Papua New
Guinea  where the principal metal target  is nickel.  The expected joint venture
with  Direct Nickel Limited for the use  of their patented technology to extract
nickel  at the Mambare Plateau in PNG  announced in 2009 has stalled although we
understand that it is not abandoned.

Aside  from nickel in PNG, Regency has  the potential for copper, gold and other
minerals  in  Queensland  and  Western  Australia;  with  respect to the latter,
Regency  recently announced having discovered significant sulphide levels within
the Lake Johnston greenstone belt with potential for base and precious metals at
depth with further exploration planned.

However, the star of its portfolio must be its continuing 24% interest in sister
company   Red   Rock  Resources  plc  to  which  management  has  been  devoting
considerable attention

Mineral exploration ventures accounting for 21% of portfolio value

Agricola Resources plc - PLUS ticker: AGRI

Agricola Resources is focused on gold exploration in Morocco, where it holds two
prospective licences at Ain-Kerma and Toufrite in the south of the country.  The
Ain-Kerma  project potentially hosts both  low-grade bulk tonnage and high-grade
strata-bound gold deposits with many gold-bearing quartz veins identified.

Agricola's  switch last year  from longer-term uranium  exploration interests to
the  shorter-term ever-improving prospects for  a successful gold-based venture,
coupled  with  the  growing  international  investment  interest  in  Morocco as
offering  a  secure  financial  environment,  appears  to have been well-timed.
Additional  licence  applications  for  further  high value mineral deposits are
under  consideration and evaluation, with a  view to enhancing investor interest
in the fund-raising exercise for implementing its envisaged Moroccan exploration
activities.   Australian  Energy  Ventures  Limited  continues  to hold a 29.9%
strategic equity stake.

Equity Resources plc - PLUS ticker: EQRP
Although  a relatively small investment showing a loss since acquisition, Equity
Resources  is  included  here  because  of  its  recent  growth  and potential.
Following  the total  loss of  its initial  two investments  and after being re-
named,  Equity Resources was fortunate  to have available cash  to invest at the
bottom  of  the  market  in  Red  Rock  Resources plc and Regency Mines plc, see
above.   The company's recently announced 2010 results  show that this change of
strategy  was well timed in that it declared  a profit for the last year as well
as  a substantial increase in  the net asset value  per share to which the share
price quote has responded.

Gippsland Limited - Sydney ASX ticker: GIP

Western  Australia-based Gippsland is now solely  listed on the ASX after having
withdrawn  from AIM, a decision taken primarily on cost grounds, but which makes
the  company  more  dependent  on  raising  its substantial capital requirements
primarily in the Australian market.

Gippsland is a Perth-based international resource company focused on world-scale
projects  that have been  overlooked by the  major producers, but have undergone
detailed  exploration work, so can offer the potential of early production.  Its
prime  assets are tantalum-tin  projects in the  Central Eastern desert of Egypt
adjacent  to the Red Sea, notably the  44.5 million tonne Abu Dabbab and the 98
million  tonne Nuweibi tantalum-tin projects,  in which Gippsland's 50% interest
is matched by an Egyptian State partner.  The Abu Dabbab project, with an annual
mill-feed  rate of 2 million tonnes for a production level in excess of 650,000
lbs  of  tantalum  pentoxide,  will  have  a  likely  20 year mine-life, and its
resource base will rank Gippsland as the world's largest producer of tantalum.

However,  capital-raising has proven problematic for companies at all levels and
with  their  greater  needs,  Gippsland  is  proving  to  be  no exception.  Its
negotiations on the forecast project financing need of US$173 million have taken
longer  than planned  to complete,  and are  sought on  an 80% debt / 20% equity
basis;  a 10 year  off-take has  already been  agreed with  the German HC Starck
group.   After  unexpected  delays  in  the  negotiations,  the  commencement of
engineering  and construction work has been deferred from 2010 to early 2013.  A
recent  placement of  80 million new  shares with  institutions has succeeded in
raising  A$3.2 million and enabled Gippsland shares to be re-admitted to trading
after a halt for clarification on financing developments.

Additionally  Gippsland  has  undertaken  exploration  drilling  within the Wadi
Allaqi  region where it has obtained highly encouraging gold results in three of
its eight separate tenements, together with a copper-nickel deposit.  Its Nubian
Resources  subsidiary has picked  up three prospecting  licences in the state of
Eritrea for base metals and gold.

International Mining & Infrastructure Corporation plc - AIM ticker: IMIC - this site remains current

International Mining & Infrastructure Corporation, formerly India Star Energy,
is focused on the energy sector.  It has three principal investments:
  * New Fuels International Ltd, a Seychelles-based specialised development
    company involved in the creation of renewable bio-fuels and bio-energy
  * Trillium North Minerals, a Toronto TVX quoted company holding interests in
    mining resource properties in Ontario; and
  * East West Resource Corporation an exploration company focused on copper,
    nickel and platinum group metals also in Canada.

Kefi Minerals plc - AIM ticker: KEFI

Kefi  Minerals, a spin-off from now 24% holder  EMED plc, is an established gold
and  copper exploration  company operating  in various  parts of Turkey in joint
venture  with TSX-listed Centerra Gold, and in Saudi Arabia where it is operator
with  a 40% interest in the G&M joint  venture with local conglomerate ARTAR; it
enjoys  first-mover advantage  in the  field of  Saudi exploration in seeking to
identify and develop million ounce plus gold deposits.

Kefi's  projects in  Turkey are  Artvin and  Gumushane in the northeast, Derinin
Tepe   and Muratdag in the west, and Bakir  Tepe in the south west, all of which
are  100% owned other than Artvin.  Kefi also owns an extensive exploration data
base, giving it a competitive advantage in identifying further prospective areas
for  project  generation.   The  Artvin  Project  comprises  fifteen  contiguous
exploration  licences  covering  253 sq.  km.   A  gold discovery at its Yanikli
Prospect has been announced.

Kefi also has a large database of Saudi Arabian mineral occurrences and historic
workings,  maps  and  surveys,  so  enabling  it  to identify, assess and target
further  potential  major  mineral  deposits  for further permitting.  Delays in
obtaining  licences in  Saudi Arabia  can be  lengthy, but  Kefi and  ARTAR have
lodged  applications for 21 exploration licences covering 2,100 sq km., seven of
which  are now at an advanced stage of permitting.  The applications are focused
on  both  gold  and  copper-gold  mineralisation,  all  of which contain ancient
workings,  some have visible gold  in quartz veins, and  two lie only 50 km from
presently operating gold mines.

Minera IRL Limited, formerly Hidefield Gold plc - AIM ticker: MIRL

Starvest's  holding in Hidefield Gold was  taken over in December 2009 by Minera
as  part of  a £7  million all  share deal.   This brought  into Minera  the Don
Nicolas  project and a large exploration portfolio with a number of increasingly
promising  prospects  in  the  Santa  Cruz  State  in Patagonia, Argentina.  Don
Nicolas  is planned  to start  production in  2012.  Minera was  already a well-
established  Latin American  gold miner  listed on  AIM, Peru, and Toronto, with
gold  production  primarily  in  Peru  at  its flagship Corihuarmi mine, with an
expected  life  to  late  2013, to  be  followed  by  new production starting at
Ollachea  by  2014.  After  the  Hidefield  acquisition,  Minera also bought the
prospective Quilavira project in Peru from ASX-listed Newcrest Mining.

With  annualised gold production targeted at  some 200,000 ounces of high margin
gold within four years, Minera appears well set for steady growth.

Sheba Exploration (UK) plc - PLUS ticker: SHE

Sheba  is a mineral exploration company exploring for gold and copper on licence
concession areas covering a total of 242 sq km in northern Ethiopia.  Three gold
projects  have been established, one of  which at Shehagne is currently operated
and  funded by Stratex  International under a  joint venture arrangement whereby
Stratex  earn a  60% interest in  the project  for a  £350,000 total exploration
spend,  with the  option of  a further  20% if Stratex  fund all exploration and
development  up to the  completion of the  bankable feasibility report.  Stratex
findings at Shehagne to date suggest a potential for bulk minable mineralisation
which  has led them to consider reconnaissance drill-testing of the zone.  Sheba
also  has a  30/70 joint venture  arrangement with  Stratex for  combining their
forces  to  explore  new  prospective  targets  and  licence  areas  in northern

Sheba's inability to raise funds from the torpid equity market has determined it
to  secure future  funding of  its activities  through joint  venture and option
agreements  with  local  and  foreign  companies as appropriate.  Meanwhile, the
Ethiopian  mineral,  gas  and  oil  sector  has  been  attracting strong foreign
interest, with new licences being granted to Chinese State-owned entities and to
various  other smaller  exploration companies,  so Sheba  appears well placed to

Sunrise Resources plc, formerly Sunrise Diamonds plc - AIM ticker: SRES

Sunrise  Resources  has  changed  both  its  name  and its objectives from being
focused  on diamond projects in Finland to a multi-commodity exploration company
with  varied projects now spreading to Canada, Ireland and Australia, the latest
venture  being the Long  Lake Gold project  in Sudbury, Canada.  Sunrise's other
projects  include the historic Derryginach barite  mine in Ireland, its original
diamond  assets in  Finland, and  an application  for an  exploration licence to
cover diamonds, gold and PGMs in Western Australia.

Owing  to weak  consumer and  investor demand  coupled with  low diamond prices,
Sunrise  had to put its Finnish operations  on a care and maintenance basis, but
can  expect  early  restoration  of  activities  with  a  potential world supply
shortage of diamonds envisaged.

The remainder accounting for 4% of the portfolio value

Alba Mineral Resources plc - AIM ticker: ALBA

Alba  Mineral Resources is focused on  uranium properties in Mauritania, nickel-
copper  in Scotland and  gold and base  metals in Ireland.   The projects are in
different  stages of development ranging from  early exploration targets to more
advanced drill-ready projects.

In  May 2010, additional loan  finance was secured  to enable the  drilling of a
178m deep  test hole on the company's Limerick  base metal licence; the core was
logged  and assay results  are pending.  Preliminary  interpretation of the core
suggested  base  metal  mineralisation  potential.   The  company  is engaged in
negotiations  with  a  third  party  seeking  a  joint  venture  on the Limerick
property.   Further exploration  work this  year is  likely to  be restricted by
ongoing  fund-raising  difficulties,  and  while  joint  venture  agreements are
actively sought, an inability to fulfil work obligations under existing licences
would risk their forfeiture.

Brazilian Diamonds Limited - Toronto TSX ticker: BZD

Brazilian  Diamonds  is  a  development  stage  resource  company engaged in the
acquisition,  exploration  and  development  of  kimberlite and alluvial diamond
properties  in Brazil.  Its recent activities have  been restricted by a need to
reduce  its indebtedness,  and in  May 2010 it  agreed to  sell its wholly-owned
subsidiary  Mineracao do Sul for an equivalent US$640,000 including the disposal
of  its Canastra project  assets.  Junior diamond  explorers in Brazil have been
experiencing  hard  times,  but  the  Company  believes  it is now in a stronger
position to evaluate other more exciting alternative opportunities in Brazil.

CAP Energy Limited - PLUS ticker: CAPP - suspended

CAP  Energy seeks to  invest in smaller  oil and gas  exploration and production
company  assets, particularly focused  on North America.   The company currently
has  five producing properties in Oklahoma and Texas, but has failed to raise an
injection  of  new  capital  and  in  May  requested trading in its shares to be
suspended.  An announcement of the Company's future intentions is awaited.

Carpathian       Resources       Ltd       -       Sydney       ASX      ticker:

Carpathian Resources is an Australian oil and gas explorer and producer focusing
on  projects in Central Europe, especially the Czech Republic and Slovakia.  The
company  has three significant projects in  the Czech Republic: the Janovice gas
field  in Northern Moravia along with  the 50%-owned (75% before pay-out) Krasna
oil  field, the Morava project  in the northern part  of the Vienna Basin, where
there  are well-established prolific oil and gas producers in operation, and the
Roznov  project area  with four  permits, where  numerous producing  oil and gas
fields exist.

The  company has declared that it will be able to fully fund planned exploration
and development programmes.

Concorde Oil & Gas plc - PLUS quotation suspended

Concorde's  focus  is  on  exploring  and  developing oil and gas properties and
projects in the Komi Republic of Russia.  Its acquisition of Pechora Energy, and
ongoing  exploration and  production funding  for the  Luzhkoye oilfield and the
Chikshinskoe exploration licence has been largely met through substantial equity
and  loan  injections  by  both  Altima  Partners and Kuwait Energy, with Kuwait
Energy  subsequently absorbing the former's  interest.  Concorde's share listing
was  suspended in May 2006.  Its activities form a minor part of Kuwait Energy's
overall  operations  which  are  primarily  concerned  with  Middle  Eastern oil
exploration and production.

It is believed that Kuwait Energy have early intentions of seeking a listing for
their  shares,  as  a  result  of  which  the remaining minority shareholders of
Concorde may be offered new Kuwait Energy shares in exchange for their holdings,
but  inevitably with further dilution of their interest.  Confirmation as to how
Concorde shareholders may finally extract value from their holdings is therefore

Fundy Minerals Limited - PLUS quote withdrawn

Fundy Minerals is concentrating on its diversified mineral properties in Canada,
and  especially  the  exploitation  of  its  high-grade limestone deposit in New
Brunswick,  having decided to curtail its diamond exploration venture in Liberia
following enactment of unattractive fiscal conditions.

Obtaining  adequate financing for  its West African  diversification at the same
time as for the development of its Canadian interests, had proved beyond Fundy's
capability,  and  its  previous  expectations  of  being able to raise new funds
through its Plus Market listing led to it to withdraw after several unsuccessful
attempts.   Alternative arrangements for  the marketing of  its shares are to be
sought with JP Jenkins.  Meanwhile the Directors continue to seek an appropriate
capital partner but have warned shareholders of present minimal cash balances.

Lisungwe plc -PLUS ticker: LIS

Lisungwe  focuses on mineral  exploration in Malawi,  a southern Africa country,
where  it has  a JORC  compliant nickel  resource, nickel  extraction techniques
through  leaching, but  having undertaken  an initial  scoping study for a mine,
then ran out of finance.

It  had  sought  to  acquire  a  local  source  of  pyrite  for  the  purpose of
manufacturing sulphuric acid, but the inability to raise the required funds in a
tough  market continued.  Strenuous  fundraising efforts made  over the past two
years  have failed despite its forecast  profitability assured by the prevailing
shortage   of  sulphuric  acid  in  the  region.   Lisungwe's  survival  remains
uncertain,  although efforts are being  made to find a  suitable project and the
funding with which to support it.

Lotus Resources plc - PLUS ticker: LOTP

Lotus Resources was set up as a UK holding company to seek, identify and acquire
mining  and  exploration  assets  in  or  close  to production in Mongolia, with
particular   focus  on  building  an  integrated  fluorspar  business  from  the
exploration stage through to mining, processing and ultimate trading.  Fluorspar
is  used as flux  in steel-making, with  Russia and Ukraine  seen as likely main
markets,  and  as  acid  in  the  chemicals  industry  with  eventual world-wide
clientele  potential.  Lotus saw Mongolia as offering exciting possibilities for
building  a profitable  business in  a sector  ready for consolidation with many
small  operators who lack access  to finance, but the  company itself met severe
difficulties in raising funding for its own requirements on acceptable terms.

This  led  the  directors  to  examine  merger  possibilities and a possible AIM
listing  for  a  new  company  to  be  formed,  but  this proved unattractive to
investors  and was  shelved, with  three directors  resigning.  The new board of
directors  opted for a  strategic review and  negotiation with the creditors and
loan  note  holders  for  the  elimination  of  most  of the outstanding debt by
conversion  into  equity  in  a  new  company  to  be  formed, Mongolian Mineral
Resources ("MMR").
The  awaited  re-vitalisation  of  the  operational  strategy  applicable to the
remaining Lotus Resources shareholders has yet to be announced.

Companies with other interests

Guild Acquisitions plc - PLUS ticker:  GACQ

Guild Acquisitions is a fledgling 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 for their
development.   However, a shortage of available  funds and the ongoing financial
uncertainties  of  the  recent  market  have  restricted  opportunities for seed
capital investments over recent years.

Its investments include a 7.33% interest in Equity Resources plc, see above.

Marechale Capital plc, formerly St Helen's Capital plc - AIM ticker: MAC

Marechale  Capital is  an investment  banking business  raising capital for both
quoted  and unquoted  high growth  companies and  funds.  Last year the original
company was acquired by and then merged with the remainder of St Helen's Capital
following the disposal of the latter's operating business and associated assets,
with the name being retained for the resultant enlarged group.

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; Chalkwell
Investments  plc, formerly The  Core Business 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 (formerly Black Rock
Oil & Gas plc) - AIM ticker: WBN   Website:

Profit and loss account
for the year ended 30 September 2010

                                         Year ended 30            Year ended 30
                                         September 2010           September 2009

                                                      £                        £

Operating income                                640,044                        -

Direct costs                                  (237,713)                        -
                                ------------------------ -----------------------
Gross profit                                    402,331                        -

Administrative expenses                       (182,760)                (189,398)

Amounts (written                              (257,953)                  295,884
off)/written back to trade
                                ------------------------ -----------------------
Operating (loss)/profit                        (38,382)                  106,486

Interest receivable                               8,083                   29,933

Interest payable                               (18,063)                 (91,727)
                                ------------------------ -----------------------
(Loss)/profit on ordinary                      (48,362)                   44,692
activities before taxation

Tax on (loss)/profit on                           9,385                  (8,600)
ordinary activities
                                ------------------------ -----------------------
(Loss)/profit on ordinary                      (38,977)                   36,092
activities after taxation
                                ------------------------ -----------------------

(Loss)/earnings  per share -                (0.1) pence                0.1 pence
                                            (0.1) pence                0.1 pence
(Loss)/earnings  per share -
fully diluted

There  are no recognised gains and losses in either year other than the loss for
the year.

All operations are continuing.

 Balance sheet
As at 30 September 2010

                                           30 September 2010   30 September 2009

                                                           £                   £

Current assets

Debtors                                               33,514              34,720

Trade investments                                  2,795,770           3,215,671
                                          ------------------- ------------------
                                                   2,829,284           3,250,391

Creditors - amounts falling due within             (377,639)           (851,769)
one year

                                          ------------------- ------------------
Net current assets                                 2,451,645           2,398,622
                                          ------------------- ------------------

Share capital and reserves

Called-up share capital                              390,173             372,173

Share premium account                              2,100,396           2,026,396

Profit and loss account                             (38,924)                  53
                                          ------------------- ------------------
Equity shareholders' funds                         2,451,645           2,398,622

                                          ------------------- ------------------

Cash flow statement

for the year ended 30 September 2010

                                                  Year ended          Year ended
                                           30 September 2010   30 September 2009
                                                           £                   £

Net cash inflow/(outflow) from                       333,851           (244,420)
operating activities

Returns on investment and servicing of

Interest receivable                                    8,083              29,933

Interest payable                                    (18,063)            (91,727)
                                          ------------------- ------------------
                                                     (9,980)            (61,794)
                                          ------------------- ------------------

Taxation (paid)/recovered                            (9,490)           1,118,401
                                          ------------------- ------------------


Issue of new shares                                   92,000                   -

Loan advanced                                              -             100,000

Short term loan repaid                             (100,000)         (1,000,000)
                                          ------------------- ------------------
                                                     (8,000)           (900,000)
                                          ------------------- ------------------

Increase/(decrease) in cash in the                   306,381            (87,813)
                                          ------------------- ------------------

The  financial information set out above  does not constitute statutory accounts
as defined in the Companies Act 2006.

The  balance sheet  at 30 September  2010, 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.( )

Copies  of the report and financial statements will be posted to Shareholders no
later  than  15 November  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:  [email protected]

Alternatively,  the  report  may  be  downloaded  from  the  Company's  website,

Enquiries to:
  * Bruce Rowan, telephone 020 7486 3997
  * John Watkins, telephone 01483 771992, or to [email protected]
  * Gerry Beaney or Colin Aaronson, Grant Thornton Corporate Finance, telephone
    020 7383 5100

                                                                                                                                                                                                                                               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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