Future Metals NL

Earnings Release • Sep 30, 2014

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RED EMPEROR RESOURCES NL - Annual Report to Shareholders

PR Newswire

London, September 30

                                                          30 September 2014                           Red Emperor Resources NL                       ("Red Emperor" or "the Company")                                 Annual ReportSet out below is a summary of Red Emperor Resources NL (ASX | AIM: RMP) full yearannual accounts for the year ended 30 June 2014 as extracted from the annual report,being:  \* Consolidated Statement of Profit or Loss and Other Comprehensive Income  \* Consolidated Statement of Financial Position  \* Consolidated Statement of Cashflow  \* Consolidated Statement of Changes in EquityA copy of the full Annual Report is available on the Company's websitewww.redemperorresources.com and also the Australian Securities Exchangewebsite www.asx.com.au (ASX code: RMP).Dear ShareholderDuring the financial year, Red Emperor continued to focus on its oil and gasexploration joint venture assets in Georgia and Puntland, as well as evaluatingseveral new investment opportunities that were both sourced and presented.Given the strong balance sheet and the relatively tight capital structure thatRed Emperor enjoys, the Board has felt that remaining leveraged to its existingassets in an attempt to give them every opportunity to add or createshareholder value has been a prudent course of action. This has obviously notprecluded the Company from assessing, reviewing and progressing discussionswith a number of parties in respect to potential transactions, and Red Emperorcontinues to do just that. Balancing the desire to assist and support theadvancement and unlocking of the exploration potential in both Georgia andPuntland against the want to deploy the company's capital, dual listing,liquidity and profile in a more diversified manner remains a constant challengefor the Board and one that is continually considered. As the current contractperiods draw near and existing negotiations unfold, we believe that the next 12months has the potential to be one of reinvigoration and renewed focus for RedEmperor. In the meantime, remaining flexible, opportunistic and wellcapitalised continues to be the Company's competitive advantage.In the short term, the Red Emperor is also looking to add more technicalexperience to its Board in the coming months and has already shortlisted anumber of candidates, which it believes will assist in the ability to reviewand hopefully add a suitable asset to the company's current portfolio. In themeantime, the Company continues to preserve its strong cash position andremains extremely enthusiastic about the short and long-term future.On behalf of the Board of Directors, I would like to thank you for your supportas a shareholder of Red Emperor Resources.Yours faithfullyGreg BandyExecutive DirectorDirectors' ReportYour Directors present the following report on Red Emperor Resources NL and itscontrolled entities (referred to hereafter as "the Group") for the financialyear ended 30 June 2014.DirectorsThe names of the Directors in office during the financial year and until thedate of this report are as follows. All Directors were in office for the entireperiod unless otherwise stated:  \* Mr Greg Bandy  \* Mr Jason Bontempo  \* Mr Stephen BrockhurstPrincipal ActivitiesThe principal activity of the Group for the year was resource and oil and gasexploration.DividendsNo dividend has been paid or recommended by the Directors during the year.Review of OperationsThe Consolidated Statement of Profit or Loss and Other Comprehensive Incomeshows a net loss attributable to owners of ($10,231,803) (2013: ($181,600)) forthe year ended 30 June 2014.ProjectsGeorgian ProjectRed Emperor has a 20% working interest in two (2) on-shore oil and gasexploration blocks, VIa and VIb, covering approximately 6,500km² in theRepublic of Georgia. The interest is held through the company's 20%shareholding in Strait Oil & Gas (Strait), which has the rights to ProductionSharing Contracts (PSCs) across both blocks.Over the course of the year Strait, the Operator, has focused on a revisedstrategy to evaluate low–cost, shallow, appraisal drilling of the continentalresources in and around the Tkibuli–Shaori coal deposit, which straddle thecentral sections of the joint venture's two blocks. At the same time and inparallel, Strait has continued to advance discussions and negotiations withrespect to potential transactions associated with the JV and it's PSCs inGeorgia. Strait continues to advise Red Emperor that a positive outcome tothese discussions is likely to occur.In June, Strait signed a one-year extension of the PSC for Block VIb with theState Agency for Regulation of Oil and Gas.Puntland ProjectIn Puntland, Red Emperor holds a 20% working interest in two licensesencompassing the highly prospective Dharoor and Nugaal valleys. These twoexploration areas cover more than 30,000km² and have been independentlyassessed to potentially contain over 19.9 billion barrels of oil-in-place. TheShabeel and Shabeel North prospects on the Dharoor Block are located on aJurassic aged rift system, which is part of the same system that has proven tobe highly productive in the Masila and Shabwa Basins in Yemen (estimated tocontain in excess of 6 billion barrels of oil). Red Emperor holds its interestin production sharing Contracts ("PSCs") with fellow joint venture partnersRange Resources Limited (ASX: RRS AIM: RRL) and Operator, Horn PetroleumCorporation (TSXV: HRN).In January, Puntland inaugurated its fifth President, Dr Abdiweli Mohamed Ali.Dr Ali, who studied at several US universities, including Harvard, defeated theincumbent Abdirahman Farole by one vote in the peaceful election. Mr Faroleaccepted defeat gracefully by saying that the election was a model for the restof Somalia.Throughout the year, the Federal Government of Somalia has continued to engagethe Somali States, including Puntland, in a process of revising the federalhydrocarbon law. The main issues being contemplated and negotiated by allparties are those of revenue sharing and where the authority to conductcontractual negotiations in the future will reside. These issues are delicateand discussions are ongoing.The Puntland Government obviously believes that it holds the right andauthority to assign and administer PSCs within its boarders and Red Emperor'sJoint Venture remains confident that the existing Dharoor and Nugaal PSCs arevalid. At recent meetings in Abu Dhabi, the JV was verbally assured of this,however it is yet to be presented with anything in writing by the Federalgovernment to confirm it. Discussions continue with the State and Federalgovernments to ensure alignment with regards to contracts and a secure workingenvironment, as well as a commitment to exploration in Puntland and theunlocking of what is believed to be material natural resources within itsboarders.Significant Changes in State Of AffairsThere have been no significant changes to the state of affairs for the year.Events since the end of the financial yearThere have been no post reporting date events.Consolidated Statement of Profit or Loss and Other Comprehensive IncomeFor the year ended 30 June 2014                                              Note         2014          2013                                                             $             $Revenue from continuing operations              2         422,654       523,783Finance costs                                             (1,996)       (1,509)Employee and director benefits expense                  (261,600)     (286,671)Financial and company secretarial expenses              (168,000)     (154,900)Consultants                                             (150,000)     (120,000)Audit fees                                               (48,725)      (43,902)Legal fees                                                      -       (8,537)Insurance                                                (13,137)      (16,217)ASX and AIM and share registry fees                     (244,490)     (320,710)Travel                                                  (107,675)      (96,032)Accounting fees                                          (11,401)      (15,540)Occupancy expense                                        (28,968)      (24,396)Exploration expenditure written off                   (9,588,355)       (3,880)Gain/ (loss) on derivative liability           12          20,893       459,932Unrealised FX gain/(loss)                                 (3,032)        26,561Other expenses                                           (47,971)     (100,581)Loss before income tax                               (10,231,803)     (181,600)Income tax expense                              3               -             -Loss after tax for the year attributable to          (10,231,803)     (181,600)owners of the CompanyOther comprehensive income / (loss)                   (2,415,222)     3,024,098Other comprehensive income net of tax                 (2,415,222)     3,024,098Total Comprehensive (loss)/ income for the           (12,647,025)     2,842,498year attributable to the owners of RedEmperor Resources NLTotal loss attributable to the owners of Red         (10,231,803)     (181,600)Emperor Resources NL                                                           Cents.        Cents.Loss per share for loss attributable to theordinary equity holders of the company:Basic loss per share (cents per share)          4         (0.038)       (0.001)Diluted loss per share (cents per share)                      n/a           n/aThe above Consolidated Statement of Profit or Loss and Other ComprehensiveIncome is to be read in conjunction with the accompanying notes.Consolidated Statement of Financial PositionAs at 30 June 2014                                             Note      2014           2013                                                         $             $ASSETSCurrent AssetsCash and cash equivalents                      6      10,321,349     11,984,410Trade and other receivables                    7          54,991         85,510Total Current Assets                                  10,376,340     12,069,920Non-Current AssetsFinancial assets at fair value through         8         298,101            400profit and lossProperty, Plant & Equipment                                    -          5,398Investment accounted for using the equity      9       6,928,175      6,628,472methodExploration and evaluation expenditure        10      15,000,000     26,486,004Total Non-current Assets                              22,226,276     33,120,274TOTAL ASSETS                                          32,602,616     45,190,194LIABILITIESCurrent LiabilitiesTrade and other payables                      11         140,722         60,382Derivative financial liability                12             783         21,676Total Current Liabilities                                141,505         82,058TOTAL LIABILITIES                                        141,505         82,058NET ASSETS                                            32,461,111     45,108,136EQUITYIssued Capital                                13      49,646,733     49,646,733Accumulated Losses                            14    (20,988,603)   (10,756,800)Reserves                                      14       3,802,981      6,218,203TOTAL EQUITY                                          32,461,111     45,108,136The above Consolidated Statement of Financial Position is to be read inconjunction with the accompanying notes.Consolidated Statement of Cash FlowsFor the year ended 30 June 2014                                             Note      2014           2013                                                         $             $Cash flows from operating activitiesPayments to suppliers and employees                    (999,114)    (1,260,508)Interest received                                        422,654        523,783Finance cost                                             (1,996)        (1,509)Net cash flows generated from / (used in)     21       (578,456)      (738,234)operating activitiesCash flows from investing activitiesPayments for purchase of equities                      (297,701)             -Payments for exploration and evaluation                (487,201)    (7,424,454)Payments from asset acquisition escrow                         -        984,136accountPayments for investment in associate                   (299,703)    (1,118,376)Net cash flows used in investing activities          (1,084,605)    (7,558,694)Cash flows from financing activitiesProceeds from issue of shares and options                      -      2,250,000Payment of share issue and IPO costs                           -      (135,000)Net cash flows from financing activities                       -      2,115,000Net increase/ (decrease) in cash and cash            (1,663,061)    (6,181,298)equivalentsCash and cash equivalents at beginning of             11,984,410     18,139,777yearEffects of exchange rate changes on cash and                   -         26,561cash equivalentsCash and cash equivalents at end of year       6      10,321,349     11,984,410The above Consolidated Statement of Cash Flows is to be read in conjunctionwith the accompanying notes.Consolidated Statement of Changes in EquityFor the year ended 30 June 2014                          Issued   Accumulated    Forex      Share     Total                         Capital      Losses     Reserve     Based                                                            Payment                            $           $                      $         $Balance at 1 July 2012  47,531,733 (10,575,200)  (637,281) 3,831,386  40,150,637Loss for the year                -    (181,600)          -         -   (181,600)Exchange difference on           -            -  3,024,098         -   3,024,098foreign operationsTotal Comprehensive              -    (181,600)  3,024,098         -   2,842,498IncomeTransaction with owner,directly recorded inequity:Issue of shares          2,250,000            -          -         -    2,250,000Issue of options                 -            -          -         -          -Share issue costs        (135,000)            -          -         -    (135,000)Balance at 30 June 2013 49,646,733 (10,756,800)   2,386,817 3,831,386  45,108,136Balance at 1 July 2013  49,646,733 (10,756,800)   2,386,817 3,831,386  45,108,136Loss for the year               - (10,231,803)           -         - (10,231,803)Exchange difference on          -            - (2,415,222)         -  (2,415,222)foreign operationsTotal Comprehensive             - (10,231,803) (2,415,222)         - (12,647,025)IncomeTransaction withowner, directlyrecorded in equity:Issue of shares                 -            -           -         -            -Issue of options                -            -           -         -            -Share issue costs               -            -           -         -            -Balance at 30 June 2014   49,646,733 (20,988,603)    (28,405) 3,831,386   32,461,111The Consolidated Statement of Changes in Equity is to be read in conjunctionwith the accompanying notes.