Future Metals NL

Earnings Release • Mar 16, 2015

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RED EMPEROR RESOURCES NL - Half-yearly Report

PR Newswire

London, March 15

16 March 2015 Red Emperor Resources NL Half Year Report for the Period Ending 31 December 2014Please see below extracts from the Company's Half Year Report for the periodended 31 December 2014, being the: * Directors' Report * Consolidated Statement of Comprehensive Income * Consolidated Statement of Financial Position * Consolidated Statement of Cash FlowsA copy of the entire Half Year Report is available on the Company's website -www.redemperorresources.comFor further information please visit www.redemperorresources.com or contact:Red EmperorGreg Bandy +61 8 9212 0102Grant Thornton UK LLPPhilip Secrett/Jen Clarke/Jamie Barklem +44 20 7383 5100Directors' ReportYour directors present their report on the consolidated entity of Red EmperorResources NL ("Red Emperor" or "the Company") and the entities it controlled atthe end of, or during, the half year ended 31 December 2014.DirectorsThe persons who were directors of Red Emperor during the half year and up tothe date of this report are:Mr Greg Bandy (Managing Director)Mr Jason Bontempo (Non-Executive Director)Mr Nathan Rayner (Non-Executive Director) - appointed 23 October 2014Mr Stephen Brockhurst (Non-Executive Director) - resigned 23 October 2014Review of Operations for the Half Year ended 31 December 2014The Consolidated Statement of Profit or loss and Other Comprehensive Incomeshows a consolidated net loss for the half year ended 31 December 2014 tomembers of $15,344,470 (2013: net loss of $307,914).Georgian ProjectDuring the period, Strait Oil and Gas ("Strait") stepped up on-groundactivities in preparation for the scheduled drilling program, which was to seethe JV commence the drilling of a well on Block VIb by the end of March 2015.The drilling of this well is to be funded by Range Resources Limited ("Range")as part of the Subscription Agreement signed between the two companies in 2011.Strait Oil & Gas advised that the drilling program had been agreed with theGeorgian Oil & Gas Ministry who also confirmed that a valid drilling license isin place. All technical aspects of the well, along with the cost budget, havebeen approved with a drill rig and all required services on standby. Rangeadvised Red Emperor that it is negotiating a financing deal with a third partythat is designed to reduce its financial exposure to the well.Puntland ProjectDuring the reporting period, the Somalian Federal Government hardened itsposition with regards to the requirement of contracts to flow through theFederal Ministry of Energy, as evidenced by the statement of the FederalMinister at the Somalia Oil & Gas Conference in late October 2014. As a result,and subsequent to the period end, the JV significantly reduced its presence inBosaso, Puntland and will refrain from any operational activity and associatedexpenditures pending a resolution of the political situation and the legitimacyof oil concession contracts. As a result the Directors are of the view thatexploration and evaluation expenditure should be written down to nil.Given the considerable efforts taken by the JV to date in Puntland (Somalia),the JV has requested a two year extension to the current exploration periodfrom the Government of Puntland to allow time for these political challenges tobe resolved.Red Emperor continued to review new opportunities throughout the period inaccordance with its outlined strategic philosophy.CorporateOn 23 October 2014 the Company announced the appointment of Nathan Rayner tothe Board of Directors following the resignation of Stephen Brockhurst.Events subsequent to Reporting DateOn 16 February 2015 the Company announced that it had recently sold its directequity investment in Highfield Resources Limited (ASX: HFR) in accordance withits treasury management strategy. The shares were sold at price of $0.80 pershare, which netted the Company $798,279 after brokerage, a 66% return on its$480,000 investment.SC55On 2 March 2015 Red Emperor announced that it had signed a Farmin Agreementwith Otto Energy Philippines Inc. (a wholly owned subsidiary of Otto EnergyLtd) to farm in to the highly prospective offshore Philippines Block, ServiceContract 55 ("SC55").SC55 is located in the southwest Palawan Basin, covers an area of 9,880km2 andwas awarded to Otto Energy Investments Ltd (formerly NorAsian Energy Ltd) in2005. It is a deep-water block in the middle of a proven regional oil and gasfairway that extends from the productive offshore Borneo region in thesouthwest to the offshore Philippine production assets northwest of Palawan.SC55 contains a number of distinct exploration play types including the Hawkeyeturbidite clastic prospect and the material Cinco carbonate gas/condensateprospect, as well as a number of follow-up leads. The permit provides amaterial opportunity and a series of possible drill targets in an explorationcampaign that will be undertaken during the remaining term of the servicecontract.The Company has the right to earn a 15% working interest in SC55 inconsideration for paying, in cash, 15% of the Well Costs for the drilling andtesting of the Hawkeye - 1 exploration well. Red Emperor's well cost exposureis capped at US$5.625m, beyond which Red Emperor has the option to reduceequity from the 15% working interest level.To ensure that Red Emperor maintains a strong cash position throughout its 2015work program, the Company agreed to place 66,558,555 shares at A$0.032 pershare (£0.016) to raise approximately A$2.13m (£1.06m) from sophisticatedinvestors both in Australia and the UK. 708 Capital Limited, a Sydney basedfull service investment advisory firm, was lead manager to the issue and wereappointed as Red Emperor's Australian broker. Brandon Hill Capital (formerlyFox Davies Limited) remains the Company's UK broker. The funds raised from theplacement will be used for purposes associated with the Company's share ofupcoming drilling costs in the Philippines.Auditor's Independence DeclarationSection 307C of the Corporations Act 2001 requires our auditors, to provide theDirectors of the company with an Independence Declaration in relation to thereview of the half-year financial report. This Independence Declaration is setout on page 4 and forms part of this Directors' report for the half-year ended31 December 2014.This report is signed in accordance with a resolution of the Board of Directorsmade pursuant to s.306(3) of the Corporations Act 2001.Greg BandyManaging DirectorPerth, Western Australia, 13 March 2015Consolidated Statement of Profit or Loss and Other Comprehensive Incomefor the half-year ended 31 December 2014 Note 31 December 31 December 2014 2013 $ $Continuing OperationsInterest income 182,854 215,743Unrealised gain on investment 5 150,000 -Gain on derivative liability 783 19,573Administration expenses (162,636) (165,931)Compliance and regulatory expenses (103,681) (167,908)Director fees (139,749) (130,800)Exploration expenditure written off 6 (15,203,814) -Occupancy expense (10,233) (15,559)Corporate advisory (60,000) (60,000)Unrealised FX gain/(loss) 2,006 (3,032)Loss from continuing operations before (15,344,470) (307,914)income taxIncome tax expense - -Loss from continuing operations after (15,344,470) (307,914)income taxNet Loss for the period (15,344,470) (307,914)Other comprehensive incomeItems that may be reclassified toprofit or lossExchange difference on translation of (243) 903,756foreign operationsOther comprehensive income for the (243) 903,756period net of taxTotal comprehensive income for the (15,344,713) 595,842periodBasic loss per share (cents) (5.76) (0.001)The above consolidated statement of profit or loss and other comprehensiveincome should be read in conjunction with the accompanying notes.Consolidated Statement of Financial Positionas at 31 December 2014 Note 31 December 30 June 2014 2014 $ $ASSETSCurrent AssetsCash and cash equivalents 9,525,726 10,321,349Trade and other receivables 4 36,297 54,991Total Current Assets 9,562,023 10,376,340Non-Current AssetsFinancial assets at fair value through profit 5 630,400 298,101and lossExploration and evaluation expenditure 6 - 15,000,000Investment accounted for using the equity 7 6,987,315 6,928,175methodTotal Non-current Assets 7,617,715 22,226,276TOTAL ASSETS 17,179,738 32,602,616LIABILITIESCurrent LiabilitiesTrade and other payables 63,340 140,722Derivative financial liability - 783Total Current Liabilities 63,340 141,505TOTAL LIABILITIES 63,340 141,505NET ASSETS 17,116,398 32,461,111EQUITYIssued capital 8 49,646,733 49,646,733Accumulated losses (36,333,073) (20,988,603)Reserves 9 3,802,738 3,802,981TOTAL EQUITY 17,116,398 32,461,111The above consolidated statement of financial position should be read inconjunction with the accompanying notes.Consolidated Statement of Cash Flowsfor the half-year ended 31 December 2014 Note 31 December 31 December 2014 2013 $ $Cash Flows from Operating ActivitiesPayments to suppliers and employees (521,111) (543,921)Finance and interest costs (961) (385)Interest received 182,854 215,743Net cash used in operating activities (339,218) (328,563)Cash Flows from Investing ActivitiesPayments for exploration and evaluation (214,966) (558,549)Payments for purchase of equities (182,299) -Payments for investment in associate (59,140) -Net cash used in investing activities (456,405) (558,549)Net decrease in cash held (795,623) (887,112)Cash and cash equivalents at the beginning of the 10,321,349 11,984,410half-yearCash and cash equivalents at end of half-year 9,525,726 11,097,298The above consolidated statement of cashflows should be read in conjunctionwith the accompanying notes.

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