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PTR MINERALS LTD Interim / Quarterly Report 2009
65621_rns_2009-03-12_1d8d5e2c-16c4-40e0-886e-c94c75cce050.pdf
Interim / Quarterly Report
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Petratherm Ltd
ABN 106 806 884
Half Year Report
for the half year ended 31 December 2008
Contents to Half Year Report
| Directors' Report | ||
|---|---|---|
| Auditor's Independence Declaration | ||
| Consolidated Income Statement | ||
| Consolidated Balance Sheet | ||
| Consolidated Statement of Changes in Equity | ||
| Consolidated Cash Flow Statement | ||
| Notes to the Financial Statements | ||
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES1. | ||
| ISSUED CAPITAL2. | ||
| SEGMENT INFORMATION3. | ||
| CONTINGENT LIABILITIES 4. | ||
| EVENTS SUBSEQUENT TO REPORTING DATE5. | ||
| SHARE-BASED PAYMENTS6. | ||
| ECONOMIC DEPENDENCY7. | ||
| Directors' Declaration | ||
| Independent Review Report |
Directors' Report
The directors of Petratherm Ltd submit their report for the half-year ended 31 December 2008.
The names of the company's directors in office during the half-year and until the date of this report are as below. Directors were in office for this entire period unless otherwise stated.
Mr Derek Carter, Chairman Mr Terry Kallis, Managing Director Dr Richard Hills Mr Richard Bonython Mr Simon O'Loughlin Dr Lloyd Taylor (resigned 31/08/09)
Review of Operations
SUMMARY
During the six months to 31 December 2008, the Company continued developing a balanced portfolio of quality geothermal energy projects in Australia, Spain and China, particularly focusing on its more advanced projects at Paralana, Madrid, Tenerife and Gran Canaria.
The Company's flagship Paralana project made considerable progress during the period with the addition of TRUenergy as a joint venture partner (in a $57 million deal for up to 30% project equity), the securing of 2000 HP rig, the completion of various geophysical studies and an application for a $7 million geothermal drilling grant.
Concurrently, the Company advanced its Geo-Madrid geothermal district heating project completing a pre-feasibility assessment, completing a successful well re-entry program and commencing a full feasibility assessment of the 8 MW project. A work program for Tenerife and Gran Canaria was prepared during the period with the assistance of specialist conventional geothermal consultant, Sinclair Knight Merz.
The Company was awarded a 9000 km² geothermal exploration permit in Victoria's Gippsland basin to develop a hot sedimentary aquifer (HSA) project.
Non-executive director, Dr. Lloyd Taylor retired from his duties with the Company as of 31 August 2008. The Company expresses its thanks for his valuable contribution.
At the end of the period the Company held $3.386 million in cash and has access to a $5 million REDI grant and joint ventures with Beach Petroleum and TRUenergy.
CORPORATE HIGHLIGHTS
A $57 million farm-in agreement was announced in August 2008 with TRUenergy, enabling them to earn up to 30% of the Paralana Geothermal Energy Joint Venture Project. The TRUenergy farm-in is additional to the existing $30 million joint venture with Beach Petroleum for up to 36% of the project established in January 2007.
All conditions of the farm-in agreement were fully satisfied and final documents were executed in January 2009. The terms of the TRUenergy farm-in are:
- $3 million for drilling and stimulating the first well, and
- $3 million for drilling and stimulating the second well and circulation tests between the wells, and
- TRUenergy may withdraw without earning equity after the completion of the first well.
7.5MW Pilot Plant Stage – TRUenergy has an option to earn a further 5% equity by contributing $7 million towards the development of the pilot plant stage that will be capable of providing power to the Beverley Uranium Mine – just 11 kilometres away.
30MW Demonstration Plant Stage – TRUenergy has an option to earn a further 15% equity by contributing $44 million towards the development of the 30MW demonstration plant stage capable of meeting the growing needs of Heathgate Resources' Beverley mine and their proposed mine development at the nearby Four Mile deposit.
A drilling rig contract with Weatherford Drilling International was secured for the Paralana 2 deep well, now expected spud on 15 June 2009. Rig # 828 a 2,000 HP LeTourneau 'Lightning' Drilling Rig, which is being manufactured by LeTourneau Technologies Inc. in Dubai is capable of drilling very deep wells, and will be suitable for other geothermal energy developers thus enabling an acceleration of development across the sector.
The Company, on the behalf of the Paralana JV Project, lodged in December 2008, an application under the Commonwealth Government's $50 million Geothermal Drilling Program (GDP) for a maximum amount of $7 million. The Paralana JV Project has been advised that its application has met all eligibility criteria for funding under the GDP and if successful funds would be received prior to the commencement of drilling the Paralana 2 deep well in June 2009. The GDP provides for an upfront payment to successful candidates of 60% of the funding prior to drilling (i.e. $4.2 million maximum).
Petratherm continued its leadership within the geothermal energy industry with its MD, Mr Terry Kallis, being appointed Chairman of the Australian Geothermal Energy Association and its representative to the Stakeholder Committee of the Australian Energy Market Commission's review of Energy markets in light of Climate Change Policies. In addition, Petratherm's Spanish Manager, Mr Raul Hidalgo, was appointed President of the geothermal chapter of Spain's Renewable Energy Generators' Association.
During the period, the Commonwealth Government outlined its Carbon Pollution Reduction Scheme (CPRS) and its 20% by 2020 Renewable Energy Target (RET) which together will provide a sound long-term commercial trading framework for renewable energy investment and give greater investor confidence in geothermal energy projects. Concurrently, the Commonwealth announced the bringing forward of its $435 million Renewable Energy Demonstration Program aimed at facilitating the demonstration of emerging/developing renewable technologies. The Company has since registered its interest in the program and intends to make a full application by 15 April 2009.
OPERATIONS HIGHLIGHTS
Preparatory work for the drilling of the Paralana 2 deep well was undertaken during the period. That preparatory work included:
- The installation of a passive seismic array that has commenced gathering data of the background seismicity of the project site. The passive seismic array will provide valuable information on microseismic events created during the stimulation phase of the Paralana reservoir enabling a better understanding of reservoir characteristics and an increased confidence in the location of the Paralana 3 deep production well.
- The results of a magneto-telluric study and a reflection seismic survey were processed during the period, further enhancing the JV's understanding of the characteristics of the geological formation at the Paralana site.
- Two water wells were drilled to approximately 115 metres at the Paralana 2 well site and were cased and screened. The wells exhibited good flow rates (4-5 litres per second) and reasonable water quality, appropriate for the use during drilling operations.
An updated estimate of key project parameters was undertaken and a revised cost estimate and economic assessment was completed. A summary was presented in the first quarter 2009 report and reconfirmed the expectation that the Paralana 30 MW demonstration project would be commercially viable and competitive with wind farm technology producing the same level of power output.
The Victorian Gippsland permit covers the onshore component of Gippsland basin and targets potential permeable reservoir sequences which may contain brine fluid of 150 °C at economically viable drill depths of 3.5 to 4.0 kilometres. Geothermal target areas are within the tenement area and are located close to power station and transmission infrastructure.
The Geo-Madrid geothermal district heating project showed very positive signs following the well re-entry program and confirmation that one of the two existing wells was structurally sound and would result in a 30% capital cost saving. The outcomes of a pre-feasibility assessment were presented in the first quarter 2009 report and confirmed an expectation of attractive returns. Work has now been completed on a detailed energy demand study by independent consultants Energisis Geotermia and is a key input into the feasibility study. The Company is working closely with local authorities and key customers to progress other aspects of the feasibility study that is to be completed in early April 2009.
A detailed work program was prepared for the volcanic conventional based geothermal projects on the islands of Tenerife and Gran Canaria and applications for tenements in the Vallés basin near Barcelona progressed through the final community consultation process. The first of three tenements was awarded shortly after the reporting period.
The Company's China exploration team completed its third and most important field trip during the period with assistance of four Chinese government institutions, with which the Company has an exclusive agreement for the provision of geological and geothermal data. A work program for priority project areas is under development and will form a basis for potential joint venture discussions with interested parties.
Auditor's independence declaration
The auditor's independence declaration is set out on page 7 and forms part of the directors` report for the half year ended 31 December 2008.
Signed in accordance with a resolution of directors made pursuant to section 306(3) of the Corporations Act 2001.
On behalf of the Directors
Mr Terry Kallis Managing Director
13 March 2009
Grant Thornton South Australian Partnership ABN 27 244 906 724
Level 1, 67 Greenhill Rd Wavville SA 5034 GPO Box 1270 Adelaide SA 5001 DX 275 Adelaide
T 61 8 8372 6666 F 61 8 8372 6677 E [email protected] W www.grantthornton.com.au
AUDITOR'S INDEPENDENCE DECLARATION TO THE DIRECTORS OF PETRATHERM LIMITED
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the review of Petratherm Ltd for the half-year ended 31 December 2008, I declare that, to the best of my knowledge and belief, there have been:
- No contraventions of the auditor independence requirements of the Corporations Act $\mathbf{a}$ 2001 in relation to the review; and
- b No contraventions of any applicable code of professional conduct in relation to the review.
GRANT THORNTON South Australian Partnership Chartered Accountants
SY Gray Partner
Signed at Wayville on this 13th day of March 2009
Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd, Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, together with its subsidiaries and related entities, delivers its services independently in Australia
Consolidated Income Statement FOR THE HALF YEAR ENDED 31 DECEMBER 2008
| Consolidated | ||||
|---|---|---|---|---|
| Half year | Half year | |||
| ended | ended | |||
| 31 Dec 2008 | 31 Dec 2007 | |||
| Note | $ | $ | ||
| Revenue | 740,032 | 241,899 | ||
| Impairment of non-current assets | (1,044,648) | - | ||
| Employee benefits expense | (656,414) | (769,751) | ||
| Depreciation expense | (22,633) | (12,877) | ||
| Other expenses | (979,459) | (438,370) | ||
| Loss before income tax expense | (1,963,122) | (979,099) | ||
| Income tax expense | (360) | (360) | ||
| Loss for the period | (1,963,482) | (979,459) | ||
| Loss attributable to members of the parent entity | (1,963,482) | (979,459) | ||
| Earnings per share: | Cents | Cents | ||
| Basic earnings per share | (3.39) | (1.69) | ||
| Diluted earnings per share | (3.39) | (1.69) | ||
The income statement is to be read in conjunction with the notes to the consolidated interim financial report.
Consolidated Balance Sheet
AS AT 31 DECEMBER 2008
| 31 December30 June20082008Note$$CURRENT ASSETSCash and cash equivalents3,386,1614,587,015Trade and other receivables756,120283,589Other current assets46,70846,457TOTAL CURRENT ASSETS4,188,9894,917,061NON-CURRENT ASSETSProperty, plant and equipment170,642135,425Exploration and evaluation assets5,078,0515,301,400TOTAL NON-CURRENT ASSETS5,248,6935,436,825TOTAL ASSETS9,437,68210,353,886CURRENT LIABILITIESTrade and other payables577,237291,711Short-term provisions132,031-Other current liabilities314,550121,000TOTAL CURRENT LIABILITIES1,023,818412,711NON-CURRENT LIABILITIESLong-term provisions13,6689,529TOTAL NON-CURRENT LIABILITIES13,6689,529TOTAL LIABILITIES1,037,486422,240NET ASSETS8,400,1969,931,646EQUITYIssued capital214,262,01614,228,516Retained earnings(6,840,668)(4,877,186)Reserves978,848580,316 | Consolidated | |||
|---|---|---|---|---|
| TOTAL EQUITY | 8,400,196 | 9,931,646 |
The balance sheet is to be read in conjunction with the notes to the consolidated interim financial report
Consolidated Statement of Changes in Equity FOR THE HALF YEAR ENDED 31 DECEMBER 2008
| Consolidated | ||||
|---|---|---|---|---|
| Issued | ||||
| Capital | Retained | |||
| Ordinary | Earnings | Reserves | Total | |
| $ | $ | $ | $ | |
| Balance at 1 July 2007 | 14,184,561 | (2,747,864) | 160,490 | 11,597,187 |
| Loss attributable to members of the parent entity | - | (979,459) | - | (979,459) |
| Issue of shares upon exercise of employee options | 32,000 | - | - | 32,000 |
| Issue of share options under employee share option plan | - | - | 329,374 | 329,374 |
| Transaction costs (net of tax) | (840) | - | - | (840) |
| Foreign exchange translations | - | - | 10,390 | 10,390 |
| Transfer from share option reserve | 4,900 | - | (4,900) | - |
| Balance at 31 December 2007 | 14,220,621 | (3,727,323) | 495,354 | 10,988,652 |
| Balance at 1 July 2008 | 14,228,516 | (4,877,186) | 580,316 | 9,931,646 |
| Loss attributable to members of the parent entity | - | (1,963,482) | - | (1,963,482) |
| Issue of shares upon exercise of employee options | 28,800 | - | - | 28,800 |
| Issue of share options under employee share option plan | - | - | 224,446 | 224,446 |
| Transaction costs (net of tax) | (840) | - | - | (840) |
| Foreign exchange translations | - | - | 179,626 | 179,626 |
| Transfer from share option reserve | 5,540 | - | (5,540) | - |
| Balance at 31 December 2008 | 14,262,016 | (6,840,668) | 978,848 | 8,400,196 |
The statement of changes in equity is to be read in conjunction with the notes to the consolidated interim financial report.
Consolidated Cash Flow Statement FOR THE HALF YEAR ENDED 31 DECEMBER 2008
| Consolidated | ||||
|---|---|---|---|---|
| Half year | Half year | |||
| ended | ended | |||
| 31 Dec 2008 | 31 Dec 2007 | |||
| $ | $ | |||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||
| Receipts from customers | 929 | - | ||
| Payments to suppliers and employees | (1,089,507) | (971,428) | ||
| Interest received | 115,439 | 245,294 | ||
| R & D Tax offset | 256,472 | - | ||
| Receipt of government grant | - | 33,219 | ||
| NET CASH USED IN OPERATING ACTIVITIES | (716,667) | (692,915) | ||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||
| Purchase of property, plant and equipment | (57,849) | (4,760) | ||
| Government exploration related grants | 543,459 | 74,560 | ||
| Joint venture receipts | 2,551,975 | 500,204 | ||
| Payments for exploration activities | (3,511,517) | (1,758,522) | ||
| NET CASH USED IN INVESTING ACTIVITIES | (473,932) | (1,188,518) | ||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||
| Proceeds from issue of shares | 28,800 | 32,000 | ||
| Transaction costs of issue of shares | (840) | (1,200) | ||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | 27,960 | 30,800 | ||
| Net increase/(decrease) in cash and cash equivalents | (1,162,639) | (1,850,633) | ||
| Net foreign exchange differences | (38,215) | - | ||
| Cash at the beginning of the reporting period | 4,587,015 | 8,189,083 | ||
| CASH AT THE END OF THE REPORTING PERIOD | 3,386,161 | 6,338,450 |
The cash flow statement is to be read in conjunction with the notes to the consolidated interim financial report.
Notes to the Financial Statements FOR THE HALF YEAR ENDED 31 DECEMBER 2008
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Reporting entity
Petratherm Ltd (the "Company") is a company domiciled in Australia. The consolidated interim financial report of the Company as at and for the six months ended 31 December 2008 comprises the Company and its subsidiaries (the "consolidated entity").
The consolidated annual financial report of the consolidated entity as at and for the year ended 30 June 2008 is available upon request from the Company's registered office.
b. Statement of compliance
The half-year consolidated financial statements are a general purpose financial report prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standard AASB 134, Australian Accounting Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board.
The consolidated interim financial report does not include all of the information required for a full annual financial report, and should be read in conjunction with the consolidated annual financial report of the consolidated entity as at and for the year ended 30 June 2008 and any public announcements made by the consolidated entity during the halfyear in accordance with continuous disclosure requirements arising under the Corporations Act 2001.
c. Significant accounting policies
The accounting policies applied by the consolidated entity in this consolidated interim financial report are the same as those applied by the consolidated entity in its consolidated financial report as at and for the year ended 30 June 2008.
Notes to the Financial Statements FOR THE HALF YEAR ENDED 31 DECEMBER 2008
2. ISSUED CAPITAL
| Consolidated | ||||
|---|---|---|---|---|
| As at | As at | |||
| 31 Dec 08 | 30 Jun 08 | |||
| $ | $ | |||
| Fully paid ordinary shares | 14,262,016 | 14,228,516 | ||
| 14,262,016 | 14,228,516 | |||
| Half year ended | ||||
| 31 Dec 08 | ||||
| Number | $ | |||
| Ordinary shares | ||||
| Balance at beginning of financial year | 57,874,626 | 14,228,516 | ||
| Issue of shares upon exercise of employee options | - | 28,800 | ||
| Transfer from share option reserve | - | 5,540 | ||
| Transaction costs on shares issued | - | (840) | ||
| Exercise of employee options | 90,000 | - | ||
| Balance at end of financial year | 57,964,626 | 14,262,016 |
3. SEGMENT INFORMATION
Industry & Geographical Segment
The Group operates in the geothermal exploration sector in Australia and Spain.
4. CONTINGENT LIABILITIES
There has been no change in contingent liabilities since the last annual reporting date.
5. EVENTS SUBSEQUENT TO REPORTING DATE
There have been no material events arising since balance date.
6. SHARE-BASED PAYMENTS
The company has established the Petratherm Ltd Employee Share Option Plan that entitles key management personnel and all employees to purchase shares in the entity. The terms and conditions of the share option plan are disclosed in the consolidated financial report as at and for the year ended 30 June 2008. In the December 2008 half year further grants on similar terms were made to employees
Notes to the Financial Statements FOR THE HALF YEAR ENDED 31 DECEMBER 2008
The terms and conditions of the grants made during the six months ended 31 December 2008 are as follows:
| Grant date | Number ofinstruments | Vestingconditions | Contractuallife of options | |
|---|---|---|---|---|
| Options granted: | ||||
| 5-Jul-0830-Aug-086-Oct-0827-Nov-08 | 400,00015,00050,000550,000 | 1 yearN/AN/AN/A | 5 years5 years5 years5 years |
Fair value of share options and assumptions for the six months ended 31 December 2008.
| Fair value at grant date | $0.325 |
|---|---|
| Share price | $0.52 |
| Exercise price | $0.60 |
| Expected volatility | 74.94% |
| Option life | 5 years |
| Risk-free interest rate | 5.29% |
The basis of measuring fair value is consistent with that disclosed in the consolidated financial report as at and for the year ended 30 June 2008.
7. ECONOMIC DEPENDENCY
The financial report has been prepared on the basis of a going concern. The company will require additional capital for the continued development of its existing projects and working capital. The directors are in consultation with the company's advisers and are evaluating the possible means to raise the required equity.
The Company's ability to continue as a going concern is contingent upon successfully raising additional capital. If additional funds are not raised, the going concern basis may not be appropriate, with the result that the company may have to realise its assets and extinguish its liabilities, other than in the ordinary course of business and in amounts different from those stated in the financial report. No allowance for such circumstances has been made in the financial report.
Directors' Declaration
In accordance with a resolution of the directors of Petratherm Ltd, I state that:
In the opinion of the directors:
- (a) the financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001, including:
- (i) give a true and fair view of the financial position as at 31 December 2008 and the performance for the half-year ended on that date of the consolidated entity; and
- (ii) comply with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and
- (b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.
Signed in accordance with a resolution of the directors.
Mr Terry Kallis Managing Director
13 March 2008
Grant Thornton South Australian Partnership ABN 27 244 906 724
Level 1, 67 Greenhill Rd Wayville SA 5034 GPO Box 1270 Adelaide SA 5001 DX 275 Adelaide
T 61 8 8372 6666 F 61 8 8372 6677 E [email protected] W www.grantthornton.com.au
INDEPENDENT AUDITOR'S REVIEW REPORT TO THE MEMBERS OF PETRATHERM LIMITED
Report on the half-year financial report
We have reviewed the accompanying half-year financial report of Petratherm Ltd (the Company) and consolidated entity, which comprises the balance sheet as at 31 December 2008, and the income statement, statement of changes in equity and cash flow statement for the half-year ended on that date, other selected explanatory notes and the directors' declaration. The consolidated entity comprises both the Company and the entities it controlled at the half-year's end or from time to time during that half-year.
Directors' responsibility for the half-year financial report
The directors of the Company are responsible for the preparation and fair presentation of the half-year financial report in accordance with Australian Accounting Standards including the Australian Accounting Interpretations and the Corporations Act 2001. This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the half-year financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditor's responsibility
Our responsibility is to express a conclusion on the consolidated half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagement ASRE 2410: Review of an Interim and Other Financial Reports Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the consolidated entity's financial position as at 31 December 2008 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Regulations 2001.
As the auditor of Petratherm Ltd, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.
Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd, Grant Thornton International Ltd and the member firms are not a worldwide oartnership. Grant Thornton Australia Limiled, together with its subsidiaries and related entities, delivers its services independently in Australia
Liability limited by a scheme approved under Professional Standards Legislation
INDEPENDENT AUDITOR'S REVIEW REPORT TO THE MEMBERS OF PETRATHERM LTD Cont
Auditor's responsibility Cont
A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Independence
In conducting our review, we complied with the independence requirements of the Corporations Act 2001.
Conclusion
Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Petratherm Ltd is not in accordance with the Corporations Act 2001, including:
- giving a true and fair view of Petratherm Ltd's financial position as at 31 December a 2008 and of its performance for the half-year ended on that date; and
- complying with Accounting Standard AASB 134: Interim Financial Reporting and b Corporations Regulations 2001.
Material Uncertainty Regarding Continuation as a Going Concern
Without qualifying our review conclusion attention is drawn to Note 7 – Economic Dependency to the Interim Financial Report. The financial report has been prepared on the basis of a going concern. The company will require additional capital for the continued development of its existing projects and working capital.
The Company's ability to continue as a going concern is contingent upon successfully raising additional capital. If additional funds are not raised, the going concern basis may not be appropriate, with the result that the Company may have to realise its assets and extinguish its liabilities, other than in the ordinary course of business and in amounts different from those stated in the interim financial report. No allowance for such circumstances has been made in the financial report.
GRANT THORNTON South Australian Partnership Chartered Accountants
S Gray Partner
Signed at Wayville on this 13th day of March 2009