16 March 2015
Red Emperor Resources NL
Half Year Report for the Period Ending 31 December 2014
Please see below extracts from the Company's Half Year Report for the period
ended 31 December 2014, being the:
* Directors' Report
* Consolidated Statement of Comprehensive Income
* Consolidated Statement of Financial Position
* Consolidated Statement of Cash Flows
A copy of the entire Half Year Report is available on the Company's website -
www.redemperorresources.com
For further information please visit www.redemperorresources.com or contact:
Red Emperor
Greg Bandy +61 8 9212 0102
Grant Thornton UK LLP
Philip Secrett/Jen Clarke/Jamie Barklem +44 20 7383 5100
Directors' Report
Your directors present their report on the consolidated entity of Red Emperor
Resources NL ("Red Emperor" or "the Company") and the entities it controlled at
the end of, or during, the half year ended 31 December 2014.
Directors
The persons who were directors of Red Emperor during the half year and up to
the 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 2014
Mr Stephen Brockhurst (Non-Executive Director) - resigned 23 October 2014
Review of Operations for the Half Year ended 31 December 2014
The Consolidated Statement of Profit or loss and Other Comprehensive Income
shows a consolidated net loss for the half year ended 31 December 2014 to
members of $15,344,470 (2013: net loss of $307,914).
Georgian Project
During the period, Strait Oil and Gas ("Strait") stepped up on-ground
activities in preparation for the scheduled drilling program, which was to see
the 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 the
Georgian Oil & Gas Ministry who also confirmed that a valid drilling license is
in place. All technical aspects of the well, along with the cost budget, have
been approved with a drill rig and all required services on standby. Range
advised Red Emperor that it is negotiating a financing deal with a third party
that is designed to reduce its financial exposure to the well.
Puntland Project
During the reporting period, the Somalian Federal Government hardened its
position with regards to the requirement of contracts to flow through the
Federal Ministry of Energy, as evidenced by the statement of the Federal
Minister 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 in
Bosaso, Puntland and will refrain from any operational activity and associated
expenditures pending a resolution of the political situation and the legitimacy
of oil concession contracts. As a result the Directors are of the view that
exploration 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 period
from the Government of Puntland to allow time for these political challenges to
be resolved.
Red Emperor continued to review new opportunities throughout the period in
accordance with its outlined strategic philosophy.
Corporate
On 23 October 2014 the Company announced the appointment of Nathan Rayner to
the Board of Directors following the resignation of Stephen Brockhurst.
Events subsequent to Reporting Date
On 16 February 2015 the Company announced that it had recently sold its direct
equity investment in Highfield Resources Limited (ASX: HFR) in accordance with
its treasury management strategy. The shares were sold at price of $0.80 per
share, which netted the Company $798,279 after brokerage, a 66% return on its
$480,000 investment.
SC55
On 2 March 2015 Red Emperor announced that it had signed a Farmin Agreement
with Otto Energy Philippines Inc. (a wholly owned subsidiary of Otto Energy
Ltd) to farm in to the highly prospective offshore Philippines Block, Service
Contract 55 ("SC55").
SC55 is located in the southwest Palawan Basin, covers an area of 9,880km2 and
was awarded to Otto Energy Investments Ltd (formerly NorAsian Energy Ltd) in
2005. It is a deep-water block in the middle of a proven regional oil and gas
fairway that extends from the productive offshore Borneo region in the
southwest to the offshore Philippine production assets northwest of Palawan.
SC55 contains a number of distinct exploration play types including the Hawkeye
turbidite clastic prospect and the material Cinco carbonate gas/condensate
prospect, as well as a number of follow-up leads. The permit provides a
material opportunity and a series of possible drill targets in an exploration
campaign that will be undertaken during the remaining term of the service
contract.
The Company has the right to earn a 15% working interest in SC55 in
consideration for paying, in cash, 15% of the Well Costs for the drilling and
testing of the Hawkeye - 1 exploration well. Red Emperor's well cost exposure
is capped at US$5.625m, beyond which Red Emperor has the option to reduce
equity from the 15% working interest level.
To ensure that Red Emperor maintains a strong cash position throughout its 2015
work program, the Company agreed to place 66,558,555 shares at A$0.032 per
share (£0.016) to raise approximately A$2.13m (£1.06m) from sophisticated
investors both in Australia and the UK. 708 Capital Limited, a Sydney based
full service investment advisory firm, was lead manager to the issue and were
appointed as Red Emperor's Australian broker. Brandon Hill Capital (formerly
Fox Davies Limited) remains the Company's UK broker. The funds raised from the
placement will be used for purposes associated with the Company's share of
upcoming drilling costs in the Philippines.
Auditor's Independence Declaration
Section 307C of the Corporations Act 2001 requires our auditors, to provide the
Directors of the company with an Independence Declaration in relation to the
review of the half-year financial report. This Independence Declaration is set
out on page 4 and forms part of this Directors' report for the half-year ended
31 December 2014.
This report is signed in accordance with a resolution of the Board of Directors
made pursuant to s.306(3) of the Corporations Act 2001.
Greg Bandy
Managing Director
Perth, Western Australia, 13 March 2015
Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the half-year ended 31 December 2014
Note 31 December 31 December
2014 2013
$ $
Continuing Operations
Interest income 182,854 215,743
Unrealised gain on investment 5 150,000 -
Gain on derivative liability 783 19,573
Administration 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 tax
Income tax expense - -
Loss from continuing operations after (15,344,470) (307,914)
income tax
Net Loss for the period (15,344,470) (307,914)
Other comprehensive income
Items that may be reclassified to
profit or loss
Exchange difference on translation of (243) 903,756
foreign operations
Other comprehensive income for the (243) 903,756
period net of tax
Total comprehensive income for the (15,344,713) 595,842
period
Basic loss per share (cents) (5.76) (0.001)
The above consolidated statement of profit or loss and other comprehensive
income should be read in conjunction with the accompanying notes.
Consolidated Statement of Financial Position
as at 31 December 2014
Note 31 December 30 June
2014
2014
$
$
ASSETS
Current Assets
Cash and cash equivalents 9,525,726 10,321,349
Trade and other receivables 4 36,297 54,991
Total Current Assets 9,562,023 10,376,340
Non-Current Assets
Financial assets at fair value through profit 5 630,400 298,101
and loss
Exploration and evaluation expenditure 6 - 15,000,000
Investment accounted for using the equity 7 6,987,315 6,928,175
method
Total Non-current Assets 7,617,715 22,226,276
TOTAL ASSETS 17,179,738 32,602,616
LIABILITIES
Current Liabilities
Trade and other payables 63,340 140,722
Derivative financial liability - 783
Total Current Liabilities 63,340 141,505
TOTAL LIABILITIES 63,340 141,505
NET ASSETS 17,116,398 32,461,111
EQUITY
Issued capital 8 49,646,733 49,646,733
Accumulated losses (36,333,073) (20,988,603)
Reserves 9 3,802,738 3,802,981
TOTAL EQUITY 17,116,398 32,461,111
The above consolidated statement of financial position should be read in
conjunction with the accompanying notes.
Consolidated Statement of Cash Flows
for the half-year ended 31 December 2014
Note 31 December 31 December
2014 2013
$ $
Cash Flows from Operating Activities
Payments to suppliers and employees (521,111) (543,921)
Finance and interest costs (961) (385)
Interest received 182,854 215,743
Net cash used in operating activities (339,218) (328,563)
Cash Flows from Investing Activities
Payments 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 11,984,410
half-year
Cash and cash equivalents at end of half-year 9,525,726 11,097,298
The above consolidated statement of cashflows should be read in conjunction
with the accompanying notes.
END