29 January 2015
Red Emperor Resources NL
QUARTERLY ACTIVITIES REPORT
FOR THE PERIOD ENDING 31 DECEMBER 2014 AND APPENDIX 5B
The Board of Red Emperor Resources NL ("Red Emperor" or the "Company") is
pleased to provide the following commentary and Appendix 5B for the period
ending 31 December 2014.
Puntland
As reported in our last quarterly update, during the previous reporting period,
the 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 quarter end, the JV is
currently in the process of closing down its office in Bosaso and releasing its
entire staff. In addition, all contracts will be terminated, with exception of
the production sharing agreements ("PSAs"), but including those for the lease
of the villas and the lay-down yard, with all remaining inventory in Puntland
being disposed of or sold.
The aim of these actions is to reduce the JV's cost exposure until there is
clarity and contractual certainty around the PSAs and the legal regime that
currently exists in country. The JV has proposed that the Puntland government
offers it a two-year extension to both PSAs, free of any consideration, so that
we may work together to properly establish the environment required for further
investment in this exploration program.
Red Emperor is obviously disappointed that the above-mentioned actions have had
to be taken, however we are very supportive of the operator, Horn Petroleum,
and feel that the JV was left with no other alternative. The Company remains
hopeful that an extension can be granted and the JV can once again operate in
Puntland with the aim of unlocking the enormous oil & gas potential that is
believed to exist.
Georgia
During the quarter, Strait Oil and Gas ("Strait") stepped up on-ground
activities in preparation for the scheduled drilling program, which was to see
the JV drill a well on Block VIb by 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. Range has 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. Red Emperor cannot
provide any guarantees that such negotiations will result in a successful
transaction and is cognizant of Range's current financial position. Red Emperor
is awaiting further correspondence from Range. We will update the market as
soon as possible in relation to the outcome of these discussions.
Corporate
Red Emperor continues to review new opportunities as it has done throughout the
year, in accordance with its previously outlined strategic philosophy. The
Company is in advanced discussions in respect of at least one transaction and
hopes to be able to provide more detail to the market in the coming weeks.
Meanwhile, Red Emperor continues to hold 1m shares in Highfield Resources,
which last traded at $0.755, valuing the holding at $755,000, a $275,000
unrealised profit on its original investment of $480,000.
Appendix 5B Summary - Consolidated statement of cash flows
Cash flows related to operating Current quarter Year to date (6 months)
activities $A'000 $A'000
1.1 Receipts from product sales and - -
related debtors
1.2 Payments for (a) exploration & (114) (215)
evaluation
- -
(b) development
- -
(c) production
(259) (522)
(d) administration
1.3 Dividends received - -
1.4 Interest and other items of a 98 183
similar nature received
1.5 Interest and other costs of finance - -
paid
1.6 Income taxes paid - -
1.7 Other (provide details if material) - -
Net Operating Cash Flows (275) (554)
Cash flows related to investing
activities
1.8 Payment for purchases of: (a) - -
prospects
- (182)
(b) equity investments
- (59)
(c) investment in associate
1.9 Proceeds from sale of: (a) - -
prospects
- -
(b) equity investments
- -
(c) other fixed assets
1.10 Loans to other entities - -
1.11 Loans repaid by other entities - -
1.12 Other (provide details if material) - -
Net investing cash flows - (241)
1.13 Total operating and investing cash (275) (795)
flows (carried forward)
1.13 Total operating and investing cash (275) (795)
flows (brought forward)
Cash flows related to financing
activities
1.14 Proceeds from issues of shares, - -
options, etc.
1.15 Proceeds from sale of forfeited - -
shares
1.16 Proceeds from borrowings - -
1.17 Repayment of borrowings - -
1.18 Dividends paid - -
1.19 Other (provide details if material) - -
Net financing cash flows - -
Net increase (decrease) in cash (275) (795)
held
1.20 Cash at beginning of quarter/year 9,801 10,321
to date
1.21 Exchange rate adjustments to item - -
1.20
1.22 Cash at end of quarter 9,526 9,526
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
Fox-Davies Capital Limited
Jonathan Evans +44 20 3463 5010