TIDMSVE
RNS Number : 1293Y
Starvest PLC
01 March 2017
Wednesday 1 March 2017
Starvest Plc ("Starvest" or "the Company")
Results for the year ended 30 September 2016
Chairman's statement
I am pleased to present my annual statement to Shareholders for
the year ended 30 September 2016 and the sixteenth since the
Company was formed in 2000.
Results for the year
The natural resource sector made an encouraging recovery
throughout 2016 and many of our investee companies saw significant
share price increases during the period. But at the end of 2016
there remained, we believe, many undervalued opportunities. It is
at this time we can benefit by employing our sector knowledge and
market experience in sourcing compelling investments.
Since the end of September 2015 (to 31 Jan 2017) our Trading
Portfolio Value has improved by more than 25%. This is as a result
of investments in several new companies combined with a better
operating environment for mining companies and improvements in
share prices of our portfolio companies.
A sustained recovery in the sector is apparent with continued
improvements in our portfolio companies such as Oracle Coalfields
(ending at 3.01p on 30th Sept 2016 up from 1.33p on 30th Sept
2015), BMR Group (ending at 5.6p on 30th Sept 2016 up from 4.5p on
30th Sept 2015), Greatland Gold (ending at 0.172p on 30th Sept 2016
up from 0.075p on 30th Sept 2015), Ariana Resources (ending at
1.75p on 30th Sept 2016 up from 0.85p on 30th Sept 2015) and Salt
Lake Potash (ending at 25.34p on 30th Sept 2016 up from 5.38p on
30th Sept 2015).
Two companies in the portfolio are still edging towards gold
production; we wait with anticipation for continued good news from
Ariana Resources plc expecting first production in Q1 2017 and KEFI
Minerals plc beginning mine construction in H2 2017.
Improvement in our portfolio value has been reflected in our
share price over the past 12 months but our share price remains
strikingly undervalued due to a relatively low investor appetite
for companies involved in mining focussed investments. However, we
believe interest will follow once markets provide a clearer
direction for investors. During this opportune time, we continue to
evaluate very good investment opportunities and look to enhance our
portfolio.
Investing policy
The Company's investing policy is reproduced on page 3 of this
report and made available on our website, www.starvest.co.uk.
Trading portfolio valuation
A brief review of the major portfolio companies follows from
page 4; other investee companies are listed with the websites from
which further information may be obtained.
Shareholder information
The Company's shares are traded on AIM.
Announcements made to the London Stock Exchange are available
from the Company's website, www.starvest.co.uk where historic
reports and announcements are also available.
Annual general meeting
We will hold our annual general meeting at 11.00 am on Thursday
30 March 2017 at the City office of Grant Thornton UK LLP, our
Nominated Adviser, when we look forward to meeting those
Shareholders able to attend.
Callum N Baxter
Chairman & Chief Executive, 28 February 2017
Investing policy statement
About us
The Board, under the leadership of the previous chairman, Bruce
Rowan, had managed the Company as an investment company since
January 2002. Collectively, the Board has significant experience
over many years of investing in small company new issues and
pre-IPO opportunities in the natural resources and mineral
exploration sectors.
Following the appointment as chairman of Callum Baxter, the
Board continues with a similar investment strategy, that is, with a
focus on the natural resources sector.
Company objective
The Company is established as a source of early stage finance to
fledgling businesses, to maximise the capital value of the Company
and to generate benefits for Shareholders in the form of capital
growth and modest dividends.
Investing strategy
Natural resources: Whilst the Company has no exclusive
commitment to the natural resources sector, the Board sees this as
having considerable growth potential in the medium term.
Historically, investments were generally made immediately prior to
an initial public offering, on AIM or ISDX/NEX as well as in the
aftermarket. As the nature of the market has changed since 2008, it
is more likely that the future investment portfolio will include a
spread of companies that generally have moved beyond the IPO stage
but remain in the early stages of identifying a commercial resource
and/or moving towards development with the appropriate finance.
Investment size: Initial investments are for varying amounts but
usually in the range of up to GBP100,000. These companies are
invariably not generating cash, but rather they have a constant
requirement to raise new equity in order to continue exploration
and development. Therefore, after appropriate due diligence, the
Company may provide further funding support and make later market
purchases, so that the total investment may be greater than
GBP100,000.
High risk: The business is inherently high risk and of a
cyclical nature dependent upon fluctuations in world economic
activity which impacts on the demand for minerals. However, it
offers the investor a spread of investments in an exciting sector,
which the Board believes will continue to offer the potential of
significant returns for the foreseeable future.
Lack of liquidity: The investee companies, being small, almost
invariably lack share market liquidity, even if they are quoted on
AIM, NEX, ASX, or TSX-V. Therefore, in the early years it is rarely
possible to sell an investment at the quoted market price with the
result that extreme patience is required whilst the investee
company develops and ultimately attracts market interest. If and
when an explorer finds a large exploitable resource, it may become
the object of a third party bid, or otherwise become a much larger
entity; either way an opportunity to realise cash is expected to
follow.
Success rate: Of the 25 to 30 investments held at any one time,
it is expected that no more than five will prove to be 'winners';
from half of the remainder we may expect to see modest share price
improvements. Overall, the expectation is that in time Shareholder
returns will be acceptable if not substantial. Accordingly, the
Board is unable to give any estimate of the quantum or timing of
returns.
Profit distribution: When profits have been realised and
adequate cash is available, it is the intention of the Board to
recommend the distribution of up to half the profits realised.
Other matters: The Company currently has investments in the
following companies, which themselves are investment companies:
Equity Investors plc and Equity Resources Limited.
The Company takes no part in the active management of investee
companies, although directors of the Company are or have been
non-executive directors on the boards of several such companies.
Callum Baxter, Chairman, is also an Executive Director of one such
company.
Review of trading portfolio
Introduction
During the year to 30 September 2016, the portfolio comprised
interests in the companies commented on below. In addition, several
other active companies were included but not commented on in this
review.
The tough trading and fundraising conditions of the past several
years have taken a toll on some of the businesses in which Starvest
is invested, although there was some relief during the year so that
as at 30 September 2016, the net asset value had increased to
GBP1.27m from a low start at September 2015 of GBP1.14m. The
largest element of the value is in coal, where the value has
improved significantly; of the remainder, much is in gold
exploration.
Transactions
During the year the Company acquired interests in Salt Lake
Potash, and Diamond Corp. and raised cash from modest sales of Alba
Mineral Resources plc, Ariana Resources plc, BMR Group plc, Red
Rock Resources plc and Regency Mines plc. As is to be expected, we
suffered failures during the year the largest being our interest in
Nordic Energy plc which was de-listed.
During the year, we received modest interest on short-term loans
advanced during the previous year to Goldcrest Resources plc;
Goldcrest also made a partial repayment of the capital.
Trading portfolio valuation
When reporting in previous years, attention was drawn to the
continuing adverse conditions in our chosen market for early stage
mineral exploration stocks. The year to September 2016 has seen a
modest reversal of fortunes. We trust that we are seeing the
beginning of a long awaited recovery.
Against this background, we continue to value our portfolio of
investments conservatively at the lower of cost or bid price or
lower directors' valuation, where we believe those facts of which
we are aware cast doubt on the market prices or where the Company's
interest is of such a size as to inhibit selling into a depressed
market. With one exception, we attribute no value to those of our
investments that do not enjoy a market quote. The exception is our
holding in Kuwait Energy plc where we use a value provided by that
company's broker based on actual trades in the company's stock.
The Directors are satisfied that this is the only significant
management estimate made within the financial statements.
This cautious approach has proved to be appropriate in these
difficult times; net provisions made in previous years totalling
GBP260,967 were released during the year (2015 additional provision
after restatement: GBP3,100,352).
A review of the leading portfolio companies follows. As last
year, we are not commenting on the smaller companies, although they
are listed at the end of the review.
Raising new finance, an essential requirement for any mineral
exploration business, has continued to be very tough leading to the
heavy dilution of existing shareholders and to some failures.
As the net asset value has increased marginally during the year
to 30 September 2016 GBP1.27m, the Company has achieved a profit of
GBP81,113 as compared with an adjusted loss of GBP3.315m in the
previous year (before restatement: GBP964,136). In addition, the
Company:
-- has no debt other than a convertible loan from a shareholder
and a bank overdraft facility only;
-- continues to believe that it is in a strong position to
benefit from an upturn in markets which will come in time;
-- believes that the fundamentals have not changed: the world is
becoming more affluent with an increasing number of people
expecting refrigerators, motor cars, air conditioning, laptop
computers and all other tools of 21st Century living which all
require natural resources in order to both produce and power.
Financial Reporting Standards (FRS102)
With effect from 1 October 2015, the Company was required to
adopt FRS 102 ("New UK GAAP"). The significant impact of this
change concerns the valuation of the Company's investments.
Previously, investments were carried at the lower of cost or
current value. However, under the new accounting standard, all
investments are marked-to-market. The new standard seeks to replace
the previous standards applying in the UK and align reporting
towards the international accounting standards that have been
evolving over recent years. The alignment is intended to be
appropriate and not unduly onerous for the mainly medium sized
companies that will be affected.
Company statistics
The Company considers the following statistics to be its Key
Performance Indicators (KPIs) and is satisfied with the results
achieved in the year given the uncertain market conditions.
30 September 30 September Change
2016 2015 %
at BID at BID
values values
as adjusted as adjusted
* Trading portfolio value GBP1.37m GBP1.04m 32%
* Company asset value net of debt GBP1.27m GBP1.14m 11%
* Net asset value per share 3.21p 3.09p 4%
* Closing share price 2.25p 2.75p -18%
* Share price discount to net asset value 30% 11%
* Market capitalisation GBP0.89m GBP1.02m -13%
Since the year end, values have slightly improved; as at the
close of business on 20 January 2017, the asset value net of debt
was GBP1.3m.
Review of the current market
We and our investee companies have endured yet another difficult
year; extreme short termism leading to lower prices and/or greater
volatility has become the norm. It is clear that many private
investors upon whom we and our investee companies have relied for
new capital have withdrawn their support or, at best, are awaiting
a recognisable upturn in world-wide economic fortunes; this is
compounded in that few institutional investors have an appetite for
early stage projects.
World markets continue to be volatile. For instance, in the past
six years the gold price has been as high as $1,883 per oz. but has
also been as low as $1,093; at the present time it is approximately
$1,200, not far from where it was two years ago.
Demand for raw materials continues to fluctuate. Although there
may be timing issues, we expect demand to recover to be followed by
prices. Meanwhile, opportunities for junior explorers to realise
value and generate cash are few.
In spite of the challenging environment, the strengthening of
the US$ has been and will be a factor in determining world
commodity prices.
Patience continues to be the key as we await a sustained
recovery.
It is worth reminding ourselves of what we have consistently
stated: we are investing in a high risk sector where positive
returns are not guaranteed and that we never expect more than
five
Interests in Gold exploration
Our interests in gold exploration have improved during the
period!
Following a gold price of below $1,100 per ounce in late 2015,
we have seen an increase to current levels of $1,200.
Amongst the Starvest investments, there are six with interests
in gold exploration. Of these, we comment on three:
Ariana Resources plc (www.arianaresources.com)
Ariana is a United Kingdom-based company engaged in the
exploration and development of epithermal gold-silver and porphyry
copper-gold deposits in Turkey.
Ariana has a 52-week low of 0.67p and a 52 week high of 2.09p.
The firm's market cap is GBP14.82 million.
Ariana is now in the final stage of its transformation from
exploration to production with its SW Turkey project, Kiziltepe
mine due to come on line by in Q1 2017 with an initial rate of
150ktpa producing 20koz Au and 100koz Ag a year for the first 8
years of mine life and at $600/oz cash cost.
As well as a first gold pour imminent for the company, it holds
advanced exploration areas around the mine site, including a recent
purchase of the 1Moz Salinbas Gold Project from Eldorado Gold Corp;
it is expected that this will add extra ounces to the mine reserves
and extend the life-of-mine beyond 10 years. In NE Turkey it holds
Tavsan with historic PEA reports outlining an open-pittable
operation with over 1M indicated and inferred gold equivalent
ounces.
In addition to Ariana's main focus on gold exploration and
production in Turkey, it also owns an Australian subsidiary, Asgard
Metals, which focuses on technology-commodities used in renewable
energy sources such as lithium; it holds interests in a
hard-rock/pegmatite lithium resource project in the Pilbara region
of Western Australia.
Panmure Gordon and Co recommended a conservative 2.71p target
price for the company in September 2016. With an average price of
1.13p over the last year this shows a healthy growth potential for
the company and once a first gold pour is achieved will see Ariana
well-funded to carry out additional exploration work on both near
mine and portfolio projects further afield.
Kefi Minerals plc (www.kefi-minerals.com)
Kefi Minerals is an exploration and development company focused
on gold and copper deposits in the Arabian-Nubian Shield. Its main
projects are Tulu Kapi in Ethiopia (100% ownership) and the Jibal
Qutman project in Saudi Arabia (40% ownership).
The Tulu Kapi project has an ore reserve of 1Moz Au
open-pittable at 115,000oz Au per annum over a nine year mine life
and has an opex of US$742/oz. Construction of the open pit is
scheduled to begin in H2 2017 with production then scheduled for
2018 and a mining licence valid until 2035 with a renewable option
for a further 10 year period.
The resource is open at depth, along strike and down plunge.
During 2016 Kefi carried out a Preliminary Economic Assessment
(PEA) on underground operations with a JORC compliant resource of
1.65Mt Au with an average grade of 6.26g/t. The PEA calculated a
50,000oz per annum production rate at a 93% recovery rate.
Resources combined, open pit and underground would produce over
150,000oz/year.
The PEA returned an NPV of US$44m based in a gold price of
US$1,250 per ounce and when added to the open pit resources this
totals an NPV of US$190m with the open pit alone giving an IRR of
33% at US$1,300/oz Au. Even at a lower gold price of US$1,050/oz
IRR is calculated at 15%.
Kefi intends to start underground mining only after the open pit
has begun to generate positive cash flow and is repaying
development financing. This will bring the time line of first
production from the underground operation to 2020, after a 2 year
construction period.
The company also continued development of its Jibal Qutman
project (0.73Moz Au resource) in Saudi Arabia with studies into a
low-cost heap leach treatment of oxide ore. The next step is to
start the Mining Licence application process, whereby they have
begun discussions with the regulator for the planned heap leach
operation and to complete a full feasibility study.
With the company on track for mine construction and production
as well as development of their exploration projects there is
plenty of upside over the next two-three years.
Greatland Gold plc (www.greatlandgold.com)
The AIM listed exploration company with licences in Australia
has undergone numerous changes to the board during 2016. Alex
Borrelli, who chairs BMR Group, now also chairs Greatland Gold and
Callum Baxter has remained on board heading up the technical side
of the company.
The Company has five main projects; three situated in Western
Australia and two in Tasmania. All projects are 100% owned by
Greatland or Greatland has the right to take 100% ownership.
Greatland is seeking to identify large mineral deposits in areas
that have not been subject to extensive exploration previously. It
is widely recognised that the next generation of large deposits
will come from such under-explored areas and Greatland is applying
advanced exploration techniques to investigate a number of
carefully selected targets within its focused licence
portfolio.
During the year four of the company's licence areas in Western
Australia and Tasmania were redefined in order to concentrate
exploration efforts on areas of high priority targets with the most
potential for gold and/or nickel resources. Drilling was carried
out on 3 of the 4 licences with encouraging results.
A 5th licence area, Havieron, was acquired in Western Australia
during Q3 for a small cash sum of just $25,000 plus an issue of
shares. This licence covers 135 sq km of the under-explored
Paterson Region just 40km east of Newcrest's Telfer Gold mine (27M
oz gold production to date). With historical data reporting grades
of up to 15.45g/t Au and 2.5% Cu this is a welcome addition to the
Greatland pipeline of projects and sits in an area attracting
increasing interest from major mining companies such as Rio
Tinto.
With share placements during 2016, Greatland Gold holds a good
cash position to further exploration and development of its
existing licences and is also actively investigating a range of new
opportunities in precious and strategic metals.
The company has recently entered into an MoU with Metal Tiger
Australia Pty Ltd to explore and co-operate on new precious and
strategic base metal ventures, primarily focusing on Australia and
Asia, either through JV or co-investments, furthering its ability
to expand its portfolio of projects in the sector.
The remaining companies are: Goldcrest Resources plc
(www.goldcrestresourcesplc.com), West Africa and Minera IRL Limited
(www.minera-irl.com), Peru.
Interests in energy
We have three companies in the energy sector on which we comment
as follows:
Alba Mineral Resources plc (www.albamineralresources.com)
Alba is a UK-based explorer focused on oil and gas, graphite,
uranium and base metals with holdings in Greenland (graphite),
Mauritania (uranium), UK (oil and gas) and Ireland (base
metals).
The Company's UK oil and gas focus is on Horse Hill-1 project
where Alba holds the second largest stake in the HHDL consortium
developing the project. The project has been drilled and was
granted flow testing to be undertaken which was completed in March
2016, with flow rates close to 1,700bpd. Alba has also now acquired
a 5% interest in the Brockham oil and gas project just 5 miles from
Horse Hill-1. Brockham was, until earlier in 2016, a producing oil
field but with production halted in order to upgrade the site with
the intension of increasing the flow rates and to prepare for
drilling of additional target areas.
Their graphite project encompasses a former graphite mine with
additional exploration ground around it in Greenland and they have
recently acquired the rights to earn up to 70% of this lease and to
date have earned a 49% stake. An EM survey was carried out
targeting the extent of graphite resources in the area and also to
investigate a possible gold resource in the south, neighbouring the
Nalunaq gold mine (340,000oz produced to date).
The base metal project in Ireland has had drilling carried out
and a gravity survey and soil sampling were completed in 2016 with
the exploration licence extended for a further 2 year period. The
Mauritania uranium project is still in early stage exploration
phase and awaiting renewal of the licence.
The company raised GBP900,000 at 0.2p/share in a placing
completed in September 2016. The share price is up from 0.24p a
year ago to 0.34p in mid-November.
Kuwait Energy plc (www.kuwaitenergy.co)
Kuwait Energy, the independent oil and gas company involved in
exploration appraisal and development and production of
hydrocarbons was established in 2005 and maintains a diverse
portfolio of projects in Iraq, Egypt, Yemen and Oman. Of the 10
exploration, development and production assets they hold, Kuwait
Energy directly operates seven.
The company has continued with production of Block-9 Faihaa-1
well in Iraq with 3,321 bopd, carried out extensive testing of
Block-9 Faihaa-2 well earlier in the year and began production in
October at a rate of 5,600 bopd. Kuwait also signed an Export Oil
Sales Agreement with the State Oil Marketing Company (SOMO) putting
in place the means by which Kuwait Energy will be paid for services
in Block-9. Kuwait received a payment of US$13.9M for production
from Block 9 between Oct 2015 and March 2016 and, under the
agreement is set to receive a further US$10M for Q2 2016
production.
The company also successfully obtained a Development Licence
from the Egyptian General Petroleum Corporation to develop its Al
Jahraa SE-1X well. Production began in August 2016 with an average
rate of 410 bopd.
And while Kuwait has increased its Proven and Probable reserves
to 818 mmboe (up 22% on 2015), unfortunately, production at the
Yemen licence which was shut down in April of 2015 has not yet been
restarted. Kuwait maintains they are 'operationally-ready when the
situation permits'.
With a forward sale agreement recently signed with VITOL for up
to US$100M, the company looks well placed to expand its production
in both Iraq and Egypt and has a long-term buyer for its Iraq crude
oil.
Oracle Coalfields plc (www.oraclecoalfields.com)
As reported last year, Oracle Coalfields holds a JORC compliant
resource of 529m tonnes of lignite coal in SE Pakistan and is
concentrating on development of the mine for first production by
end 2018 with the intension of supplying a new 600MW mine-mouth
power plant to supply much needed power to Pakistan.
Work over the last 12 months has concentrated on formalising
agreements and contracts for both mine and plant development and
securing terms for coal and power prices.
In June the company announced a set coal price at feasibility
stage of the Thar Block VI Project, averaging US$60.23/tonne over a
30 year period with an average production of 4M tonnes per annum.
This provides a stable price structure for the producing mine,
isolated from fluctuation in internationally traded coal and
provides a certainty for investors.
It also announced a capex reduction of over US$200M, bringing
costs from US$879M down to US$673M with a 70:30 debt equity
financing in place for the coal mine.
It was also announced that a key shareholder agreement was
signed with new and existing Chinese partners. Under the plan the
Chinese will take 70% equity in the project and act as engineering,
procurement and construction contractors for the mine and plant.
They are also leading discussions with Sinosure over financing.
Plans remain in place for the mine to start coal production
alongside construction of the power plant with first electricity
delivered by late 2018.
With the extension of the guarantee of 20% IRR on power
production from the plant and the appointment of experienced board
members in international capital markets and asset management in
the natural resource sector, the company is well placed to deliver
on financial and construction targets over the coming year.
BMR Group plc (www.bmrplc.com)
BMR Group is a new acquisition during the year which has
undergone some recent management changes.
A forensic audit under the new management team determined a
company holding at the historic Kabwe lead-zinc mine as a priority
target for future development and the company's ability to generate
revenue.
The mine closed in mid 1990s and tailings tests showed combined
grades of approx. 18% lead-zinc JORC compliant resource from a 2004
report: 160,000 tonnes Zn and 260,000 tonnes lead JORC compliant
with additional 190,000 tonnes zinc and 79,000 tonnes lead non-JORC
compliant calculated.
BMR raised GBP414,000 at 3p in February 2016, a further
GBP395,000 at 4.25p in April and GBP620,000 at 6.7p per share in
October. It has approximately $1M in cash. A $3.5M loan facility
was signed in November 2016 for plant construction with the plant
commissioning expected in H1 2017 and first sales by H2 2017. It is
expecting an 8-9 year equipment lifespan. The local work force is
experienced in mining and a stable power supply is already in
place.
Work has concentrated on developing an acid/brine leach
involving zinc cathode technology to extract lead and zinc in the
tailings. Recovery rates are between 80-90% and they are expecting
to process 5 tonnes/hour 24/7, with just over 37,000 tonnes per
annum running at 80% capacity. The processing plant equipment is
currently being sourced with a total CapEx of $2.7M. It is expected
to be fully operational by early 2017. ZEMA (environmental
licencing) approval is already in place. Production cost is roughly
$150/tonne of tailings. The expectation is that this will reduce in
future.
Interests in Base Metals and Agricultural Products
BMR Group plc (www.bmrplc.com)
In October 2016 the company reported that laboratory scale
testing was completed and recoveries of circa 85% zinc and 91% lead
were achieved. It also reported that the sulphate brine leach
process recovered approximately 90% of the contained vanadium,
currently calculated at 9,000 tonnes and that current market prices
for the resulting vanadium pentoxide product stand in excess of
US$15,000 per tonne.
In September 2016 the company entered into a finance deal with
Africa Compass International Limited for US$5.2M to aid
construction and plant processing facilities. The deal is interest
free and repayable 12 months after the final milestone has been
reached.
With a new board and management team in place engaged in
establishing the processing plant over the next 12 months, BMR
looks set to continue to add value to its share price during
2017.
Salt Lake Potash Limited (www.saltlakepotash.com.au)
The Australia based AIM and ASX listed Salt Lake Potash is a
recent addition to the Starvest Portfolio.
Over the past year the company has raised US$12.1M through
placements.
The company's main project is Lake Wells targeting Sulphate of
Potash (SOP), a fertilizer product rich in potassium. The capital
raising allowed for the development of the Lake Wells project
including further drilling, field evaporation trials on bulk brine
samples and a scoping study. The company intends to develop another
of its recently acquired projects, Lake Irwin.
Results of the scoping study on Lake Wells were released August
2016 and proved highly encouraging, highlighting the projects
potential to produce low cost SOP by solar evaporation of lake
brines for domestic (Australia) and international markets. The Lake
Wells Project has the potential to be one of only five large scale
salt lake SOP producers globally and with initial cash costs of
production estimated at A$185 per tonne this would make the project
amongst the lowest cost in the world.
The company is engaging in a pre-feasibility study during which
it intends to undertake more detailed hydrological modelling, brine
extraction optimisation and further assessment aimed at identifying
opportunities to enhance the project economics through capital and
operating cost reductions.
With the Lake Wells projects progressing to a pre-feasibility
study, further projects in their exploration pipeline and a decent
cash reserve this company is poised to continue its share price
increase over the coming year.
Sunrise Resources plc (www.sunriseresourcesplc.com)
Sunrise Resources' objectives are to generate cash flow from
more advanced projects and to add value through mineral discovery
by drill testing more speculative exploration targets.
They are invested in industrial minerals as they believe these
to have the greatest potential to achieve an early cash flow as
they typically have fewer permitting issues allowing projects to
advance to production more quickly than base or precious
metals.
The company holds ground in Nevada (USA), Ireland and Australia
with commodities ranging from gold, silver and diamonds through to
copper, barite and diatomite.
Sunrise has entered into an agreement with EP Minerals (the
world's leading diatomite producer) in Nevada in which it retains a
significant revenue based royalty payable 6 months from the start
of production on its diatomite licence with an initial payment of
US$450,000 in June 2017 and 3 years thereafter a payment of
US$75,000 and payments of US$150,000 every year thereafter.
Its Baystate Silver project, also in Nevada, produced
encouraging results in underground drilling at an historic mine in
2015 as did their Garfield Gold-Copper-Silver Project and Junction
Gold project. During 2016 they formed a dedicated vehicle 'Westgold
Inc' specifically to acquire gold and silver projects in Nevada and
have so far staked 3 projects in the state targeting Carlin-style
mineralisation and has added substantial new ground with 15 new
stakes claimed on its pozzolan project.
In Australia; the Cue Diamond project, previously held by De
Beers, has recovered encouraging numbers of diamonds from test
drilling the kimberlite dykes and the float material, the source of
which has yet to be traced. Its Bakers Gold Project is in an
historically well-known gold producing belt and is ready to be
drill tested. With a pipeline of projects at drill ready stage and
an agreement in place to generate cash flow from its diatomite
project. Sunrise has a good spread of projects which are likely to
add value through further exploration.
Other investments
The remaining non-core investments are available for sale when
the conditions are deemed to be right. These include: Marechale
Capital plc (www.marechalecapital.com), and Regency Mines plc
(www.regency-mines.com). In addition, there are a number of failed
or almost failed ventures to which we attribute no value, although
we always hope and seek to crystallise value where possible.
Financial Reporting Standards (FRS102)
To date we have prepared our financial statements under UK
Generally Accepted Accounting Standards (UK GAAP). However, with
effect from 1 October 2015 we will be required to adopt FRS 102
("New UK GAAP"). The significant impact of this change will be on
the valuation of the Company's investments. To date, we have been
able to carry all our investments at the lower of cost or current
value. However, under the new accounting standard, we will be
required to mark-to-market all our investments. Based on the
closing prices at 30 September 2015, the investments (and hence net
assets of the group) will not be affected as all investments are
carried at a loss to cost price.
Strategic report
Principal activities and business review
Since Bruce Rowan was appointed Chief Executive on 31 January
2002, the Company's principal trading activity was the use of his
expertise to identify and, where appropriate, support small company
new issues, pre-IPO and on-going fundraising opportunities with a
view to realising profit from disposals as the businesses mature in
the medium term. The directors expect this to continue in the
future under the leadership of Callum Baxter, appointed Chief
Executive in September 2015.
The Company's investing policy is stated on page 3.
The Company's key performance indicators and developments during
the year are given in the Chairman's statement and in the trading
portfolio review, all of which form part of the Directors'
report.
Finance Review
As explained in Note 22, the Company has adopted a new financial
standard, FRS 102, for the year ended 30 September 2016. This has
required the Company to revalue its trade investments at 1 October
2014 and 30 September 2015 with the effect that the loss on
ordinary activities for the year to 30 September 2015 is restated
at GBP3,314,817.
The greater part of this adjustment relates to the investment in
Nordic Energy plc which had a book value of GBP265,000 at 1 October
2014 but which had a market value of GBP2,800,000.
Key risks and uncertainties
This business carries with it a high level of risk and
uncertainty, although the rewards can be outstanding. The risk
arises from the very nature of early stage mineral exploration
where there can be no certainty of outcome. In addition, often
there is a lack of liquidity in the Company's trading portfolio,
most of which is, or in the case of pre-IPO commitments is expected
to be, quoted on AIM or NEX, formerly ISDX, such that the Company
may have difficulty in realising the full value in a forced sale.
Accordingly, a commitment is only made after thorough research into
both the management and the business of the target, both of which
are closely monitored thereafter. Furthermore, the Company limits
the amount of each commitment, both as to the absolute amount and
percentage of the target company.
INCOME STATEMENT
FOR THE YEARED 30 SEPTEMBER 2016
Year ended
Year ended 30 30 September
September 2016 2015
(restated)
GBP GBP
Revenue 117,920 123,891
Cost of sales (72,670) (112,916)
--------------- -------------
Gross profit 45,250 10,975
Administrative expenses (231,499) (234,766)
Amounts off against trade
investments (382,594) (3,178,773)
Amounts written back against
trade investments 643,561 78,421
--------------- -------------
Operating profit/(loss) 74,718 (3,324,143)
Interest receivable 6,395 9,326
Profit/(loss) on ordinary
activities before tax 81,113 (3,314,817)
Tax on profit on ordinary - -
activities
Profit/(loss) for the financial
year attributable to
Equity holders of the Company 81,113 (3,314,817)
=============== =============
Earnings per ordinary share
Basic & diluted 0.21 pence (8.93) pence
There are no other recognised gains and losses in either year
other than the result for the year.
All operations are continuing.
STATEMENT OF FINANCIAL POSITION
30 SEPTEMBER 2016
30 September 30 September
2016 2015 (restated)
GBP GBP
Current assets
Trade and other receivables 71,667 55,040
Trade investments 1,372,616 1,033,096
Cash and cash equivalents 9,856 228,318
------------ ---------------
Total current assets 1,454,139 1,316,454
------------ ---------------
Current liabilities
Trade and other payables (132,227) (125,155)
Total current liabilities (132,227) (125,155)
------------ ---------------
Net current assets 1,321,912 1,191,299
============ ===============
Capital and reserves
Called up share capital 396,185 394,173
Share premium account 1,514,673 2,118,396
Profit and loss account (593,946) (1,326,270)
Equity reserve 5,000 5,000
------------ ---------------
Total equity shareholders'
funds 1,321,912 1,191,299
============ ===============
These financial statements were approved and authorised for
issue by the Board of Directors on 28 February 2017.
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2016
Equity reserve Total Equity
attributable to
Share capital Share premium Profit and loss account shareholders
GBP GBP GBP GBP GBP
At 1 October 2014
(restated) 394,173 2,118,396 - 1,988,547 4,501,116
============= ============= ============== ======================= ======================
(Loss) for the period - - - (3,314,817) (3,314,817)
Total recognised income
and expenses for the
period - - - (3,314,817) (3,314,817)
------------- ------------- -------------- ----------------------- ----------------------
Equity component of
convertible loan - 5,000 - 5,000
------------- ------------- -------------- ----------------------- ----------------------
Total contributions by
and distributions to
owners - - 5,000 - 5,000
At 30 September 2015
(restated) 394,173 2,118,396 5,000 (1,326,270) 1,191,299
------------- ------------- -------------- ----------------------- ----------------------
Profit for the period - - - 81,113 81,113
Total recognised income
and expenses for the
period - - - 81,113 81,113
------------- ------------- -------------- ----------------------- ----------------------
Shares issued 25,012 24,488 - - 49,500
Cancellation of
treasury shares (23,000) (628,211) - 651,211 -
------------- ------------- -------------- ----------------------- ----------------------
Total contributions by
and distributions to
owners 2,012 (603,723) - 651,211 49,500
At 30 September 2016 396,185 1,514,673 5,000 (593,946) 1,321,912
------------- ------------- -------------- ----------------------- ----------------------
Copies of the report and financial statements will be posted to
Shareholders on 6 March 2017 and will be available for a period of
one month thereafter from the Company at the following address: 67
Park Road, Woking, Surrey GU22 7DH or by email at
emali@starvest.co.uk
Alternatively, from 6 March 2017 the report may be downloaded
from the Company's website, www.starvest.co.uk
Enquiries to:
Callum Baxter, Chairman; cbaxter@starvest.co.uk or John Watkins,
Finance Director 07768 512404; jwatkins@starvest.co.uk
Colin Aaronson or Harrison Clarke - Grant Thornton UK LLP 020
7383 5100.
END
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BIGDDSGDBGRI
(END) Dow Jones Newswires
March 01, 2017 02:00 ET (07:00 GMT)
Starvest (LSE:SVE)
Historical Stock Chart
From Apr 2024 to May 2024
Starvest (LSE:SVE)
Historical Stock Chart
From May 2023 to May 2024