31st Jan 2012 07:00
31 January 2012
WILDHORSE ENERGY LIMITED DECEMBER 2011 QUARTERLY REPORT |
Wildhorse Energy ('WHE' or 'the Company'), the AIM and ASX listed company focussed on developing underground coal gasification ('UCG') and uranium projects in Central Europe, is pleased to announce its Quarterly Report for the three months ended 31 December 2011.
Overview:
·; Ongoing development of the Mecsek Hills UCG Project in Hungary ahead of the release of the Preliminary Feasibility Study ('PFS') in Q1 2012
·; Significant progress made with confirmatory drilling campaign at Mecsek Hills UCG Project - multiple coal seams intersected - completion of final two holes at Varalja exploration target anticipated during Q1 2012
·; Successful completion of 3D seismic programme at Mecsek Hills UCG Project focussing on identifying prospective coal blocks in Varalja to assist with UCG site selection
·; Encouraging comments regarding the development of coal assets and the application of UCG in Hungary by the Hungarian Office of Mining and Geology
·; Attractive gas pricing environment in Central Europe underpins WHE business model of providing domestic sources of fuel to countries in the region
·; Solid progress made in evaluating and securing coal deposits potentially suitable for UCG application in Central European regions external to Hungary
WHE Managing Director Matt Swinney said, "Operational progress at the Mecsek Hill Project has been a high priority for WHE over the period and we are pleased to report that as we near completion of our confirmatory drilling campaign, multiple coal seams potentially suitable for UCG have been intersected. Drilling and analysis has been undertaken at the Komlo and Pecs target areas, and we are currently completing the final two holes at the Varalja target. As we reach completion of the drilling programme, we look forward to providing investors with both the final analysis of the coal seams' suitability for UCG as well as the conclusions from the Independent Engineers Report and the PFS by the end of this quarter.
"The profile of UCG in Central Europe was furthered heightened following encouraging comments made by Sándor Jászai, President of the Hungarian Office of Mining and Geology, in his October speech titled "The future; coal, ore and maybe gas embedded in rock" which specifically referenced UCG as a potential energy source within Hungary. The growing recognition that UCG can potentially unlock a substantial source of domestic energy in Central Europe is an important facet in our overall growth strategy, and I believe that our first mover advantage and world class team will enable us to build upon our current acreage in Hungary to bring UCG technology to additional countries within the region."
Drilling Programme and 3D Seismic at the Mecsek Hills Project
Over the period, the Company has been actively advancing its confirmatory drilling campaign at the Mecsek Hills UCG Project which is being conducted in conjunction with its PFS to facilitate the identification of the most prospective UCG sites.
Multiple coal seams have been intersected over the quarter and the Company is currently drilling the final two boreholes at the Varalja exploration target. Confirmatory holes have been drilled across the Komló, Pécs and Varalja target areas, using a mixture of Poly Crystalline Diamond ('PCD') and diamond coring techniques. On completion, the assay results will be reviewed to identify which coal seams may be most suitable for UCG. Final site selection will follow the completion of the drilling programme and assessment of factors including geological structure, coal suitability, land access, local infrastructure and mining layout. After site selection is completed the important next steps directly linked to the site shall be initialised like environmental permitting, hydrogeology studies as well as regulatory confirmation as to what mining licence(s) shall be required to permit conversion of coal into syngas utilising UCG technology.
The final two confirmatory boreholes, CH6 and CH7, are in the Varalja exploration target area and have intersected two and three seams with UCG potential respectively. Borehole CH6 is currently at a depth of 665m and core recovery levels are above JORC requirements of 95%. CH7 is at a depth of 750m and core recovery is also above the JORC minimum of 95%. Both wells have approximately 300m of drilling left before ordering geophysics, rock mechanical tests and demobilisation. The programme is aimed at improving confidence in the large historic database, comprising approximately 558 drill holes, and to prove the resource potential of parts of the Mecsek Hills Project to the internationally accepted JORC reporting standard. As announced on 25 May 2011, the Company has already delineated a maiden JORC Inferred Coal Resource of 81 million tonne (80.6) for the Komló Target Area and the updated drilling results will be announced in conjunction with the PFS at the end of Q1 2012.
Additionally WHE has also successfully completed a 3D seismic programme, comprising of 15 square kilometresto assist UCG site selection and drill programme planning for the further development of the project, particularly in relation to a potential Bankable Feasibility Study.
Consolidated statement of cash flows
Cash flows related to operating activities
| Current quarter $A'000 | Year to date (6.months) $A'000 | |
1.1 | Receipts from product sales and related debtors
| - | - |
1.2 | Payments for (a) exploration & evaluation (b) development (c) production (d) administration | (1,920) - - (1,235) | (5,480) - - (2,451) |
1.3 | Dividends received | - | - |
1.4 | Interest and other items of a similar nature received | 113 | 207 |
1.5 | Interest and other costs of finance paid | - | - |
1.6 | Income taxes paid | - | - |
1.7 | Payments associated with AIM Listing | - | (257) |
Net Operating Cash Flows | (3,042) | (7,981) | |
Cash flows related to investing activities | |||
1.8 | Payment for purchases of: (a) prospects (b) equity investments (c) other fixed assets | - - (56) | - - (83) |
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 (Intellectual Property) | - | - |
Net investing cash flows |
(56) |
(83) | |
1.13 | Total operating and investing cash flows (carried forward) |
(3,098) |
(8,064) |
1.13 | Total operating and investing cash flows (brought forward) |
(3,098) |
(8,064) |
Cash flows related to financing activities | |||
1.14 | Proceeds from issues of shares, options, etc. | - | - |
1.15 | Cost of share issue | - | - |
1.16 | Proceeds from borrowings | - | - |
1.17 | Repayment of borrowings | - | - |
1.18 | Dividends paid | - | - |
1.19 | Other | - | - |
Net financing cash flows | - | - | |
Net increase (decrease) in cash held
| (3,098) | (8,064) | |
1.20 | Cash at beginning of quarter/year to date | 8,456 | 13,494 |
1.21 | Exchange rate adjustments to item 1.20 | (53) | (125) |
1.22 | Cash at end of quarter | 5,305 | 5,305 |
Payments to directors of the entity and associates of the directors
Payments to related entities of the entity and associates of the related entities
Current quarter $A'000 | ||
1.23 |
Aggregate amount of payments to the parties included in item 1.2 | 661 |
1.24 |
Aggregate amount of loans to the parties included in item 1.10 |
Nil |
1.25 |
Explanation necessary for an understanding of the transactions | |
| Consulting fees, salaries, bonuses and superannuation paid to or on behalf of directors and payments for exploration and drilling paid to entities related to directors.
| |
Non-cash financing and investing activities
2.1 | Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows |
NIL
| |
2.2 | Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest |
NIL
|
Financing facilities available
Add notes as necessary for an understanding of the position.
Amount available $A'000 | Amount used $A'000 | ||
3.1 | Loan facilities
| - | - |
3.2 | Credit standby arrangements
| - | - |
Estimated cash outflows for next quarter
$A'000 | ||
4.1 | Exploration and evaluation
| 2,486 |
4.2 | Development
| - |
4.3 | Production
| - |
4.4 | Administration
| 1,025 |
Total | 3,511 |
Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows. | Current quarter $A'000 | Previous quarter $A'000 | |
5.1 | Cash on hand and at bank | 1,405 | 856 |
5.2 | Deposits at call | 3,900 | 7,600 |
5.3 | Bank overdraft | - | - |
5.4 | Other (provide details) | - | - |
Total: cash at end of quarter (item 1.22) | 5,305 | 8,456 | |
Changes in interests in mining tenements
Tenement reference | Nature of interest (note (2)) | Interest at beginning of quarter | Interest at end of quarter | ||
6.1 | Interests in mining tenements relinquished, reduced or lapsed
| Geresdlak (3629/37/2007) Szalka (3263/29/2007) Máriakéménd (4039/23/2007) | Wholly owned
Wholly owned
Wholly owned | 100%
100%
100% | Nil
Nil
Nil |
6.2 | Interests in mining tenements acquired or increased
|
Issued and quoted securities at end of current quarter
Description includes rate of interest and any redemption or conversion rights together with prices and dates.
Total number | Number quoted | Issue price per security (see note 3) (cents) | Amount paid up per security (see note 3) (cents) | ||
7.1 | Preference +securities (description) | ||||
7.2 | Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs, redemptions | ||||
7.3 | +Ordinary securities
| 250,928,627 | 250,928,627 | ||
7.4 | Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs |
|
|
|
|
7.5 | +Convertible debt securities (description) | ||||
7.6 | Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted | ||||
7.7 | Options (description and conversion factor) | Convert on a 1:1 basis
562,630 3,333,336 20,966,664 1,666,665 3,193,362 9,000,000 2,000,000 5,000,000 2,000,000 1,133,871 | Exercise price
$0.90 $0.60 $0.50, $0.60 & $0.70 $0.60, $0.90, $1.20 & $1.50 $0.34 $0.50, $0.60 & $0.70 $0.225 $0.30, $0.40, $0.50, $0.60 & $0.70 $0.50, $0.60 & $0.70 $0.31, $0.372 & $0.434 | Expiry date
30/05/2012 31/12/2011 26/02/2014 16/02/2014 1/06/2012 1/06/2014 30/06/2014 22/11/2014 30/06/2015 20/06/2013
| |
7.8 | Issued during quarter | - | - | - | - |
7.9 | Exercised during quarter | - | - | - | - |
7.10 | Expired during quarter | - | - | - | - |
7.11 | Debentures (totals only) | - | - | ||
7.12 | Unsecured notes (totals only)
| - | - |
Compliance statement
1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4).
2 This statement does give a true and fair view of the matters disclosed.
Notes
1. The quarterly report provides a basis for informing the market how the entity's activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.
2. The "Nature of interest" (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.
3. Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities.
4. The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report.
5. Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.
**ENDS**
For further information please visit www.wildhorse.com.au or contact:
Matt Swinney | Wildhorse Energy Limited | Tel: +44 (0)207 292 9110 |
Daniela Amihood | Grant Thornton UK LLP | Tel: +44 (0)207 383 5100 |
Richard Greenfield | GMP Securities Europe LLP | Tel: +44 (0)207 647 2800 |
Clayton Bush | Liberum Capital Limited | Tel: +44 (0)203 100 2222 |
Susie Geliher | St Brides Media & Finance Ltd | Tel: +44 (0)207 236 1177 |
Further Information on Wildhorse:
Wildhorse Business Model
The WHE business model is focussed upon applying UCG technology to convert coal into syngas and then selling the syngas to power stations as a gas feedstock. The development and expansion of the UCG portfolio is underpinned by a potentially world class uranium project which the Company is advancing with its Hungarian uranium development partners Mecsek-Öko and Mecsekérc, with the support of the Hungarian Government.
Business Strategy
The Company's business strategy is to become a major supplier of gas feedstock to power stations in Central Europe. WHE's project development strategy is based primarily upon acquiring strategic UCG sites in key locations in Central Europe where gas markets are dominated by Russian gas imports, energy security is a major factor for governments and large scale industrial consumers of gas and gas prices are correspondingly high. The expansion is underpinned by the development of the Mecsek Hills Uranium Project.
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