Interim Results

30th Mar 2009 07:00



60 St James's Street, London SW1A 1LE, United Kingdom

Telephone: + 44 (0)20 7629 7774 Facsimile: + 44 (0)20 7629 7773

Monday 30th March 2009

INTERIM STATEMENT FOR THE SIX MONTHS ENDED 31st DECEMBER 2008 

Spitfire Oil Limited's ("Spitfire Oil" or the "Company") is pleased to publish its unaudited interim results for the six months ended 31st December 2008, a summary of which is attached.

Introduction

Spitfire Oil Limited ("Spitfire" or "the Company") and its subsidiaries (together "the Group") recorded a loss before tax for the six months ended 31 December 2008 of A$766,608 (2007 A$1,295,142).

During 2008, most of Spitfires' activities were focused on advancing the delineation of the lignite resource base at Salmon Gums, commencing environmental approvals and progressing proof-of-concept laboratory work on its proprietary L2VTM process to extract oil and other products from the lignite at Salmon Gums. A number of significant management changes have been made in order to improve the quality and structure of the staff required for future development.

On 27 November 2008, Griffin Mining Limited ("Griffin") acquired a 39.2% equity interest in Spitfire from Citadel Equity Fund Ltd. With Mladen Ninkov and Roger Goodwin being directors of the Company and Griffin, Spitfire is now an associated company of Griffin. 

License Status

At 31 December 2008, following statutory partial relinquishments, the Group still held 368,000 square kilometres of exploration tenements. In addition, two mining leases holding the bulk of the currently known resource and totalling 9,854 hectares, were applied for in July 2008 from the Western Australian Department of Industry and Resources.

Resource Delineation and Exploration Program

Since November 2007, Spitfire has been undertaking field delineation and exploration drilling amounting to 420 holes for a total of 12,624 metres drilled. The resource delineation program consisted of infill drilling, special on-lake drilling, logging and coring with the aim of bringing the previously defined Inferred resource to Indicated status. The exploration drilling program consisted of additional air-core drilling in the area surrounding the known resource.

All drilling data and analyses are being entered into a database to generate a new lignite resource with the view of producing an independent updated JORC Indicated resource estimate by June 2009. In addition, 12 tons of lignite bulk samples were collected for use in various laboratory test work. 

Other Field Programs

Whilst the main focus of the drilling in the field program has been on exploration and resource delineation, a number of important other activities have also taken place during 2008 including:

a helicopter electromagnetic survey;

a hydro-geological investigation, including flow tests from 5 well bores;

an aerial LIDAR survey to provide up-to-date photogrammetry over the license area; 

an aerial multi-spectral survey providing detailed environmental and botanical data; and 

further testing of the L2VTM Process Technology.

L2V Process Technology

In June 2007, the Company's wholly owned subsidiary, Spitfire Oil Pty Ltd, entered into a A$4.4 million multi-year research contract with Curtin University of Technology's ("Curtin") Centre for Advanced Energy Science and Engineering ("CAESE") to pursue the optimisation of the L2VTM process. The program of test work initially fell behind schedule, principally due to academic staff movements. As a result, Spitfire decided to bolster its technical staff to provide greater interaction and continuity with Curtin, by employing Mr Barry Tindall, a coal-to-liquids specialist with over 10 years experience with Sasol of South Africa, including the design and commissioning of coal to liquids technology, as its new Chief Technical Officer.

Subsequently, Professor Chun-Zhu Li joined Curtin as head of CAESE. Professor Li was previously at Monash University where he spent years studying Victorian brown coal (i.e. lignite) and carried out extensive research in various areas of energy science and engineering including coal and biomass pyrolysis. Since these new staff appointments, good progress has been made on further proving of the L2VTM process technology, in particular:

a new, specifically designed, laboratory was completed at Curtin;

detailed lignite characterisation, small scale Pyrolysis and small-scale materials handling and lignite drying tests have been performed;

larger scale handling and drying tests have been contracted to Tsing Hua University in Beijing;

optimum "off the shelf" industrial lignite drying technology has been identified;

Spitfire's prototype rotary kiln laboratory reactor has been constructed, commissioned and oil extraction commenced;

analysis of the oil produced begun; and

a new, fluidised bed, laboratory reactor has been identified and procurement started.

Significant progress is anticipated in the near term on key technology, feasibility & optimisation issues. 

Environment and Communities

Following consultation with the relevant Australian Federal and State environmental agencies, it has been determined that the development of the Salmon Gums project will be assessed for its environmental impact by way of an Environmental Review and Management Plan which includes an eight week period for public comment. Extensive baseline flora, fauna, salt lake ecology, waste rock characterisation and groundwater studies were completed during 2008.

Consultation with local communities has been ongoing for some years. During 2008, the communities from the nearby port of Esperance and local town of Salmon Gums were canvassed and public meetings were held at both locations. These attracted significant interest from local residents and landholders. Both communities and their businesses and local governments have been supportive of Spitfire's future plans.

Contact has also been made with various Australian Federal and State government bodies for support for Spitfire's proposed activities. With the resource being locally based and the L2V Process offering an attractive alternative source of energy, Spitfire, in conjunction with CAESA, has been favourably received wherever it has made presentations.

Management

In 2008, Spitfire moved its principal office and management from Melbourne to Perth to align its management activities with the location of its assets, board of directors and State government departments. In June 2008, Mr Thyl Kint was appointed Chief Executive Officer of Spitfire, replacing Mr Andrew Woskett, who also resigned his position from the board of directors of Spitfire. Mr Kint is an energy industry professional with over 25 years experience worldwide with oil and gas projects including, most recently, the position of Project Director for BHP Billiton Petroleum's large Australian Stybarrow and Pyrenees oil and gas projects. Following these changes, the Company is in a much stronger position to undertake the tasks ahead and realise the objectives of achieving viable and economic oil production from the Salmon Gums lignite deposits.

Other Business Opportunities

Although Spitfire's primary objective remains the commercialisation of its L2V lignite-to-liquids technology over the large resource at Salmon Gums, management continues to evaluate other energy related opportunities and other possible synergistic business opportunities.

The Future

With the dwindling of known world energy resources and the subsequent expectation of significant increases in the price of oil, the Salmon Gums coal to liquids project has become a highly attractive venture. Should the results from the L2VTM tests be successful and the development of a commercial plant be achievable, the Company has the potential to reap significant financial rewards upon the Salmon Gums project coming into commercial operation.

Further Information

Spitfire Oil Limited

Mladen Ninkov - Chairman Telephone: +44(0)20 7629 7774

Roger Goodwin - Director

Investec Investment Banking

Gerard Kisbey-Green

Stephen Cooper Telephone: +44(0)20 7597 5167

Spitfire Oil Limited's shares are quoted on the Alternative Investment Market (AIM)

 of the London Stock Exchange (symbol SRO).

The Company's news releases are available on the Company's web site: www.spitfireoil.com

  Spitfire Oil Limited 

Consolidated Income Statement

For the Half Year Ended 31 December 2008

(expressed in Australian dollars)

 

 

 

The accompanying notes form part of these financial statements.

  Spitfire Oil Limited 

Consolidated Balance Sheet

31 December 2008

(expressed in Australian dollars)

		CONSOLIDATED ENTITY
		Half year ended  31 December 2008 Unaudited		Half year ended  31 December 2007 Audited		Year ended  30 June 2008 Audited
	Note	A$		A$		A$
ASSETS
Current Assets
Cash and cash equivalents		11,656,022		18,709,664		14,100,639
Trade and other receivables		207,273		76,963		194,553
Other current assets		44,832		56,135		36,270
Total Current Assets		11,908,127		18,842,762		14,331,462
Non-Current Assets
Other Financial Assets		-		10,000		-
Property, plant and equipment		14,674		8,412		41,220
Intangible asset		6,489,280		883,346		3,416,172
Total Non-Current Assets		6,503,954		901,758		3,457,392
TOTAL ASSETS		18,412,081		19,744,520		17,788,854
LIABILITIES
Current Liabilities
Trade and other payables		374,233		207,900		1,172,319
Total Current Liabilities		374,233		207,900		1,172,319
TOTAL LIABILITIES		374,233		207,900		1,172,319
NET ASSETS		18,037,848		19,536,620		16,616,535
EQUITY
Issued capital	4	20,854,412		20,570,009		20,854,412
Reserves		778,945		261,753		(1,408,976)
Accumulated losses		(3,595,509)		(1,295,142)		(2,828,901)
TOTAL EQUITY		18,037,848		19,536,620		16,616,535

The accompanying notes form part of these financial statements.   Spitfire Oil Limited

Consolidated Statement of Changes in Equity

For the Half Year Ended 31 December 2008

(expressed in Australian dollars )

	Issued Capital	Foreign Currency Translation	Accumulated Losses	Share Based Remuneration	Total
	A$	A$	A$	A$	A$
Balance at 30 June 2007	-	-	-	-	-
Shares issued	23,300,973	-	-	-	23,300,973
Share issuance costs	(2,730,964)	-	-	-	(2,730,964)
Translation of Foreign currency	-	261,753	-	-	261,753
Net (Loss) for the period	-	-	(1,295,142)	-	(1,295,142)
Balance at 31 December 2007	20,570,009	261,753	(1,295,142)	-	19,536,620
Share issuance costs	284,403	-	-	-	284,403
Share based remuneration	-	-	-	592,667	592,667
Translation of Foreign currency	-	(2,263,396)	-	-	(2,263,396)
Net (Loss) for the period	-	-	(1,533,759)	-	(1,533,759)
Balance at 30 June 2008	20,854,412	(2,001,643)	(2,828,901)	592,667	16,616,535
Share based remuneration	-	-	-	127,001	127,001
Translation of Foreign currency	-	2,060,920	-	-	2,060,920
Net (Loss) for the period	-	-	(766,608)	-	(766,608)
Balance at 31 December 2008	20,854,412	59,277	(3,595,509)	719,668	18,037,848
The accompanying notes form part of these financial statements

 

 

 

  Spitfire Oil Limited

Consolidated Cash Flow Statement

For the Half Year Ended 31 December 2008

(expressed in Australian dollars)

	CONSOLIDATED ENTITY
	31 December 2008		31 December 2007		30 June 2008
	Unaudited		Audited		Audited
	A$		A$		A$
CASH FLOWS RELATED TO OPERATING ACTIVITIES
Payments to suppliers and employees	(2,052,256)		(3,980,202)		(2,818,468)
Interest received	305,028		457,600		965,664
R&D tax concession received	311,018		277,788		277,788
NET OPERATING CASH FLOWS	(1,436,210)		(3,244,814)		(1,575,016)
CASH FLOWS RELATED TO INVESTING ACTIVITIES
Proceeds from sales of plant and equipment	6,727		-		-
Payment for purchases of plant and equipment	(2,946)		(8,913)		(45,262)
Exploration expenditure	(3,073,108)		(893,346)		(3,131,852)
NET INVESTING CASH FLOWS	(3,069,327)		(902,259)		(3,177,114)
CASH FLOWS RELATED TO FINANCING ACTIVITIES
Proceeds from issues of securities	-		22,939,791		20,854,412
Capital raising costs	-		(344,807)		-
NET FINANCING CASH FLOWS	-		22,594,984		20,854,412
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS	(4,505,537)		18,447,911		16,102,282
Cash and cash equivalents at the beginning of the period	14,100,639		-		-
Effects of exchange rate changes on cash and cash equivalents	2,060,920		261,753		(2,001,643)
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD	11,656,022		18,709,664		14,100,639
The accompanying notes form part of these financial statements.

Spitfire Oil Limited

Notes to the Financial Statements

Note 1. Basis of Preparation

The general purpose financial report for the interim half year reporting period ended 31 December 2008 has been prepared in accordance with Accounting Standard IAS134 Interim Financial Reporting and the Corporations Act 2001.

This half- year report has been prepared on an accruals basis and is based on historical costs modified by revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied. It does not include all notes of the type normally included in an annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial report.

Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2008 and any public announcements made by Spitfire Oil Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

The accounting policies adopted are consistent with the 2008 Annual Report for the year ended 30 June 2008.

All amounts stated in this interim financial report are represented in Australian Dollars (AUD) unless otherwise stated.

Note 2. Dividends

The Company has not declared any dividends in the period ended 31 December 2008.

Note 3. Contingent Liabilities and Assets

There has been no change in contingent liabilities and assets since the last annual reporting date.

Note 4. Issued Capital 

	31 December 2008		31 December 2007		30 June 2008
	No.	$	No.	$	No.	$
Issued and Paid Up Capital
Fully Paid Ordinary Shares	42,550,668	20,854,412	42,550,668	20,570,009	42,550,668	20,854,412
Total Issued Capital		20,854,412		20,570,009		20,854,412

Notes to the Financial Statements (continued)

Note 5: Loss per Share 

	31 December 2008	31 December 2007	30 June  2008
Basic loss per share (cents)	(1.83)	(3.04)	(7.06)
Diluted loss per share (cents)	(1.83)	(3.04)	(7.06)
a) Net loss used in the calculation of basic and diluted loss per share	($776,608)	($1,295,142)	(2,828,901)
b) Weighted average number of ordinary shares outstanding during the period used in the calculation of basic and diluted loss per share	42,550,668	42,550,668	40,050,309

Options that are considered to be potential ordinary shares are excluded from the weighted average number of ordinary shares used in the calculation of basic loss per share. Where dilutive, potential ordinary shares are included in the calculation of diluted loss per share. 

All the options on issue do not have the effect to dilute loss per share. Therefore they have been excluded from the calculation of diluted loss per share. There have been no other conversions to, call of, or subscriptions for ordinary shares since the reporting date and before the completion of this report.

Note 6: Net Tangible Assets

	31 December 2008	31 December 2007	30 June 2008
Net Tangible Assets	$11,548,568	$18,653,274	$13,200,363
Shares (No.)	42,550,668	42,550,668	42,550,668
Net Tangible Assets (Cents)	27.14	43.84	31.02

Note 7. Events Subsequent to Reporting Date

No matters or circumstances have arisen since 31st December 2008 which significantly affected or may significantly affect the operations of the consolidated entity, the result of those operations or the state of affairs of the consolidated entity in subsequent financial years.

ENDIR DDLFLKXBEBBB

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