24 June 2022

Oracle Power PLC

("Oracle" or the "Company")

 

 

Audited Results for the year ended 31 December 2021

Notice of AGM

 

Oracle Power PLC (AIM:ORCP), the international natural resources project developer, is pleased to announce its audited results for the 12 months ended 31 December 2021. The Company's Annual Report, which includes an unqualified audit report and audited Financial Statements for the year ended 31 December 2021, together with the Notice of AGM, will be made available on the Company's website at www.oraclepower.co.uk/investor-relations/financial-reports/ and are being posted to shareholders today.

 

 

For further information on Oracle Power PLC, visit the Company's website http://www.oraclepower.co.uk or contact:

 

Oracle Power PLC

Naheed Memon - CEO                                                                                 +44 (0) 203 580 4314

 

Strand Hanson Limited (Nominated Adviser & Broker)

Rory Murphy, Rob Patrick                                                                           +44 (0) 20 7409 3494

 

St Brides Partners Limited (Financial PR)

Susie Geliher, Catherine Leftley                                                                 +44 (0) 20 7236 1177

 

 

 

CHAIRMAN'S STATEMENT

 

I am pleased to present the financial statements for Oracle Power PLC for the year ended 31 December 2021.

 

Despite COVID-19 and the consequential limitations on travel, we have managed to grow the size and value of our project portfolio.

 

During the year, we continued to progress our Thar Block VI project. Notwithstanding the general move towards more environmentally friendly forms of power generation, with the advent of the conflict in Ukraine, the cost of energy has risen dramatically and the global energy position has changed. Pakistan's Minister of Energy announced in a recent press conference that he wants the delayed Thar Block VI project developed and PowerChina International Group Ltd ("PowerChina") remains uncertain as to whether it will move the project forward. The original Thar Block VI project plan was to build a mine with an associated 1,320 MW power station to provide base load electricity to Pakistan. The project has now expanded to include production of coal to gas. We are further exploring the possibility of using lignite to make a humic or organic material that enhances soil health and can be used to turn barren land into fertile land. Interest in the whole Thar Block VI project has therefore increased.

 

The two gold prospects in Western Australia (Jundee East and the Northern Zone projects), in which we invested in 2019 are progressing. The geological surveys and test drilling reports are all looking encouraging, and we have been approached by other mining companies in the area, which are looking to form joint ventures to advance the projects.

 

In 2021, we started a project with the objective to manufacture a green hydrogen production facility in Pakistan. To this end, we signed a non-exclusive co-operation agreement with PowerChina and, in March 2022, we formed a new Special Purpose Vehicle SPV called Oracle Energy Ltd specifically to develop this project. Oracle Energy Ltd is jointly owned by Oracle Power PLC (30%) and by His Highness Sheikh Ahmed Dalmook Al Maktoum, through his wholly owned company Kaheel Energy FZE (70%).

 

In terms of our funding position, just prior to the period end, the Company received £632,500 from the exercise of warrants and then post year end, in April 2022, we raised an additional £800,000 before expenses through an equity placing to finance the development of the green hydrogen project.

 

Operational highlights of 2021 are described in the Chief Executive's Report.

 

As you will have read in the newspapers, Imran Khan has been replaced as Prime Minister of Pakistan by Shebaz Sharif. The Pakistan Government remains supportive of the development of the Thar coal project and of relations with China. The broad parameters of security remain as last year: there have been no major incidents and, overall, the army has maintained order. 

 

We are most grateful to the Pakistani Authorities, to the Chinese Authorities through China Coal and the Joint Cooperation Committee (JCC) of CPEC for their support. 

 

Above all, I wish to thank our shareholders for their continued confidence, patience and support, enabling us to move the project towards realisation.

 

Mark W Steed

Chairman

 

CHIEF EXECUTIVE'S REPORT

 

I am pleased to present a report on the Company's progress for the year ended 31 December 2021.     
 
This year has been one of very significant and valuable progress for Oracle. During the early part of the year, we mainly focused on the active development of the Company's existing projects in Pakistan and in Western Australia, and in both jurisdictions notable progress was achieved. Then, in the last quarter of 2021, we launched our green hydrogen project, with the objective to become a developer of green and new energy as well and as a result, further expanded our portfolio of projects.   

In Pakistan, we continued to actively pursue the development of our Thar Block VI, for power as well as for CTG/L (coal to gas/liquid).  We maintained an active dialogue with the Power Division, Ministry of Energy, throughout the year, to secure permission for development of the Company's 1,320MW, coal to power project under the China-Pakistan Economic Corridor ("CPEC"). In September 2021, the Government of Pakistan published its annual Indicative Generation Capacity Expansion Plan (the "IGCEP"), a demand-supply policy guidance chart for Pakistan. Although, demand from Oracle's plant did not appear in the 2021 plan, the power sector regulator, the National Electric Power Regulatory Authority ("NEPRA"), has ruled that the Thar project of 1,320MW, should be included in the next annual review in 2022.        

Furthermore, following subsequent discussions with government and regulators, consultants were engaged in Q1 2021, to draft a government policy proposal for CTG/L, based on input received from China Coal. The draft policy for CTG/L was then jointly submitted by Oracle and China Coal, to the Petroleum Division, Ministry of Energy, for due consideration in March 2021.

 

We subsequently sponsored a consultative session for stakeholders, to discuss the policy draft, with a view to finalising it, so that feasibilities could commence. The session held on 10 March 2021 in Karachi, was hosted by the Petroleum Division, Ministry of Energy, Government of Pakistan, and presided over by the Energy Minister of Sindh, Mr. Imtiaz Ahmed Shaikh and the Special Assistant to the Prime Minister for Petroleum, Mr. Nadeem Babar. The Company continued to engage with the Petroleum Division for further action subsequent to this meeting. In parallel, in order to mitigate CTG/L development risk, we also initiated discussions with other potential off-takers.

By Q4 2021, the Company was in advanced talks with Sui Southern Gas Company Limited ("SSGC"), the semi government public gas distribution company, based on the understanding that a buy back arrangement with SSGC would trigger required government policy formulation, as well as provide necessary guarantees to lenders. This arrangement was secured post period. Further, by the end of 2021, we had also set out the scope and parameters of a detailed feasibility study for CTG/L in conjunction with China Coal, pending policy announcement. I can also confirm that generally, Oracle received tremendous encouragement, and support from the Government of Pakistan for an enhanced development plan at Block VI, during the course of 2021. To this end, the Government of Pakistan has had extensive dialogue with us on different occasions, for initiation of the feasibility study and mobilisation of CTG/L development, given Pakistan's gas crisis.     
 
I am also very pleased to report that despite all COVID-19 related challenges in West Australia, Oracle continued to conduct active exploration at both the tenements. At the Company's Northern Zone project, 25 km from Kalgoorlie, processing and interpretation of the available magnetic and induced polarisation ("IP") geophysical datasets was completed. The maiden drill programme targeting felsic intrusives porphyry bodies commenced in September 2021 and was completed within the calendar year. The samples were submitted to laboratories and significantly positive results were received post period end. In parallel, we were finally granted the exploration licence for Jundee East in May 2021. We proceeded to conduct a more extensive geochemical sampling survey and then planned a five target drilling programme based on the geophysical and extensive geochemical investigations, which established the presence of an unrecognised greenstone belt similar to the Jundee mine, one of Australia's largest, a few kilometres away. By Q4 2021, we had secured clearance for drilling at Jundee East, and sourced a rig, with drilling to commence post period end. The results of the work on both tenements, established good prospects for gold systems and further work plans for 2022 were set out at the year end 2021, subject to expected results post period. Given the low priced acquisition of the assets in Western Australia, quick exploration work, and early signs of favourable mineralisation, we expect to realise a significant increase in company value on account of the outcome of work undertaken in Western Australia.           
 

In October 2021, Oracle launched its transformational pivot to green energy by signing a non-exclusive co-operation agreement with PowerChina, to jointly develop the first green hydrogen production facility in Pakistan. The signing ceremony held at the Energy Department, Government of Sindh in Karachi was hosted by Pakistan's Minister of Energy, Sindh, Mr. Imtiaz Ahmed Shaikh. Mr. Li Bijian, the Consul General of China in Karachi, also witnessed the signing ceremony, providing assurance of the support of Chinese government for this project. Soon after our project launched, we appointed Dr. Naveed Akhtar, a hydrogen scientist as Chief Technology Officer for Hydrogen.  Dr Akhtar is an expert in hydrogen fuel cells with more than 20 years' experience.

We also engaged land surveyors and consultants to identify suitable land in the designated wind corridor in Sindh, for the development of a 400 MW capacity green hydrogen project with an annual production capacity of 55,000 tonnes. Subsequent to land identification, we applied to the Government for allotment of land for the development of the green hydrogen project. The process is expected to conclude in 2022 when we expect to start to progress of one of the larger green hydrogen projects in the region.    

In December 2021, PowerChina completed a preliminary feasibility study for production of green hydrogen, and the Company published an information memorandum for prospective investors. We also initiated conversations with domestic and international off takers as well as technology suppliers and lenders. By the end of 2021, I can confirm that significant progress had been achieved to date and we expect to make quick progress on the ground with regard to this important project. I can also say with confidence that the Government is fully supportive of this development, and is also working on a support policy for green hydrogen production, and Oracle's views as a pioneer of this initiative in Pakistan, have been taken into consideration, by those reviewing possible future policy mechanisms, and we remain a part of this conversation.    

During 2021, we remained well placed financially, and our cash balance was further enhanced on account of the exercise of warrants by multiple shareholders, including His Highness Sheikh Ahmed Dalmook Al Maktoum just prior to the period end.

 

The Company remains committed to all its projects, adding value through achieving target milestones. The addition of our green hydrogen project to our portfolio places us in a very strong position as developers of important global fuel and commodity projects, in strategic jurisdictions, with an ability to mitigate commodity risk across our portfolio.  

We would be unable to develop these projects without the commitment to our teams in the UK, Australia and in Pakistan. I am thankful to them for their commitment to the Company.  I would also like to express my gratitude to all those who support Oracle in the UK, and help us to manage regulatory affairs, public relations, accounting compliance, brokerage and market trading.
           
I also extend my greatest thanks to the shareholders for their support and belief in the Company, and for placing their trust in its management.

 

Ms Naheed Memon,

Chief Executive Officer

 

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

FOR THE YEAR ENDED 31 DECEMBER 2021

 

 

		2021		2020
		Notes	£			£
CONTINUING OPERATIONS
Revenue		-	-			-
Administrative expenses			(881,973)			(1,011,531)
OPERATING LOSS		(881,973)		(1,011,531)
Finance costs	5	-		-
Finance income	5	94		380
LOSS BEFORE INCOME TAX	6	(881,879)		(1,011,151)
Income tax	7	-		-
LOSS FOR THE YEAR		(881,879)		(1,011,151)
Loss attributable to:
Owners of the parent		(881,879)		(1,011,151)
Non-controlling interests		-		-
		(881,879)		(1,011,151)
Loss per share expressed
in pence per share:	8
Basic		(0.04)		(0.05)
Diluted		(0.04)		(0.05)

 

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2021

 

 

		2021		2020
	Notes	£		£
LOSS FOR THE YEAR		(881,879)		(1,011,151)
OTHER COMPREHENSIVE INCOME
Items that will not be reclassified to profit or loss:
Exchange difference on consolidation		(130,361)		(154,070)
Income tax relating to items of other comprehensive income		-		-
OTHER COMPREHENSIVE LOSS FOR THE YEAR, NET OF INCOME TAX		(130,361)		(154,070)
TOTAL COMPREHENSIVE LOSS FOR THE YEAR		(1,012,240)		(1,165,221)
Total comprehensive income/(loss) attributable to:
Owners of the parent		(1,012,240)		(1,165,221)
Non-controlling interests		-		-
		(1,012,240)		(1,165,221)