INTRA ENERGY CORPORATION LIMITED Record quarter for sales of 75,572 tonnes and production of 90,374 tonnes
Preliminary quarter results show a positive EBIT contribution
Significant improvement in working capital position
$1.4m capital raising completed
Intra Energy Corporation's ("IEC") focus is to be the dominant coal supplier for industrial energy users and sponsoring coal-fired power generation in the Eastern African region.
IEC had a quarter of record sales and production driven by improving fulfilment of the sales contracts and implementation of operational efficiency initiatives. As a result of an increase in sales and tight cost controls the company has had a significant improvement in working capital and preliminary results show positive EBIT contribution for the quarter. The management team continue to focus on securing additional sale contracts and implementing further productivity and cost saving initiatives to maintain the positive momentum.
Quarterly Sales Tonnages
80,000
60,000
40,000
Operational break-even
1
20,000
0
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15
Financial year quarter (June FYE)
Sales (tonnes)
Note 1: Impacted by protracted wet season and strike by haulage operators in Tanzania
Operational break-even was achieved in each the past 3 quarters.
The 2nd and 3rd financial quarters are often impacted by industry shutdowns for routine maintenance during the festive period and the wet season.
Quarterly Report to Shareholders - September 2014
MINING OPERATIONS
Tancoal (Tanzania)
Production and Sales
Quarter Ended 12 months Ended
Sept 14 | Sept 13 | Change (%) | Sept 14 | Sept 13 | Change (%) | |
Overburden Stripped (BCM) | 183,357 | 109,181 | 67.9% | 535,219 | 246,029 | 117.5% |
Coal mined (tonnes) | 85,419 | 44,348 | 92.6% | 244,335 | 109,029 | 124.1% |
Sold (tonnes) | 71,529 | 38,804 | 84.3% | 227,216 | 129,924 | 74.9% |
Third consecutive quarter of record sales.
Record quarterly production of 85,419 tonnes.
Wheel loader carrying run of mine coal for processing at the crushing and screening plant
Optimising of mine productivity including:
o Significant savings by in-sourcing of critical spares and implementing improved maintenance programmes to achieve best practice in mining equipment maintenance;
o Planning for computerised maintenance management and inventory software; and
o Commenced pre-feasibility planning for new haul road project.
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Overburden stripping at new north pit extension
Tancoal experienced significant demand above the contracted sales orders from African subsidiaries of international cement companies.
Tancoal continues to expand its industrial customer base across the Eastern African region.
September quarter sales by industry and geography
3%
10%
9%
6%
Cement Ceramics Paper mill
Textiles
6%
22%
International *
Tanzania
Kenya
72%
Other 72%
* African subsidiaries of international companies
Malcoal (Malawi)
Sales of 4,043 tonnes and production of 4,955 tonnes.
Sales were low, principally because of bottlenecks in the ramp-up of production.
Initiatives to improve production constraints including the implementation of three production shifts operating 24hrs a day. This was achieved in the September quarter, following completion of critical infrastructure.
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Tanzacoal (Tanzania)
IEC's subsidiary company, Tanzacoal East Africa Mining Limited's ("Tanzacoal"), in the prior quarter, commenced legal action in respect of the cancellation of SML 235/2005 by the Minister of Mines and Energy. The case is on-going before the High Court of Tanzania (Commercial Division) including a minor application by Tanzacoal for Injunction Orders to restrain the Ministry of Energy and Minerals of Tanzania from transferring and/or granting Special Mining Licence No. SML 235/2005 to any other person. A ruling date is set for the next quarter.
ENERGY
Project Ngaka (Tanzania)
IEC continues discussions with the Government of Tanzania and Tanzania Electric Supply Company to evaluate options to progress the Ngaka project.
IEC is also working together with prospective partners supporting these discussions with the aim to resume PPA discussions for the 200MW (net) project on mutually acceptable commercial terms.
Project Pamodzi (Malawi)
Recently, Endeavor Energy, the proposed partner for the joint development of Project Pamodzi, IEC's
120MW (net) coal-fired power station at Chipoka in Salima, informed IEC that the negotiations for a
Joint Development Agreement are on hold due to their internal reasons.
IEC is exploring alternative options including the identification of a new development partner for the project.
PPA term sheet negotiations with the Electricity Supply Corporation of Malawi have been extended to accommodate certain revised concepts improving the ability to finance the project. Conclusion of the PPA term sheet negotiations is now in its final phase.
The Government of Malawi is supportive of the project and is engaged in the negotiations for the
Implementation Agreement and the investment / tax incentives.
EXPLORATION
Tanzania
Exploration activities were undertaken in the Company's mining licenses during the quarter to
supplement mine planning and improve operational efficiencies.
IEC designed exploration drilling programs in several tenements with commencement during the next quarter.
Malawi
Further analysis of existing pit activities to ensure stable production through both the wet and dry seasons year round.
IEC completed planning for tenement maintenance exploration during next quarter.
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AAA DRILLING
AAA Drilling completed a drill and blast programme at IEC's Tancoal Mine in Tanzania and is planning
7 additional exploratory drill holes
IEC finalised the Joint Venture agreement with General Petroleum Oil Tools ("GPOT") on 10
September 2014
o Both joint venture partners will have equal representation on the board and appoint a
Joint Operating Officer to the company.
o IEC will provide marketing and regional expertise.
o GPOT will focus on operational and technical aspects, expanding on AAA Drilling's
geographical reach and specific gas expertise.
CORPORATE
The Company has undrawn facilities available and are in the process of refinancing its loan facilities
(refer to Bank Facilities).
While the cash position improved marginally during the quarter, the working capital position of the company improved by A$1.6m.
Capital Raising
IEC completed Tranche 1 of a Private Placement consisting of an issue of 27,777,778 new ordinary shares to raise A$750,000. Settlement of Tranche 1 occurred on 15 August 2014
Tranche 2 of the Private Placement, consisting of an issue 24,074,074 new ordinary shares to raise
A$650,000, was approved at IEC's Annual General Meeting held on 30 October 2014.
Participants in the Private Placement also received two unlisted IEC options for every five Shares placed. The option price is 5c and the option expires 31 August 2015.
It is the intention of IEC that funds raised by the Placement will be used for:
o Critical spares and preventative maintenance programme to increase production capacity and reduce mine operational risk;
o Haul road feasibility targetting reduced logistics costs at Tancoal;
o Power station development; and
o Logistics and sales expansion to grow market share in Eastern and Central Africa and further
diversify customer base.
IEC also announced a partially underwritten Share Purchase Plan of $500 per eligible shareholder on the same terms of the private placement, raising up to $500,000.
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Bank Facilities
Kenya Commercial Bank provided a credit approved term sheet to refinance the existing Tancoal loan facilities with National Bank of Commerce. IEC accepted the terms and documentation is currently being completed. The terms are favourable compared to existing arrangements and an update will be provided to shareholders when the documentation process is completed.
Community
Tancoal provided continued support of existing initiatives including:
o Direct and in-kind donations to regional primary and secondary schools;
o Direct and in-kind donations to fund the construction of a local dispensary; and
o Continued support of the Mbalawala Women's Organisation.
Planning commenced for various community initiatives at the Malcoal mine.
Mbalawala Women's Organisation administrative centre (Tancoal initiative)
Changes to the Board of Directors
Mr Gideon Nasari has resigned from his position as Non-Executive Director of IEC. He will continue his role on the Board of Tancoal.
The following Executive Directors also announced that they will voluntarily step back to Non- Executive Director roles:
o Mr Graeme Robertson from Executive Chairman to Non-Executive Chairman
o Mr David Mason from Executive Director to Non-Executive Director
o Mr Jonathan Warrand Executive Director to Non-Executive Director
All three Non-Executive Directors are expected to continue to play a leadership role in their respective fields of expertise.
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Management Appointment
IEC is pleased to announce the appointment of Tarn Brereton as acting Chief Executive Officer effective 1 November 2014.
Mr Brereton joined IEC in 2011 and was appointed the Chief Operating Officer of IEC in July 2013, overseeing operations in Eastern Africa. Over the past three years, he has established relationships with all key stakeholders including Government, customers and suppliers to the business.
Mr Brereton has previously worked as an engineer the iron ore division of BHP Billiton, merchant bank NM Rothschild & Sons and investment bank Grant Samuel in Australia.
Mr Brereton is responsible for managing an organisation which has over 200 employees.
For further information please contact:
Shareholder Enquiries Jonathan Warrand Executive Director & CFO
Intra Energy Corporation Limited Tel: (02) 9199 5511 www.intraenergycorp.com.au
Competent Person's Statement - JORC Resources Contained in the March 2014 Quarterly Activities Report
Coal resources have been determined in a manner consistent with the "Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves ~ The JORC Code ~ 2012 Edition" (The JORC Code) and the associated 2003 edition of "Australian Guidelines for Estimating and Reporting of Inventory Coal, Coal Resources and Coal Reserves" (the Guidelines).
The information in this report that relates to the Nkhachira and Kopakopa coal resources is based on a report compiled by Mr David Mason. The reporting is in compliance with the 2012 JORC Code. Mr Mason is a qualified coal geologist, a Fellow of the Australasian Institute of Mining and Metallurgy (No 100405) and a Non-Executive Director employed by Intra Energy Corporation Limited. He has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the Australasian Cod e for Reporting of Mineral Resources and Ore Reserves published by the Joint Ore Reserves Committee (The JORC C ode - 2012
Edition). Mr Mason has given his consent for the inclusion of this information in the report and has reviewed all statements
pertaining to the information in the form and context in which it appears.
Continuous Disclosure
It is the policy of the Company to meet its continuous disclosure obligations in the normal course of business. Outside of this requirement, the Quarterly Report will be the basis for information on the progress and plans of IEC.
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Appendix 5B
Mining exploration entity quarterly report
Appendix 5B Mining exploration entity quarterly reportIntroduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10
Name of entity
Intra Energy Corporation Limited
Rule 5.3
ABN Quarter ended ("current quarter")
65 124 408 751 September 2014
Consolidated statement of cash flowsCash flows related to operating activities
1.1 Receipts from product sales and related debtors
1.2 Payments for (a) exploration & evaluation
(b) development
(c) production
(d) administration
1.3 Dividends received
1.4 Interest and other items of a 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
+ See chapter 19 for defined terms.
29/10/2012 Appendix 5B Page 1
Appendix 5B
Mining exploration entity quarterly report
1.13 Total operating and investing cash flows (brought forward) | (1,215) | (1,215) |
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 | 781 684 (140) (65) | 781 684 (140) (65) |
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 | 1,260 | 1,260 |
Net increase (decrease) in cash held 1.20 Cash at beginning of quarter/year to date 1.21 Exchange rate adjustments to item 1.20 1.22 Cash at end of quarter | 45 (434) 4 | 45 (434) 4 |
Net increase (decrease) in cash held 1.20 Cash at beginning of quarter/year to date 1.21 Exchange rate adjustments to item 1.20 1.22 Cash at end of quarter | (384) | (384) |
Current quarter
$A'000
1.23 Aggregate amount of payments to the parties included in item 1.2 (280)
1.24 Aggregate amount of loans to the parties included in item 1.10
1.25 Explanation necessary for an understanding of the transactions
Directors fees ($35k), salaries ($78k), professional services ($35k) and management fees ($132k).
Non-cash financing and investing activities2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows
None
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
None
+ See chapter 19 for defined terms.
Appendix 5B Page 2 25/01/2012
Appendix 5B
Mining exploration entity quarterly report
Financing facilities availableAdd notes as necessary for an understanding of the position.
3.1 Loan facilities
3.2 Credit standby arrangements
Estimated cash outflows for next quarter4.1 Exploration and evaluation
4.2 Development
4.3 Production
4.4 Administration
Reconciliation of cashReconciliation 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.
Changes in interests in mining tenements6.1 Interests in mining tenements relinquished, reduced or lapsed
6.2 Interests in mining tenements acquired or increased
+ See chapter 19 for defined terms.
29/10/2012 Appendix 5B Page 3
Appendix 5B
Mining exploration entity quarterly report
Issued and quoted securities at end of current quarterDescription includes rate of interest and any redemption or conversion rights together with prices and dates.
7.7 Options (description and conversion factor)
7.8 Issued during quarter
7.9 Exercised during quarter
7.10 Expired during quarter
+ See chapter 19 for defined terms.
Appendix 5B Page 4 25/01/2012
Appendix 5B
Mining exploration entity quarterly report
7.12 Unsecured notes (totals only)
Compliance statement1 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 5).
2 This statement does give a true and fair view of the matters disclosed.
Sign here: | ............................................................ | Date: 31 October 2014 |
Print name: | Company Secretary Rozanna Lee |
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 6: Exploration for and Evaluation of
Mineral Resources and AASB 107: Statement of Cash Flows apply to this report.
5 Accounting Standards ASX will accept, for example, the use of International Financial Reporting 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.
+ See chapter 19 for defined terms.
29/10/2012 Appendix 5B Page 5
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