Half Year Financial Report 30 June 2016
Sydney, Sep 8, 2016 AEST (ABN Newswire) - The Directors of Pacific American Coal Limited (
ASX:PAK) ('the Company') present their report for the half-year ended 30 June 2016. The Directors report as follows:
HIGHLIGHTS
- 100% recovery of PAK's original investment in GCI (A$ 1.0 million)
- Completed A$ 1.5 million cash capital raising
- Acquired 40% of Imagine IM
- Completed 3D mine site modelling of Elko coking coal project
- Investigations to acquire undervalued assets
Principal Activities
The Company holds Canadian coking coal assets through its 100% owned subsidiary PAC Canada and a carbon based nanotechnology investment through its 100% owned subsidiary Pacific Technology Investments Pty Ltd (PacTech).
PAC Canada
PAC Canada is a natural resources company specialising in the exploration and development of coking coal in Canada. PAC Canada holds exploration licenses over the Hazell and Elko projects located in the East Kootenay Coal Basin. The Hazell project is a greenfields exploration coking coal and PCI project located in close proximity to existing mines and other exploration projects currently being developed. The Company's flagship project is the Elko Coking Coal Project located in southern region of the highly productive coking coal fields of South East British Columbia.
PacTech
PacTech is a technology company specialising in the commercialisation of carbon based nanotechnology. During the half year ended 30 June 2016, PacTech acquired a 20% equity position in Imagine Intelligent Materials.
Review of Operations
PAC Canada
Elko Coking Coal Project
The Company's flagship coking coal project Elko is a multi-seam high grade open cut and underground asset, situated close to existing infrastructure with a direct rail link to ports in Vancouver. During the half year ended 30 June 2016, the Company progressed the Elko Coking Coal Project through studies and reviews aimed at enhancing the understanding and viability of the project The Elko project consists of 3 exploration licenses covering 3,568 Ha. The Company aims to produce a hard coking product to supply the export markets in the Asia region.
Elko is located in a known coal producing region with nearby access to rail, port, road, power and water facilities. The Elko Project has a JORC (2012) Resource consisting 257Mt of hard coking coal and PCI with an open cut resource of 13Mt. The resource compares favourably with other large scale operations in British Columbia with coal quality comparable to benchmark hard coking coal products.
Elko Exploration Plans
The Company developed an exploration plan and budget for the Elko project focused on increasing the Company's knowledge on the resource, coal quality and geotechnical structure. The Company aims to upgrade the coal resources and coal quality through a three phased cost effective drilling and sampling program.
The main focus of future exploration is to improve the Resource classification of the Elko Project to Reserve classification, and to source appropriate material to conduct geotechnical and metallurgical analysis. The planning phase included the identification of drill hole locations and depth, along with the access routes required to reach these locations. The proposed exploration holes and access roads as shown in the figure (refer to link below). The exploration plans have been developed with a phased approach to ensure the most cost effective exploration is implemented.
Hatch Ltd, a global leader in mine engineering and design, completed the 3D mine site layout and modelling that identifies the major infrastructure and production components required to set up an operation within the Elko Coal Licence area.
The study showed that Elko can conceptually produce lMt-2Mt per annum of hard coking coal through an open cut mine followed by a short wall underground operation. Results from the study will be used for further concept studies focused on the CAPEX requirements.
Georges Colliers Inc
Through its controlled entity, the Company held 30% of GCI with an option to acquire a further 50% interest in GCI by 31 March 2016. The Board decided not to exercise that option and in May 2016 signed an agreement with a major investor of GCI to sell that 30% interest for A$1,000,000. A summary of the sales arrangement is:
- 100% recovery of original investment in GCI of US$ 731,250 (A$ 1,000,000). Refer to Note 4 for more details.
- 24 month repayment schedule commencing 15 January 2017
- Retaining a board representation and full voting rights till all funds are received
- Receiving 8% on outstanding payments, with a 4% penalty rate applying to late payments
- Receivable is secured by:
-- A personal guarantee by GCI's controlling shareholder; and
-- Pending final payment, the Company's controlled entity maintaining possession of the shares representing its 30% interest in GCI.
This has allowed the Company to reposition its capital within its high value North American asset portfolio.
Results
The Company's consolidated net loss after income tax for the half-year ended 30 June 2016 was $826,721 (Four months ended 31 December 2015: $218,860), which includes a disposal of 30% shareholding in Georges Colliers Inc ('GCI').
The Company successfully implemented all changes proposed by Directors and approved at the Company's general meetings of shareholders held on 28 October 2014 and 5 May 2016. The activities over the past half year have enabled transformational change of the Company, as it focuses on the strategic development and exploration of metallurgical coal assets in North America.
Key activities facilitating the transformational change include successful completion of:
- GCI Disposal
- $1.5 million capital raising
- Imagine Intelligent Materials Acquisition
- Completion of 3D mine site modelling of Elko coking coal project
- Investigations to acquire undervalued assets
During the half year ended 30 June 2016, PAK's net operating cash payments totalled $502,791 (Four months ended 31 December 2015 $263,788).
Pacific Technology Investments
PacTech is the Company's 100% owned subsidiary holding the Company's recent acquisition, Imagine Intelligent Materials. PacTech was established to review, acquire and commercialize technologies that offer disruptive solutions to major industries across the globe.
Imagine Intelligent Materials
During June 2016, the Company acquired a 20% equity interest in Imagine Intelligent Materials Pty Ltd ('Imagine IM') for A$1.25 million.
Imagine IM is a graphene company focused on the geotextiles industry. Funds raised provide imagine with the working capital to initiate and complete the construction of Australia's first graphene plant.
Imagine IM is a leading Australian developer of graphene-based coatings for industrial textiles and fibres.
Imagine IM has developed a licensing and certification model to ensure that participants in the supply chain are required to meet a set of standards of materials quality. Imagine IM is the first company in the world to develop conductive geomaterials using functionalised graphene.
During August 2016, the Company acquired an additional interest in Imagine IM through a share exchange arrangement with Imagine IM's shareholders. A further 20% of Imagine IM's shares was acquired in consideration for the issue of the Company's shares. The acquisition was completed on 2 August 2016.
The Company now holds a 40% interest of Imagine IM. A total of 26,099,987 PAK shares were issued in exchange for the additional 20% interest.
Outlook
Pacific American Coal Limited is focused on the production, development and exploration of metallurgical coal assets in North America. The Company's strategic focus is on the 100% owned Elko coking coal project in British Columbia, Canada and its investments in technological advanced opportunities.
Imagine IM, PAK's 40% owned associate, is developing graphene-based coatings for industrial textiles and fibres as well as other graphene related commercial applications.
The PAK investment in Imagine IM is integral to Pacific American's strategy to seek exposure to high growth carbon technologies that are compatible with ownership and development of it quality coking coal assets in British Columbia.
To view the report, please visit:
http://abnnewswire.net/lnk/747Q1A26
(View updated/amended Table showing correct inferred/indicated resource), please visit:
http://abnnewswire.net/lnk/IX6LJR5A
About Pacific American Coal Ltd
Pacific American Coal Ltd (ASX:PAK) is focused on the production, development and exploration of metallurgical coal assets in North America. The Company's strategic focus is on the 100% owned Elko hard coking coal project in British Columbia and its investments in technological advanced opportunities. PAK has 100% ownership in a total of 6 Coal Leases in the East Kootenay Coal Field in British Columbia - Canada and tenements in application in low volatile bituminous region of the Arkoma coal basin in Oklahoma.
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