2 Dec 2013 09:30
2 December 2013
Fortune Oil PLC
("Fortune Oil" or the "Company")
Non-cash Impairment Loss on Armenian Iron Ore Project
Fortune Oil (LSE: FTO.LN) announced in its Interim Management Statement on 19 November 2013 that it was continuing to determine whether the Armenian iron ore assets could be developed economically. The Company stated that the rail costs continued to be the major issue which was undermining the commercial viability of these projects. As a consequence, Fortune Oil expects to recognise a non-cash impairment loss in the Armenian iron ore project in its 2013 full year results.
The Company has completed an extensive assessment of the Armenian project during 2013. The impairment is a result of increased transportation costs to move the iron ore concentrate from the mines in Armenia to the Georgian Black Sea port of Poti, and softening of the long term iron ore prices predicted when the Armenian iron ore assets could enter commercial operations. The Company will not make any material investment in the development of this project unless there is an economically viable investment case. Nevertheless the Company will continue to evaluate options to improve the economics of the Armenian iron ore assets and is working with the Armenian authorities and the Armenian and Georgian rail companies to determine if this is possible.
Based on the unaudited consolidated accounts at 30 June 2013, the value of the total asset was US$46 million, excluding those recoverable assets such as cash & bank and a loan receivable from a minority shareholder and the impairment is expected to be the full carrying value of the Armenian iron ore project. The final figures will be included in the Company's 2013 full year results.
Fortune Oil's underlying business and balance sheet remain in good health and the Company is taking decisive action to resolve the issues which the Armenian iron ore project faces.
For further information please contact:
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Fortune Oil PLC Tian Jun - Acting Chief Executive Bill Mok - Chief Financial Officer
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Tel: (+852) 2583 3135 Tel: (+852) 2583 3120
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Pelham Bell Pottinger Archie Berens |
Tel: (+44/0) 7802 442486 |
Background on Fortune Oil
Fortune Oil is a leading independent energy company engaged in the investment and operations of oil and natural gas supply projects in the Peoples Republic of China. Fortune Oil has acquired a unique portfolio of high quality oil and natural gas projects across the country and has formed a strong partnership with domestic and international market leaders. Fortune Oil is listed on the Main Market of the London Stock Exchange with its operational headquarters in Hong Kong.