Oracle Power Regulatory News (ORCP)

Final Results

14 April 2015



Oracle Coalfields PLC

("Oracle", the "Company" or the "Group")

Results for the Year ended 31 December 2014

Oracle Coalfields PLC (AIM:ORCP), the UK energy developer of a combined lignite mineral resource and mine mouth power plant located in the Thar desert in the south-east of Sindh Province, Pakistan, today announces audited results of the Group for the year ended 31 December 2014.

2014 Highlights:

· "No Objection Certificate" issued for the Environmental and Social Impact Assessment for Block VI of the Thar Coalfield in January 2014. 

· Signing of an EPC Framework Agreement for the coal mine and power plant with SEPCO in September 2014.

· An equity placing in September 2014, raising £775,000 before costs.

Post 2014 Highlights:

· Coal Pricing Mechanism in place for the Thar Coalfield in January 2015.

· Restoration of the mining lease in February 2015, following its cancelation in November 2014.

· An equity placing in February 2015, raising £3,370,000 before costs.

· The Company's inclusion in the China-Pakistan Economic Corridor.

· Agreement with SEPCO to extend the EPC Framework Agreement to 31 December 2015.

Chairman's Statement

I am pleased to present Oracle's results for the period ending 31 December 2014. It has been a year of sharp contrast. The EPC Framework Agreement that we signed with our Chinese partners the Shandong Electric Power Company (SEPCO) in September gives us a clear outline of the overall cost and financing of the project. The Placing, announced after the year-end in February, provides us with sufficient funding to take the project through to financial close.

We are now working with SEPCO to finalise Term Sheets on the two EPC contracts (for the mine and for the power plant). When this work is complete we will progress financing arrangements with Sinosure, the China Export & Credit Insurance Corporation.

The underlying philosophy of our Company has always been to progress this project in a judicious manner in line with all relevant professional and international standards. In this same spirit we handled the unexpected and arbitrary decision by the Coal Mines Department to cancel our mining lease over Block VI in November 2014. As urgently as possible we followed due process and took the necessary actions, which led to the restoration of the lease in February 2015. In this respect we are grateful to many stakeholders for their support during this difficult and testing time. Regrettably, this development has delayed project progress by some months, but our keenness to deliver an integrated coal mine and power generation project at Thar Coalfield, Province of Sindh is as strong as ever.

Reflecting the position of the Company as a mining company, now moving towards financial close, the consolidated financial results for the year to 31 December 2014 show an operational loss after taxation for Oracle and its subsidiaries (the "Group") of £709,479 (2013: £1,038,342). The basic loss per share was 0.21p (2013: loss 0.37p).

At the end of 2014 the Group had cash and cash equivalents of £383,063 (2013: £538,789) and total assets less current liabilities of £4.09 million (2013: £4.19 million).

In September 2014, we raised further capital of £775,000 including contributions from shareholders and management. In February 2015 a further £3.37 million was raised. It is anticipated that, with these funds, the Company will have sufficient working capital to reach financial close, anticipated by the year-end. Towards the end of the year, the Company intends to approach the market for the major fund raising needed to develop the Block VI coal mine and power generation project. The Group is considering options to raise the necessary debt and equity, and has started discussions with potential investors from the Middle East and Far East, as well as being further strengthened by new shareholders in the Company's fund raising in February 2015.

The Government in Pakistan continues to demonstrate firm support for the development of the country's indigenous coal resource, recognising that it will be a fundamental game changer for the economic development of Pakistan. Support from China, both diplomatic and economic, remains strong.

The Board extends its thanks to the relevant authorities in the Province of Sindh and in Pakistan for their continued assistance. The Board welcomes the new shareholders who invested in the Company in September last year and in February this year, and continues to be very grateful for the patience and support of our longer standing shareholders.

Adrian Loader

Chairman

Chief Executive's Report

Pakistan continues to be affected by electricity shortages which are reducing the potential for economic growth. The Government of Pakistan's National Power Policy 2013 states that the current shortfall in generating capacity is 5,500MW and is projected to rise. The Government is committed to eradicating this shortfall and to diversifying the electricity supply market with particular support for the development of indigenous fuel sources including the Thar Coalfield, Province of Sindh.

Following the submission of the Environmental and Social Impact Assessment (ESIA) for the coal mine in 2013 and the issuance of the No Objection Certificate in January 2014, the Company submitted its Resettlement Action Plan (RAP) to the Sindh Environmental Protection Agency (SEPA) in May 2014 as required before project implementation. The Environmental Impact Assessment (EIA) of the proposed power plant is being assessed and will be the subject of further studies this year to provide an EIA for the integrated mine and power project.

The Thar Coal and Energy Board (TCEB) prepared a Coal Pricing Mechanism (CPM) proposal for the Thar Coalfield in mid-2014 and this was followed by a round table meeting of leaseholders and interested parties in August 2014. The CPM was subsequently approved and the rules placed into a legal framework which was enacted by the Government of Sindh. The CPM puts into practice the previously announced internal rate of return (of 20%/20.5%) for the Thar Special Economic Zone. The Company is preparing its petition under the CPM for submission in the near future to agree the coal price for the Block VI project.

In September 2014 the Company signed an Engineering, Procurement and Construction (EPC) Framework Agreement with SEPCO for the construction of initially a 600MW mine-mouth power plant and for the development of a 4.0Mt per year open-pit mine to supply the power plant. In March 2015 this Agreement was extended to 31 December 2015. Work is ongoing to develop this agreement into EPC term sheets for both the mine and the power plant and we are working with our advisors Mott MacDonald UK on the power plant, and Turner and Townsend for the coal mine development. When these term sheets are in place, we will enter into detailed discussion on the indicative financing offered through Sinosure, and certain Chinese banks.

We continue to work with K-Electric (KE) to negotiate a Power Purchase Agreement (PPA) with the Company to purchase the entire output from the 600MW power plant for a period of 30 years which will require the finalisation of the coal price under the CPM to complete. It can then be presented to the National Electric Power Regulatory Authority (NEPRA) for approval.

These are all exciting steps in the development of an integrated coal and power development within the Block VI lease area in Thar, and the work in 2015 will concentrate on formalising agreements and contracts to bring the project into full implementation.

In late November 2014, the Company's subsidiary, Sindh Carbon Energy Limited (SCEL), received a notification for the cancellation of the Mining Lease at our Block VI licence. The Company responded to this notification in the form of an Appeal as per the Rules set out in the Sindh Mining Concession Rules 2002 which was followed by a Hearing in the presence of the Secretary, Energy Department, and Government of Sindh. Following the hearing,

the Decision was made by the Secretary, Energy Department that the cancellation of the Mining Lease shall be rescinded ab initio subject to SCEL complying with submission of the Performance Guarantee and setting up of an office in Karachi. These two conditions were met by SCEL and in late February 2015, the Mining Lease was restored by the Coal Mines Development, Government of Sindh.

Work is continuing on site in the pre-development stage to implement a Corporate Social Responsibility Programme (CSR) to provide early benefits to the local community in terms of water, basic healthcare and veterinary support. Land survey work is being undertaken in accordance with the RAP prepared in 2014 which will also align with the Resettlement Policy Framework published in draft by the Sindh Government and that will conform to international best practice.

The Company remains steadfast in its objective of developing one of the largest private sector integrated coal mine and power generation projects in Pakistan. This comes with the responsibility of maintaining high standards in delivering on the project and subsequently rewarding shareholders. Our project is strategically placed in Pakistan's energy mix that includes the project in the 'approved list' of the China-Pakistan Economic Corridor (CPEC). The CPEC is a bilateral arrangement between China and Pakistan, the essence behind which is to access Chinese funding in the development of infrastructure, including energy, for the economic corridor to be established from Pakistan's North to the South.

The Board is grateful to the support of the Government of Sindh in restoring the Mining Lease in a speedy and amicable manner and in providing continued support. The Company extends its thanks to the shareholders for their continued patience and support.

Shahrukh Khan

Chief Executive Officer 

Consolidated income Statement

for the year ended 31 December 2014

Consolidated Statement of Comprehensive Income

for the year ended 31 December 2014

 Consolidated Statement of Financial Position

31 December 2014

 Consolidated Statement of Changes in Equity

for the year ended 31 December 2014

 Consolidated Statement of Cash Flows

for the year ended 31 December 2014

The financial information set out above does not constitute statutory accounts as defined in the Companies Act 2006.

The consolidated statement of financial position at 31 December 2014, the consolidated statement of profit or loss, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated cash flow statement for the year then ended have been extracted from the Company's statutory financial statements upon which the auditor's opinion is unqualified and does not include any statement under Section 498 of the Companies Act 2006.

Copies of the report and financial statements will be posted to Shareholders shortly and will be available for download on the Company's website at www.oraclecoalfields.com.

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