Oracle Power Regulatory News (ORCP)

Final Results

18 March 2016



Oracle Coalfields PLC

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

Results for the Year Ended 31 December 2015

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 its audited results for the year ended 31 December 2015.

2015 Highlights:

· Restoration of the mining lease in February 2015.

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

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

· Admission of coal price petition.

· Formal registration of the power plant project with Pakistani authorities.

· Consortium Agreement with Chinese partners SEPCO.

· Letter of No Objection for power evacuation and power plant development.

Planned Work Programme for 2016

In 2016 Oracle will concentrate on formalising agreements and contracts to bring the project to full implementation along with securing all financing arrangements, including equity for funding.

Chairman's Statement

I am pleased to present the results for Oracle Coalfields plc for the year ended 31 December 2015.

It has been a year of solid progress for our project, developing the Thar Coalfield Block VI, located in the Sindh Province of Pakistan. Notably, we resolved the lease issues with the authorities; we placed £3.37 million of equity; our inclusion in the China - Pakistan Economic Corridor was confirmed; we formally registered our power plant project and received a No Objection letter for power evacuation; our coal price petition was admitted and agreement was reached with Shangdong Electric Power Construction Corporation (SEPCO), our Chinese partners, that they take a minimum 10% equity stake in the power plant.

The world environment for mining and for coal remains very gloomy, with continuing low prices and, consequently, a general slowing of activity. Our project emerges from 2015 as one of the more exciting ones. The shortage of electricity in Pakistan remains acute, which is why the authorities are giving considerable support to the development of indigenous coal, and why they are offering coal developers an attractive rate of return. As with any mining/power project there are inherent risks, and their management is a key responsibility of the Board. I believe the progress mentioned above has reduced some of these risks, which are described in the section on Risks and Uncertainties of our Annual Report.

Reflecting the position of the Company as one of project development now moving towards financial close, the consolidated financial results for the year to 31 December 2015 show an operational loss after taxation for Oracle and its subsidiaries ("Group") of £972,776 (2014: £709,749). The basic loss per share was 0.12p (2014: loss 0.21p). At the end 2015 the Group had cash and cash equivalents of £1,860,662 (2014: £383,063) and total assets less current liabilities of £6.30 million (2014: £4.09 million). We will continue to report under the Guidelines of the Quoted Company Alliance.

With the objective of reaching financial close, we are working towards finalising a number of agreements and contracts, including the EPC term sheet and contracts with SEPCO for the coal mine and power plant; we are also finalising the environmental and social impact assessments as well as arrangements for resettlement of people affected by the project. The coal price and electricity tariff will be determined by the authorities; the power purchase agreement, coal sales agreement and implementation agreement will then be executed. Financing arrangements with Sinosure and other banks will be reached against this backdrop, and we have started discussions with potential investors to raise the necessary equity.

There will naturally be significant changes following financial close. We will be reviewing all appropriate governance processes to oversee the project expenditure required to bring the project to fruition, currently estimated to be $1,600 million. The Board of Directors will be strengthened. The Company's business model is to create value through a balanced portfolio of energy assets at the various stages in the cycle. As we move forward, we shall be mindful of the principles agreed in the Paris conference on Climate Change. The Board will be considering the detailed next steps for the company within this broader strategy without losing momentum on the Thar Block VI project.

We are among the leaders in a new business which will have a significant effect on Pakistan, inter alia through the resulting improved power supply. Inevitably, such ground breaking activity takes time and we are most grateful to all Government Authorities at both the Federal and Provincial levels for their support to our project. They, and we, recognise that the development of Thar will be a significant part of a long term sustainable solution to Pakistan's energy crisis.

I would like to thank my board and management colleagues for their hard work in 2015, which resulted in the progress described earlier.

Above all I wish to thank our shareholders for their patience during the time consuming steps that the project development has necessitated, and for their continued confidence and support.

Adrian Loader

Chairman

Chief Executive's Report

The economic growth and overall development of Pakistan continues to be restricted because of electricity supply shortfalls throughout the country. In its State of Industry Report 2014 NEPRA (The National Electricity Pricing and Regulatory Authority) projects that the existing shortfall in generating capacity of 5,500MW will continue until at least 2020 despite new capacity coming on stream during this period as demand continues to rise. The Government is committed to eradicating the shortfall and to supporting the development of indigenous fuel supplies for electricity generation.

In December 2014 the Government of Sindh enacted the Thar Coal Tariff Determination Rules which set out how the Thar Coal and Energy Board will review and agree a coal tariff for developers in Thar incorporating the fiscal incentives for project developments. The Company submitted its Tariff application in July 2015 and is currently going through the determination process. The Government has adopted a cost plus mechanism for tariff determination with a review process over time as the projects proceed.

The Private Power and Infrastructure Board (PPIB) is the division of the Ministry of Water and Power, Government of Pakistan which regulates Independent Power Producers (IPP) and approves applications to build, own and operate private power plants in Pakistan. The process entails agreeing an electricity tariff with NEPRA and also a Power Purchase Agreement (PPA) with the Central Power Purchasing Authority (CPPA) a division of the National Transmission and Despatch Company (NTDC) which owns and operates the high voltage transmission lines throughout the country. In addition to agreeing a PPA, an Implementation Agreement (IA) which guarantees payments under the PPA is provided by the Government of Pakistan to the IPP Developer.

Thar Electricity (Private) Limited (TEPL), a subsidiary of Oracle Coalfields PLC, has registered the Thar Block VI Power Plant with PPIB for a plant up to 1,200MW capacity and has made the application to construct initially a 600MW plant at the site. The Central Power Purchasing Agency issued a Letter of No Objection for the 600MW power plant in November 2015 and NTDC also confirmed that power from the project will be accommodated within the planned high voltage transmission line. The next stage of the process is for PPIB to issue a Letter of Intent (LOI) for the project which then requires the PPA application to be made along with the electricity tariff application. As part of the application the Company has entered into a Consortium Agreement with SEPCO who have also agreed to take at least a 10% equity in TEPL. Work is continuing to complete the Environmental Impact Assessment (EIA) for the Power Plant as part of the application process.

Following the signing of an Engineering, Procurement and Construction Framework Agreement with SEPCO for the development of a 4.0Mtpa mine and the construction of an initial 600MW mine mouth power plant, the Company is finalising the EPC Termsheet for the project which will then form the basis for negotiating the full EPC Contracts where we will continue to be assisted by our advisors Mott MacDonald for the power plant and Turner and Townsend for the mine. Signing the Termsheet will enable detailed discussions on the financing through Sinosure and the Chinese banks.

The Block VI integrated project is on the approved list of the China Pakistan Economic Corridor (CPEC). The CPEC is a bilateral arrangement between China and Pakistan which has been set up to fast track Chinese financing of energy and infrastructure projects across Pakistan. The inclusion of our project in the CPEC will assist in progressing the various approvals required both at Federal and Provincial level in Pakistan and also with the Chinese financial institutions.

These are all exciting steps in furthering project development for the integrated coal and power project within the Block VI Lease area in Thar and we will continue to work with the relevant authorities in Pakistan and with our Chinese partners to bring the project to full implementation.

Work is continuing on site in preparation for development in particular to establish land ownership so that land acquisition and resettlement can be undertaken in accordance with the Resettlement Policy Framework published by the Sindh Coal Authority Energy Department in May 2015 which has been written to conform to international best practice. In addition we are working 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.

The work in 2016 will concentrate on formalising agreements and contracts to bring the project to full implementation along with securing all the financing arrangements, including equity for funding.

I am most grateful to both the Provincial Government of Sindh and the Federal Government of Pakistan for their continuing support for developments in the Thar Coalfield and our Block VI project in particular which will be a major contributor to alleviating the electricity shortfall in the country. The Company again 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 2015

Consolidated Statement of Comprehensive Income

for the year ended 31 December 2015

Consolidated Statement of Financial Position

31 December 2015

Consolidated Statement of Changes in Equity

for the year ended 31 December 2015

Consolidated Statement of Cash Flows

for the year ended 31 December 2015

The financial information set out above does not constitute statutory accounts as defined in section 434 of the Companies Act 2006.

The consolidated statement of financial position at 31 December 2015, 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, includes an emphasis of matter paragraph, and does not include any statement under Section 498 (2) or (3) of the Companies Act 2006. The emphasis of matter concerns the raising of finance for the opening up of the mine and construction of the power plant. 

While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS), as adopted by the European Union (EU), this announcement does not in itself contain sufficient information to comply with IFRSs. 

The statutory accounts for the year ended 31 December 2015 will be delivered to the Registrar of Companies following the Annual General Meeting. The statutory accounts and Notice of Annual General Meeting to be held at 23 Hanover Square London W1S 1JB on Wednesday 20th April 2016 at 2:30pm 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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