Spitfire Oil Limited and its wholly owned subsidiary, Spitfire Oil Pty Ltd, together, recorded a loss before tax for the year ended 30th June 2018 of A$1,350,901 (2017 A$3,759,741), after providing $1,116,767 (2017: $3,376,906) for diminution in value of the Salmon Gums tenements. The Group benefited from interest receivable of A$63,405 (2017 A$81,588). Operating costs of A$297,539 (2017 A$464,423) were incurred. A$316,767 (2017 A$286,906) was incurred and capitalised on licence fees and tenement management.
Although a resource has been defined, and title to the Salmon Gums mineral tenements has been secured for the foreseeable future, with active development and exploration work now suspended and having considered market prices for fuel products, the directors are of the opinion that further provision be made against the carrying value of the Salmon Gums mineral tenements to $450,000, being in conformity with a review undertaken by independent consultants for the purposes of this report.
The directors, supported by independent advice, remain of the opinion that the recoverable amount of the Salmon Gums tenements is at least equal to the carrying value in the financial statements.
Operations
The Salmon Gums Lignite Project remains on hold. In September 2017 the Company renewed the retention licence over the Salmon Gums Tenements for a further two years. New regulations are being introduced which inter alia require a JORC resource under revised reporting rules. The revised JORC rules require a potentially viable operation to process the resource, without which the JORC rules require the resource to be downgraded putting at risk further renewal of the retention licence. The directors are investigating various processes to show that the resource can be processed when economic circumstances improve.
The directors continue to pursue potential joint ventures for the development of facilities to process the Salmon Gums lignite.
The Company has continued to keep its running costs to a minimum while reviewing possible new projects. A number have been considered during the year but have so far not met requirements.
Chairman’s Statement
It has been another fruitless year in the attempt to acquire a significant and value enhancing asset for the Company.
The Company continues to hold a Retention Licence over the Salmon Gums project, which was extended for a further two years in 2017. A number of parties have shown an interest in conducting due diligence over the tenements with a view to moving to a joint venture. Time will tell whether this will end in a satisfactory conclusion.
Enormous time and effort has been extended by the directors, for no fees or any other form of compensation, examining and conducting due diligence over a number of, prima facie, promising assets. All such efforts have led to nothing, inevitably due to representations made not meeting reality.
Your directors have no interest in acquiring any asset which may provide market excitement but will inevitably lead to disappointment and financial loss. The Company remains committed to finding, acquiring and developing a long term asset which will provide real returns for shareholders. The patience of shareholders over the long years demands such a result.
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