Persian Gold declares force majeure on Iran JVs

A day after announcing plans to diversify its operations into oil & gas projects in West Africa and South America, Persian Gold (LON:PNG) told investors that its declared force majeure on its two joint ventures with local Iranian partners. The company was recently granted Foreign Investor approval in Iran, and it said today it will continue to work in the country.

Yesterday, the company announced plans to merge with un-listed Hydrocarbon Exploration (HyEx) through a reverse takeover, thus acquiring a further 30% stake in its existing oil and gas project in Ghana, as well as projects in Bolivia and interests in North American oil producing assets. On completion of the deal, the company intends to rename itself Clontarf Resources.

The company’s shares are currently suspended pending the publication of an admission document in relation to the HyEx reverse takeover. “Within months, the renamed Persian Gold will be transformed into a natural resources company with oil and gas production, cash flow and excellent exploration targets”, chairman John Teeling stated.

In Iran, the company has experienced continued delays in obtaining Discovery Certificates for the the Chah-e-Zard gold oxide deposit and the Dalli gold/copper porphyry deposit.  “Despite the best efforts of our team in Iran, our Iranian partners and the diplomatic service, no progress has been made in obtaining Discovery Certificates ... Representations have been made to the Iranian authorities at frequent intervals during 2009 and 2010 but to no avail”, Persian Gold stated.

“We were informed that all procedures were in order and that we could expect the issuance of the certificates.  So far nothing has happened”. The company also noted that its local partners had become frustrated and were concerned that they could lose the licences.

Clearly, the permitting/certification delays have been on-going for some time, and to secure a future for Persian Gold and its shareholders, the company is actively evaluating resource-focused opportunities elsewhere - with the most significant, to date, being the £4.3m share-based acquisition of HyEx, it said.

HyEx has exploration interests in Bolivia and Ghana and royalty income and licences over producing assets in the US.

In Ghana, Persian Gold and HyEx collectively own 60% - with 30% each - of an onshore/offshore oil concession over 1,500km2 of the Tano basin, alongside Petrel Resources (LON:PET) with 30%, and local interests holding 10%. The concession has been signed and it is awaiting ratification from the Ghanaian cabinet and parliament. 

According to Persian Gold, the terms of the concession, are competitive, including an initial 3-year exploration period and two further 2-year extension periods. The concession carries a 12.5% oil royalty, a 35% income tax with surcharges related to Return on Investment and the work commitment will be US$20m for the first three years. 

Currently, the JV partners are reviewing and reprocessing the existing data from the block.

Meanwhile, in Bolivia, HyEx has a 10% stake in the El Dorado gas field, which has reserves of over 1 trillion cubic feet. Previously, El Dorado was a BP/Pan Andean joint venture, now the BP stake is now owned by Chaco - the Bolivian state oil company. Chaco is currently producing 20 million cubic feet of gas a day from two wells on the block.

Also, in Central Bolivia, HyEx holds a 30% interest in the Monteagudo gas/oil field, along with partners Repsol (50%) and Petrobras (20%). According to Persian, there is declining production from a number of shallow gas wells at Monteagudo, as well as a significant deep gas play.

In the United States, HyEx receives income from interests in the Gulf of Mexico - with royalty interests and a 63% working interest in Block High Island 52 and 63% working interest  in Block High Island 30L – along with small royalties from onshore holdings.

Oil production from these US-based assets is declining, and is expected to be negligible within two years. Also the company noted that there is a claim against HyEx for circa US$4 million, from Hunt Oil, which operates High Island 30. The claim is disputed.

Over recent months, Persian Gold has also identified lithium as a mineral with ‘excellent market prospects’, particularly lithium mined from salt pan brines.  After an initial evaluation of potential JV projects in the Iranian salt flats, the company turned its attention to opportunities in Bolivia - where the management team has ‘many years of experience’. According to Persian Gold, 50% of the world's lithium is contained in five salt lakes in Bolivia, mainly in the massive Lake Uyuni and Coipasa salt pans high in the Andes. 

The company recently signed a Memorandum of Understanding (MOU) with Quimbabol, a state-controlled company - to prepare a scoping study on industrial projects associated with the lakes, namely soda ash plant and borax derived projects.

Persian Gold highlighted that this project is both low-cost and "very early stage". Also the company is currently examining lithium projects on the Chile side of the Bolivia/Chilean border, as well as gold and base metal projects in Peru and Bolivia.

Additionally, to utilise its current technical staff, the company has been evaluating projects in Farsi and Turkic speaking countries. Persian Gold said it has turned down certain gold projects in Kazakhstan, and it has been in discussions with gold exploration licence holders in Azerbaijan. The company noted that Azerbaijan has significant gold potential, and it will continue its efforts there.