Oracle Coalfields interims chart a period of significant progress

Oracle Coalfields (LON:ORCP) confirmed today that it is still on track to complete a definitive feasibility study on Block VI of the Thar Coalfield in Pakistan by the end of the current quarter.

The update was given as the group unveiled its interim results statement, which charts a period of significant progress for the company.

Included was Oracle’s admission to AIM in April when it raised £3 million. With cash and cash equivalents of £3.3 million at the period end, the group said it has enough money to meet its immediate needs.

“However, additional funds will be needed to develop the Block VI coal mine and the group is considering a number of options and strategies in respect of debt and equity,” it added.

Oracle revealed today that “certain aspects of the environmental studies” will not be completed until the middle of next year. However it said this is “still consistent with the objective of first coal production in 2013”.

The company is currently applying for its mining lease. 

During the six months to June 30, Oracle saw its losses widen from £79,549 to £451,657, which includes costs of £204,524 related to the AIM admission.

The group has strengthened the board with a number of senior appointments, including Adrian Loader, who becomes chairman. 

Chief executive Shahrukh Khan said: "We were delighted to have listed on AIM on the April 20.

“We were oversubscribed and have sufficient funds to meet the working capital requirements and completion of the feasibility study, although further funding will be required to develop Block VI of the Thar Coal mine.  

“We are currently finalising the definitive feasibility study as well as applying for our mining lease, and look forward to keeping shareholders informed of our progress as we develop the project."

Thar is 380 kilometres east of Karachi and contains lignite coal, which is brown in colour and has lower calorific value than the thermal coal that goes for export from places such as Indonesia. 

It’s the sort of stuff that is found in abundance in Victoria, Australia and Germany. 

Oracle has a JORC resource of 1.4 billion tonnes and proven reserves of 371 million tonnes.

The plan is to mine around 1 million tonnes a year initially which will be sold to Lucky Cement, which will use it to heat its kilns.

Output will then ramp up to 2.5-3 million tonnes annually as its deal with the Karachi Electric Supply Company, or KESC for short kicks in.

The power company, majority owned by the Dubai-based private equity group Abraaj Capital, will use coal taken from the Thar Coalfield in new plants set to come online from around 2015.

However, Oracle’s plans currently are only the starting point for a resource that could be mined for the next century.

Analysts estimate the cost of the project to be around US$350 million in total, with around $100 million of that to be found through equity funding, or a strategic partnership.

There will also be an element of local financing involved, and the company could even qualify for assistance from the World Bank’s International Finance Corporation.