Monday, 16 March 2015

So who is this new antagonist in the ongoing tension between Northern Rivers communities and the NSW Baird Government & CSG-unconventional gas industry?

It is no secret that NSW North Coast communities want gas exploration to cease and the gas industry gone from the region.

Map courtesy of Yuraygir Coast and Range Alliance

There is now a new coal seam gas exploration company in the mix, AJ Lucas Group Limited, which is a specialist service provider to the energy, mining and infrastructure sectors according to its official website.

It has acquired PEL 445 which stretches from the NSW-Qld border down past Woodburn in the Richmond Valley, which makes it yet another mining company seeking to impose its will on Northern Rivers communities and, solicit the help of the NSW Coalition Government and NSW North Coast Nationals to do so.

So what is know about the AJ Lucas Group?

Phillip James Arnall, Chair SCADA Group Pty Ltd, Director Felix Ventures Pty Ltd, Independent Non-Executive Director Bradken Ltd, Director Cuadrilla Resources Holdings Ltd.
Julian Ball is the Managing Director of Kerogen Capital (Asia) Limited, based in Hong Kong.
Andrew Purcell owner of Lawndale Group Pty Ltd.
Ian Meares associated with Autonome Pty Ltd – possibly a director.

ASX announcement 29 September 2014:

Kerogen Investments No.1 (HK) Limited (Kerogen) currently has voting power of 49.6% of AJ Lucas (Company) and is entitled to creep to a maximum of 52.6%. Kerogen has advised the Company that it may wish to purchase shares in the Company in reliance on the “3% creep” allowance in item 9 of section 611 of the Corporations Act.

Six months to December 2014 net loss before tax $13.2 million…..
"Revenue for the six months reflects the continuing subdued activity in the mining and minerals sector. However, the significant improvement in EBITDA highlights the impact of the restructuring that has occurred over the past 12 months. The business structure is now aligned with market circumstances and provides a solid platform for growth. "We continue to develop relationships with blue chip customers, and have won a number of contract tenders, including the recently announced significant contract to construct APA Group's Eastern Goldfields Gas Pipeline in WA. "Our focus now is to build on the solid platform we have created and to ensure our customers benefit from the considerable experience and knowledge we have developed in our core strengths of pipeline construction, directional drilling and project execution."

ASX announcement 6 March 2015:

Amanda Purcell, wife of Andrew Purcell non-executive director of AJ Lucas Group Limited, purchased a total of 28,514 ordinary shares in Lucas Group Limited between 3 and 4 March 2015.

ASX announcement 6 March 2015:

AJ Lucas Group Limited (ASX: AJL) (Lucas) is pleased to provide additional information on the acquisition of the three Petroleum Exploration Licences (PELs) in New South Wales announced on 6 March 2015.

All of the PELs were acquired from Lawndale Pty Limited (Lawndale), a company controlled by Andrew Purcell, a non-executive director of AJ Lucas. Lawndale in turn acquired the PELs from Dart Energy Limited, a wholly owned subsidiary of Igas PLC, incorporated in the United Kingdom. Santos Limited currently has a 15% interest in PEL456, but has elected to earn a further 35% interest through an existing farm-in arrangement, which once completed will increase its interest to 50%. The balance of the equity interest in the PELs will be retained by Lawndale. Santos is the operator of PEL456 while PEL445 and PEL458 will be operated by Lucas or its nominee.

Significant exploration work has previously been conducted on each of the PELs and Lucas is confident of the presence of hydrocarbons.

In addition to the interests acquired in the PELs, the purchase includes an 80% interest in a significant amount of drilling and exploration equipment with a current estimated value of approximately $275,000 (together the Portfolio). The acquisition of the interests in the PELs is subject to approval by the New South Wales government. AJ Lucas has however already paid a $500,000 deposit for the purchase of the Portfolio which is only refundable in the event that the transaction does not complete because of any failure or default by Lawndale. Both Lucas and Lawndale believe there is no reason for the acquisition not to be approved in due course. Following approval of the acquisition of the PELs, together with the finalisation of formal due diligence and execution of formal documentation, the acquisition will settle with payment of a further $2.0 million.

Under ASX Listing Rule 10.11, Lawndale is a related party of AJ Lucas and as a result, Mr Purcell did not participate in the Company's investment decision.

The acquisition is being funded by the provision of a $2.5 million loan facility from Kerogen Investments No. 1 Limited (Kerogen), Lucas’ majority shareholder, secured solely against the Portfolio being acquired. The loan may be extinguished by the end of December 2015 by repayment of $2.5 million plus a fee of $250,000, or by transfer of the PELs to Kerogen. [my red bolding]

Kerogen Investments No 1 (HK) Limited (a private company registered in the British Virgin Islands) became a substantial shareholder in Lucas Group Limited on 30 September 2011 and is a substantial debt holder (AGM 2014). It is said of foreign companies using the British Virgin Islands as their official base that tax avoidance is one of the factors which may have influenced choice and, that the islands are a preferred choice of companies based in Hong Kong.

BVI Business Companies are exempt from the BVI income tax, from tax on dividends, interest, royalties, compensations and other amounts paid by a company; also they are exempt from all the capital gains, estate, inheritance, succession or gift tax with respect to any shares, debt obligations or other securities of the BVI IBC's. The companies are exempt from any kind of stamp duties relating in any way to its assets or activities, with an exception for land-ownership transactions in the BVI: in that case stamp duty remains payable.

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