PAPUA New Guinea-focused UMC Energy Corporation has delisted from the London Alternative Investment Market following discussions with shareholder Natasa Mining.
UMC shareholders voted in favour of the resolution at a shareholder meeting held in April, with 99.9 per cent of all votes cast in favour of the move.
In an announcement made in early March, UMC said it had been dependent on loan funds made available to it by Natasa to meet working capital and other requirements.
UMC added that it was likely Natasa would demand repayment of its US$17.3 million in outstanding loans should the de-listing not come into effect.
“In such a scenario, [UMC] would be required to undertake one the of the following steps; negotiate with Natasa to capitalise its loan, raise sufficient cash from alternative sources to repay the loan, or place the company into administration.”
“The company has for many years now been dependent on loan funds being made available to it by its major shareholder, Natasa, to meet its working capital and other requirements.”
UMC had attempted to raise further equity capital over the past several years, but said that these endeavours had not been successful “for various reasons, notably, the relatively early stage of the project.”
“Recently, Natasa has advised the company that while it is prepared to continue to fund the personnel and general office costs of the company, it is not prepared to continue indefinitely to fund the costs incurred by the company by virtue of its shares being admitted to trading on the Alternative Investment Market (AIM),” UMC said.
“The board believes, as a result of the general conditions within the resources sector and the limited liquidity of the company’s shares, that the costs associated with the company’s listing on the AIM market exceed the benefits of maintaining such a listing and can no longer be justified in light of the current challenging environment and the tightly held nature of the ordinary shares.”
The announcement followed UMC’s announcement late last year that it had recorded US$11 million worth of impairments against its onshore permit PPL 405 and offshore permits PPL 374 and PPL 375.
These permits were the subject of a farm-in deal signed with China National Offshore Oil Company (CNOOC) in 2012, with CNOOC holding a 70 per cent operating stake in the projects to UMC’s 30% – a stake that is cost-carried to production.
“As such, [UMC’s] interest is relatively passive with operating progress of the project under the control of CNOOC, albeit with the company playing an advisory role and having significant influence over policy decisions,” UMC said.