Cluff Natural Resources brushes off 2015 disappointment

The AIM-listed natural resources investing company released its pre-close update for the financial year to 31 December 2015 on Thursday.

Over the course of the year, the company moved its primary focus from its underground coal gasification assets - particularly the development of the Kincardine Project in Scotland.

"This was precipitated by the introduction of a moratorium on underground coal gasification in October 2015, despite previous assurances the company had received from the Scottish Government," Cluff's board said in a statement.

The moratorium was to remain in place until at least spring 2017, pending a government study and public consultation.

Despite its reported belief that the moratorium will be lifted, Cluff stopped all expenditure related to the Kincardine Project and shifted its attention in the area to the North East of England, where it believes the political situation with regard to underground coal gasification remained "more favourable".

Of Cluff's six underground coal gasification licences in the UK, six were in England and Wales and so were not subject to the Scottish moratorium.

"The company has (also) made significant progress in advancing its North Sea assets which were awarded in 2014", the board reported.

Cluff was also awaiting a total of £331,125 from a subscriber to its placing earlier in 2015, for 7,791,188 shares.

"The company believes that it is now unlikely that the funds will be forthcoming and accordingly is considering its next course of action", the board said.

However, the board said early action to curtail major costs associated with the Kincardine Project, along with a focus on cost control, meant the company was in a stronger cash position at year-end than anticipated at the time of the placing.

At 31 December 2015, Cluff said its unaudited cash position was £1.1m.

Looking forward, Cluff said it had relatively low work commitments associated with its licences, and no debt, so was well-positioned to prevail in the current low oil price climate, while it works to position its North Sea assets and general business for the longer term.

"2015 was a challenging year for the natural resources sector as a whole, however we were extremely pleased to be able to announce the completion of an independent assessment of the prospectivity of our portfolio of southern North Sea licences," said Cluff chairman and chief executive Algy Cluff.

"Our objective now is to complete the process of attracting the partners required to fully appraise the production potential of these exciting assets," he added.