Deutsche Rohstoff: Strong profit growth expected for 2016

Deutsche Rohstoff AG

Deutsche Rohstoff: Strong profit growth expected for 2016

Deutsche Rohstoff AG

Increased profit forecast for 2015/Overview of projects

Heidelberg. Deutsche Rohstoff AG expects a substantial rise in revenues from the oil and gas production in the US for 2016 and consequently a significantly higher consolidated profit than in the current year. Assuming an oil price, which is linked to the forward curve and which results in an average price for 2016 of USD 44, the Management Board expects sales of EUR 20.0 to 25.0 million. According to the budget, earnings before interest, tax, depreciation and amortization (EBITDA) will amount to approximately EUR 15.0 to 20.0 million. Net income will add up to approximately EUR 10.0 million. For the year and budget an average exchange rate of 1.10 EUR/USD is assumed.

For the current year, the Management Board has revised its forecast statement from the semi-annual report and now expects a positive net result for the group. The reason is partly due to the further depreciation of the Euro in recent months, which has brought additional currency gains and on the other hand in the higher than expected production from the first five wells of Elster, which are in production since mid-September. Deutsche Rohstoff AG as the parent company also expects a positive annual result for 2015.

Thomas Gutschlag, CEO of Deutsche Rohstoff, commented: “In the current year, we set the foundation for strong growth in sales and earnings for the years to come. The encouraging profit forecast for 2016 shows this very clearly. Should oil prices rise again, we will be able to show significant additional profit. It is also very encouraging that we can record foreign exchange gains in the amount of approximately EUR 20 million due to the decision made in mid 2014 to keep our total liquid funds in US-Dollars.”

 

Compared to the information stated in the semi-annual report, here is an overview of the activities of the Deutsche Rohstoff Group:

 

Cub Creek Energy/Elster Oil & Gas (share 74% / 93.04%):

Both companies have prepared detailed drilling proposals for the coming year. They are planning a total of 44 gross wells. Further acquisitions are currently under consideration. Just recently, Cub Creek and Elster published a reserve calculation for parts of their acreage. Together, this reserve calculation shows a proven reserve of 4.25 million BOE and a probable reserve of 8.03 million BOE. According to the NYMEX Strip pricing of 31 October 2015, these calculations may result in revenues of over USD 500 million, as well as a net value of almost USD 90 million. A detailed press release can be found here: http://tinyurl.com/reservecalculation.

 

Almonty Industries (share: 13.9%):

Almonty submitted a new resource estimate according to the Canadian Standard NI 43‑101 for its Tungsten mines Los Santos and Wolfram Camp as well as for the development project Valtreixal in Spain (more information under www.almonty.com). Together with Sangdong/South Korea, Almonty now has reserves of 12.4 million tonnes grading 0.41% WO3, Measured and Indicated resources (including reserves) of 14.86 million tonnes grading 0.45% WO3 and Inferred resources amounting to 53.98 million tonnes grading 0.32% WO3.

 

Ceritech (share: 66%):

All work regarding the gypsum project is continuously progressing. The Management Board is currently negotiating with owners of suitable material supplies and continues working on optimizing the treatment process.

 

Hammer Metals (share 16%):

Hammer Metals announced last week, that is has signed a Joint Venture Agreement with Newmont Mining, one of the world’s leading gold producers. Both companies will jointly explore an area of 250 square kilometers (approximately 12.5% of Hammer’s total land) within the Mount Isa region. Newmont Mining is planning to invest up to USD 10.5 million for exploration and project development and to receive a share of up to 75% of the land in return. In the current difficult market phase, this transaction once again emphasizes the high quality of Hammer’s license areas.

 

Tin International/Sachsenzinn (share 60%):

The activities are still concentrating on the license area Sadisdorf. To reduce costs, the Board of Tin International proposed to its shareholders to liquidate the company. Shareholders have instead received shares of Sachsenzinn, which was converted into a stock company for this purpose and renamed to Tin International AG. Deutsche Rohstoff AG will therefore hold a stake in 60% of Tin International AG instead of Tin International Ltd.

 

Rhein Petroleum (share 10%):

A test production is currently undertaken for the wells Bedernau 2 and Lauben in the Unterallgäu (Operator is Wintershall GmbH) and for the well Schwarzbach in South Hesse (Operator is Rhein Petroleum). For the coming year, Rhein Petroleum is planning up to three further wells in their license areas.


To simplify the portfolio structure and to intensify the focus on core activities, the Management Board intents to sell or dismiss activities of smaller portfolio companies in the coming weeks. This not only includes Tin International, but also Jutland Petroleum and the Australian company Strategic Resources Development.

 

Heidelberg, 21 December 2015

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Deutsche Rohstoff identifies, develops and divests attractive resource projects in North America, Australia and Europe. The focus is on the development of oil and gas opportunities within the United States. Metals, such as gold, copper, rare earth elements, tungsten and tin complete our portfolio. For more information please visit www.rohstoff.de.