TIDMAAZ
RNS Number : 5963N
Anglo Asian Mining PLC
26 September 2023
26 September 2023
Anglo Asian Mining plc
Interim results for the six-months to 30 June 2023
FY 2023 Production Guidance at 30,000 to 34,000 gold equivalent
ounces
Anglo Asian Mining plc ("Anglo Asian", the "Company" or the
"Group"), the AIM-listed copper, gold, and silver producer in
Azerbaijan announces its interim results for the six-months ended
30 June 2023 ("H1 2023" or the "Period"). The Group's performance
in the Period was in line with expectations given the declining
grades of the Gedabek open pit. The Group also released its
strategic plan to become a mid-tier copper focused miner and double
its production.
The curtailment of the Group's agitation leaching and flotation
processing from the beginning of August presented the Group with
significant challenges in the latter half of the year. The report
from Micon International Co Limited ("Micon") containing the
results of the environmental inspection is currently being
finalised.
Financial highlights
-- Total revenues of $30.8 million (H1 2022: $31.5 million)
o Lower gold bullion sales of 10,506 ounces (H1 2022: 11,273
ounces) partially offset by a higheaverage gold sales price of
$1,939 per ounce (H1 2022: $1,901 per ounce)
o Copper concentrate sales increased to $10.4 million (H1 2022:
$9.8 million)
-- Profit before taxation of $1.4 million (H1 2022: $5.7 million)
o Cost of sales increased by $4.8 million due to the increased
costs of processing lower grade ore
o Profit before taxation includes a charge of $0.2 million (H1
2022: $1.6 million) in respect of the Group's share of the loss of
Libero Copper & Gold Corporation
-- Further investment in Libero Copper & Gold Corporation of $0.6 million (H1 2022: $2.8 million)
-- All-in sustaining cost ("AISC") of gold production increased
to $1,357 per ounce (H1 2022: $983 per ounce) due to lower gold
production
-- Free cashflow was a net outflow of $9.8 million (H1 2022: $13.2 million)
o $6.6 million capital expenditure and mine development (H1
2022: $4.8 million)
o $3.8 million on exploration and evaluation activities (H1
2022: $2.4 million)
-- Cash of $9.6 million as at 30 June 2023 (31 December 2022: $20.4 million) and no bank debt
-- No interim dividend declared for 2023 due to curtailment of
processing subsequent to the Period end
Operational highlights
-- Total production of 23,391 GEOs (H1 2022: 28,772 GEOs) due to lower gold grades at Gedabek
o Gold production of 14,608 ounces (H1 2022: 20,906 ounces)
o Copper production of 1,860 tonnes (H1 2022: 1,283 tonnes)
o Silver production of 44,576 ounces (H1 2022: 99,548
ounces)
-- Construction of Gilar and Zafar mines commenced although
development was stopped between August and September
o Development expected to be restarted in October
-- Capacity of flotation plant increased to provide operational
flexibility and process the future increased rates of
production
-- FY 2023 production guidance of between 30,000 to 34,000 gold equivalent ounces
o Decrease as a result of curtailment of agitation leaching and
flotation processing since the beginning of August 2023
o Only heap leach production expected to be carried out between
August and December 2023
o Assumes restart of agitation leaching and flotation processing
in the first quarter of 2024
Curtailment of agitation leaching and flotation processing in
August 2023
-- As previously announced, the Company's agitation leaching and
flotation processing have been curtailed since the start of August
2023
-- Heap leaching continues as normal with 3,684 ounces of gold
produced from 1 July to 22 September 2023
-- Development of the Gilar and Zafar mines delayed due to
blasting suspended in August and September
-- Micon commissioned to carry out a health, safety and
environmental management review of tailings dam management at
Gedabek
o The report of the environmental inspection is currently being
finalised
-- Until the Micon report is finalised, and the Group is able to
restart full operations, there is a material uncertainty as to the
Group's ability to continue as a going concern
Anglo Asian CEO Reza Vaziri commented:
"Our results for the Period were satisfactory, and within
expectations, given that we were predominantly only mining from our
open pit mine. The ore mined contains reducing gold grades as the
mine approaches the end of its life. However, copper production
increased as the processing capacity of our flotation plant was
increased and a higher proportion of the capacity of our crushing
and grinding circuits was utilised to provide it with
feedstock.
"The curtailment of our agitation leaching and flotation
processing whilst an environmental inspection was carried out,
whilst regrettable, was understandable. The Company has fully
cooperated with all Government requests to ensure the environmental
inspection was carried out properly and to expedite other related
matters. The report by Micon of the environmental inspection is
currently being finalised.
"Given the curtailment of agitation leaching and flotation
processing, we have also revised our production guidance for the
year to between 30,000 and 34,000 gold equivalent ounces. This
guidance assumes agitation leaching and flotation processing will
not be restarted until 2024.
"We published our growth strategy during the Period, which we
believe is an achievable plan to transition to mid-tier producer
status with copper as our principal commodity. We remain committed
to our growth strategy, and whilst the curtailment of processing
has led to certain implementation delays, we are entirely focused
on, and confident of, achieving mid-tier production in the medium
term."
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014, which was incorporated into UK law by
the European Union (Withdrawal) Act 2018, until the release of this
announcement.
For further information please contact:
Tel: +994 12 596
Reza Vaziri Anglo Asian Mining plc 3350
Tel: +994 502 910
Bill Morgan Anglo Asian Mining plc 400
------------------------------ ---------------------
Tel: +994 502 916
Stephen Westhead Anglo Asian Mining plc 894
------------------------------ ---------------------
Ewan Leggat SP Angel Corporate Finance Tel: +44 (0) 20 3470
Adam Cowl LLP 0470
Nominated Adviser and Broker
------------------------------ ---------------------
Charlie Jack Hudson Sandler Tel: +44(0) 20 7796
Harry Griffiths 4133
------------------------------ ---------------------
Chairman's statement
Dear Shareholders
Our performance in the six months to 30 June 2023 was in line
with our expectations and previously issued guidance. The Company
also made good progress in advancing its strategy to become a
mid-tier miner in the next few years.
However, it is important to address the significant challenges
the Company is facing in the latter half of 2023 as a result of the
protests against the construction of a second tailings dam at
Gedabek. To ensure the existing tailings dam presented no danger to
local residents or Company employees, Micon carried out a health,
safety and environmental review of tailings management at Gedabek
in July 2023. Agitation leaching and flotation processing was also
curtailed from the beginning of August.
Our first half year performance was resilient despite falling
grades at Gedabek and macro-economic inflationary challenges. Total
half-year production was 23,291 gold equivalent ounces ("GEOs") and
in line with management's expectations. Copper production increased
significantly, growing by 45 per cent. year-on-year to a total of
1,860 tonnes in line with our strategic growth targets.
We have revised our production guidance for 2023 to between
30,000 to 34,000 GEOs due to the curtailment of processing in the
second half of the year. We maintained a cash balance of $9.4
million at the Period end with a total of saleable inventory at a
market value of $9.1 million. We have not declared an interim
dividend for 2023 due to the curtailment of processing subsequent
to the Period end.
In March, we announced our medium-term growth strategy, which
envisaged Anglo Asian more than doubling its production within the
next five years as the Company transitions to a multi-asset,
mid-tier producer with a portfolio dominated by copper. The
completion of this strategy was a significant achievement, and I
would like to thank the entire management team for their hard work
and dedication in developing it. Whilst the recent curtailment of
processing has led to certain implementation delays to the growth
strategy, we are entirely focused on, and confident of, achieving
mid-tier production in the medium term and delivering the
considerable shareholder value of which the strategy is
capable.
During the Period, we made two follow-on investments in Libero
Copper & Gold Corporation, the owner of several copper
exploration properties in North and South America including Mocoa,
one of the world's largest undeveloped copper-molybdenum resources.
However, we did not participate in Libero's private placing
announced in July 2023. Our shareholding is currently 17.4 per
cent. but we have the right to increase this in the future. Libero
represents an exciting proposition for Anglo Asian, with meaningful
deposits that align with our growth strategy.
We are still waiting for Micon to issue the final report of
their Health, Safety and Environmental review of tailings
management at the Gedabek site in late July 2023. Once the Micon
report is finalised, we will fully update our shareholders. Until
the Micon report is released, and the Group is able to resume full
operations, there is a material uncertainty as to the Group's
ability to continue as a going concern.
At our Annual General Meeting, which was held in London on 22
June 2023, the directors were pleased to engage with shareholders
and receive their feedback on the Company's performance.
Pleasingly, there was strong support for Anglo Asian's growth
strategy and prospects.
We are monitoring closely the very recent events in Karabakh.
There have been reports in the press that the Azerbaijan Government
has taken back control of the Demirli/Kyzlbulag mine, which is
located in our contract areas. We will keep shareholders fully
updated regarding future events.
I would like to extend my sincere gratitude to all Anglo Asian
employees, partners and the Government of Azerbaijan for their
continued support in what continue to be challenging times. I also
wish to thank our shareholders for their unwavering support of
Anglo Asian Mining.
Khosrow Zamani
Non-executive chairman
25 September 2023
Chief Executive Officer's review
The performance of the Company in H1 2023 was satisfactory given
that this year we are transitioning away from mining from our
legacy open pit mine to our new mines under development and the
challenging external conditions. We also unveiled our strategic
growth plan outlining a five-year transition to become a mid-tier
miner with production of approximately 36,000 tonnes of copper
equivalent by 2028.
The operational performance in H1 2023, has regrettably been
overshadowed by subsequent events. Following protests at Gedabek in
June 2023 against the construction of a second tailings dam, the
Company and the Government of Azerbaijan ("Government") jointly
commissioned a third-party inspection to reassure residents that
our tailings facility and management practices present no threat to
the health of local communities. Micon visited Gedabek in July 2023
and carried out the inspection to determine our working practices
were safe and that no discharge of cyanide into the environment was
taking place. The Company also curtailed agitation leaching and
flotation processing from the beginning of August whilst Micon
prepared their results. We are still awaiting the final report on
Micon's inspection.
Operational review
Total production for the Period was 23,391 gold equivalent
ounces ("GEOs") compared to 28,722 GEOs during the same period last
year. Copper production totalled 1,860 tonnes, a significant
increase versus last year and in line with our growth strategy.
Gold production was at 14,608 ounces, slightly lower than in 2022
due to reduced grades at Gedabek. Additionally, silver production
totalled 44,576 ounces.
During the Period, we also completed the expansion of our
Gedabek flotation plant, increasing our processing capacity to
provide significant operational flexibility. This is a critical
step in meeting our growth targets.
We also made considerable progress with our new mines. At Gilar,
further drill results confirmed an extension to the previously
reported mineralisation, where the deeper zone confirmed
significant quantities of gold, copper and zinc with an intercept
thickness of over 50 metres.
We completed a mining scoping study to determine the development
and construction of the Zafar mine. Zafar has a JORC Mineral
Resource of 28,000 tonnes of copper, 73,000 ounces of gold and
36,000 tonnes of zinc, with production planned from 2024.
Construction of the mine started in the Period but development was
suspended from August.
In February, we announced the purchase of an underground mining
fleet from Caterpillar and drilling machinery from Epiroc which
will be used initially at Zafar and Gilar. The total cost of this
equipment was $10 million, with 40 per cent. paid from our cash
reserves and the rest via vendor financing. This is Caterpillar's
first vendor financing agreement in Azerbaijan and the wider
Caucasus region, so represents a strong endorsement. However, the
purchase of the equipment is currently on hold whilst processing is
curtailed.
At Garadag, following an assessment of the historical geological
data acquired from AzerGold CJSC, we confirmed the potential to
produce over 300,000 tonnes of copper. We also completed an initial
geological block model and open pit optimisation study at Xarxar.
Xarxar and Garadag underpin our medium-term growth strategy and are
both world class assets that contain considerable quantities of
copper. We expect these projects to be commissioned by 2026 and
2028 respectively.
Financial review
The Company maintained a satisfactory financial performance in
H1 2023 with half-year revenues of $30.8 million, slightly down
from $31.5 million in 2022. This includes gold bullion sales of
10,506 ounces at an average price of $1,939 per ounce and total
copper concentrate sales of 6,648 dry metric tonnes valued at $10.4
million. Decreased gold bullion sales were offset by increased
sales of copper concentrate which is becoming an increasing
proportion of our production.
The Group decided to hedge some of its gold bullion production
in 2023 given that the price of gold appeared to plateau earlier in
the year. In June 2023, monthly forward sales of gold bullion were
made of approximately 25 to 30 per cent. of budgeted production for
the remainder of 2023. A total of 4,600 ounces were sold at prices
between $1,950 to $1,979 per ounce. The first forward sale of 1,000
ounces of gold bullion was completed at the end of June 2023,
generating additional revenue of $35,250.
Free cash flow from operations was an outflow of $9.8 million
compared to $13.2 million in H1 2022. The improvement arose due to
less cash being absorbed by increased working capital.
The Group managed costs satisfactorily during the Period. Due to
the lower gold production, our all-in sustaining cost of gold
production increased in H1 2023 to $1,357 per ounce compared to
$983 in H1 2022.
The Company had cash of $9.4 million at 30 June 2023 and
saleable inventory of 2,553 ounces of gold with a market value of
$4.9 million, and copper concentrate with a market value of $4.2
million.
Revenues from production at Gedabek continued to be subject to
an effective royalty of 12.75 per cent. through our production
sharing agreement with the Government of Azerbaijan. We anticipate
that this same royalty rate will continue to apply to at least the
end of 2025. Part of the gold and silver produced from the ore
stockpile at Vejnaly was sold in the Period. This was subject to an
effective royalty of 32 per cent. because the ore stockpile was
acquired at zero cost.
Revised production guidance for 2023
Due to the curtailment of processing, the Company has only
produced gold doré and SART concentrate from heap leaching since
the beginning of August 2023. The Group has revised its production
guidance for the 12 months to 31 December 2023 to between 30,000 to
34,000 gold equivalent ounces. This includes 22,000 to 23,000
ounces of gold and 2,100 to 2,200 tonnes of copper. This assumes
that agitation leaching and flotation processing are not restarted
before the end of 2023.
Environmental inspection and suspension of processing in
August
Anglo Asian has been operating at Gedabek since 2009. It is
proud of its long-standing and strong community relations,
particularly its significant social and economic contribution to
the local area. Accordingly, the protests in June 2023 over the
construction of a second tailings dam were unexpected. Following
the protests, Micon carried out a health, safety and environmental
review of tailings management at the Gedabek site in late July
2023. The review was carried out under the auspices of the Ministry
of Ecology and Natural Resources of Azerbaijan. The Company's local
environmental engineers, CQA International, and its independent
tailings management consultant Knight Piésold, assisted in the
review. Environmental samples were taken by both Micon and the
Company and assayed by independent accredited laboratories. The
Company is still awaiting the final report from Micon regarding the
environmental inspection.
The Company has been carrying out extensive maintenance of its
operations during the suspension of processing including relining
all its mills. These works will also make good an accumulated
backlog of wear and tear. The Company also suspended blasting
during the curtailment of processing which stopped development of
the Gilar and Zafar mines. The commencement of mining from Gilar
will therefore be delayed until the first quarter of 2024. The
delivery of the mining fleet from Caterpillar Inc. was also
postponed given the delay in mine development. The installation of
the new Imhoflot flotation cells in the flotation plant was also
postponed to 2024.
Tailings storage at Gedabek
The current tailings dam is almost full and the Company has
submitted plans to the Government for a further 7.5 metre raise of
the wall to give sufficient capacity for two to three years of
production. This raise will be carried out in two stages with the
first raise of 2.5 metres being completed in approximately four
months after permission is obtained. This permission will only be
granted following a further independent inspection of the stability
of the tailings dam wall commissioned by the Government. It is
expected that permission will be received in January 2024 provided
the independent inspection reveals no defects in the wall.
Environment, Safety and Governance ("ESG")
Anglo Asian is committed to complying with all relevant
sustainability best practice standards. We remain on target with
our internal ESG development timetable and have made meaningful
progress during the Period.
Outlook
In the immediate future, we will be primarily focused on working
with the Government to fully resume mining and processing at
Gebabek. Longer term, we will remain committed to pursuing our
strategy to become a mid-tier miner and delivering attractive
shareholder returns.
Reza Vaziri
President and chief executive
25 September 2023
Corporate Governance
A statement of the Company's compliance with the ten principles
of corporate governance in the Quoted Companies Alliance Corporate
Governance Code ('QCA Code') can be found on the Company's website
at
http://www.angloasianmining.com/media/pdf/CORPORATE_GOVERNANCE.pdf
Competent Person Statement
The information in the announcement that relates to exploration
results, minerals resources and ore reserves is based on
information compiled by Dr Stephen Westhead, who is a full time
employee of Anglo Asian Mining with the position of Vice President,
who is a Fellow of The Geological Society of London, a Chartered
Geologist, Fellow of the Society of Economic Geologists, Fellow of
The Institute of Materials, Minerals and Mining and a Member of the
Institute of Directors.
Stephen Westhead has sufficient experience that is relevant to
the style of mineralisation and type of deposit under consideration
and to the activity being undertaken to qualify as a Competent
Person as defined in the 2012 Edition of the 'Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore
Reserves'; who is a Member or Fellow of a 'Recognised Professional
Organisation' (RPO) included in a list that is posted on the ASX
website from time to time (Chartered Geologist and Fellow of the
Geological Society and Fellow of the Institute of Material,
Minerals and Mining).
Stephen Westhead has sufficient experience, relevant to the
style of mineralisation and type of deposit under consideration and
to the activity that he is undertaking, to qualify as a "competent
person" as defined by the AIM rules.
Stephen Westhead has reviewed the resources and reserves
included in this announcement and consents to the inclusion in the
announcement of the matters based on his information in the form
and context in which it appears.
Strategic report
Principal activities
Anglo Asian Mining PLC (the "Company"), together with its
subsidiaries (the "Group"), owns and operates gold, silver and
copper producing properties in the Republic of Azerbaijan
("Azerbaijan"). It also explores for and develops gold and copper
deposits in Azerbaijan.
The Group also owns approximately 17.4 per cent. of Libero
Copper & Gold Corporation ("Libero"), a company which owns
several copper exploration properties in North and South America
including Mocoa in Colombia, one of the world's largest undeveloped
copper-molybdenum resources.
Production Sharing Agreement with the Government of
Azerbaijan
The Group's mining concessions in Azerbaijan are held under a
Production Sharing Agreement ("PSA") with the Government of
Azerbaijan dated 20 August 1997. Amendments to the PSA were passed
into law in Azerbaijan on 5 July 2022.
The Group's mining concessions are called Contract Areas and six
were granted to the Group by the original PSA in 1997. These were
Gedabek, Gosha, Ordubad, Vejnaly, Kyzlbulag and Soutely. However,
there was no access to Vejnaly, Kyzlbulag and Soutely, which were
situated in territory occupied at that time by Armenia. Following
the resolution of the conflict between Azerbaijan and Armenia in
2020, access was obtained to Vejnaly in 2021.
On 5 July 2022, amendments to the PSA were passed into law by
the Government of Azerbaijan which granted the Group three
additional Contract Areas: Garadag, Xarxar and Demirli and
relinquished Soutely. There was no payment made for the amendments
to the PSA.
Contract Areas in Azerbaijan
Following the amendments to its PSA in 2022, the Group has eight
Contract Areas covering a total of 2,544 square kilometres in
western Azerbaijan:
Ø Gedabek . The location of the Group's primary gold, silver and
copper open pit mine and the Gadir and Gedabek underground mines.
The Group has two new underground mines in development at Gedabek -
Zafar and Gilar. The Group's main processing facilities are also
located at Gedabek.
Ø Gosha . Located approximately 50 kilometres from Gedabek and
hosts a narrow vein gold and silver mine.
Ø Xarxar. Another copper deposit, adjacent to Garadag, which
shows significant potential as it is likely part of the same
mineral system.
Ø Garadag. Located to the north of Gedabek and which hosts the
large Garadag copper deposit.
Ø Vejnaly. Situated in the Zangilan district of Azerbaijan and hosts the Vejnaly deposit.
Ø Ordubad. An early-stage gold and copper exploration project
located in the Nakhchivan exclave.
Ø Kyzlbulag. Situated in the Karabakh economic region. Hosts the
Demirli deposit, a copper/molybdenum mine and a processing plant.
The Group currently has no access to the Kyzlbulag Contract
Area.
Ø Demirli. Adjacent to Kyzlbulag and expands the Kyzlbulag
Contract Area to the north-east. The Group currently has no access
to the Demirli Contract Area.
Overview of the six months to 30 June 2023
The Company's strategy is to transition into a mid-tier,
copper-focused producer, which will be achieved through developing
its significant assets. The Company has made significant progress
towards becoming a mid-tier copper producer in the six months to 30
June 2023.
In January 2023, a third investment in Libero Copper & Gold
Corporation ("Libero") was made to acquire 2.6 million new shares
at CAN 15 cents per share for a total consideration of CAN$390,000
(US$289,000).
In January 2023, t he portal to the Gilar mine, a new copper and
gold mine at Gedabek, was completed and underground tunnelling
commenced to access the mineral deposit.
In February 2023, a fourth investment was made in Libero to
acquire 3.2 million new shares at CAN 15 cents per share for a
total consideration of CAN$480,000 (US$355,000).
In February 2023, a mining scoping study was completed for the
Zafar underground mine. Development work and the construction of
two portals for the Zafar mine started.
In February 2023, contracts were executed for the purchase of
the mining fleet and other major items of equipment required for
the Company's new Zafar and Gilar mines. Good progress was also
made with the upgrades to the Gedabek flotation plant.
In March 2023, an initial geological block model and open pit
optimisation study for Xarxar were completed identifying
significant copper mineralisation. These models predicted potential
mining and processing of 3 million tonnes of ore per annum, with a
production target of 10,000 tonnes of copper metal per annum over a
7-year period.
In March 2023, an increased mineral resources estimate
(non-JORC) ("MRE") for the Gilar deposit was published. The MRE for
Gilar now contains over 249,000 ounces of gold, 46,000 tonnes of
copper, and 48,000 tonnes of zinc.
In March 2023, an initial assessment of data acquired in 2022
relating to the Garadag porphyry copper deposit confirmed the
potential of the deposit to produce over 300,000 tonnes of
copper.
In March 2023, the Company's strategic plan for growth was
announced including:
-- Production to more than double in the next five years with
the Company transitioning to a multi-asset, mid-tier copper
and gold producer by 2028.
-- Total production forecast to increase by 30 to 50 per cent.
to 70,000 to 75,000 gold equivalent ounces for 2024 and 2025
(copper equivalent of 15,000 to 15,500 tonnes).
-- Copper equivalent production forecast to increase to approximately
36,000 plus tonnes per annum (gold equivalent of 175,000 ounces)
from 2028.
-- Production growth to be delivered through the sequential opening
of four new mines in Azerbaijan.
In May 2023, drill results further extended the mineralisation
at Gilar.
Production target for 2023
The Group's initial production guidance for the year ended 31
December 2023 was 50,000 to 54,000 gold equivalent ounces.
Following the curtailment of processing in August 2023, the
production guidance was revised to between 30,000 to 34,000 gold
equivalent ounces as follows:
Full year 2023
Full year 2022 Production
Metal Unit Actual production guidance
------------------ ----------------
Gold ounce 43,114 22,000 to 23,000
------ ------------------ ----------------
Copper tonne 2,516 2,100 to 2,200
------ ------------------ ----------------
Total gold and copper GEO* 57,618 30,000 to 34,000
------ ------------------ ----------------
The Company does not forecast silver production as it is not
material.
* Gold equivalent ounce
The production guidance was calculated using a mixture of actual
year to date and rest of year forecast metal prices to calculate
the gold equivalent ounces.
Mineral resources and ore reserves
Key to the future development of the Group are the mineral
resources and ore reserves within its Contract Areas. Mineral
resources and ore reserves are produced both in accordance with the
JORC (2012) code ("JORC") and as non-JORC estimates.
The Group's most recent mineral resources and ore reserves
estimates (amounts in-situ before recovery) in accordance with JORC
for the Gedabek open pit and Gadir underground mine were published
on 2 November 2020. Table 1 shows the Gedabek open pit mineral
resources estimate and Table 2 shows the Gedabek open pit ore
reserves estimate. Table 3 shows the Gadir underground mine mineral
resources estimate and Table 4 shows the Gadir underground mine ore
reserves estimate.
A final mineral resources estimate for the Zafar deposit at 30
November 2021 prepared in accordance with JORC was published on 21
March 2022 and is shown in Table 5. The latest non-JORC mineral
resources estimate for the Gilar deposit was published in March
2023 and is shown in Table 6.
Table 7 shows the Soviet mineral resources for the Vejnaly
deposit and Table 8 shows the Soviet C1 and C2 copper resources for
the Garadag deposit.
Table 1 - Gedabek open pit mineral resources estimate at 30 June
2020
MINERAL RESOURCES (cut-off grade of 0.2 g/t gold)
In-situ grades Contained metal
------- ---------------------------------- -------------------------------
Tonnage Gold Copper Silver Zinc grade Gold Copper Silver Zinc
Mineral grade grade grade (%)
Resources (Mt) (g/t) (%) (g/t) (koz) (kt) (koz) (kt)
------- ------ ------ ------ ---------- ------ ------ ------- ------
Measured 15.8 0.66 0.12 2.58 0.24 335 19.0 1,311 37.9
------- ------ ------ ------ ---------- ------ ------ ------- ------
Indicated 12.0 0.56 0.12 2.31 0.16 216 14.4 891 19.2
------- ------ ------ ------ ---------- ------ ------ ------- ------
Measured
and
Indicated 27.8 0.62 0.12 2.46 0.21 551 33.4 2,202 57.1
----------- ------- ------ ------ ------ ---------- ------ ------ ------- ------
Inferred 13.0 0.44 0.06 0.61 0.15 184 7.8 255 19.5
------- ------ ------ ------ ---------- ------ ------ ------- ------
TOTAL 40.8 0.56 0.10 1.87 0.19 735 41.2 2,457 76.6
----------- ------- ------ ------ ------ ---------- ------ ------ ------- ------
Some of the totals in the above table may not sum due to
rounding
ADDITIONAL MINERAL RESOURCES (additional to gold mineral resource)
(gold cut-off < 0.2 g/t and copper > 0.3 %
Gold Copper Silver Zinc Contained metal
--------------- --------------- --------------- --------------- ------------------------------
Tonnage Gold Tonnage Copper Tonnage Silver Tonnage Zinc Gold Copper Silver Zinc
grade grade grade grade
(Mt) (g/t) (Mt) (%) (Mt) (g/t) (Mt) (%) (koz) (kt) (koz) (kt)
------- ------ ------- ------ ------- ------ ------- ------ ------ ------ ------ ------
Measured - - 2.15 0.43 0.08 16.4 1.86 0.53 - 9.2 42 9.9
------- ------ ------- ------ ------- ------ ------- ------ ------ ------ ------ ------
Indicated - - 2.13 0.34 0.28 13.9 2.03 0.51 - 7.2 125 10.4
------- ------ ------- ------ ------- ------ ------- ------ ------ ------ ------ ------
Measured
and
Indicated - - 4.28 0.39 0.36 14.5 3.89 0.52 - 16.5 167 20.2
----------- ------- ------ ------- ------ ------- ------ ------- ------ ------ ------ ------ ------
Inferred - - 2.85 0.40 0.15 19.4 7.04 0.54 - 11.4 94 38.0
------- ------ ------- ------ ------- ------ ------- ------ ------ ------ ------ ------
TOTAL - - 7.10 0.39 0.51 15.9 10.9 0.50 - 27.9 261 58.2
----------- ------- ------ ------- ------ ------- ------ ------- ------ ------ ------ ------ ------
Some of the totals in the above table may not sum due to
rounding
Mineral resource classifications are based on the gold
estimation confidence. Copper, silver, and zinc are reported within
these classifications.
Stockpiles included in Measured Resources and Ore Reserves
Measured Mineral Tonnage Stockpile grades Contained metal
Resources
(Mt)
------- ---------------------- ----------------------
Gold Copper Silver Gold Copper Silver
grade grade grade
(g/t) (%) (g/t) (koz) (kt) (koz)
------- ------ ------ ------ ------ ------ ------
Agitation leach 0.02 1.87 0.24 17.79 1 - 10
------- ------ ------ ------ ------ ------ ------
Flotation 0.14 0.90 0.53 11.71 4 0.7 53
------- ------ ------ ------ ------ ------ ------
Heap leach (crushed) 0.06 0.81 0.11 7.71 2 0.1 16
------- ------ ------ ------ ------ ------ ------
Heap leach (ROM) 0.61 0.73 0.21 10.23 14 4.3 201
------- ------ ------ ------ ------ ------ ------
Stockpile Mineral
Resources 0.83 0.79 0.26 10.44 21 2.2 279
--------------------- ------- ------ ------ ------ ------ ------ ------
Some of the totals in the above table may not sum due to
rounding
Table 2 - Gedabek open pit ore reserves estimate at 30 June
2020
Tonnage In-situ grades Contained metal
(Mt)
Gold Copper Silver Gold Copper Silver
grade grade grade
(g/t) (%) (g/t) (koz) (kt) (koz)
------ ------ ------ ------ ------ ------
Proven 8.07 0.72 0.19 3.48 187 15.3 902
------- ------ ------ ------ ------ ------ ------
Probable 3.65 0.64 0.23 4.87 75 8.5 572
------- ------ ------ ------ ------ ------ ------
In-situ ore reserves 11.72 0.70 0.20 3.91 263 24 1,474
--------------------- ------- ------ ------ ------ ------ ------ ------
Stockpile grades
------- ---------------------- ------ ------ ------
Agitation leach 0.02 1.87 0.24 17.79 1 - 10
------- ------ ------ ------ ------ ------ ------
Flotation 0.14 0.90 0.53 11.71 4 0.7 53
------- ------ ------ ------ ------ ------ ------
Heap leach (crushed) 0.06 0.81 0.11 7.71 2 0.1 16
------- ------ ------ ------ ------ ------ ------
Heap leach (ROM) 0.61 0.73 0.21 10.23 14 4.3 201
------- ------ ------ ------ ------ ------ ------
Stockpile ore
reserves 0.83 0.79 0.26 10.44 21 2.2 279
--------------------- ------- ------ ------ ------ ------ ------ ------
TOTAL ORE RESERVES 12.55 0.70 0.21 4.34 284 26.0 1,754
--------------------- ------- ------ ------ ------ ------ ------ ------
Some of the totals in the above table may not sum due to
rounding
Proved and probable ore reserves estimate is based on that
portion of the measured and indicated mineral resources of the
deposit within the scheduled mine designs that may be economically
extracted, considering all "Modifying Factors" in accordance with
the JORC (2012) Code .
Table 3 - Gadir underground mine mineral resources estimate at
30 September 2020
MINERAL RESOURCES (cut-off grade of 0.5 g/t gold)
In-situ grades Contained Metal
------- ---------------------------------- ---------------------------------
Tonnage Gold Copper Silver Zinc grade Gold Copper Silver Zinc
Mineral grade grade grade (%)
Resources (kt) (g/t) (%) (g/t) (koz) (t) (koz) (t)
------- ------ ------ ------ ---------- ------ ------- ------ --------
Measured 2,035 2.47 0.09 4.69 0.61 162 1,831 307 12,407
------- ------ ------ ------ ---------- ------ ------- ------ --------
Indicated 966 1.59 0.02 0.63 0.33 49 193 20 3,188
------- ------ ------ ------ ---------- ------ ------- ------ --------
Measured
and
Indicated 3,001 2.19 0.07 3.40 0.52 211 2,024 326 15,595
----------- ------- ------ ------ ------ ---------- ------ ------- ------ --------
Inferred 1,594 1.10 0.01 0.03 0.10 56 159 2 1,594
------- ------ ------ ------ ---------- ------ ------- ------ --------
TOTAL 4,595 1.81 0.05 2.22 0.37 267 2,183 328 17,189
----------- ------- ------ ------ ------ ---------- ------ ------- ------ --------
Some of the totals in the above table may not sum due to
rounding
Table 4 - Gadir underground mine ore reserves estimate at 30
September 2020
Tonnage In-situ grades Contained metal
(Mt)
Gold Copper Silver Gold Copper Silver
grade grade grade
(g/t) (%) (g/t) (koz) (t) (koz)
------ ------ ------ ------ ------ ------
Proven 0.47 2.32 0.04 3.38 35 173 51
------- ------ ------ ------ ------ ------ ------
Probable 0.19 2.20 0.01 0.74 14 18 5
------- ------ ------ ------ ------ ------ ------
TOTAL ORE RESERVE 0.66 2.28 0.03 2.60 49 191 56
------------------ ------- ------ ------ ------ ------ ------ ------
Some of the totals in the above table may not sum due to
rounding
The above proved and probable ore reserves estimate is based on
that portion of the measured and indicated mineral resource of the
deposit within the scheduled mine designs that may be economically
extracted, considering all "Modifying Factors" in accordance with
the JORC (2012) Code. Zinc was not estimated as part of this
reserve as it is under study at resource level currently.
Table 5 - Zafar mineral resources estimate at 30 November
2021
Copper > 0.3 per cent. copper equivalent
Tonnage In-situ grades Contained metal
(Mt)
Copper Gold Zinc Copper Gold Zinc
(%) (g/t) (%) (kt) (kozs) (kt)
------- -------- -------- -------- ------
Measured and indicated 5.5 0.5 0.4 0.6 25 64 32
------- -------- ------- ------ -------- -------- ------
Inferred 1.3 0.2 0.2 0.3 3 9 3
------- -------- ------- ------ -------- -------- ------
Total 6.8 0.5 0.4 0.6 28 73 36
------- -------- ------- ------ -------- -------- ------
Some of the totals in the above table may not sum due to
rounding
Note that all tonnages reported are dry metric tonnes.
Table 6 - Latest non-JORC mineral resources estimate of the
Gilar deposit
Tonnes Gold Copper Zinc Gold Copper Zinc
(Mt) (g/t) (%) (%) (Oz) (T) (T)
Class
1+2 3.93 1.53 0.93 0.94 192,929 36,687 37,009
------ ------ ------ ---- ------- ------ ------
Class
3 1.71 1.02 0.57 0.69 56,155 9,778 11,777
------ ------ ------ ---- ------- ------ ------
Total 5.64 1.37 0.82 0.87 249,083 46,466 48,786
------ ------ ------ ---- ------- ------ ------
Some of the totals in the above table may not sum due to
rounding
Cut-off grade 0.5 gold eq. / gold eq = gold g/t + (copper % x
1.49) + (zinc x 0.46) + (silver x 0.01) + (lead x 0.37).
Amounts of contained metal have been rounded to the nearest
hundred of ounces or tonnes.
Table 7 - Soviet mineral resources of the Vejnaly deposit
Metal content
Units Category C1 Category C2 Total C1 and C2
---------- ----------- ----------- ---------------
Ore tonnes 181,032 168,372 349,404
---------- ----------- ----------- ---------------
Gold kilograms 2,148.5 2,264.2 4,412.7
---------- ----------- ----------- ---------------
Silver kilograms 6,108.9 4,645.2 10,754.1
---------- ----------- ----------- ---------------
Copper tonnes 1,593.6 1,348.8 2,942.4
---------- ----------- ----------- ---------------
Some of the totals in the above table may not sum due to
rounding
Table 8 - Soviet copper resources for the Garadag deposit
Copper content
Category C1 C2 Total C1 and
C2
------ ------ -------------
Ore Millions of tonnes 25.35 23.69 49.04
-------------------- ------ ------ -------------
Thousands of
Copper tonnes 168.0 150.7 318.7
-------------------- ------ ------ -------------
Grade Per cent. 0.65 0.64 0.64
-------------------- ------ ------ -------------
Some of the totals in the above table may not sum due to
rounding
Gedabek
Introduction
The Gedabek mining operation is located in a 300 square
kilometre Contract Area in the Lesser Caucasus mountains in western
Azerbaijan on the Tethyan Tectonic Belt, one of the world's most
significant copper and gold-bearing geological structures. Gedabek
is the location of the Group's Gedabek open pit mine, the Gadir and
Gedabek underground mines and the Company's processing facilities.
The new Zafar and Gilar underground mines are both being developed
at Gedabek.
Gold production at Gedabek commenced in September 2009. Ore was
initially mined from an open pit, with underground mining
commencing in 2015 when the Gadir mine was opened. In 2020,
underground mining commenced beneath the main open pit (the
"Gedabek underground mine"). The Gedabek and Gadir underground
mines have now been connected to form one continuous underground
system of tunnels.
Initial gold production was by heap leaching, with copper
production beginning in 2010 when the Sulphidisation,
Acidification, Recycling and Thickening ("SART") plant was
commissioned. The Group's agitation leaching plant commenced
production in 2013 and its flotation plant in 2015. From the start
of production to 30 June 2023, approximately 802 thousand ounces of
gold and 21 thousand tonnes of copper have been produced at
Gedabek.
Gedabek open pit and Gedabek and Gadir underground mines
The principal mining operation at the Gedabek is conventional
open-cast mining using trucks and shovels from the Gedabek open pit
(which comprises several contiguous smaller open pits). Ore is also
mined from the Gadir and Gedabek underground mines. These two
underground mines are connected, and form one continuous
underground network of tunnels, accessible from both the Gadir and
Gedabek portals. However, a significant fault structure separates
the two mines. Table 9 shows all the ore mined by the Group in the
year ended 31 December 2022 and six months ended 30 June 2023.
Table 9 - Ore mined at Gedabek for the year ended 31 December
2022 and 6 months ended 30 June 2023
12 months to 3 months to 3 months to
31 December 2022 31 March 2023 30 June 2023
Average Average Average
gold Ore gold Ore gold
Mine Ore mined grade mined grade mined grade
(tonnes) (g/t) (tonnes) (g/t) (tonnes) (g/t)
---------- -------- --------- -------- --------- --------
Open pit 1,705,337 0.47 415,365 0.43 591,118 0.30
Gadir -
u/g 136,715 1.41 38,867 1.64 46,334 1.54
Gedabek
- u/g 373,915 1.30 - - - -
---------- -------- --------- -------- --------- --------
Total 2,215,967 0.67 454,232 0.53 637,452 0.39
---------- ---------- -------- --------- -------- --------- --------
Zafar mine development
The Zafar deposit was discovered in 2021 and is located 1.5
kilometres north-west of the existing Gedabek processing plant. Its
final mineral resource estimate was published in March 2022 and is
set out in Table 5 - "Zafar mineral resources estimate at 30
November 2021".
A mining scoping study for the Zafar mine was completed in
February 2023 and development commenced. Two declines are under
construction to access the mineralisation, a haulage decline and a
parallel ventilation decline. The two portals for the declines have
been constructed close to the existing Gedabek processing
facilities and about 1,000 metres from the mineralisation. Five
metres of haulage tunnel and 6.6 metres of ventilation tunnel were
completed in H1 2023.
Mining will be by sub-level caving supplemented by sub-level
open stoping. The significant underground machinery has been
contracted for with drilling equipment manufactured by Epiroc and
the mining and loading equipment manufactured by Caterpillar.
Gilar mine development
Gilar is a mineral occurrence located approximately seven
kilometres from the Company's processing facilities and close to
the northern boundary of the Gedabek Contract Area. The Group
commenced developing the Gilar underground mine in late 2022
following exceptional drilling results in the south of the
area.
The latest non-JORC mineral resources estimate for Gilar was
published in March 2023. The mineral resources estimate (which is
not a JORC resource) was compiled by an independent consultant and
based on stage one drilling. The mineral resources were estimated
using the JORC guidelines, but because the mineral resource
estimate is subject to validation, classes 1, 2 and 3 are stated,
instead of the usual Measured, Indicated and Inferred
classifications. The mineral resources estimate is set out in Table
6 - "Latest Non-JORC mineral resources estimate of the Gilar
deposit".
A portal has been constructed and a tunnel is under construction
suitable for both exploration and production. A ventilation tunnel
is also under construction. Total development at 30 June 2023 of
the production tunnel and the ventilation tunnel was 501 metres and
114 metres respectively. The majority of the walls of the decline
are supported by steel arches and shotcrete due to the soft rock.
Extensive geological exploration was carried out at Gilar in H1
2023.
Processing operations
Ore is processed at Gedabek to produce either gold doré (an
alloy of gold and silver with small amounts of impurities, mainly
copper) or a copper and precious metal concentrate.
Gold doré is produced by cyanide leaching. Initial processing is
to leach (i.e. dissolve) the precious metal (and some copper) in a
cyanide solution. This is done by various methods:
1 Heap leaching of crushed ore. Crushed ore is heaped into
permeable "pads" onto which is sprayed a solution of cyanide. The
solution dissolves the metals as it percolates through the ore by
gravity and it is then collected by the impervious base under the
pad.
2 Heap leaching of run of mine ("ROM") ore. The process is
similar to heap leaching for crushed ore, except the ore is not
crushed, instead it is heaped into pads as received from the mine
(ROM) without further treatment or crushing. This process is used
for very low-grade ores.
3 Agitation leaching . Ore is crushed and then milled in a
grinding circuit. The finely ground ore is placed in stirred
(agitation) tanks containing cyanide solution and the contained
metal is dissolved in the solution. Any coarse, free gold is
separated using a centrifugal-type Knelson concentrator.
Slurries produced by the above processes with dissolved metal in
solution are then transferred to a resin-in-pulp ("RIP") plant.
This plant selectively absorbs then de-absorbs the gold and silver.
The gold and silver dissolved in the solution which is produced are
recovered by electrolysis and are then smelted to produce the doré
metal, comprising an alloy of gold and silver.
Copper and precious metal concentrates are produced by two
processes, SART processing and flotation.
1 Sulphidisation, Acidification, Recycling and Thickening
("SART"). The cyanide solution after gold absorption by
resin-in-pulp processing is transferred to the SART plant. The pH
of the solution is then changed by the addition of reagents which
precipitates the copper and any remaining silver from the solution.
The process also recovers cyanide from the solution, which is
recycled back to leaching.
2 Flotation. Finely ground ore is mixed with water to produce a
slurry called "pulp" and reagents are then added. This pulp is
processed in flotation cells (tanks), where the pulp is stirred and
air introduced as small bubbles. The sulphide mineral particles
attach to the air bubbles and float to the surface where they form
a froth which is collected. This froth is dewatered to form a
mineral concentrate containing copper, gold and silver.
During 2022, the Group contracted to purchase an additional
seven cells for the flotation plant. These cells use "Imhoflot"
pneumatic flotation technology, which require less energy and
offers better recoveries than traditional stirred tank cells and
flotation columns. A new thickener and filter press were also
ordered. The new equipment, together with modifications to
de-bottleneck the existing flotation plant, will double its
capacity at a total cost of around $3.0 million. It will also
enable the production of a zinc concentrate. The modifications to
increase the capacity of the flotation plant have been completed.
However, the installation of the new flotation line has been
postponed until the first half of 2024 due the suspension of
operations at Gedabek from the beginning of August 2023 .
Table 10 summarises the ore processed by leaching for the year
ended 31 December 2022 and the six months to 30 June 2023:
Table 10 - Ore processed by leaching at Gedabek for the year
ended 31 December 2022 and six months ended 30 June 2023:
Quarter ended Ore processed Gold grade of ore processed
------------------------------------- ------------------------------------
Heap Heap Heap Heap
leach leach Agitation leach leach Agitation
pad crushed pad ROM leaching pad crushed pad ROM leaching
ore ore plant* ore ore plant*
(tonnes) (tonnes) (tonnes) (g/t) (g/t) (g/t)
------------- ------------- --------- ----------
31 March 2022 115,173 273,577 144,275 0.75 0.48 1.63
30 June 2022 82,814 299,762 162,239 0.78 0.53 1.49
30 September
2022 92,398 302,714 162,669 0.81 0.57 1.41
31 December 2022 24,606 213,120 156,285 0.72 0.56 1.52
------------- ---------- ---------- ------------- --------- ----------
FY 2022 314,991 1,089,173 625,468 0.77 0.56 1.51
------------------ ------------- ---------- ---------- ------------- --------- ----------
31 March 2023 94,518 196,595 62,006 0.74 0.49 1.3
30 June 2023 56,522 203,016 105,213 0.75 0.46 1.4
------------- ---------- ---------- ------------- --------- ----------
H1 2023 151,040 399,611 167,219 0.75 0.49 1.4
------------------ ------------- ---------- ---------- ------------- --------- ----------
* includes previously heap leach ore
Table 11 summarises ore processed by flotation for the year
ended 31 December 2022 and six months ended 30 June 2023.
Table 11 - Ore processed by flotation for the year ended 31
December 2022 and six months ended 30 June 2023
Quarter ended Ore processed Gold content Silver content Copper content
(tonnes) (ounces) (ounces) (tonnes)
-------------- ------------- --------------- ---------------
31 March 2022 104,475 1,921 33,522 577
30 June 2022 114,099 1,293 24,209 745
30 September
2022 143,838 1,314 24,582 724
31 December 2022 119,819 1,389 18,003 670
-------------- ------------- --------------- ---------------
FY 2022 482,231 5,917 100,316 2,716
-------------- ------------- --------------- ---------------
31 March 2023 192,516 1,487 19,787 1,133
30 June 2023 190,593 1,033 10,380 1,191
-------------- ------------- --------------- ---------------
H1 2023 383,109 2,520 30,167 2,324
------------------ -------------- ------------- --------------- ---------------
Previously heap leached ore
Gold production at Gedabek from 2009 to 2013 was by heap
leaching crushed ore until the start-up of the agitation leaching
plant in 2013. The heaps remain in-situ and given the high grade of
ore processed prior to the commencement of agitation leaching, and
the lower recovery rates, much of the previously heap leached ore
contains significant amounts of gold. This is now being processed
by agitation leaching. Table 12 shows the amount of previously heap
leached ore processed in the year ended 31 December 2022 and the
six months ended 30 June 2023.
Table 12 - Amount of previously heap leached ore processed in
the year ended 31 December 2022 and six months ended 30 June
2023
In-situ material Average gold
(t) grade
(g/t)
1 January 2022 1,586,313 1.36
----------------- -------------
Processed in the
year (195,689) 1.18
----------------- -------------
31 December 2022 1,390,624 1.39
----------------- -------------
Processed in H1
2023 (27,815) 1.01
----------------- -------------
30 June 2023 1,366,081 1.39
------------------ ----------------- -------------
Production and sales
For the 6 months ended 30 June 2023, gold production totalled
14,608 ounces, which was a decrease of 6,298 ounces in comparison
to the production of 20,906 ounces for the 6 months ended 30 June
2022.
Table 13 summarises the gold and silver bullion produced from
doré bars and sales of gold bullion for the year ended 31 December
2022 and 6 months ended 30 June 2023.
Table 13 - Gold and silver bullion produced from doré bars and
sales of gold bullion for the year ended 31 December 2022 and 6
months ended 30 June 2023
Quarter ended Gold produced* Silver Gold sales** Gold Sales
(ounces) produced* (ounces) price
(ounces) ($/ounce)
31 March 2022 8,963 7,574 7,519 1,904
30 June 2022 10,137 7,620 3,754 1,895
30 September
2022 10,473 6,949 10,000 1,727
31 December
2022 10,437 4,820 13,645 1,727
--------------- ----------- ------------- -----------
FY 2022 40,010 26,963 34,918 1,783
--------------- --------------- ----------- ------------- -----------
31 March 2023 5,965 2,841 5,719 1,895
30 June 2023 7,375 3,593 4,787 1,992
--------------- ----------- ------------- -----------
H1 2023 13,340 6,434 10,506 1,939
--------------- --------------- ----------- ------------- -----------
Note
* including Government of Azerbaijan's share
** excluding Government of Azerbaijan's share
Table 14 summarises the total copper, gold and silver produced
as concentrate by both SART and flotation processing for the year
ended 31 December 2022 and 6 months ended 30 June 2023.
Table 14 - Total copper, gold and silver produced as concentrate
by both SART and flotation processing for the year ended 31
December 2022 and 6 months ended 30 June 2023
Concentrate Copper Gold Silver
production* content* content* content*
(dmt) (tonnes) (ounces) (ounces)
------------ --------- --------- ---------
2022
Quarter ended 31 March
SART processing 330 188 12 25,114
Flotation 2,586 380 1,065 17,986
------------ --------- --------- ---------
Total 2,916 568 1,077 43,100
------------ --------- --------- ---------
Quarter ended 30 June
SART processing 316 168 14 25,582
Flotation 3,811 547 715 15,672
------------ --------- --------- ---------
Total 4,127 715 729 41,254
------------ --------- --------- ---------
Quarter ended 30 September
SART processing 367 208 33 24,077
Flotation 2,805 401 581 14,094
------------ --------- --------- ---------
Total 3,172 609 614 38,171
------------ --------- --------- ---------
Quarter ended 31 December
SART processing 438 244 39 20,833
Flotation 2,648 380 645 11,725
------------ --------- --------- ---------
Total 3,086 624 684 32,558
------------ --------- --------- ---------
2023
Quarter ended 31 March
SART processing 364 190 25 8,750
Flotation 4,544 657 751 10,975
------------ --------- --------- ---------
Total 4,908 847 776 19,725
------------ --------- --------- ---------
Quarter ended 30 June
SART processing 272 146 16 10,348
Flotation 5,613 867 476 8,069
------------ --------- --------- ---------
Total 5,885 1,013 492 18,417
------------ --------- --------- ---------
Note
* including Government of Azerbaijan's share.
Table 15 summarises the total gold and silver production from
agitation and heap leaching for the year ended 31 December 2022 and
6 months ended 30 June 2023.
Table 15 - Total gold and silver production from agitation and
heap leaching for the year ended 31 December 2022 and six months
ended 30 June 2023
Quarter Gold Silver
ended
Agitation Heap Total Agitation Heap Total
leaching leaching leaching leaching
(ounces) (ounces) (ounces) (ounces) (ounces) (ounces)
---------- ---------- ---------- ---------- ---------- ----------
31 March 2022 5,674 3,289 8,963 4,803 2,771 7,574
30 June 2022 6,196 3,941 10,137 4,654 2,966 7,620
30 Sept 2022 5,517 4,956 10,473 3,673 3,276 6,949
31 Dec 2022 5,831 4,606 10,437 2,684 2,136 4,820
---------- ---------- ---------- ---------- ---------- ----------
FY 2022 23,218 16,792 40,010 15,814 11,139 26,963
--------------- ---------- ---------- ---------- ---------- ---------- ----------
31 March 2023 2,105 3,860 5,965 1,077 1,764 2,841
30 June 2023 3,463 3,912 7,375 1,735 1,858 3,593
---------- ---------- ---------- ---------- ---------- ----------
H1 2023 5,568 7,772 13,340 2,812 3,622 6,434
--------------- ---------- ---------- ---------- ---------- ---------- ----------
Table 16 summarises the total copper concentrate (including gold
and silver) production and sales from both SART and flotation
processing for the year ended 31 December 2022 and 6 months ended
30 June 2023.
Table 16 - Total copper concentrate (including gold and silver)
production and sales from both SART and flotation processing for
the year ended 31 December 2022 and six months ended 30 June
2023
Concentrate Copper Gold Silver Concentrate Concentrate
production* content* content* content* sales** sales**
(dmt) (tonnes) (ounces) (ounces) (dmt) ($000)
Quarter ended
------------ --------- --------- --------- ------------ --------------
31 March 2022 2,916 568 1,077 43,100 1,477 3,248
30 June 2022 4,127 715 729 41,254 4,642 8,127
30 September
2022 3,172 609 614 38,171 1,718 3,378
31 December
2022 3,086 624 684 32,558 4,606 7,487
------------ --------- --------- --------- ------------ --------------
FY 2022 13,301 2,516 3,104 155,083 12,443 22,240
--------------- ------------ --------- --------- --------- ------------ --------------
31 March 2023 4,908 847 776 19,725 1,147 2,743
30 June 2023 5,885 1,013 492 18,417 5,501 7,678
------------ --------- --------- --------- ------------ --------------
H1 2023 10,793 1,860 1,268 38,142 6,648 10,421
--------------- ------------ --------- --------- --------- ------------ --------------
* including Government of Azerbaijan's share
** excludes Government of Azerbaijan's share
these are the invoiced sales of the Group's share of production
before any accounting adjustments in respect of IFRS 15. The totals
given above do not therefore agree to amounts disclosed as revenue
in these interim financial statements
Infrastructure
The Gedabek Contract Area benefits from excellent infrastructure
and access. The site is located at the town of Gedabek, which is
connected by good metalled roads to the regional capital of Ganja.
Baku, the capital of Azerbaijan, is to the south and the country's
border with Georgia to the north, are each approximately a four to
five hour drive over good quality roads. The site is connected to
the Azeri national power grid.
Water management
The Gedabek site has its own water treatment plant which was
constructed in 2017 and which uses the latest reverse osmosis
technology. In the last few years, Gedabek town has experienced
water shortages in the summer and this plant reduces to the
absolute minimum the consumption of fresh water required by the
Company.
Tailings (waste) storage
Tailings are stored in a purpose-built dam approximately seven
kilometres from the Group's processing facilities, topographically
at a lower level than the processing plant, thus allowing gravity
assistance of tailings flow in the slurry pipeline. Immediately
downstream of the tailings dam is a reed bed biological treatment
system to purify any seepage from the dam before being discharged
safely into the nearby Shamkir river. The current tailings dam has
the capacity for approximately three months of production once
production restarts.
Knight Piésold, a leading firm of geotechnical and consulting
engineers, has determined that the wall of the existing tailings
dam has a maximum height of 90 metres. This means the current wall
can be raised by approximately an average of 7.5 metres to give
enough capacity for production for the next two to three years. The
Company is proposing to do this wall raise in two stages of 2.5
metres followed by 5.0 metres. It is anticipated that it will take
approximately four months to raise the wall by 2.5 metres. The
Company has applied for permission from the Government to carry out
the raise.
A site has been identified for a new tailings dam in the close
vicinity of the existing dam and permission for land use has been
obtained. However, following protests against its proposed location
by local communities, the suitability of the site is being
reevaluated in conjunction with the Government of Azerbaijan.
Alternative sites for the location of a second tailings dam will
also be considered.
The construction of an auxiliary tailings dam close to the Zafar
mine commenced in 2022. However, following a reevaluation of the
site, it was decided not to complete its construction. The storage
space already constructed at the location will be used for
alternative purposes.
Gosha
The Gosha Contract Area is 300 square kilometres in size and is
situated in western Azerbaijan, 50 kilometres north-west of
Gedabek. Gosha is regarded as under explored. Gosha is the location
of a high grade, underground gold mine. Ore mined at Gosha is
transported by road to Gedabek for processing. No mining was
carried out in the Gosha mine in the six months ended 30 June
2023.
Geological fieldwork has resulted in the recent discovery of
additional mineralisation adjacent to the existing underground
mine. This includes "Hasan", a new sub-vertical high gold grade
mineralised vein, immediately south of the existing Gosha mine.
Hasan can be accessed via a short tunnel from the existing
tunnelling at Gosha. A further vein close to Hasan called "Akir" is
also showing promising mineralisation.
The Company is also carrying out geological fieldwork at
Asrikchay, a copper and gold target situated within the Gosha
Contract area. Asrikchay is located in the northeast corner of the
Gosha Contract Area, about 7 kilometres from the Gosha mine, within
the Asrikchay valley.
Xarxar
The 464 square kilometre Contract Area is located immediately
north of Gedabek which it borders. Xarxar is a known area of
mineralisation which was explored in the Soviet era. Xarxar hosts a
portal and exploration tunnel constructed in Soviet times. However,
the tunnel has collapsed near its entrance.
Geological exploration began at Xarxar immediately following its
acquisition in July 2022. A new portal was constructed next to the
Soviet portal. Tunnelling then commenced parallel to the existing
tunnel. A surface drill programme was also started. The Group also
acquired historical geological and other data in respect of Xarxar
owned by AzerGold CJSC for $0.7 million. This included 805 assays
taken from 4,923 metres of Xarxar drill core.
Gilar is situated close to the northern boundary of the Gedabek
Contract Area. Geological exploration indicates that this deposit
trends to the north. The Xarxar Contract Area extends the Gedabek
Contract Area to the north and will therefore enable Gilar to be
fully exploited.
Garadag
The 344 square kilometre Garadag Contract Area is situated four
kilometres north of Gedabek alongside the road from Gedabek to
Shamkir. Garadag was explored during the Soviet era and a Soviet
resource for the deposit dated 1 January 1992 is set out in Table 8
- "Soviet copper resource for the Garadag deposit". This mineral
resource contained over 318,000 tonnes of copper under the Soviet
standard of resource classification. Garadag has been extensively
explored since the end of the Soviet era, most recently by AzerGold
CJSC, its previous owner.
In August 2022, the Group acquired historical geological and
other data and associated reports (the "Data") in respect of
Garadag owned by AzerGold CJSC for $3.3 million. The Data includes
geochemical and geophysical data including maps and interpretative
reports. Substantial core drilling and data interpretation were
carried out by Azergold CJSC and the Data includes 9,645 chemical
assays taken from 23,454 metres of drill core. The Data also
includes an initial mining scoping study based on a preliminary
mineral resource estimate with various options for mine development
including open pit designs, initial mining schedules and an outline
metallurgical flow sheet. An environmental and socio-economic
baseline assessment has also been carried and is included in the
Data. Since acquisition, the Group has started an extensive
exercise to index, analyse, interpret and verify the Data.
Vejnaly
Vejnaly is a 300 square kilometre Contract Area located in the
Zangilan district in south-west Azerbaijan. It borders Iran to the
south and Armenia to the west and hosts the Vejnaly deposit. Access
to the Contract Area was obtained in 2021 following the resolution
of the conflict between Azerbaijan and Armenia.
A camp is now established at Vejnaly for Group employees. A
thorough survey of the site has been carried out which has found
that the main ore body was extensively mined during the Armenian
occupation. There are both open pit and underground workings at the
location. There is also an existing crusher and flotation
processing plant at the mine which will need extensive renovation
to recommence operation. There was no mining or production at
Vejnaly in H1 2023.
Approximately 35 full-time employees are based at the site, who
are mainly geologists exploring in the vicinity of the existing
mine. During H1 2023, development of a ventilation tunnel commenced
with 22 metres completed. Minor amounts of ore are being extracted
from the underground mine as the geologists clean out and
rehabilitate the tunnels as part of their exploration. This ore
will be transported to Gedabek for processing.
Subsequent to the end of the Period, staff were removed from
Vejnay on the instructions of the Government of Azerbaijan,
following the discovery of a landmine. The Government of Azerbaijan
recommenced de-mining activities to ensure the site was clear of
landmines.
Ordubad
The 462 square kilometre Ordubad Contract Area is located in
Nakhchivan, south-west Azerbaijan, and contains numerous targets.
The Company carried out very limited geological fieldwork in 2021
and 2022, as access was restricted due to the COVID-19 pandemic.
However, drilling resumed in H1 2023 targeting copper porphyry
potential.
Kyzlbulag and Demirli
The Kyzlbulag Contract Area is 462 square kilometres located in
the Karabakh economic region. It contains several mines and has
excellent potential for exploration, as indicated by the presence
of many mineral deposits and known targets in the region. The
Demirli concession is 74 square kilometres and extends to the
north-east by about 10 kilometres from the Kyzlbulag Contract Area
and contains the Demirli mining property. There are indications
that up to 35,000 ounces of gold per year were extracted from the
Kyzlbulag copper-gold mine, before the mine was closed several
years ago, indicating the presence of a gold mineralising
system.
The situation in Karabakh is currently uncertain given the very
recent events when the Government of Azerbaijan (the "Government")
moved to take full control of the region. The Government will use
all reasonable endeavours to ensure that the Company has physical
access to the region to undertake mineral exploration and
production. No work was carried out at Kyzlbulag and Demirli in the
six months to 30 June 2023 as the Group had no access to the
Contract Areas.
Geological exploration
Summary
-- Mineralisation extended at Gilar
o 21 surface core drill holes completed with a total length of
8,650 metres
o Preliminary mineral resources estimate (non-JORC) published
containing over 249,000 ounces of gold, 46,000 tonnes of copper and
48,000 tonnes of zinc
-- Significant copper identified at Xarxar
o 23 surface core drill holes completed with a total length of
10,246 metres
o 6 underground core drill holes completed with a total length
of 1,149 metres
o Initial geological block model and open pit optimisation study
completed
-- Base case using $8,000 per tonne copper price showed over
93,000 tonnes of economically extractable copper
-- Over 300,000 tonnes of copper identified at Garadag
o Comprehensive assessment of historical geological data
continued
o Initial non-JORC assessment showed potential of deposit to
produce over 300,000 tonnes of copper
-- Drilling recommenced at Ordubad
o One drill rig now in operation on the flank of the Kalaky
mineral occurrence
o 5 core drill holes were completed for a total length of 2,684
metres
-- Surface core and reverse circulation drilling continued to
define the Gedabek open pit ore zone
o Two surface core drill holes completed with a total length of
267 metres
o 14 reverse circulation drill holes completed with a total
length of 1,230 metres
o Additional resource of approximately two million tonnes
defined
Gedabek
Gedabek open pit
Two surface core drill holes were completed with a total length
of 267 metres and 14 reverse circulation drill holes completed with
a total length of 1,230 metres to further define the ore zone. The
drilling was mostly located in Pits 9, 10 and 11. Based on the
reverse circulation drilling, a new mineral resource of about two
million tonnes was defined as a northernly continuation of pits 10
and 11. This will be further explored.
Gedabek open pit - underground
82 metres of underground development below pit 4 was completed.
No underground drilling was carried out.
Gadir underground mine
28 metres of exploration tunnelling was completed. No
underground drilling was carried out.
Zafar deposit
The geology of the area is structurally complex, comprising
mainly of Upper Bajocian-aged volcanics. The mineralisation seems
to be associated with a main north-west to south-east trending
structure, which is interpreted as post-dating smaller north-east
to south-west structures. In the south-west area, outcrops with
tourmaline have been mapped, which can be indicative of the
potential for porphyry-style mineral formation.
There was no geological exploration carried out in H1 2023.
Gilar
The area hosts two styles of mineralisation, gold in quartz
veins and hydrothermal gold-copper. Three mineralisation bodies
have been discovered at the occurrence.
Extensive geological exploration was carried out at Gilar in H1
2023. This significantly extended the mineralisation. 21 surface
core drill holes were completed with a total length of 8,560
metres. A magnetometry geophysical programme was completed and a
surface Induction Polarisation ("IP") survey continued throughout
H1 2023. One significant drill hole in H1 2023 with an intercept of
over 50 metres is as follows:
Borehole 22GLDD133: 51.00m @ 1.9g/t gold, 1.4% copper and 0.5%
zinc from 333.00m, including:
-- 34.50m @ 2.6g/t Au, 2.0% Cu and 0.7% zinc at 1.0g/t gold
cut-off from 342.50m, including at a 2.0 g/t Au cut-off
-- 6.80m @ 4.0g/t Au, 6.3% Cu and 3.2% zinc from 345.50m
Gosha
The Gosha mine was previously thought to consist of two narrow
gold veins, zone 13 and zone 5 to the south. Mining has previously
taken place from both veins. However, the recent discovery, Hasan,
is located immediately south of the zone 5 and intersects it at one
point. The host rock mostly exhibits silicification and
kaolinisation alteration, which changes to quartz-haematite
alteration in andesite.
Four underground core drill holes totalling 551 metres were
drilled in the Gosha mine in H1 2023. A detailed underground
sampling programme was also completed in the "Akir" high gold grade
zone. 37 metres of channel samples were taken from "vein 3" from
underground which shows high gold grades.
The Company also carried out surface magnetometry geophysical
exploration work at Asrikchay in H1 2023. A second stage
magnetometry programme was completed and a data interpretation will
be received from Reid Geophysics Limited.
Xarxar
Tunnelling from the new portal continued during the Period. 23
surface core drill holes were completed for a total length of
10,245 metres. These drill holes targeted the central copper
mineralisation zone and intercepted significantly high and
continuous grades of copper. These drill holes defined high and low
grade zones within the copper mineralisation zone. Six underground
core drill holes were completed for a total length of 1,149
metres.
Analysis of the historical geological data acquired in 2022
continued throughout H1 2023. From these data, together with
Company exploration data, an initial geological block model and
open pit optimisation study were completed during H1 2023.
The initial geological block model shows that copper
mineralisation exhibits encouraging continuity. Mineralisation
modelling was carried out within a 0.1 per cent. copper shell and
grade-tonnage estimates were made using various cut-off grades. The
range of the contained amounts of copper, based on mineralisation
above certain depths, is as follows:
Above level 1,200 metres Above level 1,000 metres
Cut-off Mineralisation Resultant Metal Cut-off Mineralisation Resultant Metal
(Cu %) (tonnes) (Cu %) (Cu tonnes) (Cu %) (tonnes) (Cu %) (Cu tonnes)
-------------- --------- ------------ -------
0.15 41,394,352 0.34 140,741 0.15 64,915,146 0.32 207,728
-------------- --------- ------------ ------- -------------- --------- ------------
0.30 17,095,640 0.53 90,607 0.30 23,428,520 0.51 119,485
-------------- --------- ------------ ------- -------------- --------- ------------
0.45 8,150,558 0.72 58,684 0.45 10,212,706 0.71 72,510
-------------- --------- ------------ ------- -------------- --------- ------------
The base case for the open pit optimisation used a copper price
of $8,000. Copper metal prices within the range of $5,000 - $20,000
per tonne were used to test the sensitivity of the open pit to
copper metal prices and mineral zone geometry. Two pit depths were
used as a "minimum" and "maximum" elevation to establish the amount
of mineralisation located beneath the various intervening pit
floors. Significant mineralisation is located below the open pit
floor in the base case. This will allow for the optimisation of the
combined open pit and underground mining approach.
The results of the initial open pit optimisation study (Base
Case 'OP 3' using a copper price of $8,000) and sensitivities are
shown in the following table:
OPTION ORE (tonnes) WASTE (tonnes) STRIPPING COPPER COPPER BOTTOM
(copper price/tonne) RATIO (tonnes) (per cent.) DEPTH (metres)
OP1 - $5,000 7,362,221 21,685,157 2.9 51,513 0.70 150
------------ -------------- --------- --------- ------------ ---------------
OP2 - $7,500 17,334,016 29,376,561 1.7 85,573 0.49 190
------------ -------------- --------- --------- ------------ ---------------
Base Case
OP3 - $8000 20,116,723 31,982,108 1.6 93,408 0.46 205
------------ -------------- --------- --------- ------------ ---------------
OP4 - $10,000 29,176,251 39,932,179 1.4 114,732 0.39 240
------------ -------------- --------- --------- ------------ ---------------
OP5 - $12,000 36,224,004 52,831,917 1.5 130,876 0.36 270
------------ -------------- --------- --------- ------------ ---------------
OP6 - $15,000 43,739,585 76,392,038 1.7 147,663 0.34 310
------------ -------------- --------- --------- ------------ ---------------
OP7 - $20,000 53,028,965 131,403,872 2.5 169,064 0.32 360
------------ -------------- --------- --------- ------------ ---------------
Garadag
No geological field work was carried out. However, assessment of
the acquired historical geological data continued throughout H1
2023. Geological re-logging of six core drill holes was completed.
This will assist in understanding the porphyry copper potential of
the deposit. A photographic unit was established to photograph all
23,000 metres of drill core acquired along with the historic
data.
A mineral resource estimation based on geostatistical techniques
and three-dimensional modelling on data received from AzerGold CJSC
was completed in H1 2023. This showed an "Indicated" plus
"Inferred" mineral resource of over 66.3 million tonnes of ore at
0.49 per cent. copper, containing some 324,688 tonnes of copper,
which further confirmed the copper potential of the Garadag
deposit.
Vejnaly
The Vejnaly deposit is located within the volcanic-plutonic
structure of the Kafan structure formation and incorporates
twenty-five gold-bearing vein zones. Ore veins and zones of the
deposit are mainly represented by quartz-sulphide and, rarely, by
quartz-carbonate-sulphide veins and hydrothermally altered,
disintegrated and brecciated rocks. Sulphides are dominated by
pyrite with subordinate chalcopyrite. There are prospects for
porphyry, epithermal and skarn type deposits.
A geological exploration team and fire assay laboratory has been
established at Vejnaly. In H1 2023, underground sampling in Zone 2
and logging of historic drill holes continued. Some assays of
historic core samples show high grade gold. Vein sampling assays of
the deposits also show significant high-grade gold.
"World View 3" satellite image data for the entire Vejnaly
Contract Area was obtained in H1` 2023. This is currently being
analysed to identify potential exploration targets.
Ordubad
The COVID-19 restrictions, which have prevented access to
Ordubad, were lifted during H1 2023 and the Company recommenced its
drilling programme. During H1 2023, 5 core drill holes were
completed for a total length of 2,684 metres on the flank of the
Kalaky mineral occurrence targeting porphyry copper potential. The
drill holes mainly intercepted weak altered intrusive rocks within
a silica halo.
Based on our latest understanding of porphyry mineralisation, a
reassessment of the Shakardara deposit commenced in H1 2023. 2,908
metres of previously drilled core were relogged and some intervals
were resampled.
Dr. Robin N. Armstrong, mining sector leader of the Natural
History Museum, London, visited Ordubad during H1 2023. During his
visit, geological logging of the last phase of the core drill holes
was carried out. Samples were also selected for a pathfinder
geochemistry study which will assist in identifying possible copper
porphyry mineral targets.
The Company is awaiting results from the samples collected by
the geological team from the Natural History Museum London as part
of their ongoing "From Arc Magmas to Ores" ("FAMOS") international
research project. This study is being carried out to determine
whether there are any indications of a porphyry system within the
Ordubad Contract Area. The results of this investigation have
unfortunately been delayed by the COVID-19 pandemic.
Sale of the Group's products
Important to the Group's success is its ability to transport its
production to market and sell them without disruption.
In H1 2023, the Group shipped all its gold doré to Switzerland
for refining by either MKS Finance SA or Argor-Heraeus SA. The
Group continually reviews which refiner offers the best commercial
terms, and based on this, decides to which refiner to ship each
consignment. The logistics of transport and sale are well
established and gold doré shipped from Gedabek arrives in
Switzerland within three to five days. The proceeds of the
estimated 90 per cent. of the gold content of the doré can be
settled within one to two days of receipt of the doré. The Group,
at its discretion, can sell the resulting refined gold bullion to
the refiner.
The Gedabek mine site has good road transportation links and
copper and precious metal concentrate is collected by truck from
the Gedabek site by the purchaser. The Group sells its copper
concentrate to three metal traders as detailed in note 2 to the
condensed Group interim financial statements below. The contracts
with each metal trader are periodically renewed and each new
contract requires the approval of the Government of Azerbaijan.
Libero Copper & Gold Corporation
Libero is a minerals exploration company listed on the Toronto
TSX Venture Exchange (ticker LBC). Anglo Asian owned approximately
20 per cent. of Libero throughout H1 2023. Michael Sununu was a
board member of Libero throughout H1 2023 and Farhang Hedjazi
served as the Company's representative on Libero's technical
committee.
Libero has an extremely attractive portfolio of exploration
assets in mining-friendly jurisdictions in North and South America,
including Mocoa in Colombia, Big Bulk and Big Red in British
Columbia, Canada, and Esperanza in Argentina.
In January 2023 Libero announced the results of its 2022 summer
drill programme at its Terry porphyry copper and gold project. One
drill hole returned 0.24 per cent. copper and 0.03 grammes per
tonne of gold. The drill hole successfully intersected the
extension of the Terry porphyry mineralisation.
No drilling was carried out at Mocoa in H1 2023 as Libero is
awaiting permits to drill. However, the new San Jose access to the
Mocoa project was completed. This access is 2.1 kilometres in
length and is for the transport of drills and ancillary supplies.
It eliminates expensive helicopter support for drilling activities.
Libero also collaborated with national universities and communities
on a Colombian Government initiative called the "Green Route". This
initiative is to develop an in-country copper supply chain which is
sustainable. Libero also participated in the first ever Colombia
Green Energy Summit.
At Ezperanza, Libero continued the required consultations to
finalise the permitting process and advance the project.
Further information can be found at
https://www.liberocopper.com/ .
Principal risks and uncertainties
Country risk in Azerbaijan
The Group's wholly-owned operations are solely in Azerbaijan and
are therefore at risk of adverse changes to the regulatory or
fiscal regime within the country. However, Azerbaijan is outward
looking and desirous of attracting direct foreign investment and
the Company believes the country will be sensitive to the adverse
effect of any proposed changes in the future. In addition,
Azerbaijan has historically had a stable operating environment and
the Company maintains very close links with all relevant
authorities.
Operational risk
The Company currently produces all its products for sale at
Gedabek. Planned production may not be achieved as a result of
unforeseen operational problems, machinery malfunction or other
disruptions. Operating costs and profits for commercial production
therefore remain subject to variation. The Group monitors its
production daily, and has robust procedures in place to effectively
manage these risks.
Commodity price risk
The Group's revenues are exposed to fluctuations in the price of
gold, silver and copper and all fluctuations have a direct impact
on the operating profit and cash flow of the Group. Whilst the
Group has no control over the selling price of its commodities, it
has very robust cost controls to minimise expenditure to ensure it
can withstand any prolonged period of commodity price weakness. The
Group actively monitors all changes in commodity prices to
understand the impact on its business. The directors keep under
review the potential benefit of hedging which it carries out from
time to time.
Foreign currency risk
The Group reports in United States Dollars and a large
proportion of its costs are incurred in United States Dollars. It
also conducts business in Australian Dollars, Azerbaijan Manats and
United Kingdom Sterling. The Group does not currently hedge its
exposure to other currencies, although it continues to review this
periodically.
Liquidity and interest rate risk
During H1 2023, the Group had only occasional minor bank
borrowings and borrowings in connection with providing letters of
credit to suppliers. The Group did therefore not have any
significant interest rate risk during the year.
The Group had surplus cash deposits during H1 2023. The Group
places these on deposit in United States dollars with a range of
banks to both ensure it obtains the best return on these deposits
and to minimise counterparty risk. The amount of interest received
on these deposits is not material to the financial results of the
Company and therefore any decrease in interest rates would not have
any adverse effect.
Russian invasion of Ukraine
The Company is unaffected directly by the Russian invasion of
Ukraine or the international sanctions levied against various
private and governmental Russian entities. However, the Company is
subject to global the macro-economic conditions resulting from the
Russian invasion such as higher input costs.
Key performance indicators
The Group has adopted certain key performance indicators
("KPIs") which enable it to measure its financial performance.
These KPIs are as follows:
1 Profit before taxation. This is the key performance indicator
used by the Group. It gives insight into cost management,
production growth and performance efficiency.
2 Net cash provided by operating activities. This is a
complementary measure to profit before taxation and demonstrates
conversion of underlying earnings into cash. It provides additional
insight into how we are managing costs and increasing efficiency
and productivity across the business in order to deliver increasing
returns.
3 Free cash flow ("FCF"). FCF is calculated as net cash from
operating activities, less expenditure on property, plant and
equipment and mine development, and Investment in exploration and
evaluation assets including other intangible assets.
4 All-in sustaining cost ("AISC") per ounce . AISC is a widely
used, standardised industry metric and is a measure of how our
operation compares to other producers in the industry. AISC is
calculated in accordance with the World Gold Council's Guidance
Note on Non-GAAP Metrics dated 27 June 2013. The AISC calculation
includes a credit for the revenue generated from the sale of copper
and silver, which are classified by the Group as by-products. There
are no royalty costs included in the Company's AISC calculation as
the Production Sharing Agreement with the Government of Azerbaijan
is structured as a physical production sharing arrangement.
Therefore, the Company's AISC is calculated using a cost of sales,
which is the cost of producing 100 per cent. of the gold and such
costs are allocated to total gold production including the
Government of Azerbaijan's share.
Reza Vaziri
President and chief executive
25 September 2023
Financial Review
Group statement of income
The Group generated revenues in the six months ended 30 June
2023 ("H1 2023") of $30.8 million ("m") (H1 2022: $31.5m) from the
sales of gold and silver bullion and copper and precious metal
concentrate.
The revenues in H1 2023 included $20.4m (H1 2022: $21.7m)
generated from the sales of gold and silver bullion from the
Group's share of the production of gold doré bars. Bullion sales in
H1 2023 were 10,506 ounces of gold and 5,480 ounces of silver (H1
2022: 11,273 ounces of gold and 11,169 ounces of silver) at an
average price of gold of $1,939 per ounce and an average price of
silver of $23 per ounce (H1 2022: $1,901 per ounce and $24 per
ounce respectively). In addition, the Group generated revenue in H1
2023 of $10.4m (H1 2022: $9.8m) from the sale of 6,648 dry metric
tonnes (H1 2022: 6,119 dry metric tonnes) of copper and precious
metal concentrate.
A gold sales hedging programme was established in H1 2023.
Monthly forward sales of gold bullion were made equivalent to
approximately 25 to 30 per cent. of the Group's share of budgeted
gold bullion production for the months of June to December 2023.
The contracts mature at the end of each respective month and a
total of 4,600 ounces of gold bullion was forward sold. The forward
sales were made at prices between $1,949.75 to $1,979.25 per ounce
of gold. The spot price of gold at the time of contracting the
forward sales was $1,947.50. 1,000 ounces of gold were sold on 30
June 2023 under the hedge programme for $1,947.50 per ounce when
the LBMA PM gold price was $1,912.25.
The Group incurred cost of sales in H1 2023 of $25.2m (H1 2022:
$20.4m) as follows:
H1 2023 H1 2022 B/(W)*
($m) ($m) ($m)
Cash cost of sales** 2 6.3 27.4 1.1
Depreciation and amortisation 6.0 6.4 0.4
--------- --------- --------
Cash costs, depreciation and amortisation 32.3 33.8 1.5
Capitalised costs (1.8) (1.2) 0.6
--------- --------- --------
Cost of sales before inventory movement
and leases 30.5 32.6 2.1
Lease adjustments 0.1 - (0.1)
Inventory movement (5.4) (12.2) (6.8)
--------- --------- --------
Cost of sales per the Group statement
of income 25.2 20.4 (4.8)
------------------------------------------- --------- --------- --------
*B/(W) - Better or Worse
**Cash costs of sales are defined as cost of sales per the Group
statement of income less depreciation and amortisation plus
capitalised costs adjusted by the movement in the period of opening
and closing inventory. A reconciliation of cash cost of sales to
cost of sales per the Group income statement is given in the table
above.
The lower cash costs of sales in H1 2023 compared to H1 2022
were largely due to lower reagent costs partially offset by higher
consumable costs. Reagent costs decreased by $1.3m due to lower
cyanide costs due to less cyanide leaching carried out in H1 2023.
Materials and consumables increased by a total of $0.6m due to
increased production by flotation in H1 2023.
Depreciation decreased by $0.4m from $6.4m in H1 2022 to $6.0m
in H1 2023 due to lower gold production. Accumulated mine
development costs within producing mines are depreciated and
amortised on a unit-of-production basis over the economically
recoverable reserves of the mine concerned or by the straight line
method. The unit of account for run of mine ("ROM") costs and for
post-ROM costs are recoverable ounces of gold.
The $5.4m inventory movement arose due to increased gold doré
and copper concentrate stocks at 30 June 2023 compared to 30
December 2022 as discussed in 'Group statement of financial
position'.
Administrative expenses in H1 2023 were $3.2m compared to $3.1m
in H1 2022. The Group's administrative expenses comprise the cost
of the administrative staff and associated costs at the Gedabek
mine site, the Baku office and maintaining the Group's listing on
AIM.
Finance costs in H1 2023 were $0.7m (H1 2022: $0.4m) and
comprise interest on bank debt and letters of credit, interest on
lease liabilities and interest accretion expense on the
rehabilitation provision. The finance costs were mainly higher due
to higher interest accretion expense on the rehabilitation
provision due to higher US dollar interest rates.
Other expense in H1 2023 was $nil (H1 2022: $710,000). The
expense in H1 2022 included the decrease in the value of Libero
Copper & Gold Corporation ("Libero") shares between 1 January
to 26 January (the date it became an associate company) of
$221,000, a loss on the revaluation of share options in Libero of
$304,000 and expensing the forward contract of $214,000 established
in respect of the January 2022 Libero share acquisition.
The Group had a taxation charge in H1 2023 of $0.6m (H1 2022:
$2.2m). This comprised a current income tax charge of $nil (H1
2022: $nil) and a deferred tax charge of $0.6m (H1 2022: $2.2m).
R.V. Investment Group Services ("RVIG") in Azerbaijan incurred a
taxable loss of $8.3m in H1 2023 (2022: $9.4m) and these losses
will be carried forward and offset against future taxable profits.
RVIG has no other taxable losses available for offset against
future profits.
The Group had an Other comprehensive profit in H1 2023 of
$126,000 (H1 2022: loss of $34,000). This was a translation gain on
the translation of Libero's financial statements into United States
dollars at 30 June 2023. This arose as the Canadian dollar
strengthened against the United States dollar in H1 2023 as
discussed in 'Libero Copper & Gold Corporation'.
All-in sustaining cost of production
AISC is a widely used, standardised industry metric and is a
measure of how our operation compares to other producers in the
industry. AISC is calculated in accordance with the World Gold
Council's Guidance Note on Non-GAAP Metrics dated 27 June 2013. The
AISC calculation includes a credit for the revenue generated from
the sale of copper and silver, which are classified by the Group as
by-products. There are no royalty costs included in the Company's
AISC calculation as the Production Sharing Agreement with the
Government of Azerbaijan is structured as a physical production
sharing arrangement. Therefore, the Company's AISC is calculated
using a cost of sales, which is the cost of producing 100 per cent.
of the gold and such costs are allocated to total gold production
including the Government of Azerbaijan's share.
The Group produced gold at an all-in sustaining cost ("AISC")
per ounce of $1,357 in H1 2023 compared to $983 in H1 2022. The
Group reports its cash cost as an AISC calculated in accordance
with the World Gold Council's guidance which is a standardised
metric in the industry and includes the credit from the sales of
silver and copper.
The Company's cost of production was broadly flat in H1 2023
compared to H1 2022 as many of the costs are fixed or semi-fixed.
However, the AISC cost per ounce increased due to the significantly
lower gold production in the Period.
Group statement of financial position
Non-current assets increased from $102.2m at 31 December 2022 to
$ 106.6m at 30 June 2023. Intangible assets increased from $38.6m
at 31 December 2022 to $42.5m at 30 June 2023 due to expenditure on
geological exploration and evaluation of $4.3m partially offset by
amortisation of $0.4m mainly in respect of mining rights. Property,
plant and equipment (including leased assets) were lower by $0.1m
due to additions to fixed and leased assets offset by depreciation
in the period. The rehabilitation provision also decreased.
Net current assets were $57.6m at 30 June 2023 compared to
$60.5m at 31 December 2022. The main reason for the decrease was a
decrease of cash of $10.6m partially offset by an increase in
inventories of $8.3m. Inventories increased by $8.3 due to an
increase in stock of finished goods of $6.2m and spare parts and
consumables of $3.0m. There were 2,553 ounces of unsold gold and
3,332 tonnes of unsold concentrate at 30 June 2023 compared to
1,448 ounces of unsold gold and 583 tonnes of unsold concentrate
respectively at 31 December 2022. These were offset by a decrease
of metal in circuit of $1.4m. Trade and other receivables
(excluding the amount owed to the Government of Azerbaijan)
increased by $1.5m. The Group's cash balances at 30 June 2023 were
$9.6m (31 December 2022: $20.4m). Surplus cash is mostly maintained
in US dollars which is placed on deposit with banks at interest
rates of around 4 per cent.
Shareholders' equity of the Group at 30 June 2023 was $114.5m
(31 December 2022: $113.5m). The increase was primarily due to the
profit retained in the Period of $0.8m and share based payment
expense credited to reserves of $0.1m. There were no shares issued
or bought back in H1 2023.
The Group was financed only by equity at 31 December 2022 and 30
June 2023 as there was no bank debt outstanding. The Group did have
an insignificant amount of very short-term bank borrowing in H1
2023 which was all repaid by 30 June 2023.
Libero Copper & Gold Corporation
Libero Copper and Gold Corporation ("Libero") remained an
associate company of the Group throughout H1 2023. The Group made
two further investments in Libero in H1 2023 as follows:
-- 6 January 2023: 2.6 million shares at CAD 15 cents per share for a total of $294,000
-- 19 February 2023: 3.2 million shares at CAD 15 cents per share for a total of $362,000
Libero's loss after taxation in H1 2023 was CAD$3.6m and the
Group's share of this loss was $213,000. The Group also included a
foreign exchange gain on revaluation of its investment in Libero of
$126,000 as the Canadian dollar strengthened from $1 equalled
CAD$1.3544 at 1 January 2023 to $1 equalled CAD$1.3255 at 30 June
2023.
A reconciliation of the carrying cost of Libero to its net
assets at 30 June 2023 is as follows:
Company's share of the net assets of Libero 1,819
Goodwill 3,912
------
Carrying value of Libero at 30 June 2023 5,731
------
Group statement of cash flow
Operating cash inflow before movements in working capital for H1
2023 was $8.6m (H1 2022: $14.6m).
Working capital movements in H1 2023 absorbed cash of $8.0m (H1
2022: $17.2m) mainly due to an increase in inventories of $8.3m (H1
2022: $12.1m). The increase in inventories was due to an increase
of unsold gold bullion and copper concentrate as described in
'Group statement of financial position'.
There was a cash inflow from operating activities in H1 2023 of
$0.6m compared to a cash outflow in H1 2022 of $6.0m. The cash
inflow resulted from less cash absorbed by working capital and
lower income tax paid of $nil (H1 2022: $3.7m)
The Group paid corporation tax in H1 2023 of $nil (H1 2022:
$3.4m) in Azerbaijan as RVIG was incurring taxable losses.
Expenditure on property, plant and equipment in H1 2023 was
$6.6m (H1 2022: $4.8m). The main items of expenditure in H1 2023
were deferred stripping costs of $1.3m, mine development costs
$3.1m, miscellaneous plant and equipment of $0.6m and tailing dam
development of $0.6m.
Exploration and evaluation expenditure incurred and capitalised
in H1 2023 was $3.8m (H1 2022: $2.4m). This arose on exploration
and evaluation of all the Group's contract areas.
Dividends
The Group paid an interim and final dividend in respect of the
year ended 31 December 2022 totalling $0.08 per share. The Group
declares its dividends in United States dollars but pays the
dividends in United Kingdom pounds sterling. The dividends declared
are converted into United Kingdom pounds sterling using a five-day
average of the daily sterling closing mid-price exchange rate
published by the Bank of England at 16:00 each day for a week prior
to the payment of each dividend. The week used for the averaging is
announced at the same time as the dividend. No interim dividend was
declared in respect of the year ending 31 December 2023.
Production sharing agreement
In accordance with the terms of the Production Sharing Agreement
("PSA") with the Government of Azerbaijan ("Government"), the Group
and the Government share the commercial products of each mine. The
Government's share is 51 per cent. of "Profit Production". Profit
Production is defined as the value of production, less all capital
and operating cash costs incurred during the period when the
production took place. Profit Production for any period is subject
to a minimum of 25 per cent. of the value of the production. This
is to ensure the Government always receives a share of production.
The minimum Profit Production is applied when the total capital and
operating cash costs (including any unrecovered costs from previous
periods) are greater than 75 per cent. of the value of production.
All operating and capital cash costs in excess of 75 per cent. of
the value of production can be carried forward indefinitely and set
off against the value of future production.
Profit Production and unrecovered costs are calculated
separately for each contract area and costs incurred at one
contract area cannot be offset against production at another.
Unrecovered costs can only be recovered against future production
from their respective contract area.
Profit Production for the Gedabek Contract Area has been subject
to the minimum 25 per cent. since commencement of production
including both the year to 31 December 2022 and the 6 months to 30
June 2023. The Government's share of production in the six months
to 30 June 2023 (as in all previous periods) was therefore 12.75
per cent. being 51 per cent. of 25 per cent. with the Group
entitled to the remaining 87.25 per cent. The Group was therefore
subject to an effective royalty on its revenues from the Gedabek
Contract Area in the six months to 30 June 2023 of 12.75 per cent.
(six months to 30 June 2022: 12.75 per cent.) of the value of its
production.
The Group produced gold and copper for the first time in 2021
from its Vejnaly Contract Area and part of the metal produced was
sold in H1 2023. The Government's share of this production was 32.0
per cent. This is because the mine and other facilities were
acquired at no cost and the only costs available to offset the
production were the administration costs of the site, minor
refurbishment capital expenditure, the cost of geological
exploration and Gedabek processing costs. Mining costs were not
available for offset as the metal was produced from ore stockpiled
at Vejnaly by the previous owner. The revenues from the Vejnaly
Contract Area in H1 2023 were not material to the Group's
revnues.
The Group can recover the following costs in accordance with the
PSA for each Contract Area as follows:
-- all direct operating expenses of the mine;
-- all exploration expenses;
-- all capital expenditure incurred on the mine;
-- an allocation of corporate overheads - currently, overheads
are apportioned to Gedabek according to the ratio of direct capital
and operating expenditure at the Gedabek contract area compared
with direct capital and operational expenditure at the Gosha and
Ordubad contract areas; and
-- an imputed interest rate of United States Dollar LIBOR + 4
per cent. per annum on any unrecovered costs.
The total unrecovered costs for the Gedabek, Gosha and Vejnaly
contract areas at 30 June 2023 were $47.6m, $33.0m and $1.4m
respectively (31 December 2022: $29.7m, $19.7m and $0.8
respectively).
The unrecovered costs at 30 June 2023 for the Garadag and Xarxar
contract areas were $1.0m and $2.9m respectively (31 December 2022:
$0.9m and $1.0m respectively). The unrecovered costs include cash
payments for historical geological data of $0.8m and $0.2m in
respect of Garadag and Xarxar respectively.
Foreign currency exposure
The Group reports in US dollars and a substantial proportion of
its business is conducted in either US dollars or the Azerbaijan
Manat ("AZN") which has been stable at AZN 1 equalling
approximately $0.58 during the six months ended 30 June 2023. The
Company's revenues and its debt facility are also denominated in US
dollars. The Company does not currently have any significant
exposure to foreign exchange fluctuations and the situation is kept
under review.
Going concern
Main business of the Group
The Group produces primarily gold and copper at its Gedabek
mining concession in north-western Azerbaijan. Ore mined at Gedabek
produces gold doré by heap and agitation leaching and copper
concentrate (which also contains gold and silver) from SART and
flotation processing. When processing operations are fully
operational, production is cash generative at current metal prices.
Historically, the Group has funded all its operational costs
(including its Baku and London overheads) from cash generated from
the sale of precious metal and copper produced at Gedabek.
Curtailment of agitation leaching and flotation processing and
current operations
The Group's agitation leaching and flotation processing produces
waste as a slurry called tailings. These tailings are stored in a
dam approximately seven kilometres from the Group's processing
plants. Cyanide is used as a reagent in agitation leaching
processing and there are strict controls in place to prevent the
cyanide from contaminating the tailings. The tailings dam is
nearing full capacity and the Group had identified a valley next to
its existing tailings dam as a possible site for the location of a
second tailings dam. The Government of the Republic of Azerbaijan
(the "Government") has given the Group land use permission for the
second dam.
In June 2023, inhabitants of Soyudlu village, which is close to
the proposed site of the second tailings dam, protested against its
construction. The Group has generally very good relations with
communities in the local area around Gedabek and these protests
were wholly unexpected. The protesters claimed that the existing
tailings dam contains cyanide contamination which is polluting the
environment in its vicinity. It could therefore be a danger to the
health of local residents and the flora and fauna in the
surrounding area.
As a result of the protests, the Government and the Company,
jointly commissioned Micon International Co Limited ("Micon") to
carry out a health, safety and environmental review of tailings
management at Gedabek in late July 2023. The review included
sampling soil, ground water and surface water for cyanide. Samples
were assayed at an accredited laboratory in Azerbaijan. The Group
also arranged for its own environmental consultants to accompany
Micon and for parallel sampling and check assays to be performed.
The discharge of tailings into the tailings dam was stopped from
the beginning of August 2023 in conjunction with the environmental
study. This required the staged curtailment of agitation leaching
and flotation processing. The Group also suspended blasting and
mining from the beginning of August 2023 to conserve funds.
The Group is currently only producing gold doré from heap
leaching and copper concentrate from SART processing. There is
currently no mining of ore and the development of the Gilar and
Zafar mines has been stopped.
Micon report and restart of full production
The Group will only restart agitation leaching and flotation
processing after issuance of the Micon report by the Government. It
is anticipated that the Group, in conjunction with the Government,
will implement changes to its operations to rectify any issues
raised in the Micon report. The Group will work with the Government
to address any issues and identify a time for resumption of its
curtailed operations. The Company is still awaiting the issue of
the final Micon report.
Should agitation leaching and flotation processing restart, the
existing tailings dam currently only has sufficient capacity for
approximately three months further production. The capacity of the
tailings dam has been increased several times in the past by
increasing the height of its wall. The Group now wishes to further
increase the height of the wall by an average of 7.5 metres to give
the tailings dam sufficient capacity for an additional two to three
years of production. This raise of the dam wall will be carried out
in stages with the first stage being a raise of approximately 2.5
metres. The Group has applied to the Government for permission to
raise the wall and the environmental engineers, Shinyei Kaisha are
being commissioned to carry out a study to ensure it has sufficient
structural stability for a further raise. It is expected the study
will take approximately four months and be completed by January
2024. Upon receiving permission, the first raise of approximately
2.5 metres of the tailings dam wall is expected to take
approximately four months to complete. Given that the current
tailings dam only has three months capacity, and it may take up to
eight months in total to obtain permission and then carry the raise
of the wall, further interruptions to full production will be
necessary once production resumes.
Financial condition of the Group and forecast till end of
September 2024
The Group has in place an ANZ 55 million ($32.3 million)
revolving credit facility with the International Bank of Azerbaijan
("IBA") with no conditions on drawdown. Under the terms of the
revolving credit facility, there is a general obligation on the
Group that there should be no significant deterioration in its
financial position. The partial curtailment of processing
operations means the Group can no longer meet this obligation.
Accordingly, IBA have informally advised the Group that they have
suspended lending under the revolving credit facility.
The Group has cash reserves of $10.4 million at 25 September
2023. The current costs of maintaining the Group's operations on a
"care and maintenance" basis including administrative overheads in
Baku and London is estimated at $1.5 million per month. Cash
forecasts show that if the Group only continues to heap leach gold
and cannot resume borrowing from IBA, it will exhaust its current
cash reserves in the first quarter of 2024. To finance its
operations from the first quarter of 2024 onwards, the Group will
need to have restarted full operations and agreed to a resumption
of lending from IBA under its revolving credit facility.
The Group has prepared a 12 month cash flow forecast until the
end of September 2024, assuming resumption of its processing
operations and availability of its IBA credit line. It also assumes
the first 2.5 metre raise of the tailing will be completed by May
2024. This cash flow uses a gold price of $1,900 per ounce, a
copper price of $8,200 per tonne. This base case cash flow shows
that the Group is able to finance its operations till 30 September
2024.
Material uncertainties over going concern
At the time of approving the issuance of the financial
statements, there exist several material uncertainties related to
future events that may cast doubt on the Group's ability to
continue as a going concern. It may therefore be unable to realise
its assets and discharge its liabilities in the normal course of
business.
These material uncertainties are as follows:
1 The Group will be able to fully restart agitation leaching and flotation processing.
2 IBA will agree to restart lending to the Group under its revolving credit facility.
3 The Government will not impose any conditions or fines etc. on
the Group which will be so onerous as to make it impossible for the
Group to continue in commercial operation.
4 Permission will be obtained to further raise the wall of the
tailings dam and this wall raise will be completed by April
2023.
The Group operates its Gedabek site using best environmental
practice. The directors therefore have an expectation that Micon
report will not contain any adverse findings that will prevent it
from resuming operations.
The Group's tailing dam has been subject to regular inspections
by both CQA and Knight Piésold. These two firms of environmental
engineers have both reported no issues with the structural
stability of the wall of the tailings dam. In addition, Knight
Piésold have recommended that a further raise of the wall presents
no danger of structural failure. The directors therefore also have
an expectation that approval will be obtained for a further raise
of its existing tailings dam wall and that the raise can be carried
in sufficient time to enable the Group to meet its 12 month cash
flow forecast until the end of September 2024.
Accordingly, but recognising the degree of uncertainty in a
dynamic situation, the directors believe it is appropriate to
prepare these financial statements on a going concern basis. The
financial statements do not contain any adjustments that would be
required to be made if they were prepared on a basis other than the
going concern basis.
The Group's business activities, together with the factors
likely to affect its future development, performance and position,
can be found within the chairman's statement, the Chief Executive
Officer's review and the strategic report above. The financial
position of the Group, its cash flow, liquidity position and
borrowing facilities are discussed within this financial
review.
William Morgan
Chief financial officer
25 September 2023
Anglo Asian Mining plc
Condensed group statement of income
Six months ended 30 June 2023
6 months 6 months
to to
30 June 30 June
2023 2022
(unaudited) (unaudited)
Continuing operations Notes $000 $000
-------------------------------- ----- --------------------------- -----------------
Revenue 2 30,785 31,548
Cost of sales (25,214) (20,426)
-------------------------------- ----- --------------------------- -----------------
Gross profit 5,571 11,122
Other operating income 119 -
Administrative expenses (3,171) (3,058)
Other operating expenses (343) (511)
Operating profit 2,176 7,553
Finance costs (731) (359)
Finance income 127 39
Other expense - (710)
Share of loss of an associate
company 3 (213) (866)
-------------------------------- ----- --------------------------- -----------------
Profit before tax 1,359 5,657
Income tax expense 4 (546) (2,182)
-------------------------------- ----- --------------------------- -----------------
Profit attributable to the
equity holders of the parent 813 3,475
-------------------------------- ----- --------------------------- -----------------
Profit per share attributable
to the equity holders of the
parent 813 3,475
-------------------------------- ----- --------------------------- -----------------
Basic (US cents per share) 5 0.71 3.04
Diluted (US cents per share) 5 0.71 3.04
-------------------------------- ----- --------------------------- -----------------
Anglo Asian Mining plc
Condensed group statement of comprehensive income
Six months ended 30 June 2023
6 months 6 months
to to
30 June 30 June
2023 2022
(unaudited) (unaudited)
$000 $000
------------------------------------- -------------- -------------
Profit for the period 813 3,475
Other comprehensive income
Other comprehensive income that
may be reclassified to profit
or loss in subsequent periods*:
Exchange differences on translation
of foreign associate company 132 (37)
Share of comprehensive (loss)
/ profit of an associate company (6) 3
------------------------------------- -------------- -------------
Net other comprehensive profit
/ (loss) that may be reclassified
to profit or loss in subsequent
periods 126 (34)
------------------------------------- -------------- -------------
Total comprehensive income for
the period, net of tax* 939 3,441
------------------------------------- -------------- -------------
* These are gross amounts and the tax effect is $nil.
Anglo Asian Mining plc
Condensed group statement of financial position
30 June 2023
30 June 31 December
2023 30 June 2022 2022
(unaudited) (unaudited) (audited)
Notes $000 $000 $000
------------------------------ ----- -------------- ------------- ------------
Non-current assets
Intangible assets 6 42,492 32,200 38,616
Property, plant and equipment 7 56,140 56,853 56,045
Leased assets 8 2,171 2,814 2,363
Investment in an associate
company 3 5,731 4,049 5,172
Non-current financial
assets 9 39 80 39
106,573 95,996 102,235
------------------------------ ----- -------------- ------------- ------------
Current assets
Inventory 10 48,493 49,019 40,202
Trade and other receivables 11 15,640 29,784 18,331
Current income tax asset - 300 -
Cash and cash equivalents 9,556 21,152 20,410
------------------------------ ----- -------------- ------------- ------------
73,689 100,255 78,943
------------------------------ ----- -------------- ------------- ------------
Total assets 180,262 196,251 181,178
------------------------------ ----- -------------- ------------- ------------
Current liabilities
Trade and other payables 12 (15,673) (32,131) (18,022)
Income taxes payable - - (46)
Lease liabilities 8 (449) (429) (419)
------------------------------ ----- -------------- ------------- ------------
(16,122) (32,560) (18,487)
------------------------------ ----- -------------- ------------- ------------
Net current assets 57,567 67,695 60,456
------------------------------ ----- -------------- ------------- ------------
Non-current liabilities
Trade and other payables (3,009) - (2,897)
Provision for rehabilitation (16,006) (12,026) (16,006)
Lease liabilities 8 (2,059) (2,715) (2,289)
Deferred tax liability 4 (28,538) (26,881) (27,992)
------------------------------ ----- -------------- ------------- ------------
(49,612) (41,622) (49,184)
------------------------------ ----- -------------- ------------- ------------
Total liabilities (65,734) (74,182) (67,671)
------------------------------ ----- -------------- ------------- ------------
Net assets 114,528 122,069 113,507
------------------------------ ----- -------------- ------------- ------------
Equity
Share capital 13 2,016 2,016 2,016
Share premium 14 33 33 33
Treasury shares (145) - (145)
Share-based payment reserve 506 223 424
Merger reserve 46,206 46,206 46,206
Foreign currency translation
reserve (101) (34) (233)
Retained earnings 66,013 73,625 65,206
Total equity 114,528 122,069 113,507
------------------------------ ----- -------------- ------------- ------------
Anglo Asian Mining plc
Condensed group statement of cash flows
Six months ended 30 June 2023
6 months 6 months
to to
30 June 30 June 2022
2023
(unaudited) (unaudited)
$000 $000
----------------------------------------------- ------------- -------------
Cash flows from operating activities
Profit before tax 1,359 5,657
Adjustments to reconcile profit before
tax to net cash flows:
Finance costs 731 359
Finance income (127) (39)
Unrealised loss on financial instruments - 743
Gain on the modification of lease liabilities (28) -
Depreciation of owned assets 5,689 5,945
Depreciation of leased assets 229 306
Share based payment 82 211
Share of loss of an associated company 214 866
Amortisation of mining rights and other
intangible assets 399 550
Foreign exchange loss 88 -
--------------------------------------------------- ------------- -------------
Operating cash flow before movements
in working capital 8,636 14,598
Increase in trade and other receivables (515) (3,666)
Increase in inventories (8,291) (12,107)
Increase / (decrease) in trade and other
payables 852 (1,461)
--------------------------------------------------- ------------- -------------
Cash generated from / (absorbed by) operations 682 (2,636)
Income taxes paid (46) (3,363)
--------------------------------------------------- ------------- -------------
Net cash provided by / (used by) operating
activities 636 (5,999)
--------------------------------------------------- ------------- -------------
Cash flows from investing activities
Expenditure on property, plant and equipment
and mine development (6,623) (4,794)
Investment in exploration and evaluation
activities (3,784) (2,403)
Acquisition of an associated company - (2,776)
Further investment in an associated company (646) -
Interest received - 38
--------------------------------------------------- ------------- -------------
Net cash used in investing activities (11,053) (9,935)
--------------------------------------------------- ------------- -------------
Cash flows from financing activities
Interest paid - lease liabilities (140) (164)
Repayment of lease liabilities (209) (203)
--------------------------------------------------- ------------- -------------
Net cash used in financing activities (349) (367)
--------------------------------------------------- ------------- -------------
Net decrease in cash and cash equivalents (10,766) (16,301)
Net foreign exchange difference (88) -
Cash and cash equivalents at beginning
of period 20,410 37,453
--------------------------------------------------- ------------- -------------
Cash and cash equivalents at end of the
period 9,556 21,152
--------------------------------------------------- ------------- -------------
Anglo Asian Mining plc
Condensed group statement of changes in equity
Six months ended 30 June 2023
(unaudited)
Foreign
Share-based currency
Share Share Treasury payment Merger translation Retained Total
capital premium shares reserve reserve reserve earnings equity
$000 $000 $000 $000 $000 $000 $000 $000
-------------------- --------- --------- ---------- ------------- --------- ------------ ---------- --------
1 January 2023 2,016 33 (145) 424 46,206 (233) 65,206 113,507
Profit for the
period - - - - - - 813 813
Other comprehensive
income for the
period - - - - - 132 (6) 126
-------------------- --------- --------- ---------- ------------- --------- ------------ ---------- --------
Total comprehensive
income for the
period - - - - - 132 807 939
Share based payment - - - 82 - - - 82
-------------------- --------- --------- ---------- ------------- --------- ------------ ---------- --------
30 June 2023 2,016 33 (145) 506 46,206 (101) 66,013 114,528
-------------------- --------- --------- ---------- ------------- --------- ------------ ---------- --------
Six months ended 30 June 2022
(unaudited)
Foreign
Share-based currency
Share Share payment Merger translation Retained Total
capital premium reserve reserve reserve earnings equity
$000 $000 $000 $000 $000 $000 $000
--------------------- --------- --------- ------------- --------- ------------ ---------- --------
1 January 2022 2,016 33 12 46,206 - 70,150 118,417
Profit for the
period - - - - - 3,475 3,475
Other comprehensive
loss for the period - - - - (34) - (34)
--------------------- --------- --------- ------------- --------- ------------ ---------- --------
Total comprehensive
income for the
period - - - - (34) 3,475 3,441
Share based payment - - 211 - - - 211
--------------------- --------- --------- ------------- --------- ------------ ---------- --------
30 June 2022 2,016 33 223 46,206 (34) 73,625 122,069
--------------------- --------- --------- ------------- --------- ------------ ---------- --------
Year ended 31 December 2022
(audited)
Share-based Foreign
payment currency
Share Share Treasury reserve Merger translation Retained Total
capital premium shares $000 reserve reserve earnings equity
$000 $000 $000 $000 $000 $000 $000
-------------------- -------- -------- ---------- ------------- -------- ------------- ---------- -------
1 January 2022 2,016 33 - 12 46,206 - 70,150 118,417
Profit for
the year - - - - - - 3,660 3,660
Other comprehensive
loss for the
year - - - - - (233) 8 (225)
--------------------- -------- -------- ---------- ------------- -------- ------------- ---------- -------
Total comprehensive
income for
the year - - - - - (233) 3,668 3,435
Cash dividends
paid - - - - - - (8,612) (8,612)
Share-based
payment - - - 412 - - - 412
Purchase of
shares for
treasury - - (145) - - - - (145)
--------------------- -------- -------- ---------- ------------- -------- ------------- ---------- -------
31 December
2022 2,016 33 (145) 424 46,206 (233) 65,206 113,507
--------------------- -------- -------- ---------- ------------- -------- ------------- ---------- -------
Anglo Asian Mining plc
Notes to the condensed Group interim financial statements
Six months ended 30 June 2023
1 General information
Anglo Asian Mining plc (the "Company") is a company incorporated
in England and Wales under the Companies Act 2006. The Company's
ordinary shares are traded on the AIM market of the London Stock
Exchange plc. The Company is a holding company. The principal
activity of the Company and its subsidiaries (the "Group") is
operating a portfolio of mining operations and metal production
facilities within Azerbaijan. The Group also invests in mining
businesses outside of Azerbaijan.
Basis of preparation
The condensed Group interim financial statements for the
six-month period ending 30 June 2023 have been prepared in
accordance with IAS 34 'Interim Financial Reporting' as issued by
the International Accounting Standards Board and IAS 34 as adopted
for use in the United Kingdom. The information for the half year
ended 30 June 2023 does not constitute statutory accounts as
defined in section 435 of the Companies Act 2006. A copy of the
statutory accounts for the year ended 31 December 2022 has been
delivered to the Registrar of Companies. The auditor's report on
those accounts was not qualified, did not include a reference to
any matters to which the auditor drew attention by way of an
emphasis of matter and did not contain a statement under sections
498(2) or 498(3) of the Companies Act 2006. The condensed Group
interim financial statements have not been audited.
The condensed Group interim financial statements have been
prepared under the historical cost convention except for the
treatment of share-based payments, certain trade receivables at
fair value, derivatives not designated as hedging instruments and
financial assets at fair value through profit and loss. The
condensed Group interim financial statements are presented in
United States dollars ("$") and all values are rounded to the
nearest thousand except where otherwise stated. In the condensed
Group interim financial statements "GBP" and "pence" are references
to the United Kingdom pound sterling, "CAN$" and "CAN cents" are
references to Canadian dollars and cents and "AZN" is a reference
to the Azerbaijan New Manat.
Accounting policies and new standards, interpretations and
amendments
The annual financial statements of Anglo Asian Mining plc are
prepared in accordance with IFRSs as issued by the International
Accounting Standards Board and in conformity with the requirements
of the Companies Act 2006. The condensed Group interim financial
statements included in this half-yearly financial report have been
prepared in accordance with IAS 34 'Interim Financial Reporting' as
issued by the International Accounting Standards Board and in
conformity with the requirements of the Companies Act 2006.
The accounting policies adopted in the preparation of the
half-yearly condensed Group interim financial statements for 2023
are consistent with those followed in the preparation of the
Group's annual report and accounts for 2022, except for the
adoption of new standards that became effective from 1 January
2023. The Group has not adopted any other standard, interpretation
or amendment that has been issued but is not yet effective.
Several amendments and interpretations apply for the first time
in 2023, but do not have an impact on the condensed Group interim
financial statements.
Going concern
Main business of the Group
The Group produces primarily gold and copper at its Gedabek
mining concession in north-western Azerbaijan. Ore mined at Gedabek
produces gold doré by heap and agitation leaching and copper
concentrate (which also contains gold and silver) from SART and
flotation processing. When processing operations are fully
operational, production is cash generative at current metal prices.
Historically, the Group has funded all its operational costs
(including its Baku and London overheads) from cash generated from
the sale of precious metal and copper produced at Gedabek.
Curtailment of agitation leaching and flotation processing and
current operations
The Group's agitation leaching and flotation processing produces
waste as a slurry called tailings. These tailings are stored in a
dam approximately seven kilometres from the Group's processing
plants. Cyanide is used as a reagent in agitation leaching
processing and there are strict controls in place to prevent the
cyanide from contaminating the tailings. The tailings dam is
nearing full capacity and the Group had identified a valley next to
its existing tailings dam as a possible site for the location of a
second tailings dam. The Government of the Republic of Azerbaijan
(the "Government") has given the Group land use permission for the
second dam.
In June 2023, inhabitants of Soyudlu village, which is close to
the proposed site of the second tailings dam, protested against its
construction. The Group has generally very good relations with
communities in the local area around Gedabek and these protests
were wholly unexpected. The protesters claimed that the existing
tailings dam contains cyanide contamination which is polluting the
environment in its vicinity. It could therefore be a danger to the
health of local residents and the flora and fauna in the
surrounding area.
As a result of the protests, the Government and the Company,
jointly commissioned Micon International Co Limited ("Micon") to
carry out a health, safety and environmental review of tailings
management at Gedabek in late July 2023. The review included
sampling soil, ground water and surface water for cyanide. Samples
were assayed at an accredited laboratory in Azerbaijan. The Group
also arranged for its own environmental consultants to accompany
Micon and for parallel sampling and check assays to be performed.
The discharge of tailings into the tailings dam was stopped from
the beginning of August 2023 in conjunction with the environmental
study. This required the staged curtailment of agitation leaching
and flotation processing. The Group also suspended blasting and
mining from the beginning of August 2023 to conserve funds.
The Group is currently only producing gold doré from heap
leaching and copper concentrate from SART processing. There is
currently no mining of ore and the development of the Gilar and
Zafar mines has been stopped.
Micon report and restart of full production
The Group will only restart agitation leaching and flotation
processing after issuance of the Micon report by the Government. It
is anticipated that the Group, in conjunction with the Government,
will implement changes to its operations to rectify any issues
raised in the Micon report. The Group will work with the Government
to address any issues and identify a time for resumption of its
curtailed operations. The Company is still awaiting the issue of
the final Micon report.
Should agitation leaching and flotation processing restart, the
existing tailings dam currently only has sufficient capacity for
approximately three months further production. The capacity of the
tailings dam has been increased several times in the past by
increasing the height of its wall. The Group now wishes to further
increase the height of the wall by an average of 7.5 metres to give
the tailings dam sufficient capacity for an additional two to three
years of production. This raise of the dam wall will be carried out
in stages with the first stage being a raise of approximately 2.5
metres. The Group has applied to the Government for permission to
raise the wall and the environmental engineers, Shinyei Kaisha are
being commissioned to carry out a study to ensure it has sufficient
structural stability for a further raise. It is expected the study
will take approximately four months and be completed by January
2024. Upon receiving permission, the first raise of approximately
2.5 metres of the tailings dam wall is expected to take
approximately four months to complete. Given that the current
tailings dam only has three months capacity, and it may take up to
eight months in total to obtain permission and then carry the raise
of the wall, further interruptions to full production will be
necessary once production resumes.
Financial condition of the Group and forecast till end of
September 2024
The Group has in place an ANZ 55 million ($32.3 million)
revolving credit facility with the International Bank of Azerbaijan
("IBA") with no conditions on drawdown. Under the terms of the
revolving credit facility, there is a general obligation on the
Group that there should be no significant deterioration in its
financial position. The partial curtailment of processing
operations means the Group can no longer meet this obligation.
Accordingly, IBA have informally advised the Group that they have
suspended lending under the revolving credit facility.
The Group has cash reserves of $10.4 million at 25 September
2023. The current costs of maintaining the Group's operations on a
"care and maintenance" basis including administrative overheads in
Baku and London is estimated at $1.5 million per month. Cash
forecasts show that if the Group only continues to heap leach gold
and cannot resume borrowing from IBA, it will exhaust its current
cash reserves in the first quarter of 2024. To finance its
operations from the first quarter of 2024 onwards, the Group will
need to have restarted full operations and agreed to a resumption
of lending from IBA under its revolving credit facility.
The Group has prepared a 12 month cash flow forecast until the
end of September 2024, assuming resumption of its processing
operations and availability of its IBA credit line. It also assumes
the first 2.5 metre raise of the tailing will be completed by May
2024. This cash flow uses a gold price of $1,900 per ounce, a
copper price of $8,200 per tonne. This base case cash flow shows
that the Group is able to finance its operations till 30 September
2024.
Material uncertainties over going concern
At the time of approving the issuance of the financial
statements, there exist several material uncertainties related to
future events that may cast doubt on the Group's ability to
continue as a going concern. It may therefore be unable to realise
its assets and discharge its liabilities in the normal course of
business.
These material uncertainties are as follows:
1 The Group will be able to fully restart agitation leaching and flotation processing.
2 IBA will agree to restart lending to the Group under its revolving credit facility.
3 The Government will not impose any conditions or fines etc. on
the Group which will be so onerous as to make it impossible for the
Group to continue in commercial operation.
4 Permission will be obtained to further raise the wall of the
tailings dam and this wall raise will be completed by April
2023.
The Group operates its Gedabek site using best environmental
practice. The directors therefore have an expectation that Micon
report will not contain any adverse findings that will prevent it
from resuming operations.
The Group's tailing dam has been subject to regular inspections
by both CQA and Knight Piésold. These two firms of environmental
engineers have both reported no issues with the structural
stability of the wall of the tailings dam. In addition, Knight
Piésold have recommended that a further raise of the wall presents
no danger of structural failure. The directors therefore also have
an expectation that approval will be obtained for a further raise
of its existing tailings dam wall and that the raise can be carried
in sufficient time to enable the Group to meet its 12 month cash
flow forecast until the end of September 2024.
Accordingly, but recognising the degree of uncertainty in a
dynamic situation, the directors believe it is appropriate to
prepare these financial statements on a going concern basis. The
financial statements do not contain any adjustments that would be
required to be made if they were prepared on a basis other than the
going concern basis.
The Group's business activities, together with the factors
likely to affect its future development, performance and position,
can be found within the chairman's statement, the Chief Executive
Officer's review and the strategic report above. The financial
position of the Group, its cash flow, liquidity position and
borrowing facilities are discussed within the financial review
above.
2 Operating segments
The Group determines operating segments based on the information
that is internally provided to the Group's chief operating decision
maker. The chief operating decision maker has been identified as
the board of directors. The board of directors currently considers
consolidated financial information for the entire Group and reviews
the business based on the Group income statement and Group
statement of financial position in their entireties. Accordingly,
the Group has only one operating segment, mining operations. The
mining operations comprise the Group's major producing asset, the
open cast and underground mines located at the Gedabek and Gosha
licence areas, which account for all the Group's revenues and the
majority of its cost of sales, depreciation and amortisation. The
Group's mining operations are all located within Azerbaijan and
therefore all within one geographic segment.
Sales of gold within doré and gold and silver bullion in 2022
and 2023 were made to two customers, the Group's gold refiners, MKS
Finance SA and Argor-Heraeus SA, both based in Switzerland.
The gold and copper concentrate was sold in 2022 and 2023 to
Industrial Minerals SA, Trafigura PTE Ltd and Metal-Kim Metalurji
Ve Kimya Tarim Sanayi Tic Ltd Sti.
3 Investment in an associate
Libero Copper & Gold Corporation ("Libero") is a minerals
exploration company listed on the TSX Venture Exchange (ticker:
LBC) in Canada and owns, or has the right to acquire, several
copper exploration properties in North and South America.
On 26 January 2022, the Group acquired an additional 10 per
cent. interest in Libero taking its total interest to 19.8 per
cent. From this date, Libero is accounted for using the equity
method of accounting in the Group's consolidated financial
statements. Prior to 26 January 2022, the Group had a 9.8 per cent.
interest in Libero and accounted for the investment as a financial
asset.
The Group has significant influence over Libero as it has a
shareholding of approximately 20 per cent. in Libero, a Group
director is also a director of Libero and the Group's Vice
president, technical services is a member of the technical
committee of Libero. The market value of the Libero shares held by
the Group, which corresponds to their fair value, on 30 June 2023
was $1,125,000. There are no restrictions on the ability of the
Group to transfer funds to Libero and for Libero to transfer funds
to the Group. The financial statements of Libero are made up to 31
December of each year. The financial information about Libero,
included in these Group financial statements, has been taken from
their audited financial statements for the year ended 31 December
2022 dated 25 April 2023 and their unaudited financial statements
for the six months ended 30 June 2023 dated 24 August 2023.
The Group's interest in Libero at 31 December 2022 was 18.29 per
cent. Libero carried out a placement of 6,747,000 shares on 30
December 2022. The Group subscribed for 2.6 million shares at CAD
15 cents per share for a total of $294,000 as part of this
placement to maintain its interest in Libero at 19.8 per cent. The
Group completed its placement on 8 January 2023. The Group's
interest in Libero was therefore temporarily 18.29 per cent. in the
period 31 December 2022 to 7 January 2023. The Group also
subscribed for 3.2 million shares at CAD 15 per share for a total
of $362,000 in February 2023.
The following tables illustrates the summarised financial
information of the Group's investment in Libero:
The goodwill and other assets of Libero at 31 December 2022 and
30 June 2023 were assessed for impairment and no impairment charge
was considered necessary.
Balance sheet of Libero at 30 June 2023, 30 June 2022 and 31
December 2022
30 June 30 June 31 December
2023 2022 2022
(Unaudited) (unaudited) (Audited)
$000 $000 $000
------------------------------- -------------- ------------- -------------
Current assets 436 1,684 338
Non-current assets 2,940 2,908 2,579
Current liabilities (1,128) (961) (639)
Non-current liabilities (143) (209) (139)
------------------------------- -------------- ------------- -------------
Equity 2,105 3,422 2,139
------------------------------- -------------- ------------- -------------
Reconciliation to carrying value
in Group balance sheet
Equity of Libero 2,105 3,422 2,139
Share based payment expense (972) (582) (874)
Exploration expense 8,299 - 6,531
------------------------------- -------------- ------------- -------------
Equity recognised by the
Group 9,432 2,840 7,796
------------------------------- -------------- ------------- -------------
Group's share in equity
- 19.3% and 19.6% (2022:
18.3%) 1,819 556 1,426
Goodwill 3,912 3,493 3,746
------------------------------- -------------- ------------- -------------
Carrying value of associate
company 5,731 4,049 5,172
------------------------------- -------------- ------------- -------------
Profit and loss account of Libero for the
6 months to 30 June 2023
6 months 6 months
to to
30 June 30 June
2023 2022
(Unaudited) (Unaudited)
$000 $000
---------------------- -------------- -------------
Expenses 2,618 5,169
Other expenses 75 314
---------------------- -------------- -------------
Loss before taxation 2,693 5,483
Taxation (10) -
---------------------- -------------- -------------
Loss for the period 2,683 5,483
---------------------- -------------- -------------
Reconciliation to loss of associate company in the Group profit
and loss account
Loss for the period 2,683 5,483
Pre-acquisition loss to 25
January 2022 - (659)
Exploration expense (1,596) -
--------------------------------- -------- ------
Post acquisition loss 1,087 4,824
--------------------------------- -------- ------
Group's share of the loss at
19.7 and 19.6 per cent. 213 949
Profit on deemed disposal of
0.2 per cent. of Libero - (83)
--------------------------------- -------- ------
Loss recognised as an associate 213 866
--------------------------------- -------- ------
Reconciliation of the movement in associate company for the year
ended 31 December 2022
and the 6 months to 30 June 2023
$000
--------------------------------- -------
1 January 2022 -
Transfer from other financial
assets 2,382
Additions 3,491
Share of loss of the associated
company (476)
Foreign exchange loss (225)
---------------------------------- -------
31 December 2022 5,172
Additions 646
Share of loss of the associated
company (213)
Foreign exchange gain 126
---------------------------------- -------
30 June 2023 5,731
---------------------------------- -------
Libero had no contingent liabilities or capital commitments at
31 December 2022 and 30 June 2023.
4 Income tax
The income taxation charge for the 6 months ended 30 June 2023
represents a current income tax charge of $nil (2022: $nil) and a
deferred taxation charge of $0.6m (2022: $2.2m). These current and
deferred taxation charges are in respect of the representative
office registered in Azerbaijan of RV Investment Group Services LLC
("RVIG") (a wholly owned subsidiary of the Company).
Deferred taxation assets or liabilities are calculated at the
taxation rates that are expected to apply in the period when the
liability is settled or the asset is realised. Deferred taxation is
charged or credited in the income statement, except when it relates
to items charged or credited directly to equity, in which case the
deferred taxation is also dealt with in equity.
Deferred taxation assets and liabilities are offset when there
is a legally enforceable right to offset current taxation assets
against current taxation liabilities and when they relate to income
taxes levied by the same taxation authority and the Group intends
to settle its current taxation assets and liabilities on a net
basis.
At 30 June 2023, RVIG had unused taxation losses available for
offset against future profits of $8.3m and a deferred taxation
asset of $2.7m has been offset against deferred taxation
liabilities in the Group balance sheet. The Group also has unused
taxation losses within the Company and a subsidiary (Anglo Asian
Operations Limited) available for offset against future profits. No
deferred taxation asset has been recognised in respect of such
losses due to the unpredictability of future profit streams. Unused
taxation losses may be carried forward indefinitely.
5 Profit per ordinary share
6 months 6 months
to to
30 June 30 June
2023 2022
(unaudited) (unaudited)
Profit per ordinary share $000 $000
----------------------------- ------------- ------------
Profit after tax for the
period 813 3,475
Basic profit per share (US
cents) 0.71 3.04
Diluted profit per share
(US cents) 0.71 3.04
------------- ------------
Weighted average number Number Number
of shares
----------------------------- ------------- ------------
For basic earnings per share 114,242,024 114,392,024
For diluted earnings per
share 114,242,024 114,392,024
------------- ------------
6 Intangible assets
Exploration and evaluation
---------------------------------------------------------------------------------------- ------------- ------------- -------------
Other
Mining Intangible
Gedabek Gosha Ordubad Vejnaly Xarxar Garadag rights assets Total
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
$000 $000 $000 $000 $000 $000 $000 $000 $000
----------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
Cost
I January
2022 17,356 2,198 5,941 - - - 41,925 562 67,982
Additions 3,654 515 165 517 1,613 2,772 - 164 9,400
----------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
31
December
2022 21,010 2,713 6,106 517 1,613 2,772 41,925 726 77,382
Additions 1,117 203 478 635 1,815 27 - - 4,275
----------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
30 June
2023 22,127 2,916 6,584 1,152 3,428 2,799 41,925 726 81,657
----------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
Amortisation and impairment
1 January
2022 - - - - - - 37,142 493 37,635
Charge for
the year - - - - - - 1,107 24 1,131
----------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
31
December
2022 - - - - - - 38,249 517 38,766
Charge for
the
period - - - - - - 374 25 399
----------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
30 June
2023 - - - - - - 38,623 542 39,165
----------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
Net book
value
31
December
2022 21,010 2,713 6,106 517 1,613 2,772 3,676 209 38,616
----------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
30 June
2023 22,127 2,916 6,584 1,152 3,428 2,799 3,302 184 42,492
----------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
7 Property, plant and equipment
Plant
and
equipment
and motor Producing Assets under
vehicles mines construction Total
(unaudited) (unaudited) (unaudited) (unaudited)
$000 $000 $000 $000
---------------------- ------------ ------------ ------------- ------------
Cost
1 January 2022 27,181 224,915 2,227 254,323
Additions 1,409 7,106 601 9,116
Transfer to producing
mines - 647 (647) -
Increase in provision
for
rehabilitation - 3,662 - 3,662
------------ ------------ ------------- ------------
31 December 2022 28,590 236,330 2,181 267,101
Additions 800 4,538 925 6,263
Decrease in provision
for rehabilitation - (479) - (479)
---------------------- ------------ ------------ ------------- ------------
30 June 2023 29,390 240,389 3,106 272,885
---------------------- ------------ ------------ ------------- ------------
Depreciation and impairment
1 January 2022 23,193 172,420 - 195,613
Charge for year 1,002 14,441 - 15,443
31 December 2022 24,195 186,861 - 211,056
Charge for period 403 5,286 - 5,689
---------------------- ------------ ------------ ------------- ------------
30 June 2023 24,598 192,147 - 216,745
---------------------- ------------ ------------ ------------- ------------
Net book value
31 December 2022 4,395 49,469 2,181 56,045
---------------------- ------------ ------------ ------------- ------------
30 June 2023 4,792 48,242 3,106 56,140
---------------------- ------------ ------------ ------------- ------------
8 Leases
Right of use assets
Plant and
equipment
and motor Producing
vehicles mines Total
(unaudited) (unaudited) (unaudited)
$000 $000 $000
-------------------- ------------ ------------ ------------
Cost
1 January 2022 3,480 1,210 4,690
Additions 337 - 337
Lease modifications (743) (57) (800)
-------------------- ------------ ------------ ------------
31 December 2022 3,074 1,153 4,227
Additions 168 - 168
Lease modifications (254) - (254)
-------------------- ------------ ------------ ------------
30 June 2023 2,988 1,153 4,141
-------------------- ------------ ------------ ------------
Depreciation and impairment
1 January 2022 1,223 401 1,624
Charge for year 386 154 540
Lease modifications (264) (36) (300)
31 December 2022 1,345 519 1,864
Charge for period 166 63 166
Lease modifications (123) - (123)
-------------------- ------------ ------------ ------------
30 June 2023 1,388 582 1,970
-------------------- ------------ ------------ ------------
Net book value
31 December 2022 1,729 634 2,363
-------------------- ------------ ------------ ------------
30 June 2023 1,600 571 2,171
-------------------- ------------ ------------ ------------
Lease liabilities
Total
$000
--------------------- ------
1 January 2022 3,293
Additions 337
Lease modifications (565)
Interest expense 291
Repayment (648)
--------------------- ------
31 December 2022 2,708
Addition 168
Lease modifications (159)
Interest expense 140
Repayment (349)
--------------------- ------
30 June 2023 2,508
--------------------- ------
30 June 31 December
2023 2022
(unaudited) 30 June 2022
(unaudited) (audited)
$000 $000 $000
------------------------ ------------- ------------ -----------
Current liabilities 449 429 419
Non-current liabilities 2,059 2,715 2,289
Total lease liabilities 2,508 3,144 2,708
------------------------ ------------- ------------ -----------
Amount recognised in the profit and loss account
6 months 6 months
to to
30 June 30 June
2023 2022
(unaudited) (unaudited)
$000 $000
------------------------------- -------------- -------------
Depreciation expense of right
to use assets 229 306
Interest expense 140 165
Expense relating to short
leases 129 131
Gain on lease modifications (28) -
------------------------------- -------------- -------------
470 602
------------------------------- -------------- -------------
9 Other financial assets
30 June 30 June 2022 31 December
2023 (unaudited) 2022
Non - current $000 (unaudited) (audited)
$000 $000
------------------------------ ------------------ ------------- ------------
Derivatives not designated as
hedging instruments
Share warrants 39 80 39
------------------------------ ------------------ ------------- ------------
Share warrants
Each of the 12,600,000 shares purchased in Libero has half a
warrant attached totalling 6,300,000 warrants. The carrying value
is the value of the 6,300,000 warrants valued using a risk-neutral
binomial tree. Quantitative information about the fair value
measurement of the warrants using significant directly or
indirectly observable inputs together with the major assumptions
used to value the share warrants in Libero is as follows:
Assumption 30 June 2023 30 June 2022 31 December
2022
------------------------ ------------------ ------------------ ------------------
Share price of Libero CAD$0.07 CAD$0.24 CAD$0.16
Option exercise price CAD$0.75 CAD$0.75 CAD$0.75
Acceleration condition CAD$1.00 CAD$1.00 CAD$1.00
Lapse date
2.8m warrants issued 21 December 21 December 21 December
22 December 2021 2023 2023 2023
3.5m warrants issued 25 January 25 January 25 January
26 January 2022 2024 2024 2024
Risk free rate 4.6 per cent. 3.09 per cent. 4.6 per cent.
Expected volatility 6.88 per cent. 5.64 per cent. 6.88 per cent.
- daily
Expected volatility 109.26 per 89.58 per cent. 109.26 per
- annualised cent. cent.
Discount for lack of 13.97 per 11.61 per cent. 13.97 per cent.
marketability cent.
Exchange rate US$1 = CAD$1.3255 US$1 = CAD$1.2872 US$1 = CAD$1.3549
------------------ ------------------ ------------------
10 Inventory
30 June 30 June 2022 31 December
2023 (unaudited) 2022
$000 (unaudited) (audited)
$000 $000
-------------------------------------- ------------------ ------------- ------------
Cost
Finished goods - bullion 4,834 10,500 2,243
Finished goods - metal in concentrate 4,701 3,843 1,128
Metal in circuit 10,726 12,391 12,140
Ore stockpiles 8,813 7,138 8,299
Spare parts and consumables 19,419 15,147 16,392
-------------------------------------- ------------------ ------------- ------------
Total current inventories 48,493 49,019 40,202
-------------------------------------- ------------------ ------------- ------------
Total inventories at the lower
of cost and net realisable value 48,493 49,019 40,202
-------------------------------------- ------------------ ------------- ------------
Current ore stockpiles consist of high-grade and low-grade oxide
ores that are expected to be processed during the 12 months
subsequent to the balance sheet date.
Inventory is recognised at lower of cost or net realisable
value.
11 Trade and other receivables
30 June 30 June 2022 31 December
2023 (unaudited) 2022
Current $000 (unaudited) (audited)
$000 $000
-------------------------- ------------------ ------------- ------------
Gold held due to the
Government of Azerbaijan 3,045 22,488 7,274
VAT refund due 792 25 1,562
Loan to employee 520 500 510
Other tax receivable 1,713 1,432 1,038
Trade receivables
- fair value* 3,569 1,441 2,716
Prepayments and advances 6,001 3,898 5,231
-------------------------- ------------------ ------------- ------------
15,640 29,784 18,331
-------------------------- ------------------ ------------- ------------
*Trade receivables subject to provisional pricing.
Trade receivables (subject to provisional pricing) are for sales
of gold and copper concentrate and are non interest-bearing, but
are exposed to future commodity price movements over the
quotational period ("QP") and, hence, fail the 'solely payments of
principal and interest' test and are measured at fair value up
until the date of settlement. These trade receivables are initially
measured at the amount which the Group expects to be entitled,
being the estimate of the price expected to be received at the end
of the QP. Approximately 90 per cent. of the provisional invoice
(based on the provisional price) is received in cash within one to
two weeks from when the concentrate is collected from site, which
reduces the initial receivable recognised under IFRS 15. The QPs
can range between one and four months post shipment and final
payment is due between 30-90 days from the end of the QP.
The Group does not consider any trade or other receivable as
past due or impaired. All receivables at amortised cost have been
received shortly after the balance sheet date and therefore the
Group does not consider that there is any credit risk exposure. No
provision for any expected credit loss has therefore been
established at 30 June 2022 and 2023 and 31 December 2022.
The VAT refund due at 30 June 2022 and 2023 and 31 December 2022
relates to VAT paid on purchases.
Gold bullion held and transferable to the Government is bullion
held by the Group due to the Government of Azerbaijan. The Group
holds the Government's share of the product from its mining
activities and from time to time transfers that product to the
Government. A corresponding liability to the Government is included
in trade and other payables shown in note 12.
12 Trade and other payables
30 June 2023 31 December
2022
(unaudited) 30 June 2022
(unaudited) (audited)
Current assets $000 $000 $000
-------------------------------- -------------- ------------ -----------
Accruals and other payables 5,736 4,868 4,912
Trade creditors 4,992 3,075 3,211
Gold held due to the Government
of Azerbaijan 3,045 22,488 7,274
Payable to the Government
of Azerbaijan from copper
concentrate joint sale 1,900 1,700 2,525
-------------------------------- -------------- ------------ -----------
15,673 32,131 18,022
-------------------------------- -------------- ------------ -----------
30 June 2023 31 December
2022
(unaudited) 30 June 2022
(unaudited) (audited)
Non-current assets $000 $000 $000
-------------------- -------------- ------------ -----------
Geological data 3,009 - 2,897
-------------------- -------------- ------------ -----------
Trade creditors primarily comprise amounts outstanding for trade
purchases and ongoing costs. Trade creditors are non-interest
bearing. Accruals and other payables mainly consist of accruals
made for accrued but not paid salaries, bonuses, related payroll
taxes and social contributions, accrued interest on borrowings, and
services provided but not billed to the Group by the end of the
reporting period. The directors consider that the carrying amount
of trade and other payables approximates to their fair value.
The amount payable to the Government of Azerbaijan from copper
concentrate joint sale represents the portion of cash received from
the customer for the government's portion from the joint sale of
copper concentrate.
In the year ended 31 December 2022, the Group contracted with
AzerGold CJSC to pay $4.0 million for the historical geological
data Azergold CJSC owned in respect of the Garadag and Xarxar
Contract Areas. The consideration was apportioned as $3.3 million
for Garadag data and $0.7 million for Xarxar data. $1.0 million (25
per cent.) was paid in 2022 with the remaining $3.0 million (75 per
cent.) payable after three years, or if earlier for each respective
deposit, the balance of the purchase price on the approval of the
Group's development and production programme for the deposit in
accordance with the Group's Production Sharing Agreement. The
amount outstanding under the contract at 30 June 2023 and 31
December 2022 has been classified as a non-current liability. The
long-term creditor has been discounted at a rate of 8 per cent.
being the risk-free rate. The repayment dates of the creditor are
the directors' best estimation of when repayment will occur. The
undiscounted amount of the creditor at 30 June 2023 and 31 December
2022 is $3.0 million (30 June 2022: $nil).
13 Share capital
Ordinary
shares of
1 pence each $000
--------------------------------------- ------------- -----
Ordinary shares issued and fully paid:
30 June 2023 and 2022 and 31 December
2022 114,392,024 2,016
--------------------------------------- ------------- -----
150,000 ordinary shares were brought back during the year ended
31 December 2022 and are now held in treasury.
14 Share premium account
$000
------------------------------------------- ------
30 June 2023 and 2022 and 31 December 2022 33
-------------------------------------------- ------
15 Distributions made and proposed
Six months Six months Year ended
ended 30 ended 30 31 December
June June
2023 2022 2022
(unaudited) (unaudited) (audited)
$000 $000 $000
------------------------------- -------------- ------------ ------------
Cash dividends on ordinary shares declared
and paid
Final dividend for 2021: 3.5
US cents* per share - - 3,995
Interim dividend for 2022: 4.0
US cents* per share - - 4,617
- - 8,612
---------------------------------------------- ------------ ------------
Cash dividends proposed on
ordinary shares
Final dividend for 2022: 4.0
US cents***per share - - 4,570
------------------------------- -------------- ------------ ------------
* the final dividend for 2021 was declared in United States
dollars but paid in Sterling in the amount of 2.9181 pence per
ordinary share on 28 July 2022.
**the interim dividend for 2022 was declared in United States
dollars but paid in Sterling in the amount of 3.5559 pence per
ordinary share on 3 November 2022.
***the final dividend for 2022 was declared in United States
dollars but paid in Sterling in the amount of 3.1421 pence per
ordinary share on 27 July 2023.
The proposed but not paid final and interim dividends for the
year ending 31 December 2022 and the 6 months ended 30 June 2023
respectively are not recognised as liabilities in the Group
statements of financial position.
16 Contingencies and commitments
The Group undertakes its mining operations in the Republic of
Azerbaijan pursuant to the provisions of the Agreement on the
Exploration, Development and Production Sharing for the Prospective
Gold Mining Areas: Gedabek, Gosha, Ordubad Group (Piazbashi,
Agyurt, Shakardara, Kiliyaki), Soutely, Kyzilbulag and Vejnali
Deposits dated year ended 20 August 1997 (the "PSA"). The original
agreement was dated 20 August 1997 and granted the Group mining
rights over the following contract areas containing mineral
deposits: Gedabek, Gosha, Ordubad Group (Piyazbashi, Agyurt,
Shakardara, Kiliyaki), Soutely, Kyzilbulag and Vejnali. On 5 July
2022, amendments to the PSA were ratified by the Parliament of the
Republic of Azerbaijan which granted the Group three new contract
areas with a combined area of 882 square kilometres and
relinquished the Soutely contract area. The parliamentary
ratification was signed into law on 5 July 2022 by the President of
the Republic of Azerbaijan
The PSA contains various provisions relating to the obligations
of the R.V. Investment Group Services LLC ("RVIG"), a wholly owned
subsidiary of the Company. The principal provisions are regarding
the exploration and development programme, preparation and timely
submission of reports to the Government, compliance with
environmental and ecological requirements. The Directors believe
that RVIG is in compliance with the requirements of the PSA. The
Group has announced a discovery on Gosha Mining Property in
February 2011 and submitted the development programme to the
Government according to the PSA requirements, which was approved in
2012. In April 2012 the Group announced a discovery on the Ordubad
Group of Mining Properties and submitted the development programme
to the Government for review and approval according to the PSA
requirements. The Group and the Government are still discussing the
formal approval of the development programme.
The initial period of the mining licence for Gedabek was until
March 2022. The Company has the option to extend the licence for
two five-year periods (ten years in total) conditional upon
satisfaction of certain requirements in the PSA. The first of the
five year extensions was obtained by the Company in April 2021 and
accordingly the mining licence now extends to March 2027 with a
further five year extension permitted.
RVIG is also required to comply with the clauses contained in
the PSA relating to environmental damage. The directors believe
RVIG is substantially in compliance with the environmental clauses
contained in the PSA.
Forward sales of gold bullion and commitment to physical deliver
gold bullion
As part of its risk management procedures, the Group from time
to time, contracts for forward sales of gold bullion to hedge the
gold price at which a proportion of its gold bullion is sold. At 30
June 2023 (31 December 2022 and 30 June 2022: nil), the Group had
the following forward sales contracts outstanding.
Amount of gold Contracted gold
Delivery date bullion sold sale price per Value of forward
and sale of gold (ounces) ounce sales
bullion ($) ($000)
31 July 2023 400 1,954.75 782
--------------- ---------------- -------------------
31 August 2023 300 1,959.75 588
--------------- ---------------- -------------------
29 September
2023 300 1,964.50 589
--------------- ---------------- -------------------
31 October 2023 1,000 1,969.50 1,970
--------------- ---------------- -------------------
30 November 2023 800 1,974.50 1,580
--------------- ---------------- -------------------
29 December 2023 800 1,979.25 1,583
--------------- ---------------- -------------------
The gold forward sales contracts disclosed above did not meet
the criteria of financial instruments for accounting purposes on
the basis that they meet the normal purchase and sale exemption
because physical gold will be delivered to settle the contract.
Accordingly, the contracts will be accounted for as sale contracts
with revenue recognition in the period in which the gold bullion is
made. The balances in the table above relate to the value of the
contracts to be delivered into by transfer of physical gold.
17 Related party transactions
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note. Transactions between the Group and other
related parties are disclosed below.
Trading transactions
During the period, there were no trading transactions between
group companies and related parties who are not members of the
Group.
Other related party transactions
a) Total payments in the 6 months to 30 June 2023 of $2,755,000
(6 months to 30 June 2022: $1,809,000) were made for equipment and
spare parts purchased from Proses Muhendislik Danismanlik Inshaat
ve Tasarim Anonim Shirket ("PMDI"), an entity in which the vice
president of technical services of Azerbaijan International Mining
Company has a direct ownership interest. There is an outstanding
payable to PMDI of $458,000 at 30 June 2023 (30 June 2022: $nil and
31 December 2022: $250,000).
b) No payment in the 6 months to 30 June 2023 (6 months to 30
June 2022: $1,033,000) was made for equipment and spare parts
purchased from F&H Group LLC ("F&H"), an entity in which
the vice president of technical services of Azerbaijan
International Mining Company has a direct ownership interest. There
is not a payable to F&H at 30 June 2023 (30 June 2022: $576,000
and 31 December 2022: $nil).
c) On 30 June 2022, a loan of $500,000 was made to the vice
president of technical services of Azerbaijan International Mining
Company. The loan carries an interest rate of 4 per cent. and is
repayable on 30 June 2023 with earlier repayment permissible. The
loan is secured on the Anglo Asian Mining plc shares owned by the
vice president of technical services of Azerbaijan International
Mining Company. The loan was guaranteed by the president and chief
executive officer of Anglo Asian Mining plc. The loan was renewed
for a further a year to 30 June 2024.
18 Post balance sheet events
Temporary curtailment of operations at Gedabek mine
In June 2023, protests took place by local communities against
the location of a second tailings dam in the vicinity of the
Company's existing tailings dam. To give assurances to local
communities that the existing dam does not present any danger to
health, the Government of Azerbaijan (the "Government") and the
Company agreed that an independent health, safety and environmental
review of tailings dam management at Gedabek be carried out. The
Company also agreed to stop discharging tailings whilst the results
of the review were being collated. Accordingly, the Company
suspended agitation leaching and flotation processing and blasting
from the beginning of August 2023. Micon International Limited
("Micon") were commissioned to carry out the review.
The Company is still awaiting the results of the environmental
review by Micon. Until the results are obtained, it is not possible
to quantify the financial effects of the suspension of
operations.
19 Approval of condensed group interim financial statements
The condensed group interim financial statements of Anglo Asian
Mining plc and its subsidiaries for the six-month period ended 30
June 2023 were authorised for issue in accordance with a resolution
of the directors on 25 September 2023.
**ENDS**
Notes:
Anglo Asian Mining plc (AIM:AAZ) is a gold, copper and silver
producer with a high-quality portfolio of production and
exploration assets in Azerbaijan. The Company produced 57,618 gold
equivalent ounces ("GEOs") for the year ended 31 December 2022.
On 30 March 2023, the Company published its strategic plan for
growth which shows a clearly defined path for the Company to
transition to a multi-asset, mid-tier copper and gold producer by
2028. By 2028, copper will be the principal product of the Company,
with forecast production of around 36,000 copper equivalent tonnes.
It plans to achieve this growth by bringing into production four
new mines during 2023 to 2028 at Zafar, Gilar, Xarxar and
Garadag.
The Company owns approximately 17.4 per cent. of Libero Copper
& Gold Corporation ("Libero"). Libero is listed on the TSX
Venture Exchange in Canada and owns, or has the option to acquire,
several copper exploration properties in North and South America,
including Mocoa in Colombia, one of the world's largest undeveloped
copper-molybdenum resources.
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END
IR SELESIEDSEFU
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