Final Results

RNS Number : 0594N

Anglo Asian Mining PLC

04 June 2010

 



Anglo Asian Mining plc / Ticker: AAZ / Index: AIM / Sector: Mining

4 June 2010  

Anglo Asian Mining plc ('Anglo Asian' or 'the Company')

Final Results

Anglo Asian Mining plc, the AIM listed gold producer in Azerbaijan, is pleased to announce its results for the year ended 31 December 2009. 

Highlights for the Period

·        Gedabek gold/copper mine in Azerbaijan completed May 2009 and opened by the President of Azerbaijan

·        First gold and silver poured at the opening ceremony - first gold sales achieved July 2009

·        Gold production at Gedabek continuing to increase quarter on quarter as efficiencies at the mine further improve

·        Revenue of $10,256,851

·        Operating loss of $11,723,910

Highlights since Period End

·        Gold production to 30 April 2010 totalled 30,323 oz - exceeding forecast for first full year of operation to 30 June 2010 of 25,000 oz Au

·        Second calendar year production target to 31 December 2010 of 53,500 oz Au

·        Sulphidisation, Acidification, Recycling, and Thickening ('SART') processing plant to facilitate the recovery of the copper and silver dissolved in the leaching solution completed February 2010 - expected to be fully operational by September 2010

·        Anticipate increasing the mine life and reserve figures at Gedabek by identifying additional resources within the mine's proximity

·        Focussed on developing 1,962 sq km gold/copper exploration portfolio with the aim of replicating success at Gedabek and developing additional mining operations

Chairman's Statement

2009 was a particularly important year in your Company's history as it saw us take the Gedabek gold/copper mine ('Gedabek') in Azerbaijan into production. This exciting event was not only a major milestone for Anglo Asian, but also for Azerbaijan as it is the country's first operating gold mine in recent times. With gold production at Gedabek continuing to increase quarter on quarter as efficiencies at the mine further improve, and the updated JORC compliant resource expected to increase by at least 50% from our original resource estimation of 702,000 ounces of gold, 37,500 tonnes of copper and 6,100,000 ounces of silver, we remain confident of Gedabek's long-term success as a profitable gold producing entity.

Whilst our efforts have focused on Gedabek and ensuring its success, the development of our total 1,962 sq km portfolio of prospective copper and gold assets also remains central to our mid-term strategy of increasing our production portfolio. To this end, now that mining operations are successfully underway at Gedabek we look forward to advancing various exploration programmes across our portfolio.

Gedabek, located in western Azerbaijan, is an open pit, heap leach operation. Whilst it currently has an initial six year mine life with target production in excess of 300,000 ounces of gold, we are confident that through the expected resource upgrade and through further exploration in the immediate region, this will be extended. Initially, the processing plant suffered technical teething problems, including the operational consistency of the secondary and tertiary crushers and the level of ore on the leach pad. However these issues have largely been rectified through the installation of new plant equipment and we are now experiencing increasing production figures. In the months ending 31 March 2010 and 30 April 2010 we achieved gold production of 6,167 ounces and 5,298 ounces respectively, and we anticipate that these levels of production will continue. We have already exceeded our revised target of 25,000 ounces of gold for the first 12 months of operation to 30 June 2010 with total production to 30 April 2010 totalling 30,323 ounces of gold. We have now aligned our production targets with the Company's financial year; our production forecast for the year ending 31 December 2010 is 53,500 ounces of gold.

In terms of gold sales, we completed our first gold sale in July 2009 and in line with increasing gold production figures, these sales have increased over the period. The buoyant gold price has seen the Company completing gold sales ahead of forecast projections at an average of $1,098 per ounce for the months July 2009 to April 2010.

Our excellent relationship with the Government of Azerbaijan continues and we are very grateful for its support. Indeed, we were delighted when His Excellency Ilham Aliyev, the President of Azerbaijan, agreed to open Gedabek at a formal ceremony in May 2009. Since that time we have maintained a close dialogue with him and various ministers including the Minister of Ecology and Natural Resources. We also continue to work closely with the International Bank of Azerbaijan ('IBA'), which is majority owned by the Government of Azerbaijan and has provided us with loans now amounting to $43.9 million, to be repaid from cash generated from production at Gedabek. Further details of these loans are given in the Financial Review.

At this point I should once again outline our Production Sharing Agreement ('PSA'). This sees the Government of Azerbaijan take 51% of commercial products from each mine after deducting the quantities of commercial products necessary to enable the Company to recover its operating costs, capital costs and imputed interest. Costs allowable as operating, capital and imputed interest for each mine are defined under the terms of the PSA agreement. Prior to the point at which the Company has recovered all its carried forward, unrecovered operating, capital and imputed interest costs, the Company is able to recover up to a maximum of 75% of the imputed revenue from each mine. Up until the time Anglo Asian has recovered all its carried forward, unrecovered costs, the Government of Azerbaijan effectively takes 12.75% (being 51% of the balancing 25%) of commercial products of each mine with the Company taking 87.25%.

In tandem with our main cash generation from gold, our silver and copper by-products will also add to our revenues going forward. To this end, during the year we continued the development of the SART processing plant to facilitate the recovery of the copper and silver dissolved in the leaching solution. This was completed in February 2010, but as this process has never been used commercially on such a scale before, we expect a few start up issues in its first months of operation. We hope it will be fully operational by September 2010. The plant capacity is approximately 1,800 tonnes of copper/silver concentrate per year although the amount produced will depend on ore mineralogy and process efficiencies. Initial assay results show that the copper concentrate contains 60-70% copper and 4,000 to 6,000 g/t of silver. It should be noted that the higher silver content may be the result of an anomaly caused by the silver build up in the solution prior to the start up of the SART plant. The Company is in the process of evaluating options for the sale of copper/silver concentrate.

Additionally, at Gedabek, leading global mining consultant SGS Mineral Services ('SGS') has been analysing existing drilling data with a view to completing a new resource and reserve model by the end of 2010. We were delighted to announce recently the initial results of Phase I of the Realistic Mineral Model Report, completed by SGS, which indicates upgrades for the measured, indicated and inferred gold, copper and silver metal contents of at least 50%. We are expecting confirmation of these results in the form of a new JORC compliant resource statement by the end of July 2010. The report represents the first phase of SGS's work; the second phase of the project will involve in-fill drilling to increase the reliability of the results obtained from the original drill holes. This work is expected to be completed in late 2010 and will increase our knowledge of the size and characteristics of the ore body at Gedabek.

Developing our asset portfolio forms a key part of our strategy as ultimately we hope to replicate our success at Gedabek in other areas. Our portfolio of Contract Areas in Azerbaijan consists of Gedabek, two further Contract Areas, Ordubad and Gosha, totalling 1,062 sq km and three additional Contract Areas covering 900 sq km in territories occupied by Armenia, which we are unable to develop until access is obtained.

Exploration work has been ongoing at our 462 sq km Ordubad and 300 sq km Gosha Contract Areas at a low level. We anticipate that this will pick up during the remainder of 2010.

A strong, stable team is key to the success of any business and Anglo Asian is no different. I am delighted with our current team, which is working well together and delivering solid results. During the year we made a number of appointments including that of Professor John Monhemius who joined as a Non-executive Director in August 2009, replacing Ross Bhappu. Professor Monhemius has over 40 years of experience of academic and industrial research and development in hydrometallurgy and environmental control in mining and metallurgical processes as well as experience in the public company arena.

On the management side, in October 2009 we appointed a new Operations Manager, Timothy van Zeller, to oversee Gedabek on a day-to-day basis. Timothy has over 30 years' experience in the mining industry having worked for many large scale mining operations in Zimbabwe, South Africa, Uzbekistan and Kazakhstan, and specialises in heap leach operations. His appointment has left Farhang Hedjazi, who stepped across from his role as Chief Technical Officer to become a consultant to the Company, free to focus on the wider operations including Gedabek geometallurgical studies and exploration activities.

Our whole team now consists of approximately 300 personnel from mining engineers to geologists and project managers. As ever, maintaining good health, safety, social and environmental standards is very important to us. We were therefore very pleased to be recognised for our efforts through the award of various certificates including ISO 9001:2008 Quality Management System, ISO 14001:2004 Environmental Management System and OHSAS 18001:2007 Occupational Health and Safety Management System for our mining and gold and copper processing operations at Gedabek.

In addition, we are also committed to Gedabek's local community and have implemented community projects aimed at keeping an open and active dialogue with the local populace and assisting in their economic advancement. Over the past two years we have implemented initiatives including the provision of the necessary expertise and materials to provide two villages in the vicinity of Gedabek to obtain fresh water, as well as repairing a bridge and a medical facility in one of the villages.

In 2009 Anglo Asian generated revenues of $10,256,851 (2008: $nil) as a result of gold and silver sales from the Gedabek mine. The revenues were generated from the sale of Anglo Asian's share of the production for the year which comprised 9,656 ounces of gold and 2,919 ounces of silver at an average price of $1,057 and $17 respectively. The Group incurred mining cost of sales of $8,403,928 (2008: $nil) and therefore reported a mining profit of $1,852,923 for FY 2009 (2008: $nil). As production ramps up we expect gross profits achieved to improve significantly.

During the year there was an impairment charge of $5,773,180 (2008: $nil). This comprised of a write down of $5,000,000 in respect of the mining rights of Ordubad Contract Area and $773,180 in respect of evaluation and exploration expenditure for three mining properties within the Ordubad Contract Area. The Company originally carried mining rights for Ordubad at $10,000,000 at the time it purchased rights to the Contract Area and wrote down an amount of $5,000,000 during 2007. The Directors carefully evaluated the potential of Ordubad Contract Area in relation to the expiry of the licence in 2011 and made the decision to write down the balance of $5,000,000.

The Group incurred administration expenses of $4,250,801 (2008: $4,526,090) and finance costs for the year of $3,262,986 (2008: $nil). The Group generated a loss for the year of $11,723,910 (2008: $4,471,434).

Looking forward, I believe 2010 will prove to be a very exciting year for Anglo Asian. With further plant improvements in the pipeline, Gedabek is expected to generate increasing revenues from this point onwards. This, in tandem with our exploration activities, gives us confidence in our strategy of becoming a mid-tier gold and base metal mining Company focused in Caucasia and Central Asia.

I would like to thank all those involved in the Company for their continued support and belief in our projects. I truly believe that Anglo Asian has great potential to deliver good rewards to its shareholders and look forward to the coming year with confidence.

Khosrow Zamani

Non-executive Chairman

27 May 2010

Chief Executive Review

Mining operations

Our focus during 2009 was channelled towards Gedabek, and the building of its mine and processing plant. These efforts bore fruit in May 2009 when we commenced gold mining operations and sold our first gold in July 2009.

The Company began construction of an open pit mine in 2008. This included building infrastructure and developing an open pit mine, as well as designing and building a conventional heap leach pad and processing facility for the recovery of gold, copper and silver. It was also the Company's intention during the first year of the mine's operation to revise its JORC compliant resource of 15.6 million tonnes of ore grading 1.4 g/t gold, 0.24% copper and 12.2 g/t silver in the indicated and inferred categories. To this end we completed Phase I of the Realistic Mineral Model Report which indicates upgrades for the measured, indicated and inferred gold, copper and silver metal contents of at least 50%. We expect the JORC compliant report to be completed by the end of July 2010 with the more detailed Phase II study to follow at the end of the year after further in-fill drilling has been completed.

As is often the case, there were some technical problems experienced during the start-up of the mine, namely at the processing facility. These included the operational consistency of the secondary and tertiary crushers, which curtailed production, as well as geological issues pertaining to the location of the leach pads. Accordingly, Anglo Asian implemented a number of initiatives in July and August 2009 to rectify these problems, expand production and improve efficiencies. These initiatives included installing two new cone crushers to improve operational consistency which were fitted and completed at the end of September 2009. Anglo Asian also installed an additional tertiary cone crusher and sourced a reconditioned one that can be introduced as a standby for the secondary cone crusher to increase the plant's operational flexibility.

We continued to encounter difficulties during the installation of these new cone crushers and also had ongoing problems with the stacker that affected levels of ore on the leach pad. These difficulties were principally the result of unexpectedly high moisture content within the ore fed to the crushers. Subsequently, the Company revised its production forecasts to 25,000 ounces of gold in its first full year of production to June 2010 from the initial 70,000 ounces of gold. Since that time, we have experienced increasing gold production and as a result, we have already exceeded our revised production target for our first year of operation with production from July 2009 to April 2010 totalling 30,323 ounces of gold. The table below illustrates monthly gold production.

Table 1: Production at Gedabek

Month	Gold Produced (Including Govt. of Azerbaijan's share) (oz)	Cumulative Gold Production (Including Govt. of Azerbaijan's share) (oz)	Weighted Average Gold Sale Price ($)
July 2009	802	802	944
August 2009	751	1,553	951
September 2009	2,192	3,745	997
October 2009	2,208	5,953	1,037
November 2009	2,549	8,502	1,129
December 2009	2,863	11,365	1,105
January 2010	3,483	14,848	1,106
February 2010	4,007	18,855	1,090
March 2010	6,170	25,025	1,111
April 2010	5,298	30,323	1,151
Total to 30 April 2010	30,323	30,323	1,098

Our new stacker system will begin operating in late May 2010 and further increases in plant availability and production are expected.

Table 2 summarises levels of dry ore which have been transferred to the leach pad on a monthly basis since April 2009. In order to improve economic recovery, blending of high and low grade ore has been carried out in a ratio that will increase tonnes whilst maintaining the grade quality.

Table 2: Dry ore transferred to leach pad at Gedabek

Month	Dry ore transferred to the leach pad (tonnes)	Average grade (g/t)
March 2009	9,730	2.77
April 2009	24,066	2.50
May 2009	23,702	2.95
June 2009	-	-
July 2009	29,785	4.20
August 2009	37,317	4.07
September 2009	18,403	5.04
October 2009	40,603	3.27
November 2009	27,022	4.59
December 2009	62,346	4.04
January 2010	59,208	4.62
February 2010	70,118	5.17
March 2010	66,000	4.68
April 2010	56,667	4.42

The weather will always play a role in the running of operations given our location. Over the winter months we experienced extremely cold conditions, which resulted in the freezing of our solution application pipes. However we have now purchased below surface drippers which will be installed before next winter. We are now moving into the wet season, which creates its own challenges. In anticipation of this we have been building bigger drainage channels around the leach pad and increased the surge capacity of our solution storage ponds, although the fact that no ore was delivered to the leach pad in June 2009 was due to a lack of capacity on the pad.

Post period end, we were delighted to commence the new SART process, which facilitates the recovery of the copper dissolved in the leaching solution. The copper is recovered in the form of a precipitated copper sulphide concentrate by-product, which also contains silver with commercial value. Initial results appear promising. Following process optimisation, a plant automation system will be installed. The plant capacity is 1,800 tonnes of copper concentrate per year although the amount produced will depend on ore mineralogy and process efficiencies. Initial assay results show that the copper concentrate contains 60-70% copper and 4,000 to 6,000 g/t of silver although it should be noted that the high silver content may be the result of an anomaly caused by the silver build up in the solution prior to the start up of the SART plant. During March and April 2010 we produced approximately 85 dry tonnes of copper concentrate using circa 30% of the plant's capacity. The Company is in the process of evaluating options for the sale of copper/silver concentrate.

On more practical issues surrounding the running of the mine, health and safety systems remain at the forefront of our agenda. We abide by strict health and safety criteria and our record in this respect remains excellent with no major or serious accidents during 2009 and to date in 2010.

Environmental principles are also high on our agenda and the mine is constructed to the highest environmental standards. In terms of power and water, we are using our own diesel-powered generators and water supply is readily available from nearby streams.

On the same theme, we were delighted to announce that in March 2010, the Company was awarded the following certificates: ISO 9001:2008 Quality Management System, ISO 14001:2004 Environmental Management System and OHSAS 18001:2007 Occupational Health and Safety Management System.

We have good relationships with our labour force of approximately 300 people including a local management team, Azeri mining and earthworks contractors and experienced operations personnel from surrounding countries. In order to accommodate our staff we have built a permanent mine camp at Gedabek.

We also have a highly active community policy aimed at enfranchising the local community and assisting in their economic advancement. To date, Anglo Asian has carried out several community development projects including providing seminars and training on beekeeping and we have a pilot programme in place to give soft loans to beekeeping families to start in business. Anglo Asian has also provided the expertise and material to enable two villages local to the Gedabek mine to obtain fresh water, as well as repairing a bridge and a medical facility in one of the villages. Additionally, we have set up a training centre in Gedabek and have partnered with two international Non Government Organisations ('NGOs') to offer local residents vocational training such as welding and business development courses such as beekeeping, tailoring, computer skills and business start-up. The centre is also used for an internet café at Gedabek, which gives ongoing training in the use of computers and free use of the internet for the local community.

Exploration

Although we are currently focused on development and successful production at Gedabek, exploration still remains central to our long-term strategy of increasing our production profile. Our portfolio includes three Contract Areas covering 1,062 sq km: Gedabek, Ordubad and Gosha, which run across the Tethyan Tectonic Belt, one of the world's significant copper and gold bearing areas. We believe that with further exploration, our exploration portfolio has the potential to replicate Gedabek and generate further producing entities. Additionally, we hope to develop our 900 sq km prospects in three additional Contract Areas located in the region in Azerbaijan occupied by Armenia when the political situation permits.

Gedabek

Exploration activities within the Gedabek Contract Area continue. During the initial development of the mine, it became evident that in a number of areas the ore had higher grades than forecast by the original ore body model and there are also extensions beyond the predicted final pit boundaries. Ore mined as of 31 March 2010 amounted to 468,000 tonnes at a grade of 4.18 g/t. Out of this amount, 212,000 tonnes with an average grade of 3.0 g/t was not included in the original reserve estimations. In order to help clarify the situation, we enlisted the help of SGS Mineral Services and, at the end of August 2009, one of its consultants visited Gedabek to review its geology and existing drill logs. Subsequently, a re-modelling and a geometallurgical study was commissioned to create a more accurate ore body model of the Gedabek deposit.

Initial results of Phase I of the Realistic Mineral Resources Model Report were announced in April 2010 and indicated upgrades for the measured, indicated and inferred gold, copper and silver metal contents of at least 50% from the JORC compliant mineral resources statement provided by SRK in 2006. The mineral resources were estimated by accessing, reviewing, validating and processing the whole geological and chemical information from 141 exploration diamond and reverse circulation (29 diamond, 34 reverse circulation and 78 combined) drillholes and 262 production blastholes.

It is important to note that the report represents the first phase of SGS's work; the second phase of the project will involve in-fill drilling to increase the reliability of the results obtained from the original drill holes. This work is expected to be completed by late 2010 and will increase the Board's confidence in the new resource evaluations. The results of the report are therefore subject to revision.

We also continued exploration work at Maarif, another property on the Gedabek Contract Area. This included pioneer drilling following geochemical and geophysical surveys. This will be followed by analysis and interpretation of the results in the second half of 2010.

Gosha

The 300 sq km Gosha Contract Area is situated 50 km north-west of Gedabek and contains three prospects: Gosha, Itkirlan and Munduglu. In April 2009 the Company was granted a two year extension by the Government of Azerbaijan to continue exploration in this area for precious and base metals until 13 April 2011.

We have access to a significant amount of data generated in the Soviet-era from this area, which, used in tandem with additional data that we have collected, will form the basis for an extensive exploration programme. Ultimately, we aim to define new resources and replicate our success at Gedabek with the development of an underground mining operation.

Gosha has more than 6 km of exploration audits from the Soviet-era, of which the richest mineralisation zone has a prospect of narrow vein type renegade gold deposit. In addition to this zone, which according to Soviet-era studies contains approximately 3.2 tonnes of gold with average grade of 14.0 g/t, there are several other vein type mineralisation zones. In total according to these studies, Gosha has a resource of 8 tonnes of gold in the indicated and inferred categories.

Additionally, assay results from extensive samplings completed by the Company on the richest mineralisation zone indicate a close match with previous works during the Soviet-era. With this in mind we launched a new exploration programme for 2010 including diamond core drilling. Furthermore a contract for an extension of a new audit was signed with a local company for 2010, in order to cross cut the ore vein at a lower depth.

Ordubad

The 462 sq km Ordubad Contract Area in the Nakhchivan region contains numerous targets including Shakardara, Piyazbashi, Misdag, Agyurt, Shalala and Diakchay, which are all located within a 5km radius. In April 2009 we were granted a two year extension to continue exploration in this area for precious and base metals until 13 April 2011.

During 2009 based on previous Soviet-era studies, we launched a core drilling programme at the Misdag, Shalala and Diakchay targets. These results did not correlate to the data indicated in the Soviet-era reports. In light of this, we have modified our exploration strategy at the Ordubad Contract Area and started a new regional geological survey over the area, in addition to limited exploration activities at the Agyurt target area with a view to extending the licence period. Consequently, we have made a decision to write off $773,180 in exploration and evaluation expenditure attributable to Misdag, Shalala and Diakchay mining properties as well as writing down the remaining $5,000,000 mining rights attributable to Ordubad Contract Area.

Product Sharing Agreement ('PSA')

The Company has exclusive rights, through one of its subsidiaries, RV Investment Group Services LLC, to explore and extract all minerals from all of the Contract Areas through a PSA with the Government of Azerbaijan. This also provides Anglo Asian with exclusive rights to data from the Soviet-era covering these areas. Under the terms of the PSA, which is modelled on Azerbaijan's internationally recognised oil industry practices, the Government of Azerbaijan is entitled to 51% of commercial products from each mine after deducting the quantities of commercial products necessary to enable the Company to recover its operating costs, capital costs and imputed interest. Costs allowable as operating, capital and imputed interest for each mine are defined under the terms of the PSA agreement. Prior to the point at which the Company has recovered all its carried forward, unrecovered operating, capital and imputed interest costs, the Company is able to recover up to a maximum of 75% of the imputed revenue from each mine. Up until the time Anglo Asian has recovered all its carried forward, unrecovered costs, the Government of Azerbaijan effectively takes 12.75% (being 51% of the balancing 25%) of commercial products of each mine with the Company taking 87.25%.

Reza Vaziri

President and Chief Executive

27 May 2010

Financial Review

Introduction

I am pleased to report that in 2009 Anglo Asian generated revenues of $10,256,851 (2008: £nil) as a result of gold and silver sales from the Gedabek mine.

The revenues were generated from the sale of Anglo Asian's share of the production for the year which comprised 9,656 ounces of gold and 2,919 ounces of silver at an average price of $1,057 and $17 respectively.

The Group incurred mining cost of sales of $8,403,298 and therefore reported a mining profit of $1,852,923 for FY2009 (2008: $nil). Low production of gold and silver in the early months of operation was the main factor in the amount of mining profit.

After consideration of all available facts and information, the Board has taken the view that the Group entered into commercial production from 1 July 2009. As such the intangible mining asset carried for Gedabek has been amortised over the period since 1 July 2009 on a unit of production basis.

During the year there was an impairment charge of $5,773,180 (2008: $nil). This comprised of a write down of $5,000,000 in respect of the mining rights of Ordubad Contract Area and $773,180 in respect of evaluation and exploration expenditure for three mining properties within the Ordubad Contract Area. The Company originally carried mining rights for Ordubad at $10,000,000 at the time it purchased rights to the Contract Area and wrote down an amount of $5,000,000 during 2007. The Directors carefully evaluated the potential of Ordubad Contract Area in relation to the expiry of the licence in 2011 and made the decision to write down the balance of $5,000,000.

The Group incurred administration expenses of $4,250,801 (2008:$4,526,090) which along with finance costs for the year of $3,262,986 (2008: $nil) resulted in a loss for the year of $11,723,910 (2008: $4,471,434). The finance costs for the year comprises interest on the credit facilities and loans net of capitalised interest, interest on letters of credit and accretion expenses on the rehabilitation provision.

In addition to the $25.0 million credit facility obtained from the IBA during 2008, the Group obtained three further loans from the IBA for the value of $9.4 million, $6.5 million and $3.0 million giving an aggregate of $18.9 million obtained in 2009. All loans carry an interest rate of 15% per annum. The loan of $9.4 million is to be repaid in nine quarterly instalments (first eight tranches of $1,044,000 and a ninth tranche of $1,048,000) with the first instalment due in March 2011 and then every three months to March 2013. The loan of $6.5 million is to be repaid in 13 instalments of $500,000 with the first instalment due in June 2010 and then every three months until June 2013. The loan of $3.0 million is to be repaid in six monthly instalments of $500,000 beginning from April 2010. Subsequent to the year-end date, the repayment terms of the loan has been revised. Table 3 below shows the repayment schedule for IBA loans at 31 December 2009 and at 27 May 2010.

Table 3: Repayment schedule for IBA loans at 31 December 2009 and at 27 May 2010

	2010	2011	2012	2013	Total
	$	$	$	$	$
Repayment schedule for IBA loans as at 31 December 2009	17,083,337	18,592,663	6,176,000	2,048,000	43,900,000
Impact of agreement to reschedule loan repayments	(8,416,665)	(3,583,335)	12,000,000	-	-
Repayment schedule for IBA  loans as at 27 May 2010	8,666,672	15,009,328	18,176,000	2,048,000	43,900,000

The Group also obtained a $1.0 million unsecured loan from its CEO, Mr Reza Vaziri, to provide additional working capital for the Group. Under the terms of the loan agreement, an all inclusive annual interest rate of 8% per annum will be applied. 20% of initial net gold sales will be used to service repayment of this loan with the latest date for the outstanding balance to be paid in full being 7 February 2010. Subsequent to the year-end date and as announced on 12 April 2010 the repayment term of this loan has been changed so that the entire loan is repayable on 30 November 2010.

As announced on 8 March 2010, the Group obtained a credit line from Bank Standard JSC for an amount of $1.0 million repayable on 11 December 2010. Interest is payable on the credit line at 19% per annum. The Group has obtained a loan from Pasha Bank for $450,000 for the purposes of purchasing two mining fleet vehicles. Interest is payable at 17%. The loan is repayable in instalments with the last instalment payable in December 2010.

During the year Anglo Asian continued to draw down on its available credit facilities and at the end of the year had debt of $42,983,336 (2008: $17,396,890).

As at 31 December 2009 the Group had undrawn facilities of $589,471 (2008: $5,663,778) after consideration of the letters of credit which are guaranteed by the International Bank of Azerbaijan.

The Group held cash balances of $809,548 (2008: $738,722) and inventories at cost of $10,276,024 (2008: $nil).

Exploration and evaluation expenditure of $1,685,142 (2008: $352,344) were incurred and capitalised during the year.

The Group did not pay any corporation tax during the year as it continued to be loss making. No deferred tax asset has been recognised.

Going concern

The Directors have prepared the consolidated financial statements on a going concern basis after reviewing the Group's cash position for the period to 30 June 2011 and satisfying themselves the Group will have sufficient funds on hand to realise their assets and meet their obligations as and when they fall due. Refer to note 1 to the consolidated financial statements for the facts and assumptions the Directors used to base their conclusion on.

Commodity price risk

The Group obtained its first revenues during the year and also entered into the phase of commercial production from 1 July 2009. As such its revenue is exposed to fluctuations in the price of gold, silver and copper. Anglo Asian currently does not hold any financial instruments to hedge the commodity price risk on its expected future production; however the Board will review this exposure and the requirement for hedging activities on an ongoing basis.

Foreign currency risk

The Group reports in US Dollars and a large proportion of its business is conducted in US Dollars. It also conducts business in Australian Dollars, Azerbaijan Manats and UK Sterling. The Group does not currently hedge its exposure to other currencies although it will review this periodically if the volume of non-US Dollar transactions increases significantly.

Liquidity/interest rate risk

The Group has not used any interest rate swaps or other instruments to manage its interest rate profile during 2009 but will review this requirement on a periodic basis.

Board approval is required for all new borrowing facilities. At the year end the Group's only interest rate exposure was on cash held in the bank. During the year it had entered into short-term deposits which included overnight, weekly and monthly up to 12 months, however it held no short-term deposits as at the year end.

Market risk

Exposure to interest rate fluctuations is minimal as the Group currently has no floating rate debt. Interest rates on UK Sterling and US Dollar deposits have been at historic lows during the current year. The levels of deposits held by the Group have also been low therefore any impact of changing rates is minimal. The Group is exposed to fluctuations in commodity prices now that production has commenced.

Operational risk

There is exposure to levels of production as a result of unforeseen operational problems or machinery malfunction and therefore operating costs for commercial production may remain subject to variation from those forecast by the Directors. The Group will monitor progress on delays and costs on a regular basis.

Andrew Herbert

Chief Financial Officer

27 May 2010

Consolidated income statement

For the year ended 31 December 2009

		Year	Year
		ended	ended
		31 December	31 December
		2009	2008 (Restated)
		US$	US$
Revenue		10,256,851	-
Cost of sales		(8,403,928)	-
Gross profit		1,852,923	-
Administrative expenses		(4,250,801)	(4,526,090)
Write down of capitalised intangible assets		(5,773,180)	-
Other operating expense		(290,674)	-
Operating loss		(8,461,732)	(4,526,090)
Finance income		808	54,656
Finance costs		(3,262,986)	-
Loss before tax		(11,723,910)	(4,471,434)
Income tax expense		-	-
Loss for the period attributable
to the equity holders of the parent		(11,723,910)	(4,471,434)
Loss per share for the period attributable
to the equity holders of the parent
Basic and diluted (cents per share)		(11.28)	(4.41)

The Group's loss relates to continuing operations in both years.

Consolidated statement of comprehensive income

For the year ended 31 December 2009

	Year	Year
	ended	ended
	31 December	31 December
	2009	2008 (Restated)
	US$	US$
Loss for the year	(11,723,910)	(4,471,434)
Other comprehensive income	-	-
Total comprehensive loss for the year	(11,723,910)	(4,471,434)
Attributable to the equity holders of the parent	(11,723,910)	(4,471,434)

Consolidated balance sheet

As at 31 December 2009

			As at	As at
		As at	31 December	1 January
		31 December	2008	2008
		2009	(Restated)	(Restated)
		US$	US$	US$
Non-current assets
Intangible assets		38,745,095	44,127,513	43,729,409
Property, plant and equipment		48,298,659	35,057,769	7,492,689
Non-current prepayments		79,200	509,794	-
		87,122,954	79,695,076	51,222,098
Current assets
Trade and other receivables		3,836,685	1,474,063	192,164
Inventories		10,276,024	-	-
Cash and cash equivalents		809,548	738,722	6,810,902
		14,922,257	2,212,785	7,003,066
Total assets		102,045,211	81,907,861	58,225,164
Current liabilities
Trade and other payables		(14,951,262)	(11,370,718)	(1,332,491)
Interest-bearing loans and borrowings		(19,097,540)	-	-
		(34,048,802)	(11,370,718)	(1,332,491)
Net current liabilities		(19,126,545)	(9,157,933)	(5,670,575)
Non-current liabilities
Provision for rehabilitation		(1,530,978)	-	-
Trade and other payables		-	(1,312,537)	-
Interest-bearing loans and borrowings		(23,885,796)	(16,084,353)	-
(25,416,774)			(17,396,890)	-
Total liabilities		(59,465,576)	(28,767,608)	(1,332,491)
Net assets		42,579,635	53,140,253	56,892,673
Equity
Share capital		1,934,363	1,851,516	1,792,015
Share premium account		31,939,385	30,911,013	30,387,514
Share-based payment reserve		621,802	569,729	433,715
Merger reserve		46,206,390	46,206,390	46,206,390
Accumulated loss		(38,122,305)	(26,398,395)	(21,926,961)
Total equity		42,579,635	53,140,253	56,892,673

Consolidated cash flow statement

For the year ended 31 December 2009

		Year	Year
		ended	ended
		31 December	31 December
		2009	2008 (Restated)
		US$	US$
Net cash outflow used in operating activities		(4,520,532)	(412,209)
Investing activities
Expenditure on property, plant and equipment and mine development		(15,733,989)	(21,061,704)
Expenditure on intangible assets		(1,402,839)	(258,670)
Interest received		808	54,656
Net cash used in investing activities		(17,136,020)	(21,265,718)
Financing activities
Proceeds from borrowings		26,898,983	16,084,353
Interest paid		(5,171,605)	(478,606)
Net cash generated from financing activities		21,727,378	15,605,747
Net increase/(decrease) in cash and cash equivalents		70,826	(6,072,180)
Cash and cash equivalents at beginning of year		738,722	6,810,902
Cash and cash equivalents at end of year		809,548	738,722

Timetable and distribution of accounts

A copy of the Annual Report of Accounts is available on the Company's website at www.aamining.com and hard copies of the Annual Report and Accounts have been sent today to shareholders.

The Annual General Meeting will be held on 28 June 2010 at 10.30am at the offices of Hammonds LLP, 7 Devonshire Square, London EC2M 4YH.

* * ENDS * *

For further information please visit www.aamining.com or contact:

Reza Vaziri	Anglo Asian Mining plc	Tel: [phone]
Andrew Herbert	Anglo Asian Mining plc	Tel: [phone]
John Harrison	Numis Securities Limited, as  Nominated Adviser	Tel: [phone]
James Black	Numis Securities Limited, as Corporate Broker	Tel: [phone]
Hugo de Salis	St Brides Media & Finance Ltd	Tel: [phone]
Felicity Edwards	St Brides Media & Finance Ltd	Tel: [phone]

 

END

 

 

FR UOABRROANRAR