Interim Results

Anglo Asian Mining PLC 24 August 2006 ANGLO ASIAN MINING PLC ('Anglo Asian' or 'the Company') INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2006 AND DRILLING UPDATE Highlights for the period • Drilling at Gedabek progressing on target with encouraging results • SRK Consulting retained to assist with the implementation of the drilling programme • Contract to dismantle and containerise CIL gold processing plant in Australia completed • Graham Mascall appointed as Chairman in March 2006 Subsequent events • Encouraging results continue at Gedabek and a scoping study is underway • Gordon Lewis appointed as Chief Executive in July 2006 Graham Mascall, Chairman of Anglo Asian, commented: 'The operating loss of $1.8m for the 6 month period to 30 June 2006 arose from the charging of administrative expenses and crediting an exchange gain. In the period, the Company also invested $3.0m in exploration expenses and $5.8m in the form of capital expenditure primarily to acquire, dismantle and containerise the CIL plant in Australia.' Mr Mascall continued: 'The drilling programme at Gedabek went well during the period and according to plan. We released the initial encouraging results in early June and today release further results, which continue to support the prospect of developing the Gedabek property. We anticipate announcing a resource estimate for Gedabek in the fourth quarter of this year. I am also particularly pleased to see the arrival of Gordon Lewis as Chief Executive. Following the recent strengthening of the Board, Robert Jeffcock has considered this an appropriate time to step down from the Board in order to concentrate on his other business interests. I thank Robert for his contribution to the Company.' Enquiries: Anglo Asian Mining PLC Numis Securities Limited Parkgreen Communications Gordon Lewis, Chief Executive John Harrison Justine Howarth Richard Round, Finance Director Victoria Thomas T: +44 20 7409 3232 T: +44 20 7776 1590 T: +44 20 7493 3713 www.aamining.com victoria.thomas@parkgreenmedia.com INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2006 AND DRILLING UPDATE Chairman's statement General The reported six month period has been an important one for Anglo Asian, with the strategic focus shifting from the Ordubad region to the Gedabek project in the West of Azerbaijan which was considered to be the best prospect for an early production decision, based on the available data and initial reconnaissance work. In addition the Board has been strengthened with individuals who have significant mining experience, which along with the retention of SRK has led to a more focused approach to the Company's various activities and prospects. As a result of the continuing encouraging results from Gedabek, which are summarised below, the Company will now progress this prospect to early development. Gedabek Drilling commenced early in 2006 using three of the four available rigs. This has now been increased to five rigs. The drilling programme has progressed well and according to plan with SRK being retained to assist with the implementation of the programme. Results remain encouraging. To date 24 diamond drill holes, 17 reverse circulation holes ('RC') and 46 holes combining RC at the top with diamond drilling at the bottom have been drilled on a 55 metre grid. The holes completed and available assays continue to indicate the presence of significant copper and gold mineralisation at Gedabek. Assay results received, since the results released on 2 June 2006, are summarised in the table attached (at the end of the text of the announcement prior to the financial statements). A gold equivalent cut-off grade of 0.50 grams per tonne (g/t) was used to define each of the intervals. Gold equivalent conversion is based on a ratio of 1g/t gold to 60 g/t silver and 1% copper to 2.3g/t gold. The Company plans to complete further infill and boundary drilling to supplement the current drill programme as required. Completion of this drill programme and receipt of the assay data will allow Anglo Asian and their consultants SRK Consulting to develop a resource estimate for Gedabek in the fourth quarter of 2006. A scoping study is also now underway on Gedabek which is expected to be completed by January 2007. The study will incorporate the resource evaluation, mining plan, metallurgy and process flowsheet, geotechnical assessment, environmental management, assessment of operating and capital costs and a preliminary economic model. The results of the scoping study will enable the Board to establish the financing requirements for the project and the need for a full feasibility study and the ability to fast track project development. The local population and government of Gedabek have been very supportive of the Company's activities. The mine previously operated between 1849 and 1917. Since 1960, the Soviets and the Azeris carried out exploration activity including mapping, sampling, trenching, drilling and underground exploration. Gosha Limited adit sampling has been carried out at Gosha, confirming the presence of two large vein-like structures which contain grades and thicknesses, in line with the Soviet data. Assessment of this resource will continue through a combination of further sampling, geological modelling and drilling as required. Ordubad The drilling programme at Piyazbashi was completed in March of this year. The results of the drilling and the adit sampling provided confirmation of gold grade in the veins broadly in line with the Soviet data. The final resource modelling and assessment need to be completed and the classification is expected to improve but the Company's consultants, SRK Consulting have advised that the greater potential of the Gedabek property meant that focus for a first feasibility study should be switched to there. Piyazbashi will therefore not be a first priority for a feasibility study and progression towards early production as was envisaged in the Admission Document. On completion of the drilling at Piyazbashi a diamond drill rig was moved to Shakardara. Shortly after a short drilling campaign there, it was considered that the rig could be better utilised by speeding up the programme at Gedabek and it was therefore moved to that property. The drilling and assessment programme at Ordubad is now effectively on hold, but further work is required in order to obtain a full assessment of the prospects in particular at Misdag and Shakardara. CIL plant The contract to dismantle, containerise and store the CIL plant within the close proximity of Mackay port in Australia was completed in the period. DHL Global Forwarding Projects, our preferred freight forwarder, has carried out a full route survey to the Gedabek site and estimate a transit time of 8 to 10 weeks from Mackay to the site. Financial results The Group reported an unaudited operating loss of $1,820,561 ($662,745) for the six months to 30 June 2006 (six months to 31 July 2005). The operating loss resulted from the charging of administrative expenses of $2,044,385 ($756,575) and crediting an exchange gain of $223,824 ($93,830). The six month comparative period to 31 July 2005 was almost entirely prior to the IPO which occurred on 29 July 2005 and the increase of expenditure in the current interim period reflects the increase in activity following the IPO. The net interest credit in the period of $370,378 (interest charge $3,732) arose from interest received on deposits. Exploration and evaluation expenditures of $2,973,376 ($1,199,199) were capitalised in the period. Further payments were made to acquire, dismantle and containerise the CIL plant in Australia amounting to $5,384,707 ($nil) and other capital expenditure was incurred of $423,819 ($52,373). The Group at the period end retained cash balances of $11,750,911 ($81,966) and an asset with significant value in the CIL plant with the dismantling and containerisation complete. $50,000 remains outstanding to complete the purchase of the equipment. Directors and management The Company continued to strengthen the Board with individuals who possess significant experience in the mining sector. I joined the Company in March 2006 as Chairman and Gordon Lewis joined as Chief Executive in July 2006. Gordon has a depth of operating experience in various locations throughout the world, where he has taken gold mining projects through from feasibility to construction and production. Gordon is putting in place an experienced management team based in Azerbaijan to continue the push towards early production at Gedabek. I also announce that Robert Jeffcock, one of the founding members, is resigning from the Board with immediate effect. Robert has also undertaken other business ventures and believes that following the recent appointments the Company rests in good hands. Robert will continue to support the Company as a shareholder and I would like to take this opportunity to thank him for his contribution to Anglo Asian. The future The Group is poised to transform as it moves towards the development of the Gedabek project. We remain adequately funded for the work in progress with an experienced Board and management team now in place. I look forward to updating the shareholders with progress over the coming months. Graham Mascall Chairman 23 August 2006 Table of Assay Results from Gedabek Drilling Programme ----------------------------------------------------------------------------------- Hole No. Type TD (m) From(m) To Interval Au Eq.(g/t) Au(g/t) Ag(g/t) Cu(%) (m) (m) ----------------------------------------------------------------------------------- GDDD14 Core 200.0 66.0 74.2 8.2 1.56 1.14 2.85 0.16 and 74.2 76.0 1.8 Void and 76.0 110.0 34.0 2.14 1.10 5.27 0.41 and 116.0 124.0 8.0 2.93 1.25 10.68 0.65 ----------------------------------------------------------------------------------- GDDD15 Core 190.0 26.0 44.0 18.0 4.41 3.12 14.61 0.45 and 62.0 78.0 16.0 1.82 0.20 2.06 0.69 with 68.0 74.0 6.0 1.52 ----------------------------------------------------------------------------------- GDDD16 Core 180.0 No Intersections with AuEq grade above 0.5 g/t ----------------------------------------------------------------------------------- GDDD17 Core 185.0 10.0 36.0 26.0 2.18 1.32 15.12 0.27 and 42.0 62.0 20.0 1.35 0.26 2.39 0.46 with 48.0 52.0 4.0 1.35 and 66.0 78.0 12.0 0.84 0.08 1.17 0.32 ----------------------------------------------------------------------------------- GDDD18 Core 183.0 32.0 40.0 8.0 0.79 0.11 3.40 0.27 and 122.0 134.0 12.0 0.82 0.21 1.48 0.26 ----------------------------------------------------------------------------------- GDDD19 Core See GDRC09a ----------------------------------------------------------------------------------- GDDD20 Core 210.0 20 26.0 6.0 1.09 0.96 4.52 0.02 and 74 80.0 6.0 0.88 0.33 2.07 0.23 ----------------------------------------------------------------------------------- GDDD21 Core 10.0 Abandoned - not assayed ----------------------------------------------------------------------------------- GDRC08 RC 204.0 38.0 61.0 22.0 6.17 4.91 57.58 0.13 Excluding 46.0 47.0 1.0 No Sample and 64.0 73.0 9.0 8.78 5.34 17.97 1.36 and 77.0 88.0 11.0 1.24 0.42 4.35 0.32 and 92.0 96.0 4.0 1.58 0.09 0.58 0.64 and 131.0 138.0 7.0 1.98 0.47 2.74 0.64 ----------------------------------------------------------------------------------- GDRC09 RC 47.0 Abandoned - not assayed ----------------------------------------------------------------------------------- GDRC09a / RC / GDDD19 Core 89.0/223.0 0.0 3.0 3.0 0.66 0.44 6.17 0.05 and 23.0 27.0 4.0 1.00 0.91 1.82 0.03 and 32.0 49.0 17.0 3.65 2.37 14.97 0.45 ----------------------------------------------------------------------------------- GDRC10 RC 194.0 45.0 84.0 39.0 0.77 0.13 1.15 0.27 ----------------------------------------------------------------------------------- GDRC11 RC 153.0 13.0 63.0 50.0 2.83 2.40 9.79 0.12 with 16.0 22.0 6.0 7.20 34.19 and 111.0 120.0 9.0 7.58 7.24 17.27 0.02 with 112.0 116.0 4.0 14.32 34.14 and 143.0 146.0 3.0 1.25 1.04 3.65 0.06 GDRC12 RC 165.0 14.0 27.0 13.0 6.33 5.17 8.12 0.45 and 35.0 52.0 17.0 1.57 0.10 0.33 0.64 and 63.0 69.0 6.0 1.66 0.07 0.25 0.69 ----------------------------------------------------------------------------------- GDRC13 RC 145.0 81.0 95.0 14.0 1.33 0.05 0.32 0.55 ----------------------------------------------------------------------------------- GDRC14 RC 145.0 24.0 29.0 5.0 1.15 0.19 0.86 0.41 and 35.0 67.0 32.0 0.82 0.06 0.85 0.32 ----------------------------------------------------------------------------------- GDRC15 RC 102.0 24.0 30.0 6.0 1.47 0.22 2.10 0.53 and 36.0 56.0 20.0 0.80 0.03 0.27 0.34 ----------------------------------------------------------------------------------- Ms. L Mach of SRK Consulting has reviewed and approved the information, pertaining to Gedabek, contained in this press release for the purposes of Part Two of the 'Guidance Note for Mining, Oil and Gas Companies' dated March 2006 issued by the London Stock Exchange. Ms. Mach is a Certified Professional Geologist (American Institute of Professional Geologists) and is considered a Qualified Person within the meaning of NI 43-101 and JORC. SRK Consulting is an international minerals consultancy group, independent of Anglo Asian. Notes: 1. All holes are drilled vertically and reported intervals are drill-hole lengths; true widths of mineralisation intercepts have not yet been calculated. 2. The diamond drill cores are predominately HQ-sized (63.5mm diameter), with some holes reduced to NQ (47.6mm diameter). The RC holes GDRC08 to GDRC09a are 115mm in diameter and later holes are 135mm. 3. The core is split on-site and one half is shipped to OMAC Laboratories Ltd in Loughrea, Ireland. RC chips are reduced to a nominal 2 kilogram sample on-site and also sent to OMAC. Gold is analysed by fire assay (30 gram) with atomic absorption finish. Copper and silver are analysed with a 46 element ICP procedure. A laboratory quality assurance/quality control programme is in place with blanks and duplicate samples inserted into the sample stream. External check assays will be done at ALS Chemex in Vancouver, British Columbia, Canada. Interim financial statements for the 6 month period to 30 June 2006 Consolidated Profit and Loss Account Unaudited Unaudited Audited Period from 6 months 6 months 1 Feb 2005 to 30 Jun to 31 Jul to 31 Dec 2006 2005 2005 Note US$ US$ US$ ---------------------------------------------------------------------------------------------- TURNOVER - - - Administration expenses (2,044,385) (756,575) (2,867,951) Exchange gain 223,824 93,830 208,112 ---------------------------------------------------------------------------------------------- OPERATING LOSS (1,820,561) (662,745) (2,659,839) Interest received and similar income 370,391 986 613,400 Interest payable and similar charges (13) (4,718) (8,325) ---------------------------------------------------------------------------------------------- LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (1,450,183) (666,477) (2,054,764) Tax on loss on ordinary activities - - - ---------------------------------------------------------------------------------------------- LOSS FOR THE PERIOD (1,450,183) (666,477) (2,054,764) ---------------------------------------------------------------------------------------------- Basic and diluted loss per ordinary share (cents) 3 1.46 0.67 2.07 There is no difference between the loss on ordinary activities before taxation and the loss for the financial period stated above and their historical cost equivalents. There are no recognised gains or losses other than those stated above. Consolidated Balance Sheet Unaudited Unaudited Audited As at As at As at 30 Jun 2006 31 Jul 2005 31 Dec 2005 US$ US$ US$ Note ---------------------------------------------------------------------------------------------- FIXED ASSETS Intangible assets 4 51,525,289 48,124,462 48,551,913 Tangible assets 5 10,562,016 53,977 453,184 ---------------------------------------------------------------------------------------------- TOTAL FIXED ASSETS 62,087,305 48,178,439 49,005,097 CURRENT ASSETS Debtors - amounts falling due 6 372,897 35,523,679 5,246,275 within one year Cash at bank 11,750,911 81,966 21,345,703 ---------------------------------------------------------------------------------------------- 12,123,808 35,605,645 26,591,978 CREDITORS - AMOUNTS FALLING DUE WITHIN ONE YEAR 7 (935,606) (7,616,338) (798,213) ---------------------------------------------------------------------------------------------- NET CURRENT ASSETS 11,188,202 27,989,307 25,793,765 ---------------------------------------------------------------------------------------------- NET ASSETS 73,275,507 76,167,746 74,798,862 ---------------------------------------------------------------------------------------------- CAPITAL AND RESERVES Called up share capital 1,782,605 1,782,605 1,782,605 Share premium account 30,279,301 30,279,301 30,279,301 Merger reserve 46,206,390 46,206,390 46,206,390 Profit and loss account (4,992,789) (2,100,550) (3,469,434) ---------------------------------------------------------------------------------------------- CAPITAL EMPLOYED 73,275,507 76,167,746 74,798,862 ---------------------------------------------------------------------------------------------- Consolidated Cash Flow Statement Unaudited Unaudited Audited Period from 6 months 6 months 1 Feb 2005 to 30 Jun to 31 Jul to 31 Dec 2006 2005 2005 US$ US$ US$ Note NET CASH OUTFLOW FROM OPERATING ACTIVITIES 8 (1,183,268) (303,293) (7,461,090) RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Interest received 370,391 986 613,400 Interest paid (13) - (8,325) ---------------------------------------------------------------------------------------------------- NET CASH INFLOW FROM RETURNS ON INVESTMENTS AND SERVICING 370,378 986 605,075 OF FINANCE CAPITAL EXPENDITURE AND FINANCIAL INVESTMENTS Purchase of tangible fixed assets (5,808,526) (52,373) (486,097) Exploration and evaluation expenditure (2,973,376) (1,199,199) (1,626,651) Purchase of subsidiary undertaking - - (2,000,000) ---------------------------------------------------------------------------------------------------- NET CASH OUTFLOW FROM CAPITAL EXPENDITURE AND FINANCIAL (13,131,902) (1,251,572) (4,112,748) INVESTMENTS NET CASH OUTFLOW BEFORE USE OF LIQUID RESOURCES AND FINANCING (9,594,792) (1,553,879) (10,968,763) FINANCING Issue of ordinary shares, net of expenses - 30,736,901 30,736,901 Funds due from share issue, net of expenses - (30,736,901) - Shares issued for cash in subsidiary - 663,539 663,539 Repayment of loans - - (58,280) ---------------------------------------------------------------------------------------------------- (DECREASE)/INCREASE IN CASH FOR THE PERIOD (9,594,792) (890,340) 20,373,397 ---------------------------------------------------------------------------------------------------- RECONCILIATION OF CASH BALANCES Cash at start of period 21,345,703 972,306 972,306 (Decrease)/Increase in cash for the period (9,594,792) (890,340) 20,373,397 ----------------------------------------------------------------------------------------------------- CASH AT END OF THE PERIOD 11,750,911 81,966 21,345,703 ----------------------------------------------------------------------------------------------------- Notes to the financial statements 1. Basis of preparation Anglo Asian Mining PLC ('Anglo Asian' or the 'Company') was incorporated on 9 September 2004 and its Ordinary Shares were listed on the AIM market of the London Stock Exchange on 29 July 2005 (the 'Listing') having become the new parent company of Anglo Asian Operations Limited Group on 24 June 2005. Anglo Asian Operations Limited was incorporated on 5 February 2004. To provide information which is meaningful to the Company's shareholders, the Directors believe that it is necessary to prepare the results on the basis that the Anglo Asian Group had existed from the date of incorporation of Anglo Asian Operations Limited. The Directors believe that this information reflects the ongoing operations of the Group more clearly. The combination of Anglo Asian with the Anglo Asian Operations Group has been accounted for as a group reconstruction under the provisions of FRS 6 ('Mergers and Acquisitions') and is presented as if the Company had been the holding company and intermediate holding company, respectively, of the Group for each period presented. These June 2006 interim consolidated statements are for the six months ended 30 June 2006 and have been prepared in accordance with applicable United Kingdom accounting standards. The accounting policies are consistent with those disclosed in the Annual Report and Accounts for the eleven months to December 2005. These interim financial statements have been prepared under the historical cost convention. 2. Comparative period The Comparative period accounts for 31 December were drawn up for the 11 month period from 1 February 2005 to 31 December 2005 following the change in the accounting reference date from 31 January to 31 December. The Comparative period for 31 July 2005 is for the 6 month period from 1 February 2005 to 31 July 2005. 3. Earnings per ordinary share Basic earnings per share on the loss for the period Unaudited Unaudited Audited Period from 6 months 6 months 1 Feb 2005 to 30 Jun to 31 Jul to 31 Dec 2006 2005 2005 ------------------------------------------------------------------------------------ Loss for the financial period (US$) (1,450,183) (666,477) (2,054,764) Number of shares of the Company in issue 99,171,800 99,171,800 99,171,800 Proforma loss per share for the period (US cents) (1.46) (0.67) (2.07) The proforma loss per share ('EPS') calculation has assumed that the number of Ordinary Shares in issue immediately after Listing (being 99,171,800) had been in issue from 1 February 2005. The Directors believe that this proforma EPS provides a more meaningful comparison of the Group's ongoing business than using the statutory EPS which would only reflect shares issued at the date of Listing. Basic and dilutive EPS are the same because the only outstanding share options are anti-dilutive as the Group has made a loss. 4. Intangible fixed assets Audited Unaudited Unaudited US$ US$ US$ 1 Jan 2006 Additions 30 Jun 2006 ---------------------------------------------------------------------------------- Mining rights 46,925,262 - 46,925,262 Exploration and evaluation expenditure 1,626,651 2,973,376 4,600,027 ---------------------------------------------------------------------------------- 48,551,913 2,973,376 51,525,289 ---------------------------------------------------------------------------------- 5.. Tangible fixed assets Asset in course of Temporary Plant & Motor Office Leasehold Total construction buildings equipment vehicles equipment improvements US$ US$ US$ US$ US$ US$ US$ Group -------------------------------------------------------------------------------------------------------------------- Cost As at 1 January 2006 (Audited) - 84,286 82,391 58,516 141,180 124,815 491,188 Additions 9,734,707 31,169 34,061 29,310 151,217 178,062 10,158,526 -------------------------------------------------------------------------------------------------------------------- As at 30 June 2006 (Unaudited) 9,734,707 115,455 116,452 87,826 292,397 302,877 10,649,714 -------------------------------------------------------------------------------------------------------------------- Accumulated depreciation As at 1 January 2006 (Audited) - (2,107) (10,298) (7,314) (16,725) (1,560) (38,004) Charge for half year - (2,311) (11,140) (8,612) (25,342) (2,289) (49,694) --------------------------------------------------------------------------------------------------------------------- As at 30 June 2006 (Unaudited) - (4,418) (21,438) (15,926) (42,067) (3,849) (87,698) --------------------------------------------------------------------------------------------------------------------- Net book value As at 1 January 2006 (Audited) - 82,179 72,093 51,202 124,455 123,255 453,184 --------------------------------------------------------------------------------------------------------------------- Aa at 30 June 2006 (Unaudited) 9,734,707 111,037 95,014 71,900 250,330 299,028 10,562,016 --------------------------------------------------------------------------------------------------------------------- The asset in course of construction comprises costs incurred to acquire, dismantle and containerise a gold processing plant located in Australia. The addition in the period of $9,734,707 includes the advances to acquire fixed assets of $4,350,000 paid in 2005. 6. Debtors Unaudited Unaudited Audited US$ US$ US$ As at As at As at 30 Jun 31 Jul 31 Dec 2006 2005 2005 ---------------------------------------------------------------------------------- Prepayments 109,530 96,003 567,768 HM Revenue & Customs 28,673 177,899 233,337 Other debtors 234,694 14,577 95,170 Advances to acquire fixed asset - - 4,350,000 Share capital receivable - 35,235,200 - ---------------------------------------------------------------------------------- 372,897 35,523,679 5,246,275 ---------------------------------------------------------------------------------- The advances to acquire fixed assets have been capitalised as asset in course of construction (note5). 7. Creditors Amounts falling due within one year: Unaudited Unaudited Audited US$ US$ US$ As at As at As at 30 Jun 31 Jul 31 Dec 2006 2005 2005 ----------------------------------------------------------------------------------- Trade creditors 362,034 758,676 213,776 Other creditors 38,832 394,879 4,910 Deferred purchase consideration - 2,000,000 - Accruals 534,740 4,404,503 579,527 Loans - 58,280 - ----------------------------------------------------------------------------------- 935,606 7,616,338 798,213 ----------------------------------------------------------------------------------- 8. Reconciliation of operating loss to net cash flow from operating activities Unaudited Unaudited Audited Period from 6 months 6 months 1 Feb 2005 to 30 Jun to Jul 2005 to 31 Dec 2006 2005 US$ US$ US$ -------------------------------------------------------------------------------------- Operating loss (1,820,561) (662,745) (2,659,839) Depreciation 49,694 3,487 38,004 Decrease/(Increase) in debtors and 523,378 (287,340) (5,245,136) prepayments Increase in creditors and accruals 137,393 731,892 475,065 Exchange differences (73,172) (88,587) (69,184) -------------------------------------------------------------------------------------- Net cash outflow from operating activities (1,183,268) (303,293) (7,461,090) -------------------------------------------------------------------------------------- This information is provided by RNS The company news service from the London Stock Exchange
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