Preliminary Results
Anglo Asian Mining PLC
12 April 2006
AIM:AAZ
ANGLO ASIAN MINING PLC
('Anglo Asian' or 'the Company')
PRELIMINARY RESULTS FOR THE ELEVEN MONTH PERIOD ENDED
31 DECEMBER 2005
Highlights for the period
• Admission to AIM on 29 July 2005
• Raised net proceeds of US$30.7 m (£17.4 m)
• Access constructed to the Ordubad, Gosha and Gedabek contract areas
• Drilling commenced at Piyazbashi (Ordubad) on 10 September 2005
• Contract completed for purchase of CIL gold processing plant and
dismantling contract awarded
• Richard Round appointed as Finance Director on 19 September 2005
• Ross Bhappu appointed as non-executive director on 1 November 2005
Subsequent events
• Drilling now focussed at Gedabek which commenced in January 2006
• Contract for dismantling of CIL gold processing plant completed
• Graham Mascall appointed as non-executive Chairman on 13 March 2006
• Terms have been agreed with a new Chief Executive and details will be
announced shortly
Graham Mascall, Chairman of Anglo Asian, commented: 'The Admission to AIM of
Anglo Asian was successfully completed on 29 July 2005, raising US$30.7 million
net of expenses. The operating loss for the 11 month period to 31 December 2005
of $2.7 million arose from charging administrative expenses and crediting an
exchange gain. In addition $1.6 million of exploration expenses were
capitalised'
Mr Mascall continued 'In the period since Admission and injection of the new
capital sound progress has been made on the establishment of infrastructure to
allow a comprehensive exploration programme to be undertaken in all contract
areas. In line with the recommendation of our consultant, SRK Consulting, we
now consider Gedabek to be a more attractive proposition for the first
feasibility study and priority and focus has therefore shifted from Piyazbashi
to this property. We remain well funded, with a significant asset in the
containerised CIL plant in Australia and an experienced Board and management
team in place.'
Enquiries:
Anglo Asian Mining PLC Numis Securities Limited Parkgreen Communications
Charles Hancock, 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
PRELIMINARY RESULTS FOR THE ELEVEN MONTH PERIOD ENDED
31 DECEMBER 2005
Chairman's statement
It is with pleasure that I make my first Chairman's statement just a month
following my appointment at Anglo Asian.
This reporting period has been a significant one for the group in which on 29
July 2005 saw Anglo Asian admitted to AIM and successfully raise US$30.7 m net
of expenses via an institutional placing. This followed the previous period's
acquisition of Anglo Asian Cayman Limited, the holding company of RV Investment
Group Services LLC, which, through a Production Sharing Agreement with the
Azerbaijan Government, retains the right to explore and to extract all minerals
in its contract areas in Azerbaijan.
General
Following the injection of new capital, the group made sound operational
progress in Azerbaijan, establishing the required infrastructure to carry out an
extensive drilling and sampling campaign across its contract areas. Anglo Asian
concluded a contract to acquire a 4,000 tonne a day Carbon-in-Leach ('CIL') gold
processing plant in Australia. Stage payments were made in the period and a
contract was also awarded to dismantle and containerise the plant. Since the
period end, the plant has been successfully dismantled and containerised and is
currently in storage in close proximity to the Mackay port in Australia.
SRK Consulting has been retained to assist with the implementation of Anglo
Asian's exploration programme and to provide technical, audit and advisory
services for its projects. SRK's considerable mining expertise and resources
will be used where relevant to progress projects towards the feasibility stage.
I summarise below the exploration work carried out to date.
Piyazbashi
The exploration and sampling programme involved the use of three diamond and one
reverse circulation drilling rigs. The drilling campaign has been supplemented
by sampling of adits previously driven in the Soviet era, trenches and road
cuts. The Company's entire drilling activity in the period was carried out at
the Piyazbashi site within the Ordubad contract area, from which the results
from the initial drilling carried out in a step out area proved to be
disappointing, as announced on 27 October 2005. The subsequent drilling in the
actual Piyazbashi property progressed in the period, and along with adit
sampling, provided confirmation of gold grade in the veins broadly in line with
the Soviet data. The drilling programme at Piyazbashi was completed in March
2006. Whilst the classification of the resource is expected to improve, the
Company's consultants, SRK Consulting, have advised that the greater attraction
of the Gedabek property means that Piyazbashi will not be a first priority for a
feasibility study and progression towards early production as was envisaged in
the Admission Document.
Other Ordubad
A camp was constructed at Keleki during the autumn of 2005 in support of the
entire Ordubad exploration campaign, which provides an area for core storage,
plant maintenance and accommodation and welfare facilities for personnel. A
local office has also been established in Nakhchivan.
During the period access roads were driven from the camp to the drill sites and
adits at Shakardara and adit cleaning was undertaken. Shortly after the period
end results were received from the sampling of adit 12, which were announced on
17 January 2006. The average of the preliminary channel sampling was 0.09g/t of
gold, as opposed to the Soviet classified grade in that adit of an average of
1.1 g/t gold over 380 metres. The inferred copper resource of Shakardara stated
in the Admission Document is not based on adit 12 but mainly from results from
other parts of the deposit, including adit 10. Following the completion of the
drilling at Piyazbashi a diamond drill rig has been moved to Shakardara in order
to obtain a clearer understanding of the resources and to help overcome the
blocked access to adit 10.
Limited initial reconnaissance sampling has been undertaken at Misdag, which
showed slightly higher copper grades than incorporated in the Soviet data.
Further extensive sampling is planned in late spring and the summer. Depending
on progress at Shakardara it is intended to carry out drilling on Misdag using
the diamond drill rig.
Gedabek and Gosha
In the reporting period, adit cleaning and the establishment of infrastructure
was undertaken. Some limited adit sampling was carried out at Gosha, which
confirmed the presence of the two large vein-like structures in line with the
Soviet data.
There was mining at Gedabek between 1849 and 1917 and since 1960 the Soviets and
Azeris carried out exploration activity including mapping, sampling, trenching,
drilling and underground exploration. Anglo Asian is utilising a combination of
this information along with the use of two of the diamond and the reverse
circulation drill rigs, which were transferred to Gedabek in January 2006, to
carry out a full drilling programme in order to further define the resource.
The Board now consider Gedabek a priority and the focus for the first
feasibility study.
Financial results
The Group reported an audited operating loss of $2,659,839 ($1,348,814) for the
eleven months to 31 December 2005 (period from 5 February 2004 to 31 January
2005). The operating loss resulted from the charging of administrative expenses
of $2,867,951 ($1,348,814) and crediting an exchange gain of $208,112 ($ nil).
The net interest credit in the period of $605,075 ($3,328) arose primarily from
interest received on deposits.
Exploration and evaluation expenditures of $1,626,651 ($ nil) were capitalised
in the period and advance payments of $4,350,000 were made to acquire the CIL
plant in Australia.
The deferred consideration for the acquisition of Anglo Asian Cayman Limited
amounting to $2,000,000 was settled in the period following the IPO.
The Group remains well funded and at the period end retained cash balances of
$21,345,703 ($972,306).
Board
In 2005 and following the IPO, the Company continued its strategy of recruiting
further individuals to the Board with experience in the mining sector. Richard
Round joined as Finance Director in September and Ross Bhappu in November as a
non executive director. I joined as Chairman in March 2006, at which point Reza
Vaziri took up the position of President on the Board. In this capacity, he
will continue to have responsibility for governmental and public relations in
Azerbaijan. The Board will be further strengthened with the agreed arrival of a
new Chief Executive. He offers a depth of operating experience in various
locations throughout the world.
I would like to take this opportunity to thank Charles Hancock for his
commitment to Anglo Asian following the Admission to AIM. Charles will become a
non-executive director on the arrival of the new Chief Executive.
Strategy
The Group remains sufficiently well funded to be able to continue with
exploration programmes on a number of its projects and if appropriate through to
the full feasibility stage. The CIL plant will be moved to Azerbaijan from its
current location in Australia as soon as the Company obtains sufficient comfort
regarding the economic evaluation of its projects, the current focus being on
the Gedabek property. Meanwhile, the Directors have been advised that the
current value of the plant exceeds the amount paid and that Anglo Asian is in
possession of an asset with significant value.
I very much look forward to keeping the shareholders informed of progress during
the current year.
Graham Mascall
Chairman
11 April 2006
Consolidated profit and loss account
Period from Period from
1 Feb 2005 5 Feb 2004
to 31 Dec to 31 Jan
2005 2005
Note US$ US$
TURNOVER - -
Administration expenses (2,867,951) (1,348,814)
Exchange gain 208,112 -
OPERATING LOSS (2,659,839) (1,348,814)
Interest receivable and similar income 613,400 3,328
Interest payable and similar charges (8,325) -
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION 3 (2,054,764) (1,345,486)
Tax on loss on ordinary - -
activities
LOSS FOR THE PERIOD (2,054,764) (1,345,486)
Statutory basic and diluted loss per 3 (3.18) (2.73)
ordinary share (cents)
Proforma basic and diluted loss per ordinary 3 (2.07) (1.36)
share (cents)
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.
Consolidated statement of total recognised gains and losses
Loss for the period (2,054,764) (1,345,486)
Exchange difference (69,184) -
TOTAL RECOGNISED GAINS AND LOSSES (2,123,948) (1,345,486)
Consolidated balance sheet
As at As at
31 Dec 31 Jan 2005
2005
US$ US$
Note
FIXED ASSETS
Intangible assets 4 48,551,913 31,067,688
Tangible assets 453,184 5,091
TOTAL FIXED ASSETS 49,005,097 31,072,779
CURRENT ASSETS
Debtors - amounts falling due 5,246,275 1,139
within one year
Cash at bank 21,345,703 972,306
26,591,978 973,445
CREDITORS - AMOUNTS FALLING DUE
WITHIN ONE YEAR (798,213) (2,381,428)
NET CURRENT ASSETS/ 25,793,765 (1,407,983)
(LIABILITIES)
NET ASSETS 74,798,862 29,664,796
CAPITAL AND RESERVES
Called up share capital 5 1,782,605 2
Share premium account 6 30,279,301 -
Merger reserve 6 46,206,390 31,010,280
Profit and loss account 6 (3,469,434) (1,345,486)
CAPITAL EMPLOYED 74,798,862 29,664,796
Consolidated cash flow statement
Period from Period from
1 Feb 2005 5 Feb 2004
to 31 Dec to 31 Jan
2005 2005
US$ US$
Note
NET CASH OUTFLOW FROM OPERATING ACTIVITIES 7 (7,461,090) (1,042,622)
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received 613,400 3,328
Interest paid (8,325) -
NET CASH INFLOW FROM RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE 605,075 3,328
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENTS
Purchase of tangible fixed assets (486,097) -
Exploration and evaluation expenditure (1,626,651) -
Purchase of subsidiary undertaking (2,000,000) (109,040)
NET CASH OUTFLOW FROM CAPITAL EXPENDITURE AND
FINANCIAL INVESTMENTS (4,112,748) (109,040)
NET CASH OUTFLOW BEFORE USE OF LIQUID RESOURCES
AND FINANCING (10,968,763) (1,148,334)
FINANCING
Issue of ordinary shares, net of 30,736,901 2
expenses
Shares issued for cash in subsidiary 663,539 2,062,358
(Repayment)/issue of loans (58,280) 58,280
INCREASE IN CASH FOR THE PERIOD 20,373,397 972,306
RECONCILIATION OF CASH BALANCES
Cash at start of period 972,306 -
Increase in cash for the period 20,373,397 972,306
CASH AT END OF THE PERIOD 21,345,703 972,306
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.
The financial information set out above does not constitute the Group's
statutory accounts for the period ended 31 December 2005 but is derived from the
Group's statutory accounts, for that period. The auditors' report on the
statutory accounts for the period ending 31 December 2005 was unqualified and
did not contain statements under section 237(2) of the Companies Act 1985
(regarding adequacy of accounting records and returns) or under section 237(3)
(regarding provision of necessary information and explanations).
The consolidated financial information for the Group has been prepared under the
historical cost convention and in accordance with applicable United Kingdom
accounting standards.
2.
Accounting policies and basis of consolidation
The accounting policies are consistent with those disclosed in the Accountant's
Report for Anglo Asian Operations Limited as presented in the AIM Admission
Document dated 26 July 2005.
The consolidated financial information incorporates the financial statements of
the Company and all of its subsidiaries, being the companies that it controls.
This control is normally evidenced when the Group is able to govern a company's
financial and operating policies so as to benefit from its activities or where
the Group owns, either directly or indirectly, the majority of a company's
equity voting rights.
The results of subsidiaries acquired or sold during the period are consolidated
for the periods from, or to, the date on which control passed. Acquisitions are
accounted for under the acquisition method.
Excess purchase consideration, being the difference between the fair value of
the consideration given and the fair value of the identifiable assets and
liabilities acquired, is capitalised as an asset on the balance sheet.
To the extent that such excess purchase consideration relates to the acquisition
of mining properties and leases, that amount is initially capitalised as mining
rights within intangible fixed assets. Provision is made for any impairment.
3.
Earnings per ordinary share
Basic earnings per share on the loss for the period
Period from Period from
1 Feb 2005 5 Feb 2004
to 31 Dec to 31 Jan
2005 2005
Loss for the financial period (2,054,764) (1,345,486)
(US$)
Weighted average number of shares of the 64,674,982 49,359,914
Company in issue
Statutory loss per share for the period (3.18) (2.73)
(US cents)
Number of shares of the Company in 99,171,800 99,171,800
issue
Proforma loss per share for the period (2.07) (1.36)
(US cents)
The statutory loss per share has been based on the weighted average number of
shares in issue.
The proforma loss per share ('EPS') calculation has assumed that the number of
Ordinary Shares in issue immediately after Listing (being 99,171,800) had been
in issue from 5 February 2004. The Directors believe that this proforma EPS
provides a more meaningful comparison of the Group's ongoing business than using
the statutory EPS which would only reflect shares issued at the date of Listing.
Basic and dilutive EPS are the same because the only outstanding share options
are anti-dilutive as the Group has made a loss.
4.
Intangible fixed assets
Exploration
and
Mining evaluation
rights expenditure Total
US$ US$ US$
Cost
As at 1 February 31,067,688 - 31,067,688
2005
29 June 2005 - 3,238,600 shares
issued to
Limelight Industrial Developments 4,538,574 - 4,538,574
Limited
19 July 2005 - 8,400,000 shares issued to
the vendors of
RV Investment 11,319,000 - 11,319,000
Group
Piyazbashi - 1,098,474 1,098,474
Shakardara - 41,658 41,658
Misdag/Agyurt - 41,658 41,658
Gedabek - 270,255 270,255
Gosha - 174,606 174,606
As at 31 December 2005 46,925,262 1,626,651 48,551,913
5.
Share capital
As at As at
31 Dec 2005 31 Jan 2005
Number £ Number £
Company
Authorised
Ordinary shares of £0.01 600,000,000 6,000,000 - -
each
Ordinary shares of - - 100 100
£1 each
US$ US$
Allotted and fully
paid
At the beginning of the 1 2 1 2
period
Subscriber share subdivided into 99 - - -
share of £0.01p
Shares issued in
consideration for share in
Anglo Asian Operations 73,171,700 1,325,003 - -
Limited
Shares placed for 26,000,000 457,600 - -
cash
At the end of the 99,171,800 1,782,605 1 2
period
6.
Reserves
Share Profit
Merger premium and loss
reserve account account
US$ US$ US$
Group
1 February 31,010,280 - (1,345,486)
2005
Loss for the - - (2,054,764)
period
Premium on share - 34,777,600 -
issue
Share issue expenses - (4,498,299) -
Exchange differences - - (69,184)
Fair value 15,196,110 - -
adjustments
31 December 46,206,390 30,279,301 (3,469,434)
2005
7.
Reconciliation of operating loss to net cash flow from operating activities
Period from Period from
1 Feb 2005 5 Feb 2004
to 31 Dec to 31 Jan
2005 2005
US$ US$
Operating loss (2,659,839) (1,348,814)
Depreciation 38,004 -
Goodwill - 28,200
amortisation
Increase in debtors and (5,245,136) -
prepayments
Increase in creditors and 475,065 277,992
accruals
Exchange (69,184) -
differences
Net cash outflow from operating (7,461,090) (1,042,622)
activities
END
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