Final Results For The Year Ended 31 December 2022

Ariana Resources PLC

06 June 2023

 

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 as it forms part of UK Domestic Law by virtue of the European Union (Withdrawal) Act 2018 ("UK MAR").

06 June 2023

AIM: AAU

FINAL AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2022

NOTICE OF ANNUAL GENERAL MEETING ("AGM")

Ariana Resources plc ("Ariana" or "the Company"), the AIM-listed mineral exploration and development company with gold mining interests in Europe, announces its final audited results for the year ended 31 December 2022.

The Report and Accounts will be posted to shareholders as applicable and are available on the Company's website.

In accordance with Rule 20 of the AIM Rules, Ariana Resources confirms that the annual report and accounts for the year ended 31 December 2022 and notice of the Annual General Meeting ("AGM") and related proxy form will be available to view on the Company's website on 06 June 2023 and will be posted to shareholders. The AGM will be held on 29 June 2023, at 10.30 a.m. at East India Club, 16 St James's Square, London, SW1Y 4LH.

Chairman's Statement

In looking forward to the next financial year and beyond, it is worth highlighting Ariana's transformation over the past 20 years from a grassroots gold explorer to an international multi-commodity, multi-region explorer and developer, funded via successful mining operations.  Over this period, and specifically since achieving profitability in 2016, we have created a self-sustaining, cash positive, debt free business model, which allows us to leverage our strengths to grow our business.

This reshaping of our business is occurring against a tipping point in the world economy. Multiple factors are contributing to a 'perfect storm' in demand for precious and technology metals. The key factors are the banking crisis, the Ukraine war, the demand for metals for the de-carbonisation of energy, and the ever increasing gap between the rate of discovery and demand for mineral resources in general. Against this backdrop, central bank purchases of gold are at their highest for 50 years; in 2022 central bank gold reserves increased by 1,136 tonnes, whilst their foreign reserves decreased by US$ 950 billion. A clear message can be discerned in these changes. Unlike fiat currencies created by central bank printing, gold is a fundamentally different and immutable store of value, with no counterparty risk and finite supply. Unsurprisingly, gold spot prices have recently topped US$2,000 per ounce three times in recent years. At the recent Mining Indaba in Cape Town several contributors noted that 'animal spirits' have consequently returned to the precious metals mining industry.

Adding fuel to this situation, international consultancy McKinsey warned recently that: "We need to double the exploration effort if we are to avert the looming reserve crisis." McKinsey also noted that the industry needs to invest in people and to "get serious about science". These two guiding principles have been fundamental since our inception and we are confident that our investors continue to be beneficiaries of our wholehearted emphasis on our team and the use of cutting-edge technologies. Furthermore, McKinsey stated that "geology comes first", noting that this concept had gone somewhat out of fashion, leading to failed projects and loss of investor confidence. Ariana has always been driven by geology from the top down; we have always understood that geological expertise in exploration, resource targeting, definition and estimation is the difference between success and failure. Given the looming crisis in the world's mineral reserves, it is vital that companies like Ariana continue to spearhead the discovery of precious and technology metals within our framework of technology leadership, environmentally responsible conduct and robust governance.

A measure of a successful company is the way in which it meets such market needs. Hence our clear focus on precious and technology metals to meet the challenges presented by this financial backdrop, the energy revolution and the chronic exploration deficit. We also recognise that investor needs must be addressed in terms of profitability, opportunity growth, sustainability, robust governance and risk management. We aim to ensure our exploration and production costs are industry leading, our project pipeline is growing, we remain profitable with competent governance, and we mitigate risks by diversifying across commodities and regions. Since 2021 we have been able to pay £7.74m dividends to shareholders, which is an extraordinary milestone for any exploration company.

Shareholder value has been enhanced by sourcing the majority of our development finance through joint venture partner investment. Company management has also been enhanced through these collaborative relationships significantly complementing Ariana's in house experience. A valuable by-product of being an exploration company since our inception is that we had to implement effective remote working from the field and dispersed project offices decades ago. As this working method was part of our doctrine from the outset, we were able to thrive for the duration of the recent pandemic, which proved disruptive to so many other businesses.  This continues to be a valuable approach to growing an accessible pool of new talent for our industry.

Against a shifting and challenging macroeconomic background, we believe every crisis is an opportunity. We also believe we have pivoted Ariana to leverage our competitive advantages over a wider commodity range and geographical reach. A key differentiator is that Ariana is a technology-led and data-driven business, enabling us to achieve industry leading discovery and production costs. Approaching business decision-making with a doctrine of quality data at the centre of every investment has ultimately resulted in a diversified growth path with unique projects in our portfolio.  These significant strategic developments have now positioned us even more powerfully as an innovative and agile explorer and developer, able to optimise the opportunities of rising global demand for precious and technology metals.

Our investments in cutting-edge technologies and processes, combined with highly skilled staff, are critical to Ariana's success. Indeed, we have chosen to continue investing further in these areas and in addition to our own internal competency, we seek to encourage those of the next generation of industry leaders.  Our strong links with several universities and our sponsorship of research programmes, notably at the University of Western Australia, also ensures we remain at the forefront of advanced geological research. Additionally, we have regularly sponsored student summer internships, with almost half our geoscientific team having been derived from such programmes.

Added to these developments it is important to highlight the progress in many other project areas over the past year. All these project areas are managed within the framework of our commitment to socially conscious and environmentally responsible development. We are focusing our efforts within countries committed to using green energy and we use solar and geothermal energy systems in our own offices. Our own carbon emissions are less than half the global average for our industry. We are involved in extensive re-forestation programmes in all our operational areas, including the voluntary planting of new trees and re-wilding programmes through charitable organisations. We are actively involved with local communities, especially supporting local educational institutions.

In western Türkiye at the Kiziltepe gold mine we have seen a record year, with 50% more gold produced to date than planned in the Feasibility Study. This mine is operated by Zenit Madencilik, a partnership in which Ariana has a 23.5% stake with partners Proccea Construction Co. and Ozaltin Holding A.S. Production at Kiziltepe has consistently beaten guidance since 2017, with annual production up to 28,000 ounces of gold per annum and a total revenue of US$235 million to the end of December 2022.  Also in western Türkiye, Zenit Madencilik is currently constructing its second gold mine at Tavşan, which contains a JORC Resource of 307,000 ounces of gold. The construction is currently being financed by Zenit without the encumbrance of bank debt.  Post-period end construction had been temporarily suspended owing to a local court ruling, although we are expecting construction operations to recommence later this year.

In eastern Türkiye at our Salinbas/Ardala project we are highly encouraged by the progress of our recent extensive drilling programme. The 1.5Moz gold Salinbas/Ardala system is a porphyry and epithermal deposit containing gold, silver, copper and molybdenum. This project is situated in the highly prospective Artvin Goldfield, containing the 4Moz Hot Maden project 16 km to the south.  Last year we separately initiated Project Leopard across eastern Türkiye. The project aims to expand our reach into new search spaces across three under-explored yet highly prospective volcanic arcs in a region estimated to contain 40Moz gold. For this project Ariana has deployed its Project Generation Division, with our in-house specialists in remote sensing, geophysics and geochemistry.  This gives us high quality, rapid and cost-effective results, as none of these processes are outsourced to consultants.  Our ability to deploy these expert in-house teams allows us to deliver results faster, better and cheaper than many of our peers; our US$11 per ounce discovery cost is proof of this excellence. We have great expectations for this team which was responsible for identifying the potential of the Gulluce licence area.

In Cyprus, Ariana is working with Venus Minerals to develop near term and advanced copper-gold projects. Ariana has a 58%* stake in Venus Minerals and we are working with our partners Semarang Enterprises on an IPO for Venus. Our Magellan Project contains some 17 million tonnes at 0.45-1.10% copper with associated gold.  Our investment in Venus is significant given the scale of the impending world copper supply deficit against rising demand for copper used in alternative energy production. Elsewhere in south-eastern Europe, we have entered into a five-year exploration partnership with Newmont Corporation targeting Tier 1 copper-gold resources. We established Western Tethyan Resources (WTR) which is 75% held by Ariana, with the remainder held by an expert board with regional specialisation. Newmont invested US$2.5 million in Ariana to develop the WTR initiative and provided joint-ownership of the Eastern Europe Newmont exploration database.

On a broader geographic scale Ariana's wholly-owned subsidiary, Asgard Metals is focused on investments in discovery-stage opportunities. We use our well-defined selection process to identify high prospectivity projects in low cost/risk jurisdictions, where there are sound environmental policies. This approach has worked successfully for Ariana, as it has delivered a 100 times value increase in some of our prior investments. Our current work with Panther Metals Ltd is an example of the way Asgard is operating. Working in parallel with the Panther team we have supported the discovery of a major nickel-cobalt project at Coglia in Western Australia.  These developments highlight our focus on what we consider to be the sweet spot for Ariana's growth. This is the inflexion point between greenfield discovery and development, where we can act as a project catalyst by bringing to bear our geological expertise and cutting-edge technologies.

Ariana has travelled a long way from its foundation over 20 years ago. The team has put in the hard yards to win the respect of its major shareholders, industry partners, academic institutions, technology suppliers, government organisations and local communities. Alongside our geological expertise, each one of these relationships has been critical to Ariana's success. From the springboard of our technologies and our team we are confident we are now ready to drive further and faster towards the discovery of significant Tier 1 resources across an international stage.

The Board looks forward to welcoming shareholders at our next Annual General Meeting where we will conduct the formal business of the meeting outlined in the Notice of Meeting. I would like to encourage shareholders to exercise their proxy votes in favour of these resolutions even if you are planning to attend the meeting.

Last but not least, I would like to sign off by thanking our excellent team and stakeholders and in particular those new to the Ariana family, all of whom have contributed to the Ariana success story.

* Post-period end.

Michael de Villiers

Chairman

05 June 2023

Financial Review

The Consolidated Statement of Comprehensive Income sets out our very satisfactory results for the year, reflecting the success of the group on a number of fronts.  Overall the Group has recorded a profit before tax for the year to December 2022 of £5.0m.  This was £2.7m less than 2021, albeit that year benefited from the profit of £6.4m on the part disposal of our Turkish interests.  Administrative costs increased only marginally on the prior year, though as explained in note 4a, we have benefited from an exchange gain of £2.8m arising on our US dollar cash balances this year, resulting in a reduction to £0.6m as reported in the Statement.  Otherwise the principal driver of our performance has been the increase in our net share of the profit and losses of our Associated investments, which increased by £1.5m over the prior year.  Once again the decline in value of the Turkish Lira has meant that we are showing an accounting loss through Other Comprehensive Income primarily on the translation of our opening balances of our overseas subsidiaries at closing rates of exchange.  These losses are not realised unless we divest ourselves of such assets.

The Consolidated Statement of Financial Position reflects the increase in the value of our share of our Associates, up from £11.4m to £15.3m in 2022, as set out in note 6.  The main change was in the value of Zenit, in part reflecting the fact there was no dividend received this year, as funds were directed at developing Tavşan.  Another major change this year is the decline in cash balances from £16.4m to £9.4m, comprising dividends paid by the Company to shareholders amounting to £4m during the year as part of the special dividend arising on last year's part disposal of our interests, and also an increase in tax payable in Turkey of £1.9m due to corporation tax changing to becoming payable in advance there. A final point worthy of note is the transfer of £7.2m from the Capital Reduction Reserve to boost Retained Earnings, and facilitate dividend payments in future years.   

Overall the Group has made great progress and the financial results reflect that performance, and our strong financial position gives us the platform to continue our development at pace.

Outlook

2022 marked the 20^th anniversary of the foundation of the Company.  We enjoyed the opportunity to celebrate this significant event with our long-term and supportive shareholders, advisors, friends and relatives in London in July.  Subsequently, in Türkiye, we were also able to formally open our own dedicated Head Office in Ankara, surrounded by our fantastic team.

Operationally with Zenit, the Company had its most successful year to date, achieving record gold production and revenue from its Turkish mine, coupled with the most drilling ever completed across three simultaneous campaigns at Kiziltepe, Tavşan and Salinbas.  The year also marked the commencement of construction at the Tavşan mine site in July, which will lead to the development of Zenit's second gold mining operation in Türkiye.

Following the strategic investment of US$2.5 million into the Company by Newmont Mining Corporation in March, we were pleased to see the grant of the first four exploration licences in Kosovo, coupled post-period end with the grant of the first Project Leopard exploration licences in Eastern Türkiye.  These events mark the commencement of new grassroots exploration for major copper-gold systems across the Tethyan Metallogenic Belt, in poorly explored areas known to host multi-million ounce gold deposits.  This represents one of the core strands of our strategy; to pick up good ground cost-effectively and to build value incrementally and organically within the Company over time. 

In Australia, our nascent discovery fund, Asgard Metals, achieved a number of milestones of its own.  In addition to completing three substantial investments, it also established a trading account through which it may participate in corporate offers or trade securities on the ASX market.  Meanwhile, our technical team has contributed to the exploration programmes of our investee companies across a variety of jurisdictions, but perhaps most notably in Western Australia, where a substantial nickel-cobalt JORC Resource Estimate of 70.6Mt at 0.7% Ni + 460ppm Co was established for Panther Metals Limited. 

Of course, not everything can go our way or in the manner originally intended.  Notably our intention to list Venus Minerals on AIM did not happen as planned during the year.  While we had made arrangements for an IPO in June, the markets took a turn for the worse and we decided to postpone the launch.  Poor market conditions have unfortunately prevailed for the remainder of the year and have only continued to deteriorate during 2023.  However, this did not phase us, as it enabled the opportunity to increase our holding in Venus, making it a subsidiary, and we look forward to continuing to incubate and advance its Cypriot copper-gold portfolio accordingly. 

Lastly, we were very pleased to pay the last tranche of our Special Dividend to shareholders in October, thus completing on a process which we had initiated in late 2019.  Accordingly, we have come to view this moment as the closure of the first chapter in the life of Ariana, having successfully brought our most advanced projects in Türkiye to the point of providing very meaningful returns to our shareholders.  We are now on the hunt for new projects on the international stage which may be developed in similar ways, to ensure that further returns may continue to be paid well in the future. 

We are resolutely focused on upscaling the Company by pursuing bold objectives.  In particular we are keen to advance on larger projects capable of supporting the Company on its journey towards becoming a mid-tier mine developer.  As part of this process, we are going to pursue support from investors from further afield and will be marketing the Company accordingly.  In parallel with this we are undertaking several project and jurisdictional reviews with the aim of securing a significant new flagship asset around which the future of the Company may continue to be built.

Over the years we have developed a unique skill-set, rarely seen in a company of our size.  We have the capacity to undertake exploration and development projects from the grassroots stage all the way through to mine development and production.  Our in-house team comprises individuals with backgrounds in every geoscientific discipline relevant to mineral exploration and mine development, with the expertise to take projects through to Feasibility Study level.  We recognise this as being where the true value of the Company lies.  We will be drawing on these skills to draw the maximum value out of the opportunities already available to us but also to create new opportunities capable of catapulting the Company into the next decade and towards a higher level of market recognition.

We invite shareholders to join us on the next chapter of our journey and welcome their ongoing support.

Dr Kerim Sener

Managing Director

05 June 2023

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2022

Continuing operations	Note	2022 £'000	2021 £'000
Administrative costs (net of exchange gains)	4a	(555)	(2,917)
General exploration expenditure		(181)	(67)
Operating loss	4b	(736)	(2,984)
Profit on restructuring of group activities	5	-	6,423
Share of profit of associate accounted for using the equity method	6c	6,010	4,260
Share of loss of associate accounted for using the equity method	6b	(551)	(213)
Other income		159	-
Investment income		135	202
Profit before tax		5,017	7,688
Taxation	8	(987)	(3,832)
Profit for the year from continuing operations		4,030	3,856
Earnings per share (pence) attributable to equity holders of the company
Basic and diluted	10	0.36	0.36
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations		(3,504)	(2,948)
Other comprehensive loss for the year net of income tax		(3,504)	(2,948)
Total comprehensive profit for the year		526	908

The accompanying notes form part of these financial statements.

Consolidated Statement of Financial Position

For the year ended 31 December 2022

	Note	2022 £'000	2021 £'000
Assets Non-current assets
Trade and other receivables	16	414	815
Financial assets at fair value through profit or loss	13	639	461
Intangible assets	11	130	149
Land, property, plant and equipment	12	461	238
Investment in associates accounted for using the equity method	6	15,317	11,402
Exploration expenditure	14a	199	-
Earn-In advances	14b	87	-
Total non-current assets		17,247	13,065
Current assets
Trade and other receivables	17	1,280	1,136
Cash and cash equivalents		9,375	16,389
Total current assets		10,655	17,525
Total assets		27,902	30,590
Equity
Called up share capital	19	1,147	1,097
Share premium	19	2,207	305
Capital reduction reserve	19	-	7,222
Other reserves		720	720
Share based payments	19	-	173
Translation reserve		(11,682)	(8,178)
Retained earnings		34,666	27,160
Total equity attributable to equity holders of the parent		27,058	28,499
Non-controlling interest		30	30
Total equity		27,088	28,529
Liabilities
Current liabilities
Trade and other payables	18	814	2,061
Total current liabilities		814	2,061
Total equity and liabilities		27,902	30,590

The financial statements were approved by the Board of Directors and authorised for issue on 5 June 2023.

They were signed on its behalf by:

M J de Villiers

Chairman

A.K.Sener

Managing Director

Registered number: 05403426

The accompanying notes form part of these financial statements.

Company Statement of Financial Position

For the year ended 31 December 2022

	Note	2022 £'000	2021 £'000
Assets Non-current assets
Trade and other receivables	16	3,850	5,942
Investments in group undertakings	15	377	377
Investment in associate accounted for using the equity method	6	2,612	2,612
Total non-current assets		6,839	8,931
Current assets
Trade and other receivables	17	540	132
Cash and cash equivalents		-	-
Total current assets		540	132
Total assets		7,379	9,063
Equity
Called up share capital	19	1,147	1,097
Share premium	19	2,207	305
Capital reduction reserve	19	-	7,222
Share based payments reserve	19	-	173
Retained earnings		3,886	34
Total equity		7,240	8,831
Liabilities Current liabilities
Trade and other payables	18	139	232
Total current liabilities		139	232
Total equity and liabilities		7,379	9,063

The financial statements were approved by the Board of Directors and authorised for issue on 5 June 2023.

They were signed on its behalf by:

M J de Villiers

Chairman

A.K.Sener

Managing Director

Registered number: 05403426

The accompanying notes form part of these financial statements.

Consolidated Statement of Changes in Equity

For the year ended 31 December 2022

	Share capital £'000	Share premium £'000	Other reserves £'000	Share based payments reserve £'000	Capital reduction reserve £'000	Translation reserve £'000	Retained earnings £'000	Total attributable to equity holders of parent £'000	Non- controlling interest £'000	Total £'000
Changes in equity to 31 December 2021
Balance at 1 January 2021	6.070	12,053	720	307	-	(9,617)	17,164	26,697	-	26,697
Profit for the year	-	-	-	-	-	-	3,856	3,856	-	3,856
Other comprehensive income	-	-	-	-	-	(2,948)	-	(2,948)	-	(2,948)
Total comprehensive income	-	-	-	-	-	(2,948)	3,856	908	-	908
Issue of ordinary shares	22	305	-	-	-	-	-	327	-	327
Court order - reduction in capital	(4,995)	(12,053)	-	-	7,222	-	9,826	-	-	-
Dividend paid to shareholders	-	-	-	-	-	-	(3,820)	(3,820)	-	(3,820)
Recycle of translation losses	-	-	-	-	-	4,387	-	4,387	-	4,387
Transactions between shareholders	-	-	-	-	-	-	-	-	30	30
Transfer between reserves	-	-	-	(134)	-	-	134	-	-	-
Transactions with owners	(4,973)	(11,748)	-	(134)	7,222	4,387	6,140	894	30	924
Balance at 31 December 2021	1,097	305	720	173	7,222	(8,178)	27,160	28,499	30	28,529
Changes in equity to 31 December 2022
Profit for the year	-	-	-	-	-	-	4,030	4,030	-	4,030
Other comprehensive income	-	-	-	-	-	(3,504)	-	(3,504)	-	(3,504)
Total comprehensive income	-	-	-	-	-	(3,504)	4,030	526	-	526
Issue of ordinary shares	50	1,902	-	-	-	-	-	1,952	-	1,952
Dividend paid to shareholders	-	-	-	-	-	-	(3,919)	(3,919)	-	(3,919)
Transfer between reserves	-	-	-	(173)	(7,222)	-	7,395	-	-	-
Transactions with owners	50	1,902	-	(173)	(7,222)	-	3,476	(1,967)	-	(1,967)
Balance at 31 December 2022	1,147	2,207	720	-	-	(11,682)	34,666	27,058	30	27,088

The accompanying notes form part of these financial statements

Company Statement of Changes in Equity

For the year ended 31 December 2022

	Share capital £'000	Share premium £'000	Capital reduction Reserve £'000	Share based payments reserve £'000	Retained earnings £'000		Total £'000
Changes in equity to 31 December 2021
Balance at 1 January 2021	6,070	12,053	-	307		(9,826)		8,604
Profit for the year	-	-	-	-		3,720		3,720
Other comprehensive income	-	-	-	-		-		-
Total comprehensive income	-	-	-	-		3.720		3,720
Issue of ordinary shares	22	305	-	-		-		327
Court order - reduction in capital	(4,995)	(12,053)	7,222	-		9,826		-
Dividend paid to shareholders	-	-	-	-		(3,820)		(3,820)
Transfer between reserves	-	-	-	(134)		134		-
Transactions with owners	(4,973)	(11,748)	7,222	(134)		6,140		(3,493)
Balance at 31 December 2021	1,097	305	7,222	173		34		8,831
Changes in equity to 31 December 2022
Profit for the year	-	-	-	-		376		376
Other comprehensive income	-	-	-	-		-		-
Total comprehensive income	-	-	-	-		376		376
Issue of ordinary shares	50	1,902	-	-		-		1,952
Dividend paid to shareholders	-	-	-	-		(3,919)		(3,919)
Transfer between reserves	-	-	(7,222)	(173)		7,395		-
Transactions with owners	50	1,902	(7,222)	(173)		3,476		(1,967)
Balance at 31 December 2022	1,147	2,207	-	-		3,886		7,240

The accompanying notes form part of these financial statements.

 

Consolidated Statement of Cash Flows

For the year ended 31 December 2022

	2022 £'000	2021 £'000
Cash flows from operating activities
Profit for the year	4,030	3,856
Adjustments for:
Profit on restructuring of group activities	-	(6,423)
Depreciation of non-current assets	93	44
Share of profit in equity accounted associate	(6,010)	(4,260)
Share of loss in equity accounted associate	551	213
Investment income	(135)	(202)
Income tax expense	987	3,832
	(484)	(2,940)
Movement in working capital
(increase)/decrease in trade and other receivables	(361)	62
(Decrease)/increase in trade and other payables	46	(271)
Cash (outflow)/inflow from operating activities	(799)	(3,149)
Taxation paid	(1,882)	(2,923)
Net cash (used in)/generated from operating activities	(2,681)	(6,072)
Cash flows from investing activities
Earn-In Advances	(87)	(1,406)
Purchase of land, property, plant and equipment	(333)	(241)
Payments for intangible and exploration assets	(199)	-
Proceeds from restructuring of group activities	-	28,951
Purchase of associate investment	-	(4,139)
Purchase of financial assets at fair value through profit or loss	(155)	(461)
Loan granted to associate	(500)	-
Dividends from associate	-	705
Investment income	135	202
Net cash generated from/ (used in) investing activities	(1,139)	23,611
Cash flows from financing activities
Issue of share capital	1,952	326
Proceeds from non-controlling interest	-	30
Payment of shareholder dividend (excluding uncashed)	(4,022)	(3,689)
Net cash (used in)/generated from financing activities	(2,070)	(3,333)
Net (decrease)/increase in cash and cash equivalents	(5,890)	14,206
Cash and cash equivalents at beginning of year	16,389	2,978
Exchange adjustment on cash and cash equivalents	(1,124)	(795)
Cash and cash equivalents at end of year	9,375	16,389

The accompanying notes form part of these financial statements.

Selected Notes to the Consolidated Financial Statements for the year ended 31 December 2022

1. General Information

Ariana Resources PLC (the "Company") is a public limited company incorporated, domiciled and registered in the UK. The registered number is 05403426 and the registered address is 2nd Floor, Regis House, 45 King William Street, London, EC4R 9AN.

The Company's shares are listed on the Alternative Investment Market of the London Stock Exchange. The principal activities of the Company and its subsidiaries (together the "Group") are related to the exploration for and development of gold and technology-metals, principally in south-eastern Europe.

The consolidated financial statements are presented in Pounds Sterling (£), which is the parent company's functional and presentation currency, and all values are rounded to the nearest thousand except where otherwise indicated. The financial information has been prepared on the historical cost basis modified to include revaluation to fair value of certain financial instruments and the recognition of net assets acquired including contingent liabilities assumed through business combinations at their fair value on the acquisition date modified by the revaluation of certain items, as stated in the accounting policies.

Basis of Preparation

The Group financial statements have been prepared and approved by the Directors in accordance with UK-adopted International Accounting Standards and effective for the Group's reporting for the year ended 31 December 2022.

The separate financial statements of the Company are presented as required by the Companies Act 2006. As permitted by that Act, the separate financial statements have been prepared in accordance with UK-adopted International Accounting Standards. These financial statements have been prepared under the historical cost convention (except for financial assets at FVOCI) and the accounting policies have been applied consistently throughout the period.

Going Concern

These financial statements have been prepared on the going concern basis.

The Directors are mindful that there is an ongoing need to monitor overheads and costs associated with delivering on its strategy and certain exploration programmes being undertaken across its portfolio.  The Group is not expecting to raise additional capital at this time, but may do so to support its strategy and specific activities on occasion. The Group has no bank facilities and has been meeting its working capital requirements from cash resources. At the year end the Group had cash and cash equivalents amounting to £9.375 million (2021: £16.389 million).

The Directors have prepared cash flow forecasts for the Group for the period to 30 September 2024 based on their assessment of the prospects of the Group's operations. The cash flow forecasts include expected future cash flows from our equity accounted associates along with the normal operating costs for the Group over the period together with the discretionary and non-discretionary exploration and development expenditure.

The forecasts indicate that on the basis of existing cash and other resources, and expected future dividend payments from Zenit, the Group will have adequate resources to meet all its expected obligations in delivering its work programme for the forthcoming year.

In preparing these financial statements the Directors have given consideration to the above matters and on this basis they believe that it remains appropriate to prepare the financial statements on a going concern basis.

4. Administrative costs & Operating loss

4a.  Administrative costs amounting to £555,000 are stated after exceptional exchange gains amounting to £2.8m, these primarily arising in the group's wholly owned subsidiary Galata Mineral Madencilik San. ve Tic. A.S. ("Galata"), mainly due to the strengthening of the US dollar against the Turkish Lira. On retranslation into Galata's functional currency, US dollar denominated assets held by Galata, including bank and trade receivables, resulted in an uplift to those Lira asset valuations and a corresponding exchange gain for the year to 31 December 2022.

4b. The operating loss is stated after charging/(crediting):

	2022 £'000	2021 £'000
Depreciation and amortisation - owned assets	93	44
Office lease rentals	8	12
Exceptional exchange (gain) in Türkiye	(2,821)	-
Net foreign exchange losses/(gains)	156	(75)
Fees payable to the Company's auditor for the audit of the Group's and Company's annual accounts	50	50
Fees payable to the Company's auditor for other services: - The audit of the Company's subsidiaries	25	25

5. Profit on restructuring of group activities

During the prior year, the Group concluded its restructuring programme. This comprised the part-disposal of its interest in Zenit Madencilik San. ve Tic. A.S. ("Zenit") and Pontid Madencilik San. ve Tic. A.S. ("Pontid") to Ozaltin Insaat, Ticaret and Sanayi A.S. ("Ozaltin") and Proccea Construction Co ("Proccea") for a total consideration of US$35.75m. Under the terms of the Pontid sale agreement and during the year, Ozaltin completed its equity commitment to invest a further US$8m in the development of the Salinbaş project. A further US$2m is to be paid in instalments to the Group by Zenit following the transfer of the three remaining satellite projects held by the Group's wholly owned subsidiary, Galata Mineral Madencilik San. ve Tic. A.S.

	2022 £'000	2021 £'000
Disposal proceeds receivable (net of group transactions) Less:-	-	26,976
Cost of Investment and other incidental costs incurred on disposal	-	(4,684)
Reversal of fair value transactions associated with the Salinbaş acquisition	-	(9,466)
Increase in valuation of associate following acquisition	-	2,197
Reduction in valuation of JV following part disposal (excluding translation losses)	-	(4,234)
Recycled translation losses	-	(4,386)
Profit on restructuring of Group's activities	-	6,423

6. Equity accounted Investments

The Group and Company's investments comprise the following: -

Associates and joint ventures companies	Note	Group 2022 £'000	Company 2022 £'000	Group 2021 £'000	Company 2021 £'000
Associate Interest in Pontid Madencilik San. ve Tic. A.S. ("Pontid")	6a	4,139	-	4,139	-
Associate Interest in Venus Minerals Ltd ("Venus")	6b	1,848	2,612	2,399	2,612
Associate Interest in Zenit Madencilik San. ve Tic. A.S. ("Zenit")	6c	9,330	-	4,864	-
Carrying amount of investment at 31 December		15,317	2,612	11,402	2,612

6a Associate Interest in Pontid.

Following the disposal in the prior year by Greater Pontides Exploration B.V. (holding company) of its entire interest in Pontid Madencilik San. ve Tic. A.S. ("Pontid") to Ozaltin Holding A.S and Proccea Construction Co., the Group reinvested US$5.75m for a 23.5% shareholding in Pontid. This investment is currently valued at £4.139m and represents the Group's share of Pontid's net assets and goodwill paid on acquisition. Since the date of acquisition, Pontid continues to benefit from new capital funding into its Salinbaş project.

Financial information based on Pontid's translated financial statements, and reconciliations with the carrying amount of the investment in the consolidated financial statements are set out below

Statement of financial position As at 31 December 2022	2022 £'000	2021 £'000
Assets Non-current assets
Other receivables	14	10
Intangible exploration assets	2,006	1,120
Land, property, plant and machinery	69	96
Total non-current assets	2,089	1,226
Current assets
Trade and other receivables	337	86
Cash and cash equivalents	4,377	5,230
Total current assets	4.714	5,316
Total assets	6,803	6,542
Current liabilities
Other payables	131	229
Total current liabilities	131	229
Equity	6,672	6,313
Proportion of the Group's ownership	23.5%	23.5%
Share of net assets per above analysis	1,568	1,483
Goodwill on acquisition and share of interest post acquisition	2,571	2,656
Carrying amount of investment in Pontid	4,139	4,139

6b Share of loss of associate interest in Venus Minerals Ltd

The Company and group acquired 50% of Venus Minerals Ltd through an earn-in agreement on 5 November 2021.

The Group accounts for its associate interest in Venus Minerals Ltd using the equity method in accordance with IAS 28 (revised). The results set out below includes the Group`s share of loss for the year to 31 December 2022.

	Group 2022 £'000	Company 2022 £'000	Group 2021 £`000	Company 2021 £`000
	Equity accounted Associate interest	Equity accounted Associate interest	Equity accounted Associate interest	Equity accounted Associate interest
At 1 January 2022	2,399	2,612	2,612	2,612
Share of loss since significant influence recognised by Group	(551)	-	(213)	-
At 31 December 2022	1,848	2,612	2,399	2,612

6c Share of profit of associate interest in Zenit

The Group accounts for its associate interest in Zenit using the equity method in accordance with IAS 28 (revised). In prior years Zenit was also accounted for using the equity method of accounting, albeit the company was then classified as a joint venture, until part disposal by the Group in February 2021.  At 31 December 2022 the Group has a 23.5% interest in Zenit, and profits from Zenit are shared in the ratio of 23.5% the Group, 23.5% Proccea and the remaining 53% interest to Ozaltin Holding A.S. 

Zenit was incorporated in, and has its principal place of business in Ankara, Türkiye.

Financial information based on Zenit's translated financial statements, and reconciliations with the carrying amount of the investment in the consolidated financial statements are set out below:

Statement of Comprehensive Income For the year ended 31 December 2022	2022 £'000	2021 £'000
Revenue	47,489	32,784
Cost of sales	(26,244)	(14,586)
Gross Profit	21,245	18,198
Administrative expenses	(555)	(2,344)
Operating profit	20,690	15,854
Other income	-	124
Finance expenses including foreign exchange losses	(1,102)	(1,171)
Finance income including foreign exchange gains	4,728	5,213
Profit before tax	24,316	20,020
Taxation (credit) / charge	1,259	(1,890)
Profit for the year	25,575	18,130
Proportion of the Group's profit share	23.5%	23.5%
Group's share of profit for the year	6,010	4,260

6c Share of profit of interest in associate in Zenit

Statement of financial position As at 31 December 2022	2022 £'000		2021 £'000
Assets Non-current assets
Other receivables and deferred tax asset	6,287		295
Intangible exploration assets	50		70
Kiziltepe Gold Mine (including capitalised mining costs, land, property, plant, and equipment)	12,889		15,804
Tavşan construction in progress	4,709		-
Total non-current assets	23,935		16,169
Current assets
Trade and other receivables		281	650
Inventories		3,424	2,033
Other receivables, VAT and prepayments		5,345	2,521
Cash and cash equivalents		15,420	6,680
Total current assets		24,470	11,884
Total assets		48,405	28,053
Liabilities
Non-current liabilities
Borrowings		-	412
Deferred tax		-	367
Asset retirement obligation		582	616
Total non-current liabilities		582	1,395
Current liabilities
Borrowings		361	884
Trade payables		3,345	1,406
Other payables		4,415	3,671
Total current liabilities		8,121	5,961
Total liabilities		8,703	7,356
Equity		39,702	20,697
Proportion of the Group's ownership		23.5%	23.5%
Carrying amount of investment in associate		9,330	4,864
Movement in Equity - our share
Opening balance		4,864	11,213
Profit for the year		6,010	4,260
Part disposal of Interest		-	(5,943)
Translation and other reserves		(1,544)	(3,613)
Dividend receivable		-	(1,053)
Closing balance		9,330	4,864

9. Profit and distributable reserves of parent Company

(a) Profit of parent company

As permitted by Section 408 of the Companies Act 2006, the statement of comprehensive income of the parent Company is not presented as part of these financial statements. The parent Company's Profit for the financial year was £376,000 (2021: £3,720,000).

(b) Distributable reserves of parent company

The Company paid its first shareholder inaugural special dividend on 24 September 2021 amounting to £3,820,873. To facilitate this distribution the Company gained shareholder approval during February 2021 and applied to the High Court of Justice of England and Wales to reduce its share capital. This application was granted by the High Court during July 2021 and the share capital reduction scheme resulted in generating distributable reserves of £7.22m, as set out in the Company's Statement of Changes in Equity and note 19.

(c) Dividends

A second interim and third final part of the inaugural special dividend distribution was paid out of distributable reserves. The second interim payment on the 11^th March 2022 of 0.175 pence per ordinary share amounted to £1,919,186; the third and final payment on the 21^st September 2022 of 0.175 pence per ordinary share amounted to £2,000,010.

10. Earnings per share on continuing operations

The calculation of basic profit per share is based on the profit attributable to ordinary shareholders of £4,030,000 (2021: £3,856,000) divided by the weighted average number of shares in issue during the year being shares 1,133,043,081 (2021: 1,085,894,966). There is no material effect on the basic earnings per share for the dilution provided by the share options.

13. Financial assets at fair value through profit or loss

Group and Company	Group 2022 £'000
At 1 January 2022	461
Addition	155
Exchange movement	23
At 31 December 2022	639
Carrying value
At 31 December 2021	461
At 31 December 2022	639

During the year, the Group's wholly owned subsidiary, Asgard Metals Pty. Ltd., continued with its investment strategy, and further investments during the year amounted to £155,000. The market valuation of listed securities at the balance sheet date amounted to £202,000, compared to a carrying valuation of £217,000 (level 1 hierarchy). This immaterial fall in valuation amounting to £15,000 has not been reflected in the statement of comprehensive income.

Unlisted securities, where fair value cannot be reliably measured, continue to be valued at cost and amounted to £422,000 (level 3 hierarchy) at the balance sheet date.

 

16. Non-current other receivables

	Group		Company
	2022 £'000	2021 £'000	2022 £'000	2021 £'000
Amounts owed by Group undertakings	-	-	3,850	5,942
Amounts owed by associate interest	414	815	-	-
	414	815	3,850	5,942

The amount owed to the Group relate to an instalment based interest free loan agreed upon following the disposal by Galata of its three remaining satellite projects to Zenit at a rate of US$50,000 per calendar month. The directors have assessed that the future fair value return on settlement of this debt is not materially different from the carrying value shown above.

17. Trade and other receivables

	Group		Company
	2022 £'000	2021 £'000	2022 £'000	2021 £'000
Other receivables	155	219	29	132
Amounts owed by associate interest	497	792	-	-
Loan to associate interest	500	-	511	-
Prepayments	128	125	-	-
	1,280	1,136	540	132

The carrying values of other receivables and amounts owed by associate interest approximate their fair values as these balances are expected to be cash settled in the near future.

During September 2022, a convertible loan agreement was entered into with Venus Minerals Limited amounting to £500,000. Post-period end a further convertible loan agreement was completed with Venus for £200,000.

18. Trade and other payables

	Group		Company
	2022 £'000	2021 £'000	2022 £'000	2021 £'000
Trade and other payables	189	203	102	94
Social security and other taxes	355	1,380	-	-
Other creditors and advances	137	343	29	132
Accruals and deferred income	133	135	8	6
	814	2,061	139	232

The above listed payables are all unsecured. Due to the short-term nature of current payables, their carrying values approximate their fair value.

19. Called up share capital, share premium and capital reduction reserve

Allotted, issued and fully paid ordinary 0.1p shares	Number	Ordinary Shares £'000	Share Premium £'000	Capital reduction reserve £'000
In issue at 1 January 2022	1,096,677,943	1,097	305	7,222
Issue of ordinary shares	46,185,387	46	1,843	-
Share options exercised Transfer to retained earnings	3,500,000 -	4 -	59 -	- (7,222)
In issue at 31 December 2022	1,146,363,330	1,147	2,207	-

During the prior year, the Company was granted permission by the High Court of Justice in England and Wales to reduce its share capital by the cancellation of its share premium and its sub-divided deferred shares. This allowed the Company to extinguish retained losses bought forward from prior years amounting to £9,826,000 and resulted in the establishment of a capital reduction reserve. This distributable reserve was subsequently transferred to retained earnings during 2022.

22. Contingent liabilities

Following the restructuring of the Group and the part disposal by Galata Mineral Madencilik San. ve Tic. A.S. of 26.5% of its interest in Zenit Madencilik San. ve Tic. A.S., 75% of the resulting gain on disposal is exempt from Turkish corporation tax provided the gain is retained under equity by Galata for a period of 5 years. This potentially exempt taxable gain, including the previously reported gain during 2019 on Çamyol Gayrimenkul, Madencilik, Turizm, Tarim ve Hayvancilik Ltd ("Camyol") is as follows:

Contracting parties	Shareholding	Taxable gain in Lira	Contingent liability in Lira	Contingent Liability in GBP
Galata	26.5%	127,766,456	31,941,614	1,414,761
Çamyol	99%	4,529,343	996,455	44,135

24. Post year end events

In April 2023 the loan of £500,000 outstanding at the year end from Venus Minerals Limited was capitalised, along with an additional loan of £200,000 increasing the Group's shareholding in that company to 58%. The assessment of the fair values of the assets and liabilities acquired is currently ongoing, and will be reported in the Group's next available financial statements.

Note to the announcement

The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 December 2022 or year ended 31 December 2021, but is derived from those accounts. Statutory accounts for 2021 have been delivered to the Registrar of Companies and those for 2022 on which the auditors have provided an unqualified report will be delivered following the AGM.

Contacts:

Ariana Resources plc	Tel: [phone]
Michael de Villiers, Chairman
Kerim Sener, Managing Director
Beaumont Cornish Limited (Nominated Adviser)	Tel: [phone]
Roland Cornish / Felicity Geidt
Panmure Gordon (UK) Limited (Joint Broker)	Tel: [phone]
John Prior / Hugh Rich / Atholl Tweedie
WHIreland Limited (Joint Broker) Harry Ansell / Katy Mitchell / George Krokos	Tel: [phone]
Yellow Jersey PR Limited (Financial PR) Dom Barretto / Shivantha Thambirajah / Bessie Elliot	[e-mail] Tel: [phone]

Editors' Note:

The information in this announcement that relates to exploration results is based on information compiled by Dr. Kerim Sener BSc (Hons), MSc, PhD, Managing Director of Ariana Resources plc. Dr. Sener is a Fellow of The Geological Society of London and a Member of The Institute of Materials, Minerals and Mining and has sufficient experience relevant to the styles of mineralisation and type of deposit under consideration and to the activity that has been undertaken to qualify as a Competent Person as defined by the 2012 edition of the Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code) and under the AIM Rules - Note for Mining and Oil & Gas Companies.  Dr. Sener consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

About Ariana Resources:

Ariana is an AIM-listed mineral exploration and development company with an exceptional track-record of creating value for its shareholders through its interests in active mining projects and investments in exploration companies. Its current interests include gold production in Turkey and copper-gold exploration and development projects in Cyprus and Kosovo.

The Company holds 23.5% interest in Zenit Madencilik San. ve Tic. A.S. a joint venture with Ozaltin Holding A.S. and Proccea Construction Co. in Turkey which contains a depleted total of c. 2.1 million ounces of gold and other metals (as at February 2022). The joint venture comprises the Kiziltepe Mine and the Tavsan and Salinbas projects.

The Kiziltepe Gold-Silver Mine is located in western Turkey and contains a depleted JORC Measured, Indicated and Inferred Resource of 222,000 ounces gold and 3.8 million ounces silver (as at February 2022). The mine has been in profitable production since 2017 and is expected to produce at a rate of c.20,000 ounces of gold per annum to at least the mid-2020s. A Net Smelter Return ("NSR") royalty of 2.5% on production is being paid to Franco-Nevada Corporation.

The Tavsan Gold Mine is located in western Turkey and contains a JORC Measured, Indicated and Inferred Resource of 307,000 ounces gold and 1.1 million million ounces silver (as at November 2022). Following the approval of its Environmental Impact Assessment and associated permitting, Tavsan is being developed as the second gold mining operation in Turkey.  Construction progress is temporarily suspended pending the outcome of a local court decision pertaining to the EIA.  A NSR royalty of up to 2% on future production is payable to Sandstorm Gold.

The Salinbas Gold Project is located in north-eastern Turkey and contains a JORC Measured, Indicated and Inferred Resource of 1.5 million ounces of gold (as at July 2020). It is located within the multi-million ounce Artvin Goldfield, which contains the "Hot Gold Corridor" comprising several significant gold- copper projects including the 4 million ounce Hot Maden project, which lies 16km to the south of Salinbas. A NSR royalty of up to 2% on future production is payable to Eldorado Gold Corporation.

Ariana owns 100% of Australia-registered Asgard Metals Fund ("Asgard"), as part of the Company's proprietary Project Catalyst Strategy. The Fund is focused on investments in high-value potential, discovery-stage mineral exploration companies located across the Eastern Hemisphere and within easy reach of Ariana's operational hubs in Australia, Turkey and the UK.

Ariana owns 75% of UK-registered Western Tethyan Resources Ltd ("WTR"), which operates across south-eastern Europe and is based in Pristina, Republic of Kosovo. The company is targeting its exploration on major copper-gold deposits across the porphyry-epithermal transition.  WTR is being funded through a five-year Alliance Agreement with Newmont Corporation (www.newmont.com) and is separately earning-in to 85% of the Slivova Gold Project.

Ariana owns 58% of UK-registered Venus Minerals Ltd ("Venus") which is focused on the exploration and development of copper-gold assets in Cyprus which contain a combined JORC Indicated and Inferred Resource of 17Mt @ 0.45% to 1.10% copper (excluding additional gold, silver and zinc.

Panmure Gordon (UK) Limited and WH Ireland Limited are brokers to the Company and Beaumont Cornish Limited is the Company's Nominated Adviser.

For further information on Ariana, you are invited to visit the Company's website at www.arianaresources.com.

Ends.

 

END