Interim Results
30 September 2013
AIM: AAU
INTERIM RESULTS
Ariana Resources plc ("Ariana" or "the Company") the gold exploration and development company focused on Turkey, announces its results for the six month period ended 30 June 2013.
Highlights:
Positive Definitive Feasibility Study received for the advanced Kiziltepe gold-silver project, demonstrating a gross project NPV of US$34.4 million and a 37.8% IRR at a base case of US$1304 / Au oz and US$22.6 / Ag oz.
Final environmental approvals process in progress at the Ministry of Environment and Urban Planning.
Project-level financing discussions for the US$25 million capital requirement to build the mine are underway with lenders.
New exploration at Kiziltepe is continuing to yield highly encouraging results, demonstrating potential to increase the resource base and ultimately life of mine.
Chairman's Statement
This is my first formal statement for the Company since becoming Chairman following the retirement of Michael Spriggs in July. In my new capacity, I would firstly like to thank Michael for his efforts as Chairman over the eight-year period since our IPO. During this time, the Company has successfully navigated a course from very early-stage greenfields explorer to mine developer. It is important to recognise that only a minority of exploration companies achieve such an outcome within such a short time-frame, and I would like to thank the whole team and our partners in Turkey, Proccea Construction Co., for enabling this significant progress.
In June, a positive feasibility outcome for the Company's flagship Kiziltepe gold-silver project was announced, which demonstrated robust project economics. Post-period end, in late August, the Company submitted its final Environmental Impact Assessment (EIA) report to the Turkish Ministry of Environment and Urban Planning. This marks a critical milestone in our strategy to transform Ariana from gold explorer to producer. With our joint venture partners, Proccea, we remain confident that we will receive approval of our EIA over the coming months. Importantly, the project is recognised by the Turkish Government as one of the most advanced stand-alone gold development projects in western Turkey.
Once the EIA is approved, we will vigorously seek the additional permits required. Many of these are routine approvals prior to the commencement of mine construction. In parallel with Proccea, which also became a shareholder in Ariana during the period, we are jointly pursuing financing options for mine construction with several potential lenders including Turkish banks. These discussions have demonstrated to the Company the value of our asset as a future low-cost producer, with estimated cash-costs of about US$600 per ounce, placing us in an enviable position on the international gold mining cost-curve. We are also grateful for the energetic way in which our partner is driving progress towards mine construction, now that management control of our JV has been transferred to Proccea and since progressing to the final stage of environmental permitting.
As we head into the final furlong of transforming our company into a gold producer, we are encouraged by the positive developments on all fronts. It is important to emphasise the outstanding exploration results we have recently announced in the context of the development of the Kiziltepe mine. This points, with great clarity, to the significant potential of our existing mining licences to deliver additional resources and the high probability that we will extend the life of mine beyond eight years. The Kiziltepe Project will become a significant mining investment in Western Turkey and it will bring much needed economic benefits to the local community, which has consistently demonstrated its support for the project. We owe all our stakeholders nothing less than steadfast focus on delivering our long-term objectives.
Contacts:
| Ariana Resources plc | Tel: +44 (0) 20 7407 3616 |
| Michael de Villiers, Chairman | |
| Kerim Sener, Managing Director | |
| Beaumont Cornish Limited | Tel: +44 (0) 20 7628 3396 |
| Roland Cornish / Felicity Geidt | |
| Beaufort Securities Limited | Tel: +44 (0) 20 7382 8387 |
| Chris Rourke / Guy Wheatley | |
| Loeb Aron & Company Ltd. | Tel: +44 (0) 20 7628 1128 |
| John Beresford-Peirse / Dr. Frank Lucas | |
| St Brides Media & Finance Ltd | Tel: +44 (0) 20 7236 1177 |
| Susie Geliher / Lottie Brocklehurst | |
Editors' note:
About Ariana Resources:
Ariana is an exploration and development company focused on epithermal gold-silver and porphyry copper-gold deposits in Turkey. The Company is developing a portfolio of prospective licences selected on the basis of its in-house geological and remote-sensing database, on its own in western Turkey and in Joint Venture with Eldorado Gold Corporation in north-eastern Turkey. Eldorado owns 51% of this joint venture and are fully funding all exploration work on the JV properties, while Ariana owns 49%. The total resource inventory within this JV is 1.09 million ounces of gold.
The Company's flagship assets are its Kiziltepe and Tavsan gold projects, which form the Red Rabbit Gold Project. Both contain a series of prospects, within two prolific mineralised districts in the Western Anatolian Volcanic and Extensional (WAVE) Province in western Turkey. This Province hosts the largest operating gold mines in Turkey and remains highly prospective for new porphyry and epithermal deposits. These core projects, which are separated by a distance of 75km, are presently being assessed as to their economic merits and now form part of a Joint Venture with Proccea Construction Co. The total resource inventory at the Red Rabbit Project stands at 448,000 ounces of gold equivalent.
Ariana also has a strategic investment in Tigris Resources Limited (www.tigrisresources.com), a private Jersey-based exploration company, which is focused on the exploration of copper and gold deposits in south-eastern Turkey. Ariana retains 7.6% of Tigris Resources Limited.
Beaufort Securities Limited and Loeb Aron & Company Ltd. are joint 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
Ariana Resources Plc
Unaudited Condensed Consolidated Interim Financial Statements
for the six months ended 30 June 2013
Condensed consolidated statement of comprehensive income
| Note | 6 months to 30 June 2013 | 6 months to 30 June 2012 | 12 months to 31 December 2012 | |
| £'000 | £'000 | £'000 | ||
| Continuing Operations | ||||
| Administrative costs | (414) | (322) | (769) | |
| General exploration expenditure | (67) | (41) | (315) | |
| Other income | 78 | 14 | 4 | |
| Operating Loss | (403) | (349) | (1,080) | |
| Finance costs | 4 | (38) | (90) | (111) |
| Fair value loss on derivative financial assets | 9 | (265) | - | - |
| Loss on dilution of interest in joint venture | 5 | (162) | - | - |
| Investment income | 1 | 25 | 9 | |
| Reclassification of translation difference on dilution of interest in joint venture | (8) | - | - | |
| Loss on ordinary activities before tax | (875) | (414) | (1,182) | |
| Taxation | 7 | - | - | - |
| Loss for the period | (875) | (414) | (1,182) | |
| Other comprehensive income: | ||||
| Exchange differences on translating foreign operations | (15) | 52 | 29 | |
| Reclassification of translation difference on dilution of interest in joint venture | 8 | - | - | |
| Other comprehensive income for the period, net of tax | (7) | 52 | 29 | |
| Total comprehensive income for the period | (882) | (362) | (1,153) | |
| Loss for the period attributable to owners of the parent company | (875) | (414) | (1,182) | |
| Total comprehensive income attributable to owners of the parent company | (882) | (362) | (1,153) | |
| Loss per share (pence): | ||||
| Basic and diluted | 8 | 0.21 | 0.15 | 0.40 |
Condensed consolidated balance sheet
Condensed consolidated interim statement of financial position
| Note | 30 June 2013 £'000 | 30 June 2012 £'000 | 31 December 2012 £'000 | |
| ASSETS | ||||
| Non-current assets | ||||
| Trade and other receivables | 87 | 12 | 75 | |
| Derivative financial asset | 9 | 368 | - | - |
| Available for sale investments | 226 | 169 | 226 | |
| Land, property, plant and equipment | 445 | 426 | 407 | |
| Intangible assets | 10 | 5,672 | 5,125 | 5,320 |
| Total non-current assets | 6,798 | 5,732 | 6,028 | |
| Current assets | ||||
| Trade and other receivables | 464 | 720 | 894 | |
| Derivative financial asset | 9 | 367 | - | - |
| Cash and cash equivalents | 631 | 725 | 255 | |
| Total current assets | 1,462 | 1,445 | 1,149 | |
| Total Assets | 8,260 | 7,177 | 7,177 | |
| Equity | ||||
| Called up share capital | 11 | 5,550 | 2,694 | 3,710 |
| Share premium | 6,900 | 6,843 | 7,004 | |
| Other reserves | 720 | 720 | 720 | |
| Share options | 578 | 578 | 578 | |
| Translation reserve | (154) | (124) | (147) | |
| Retained earnings | (6,308) | (4,664) | (5,432) | |
| Total equity attributable to equity holders of the parent | 7,286 | 6,047 | 6,433 | |
| Liabilities | ||||
| Current liabilities | ||||
| Trade and other payables | 842 | 654 | 506 | |
| Interest bearing borrowings | 12 | 132 | 476 | 238 |
| Total current liabilities | 974 | 1,130 | 744 | |
| Total Equity and Liabilities | 8,260 | 7,177 | 7,177 |
Condensed consolidated interim statement of changes in equity
| Condensed consolidated interim statement of changes in | Share capital | Share premium | Other reserves | Share options | Trans -lation reserve | Retained losses | Total attributable to equity holder of parent |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Balance at 1 January 2012 | 2,597 | 6,481 | 720 | 578 | (176) | (4,250) | 5,950 |
| Changes in equity to 30 June 2012 | |||||||
| Other comprehensive income- Exchange differences on retranslation of foreign operations | - | - | - | - | 52 | - | 52 |
| Loss for the period | - | - | - | - | - | (414) | (414) |
| Total comprehensive income | - | - | - | - | 52 | (414) | (362) |
| Issue of share capital (net of expenses) | 97 | 362 | - | - | - | - | 459 |
| Balance at 30 June 2012 | 2,694 | 6,843 | 720 | 578 | (124) | (4,664) | 6,047 |
| Changes in equity to 31 December 2012 | |||||||
| Other comprehensive income- Exchange differences on retranslation of foreign operations | - | - | - | - | (23) | - | (23) |
| Loss for the period | - | - | - | - | - | (768) | (768) |
| Total comprehensive income | - | - | - | - | (23) | (768) | (791) |
| Issue of share capital (net of expenses) | 1,016 | 161 | - | - | - | - | 1,177 |
| Balance at 31 December 2012 | 3,710 | 7,004 | 720 | 578 | (147) | (5,432) | 6,433 |
| Changes in equity to 30 June 2013 | |||||||
| Other comprehensive income- Exchange differences on retranslation of foreign operations | - | - | - | - | (7) | (8) | (15) |
| Loss for the period | - | - | - | - | - | (868) | (868) |
| Total comprehensive income | - | - | - | - | (7) | (876) | (883) |
| Issue of share capital (net of expenses) | 1,840 | (104) | - | - | - | - | 1,736 |
| Balance at 30 June 2013 | 5,550 | 6,900 | 720 | 578 | (154) | (6,308) | 7,286 |
Condensed consolidated interim cash flow
Condensed consolidated interim statement of cash flows
| 6 months to 30 June 2013 | 6 months to 30 June 2012 | 12 months to 31 December 2012 | ||
| £'000 | £'000 | £'000 | ||
| Cash flows from operating activities | ||||
| Cash generated from operations | (64) | (612) | (860) | |
| Net cash outflow from operations | (64) | (612) | (860) | |
| Cash flows from investing activities | ||||
| Purchase of land, property, plant and equipment | (61) | (115) | (132) | |
| Purchase of investments | - | - | (57) | |
| Purchase of intangible assets | (529) | (488) | (891) | |
| Investment income | 1 | 25 | 9 | |
| Net cash used in investing activities | (589) | (578) | (1,071) | |
| Cash flows from financing activities | ||||
| Proceeds from issue of capital (net of expenses) | 1,175 | 1,115 | 1,062 | |
| Proceeds from borrowings | 145 | 459 | 1,154 | |
| Repayment of borrowings | (281) | (477) | (804) | |
| Interest and financing fees | (10) | (90) | (134) | |
| Net cash proceeds from financing activities | 1,029 | 1,007 | 1,278 | |
| Net increase/(decrease) in cash and cash equivalents | 376 | (183) | (653) | |
| Cash and cash equivalents at the beginning of period | 255 | 908 | 908 | |
| Cash and cash equivalents at end of period | 631 | 725 | 255 |
Notes to the interim financial statements for the six months ended 30 June 2013
1. General information
Ariana Resources Plc (the "Company") is a public limited company incorporated and domiciled in Great Britain and whose registered office is Bridge House, London Bridge, London, SE1 9QR. The principal activities of the Company and its subsidiaries (the "Group") are related to the exploration for and development of gold and other minerals in Turkey. The Company's shares are listed on the Alternative Investment Market of the London Stock Exchange.
2. Basis of preparation
The condensed interim financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards (IFRS) and in accordance with International Accounting Standard 34 Interim Financial Reporting. The condensed interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2012, which have been prepared in accordance with IFRS as adopted by the European Union.
The condensed interim financial statements set out above do not constitute statutory accounts within the meaning of the Companies Act 2006. They have been prepared on a going concern basis in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS) as adopted by the European Union. Statutory financial statements for the year ended 31 December 2012 were approved by the Board of Directors on 23May 2013 and delivered to the Registrar of Companies. The financial information for the periods ended 30 June 2013 and 30 June 2012 are unaudited.
3. Significant accounting policies
The condensed interim financial statements have been prepared under the historical cost convention.
The same accounting policies have been followed in these condensed interim financial statements as were applied in the preparation of the Group's financial statements for the year ended 31 December 2012.
Effective January 1, 2013, several new accounting standards and amendments were introduced. The Company has evaluated these new standards and amendments and determined that none of them are expected to have a material impact.
In addition to the accounting estimates and judgements identified in the Company's annual accounts, the Company and Lanstead Capital L.P. have entered into an equity swap agreement in respect of a share placing undertaken in June 2013 and thereby created a derivative financial asset. Consideration will be received over a period of 24 months (see note 9). The amount to be received each month is dependent on the performance of the Company's share price. The directors have made an assumption in these financial statements as to the quantum of funds ultimately receivable based on the share price at the balance sheet date. However there is significant uncertainty about what sums will ultimately be received due to the unpredictable nature of share prices.
The Group and Company financial statements have been prepared on a going concern basis. As an exploration and development company the Directors are mindful that there is an ongoing need to monitor overheads and cash associated with the exploration and development programme, and raise additional working capital on an ad hoc basis to support the Group's activities.
The Group expects to incur further losses in the development of its business, all of which cast doubt on its ability to continue as a going concern. The Group's ability to continue its operations and to realise its assets at their carrying values is dependent upon obtaining additional financing and generating revenues sufficient to cover its operating costs. These financial statements do not give effect to any adjustments which would be necessary should the Group be unable to continue as a going concern and therefore be required to realise its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying financial statements.
The Company raised £1.74m, subject to collection of the related derivative financial asset, in the six month period under review and the Directors remain confident that if future funding is required they will be able to raise this finance to meet the Group exploration and development programme and associated overhead cost.
4. Finance cost
| Interest on borrowing | 6 months to 30 June 2013 | 6 months to 30 June 2012 | 12 months to 31 December 2012 |
| £'000 | £'000 | £'000 | |
| Interest on convertible loan | 28 | 16 | 39 |
| Facility fees | 10 | 74 | 72 |
| 38 | 90 | 111 |
5. Loss on dilution of interest in joint venture
In July 2010, the Group entered into an agreement with Proccea Construction Co. ("Proccea") such that Galata Madencilik San. ve Tic. Ltd. ("Galata") would transfer its principal assets at Sindirgi and Tavsan, collectively known as the "Red Rabbit Gold Project" into a new wholly owned subsidiary, Zenit Madencilik San. ve Tic. A.S. ("Zenit"). Proccea earn their 50% share in Zenit by investing US$8m in the capital of Zenit, US$1.4m of such funds to be spent on a Feasibility Study and an Environmental Impact Assessment ("EIA"), with the balance on initial mine construction, once the Feasibility Study and EIA are completed satisfactorily. Ultimately profits from Zenit will be shared in the ratio of 51% the Group and 49% Proccea, but key decisions require approval from both the Group and Proccea, and consequently the Group consolidates the results of Zenit by way of proportional consolidation. Proccea's stake in Zenit increased during the period from 13.98% to 18.32%, resulting in a corresponding reduction in the Group`s shareholding in Zenit. This dilution in shareholding has been valued at £162,000 and accordingly charged to the comprehensive income account.
6. Segmental analysis
Management currently identifies one division as an operating segment - mineral exploration. This operating segment is monitored and strategic decisions are made based upon this and other non-financial data collated from exploration activities.
Principal activities for this operating segment are as follows:
Mining - incorporates the acquisition, exploration and development of gold resources in Turkey.
| June 2013 | June 2012 | December 2012 | |||||||
| Mining | Other reconciling items | Group | Mining | Other reconciling items | Group | Mining | Other reconciling items | Group | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Administrative costs | (414) | (414) | - | (322) | (322) | - | (769) | (769) | |
| General exploration Expenditure | (67) | - | (67) | (41) | - | (41) | (315) | - | (315) |
| Other income | 78 | - | 78 | 14 | -- | 14 | 4 | - | 4 |
| Finance costs | - | (38) | (38) | - | (90) | (90) | - | (111) | (111) |
| Fair value loss on derivative financial assets | - | (265) | (265) | - | - | - | - | - | - |
| Loss on dilution of interest in joint venture | - | (162) | (162) | - | - | - | - | - | - |
| Reclassification of translation difference on dilution of interest in joint venture | (8) | (8) | - | - | - | - | - | - | |
| Investment income | - | 1 | 1 | 25 | 25 | - | 9 | 9 | |
| Tax | - | - | - | - | - | - | - | - | - |
| Loss after tax | 11 | (886) | (875) | (27) | (387) | (414) | (311) | (871) | (1,182) |
| June 2013 | June 2012 | December 2012 | |||||||
| Mining | Other reconciling items | Group | Mining | Other reconciling items | Group | Mining | Other reconciling items | Group | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Assets | |||||||||
| Segment assets | 6,614 | 1,646 | 8,260 | 6,875 | 302 | 7,177 | 6,196 | 981 | 7,177 |
| Liabilities | |||||||||
| Segment liabilities | (648) | (326) | (974) | (138) | (992) | (1,130) | (410) | (334) | (744) |
| Additions to Segment Assets | |||||||||
| Intangible assets | 552 | - | 552 | 488 | - | 488 | 893 | - | 893 |
Other income includes consultancy and license fees.
Reconciling items include non mineral exploration costs and transactions between Group and associate companies.
Geographical segments
All of the Group`s mining assets and liabilities are located in Turkey.
| June 2013 | June 2012 | December 2012 | |||||||
Turkey | United Kingdom | Group | Turkey | United Kingdom | Group | Turkey | United Kingdom | Group | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Carrying amount of segment Non current assets | 6,204 | 594 | 6,798 | 5,563 | 169 | 5,732 | 5,801 | 227 | 6,028 |
7. Taxation
The Group has incurred tax losses for the period and a corporation tax charge is not anticipated.
8. Loss per share
The calculation of basic loss per share is based on the loss attributable to ordinary shareholders of £875,000 divided by the weighted average number of shares in issue during the period, being 407,675,374.
9. Derivative financial asset
In June 2013, the Company raised £1.25 million following the issue of 125 million new shares at 1p per share to Lanstead Capital L.P. (Lanstead). The Company received £250,000 in cash and entered into an equity swap price mechanism with Lanstead for the balance of these shares with consideration payable on a monthly basis over a period of 24 months. The Company also issued 12.5 million shares to Lanstead in consideration for the equity swap agreement.
The consideration from Lanstead has been treated as a derivative financial asset and its fair value has been determined by reference to the Company`s share price at the balance sheet date and has been calculated as follows:
| Total £`000 | Non-current assets £`000 | Current assets £`000 | |
| Value recognised on inception | 1,000 | 500 | 500 |
| Loss on revaluation of derivative during the period | (265) | (132) | (133) |
| Value of derivative at 30 June 2013 | 735 | 368 | 367 |
10. Additions and disposals of intangible assets
Exploration, evaluation and development of mineral resources
| Six months ended 30 June 2012 | £'000 |
| Opening net book amount 1 January 2012 | 4,627 |
| Additions and capitalised depreciation | 488 |
| Disposals | (26) |
| Exchange movements | 36 |
| Closing net book amount 30 June 2012 | 5,125 |
| Six months ended 31 December 2012 | |
| Opening net book amount 1 July 2012 | 5,125 |
| Additions and capitalised depreciation | 440 |
| Disposals | (224) |
| Exchange movements | (21) |
| Closing net book amount 31 December 2012 | 5,320 |
| Six months ended 30 June 2013 | |
| Opening net book amount 1 January 2013 | 5,320 |
| Additions and capitalised depreciation | 552 |
| Disposals | (190) |
| Exchange movements | (10) |
| Closing net book amount 30 June 2013 | 5,672 |
11. Called up share capital and share premium
Details of issued capital are as follows:
| Number of | Nominal Value | Share Premium | |
| shares | £'000 | £'000 | |
| At 1 January 2012 | 259,672,334 | 2,597 | 6,481 |
| Shares issued in period (net of expenses) | 9,657,175 | 97 | 362 |
| At 30 June 2012 | 269,329,509 | 2,694 | 6,843 |
| Shares issued in period (net of expenses) | 101,689,985 | 1,016 | 161 |
| At 31 December 2012 | 371,019,494 | 3,710 | 7,004 |
| Shares issued in period (net of expenses) | 183,929,980 | 1,840 | (104) |
| At 30 June 2013 | 554,949,474 | 5,550 | 6,900 |
12. Borrowings
A convertible loan of $1m, bearing interest at 10% and repayable within one year, was drawn
down in June 2012 and repaid during June 2013. On the 26th March 2013 a further loan of $250,000
was advanced, bearing interest at 10% and repayable in full by the end of this year. Under the new loan, conversion into new ordinary shares is at the lender's option at a price 2.0678 pence per ordinary share.
13. Approval of interim financial statements
The interim financial statements were approved by the Board of Directors on 27 September 2013.
The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of the
information contained therein.
Source: Ariana Resources plc via Thomson Reuters ONE
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