Anglo Asian Mining PLC Full year results 2018 - pre-tax profit of $25.2m (1786Z)

Share Name	Share Symbol	Market	Type	Share ISIN	Share Description
Anglo Asian Mining Plc	LSE:AAZ	London	Ordinary Share	GB00B0C18177	ORD 1P

	Price Change	% Change	Share Price	Bid Price	Offer Price	High Price	Low Price	Open Price	Shares Traded	Last Trade
	-0.40	-0.62%	64.60	62.00	67.00	64.50	64.50	64.50	30,501	16:35:04

Industry Sector	Turnover	Profit	EPS - Basic	PE Ratio	Market Cap
Miscellaneous Metal Ores,nec	84.72M	3.66M	0.0320	20.16	73.69M

Anglo Asian Mining (LSE:AAZ)
Historical Stock Chart

From Apr 2019 to Apr 2024

Click Here for more Anglo Asian Mining Charts.

TIDMAAZ

RNS Number : 1786Z

Anglo Asian Mining PLC

16 May 2019

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

16 May 2019

Anglo Asian Mining PLC

Full year results - 2018

Profit before tax increases to $25.2 million (2017: $5.7 million)

Final dividend of $0.04 per share giving a total 2018 dividend of $0.07 per share

Anglo Asian Mining PLC ("Anglo Asian" or the "Company"), the AIM listed gold, copper and silver producer focused in Azerbaijan, is pleased to announce its final audited results for the year ended 31 December 2018 ("FY 2018"). Note that all references to "$" are to United States Dollars.

Highlights

-- Achieved FY 2018 production at the upper range of the Company forecast - 83,736 gold equivalent ounces ("GEOs") produced compared to forecast of 78,000 to 84,000 GEOs:

o Total production for FY 2018 increased by 17 per cent. year-on-year ("y-o-y") to 83,736 GEOs (FY 2017: 71,461 GEOs)

o Gold production for FY 2018 increased by 22 per cent. y-o-y to 72,798 ounces (FY 2017: 59,617 ounces)

o Copper production for FY 2018 of 1,645 tonnes (FY 2017: 1,991 tonnes)

o Silver production for FY 2018 of 210,184 ounces (FY 2017: 172,853 ounces)

-- Gold bullion sales in FY 2018 of 59,481 ounces (FY 2017: 43,496 ounces) completed at an average of $1,265 per ounce (FY 2017: $1,265 per ounce)

-- All-in sustaining cost of gold production in 2018 further decreased in the lowest quartile to $541 per ounce (2017: $604 per ounce)

   --    Net cash of $6.1 million at 31 December 2018

-- Final dividend declared of $0.04 per ordinary share payable on 25 July 2019 subject to approval at the Annual General Meeting giving a FY 2018 total dividend of $0.07 per ordinary share

   --    Total production target for FY 2019 of between 82,000 and 86,000 GEOs

Financials

-- Total revenues in 2018 of $90.4 million representing a 26 per cent. y-o-y increase (2017: $71.8 million)

-- Profit before taxation in 2018 of $25.2 million representing a more than four times increase (2017: $5.7 million)

-- Operating cash flow before movements in working capital for FY 2018 of $50.1 million (2017: $32.2 million)

-- Net cash of $6.1 million at 31 December 2018 (31 December 2017: Net debt of $18.1 million) calculated as cash and cash equivalents less aggregate of loans and borrowings

   --    Cash of $14.5 million as at 31 December 2018 (31 December 2017: $2.5 million)

Chairman's Statement

It is a great pleasure to report on a truly transformational year for Anglo Asian. All our hard work in previous years came to fruition and this delivered both record production and an outstanding financial performance. I am also delighted that the Company paid its maiden dividend in 2018 and to announce a final dividend of US 4 cents per share. This gives a total dividend for the year of US 7 cents per share and means our shareholders share in our success.

Our main site at Gedabek is now a well-developed operation although we continue to invest to ensure it operates to the highest possible level of safety and efficiency. Gedabek produces gold at one of the lowest costs in the industry, and we are determined to maintain this position as we continue to extend its production life. The evaluation of the mineral resources and ore reserves of Gedabek's three mines in accordance with the JORC code is now also complete, which has extended the combined mine life until 2024.

We embarked upon an extensive three-year geological exploration programme in 2018 to further develop and grow the Company. Our goal is to open further mines which we can do rapidly and efficiently as demonstrated by the fast development of Ugur. The aerial geophysical survey identified many exciting targets at Gedabek and a new discovery has been made at Gosha. We have also substantially increased our efforts at Ordubad which is a highly prospective region with great promise. Whilst still relatively early days, Ordubad has the potential to significantly grow the Company in future years.

Operational review

A total of 83,736 gold equivalent ounces was produced in 2018, a 17 per cent. increase compared to 2017 and a record for the Company. Gold production was 72,798 ounces compared to 59,617 ounces in 2017, which was a 22 per cent. increase largely due to gold doré production from processing Ugur ore throughout the year. Silver production also increased to 210,184 ounces, an increase of 22 per cent. compared to 2017.

Copper production decreased in 2018 to 1,645 tonnes. The flotation plant was mostly on planned care and maintenance in the first half of the year due to limited feedstock as the agitation leaching plant was processing Ugur ore which does not contain copper. A new, dedicated jaw crusher for the flotation plant commenced operation in July 2018. As a result, copper production increased significantly in the second half of the year as this capital investment enabled the independent operation of the flotation plant processing copper rich ore. As well as allowing the independent operation of the agitation leaching and flotation plants, the new jaw crusher increases the overall flexibility of our processing plants.

Gedabek's operational performance was strengthened in the year by the recruitment of several highly experienced managers in key areas which included blasting, transportation logistics and ore handling and equipment maintenance. Many opportunities to improve working practices were actioned and these initiatives are all contributing to a more professional and efficient working environment. The Company also signed an off-take agreement in late 2018 for flotation concentrate with Trafigura PTE Ltd. on improved commercial terms.

The tragic collapse of the Brumadinho tailings dam in Brazil was unfortunately not an isolated incident in the last ten years. Safety is our number one priority and the Company's tailing dam has been constructed to the highest possible specification. The dam is constructed from hard rock and not tailings material, as is common in the industry, and the building and maintenance of the dam has been continuously supervised by one environmental and geotechnical consultancy. However, in light of the Brumadinho collapse, the Company has commissioned an inspection of the dam this summer by Knight Piésold, a leading environmental engineering company. Any actions highlighted by the inspection will be carried out immediately.

Financial results and dividend

Our financial performance in the year was exceptional and revenues increased by $18.6 million to $90.4 million. This improvement arose from increased gold doré production together with higher gold and copper prices. Revenues continued to be subject to an effective royalty of 12.75 per cent. in 2018. We anticipate this effective royalty rate will continue until at least 2023 and further details are in the financial review below. The all-in sustaining cost ("AISC") per ounce of gold produced decreased in the year to $541 from $604 in 2017. The Company's AISC has steadily reduced for the past five years and is considered to now be amongst the lowest in the industry.

The Company's balance sheet has been transformed in 2018 with increased cash flow. Cash from operations was $50.7 million and free cash flow was $28.9 million. The Company refinanced $13.5 million of its debt and repaid the remainder outstanding from internally generated funds during the year. At 7 per cent. fixed rate, the refinancing loan has a lower rate of interest than previous borrowings, has no covenants and is unsecured. The loan from the chief executive was repaid in full in March 2018 and I would like to take this opportunity to emphatically thank Reza for his confidence and commitment to the Company which has proven to be amply justified.

A key milestone for the Company was payment of a maiden dividend of US 3 cents per share in November 2018. In accordance with the Company's target of distributing approximately 25 per cent. of free cash flow to shareholders each year, I am delighted to announce a final dividend for the year ended 31 December 2018 of an additional US 4 cents per share. This makes a total dividend for 2018 of US 7 cents per share.

Mineral resources and geological exploration

The Company completed its goal of formalising mineral resource and ore reserves for its three mines at Gedabek by early 2019. In September 2018, an updated mineral resource and ore reserve estimate for the Gedabek open pit was published in accordance with the JORC code. The total mineral resource was around one million ounces of gold, which at this point in time has extended the life of mine of the Gedabek open pit by up to six years. In early 2019, a maiden mineral resource and ore reserve estimate for the Gadir underground mine was published in accordance with the JORC code which established an initial five-year life of mine.

In accordance with our commitment to be a long-term producer of precious metal and copper, a comprehensive three-year geological exploration programme commenced in the year. In the final quarter of 2018, a helicopter-borne electromagnetic survey was carried out over the entire Gedabek contract area which successfully identified many new targets for follow-up exploration work. This was the first such survey in Azerbaijan and was carried out with the assistance of the Azeri Government. Other on-going geological work has identified further copper and gold mineralisation beneath, and extending from, the Gedabek open pit that has the potential to further increase its life of mine.

We substantially increased our exploration efforts at Ordubad during 2018. Soviet era data indicate extensive mineralisation and the region is adjacent to significant copper deposits in neighbouring countries. We have identified several exciting targets all within a five kilometre radius. Extensive surface geological work was carried out in the year and core drilling has started. We were also pleased that a geological team from the Natural History Museum of London assisted our work as part of their "FAMOS" research programme. It is clear from its location and both the Soviet era and current work that Ordubad is a very promising region with widespread mineralisation.

We recently announced a new discovery within Gosha at the Asrikchay target area. This polymetallic discovery is exciting as it is the first indication of copper in the region. We have a track record of rapidly advancing discoveries as evidenced by Ugur, which progressed from discovery to production in just over a year, and we are confident that we can replicate this approach with any future discoveries.

Outlook

The success achieved in 2018 has placed Anglo Asian in an enviable position to move forward. Gedabek is now generating stable cash flow which provides funds for both investment and to pay dividends. The Company's solid balance sheet and excellent relationships with banks in Azerbaijan and elsewhere means loan finance can be easily obtained if required. Together, this means the Company has ample financial resources to seize any suitable opportunities that may arise.

The Company has over 1,000 square kilometers of land within its contract areas. As set out above and in the strategic report below, the Company has a comprehensive exploration programme underway to extensively explore this land for new deposits. This programme is starting to yield results with the identification of several major targets at Gedabek and Gosha. We regard Ordubad as an untapped value opportunity and work there is now being ramped up. The Company will also aggressively pursue any suitable opportunities outside Azerbaijan which it believes can be made commercially successful.

During 2018, Anglo Asian made a concerted effort to meet with many existing and potential investors including organised roadshows, investor presentations and conferences. Our reputation as an attractive investment opportunity was evidenced by the press coverage received in 2018 with articles published both in trade publications and mainstream national newspapers in the United Kingdom. As the Company develops and grows, we firmly intend to maintain this reputation and increase the profile of the Company. We also intend to increase the Company's social media presence.

We have set a production target of between 82,000 and 86,000 gold equivalent ounces for 2019, which is an increase from 2018. This includes up to 67,500 ounces of gold and up to 3,300 tonnes of copper. We are on track to achieve this production target and I look forward to updating shareholders with our progress in the coming months.

I would like to conclude by saying that Anglo Asian accomplished a tremendous amount in 2018. We plan to build on our now very solid foundations to develop your Company into a mid-tier gold, copper and silver producer. It is therefore with continued optimism that I look forward to 2019 and beyond.

Appreciation

I would like to take this opportunity to thank the employees of Anglo Asian, our partners, the Government of Azerbaijan and our advisors for their continued support as we deliver on our strategy of becoming a leading gold, copper and silver producer. Finally, I wish to sincerely thank our shareholders for their continued investment and support in Anglo Asian. I look forward to sharing the successes of 2019 with you.

Khosrow Zamani

Non-executive chairman

Dividend

A final dividend of US$0.04 per share will be paid gross in respect of the year ended 31 December 2018 to shareholders on 25 July 2019 that are on the shareholders record at the record date of 28 June 2019 subject to approval of the shareholders at the Company's Annual General Meeting on 20 June 2019. The shares will go ex-dividend on 27 June 2019. All dividends will be paid gross and in cash. A scrip dividend or any other dividend reinvestment plan will not be offered by the Company.

The dividend will be payable in pounds sterling. The dividend will be converted to pounds sterling using the average of the sterling closing mid-price using the exchange rate published by the Bank of England at 4pm each day from the 1 to 5 July 2019.

Corporate Governance

A statement of the Company's compliance with the ten principles of corporate governance contained within the Quoted Companies Alliance Corporate Governance Code ('QCA Code') will be included in the Company's annual report and accounts for 2018.

Market Abuse (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

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

 
 Reza Vaziri        Anglo Asian Mining plc       Tel: +994 12 596 3350 
 Bill Morgan        Anglo Asian Mining plc       Tel: +994 502 910 400 
                   ---------------------------  ---------------------- 
 Stephen Westhead   Anglo Asian Mining plc       Tel: +994 502 916 894 
                   ---------------------------  ---------------------- 
 Ewan Leggat        SP Angel Corporate Finance   Tel: +44 (0) 20 3470 
                     LLP                          0470 
                     Nominated Adviser and 
                     Broker 
                   ---------------------------  ---------------------- 
 Soltan Tagiev      SP Angel Corporate Finance   Tel + 44 (0) 20 3470 
                     LLP                          0470 
                   ---------------------------  ---------------------- 
 Isabel de Salis    St Brides Partners Ltd       Tel: +44 (0) 20 7236 
                                                  1177 
                   ---------------------------  ---------------------- 
 Gaby Jenner        St Brides Partners Ltd       Tel: +44 (0) 20 7236 
                                                  1177 
                   ---------------------------  ----------------------

Competent Person Statement

The information in the announcement that relates to exploration results, minerals resources and ore reserves is based on information compiled by Dr Stephen Westhead, who is a full time employee of Anglo Asian Mining with the position of Director of Geology & Mining, who is a Fellow of The Geological Society of London, a Chartered Geologist, Fellow of the Society of Economic Geologists, Member of The Institute of Materials, Minerals and Mining and a Member of the Institute of Directors.

Stephen Westhead has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Stephen Westhead consents to the inclusion in the announcement of the matters based on his information in the form and context in which it appears.

Stephen Westhead has sufficient experience, relevant to the style of mineralisation and type of deposit under consideration and to the activity that he is undertaking, to qualify as a "competent person" as defined by the AIM rules. Stephen Westhead has reviewed the resources and reserves included in this announcement.

The information in this announcement that relates to Exploration Targets, Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Dr Stephen Westhead, a Competent Person who is a Member or Fellow of a 'Recognised Professional Organisation' (RPO) included in a list that is posted on the ASXwebsite from time to time (Chartered Geologist and Fellow of the Geological Society and Member of the Institute of Material, Minerals and Mining). Dr. Stephen Westhead is a full-time employee of the Company.

Strategic Report

Principal activities

The principal activity of Anglo Asian Mining PLC (the "Company") is that of a holding company and a provider of support and management services to its main operating subsidiary R.V. Investment Group Services LLC. The Company, together with its subsidiaries (the "Group"), owns and operates gold, silver and copper producing properties in the Republic of Azerbaijan ("Azerbaijan"). It also explores for and develops other potential gold and copper deposits in Azerbaijan.

The Group has a 1,962 square kilometre portfolio of gold, silver and copper properties in western Azerbaijan, at various stages of the development cycle. The Group's primary operating site is Gedabek, which is the location of the Group's main gold, silver and copper open pit mine, the Ugur open pit mine and Gadir, an underground mine. The Group's processing facilities to produce gold doré and copper, silver and gold concentrates are also located at Gedabek. Gosha, the Group's second underground gold and silver mine, is located 50 kilometres away from Gedabek. Ordubad, the Group's early stage gold and copper exploration project is located in Nakhchivan, South West Azerbaijan.

Overview of 2018 and 2019 to date and 2019 production target

In 2018, the Group built upon the successful results of the wide-ranging strategic review carried out in 2017 to ensure long term sustainable production at Gedabek:

-- Mining was carried out throughout 2018 from the Ugur open pit which commenced operations in September 2017. 1.2 million tonnes of ore grading an average of 1.27 grammes of gold per tonne were mined from the Ugur open pit in 2018.

-- A second jaw crusher line was installed for the flotation plant which commenced operation in July 2018. This enabled the agitation leaching plant and the flotation plant to operate independently.

-- The Group continued to formalise all its resources and JORC mineral resources and ore reserves estimates were published for both the Gedabek open pit mine and the Gadir underground mine.

-- A three year geological exploration programme was commenced in 2018 which includes near mine, brownfield and greenfield exploration. As part of this programme, an airborne geophysical survey of the entire Gedabek contract area was carried out in quarter four 2018.

The Group has a production target for the year to 31 December 2019 of 65,000 ounces to 67,500 ounces of gold and 3,100 tonnes to 3,300 tonnes of copper. The total production target for the year to 31 December 2019 expressed as gold equivalent ounces ("GEOs") is between 82,000 GEOs and 86,000 GEOs, compared to total production for the year to 31 December 2018 of 83,736 GEOs.

Gedabek

Introduction

The Gedabek mining operation is located in a 300 square kilometre contract area in the Lesser Caucasus mountains in western Azerbaijan on the Tethyan Tectonic Belt, one of the world's most significant copper and gold-bearing geological structures. Gedabek is the location of the Group's open pits and underground mines and its processing facilities.

Gold was first poured from ore mined from the Gedabek open pit and processed by heap leaching in May 2009, with production fully commencing in September 2009. Copper and precious metal concentrate production began in 2010 when the Sulphidisation, Acidification, Recycling and Thickening (SART) plant was commissioned. The Group's agitation leaching plant commenced production in 2013 and its flotation plant in 2015. Underground extraction of ore at Gedabek started in June 2015 when the Gadir mine was opened. During 2017, the Group brought Ugur, a newly discovered gold deposit three kilometres north-west of its processing facilities, into production as an open pit mine. In July 2018, a second crusher line was added to the flotation plant to enable independent operation and processing by the agitation leaching plant and the flotation plant.

Mineral resources and ore reserves

Key to the future development of the Gedabek site is our knowledge of the mineral resources and ore reserves within our contract areas. The Group's most recent mineral resources and ore reserves estimates for the Gedabek open pit were published as of 18 September 2018. Full JORC (2012) reporting with unchanged mineral resources and ore reserves estimates was subsequently released on 14 March 2019. The mineral resource showed a total mineral resource (at a cut-off grade of 0.3 grammes per tonne of gold) of approximately 986 thousand ounces of gold, 63.4 thousand tonnes of copper and 8,172 thousand ounces of silver. The economically mineable ore reserves are over 343,000 ounces of gold and more than 36,000 tonnes of copper, which has extended the current life of the Gedabek open pit until 2024. Table 1 shows the Gedabek open pit mineral resources estimate at 14 March 2019 and Table 2 shows the Gedabek open pit ore reserves estimate at 14 March 2019.

Table 1 - Gedabek open pit mineral resources estimate at 14 March 2019

 
 Gold (+ Copper) Mineral Resources (cut-off grade >= 0.3 g/t gold) 
  Mineral Resources    Tonnage   Gold Grade   Copper Grade   Silver   Gold    Copper   Silver 
                                                              Grade 
                      --------  -----------  -------------  -------  ------  -------  ------- 
                        (Mt)       (g/t)          (%)        (g/t)    (koz)    (kt)    (koz) 
                      --------  -----------  -------------  -------  ------  -------  ------- 
      Measured          18.0        0.9           0.2         8.3      532     38.0    4,800 
                      --------  -----------  -------------  -------  ------  -------  ------- 
      Indicated         11.1        0.7           0.1         5.6      264     15.7    2,011 
                      --------  -----------  -------------  -------  ------  -------  ------- 
 Measured+Indicated     29.1        0.9           0.2         7.3      796     53.7    6,811 
                      --------  -----------  -------------  -------  ------  -------  ------- 
      Inferred           8.5        0.7           0.1         5.0      189     9.7     1,361 
                      --------  -----------  -------------  -------  ------  -------  ------- 
        Total           37.6        0.8           0.2         6.8      986     63.4    8,172 
                      --------  -----------  -------------  -------  ------  -------  ------- 
 Copper Mineral Resource (Additional to Gold Mineral Resource) (cut-off 
  grade copper >=0.3% and gold <0.3 g/t) 
  Mineral Resources    Tonnage   Gold Grade   Copper Grade   Silver   Gold    Copper   Silver 
                                                              Grade 
                      --------  -----------  -------------  -------  ------  -------  ------- 
                        (Mt)       (g/t)          (%)        (g/t)    (koz)    (kt)    (koz) 
                      --------  -----------  -------------  -------  ------  -------  ------- 
      Measured           5.3        0.1           0.5         2.1      21      26.3     356 
                      --------  -----------  -------------  -------  ------  -------  ------- 
      Indicated          0.9        0.1           0.5         1.6       3      4.4       48 
                      --------  -----------  -------------  -------  ------  -------  ------- 
 Measured+Indicated      6.2        0.1           0.5         2.0      24      30.7     404 
                      --------  -----------  -------------  -------  ------  -------  ------- 
      Inferred           0.5        0.1           0.4         1.5       1      1.9       23 
                      --------  -----------  -------------  -------  ------  -------  ------- 
        Total            6.7        0.1           0.5         2.0      25      32.6     426 
                      --------  -----------  -------------  -------  ------  -------  -------