Ariana Resources PLC FINAL RESULTS FOR THE YEAR 31 DECEMBER 2019 (2060U)

Share Name	Share Symbol	Market	Type	Share ISIN	Share Description
Ariana Resources Plc	LSE:AAU	London	Ordinary Share	GB00B085SD50	ORD 0.1P

	Price Change	% Change	Share Price	Bid Price	Offer Price	High Price	Low Price	Open Price	Shares Traded	Last Trade
	0.00	0.00%	2.825	2.75	2.90	2.825	2.825	2.825	5,396	08:00:00

Industry Sector	Turnover	Profit	EPS - Basic	PE Ratio	Market Cap
Gold Ores	0	4.03M	0.0035	8.06	32.33M

Ariana Resources (LSE:AAU)
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RNS Number : 2060U

Ariana Resources PLC

28 July 2020

AIM: AAU

FINAL AUDITED RESULTS FOR THE YEAR 31 DECEMBER 2019

NOTICE OF ANNUAL GENERAL MEETING ("AGM")

Ariana Resources plc ("Ariana" or "the Company"), the AIM-listed exploration and development company operating in Europe, announces its final audited results for the year ended 31 December 2019.

The Report and Accounts will be posted to shareholders as applicable, and are available on the Company's website www.arianaresources.com , together with the Notice of AGM, and extracts are set out below.

The AGM will be held at 2nd Floor, Regis House, 45 King William Street, London, EC4R 9AN on 28 August 2020 at 12.00 noon.

Chairman's Statement

Fellow shareholders,

I am pleased to report on the Company's audited results for the year ended 31 December 2019. This has been another outstanding year for Ariana, which has delivered production and profitability well above its plans. The Kiziltepe Mine, which is held within Zenit Madencilik San. ve Tic. A.S. (a 50:50 JV with Proccea Construction Co.), achieved gold production of 27,985 ounces, 12% above production guidance at an average cash cost of just US$507/oz. This, once again, places the Kiziltepe Mine comfortably amongst the lowest-cost gold producers in the world. The profitability from our Turkish operations has enabled Ariana to report a significant improved earnings per share of 0.65 pence and a price earnings ratio of 6, which is a respectable position in the junior gold mining sector.

Production at the Kiziltepe Mine has remained well above the planned feasibility rates since start-up in 2017, resulting in accelerated depletion of the Arzu South open-pit. Post-period end, this enabled timely completion of repayments against the US$33 million capital expenditure loan, in addition to the JV partners receiving a return of capital invested and their respective share of profits. This allowed for the payment of a maiden dividend of GBP1.6 million from our Turkish operating subsidiary to Ariana Resources plc, representing the first profit cash-flow in the Company's history. This places Ariana in a particularly strong position in a time of general uncertainty. We are, therefore, well-placed to deploy our resources to the ongoing development of our existing portfolio of wholly-owned projects in Turkey, particularly Salinbas, as well as our new earn-in on Cyprus-focused Venus Minerals.

At Kiziltepe, resource extension work was completed earlier this year, which is currently targeting an extension of the life of mine to a total of 10 years. In addition, further drilling and resource work is currently being undertaken at Kiziltepe to test down-dip extensions of the Arzu South vein with a view to assessing possible underground or additional open-pit potential. Similar resource extension and other project development work has been completed at Tavsan with a view to bringing this project into production from 2022. Salinbas has also seen extensive work during the year, achieving proof of concept on both the origin and potential extent of this very large mineral system. The area has attracted significant international interest following the spectacular recent drilling results from the nearby Hot Maden project, validating the perceptive decision by Ariana to continue investing in this region.

The new year started positively for the Company, with management able to report excellent first quarter production results and guidance for the year well above the feasibility plan. This sound start to the year has, however, been overshadowed by the scale and significance of the COVID-19 pandemic sweeping across the world, touching all of our lives. Having seen, early on in my mining career in Namibia, some of the gruesome consequences of the 1918 Spanish Flu epidemic, I am well aware of the serious impact this could have on both our personal and business lives. The Ariana and Zenit management teams have put in place all the recommended procedures for the well-being and safety of our employees and contractors at both exploration and mining sites, allowing operations to continue unhindered. I must pay tribute to all the people working for Ariana and those at the Kiziltepe Mine for their prompt and no-nonsense approach in adjusting to the required precautionary steps and then just getting on with life. By facing these challenges head on and adopting new working practices we have been able to operate much as we did before. Thus far, we have not had any incidence of COVID-19 in any of our spheres of operations.

The business of mineral exploration is well versed in the process of defining uncertainty and risk and is also adept at managing these factors, evidenced by the way in which both current exploration and mining operations have adapted to this current climate of uncertainty. Our industry has been a long-term adopter of remote work and distributed working teams, and for a while it has been the norm for our work to be carried out in the field on one continent and be collated and analysed on another. Despite international travel restrictions, it is a great credit to our dedicated team that they have been able to carry on with normal work commitments, enabling us to meet all our ongoing work and reporting requirements within a reasonable timeframe. We will continue to review ways we might need to adapt in response to this worldwide crisis in order to mitigate risks and to continue working effectively.

The last financial year has been particularly good for gold but not quite so for silver. As the bulk of Ariana's production revenue (>85%) comes from gold, the lacklustre silver price in response to market sentiment has not had a material impact on overall revenue. Interestingly, the gold-silver ratio has for most of modern history been around 1 to 50, while the current ratio is closer 1 to 100; a marked departure from the norm, which is an indication that the silver price is overdue for a positive correction. The diverse industrial usage of silver is an additional driver for the market price firming, including the requirement for silver in medical and anti-viral/microbial settings. Copper, while not yet part of our current revenue stream, but part of our exploration portfolio, is also likely to see a price improvement following a post-pandemic price correction. It already has a broad base of demand in the evolving electrification of vehicles and other low-carbon technological developments, but is now being mooted as having anti-viral/microbial uses where it could be applied to frequently touched surfaces. This may well become an industry standard following the experience of our current crisis.

Meanwhile, the long-term trend for gold has been upwards for much of the last two decades and there is little to detract from this trajectory. Increasing levels of global uncertainty, marked differences between the paper and physical prices of precious metals, physical accumulation by hoarders, central banks and exchange-traded funds ('ETFs'), and the expansive nature of government spending will all undoubtedly result in hard currency inflation, all of which support the long-term price of our primary product, gold. Gold is, after all, a currency without a government. Ariana is well placed, both in terms of its balance sheet and its project portfolio of the correct metals, to prosper through the coming years.

With this long-term perspective in mind across our commodities of prime interest, the Company has been exceptionally busy on the exploration and development front during the past year. We have made significant progress across our pipeline of strategic projects in Turkey and for our new earn-in focused on Cyprus. For the latter, we are not alone in recognising the potential of this ancient source of copper, which also appears to host significant and previously unrecognised gold potential. Consequently, Ariana is very well positioned to deploy existing resources and attract other industry partners to contribute to the development of an attractive portfolio of prospective development assets. With the shake-up in the resources sector, it is probable that we will see other industry sectors, such as energy, starting to look at the minerals sector to progress their long-term green development objectives, given that the decarbonisation agenda requires the identification and consumption of substantial mineral resources.

Exploration like all other frontier industries is only as successful as its philosophy will allow it to be. It is on reflection of this that I think of how the legendary geologist J David Lowell, the world's best mine finder, expressed himself. He was noted for saying he was good at being wrong and was never afraid of that. Drilling out a 'duster' was nothing to be afraid of, as the mistake would have been not to try. You had to ignore existing dogma in order to have a chance of success. Above all else he was successful at finding some of the best mines in the world today, over one of the longest careers in our industry. It is particularly poignant that such a legendary man should pass at the ripe old age of 92 in the very year that we need such courage and inspiration. I think that we should all take a leaf out of his book as we step out into this changed new world to find the materials we need to build our future.

Like all companies, Ariana exists for the benefit of its stakeholders and in particular its shareholders, who must be rewarded through increasing market capitalisation and a potential dividend stream. Your Board remains focused on these outcomes and we are particularly pleased to see that the market price of Ariana shares is substantially higher than it was this time last year. The Board would particularly like to thank its shareholders for the close and personal interest you have shown in the Company over the last few years. We appreciate your support and we look forward to meeting you on future occasions. It seems unlikely we will be able to hold face-to-face meetings or the AGM as we have done before, and we are instead looking at participating in virtual events accordingly. Either way, we would like to ask you all to exercise your proxy votes well in advance of the AGM date, as it is unlikely that we will be able to accommodate online voting at this stage. We look forward to the day when we are all able to meet in the same room as before.

Last but not least I would like to thank our employees, professional advisors and our joint venture partners for their dedication and support in helping Ariana achieve its ongoing success.

Michael de Villiers

Chairman

Financial Review

The Group's profit after tax grew by more than threefold in the year under review rising to GBP6.9m (2018: GBP2.2m) primarily due to the excellent operational performance of our Joint Venture investment in Zenit. This company's turnover grew by 21% reflecting the favourable movement in the gold price and increased production year on year, with their profits after tax rising from GBP7.4m to GBP15.8m, our 50% share of which amounted to GBP7.9m (2018: GBP3.7m). The year's performance also benefited from the disposal of our Kiziltepe property owning subsidiary, Camyol, being sold to Zenit at a book profit of GBP0.6m. The Directors are confident that Zenit will continue to finance the Group's operations for the foreseeable future through dividends declared and paid over the course of the year.

Aside from the performance of Zenit, the results are generally consistent with the prior year, with administrative costs slightly improved at GBP1.2m, and net exploration costs written off also broadly consistent amounting to GBP0.4m (2018: GBP0.3m). The effect of the declining value of the Turkish Lira on the underlying value of our subsidiaries in Turkey is GBP0.4m better than the previous year, but still a significant cost reflected though Other Comprehensive Income at GBP1.8m. Nonetheless, our earnings per share has shown a very healthy increase from 0.21 pence per share in 2018 to 0.65 pence per share in 2019.

Our net assets as recorded in the Statement of Financial Position have increased by GBP5.3m primarily on account of our share of the net assets of Zenit increasing by GBP3.8m. The Company also capitalised a further GBP0.5m of expenditure within intangible exploration assets, being our Turkish exploration work, as well as incurring a further GBP0.5m of expenditure included within debtors on our Cypriot project, ahead of it being converted into shares under our earn in agreement with Venus Minerals Limited in May 2020.

Overall this was a very satisfactory year for the Group from a financial perspective, and we look forward to building on these foundations to enhance our performance for our shareholders going forward.

Outlook

During 2019, Ariana consolidated its position as a sustainable mineral exploration and development enterprise. This has established a solid platform on which Ariana can develop its strategy, which is all the more important given the current global challenges.

We have started 2020 facing several new and unexpected circumstances. The developing trade-war between the USA and China, coupled with decadal lows in the oil price, have now been compounded by the COVID-19 virus pandemic originating in China. At the time of writing, the pandemic has sadly had a significant cost in human lives and is creating a profound global economic shock in its wake. Factories in China, which are attempting to gear-up following a reduction in output in the early phase of the pandemic, are now producing for a market that no longer exists; the rest of the world economy is in the process of severe contraction. As the consumer-producer dynamic becomes strained, supply lines are becoming choked. Meanwhile, to try and save the day, governments are scrambling to apply a band-aid to systemic problems with an obscenely leveraged and derivatives driven global financial system based on the US dollar.

What this will mean for commodity markets and producers is, as yet, unknown. However, as a gold producer, we are expecting that demand for the ultimate form of money will continue unabated. Unlike paper money, gold does not represent debt (a consequence of fractional-reserve banking), it presents no counterparty risk and acts as the only real hedge against inflation in the long term. It is no surprise that central banks around the world, particularly those which wish to maintain some resilience and independence outside of the US dollar denominated global order (including Turkey), have been buying gold in ever increasing amounts during recent years. In fact, central bank gold purchases in 2018 and 2019 were at 50-year highs as part of this effort to spread risks away from the US dollar, with some 650 tons of gold added to central bank reserves in 2019. Consequently, we are in the fortunate position of producing the only commodity which represents the ultimate final form of payment for the international banking system. Whatever the headwinds, this financial demand will remain.

Operationally we are well-positioned to take advantage of these unusual circumstances. Despite the current crisis, we have been fortunate in the commitment of our staff in the UK and Turkey at a time when families and communities have been under great strain. We have also seen a very supportive approach to our business at both local and national government levels in Turkey. Our JV operation at Kiziltepe is continuing to produce gold and silver at high margins due to the low-cost operating environment. This has resulted in sufficient cashflow to satisfy our operational requirements and has created opportunities to diversify and make new investments, such as Venus Minerals. Our portfolio of assets and investments represents projects at every stage of a self-sustaining investment cycle, which we have spent the past 15 years developing methodically as part of our long-term strategy. In addition to an operating mine, this includes near-term development assets, a major large-scale exploration asset, and is supported by both current and nascent investments.

We are a unique exploration and development company, with a strategy geared toward longevity, sustainability and the growth of value in the long-term, which is ultimately underpinned and driven by our exploration success. At the beginning of a new and uncertain decade, we look forward to the future and remain resolved on delivering upon the immutable certainty of pure gold.

Dr Kerim Sener

Managing Director

Consolidated Statement of Comprehensive Income