REG - Anglo Asian Mining - 2025 Full Year Results
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RNS Number : 5568F Anglo Asian Mining PLC 26 May 2026
26 May 2026
2025 Full Year Results
A transformational year with two new mines entering production
2026 guidance maintained
Dividend reinstated
Anglo Asian Mining PLC ("Anglo Asian", the "Company" or the "Group"), the AIM
listed gold, copper and silver producer focused in Azerbaijan, announces its
final audited results for the year ended 31 December 2025 ("FY 2025").
Operational overview
· Two new mines brought into production during 2025, in accordance with the
Company's strategy to become a mid-tier, multi-asset producer
o Gilar, a new underground copper and gold mine, at Gedabek
Ø Entered production in May and leverages existing infrastructure
Ø Producing high grade ore
o Demirli, a large brownfield copper project in Karabakh
Ø Entered production in July
Ø Performing in accordance with our expectations
Ø On track to deliver full year production within our 2026 guidance.
· Total production of 25,061 ounces of gold (2024: 15,073 ounces) and 7,915
tonnes of copper (2024: 377 tonnes)
· Gold bullion sales of 19,631 ounces (2024: 15,251 ounces) completed at an
average of $3,441 per ounce (2024: $2,432 per ounce)
· Copper concentrate shipments totalling 29,695 dry metric tonnes ("dmt") with a
sales value of $54.5 million (excluding the Government of Azerbaijan
production share) (2024: 1,519 dmt with a sales value of $2.5 million)
· Considerable progress made in developing the Xarxar and Garadag copper
projects, with consultants set to be appointed to undertake the feasibility
studies
· Completion of the final raise of the Gedabek tailings dam wall nearing
completion
which will provide a further 2 to 3 years of storage capacity
· Recently reported Q1 2026 production of 3,711 tonnes of copper and 6,062
ounces of gold in accordance with the Company's expectations
Financial overview
· Revenues increased to $122.8 million (2024: $39.6 million)
o Full year of production at Gedabek
o Start of production from the Gilar and Demirli mines providing a significant
increase in production
· Group returned to profitability, delivering profit before taxation of $25.8
million (2024: loss of $21.3 million)
o Increased revenues due to increased production
o Favourable commodity prices
· Positive net cash position of $2.6 million on 31 December 2025 (2024: net debt
of $14.7 million)
o Net cash flow from operations of $46.7 million (2024: $8.6 million)
· Final dividend in respect of the year ended 31 December 2025 of 4 US cents per
share
o Reflects the commitment of the directors to delivering attractive
shareholder returns
o To be paid on 27 August 2026
Outlook
2026 is set to be another milestone year for Anglo Asian Mining, being the
first full year of production from Gilar and Demirli, and the first year in
which copper is expected to be its principal output. Both mines are delivering
in accordance with expectations, with Demirli continuing to ramp up to full
production.
The Group is on track to deliver its 2026 guidance(*), and remains confident
in the execution of its medium-term growth strategy of becoming a
copper-focused, multi-asset, mid-tier producer.
Reza Vaziri, Chief Executive Officer of Anglo Asian, commented:
"2025 was a historic year for Anglo Asian, as we achieved the first milestone
of our growth strategy, becoming a multi-asset producer. In May, we brought
Gilar into production, which is a high-grade underground copper and gold mine.
Demirli entered production in July, and is a significant copper mine, the
first of three that will enable us to deliver the remaining targets of our
growth strategy.
"As a result of our strong operational and financial performance, we are
delighted to reinstate the dividend, representing our commitment to deliver
attractive value for our shareholders.
"During 2026, we expect to become primarily a copper-producing company, which
is the second target of our strategy. We will also continue to develop the
Xarxar and Garadag copper deposits and look forward to bringing these into
production in the years ahead. We are confident that Anglo Asian has an
exciting future, with a strong operational track record, attractive commodity
exposure and meaningful growth ahead."
(*)The Company expects annual production in 2026 of 20,000 to 25,000 tonnes of
copper at an AISC of $6,800 to $7,800 per tonne and 28,000 to 33,000 ounces of
gold at an AISC of $1,500 to $1,800 per ounce.
Note that all references to "$" are to United States dollars, "CAN$" are to
Canadian dollars, "£" and "pence" are to the United Kingdom pound sterling
and AZN are to the Azerbaijan New Manat.
Market Abuse Regulation (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, which was incorporated into UK law by the European
Union (Withdrawal) Act 2018, until the release of this announcement.
For further information please contact:
Anglo Asian Mining plc
Reza Vaziri, Chief Executive Officer Tel: +994 12 596 3350
Bill Morgan, Chief Financial Officer Tel: +994 502 910 400
Stephen Westhead, Vice President Tel: +994 502 916 894
Amir Vaziri, Chief Business Development Officer Tel: +1 (301) 332 9938
Peel Hunt LLP (Broker) Tel: +44 (0) 20 7418 8900
Ross Allister
David McKeown
Emily Bhasin
SP Angel Corporate Finance LLP (Nominated Adviser) Tel: +44 (0) 20 3470 0470
Ewan Leggat
Adam Cowl
Hudson Sandler (Financial PR) aaz@hudsonsandler.com (mailto:aaz@hudsonsandler.com)
Charlie Jack Tel: +44 (0) 20 7796 4133
Harry Griffiths
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 the Group with the
position of Vice-President, who is a Fellow of The Geological Society of
London, a Chartered Geologist, Fellow of the Society of Economic Geologists,
Fellow 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 mineral resources included in
this announcement. For the avoidance of doubt, resources and economically
extractable copper figures in this notification are not based on a Standard
for the reporting of reserves and resources, such as JORC, as defined in the
AIM Rules for Companies.
Dividend for 2025
A final dividend of US$0.04 per ordinary share will be paid gross in respect
of the year ended 31 December 2025 to shareholders on 27 August 2026 that are
on the shareholders record at the record date of 7 August 2026, subject to
approval of the shareholders at the Company's Annual General Meeting for 2026.
The shares will go ex-dividend on 6 August 2026. 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 27 to 31 July 2026.
Annual General Meeting for 2026
The Annual General Meeting of the Company for 2026 will be held on 24 June
2026 at 11:00 am at The Washington Mayfair Hotel, 5 Curzon Street, Mayfair,
London W1J 5HE, United Kingdom. All shareholders are warmly invited to attend.
Corporate governance and Section 172 (1) Statement
A statement of the Company's compliance with the ten principles of corporate
governance in the Quoted Companies Alliance Corporate Governance (2023) Code
('QCA Code') will be included in the Company's annual report and accounts for
2025.
The Company's Section 172 (1) Statement will be included in the Company's
annual report and accounts for 2025.
Sustainability at Anglo Asian Mining
A report on sustainability, including a detailed report on health and
safety, will be included in the Company's annual report and accounts for
2025.
Chairman's statement
I am delighted to present Anglo Asian Mining's full year results for 2025, a
significant milestone for your Company, in our transition to become a
mid-tier, copper-focused producer.
We successfully opened two mines during 2025. Gilar, an underground mine
located within the Gedabek contract area, entered production in May. Gilar
benefits from the extensive and mature infrastructure at Gedabek. Demirli is a
large open pit copper mine and flotation processing plant in Karabakh, which
began production in July, after extensive refurbishment of the plant and
associated infrastructure. Demirli is a cornerstone asset in our medium-term
growth strategy. Bringing two new mines successfully into production in one
year was an ambitious undertaking, and I wish to thank everybody who helped
deliver this significant achievement.
Gilar and Demirli enabled us to significantly increase production during 2025,
and we produced 25,061 ounces of gold and 7,915 tonnes of copper. This
increase in production, combined with strong commodity prices, produced a
financial turnaround for the Group. The Group returned to profitability after
two years of losses, reporting revenues of $123 million and a profit before
tax of $26 million. The Group also generated cash from operations of $47
million.
The Board is considering a future dividend policy following the Group's return
to profitability and the positive outlook for the business. The policy will
seek to provide a consistent dividend, whilst also allowing for the required
investment in the business to support our ambitious growth plans. We will
advise shareholders of the proposed policy in due course. Following the strong
performance in 2025, the Board has approved a 4 US cents final dividend for
the year ended 31 December 2025 which will be payable on 27 August 2026. The
Board plans to pay both an interim and final dividend in respect of the year
ending 31 December 2026.
Our ongoing efforts to meet and exceed sustainability best practice continues,
and we were delighted to receive our inaugural sustainability rating from
Digbee Ltd, who awarded us an overall BB rating. The rating reflects our
commitment to operating responsibly and sustainably. We are committed to
improving this rating.
Our safety record improved during 2025 due to better working conditions,
improved safety practices and broader monitoring. There were only five lost
time injuries, compared to seven in 2024, despite a significant increase in
manhours worked. Our lost time injury frequency rate accordingly decreased to
2.44 compared to 4.57 in 2024. I was especially pleased that Demirli completed
its inaugural year with zero accidents.
The Group continues to adhere to best practice corporate governance and
implemented the revised QCA Corporate Governance (2023) Code in the year. The
revised code recommends the Company's remuneration policy and report are
approved by shareholders on an advisory basis. Accordingly, the appropriate
resolutions will be tabled to shareholders at our forthcoming annual general
meeting, details of which are given above. We encourage all shareholders to
attend and look forward to meeting as many of you as possible.
The Company has developed considerable operational momentum and is on track to
deliver on its medium-term growth strategy, with 2026 set to be another year
of growth. We look forward to continuing to update our investors of our
progress. I would also like to extend my gratitude to all Anglo Asian Mining
employees and partners and the Government of Azerbaijan for their continued
support.
Khosrow Zamani
Non-executive chairman
26 May 2026
President and chief executive's review
I am very pleased to report Anglo Asian Mining's full year results for 2025, a
year in which we delivered strongly against our operational and strategic
objectives. The Group demonstrated clear progress in its transition to a
mid-tier, copper-focused producer and met an important strategic growth target
of becoming a multi-asset producer.
The Group successfully brought two new mines into production in 2025. Gilar,
an underground mine at Gedabek, commenced production in May. Demirli, a large
open pit copper mine with existing processing facilities and infrastructure,
entered production in July. To bring these two predominantly copper mines into
operation supports our strategic objective of copper becoming the majority of
our production.
Gedabek was fully restarted in late 2024, and since then has operated without
any significant issues, increasing production substantially year on year.
Gilar and Demirli have also made important contributions to our copper
production. These positive outcomes all significantly increased production in
2025 and, supported by favourable metal prices, returned the Group to
profitability.
Operational review
The Group produced 25,061 ounces of gold and 7,915 tonnes of copper in 2025 as
a result of a full year of production at Gedabek, and contributions from Gilar
and Demirli. 4,787 tonnes of copper were produced at Gedabek and 3,128
tonnes at Demirli.
Gedabek had a full year of production following the restart of its flotation
and agitation leaching plants in late 2024. Throughout 2025, the plants
operated in line with our expectations. We continued to optimise the
processing facilities with initiatives such as replacing the flotation plant's
filter presses with larger capacity models to process Gilar ore. We also
started an upgrade of the flotation plant with the addition of nine Imhoflot
pneumatic flotation cells. This upgrade is now substantially complete.
Gilar commenced production in May and has successfully ramped up production
since it opened. Mining rates have steadily increased toward our targeted
rate, with excellent ore grades in line with expectations.
The Group entered into a lease with AzerGold Closed Joint Stock Company for
the use of the Demirli flotation plant and associated infrastructure and
mining equipment in the year. The lease is for three years, which can be
extended, and the Group can give notice at any time if the plant ceases to be
the main processing plant. The annual base rent is $24 million per annum ($2
million per month) which is variable under certain circumstances. These
circumstances are fully explained in the financial review below. The Group's
usual production sharing arrangements will apply to Demirli and the rent is
included in our recoverable costs.
Demirli entered production in June. This is a remarkable achievement given
that we only gained access to the property in November 2024. During 2025, the
existing infrastructure was substantially upgraded and refurbished to commence
production. Unfortunately, failure of the gear shaft of the plant's ball mill
reduced production in the year and quarter one 2026. However, it has now been
replaced, and both mills are operating satisfactorily. With its six million
tonne per annum capacity flotation plant, Demirli is well placed to deliver
significant copper production.
We established logistic centres for Gedabek and Demirli in the year for the
sale of copper concentrate. They are located close to their respective mine
sites, and the main road from Baku to Georgia, and have greatly expedited our
copper concentrate sales.
The final raise of the tailings dam wall at Gedabek will be finished mid-year.
This will provide enough capacity for the next two to three years. We have
begun the process, together with the Government of Azerbaijan, to build the
second Gedabek tailings dam. Various technical studies of the Demirli tailings
dam were carried out, including inspections by local and international
consultancies. These confirmed that the current tailings dam wall is safe for
current operations. However, we are taking measures to further strengthen the
dam including buttressing its wall.
We continue to make excellent progress with our portfolio of assets under
development. We pursued our studies of the historical data and drill core of
Garadag and Xarxar in 2025. We have started the process of appointing an
external consultant to prepare feasibility studies for both projects. These
are substantial assets which will drive the growth of the Group. Xarxar will
be the first of the assets to enter production and is scheduled to commence
production in 2027 to 2028.
We continued to invest in infrastructure across our operations, including
tailings management facilities and site improvements. These support increased
production and ensure we meet or exceed international best practice standards.
Financial performance
The strong increase in production during the year, supported by favourable
copper and gold prices, resulted in a major turnaround in our financial
performance in 2025. The Group returned to profitability after two years of
losses.
Revenues increased significantly year on year to $123 million, while our
profit before tax was $26 million. The Group generated cash from operations of
$47 million. At year end, we had net cash of $2.6 million, reflecting our
strong cash generation in the year. The Group did not hedge any sales of its
production in the year.
The Group will not report an All-In Sustaining Cost ("AISC") of gold or copper
produced for 2025. Given that both Gilar and Demirli commenced production in
mid-2025, we do not believe the costs would be meaningful in 2025. The Group
will report AISC for copper and gold in 2026, and guidance has already been
given for these costs.
Revenues from production at Gedabek and Demirli throughout 2025 were subject
to an effective royalty rate of 12.75 per cent. in accordance with our
production sharing agreement with the Government of Azerbaijan. We anticipate
that this same effective royalty rate will continue to apply, to at least the
end of 2026, for Demirli. However, we expect the effective royalty rate to
rise to around 18 per cent. for Gedabek by the end of 2026.
Commitment to global standards and sustainability
In June, we were pleased to be awarded a BB rating from Digbee, the ESG rating
company, which is the Group's first-ever sustainability rating. This shows the
progress made against our sustainability goals and our focus on always
operating responsibly. More importantly, it provides a solid foundation from
which we will continue to develop our approach to sustainability and
strengthen our ESG practices to improve the rating.
As one of the largest employers in Azerbaijan, with approximately 1,400
employees, we remain committed to delivering value to local communities
through employment, community initiatives and environmental programmes. Our
outreach activities, including medical support, food aid and environmental
initiatives such as tree planting, have continued throughout the year.
We continued our work towards full alignment with the Global Industry Standard
on Tailings Management ('GISTM'), aiming to achieve full compliance by the end
of 2026. In parallel, we have enhanced our internal policies across health and
safety, ethics, and environmental management, ensuring alignment with
international best-practice standards.
Dividend
The Board has approved a 4 US cents final dividend for the year ended 31
December 2025 as set out in the Chairman's statement.
Annual general meeting ("AGM") for 2026
We encourage shareholders to attend our AGM for 2026, details of which are set
out above. This year, two additional non-binding resolutions will be presented
to shareholders to approve the directors' remuneration policy and the
directors' remuneration. The directors welcome all shareholders to attend and
look forward to meeting as many of you as possible. At the previous two AGMs,
we gave shareholders a detailed presentation about the Company. We believe
these presentations were well received and a further such presentation will be
made at the AGM for 2026.
Rectification of technical issues regarding distributable reserves
Following issue of a shareholder circular, a general meeting of the Company
was held on 22 October 2025, where the shareholders passed a resolution to
rectify the technical issues regarding distributable reserves. Deeds of
release were then signed to give legal force to the rectification. The
directors will obtain appropriate external legal advice, whenever further
dividends are paid, to avoid any such issues in the future.
Appointment of Peel Hunt LLC as brokers to the Company
We were very pleased to announce that in early 2026, Peel Hunt LLC were
appointed as new brokers for the Company. SP Angel Corporate Finance LLP will
remain as the Company's nominated adviser ('NOMAD').
Looking ahead
The progress made in 2025 marks a significant step forward in Anglo Asian's
evolution towards becoming a mid-tier producer.
We are pleased to have issued 2026 guidance of 20,000 to 25,000 tonnes of
copper production, 28,000 to 33,000 ounces of gold, and 170,000 to 210,000
ounces of silver, reflecting our continued growth and the first full year of
production at Gilar and Demirli. We also disclosed our first-ever Group cost
guidance, with 2026 AISC of $1,500 to $1,800 per ounce of gold and $6,800 to
$7,800 per tonne of copper.
I would like to thank all our employees for their dedication and hard work
during the year, with their commitment being instrumental in delivering such
strong progress and positioning Anglo Asian for future success.
With Gedabek operating at full capacity, Gilar and Demirli now in production
and an exciting portfolio of future projects in development, we are confident
that the future is bright for Anglo Asian.
Reza Vaziri
President and chief executive
26 May 2026
Strategic report
Principal activities
Anglo Asian Mining PLC (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,
gold and copper deposits in Azerbaijan.
The Group has a substantial portfolio of assets that lay the foundation for
future growth of the business. Gilar, Zafar, Xarxar and Garadag all host
significant ore deposits. At 1 January 2026, they contain total JORC mineral
resources (measured, indicated and inferred) of over one million tonnes of
copper and 344,000 ounces of gold. Demirli also hosts a significant non-JORC
copper resource.
Production Sharing Agreement with the Government of Azerbaijan
The Group's mining concessions ("Contract Areas") in Azerbaijan are held under
a Production Sharing Agreement ("PSA") with the Government of Azerbaijan dated
20 August 1997. Amendments to the PSA which granted the Group additional
Contract Areas, were passed into law in Azerbaijan on 5 July 2022.
A further amendment was made to the PSA which replaced the local party to the
PSA, the Ministry of Ecology and Natural Resources, with AzerGold Closed Joint
Stock Company ("AzerGold CJSC"). Minor amendments were also made in respect of
the use of facilities for the Kyzlbulag, Demirli and Vejnaly Contract Areas.
These amendments were passed into law in Azerbaijan on 21 June 2024.
Contract Areas in Azerbaijan
The Group has eight Contract Areas covering a total of 2,544 square kilometres
in western Azerbaijan:
• Gedabek. The location of one of the Group's open pit mines and Gilar, a
major new underground mine. Gilar extracted its first ore in March 2025 and
started production in May 2025. The Gedabek and Gadir underground mines were
both shut in 2025. The Zafar deposit is also situated at Gedabek but
development of the mine was stopped in mid-2023. The Group has leaching and
flotation processing facilities located at Gedabek.
• Demirli. The location of a copper and molybdenum open pit mine and a
flotation processing plant. The Demirli Contract Area is in Karabakh and
adjacent to the Kyzlbulag Contract Area which it extends to the northeast. The
Group commenced production from the open pit mine and flotation plant in July
2025.
• Xarxar. Hosts the Xarxar copper deposit. It is located adjacent to the
Gedabek and Garadag Contract Areas.
• Garadag. Hosts the large Garadag copper deposit and is located to the
north of Gedabek and Xarxar.
• Gosha. Located approximately 50 kilometres from Gedabek and hosts a
narrow-vein gold and silver mine.
• Vejnaly. Situated in the Zangilan district of Azerbaijan and hosts the
Vejnaly deposit.
• Ordubad. An early-stage gold and copper exploration area located in the
Nakhchivan exclave of Azerbaijan.
• Kyzlbulag. Situated in Karabakh and hosts the Kyzlbulag mine.
The Gedabek, Xarxar, Garadag and Gosha Contract Areas form a contiguous
territory totalling 1,408 square kilometres. The Group received full access to
the Kyzlbulag Contract Area in April 2026. The Group had its access restored
in 2026 to the Vejnaly Contract Area in Zangilan. The Government had
previously withdrawn access to Vejnaly whilst the site was made safe from land
mines.
Overview of 2025
The Group's strategy is to transition into a mid-tier, multi-asset, copper
focused producer, which will be achieved through developing its considerable
assets. The Group made excellent progress against this strategy in 2025 with
the opening of two new mines. The Group's new Gilar underground mine started
production in May 2025 and its new open pit Demirli mine started production in
July 2025. The Group achieved record copper production in 2025 of 7,915
tonnes.
The Group continued to invest to improve its operations and a major upgrade of
the flotation plant at Gedabek, to increase its capacity and flexibility,
started in 2025. The Group also established two logistic centres for the sale
of its copper concentrate. Construction of stage two of the final raise of the
tailings dam at Gedabek continued throughout 2025.
Gilar mine production
The Group's new underground Gilar mine at Gedabek commenced production in
2025. The first ore from the mine was extracted in March 2025 and the mine
entered production in May 2025.
Demirli mine production
The Group's new open pit mine at Demirli in Karabakh entered production in
July 2025. The Group concluded a concentrate sales agreement with Trafigura
Pte Ltd. in November 2025, and the first sales of its copper concentrate
production were made in December 2025.
Gedabek and Gadir underground mines
The Gedabek and Gadir underground mines were both shut in 2025 although access
to the mines still remains in place.
Logistics centres
The Group established two logistics centres in 2025 for the sale of its copper
concentrate, one for Demirli and one for Gedabek. They are both located close
to their respective mine sites and the main highway from Baku to Georgia. They
comprise warehousing and material handling facilities for bags of copper
concentrate. These facilities enable more efficient delivery of concentrate to
customers. It is also more environmentally friendly to store concentrate at
dedicated warehouse facilities than at the mine sites. Trucks also require
permission from the Government of Azerbaijan to enter Karabakh. The Demirli
logistics centre is located outside of Karabakh which avoids customers needing
to obtain permission for their trucks to enter Karabakh to take delivery of
concentrate produced by Demirli.
Inaugural Environment, Social and Governance ("ESG") rating
In June 2025, the Group received its inaugural sustainability rating from
Digbee Ltd, an independent provider of ESG assessment and disclosure solutions
to the mining sector. Obtaining this rating was in line with the Group's
objective of continuous improvement of its ESG performance.
New corporate website
The Group released a new corporate website in December 2025
Production and cost guidance for full year 2026 ("FY 2026")
The Group published its production guidance for FY 2026 on 18 February 2026 as
follows:
Group production guidance
2026 production guidance¹
Copper (tonnes) 20,000 to 25,000
Gold (ounces) 28,000 to 33,000
Silver (ounces) 170,000 to 210,000
Group cost guidance
2026 AISC guidance
Gold ($/oz) 1,500 to 1,800
Copper ($/tonne) 6,800 to 7,800(²)
Notes
1. 2026 production guidance represents aggregate Group production inclusive
of the Government of Azerbaijan's share under the terms of the Production
Sharing Agreement.
2. The copper All-In-Sustaining-Cost ("AISC") guidance excludes the cost of
the lease of the Demirli property complex from the Government of Azerbaijan as
it is equivalent to the capital cost of building the plant. If the cost of the
lease is included, the AISC guidance for copper increases by approximately
$1,000 per tonne. The copper AISC also reflects the costs of overburden
stripping required at Demirli to expose further reserves of ore.
Calculation of All-In Sustaining Cost ("AISC") for copper and gold
Gedabek copper and gold production
The Group produces both copper and gold at its Gedabek production site. Both
metals are considered primary products as both contribute materially to
revenue. Accordingly, the "Co-Product Accounting" method is used to allocate
costs to gold and copper. The total cost of the Gedabek production site, plus
sustaining capital expenditure and metal selling costs, is therefore allocated
to gold and copper in proportion to their expected sales revenues.
The revenue from silver production is treated as a by-product and credited
against the total costs of Gedabek production before allocation. The forecast
revenues generated by gold, silver and copper are calculated using the Group's
share of production which are also used for calculating the AISC of copper and
gold. A proportion of the total costs (based on Gedabek and Demirli site
headcount) of the Group's office in Baku is also included as this office
performs various administrative functions for the Gedabek and Demirli sites.
Demirli copper production
The AISC for copper is calculated using the total costs of production at the
site including sustaining capital expenditure, copper selling costs and its
share of the Baku office overheads. The Group's share of production is used to
calculate the AISC.
Group gold and copper production
The AISC for Gold production is the AISC for Gedabek. The Group's only
location where gold is produced is Gedabek. The AISC for copper is calculated
as the total costs of Gedabek and Demirli divided by the total of the Group's
share of copper production.
Mineral resources and ore reserves
Key to the future development of the Group are the mineral resources and ore
reserves within its Contract Areas. Mineral resource and ore reserve estimates
are produced both in accordance with the JORC (2012) code ("JORC") and as
non-JORC compliant internal estimates.
An internal Group estimate has been prepared, in accordance with JORC
procedures, of the remaining mineralisation of the Gedabek open pit at 1
January 2026. This is set out in Table 1. The Gedabek underground mine and the
Gadir underground mine were shut in 2025.
A final JORC mineral resources estimate of the Zafar deposit at 30 November
2021 is set out in Table 2. A maiden JORC mineral resources estimate of the
Gilar deposit at 30 November 2023 was published on 11 December 2023. An
internal Group estimate of the Gilar JORC mineral resources estimate, updated
for depletion between commencement of mining in 2025 and 31 December 2025, is
set out in Table 3. A maiden JORC mineral resources estimate of copper in the
Xarxar deposit at January 2024 was published on 20 February 2024 and is set
out in Table 4.
The maiden JORC mineral resources estimate of copper in the Garadag deposit at
July 2024 was published on 24 September 2024 and is set out in Table 5. Table
6 sets out the Soviet mineral resources estimate for the Vejnaly deposit.
Table 7 sets out an internal Group estimate of the remaining mineral resources
of the Demirli deposit classified according to the JORC standard at 1 January
2026.
Table 1 - Internal Group estimate of the remaining mineralisation of the
Gedabek open pit in accordance with JORC at 1 January 2026
Tonnage In-situ grades Contained metal
(million
tonnes)
Gold Copper Silver Zinc Gold Copper Silver Zinc
(g/t) (%) (g/t) (%) (koz) (kt) (koz) (t)
Measured and indicated 3.24 0.27 0.45 6.18 0.18 27.5 14.7 624.0 5.7
Inferred 0.80 0.56 0.21 6.51 0.10 13.9 1.7 162.8 0.8
Total 4.05 0.33 0.40 6.25 0.16 41.4 16.4 786.8 6.5
Some of the totals in the above table may not sum due to rounding.
All tonnages reported are dry metric tonnes.
Table 2 - Final JORC mineral resources estimate of the Zafar deposit at 30
November 2021
Copper > 0.3 per cent. copper equivalent
Tonnage In-situ grades Contained metal
(million
tonnes)
Copper Gold Zinc Copper Gold Zinc
(%) (g/t) (%) (kt) (kozs) (kt)
Measured and indicated 5.5 0.5 0.4 0.6 25 64 32
Inferred 1.3 0.2 0.2 0.3 3 9 3
Total 6.8 0.5 0.4 0.6 28 73 36
Some of the totals in the above table may not sum due to rounding.
All tonnages reported are dry metric tonnes.
Table 3 - Internal Group estimate of the remaining mineralisation of the Gilar
deposit in accordance with JORC at 1 January 2026
Reporting cut-off >= 0.5 grammes per tonne of gold equivalent*
Tonnage In-situ grades Contained metal
(million
tonnes)
Gold Copper Zinc Gold Copper Zinc
(g/t) (%) (%) (koz) (kt) (kt)
Measured 3.31 1.46 0.97 0.89 150.0 32.2 29.4
Indicated 2.01 1.00 0.56 0.49 62.5 11.3 9.8
Measured and indicated 5.32 1.28 0.82 0.74 212.4 43.5 39.2
Inferred 0.20 0.69 0.26 0.26 4.2 0.5 0.5
Total 5.52 1.26 0.80 0.72 216.7 44.0 39.7
Some of the totals in the above table may not sum due to rounding.
All tonnages reported are dry metric tonnes.
* Gold equivalent calculation = Gold g/t plus (copper per cent.*1.49) plus
(zinc*0.46). The metal price assumptions used were Gold - $1,675 per ounce;
Copper - $8,000 per tonne; Zinc - $2,500 per tonne.
Table 4 - Maiden JORC mineral resources estimate of copper in the Xarxar
deposit at January 2024
Reporting cut-off >= 0.2 per cent. copper.
Domain Mineral resources estimate of copper in the Xarxar Deposit by oxidation domain
Indicated Inferred Ind
ica
ted
and
inf
err
ed*
Tonnes Grade Metal Tonnes Grade Metal Tonnes Grade Metal
(mt) (%) (kt) (mt) (%) (kt) (mt) (%) (kt)
Oxide 5.2 0.55 28.5 0.8 0.66 5.2 5.9 0.57 33.7
Sulphide 16.8 0.46 77.9 2.1 0.35 7.6 18.9 0.45 85.5
Total 22.0 0.48 106.3 2.9 0.44 12.8 24.9 0.48 119.1
Some of the totals in the above table may not sum due to rounding.
All tonnages reported are dry metric tonnes.
* Measured resources were nil due to insufficient third-party quality
assurance and quality control ("QAQC") drill core assays being carried out.
Further QAQC drill core assays will be carried out.
Table 5 - Maiden JORC mineral resources estimate of copper in the Garadag
deposit at July 2024 by domain
Domain Cut-off Indicated Inferred Indicated and inferred
(%)
Tonnes Grade Metal Tonnes Grade Metal Tonnes Grade Metal
(Mt) (Cu %) (kt) (Mt) (Cu %) (kt) (Mt) (Cu %) (kt)
0 (un-mineralised) 0.13 - - - - - - - - -
1 (leach) 0.13 - - - - - - - - -
3 (enriched) 0.13 45.8 0.45 205.6 68.9 0.42 285.9 114.7 0.43 491.5
5 (primary) 0.13 41.1 0.24 98.7 129.1 0.24 306.7 170.2 0.24 405.4
Total 86.9 0.35 304.3 198 0.30 592.6 284.9 0.32 896.9
Some of the totals in the above table may not sum due to rounding.
All tonnages reported are dry metric tonnes.
Table 6 - Soviet mineral resources estimate of the Vejnaly deposit
Metal content
Units Category C1 Category C2 Total
C1 and C2
Ore Tonnes 181,032 168,372 349,404
Gold Kilogrammes 2,148.5 2,264.2 4,412.7
Silver Kilogrammes 6,108.9 4,645.2 10,754.1
Copper Tonnes 1,593.6 1,348.8 2,942.4
Some of the totals in the above table may not sum due to rounding.
Table 7 - Internal Group estimate (non-JORC) of the remaining mineral
resources of the Demirli deposit classified according to the JORC standard at
1 January 2026
Ore tonnage In-situ grades Contained
(million tonnes) Copper metal
(%) Copper
(thousand
tonnes)
Measured 3.50 0.44 15.6
Indicated 9.51 0.45 42.8
Inferred 27.78 0.37 102.8
Non-classified 15.56 0.44 68.5
Total 56.35 0.41 229.6
Some of the totals in the above table may not sum due to rounding.
All tonnages reported are dry metric tonnes.
The above mineral resources estimate for Demirli is only in respect of the
mineral resources below the current open pit and does not include further
resources in the surrounding area.
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 Gedabek open pit
mine. The Group has agitation and flotation processing facilities at Gedabek.
A new underground mine, Gilar, opened in 2025 with its first ore extracted in
March 2025 and production started in May 2025. Zafar is another underground
mine under development at Gedabek. One portal of the Zafar mine has been
constructed, but no further development is currently being carried out.
Gold production at Gedabek commenced in September 2009. Ore was initially
mined from an open pit, with underground mining commencing in 2015, when the
Gadir mine was opened. In 2020, underground mining commenced beneath the main
open pit (the "Gedabek underground mine"). The Gedabek and Gadir underground
mines now form one continuous underground system of tunnels.
Initial gold production was by heap leaching, with copper production beginning
in 2010 from the Sulphidisation, Acidification, Recycling and Thickening
("SART") plant. The Group's agitation leaching plant commenced production in
2013 and its flotation plant in 2015. From the start of production to 31
December 2025, approximately 850 thousand ounces of gold and 26 thousand
tonnes of copper have been produced at Gedabek.
Gedabek open pit
Open pit mining at Gedabek is carried out at its main open pit (which
comprises several contiguous smaller open pits). It is mined using
conventional open-cast mining using trucks and shovels and ore transported to
the processing facilities by truck.
Gadir and Gedabek underground mines
Ore was previously mined from the Gadir and Gedabek underground mines.
However, the Gadir and Gedabek underground mines were shut in 2025, although
access to the mines remains in place. It is not expected that production from
the mines will restart in the foreseeable future.
Gilar mine
Gilar is an underground mine located approximately seven kilometres from the
Company's processing facilities and close to the northern boundary of the
Gedabek Contract Area. The Group commenced developing the Gilar underground
mine in late 2022 and the mine entered production in May 2025.
A maiden JORC mineral resources estimate was published on 11 December 2023. An
internal Group estimate of this Gilar JORC mineral resources estimate, updated
for depletion between commencement of mining in 2025 and 31 December 2025, is
set out in Table 3 above.
The Gilar mine comprises two underground tunnels, a main production tunnel and
a second tunnel for ventilation. A spiral accesses the ore body. The lengths
of the production and ventilation tunnels are 1,461 metres and 774 metres
respectively. The walls of the tunnels are supported by steel arches and
shotcrete where necessary due to soft rock. Water encountered underground is
being pumped from the mine into a settling pond constructed near the entrance
to the mine. The mining method employed at Gilar is sub-level caving. Ore from
the mine is hauled by truck to the Gedabek processing facilities.
Surface infrastructure comprises of a heavy equipment workshop, mine office
facilities and technical support and services offices and a canteen. Security
and safety fencing, a mine entrance area and power generator set foundations
have also been constructed. The Caterpillar underground mining fleet comprises
of three R1700 and two 980UMA underground loaders.
Zafar mine development
The Zafar deposit was discovered in 2021 and is located 1.5 kilometres
northwest of the existing Gedabek processing plant. Its final JORC mineral
resources estimate was published in March 2022 and is set out in Table 2
above.
A mining scoping study for the Zafar mine was completed in February 2023 and
development commenced. Two tunnels are planned, one for haulage and a parallel
ventilation tunnel. One of the two portals required for the tunnels was
constructed close to the existing Gedabek processing facilities and about one
kilometre from the mineralisation. Five metres of haulage tunnel and 6.6
metres of ventilation tunnel had also been completed, prior to suspension of
development.
Development of the Zafar mine was stopped in mid-2023 and resources diverted
to development of the Gilar mine.
Environmental study and Micon report
Micon International Co Limited ("Micon") undertook a health, safety and
environmental due diligence review of tailings management at Gedabek in July
2023. No significant environmental contamination was found. The final Micon
report contained various recommendations to improve some operational, social
and safety aspects of the Gedabek operations. In November 2023, the Group
agreed an action plan with the Government of Azerbaijan (the "Action Plan") to
address these recommendations. The Group is still carrying out some long term
and continuous obligations of the Micon recommendations.
Ore mined in 2025
Table 8 sets out all the ore mined at Gedabek for the year ended 31 December
2025.
Table 8 - Ore mined at Gedabek for the year ended 31 December 2025
Mine Total ore mined
for the year ended
31 December 2025
Ore mined Average Average
(tonnes) gold grade copper grade
(g/t) (%)
Gedabek open pit 682,495 0.28 0.34
Gadir underground 13,592 2.07 0.19
Gilar underground 544,459 1.43 1.00
Total for the year 1,240,546 0.80 0.63
Processing operations
Ore is processed at Gedabek to produce either gold doré (an alloy of gold and
silver with small amounts of impurities, mainly copper) or a copper and
precious metal concentrate.
Gold doré is produced by cyanide leaching. Initial processing is to leach
(i.e. dissolve) the precious metal (and some copper) in a cyanide solution.
This is done by various methods:
1. Heap leaching of crushed ore. Crushed ore is heaped into permeable "pads"
onto which is sprayed a solution of cyanide. The solution dissolves the metals
as it percolates through the ore by gravity and it is then collected on the
impervious base under the pad.
2. Heap leaching of run of mine ("ROM") ore. The process is similar to heap
leaching for crushed ore, except the ore is not crushed, instead it is heaped
into pads as received from the mine (ROM) without further treatment or
crushing. This process is used for very low grade ores.
3. Agitation leaching. Ore is crushed and then milled in a grinding circuit.
The finely ground ore is placed in stirred (agitation) tanks containing
cyanide solution and the contained metal is dissolved in the solution. Any
coarse, free gold is separated using a centrifugal-type Knelson concentrator.
Slurries produced by the above processes with dissolved metal in solution are
then transferred to a resin-in-pulp ("RIP") plant. In this plant, a synthetic
resin is used to selectively absorb the gold and silver from the slurry. The
metal-loaded resin is then "stripped" of its gold and silver by desorption
into another solution, from which the metals are recovered by electrolysis,
followed by smelting to produce the doré metal, which comprises an alloy of
gold and silver.
Copper and precious metal concentrates are produced by two processes, SART
processing and flotation.
1. Sulphidisation, Acidification, Recycling and Thickening ("SART"). The
cyanide solution after gold absorption by resin-in-pulp processing is
transferred to the SART plant. The pH of the solution is then changed by the
addition of reagents which precipitates the copper and any remaining silver
from the solution. The process also recovers cyanide from the solution, which
is recycled back to leaching.
2. Flotation. Finely ground ore is mixed with water to produce a slurry
called "pulp" and reagents are then added. This pulp is processed in flotation
cells (tanks), where the pulp is stirred and air introduced as small bubbles.
The sulphide mineral particles attach to the air bubbles and float to the
surface where they form a froth which is collected. This froth is dewatered to
form a mineral concentrate containing copper, gold and silver. The tailings
from the agitation leaching are also used as flotation feedstock. The original
filter press of the flotation plant was replaced in 2025 with two new filter
presses, and a new thickener installed, to process the higher grade Gilar
ores. A further upgrade to the flotation plant, which will include the
installation of new cells, commenced in 2025. This is to both increase its
capacity and increase its flexibility.
Table 9 summarises the ore processed by leaching for the year ended 31
December 2025.
Table 9 - Ore processed by leaching at Gedabek for the year ended 31 December
2025
Quarter ended Ore processed (tonnes) Gold grade of ore processed (g/t)
Heap Heap Agitation Heap Heap Agitation
leach pad leach pad leaching leach pad leach pad leaching
crushed ore ROM ore plant crushed ore ROM ore plant
31 March 2025 106,429 - 149,763 0.40 - 1.16
30 June 2025 133,153 - 154,948 0.40 - 1.13
30 September 2025 47,202 - 156,773 0.40 - 1.52
31 December 2025 - - 163,541 - - 1.27
Total for the year 286,784 - 625,025 0.40 - 1.26
Table 10 summarises ore processed by flotation for the year ended 31 December
2025.
Table 10 - Ore processed by flotation at Gedabek for the year ended 31
December 2025
Ore processed Gold content Silver content Copper content
Quarter ended (tonnes) (ounces) (ounces) (tonnes)
31 March 2025 155,406 535 9,516 729
30 June 2025 166,135 1,193 30,537 900
30 September 2025 151,359 3,185 85,123 1,793
31 December 2025 156,158 3,027 93,835 2,409
Total for the year 629,058 7,940 219,011 5,831
Previously heap leached ore
Gold production at Gedabek from 2009 to 2013 was by heap leaching crushed ore
until the start-up of the agitation leaching plant in 2013. The heaps remain
in-situ and given the high grade of ore processed prior to the commencement of
agitation leaching, and the lower recovery rates, much of the early heap
leached ore contains significant amounts of gold. This is now being
reprocessed by agitation leaching. Table 11 sets out the previously heap
leached ore processed for the year ended 31 December 2025.
Table 11 - Previously heap leached ore processed for the year ended 31
December 2025
In-situ Average
material gold grade
(tonnes) (g/t)
1 January 2025 290,429 0.83
Processed in the year (194,304) 0.99
31 December 2025 96,125 0.50
The in-situ material is calculated at a standard cutoff grade of > 0.8
grammes per tonne of gold.
Production and sales
For the year ended 31 December 2025, gold production totalled 25,061 ounces,
which was an increase of 9,988 ounces in comparison to the production of
15,073 ounces for the year ended 31 December 2024. Copper production for the
year ended 31 December 2025 was 4,787 tonnes compared to 377 tonnes for the
year ended 31 December 2024, an increase of 4,410 tonnes. The higher
production of gold and copper in 2025 compared to 2024 arose due to the start
of production from the Gilar mine.
Table 12 summarises the gold and silver bullion produced from doré bars and
sales of gold bullion for the year ended 31 December 2025.
Table 12 - Gold and silver bullion produced from doré bars and sales of gold
bullion for the year ended 31 December 2025
Quarter ended Gold Silver Gold Gold sales
produced* produced* sales** price
(ounces) (ounces) (ounces) ($/ounce)
31 March 2025 5,758 8,206 4,753 2,843
30 June 2025 5,624 6,699 5,028 3,299
30 September 2025 5,814 4,655 5,181 3,430
31 December 2025 5,133 4,788 4,669 4,214
Total for the year 22,329 24,348 19,631 3,411
* Including the Government of Azerbaijan's share.
** Excluding the Government of Azerbaijan's share.
Table 13 summarises the total copper, gold and silver produced as concentrate
by both SART and flotation processing for the year ended 31 December 2025.
Table 13 - Total copper, gold and silver produced as concentrate by both SART
and flotation processing for the year ended 31 December 2025
Quarter ended Copper (tonnes) Gold (ounces) Silver (ounces)
SART Flotation Total SART Flotation Total SART Flotation Total
31 March 2025 66 468 534 7 263 270 17,227 4,882 22,109
30 June 2025 70 584 654 4 458 462 12,753 12,582 25,335
30 September 2025 146 1,431 1,577 8 976 984 7,023 29,945 36,968
31 December 2025 164 1,858 2,022 9 1,007 1,016 9,221 35,352 44,573
Total for the year 446 4,341 4,787 28 2,704 2,732 46,224 82,761 128,985
Table 14 summarises the total copper concentrate (including gold and silver)
production and sales from both SART and flotation processing for the year
ended 31 December 2025.
Table 14 - Total copper concentrate (including gold and silver) production and
sales from both SART and flotation processing for the year ended 31 December
2025
Quarter ended Concentrate Copper Gold Silver Concentrate Concentrate
production* content* content* content* sales **(†) sales **(†)
(dmt) (tonnes) (ounces) (ounces) (dmt) ($000)
31 March 2025 3,072 534 270 22,109 2,324 4,050
30 June 2025 3,523 654 462 25,334 3,886 7,060
30 September 2025 6,769 1,577 984 36,968 6,852 17,760
31 December 2025 9,784 2,022 1,016 44,573 7,255 18,430
Total for the year 23,148 4,787 2,732 128,984 20,317 47,300
* Including the Government of Azerbaijan's share
** Excluding the Government of Azerbaijan's share
† These are invoiced sales of the Group's share of production before any
accounting adjustments in respect of IFRS 15. The total for the year does not
therefore agree to the revenue disclosed in note 6 - "Revenue" to the Group
financial statements.
Infrastructure
The Gedabek Contract Area benefits from excellent infrastructure and access.
The site is located adjacent to the town of Gedabek, which is connected by
good metalled roads to the regional capital of Ganja. Baku, the capital of
Azerbaijan, is to the south and the country's border with Georgia to the
north, are each approximately a four to five hour drive over good quality
roads. The site is connected to the Azeri national power grid.
Water management
The Gedabek site has its own water treatment plant which uses the latest
reverse osmosis technology. In the last few years, Gedabek town has
experienced water shortages in the summer and this plant reduces to the
absolute minimum the consumption of fresh water required by the Company.
Tailings (waste) storage
The Group manages its tailings facilities at Gedabek in strict compliance with
the Global Industry Standard on Tailings Management ("GISTM"). The Group is
working towards its tailings facilities being fully accredited to GISTM
standards. Safety and compliance are monitored through a multi-layered
process. These include both daily and monthly inspections. Water quality is
monitored by company staff who collect samples which are analysed on site and
by external laboratories. Vibrating wire piezometers track pore pressure and
data collection is carried out by an external company. There is also an
emergency preparedness and response plan in place.
Tailings are stored in a purpose-built dam approximately seven kilometres from
the Group's processing facilities, topographically at a lower level than the
processing plant, thus allowing gravity assistance of tailings flow in the
slurry pipeline. Prior to the final raise of the tailings dam wall,
immediately downstream of the tailings dam was a reed bed biological treatment
system, to purify any seepage from the dam before being discharged safely into
the nearby Shamkir river. However, the final wall raise will subsume this dam.
In 2024, the Government of Azerbaijan approved the final raise of the tailings
dam wall. This is a 6.0 metres wall raise which will raise the wall to its
final design height of 90 metres. The wall raise is being carried out in two
back-to-back stages, and the first raise of 2.5 metres was completed in
November 2024. The construction of the final wall raise of 3.5 metres was
carried out throughout 2025 with completion expected in 2026. The final raise
of the wall will give the dam enough capacity for the next two to three years
of production. The wall raise is being monitored by a range of high quality
consultants with relevant geotechnical and other experience together with
representatives of the Government of Azerbaijan.
The Group has started the process to construct a second tailings dam at
Gedabek. Various sites in the vicinity of the existing tailings dam have been
identified. The Group is currently in close consultation with the Government
of Azerbaijan to select the most appropriate site for its construction. Once
the site has been selected, the technical work will commence to design the
tailings dam etc. which will then need to be approved by the Government of
Azerbaijan.
Demirli
Introduction
The Demirli Contract Area is 74 square kilometres in Karabakh that extends to
the northeast by about 10 kilometres from the Kyzlbulag Contract Area and
contains the Demirli mining property. The Demirli mining property comprises an
open pit mine, a processing plant and power and water infrastructure. The
Demirli mining property was built during the occupation of Karabakh by Armenia
and abandoned by its previous owner following resumption of sovereignty over
Karabakh by the Government of Azerbaijan. The Group gained limited access to
Demirli in 2024 and full access in 2025. The Group has comprehensively
renovated and refurbished the plant, mining fleet and associated
infrastructure. The Group commenced production from Demirli in July 2025.
Demirli mine
The Demirli mine comprises two contiguous open pits. It was mined extensively
by its previous owner prior to its abandonment. A reverse circulation drilling
programme was completed at Demirli in 2025 to determine the start-up resource
of the mine. An internal Group estimate of the remaining mineral resources at
1 January 2026, classified in accordance with JORC, was 56 million tonnes of
ore with an average copper grade of 0.41 per cent. copper containing 230
thousand tonnes of copper. This internal estimate is set out in Table 7 above.
Ore mined in 2025
Table 15 summarises the total ore mined at Demirli for the year ended 31
December 2025.
Table 15 - Ore mined at Demirli for the year ended 31 December 2025
Total ore mined for the year ended 31 December 2025
Ore mined Average
copper grade
Mine (tonnes) (%)
Open pit 1,974,840 0.47
Processing operations
The processing plant contains two rotary mills, a copper flotation plant and a
molybdenum plant. The plant and associated infrastructure have been completely
renovated and refurbished by the Group and production commenced in July 2025.
The capacity of the plant is around 6.5 million tonnes per annum. There is
also an upstream tailings dam located close to the plant. The Group leases the
flotation plant, mining fleet and associated infrastructure from the
Government of Azerbaijan. Further details of the lease are set out in the
financial review below.
Table 16 summarises the total ore processed at Demirli for the year ended 31
December 2025.
Table 16 - Total ore processed at Demirli for the year ended 31 December 2025
Quarter ended Ore feed to plant Grade Copper content
(tonnes) (%) (tonnes)
31 March 2025 - - -
30 June 2025 - - -
30 September 2025 292,950 0.45 1,307
31 December 2025 701,285 0.47 3,296
Total for the year 994,225 0.47 4,603
Production and sales
Table 17 summarises the total copper production and sales at Demirli for the
year ended 31 December 2025.
Table 17 - Total copper production and sales at Demirli for the year ended 31
December 2025
Copper production* Copper sales**
Quarter ended Copper Copper content Concentrate Sales value***
Concentrate (tonnes) sales ($m)
(tonnes) (tonnes)
31 March 2025 - - - -
30 June 2025 - - - -
30 September 2025 4,548 711 - -
31 December 2025 13,975 2,417 9,378 17.4
Total for the year 18,543 3,128 9,378 17.4
* Including the Government of Azerbaijan's share.
** Excluding the Government of Azerbaijan's share.
*** These are invoiced sales of the Group's share of production before any
accounting adjustments in respect of IFRS 15. The total for the year does not
therefore agree to the revenue disclosed in note 6 - "Revenue" to the Group
financial statements.
Infrastructure
The Demirli plant has excellent infrastructure. It is connected to the main
highway from Baku to Georgia via a good metalled road. Electricity is supplied
by the Azeri national power grid and there is a power station at site.
Processing water is supplied via a closed circuit which reuses water from the
tailings dam. Water losses are replenished from water from a nearby river
which is stored in a dam close to the plant.
Tailings (waste) storage
There is an existing tailings dam at Demirli which was constructed by the
previous owner of the property. A hybrid construction method was used to build
the dam. This was initially by the centreline method (the wall is raised
vertically) and later by the upstream method (each raise moves the crest of
the wall upstream). The current dam has limited remaining capacity. As an
interim measure, water and tailings are currently being discharged into the
dam. Various technical studies, including inspections by Knight Piésold and
CQA Consultants have confirmed the current tailings dam wall is safe and
compliant for its current operation. The tailings dam wall is also being
buttressed by waste rock from the mine.
A site for a new tailings dam has been identified at Demirli. Geotechnical
studies have been completed and the tailings dam wall and pipeline route
designs completed. It is targeted to obtain approval and start construction of
the new tailings dam in 2026.
Xarxar
The 464 square kilometre Xarxar Contract Area is located immediately north of
the Gedabek Contract Area which it borders. The Xarxar Contract Area was
acquired in 2022 together with historical geological and other data owned by
AzerGold CJSC, its previous owner.
The Xarxar Contract Area hosts the Xarxar copper deposit. The mineralisation
of the deposit is copper dominant and comprises mainly oxides and secondary
sulphides, with minerals such as malachite, azurite, pyrite, chalcocite and
bornite, together with some primary chalcopyrite, as common minerals in the
deposit, and minor barite and magnetite minerals are also recorded. The main
copper mineralisation lenses are located in the central part of the Xarxar
deposit, with approximate east-west orientations.
On 20 February 2024, a maiden JORC mineral resources estimate was published
for the Xarxar deposit, which is set out in Table 4 above. No geological
fieldwork was carried out during 2025. Analysis continued of the drill core
acquired from AzerGold CJSC.
Gilar is situated close to the northern boundary of the Gedabek Contract Area.
Geological exploration indicates that this deposit trends to the north. The
Xarxar Contract Area extends the Gedabek Contract Area to the north and will
therefore enable the Gilar deposit to be fully mined.
Garadag
The 344 square kilometre Garadag Contract Area is situated four kilometres
north of Gedabek alongside the road from Gedabek to Shamkir. Garadag was first
explored during the Soviet era and has been extensively explored since then,
most recently by AzerGold CJSC, its previous owner. The roads built for drill
access are still accessible and serviceable on Garadag.
In 2022, the Group acquired historical geological and other data and
associated reports (the "Data") in respect of Garadag from AzerGold CJSC for
$3.3 million. The Data includes geochemical and geophysical data, including
maps and interpretative reports. Substantial core drilling and data
interpretations were carried out by AzerGold CJSC and the Data includes 9,645
chemical assays taken from 23,454 metres of drill core, which have been
transferred to the Group. The Data also includes an initial mining scoping
study based on a preliminary mineral resource estimate with various options
for mine development, including open pit designs, initial mining schedules and
an outline metallurgical flow sheet. An environmental and socio-economic
baseline assessment has also been carried out and is included in the Data.
On 24 September 2024, the Group published a maiden JORC mineral resources
estimate of the Garadag deposit at July 2024. This showed a total in-situ
mineral resource (indicated and inferred) of 285 million tonnes of
mineralisation containing 897 thousand tonnes of copper at an average grade of
0.32 per cent. This maiden JORC resource is set out in Table 5 on above. No
drilling or other geological fieldwork was carried out in 2025. However, the
Group continued to analyse the drill core obtained from AzerGold CJSC.
Gosha
The Gosha Contract Area is 300 square kilometres in size and is situated in
western Azerbaijan, 50 kilometres northwest of Gedabek. Gosha is regarded as
under-explored. Gosha is the location of a small, high grade, underground gold
mine. Ore mined at Gosha is transported by road to Gedabek for processing. No
mining was carried out in the Gosha mine in the year ended 31 December 2025.
Geological fieldwork has resulted in the discovery of additional
mineralisation adjacent to the existing underground mine. This includes
"Hasan", a sub-vertical high gold grade mineralised vein, immediately south of
the existing Gosha mine. Hasan can be accessed via a short tunnel from the
existing tunnelling at Gosha. A further vein close to Hasan called "Akir" is
also showing promising mineralisation.
The Group is also carrying out geological fieldwork at Asrikchay, a copper and
gold target situated within the Gosha Contract Area. Asrikchay is located in
the northeast corner of the Contract Area, about seven kilometres from the
Gosha mine, within the Asrikchay valley.
Vejnaly
Vejnaly is a 300 square kilometre Contract Area located in the Zangilan
district in southwest Azerbaijan. It borders Iran to the south and Armenia to
the west and hosts the Vejnaly deposit.
A thorough survey of the site has been carried out, which has found that the
main ore body was extensively mined during the Armenian occupation. There are
both open pit and underground workings at the location. There is also an
existing crusher and flotation processing plant at the mine, which will need
extensive renovation to recommence operations.
Throughout 2025, staff were not allowed access to Vejnaly on the instructions
of the Government of Azerbaijan due to the potential danger from landmines.
However, access to the Contract Area was restored in early 2026.
Ordubad
The 462 square kilometre Ordubad Contract Area is located in the Nakhchivan
exclave, southwest Azerbaijan, and contains numerous targets. Limited
geological exploration work was carried out in the year ended 31 December
2025.
Kyzlbulag
The Kyzlbulag Contract Area is 462 square kilometres and is located in
Karabakh. It contains several mines and has excellent potential for
exploration, as indicated by the presence of many mineral deposits and known
targets in the region. There are indications that up to 35,000 ounces of gold
per year were extracted from the Kyzlbulag copper-gold mine, before the mine
was closed several years ago, indicating the presence of a gold mineralising
system.
The Group only carried out some initial geological studies at Kyzlbulag in the
year ended 2025 as the Group had not been granted full access to the Contract
Area in 2025. The Group was granted full access to Kyzlbulag in April 2026.
Geological exploration
Summary
· Limited exploration work was carried out in 2025 due to strict cost
control and the Group's focus on bringing the new Gilar and Demirli mines into
production.
· Limited underground drilling was carried out at the Gadir and Gilar
underground mines
o 50 underground drill holes totalling 2,492 metres completed at the Gilar
mine
o Four underground drill holes totalling 166 metres completed at the Gadir
mine
· Geological exploration commenced at Uluxanli, a new copper and gold
target at Gedabek
· Reverse circulation and core drilling was carried out at Demirli
o 2,199 reverse circulation drill holes completed with a total length of
26,974 metres to determine the remaining resource and for grade control
purposes
o Seven core drill holes totalling 1,208 metres completed to investigate the
potential for copper feeder zones
The drill hole database was digitised and a comprehensive alteration map
prepared
· Trenching continued at Ordubad with 1,286 metres completed yielding
659 channel samples
· In-house analysis of samples from various deposits such as Zafar and
Xarxar continued throughout the year
Gedabek Contract Area
Gedabek open pit mine
No exploration was conducted at the Gedabek open pit mine in 2025. Drilling
activities continued to be carried out for grade control purposes.
Gadir underground mine
Four diamond drill holes totalling of 166 metres were completed in the first
half of 2025. No underground sampling activities were carried out in 2025 as
mining operations are complete and the mine was closed in 2025.
Gilar
The area hosts two styles of mineralisation, gold in quartz veins and
hydrothermal gold-copper. Three mineralisation bodies have been discovered.
During 2025, channel sampling of the walls of the main tunnel was carried out
with 248 underground samples taken with a total length of 241 metres.
Additionally, 50 underground core drill holes totalling 2,492 metres were
completed in the southern and southwestern flanks of the deposit. These areas
show significant potential for resource and reserve expansion.
To enable detailed exploration of the so-called Upper Zones (Zone-1 and
Zone-2), dedicated exploration drifts are being developed from the main Gilar
underground development galleries. These drifts will provide access for
shallower underground diamond drilling, allowing more accurate delineation and
evaluation of mineralisation within these upper zones to support the potential
addition of resources. It is planned that the underground exploration drift to
support underground drilling activities will be completed by approximately
November 2026.
Uluxanli
Uluxanli is a recently identified copper and gold target. During 2025,
first-stage exploration activities at the Uluxanli (East Ertepe) area were
completed. The program comprised assaying 575 soil geochemical samples, a
detailed ground magnetic survey, XRD analyses, and comprehensive mineralogical
and petrographic studies. An integrated interpretation of all acquired
geological, geochemical and geophysical datasets is now being undertaken.
Preliminary results have identified narrow (5 to 30 centimetres), parallel
epithermal quartz veins hosting high-grade gold mineralisation. However, no
associated bulk or stockwork-style mineralisation has yet been identified in
the surrounding host rocks.
Zafar
The geology of the area is structurally complex, comprising mainly of Upper
Bajocian-aged volcanics. The mineralisation seems to be associated with a main
northwest to southeast trending structure, which is interpreted as post-dating
smaller northeast to southwest structures. Zafar is characterised by copper,
silver, gold and zinc mineralisation. In the southwest area, outcrops with
tourmaline have been mapped, which can be indicative of the potential for
porphyry-style mineral formation.
There was no geological exploration carried out at Zafar in 2025. However, all
underground design preparation works for the Zafar deposit have been
successfully completed. The deposit is now fully ready for the commencement of
advance tunnelling and mining operations. Metallurgical laboratory test work
has demonstrated consistently high leaching recoveries, confirming the
favourable processing characteristics of the ore.
Interpretation of updated anomaly maps indicates that Zafar has significant
potential for additional mineralisation.
Demirli Contract Area
A reverse circulation drill programme was carried out in 2025 to determine the
remaining resource in the current open pit and for grade control purposes.
This continued the work which was started in 2024. 2,199 reverse circulation
drill holes were completed in 2025 totalling 26,974 metres. Seven core drill
holes totalling 1,208 meters were also completed in the central pit to
investigate the potential for copper feeder zones, with preliminary results
confirming encouraging copper grades.
A geotechnical investigation of the tailings dam was carried out in 2025 with
eight geotechnical drill holes completed with a combined depth of 313 metres.
Seismic geophysical studies were also carried out. The purpose of this work
was to assess the structural stability of the tailings dam and its compliance
with safety and environmental standards.
A comprehensive structural alteration map of the Demirli mine has been
prepared and the drill hole database digitised. An initial residual ore
resource report has been prepared and submitted to the Government of
Azerbaijan. A more precise ore resource estimate will be prepared following
further sampling of existing drill core and further drilling. 157 surface
samples were collected to support this more precise estimate.
Interpretation of the geological, geochemical, and structural results indicate
that the Demirli deposit and its surrounding flanges hold significant
remaining ore potential. In particularly, the south Demirli area exhibits
substantial unexplored mineralisation. Exploration drilling is planned in this
area in the coming years
Gosha Contract Area
Gosha mine
The Gosha mine is an underground, narrow vein mine, situated in the Gosha
Contract Area. It was initially thought to consist of two narrow gold veins,
zone 13 and zone 5. Mining has taken place from both veins. A further vein,
"Hasan", has also been discovered located immediately south of zone 5, which
it intersects at one point. The host rock mostly exhibits silicification and
kaolinisation alteration, which changes to quartz-haematite alteration in
andesite.
There was no geological exploration carried out at the Gosha mine in 2025.
Boyuk Gishlag mineralisation occurrence
Geological fieldwork activity was carried out in 2025 at the Boyuk Gishlag
mineralisation occurrence. Reconnaissance work focused on assessing the
mineralisation occurrences and identifying priority targets for future
exploration campaigns.
Xarxar Contract Area
Xarxar deposit
No geological fieldwork was carried out at Xarxar in 2025.
Scanning of the existing Xarxar drill core was completed during 2025 using
TerraCore technology. The scanning will support the development of a 3-D
alteration model. This model is essential to identifying further
mineralisation and to ascertain the best metallurgical methods to process the
ore. TerraCore scanning is hyperspectral scanning which enables identification
of anomalies not visible to the naked eye. The scanning was carried out by
TerraCore staff in Azerbaijan using a TerraCore scanner imported into
Azerbaijan. This is the first time hyperspectral scanning has been carried out
in Azerbaijan. TerraCore and Data Rock have been contracted to interpret the
hyperspectral data.
To further strengthen the JORC compliant resources of the Xarxar deposit,
1,400 core samples were submitted to ALS Laboratories (Ireland) for
independent analysis and quality assurance.
Cayir
Cayir is a new copper and gold target in the Xarxar Contract Area which
extends into the Garadag copper mineralisation belt. Widespread mineralised
quartz veins have been observed across the area, indicating strong
prospectivity. Based on the encouraging results obtained to date, Cayir is a
priority exploration target within the Company's portfolio.
During 2025, exploration activities were carried out. The initial phase of the
geological sampling program has been successfully completed, with a total of
1,747 rock chip and 225 metres of trench samples collected and analysed.
Alteration mapping and detailed ground magnetometric surveys have also been
carried out. Integrated interpretation of the geological, geochemical and
geophysical datasets has highlighted multiple priority target zones and
reinforces the potential for gold and copper mineralisation within the area.
Despite the presence of thick soil cover, exploration work has led to the
identification of the Qızıl (Gold) mineralisation zone, which is considered
highly prospective for gold.
Follow-up exploration programs are planned and will include more extensive
geochemical sampling and a staged drilling campaign aimed at delineating and
evaluating the identified mineralised area.
Garadag Contract Area
No geological field work was carried out at Garadag in 2025. Detailed
assessment continued of the historical exploration data and metallurgical
studies to better understand the processing characteristics of the deposit's
mineralisation.
As part of the investigation into the potential for in-situ leaching of the
Garadag ore body, underground mine design studies were undertaken in the year.
A total of 12 geotechnical and hydrogeological drillholes were completed, with
a cumulative depth of 1,423 metres. Following geotechnical and structural
logging of core samples, selected samples will be sent to the laboratory for
comprehensive geotechnical testing, including unconfined compressive strength
and triaxial, tensile, shear, and plate load tests. Vibrating wire piezometers
are being installed in the drillholes to monitor hydrogeological conditions.
Ordubad Contract Area
Trenching continued in 2025 in the Dirnis and Destabashi areas with 1,286
metres completed yielding 659 channel samples. Trenches were dug with a depth
of 10 metres to explore extensions of previously identified copper and silver
mineralisation. Consistent with earlier trenching campaigns, results confirmed
that mineralisation thickness increases by about 30 per cent. compared to
surface expressions.
Vejnaly Contract Area
No geological fieldwork was carried out in 2025 as the Group did not have
access to the Contract Area. Now that access to the Contract Area has been
restored, in-house geological fieldwork will start exploring known gold
targets and targets identified by the "WorldView-3" study carried out in 2024.
A detailed target mineralisation map has also been developed.
Kyzlbulag Contract Area
During 2025, no field-based exploration activities were conducted at the
Kyzlbulag Contract Area. The Company was granted full access to the Contract
Area in April 2026 but small scale site visits were undertaken in 2025.
The Kyzlbulag Contract Area, located southwest of the Demirli Contract Area
and covering approximately 300 square kilometres, has a known history of gold
and copper and polymetallic mineralisation. Historical exploration records
indicate the presence of the Kyzlbulag deposit and five additional
polymetallic occurrences within the license boundary. According to Soviet-era
(1989) and Azerbaijan State (1998) data, the Kyzlbulag deposit was estimated
to contain approximately 78.8 million tonnes of ore, including 28.35 tonnes of
gold, 32.40 tonnes of silver, and 99.25 thousand tonnes of copper. These
historical figures have not yet been verified against modern reporting
standards. The deposit is reported to have been mined during the period of
Armenian occupation.
During 2025, the Group continued the digitisation and integration of all
available historical geological, geochemical, and production records. These
data are being combined with remote sensing interpretations and broader
regional geological information to reassess the area's mineral potential and
guide future exploration priorities.
Now that access to the Kyzlbulag Contract Area and former mine sites has been
restored, field evaluations will be undertaken. These will include validation
of historical mineralisation targets and an assessment of potential residual
ore at the Kyzlbulag deposit.
Sale of the Group's products
Important to the Group's success is its ability to transport its products to
market and sell them without disruption.
In the year ended 31 December 2025, the Group shipped all its gold doré to
Switzerland for refining by MKS Finance SA. The logistics of transport and
sale are well established and gold doré shipped from Gedabek arrives in
Switzerland within three to five days. The proceeds of the estimated 90 per
cent of the gold content of the doré is sold and revenue recognised within
one to two days of receipt of the doré. The Group, at its discretion, can
sell the resulting refined gold and silver bullion to the refiner. All sales
of gold and silver bullion in 2025 were made to MKS Finance SA.
The Gedabek and Demirli mine sites both have good road transportation links.
The Group established two logistics centres in 2025, one each for its Gedabek
and Demirli mine sites. These logistics centres, which have warehousing and
material handling facilities, are both situated close to the main Baku to
Georgia highway. Copper and precious metal concentrate is initially
transported to the respective logistics centres by the Group. The concentrate
is then collected by truck from the logistics centres by the purchaser. The
Group sells its copper concentrate to three metal traders as detailed in note
6 to the Group financial statements. The contracts with each metal trader are
periodically renewed and each new contract requires the approval of the
Government of Azerbaijan.
Copper Giant Resources Corp. (formerly Libero Copper & Gold Corporation)
("Copper Giant")
Copper Giant owns the Mocoa copper property in Colombia. The Company's
shareholding in Copper Giant was unchanged in 2025 with no further investment
being made. The Group's interest was held as an equity investment throughout
2025.
Further information can be found at https://coppergiant.co/.
Principal risks and uncertainties
Country risk in Azerbaijan
The Group's wholly owned operations are solely in Azerbaijan and are therefore
at risk of adverse changes to the regulatory or fiscal regime within the
country. However, Azerbaijan is outward looking and desirous of attracting
direct foreign investment and the Company believes the country will be
sensitive to the adverse effect of any proposed changes in the future. In
addition, Azerbaijan has historically had a stable operating environment, and
the Company maintains very close links with all relevant authorities.
Operational risk
The Company currently produces all its products for sale at Gedabek and
Demirli. Planned production may not be achieved as a result of unforeseen
operational problems, machinery malfunction or other disruptions. Operating
costs and profits for commercial production therefore remain subject to
variation. The Group monitors its production daily and has robust procedures
in place to effectively manage these risks. Planned production may also not be
achieved due to lower ore being available than predicted by its geological
models. The Company maintains active exploration and other geological
programmes to minimise the risk.
Commodity price risk
The Group's revenues are exposed to fluctuations in the price of gold, silver
and copper and all fluctuations have a direct impact on the operating profit
and cash flow of the Group. Whilst the Group has no control over the selling
price of its commodities, it has very robust cost controls to minimise
expenditure to ensure it can withstand any prolonged period of commodity price
weakness. The Group actively monitors all changes in commodity prices to
understand the impact on its business. The directors keep under review the
potential benefit of hedging which it carries out from time to time. The Group
did not hedge any sales of copper and gold in 2025.
Foreign currency risk
The Group reports in United States Dollars and a large proportion of its costs
are incurred in United States Dollars. It also conducts business in Euros,
Azerbaijan Manats and United Kingdom Sterling. The Group does not currently
hedge its exposure to any foreign currency exchange rate exposure, although it
continues to review this periodically.
Liquidity and interest rate risk
The Group utilised various credit lines from several banks in Azerbaijan
throughout 2025. This was primarily to provide working capital whilst the
Gilar and Demirli mines were brought into production. The banks loans were all
at a fixed rate of interest and therefore the Group had no interest rate risk
in respect of bank loans during 2025.
The Group also utilised a vendor financing facility which carries interest at
a rate of CME Term SOFR plus a margin of 2 per cent. Given the size of the
borrowing and relative stability of interest rates, the Group does not
consider that this variable rate presents any material interest rate risk to
the Group.
Russian invasion of Ukraine and US/Iran war
The Company is unaffected directly by the Russian invasion of Ukraine or the
US/Iran war. It is also unaffected by Government or private individuals
sanctioned as a result of these wars. The Company is subject to changing
global macro-economic conditions as a result of these wars such as higher
input costs.
Key performance indicators
The Group has adopted certain key performance indicators ("KPIs") which enable
it to measure its financial performance. These KPIs are as follows:
1 Profit before taxation. This is the key performance indicator used by the
Group. It gives insight into cost management, production growth and
performance efficiency.
2 Net cash provided by operating activities. This is a complementary
measure to profit before taxation and demonstrates conversion of underlying
earnings into cash. It provides additional insight into how we are managing
costs and increasing efficiency and productivity across the business in order
to deliver increasing returns.
3 Free cash flow ("FCF"). FCF is calculated as net cash from operating
activities, less expenditure on property, plant and equipment and mine
development, and Investment in exploration and evaluation assets including
other intangible assets.
Reza Vaziri
President and chief executive
26 May 2026
Financial review
Currency of financial review
References to "$" and "cents" are to United States dollars and cents.
References to "£" and "p" are to United Kingdom Sterling pounds and pence.
References to AZN are to the Azerbaijan New Manat. References to "m" are to
million and some figures below may not sum due to rounding.
Group statement of income
The Group generated revenues in 2025 of $122.8m (2024: $39.6m) from the sales
of gold doré, gold and silver bullion and copper and precious metal
concentrate. The Group's revenues were higher in 2025 due to increased
production due to a full year of operation of the Gedabek site and the start
of operations of the Gilar and Demilri mines in the year and higher metal
selling prices.
The revenues in 2025 included $68.3m (2024: $37.1m) generated from sales of
gold and silver bullion from the Group's share of the production of doré
bars. Bullion sales in 2025 were 19,631 (2024: 15,251) ounces of gold and
20,935 (2024: 10,563) ounces of silver at an average price of $3,441 (2024:
$2,432) per ounce and $37 (2024: $29) per ounce respectively. In addition, the
Group generated revenue in 2025 of $54.5m (2024: $2.5m) from the sale of
29,695 (2024: 1,519) dry metric tonnes of copper and precious metal
concentrate. The Group's concentrate sales in 2025 for the Gedabek and Demirli
mines in 2025 were $41.4m and $13.1m respectively. The Group's revenue
benefited in the year from a higher average price of gold at $3,441 (2024:
$2,390) per ounce and a higher average price of copper at $9,797 (2024:
$9,267) per tonne. The Group made buy and hold sales of copper concentrate in
December 2025 of 4,444 dry metric tonnes totalling $8.6m (2024:nil). Buy and
hold sales are where the inventory was not delivered to the purchaser at 31
December 2025. The inventory sold was kept on the Group's premises but
segregated from other inventory and not available for sale.
The were no precious metal or copper sales made under any hedging programme in
2025. In March and April 2024, 1,600 ounces of gold were sold under a hedging
programme started in 2023 at an average price of $1,976.85 per ounce. The
Group generated lower revenue in 2024 of $30,600 from the hedging programme,
calculated by comparing the hedged sale price with the spot price at each date
of sale.
The Group incurred cost of sales in 2025 of $68.2m (2024: $49.7m) as follows:
2025 2024
$m $m
Gedabek 54.6 49.7
Demirli 13.6 -
Total cost of sales 68.2 49.7
The costs of sales at Gedabek in 2025 increased due to increased production
and the opening of the Gilar mine effective May. The Demirli mine only
operated in 2025.
Depreciation of owned assets in 2025 increased to $13.5m compared to $10.5m in
2024. Accumulated mine development costs within producing mines are
depreciated and amortised on a unit-of-production basis over the economically
recoverable reserves of the mine concerned or by the straight-line method. The
costs of the producing mines which are depreciated include future capital
development which will be required to process the economically recoverable
reserves. The depreciation of right of use assets in 2025 was $8.5m compared
to $0.8m in 2024. This was due to the depreciation of the Demirli property
complex which was leased in 2025. The Demirli property complex is depreciated
on a straight line basis.
The Group incurred administration expenses in 2025 of $9.3m (2024: $6.6m) as
follows:
2025 2024
$m $m
Gedabek 0.3 0.2
Demirli 0.8 0.3
Baku office 5.5 3.1
Corporate 2.7 3.0
Total administration costs 9.3 6.6
The Demirli administration costs increased as the site commenced production in
2025. Baku office costs increased due to the increased headcount required for
the administration of Demirli in the year. The Baku administrative headcount
at 31 December 2025 was 56 (2024: 46).
The majority of the administration costs are incurred in either Azerbaijan New
Manats, the United States dollar or United Kingdom pounds sterling. The
Azerbaijan New Manat was stable against the US dollar in 2025 at an exchange
rate of $1 equals AZN1.7. The United States dollar to the United Kingdom
Pounds Sterling exchange rate was relatively volatile in 2025 with the Pound
Sterling slowly strengthening during 2025 from £1 equals $1.25 at the
beginning of January to £1 equals $1.34 at the end of December.
Other operating expenses of $4.4m (2024: $1.7m) include impairment of
inventory of $3.3m (2024: $nil) selling costs of $0.3m (2024: $0.2m). Selling
costs for 2025 comprised transportation costs of gold doré of $0.2m and gold
doré refining costs of $0.1m. Selling costs increased due to the increased
product sold in the 2025.
Finance costs in 2025 were $5.2m (2024: $3.0m). Finance costs comprise
interest on borrowings and lease liabilities, interest on unwinding the
discount on provisions, interest on deposit received from a customer and
interest on the AzerGold CJSC creditor. Finance costs increased in 2025
compared to 2024 due to the Group's increase in borrowings in 2025, and
additional finance charges in 2025, in respect of the lease and rehabilitation
provision of the Demirli mine.
The Group's investment in Copper Giant Resources Corp (formerly Libero Copper
& Gold Corporation) ("Copper Giant") remained a financial asset throughout
2025. Other income of $0.3m (2024: Other expense of $0.1m) was recorded in
respect of Copper Giant. This was the revaluation of the Group's shareholding
to market value at 31 December 2025.
The Group recorded an impairment charge in 2025 in respect of its historical
geological exploration expense of $7.6m (2024: $1.3m). The 2025 charge was
$2.6m in respect of Ordubad and $5.0m in respect of Gedabek.
The Group recorded a profit before taxation in 2025 of $25.8m (2024: loss
before taxation $21.3m). The profit in 2025 arose from a full year of
operations and the start of production from the Gilar mine at the Gedabek site
in May 2025 and start of production at the Demirli mine site in July 2025.
The Group had a taxation charge in 2025 of $8.2m (2024: benefit of $3.8m).
This comprised a current income tax charge of $0.2m (2024: $nil) and a
deferred tax charge of $8.0m (2024: benefit of $3.8m). R.V. Investment Group
Services ("RVIG") in Azerbaijan generated taxable profits in 2025 of $22.8m
(2024: losses of $5.1m). RVIG's taxable profits are taxed at 32 per cent. (the
corporation tax rate stipulated in the Group's production sharing agreement).
RVIG had tax losses available for carry forward of $nil at 31 December 2025
(2024: $22.4m).
All-in sustaining cost of gold and copper production
The Group will not report an all-in sustaining costs ("AISC") for 2024 and
2025. AISC has not been presented for 2024, as operating costs for that period
included significant non-production expenditures, including site care and
maintenance costs at Gedabek, expenses associated with an idle processing
plant, and workforce costs where a substantial proportion of employees were on
administrative leave. In 2025, Demirli and Gilar both commenced operations
mid-year. As a result, AISC for 2024 and 2025 would not provide a meaningful
measure of operating performance.
Group statement of financial position
Non-current assets
Non-current assets increased from $101.0m at the end of 2024 to $147.2m at the
end of 2025. Intangible assets decreased by $6.6m from $24.0m at the end of
2024 to $17.4m at the end of 2025 due to transfers of intangible assets to
assets under construction at Gedabek of $0.1m, amortisation of $0.4m and
impairment of $7.6m. This was partially offset by additions of $1.4m (2024:
$2.2m). Property, plant and equipment were higher by $11.0m due to additions
of $25.6m and transfer from intangibles of $0.1m partially offset by
depreciation of $13.5m. The rehabilitation provision increased by $3.8m due to
the increase of the Gedabek rehabilitation provision of $1.3m and the
inclusion of the rehabilitation provision of Demirli of $2.5m.
Right of use assets at $33.0m were $31.3m higher in 2025 compared to $1.7m in
2024. Additions of $39.8m were partially offset by depreciation of $8.5m. The
additions of $39.2m were in respect of the lease of the Demirli property
complex (the "Demirli Lease"). The Demirli lease is further explained below.
Demirli lease
The Group leased the Demirli Property Complex in 2025. The term commencement
date (the date from which the Group commenced paying rent) was 1 October 2025.
The initial term is 3 years which is extendable, and which can be cancelled at
any time by the Group, subject to certain provisions under the Group's
Production Sharing Agreement. The lease has been accounted for as a capital
lease under the assumption that the property will be leased for three years.
This is the directors best estimate of the period that flotation processing
will take place at Demirli. The assets were made available to the Group on 30
April 2025, which is the inception date of the lease for IFRS accounting. The
period from 30 April to 30 September 2025 has been treated as a rent-free
period.
There is a base rent of $24m per annum which is variable dependent upon
production and revenues. The minimum rent payable is $15m per annum and there
is no maximum rent. The base rent will be reduced, if in any calendar year, 75
per cent. of the revenue from the flotation plant less operating and capital
expenses (the "Minimum Rent") is less than $24 million. The Minimum Rent will
be paid for that calendar year subject an overall lower limit of a Minimum
Rent payment of $15 million per annum. If 15 per cent. of revenue in any year
exceeds $28 million, the rent will be increased to 15 per cent. of revenue
less $4 million. This is provided 75 per cent. of revenue less operating and
capital expenses is greater than $28 million. The Group's usual production
sharing arrangements will apply to Demirli. The rent will be included in the
Demirli recoverable costs in accordance with the production sharing agreement
and will be deductible for tax.
The business plan used to calculate the capitalised value of the lease assumes
only the minimum rent of $15m per annum will be paid over the 3 years and a
discount rate of 7.0 per cent. per annum. Under these assumptions, the
capitalised value of the lease is $39.3m. Additional expenditure to the
Demirli property complex to make it fully operational was $11.2m which was
capitalised as leasehold improvements within the property, plant and
equipment. The amount of rent payable used to calculate the capital value of
the lease is from a business plan for Demirli prepared using the directors'
best estimates. The right of use asset for Demirli is depreciated on a
straight-line basis.
Current assets
Current assets increased by $49.1m to $92.1m at 31 December 2025 compared to
$43.0m at 31 December 2024. All categories of current assets increased due to
the increased size of the operations of the business in 2025.
Inventories increased from $24.7m in 2024 to $37.5m in 2025 due to increases
in metal in circuit and the tailings dam, ore stockpiles and finished goods.
The increases in metal in circuit and tailings dam were due to increased
production in 2025. There were 366 ounces of gold within metal in circuit
valued at $8.0m at 31 December 2025 compared to 18.0 ounces of gold within
metal in circuit valued at $0.4m at 31 December 2024. Gold in the tailings dam
at 31 December 2025 was 217 ounces valued at $0.7m (2024: 217 ounces valued at
$0.5m). Ore stockpiles increased due to stockpiling of Gilar ore at Gedabek
during 2025 and the inclusion for the first time of ore stockpiled at Demirli.
In total (including ore stockpiles classified as non-current assets) there
were 17,770,000 tonnes of ore stockpiled at 31 December 2025 compared to
568,000 tonnes at 31 December 2024 valued at $17.4m and $6.7m respectively. At
31 December 2025 there was 1,414 tonnes of copper concentrate in inventory
valued at $8.0m (2024: 58 tonnes valued at $0.5m) and 795 ounces of gold
bullion valued at $2.0m (2024: 1,055 ounces valued at $2.3m).
Trade and other receivables increased from $13.0m in 2024 to $24.4m in 2025.
The main reasons were an increase of gold held on behalf of the Government of
Azerbaijan, trade receivables and prepayments. Gold held on behalf of the
Government at 31 December 2025 was $14.3m (2024 $7.5m). This was 3,320 ounces
of gold (2024: 2,862 ounces) due to the Government of Azerbaijan valued at the
market price of gold at 31 December 2025 of $4,308 per ounce (31 December
2024: $2,611 per ounce). Gold held on behalf of the Government was offset by
an other creditor of equal amount. Trade receivables increased to $2.4m (2024:
$nil) due to sales of concentrate made in December 2025. Prepayments increased
to $3.6m (2024: $1.3m) due to amounts paid to suppliers in respect of
production at the Gilar mine and the Demirli flotation plant.
The Group's cash balances at 31 December 2025 were $21.2m (31 December 2024:
$0.9m) and restricted cash of $9.0m (31 December 2024: $6.0m) which is not
available for use by the Group as it is pledged as security for two loans from
a bank. Surplus cash during the year was maintained in US dollars and was
placed on fixed deposit with banks in Azerbaijan at tenors of between one to
three months at interest rates of around 2.5 to 4.0 per cent.
Current liabilities
All categories of current liabilities increased due to the growth of the
business.
Trade creditors increased from $5.5m at 31 December 2024 to $11.1m at 31
December 2025 due to increased activity. Gold held on behalf of the Government
of Azerbaijan increased from $7.5m to $14.3m as set out above in current
assets. Trade and other liabilities at 31 December 2024 also included a $3.4m
creditor for geological data which was settled in 2025. There was also an
amount owed the Government of Azerbaijan in respect of copper concentrate
sales of $7.3m (2024: 1.0m). This increased due to increased copper
concentrate sales in 2025. The increase in lease liabilities is discussed
below.
Interest bearing loans and borrowings
Total borrowings at fair value including interest at 31 December 2025 were
$27.7m (31 December 2024: $21.6m). These comprise borrowings from local banks
in Azerbaijan totalling $25.8m (2024: $18.5m) and a vendor financing loan of
$1.9m (2024: $3.1m). The total liability is disclosed as a current liability
of $22.2m (2024: $18.5m) and non-current liability of $5.5m (2024: $3.1m). The
Group entered into 4 new loans from local Azerbaijan banks totalling $12.0
million in 2025. These loans bear interest rates of between 5 per cent. to 8.5
per cent. $5.0m of the loans are repayable in 2026 and $7.0m of the loans are
repayable in December 2028. The principal of the loans are repayable either at
the end of the loan term or throughout the life of the loan on a fixed
repayment, reducing principal balance basis. Total principal repayments on its
borrowings in 2025 were $6.0m (2024: $2.8m).
The Group received the proceeds of a vendor financing facility with
Caterpillar Financial Services Corporation ("Caterpillar") in 2024 of $3.7m.
The interest rate is CME Term SOFR rate plus a margin of 2 per cent. and
repayment of capital is by 12 equal quarterly instalments. The amount
outstanding at 31 December 2025 was $1.9m (2024: $3.1m). The loan is subject
to net debt to EBITDA and net worth covenants. The Group complied with these
covenants at 31 December 2025.
Non-current liabilities
As at 31 December 2025 non-current liabilities of the Group comprises of
provision for rehabilitation in the amount of $22.9m (2024: $19.1m),
borrowings in the amount of $5.5m (2024: $3.1m), deferred tax liability in the
amount of $24.5m (2024: $16.5m) and lease liabilities in the amount of $25.5m
(2024: $1.5m). The provision for rehabilitation includes the provision for
Demirli, for the first time, of $2.5m. The provision for rehabilitation for
Gedabek also increased to $20.4m. Lease liabilities are separately discussed
below.
Lease liabilities
Total lease liabilities at 31 December 2025 were $39.2m (2024: $2.1m) of which
$13.7m were current liabilities and $25.5m were liabilities due after one
year. The increase in lease liabilities was due to the leasing of the Demirli
property complex in 2025. Lease liabilities incurred finance costs of $2.0m
and repayment of the lease liabilities in 2025 was $0.8m.
Net assets
Net assets were $85.2m at the end of 2025 compared to $67.5m at the end of
2024. The net assets were higher due to an increase in retained earnings as a
result of the profit in 2025.
Equity
The Group's gearing ratio at 31 December 2024 and December 2025 was 35.3 per
cent. and 78.5 per cent. respectively. The calculation of the gearing ratio is
set out in note 25 - financial instruments to the Group financial statements.
The Group issued 100,000 (2024: nil) ordinary shares in 2025 under an employee
share option scheme. This resulted in an increase in issued share capital of
$1,335 and an increase in the share premium account of $0.3m. The Group's
holding company did not buy back any ordinary shares in 2024 or 2025. However,
the share buy backs in 2022 were deemed unlawful due to lack of distributable
reserves of the Group's holding company. Following a shareholder meeting and
execution of a share buy back deed with S P Angel Corporate Finance LLP, legal
force was given to the share backs in 2025. The share buy backs have therefore
been accounted for in 2025. No dividends were paid in 2025.
Copper Giant Resources Corp. (formerly Libero Copper & Gold Corporation)
("Copper Giant")
The Group's investment in Copper Giant was reclassified as a financial asset
on 15 February 2024 as the Group's interest reduced to 5.7 per cent.
and Michael Sununu resigned from the board. There was no further investment
in Copper Giant.
From 15 February 2024, the investment in Copper Giant is included in the
Group's balance sheet by reference to their closing quoted value at each
respective balance sheet date. The market value of the Group's shares in
Copper Giant at 31 December 2025 was $0.8m (31 December 2024: $0.5m). In 2025,
an unrealised profit on the value of the shares of $0.3m was recorded as other
income (2024: unrealised loss of $0.1m recorded as other expense). The
investment is classified as a non-current financial asset as the directors do
not intend to sell the shares within 12 months of the balance sheet date.
Group cash flow statement
Operating cash inflow before movements in working capital for 2025 was $67.0m
(2024: outflow of $6.6m). Operating cash was improved in the year due to the
start of production from the Gilar and Demirli mines.
Working capital movements absorbed cash of $20.2m (2024: generated cash of
$15.2m) due to an increase in inventories which were higher by $22.9m (2024:
lower by $9.9m) and trade and other receivables which were higher by $6.5m
(2024: lower by $3.4m). The increase in inventories and trade and other
receivables was due to the higher activity in 2025.
Cash from operations in 2025 was $46.7m compared to $8.6m in 2024 due to the
higher cash flows from operations.
The Company paid corporation tax in 2025 of $nil (2024: $nil) in Azerbaijan in
accordance with local requirements as its profits were extinguished by losses
brought forward. The Group has no tax losses carried forward in Azerbaijan at
31 December 2025 (2024: $22.4m).
Expenditure on property, plant and equipment and mine development in 2025 was
$25.9m (2024: $8.9m). The main additions in 2025 were the development costs of
$11.2m for Demirli and $3.5m for the Gilar mine. The expenditure also included
$3.2m for the final stage of the Gedabek tailings dam wall raise.
The Group was also financed by two concentrate prepayment agreements with
Trafigura Pty. Ltd. The Group drew down $16.5m under this facility in 2025,
but all amounts were repaid by 31 December 2025.
Expenditure on intangible assets in 2025 was $1.4m (2024: $2.1m) which was
expenditure on exploration and evaluation. The main expenditure on exploration
and evaluation expenditure was $0.9m (2024: $0.7m) and $0.1m (2024: nil) at
Gedabek and Vejnaly respectively. Expenditure on exploration and evaluation in
2025 was curtailed to conserve funds due to the partial suspension of
processing in the year.
Dividends
In respect of the year ended 31 December 2025, the Group did not pay an
interim dividend and a final dividend of 4 United States cents is proposed.
Production Sharing Agreement
Under the terms of the Production Sharing Agreement (the "PSA") with the
Government of Azerbaijan (the "Government"), the Group and the Government
share the commercial products of each mine. The Government's share is 51 per
cent. of "Profit Production". Profit Production is defined as the value of
production, less all capital and operating cash costs incurred during the
period when the production took place. Profit Production for any period is
subject to a minimum of 25 per cent. of the value of the production. This is
to ensure the Government always receives a share of production. The minimum
Profit Production is applied when the total capital and operating cash costs
(including any unrecovered costs carried forward from previous periods) are
greater than 75 per cent. of the value of production. All operating and
capital cash costs in excess of 75 per cent. of the value of production can be
carried forward indefinitely and set off against the value of future
production.
Profit Production and unrecovered costs are calculated separately for each
Contract Area from the total production and total costs for each Contract
Area. Costs incurred in one Contract Area cannot be offset against production
of a different Contract Area. Unrecovered costs can only be recovered against
future production from their respective contract area.
Profit Production for the Group has been subject to the minimum 25 per cent.
for all years since commencement of production including 2025 for the Gedabek
Contract Area. The Government's share of production in 2024 (as in all
previous years) was therefore 12.75 per cent. being 51 per cent. of 25 per
cent. with the Group entitled to the remaining 87.25 per cent. The Group was
therefore subject to an effective royalty on its revenues in 2025 of 12.75 per
cent. (2024: 12.75 per cent.) of the value of its production at Gedabek and
Demirli mines.
The Group can recover the following costs in accordance with the PSA for each
Contract Area as follows:
• all direct operating expenses of the mine;
• all exploration expenses;
• all capital expenditure incurred on the mine;
• an allocation of corporate overheads - currently, overheads are
apportioned to Gedabek according to the ratio of direct capital and operating
expenditure at the Gedabek contract area compared with direct capital and
operational expenditure at the Gosha and Ordubad contract areas; and
• an imputed interest rate of United States Dollar LIBOR + 4 per cent.
per annum on any unrecovered costs.
The total unrecovered costs (operating costs and capital expenditure) for the
Group's eight contract areas are as follows:
Contract area Total unrecovered costs ($m)
31 December 31 December
2025 2024
Gedabek 70.5 82.0
Gosha 41.9 38.3
Ordubad 40.1 36.6
Vejnaly 2.7 2.3
Garadag 4.5 1.4
Xarxar 4.8 3.9
Demirli 9.3 0.3
Kyzlbulag 3.0 -
Foreign currency exposure
The Group reports in US dollars and a substantial proportion of its business
is conducted in either US dollars or the Azerbaijan Manat ("AZN") which has
been stable at AZN 1 equalling approximately $0.59 during the year ended 31
December 2025. The Company's revenues and its debt facility are also
denominated in US dollars. The Company does not currently have any significant
exposure to foreign exchange fluctuations and the situation is kept under
review.
Calculation of non-IFRS financial indicators
Net debt/cash
Calculated as the cash and cash equivalents minus current and non-current
interest-bearing loans and borrowings.
Free cash flow
Calculated as net cash from operating activities less expenditure on property,
plant and equipment and mine development and, Investment in exploration and
evaluation assets including other intangible assets.
Going concern
Preparation of financial statements on a going concern basis
The directors have prepared the Group financial statements on a going concern
basis after reviewing the Group's forecast cash position for the period from
the date of signing these financial statements to 30 June 2027 (the "going
concern review period") and satisfying themselves that the Group will have
sufficient funds on hand to meet its obligations as and when they fall due
over the period of their assessment. Appropriate rigour and diligence have
been applied by the directors who believe the assumptions are prepared on a
realistic basis using the best available information.
Main business of the Group
The Group produces gold and copper at its Gedabek mining concession in
northwestern Azerbaijan. Ore mined at Gedabek produces gold doré by heap and
agitation leaching and copper concentrate (which also contains gold and
silver) from SART and flotation processing. The Group's new Gilar underground
mine which commenced production in May 2025 has substantially increased
production at Gedabek as its ore is much richer than the Group's older legacy
mines.
The Group also commenced copper production from its Demirli property in
Karabakh in July 2025. Demirli is an existing open pit copper mine and
associated flotation plant which was acquired in 2022 and has been extensively
refurbished by the Group. It produces a copper concentrate which is delivered
to offtakers at a dedicated logistics centre.
Business plans for Gedabek and Demirli
The directors have prepared a cash flow forecast for the Gedabek operation
that assumes production is consistent with the business plan and uses a gold
price of between $4,100 and $4,500 per ounce and a copper price of between
$11,500 and $12,000 per tonne. This cash flow forecast shows that the Gedabek
operation is cash generative throughout the going concern review period and
able to fund its working capital, capital expenditure and financing operations
from cash generated from its operations.
The directors have started the process to apply for the second five-year
extension of the Gedabek licence from March 2027 to March 2032 in accordance
with the Group's production sharing agreement. The directors have judged the
second five-year extension will be obtained (see note 32 - "Contingencies and
commitments" to the Group financial statements)
The directors have also prepared a cash flow forecast for the Group's new
Demirli operation which assumes production is consistent with the business
plan and uses the same copper price as the Gedabek business plan. The cash
flow forecast shows that Demirli will be cash generative throughout the going
concern review period and able to fund its working capital and capital
expenditure from cash generated from its operations.
Sensitivities of business plans
The directors have considered a range of outcomes for the major variables
which effect the cash flow. These are as follows:
· Production
· Costs
· Metal selling prices
Sensitivity analysis was performed on the cash flow of a decrease of 20 per
cent. for production and metal selling prices and an increase in costs of 20
per cent. The analysis showed that under this range of sensitivities, the
Group could still continue as a going concern.
Given the ongoing evaluation of potential resources and reserves at Demirli, a
downside scenario, being an indefinite pause in production at Demirli, has
been modelled. This scenario shows that cancellation of the lease is possible
under the terms of the lease agreement, and the Group would have sufficient
cash from the operations at Gedabek to meet its liabilities as they fall due.
The directors do not consider this scenario likely, but it is one of the
sensitivity scenarios that has been considered.
Financial condition and credit facilities available to the Group
The Group had cash reserves of $37.2 million and debt (excluding leases) of
$19.5 million at 31 March 2026. The Group generated net cash of $15.4 million
in the three months to 31 March 2026.
The Group has in place several credit facilities:
· An AZN 55 million ($32.3 million) General credit agreement with the
International Bank of Azerbaijan ("IBA") with minimal conditions on drawdown.
The Group had outstanding borrowings of $17.3 million under this facility at
31 December 2025;
· Two copper concentrate prepayment facilities with Trafigura Pte Ltd.
("Trafigura")
o A 3-month revolving, $5.0 million to $10.0 million prepayment facility for
concentrate produced at Gedabek.
o A 3-month revolving prepayment facility of up to $25 million at an interest
rate of SOFR plus 4 per cent. per annum for concentrate produced at Demirli.
· A $5 million loan facility with Yapi Credit Bank in Azerbaijan. The
Group had utilised $3 million of this facility at 31 December 2025.
There was $nil outstanding under the Trafigura Pte Ltd. facilities at 31
December 2025.
The Group's business plans show, that as the Group will be cash generative,
the Group does not intend to make any further borrowings in the going concern
review period to fund its current operations. However, these facilities are
available to cover any shortfalls in cash generation against the business
plans.
The Group closed a vendor refinancing in 2024 and $1.9 million is outstanding
at 31 December 2025. The loan will be repaid in quarterly instalments with the
final instalment in July 2027. The loan is subject to a net debt to EBITDA
ratio covenant and a net worth covenant. The Group complied with these
covenants for the year ended 31 December 2025.
Directors' going concern opinion
The Group's business activities, together with the factors likely to affect
its future development, performance and position, can be found within the
chairman's statement above, the president and chief executive's review above
and the strategic report on pages above. The financial position of the Group,
its cash flow, liquidity position and borrowing facilities are discussed
within this financial review. In addition, note 25 to the Group financial
statements below includes the Group's financial management risk objectives and
details of its financial instrument exposures to credit risk and liquidity
risk.
After making due enquiry, the directors have a reasonable expectation that the
Company and the Group have adequate resources to continue in operational
existence for the foreseeable future. Accordingly, the directors continue to
adopt the going concern basis in preparing the annual report and financial
statements.
William Morgan
Chief financial officer
26 May 2026
Directors emoluments
Year ended 31 December 2025 Consultancy Fees Benefits Total
$ $ $ $
John Monhemius - 71,071 - 71,071
John Sununu - 74,400 - 74,400
Michael Sununu - 54,000 - 54,000
Reza Vaziri 576,099 54,000 46,165 676,264
Khosrow Zamani - 123,600 - 123,600
576,099 377,071 46,165 999,335
Year ended 31 December 2024 Consultancy Fees Benefits Total
$ $ $ $
John Monhemius 14,157 58,329 - 72,486
John Sununu - 74,400 - 74,400
Michael Sununu - 54,000 - 54,000
Reza Vaziri 584,981 54,000 46,238 685,219
Khosrow Zamani - 123,600 - 123,600
599,138 364,329 46,238 1,009,705
Directors' fees and consultancy for 2024 and 2025 were paid in cash.
No director held or exercised any share options during the years ended 31
December 2024 and 31 December 2025.
Group statement of income
year ended 31 December 2025
2025 2024
Continuing operations Notes $000 $000
Revenue 6 122,789 39,585
Cost of sales (68,174) (49,652)
Gross profit/(loss) 54,615 (10,067)
Other operating income 7 710 1,340
Administrative expenses (9,253) (6,570)
Other operating expenses 7 (4,427) (1,694)
Impairment charge of development assets 15 (3,620) (534)
Impairment of geological exploration 14 (7,569) (1,314)
Operating profit/(loss) 8 30,456 (18,839)
Finance costs 10 (5,237) (2,973)
Finance income 313 289
Other income 7 891 -
Other expense 7 (596) (75)
Share of loss of an associate company 11 - (46)
Reversal of impairment for investment in an associate company 11 - 354
Profit/(loss) before tax 25,827 (21,290)
Income tax (charge)/benefit 12 (8,146) 3,788
Profit/(loss) attributable to the equity holders of the parent 17,681 (17,502)
Profit/(loss) per share attributable to the equity holders of the parent
Basic (US cents per share) 13 15.5 (15.3)
Diluted (US cents per share) 13 15.4 (15.3)
Group statement of comprehensive income
year ended 31 December 2025
2025 2024
$000 $000
Profit/(loss) for the year 17,681 (17,502)
Total comprehensive profit/(loss) 17,681 (17,502)
Total comprehensive profit/(loss) for the year attributable to the equity 17,681 (17,502)
holders of the parent
Group statement of financial position
31 December 2025
2025 2024 Restated* 1 January 2024 Restated*
Notes $000 $000 $000
Non-current assets
Intangible assets 14 17,409 23,998 27,126
Property, plant and equipment 15 82,915 71,910 66,775
Right of use assets 16 32,993 1,690 2,053
Investment in an associate company - - 242
Financial assets 17 762 475 -
Inventory 18 12,575 5,716 -
Other receivables 19 541 260 975
147,195 104,049 97,171
Current assets
Inventory 18 37,467 24,733 40,342
Trade and other receivables 19 24,408 11,407 8,799
Restricted cash 20 9,000 6,000 6,000
Cash and cash equivalents 20 21,247 886 4,477
92,122 43,026 59,618
Total assets 239,317 147,075 156,789
Current liabilities
Trade and other payables 21 (39,630) (19,700) (9,200)
Income tax payable 12 (142) - -
Interest-bearing loans and borrowings 22 (22,181) (18,546) (13,629)
Lease liabilities 16 (13,720) (691) (555)
(75,672) (38,937) (23,384)
Net current assets 16,449 4,089 36,234
Non-current liabilities
Other payables 21 - (476) (4,219)
Provision for rehabilitation 24 (22,940) (19,130) (14,948)
Interest-bearing loans and borrowings 22 (5,507) (3,083) (7,105)
Lease liabilities 16 (25,488) (1,456) (1,916)
Deferred tax liability 12 (24,481) (16,476) (20,264)
(78,416) (40,621) (46,452)
Total liabilities (154,089) (79,558) (71,836)
Net assets 85,228 67,517 84,953
Equity
Share capital 26 2,017 2,016 2,016
Share premium 27 338 33 33
Treasury shares 28 (145) - -
Share-based payment reserve 29 445 576 571
Merger reserve 26 46,206 46,206 46,206
Foreign currency translation reserve (172) (172) (233)
Retained earning 36,539 18,858 36,360
Total equity 85,228 67,517 84,953
* See Note 34 "Prior year restatements" for details regarding restatement.
Group statement of cash flows
year ended 31 December 2025
2025 2024
Notes $000 $000
Cash flows from operating activities
Profit/(loss) before tax 25,827 (21,290)
Adjustments to reconcile profit/(loss) before tax to net cash flows:
Finance costs 10 5,237 2,973
Finance income (313) (289)
Unrealised loss on financial instruments 7 - 75
Gain on the modification of lease liabilities 7 - (8)
Loss on impairment of inventory 18 3,295 -
Gain on cancellation of trade payables 7 (697) (1,332)
Depreciation of owned assets 15 13,512 10,544
Depreciation of leased assets 16 8,506 729
Amortisation of mining rights and other intangible assets 14 388 387
Gain on fair value of investment (287) -
Share-based payment expense 29 22 5
Share of loss of an associate company 11 - 46
Reversal of impairment for investment in an associate company 11 - (354)
Impairment of development assets 15 3,620 534
Impairment of geological exploration 14 7,569 1,314
Foreign exchange loss 236 45
Operating cash inflow/(outflow) before movement in working capital 66,915 (6,621)
(Increase)/decrease in trade and other receivables (6,536) 3,366
(Increase)/decrease in inventories (22,909) 9,897
Increase in trade and other payables 9,266 1,936
Cash from operations 46,736 8,578
Income taxes paid - -
Net cash flow generated from operating activities 46,736 8,578
Cash flows from investing activities
Expenditure on property, plant and equipment and mine development (25,916) (8,917)
Investment in exploration and evaluation assets including other intangible (1,349) (2,147)
assets
Placement of restricted cash 20 (3,000) -
Interest received 243 243
Net cash used in investing activities (30,022) (10,821)
Cash flows from financing activities
Issue of ordinary shares 26,27 100 -
Proceeds from borrowings 22 12,000 3,708
Cash received from concentrate repayments - 1,681
Cash repaid from concentrate prepayments - (1,681)
Repayment of borrowings 22 (5,981) (2,802)
Interest paid - borrowings 22 (1,220) (1,247)
Interest paid - lease liabilities 16 (245) (280)
Repayment of lease liabilities 16 (771) (682)
Net cash generated from / (used in) financing activities 3,883 (1,303)
Net increase/(decrease) in cash and cash equivalents 20,597 (3,546)
Net foreign exchange difference (236) (45)
Cash and cash equivalents at the beginning of the year 20 886 4,477
Cash and cash equivalents at the end of the year 20 21,247 886
Group statement of changes in equity
year ended 31 December 2025
Notes Share Share Merger Total
capital premium reserve equity
$000 $000 Share-based $000 Foreign Retained $000
payment currency earnings
Treasury reserve translation $000
shares $000 reserve
$000 $000
1 January 2024 2,016 33 (145) 571 46,206 (233) 36,360 84,808
Correction of an error* 34 - - 145 - - - - 145
1 January 2024 Restated* 2,016 33 - 571 46,206 (233) 36,360 84,953
Loss for the year - - - - - - (17,502) (17,502)
Foreign currency 61 61
translation reserve
Share based payment 23 - - - 5 - - - 5
31 December 2024 Restated* 576
2,016 33 - 46,206 (172) 18,858 67,517
Profit for the year - - - - - - 17,681 17,681
Issue of shares 1 152 - - - - - 153
Transfer from share based payment reserve 28 - 153 - (153) - - - -
Buy back of shares 29 - - (145) - - - - (145)
Share-based payment - - - 22 - - - 22
31 December 2025 2,017 338 (145) 445 46,206 (172) 36,539 85,228
* See Note 34 "Prior year restatements" for details regarding restatement.
Notes to the Group financial statements
year ended 31 December 2025
General information
Anglo Asian Mining PLC (the "Company") is a company incorporated and limited
by shares in England and Wales under the Companies Act 2006. The address of
its registered office is 78 Pall Mall, London, SW1 5ES, United Kingdom. The
Company's ordinary shares are traded on the AIM exchange of the London Stock
Exchange. The Company is a holding company. The principal activities and place
of business of the Company and its subsidiaries (the "Group") are set out in
note 31 below and the chairman's statement, the president and chief
executive's review and the strategic report above.
This announcement contains selected information from the Group's full set of
financial statements for the year ended 31 December 2025. For the Group's full
set of financial statements for the year ended 31 December 2025, please refer
to pages 68 to 106 of the Group's annual report and accounts for the year
ended 31 December 2025. These financial statements will be posted to
shareholders and made available on its website in June 2026.
Basis of preparation
The financial information for the year ended 31 December 2025 was approved by
the board of directors on 26 May 2026. The financial information has been
prepared in accordance with UK-adopted International accounting standards.
The financial information set out herein does not constitute the Group's
statutory financial statements for the year ended 31 December 2025, but is
derived from the Group's audited financial statements. The auditors have
reported on the 2025 financial statements and their reports were unqualified
and did not contain statements under s498(2) or (3) Companies Act 2006, nor
did they contain a material uncertainty in relation to going concern. The 2025
Annual Report was approved by the Board of Directors 26 May 2026, and will be
mailed to shareholders in June 2026. The financial information in this
statement is audited but does not have the status of statutory accounts within
the meaning of Section 434 of the Companies Act 2006.
The financial information has been prepared using accounting policies set out
in note 4 which are consistent with all applicable IFRSs and with those
parts of the Companies Act 2006 applicable to companies reporting under IFRSs.
For these purposes, IFRSs comprises the standards issued by the International
Accounting Standards Board and interpretations issued by the International
Financial Reporting Interpretations Committee that have been endorsed by the
UK Endorsement Board.
The financial information has been prepared under the historical cost
convention except for the treatment of share-based payments, certain trade
receivables at fair value, financial assets at fair value through profit and
loss and gold owed to the Government of Azerbaijan. The financial information
is presented in United States Dollars ("$") and all values are rounded to the
nearest thousand except where otherwise stated. In the financial information
"£" and "pence" are references to the United Kingdom pound sterling and
"CAN$" and "CAN cents" are references to Canadian dollars and cents.
The functional currency of the Company and all the Group's subsidiaries is
United States Dollars. The financial statements of each entity including the
Company are prepared in United States Dollars (see accounting policy 4.23 -
'Foreign currencies').
Going concern
Preparation of financial statements on a going concern basis
The directors have prepared the Group financial statements on a going concern
basis after reviewing the Group's forecast cash position for the period from
the date of signing these financial statements to 30 June 2027 (the "going
concern review period") and satisfying themselves that the Group will have
sufficient funds on hand to meet its obligations as and when they fall due
over the period of their assessment. Appropriate rigour and diligence have
been applied by the directors who believe the assumptions are prepared on a
realistic basis using the best available information.
Main business of the Group
The Group produces gold and copper at its Gedabek mining concession in
northwestern Azerbaijan. Ore mined at Gedabek produces gold doré by heap and
agitation leaching and copper concentrate (which also contains gold and
silver) from SART and flotation processing. The Group's new Gilar underground
mine which commenced production in May 2025 has substantially increased
production at Gedabek as its ore is much richer than the Group's older legacy
mines.
The Group also commenced copper production from its Demirli property in
Karabakh in July 2025. Demirli is an existing open pit copper mine and
associated flotation plant which was acquired in 2022 and has been extensively
refurbished by the Group. It produces a copper concentrate which is delivered
to offtakers at a dedicated logistics centre.
Business plans for Gedabek and Demirli
The directors have prepared a cash flow forecast for the Gedabek operation
that assumes production is consistent with the business plan and uses a gold
price of between $4,100 and $4,500 per ounce and a copper price of between
$11,500 and $12,000 per tonne. This cash flow forecast shows that the Gedabek
operation is cash generative throughout the going concern review period and
able to fund its working capital, capital expenditure and financing operations
from cash generated from its operations.
The directors have started the process to apply for the second five-year
extension of the Gedabek licence from March 2027 to March 2032 in accordance
with the Group's production sharing agreement. The directors have judged the
second five-year extension will be obtained (see note 32 - "Contingencies and
commitments" to the Group financial statements).
The directors have also prepared a cash flow forecast for the Group's new
Demirli operation which assumes production is consistent with the business
plan and uses the same copper price as the Gedabek business plan. The cash
flow forecast shows that Demirli will be cash generative throughout the going
concern review period and able to fund its working capital and capital
expenditure from cash generated from its operations.
Sensitivities of business plans
The directors have considered a range of outcomes for the major variables
which effect the cash flow. These are as follows:
· Production
· Costs
· Metal selling prices
Sensitivity analysis was performed on the cash flow of a decrease of 20 per
cent. for production and metal selling prices and an increase in costs of 20
per cent. The analysis showed that under this range of sensitivities, the
Group could still continue as a going concern.
Given the ongoing evaluation of potential resources and reserves at Demirli, a
downside scenario, being an indefinite pause in production at Demirli, has
been modelled. This scenario shows that cancellation of the lease is possible
under the terms of the lease agreement, and the Group would have sufficient
cash from the operations at Gedabek to meet its liabilities as they fall due.
The directors do not consider this scenario likely, but it is one of the
sensitivity scenarios that has been considered.
Financial condition and credit facilities available to the Group
The Group had cash reserves of $37.2 million and debt (excluding leases) of
$19.5 million at 31 March 2026. The Group generated net cash of $15.4 million
in the three months to 31 March 2026.
The Group has in place several credit facilities:
· An AZN 55 million ($32.3 million) General credit agreement with the
International Bank of Azerbaijan ("IBA") with minimal conditions on drawdown.
The Group had outstanding borrowings of $17.3 million under this facility at
31 December 2025;
· Two copper concentrate prepayment facilities with Trafigura Pte Ltd.
("Trafigura"):
o A 3-month revolving, $5.0 million to $10.0 million prepayment facility for
concentrate produced at Gedabek.
o A 3-month revolving prepayment facility of up to $25 million at an interest
rate of SOFR plus 4 per cent. per annum for concentrate produced at Demirli.
· A $5 million loan facility with Yapi Credit Bank in Azerbaijan. The
Group had utilised $3 million of this facility at 31 December 2025.
There was $nil outstanding under the Trafigura Pte Ltd. facilities at 31
December 2025.
The Group's business plans show, that as the Group will be cash generative,
the Group does not intend to make any further borrowings in the going concern
review period to fund its current operations. However, these facilities are
available to cover any shortfalls in cash generation against the business
plans.
The Group closed a vendor refinancing in 2024 and $1.9 million is outstanding
at 31 December 2025. The loan will be repaid in quarterly instalments with the
final instalment in July 2027. The loan is subject to a net debt to EBITDA
ratio covenant and a net worth covenant. The Group complied with these
covenants for the year ended 31 December 2025.
Directors' going concern opinion
The Group's business activities, together with the factors likely to affect
its future development, performance and position, can be found within the
chairman's statement, the president and chief executive's review and the
strategic report above. The financial position of the Group, its cash flow,
liquidity position and borrowing facilities are discussed within the financial
review above. In addition, note 25 to the Group financial statements below
includes the Group's financial management risk objectives and details of its
financial instrument exposures to credit risk and liquidity risk.
After making due enquiry, the directors have a reasonable expectation that the
Company and the Group have adequate resources to continue in operational
existence for the foreseeable future. Accordingly, the directors continue to
adopt the going concern basis in preparing the annual report and financial
statements.
3 Adoption of new and revised standards
3.1 New and amended standards and interpretations
The following amendment was applicable for annual financial statements
beginning on or after 1 January 2025. It has no impact on the consolidated
financial statements of the Group:
• Amendments to IAS 21: Lack of Exchangeability
3.2 Standards issued but not yet effective
The new and amended standards and interpretations that are issued, but not yet
effective, up to the date of issuance of the Group's financial statements are
disclosed below. The Group intends to adopt these new and amended standards
and interpretations, if applicable, when they become effective.
IFRS 18 Presentation and Disclosure in Financial Statements
In April 2024, the IASB issued IFRS 18, which replaces IAS 1 Presentation of
Financial Statements. IFRS 18 introduces new requirements for presentation
within the statement of profit or loss, including specified totals and
subtotals. Furthermore, entities are required to classify all income and
expenses within the statement of profit or loss into one of five categories:
operating, investing, financing, income taxes and discontinued operations,
whereof the first three are new.
It also requires disclosure of newly defined management-defined performance
measures, subtotals of income and expenses, and includes new requirements for
aggregation and disaggregation of financial information based on the
identified 'roles' of the primary financial statements (PFS) and the notes.
In addition, narrow-scope amendments have been made to IAS 7 Statement of Cash
Flows, which include changing the starting point for determining cash flows
from operations under the indirect method, from 'profit or loss' to 'operating
profit or loss' and removing the optionality around classification of cash
flows from dividends and interest. In addition, there are consequential
amendments to several other standards.
IFRS 18, and the amendments to the other standards, is effective for reporting
periods beginning on or after 1 January 2027, but earlier application is
permitted and must be disclosed. IFRS 18 will apply retrospectively. The Group
is currently working to identify the impacts the amendments will have on the
primary financial statements and notes to the financial statements.
IFRS 19 Subsidiaries without Public Accountability: Disclosures
In May 2024, the IASB issued IFRS 19, which allows eligible entities to elect
to apply its reduced disclosure requirements while still applying the
recognition, measurement and presentation requirements in other IFRS
accounting standards. To be eligible, at the end of the reporting period, an
entity must be a subsidiary as defined in IFRS 10, cannot have public
accountability and must have a parent (ultimate or intermediate) that prepares
consolidated financial statements, available for public use, which comply with
IFRS accounting standards.
IFRS 19 will become effective for reporting periods beginning on or after 1
January 2027, with early application permitted. As the Group's shares are
publicly traded, the Group believes that the new standard will have no effect
on its financial statements.
Annual Improvements to IFRS Accounting Standards - Volume 11
In July 2024, the IASB issued nine narrow scope amendments as part of its
periodic maintenance of IFRS accounting standards. The amendments include
clarifications, simplifications, corrections or changes to improve consistency
in IFRS 1 First-time Adoption of International Financial Reporting Standards,
IFRS 7 Financial instruments: Disclosure and its accompanying Guidance on
implementing IFRS 7, IFRS 9 Financial Instruments, IFRS 10 Consolidated
Financial Statements and IAS 7 Statements of Cash Flows.
The amendments will be effective for reporting periods beginning on or after 1
January 2026. Earlier application is permitted and must be disclosed.
The amendments are not expected to have a material impact on the Group's
consolidated financial statements.
Contracts Referencing Nature-dependent Electricity - Amendments to IFRS 9 and
IFRS 7
In December 2024, the IASB issued Amendments to IFRS 9 and IFRS 7 - Contracts
Referencing Nature-dependent Electricity. The amendments apply only to
contracts that reference nature-dependent electricity; the amendments:
Clarify the application of the 'own-use' requirements for in-scope contracts
Amend the designation requirements for a hedged item in a cash flow hedging
relationship for in-scope contracts
Add new disclosure requirements to enable investors to understand the effect
of these contracts on a company's financial performance and cash flows
The amendments will take effect for annual reporting periods starting on or
after 1 January 2026. Early adoption is allowed, but it must be disclosed. The
amendments concerning the own-use exception are to be applied retrospectively,
while the hedge accounting amendments should be applied prospectively to new
hedging relationships designated from the initial application date.
Additionally, the IFRS 7 disclosure amendments must be implemented alongside
the IFRS 9 amendments. If an entity does not restate comparative information,
it cannot present comparative disclosures.
The Group does not expect that the amendments will have a material impact on
its consolidated financial statements.
Material accounting policies
4.1 Basis of consolidation
The consolidated financial statements comprise the financial statements of the
Group and its subsidiaries as at 31 December 2025. Control is achieved when
the Group is exposed, or has rights, to variable returns from its involvement
with the investee and has the ability to affect those returns through its
power over the investee. Specifically, the Group controls an investee if, and
only if, the Group has:
· power over the investee (i.e. existing rights that give it the current
ability to direct the relevant activities of the investee);
· exposure, or rights, to variable returns from its involvement with the
investee; and
· the ability to use its power over the investee to affect its returns.
Generally, there is a presumption that a majority of voting rights result in
control. To support this presumption and when the Group has less than a
majority of the voting or similar rights of an investee, the Group considers
all relevant facts and circumstances in assessing whether it has power over an
investee, including:
· the contractual arrangement with the other vote holders of the investee;
· rights arising from other contractual arrangements; and
· the Group's voting rights and potential voting rights.
The Group reassesses whether or not it controls an investee if facts and
circumstances indicate that there are changes to one or more of the three
elements of control. Consolidation of a subsidiary begins when the Group
obtains control over the subsidiary and ceases when the Group loses control of
the subsidiary. Assets, liabilities, income and expenses of a subsidiary
acquired or disposed of during the year are included in the consolidated
financial statements from the date the Group gains control until the date the
Group ceases to control the subsidiary.
All intra-group transactions, balances, income and expenses are eliminated on
consolidation.
The financial statements of the subsidiaries are prepared for the same
reporting period as the parent company, using consistent accounting policies.
4.2 Revenue
The Group is principally engaged in the business of producing gold and silver
bullion and copper and precious metal concentrate. Revenue from contracts with
customers is recognised when control of the goods is transferred to the
customer at an amount that reflects the consideration to which the Group
expects to be entitled in exchange for those goods.
The Group has concluded that it is the principal in its revenue contracts
because it typically controls the goods before transferring them to the
customer.
I) Contract balances
a) Contract assets
A contract asset is the right to consideration in exchange for goods
transferred to the customer. If the Group performs by transferring goods to a
customer before the customer pays consideration or before payment is due, a
contract asset is recognised for the earned consideration that is conditional.
The Group does not have any contract assets as performance and a right to
consideration occurs within a short period of time and all rights to
consideration are unconditional.
b) Trade receivables
A trade receivable represents the Group's right to an amount of consideration
that is unconditional (i.e., only the passage of time is required before
payment of the consideration is due). Refer to accounting policy 4.14 for the
accounting policies for financial assets and accounting policy 4.15 for the
accounting policy for trade receivables.
c) Contract liabilities
A contract liability is the obligation to transfer goods to a customer for
which the Group has received consideration (or an amount of consideration is
due) from the customer. If a customer pays consideration before the Group
transfers goods to the customer, a contract liability is recognised when the
payment is made or the payment is due (whichever is earlier). Contract
liabilities are recognised as revenue when the Group performs under the
contract.
ii) Gold and silver sales to the refiner
For gold sales, these are sold under spot sales contracts with the Company's
gold refiners. The Group initially sends its unrefined doré to the refiner.
The refiner is contracted by the Company to perform two separate and distinct
functions, to process the doré into gold and silver bullion and to purchase
gold and silver. The gold contained in the doré may be purchased at two
different times at the discretion of the Company and instruction is given to
the refiner as to the method of sale on a shipment-by-shipment basis:
· Upon receipt of the doré. In this circumstance, the refiner will
purchase 90 per cent. of the estimated gold content of the doré. The balance
of the gold will be sold to the refiner as gold bullion following refining and
agreement of final gold content of the doré with the refiner.
· Following production of gold bullion by the refining process. During
the refining process ownership (i.e., control of the gold) does not pass to
the refiner, it is simply providing refining services to the Group.
There is no formal sales agreement for each sale of gold. Instead, there is a
deal confirmation, which sets out the terms of the sale including the
applicable spot price and this is considered to be the enforceable contract.
The only performance obligation is the sale of gold within the doré or as
bullion.
Silver is only sold to the refiner as silver bullion following the refining
process. The process of sale of the silver bullion is the same as for gold
bullion. Revenue is recognised at a point in time when control passes to the
refiner. As the gold and silver is at this time already on the premises of the
refiner, physical delivery has already taken place when the sales are made.
There are no advance payments received from the refiner, therefore no
conditional rights to consideration.
A trade receivable is recognised at the date of sale and there are only
several days between recognition of revenue and payment. The contract is
entered into and the transaction price is determined at outturn by virtue of
the deal confirmation and there are no further adjustments to this price.
Also, given each spot sale represents the enforceable contract and all
performance obligations are satisfied at that time, there are no remaining
performance obligations (unsatisfied or partially unsatisfied) requiring
disclosure. Refer to note 19 - 'Trade and other receivables' for details of
payment terms.
iii) Gold and copper in concentrate (metal in concentrate) sales
For gold and copper in concentrate (metal in concentrate) sales, delivery is
made under a binding contract. Under the terms of the contract, the trade
receivables generated are short term in nature. The performance obligation is
the delivery of the concentrate to the customer, or for bill and hold sales,
segregation of the inventory.
The Group's sales of metal in concentrate allow for price adjustments based on
the market price at the end of the relevant quotational period ("QP")
stipulated in the contract. These are referred to as provisional pricing
arrangements and are such that the selling price for metal in concentrate is
based on prevailing spot prices on a specified future date (or average of
future spot prices over a defined period, usually a week) after shipment to
the customer. Adjustments to the sales price occur based on movements in
quoted market prices up to the end of the QP. The period between provisional
invoicing and the end of the QP can be between one and four months.
Revenue is recognised when control passes to the customer, which occurs at a
point in time when the metal in concentrate is either physically delivered to
the customer or control passes to the customer but the metal in concentrate is
held by the Group for future delivery ("Bill and Hold Sale"). Revenue is only
recognised under a Bill and Hold Sale when the following criteria are met:
· The customer has requested the arrangement.
· The metal in concentrate is identified separately in the Group's
logistics centre as belonging to the customer.
· The metal in concentrate is ready for physical transfer to the
customer.
· The Group does not have the ability to sell the metal in concentrate
to another customer.
The revenue is measured at the amount to which the Group expects to be
entitled, being the estimate of the price expected to be received at the end
of the QP, i.e., the forward price, and a corresponding trade receivable is
recognised.
For these provisional pricing arrangements, any future change that occur over
the QP is an embedded derivative within the provisionally priced trade
receivables and are, therefore, within the scope of IFRS 9 and not within the
scope of IFRS 15. The Group does not separately account for the embedded
derivative in each transaction as the short transaction cycle of one to four
months would result in any changes to the Group's financial statements being
immaterial. Any difference between the provisional and final price is adjusted
through revenue from contracts with customers. Changes in fair value over, and
until the end of, the QP, are estimated by reference to updated forward market
prices for gold and copper as well as taking into account relevant other fair
value considerations as set out in IFRS 13, including interest rate and credit
risk adjustments. See accounting policy 4.12 for further discussion on fair
value. Refer to note 19 - 'Trade and other receivables' for details of
payments terms for trade receivables.
As noted above, as the enforceable contract for most arrangements is the
purchase order, the transaction price is determined at the date of each sale
(i.e., for each separate contract) and, therefore, there is no future
variability within scope of IFRS 15 and no further remaining performance
obligations under those contracts.
iv) Interest revenue
Interest revenue is recognised as it accrues, using the effective interest
rate method.
4.3 Production sharing agreement
The Group undertakes its mining operations in the Republic of Azerbaijan
pursuant to the provisions of the Agreement on the Exploration, Development
and Production Sharing for the Prospective Gold Mining Areas: Gedabek, Gosha,
Ordubad Group (Piazbashi, Agyurt, Shakardara, Kiliyaki), Soutely, Kyzilbulag
and Vejnali Deposits dated year ended 20 August 1997 (the "PSA"). The PSA was
revised in 2022 and 2024.
In accordance with the PSA, the Group and the Government of the Republic of
Azerbaijan (the "Government") physically share the commercial products of each
mine. The Group does not have ownership of the Government's share of
production and transfers gold bullion produced to the Government to settle its
obligations to the Government. For silver and copper production, the Group
purchases gold bullion to the value of the Government's share of the
production which is then also transferred to the Government. There is no
royalty payable to the Government.
The Government's share is 51 per cent. of "Profit Production". Profit
Production is defined as the value of production, less all capital and
operating cash costs incurred during the period when the production took
place. Profit Production for any period is subject to a minimum of 25 per
cent. of the value of the production.
All of the costs of production are incurred and recorded by the Group. The
Government does not bear any of the costs of production.
The PSA mandates corporation tax at a rate of 32 per cent. on the profits of
the mining operations undertaken under the PSA.
Profit Production and unrecovered costs are calculated separately for each
contract area and costs incurred at one contract area cannot be offset against
production at another. Unrecovered costs can only be recovered against future
production from their respective contract area.
i)Accounting for the Government's share of production
As the Group does not own the Government's share of production, the revenue
from its sale or otherwise disposal is not recorded in the Group's revenue.
The revenue disclosed in the profit and loss account is therefore only that
which arises from the sale of the Group's share of production.
ii)Gold held due to the Government
Gold held due to the Government comprises the following at each balance sheet
date:
· The Government's share of refined gold bullion which is included
within the Group's gold account maintained with its gold refinery; and
· The Government's share of gold contained within physical gold doré
inventory.
As the Group has a legal obligation under the PSA to transfer the gold to the
Government, the gold held on behalf of the Government is included in the
Group's balance sheet as an other current receivable. A corresponding equal
and opposite liability for the gold is included in other current payables
reflecting the liability to the Government. The gold is valued at the market
price of gold at each balance sheet date. The asset and liability are
derecognised when the Government either takes physical delivery of, or sells,
the gold bullion.
iii)Calculation of corporation tax of the Azerbaijan companies
The corporation tax liabilities (and associated deferred tax assets and
liabilities) are calculated at 32 per cent. and not the prevailing rate of
corporation taxation in Azerbaijan. The corporation taxation rate of 32 per
cent. is the rate stipulated the Group's production sharing agreement.
4.4 Leases
The Group assesses at contract inception, all arrangements to determine
whether they are, or contain, a lease. That is, if the contract conveys the
right to control the use of an identified asset for a period of time in
exchange for consideration. The Group is not a lessor in any transactions, it
is only a lessee.
i) Group as a lessee
The Group applies a single recognition and measurement approach for all
leases, except for short term leases. The Group recognises lease liabilities
to make lease payments and right of use assets representing the right to use
the underlying assets.
a) Right of use assets except for Demirli property complex
The Group recognises right of use assets at the commencement date of the lease
(i.e., the date when the underlying asset is available for use). Right of use
assets are measured at cost, less any accumulated depreciation and impairment
losses, and adjusted for any remeasurement of lease liabilities. The cost of
right of use assets includes the amount of lease liabilities recognised,
initial direct costs incurred, and lease payments made at or before the
commencement date less any lease incentives received. Right of use assets are
depreciated on a straight line basis over the shorter of the lease term and
the estimated useful lives of the assets, as follows:
· Plant and equipment - six years
· Motor vehicles - four years
· Land and buildings - eight years
If ownership of the leased asset transfers to the Group at the end of the
lease term or the cost reflects the exercise of a purchase option,
depreciation is calculated using the estimated useful life of the asset.
The right of use assets are also subject to impairment. Refer to the
accounting policies in note 4.11 - "Impairment of tangible and intangible
assets".
b) Demirli property complex
The Group leases the Demirli property complex from the Government of
Azerbaijan. The Demirli property complex comprises the copper flotation plant,
mining fleet and associate fixed and moveable equipment located within the
Demirli contract area in Karabakh ("Demirli Property"). The significant terms
of the lease are set out in note 16 - "Right of Use Assets". The initial date
of recognition of the lease is 30 April 2025, the date the assets were made
available to the Group. Rental payments for the lease commenced on 1 October
2025 and the period from 30 April 2025 to 30 September 2025 is treated as a
rent-free period. The term of the lease is the Group's best estimate of the
period for which it will require the Demirli property and is currently from 30
April 2025 (the date of initial recognition) until 30 September 2028 (the
"Lease Term").
The rent payable for the Demirli Property contains a variable element which
depends upon the expected copper production, forecast copper prices and
profitability of the Demirli Property over the Lease Term. The Group prepares
a detailed business plan for the Demirli Property using its best estimates of
production, operating costs and forecast copper prices. The business plan is
used to determine the liability for lease payments over the Lease Term. The
cost of the Demirli Property includes the amount of lease liabilities
recognised and initial direct costs incurred. It also includes the Group's
best estimate of the cost of retiring the Demirli Property at the end of the
lease term discounted to its value at the date of inception of the lease. The
Demirli Property comprises inventory, movable property such as mining
equipment, inventory and immovable property, such as plant, buildings,
infrastructure and land. These assets will not be used independently of each
other and no asset is a separate right of use asset. The practical expedient
under IFRS 16 has been applied and the whole lease has been accounted for as a
single lease and not separate lease components. Amounts spent by the Group on
repairing and improving the Demirli Property are capitalised as leasehold
improvements. The Demirli Property is depreciated over the Lease Term on a
straight line basis.
c) Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities
measured at the present value of lease payments to be made over the lease
term. The lease payments include fixed payments less any lease incentives
receivable, variable lease payments that depend on an index or a rate, and
amounts expected to be paid under residual value guarantees.
In calculating the present value of lease payments, the Group uses its
incremental borrowing rate at the lease commencement date because the interest
rate implicit in the lease is generally not readily determinable. After the
commencement date, the amount of lease liabilities is increased to reflect the
accretion of interest and reduced for the lease payments made. In addition,
the carrying amount of lease liabilities is remeasured if there is a
modification, a change in the lease term or a change in the lease payments.
The Group's lease liabilities are separately disclosed in the Group statement
of financial position.
d) Short-term leases
The Group applies the short term lease recognition exemption to its short term
leases of equipment and other assets (i.e., those leases that have a lease
term of 12 months or less from the commencement date and do not contain a
purchase option). Lease payments on short term leases are recognised as an
expense on a straight line basis over the lease term.
e) Lease modifications
Where the terms of a lease are varied during its term which results in a
revised carrying amount of the lease, the change to the carrying amount is
accounted for as "Lease Modifications".
4.5 Taxation
i) Current and deferred income taxes
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the Group financial
statements and the corresponding tax bases used in the computation of taxable
profit and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised for all deductible
temporary differences, carry forward of unused tax assets and unused tax
losses. Deferred tax assets are recognised to the extent that it is probable
that taxable profits will be available against which deductible temporary
differences and the carry forward of unused tax credits and unused tax losses
can be utilised.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised, based on tax
rates (and tax laws) that have been enacted or substantively enacted at the
reporting date. Deferred tax relating to items recognised in the Group income
statement is charged or credited in the Group income statement. Deferred tax
relating to items recognised outside the Group income statement is recognised
outside the Group income statement and items are recognised in correlation to
the underlying transaction either in the Group statement of comprehensive
income or directly in equity.
Deferred tax assets are not recognised in respect of temporary differences
relating to tax losses where there is insufficient evidence that the asset
will be recovered. Unrecognised deferred tax assets are reassessed at each
reporting date and are recognised to the extent that it has become probable
that future taxable profits will allow the deferred tax asset to be
recovered. Deferred tax assets and liabilities are classified as non-current
assets and liabilities.
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the Group income statement
because it excludes items of income or expense that are taxable or deductible
in other years and it further excludes items that are never taxable or
deductible. The Group's liability for current tax is calculated using tax
rates that have been enacted or substantively enacted at the reporting date.
The tax expense represents the sum of the tax currently payable and deferred
tax.
ii) Value-added taxes ("VAT")
The Group pays VAT on purchases made in both the Republic of Azerbaijan and
the United Kingdom. Under both jurisdictions, VAT paid is refundable.
Azerbaijani jurisdiction permits offset of an Azerbaijani VAT credit against
other taxes payable to the state budget.
4.6 Transactions with related parties
For the purposes of these Group financial statements, parties are considered
to be related:
· where one party has the ability to control the other party or exercise
significant influence over the other party in making financial or operational
decisions;
· entities under common control; and
· key management personnel
In considering each possible related party relationship, attention is directed
to the substance of the relationship, not merely the legal form.
Related parties may enter into transactions which unrelated parties might not
and transactions between related parties may not be effected on the same
terms, conditions and amounts as transactions between unrelated parties.
It is the nature of transactions with related parties that they cannot be
presumed to be carried out on an arm's length basis.
4.7 Borrowing costs
Borrowing costs directly relating to the acquisition, construction or
production of a qualifying capital project under construction are capitalised
and added to the project cost during construction until such time the assets
are considered substantially ready for their intended use i.e. when they are
capable of commercial production. Where funds are borrowed specifically to
finance a project, the amount capitalised represents the actual borrowing
costs incurred. Where surplus funds are available for a short term out of
money borrowed specifically to finance a project, the income generated from
the temporary investment of such amounts is also capitalised and deducted from
the total capitalised borrowing cost. Where the funds used to finance a
project form part of general borrowings, the amount capitalised is calculated
using a weighted average of rates applicable to relevant general borrowings of
the Group during the period. All other borrowing costs are recognised in the
Group income statement in the period in which they are incurred.
Even though exploration and evaluation assets can be qualifying assets, they
generally do not meet the 'probable economic benefits' test. Any related
borrowing costs are therefore generally recognised in the Group income
statement in the period they are incurred.
4.8 Intangible assets
i) Exploration and evaluation assets
The costs of exploration properties and leases, which include the cost of
acquiring prospective properties and exploration rights and costs incurred in
exploration and evaluation activities, are capitalised as intangible assets as
part of exploration and evaluation assets.
Exploration and evaluation assets are carried forward during the exploration
and evaluation stage and are assessed for impairment in accordance with the
indicators of impairment as set out in IFRS 6 - 'Exploration for and
Evaluation of Mineral Resources'.
In circumstances where a property is abandoned, the cumulative capitalised
costs relating to the property are written off in the period. No
amortisation is charged prior to the commencement of production.
Once commercially viable reserves are established and development is
sanctioned, exploration and evaluation assets are transferred to assets under
construction.
Upon transfer of exploration and evaluation costs into Assets under
construction, all subsequent expenditure on the construction, installation or
completion of infrastructure facilities is capitalised within Assets under
construction.
When commercial production commences, exploration, evaluation and development
costs previously capitalised are amortised over the commercial measured and
indicated reserves of the mining property on a units-of-production basis.
Exploration and evaluation costs incurred after commercial production start
date in relation to evaluation of potential mineral reserves and resources
that are expected to result in increase of reserves are capitalised as
Evaluation and exploration assets within intangible assets. Once there is
evidence that reserves are increased, such costs are tested for impairment and
transferred to producing mines.
ii) Mining rights
Mining rights are carried at cost to the Group less any provisions for
impairments which result from evaluations and assessments of potential
mineral recoveries and accumulated depletion. Mining rights are depleted on
the units-of-production basis over the total measured and indicated reserves
of the relevant area.
iii) Other intangible assets
Other intangible assets are mainly software and mining rights.
Intangible assets with finite lives are amortised over the useful economic
life and assessed for impairment whenever there is an indication that the
intangible asset may be impaired. The amortisation period and the amortisation
method for an intangible asset with a finite useful life is reviewed at least
at each reporting date. Changes in the expected useful life or the expected
pattern of consumption of future economic benefits embodied in the asset are
accounted for by changing the amortisation period or method, as appropriate,
and are treated as changes in accounting estimates. The amortisation expense
on intangible assets with finite lives is recognised in the Group income
statement in the expense category consistent with the function of the
intangible asset.
Gains or losses arising from derecognition of an intangible asset are measured
as the difference between the net disposal proceeds and the carrying amount of
the asset and are recognised in the Group income statement when the asset is
derecognised.
4.9 Property, plant and equipment and mine properties
Upon completion of mine construction, the assets initially charged to 'Assets
under construction' are transferred into 'Plant and equipment and motor
vehicles' or 'Producing mines'. Items of 'Plant and equipment and motor
vehicles' and 'Producing mines' are stated at cost, less accumulated
depreciation and accumulated impairment losses.
During the production period expenditures directly attributable to the
construction of each individual asset are capitalised as 'Assets under
construction' up to the period when asset is ready to be put into operation.
When an asset is put into operation it is transferred to 'Plant and
equipment and motor vehicles' or 'Producing mines'. Additional capital costs
incurred subsequent to the date of commencement of operation of the asset are
charged directly to 'Plant and equipment and motor vehicles' or 'Producing
mines', i.e. where the asset itself was transferred.
The initial cost of an asset comprises its purchase price or construction
cost, any costs directly attributable to bringing the asset into operation,
the initial estimate of the rehabilitation obligation and, for qualifying
assets, borrowing costs. The purchase price or construction cost is the
aggregate amount paid and the fair value of any other consideration given to
acquire the asset.
When a mine construction project moves into the production stage, the
capitalisation of certain mine construction costs ceases and costs are either
regarded as inventory or expensed, except for costs which qualify for
capitalisation relating to mining asset additions or improvements, underground
mine development or mineable reserve development.
i) Depreciation and amortisation
Accumulated mine development costs within producing mines are depreciated and
amortised on a units-of-production basis over the economically recoverable
reserves of the mine concerned, except in the case of assets whose useful life
is shorter than the life of the mine, in which case the straight line method
is applied. Economically recoverable reserves include the proved and probable
reserves of each mine. Economically recoverable reserves also include a
proportion of measured and indicated resources which are expected to be
converted to reserves in future. The unit of account for run of mine ("ROM")
costs and for post-ROM costs is recoverable ounces of gold. The
units-of-production rate for the depreciation and amortisation of mine
development costs takes into account expenditures incurred to date plus future
field development costs required to recover the commercial reserves remaining.
Changes in the estimates of commercial reserves or future field development
costs are dealt with prospectively.
Other plant and equipment such as mobile mine equipment is generally
depreciated on a straight line basis over their estimated useful lives as
follows:
· Temporary buildings - eight years
(2024: eight years)
· Plant and equipment - eight years
(2024: eight years)
· Motor vehicles -
four years (2024: four years)
· Office equipment - four
years (2024: four years)
· Leasehold improvements - lower of eight years
(2024: eight years) and the remaining term of the relevant lease
An item of property, plant and equipment, and any significant part initially
recognised, is derecognised upon disposal or when no future economic benefits
are expected from its use or disposal. Any gain or loss arising on
derecognition of the asset (calculated as the difference between the net
disposal proceeds and the carrying amount of the asset) is included in the
Group income statement when the asset is derecognised.
The asset's residual values, useful lives and methods of depreciation and
amortisation are reviewed at each reporting date and adjusted prospectively
if appropriate.
ii) Major maintenance and repairs
Expenditure on major maintenance refits or repairs comprises the cost of
replacement assets or parts of assets and overhaul costs. Where an asset or
part of an asset that was separately depreciated and is now written off is
replaced, and it is probable that future economic benefits associated with the
item will flow to the Group through an extended life, the expenditure is
capitalised.
Where part of the asset was not separately considered as a component, the
replacement value is used to estimate the carrying amount of the replaced
assets which is immediately written off. All other day-to-day maintenance and
repair costs are expensed as incurred.
4.10 Investment in associate companies
An associate company is an entity over which the Group has significant
influence. Significant influence is the power to participate in the financial
and operating policy decisions of the investee but is not control or joint
control over those policies.
The considerations made in determining significant influence are similar to
those necessary to determine control over subsidiaries. The Group's investment
in its associate company is accounted for using the equity method.
Under the equity method, the investment in an associate company is initially
recognised at cost. The carrying amount of the investment is adjusted to
recognise changes in the Group's share of net assets of the associate company
since the acquisition date. Goodwill relating to the associate company, that
existed at the initial recognition date, is included in the carrying amount of
the investment and is not tested for impairment separately as subsequent
goodwill is treated differently.
The statement of profit or loss reflects the Group's share of the results of
operations of the associate company. Any change in other comprehensive income
of those investees is presented as part of the Group's comprehensive income.
In addition, when there has been a change recognised directly in the equity of
the associate company, the Group recognises its share of any changes, when
applicable, in the statement of changes in equity.
The aggregate of the Group's share of profit or loss of the associate company
is shown on the face of the statement of profit or loss outside operating
profit and represents profit or loss after tax and non- controlling interests
in the subsidiaries of the associate company.
The financial statements of the associate company are prepared for the same
reporting period as the Group. When necessary, adjustments are made to bring
the accounting policies in line with those of the Group.
After application of the equity method, the Group determines whether it is
necessary to recognise an impairment loss on its investment in its associate
company. At each reporting date, the Group determines whether there is
objective evidence that the investment in the associate company is impaired.
If there is such evidence, the Group calculates the amount of impairment as
the difference between the recoverable amount of the associate company and its
carrying value, and then recognises the loss in the statement of profit or
loss.
Upon loss of significant influence, the Group measures and recognises any
retained investment at its fair value. Any difference between the carrying
amount of the associate company upon loss of significant influence and the
fair value of the retained investment and proceeds from disposal is recognised
in profit or loss.
4.11 Impairment of tangible and intangible assets
The Group conducts annual internal assessments of the carrying values of
tangible and intangible assets. The carrying values of capitalised exploration
and evaluation expenditure, mine properties and property, plant and equipment
are assessed for impairment when indicators of such impairment exist or at
least annually. In such cases an estimate of the asset's recoverable amount is
calculated. The recoverable amount is determined as the higher of the fair
value less costs to sell for the asset and the asset's value in use. This is
determined for an individual asset, unless the asset does not generate cash
inflows that are largely independent of those from other assets or groups of
assets. If this is the case, the individual assets are grouped together into
cash-generating units ("CGUs") for impairment purposes. Such CGUs represent
the lowest level for which there are separately identifiable cash inflows that
are largely independent of the cash flows from other assets or other groups of
assets. This generally results in the Group evaluating its non‑financial
assets on a geographical or licence basis.
If the carrying amount of the asset exceeds its recoverable amount, the asset
is impaired and an impairment loss is charged to the Group income statement
so as to reduce the carrying amount to its recoverable amount (i.e the higher
of fair value less cost to sell and value in use).
Impairment losses related to continuing operations are recognised in the Group
income statement in those expense categories consistent with the function of
the impaired asset.
For assets excluding the intangibles referred to above, an assessment is made
at each reporting date as to whether there is any indication that previously
recognised impairment losses may no longer exist or may have decreased. If
such indication exists, the Group makes an estimate of the recoverable amount.
A previously recognised impairment loss is reversed only if there has been a
change in the estimates used to determine the asset's recoverable amount since
the last impairment loss was recognised. If this is the case, the carrying
amount of the asset is increased to its recoverable amount. The increased
amount cannot exceed the carrying amount that would have been determined, net
of depreciation or amortisation, had no impairment loss been recognised for
the asset in prior years. Such reversal is recognised in the consolidated
statement of other comprehensive income. Impairment losses recognised in
relation to indefinite life intangibles are not reversed for subsequent
increases in its recoverable amount.
4.12 Fair value measurement
The Group measures financial instruments at fair value at each balance sheet
date. Fair value disclosures for financial instruments measured at fair value,
or where fair value is disclosed, are summarised in the following notes:
· Note 19 - 'Trade and other receivables';
· Note 20 - 'Restricted cash and cash and cash equivalents';
· Note 17 - 'Financial assets';
· Note 21 - 'Trade and other payables'; and
· Note 22 - 'Interest-bearing loans and borrowings'
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date. The fair value measurement is based on the presumption
that the transaction to sell the asset or transfer the liability takes place
either:
· in the principal market place for the asset or the liability; or
· in the absence of a principal market, the most advantageous market for
the asset or liability.
The fair value of an asset or liability is measured using the assumptions that
market participants would use when pricing the asset or liability, assuming
that market participants act in their economic best interest.
The Group uses valuation techniques that are appropriate in the circumstances
and for which sufficient data is available to measure fair value, maximising
the use of relevant observable inputs and minimising the unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in
the financial statements are categorised within the fair value hierarchy,
described as follows, based on the lowest level input that is significant to
the fair value measurement as a whole.
· Level 1 - Quoted (unadjusted) market prices in active markets for
identical assets or liabilities.
· Level 2 - Valuation techniques for which the lowest level input that is
significant to the fair value measurement is directly or indirectly
observable.
· Level 3 - Valuation techniques for which the lowest level input that is
significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised in the financial statements on
a recurring basis, the Group determines whether transfers have occurred
between levels in the hierarchy by re-assessing categorisation (based on the
lowest level input that is significant to the fair value measurement as a
whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Group has determined classes of
assets and liabilities on the basis of the nature, characteristics and risks
of the asset or liability and the level of the fair value hierarchy as set out
above.
4.13 Provisions
i) General
Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that an outflow of
resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the
obligation. When the Group expects some or all of a provision to be
reimbursed, for example, under an insurance contract, the reimbursement is
recognised as a separate asset, but only when the reimbursement is virtually
certain. The expense relating to a provision is presented in the statement of
profit or loss net of any reimbursement.
ii) Rehabilitation provision
The Group records the present value of estimated costs of legal and
constructive obligations required to restore operating locations in the period
in which the obligation is incurred. The nature of these restoration
activities includes dismantling and removing structures, rehabilitating mines
and tailings dams, dismantling operating facilities, closure of plant and
waste sites and restoration, reclamation and revegetation of affected areas.
The obligation generally arises when the asset is installed or the ground or
environment is disturbed at the production location. When the liability is
initially recognised, the present value of the estimated cost is capitalised
by increasing the carrying amount of the related mining assets to the extent
that it was incurred prior to the production of related ore. Over time, the
discounted liability is increased for the change in present value based on the
discount rates that reflect current market assessments and the risks specific
to the liability.
The periodic unwinding of the discount is recognised in the Group income
statement as a finance cost. Additional disturbances or changes in
rehabilitation costs will be recognised as additions or charges to the
corresponding assets and rehabilitation liability when they occur. Any
reduction in the rehabilitation liability and therefore any deduction from the
rehabilitation asset may not exceed the carrying amount of that asset. If it
does, any excess over the carrying value is taken immediately to the Group
income statement.
If the change in estimate results in an increase in the rehabilitation
liability and therefore an addition to the carrying value of the asset, the
Group is required to consider whether this is an indication of impairment of
the asset as a whole and test for impairment in accordance with IAS 36. If,
for mature mines, the revised mine assets net of rehabilitation provisions
exceeds the recoverable value, that portion of the increase is charged
directly to expense.
For closed sites, changes to estimated costs are recognised immediately
in the Group income statement. Also, rehabilitation obligations that arose
as a result of the production phase of a mine should be expensed as incurred.
4.14 Financial instruments - initial recognition and subsequent measurement
A financial instrument is any contract that gives rise to a financial asset of
one entity and a financial liability or equity instrument of another entity.
a) Financial assets
i) Initial recognition and measurement
Financial assets are classified, at initial recognition, and subsequently
measured at amortised cost, fair value through other comprehensive income
("OCI"), or fair value through profit or loss.
The classification of financial assets at initial recognition that are debt
instruments depends on the financial asset's contractual cash flow
characteristics and the Group's business model for managing them. With the
exception of trade receivables that do not contain a significant financing
component or for which the Group has applied the practical expedient, the
Group initially measures a financial asset at its fair value plus, in the case
of a financial asset not at fair value through profit or loss, transaction
costs. Trade receivables that do not contain a significant financing component
or for which the Group has applied the practical expedient for contracts that
have a maturity of one year or less, are measured at the transaction price
determined under IFRS 15. Refer to the accounting policy 4.2 - 'Revenue from
contracts with customers'
In order for a financial asset to be classified and measured at amortised cost
or fair value through OCI, it needs to give rise to cash flows that are
'solely payments of principal and interest ("SPPI") on the principal amount
outstanding. This assessment is referred to as the SPPI test and is performed
at an instrument level. Financial assets with cash flows that are not SPPI are
classified and measured at fair value through profit or loss, irrespective of
the business model.
The Group's business model for managing financial assets refers to how it
manages its financial assets in order to generate cash flows. The business
model determines whether cash flows will result from collecting contractual
cash flows, selling the financial assets, or both.
ii) Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in
four categories:
· Financial assets at amortised cost (debt instruments);
· Financial assets at fair value through OCI with recycling of cumulative
gains and losses (debt instruments);
· Financial assets designated at fair value through OCI with no recycling
of cumulative gains and losses upon derecognition (equity instruments); and
· Financial assets at fair value through profit or loss.
iii) Financial assets at amortised cost (debt instruments)
This category is the most relevant to the Group. The Group measures financial
assets at amortised cost if both of the following conditions are met:
· The financial asset is held within a business model with the objective
to hold financial assets in order to collect contractual cash flows; and
· The contractual terms of the financial asset give rise on specified
dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the
effective interest rate ("EIR") method and are subject to impairment. Interest
received is recognised as part of finance income in the statement of profit or
loss and other comprehensive income. Gains and losses are recognised in profit
or loss when the asset is derecognised, modified or impaired.
The Group's financial assets at amortised cost include trade receivables (not
subject to provisional pricing) and other receivables. Refer below to
'Financial assets at fair value through profit or loss' for a discussion of
trade receivables (subject to provisional pricing).
iii) Financial assets at amortised cost (debt instruments)
iv) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets
held for trading, e.g., derivative instruments, financial assets designated
upon initial recognition at fair value through profit or loss, e.g., debt or
equity instruments, or financial assets mandatorily required to be measured at
fair value, i.e., where they fail the SPPI test. Financial assets are
classified as held for trading if they are acquired for the purpose of selling
or repurchasing in the near term. Derivatives, including separated embedded
derivatives, are also classified as held for trading unless they are
designated as effective hedging instruments. Financial assets with cash flows
that do not pass the SPPI test are required to be classified and measured at
fair value through profit or loss, irrespective of the business model.
Notwithstanding the criteria for debt instruments to be classified at
amortised cost or at fair value through OCI, as described above, debt
instruments may be designated at fair value through profit or loss on initial
recognition if doing so eliminates, or significantly reduces, an accounting
mismatch.
Financial assets at fair value through profit or loss are carried in the
statement of financial position at fair value with net changes in fair value
recognised in the profit or loss account.
A derivative embedded in a hybrid contract with a financial liability or
non-financial host, is separated from the host and accounted for as a separate
derivative if: the economic characteristics and risks are not closely related
to the host; a separate instrument with the same terms as the embedded
derivative would meet the definition of a derivative; and the hybrid contract
is not measured at fair value through profit or loss. Embedded derivatives are
measured at fair value with changes in fair value recognised in profit or
loss. Reassessment only occurs if there is either a change in the terms of the
contract that significantly modifies the cash flows that would otherwise be
required or a reclassification of a financial asset out of the fair value
through profit or loss category.
As IFRS 9 now has the SPPI test for financial assets, the requirements
relating to the separation of embedded derivatives is no longer needed for
financial assets. An embedded derivative will often make a financial asset
fail the SPPI test thereby requiring the instrument to be measured at fair
value through profit or loss in its entirety. This is applicable to the
Group's trade receivables (subject to provisional pricing). These receivables
relate to sales contracts where the selling price is determined after delivery
to the customer, based on the market price at the relevant QP stipulated in
the contract. This exposure to the commodity price causes such trade
receivables to fail the SPPI test. As a result, these receivables are measured
at fair value through profit or loss from the date of recognition of the
corresponding sale, with subsequent movements where material being recognised
in 'fair value gains/losses on provisionally priced trade receivables' in the
statement of profit or loss and other comprehensive income.
The Group does not currently account separately for embedded derivatives in
its trade receivables subject to provisional pricing. The short one to four
month transaction cycle would result in any change to the Group's financial
statements being immaterial. Any adjustment to the trade receivable subsequent
to initial recording is adjusted through revenue.
v) Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part
of a group of similar financial assets) is primarily derecognised (i.e.,
removed from the Group's consolidated statement of financial position) when:
· The rights to receive cash flows from the asset have expired; or
· The Group has transferred its rights to receive cash flows from the asset
or has assumed an obligation to pay the received cash flows in full without
material delay to a third party under a 'pass-through' arrangement; and
either (a) the Group has transferred substantially all the risks and rewards
of the asset, or (b) the Group has neither transferred nor retained
substantially all the risks and rewards of the asset, but has transferred
control of the asset.
When the Group has transferred its rights to receive cash flows from an asset
or has entered into a pass-through transferred nor retained substantially all
of the risks and rewards of the asset, nor transferred control of the asset,
the Group continues to recognise the transferred asset to the extent of its
continuing involvement. In that case, the Group also recognises an associated
liability. The transferred asset and the associated liability are measured on
a basis that reflects the rights and obligations that the Group has retained.
Continuing involvement that takes the form of a guarantee over the transferred
asset is measured at the lower of the original carrying amount of the asset
and the maximum amount of consideration that the Group could be required to
repay.
vi) Impairment of financial assets
Further disclosures relating to impairment of financial assets are also
provided in the following notes:
· Disclosure of significant assumptions: accounting policy 4.24
· Trade and other receivables: accounting policy
4.15 and note 19
The Group recognises an allowance for expected credit loss ("ECL") for all
debt instruments not held at fair value through profit or loss. ECLs are based
on the difference between the contractual cash flows due in accordance with
the contract and all the cash flows that the Group expects to receive,
discounted at an approximation of the original EIR. The expected cash flows
will include cash flows from the sale of collateral held or other credit
enhancements that are integral to the contractual terms.
ECLs are recognised in two stages. For credit exposures for which there has
not been a significant increase in credit risk since initial recognition, ECLs
are provided for credit losses that result from default events that are
possible within the next 12-months (a 12-month ECL). For those credit
exposures for which there has been a significant increase in credit risk since
initial recognition, a loss allowance is required for credit losses expected
over the remaining life of the exposure, irrespective of the timing of the
default (a lifetime ECL).
For trade receivables (not subject to provisional pricing) and other
receivables due in less than 12 months, the Group applies the simplified
approach in calculating ECLs, as permitted by IFRS 9. Therefore, the Group
does not track changes in credit risk, but instead, recognises a loss
allowance based on the financial asset's lifetime ECL at each reporting date.
For any other financial assets carried at amortised cost (which are due in
more than 12 months), the ECL is based on the 12-month ECL. The 12-month ECL
is the proportion of lifetime ECLs that results from default events on a
financial instrument that are possible within 12 months after the reporting
date. However, when there has been a significant increase in credit risk since
origination, the allowance will be based on the lifetime ECL. When determining
whether the credit risk of a financial asset has increased significantly since
initial recognition and when estimating ECLs, the Group considers reasonable
and supportable information that is relevant and available without undue cost
or effort. This includes both quantitative and qualitative information and
analysis, based on the Group's historical experience and informed credit
assessment including forward-looking information.
The Group considers a financial asset in default when contractual payments are
90 days past due. However, in certain cases, the Group may also consider a
financial asset to be in default when internal or external information
indicates that the Group is unlikely to receive the outstanding contractual
amounts in full before taking into account any credit enhancements held by the
Group. A financial asset is written off when there is no reasonable
expectation of recovering the contractual cash flows and usually occurs when
past due for more than one year and not subject to enforcement activity.
At each reporting date, the Group assesses whether financial assets carried at
amortised cost are credit- impaired. A financial asset is credit-impaired when
one or more events that have a detrimental impact on the estimated future cash
flows of the financial asset have occurred.
b) Financial liabilities
i) Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial
liabilities at fair value through profit or loss, loans and borrowings,
payables, or as derivatives designated as hedging instruments in an effective
hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the
case of loans and borrowings and payables, net of directly attributable
transaction costs.
The Group's financial liabilities include trade and other payables and loans
and borrowings including bank overdrafts and vendor financing facility.
ii) Subsequent measurement
The measurement of financial liabilities depends on their classification, as
described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial
liabilities held for trading and financial liabilities designated upon initial
recognition as at fair value through profit or loss.
Financial liabilities are classified as held for trading if they are incurred
for the purpose of repurchasing in the near term. This category also includes
derivative financial instruments entered into by the Group that are not
designated as hedging instruments in hedge relationships as defined by IFRS 9.
Gains or losses on liabilities held for trading are recognised in the
statement of profit or loss and other comprehensive income.
Loans and borrowings and trade and other payables
After initial recognition, interest-bearing loans and borrowings and trade and
other payables are subsequently measured at amortised cost using the EIR
method. Gains and losses are recognised in the statement of profit or loss and
other comprehensive income when the liabilities are derecognised, as well as
through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the EIR. The EIR
amortisation is included as finance costs in the statement of profit or loss
and other comprehensive income.
This category generally applies to interest-bearing loans and borrowings and
trade and other payables
iii) Derecognition of financial liabilities
A financial liability is derecognised when the associated obligation is
discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an existing liability
are substantially modified, such an exchange or modification is treated as the
derecognition of the original liability and the recognition of a new
liability. The difference in the respective carrying amounts is recognised in
profit or loss and other comprehensive income.
c) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is
reported in the consolidated statement of financial position if there is a
currently enforceable legal right to offset the recognised amounts and there
is an intention to settle on a net basis, to realise the assets and settle the
liabilities simultaneously.
d) Cash and cash equivalents
Cash and cash equivalents in the statement of financial position comprise cash
at banks and on hand and short- term deposits with an original maturity of
three months or less.
For the purpose of the consolidated statement of cash flows, cash and cash
equivalents consist of cash and short- term deposits as defined above.
Cash deposits which are pledged as security for borrowings from financial
institutions such as banks, and cannot be accessed, are classified in the
balance sheet as restricted cash.
4.15 Trade and other receivables
The Group presents trade and other receivables in the statement of financial
position based on a current or non-current classification. A trade and other
receivable is classified as current as follows:
· expected to be realised or intended to be sold or consumed in the normal
operating cycle;
held primarily for the purpose of trading; and expected to be realised
within 12 months after the date of the statement of financial position.
· gold bullion held on behalf of the Government of Azerbaijan is
classified as a current asset and valued at the current market price of gold
at the statement of financial position date. A current liability of equal
amount representing the liability of the gold bullion to the Government of
Azerbaijan is also established. Refer to accounting policy 4.3 - 'Production
sharing agreement'.
Advances made to suppliers for fixed asset purchases are recognised as
non-current prepayments until the fixed asset is delivered when they are
capitalised as part of the cost of the fixed asset.
4.16 Inventories
Metal in circuit consists of in-circuit material at properties with milling or
processing operations and doré awaiting refinement, all valued at the lower
of average cost and net realisable value. In-process inventory costs consist
of direct production costs (including mining, crushing and processing and site
administration costs) and allocated indirect costs (including depreciation,
depletion and amortisation of producing mines and mining interests).
Ore stockpiles consist of stockpiled ore, ore on surface and crushed ore, all
valued at the lower of average cost and net realisable value. Ore stockpile
costs consist of direct production costs (including mining, crushing and site
administration costs) and allocated indirect costs (including depreciation,
depletion and amortisation of producing mines and mining interests).
Metal in tailings dam consists of the gold within solution in the tailings
dam. This solution is recirculated around the gold processing plant and
circuits.
Inventory costs are charged to operations on the basis of ounces of gold sold.
The Group regularly evaluates and refines estimates used in determining the
costs charged to operations and costs absorbed into inventory carrying values
based upon actual gold recoveries and operating plans.
Finished goods consist of doré bars that have been refined and assayed and
are in a form that allows them to be sold on international bullion markets and
metal in concentrate. Finished goods are valued at the lower of average cost
and net realisable value. Finished goods costs consist of direct production
costs (including mining, crushing and processing; site administration costs;
and allocated indirect costs, including depreciation, depletion and
amortisation of producing mines and mining interests).
Spare parts and consumables consist of consumables used in operations, such as
fuel, chemicals, reagents and spare parts, valued at the lower of average
cost and replacement cost and, where appropriate, less a provision for
obsolescence.
4.17 Equity instruments
Equity instruments issued by the Company are recorded at the proceeds
received, net of direct issue costs, or value of services received net of any
issue costs.
4.18 Treasury shares
Own equity instruments that are reacquired (treasury shares) are recognised at
cost and deducted from equity. No gain or loss is recognised in profit or loss
on the purchase, sale, issue or cancellation of the Group's own equity
instruments. Any difference between the carrying amount and the consideration,
if reissued, is recognised in the share premium.
4.19 Deferred stripping costs
The removal of overburden and other mine waste materials is often necessary
during the initial development of a mine site, in order to access the
mineral ore deposit. The directly attributable cost of this activity is
capitalised in full within mining properties and leases, until the point at
which the mine is considered to be capable of commercial production. This is
classified as expansionary capital expenditure, within investing cash flows.
The removal of waste material after the point at which a mine is capable of
commercial production is referred to as production stripping.
When the waste removal activity improves access to ore extracted in the
current period, the costs of production stripping are accounted for as part of
the cost of producing those inventories.
Where production stripping activity both produces inventory and improves
access to ore in future periods the associated costs of waste removal are
allocated between the two elements. The portion which benefits future ore
extraction is capitalised within stripping and development capital
expenditure. If the amount to be capitalised cannot be specifically identified
it is determined based on the volume of waste extracted compared with expected
volume for the identified component of the orebody. Components are specific
volumes of a mine's orebody that are determined by reference to the life of
mine plan.
In certain instances significant levels of waste removal may occur during the
production phase with little or no associated production.
All amounts capitalised in respect of waste removal are depreciated using the
unit of production method based on the ore reserves of the component of the
orebody to which they relate.
The effects of changes to the life of mine plan on the expected cost of waste
removal or remaining reserves for a component are accounted for prospectively
as a change in estimate.
4.20 Employee leave benefits
Liabilities for wages and salaries, including non-monetary benefits and
accrued but unused annual leave, are recognised in respect of employees'
services up to the reporting date. They are measured at the amounts expected
to be paid when the liabilities are settled.
4.21 Retirement benefit costs
The Group does not operate a pension scheme for the benefit of its employees
but instead makes contributions to their personal pension policies. The
contributions due for the period are charged to the Group income statement.
4.22 Share-based payments
The Group has applied the requirements of IFRS 2 - 'Share-based Payment'. IFRS
2 has been applied to all grants of equity instruments.
The Group issues equity-settled share-based payments to certain employees.
Equity-settled share-based payments are measured at fair value (excluding the
effect of non market-based vesting conditions) at the date of grant. The fair
value determined at the grant date of the equity-settled share-based payments
is expensed on a straight line basis over the vesting period, based on
the Group's estimate of shares that will eventually vest and adjusted for the
effect of non market-based vesting conditions.
The fair value of share options is calculated using the assumption that they
will only be exercised if the share price prevailing at the date of exercise
is equal to, or above, the price at which the options were granted. This
methodology approximates to valuing the share options using a Black-Scholes
model. The expected life used in the model has been calculated using
management's best estimate of the effects of non-transferability, exercise
restrictions and behavioural considerations. The vesting condition
assumptions are reviewed during each reporting period to ensure they reflect
current expectations.
4.23 Foreign currencies
The presentation and functional currency of the Group is United States
Dollars. The individual financial statements of each company in the Group are
also prepared in United States Dollars. In preparing the financial statements
of the individual entities, transactions in currencies other than the entity's
functional currency (foreign currencies) are recognised at the rates of
exchange prevailing at the dates of the transactions. At the end of each
reporting period, monetary items denominated in foreign currencies are
retranslated at the rates prevailing at that date. Non-monetary items carried
at fair value that are denominated in foreign currencies are retranslated at
the rates prevailing at the date when the fair value was determined.
Non-monetary items that are measured in terms of historical cost in a foreign
currency are translated using exchange rates at the date of the transaction.
4.24 Significant accounting judgements
The preparation of the Group financial statements in conformity with IFRS
requires management to make judgements that affect the reported amounts of
assets, liabilities and contingent liabilities at the date of the Group
financial statements and reported amounts of revenues and expenses during the
reporting period.
i) Exploration and evaluation expenditure (note 14)
The application of the Group's accounting policy for exploration and
evaluation expenditure requires judgement. For each reporting period, the
Group assesses whether there are indictors of impairment. These include
whether the right to explore has expired, the results of geological
exploration results and whether further exploration is planned, the likelihood
that commercial exploitation will go ahead and whether it will result in
recovery of the carrying value of the exploration expenditure. If information
becomes available suggesting that the recovery of expenditure is unlikely, the
amount capitalised is written off in the consolidated statement of profit or
loss in the period when the new information becomes available.
ii) Impairment of intangible and tangible assets (notes 14,15 and 16)
The assessment of tangible and intangible assets for any internal and external
indications of impairment involves judgement. For each reporting period, the
Group assesses whether there are indicators of impairment, if indicated then a
formal estimate of the recoverable amount is performed and an impairment loss
recognised to the extent that the carrying amount exceeds recoverable amount.
Recoverable amount is determined as the value in use. Determining whether the
projects are impaired requires an estimation of the recoverable value of the
individual areas to which value has been ascribed. The value in use
calculation requires the entity to estimate the future cash flows expected to
arise from the projects in order to calculate present value.
The Group considered whether there are any impairment indicators of its two
operating cash generating units ("CGU") which are its mines together with
their associated processing facilities at Gedabek ("Gedabek Mining
Operations") and its mines together with their associated processing
facilities at Demirli ("Demirli Mining Operations"). The significant
assumptions made to perform this calculation are: production volumes, precious
metal and copper prices, discount rates and operating and capital expenditure,
all of which are discussed within the significant accounting estimates note
4.25. The Group has determined that there are no indicators of impairment.
iii) Production start date (note 15)
The Group assesses the stage of each mine under construction to determine when
a mine moves into the production stage. The criteria used to assess the start
date are determined based on the unique nature of each mine construction
project, such as the complexity of a plant and its location. The Group
considers various relevant criteria to assess when the mine is substantially
complete, ready for its intended use and is reclassified from Assets under
construction to Producing mines and Property, plant and equipment. Some of the
criteria will include, but are not limited to, the following:
· the level of capital expenditure compared to the construction cost
estimates;
· completion of a reasonable period of testing of the mine plant and
equipment;
· ability to produce metal in saleable form (within specifications); and
· ability to sustain ongoing production of metal.
When a mine construction project moves into the production stage, the
capitalisation of certain mine construction costs ceases and costs are either
regarded as inventory or expensed, except for costs that qualify for
capitalisation relating to mining asset additions or improvements, underground
mine development or mineable reserve development. This is also the point at
which the depreciation/amortisation recognition commences.
iv) Leases (note 16)
IFRS 16 requires the Group to make judgements as to whether any contract
entered into by the Group contains a lease. In making this judgement, the
Group looks at a number of factors including the broader economics of each
contract. Once a contract has been determined to contain a lease, the Group
is required to make judgements and estimates that affect the measurement of
right to use assets and lease liabilities which have been considered in more
detail in the significant accounting estimates disclosure below in note 4.25.
In determining the lease term, the Group considers all facts and circumstances
that determine the likely total length of time the asset will be leased.
Estimates are required to determine the appropriate discount rate of 7 per
cent. used to measure lease liabilities.
v) Renewal of Production Sharing Agreement ("PSA") (note 32)
The Group operates its mines and processing facilities on contract areas
licenced under a PSA with the Government of Azerbaijan. The majority of the
Group's fixed assets, including its processing facilities and its main
producing mines, are located on the Gedabek contract area which initially had
a mining licence expiring in March 2022. The PSA contains an option to extend
the Gedabek licence for a further ten years from March 2022, conditional upon
satisfaction of certain requirements stipulated in the PSA, and the first of
the two five-year extensions allowed under the PSA to March 2027 has been
obtained. The directors have judged that the requirements to renew the licence
for the second five-year extension from March 2027 to March 2032 will be
satisfied. The Group depreciates each tangible fixed asset over its estimated
useful life subject to no asset having a life extending beyond March 2032.
4.25 Significant accounting estimates
The preparation of the Group financial statements in conformity with IFRS
requires management to make estimates that affect the reported amounts of
assets, liabilities and contingent liabilities at the date of the Group
financial statements and reported amounts of revenues and expenses during the
reporting period. Estimates are continuously evaluated and are based on
management's experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances. However,
actual outcomes can differ from these estimates. In particular, information
about significant areas of estimation uncertainty considered by management in
preparing the Group financial statements is described below.
i) Impairment of intangible and tangible assets (notes 14,15 and 16)
Once an intangible or tangible asset has been determined to have an indicator
of impairment, an estimate is made of its recoverable amount. Recoverable
amount is determined as the higher of fair value less costs to sell and value
in use. Determining whether the projects are impaired requires an estimation
of the recoverable value of the individual areas to which value has been
ascribed. The value in use calculation requires the entity to estimate the
future cash flows expected to arise from the projects and a suitable discount
rate in order to calculate present value. The assessment was carried out in
2023 as there were indicators of impairment. Assessments of the recoverable
amounts of the Group's intangible assets were made for 2023 and 2024. For both
years, it was determined that there were indicators of impairment. Impairment
charges were made in both 2023 and 2024 as set out in note 14 - 'Intangible
assets'.
ii) Ore reserves and resources (notes 14 and 15)
Ore reserves are estimates of the amount of ore that can be economically and
legally extracted from the Group's mining properties. The Group estimates its
ore reserves and mineral resources, based on information compiled by
appropriately qualified persons relating to the geological data on the size,
depth and shape of the ore body and requires complex geological judgements to
interpret the data. The estimation of recoverable reserves is based upon
factors such as estimates of foreign exchange rates, commodity prices, future
capital requirements and production costs along with geological assumptions
and judgements made in estimating the size and grade of the ore body. Changes
in the reserve or resource estimates may impact upon the carrying value of
exploration and evaluation assets, mine properties, property, plant and
equipment, provision for rehabilitation and depreciation and amortisation
charges.
iii) Inventory (note 18)
Net realisable value tests are performed at least annually and represent the
estimated future sales price of the product based on prevailing spot metals
prices at the reporting date, less estimated costs to complete production and
bring the product to sale.
Stockpiles are measured by estimating the number of tonnes added and removed
from the stockpile, the number of contained gold ounces based on assay data
and the estimated recovery percentage based on the expected processing method.
Stockpile tonnages are verified by periodic surveys. The ounces of gold sold
are compared to the remaining reserves of gold for the purpose of charging
inventory costs to operations.
iv) Mine rehabilitation provision (note 24)
The Group assesses its mine rehabilitation provision annually. Significant
estimates and assumptions are made in determining the provision for mine
rehabilitation as there are numerous factors that will affect the ultimate
liability payable. These factors include estimates of the extent and costs of
rehabilitation activities, technological changes, regulatory changes and
changes in discount rates. Those uncertainties may result in future actual
expenditure differing from the amounts currently provided. The provision at
the reporting date represents management's best estimate of the present value
of the future rehabilitation costs required. Changes to estimated future costs
are recognised in the Group statement of financial position by either
increasing or decreasing the rehabilitation liability and rehabilitation asset
if the initial estimate was originally recognised as part of an asset measured
in accordance with IAS 16 'Property, Plant and Equipment'. Expenditure on mine
rehabilitation is expected to take place between 2028 and 2030 for Gedabek and
between 2026 and 2027 for Demirli. The Group has performed a sensitivity
analysis of reasonable possible changes in the significant assumptions taking
into account historical experience; however, the estimates may verify by
greater amounts. A 2 per cent. increase or decrease in the discount rate would
result in a decrease of $1,228,000 and an increase of $1,355,000 respectively
in the provision for the asset retirement obligation. A 2 per cent. increase
or decrease in the inflation rate would result in an increase of $695,000 or a
decrease of $676,000 in the provision for the asset retirement obligation. A
20 per cent. increase in cost would result in an increase of $6,746,000 in the
provision for the asset retirement obligation.
4.26 Other accounting estimates
i) Recovery of deferred tax assets (note 12)
Judgement is required in determining whether deferred tax assets are
recognised within the Group statement of financial position. Deferred tax
assets, including those arising from unutilised tax losses, require management
to assess the likelihood that the Group will generate taxable earnings in
future periods, in order to utilise recognised deferred tax assets. Estimates
of future taxable income are based on forecast cash flows from operations and
the application of existing tax laws in each jurisdiction. To the extent that
future cash flows and taxable income differ significantly from estimates, the
ability of the Group to realise the deferred tax assets recorded at the
reporting date could be impacted. Deferred tax assets in the balance sheet are
netted off against deferred tax liabilities.
ii) Leases (note 16)
The implementation of IFRS 16 requires the Group to make estimates that affect
the measurement of right to use assets and lease liabilities. In determining
the lease term, the Group considers all facts and circumstances that determine
the likely total length of time the asset will be leased. Estimates are
required to determine the appropriate discount rates used to measure lease
liabilities.
5 Segment information
The Group determines operating segments based on the information that is
internally provided to the Group's chief operating decision maker. The chief
operating decision maker has been identified as the board of directors. The
board of directors currently considers consolidated financial information for
the entire Group and reviews the business based on the Group statement of
income and Group statement of financial position on this basis. Accordingly,
the Group has only one operating segment, mining operations. The Group's
mining operations mainly comprise its producing assets, the Gedabek and
Demirli mines and related exploration and development at its Gedabek mining
concession. The majority of the Group's revenues and its cost of sales,
depreciation and amortisation are generated at Gedabek and Demirli.
The Group's exploration and all of its development and production activities
are carried out by its wholly-owned subsidiaries in Azerbaijan.
6 Revenue
The Group's revenue consists of sales to third parties of:
· gold contained within doré and gold and silver bullion to the Group's
refiners; and
· gold and copper concentrate.
2025 2024
$000 $000
Gold within doré and gold bullion 67,550 36,784
Silver bullion 782 302
Gold and copper concentrate 54,457 2,499
122,789 39,585
All revenue from sales of gold within doré and gold and silver bullion and
gold and copper concentrate is recognised at the time when control passes to
the customer.
Sales of gold within doré and gold and silver bullion in 2025 and 2024 were
made to the Group's gold refiner, MKS Finance SA, based in Switzerland. The
total sales to MKS Finance SA in 2025 were $68,332,000 (2024: $37,086,000).
The gold and copper concentrate in 2025 and 2024 was sold to Industrial
Minerals SA and Trafigura PTE Ltd. The total sales to Industrial Minerals SA
and Trafigura PTE Ltd in 2025 were $3,374,000 and $51,03,000 respectively
(2024: $1,010,000 and $1,489,000 respectively).
7 Other operating income and expenses and other expense
Other operating income
2025 2024
$000 $000
Gain on cancellation of trade payables 710 1,332
Gain on modification of lease liabilities - 8
710 1,340
Other operating expenses
2025 2024
$000 $000
Transportation and refining costs 341 217
Foreign exchange loss 236 45
Staff costs 198 19
VAT write off - 392
Impairment of receivables - 215
Mine planning and resource determination 137 448
Research costs 220 358
Impairment of inventory 3,295 -
4,427 1,694
Other expense
2025 2024
$000 $000
Copper concentrate settlement with the Government 596 -
Fair value loss on financial assets - 75
596 75
Other income
2025 2024
$000 $000
Insurance proceeds 604 -
Fair value gain on financial assets (Note 17) 287 -
891 -
8 Operating profit /(loss)
Notes 2025 2024
$000 $000
Operating profit / (loss) is stated after charging:
Depreciation on property, plant and equipment - owned 15 13,512 10,544
Depreciation on property plant and equipment - right of use assets 16 8,506 729
Amortisation of mining rights and other intangible assets 14 388 387
Impairment charge of development assets 15 3,620 534
Impairment of intangible assets 14 7,569 1,314
Employee benefits and expenses 9 13,264 11,221
Foreign currency exchange net loss 236 45
Inventory expensed during the year 35,129 13,865
Fees payable to the Company's auditor for:
The audit of the Group's annual accounts 360 200
The audit of the Group's subsidiaries pursuant to legislation 188 103
Total audit services 548 303
Amounts paid to auditor for other services:
Tax compliance services - -
Total non-audit services - -
Total 548 303
The audit fees for the parent company were $140,000 (2024: $120,000).
9 Staff numbers and costs
The average number of staff employed by the Group (including directors) during
the year, analysed by category, was as follows:
2025 2024
Management and administration 56 46
Exploration 44 44
Mine operations 1,236 849
1,336 939
The aggregate payroll costs of these persons were as follows:
2025 2024
$000 $000
Wages and salaries 11,338 10,748
Social security costs 3,599 2,443
Costs capitalised as exploration (1,673) (1,970)
13,264 11,221
The Group does not make any contributions to either individual or collective
staff pension plans.
Remuneration of key management personnel
The remuneration of the key management personnel of the Group, is set out
below in aggregate:
2025 2024
$ $
Share based payment expense 22,349 5,450
Short-term employee benefits 2,250,954 2,172,754
2,273,303 2,178,204
The key management personnel of the Group comprise the chief executive
officer, the vice president of procurement, HR and IT, the chief operating
officer, the two vice presidents of Azerbaijan International Mining Company
and the chief financial officer. The key management personnel receive no
post-employment benefits or other long term benefits. The disclosure of the
remuneration of the directors as required by the Companies Act 2006 is given
in the directors' emoluments section above.
10 Finance costs
2025 2024
$000 $000
Interest charged on interest-bearing loans and borrowings 1,426 1,323
Interest on deposit 270 270
Interest expense on lease liabilities 2,019 280
Unwinding of discount on provisions 1,361 850
Interest on creditor: geological data 161 250
5,237 2,973
11 Investment in an associate company
Copper Giant Resources Corp. ("Copper Giant") (formerly Libero Copper &
Gold Corporation) is a minerals exploration company listed on the TSX Venture
Exchange (ticker: CGNT) in Canada and owns the Mocoa copper property in
Colombia. Until 15 February 2024, Copper Giant was an associate company of the
Group. Copper Giant ceased to be an associate company of the Group following a
private placement of shares in which the Group did not participate.
The loss recognised for Copper Giant as an associate company for the year
ended 31 December 2024, is the Group's share of the loss of Copper Giant for
the period 1 January 2024 to 15 February 2024. Subsequent to 15 February 2024,
the Group's interest in Copper Giant is accounted for as a financial asset.
A release of a previously made impairment provision was made of $354,000, upon
the investment being reclassified as a financial asset, being the difference
between the market value of Copper Giant's shares and its carrying value as an
associate company on 15 February 2024
12 Taxation
Corporation tax is calculated at 32 per cent. (as stipulated in the production
sharing agreement for R.V. Investment Group Services LLC ("RVIG")) in the
Republic of Azerbaijan, the entity that contributes the profit before tax in
the Group financial statements. Taxation for other jurisdictions is calculated
at the rates prevailing in the respective jurisdictions. Deferred income taxes
arising in RVIG are recognised and fully disclosed in these Group financial
statements. RVIG's unutilised tax losses at 31 December 2025 were $nil (2024:
$22,384,000).
The major component of the income tax charge/(benefit) for the year ended 31
December are:
2025 2024
$000 $000
Deferred tax
Taxation charge/(benefit) relating to origination and reversal of temporary 8,004 (3,788)
differences
Current year taxation charge 142 -
Income tax charge/(benefit) for the year 8,146 (3,788)
Deferred income tax at 31 December relates to the following:
Statement Income statement
of financial position
2025 2024 2025 2024
$000 $000 $000 $000
Deferred income tax liability
Property, plant and equipment and intangible assets - accelerated depreciation (22,908) (23,329) 421 (3,124)
Right of use assets - accelerated depreciation (10,558) (541) (10,017) 116
Non-current other receivables (173) (83) (90) 229
Trade and other receivables (1,959) (144) (1,815) 810
Inventories (16,013) (9,744) (6,269) 1,727
Deferred income tax liability (51,611) (33,841)
Deferred income tax asset
Tax losses brought forward - 7,163 (7,163) 1,615
Trade and other payables and provisions * 7,244 3,491 3,753 637
Lease liabilities 12,546 687 11,859 (104)
Asset retirement obligation * 7,341 6,024 1,317 1,882
Deferred income tax asset 27,131 17,365
Deferred income tax benefit (8,004) 3,788
Net deferred tax liability (24,480) (16,476)
* Deferred income tax assets have been recognised for the trade
and other payables and provisions, asset retirement obligation and lease
liabilities based on local tax basis differences expected to be utilised
against future taxable profits.
A reconciliation between the accounting profit/(loss) and the total taxation
charge/(benefit) for the year ended 31 December is as follows
2025 2024
$000 $000
Profit/(loss) before tax 25,827 (21,290)
Theoretical tax charge at statutory rate of 32 per cent. for RVIG* 8,265 (6,813)
Revision of prior year estimation (729) 340
Effects of different tax rates for certain Group entities 235 -
Tax effect of items which are not deductible or assessable for taxation
purposes:
- Items not deductible or assessable 375 2,685
Income tax charge/(benefit) for the year 8,146 (3,788)
* This is the tax rate stipulated in RVIG's production sharing agreement.
The Group has a consolidated turnover below Euro 750 million. Therefore, the
OECD Pillar Two model rules do not apply to the Group.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised.
Deferred tax assets and liabilities have been offset for deferred taxes
recognised for RVIG since there is a legally enforceable right to set off
current tax assets against current tax liabilities and they relate to income
taxes levied by the same taxation authority. The Group intends to settle its
current tax assets and liabilities on a net basis in the Republic of
Azerbaijan.
At 31 December 2025, the Group had total unused tax losses available for
offset against future profits of $36,840,000 (2024: $57,409,000). Unused tax
losses in the Republic of Azerbaijan at 31 December 2025 were $nil (2024:
$22,384,000) and unused tax losses in the United Kingdom were $36,840,000
(2024: $35,025,000). The tax losses in the Republic of Azerbaijan and the
United Kingdom can be carried forward indefinitely. No deferred tax assets
have been recognised in respect of jurisdictions other than the Republic of
Azerbaijan due to the uncertainty of future profit streams.
13 Profit/(loss) per share
The calculation of basic and diluted profit/(loss) per share is based upon the
retained profit for the financial year of $17,681,000 (2024: loss of
$17,502,000).
The weighted average number of ordinary shares for calculating the basic
profit/(loss) and diluted profit /(loss) per share after adjusting for the
effects of all dilutive potential ordinary shares relating to share options
and treasury shares are as follows:
2025 2024
Basic 114,267,024 114,242,024
Diluted 114,647,024 114,242,024
At 31 December 2025 there were no unexercised share options that could
potentially dilute basic earnings per share (2024: nil).
14 Intangible assets
Exploration and evaluation
Other intangible assets
Mining rights $000
Gedabek Gosha Ordubad Vejnaly Xarxar Garadag Demirli $000 Total
$000 $000 $000 $000 $000 $000 $000 $000
Cost
1 January 2024 19,339 2,967 6,733 1,478 3,514 2,834 - 41,925 726 79,516
Additions 764 - 524 259 201 361 59 - - 2,168
Transfer to assets under construction (3,574) - - - - - - - - (3,574)
31 December 2024 16,529 2,967 7,257 1,737 3,715 3,195 59 41,925 726 78,110
Additions 931 3 305 120 16 43 5 - - 1,423
Transfer to assets under construction (56) - - - - - - - - (56)
31 December 2025 17,404 2,970 7,562 1,857 3,731 3,238 64 41,925 726 79,477
Amortisation and impairment*
1 January 2024 5,086 2,967 4,978 - - - - 38,815 544 52,390
Charge for the year - - - - - - - 387 21 408
Impairment 1,314 - - - - - - - - 1,314
31 December 2024 6,400 2,967 4,978 - - - - 39,202 565 54,112
Charge for the year - - - - - - - 370 18 388
Impairment 4,981 3 2,584 - - - - - - 7,568
31 December 2025 11,381 2,970 7,562 - - - - 39,572 583 62,068
Net book value
31 December 2024 10,129 - 2,279 1,737 3,715 3,195 59 2,723 161 23,998
31 December 2025 6,023 - - 1,857 3,731 3,238 64 2,353 143 17,409
*185,000 ounces of gold at 1 January 2025 were used to determine depreciation
of mining rights and other intangible assets (2024: 121,000 ounces). A 5 per
cent. increase or decrease in the ounces of gold used to compute the
amortisation of intangible assets would result in a decrease in amortisation
of $18,000 (2024: $18,000) and an increase in amortisation of $19,000 (2024:
$20,000) respectively.
The Group's accounting policy requires judgement to determine whether future
economic benefits are likely to be derived from exploration areas through
either future exploitation or sale of properties or whether activities have
reached a stage that permits a reasonable assessment of the existence of
reserves. In making this assessment, the directors have made certain
assumptions about future events and circumstances, particularly, whether an
economically viable extraction operation can be achieved. Any such estimates
and assumptions may change as new information becomes available.
The Group's strategy is to focus on growing its production in the next five
years by exploiting its deposits at its Gedabek, Demirli, Xarxar and Garadag
contract areas. The Group is therefore considering returning the Ordubad and
Gosha contract areas to the Government of Azerbaijan. This is considered an
indicator of impairment and accordingly all capitalised exploration and
evaluation expenses for these two contract areas have been provided against in
the year. The Group will continue to explore the Vejnaly and Kyzlbulag
contract areas.
The Gilar underground mine commenced in 2025 and the majority of the
production at Gedabek in the next 5 years will be from Gilar. This can also be
supplemented by production by developing the Zafar mine. It is therefore
likely that production from the open pit will be minimal in the next few
years. This is an indicator of impairment and accordingly exploration and
evaluation expense for the open pit mine at Gedabek totalling $3.0 million has
been provided against in the year.
15 Property, plant and equipment
Plant and
equipment and Producing Assets under construction
motor vehicles mines Total
$000 $000 $000 $000
Cost
1 January 2024 36,290 236,950 12,298 285,538
Correction of an error* - 2,000 - 2,000
1 January 2024 - restated* 36,290 238,950 12,298 287,537
Additions 1,399 1,167 6,741 9,307
Transfer to producing mines - 1,044 (1,044) -
Transfer from intangibles - - 3,574 3,574
Increase in provision for rehabilitation - 6,028 - 6,028
31 December 2024 37,689 247,189 21,569 306,447
Correction of an error* - (2,696) - (2,696)
31 December 2024 Restated* 37,689 244,493 21,569 303,751
Additions 7,074 7,588 10,970 25,632
Transfer from intangibles - 56 - 56
Transfer to producing mines - 21,754 (21,754) -
Increase in provision for rehabilitation (note 24) - 30 2,419 2,449
31 December 2025 44,763 273,921 13,204 331,888
Depreciation and impairment**
1 January 2024 25,337 195,426 - 220,763
Charge for the year 2,011 8,533 - 10,544
Impairment - 534 - 534
31 December 2024 27,348 204,493 - 231,841
Charge for the year 2,812 10,700 - 13,512
Impairment of development assets - 2,167 1,453 3,620
31 December 2025 30,160 217,360 1,453 248,973
Net book value
31 December 2024 Restated* 10,341 40,000 21,569 71,910
31 December 2025 14,603 56,561 11,751 82,915
*see note 34 - "Prior year restatements"
**185,000 ounces of gold at 1 January 2025 were used to determine depreciation
of producing mines (2024: 121,000 ounces). A 5 per cent. increase or decrease
in the ounces of gold used to compute the depreciation of property plant and
equipment would result in a decrease in depreciation of $322,000 (2024:
$281,000) and an increase in depreciation of $288,000 (2024: $311,000)
respectively.
Impairment assessment of the Group's fixed assets
The Group assesses at each balance sheet date whether any indicators of
impairment exist for each asset or cash generating unit ("CGU"). The Group has
two operating CGUs:
· The Group's mines together with their associated processing facilities
at Gedabek ("Gedabek Mining Operations").
· The Group's mines together with their associated processing facilities
at Demirli ("Demirli Mining Operations").
If any such indications of impairment exist, a formal estimate of the
recoverable amount is performed separately for the Gedabek Mining Operations
and Demirli Mining Operations.
In assessing whether an impairment is required, the carrying value of the
Gedabek Mining Operations and Demirli Mining Operations are compared with
their respective recoverable amounts. Recoverable amount is the higher of the
fair value less costs of disposal ("FVLCD") and value in use ("VIU"). Given
the nature of the Group's activities, information on the fair value less costs
to disposal of both Mining Operations are difficult to obtain unless
negotiations with potential purchasers or similar transactions are taking
place. Consequently, the VIU recoverable amount for both Mining Operations is
estimated based on the discounted future estimated cash flows (expressed in
nominal terms) expected to be generated from its continued use using
market-based commodity price assumptions, estimated quantities of recoverable
minerals, production levels, operating costs and capital requirements based on
the Group's strategic growth plan and life of mine plan. The cash flows are
discounted using a nominal discount rate before taxation that reflects current
market assessments of the time value of money and the risks specific to both
Mining Operations.
The majority of the operating assets for Demirli are leased and included in
the Group's balance sheet as right of use assets. The impairment assessment
for Demirli has therefore included both property, plant and equipment and
right of use assets in calculating the carrying value of the Demirli Mining
Operations
The determination of the recoverable amount of Mining Operations is most
sensitive to the following key assumptions:
· production volumes;
· commodity prices;
· discount rates;
· foreign exchange rates; and
· capital and operating costs.
Gedabek
The Group will be increasing its production from its Gilar mine in 2026 and
subsequent years following the opening of the mine in 2025. Gold and copper
prices have increased significantly in 2025 and early 2026 and at
approximately $4,700 per ounce and $13,000 per tonne are around their record
highs. Interest rates have also remained stable. The Gedabek site is mature
which only requires minimal sustaining capital expenditure and operating costs
have remained stable. The management have therefore assessed that there were
no indicators of impairment at 31 December 2025. Accordingly, no impairment
analysis was performed for property, plant and equipment in the Group's
balance sheet relating to the Gedabek Mining Operations at 31 December 2025.
Demirli
The Group will be increasing its production from its Demirli site in 2026 and
subsequent years following the opening of the mine in 2025. The price of
copper increased significantly in 2025 and early 2026 and at approximately
$13,000 per tonne is around a record high. Interest rates have also remained
stable. The Demirli site is well developed and only requires minimal
sustaining capital expenditure. Although the site has only been operating for
less than one year, the site is profitable and our limited experience of
operating costs is that they are stable. The management have therefore
assessed that there were no indicators of impairment at 31 December 2025.
Accordingly, no impairment analysis was performed for property, plant and
equipment together with right of use assets in the Group's balance sheet
relating to the Demirli Mining Operations at 31 December 2025.
Capital commitments
There are no material capital commitments
16 Leases
Right of use assets
Plant and Demirli property lease complex
equipment and $000 Land and Total
motor vehicles buildings
$000 $000 $000
Cost
1 January 2024 3,163 - 1,153 4,316
Additions 443 - - 443
Lease modifications (37) - (48) (85)
31 December 2024 3,569 - 1,105 4,674
Additions 345 39,261 203 39,809
31 December 2025 3,914 39,261 1,308 44,483
Depreciation
1 January 2024 1,579 - 684 2,263
Charge for the year 572 - 157 729
Lease modifications (8) - - (8)
31 December 2024 2,143 - 841 2,984
Charge for the year 528 7,661 317 8,506
31 December 2025 2,671 7,661 1,158 11,490
Net book value
31 December 2024 1,426 - 264 1,690
31 December 2025 1,243 31,600 150 32,993
Lease liabilities
2025 2024
$000 $000
1 January 2,147 2,471
Additions 39,894 443
Lease modifications - (85)
Interest expense 2,019 280
Repayment (4,852) (962)
31 December 39,208 2,147
Current liabilities 13,720 691
Non-current liabilities 25,488 1,456
39,208 2,147
Amount recognised in the profit and loss account
2025 2024
$000 $000
Depreciation expense of right of use assets 8,506 729
Gain on lease modifications - (8)
Interest expense 2,019 280
Expenses relating to short term leases 199 132
10,724 1,133
The total cash outflow related to leases in the year ended 31 December 2025
was $5,146,000 (2024: $1,139,000).
Lease for Demirli property complex
The assets above include right of use assets in respect of the Demirli
property complex ("Demirli Property"). The following are the significant terms
of the lease for the Demirli Property:
1. Date lease signed: 10 March 2025
2. Delivery date: The date the assets were made available to the Group: 30
April 2025
3. Term commencement date: The date the Group accepted the accepted the
property and the date from which lease and rental payments commenced: 1
October 2025
4. Lease term: Initial lease term 3 years, followed by automatic 12 month
extensions unless terminated. Can be terminated by either party before then
for breach or force majeure.
5. Rent payable: Base rent of $24m per annum, payable quarterly in arrears.
The rent is subject to a minimum and maximum rent as follows:
5.1 The rent will be reduced if, in any calendar year, 75 per cent. of revenue
less operating and capital expenses is less than $24 million. This is subject
to a floor of $15 million per annum.
5.2 If 15 per cent. of revenue in any year exceeds $28 million, the rent will
be increased to 15 per cent. of revenue less $4 million. This is provided 75
per cent. of revenue less operating and capital expenses is greater than $28
million. There is no ceiling.
6. Termination: The Group has the right to terminate at any time if the
Demirli Property ceases to be the principle processing method to produce
copper at Demirli.
17 Financial assets
2025 2024
Non-current $000 $000
Financial assets at fair value through profit or loss
Listed equity instruments 762 475
At 31 December 2024 and 2025, the Company held 2,130,000 shares in Copper
Giant Resources Corp. ("Copper Giant"), a company which is listed on the
Toronto Ventures Stock Exchange in Canada.
Copper Giant ceased to be an associate from 15 February 2024 (note 11 -
'Investment in an associate company').
18 Inventory
Non-current assets 2025 2024
$000 $000
Ore stockpiles 12,575 5,716
2025 2024
Current assets $000 $000
Finished goods - bullion 2,011 2,295
Finished goods - metal in concentrate 7,996 411
Metal in circuit 3,977 3,162
Metal in tailings dam 675 455
Ore stockpiles 4,816 953
Spare parts and consumables 21,287 17,457
Provision on slow-moving spare parts and consumables (3,295) -
Total current inventories 37,467 24,733
Total inventories at the lower of cost and net realisable value 50,042 30,449
The Group has capitalised mining costs related to stockpiles of ore at both
the Gedabek and Demirli sites. High grade Gilar ore has been stockpiled at
Gedabek to be processed through the upgraded flotation plant in 2026. At
Demirli, low grade oxide ore has been stockpiled for future processing by heap
leaching. Inventory is recognised at the lower of cost or net realisable
value.
19 Trade and other receivables
2025 2024
Non-current $000 $000
Other receivables
Loans to an employees* 541 260
2025 2024 1 January 2024
Current $000 Restated* Restated*
$000 $000
Trade and other receivables
Gold held due to the Government of Azerbaijan 14,304 7,471 1,988
VAT refund due 2,488 808 1,609
Loan to employee** 264 527 -
Other tax receivable 1,290 1,247 734
Trade receivables - fair value*** 2,394 44 637
Prepayments and advances 3,668 1,310 3,831
24,408 11,407 8,799
*see note 34 - "Prior year restatements"
*see note 33 - "Related party transactions"
**Trade receivables subject to provisional pricing.
Trade receivables (not subject to provisional pricing) are for sales of gold
and silver to the refiner and are non interest-bearing and payment is usually
received one to two days after the date of sale.
Trade receivables (subject to provisional pricing) are for sales of gold and
copper concentrate and are non-interest bearing, but as discussed in
accounting policy 4.2, are exposed to future commodity price movements over
the quotational period ("QP") and, hence, fail the 'solely payments of
principal and interest' test and are measured at fair value up until the date
of settlement. These trade receivables are initially measured at the amount
which the Group expects to be entitled, being the estimate of the price
expected to be received at the end of the QP. Approximately 90 per cent. of
the provisional invoice (based on the provisional price) is received in cash
within one to two weeks from when the concentrate is collected from site,
which reduces the initial receivable recognised under IFRS 15. The QPs can
range between one and four months post shipment and final payment is due
between 30-90 days from the end of the QP. Refer to accounting policy 4.12 for
details of fair value measurement.
The Group does not consider any trade or other receivable as past due or
impaired. All receivables at amortised cost have been received shortly after
the balance sheet date and therefore the Group does not consider that there is
any credit risk exposure. No provision for any expected credit loss has
therefore been established in 2024 or 2025.
The VAT refund due at 31 December 2025 and 2024 relates to VAT paid on
purchases.
Gold bullion held and transferable to the Government is bullion held by the
Group due to the Government of Azerbaijan. The Group holds the Government's
share of the product from its mining activities and from time to time
transfers that product to the Government. A corresponding liability to the
Government is included in trade and other payables as disclosed in note 21 -
'Trade and other payables'.
20 Restricted cash, cash and cash equivalents
Restricted cash comprises two bank deposits totalling $9.0 million with two
banks in Azerbaijan which have been pledged as security for two loans from the
banks of $5.6 million and $3.0 million (2024: a deposit of $6.0 million
pledged as security for a loan from a bank in Azerbaijan of $5.6 million).
These deposits cannot be withdrawn from the banks whilst the loans are
outstanding. Details of the loans are set out in note 22 - "Interest-bearing
loans and borrowings".
Cash and cash equivalents consist of cash on hand and held by the Group within
financial institutions that are available immediately. The carrying amount of
these assets approximates their fair value.
The Group's cash on hand and cash held within financial institutions at 31
December 2025 (including short-term cash deposits) comprised $16,000 and
$21,231,000 respectively (2024: $15,000 and $871,000).
The Group's cash and cash equivalents are mostly held in United States
Dollars.
21 Trade and other payables
2025 2024
Current $000 $000
Trade and other payables 6,925 2,330
Accruals and other payables
Trade creditors 11,101 5,503
Gold held due to the Government of Azerbaijan 14,304 7,471
Geological data - 3,379
Payable to the Government of Azerbaijan from copper concentrate joint sale 7,300 1,017
39,630 19,700
2025 2024
Non-current $000 $000
Other payables
Other payables - 476
Trade creditors primarily comprise amounts outstanding for trade purchases and
ongoing costs. Trade creditors are non-interest bearing and the creditor days
were 65 (2024: 65). Accruals and other payables mainly consist of accruals for
salaries, bonuses, related payroll taxes and social contributions, and
services provided but not billed to the Group by the end of the reporting
period. The directors consider that the carrying amount of trade and other
payables approximates to their fair value.
The amount payable to the Government of Azerbaijan from copper concentrate
joint sale represents the portion of cash received from the customer for the
Government's portion from the joint sale of copper concentrate.
In the year ended 31 December 2022, the Group contracted with AzerGold CJSC to
pay $4.0 million for the historical geological data AzerGold CJSC owned in
respect of the Garadag and Xarxar Contract Areas. The consideration was
apportioned as $3.3 million for Garadag data and $0.7 million for Xarxar data.
$1.0 million (25 per cent.) was paid in 2022. The remaining $3.0 million (75
per cent.) plus VAT was paid in 2025.
22 Interest-bearing loans and borrowings
Interest rate (per cent.) Final maturity date 2025 2024
$000 $000
$5,000,000 bank loan 8.5 per annum May 2026 5,059 5,002
$5,650,000 bank loan 6.5 per annum June 2026 5,679 5,684
$3,708,000 vendor financing SOFR + 2.0 per annum July 2027 1,858 3,093
$10,000,000 bank loan 6.5 per annum May 2026 3,083 7,850
$2,000,000 bank loan 7.5 per month September 2026 2,003 -
$3,000,000 bank loan 5.0 per month October 2026 3,008 -
$4,000,000 bank loan 8.0 per annum December 2028 4,011 -
$3,000,000 bank loan 8.5 per annum December 2028 2,987 -
27,688 21,629
Loans repayable in less than one year 22,181 18,546
Loans repayable in more than one year 5,507 3,083
27,688 21,629
The directors consider that the carrying amount of interest-bearing loans and
borrowings approximates to their fair value.
$5,000,000 bank loan
The loan is unsecured and was originally repayable in full on 11 May 2025 then
amended to 11 May 2026. It carries an interest rate of 8.5 per cent. per annum
(2024: 6 per cent. per annum) and interest is payable monthly. It has now been
fully repaid.
$5,650,000 bank loan
The loan is secured against a $6 million deposit maintained with the lender.
The principal was initially repayable in 2 instalments of $2,818,659 and
$2,831,341 in March 2024 and April 2024 respectively. The loan has been
extended several times and is now fully repayable by June 2026. The amended
interest rate is 6.5 per cent. per annum. The $6 million deposit has been
disclosed as restricted cash in the Group balance sheet at 31 December 2025
and 31 December 2024
$3,708,000 vendor financing
On 2 May 2024, Azerbaijan International Mining Company (a wholly owned
subsidiary of the Group) agreed and signed a vendor financing facility (the
"Facility") with Caterpillar Financial Services Corporation ("Cat
Financial"). On 26 August 2024 the Group received the full proceeds of
$3,708,000 from its vendor financing loan with Cat Financial. The loan is
secured against the underground mining equipment purchased under the agreement
for the Group's Gilar mine. The underground fleet cost $4.6 million which had
already been paid by the Group at 31 December 2023. $3,708,000 of the
purchase price was refinanced through the Facility. Other principal terms of
the facility were as follows:
Guarantor: Anglo Asian Mining PLC
Interest rate: CME Term SOFR rate plus a margin of 2 per cent.
Repayment of interest: quarterly
Repayment of capital: 12 equal quarterly installments
Net debt to EBITDA and net worth covenants
Prepayment: allowed subject to a fee
The Group was in breach of its covenants on the Facility at 31 December 2024.
Accordingly, the entire loan has been classified as a current liability in the
2024 balance sheet. The Group subsequently obtained a waiver for the breach of
the covenant The Group was not in breach of its covenants on the facility at
31 December 2025.
$10,000,000 bank loan
The loan is unsecured. The borrowing commenced on 6 November 2023. The loan
had a 6 month capital repayment grace period during which only interest of
$54,167 per month was payable. From May 2024 to November 2024, 6 equal monthly
repayments of principal and interest totalling $413,306 were made by the
Group. On 14 October 2024, a new capital repayment grace period was determined
from November 2024 to May 2025, 13 equal monthly repayments of principal and
interest totalling $624,297 will be made to repay the principal on a monthly
reducing balance basis. A final repayment of principal and interest of
$624,297 was made in May 2026.
$2,000,000 bank loan
The loan commenced in September 2025 and is unsecured and repayable in full in
September 2026. It carries an interest rate of 7.5 per cent. per annum and
interest is payable monthly.
$3,000,000 bank loan
The loan commenced in October 2025 and is unsecured and repayable in full in
October 2026. It carries an interest rate of 5.0 per cent. per annum and
interest is payable monthly.
$4,000,000 bank loan
The loan commenced in December 2025 and is unsecured. It is repayable in
installments with the final repayment in December 2028. It carries an interest
rate of 8.0 per cent. per annum and interest is payable monthly.
$3,000,000 bank loan
The loan commenced in December 2025 and is repayable in full in December 2028.
It carries an interest rate of 8.5 per cent. per annum and interest is payable
monthly. The loan is secured against a $3 million deposit maintained with the
lender. The $3 million deposit has been disclosed as restricted cash in the
Group balance sheet at 31 December 2025.
23 Changes in liabilities arising from financing activities
2025
1 January Cash flows Other 31 December
$000 $000 $000 $000
Interest bearing loans and borrowings 21,629 4,799 1,260 27,688
Lease liabilities 2,147 (1,016) 38,007 39,208
Total liabilities from financing activities 23,776 3,783 39,337 66,896
2024
1 January Cash flows Other 31 December
$000 $000 $000 $000
Interest bearing loans and borrowings 20,734 (342) 1,237 21,629
Lease liabilities 2,471 (962) 638 2,147
Total liabilities from financing activities 23,205 (1,304) 1,875 23,776
24 Provision for rehabilitation
2025 2024
$000 $000
1 January 18,826 12,948
Correction of an error* 304 2,000
1 January restated* 19,130 14,948
Change in estimates 30 3,332
Increase 2,419 -
Accretion expense 1,361 850
31 December 22,940 19,130
*see note 34 - "Prior year restatement"
The Group has a liability for restoration, rehabilitation and environmental
costs arising from its mining operations. Estimates of the cost of this work
including reclamation costs, close down and pollution control are made on an
ongoing basis, based on the estimated life of the mine. The provision
represents the net present value of the best estimate of the expenditure
required to settle the obligation to rehabilitate any environmental
disturbances caused by mining operations. The total undiscounted liability for
rehabilitation at 31 December 2025 was $24,241,000(2024: $20,520,000). The
increase related to the Demirli mine. The undiscounted liability was
discounted using a risk-free rate of 6.58 per cent. and 6.50 per cent. for
Gedebek and Demirli mine sites respectively (2024: 6.57 per cent. for Gedabek
mine site). Expenditures on restoration and rehabilitation works are expected
between 2028 to 2030 and 2026 to 2028 years for Gedabek and Demirli mine sites
(2024: between 2028 to 2030 years for Gedabek mine site).
25 Financial instruments
Financial risk management objectives and policies
The Group's principal financial instruments at 31 December 2025 comprised cash
and cash equivalents and borrowings. The main purpose of these financial
instruments is to finance the Group operations. The Group has other financial
instruments, such as certain of its trade and other receivables and trade and
other payables, which arise directly from its operations. Surplus cash within
the Group is put on deposit, the objective being to maximise returns on such
funds whilst ensuring that the short-term cash flow requirements of the Group
are met.
The Group's only financial instrument which is valued at fair value through
profit and loss is its investment in Copper Giant at 31 December 2025. It is
valued using level 1 inputs. The investment is valued at its market price in
an active market without adjustment.
The main risks that could adversely affect the Group's financial assets,
liabilities or future cash flows are capital risk, market risk, interest rate
risk, foreign currency risk, liquidity risk and credit risk. Management
reviews and agrees policies for managing each of these risks which are
summarised below.
The following discussion also includes a sensitivity analysis that is intended
to illustrate the sensitivity to changes in market variables on the Group's
financial instruments and show the impact on profit or loss and shareholders'
equity, where applicable. Financial instruments affected by market risk
include bank loans and overdrafts, accounts receivable, accounts payable and
accrued liabilities.
The sensitivity has been prepared for the years ended 31 December 2025 and
2024 using the amounts of debt and other financial assets and liabilities held
as at those reporting dates.
Capital risk management
The capital structure of the Group at 31 December 2025 consists cash and cash
equivalents, bank borrowings, lease liabilities and equity attributable to
equity holders of the parent, comprising issued share capital, reserves and
retained earnings as disclosed in the consolidated statement of changes in
equity. The Group may enter into bank and other loans and letters of credit in
the future. The Group has sufficient capital to fund ongoing production and
exploration activities, with capital requirements reviewed by the Board on a
regular basis. Capital has been sourced through share issues on the AIM, part
of the London Stock Exchange, and loans from banks in Azerbaijan and
elsewhere. In managing its capital, the Group's primary objective is to ensure
its continued ability to provide a consistent return for its equity
shareholders through capital growth. In order to achieve this objective, the
Group seeks to maintain a gearing ratio that balances risk and returns at an
acceptable level and also to maintain a sufficient funding base to enable the
Group to meet its working capital and strategic investment needs. In 2025, the
Group entered into a vendor financing facility with Caterpillar Financial
Services Corporation in 2025 of $3.7 million. The loan is subject to a net
debt to EBITDA and a net worth covenant.
The Group is not subject to externally imposed capital requirements and
monitors capital using a gearing ratio. The Group's policy is to keep the
gearing ratio below 70 per cent. The Group calculates its gearing ratio as
total debt divided by total equity and multiplying the result by 100 to
express the gearing ratio as a percentage. At 31 December 2024, the Group's
gearing ratio was 69.5 per cent. (2024: 32.2 per cent.) as follows:
2025 2024
$000 $000
Current liabilities
Interest-bearing loans and other borrowings 22,181 18,546
Lease liabilities 13,720 691
Non-current liabilities
Interest-bearing loans and other borrowings 5,507 3,083
Lease liabilities 25,488 1,456
TOTAL DEBT 66,896 23,776
TOTAL EQUITY 85,228 67,372
Total debt / total equity X 100 (per cent.) 78.5 35.3
Interest rate risk
The Group's cash deposits are at a fixed rate of interest. The Group's bank
borrowings during the year ended 31 December 2025 were at a fixed rate of
interest. The Group would expect any future bank borrowings and letters of
credit to be at a fixed rate of interest. The Group also utilised supplier
financing at a variable rate of interest during the year ended 31 December
2025. The variable rate applicable to the Group's interest-bearing supplier
financing exposes the Group to fluctuations in interest payments due to
changes in the SOFR.
The Group manages the risk by maintaining fixed rate instruments, with
approval from the directors required for all new borrowing facilities.
The Group has not used any interest rate swaps or other instruments to manage
its interest rate profile during 2025 and 2024.
Liquidity risk
Ultimate responsibility for liquidity risk management rests with the board of
directors, which has built an appropriate liquidity risk management framework
for the management of the Group's short, medium and long-term funding and
liquidity management requirements. The Group manages liquidity risk by
maintaining adequate reserves, banking facilities and reserve borrowing
facilities by continuously monitoring forecast and actual cash flows and
matching the maturity profiles of financial liabilities. The Group has access
to local sources of both short and long-term finance should this be required.
The tables below summarise the maturity profile of the Group's financial
liabilities. The cash flows presented are the contractual undiscounted cash
flows and accordingly certain amounts differ from the amounts included in the
statement of financial position.
Year ended 31 December 2025
On Less than 3 to 12 1 to 5 >5 Total
demand 3 months months years years $000
$000 $000 $000 $000 $000
Lease liabilities 1,356 2,711 12,200 29,849 - 46,116
Interest-bearing loans and borrowings - 2,443 19,737 5,508 - 27,688
Trade and other payables - 9,908 29,723 - - 39,631
1,356 15,062 61,660 35,357 - 113,435
Year ended 31 December 2024
On Less 3 to 12 1 to 5 >5 Total
demand than Months years years $000
$000 3 months $000 $000 $000
$000
Lease liabilities 79 159 714 1,634 - 2,586
Interest-bearing loans and borrowings - 73 18,473 3,083 - 21,629
Trade and other payables - 4,925 14,936 476 - 20,337
79 5,157 34,123 5,193 - 44,552
Credit risk
Credit risk refers to the risk that a counterparty will default on its
contractual obligations resulting in financial loss to the Group. The maximum
credit risk exposure relating to financial assets is represented by their
carrying value as at the consolidated statement of financial position date.
The Group has adopted a policy of only dealing with creditworthy banks and has
cash deposits held with reputable financial institutions. These usually have a
lower to upper medium grade credit rating. Trade receivables consist of
amounts due to the Group from sales of gold and silver and copper and precious
metal concentrates. Sales of gold and silver bullion are made to MKS Finance
SA, Switzerland-based gold refinery, and copper concentrate is sold to
Industrial Minerals SA and Trafigura PTE Ltd. Due to the nature of the
customers, the board of directors does not consider that a significant credit
risk exists for receipt of revenues. The board of directors continually
reviews the possibilities of selling gold to alternative customers and also
the requirement for additional measures to mitigate any potential credit risk.
Foreign currency risk
The presentational currency of the Group is United States Dollars. The Group
is exposed to currency risk due to movements in foreign currencies relative
to the US Dollar affecting foreign currency transactions and balances.
The carrying amounts of the Group's foreign currency denominated monetary
assets and monetary liabilities at 31 December are as follows:
Liabilities Assets
2025 2024 2025 2024
$000 $000 $000 $000
UK Sterling 208 449 377 198
Azerbaijan Manats 12,359 10,481 5,176 1,917
Other 2,032 1,879 17 17
Foreign currency sensitivity analysis
The Group is mainly exposed to the currency of the United Kingdom (UK
Sterling), the currency of the European Union (Euro) and the currency of the
Republic of Azerbaijan (Azerbaijan Manat).
The following table details the Group's sensitivity to a 9.16 per cent., 8.69
per cent. and 2.00 per cent. (2024: 9.16 per cent., 8.69 per cent. and 2.00
per cent.) increase in and a 10.32 per cent, 5.57 per cent. and 2.00 per cent.
(2024: 10.32 per cent, 5.57 per cent. and 2.00 per cent.) decrease in the
United States Dollar against United Kingdom Sterling, Euro and Azerbaijan
Manat, respectively. These are the sensitivity rates used when reporting
foreign currency risk internally to key management personnel and represents
management's assessment of the reasonably possible change in foreign exchange
rates. The sensitivity analysis includes only outstanding foreign currency
denominated monetary items and adjusts their translation at the period end for
respective change in foreign currency rates. A positive number below indicates
an increase in profit other equity where the United States Dollar strengthens
by the mentioned rates against the relevant currency. Weakening of the United
States Dollar against the relevant currency, there would be an equal and
opposite impact on the profit and other equity, and the balances below would
be reversed.
UK Sterling impact Azerbaijan Manat impact Euro Impact
2025 2024 2025 2024 2025 2024
$000 $000 $000 $000 $000 $000
Increase - effect on (loss) /profit before tax 15 5 144 171 174 162
Decrease - effect on (loss) / profit before tax (17) (5) (144) (171) (111) (104)
Market risk
The Group's activities primarily expose it to the financial risks of changes
in gold, silver and copper prices which have a direct impact on revenues. The
management and board of directors continuously monitor the spot price of these
commodities. The forward prices for these commodities are also regularly
monitored. The majority of the Group's production is sold by reference to the
spot price on the date of sale. However, the board of directors will enter
into forward and option contracts for the purchase and sale of commodities
when it is commercially advantageous.
A 10 per cent. decrease in gold price in the year ended 31 December 2025 would
result in a reduction in revenue of $6.8 million (2024: $3.7 million) and a 10
per cent. increase in gold price would have the equal and opposite effect a 10
per cent. decrease in silver price would result in a reduction in revenue of
$0.78 million (2024: $0.08 million) and a 10 per cent. increase in silver
price would have an equal and opposite effect. A 10 per cent. decrease in
copper price would result in a reduction in revenue of $4.3 million (2024:
$0.3 million) and a 10 per cent. increase in copper price would have an equal
and opposite effect.
26 Share capital and merger reserve
2025 2024
Number £ Number £
Authorised
Ordinary shares of 1 pence each 600,000,000 6,000,000 600,000,000 6,000,000
Shares $000 Shares $000
Ordinary shares issued and fully paid
1 January 114,392,024 2,016 114,392,024 2,016
Issued during the year 100,000 1 - -
31 December 114,492,024 2017 114,392,024 2,016
Fully paid ordinary shares carry one vote per share and carry the right to
dividends. 150,000 ordinary shares were bought back during the year ended 31
December 2025 and are now held in treasury (note 28 - 'Treasury shares').
Share options
The Group has share option scheme under which options to subscribe for the
Company's shares have been granted to certain executives and senior employees
(note 29 - 'Share based payment').
Merger reserve
The merger reserve was created in accordance with the merger relief provisions
under Section 612 of the Companies Act 2006 (as amended) relating to
accounting for Group reconstructions involving the issue of shares at a
premium. In preparing Group consolidated financial statements, the amount by
which the base value of the consideration for the shares allotted exceeded the
aggregate nominal value of those shares was recorded within a merger reserve
on consolidation, rather than in the share premium account.
27 Share premium
2025 2024
$000 $000
1 January 33 33
Shares issued during the year 152 -
Transfer from share-based payment reserve 153 -
31 December 338 33
28 Treasury shares
Shares $000
1 January 2024 150,000 145
Correction of an error* (150,000) (145)
1 January 2024 - restated - -
Movement in 2024 - -
31 December 2024 - restated - -
Buy back of shares 150,000 145
31 December 2025 150,000 145
See note 34 - "Prior year restatement"
The Company bought back the following ordinary shares in the year ended 31
December 2025:
Price per share pence Total cost Total cost
Date of original unlawful buyback Number of shares £ $000
21 July 2022 50,000 81.75 40,875 49
10 August 2022 50,000 89.50 44,750 54
16 September 2022 50,000 73.00 36,500 42
150,000 81.42* 122,125 145
* Average cost
29 Share-based payment
The Group operates a share option scheme for directors and senior employees of
the Group. The period during which share options can be exercised is
determined by the board of directors for each individual grant of share
options subject to exercise not taking place later than the tenth anniversary
of their issue. Options are exercisable at a price equal to the closing quoted
market price of the Group's shares on the date of the board of directors
approval to grant options. Options are forfeited if the employee leaves the
Group and the options are not exercised within three months from leaving date.
The number and weighted average exercise prices ("WAEP") of, and movements in,
share options during the year were as follows:
2025 2024
WAEP WAEP
Number pence Number pence
Outstanding at 1 January 380,000 113 380,000 113
Issued during the year 100,000 166 - -
Exercised during the year (100,000) 205 - -
Exercisable at 31 December 380,000 127 380,000 113
The weighted average remaining contractual life of the share options
outstanding at 31 December 2025 was 2 years (2024: 2.5 years) and their
average exercise price was 127 pence (2024: 113 pence).
The Group issued 100,000 new share options during the year ended 31 December
2025 (2024: nill).
Share options are valued using the assumption that they will only be exercised
if the share price prevailing at the date of exercise is equal to, or above,
the price at which the options were granted. This methodology approximates to
valuing the share options using a Black-Scholes model.
The Group recognised total expense related to equity-settled share-based
payment transactions for the year ended 31 December 2025 of $22,000 (2024:
$5,000).
30 Distributions
2025 2024
$000 $000
Cash dividends on ordinary shares declared
Final dividend for the year ended 31 December: 4 US cents per share 4,574 -
4,574 -
Cash dividends are declared in US dollars but paid in a combination of US
dollars and pounds Sterling. Dividends paid in pounds Sterling are converted
into pounds Sterling using a five-day average of the sterling closing
mid-price published by the Bank of England at 4pm each day for a specified
week prior to payment of the dividend.
31 Subsidiary undertakings and associate company
Anglo Asian Mining PLC is the parent and ultimate parent of the Group.
The Company's subsidiaries included in the Group financial statements at 31
December 2024 and 31 December 2025 are as follows:
Name Country of incorporation Primary Percentage
place of business of holding
per cent.
Anglo Asian Operations Limited England and Wales United Kingdom 100
Holance Holdings Limited British Virgin Islands Azerbaijan 100
Anglo Asian Cayman Limited Cayman Islands Azerbaijan 100
R.V. Investment Group Services LLC Delaware, USA Azerbaijan 100
Azerbaijan International Mining Company Limited Cayman Islands Azerbaijan 100
There has been no change in subsidiary undertakings since 1 January 2025.
See note 6 - "Subsidiaries" of notes to the Company financial statements for
the registered address of the subsidiaries.
32 Contingencies and commitments
The Group undertakes its mining operations in the Republic of Azerbaijan
pursuant to the provisions of an Agreement on the Exploration, Development and
Production Sharing for Prospective Gold Mining Areas ("PSA"). The original
agreement was dated 20 August 1997 and granted the Group mining rights over
the following contract areas containing mineral deposits: Gedabek, Gosha,
Ordubad Group (Piyazbashi, Agyurt, Shakardara, Kiliyaki), Soutely, Kyzilbulag
and Vejnali. On 5 July 2022, amendments to the PSA were ratified by
the Parliament of the Republic of Azerbaijan granting the Group three new
contract areas with a combined area of 882 square kilometres and which
relinquished the Soutely contract area. The parliamentary ratification was
signed into law on 5 July 2022 by the President of the Republic of
Azerbaijan.
The PSA contains various provisions relating to the obligations of R.V.
Investment Group Services LLC ("RVIG"), a wholly owned subsidiary of the
Company. The principal provisions are regarding the exploration and
development programme, preparation and timely submission of reports to the
Government, compliance with environmental and ecological requirements. The
Directors believe that RVIG is in compliance with the requirements of the PSA.
The Group has announced a discovery on Gosha Mining Property in February 2011
and submitted the development programme to the Government according to the PSA
requirements, which was approved in 2012. In April 2012 the Group announced a
discovery on the Ordubad Group of Mining Properties and submitted the
development programme to the Government for review and approval according to
the PSA requirements. The Group and the Government are still discussing the
formal approval of the development programme.
The initial period of the mining licence for Gedabek was until March 2022. The
Company has the option to extend the licence for two five-year periods (ten
years in total) conditional upon satisfaction of certain requirements in the
PSA. The first of the five year extensions was obtained by the Company in
April 2021 and accordingly the mining licence is now to March 2027 with a
further five year extension permitted.
RVIG is also required to comply with the clauses contained in the PSA relating
to environmental damage. The Directors believe RVIG is in compliance with the
environmental clauses contained in the PSA.
33 Related party transactions
Trading transactions
During the years ended 31 December 2024 and 2025, there were no trading
transactions between Group companies.
Other related party transactions
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed in this
note. Transactions between the Group and other related parties are disclosed
below.
a) Remuneration paid to directors is disclosed above.
b) During the year ended 31 December 2025, total payments of $2,758,000
(2024: $333,000) were made for processing equipment and supplies purchased
from Proses Muhendislik Danismanlik Inshaat ve Tasarim Anonim Shirket, an
entity in which the chief operating officer of Azerbaijan International
Mining Company, has a direct ownership interest.
At 31 December 2024 there is a payable in relation to the above related party
transaction of $150,000 (2024: $282,000).
c) On 30 June 2022, a loan of $500,000 was made to the chief operating
officer of Azerbaijan International Mining Company. The loan carries an
interest rate of 4 per cent. and was repayable on 30 June 2023 with earlier
repayment permissible. The loan is secured on the Anglo Asian Mining plc
shares owned by the vice president of technical services of Azerbaijan
International Mining Company. The loan was guaranteed by the president and
chief executive officer of Anglo Asian Mining plc. In June 2023, the loan was
renewed on the same terms as previously except the term of the loan was
extended for 3 years from the date of the original advance and the interest
rate was increased to 6 per cent. On 21 May 2024 and 11 May 2025, a loan
repayments of $40,000 and $15,000 were made, which were deducted from accrued
interest up to the date of repayment.
d) 1 October 2020, Azerbaijan International Mining Company ("AIMC") lent
$245,000 for a period of 3 years to Ilham Khalilov, Vice President of AIMC and
a member of the key management personnel of the Group. On 1 October 2023, the
loan was extended until 31 December 2026 at an interest rate of 6 per cent. On
10 February 2025, a loan repayment of $5,000 was made, which was deducted from
accrued interest up to the date of repayment.
34 Prior year restatements
34.1 Share buy backs
In the year ended 31 December 2022, the Company bought back 150,000 shares at
a cost of $145,000. Sections 836 and 838 of the Companies Act 2006 require
that share buybacks can only be made by Companies which have sufficient
distributable reserves from which to buy back those shares. The Company did
not have sufficient reserves at that time, and the share buybacks were
therefore unlawful.
To rectify the situation the following actions were carried out in 2025:
· A dividend of $60 million was paid by Anglo Asian Operations Limited
to the Company to rectify the deficiency on reserves.
· A shareholder's meeting was held on 22 October 2025. A resolution by
the shareholders was passed which put all potentially affected parties in the
position which they were intended to be in had the share buy backs been made
in accordance with the full requirements of the Companies Act 2006.
· The Company entered into a buy-back deed with SP Angel Corporate
Finance LLP, the Company's NOMAD ("Buy-back Deed").
The consequence of entering into the Buy-back Deed is, inter alia, to effect
the lawful transfer of the Ordinary Shares which were subject to buy-backs in
accordance with the Companies Act 2006, from SP Angel Corporate Finance LLP to
the Company. As the actions taken to rectify the share buybacks and the
Buy-back Deed were entered into in 2025, the share buybacks have now been
accounted for as if they took place in 2025. No money was transferred to, or
from, the Company and S P Angel Corporate Finance LLP in 2025. The share buy
backs have therefore been recorded at their original price in 2022.
The effects on the financial statements are as follows:
· The reserve for Treasury shares has only been recognised in the
financial statements for the year ended 31 December 2025. It has been recorded
as $nil in all previous years.
· An other receivable has been established for $145,000 in the balance
sheet for the years ended 31 December 2022 to 31 December 2024. This was money
held at S P Angel Corporate Finance LLP on account of the share purchases
which were unlawful.
The effect on debtors and Treasury shares reserve for the years ended 31
December 2023 and 31 December 2024 is given in the balance sheet below.
34.2 Contingency for provision of rehabilitation
In 2024, to align itself with similar companies in the industry, the Group
added a contingency to its rehabilitation provision. During the year, the
Group identified that this contingency for rehabilitation had been incorrectly
calculated. The net impact of this miscalculation was that both Property,
plant and equipment and the rehabilitation provision had been overstated by
$2,696,000.
In 2023 and 2024, the Group used an incorrect inflation rate to calculate the
rehabilitation provision. The net impact of this miscalculation was that both
Property, plant and equipment and the rehabilitation provision had been
understated by $2 million in 2023 and $3 million in 2024.
The above errors are prior year adjustments and have been corrected by
restating the balance sheet at 31 December 2023 and 2024. In 2023. Property,
plant and equipment and the rehabilitation provision have both been increased
by $2 million. In 2024, Property, plant and equipment and the rehabilitation
provision have both been increased by a further $0.3 million.
The effect on Property, plant and equipment and rehabilitation prevision for
the years ended 31 December 2023 and 31 December 2024 is given in the balance
sheets below.
34.3 Restated balance sheet at 31 December 2024
As previously reported Share buy backs Rehabilitation provision As restated
$000 $000 $000 $000
As previously reported Share buy backs Rehabilitation provision As restated
$000 $000 $000 $000
Property plant and equipment 71,606 - 304 71,910
Total non-current assets 103,745 - 304 104,049
Prepayments and advances 1,165 145 - 1,310
Trade and other receivable 11,262 145 - 11,407
Current assets 42,881 145 - 43,026
Total assets 146,626 145 304 147,075
Provision for rehabilitation (18,826) - (304) (19,130)
Non-current liabilities (40,317) - (304) (40,621)
Total liabilities (79,254) - (304) (79,558)
Net assets 67,372 145 - 67,517
Treasury shares (145) 145 - -
Total equity 67,372 145 - 67,517
34.4 Restated balance sheet at 31 December 2023
As previously reported Share buy backs Rehabilitation provision As restated
$000 $000 $000 $000
Property plant and equipment 64,775 - 2,000 66,775
Total non-current assets 95,171 - 2,000 97,171
Prepayments and advances 3,686 145 - 3,831
Trade and other receivable 8,654 145 - 8,799
Current assets 59,473 145 - 59,618
Total assets 154,644 145 2,000 156,789
Provision for rehabilitation (12,948) - (2,000) (14,948)
Non-current liabilities (46,452) - (2,000) (48,452)
Total liabilities (69,836) - (2,000) (71,836)
Net assets 84,808 145 - 84,953
Treasury shares (145) 145 - -
Total equity 84,808 145 - 84,953
**ENDS**
Notes to editors:
Anglo Asian Mining plc (AIM:AAZ) is a copper and gold producer with a
high-quality portfolio of production and exploration assets in Azerbaijan. The
Company produced 7,915 tonnes of copper and 25,061 ounces of gold for the year
ended 31 December 2025.
The Company's strategic plan for growth shows a clearly defined path for the
Company to transition to a multi-asset, mid-tier, copper and gold producer by
2030, by which time copper will be the principal product of the Company, with
forecast annual production of around 50,000 to 55,000 tonnes of copper. It
plans to achieve this growth by bringing into production three new mines
during the period 2027 to 2030 at Xarxar, Garadag and Zafar, in addition to
the newly opened Gilar and Demirli mines. Production commenced at the Gilar
mine in May 2025 and Demirli in July 2025. https://www.angloasianmining.com/
(https://www.angloasianmining.com/)
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