REG - Anglo Asian Mining - Interim Results
26/09/2024 07:00
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RNS Number : 7040F Anglo Asian Mining PLC 26 September 2024
26 September 2024
Anglo Asian Mining plc
Interim results for the six-months to 30 June 2024
Ramp-up to full production underway
FY 2024 Production Guidance of 15,000 to 19,500 gold equivalent ounces
maintained
Anglo Asian Mining plc ("Anglo Asian", the "Company" or the "Group"), the
AIM-listed copper, gold, and silver producer in Azerbaijan announces its
interim results for the six-months ended 30 June 2024 ("H1 2024" or the
"Period").
The Group's performance was in keeping with expectations, given that agitation
leaching and flotation processing were suspended throughout the Period.
The Group has now received authorisation from the Government of Azerbaijan for
the raise of its tailings dam wall, construction of which started on 6 August
2024. The Group is swiftly progressing towards normalised production.
Financial highlights
· Total revenues of $13.4 million (H1 2023: $30.8 million) due to
agitation leaching and flotation production being suspended throughout the
period
· Lower gold bullion sales of 6,000 ounces (H1 2023: 10,506 ounces)
partially offset by a higher average gold price of $2,174 per ounce (H1 2023:
$1,939 per ounce)
· Copper concentrate sales lower at $0.5 million (H1 2023: $10.4
million)
· Loss before taxation of $5.5 million (H1 2023: profit of $1.4
million)
· Gross loss of $1.7 million (H1 2023: gross profit of $5.6 million)
· Higher finance costs at $1.2 million (H1 2023: $0.7 million) due to
higher borrowings
· Net cash generated by operating activities of $3.2 million (H1 2023:
$0.6 million)
· Investment in our future growth continued in the Period
· $6.3 million mine development and other capital expenditure (H1 2023:
$6.6 million)
· Net debt of $12.0 million as at 30 June 2024 (31 December 2023: $10.3
million)
· No interim dividend declared for 2024 due to the loss in the Period
Operational highlights
· Total production of 5,270 Gold Equivalent Ounces ("GEOs") (H1 2023:
23,391 GEOs) due to suspension of agitation leaching and flotation processing
throughout the Period
· Gold production of 4,704 ounces (H1 2023: 14,623 ounces)
· Copper production of 100 tonnes (H1 2023: 1,870 tonnes)
· Silver production of 12,746 ounces (H1 2023: 44,696 ounces)
· Garadag JORC maiden mineral resources estimate published on 24
September 2024
· Group's four new mineral deposits now have a combined JORC mineral
resources estimate of over one million tonnes of copper
· Full year 2024 production guidance maintained of between 15,000
to 19,500 GEOs
· Gold production of between 14,000 to 16,000 ounces
· Copper production of between 250 to 850 tonnes
Approval of tailings dam wall raise and restart of full production
· Authorisation from the Government of Azerbaijan received on 5
August 2024 for the Group to raise the wall of its existing tailings dam
· The first phase of 2.5 metres is expected to be completed in November
2024
· Agitation leaching processing nearing the end of its start-up
commissioning with production to restart imminently with flotation processing
restarting in November
· First ore expected to be mined from Gilar in December 2024
Anglo Asian CEO Reza Vaziri commented:
"I am pleased to report on a satisfactory performance during the first half of
2024. Production was significantly reduced due to the partial suspension of
processing throughout the Period which resulted in a loss. The loss was
minimised by stringent cost control. Cash was also carefully managed resulting
in net debt increasing by less than two million dollars in the Period.
"During this time of significantly reduced production, we have taken a number
of important steps to deliver future growth and achieve our medium-term target
of becoming a mid-tier producer. We are currently ramping up towards previous
rates of production and are also close to bringing Gilar into production. I
look forward to updating the market on these and other developments in due
course."
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:
Reza Vaziri Anglo Asian Mining plc Tel: +994 12 596 3350
Bill Morgan Anglo Asian Mining plc Tel: +994 502 910 400
Stephen Westhead Anglo Asian Mining plc Tel: +994 502 916 894
Ewan Leggat SP Angel Corporate Finance LLP Tel: +44 (0) 20 3470 0470
Adam Cowl Nominated Adviser and Broker
Charlie Jack Hudson Sandler Tel: +44(0) 20 7796 4133
Harry Griffiths
Chairman's statement
Dear Shareholders
The six months to 30 June 2024 remained challenging for Anglo Asian as
production from agitation leaching and flotation was suspended throughout the
Period while we waited for authorisation from the Government of Azerbaijan to
raise our tailings dam wall. We were pleased to receive authorisation in early
August and immediately started the raise of the tailings dam wall. We are now
making rapid progress to restart both agitation and flotation processing.
The Company continued to make progress on its growth plans. Development of the
new Gilar mine continued with its first ore expected to be extracted in
December. We continued to confirm our mineral resources with the publication
of the maiden Xarxar JORC mineral resources estimate in February. The maiden
Garadag JORC mineral resources estimate was also published post Period-end on
24 September 2024. Restricted access to Demirli was obtained and we have now
started work at the property. We also took steps to strengthen our
Environmental Social and Governance ('ESG') credentials, including the
formation of a Sustainability Committee.
Production
Our performance in the Period was severely impacted by the partial suspension
of processing, resulting in total production of only 5,270 gold equivalent
ounces ("GEOs"). This was predominantly 100 tonnes of copper and 4,704 ounces
of gold from heap leaching and SART processing. This was a major reduction
compared to last year, which included a full six months of agitation leaching
and flotation processing. Our production from heap leach and SART processing
proved critical to maintaining the Company's solvency during the Period. This
flexibility in our processing operations is another demonstration of the
Company's resilience.
Tailings dam wall construction and production guidance
On 5 August 2024, we received authorisation from the Government of Azerbaijan
to raise the wall of our tailings dam which is a credit to the many parties
involved for all their hard work. Construction is now underway, and we expect
the first phase, which is a 2.5 metre raise of the dam wall, to be completed
in November. Accordingly, we have issued 2024 production guidance of between
15,000 and 19,500 GEOs, including 250 to 850 tonnes of copper and 14,000 to
16,000 ounces of gold.
Strategic growth plan
Our medium-term growth strategy remains intact, with the Gilar mine expected
to enter first production in December. The start-up of Gilar will be a
significant milestone in the Company becoming a mid-tier copper producer, as
it is the first new mine the Company will open since the Gedabek underground
mine in 2020. Gilar will enable the Company to start reversing the declining
production of the last few years from its existing mines which are all
starting to approach the end of their lives.
Another important event during the Period was that our production sharing
agreement ("PSA") was revised, with AzerGold Closed Joint Stock Company
("AzerGold CJSC") replacing the Ministry of Ecology and Natural Resources as
the local party to the PSA. Our future collaboration with AzerGold CJSC will
allow us to leverage their extensive local experience and expertise.
Libero Copper and Gold Corporation ("Libero")
Our shareholding in Libero remained unchanged throughout the Period. However,
our interest in Libero suffered a very significant dilution in early 2024
following a major fund raising in which we did not participate. Libero ceased
to be an associate company following the fund raising and will now be
classified as an equity investment. Although the overall investment to date
has been a disappointment, we still believe Libero has the ability to create
shareholder value.
Dividend and going concern
The Company continued to make losses in the Period and therefore does not
intend to pay an interim dividend. The directors fully intend to resume
dividend payments once conditions allow.
The Micon environmental audit and subsequent partial suspension of processing
resulted in the financial statements for the six months to 30 June 2023 and
the full year to 31 December 2023, containing material uncertainties as to
going concern. However, given the receipt of the authorisation of the tailings
dam wall raise and imminent restart of full operations, the financial
statements for the Period do not contain any material uncertainties to going
concern. Further details regarding going concern are contained within the
financial review and financial statements below.
UN Climate Change Conference in Baku in November 2024 ("COP 29")
Preparations for the COP 29 conference are now well underway in Baku with
significant work being undertaken to prepare the city for the event. The
Company welcomes this opportunity for Azerbaijan to showcase its capital
city and, as a significant business in Azerbaijan, it intends to fully
participate in the conference where appropriate.
Annual General Meeting for 2024 ("AGM")
Our AGM was held on 20 June 2024 and we were very pleased with the continuing
strong support and interest from our shareholders. For the first time, a
detailed presentation about the Company was made following the formal business
of the AGM. We believe this was well received by our shareholders and the
Company plans to make further such presentations at future AGMs.
Appreciation
I would like to extend my gratitude to all Anglo Asian employees, partners and
the Government of Azerbaijan for their continued support. I would also like to
thank our shareholders for their unwavering commitment to Anglo Asian during
what has been a challenging time. As we navigate the remainder of 2024, we are
poised to deliver on our strategic goals and look forward to a strong finish
to the year and a better 2025.
Khosrow Zamani
Non-executive chairman
25 September 2024
Chief Executive Officer's review
I am pleased to report a satisfactory performance for the six months to 30
June 2024 given the circumstances. Production was significantly reduced due to
the partial suspension of processing throughout the Period which resulted in a
loss. However, strict cost control in the Period limited the loss before tax
to $5.5 million.
Following the authorisation for the raise of our tailings dam wall, we are now
working to return to full production in a prompt and responsible manner. We
expect full processing to restart in November.
Operational review
Total production for the Period was 5,270 gold equivalent ounces ("GEOs"),
compared to 23,391 GEOs during the same period last year ("H1 2023"). Copper
production totalled 100 tonnes, compared with 1,870 tonnes in H1 2023, while
gold production totalled 4,704 ounces, compared with 14,623 ounces in H1 2023.
We took the opportunity of the shut-down of agitation leaching and flotation
processing to undertake extensive renovation and refurbishment of our plants.
The agitation leaching plant has now undergone cold commissioning using water
for testing and all minor leaks have been rectified. All crushing and grinding
equipment has been subject to extensive maintenance and is fully operational.
Development of the Gilar mine continued throughout 2024. The tunnelling
encountered worse ground conditions than anticipated, which has required the
use of shotcrete and reinforced roof supports. Water has also been encountered
which is now being pumped from the mine. Approximately 515 metres of the
ventilation tunnel and 1,199 metres of the production tunnel have been
completed. The surface infrastructure is now complete and includes a heavy
equipment maintenance workshop. Our new Caterpillar mining fleet has been
deployed in the tunnelling.
We also made important progress with our development portfolio. In January,
drilling results confirmed a significant quantity of copper mineralisation at
Xarxar. In February, the maiden JORC mineral resources estimate of Xarxar was
published. This confirmed that Xarxar contains 24.9 million tonnes of
mineralisation with average grades of 0.48 per cent. copper which equates to
over 100,000 tonnes of copper in the ground. Post period-end on 24 September,
the maiden JORC mineral resources estimate of Garadag was published which
showed the deposit contains 285 million tonnes of mineralisation with an
average grade of 0.32 per cent. copper. The Group now has in total a JORC
minerals resource of over one million tonnes of copper. Xarxar and Garadag are
significant pillars in our ability to transition to a copper focused producer.
We have obtained restricted access to Demirli and there have been various
visits by senior management and directors. Environmental, tailings dam and
other studies are currently underway to fully evaluate the property. We are
also refurbishing the site accommodation and laboratory. A drill programme of
the remaining resource is also being planned.
We decided not to take part in Libero Copper & Gold Corporation's
("Libero") fundraise in January. This decision reflected the Company's
priorities and cash requirements. Our shareholding reduced to 5.9 per cent.,
with Michael Sununu resigning from Libero's Board in February.
Tailings storage and the restart of production
We were delighted in early August to receive authorisation from the Government
of Azerbaijan to raise our tailings dam wall and construction began
immediately. The work is progressing well, and the Company anticipates that
the first raise of 2.5 metres will be completed in November. We have also
commenced our return to full production with the agitation leaching processing
plant currently being commissioned and flotation processing to be restarted in
in November. The plants will initially process ore from our existing mines
with processing of ore from Gilar expected to start in December.
Financial review
Revenues were $13.4 million compared to $30.8 million in the six months to 30
June 2023 ("H1 2023"). Revenues for H1 2024 include gold bullion sales of
6,000 ounces at an average price of $2,174 per ounce and total copper
concentrate sales of 331 dry metric tonnes valued at $0.5 million.
The Company did not hedge any of its gold bullion production in the Period.
1,600 ounces of gold in respect of hedges entered into in 2023 were closed in
the Period, resulting in a small loss compared to the spot price of gold at
the date of closure of the hedges.
The Company incurred a loss before tax of $5.5 million compared with a profit
in H1 2023
of $1.4 million. This loss was incurred due to the partial suspension of
processing throughout the Period and higher finance costs.
The Group will not report an All-In Sustaining Cost ("AISC") of gold produced
for H1 2024. The Group's costs in H1 2024 include substantial non-production
costs, such as maintaining the idle plant and Gedabek site, and the cost of
the Gedabek workforce, many of whom were placed on administrative leave. The
AISC metric is therefore not meaningful for this Period.
Following a refinancing by Libero in early 2024, in which Anglo Asian did not
participate, our holding in Libero fell to 5.9 per cent. in February 2024 and
it ceased to be an associate company. Since February 2024, Libero has been
accounted for as an equity investment. A net gain of $0.3 million was
recognised the Period in respect of Libero due to the increase in its share
price.
The Company had net debt of $12.0 million at 30 June 2024 and saleable
inventory of 1,463 ounces of gold with a market value of approximately $3.0
million.
In May, the Company signed a vendor financing facility with Caterpillar
Financial Services Corporation to refinance $3.7 million of the purchase price
of the Caterpillar mining fleet purchased in 2023. The facility was fully
drawn down in August. The Group also consolidated loans totalling $5.0 million
with the International Bank of Azerbaijan into one loan which was renewed for
one year until May 2025.
In June, the Company entered into a prepayment agreement with Trafigura Pte
Ltd ("Trafigura") for copper concentrate sales totalling $5.0 million. A $3.0
million prepayment was received in June and a further $2.0 million prepayment
will be receivable upon resumption of flotation processing. Trafigura has been
given the exclusive right to purchase 50 per cent. of the first year of future
copper concentrate production from Demirli.
Revenues from production at Gedabek throughout the Period continued to be
subject to an effective royalty of 12.75 per cent. through our production
sharing agreement with the Government of Azerbaijan. We anticipate that this
same royalty rate will continue to apply to at least the end of 2025.
Environmental, Social and Governance ("ESG")
We have put several practices in place in the Period to ensure that we grow
sustainably and uphold our commitment to operate responsibly.
In March, we were pleased to announce the establishment of our sustainability
committee, which is chaired by Professor John Monhemius. The committee will
oversee the development of our strategy related to sustainable development and
social responsibility. It reflects our dedication to operational safety,
sustainable practices, environmental stewardship and community engagement.
As part of our ongoing commitment to upholding the highest standards of
tailings management, we announced our commitment to the Global Industry
Standard on Tailings Management ("GISTM"). This set of principals was
established under the auspices of the UN Environment Programme, the
International Council on Mining and Metals and the Principles of Responsible
Investment. We have confirmed with the Church of England Pensions Board, which
oversees the implementation of the GISTM, that Anglo Asian will work towards
full compliance by the end of 2026.
We were also very pleased to include full 'Climate change and task force on
climate-related financial disclosures (TCFD)' for the first time in our 2023
annual report.
Outlook
The last 12 months have been challenging for the Company. However, we believe
this difficult period is now behind us. Our immediate focus is now on fully
restarting our operations and bringing Gilar into production. We remain on
track to restart full production in November, with production from Gilar
commencing in December.
We recently issued production guidance for the year of between 16,000 and
19,500 GEOs, comprising 14,000 to 16,000 ounces of gold and 250 to 850 tonnes
of copper. We anticipate agitation leaching production to restart imminently
and flotation processing in November.
We have maintained our focus on the future development of the Company. We
remain on track to deliver our growth targets and to become a mid-tier,
multi-asset, primarily copper producer in the medium term.
Reza Vaziri
President and chief executive
25 September 2024
Corporate Governance
A statement of the Company's compliance with the ten principles of corporate
governance in the Quoted Companies Alliance Corporate Governance Code ('QCA
Code') can be found on the Company's website at
https://wp-angloasianmining-2020.s3.eu-west-2.amazonaws.com/media/2023/10/Corporate-Governance.docx.pdf
(https://wp-angloasianmining-2020.s3.eu-west-2.amazonaws.com/media/2023/10/Corporate-Governance.docx.pdf)
Competent Person Statement
The information in the announcement that relates to exploration results,
minerals resources and ore reserves is based on information compiled by Dr
Stephen Westhead, who is a full time employee of Anglo Asian Mining with the
position of Vice President. Dr Stephen Westhead 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.
Dr 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'; who is a Member or Fellow of a
'Recognised Professional Organisation' (RPO) included in a list that is posted
on the ASX website from time to time (Chartered Geologist and Fellow of the
Geological Society and Fellow of the Institute of Material, Minerals and
Mining).
Dr 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.
Dr Stephen Westhead has reviewed the resources and reserves included in this
announcement and consents to the inclusion in the announcement of the matters
based on his information in the form and context in which it appears.
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 greenfield assets that lay the
foundation for future growth of the business. Gilar, Zafar, Xarxar and Garadag
all host significant ore deposits which contain total JORC mineral resources
(measured, indicated and inferred) of over one million tonnes of copper and
328,000 ounces of gold.
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 the Group's primary gold, silver and copper
open pit mine and the Gadir and Gedabek underground mines. The Group has a
major new underground mine in development at Gedabek - Gilar. The Zafar
deposit is also situated at Gedabek. Development of Zafar started in 2023 but
has been suspended since mid-2023. The Group's processing facilities are also
located at Gedabek.
· Xarxar. Located adjacent to Gedabek and Garadag and which hosts the
Xarxar deposit. It is likely part of the same mineral system.
· Garadag. Located to the north of Gedabek and Xarxar and hosts the
large Garadag copper deposit.
· 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
Azerbaijan's Nakhchivan exclave.
· Kyzlbulag. Situated in Karabakh. It hosts the Kyzlbulag mine.
· Demirli. Adjacent to Kyzlbulag and expands the Kyzlbulag Contract
Area to the northeast. It hosts a copper and molybdenum mine and a processing
plant.
The Gedabek, Xarxar, Garadag and Gosha Contract Areas form a contiguous
territory totalling 1,408 square kilometres. The Group currently has
restricted access to the Demirli Contract Area and no access to the Kyzlbulag
Contract Area which are both situated in Karabakh. The PSA will only commence
in respect of these latter two Contract Areas upon notification by the
Government of Azerbaijan to the Group that it is safe to grant full access to
the district in which the Contract Areas are located.
Overview of the six months to 30 June 2024
The Company's strategy is to transition into a mid-tier, copper-focused
producer, which will be achieved through developing its considerable assets.
Production from the Group's agitation leaching and flotation plants was
suspended throughout the Period whilst permission was being obtained for a
final raise of the tailings dam wall. Limited production of gold doré and
copper continued throughout the Period by heap leach and SART processing. Only
limited mining took place but development of the Gilar mine continued
throughout the period.
Despite the limited production during the Period and the associated strong
focus on cost control, the Group continued to make progress on its development
and in strengthening its Environment Social and Governance ('ESG')
credentials.
Gilar mine development
Gilar mine development continued through the Period. At 19 September 2024,
1,199 metres of the total length of 1,461 metres of the main decline had been
completed. 515 metres of the total length of 774 metres of the ventilation
tunnel had also been completed. The surface infrastructure supporting the
tunnelling was also completed.
Commitment to Global Industry Standard on Tailings Management
In January 2024, the Group committed to implement the Global Industry
Standard on Tailings Management ("GISTM") at its operations at Gedabek.
Libero Copper & Gold Corporation ("Libero")
In February 2024, Michael Sununu, a non-executive director of the Company
resigned from the board of Libero. This followed the Group's holding in Libero
falling to approximately 5.9 per cent. Libero also ceased to be an associate
company of the Group in February 2024.
Xarxar maiden JORC mineral resources estimate
On 20 February 2024, the maiden JORC mineral resources estimate for the
Group's Xarxar copper deposit was published, confirming 24.9 million tonnes of
mineralisation with average grades of 0.48 per cent. copper.
Establishment of a sustainability committee
In March 2024, a sustainability committee for the Group was established
chaired by Professor John Monhemius.
Vendor financing facility agreement with Caterpillar Financial Services
Corporation
In May 2024, the Group's subsidiary, Azerbaijan International Mining
Company Limited, signed a vendor financing facility agreement
with Caterpillar Financial Services Corporation for $3.7 million. On 26
August 2024, the proceeds of the loan of $3.7 million were received.
Climate change and task force on climate-related financial disclosures
("TCFD")
In June 2024, the Group included in its annual report for 2023, its first
detailed report on climate-related risks and opportunities in accordance with
the TCFD recommendations. This report also contained detailed information
regarding the Group's energy use and greenhouse gas emissions.
Prepayment agreement for the sale of concentrate
In June 2024, the Group's subsidiary, Azerbaijan International Mining Company
Limited, entered into a prepayment agreement totalling $5.0 million in
respect of its sales of copper concentrate with Trafigura Pte Ltd. $3.0
million of the prepayment was drawn down in June 2024.
Production sharing agreement ("PSA")
In June 2024, the Group's production sharing agreement ("PSA") was revised,
with AzerGold CJSC replacing the Ministry of Ecology and Natural Resources as
the local party to the PSA.
Production guidance for full year 2024 ("FY 2024")
The Group published production guidance for FY 2024 on 22 August 2024
following commencement of the construction of the raise of its tailings dam
wall. The production guidance is between 15,000 to 19,500 gold equivalent
ounces ("GEOs") as follows:
Metal Full year 2023 Full year 2024
Actual production production guidance*
Gold 21,758 ounces 14,000 to 16,000 ounces
Copper 2,138 tonnes 250 to 850 tonnes
Total** 31,821 GEO's 15,000 to 19,000 GEOs
* The Company does not forecast silver production as it is not
material.
** The gold equivalent ounces have been computed using actual metal prices
for the 7 months of January to July 2024 and a gold price of $2,500 per ounce
and a copper price of $8,900 per tonne for the 5 months of August to December
2024.
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.
Internal Group estimates have been prepared, in accordance with JORC
procedures, of the remaining mineralisation of the Gedabek open pit, the
Gedabek underground mine and the Gilar underground mine as at 1 March 2024.
These are set out in Tables 1 to 3 respectively.
A final JORC mineral resources estimate of the Zafar deposit at 30 November
2021 is set out in Table 4. A maiden JORC mineral resources estimate of the
Gilar deposit was published on 11 December 2023 and is set out in Table 5. A
maiden JORC mineral resources estimate of copper in the Xarxar deposit was
published on 20 February 2024 and is set out in Table 6.
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 7. Table
8 sets out the Soviet mineral resources estimate for the Vejnaly deposit.
Table 1 - Internal Group estimate of the remaining mineralisation of the
Gedabek open pit in accordance with JORC at 1 March 2024
Tonnage In-situ grades Contained metal
(tonnes)
Gold Copper Silver Zinc Gold Copper Silver Zinc
(g/t) (%) (g/t) (%) (koz) (t) (koz) (t)
Measured and indicated 5,209,556 0.45 0.33 3.5 0.18 76 17,201 710 9,467
Inferred 189,677 0.63 0.22 5.3 0.10 4 423 15 193
Total 5,399,233 0.45 0.33 3.6 0.08 80 17,624 725 9,661
Some of the totals in the above table may not sum due to rounding.
All tonnages reported are dry metric tonnes.
Table 2 - Internal Group estimate of the remaining mineralisation of the
Gedabek underground mine in accordance with JORC at 1 March 2024
Tonnage In-situ grades Contained metal
(tonnes)
Gold Copper Silver Zinc Gold Copper Silver Zinc
(g/t) (%) (g/t) (%) (koz) (t) (koz) (t)
Measured and indicated 424,111 1.38 0.04 13.9 0.31 19 173 190 1,311
Inferred - - - - - - - - -
Total 424,111 1.38 0.04 13.9 0.31 19 173 190 1,311
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 Gadir
underground mine in accordance with JORC at 1 March 2024
Tonnage In-situ grades Contained metal
(tonnes)
Gold Copper Silver Zinc Gold Copper Silver Zinc
(g/t) (%) (g/t) (%) (koz) (t) (koz) (t)
Measured and indicated 15,483 2.38 0.64 24 0.52 1 99 12 81
Inferred - - - - - - - - -
Total 15,483 2.38 0.64 24 0.52 1 99 12 81
Some of the totals in the above table may not sum due to rounding.
All tonnages reported are dry metric tonnes.
Table 4 - 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 5 - Maiden JORC mineral resources estimate of the Gilar deposit at 30
November 2023
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 3.88 1.49 1.08 0.91 186.06 42.09 35.43
Indicated 2.02 1.00 0.56 0.48 64.80 11.30 9.77
Measured and indicated 5.90 1.32 0.90 0.77 250.86 53.39 45.20
Inferred 0.20 0.70 0.26 0.26 4.38 0.50 0.51
Total 6.10 1.30 0.88 0.75 255.24 53.89 45.72
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 %*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 6 - Maiden JORC mineral resources estimate of copper in the Xarxar
deposit at January 2024
Reporting cut-off >= 0.2 per cent. copper
Mineral resources estimate of copper in the Xarxar Deposit by oxidation domain
Domain
Indicated Inferred Indicated and inferred*
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 7 - 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 8 - 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 kilograms 2,148.5 2,264.2 4,412.7
Silver kilograms 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.
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 Gadir and Gedabek underground mines and the Group's processing
facilities. Two new underground mines, Zafar and Gilar, are in the
developmental stage at Gedabek. The development of Gilar is well advanced with
its first ore expected to be extracted in December 2024. One portal of the
Zafar mine has been constructed but further work is currently suspended.
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 30 June
2024, approximately 815 thousand ounces of gold and 21 thousand tonnes of
copper have been produced at Gedabek.
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 December 2023, the Group
agreed an action plan with the Government of Azerbaijan to address these
recommendations.
The recommendations of the Action Plan included improving the Gedabek
emergency response capability, strengthening its environmental monitoring and
documentation and how the Group engages and communicates with local
communities. Implementation of the recommendations continued satisfactorily
during the Period with the Government of Azerbaijan receiving frequent
updates on their status.
Gedabek open pit and Gedabek and Gadir underground mines
The principal mining operation at Gedabek is conventional open-cast mining
using trucks and shovels from the Gedabek open pit (which comprises several
contiguous smaller open pits). Ore is also mined from the Gadir and Gedabek
underground mines. These two underground mines are connected, and form one
continuous underground network of tunnels, accessible from both the Gadir and
Gedabek portals. However, a significant fault structure separates the two
mines.
Table 9 shows all the ore mined by the Group in the year ended 31 December
2023 and six months ended 30 June 2024.
Table 9 - Ore mined at Gedabek for the year ended 31 December 2023 and 6
months ended 30 June 2024
12 months to 3 months to 3 months to
31 December 2023 31 March 2024 30 June 2024
Mine Ore mined Average Ore mined Average Ore mined Average
gold grade gold grade gold grade
(tonnes) (g/t) (tonnes) (g/t) (tonnes) (g/t)
Open pit 1,180,695 0.38 186,122 0.81 101,199 0.74
Gadir - u/g 109,320 1.64 50,964 2.18 43,326 1.33
Total 1,290,015 0.49 237,086 1.10 144,525 0.92
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 Group's processing plants have undergone extensive maintenance since
August 2023 when production was partially suspended. Extensive refurbishment
of the agitation and flotation plants has been carried out, including
installing a new hopper and redesigned pipework for the agitation leach plant
to improve ore feed. The ball mills have been relined and refurbished. Much of
the work has improved safe working such as repairing minor leaks, installing
new floors and improved ladders and gantries. Roof repairs have also been
carried out where necessary. A substantial proportion of the exterior of the
plant has been cleaned by shot blasting and repainted. Exterior pipework has
also been cleaned or replaced as necessary.
Table 10 summarises the ore processed by leaching for the year ended 31
December 2023 and the six months to 30 June 2024:
Table 10 - Ore processed by leaching at Gedabek for the year ended 31 December
2023 and six months ended 30 June 2024
Quarter ended Ore processed Gold grade of ore processed
Heap leach pad crushed ore Heap leach pad ROM Agitation leaching Heap leach pad crushed ore Heap leach pad ROM Agitation leaching
(tonnes) ore plant* (g/t) ore plant*
(tonnes) (tonnes) (g/t) (g/t)
31 March 2023 94,518 196,595 62,006 0.74 0.49 1.30
30 June 2023 56,522 202,788 105,213 0.75 0.46 1.40
30 September 2023 25,690 34,621 - 0.83 0.45 -
31 December 2023 - - - - - -
FY 2023 176,730 434,004 167,219 0.76 0.48 1.40
31 March 2024 120,528 - - 0.68 - -
30 June 2024 32,441 - - 0.59 - -
H1 2024 152,969 - - 0.66 - -
* includes previously heap leached ore.
Table 11 summarises ore processed by flotation for the year ended 31 December
2023 and six months ended 30 June 2024.
Table 11 - Ore processed by flotation for the year ended 31 December 2023 and
six months ended 30 June 2024
Quarter ended Ore processed Gold content Silver content Copper content
(tonnes) (ounces) (ounces) (tonnes)
31 March 2023 192,516 1,487 19,787 1,133
30 June 2023 190,593 1,033 10,380 1,191
30 September 2023 62,369 478 4,358 363
31 December 2023 - - - -
FY 2023 445,478 2,998 34,525 2,687
31 March 2024 - - - -
30 June 2024 - - - -
H1 2024 - - - -
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 12 shows the amount of previously
heap leached ore processed in the year ended 31 December 2023 and the six
months ended 30 June 2024.
Table 12 - Amount of previously heap leached ore processed in the year ended
31 December 2023 and six months ended 30 June 2024
In-situ material Average gold grade
(t) (g/t)
1 January 2023 1,390,624 1.39
Processed in the year (262,825) 0.72
31 December 2023 1,127,799 1.55
Processed in H1 2024 - -
30 June 2024 1,127,799 1.55
Production and sales
For the 6 months ended 30 June 2024, gold production totalled 4,704 ounces,
which was a decrease of 9,919 ounces in comparison to the production of 14,623
ounces for the 6 months ended 30 June 2023.
Table 13 summarises the gold and silver bullion produced from doré bars and
sales of gold bullion for the year ended 31 December 2023 and 6 months ended
30 June 2024.
Table 13 - Gold and silver bullion produced from doré bars and sales of gold
bullion for the year ended 31 December 2023 and 6 months ended 30 June 2024
Quarter ended Gold produced* Silver Gold sales** Gold Sales price
produced*
(ounces) (ounces) (ounces) ($/ounce)
31 March 2023 5,965 2,841 5,719 1,895
30 June 2023 7,375 3,593 4,787 1,992
30 September 2023 4,001 1,488 2,900 1,949
31 December 2023 2,975 1,610 2,416 2,004
FY 2023 20,316 9,532 15,822 1,951
31 March 2024 2,259 1,512 3,925 2,080
30 June 2024 2,433 1,532 2,075 2,350
H1 2024 4,692 3,044 6,000 2,174
Note
* including Government of Azerbaijan's share
** excluding Government of Azerbaijan's share
Table 14 summarises the total copper, gold and silver produced as concentrate
by both SART and flotation processing for the year ended 31 December 2023 and
6 months ended 30 June 2024.
Table 14 - Total copper, gold and silver produced as concentrate by both SART
and flotation processing for the year ended 31 December 2023 and 6 months
ended 30 June 2024
Concentrate Copper Gold Silver
production* content* content* content*
(dmt) (tonnes) (ounces) (ounces)
2023
Quarter ended 31 March
SART processing 364 191 26 8,750
Flotation 4,544 665 762 11,095
Total 4,908 856 788 19,845
Quarter ended 30 June
SART processing 272 145 16 10,316
Flotation 5,613 869 479 8,101
Total 5,885 1,014 495 18,417
Quarter ended 30 September
SART processing 85 43 4 2,194
Flotation 1,316 207 151 1,974
Total 1,401 250 155 4,168
Quarter ended 31 December
SART processing 29 18 4 1,264
Flotation - - - -
Total 29 18 4 1,264
2024
Quarter ended 31 March
SART processing 89 54 7 4,893
Flotation - - - -
Total 89 54 7 4,893
Quarter ended 30 June
SART processing 77 46 5 4,809
Flotation - - - -
Total 77 46 5 4,809
Note
* including Government of Azerbaijan's share.
Certain amounts for SART and flotation production may differ to those
previously disclosed due to final reconciliation of production.
Table 15 summarises the total copper concentrate (including gold and silver)
production and sales from both SART and flotation processing for the year
ended 31 December 2023 and 6 months ended 30 June 2024.
Table 15 - Total copper concentrate (including gold and silver) production and
sales from both SART and flotation processing for the year ended 31 December
2023 and six months ended 30 June 2024
Concentrate Copper Gold Silver Concentrate
Concentrate
production* content* content* content* sales** sales**
(dmt) (tonnes) (ounces) (ounces) (dmt) ($000)
Quarter ended
31 March 2023 4,908 856 788 19,845 1,147 2,743
30 June 2023 5,885 1,014 495 18,417 5,501 7,678
30 September 2023 1,401 250 155 4,168 2,358 3,066
31 December 2023 29 18 4 1,264 2,186 2,306
FY 2023 12,223 2,138 1,442 43,694 11,192 15,793
31 March 2024 89 54 7 4,893 71 295
30 June 2024 77 46 5 4,809 260 1,002
H1 2024 166 100 12 9,702 331 1,297
* including 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 totals for the FY 2023 and
H1 2024 do not therefore agree to the revenues disclosed for concentrate sales
within the financial statements or financial review.
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 was constructed in
2017 and 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
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. Immediately downstream of the tailings dam is a reed bed
biological treatment system to purify any seepage from the dam before being
discharged safely into the nearby Shamkir river.
Since the second half of 2023, the Group worked with the Government of
Azerbaijan to obtain approval for a final raise of the tailings dam wall. In
June 2024, the Government of Azerbaijan issued technical confirmation and a
positive environmental report stating that the tailing dam wall is suitable
for a final raise. On 5 August 2024, the Government of Azerbaijan issued
approval for the wall raise to go ahead. A further 6.0 metres wall raise has
been authorised which will raise the wall to its final design height of 90
metres. The raise will be carried out in two back-to-back stages, and the
first raise of 2.5 metres is currently being carried out. It is expected to be
completed in November 2024 with the final raise of 3.5 metres in H2 2025. The
final raise of the wall will give the dam enough capacity for the next two to
three years of production.
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 mineral
resources estimate was published in March 2022 and is set out in Table 4.
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 has also
been 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 been completed, prior to suspension of
development.
Development of the Zafar mine was suspended in mid-2023 and resources diverted
to development of the Gilar mine, following exceptional drill results from
Gilar.
Gilar mine development
Gilar is a mineral occurrence 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 following exceptional drilling results in the south of the
area.
A maiden JORC mineral resources estimate was published on 11 December 2023 and
is set out in Table 5.
A portal has been constructed and construction of the main production tunnel
has started. A second tunnel for ventilation is also being constructed. At 19
September 2024, 1,199 metres of the production tunnel and 515 metres of the
ventilation tunnel had been completed. The planned length 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 has also been encountered underground which
is being pumped from the mine into a settling pond constructed near the
entrance to the mine.
Surface infrastructure development has comprised the construction 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.
In December 2023, the Company took delivery of a new underground mining fleet
supplied by Caterpillar for the mine. The fleet comprised three R1700 and two
980UMA underground loaders. This is the first time this type of underground
equipment has been deployed in Azerbaijan. The fleet is currently being used
in the development of the Gilar mine.
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.
No geological fieldwork was carried out during H1 2024 at Xarxar. Analysis of
the drill core acquired from AzerGold CJSC continued. On 20 February 2024, a
maiden JORC mineral resources estimate was published for the Xarxar deposit,
which is set out in Table 6.
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 340 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.
No drilling or other geological fieldwork was carried at Garadag out in H1
2024. However, the Company continued to analyse the drill core obtained from
AzerGold CJSC.
On 24 September 2024, the Company 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 284.9 million tonnes of
mineralisation containing 896.9 thousand tonnes of copper at an average grade
of 0.32 per cent. This maiden JORC resource is set out in table 7 above.
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 six months ended 30 June 2024.
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 7 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.
On 3 August 2023, staff were evacuated from Vejnay on the instructions of the
Government of Azerbaijan due to the potential danger from landmines. At 30
June 2024, staff had still not been allowed to return to Vejnaly. Accordingly,
no fieldwork was carried out at the site in H1 2024.
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 H1 2024.
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.
No work was carried out at Kyzlbulag in H1 2024 as the Group had no access to
the Contract Area.
Demirli
The Demirli Contract Area is 74 square kilometres 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 infrastructure. The processing plant
contains two rotary mills, a copper flotation plant and a molybdenum plant.
The plant is generally in good order although various sections do need
replacement or refurbishment. The capacity of the plant is around 6.5 million
tonnes per annum. There is also an upstream tailings dam.
The Group had restricted access to Demirli in H1 2024. The Group has started
a comprehensive study to determine the work required and associated timeframe
to bring the plant back into production. Various external consultants have
also visited the site to carry out an environmental assessment and assessment
of the suitability of the tailings dam for further use. The Group now has a
small team based permanently at the Demirli Contract Area. The Group is also
refurbishing the accommodation and laboratory facilities at the mine site.
Geological exploration
Summary
· Minimal drilling was carried out in H1 2024 due to the strict cost
control exercised throughout the Period:
· No surface core drilling was carried out
· 47 reverse circulation holes drilled totalling 3,818 metres were
completed at the Gedabek open pit
· One underground geotechnical drill hole was completed with a total
length 138 metres in the Gilar mine together with 443 meters of channel
sampling of the tunnel walls.
· Maiden JORC mineral resources estimate for Xarxar was published on 20
February 2024.
· Scanning of the existing drill core of the Xarxar and Garadag deposits
was carried out using TerraCore hyperspectral scanning technology. The results
will be used to prepare 3-D alteration models of the deposits and support
identification of the best metallurgical processes to treat the ore.
· Post Period-end, a maiden JORC mineral resources estimate of the
Garadag deposit at June 2024 was published on 24 September 2024.
Gedabek
Gedabek open pit mine
47 reverse circulation drill holes were completed with a total length of 3,818
metres to further define the ore zone. The drilling was mostly located in Pits
4, 6 and 8. The results confirmed the further extension of the gold-copper
mineralisation.
Gedabek underground mine
A total of 610 metres of underground development with 250 channel samples was
completed in the area below Pit 4.
Gilar
The area hosts two styles of mineralisation, gold in quartz veins and
hydrothermal gold-copper. Three mineralisation bodies have been discovered.
One underground geotechnical core drill hole was completed with a total length
of 138 metres. Channel sampling of the walls of the tunnel was carried out
with 109 underground samples taken with a total length of 443 metres.
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. 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 H1 2024.
Comprehensive interpretation of the final results from the soil geochemical
sampling programme continued. This revealed a second anomaly similar to the
original Zafar anomaly. This area has significant potential for future
exploration.
Gosha
The Gosha mine 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 the 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 H1 2024.
Geological fieldwork activity was carried out at the Boyuk Gishlag
mineralisation occurrence within the Gosha contract area. A total of 74
samples were collected from intensive hydrothermal altered outcrops.
Xarxar
A maiden mineral resources estimate was published for the Xarxar deposit on 20
February 2024 and is set out in table 6 above. This shows the deposit contains
approximately 25 million tonnes of copper ore.
Scanning of the existing Xarxar drill core was undertaken during H1 2024 using
TerraCore technology. After completion of the scans, a 3-D alteration model
will be prepared to identify further mineralisation and help identify 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 is being 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.
Uluxanli
This is a new exploration area where a high-grade quartz gold vein has been
discovered. The initial exploration phase which started in 2023 was completed
in H1 2024. After interpretation, the next exploration phase will be
determined.
Garadag
No geological field work was carried out at Garadag in H1 2024. Scanning of
the existing Garadag drill core was also undertaken using TerraCore
technology. Extensive analytical work was also required for the preparation of
the maiden JORC mineral resources estimate of the Garadag deposit. This was
published on 24 September 2024 and is set out in table 7 above.
Cayir (Ashagi Cayir)
This is a new exploration area in the Garadag Contract Area. Geochemical
testing was carried out in H1 2024 with 75 soil samples and 12 rock samples
collected. 676 outcrop samples were also collected. Results indicate that the
area warrants further exploration.
Ordubad
667 metres of trenching were carried out in the Dirnis and Dastabashi areas.
Trenches were dug with a depth of 10 meters. Results show that mineralisation
thickness increases by about 30 per cent. 10 metres below the surface.
Vejnaly
No geological fieldwork was carried out in H1 2024 as the Group did not have
access to the Contract Area.
A "WorldView-3" study was completed by an independent company "Exploration
Mapping USA" and a map prepared identifying mineralisation targets. Once
access to the Contract Area is restored, in-house geological fieldwork will
start exploring known gold targets and targets identified by the "WorldView-3"
study.
Demirli
Geological evaluation of the deposit commenced in H1 2024. The Demirli mine
geological map was digitised and digitising historic drill hole data is now in
progress.
Sale of the Group's products
Important to the Group's success is its ability to transport its production to
market and sell them without disruption.
In H1 2024, 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 can be settled within one to two days of receipt of the doré. The
Group, at its discretion, can sell the resulting refined gold bullion to the
refiner.
The Gedabek mine site has good road transportation links and copper and
precious metal concentrate is collected by truck from the Gedabek site by the
purchaser. The Group sells its copper concentrate to three metal traders as
detailed in note 2 to the condensed Group interim financial statements below.
The contracts with each metal trader are periodically renewed and each new
contract requires the approval of the Government of Azerbaijan.
Libero Copper & Gold Corporation ("Libero")
Libero suffered from a shortage of funds in 2023 and in consequence disposed
of most of its properties except for its Mocoa property. Libero will now
continue to focus on the development of Mocoa.
The Company's shareholding in Libero reduced to approximately 5 per cent. in
February 2024 following a refinancing in which the Company did not
participate. Michael Sununu also resigned from the Libero board in February
2024. Libero ceased to be an associated company from February 2024 and the
Group's interest will be held as an equity investment.
Further information can be found at https://www.liberocopper.com/
(https://www.liberocopper.com/) .
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. 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.
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.
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 Australian
Dollars, Azerbaijan Manats and United Kingdom Sterling. The Group does not
currently hedge its exposure to other currencies, although it continues to
review this periodically.
Liquidity and interest rate risk
The Group utilised various credit lines from several banks in Azerbaijan
throughout H1 2024. This was primarily to provide working capital during the
partial suspension of the Group's operations. The banks loans were all at a
fixed rate of interest and therefore the Group had no interest rate risk
during H1 2024.
Russian invasion of Ukraine
The Company is unaffected directly by the Russian invasion of Ukraine or the
international sanctions levied against various private and governmental
Russian entities. However, the Company is subject to global the macro-economic
conditions resulting from the Russian invasion 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.
4 All-in sustaining cost ("AISC") per ounce. AISC is a widely used,
standardised industry metric and is a measure of how our operation compares to
other producers in the industry. AISC is calculated in accordance with the
World Gold Council's Guidance Note on Non-GAAP Metrics dated 27 June 2013. The
AISC calculation includes a credit for the revenue generated from the sale of
copper and silver, which are classified by the Group as by-products. There are
no royalty costs included in the Company's AISC calculation as the Production
Sharing Agreement with the Government of Azerbaijan is structured as a
physical production sharing arrangement. Therefore, the Company's AISC is
calculated using a cost of sales, which is the cost of producing 100 per cent.
of the gold and such costs are allocated to total gold production including
the Government of Azerbaijan's share.
Reza Vaziri
President and chief executive
25 September 2024
Financial review
Currency of financial review
References to "$" and "cents" are to United States dollars and cents.
References to "CAN$" and "CAN cents" are to Canadian dollars and cents.
References to "£" and "p" are to United Kingdom Sterling pounds and pence.
References to AZN are to the Azerbaijan New Manat and "m" are to million.
Group statement of income
The Group generated revenues in the six months ended 30 June 2024 ("H1 2024")
of $13.4m (H1 2023: $30.8m) from the sales of gold and silver bullion and
copper and precious metal concentrate.
The revenues in H1 2024 included $12.9m (H1 2023: $20.4m) generated from the
sales of gold and silver bullion from the Group's share of the production of
gold doré bars. Bullion sales in H1 2024 were 6,000 ounces of gold and 4,846
ounces of silver (H1 2023: 10,506 ounces of gold and 5,480 ounces of silver)
at an average price of gold of $2,174 per ounce and an average price of silver
of $26 per ounce (H1 2023: $1,939 per ounce and $23 per ounce respectively).
In addition, the Group generated revenue in H1 2024 of $0.5m (H1 2023: $10.4m)
from the sale of 331 dry metric tonnes (H1 2023: 6,648 dry metric tonnes) of
copper and precious metal concentrate. The Group's revenue benefitted in H1
2024 from both a higher average price of gold at $2,204 (H1 2023: $1,933) per
ounce and a higher average price of copper at $8,998 (H1 2023: $8,661) per
metric tonne during the Period.
A gold sales hedging programme was established in 2023. Monthly forward sales
of gold bullion were made equivalent to approximately 25 to 30 per cent. of
the Group's share of budgeted gold bullion production for the months of June
to December 2023. The contracts matured at the end of each respective month
and a total of 4,600 ounces of gold bullion was forward sold. The forward
sales were made at prices between $1,949.75 to $1,979.25 per ounce of gold.
The spot price of gold at the time of contracting the forward sales was
$1,947.50 per ounce. 3,000 ounces of gold were sold in 2023 under the hedging
programme for an average price of $1,969.97 per ounce. The remaining 1,600
ounces of gold were sold in March and April 2024 at an average price of
$1,976.85 per ounce. The Group generated lower revenue in H1 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 H1 2024 of $15.0m (H1 2023: $25.2m) as
follows:
H1 2024 H1 2023 B/(W)*
($m) ($m) ($m)
Cash cost of sales** 14.9 26.3 11.4
Depreciation and amortisation 2.2 6.0 3.8
Cash costs, depreciation and amortisation 17.1 32.3 15.2
Capitalised costs (1.3) (1.8) (0.5)
Cost of sales before inventory movement and leases 15.8 30.5 14.7
Lease adjustments (0.1) 0.1 0.2
Inventory movement (0.7) (5.4) (4.7)
Cost of sales per the Group statement of income 15.0 25.2 10.2
*B/(W) - Better or Worse
**Cash costs of sales are defined as cost of sales per the Group statement of
income less depreciation and amortisation plus capitalised costs adjusted by
the movement in the period of opening and closing inventory. A reconciliation
of cash cost of sales to cost of sales per the Group income statement is given
in the table above.
The cash cost of sales are not comparable between H1 2023 and H1 2024. During
H1 2023 agitation leaching and flotation processing were in operation
throughout the period. In H1 2024, agitation leaching and flotation were
suspended throughout the period with only heap leaching and SART processing in
operation. Mining was also significantly reduced. However, employee payroll
and other employment costs were approximately level at $4.3m in H1 2024
compared to $4.5m in H1 2023. All other variable costs such as reagents and
materials and consumables were very significantly reduced in H1 2024 due to
the reduced processing and mining activity.
Depreciation (including leased assets) decreased by $3.7m from $6.0m in H1
2023 to $2.3m in H1 2024 due to lower gold production. 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 unit of account for run of
mine ("ROM") costs and for post-ROM costs are recoverable ounces of gold.
Administrative expenses in H1 2024 were $3.0m compared to $3.2m in H1 2023.
The Group's administrative expenses comprise the cost of the administrative
staff and associated costs at the Gedabek mine site, the Baku office and
maintaining the Group's listing on AIM. 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 H1 2023 and H1 2024 at an exchange rate of $1 =
AZN1.7. The United States dollar gradually weakened against the United
Kingdom Sterling pounds in H1 2023 and H1 2024 with an average rate in H1
2024 of £1 equalling $1.27 (H1 2023: £1 equalling $1.23).
Finance costs in H1 2024 were $1.2m (H1 2023: $0.7m) and comprise interest on
bank debt and letters of credit, interest on lease liabilities and interest
accretion expense on the rehabilitation provision. The finance costs in H1
2024 were higher as the Group had an interest charge of $0.6m (H1 2023: $nil)
in respect of bank borrowings incurred after 30 June 2023.
The Group had a taxation credit in H1 2024 of $1.4m (H1 2023: charge of
$0.6m). This was a deferred tax credit of $1.4m (H1 2023: charge of $0.6m).
R.V. Investment Group Services ("RVIG") in Azerbaijan generated taxable
losses in H1 2024 of $3.7m (H1 2023: $8.3m). 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 $21.0m
at 30 June 2024 (30 June 2023: $8.3m) and these losses will be carried forward
and offset against future taxable profits. RVIG has no other taxable losses
available for offset against future
profits.
All-in sustaining cost of production
All-in sustaining cost ("AISC") is a widely used, standardised industry metric
and is a measure of how our operation compares to other producers in the
industry. AISC is calculated in accordance with the World Gold
Council's Guidance Note on Non-GAAP Metrics dated 27 June 2013. The AISC
calculation includes a credit for the revenue generated from the sale of
copper and silver, which are classified by the Group as by-products. There are
no royalty costs included in the Company's AISC calculation as the Production
Sharing Agreement with the Government of Azerbaijan is structured as a
physical production sharing arrangement. Therefore, the Company's AISC is
calculated using a cost of sales, which is the cost of producing 100 per cent.
of the gold and such costs are allocated to total gold production including
the Government of Azerbaijan's share.
The Group will not report an AISC of gold produced in H1 2024. The Group's
costs in H1 2024 include substantial non-production costs such as maintaining
the entire Gedabek site together with the idle plant, and the cost of the
Gedabek workforce, a large proportion of whom were placed on administrative
leave. The AISC metric is therefore not meaningful for H1 2024.
Group statement of financial position
Assets
Non-current assets increased from $95.2m at 31 December 2023 to $99.0m at 30
June 2024. Intangible assets increased from $27.1m at 31 December 2023 to
$27.8m at 30 June 2024 due to expenditure on geological exploration and
evaluation of $0.8m partially offset by amortisation of $0.1m in respect of
mining rights. Property, plant and equipment (including leased assets) at
$70.2m were higher by $3.4m due to additions to fixed and leased assets of
$6.0m offset by depreciation of $2.3m in the period and a reduction in the
rehabilitation provision of $0.3m.
Current assets were $57.4m at 30 June 2024 compared to $59.5m at 31 December
2023. The main reason for the decrease was a decrease of cash of $2.5m
partially offset by an increase in inventories of $0.8m. Inventories increased
by $0.8m due to an increase in ore stockpiles of $2.6m offset by lower gold
bullion inventory. There were 1,463 ounces of unsold gold and minimal unsold
concentrate at 30 June 2024. The Group's cash balances at 30 June 2024 were
$1.9m (31 December 2023: $4.5m) and restricted cash of $6.0m (31 December
2023: $6.0m) which is not available for use by the Company as it is security
for a loan. Surplus cash is 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 1.5 to 4.0 per cent.
Liabilities
Current liabilities at 30 June 2024 were $33.1m (31 December 2023: $23.4m).
Trade and other payables (excluding the amount owed to the Government of
Azerbaijan) increased by $4.0m. Trade creditors increased from $2.7m at 31
December 2023 to $6.8m at 30 June 2024 as a result of actions to manage
working capital. Current liabilities at 30 June 2024 also include a $3.0m (31
December 2023: $nil) prepayment for the sale of concentrate received from
Trafigura Pte Ltd. This advance will be repaid from sales of concentrate under
the Group's existing contract with Trafigura Pte Ltd. and is expected to be
fully repaid within 12 months of the balance sheet date.
The Group commenced borrowing in 2023 to finance the capital expenditure of
developing its assets and the partial suspension of processing operations from
August 2023. Total bank borrowings at 30 June 2024 were $19.9m (31 December
2023: $20.7m). The Group borrowed from two banks in Azerbaijan during H1
2024, International Bank of Azerbaijan ("IBA") and Access Bank. The
principal amounts outstanding at 30 June 2024 were $15.0m and $5.6m
respectively at interest rates of between 6.0 and 6.5 per cent per annum. The
loan from Access Bank was secured against a $6.0m cash deposit. The Group had
three borrowings from IBA totalling $5.0m which matured in May 2024. These
were consolidated into one loan of $5.0m with a maturity of May 2025. The loan
from Access Bank was also extended to March 2025.
Net assets of the Group at 30 June 2024 were $80.7m (31 December 2023:
$84.8m). The net assets were lower due to a decrease in retained earnings as a
result of the loss in H1 2024. There were no shares issued or bought back in
H1 2024.
Equity
The Group was financed entirely by equity at 1 January 2023. In 2023, the
Group commenced borrowing from banks and the Group's gearing ratio at 30 June
2024 was 24.7 per cent. (31 December 2023: 24.4 per cent.). The Group's
gearing ratio is calculated as gross debt as a percentage of total equity.
There were no movements of the Group's share capital, merger reserve and share
premium account in FY 2023 or H1 2024. The Group's holding company did not buy
back any ordinary shares in FY 2023 or H1 2024.
Libero Copper & Gold Corporation ("Libero")
The Group's shareholding in Libero remained unchanged throughout H1 2024.
However, the 21,300,000 shares held at 1 January 2024 were consolidated into
2,130,000 shares following a one for ten share consolidation in February 2024.
Libero completed a private placement on 15 February 2024 in which the Company
did not participate. Following the private placement, the Group's interest
reduced to approximately 5.9 per cent. and Libero ceased to be an associate
company. The Group's share of Libero's loss from 1 January to 15 February 2024
was $46,000, which was recognised in the profit and loss account.
On 15 February 2024 (the date Libero ceased to be an associate company),
Libero's carrying value was $196,000 and the market value of the Libero shares
was $550,000. Accordingly, a release of the Libero impairment provision was
made of $354,000 being the difference between the market value of Libero's
shares and its carrying value as an associate company on 15 February 2024. The
Group's interest in Libero was accordingly reclassified as an equity
investment at no gain or loss.
Subsequent to 15 February 2024, the Group's interest in Libero was accounted
for as a financial asset at fair value through profit and loss. The Group's
holding in Libero will be valued at each balance sheet date as the market
value of its shares which corresponds to the fair value. The market value of
Libero's shares at 30 June 2024 was $560,000. Accordingly $10,000 has been
recognised as other income being the increase in the market value of Libero's
shares in the period 15 February to 30 June 2024. The investment has been
classified as non-current as the directors intend to hold the investment for
longer than one year from the balance sheet date.
Group statement of cash flow
Operating cash outflow before movements in working capital for H1 2024 was
$2.3m (H1 2023: inflow of $8.6m). The outflow was due to the loss incurred in
H1 2024.
Working capital movements in H1 2024 generated cash of $5.5m (H1 2023:
absorbed $8.0m). Trade and other payables increased by $4.0m and trade debtors
and other receivables decreased by $2.4m. These inflows reflect actions to
manage working capital in H1 2024 and the lower sales.
There was a cash inflow from operating activities in H1 2024 of $3.2m compared
to H1 2023 of $0.6m. The cash inflow resulted from the cash generated from
working capital.
The Group paid corporation tax in H1 2024 of $nil (H1 2023: $nil)
in Azerbaijan as RVIG was incurring taxable losses.
Expenditure on property, plant and equipment in H1 2024 was $6.3m (H1 2023:
$6.6m). The main items of expenditure in H1 2024 were deferred stripping costs
of $0.6m and mine development costs of $3.0m.
Exploration and evaluation expenditure incurred and capitalised in H1 2024 was
$0.8m (H1 2023: $3.8m) with the majority of the expense expended on the
Ordubad property. Exploration and evaluation activities were significantly
reduced in H1 2024 to conserve funds.
There was a cash inflow in H1 2024 from financing activities of $1.2m (H1
2023: outflow of $0.3m). This inflow included $3.0m being an advance received
from Trafigura Pte Ltd. This advance has been classified as part of the
Group's financing cash flows as it is financing in nature.
Dividends
No dividend was declared in respect of the year ending 31 December 2023 and
the six months ended 30 June 2024.
The Group paid a final dividend in respect of the year ended 31 December 2022
of $0.04 per share totalling $4.6m in July 2023. The Group declares its
dividends in United States dollars but pays the dividends in United
Kingdom pounds sterling. The dividends declared are converted into United
Kingdom pounds sterling.
Production sharing agreement
In accordance with the terms of the Production Sharing Agreement ("PSA") with
the Government of Azerbaijan ("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 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 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.
Profit Production for the Gedabek Contract Area has been subject to the
minimum 25 per cent. since commencement of production including both the year
to 31 December 2023 and the 6 months to 30 June 2024. The Government's share
of production in the six months to 30 June 2024 (as in all previous periods)
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 from the Gedabek Contract Area
in the six months to 30 June 2024 of 12.75 per cent. (six months to 30 June
2023: 12.75 per cent.) of the value of its production.
The Group produced gold and copper for the first time in 2021 from its Vejnaly
Contract Area and part of the metal produced was sold in H1 2023. The
Government's share of this production was 32.0 per cent. This is because the
mine and other facilities were acquired at no cost and the only costs
available to offset the production were the administration costs of the site,
minor refurbishment capital expenditure, the cost of geological exploration
and Gedabek processing costs. Mining costs were not available for offset as
the metal was produced from ore stockpiled at Vejnaly by the previous owner.
The revenues from the Vejnaly Contract Area in H1 2023 were not material to
the Group's revenues.
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)
30 June 2024 31 December 2023
Gedabek 77.2 64.2
Gosha 36.5 34.8
Ordubad 34.8 33.0
Vejnaly 2.1 1.9
Garadag* 1.4 1.2
Xarxar* 3.6 3.4
Demirli 0.1 -
Kyzlbulag - -
*The unrecovered costs include cash payments for historical geological data of
$0.8m and $0.2m in respect of Garadag and Xarxar respectively.
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 $0.58 during the six months ended
30 June 2024. 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.
Going concern
Main business of the Group
The Group produces primarily 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. When processing operations are
fully operational, production is cash generative at current and forecast metal
prices. Historically, the Group funded all its operational costs (including
Azerbaijan and London overheads) from cash generated from the sale of
precious metal and copper concentrates produced at Gedabek.
The Group has historically mined ore from its main open pit and the Gadir and
Gedabek undergound mines. These mines are all approaching the end of their
lives. To replace the ore from these mines, the Group has a pipeline of
several mines and mineral resource properties in various stages of
development. The Group has two new mines under development, Zafar and Gilar.
The Zafar mine development is currently on hold but the building of the Gilar
mine is almost complete with the first ore expected to be mined in December
2024. The Gilar mine contains sufficient ore for the Group's current
processing facilities to operate at substantially full capacity for
approximately the next four years. Any shortages of ore from Gilar to keep the
production facilities operating at full capacity during the next four years
will be met by mining additional ore from the Group's existing mines.
Material uncertainties over going concern in financial statements for the year
ended 31 December 2023
The Group published its audited financial statements for the year ended 31
December 2023 ("2023 Final Results") on 15 May 2024. The Group reported in its
2023 Final Results the following material uncertainties regarding its going
concern:
1. Whether the Group will receive permission from the Government of
Azerbaijan (the "Government") to raise the wall of the tailings dam.
2. Once permission is received, whether the Group will close the loan of $10
million from the International Bank of Azerbaijan ("IBA") which remains
subject to their approval, and the further loans forecast to be taken with IBA
in the going concern period, for which discussion have not yet commenced, ($3
million in the base case and $7 million in the Sensitivity Case) from IBA.
On 5 August 2024, the Group received authorisation from the Government to
raise the wall of the tailings dam.
The Group had three bank loans from IBA totalling $5 million which matured in
May 2024. These loans were consolidated into one bank loan of $5 million which
was renewed at 6 per cent. interest for one year until May 2025. The Group
also renewed a $5.65 million loan with Access Bank which was repayable in May
2024. The loan was extended for another year with a final repayment in May
2025. Discussions are currently ongoing with IBA regarding a further $10
million loan.
Suspension of agitation leaching and flotation processing in 2023 and restart
in 2024
The Group suspended agitation leaching and flotation processing from the
beginning of August 2023 whilst an environmental audit of its Gedabek site was
carried out. The results of the environmental audit were satisfactory and on
26 September 2023 the Government gave permission to the Group to fully restart
operations and did not impose any fines or other penalties on the Group. The
Group also agreed an action plan with the Government to improve some
operational, social and safety aspects of the Gedabek operations. This action
plan has been substantially completed.
At the time of suspension of operations in August 2023, the Group's tailing
dam only had sufficient capacity for up to three months production from
agitation leaching and flotation. One recommendation arising from the
environmental audit was that Government permission was required for any
further raises of the wall of the Group's tailings dam. The Group therefore
decided not to restart production from agitation leaching and flotation until
the Government permission to raise the tailings dam wall was obtained. To
commence production and then stop within a three-month period is not
operationally desirable. The Group obtained Government permission to raise its
tailings dam on 5 August 2024 and work on the first raise of 2.5 metres began
immediately. The work is expected to be completed in November 2024. The
Company continued to produce gold doré and copper concentrate throughout 2023
and H1 2024 using heap leaching and SART as these processes do not produce
tailings.
The Company expects the agitation leaching plant production will restart by
the end of September 2024, initially processing 97,000 tonnes of stockpiled
ore. The flotation plant will restart in November on an independent basis
using fresh ore from the existing open pit.
The Company expects the first ore to be mined from Gilar in December 2024. To
treat Gilar ore, processing will be reconfigured and the agitation leaching
plant will initially process Gilar ore with further processing of its tailings
by flotation to produce copper.
Financial condition and credit facilities available to the Group
The Group had cash reserves of $7.9 million (including $6.0 million restricted
cash) and debt of $19.9 million at 30 June 2024. The current cost of
maintaining the Group's operations, including mining, Gilar development, heap
leaching, SART processing and administrative overheads in Azerbaijan
and London, is estimated at $3.5 million to $4.0 million per month. The
Group is currently generating revenue of approximately $2.0 million per month
from precious metal and concentrate sales.
The Group has in place an AZN 55 million ($32.3 million) General credit
agreement ("GCA") with the International Bank of Azerbaijan ("IBA"). The
Group has borrowed $15.0 million under this facility to date, of which $10.0
million is repayable in instalments between May 2024 to 2026, and $5.0 million
is now repayable in May 2025. The Group is currently discussing a further
$10.0 million loan under the GCA.
The Group agreed in May 2024 a vendor refinancing of part of the purchase
price of its Caterpillar mining fleet of $3.7 million and the proceeds of $3.7
million were received on 26 August 2024. In June 2024, the Group entered into
a prepayment agreement totalling $5.0 million in respect of its sales of
copper concentrate with Trafigura Pte Ltd. $3.0 million was drawn down under
that facility in June 2024.
12 Month cash flow forecast to 30 September 2025
The directors have prepared a base case cash flow forecast that assumes
production is consistent with the business plan. The business plan includes
the following major assumptions:
- The first raise of the tailings dam of 2.5 metres will be
completed in November 2024 and the second raise of 3.5 metres will be
completed in H2 2025.
- Agitation leaching processing will commence by the end of September
2024 and flotation processing in November 2024
- The Gilar mine will commence production in December 2024
- IBA loan of $10 million will be received by the end of
November 2024.
The base cash flow uses gold prices of $2,400 to $2,450 per ounce and a copper
price of $9,000 per tonne. The base cash flow forecast shows that the Group
will generate free cash flow from January 2025, upon resuming full production
using Gilar ore, and is able to finance its operations till the end of the
going concern period being 30 September 2025.
Going concern opinion
The directors have prepared the condensed Group interim financial statements
on a going concern basis after reviewing the Group's forecast cash position
for the period to 30 September 2025 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.
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 chief executive officer'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.
William Morgan
Chief financial officer
25 September 2024
Anglo Asian Mining plc
Condensed group statement of income
Six months ended 30 June 2024
6 months to 6 months to
30 June 2024 30 June 2023
(unaudited) (unaudited)
Continuing operations Notes $000 $000
Revenue 2 13,372 30,785
Cost of sales (15,022) (25,214)
Gross (loss) / profit (1,650) 5,571
Other operating income 10 119
Administrative expenses (2,995) (3,171)
Other operating expenses (97) (343)
Operating (loss) / profit (4,732) 2,176
Finance costs (1,237) (731)
Finance income 138 127
Other income 9 10 -
Share of loss of an associate company 3 (46) (213)
Reversal of impairment of an associate company 3 354 -
(Loss) / profit before tax (5,513) 1,359
Income tax benefit / (expense) 4 1,426 (546)
(Loss) / profit attributable to the equity holders of the parent (4,087) 813
(4,087) 813
(Loss) / profit per share attributable to the equity holders of the parent
Basic (US cents per share) 5 (3.57) 0.71
Diluted (US cents per share) 5 (3.57) 0.71
Anglo Asian Mining plc
Condensed group statement of comprehensive income
Six months ended 30 June 2024
6 months to 6 months to
30 June 2024 30 June 2023
(unaudited) (unaudited)
$000 $000
(Loss) / profit for the period (4,087) 813
Other comprehensive (loss) / income
Other comprehensive (loss) / income that may be reclassified to profit or loss
in subsequent periods*:
Exchange differences on translation of foreign associate company
Share of comprehensive (loss) of an associate company - 132
- (6)
Net other comprehensive profit that may be reclassified to profit or loss in
subsequent periods
- 126
Total comprehensive (loss) / income for the period, net of tax*
(4,087) 939
* These are gross amounts and the tax effect is $nil.
Anglo Asian Mining plc
Condensed group statement of financial position
30 June 2024
30 June 2023
30 June 2024 (unaudited) 31 December 2023
(unaudited) (audited)
Notes $000 $000 $000
Non-current assets
Intangible assets 6 27,764 42,492 27,126
Property, plant and equipment 7 68,454 56,140 64,775
Leased assets 8 1,738 2,171 2,053
Investment in an associate company 3 - 5,731 242
Non-current financial assets 9 560 39 -
Non-current trade and other receivables 10 440 - 975
98,956 106,573 95,171
Current assets
Inventory 11 41,178 48,493 40,342
Trade and other receivables 10 8,314 15,640 8,654
Restricted cash 12 6,000 - 6,000
Cash and cash equivalents 12 1,946 9,556 4,477
57,438 73,689 59,473
Total assets 156,394 180,262 154,644
Current liabilities
Trade and other payables 13 (14,734) (15,673) (9,200)
Interest-bearing loans and borrowings 14 (15,127) - (13,629)
Advances 15 (3,000) - -
Lease liabilities 8 (263) (449) (555)
(33,124) (16,122) (23,384)
Net current assets 24,314 57,567 36,089
Non-current liabilities
Trade and other payables 13 (3,254) (3,009) (4,219)
Provision for rehabilitation (13,715) (16,006) (12,948)
Interest-bearing loans and borrowings 14 (4,803) - (7,105)
Lease liabilities 8 (1,934) (2,059) (1,916)
Deferred tax liability 4 (18,838) (28,538) (20,264)
(42,544) (49,612) (46,452)
Total liabilities (75,668) (65,734) (69,836)
Net assets 80,726 114,528 84,808
Equity
Share capital 16 2,016 2,016 2,016
Share premium 17 33 33 33
Treasury shares (145) (145) (145)
Share-based payment reserve 576 506 571
Merger reserve 46,206 46,206 46,206
Foreign currency translation reserve (233) (101) (233)
Retained earnings 32,273 66,013 36,360
Total equity 80,726 114,528 84,808
Anglo Asian Mining plc
Condensed group statement of cash flows
Six months ended 30 June 2024
Notes 6 months to 6 months to
30 June 2024 30 June 2023
(unaudited) (unaudited)
$000 $000
Cash flows from operating activities
(Loss) / profit before tax (5,513) 1,359
Adjustments to reconcile (loss) / profit before tax to net cash flows:
Finance costs 14 1,237 731
Finance income (138) (127)
Unrealised profit on financial instruments 9 (10) -
Gain on the modification of lease liabilities 8 (2) (28)
Depreciation of owned assets 7 1,922 5,689
Depreciation of leased assets 8 330 229
Share based payment 5 82
Share of loss of an associate company 3 46 214
Reversal of impairment of an associate company 3 (354) -
Amortisation of mining rights and other intangible assets 6 121 399
Foreign exchange loss 20 88
Operating cash (outflow) / inflow before movements in working capital (2,336) 8,636
Decrease / (increase) in trade and other receivables 10 2,394 (515)
Increase in inventories 11 (837) (8,291)
Increase in trade and other payables 13 3,989 852
Cash generated from operations 3,210 682
Income taxes paid - (46)
Net cash generated by operating activities 3,210 636
Cash flows from investing activities
Expenditure on property, plant and equipment and mine development (6,347) (6,623)
Investment in exploration and evaluation activities (760) (3,784)
Further investment in an associated company 3 - (646)
Interest received 163 -
Net cash used in investing activities (6,944) (11,053)
Cash flows from financing activities
Proceeds from borrowing 14 2,000 -
Repayment of borrowings 14 (2,720) -
Advance received 15 3,000 -
Interest paid - loans 14 (641) -
Interest paid - lease liabilities 8 (129) (140)
Repayment of lease liabilities 8 (287) (209)
Net cash used in financing activities 1,223 (349)
Net decrease in cash and cash equivalents (2,511) (10,766)
Net foreign exchange difference (20) (88)
Cash and cash equivalents at beginning of period 12 4,477 20,410
Cash and cash equivalents at end of the period 12 1,946 9,556
Anglo Asian Mining plc
Condensed group statement of changes in equity
Six months ended 30 June 2024
(unaudited)
Share Share Merger Foreign currency translation Retained Total
capital premium Share-based reserve reserve earnings equity
$000 $000 Treasury payment $000 $000 $000 $000
shares reserve
$000 $000
1 January 2024 2,016 33 (145) 571 46,206 (233) 36,360 84,808
Loss for the period - - - - - - (4,087) (4,087)
Other comprehensive income / (loss) for the period - - - - - - -
-
-
Total comprehensive (loss) for the period - - - - - - (4,087) (4,087)
Share based payment - - - 5 - - - 5
30 June 2024 2,016 33 (145) 576 46,206 (233) 32,273 80,726
Six months ended 30 June 2023
(unaudited)
Share Share Merger Foreign currency translation Retained Total
capital premium Share-based reserve reserve earnings equity
$000 $000 Treasury payment $000 $000 $000 $000
shares reserve
$000 $000
1 January 2023 2,016 33 (145) 424 46,206 (233) 65,206 113,507
Profit for the period - - - - - - 813 813
Other comprehensive income / (loss) for the - - - - - 132 (6) 126
period
Total comprehensive income for the period - - - - - 132 807 939
Share based payment - - - 82 - - - 82
30 June 2023 2,016 33 (145) 506 46,206 (101) 66,013 114,528
Year ended 31 December 2023
(audited)
Notes Share Share Share-based Merger Foreign currency translation Retained Total
capital premium payment reserve reserve earnings equity
$000 $000 Treasury reserve $000 $000 $000 $000
shares $000
$000
1 January 2023 2,016 33 (145) 424 46,206 (233) 65,206 113,507
Loss for the year - - - - - - (24,242) (24,242)
Other comprehensive loss for the year - - - - - - (1) (1)
Total comprehensive loss for the year - - - - - - (24,243) (24,243)
Cash dividends paid 18 - - - - - - (4,603) (4,603)
Share-based payment
- - - 147 - - - 147
31 December 2023 2,016 33 (145) 571 46,206 (233) 36,360 84,808
Anglo Asian Mining plc
Notes to the condensed Group interim financial statements
Six months ended 30 June 2024
1 General information
Anglo Asian Mining plc (the "Company") is a company incorporated in England
and Wales under the Companies Act 2006. The Company's ordinary shares are
traded on the AIM market of the London Stock Exchange plc. The Company is a
holding company. The principal activity of the Company and its subsidiaries
(the "Group") is operating a portfolio of mining operations and metal
production facilities within Azerbaijan. The Group also invests in mining
businesses outside of Azerbaijan.
Basis of preparation
The condensed Group interim financial statements for the six-month period
ending 30 June 2024 have been prepared in accordance with IAS 34 'Interim
Financial Reporting' as issued by the International Accounting Standards Board
and IAS 34 as adopted for use in the United Kingdom. The information for the
half year ended 30 June 2024 does not constitute statutory accounts as defined
in section 435 of the Companies Act 2006. A copy of the statutory accounts
for the year ended 31 December 2023 has been delivered to the Registrar of
Companies. The auditor's report on those accounts was not qualified and did
not contain a statement under sections 498(2) or 498(3) of the Companies Act
2006. The auditor's report on those accounts contained a statement of
"Material uncertainties relating to going concern" but their opinion was not
modified in respect of the matter. The condensed Group interim financial
statements have not been audited.
The condensed Group interim financial statements have been prepared under the
historical cost convention except for the treatment of share-based payments,
certain trade receivables at fair value, derivatives not designated as hedging
instruments and financial assets at fair value through profit and loss. The
condensed Group interim financial statements are presented in United States
dollars ("$") and all values are rounded to the nearest thousand except where
otherwise stated. In the condensed Group interim financial statements "£" and
"pence" are references to the United Kingdom pound sterling, "CAN$" and "CAN
cents" are references to Canadian dollars and cents and "AZN" is a reference
to the Azerbaijan New Manat.
Accounting policies and new standards, interpretations and amendments
The annual financial statements of Anglo Asian Mining plc are prepared in
accordance with UK adopted International Accounting Standards and in
conformity with the requirements of the Companies Act 2006. The condensed
Group interim financial statements included in this half-yearly financial
report have been prepared in accordance with IAS 34 'Interim Financial
Reporting' adopted by the UK and in conformity with the requirements of the
Companies Act 2006.
The accounting policies adopted in the preparation of the half-yearly
condensed Group interim financial statements for 2024 are consistent with
those followed in the preparation of the Group's annual report and accounts
for 2023, except for the adoption of new standards that became effective from
1 January 2024. The Group has not adopted any other standard, interpretation
or amendment that has been issued but is not yet effective.
Several amendments and interpretations apply for the first time in 2024, but
do not have an impact on the condensed Group interim financial statements.
Going concern
Main business of the Group
The Group produces primarily 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. When processing operations are
fully operational, production is cash generative at current and forecast metal
prices. Historically, the Group funded all its operational costs (including
Azerbaijan and London overheads) from cash generated from the sale of
precious metal and copper concentrates produced at Gedabek.
The Group has historically mined ore from its main open pit and the Gadir and
Gedabek undergound mines. These mines are all approaching the end of their
lives. To replace the ore from these mines, the Group has a pipeline of
several mines and mineral resource properties in various stages of
development. The Group has two new mines under development, Zafar and Gilar.
The Zafar mine development is currently on hold but the building of the Gilar
mine is almost complete with the first ore expected to be mined in December
2024. The Gilar mine contains sufficient ore for the Group's current
processing facilities to operate at substantially full capacity for
approximately the next four years. Any shortages of ore from Gilar to keep the
production facilities operating at full capacity during the next four years
will be met by mining additional ore from the Group's existing mines.
Material uncertainties over going concern in financial statements for the year
ended 31 December 2023
The Group published its audited financial statements for the year ended 31
December 2023 ("2023 Final Results") on 15 May 2024. The Group reported in its
2023 Final Results the following material uncertainties regarding its going
concern:
1. Whether the Group will receive permission from the
Government of Azerbaijan (the "Government") to raise the wall of the tailings
dam.
2. Once permission is received, whether the Group will
close the loan of $10 million from the International Bank of Azerbaijan
("IBA") which remains subject to their approval, and the further loans
forecast to be taken with IBA in the going concern period, for which
discussion have not yet commenced, ($3 million in the base case and $7 million
in the Sensitivity Case) from IBA.
On 5 August 2024, the Group received authorisation from the Government to
raise the wall of the tailings dam.
The Group had three bank loans from IBA totalling $5 million which matured in
May 2024. These loans were consolidated into one bank loan of $5 million which
was renewed at 6 per cent. interest for one year until May 2025. The Group
also renewed a $5.65 million loan with Access Bank which was repayable in May
2024. The loan was extended for another year with a final repayment in May
2025. Discussions are currently ongoing with IBA regarding a further $10
million loan.
Suspension of agitation leaching and flotation processing in 2023 and restart
in 2024
The Group suspended agitation leaching and flotation processing from the
beginning of August 2023 whilst an environmental audit of its Gedabek site was
carried out. The results of the environmental audit were satisfactory and on
26 September 2023 the Government gave permission to the Group to fully restart
operations and did not impose any fines or other penalties on the Group. The
Group also agreed an action plan with the Government to improve some
operational, social and safety aspects of the Gedabek operations. This action
plan has been substantially completed.
At the time of suspension of operations in August 2023, the Group's tailing
dam only had sufficient capacity for up to three months production from
agitation leaching and flotation. One recommendation arising from the
environmental audit was that Government permission was required for any
further raises of the wall of the Group's tailings dam. The Group therefore
decided not to restart production from agitation leaching and flotation until
the Government permission to raise the tailings dam wall was obtained. To
commence production and then stop within a three-month period is not
operationally desirable. The Group obtained Government permission to raise its
tailings dam on 5 August 2024 and work on the first raise of 2.5 metres began
immediately. The work is expected to be completed in November 2024. The
Company continued to produce gold doré and copper concentrate throughout 2023
and H1 2024 using heap leaching and SART as these processes do not produce
tailings.
The Company expects the agitation leaching plant production will restart by
the end of September 2024, initially processing 97,000 tonnes of stockpiled
ore. The flotation plant will restart in November on an independent basis
using fresh ore from the existing open pit.
The Company expects the first ore to be mined from Gilar in December 2024. To
treat Gilar ore, processing will be reconfigured and the agitation leaching
plant will initially process Gilar ore with further processing of its tailings
by flotation to produce copper.
Financial condition and credit facilities available to the Group
The Group had cash reserves of $7.9 million (including $6.0 million restricted
cash) and debt of $19.9 million at 30 June 2024. The current cost of
maintaining the Group's operations, including mining, Gilar development, heap
leaching, SART processing and administrative overheads in Azerbaijan
and London, is estimated at $3.5 million to $4.0 million per month. The
Group is currently generating revenue of approximately $2.0 million per month
from precious metal and concentrate sales.
The Group has in place an AZN 55 million ($32.3 million) General credit
agreement ("GCA") with the International Bank of Azerbaijan ("IBA"). The
Group has borrowed $15.0 million under this facility to date, of which $10.0
million is repayable in instalments between May 2024 to 2026, and $5.0 million
is now repayable in May 2025. The Group is currently discussing a further
$10.0 million loan under the GCA.
The Group agreed in May 2024 a vendor refinancing of part of the purchase
price of its Caterpillar mining fleet of $3.7 million and the proceeds of $3.7
million were received on 26 August 2024. In June 2024, the Group entered into
a prepayment agreement totalling $5.0 million in respect of its sales of
copper concentrate with Trafigura Pte Ltd. $3.0 million was drawn down under
that facility in June 2024.
12 Month cash flow forecast to 30 September 2025
The directors have prepared a base case cash flow forecast that assumes
production is consistent with the business plan. The business plan includes
the following major assumptions:
- The first raise of the tailings dam of 2.5
metres will be completed in November 2024 and the second raise of 3.5 metres
will be completed in H2 2025.
- Agitation leaching processing will commence by
the end of September 2024 and flotation processing in November 2024
- The Gilar mine will commence production in
December 2024
- IBA loan of $10 million will be received by the
end of November 2024.
The base cash flow uses gold prices of $2,400 to $2,450 per ounce and a copper
price of $9,000 per tonne. The base cash flow forecast shows that the Group
will generate free cash flow from January 2025, upon resuming full production
using Gilar ore, and is able to finance its operations till the end of the
going concern period being 30 September 2025.
Going concern opinion
The directors have prepared the condensed Group interim financial statements
on a going concern basis after reviewing the Group's forecast cash position
for the period to 30 September 2025 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.
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 Chief Executive Officer'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.
2 Operating segments
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 income statement
and Group statement of financial position in their entireties. Accordingly,
the Group has only one operating segment, mining operations. The mining
operations comprise the Group's major producing asset, the open cast and
underground mines located at the Gedabek and Gosha licence areas, which
account for all the Group's revenues and the majority of its cost of sales,
depreciation and amortisation. The Group's mining operations are all located
within Azerbaijan and therefore all within one geographic segment.
Sales of gold within doré and gold and silver bullion in 2023 and 2024 were
made to the Group's gold refiners, MKS Finance SA which is based in
Switzerland.
The gold and copper concentrate was sold in 2023 to Industrial Minerals SA,
Trafigura PTE Ltd and Metal-Kim Metalurji Ve Kimya Tarim Sanayi Tic Ltd Sti.
The copper concentrate was sold to Trafigura PTE Ltd in H1 2024.
3 Investment in an associate company
Libero Copper & Gold Corporation ("Libero") is a minerals exploration
company listed on the TSX Venture Exchange (ticker: LBC) in Canada and owns
the Mocoa copper property in Colombia.
From 1 January 2023 to 15 February 2024, Libero was an associate company of
the Group which held an interest ranging from 18.29 per cent. at 1 January
2023 to 13.11 per cent. at 15 February 2024. A Group director was also a
director of Libero and the Group's vice president, technical services was a
member of the technical committee of Libero. There were no restrictions on the
ability of the Group to transfer funds to Libero and for Libero to transfer
funds to the Group.
On 22 January 2024, Libero announced a non-brokered private placement for
aggregate gross proceeds of up to CAN $3 million. The private placement
completed on 15 February 2024. The Company did not participate in the private
placement and its interest in Libero reduced to approximately 5.9 per cent
following completion of the private placement. Michael Sununu resigned from
the board of directors of Libero on 15 February 2024 and Libero ceased to be
an associate company of the Group from that date.
The loss recognised for Libero as an associate company for the six months
ended 30 June 2024, is the Group's share of the loss of Libero for the period
1 January 2024 to 15 February 2024. Subsequent to 15 February 2024, the
Group's interest in Libero will be accounted for as a financial asset. The
Group's holding in Libero from 15 February 2024 will be valued at each balance
sheet date as the market value of its shares which corresponds to the fair
value.
The recoverable value of Libero was estimated at 31 December 2023 at the
market value of its shares of $242,000 at that date. This value at 31 December
2023 was lower than its carrying value as an associate company which was
regarded as an indication of impairment. This gave rise to an impairment
charge in the year ended 31 December 2023 of $5.0 million. This was the
difference between its carrying value as an associate company and the market
value of its shares.
On 15 February 2024 (the date Libero ceased to be an associate company),
Libero's carrying value as an associate company was $196,000 and the market
value of the Libero shares was $550,000. Accordingly, a release of the
impairment provision was made of $354,000 being the difference between the
market of Libero's shares and its carrying value as an associate company on 15
February 2024. Libero was reclassified as a financial asset at fair value
through profit and loss at a value of $550,000. Accordingly, no profit or loss
was therefore recognised when Libero was reclassified. At 30 June 2024 Libero
was classified in the Group's balance sheet as a financial asset (note 9 -
"Other financial assets").
The financial statements of Libero are made up to 31 December of each year.
The financial information about Libero, included in these Group financial
statements, has been taken from their unaudited financial statements for the
six months ended 30 June 2023 dated 24 August 2023, their audited financial
statements for the year ended 31 December 2023 dated 25 April 2024 and their
unaudited financial statements for the three months ended 31 March 2024 dated
28 May 2024.
The following tables illustrates the summarised financial information of the
Group's investment in Libero:
Balance sheet of Libero at 30 June 2023 and 31 December 2023
30 June 2023 31 December 2023
(unaudited) (audited)
$000 $000
Current assets 436 696
Non-current assets 2,940 1,323
Current liabilities (1,128) (1,486)
Non-current liabilities (143) (142)
Equity 2,105 391
Reconciliation to carrying value in the Group balance sheet
Equity of Libero 2,105 391
Share based payment expense (972) (977)
Exploration expense 8,299 9,052
Equity recognised by the Group 9,432 8,466
Group's share in equity - 19.3% and 13.11% 1,819 1,110
Goodwill 3,912 4,167
Impairment provision - (5,035)
Group carrying value of associate company
5,731 242
Profit and loss account of Libero for the 6 months to 30 June 2023 and from 1
January to 15 February 2024
1 January to 6 months to
15 February 2024 30 June 2023
(unaudited)* (unaudited)
$000 $000
Expenses 513 2,618
Other expenses 63 75
Loss before taxation 576 2,693
Taxation - (10)
Loss for the period 576 2,683
Reconciliation to loss of associate company in the Group profit and loss
account
Loss for the period 576 2,683
Exploration expense (236) (1,596)
Loss for the period as an associate company
340 1,087
Group's share of the loss at 13.1 and 19.7 per cent.
46 213
*estimated by time apportionment from the unaudited financial statements of
Libero for the 3 months
ended 31 March 2024.
Reconciliation of the movement in associate company for the year ended 31
December 2023
and the 6 months to 30 June 2024
$000
1 January 2023 5,172
Additions 646
Share of loss of the associated company (541)
Impairment provision (5,035)
31 December 2023 242
Share of loss of the associated company (46)
Reversal of impairment provision 354
Transfer to other financial assets (550)
30 June 2024 -
Libero had no contingent liabilities or capital commitments at 31 December
2023 and 30 June 2023.
4 Income tax
The income taxation charge for the 6 months ended 30 June 2024 represents a
current income tax charge of $nil (2023: $nil) and a deferred taxation credit
of $1.4 million (2023: charge of $0.6 million). These current and deferred
taxation charges and credits are in respect of the representative office
registered in Azerbaijan of RV Investment Group Services LLC ("RVIG") (a
wholly owned subsidiary of the Company).
Deferred taxation assets or liabilities are calculated at the taxation rates
that are expected to apply in the period when the liability is settled or the
asset is realised. Deferred taxation is charged or credited in the income
statement, except when it relates to items charged or credited directly to
equity, in which case the deferred taxation is also dealt with in equity.
Deferred taxation assets and liabilities are offset when there is a legally
enforceable right to offset current taxation assets against current taxation
liabilities and when they relate to income taxes levied by the same taxation
authority and the Group intends to settle its current taxation assets and
liabilities on a net basis.
At 30 June 2024, RVIG had unused taxation losses available for offset against
future profits of $21.0 million (30 June 2023: $8.3 million and 31 December
2023: $17.3 million) and a deferred taxation asset of $6.7 million (30 June
2023: $2.7 million and 31 December 2023: $5.5 million) has been offset against
deferred taxation liabilities in the Group balance sheet. The Group also has
unused taxation losses within the Company and a subsidiary (Anglo Asian
Operations Limited) available for offset against future profits. No deferred
taxation asset has been recognised in respect of such losses due to the
unpredictability of future profit streams. Unused taxation losses may be
carried forward indefinitely.
5 (Loss) / profit per ordinary share
(Loss) / profit per ordinary share 6 months to 6 months to
30 June 2024 30 June 2023
(unaudited) (unaudited)
$000 $000
(Loss) / profit after tax for the period (4,087) 813
Basic (loss) / profit per share (US cents) (3.57) 0.71
Diluted (loss) / profit per share (US cents) (3.57) 0.71
Weighted average number of shares Number Number
For basic earnings per share 114,335,175 114,392,024
For diluted earnings per share 114,335,175 114,392,024
6 Intangible assets
Exploration and evaluation Other
Mining Intangible
rights assets Total
(unaudited) (unaudited) (unaudited)
$000 $000 $000
Gedabek Gosha Ordubad Vejnaly Xarxar Garadag
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
$000 $000 $000 $000 $000 $000
Cost
I January 2023 21,010 2,713 6,106 517 1,613 2,772 41,925 726 77,382
Additions 2,131 254 627 961 1,901 62 - - 5,936
Transfer to assets under construction (3,802) - - - - - - - (3,802)
31 December 2023 19,339 2,967 6,733 1,478 3,514 2,834 41,925 726 79,516
Additions - 84 437 148 40 50 - - 759
30 June 2024 19,339 3,051 7,170 1,626 3,554 2,884 41,925 726 80,275
Amortisation and impairment
1 January 2023 - - - - - - 38,249 517 38,766
Charge for the year - - - - - - 566 27 593
Impairment 5,086 2,967 4,978 - - - - - 13,031
31 December 2023 5,086 2,967 4,978 - - - 38,815 544 52,390
Charge for the period - - - - - - 121 - 121
30 June 2024 5,086 2,967 4,978 - - - 38,936 542 52,511
Net book value
31 December 2023 14,253 - 1,755 1,478 3,514 2,834 3,110 182 27,126
30 June 2024 14,253 84 2,192 1,626 3,554 2,884 2,989 182 27,764
7 Property, plant and equipment
Plant and
equipment Producing mines Assets under construction Total
and motor vehicles (unaudited) (unaudited) (unaudited)
(unaudited)
$000 $000 $000 $000
Cost
1 January 2023 28,590 236,330 2,181 267,101
Additions 7,700 4,637 10,117 22,454
Change in provision for
rehabilitation - 3,662 - 3,662
31 December 2023 36,290 236,950 12,298 285,538
Additions 668 2,257 3,019 5,944
Change in provision for rehabilitation
- (343) - (343)
30 June 2024 36,958 238,864 15,317 291,139
Depreciation and impairment
1 January 2023 24,195 186,861 - 211,056
Charge for year 1,142 8,565 - 9,707
31 December 2023 25,337 195,426 - 220,763
Charge for period 1,636 286 - 1,922
30 June 2024 26,973 195,712 - 222,685
Net book value
31 December 2023 10,953 41,524 12,298 64,775
30 June 2024 9,985 43,152 15,317 68,454
8 Leases
Right of use assets
Plant and equipment Producing mines Total
and motor vehicles (unaudited) (unaudited)
(unaudited)
$000 $000 $000
Cost
1 January 2023 3,074 1,153 4,227
Additions 682 - 682
Lease modifications (593) - (593)
31 December 2023 3,163 1,153 4,316
Additions 31 - 31
Lease modifications (24) - (24)
30 June 2024 3,170 1,153 4,323
Depreciation and impairment
1 January 2023 1,345 519 1,864
Charge for year 401 165 566
Lease modifications (167) - (167)
31 December 2023 1,579 684 2,263
Charge for period 242 88 330
Lease modifications (8) - (8)
30 June 2024 1,813 772 2,585
Net book value
31 December 2023 1,584 469 2,053
30 June 2024 1,357 381 1,738
Lease liabilities
Total
$000
1 January 2023 2,708
Additions 682
Lease modifications (497)
Interest expense 275
Repayment (697)
31 December 2023 2,471
Addition 31
Lease modifications (18)
Interest expense 129
Repayment (416)
30 June 2024 2,197
30 June 2024 30 June 2023 (unaudited) 31 December 2023
(unaudited) $000 (audited)
$000 $000
Current liabilities 263 449 555
Non-current liabilities 1,934 2,059 1,916
Total lease liabilities 2,197 2,508 2,471
Amount recognised in the profit and loss account
6 months to 6 months to
30 June 2024 30 June 2023
(unaudited) (unaudited)
$000 $000
Depreciation expense of right to use assets 330 229
Interest expense 129 140
Expense relating to short leases 29 129
Gain on lease modifications (2) (28)
486 470
9 Other financial assets
Non - current 30 June 2023 31 December 2023
(unaudited) (audited)
30 June 2024 (unaudited) $000 $000
$000
Derivatives not designated as hedging instruments
Share warrants - 39 -
Financial assets at fair value through profit or loss
Listed equity investments 560 - -
560 39 -
Share warrants
The Group has acquired share warrants in Libero Copper & Gold Corporation
("Libero") which were attached to certain of its subscriptions for ordinary
shares. Details of these warrants are as follows:
Number of Exercise price
Date of issue warrants (CAN cents) Length of warrant Last day of exercise
22 December 2021 2,800,000 75 24 months 21 December 2023
26 January 2022 3,500,000 75 24 months 25 January 2024
6 January 2023 2,600,000 22 24 months 5 January 2025
17 February 2023 3,200,000 22 24 months 16 February 2025
None of the share warrants in Libero had been exercised at the date of the
signing the financial statements. The 2,800,000 warrants issued on 22 December
2021 at 75 CAN cents per warrant expired in the year ended 31 December 2023.
The 3,500,000 warrants issued on 26 December 2022 at 75 CAN cents per warrant
expired in the 6 months ended 30 June 2024.
The share warrants outstanding at 30 June 2023 were valued using a
risk-neutral binomial tree. Quantitative information about the fair value
measurement of the warrants using significant directly or indirectly
observable inputs was as follows:
Assumption 30 June 2023
Share price of Libero CAD$0.07
Option exercise price CAD$0.75
Acceleration condition CAD$1.00
Lapse date
2.8m warrants issued 22 December 2021 21 December 2023
3.5m warrants issued 26 January 2022 25 January 2024
Risk free rate 4.6 per cent.
Expected volatility - daily 6.88 per cent.
Expected volatility - annualised 109.26 per cent.
Discount for lack of marketability 13.97 per cent.
Exchange rate US$1 = CAD$1.3255
No value has been ascribed to the share warrants outstanding at 30 December
2023 or 30 June 2024.
Listed equity investments
At 30 June 2024, these were 2,130,000 shares in Libero, a company which is
listed on the Toronto Ventures Stock Exchange in Canada. At 31 December 2023,
Libero was classified as an associate company. During the six months ended 30
June 2024, the Group's interest was diluted and Libero was reclassified as a
financial asset at fair value through profit and loss (note 3 - Investment in
an associate company).
Libero was transferred to financial asset at fair value through profit and
loss at a value of $550,000, the market value of the shares on the day of
transfer. The value of the shares at 30 June 2024 was $560,000 and the
unrealised profit of $10,000 was credited to profit and loss account as other
income.
10 Trade and other receivables
Other receivables
30 June 2023
30 June 2024 (unaudited) (unaudited) 31 December 2023
Non-current $000 $000 (audited)
$000
Advances for purchases 195 - 195
Prepayments and advances 245 - 780
440 - 975
Trade and other receivables
30 June 2024 (unaudited) 30 June 2023 31 December 2023
Current $000 (unaudited) (audited)
$000 $000
Gold held due to the Government of Azerbaijan
3,531 3,045 1,988
VAT refund due 1,748 792 1,609
Loan to employee* 511 520 -
Other tax receivable 157 1,713 734
Trade receivables - fair value** 82 3,569 637
Prepayments and advances 2,285 6,001 3,686
8,314 15,640 8,654
*See note 20 - "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 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.
The Group does not consider any trade or other receivables 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 at 30 June 2023 and 2024 and 31 December 2023
The VAT refund due at 30 June 2024 and 2023 and 31 December 2023 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 shown in note 13.
11 Inventory
30 June 2023 31 December 2023
30 June 2024 (unaudited) (unaudited) (audited)
$000 $000 $000
Cost
Finished goods - bullion 2,974 4,834 5,922
Finished goods - metal in concentrate 6 4,701 53
Metal in circuit 11,457 10,726 10,350
Ore stockpiles 8,311 8,813 5,745
Spare parts and consumables 18,430 19,419 18,272
Total current inventories 41,178 48,493 40,342
Total inventories at the lower of cost and net realisable value 41,178 48,493 40,342
Current ore stockpiles consist of high-grade and low-grade oxide ores that are
expected to be processed during the 12 months subsequent to the balance sheet
date.
Inventory is recognised at lower of cost or net realisable value.
12 Restricted cash and cash and cash equivalents
Restricted cash comprises of a bank deposit in Azerbaijan which has been
pledged as security for a $5,650,000 loan from the bank. Details of the loan
are set out in note 14 - "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 and cash equivalents are mostly held in United States
Dollars.
13 Trade and other payables
Current 30 June 2023 (unaudited) 31 December 2023
30 June 2024 $000 (audited)
(unaudited) $000
$000
Accruals and other payables 3,705 5,736 3,610
Trade creditors 6,836 4,992 2,721
Gold held due to the Government of Azerbaijan 3,531 3,045 1,988
Payable to the Government of Azerbaijan from copper concentrate joint sale 881
662 1,900
14,734 15,673 9,200
Non-current 30 June 2023 (unaudited) 31 December 2023
30 June 2024 $000 (audited)
(unaudited) $000
$000
Geological data 3,254 3,009 3,129
Other payables - - 1,090
3,254 3,009 4,219
Trade creditors primarily comprise amounts outstanding for trade purchases and
ongoing costs. Trade creditors are non-interest bearing. Accruals and other
payables mainly consist of accruals made for accrued but not paid salaries,
bonuses, related payroll taxes and social contributions, accrued interest on
borrowings, 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 (plus VAT) 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 with the remaining $3.0
million (75 per cent.) payable after three years, or if earlier for each
respective deposit, the balance of the purchase price on the approval of the
Group's development and production programme for the deposit in accordance
with the Group's Production Sharing Agreement. The long-term creditor has been
discounted at a rate of 8 per cent. being the risk-free rate. The repayment
dates of the creditor are the directors' best estimation of when repayment
will occur. The undiscounted amount of the creditor at 30 June 2024, 30 June
2023 and 31 December 2023 is $3.0 million. The discounted amounts outstanding
at each balance sheet date have been grossed up by the VAT liability at a rate
of 18 per cent. The amount outstanding under the contract at 30 June 2024 and
31 December 2023 has been classified as a non-current liability.
14 Interest-bearing loans and borrowings
Interest rate Final maturity date 30 June 2024 30 June 2023 (unaudited) 31 December 2023 (audited)
(per cent.) (unaudited) $000 $000
$000
$1,000,000 bank loan 5.5 per annum May 2024 - - 1,002
$2,500,000 bank loan 5.5 per annum May 2024 - - 2,505
$1,500,000 bank loan 5.5 per annum May 2024 - - 1,504
$5,650,000 bank loan 0.5 per month March 2025 5,650 - 5,678
$10,000,000 bank loan 6.5 per annum May 2026 9,280 - 10,045
$5,000,000 bank loan 6.0 per annum May 2025 5,000 - -
19,930 - 20,734
Loans repayable in less than one year 15,127 - 13,629
Loans repayable in more than one year 4,803 - 7,105
19,930 - 20,734
The directors consider that the carrying amount of interest-bearing loans and
borrowings approximates to their fair value.
$5,650,000 bank loan
The loan is secured against a $6 million deposit maintained with the lender.
The principal is repayable in 5 instalments of approximately $1.1 million each
in the five months November 2024 to March 2025. The $6 million deposit has
been disclosed as restricted cash in the Group balance sheet at 30 June 2024
and 31 December 2023.
$10,000,000 bank loan
The loan is unsecured. The borrowing commenced on 6 November 2023. The loan
has a 6-month capital repayment grace period during which only interest of
$54,167 per month is payable. From May 2024 till May 2026, 25 equal monthly
repayments of principal and interest totalling $413,306 will be made to repay
the principal on a monthly reducing balance basis. A final repayment of
principal and interest of $413,306 will also be made in May 2026.
$5,000,000 bank loan
The loan is unsecured and repayable in full on 11 May 2025.
15 Advances
30 June 2023 (unaudited) 31 December 2023
30 June 2024 $000 (audited)
(unaudited) $000
$000
Prepayment for the sale of concentrate 3,000 - -
The Group has entered into a prepayment agreement in regard of sales of copper
concentrate to Trafigura Pte Ltd ("Trafigura"), the Group's main offtaker of
copper concentrates. Under the agreement, Trafigura has made an advance
payment to the Group totalling $3 million for the purchase of copper
concentrate. The advance payment will be settled by the delivery of copper
concentrate to Trafigura under the Group's existing contract. The existing
contract sets the sales price of the copper within the concentrate by
reference to the market price of copper at the date of sale. The volume of
concentrate deliveries to settle the advance will therefore depend, inter
alia, on the future market price of copper. The prepayment is secured against
certain fixed and mobile assets of the Group at Gedabek including crushing and
milling equipment and a crane.
The agreement has also granted Trafigura the exclusive right to purchase 50
per cent. of the first year of future production from the Demirli mine. The
directors believe that the timing and amount, if any, of concentrate sales
from Demirli is uncertain. The Demirli project is a brownfield project which
is in the early stages of evaluation by the Group. In light of this
uncertainty, the directors believe that no value can be assigned to the
exclusive right granted to Trafigura under the contract.
The Group expects the advance will be settled within 12 months of the balance
sheet date.
16 Share capital
Ordinary shares of 1 pence each $000
Ordinary shares issued and fully paid:
30 June 2024 and 2023 and 31 December 2023 114,392,024 2,016
150,000 ordinary shares were brought back during the year ended 31 December
2022 and are now held in treasury.
17 Share premium account
$000
30 June 2024 and 2023 and 31 December 2023 33
18 Distributions
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2024 2023 2023
(unaudited) (unaudited) (audited)
$000 $000 $000
Cash dividends on ordinary shares declared and paid
Final dividend for 2022: 4.0 US cents per share - - 4,603
The final dividend for 2022 was declared in United States dollars but paid in
Sterling in the amount of 3.1421 pence per ordinary share on 27 July 2023.
19 Contingencies and commitments
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 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 which granted the Group three new
contract areas with a combined area of 882 square kilometres and relinquished
the Soutely contract area. The parliamentary ratification was signed into law
on 5 July 2022 by the President of the Republic of Azerbaijan. In June 2024,
the local party, the Ministry of Ecology and Natural Resources, to the PSA was
replaced by AzerGold Closed Joint Stock Company. Minor amendments were also
made in respect of the use of facilities for the Kyzlbulag, Demirli and
Vejnaly contract areas.
The PSA contains various provisions relating to the obligations of the 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 now extends 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 substantially in
compliance with the environmental clauses contained in the PSA.
20 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.
Trading transactions
During the period, there were no trading transactions between group companies
and related parties who are not members of the Group.
Other related party transactions
(a) Total payments in the 6 months to 30 June 2024 of $69,000 (6 months
to 30 June 2023: $2,755,000) were made for equipment and spare parts
purchased from Proses Muhendislik Danismanlik Inshaat ve Tasarim Anonim
Shirket ("PMDI"), an entity in which the vice president of technical services
of Azerbaijan International Mining Company has a direct ownership
interest. There is an outstanding payable to PMDI of $126,000 at 30 June 2024
(30 June 2023: $458,000 and 31 December 2023: $33,000).
(b) On 30 June 2022, a loan of $500,000 was made to the vice president of
technical services 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.
(c) During 2023, Ilham Khalilov was promoted to Vice President, Azerbaijan
International Mining Company ("AIMC") and become a member of the key
management personnel of the Group. On 1 October 2020, AIMC lent $245,000 to
Ilham Khalilov for a period of 3 years. On 1 October 2023, the loan was
extended until 31 December 2026 at an interest rate of 6 per cent.
All of the above transactions were made on arm's length terms.
21 Post balance sheet events
Authorisation to raise wall of the Group's tailing dam and restart of
operations at Gedabek
On 5 August 2024, Azerbaijan International Mining Company (a wholly-owned
subsidiary of the Group) received authorisation from the Government
of Azerbaijan to raise the wall of its existing tailings dam. Confirmation
was also received that the construction work will comply with all health and
safety requirements. Work on raising the wall of the tailings dam has
commenced. The Group's expects to fully restart its operations at Gedabek by
November 2024.
Drawdown of loan from Caterpillar Financial Services Corporation
On 26 August 2024 the Group received the proceeds of $3.7 million from its
vendor financing loan with Caterpillar Financial Services Corporation.
22 Approval of condensed group interim financial statements
The condensed group interim financial statements of Anglo Asian Mining plc and
its subsidiaries for the six-month period ended 30 June 2024 were authorised
for issue in accordance with a resolution of the directors on 25 September
2024.
**ENDS**
Notes:
Anglo Asian Mining plc (AIM:AAZ) is a gold, copper and silver producer with a
high-quality portfolio of production and exploration assets in Azerbaijan.
The Company produced 31,821 gold equivalent ounces ("GEOs") for the year
ended 31 December 2023.
On 30 March 2023, the Company published its strategic plan for growth which
shows a clearly defined path for the Company to transition to a multi-asset,
mid-tier, copper and gold producer by 2028, by which time copper will be the
principal product of the Company, with forecast production of around 36,000
copper equivalent tonnes. It plans to achieve this growth by bringing into
production four new mines during the period 2024 to 2028 at Zafar, Gilar,
Xarxar and Garadag.
https://www.angloasianmining.com/ (https://www.angloasianmining.com/)
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