REG - Ariana Resources PLC - FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2021
29/06/2022 07:00
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RNS Number : 5539Q Ariana Resources PLC 29 June 2022
29 June 2022
AIM: AAU
FINAL AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTICE OF ANNUAL GENERAL MEETING ("AGM")
Ariana Resources plc ("Ariana" or the "Company"), an AIM-listed mineral
exploration and development company with gold mining interests in Europe,
announces its final audited results for the year ended 31 December 2021.
The Report and Accounts will be posted to shareholders as applicable, and are
available on the Company's website (www.arianaresources.com
(http://www.arianaresources.com) ), and extracts are set out below.
The AGM will be held at the East India Club, 16 St James's Square, London,
SW1Y 4LH on Wednesday, 10 August 2022 at 12:00 noon.
Chairman's Statement
Looking at our world in 2022 is a daunting prospect. Collectively we face a
perfect storm: the aftermath of a pandemic, war in Ukraine, geo-strategic
realignment, inflation, the challenges of de-carbonisation and looming
shortages of critical technology metals. However, this world of escalating
risks is also one of burgeoning opportunities, particularly for explorers and
miners of precious and technology metals.
During 2020 and into 2021, instead of allowing ourselves to be consumed with
pandemic related crisis management, we undertook a deep-rooted strategic
review of our business. Our aim was to ensure we built the foundations of a
sustainable business, fit to meet the challenges and grasp the opportunities
of the future. We were also unanimous that Ariana must play its part in
helping shape a world fit for future generations to inhabit.
The rapid acceleration of global risks since we first undertook our review has
vindicated the vision of our approach. There are three core elements in
reshaping Ariana's business: strategic reach through early-stage catalytic
investments right through to mature development and production partnerships,
geographical diversification across the Eastern Hemisphere, and commodity
diversification across both precious and technology metals. The extended reach
and range have the benefit of mitigating risks and increasing opportunities.
Reinforcing our strategy is the backstop of a successful producing mine at
Kiziltepe. This has provided US$177 million of revenue to our investee
company, Zenit Madencilik, to the end of 2021 and has exceeded production
guidance for the fifth year running (since inception of operations in 2017).
Profitable operations and strong cash flow capabilities are necessary in the
long-term to sustain our business, and will enable us to grow and maintain an
ongoing dividend stream.
Now that we have received a positive Environmental Impact Assessment for our
gold project at Tavsan in western Turkey, we are progressing this project to
develop our second gold mine, targeting a production rate of circa 30,000
ounces of gold per annum. At the Salinbaş project in eastern Turkey we have
already established a resource of 1.5Moz gold. This has been the focus of an
extensive drilling programme, which is still underway, to develop our
understanding of this major resource within the multi-million ounce Artvin
goldfield.
In line with our broader strategy, we have also successfully enhanced our
asset base through our 50% earn in to Venus Minerals Ltd and the associated JV
development of the fully permitted Apliki copper gold mine in Cyprus. In
south-eastern Europe, we hold a 75% stake in Western Tethyan Resources Ltd,
which is developing licences in Kosovo and using the newly acquired Newmont
database to target significant opportunities in the wider region. In
Australia, our Asgard Metals Fund has made investments in Australia-focused
Panther Metals and Kazakhstan-focused Pallas Resources, in addition to
Indochina-focused Annamite Resources post-period end. This strategy of
leveraging our exploration knowledge and skills underpins our ability to
differentiate solid opportunities from the myriad that we review. Our ability
to generate a range of prospective targets across a wider geography also has
the benefit of allowing us to have an 'evergreen' approach to exploration
throughout the year.
We have also focused on ensuring Ariana's core strengths remain the bedrock of
our strategy. Developing a successful exploration and mining company over the
past 20 years meant we had to learn to turn adversity into an advantage. This
has made Ariana a lean and agile company, well used to operating with tight
financial constraints and low management overheads. A perfect illustration of
the benefits of our lean approach is that Ariana has one of the lowest gold
discovery costs in the business - a fifth of the industry average. We are
confident that a strategy of broadening our opportunities, while mitigating
our risks and leveraging our strengths will ensure we continue to build a
resilient and agile company.
Whilst conducting our strategic review, we recognised that at the heart of
Ariana's ability to survive and thrive is the quality of our team. From
Ariana's inception, we understood the need to build and develop a diverse,
distributed and multi-skilled team. We also recognised the need to work
together cohesively, despite the challenges of field conditions and remote
locations. As in many instances of Ariana's history, hardships drove
adaptation. Thus, long before the company had to face the challenges of the
recent pandemic, we had harnessed technology to enable collaborative team
working, even from the remotest locations. Indeed, the capabilities we built
into the company enabled us to operate successfully without disruption
throughout the past two years.
Furthermore, the Ariana team has grown significantly over the last year and I
would like to extend a warm welcome to all the new members and acknowledge how
fortunate we are to have you on board. We are proud of our ability to attract
and retain great people, as well as our ability to form alliances with
academia and established mining experts across many countries. It is this
diversity of skills, talents and experience which is constantly enriching
Ariana's working environment. We also recognise the importance of giving our
teams freedom to experiment without fear of failure. We depend on their
innovations and their boldness. We find that younger team members often
teach and reinvigorate older ones. In doing so they refresh the DNA of the
organisation.
In the context of such skills sharing and collaboration, we are especially
pleased to open our new Ankara head office as a regional hub for our
geoscientific skills and analytical capabilities. We know that the active
collaboration of great people can achieve extraordinary things. A textbook
example of the power of collaborative teamwork was the famous 'Skunk Works',
developed by Lockheed Martin under the brilliant and legendary leadership of
Kelly Johnson. Using an agile approach to teamwork, where teams were given
great autonomy, unhindered by bureaucracy, Lockheed achieved seemingly
impossible timescales in the development of new aerospace technologies.
There are consequently three cornerstones underpinning Ariana's strategy:
targeting, technology and teamwork, and these drive everything that we do. Our
recent collaboration with Newmont (post-period end) brings into sharp focus
our objective to hunt for world-class mineral deposits, as Newmont is itself
specifically focused on Tier One Assets. Newmont has undertaken not only to
collaborate with Ariana in exploration across south-eastern Europe but has
also invested US$2.5 million in Ariana. I would like to take this opportunity
to thank Newmont for this statement of confidence and encouragement. Newmont's
investment in Ariana also demonstrates their alignment with our view that it
is within the under-explored Tethyan Metallogenic Belt that the next Tier One
Assets will be discovered.
It is worth reflecting on Newmont's achievements over their 100 years'
existence and where they came from. As a fledgling mining company, Newmont
made its first major gold investment with a 25% founding stake in Anglo
American Corporation in South Africa. This is a good example of how a part
investment stake can lead to great things. Newmont has since gone on to become
the largest gold producer in the world, as well as owning a host of other
mineral producing mines globally. We have a long history of working with the
Newmont team and have had access to their regional database in Turkey for some
time. We view it as a powerful endorsement that they have chosen us to be
their eyes and boots on the ground in south-eastern Europe. Their own stable
of Tier One assets shows us what they will be looking for in this new theatre
of operations and I have no doubt we will not disappoint them.
Having boots on the ground in prospective geological territory is all well and
good but one must also be mindful of the broader picture. As the renowned
geologist Terry Grammar was noted for saying, you have to look at all aspects
of a project. This includes the business model, legal title, operating
environment and financing. In summary, you must have sharp situational
awareness. It is only then that you can achieve a successful mineral
discovery. With this in mind, we have gone to great lengths to ensure we are
well informed on all aspects of our prospective investments, not only for the
projects we undertake directly but also for our target investment companies,
where we maintain an ongoing dialog. This background work behind a sound
business strategy is so often unseen and unsung and yet it is a vital
cornerstone of success. Ariana would not have a successful operational gold
mine today were it not for the patient hours and indeed years of quiet
diplomacy with communities, business partners and government organisations.
A critical part of our approach relates to shared values, built both within
and outside the company, linking our teams and our partners. There is a shared
moral compass at the heart of this approach, with our emphasis on trying to
take the responsible course of action, even if this is often not the easiest
route. A diligent approach to environmental, social and governance
responsibilities is as relevant to the external actions of a company as it is
in the internal arrangements of a company.
As we continue to seek our core strategic metals - gold, silver and copper -
we remain confident of their long-term value. We are also confident that their
prices will continue to trend upwards, despite the odd dip following a recent
rise in interest rates. In the context of geostrategic realignment, it is
interesting to note that the Pentagon has recently asked Congress to extend
funding to mineral projects in other jurisdictions, namely the UK and
Australia. This demonstrates that our exploration strategy is well positioned
and that there are great opportunities for agile explorers and developers like
Ariana.
Despite an exceptionally challenging world environment, after our first 20
years we stride into Ariana's future confident we have reshaped our business
to meet the challenges and grasp the opportunities of the future. Ariana has
three inherent advantages that we will draw on to drive the next 20 years: our
clear strategic direction, the intelligence and agility of our youthful team
and the passion for exploration and mining that guides our endeavours.
Ariana has also demonstrated it is adroit at forging strong relationships with
able business partners to further our strategy. We now have a pipeline of
projects at varying stages of maturity to extend the reach and range of our
business across new geographies and commodities. This new reach and range
encompasses south-eastern Europe copper/gold, Cyprus copper, Central Asian
copper/gold and Australian gold/nickel-cobalt. We are also poised to leap
further into uncharted territory in the Tethyan Metallogenic Belt with our
newly conceived Project Leopard in Eastern Turkey. The mighty Anatolian
Leopard may be an elusive creature but we intend to unleash not only two
decades of exploration expertise but also the youthful eyes and energy of our
team on this vast under-explored territory. Empowered by the robust finances
of our Kiziltepe mine, a clear strategy and a proven team, we look out from
the crow's nest over the horizons of the next years with confidence.
As I look back at my nearly two decades of investment with Ariana there are
many highlights that I can reflect on. I think the ones that stand out amongst
the many include the AIM listing of a fledgling exploration company with a
prospective gold asset, and seeing that asset being developed into a core
profitable producing gold mine following its first gold pour. The latter,
without doubt, takes the top slot of all my highlights, followed by the
receipt of our first ever dividend cheque in the post, which itself is
probably one of the most rewarding things any exploration investor can
experience. As I look forward to the next decade, with such a wide
distribution of capable team members, from Australia as far as Turkey and
Zimbabwe, and having the tools and resources available, we are better placed
than we have ever been to make a major gold discovery.
As a team, we look forward to welcoming our shareholders at our next Annual
General Meeting where we will follow the formal business by updating you with
a presentation on our current developments. The notice of AGM includes all the
resolutions proposed including the proposed dividend payment. I would like
to encourage shareholders to exercise your proxy votes in favour of these
resolutions even if you are planning to attend the AGM. I would also like to
round off by thanking our team and stakeholders and in particular those new
partnership members who have demonstrated their confidence in the Ariana
success story.
Michael de Villiers
Chairman
28 June 2022
Financial Review
Profits before tax increased to £7.7m up from £5.1m in the previous year.
The principal driver of this was the partial disposal of our interests in
Turkey in February 2021 as we reduced our 50% interest in the Kiziltepe mine
and 100% interest in the Salinbaş project to a collective 23.5% interest in
both, for net proceeds of £27m giving rise to profit of £6.4m, as set out in
note 5 to the accounts. Administrative costs increased by £1.5m due in part
to increased staff costs of £0.4m on account of less being capitalised within
intangible exploration assets this year, and in part due to increased costs
associated with management of our interests in Zenit by Proccea of £1.1m
following our reduced involvement in the mine itself. These latter costs are
expected to run until Q1 2023.
Otherwise our profits are primarily determined by the performance of our
interests in our investments in our associated undertakings, being our 23.5%
ownership in our aforementioned Turkish interests, and our interest in our
Cypriot copper gold projects though our 50% interest in Venus, showing an
aggregated net share of profit this year of £4m.
Other points of note are the increased tax charge arising in part due to the
tax arising on the partial disposal of our interests and also withholding tax
on dividends subsequently returned to the UK. The Turkish Lira declined
significantly against Sterling towards the end of the year which has given
rise to a translation loss on the revaluation of our foreign entity opening
balances of £2.9m, recorded through other comprehensive income as usual.
As far as the Group Statement of Financial Position is concerned, our interest
in Zenit is now treated as an associate rather than joint venture investment,
albeit the equity method of accounting for it remains the same, but now our
interests in Salinbaş via Pontid and Cyprus via Venus are also accounted for
as associates using the equity method of accounting too, reporting a combined
value at the year end of £11.4m.
Another significant change this year arose from our capital reduction in July
2021 when we applied via the Courts to cancel our historical deferred ordinary
shares and share premium and set them against retained losses to create a
distributable capital reduction reserve of £7.2m, thereby facilitating the
payment of the first tranche of our Special Dividend of £3.8m from the
proceeds of our reduction of our Turkish interests. Since the year end another
tranche of £1.8m has been paid, with another such dividend planned for
October 2022.
At the year end the Directors were pleased to report a healthy cash balance of
£16.4m, and we will continue to strive to deliver value from this position,
with a view to further dividends in future.
Outlook
As predicted in our outlook of last year, 2021 marked the dawn of a new age
for Ariana Resources. During 2020, we set up the Company in a strategically
powerful position and then acted systematically in line with this strategy
throughout the past year. This is exemplified by the culmination, post-period
end, of a strategic investment by Newmont Corporation into our business, with
the intention of developing the exploration opportunities we had created
through the establishment of Western Tethyan Resources last year.
In addition to advancing our long-term interests in south-eastern Europe, the
Company also commenced investing in high-impact early-stage exploration
opportunities via the Asgard Metals Fund. By year end, the Company was
invested in gold and nickel-cobalt exploration in Western Australia and the
Northern Territory, and in gold-copper exploration in Kazakhstan. Post-period
end, these were joined by an investment in gold-copper exploration in Laos. As
part of this investment strategy, we are actively engaged with our investee
companies and provide regular input into their exploration programmes, while
their teams in turn provide in-country experience and leverage.
Such activities corresponded with a significant increase in news-flow, which
will be sustained in the years ahead given the wider geographic spread of
projects in which we are now invested. These projects are in part selected
across various climatic zones to maximise the potential for seasonal
exploration activity, resulting in a more even spread of work throughout the
year for our project evaluation team and enabling steady emphasis to be
sustained year-round across our investee projects. This further builds on our
already notable operational efficiencies as a business, particularly in this
new world of reduced travel and remote-working; further advantages of this
approach are the marked benefits to our corporate ESG commitments.
The Company presently has the capability and financial resources to hold a
structurally more diverse portfolio of mineral exploration, development and
mining project investments across a broader geography. With the significantly
increased demand in commodities, particularly those which contribute to
technological development, we find ourselves on the brink of profound changes
in perception and awareness of the industry and a consequent marked
realignment of investment portfolios globally. Not only will the mining sector
need to find and mine more at an accelerating rate but it will also need to do
this without the environmental and social impacts of the past. This presents
several fundamental challenges and an opportunity for agile companies capable
of advancing their exploration strategies in new search spaces. We have spent
the past year positioning the Company accordingly.
This year also represents 20 years since the foundation of the original Ariana
Resources in Australia and we are consequently very proud of what has been
achieved by our team during the past decades. There is a strong sense among us
of the Company now having come full-circle, particularly given my own
relocation to Perth during 2020. This is especially relevant given the
significance of Perth to the global mining and exploration industry in terms
of the development of world-leading exploration models, techniques and
operational practices, in addition to its particularly dynamic and vibrant
deal-making scene. Accordingly, the Company is very well positioned for the
future and we look forward to continuing to action our unique strategy.
Dr Kerim Sener
Managing Director
28 June 2022
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2021
Continuing operations Note 2021 2020
£'000 £'000
Administrative costs (2,917) (1,360)
General exploration expenditure (67) (35)
Operating loss 4 (2,984) (1,395)
Profit on restructuring of group activities 5 6,423 -
Share of profit of associate accounted for using the equity method 6 4,260 -
Share of profit of joint venture accounted for using the equity method - 6,478
Share of loss of associate accounted for using the equity method 6 (213) -
Investment income 202 7
Profit before tax 7,688 5,090
Taxation 8 (3,832) (327)
Profit for the year from continuing operations 3,856 4,763
Earnings per share (pence) attributable to equity holders of the company
Basic and diluted 10 0.36 0.45
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations (2,948) (3,647)
Other comprehensive loss for the year net of income tax (2,948) (3,647)
Total comprehensive profit for the year 908 1,116
The accompanying notes form part of these financial statements.
Consolidated Statement of Financial Position
For the year ended 31 December 2021
Note 2021 2020
£'000 £'000
Assets
Non-current assets
Trade and other receivables 15 815 100
Financial assets at fair value through profit or loss 13 461 -
Intangible assets 11 149 168
Land, property, plant and equipment 12 238 41
Investment in associates accounted for using the equity method 6 11,402 -
Investment in Joint Venture accounted for using the equity method 6 - 11,213
Earn-In advances 6 - 1,206
Total non-current assets 13,065 12,728
Current assets
Trade and other receivables 16 1,136 298
Cash and cash equivalents 16,389 2,978
Assets classified as held for sale 18 - 16,002
Total current assets 17,525 19,278
Total assets 30,590 32,006
Equity
Called up share capital 19 1,097 6,070
Share premium 19 305 12,053
Capital reduction reserve 19 7,222 -
Other reserves 720 720
Share based payments 19 173 307
Translation reserve (8,178) (9,617)
Retained earnings 27,160 17,164
Total equity attributable to equity holders of the parent 28,499 26,697
Non-controlling interest 30 -
Total equity 28,529 26,697
Liabilities
Current liabilities
Trade and other payables 17 2,061 1,385
Liabilities directly associated with classified as held for resale 18 - 3,924
Total current liabilities 2,061 5,309
Total equity and liabilities 30,590 32,006
The accompanying notes form part of these financial statements.
Company Statement of Financial Position
For the year ended 31 December 2021
Note 2021 2020
£'000 £'000
Assets
Non-current assets
Trade and other receivables 15 5,942 7,027
Investments in group undertakings 14 377 377
Investment in associate accounted for using the equity method 6 2,612 -
Earn-In advances 6 - 1,206
Total non-current assets 8,931 8,610
Current assets
Trade and other receivables 16 132 -
Cash and cash equivalents - -
Total current assets 132 -
Total assets 9,063 8,610
Equity
Called up share capital 19 1,097 6,070
Share premium 19 305 12,053
Capital reduction reserve 19 7,222 -
Share based payments reserve 19 173 307
Retained earnings 34 (9,826)
Total equity 8,831 8,604
Liabilities
Current liabilities
Trade and other payables 17 232 6
Total current liabilities 232 6
Total equity and liabilities 9,063 8,610
The accompanying notes form part of these financial statements.
Consolidated Statement of Changes in Equity
For the year ended 31 December 2021
Share Share Other Share Capital Translation reserve Retained Total attributable to equity holders of parent Non- Total
capital premium reserves based Reduction £'000 earnings £'000 controlling £'000
£'000 £'000 £'000 payments reserve £'000 interest
reserve £'000 £'000
£'000
Changes in equity to
31 December 2020
Balance at 6,054 11,821 720 364 - (5,970) 12,298 25,287 - 25,287
1 January 2020
Profit for the year - - - - - - 4,763 4,763 - 4,763
Other - - - - - (3,647) - (3,647) - (3,647)
comprehensive income
Total - - - - - (3,647) 4,763 1,116 - 1,116
comprehensive income
Issue of ordinary shares 16 232 - - - - - 248 - 248
Share options - - - 46 - - - 46 - 46
Transfer between reserves - - - (103) - - 103 - - -
Transactions 16 232 - (57) - - 103 294 - 294
with owners
Balance at 6,070 12,053 720 307 - (9,617) 17,164 26,697 - 26,697
31 December 2020
Changes in equity to
31 December 2021
Profit for the year - - - - - - 3,856 3,856 - 3,856
Other - - - - - (2,948) - (2,948) - (2,948)
comprehensive income
Total - - - - - (2,948) 3,856 908 - 908
comprehensive income
Issue of ordinary shares 22 305 - - - - - 327 - 327
Court order - (4,995) (12,053) - - 7,222 - 9,826 - - -
reduction in capital
Dividend paid - - - - - - (3,820) (3,820) - (3,820)
to shareholders
Recycle of - - - - - 4,387 - 4,387 - 4,387
translation losses
Transactions - - - - - - - - 30 30
between shareholders
Transfer between reserves - - - (134) - - 134 - - -
Transactions (4,973) (11,748) - (134) 7,222 4,387 6,140 894 30 924
with owners
Balance at 1,097 305 720 173 7,222 (8,178) 27,160 28,499 30 28,529
31 December 2021
The accompanying notes form part of these financial statements.
Company Statement of Changes in Equity
For the year ended 31 December 2021
Share Share Capital Share Retained Total
capital premium Reduction based earnings £'000
£'000 £'000 Reserve payments £'000
£'000 reserve
£'000
Changes in equity to
31 December 2020
Balance at 1 January 2020 6,054 11,821 - 364 (8,838) 9,401
Loss for the year - - - - (1,091) (1,091)
Other comprehensive income - - - - - -
Total comprehensive income - - - - (1,091) (1,091)
Issue of ordinary shares 16 232 - - - 248
Share options - - - 46 - 46
Transfer between reserves - - - (103) 103 -
Transactions with owners 16 232 - (57) 103 294
Balance at 31 December 2020 6,070 12,053 - 307 (9,826) 8,604
Changes in equity to
31 December 2021
Profit for the year - - - - 3,720 3,720
Other comprehensive income - - - - - -
Total comprehensive income - - - - 3.720 3,720
Issue of ordinary shares 22 305 - - - 327
Court order - reduction in capital (4,995) (12,053) 7,222 - 9,826 -
Dividend paid to shareholders - - - - (3,820) (3,820)
Transfer between reserves - - - (134) 134 -
Transactions with owners (4,973) (11,748) 7,222 (134) 6,140 (3,493)
Balance at 31 December 2021 1,097 305 7,222 173 34 8,831
The accompanying notes form part of these financial statements.
Consolidated Statement of Cash Flows
For the year ended 31 December 2021
2021 2020
£'000 £'000
Cash flows from operating activities
Profit for the year 3,856 4,763
Adjustments for:
Profit on restructuring of group activities (6,423) -
Depreciation of non-current assets 44 20
Share of profit in equity accounted associate (4,260) -
Share of profit in joint venture - (6,478)
Share of loss in equity accounted associate 213 -
Share based payments charge - 45
Investment income (202) (7)
Income tax expense 3,832 327
(2,940) (1,330)
Movement in working capital
Decrease in trade and other receivables 62 3,056
(Decrease)/increase in trade and other payables (271) 1,021
Cash (outflow)/inflow from operating activities (3,149) 2,747
Taxation paid (2,923) (282)
Net cash (used in)/generated from operating activities (6,072) 2,465
Cash flows from investing activities
Earn-In Advances (1,406) (672)
Purchase of land, property, plant and equipment (241) (3)
Payments for intangible assets - (262)
Proceeds from restructuring of group activities 28,951 -
Purchase of associate investment (4,139) -
Purchase of financial assets at fair value through profit or loss (461) -
Dividends from associate 705 -
Dividends from joint venture - 776
Investment income 202 7
Net cash generated from/(used in) investing activities 23,611 (154)
Cash flows from financing activities
Issue of share capital 326 248
Proceeds from non-controlling interest 30 -
Payment of shareholder dividend (excluding uncashed) (3,689) -
Net cash (used in)/generated from financing activities (3,333) 248
Net increase in cash and cash equivalents 14,206 2,559
Cash and cash equivalents at beginning of year 2,978 453
Exchange adjustment on cash and cash equivalents (795) (34)
Cash and cash equivalents at end of year 16,389 2,978
The accompanying notes form part of these financial statements.
Selected Notes to the Consolidated Financial Statements for the year ended 31
December 2021
1. General Information
Ariana Resources PLC (the "Company") is a public limited company incorporated,
domiciled and registered in the UK. The registered number is 05403426 and the
registered address is 2nd Floor, Regis House, 45 King William Street, London,
EC4R 9AN.
The Company's shares are listed on the Alternative Investment Market of the
London Stock Exchange. The principal activities of the Company and its
subsidiaries (together the "Group") are related to the exploration for and
development of gold and technology-metals, principally in south-eastern
Europe.
The consolidated financial statements are presented in Pounds Sterling (£),
which is the parent company's functional and presentation currency, and all
values are rounded to the nearest thousand except where otherwise indicated.
The financial information has been prepared on the historical cost basis
modified to include revaluation to fair value of certain financial instruments
and the recognition of net assets acquired including contingent liabilities
assumed through business combinations at their fair value on the acquisition
date modified by the revaluation of certain items, as stated in the accounting
policies.
Basis of Preparation
The Group financial statements have been prepared and approved by the
Directors in accordance with UK-adopted International Accounting Standards and
effective for the Group's reporting for the year ended 31 December 2021.
The separate financial statements of the Company are presented as required by
the Companies Act 2006. As permitted by that Act, the separate financial
statements have been prepared in accordance with UK-adopted International
Accounting Standards. These financial statements have been prepared under the
historical cost convention (except for financial assets at FVOCI) and the
accounting policies have been applied consistently throughout the period.
Going Concern
These financial statements have been prepared on the going concern basis.
The Directors are mindful that there is an ongoing need to monitor overheads
and costs associated with delivering on its strategy and certain exploration
programmes being undertaken across its portfolio. The Group is not expecting
to raise additional capital at this time, but may do so to support its
strategy and specific activities on occasion. The Group has no bank facilities
and has been meeting its working capital requirements from cash resources. At
the year end the Group had cash and cash equivalents amounting to £16.389
million (2020: £2.978 million).
The Directors have prepared cash flow forecasts for the Group for the period
to 31 December 2023 based on their assessment of the prospects of the Group's
operations. The cash flow forecasts include expected future cash flows from
our equity accounted associate (formerly Joint Venture) investment in Zenit
along with the normal operating costs for the Group over the period together
with the discretionary and non-discretionary exploration and development
expenditure.
The forecasts indicate that on the basis of existing cash and other resources,
and expected future dividend payments from Zenit, the Group will have adequate
resources to meet all its expected obligations in delivering its work
programme for the forthcoming year.
The Group believes there should be no significant material disruption to the
mining operations in Zenit from COVID-19, but the Board continues to monitor
these risks and Zenit's business continuity plans.
In preparing these financial statements the Directors have given consideration
to the above matters and on this basis they believe that it remains
appropriate to prepare the financial statements on a going concern basis.
5. Profit on restructuring of group activities
During February 2021, the Group concluded its restructuring programme. This
comprised the part-disposal of its interest in Zenit Madencilik San.ve Tic.
A.S. ("Zenit") and Pontid Madencilik San.ve Tic. A.S. ("Pontid") to Ozaltin
Insaat, Ticaret and Sanayi A.S. ("Ozaltin") and Proccea Construction Co
("Proccea") for a total consideration of US$35.75m. Under the terms of the
Pontid sale agreement and during the year, Ozaltin completed its equity
commitment to invest a further US$8m in the development of the Salinbaş
project. A further US$2m is to be paid in instalments to the Group by Zenit
following the transfer of the three-remaining satellite remain projects held
by the Group's wholly owned subsidiary, Galata Mineral Madencilik San. ve Tic.
A.S.
2021 2020
£'000 £'000
Disposal proceeds receivable (net of group transactions) 26,976 -
Less:-
Cost of Investment and other incidental costs incurred on disposal (4,684) -
Reversal of fair value transactions associated with the Salinbaş acquisition (9,466) -
Increase in valuation of associate following acquisition 2,197 -
Reduction in valuation of JV following part disposal (excluding translation (4,234) -
losses)
Recycled translation losses (4,386) -
Profit on restructuring of Group's activities 6,423 -
6. Equity accounted Investments
The Group and Company's investments comprise the following: -
Associates and joint ventures companies Note Group Company Group Company
2021 2021 2020 2020
£'000 £'000 £'000 £'000
Associate Interest in Pontid Madencilik San. ve Tic. A.S. ("Pontid") 6a 4,139 - - -
Associate Interest in Venus Minerals Ltd ("Venus") 6b 2,399 2,612 - -
Associate Interest in Zenit Madencilik San. Ve Tic. A.S. ("Zenit") 6c 4,864 - - -
Joint venture Interest in Zenit Madencilik San. Ve Tic. A.S. ("Zenit") 6c - - 11,213 -
Carrying amount of investment at 31 December 11,402 2,612 11,213 -
6a Associate Interest in Pontid.
Following the disposal by Greater Pontid Exploration B.V. (holding company) of
its entire interest in Pontid Madencilik San. ve Tic. A.S. ("Pontid") to
Ozaltin Holding A.S and Proccea Construction Co, the Group reinvested US$5.75m
for a 23.5% shareholding in Pontid. This investment is currently valued at
£4.139m and represents the Group's share of Pontid's net assets and goodwill
paid on acquisition. Since the date of acquisition, Pontid continues to
benefit from new capital funding of US$8m into its Salinbaş project.
Financial information based on Pontid's translated financial statements, and
reconciliations with the carrying amount of the investment in the consolidated
financial statements are set out below:
Statement of financial position 2021 2020
As at 31 December 2021 £'000 £'000
Assets
Non-current assets
Other receivables 10 -
Intangible exploration assets 1,120 -
Land, property, plant and machinery 96 -
Total non-current assets 1,226 -
Current assets
Cash and cash equivalents 5,230 -
Trade and other receivables 86 -
Total current assets 5,316 -
Total assets 6,542 -
Current liabilities
Other payables 229 -
Total current liabilities 229 -
Equity 6,313 -
Proportion of the Group's ownership 23.5% -
Share of net assets per above analysis 1,483 -
Goodwill on acquisition and share of interest post acquisition 2,656 -
Carrying amount of investment in Pontid 4,139 -
6b Share of loss of associate interest in Venus Minerals Ltd
The Company and group acquired 50% of Venus Minerals Ltd through an earn-in
agreement on 5 November 2021.
The results set out below includes the Group`s share of loss for the period
from significant influence to 31 December 2021.
Group Company Group and Company
2021 2021 2021
£'000 £'000 £'000
Equity accounted Equity accounted Associate interest Earn-In Advances
Associate interest
At 1 January 2021 - - 1,206
Advances paid during the year - - 1,406
Reclassification following conversion of rights 2,612 2,612 (2,612)
Share of loss since significant influence recognised by Group (213) - -
At 31 December 2021 2,399 2,612 -
6c Share of profit of associate interest in Zenit
The Group accounts for its associate interest in Zenit using the equity method
in accordance with IAS 28 (revised). In prior years Zenit was also accounted
for using the equity method of accounting, albeit the company was then
classified as a joint venture, until part disposal by the Group in February
2021. At 31 December 2021 the Group has a 23.5% (2020: 50%) interest in Zenit,
and, profits from Zenit are shared in the ratio of 23.5% (2020: 50%) the
Group, 23.5% (2020: 50%) Proccea and the remaining 53% (2020: nil) interest to
Ozaltin Holding A.S.
Zenit was incorporated in, and has its principal place of business in Ankara,
Turkey.
Financial information based on Zenit`s translated financial statements, and
reconciliations with the carrying amount of the investment in the consolidated
financial statements are set out below:
Statement of Comprehensive Income 2021 2020
For the year ended 31 December 2021 £'000 £'000
Revenue 32,784 29,145
Cost of sales (14,586) (13,335)
Gross Profit 18,198 15,810
Administrative expenses (2,344) (1,750)
Operating profit 15,854 14,060
Other income 124 -
Finance expenses including foreign exchange losses (1,171) (3,143)
Finance income including foreign exchange gains 5,213 2,262
Profit before tax 20,020 13,179
Taxation charge (1,890) (223)
Profit for the year 18,130 12,956
Proportion of the Group's profit share 23.5% 50%
Group's share of profit for the year 4,260 6,478
6c Share of profit of interest in associate in Zenit
Statement of financial position 2021 2020
As at 31 December 2021 £'000 £'000
Assets
Non-current assets
Other receivables and deferred tax asset 295 1,244
Intangible exploration assets 70 670
Kiziltepe Gold Mine (including capitalised mining costs, land, property, plant 15,804 18,817
and equipment)
Total non-current assets 16,169 20,731
Current assets
Cash and cash equivalents 6,680 8,031
Trade and other receivables 650 286
Inventories 2,033 2,598
Other receivables, VAT and prepayments 2,521 2,004
Total current assets 11,884 12,919
Total assets 28,053 33,650
Liabilities
Non-current liabilities
Borrowings 412 2,126
Deferred tax 367 -
Asset retirement obligation 616 924
Total non-current liabilities 1,395 3,050
Current liabilities
Borrowings 884 4,881
Trade payables 1,406 1,544
Other payables 3,671 1,749
Total current liabilities 5,961 8,174
Total liabilities 7,356 11,224
Equity 20,697 22,426
Proportion of the Group's ownership 23.5% 50%
Carrying amount of investment in associate 4,864 -
Carrying amount of investment in joint venture - 11,213
Movement in Equity - our share
Opening balance 11,213 7,768
Profit for the year 4,260 6,478
Part disposal of Interest (5,943) -
Translation and other reserves (3,613) (2,257)
Dividend receivable (1,053) (776)
Closing balance 4,864 11,213
9. Profit and distributable reserves of parent Company
(a) Profit of parent company
As permitted by Section 408 of the Companies Act 2006, the statement of
comprehensive income of the parent Company is not presented as part of these
financial statements. The parent Company's Profit for the financial year was
£3,720,000 (2020: Loss - £1,091,000).
(b) Distributable reserves of parent company
The Company paid its first shareholder dividend on 24 September 2021 amounting
to £3,820,873. To facilitate this distribution the Company gained shareholder
approval during February 2021 and applied to the High Court of Justice of
England and Wales to reduce its share capital. This application was granted by
the High Court during July 2021 and the share capital reduction scheme
resulted in generating distributable reserves of £7.22m, as set out in the
Company's Statement of Changes in Equity and note 19.
(c) Dividends
An interim dividend was paid during the year ended 31 December 2021 of 0.35
pence per ordinary share amounting to £3,820,000 (2020: £nil).
10. Earnings per share on continuing operations
The calculation of basic profit per share is based on the profit attributable
to ordinary shareholders of £3,856,000 (2020: £4,763,000) divided by the
weighted average number of shares in issue during the year being shares
1,085,894,966 (2020: 1,062,538,317). There is no material effect on the basic
earnings per share for the dilution provided by the share options.
13. Financial assets at fair value through profit or loss
Group and Company Group
2021
£'000
At 1 January 2021 -
Addition in Panther Metals Ltd 188
Addition in Pallas Resources Ltd 273
At 31 December 2021 461
Net book value
At 31 December 2020 -
At 31 December 2021 461
During the year, the Group's wholly owned subsidiary Asgard Metals Pty. Ltd.
acquired shares in the following companies as set out below:
Panther Metals Ltd is listed on the Australian Stock Exchange, incorporated
and domiciled in Australia. At the balance sheet date, its listed price
exceeded its acquisition cost by £35,000. This increase has not been
reflected in profit or loss.
Pallas Resources Ltd is a private company limited by shares, incorporated and
registered in the United Kingdom. At the balance sheet date as an unlisted
company, its fair value cannot be reliably measured and approximates to
historical cost.
15. Non-current other receivables
Group Company
2021 2020 2021 2020
£'000 £'000 £'000 £'000
Amounts owed by Group undertakings - - 5,942 7,027
Amounts owed by associate interest 815 - - -
Other receivables - 100 - -
815 100 5,942 7,027
The amount owed to the Group relate to an instalment based interest free loan
agreed upon following the disposal by Galata of its three remaining satellite
projects to Zenit at a rate of US$50,000 per calendar month. The directors
have assessed that the future fair value return on settlement of this debt is
not materially different from the carrying value shown above.
16. Other receivables
Group Company
2021 2020 2021 2020
£'000 £'000 £'000 £'000
Other receivables 219 183 132 -
Amounts owed by associate interest 792 - - -
Prepayments 125 115 - -
1,136 298 132 -
The carrying values of other receivables and amounts owed by associate
interest approximate their fair values as these balances are expected to be
cash settled in the near future.
17. Trade and other payables
Group Company
2021 2020 2021 2020
£'000 £'000 £'000 £'000
Trade and other payables 203 147 94 -
Social security and other taxes 1,380 14 - -
Other creditors and advances 343 1,099 132 -
Accruals and deferred income 135 125 6 6
2,061 1,385 232 6
The above listed payables are all unsecured. Due to the short-term nature of
current payables, their carrying values approximate their fair value.
18. Assets and liabilities classified as held for sale
Group Company
2021 2020 2021 2020
£'000 £'000 £'000 £'000
Assets classified as held for sale
Intangible Exploration assets - 16,002 - -
Total assets of group held for sale - 16,002 - -
Liabilities directly associated with assets classified as held for sale
Deferred tax liabilities - 2,273 - -
Contingent consideration payable - 1,651 - -
Total liabilities of group held for sale - 3,924 - -
The above assets and liabilities held for sale were reclassified from
non-current assets and non-current liabilities as at 31 December 2020 due to
the Group concluding the disposal of its interests in its Salinbaş and all
other exploration projects, held through its subsidiary companies based in
Turkey.
19. Called up share capital, share premium and capital reduction reserve
Allotted, issued and fully paid ordinary 0.1p shares Number Ordinary Shares Deferred shares Share Capital reduction reserve
Premium
£'000 £'000
£'000
£'000
In issue at 1 January 2021 1,075,677,943 1,075 4,995 12,053 -
Share capital reduction scheme - (4,995) (12,053) 17,048
Retained losses utilised - - - (9,826)
Share options exercised 21,000,000 22 - 305 -
In issue at 31 December 2021 1,096,677,943 1,097 - 305 7,222
During July 2021, the Company was granted permission by the High Court of
Justice in England and Wales to reduce its share capital by the cancellation
of its share premium and its sub-divided deferred shares. This allowed the
Company to extinguish retained losses bought forward from the prior year
amounting to £9,826,000.
22. Contingent liabilities
Following the restructuring of the Group and the part disposal by Galata
Mineral Madencilik San. ve Tic. A.S. of 26.5% of its interest in Zenit
Madencilik San. ve Tic. A.S., 75% of the resulting gain on disposal is exempt
from Turkish corporation tax provided the gain is retained under equity by
Galata for a period of 5 years. This potentially exempt taxable gain,
including the previously reported gain during 2019 on Çamyol Gayrimenkul,
Madencilik, Turizm, Tarim ve Hayvancilik Ltd ("Camyol") is as follows:
Contracting parties Shareholding Taxable gain in Lira Contingent liability in Lira Contingent Liability in GBP
Galata 26.5% 127,766,456 31,941,614 1,779,606
Çamyol 99% 4,529,343 996,455 55,516
24. Post year end events
During March 2022 the Company issued 46,185,387 new ordinary shares at 4.11
pence per share to Newmont Corporation in connection with a five-year
exploration and alliance agreement focused on copper and gold exploration
within Bosnia and Herzegovina, Bulgaria, Greece, Kosovo, North Macedonia and
Serbia, utilising the exploration teams established within the Group.
Note to the announcement
The financial information set out above does not constitute the Company's
statutory accounts for the year ended 31 December 2021 or year ended 31
December 2020, but is derived from those accounts. Statutory accounts for 2020
have been delivered to the Registrar of Companies and those for 2021 on which
the auditors have provided an unqualified report will be delivered following
the AGM.
Contacts:
Ariana Resources plc Tel: +44 (0) 20 3476 2080
Michael de Villiers, Chairman
Kerim Sener, Managing Director
Beaumont Cornish Limited Tel: +44 (0) 20 7628 3396
Roland Cornish / Felicity Geidt
Panmure Gordon (UK) Limited Tel: +44 (0) 20 7886 2500
John Prior / Hugh Rich / Atholl Tweedie
Yellow Jersey PR Limited Tel: +44 (0) 20 3004 9512
Dominic Barretto / Henry Wilkinson arianaresources@yellowjerseypr.com (mailto:arianaresources@yellowjerseypr.com)
Editors' Note:
About Ariana Resources:
Ariana is an AIM-listed mineral exploration and development company with an
exceptional track-record of creating value for its shareholders through its
interests in active mining projects and investments in exploration companies.
Its current interests include gold production in Turkey and copper-gold
exploration and development projects in Cyprus and Kosovo.
The Company holds 23.5% interest in Zenit Madencilik San. ve Tic. A.S. a joint
venture with Ozaltin Holding A.S. and Proccea Construction Co. in Turkey which
contains a depleted total of c. 2.1 million ounces of gold and other metals
(as at February 2022). The joint venture comprises the Kiziltepe Mine and the
Tavsan and Salinbas projects.
The Kiziltepe Gold-Silver Mine is located in western Turkey and contains a
depleted JORC Measured, Indicated and Inferred Resource of 222,000 ounces gold
and 3.8 million ounces silver (as at February 2022). The mine has been in
profitable production since 2017 and is expected to produce at a rate of
c.20,000 ounces of gold per annum to at least the mid-2020s. A Net Smelter
Return ("NSR") royalty of 2.5% on production is being paid to Franco-Nevada
Corporation.
The Tavsan Gold Project is located in western Turkey and contains a JORC
Measured, Indicated and Inferred Resource of 253,000 ounces gold and 0.7
million ounces silver (as at June 2020). Following the approval of its
Environmental Impact Assessment, resulting permitting work is ongoing to
develop Tavsan as the second joint venture gold mining operation in Turkey. A
NSR royalty of up to 2% on future production is payable to Sandstorm Gold.
The Salinbas Gold Project is located in north-eastern Turkey and contains a
JORC Measured, Indicated and Inferred Resource of 1.5 million ounces of gold
(as at July 2020). It is located within the multi-million ounce Artvin
Goldfield, which contains the "Hot Gold Corridor" comprising several
significant gold-copper projects including the 4 million ounce Hot Maden
project, which lies 16km to the south of Salinbas. A NSR royalty of up to 2%
on future production is payable to Eldorado Gold Corporation.
Ariana owns 100% of Australia-registered Asgard Metals Fund ("Asgard"), as
part of the Company's proprietary Project Catalyst Strategy. The Fund is
focused on investments in high-value potential, discovery-stage mineral
exploration companies located across the Eastern Hemisphere and within easy
reach of Ariana's operational hubs in Australia, Turkey and the UK.
Ariana owns 75% of UK-registered Western Tethyan Resources Ltd ("WTR"), which
operates across south-eastern Europe and is based in Pristina, Republic of
Kosovo. The company is targeting its exploration on major copper-gold
deposits across the porphyry-epithermal transition. WTR is being funded
through a five-year Alliance Agreement with Newmont Corporation
(www.newmont.com (http://www.newmont.com) ).
Ariana owns 50% of UK-registered Venus Minerals Ltd ("Venus") which is focused
on the exploration and development of copper-gold assets in Cyprus which
contain a combined JORC Indicated and Inferred Resource of 17Mt @ 0.45% to
1.10% copper (excluding additional gold, silver and zinc), in addition to
pursuing a separate 50:50 JV on Hellenic Apliki Mines, which owns the Hellenic
SX-EW processing plant and the 11Mt @ 0.25% to 0.69% Cu Apliki mine
development project.
Panmure Gordon (UK) Limited is broker to the Company and Beaumont Cornish
Limited is the Company's Nominated Adviser and Broker.
For further information on Ariana you are invited to visit the Company's
website at www.arianaresources.com (http://www.arianaresources.com) .
Ends.
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