REG - Ariana Resources PLC - Final Results For The Year Ended 31 December 2022
06/06/2023 07:00
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RNS Number : 7026B Ariana Resources PLC 06 June 2023
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 as it forms part of UK Domestic Law by virtue of the
European Union (Withdrawal) Act 2018 ("UK MAR").
06 June 2023
AIM: AAU
FINAL AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2022
NOTICE OF ANNUAL GENERAL MEETING ("AGM")
Ariana Resources plc ("Ariana" or "the Company"), the AIM-listed mineral
exploration and development company with gold mining interests in Europe,
announces its final audited results for the year ended 31 December 2022.
The Report and Accounts will be posted to shareholders as applicable and are
available on the Company's website (https://arianaresources.com/) .
In accordance with Rule 20 of the AIM Rules, Ariana Resources confirms that
the annual report and accounts for the year ended 31 December 2022 and notice
of the Annual General Meeting ("AGM") and related proxy form will be available
to view on the Company's website (https://arianaresources.com/) on 06 June
2023 and will be posted to shareholders. The AGM will be held on 29 June
2023, at 10.30 a.m. at East India Club, 16 St James's Square, London, SW1Y
4LH.
Chairman's Statement
In looking forward to the next financial year and beyond, it is worth
highlighting Ariana's transformation over the past 20 years from a grassroots
gold explorer to an international multi-commodity, multi-region explorer and
developer, funded via successful mining operations. Over this period, and
specifically since achieving profitability in 2016, we have created a
self-sustaining, cash positive, debt free business model, which allows us to
leverage our strengths to grow our business.
This reshaping of our business is occurring against a tipping point in the
world economy. Multiple factors are contributing to a 'perfect storm' in
demand for precious and technology metals. The key factors are the banking
crisis, the Ukraine war, the demand for metals for the de-carbonisation of
energy, and the ever increasing gap between the rate of discovery and demand
for mineral resources in general. Against this backdrop, central bank
purchases of gold are at their highest for 50 years; in 2022 central bank gold
reserves increased by 1,136 tonnes, whilst their foreign reserves decreased by
US$ 950 billion. A clear message can be discerned in these changes. Unlike
fiat currencies created by central bank printing, gold is a fundamentally
different and immutable store of value, with no counterparty risk and finite
supply. Unsurprisingly, gold spot prices have recently topped US$2,000 per
ounce three times in recent years. At the recent Mining Indaba in Cape Town
several contributors noted that 'animal spirits' have consequently returned to
the precious metals mining industry.
Adding fuel to this situation, international consultancy McKinsey warned
recently that: "We need to double the exploration effort if we are to avert
the looming reserve crisis." McKinsey also noted that the industry needs to
invest in people and to "get serious about science". These two guiding
principles have been fundamental since our inception and we are confident that
our investors continue to be beneficiaries of our wholehearted emphasis on our
team and the use of cutting-edge technologies. Furthermore, McKinsey stated
that "geology comes first", noting that this concept had gone somewhat out of
fashion, leading to failed projects and loss of investor confidence. Ariana
has always been driven by geology from the top down; we have always understood
that geological expertise in exploration, resource targeting, definition and
estimation is the difference between success and failure. Given the looming
crisis in the world's mineral reserves, it is vital that companies like Ariana
continue to spearhead the discovery of precious and technology metals within
our framework of technology leadership, environmentally responsible conduct
and robust governance.
A measure of a successful company is the way in which it meets such market
needs. Hence our clear focus on precious and technology metals to meet the
challenges presented by this financial backdrop, the energy revolution and the
chronic exploration deficit. We also recognise that investor needs must be
addressed in terms of profitability, opportunity growth, sustainability,
robust governance and risk management. We aim to ensure our exploration and
production costs are industry leading, our project pipeline is growing, we
remain profitable with competent governance, and we mitigate risks by
diversifying across commodities and regions. Since 2021 we have been able to
pay £7.74m dividends to shareholders, which is an extraordinary milestone for
any exploration company.
Shareholder value has been enhanced by sourcing the majority of our
development finance through joint venture partner investment. Company
management has also been enhanced through these collaborative relationships
significantly complementing Ariana's in house experience. A valuable
by-product of being an exploration company since our inception is that we had
to implement effective remote working from the field and dispersed project
offices decades ago. As this working method was part of our doctrine from the
outset, we were able to thrive for the duration of the recent pandemic, which
proved disruptive to so many other businesses. This continues to be a
valuable approach to growing an accessible pool of new talent for our
industry.
Against a shifting and challenging macroeconomic background, we believe every
crisis is an opportunity. We also believe we have pivoted Ariana to leverage
our competitive advantages over a wider commodity range and geographical
reach. A key differentiator is that Ariana is a technology-led and data-driven
business, enabling us to achieve industry leading discovery and production
costs. Approaching business decision-making with a doctrine of quality data at
the centre of every investment has ultimately resulted in a diversified growth
path with unique projects in our portfolio. These significant strategic
developments have now positioned us even more powerfully as an innovative and
agile explorer and developer, able to optimise the opportunities of rising
global demand for precious and technology metals.
Our investments in cutting-edge technologies and processes, combined with
highly skilled staff, are critical to Ariana's success. Indeed, we have chosen
to continue investing further in these areas and in addition to our own
internal competency, we seek to encourage those of the next generation of
industry leaders. Our strong links with several universities and our
sponsorship of research programmes, notably at the University of Western
Australia, also ensures we remain at the forefront of advanced geological
research. Additionally, we have regularly sponsored student summer
internships, with almost half our geoscientific team having been derived from
such programmes.
Added to these developments it is important to highlight the progress in many
other project areas over the past year. All these project areas are managed
within the framework of our commitment to socially conscious and
environmentally responsible development. We are focusing our efforts within
countries committed to using green energy and we use solar and geothermal
energy systems in our own offices. Our own carbon emissions are less than half
the global average for our industry. We are involved in extensive
re-forestation programmes in all our operational areas, including the
voluntary planting of new trees and re-wilding programmes through charitable
organisations. We are actively involved with local communities, especially
supporting local educational institutions.
In western Türkiye at the Kiziltepe gold mine we have seen a record year,
with 50% more gold produced to date than planned in the Feasibility Study.
This mine is operated by Zenit Madencilik, a partnership in which Ariana has a
23.5% stake with partners Proccea Construction Co. and Ozaltin Holding A.S.
Production at Kiziltepe has consistently beaten guidance since 2017, with
annual production up to 28,000 ounces of gold per annum and a total revenue of
US$235 million to the end of December 2022. Also in western Türkiye, Zenit
Madencilik is currently constructing its second gold mine at Tavşan, which
contains a JORC Resource of 307,000 ounces of gold. The construction is
currently being financed by Zenit without the encumbrance of bank debt.
Post-period end construction had been temporarily suspended owing to a local
court ruling, although we are expecting construction operations to recommence
later this year.
In eastern Türkiye at our Salinbas/Ardala project we are highly encouraged by
the progress of our recent extensive drilling programme. The 1.5Moz gold
Salinbas/Ardala system is a porphyry and epithermal deposit containing gold,
silver, copper and molybdenum. This project is situated in the highly
prospective Artvin Goldfield, containing the 4Moz Hot Maden project 16 km to
the south. Last year we separately initiated Project Leopard across eastern
Türkiye. The project aims to expand our reach into new search spaces across
three under-explored yet highly prospective volcanic arcs in a region
estimated to contain 40Moz gold. For this project Ariana has deployed its
Project Generation Division, with our in-house specialists in remote sensing,
geophysics and geochemistry. This gives us high quality, rapid and
cost-effective results, as none of these processes are outsourced to
consultants. Our ability to deploy these expert in-house teams allows us to
deliver results faster, better and cheaper than many of our peers; our US$11
per ounce discovery cost is proof of this excellence. We have great
expectations for this team which was responsible for identifying the potential
of the Gulluce licence area.
In Cyprus, Ariana is working with Venus Minerals to develop near term and
advanced copper-gold projects. Ariana has a 58%* stake in Venus Minerals and
we are working with our partners Semarang Enterprises on an IPO for Venus. Our
Magellan Project contains some 17 million tonnes at 0.45-1.10% copper with
associated gold. Our investment in Venus is significant given the scale of
the impending world copper supply deficit against rising demand for copper
used in alternative energy production. Elsewhere in south-eastern Europe, we
have entered into a five-year exploration partnership with Newmont Corporation
targeting Tier 1 copper-gold resources. We established Western Tethyan
Resources (WTR) which is 75% held by Ariana, with the remainder held by an
expert board with regional specialisation. Newmont invested US$2.5 million in
Ariana to develop the WTR initiative and provided joint-ownership of the
Eastern Europe Newmont exploration database.
On a broader geographic scale Ariana's wholly-owned subsidiary, Asgard Metals
is focused on investments in discovery-stage opportunities. We use our
well-defined selection process to identify high prospectivity projects in low
cost/risk jurisdictions, where there are sound environmental policies. This
approach has worked successfully for Ariana, as it has delivered a 100 times
value increase in some of our prior investments. Our current work with Panther
Metals Ltd is an example of the way Asgard is operating. Working in parallel
with the Panther team we have supported the discovery of a major nickel-cobalt
project at Coglia in Western Australia. These developments highlight our
focus on what we consider to be the sweet spot for Ariana's growth. This is
the inflexion point between greenfield discovery and development, where we can
act as a project catalyst by bringing to bear our geological expertise and
cutting-edge technologies.
Ariana has travelled a long way from its foundation over 20 years ago. The
team has put in the hard yards to win the respect of its major shareholders,
industry partners, academic institutions, technology suppliers, government
organisations and local communities. Alongside our geological expertise, each
one of these relationships has been critical to Ariana's success. From the
springboard of our technologies and our team we are confident we are now ready
to drive further and faster towards the discovery of significant Tier 1
resources across an international stage.
The Board looks forward to welcoming shareholders at our next Annual General
Meeting where we will conduct the formal business of the meeting outlined in
the Notice of Meeting. I would like to encourage shareholders to exercise
their proxy votes in favour of these resolutions even if you are planning to
attend the meeting.
Last but not least, I would like to sign off by thanking our excellent team
and stakeholders and in particular those new to the Ariana family, all of whom
have contributed to the Ariana success story.
* Post-period end.
Michael de Villiers
Chairman
05 June 2023
Financial Review
The Consolidated Statement of Comprehensive Income sets out our very
satisfactory results for the year, reflecting the success of the group on a
number of fronts. Overall the Group has recorded a profit before tax for the
year to December 2022 of £5.0m. This was £2.7m less than 2021, albeit that
year benefited from the profit of £6.4m on the part disposal of our Turkish
interests. Administrative costs increased only marginally on the prior year,
though as explained in note 4a, we have benefited from an exchange gain of
£2.8m arising on our US dollar cash balances this year, resulting in a
reduction to £0.6m as reported in the Statement. Otherwise the principal
driver of our performance has been the increase in our net share of the profit
and losses of our Associated investments, which increased by £1.5m over the
prior year. Once again the decline in value of the Turkish Lira has meant
that we are showing an accounting loss through Other Comprehensive Income
primarily on the translation of our opening balances of our overseas
subsidiaries at closing rates of exchange. These losses are not realised
unless we divest ourselves of such assets.
The Consolidated Statement of Financial Position reflects the increase in the
value of our share of our Associates, up from £11.4m to £15.3m in 2022, as
set out in note 6. The main change was in the value of Zenit, in part
reflecting the fact there was no dividend received this year, as funds were
directed at developing Tavşan. Another major change this year is the
decline in cash balances from £16.4m to £9.4m, comprising dividends paid by
the Company to shareholders amounting to £4m during the year as part of the
special dividend arising on last year's part disposal of our interests, and
also an increase in tax payable in Turkey of £1.9m due to corporation tax
changing to becoming payable in advance there. A final point worthy of note is
the transfer of £7.2m from the Capital Reduction Reserve to boost Retained
Earnings, and facilitate dividend payments in future years.
Overall the Group has made great progress and the financial results reflect
that performance, and our strong financial position gives us the platform to
continue our development at pace.
Outlook
2022 marked the 20(th) anniversary of the foundation of the Company. We
enjoyed the opportunity to celebrate this significant event with our long-term
and supportive shareholders, advisors, friends and relatives in London in
July. Subsequently, in Türkiye, we were also able to formally open our own
dedicated Head Office in Ankara, surrounded by our fantastic team.
Operationally with Zenit, the Company had its most successful year to date,
achieving record gold production and revenue from its Turkish mine, coupled
with the most drilling ever completed across three simultaneous campaigns at
Kiziltepe, Tavşan and Salinbas. The year also marked the commencement of
construction at the Tavşan mine site in July, which will lead to the
development of Zenit's second gold mining operation in Türkiye.
Following the strategic investment of US$2.5 million into the Company by
Newmont Mining Corporation in March, we were pleased to see the grant of the
first four exploration licences in Kosovo, coupled post-period end with the
grant of the first Project Leopard exploration licences in Eastern Türkiye.
These events mark the commencement of new grassroots exploration for major
copper-gold systems across the Tethyan Metallogenic Belt, in poorly explored
areas known to host multi-million ounce gold deposits. This represents one
of the core strands of our strategy; to pick up good ground cost-effectively
and to build value incrementally and organically within the Company over
time.
In Australia, our nascent discovery fund, Asgard Metals, achieved a number of
milestones of its own. In addition to completing three substantial
investments, it also established a trading account through which it may
participate in corporate offers or trade securities on the ASX market.
Meanwhile, our technical team has contributed to the exploration programmes of
our investee companies across a variety of jurisdictions, but perhaps most
notably in Western Australia, where a substantial nickel-cobalt JORC Resource
Estimate of 70.6Mt at 0.7% Ni + 460ppm Co was established for Panther Metals
Limited.
Of course, not everything can go our way or in the manner originally
intended. Notably our intention to list Venus Minerals on AIM did not happen
as planned during the year. While we had made arrangements for an IPO in
June, the markets took a turn for the worse and we decided to postpone the
launch. Poor market conditions have unfortunately prevailed for the
remainder of the year and have only continued to deteriorate during 2023.
However, this did not phase us, as it enabled the opportunity to increase our
holding in Venus, making it a subsidiary, and we look forward to continuing to
incubate and advance its Cypriot copper-gold portfolio accordingly.
Lastly, we were very pleased to pay the last tranche of our Special Dividend
to shareholders in October, thus completing on a process which we had
initiated in late 2019. Accordingly, we have come to view this moment as the
closure of the first chapter in the life of Ariana, having successfully
brought our most advanced projects in Türkiye to the point of providing very
meaningful returns to our shareholders. We are now on the hunt for new
projects on the international stage which may be developed in similar ways, to
ensure that further returns may continue to be paid well in the future.
We are resolutely focused on upscaling the Company by pursuing bold
objectives. In particular we are keen to advance on larger projects capable
of supporting the Company on its journey towards becoming a mid-tier mine
developer. As part of this process, we are going to pursue support from
investors from further afield and will be marketing the Company accordingly.
In parallel with this we are undertaking several project and jurisdictional
reviews with the aim of securing a significant new flagship asset around which
the future of the Company may continue to be built.
Over the years we have developed a unique skill-set, rarely seen in a company
of our size. We have the capacity to undertake exploration and development
projects from the grassroots stage all the way through to mine development and
production. Our in-house team comprises individuals with backgrounds in
every geoscientific discipline relevant to mineral exploration and mine
development, with the expertise to take projects through to Feasibility Study
level. We recognise this as being where the true value of the Company
lies. We will be drawing on these skills to draw the maximum value out of
the opportunities already available to us but also to create new opportunities
capable of catapulting the Company into the next decade and towards a higher
level of market recognition.
We invite shareholders to join us on the next chapter of our journey and
welcome their ongoing support.
Dr Kerim Sener
Managing Director
05 June 2023
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2022
Continuing operations Note 2022 2021
£'000 £'000
Administrative costs (net of exchange gains) 4a (555) (2,917)
General exploration expenditure (181) (67)
Operating loss 4b (736) (2,984)
Profit on restructuring of group activities 5 - 6,423
Share of profit of associate accounted for using the equity method 6c 6,010 4,260
Share of loss of associate accounted for using the equity method 6b (551) (213)
Other income 159 -
Investment income 135 202
Profit before tax 5,017 7,688
Taxation 8 (987) (3,832)
Profit for the year from continuing operations 4,030 3,856
Earnings per share (pence) attributable to equity holders of the company
Basic and diluted 10 0.36 0.36
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations (3,504) (2,948)
Other comprehensive loss for the year net of income tax (3,504) (2,948)
Total comprehensive profit for the year 526 908
The accompanying notes form part of these financial statements.
Consolidated Statement of Financial Position
For the year ended 31 December 2022
Note 2022 2021
£'000 £'000
Assets
Non-current assets
Trade and other receivables 16 414 815
Financial assets at fair value through profit or loss 13 639 461
Intangible assets 11 130 149
Land, property, plant and equipment 12 461 238
Investment in associates accounted for using the equity method 6 15,317 11,402
Exploration expenditure 14a 199 -
Earn-In advances 14b 87 -
Total non-current assets 17,247 13,065
Current assets
Trade and other receivables 17 1,280 1,136
Cash and cash equivalents 9,375 16,389
Total current assets 10,655 17,525
Total assets 27,902 30,590
Equity
Called up share capital 19 1,147 1,097
Share premium 19 2,207 305
Capital reduction reserve 19 - 7,222
Other reserves 720 720
Share based payments 19 - 173
Translation reserve (11,682) (8,178)
Retained earnings 34,666 27,160
Total equity attributable to equity holders of the parent 27,058 28,499
Non-controlling interest 30 30
Total equity 27,088 28,529
Liabilities
Current liabilities
Trade and other payables 18 814 2,061
Total current liabilities 814 2,061
Total equity and liabilities 27,902 30,590
The financial statements were approved by the Board of Directors and
authorised for issue on 5 June 2023.
They were signed on its behalf by:
M J de Villiers
Chairman
A.K.Sener
Managing Director
Registered number: 05403426
The accompanying notes form part of these financial statements.
Company Statement of Financial Position
For the year ended 31 December 2022
Note 2022 2021
£'000 £'000
Assets
Non-current assets
Trade and other receivables 16 3,850 5,942
Investments in group undertakings 15 377 377
Investment in associate accounted for using the equity method 6 2,612 2,612
Total non-current assets 6,839 8,931
Current assets
Trade and other receivables 17 540 132
Cash and cash equivalents - -
Total current assets 540 132
Total assets 7,379 9,063
Equity
Called up share capital 19 1,147 1,097
Share premium 19 2,207 305
Capital reduction reserve 19 - 7,222
Share based payments reserve 19 - 173
Retained earnings 3,886 34
Total equity 7,240 8,831
Liabilities
Current liabilities
Trade and other payables 18 139 232
Total current liabilities 139 232
Total equity and liabilities 7,379 9,063
The financial statements were approved by the Board of Directors and
authorised for issue on 5 June 2023.
They were signed on its behalf by:
M J de Villiers
Chairman
A.K.Sener
Managing Director
Registered number: 05403426
The accompanying notes form part of these financial statements.
Consolidated Statement of Changes in Equity
For the year ended 31 December 2022
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 2021
Balance at 6.070 12,053 720 307 - (9,617) 17,164 26,697 - 26,697
1 January 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
Changes in equity to
31 December 2022
Profit for the year - - - - - - 4,030 4,030 - 4,030
Other - - - - - (3,504) - (3,504) - (3,504)
comprehensive income
Total - - - - - (3,504) 4,030 526 - 526
comprehensive income
Issue of ordinary shares 50 1,902 - - - - - 1,952 - 1,952
Dividend paid - - - - - - (3,919) (3,919) - (3,919)
to shareholders
Transfer between - - - (173) (7,222) - 7,395 - - -
reserves
Transactions 50 1,902 - (173) (7,222) - 3,476 (1,967) - (1,967)
with owners
Balance at 1,147 2,207 720 - - (11,682) 34,666 27,058 30 27,088
31 December 2022
The accompanying notes form part of these financial statements
Company Statement of Changes in Equity
For the year ended 31 December 2022
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 2021
Balance at 1 January 2021 6,070 12,053 - 307 (9,826) 8,604
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
Changes in equity to
31 December 2022
Profit for the year - - - - 376 376
Other comprehensive income - - - - - -
Total comprehensive income - - - - 376 376
Issue of ordinary shares 50 1,902 - - - 1,952
Dividend paid to shareholders - - - - (3,919) (3,919)
Transfer between reserves - - (7,222) (173) 7,395 -
Transactions with owners 50 1,902 (7,222) (173) 3,476 (1,967)
Balance at 31 December 2022 1,147 2,207 - - 3,886 7,240
The accompanying notes form part of these financial statements.
Consolidated Statement of Cash Flows
For the year ended 31 December 2022
2022 2021
£'000 £'000
Cash flows from operating activities
Profit for the year 4,030 3,856
Adjustments for:
Profit on restructuring of group activities - (6,423)
Depreciation of non-current assets 93 44
Share of profit in equity accounted associate (6,010) (4,260)
Share of loss in equity accounted associate 551 213
Investment income (135) (202)
Income tax expense 987 3,832
(484) (2,940)
Movement in working capital
(increase)/decrease in trade and other receivables (361) 62
(Decrease)/increase in trade and other payables 46 (271)
Cash (outflow)/inflow from operating activities (799) (3,149)
Taxation paid (1,882) (2,923)
Net cash (used in)/generated from operating activities (2,681) (6,072)
Cash flows from investing activities
Earn-In Advances (87) (1,406)
Purchase of land, property, plant and equipment (333) (241)
Payments for intangible and exploration assets (199) -
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 (155) (461)
Loan granted to associate (500) -
Dividends from associate - 705
Investment income 135 202
Net cash generated from/ (used in) investing activities (1,139) 23,611
Cash flows from financing activities
Issue of share capital 1,952 326
Proceeds from non-controlling interest - 30
Payment of shareholder dividend (excluding uncashed) (4,022) (3,689)
Net cash (used in)/generated from financing activities (2,070) (3,333)
Net (decrease)/increase in cash and cash equivalents (5,890) 14,206
Cash and cash equivalents at beginning of year 16,389 2,978
Exchange adjustment on cash and cash equivalents (1,124) (795)
Cash and cash equivalents at end of year 9,375 16,389
The accompanying notes form part of these financial statements.
Selected Notes to the Consolidated Financial Statements for the year ended 31
December 2022
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 2022.
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 £9.375
million (2021: £16.389 million).
The Directors have prepared cash flow forecasts for the Group for the period
to 30 September 2024 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 associates 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.
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.
4. Administrative costs & Operating loss
4a. Administrative costs amounting to £555,000 are stated after exceptional
exchange gains amounting to £2.8m, these primarily arising in the group's
wholly owned subsidiary Galata Mineral Madencilik San. ve Tic. A.S.
("Galata"), mainly due to the strengthening of the US dollar against the
Turkish Lira. On retranslation into Galata's functional currency, US dollar
denominated assets held by Galata, including bank and trade receivables,
resulted in an uplift to those Lira asset valuations and a corresponding
exchange gain for the year to 31 December 2022.
4b. The operating loss is stated after charging/(crediting):
2022 2021
£'000 £'000
Depreciation and amortisation - owned assets 93 44
Office lease rentals 8 12
Exceptional exchange (gain) in Türkiye (2,821) -
Net foreign exchange losses/(gains) 156 (75)
Fees payable to the Company's auditor for the audit of the Group's and 50 50
Company's annual accounts
Fees payable to the Company's auditor for other services: 25 25
- The audit of the Company's subsidiaries
5. Profit on restructuring of group activities
During the prior year, 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 projects held by the
Group's wholly owned subsidiary, Galata Mineral Madencilik San. ve Tic. A.S.
2022 2021
£'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
2022 2022 2021 2021
£'000 £'000 £'000 £'000
Associate Interest in Pontid Madencilik San. ve Tic. A.S. ("Pontid") 6a 4,139 - 4,139 -
Associate Interest in Venus Minerals Ltd ("Venus") 6b 1,848 2,612 2,399 2,612
Associate Interest in Zenit Madencilik San. ve Tic. A.S. ("Zenit") 6c 9,330 - 4,864 -
Carrying amount of investment at 31 December 15,317 2,612 11,402 2,612
6a Associate Interest in Pontid.
Following the disposal in the prior year by Greater Pontides 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 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 2022 2021
As at 31 December 2022 £'000 £'000
Assets
Non-current assets
Other receivables 14 10
Intangible exploration assets 2,006 1,120
Land, property, plant and machinery 69 96
Total non-current assets 2,089 1,226
Current assets
Trade and other receivables 337 86
Cash and cash equivalents 4,377 5,230
Total current assets 4.714 5,316
Total assets 6,803 6,542
Current liabilities
Other payables 131 229
Total current liabilities 131 229
Equity 6,672 6,313
Proportion of the Group's ownership 23.5% 23.5%
Share of net assets per above analysis 1,568 1,483
Goodwill on acquisition and share of interest post acquisition 2,571 2,656
Carrying amount of investment in Pontid 4,139 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 Group accounts for its associate interest in Venus Minerals Ltd using the
equity method in accordance with IAS 28 (revised). The results set out below
includes the Group`s share of loss for the year to 31 December 2022.
Group Company Group Company
2022 2022 2021 2021
£'000 £'000 £`000 £`000
Equity accounted Equity accounted Equity accounted Equity accounted
Associate interest Associate interest Associate interest Associate interest
At 1 January 2022 2,399 2,612 2,612 2,612
Share of loss since significant influence recognised by Group (551) - (213) -
At 31 December 2022 1,848 2,612 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 2022 the Group has a 23.5% interest in Zenit, and
profits from Zenit are shared in the ratio of 23.5% the Group, 23.5% Proccea
and the remaining 53% interest to Ozaltin Holding A.S.
Zenit was incorporated in, and has its principal place of business in Ankara,
Türkiye.
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 2022 2021
For the year ended 31 December 2022 £'000 £'000
Revenue 47,489 32,784
Cost of sales (26,244) (14,586)
Gross Profit 21,245 18,198
Administrative expenses (555) (2,344)
Operating profit 20,690 15,854
Other income - 124
Finance expenses including foreign exchange losses (1,102) (1,171)
Finance income including foreign exchange gains 4,728 5,213
Profit before tax 24,316 20,020
Taxation (credit) / charge 1,259 (1,890)
Profit for the year 25,575 18,130
Proportion of the Group's profit share 23.5% 23.5%
Group's share of profit for the year 6,010 4,260
6c Share of profit of interest in associate in Zenit
Statement of financial position 2022 2021
As at 31 December 2022 £'000 £'000
Assets
Non-current assets
Other receivables and deferred tax asset 6,287 295
Intangible exploration assets 50 70
Kiziltepe Gold Mine (including capitalised mining costs, land, property, 12,889 15,804
plant, and equipment)
Tavşan construction in progress 4,709 -
Total non-current assets 23,935 16,169
Current assets
Trade and other receivables 281 650
Inventories 3,424 2,033
Other receivables, VAT and prepayments 5,345 2,521
Cash and cash equivalents 15,420 6,680
Total current assets 24,470 11,884
Total assets 48,405 28,053
Liabilities
Non-current liabilities
Borrowings - 412
Deferred tax - 367
Asset retirement obligation 582 616
Total non-current liabilities 582 1,395
Current liabilities
Borrowings 361 884
Trade payables 3,345 1,406
Other payables 4,415 3,671
Total current liabilities 8,121 5,961
Total liabilities 8,703 7,356
Equity 39,702 20,697
Proportion of the Group's ownership 23.5% 23.5%
Carrying amount of investment in associate 9,330 4,864
Movement in Equity - our share
Opening balance 4,864 11,213
Profit for the year 6,010 4,260
Part disposal of Interest - (5,943)
Translation and other reserves (1,544) (3,613)
Dividend receivable - (1,053)
Closing balance 9,330 4,864
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
£376,000 (2021: £3,720,000).
(b) Distributable reserves of parent company
The Company paid its first shareholder inaugural special 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
A second interim and third final part of the inaugural special dividend
distribution was paid out of distributable reserves. The second interim
payment on the 11(th) March 2022 of 0.175 pence per ordinary share amounted to
£1,919,186; the third and final payment on the 21(st) September 2022 of 0.175
pence per ordinary share amounted to £2,000,010.
10. Earnings per share on continuing operations
The calculation of basic profit per share is based on the profit attributable
to ordinary shareholders of £4,030,000 (2021: £3,856,000) divided by the
weighted average number of shares in issue during the year being shares
1,133,043,081 (2021: 1,085,894,966). 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
2022
£'000
At 1 January 2022 461
Addition 155
Exchange movement 23
At 31 December 2022 639
Carrying value
At 31 December 2021 461
At 31 December 2022 639
During the year, the Group's wholly owned subsidiary, Asgard Metals Pty. Ltd.,
continued with its investment strategy, and further investments during the
year amounted to £155,000. The market valuation of listed securities at the
balance sheet date amounted to £202,000, compared to a carrying valuation of
£217,000 (level 1 hierarchy). This immaterial fall in valuation amounting to
£15,000 has not been reflected in the statement of comprehensive income.
Unlisted securities, where fair value cannot be reliably measured, continue to
be valued at cost and amounted to £422,000 (level 3 hierarchy) at the balance
sheet date.
16. Non-current other receivables
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Amounts owed by Group undertakings - - 3,850 5,942
Amounts owed by associate interest 414 815 - -
414 815 3,850 5,942
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.
17. Trade and other receivables
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Other receivables 155 219 29 132
Amounts owed by associate interest 497 792 - -
Loan to associate interest 500 - 511 -
Prepayments 128 125 - -
1,280 1,136 540 132
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.
During September 2022, a convertible loan agreement was entered into with
Venus Minerals Limited amounting to £500,000. Post-period end a further
convertible loan agreement was completed with Venus for £200,000.
18. Trade and other payables
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Trade and other payables 189 203 102 94
Social security and other taxes 355 1,380 - -
Other creditors and advances 137 343 29 132
Accruals and deferred income 133 135 8 6
814 2,061 139 232
The above listed payables are all unsecured. Due to the short-term nature of
current payables, their carrying values approximate their fair value.
19. Called up share capital, share premium and capital reduction reserve
Allotted, issued and fully paid ordinary 0.1p shares Number Ordinary Shares Share Capital reduction reserve
Premium
£'000
£'000
£'000
In issue at 1 January 2022 1,096,677,943 1,097 305 7,222
Issue of ordinary shares 46,185,387 46 1,843 -
Share options exercised 3,500,000 4 59 -
Transfer to retained earnings - - - (7,222)
In issue at 31 December 2022 1,146,363,330 1,147 2,207 -
During the prior year, 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 prior years
amounting to £9,826,000 and resulted in the establishment of a capital
reduction reserve. This distributable reserve was subsequently transferred to
retained earnings during 2022.
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 1,414,761
Çamyol 99% 4,529,343 996,455 44,135
24. Post year end events
In April 2023 the loan of £500,000 outstanding at the year end from Venus
Minerals Limited was capitalised, along with an additional loan of £200,000
increasing the Group's shareholding in that company to 58%. The assessment of
the fair values of the assets and liabilities acquired is currently ongoing,
and will be reported in the Group's next available financial statements.
Note to the announcement
The financial information set out above does not constitute the Company's
statutory accounts for the year ended 31 December 2022 or year ended 31
December 2021, but is derived from those accounts. Statutory accounts for 2021
have been delivered to the Registrar of Companies and those for 2022 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 (Nominated Adviser) Tel: +44 (0) 20 7628 3396
Roland Cornish / Felicity Geidt
Panmure Gordon (UK) Limited (Joint Broker) Tel: +44 (0) 20 7886 2500
John Prior / Hugh Rich / Atholl Tweedie
WHIreland Limited (Joint Broker) Tel: +44 (0) 207 2201666
Harry Ansell / Katy Mitchell / George Krokos
Yellow Jersey PR Limited (Financial PR) arianaresources@yellowjerseypr.com (mailto:arianaresources@yellowjerseypr.com)
Tel: +44 (0) 7983 521 488
Dom Barretto / Shivantha Thambirajah /
Bessie Elliot
Editors' Note:
The information in this announcement that relates to exploration results is
based on information compiled by Dr. Kerim Sener BSc (Hons), MSc, PhD,
Managing Director of Ariana Resources plc. Dr. Sener is a Fellow of The
Geological Society of London and a Member of The Institute of Materials,
Minerals and Mining and has sufficient experience relevant to the styles of
mineralisation and type of deposit under consideration and to the activity
that has been undertaken to qualify as a Competent Person as defined by the
2012 edition of the Australasian Code for the Reporting of Exploration
Results, Mineral Resources and Ore Reserves (JORC Code) and under the AIM
Rules - Note for Mining and Oil & Gas Companies. Dr. Sener consents to
the inclusion in the report of the matters based on his information in the
form and context in which it appears.
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 Mine is located in western Turkey and contains a JORC
Measured, Indicated and Inferred Resource of 307,000 ounces gold and 1.1
million million ounces silver (as at November 2022). Following the approval of
its Environmental Impact Assessment and associated permitting, Tavsan is being
developed as the second gold mining operation in Turkey. Construction
progress is temporarily suspended pending the outcome of a local court
decision pertaining to the EIA. 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) ) and is separately earning-in to 85% of the Slivova
Gold Project.
Ariana owns 58% 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.
Panmure Gordon (UK) Limited and WH Ireland Limited are brokers to the Company
and Beaumont Cornish Limited is the Company's Nominated Adviser.
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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