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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  Anglo Asian Mining PLC    AAZ   GB00B0C18177

ANGLO ASIAN MINING PLC

(AAZ)
  Report
Delayed Quote. Delayed London Stock Exchange - 10/23 11:35:05 am
115 GBX   -1.29%
10/08ANGLO ASIAN MINING PLC : Ex-dividend day for interim dividend
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09/24ANGLO ASIAN MINING : Interim results 2020
PU
07/16ANGLO ASIAN MINING : Q2 and H1 2020 Production and Operations Review
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Anglo Asian Mining : Interim results 2020

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09/24/2020 | 05:25am EDT

Anglo Asian Mining plc / Ticker: AAZ / Index: AIM / Sector: Mining

23 September 2020

Anglo Asian Mining plc

Interim Results for the six-months to 30 June 2020

Profit before tax increased to $11.8 million

FY 2020 guidance maintained with stronger performance expected in H2 2020

Interim dividend for 2020 increased to US 4.5 cents per ordinary share and the directors

will consider a special dividend in Q1 2021

Anglo Asian Mining plc ("Anglo Asian", the "Company" or the "Group"), the AIM listed gold, copper and silver producer in Azerbaijan, is pleased to announce its interim results for the six- month period ended 30 June 2020 ("H1 2020"). Note that all references to "$" and "cents" are to United States dollars and cents, "€" are to European Euros and "£" and "pence" are to Pounds Sterling.

The Company also announces its interim dividend in respect of the year ending 31 December 2020 of US 4.5 cents per ordinary share payable on 5 November 2020 to shareholders on record on 9 October 2020. The 2020 interim dividend is a 29 per cent. increase on the interim dividend for 2019. The directors will also consider a special dividend in Q1 2021 due to the on-going strong cash generation.

A presentation on the Company's H1 2020 financial results will be available later today on the Anglo Asian website: http://www.angloasianmining.com.

Financial results

  • Total revenues in H1 2020 of $45.8 million representing a six per cent. year-on-year increase on the previous year (H1 2019: $43.3 million)
  • Profit before taxation in H1 2020 increased to $11.8 million (H1 2019: $10.3 million)
  • Free cash flow inclusive of cash in transit in H1 2020 increased to $13.4 million (H1 2019: $10.0 million)
  • Interim dividend for 2020 of US 4.5 cents per ordinary share declared
    1. Interim dividend is 29 per cent. increase over previous year o Special dividend will be considered in Q1 2021
  • Cash of $29.2 million and the significant milestone achieved of no debt at 30 June 2020 (31 December 2019: cash of $17.8 million excluding cash in transit and debt of $1.7 million)

Operational highlights

  • Total reportable production in H1 2020 of 32,501 gold equivalent ounces ("GEOs") (H1

2019: 39,905 GEOs)

  • o Gold production totalled 27,922 ounces (H1 2019: 34,349 ounces)

    o Copper production totalled 1,207 tonnes (H1 2019: 963 tonnes)

    o Silver production totalled 58,529 ounces (H1 2019: 84,586 ounces)

  • Gold bullion sales in H1 2020 of 23,979 ounces (H1 2019: 26,589 ounces) completed at
    an average price of $1,649 per ounce (H1 2019: $1,319 per ounce)
  • All-insustaining cost ("AISC") of gold production in H1 2020 of $743 per ounce (H1 2019: $603 per ounce) due to fixed cost impact of lower production

Full year 2020 guidance and future development

  • Financial performance is expected to significantly improve in H2 2020 due to increased production and precious metal prices remaining higher than H1 2020
    o Total production target maintained at between 75,000 and 80,000 GEOs when calculated using budgeted metal prices at 1 January 2020 and also FY revenue guidance of over $100 million maintained
  • Growth at Gedabek focused on further exploration of the five new discoveries with the aim to fast-track mines into production subject to satisfactory economic evaluation
    o Production scheduled to commence from new mines in 2022
  • Process underway to extend the Production Sharing Agreement for the first five years of the 10 years permitted for the Gedabek contract area - this is expected to be routine
  • Revised JORC reserves and resources for existing mines to be published shortly
  • Discussions resuming with the Government of Azerbaijan to increase our portfolio by obtaining further exploration areas in the country
  • Heads of terms for a joint venture with Conroy Gold and Natural Resources PLC agreed to further develop the Clontibret licence area and other gold properties in Ireland - the
    Company's first venture outside Azerbaijan

Chairman's Statement

Review of 2020 to date

I am pleased to report on another encouraging half year performance. The Company has continued to operate profitably throughout the period and our financial position remains robust. Accordingly, your board is delighted to declare a dividend of US 4.5 cents per ordinary share as an interim dividend for the year ending 31 December 2020, a 29 per cent. increase on the interim dividend for 2019. The directors will also consider paying a special dividend in quarter one 2021 due to the on-going strong cash generation provided precious metal prices are maintained, the Company meets the expected improvement in production and there is no unexpected adverse impact from the COVID-19 pandemic.

Our geological exploration programme continues to make good progress. The Company's main focus is on fast-tracking five new discoveries, with production targeted to commence

from new mines in 2022. We are also finalising new JORC reserve and resource statements for our existing mines which we will publish shortly.

We have begun the process to extend our Production Sharing Agreement for the first five years of the permitted ten years for the Gedabek contract area, and we believe this will be routine. We are also in discussions with the Government of Azerbaijan to obtain additional exploration territory.

We were very pleased to reach agreement and sign heads of terms with Conroy Gold and Natural Resources PLC ("Conroy Gold") to form a joint venture subject to satisfactory due diligence for the exploration and possible mine development in the Longford Down Massif in Ireland. We believe this project has high potential in a transparent and mining-friendly jurisdiction. The Company is currently completing due diligence and finalising the joint venture agreement with Conroy Gold. This process has been impacted slightly due to COVID- 19 travel restrictions.

Operational review and COVID-19 pandemic

Gedabek continued to produce and sell its products throughout the period. The COVID-19 pandemic and resultant restrictions in Azerbaijan did have some effect on our operations in the second quarter. Staff have worked for longer at Gedabek than usual without rotation. The constraints placed on obtaining supplies, maintaining equipment and shipping gold have also required extra effort. However, since early August 2020, the Government of Azerbaijan has started to slowly ease the restrictions. This has benefitted the Company which has resumed shipping gold doré by scheduled air flights instead of air charter. We look forward to restoring the full efficiency of our operations in the near future as the restrictions continue to ease.

A total of 32,501 gold equivalent ounces ("GEOs") were produced in the six months to 30 June 2020 ("H1 2020") compared to 39,905 GEOs in H1 2019. Copper production increased to 1,207 tonnes from 963 tonnes in H1 2019 and gold production was 27,922 ounces compared to 34,349 ounces in H1 2019. Higher grade copper ore was processed, but the reduction in gold production was due to a decrease in the gold grade of ore, especially from the Ugur open pit which is approaching the end of its mine life.

Given our lower than forecast production in H1 2020, various measures have been taken to increase our production in H2 2020 to maintain our production guidance for the year. These include constructing a new decline to allow underground mining of the high-grade ore below the Gedabek open pit and the reprocessing by agitation leaching of previously heap-leached ore with high residual gold grades. This was originally treated in the early years of the Gedabek operation.

The safety of our employees is our prime concern and the Board was delighted that in July 2020, the Company achieved the very significant milestone of one million man-hours worked without a lost time injury ("LTI"). The Company is now targeting its next milestone of two million man-hours worked without a LTI. Company employees have been tested for COVID- 19 and to our knowledge, none of our employees have contracted the virus.

A further six metres raise of the tailings dam wall was carried out in 2020 to increase the storage capacity by 1.4 million cubic metres. This will give sufficient capacity for the next two

years and will be the last raise of the wall as the dam has now reached its final design height. The Company is identifying sites to build a second tailings dam and is also considering alternative treatment options for its tailings.

Financial results

The Company's financial performance in H1 2020 remained strong with revenue increasing by $2.5 million to $45.8 million due to both higher gold bullion and copper sales. Profit after tax increased to $8.6 million compared to $6.6 million in H1 2019. The AISC per ounce of gold produced increased in H1 2020 to $743 per ounce. The major costs of the Company's production such as staff and operating its plant are fixed and AISC has therefore increased due to the lower production. Anglo Asian remains a lowest quartile cost producer and the AISC is expected to reduce materially in H2 2020 as production increases.

Revenues continued to be subject to an effective royalty of 12.75 per cent. in H1 2020. The Company anticipates that this effective royalty rate will continue until at least 2023 and further details are set out in the financial review below.

The Company continues not to hedge gold sales, although the policy is kept under constant review. Selling at spot prices in H1 2020 enabled the Company to achieve an average selling price of $1,649 per ounce for its gold bullion compared to the average spot price in the period of $1,647 per ounce.

The Company's balance sheet continued to strengthen in H1 2020. Cash flow from operations inclusive of cash in transit was $21.4 million compared to $15.0 million in H1 2019. The final instalment of bank debt was repaid in February 2020. The Company had over $50 million of bank debt in 2015 and it was therefore a significant achievement to become debt-free in early 2020. The Company also has an $18 million stand-by credit facility which is currently unused.

Mineral resources and exploration

Current mineral resource and ore reserves for the Company's three mines at Gedabek, together with recent near-mine exploration work, provide confidence of a combined mine life of Anglo Asian's existing mines to at least 2024. It is the Company's intention to publish shortly new JORC resource and reserves statements for its existing mines.

The Company is now focusing its main geological exploration programme on five mineral discoveries at Gedabek which can be fast-tracked into production, with production scheduled to commence from new mines in 2022. These are Avshancli 1 and 3, Gilar, Ugur Deep and Zefer. Drilling in H1 2020 at these new discoveries was encouraging with high grade intersections of up to 14 grammes per tonne of gold encountered. Development drilling in the existing Gadir underground mine also demonstrated the potential for further expansion of this mine.

Drilling was carried out at Gosha around the existing underground mine and significant gold grades of up to 15 grammes per tonne of gold were encountered. Work at Ordubad was unfortunately limited as the COVID-19 pandemic prevented drill access. However, trench work was carried out on the recently discovered gold vein systems.

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

Anglo Asian Mining plc published this content on 23 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 September 2020 08:24:01 UTC


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Financials
Sales 2020 86,9 M 113 M 113 M
Net income 2020 22,1 M 28,8 M 28,8 M
Net cash 2020 32,1 M 41,8 M 41,8 M
P/E ratio 2020 5,96x
Yield 2020 -
Capitalization 132 M 172 M 172 M
EV / Sales 2020 1,14x
EV / Sales 2021 0,92x
Nbr of Employees 778
Free-Float 55,5%
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Mean consensus HOLD
Number of Analysts 2
Average target price 195,00 GBX
Last Close Price 115,00 GBX
Spread / Highest target 81,7%
Spread / Average Target 69,6%
Spread / Lowest Target 57,4%
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Managers
NameTitle
Mohammed Reza Vaziri President, Chief Executive Officer & Director
Khosrow Kashani Zamani Chairman
William Roy Morgan Chief Financial Officer & Secretary
Farhang Hedjazi Vice President-Technical Services
Richard Calvin Round Independent Non-Executive Director
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