TIDMAAU
RNS Number : 1362F
Ariana Resources PLC
14 July 2021
14 July 2021
AIM: AAU
FINAL AUDITED RESULTS FOR THE YEARED 31 DECEMBER 2020
NOTICE OF ANNUAL GENERAL MEETING ("AGM")
Ariana Resources plc ("Ariana" or "the Company"), the AIM-listed
exploration and development company operating in Europe, announces
its final audited results for the year ended 31 December 2020.
The Report and Accounts will be posted to shareholders as
applicable, and are available on the Company's website (
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, 18 August 2021 at 11:00
am.
The Company also announces that Dr. Kerim Sener, Managing
Director, and Michael de Villiers, Chairman, will provide an
investor webinar on Tuesday, 20 July 2021 at 10:00 am.
The webinar is open to all existing and potential investors and
will consist of a brief update on the final results followed by
Q&A session, held on the Investor Meet Company platform.
Investors can sign up to Investor Meet Company for free and then
click "Add to meet" Ariana Resources via the following link to join
the webinar:
https://www.investormeetcompany.com/ariana-resources-plc/register-investor
.
Investors who have already registered and clicked "Add to meet"
Ariana Resources, will be automatically invited.
-- Investors are encouraged to submit questions pre-event via
the Investor Meet Company Platform, once registered.
-- Questions can be submitted pre-event via the "Ask a Question"
function located on your Investor Meet Company dashboard, in
addition questions can be submitted during the live event.
-- Whilst the Company will not be in a position to answer every
question it receives, it will address the most prominent within the
confines of information already disclosed to the market through
regulatory notifications.
-- Responses to the Q&A will be published at the earliest
opportunity on the Investor Meet Company platform.
-- Investor feedback can also be submitted directly to
management post the event to ensure the Company can understand the
views of all elements of its shareholder base.
Chairman's Statement
Fellow shareholders,
I am pleased to report that Ariana has again had an outstanding
year with gold production at 18,645 ounces, at an average life of
mine cash cost less than US$500 per ounce, alongside a most
successful ongoing exploration programme. This set the stage for a
transformational transaction concluded after the year end, whereby
Ariana sold a significant portion of its Turkish assets for a cash
consideration, whilst still maintaining a sizeable share of the
cash-generating operations, enabling Ariana to continue to
implement its successful exploration and development strategy.
During the period, the Kiziltepe Mine continued to perform well
above feasibility rates. This has been the case since the
commencement of operations and is testament to the determination
and professionalism of the operating team. Despite the challenges
of the COVID-19 pandemic, they have managed to advance production,
exploration drilling and plant expansion work simultaneously. The
plant expansion, which is expected to be commissioned during the
second half of 2021, allows for a doubling of the current level of
mill throughput. This will enable a lower unit cost, as lower grade
ore is brought on stream. Excellent exploration and development
work has identified extensive additional mineral resources in the
immediate vicinity of the plant, which have the potential to extend
the life of mine significantly.
The mine continued to produce gold in the lowest cost quartile
internationally. This has enabled both the repayment of the
original construction loan and an ongoing profit distribution to
the Joint Venture ("JV") shareholders. This quality of operation
enabled the original JV partners to attract a highly regarded third
JV partner, namely Özaltin Holding A.S., which bought a 53% stake
in Zenit Madencilik San. ve Tic. A.S., now incorporating the
Salinba Gold Project, in addition to the Kiziltepe Mine and the Tav
an Gold Project. We now have a three-way partnership working on our
Turkish portfolio of assets and we are looking forward to the
accelerated development of these projects.
Over the last year, the delays and obstacles arising from the
ongoing pandemic naturally led to the direction of available
manpower predominantly to the Kiziltepe Mine. Fewer resources were
physically deployed on the other Company assets, though project
work continued across the portfolio, leading significantly to
several important resource updates. Currently the Tav an Project is
awaiting its Environmental Impact Assessment approvals and various
provisional permitting applications are in process. At the present
rate of progress, we are expecting production at Tav an to be
achieved from late 2022. Meanwhile, further work is ongoing at the
Salinba Project, with a new drilling programme scheduled to
commence later in 2021.
While presenting some challenges, this new operating environment
has also introduced a number of new opportunities, which, along
with the successful completion of the Özaltin JV transaction, will
allow Ariana to pursue more ambitious exploration programmes. This
is being pursued predominantly through the use of freely available
information and databases integrated with data held by Ariana. This
is a highly technical process of data interpretation and target
definition, which our exploration team is particularly skilled in.
We use this information to develop partnerships with carefully
chosen collaborators who then go on to develop assets. This
approach has yielded success many times in the past.
The Ariana team has never been afraid of drilling up a "duster".
Yet in my 16 years of recollection there have not been many, if any
at all. When undertaking new exploration, one must allow for the
occasional "miss" when aiming at a new target. It takes a lot of
courage and determination to launch into a new territory and most
definitely needs the support of a close team to undertake such new
ventures. It seems appropriate to take inspiration from one of the
most prolific goal scorers, Wayne Gretzky, whose mantra was "you
missed 100% of the shots you don't take". With that in mind, I am
encouraging our very talented and dedicated exploration teams to
carry on with their excellent work, with the assurance that there
is 100% support, and the understanding that we are all in this for
the long game, for that next mega discovery which is just over the
next hill.
What Ariana is particularly good at is seeing the big picture:
where to look next and with whom to collaborate to achieve the best
outcome. To this end, we have taken a global view of the Tethyan
Metallogenic Belt ("TMB"), our area of expertise, then delved into
our extensive database of potential targets and pulled in our best
partners for collaboration in these areas to form a number of new
exploration opportunities. This is now taking the form of Western
Tethyan Resources Ltd, a company which is focused on the Eastern
European end of the TMB, while we continue to support the
successful work of Venus Minerals Ltd on the island of Cyprus.
Meanwhile, further exploration and development will continue in
Turkey via our well-established operations hub in Ankara, where
Ariana is establishing a dedicated office and technical centre.
This is allowing a full multidisciplinary team to work on both data
and material samples under one roof. This is both an effective and
efficient operation in a very well-resourced location. Via these
regional partnerships, Ariana has reach over 2,500km of some of the
most prospective territory for gold, silver and copper deposits in
the world.
Any company's annual review would be incomplete without some
discussion and comment on "the herd of elephants in the room" in
our sector. To mention just a few of these: the magnitude of the
pandemic has probably taken most of us by surprise and left many of
us considering what are the most important things to us in our
working and private lives. To that end, it is probably worth
thinking of what one's core values are and what we deliver in our
day-to-day work. I can honestly say that the Ariana team are
focused on delivering the most professional job possible despite
the challenges of the moment. The dedication and focus of our team
is admirable and the Company is especially grateful.
The other elephant in the room, and an important subject
undergoing continual internal review, is Environmental, Social and
Governance ("ESG"). I see this subject as being largely about one's
core values and how we interact with our stakeholders and the
environment. In the broader sense, stakeholders are as wide ranging
as the environment in which we operate, the communities located
around our exploration prospects, the Kiziltepe mine community and
the ultimate beneficiaries of our commercial endeavours, our staff
and shareholders, in addition to local and national economies. In
all areas this range of stakeholders must be treated with fairness
and respect, as well as being kept informed about aspects of the
Company's affairs that materially affect them. This relationship is
inevitably a two-way street of communication with both sides
practising active listening and respect for one another's point of
view. It is through this process that I think we learn the
most.
Of course, the one stakeholder which does not have a voice of
its own needs special mention here. I think the environment and
climate change should be discussed as a broader and integrated
topic. While the extractive industries continue to get the blunt
edge of media attention, it is plainly obvious that human
civilisation cannot exist without incurring an impact on the Earth.
All primary industries, whether it is fishing, farming, forestry or
mining, leave a physical and lasting impact, altering the
environment through their presence. One only has to view Google
Earth to see the massive physical evidence of sea pollution,
farming, forestry and the odd mining or tailings dam site. However,
of all industries in my opinion, mining delivers significantly more
permanent benefit relative to its physical impact on the Earth. We
cannot change the fact that our industry has already had a
significant impact and made many mistakes. Nevertheless, we can
positively affect the future and our overall environmental impact
going forwards.
With this in mind, Ariana aims to continue to explore for our
natural assets in a constructive and sustainable manner, very
conscious of our legacy. Mining for resources predates farming and
probably followed mankind's first hunting and fishing activities.
As we now try to live in closer harmony with our natural world and
take steps towards living in the least polluting way, we will also
need to continue to explore for the minerals that will allow for
greater electrification and pollution-scrubbing of fossil fuels.
Ariana will continue along this theme, to look for sizeable
deposits in the copper, gold and silver space along with other
elements, set against the backdrop of the requirement for a cleaner
environment. The mining industry has been the leader in dealing
with the ESG agenda for decades, ahead of many other industries. It
has been at the top of the agenda on all the mining projects I have
ever been involved with during my working life. This will continue
to be the case. A lot more thought and resources should be invested
in mineral exploration to deliver our ongoing needs for new
minerals and the clean and effective use of remaining
resources.
We cannot leave the discussion of "elephants in the room"
without considering the largest destination for much of what is
mined, that being Asia, in particular China. China is by far the
largest consumer of coal and iron and is consequentially the
largest producer of industrial pollution by some margin. China has
made very clear steps towards disinvesting out of polluting
industries and increasing investment in cleaner energy
alternatives. It is a very well publicised fact that there are
simply not enough of the required battery and electrification
metals available to meet the forecast demand for a significant
switch to broader electrification. This trend, along with worldwide
government stimulus and post-pandemic investment, further supports
the view that whilst we have been in a commodities super-cycle for
some time, this is likely to continue with the help of Chinese
demand, placing Ariana in the right place at the right time to
continue to enjoy this growing trend.
With Ariana now looking at a wider field of potential
exploration, it is appropriate that we have a wider spread of our
team and partners across our theatres of operation. This currently
ranges across Australia, Cyprus, Kosovo, Turkey and the UK. Our
team is consequently able to cover nine time zones and a multitude
of prospective geological regions simultaneously. This strategy
allows for "boots on the ground" and "the eyeball mark one" to be
deployed without any need for international air travel, which in
itself satisfies a significant part of our ESG commitment going
forward.
Last but not least, we intend to reward our shareholders who
have remained invested over the long haul through the payment of
dividends. Court approval of our capital reorganisation has been
received and this will enable the declaration of a dividend which
the Board will announce in due course. As current guidance on AGM
regimes is returning to face-to-face meetings, with social
distancing, it may again be possible to meet you in person to
present our results and provide a company update. We would however
still encourage you to exercise your proxy votes well in advance of
the AGM date as you did last year. I would like to close by
thanking our corporate advisors and growing clan of strategic
partners for their dedication and support in helping Ariana achieve
its ongoing success.
Financial Review
The Group recorded a profit before tax for the year of GBP5
million, compared to GBP7 million in the prior year. The key driver
of this was the decline in profitability of our Joint Venture
company, Zenit Madencilik San. ve Tic. A.S. ("Zenit"), where our
share of their profit for the year reduced by GBP1.4 million, as
set out in note 6 to the accounts. Despite the price of gold being
strong over the period, and operationally the Company remaining
very robust, the decline in performance was in part due to the
lower grade ore being processed through the plant. However, the JV
company remains in a very strong position, having paid off all its
original capital loans, and the plant is currently being expanded
to increase throughput to match the expanding resource base.
Otherwise on the Group Income Statement front, there are few
surprises - costs remain broadly constant year on year, with no
write downs of previously capitalised exploration expenditure.
Within Other Comprehensive Income, there continues to be a large
charge recorded in respect of the foreign exchange loss due to the
weakening Turkish Lira. This represents the revaluation of Group
assets denominated in Lira, so does not directly impact us
operationally. Fortunately, our implicit revenue stream from
Zenit's gold production is directly linked to the US dollar
denominated price of gold.
As far as the Statement of Financial Position is concerned, our
primary assets are our aforementioned investment in Zenit, which
increased in value due to our share of the company's net assets
increasing year on year, along with our investment in Salinba . As
referenced in note 25, the Group concluded the disposal of both
these assets in February 2021, and so we have transferred the cost
of Salinba to current assets at the year end to reflect this. In
the future we will continue to record our ongoing investment in
23.5% of the share capital of the enlarged Zenit by way of equity
accounting, i.e. our share of that company's profits and net
assets, in our published accounts.
The Statement of Financial Position also reflects our earn-in to
our Cyprus venture - at the year end we had spent GBP1.2 million,
which is being converted to share capital as we earn into our full
50% stake in due course. In cash terms the Group performed strongly
with a net increase in cash of GBP2.5 million, arising mainly from
repayment of loans and dividends from Zenit.
The disposal of part of our interests in Turkey for a
consideration before costs and taxation of US$35.75 million (with a
further US$2 million due to be paid in instalments following the
transfer of the Satellite Projects), approved by shareholders prior
to the year end but concluded in February of this year, together
with the capital reorganisation finalised through the Courts in
June of this year, has put the Group firmly on a path towards
payment of dividends going forward; a suitable return for our loyal
shareholders.
Outlook
With some of the difficulties of 2020 behind us, we are now
looking strategically and operationally to the horizon of the next
decade. Since our IPO in 2005, we have transformed the Company from
a junior gold explorer to one which is sustainably self-financing,
holding a diverse portfolio of mineral exploration, development and
mining project investments. Most importantly of all from an
investor perspective, the Company can demonstrate a robust
track-record across several metrics which, among others, includes
our industry-leading discovery cost per ounce of gold and our
operational cash-costs which are in the lower quartile
internationally. From an environmental stand-point, our joint
venture operations produce gold at a CO(2) per ounce level which
significantly beats the international average.
Having diligently built these solid foundations for our future
business during the best part of the past two decades, we very much
look forward to the new "Roaring 20s". As it was 100 years ago,
with the world having emerged from a catastrophic pandemic, so will
it be today. While the 1920s were marked by the development of
technologies which enabled commercial flight, liquid-fuelled
rockets, energy distribution and television, the 2020s will be
marked by the development of commercial space-flight, renewable
energy, artificial intelligence and virtual reality, amongst other
technological advances. With the global population having increased
by 430% over the past century, the increased requirements of these
and other industries on the mining sector are unprecedented. Your
Company finds itself at the dawn of this new age with the
capability and financial resources to meet these demands head
on.
Stated simply, our reinvigorated purpose is to discover the
mineral resources needed by mankind faster, better and cheaper than
our competitors. We will continue to achieve this by mitigating
risks, mobilising cutting-edge technologies, minimising
environmental impact and maximising partnerships with local
communities. In addition, very unusually for a mineral exploration
and development company, we are advancing a strategy to enable the
Company to pay dividends over the long-term. This is in recognition
of the important role played by our shareholders, who provided the
risk-capital we required during our formative period and in the
expectation of facilitating a virtuous circle of future investment
in our Company.
Michael de Villiers
Chairman
13 July 2021
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2020
2020 2019
Continuing operations Note GBP'000 GBP'000
--------------------------------------------------- ---- -------- ----------
Administrative costs (1,360) (1,242)
General exploration expenditure (35) (18)
Intangible exploration assets - written
off 11a - (364)
Other gains 4 - 627
Other income - 61
--------------------------------------------------- ---- -------- ----------
Operating loss 5 (1,395) (936)
--------------------------------------------------- ---- -------- --------
Profit/(loss) on disposal of equity securities
at FVOCI - 20
Share of profit of Joint Venture accounted
for using the equity method 6 6,478 7,891
Investment income 7 5
--------------------------------------------------- ---- -------- --------
Profit before tax 5,090 6,980
--------------------------------------------------- ---- -------- --------
Taxation 8 (327) (46)
--------------------------------------------------- ---- -------- --------
Profit for the year from continuing operations 4,763 6,934
Earnings per share (pence) attributable
to equity holders of the company
--------------------------------------------------- ---- -------- --------
Basic and diluted 10 0.45 0.65
--------------------------------------------------- ---- -------- --------
Other comprehensive income
Items that are or may be reclassified subsequently
to profit or loss:
Exchange differences on translating foreign
operations (3,647) (1,774)
Items that will not be classified subsequently
to profit or loss:
Net change in fair value of equity securities
at FVOCI 13 - 49
--------------------------------------------------- ---- -------- --------
Other comprehensive loss for the year net
of income tax (3,647) (1,725)
--------------------------------------------------- ---- -------- --------
Total comprehensive profit for the year 1,116 5,209
--------------------------------------------------- ---- -------- --------
The accompanying notes form part of these financial
statements.
Consolidated Statement of Financial Position
For the year ended 31 December 2020
Note 2020 2019
GBP'000 GBP'000
--------------------------------------------- ----- --------- ---------
Assets
Non-current assets
Trade and other receivables 15 100 93
Intangible exploration assets 11a - 16,404
Intangible assets 11b 168 187
Land, property, plant and equipment 12 41 50
Earn-In advances 13 1,206 -
Investment in Joint Venture accounted
for using the equity method 6 11,213 7,768
--------------------------------------------- ----- --------- ---------
Total non-current assets 12,728 24,502
--------------------------------------------- ----- --------- ---------
Current assets
Trade and other receivables 16 298 4,574
Cash and cash equivalents 2,978 453
Assets classified as held for sale 18 16,002 -
--------------------------------------------- ----- --------- ---------
Total current assets 19,278 5,027
--------------------------------------------- ----- --------- ---------
Total assets 32,006 29,529
--------------------------------------------- ----- --------- ---------
Equity
Called up share capital 19 6,070 6,054
Share premium 19 12,053 11,821
Other reserves 720 720
Share based payments 19 307 364
Translation reserve (9,617) (5,970)
Retained earnings 17,164 12,298
--------------------------------------------- ----- --------- ---------
Total equity attributable to equity holders
of the parent 26,697 25,287
--------------------------------------------- ----- --------- ---------
Total equity 26,697 25,287
--------------------------------------------- ----- --------- ---------
Liabilities
Non-current liabilities
Deferred tax liabilities 20 - 2,273
Other financial liabilities 21 - 1,651
--------------------------------------------- ----- --------- ---------
Total non-current liabilities - 3,924
--------------------------------------------- ----- --------- ---------
Current liabilities
Trade and other payables 17 1,385 318
Liabilities directly associated with
classified as held for resale 18 3,924 -
--------------------------------------------- ----- --------- ---------
Total current liabilities 5,309 318
--------------------------------------------- ----- --------- ---------
Total equity and liabilities 32,006 29,529
--------------------------------------------- ----- --------- ---------
The accompanying notes form part of these financial
statements.
Company Statement of Financial Position
For the year ended 31 December 2020
Note 2020 2019
GBP'000 GBP'000
----------------------------------- ----- --------- ---------
Assets
Non-current assets
Trade and other receivables 15 7,027 8,508
Investments in group undertakings 14 377 365
Earn-In advances 13 1,206 -
----------------------------------- ----- --------- ---------
Total non-current assets 8,610 8,873
----------------------------------- ----- --------- ---------
Current assets
Trade and other receivables 16 - 534
Cash and cash equivalents - -
----------------------------------- ----- --------- ---------
Total current assets - 534
----------------------------------- ----- --------- ---------
Total assets 8,610 9,407
----------------------------------- ----- --------- ---------
Equity
Called up share capital 19 6,070 6,054
Share premium 19 12,053 11,821
Share based payments reserve 19 307 364
Retained earnings (9,826) (8,838)
----------------------------------- ----- --------- ---------
Total equity 8,604 9,401
----------------------------------- ----- --------- ---------
Liabilities
Current liabilities
Trade and other payables 17 6 6
----------------------------------- ----- --------- ---------
Total current liabilities 6 6
----------------------------------- ----- --------- ---------
Total equity and liabilities 8,610 9,407
----------------------------------- ----- --------- ---------
The accompanying notes form part of these financial
statements.
Consolidated Statement of Changes in Equity
For the year ended 31 December 2020
Share Share Other Share Translation Retained Total attributable
capital premium reserves based reserve earnings to equity
GBP'000 GBP'000 GBP'000 payments GBP'000 GBP'000 holders
reserve of parent
GBP'000 GBP'000
Changes in equity
to 31 December
2019
Balance at 1
January 2019 6,054 11,821 720 250 (4,196) 5,315 19,964
------------------------ ------ --------- ---------- ---------- ------------ ---------- -------------------
Profit for the
year - - - - - 6,934 6,934
Other comprehensive
income - - - - (1,774) 49 (1,725)
------------------------ ------ --------- ---------- ---------- ------------ ---------- -------------------
Total comprehensive
income - - - - (1,774) 6,983 5,209
------------------------ ------ --------- ---------- ---------- ------------ ---------- -------------------
Share options - - - 114 - - 114
------------------------ ------ --------- ---------- ---------- ------------ ---------- -------------------
Transactions
with owners - - - 114 - - 114
------------------------ ------ --------- ---------- ---------- ------------ ---------- -------------------
Balance at 31
December 2019 6,054 11,821 720 364 (5,970) 12,298 25,287
------------------------ ------ --------- ---------- ---------- ------------ ---------- -------------------
Changes in equity
to 31 December
2020
Profit for the
year - - - - - 4,763 4,763
Other comprehensive
income - - - - (3,647) - (3,647)
------------------------ ------ --------- ---------- ---------- ------------ ---------- -------------------
Total comprehensive
income - - - - (3,647) 4,763 1,116
------------------------ ------ --------- ---------- ---------- ------------ ---------- -------------------
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 12,053 720 307 (9,617) 17,164 26,697
------------------------ ------ --------- ---------- ---------- ------------ ---------- -------------------
The accompanying notes form part of these financial
statements.
Company Statement of Changes in Equity
For the year ended 31 December 2020
Share Share Share Retained Total
capital premium based earnings GBP'000
GBP'000 GBP'000 payments GBP'000
reserve
GBP'000
--------------------------- --------- --------- ---------- ---------- ---------
Changes in equity to
31 December 2019
Balance at 1 January
2019 6,054 11,821 250 (8,010) 10,115
--------------------------- --------- --------- ---------- ---------- ---------
Loss for the year - - - (828) (828)
Other comprehensive - - - - -
income
--------------------------- --------- --------- ---------- ---------- ---------
Total comprehensive
income - - - (828) (828)
--------------------------- --------- --------- ---------- ---------- ---------
Share options - - 114 - 114
Transactions with owners - - 114 - 114
--------------------------- --------- --------- ---------- ---------- ---------
Balance at 31 December
2019 6,054 11,821 364 (8,838) 9,401
--------------------------- --------- --------- ---------- ---------- ---------
Changes in equity to
31 December 2020
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
--------------------------- --------- --------- ---------- ---------- ---------
The accompanying notes form part of these financial
statements.
Consolidated Statement of Cash Flows
For the year ended 31 December 2020
2020 2019
GBP'000 GBP'000
------------------------------------------------------ --------- ---------
Cash flows from operating activities
Profit for the year 4,763 6,934
Adjustments for:
Profit on disposal of subsidiary undertaking,
net of tax - (627)
(Profit)/loss on disposal of equity securities
at FVOCI - (20)
(Profit) on disposal of equipment - (53)
Depreciation of non-current assets 20 20
Write down of intangible exploration assets - 364
Fair value adjustments - (49)
Share of profit in Joint Venture (6,478) (7,891)
Share based payments charge 45 114
Investment income (7) (5)
Income tax expense 327 46
------------------------------------------------------ --------- ---------
Movement in working capital (1,330) (1,167)
Decrease in trade and other receivables 3,056 918
Increase in trade and other payables 1,021 253
------------------------------------------------------ --------- ---------
Cash inflow from operating activities 2,747 4
Taxation paid (282) (8)
------------------------------------------------------ --------- ---------
Net cash from operating activities 2,465 (4)
------------------------------------------------------ --------- ---------
Cash flows from investing activities
Earn-In Advances (672) -
Purchase of land, property, plant and equipment (3) (12)
Payments for intangible assets (262) (516)
Proceeds from disposal of equity securities
at FVOCI - 104
Proceeds from disposal of equipment - 55
Dividends from Joint Venture 776 -
Investment income 7 5
------------------------------------------------------ --------- ---------
Net cash used in investing activities (154) (364)
------------------------------------------------------ --------- ---------
Cash flows from financing activities
Issue of share capital 248 -
------------------------------------------------------ --------- ---------
Net cash generated from financing activities 248 -
------------------------------------------------------ --------- ---------
Net increase/(decrease) in cash and cash equivalents 2,559 (368)
Cash and cash equivalents at beginning of year 453 938
------------------------------------------------------ --------- ---------
Exchange adjustment on cash and cash equivalents (34) (117)
------------------------------------------------------ --------- ---------
Cash and cash equivalents at end of year 2,978 453
------------------------------------------------------ --------- ---------
Selected Notes to the Consolidated Financial Statements for the
year ended 31 December 2020
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 Turkey.
The consolidated financial statements are presented in Pounds
Sterling (GBP), 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 International Financial
Reporting Standards as adopted by the EU ("Adopted IFRSs") and
effective for the Group's reporting for the year ended 31 December
2020.
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 IFRS. 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 GBP2.953 million (2019: GBP453,000).
As set out in note 26, subsequent to the year end the Group
partly disposed of its interests in Zenit Madencilik San. Ve Tic.
A.S. ("Zenit") and Pontid Madencilik San. Ve Tic. Limited for a
gross consideration before costs and taxation of US$37.75
million.
The Directors have prepared cash flow forecasts for the Group
for the period to 31 July 2022 based on their assessment of the
prospects of the Group's operations. The cash flow forecasts
include expected future cash flows from our 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.
6. Share of profit of interest in Joint Venture
In July 2010 the Group entered into an agreement with Proccea
Construction Co. ("Proccea") such that Galata Madencilik San. ve
Tic. Ltd. ("Galata") would transfer its principal assets at
Kiziltepe and Tav an, collectively known as the "Red Rabbit Gold
Project" into a wholly owned subsidiary, Zenit Madencilik San. ve
Tic. A.S. ("Zenit"). Proccea earned their 50% share in Zenit by
investing US$8 million in the capital of Zenit, US$1.4 million of
such funds having been spent on a Feasibility Study and an
Environmental Impact Assessment ("EIA"), with the balance on
initial mine construction, once the Feasibility Study and EIA were
completed satisfactorily. Shareholdings in Zenit represents the
ratio of 50% the Group and 50% to Proccea, with Proccea in
management control, but with key decisions requiring approval from
both the Group and Proccea.
Zenit entered production during March 2017, with commercial
production declared from 1 July 2017. Operational revenues and
costs arising from pre-commercial production were capitalised in
2017 along with any new capital expenditure incurred during 2018
including the construction of the district road diversion necessary
for the full development of the Arzu South open pit. Total revenue
for the year was c. US$37.5 million (2019: US$45.1 million) in gold
and silver sales.
The liability of the Joint Venture includes current and
non-current portions of a bank loan repayable to Turkiye Finans
Katilim Bankasi A.S. and Garanti Bankasi A.S.. Management does not
foresee any significant restrictions on the ability of the Joint
Venture to repay these loans.
The Group accounts for its Joint Venture with Proccea in Zenit
using the equity method in accordance with IAS 28 (revised). At 31
December 2020 the Group has a 50% (2019: 50%) interest in Zenit.
Ultimately profits from Zenit are shared in the ratio of 50:50
between Group and Proccea.
Principal place of business for Zenit is Ankara, Turkey. Zenit
was also incorporated in Ankara, Turkey.
Financial information of the Joint Venture, based on its
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 2020 2019
For the year ended 31 December 2020 GBP'000 GBP'000
--------------------------------------------- --------- ---------
Revenue 29,145 35,337
Cost of sales (13,335) (15,444)
--------------------------------------------- --------- ---------
Gross Profit 15,810 19,893
Administrative expenses (1,750) (1,636)
--------------------------------------------- --------- ---------
Operating profit 14,060 18,257
Finance expenses including foreign exchange
losses (3,143) (4,762)
Finance income including foreign exchange
gains 2,262 2,667
--------------------------------------------- --------- ---------
Profit before tax 13,179 16,162
Taxation charge (223) (380)
--------------------------------------------- --------- ---------
Profit for the year 12,956 15,782
--------------------------------------------- --------- ---------
Proportion of the Group's profit share 50% 50%
Group's share of profit for the year 6,478 7,891
--------------------------------------------- --------- ---------
Statement of financial position 2020 2019
As at 31 December 2020 GBP'000 GBP'000
----------------------------------------------------- --------- ---------
Assets
Non-current assets
Other receivables and deferred tax asset 1,244 440
Intangible exploration assets 670 837
Kiziltepe Gold Mine (including capitalised
mining costs, land, property, plant and equipment) 18,817 23,275
----------------------------------------------------- --------- ---------
Total non-current assets 20,731 24,552
----------------------------------------------------- --------- ---------
Current assets
Cash and cash equivalents 8,031 7,184
Trade and other receivables 286 752
Inventories 2,598 1,745
Other receivables, VAT and prepayments 2,004 2,187
----------------------------------------------------- --------- ---------
Total current assets 12,919 11,868
----------------------------------------------------- --------- ---------
Total assets 33,650 36,420
----------------------------------------------------- --------- ---------
Liabilities
Non-current liabilities
Borrowings 2,126 3,241
Asset retirement obligation 924 1,000
----------------------------------------------------- --------- ---------
Total non-current liabilities 3,050 4,241
----------------------------------------------------- --------- ---------
Current liabilities
Borrowings 4,881 5,776
Trade payables 1,544 1,883
Other payables 1,749 8,984
----------------------------------------------------- --------- ---------
Total current liabilities 8,174 16,643
----------------------------------------------------- --------- ---------
Total liabilities 11,224 20,884
----------------------------------------------------- --------- ---------
Equity 22,426 15,536
Proportion of the Group's profit share 50% 50%
Carrying amount of investment in Joint Venture 11,213 7,768
----------------------------------------------------- --------- ---------
Movement in Equity - our share
Opening balance 7,768 3,968
Profit for the year 6,478 7,891
Translation and other reserves (2,257) (1,049)
Dividend receivable (776) (3,042)
----------------------------------------------------- --------- ---------
Closing balance 11,213 7,768
----------------------------------------------------- --------- ---------
10. Earnings per share on continuing operations
The calculation of basic profit per share is based on the profit
attributable to ordinary shareholders of GBP4,763,000 (2019:
GBP6,934,000) divided by the weighted average number of shares in
issue during the year being 1,062,538,317 shares (2019:
1,059,677,953). There is no material effect on the basic earnings
per share for the dilution provided by the share options.
11a. Intangible exploration assets
Deferred exploration expenditure
GBP'000
Cost
---------------------------------------- ---------------------------------
At 1 January 2019 16,975
Additions and capitalised depreciation 516
Reclassification of expenditure (206)
Exchange movements (517)
Expenditure written off (364)
---------------------------------------- ---------------------------------
At 31 December 2019 16,404
---------------------------------------- ---------------------------------
Additions and capitalised depreciation 263
Exchange movements (665)
Expenditure reclassified to assets
held for sale (note 18) (16,002)
---------------------------------------- ---------------------------------
At 31 December 2020 -
---------------------------------------- ---------------------------------
Net book value
At 1 January 2019 16,975
At 31 December 2019 16,404
---------------------------------------- ---------------------------------
At 31 December 2020 -
---------------------------------------- ---------------------------------
None of the Group's intangible assets are owned by the
Company.
The technical feasibility and commercial viability of extracting
a mineral resource are not yet fully demonstrable in the above
intangible exploration assets. These assets are not amortised,
until technical feasibility and commercial viability is
established. Intangible exploration costs written off represent
costs relating to certain projects that are no longer considered
economically viable or where exploration licences have been
relinquished.
15. Non-current trade and other receivables
Group Company
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ --------- ---------- --------- ----------
Amounts owed by Group undertakings - - 7,027 8,508
------------------------------------ --------- ---------- --------- ----------
Other receivables 100 93 - -
------------------------------------ --------- ---------- --------- ----------
100 93 7,027 8,508
------------------------------------ --------- ---------- --------- ----------
Other receivables falling due after more than one year represent
amounts due from the government of Turkey in respect of VAT
relating to the Group's exploration projects. The amounts owed to
the Company by Group undertakings are interest free and repayable
on demand.
16. Trade and other receivables
Group Company
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------------- --------- ---------- --------- ----------
Amounts owed by Joint Venture Company - 3,383 - -
Other receivables 183 598 - -
Earn-In advances reclassified to Non-current
assets - 534 - 534
Prepayments 115 59 - -
---------------------------------------------- --------- ---------- --------- ----------
298 4,574 - 534
---------------------------------------------- --------- ---------- --------- ----------
The carrying values of other receivables approximate their fair
values because these balances are expected to be cash settled in
the near future.
17. Trade and other payables
Group Company
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------- --------- --------- --------- ---------
Trade and other payables 147 109 - -
Social security and other taxes 14 66 - -
Other creditors and advances 1,099 7 - -
Accruals and deferred income 125 136 6 6
---------------------------------- -------------- --------- --------- ---------
1,385 318 6 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
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'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 3,924 - - -
sale
---------------------------------------- --------- --------- ----------- ---------
The above assets and liabilities held for sale were reclassified
from non-current assets and non-current liabilities due to the
Group concluding the disposal, since the year end, of its interests
in its Salinbas and all other exploration projects, held through
its subsidiary companies based in Turkey. Further details are
disclosed in note 26.
19. Called up share capital and premium
Allotted, issued Number Ordinary Deferred Called up Share
and fully paid Shares shares Share capital Premium
ordinary 0.1p shares GBP'000 GBP'000 GBP'000 GBP'000
------------------------- -------------- --------- --------- --------------- ---------
In issue at 1
January 2020 1,059,677,943 1,059 4,995 6,054 11,821
Share options exercised 16,000,000 16 - 16 232
------------------------- -------------- --------- --------- --------------- ---------
In issue at 31
December 2020 1,075,677,943 1,075 4,995 6,070 12,053
------------------------- -------------- --------- --------- --------------- ---------
During 2013 the existing ordinary shares were sub-divided into
one new ordinary share of 0.1 pence ("New Ordinary Share") and one
deferred share of 0.9 pence ("Deferred Share"). The New Ordinary
Shares have a nominal value of 0.1 pence. The percentage of New
Ordinary Shares held by each shareholder following the subdivision
is the same as the percentage of existing ordinary shares held by
the shareholder before the change.
Fully paid Ordinary Shares carry one vote per share and carry
the right to dividends. Deferred Shares have attached to them the
following rights and restrictions:
-- they do not entitle the holders to receive any dividends and distributions;
-- they do not entitle the holders to receive notice or to
attend or vote at General Meetings of the Company;
-- on return of capital on a winding up the holders of the
Deferred Shares are only entitled to receive the amount paid up on
such shares after the holders of the Ordinary Shares have received
the sum of 0.1p for each ordinary share held by them and do not
have any other right to participate in the assets of the
Company.
Potential issue of ordinary shares
Share options
The Company issued 64,000,000 new options to Directors and staff
at an exercise price of 1.55 pence, vesting over 3 years,
commencing on 1 January 2018. At 31 December 2020 the Company had
options outstanding for the issue of ordinary shares as
follows:
Date options Exercisable Exercisable Exercise Number Options Number at
granted from to price granted exercised 31 December
during the 2020
year
-------------- ------------- ------------- ----------- ----------- ------------- -------------
1 January 1 January 31 December
2018 2018 2023 1.55p 64,000,000 (16,000,000) 48,000,000
-------------- ------------- ------------- ----------- ----------- ------------- -------------
Total 64,000,000 (16,000,000) 48,000,000
-------------------------------------------- ------- ----------- ------------- -------------
The fair value of services received in return for share options
are measured by reference to the fair value of share options
granted. The fair value of employee share options is measured using
the Black-Scholes model. Measurement inputs and assumptions are as
follows:
Costs associated with options issued on the 1 January 2018
and exercisable by 2023
Share price when options issued 1.25p
Expected volatility (based on closing prices
over the last 7 years) 67.84%
Expected life 5 years
Risk free rate 0.75%
Expected dividends 0%
The expected volatility is wholly based on the historic
volatility (calculated based on the weighted average of the last 7
years of quotation).
Group and Company
2020
Share based payments reserve GBP'000
------------------------------------ ------------------
At 1 January 2020 364
Charge during the year 46
Transfer to retained earnings for
options exercised during the year (103)
------------------------------------ ------------------
At 31 December 2020 307
------------------------------------ ------------------
As set out in note 2 the Group recognised an expense of
GBP46,000 (2019: GBP114,000) relating to equity share based payment
transactions in the year.
20. Deferred tax liabilities
Group Company
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- --------- --------- --------- ---------
Opening and closing deferred - 2,273 - -
tax liability
----------------------------- --------- --------- --------- ---------
Deferred tax has been provided against the fair value uplift of
intangible exploration assets that resulted from a previous
business combination. This liability has been reclassified under
liabilities directly associated with assets held for sale, as set
out in note 18.
21. Other financial liabilities
Group Company
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ ----------- --------- ----------- ---------
Contingent consideration payable - 1,651 - -
------------------------------------ ----------- --------- ----------- ---------
The consideration above relates to a 2% net smelter returns
royalty on the future production revenue at Salinba . This
liability arose as a result of the business combination as noted in
note 20. This liability has been reclassified under liabilities
directly associated with assets held for sale, as set out in note
18.
26. Post year end events
In February 2021 the Group concluded the disposal of its
interests in Salinba held through its subsidiary company Pontid
Madencilik San ve Tic. Ltd to Zenit, and the subsequent disposal of
53% of its existing shareholding in Zenit to Özaltin Holding A.S.
for an overall consideration of US$35.75 million before costs and
taxation, retaining a 23.5% interest in the ongoing joint venture.
A further US$2 million is to be paid in instalments to the Group by
Zenit following the transfer of three remaining Satellite Projects
by Galata Madenicilik San. ve Tic. Ltd. to Zenit.
In June 2021 the Company was successful in its application to
the Court for permission to reduce its share capital via the
cancellation of its share premium account and historical deferred
shares in issue.
Note to the announcement
The financial information set out above does not constitute the
Company's statutory accounts for the year ended 31 December 2020,
or year ended 31 December 2019, but is derived from those accounts.
Statutory accounts for 2019 have been delivered to the Registrar of
Companies and those for 2020 on which the auditors have provided an
unqualified report will be delivered following the AGM.
Contacts:
Ariana Resources plc Tel: +44 (0) 20 7407 3616
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) 7951 402 336
Dom Barretto / Joe Burgess / Henry arianaresources@yellowjerseypr.com
Wilkinson
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 July 2020). 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 227,000 ounces gold and 0.7 million ounces silver (as at April
2020). 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 3.7 million ounces silver (as at June
2020). The project is being progressed through permitting and an
Environmental Impact Assessment, with the intention of developing
the site to become the second joint venture gold mining operation.
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 is earning-in to 75% of Western Tethyan Resources Ltd
("WTR"), which operates across 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.
Ariana is also earning-in to 50% of UK-registered Venus Minerals
Ltd ("Venus") and has to date been earning into an entitlement to
37.5%. Venus is focused on the exploration and development of
copper-gold assets in Cyprus which contain a combined JORC Inferred
Resource of 9.5Mt @ 0.65% copper (excluding additional gold, silver
and zinc).
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 .
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END
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