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LONDON (Alliance News) - Anglo Asian Mining PLC Wednesday said its pretax profit slumped in 2013 as expected, as it was hit by lower revenues, increased cost of sales and changes to the accounting treatment of certain items.
The gold producer with operations in Azerbaijan said its pretax profit fell to USD1.4 million, from USD28.6 million the previous year, with revenues falling 3.7% to USD70.8 million from USD73.5 million and cost of sales increasing 54% to USD57.5 million from USD37.4 million.
The company released two profit warnings regarding the 2013 figures earlier this year, stating earlier in May that it expected profits for the year to be significantly below market expectations.
On Wednesday, it said production rates and higher processing costs from its leaching plant, coupled with lower gold prices during 2013, meant that its cash cost per ounce increased and profitability was significantly reduced.
The company also noted that its finance costs more than doubled to USD3.8 million, from USD1.5 million, due to changes on the interest charged in its loans and borrowings with the International Bank of Azerbaijan, the Amsterdam Trade Bank NV and Atlas Copco Customer Finance AB.
In 2013, Anglo Asian focused on increasing production capacity at its Gedabek site to enable gold production levels in excess of 60,000 ounces for 2014, and on progressing its second mine, Gosha, towards production by the end of 2014.
However, the company announced in January that it missed its production target for 2013, increasing its production to 52,068 ounces, from 50,025 ounces in 2012, but failing to achieve its original production target of 60,000 ounces.
Anglo Asian also said that the average price it received for gold fell to USD1,387 per ounce from USD1,666 per ounce the previous year, and its average price received for silver fell to USD25 per ounce, from USD32 per ounce.
On Wednesday, the company said that while the gold market remains somewhat depressed, it already seen evidence of stabilisation in 2014 predicted this process will continue.
After revising down its forecast production rates for 2014 during April due to lower grade recoveries from a new leaching plant, the company now has a gold production target of between 62,000 and 67,000 ounces, of which 10,000 ounces will come from its Gosha project. It previously had a forecast target of between 80,000 to 90,000 ounces.
Anglo Asian shares were down 3.0% to 10.55 pence on Wednesday.
By Tom McIvor; tommcivor@alliancenews.com; @TomMcIvor1
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