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LONDON (Alliance News) - Anglo Asian Mining PLC Wednesday said record gold production helped its operations to turn a profit in 2015, with production expected to continue growing, but the miner still booked an overall loss for the year.
"2015 was another important year for Anglo Asian where we demonstrated our ability as a mid-tier gold, copper and silver producer. I believe it marks the first stage in turning around your company. The performance of our assets in Azerbaijan improved and we delivered record gold production," said Chairman Khosrow Zamani.
Anglo Asian, which produces gold, silver and copper from its operations in Azerbaijan, reported an USD8.9 million pretax loss in 2015, but that was significantly narrower than the USD14.4 million loss that was reported in 2014.
The fact Anglo Asian's operations turned profitable in the year was the biggest driver of the results. Revenue rose to USD78.1 million in 2015 to allow the company to squeeze out a gross profit of USD2.8 million compared to 2014 when revenue amounted to USD68.0 million and a gross loss totalling USD536,000 was booked.
Reductions in administrative expenses to USD5.4 million from USD7.2 million and lower operating expenses of USD1.3 million compared to USD1.8 million the year before, driven by the rise in production, also helped Anglo Asian to narrow its pretax loss in 2015.
Gold prices have rallied since the start of 2016 after coming under pressure last year. Although the average price paid for the gold sold by Anglo Asian in 2015 dropped by USD106 per ounce from 2014 levels, the company reduced its operating costs at a steeper rate during the year, falling USD247 per ounce year-on-year.
Anglo Asian hit record production levels of gold in 2015 after extracting 72,032 ounces in the year compared to only 60,285 ounces in 2014 as the average operating cost, net of by-product credits, declined to USD724 per ounce from USD971.
Of the gold produced, 63,924 ounces were sold compared to only 50,615 ounces in 2014 whilst the average selling price declined to USD1,161 per ounce from USD1,267 in 2014.
Spot gold was trading at only USD1,061 per ounce at the end of 2015 but has rallied by around 15% during 2016 to trade at USD1,221 per ounce on Wednesday.
Silver production in the year totalled 28,628 ounces in 2015, down from 31,177 ounces a year earlier due to changes in the mineralogy at its operations whilst copper production rose by around one quarter year-on-year to 969 tonnes from 784 tonnes.
"The increase in metal prices seen since the beginning of 2016, together with the cost reduction and efficiency initiatives and the devaluation of the Azerbaijan Manat, will further enhance Anglo Asian's performance in the future," said Zamani.
Encouragingly, Anglo Asian plans to up production of both gold and copper this year. Gold production is expected to rise by between 1.4% to 7.0% this year to a range of 73,000 to 77,000 ounces whilst copper production is expected to increase by at least 76% to a range of 1,700 to 2,100 tonnes. No guidance for silver was provided.
Growth will come from the company's Gedabek site and will also be boosted by the new floatation plant launched in the fourth quarter of 2015. Anglo Asian will also try to lower costs further this year. The miner said its operating costs should fall by USD13.0 million this year just from the benefit of foreign exchange.
The first ore to be mined from the Gadir mine, which is on the Gedabek site, was processed during 2015 and production should ramp-up this year as it feeds ore to the new plant. The plant managed to produce 251.0 metric tonnes of copper concentrate in the first three months of this year, 777 ounces of gold and 24,595 ounces silver.
The flotation plant is expected to contribute around 4,000 to 5,000 ounces of gold to overall production this year, making it integral to the company's plan to grow production.
"Our forecast gold production for 2016 is slightly higher than that achieved in 2015, and there will be a full year's contribution from our new flotation plant. We are also benefiting from lower costs due to the devaluation of the Azerbaijan Manat. Accordingly, we believe the outlook for 2016 represents a further improvement over 2015 and look forward to updating shareholders on our progress," said Zamani.
Anglo Asian shares were down 8.0% to 10.58 pence per share on Wednesday.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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