LONDON (Alliance News) - Anglo Asian Mining PLC on Tuesday reported a narrower pretax loss in the first half of 2015 after the company significantly increased production and focused on lowering its costs in light of the downturn in commodity prices.
Production has begun increasing ?above management?s plan? since the start of July, and the miner reiterated its full-year production guidance as it starts its turnaround to return the company to profitability.
The gold, silver and copper producer based in Azerbaijan reported a USD4.1 million pretax loss in the first six months of 2015, narrowing from the USD7.5 million loss a year earlier as revenue rose to USD41.8 million from USD32.7 million.
The company swung to a USD1.9 million gross profit in the period from a USD832,000 loss, and administrative costs were cut to USD2.8 million from USD3.6 million. That was partially offset by finance costs edging up to USD3.0 million from USD2.8 million.
?The low level of metal prices, together with a number of operational challenges, saw the company make a loss in 2014. However, we have made significant progress in operational efficiency in the first half of 2015, which has improved the company?s financial performance compared to 2014,? said the miner.
Anglo Asian Mining, which operates the Gedabek, Gadir and Gosha mines, ramped up production to 35,938 ounces of gold in the half, compared to 27,054 ounces a year earlier, whilst copper concentrate production experienced a small lift to 689 dry metric tonnes from 646 tonnes.
However, silver production plummeted to 6,477 ounces from 21,924 ounces.
Gold sales rose to 33,295 ounces from 23,545 ounces, but gold prices dropped to an average of USD1,204 per ounce compared to USD1,297 per ounce a year ago. Copper concentrate sales rose to 692 dry metric tonnes from 567 tonnes.
Gold production in the second half is currently ?above management?s plan?, totalling 14,841 ounces, bringing total gold production to date to 50,779 ounces of gold.
The company said it remains on track to produce between 70,000 to 75,000 ounces of gold in 2015, which would represent a 16% to 24% rise compared to the 60,285 ounces produced in the whole of 2014.
The company is set to imminently benefit from its new small-scale flotation plant that is being constructed at the Gedabek mine site. The plant is ?very near completion? and undergoing commissioning, and once completed will contribute 5,000 ounces of gold and 1,600 tonnes of copper before the end of 2015.
First production of a commercial copper concentrate from the new plant is expected before the end of September.
?The flotation plant will allow us to fully take advantage of the additional sulphide ore reserves at Gedabek and add an important new source of production and revenues for Anglo Asian,? said the company.
The miner lowered its cash costs in response to lower metal prices. Average cash operating costs fell by almost a third to USD736 per ounce from USD1,014 per ounce after benefiting from higher production volumes and, in dollar terms, from the depreciation of the Azerbaijani manat.
Anglo Asian Mining also reduced its net debt to USD48.7 million at the end of June from USD52.4 million at the end of December.
That was despite the company spending more in capital expenditure, totalling USD9.1 million in the half, compared to USD7.1 million a year earlier, as Anglo Asian Mining continues to increase the capacity at the tailings plant and construct the new flotation plant at the Gedabek mine site.
That capital expenditure was funded from the USD15.6 million generated from operations, with the remainder being used to service its debt. A year earlier, the company generated USD9.4 million from its operations.
At the end of June, Anglo Asian Mining's cash balance stood at USD1.8 million, accompanied by credit facilities of USD1.4 million, compared to a cash balance of only USD300,000 at the end of December.
A small amount of exploration work was conducted on the greater Gedabek area in the half to try to find further reserves and resources to extend the life of the project, alongside some exploration on its Orbudad property.
?This has been an important time for your company, a period which marks the start of the turnaround for Anglo Asian. Our strategic initiatives to increase production and lower operating costs are progressing well and we believe they will return the company to profitability,? said Chairman Khosrow Zamani.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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Anglo Asian (AAZ)