Anglo Asian Regulatory News (AAZ)

24 Aug 2006 07:01

Anglo Asian Mining PLC24 August 2006 ANGLO ASIAN MINING PLC ('Anglo Asian' or 'the Company') INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2006 AND DRILLING UPDATE Highlights for the period • Drilling at Gedabek progressing on target with encouraging results • SRK Consulting retained to assist with the implementation of the drilling programme • Contract to dismantle and containerise CIL gold processing plant in Australia completed • Graham Mascall appointed as Chairman in March 2006 Subsequent events • Encouraging results continue at Gedabek and a scoping study is underway • Gordon Lewis appointed as Chief Executive in July 2006 Graham Mascall, Chairman of Anglo Asian, commented: 'The operating loss of $1.8mfor the 6 month period to 30 June 2006 arose from the charging of administrativeexpenses and crediting an exchange gain. In the period, the Company alsoinvested $3.0m in exploration expenses and $5.8m in the form of capitalexpenditure primarily to acquire, dismantle and containerise the CIL plant inAustralia.' Mr Mascall continued: 'The drilling programme at Gedabek went well during theperiod and according to plan. We released the initial encouraging results inearly June and today release further results, which continue to support theprospect of developing the Gedabek property. We anticipate announcing aresource estimate for Gedabek in the fourth quarter of this year. I am alsoparticularly pleased to see the arrival of Gordon Lewis as Chief Executive.Following the recent strengthening of the Board, Robert Jeffcock has consideredthis an appropriate time to step down from the Board in order to concentrate onhis other business interests. I thank Robert for his contribution to theCompany.' Enquiries: Anglo Asian Mining PLC Numis Securities Limited Parkgreen CommunicationsGordon Lewis, Chief Executive John Harrison Justine HowarthRichard Round, Finance Director Victoria ThomasT: +44 20 7409 3232 T: +44 20 7776 1590 T: +44 20 7493 3713www.aamining.com victoria.thomas@parkgreenmedia.com INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2006 AND DRILLING UPDATE Chairman's statement General The reported six month period has been an important one for Anglo Asian, withthe strategic focus shifting from the Ordubad region to the Gedabek project inthe West of Azerbaijan which was considered to be the best prospect for an earlyproduction decision, based on the available data and initial reconnaissancework. In addition the Board has been strengthened with individuals who havesignificant mining experience, which along with the retention of SRK has led toa more focused approach to the Company's various activities and prospects. As aresult of the continuing encouraging results from Gedabek, which are summarisedbelow, the Company will now progress this prospect to early development. Gedabek Drilling commenced early in 2006 using three of the four available rigs. Thishas now been increased to five rigs. The drilling programme has progressed welland according to plan with SRK being retained to assist with the implementationof the programme. Results remain encouraging. To date 24 diamond drill holes, 17 reverse circulation holes ('RC') and 46 holescombining RC at the top with diamond drilling at the bottom have been drilled ona 55 metre grid. The holes completed and available assays continue to indicatethe presence of significant copper and gold mineralisation at Gedabek. Assayresults received, since the results released on 2 June 2006, are summarised inthe table attached (at the end of the text of the announcement prior to thefinancial statements). A gold equivalent cut-off grade of 0.50 grams per tonne(g/t) was used to define each of the intervals. Gold equivalent conversion isbased on a ratio of 1g/t gold to 60 g/t silver and 1% copper to 2.3g/t gold. The Company plans to complete further infill and boundary drilling to supplementthe current drill programme as required. Completion of this drill programme andreceipt of the assay data will allow Anglo Asian and their consultants SRKConsulting to develop a resource estimate for Gedabek in the fourth quarter of2006. A scoping study is also now underway on Gedabek which is expected to becompleted by January 2007. The study will incorporate the resource evaluation,mining plan, metallurgy and process flowsheet, geotechnical assessment,environmental management, assessment of operating and capital costs and apreliminary economic model. The results of the scoping study will enable theBoard to establish the financing requirements for the project and the need for afull feasibility study and the ability to fast track project development. The local population and government of Gedabek have been very supportive of theCompany's activities. The mine previously operated between 1849 and 1917.Since 1960, the Soviets and the Azeris carried out exploration activityincluding mapping, sampling, trenching, drilling and underground exploration. Gosha Limited adit sampling has been carried out at Gosha, confirming the presence oftwo large vein-like structures which contain grades and thicknesses, in linewith the Soviet data. Assessment of this resource will continue through acombination of further sampling, geological modelling and drilling as required. Ordubad The drilling programme at Piyazbashi was completed in March of this year. Theresults of the drilling and the adit sampling provided confirmation of goldgrade in the veins broadly in line with the Soviet data. The final resourcemodelling and assessment need to be completed and the classification is expectedto improve but the Company's consultants, SRK Consulting have advised that thegreater potential of the Gedabek property meant that focus for a firstfeasibility study should be switched to there. Piyazbashi will therefore not bea first priority for a feasibility study and progression towards earlyproduction as was envisaged in the Admission Document. On completion of the drilling at Piyazbashi a diamond drill rig was moved toShakardara. Shortly after a short drilling campaign there, it was consideredthat the rig could be better utilised by speeding up the programme at Gedabekand it was therefore moved to that property. The drilling and assessment programme at Ordubad is now effectively on hold, butfurther work is required in order to obtain a full assessment of the prospectsin particular at Misdag and Shakardara. CIL plant The contract to dismantle, containerise and store the CIL plant within the closeproximity of Mackay port in Australia was completed in the period. DHL Global Forwarding Projects, our preferred freight forwarder, has carried outa full route survey to the Gedabek site and estimate a transit time of 8 to 10weeks from Mackay to the site. Financial results The Group reported an unaudited operating loss of $1,820,561 ($662,745) for thesix months to 30 June 2006 (six months to 31 July 2005). The operating lossresulted from the charging of administrative expenses of $2,044,385 ($756,575)and crediting an exchange gain of $223,824 ($93,830). The six month comparativeperiod to 31 July 2005 was almost entirely prior to the IPO which occurred on 29July 2005 and the increase of expenditure in the current interim period reflectsthe increase in activity following the IPO. The net interest credit in the period of $370,378 (interest charge $3,732) arosefrom interest received on deposits. Exploration and evaluation expenditures of $2,973,376 ($1,199,199) werecapitalised in the period. Further payments were made to acquire, dismantle andcontainerise the CIL plant in Australia amounting to $5,384,707 ($nil) and othercapital expenditure was incurred of $423,819 ($52,373). The Group at the period end retained cash balances of $11,750,911 ($81,966) andan asset with significant value in the CIL plant with the dismantling andcontainerisation complete. $50,000 remains outstanding to complete the purchaseof the equipment. Directors and management The Company continued to strengthen the Board with individuals who possesssignificant experience in the mining sector. I joined the Company in March 2006as Chairman and Gordon Lewis joined as Chief Executive in July 2006. Gordon hasa depth of operating experience in various locations throughout the world, wherehe has taken gold mining projects through from feasibility to construction andproduction. Gordon is putting in place an experienced management team based inAzerbaijan to continue the push towards early production at Gedabek. I also announce that Robert Jeffcock, one of the founding members, is resigningfrom the Board with immediate effect. Robert has also undertaken other businessventures and believes that following the recent appointments the Company restsin good hands. Robert will continue to support the Company as a shareholder andI would like to take this opportunity to thank him for his contribution to AngloAsian. The future The Group is poised to transform as it moves towards the development of theGedabek project. We remain adequately funded for the work in progress with anexperienced Board and management team now in place. I look forward to updating the shareholders with progress over the comingmonths. Graham Mascall Chairman 23 August 2006 Table of Assay Results from Gedabek Drilling Programme-----------------------------------------------------------------------------------Hole No. Type TD (m) From(m) To Interval Au Eq.(g/t) Au(g/t) Ag(g/t) Cu(%) (m) (m) -----------------------------------------------------------------------------------GDDD14 Core 200.0 66.0 74.2 8.2 1.56 1.14 2.85 0.16and 74.2 76.0 1.8 Voidand 76.0 110.0 34.0 2.14 1.10 5.27 0.41and 116.0 124.0 8.0 2.93 1.25 10.68 0.65-----------------------------------------------------------------------------------GDDD15 Core 190.0 26.0 44.0 18.0 4.41 3.12 14.61 0.45and 62.0 78.0 16.0 1.82 0.20 2.06 0.69with 68.0 74.0 6.0 1.52-----------------------------------------------------------------------------------GDDD16 Core 180.0 No Intersections with AuEq grade above 0.5 g/t----------------------------------------------------------------------------------- GDDD17 Core 185.0 10.0 36.0 26.0 2.18 1.32 15.12 0.27and 42.0 62.0 20.0 1.35 0.26 2.39 0.46with 48.0 52.0 4.0 1.35and 66.0 78.0 12.0 0.84 0.08 1.17 0.32-----------------------------------------------------------------------------------GDDD18 Core 183.0 32.0 40.0 8.0 0.79 0.11 3.40 0.27and 122.0 134.0 12.0 0.82 0.21 1.48 0.26-----------------------------------------------------------------------------------GDDD19 Core See GDRC09a-----------------------------------------------------------------------------------GDDD20 Core 210.0 20 26.0 6.0 1.09 0.96 4.52 0.02and 74 80.0 6.0 0.88 0.33 2.07 0.23-----------------------------------------------------------------------------------GDDD21 Core 10.0 Abandoned - not assayed-----------------------------------------------------------------------------------GDRC08 RC 204.0 38.0 61.0 22.0 6.17 4.91 57.58 0.13Excluding 46.0 47.0 1.0 No Sampleand 64.0 73.0 9.0 8.78 5.34 17.97 1.36and 77.0 88.0 11.0 1.24 0.42 4.35 0.32and 92.0 96.0 4.0 1.58 0.09 0.58 0.64and 131.0 138.0 7.0 1.98 0.47 2.74 0.64-----------------------------------------------------------------------------------GDRC09 RC 47.0 Abandoned - not assayed-----------------------------------------------------------------------------------GDRC09a / RC /GDDD19 Core 89.0/223.0 0.0 3.0 3.0 0.66 0.44 6.17 0.05and 23.0 27.0 4.0 1.00 0.91 1.82 0.03and 32.0 49.0 17.0 3.65 2.37 14.97 0.45-----------------------------------------------------------------------------------GDRC10 RC 194.0 45.0 84.0 39.0 0.77 0.13 1.15 0.27-----------------------------------------------------------------------------------GDRC11 RC 153.0 13.0 63.0 50.0 2.83 2.40 9.79 0.12with 16.0 22.0 6.0 7.20 34.19and 111.0 120.0 9.0 7.58 7.24 17.27 0.02with 112.0 116.0 4.0 14.32 34.14and 143.0 146.0 3.0 1.25 1.04 3.65 0.06GDRC12 RC 165.0 14.0 27.0 13.0 6.33 5.17 8.12 0.45and 35.0 52.0 17.0 1.57 0.10 0.33 0.64and 63.0 69.0 6.0 1.66 0.07 0.25 0.69-----------------------------------------------------------------------------------GDRC13 RC 145.0 81.0 95.0 14.0 1.33 0.05 0.32 0.55-----------------------------------------------------------------------------------GDRC14 RC 145.0 24.0 29.0 5.0 1.15 0.19 0.86 0.41and 35.0 67.0 32.0 0.82 0.06 0.85 0.32-----------------------------------------------------------------------------------GDRC15 RC 102.0 24.0 30.0 6.0 1.47 0.22 2.10 0.53and 36.0 56.0 20.0 0.80 0.03 0.27 0.34----------------------------------------------------------------------------------- Ms. L Mach of SRK Consulting has reviewed and approved the information,pertaining to Gedabek, contained in this press release for the purposes of PartTwo of the "Guidance Note for Mining, Oil and Gas Companies" dated March 2006issued by the London Stock Exchange. Ms. Mach is a Certified ProfessionalGeologist (American Institute of Professional Geologists) and is considered aQualified Person within the meaning of NI 43-101 and JORC. SRK Consulting is aninternational minerals consultancy group, independent of Anglo Asian. Notes: 1. All holes are drilled vertically and reported intervals are drill-holelengths; true widths of mineralisation intercepts have not yet been calculated. 2. The diamond drill cores are predominately HQ-sized (63.5mm diameter), withsome holes reduced to NQ (47.6mm diameter). The RC holes GDRC08 to GDRC09a are115mm in diameter and later holes are 135mm. 3. The core is split on-site and one half is shipped to OMAC Laboratories Ltdin Loughrea, Ireland. RC chips are reduced to a nominal 2 kilogram sampleon-site and also sent to OMAC. Gold is analysed by fire assay (30 gram) withatomic absorption finish. Copper and silver are analysed with a 46 element ICPprocedure. A laboratory quality assurance/quality control programme is in placewith blanks and duplicate samples inserted into the sample stream. Externalcheck assays will be done at ALS Chemex in Vancouver, British Columbia, Canada. Interim financial statements for the 6 month period to 30 June 2006 Consolidated Profit and Loss Account Unaudited Unaudited Audited Period from 6 months 6 months 1 Feb 2005 to 30 Jun to 31 Jul to 31 Dec 2006 2005 2005 Note US$ US$ US$---------------------------------------------------------------------------------------------- TURNOVER - - - Administration expenses (2,044,385) (756,575) (2,867,951) Exchange gain 223,824 93,830 208,112 ---------------------------------------------------------------------------------------------- OPERATING LOSS (1,820,561) (662,745) (2,659,839) Interest received and similar income 370,391 986 613,400 Interest payable and similar charges (13) (4,718) (8,325) ---------------------------------------------------------------------------------------------- LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (1,450,183) (666,477) (2,054,764) Tax on loss on ordinary activities - - - ---------------------------------------------------------------------------------------------- LOSS FOR THE PERIOD (1,450,183) (666,477) (2,054,764) ---------------------------------------------------------------------------------------------- Basic and diluted loss per ordinary share (cents) 3 1.46 0.67 2.07 There is no difference between the loss on ordinary activities before taxationand the loss for the financial period stated above and their historical costequivalents. There are no recognised gains or losses other than those stated above. Consolidated Balance Sheet Unaudited Unaudited Audited As at As at As at 30 Jun 2006 31 Jul 2005 31 Dec 2005 US$ US$ US$ Note---------------------------------------------------------------------------------------------- FIXED ASSETS Intangible assets 4 51,525,289 48,124,462 48,551,913 Tangible assets 5 10,562,016 53,977 453,184 ---------------------------------------------------------------------------------------------- TOTAL FIXED ASSETS 62,087,305 48,178,439 49,005,097 CURRENT ASSETS Debtors - amounts falling due 6 372,897 35,523,679 5,246,275within one year Cash at bank 11,750,911 81,966 21,345,703---------------------------------------------------------------------------------------------- 12,123,808 35,605,645 26,591,978 CREDITORS - AMOUNTS FALLING DUEWITHIN ONE YEAR 7 (935,606) (7,616,338) (798,213)---------------------------------------------------------------------------------------------- NET CURRENT ASSETS 11,188,202 27,989,307 25,793,765 ---------------------------------------------------------------------------------------------- NET ASSETS 73,275,507 76,167,746 74,798,862 ---------------------------------------------------------------------------------------------- CAPITAL AND RESERVES Called up share capital 1,782,605 1,782,605 1,782,605 Share premium account 30,279,301 30,279,301 30,279,301 Merger reserve 46,206,390 46,206,390 46,206,390 Profit and loss account (4,992,789) (2,100,550) (3,469,434) ---------------------------------------------------------------------------------------------- CAPITAL EMPLOYED 73,275,507 76,167,746 74,798,862 ---------------------------------------------------------------------------------------------- Consolidated Cash Flow Statement Unaudited Unaudited Audited Period from 6 months 6 months 1 Feb 2005 to 30 Jun to 31 Jul to 31 Dec 2006 2005 2005 US$ US$ US$ Note NET CASH OUTFLOW FROM OPERATING ACTIVITIES 8 (1,183,268) (303,293) (7,461,090) RETURNS ON INVESTMENTS AND SERVICING OF FINANCEInterest received 370,391 986 613,400 Interest paid (13) - (8,325) ---------------------------------------------------------------------------------------------------- NET CASH INFLOW FROM RETURNS ON INVESTMENTS AND SERVICING 370,378 986 605,075OF FINANCE CAPITAL EXPENDITURE AND FINANCIAL INVESTMENTS Purchase of tangible fixed assets (5,808,526) (52,373) (486,097)Exploration and evaluation expenditure (2,973,376) (1,199,199) (1,626,651) Purchase of subsidiary undertaking - - (2,000,000) ---------------------------------------------------------------------------------------------------- NET CASH OUTFLOW FROM CAPITAL EXPENDITURE AND FINANCIAL (13,131,902) (1,251,572) (4,112,748)INVESTMENTS NET CASH OUTFLOW BEFORE USE OF LIQUID RESOURCES AND FINANCING (9,594,792) (1,553,879) (10,968,763) FINANCING Issue of ordinary shares, net of expenses - 30,736,901 30,736,901 Funds due from share issue, net of expenses - (30,736,901) - Shares issued for cash in subsidiary - 663,539 663,539 Repayment of loans - - (58,280) ---------------------------------------------------------------------------------------------------- (DECREASE)/INCREASE IN CASH FOR THE PERIOD (9,594,792) (890,340) 20,373,397 ---------------------------------------------------------------------------------------------------- RECONCILIATION OF CASH BALANCES Cash at start of period 21,345,703 972,306 972,306 (Decrease)/Increase in cash for the period (9,594,792) (890,340) 20,373,397 ----------------------------------------------------------------------------------------------------- CASH AT END OF THE PERIOD 11,750,911 81,966 21,345,703 ----------------------------------------------------------------------------------------------------- Notes to the financial statements 1. Basis of preparation Anglo Asian Mining PLC ("Anglo Asian" or the "Company") was incorporated on 9September 2004 and its Ordinary Shares were listed on the AIM market of theLondon Stock Exchange on 29 July 2005 (the "Listing") having become the newparent company of Anglo Asian Operations Limited Group on 24 June 2005. AngloAsian Operations Limited was incorporated on 5 February 2004. To provide information which is meaningful to the Company's shareholders, theDirectors believe that it is necessary to prepare the results on the basis thatthe Anglo Asian Group had existed from the date of incorporation of Anglo AsianOperations Limited. The Directors believe that this information reflects theongoing operations of the Group more clearly. The combination of Anglo Asianwith the Anglo Asian Operations Group has been accounted for as a groupreconstruction under the provisions of FRS 6 ("Mergers and Acquisitions") and ispresented as if the Company had been the holding company and intermediateholding company, respectively, of the Group for each period presented. These June 2006 interim consolidated statements are for the six months ended 30June 2006 and have been prepared in accordance with applicable United Kingdomaccounting standards. The accounting policies are consistent with thosedisclosed in the Annual Report and Accounts for the eleven months to December2005. These interim financial statements have been prepared under the historical costconvention. 2. Comparative period The Comparative period accounts for 31 December were drawn up for the 11 monthperiod from 1 February 2005 to 31 December 2005 following the change in theaccounting reference date from 31 January to 31 December. The Comparative periodfor 31 July 2005 is for the 6 month period from 1 February 2005 to 31 July 2005. 3. Earnings per ordinary share Basic earnings per share on the loss forthe period Unaudited Unaudited Audited Period from 6 months 6 months 1 Feb 2005 to 30 Jun to 31 Jul to 31 Dec 2006 2005 2005 ------------------------------------------------------------------------------------ Loss for the financial period (US$) (1,450,183) (666,477) (2,054,764) Number of shares of the Company in issue 99,171,800 99,171,800 99,171,800 Proforma loss per share for the period (US cents) (1.46) (0.67) (2.07) The proforma loss per share ("EPS") calculation has assumed that the number ofOrdinary Shares in issue immediately after Listing (being 99,171,800) had beenin issue from 1 February 2005. The Directors believe that this proforma EPSprovides a more meaningful comparison of the Group's ongoing business than usingthe statutory EPS which would only reflect shares issued at the date of Listing.Basic and dilutive EPS are the same because the only outstanding share optionsare anti-dilutive as the Group has made a loss. 4. Intangible fixed assets Audited Unaudited Unaudited US$ US$ US$ 1 Jan 2006 Additions 30 Jun 2006 ---------------------------------------------------------------------------------- Mining rights 46,925,262 - 46,925,262 Exploration and evaluation expenditure 1,626,651 2,973,376 4,600,027 ---------------------------------------------------------------------------------- 48,551,913 2,973,376 51,525,289 ---------------------------------------------------------------------------------- 5.. Tangible fixed assets Asset in course of Temporary Plant & Motor Office Leasehold Total construction buildings equipment vehicles equipment improvements US$ US$ US$ US$ US$ US$ US$Group--------------------------------------------------------------------------------------------------------------------CostAs at 1 January 2006(Audited) - 84,286 82,391 58,516 141,180 124,815 491,188 Additions 9,734,707 31,169 34,061 29,310 151,217 178,062 10,158,526 -------------------------------------------------------------------------------------------------------------------- As at 30 June 2006(Unaudited) 9,734,707 115,455 116,452 87,826 292,397 302,877 10,649,714 -------------------------------------------------------------------------------------------------------------------- AccumulateddepreciationAs at 1 January 2006(Audited) - (2,107) (10,298) (7,314) (16,725) (1,560) (38,004) Charge for half year - (2,311) (11,140) (8,612) (25,342) (2,289) (49,694) --------------------------------------------------------------------------------------------------------------------- As at 30 June 2006(Unaudited) - (4,418) (21,438) (15,926) (42,067) (3,849) (87,698) --------------------------------------------------------------------------------------------------------------------- Net book valueAs at 1 January 2006(Audited) - 82,179 72,093 51,202 124,455 123,255 453,184 --------------------------------------------------------------------------------------------------------------------- Aa at 30 June 2006(Unaudited) 9,734,707 111,037 95,014 71,900 250,330 299,028 10,562,016 --------------------------------------------------------------------------------------------------------------------- The asset in course of construction comprises costs incurred to acquire,dismantle and containerise a gold processing plant located in Australia. Theaddition in the period of $9,734,707 includes the advances to acquire fixedassets of $4,350,000 paid in 2005. 6. Debtors Unaudited Unaudited Audited US$ US$ US$ As at As at As at 30 Jun 31 Jul 31 Dec 2006 2005 2005 ---------------------------------------------------------------------------------- Prepayments 109,530 96,003 567,768HM Revenue & Customs 28,673 177,899 233,337Other debtors 234,694 14,577 95,170Advances to acquire fixed asset - - 4,350,000Share capital receivable - 35,235,200 - ---------------------------------------------------------------------------------- 372,897 35,523,679 5,246,275 ---------------------------------------------------------------------------------- The advances to acquire fixed assets have been capitalised as asset in course ofconstruction (note5). 7. Creditors Amounts falling due within oneyear: Unaudited Unaudited Audited US$ US$ US$ As at As at As at 30 Jun 31 Jul 31 Dec 2006 2005 2005 ----------------------------------------------------------------------------------- Trade creditors 362,034 758,676 213,776Other creditors 38,832 394,879 4,910Deferred purchase consideration - 2,000,000 -Accruals 534,740 4,404,503 579,527Loans - 58,280 - ----------------------------------------------------------------------------------- 935,606 7,616,338 798,213 ----------------------------------------------------------------------------------- 8. Reconciliation of operating loss to net cash flow from operating activities Unaudited Unaudited Audited Period from 6 months 6 months 1 Feb 2005 to 30 Jun to Jul 2005 to 31 Dec 2006 2005 US$ US$ US$ -------------------------------------------------------------------------------------- Operating loss (1,820,561) (662,745) (2,659,839)Depreciation 49,694 3,487 38,004Decrease/(Increase) in debtors and 523,378 (287,340) (5,245,136)prepaymentsIncrease in creditors and accruals 137,393 731,892 475,065Exchange differences (73,172) (88,587) (69,184) -------------------------------------------------------------------------------------- Net cash outflow from operating activities (1,183,268) (303,293) (7,461,090) -------------------------------------------------------------------------------------- This information is provided by RNS The company news service from the London Stock Exchange