🕐20.09.11 - 10:00 Uhr

ANGLO ASIAN MINING: NUMIS MORNING NOTE (SP 38P BUY 70P)



Numis GTFV: The Morning Miner * Anglo Asian (Buy 70p).

Interims.

With production known, the focus is on cash operating costs; which were higher than expected at $445/oz (vs $358/oz for FY 10).

A lower depreciation charge saw H1 PBT $14.2m in line with our forecast $13.5m.

FY 11 production guidance is reduced slightly to 58-60,000oz (from "minimum of 60,000oz").

The main hit on output/costs was from lower leaching rates in transition ore with increased chemical/reagent usage, as well as higher labour costs and general inflationary pressure.

We expect some clawback, as there were also one-off effects from the exceptionally harsh winter; plus AAZ also expect to open up further known oxide reserves which, together with finer crushing of transition ore, will help leaching rates/recoveries.

Exploration remains a key focus and AAZ expect to announce an updated JORC resource in Q1 2012.

We retain our Buy recommendation and expect a higher cost deck to see a small downgrade of around 5% to our target price once we have worked through the numbers.

Currently trading at just under 1.0x NAV and 3.5x average 2012/13 cash flow.

AAZ remains a solid producer with good exposure to the gold price and upside from exploration. * Commodities.

Copper prices fell to the lowest level this year, down 1.7%, before rebounding slightly this morning as the record lows piqued investor interest.

A recent Bloomberg survey showed that gold prices are expected to rise to an average of $2038 by the end of the year, before peaking at $2268 next year
Anglo Asian Mining plc / Ticker: AAZ / Index: AIM / Sector: Mining 20 September 2011 Anglo Asian Mining plc (Anglo Asian or the Company) Interim Results Anglo Asian Mining plc, the AIM listed emerging gold producer, is pleased to announce its interim results for the six months ended 30 June 2011. Overview * Profit before tax up 129% to US$14.2 million (30 June 2010: US$6.2 million) * Gross profit up 62.5% to US$19.8 million (2010: US$12.3 million) * Revenue up 35.6% to US$38.5 million (2010: US$28.4 million) * Operating cash flows before movement in working capital of US$24.8 million (2010: US$18.6 million) * Gold production at Gedabek gold/copper mine for the six months to 30 June 2011 totalled 28,610 ounces of gold * Gold production target for FY 2011 between 58,000 ounces to 60,000 ounces * Produced gold at an average cash operating cost of US$445 per ounce of gold including the Government of Azerbaijans share and US$524 per ounce of gold net of the Government of Azerbaijans share * Feasibility study in progress for new agitation leaching plant at Gedabek to improve total gold recovery and increase life of mine * First sales of copper concentrate from SART operations at Gedabek recorded of US$2.1 million * Repaid US$12.6 million of loans to International Bank of Azerbaijan - outstanding loans at 30 June 2011 total US$18.0 million (2010: US$42.1 million) * Focussed on developing 1,962 sq km gold/copper exploration portfolio with the aim of replicating success at Gedabek and developing additional mining operations Chairmans Statement During the period under review we have continued our progress as a profitable gold mining company focussed in Central Asia, and have been active in developing and implementing plans to ensure the future growth and success of our flagship Gedabek gold/copper mine (Gedabek) and two mining development Contract Areas, Gosha and Ordubad, in Azerbaijan.

Additionally, we have implemented defined exploration and development programmes across each of these Contract Areas to delineate and upgrade our resource base, which currently stands at 791,000 ounces (oz) of gold, 49,300 tonnes of copper and 7,597,000 oz of silver for all categories. At Gedabek, the first gold mine in Azerbaijan in modern times, gold production for the six month period to 30 June 2011 totalled 28,610 oz (2010: 28,497 oz), with an average cash operating cost of US$445 per oz (2010: US$324) of gold including the Government of Azerbaijans share and US$524 per oz (2010: US$372) of gold net of the Government of Azerbaijans share.

This low cash operating price is up slightly on last year mainly due to the increased consumption of chemicals and reagents, an increase in employee numbers, the impact of lower grade in 2011 compared to 2010 and general inflationary increases.

In terms of gold sales completed for the first half of the year, Anglo Asian sold 24,586 oz at an average of US$1,450 per oz (2010: 24,460 oz at an average of US$1,155).

As a result of solid gold sales, combined with the buoyant gold price environment, we have achieved a profit before tax of US$14.2 million (2010: US$6.2 million) and operating cash flow of US$16.2 million (2010: US$13.1 million) for the period. Our headline gold production figure was 28,500 oz of gold, which was slightly behind managements target of 30,000 oz of gold for the half year period.

This slight drop in gold production is due to a number of factors relating to a change in the physical characteristics of the ore, whereby a change in density and structure associated more with transitional ore is affecting the leach rates and in turn gold recovery and production.

Channelling has also occurred in one of the cells as a result of harsh winter conditions. In order to address these processing difficulties, we have implemented initiatives which include two-shift drilling for blasting and have employed additional excavators to accelerate waste removal.

This will open up areas of known oxide ore over the Gedabek Mine, which will deliver the leaching characteristics more suitable to the heap leach process.

We have also started to crush the ore more finely to help with cyanide leaching.

Waste removal has increased to approximately 6,000m3 per day; this will rise further when our contractor steps up the haulage of waste to leach pad # 4. In terms of processing, during the first half of the year we transferred 418,526 tonnes of dry ore onto the leach pad with an average gold content of 3.34 g/t (2010: 370,000 tonnes at an average grade of 4.4 g/t).

The reduced grade in 2011 is in line with expectations from the Companys mine plan. To ensure the long-term success of Gedabek as a leading gold/ copper mine in the Central Asian region we are continually looking at ways to improve operational efficiencies and production.

One primary measure of the efficiency of the plant is the gold recovery rate, and in view of this we have entered into an agreement with mining consultants Arcardis Chile with regards to undertaking a feasibility study to assess the potential benefits of building a new agitation leaching plant.

This plant would process high grade ore and additional resources that are not suitable for heap leaching, thereby improving total gold recoveries at Gedabek.

Agitation leaching recovery rates for mineral extraction are typically measured at over 90% compared to circa 70% typically achieved in heap leaching.

Additionally, residual gold in high grade ore that has been processed by heap leaching and left on the heap leach pad during 2009 through to the end of 2011 could be processed through agitation leaching, again improving total metal extraction from Gedabeks orebody.

We are expecting the feasibility study to be completed by October 2011 and look forward to reporting on these developments in due course. In terms of copper production at Gedabek, our Sulphidisation, Acidification, Recycling, and Thickening (SART) plant, which recovers copper in the form of a precipitated copper sulphide concentrate containing silver with commercial value, has seen increased production.

Copper concentrate produced for the first half of the year totalled 433 tonnes, which contained 261 recovered tonnes of copper, 50,739 oz of silver and an additional 109 oz of gold.

The SART plant is currently running at 75% capacity and we are on track to achieve the production budgets.

The SART plants full capacity is 1,800 tonnes of copper concentrate with copper recoveries projected to be 50-70% and silver recoveries of 4,000 - 6,000 g/t. We recorded our first copper concentrate sales in the first half of 2011.

Revenue of US$2.1 million was generated from the Companys 87.25% share of the sale of 90 tonnes of payable copper, 29,132 oz of payable silver and 335 oz of payable gold.

Subsequent to the period end, further shipments of copper concentrate have been loaded and sales will be finalised over the coming months.

At the end of August 2011, there was a stockpile of copper concentrate containing approximately 383 tonnes of copper, 2,422 kg of silver and 3kg of gold.

We are in discussions with our government partners and potential buyers about the sale of this stockpile and expect to sign an agreement in regards to this in the near future. Exploration remains an important part of our focus to increase our current resource base at Gedabek of 791,000 oz of gold 49,300 tonnes of copper and 7,597,000 oz of silver for all categories and define maiden resources at Gosha and Ordubad Contract Areas to prove their economic potential and in turn develop additional mining operations. In order to increase the life of mine at Gedabek, which currently stands at 300,000 oz of gold over a six year period, we have undertaken an advanced exploration programme comprising a two phase drilling programme.

Phase 1 drilling, which was completed February 2011, comprised 61 holes over 6,000m and concentrated within the boundaries of the existing pit.

The results, which are presently being assessed by a third party Qualified Person, will be announced to the market shortly.

In the first quarter of 2011 we commenced Phase 2 of the exploration programme.

So far 47 drill holes with a total of 7,150m of drilling have been completed and some of the assays have been received.

Further drill holes have been planned as the ore body shows extensions towards the south of the mine. Other exploration activities continue within the Gedabek Contract Area, namely at the Maarif target.

To date, 1,630m of the planned 3,000m drilling programme (previously 7,000m) has been completed at Maarif, and the samples have been sent for independent assay.

Priority for drilling equipment has been given to Phase 2 drilling at Gedabek, which has lead to the Maarif programme being reduced for the year.

Drilling was also due to take place at the Cholpan target, a highly prospective area in close proximity to the existing mine, but this has been delayed whilst further geological mapping is undertaken prior to commencing drilling.

Additionally, remote sensing has been conducted across the entire Gedabek Contract Area with several potential anomalies detected for further investigations, which are planned for 2012. It is our intention to issue an upgraded JORC resource report by the first quarter of 2012 with a JORC compliant reserve estimate to follow soon after. At Gosha, during the period we were delighted to announce that we submitted a Notice of Discovery to the Government of Azerbaijan, following an active exploration programme in 2010, which included 3,000m of drilling and 300m of adit and sample work.

We are on course to submit a Development and Production Programme in October 2011 to the Government as per the Product Sharing Agreement (PSA) rules and we will update shareholders on the programmes approval in due course.

It is the Companys intention to develop a small gold mine with production by the second half of 2012. Exploration work continues in the Ordubad Contract Area focusing on the Agyurt deposit.

The Soviet-era galleries have been re-sampled and further underground drilling is planned for 2011. We continue to work closely with the Government of Azerbaijan and are pleased with the level of support it gives us.

Additionally, we have a strong relationship with the International Bank of Azerbaijan (IBA), which is majority owned by the Government of Azerbaijan.

During the first half of 2011 we repaid US$12.6 million of our loan with the IBA, bringing the outstanding loan balance to US$17.0 million as at 30 June 2011.

Including our loan of US$1.0 million from our CEO Reza Vaziri, the value of total outstanding loans at 30 June 2011 is US$18.0 million (2010: US$42.1 million).

A further repayment of US$1.0 million has been made subsequent to the balance sheet date.

The next repayment to IBA of US$0.6 million is due in March 2012, although the Company will continue to repay this loan ahead of schedule as cash flow allows. As mentioned earlier, we have a PSA with the Government of Azerbaijan whereby until the time Anglo Asian has recovered its carried forward, unrecovered costs, the Government of Azerbaijan effectively takes 12.75% of the commercial products of each mine, with the Company taking 87.25%.

We expect to continue retaining 87.25% of the commercial products until at least the end of 2011. The Company made a profit before tax of US$14.2 million in the period to 30 June 2010 (2010: US$6.2 million).

Revenue of US$38.5 million (2010: US$28.4 million) was generated from gold sales of 24,586 oz (2010: 24,360 oz) at an average price of $1,450 per oz (2010: US$1,155 per oz), silver sales of US$0.8 million (2010: US$0.3 million) and copper concentrate sales of US$2.1 million (2010: nil). The cost of sales for the period amounted to US$18.7 million (2010: US$16.1 million), resulting in a gross profit of US$19.8 million (2010: US$12.3 million). Administration costs were US$3.1 million (2010: US$2.3 million) and finance costs were US$1.9 million (2010: US$3.4 million), most of which related to interest on the loans from IBA. Net cash inflow from operating activities was US$16.2 million (2010: US$13.1 million).

This was utilised to fund the purchase of tangible assets of US$2.8 million, exploration expenditure of US$2.7 million, a reduction in loans of US$12.6 million and payment of interest of US$1.8 million. Current assets have increased from US$25.8 million at 31 December 2010 to US$31.7 million at 30 June 2011 (2010: US$20.6 million).

The increase is mostly as a result in increase of gold work in progress and finished inventory.

Increased lead time on the leach pad has led to more ounces in stock and increased production cost has led to a higher cost per unit of stock, when compared to 31 December 2010.

The other main factor affecting current assets is that the Company has made an advance payment of profit tax for 2011.

Under the terms of the PSA, the Company must estimate its profit tax liability for the financial year and pay one-quarter of this amount within 25 days following the end of the calendar quarter in the form of an advance.

Following the first quarter, an amount of US$2.1 million was paid (2010: nil).

Subsequent to the balance sheet date, a further amount of US$2.1 million was paid.

At the balance sheet date, the Company believes that it has unutilised carried-forward tax losses in its subsidiary, R.V.

Investment Group Services LLC.

However, the Company expects that these carried-forward tax losses will be fully exhausted within 2011 and profit tax will be assessed. Maintaining good health, safety, social and environmental standards remains a priority to us and in line with this we have a Health, Safety, Environment and Technology Committee (HSET) at Board level, under the chairmanship of Professor John Monhemius, one of our Non-executive Directors.

This committee has the responsibility to oversee all aspects of the HSET performance of the Company and to make recommendations to the Board.

During the period we appointed an experienced Health, Safety and Environment manager as a full-time member of our corporate management team.

We have approximately 450 personnel working in the Company. With the buoyant gold price set to continue and speculation that the price range of US$1,700 to US$1,900 will be maintained, we remain confident of the on-going profitability and success of our flagship Gedabek operation.

Positive actions are being taken to ensure the smooth running of gold production for the remainder of the financial year and beyond.

In addition, copper production has been increasing quarter on quarter, which will add increased profitability to our bottom line once sales of the concentrate have been finalised further.

I also look forward to reporting on the development of our extensive exploration portfolio and in turn achieving our milestones towards building a multiple gold mine company. Last but not least, I would like to thank the employees, my fellow Directors, advisors and shareholders for their continued support and I look forward to updating investors regularly on the progress of Anglo Asian, a highly profitable, cash-generative, producing gold and copper company in Azerbaijan. Khosrow Zamani Non-executive Chairman Interim consolidated income statement For the 6 months ended 30 June 2011
Unaudited Unaudited
Six months to Six months to
30 June 30 June
2011 2010
Notes US$ US$ Revenue
38,527,107 28,400,909 Cost of sales
(18,743,741) (16,149,858) Gross profit
19,783,366 12,251,051 Administrative expenses
(3,105,133) (2,273,163) Other operating expense
(583,445) (334,696) Operating profit
16,094,788 9,643,192 Finance costs
(1,938,335) (3,408,929) Profit before tax
14,156,453 6,234,263 Income tax expense 3 (5,817,411) - Profit after tax
8,339,042 6,234,263 Profit per share for the period attributable to the equity holders of the parent
8,339,042 6,234,263 Basic cents per share 4 7.51 5.69 Diluted cents per share 4 7.36 5.61
Interim consolidated statement of comprehensive income For the 6 months ended 30 June 2011
Unaudited Unaudited
Six months to Six months to
30 June 30 June
2011 2010
US$ US$ Profit for the period 8,339,042 6,234,263 Other comprehensive income - - Total comprehensive profit for the period 8,339,042 6,234,263
Attributable to the equity holders of the parent 8,339,042 6,234,263
Interim consolidated balance sheet As at 30 June 2011
Unaudited As at 30 June 2011 Audited As at 31 December 2010 Unaudited As at 30 June 2010
Notes US$ US$ US$ Non-current assets
Intangible assets 5 33,903,822 34,469,441 36,356,328 Property, plant and equipment 6 40,843,964 43,290,670 47,065,817 Non-current prepayments
172,601 284,461 350,284
74,920,387 78,044,572 83,772,429 Current assets
Trade receivables and other assets 7 8,106,682 4,322,094 4,831,166 Inventories 8 22,180,233 16,354,968 14,405,616 Cash and cash equivalents
1,408,998 5,110,851 1,328,431
31,695,913 25,787,913 20,565,213 Total assets
106,616,300 103,832,485 104,337,642 Current liabilities
Trade and other payables
(10,396,577) (9,263,458) (11,270,735) Interest bearing loans and borrowings 9 (7,141,997) (10,641,996) (15,053,329)
(17,538,574) (19,905,454) (26,324,064) Net current assets/(liabilities)
14,157,339 5,882,459 (5,758,851) Non-current liabilities
Provision for rehabilitation
(1,397,378) (1,363,970) (2,018,892) Interest bearing loans and borrowings 9 (10,897,666) (19,983,674) (27,081,874) Deferred tax liability
(10,378,345) (4,560,934) -
(22,673,389) (25,908,578) (29,100,766) Total liabilities
(40,211,963) (45,814,032) (55,424,830) Net assets
66,404,337 58,018,453 48,912,812 Equity
Share capital 10 1,967,704 1,957,424 1,944,991 Share premium account
32,133,847 32,101,124 32,024,407 Share-based payment reserve
642,216 638,377 625,066 Merger reserve
46,206,390 46,206,390 46,206,390 Accumulated loss
(14,545,820) (22,884,862) (31,888,042) Total equity
66,404,337 58,018,453 48,912,812
Interim consolidated cash flows statement For the six months ended 30 June 2011
Unaudited Unaudited
Six months to Six months to
30 June 30 June
2011 2010
Notes US$ US$ Net cash inflow generated from operating activities 11 16,200,374 12,997,854 Investing activities
Expenditure on property, plant and equipment and mine development
(2,822,501) (7,285,202) Expenditure on intangible assets
(2,733,586) (1,021,703) Net cash used in investing activities
(5,556,087) (8,306,905) Financing activities
Shares issued in lieu of cash and for options exercised
43,003 95,650 Proceeds from borrowings
- 3,099,598 Repayment of borrowings
(12,588,000) (3,947,731) Interest paid
(1,801,143) (3,419,583) Net cash used in financing activities
(14,346,140) (4,172,066) Net (decrease)/ increase in cash and cash equivalents
(3,701,853) 518,883 Cash and cash equivalents at beginning of period
5,110,851 809,548 Cash and cash equivalents at end of period
1,408,998 1,328,431
Interim consolidated statement of changes in equity For the six months ended 30 June 2011
Share-based
Share Share payment Merger Accumulated Total
capital premium reserve Reserve loss Equity
Notes US$ US$ US$ US$ US$ US$ At 1 January 2011
1,957,424 32,101,124 638,377 46,206,390 (22,884,862) 58,018,453 Total comprehensive income
- - - - 8,339,042 8,339,042 Shares issued
10,280 32,723 - - - 43,003 Share based payment charge for the period
- - 3,839 - - 3,839 At 30 June 2011
1,967,704 32,133,847 642,216 46,206,390 (14,545,820) 66,404,337
For the six months ended 30 June 2010
Share-based
Share Share payment Merger Accumulated Total
capital premium reserve Reserve loss Equity
Notes US$ US$ US$ US$ US$ US$ At 1 January 2010
1,934,363 31,939,385 621,802 46,206,390 (38,122,305) 42,579,635 Total comprehensive income
- - - - 6,234,263 6,234,263 Shares issued
10,628 85,022 - - - 95,650 Share based payment charge for the period
- - 3,264 - - 3,264 At 30 June 2010
1,944,991 32,024,407 625,066 46,206,390 (31,888,042) 48,912,812
Notes to the financial statements
1.

Basis of preparation Anglo Asian Mining is a public company listed on the Alternative Investment Market (AIM).

Its principal activity is building a portfolio of mining operations within Azerbaijan.

The impact on seasonality or cyclicality on operations is not regarded as significant to the interim financial statements. The financial information has been prepared in accordance with IAS 34 Interim Financial Reporting as issued by the International Accounting Standards Board.

The information for the half year ended 30 June 2011 does not constitute statutory accounts as defined in section 435 of the Companies Act 2006.

A copy of the statutory accounts for the year ended 31 December 2010 has been delivered to the Registrar of Companies.

The auditors report on those accounts was not qualified and did not contain statements under section 498(2) or 498(3) of the Companies Act 2006. The financial information has not been audited and has been prepared on the historical cost basis.

The principal accounting policies adopted are consistent with those adopted in the annual accounts to 31 December 2010. The interim report was approved by the Board of Directors on 19 September 2011. The Directors have prepared the consolidated financial statements on a going concern basis after reviewing the Groups cash position for the period to 30 September 2012 and satisfying themselves the Group will have sufficient funds on hand to realise their assets and meet their obligations as and when they fall due. 2.

Operating segments The operations of the Group are all located within Azerbaijan.

The Group has one producing asset: its gold, silver and copper mine in Gedabek.

The Company produces gold-silver dore bullions and copper concentrate.

Gold-silver bullions are sold to the Groups gold refinery, MKS Finance SA, based in Switzerland.

Copper concentrate is sold to Seagate Minerals & Metals.

The management of the Group does not segment the business when evaluating its performance. 3.

Taxation Corporation tax is calculated at 32% (as stipulated in the PSA for RV Investment Group Services LLC in Azerbaijan, the entity that contributes the most significant portion of profit before tax) of the estimated assessable profit for the year.

According to the terms of the PSA, the Groups subsidiary, RV Investment Group Services LLC, should submit a profit tax return for provisional profit tax in the first quarter of the year when it expects a taxable profit.

In May 2011, the Company made the first quarterly provisional profit tax payment of $2.1 million, representing one-quarter of the estimated 2011 profit tax payable at the end of each quarter.

At the balance sheet date, RV Investment Group Services LLC estimates it has unutilised tax losses which will be fully utilised in the second half of 2011 and corporation tax will be assessable for 2011. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised.

Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. At the balance sheet date, the Group has unused tax losses within the Parent and subsidiary (Anglo Asian Operations Limited) available for offset against future profits.

No deferred tax asset has been recognised in respect of such losses due to the unpredictability of future profit streams.

Unused tax losses may be carried forward indefinitely. Profit tax charged during the period represents the change in deferred tax liability during the period incurred by RV Investment Group Services LLC representative office registered in Azerbaijan.
4.

Earnings per ordinary share
Unaudited
Unaudited
6 months to
6 months to
30 June 2011
30 June 2010
US$
US$
Earnings per ordinary share
Profit after tax
8,339,042
6,234,263
Basic earnings per share
7.51
5.69
Diluted earnings per share
7.36
5.61
Number
Number
Weighted average number of shares:
For basic earnings per share
110,993,882
109,592,494
For diluted earnings per share
113,178,337
111,211,011
5.

Intangible assets Evaluation and exploration assets
Gedabek Gosha Ordubad Total
US$ US$ US$ US$ Cost:
As at 1 January 2010
746,957 771,039 1,298,097 2,816,093 Additions
1,285,318 1,753,680 410,472 3,449,470 As at 31 December 2010
2,032,275 2,524,719 1,708,569 6,265,563 Additions
1,387,688 1,091,772 170,847 2,650,307 As at 30 June 2011
3,419,963 3,616,491 1,879,416 8,915,870
Mining rights and other intangible assets
Cost: Mining rights US$ Other intangible assets US$ Total US$ As at 1 January 2010 41,925,262 314,245 42,239,507 Additions - 27,544 27,544 As at 31 December 2010 41,925,262 341,789 42,267,051 Additions - 83,279 83,279 As at 30 June 2011 41,925,262 425,068 42,350,330
Accumulated depreciation and impairment
As at 1 January 2010 (6,293,360) (17,145) (6,310,505) Charge for the year (7,682,138) (70,530) (7,752,668) As at 31 December 2010 (13,975,498) (87,675) (14,063,173) Charge for the period (3,266,602) (32,603) (3,299,206) As at 30 June 2011 (17,242,100) (120,278) (17,362,378) Carrying amount
As at 31 December 2010 27,949,764 254,114 28,203,878 As at 30 June 2011 24,683,162 304,790 24,987,952
6.

Property, plant and equipment
Temporary Plant and Producing Motor Office Leasehold Assets under
buildings Equipment mines Vehicles equipment improvements Construction Total
US$ US$ US$ US$ US$ US$ US$ US$ Cost
As at 1 January 2010 302,757 6,023,811
39,414,228 432,938 1,242,469 438,357 5,242,676 53,097,236 Capitalisation of interest - -
- - - - 81,843 81,843 Additions - 818,692 2,685,583 122,207 608,563 11,738
4,019,310 8,266,093 Transfer to producing mines - - 6,398,124 - - - (6,398,124) - Decrease in Rehabilitation Provision - - (243,557) - - - - (243,557) As at 31 December 2010 302,757 6,842,503 48,254,378 555,145 1,851,032 450,095 2,945,705 61,201,615 Additions - 237,011 - 19,936 209,051 - 2,468,363 2,934,361 Transfer to producing mines - - 458,613 - - - (458,613) - As at 30 June 2011 302,757 7,079,514 48,712,991 575,081 2,060,083 450,095 4,955,455 64,135,976 Accumulated depreciation
and impairment
As at 1 January 2010 (152,602) (1,119,602) (2,566,134) (200,833) (508,271) (251,135) - (4,798,577) Charge for year (37,845) (915,420) (11,692,141) (116,269) (295,078) (55,614) - (13,112,367) As at 31 December 2010 (190,447) (2,035,022) (14,258,275) (317,102) (803,349) (306,749) - (17,910,944) Charge for period (20,168) (497,519) (4,630,313) (53,412) (151,525) (28,131) - (5,381,068) As at 30 June 2011 (210,615) (2,532,541) (18,888,588) (370,514) (954,874) (334,880) - (23,292,012) Carrying amount
As at 31 December 2010 112,310 4,807,481 33,996,103 238,043 1,047,682 143,346 2,945,705 43,290,670 As at 30 June 2011 92,142 4,546,973 29,824,403 204,567 1,105,209 115,215 4,955,455 40,843,964
7.

Trade receivables and other assets
Unaudited Audited
As at As at
30 June 31 December
2011 2010
US$ US$ Gold held on behalf of the Government of Azerbaijan 1,421,794 1,533,403 Receivable for copper concentrate of the Government of Azerbaijan 308,478 - VAT refund due 1,808,072 1,457,609 Trade receivables 404,171 240,664 Prepayments 242,203 235,445 Advances 1,760,884 845,858 Advance payment for profit tax 2,161,080 - Other receivables - 9,115
8,106,682 4,322,094
The carrying amount of trade and other receivables approximates the fair value. The VAT refund due at 30 June 2011 and 31 December 2010 relates to VAT paid on purchases. The Group trade receivable relates to its copper concentrate sales that took place in the period.

In 2011, the Group had its first sale of copper concentrate.

Sale of copper is recognized when risk and title is substantially transferred to the buyer and metal content of concentrate and value are reasonably measurable. The gold bullion receivable on behalf of the Government of Azerbaijan relates to bullion held in the account of the Group for which the Government of Azerbaijan is the beneficial holder.

The Group holds the Governments share of the product from its mining activities and from time to time transfers that product to the Government of Azerbaijan.

A corresponding liability to the Government of Azerbaijan is included in trade and other payables. Receivable for copper concentrate of the Government of Azerbaijan represents the portion allocated to the government of Azerbaijan from joint sale of copper concentrate carried out by Group.

The same amount was recognised as payable to the government. In accordance with the terms of the PSA the Group has started payment of profit tax in advance on a quarterly basis.

No profit tax liability was incurred at 30 June 2011.

Final profit tax liability will be determined at year end and any overpayment or underpayment for actual profit tax liability will be settled in March 2012 as per the PSA. The Group does not consider any trade and other receivables as past due or impaired.
8.

Inventories
As at As at
30 June 31 December
2011 2010
US$ US$ At cost
Finished goods - bullion 999,830 833,314 Finished goods - metal in concentrate 2,268,665 1,370,286 Metal in circuit 13,516,727 11,114,620 Ore stockpiles 1,971,176 409,995 Spare parts and consumables 3,423,835 2,626,753
22,180,233 16,354,968
Following the sale of 234 dry metric tons in the first half of 2011, the balance of copper concentrate at 30 June 2011 was approximately 706 dry metric tons (31 December 2010: 483 dry metric tons). The increase in the value of ore stockpiles is due to an increased stockpile of lower grade ore which is accumulated from inception to date for usage in the future.
9.

Interest-bearing loans and borrowings
Unaudited Audited
As at As at
30 June 31 December
2011 2010
US$ US$ Loans from IBA 17,041,000 29,627,007 Loan from Reza Vaziri 998,663 998,663 Total interest bearing loans and borrowings 18,039,663 30,625,670 Loans repayable in less than one year 7,141,997 10,641,996 Loans repayable in more than one year 10,897,666 19,983,674
Loans with the International Bank of Azerbaijan carry an interest rate of 15% per annum.

There is no penalty for early repayment on any of the loans from International Bank of Azerbaijan. In the 6 months to 30 June 2011, the Group had made repayments to the International Bank of Azerbaijan of $12.6 million. Total interest accrued on interest bearing loans during the period was $1.8 million.
10.

Equity
shares US$ Ordinary shares issued and fully paid:
At 1 January 2010 108,945,949 1,934,363 Issued to directors in lieu of salary, fees and expenses 684,691 10,868 Issued to a trade creditor in lieu of cash payment 66,667 1,004 Exercise of stock options 700,000 11,189 At 31 December 2010 110,397,307 1,957,424 Exercise of stock options 650,000 10,280 At 30 June 2011 111,047,307 1,967,704
11.

Notes to the cash flow statement
Unaudited Unaudited
Six months to Six months to
30 June 30 June
2011 2010
US$ US$ Profit before tax 14,156,453 6,234,263 Adjustments for:
Finance costs 1,938,339 3,408,929 Depreciation of property, plant and equipment 5,381,068 5,629,993 Amortization of mining rights and other intangible assets 3,299,206 3,287,054 Share-based payment expense 3,839 3,264 Operating cash flows before movements in working capital 24,778,905 18,563,503 Increase in trade and other receivables (1,426,639) (994,481) Increase in inventories (5,825,267) (4,129,592) Increase/(decrease) in trade and other payables 834,455 (441,576)
18,361,454 12,997,854 Income tax paid (2,161,080) - Cash generated from operations 16,200,374 12,997,854 Net cash generated from operating activities 16,200,374 12,997,854
12.

Related party transactions Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

Transactions between the Group and other related parties are disclosed below. Trading transactions During the period, there were no trading transactions between group companies and related parties who are not members of the Group. Other related party transactions a) Mr Reza Vaziri, a director of the company, retains an indirect interest in the lease of the office in Baku, Azerbaijan.

The cost of the lease in the period was $46,384 (comparative period ended 30 June 2010: $45,765). b) In January 2011, Khosrow Zamani, a Non-executive Chairman of the Company, exercised 550,000 stock options. c) During the period $118,443 (comparative period ended 30 June 2010: $119,109) was paid to Mr Reza Vaziri for consultancy services. d) During the period, $39,618 (comparative period ended 30 June 2010: $39,618) of interest was accrued on the loan of $998,663 from Mr Reza Vaziri. e) During the period, $6,343 (comparative period ended 30 June 2010: $5,054) was paid to Professor John Monhemius, a director of the company, for consultancy services.
**ENDS*** For further information please visit www.aamining.com or contact: Reza Vaziri Anglo Asian Mining plc Tel: +994 12 596 3350 Andrew Herbert Anglo Asian Mining plc Tel: +994 12 596 3350 John Harrison Numis Securities Limited, as Nominated Adviser Tel: +44 (0) 20 7260 1000 James Black Numis Securities Limited, as Corporate Broker Tel: +44 (0) 20 7260 1000 Felicity Edwards St Brides Media & Finance Ltd Tel: +44 (0) 20 7236 1177 Hugo de Salis St Brides Media & Finance Ltd Tel: +44 (0) 20 7236 1177







Products & Services | Jobs