Interim Results

RNS Number : 6046A
Ariana Resources PLC
30 September 2015
 

 

30 September 2015

AIM: AAU

 

INTERIM RESULTS

 

Ariana Resources plc ("Ariana" or "the Company"), the gold exploration and development company focused on Turkey, is pleased to announce its unaudited interim results for the six months ended 30 June 2015.

 

Highlights:

 

·     Advancement of the Red Rabbit Gold Project ("RRGP"), Kiziltepe Mine, into construction.

 

·     Strategic investment incentives approved by the Turkish Government for Kiziltepe.

 

·     Continued progress across exploration and development portfolio - new mineralised zones at Kiziltepe to be drill tested in Q4 2015.

 

·     Kiziltepe on track to deliver first gold pour in H2 2016.

 

 

Michael de Villiers, Chairman, commented: 

 

"I am very pleased to be able to report the significant progress made by Ariana in the first half of this financial year where we are transitioning into a gold producer at our Red Rabbit Gold Project in Turkey. We have been further encouraged by results from recent work suggesting the project contains significant potential for further resource discoveries in the vicinity. The Board is looking forward the continuing the successful execution of our Company strategy and to a positive year end."

 

 

Contacts:

 

Ariana Resources plc

Tel: +44 (0) 20 7407 3616

Michael de Villiers, Chairman


Kerim Sener, Managing Director




Beaumont Cornish Limited

Tel: +44 (0) 20 7628 3396

Roland Cornish / Felicity Geidt




Beaufort Securities Limited

Tel: +44 (0) 20 7382 8300

Jon Belliss




Loeb Aron & Company Ltd.

Tel: +44 (0) 20 7628 1128

John Beresford-Peirse




IFC Advisory

Tel: +44 (0) 20 3053 8671

Tim Metcalfe

Graham Herring

Heather Armstrong


 

 

Editors' note:

 

About Ariana Resources:

 

Ariana is an exploration and development company focused on epithermal gold-silver and porphyry copper-gold deposits in Turkey.  The Company is developing a portfolio of prospective licences selected on the basis of its in-house geological and remote-sensing database, on its own in western Turkey and in Joint Venture with Eldorado Gold Corporation in north-eastern Turkey.  Eldorado owns 51% of this joint venture and are fully funding all exploration work on the JV properties, while Ariana owns 49%.  The total resource inventory within this JV is 1.09 million ounces of gold.

 

The Company's flagship assets are its Kiziltepe and Tavsan gold projects which form the Red Rabbit Gold Project.  Both contain a series of prospects, within two prolific mineralised districts in the Western Anatolian Volcanic and Extensional (WAVE) Province in western Turkey.  This Province hosts the largest operating gold mines in Turkey and remains highly prospective for new porphyry and epithermal deposits.  These core projects, which are separated by a distance of 75km, are presently being assessed as to their economic merits and now form part of a Joint Venture with Proccea Construction Co.  The total resource inventory at the Red Rabbit Project stands at 475,000 ounces of gold equivalent. 

 

Beaufort Securities Limited and Loeb Aron & Company Ltd. are joint brokers to the Company and Beaumont Cornish Limited is the Company's Nominated Adviser.

 

For further information on Ariana you are invited to visit the Company's website at www.arianaresources.com.

 

Ends

 

 



Chairman's Statement

 

During the period, the Company has successfully transitioned into the construction stage of its first mine at Kiziltepe.  This mine is part of the Red Rabbit Gold Project ("RRGP"), which the Company is developing in a 50:50 partnership with Proccea Construction Co., with development finance of US$33 million provided by Turkiye Finans Katilim Bankasi A.S.  Current progress on mine development includes the acquisition of all required freehold land, installation of perimeter security fencing and the laying of foundations for mine buildings.  Long-lead orders and selection of mining contractor have also been negotiated.  The Company remains on target for first gold pour in in the second half of 2016. 

 

The Kiziltepe Mine will be producing at a rate of approximately 20,000 ounces gold equivalent per annum over the course of eight years at an expected cash cost in the vicinity of US$600 per ounce.  It is apparent from recent work that the project contains significant potential for further resource discoveries in the vicinity and the Company is advancing to drill-testing several targets in the coming months.  The area is host to a prolific gold-bearing vein system, which at Kiziltepe contains significant quantities of silver (approaching 40 grammes per tonne of silver in Reserve) and at Kepez (up to c.380 grammes per tonne of silver in rock-chips).  On the exploration front, the work that we are progressing now is focused on the identification of new resource areas in order to enhance late-stage mine life and profitability.

 

Meanwhile we have been encouraged by the discovery of the 3 million ounce gold equivalent Hot Maden deposit by Mariana Resources and Lidya Madencilik, which sits on our doorstep at our Salinbas/Ardala Joint Venture project with Eldorado Gold Corp.  This reinforces our view that this area has the potential to host multi-million ounce gold deposits.  Ariana owns 49% of the joint venture which already contains approximately 1 million ounces in Inferred and Indicated resources, and for which a positive scoping study was completed in the period.  We have continued discussions with both Eldorado and a number of Turkish groups, on this project in order to determine the most beneficial way forward and in an effort to crystallise early value. 

 

Post the period end in July, the Company completed a placing for £1 million which strengthened the balance sheet and will enable meaningful exploration and development work to be conducted across its portfolio.  It is a rare occurrence for any mineral resources company to successfully make the transition from explorer to producer, simply because the odds on any individual discovery becoming a mine are so small.  Ariana is in the process of making this transition, reaching this point by having carefully focused its strategy and undertaking exploration in a cost-effective manner. 

 

We have made significant progress in the first half of the year and are optimistic in achieving a successful outcome to the year as we continue with our strategy in becoming a gold producer and it is my privilege to be a part of the team making this transition happen. I would like to take this opportunity to thank our employees for their hard work and dedication, and our shareholders for your support throughout the period.


 

 

 

Ariana Resources Plc

Unaudited Condensed Consolidated Interim Financial Statements

for the six months ended 30 June 2015

 

Condensed consolidated statement of comprehensive income

 




     



Note

  6 months to

30 June

2015

  6 months to

30 June

2014

12 months to

31 December

2014          



£'000

£'000

£'000

Continuing Operations










Administrative costs


(343)

(411)

(739)

General exploration expenditure


(9)

(13)

(76)

Exploration costs written-off


-

-

(65)

Other income


-

34

-

 

Operating Loss


(352)

(390)

(880)






Finance costs

4

(111)

(25)

(185)

Investment income


33

2

74

Gain on dilution of interest in joint venture

5

68

214

228

Share of (loss) of a joint venture

5

(259)

(26)

(122)

 

Loss on ordinary activities before tax


(621)

(225)

(885)






Taxation

7

-

-

-

 

Loss for the period


(621)

(225)

(885)






Other comprehensive income:





Exchange differences on translating foreign operations


(126)

(15)

(19)






Fair value adjustment on other financial asset classified as Available for sale

10

122

      (286)

(96)






Other comprehensive income for the period net of tax


(4)

(301)

(115)






Total comprehensive income for the period


(625)

(526)

(1,000)






Loss for the period attributable

to owners of the parent


(621)

(225)

(885)






Total comprehensive income attributable

to owners of the parent


(625)

(526)

(1,000)






Loss per share (pence):





Basic and diluted

8

(0.09)

(0.04)

(0.14)

 

 

 










 

 

 

Condensed consolidated interim statement of financial position

 




 

      

 

 


Note

30 June
2015

£'000

30 June

2014

£'000

31 December

2014

£'000

ASSETS





Non-current assets





Trade and other receivables


31

40

37

Other financial asset

10

-

135

13

Available for sale investments


109

109

109

Intangible exploration assets

9

2,156

1,978

2,146

Land, property, plant and equipment


329

382

369

Investment in Joint Venture

5

2,704

3,108

2,895






Total non-current assets


5,329

5,752

5,569






Current assets





Trade and other receivables


1,075

864

861

Other financial asset

10

97

325

250

Cash and cash equivalents


55

271

44

Total current assets


1,227

1,460

1,155

Total Assets


6,556

7,212

6,724






EQUITY





Called up share capital

11

5,686

5,640

5,640

Share premium

11

7,948

7,585

7,585

Other reserves


720

720

720

Share based payment reserve


578

578

578

Translation reserve


(287)

(157)

(161)

Retained earnings


(8,386)

(7,370)

(7,887)

Total equity attributable to equity holders

 of the parent


                6,259

                             

 

6,996

    6,473






Non - controlling Interest


3

-

3

 

Total equity


6,262

6,996

 

6,476

LIABILITIES





Current liabilities





Trade and other payables


294

216

248






Total current liabilities


                   294                     

216

248

 

Total Equity and Liabilities


6,556

7,212

6,724

 

 

 



 

 

 

Condensed consolidated interim statement of changes in equity


    Share  capital

    Share premium

 Other reserves

Share options

 

 

 

 

 

Trans

-lation

Reserve

Retained  losses

 

 

 

 

 

Non-controlling interests

 

 

Total attributable to equity holder of

parent


£'000

                £'000

£'000

£'000

 

£'000

£'000

      £'000

      £'000

Balance at 1 January 2014

5,550

6,900

720

578

(142)

  (6,859)

-

6,747










Changes in equity

to 30 June 2014 


















Loss for the period

-

-

-

-

-

(511)

-

(511)

Other comprehensive income

-

-

-

-

(15)

-

-

(15)










Total comprehensive income

-

-

-

-

(15)

(511)

-

(526)

Issue of share capital

90

725

-

-

-

-

-

815

Share issue costs

-

(40)

-

-

-

-

-

(40)

Transactions with owners

90

685

-

-

-

-

-

775

Balance at 30 June 2014

5,640

7,585

720

578

(157)

(7,370)

-

6,996










Changes in equity

to 31 December 2014

 









Loss for the period

-

-

-

-

-

(517)

-

(517)

Other comprehensive income

-

-

-

-

(4)

-

-

(4)

Total comprehensive income

-

-

-

-

(4)

(517)

-

(521)

Issue of share capital

-

-

-

-

-

-

-

-

Share issue costs

-

(2)

-

-

-

-

-

(2)

Non-controlling interest

-

-

-

-

-

-

3

3

Transactions with owners

-

(2)

-

-

-

-

3

1

Balance at 31 December 2014

5,640

7,583

720

578

(161)

(7,887)

3

6,476

 


 










Changes in equity to

 30 June 2015









Loss for the period

-

-

-

-

-

(621)

-

(621)

Other comprehensive income

-

-

-

-

(126)

122

-

(4)

Total comprehensive income

-

-

-

-

(126)

(499)

-

(625)

Issue of share capital

46

368

-

-

-

-

-

414

Share issue costs

-

(3)

-

-

-

-

-

(3)

Transactions with owners

46

365

-

-

-

-

-

411

Balance at 30 June 2015

5,686

7,948

720

578

(287)

(8,386)

3

6,262


Condensed consolidated interim statement of cash flows








6 months to

30 June

2015

6 months to

30 June

2014

12 months to

31 December 2014



£'000

£'000

£'000






Loss for the period


(621)

(225)

(885)

Adjustments for:





Depreciation


-

-

1

Write down of intangible exploration assets


5

-

65

Other financial asset charges


111

25

185

Foreign exchange movement


(11)

33

21

Investment income


(33)

(2)

(74)

Changes in:





Joint venture asset


191

(213)

(106)

Trade and other receivables


(133)

(92)

(88)

Trade and other payables


46

35

69

Cash used in group operations


(445)

(439)

(812)











Cash flows from investing activities





Purchase of land, property, plant and equipment


(1)

(12)

(27)

Payments for intangible assets 


(89)

(119)

(271)

Investment income


33

2

74

Net cash used in investing activities


(57)

(129)

(224)






Cash flows from financing activities





Proceeds from issue of share capital and swap repayments


513

627

868

Net cash proceeds from financing activities


513

627

868

 

Net increase/(decrease) in cash and cash equivalents


11

59

(168)

 

Cash and cash equivalents at the beginning of period


44

212

212

 

Cash and cash equivalents at end of period


55

271

44

 

 


Notes to the interim financial statements for the six months ended 30 June 2015

1. General information

 

Ariana Resources Plc (the "Company") is a public limited company incorporated and domiciled in Great Britain and whose registered office is Bridge House, London Bridge London SE1 9QR. The principal activities of the Company and its subsidiaries (the "Group") are related to the exploration for and development of gold and other minerals in Turkey. The Company's shares are listed on the Alternative Investment Market of the London Stock Exchange.

2. Basis of preparation

 

The condensed interim financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards and in accordance with International Accounting Standard 34 Interim Financial Reporting.  The condensed interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2014, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.

The condensed interim financial statements set out above do not constitute statutory accounts within the meaning of the Companies Act 2006.  They have been prepared on a going concern basis in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS) as adopted by the European Union.  Statutory financial statements for the year ended 31 December 2014 were approved by the Board of Directors on 2 June 2015 and delivered to the Registrar of Companies.  The financial information for the periods ended 30 June 2015 and 30 June 2014 are unaudited.

3. Significant accounting policies

The condensed interim financial statements have been prepared under the historical cost convention. 

The same accounting policies have been followed in these condensed interim financial statements as were applied in the preparation of the Group's financial statements for the year ended 31 December 2014.

The Group and Company financial statements have been prepared on a going concern basis. As an exploration and development company the Directors are mindful that there is an ongoing need to monitor overheads and cash associated with the exploration and development programme; and to raise additional working capital on an ad hoc basis to support the Group's activities.

 

The Group expects to incur further losses in the development of its business. The Group's ability to continue its operations and to realise its assets at their carrying values is dependent upon obtaining additional financing and generating revenues sufficient to cover its operating costs. These financial statements do not give effect to any adjustments which would be necessary should the Group be unable to continue as a going concern and therefore be required to realise its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying financial statements.

 

The Company raised £414,000 in the six month period under review and £1m after the period end in July 2015 and the Directors remain confident that if future funding is required they will be able to raise this finance to meet the Group exploration and development programme and associated overhead cost.

 

 

4. Finance cost                                                                                                                                                             


6 months to

30 June

2015

6 months to

30 June

2014

12 months to

31 December 2014


£'000

£'000

£'000





Swap charges on other financial assets

111

25

185

 

 



 

  5. Interest in joint venture

The Group accounts for its joint venture with Proccea Construction Co in Zenit Madencilik San ve Tic AS ("Zenit")  using the equity method in accordance with IAS 28 (revised).  At 30 June 2015 the Group has a 69.58% (2014: 73.47%) interest in Zenit.

 

Summarised financial information of the joint venture, based on its translated financial statements, and reconciliations with the carrying amount of the investment in the consolidated financial statements are set out below:-


 


Summarised statement of financial position

30 June 2015

30 June 2014

31 December 2014


£'000

£'000

£'000

Non-current assets

4,947

5,096

4,991

Current assets

263

376

401

Current and non-current liabilities

(1,324)

(1,241)

(1,451)

 

Equity

3,886

 

4,231

 

3,941

Proportion of the Group's ownership

 

69.58%

 

73.47%

 

73.47%

 

Carrying amount of Investment in Joint Venture

2,704

 

3,108

 

2,895





Summarised statement of Profit and Loss

30 June 2015

30 June 2014

31 December 2014

 

Other income

-

 

-

 

-

 

Administrative expenses - including exchange losses

(372)

 

(35)

 

(166)

 

Loss for the period

(372)

 

(35)

 

(166)

Proportion of the Groups ownership

69.58%

73.47%

73.47%

Group`s share of loss for the period

(259)

(26)

(122)

Gain on dilution of interest in joint venture

68

214

228

 

Increase/(decrease) in interest in Joint Venture for the period

 

(191)

 

188

 

106

 

 

 

 

 

 

 

 

 

 

 

6. Segmental analysis

 

Management currently identifies one division as an operating segment - mineral exploration. This operating segment is monitored and strategic decisions are made based upon this and other non-financial data collated from exploration activities.

Principal activities for this operating segment are as follows:

Mining - incorporates the acquisition, exploration and development of gold resources in Turkey.  


30 June 2015

30 June 2014

31 December 2014


 

 

Mining

Other reconciling items

 

 

Group

 

 

Mining

Other reconciling items

 

 

Group

 

 

Mining

Other reconciling items

 

 

Group


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Administrative costs

-

(343)

(343)

-

(411)

(411)

-

(739)

(739)

Exploration

Expenditure

(9)

-

(9)

(13)

-

(13)

(141)

-

(141)

Other income

-

-

-

34

-

34

-

-

-

Finance costs

-

(111)

(111)

-

(25)

(25)

-

(185)

(185)

Share of profit/(loss)

of its interest in a

joint venture

(191)

-

(191)

188

-

188

106

-

106

Investment income

-

33

33

-

2

2

-

74

74

Tax

-

-

-

-

-

-

-

-

-

Loss after tax

(200)

(421)

(621)

209

(434)

(225)

(35)

(850)

(885)











Assets










Segment assets

6,372

184

6,556

6,157

1,055

7,212

6,232

492

6,724











Liabilities










Segment liabilities

(24)

(270)

(294)

(28)

(188)

(216)

(204)

(44)

(248)

 

Reconciling items include non mineral exploration costs and transactions between Group and associate companies.

 

Geographical segments

All of the Group`s mining assets and liabilities are located in Turkey.                   

 


30 June 2015

30 June 2014

31 December 2014




Turkey


United Kingdom



Group



Turkey


United Kingdom



Group



Turkey


United Kingdom



Group


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Carrying amount of segment

non-current assets

5,219

110

5,329

5,339

413

5,752

5,457

112

5,569

 



7. Taxation

 

The Group has incurred tax losses for the period and a corporation tax charge is not anticipated.

 

8. Loss per share

 

The calculation of basic loss per share is based on the loss attributable to ordinary shareholders of £621,000 divided by the weighted average number of shares in issue during the period, being 667,927,904

 

 

9. Intangible exploration assets

 

                                                                                                                                                                 

Six months ended 30 June 2014

£'000



Opening net book value 1 January 2013

1,951



Additions and capitalised depreciation

34



Exchange movements

Closing net book value 30 June 2014

1,978



Six months ended 31 December 2014




Opening net book value 1 July 2014

1,978



Additions and capitalised depreciation

 

 

237

Costs written off

(65)

 

Exchange movements

(4)

Closing net book value 31 December 2014

2,146



Six months ended 30 June 2015



 

 

Opening net book value 1 January 2015

2,146



Additions and capitalised depreciation

99

 

 

Costs written off

(5)



Exchange movements

(84)

Closing net book value 30 June 2015

2,156

 



 

10. Other financial asset

 

During previous accounting periods the Company raised £1.25 million following the issue of 125 million new shares at 1p per share to Lanstead Capital L.P. (Lanstead). The Company received £250,000 in cash and entered into an equity swap price mechanism with Lanstead for the balance of these shares with consideration payable on a monthly basis over a period of 24 months. The Company also issued 12.5 million shares to Lanstead in consideration for the equity swap agreement. A second equity swap arrangement was entered into on similar terms with Lanstead for £152,000 during the January 2014 share placement, where the Company raised £789,000 following the issue of 87 million new shares at 0.9p per share.    

 

 

The consideration from Lanstead has been treated as a non-derivative financial asset and its fair value has been determined by reference to the Company`s share price at the balance sheet date as measured against a benchmark price of 1.33pence for the first equity swap agreement and 1.20pence per share for the second agreement.

                       


30th June

2015

£`000

 

30th June

2014

£`000

   

31st December

2014

£`000

 

Fair value recognised at start of period

 

Swap settlement for shares

 

263

 

-

 

639

 

152

 

 

639

 

152

 

 

Capital repayments

 

(177)

 

(20)

 

(247)

 

Swap charges

 

 

(111)

 

(25)

 

 

                               (185)

 

Profit/(loss) on revaluation

122

(286)

(96)

 

Fair value recognised at end of period

 

97

 

460

 

263

 

 

The amounts reported in the balance sheet relating to other financial instruments mature as follows:

 

 


30th June

2015

£`000

 

30th June

2014

£`000

   

31st December

2014

£`000

Receivable within one year

97

325

250

Receivable within two years

-

135

13

Total receivable

97

460

263

                                                                                                                                                                                                

 

 

11. Called up share capital and share premium

 

Details of issued capital are as follows:

 


 

Number of

Share

Capital

Deferred shares

 Share

Premium


shares

£'000

£'000

£'000






At 1 January 2014

554,949,474

555

4,995

6,900






Shares issued in period (net of expenses)

90,866,667

90

-

685











At 30 June 2014

645,816,141

645

4,995

7,585






Shares issued in period (net of expenses)

-

-

-

(2)






At 31 December 2014

645,816,141

645

4,995

7,583






Shares issued in period (net of expenses)

45,132,953        

 

46

-

365

 

At 30 June 2015

690,949,094

 

 

691

 

 

4,995

 

7,948

 

 


                                                                                                                                 

12. Post period end event

 

In July 2015 the Company raised £1,000,000 before expenses through the issue of 111,111,111 ordinary shares.

 

 

 

13. Approval of interim financial statements

 

The interim financial statements were approved by the Board of Directors on 29/09/2015.

 

 

 


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