28th May 2015 08:14
LONDON (Alliance News) - Anglo Asian Mining PLC Thursday said it swung to a pretax loss in 2014 as costs rose and gold prices fell but said 2015 is an important year to begin "restoring profitability" as it plans to ramp up production and lower costs.
Anglo Asian shares fell 11% to 5.01 pence per share on Thursday morning.
The gold, copper and silver miner in Azerbaijan swung to a pretax loss of USD14.4 million in 2014 from a USD1.4 million profit in 2013 as its costs of sales outstripped revenue, which fell during the year, and as some of the company's other costs rose.
Revenue dipped to USD68.0 million but cost of sales rose to USD68.5 million. In 2013, revenue stood at USD70.8 million with cost of sales totalling USD57.5 million.
Administrative expenses rose to USD7.2 million from USD6.8 million and finance costs increased to USD5.5 million from USD3.8 million.
Revenue declined despite the company selling more gold as prices fell. Total gold sales came in at 50,615 ounces from 46,077 ounces, but achieving a lower price of USD1,267 per ounce compared to USD1,387 per ounce in 2013.
Gold production rose to a "record" level of 60,285 ounces from 52,107 ounces, but the average cash operating cost net of by-product credits dramatically rose to USD971 an ounce in 2014 from USD626 per ounce in 2013. The higher cash costs were due to there being a full year cost of production of the agitation leach plant in 2014, it said.
Copper production more than doubled in the year to 784 tonnes from 327 tonnes, but silver production fell to 31,177 ounces from 65,939 ounces due to changes in the mineralogy of the ore being mined.
In 2015, the company is expecting a rise in production thanks to the new agitation leaching plant, heap leach operation, and ore being processed from the Gosha and Gadir operations. Gosha began producing in 2014 and the Gadir operation is due to commence in 2015. Guidance for the year has been set between 70,000 to 75,000 ounces of gold.
"Our primary focus in 2014 was the optimisation of production at, and future development of Gedabek - our gold, copper and silver mining operation located in the lower Caucasus mountains in the west of the country. We have also been developing our second gold resource, Gosha, only 50 kilometres away from Gedabek and a new underground mine, Gadir, situated on the Gedabek property," said the company.
"2015 is an important year for our company and a time which we believe marks the start of our turnaround strategy to restore profitability. The year has started well, and we were delighted to report quarter one, 2015 production figures of 17,053 ounces of gold, marking a 52% increase in gold production from quarter one 2014," Anglo Asian added.
Anglo Asian also said it expects to benefit from around USD6.5 million in operating cost expenses in 2015 from the devaluation of the Azerbaijan Manat against the dollar.
Net debt at the end of 2014 had risen to USD52.4 million from USD45.5 million at the end of 2013 and Anglo Asian's cash position was low at only USD300,000, which is down from a balance of USD5.5 million at the end of 2013.
By Joshua Warner; [email protected]; @JoshAlliance
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