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Anglo Asian Mining PLC announced its final audited results for the year ended 31 December 2025 on 26 May 2026. The company reported total gold production of 25,061 ounces and copper production of 7,915 tonnes, with revenues increasing to $122.8 million (2024: $39.6 million). The Group delivered a profit before taxation of $25.8 million (2024: loss of $21.3 million) and declared a final dividend of 4 US cents per share, payable on 27 August 2026.
| Date | 26 May 2026 |
| Time | 07:00:13 |
| Category | Results |
| ID | 5568F |
26 May 2026
2025 Full Year Results
A transformational year with two new mines entering production
2026 guidance maintained
Dividend reinstated
Anglo Asian Mining PLC ("Anglo Asian", the "Company" or the "Group"), the AIM listed gold, copper and silver producer focused in Azerbaijan, announces its final audited results for the year ended 31 December 2025 ("FY 2025").
Operational overview
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Financial overview
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Revenues increased to $122.8 million (2024: $39.6 million) |
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o Full year of production at Gedabek |
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o Start of production from the Gilar and Demirli mines providing a significant increase in production |
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Group returned to profitability, delivering profit before taxation of $25.8 million (2024: loss of $21.3 million) |
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o Increased revenues due to increased production o Favourable commodity prices |
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Positive net cash position of $2.6 million on 31 December 2025 (2024: net debt of $14.7 million) |
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o Net cash flow from operations of $46.7 million (2024: $8.6 million) |
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Final dividend in respect of the year ended 31 December 2025 of 4 US cents per share |
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o Reflects the commitment of the directors to delivering attractive shareholder returns o To be paid on 27 August 2026 |
Outlook
2026 is set to be another milestone year for Anglo Asian Mining, being the first full year of production from Gilar and Demirli, and the first year in which copper is expected to be its principal output. Both mines are delivering in accordance with expectations, with Demirli continuing to ramp up to full production.
The Group is on track to deliver its 2026 guidance*, and remains confident in the execution of its medium-term growth strategy of becoming a copper-focused, multi-asset, mid-tier producer.
Reza Vaziri, Chief Executive Officer of Anglo Asian, commented:
"2025 was a historic year for Anglo Asian, as we achieved the first milestone of our growth strategy, becoming a multi-asset producer. In May, we brought Gilar into production, which is a high-grade underground copper and gold mine. Demirli entered production in July, and is a significant copper mine, the first of three that will enable us to deliver the remaining targets of our growth strategy.
"As a result of our strong operational and financial performance, we are delighted to reinstate the dividend, representing our commitment to deliver attractive value for our shareholders.
"During 2026, we expect to become primarily a copper-producing company, which is the second target of our strategy. We will also continue to develop the Xarxar and Garadag copper deposits and look forward to bringing these into production in the years ahead. We are confident that Anglo Asian has an exciting future, with a strong operational track record, attractive commodity exposure and meaningful growth ahead."
*The Company expects annual production in 2026 of 20,000 to 25,000 tonnes of copper at an AISC of $6,800 to $7,800 per tonne and 28,000 to 33,000 ounces of gold at an AISC of $1,500 to $1,800 per ounce.
Note that all references to "$" are to United States dollars, "CAN$" are to Canadian dollars, "£" and "pence" are to the United Kingdom pound sterling and AZN are to the Azerbaijan New Manat.
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014, which was incorporated into UK law by the European Union (Withdrawal) Act 2018, until the release of this announcement.
For further information please contact:
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Anglo Asian Mining plc |
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Reza Vaziri, Chief Executive Officer |
Tel: +994 12 596 3350 |
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Bill Morgan, Chief Financial Officer |
Tel: +994 502 910 400 |
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Stephen Westhead, Vice President |
Tel: +994 502 916 894 |
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Amir Vaziri, Chief Business Development Officer
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Tel: +1 (301) 332 9938
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Peel Hunt LLP (Broker) Ross Allister David McKeown Emily Bhasin
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Tel: +44 (0) 20 7418 8900 |
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SP Angel Corporate Finance LLP (Nominated Adviser) Ewan Leggat Adam Cowl
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Tel: +44 (0) 20 3470 0470 |
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Hudson Sandler (Financial PR) Charlie Jack Harry Griffiths
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Tel: +44 (0) 20 7796 4133
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Competent Person Statement
The information in the announcement that relates to exploration results, minerals resources and ore reserves is based on information compiled by Dr Stephen Westhead, who is a full-time employee of the Group with the position of Vice-President, who is a Fellow of The Geological Society of London, a Chartered Geologist, Fellow of the Society of Economic Geologists, Fellow of the Institute of Materials, Minerals and Mining and a Member of the Institute of Directors.
Stephen Westhead has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Stephen Westhead consents to the inclusion in the announcement of the matters based on his information in the form and context in which it appears.
Stephen Westhead has sufficient experience, relevant to the style of mineralisation and type of deposit under consideration and to the activity that he is undertaking, to qualify as a "competent person" as defined by the AIM rules. Stephen Westhead has reviewed the mineral resources included in this announcement. For the avoidance of doubt, resources and economically extractable copper figures in this notification are not based on a Standard for the reporting of reserves and resources, such as JORC, as defined in the AIM Rules for Companies.
Dividend for 2025
A final dividend of US$0.04 per ordinary share will be paid gross in respect of the year ended 31 December 2025 to shareholders on 27 August 2026 that are on the shareholders record at the record date of 7 August 2026, subject to approval of the shareholders at the Company's Annual General Meeting for 2026. The shares will go ex-dividend on 6 August 2026. All dividends will be paid gross and in cash. A scrip dividend or any other dividend reinvestment plan will not be offered by the Company.
The dividend will be payable in pounds sterling. The dividend will be converted to pounds sterling using the average of the sterling closing mid-price using the exchange rate published by the Bank of England at 4pm each day from 27 to 31 July 2026.
Annual General Meeting for 2026
The Annual General Meeting of the Company for 2026 will be held on 24 June 2026 at 11:00 am at The Washington Mayfair Hotel, 5 Curzon Street, Mayfair, London W1J 5HE, United Kingdom. All shareholders are warmly invited to attend.
Corporate governance and Section 172 (1) Statement
A statement of the Company's compliance with the ten principles of corporate governance in the Quoted Companies Alliance Corporate Governance (2023) Code ('QCA Code') will be included in the Company's annual report and accounts for 2025.
The Company's Section 172 (1) Statement will be included in the Company's annual report and accounts for 2025.
Sustainability at Anglo Asian Mining
A report on sustainability, including a detailed report on health and safety, will be included in the Company's annual report and accounts for 2025.
Chairman's statement
I am delighted to present Anglo Asian Mining's full year results for 2025, a significant milestone for your Company, in our transition to become a mid-tier, copper-focused producer.
We successfully opened two mines during 2025. Gilar, an underground mine located within the Gedabek contract area, entered production in May. Gilar benefits from the extensive and mature infrastructure at Gedabek. Demirli is a large open pit copper mine and flotation processing plant in Karabakh, which began production in July, after extensive refurbishment of the plant and associated infrastructure. Demirli is a cornerstone asset in our medium-term growth strategy. Bringing two new mines successfully into production in one year was an ambitious undertaking, and I wish to thank everybody who helped deliver this significant achievement.
Gilar and Demirli enabled us to significantly increase production during 2025, and we produced 25,061 ounces of gold and 7,915 tonnes of copper. This increase in production, combined with strong commodity prices, produced a financial turnaround for the Group. The Group returned to profitability after two years of losses, reporting revenues of $123 million and a profit before tax of $26 million. The Group also generated cash from operations of $47 million.
The Board is considering a future dividend policy following the Group's return to profitability and the positive outlook for the business. The policy will seek to provide a consistent dividend, whilst also allowing for the required investment in the business to support our ambitious growth plans. We will advise shareholders of the proposed policy in due course. Following the strong performance in 2025, the Board has approved a 4 US cents final dividend for the year ended 31 December 2025 which will be payable on 27 August 2026. The Board plans to pay both an interim and final dividend in respect of the year ending 31 December 2026.
Our ongoing efforts to meet and exceed sustainability best practice continues, and we were delighted to receive our inaugural sustainability rating from Digbee Ltd, who awarded us an overall BB rating. The rating reflects our commitment to operating responsibly and sustainably. We are committed to improving this rating.
Our safety record improved during 2025 due to better working conditions, improved safety practices and broader monitoring. There were only five lost time injuries, compared to seven in 2024, despite a significant increase in manhours worked. Our lost time injury frequency rate accordingly decreased to 2.44 compared to 4.57 in 2024. I was especially pleased that Demirli completed its inaugural year with zero accidents.
The Group continues to adhere to best practice corporate governance and implemented the revised QCA Corporate Governance (2023) Code in the year. The revised code recommends the Company's remuneration policy and report are approved by shareholders on an advisory basis. Accordingly, the appropriate resolutions will be tabled to shareholders at our forthcoming annual general meeting, details of which are given above. We encourage all shareholders to attend and look forward to meeting as many of you as possible.
The Company has developed considerable operational momentum and is on track to deliver on its medium-term growth strategy, with 2026 set to be another year of growth. We look forward to continuing to update our investors of our progress. I would also like to extend my gratitude to all Anglo Asian Mining employees and partners and the Government of Azerbaijan for their continued support.
Khosrow Zamani
Non-executive chairman
26 May 2026
President and chief executive's review
I am very pleased to report Anglo Asian Mining's full year results for 2025, a year in which we delivered strongly against our operational and strategic objectives. The Group demonstrated clear progress in its transition to a mid-tier, copper-focused producer and met an important strategic growth target of becoming a multi-asset producer.
The Group successfully brought two new mines into production in 2025. Gilar, an underground mine at Gedabek, commenced production in May. Demirli, a large open pit copper mine with existing processing facilities and infrastructure, entered production in July. To bring these two predominantly copper mines into operation supports our strategic objective of copper becoming the majority of our production.
Gedabek was fully restarted in late 2024, and since then has operated without any significant issues, increasing production substantially year on year. Gilar and Demirli have also made important contributions to our copper production. These positive outcomes all significantly increased production in 2025 and, supported by favourable metal prices, returned the Group to profitability.
Operational review
The Group produced 25,061 ounces of gold and 7,915 tonnes of copper in 2025 as a result of a full year of production at Gedabek, and contributions from Gilar and Demirli. 4,787 tonnes of copper were produced at Gedabek and 3,128 tonnes at Demirli.
Gedabek had a full year of production following the restart of its flotation and agitation leaching plants in late 2024. Throughout 2025, the plants operated in line with our expectations. We continued to optimise the processing facilities with initiatives such as replacing the flotation plant's filter presses with larger capacity models to process Gilar ore. We also started an upgrade of the flotation plant with the addition of nine Imhoflot pneumatic flotation cells. This upgrade is now substantially complete.
Gilar commenced production in May and has successfully ramped up production since it opened. Mining rates have steadily increased toward our targeted rate, with excellent ore grades in line with expectations.
The Group entered into a lease with AzerGold Closed Joint Stock Company for the use of the Demirli flotation plant and associated infrastructure and mining equipment in the year. The lease is for three years, which can be extended, and the Group can give notice at any time if the plant ceases to be the main processing plant. The annual base rent is $24 million per annum ($2 million per month) which is variable under certain circumstances. These circumstances are fully explained in the financial review below. The Group's usual production sharing arrangements will apply to Demirli and the rent is included in our recoverable costs.
Demirli entered production in June. This is a remarkable achievement given that we only gained access to the property in November 2024. During 2025, the existing infrastructure was substantially upgraded and refurbished to commence production. Unfortunately, failure of the gear shaft of the plant's ball mill reduced production in the year and quarter one 2026. However, it has now been replaced, and both mills are operating satisfactorily. With its six million tonne per annum capacity flotation plant, Demirli is well placed to deliver significant copper production.
We established logistic centres for Gedabek and Demirli in the year for the sale of copper concentrate. They are located close to their respective mine sites, and the main road from Baku to Georgia, and have greatly expedited our copper concentrate sales.
The final raise of the tailings dam wall at Gedabek will be finished mid-year. This will provide enough capacity for the next two to three years. We have begun the process, together with the Government of Azerbaijan, to build the second Gedabek tailings dam. Various technical studies of the Demirli tailings dam were carried out, including inspections by local and international consultancies. These confirmed that the current tailings dam wall is safe for current operations. However, we are taking measures to further strengthen the dam including buttressing its wall.
We continue to make excellent progress with our portfolio of assets under development. We pursued our studies of the historical data and drill core of Garadag and Xarxar in 2025. We have started the process of appointing an external consultant to prepare feasibility studies for both projects. These are substantial assets which will drive the growth of the Group. Xarxar will be the first of the assets to enter production and is scheduled to commence production in 2027 to 2028.
We continued to invest in infrastructure across our operations, including tailings management facilities and site improvements. These support increased production and ensure we meet or exceed international best practice standards.
Financial performance
The strong increase in production during the year, supported by favourable copper and gold prices, resulted in a major turnaround in our financial performance in 2025. The Group returned to profitability after two years of losses.
Revenues increased significantly year on year to $123 million, while our profit before tax was $26 million. The Group generated cash from operations of $47 million. At year end, we had net cash of $2.6 million, reflecting our strong cash generation in the year. The Group did not hedge any sales of its production in the year.
The Group will not report an All-In Sustaining Cost ("AISC") of gold or copper produced for 2025. Given that both Gilar and Demirli commenced production in mid-2025, we do not believe the costs would be meaningful in 2025. The Group will report AISC for copper and gold in 2026, and guidance has already been given for these costs.
Revenues from production at Gedabek and Demirli throughout 2025 were subject to an effective royalty rate of 12.75 per cent. in accordance with our production sharing agreement with the Government of Azerbaijan. We anticipate that this same effective royalty rate will continue to apply, to at least the end of 2026, for Demirli. However, we expect the effective royalty rate to rise to around 18 per cent. for Gedabek by the end of 2026.
Commitment to global standards and sustainability
In June, we were pleased to be awarded a BB rating from Digbee, the ESG rating company, which is the Group's first-ever sustainability rating. This shows the progress made against our sustainability goals and our focus on always operating responsibly. More importantly, it provides a solid foundation from which we will continue to develop our approach to sustainability and strengthen our ESG practices to improve the rating.
As one of the largest employers in Azerbaijan, with approximately 1,400 employees, we remain committed to delivering value to local communities through employment, community initiatives and environmental programmes. Our outreach activities, including medical support, food aid and environmental initiatives such as tree planting, have continued throughout the year.
We continued our work towards full alignment with the Global Industry Standard on Tailings Management ('GISTM'), aiming to achieve full compliance by the end of 2026. In parallel, we have enhanced our internal policies across health and safety, ethics, and environmental management, ensuring alignment with international best-practice standards.
Dividend
The Board has approved a 4 US cents final dividend for the year ended 31 December 2025 as set out in the Chairman's statement.
Annual general meeting ("AGM") for 2026
We encourage shareholders to attend our AGM for 2026, details of which are set out above. This year, two additional non-binding resolutions will be presented to shareholders to approve the directors' remuneration policy and the directors' remuneration. The directors welcome all shareholders to attend and look forward to meeting as many of you as possible. At the previous two AGMs, we gave shareholders a detailed presentation about the Company. We believe these presentations were well received and a further such presentation will be made at the AGM for 2026.
Rectification of technical issues regarding distributable reserves
Following issue of a shareholder circular, a general meeting of the Company was held on 22 October 2025, where the shareholders passed a resolution to rectify the technical issues regarding distributable reserves. Deeds of release were then signed to give legal force to the rectification. The directors will obtain appropriate external legal advice, whenever further dividends are paid, to avoid any such issues in the future.
Appointment of Peel Hunt LLC as brokers to the Company
We were very pleased to announce that in early 2026, Peel Hunt LLC were appointed as new brokers for the Company. SP Angel Corporate Finance LLP will remain as the Company's nominated adviser ('NOMAD').
Looking ahead
The progress made in 2025 marks a significant step forward in Anglo Asian's evolution towards becoming a mid-tier producer.
We are pleased to have issued 2026 guidance of 20,000 to 25,000 tonnes of copper production, 28,000 to 33,000 ounces of gold, and 170,000 to 210,000 ounces of silver, reflecting our continued growth and the first full year of production at Gilar and Demirli. We also disclosed our first-ever Group cost guidance, with 2026 AISC of $1,500 to $1,800 per ounce of gold and $6,800 to $7,800 per tonne of copper.
I would like to thank all our employees for their dedication and hard work during the year, with their commitment being instrumental in delivering such strong progress and positioning Anglo Asian for future success.
With Gedabek operating at full capacity, Gilar and Demirli now in production and an exciting portfolio of future projects in development, we are confident that the future is bright for Anglo Asian.
Reza Vaziri
President and chief executive
26 May 2026
Strategic report
Principal activities
Anglo Asian Mining PLC (the "Company"), together with its subsidiaries (the "Group"), owns and operates gold, silver and copper producing properties in the Republic of Azerbaijan ("Azerbaijan"). It also explores for, and develops, gold and copper deposits in Azerbaijan.
The Group has a substantial portfolio of assets that lay the foundation for future growth of the business. Gilar, Zafar, Xarxar and Garadag all host significant ore deposits. At 1 January 2026, they contain total JORC mineral resources (measured, indicated and inferred) of over one million tonnes of copper and 344,000 ounces of gold. Demirli also hosts a significant non-JORC copper resource.
Production Sharing Agreement with the Government of Azerbaijan
The Group's mining concessions ("Contract Areas") in Azerbaijan are held under a Production Sharing Agreement ("PSA") with the Government of Azerbaijan dated 20 August 1997. Amendments to the PSA which granted the Group additional Contract Areas, were passed into law in Azerbaijan on 5 July 2022.
A further amendment was made to the PSA which replaced the local party to the PSA, the Ministry of Ecology and Natural Resources, with AzerGold Closed Joint Stock Company ("AzerGold CJSC"). Minor amendments were also made in respect of the use of facilities for the Kyzlbulag, Demirli and Vejnaly Contract Areas. These amendments were passed into law in Azerbaijan on 21 June 2024.
Contract Areas in Azerbaijan
The Group has eight Contract Areas covering a total of 2,544 square kilometres in western Azerbaijan:
• Gedabek. The location of one of the Group's open pit mines and Gilar, a major new underground mine. Gilar extracted its first ore in March 2025 and started production in May 2025. The Gedabek and Gadir underground mines were both shut in 2025. The Zafar deposit is also situated at Gedabek but development of the mine was stopped in mid-2023. The Group has leaching and flotation processing facilities located at Gedabek.
• Demirli. The location of a copper and molybdenum open pit mine and a flotation processing plant. The Demirli Contract Area is in Karabakh and adjacent to the Kyzlbulag Contract Area which it extends to the northeast. The Group commenced production from the open pit mine and flotation plant in July 2025.
• Xarxar. Hosts the Xarxar copper deposit. It is located adjacent to the Gedabek and Garadag Contract Areas.
• Garadag. Hosts the large Garadag copper deposit and is located to the north of Gedabek and Xarxar.
• Gosha. Located approximately 50 kilometres from Gedabek and hosts a narrow-vein gold and silver mine.
• Vejnaly. Situated in the Zangilan district of Azerbaijan and hosts the Vejnaly deposit.
• Ordubad. An early-stage gold and copper exploration area located in the Nakhchivan exclave of Azerbaijan.
• Kyzlbulag. Situated in Karabakh and hosts the Kyzlbulag mine.
The Gedabek, Xarxar, Garadag and Gosha Contract Areas form a contiguous territory totalling 1,408 square kilometres. The Group received full access to the Kyzlbulag Contract Area in April 2026. The Group had its access restored in 2026 to the Vejnaly Contract Area in Zangilan. The Government had previously withdrawn access to Vejnaly whilst the site was made safe from land mines.
Overview of 2025
The Group's strategy is to transition into a mid-tier, multi-asset, copper focused producer, which will be achieved through developing its considerable assets. The Group made excellent progress against this strategy in 2025 with the opening of two new mines. The Group's new Gilar underground mine started production in May 2025 and its new open pit Demirli mine started production in July 2025. The Group achieved record copper production in 2025 of 7,915 tonnes.
The Group continued to invest to improve its operations and a major upgrade of the flotation plant at Gedabek, to increase its capacity and flexibility, started in 2025. The Group also established two logistic centres for the sale of its copper concentrate. Construction of stage two of the final raise of the tailings dam at Gedabek continued throughout 2025.
Gilar mine production
The Group's new underground Gilar mine at Gedabek commenced production in 2025. The first ore from the mine was extracted in March 2025 and the mine entered production in May 2025.
Demirli mine production
The Group's new open pit mine at Demirli in Karabakh entered production in July 2025. The Group concluded a concentrate sales agreement with Trafigura Pte Ltd. in November 2025, and the first sales of its copper concentrate production were made in December 2025.
Gedabek and Gadir underground mines
The Gedabek and Gadir underground mines were both shut in 2025 although access to the mines still remains in place.
Logistics centres
The Group established two logistics centres in 2025 for the sale of its copper concentrate, one for Demirli and one for Gedabek. They are both located close to their respective mine sites and the main highway from Baku to Georgia. They comprise warehousing and material handling facilities for bags of copper concentrate. These facilities enable more efficient delivery of concentrate to customers. It is also more environmentally friendly to store concentrate at dedicated warehouse facilities than at the mine sites. Trucks also require permission from the Government of Azerbaijan to enter Karabakh. The Demirli logistics centre is located outside of Karabakh which avoids customers needing to obtain permission for their trucks to enter Karabakh to take delivery of concentrate produced by Demirli.
Inaugural Environment, Social and Governance ("ESG") rating
In June 2025, the Group received its inaugural sustainability rating from Digbee Ltd, an independent provider of ESG assessment and disclosure solutions to the mining sector. Obtaining this rating was in line with the Group's objective of continuous improvement of its ESG performance.
New corporate website
The Group released a new corporate website in December 2025
Production and cost guidance for full year 2026 ("FY 2026")
The Group published its production guidance for FY 2026 on 18 February 2026 as follows:
Group production guidance
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2026 production guidance¹ |
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Copper (tonnes) |
20,000 to 25,000 |
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Gold (ounces) |
28,000 to 33,000 |
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Silver (ounces) |
170,000 to 210,000 |
Group cost guidance
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2026 AISC guidance |
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Gold ($/oz) |
1,500 to 1,800 |
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Copper ($/tonne) |
6,800 to 7,800² |
Notes
1. 2026 production guidance represents aggregate Group production inclusive of the Government of Azerbaijan's share under the terms of the Production Sharing Agreement.
2. The copper All-In-Sustaining-Cost ("AISC") guidance excludes the cost of the lease of the Demirli property complex from the Government of Azerbaijan as it is equivalent to the capital cost of building the plant. If the cost of the lease is included, the AISC guidance for copper increases by approximately $1,000 per tonne. The copper AISC also reflects the costs of overburden stripping required at Demirli to expose further reserves of ore.
Calculation of All-In Sustaining Cost ("AISC") for copper and gold
Gedabek copper and gold production
The Group produces both copper and gold at its Gedabek production site. Both metals are considered primary products as both contribute materially to revenue. Accordingly, the "Co-Product Accounting" method is used to allocate costs to gold and copper. The total cost of the Gedabek production site, plus sustaining capital expenditure and metal selling costs, is therefore allocated to gold and copper in proportion to their expected sales revenues.
The revenue from silver production is treated as a by-product and credited against the total costs of Gedabek production before allocation. The forecast revenues generated by gold, silver and copper are calculated using the Group's share of production which are also used for calculating the AISC of copper and gold. A proportion of the total costs (based on Gedabek and Demirli site headcount) of the Group's office in Baku is also included as this office performs various administrative functions for the Gedabek and Demirli sites.
Demirli copper production
The AISC for copper is calculated using the total costs of production at the site including sustaining capital expenditure, copper selling costs and its share of the Baku office overheads. The Group's share of production is used to calculate the AISC.
Group gold and copper production
The AISC for Gold production is the AISC for Gedabek. The Group's only location where gold is produced is Gedabek. The AISC for copper is calculated as the total costs of Gedabek and Demirli divided by the total of the Group's share of copper production.
Mineral resources and ore reserves
Key to the future development of the Group are the mineral resources and ore reserves within its Contract Areas. Mineral resource and ore reserve estimates are produced both in accordance with the JORC (2012) code ("JORC") and as non-JORC compliant internal estimates.
An internal Group estimate has been prepared, in accordance with JORC procedures, of the remaining mineralisation of the Gedabek open pit at 1 January 2026. This is set out in Table 1. The Gedabek underground mine and the Gadir underground mine were shut in 2025.
A final JORC mineral resources estimate of the Zafar deposit at 30 November 2021 is set out in Table 2. A maiden JORC mineral resources estimate of the Gilar deposit at 30 November 2023 was published on 11 December 2023. An internal Group estimate of the Gilar JORC mineral resources estimate, updated for depletion between commencement of mining in 2025 and 31 December 2025, is set out in Table 3. A maiden JORC mineral resources estimate of copper in the Xarxar deposit at January 2024 was published on 20 February 2024 and is set out in Table 4.
The maiden JORC mineral resources estimate of copper in the Garadag deposit at July 2024 was published on 24 September 2024 and is set out in Table 5. Table 6 sets out the Soviet mineral resources estimate for the Vejnaly deposit. Table 7 sets out an internal Group estimate of the remaining mineral resources of the Demirli deposit classified according to the JORC standard at 1 January 2026.
Table 1 - Internal Group estimate of the remaining mineralisation of the Gedabek open pit in accordance with JORC at 1 January 2026
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Tonnage (million tonnes) |
In-situ grades |
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Contained metal |
||||||
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Gold (g/t) |
Copper (%) |
Silver (g/t) |
Zinc (%) |
|
Gold (koz) |
Copper (kt) |
Silver (koz) |
Zinc (t) |
||
|
Measured and indicated |
3.24 |
0.27 |
0.45 |
6.18 |
0.18 |
|
27.5 |
14.7 |
624.0 |
5.7 |
|
Inferred |
0.80 |
0.56 |
0.21 |
6.51 |
0.10 |
|
13.9 |
1.7 |
162.8 |
0.8 |
|
Total |
4.05 |
0.33 |
0.40 |
6.25 |
0.16 |
|
41.4 |
16.4 |
786.8 |
6.5 |
Some of the totals in the above table may not sum due to rounding.
All tonnages reported are dry metric tonnes.
Table 2 - Final JORC mineral resources estimate of the Zafar deposit at 30 November 2021
Copper > 0.3 per cent. copper equivalent
|
|
Tonnage (million tonnes) |
In-situ grades |
|
Contained metal |
||||
|
Copper (%) |
Gold (g/t) |
Zinc (%) |
|
Copper (kt) |
Gold (kozs) |
Zinc (kt) |
||
|
Measured and indicated |
5.5 |
0.5 |
0.4 |
0.6 |
|
25 |
64 |
32 |
|
Inferred |
1.3 |
0.2 |
0.2 |
0.3 |
|
3 |
9 |
3 |
|
Total |
6.8 |
0.5 |
0.4 |
0.6 |
|
28 |
73 |
36 |
Some of the totals in the above table may not sum due to rounding.
All tonnages reported are dry metric tonnes.
Table 3 - Internal Group estimate of the remaining mineralisation of the Gilar deposit in accordance with JORC at 1 January 2026
Reporting cut-off >= 0.5 grammes per tonne of gold equivalent*
|
|
Tonnage (million tonnes) |
In-situ grades |
|
Contained metal |
||||
|
Gold (g/t) |
Copper (%) |
Zinc (%) |
|
Gold (koz) |
Copper (kt) |
Zinc (kt) |
||
|
Measured |
3.31 |
1.46 |
0.97 |
0.89 |
|
150.0 |
32.2 |
29.4 |
|
Indicated |
2.01 |
1.00 |
0.56 |
0.49 |
|
62.5 |
11.3 |
9.8 |
|
Measured and indicated |
5.32 |
1.28 |
0.82 |
0.74 |
|
212.4 |
43.5 |
39.2 |
|
Inferred |
0.20 |
0.69 |
0.26 |
0.26 |
|
4.2 |
0.5 |
0.5 |
|
Total |
5.52 |
1.26 |
0.80 |
0.72 |
|
216.7 |
44.0 |
39.7 |
Some of the totals in the above table may not sum due to rounding.
All tonnages reported are dry metric tonnes.
* Gold equivalent calculation = Gold g/t plus (copper per cent.*1.49) plus (zinc*0.46). The metal price assumptions used were Gold - $1,675 per ounce;
Copper - $8,000 per tonne; Zinc - $2,500 per tonne.
Table 4 - Maiden JORC mineral resources estimate of copper in the Xarxar deposit at January 2024
Reporting cut-off >= 0.2 per cent. copper.
|
Domain |
Mineral resources estimate of copper in the Xarxar Deposit by oxidation domain |
||||||||||
|
Indicated |
|
Inferred |
|
Indicated and inferred* |
|||||||
|
Tonnes (mt) |
Grade (%) |
Metal (kt) |
|
Tonnes (mt) |
Grade (%) |
Metal (kt) |
|
Tonnes (mt) |
Grade (%) |
Metal (kt) |
|
|
Oxide |
5.2 |
0.55 |
28.5 |
|
0.8 |
0.66 |
5.2 |
|
5.9 |
0.57 |
33.7 |
|
Sulphide |
16.8 |
0.46 |
77.9 |
|
2.1 |
0.35 |
7.6 |
|
18.9 |
0.45 |
85.5 |
|
Total |
22.0 |
0.48 |
106.3 |
|
2.9 |
0.44 |
12.8 |
|
24.9 |
0.48 |
119.1 |
Some of the totals in the above table may not sum due to rounding.
All tonnages reported are dry metric tonnes.
* Measured resources were nil due to insufficient third-party quality assurance and quality control ("QAQC") drill core assays being carried out. Further QAQC drill core assays will be carried out.
Table 5 - Maiden JORC mineral resources estimate of copper in the Garadag deposit at July 2024 by domain
|
Domain |
Cut-off (%) |
Indicated |
|
Inferred |
|
Indicated and inferred |
||||||
|
Tonnes (Mt) |
Grade (Cu %) |
Metal (kt) |
|
Tonnes (Mt) |
Grade (Cu %) |
Metal (kt) |
|
Tonnes (Mt) |
Grade (Cu %) |
Metal (kt) |
||
|
0 (un-mineralised) |
0.13 |
- |
- |
- |
|
- |
- |
- |
|
- |
- |
- |
|
1 (leach) |
0.13 |
- |
- |
- |
|
- |
- |
- |
|
- |
- |
- |
|
3 (enriched) |
0.13 |
45.8 |
0.45 |
205.6 |
|
68.9 |
0.42 |
285.9 |
|
114.7 |
0.43 |
491.5 |
|
5 (primary) |
0.13 |
41.1 |
0.24 |
98.7 |
|
129.1 |
0.24 |
306.7 |
|
170.2 |
0.24 |
405.4 |
|
Total |
|
86.9 |
0.35 |
304.3 |
|
198 |
0.30 |
592.6 |
|
284.9 |
0.32 |
896.9 |
Some of the totals in the above table may not sum due to rounding.
All tonnages reported are dry metric tonnes.
Table 6 - Soviet mineral resources estimate of the Vejnaly deposit
|
|
|
Metal content |
|||
|
Units |
Category C1 |
Category C2 |
Total C1 and C2 |
||
|
Ore |
Tonnes |
181,032 |
168,372 |
349,404 |
|
|
Gold |
Kilogrammes |
2,148.5 |
2,264.2 |
4,412.7 |
|
|
Silver |
Kilogrammes |
6,108.9 |
4,645.2 |
10,754.1 |
|
|
Copper |
Tonnes |
1,593.6 |
1,348.8 |
2,942.4 |
|
Some of the totals in the above table may not sum due to rounding.
Table 7 - Internal Group estimate (non-JORC) of the remaining mineral resources of the Demirli deposit classified according to the JORC standard at 1 January 2026
|
|
Ore tonnage (million tonnes) |
In-situ grades Copper (%) |
Contained metal Copper (thousand tonnes) |
|
Measured |
3.50 |
0.44 |
15.6 |
|
Indicated |
9.51 |
0.45 |
42.8 |
|
Inferred |
27.78 |
0.37 |
102.8 |
|
Non-classified |
15.56 |
0.44 |
68.5 |
|
Total |
56.35 |
0.41 |
229.6 |
Some of the totals in the above table may not sum due to rounding.
All tonnages reported are dry metric tonnes.
The above mineral resources estimate for Demirli is only in respect of the mineral resources below the current open pit and does not include further resources in the surrounding area.
Gedabek
Introduction
The Gedabek mining operation is located in a 300 square kilometre Contract Area in the Lesser Caucasus mountains in western Azerbaijan on the Tethyan Tectonic Belt, one of the world's most significant copper and gold-bearing geological structures. Gedabek is the location of the Group's Gedabek open pit mine. The Group has agitation and flotation processing facilities at Gedabek. A new underground mine, Gilar, opened in 2025 with its first ore extracted in March 2025 and production started in May 2025. Zafar is another underground mine under development at Gedabek. One portal of the Zafar mine has been constructed, but no further development is currently being carried out.
Gold production at Gedabek commenced in September 2009. Ore was initially mined from an open pit, with underground mining commencing in 2015, when the Gadir mine was opened. In 2020, underground mining commenced beneath the main open pit (the "Gedabek underground mine"). The Gedabek and Gadir underground mines now form one continuous underground system of tunnels.
Initial gold production was by heap leaching, with copper production beginning in 2010 from the Sulphidisation, Acidification, Recycling and Thickening ("SART") plant. The Group's agitation leaching plant commenced production in 2013 and its flotation plant in 2015. From the start of production to 31 December 2025, approximately 850 thousand ounces of gold and 26 thousand tonnes of copper have been produced at Gedabek.
Gedabek open pit
Open pit mining at Gedabek is carried out at its main open pit (which comprises several contiguous smaller open pits). It is mined using conventional open-cast mining using trucks and shovels and ore transported to the processing facilities by truck.
Gadir and Gedabek underground mines
Ore was previously mined from the Gadir and Gedabek underground mines. However, the Gadir and Gedabek underground mines were shut in 2025, although access to the mines remains in place. It is not expected that production from the mines will restart in the foreseeable future.
Gilar mine
Gilar is an underground mine located approximately seven kilometres from the Company's processing facilities and close to the northern boundary of the Gedabek Contract Area. The Group commenced developing the Gilar underground mine in late 2022 and the mine entered production in May 2025.
A maiden JORC mineral resources estimate was published on 11 December 2023. An internal Group estimate of this Gilar JORC mineral resources estimate, updated for depletion between commencement of mining in 2025 and 31 December 2025, is set out in Table 3 above.
The Gilar mine comprises two underground tunnels, a main production tunnel and a second tunnel for ventilation. A spiral accesses the ore body. The lengths of the production and ventilation tunnels are 1,461 metres and 774 metres respectively. The walls of the tunnels are supported by steel arches and shotcrete where necessary due to soft rock. Water encountered underground is being pumped from the mine into a settling pond constructed near the entrance to the mine. The mining method employed at Gilar is sub-level caving. Ore from the mine is hauled by truck to the Gedabek processing facilities.
Surface infrastructure comprises of a heavy equipment workshop, mine office facilities and technical support and services offices and a canteen. Security and safety fencing, a mine entrance area and power generator set foundations have also been constructed. The Caterpillar underground mining fleet comprises of three R1700 and two 980UMA underground loaders.
Zafar mine development
The Zafar deposit was discovered in 2021 and is located 1.5 kilometres northwest of the existing Gedabek processing plant. Its final JORC mineral resources estimate was published in March 2022 and is set out in Table 2 above.
A mining scoping study for the Zafar mine was completed in February 2023 and development commenced. Two tunnels are planned, one for haulage and a parallel ventilation tunnel. One of the two portals required for the tunnels was constructed close to the existing Gedabek processing facilities and about one kilometre from the mineralisation. Five metres of haulage tunnel and 6.6 metres of ventilation tunnel had also been completed, prior to suspension of development.
Development of the Zafar mine was stopped in mid-2023 and resources diverted to development of the Gilar mine.
Environmental study and Micon report
Micon International Co Limited ("Micon") undertook a health, safety and environmental due diligence review of tailings management at Gedabek in July 2023. No significant environmental contamination was found. The final Micon report contained various recommendations to improve some operational, social and safety aspects of the Gedabek operations. In November 2023, the Group agreed an action plan with the Government of Azerbaijan (the "Action Plan") to address these recommendations. The Group is still carrying out some long term and continuous obligations of the Micon recommendations.
Ore mined in 2025
Table 8 sets out all the ore mined at Gedabek for the year ended 31 December 2025.
Table 8 - Ore mined at Gedabek for the year ended 31 December 2025
|
Mine |
Total ore mined for the year ended 31 December 2025 |
||
|
Ore mined (tonnes) |
Average gold grade (g/t) |
Average copper grade (%) |
|
|
Gedabek open pit |
682,495 |
0.28 |
0.34 |
|
Gadir underground |
13,592 |
2.07 |
0.19 |
|
Gilar underground |
544,459 |
1.43 |
1.00 |
|
Total for the year |
1,240,546 |
0.80 |
0.63 |
Processing operations
Ore is processed at Gedabek to produce either gold doré (an alloy of gold and silver with small amounts of impurities, mainly copper) or a copper and precious metal concentrate.
Gold doré is produced by cyanide leaching. Initial processing is to leach (i.e. dissolve) the precious metal (and some copper) in a cyanide solution. This is done by various methods:
1. Heap leaching of crushed ore. Crushed ore is heaped into permeable "pads" onto which is sprayed a solution of cyanide. The solution dissolves the metals as it percolates through the ore by gravity and it is then collected on the impervious base under the pad.
2. Heap leaching of run of mine ("ROM") ore. The process is similar to heap leaching for crushed ore, except the ore is not crushed, instead it is heaped into pads as received from the mine (ROM) without further treatment or crushing. This process is used for very low grade ores.
3. Agitation leaching. Ore is crushed and then milled in a grinding circuit. The finely ground ore is placed in stirred (agitation) tanks containing cyanide solution and the contained metal is dissolved in the solution. Any coarse, free gold is separated using a centrifugal-type Knelson concentrator.
Slurries produced by the above processes with dissolved metal in solution are then transferred to a resin-in-pulp ("RIP") plant. In this plant, a synthetic resin is used to selectively absorb the gold and silver from the slurry. The metal-loaded resin is then "stripped" of its gold and silver by desorption into another solution, from which the metals are recovered by electrolysis, followed by smelting to produce the doré metal, which comprises an alloy of gold and silver.
Copper and precious metal concentrates are produced by two processes, SART processing and flotation.
1. Sulphidisation, Acidification, Recycling and Thickening ("SART"). The cyanide solution after gold absorption by resin-in-pulp processing is transferred to the SART plant. The pH of the solution is then changed by the addition of reagents which precipitates the copper and any remaining silver from the solution. The process also recovers cyanide from the solution, which is recycled back to leaching.
2. Flotation. Finely ground ore is mixed with water to produce a slurry called "pulp" and reagents are then added. This pulp is processed in flotation cells (tanks), where the pulp is stirred and air introduced as small bubbles. The sulphide mineral particles attach to the air bubbles and float to the surface where they form a froth which is collected. This froth is dewatered to form a mineral concentrate containing copper, gold and silver. The tailings from the agitation leaching are also used as flotation feedstock. The original filter press of the flotation plant was replaced in 2025 with two new filter presses, and a new thickener installed, to process the higher grade Gilar ores. A further upgrade to the flotation plant, which will include the installation of new cells, commenced in 2025. This is to both increase its capacity and increase its flexibility.
Table 9 summarises the ore processed by leaching for the year ended 31 December 2025.
Table 9 - Ore processed by leaching at Gedabek for the year ended 31 December 2025
|
Quarter ended |
Ore processed (tonnes) |
|
Gold grade of ore processed (g/t) |
||||
|
Heap leach pad crushed ore |
Heap leach pad ROM ore |
Agitation leaching plant |
|
Heap leach pad crushed ore |
Heap leach pad ROM ore |
Agitation leaching plant |
|
|
31 March 2025 |
106,429 |
- |
149,763 |
|
0.40 |
- |
1.16 |
|
30 June 2025 |
133,153 |
- |
154,948 |
|
0.40 |
- |
1.13 |
|
30 September 2025 |
47,202 |
- |
156,773 |
|
0.40 |
- |
1.52 |
|
31 December 2025 |
- |
- |
163,541 |
|
- |
- |
1.27 |
|
Total for the year |
286,784 |
- |
625,025 |
|
0.40 |
- |
1.26 |
Table 10 summarises ore processed by flotation for the year ended 31 December 2025.
Table 10 - Ore processed by flotation at Gedabek for the year ended 31 December 2025
|
Quarter ended |
Ore processed (tonnes) |
Gold content (ounces) |
Silver content (ounces) |
Copper content (tonnes) |
|
31 March 2025 |
155,406 |
535 |
9,516 |
729 |
|
30 June 2025 |
166,135 |
1,193 |
30,537 |
900 |
|
30 September 2025 |
151,359 |
3,185 |
85,123 |
1,793 |
|
31 December 2025 |
156,158 |
3,027 |
93,835 |
2,409 |
|
Total for the year |
629,058 |
7,940 |
219,011 |
5,831 |
Previously heap leached ore
Gold production at Gedabek from 2009 to 2013 was by heap leaching crushed ore until the start-up of the agitation leaching plant in 2013. The heaps remain in-situ and given the high grade of ore processed prior to the commencement of agitation leaching, and the lower recovery rates, much of the early heap leached ore contains significant amounts of gold. This is now being reprocessed by agitation leaching. Table 11 sets out the previously heap leached ore processed for the year ended 31 December 2025.
Table 11 - Previously heap leached ore processed for the year ended 31 December 2025
|
|
In-situ material (tonnes) |
Average gold grade (g/t) |
|
1 January 2025 |
290,429 |
0.83 |
|
Processed in the year |
(194,304) |
0.99 |
|
31 December 2025 |
96,125 |
0.50 |
The in-situ material is calculated at a standard cutoff grade of > 0.8 grammes per tonne of gold.
Production and sales
For the year ended 31 December 2025, gold production totalled 25,061 ounces, which was an increase of 9,988 ounces in comparison to the production of 15,073 ounces for the year ended 31 December 2024. Copper production for the year ended 31 December 2025 was 4,787 tonnes compared to 377 tonnes for the year ended 31 December 2024, an increase of 4,410 tonnes. The higher production of gold and copper in 2025 compared to 2024 arose due to the start of production from the Gilar mine.
Table 12 summarises the gold and silver bullion produced from doré bars and sales of gold bullion for the year ended 31 December 2025.
Table 12 - Gold and silver bullion produced from doré bars and sales of gold bullion for the year ended 31 December 2025
|
Quarter ended |
Gold produced* (ounces) |
Silver produced* (ounces) |
Gold sales** (ounces) |
Gold sales price ($/ounce) |
|
31 March 2025 |
5,758 |
8,206 |
4,753 |
2,843 |
|
30 June 2025 |
5,624 |
6,699 |
5,028 |
3,299 |
|
30 September 2025 |
5,814 |
4,655 |
5,181 |
3,430 |
|
31 December 2025 |
5,133 |
4,788 |
4,669 |
4,214 |
|
Total for the year |
22,329 |
24,348 |
19,631 |
3,411 |
* Including the Government of Azerbaijan's share.
** Excluding the Government of Azerbaijan's share.
Table 13 summarises the total copper, gold and silver produced as concentrate by both SART and flotation processing for the year ended 31 December 2025.
Table 13 - Total copper, gold and silver produced as concentrate by both SART and flotation processing for the year ended 31 December 2025
|
Quarter ended |
Copper (tonnes) |
|
Gold (ounces) |
|
Silver (ounces) |
||||||
|
SART |
Flotation |
Total |
|
SART |
Flotation |
Total |
|
SART |
Flotation |
Total |
|
|
31 March 2025 |
66 |
468 |
534 |
|
7 |
263 |
270 |
|
17,227 |
4,882 |
22,109 |
|
30 June 2025 |
70 |
584 |
654 |
|
4 |
458 |
462 |
|
12,753 |
12,582 |
25,335 |
|
30 September 2025 |
146 |
1,431 |
1,577 |
|
8 |
976 |
984 |
|
7,023 |
29,945 |
36,968 |
|
31 December 2025 |
164 |
1,858 |
2,022 |
|
9 |
1,007 |
1,016 |
|
9,221 |
35,352 |
44,573 |
|
Total for the year |
446 |
4,341 |
4,787 |
|
28 |
2,704 |
2,732 |
|
46,224 |
82,761 |
128,985 |
Table 14 summarises the total copper concentrate (including gold and silver) production and sales from both SART and flotation processing for the year ended 31 December 2025.
Table 14 - Total copper concentrate (including gold and silver) production and sales from both SART and flotation processing for the year ended 31 December 2025
|
Quarter ended |
Concentrate production* (dmt) |
Copper content* (tonnes) |
Gold content* (ounces) |
Silver content* (ounces) |
Concentrate sales **† (dmt) |
Concentrate sales **† ($000) |
|
31 March 2025 |
3,072 |
534 |
270 |
22,109 |
2,324 |
4,050 |
|
30 June 2025 |
3,523 |
654 |
462 |
25,334 |
3,886 |
7,060 |
|
30 September 2025 |
6,769 |
1,577 |
984 |
36,968 |
6,852 |
17,760 |
|
31 December 2025 |
9,784 |
2,022 |
1,016 |
44,573 |
7,255 |
18,430 |
|
Total for the year |
23,148 |
4,787 |
2,732 |
128,984 |
20,317 |
47,300 |
* Including the Government of Azerbaijan's share
** Excluding the Government of Azerbaijan's share
† These are invoiced sales of the Group's share of production before any accounting adjustments in respect of IFRS 15. The total for the year does not therefore agree to the revenue disclosed in note 6 - "Revenue" to the Group financial statements.
Infrastructure
The Gedabek Contract Area benefits from excellent infrastructure and access. The site is located adjacent to the town of Gedabek, which is connected by good metalled roads to the regional capital of Ganja. Baku, the capital of Azerbaijan, is to the south and the country's border with Georgia to the north, are each approximately a four to five hour drive over good quality roads. The site is connected to the Azeri national power grid.
Water management
The Gedabek site has its own water treatment plant which uses the latest reverse osmosis technology. In the last few years, Gedabek town has experienced water shortages in the summer and this plant reduces to the absolute minimum the consumption of fresh water required by the Company.
Tailings (waste) storage
The Group manages its tailings facilities at Gedabek in strict compliance with the Global Industry Standard on Tailings Management ("GISTM"). The Group is working towards its tailings facilities being fully accredited to GISTM standards. Safety and compliance are monitored through a multi-layered process. These include both daily and monthly inspections. Water quality is monitored by company staff who collect samples which are analysed on site and by external laboratories. Vibrating wire piezometers track pore pressure and data collection is carried out by an external company. There is also an emergency preparedness and response plan in place.
Tailings are stored in a purpose-built dam approximately seven kilometres from the Group's processing facilities, topographically at a lower level than the processing plant, thus allowing gravity assistance of tailings flow in the slurry pipeline. Prior to the final raise of the tailings dam wall, immediately downstream of the tailings dam was a reed bed biological treatment system, to purify any seepage from the dam before being discharged safely into the nearby Shamkir river. However, the final wall raise will subsume this dam.
In 2024, the Government of Azerbaijan approved the final raise of the tailings dam wall. This is a 6.0 metres wall raise which will raise the wall to its final design height of 90 metres. The wall raise is being carried out in two back-to-back stages, and the first raise of 2.5 metres was completed in November 2024. The construction of the final wall raise of 3.5 metres was carried out throughout 2025 with completion expected in 2026. The final raise of the wall will give the dam enough capacity for the next two to three years of production. The wall raise is being monitored by a range of high quality consultants with relevant geotechnical and other experience together with representatives of the Government of Azerbaijan.
The Group has started the process to construct a second tailings dam at Gedabek. Various sites in the vicinity of the existing tailings dam have been identified. The Group is currently in close consultation with the Government of Azerbaijan to select the most appropriate site for its construction. Once the site has been selected, the technical work will commence to design the tailings dam etc. which will then need to be approved by the Government of Azerbaijan.
Demirli
Introduction
The Demirli Contract Area is 74 square kilometres in Karabakh that extends to the northeast by about 10 kilometres from the Kyzlbulag Contract Area and contains the Demirli mining property. The Demirli mining property comprises an open pit mine, a processing plant and power and water infrastructure. The Demirli mining property was built during the occupation of Karabakh by Armenia and abandoned by its previous owner following resumption of sovereignty over Karabakh by the Government of Azerbaijan. The Group gained limited access to Demirli in 2024 and full access in 2025. The Group has comprehensively renovated and refurbished the plant, mining fleet and associated infrastructure. The Group commenced production from Demirli in July 2025.
Demirli mine
The Demirli mine comprises two contiguous open pits. It was mined extensively by its previous owner prior to its abandonment. A reverse circulation drilling programme was completed at Demirli in 2025 to determine the start-up resource of the mine. An internal Group estimate of the remaining mineral resources at 1 January 2026, classified in accordance with JORC, was 56 million tonnes of ore with an average copper grade of 0.41 per cent. copper containing 230 thousand tonnes of copper. This internal estimate is set out in Table 7 above.
Ore mined in 2025
Table 15 summarises the total ore mined at Demirli for the year ended 31 December 2025.
Table 15 - Ore mined at Demirli for the year ended 31 December 2025
|
|
Total ore mined for the year ended 31 December 2025 |
|
|
|
Ore mined |
Average copper grade |
|
Mine |
(tonnes) |
(%) |
|
Open pit |
1,974,840 |
0.47 |
Processing operations
The processing plant contains two rotary mills, a copper flotation plant and a molybdenum plant. The plant and associated infrastructure have been completely renovated and refurbished by the Group and production commenced in July 2025. The capacity of the plant is around 6.5 million tonnes per annum. There is also an upstream tailings dam located close to the plant. The Group leases the flotation plant, mining fleet and associated infrastructure from the Government of Azerbaijan. Further details of the lease are set out in the financial review below.
Table 16 summarises the total ore processed at Demirli for the year ended 31 December 2025.
Table 16 - Total ore processed at Demirli for the year ended 31 December 2025
|
|
|
|
|||
|
Quarter ended |
Ore feed to plant (tonnes) |
Grade (%) |
Copper content (tonnes) |
||
|
31 March 2025 |
- |
- |
- |
||
|
30 June 2025 |
- |
- |
- |
||
|
30 September 2025 |
292,950 |
0.45 |
1,307 |
||
|
31 December 2025 |
701,285 |
0.47 |
3,296 |
||
|
Total for the year |
994,225 |
0.47 |
4,603 |
||
Production and sales
Table 17 summarises the total copper production and sales at Demirli for the year ended 31 December 2025.
Table 17 - Total copper production and sales at Demirli for the year ended 31 December 2025
|
|
|
|
|
|
|||||
|
|
Copper production* |
|
Copper sales** |
||||||
|
Quarter ended |
Copper Concentrate (tonnes) |
Copper content (tonnes) |
|
Concentrate sales (tonnes) |
Sales value*** ($m) |
||||
|
31 March 2025 |
- |
- |
|
- |
- |
||||
|
30 June 2025 |
- |
- |
|
- |
- |
||||
|
30 September 2025 |
4,548 |
711 |
|
- |
- |
||||
|
31 December 2025 |
13,975 |
2,417 |
|
9,378 |
17.4 |
||||
|
Total for the year |
18,543 |
3,128 |
|
9,378 |
17.4 |
||||
* Including the Government of Azerbaijan's share.
** Excluding the Government of Azerbaijan's share.
*** These are invoiced sales of the Group's share of production before any accounting adjustments in respect of IFRS 15. The total for the year does not therefore agree to the revenue disclosed in note 6 - "Revenue" to the Group financial statements.
Infrastructure
The Demirli plant has excellent infrastructure. It is connected to the main highway from Baku to Georgia via a good metalled road. Electricity is supplied by the Azeri national power grid and there is a power station at site. Processing water is supplied via a closed circuit which reuses water from the tailings dam. Water losses are replenished from water from a nearby river which is stored in a dam close to the plant.
Tailings (waste) storage
There is an existing tailings dam at Demirli which was constructed by the previous owner of the property. A hybrid construction method was used to build the dam. This was initially by the centreline method (the wall is raised vertically) and later by the upstream method (each raise moves the crest of the wall upstream). The current dam has limited remaining capacity. As an interim measure, water and tailings are currently being discharged into the dam. Various technical studies, including inspections by Knight Piésold and CQA Consultants have confirmed the current tailings dam wall is safe and compliant for its current operation. The tailings dam wall is also being buttressed by waste rock from the mine.
A site for a new tailings dam has been identified at Demirli. Geotechnical studies have been completed and the tailings dam wall and pipeline route designs completed. It is targeted to obtain approval and start construction of the new tailings dam in 2026.
Xarxar
The 464 square kilometre Xarxar Contract Area is located immediately north of the Gedabek Contract Area which it borders. The Xarxar Contract Area was acquired in 2022 together with historical geological and other data owned by AzerGold CJSC, its previous owner.
The Xarxar Contract Area hosts the Xarxar copper deposit. The mineralisation of the deposit is copper dominant and comprises mainly oxides and secondary sulphides, with minerals such as malachite, azurite, pyrite, chalcocite and bornite, together with some primary chalcopyrite, as common minerals in the deposit, and minor barite and magnetite minerals are also recorded. The main copper mineralisation lenses are located in the central part of the Xarxar deposit, with approximate east-west orientations.
On 20 February 2024, a maiden JORC mineral resources estimate was published for the Xarxar deposit, which is set out in Table 4 above. No geological fieldwork was carried out during 2025. Analysis continued of the drill core acquired from AzerGold CJSC.
Gilar is situated close to the northern boundary of the Gedabek Contract Area. Geological exploration indicates that this deposit trends to the north. The Xarxar Contract Area extends the Gedabek Contract Area to the north and will therefore enable the Gilar deposit to be fully mined.
Garadag
The 344 square kilometre Garadag Contract Area is situated four kilometres north of Gedabek alongside the road from Gedabek to Shamkir. Garadag was first explored during the Soviet era and has been extensively explored since then, most recently by AzerGold CJSC, its previous owner. The roads built for drill access are still accessible and serviceable on Garadag.
In 2022, the Group acquired historical geological and other data and associated reports (the "Data") in respect of Garadag from AzerGold CJSC for $3.3 million. The Data includes geochemical and geophysical data, including maps and interpretative reports. Substantial core drilling and data interpretations were carried out by AzerGold CJSC and the Data includes 9,645 chemical assays taken from 23,454 metres of drill core, which have been transferred to the Group. The Data also includes an initial mining scoping study based on a preliminary mineral resource estimate with various options for mine development, including open pit designs, initial mining schedules and an outline metallurgical flow sheet. An environmental and socio-economic baseline assessment has also been carried out and is included in the Data.
On 24 September 2024, the Group published a maiden JORC mineral resources estimate of the Garadag deposit at July 2024. This showed a total in-situ mineral resource (indicated and inferred) of 285 million tonnes of mineralisation containing 897 thousand tonnes of copper at an average grade of 0.32 per cent. This maiden JORC resource is set out in Table 5 on above. No drilling or other geological fieldwork was carried out in 2025. However, the Group continued to analyse the drill core obtained from AzerGold CJSC.
Gosha
The Gosha Contract Area is 300 square kilometres in size and is situated in western Azerbaijan, 50 kilometres northwest of Gedabek. Gosha is regarded as under-explored. Gosha is the location of a small, high grade, underground gold mine. Ore mined at Gosha is transported by road to Gedabek for processing. No mining was carried out in the Gosha mine in the year ended 31 December 2025.
Geological fieldwork has resulted in the discovery of additional mineralisation adjacent to the existing underground mine. This includes "Hasan", a sub-vertical high gold grade mineralised vein, immediately south of the existing Gosha mine. Hasan can be accessed via a short tunnel from the existing tunnelling at Gosha. A further vein close to Hasan called "Akir" is also showing promising mineralisation.
The Group is also carrying out geological fieldwork at Asrikchay, a copper and gold target situated within the Gosha Contract Area. Asrikchay is located in the northeast corner of the Contract Area, about seven kilometres from the Gosha mine, within the Asrikchay valley.
Vejnaly
Vejnaly is a 300 square kilometre Contract Area located in the Zangilan district in southwest Azerbaijan. It borders Iran to the south and Armenia to the west and hosts the Vejnaly deposit.
A thorough survey of the site has been carried out, which has found that the main ore body was extensively mined during the Armenian occupation. There are both open pit and underground workings at the location. There is also an existing crusher and flotation processing plant at the mine, which will need extensive renovation to recommence operations.
Throughout 2025, staff were not allowed access to Vejnaly on the instructions of the Government of Azerbaijan due to the potential danger from landmines. However, access to the Contract Area was restored in early 2026.
Ordubad
The 462 square kilometre Ordubad Contract Area is located in the Nakhchivan exclave, southwest Azerbaijan, and contains numerous targets. Limited geological exploration work was carried out in the year ended 31 December 2025.
Kyzlbulag
The Kyzlbulag Contract Area is 462 square kilometres and is located in Karabakh. It contains several mines and has excellent potential for exploration, as indicated by the presence of many mineral deposits and known targets in the region. There are indications that up to 35,000 ounces of gold per year were extracted from the Kyzlbulag copper-gold mine, before the mine was closed several years ago, indicating the presence of a gold mineralising system.
The Group only carried out some initial geological studies at Kyzlbulag in the year ended 2025 as the Group had not been granted full access to the Contract Area in 2025. The Group was granted full access to Kyzlbulag in April 2026.
Geological exploration
Summary
· Limited exploration work was carried out in 2025 due to strict cost control and the Group's focus on bringing the new Gilar and Demirli mines into production.
· Limited underground drilling was carried out at the Gadir and Gilar underground mines
o 50 underground drill holes totalling 2,492 metres completed at the Gilar mine
o Four underground drill holes totalling 166 metres completed at the Gadir mine
· Geological exploration commenced at Uluxanli, a new copper and gold target at Gedabek
· Reverse circulation and core drilling was carried out at Demirli
o 2,199 reverse circulation drill holes completed with a total length of 26,974 metres to determine the remaining resource and for grade control purposes
o Seven core drill holes totalling 1,208 metres completed to investigate the potential for copper feeder zones
The drill hole database was digitised and a comprehensive alteration map prepared
· Trenching continued at Ordubad with 1,286 metres completed yielding 659 channel samples
· In-house analysis of samples from various deposits such as Zafar and Xarxar continued throughout the year
Gedabek Contract Area
Gedabek open pit mine
No exploration was conducted at the Gedabek open pit mine in 2025. Drilling activities continued to be carried out for grade control purposes.
Gadir underground mine
Four diamond drill holes totalling of 166 metres were completed in the first half of 2025. No underground sampling activities were carried out in 2025 as mining operations are complete and the mine was closed in 2025.
Gilar
The area hosts two styles of mineralisation, gold in quartz veins and hydrothermal gold-copper. Three mineralisation bodies have been discovered.
During 2025, channel sampling of the walls of the main tunnel was carried out with 248 underground samples taken with a total length of 241 metres. Additionally, 50 underground core drill holes totalling 2,492 metres were completed in the southern and southwestern flanks of the deposit. These areas show significant potential for resource and reserve expansion.
To enable detailed exploration of the so-called Upper Zones (Zone-1 and Zone-2), dedicated exploration drifts are being developed from the main Gilar underground development galleries. These drifts will provide access for shallower underground diamond drilling, allowing more accurate delineation and evaluation of mineralisation within these upper zones to support the potential addition of resources. It is planned that the underground exploration drift to support underground drilling activities will be completed by approximately November 2026.
Uluxanli
Uluxanli is a recently identified copper and gold target. During 2025, first-stage exploration activities at the Uluxanli (East Ertepe) area were completed. The program comprised assaying 575 soil geochemical samples, a detailed ground magnetic survey, XRD analyses, and comprehensive mineralogical and petrographic studies. An integrated interpretation of all acquired geological, geochemical and geophysical datasets is now being undertaken. Preliminary results have identified narrow (5 to 30 centimetres), parallel epithermal quartz veins hosting high-grade gold mineralisation. However, no associated bulk or stockwork-style mineralisation has yet been identified in the surrounding host rocks.
Zafar
The geology of the area is structurally complex, comprising mainly of Upper Bajocian-aged volcanics. The mineralisation seems to be associated with a main northwest to southeast trending structure, which is interpreted as post-dating smaller northeast to southwest structures. Zafar is characterised by copper, silver, gold and zinc mineralisation. In the southwest area, outcrops with tourmaline have been mapped, which can be indicative of the potential for porphyry-style mineral formation.
There was no geological exploration carried out at Zafar in 2025. However, all underground design preparation works for the Zafar deposit have been successfully completed. The deposit is now fully ready for the commencement of advance tunnelling and mining operations. Metallurgical laboratory test work has demonstrated consistently high leaching recoveries, confirming the favourable processing characteristics of the ore.
Interpretation of updated anomaly maps indicates that Zafar has significant potential for additional mineralisation.
Demirli Contract Area
A reverse circulation drill programme was carried out in 2025 to determine the remaining resource in the current open pit and for grade control purposes. This continued the work which was started in 2024. 2,199 reverse circulation drill holes were completed in 2025 totalling 26,974 metres. Seven core drill holes totalling 1,208 meters were also completed in the central pit to investigate the potential for copper feeder zones, with preliminary results confirming encouraging copper grades.
A geotechnical investigation of the tailings dam was carried out in 2025 with eight geotechnical drill holes completed with a combined depth of 313 metres. Seismic geophysical studies were also carried out. The purpose of this work was to assess the structural stability of the tailings dam and its compliance with safety and environmental standards.
A comprehensive structural alteration map of the Demirli mine has been prepared and the drill hole database digitised. An initial residual ore resource report has been prepared and submitted to the Government of Azerbaijan. A more precise ore resource estimate will be prepared following further sampling of existing drill core and further drilling. 157 surface samples were collected to support this more precise estimate.
Interpretation of the geological, geochemical, and structural results indicate that the Demirli deposit and its surrounding flanges hold significant remaining ore potential. In particularly, the south Demirli area exhibits substantial unexplored mineralisation. Exploration drilling is planned in this area in the coming years
Gosha Contract Area
Gosha mine
The Gosha mine is an underground, narrow vein mine, situated in the Gosha Contract Area. It was initially thought to consist of two narrow gold veins, zone 13 and zone 5. Mining has taken place from both veins. A further vein, "Hasan", has also been discovered located immediately south of zone 5, which it intersects at one point. The host rock mostly exhibits silicification and kaolinisation alteration, which changes to quartz-haematite alteration in andesite.
There was no geological exploration carried out at the Gosha mine in 2025.
Boyuk Gishlag mineralisation occurrence
Geological fieldwork activity was carried out in 2025 at the Boyuk Gishlag mineralisation occurrence. Reconnaissance work focused on assessing the mineralisation occurrences and identifying priority targets for future exploration campaigns.
Xarxar Contract Area
Xarxar deposit
No geological fieldwork was carried out at Xarxar in 2025.
Scanning of the existing Xarxar drill core was completed during 2025 using TerraCore technology. The scanning will support the development of a 3-D alteration model. This model is essential to identifying further mineralisation and to ascertain the best metallurgical methods to process the ore. TerraCore scanning is hyperspectral scanning which enables identification of anomalies not visible to the naked eye. The scanning was carried out by TerraCore staff in Azerbaijan using a TerraCore scanner imported into Azerbaijan. This is the first time hyperspectral scanning has been carried out in Azerbaijan. TerraCore and Data Rock have been contracted to interpret the hyperspectral data.
To further strengthen the JORC compliant resources of the Xarxar deposit, 1,400 core samples were submitted to ALS Laboratories (Ireland) for independent analysis and quality assurance.
Cayir
Cayir is a new copper and gold target in the Xarxar Contract Area which extends into the Garadag copper mineralisation belt. Widespread mineralised quartz veins have been observed across the area, indicating strong prospectivity. Based on the encouraging results obtained to date, Cayir is a priority exploration target within the Company's portfolio.
During 2025, exploration activities were carried out. The initial phase of the geological sampling program has been successfully completed, with a total of 1,747 rock chip and 225 metres of trench samples collected and analysed. Alteration mapping and detailed ground magnetometric surveys have also been carried out. Integrated interpretation of the geological, geochemical and geophysical datasets has highlighted multiple priority target zones and reinforces the potential for gold and copper mineralisation within the area. Despite the presence of thick soil cover, exploration work has led to the identification of the Qızıl (Gold) mineralisation zone, which is considered highly prospective for gold.
Follow-up exploration programs are planned and will include more extensive geochemical sampling and a staged drilling campaign aimed at delineating and evaluating the identified mineralised area.
Garadag Contract Area
No geological field work was carried out at Garadag in 2025. Detailed assessment continued of the historical exploration data and metallurgical studies to better understand the processing characteristics of the deposit's mineralisation.
As part of the investigation into the potential for in-situ leaching of the Garadag ore body, underground mine design studies were undertaken in the year. A total of 12 geotechnical and hydrogeological drillholes were completed, with a cumulative depth of 1,423 metres. Following geotechnical and structural logging of core samples, selected samples will be sent to the laboratory for comprehensive geotechnical testing, including unconfined compressive strength and triaxial, tensile, shear, and plate load tests. Vibrating wire piezometers are being installed in the drillholes to monitor hydrogeological conditions.
Ordubad Contract Area
Trenching continued in 2025 in the Dirnis and Destabashi areas with 1,286 metres completed yielding 659 channel samples. Trenches were dug with a depth of 10 metres to explore extensions of previously identified copper and silver mineralisation. Consistent with earlier trenching campaigns, results confirmed that mineralisation thickness increases by about 30 per cent. compared to surface expressions.
Vejnaly Contract Area
No geological fieldwork was carried out in 2025 as the Group did not have access to the Contract Area. Now that access to the Contract Area has been restored, in-house geological fieldwork will start exploring known gold targets and targets identified by the "WorldView-3" study carried out in 2024. A detailed target mineralisation map has also been developed.
Kyzlbulag Contract Area
During 2025, no field-based exploration activities were conducted at the Kyzlbulag Contract Area. The Company was granted full access to the Contract Area in April 2026 but small scale site visits were undertaken in 2025.
The Kyzlbulag Contract Area, located southwest of the Demirli Contract Area and covering approximately 300 square kilometres, has a known history of gold and copper and polymetallic mineralisation. Historical exploration records indicate the presence of the Kyzlbulag deposit and five additional polymetallic occurrences within the license boundary. According to Soviet-era (1989) and Azerbaijan State (1998) data, the Kyzlbulag deposit was estimated to contain approximately 78.8 million tonnes of ore, including 28.35 tonnes of gold, 32.40 tonnes of silver, and 99.25 thousand tonnes of copper. These historical figures have not yet been verified against modern reporting standards. The deposit is reported to have been mined during the period of Armenian occupation.
During 2025, the Group continued the digitisation and integration of all available historical geological, geochemical, and production records. These data are being combined with remote sensing interpretations and broader regional geological information to reassess the area's mineral potential and guide future exploration priorities.
Now that access to the Kyzlbulag Contract Area and former mine sites has been restored, field evaluations will be undertaken. These will include validation of historical mineralisation targets and an assessment of potential residual ore at the Kyzlbulag deposit.
Sale of the Group's products
Important to the Group's success is its ability to transport its products to market and sell them without disruption.
In the year ended 31 December 2025, the Group shipped all its gold doré to Switzerland for refining by MKS Finance SA. The logistics of transport and sale are well established and gold doré shipped from Gedabek arrives in Switzerland within three to five days. The proceeds of the estimated 90 per cent of the gold content of the doré is sold and revenue recognised within one to two days of receipt of the doré. The Group, at its discretion, can sell the resulting refined gold and silver bullion to the refiner. All sales of gold and silver bullion in 2025 were made to MKS Finance SA.
The Gedabek and Demirli mine sites both have good road transportation links. The Group established two logistics centres in 2025, one each for its Gedabek and Demirli mine sites. These logistics centres, which have warehousing and material handling facilities, are both situated close to the main Baku to Georgia highway. Copper and precious metal concentrate is initially transported to the respective logistics centres by the Group. The concentrate is then collected by truck from the logistics centres by the purchaser. The Group sells its copper concentrate to three metal traders as detailed in note 6 to the Group financial statements. The contracts with each metal trader are periodically renewed and each new contract requires the approval of the Government of Azerbaijan.
Copper Giant Resources Corp. (formerly Libero Copper & Gold Corporation) ("Copper Giant")
Copper Giant owns the Mocoa copper property in Colombia. The Company's shareholding in Copper Giant was unchanged in 2025 with no further investment being made. The Group's interest was held as an equity investment throughout 2025.
Further information can be found at https://coppergiant.co/.
Principal risks and uncertainties
Country risk in Azerbaijan
The Group's wholly owned operations are solely in Azerbaijan and are therefore at risk of adverse changes to the regulatory or fiscal regime within the country. However, Azerbaijan is outward looking and desirous of attracting direct foreign investment and the Company believes the country will be sensitive to the adverse effect of any proposed changes in the future. In addition, Azerbaijan has historically had a stable operating environment, and the Company maintains very close links with all relevant authorities.
Operational risk
The Company currently produces all its products for sale at Gedabek and Demirli. Planned production may not be achieved as a result of unforeseen operational problems, machinery malfunction or other disruptions. Operating costs and profits for commercial production therefore remain subject to variation. The Group monitors its production daily and has robust procedures in place to effectively manage these risks. Planned production may also not be achieved due to lower ore being available than predicted by its geological models. The Company maintains active exploration and other geological programmes to minimise the risk.
Commodity price risk
The Group's revenues are exposed to fluctuations in the price of gold, silver and copper and all fluctuations have a direct impact on the operating profit and cash flow of the Group. Whilst the Group has no control over the selling price of its commodities, it has very robust cost controls to minimise expenditure to ensure it can withstand any prolonged period of commodity price weakness. The Group actively monitors all changes in commodity prices to understand the impact on its business. The directors keep under review the potential benefit of hedging which it carries out from time to time. The Group did not hedge any sales of copper and gold in 2025.
Foreign currency risk
The Group reports in United States Dollars and a large proportion of its costs are incurred in United States Dollars. It also conducts business in Euros, Azerbaijan Manats and United Kingdom Sterling. The Group does not currently hedge its exposure to any foreign currency exchange rate exposure, although it continues to review this periodically.
Liquidity and interest rate risk
The Group utilised various credit lines from several banks in Azerbaijan throughout 2025. This was primarily to provide working capital whilst the Gilar and Demirli mines were brought into production. The banks loans were all at a fixed rate of interest and therefore the Group had no interest rate risk in respect of bank loans during 2025.
The Group also utilised a vendor financing facility which carries interest at a rate of CME Term SOFR plus a margin of 2 per cent. Given the size of the borrowing and relative stability of interest rates, the Group does not consider that this variable rate presents any material interest rate risk to the Group.
Russian invasion of Ukraine and US/Iran war
The Company is unaffected directly by the Russian invasion of Ukraine or the US/Iran war. It is also unaffected by Government or private individuals sanctioned as a result of these wars. The Company is subject to changing global macro-economic conditions as a result of these wars such as higher input costs.
Key performance indicators
The Group has adopted certain key performance indicators ("KPIs") which enable it to measure its financial performance. These KPIs are as follows:
1 Profit before taxation. This is the key performance indicator used by the Group. It gives insight into cost management, production growth and performance efficiency.
2 Net cash provided by operating activities. This is a complementary measure to profit before taxation and demonstrates conversion of underlying earnings into cash. It provides additional insight into how we are managing costs and increasing efficiency and productivity across the business in order to deliver increasing returns.
3 Free cash flow ("FCF"). FCF is calculated as net cash from operating activities, less expenditure on property, plant and equipment and mine development, and Investment in exploration and evaluation assets including other intangible assets.
Reza Vaziri
President and chief executive
26 May 2026
Financial review
Currency of financial review
References to "$" and "cents" are to United States dollars and cents. References to "£" and "p" are to United Kingdom Sterling pounds and pence. References to AZN are to the Azerbaijan New Manat. References to "m" are to million and some figures below may not sum due to rounding.
Group statement of income
The Group generated revenues in 2025 of $122.8m (2024: $39.6m) from the sales of gold doré, gold and silver bullion and copper and precious metal concentrate. The Group's revenues were higher in 2025 due to increased production due to a full year of operation of the Gedabek site and the start of operations of the Gilar and Demilri mines in the year and higher metal selling prices.
The revenues in 2025 included $68.3m (2024: $37.1m) generated from sales of gold and silver bullion from the Group's share of the production of doré bars. Bullion sales in 2025 were 19,631 (2024: 15,251) ounces of gold and 20,935 (2024: 10,563) ounces of silver at an average price of $3,441 (2024: $2,432) per ounce and $37 (2024: $29) per ounce respectively. In addition, the Group generated revenue in 2025 of $54.5m (2024: $2.5m) from the sale of 29,695 (2024: 1,519) dry metric tonnes of copper and precious metal concentrate. The Group's concentrate sales in 2025 for the Gedabek and Demirli mines in 2025 were $41.4m and $13.1m respectively. The Group's revenue benefited in the year from a higher average price of gold at $3,441 (2024: $2,390) per ounce and a higher average price of copper at $9,797 (2024: $9,267) per tonne. The Group made buy and hold sales of copper concentrate in December 2025 of 4,444 dry metric tonnes totalling $8.6m (2024:nil). Buy and hold sales are where the inventory was not delivered to the purchaser at 31 December 2025. The inventory sold was kept on the Group's premises but segregated from other inventory and not available for sale.
The were no precious metal or copper sales made under any hedging programme in 2025. In March and April 2024, 1,600 ounces of gold were sold under a hedging programme started in 2023 at an average price of $1,976.85 per ounce. The Group generated lower revenue in 2024 of $30,600 from the hedging programme, calculated by comparing the hedged sale price with the spot price at each date of sale.
The Group incurred cost of sales in 2025 of $68.2m (2024: $49.7m) as follows:
|
|
2025 $m |
2024 $m |
|
Gedabek |
54.6 |
49.7 |
|
Demirli |
13.6 |
- |
|
Total cost of sales |
68.2 |
49.7 |
The costs of sales at Gedabek in 2025 increased due to increased production and the opening of the Gilar mine effective May. The Demirli mine only operated in 2025.
Depreciation of owned assets in 2025 increased to $13.5m compared to $10.5m in 2024. Accumulated mine development costs within producing mines are depreciated and amortised on a unit-of-production basis over the economically recoverable reserves of the mine concerned or by the straight-line method. The costs of the producing mines which are depreciated include future capital development which will be required to process the economically recoverable reserves. The depreciation of right of use assets in 2025 was $8.5m compared to $0.8m in 2024. This was due to the depreciation of the Demirli property complex which was leased in 2025. The Demirli property complex is depreciated on a straight line basis.
The Group incurred administration expenses in 2025 of $9.3m (2024: $6.6m) as follows:
|
|
2025 $m |
2024 $m |
|
Gedabek |
0.3 |
0.2 |
|
Demirli |
0.8 |
0.3 |
|
Baku office |
5.5 |
3.1 |
|
Corporate |
2.7 |
3.0 |
|
Total administration costs |
9.3 |
6.6 |
The Demirli administration costs increased as the site commenced production in 2025. Baku office costs increased due to the increased headcount required for the administration of Demirli in the year. The Baku administrative headcount at 31 December 2025 was 56 (2024: 46).
The majority of the administration costs are incurred in either Azerbaijan New Manats, the United States dollar or United Kingdom pounds sterling. The Azerbaijan New Manat was stable against the US dollar in 2025 at an exchange rate of $1 equals AZN1.7. The United States dollar to the United Kingdom Pounds Sterling exchange rate was relatively volatile in 2025 with the Pound Sterling slowly strengthening during 2025 from £1 equals $1.25 at the beginning of January to £1 equals $1.34 at the end of December.
Other operating expenses of $4.4m (2024: $1.7m) include impairment of inventory of $3.3m (2024: $nil) selling costs of $0.3m (2024: $0.2m). Selling costs for 2025 comprised transportation costs of gold doré of $0.2m and gold doré refining costs of $0.1m. Selling costs increased due to the increased product sold in the 2025.
Finance costs in 2025 were $5.2m (2024: $3.0m). Finance costs comprise interest on borrowings and lease liabilities, interest on unwinding the discount on provisions, interest on deposit received from a customer and interest on the AzerGold CJSC creditor. Finance costs increased in 2025 compared to 2024 due to the Group's increase in borrowings in 2025, and additional finance charges in 2025, in respect of the lease and rehabilitation provision of the Demirli mine.
The Group's investment in Copper Giant Resources Corp (formerly Libero Copper & Gold Corporation) ("Copper Giant") remained a financial asset throughout 2025. Other income of $0.3m (2024: Other expense of $0.1m) was recorded in respect of Copper Giant. This was the revaluation of the Group's shareholding to market value at 31 December 2025.
The Group recorded an impairment charge in 2025 in respect of its historical geological exploration expense of $7.6m (2024: $1.3m). The 2025 charge was $2.6m in respect of Ordubad and $5.0m in respect of Gedabek.
The Group recorded a profit before taxation in 2025 of $25.8m (2024: loss before taxation $21.3m). The profit in 2025 arose from a full year of operations and the start of production from the Gilar mine at the Gedabek site in May 2025 and start of production at the Demirli mine site in July 2025.
The Group had a taxation charge in 2025 of $8.2m (2024: benefit of $3.8m). This comprised a current income tax charge of $0.2m (2024: $nil) and a deferred tax charge of $8.0m (2024: benefit of $3.8m). R.V. Investment Group Services ("RVIG") in Azerbaijan generated taxable profits in 2025 of $22.8m (2024: losses of $5.1m). RVIG's taxable profits are taxed at 32 per cent. (the corporation tax rate stipulated in the Group's production sharing agreement). RVIG had tax losses available for carry forward of $nil at 31 December 2025 (2024: $22.4m).
All-in sustaining cost of gold and copper production
The Group will not report an all-in sustaining costs ("AISC") for 2024 and 2025. AISC has not been presented for 2024, as operating costs for that period included significant non-production expenditures, including site care and maintenance costs at Gedabek, expenses associated with an idle processing plant, and workforce costs where a substantial proportion of employees were on administrative leave. In 2025, Demirli and Gilar both commenced operations mid-year. As a result, AISC for 2024 and 2025 would not provide a meaningful measure of operating performance.
Group statement of financial position
Non-current assets
Non-current assets increased from $101.0m at the end of 2024 to $147.2m at the end of 2025. Intangible assets decreased by $6.6m from $24.0m at the end of 2024 to $17.4m at the end of 2025 due to transfers of intangible assets to assets under construction at Gedabek of $0.1m, amortisation of $0.4m and impairment of $7.6m. This was partially offset by additions of $1.4m (2024: $2.2m). Property, plant and equipment were higher by $11.0m due to additions of $25.6m and transfer from intangibles of $0.1m partially offset by depreciation of $13.5m. The rehabilitation provision increased by $3.8m due to the increase of the Gedabek rehabilitation provision of $1.3m and the inclusion of the rehabilitation provision of Demirli of $2.5m.
Right of use assets at $33.0m were $31.3m higher in 2025 compared to $1.7m in 2024. Additions of $39.8m were partially offset by depreciation of $8.5m. The additions of $39.2m were in respect of the lease of the Demirli property complex (the "Demirli Lease"). The Demirli lease is further explained below.
Demirli lease
The Group leased the Demirli Property Complex in 2025. The term commencement date (the date from which the Group commenced paying rent) was 1 October 2025. The initial term is 3 years which is extendable, and which can be cancelled at any time by the Group, subject to certain provisions under the Group's Production Sharing Agreement. The lease has been accounted for as a capital lease under the assumption that the property will be leased for three years. This is the directors best estimate of the period that flotation processing will take place at Demirli. The assets were made available to the Group on 30 April 2025, which is the inception date of the lease for IFRS accounting. The period from 30 April to 30 September 2025 has been treated as a rent-free period.
There is a base rent of $24m per annum which is variable dependent upon production and revenues. The minimum rent payable is $15m per annum and there is no maximum rent. The base rent will be reduced, if in any calendar year, 75 per cent. of the revenue from the flotation plant less operating and capital expenses (the "Minimum Rent") is less than $24 million. The Minimum Rent will be paid for that calendar year subject an overall lower limit of a Minimum Rent payment of $15 million per annum. If 15 per cent. of revenue in any year exceeds $28 million, the rent will be increased to 15 per cent. of revenue less $4 million. This is provided 75 per cent. of revenue less operating and capital expenses is greater than $28 million. The Group's usual production sharing arrangements will apply to Demirli. The rent will be included in the Demirli recoverable costs in accordance with the production sharing agreement and will be deductible for tax.
The business plan used to calculate the capitalised value of the lease assumes only the minimum rent of $15m per annum will be paid over the 3 years and a discount rate of 7.0 per cent. per annum. Under these assumptions, the capitalised value of the lease is $39.3m. Additional expenditure to the Demirli property complex to make it fully operational was $11.2m which was capitalised as leasehold improvements within the property, plant and equipment. The amount of rent payable used to calculate the capital value of the lease is from a business plan for Demirli prepared using the directors' best estimates. The right of use asset for Demirli is depreciated on a straight-line basis.
Current assets
Current assets increased by $49.1m to $92.1m at 31 December 2025 compared to $43.0m at 31 December 2024. All categories of current assets increased due to the increased size of the operations of the business in 2025.
Inventories increased from $24.7m in 2024 to $37.5m in 2025 due to increases in metal in circuit and the tailings dam, ore stockpiles and finished goods. The increases in metal in circuit and tailings dam were due to increased production in 2025. There were 366 ounces of gold within metal in circuit valued at $8.0m at 31 December 2025 compared to 18.0 ounces of gold within metal in circuit valued at $0.4m at 31 December 2024. Gold in the tailings dam at 31 December 2025 was 217 ounces valued at $0.7m (2024: 217 ounces valued at $0.5m). Ore stockpiles increased due to stockpiling of Gilar ore at Gedabek during 2025 and the inclusion for the first time of ore stockpiled at Demirli. In total (including ore stockpiles classified as non-current assets) there were 17,770,000 tonnes of ore stockpiled at 31 December 2025 compared to 568,000 tonnes at 31 December 2024 valued at $17.4m and $6.7m respectively. At 31 December 2025 there was 1,414 tonnes of copper concentrate in inventory valued at $8.0m (2024: 58 tonnes valued at $0.5m) and 795 ounces of gold bullion valued at $2.0m (2024: 1,055 ounces valued at $2.3m).
Trade and other receivables increased from $13.0m in 2024 to $24.4m in 2025. The main reasons were an increase of gold held on behalf of the Government of Azerbaijan, trade receivables and prepayments. Gold held on behalf of the Government at 31 December 2025 was $14.3m (2024 $7.5m). This was 3,320 ounces of gold (2024: 2,862 ounces) due to the Government of Azerbaijan valued at the market price of gold at 31 December 2025 of $4,308 per ounce (31 December 2024: $2,611 per ounce). Gold held on behalf of the Government was offset by an other creditor of equal amount. Trade receivables increased to $2.4m (2024: $nil) due to sales of concentrate made in December 2025. Prepayments increased to $3.6m (2024: $1.3m) due to amounts paid to suppliers in respect of production at the Gilar mine and the Demirli flotation plant.
The Group's cash balances at 31 December 2025 were $21.2m (31 December 2024: $0.9m) and restricted cash of $9.0m (31 December 2024: $6.0m) which is not available for use by the Group as it is pledged as security for two loans from a bank. Surplus cash during the year was maintained in US dollars and was placed on fixed deposit with banks in Azerbaijan at tenors of between one to three months at interest rates of around 2.5 to 4.0 per cent.
Current liabilities
All categories of current liabilities increased due to the growth of the business.
Trade creditors increased from $5.5m at 31 December 2024 to $11.1m at 31 December 2025 due to increased activity. Gold held on behalf of the Government of Azerbaijan increased from $7.5m to $14.3m as set out above in current assets. Trade and other liabilities at 31 December 2024 also included a $3.4m creditor for geological data which was settled in 2025. There was also an amount owed the Government of Azerbaijan in respect of copper concentrate sales of $7.3m (2024: 1.0m). This increased due to increased copper concentrate sales in 2025. The increase in lease liabilities is discussed below.
Interest bearing loans and borrowings
Total borrowings at fair value including interest at 31 December 2025 were $27.7m (31 December 2024: $21.6m). These comprise borrowings from local banks in Azerbaijan totalling $25.8m (2024: $18.5m) and a vendor financing loan of $1.9m (2024: $3.1m). The total liability is disclosed as a current liability of $22.2m (2024: $18.5m) and non-current liability of $5.5m (2024: $3.1m). The Group entered into 4 new loans from local Azerbaijan banks totalling $12.0 million in 2025. These loans bear interest rates of between 5 per cent. to 8.5 per cent. $5.0m of the loans are repayable in 2026 and $7.0m of the loans are repayable in December 2028. The principal of the loans are repayable either at the end of the loan term or throughout the life of the loan on a fixed repayment, reducing principal balance basis. Total principal repayments on its borrowings in 2025 were $6.0m (2024: $2.8m).
The Group received the proceeds of a vendor financing facility with Caterpillar Financial Services Corporation ("Caterpillar") in 2024 of $3.7m. The interest rate is CME Term SOFR rate plus a margin of 2 per cent. and repayment of capital is by 12 equal quarterly instalments. The amount outstanding at 31 December 2025 was $1.9m (2024: $3.1m). The loan is subject to net debt to EBITDA and net worth covenants. The Group complied with these covenants at 31 December 2025.
Non-current liabilities
As at 31 December 2025 non-current liabilities of the Group comprises of provision for rehabilitation in the amount of $22.9m (2024: $19.1m), borrowings in the amount of $5.5m (2024: $3.1m), deferred tax liability in the amount of $24.5m (2024: $16.5m) and lease liabilities in the amount of $25.5m (2024: $1.5m). The provision for rehabilitation includes the provision for Demirli, for the first time, of $2.5m. The provision for rehabilitation for Gedabek also increased to $20.4m. Lease liabilities are separately discussed below.
Lease liabilities
Total lease liabilities at 31 December 2025 were $39.2m (2024: $2.1m) of which $13.7m were current liabilities and $25.5m were liabilities due after one year. The increase in lease liabilities was due to the leasing of the Demirli property complex in 2025. Lease liabilities incurred finance costs of $2.0m and repayment of the lease liabilities in 2025 was $0.8m.
Net assets
Net assets were $85.2m at the end of 2025 compared to $67.5m at the end of 2024. The net assets were higher due to an increase in retained earnings as a result of the profit in 2025.
Equity
The Group's gearing ratio at 31 December 2024 and December 2025 was 35.3 per cent. and 78.5 per cent. respectively. The calculation of the gearing ratio is set out in note 25 - financial instruments to the Group financial statements.
The Group issued 100,000 (2024: nil) ordinary shares in 2025 under an employee share option scheme. This resulted in an increase in issued share capital of $1,335 and an increase in the share premium account of $0.3m. The Group's holding company did not buy back any ordinary shares in 2024 or 2025. However, the share buy backs in 2022 were deemed unlawful due to lack of distributable reserves of the Group's holding company. Following a shareholder meeting and execution of a share buy back deed with S P Angel Corporate Finance LLP, legal force was given to the share backs in 2025. The share buy backs have therefore been accounted for in 2025. No dividends were paid in 2025.
Copper Giant Resources Corp. (formerly Libero Copper & Gold Corporation) ("Copper Giant")
The Group's investment in Copper Giant was reclassified as a financial asset on 15 February 2024 as the Group's interest reduced to 5.7 per cent. and Michael Sununu resigned from the board. There was no further investment in Copper Giant.
From 15 February 2024, the investment in Copper Giant is included in the Group's balance sheet by reference to their closing quoted value at each respective balance sheet date. The market value of the Group's shares in Copper Giant at 31 December 2025 was $0.8m (31 December 2024: $0.5m). In 2025, an unrealised profit on the value of the shares of $0.3m was recorded as other income (2024: unrealised loss of $0.1m recorded as other expense). The investment is classified as a non-current financial asset as the directors do not intend to sell the shares within 12 months of the balance sheet date.
Group cash flow statement
Operating cash inflow before movements in working capital for 2025 was $67.0m (2024: outflow of $6.6m). Operating cash was improved in the year due to the start of production from the Gilar and Demirli mines.
Working capital movements absorbed cash of $20.2m (2024: generated cash of $15.2m) due to an increase in inventories which were higher by $22.9m (2024: lower by $9.9m) and trade and other receivables which were higher by $6.5m (2024: lower by $3.4m). The increase in inventories and trade and other receivables was due to the higher activity in 2025.
Cash from operations in 2025 was $46.7m compared to $8.6m in 2024 due to the higher cash flows from operations.
The Company paid corporation tax in 2025 of $nil (2024: $nil) in Azerbaijan in accordance with local requirements as its profits were extinguished by losses brought forward. The Group has no tax losses carried forward in Azerbaijan at 31 December 2025 (2024: $22.4m).
Expenditure on property, plant and equipment and mine development in 2025 was $25.9m (2024: $8.9m). The main additions in 2025 were the development costs of $11.2m for Demirli and $3.5m for the Gilar mine. The expenditure also included $3.2m for the final stage of the Gedabek tailings dam wall raise.
The Group was also financed by two concentrate prepayment agreements with Trafigura Pty. Ltd. The Group drew down $16.5m under this facility in 2025, but all amounts were repaid by 31 December 2025.
Expenditure on intangible assets in 2025 was $1.4m (2024: $2.1m) which was expenditure on exploration and evaluation. The main expenditure on exploration and evaluation expenditure was $0.9m (2024: $0.7m) and $0.1m (2024: nil) at Gedabek and Vejnaly respectively. Expenditure on exploration and evaluation in 2025 was curtailed to conserve funds due to the partial suspension of processing in the year.
Dividends
In respect of the year ended 31 December 2025, the Group did not pay an interim dividend and a final dividend of 4 United States cents is proposed.
Production Sharing Agreement
Under the terms of the Production Sharing Agreement (the "PSA") with the Government of Azerbaijan (the "Government"), the Group and the Government share the commercial products of each mine. The Government's share is 51 per cent. of "Profit Production". Profit Production is defined as the value of production, less all capital and operating cash costs incurred during the period when the production took place. Profit Production for any period is subject to a minimum of 25 per cent. of the value of the production. This is to ensure the Government always receives a share of production. The minimum Profit Production is applied when the total capital and operating cash costs (including any unrecovered costs carried forward from previous periods) are greater than 75 per cent. of the value of production. All operating and capital cash costs in excess of 75 per cent. of the value of production can be carried forward indefinitely and set off against the value of future production.
Profit Production and unrecovered costs are calculated separately for each Contract Area from the total production and total costs for each Contract Area. Costs incurred in one Contract Area cannot be offset against production of a different Contract Area. Unrecovered costs can only be recovered against future production from their respective contract area.
Profit Production for the Group has been subject to the minimum 25 per cent. for all years since commencement of production including 2025 for the Gedabek Contract Area. The Government's share of production in 2024 (as in all previous years) was therefore 12.75 per cent. being 51 per cent. of 25 per cent. with the Group entitled to the remaining 87.25 per cent. The Group was therefore subject to an effective royalty on its revenues in 2025 of 12.75 per cent. (2024: 12.75 per cent.) of the value of its production at Gedabek and Demirli mines.
The Group can recover the following costs in accordance with the PSA for each Contract Area as follows:
• all direct operating expenses of the mine;
• all exploration expenses;
• all capital expenditure incurred on the mine;
• an allocation of corporate overheads - currently, overheads are apportioned to Gedabek according to the ratio of direct capital and operating expenditure at the Gedabek contract area compared with direct capital and operational expenditure at the Gosha and Ordubad contract areas; and
• an imputed interest rate of United States Dollar LIBOR + 4 per cent. per annum on any unrecovered costs.
The total unrecovered costs (operating costs and capital expenditure) for the Group's eight contract areas are as follows:
|
Contract area |
Total unrecovered costs ($m) |
|
|
31 December 2025 |
31 December 2024 |
|
|
Gedabek |
70.5 |
82.0 |
|
Gosha |
41.9 |
38.3 |
|
Ordubad |
40.1 |
36.6 |
|
Vejnaly |
2.7 |
2.3 |
|
Garadag |
4.5 |
1.4 |
|
Xarxar |
4.8 |
3.9 |
|
Demirli |
9.3 |
0.3 |
|
Kyzlbulag |
3.0 |
- |
Foreign currency exposure
The Group reports in US dollars and a substantial proportion of its business is conducted in either US dollars or the Azerbaijan Manat ("AZN") which has been stable at AZN 1 equalling approximately $0.59 during the year ended 31 December 2025. The Company's revenues and its debt facility are also denominated in US dollars. The Company does not currently have any significant exposure to foreign exchange fluctuations and the situation is kept under review.
Calculation of non-IFRS financial indicators
Net debt/cash
Calculated as the cash and cash equivalents minus current and non-current interest-bearing loans and borrowings.
Free cash flow
Calculated as net cash from operating activities less expenditure on property, plant and equipment and mine development and, Investment in exploration and evaluation assets including other intangible assets.
Going concern
Preparation of financial statements on a going concern basis
The directors have prepared the Group financial statements on a going concern basis after reviewing the Group's forecast cash position for the period from the date of signing these financial statements to 30 June 2027 (the "going concern review period") and satisfying themselves that the Group will have sufficient funds on hand to meet its obligations as and when they fall due over the period of their assessment. Appropriate rigour and diligence have been applied by the directors who believe the assumptions are prepared on a realistic basis using the best available information.
Main business of the Group
The Group produces gold and copper at its Gedabek mining concession in northwestern Azerbaijan. Ore mined at Gedabek produces gold doré by heap and agitation leaching and copper concentrate (which also contains gold and silver) from SART and flotation processing. The Group's new Gilar underground mine which commenced production in May 2025 has substantially increased production at Gedabek as its ore is much richer than the Group's older legacy mines.
The Group also commenced copper production from its Demirli property in Karabakh in July 2025. Demirli is an existing open pit copper mine and associated flotation plant which was acquired in 2022 and has been extensively refurbished by the Group. It produces a copper concentrate which is delivered to offtakers at a dedicated logistics centre.
Business plans for Gedabek and Demirli
The directors have prepared a cash flow forecast for the Gedabek operation that assumes production is consistent with the business plan and uses a gold price of between $4,100 and $4,500 per ounce and a copper price of between $11,500 and $12,000 per tonne. This cash flow forecast shows that the Gedabek operation is cash generative throughout the going concern review period and able to fund its working capital, capital expenditure and financing operations from cash generated from its operations.
The directors have started the process to apply for the second five-year extension of the Gedabek licence from March 2027 to March 2032 in accordance with the Group's production sharing agreement. The directors have judged the second five-year extension will be obtained (see note 32 - "Contingencies and commitments" to the Group financial statements)
The directors have also prepared a cash flow forecast for the Group's new Demirli operation which assumes production is consistent with the business plan and uses the same copper price as the Gedabek business plan. The cash flow forecast shows that Demirli will be cash generative throughout the going concern review period and able to fund its working capital and capital expenditure from cash generated from its operations.
Sensitivities of business plans
The directors have considered a range of outcomes for the major variables which effect the cash flow. These are as follows:
· Production
· Costs
· Metal selling prices
Sensitivity analysis was performed on the cash flow of a decrease of 20 per cent. for production and metal selling prices and an increase in costs of 20 per cent. The analysis showed that under this range of sensitivities, the Group could still continue as a going concern.
Given the ongoing evaluation of potential resources and reserves at Demirli, a downside scenario, being an indefinite pause in production at Demirli, has been modelled. This scenario shows that cancellation of the lease is possible under the terms of the lease agreement, and the Group would have sufficient cash from the operations at Gedabek to meet its liabilities as they fall due. The directors do not consider this scenario likely, but it is one of the sensitivity scenarios that has been considered.
Financial condition and credit facilities available to the Group
The Group had cash reserves of $37.2 million and debt (excluding leases) of $19.5 million at 31 March 2026. The Group generated net cash of $15.4 million in the three months to 31 March 2026.
The Group has in place several credit facilities:
· An AZN 55 million ($32.3 million) General credit agreement with the International Bank of Azerbaijan ("IBA") with minimal conditions on drawdown. The Group had outstanding borrowings of $17.3 million under this facility at 31 December 2025;
· Two copper concentrate prepayment facilities with Trafigura Pte Ltd. ("Trafigura")
o A 3-month revolving, $5.0 million to $10.0 million prepayment facility for concentrate produced at Gedabek.
o A 3-month revolving prepayment facility of up to $25 million at an interest rate of SOFR plus 4 per cent. per annum for concentrate produced at Demirli.
· A $5 million loan facility with Yapi Credit Bank in Azerbaijan. The Group had utilised $3 million of this facility at 31 December 2025.
There was $nil outstanding under the Trafigura Pte Ltd. facilities at 31 December 2025.
The Group's business plans show, that as the Group will be cash generative, the Group does not intend to make any further borrowings in the going concern review period to fund its current operations. However, these facilities are available to cover any shortfalls in cash generation against the business plans.
The Group closed a vendor refinancing in 2024 and $1.9 million is outstanding at 31 December 2025. The loan will be repaid in quarterly instalments with the final instalment in July 2027. The loan is subject to a net debt to EBITDA ratio covenant and a net worth covenant. The Group complied with these covenants for the year ended 31 December 2025.
Directors' going concern opinion
The Group's business activities, together with the factors likely to affect its future development, performance and position, can be found within the chairman's statement above, the president and chief executive's review above and the strategic report on pages above. The financial position of the Group, its cash flow, liquidity position and borrowing facilities are discussed within this financial review. In addition, note 25 to the Group financial statements below includes the Group's financial management risk objectives and details of its financial instrument exposures to credit risk and liquidity risk.
After making due enquiry, the directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, the directors continue to adopt the going concern basis in preparing the annual report and financial statements.
William Morgan
Chief financial officer
26 May 2026
Directors emoluments
|
Year ended 31 December 2025 |
Consultancy $ |
Fees $ |
Benefits $ |
Total $ |
|
John Monhemius |
- |
71,071 |
- |
71,071 |
|
John Sununu |
- |
74,400 |
- |
74,400 |
|
Michael Sununu |
- |
54,000 |
- |
54,000 |
|
Reza Vaziri |
576,099 |
54,000 |
46,165 |
676,264 |
|
Khosrow Zamani |
- |
123,600 |
- |
123,600 |
|
|
576,099 |
377,071 |
46,165 |
999,335 |
|
|
|
|
|
|
||||
|
Year ended 31 December 2024 |
Consultancy $ |
Fees $ |
Benefits $ |
Total $ |
|
|||
|
John Monhemius |
14,157 |
58,329 |
- |
72,486 |
|
|||
|
John Sununu |
- |
74,400 |
- |
74,400 |
|
|||
|
Michael Sununu |
- |
54,000 |
- |
54,000 |
|
|||
|
Reza Vaziri |
584,981 |
54,000 |
46,238 |
685,219 |
|
|||
|
Khosrow Zamani |
- |
123,600 |
- |
123,600 |
|
|||
|
|
599,138 |
364,329 |
46,238 |
1,009,705 |
|
|||
Directors' fees and consultancy for 2024 and 2025 were paid in cash.
No director held or exercised any share options during the years ended 31 December 2024 and 31 December 2025.
Group statement of income
year ended 31 December 2025
|
|
|
2025 |
2024 |
|
|
|
Continuing operations |
Notes |
$000 |
$000 |
|
|
|
Revenue |
6 |
122,789 |
39,585 |
|
|
|
Cost of sales |
|
(68,174) |
(49,652) |
|
|
|
Gross profit/(loss) |
|
54,615 |
(10,067) |
|
|
|
Other operating income |
7 |
710 |
1,340 |
|
|
|
Administrative expenses |
|
(9,253) |
(6,570) |
|
|
|
Other operating expenses |
7 |
(4,427) |
(1,694) |
|
|
|
Impairment charge of development assets |
15 |
(3,620) |
(534) |
|
|
|
Impairment of geological exploration |
14 |
(7,569) |
(1,314) |
|
|
|
Operating profit/(loss) |
8 |
30,456 |
(18,839) |
|
|
|
Finance costs |
10 |
(5,237) |
(2,973) |
|
|
|
Finance income |
|
313 |
289 |
|
|
|
Other income |
7 |
891 |
- |
|
|
|
Other expense |
7 |
(596) |
(75) |
|
|
|
Share of loss of an associate company |
11 |
- |
(46) |
|
|
|
Reversal of impairment for investment in an associate company |
11 |
- |
354 |
|
|
|
Profit/(loss) before tax |
|
25,827 |
(21,290) |
|
|
|
Income tax (charge)/benefit |
12 |
(8,146) |
3,788 |
|
|
|
Profit/(loss) attributable to the equity holders of the parent |
|
17,681 |
(17,502) |
|
|
|
|
|
|
|
||
|
Profit/(loss) per share attributable to the equity holders of the parent |
|
|
|
||
|
Basic (US cents per share) |
13 |
15.5 |
(15.3) |
||
|
Diluted (US cents per share) |
13 |
15.4 |
(15.3) |
||
Group statement of comprehensive income
year ended 31 December 2025
|
|
|
2025 |
2024 |
|
|
|
$000 |
$000 |
|
Profit/(loss) for the year |
|
17,681 |
(17,502) |
|
Total comprehensive profit/(loss) |
|
17,681 |
(17,502) |
|
Total comprehensive profit/(loss) for the year attributable to the equity holders of the parent |
|
17,681 |
(17,502) |
Group statement of financial position
31 December 2025
|
|
|
2025 |
2024 Restated* |
1 January 2024 Restated* |
||
|
|
Notes |
$000 |
$000 |
$000 |
||
|
Non-current assets |
|
|
|
|
||
|
Intangible assets |
14 |
17,409 |
23,998 |
27,126 |
||
|
Property, plant and equipment |
15 |
82,915 |
71,910 |
66,775 |
||
|
Right of use assets |
16 |
32,993 |
1,690 |
2,053 |
||
|
Investment in an associate company |
|
- |
- |
242 |
||
|
Financial assets |
17 |
762 |
475 |
- |
||
|
Inventory |
18 |
12,575 |
5,716 |
- |
||
|
Other receivables |
19 |
541 |
260 |
975 |
||
|
|
|
147,195 |
104,049 |
97,171 |
||
|
Current assets |
|
|
|
|
||
|
Inventory |
18 |
37,467 |
24,733 |
40,342 |
||
|
Trade and other receivables |
19 |
24,408 |
11,407 |
8,799 |
||
|
Restricted cash |
20 |
9,000 |
6,000 |
6,000 |
||
|
Cash and cash equivalents |
20 |
21,247 |
886 |
4,477 |
||
|
|
|
92,122 |
43,026 |
59,618 |
||
|
Total assets |
|
239,317 |
147,075 |
156,789 |
||
|
Current liabilities |
|
|
|
|
||
|
Trade and other payables |
21 |
(39,630) |
(19,700) |
(9,200) |
||
|
Income tax payable |
12 |
(142) |
- |
- |
||
|
Interest-bearing loans and borrowings |
22 |
(22,181) |
(18,546) |
(13,629) |
||
|
Lease liabilities |
16 |
(13,720) |
(691) |
(555) |
||
|
|
|
(75,672) |
(38,937) |
(23,384) |
||
|
Net current assets |
|
16,449 |
4,089 |
36,234 |
||
|
Non-current liabilities |
|
|
|
|
||
|
Other payables |
21 |
- |
(476) |
(4,219) |
||
|
Provision for rehabilitation |
24 |
(22,940) |
(19,130) |
(14,948) |
||
|
Interest-bearing loans and borrowings |
22 |
(5,507) |
(3,083) |
(7,105) |
||
|
Lease liabilities |
16 |
(25,488) |
(1,456) |
(1,916) |
||
|
Deferred tax liability |
12 |
(24,481) |
(16,476) |
(20,264) |
||
|
|
|
(78,416) |
(40,621) |
(46,452) |
||
|
Total liabilities |
|
(154,089) |
(79,558) |
(71,836) |
||
|
Net assets |
|
85,228 |
67,517 |
84,953 |
||
|
Equity |
|
|
|
|
||
|
Share capital |
26 |
2,017 |
2,016 |
2,016 |
||
|
Share premium |
27 |
338 |
33 |
33 |
||
|
Treasury shares |
28 |
(145) |
- |
- |
||
|
Share-based payment reserve |
29 |
445 |
576 |
571 |
||
|
Merger reserve |
26 |
46,206 |
46,206 |
46,206 |
||
|
Foreign currency translation reserve |
|
(172) |
(172) |
(233) |
||
|
Retained earning |
|
36,539 |
18,858 |
36,360 |
||
|
Total equity |
|
85,228 |
67,517 |
84,953 |
||
|
|
|
|
|
|
|
|
* See Note 34 "Prior year restatements" for details regarding restatement.
Group statement of cash flows
year ended 31 December 2025
|
|
|
2025 |
2024 |
|
|
Notes |
$000 |
$000 |
|
Cash flows from operating activities |
|
|
|
|
Profit/(loss) before tax |
|
25,827 |
(21,290) |
|
Adjustments to reconcile profit/(loss) before tax to net cash flows: |
|
|
|
|
Finance costs |
10 |
5,237 |
2,973 |
|
Finance income |
|
(313) |
(289) |
|
Unrealised loss on financial instruments |
7 |
- |
75 |
|
Gain on the modification of lease liabilities |
7 |
- |
(8) |
|
Loss on impairment of inventory |
18 |
3,295 |
- |
|
Gain on cancellation of trade payables |
7 |
(697) |
(1,332) |
|
Depreciation of owned assets |
15 |
13,512 |
10,544 |
|
Depreciation of leased assets |
16 |
8,506 |
729 |
|
Amortisation of mining rights and other intangible assets |
14 |
388 |
387 |
|
Gain on fair value of investment |
|
(287) |
- |
|
Share-based payment expense |
29 |
22 |
5 |
|
Share of loss of an associate company |
11 |
- |
46 |
|
Reversal of impairment for investment in an associate company |
11 |
- |
(354) |
|
Impairment of development assets |
15 |
3,620 |
534 |
|
Impairment of geological exploration |
14 |
7,569 |
1,314 |
|
Foreign exchange loss |
|
236 |
45 |
|
Operating cash inflow/(outflow) before movement in working capital |
|
66,915 |
(6,621) |
|
(Increase)/decrease in trade and other receivables |
|
(6,536) |
3,366 |
|
(Increase)/decrease in inventories |
|
(22,909) |
9,897 |
|
Increase in trade and other payables |
|
9,266 |
1,936 |
|
Cash from operations |
|
46,736 |
8,578 |
|
Income taxes paid |
|
- |
- |
|
Net cash flow generated from operating activities |
|
46,736 |
8,578 |
|
Cash flows from investing activities |
|
|
|
|
Expenditure on property, plant and equipment and mine development |
|
(25,916) |
(8,917) |
|
Investment in exploration and evaluation assets including other intangible assets |
|
(1,349) |
(2,147) |
|
Placement of restricted cash |
20 |
(3,000) |
- |
|
Interest received |
|
243 |
243 |
|
Net cash used in investing activities |
|
(30,022) |
(10,821) |
|
Cash flows from financing activities |
|
|
|
|
Issue of ordinary shares |
26,27 |
100 |
- |
|
Proceeds from borrowings |
22 |
12,000 |
3,708 |
|
Cash received from concentrate repayments |
|
- |
1,681 |
|
Cash repaid from concentrate prepayments |
|
- |
(1,681) |
|
Repayment of borrowings |
22 |
(5,981) |
(2,802) |
|
Interest paid - borrowings |
22 |
(1,220) |
(1,247) |
|
Interest paid - lease liabilities |
16 |
(245) |
(280) |
|
Repayment of lease liabilities |
16 |
(771) |
(682) |
|
Net cash generated from / (used in) financing activities |
|
3,883 |
(1,303) |
|
Net increase/(decrease) in cash and cash equivalents |
|
20,597 |
(3,546) |
|
Net foreign exchange difference |
|
(236) |
(45) |
|
Cash and cash equivalents at the beginning of the year |
20 |
886 |
4,477 |
|
Cash and cash equivalents at the end of the year |
20 |
21,247 |
886 |
Group statement of changes in equity
year ended 31 December 2025
|
|
Notes |
Share capital $000 |
Share premium $000 |
Treasury shares $000 |
Share-based payment reserve $000 |
Merger reserve $000 |
Foreign currency translation reserve $000 |
Retained earnings $000 |
Total equity $000 |
|
1 January 2024 |
|
2,016 |
33 |
(145) |
571 |
46,206 |
(233) |
36,360 |
84,808 |
|
Correction of an error* |
34 |
- |
- |
145 |
- |
- |
- |
- |
145 |
|
1 January 2024 Restated* |
|
2,016 |
33 |
- |
571 |
46,206 |
(233) |
36,360 |
84,953 |
|
Loss for the year |
|
- |
- |
- |
- |
- |
- |
(17,502) |
(17,502) |
|
Foreign currency translation reserve |
|
|
|
|
|
|
61 |
|
61 |
|
Share based payment |
23 |
- |
- |
- |
5 |
- |
- |
- |
5 |
|
31 December 2024 Restated* |
|
2,016 |
33 |
- |
576 |
46,206 |
(172) |
18,858 |
67,517 |
|
Profit for the year |
|
- |
- |
- |
- |
- |
- |
17,681 |
17,681 |
|
Issue of shares |
|
1 |
152 |
- |
- |
- |
- |
- |
153 |
|
Transfer from share based payment reserve |
28 |
- |
153 |
- |
(153) |
- |
- |
- |
- |
|
Buy back of shares |
29 |
- |
- |
(145) |
- |
- |
- |
- |
(145) |
|
Share-based payment |
- |
- |
- |
22 |
- |
- |
- |
22 |
|
|
31 December 2025 |
|
2,017 |
338 |
(145) |
445 |
46,206 |
(172) |
36,539 |
85,228 |
* See Note 34 "Prior year restatements" for details regarding restatement.
Notes to the Group financial statements
year ended 31 December 2025
General information
Anglo Asian Mining PLC (the "Company") is a company incorporated and limited by shares in England and Wales under the Companies Act 2006. The address of its registered office is 78 Pall Mall, London, SW1 5ES, United Kingdom. The Company's ordinary shares are traded on the AIM exchange of the London Stock Exchange. The Company is a holding company. The principal activities and place of business of the Company and its subsidiaries (the "Group") are set out in note 31 below and the chairman's statement, the president and chief executive's review and the strategic report above.
This announcement contains selected information from the Group's full set of financial statements for the year ended 31 December 2025. For the Group's full set of financial statements for the year ended 31 December 2025, please refer to pages 68 to 106 of the Group's annual report and accounts for the year ended 31 December 2025. These financial statements will be posted to shareholders and made available on its website in June 2026.
Basis of preparation
The financial information for the year ended 31 December 2025 was approved by the board of directors on 26 May 2026. The financial information has been prepared in accordance with UK-adopted International accounting standards.
The financial information set out herein does not constitute the Group's statutory financial statements for the year ended 31 December 2025, but is derived from the Group's audited financial statements. The auditors have reported on the 2025 financial statements and their reports were unqualified and did not contain statements under s498(2) or (3) Companies Act 2006, nor did they contain a material uncertainty in relation to going concern. The 2025 Annual Report was approved by the Board of Directors 26 May 2026, and will be mailed to shareholders in June 2026. The financial information in this statement is audited but does not have the status of statutory accounts within the meaning of Section 434 of the Companies Act 2006.
The financial information has been prepared using accounting policies set out in note 4 which are consistent with all applicable IFRSs and with those parts of the Companies Act 2006 applicable to companies reporting under IFRSs. For these purposes, IFRSs comprises the standards issued by the International Accounting Standards Board and interpretations issued by the International Financial Reporting Interpretations Committee that have been endorsed by the UK Endorsement Board.
The financial information has been prepared under the historical cost convention except for the treatment of share-based payments, certain trade receivables at fair value, financial assets at fair value through profit and loss and gold owed to the Government of Azerbaijan. The financial information is presented in United States Dollars ("$") and all values are rounded to the nearest thousand except where otherwise stated. In the financial information "£" and "pence" are references to the United Kingdom pound sterling and "CAN$" and "CAN cents" are references to Canadian dollars and cents.
The functional currency of the Company and all the Group's subsidiaries is United States Dollars. The financial statements of each entity including the Company are prepared in United States Dollars (see accounting policy 4.23 - 'Foreign currencies').
Going concern
Preparation of financial statements on a going concern basis
The directors have prepared the Group financial statements on a going concern basis after reviewing the Group's forecast cash position for the period from the date of signing these financial statements to 30 June 2027 (the "going concern review period") and satisfying themselves that the Group will have sufficient funds on hand to meet its obligations as and when they fall due over the period of their assessment. Appropriate rigour and diligence have been applied by the directors who believe the assumptions are prepared on a realistic basis using the best available information.
Main business of the Group
The Group produces gold and copper at its Gedabek mining concession in northwestern Azerbaijan. Ore mined at Gedabek produces gold doré by heap and agitation leaching and copper concentrate (which also contains gold and silver) from SART and flotation processing. The Group's new Gilar underground mine which commenced production in May 2025 has substantially increased production at Gedabek as its ore is much richer than the Group's older legacy mines.
The Group also commenced copper production from its Demirli property in Karabakh in July 2025. Demirli is an existing open pit copper mine and associated flotation plant which was acquired in 2022 and has been extensively refurbished by the Group. It produces a copper concentrate which is delivered to offtakers at a dedicated logistics centre.
Business plans for Gedabek and Demirli
The directors have prepared a cash flow forecast for the Gedabek operation that assumes production is consistent with the business plan and uses a gold price of between $4,100 and $4,500 per ounce and a copper price of between $11,500 and $12,000 per tonne. This cash flow forecast shows that the Gedabek operation is cash generative throughout the going concern review period and able to fund its working capital, capital expenditure and financing operations from cash generated from its operations.
The directors have started the process to apply for the second five-year extension of the Gedabek licence from March 2027 to March 2032 in accordance with the Group's production sharing agreement. The directors have judged the second five-year extension will be obtained (see note 32 - "Contingencies and commitments" to the Group financial statements).
The directors have also prepared a cash flow forecast for the Group's new Demirli operation which assumes production is consistent with the business plan and uses the same copper price as the Gedabek business plan. The cash flow forecast shows that Demirli will be cash generative throughout the going concern review period and able to fund its working capital and capital expenditure from cash generated from its operations.
Sensitivities of business plans
The directors have considered a range of outcomes for the major variables which effect the cash flow. These are as follows:
· Production
· Costs
· Metal selling prices
Sensitivity analysis was performed on the cash flow of a decrease of 20 per cent. for production and metal selling prices and an increase in costs of 20 per cent. The analysis showed that under this range of sensitivities, the Group could still continue as a going concern.
Given the ongoing evaluation of potential resources and reserves at Demirli, a downside scenario, being an indefinite pause in production at Demirli, has been modelled. This scenario shows that cancellation of the lease is possible under the terms of the lease agreement, and the Group would have sufficient cash from the operations at Gedabek to meet its liabilities as they fall due. The directors do not consider this scenario likely, but it is one of the sensitivity scenarios that has been considered.
Financial condition and credit facilities available to the Group
The Group had cash reserves of $37.2 million and debt (excluding leases) of $19.5 million at 31 March 2026. The Group generated net cash of $15.4 million in the three months to 31 March 2026.
The Group has in place several credit facilities:
· An AZN 55 million ($32.3 million) General credit agreement with the International Bank of Azerbaijan ("IBA") with minimal conditions on drawdown. The Group had outstanding borrowings of $17.3 million under this facility at 31 December 2025;
· Two copper concentrate prepayment facilities with Trafigura Pte Ltd. ("Trafigura"):
o A 3-month revolving, $5.0 million to $10.0 million prepayment facility for concentrate produced at Gedabek.
o A 3-month revolving prepayment facility of up to $25 million at an interest rate of SOFR plus 4 per cent. per annum for concentrate produced at Demirli.
· A $5 million loan facility with Yapi Credit Bank in Azerbaijan. The Group had utilised $3 million of this facility at 31 December 2025.
There was $nil outstanding under the Trafigura Pte Ltd. facilities at 31 December 2025.
The Group's business plans show, that as the Group will be cash generative, the Group does not intend to make any further borrowings in the going concern review period to fund its current operations. However, these facilities are available to cover any shortfalls in cash generation against the business plans.
The Group closed a vendor refinancing in 2024 and $1.9 million is outstanding at 31 December 2025. The loan will be repaid in quarterly instalments with the final instalment in July 2027. The loan is subject to a net debt to EBITDA ratio covenant and a net worth covenant. The Group complied with these covenants for the year ended 31 December 2025.
Directors' going concern opinion
The Group's business activities, together with the factors likely to affect its future development, performance and position, can be found within the chairman's statement, the president and chief executive's review and the strategic report above. The financial position of the Group, its cash flow, liquidity position and borrowing facilities are discussed within the financial review above. In addition, note 25 to the Group financial statements below includes the Group's financial management risk objectives and details of its financial instrument exposures to credit risk and liquidity risk.
After making due enquiry, the directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, the directors continue to adopt the going concern basis in preparing the annual report and financial statements.
3 Adoption of new and revised standards
3.1 New and amended standards and interpretations
The following amendment was applicable for annual financial statements beginning on or after 1 January 2025. It has no impact on the consolidated financial statements of the Group:
• Amendments to IAS 21: Lack of Exchangeability
3.2 Standards issued but not yet effective
The new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group's financial statements are disclosed below. The Group intends to adopt these new and amended standards and interpretations, if applicable, when they become effective.
IFRS 18 Presentation and Disclosure in Financial Statements
In April 2024, the IASB issued IFRS 18, which replaces IAS 1 Presentation of Financial Statements. IFRS 18 introduces new requirements for presentation within the statement of profit or loss, including specified totals and subtotals. Furthermore, entities are required to classify all income and expenses within the statement of profit or loss into one of five categories: operating, investing, financing, income taxes and discontinued operations, whereof the first three are new.
It also requires disclosure of newly defined management-defined performance measures, subtotals of income and expenses, and includes new requirements for aggregation and disaggregation of financial information based on the identified 'roles' of the primary financial statements (PFS) and the notes.
In addition, narrow-scope amendments have been made to IAS 7 Statement of Cash Flows, which include changing the starting point for determining cash flows from operations under the indirect method, from 'profit or loss' to 'operating profit or loss' and removing the optionality around classification of cash flows from dividends and interest. In addition, there are consequential amendments to several other standards.
IFRS 18, and the amendments to the other standards, is effective for reporting periods beginning on or after 1 January 2027, but earlier application is permitted and must be disclosed. IFRS 18 will apply retrospectively. The Group is currently working to identify the impacts the amendments will have on the primary financial statements and notes to the financial statements.
IFRS 19 Subsidiaries without Public Accountability: Disclosures
In May 2024, the IASB issued IFRS 19, which allows eligible entities to elect to apply its reduced disclosure requirements while still applying the recognition, measurement and presentation requirements in other IFRS accounting standards. To be eligible, at the end of the reporting period, an entity must be a subsidiary as defined in IFRS 10, cannot have public accountability and must have a parent (ultimate or intermediate) that prepares consolidated financial statements, available for public use, which comply with IFRS accounting standards.
IFRS 19 will become effective for reporting periods beginning on or after 1 January 2027, with early application permitted. As the Group's shares are publicly traded, the Group believes that the new standard will have no effect on its financial statements.
Annual Improvements to IFRS Accounting Standards - Volume 11
In July 2024, the IASB issued nine narrow scope amendments as part of its periodic maintenance of IFRS accounting standards. The amendments include clarifications, simplifications, corrections or changes to improve consistency in IFRS 1 First-time Adoption of International Financial Reporting Standards, IFRS 7 Financial instruments: Disclosure and its accompanying Guidance on implementing IFRS 7, IFRS 9 Financial Instruments, IFRS 10 Consolidated Financial Statements and IAS 7 Statements of Cash Flows.
The amendments will be effective for reporting periods beginning on or after 1 January 2026. Earlier application is permitted and must be disclosed.
The amendments are not expected to have a material impact on the Group's consolidated financial statements.
Contracts Referencing Nature-dependent Electricity - Amendments to IFRS 9 and IFRS 7
In December 2024, the IASB issued Amendments to IFRS 9 and IFRS 7 - Contracts Referencing Nature-dependent Electricity. The amendments apply only to contracts that reference nature-dependent electricity; the amendments:
Clarify the application of the 'own-use' requirements for in-scope contracts
Amend the designation requirements for a hedged item in a cash flow hedging relationship for in-scope contracts
Add new disclosure requirements to enable investors to understand the effect of these contracts on a company's financial performance and cash flows
The amendments will take effect for annual reporting periods starting on or after 1 January 2026. Early adoption is allowed, but it must be disclosed. The amendments concerning the own-use exception are to be applied retrospectively, while the hedge accounting amendments should be applied prospectively to new hedging relationships designated from the initial application date. Additionally, the IFRS 7 disclosure amendments must be implemented alongside the IFRS 9 amendments. If an entity does not restate comparative information, it cannot present comparative disclosures.
The Group does not expect that the amendments will have a material impact on its consolidated financial statements.
Material accounting policies
4.1 Basis of consolidation
The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 31 December 2025. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:
· power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);
· exposure, or rights, to variable returns from its involvement with the investee; and
· the ability to use its power over the investee to affect its returns.
Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:
· the contractual arrangement with the other vote holders of the investee;
· rights arising from other contractual arrangements; and
· the Group's voting rights and potential voting rights.
The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.
All intra-group transactions, balances, income and expenses are eliminated on consolidation.
The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.
4.2 Revenue
The Group is principally engaged in the business of producing gold and silver bullion and copper and precious metal concentrate. Revenue from contracts with customers is recognised when control of the goods is transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods.
The Group has concluded that it is the principal in its revenue contracts because it typically controls the goods before transferring them to the customer.
I) Contract balances
a) Contract assets
A contract asset is the right to consideration in exchange for goods transferred to the customer. If the Group performs by transferring goods to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional. The Group does not have any contract assets as performance and a right to consideration occurs within a short period of time and all rights to consideration are unconditional.
b) Trade receivables
A trade receivable represents the Group's right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Refer to accounting policy 4.14 for the accounting policies for financial assets and accounting policy 4.15 for the accounting policy for trade receivables.
c) Contract liabilities
A contract liability is the obligation to transfer goods to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Group transfers goods to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Group performs under the contract.
ii) Gold and silver sales to the refiner
For gold sales, these are sold under spot sales contracts with the Company's gold refiners. The Group initially sends its unrefined doré to the refiner. The refiner is contracted by the Company to perform two separate and distinct functions, to process the doré into gold and silver bullion and to purchase gold and silver. The gold contained in the doré may be purchased at two different times at the discretion of the Company and instruction is given to the refiner as to the method of sale on a shipment-by-shipment basis:
· Upon receipt of the doré. In this circumstance, the refiner will purchase 90 per cent. of the estimated gold content of the doré. The balance of the gold will be sold to the refiner as gold bullion following refining and agreement of final gold content of the doré with the refiner.
· Following production of gold bullion by the refining process. During the refining process ownership (i.e., control of the gold) does not pass to the refiner, it is simply providing refining services to the Group.
There is no formal sales agreement for each sale of gold. Instead, there is a deal confirmation, which sets out the terms of the sale including the applicable spot price and this is considered to be the enforceable contract. The only performance obligation is the sale of gold within the doré or as bullion.
Silver is only sold to the refiner as silver bullion following the refining process. The process of sale of the silver bullion is the same as for gold bullion. Revenue is recognised at a point in time when control passes to the refiner. As the gold and silver is at this time already on the premises of the refiner, physical delivery has already taken place when the sales are made. There are no advance payments received from the refiner, therefore no conditional rights to consideration.
A trade receivable is recognised at the date of sale and there are only several days between recognition of revenue and payment. The contract is entered into and the transaction price is determined at outturn by virtue of the deal confirmation and there are no further adjustments to this price. Also, given each spot sale represents the enforceable contract and all performance obligations are satisfied at that time, there are no remaining performance obligations (unsatisfied or partially unsatisfied) requiring disclosure. Refer to note 19 - 'Trade and other receivables' for details of payment terms.
iii) Gold and copper in concentrate (metal in concentrate) sales
For gold and copper in concentrate (metal in concentrate) sales, delivery is made under a binding contract. Under the terms of the contract, the trade receivables generated are short term in nature. The performance obligation is the delivery of the concentrate to the customer, or for bill and hold sales, segregation of the inventory.
The Group's sales of metal in concentrate allow for price adjustments based on the market price at the end of the relevant quotational period ("QP") stipulated in the contract. These are referred to as provisional pricing arrangements and are such that the selling price for metal in concentrate is based on prevailing spot prices on a specified future date (or average of future spot prices over a defined period, usually a week) after shipment to the customer. Adjustments to the sales price occur based on movements in quoted market prices up to the end of the QP. The period between provisional invoicing and the end of the QP can be between one and four months.
Revenue is recognised when control passes to the customer, which occurs at a point in time when the metal in concentrate is either physically delivered to the customer or control passes to the customer but the metal in concentrate is held by the Group for future delivery ("Bill and Hold Sale"). Revenue is only recognised under a Bill and Hold Sale when the following criteria are met:
· The customer has requested the arrangement.
· The metal in concentrate is identified separately in the Group's logistics centre as belonging to the customer.
· The metal in concentrate is ready for physical transfer to the customer.
· The Group does not have the ability to sell the metal in concentrate to another customer.
The revenue is measured at the amount to which the Group expects to be entitled, being the estimate of the price expected to be received at the end of the QP, i.e., the forward price, and a corresponding trade receivable is recognised.
For these provisional pricing arrangements, any future change that occur over the QP is an embedded derivative within the provisionally priced trade receivables and are, therefore, within the scope of IFRS 9 and not within the scope of IFRS 15. The Group does not separately account for the embedded derivative in each transaction as the short transaction cycle of one to four months would result in any changes to the Group's financial statements being immaterial. Any difference between the provisional and final price is adjusted through revenue from contracts with customers. Changes in fair value over, and until the end of, the QP, are estimated by reference to updated forward market prices for gold and copper as well as taking into account relevant other fair value considerations as set out in IFRS 13, including interest rate and credit risk adjustments. See accounting policy 4.12 for further discussion on fair value. Refer to note 19 - 'Trade and other receivables' for details of payments terms for trade receivables.
As noted above, as the enforceable contract for most arrangements is the purchase order, the transaction price is determined at the date of each sale (i.e., for each separate contract) and, therefore, there is no future variability within scope of IFRS 15 and no further remaining performance obligations under those contracts.
iv) Interest revenue
Interest revenue is recognised as it accrues, using the effective interest rate method.
4.3 Production sharing agreement
The Group undertakes its mining operations in the Republic of Azerbaijan pursuant to the provisions of the Agreement on the Exploration, Development and Production Sharing for the Prospective Gold Mining Areas: Gedabek, Gosha, Ordubad Group (Piazbashi, Agyurt, Shakardara, Kiliyaki), Soutely, Kyzilbulag and Vejnali Deposits dated year ended 20 August 1997 (the "PSA"). The PSA was revised in 2022 and 2024.
In accordance with the PSA, the Group and the Government of the Republic of Azerbaijan (the "Government") physically share the commercial products of each mine. The Group does not have ownership of the Government's share of production and transfers gold bullion produced to the Government to settle its obligations to the Government. For silver and copper production, the Group purchases gold bullion to the value of the Government's share of the production which is then also transferred to the Government. There is no royalty payable to the Government.
The Government's share is 51 per cent. of "Profit Production". Profit Production is defined as the value of production, less all capital and operating cash costs incurred during the period when the production took place. Profit Production for any period is subject to a minimum of 25 per cent. of the value of the production.
All of the costs of production are incurred and recorded by the Group. The Government does not bear any of the costs of production.
The PSA mandates corporation tax at a rate of 32 per cent. on the profits of the mining operations undertaken under the PSA.
Profit Production and unrecovered costs are calculated separately for each contract area and costs incurred at one contract area cannot be offset against production at another. Unrecovered costs can only be recovered against future production from their respective contract area.
i)Accounting for the Government's share of production
As the Group does not own the Government's share of production, the revenue from its sale or otherwise disposal is not recorded in the Group's revenue. The revenue disclosed in the profit and loss account is therefore only that which arises from the sale of the Group's share of production.
ii)Gold held due to the Government
Gold held due to the Government comprises the following at each balance sheet date:
· The Government's share of refined gold bullion which is included within the Group's gold account maintained with its gold refinery; and
· The Government's share of gold contained within physical gold doré inventory.
As the Group has a legal obligation under the PSA to transfer the gold to the Government, the gold held on behalf of the Government is included in the Group's balance sheet as an other current receivable. A corresponding equal and opposite liability for the gold is included in other current payables reflecting the liability to the Government. The gold is valued at the market price of gold at each balance sheet date. The asset and liability are derecognised when the Government either takes physical delivery of, or sells, the gold bullion.
iii)Calculation of corporation tax of the Azerbaijan companies
The corporation tax liabilities (and associated deferred tax assets and liabilities) are calculated at 32 per cent. and not the prevailing rate of corporation taxation in Azerbaijan. The corporation taxation rate of 32 per cent. is the rate stipulated the Group's production sharing agreement.
4.4 Leases
The Group assesses at contract inception, all arrangements to determine whether they are, or contain, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Group is not a lessor in any transactions, it is only a lessee.
i) Group as a lessee
The Group applies a single recognition and measurement approach for all leases, except for short term leases. The Group recognises lease liabilities to make lease payments and right of use assets representing the right to use the underlying assets.
a) Right of use assets except for Demirli property complex
The Group recognises right of use assets at the commencement date of the lease (i.e., the date when the underlying asset is available for use). Right of use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right of use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right of use assets are depreciated on a straight line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows:
· Plant and equipment - six years
· Motor vehicles - four years
· Land and buildings - eight years
If ownership of the leased asset transfers to the Group at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.
The right of use assets are also subject to impairment. Refer to the accounting policies in note 4.11 - "Impairment of tangible and intangible assets".
b) Demirli property complex
The Group leases the Demirli property complex from the Government of Azerbaijan. The Demirli property complex comprises the copper flotation plant, mining fleet and associate fixed and moveable equipment located within the Demirli contract area in Karabakh ("Demirli Property"). The significant terms of the lease are set out in note 16 - "Right of Use Assets". The initial date of recognition of the lease is 30 April 2025, the date the assets were made available to the Group. Rental payments for the lease commenced on 1 October 2025 and the period from 30 April 2025 to 30 September 2025 is treated as a rent-free period. The term of the lease is the Group's best estimate of the period for which it will require the Demirli property and is currently from 30 April 2025 (the date of initial recognition) until 30 September 2028 (the "Lease Term").
The rent payable for the Demirli Property contains a variable element which depends upon the expected copper production, forecast copper prices and profitability of the Demirli Property over the Lease Term. The Group prepares a detailed business plan for the Demirli Property using its best estimates of production, operating costs and forecast copper prices. The business plan is used to determine the liability for lease payments over the Lease Term. The cost of the Demirli Property includes the amount of lease liabilities recognised and initial direct costs incurred. It also includes the Group's best estimate of the cost of retiring the Demirli Property at the end of the lease term discounted to its value at the date of inception of the lease. The Demirli Property comprises inventory, movable property such as mining equipment, inventory and immovable property, such as plant, buildings, infrastructure and land. These assets will not be used independently of each other and no asset is a separate right of use asset. The practical expedient under IFRS 16 has been applied and the whole lease has been accounted for as a single lease and not separate lease components. Amounts spent by the Group on repairing and improving the Demirli Property are capitalised as leasehold improvements. The Demirli Property is depreciated over the Lease Term on a straight line basis.
c) Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees.
In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is generally not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term or a change in the lease payments.
The Group's lease liabilities are separately disclosed in the Group statement of financial position.
d) Short-term leases
The Group applies the short term lease recognition exemption to its short term leases of equipment and other assets (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). Lease payments on short term leases are recognised as an expense on a straight line basis over the lease term.
e) Lease modifications
Where the terms of a lease are varied during its term which results in a revised carrying amount of the lease, the change to the carrying amount is accounted for as "Lease Modifications".
4.5 Taxation
i) Current and deferred income taxes
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the Group financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax assets and unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised.
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, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognised in the Group income statement is charged or credited in the Group income statement. Deferred tax relating to items recognised outside the Group income statement is recognised outside the Group income statement and items are recognised in correlation to the underlying transaction either in the Group statement of comprehensive income or directly in equity.
Deferred tax assets are not recognised in respect of temporary differences relating to tax losses where there is insufficient evidence that the asset will be recovered. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the Group income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted at the reporting date.
The tax expense represents the sum of the tax currently payable and deferred tax.
ii) Value-added taxes ("VAT")
The Group pays VAT on purchases made in both the Republic of Azerbaijan and the United Kingdom. Under both jurisdictions, VAT paid is refundable. Azerbaijani jurisdiction permits offset of an Azerbaijani VAT credit against other taxes payable to the state budget.
4.6 Transactions with related parties
For the purposes of these Group financial statements, parties are considered to be related:
· where one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions;
· entities under common control; and
· key management personnel
In considering each possible related party relationship, attention is directed to the substance of the relationship, not merely the legal form.
Related parties may enter into transactions which unrelated parties might not and transactions between related parties may not be effected on the same terms, conditions and amounts as transactions between unrelated parties.
It is the nature of transactions with related parties that they cannot be presumed to be carried out on an arm's length basis.
4.7 Borrowing costs
Borrowing costs directly relating to the acquisition, construction or production of a qualifying capital project under construction are capitalised and added to the project cost during construction until such time the assets are considered substantially ready for their intended use i.e. when they are capable of commercial production. Where funds are borrowed specifically to finance a project, the amount capitalised represents the actual borrowing costs incurred. Where surplus funds are available for a short term out of money borrowed specifically to finance a project, the income generated from the temporary investment of such amounts is also capitalised and deducted from the total capitalised borrowing cost. Where the funds used to finance a project form part of general borrowings, the amount capitalised is calculated using a weighted average of rates applicable to relevant general borrowings of the Group during the period. All other borrowing costs are recognised in the Group income statement in the period in which they are incurred.
Even though exploration and evaluation assets can be qualifying assets, they generally do not meet the 'probable economic benefits' test. Any related borrowing costs are therefore generally recognised in the Group income statement in the period they are incurred.
4.8 Intangible assets
i) Exploration and evaluation assets
The costs of exploration properties and leases, which include the cost of acquiring prospective properties and exploration rights and costs incurred in exploration and evaluation activities, are capitalised as intangible assets as part of exploration and evaluation assets.
Exploration and evaluation assets are carried forward during the exploration and evaluation stage and are assessed for impairment in accordance with the indicators of impairment as set out in IFRS 6 - 'Exploration for and Evaluation of Mineral Resources'.
In circumstances where a property is abandoned, the cumulative capitalised costs relating to the property are written off in the period. No amortisation is charged prior to the commencement of production.
Once commercially viable reserves are established and development is sanctioned, exploration and evaluation assets are transferred to assets under construction.
Upon transfer of exploration and evaluation costs into Assets under construction, all subsequent expenditure on the construction, installation or completion of infrastructure facilities is capitalised within Assets under construction.
When commercial production commences, exploration, evaluation and development costs previously capitalised are amortised over the commercial measured and indicated reserves of the mining property on a units-of-production basis.
Exploration and evaluation costs incurred after commercial production start date in relation to evaluation of potential mineral reserves and resources that are expected to result in increase of reserves are capitalised as Evaluation and exploration assets within intangible assets. Once there is evidence that reserves are increased, such costs are tested for impairment and transferred to producing mines.
ii) Mining rights
Mining rights are carried at cost to the Group less any provisions for impairments which result from evaluations and assessments of potential mineral recoveries and accumulated depletion. Mining rights are depleted on the units-of-production basis over the total measured and indicated reserves of the relevant area.
iii) Other intangible assets
Other intangible assets are mainly software and mining rights.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life is reviewed at least at each reporting date. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the Group income statement in the expense category consistent with the function of the intangible asset.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Group income statement when the asset is derecognised.
4.9 Property, plant and equipment and mine properties
Upon completion of mine construction, the assets initially charged to 'Assets under construction' are transferred into 'Plant and equipment and motor vehicles' or 'Producing mines'. Items of 'Plant and equipment and motor vehicles' and 'Producing mines' are stated at cost, less accumulated depreciation and accumulated impairment losses.
During the production period expenditures directly attributable to the construction of each individual asset are capitalised as 'Assets under construction' up to the period when asset is ready to be put into operation. When an asset is put into operation it is transferred to 'Plant and equipment and motor vehicles' or 'Producing mines'. Additional capital costs incurred subsequent to the date of commencement of operation of the asset are charged directly to 'Plant and equipment and motor vehicles' or 'Producing mines', i.e. where the asset itself was transferred.
The initial cost of an asset comprises its purchase price or construction cost, any costs directly attributable to bringing the asset into operation, the initial estimate of the rehabilitation obligation and, for qualifying assets, borrowing costs. The purchase price or construction cost is the aggregate amount paid and the fair value of any other consideration given to acquire the asset.
When a mine construction project moves into the production stage, the capitalisation of certain mine construction costs ceases and costs are either regarded as inventory or expensed, except for costs which qualify for capitalisation relating to mining asset additions or improvements, underground mine development or mineable reserve development.
i) Depreciation and amortisation
Accumulated mine development costs within producing mines are depreciated and amortised on a units-of-production basis over the economically recoverable reserves of the mine concerned, except in the case of assets whose useful life is shorter than the life of the mine, in which case the straight line method is applied. Economically recoverable reserves include the proved and probable reserves of each mine. Economically recoverable reserves also include a proportion of measured and indicated resources which are expected to be converted to reserves in future. The unit of account for run of mine ("ROM") costs and for post-ROM costs is recoverable ounces of gold. The units-of-production rate for the depreciation and amortisation of mine development costs takes into account expenditures incurred to date plus future field development costs required to recover the commercial reserves remaining. Changes in the estimates of commercial reserves or future field development costs are dealt with prospectively.
Other plant and equipment such as mobile mine equipment is generally depreciated on a straight line basis over their estimated useful lives as follows:
· Temporary buildings - eight years (2024: eight years)
· Plant and equipment - eight years (2024: eight years)
· Motor vehicles - four years (2024: four years)
· Office equipment - four years (2024: four years)
· Leasehold improvements - lower of eight years (2024: eight years) and the remaining term of the relevant lease
An item of property, plant and equipment, and any significant part initially recognised, is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Group income statement when the asset is derecognised.
The asset's residual values, useful lives and methods of depreciation and amortisation are reviewed at each reporting date and adjusted prospectively if appropriate.
ii) Major maintenance and repairs
Expenditure on major maintenance refits or repairs comprises the cost of replacement assets or parts of assets and overhaul costs. Where an asset or part of an asset that was separately depreciated and is now written off is replaced, and it is probable that future economic benefits associated with the item will flow to the Group through an extended life, the expenditure is capitalised.
Where part of the asset was not separately considered as a component, the replacement value is used to estimate the carrying amount of the replaced assets which is immediately written off. All other day-to-day maintenance and repair costs are expensed as incurred.
4.10 Investment in associate companies
An associate company is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.
The considerations made in determining significant influence are similar to those necessary to determine control over subsidiaries. The Group's investment in its associate company is accounted for using the equity method.
Under the equity method, the investment in an associate company is initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in the Group's share of net assets of the associate company since the acquisition date. Goodwill relating to the associate company, that existed at the initial recognition date, is included in the carrying amount of the investment and is not tested for impairment separately as subsequent goodwill is treated differently.
The statement of profit or loss reflects the Group's share of the results of operations of the associate company. Any change in other comprehensive income of those investees is presented as part of the Group's comprehensive income. In addition, when there has been a change recognised directly in the equity of the associate company, the Group recognises its share of any changes, when applicable, in the statement of changes in equity.
The aggregate of the Group's share of profit or loss of the associate company is shown on the face of the statement of profit or loss outside operating profit and represents profit or loss after tax and non- controlling interests in the subsidiaries of the associate company.
The financial statements of the associate company are prepared for the same reporting period as the Group. When necessary, adjustments are made to bring the accounting policies in line with those of the Group.
After application of the equity method, the Group determines whether it is necessary to recognise an impairment loss on its investment in its associate company. At each reporting date, the Group determines whether there is objective evidence that the investment in the associate company is impaired. If there is such evidence, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate company and its carrying value, and then recognises the loss in the statement of profit or loss.
Upon loss of significant influence, the Group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the associate company upon loss of significant influence and the fair value of the retained investment and proceeds from disposal is recognised in profit or loss.
4.11 Impairment of tangible and intangible assets
The Group conducts annual internal assessments of the carrying values of tangible and intangible assets. The carrying values of capitalised exploration and evaluation expenditure, mine properties and property, plant and equipment are assessed for impairment when indicators of such impairment exist or at least annually. In such cases an estimate of the asset's recoverable amount is calculated. The recoverable amount is determined as the higher of the fair value less costs to sell for the asset and the asset's value in use. This is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. If this is the case, the individual assets are grouped together into cash-generating units ("CGUs") for impairment purposes. Such CGUs represent the lowest level for which there are separately identifiable cash inflows that are largely independent of the cash flows from other assets or other groups of assets. This generally results in the Group evaluating its non‑financial assets on a geographical or licence basis.
If the carrying amount of the asset exceeds its recoverable amount, the asset is impaired and an impairment loss is charged to the Group income statement so as to reduce the carrying amount to its recoverable amount (i.e the higher of fair value less cost to sell and value in use).
Impairment losses related to continuing operations are recognised in the Group income statement in those expense categories consistent with the function of the impaired asset.
For assets excluding the intangibles referred to above, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group makes an estimate of the recoverable amount.
A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised. If this is the case, the carrying amount of the asset is increased to its recoverable amount. The increased amount cannot exceed the carrying amount that would have been determined, net of depreciation or amortisation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the consolidated statement of other comprehensive income. Impairment losses recognised in relation to indefinite life intangibles are not reversed for subsequent increases in its recoverable amount.
4.12 Fair value measurement
The Group measures financial instruments at fair value at each balance sheet date. Fair value disclosures for financial instruments measured at fair value, or where fair value is disclosed, are summarised in the following notes:
· Note 19 - 'Trade and other receivables';
· Note 20 - 'Restricted cash and cash and cash equivalents';
· Note 17 - 'Financial assets';
· Note 21 - 'Trade and other payables'; and
· Note 22 - 'Interest-bearing loans and borrowings'
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
· in the principal market place for the asset or the liability; or
· in the absence of a principal market, the most advantageous market for the asset or liability.
The fair value of an asset or liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximising the use of relevant observable inputs and minimising the unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole.
· Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
· Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
· Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as set out above.
4.13 Provisions
i) General
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Group expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit or loss net of any reimbursement.
ii) Rehabilitation provision
The Group records the present value of estimated costs of legal and constructive obligations required to restore operating locations in the period in which the obligation is incurred. The nature of these restoration activities includes dismantling and removing structures, rehabilitating mines and tailings dams, dismantling operating facilities, closure of plant and waste sites and restoration, reclamation and revegetation of affected areas.
The obligation generally arises when the asset is installed or the ground or environment is disturbed at the production location. When the liability is initially recognised, the present value of the estimated cost is capitalised by increasing the carrying amount of the related mining assets to the extent that it was incurred prior to the production of related ore. Over time, the discounted liability is increased for the change in present value based on the discount rates that reflect current market assessments and the risks specific to the liability.
The periodic unwinding of the discount is recognised in the Group income statement as a finance cost. Additional disturbances or changes in rehabilitation costs will be recognised as additions or charges to the corresponding assets and rehabilitation liability when they occur. Any reduction in the rehabilitation liability and therefore any deduction from the rehabilitation asset may not exceed the carrying amount of that asset. If it does, any excess over the carrying value is taken immediately to the Group income statement.
If the change in estimate results in an increase in the rehabilitation liability and therefore an addition to the carrying value of the asset, the Group is required to consider whether this is an indication of impairment of the asset as a whole and test for impairment in accordance with IAS 36. If, for mature mines, the revised mine assets net of rehabilitation provisions exceeds the recoverable value, that portion of the increase is charged directly to expense.
For closed sites, changes to estimated costs are recognised immediately in the Group income statement. Also, rehabilitation obligations that arose as a result of the production phase of a mine should be expensed as incurred.
4.14 Financial instruments - initial recognition and subsequent measurement
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
a) Financial assets
i) Initial recognition and measurement
Financial assets are classified, at initial recognition, and subsequently measured at amortised cost, fair value through other comprehensive income ("OCI"), or fair value through profit or loss.
The classification of financial assets at initial recognition that are debt instruments depends on the financial asset's contractual cash flow characteristics and the Group's business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient for contracts that have a maturity of one year or less, are measured at the transaction price determined under IFRS 15. Refer to the accounting policy 4.2 - 'Revenue from contracts with customers'
In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are 'solely payments of principal and interest ("SPPI") on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. Financial assets with cash flows that are not SPPI are classified and measured at fair value through profit or loss, irrespective of the business model.
The Group's business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.
ii) Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
· Financial assets at amortised cost (debt instruments);
· Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments);
· Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments); and
· Financial assets at fair value through profit or loss.
iii) Financial assets at amortised cost (debt instruments)
This category is the most relevant to the Group. The Group measures financial assets at amortised cost if both of the following conditions are met:
· The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and
· The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the effective interest rate ("EIR") method and are subject to impairment. Interest received is recognised as part of finance income in the statement of profit or loss and other comprehensive income. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
The Group's financial assets at amortised cost include trade receivables (not subject to provisional pricing) and other receivables. Refer below to 'Financial assets at fair value through profit or loss' for a discussion of trade receivables (subject to provisional pricing).
iii) Financial assets at amortised cost (debt instruments)
iv) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for trading, e.g., derivative instruments, financial assets designated upon initial recognition at fair value through profit or loss, e.g., debt or equity instruments, or financial assets mandatorily required to be measured at fair value, i.e., where they fail the SPPI test. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments. Financial assets with cash flows that do not pass the SPPI test are required to be classified and measured at fair value through profit or loss, irrespective of the business model. Notwithstanding the criteria for debt instruments to be classified at amortised cost or at fair value through OCI, as described above, debt instruments may be designated at fair value through profit or loss on initial recognition if doing so eliminates, or significantly reduces, an accounting mismatch.
Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value recognised in the profit or loss account.
A derivative embedded in a hybrid contract with a financial liability or non-financial host, is separated from the host and accounted for as a separate derivative if: the economic characteristics and risks are not closely related to the host; a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and the hybrid contract is not measured at fair value through profit or loss. Embedded derivatives are measured at fair value with changes in fair value recognised in profit or loss. Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required or a reclassification of a financial asset out of the fair value through profit or loss category.
As IFRS 9 now has the SPPI test for financial assets, the requirements relating to the separation of embedded derivatives is no longer needed for financial assets. An embedded derivative will often make a financial asset fail the SPPI test thereby requiring the instrument to be measured at fair value through profit or loss in its entirety. This is applicable to the Group's trade receivables (subject to provisional pricing). These receivables relate to sales contracts where the selling price is determined after delivery to the customer, based on the market price at the relevant QP stipulated in the contract. This exposure to the commodity price causes such trade receivables to fail the SPPI test. As a result, these receivables are measured at fair value through profit or loss from the date of recognition of the corresponding sale, with subsequent movements where material being recognised in 'fair value gains/losses on provisionally priced trade receivables' in the statement of profit or loss and other comprehensive income.
The Group does not currently account separately for embedded derivatives in its trade receivables subject to provisional pricing. The short one to four month transaction cycle would result in any change to the Group's financial statements being immaterial. Any adjustment to the trade receivable subsequent to initial recording is adjusted through revenue.
v) Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Group's consolidated statement of financial position) when:
· The rights to receive cash flows from the asset have expired; or
· The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a 'pass-through' arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Group continues to recognise the transferred asset to the extent of its continuing involvement. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.
vi) Impairment of financial assets
Further disclosures relating to impairment of financial assets are also provided in the following notes:
· Disclosure of significant assumptions: accounting policy 4.24
· Trade and other receivables: accounting policy 4.15 and note 19
The Group recognises an allowance for expected credit loss ("ECL") for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original EIR. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
For trade receivables (not subject to provisional pricing) and other receivables due in less than 12 months, the Group applies the simplified approach in calculating ECLs, as permitted by IFRS 9. Therefore, the Group does not track changes in credit risk, but instead, recognises a loss allowance based on the financial asset's lifetime ECL at each reporting date. For any other financial assets carried at amortised cost (which are due in more than 12 months), the ECL is based on the 12-month ECL. The 12-month ECL is the proportion of lifetime ECLs that results from default events on a financial instrument that are possible within 12 months after the reporting date. However, when there has been a significant increase in credit risk since origination, the allowance will be based on the lifetime ECL. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group's historical experience and informed credit assessment including forward-looking information.
The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows and usually occurs when past due for more than one year and not subject to enforcement activity.
At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit- impaired. A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.
b) Financial liabilities
i) Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The Group's financial liabilities include trade and other payables and loans and borrowings including bank overdrafts and vendor financing facility.
ii) Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.
Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IFRS 9.
Gains or losses on liabilities held for trading are recognised in the statement of profit or loss and other comprehensive income.
Loans and borrowings and trade and other payables
After initial recognition, interest-bearing loans and borrowings and trade and other payables are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the statement of profit or loss and other comprehensive income when the liabilities are derecognised, as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss and other comprehensive income.
This category generally applies to interest-bearing loans and borrowings and trade and other payables
iii) Derecognition of financial liabilities
A financial liability is derecognised when the associated obligation is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in profit or loss and other comprehensive income.
c) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
d) Cash and cash equivalents
Cash and cash equivalents in the statement of financial position comprise cash at banks and on hand and short- term deposits with an original maturity of three months or less.
For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash and short- term deposits as defined above.
Cash deposits which are pledged as security for borrowings from financial institutions such as banks, and cannot be accessed, are classified in the balance sheet as restricted cash.
4.15 Trade and other receivables
The Group presents trade and other receivables in the statement of financial position based on a current or non-current classification. A trade and other receivable is classified as current as follows:
· expected to be realised or intended to be sold or consumed in the normal operating cycle;
held primarily for the purpose of trading; and expected to be realised within 12 months after the date of the statement of financial position.
· gold bullion held on behalf of the Government of Azerbaijan is classified as a current asset and valued at the current market price of gold at the statement of financial position date. A current liability of equal amount representing the liability of the gold bullion to the Government of Azerbaijan is also established. Refer to accounting policy 4.3 - 'Production sharing agreement'.
Advances made to suppliers for fixed asset purchases are recognised as non-current prepayments until the fixed asset is delivered when they are capitalised as part of the cost of the fixed asset.
4.16 Inventories
Metal in circuit consists of in-circuit material at properties with milling or processing operations and doré awaiting refinement, all valued at the lower of average cost and net realisable value. In-process inventory costs consist of direct production costs (including mining, crushing and processing and site administration costs) and allocated indirect costs (including depreciation, depletion and amortisation of producing mines and mining interests).
Ore stockpiles consist of stockpiled ore, ore on surface and crushed ore, all valued at the lower of average cost and net realisable value. Ore stockpile costs consist of direct production costs (including mining, crushing and site administration costs) and allocated indirect costs (including depreciation, depletion and amortisation of producing mines and mining interests).
Metal in tailings dam consists of the gold within solution in the tailings dam. This solution is recirculated around the gold processing plant and circuits.
Inventory costs are charged to operations on the basis of ounces of gold sold. The Group regularly evaluates and refines estimates used in determining the costs charged to operations and costs absorbed into inventory carrying values based upon actual gold recoveries and operating plans.
Finished goods consist of doré bars that have been refined and assayed and are in a form that allows them to be sold on international bullion markets and metal in concentrate. Finished goods are valued at the lower of average cost and net realisable value. Finished goods costs consist of direct production costs (including mining, crushing and processing; site administration costs; and allocated indirect costs, including depreciation, depletion and amortisation of producing mines and mining interests).
Spare parts and consumables consist of consumables used in operations, such as fuel, chemicals, reagents and spare parts, valued at the lower of average cost and replacement cost and, where appropriate, less a provision for obsolescence.
4.17 Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs, or value of services received net of any issue costs.
4.18 Treasury shares
Own equity instruments that are reacquired (treasury shares) are recognised at cost and deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Group's own equity instruments. Any difference between the carrying amount and the consideration, if reissued, is recognised in the share premium.
4.19 Deferred stripping costs
The removal of overburden and other mine waste materials is often necessary during the initial development of a mine site, in order to access the mineral ore deposit. The directly attributable cost of this activity is capitalised in full within mining properties and leases, until the point at which the mine is considered to be capable of commercial production. This is classified as expansionary capital expenditure, within investing cash flows.
The removal of waste material after the point at which a mine is capable of commercial production is referred to as production stripping.
When the waste removal activity improves access to ore extracted in the current period, the costs of production stripping are accounted for as part of the cost of producing those inventories.
Where production stripping activity both produces inventory and improves access to ore in future periods the associated costs of waste removal are allocated between the two elements. The portion which benefits future ore extraction is capitalised within stripping and development capital expenditure. If the amount to be capitalised cannot be specifically identified it is determined based on the volume of waste extracted compared with expected volume for the identified component of the orebody. Components are specific volumes of a mine's orebody that are determined by reference to the life of mine plan.
In certain instances significant levels of waste removal may occur during the production phase with little or no associated production.
All amounts capitalised in respect of waste removal are depreciated using the unit of production method based on the ore reserves of the component of the orebody to which they relate.
The effects of changes to the life of mine plan on the expected cost of waste removal or remaining reserves for a component are accounted for prospectively as a change in estimate.
4.20 Employee leave benefits
Liabilities for wages and salaries, including non-monetary benefits and accrued but unused annual leave, are recognised in respect of employees' services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled.
4.21 Retirement benefit costs
The Group does not operate a pension scheme for the benefit of its employees but instead makes contributions to their personal pension policies. The contributions due for the period are charged to the Group income statement.
4.22 Share-based payments
The Group has applied the requirements of IFRS 2 - 'Share-based Payment'. IFRS 2 has been applied to all grants of equity instruments.
The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value (excluding the effect of non market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight line basis over the vesting period, based on the Group's estimate of shares that will eventually vest and adjusted for the effect of non market-based vesting conditions.
The fair value of share options is calculated using the assumption that they will only be exercised if the share price prevailing at the date of exercise is equal to, or above, the price at which the options were granted. This methodology approximates to valuing the share options using a Black-Scholes model. The expected life used in the model has been calculated using management's best estimate of the effects of non-transferability, exercise restrictions and behavioural considerations. The vesting condition assumptions are reviewed during each reporting period to ensure they reflect current expectations.
4.23 Foreign currencies
The presentation and functional currency of the Group is United States Dollars. The individual financial statements of each company in the Group are also prepared in United States Dollars. In preparing the financial statements of the individual entities, transactions in currencies other than the entity's functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using exchange rates at the date of the transaction.
4.24 Significant accounting judgements
The preparation of the Group financial statements in conformity with IFRS requires management to make judgements that affect the reported amounts of assets, liabilities and contingent liabilities at the date of the Group financial statements and reported amounts of revenues and expenses during the reporting period.
i) Exploration and evaluation expenditure (note 14)
The application of the Group's accounting policy for exploration and evaluation expenditure requires judgement. For each reporting period, the Group assesses whether there are indictors of impairment. These include whether the right to explore has expired, the results of geological exploration results and whether further exploration is planned, the likelihood that commercial exploitation will go ahead and whether it will result in recovery of the carrying value of the exploration expenditure. If information becomes available suggesting that the recovery of expenditure is unlikely, the amount capitalised is written off in the consolidated statement of profit or loss in the period when the new information becomes available.
ii) Impairment of intangible and tangible assets (notes 14,15 and 16)
The assessment of tangible and intangible assets for any internal and external indications of impairment involves judgement. For each reporting period, the Group assesses whether there are indicators of impairment, if indicated then a formal estimate of the recoverable amount is performed and an impairment loss recognised to the extent that the carrying amount exceeds recoverable amount. Recoverable amount is determined as the value in use. Determining whether the projects are impaired requires an estimation of the recoverable value of the individual areas to which value has been ascribed. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the projects in order to calculate present value.
The Group considered whether there are any impairment indicators of its two operating cash generating units ("CGU") which are its mines together with their associated processing facilities at Gedabek ("Gedabek Mining Operations") and its mines together with their associated processing facilities at Demirli ("Demirli Mining Operations"). The significant assumptions made to perform this calculation are: production volumes, precious metal and copper prices, discount rates and operating and capital expenditure, all of which are discussed within the significant accounting estimates note 4.25. The Group has determined that there are no indicators of impairment.
iii) Production start date (note 15)
The Group assesses the stage of each mine under construction to determine when a mine moves into the production stage. The criteria used to assess the start date are determined based on the unique nature of each mine construction project, such as the complexity of a plant and its location. The Group considers various relevant criteria to assess when the mine is substantially complete, ready for its intended use and is reclassified from Assets under construction to Producing mines and Property, plant and equipment. Some of the criteria will include, but are not limited to, the following:
· the level of capital expenditure compared to the construction cost estimates;
· completion of a reasonable period of testing of the mine plant and equipment;
· ability to produce metal in saleable form (within specifications); and
· ability to sustain ongoing production of metal.
When a mine construction project moves into the production stage, the capitalisation of certain mine construction costs ceases and costs are either regarded as inventory or expensed, except for costs that qualify for capitalisation relating to mining asset additions or improvements, underground mine development or mineable reserve development. This is also the point at which the depreciation/amortisation recognition commences.
iv) Leases (note 16)
IFRS 16 requires the Group to make judgements as to whether any contract entered into by the Group contains a lease. In making this judgement, the Group looks at a number of factors including the broader economics of each contract. Once a contract has been determined to contain a lease, the Group is required to make judgements and estimates that affect the measurement of right to use assets and lease liabilities which have been considered in more detail in the significant accounting estimates disclosure below in note 4.25.
In determining the lease term, the Group considers all facts and circumstances that determine the likely total length of time the asset will be leased. Estimates are required to determine the appropriate discount rate of 7 per cent. used to measure lease liabilities.
v) Renewal of Production Sharing Agreement ("PSA") (note 32)
The Group operates its mines and processing facilities on contract areas licenced under a PSA with the Government of Azerbaijan. The majority of the Group's fixed assets, including its processing facilities and its main producing mines, are located on the Gedabek contract area which initially had a mining licence expiring in March 2022. The PSA contains an option to extend the Gedabek licence for a further ten years from March 2022, conditional upon satisfaction of certain requirements stipulated in the PSA, and the first of the two five-year extensions allowed under the PSA to March 2027 has been obtained. The directors have judged that the requirements to renew the licence for the second five-year extension from March 2027 to March 2032 will be satisfied. The Group depreciates each tangible fixed asset over its estimated useful life subject to no asset having a life extending beyond March 2032.
4.25 Significant accounting estimates
The preparation of the Group financial statements in conformity with IFRS requires management to make estimates that affect the reported amounts of assets, liabilities and contingent liabilities at the date of the Group financial statements and reported amounts of revenues and expenses during the reporting period. Estimates are continuously evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual outcomes can differ from these estimates. In particular, information about significant areas of estimation uncertainty considered by management in preparing the Group financial statements is described below.
i) Impairment of intangible and tangible assets (notes 14,15 and 16)
Once an intangible or tangible asset has been determined to have an indicator of impairment, an estimate is made of its recoverable amount. Recoverable amount is determined as the higher of fair value less costs to sell and value in use. Determining whether the projects are impaired requires an estimation of the recoverable value of the individual areas to which value has been ascribed. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the projects and a suitable discount rate in order to calculate present value. The assessment was carried out in 2023 as there were indicators of impairment. Assessments of the recoverable amounts of the Group's intangible assets were made for 2023 and 2024. For both years, it was determined that there were indicators of impairment. Impairment charges were made in both 2023 and 2024 as set out in note 14 - 'Intangible assets'.
ii) Ore reserves and resources (notes 14 and 15)
Ore reserves are estimates of the amount of ore that can be economically and legally extracted from the Group's mining properties. The Group estimates its ore reserves and mineral resources, based on information compiled by appropriately qualified persons relating to the geological data on the size, depth and shape of the ore body and requires complex geological judgements to interpret the data. The estimation of recoverable reserves is based upon factors such as estimates of foreign exchange rates, commodity prices, future capital requirements and production costs along with geological assumptions and judgements made in estimating the size and grade of the ore body. Changes in the reserve or resource estimates may impact upon the carrying value of exploration and evaluation assets, mine properties, property, plant and equipment, provision for rehabilitation and depreciation and amortisation charges.
iii) Inventory (note 18)
Net realisable value tests are performed at least annually and represent the estimated future sales price of the product based on prevailing spot metals prices at the reporting date, less estimated costs to complete production and bring the product to sale.
Stockpiles are measured by estimating the number of tonnes added and removed from the stockpile, the number of contained gold ounces based on assay data and the estimated recovery percentage based on the expected processing method. Stockpile tonnages are verified by periodic surveys. The ounces of gold sold are compared to the remaining reserves of gold for the purpose of charging inventory costs to operations.
iv) Mine rehabilitation provision (note 24)
The Group assesses its mine rehabilitation provision annually. Significant estimates and assumptions are made in determining the provision for mine rehabilitation as there are numerous factors that will affect the ultimate liability payable. These factors include estimates of the extent and costs of rehabilitation activities, technological changes, regulatory changes and changes in discount rates. Those uncertainties may result in future actual expenditure differing from the amounts currently provided. The provision at the reporting date represents management's best estimate of the present value of the future rehabilitation costs required. Changes to estimated future costs are recognised in the Group statement of financial position by either increasing or decreasing the rehabilitation liability and rehabilitation asset if the initial estimate was originally recognised as part of an asset measured in accordance with IAS 16 'Property, Plant and Equipment'. Expenditure on mine rehabilitation is expected to take place between 2028 and 2030 for Gedabek and between 2026 and 2027 for Demirli. The Group has performed a sensitivity analysis of reasonable possible changes in the significant assumptions taking into account historical experience; however, the estimates may verify by greater amounts. A 2 per cent. increase or decrease in the discount rate would result in a decrease of $1,228,000 and an increase of $1,355,000 respectively in the provision for the asset retirement obligation. A 2 per cent. increase or decrease in the inflation rate would result in an increase of $695,000 or a decrease of $676,000 in the provision for the asset retirement obligation. A 20 per cent. increase in cost would result in an increase of $6,746,000 in the provision for the asset retirement obligation.
4.26 Other accounting estimates
i) Recovery of deferred tax assets (note 12)
Judgement is required in determining whether deferred tax assets are recognised within the Group statement of financial position. Deferred tax assets, including those arising from unutilised tax losses, require management to assess the likelihood that the Group will generate taxable earnings in future periods, in order to utilise recognised deferred tax assets. Estimates of future taxable income are based on forecast cash flows from operations and the application of existing tax laws in each jurisdiction. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Group to realise the deferred tax assets recorded at the reporting date could be impacted. Deferred tax assets in the balance sheet are netted off against deferred tax liabilities.
ii) Leases (note 16)
The implementation of IFRS 16 requires the Group to make estimates that affect the measurement of right to use assets and lease liabilities. In determining the lease term, the Group considers all facts and circumstances that determine the likely total length of time the asset will be leased. Estimates are required to determine the appropriate discount rates used to measure lease liabilities.
5 Segment information
The Group determines operating segments based on the information that is internally provided to the Group's chief operating decision maker. The chief operating decision maker has been identified as the board of directors. The board of directors currently considers consolidated financial information for the entire Group and reviews the business based on the Group statement of income and Group statement of financial position on this basis. Accordingly, the Group has only one operating segment, mining operations. The Group's mining operations mainly comprise its producing assets, the Gedabek and Demirli mines and related exploration and development at its Gedabek mining concession. The majority of the Group's revenues and its cost of sales, depreciation and amortisation are generated at Gedabek and Demirli.
The Group's exploration and all of its development and production activities are carried out by its wholly-owned subsidiaries in Azerbaijan.
6 Revenue
The Group's revenue consists of sales to third parties of:
· gold contained within doré and gold and silver bullion to the Group's refiners; and
· gold and copper concentrate.
|
|
2025 $000 |
2024 $000 |
|
Gold within doré and gold bullion |
67,550 |
36,784 |
|
Silver bullion |
782 |
302 |
|
Gold and copper concentrate |
54,457 |
2,499 |
|
|
122,789 |
39,585 |
All revenue from sales of gold within doré and gold and silver bullion and gold and copper concentrate is recognised at the time when control passes to the customer.
Sales of gold within doré and gold and silver bullion in 2025 and 2024 were made to the Group's gold refiner, MKS Finance SA, based in Switzerland. The total sales to MKS Finance SA in 2025 were $68,332,000 (2024: $37,086,000).
The gold and copper concentrate in 2025 and 2024 was sold to Industrial Minerals SA and Trafigura PTE Ltd. The total sales to Industrial Minerals SA and Trafigura PTE Ltd in 2025 were $3,374,000 and $51,03,000 respectively (2024: $1,010,000 and $1,489,000 respectively).
7 Other operating income and expenses and other expense
Other operating income
|
|
2025 $000 |
2024 $000 |
|
Gain on cancellation of trade payables |
710 |
1,332 |
|
Gain on modification of lease liabilities |
- |
8 |
|
|
710 |
1,340 |
Other operating expenses
|
|
2025 $000 |
2024 $000 |
|
Transportation and refining costs |
341 |
217 |
|
Foreign exchange loss |
236 |
45 |
|
Staff costs |
198 |
19 |
|
VAT write off |
- |
392 |
|
Impairment of receivables |
- |
215 |
|
Mine planning and resource determination |
137 |
448 |
|
Research costs |
220 |
358 |
|
Impairment of inventory |
3,295 |
- |
|
|
4,427 |
1,694 |
Other expense
|
|
2025 $000 |
2024 $000 |
|
Copper concentrate settlement with the Government |
596 |
- |
|
Fair value loss on financial assets |
- |
75 |
|
|
596 |
75 |
Other income
|
|
2025 $000 |
2024 $000 |
|
Insurance proceeds |
604 |
- |
|
Fair value gain on financial assets (Note 17) |
287 |
- |
|
|
891 |
- |
8 Operating profit /(loss)
|
|
Notes |
2025 $000 |
2024 $000 |
|
Operating profit / (loss) is stated after charging: |
|
|
|
|
Depreciation on property, plant and equipment - owned |
15 |
13,512 |
10,544 |
|
Depreciation on property plant and equipment - right of use assets |
16 |
8,506 |
729 |
|
Amortisation of mining rights and other intangible assets |
14 |
388 |
387 |
|
Impairment charge of development assets |
15 |
3,620 |
534 |
|
Impairment of intangible assets |
14 |
7,569 |
1,314 |
|
Employee benefits and expenses |
9 |
13,264 |
11,221 |
|
Foreign currency exchange net loss |
|
236 |
45 |
|
Inventory expensed during the year |
|
35,129 |
13,865 |
|
Fees payable to the Company's auditor for: |
|
|
|
|
The audit of the Group's annual accounts |
|
360 |
200 |
|
The audit of the Group's subsidiaries pursuant to legislation |
|
188 |
103 |
|
Total audit services |
|
548 |
303 |
|
Amounts paid to auditor for other services: |
|
|
|
|
Tax compliance services |
|
- |
- |
|
Total non-audit services |
|
- |
- |
|
Total |
|
548 |
303 |
The audit fees for the parent company were $140,000 (2024: $120,000).
9 Staff numbers and costs
The average number of staff employed by the Group (including directors) during the year, analysed by category, was as follows:
|
|
2025 |
2024 |
|
Management and administration |
56 |
46 |
|
Exploration |
44 |
44 |
|
Mine operations |
1,236 |
849 |
|
|
1,336 |
939 |
The aggregate payroll costs of these persons were as follows:
|
|
2025 $000 |
2024 $000 |
|
Wages and salaries |
11,338 |
10,748 |
|
Social security costs |
3,599 |
2,443 |
|
Costs capitalised as exploration |
(1,673) |
(1,970) |
|
|
13,264 |
11,221 |
The Group does not make any contributions to either individual or collective staff pension plans.
Remuneration of key management personnel
The remuneration of the key management personnel of the Group, is set out below in aggregate:
|
|
2025 $ |
2024 $ |
|
Share based payment expense |
22,349 |
5,450 |
|
Short-term employee benefits |
2,250,954 |
2,172,754 |
|
|
2,273,303 |
2,178,204 |
The key management personnel of the Group comprise the chief executive officer, the vice president of procurement, HR and IT, the chief operating officer, the two vice presidents of Azerbaijan International Mining Company and the chief financial officer. The key management personnel receive no post-employment benefits or other long term benefits. The disclosure of the remuneration of the directors as required by the Companies Act 2006 is given in the directors' emoluments section above.
10 Finance costs
|
|
2025 $000 |
2024 $000 |
|
Interest charged on interest-bearing loans and borrowings |
1,426 |
1,323 |
|
Interest on deposit |
270 |
270 |
|
Interest expense on lease liabilities |
2,019 |
280 |
|
Unwinding of discount on provisions |
1,361 |
850 |
|
Interest on creditor: geological data |
161 |
250 |
|
|
5,237 |
2,973 |
11 Investment in an associate company
Copper Giant Resources Corp. ("Copper Giant") (formerly Libero Copper & Gold Corporation) is a minerals exploration company listed on the TSX Venture Exchange (ticker: CGNT) in Canada and owns the Mocoa copper property in Colombia. Until 15 February 2024, Copper Giant was an associate company of the Group. Copper Giant ceased to be an associate company of the Group following a private placement of shares in which the Group did not participate.
The loss recognised for Copper Giant as an associate company for the year ended 31 December 2024, is the Group's share of the loss of Copper Giant for the period 1 January 2024 to 15 February 2024. Subsequent to 15 February 2024, the Group's interest in Copper Giant is accounted for as a financial asset.
A release of a previously made impairment provision was made of $354,000, upon the investment being reclassified as a financial asset, being the difference between the market value of Copper Giant's shares and its carrying value as an associate company on 15 February 2024
12 Taxation
Corporation tax is calculated at 32 per cent. (as stipulated in the production sharing agreement for R.V. Investment Group Services LLC ("RVIG")) in the Republic of Azerbaijan, the entity that contributes the profit before tax in the Group financial statements. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. Deferred income taxes arising in RVIG are recognised and fully disclosed in these Group financial statements. RVIG's unutilised tax losses at 31 December 2025 were $nil (2024: $22,384,000).
The major component of the income tax charge/(benefit) for the year ended 31 December are:
|
|
2025 $000 |
2024 $000 |
|
Deferred tax |
|
|
|
Taxation charge/(benefit) relating to origination and reversal of temporary differences |
8,004 |
(3,788) |
|
Current year taxation charge |
142 |
- |
|
Income tax charge/(benefit) for the year |
8,146 |
(3,788) |
Deferred income tax at 31 December relates to the following:
|
|
Statement |
|
Income statement |
|||
|
|
2025 |
2024 |
|
2025 |
2024 |
|
|
|
$000 |
$000 |
|
$000 |
$000 |
|
|
Deferred income tax liability |
|
|
|
|
|
|
|
Property, plant and equipment and intangible assets - accelerated depreciation |
(22,908) |
(23,329) |
|
421 |
(3,124) |
|
|
Right of use assets - accelerated depreciation |
(10,558) |
(541) |
|
(10,017) |
116 |
|
|
Non-current other receivables |
(173) |
(83) |
|
(90) |
229 |
|
|
Trade and other receivables |
(1,959) |
(144) |
|
(1,815) |
810 |
|
|
Inventories |
(16,013) |
(9,744) |
|
(6,269) |
1,727 |
|
|
Deferred income tax liability |
(51,611) |
(33,841) |
|
|
|
|
|
Deferred income tax asset |
|
|
|
|
|
|
|
Tax losses brought forward |
- |
7,163 |
|
(7,163) |
1,615 |
|
|
Trade and other payables and provisions * |
7,244 |
3,491 |
|
3,753 |
637 |
|
|
Lease liabilities |
12,546 |
687 |
|
11,859 |
(104) |
|
|
Asset retirement obligation * |
7,341 |
6,024 |
|
1,317 |
1,882 |
|
|
Deferred income tax asset |
27,131 |
17,365 |
|
|
|
|
|
Deferred income tax benefit |
|
|
|
(8,004) |
3,788 |
|
|
Net deferred tax liability |
(24,480) |
(16,476) |
|
|
|
|
* Deferred income tax assets have been recognised for the trade and other payables and provisions, asset retirement obligation and lease liabilities based on local tax basis differences expected to be utilised against future taxable profits.
A reconciliation between the accounting profit/(loss) and the total taxation charge/(benefit) for the year ended 31 December is as follows
|
|
2025 $000 |
2024 $000 |
|
Profit/(loss) before tax |
25,827 |
(21,290) |
|
|
|
|
|
Theoretical tax charge at statutory rate of 32 per cent. for RVIG* |
8,265 |
(6,813) |
|
Revision of prior year estimation |
(729) |
340 |
|
Effects of different tax rates for certain Group entities |
235 |
- |
|
Tax effect of items which are not deductible or assessable for taxation purposes: |
|
|
|
- Items not deductible or assessable |
375 |
2,685 |
|
Income tax charge/(benefit) for the year |
8,146 |
(3,788) |
* This is the tax rate stipulated in RVIG's production sharing agreement.
The Group has a consolidated turnover below Euro 750 million. Therefore, the OECD Pillar Two model rules do not apply to the Group.
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 assets and liabilities have been offset for deferred taxes recognised for RVIG since there is a legally enforceable right to set off current tax assets against current tax liabilities and they relate to income taxes levied by the same taxation authority. The Group intends to settle its current tax assets and liabilities on a net basis in the Republic of Azerbaijan.
At 31 December 2025, the Group had total unused tax losses available for offset against future profits of $36,840,000 (2024: $57,409,000). Unused tax losses in the Republic of Azerbaijan at 31 December 2025 were $nil (2024: $22,384,000) and unused tax losses in the United Kingdom were $36,840,000 (2024: $35,025,000). The tax losses in the Republic of Azerbaijan and the United Kingdom can be carried forward indefinitely. No deferred tax assets have been recognised in respect of jurisdictions other than the Republic of Azerbaijan due to the uncertainty of future profit streams.
13 Profit/(loss) per share
The calculation of basic and diluted profit/(loss) per share is based upon the retained profit for the financial year of $17,681,000 (2024: loss of $17,502,000).
The weighted average number of ordinary shares for calculating the basic profit/(loss) and diluted profit /(loss) per share after adjusting for the effects of all dilutive potential ordinary shares relating to share options and treasury shares are as follows:
|
|
2025 |
2024 |
|
Basic |
114,267,024 |
114,242,024 |
|
Diluted |
114,647,024 |
114,242,024 |
At 31 December 2025 there were no unexercised share options that could potentially dilute basic earnings per share (2024: nil).
14 Intangible assets
Exploration and evaluation
|
|
Gedabek $000 |
Gosha $000 |
Ordubad $000 |
Vejnaly $000 |
Xarxar $000 |
Garadag $000 |
Demirli $000 |
Mining rights $000 |
Other intangible assets $000 |
Total $000 |
|
Cost |
|
|
|
|
|
|
|
|
|
|
|
1 January 2024 |
19,339 |
2,967 |
6,733 |
1,478 |
3,514 |
2,834 |
- |
41,925 |
726 |
79,516 |
|
Additions |
764 |
- |
524 |
259 |
201 |
361 |
59 |
- |
- |
2,168 |
|
Transfer to assets under construction |
(3,574) |
- |
- |
- |
- |
- |
- |
- |
- |
(3,574) |
|
31 December 2024 |
16,529 |
2,967 |
7,257 |
1,737 |
3,715 |
3,195 |
59 |
41,925 |
726 |
78,110 |
|
Additions |
931 |
3 |
305 |
120 |
16 |
43 |
5 |
- |
- |
1,423 |
|
Transfer to assets under construction |
(56) |
- |
- |
- |
- |
- |
- |
- |
- |
(56) |
|
31 December 2025 |
17,404 |
2,970 |
7,562 |
1,857 |
3,731 |
3,238 |
64 |
41,925 |
726 |
79,477 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortisation and impairment* |
|
|
|
|
|
|
|
|
|
|
|
1 January 2024 |
5,086 |
2,967 |
4,978 |
- |
- |
- |
- |
38,815 |
544 |
52,390 |
|
Charge for the year |
- |
- |
- |
- |
- |
- |
- |
387 |
21 |
408 |
|
Impairment |
1,314 |
- |
- |
- |
- |
- |
- |
- |
- |
1,314 |
|
31 December 2024 |
6,400 |
2,967 |
4,978 |
- |
- |
- |
- |
39,202 |
565 |
54,112 |
|
Charge for the year |
- |
- |
- |
- |
- |
- |
- |
370 |
18 |
388 |
|
Impairment |
4,981 |
3 |
2,584 |
- |
- |
- |
- |
- |
- |
7,568 |
|
31 December 2025 |
11,381 |
2,970 |
7,562 |
- |
- |
- |
- |
39,572 |
583 |
62,068 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value |
|
|
|
|
|
|
|
|
|
|
|
31 December 2024 |
10,129 |
- |
2,279 |
1,737 |
3,715 |
3,195 |
59 |
2,723 |
161 |
23,998 |
|
31 December 2025 |
6,023 |
- |
- |
1,857 |
3,731 |
3,238 |
64 |
2,353 |
143 |
17,409 |
*185,000 ounces of gold at 1 January 2025 were used to determine depreciation of mining rights and other intangible assets (2024: 121,000 ounces). A 5 per cent. increase or decrease in the ounces of gold used to compute the amortisation of intangible assets would result in a decrease in amortisation of $18,000 (2024: $18,000) and an increase in amortisation of $19,000 (2024: $20,000) respectively.
The Group's accounting policy requires judgement to determine whether future economic benefits are likely to be derived from exploration areas through either future exploitation or sale of properties or whether activities have reached a stage that permits a reasonable assessment of the existence of reserves. In making this assessment, the directors have made certain assumptions about future events and circumstances, particularly, whether an economically viable extraction operation can be achieved. Any such estimates and assumptions may change as new information becomes available.
The Group's strategy is to focus on growing its production in the next five years by exploiting its deposits at its Gedabek, Demirli, Xarxar and Garadag contract areas. The Group is therefore considering returning the Ordubad and Gosha contract areas to the Government of Azerbaijan. This is considered an indicator of impairment and accordingly all capitalised exploration and evaluation expenses for these two contract areas have been provided against in the year. The Group will continue to explore the Vejnaly and Kyzlbulag contract areas.
The Gilar underground mine commenced in 2025 and the majority of the production at Gedabek in the next 5 years will be from Gilar. This can also be supplemented by production by developing the Zafar mine. It is therefore likely that production from the open pit will be minimal in the next few years. This is an indicator of impairment and accordingly exploration and evaluation expense for the open pit mine at Gedabek totalling $3.0 million has been provided against in the year.
15 Property, plant and equipment
|
|
|
|
|
|
|
|
Plant and equipment and motor vehicles |
Producing mines |
Assets under construction |
Total |
|
|
$000 |
$000 |
$000 |
$000 |
|
Cost |
|
|
|
|
|
1 January 2024 |
36,290 |
236,950 |
12,298 |
285,538 |
|
Correction of an error* |
- |
2,000 |
- |
2,000 |
|
1 January 2024 - restated* |
36,290 |
238,950 |
12,298 |
287,537 |
|
Additions |
1,399 |
1,167 |
6,741 |
9,307 |
|
Transfer to producing mines |
- |
1,044 |
(1,044) |
- |
|
Transfer from intangibles |
- |
- |
3,574 |
3,574 |
|
Increase in provision for rehabilitation |
- |
6,028 |
- |
6,028 |
|
31 December 2024 |
37,689 |
247,189 |
21,569 |
306,447 |
|
Correction of an error* |
- |
(2,696) |
- |
(2,696) |
|
31 December 2024 Restated* |
37,689 |
244,493 |
21,569 |
303,751 |
|
Additions |
7,074 |
7,588 |
10,970 |
25,632 |
|
Transfer from intangibles |
- |
56 |
- |
56 |
|
Transfer to producing mines |
- |
21,754 |
(21,754) |
- |
|
Increase in provision for rehabilitation (note 24) |
- |
30 |
2,419 |
2,449 |
|
31 December 2025 |
44,763 |
273,921 |
13,204 |
331,888 |
|
|
|
|
|
|
|
Depreciation and impairment** |
|
|
|
|
|
1 January 2024 |
25,337 |
195,426 |
- |
220,763 |
|
Charge for the year |
2,011 |
8,533 |
- |
10,544 |
|
Impairment |
- |
534 |
- |
534 |
|
31 December 2024 |
27,348 |
204,493 |
- |
231,841 |
|
Charge for the year |
2,812 |
10,700 |
- |
13,512 |
|
Impairment of development assets |
- |
2,167 |
1,453 |
3,620 |
|
31 December 2025 |
30,160 |
217,360 |
1,453 |
248,973 |
|
|
|
|
|
|
|
Net book value |
|
|
|
|
|
31 December 2024 Restated* |
10,341 |
40,000 |
21,569 |
71,910 |
|
31 December 2025 |
14,603 |
56,561 |
11,751 |
82,915 |
*see note 34 - "Prior year restatements"
**185,000 ounces of gold at 1 January 2025 were used to determine depreciation of producing mines (2024: 121,000 ounces). A 5 per cent. increase or decrease in the ounces of gold used to compute the depreciation of property plant and equipment would result in a decrease in depreciation of $322,000 (2024: $281,000) and an increase in depreciation of $288,000 (2024: $311,000) respectively.
Impairment assessment of the Group's fixed assets
The Group assesses at each balance sheet date whether any indicators of impairment exist for each asset or cash generating unit ("CGU"). The Group has two operating CGUs:
· The Group's mines together with their associated processing facilities at Gedabek ("Gedabek Mining Operations").
· The Group's mines together with their associated processing facilities at Demirli ("Demirli Mining Operations").
If any such indications of impairment exist, a formal estimate of the recoverable amount is performed separately for the Gedabek Mining Operations and Demirli Mining Operations.
In assessing whether an impairment is required, the carrying value of the Gedabek Mining Operations and Demirli Mining Operations are compared with their respective recoverable amounts. Recoverable amount is the higher of the fair value less costs of disposal ("FVLCD") and value in use ("VIU"). Given the nature of the Group's activities, information on the fair value less costs to disposal of both Mining Operations are difficult to obtain unless negotiations with potential purchasers or similar transactions are taking place. Consequently, the VIU recoverable amount for both Mining Operations is estimated based on the discounted future estimated cash flows (expressed in nominal terms) expected to be generated from its continued use using market-based commodity price assumptions, estimated quantities of recoverable minerals, production levels, operating costs and capital requirements based on the Group's strategic growth plan and life of mine plan. The cash flows are discounted using a nominal discount rate before taxation that reflects current market assessments of the time value of money and the risks specific to both Mining Operations.
The majority of the operating assets for Demirli are leased and included in the Group's balance sheet as right of use assets. The impairment assessment for Demirli has therefore included both property, plant and equipment and right of use assets in calculating the carrying value of the Demirli Mining Operations
The determination of the recoverable amount of Mining Operations is most sensitive to the following key assumptions:
· production volumes;
· commodity prices;
· discount rates;
· foreign exchange rates; and
· capital and operating costs.
Gedabek
The Group will be increasing its production from its Gilar mine in 2026 and subsequent years following the opening of the mine in 2025. Gold and copper prices have increased significantly in 2025 and early 2026 and at approximately $4,700 per ounce and $13,000 per tonne are around their record highs. Interest rates have also remained stable. The Gedabek site is mature which only requires minimal sustaining capital expenditure and operating costs have remained stable. The management have therefore assessed that there were no indicators of impairment at 31 December 2025. Accordingly, no impairment analysis was performed for property, plant and equipment in the Group's balance sheet relating to the Gedabek Mining Operations at 31 December 2025.
Demirli
The Group will be increasing its production from its Demirli site in 2026 and subsequent years following the opening of the mine in 2025. The price of copper increased significantly in 2025 and early 2026 and at approximately $13,000 per tonne is around a record high. Interest rates have also remained stable. The Demirli site is well developed and only requires minimal sustaining capital expenditure. Although the site has only been operating for less than one year, the site is profitable and our limited experience of operating costs is that they are stable. The management have therefore assessed that there were no indicators of impairment at 31 December 2025. Accordingly, no impairment analysis was performed for property, plant and equipment together with right of use assets in the Group's balance sheet relating to the Demirli Mining Operations at 31 December 2025.
Capital commitments
There are no material capital commitments
16 Leases
Right of use assets
|
|
Plant and equipment and motor vehicles |
Demirli property lease complex $000 |
Land and buildings |
Total |
|
|
$000 |
|
$000 |
$000 |
|
Cost |
|
|
|
|
|
1 January 2024 |
3,163 |
- |
1,153 |
4,316 |
|
Additions |
443 |
- |
- |
443 |
|
Lease modifications |
(37) |
- |
(48) |
(85) |
|
31 December 2024 |
3,569 |
- |
1,105 |
4,674 |
|
Additions |
345 |
39,261 |
203 |
39,809 |
|
31 December 2025 |
3,914 |
39,261 |
1,308 |
44,483 |
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
1 January 2024 |
1,579 |
- |
684 |
2,263 |
|
Charge for the year |
572 |
- |
157 |
729 |
|
Lease modifications |
(8) |
- |
- |
(8) |
|
31 December 2024 |
2,143 |
- |
841 |
2,984 |
|
Charge for the year |
528 |
7,661 |
317 |
8,506 |
|
31 December 2025 |
2,671 |
7,661 |
1,158 |
11,490 |
|
Net book value |
|
|
|
|
|
31 December 2024 |
1,426 |
- |
264 |
1,690 |
|
31 December 2025 |
1,243 |
31,600 |
150 |
32,993 |
Lease liabilities
|
|
2025 |
2024 |
|
|
$000 |
$000 |
|
1 January |
2,147 |
2,471 |
|
Additions |
39,894 |
443 |
|
Lease modifications |
- |
(85) |
|
Interest expense |
2,019 |
280 |
|
Repayment |
(4,852) |
(962) |
|
31 December |
39,208 |
2,147 |
|
Current liabilities |
13,720 |
691 |
|
Non-current liabilities |
25,488 |
1,456 |
|
|
39,208 |
2,147 |
Amount recognised in the profit and loss account
|
|
2025 $000 |
2024 $000 |
|
Depreciation expense of right of use assets |
8,506 |
729 |
|
Gain on lease modifications |
- |
(8) |
|
Interest expense |
2,019 |
280 |
|
Expenses relating to short term leases |
199 |
132 |
|
|
10,724 |
1,133 |
The total cash outflow related to leases in the year ended 31 December 2025 was $5,146,000 (2024: $1,139,000).
Lease for Demirli property complex
The assets above include right of use assets in respect of the Demirli property complex ("Demirli Property"). The following are the significant terms of the lease for the Demirli Property:
1. Date lease signed: 10 March 2025
2. Delivery date: The date the assets were made available to the Group: 30 April 2025
3. Term commencement date: The date the Group accepted the accepted the property and the date from which lease and rental payments commenced: 1 October 2025
4. Lease term: Initial lease term 3 years, followed by automatic 12 month extensions unless terminated. Can be terminated by either party before then for breach or force majeure.
5. Rent payable: Base rent of $24m per annum, payable quarterly in arrears. The rent is subject to a minimum and maximum rent as follows:
5.1 The rent will be reduced if, in any calendar year, 75 per cent. of revenue less operating and capital expenses is less than $24 million. This is subject to a floor of $15 million per annum.
5.2 If 15 per cent. of revenue in any year exceeds $28 million, the rent will be increased to 15 per cent. of revenue less $4 million. This is provided 75 per cent. of revenue less operating and capital expenses is greater than $28 million. There is no ceiling.
6. Termination: The Group has the right to terminate at any time if the Demirli Property ceases to be the principle processing method to produce copper at Demirli.
17 Financial assets
|
|
2025 |
2024 |
|
|
|
Non-current |
$000 |
$000 |
|
|
|
Financial assets at fair value through profit or loss |
|
|
|
|
|
Listed equity instruments |
762 |
475 |
|
|
At 31 December 2024 and 2025, the Company held 2,130,000 shares in Copper Giant Resources Corp. ("Copper Giant"), a company which is listed on the Toronto Ventures Stock Exchange in Canada.
Copper Giant ceased to be an associate from 15 February 2024 (note 11 - 'Investment in an associate company').
18 Inventory
|
Non-current assets |
2025 $000 |
2024 $000 |
|
Ore stockpiles |
12,575 |
5,716 |
|
|
2025 |
2024 |
|
Current assets |
$000 |
$000 |
|
Finished goods - bullion |
2,011 |
2,295 |
|
Finished goods - metal in concentrate |
7,996 |
411 |
|
Metal in circuit |
3,977 |
3,162 |
|
Metal in tailings dam |
675 |
455 |
|
Ore stockpiles |
4,816 |
953 |
|
Spare parts and consumables |
21,287 |
17,457 |
|
Provision on slow-moving spare parts and consumables |
(3,295) |
- |
|
Total current inventories |
37,467 |
24,733 |
|
|
|
|
|
Total inventories at the lower of cost and net realisable value |
50,042 |
30,449 |
The Group has capitalised mining costs related to stockpiles of ore at both the Gedabek and Demirli sites. High grade Gilar ore has been stockpiled at Gedabek to be processed through the upgraded flotation plant in 2026. At Demirli, low grade oxide ore has been stockpiled for future processing by heap leaching. Inventory is recognised at the lower of cost or net realisable value.
19 Trade and other receivables
|
|
2025 |
2024 |
|
|||||||
|
Non-current |
$000 |
$000 |
|
|||||||
|
Other receivables |
|
|
|
|||||||
|
Loans to an employees* |
541 |
260 |
|
|||||||
|
|
|
|
|
|
||||||
|
Current |
2025 $000 |
2024 Restated* $000 |
1 January 2024 Restated* $000 |
|
||||||
|
Trade and other receivables |
|
|
|
|
||||||
|
Gold held due to the Government of Azerbaijan |
14,304 |
7,471 |
1,988 |
|
||||||
|
VAT refund due |
2,488 |
808 |
1,609 |
|
||||||
|
Loan to employee** |
264 |
527 |
- |
|
||||||
|
Other tax receivable |
1,290 |
1,247 |
734 |
|
||||||
|
Trade receivables - fair value*** |
2,394 |
44 |
637 |
|
||||||
|
Prepayments and advances |
3,668 |
1,310 |
3,831 |
|
||||||
|
|
24,408 |
11,407 |
8,799 |
|
||||||
*see note 34 - "Prior year restatements"
*see note 33 - "Related party transactions"
**Trade receivables subject to provisional pricing.
Trade receivables (not subject to provisional pricing) are for sales of gold and silver to the refiner and are non interest-bearing and payment is usually received one to two days after the date of sale.
Trade receivables (subject to provisional pricing) are for sales of gold and copper concentrate and are non-interest bearing, but as discussed in accounting policy 4.2, are exposed to future commodity price movements over the quotational period ("QP") and, hence, fail the 'solely payments of principal and interest' test and are measured at fair value up until the date of settlement. These trade receivables are initially measured at the amount which the Group expects to be entitled, being the estimate of the price expected to be received at the end of the QP. Approximately 90 per cent. of the provisional invoice (based on the provisional price) is received in cash within one to two weeks from when the concentrate is collected from site, which reduces the initial receivable recognised under IFRS 15. The QPs can range between one and four months post shipment and final payment is due between 30-90 days from the end of the QP. Refer to accounting policy 4.12 for details of fair value measurement.
The Group does not consider any trade or other receivable as past due or impaired. All receivables at amortised cost have been received shortly after the balance sheet date and therefore the Group does not consider that there is any credit risk exposure. No provision for any expected credit loss has therefore been established in 2024 or 2025.
The VAT refund due at 31 December 2025 and 2024 relates to VAT paid on purchases.
Gold bullion held and transferable to the Government is bullion held by the Group due to the Government of Azerbaijan. The Group holds the Government's share of the product from its mining activities and from time to time transfers that product to the Government. A corresponding liability to the Government is included in trade and other payables as disclosed in note 21 - 'Trade and other payables'.
20 Restricted cash, cash and cash equivalents
Restricted cash comprises two bank deposits totalling $9.0 million with two banks in Azerbaijan which have been pledged as security for two loans from the banks of $5.6 million and $3.0 million (2024: a deposit of $6.0 million pledged as security for a loan from a bank in Azerbaijan of $5.6 million). These deposits cannot be withdrawn from the banks whilst the loans are outstanding. Details of the loans are set out in note 22 - "Interest-bearing loans and borrowings".
Cash and cash equivalents consist of cash on hand and held by the Group within financial institutions that are available immediately. The carrying amount of these assets approximates their fair value.
The Group's cash on hand and cash held within financial institutions at 31 December 2025 (including short-term cash deposits) comprised $16,000 and $21,231,000 respectively (2024: $15,000 and $871,000).
The Group's cash and cash equivalents are mostly held in United States Dollars.
21 Trade and other payables
|
Current |
2025 $000 |
2024 $000 |
|
Trade and other payables Accruals and other payables |
6,925 |
2,330 |
|
Trade creditors |
11,101 |
5,503 |
|
Gold held due to the Government of Azerbaijan |
14,304 |
7,471 |
|
Geological data |
- |
3,379 |
|
Payable to the Government of Azerbaijan from copper concentrate joint sale |
7,300 |
1,017 |
|
|
39,630 |
19,700 |
|
Non-current |
2025 $000 |
2024 $000 |
|
Other payables |
|
|
|
Other payables |
- |
476 |
Trade creditors primarily comprise amounts outstanding for trade purchases and ongoing costs. Trade creditors are non-interest bearing and the creditor days were 65 (2024: 65). Accruals and other payables mainly consist of accruals for salaries, bonuses, related payroll taxes and social contributions, and services provided but not billed to the Group by the end of the reporting period. The directors consider that the carrying amount of trade and other payables approximates to their fair value.
The amount payable to the Government of Azerbaijan from copper concentrate joint sale represents the portion of cash received from the customer for the Government's portion from the joint sale of copper concentrate.
In the year ended 31 December 2022, the Group contracted with AzerGold CJSC to pay $4.0 million for the historical geological data AzerGold CJSC owned in respect of the Garadag and Xarxar Contract Areas. The consideration was apportioned as $3.3 million for Garadag data and $0.7 million for Xarxar data. $1.0 million (25 per cent.) was paid in 2022. The remaining $3.0 million (75 per cent.) plus VAT was paid in 2025.
22 Interest-bearing loans and borrowings
|
|
Interest rate (per cent.) |
Final maturity date |
2025 $000 |
2024 $000 |
|
$5,000,000 bank loan |
8.5 per annum |
May 2026 |
5,059 |
5,002 |
|
$5,650,000 bank loan |
6.5 per annum |
June 2026 |
5,679 |
5,684 |
|
$3,708,000 vendor financing |
SOFR + 2.0 per annum |
July 2027 |
1,858 |
3,093 |
|
$10,000,000 bank loan |
6.5 per annum |
May 2026 |
3,083 |
7,850 |
|
$2,000,000 bank loan |
7.5 per month |
September 2026 |
2,003 |
- |
|
$3,000,000 bank loan |
5.0 per month |
October 2026 |
3,008 |
- |
|
$4,000,000 bank loan |
8.0 per annum |
December 2028 |
4,011 |
- |
|
$3,000,000 bank loan |
8.5 per annum |
December 2028 |
2,987 |
- |
|
|
|
|
27,688 |
21,629 |
|
Loans repayable in less than one year |
22,181 |
18,546 |
|
Loans repayable in more than one year |
5,507 |
3,083 |
|
|
27,688 |
21,629 |
The directors consider that the carrying amount of interest-bearing loans and borrowings approximates to their fair value.
$5,000,000 bank loan
The loan is unsecured and was originally repayable in full on 11 May 2025 then amended to 11 May 2026. It carries an interest rate of 8.5 per cent. per annum (2024: 6 per cent. per annum) and interest is payable monthly. It has now been fully repaid.
$5,650,000 bank loan
The loan is secured against a $6 million deposit maintained with the lender. The principal was initially repayable in 2 instalments of $2,818,659 and $2,831,341 in March 2024 and April 2024 respectively. The loan has been extended several times and is now fully repayable by June 2026. The amended interest rate is 6.5 per cent. per annum. The $6 million deposit has been disclosed as restricted cash in the Group balance sheet at 31 December 2025 and 31 December 2024
$3,708,000 vendor financing
On 2 May 2024, Azerbaijan International Mining Company (a wholly owned subsidiary of the Group) agreed and signed a vendor financing facility (the "Facility") with Caterpillar Financial Services Corporation ("Cat Financial"). On 26 August 2024 the Group received the full proceeds of $3,708,000 from its vendor financing loan with Cat Financial. The loan is secured against the underground mining equipment purchased under the agreement for the Group's Gilar mine. The underground fleet cost $4.6 million which had already been paid by the Group at 31 December 2023. $3,708,000 of the purchase price was refinanced through the Facility. Other principal terms of the facility were as follows:
Guarantor: Anglo Asian Mining PLC
Interest rate: CME Term SOFR rate plus a margin of 2 per cent.
Repayment of interest: quarterly
Repayment of capital: 12 equal quarterly installments
Net debt to EBITDA and net worth covenants
Prepayment: allowed subject to a fee
The Group was in breach of its covenants on the Facility at 31 December 2024. Accordingly, the entire loan has been classified as a current liability in the 2024 balance sheet. The Group subsequently obtained a waiver for the breach of the covenant The Group was not in breach of its covenants on the facility at 31 December 2025.
$10,000,000 bank loan
The loan is unsecured. The borrowing commenced on 6 November 2023. The loan had a 6 month capital repayment grace period during which only interest of $54,167 per month was payable. From May 2024 to November 2024, 6 equal monthly repayments of principal and interest totalling $413,306 were made by the Group. On 14 October 2024, a new capital repayment grace period was determined from November 2024 to May 2025, 13 equal monthly repayments of principal and interest totalling $624,297 will be made to repay the principal on a monthly reducing balance basis. A final repayment of principal and interest of $624,297 was made in May 2026.
$2,000,000 bank loan
The loan commenced in September 2025 and is unsecured and repayable in full in September 2026. It carries an interest rate of 7.5 per cent. per annum and interest is payable monthly.
$3,000,000 bank loan
The loan commenced in October 2025 and is unsecured and repayable in full in October 2026. It carries an interest rate of 5.0 per cent. per annum and interest is payable monthly.
$4,000,000 bank loan
The loan commenced in December 2025 and is unsecured. It is repayable in installments with the final repayment in December 2028. It carries an interest rate of 8.0 per cent. per annum and interest is payable monthly.
$3,000,000 bank loan
The loan commenced in December 2025 and is repayable in full in December 2028. It carries an interest rate of 8.5 per cent. per annum and interest is payable monthly. The loan is secured against a $3 million deposit maintained with the lender. The $3 million deposit has been disclosed as restricted cash in the Group balance sheet at 31 December 2025.
23 Changes in liabilities arising from financing activities
|
|
2025 |
|||
|
|
1 January $000 |
Cash flows $000 |
Other $000 |
31 December $000 |
|
Interest bearing loans and borrowings |
21,629 |
4,799 |
1,260 |
27,688 |
|
Lease liabilities |
2,147 |
(1,016) |
38,007 |
39,208 |
|
Total liabilities from financing activities |
23,776 |
3,783 |
39,337 |
66,896 |
|
|
2024 |
|||
|
|
1 January $000 |
Cash flows $000 |
Other $000 |
31 December $000 |
|
Interest bearing loans and borrowings Lease liabilities |
20,734 2,471 |
(342) (962) |
1,237 638 |
21,629 2,147 |
|
Total liabilities from financing activities |
23,205 |
(1,304) |
1,875 |
23,776 |
24 Provision for rehabilitation
|
|
2025 $000 |
2024 $000 |
|
1 January |
18,826 |
12,948 |
|
Correction of an error* |
304 |
2,000 |
|
1 January restated* |
19,130 |
14,948 |
|
Change in estimates |
30 |
3,332 |
|
Increase |
2,419 |
- |
|
Accretion expense |
1,361 |
850 |
|
31 December |
22,940 |
19,130 |
*see note 34 - "Prior year restatement"
The Group has a liability for restoration, rehabilitation and environmental costs arising from its mining operations. Estimates of the cost of this work including reclamation costs, close down and pollution control are made on an ongoing basis, based on the estimated life of the mine. The provision represents the net present value of the best estimate of the expenditure required to settle the obligation to rehabilitate any environmental disturbances caused by mining operations. The total undiscounted liability for rehabilitation at 31 December 2025 was $24,241,000(2024: $20,520,000). The increase related to the Demirli mine. The undiscounted liability was discounted using a risk-free rate of 6.58 per cent. and 6.50 per cent. for Gedebek and Demirli mine sites respectively (2024: 6.57 per cent. for Gedabek mine site). Expenditures on restoration and rehabilitation works are expected between 2028 to 2030 and 2026 to 2028 years for Gedabek and Demirli mine sites (2024: between 2028 to 2030 years for Gedabek mine site).
25 Financial instruments
Financial risk management objectives and policies
The Group's principal financial instruments at 31 December 2025 comprised cash and cash equivalents and borrowings. The main purpose of these financial instruments is to finance the Group operations. The Group has other financial instruments, such as certain of its trade and other receivables and trade and other payables, which arise directly from its operations. Surplus cash within the Group is put on deposit, the objective being to maximise returns on such funds whilst ensuring that the short-term cash flow requirements of the Group are met.
The Group's only financial instrument which is valued at fair value through profit and loss is its investment in Copper Giant at 31 December 2025. It is valued using level 1 inputs. The investment is valued at its market price in an active market without adjustment.
The main risks that could adversely affect the Group's financial assets, liabilities or future cash flows are capital risk, market risk, interest rate risk, foreign currency risk, liquidity risk and credit risk. Management reviews and agrees policies for managing each of these risks which are summarised below.
The following discussion also includes a sensitivity analysis that is intended to illustrate the sensitivity to changes in market variables on the Group's financial instruments and show the impact on profit or loss and shareholders' equity, where applicable. Financial instruments affected by market risk include bank loans and overdrafts, accounts receivable, accounts payable and accrued liabilities.
The sensitivity has been prepared for the years ended 31 December 2025 and 2024 using the amounts of debt and other financial assets and liabilities held as at those reporting dates.
Capital risk management
The capital structure of the Group at 31 December 2025 consists cash and cash equivalents, bank borrowings, lease liabilities and equity attributable to equity holders of the parent, comprising issued share capital, reserves and retained earnings as disclosed in the consolidated statement of changes in equity. The Group may enter into bank and other loans and letters of credit in the future. The Group has sufficient capital to fund ongoing production and exploration activities, with capital requirements reviewed by the Board on a regular basis. Capital has been sourced through share issues on the AIM, part of the London Stock Exchange, and loans from banks in Azerbaijan and elsewhere. In managing its capital, the Group's primary objective is to ensure its continued ability to provide a consistent return for its equity shareholders through capital growth. In order to achieve this objective, the Group seeks to maintain a gearing ratio that balances risk and returns at an acceptable level and also to maintain a sufficient funding base to enable the Group to meet its working capital and strategic investment needs. In 2025, the Group entered into a vendor financing facility with Caterpillar Financial Services Corporation in 2025 of $3.7 million. The loan is subject to a net debt to EBITDA and a net worth covenant.
The Group is not subject to externally imposed capital requirements and monitors capital using a gearing ratio. The Group's policy is to keep the gearing ratio below 70 per cent. The Group calculates its gearing ratio as total debt divided by total equity and multiplying the result by 100 to express the gearing ratio as a percentage. At 31 December 2024, the Group's gearing ratio was 69.5 per cent. (2024: 32.2 per cent.) as follows:
|
|
2025 $000 |
2024 $000 |
|
Current liabilities |
|
|
|
Interest-bearing loans and other borrowings |
22,181 |
18,546 |
|
Lease liabilities |
13,720 |
691 |
|
Non-current liabilities |
|
|
|
Interest-bearing loans and other borrowings |
5,507 |
3,083 |
|
Lease liabilities |
25,488 |
1,456 |
|
TOTAL DEBT |
66,896 |
23,776 |
|
|
|
|
|
TOTAL EQUITY |
85,228 |
67,372 |
|
|
|
|
|
Total debt / total equity X 100 (per cent.) |
78.5 |
35.3 |
Interest rate risk
The Group's cash deposits are at a fixed rate of interest. The Group's bank borrowings during the year ended 31 December 2025 were at a fixed rate of interest. The Group would expect any future bank borrowings and letters of credit to be at a fixed rate of interest. The Group also utilised supplier financing at a variable rate of interest during the year ended 31 December 2025. The variable rate applicable to the Group's interest-bearing supplier financing exposes the Group to fluctuations in interest payments due to changes in the SOFR.
The Group manages the risk by maintaining fixed rate instruments, with approval from the directors required for all new borrowing facilities.
The Group has not used any interest rate swaps or other instruments to manage its interest rate profile during 2025 and 2024.
Liquidity risk
Ultimate responsibility for liquidity risk management rests with the board of directors, which has built an appropriate liquidity risk management framework for the management of the Group's short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial liabilities. The Group has access to local sources of both short and long-term finance should this be required.
The tables below summarise the maturity profile of the Group's financial liabilities. The cash flows presented are the contractual undiscounted cash flows and accordingly certain amounts differ from the amounts included in the statement of financial position.
Year ended 31 December 2025
|
|
On demand $000 |
Less than 3 months $000 |
3 to 12 months $000 |
1 to 5 years $000 |
>5 years $000 |
Total $000 |
|
Lease liabilities |
1,356 |
2,711 |
12,200 |
29,849 |
- |
46,116 |
|
Interest-bearing loans and borrowings |
- |
2,443 |
19,737 |
5,508 |
- |
27,688 |
|
Trade and other payables |
- |
9,908 |
29,723 |
- |
- |
39,631 |
|
|
1,356 |
15,062 |
61,660 |
35,357 |
- |
113,435 |
Year ended 31 December 2024
|
|
On demand $000 |
Less than 3 months $000 |
3 to 12 Months $000 |
1 to 5 years $000 |
>5 years $000 |
Total $000 |
|
Lease liabilities |
79 |
159 |
714 |
1,634 |
- |
2,586 |
|
Interest-bearing loans and borrowings |
- |
73 |
18,473 |
3,083 |
- |
21,629 |
|
Trade and other payables |
- |
4,925 |
14,936 |
476 |
- |
20,337 |
|
|
79 |
5,157 |
34,123 |
5,193 |
- |
44,552 |
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The maximum credit risk exposure relating to financial assets is represented by their carrying value as at the consolidated statement of financial position date.
The Group has adopted a policy of only dealing with creditworthy banks and has cash deposits held with reputable financial institutions. These usually have a lower to upper medium grade credit rating. Trade receivables consist of amounts due to the Group from sales of gold and silver and copper and precious metal concentrates. Sales of gold and silver bullion are made to MKS Finance SA, Switzerland-based gold refinery, and copper concentrate is sold to Industrial Minerals SA and Trafigura PTE Ltd. Due to the nature of the customers, the board of directors does not consider that a significant credit risk exists for receipt of revenues. The board of directors continually reviews the possibilities of selling gold to alternative customers and also the requirement for additional measures to mitigate any potential credit risk.
Foreign currency risk
The presentational currency of the Group is United States Dollars. The Group is exposed to currency risk due to movements in foreign currencies relative to the US Dollar affecting foreign currency transactions and balances.
The carrying amounts of the Group's foreign currency denominated monetary assets and monetary liabilities at 31 December are as follows:
|
|
Liabilities |
|
Assets |
||
|
|
2025 $000 |
2024 $000 |
|
2025 $000 |
2024 $000 |
|
UK Sterling |
208 |
449 |
|
377 |
198 |
|
Azerbaijan Manats |
12,359 |
10,481 |
|
5,176 |
1,917 |
|
Other |
2,032 |
1,879 |
|
17 |
17 |
Foreign currency sensitivity analysis
The Group is mainly exposed to the currency of the United Kingdom (UK Sterling), the currency of the European Union (Euro) and the currency of the Republic of Azerbaijan (Azerbaijan Manat).
The following table details the Group's sensitivity to a 9.16 per cent., 8.69 per cent. and 2.00 per cent. (2024: 9.16 per cent., 8.69 per cent. and 2.00 per cent.) increase in and a 10.32 per cent, 5.57 per cent. and 2.00 per cent. (2024: 10.32 per cent, 5.57 per cent. and 2.00 per cent.) decrease in the United States Dollar against United Kingdom Sterling, Euro and Azerbaijan Manat, respectively. These are the sensitivity rates used when reporting foreign currency risk internally to key management personnel and represents management's assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for respective change in foreign currency rates. A positive number below indicates an increase in profit other equity where the United States Dollar strengthens by the mentioned rates against the relevant currency. Weakening of the United States Dollar against the relevant currency, there would be an equal and opposite impact on the profit and other equity, and the balances below would be reversed.
|
|
UK Sterling impact |
|
Azerbaijan Manat impact |
Euro Impact |
|
|||||
|
|
2025 |
2024 |
|
2025 |
2024 |
2025 |
2024 |
|
||
|
|
$000 |
$000 |
|
$000 |
$000 |
$000 |
$000 |
|
||
|
Increase - effect on (loss) /profit before tax |
15 |
5 |
|
144 |
171 |
174 |
162 |
|||
|
Decrease - effect on (loss) / profit before tax |
(17) |
(5) |
|
(144) |
(171) |
(111) |
(104) |
|||
Market risk
The Group's activities primarily expose it to the financial risks of changes in gold, silver and copper prices which have a direct impact on revenues. The management and board of directors continuously monitor the spot price of these commodities. The forward prices for these commodities are also regularly monitored. The majority of the Group's production is sold by reference to the spot price on the date of sale. However, the board of directors will enter into forward and option contracts for the purchase and sale of commodities when it is commercially advantageous.
A 10 per cent. decrease in gold price in the year ended 31 December 2025 would result in a reduction in revenue of $6.8 million (2024: $3.7 million) and a 10 per cent. increase in gold price would have the equal and opposite effect a 10 per cent. decrease in silver price would result in a reduction in revenue of $0.78 million (2024: $0.08 million) and a 10 per cent. increase in silver price would have an equal and opposite effect. A 10 per cent. decrease in copper price would result in a reduction in revenue of $4.3 million (2024: $0.3 million) and a 10 per cent. increase in copper price would have an equal and opposite effect.
26 Share capital and merger reserve
|
|
2025 |
2024 |
||
|
|
Number |
£ |
Number |
£ |
|
Authorised Ordinary shares of 1 pence each |
600,000,000 |
6,000,000 |
600,000,000 |
6,000,000 |
|
|
|
|
|
|
|
|
Shares |
$000 |
Shares |
$000 |
|
Ordinary shares issued and fully paid 1 January |
114,392,024 |
2,016 |
114,392,024 |
2,016 |
|
Issued during the year |
100,000 |
1 |
- |
- |
|
31 December |
114,492,024 |
2017 |
114,392,024 |
2,016 |
Fully paid ordinary shares carry one vote per share and carry the right to dividends. 150,000 ordinary shares were bought back during the year ended 31 December 2025 and are now held in treasury (note 28 - 'Treasury shares').
Share options
The Group has share option scheme under which options to subscribe for the Company's shares have been granted to certain executives and senior employees (note 29 - 'Share based payment').
Merger reserve
The merger reserve was created in accordance with the merger relief provisions under Section 612 of the Companies Act 2006 (as amended) relating to accounting for Group reconstructions involving the issue of shares at a premium. In preparing Group consolidated financial statements, the amount by which the base value of the consideration for the shares allotted exceeded the aggregate nominal value of those shares was recorded within a merger reserve on consolidation, rather than in the share premium account.
27 Share premium
|
|
2025 $000 |
2024 $000 |
|
1 January |
33 |
33 |
|
Shares issued during the year |
152 |
- |
|
Transfer from share-based payment reserve |
153 |
- |
|
31 December |
338 |
33 |
28 Treasury shares
|
|
|
|
|||
|
|
Shares |
|
$000 |
||
|
1 January 2024 |
150,000 |
|
145 |
||
|
Correction of an error* |
(150,000) |
|
(145) |
||
|
1 January 2024 - restated |
- |
|
- |
||
|
Movement in 2024 |
- |
|
- |
||
|
31 December 2024 - restated |
- |
|
- |
||
|
Buy back of shares |
150,000 |
|
145 |
||
|
31 December 2025 |
150,000 |
|
145 |
||
See note 34 - "Prior year restatement"
The Company bought back the following ordinary shares in the year ended 31 December 2025:
|
Date of original unlawful buyback |
Number of shares |
Price per share pence |
Total cost £ |
Total cost $000 |
|
21 July 2022 |
50,000 |
81.75 |
40,875 |
49 |
|
10 August 2022 |
50,000 |
89.50 |
44,750 |
54 |
|
16 September 2022 |
50,000 |
73.00 |
36,500 |
42 |
|
|
150,000 |
81.42* |
122,125 |
145 |
* Average cost
29 Share-based payment
The Group operates a share option scheme for directors and senior employees of the Group. The period during which share options can be exercised is determined by the board of directors for each individual grant of share options subject to exercise not taking place later than the tenth anniversary of their issue. Options are exercisable at a price equal to the closing quoted market price of the Group's shares on the date of the board of directors approval to grant options. Options are forfeited if the employee leaves the Group and the options are not exercised within three months from leaving date.
The number and weighted average exercise prices ("WAEP") of, and movements in, share options during the year were as follows:
|
|
2025 |
|
2024 |
||
|
|
Number |
WAEP pence |
|
Number |
WAEP pence |
|
Outstanding at 1 January |
380,000 |
113 |
|
380,000 |
113 |
|
Issued during the year |
100,000 |
166 |
|
- |
- |
|
Exercised during the year |
(100,000) |
205 |
|
- |
- |
|
Exercisable at 31 December |
380,000 |
127 |
|
380,000 |
113 |
The weighted average remaining contractual life of the share options outstanding at 31 December 2025 was 2 years (2024: 2.5 years) and their average exercise price was 127 pence (2024: 113 pence).
The Group issued 100,000 new share options during the year ended 31 December 2025 (2024: nill).
Share options are valued using the assumption that they will only be exercised if the share price prevailing at the date of exercise is equal to, or above, the price at which the options were granted. This methodology approximates to valuing the share options using a Black-Scholes model.
The Group recognised total expense related to equity-settled share-based payment transactions for the year ended 31 December 2025 of $22,000 (2024: $5,000).
30 Distributions
|
|
2025 $000 |
2024 $000 |
|
Cash dividends on ordinary shares declared |
|
|
|
Final dividend for the year ended 31 December: 4 US cents per share |
4,574 |
- |
|
|
4,574 |
- |
Cash dividends are declared in US dollars but paid in a combination of US dollars and pounds Sterling. Dividends paid in pounds Sterling are converted into pounds Sterling using a five-day average of the sterling closing mid-price published by the Bank of England at 4pm each day for a specified week prior to payment of the dividend.
31 Subsidiary undertakings and associate company
Anglo Asian Mining PLC is the parent and ultimate parent of the Group.
The Company's subsidiaries included in the Group financial statements at 31 December 2024 and 31 December 2025 are as follows:
|
Name |
Country of incorporation |
Primary place of business |
Percentage of holding per cent. |
|
Anglo Asian Operations Limited |
England and Wales |
United Kingdom |
100 |
|
Holance Holdings Limited |
British Virgin Islands |
Azerbaijan |
100 |
|
Anglo Asian Cayman Limited |
Cayman Islands |
Azerbaijan |
100 |
|
R.V. Investment Group Services LLC |
Delaware, USA |
Azerbaijan |
100 |
|
Azerbaijan International Mining Company Limited |
Cayman Islands |
Azerbaijan |
100 |
There has been no change in subsidiary undertakings since 1 January 2025.
See note 6 - "Subsidiaries" of notes to the Company financial statements for the registered address of the subsidiaries.
32 Contingencies and commitments
The Group undertakes its mining operations in the Republic of Azerbaijan pursuant to the provisions of an Agreement on the Exploration, Development and Production Sharing for Prospective Gold Mining Areas ("PSA"). The original agreement was dated 20 August 1997 and granted the Group mining rights over the following contract areas containing mineral deposits: Gedabek, Gosha, Ordubad Group (Piyazbashi, Agyurt, Shakardara, Kiliyaki), Soutely, Kyzilbulag and Vejnali. On 5 July 2022, amendments to the PSA were ratified by the Parliament of the Republic of Azerbaijan granting the Group three new contract areas with a combined area of 882 square kilometres and which relinquished the Soutely contract area. The parliamentary ratification was signed into law on 5 July 2022 by the President of the Republic of Azerbaijan.
The PSA contains various provisions relating to the obligations of R.V. Investment Group Services LLC ("RVIG"), a wholly owned subsidiary of the Company. The principal provisions are regarding the exploration and development programme, preparation and timely submission of reports to the Government, compliance with environmental and ecological requirements. The Directors believe that RVIG is in compliance with the requirements of the PSA. The Group has announced a discovery on Gosha Mining Property in February 2011 and submitted the development programme to the Government according to the PSA requirements, which was approved in 2012. In April 2012 the Group announced a discovery on the Ordubad Group of Mining Properties and submitted the development programme to the Government for review and approval according to the PSA requirements. The Group and the Government are still discussing the formal approval of the development programme.
The initial period of the mining licence for Gedabek was until March 2022. The Company has the option to extend the licence for two five-year periods (ten years in total) conditional upon satisfaction of certain requirements in the PSA. The first of the five year extensions was obtained by the Company in April 2021 and accordingly the mining licence is now to March 2027 with a further five year extension permitted.
RVIG is also required to comply with the clauses contained in the PSA relating to environmental damage. The Directors believe RVIG is in compliance with the environmental clauses contained in the PSA.
33 Related party transactions
Trading transactions
During the years ended 31 December 2024 and 2025, there were no trading transactions between Group companies.
Other 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.
a) Remuneration paid to directors is disclosed above.
b) During the year ended 31 December 2025, total payments of $2,758,000 (2024: $333,000) were made for processing equipment and supplies purchased from Proses Muhendislik Danismanlik Inshaat ve Tasarim Anonim Shirket, an entity in which the chief operating officer of Azerbaijan International Mining Company, has a direct ownership interest.
At 31 December 2024 there is a payable in relation to the above related party transaction of $150,000 (2024: $282,000).
c) On 30 June 2022, a loan of $500,000 was made to the chief operating officer of Azerbaijan International Mining Company. The loan carries an interest rate of 4 per cent. and was repayable on 30 June 2023 with earlier repayment permissible. The loan is secured on the Anglo Asian Mining plc shares owned by the vice president of technical services of Azerbaijan International Mining Company. The loan was guaranteed by the president and chief executive officer of Anglo Asian Mining plc. In June 2023, the loan was renewed on the same terms as previously except the term of the loan was extended for 3 years from the date of the original advance and the interest rate was increased to 6 per cent. On 21 May 2024 and 11 May 2025, a loan repayments of $40,000 and $15,000 were made, which were deducted from accrued interest up to the date of repayment.
d) 1 October 2020, Azerbaijan International Mining Company ("AIMC") lent $245,000 for a period of 3 years to Ilham Khalilov, Vice President of AIMC and a member of the key management personnel of the Group. On 1 October 2023, the loan was extended until 31 December 2026 at an interest rate of 6 per cent. On 10 February 2025, a loan repayment of $5,000 was made, which was deducted from accrued interest up to the date of repayment.
34 Prior year restatements
34.1 Share buy backs
In the year ended 31 December 2022, the Company bought back 150,000 shares at a cost of $145,000. Sections 836 and 838 of the Companies Act 2006 require that share buybacks can only be made by Companies which have sufficient distributable reserves from which to buy back those shares. The Company did not have sufficient reserves at that time, and the share buybacks were therefore unlawful.
To rectify the situation the following actions were carried out in 2025:
· A dividend of $60 million was paid by Anglo Asian Operations Limited to the Company to rectify the deficiency on reserves.
· A shareholder's meeting was held on 22 October 2025. A resolution by the shareholders was passed which put all potentially affected parties in the position which they were intended to be in had the share buy backs been made in accordance with the full requirements of the Companies Act 2006.
· The Company entered into a buy-back deed with SP Angel Corporate Finance LLP, the Company's NOMAD ("Buy-back Deed").
The consequence of entering into the Buy-back Deed is, inter alia, to effect the lawful transfer of the Ordinary Shares which were subject to buy-backs in accordance with the Companies Act 2006, from SP Angel Corporate Finance LLP to the Company. As the actions taken to rectify the share buybacks and the Buy-back Deed were entered into in 2025, the share buybacks have now been accounted for as if they took place in 2025. No money was transferred to, or from, the Company and S P Angel Corporate Finance LLP in 2025. The share buy backs have therefore been recorded at their original price in 2022.
The effects on the financial statements are as follows:
· The reserve for Treasury shares has only been recognised in the financial statements for the year ended 31 December 2025. It has been recorded as $nil in all previous years.
· An other receivable has been established for $145,000 in the balance sheet for the years ended 31 December 2022 to 31 December 2024. This was money held at S P Angel Corporate Finance LLP on account of the share purchases which were unlawful.
The effect on debtors and Treasury shares reserve for the years ended 31 December 2023 and 31 December 2024 is given in the balance sheet below.
34.2 Contingency for provision of rehabilitation
In 2024, to align itself with similar companies in the industry, the Group added a contingency to its rehabilitation provision. During the year, the Group identified that this contingency for rehabilitation had been incorrectly calculated. The net impact of this miscalculation was that both Property, plant and equipment and the rehabilitation provision had been overstated by $2,696,000.
In 2023 and 2024, the Group used an incorrect inflation rate to calculate the rehabilitation provision. The net impact of this miscalculation was that both Property, plant and equipment and the rehabilitation provision had been understated by $2 million in 2023 and $3 million in 2024.
The above errors are prior year adjustments and have been corrected by restating the balance sheet at 31 December 2023 and 2024. In 2023. Property, plant and equipment and the rehabilitation provision have both been increased by $2 million. In 2024, Property, plant and equipment and the rehabilitation provision have both been increased by a further $0.3 million.
The effect on Property, plant and equipment and rehabilitation prevision for the years ended 31 December 2023 and 31 December 2024 is given in the balance sheets below.
34.3 Restated balance sheet at 31 December 2024
|
|
As previously reported $000 |
Share buy backs $000 |
Rehabilitation provision $000 |
As restated $000 |
|
|
As previously reported $000 |
Share buy backs $000 |
Rehabilitation provision $000 |
As restated $000 |
|
Property plant and equipment |
71,606 |
- |
304 |
71,910 |
|
Total non-current assets |
103,745 |
- |
304 |
104,049 |
|
Prepayments and advances |
1,165 |
145 |
- |
1,310 |
|
Trade and other receivable |
11,262 |
145 |
- |
11,407 |
|
Current assets |
42,881 |
145 |
- |
43,026 |
|
Total assets |
146,626 |
145 |
304 |
147,075 |
|
Provision for rehabilitation |
(18,826) |
- |
(304) |
(19,130) |
|
Non-current liabilities |
(40,317) |
- |
(304) |
(40,621) |
|
Total liabilities |
(79,254) |
- |
(304) |
(79,558) |
|
Net assets |
67,372 |
145 |
- |
67,517 |
|
Treasury shares |
(145) |
145 |
- |
- |
|
Total equity |
67,372 |
145 |
- |
67,517 |
34.4 Restated balance sheet at 31 December 2023
|
|
As previously reported $000 |
Share buy backs $000 |
Rehabilitation provision $000 |
As restated $000 |
|
Property plant and equipment |
64,775 |
- |
2,000 |
66,775 |
|
Total non-current assets |
95,171 |
- |
2,000 |
97,171 |
|
Prepayments and advances |
3,686 |
145 |
- |
3,831 |
|
Trade and other receivable |
8,654 |
145 |
- |
8,799 |
|
Current assets |
59,473 |
145 |
- |
59,618 |
|
Total assets |
154,644 |
145 |
2,000 |
156,789 |
|
Provision for rehabilitation |
(12,948) |
- |
(2,000) |
(14,948) |
|
Non-current liabilities |
(46,452) |
- |
(2,000) |
(48,452) |
|
Total liabilities |
(69,836) |
- |
(2,000) |
(71,836) |
|
Net assets |
84,808 |
145 |
- |
84,953 |
|
Treasury shares |
(145) |
145 |
- |
- |
|
Total equity |
84,808 |
145 |
- |
84,953 |
**ENDS**
Notes to editors:
Anglo Asian Mining plc (AIM:AAZ) is a copper and gold producer with a high-quality portfolio of production and exploration assets in Azerbaijan. The Company produced 7,915 tonnes of copper and 25,061 ounces of gold for the year ended 31 December 2025.
The Company's strategic plan for growth shows a clearly defined path for the Company to transition to a multi-asset, mid-tier, copper and gold producer by 2030, by which time copper will be the principal product of the Company, with forecast annual production of around 50,000 to 55,000 tonnes of copper. It plans to achieve this growth by bringing into production three new mines during the period 2027 to 2030 at Xarxar, Garadag and Zafar, in addition to the newly opened Gilar and Demirli mines. Production commenced at the Gilar mine in May 2025 and Demirli in July 2025. https://www.angloasianmining.com/