Anglo Asian Mining PLC Annual Report 2014

FY2014 Annual Report · Anglo Asian Mining PLC

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Anglo Asian Mining PLC
Annual report and accounts 2014

Anglo Asian Mining PLC is listed on AIM and has
a portfolio of gold, copper and silver exploration
and production properties in Azerbaijan.

The Company’s extensive portfolio is located on the Tethyan Tectonic Belt,
one of the world’s most significant gold and copper bearing trends, which
extends from Pakistan to the Balkans passing through Iran, Azerbaijan,
Georgia and Turkey.

The Company’s key operations span three contract areas in Azerbaijan
covering 1,062 square kilometres. Three additional contract areas covering
900 square kilometres are held in territories occupied by Armenia which it
hopes to develop once access is obtained.

Our properties are held under a Production Sharing Agreement with the
Government of Azerbaijan.

Contents

Anglo Asian Mining PLC
1 Highlights
2 Anglo Asian Mining PLC
3 Azerbaijan

Chairman’s statement
4 Chairman’s statement

Strategic report
6 Strategic report

Financial review
10 Financial review

Corporate governance
13 Board of directors
14 Directors’ report
18 Report on directors’ remuneration
20 Statement of directors’ responsibilities
21 Corporate governance

Group financial statements
22 Independent auditor’s report
23 Group income statement
23 Group statement of comprehensive income
24 Group statement of financial position
25 Group cash flow statement
26 Group statement of changes in equity
27 Notes to the Group financial statements

Discover more online

For the latest news and investor
information, visit our website at
www.angloasianmining.com

Company financial statements
53 Company balance sheet
54 Notes to the Company financial statements

Annual general meeting
58 Letter to shareholders
59 Notice of annual general meeting of shareholders

Highlights
year ended 31 December 2014

Financial highlights

Revenue

$68.0m

(2013:$70.8m)

Loss before taxation

$14.4m

(2013:profit of $1.4m)

Operating cash flow before movements
in working capital

$10.6m

(2013:$17.9m)

Net debt calculated as aggregate
of loans and borrowings

$52.4m

(2013:$45.5m)

Cash

$0.3m

(2013:$5.5m)

Operational highlights

Azerbaijan with record gold production

• Strong production performance at Gedabek mine in
• Total FY 2014 gold production of 60,285 ounces
• Gold sales of 50,615 ounces (2013: 46,077 ounces)

completed at an average of $1,267 per ounce
(2013: $1,387 per ounce)

(2013: 52,107 ounces)

• Gold produced at an average cash operating cost net

of by-product credits of $971 per ounce (2013: $626 per
ounce) - higher cash costs due to there being a full year
cost of production of the agitation leach plant in FY 2014

– FY 2014 lower due to changes in mineralogy of the ore

• Silver production totalled 31,177 ounces (2013: 65,939 ounces)
• Copper production of 784 tonnes, a 140 per cent.
• Gedabek production target to produce circa

increase over 2013 production of 327 tonnes

70,000-75,000 ounces of gold for FY 2015 from the
agitation leaching plant and heap leach operation,
including ore from Anglo Asian’s Gosha and Gadir
operations

• Revised JORC reserve report announced with 20.5 million

tonnes of ore grading 1.03 grammes per tonne of gold
(682,000 ounces); 0.50 per cent. copper (102,000 tonnes);
and 7.35 grammes per tonne of silver (4.84 million ounces)

scheduled to commence operations in 2015

• Gosha mine commenced operations in 2014 and Gadir
• Construction of small scale flotation plant to increase gold

and copper recoveries scheduled to be completed
in quarter three 2015

Underground low loader.

Annual report and accounts 2014

Anglo Asian Mining PLCChairman’s statementStrategic reportFinancial reviewCorporate governanceGroup financial statementsCompany financial statementsAnnual general meeting
Anglo Asian Mining PLC
Our operations

The Company’s main property is its Gedabek open pit mine,
Azerbaijan’s first gold mine in modern times. The Company also
owns Gosha, an underground mine 50 kilometres from Gedabek.
Gadir, an underground mine is also being developed at Gedabek.
Ore mined at Gosha is processed at Gedabek.

The Company processes ore at Gedabek. Gold doré is produced by heap leach and by
its agitation leaching plant. A copper and precious metals concentrate is
also produced by SART (Sulphidisation, Acidification, Recycling and Thickening)
processing. The Company is also constructing a small scale flotation plant to
exploit Gedabek’s copper resources.

Gedabek
Gedabek is the Company’s main mine and the site of its processing operations. Situated at Gedabek is the Company’s
agitation leaching plant and its SART processing facility. In 2014, 60,285 ounces of gold, 31,177 ounces of silver and
784 tonnes of copper were produced.

Mining in the Gedabek open pit.

View of the agitation leaching plant and partially constructed small
scale flotation plant.

Agitation leach tanks.

Inside of the SART plant.

Anglo Asian Mining PLC

Annual report and accounts 2014

Anglo Asian Mining PLC
Our operations

Gadir
Gadir is a new underground mine being developed at the Gedabek site.

Entrance to the newly developed Gadir decline.

Inside of the Gadir decline showing wall and
roof supports.

Gosha
The Gosha underground mine is 50 kilometres from Gedabek and is being developed as a small high grade mine. In 2014,
Gosha produced 28,891 tonnes of ore at a grade of 4.15 grammes per tonne.

Truck entering the Gosha mine.

Ore being transported underground in the
Gosha mine.

Ore mined at Gosha waiting to be
transported to Gedabek.

Azerbaijan
Azerbaijan is situated in south-western Asia, bordering the Caspian Sea between Iran and Russia,
with a small European portion north of the Caucasus range.

It borders Armenia, Georgia, Iran, Russia and Turkey and is split into two parts by Armenia; the smaller part is called
the Autonomous Republic of Nakhchivan.

The country has an established democratic government, which is fully supportive of international investment initiatives.
Infrastructure is reasonably extensive. Low cost labour is also available.

Contract Area
Locations
Gosha
Gedabek
Ordubad

Occupied territories
(grey area)
Soutely
Gyzilbulakh
Vejnali

Georgia

Russia

Azerbaijan

Armenia

Turkey

Nakhchivan

Caspian Sea

Iran

www.angloasianmining.com

Annual report and accounts 2014

We continue to build a leading gold,
copper and silver producer in Azerbaijan.

Anglo Asian is a gold, copper and silver
producer with mining properties located
in Azerbaijan in the prospective Tethyan
Tectonic Belt, one of the world’s significant
copper and gold mineralised zones. Our
primary focus in 2014 was the optimisation
of production at, and future development
of Gedabek – our gold, copper and silver
mining operation located in the lower
Caucasus mountains in the west of the
country. We have also been developing
our second gold resource, Gosha, only
50 kilometres away from Gedabek and
a new underground mine, Gadir, situated
on the Gedabek property.

Review of the year
We were pleased to report total gold
production for 2014 of 60,285 ounces,
a 16 per cent. increase over 2013 production
of 52,107 ounces and copper production
of 784 tonnes, a 140 per cent. increase
over the 2013 production of 327 tonnes.
Production of silver totalled 31,177 ounces for
2014, however this was a 53 per cent.
decrease over 2013 production of
65,939 ounces due to changes
in the mineralogy of the ore.

Whilst gold and copper production
for the year increased substantially,
the environment for mining companies
globally remained poor with the effects
still being felt of the sustained low gold
and copper prices. Despite a strong
performance in terms of production,
the low global metals prices throughout
the year, together with the first full year’s
operational cost of the agitation leach
plant at Gedabek, have adversely impacted
profitability for 2014. Whilst we achieved
solid revenues of $68.0 million, we are
disappointed to report a loss before
tax of $14.4 million for the year.

To improve production and lower operating
costs during 2014, the Company has been
exploring a number of options to overcome
the lower than expected metal recoveries
from the agitation leach plant and
to decrease the large cyanide usage and
associated costs resulting from the high
copper sulphide content of its high grade
ore. A Knelson concentrator was installed
in March 2014 and the use of ammonia as
a reagent to improve recoveries has been
introduced. The Company has also
commenced heap leaching uncrushed
(Run of Mine or ROM) ore during 2014.
This is a low cost method to treat low
grade ore which would otherwise not
be economic to process.

The Gosha underground mine commenced
production in the year. In 2014, it produced
28,891 tonnes of ore grading 4.15 grammes
of gold per tonne. The development
of the mine has been hampered due
to the very narrow ore veins which
make mining difficult.

Ore mined at Gosha is transported to
Gedabek for processing. The Gosha mine
will continue to form an important although
small part of the Company’s portfolio of
properties. We are also developing a new
underground mine, Gadir, at our Gedabek
site. It is expected ore will be extracted
from Gadir in the second half of 2015.

We continue to develop the greater Gedabek
area with the aim of delineating further
resources and reserves to increase the life
of mine of the operation. We were therefore
delighted to announce a revised JORC
reserve report of 20.5 million tonnes of ore
grading 1.03 grammes per tonne of gold
(682,000 ounces); 0.50 per cent. copper
(102,000 tonnes); and 7.35 grammes per
tonne of silver (4.84 million ounces).
Notably this demonstrated a 96 per cent.
increase of copper with recoverable
copper increasing by over 500 per cent.
to 68,000 tonnes compared to our May 2012
ore reserve statement.

The new small scale flotation plant which is under construction.

Anglo Asian Mining PLC Annual report and accounts 2014Tailings dam showing the newly raised wall waiting to be lined.

Whilst we are still focused on increasing
the production of gold of which we have
682,000 ounces in ore reserves, we are
now aiming to take advantage of the
significant copper content of the ore we
are encountering at Gedabek. Consequently,
we initiated the construction of a small
scale flotation plant suited to process the
high copper content ore to help increase
our copper production, in tandem with
gold and silver. Flotation typically has lower
costs than cyanide leaching as it does
not use expensive cyanide as a reagent.

In order to demonstrate how the
flotation process can be used to enhance
recoveries, in-house test work has shown
that by applying the flotation process
to the agitation leaching plant tailings,
overall recoveries can be increased to
approximately 80 per cent. for copper,
70 per cent. for silver and 90 per cent.
for gold. The flotation process can
produce a saleable copper concentrate
with approximately 20 per cent.
copper content.

The construction of the small scale flotation
plant is due to be completed in quarter
three, 2015 and if completed on target
should see an additional 5,000 ounces of
gold and 1,200 tonnes of copper produced
for the full year 2015. This production will
be from stockpiles of ore which have
already been mined and therefore will
incur no additional mining costs.

The Company places the highest priority
on its environmental responsibilities.
A key responsibility is secure storage of
tailings produced at Gedabek. Accordingly
in 2014, the Company embarked upon
a project to approximately double the
capacity of its tailing dam by raising the
wall of the dam and to increase security
by building a reed bed biological treatment
system immediately downstream of the
dam to process any seepage. This project

is nearing completion and will provide
adequate and secure capacity for tailings
storage for the next few years.

The Company sells its product in US dollars,
however it has a significant portion of
costs denominated in Azerbaijan Manats.
The recent 34 per cent. devaluation of the
Azerbaijan Manat against the US dollar is
obviously unwelcome for Azerbaijan and
its people. However, we believe this will
have a considerable beneficial effect for
us in 2015 by reducing our operating cost
by around $6.5 million in the 2015 financial
year at the current US dollar to Azerbaijan
Manat exchange rate.

Outlook
2015 is an important year for our Company
and a time which we believe marks the
start of our turnaround strategy to restore
profitability. The year has started well and
we were delighted to report quarter one,
2015 production figures of 17,053 ounces
of gold, marking a 52 per cent. increase
in gold production from quarter one
2014. This highly credible performance
for quarter one, 2015 demonstrates that
the initiatives undertaken during 2014
to improve production are beginning
to take effect. Accordingly, we have
announced a gold production target
of between 70,000 to 75,000 ounces for
the year to 31 December 2015, which if
achieved, will mark an increase of around
16 to 24 per cent. from the full year 2014.

The construction of our small scale
flotation pilot plant continues to plan
with commissioning scheduled for
quarter three, 2015. The successful
commissioning of this plant, which
will enable us to fully exploit the
sulphide ore reserves at Gedabek,
will add an important new source
of production and revenues for
Anglo Asian.

Given the improved start to 2015, and the
commencement of flotation later in the
year, we believe the outlook for the rest
of the year is a significant improvement
over 2014 and look forward to updating
shareholders on our progress.

Appreciation
I would like to take this opportunity to
thank our Anglo Asian employees, partners,
the Government of Azerbaijan, advisers,
fellow directors and shareholders for their
continued support as we continue to build
Anglo Asian into a leading and profitable
mid-tier gold, copper and silver producer
in Azerbaijan and Caucasia.

Khosrow Zamani
Non-executive chairman
27 May 2015

www.angloasianmining.com Annual report and accounts 2014Financial reviewStrategic reportChairman’s statementAnglo Asian Mining PLCCorporate governanceGroup financial statementsAnnual general meetingAnglo Asian Mining PLCChairman’s statementStrategic reportFinancial reviewCorporate governanceGroup financial statementsCompany financial statementsAnnual general meetingStrategic report

The Group’s main focus has been
on several key areas to increase our
gold, copper and silver production
at the lowest possible cost.

The directors present their strategic report
for the year ended 31 December 2014.

Principal activities
The principal activity of Anglo Asian
Mining PLC is that of a holding company
and a provider of support and management
services to its main operating subsidiary
R.V. Investment Group Services LLC. 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 and develops other
potential gold and copper projects
in Azerbaijan.

The Group has a 1,962 square kilometre
portfolio of gold, silver and copper
properties in Azerbaijan, at various stages
of the development cycle. These include
our Gedabek gold, silver and copper mine
in western Azerbaijan. Our processing
facilities to produce gold doré, and a
copper, silver and gold concentrate, from
mined ore are also located at Gedabek.
Gosha, our second gold and silver mine, is
located 50 kilometres away from Gedabek.
Ordubad, our early stage gold-copper
exploration project is located in the
Nakhchivan region of Azerbaijan.

During the period under review, the Group’s
main focus has been on several key areas
to increase our gold, copper and silver
production and ensure the future success
of our operations as follows:
• optimisation of the performance of
our agitation leach plant to ensure
maximum production at lowest
possible cost;

• implementation of uncrushed ore

(Run of Mine or ROM) heap leaching to
provide additional low cost production
from low grade ore; and

• construction of a small scale flotation
plant to primarily produce copper to
exploit the copper content of the ore
at Gedabek and provide a path for
future development of the site.

The Group has a target production for the
full year to 31 December 2015 of between
70,000 to 75,000 ounces of gold.

Gedabek
Introduction
The Gedabek mining operation is located
in a 300 square kilometre contract area in
the lower Caucasus mountains in western
Azerbaijan on the Tethyan Tectonic Belt,
one of the world’s most significant copper
and gold bearing structures. The mine,
which first poured gold in 2009, is an
open-pit mining operation. In addition,
in late 2014, the Group started to develop
an underground mine, Gadir, on the
Gedabek property.

Mineral resources
Key to the future development of the
Gedabek site is our knowledge of the
mineral resources and ore reserves
within the contract area. In this respect,
the Group was pleased to announce
in November 2014 a new ore reserve
estimate as of 1 September 2014. This
ore reserve estimate showed an increase
of approximately 3.9 million tonnes of
ore, after allowing for depletion due
to mining since the previous estimate.
It also showed a significantly higher
copper content. Table 1 shows the ore
reserve estimate at 1 September 2014.

Geological samples at Gedabek.

Furnace used for pouring gold doré.

Anglo Asian Mining PLC Annual report and accounts 2014Gedabek continued
Mining operations
The principal mining operation at
Gedabek is conventional open cast
mining from several contiguous open
pits. Ore is first drilled and blasted and
then transported either to a processing
facility or to a stockpile for storage.
The major mining activities of drill and
blasting and subsequent transportation
of ore are carried out by contractors.
Table 2 summarises the ore mined from
the Gedabek open pit mining operations
during the year ended 31 December 2014.

Gadir is being developed as an
underground mine and is situated
approximately one kilometre from
the main open pit at the Gedabek site.
A decline is being constructed to access
the ore body and at 31 March 2015,
approximately 350 metres of decline
had been constructed. It is expected
that ore will be extracted from the
Gadir mine in 2015.

Processing operations
Ore mined at Gedabek is processed to
produce either gold doré (an alloy of gold

and silver with small amounts of impurities)
or a copper and precious metal concentrate
using several industrial processes. Initial
processing is to leach (i.e. dissolve) the
precious metal (and copper) in a cyanide
solution. This is done by various methods:

Heap leaching of crushed ore. Crushed
ore is heaped into “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.

Heap leaching of run of mine (ROM)
ore. The process is similar to heap
leaching for crushed ore except the
ore is not crushed and is heaped into
pads just as received from the mine
without further treatment or crushing.

Agitation leaching. Ore is crushed and
then processed through a grinding
circuit. The ground ore is then placed
in tanks containing a cyanide solution
and agitated and the contained metal
is dissolved in the solution.

Slurries produced by the above processes
with dissolved metal in solution are then

transferred to a resin in pulp (“RIP”) plant.
A synthetic resin, in the form of small
spherical plastic beads designed to absorb
gold selectively over copper and silver,
is placed in contact with the leach slurry,
or “pulp”. After separation from the pulp,
the gold-loaded resin is treated with a
second solution, which “strips” (i.e. desorbs)
the gold, plus the small amounts of
absorbed copper and silver, transferring
the metals from the resin back into
solution. The gold and silver within this
final solution are recovered by electrolysis
and are then smelted to produce the
doré metal, containing gold and silver.

Copper and silver (and small amounts
of gold) are also produced by the
Sulphidisation, Acidification, Recycling
and Thickening (“SART”) process. The
cyanide solution after metal absorption
by RIP processing is transferred to the
SART plant. The pH of the solution is then
changed by the addition of reagents. This
recovers the copper from the solution in
the form of a precipitated copper sulphide
concentrate containing silver and minor
amounts of gold.

Table 1 – ore reserve estimate as at 1 September 2014

Ore reserve

In situ grades

Contained metal

Recovered metal

Reserve
category

In situ
tonnes

Proven

16,733,000

Probable

3,761,000

Total

20,494,000

Au
g/t

1.12

0.68

1.03

Cu
per cent.

0.61

0.40

0.50

Ag
g/t

7.63

6.12

Au
ounces

Cu
tonnes

Ag
ounces

Au
ounces

Cu
tonnes

Ag
ounces

600,000

87,000

4,105,000

447,000

65,000

1,346,000

82,000

15,000

740,000

58,000

11,000

268,000

7.35

682,000

102,000 4,845,000

505,000

76,000 1,614,000

Table 2 – ore mined at Gedabek for the year ended 31 December 2014
Ore mined (tonnes)

Quarter ended

31 March 2014

30 June 2014

30 September 2014

31 December 2014

Total for the year

High grade

Low grade

Sulphide

Total

Waste
mined
(tonnes)

119,402

151,206

145,392

133,929

137,589

208,205

234,534

202,451

6,869

11,893

16,370

263,860

1,457,446

371,304

1,654,284

396,296

1,631,610

8,425

344,805

1,275,458

549,929

782,779

43,557

1,376,265 6,018,798

www.angloasianmining.com Annual report and accounts 2014Anglo Asian Mining PLCChairman’s statementStrategic reportFinancial reviewCorporate governanceGroup financial statementsCompany financial statementsAnnual general meetingStrategic report continued

Gedabek continued
Processing operations continued
Initially, gold doré was produced at Gedabek
by heap leaching crushed ore. Heap leach
is a low capital cost method of production
traditionally used by mines when they first
move into production. However, heap
leaching has limitations with regards to
the minimum size of the ore being leached
limited to around 25 millimetres. This
limitation results in only approximately
60 to 70 per cent. of the gold within the
ore being recovered with leaching cycles
typically extending up to one year
depending on the detailed composition
of the ore.

To increase gold recoveries and
production, the Group constructed and
commissioned in July 2013 an agitation
leach plant. Compared to heap leaching,
agitation leaching can deliver higher
recoveries of gold without long leaching
cycles. Heap leach pads also require
considerable space for their construction
and due to the topology of the Gedabek
site, this was a constraint.

Following commissioning in 2013, the
plant’s performance was not as planned
due to the mineralogical variation of

the ore. Due to the unforeseen presence
of very high copper values in the ore,
recoveries of gold were not as high as
anticipated and the plant’s usage of
cyanide was higher than planned. This
was because excess cyanide was being
consumed dissolving copper. Throughout
2014, the Group has therefore expended
considerable effort in improving the
performance of the plant. This has been
aimed both at increasing metal recoveries
to increase production and lowering
cyanide consumption to decrease costs.
A continuous Knelson concentrator was
installed at the agitation leaching plant
in March 2014 which enhanced gold
recoveries. Using ammonia as a reagent
in the process to reduce cyanide
consumption has also been introduced.

Table 3 shows the amounts of ore and
its average grade processed by heap and
agitated leaching at Gedabek in 2014.

For the year to 31 December 2014,
gold production totalled 60,285 ounces,
which was an increase of 8,178 ounces
in comparison to the production
of 52,107 ounces in the year ended
31 December 2013.

Table 4 summarises the total gold
production and sales and demonstrates
the quarter-on-quarter increase in gold
production and also details the copper
and silver production at Gedabek.

The Group’s experience of processing
has shown the ore at Gedabek to be
poly-metallic containing significant
amounts of copper. To exploit this high
copper content of the Group’s ore
reserves, the Group commenced
construction of a small scale flotation
plant in the fourth quarter 2014 whose
function would be to primarily produce
copper with gold and silver as by-products.
It was initially envisaged that the flotation
plant would act as a pilot plant to assess
future full scale copper production and
would initially process 379,000 tonnes of
stockpiled high copper content sulphide
ore to produce a copper and precious
metal concentrate. However in 2015,
in-house test work showed that by applying
the flotation process to the agitation
leach plant tailings, overall recoveries
for the agitation leaching plant can be
increased to 80 per cent. for copper,
70 per cent. for silver and 90 per cent.

Table 3 – amount of ore and its grade processed at Gedabek for the year ended 31 December 2014

Quarter ended

31 March 2014

30 June 2014

30 September 2014

31 December 2014

Total for the year

Amount of 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

110,564

154,902

144,861

120,390

—

95,542

407,236

312,374

152,554

159,605

151,473

133,470

530,717

815,152

597,102

1.14

1.18

1.27

1.44

1.26

0.00

0.98

0.97

2.51

2.88

2.99

3.41

2.93

Table 4 – gold, silver and copper production at Gedabek for the year ended 31 December 2014

Gold
produced*
ounces

Gold
sales**

ounces

Gold
sales price
$

Copper
produced
dmt†

Copper
concentrate
sales
dmt†

Silver
produced
ounces

11,318

15,736

16,178

17,053

10,403

13,142

13,798

13,272

1,302

1,291

1,281

1,201

60,285

50,615

1,267

141

228

210

205

784

152

523

250

391

13,139

8,785

5,504

3,749

1,316

31,177

Quarter ended

31 March 2014

30 June 2014

30 September 2014

31 December 2014

Total for the year

* Including Government of Azerbaijan’s share
** Excludes Government of Azerbaijan’s share
† dmt = dry metric tonnes

Anglo Asian Mining PLC Annual report and accounts 2014Gedabek continued
Processing operations continued
for gold. Engineering studies determined
that by the addition of an extra six large
flotation cells, each of 50 cubic metres,
the small scale flotation plant can be
configured to treat 90 tonnes of ore per
hour which is equivalent to the current
throughput of the agitation leaching plant.
The modified small scale flotation plant
will have the flexibility to be configured
for various methods of operation. It will
be able to process the stockpiles of high
copper content ore as initially envisaged.
However, it will now also be able to
be configured to treat ore feed to, or
tailings from the agitation leach plant.
In such configurations, the plant would
no longer be a pilot but an integral
part of the agitation leach plant. The small
scale flotation plant is expected to be
commissioned in the third quarter of 2015.

Tailings (waste) storage
The Company stores its tailings in a purpose
built dam approximately 7 kilometres from
its processing operations. The Company
is very mindful of the importance of proper
storage of tailings both for efficient
operation of the plant and to fulfil its
environmental responsibilities. In 2014,
the Company embarked upon a project to
increase the capacity and efficiency of its
tailing dam. This comprised raising the
existing tailings dam wall by 14 metres by
the deposition of approximately 600,000
cubic metres of rock on the existing wall.
This will approximately double the capacity
of the dam from its current 1.6 million cubic
metres. The Company is also constructing
a reed bed biological treatment system
on the downstream side of the dam.
This is to collect and treat any seepage
of solution from the dam.

Personnel and health and safety
Azerbaijan is not a country with a large
mining industry and there is often a lack
of suitable qualified people and therefore
expatriate employees have to be hired
to fill the skills gap. However, the Group
is actively training and developing the
skills of local people to replace expatriates.
The Group has also been developing its
health, safety and environment (“HSE”)
procedures during the year. A HSE team was
recruited during 2014 and is implementing
formal systems for monitoring activities
alongside various other safety procedures.
The Group aims to minimise the impact
of its operations on the environment and
takes all possible measures to increase
the social welfare of its workers and to
create conditions for first-rate quality
and safety in work.

Exploration at Gedabek site
The main exploration activity at the
Gedabek site in the period under review
has been on the Gadir area. During this
period nine drill holes with a total length
of 3,400 metres were drilled. Further
geochemical surveys were also made
in the vicinity of the Gadir area.

Gosha
The Group’s second mining project,
the 300 square kilometre Gosha contract
area, is located in western Azerbaijan,
50 kilometres north-west of Gedabek.
Gosha is currently being developed
as a small, high grade, underground
gold mine.

During the development and early
production of the Gosha mine, it became
evident that the initial estimated ore
vein thickness was not as expected.
This not only affected the resource
estimate but also resulted in changes
in mining method to decrease dilution
during mining. Currently, based on
a non-JORC report by SRK, the Gosha
resource is about 40,000 ounces of gold
(140,000 tonnes of ore grading 9 grammes
per tonne – all figures in situ and before
dilution). This ore resource will be mined
from 2015 to 2017. We are also planning
for further exploration at Gosha.

A total of 28,892 tonnes of ore of average
grade 4.15 grammes per tonne were
mined at Gosha in the year ended
31 December 2014.

Ordubad
Our 462 square kilometre Ordubad Contract
Area is located in the Nakhchivan region
of Azerbaijan and contains numerous
targets including Shakardara, Piyazbashi,
Misdag, Agyurt, Shalala and Diakchay, which
are all located within a 5 kilometre radius
of each other. Development at Ordubad
forms part of the Group’s longer-term
development portfolio as a mid-tier gold,
copper and silver mining company.

Sale of Group’s products
Important to the Group’s success is
the ability to transport its products to
market and sell them without disruption.

The Group sells all of its gold doré
to MKS Finance SA in Switzerland.
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 settled within
one to two days of receipt of the doré.

The Group has not experienced any
disruptions to its sale of metal due to
logistics or delays in customs clearance.
MKS Finance SA both refines and purchases
our precious metal, all assays and a full
accounting of all metal is agreed with them.

The Gedabek mine site has good road
transportation links and our copper and
silver concentrate is collected from the
Gedabek site by the purchaser. The Group
was pleased to announce in May 2014
that it had signed an exclusive three year
contract with Industrial Minerals SA, a
Swiss based integrated trading, mining
and logistics group for the sale of its
copper concentrate. The Group has again
experienced no delays in the sale of its
copper concentrate.

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:

Profit before taxation: this is the
key performance indicator used
by the Group. It gives insight to cost
management, production growth
and performance efficiency.

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 to how we are managing
costs and increasing efficiency and
productivity across the business in
order to deliver increasing returns.

Cash cost per ounce: cash cost per
ounce of gold produced is a widely
used industry metric and is a measure
of how our operation compares to
other producers in the industry.

The Group’s performance against
these indicators are discussed in the
financial review.

Reza Vaziri
President and chief executive
27 May 2015

$64.3 million of revenue was generated from the sale
of Anglo Asian’s share of doré production for the year
which comprised 50,615 ounces of gold and 6,802
ounces of silver at average prices of $1,267 per ounce
and $20 per ounce respectively.

Group income statement
The Group generated revenues of $67,964k
(2013: $70,820k) from sales of gold and
silver bullion and copper concentrate.

$64,280k of the revenues (2013: $64,386k)
were generated from sales of gold and
silver bullion from the Group’s share of
the production of doré bars in 2014. Bullion
sales in 2014 were 50,615 ounces of gold and
6,802 ounces of silver (2013: 46,077 ounces
of gold and 19,016 ounces of silver) at
an average price of $1,267 per ounce and
$20 per ounce respectively (2013: $1,385 per
ounce and $23 per ounce respectively).
In addition, the Group generated revenue
from the sale of copper concentrate
of $3,684k (2013: $6,434k).

The Group incurred cost of sales of $68,500k
(2013: $57,480k) and therefore reported
a gross loss for 2014 of $536k (2013: gross
profit of $13,340k). The increased cost of
sales in FY 2014 was mainly due to higher
processing costs in the agitation leach
plant following high cyanide consumption
and increased depreciation following the
commissioning of the agitation leach
plant. The cost of sales for 2014 includes
a full year’s cost of operating the agitation
leach plant.

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, 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. The unit of account for run
of mine (“ROM”) costs and for post-ROM
costs is recoverable ounces of gold.

639,000 ounces of gold were used
to determine depreciation of producing
mines, mining rights and other intangible
assets following compilation of a
new reserve statement for the Group.

The Group had other income in 2014 of
$632k (2013: $519k) which arose from the
release of accruals and provisions. The
Group incurred administration expenses
of $7,202k (2013: $6,845k) and finance costs
for the year of $5,462k (2013: $3,779k).
The Group’s administration expenses
comprise the cost of the administrative
staff and associated costs at the Gedabek
mine site, the cost of the Baku office
and the cost of maintaining the Group’s
listing on the AIM market. The finance
costs for the year comprise interest on
the credit facilities and loans, interest
on letters of credit and accretion
expenses on the rehabilitation provision.
The Group accordingly recorded a loss
before taxation for the year of $14,364k
(2013: profit of $1,391k).

The Group had a taxation credit for the
year of $3,436k (2013: charge of $1,055k).
This comprised a current income tax
charge of $nil and a deferred tax credit
of $3,436k (2013: taxation charge of
$1,055k comprising a current income
taxation charge of $nil and a deferred
taxation charge of $1,055k). The Group
had no current taxation charge in 2014
as its main operating companies incurred
a taxable loss for the year. The deferred
taxation credit in 2014 arose primarily
due to an increase in carry forward
losses partially offset by lower
taxation depreciation compared
to accounting depreciation.

Cash cost of production
The Group produced gold at an average
cash operating cost net of by-product
credits in 2014 of $971 per ounce compared
to $626 per ounce in 2013. The higher cash
cost of production was due to there being
a full year production from the agitation
leach plant in 2014 compared to only
6 months in 2013. The cash operating
cost of the agitation leach plant is higher
than from heap leaching.

Group statement of financial position
Non-current assets decreased from
$140,457k at the end of 2013 to $137,451k
at the end of 2014. The main reasons
for the decrease were property plant
and equipment lower by $1,203k due to
depreciation in the year and non-current
inventory lower by $1,644k due to a decrease
in ore stockpiles.

Net current assets decreased from
$33,040k at the end of 2013 to $10,136k
at the end of 2014. The main reasons
for the decrease were a decrease in cash
and cash equivalents, an increase in trade
and other payables and an increase in
the current portion of interest bearing
loans and borrowings. The Group’s cash
balances at 31 December 2014 were $322k
(2013: $5,489k). The current portion of
interest bearing loans and borrowings
increased from $2,031k to $16,675k mainly
as principal repayments commence in 2015
in respect of the loans from the Amsterdam
Trade Bank and the International Bank of
Azerbaijan to build the agitation leach plant.

Net assets of the Group were $85,916k
(2013: $96,750k). The decrease was primarily
due to the loss incurred in the year.

Anglo Asian Mining PLC Annual report and accounts 2014Once all prior year costs are recovered,
the Group can continue with cost recovery
of up to 75 per cent. of the value of
commercial products, before the remaining
product revenues are shared between
the Company and the Government of
Azerbaijan in a 49 per cent. to 51 per cent.
ratio. The Group can recover the
following costs:
• all direct operating expenses of the

Gedabek mine;

• all exploration expenses incurred on

the Gedabek Contract Area;

• all capital expenditure incurred on the

Gedabek 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 US Dollar
LIBOR + 4 per cent. per annum on any
unrecovered costs.

Going concern
The directors have prepared the Group
financial statements on a going concern
basis after reviewing the Group’s forecast
cash position for the period to 30 June
2016 and satisfying themselves that the
Group will have sufficient funds on hand
to realise its assets and meet its
obligations as and when they fall due.

In making this assessment the directors
have acknowledged the challenging and
uncertain market conditions the Group
is operating in. In 2014, the price of gold
averaged $1,266 per ounce with a high
of $1,382 per ounce and a low of $1,144
per ounce. 2015 has seen a continuation
of the depressed gold price which has
continued the low margins experienced
in 2014.

The Group is financed by a mixture of
equity and debt. The Group’s total debt
at 31 December 2014 was $52.8m and
comprised the following:

a $37.0m term loan from the Amsterdam
Trade Bank (“ATB”). The loan has a
quarterly interest rate of LIBOR plus
8.25 per cent. The term of the loan
is 58 months and repayment is by
quarterly instalments of $2.5m which
commence in February 2015, 16 months
after drawdown. The final repayment
is due on 25 August 2018. The Group
has pledged to ATB its present and
future rights against MKS Finance SA,
the sole buyer of the Group’s gold and
silver bullion until the loan is repaid.
The actual rate of interest the loan
incurred in 2014 was 8.65 per cent.
The loan has a debt service coverage
ratio (“DSCR”) covenant of 1:1.25
calculated half and full yearly from
the Group’s published financial
statements. The Group met this
DSCR for both the 6 months ended
30 June 2014 and 12 months ended
31 December 2014.

b $13.0m of loans from the International
Bank of Azerbaijan (“IBA”). $11.6m of
this loan is the remaining balance of
the loans obtained for the construction
of the agitation leach plant. Repayment
starts on 31 March 2015 and ends on
31 March 2018. $1.5m of the loan is a one
year working capital facility and carries
an interest rate of 12 per cent. It is
repayable in full on 31 December 2015.
Since the year end, the amount of the
facility has been increased to $2.0m.

$0.8m due to Atlas Copco for
equipment financing.

d $0.9m due to Yapi Kredi Bank for

working capital financing.

e $1.2m due to Pasha Bank. $1.0m is

payable in respect of the credit line
($3.1m) for financing letters of credit
for cyanide purchases. $0.3m is in
respect of the $2.5m credit facility
obtained for the financing of the
small scale flotation plant.

The Group had a deferred taxation
liability at 31 December 2014 of
$16,964k (2013: $20,400k).

Group cash flow statement
Operating cash inflow before movements
in working capital was $10,567k (2013:
$17,934k). The main source of operating
cash flow was the profit before taxation,
finance costs and amortisation and
depreciation of $10,129k (2013: $17,506k).

Working capital generated cash of
$4,254k (2013: $2,694k) due to a decrease
in trade and other receivables of $3,694k
(2013: $1,157k) and an increase in trade and
other payables of $3,902k (2013: decrease
of $2,451k) partially offset by an increase
in inventories of $3,342k (2013: decrease
of $3,988k).

Income tax paid was $nil (2013: $800k)
as the Group incurred taxable losses
for the year.

Net cash provided by operating activities
in 2014 was $14,821k compared to $19,828
in 2013. This lower cash generated from
operations in the year was due to the
reduced profitability of the Group partially
offset by cash generated from working
capital of $4,254k.

Expenditure on property, plant and
equipment and mine development was
$16,270k (2013: $31,494k). The main items
of expenditure in 2014 were the small
scale flotation plant, construction of
a reed bed for the tailings dam and
capitalisation of deferred stripping costs.

Exploration and evaluation expenditure
of $608k (2013: $308k) was incurred
and capitalised. This arose due to
exploration at the Gedabek and
Ordubad mining properties.

Production sharing agreement (“PSA”)
Under the terms of the PSA in place with
the Government of Azerbaijan, the Group
and the Government of Azerbaijan share
commercial products of each mine. Until
the time the Group has recovered all its
carried forward, unrecovered costs, the
Government of Azerbaijan effectively takes
12.75 per cent. of commercial products
of each mine, with the Group taking
87.25 per cent. (being 75 per cent.
for capital and operating costs plus
49 per cent. of the remaining 25 per cent.
balance). The Group will not have recovered
all its costs incurred by the end of 2015
and the ratio of sharing commercial
products for the Gedabek mine of
87.25 per cent. for the Group and
12.75 per cent. for the Government
of Azerbaijan will continue
throughout 2015.

Going concern continued
The Group has commenced making
payments on the principal of its debt in
2015. Until the date of this annual report,
the Group has made all payments of
interest and principal on time. However,
in order to ensure that the Group can
meet all principal repayments for the
remainder of 2015, it has negotiated
with the International Bank of Azerbaijan
(“IBA”) to defer some principal repayments
due in 2015. IBA will defer two thirds of
the principal repayments due in June and
September which total $1,544,000 to 2016.
The amount of principal deferred totals
$1,029,000. In addition, a principal
shareholder of the Group has committed
to provide a loan facility of $4 million
at an interest rate of 10 per cent. per
annum to the Group for the period
20 May 2015 to 8 January 2016. At the
date of this annual report, $2 million
of the facility had been utilised.

The Group is forecasting to meet its debt
service cover ratio (“DSCR”) for the six
months to 30 June 2015. For the full year
to 31 December 2015 and subsequent
years the Group can comfortably meet
the debt service cover ratio of 1.25 as
specified in the loan agreement with the
Amsterdam Trade Bank.

Should there be a moderate and sustained
decrease in either the production or gold
price assumptions, significant doubt would
be cast over the Group’s short term cash
position. Under this circumstance, the
Group would look to defer all non-essential
capital expenditure and administrative
costs in order to preserve cash. The
directors believe that the Group’s
assumptions are neither overly aggressive
or overly conservative and appropriate
rigour and diligence has been performed
by the directors in approving the
assumptions. The directors believe all
assumptions are prepared on a realistic
basis using the best available information.

Should the Group’s small scale flotation
plant not be commissioned on time or not
achieve the forecast performance, the
Group may not achieve sufficient cash
generation to make repayment of all loan
principal due in the first half of 2016. In
these circumstances, the Group would
look to establish credit lines either
from commercial banks or its principal
shareholder to cover any shortfall.

The Group’s business activities, together
with the factors likely to affect its future
development, performance and position,
can be found in the financial statements
within the Chairman’s statement on
pages 4 to 5 and within the strategic
report on pages 6 to 9. The financial
position of the Group, its cash flow,
liquidity position and borrowing facilities
are described in this financial review.
In addition, note 23 to the consolidated
financial statements includes the
Group’s objectives, 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 Group continues to adopt
the going concern basis in preparing the
annual report and financial statements.

Principal risks and uncertainties
Commodity price risk
The Group’s revenues are exposed to
fluctuations in the price of gold, silver
and copper. The Group does not currently
hedge the commodity price risk on its
expected future production.

Foreign currency risk
The Group reports in US Dollars and a
large proportion of its costs are incurred
in US Dollars. It also conducts business in
Australian Dollars, Azerbaijan Manats and
UK Sterling. The Group does not currently
hedge its exposure to other currencies
although it will review this periodically if
the volume of non US Dollar transactions
increases significantly. Also, the fact that
both revenue of the Group and the
Group’s interest bearing debt are settled
in US Dollars is a key mitigating factor
that helps to avoid significant exposure
to foreign currency risk. Information on
the carrying value of monetary assets
and liabilities denominated in foreign
currency and the sensitivity analysis of
foreign currency is disclosed in note 25
to the financial statements.

Liquidity and interest rate risk
The Group has not used any interest rate
swaps or other instruments to manage
its interest rate profile during 2014 but
will review this requirement on a periodic
basis. Interest rates on current loans are
fixed except for three month LIBOR
embedded in interest on the ATB loan.
Information on the exposure to changing
interest rates is disclosed in note 22 to
the financial statements.

The approval of the board of directors
is required for all new borrowing
facilities. At the year end the Group’s
only interest rate exposure was on cash
held in the bank.

Market risk
Exposure to interest rate fluctuations
is minimal as the Group currently has
no floating rate debt. Interest rates on
UK Sterling and US Dollar deposits have
been at historic lows during the current
year. The levels of deposits held by the
Group have also been low therefore any
impact of changing rates is minimal.

The Group is exposed to fluctuations
in commodity prices and all fluctuations
have a direct impact on the operating
profit of the Group. The Group does not
hedge this commodity price exposure
and actively monitors all changes in the
commodity prices to understand the impact
on the business. The Group remains open
to the possibility of hedging to mitigate
this commodity price risk and the policy
of hedging is reviewed periodically.

Operational risk
There is exposure to levels of production
as a result of unforeseen operational
problems or machinery malfunction
and therefore operating costs and profits
for commercial production may remain
subject to variation. The Group monitors
production on a daily basis and has robust
procedures in place to effectively manage
these risks.

By order of the board of directors

Reza Vaziri
President and chief executive
27 May 2015

William Morgan
Chief financial officer
27 May 2015

Anglo Asian Mining PLC Annual report and accounts 2014Board of directors

Mr Khosrow Zamani *
Non-executive chairman, age 72
Khosrow Zamani was director of the southern Europe and central
Asia department of the International Finance Corporation (“IFC”),
the private sector lending arm of the World Bank, from March 2000
to July 2005. He was responsible for the IFC investment programme
and strategy in 15 countries across the region. Whilst a director
at IFC, Khosrow was instrumental in building the IFC investment
portfolio in the region with several new initiatives, particularly
in central Asia and Caucasia. He oversaw the IFC portfolio of
more than $2 billion, diversified across the financial, oil and
gas, mining and manufacturing sectors. Mr Zamani has over
30 years of experience in investment and project finance and
banking in emerging markets. He holds an MSc in Engineering
from the United States of America and a master of business
operations and management from the United Kingdom. He is
currently a non-executive board member and chairman of the
corporate governance committee of Sekerbank A.S., a publicly
listed commercial bank in Turkey, a non-executive board member
and chairman of the compensation committee of Komercijalna
Bank, Serbia and a non-executive board member of Borusan
Makina in Turkey.

Mr Reza Vaziri
President and chief executive, age 62
Reza Vaziri has been actively involved in business in the
Republic of Azerbaijan since just after its independence.
Since R.V. Investment Group Services LLC, now Anglo Asian’s
subsidiary, signed a Production Sharing Agreement with the
Government of the Republic of Azerbaijan, Reza has been focused
on developing Anglo Asian Mining PLC into a significant gold
producer in the Caucasia and central Asia region. Prior to his
business career, Reza held a number of high-ranking positions
in the pre-revolutionary Iranian government. He was the head
of the Foreign Relations Office at the Ministry of the Imperial
Court of Iran. At the time of the revolution, he was chief of the
office of political and international affairs. Reza holds a law
degree from the national university of Iran. As founder and
co-chairman for life of the board of directors of the US–Azerbaijan
Chamber of Commerce with James A Baker IV, Reza dedicates
much of his time furthering business relations between the two
countries. Reza serves alongside such directors as James Baker
III, Zbigniew Brezinski, Governor John Sununu and Henry
Kissinger. Reza resides in Baku, London and Washington, DC.

Mr Richard Round *
Non-executive director, age 57
Richard Round began his career with British Coal in 1977. Richard
has since held a number of finance director roles in various
public and private mining, energy, engineering and oil and gas
service groups including Ferrum Holdings plc, Consolidated
Supply Management Limited, Mining (Scotland) Group,
Cambrian Mining PLC, Lubel Coal Company Limited, Novera
Energy plc, Aquamarine Power and also Anglo Asian Mining PLC
where he stepped down in July 2008 and took up the position
of non-executive director. Richard has recently been appointed
as chief executive of Green Highland Renewables, a hydropower
developer based in Scotland.

Governor John H Sununu
Non-executive director, age 75
Governor John Sununu received a PhD from Massachusetts Institute
of Technology and taught engineering at Tufts University for
16 years. He served three terms as the Governor of New Hampshire
before President George H W Bush appointed him chief of staff
in 1989, a position that he held until March 1992. After his tenure
as chief of staff, he co-hosted CNN’s Crossfire, ran an engineering
firm and then, in 2004, served as the visiting Roy M and
Barbara Goodman family professor of practice in public service
at the Kennedy School of Government at Harvard University.
John is a former partner in Trinity International Partners,
a private financial firm, and currently serves as president
of JHS Associates Ltd.

Professor John Monhemius *
Non-executive director, age 72
Emeritus professor John Monhemius held the Roy Wright Chair
in mineral and environmental engineering at the Royal School
of Mines, Imperial College, London until 2004, when he retired
from full-time academic work. From 2000 to 2004, he was dean
of the Royal School of Mines. He has more than 40 years of
experience of academic and industrial research and development
in hydrometallurgy and environmental control in mining and
metallurgical processes, particularly in the management of toxic
wastes and effluents, and he has acted as a consultant to many
large mining and chemical companies. Professor Monhemius
has published over 130 papers of scientific literature and he has
supervised more than 30 PhD students. From 1986–96, he was a
co-founder and director of Consort Research Ltd, a consultancy
specialising in gold and base metal ore processing, and he is
a former director of Obtala Resources plc.

* Independent non-executive director.

Annual report and financial statements
The directors present their annual report together with the audited Group financial statements on pages 23 to 57.

Principal activities
The Group’s principal activity during the year was the production of gold and silver doré and copper concentrate from the Gedabek
and Gosha mines in western Azerbaijan.

Business review and future prospects
A review of the activities of the business throughout the year and up to 27 May 2015 is set out in the chairman’s statement
on pages 4 and 5 and the strategic report on pages 6 to 9 which includes information on the Group’s risks, uncertainties
and performance indicators. These sections are incorporated in this directors’ report by reference.

Dividends
The directors do not recommend a dividend for the year (2013: $nil) and the loss for the year has been deducted from retained earnings.

Capital structure
Details of the Company’s authorised and issued share capital, together with the movements for the years ended 31 December 2013
and 2014 are set out in note 23 – ‘‘Equity’’ of the Group financial statements. The Company has one class of ordinary share and they
carry no right to fixed income. Each ordinary share carries the right to one vote at general meetings of the Company. All issued
ordinary shares are fully paid.

There are no specific restrictions on the size of a holding or on the transfer of the ordinary shares, which are both governed by the
general provisions of the articles of association and prevailing legislation. The directors are not aware of any agreements between
holders of the Company’s ordinary shares that may result in restrictions on the transfer of securities or on voting rights.

Certain directors own ordinary shares in the Company and certain parties own 3 per cent. or more of the ordinary shares in the
Company. These holdings are set out in the ‘‘Directors’ interests’’ and ‘‘Substantial shareholders’’ sections of this directors’ report.
No person has any special rights of control over the Company’s share capital.

There is no scheme in place for employees to acquire ordinary shares in the Company. Certain employees and directors have been
granted options to acquire ordinary shares. Details of the share options granted are set out in note 24 – ‘‘Share-based payment’’
of the Group financial statements.

With regard to the appointment and replacement of directors, the Company is governed by its articles of association, the
Companies Act 2006 and related legislation. It also complies with the United Kingdom Corporate governance code as far as
practicable. The articles of association themselves may be amended by special resolution of the shareholders. The powers
of the directors are described in the corporate governance statement on page 21.

Under its articles of association, the Company has authority to issue 600 million ordinary shares.

There are no agreements to which the Company is a party that take effect, alter or terminate upon a change of control of the
Company following a takeover bid. There are also no agreements to which the Company is a party which provide for compensation
for loss of office or employment that occurs because of a takeover bid.

Directors
The directors who served throughout the year and up to 27 May 2015 are set out on page 13.

John Monhemius retires by rotation at the next annual general meeting and, being eligible, offers himself for re-election.

Secretary
Fisher Secretaries Limited
Acre House
11/15 William Road
London NW1 3ER
United Kingdom

Registered office
7 Devonshire Square
Cutlers Gardens
London EC2M 4YH
United Kingdom

Anglo Asian Mining PLC Annual report and accounts 2014Directors’ interests
The beneficial interests of the directors who held office at 31 December 2014 and their connected parties in the share capital
of the Company at 31 December were as follows:

John Monhemius
Richard Round
John Sununu
Reza Vaziri
Khosrow Zamani

All directors’ interests are beneficially held.

2014
Number of
ordinary shares

2013
Number of
ordinary shares

205,556
153,958
10,674,540
32,796,830
793,184

55,556
153,958
10,674,540
32,796,830
793,184

Directors’ insurance
The Company has made qualifying third-party provision for the benefit of its directors during the year and which remains in force
at the date of this report.

Substantial shareholders
The Company has been notified of the following interests of 3 per cent. or more in its issued share capital as at 27 May 2015:

Reza Vaziri
Khagani Bashirov
John Sununu
Limelight Industrial Developments

2015

Number of
ordinary shares

32,796,830
12,772,758
10,674,540
4,038,600

per cent.

29.37
11.44
9.56
3.62

Going concern
The directors have prepared the Group financial statements on a going concern basis after reviewing the Group’s forecast cash
position for the period to 30 June 2016 and satisfying themselves that the Group will have sufficient funds on hand to realise its
assets and meet its obligations as and when they fall due.

In making this assessment the directors have acknowledged the challenging and uncertain market conditions the Group is operating
in. In 2014, the price of gold averaged $1,266 per ounce with a high of $1,382 per ounce and a low of $1,144 per ounce. 2015 has seen
a continuation of the depressed gold price which has continued the low margins experienced in 2014.

The Group has commenced making payments on the principal of its debt in 2015. Until the date of this annual report, the Group
has made all payments of interest and principal on time. However, in order to ensure that the Group can meet all principal repayments
for the remainder of 2015, it has negotiated with the International Bank of Azerbaijan (“IBA”) to defer some principal repayments
due in 2015. IBA will defer two thirds of the principal repayments due in June and September which total $1,544,000 to 2016.
The amount of principal deferred totals $1,029,000. In addition, a principal shareholder of the Group has committed to provide
a loan facility of $4 million at an interest rate of 10 per cent. per annum to the Group for the period 20 May 2015 to 8 January 2016.
At the date of this annual report, $2 million of the facility had been utilised.

The Group is forecasting to meet its debt service cover ratio (“DSCR”) for the six months to 30 June 2015. For the full year to 31
December 2015 and subsequent years the Group can comfortably meet the debt service cover ratio of 1.25 as specified in the loan
agreement with the Amsterdam Trade Bank.

Key to achieving the Group’s forecast cash position, and therefore its going concern assumption are the following:
• achieving the forecast production of its gold production operations, principally its heap and agitation leaching;
• its gold price assumption; and
• the small scale flotation plant being commissioned on time and achieving its planned performance.
Should there be a moderate and sustained decrease in either the production or gold price assumptions, significant doubt would
be cast over the Group’s short term cash position. Under this circumstance, the Group would look to defer all non-essential capital
expenditure and administrative costs in order to preserve cash. The directors believe that the Group’s assumptions are neither
overly aggressive or overly conservative and appropriate rigour and diligence has been performed by the directors in approving the
assumptions. The directors believe all assumptions are prepared on a realistic basis using the best available information.

Going concern continued
Should the Group’s small scale flotation plant not be commissioned on time or not achieve the forecast performance, the Group
may not achieve sufficient cash generation to make repayment of all loan principal due in the first half of 2016. In these circumstances,
the Group would look to establish credit lines either from commercial banks or its principal shareholder to cover any shortfall.

The Group’s business activities, together with the factors likely to affect its future development, performance and position, can be
found in the financial statements within the Chairman’s statement on pages 4 to 5 and within the strategic report on pages 6 to 9.
The financial position of the Group, its cash flow, liquidity position and borrowing facilities are described in this financial review.
In addition, note 23 to the consolidated financial statements includes the Group’s objectives, 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 Group continues to adopt the going concern basis
in preparing the annual report and financial statements.

Auditors
Each of the persons who is a director at the date of approval of this report confirms that:

1 so far as the director is aware, there is no relevant audit information of which the Company’s auditors are unaware; and

the director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant
audit information and to establish that the Company’s auditors are aware of that information.

This confirmation is given and should be interpreted in accordance with the provisions of s418(2) of the Companies Act 2006.

Ernst & Young LLP have expressed their willingness to continue in office as auditors and a resolution to reappoint them
will be proposed at the forthcoming annual general meeting.

Corporate governance
A report on corporate governance and compliance with provisions of the United Kingdom Corporate governance code is set out on
page 21.

Annual general meeting
The Company will hold its annual general meeting for 2015 on 29 June 2015. Notification of the meeting has been included in this annual report.

Listing
The Company’s ordinary shares have been traded on London’s Alternative Investment Market (AIM) since 29 July 2005. SP Angel
Corporate Finance LLP is the Company’s nominated adviser and broker. The closing mid-market share price at 31 December 2014
was 6.625p (2013: 17.75p).

Relations with shareholders
Communications with shareholders are considered important by the directors. The directors regularly speak to investors and analysts
during the year. Press releases have been issued throughout the year and since the balance sheet date in relation to the progress
of the Group. A website, www.angloasianmining.com, is regularly updated and contains a wide range of information about the Group.

Employee consultation
The Group places considerable value on the involvement of its employees and has continued to keep them informed on matters
affecting them as employees and on the relevant matters affecting the performance of the Group. This is mainly achieved through
informal meetings which the directors believe is the most appropriate method given the current number of Group employees.

Internal controls
The board of directors acknowledges that it is responsible for establishing and maintaining the Group’s system of internal controls
and for reviewing its effectiveness. The procedures which include, inter alia, financial, operational and compliance matters and risk
management are reviewed on an ongoing basis. The internal control system can only provide reasonable and not absolute assurance
against material misstatement or loss. The directors do not believe an internal audit function is practicable in a company of this size.

Anglo Asian Mining PLC Annual report and accounts 2014Donations
The Group has made charitable donations during the year of $nil (2013: $nil). Political donations of $nil (2013: $nil) were made.

Research and development
There was no expenditure on research and development during the year (2013: $nil).

Related party transactions
Related party transactions are disclosed in note 26 to the Group financial statements.

Subsequent events
Events subsequent to 31 December 2014 are disclosed in note 27 to the Group financial statements.

Financial risk management
The Group’s operations expose it to financial risks that include liquidity risk, credit risk, foreign exchange risk and interest rate
risk. The Group does not enter into any derivative transactions, and it is the Group’s policy that no trading in such financial
instruments shall be undertaken.

The main risks arising from the Group’s financial instruments are liquidity risk, credit risk, foreign exchange risk and interest rate
risk. Further details are provided in note 22 of the Group financial statements.

Supplier payment policy
It is Group policy to agree and clearly communicate the terms of payment as part of the commercial arrangement negotiated
with suppliers and then to pay according to those terms. The Company is a holding company and therefore has few suppliers.

By order of the board of directors

Fisher Secretaries Limited
Company secretary
27 May 2015

Unaudited information
Policy on the executive director’s remuneration
The Company operates within a competitive environment and its performance depends on the individual contributions of the directors
and employees.

The executive director’s remuneration packages may include:

i) basic annual salary; and

ii) health insurance for the executive and his family.

The executive director’s remuneration is reviewed once per year. In deciding upon appropriate levels of remuneration the remuneration
committee has regard to rates of pay for similar jobs in comparable companies as well as internal factors such as performance.

Directors’ contracts
The executive director currently has an employment contract which may be terminated by the Company with up to 12 months'
notice. No other payments are made for compensation for loss of office.

The remuneration of the non-executive directors is determined by the board of directors within the limits set out in the articles of
association. Non-executive directors currently have employment contracts which may be terminated by the director or the Company
with 3 months' notice. No other payments are made in compensation for loss of office.

Audited information
Directors' emoluments
Amounts paid by the Group in respect of directors’ services are as follows.

Year ended 31 December 2014

John Monhemius
Richard Round
John Sununu
Reza Vaziri
Khosrow Zamani

Directors’ fees and consultancy fees for 2014 were paid in cash.

Year ended 31 December 2013

John Monhemius
Richard Round
John Sununu
Reza Vaziri
Khosrow Zamani

Directors’ fees and consultancy fees for 2013 were paid in cash.

Consultancy
$

5,003
—
—
474,141
—

479,144

Consultancy
$

15,870
—
—
493,160
—

509,030

Fees
$

53,460
53,460
78,292
53,460
131,862

370,534

Fees
$

50,845
50,845
74,274
50,845
125,094

351,903

Benefits
$

—
—
—
42,000
—

42,000

Benefits
$

—
—
—
42,000
—

42,000

Total
$

58,463
53,460
78,292
569,601
131,862

891,678

Total
$

66,715
50,845
74,274
586,005
125,094

902,933

Anglo Asian Mining PLC Annual report and accounts 2014Audited information continued
Share option scheme
The Group has initiated a share option scheme for its employees. This was set up in order to reward employees for the performance
of the Company on a long term basis and to enable the Company to continue to attract a high calibre of management and operational
personnel. Details of share options issued under the scheme are set out in note 24 – ‘‘Share-based payment’’ of the Group
financial statements.

Details of share options for directors who served during the year are as follows:

Khosrow Zamani

Richard Round

John Monhemius

Exercise
price
pence

Latest
exercise
date

16.5
12.0
77.0
42.5
12.0
11.5

1 June 2017
27 July 2017
26 July 2015
12 April 2016
27 July 2017
14 August 2019

1 January
2014

100,000
500,000
432,900
495,859
600,000
150,000

Exercised
during
the year

—
—
—
—
—
(150,000)

31 December
2014

100,000
500,000
432,900
495,859
600,000
—

During the year ended 31 December 2014, a gain of $6,848 (2013: $nil) was realised by a director as a result of the exercise of share options.

The Company’s share price has ranged from 17.75p at 31 December 2013 to a high of 25.75p and a low of 6.375p during the year
ended 31 December 2014 with a closing price of 6.625p at 31 December 2014.

By order of the board of directors

Fisher Secretaries Limited
Company secretary
27 May 2015

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law
and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the
directors have, as required by the rules of the Alternative Investment Market of the London Stock Exchange, elected to prepare the
Group financial statements in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European
Union and have elected to prepare the financial statements of the parent company (the “Company”) in accordance with United
Kingdom Generally Accepted Accounting Principles (“UK GAAP”).

In the case of the Group’s IFRS financial statements, the directors are required to prepare Group financial statements for each
financial year which present fairly the financial position of the Group and the financial performance and cash flows of the Group
for that period. In preparing the Group financial statements the directors are required to:
• select suitable accounting policies in accordance with International Accounting Standard (“IAS”) 8 ‘Accounting Policies,

Changes in Accounting Estimates and Errors’ and then apply them consistently;

• present information, including accounting policies, in a manner that provides relevant, reliable, comparable and

understandable information;

• provide additional disclosures when compliance with the specific requirements in IFRS is insufficient to enable users to understand
the impact of particular transactions, other events and conditions on the entity’s financial position and financial performance;

• state whether they have been prepared in accordance with IFRS;
• prepare the accounts on a going concern basis unless, having assessed the ability of the Group to continue as a going concern,

management either intends to liquidate the entity or to cease trading, or has no realistic alternative but to do so; and

• make judgements and estimates that are reasonable and prudent.
In the case of the Company’s UK GAAP financial statements, the directors are required to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of the Company. In preparing these financial statements,
the directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether they have been prepared in accordance with UK GAAP; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company

will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable
them to ensure that the financial statements comply with the Companies Act 2006 and Article 4 of the IAS regulation. They are also
responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the
Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of the financial statements
and other information included in annual reports may differ from legislation in other jurisdictions.

Responsibility statement
We confirm that to the best of our knowledge:
• the financial statements, prepared in accordance with the applicable accounting frameworks, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken
as a whole; and

• the management report, which is incorporated into the strategic report and the directors’ report, includes a fair review of the
development and performance of the business and the position of the Company and the undertakings included in the consolidation
taken as a whole, together with a description of the principal risks and uncertainties that they face.

By order of the board of directors

Khosrow Zamani
Non-executive chairman
27 May 2015

Anglo Asian Mining PLC Annual report and accounts 2014Corporate governance

Introduction
Although the rules of the Alternative Investment Market do not require the Company to comply with the United Kingdom corporate
governance code (the “Code”), the Company fully supports the principles set out in the Code and will attempt to comply wherever
possible, given both the size and resources available to the Company. Details are provided below of how the Company complies
with the Code.

The board of directors
The board of directors (“the Board”) currently comprises one executive director and four non-executive directors, one of whom is
the chairman. The roles of chairman and chief executive are split in line with the recommended policy.

The Board meets regularly throughout the year and receives a board pack comprising individual reports from the executive
director together with any other material deemed necessary for the Board to discharge its duties. The Board also conducts
telephone board meetings as issues arise which require board attention. It is the Board’s responsibility to formulate, review and
approve the Group’s strategy, budgets and major items of expenditure. The Board sets the Group’s objectives and policies and monitors
the implementation by the executive team.

The Board considers two of the non-executive directors other than the chairman to be independent.

Audit committee
The Board has an audit committee which comprises Richard Round and John Sununu and is scheduled to meet at least twice a year.
The external auditor attends the meetings and the chief executive and chief financial officer are invited. It is the audit committee’s
role to provide formal and transparent arrangements for considering how to apply the financial reporting and internal control
requirements of the Code, whilst maintaining an appropriate relationship with the independent auditor of the Group.

Remuneration committee
The Board has a remuneration committee which comprises Khosrow Zamani and John Sununu and meets as required. It is the
remuneration committee’s role to establish a formal and transparent policy on executive remuneration and to set remuneration
packages for individual directors.

Nomination committee
The Board has a nomination committee which comprises Khosrow Zamani and John Sununu. It is the role of the nomination
committee to review and consider the Board structure and composition and it meets as required to consider and make
recommendations on the appointment of directors to the Board.

Health, Safety, Environment and Technology Committee
The Board has a health, safety, environment and technology committee which comprises John Monhemius and Reza Vaziri and meets
as required. The committee’s primary function is to assist the Board in fulfilling its oversight responsibilities in the following areas:
• health, safety, environmental and technological issues relating to the Company;
• the Company’s compliance with corporate policies that provide processes, procedures and standards to follow in accomplishing
the Company’s goals and objectives relating to health, safety and environmental issues, to ensure that the Company’s operations
and work practices comply as far as is practicable with the best international standards; and

• the management of risk related to health, safety, environmental and technological issues.

Shareholder relations
The Company meets with its institutional shareholders and analysts as appropriate and encourages communication with private
shareholders via the annual general meeting. In addition, the Company uses the annual report and financial statements, interim
statement and website, (www.angloasianmining.com), to provide further information to shareholders.

Internal control and risk management
The Board is responsible for the system of internal control and for reviewing its effectiveness. Such systems are designed to
manage rather than eliminate risks and can provide only reasonable and not absolute assurance against material misstatement
or loss. For each year, on behalf of the Board, the audit committee reviews the effectiveness of these systems. This is achieved
primarily by considering the risks potentially affecting the Group and discussions with the external auditor.

The Group does not currently have an internal audit function due to the small size of the Group and limited resources available.

A comprehensive budgeting process is completed once a year and is reviewed by the Board and where appropriate revised forecasts
are prepared and also reviewed by the Board. The Group’s results, as compared against budget, are reported to the Board on a
monthly basis and discussed in detail at each meeting of the Board.

The Group maintains appropriate insurance cover in respect of legal actions against the directors as well as against material
loss or claims against the Group and the Board reviews the adequacy of the cover regularly.

We have audited the financial statements of Anglo Asian Mining PLC for the year ended 31 December 2014 which comprise the Group
income statement, Group statement of comprehensive income, Group statement of financial position, Group cash flow statement,
Group statement of changes in equity, Company balance sheet and the related notes set out on pages 27 to 57. The financial reporting
framework that has been applied in the preparation of the Group financial statements is applicable law and International Financial
Reporting Standards (IFRSs) as adopted by the European Union. The financial reporting framework that has been applied in the preparation
of the parent company financial statements is applicable law and United Kingdom Accounting Standards (United Kingdom Generally
Accepted Accounting Practice).

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to
them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions
we have formed.

Respective responsibilities of directors and auditor
As explained more fully in the Statement of directors’ responsibilities set out on page 20, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an
opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland).
Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable
assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment
of: whether the accounting policies are appropriate to the Group’s and the parent company’s circumstances and have been consistently
applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall
presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to
identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially
incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become
aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements
In our opinion:
• the financial statements give a true and fair view of the state of the Group’s and of the parent company’s affairs as at 31 December 2014

and of the Group’s loss for the year then ended;

• the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; and
• the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted

Accounting Practice; and

• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the strategic report and the directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received

from branches not visited by us; or

• the parent company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.

Steven Dobson (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
27 May 2015

Notes:
1.

The maintenance and integrity of the Anglo Asian Mining PLC website is the responsibility of the directors; the work carried out by the auditors does not
involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial
statements since they were initially presented on the web site.

2. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Anglo Asian Mining PLC Annual report and accounts 2014Group income statement
year ended 31 December 2014

Revenue

Cost of sales

Gross (loss)/profit

Other income

Administrative expenses

Other operating expense

Operating (loss)/profit

Finance income

Finance costs

(Loss)/profit before tax

Income tax

(Loss)/profit attributable to the equity holders of the parent

(Loss)/earnings per share attributable to the equity holders of the parent

Basic (US cents per share)

Diluted (US cents per share)

Notes

2014
$000

67,964

(68,500)

(536)

632

(7,202)

(1,803)

(8,909)

(5,462)

(14,364)

3,436

(10,928)

2013
$000

70,820

(57,480)

13,340

519

(6,845)

(1,878)

5,136

(3,779)

1,391

(1,055)

336

(9.79)

(9.77)

0.30

Group statement of comprehensive income
year ended 31 December 2014

(Loss)/profit for the year

Total comprehensive (loss)/income

Attributable to the equity holders of the parent

2014
$000

(10,928)

2013
$000

336

Group statement of financial position
31 December 2014

Non-current assets

Intangible assets

Property, plant and equipment

Inventory

Other receivables

Current assets

Inventory

Trade and other receivables

Cash and cash equivalents

Total assets

Current liabilities

Trade and other payables

Interest-bearing loans and borrowings

Net current assets

Non-current liabilities

Provision for rehabilitation

Interest-bearing loans and borrowings

Deferred tax liability

Total liabilities

Net assets

Equity

Share capital

Share premium account

Share-based payment reserve

Merger reserve

Retained earnings

Total equity

Notes

2014
$000

2013
$000

20,045

114,431

1,670

1,305

21,157

115,634

3,314

352

137,451

140,457

33,355

5,350

322

39,027

28,742

7,901

5,489

42,132

176,478

182,589

(12,216)

(16,675)

(7,061)

(2,031)

(28,891)

(9,092)

10,136

33,040

(8,624)

(36,083)

(16,964)

(7,357)

(48,990)

(20,400)

(61,671)

(76,747)

(90,562)

(85,839)

85,916

96,750

1,978

32,246

670

46,206

4,816

85,916

1,973

32,173

735

46,206

15,663

96,750

The Group financial statements were approved by the board of directors and authorised for issue on 27 May 2015. They were signed
on its behalf by:

Reza Vaziri
Chief Executive

Anglo Asian Mining PLC Annual report and accounts 2014Group cash flow statement
year ended 31 December 2014

(Loss)/profit before tax

Adjustments for:

Finance income

Finance costs

Depreciation of property, plant and equipment

Amortisation of mining rights and other intangible assets

Share-based payment expense

Shares issued in lieu of cash payment

Write down of unrecoverable inventory

Operating cash flow before movements in working capital

Decrease in trade and other receivables

(Increase)/decrease in inventories

Increase/(decrease) in trade and other payables

Cash provided by operations

Income taxes paid

Net cash provided by operating activities

Investing activities

Expenditure on property, plant and equipment and mine development

Investment in exploration and evaluation assets including other intangible assets

Interest received

Net cash used in investing activities

Financing activities

Proceeds from issuance of shares

Proceeds from borrowings

Repayments of borrowings

Interest paid

Net cash (outflow)/inflow from financing activities

Net (decrease)/increase in cash and cash equivalents

Cash and cash equivalents at the beginning of the year

Cash and cash equivalents at the end of the year

Notes

2014
$000

(14,364)

(7)

5,462

17,318

1,720

372

10,567

3,694

(3,342)

3,902

14,821

—

14,821

(16,270)

(608)

2013
$000

1,391

(34)

3,779

10,682

1,688

—

383

17,934

1,157

3,988

(2,451)

20,628

(800)

19,828

(31,494)

(308)

(16,871)

(31,768)

8,662

(6,982)

(4,825)

(3,117)

(5,167)

5,489

322

—

60,951

(40,746)

(5,187)

15,018

3,078

2,411

5,489

Notes

1 January 2013

Profit for the year

Share options exercised

Share-based payment charge

31 December 2013

Loss for the year

Share options exercised

Shares issued

Fair value of forfeited
options

Share-based payment charge

Share
capital
$000

1,973

—

Share
premium
$000

32,173

—

1,973

32,173

—

Share-based
payment
reserve
$000

732

—

(42)

735

—

(28)

—

(53)

Merger
reserve
$000

46,206

—

46,206

—

Retained
earnings
$000

Total
equity
$000

15,285

96,369

336

—

336

—

15,663

(10,928)

96,750

(10,928)

—

31 December 2014

1,978

32,246

670

46,206

4,816

85,916

Anglo Asian Mining PLC Annual report and accounts 2014Notes to the Group financial statements
year ended 31 December 2014

1 General information

Anglo Asian Mining PLC (the “Company”) is a company incorporated in England and Wales under the Companies Act 2006.
The address of its registered office is set out in Company information on page 61 of this annual report. The Company’s ordinary
shares are traded on the Alternative Investment Market (“AIM”) 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 5,
the chairman’s statement on pages 4 and 5 and the strategic report on pages 6 to 9 of this annual report.

2 Basis of preparation

The Group’s annual report is for the year ended 31 December 2014 and includes the consolidated financial statements of the
Group prepared in accordance with International Financial Reporting Standards (“IFRS”) adopted by the European Union and
therefore the Group financial statements comply with Article 4 of the EU IAS Regulation.

The Group financial statements have 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 European Union.

The Group financial statements have been prepared under the historical cost convention except for the treatment of share
based payments. The Group financial statements are presented in United States Dollars (“$”) and all values are rounded
to the nearest thousand except where otherwise stated. In the Group financial statements “£” and “pence” are references
to the United Kingdom pound sterling.

As set out in the directors' report on page 15, the board of directors assessed the ability of the Group to continue as a going
concern and these financial statements have been prepared 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 to 30 June 2016 and satisfying themselves that the Group will have sufficient funds on hand to realise its
assets and meet its obligations as and when they fall due.

In making this assessment the directors have acknowledged the challenging and uncertain market conditions the Group is
operating in. In 2014, the price of gold averaged $1,266 per ounce with a high of $1,382 per ounce and a low of $1,144 per ounce.
2015 has seen a continuation of the depressed gold price which has continued the low margins experienced in 2014.

The Group has commenced making payments on the principal of its debt in 2015. Until the date of this annual report, the Group
has made all payments of interest and principal on time. However, in order to ensure that the Group can meet all principal
repayments in the remainder of 2015, it has negotiated with the International Bank of Azerbaijan (“IBA”) to defer some principal
repayments due in 2015. IBA will defer two thirds of the principal repayments due in June and September which total $1,544,000
to 2016. The amount of principal deferred totals $1,029,000. In addition, a principal shareholder of the Group has committed
to provide a loan facility of $4 million at an interest rate of 10 per cent. per annum to the Group for the period 20 May 2015
to 8 January 2016. At the date of this annual report, $2 million of the facility had been utilised.

The Group is forecasting to meet its debt service cover ratio (“DSCR”) for the six months to 30 June 2015. For the full year to 31
December 2015 and subsequent years the Group can comfortably meet the debt service cover ratio of 1.25 as specified in the
loan agreement with the Amsterdam Trade Bank.

Key to achieving the Group’s forecast cash position, and therefore its going concern assumption are the following:
• achieving the forecast production of its gold production operations, principally its heap and agitation leaching;
• its gold price assumption; and
• the small scale flotation plant being commissioned on time and achieving its planned performance.
Should there be a moderate and sustained decrease in either the production or gold price assumptions, significant doubt would
be cast over the Group’s short term cash position. Under this circumstance, the Group would look to defer all non-essential capital
expenditure and administrative costs in order to preserve cash. The directors believe that the Group’s assumptions are neither
overly aggressive or overly conservative and appropriate rigour and diligence has been performed by the directors in approving
the assumptions. The directors believe all assumptions are prepared on a realistic basis using the best available information.

Should the Group’s small scale flotation plant not be commissioned on time or not achieve the forecast performance, the Group may
not achieve sufficient cash generation to make repayment of all loan principal due in the first half of 2016. In these circumstances,
the Group would look to establish credit lines either from commercial banks or its principal shareholder to cover any shortfall.

The Group’s business activities, together with the factors likely to affect its future development, performance and position,
can be found in the financial statements within the Chairman’s statement on pages 4 to 5 and within the strategic report
on pages 6 to 9. The financial position of the Group, its cash flow, liquidity position and borrowing facilities are described
in this financial review. In addition, note 23 to the consolidated financial statements includes the Group’s objectives, 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 Group continues to adopt the going
concern basis in preparing the annual report and financial statements.

3 Adoption of new and revised standards

a) New and amended standards and interpretations
A number of new standards and amendments became effective from 1 January 2014.
• IFRS 10 ‘Consolidated Financial Statements' and 'IAS 27 Separate Financial Statements’

The new standard provides additional guidance to assist in the determination of which entities are controlled and are
required to be consolidated. This standard replaces the portion of IAS 27 ‘Consolidated and Separate Financial Statements’
that addresses the accounting for consolidated financial statements.

• IFRS 11 ‘Joint Arrangements' and 'IAS 28 Investment in Associates and Joint Ventures’

The new standard replaces IAS 31 ‘Interests in Joint Ventures’ and SIC 13 'Jointly Controlled Entities – Non-monetary
Contributions by Venturers’.

• IFRS 12 ‘Disclosure of Involvement With Other Entities’

The new standard covers the disclosures that were previously required in consolidated financial statements under IAS 27
‘Consolidated and Separate Financial Statements’ as well as those included in IAS 31 ‘Interests in Joint Ventures’ and IAS 28
‘Investments in Associates’.

• Amendments to IAS 32 ‘Financial Instruments: Presentation’

Offsetting Financial Assets and Financial Liabilities.

• Amendments to IAS 36 ‘Impairment of Assets’

Recoverable Amount Disclosures for Non-Financial Assets.

• Amendments to IAS 39 ‘Financial Instruments: Recognition and Measurement’

Novation of derivatives and continuation of hedge accounting.

• IFRIC 21 Levies.
• Improvements to IFRSs – 2010-2012 Cycle: Amendments to IFRS 13 ‘Short–term receivables and payables’.
• Improvements to IFRSs – 2011-2013 Cycle: Amendments to IFRS 1 ‘Meaning of “effective IFRSs”’.
None of these standards and amendments impact the Group financial statements.

b) Standards issued but not yet effective
The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group financial
statements are disclosed below. The Group intends to adopt these standards, if applicable, when they become effective.

IFRS 9 'Financial Instruments'
In July 2014, the IASB issued the final version of IFRS 9 'Financial Instruments' which reflects all phases of the financial instruments
project and replaces IAS 39 'Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9.' The standard
introduces new requirements for classification and measurement, impairment, and hedge accounting. IFRS 9 is effective for annual
periods beginning on or after 1 January 2018, with early application permitted. Retrospective application is required, but comparative
information is not compulsory. Early application of previous versions of IFRS 9 (2009, 2010 and 2013) is permitted if the date of initial
application is before 1 February 2015. The adoption of IFRS 9 will have an effect on the classification and measurement of the Group’s
financial assets, but no impact on the classification and measurement of the Group’s financial liabilities.

Notes to the Group financial statements continuedyear ended 31 December 2014Anglo Asian Mining PLC Annual report and accounts 20143 Adoption of new and revised standards continued

b) Standards issued but not yet effective continued
IFRS 14 'Regulatory Deferral Accounts'
IFRS 14 is an optional standard that allows an entity, whose activities are subject to rate-regulation, to continue applying most
of its existing accounting policies for regulatory deferral account balances upon its first-time adoption of IFRS. Entities that adopt
IFRS 14 must present the regulatory deferral accounts as separate line items on the statement of financial position and present
movements in these account balances as separate line items in the statement of profit or loss and other comprehensive income.
The standard requires disclosures on the nature of, and risks associated with, the entity’s rate-regulation and the effects of that
rate-regulation on its financial statements. IFRS 14 is effective for annual periods beginning on or after 1 January 2016. Since
the Group is an existing IFRS preparer, this standard would not apply.

Amendments to IAS 19 'Defined Benefit Plans: Employee Contributions'
IAS 19 requires an entity to consider contributions from employees or third parties when accounting for defined benefit plans.
Where the contributions are linked to service, they should be attributed to periods of service as a negative benefit. These amendments
clarify that, if the amount of the contributions is independent of the number of years of service, an entity is permitted to recognise
such contributions as a reduction in the service cost in the period in which the service is rendered, instead of allocating the
contributions to the periods of service. This amendment is effective for annual periods beginning on or after 1 July 2014. It is not
expected that this amendment would be relevant to the Group, since none of the entities within the Group have defined
benefit plans with contributions from employees or third parties.

Annual improvements 2010-2012 Cycle
These improvements are effective from 1 July 2014 and are not expected to have a material impact on the Group. They include:

IFRS 2 'Share-based Payment'
This improvement is applied prospectively and clarifies various issues relating to the definitions of performance and service
conditions which are vesting conditions, including:
• a performance condition must contain a service condition;
• a performance target must be met while the counterparty is rendering service;
• a performance target may relate to the operations or activities of an entity, or to those of another entity in the same group;
• a performance condition may be a market or non-market condition; and
• if the counterparty, regardless of the reason, ceases to provide service during the vesting period, the service condition is not

satisfied.

IFRS 3 'Business Combinations'
The amendment is applied prospectively and clarifies that all contingent consideration arrangements classified as liabilities
(or assets) arising from a business combination should be subsequently measured at fair value through profit or loss whether
or not they fall within the scope of IFRS 9 (or IAS 39, as applicable).

IFRS 8 'Operating Segments'
The amendments are applied retrospectively and clarify that:
• an entity must disclose the judgements made by management in applying the aggregation criteria in paragraph 12 of IFRS 8,
including a brief description of operating segments that have been aggregated and the economic characteristics (e.g. sales
and gross margins) used to assess whether the segments are ‘similar’;

• the reconciliation of segment assets to total assets is only required to be disclosed if the reconciliation is reported

to the chief operating decision maker, similar to the required disclosure for segment liabilities.

IAS 16 'Property, Plant and Equipment and IAS 38 Intangible Assets'
The amendment is applied retrospectively and clarifies in IAS 16 and IAS 38 that the asset may be revalued by reference
to observable data on either the gross or the net carrying amount. In addition, the accumulated depreciation or amortisation
is the difference between the gross and carrying amounts of the asset.

IAS 24 'Related Party Disclosures'
The amendment is applied retrospectively and clarifies that a management entity (an entity that provides key management
personnel services) is a related party subject to the related party disclosures. In addition, an entity that uses a management
entity is required to disclose the expenses incurred for management services.

b) Standards issued but not yet effective continued
Annual improvements 2011-2013 Cycle
These improvements were effective from 1 July 2014 and are not expected to have a material impact on the Group. They include:

IFRS 3 'Business Combinations'
The amendment is applied prospectively and clarifies for the scope exceptions within IFRS 3 that:
• joint arrangements, not just joint ventures, are outside the scope of IFRS 3; and
• this scope exception applies only to the accounting in the financial statements of the joint arrangement itself.
IFRS 13 'Fair Value Measurement'
The amendment is applied prospectively and clarifies that the portfolio exception in IFRS 13 can be applied not only
to financial assets and financial liabilities, but also to other contracts within the scope of IFRS 9 (or IAS 39, as applicable).

IAS 40 'Investment Property'
The description of ancillary services in IAS 40 differentiates between investment property and owner-occupied property
(i.e. property, plant and equipment). The amendment is applied prospectively and clarifies that IFRS 3, and not the description
of ancillary services in IAS 40, is used to determine if the transaction is the purchase of an asset or business combination.

IFRS 15 'Revenue from Contracts with Customers'
IFRS 15 was issued in May 2014 and establishes a new five-step model that will apply to revenue arising from contracts with
customers. Under IFRS 15 revenue is recognised at an amount that reflects the consideration to which an entity expects to
be entitled in exchange for transferring goods or services to a customer. The principles in IFRS 15 provide a more structured
approach to measuring and recognising revenue.

The new revenue standard is applicable to all entities and will supersede all current revenue recognition requirements under
IFRS. Either a full or modified retrospective application is required for annual periods beginning on or after 1 January 2017
with early adoption permitted. The Group is currently assessing the impact of IFRS 15 and plans to adopt the new standard
on the required effective date.

Amendments to IFRS 11 'Joint Arrangements: Accounting for Acquisitions of Interests'
The amendments to IFRS 11 require that a joint operator accounting for the acquisition of an interest in a joint operation, in which
the activity of the joint operation constitutes a business must apply the relevant IFRS 3 principles for business combinations
accounting. The amendments also clarify that a previously held interest in a joint operation is not remeasured on the acquisition
of an additional interest in the same joint operation while joint control is retained. In addition, a scope exclusion has been added
to IFRS 11 to specify that the amendments do not apply when the parties sharing joint control, including the reporting entity,
are under common control of the same ultimate controlling party.

The amendments apply to both the acquisition of the initial interest in a joint operation and the acquisition of any additional
interests in the same joint operation and are prospectively effective for annual periods beginning on or after 1 January 2016,
with early adoption permitted. These amendments are not expected to have any impact on the Group.

Amendments to IAS 16 and IAS 38 'Clarification of Acceptable Methods of Depreciation and Amortisation'
The amendments clarify the principle in IAS 16 and IAS 38 that revenue reflects a pattern of economic benefits that are generated
from operating a business (of which the asset is part) rather than the economic benefits that are consumed through use of the
asset. As a result, a revenue-based method cannot be used to depreciate property, plant and equipment and may only be used
in very limited circumstances to amortise intangible assets. The amendments are effective prospectively for annual periods
beginning on or after 1 January 2016, with early adoption permitted. These amendments are not expected to have any impact
to the Group given that the Group has not used a revenue-based method to depreciate its non-current assets.

Amendments to IAS 16 and IAS 41 'Agriculture: Bearer Plants'
The amendments change the accounting requirements for biological assets that meet the definition of bearer plants. Under
the amendments, biological assets that meet the definition of bearer plants will no longer be within the scope of IAS 41. Instead,
IAS 16 will apply. After initial recognition, bearer plants will be measured under IAS 16 at accumulated cost (before maturity) and
using either the cost model or revaluation model (after maturity). The amendments also require that produce that grows on
bearer plants will remain in the scope of IAS 41 measured at fair value less costs to sell. For government grants related to bearer
plants, IAS 20 'Accounting for Government Grants and Disclosure of Government Assistance' will apply. The amendments are
retrospectively effective for annual periods beginning on or after 1 January 2016, with early adoption permitted. These
amendments are not expected to have any impact to the Group as the Group does not have any bearer plants.

Amendments to IAS 27 'Equity Method in Separate Financial Statements'
The amendments will allow entities to use the equity method to account for investments in subsidiaries, joint ventures and
associates in their separate financial statements. Entities already applying IFRS and electing to change to the equity method
in their separate financial statements will have to apply that change retrospectively. For first-time adopters of IFRS electing to
use the equity method in their separate financial statements, they will be required to apply this method from the date of
transition to IFRS. The amendments are effective for annual periods beginning on or after 1 January 2016, with early adoption
permitted. These amendments will not have any impact on the Group’s consolidated financial statements.

Notes to the Group financial statements continuedyear ended 31 December 2014Anglo Asian Mining PLC Annual report and accounts 20144 Significant accounting policies

a) Basis of consolidation
The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 31 December 2014.
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 re-assesses 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 beings 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.

b) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue
can be reliably measured.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership have been transferred,
which is considered to occur when title passes to the customer. This generally occurs when product is physically transferred
to the buyer.

The following criteria are also met in specific revenue transactions:

Gold bullion and copper concentrate sales
Revenue from gold bullion sales is recognised when the significant risks and rewards of ownership have transferred to the
buyer and selling prices and assay results are known or can be reasonably estimated. Assay results determine the content
of gold and silver in doré, the price of which is determined based on market quotations of each metal. Silver in doré which
is produced together with gold, is treated as a by-product and recognised in sales revenue.

Contractual terms for the Group’s sale of gold, silver and copper in concentrate (metal in concentrate) allow for a price
adjustment based on final assay results of the metal in concentrate to determine the final content. Recognition of sales
revenue for these commodities is based on the most recently determined estimate of metal in concentrate (based on initial
assay results) and the spot price at the date of shipment, with a subsequent adjustment made upon final determination.

Contractual terms with third parties for the sale of metal in concentrate specify a provisional selling price based on the average
prevailing spot prices at date of shipment to the customer. Final selling price is based on average prevailing spot prices during a
specified future period after shipment to the customer (the “quotation period”). Sales revenue for the sale of metal in concentrate
is recognised at final selling price.

Interest revenue
Interest revenue is recognised as it accrues, using the effective interest rate method.

c) Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at inception
date and whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys
a right to use the asset.

Operating lease payments are recognised as an expense in the Group income statement on a straight line basis over the
lease term.

The Group had no finance leases during 2014 and 2013.

d) 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 is charged or credited in the Group income statement, except when it relates to items charged or credited directly to
equity, in which case the deferred tax is also dealt with in equity.

Deferred tax assets 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.

The tax expense represents the sum of the tax currently payable and deferred tax.

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.

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.

e) Transactions with related parties
For the purposes of these Group financial statements, parties are considered to be related if one party has the ability to
control the other party or exercise significant influence over the other party in making financial or operational decisions.
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.

f) 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.

g) 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.

Notes to the Group financial statements continuedyear ended 31 December 2014Anglo Asian Mining PLC Annual report and accounts 20144 Significant accounting policies continued

g) Intangible assets continued
i) Exploration and evaluation assets continued
Once commercially viable reserves are established and development is sanctioned, exploration and evaluation assets
are tested for impairment and 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 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 is 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 reserves of the relevant area.

iii) Other intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a
business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried
at cost less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets,
excluding capitalised development costs, are not capitalised and expenditure is reflected in the Group income statement in
the year in which the expenditure is incurred. The useful lives of intangible assets are assessed as either finite or indefinite.

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.

h) Property, plant and equipment and mine properties
Development expenditure is net of proceeds from all but the incidental sale of ore extracted during the development phase.

Upon completion of mine construction, the assets initially charged to assets in the course of construction are transferred into
‘Plant and equipment, motor vehicles and leasehold improvements’ or ‘Producing mines’. Items of ‘Plant and equipment,
motor vehicles and leasehold improvements’ 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’ in the course of 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, motor vehicles and leasehold improvements’ or ‘Producing mines’.
Additional capitalised costs performed subsequent to the date of commencement of operation of the asset are charged
directly to ‘Plant and equipment, motor vehicles and leasehold improvements’ 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. 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.

The premium paid in excess of the intrinsic value of land to gain access is amortised over the life of the mine.

h) Property, plant and equipment and mine properties continued
i) Depreciation and amortisation continued
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
• Plant and equipment
• Motor vehicles
• Office equipment
• Leasehold improvements – eight years (2013: eight years)
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.

– eight years (2013: eight years)
– eight years (2013: eight years)
– four years (2013: four years)
– four years (2013: four years)

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 costs are expensed as incurred.

i) 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.

j) Fair value measurement
The Group measures financial instruments such as bank borrowings 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 17 – ‘Trade and other receivables’
• Note 18 – ‘Cash and cash equivalents’
• Note 19 – ‘Trade and other payables’
• Note 20 – ‘Interest bearing loans and borrowings’

Notes to the Group financial statements continuedyear ended 31 December 2014Anglo Asian Mining PLC Annual report and accounts 20144 Significant accounting policies continued
j) Fair value measurement continued
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 re-occurring 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.

k) Provisions
i) General
Provisions are recognised when (a) the Group has a present obligation (legal or constructive) as a result of a past event and (b) 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. If the effect of the time value of money is material, provisions are discounted using
a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase
in the provision due to the passage of time is recognised as a finance cost.

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.

l) Financial assets
i) Initial recognition and measurement
Financial assets within the scope of IAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables,
held-to-maturity investments, available-for-sale financial assets, or as derivatives designated as hedging instruments in an effective
hedge, as appropriate. The Group determines the classification of its financial assets at initial recognition. All financial assets
are recognised initially at fair value.

Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention
in the marketplace (regular way trades) are recognised on the trade date, i.e. the date that the Group commits to purchase
or sell the asset.

The Group’s financial assets include cash and short-term deposits as well as trade and other receivables.

ii) Subsequent measurement
The subsequent measurement of financial assets depends on their classification:

Trade and other receivables
Trade and other receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market. After initial measurement, such financial assets are subsequently measured at amortised cost using the
effective interest rate method, less impairment. 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 effective interest rate method. The effective interest rate
method amortisation is included in finance income in the consolidated statement of profit or loss. The losses arising from
impairment are recognised in the consolidated statement of profit or loss.

Derecognition
A financial asset (or, where applicable a part of a financial asset) is derecognised when:
• the rights to receive cash flows from the asset have expired; and
• 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.

Impairment of financial assets
The Group assesses at each reporting date whether there is any objective evidence that a financial asset or a group of financial
assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective
evidence of impairment as a result of one or more events that have occurred after the initial recognition of the asset (an
incurred ‘loss event’) and that loss event has an impact on the estimated future cash flows of the financial asset or the group
of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group
of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability
that they will enter bankruptcy or other financial re-organisation and where observable data indicates that there is a
measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with
defaults.

Financial assets carried at amortised cost
For financial assets carried at amortised cost, the Group first assesses individually whether objective evidence of impairment
exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually
significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset,
whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively
assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is,
or continues to be, recognised are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss has incurred, the amount of the loss is measured as the difference
between the asset’s carrying amount and the present value of estimated future cash flows (excluding future expected credit
losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial
asset’s original effective interest rate.

m) Financial liabilities
i) Initial recognition and measurement
Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit or loss, loans and
borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Group determines
the classification of its financial liabilities at initial recognition. All financial liabilities are recognised initially at fair value and
in the case of loans and borrowings, plus directly attributable transaction costs. The Group’s financial liabilities include trade
and other payables, contractual provisions and loans and borrowings.

Notes to the Group financial statements continuedyear ended 31 December 2014Anglo Asian Mining PLC Annual report and accounts 20144 Significant accounting policies continued

m) Financial liabilities continued
ii) Subsequent measurement
The measurement of financial liabilities depends on their classification as follows:

Trade and other payables and contractual provisions
Trade and other payables are initially measured at fair value and are subsequently measured at amortised cost using the
effective interest rate method.

Loans and borrowings
Interest-bearing loans and overdrafts are recorded at the proceeds received, net of direct transaction costs. Finance charges,
including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accrual basis and
charged to the Group income statement using the effective interest method. They are added to the carrying amount of the
instrument to the extent that they are not settled in the period in which they arise.

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective
interest rate method. Gains and losses are recognised in the Group income statement when the liabilities are derecognised as
well as through the effective interest rate method amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fee or costs that are an integral
part of the effective interest rate method. The effective interest rate method amortisation is included in finance costs in the
Group income statement.

iii) Derecognition
A financial liability is derecognised when the obligation under the liability 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 a derecognition of the original
liability and the recognition of a new liability and the difference in the respective carrying amounts is recognised in the
Group income statement.

n) Non-current prepayments
Advances made to suppliers for fixed asset purchases are recognised as non-current prepayments until the time when fixed
assets are supplied.

o) 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).

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.

p) 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.

q) 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 charged to the Group income statement as operating costs in accordance with the principles of IAS 2 ‘Inventories’.

www.angloasianmining.com Annual report and accounts 2014Anglo Asian Mining PLCChairman’s statementStrategic reportFinancial reviewCompany financial statementsAnnual general meetingCorporate governanceGroup financial statements4 Significant accounting policies continued
q) Deferred stripping costs continued
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.

r) 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.

s) 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.

t) 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.

Fair value is measured by use of the Black-Scholes model. The expected life used in the model has been applied based
on management’s best-estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.
The vesting conditions assumptions are reviewed during each reporting period to ensure they reflect current expectations.

u) Significant accounting judgements, estimates and assumptions
The preparation of the Group financial statements in conformity with IFRS requires management to make judgements,
estimates and assumptions 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 and
assumptions 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) Ore reserves and resources
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.

ii) Exploration and evaluation expenditure (note 13)
The application of the Group’s accounting policy for exploration and evaluation expenditure requires judgement in determining
whether it is likely that future economic benefits are likely either from future exploitation or sale or where activities have not reached
a stage which permits a reasonable assessment of the existence of reserves. The determination of a Joint Ore Reserves Committee
(‘JORC’) resource is itself an estimation process that requires varying degrees of uncertainty depending on sub-classification and these
estimates directly impact the point of deferral of exploration and evaluation expenditure. The deferral policy requires management
to make certain estimates and assumptions about future events or circumstances, in particular whether an economically viable
extraction operation can be established. Estimates and assumptions made may change if new information becomes available.
If, after expenditure is capitalised, 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.

Notes to the Group financial statements continuedyear ended 31 December 2014Anglo Asian Mining PLC Annual report and accounts 20144 Significant accounting policies continued

u) Significant accounting judgements, estimates and assumptions continued
iii) Inventory (note 16)
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) Impairment of tangible and intangible assets (notes 13 and 14)
The assessment of tangible and intangible assets for any internal and external indications of impairment involves judgement.
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 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.

v) Production start date
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.

vi) Mine rehabilitation provision (note 21)
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’.

vii) Recovery of deferred tax assets (note 11)
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 net deferred tax assets recorded at the reporting date could be impacted.

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 income statement
and Group statement of financial position in their entireties. Accordingly the Group has only one operating segment, mining
operations. The mining operations comprise the Group’s major producing asset, the Gedabek mine which accounts for all the
Group’s revenues and the majority of its cost of sales, depreciation and amortisation. The Group’s mining operations are all
located within Azerbaijan and therefore all within one geographic segment.

All sales of gold and silver bullion are made to one customer, the Group’s gold refinery, MKS Finance SA, based in Switzerland.
Copper concentrate is sold to two customers: Glencore International AG and Industrial Minerals SA.

The Group’s revenue consists of gold and silver bullion and copper concentrate sold to third-party customers. Revenue from
sales of gold and silver bullion was $64,145,000 and $135,000 respectively (2013: $63,907,000 and $479,000). Revenue from sales
of copper concentrate was $3,684,000 (2013: $6,434,000).

Finance income of $7,000 in 2014 represents cash deposit interest received during the year (2013: $34,000).

7 Other operating income and expense

Other operating income relates to the income generated as a result of release of accruals and provisions during 2014 and 2013.

Other operating expenses consist of metal refining costs, foreign currency exchange loss and miscellaneous operating
expenses. Foreign currency exchange loss for the year ended 31 December 2014 comprised $137,000 (2013: $295,000).

8 Operating (loss)/profit

Operating (loss)/profit is stated after charging:
Depreciation on property, plant and equipment – owned
Amortisation of mining rights and other intangible assets
Employee benefits and expenses
Net foreign currency exchange loss
Inventory expensed during the year
Operating lease expenses

Fees payable to the Company's auditor for:
The audit of the Group’s annual accounts
The audit of the Group’s subsidiaries pursuant to legislation

Total audit services

Amounts paid to auditor for other services:
Tax compliance services
Tax advice services
Audit related assurance services – half year review

Total non-audit services

Total

Notes

14
13
9

2014
$000

17,318
1,720
10,882
137
35,879
431

190
119

309

15
13
20

357

2013
$000

10,682
1,687
10,138
342
36,960
360

229
119

348

14
—
—

362

There were no non-cancellable operating lease and sublease arrangements during 2014 and 2013.

The audit fees for the parent company were $107,000 (2013: $147,000).

9 Staff numbers and costs

The average number employed by the Group (including directors) during the year, analysed by category, was as follows:

Management and administration
Exploration
Mine operations

The aggregate payroll costs of these persons were as follows:

Wages and salaries
Share-based payments
Social security costs

Less: salary costs capitalised as exploration, evaluation development, fixed asset
and inventory expenditure

2014
Number

2013
Number

54
41
491

586

2014
$000

9,363
16
2,100

11,479

(597)

10,882

49
39
467

555

2013
$000

8,998
45
1,979

11,022

(884)

10,138

Notes to the Group financial statements continuedyear ended 31 December 2014Anglo Asian Mining PLC Annual report and accounts 20149 Staff numbers and costs continued

Remuneration of key management personnel
The remuneration of the key management personnel of the Group, is set out below in aggregate:

Short-term employee benefits
Share-based payment

2014
$

1,384,320
65,757

1,450,077

2013
$

1,261,672
45,375

1,307,047

The key management personnel of the Group comprise the chief executive officer, the vice president, Government affairs,
the senior vice president, Azerbaijan International Mining Company Limited, the vice president technical services and the
chief financial officer. The disclosure of the remuneration of the directors as required by the Companies Act 2006 is given
in the Report on directors’ remuneration on pages 18 to 19.

10 Finance cost

Interest charged on interest-bearing loans and borrowings
Finance charges on letters of credit
Unwinding of discount on provisions
Interest capitalised during the period

2014
$000

4,882
111
469
—

5,462

2013
$000

5,244
123
306
(1,894)

3,779

Interest on interest-bearing loans and borrowings represents charges incurred on credit facilities with the International
Bank of Azerbaijan, the Amsterdam Trade Bank, Yapi Kredi Bank Azerbaijan, Pashabank and Atlas Copco Customer Finance AB.

Where a portion of the loans has been used to finance the construction and purchase of assets of the Group (‘qualifying assets’),
the interest on that portion of the loans has been capitalised up until the time the assets were substantially ready for use.
For the year ended 31 December 2014, $nil (2013: $1,894,000) interest was capitalised (note 14).

11 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 most significant portion of profit or loss before tax
in the Group financial statements) of the estimated assessable profit or loss for the year. 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 2014 were $24,888,000
(2013: $5,108,000).

The major components of the income tax expense for the year ended 31 December are:

Current income tax
Current income tax charge
Deferred tax
Relating to origination and reversal of temporary differences

Income tax credit/(expense) for the year

2014
$000

—

3,436

2013
$000

—

(1,055)

Deferred income tax at 31 December relates to the following:

Deferred income tax liability
Property, plant and equipment – accelerated depreciation
Non-current prepayments
Trade and other receivables
Inventories

Deferred income tax liability

Deferred income tax asset
Trade and other payables and provisions*
Asset retirement obligation*
Interest-bearing loans and borrowings*
Carry forward losses**

Deferred income tax asset

Deferred income tax credit/(expense)

Net deferred income tax liability

Statement of financial position

Income statement

2014
$000

2013
$000

(20,253)
(418)
(360)
(9,770)

(30,801)

2,952
2,760
161
7,964

13,837

(16,779)
(113)
(1,324)
(8,819)

(27,035)

1,751
2,354
895
1,635

6,635

2014
$000

(3,474)
(305)
964
(951)

1,201
406
(734)
6,329

2013
$000

(6,143)
766
(18)
1,639

(703)
874
895
1,635

(16,964)

(20,400)

3,436

(1,055)

Deferred income tax assets have been recognised for the trade and other payables and provisions, asset retirement obligation and interest bearing
loans and borrowings based on local tax basis differences expected to be utilised against future taxable profits.

** Deferred income tax assets have been recognised for the carry-forward of unused tax losses to the extent that it is probable that taxable profits will be
available in the future against which the unused tax losses can be utilised. The probability that taxable profits will be available in the future is based
on forward looking budgets and business plans of the Group.

A reconciliation between the accounting (loss)/profit and the total taxation (benefit)/charge for the year ended 31 December
is as follows:

(Loss)/profit before tax

Theoretical tax charge at statutory rate of 32 per cent. for RVIG*
Effects of different tax rates for certain Group entities (28 per cent.)
Tax effect of items which are not deductible or assessable for taxation purposes:
– losses in jurisdictions that are exempt from taxation
– non-deductible expenses
– non-taxable income

Income tax (credit)/expense for the year

This is the local tax rate applicable in accordance with local legislation.

2014
$000

(14,364)

(4,596)
130

5
1,078
(53)

(3,436)

2013
$000

1,391

445
61

6
609
(66)

1,055

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 2014, the Group had unused tax losses available for offset against future profits of $31,723,000 (2013: $15,259,000).
Unused tax losses in the Republic of Azerbaijan at 31 December 2014 were $24,888,000 (2013: $5,108,000). 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.

Notes to the Group financial statements continuedyear ended 31 December 2014Anglo Asian Mining PLC Annual report and accounts 2014

12 (Loss)/earnings per share

The calculation of basic and diluted earnings per share is based upon the retained loss for the financial year of $10,928,000
(2013: retained profit of $336,000).

The weighted average number of ordinary shares for calculating the basic loss (2013: profit) and diluted loss (2013: profit)
per share after adjusting for the effects of all dilutive potential ordinary shares relating to share options are as follows:

Basic

Diluted

2014

2013

111,667,479

111,397,307

111,808,003

112,233,035

For instruments that could potentially dilute basic earnings per share in the future see note 24 – “share-based payment” which
shows 2,501,684 share options that could be dilutive in the future.

13 Intangible assets

Cost
1 January 2013
Additions
Reclassification

31 December 2013
Additions

31 December 2014

Amortisation and impairment*
1 January 2013
Charge for the year

31 December 2013
Charge for the year

31 December 2014

Net book value
31 December 2013

31 December 2014

Exploration &
evaluation
Ordubad
$000

2,684
221
—

2,905
608

3,513

—
—

—

2,905

3,513

Mining
rights
$000

41,925
—
—

41,925
—

41,925

22,260
1,649

23,909
1,697

25,606

18,016

16,319

Other
intangible
assets
$000

673
87
(292)

468
—

468

193
39

232
23

255

236

213

Total
$000

45,282
308
(292)

45,298
608

45,906

22,453
1,688

24,141
1,720

25,861

2 1 ,1 5 7

20,045

* 639,000 ounces of gold were used to determine depreciation of producing mines, mining rights and other intangible assets following compilation of a

new reserve statement for the Group (2013: 621,000 ounces).

Cost
1 January 2013
Capitalisation of interest (note 10)
Additions
Transfer to producing mines
Transfer from other intangible assets
Increase in provision for rehabilitation

31 December 2013
Additions
Transfer to producing mines
Increase in provision for rehabilitation

31 December 2014

Depreciation and impairment*
1 January 2013
Charge for the year

31 December 2013
Charge for the year

31 December 2014

Net book value
31 December 2013

31 December 2014

Plant and
equipment,
motor vehicles
and leasehold
improvements
$000

Producing
mines
$000

Assets under
construction
$000

12,712
—
6,287
—
—
—

18,999
410
—
—

19,409

6,636
1,684

8,320
2,441

75,062
—
4,506
53,244
292
2,428

135,532
11,877
11,690
799

159,898

32,333
8,998

41,331
14,877

10,761

56,208

39,072
1,894
23,032
(53,244)
—
—

10,754
3,029
(11,690)
—

2,093

—
—

—

10,679

8,648

94,201

103,690

10,754

2,093

Total
$000

126,846
1,894
33,825
—
292
2,428

165,285
15,316
—
799

181,400

38,969
10,682

49,651
17,318

66,969

115,634

114,431

* 639,000 ounces of gold were used to determine depreciation of producing mines, mining rights and other intangible assets following compilation of a

new reserve statement for the Group (2013: 621,000 ounces).

Upon commencement of production from Gosha during 2014, accumulated development costs and construction in progress
assets of Gosha totalling $7,736,000 were transferred from the category of assets under construction to the category of producing
mines. In addition, upon the completion of a new storage pond facility at Gedabek, accumulated expenses of $3,954,000 were
transferred from the category of assets under construction to the category of producing mines.

As a result of the recoverable amount analysis performed during the year, no impairment losses were recognised by the Group.

The capital commitments by the Group have been disclosed in note 25.

The Group performs an impairment analysis at each balance sheet date to ascertain that the carrying value of the Group’s
property plant and equipment is in excess of its fair value less cash to dispose (“FVLCD”). The determination of FVLCD is most
sensitive to the following key assumptions:
• Production volumes
• Commodity prices
• Discount rates
• Foreign exchange rates
• Capital and operating costs
Production volumes: In calculating the FVLCD, the production volumes incorporated into the cash flow models were 509,100
ounces of gold and 73,513 ounces of copper. Estimated production volumes are based on detailed life of mine plans.
Production volumes are dependent on a number of variables such as the recoverable quantities, the cost of the necessary
infrastructure to recover the reserves, the production costs, the contractual duration of the mining rights and the selling prices
of the quantities extracted.

Commodity prices: Forecast precious metal and commodity prices are based on management estimates. Estimated long-term
gold and copper prices of $1,250 (2013: $1,300 per ounce) and $6,600 per tonne (2013: $6,600 per tonne) respectively have been
used to estimate future revenues.

Notes to the Group financial statements continuedyear ended 31 December 2014Anglo Asian Mining PLC Annual report and accounts 201414 Property, plant and equipment continued

Discounts rates: In calculating the FVLCD, a real post-tax discount rate of 13.54 per cent. was applied to the post tax cash flows
expressed in real terms. This discount rate is derived from the Group’s post-tax weighted average cost of capital (“WACC”). The
WACC takes into account both equity and debt.

Foreign exchange rates: The only significant exchange foreign exchange rate in the cash flow model is the US dollar to
Azerbaijan Manat rate. A rate of US$1 equals 0.7845 Manat (2013: US$1 equals 0.7845 Manat) has been used in the cash flow
model.

Capital and operating costs: In calculating the cash flow model, the significant capital and operating costs are the additional
future capital cost to be incurred over the life of the mine and the cash cost per ounce of producing gold. For 2014, these costs
were $40 million and $750 to $794 per ounce respectively.

Management believes that, other than the volume of gold production, there are no changes which are reasonably possible in
any of the other assumptions discussed above, which would lead to impairment. At 31 December 2014, the recoverable amount
of the Group’s assets exceeded its carrying amount by $20 million. It is estimated that a 10 per cent. reduction in gold production,
after incorporating any consequential effects of changes on the other variables used to measure the recoverable amount, would
cause impairment of approximately $4 million.

15 Subsidiary undertakings

Anglo Asian Mining PLC is the parent and ultimate parent of the Group.

The Company’s subsidiaries at 31 December 2014 are as follows:

Name

Anglo Asian Operations Limited
Holance Holdings Limited
Anglo Asian Cayman Limited
R.V. Investment Group Services LLC
Azerbaijan International Mining Company Limited

Country of
incorporation

England and Wales
British Virgin Islands
Cayman Islands
Delaware, USA
Cayman Islands

There has been no change in subsidiary undertakings since 1 January 2014.

Primary
activity

Percentage
of holding
per cent.

Holding company
Holding company
Holding company
Mineral development
Mineral development

100
100
100
100
100

16 Inventory

Non-current assets

Cost
Ore stockpiles

Current assets

Cost
Finished goods – bullion
Finished goods – metal in concentrate
Metal in circuit
Ore stockpiles
Spare parts and consumables

Total current inventories

Total inventories at the lower of cost and net realisable value

2014
$000

2013
$000

1,670

3,314

3,211
150
18,559
1,602
9,833

33,355

35,025

1,844
471
13,035
4,579
8,813

28,742

32,056

The Group has capitalised mining costs related to high grade sulphide ore stockpiled during the year. Such stockpiles are
expected to be utilised as part of agitation leaching process. Inventory is recognised at the lower of cost or net realisable value.

Write down of unrecoverable inventory of $372,000 (2013: $384,000) was recognised during the year as other operating expense.

17 Trade and other receivables

Non-current assets

Advances for fixed asset purchases
Loans

2014
$000

1,143
162

1,305

2013
$000

352
—

352

Current assets

Gold held due to the Government of Azerbaijan
VAT refund due
Other tax receivable
Trade receivables
Prepayments and advances
Loans
Advance payment for profit tax

2014
$000

2,557
828
275
8
1,634
48
—

5,350

2013
$000

1,413
792
456
169
4,093
—
978

7,901

The carrying amount of trade and other receivables approximates to their fair value.

The VAT refund due at 31 December 2014 and 2013 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 shown in note 19.

The Group does not consider any stated trade and other receivables as past due or impaired.

18 Cash and cash equivalents

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 2014 (including short-term cash deposits)
comprised $76,000 and $246,000, respectively (2013: $175,000 and $5,314,000).

The Group’s cash and cash equivalents are mostly held in US Dollars.

19 Trade and other payables

Accruals and other payables
Trade creditors
Gold held due to the Government of Azerbaijan
Payable to the Government of Azerbaijan from copper concentrate joint sale

2014
$000

5,342
4,106
2,557
211

12,216

2013
$000

4,843
553
1,413
252

7,061

Trade creditors primarily comprise amounts outstanding for trade purchases and ongoing costs. Trade creditors are non-interest
bearing and the creditor days were 22 (2013: 25). Accruals and other payables mainly consist of accruals made for accrued but not
paid salaries, bonuses, related payroll taxes and social contributions, as well as 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.

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.

Notes to the Group financial statements continuedyear ended 31 December 2014Anglo Asian Mining PLC Annual report and accounts 201420 Interest-bearing loans and borrowings

Loans from International Bank of Azerbaijan
Loans from Amsterdam Trade Bank
Loans from Atlas Copco
Loans from Yapi Kredi Bank
Loans from Pashabank

Total interest-bearing loans and borrowings

Loans repayable in less than one year
Loans repayable in more than one year

2014
$000

13,026
36,783
789
922
1,238

52,758

16,675
36,083

2013
$000

11,501
36,697
2,823
—
—

51,021

2,031
48,990

Prior to 31 December 2013, the Group had borrowed US$49.5 million from the International Bank of Azerbaijan (“IBA”) under
a series of loan agreements. The interest rate for each agreement is 12 per cent. Repayment of the principal begins two years
from the withdrawal date for each loan contract. The loans due to IBA were partially repaid in 2013 by the proceeds of a
refinancing loan obtained from the Amsterdam Trade Bank (“ATB”). The gross amount of the loan agreements outstanding
with IBA at 31 December 2013 was $11.5 million. They are repayable between 31 March 2015 and 30 June 2018.

During 2013, the Group entered into a loan agreement with ATB for $37.0 million for the purpose of refinancing its loans from
IBA. The interest rate is 8.25 per cent. per annum plus the three months LIBOR rate. The loan principal repayments start in
February 2016 which is 16 months subsequent to loan principal drawdown. According to the terms of a pledge agreement
signed with ATB, the Group has pledged to ATB its present and future claims against MKS Finance SA, the Group’s sole buyer
of gold doré until termination of the loan agreement.

During 2014, the Group opened a credit facility with the International Bank of Azerbaijan in the amount of $1,500,000 with
an interest rate of 12 per cent. for a one year period. As of 31 December 2014, this credit facility was fully utilised. This facility
was increased by $2 million subsequent to 31 December 2014. The Group entered into loan agreements with Yapi Kredi Bank
Azerbaijan on 17 November 2014 and 19 November 2014 for amounts of $550,000 and $450,000 respectively, with a 14 per cent.
interest rate for a one year period. An amount of $78,000 was repaid during 2014 in respect of these loan agreements. On 4 July 2014,
the Group entered into a credit facility to finance letters of credit with Pashabank in the amount of $3,059,000 (AZN 2,400,000)
for the financing of cyanide purchases. This credit facility is valid until 7 January 2016. As of 31 December 2014, $988,000 was
payable to Pashabank in respect of this credit facility. The Group also entered into a credit facility to finance a letter of credit
with Pashabank in the amount $2,500,000 with 6 per cent. interest for the unused portion of, and 6.8 per cent. plus one month
LIBOR for the used portion of the credit facility. The purpose of this credit facility was to finance the construction of the small
scale flotation plant. As of 31 December 2014, $250,000 was utilised from this credit facility from the Pashabank. The Group
has repaid $1,879,340 of its loan from Atlas Copco during 2014.

21 Provision for rehabilitation

1 January
Change in estimate
Accretion expense
Effect of passage of time and changes in discount rate

31 December

2014
$000

7,357
221
469
577

8,624

2013
$000

4,623
2,239
306
189

7,357

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. This 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 undiscounted liability
for rehabilitation at 31 December 2014 was $8,892,000 (2013: $8,638,000). The undiscounted liability was discounted using a
risk free rate adjusted to the risks specific to the liability of 4.77 per cent. (2013: 6.33 per cent.). Expenditures on restoration
and rehabilitation works are expected between 2021 and 2022.

Financial risk management objectives and policies
The Group’s principal financial instruments comprise cash and cash equivalents, loans and letters of credit. The main purpose
of these financial instruments is to finance the Group operations. The Group has other financial instruments, such as 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 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 2014 and 2013 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 consists of debt, which includes the borrowings disclosed in note 20, cash and cash
equivalents 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 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 Alternative Investment Market, part of the London Stock Exchange, and loans from the
International Bank of Azerbaijan, Amsterdam Trade Bank (“ATB”) and other banks in Azerbaijan. 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.

The Group is not subject to externally imposed capital requirements other than the limit for financial indebtedness with ATB
which is that the Group will not incur financial indebtedness of more than $30,000,000 without written prior approval from ATB.
The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group’s policy
is to keep the gearing ratio below 70 per cent. The Group defines net debt as interest-bearing loans and borrowings less cash
and cash equivalents.

Interest-bearing loans and borrowings (note 20)
Less cash and cash equivalents (note 18)

Net debt
Equity

Capital and net debt

Gearing ratio (per cent.)

2014
$000

52,758
(322)

52,436
85,916

138,352

2013
$000

51,021
(5,489)

45,532
96,750

142,282

Interest rate risk
The Group’s cash deposits, letters of credit, borrowings and interest-bearing loans are at a fixed rate of interest except
for three month LIBOR embedded in interest with ATB.

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 2014 and 2013.

Notes to the Group financial statements continuedyear ended 31 December 2014Anglo Asian Mining PLC Annual report and accounts 201422 Financial instruments continued
Interest rate sensitivity analysis
Interest rate sensitivity of the Group from reasonably possible movement in the three month LIBOR rate is limited to $187,000 (2013:
$185,000) negative and positive impact on the Group’s profit before tax. Assumed movement is based on 0.5 per cent. increase
or decrease in LIBOR on interest bearing loans from ATB.

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. Included
in note 20 is a description of additional undrawn facilities that the Group has at its disposal to further reduce liquidity risk.

The table below summarises the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments.

Year ended 31 December 2014

Interest-bearing loans
and borrowings
Trade and other payables

Year ended 31 December 2013

Interest-bearing loans
and borrowings
Trade and other payables

On
demand
$000

Less than
3 months
$000

—
458

458

5,014
11,758

16,772

On
demand
$000

Less than
3 months
$000

—
1,664

1,664

1,704
5,313

7,017

3 to 12
months
$000

15,705
—

15,705

3 to 12
months
$000

5,048
—

5,048

1 to 5
years
$000

40,714
—

40,714

1 to 5
years
$000

57,842
—

57,842

> 5 years
$000

—
—

—

> 5 years
$000

—
—

—

Total
$000

61,433
12,216

73,649

Total
$000

64,594
6,977

71,571

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. Trade receivables consist of amounts due to the Group from sales of gold and silver. All sales of gold and silver
bullion are made to MKS Finance SA, a Switzerland-based gold refinery, and copper concentrate to Industrial Minerals SA and
Glencore International AG. Due to the nature of the customers, the board of directors does not feel 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:

UK Sterling
Azerbaijan Manats
Other

Liabilities

Assets

2014
$000

330
4,127
160

2013
$000

53
3,679
160

2014
$000

31
1,439
—

2013
$000

69
1,851
2

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 5.73 per cent., 6.23 per cent. and 35 per cent. (2013: 7.5 per cent., 9.41 per cent.
and 1.37 per cent.) increase and 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 and 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.

Effect on (loss)/profit before tax

UK Sterling impact

Azerbaijan Manat impact

Euro impact

2014
$000

2013
$000

2014
$000

941

2013
$000

2014
$000

2013
$000

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 board of directors monitors both the spot and forward price of these regularly.

A 10 per cent. decrease in gold price would result in a reduction in revenue of $6,415 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 $14
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 $330 and a 10 per cent. increase in copper price would have an equal and opposite effect.

Fair value of the Group’s interest bearing loans and borrowings
The Group has estimated the fair value of its interest bearing loans and borrowings at $57.8 million which equals the carrying
value of those liabilities in its balance sheet. This valuation has been carried out using level 3 valuation techniques (significant
unobservable inputs).

23 Equity

Authorised
Ordinary shares of 1 pence each

Ordinary shares issued and fully paid
1 January and 31 December 2013
Exercise of share options
Shares issued in lieu of cash payment

31 December 2014

2014

2013

Number

600,000,000

6,000,000

600,000,000

6,000,000

$000

111,397,307
150,000
136,665

111,683,972

1,973
3
2

1,978

Fully paid ordinary shares carry one vote per share and carry the right to dividends.

Share options
The Group has a share option scheme under which options to subscribe for the Company’s shares have been granted to certain
executives and senior employees (note 24).

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.

Retained earnings
Retained earnings represent the cumulative profit/(loss) of the Group attributable to the equity shareholders.

Notes to the Group financial statements continuedyear ended 31 December 2014Anglo Asian Mining PLC Annual report and accounts 201424 Share-based payment

The Group operates a share option scheme for directors and senior employees of the Group. The vesting periods are up
to three years. 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:

2014

2013

1 January
Granted during the year
Forfeited during the year
Exercised during the year

31 December

The following share options were exercisable at 31 December 2014:

Number

3,001,684
300,000
(350,000)
(150,000)

2,801,684

2014

Number

2,501,684

WAEP
Pence

38
15
46
11

WAEP
Pence

Number

3,101,684
50,000
(150,000)
—

3,001,684

2013

Number

2,701,684

WAEP
Pence

34
22
35
—

WAEP
Pence

The weighted average remaining contractual life of the share options outstanding at 31 December 2014 was 2 years (2013: 5 years)
and the range of their exercise prices was 12 pence to 97 pence (2013: 11.5 pence to 97 pence).

The weighted average fair value of the share options granted during the year was £0.06 (US$0.10) (2013: £0.11 (US$0.18)).

Share options are valued using the Black-Scholes model. The assumptions used to value the share options issued in the years
ended 31 December are as follows:

Weighted average share price (pence)
Weighted average exercise price (pence)
Expected volatility for six months' vesting period option (per cent.)
Expected volatility for one year's vesting period option (per cent.)
Expected volatility for two years' vesting period option (per cent.)
Expected life for six months' vesting period option (years)
Risk-free rate (per cent.)

2014

15
15
—
58
58
2
1.43

2013

22
22
81
—
—
2
0.82

Expected volatility was determined by calculating the historical volatility of the Company’s share price over the previous one and two
years for share options with one and two year vesting periods, respectively. The expected life used in the model has been adjusted,
based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

The Group recognised total expense related to equity-settled share-based payment transactions for the year ended
31 December 2014 of $16,000 (2013: $45,000).

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www.angloasianmining.com Annual report and accounts 2014Anglo Asian Mining PLCChairman’s statementStrategic reportFinancial reviewAnnual general meetingCorporate governance

25 Contingencies and commitments

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
contains various provisions relating to the obligations of the R.V. Investment Group Services LLC ("RVIG"), a wholly owned subsidiary of
the Company, with regards to the exploration and development programme, preparation and timely submission of reports to the
Government, compliance with environmental and ecological requirements, etc. 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 mining licence on Gedabek expires in March 2022, with the option to extend the licence by ten years conditional upon
satisfaction of certain requirements stipulated in the PSA.

RVIG is also required to comply with the clauses contained in the PSA relating to environmental damage. The Directors believe
RVIG is substantially in compliance with the environmental clauses contained in the PSA.

Based on the pledge agreement signed on 24 July 2013 the Group is a guarantor for one of its suppliers, Azerinterpartlayish-X
MMC, for a loan taken from the International Bank of Azerbaijan in amount of $500,000 for 36 months.

There were no significant operating lease or capital lease commitments at 31 December 2014 (2013: $nil).

26 Related party transactions

Trading transactions
During the years ended 31 December 2013 and 2014, 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) Reza Vaziri had an indirect interest in the lease of the Company's office in Baku, the Republic of Azerbaijan. The office in Baku
was sold during the year ended 31 December 2014. The cost of the lease for the year ended 31 December 2014 was $48,000
(2013: $94,000).

b) Shares issued to directors are disclosed in the Report on directors' remuneration on pages 18 and 19.

c) Remuneration paid to directors is disclosed in the Report on directors' remuneration on pages 18 and 19.

d) During the year ended 31 December 2014, total payments of $1,182,000 (2013: $2,589,000) were made for equipment and spare
parts purchased from Proses Muhendislik Danismanlik Inshaat ve Tasarim Anonim Shirket, the entity in which the Chief Technical
Officer of Azerbaijan International Mining Company has a direct ownership interest.

At 31 December 2014 there is an advance payment in relation to the above related party transaction of $65,000 (2013: $66,000).

All of the above transactions were made on arm’s length terms.

27 Subsequent events

The following subsequent events relate to the period from 31 December 2014 to the date of approval of the Group financial
statements on 27 May 2015.

Devaluation of the Azerbaijan Manat
On 21 February 2015, the Azerbaijan Manat (“AZN”) was devalued against the US Dollar and other major currencies by approximately
34 per cent. The exchange rates before and after devaluation were AZN 0.786 and AZN 1.050 to $1, respectively. In light of this
devaluation, the Group has taken precautionary measures it considered necessary in order to support the sustainability and
development of its business in the foreseeable future.

Loan from major shareholder
On 22 May 2015, Reza Vaziri, President and chief executive officer of the Company agreed to provide a loan facility to the
Company. The principal terms of the loan were as follows:
• Facility up to $4 million.
• Term of loan is until 8 January 2016.
• Interest of 10 per cent. per annum payable in full at the end of the term.
• Early repayment allowed with approval of both the Company and Reza Vaziri.
The Company intends to use the loan for working capital purposes.

Notes to the Group financial statements continuedyear ended 31 December 2014Anglo Asian Mining PLC Annual report and accounts 2014Company balance sheet
31 December 2014

Non-current assets
Tangible assets
Investments
Debtors – amounts falling due after one year

Current assets
Debtors – amounts falling due within one year
Cash at bank and in hand

Creditors: trade creditors and accruals

Net current assets

Net assets

Share capital and reserves
Called up share capital
Share premium account
Accumulated loss
Capital employed

Notes

3
4
6

6
7

10, 11
11
11

2014
$000

71
1,325
162

1,558

18,453
125

18,578

(605)

17,973

19,531

1,978
32,246
(14,693)
19,531

2013
$000

—
1,325
—

1,325

19,127
895

20,022

(852)

19,170

20,495

1,973
32,173
(13,651)
20,495

These financial statements were approved by the board of directors on 27 May 2015 and were signed on its behalf by:

Reza Vaziri
Chief Executive

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year ended 31 December 2014

1 Significant accounting policies

a) Basis of preparation
The parent company financial statements of Anglo Asian Mining PLC (the "Company") are presented as required
by the Companies Act 2006 and were approved for issue on 27 May 2015.

The financial statements are prepared under the historical cost convention and are prepared in accordance with
United Kingdom Generally Accepted Accounting Practice.

No profit and loss account is presented by the Company as permitted by Section 408 of the Companies Act 2006
and the Company has taken the exemption under FRS 1 not to present a cash flow statement.

The Company has taken advantage of the exemption in paragraph 2D of FRS 29 ‘Financial Instruments: Disclosures’ and
has not disclosed information required by that standard, as the Group’s consolidated financial statements, in which the
Company is included, provide equivalent disclosures for the Group under IFRS 7 ‘Financial Instruments: Disclosures’.

The Company has taken advantage of the exemption under FRS 8 not to disclose transactions with wholly owned subsidiaries.

b) Tangible assets
Tangible assets are stated at cost less accumulated depreciation and accumulated impairment losses. Such cost included
costs directly attributable to making the asset capable of operating as intended.

Depreciation is provided on cost in annual instalments over the estimated useful lives of assets which are reviewed annually.
The tangible assets mainly represented by office and computer equipment are depreciated on a straight line basis over
four years.

The carrying values of tangible fixed assets are reviewed for impairment when events or changes in circumstances indicate
that the carrying amount may not be recoverable.

c) Investments
Investments in subsidiaries are stated at cost less, where appropriate, provisions for impairment. Impairment is tested
annually by comparing the net assets of the underlying subsidiary to the carrying value of the investment, with any shortfall
provided for during the period.

d) Leased assets
Rentals where substantially all of the benefits and risks of ownership remain with the lessor are charged to the profit and loss
account on a straight line basis over the period of the lease.

e) Debtors
Debtors are recognised and carried at the lower of their original invoiced value and recoverable amount. Provision is made
when there is objective evidence that the Company will not be able to recover the balances in full.

f) Deferred taxation
Deferred tax assets are not recognised in respect of timing differences relating to tax losses where there is insufficient
evidence that the asset will be recovered.

g) Share-based payments
The Company has applied the requirements of FRS 20 ‘Share-based Payment’ from 1 January 2006. In accordance with the
transitional provisions, FRS 20 has been applied to all grants of equity instruments after 7 November 2002 that were unvested
as of 1 January 2006. Application of this standard has been applied retrospectively.

The Company issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are
measured at fair value at the date of grant. The fair value determined at the date of the equity-settled share-based payments
is expensed on a straight line basis over the vesting period, based on the Company’s estimate of shares that will eventually vest.

Fair value is measured by use of the Black-Scholes pricing model. The expected lives used in the model have been adjusted,
based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

2 Loss attributable to members of the parent company

The loss dealt with in the financial statements of the parent company is $1,081,000 (2013: $1,509,000).

Anglo Asian Mining PLC Annual report and accounts 20143 Tangible assets

Cost
1 January 2014
Additions

31 December 2014

Accumulated depreciation
1 January and 31 December 2014

Net book value
31 December 2013

31 December 2014

Investments

Shares in subsidiary undertakings
Anglo Asian Operations Limited

5 Subsidiaries

Anglo Asian Mining PLC is the parent and ultimate parent of the Group.

The Company’s subsidiaries at 31 December 2014 are as follows:

Name

Anglo Asian Operations Limited
Holance Holdings Limited
Anglo Asian Cayman Limited
R.V. Investment Group Services LLC
Azerbaijan International Mining Company Limited

Country of
incorporation

England and Wales
British Virgin Islands
Cayman Islands
Delaware, USA
Cayman Islands

There has been no change in subsidiary undertakings since 1 January 2014.

6 Debtors

Amounts falling due after one year
Loans

Amounts falling due within one year
Prepayments
Loans
HMRC
Amounts owed by subsidiary undertakings

Office
equipment
$000

95
71

166

—

2013
$000

2014
$000

1,325

Primary
activity

Percentage
of holding
Per cent.

Holding company
Holding company
Holding company
Mineral development
Mineral development

2014
$000

162

2014
$000

28
48
—
18,377

18,453

100
100
100
100
100

2013
$000

—

2013
$000

22
196
4
18,905

19,127

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Notes to the Company financial statements continued
year ended 31 December 2014

7 Cash

Cash and cash equivalents comprise cash held by the Company and short-term bank deposits with an original maturity of three
months or less. The carrying amount of these assets approximates to their fair value.

There are no restrictions over the access to, and use of, the Company’s bank and cash balances, other than those that
customarily relate to periodic short-term deposits.

8 Creditors

Amounts falling due within one year
Trade creditors
Accruals
HMRC

9 Deferred taxation

The elements of unrecognised deferred taxation are as follows:
Tax losses

Unrecognised deferred tax asset

2014
$000

147
429
29

605

2014
$000

2,187

2013
$000

32
820
—

852

2013
$000

2,104

A deferred tax asset has not been recognised in respect of timing differences relating to tax losses as there is insufficient
evidence that the asset will be recovered. None of the assets are recognised. The asset would be recovered if suitable
taxable profits were generated in future periods.

2014

2013

Number

600,000,000

6,000,000

600,000,000

6,000,000

$000

111,397,307
150,000
136,665

111,683,972

1,973
3
2

1,978

Accumulated
loss
$000

Shareholders’
funds
$000

(13,651)
(1,082)
—
40

20,495
(1,082)
78
40

19,531

Share
premium
account
$000

32,173
—
73
—

Share
capital
$000

1,973
—
5
—

1,978

32,246

(14,693)

10 Called up share capital

Authorised
Ordinary shares of 1 pence each

Ordinary shares issued and fully paid
1 January and 31 December 2013
Exercise of share options
Shares issued in lieu of cash payment

31 December 2014

11 Reconciliation of shareholders’ funds and movements on reserves

1 January 2014
Loss for the year
Shares issued
Share-based payment

31 December 2014

Anglo Asian Mining PLC Annual report and accounts 201412 Share-based payments

Equity-settled share option scheme
Details of the Company’s equity-settled share option scheme are given in note 26 to the Group financial statements.

13 Subsequent events

No significant events took place during the period after the balance sheet date.

14 Auditor’s remuneration

The Company paid $107,000 (2013: $147,000) to its auditor in respect of the audit of the financial statements of the Company.
Fees paid to Ernst & Young LLP and its associates for non-audit services to the Company itself are not disclosed in the
individual accounts of Anglo Asian Mining PLC because Group financial statements are prepared which are required to disclose
such fees on a consolidated basis.

Anglo Asian Mining PLC
(Incorporated and registered in England and Wales under the Companies Act 1985 with registered number 5227012)

Directors
Khosrow Zamani (Non-executive chairman)
John Monhemius
Richard Round
John Sununu
Reza Vaziri

3 June 2015

Registered office
7 Devonshire Square
Cutlers Gardens
London EC2M 4YH

To the holders of ordinary shares and, for information only, to the holders of share options of Anglo Asian Mining PLC
(the "Company").

Dear shareholder
Accompanying this letter you will find the Company’s annual report and accounts for the year to 31 December 2014 together with
the attached notice of the Annual General Meeting to be held on 29 June 2015 (the "Meeting") and a form of proxy. This letter
is to explain the background to some of the resolutions to be put to shareholders at the Meeting.

Resolution 3 – Re-election of the Director retiring by rotation
Under the Company’s articles of association, one third of the directors of the board of directors (or, if the number of directors is
not three or a multiple of three, the number nearest to and not exceeding one third) must retire at each Annual General Meeting
and may offer themselves for re-election to the board of directors. This year John Monhemius is retiring in accordance with the
Company’s articles of association and is seeking re-election at the Meeting.

Resolution 4 – Authority to allot shares
This ordinary resolution deals with the renewal of the directors’ authority to allot new Ordinary Shares during the course of the
year in order to facilitate the business of the Company and renews the equivalent authority granted at last year’s Annual General
Meeting which expires at the end of the Meeting.

The current ABI guidelines state that ABI members will permit, and treat as routine, resolutions seeking authority to allot shares
representing up to two-thirds of the Company’s issued share capital, but on the basis that any authority to allot shares exceeding
one-third of the Company’s issued share capital can only be used to allot shares pursuant to a fully pre-emptive rights issue.

In accordance with these guidelines, resolution 4 proposes that directors be granted authority to allot shares in the capital of
the Company up to a maximum amount representing the guideline limit of two-thirds of the Company’s issued ordinary share
capital as at 27 May 2015 (the latest practicable date prior to publication of this letter). Of this amount, half can only be allotted
pursuant to a rights issue.

The authority will expire on the earlier of: (i) the conclusion of the next Annual General Meeting; and (ii) 30 June 2016 (being six months
after the Company’s accounting reference date).

Resolution 5 – Disapplication of statutory pre-emption rights
This resolution is a special resolution that renews the authority given at last year’s Annual General Meeting and which seeks
to give the directors the authority to allot securities for cash on a pre-emptive basis within the limits of the authority set out in
resolution 4 and on a non pre-emptive basis up to a maximum of 10 per cent. of the issued ordinary share capital of the Company.
The directors believe that it is in the best interests of the shareholders that the directors should have the right to allot relevant
securities for cash on a pre-emptive basis and a limited authority to allot relevant securities for cash on a non-pre-emptive basis.

Action to be taken
Whether or not you intend to be present at the Meeting, you are requested to complete the reply-paid form of proxy in accordance
with its instructions and return it to the address given on the form of proxy.

Recommendation
The directors consider all the resolutions to be put to the Meeting to be in the best interests of the Company and its shareholders
as a whole and are most likely to promote the success of the Company for the benefit of its shareholders as a whole. Accordingly
the directors unanimously recommend that you vote in favour of the proposed resolutions, as they intend to do in respect of
their own beneficial shareholdings.

We look forward to as many of you as possible attending the Meeting.

Yours faithfully

Khosrow Zamani
Non-executive chairman

Anglo Asian Mining PLC Annual report and accounts 2014
Notice of annual general meeting of shareholders

NOTICE IS HEREBY GIVEN that the annual general meeting (the "AGM") of the shareholders of Anglo Asian Mining plc (the "Company")
will be held on 29 June 2015 at 11.00 am at the offices of Squire Patton Boggs (UK) LLP, 7 Devonshire Square, Cutlers Gardens London EC2M 4YH
for the purpose of considering and, if thought fit, passing the following resolutions, of which resolutions 1 to 4 (inclusive) will be
proposed as ordinary resolutions and resolution 5 will be proposed as a special resolution:

Ordinary resolutions
1

THAT the consolidated financial statements and the reports of the board of directors and of the auditors for the year ended
31 December 2014 be received;

THAT Ernst & Young LLP be re-appointed as the auditors of the Company and that the board of directors be authorised
to fix their remuneration;

THAT John Monhemius be re-elected as a director, having retired by rotation in accordance with the Company’s articles
of association;

THAT the directors be hereby authorised generally and unconditionally pursuant to Section 551 of the Companies Act 2006
(the ‘Act’) to exercise all powers of the Company to allot equity securities (as defined in Section 560 of the Act):

(a) up to an aggregate nominal amount of £372,279*; and

(b) up to an aggregate nominal amount of £744,559** (including within such limit any equity securities issued under paragraph

(a) above) in connection with an offer by way of a rights issue:

(i) to ordinary shareholders in proportion (as nearly as may be practicable) to their existing holdings; and

(ii) to holders of other equity securities as required by the rights of those securities or as the directors otherwise consider necessary,

and so that the directors may impose any limits or restrictions and make any arrangements which they consider
necessary or appropriate to deal with any treasury shares, fractional entitlements, record dates, legal, regulatory
or practical problems in, or under the laws of, any territory or any matter.

The authority granted by this resolution shall (unless previously revoked, varied or extended by the Company in general meeting)
expire on the conclusion of the next AGM of the Company after the passing of this resolution or, if earlier, on 30 June 2016, save
that the Company may at any time before such expiry make an offer or agreement which would or might require equity securities
to be allotted after such expiry and the directors may allot equity securities in pursuance of such an offer or agreement as if
this authority had not expired.

Special resolution
5

THAT subject to the passing of resolution 4 above the directors be hereby empowered pursuant to Section 570 and Section 573
of the Act to allot equity securities (as defined by Section 560 of the Act) wholly for cash and/or to sell or transfer shares held
by the Company in treasury ("Treasury Shares") as the directors deem appropriate (in the case of allotments, pursuant to
the authority conferred by resolution 4 above) as if Section 561(1) of the Act did not apply to any such allotment, provided
that this power shall be limited to the allotment (or, in the case of Treasury Shares, the sale or transfer) of equity securities:

(a) in connection with an offer of such securities by way of rights to holders of ordinary shares in proportion (as nearly as
may be practicable) to their respective holdings of such shares, but subject to such exclusions or other arrangements as
the Directors may deem necessary or expedient in relation to fractional entitlements or any legal or practical problems
under the laws of any territory, or the requirements of any regulatory body or stock exchange or otherwise; and

(b) otherwise than pursuant to sub-paragraph (a) of this resolution up to an aggregate nominal amount of £111,683†,

and provided that this authority shall (unless previously revoked, varied or extended by the Company in general meeting) expire
on the conclusion of the Company’s next annual general meeting or, if earlier, 30 June 2016 save that the Company may, at any time
before such expiry make an offer or agreement which would or might require equity securities to be allotted (or in the case of Treasury
Shares, sold or transferred) after such expiry and the Directors may allot (or in the case of Treasury Shares, sell or transfer) equity
securities in pursuance of any such offer or agreement notwithstanding that the power conferred hereby has expired.

By order of the board of directors

Fisher Secretaries Limited
Acre House
11/15 William Road
London NW1 3ER
United Kingdom
3 June 2015

* Calculated as one third of the nominal value of the total issued ordinary share capital (i.e. 111,683,972 shares of an aggregate nominal value £1,116,839.72).
** Calculated as two thirds of the nominal value of the total issued ordinary share capital (£1,116,839.72).
† 10 per cent. of the ordinary issued share capital of the Company (£1,116,839.72).

Notes

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Notice of annual general meeting of shareholders
continued

A member entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to exercise any of their rights to
attend, speak and vote on their behalf at the AGM. A proxy need not be a member of the Company. Where more than one proxy
is appointed, each proxy must be appointed for different shares. A proxy form is enclosed. Completion and return of a proxy
form will not preclude a member from attending and voting at the AGM should he subsequently decide to do so. To be effective,
the proxy form and any power of attorney or other such instrument (if any) under which it is signed or a notarially certified copy
of such power of attorney must be deposited at the offices of Capita Asset Services, PXS, 34 Beckenham Road, Kent BR3 4TU not
later than 11am on 26 June 2015.

In accordance with Regulation 41 of the Uncertificated Securities Regulations 2001, only those members entered on the register
of members of the Company at 6.00pm on 26 June 2015 shall be entitled to vote in respect of shares registered in their name at
that time. Changes to the register of members after 6.00pm on 26 June 2015 shall be disregarded in determining the rights of
any person to attend or vote at the AGM.

Anglo Asian Mining PLC Annual report and accounts 2014Company information

Azerbaijan office (principal place of business)
20,521 Yard
Huseyn Javid Avenue
Baku, AZ 1073
The Republic of Azerbaijan

Secretary
Fisher Secretaries Limited
Acre House
11/15 William Road
London NW1 3ER
United Kingdom

Registered office
7 Devonshire Square
Cutlers Gardens
London EC2M 4YH
United Kingdom

Website
www.angloasianmining.com

Company number
5227012
Registered in England and Wales

VAT registration number
872 3197 09

Bankers – United Kingdom
HSBC
79 Piccadilly
London W1J 8EU
United Kingdom

Bankers – Azerbaijan
International Bank of Azerbaijan
67 Nizami Str.
Baku
The Republic of Azerbaijan

Yapi Kredi Bank Azerbaijan JSC
32 J. Jabbarly Str.
Baku
The Republic of Azerbaijan

Solicitors – United Kingdom
Squire Patton Boggs (UK) LLP
7 Devonshire Square
Cutlers Gardens
London EC2M 4YH
United Kingdom

Solicitors – Azerbaijan
Nazal Consulting LLC
36 Islam Safarly Str.
Baku
The Republic of Azerbaijan

Auditor
Ernst & Young LLP
1 More London Place
London SE1 2AF
United Kingdom

Nominated adviser and broker
SP Angel Corporate Finance LLP
Prince Frederick House
35–39 Maddox Street
London W1S 2PP
United Kingdom

Financial PR advisers
St Brides Media and Finance Limited
3 St. Michael’s Alley
London EC3V 9DS
United Kingdom

Registrar
Capita Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
United Kingdom

Anglo Asian Mining PLC
20, 521 Yard
Huseyn Javid Avenue
Baku, AZ 1073
The Republic of Azerbaijan
Tel +994 12 596 3350
Fax +994 12 596 3354
www.angloasianmining.com