Anglo Asian Mining PLC Annual Report 2015

FY2015 Annual Report · Anglo Asian Mining PLC

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Anglo Asian Mining PLC
Annual report and accounts 2015

Anglo Asian Mining PLC is listed on AIM and has
a portfolio of gold, copper and silver exploration
and production assets 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
4 New flotation plant

Chairman’s statement
5 Chairman’s statement

Strategic report
7 Strategic report

Financial review
13 Financial review

Corporate governance
16 Board of directors
17 Directors’ report
21 Report on directors’ remuneration
23 Statement of directors’ responsibilities
24 Corporate governance

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

Discover more online

For the latest news and
investor information, visit
the Company’s website at
www.angloasianmining.com

Company financial statements
53 Company statement of financial position
54 Company statement of changes in equity
55 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 2015

Financial highlights

Revenue

$78.1m

(2014: $68.0m)

Average cash operating cost net of
by‑product credits

$724 per oz

(2014: $971 per oz)

Loss before taxation

$8.9m

(2014: $14.4m)

Operating cash flow before movements
in working capital

$18.6m

(2014: $10.6m)

Net debt calculated as aggregate
of loans and borrowings

$49.0m

(2014: $52.4m)

Operational highlights

gold production

• Strong production performance in 2015 with record
• Total gold production in 2015 of 72,032 ounces, a 19 per cent.
• Gold sales in 2015 of 63,924 ounces (2014: 50,615 ounces)

increase compared to 60,285 ounces produced in 2014

completed at an average of $1,161 per ounce (2014: $1,267
per ounce)

• Flotation plant commenced production in the fourth

quarter of 2015 with 578 dry metric tonnes of copper
concentrate produced containing 130 tonnes of copper,
335 ounces of gold and 9,264 ounces of silver

• Gadir underground mine commenced production in

2015 with 37,880 tonnes of ore mined with an average
grade of 7.98 grammes of gold per tonne

• Gold produced at an average cash operating cost net

of by-product credits of $724 per ounce (2014: $971 per
ounce). Lower average cash operating cost due to
increase in production and lower costs

increase compared to 784 tonnes produced in 2014

• Copper production for 2015 was 969 tonnes, a 24 per cent.
• Silver production totalled 28,628 ounces, an eight per cent.

decrease compared to 31,177 ounces produced in 2014
due to changing mineralogy

• Production target of 73,000 to 77,000 ounces of gold

and 1,700 to 2,100 tonnes of copper for full year 2016

New haul truck working in the Gadir mine.

Annual report and accounts 2015

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

The Company’s main asset is its Gedabek open pit mine, Azerbaijan’s
first gold mine in modern times. Gadir, an underground mine,
is also situated at Gedabek. The Company also owns Gosha,
an underground mine 50 kilometres from 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. The Company produces a copper and precious metal concentrate
from its flotation plant, which commenced production in 2015. A copper and precious metal
concentrate is also produced by SART processing.

Gedabek
Gedabek is the Company’s main mine site and the location of its processing operations. The Company mines from
both open pit and underground mines. Situated at Gedabek is the Company’s agitation leaching plant, SART processing
facility and flotation plant. In 2015, 72,032 ounces of gold, 28,628 ounces of silver and 969 tonnes of copper were produced.

Mining in the Gedabek open pit.

View of the agitation leaching plant and completed flotation plant.

Agitation leach tanks.

Inside of the SART plant.

Anglo Asian Mining PLC Annual report and accounts 2015Anglo Asian Mining PLC

Gadir
Gadir is a new underground mine at the Gedabek site which commenced production in June 2015. 37,880 tonnes
of ore were mined at an average grade of 7.98 grammes per tonne in 2015.

Entrance to the Gadir mine.

Inside of the Gadir decline showing wall
and roof supports.

Front view of new MT2010 mine truck.

Rear view of new MT2010 mine truck.

Underground worker at rock face.

New ST7 Scooptram loader.

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 2015

Anglo Asian Mining PLCChairman’s statementStrategic reportFinancial reviewCorporate governanceGroup financial statementsCompany financial statementsAnnual general meetingAnglo Asian Mining PLC

New flotation plant
The Company’s new flotation plant started production in November 2015. The plant is producing a copper and
precious metal concentrate. Feed for the flotation plant can be either tailings from the agitation leaching plant
or fresh ore initially fed through a crushing and grinding circuit.

The flotation plant currently comprises two grinding mills, two conditioning tanks and six flotation cells, a thickener, eight cleaner cells,
a concentrate collection tank and two filter presses. There are also an additional eight tanks for reagent handling and 12 smaller flotation
cells which were constructed as part of the initial project to build a pilot plant.

The flotation plant’s first full quarter of operation was the three months to 31 March 2016. During this quarter, 108,381 dry metric tonnes
of agitation leaching plant tailing were processed by the plant. The gross metal contained within the feedstock was 3,146 ounces of gold,
64,612 ounces of silver and 570 tonnes of copper. 1,458 dry metric tonnes of copper concentrate were produced containing 777 ounces
of gold, 24,595 ounces of silver and 251 tonnes of copper.

Outside view of the flotation plant.

Tailings feed pipe from the agitation leaching plant (rear). The
pipe to the main tailings disposal pipe is in the foreground.

Inside of the flotation plant. The two conditioning tanks and six flotation
cells are to the right and the 12 smaller flotation cells are to the left.

Two of the smaller flotation cells in production. On top of the two cells
can be seen the ‘froth’ which is dewatered to form the concentrate.

The two filter presses which are used to produce the final concentrate.

Bags of concentrate awaiting shipment to the buyer.

Anglo Asian Mining PLC Annual report and accounts 2015Chairman’s statement
Khosrow Zamani, Non-executive chairman

Anglo Asian is now able to deliver
long-term, sustainable value
to shareholders...

2015 was another important year for Anglo
Asian where we demonstrated our ability
as a mid-tier gold, copper and silver
producer. I believe it marks the first stage
in turning around your Company. The
performance of our assets in Azerbaijan
improved and we delivered record gold
production of 72,032 ounces. With
production increasing at Gedabek,
together with the successful launch of our
flotation plant in the fourth quarter of
2015, Anglo Asian is now able to deliver
long-term, sustainable value to
shareholders even during periods of low
metal prices such as seen during 2015. The
increase in metal prices seen since the
beginning of 2016, together with the cost
reduction and efficiency initiatives and the
devaluation of the Azerbaijan Manat, will
further enhance Anglo Asian’s performance
in the future.

Review of 2015 and 2016 to date
We reported total gold production for 2015 of
72,032 ounces, a 19 per cent. increase over 2014
of 60,285 ounces; copper production in 2015
was 969 tonnes, a 24 per cent. increase over
2014 of 784 tonnes. Production of silver,
however, totalled 28,628 ounces for 2015,
which was an 8 per cent. decrease over 2014
of 31,177 ounces, due to changes in the
mineralogy of the ore. Whilst our gold and
copper production in 2015 increased
substantially, the global environment for
mining companies remained poor. The
difficulties experienced by mining
companies in 2015 resulting from the low
prices of many commodities were often
headline news. Average gold and copper
prices in 2015 were $1,160 per ounce and
$5,494 per tonne respectively which were
8 per cent. and 20 per cent. lower
respectively than in 2014.

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2016

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Gold and silver prices since 1 January 2015 showing recent increase in 2016.

The ore mined at Gedabek was found to be
noticeably harder in late 2015 and early 2016
and as a result the Company is planning to
commission a second semi-autogenous
(“SAG”) mill in the agitation leaching plant
in the third quarter of 2016 to improve
productivity. This new SAG mill will
eventually be redeployed in an expanded
flotation plant. In March 2016, a new
contract was signed with Industrial Minerals
S.A. for the sale of copper concentrate
produced from the flotation plant. This
contract is on the same terms as the
Company’s existing contract with the
exception of improved terms for any penalty
due to the concentrate containing zinc.

The increased gold production beneficially
impacted our financial results for the year.
The impact of the first revenues from
flotation was limited in 2015, but is expected
to enhance the results from 2016 onwards.
Revenues increased from $68.0 million to
$78.1 million and our cash costs reduced
from $971 to $724 per ounce which resulted
in the operating loss reducing to $3.2 million
from $8.9 million in 2014. Cash provided by
operating activities increased in the year
to $22.9 million from $14.8 million in 2014.
We serviced our debts on time with net
principal and interest payments made in
the year totalling $23.1 million.

We continue to work on improving the
efficiency of our production and to lower
costs and in particular the management of
mining contractors. Cyanide is now also being
partially sourced from Georgia at lower prices
and its shorter delivery lead time is enabling
cyanide stocks to be reduced.

www.angloasianmining.com Annual report and accounts 2015Financial 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 meeting

Appreciation
I would like to take this opportunity to
thank our Anglo Asian senior management
team and employees, partners, the
Government of Azerbaijan, advisers and
fellow directors 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.
I would also like to especially thank our
shareholders for their invaluable support
as we look forward to a successful 2016.

Khosrow Zamani
Non-executive chairman
24 May 2016

Chairman’s statement continued
Khosrow Zamani, Non-executive chairman

lined trenches to capture any seepage
should any pipe rupture.

We sell our products in US Dollars; however,
a significant portion of our costs are
denominated in Azerbaijan Manats.
The recent devaluation of the Azerbaijan
Manat against the US Dollar of 43 per cent.
in addition to the previous devaluation of
34 per cent. is unwelcome for Azerbaijan and
its people. However, we believe this will have
a considerable beneficial effect for Anglo Asian
in 2016. We estimate that the combined effect
of the recent devaluation and the previous
devaluation in February 2015 will reduce our
operating costs by approximately $13 million
in the 2016 financial year at the current
US Dollar to Azerbaijan Manat exchange rate
of approximately $1 equals AZN 1.5.

Outlook
It is with optimism that I look forward to
2016 and beyond. I believe that during the
course of 2015, we have demonstrated
that our strategy can deliver success, and we
have built a strong platform for sustained
growth and profitability.

The outlook for metal prices remains uncertain.
However, the increase in prices during the first
four months of 2016 is obviously beneficial to
us and we hope marks the start of a sustained
recovery in prices.

Despite the production challenges in the
first quarter of 2016 as noted above, we are
confident that total gold production during
the remainder of the year will improve and
accordingly have announced a gold
production target for 2016 of between 73,000
ounces to 77,000 ounces (which includes
approximately 4,000 ounces to 5,000 ounces
of production from the flotation plant).
Furthermore, we have also announced a
copper production target of between
1,700 tonnes and 2,100 tonnes for 2016 which
is significantly higher than 2015’s production
of 969 tonnes. Our forecast gold production
for 2016 is slightly higher than that achieved
in 2015, and there will be a full year’s
contribution from our new flotation plant.
We are also benefiting from lower costs due
to the devaluation of the Azerbaijan Manat.
Accordingly, we believe the outlook for 2016
represents a further improvement over 2015
and look forward to updating shareholders
on our progress.

Review of 2015 and 2016 to date
continued
We were very pleased to announce the
completion of construction and first
production and revenues from our flotation
plant in the fourth quarter of 2015. The
successful completion of this project to
build a flotation plant in under two years
and for $4.5 million is a remarkable
achievement and a credit to the technical
staff of Anglo Asian and its contractors.
Commissioning encountered a few teething
problems, which is usual for such projects,
but these have now been largely overcome.
Initial production of concentrate also
contained zinc, which is treated as a
contaminant by the buyer. We are working
very hard to mitigate this problem and are
making good progress in reducing the zinc
content of the concentrate produced. The
Company is expected to benefit from a full
year of production from the flotation plant
in 2016.

During 2015, we were also pleased to
announce the first ore mined from Gadir, an
underground mine co-located on the
Gedabek site. During 2015, 37,880 tonnes of
ore grading 7.98 grammes per tonne of gold
was extracted and processed. This ore is very
amenable to leaching by our agitation
leaching plant and is therefore prolonging
the useful life of the plant. In March and
April 2016, we took delivery of an underground
drill machine, loader and truck from Atlas
Copco which is expected to increase the
productivity of the Gadir mine.

The first quarter of 2016 unfortunately saw a
slow-down in production. Ordinarily, the
first quarter of the year has always had lower
production due to the difficult winter weather
conditions. However, the harder rock that
has been encountered together with its
lower gold grade also adversely affected
production. On the other hand, we were very
pleased to report the first full quarter of
production from the flotation plant. In the
three months to 31 March, 2016 the flotation
plant produced 1,458 dry metric tonnes of
copper concentrate containing 251 metric
tonnes of copper and 777 ounces and 24,595
ounces of gold and silver respectively.

We place our highest priority on
our environmental responsibilities. A key
responsibility is secure storage of tailings
produced at Gedabek. In 2015, we
approximately doubled the capacity of our
tailings dam by raising the wall of the dam
and increased security by building a reed
bed biological treatment system
immediately downstream of the dam to
process any seepage. The pipes to the
tailings dam were also relocated into fully

Anglo Asian Mining PLC

Annual report and accounts 2015

Strategic report

The Group has a target production
for the full year to 31 December 2016
of 73,000 to 77,000 ounces of gold
and 1,700 to 2,100 tonnes of copper.

Geological samples at Gedabek.

Furnace used for pouring gold doré.

• increasing production of ore from

the Gadir underground mine, which
is co-located on the Gedabek
property, and which commenced
production in 2015; and

• production of a copper and precious
metal concentrate from the flotation
plant which was commissioned in the
fourth quarter of 2015.

The Group has a target production for the
full year to 31 December 2016 of 73,000
to 77,000 ounces of gold and 1,700 to
2,100 tonnes of copper.

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
geological structures. The mine, which
first poured gold in 2009, is principally
an open pit mining operation. In addition,
in late 2014, the Group started to develop
an underground mine, Gadir, co-located
on the Gedabek property, which
commenced production in June 2015.

The directors present their strategic report
for the year ended 31 December 2015.

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 assets in the
Republic of Azerbaijan (“Azerbaijan”). It
also explores for and develops other
potential gold and copper projects
in Azerbaijan.

The Group has a 1,962 square kilometre
portfolio of gold, silver and copper assets
in western Azerbaijan at various stages
of the development cycle. These include
our main Gedabek gold, silver and copper
mine. Gadir, an underground mine, is
also located at Gedabek. The Group’s
processing facilities to produce gold doré
and copper, silver and gold concentrates,
from mined ore are also located at
Gedabek. Gosha, the Group’s second gold
and silver mine, is located 50 kilometres
away from Gedabek. Ordubad, the Group’s
early stage gold and 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:
• continued optimisation of the

performance of the agitation leaching
plant to ensure maximum production
at lowest possible cost;

www.angloasianmining.com Annual report and accounts 2015Anglo Asian Mining PLCChairman’s statementStrategic reportFinancial reviewCorporate governanceGroup financial statementsCompany financial statementsAnnual general meetingStrategic report continued

Gedabek continued
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. The Group’s latest ore
reserve estimate was carried out 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 than
the previous estimate. Table 1 shows the
ore reserve estimate as at 1 September 2014.

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 drilling and blasting and subsequent
transportation of ore are carried out by
contractors. Table 2 summarises the ore
mined from the open pit at Gedabek for
the year ended 31 December 2015.

Ore is also mined at Gedabek from the
Gadir underground mine which is situated
approximately one kilometre from the main
open pit at the Gedabek site. Development
of the Gadir mine commenced in 2014 with
the construction of a decline and the
mine started producing ore in June 2015.

Table 3 summarises the ore mined from
the Gadir underground mine for the year
ended 31 December 2015.

Processing operations
Ore is processed at Gedabek to
produce either gold doré (an alloy of
gold and silver with small amounts of
impurities) or a copper and precious
metal concentrate.

Gold doré is produced by cyanide leaching.
Initial processing is to leach (i.e. dissolve)
the precious metal (and copper) in a cyanide
solution. This is done by various methods:

Heap leaching of crushed ore.
Crushed ore is heaped into permeable
“pads” onto which is sprayed a solution
of cyanide. The solution dissolves the
metals as it percolates through the
ore by gravity and it is then collected.

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 as received from the mine
(ROM) without further treatment
or crushing.

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

The raised wall of the tailings dam now
fully completed.

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 dissolved in this final
solution are recovered by electrolysis
and are then smelted to produce the
doré metal, containing gold and silver.

Copper and precious metal concentrates
are produced by two processes, SART
processing and flotation.

Table 1 – ore reserve estimate as at 1 September 2014

In situ grades

Contained metal

Recoverable metal

Ore reserve

Reserve
category

In situ
tonnes

Au
g/t

Cu
per cent.

Ag
g/t

Au
ounces

Cu
tonnes

Ag
ounces

Au
ounces

Cu
tonnes

Ag
ounces

Proven

16,733,000

Probable

3,761,000

Total

20,494,000

1.12

0.68

1.03

0.61

0.40

0.50

7.63

600,000

87,000 4,105,000

447,000

65,000 1,346,000

6.12

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 from the open pit at Gedabek for the year ended 31 December 2015

Quarter ended

31 March 2015

30 June 2015

30 September 2015

31 December 2015

Total for the year

Ore mined (tonnes)

High grade

Low grade

Sulphide

Total

Waste
mined
tonnes

134,334

257,472

9,410

401,216 1,482,906

145,132

260,264

58,059

463,455 1,515,311

154,913

304,726

16,305

475,944 1,484,146

130,800

300,264

50,492

481,556 1,444,114

565,179 1,122,726

134,266 1,822,171 5,926,477

Anglo Asian Mining PLC Annual report and accounts 2015Gedabek continued
Processing operations continued
Sulphidisation, Acidification,
1
Recycling and Thickening (“SART”).
The cyanide solution after metal
absorption by resin in pulp processing
is transferred to the SART plant. The
pH of the solution is then changed by
the addition of reagents. This recovers
the copper from the solution in the form
of a precipitated copper sulphide
concentrate containing silver and
minor amounts of gold.

Flotation. Flotation is carried out in a
separate flotation plant. Feedstock is
mixed with water and other chemicals
including flocculants to produce a slurry
called “pulp”. This pulp is processed
in flotation cells (tanks). The flotation
cells are agitated and air introduced
as small bubbles. The sulphide minerals
attach to the air bubbles and float to
the surface where they form a froth
which is collected. This froth is
dewatered to form a concentrate
containing copper, gold and silver.
Feedstock can be either tailings from
the agitation leaching plant or freshly
crushed and milled ore.

Initially, gold doré was produced at Gedabek
by heap leaching crushed ore.

Heap leaching 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 leaching 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 Gebabek site, this
was a constraint.

The agitation leaching plant’s initial
performance was not as planned due
to the mineralogical variation of the ore.
Due to 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.
Throughout 2014 and 2015, the Group
has therefore expended considerable

Completed reed bed biological system
immediately downstream of tailing dam.

effort in improving the performance of
the plant. This has been focused on both
increasing metal recoveries to increase
production and lowering cyanide
consumption to decrease costs.

During the year ended 31 December 2015,
ore has been processed by three methods
at Gedabek: whole ore heap leaching;
crushed ore heap leaching; and agitation
leaching. Table 4 shows the amounts of
ore and its grade processed at Gedabek
for the year ended 31 December 2015.

The Group’s experience of processing has
shown the ore at Gedabek to be poly-metallic
containing significant amounts of copper.

Table 3 – ore mined from the Gadir underground mine for the year ended 31 December 2015

Quarter ended

30 June 2015

30 September 2015

31 December 2015

Total for the year

Ore mined
tonnes

Average gold
grade
glt

2,116

6,945

28,819

37,880

9.45

8.69

7.71

7.98

Table 4 – amount of ore and its grade processed at Gedabek for the year ended 31 December 2015

Quarter ended

31 March 2015

30 June 2015

30 September 2015

31 December 2015

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

92,586

135,531

136,717

127,510

243,444

141,552

72,817

135,731

150,370

101,086

32,004

148,240

393,999

546,710

576,879

1.47

1.50

1.43

1.48

1.47

1.00

0.84

1.07

1.09

0.95

3.63

3.43

3.25

3.60

3.45

Gedabek continued
Processing operations continued
Initially, the SART processing plant was
constructed to produce a copper and
precious metal concentrate. However,
to further exploit the high copper content
of the Group’s ore reserves, the Group
commenced construction of a flotation
plant in the fourth quarter of 2014 whose
function is primarily to produce copper
with gold and silver as by-products.

The flotation plant has the flexibility
to be configured for various methods
of operation. It is able to process
the Company’s stockpiles of high copper
content ore. It can also treat ore feed to,
or tailings from, the agitation leaching
plant. In such configurations, the plant
will be an integral part of the agitation
leaching plant.

The flotation plant was commissioned
in the fourth quarter of 2015 and is now
producing a copper and precious metal
concentrate from the tailings of the
agitation leaching plant. Commissioning
took longer than anticipated due to some
minor delays in final installation of
equipment and the time required for
the optimisation of the quality of the

concentrate due to the presence of zinc,
which is an impurity. These teething
problems have been largely overcome
and the plant is currently producing at
around 75 to 80 per cent. of its design
capacity which equates to approximately
1,000 wet tonnes of mineral concentrate
per month.

Production and sales
For the year ended 31 December 2015,
total gold production as doré bars and as
a constituent of the copper and precious
metal concentrate totalled 72,032 ounces,
which was an increase of 11,747 ounces
in comparison to the production of 60,285
ounces in the year ended 31 December 2014.

Table 5 summarises the gold and
silver produced as doré bars and sales
of gold bullion for the year ended
31 December 2015.

Table 6 summarises the total copper and
precious metal production as concentrate
from both SART processing and flotation
for the year ended 31 December 2015.

Table 7 summarises the total copper
concentrate sales from both SART
processing and flotation for the year
ended 31 December 2015.

Tailings (waste) storage
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. The Company stores its
tailings in a purpose built dam approximately
seven kilometres from its processing
operations. The project to approximately
double the capacity of the tailings dam
by raising its wall 14 metres to 64 metres
is now complete. The tailings dam
now has a capacity of approximately
3.2 million cubic metres. The tailings dam
seepage water return pumping system
has been greatly improved with many
failsafe features added. The reed bed
biological treatment system immediately
downstream of the dam to process any
seepage has also been completed. This
will enable seepage water to be purified
before discharge into the Shamkir river.
The new dam construction and pumping
system has now been inspected and
approved by third-party consultant
engineers. Work has also been carried
out to relocate the pipes from the agitation
leaching plant to the tailings dam into
a fully lined trench designed to capture
any seepage should any pipe rupture.

Table 5 – gold and silver produced as doré bars and sales of gold bullion for the year ended
31 December 2015

Quarter ended

31 March 2015

30 June 2015

30 September 2015

31 December 2015

Total for the year

* Including Government of Azerbaijan’s share.

** Excludes Government of Azerbaijan’s share.

Gold
produced*
ounces

Silver
produced
ounces

Gold
sales**

ounces

Gold
sales price
$

17,185

18,739

18,158

17,588

596

900

907

17,206

16,088

14,871

1,858

15,759

71,670

4,261

63,924

1,214

1,193

1,123

1,108

1,161

Table 6 – total copper and precious metal production as concentrate for the year ended
31 December 2015

Copper (tonnes)

Gold (ounces)

Silver (ounces)

Quarter ended

SART

Flotation

Total

SART

Flotation

Total

SART

Flotation

Total

31 March 2015

30 June 2015

30 September 2015

31 December 2015

Total for the year

182

236

216

205

839

—

130

182

236

216

335

969

—

335

341

362

1,354

3,628

3,532

6,589

—

1,354

3,628

3,532

9,264

15,853

15,103

9,264

24,367

Anglo Asian Mining PLC Annual report and accounts 2015Gedabek continued
Tailings (waste) storage continued
Due to the high rainfall in the Gedabek
region, there is a positive water balance
over the mine property, which accumulates
water at a rate of about 300,000 cubic
metres per year. To date, all excess
water is stored in the tailings dam, but
in 2015 a project was initiated to design
and construct a water detoxification
system that will enable clean water to
be discharged from the site into local
water courses. The treatment system will
involve reverse osmosis and ion exchange
and the first phase of this project is
expected to start operation during 2016.

Personnel and health and safety
The health and safety of our employees
and the protection of the environment in
and around our mine properties are prime
concerns for the Company’s board and
management team. The Health, Safety and
Environmental (“HSE”) department at
Gedabek has a qualified HSE manager,
who is assisted by four HSE officers. Overall
strategy for HSE matters in the Company
is overseen by the HSE and Technical
committee, which is chaired by a board
director, Professor John Monhemius.

During 2015, there were 78 (2014: 65)
reportable safety incidents, of which
ten (2014: four) were lost time incidents
(“LTI”), where the casualty had to take
time off from work. The increased number
of incidents is partly explained by the
increasing size and complexity of the
mining and processing operations across
our properties as the Company’s activities
progress. However, the Company is actively
monitoring the situation and taking action
to reduce the number of incidents.

To improve medical coverage over all the
operations, 85 managers and supervisors
have undergone first aid training, so that
they can provide first responder help in
the event of accidents or other emergencies,
before professional medical assistance
arrives from the local hospital.

A geotechnical inspection of the new Gadir
underground mine was carried out in
August 2015 by AMC Consultancy, United
Kingdom. Their report identified a number
of short and medium term issues that
are in the process of being addressed.

Exploration at Gedabek site
The main exploration activities in the
year have been at the Gadir mine and
surrounding area at Gedabek and at
the Ordubud site.

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 the consultants 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). We are also
planning for further exploration at Gosha.

A total of 14,981 tonnes of ore of
average grade 6.15 grammes per tonne
were mined at Gosha in the year ended
31 December 2015.

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 the 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 ships 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 then 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
precious metal 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 in the period under
review. In March 2016, the Group signed
an additional contract with Industrial
Minerals SA for the sale of the concentrate
produced by its flotation plant which had
improved terms. The contract is valid for
the period to 31 December 2018. Until
this date, sales of concentrate produced
by the flotation plant were made under
the original contract.

Table 7 – total copper concentrate sales for the year ended 31 December 2015

Quarter ended

31 March 2015

30 June 2015

30 September 2015

31 December 2015

Total for the year

SART processing

Flotation

Total

Sales (dmt)

$000

Sales (dmt)

$000

Sales (dmt)

$000

234

372

279

425

635

1,021

601

891

1,310

3,148

—

392

—

630

234

372

279

817

635

1,021

601

1,521

1,702

3,778

Principal risks and uncertainties
Country risk in Azerbaijan
The Group currently operates solely in
Azerbaijan and is therefore naturally at
risk of adverse changes to the regulatory
or fiscal regime within the country. However,
Azerbaijan is outward looking and desirous
of attracting direct foreign investment
and the Company believes the country
will be sensitive to the adverse effect
of any proposed changes in the future.
In addition, Azerbaijan has historically
had a stable operating environment
and the Company maintains very close
links with all relevant authorities.

Operational risk
The Company currently produces all its
products for sale at Gedabek. Planned
production may not be achieved as a
result of unforeseen operational problems,
machinery malfunction or other disruptions.
Operating costs and profits for commercial
production therefore remain subject to
variation. The Group monitors production
on a daily basis and has robust procedures
in place to effectively manage these risks.

Commodity price risk
The Group’s revenues are exposed to
fluctuations in the price of gold, silver
and copper and all fluctuations have a
direct impact on the operating profit and
cash flow of the Group. Whilst the Group
has no control over the selling price of
its commodities, it has very robust cost
controls to minimise costs to ensure it
can withstand any prolonged period of
commodity price weakness.

The Group does not hedge this commodity
price exposure and actively monitors all
changes in commodity prices to understand
the impact on the business. The Group
remains open to the possibility of hedging,
which is reviewed periodically.

Foreign currency risk
The Group reports in United States Dollars
and a large proportion of its costs are
incurred in United States Dollars. It also
conducts business in Australian Dollars,
Azerbaijan Manats and United Kingdom
Sterling. The Group does not currently
hedge its exposure to other currencies,
although it will review this periodically
if the volume of non-United States dollar
transactions increases significantly. Also,
the fact that both revenue of the Group
and the Group’s interest-bearing debt
are settled in United States 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 22 – ‘Financial instruments’ to
the Group financial statements.

Liquidity and interest rate risk
Interest rates on current loans are fixed
except for three month LIBOR embedded
in the terms of the Amsterdam Trade
Bank loan. The Group has not used any
interest rate swaps or other instruments
to manage its interest rate profile during
2015, but this requirement is reviewed
on a periodic basis. Information on the
exposure to changing interest rates
is disclosed in note 22 – ‘Financial
instruments’ to the Group 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 the interest rate charged on
the Amsterdam Trade Bank loan.

The levels of deposits held by the Group
have also been low; therefore any impact
of changing rates on interest receivable
is minimal.

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 into 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 into 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 is discussed in the
financial review.

Reza Vaziri
President and chief executive
24 May 2016

Anglo Asian Mining PLC Annual report and accounts 2015Financial review

The Group recorded a reduced loss before taxation
in 2015 of $8,910k due to higher revenues and average
cash costs reducing to $724 per ounce compared
to $971 per ounce in 2014.

The directors present their financial review
for the year ended 31 December 2015. This
financial review forms part of the strategic
report on pages 7 to 12.

Group income statement
The Group generated revenues of
$78,057k (2014: $67,964k) from sales
of gold and silver bullion and copper
and precious metal concentrates.

$74,279k of the revenues (2014: $64,280k)
were generated from sales of gold and
silver bullion from the Group’s share
of the production of doré bars in 2015.
Bullion sales in 2015 were 63,924 ounces
of gold and 3,754 ounces of silver
(2014: 50,615 ounces of gold and 6,802
ounces of silver) at an average price of
$1,161 per ounce and $15 per ounce
respectively (2014: $1,267 per ounce and
$20 per ounce respectively). In addition,
the Group generated revenue from the
sale of copper concentrate of $3,778k
(2014: $3,684k).

The Group incurred cost of sales of
$75,234k (2014: $68,500k). The cash
cost of mining and processing in 2015
decreased by $6,160k from $61,697k
in 2014 to $55,537k in 2015. This was
due to improving operational efficiency,
cost control and the devaluation of the
Azerbaijan Manat. However, this was
offset by higher depreciation and
amortisation of $2,819k ($21,857k in
2015 compared to $19,038k in 2014),
a net charge in respect of opening and
closing inventory in 2015 of $6,828k
and a decrease in capitalised deferred
stripping costs in 2015 of $3,289k.

Depreciation and amortisation in 2015 was
$21,857k compared to $19,038k in 2014.
The higher depreciation was due to increased
production of gold. 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.

The Group had other income in 2015 of
$714k (2014: $632k) which was interest
receivable on employee loans, consultancy
and exchange gains. The Group incurred
administration expenses in 2015 of $5,415k
(2014: $7,202k) and finance costs of
$5,721k (2014: $5,462k). 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 AIM. The Group’s administration costs
reduced in 2015 compared to 2014 due
to the devaluation of the Azerbaijan
Manat and cost reduction measures.
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 recorded a reduced loss
before taxation in 2015 of $8,910k
(2014: $14,364k) due to higher revenues
in 2015 and average cash costs reducing
to $724 per ounce compared to
$971 per ounce in 2014.

The Group had a taxation credit for the year
of $1,529k (2014: $3,436k). This comprised
a current income tax charge of $nil and
a deferred tax credit of $1,529k (2014:
taxation credit of $3,436k comprising
a current income taxation charge of
$nil and a deferred taxation credit of
$3,436k). The Group had no current
taxation charge in 2015 as its main
operating companies incurred a taxable
loss for the year. The deferred taxation
credit in 2015 arose primarily due to an
increase in carry forward losses partially
offset by lower taxation depreciation
compared to accounting depreciation.

Cash cost of total gold production
The Group produced gold at an average
cash operating cost net of by-product
credits in 2015 of $724 per ounce
compared to $971 per ounce in 2014.
Cash operating cost is defined as the
cash cost of mining and processing
(before adjustment for inventory
movements and deferred stripping costs
capitalised or released) plus metal selling
costs. By-product credits are the sale
proceeds (including Government of
Azerbaijan share) of copper and silver.
The reason for the decrease in 2015
compared to 2014 was both the decrease
in cash operating costs and the increase
in production.

Group statement of financial position
Non-current assets decreased from
$137,451k at the end of 2014 to $129,464k
at the end of 2015. The main reasons
for the decrease were intangible assets
lower by $1,672k and property, plant
and equipment lower by $6,003k.
These decreases were mainly driven
by depreciation and amortisation in the
year. Non-current inventory increased by
$873k due to an increase in ore stockpiles.

Net current assets decreased from $10,136k
at the end of 2014 to net current liabilities
of $4,243k at the end of 2015. The main
reason for the decrease was an increase
in the current portion of interest-bearing
loans and borrowings. The current portion
of interest-bearing loans and borrowings
increased by $10,033k from $16,675k to
$26,708k. This was mainly due to $2,007k
of existing loans from the International
Bank of Azerbaijan now maturing within
one year, an increase in the loan of $3,379k
due to Pasha Bank which was drawn
down in the year to finance the flotation
plant construction and the loan from
director of $3,860k which is repayable
within one year. The Group’s cash
balances at 31 December 2015 were
$249k (2014: $322k).

Net assets of the Group were $78,644k
(2014: $85,916k). The decrease was mainly
due to the loss incurred in the year.

The Group is financed by a mixture of
equity and debt. The Group’s total debt
at 31 December 2015 was $49,296k and
comprised the following:

a $27.1m 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 2015 was 8.73 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 half and annual
financial statements. The Group met
this DSCR for both the six months
ended 30 June 2015 and 12 months
ended 31 December 2015.

b $11.7m of loans from the International
Bank of Azerbaijan. $10.2m of these
loans is the remaining balance of the
loans obtained for the construction of
the agitation leaching plant. Repayment
started on 31 March 2015 and ends
on 31 March 2018. $1.5m is a working
capital facility and carries an interest
rate of 12 per cent. It is repayable in
full on 30 June 2016.

$0.4m due to Atlas Copco for
equipment financing.

d $1.7m due to Yapi Kredi Bank for

working capital financing.

e $4.6m due to Pasha Bank. $1.4m is

payable in respect of the credit line for
financing letters of credit for cyanide
purchases. $3.3m is in respect of the
credit facility obtained for the financing
of the flotation plant. The total amount
outstanding under the two facilities
is repayable in two equal instalments
in May and November 2016.

$3.9m from a director. This carries
interest at 10 per cent. Repayment
date is 8 July 2016.

The Group had a deferred taxation
liability at 31 December 2015 of
$15,435k (2014: $16,964k).

Group cash flow statement
Operating cash inflow before movements
in working capital was $18,581k (2014:
$10,567k). The main source of operating
cash flow was the profit before taxation,
finance costs and amortisation and
depreciation of $18,668k (2014: $10,129k).

Working capital movements generated
cash of $4,631k (2014: $4,254k) due
to a decrease in inventories of $6,285k
(2014: increase of $3,342k) mainly driven
by a decrease in metal in circuit of $6,660k
partially offset by a decrease in trade and
other payables of $793k (2014: increase
of $3,902k) and an increase in trade
and other receivables of $1,110k
(2014: decrease of $3,694k).

Income tax paid was $nil (2014: $nil) as the
Group incurred taxable losses for the year.

Net cash provided by operating activities
in 2015 was $22,963k compared to
$14,821k in 2014. This higher cash
generated from operating activities
in the year was due to the decreased loss
of the Group partially offset by less cash
generated from working capital.

Expenditure on property, plant and
equipment and mine development was
$14,279k (2014: $16,270k). The main
items of expenditure in 2015 were
capitalisation of deferred stripping costs
of $6,627k, the raise of the wall of the
tailings dam and construction of a reed
bed for the tailings dam of $2,983k,
construction of the flotation plant of
$3,188k and development of the Gadir
mine of $894k.

Exploration and evaluation expenditure
of $377k (2014: $608k) 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 2016 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 2016.

Anglo Asian Mining PLC Annual report and accounts 2015The Group commenced making payments
on the principal of its debt in 2015.
At the date of this annual report, the
Group has made all payments of interest
and principal on time.

The Group’s loan agreement with the
Amsterdam Trade Bank contains a debt
service cover ratio (“DSCR”) covenant of
at least 1.25. This ratio is calculated
twice a year from its published financial
statements. The Group has so far met the
DSCR of 1.25 for all reporting periods
subsequent to loan drawdown. For the
full year to 31 December 2016 and for
the six month period to 30 June 2017,
the Group’s cash flow forecasts show the
Group is able meet the debt service cover
ratio of 1.25 as specified.

• achieving its forecast production

of precious metal concentrates from
its SART and flotation processing.

The Group’s business activities, together
with the factors likely to affect its future
development, performance and position,
can be found in the Group’s annual report
and accounts within the chairman’s
statement on pages 5 and 6 and within
the strategic report on pages 7 to 12.
The financial position of the Group, its
cash flow, liquidity position and borrowing
facilities are discussed in the financial
review. In addition, note 22 to the Group
financial statements includes the Group’s
objectives and details of its financial
instrument exposures to credit risk and
liquidity risk.

After making due enquiry, the directors
have a reasonable expectation that the
Company and the Group have adequate
resources to continue in operational
existence for the foreseeable future.
Accordingly, the Group continues to
adopt the going concern basis in
preparing the financial statements.

By order of the board of directors

• its metal (principally gold and

copper) price assumptions being
met or bettered.

Reza Vaziri
President and chief executive
24 May 2016

William Morgan
Chief financial officer
24 May 2016

Should there be a moderate and sustained
decrease in either the production or metal
price assumptions, significant doubt would
be cast over the Group’s short term cash
position. Under this circumstance, the
Group would seek to defer all non-essential
capital expenditure and administrative
costs in order to preserve cash. The Group
also has access to local sources of short
term finance to meet any shortfalls.

The Group’s assumptions are based on
best estimates and appropriate sensitivities
have been applied. 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.

Production Sharing Agreement
continued
Once 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 2017
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 in which the
Group is operating. In 2015, the price of
gold averaged $1,160 per ounce with a
high of $1,298 per ounce and a low of
$1,060 per ounce. This resulted in a
continuation of the depressed margins
seen in 2014. However, 2016 has seen a
small but significant increase in the price
of gold and during the period 1 January
to 20 May 2016, the price of gold averaged
$1,206 per ounce. In addition, the Group
received its first revenues from its flotation
plant in the fourth quarter of 2015 after
the plant commenced production. 2016
and 2017 will see the benefit of a full
years’ contribution of revenues from
the flotation plant.

Mr Khosrow Zamani*
Non‑executive chairman, age 73
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. Khosrow 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 63
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 Brzezinski, Governor John Sununu and Henry Kissinger.
Reza resides in Baku, London and Washington, DC.

Governor John Sununu
Non‑executive director, age 76
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.

Mr Richard Round*
Non‑executive director, age 58
Richard Round has held senior finance and leadership roles
in a range of quoted and private companies. Richard is now
maintaining and developing a portfolio of non-executive director
and board advisory positions in the energy, mining and technology
development sectors. Most recently, Richard led the strategy
and ultimate sale of hydro developer Green Highland Renewables
prior to which he successfully secured around £70 million of
funding for the development of the Oyster wave power technology
for Aquamarine Power. Prior to joining Aquamarine Power,
Richard was acting chief executive at the quoted group, Novera
Energy plc where he led the sale of the landfill gas, wind and
hydro group. Richard has also held a number of finance director
roles in the renewable, oil and gas service, coal and mining
sectors with companies including Mining Scotland, Consolidated
Supply Management and Cambrian Mining plc. Richard was also
finance director of Anglo Asian Mining PLC where he stepped
down in July 2008 and was appointed a non-executive director.

Professor John Monhemius*
Non‑executive director, age 73
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. John 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.

Anglo Asian Mining PLC Annual report and accounts 2015Directors’ report
year ended 31 December 2015

Annual report and financial statements
The directors present their annual report together with the audited Group financial statements on pages 26 to 52.

Principal activities
The Group’s principal activity during the year was the production of gold and silver doré and precious metal 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 24 May 2016 is set out in the chairman’s statement
on pages 5 and 6 and the strategic report on pages 7 to 12 which includes information on the Group’s risks, uncertainties and key
performance indicators. These sections are incorporated in this directors’ report by reference.

Dividends
The directors do not recommend a dividend for the year (2014: $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 2014
and 2015 are disclosed in note 23 – ‘Equity’ to 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 disclosed in note 24 – ‘Share-based payment’
to 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 report on page 24.

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 24 May 2016 are set out on page 16.

John Sununu 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

Directors’ interests
The beneficial interests of the directors who held office at 31 December 2015 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.

2015
Number of
ordinary shares

2014
Number of
ordinary shares

341,890
306,759
10,734,540
32,796,830
1,259,590

202,143
153,958
10,734,540
32,796,830
793,184

Directors’ insurance
The Company has made qualifying third-party provision for the benefit of its directors during the year 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 23 May 2016:

Reza Vaziri
John Sununu
Limelight Industrial Developments

Number of
ordinary shares

per cent.

32,796,830
10,734,540
4,038,600

29.1
9.5
3.6

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 2017 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 in which the Group
is operating. In 2015, the price of gold averaged $1,160 per ounce with a high of $1,298 per ounce and a low of $1,060 per ounce.
This resulted in a continuation of the depressed margins seen in 2014. However, 2016 has seen a small but significant increase in
the price of gold and during the period 1 January to 20 May 2016, the price of gold averaged $1,206 per ounce. In addition, the
Group received its first revenues from its flotation plant in the fourth quarter of 2015 after the plant commenced production.
2016 and 2017 will see the benefit of a full years’ contribution of revenues from the flotation plant.

The Group commenced making payments on the principal of its debt in 2015. At the date of this annual report, the Group has
made all payments of interest and principal on time.

The Group’s loan agreement with the Amsterdam Trade Bank contains a debt service cover ratio (“DSCR”) covenant of at least 1.25.
This ratio is calculated twice a year from its published financial statements. The Group has so far met the DSCR of 1.25 for all reporting
periods subsequent to loan drawdown. For the full year to 31 December 2016 and for the six month period to 30 June 2017, the
Group’s cash flow forecasts show the Group is able meet the debt service cover ratio of 1.25 as specified.

Anglo Asian Mining PLC Annual report and accounts 2015Going concern continued
Should there be a moderate and sustained decrease in either the production or metal price assumptions, significant doubt would
be cast over the Group’s short term cash position. Under this circumstance, the Group would seek to defer all non-essential capital
expenditure and administrative costs in order to preserve cash. The Group also has access to local sources of short term finance
to meet any shortfalls.

The Group’s assumptions are based on best estimates and appropriate sensitivities have been applied. 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.

The Group’s business activities, together with the factors likely to affect its future development, performance and position, can
be found in the Group’s annual report and accounts within the chairman’s statement on pages 5 and 6 and within the strategic
report on pages 7 to 12. The financial position of the Group, its cash flow, liquidity position and borrowing facilities are discussed
in the financial review. In addition, note 22 to the Group financial statements includes the Group’s objectives and details of its
financial instrument exposures to credit risk and liquidity risk.

After making due enquiry, the directors have a reasonable expectation that the Company and the Group have adequate resources
to continue in operational existence for the foreseeable future. Accordingly, the Group continues to adopt the going concern basis
in preparing the 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 is set out on page 24.

Annual general meeting
The Company will hold its annual general meeting for 2016 on 27 June 2016. 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 2015
was 5.5p (2014: 6.625p).

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.

Donations
The Group has made charitable donations during the year of $nil (2014: $nil). Political donations of $nil (2014: $nil) were made.

Research and development
There was no expenditure on research and development during the year (2014: $nil).

Related party transactions
Related party transactions are disclosed in note 26 – ‘Related party transactions’ 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 disclosed in note 22 – ‘Financial instruments’ to the Group financial statements.

By order of the board of directors

Fisher Secretaries Limited
Company secretary
24 May 2016

Anglo Asian Mining PLC Annual report and accounts 2015Report on directors’ remuneration
year ended 31 December 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 package 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 three months’ notice. No other payments are made for 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 2015

John Monhemius
Richard Round
John Sununu
Reza Vaziri
Khosrow Zamani

Consultancy
$

6,145
—
—
577,597
—

583,742

Fees
$

50,252
50,252
72,486
50,252
124,446

347,688

Benefits
$

—
—
—
42,283
—

42,283

Total
$

56,397
50,252
72,486
670,132
124,446

973,713

Certain fees and expenses of the directors for the year ended 31 December 2015 were settled by issuing shares to those directors.
The number of shares issued and the gross fees (before deduction of taxes) and expenses in which they were in respect of, are
as follows:

Director

John Monhemius
Richard Round
Khosrow Zamani

The shares were issued on 22 July 2015 at a price of 6.19 pence per share.

Year ended 31 December 2014

John Monhemius
Richard Round
John Sununu
Reza Vaziri*
Khosrow Zamani

Number of
shares issued

157,845
152,801
666,406

Fees
$

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

370,534

Fees
$

25,554
25,554
63,946

Benefits
$

—
—
—
42,135
—

42,135

Expenses
$

—
—
1,962

Total
$

58,463
53,460
78,292
671,140
131,862

993,217

Consultancy
$

5,003
—
—
575,545
—

580,548

* Restated to reflect the effect of taxation.

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

Audited 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 disclosed in note 24 – ‘Share-based payment’ to the Group
financial statements.

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

Khosrow Zamani

Richard Round

Exercise
price
pence

16.5
12.0
77.0
42.5
12.0

Latest
exercise
date

1 June 2017
27 July 2017
26 July 2015
12 April 2016
27 July 2017

1 January
2015

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

Lapsed
during
the year

—
—
(432,900)
—
—

31 December
2015

100,000
500,000
—
495,859
600,000

The Company’s share price has ranged from 6.625p at 31 December 2014 to a high of 9.75p and a low of 3.5p during the year ended
31 December 2015 with a closing price of 5.5p at 31 December 2015.

By order of the board of directors

Fisher Secretaries Limited
Company secretary
24 May 2016

Anglo Asian Mining PLC Annual report and accounts 2015Statement of directors’ responsibilities

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”). The directors are also responsible for preparing the directors’ report
in accordance with the Companies Act 2006 and applicable regulations.

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
24 May 2016

Introduction
Although the rules of the Alternative Investment Market (‘AIM’) 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. The principal constituents of the Group’s corporate
governance are detailed below. However, this is not a statement of compliance 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 the 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.

Anglo Asian Mining PLC Annual report and accounts 2015Independent auditor’s report
to the members of Anglo Asian Mining PLC

We have audited the financial statements of Anglo Asian Mining PLC for the year ended 31 December 2015 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 26 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), including FRS 101 “Reduced Disclosure Framework”.

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 23, 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 strategic report
and directors' 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 2015

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:
• based on the work undertaken in the course of the audit:

• 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;

• the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements; and
• in light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have

identified no material misstatements in the strategic report or directors’ report.

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.

Andrew Smyth (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
24 May 2016

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.

www.angloasianmining.com Annual report and accounts 2015Anglo Asian Mining PLCChairman’s statementStrategic reportFinancial reviewCompany financial statementsAnnual general meetingCorporate governanceGroup financial statementsGroup income statement
year ended 31 December 2015

Revenue

Cost of sales

Gross profit/(loss)

Other income

Administrative expenses

Other operating expense

Operating loss

Finance income

Finance costs

Loss before tax

Income tax

Loss attributable to the equity holders of the parent

Loss per share attributable to the equity holders of the parent

Basic (US cents per share)

Diluted (US cents per share)

Notes

2015
$000

78,057

(75,234)

2,823

714

(5,415)

(1,311)

(3,189)

—

(5,721)

(8,910)

1,529

2014
$000

67,964

(68,500)

(536)

632

(7,202)

(1,803)

(8,909)

(5,462)

(14,364)

3,436

(7,381)

(10,928)

(6.58)

(9.79)

Group statement of comprehensive income
year ended 31 December 2015

Loss for the year

Total comprehensive loss

Attributable to the equity holders of the parent

2015
$000

2014
$000

(7,381)

(10,928)

(7,381)

(10,928)

(7,381)

(10,928)

Anglo Asian Mining PLC Annual report and accounts 2015

Group statement of financial position
31 December 2015

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 (liabilities)/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 (loss)/earnings

Total equity

Notes

2015
$000

2014
$000

18,373

108,428

2,543

120

129,464

26,197

16,131

249

42,577

20,045

114,431

1,670

1,305

137,451

33,355

5,350

322

39,027

172,041

176,478

(20,112)

(26,708)

(12,216)

(16,675)

(46,820)

(28,891)

(4,243)

10,136

(8,554)

(22,588)

(15,435)

(8,624)

(36,083)

(16,964)

(46,577)

(61,671)

(93,397)

(90,562)

78,644

85,916

1,993

32,325

283

46,206

(2,163)

78,644

1,978

32,246

670

46,206

4,816

85,916

The Group financial statements were approved by the board of directors and authorised for issue on 24 May 2016. They were signed
on its behalf by:

Reza Vaziri
Chief executive

Loss 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

Foreign exchange gain, net

Write down of unrecoverable inventory

Write down of advances paid

Operating cash flow before movements in working capital

(Increase)/decrease in trade and other receivables

Decrease/(increase) in inventories

(Decrease)/increase 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 from financing activities

Net decrease 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

2015
$000

2014
$000

(8,910)

(14,364)

—

5,721

19,808

2,049

(380)

—

184

18,581

(1,110)

6,285

(793)

22,963

—

22,963

(14,279)

(377)

—

(7)

5,462

17,318

1,720

—

372

—

10,567

3,694

(3,342)

3,902

14,821

—

14,821

(16,270)

(608)

(14,656)

(16,871)

—

14,793

(18,314)

(4,859)

(8,380)

(73)

322

249

8,662

(6,982)

(4,825)

(3,117)

(5,167)

5,489

322

Anglo Asian Mining PLC Annual report and accounts 2015Group statement of changes in equity
year ended 31 December 2015

1 January 2014

Loss for the year

Share options exercised

Shares issued

Fair value of forfeited options

Share-based payment

31 December 2014

Loss for the year

Shares issued

Fair value of expired options

Share-based payment

Notes

Share
capital
$000

1,973

—

Share
premium
$000

32,173

—

1,978

32,246

—

31 December 2015

1,993

32,325

Share-based
payment
reserve
$000

735

—

(28)

—

(53)

670

—

(402)

283

Merger
reserve
$000

46,206

—

46,206

—

Retained
earnings/
(loss)
$000

15,663

(10,928)

—

4,816

(7,381)

—

402

—

Total
equity
$000

96,750

(10,928)

—

85,916

(7,381)

—

46,206

(2,163)

78,644

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 15, the
chairman’s statement on pages 5 and 6 and the strategic report on pages 7 to 12 of this annual report.

2 Basis of preparation

The Group’s annual report is for the year ended 31 December 2015 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 18, 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 2017 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 in which the Group
is operating. In 2015, the price of gold averaged $1,160 per ounce with a high of $1,298 per ounce and a low of $1,060 per ounce.
This resulted in a continuation of the depressed margins seen in 2014. However, 2016 has seen a small but significant increase
in the price of gold and during the period 1 January to 20 May 2016, the price of gold averaged $1,206 per ounce. In addition, the
Group received its first revenues from its flotation plant in the fourth quarter of 2015 after the plant commenced production.
2016 and 2017 will see the benefit of a full years’ contribution of revenues from the flotation plant.

The Group commenced making payments on the principal of its debt in 2015. At the date of this annual report, the Group has
made all payments of interest and principal on time.

The Group’s loan agreement with the Amsterdam Trade Bank contains a debt service cover ratio (“DSCR”) covenant of at least
1.25. This ratio is calculated twice a year from its published financial statements. The Group has so far met the DSCR of 1.25
for all reporting periods subsequent to loan drawdown. For the full year to 31 December 2016 and for the six month period
to 30 June 2017, the Group’s cash flow forecasts show the Group is able meet the debt service cover ratio of 1.25 as specified.

Key to achieving the Group’s forecast cash position, and therefore its going concern assumption are the following:
• achieving the forecast production of gold doré from its heap and agitation leaching facilities.
• achieving its forecast production of precious metal concentrates from its SART and flotation processing.
• its metal (principally gold and copper) price assumptions being met or bettered.
Should there be a moderate and sustained decrease in either the production or metal price assumptions, significant doubt would
be cast over the Group’s short term cash position. Under this circumstance, the Group would seek to defer all non-essential
capital expenditure and administrative costs in order to preserve cash. The Group also has access to local sources of short
term finance to meet any shortfalls.

The Group’s assumptions are based on best estimates and appropriate sensitivities have been applied. 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.

The Group’s business activities, together with the factors likely to affect its future development, performance and position,
can be found in the Group’s annual report and accounts within the chairman’s statement on pages 5 and 6 and within the
strategic report on pages 7 to 12. The financial position of the Group, its cash flow, liquidity position and borrowing facilities
are discussed in the financial review. In addition, note 22 to the Group financial statements includes the Group’s objectives
and details of its financial instrument exposures to credit risk and liquidity risk.

After making due enquiry, the directors have a reasonable expectation that the Company and the Group have adequate resources
to continue in operational existence for the foreseeable future. Accordingly, the Group continues to adopt the going concern
basis in preparing the financial statements.

Anglo Asian Mining PLC Annual report and accounts 20153 Adoption of new and revised standards

a) New and amended standards and interpretations
The Group applied those minor amendments, including annual improvements, which are effective for annual periods beginning
on or after 1 January 2015. However, they do not impact the annual consolidated financial statements of the Group or the interim
financial statements and, hence, have not been disclosed.

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 financial statements
that the Group reasonably expects will have an impact on its disclosures, financial position or performance when applied at a
future date are disclosed below. The Group intends to adopt these standards when they become effective. The standards and
interpretations that are issued, but not yet effective, up to the date of issuance of the financial statements that are not expected
to impact the Group have not been listed below.
• IFRS 9 ‘Financial Instruments’

In July 2014, the IASB issued the final version of IFRS 9 'Financial Instruments' that replaces IAS 39 and all previous versions
of IFRS 9. IFRS 9 brings together all three aspects of the accounting for the financial instruments project: classification and
measurement, impairment and hedge accounting. IFRS 9 is effective for annual periods beginning on or after 1 January 2018,
with early adoption permitted. Except for hedge accounting, retrospective application is required, but the provision of
comparative information is not compulsory. For hedge accounting, the requirements are generally applied prospectively,
with some limited exceptions.

The Group plans to adopt the new standard on the required effective date. The Group is in the process of assessing the
impact of the changes required by the final version of IFRS 9, but these are not expected to be materially significant.

• IFRS 15 ‘Revenue from Contracts with Customers’

IFRS 15 was issued in May 2014 and establishes a five-step model to account for 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 new revenue standard will supersede all current revenue
recognition requirements under IFRS. Either a full retrospective application or a modified retrospective application is required
for annual periods beginning on or after 1 January 2018. Early adoption is permitted.

The Group plans to adopt the new standard on the required effective date using the full retrospective method. The Group
is currently assessing the impact of the changes of IFRS 15, but these are not expected to be materially significant.

• IAS 7 ‘Statement of cash flows’

An exposure draft proposing amendments to IAS 7 ‘Statement of cash flows’ was issued in December 2014. The exposure
draft includes a proposal to require a reconciliation of the amounts in the opening and closing statements of financial
position for each item classified as financing in the statement of cash flows. It also includes a proposal to require extended
disclosures about the restrictions on cash and cash equivalent balances to provide the users with additional information
about the entity’s liquidity.

The Group plans to implement the new standard on the effective date for implementation which is for annual periods
beginning on or after 1 January 2017. Comparative information for preceding annual periods is not required to be restated.
The Group does not expect these additional disclosures to be materially significant.

• Amendments to IAS 1 Disclosure Initiative

The amendments to IAS 1 ‘Presentation of Financial Statements’ clarify, rather than significantly change, existing IAS 1
requirements. The amendments clarify:
• the materiality requirements in IAS 1;
• that specific line items in the statement(s) of profit or loss and other comprehensive income and the statement

of financial position may be disaggregated;

• that entities have flexibility as to the order in which they present the notes to financial statements; and
• that the share of other comprehensive income of associates and joint ventures accounted for using the equity method

must be resented in aggregate as a single line item, and classified between those items that will or will not be subsequently
reclassified to profit or loss.

Furthermore, the amendments clarify the requirements that apply when additional subtotals are presented in the statement
of financial position and the statement(s) of profit or loss and other comprehensive income. These amendments are effective
for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments are not currently
expected to have any impact on the Group.

4 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 2015.
Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and
has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and
only if, the Group has:
• power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);
• exposure, or rights, to variable returns from its involvement with the investee; and
• the ability to use its power over the investee to affect its returns.
Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when
the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and
circumstances in assessing whether it has power over an investee, including:
• the contractual arrangement with the other vote holders of the investee;
• rights arising from other contractual arrangements; and
• the Group’s voting rights and potential voting rights.
The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to
one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the
subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary
acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains
control until the date the Group ceases to control the subsidiary.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using
consistent accounting policies.

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 2015 and 2014.

Notes to the Group financial statements continuedyear ended 31 December 2015Anglo Asian Mining PLC Annual report and accounts 20154 Significant accounting policies continued

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, the carry forward of unused tax assets and
unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available
against which deductible temporary differences and the carry forward of unused tax credits and unused tax losses can
be utilised.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset
is realised, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred
tax relating to items recognised in the Group income statement is charged or credited in the Group income statement.
Deferred tax relating to items recognised outside the Group income statement is recognised outside the Group income
statement and items are recognised in correlation to the underlying transaction either in the Group statement of
comprehensive income or directly in equity.

Deferred tax assets are not recognised in respect of temporary differences relating to tax losses where there is insufficient evidence
that the asset will be recovered. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised
to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

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, the following parties are considered to be related:
• where one party has the ability to control the other party or exercise significant influence over the other party in making

financial or operational decisions;
• entities under common control; and
• key management personnel.
In considering each possible related party relationship, attention is directed to the substance of the relationship, not merely
the legal form.

Related parties may enter into transactions which unrelated parties might not and transactions between related parties
may not be effected on the same terms, conditions and amounts as transactions between unrelated parties.

It is the nature of transactions with related parties that they cannot be presumed to be carried out on an arm’s length basis.

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.

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
Other intangible assets mainly represent the cost paid to landowners for the use of land ancillary to our mining operations.
They are depreciated over the respective terms of right to use the land.

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 the 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.

Notes to the Group financial statements continuedyear ended 31 December 2015Anglo Asian Mining PLC Annual report and accounts 20154 Significant accounting policies continued

h) Property, plant and equipment and mine properties continued
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 on a
units-of-production basis.

–

eight years (2014: eight years)

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 –
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 (2014: eight years)

four years (2014: four years)

–

The assets’ 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’
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 reoccurring basis, the Group determines whether
transfers have occurred between levels in the hierarchy by reassessing 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 exceed
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. Rehabilitation
obligations that arise as a result of the standard production activities of a mine are expensed as incurred.

Notes to the Group financial statements continuedyear ended 31 December 2015Anglo Asian Mining PLC Annual report and accounts 20154 Significant accounting policies continued

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 reorganisation 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.

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.

m) Financial liabilities continued
ii) Subsequent measurement continued
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 fees 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 accounted for as part of the cost of producing those inventories.

Where production stripping activity both produces inventory and improves access to ore in future periods the associated costs
of waste removal are allocated between the two elements. The portion which benefits future ore extraction is capitalised as
deferred stripping capital expenditure within producing mines. 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.

Notes to the Group financial statements continuedyear ended 31 December 2015Anglo Asian Mining PLC Annual report and accounts 20154 Significant accounting policies continued
q) Deferred stripping costs continued
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 calculated using
management’s best estimate of 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.

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.

u) Significant accounting judgements, estimates and assumptions continued
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 on this basis. 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 Industrial Minerals SA.

6 Revenue

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 $74,221,000 and $58,000 respectively (2014: $64,145,000 and $135,000). Revenue from sales
of precious metal concentrate was $3,778,000 (2014: $3,684,000).

Finance income of $nil was received in 2015. Finance income of $7,000 in 2014 was interest received on cash deposits during
the year.

Notes to the Group financial statements continuedyear ended 31 December 2015Anglo Asian Mining PLC Annual report and accounts 20157 Other income and operating expense

Other income
Other income comprises loan interest receivable from employee loans, consulting income and foreign exchange gains for the
years ended 31 December 2014 and 2015. Foreign exchange gain for the year ended 31 December 2015 was $629,000 (2014: $nil).

Other operating expense
Other operating expense comprises metal refining costs, foreign currency exchange losses and miscellaneous operating
expenses for the years ended 31 December 2014 and 2015. Foreign exchange loss for the year ended 31 December 2015 was
$249,000 (2014: $137,000).

8 Operating loss

Operating loss is stated after charging:
Depreciation on property, plant and equipment – owned
Amortisation of mining rights and other intangible assets
Employee benefits and expenses
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

2015
$000

19,808
2,049
9,614
249
35,592
616

138
119

257

10
—
—

267

2014
$000

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

194
121

315

15
13
20

363

There were no non-cancellable operating lease and sublease arrangements during 2015 and 2014.

The audit fees for the parent company were $107,000 (2014: $107,000).

9 Staff numbers and costs

The average number of staff employed by the Group (including directors) during the year, analysed by category, was as follows:
2014
Number

2015
Number

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

51
19
545

615

2015
$000

8,172
15
1,609

9,796

(182)

9,614

54
41
491

586

2014
$000

9,363
16
2,100

11,479

(597)

10,882

9 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

2015
$

1,541,245
109,658

1,650,903

2014
$

1,633,037
65,757

1,698,794

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 21 and 22.

10 Finance costs

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

2015
$000

5,177
130
414

5,721

2014
$000

4,882
111
469

5,462

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, Pasha Bank, Atlas Copco Customer Finance AB and
a director.

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 2015, $nil (2014: $nil) interest was capitalised.

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 2015 were $27,990,000
(2014: $24,888,000).

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 for the year

2015
$000

—

1,529

2014
$000

—

3,436

Notes to the Group financial statements continuedyear ended 31 December 2015Anglo Asian Mining PLC Annual report and accounts 201511 Taxation continued

Deferred income tax at 31 December relates to the following:

Statement of financial position

Income statement

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

2015
$000

2014
$000

(20,791)
(158)
(694)
(7,759)

(29,402)

2,298
2,737
(25)
8,957

13,967

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

(30,801)

2,952
2,760
161
7,964

13,837

2015
$000

(538)
260
(334)
2,011

(654)
(23)
(186)
993

2014
$000

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

1,201
406
(734)
6,329

1,529

3,436

Net deferred income tax liability

(15,435)

(16,964)

* 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 and the total taxation benefit for the year ended 31 December is as follows:

Loss before tax

Theoretical tax charge at statutory rate of 32 per cent. for RVIG*
Effects of different tax rates for certain Group entities (20/28 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 for the year

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

2015
$000

2014
$000

(8,910)

(14,364)

(2,851)
173

1
1,175
(27)

(1,529)

(4,596)
130

5
1,078
(53)

(3,436)

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 2015, the Group had unused tax losses available for offset against future profits of $30,762,000 (2014: $27,075,000).
Unused tax losses in the Republic of Azerbaijan at 31 December 2015 were $27,990,000 (2014: $24,888,000). 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.

12 Loss per share

The calculation of basic and diluted loss per share is based upon the retained loss for the financial year of $7,381,000 (2014: $10,928,000).

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

Basic

Diluted

2015

2014

112,117,622

111,667,479

112,117,622

111,667,479

At 31 December 2015 there were no instruments that could potentially dilute basic earnings per share due to the loss (2014: nil).

13 Intangible assets

Cost
1 January 2014
Additions

31 December 2014
Additions

31 December 2015

Amortisation and impairment*
1 January 2014
Charge for the year

31 December 2014
Charge for the year

31 December 2015

Net book value
31 December 2014

31 December 2015

Exploration and
evaluation
Ordubad
$000

2,905
608

3,513
347

3,860

—
—

—

3,513

3,860

Mining
rights
$000

41,925
—

41,925

23,909
1,697

25,606
2,020

27,626

16,319

14,299

Other
intangible
assets
$000

468
—

468
30

498

232
23

255
29

284

213

214

Total
$000

45,298
608

45,906
377

46,283

24,141
1,720

25,861
2,049

27,910

20,045

18,373

* 579,000 ounces of gold at 1 January 2015 were used to determine depreciation of producing mines, mining rights and other intangible assets following

compilation of a new reserve statement for the Group (2014: 639,000 ounces).

14 Property, plant and equipment

Cost
1 January 2014
Additions
Transfer to producing mines
Increase in provision for rehabilitation

31 December 2014
Additions
Transfer to producing mines
Decrease in provision for rehabilitation

31 December 2015

Depreciation and impairment*
1 January 2014
Charge for the year

31 December 2014
Charge for the year

31 December 2015

Net book value
31 December 2014

31 December 2015

Plant and
equipment,
motor vehicles
and leasehold
improvements
$000

18,999
410
—
—

19,409
257
—
—

Producing
mines
$000

Assets under
construction
$000

135,532
11,877
11,690
799

159,898
6,810
8,838
(484)

10,754
3,029
(11,690)
—

2,093
7,222
(8,838)
—

Total
$000

165,285
15,316
—
799

181,400
14,289
—
(484)

19,666

175,062

477

195,205

8,320
2,441

10,761
1,881

12,642

8,648

7,024

41,331
14,877

56,208
17,927

74,135

103,690

100,927

—
—

—

49,651
17,318

66,969
19,808

86,777

2,093

477

114,431

108,428

* 579,000 ounces of gold at 1 January 2015 were used to determine depreciation of producing mines, mining rights and other intangible assets following

compilation of a new reserve statement for the Group (2014: 639,000 ounces).

Notes to the Group financial statements continuedyear ended 31 December 2015Anglo Asian Mining PLC Annual report and accounts 201514 Property, plant and equipment continued

Upon commencement of production from the Gadir underground mine during 2015, accumulated development costs and
construction in progress assets of Gadir totalling $942,000 were transferred from the category of assets under construction
to the category of producing mines. In addition, upon the completion of tailing dam capacity increase and tailing reed bed
projects accumulated expenses of $3,182,000 were transferred from the category of assets under construction to the category
of producing mines. Upon completion of construction and commencement of production from the flotation plant accumulated
expenses of $4,496,000 were transferred from the category of assets under construction to the category of producing mines.
During 2015 construction of a workshop for heavy equipment and heating system installation for the agitation plant commenced
and upon completion of construction of the workshop and installation of heating system accumulated costs of $93,000 and
$125,000 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 cost to dispose (“FVLCD”). The determination of FVLCD is most
sensitive to the following key assumptions:
• production volumes;
• commodity prices;
• discount rates;
• foreign exchange rates; and
• capital and operating costs.
Production volumes: In calculating the FVLCD, the production volumes incorporated into the cash flow models were 420,000
ounces of gold and 65,000 tonnes 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 $1,284 (2014: $1,250) per ounce and $6,600 (2014: $6,600) per tonne respectively have been used to
estimate future revenues.

Discount rates: In calculating the FVLCD, a post-tax discount rate of 13.5 per cent. (2014: 13.5 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”), which takes into account both equity and debt, and is then adjusted to reflect the Group's assessment
of a discount rate that other market participants would consider when evaluating the assets.

Foreign exchange rates: The only significant foreign exchange rate in the cash flow model is the US dollar to Azerbaijan Manat
rate. A rate of $1 equals 1.55 Manat (2014: $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 the 2015 impairment
analysis, these costs were $30 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 2015, the recoverable amount
of the Group’s assets exceeded its carrying amount by $15 million. It is estimated that a 10 per cent. reduction in gold production
and copper production in the flotation plant, after incorporating any consequential effects of changes on the other variables
used to measure the recoverable amount, would cause impairment of approximately $2.2 million.

15 Subsidiary undertakings

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

The Company’s subsidiaries included in the Group financial statements at 31 December 2015 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

Registered address

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

There has been no change in subsidiary undertakings since 1 January 2015.

Primary place
of business

Percentage
of holding
per cent.

United Kingdom
Azerbaijan
Azerbaijan
Azerbaijan
Azerbaijan

100
100
100
100
100

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

2015
$000

2014
$000

2,543

1,670

1,441
203
11,899
4,635
8,019

26,197

28,740

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

33,355

35,025

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 the flotation process. Inventory is recognised at the lower of cost or net realisable value.

Write down of unrecoverable inventory of $nil (2014: $372,000) was recognised during the year as other operating expense.

17 Trade and other receivables

Non-current assets

Advances for fixed asset purchases
Loans

Current assets

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

2015
$000

—
120

120

12,412
186
720
642
2,121
50

16,131

2014
$000

1,143
162

1,305

2,557
828
275
8
1,634
48

5,350

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

The VAT refund due at 31 December 2015 and 2014 relates to VAT paid on purchases.

Gold bullion held and transferable to the Government is bullion held by the Group due to the Government of Azerbaijan.
The Group holds the Government’s share of the product from its mining activities and from time to time transfers that product
to the Government. A corresponding liability to the Government is included in trade and other payables as disclosed in note 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 2015 (including short-term cash deposits)
comprised $98,000 and $151,000, respectively (2014: $76,000 and $246,000).

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

Notes to the Group financial statements continuedyear ended 31 December 2015Anglo Asian Mining PLC Annual report and accounts 2015

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

2015
$000

4,861
2,302
12,412
537

20,112

2014
$000

5,342
4,106
2,557
211

12,216

Trade creditors primarily comprise amounts outstanding for trade purchases and ongoing costs. Trade creditors are non-interest
bearing and the creditor days were 11 (2014: 22). Accruals and other payables mainly consist of accruals made for accrued but not
paid salaries, bonuses, related payroll taxes and social contributions, accrued interest on borrowings, and services provided
but not billed to the Group by the end of the reporting period. The directors consider that the carrying amount of trade and
other payables approximates to their fair value.

The amount payable to the Government of Azerbaijan from copper concentrate joint sale represents the portion of cash
received from the customer for the Government’s portion from the joint sale of copper concentrate.

20 Interest-bearing loans and borrowings

International Bank of Azerbaijan – agitation leaching plant loan
International Bank of Azerbaijan – loan facility
Amsterdam Trade Bank
Atlas Copco
Yapi Kredi Bank
Pasha Bank
Director

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

2015
$000

10,209
1,500
27,096
355
1,659
4,617
3,860

49,296

26,708
22,588

49,296

2014
$000

11,526
1,500
36,783
789
922
1,238
—

52,758

16,675
36,083

52,758

International Bank of Azerbaijan (“IBA”)
Agitation leaching plant loan
In 2012 and 2013, the Group borrowed $49.5 million under a series of loan agreements to finance the construction of its agitation
leaching plant. The interest rate for each agreement is 12 per cent. The repayment of principal begins two years from the
withdrawal date for each agreement. The loans were partially repaid by the proceeds of a refinancing loan from Amsterdam
Trade Bank. The loan agreements are repayable commencing in 31 March 2015 and finishing in 30 June 2018. The total gross
amount outstanding under the loan agreements at 31 December 2015 was $10.2 million (31 December 2014: $11.5 million).

Loan facility
During 2014, the Group entered into a credit facility for $1.5 million for a period of one year at an interest rate of 12 per cent.
The repayment date of the credit facility was extended in 2015 and the loan is repayable on 30 June 2016.

Amsterdam Trade Bank (“ATB”)
During 2013, the Group entered into a loan agreement for $36.8 million to refinance its agitation leaching plant loan from IBA.
The interest rate is 8.25 per cent. per annum plus LIBOR. Principal is repayable in 15 equal quarterly instalments of $2,467,000.
The first payment of principal commenced in February 2015 with the final instalment payable in August 2018. 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. The total gross amount outstanding at 31 December 2015 was $27.1 million (31 December 2014: $36.8 million).

Atlas Copco
The amount outstanding is in respect of vendor financing. The amount outstanding is repayable in July 2016.

Yapi Credit Bank, Azerbaijan (“YCBA”)
The Group entered into credit facilities with YCBA in 2014 for $550,000 and $450,000 respectively. In 2015, further credit facilities
were entered into totalling $1,929,000. The interest rate for all facilities is 10 per cent. The credit facilities are all repayable
within 12 months of drawdown.

Pasha Bank
Letters of credit for flotation plant construction
In 2014, the Group entered into a facility for $2.5 million to finance a letter of credit for the construction of its flotation plant.
The facility carries an interest rate of 6 per cent. for the unused portion of, and 6.8 per cent. plus one month LIBOR for the
used portion of, the credit facility. In 2015, an additional facility was entered into for $1.2 million which carries an interest rate
of 6.2 per cent. for the unused portion and 7.05 per cent. plus one month LIBOR for the used portion of the credit facility.
The amounts outstanding under the two facilities at 31 December 2015 were $3,233,000 (31 December 2014: $250,000).
The total amount outstanding under the two facilities is repayable in two equal instalments in May and November 2016.

Letters of credit for cyanide purchases
On 4 July 2014, the Group entered into a credit facility to finance letters of credit with a total amount of $3,059,000 (AZN 2.4 million)
for the purchase of cyanide. This facility was extended in 2015 to 7 July 2017 for a total amount of $3 million at an interest rate
of 3 per cent. The amount outstanding under these facilities as at 31 December 2015 was $1,384,000 (31 December 2014: $988,000).
The amounts outstanding are all repayable with 12 months of the balance sheet date.

Director
On 20 May 2015, the chief executive of Anglo Asian Mining PLC provided a $4 million loan facility to the Group. Any loan from the
facility was repayable on 8 January 2016 at an interest rate of 10 per cent. On 8 January, 2016 the repayment date for the loan
facility was extended until 8 July 2016 with all other terms remaining the same.

21 Provision for rehabilitation

1 January
Change in estimate
Accretion expense
Change in discount rate

31 December

2015
$000

8,624
(747)
414
263

8,554

2014
$000

7,357
221
469
577

8,624

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 2015 was $9,436,000 (2014: $8,892,000). The undiscounted liability was discounted using a
risk-free rate of 5.73 per cent. (2014: 4.77 per cent.). Expenditures on restoration and rehabilitation works are expected between
2023 and 2025 (2014: between 2021 and 2022).

22 Financial instruments

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 2015 and 2014 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.

Notes to the Group financial statements continuedyear ended 31 December 2015Anglo Asian Mining PLC Annual report and accounts 201522 Financial instruments continued

Capital risk management continued
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.)

2015
$000

49,296
(249)

49,047
78,644

127,691

2014
$000

52,758
(322)

52,436
85,916

138,352

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 the interest rate on the borrowings 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 2015 and 2014.

Interest rate sensitivity analysis
Interest rate sensitivity of the Group from reasonably possible movement in the three month LIBOR rate is limited to $203,000
(2014: $187,000) 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 2015

Interest-bearing loans and borrowings
Trade and other payables

Year ended 31 December 2014

Interest-bearing loans and borrowings
Trade and other payables

On
demand
$000

—
—

—

On
demand
$000

—
458

458

Less than
3 months
$000

6,574
20,112

26,686

Less than
3 months
$000

5,014
11,758

16,772

3 to 12
months
$000

23,235
—

23,235

3 to 12
months
$000

15,705
—

15,705

1 to 5
years
$000

24,734
—

24,734

1 to 5
years
$000

40,714
—

40,714

Total
$000

54,543
20,112

74,655

Total
$000

61,433
12,216

73,649

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.
Due to the nature of the customers, the board of directors does not consider that a significant credit risk exists for receipt of
revenues. The board of directors continually reviews the possibilities of selling gold to alternative customers and also the
requirement for additional measures to mitigate any potential credit risk.

Foreign currency risk
The presentational currency of the Group is United States Dollars. The Group is exposed to currency risk due to movements
in foreign currencies relative to the US Dollar affecting foreign currency transactions and balances.

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at 31 December
are as follows:

UK Sterling
Azerbaijan Manats
Other

Liabilities

Assets

2015
$000

187
3,416
317

2014
$000

330
4,127
160

2015
$000

2
1,003
—

2014
$000

31
1,439
—

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 13 per cent., 12.5 per cent. and 15 per cent. (2014: 5.73 per cent., 6.23 per cent.
and 35 per cent.) increase and a 4.5 per cent., 12.5 per cent. and 60 per cent. (2014: 5.73 per cent., 6.23 per cent. and 35 per cent.)
decrease in the United States Dollar against United Kingdom Sterling, Euro and Azerbaijan Manat, respectively. These are the
sensitivity rates used when reporting foreign currency risk internally to key management personnel and represents management’s
assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign
currency denominated monetary items and adjusts their translation at the period end for respective change in foreign currency
rates. A positive number below indicates an increase in profit 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.

Increase – effect on loss before tax
Decrease – effect on loss before tax

UK Sterling impact

Azerbaijan Manat impact

Euro impact

2015
$000

24
(8)

2014
$000

17
(17)

2015
$000

1,447
(362)

2014
$000

941
(941)

2015
$000

40
(40)

2014
$000

10
(10)

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 in the year ended 31 December 2015 would result in a reduction in revenue of $7,447,000 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 $29,000 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 $335,000 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 $49.2 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 2015
Shares issued in lieu of cash payment

31 December 2015

2015

2014

Number

600,000,000

6,000,000

600,000,000

6,000,000

$000

111,683,972
977,052

112,661,024

1,978
15

1,993

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

The shares issued in lieu of cash payment were to directors for certain fees and expenses as set out in the report on directors’
remuneration on page 21.

Notes to the Group financial statements continuedyear ended 31 December 2015Anglo Asian Mining PLC Annual report and accounts 201523 Equity continued
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 (loss)/earnings
Retained earnings represent the cumulative (loss)/earnings of the Group attributable to the equity shareholders.

24 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
the board of directors give 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:

2015

2014

1 January
Granted during the year
Expired during the year
Exercised during the year

31 December

The following share options were exercisable at 31 December 2015:

Number

2,801,684
—
(680,825)
—

2,120,859

2015

Number

1,970,859

WAEP
pence

36
—
84
—

WAEP
pence

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

The weighted average remaining contractual life of the share options outstanding at 31 December 2015 was 3 years (2014: 3 years)
and the range of their exercise prices was 12 pence to 43 pence (2014: 12 pence to 97 pence).

There were no share options granted during 2015.

The weighted average fair value of the share options granted during 2014 was £0.06 ($0.10).

Share options are valued using the Black-Scholes model. The assumptions used to value the share options issued in the year
ended 31 December 2014 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.)

* Not applicable as no options issued in 2015.

2015*

n/a
n/a
n/a
n/a
n/a
n/a
n/a

2014

15
15
—
58
58
2
1.43

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 2015 of $15,000 (2014: $16,000).

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 R.V. Investment Group Services LLC ("RVIG"), a wholly owned
subsidiary of the Company. The principal provisions are regarding the exploration and development programme, preparation
and timely submission of reports to the Government, compliance with environmental and ecological requirements. The Directors
believe that RVIG is in compliance with the requirements of the PSA. The Group has announced a discovery on Gosha Mining
Property in February 2011 and submitted the development programme to the Government according to the PSA requirements,
which was approved in 2012. In April 2012 the Group announced a discovery on the Ordubad Group of Mining Properties and
submitted the development programme to the Government for review and approval according to the PSA requirements.

The 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 2015 (2014: $nil).

26 Related party transactions

Trading transactions
During the years ended 31 December 2014 and 2015, 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 The chief executive 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 2015 was $nil
(2014: $48,000).

b Shares issued to directors are disclosed in the report on directors’ remuneration on pages 21 and 22.

c Remuneration paid to directors is disclosed in the report on directors’ remuneration on pages 21 and 22.

d During the year ended 31 December 2015, total payments of $1,018,000 (2014: $1,182,000) 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 2015 there is an advance payment in relation to the above related party transaction of $59,000 (2014: $65,000).

e On 20 May 2015, the chief executive made a $4 million loan facility available to the Group. The interest accrued and unpaid

at 31 December 2015 was $195,000 (2014: nil). Details of the loan facility are disclosed in note 20 – ‘Interest-bearing loans and
borrowings’ on page 48.

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

Notes to the Group financial statements continuedyear ended 31 December 2015Anglo Asian Mining PLC Annual report and accounts 2015Company statement of financial position
31 December 2015

Non-current assets

Property, plant and equipment

Investments

Other receivables

Current assets

Other receivables

Cash and cash equivalents

Total assets

Current liabilities

Trade and other payables

Net current assets

Total liabilities

Net assets

Equity

Share capital

Share premium account

Retained loss

Total equity

Notes

2015
$000

241

1,325

119

1,685

17,193

17,261

18,946

(724)

16,537

(724)

18,222

1,993

32,325

2014
$000

1,325

162

1,558

18,453

125

18,578

20,136

(605)

17,973

(605)

19,531

1,978

32,246

2013
$000

—

1,325

—

1,325

19,127

895

20,022

21,347

(852)

19,170

(852)

20,495

1,973

32,173

(16,096)

(14,693)

(13,651)

18,222

19,531

20,495

The loss dealt with in the financial statements of the Company is $1,418,000 (2014: $1,081,000).

These Company financial statements were approved by the board of directors and authorised for issue on 24 May 2016. They were
signed on its behalf by:

Reza Vaziri
Chief executive

www.angloasianmining.com Annual report and accounts 2015Anglo Asian Mining PLCChairman’s statementStrategic reportFinancial reviewAnnual general meetingCorporate governanceGroup financial statementsCompany financial statements

Company statement of changes in equity
year ended 31 December 2015

Share
capital
$000

1,973

—

Share
premium
$000

32,173

—

1,973

32,173

—

1,978

32,246

—

Accumulated
loss
$000

(12,141)

(1,555)

(13,651)

(1,081)

—

(14,693)

(1,418)

—

Total
equity
$000

22,005

(1,555)

20,495

(1,081)

19,531

(1,418)

1,993

32,325

(16,096)

18,222

1 January 2013

Loss for the year

Share-based payment

31 December 2013

Loss for the year

Shares issued

Share-based payment

31 December 2014

Loss for the year

Shares issued

Share-based payment

31 December 2015

Anglo Asian Mining PLC Annual report and accounts 2015Notes to the Company financial statements
year ended 31 December 2015

1 Basis of preparation

The parent company financial statements of Anglo Asian Mining PLC are presented as required by the Companies Act 2006
and were approved for issue on 24 May 2016.

The parent company financial statements have been prepared in accordance with Financial Reporting Standard 101: Reduced
Disclosure Framework (“FRS 101”), which was first applied this year after notifying shareholders. FRS 101 enables the financial
statements of the parent company to be prepared in accordance with EU-adopted IFRS but with certain disclosure exemptions.
The main areas of reduced disclosure are in respect of equity settled share-based payments, financial instruments, the cash
flow statement and related party transactions with Group companies.

The Company has elected to adopt early the Companies, Partnerships and Groups (Accounts and Reports) Regulations 2015 and
has prepared its primary statements in accordance with IAS 1 – Presentation of Financial Statements. The Company has used
the exemption available under IFRS 1D 15 to determine the carrying amount of its investments in subsidiaries at 1 January 2014
in accordance with the previous UK GAAP as their deemed cost at that date.

The presentation of the parent company financial statements under FRS 101 instead of the previously applicable UK Generally
Accepted Accounting Practice (“UK GAAP”) is a change of accounting basis. The accounting policies set out in note 2 are those
policies which apply for the financial statements for the year ended 31 December 2015. The reported losses and net assets of the
parent company were unaffected by the transition to FRS 101 and remain consistent with UK GAAP which was applied previously.
In accordance with IAS1 – “Presentation of Financial Statements” an additional balance sheet at 31 December 2013 has been
presented prepared in accordance with FRS 101.

The parent company financial statements have been prepared under the historical cost convention except for the treatment
of share based payments. The parent company financial statements are presented in United States dollars (“$”) and all values
are rounded to the nearest thousand except where otherwise stated. In the parent company financial statements “£” and “pence”
are references to the United Kingdom pound sterling. As permitted by sections 408 of the Companies Act 2006, the income
statement of the parent company is not presented as part of the financial statements.

2 Significant accounting policies

a Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment losses.
The initial cost includes 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.
Property plant and equipment is mainly office and computer equipment which are depreciated on a straight line basis over
four years.

The carrying values of property plant and equipment are reviewed for impairment when events or changes in circumstances
indicate that the carrying amount may not be recoverable.

b Investments

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

c Other receivables

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 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 and costs that are an integral part of the effective interest rate method. The losses arising from impairment
are recognised in the profit and loss account.

d Deferred taxation

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities
and their carrying amounts for financial reporting purposes at the reporting date.

Deferred tax assets are not recognised in respect of temporary differences where there is insufficient evidence that the asset
will be recovered.

e Share-based payments

The Company has applied the requirements of IFRS 2 ‘Share-based Payment’. IFRS 2 has been applied to all grants
of equity instruments.

The Company 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 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 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 have been adjusted, based
on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.
The vesting condition assumptions are reviewed during each reporting period to ensure they reflect current expectations.

Notes to the Company financial statements continued
year ended 31 December 2015

3 Loss attributable to members of the parent company

The loss dealt with in the financial statements of the parent company is $1,418,000 (2014: $1,081,000).

4 Property, plant and equipment

Cost
1 January 2013 and 2014
Additions

31 December 2014
Additions

31 December 2015

Depreciation
1 January 2013
Charge for the year

31 December 2013 and 2014
Charge for the year

31 December 2015

Net book value
31 December 2013

31 December 2014

31 December 2015

Investments

2015
$000

2014
$000

Office
equipment
$000

95
71

166
183

349

81
14

95
13

108

—

241

2013
$000

Shares in subsidiary undertakings
Anglo Asian Operations Limited

1,325

6 Subsidiaries

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

The Company’s subsidiaries at 31 December 2015 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

Primary
activity

Percentage
of holding
per cent.

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

Holding company
Holding company
Holding company
Mineral development
Mineral development

There has been no change in subsidiary undertakings since 1 January 2015.

7 Other receivables

Non-current assets
Loans

Current assets
Prepayments
Loans
Advances
HMRC
Amounts owed by subsidiary undertakings

2015
$000

119

2015
$000

29
74
46
26
17,018

17,193

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

Anglo Asian Mining PLC Annual report and accounts 2015

8 Cash and cash equivalents

Cash and cash equivalents comprise cash held by the Company and short-term bank deposits with an original maturity
of three months or less.

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.

9 Trade and other payables

Trade creditors
Accruals
HMRC

10 Deferred taxation

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

Unrecognised deferred tax asset

2015
$000

47
677
—

724

2015
$000

2,772

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 temporary 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.

11 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
Shares issued in lieu of cash payment

31 December 2015

2015

2014 and 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
977,052

112,661,024

1,973
3
2

1,978
15

1,993

The shares issued in lieu of cash payment in 2015 were to directors for certain fees and expenses as set out in report
on directors’ remuneration on page 21.

12 Share-based payments

Equity-settled share option scheme
Details of the Company’s equity-settled share option scheme are given in note 24 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 (2014: $107,000) 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.

Letter to shareholders

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

Directors
Khosrow Zamani
John Monhemius
Richard Round
John Sununu
Reza Vaziri

1 June 2016

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 2015 together with
the attached notice of the Annual General Meeting to be held on 27 June 2016 (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 Sununu 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 Investment Association guidelines state that Investment Association 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 24 May 2016
(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 2017 (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 2015
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 27 June 2016 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 2015 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 Sununu 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 £375,537*; and

(b) up to an aggregate nominal amount of £751,073** (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 2017, 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 £112,661†,

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 2017 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
1 June 2016

* Calculated as one third of the nominal value of the total issued ordinary share capital (i.e. 112,661,024 shares of nominal value £1,126,610.24).
** Calculated as two thirds of the nominal value of the total issued ordinary share capital (£1,126,610.24).
† 10 per cent. of the ordinary issued share capital of the Company (£1,126,610.24).

www.angloasianmining.com Annual report and accounts 2015Anglo Asian Mining PLCChairman’s statementStrategic reportFinancial reviewCompany financial statementsCorporate governanceGroup financial statementsAnnual general meeting

Notice of annual general meeting of shareholders
continued

Notes
1

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 11.00am on 24 June 2016.

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 24 June 2016 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 24 June 2016 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 2015Company information

Azerbaijan office (principal place of business)
20, Block 520
Huseyn Javid Avenue
Baku, AZ 1073
The Republic of Azerbaijan
Tel +994 12 596 3350
Fax +994 12 596 3354

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

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Anglo Asian Mining PLC
20, Block 520
Huseyn Javid Avenue
Baku, AZ 1073
The Republic of Azerbaijan
Tel +994 12 596 3350
Fax +994 12 596 3354
www.angloasianmining.com