Anglo Asian Mining PLC Annual Report 2019

FY2019 Annual Report · Anglo Asian Mining PLC

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Delivering returns
to shareholders

Anglo Asian Mining PLC
Annual report and accounts 2019

Anglo Asian Mining PLC
is building a long-term
and sustainable mining
business in Azerbaijan
which is both profitable
and cash generative.

Gold, copper and silver are produced at Gedabek in
north western Azerbaijan. Ore is mined from open pit and
underground mines and processed by both leaching and
flotation. The Company reported production of 81,399 gold
equivalent ounces in 2019. The Company will pay a total
of US 8 cents per share dividend in respect of 2019.

The Company has two other operating concessions in
Azerbaijan, which together with Gedabek, cover 1,062
square kilometres. These concessions are all located on
the Tethyan Tectonic Belt, one of the world’s most
significant gold and copper-bearing trends. A three-year
programme of geological exploration is currently underway
to exploit their extensive potential.

The Company’s properties are held under a Production
Sharing Agreement with the Government of Azerbaijan
and the Company has been listed on AIM since 2005.

Contents

Anglo Asian Mining

01 Highlights and dividend

02 Anglo Asian Mining

03 Gedabek, Gosha and Ordubad

Chairman’s statement

04 Chairman’s statement

Strategic report

07 Geological exploration

17 Strategic report

26 Section 172(1) statement and stakeholder engagement

Financial review

28 Financial review

Corporate governance

31 Board of directors

32 Corporate governance

35 Directors’ report

38 Report on directors’ remuneration

39 Statement of directors’ responsibilities

Group financial statements

Independent auditor’s report

47 Group statement of income

Group statement of comprehensive income

48 Group statement of financial position

49 Group statement of cash flows

50 Group statement of changes in equity

Notes to the Group financial statements

Company financial statements

Company statement of financial position

Company statement of changes in equity

Notes to the Company financial statements

Annual general meeting

Letter to shareholders from the Chairman

Notice of annual general meeting of shareholders

Company information

89 Company information

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

Highlights
year ended 31 December 2019

Operational highlights

Financial highlights

• Total production for 2019 was 81,399 gold equivalent
ounces (“GEOs”) compared to 83,736 GEOs in 2018

• Gold production for 2019 of 70,098 ounces,

a four per cent. decrease compared to 72,798 ounces
produced in 2018

• Gold bullion sales in 2019 of 53,992 ounces

(2018: 59,481 ounces) completed at an average
of $1,410 per ounce (2018: $1,265 per ounce)

• Gold produced in 2019 at an all-in sustaining

cost* net of by-product credits of $591 per ounce
(2018: $541 per ounce). Higher all-in sustaining
cost due to independent operation of the flotation
plant throughout 2019 and increased mining from
the Gedabek open pit

• Copper production for 2019 was 2,210 tonnes
compared to 1,645 tonnes produced in 2018
due to a full year’s independent operation of
the flotation plant

• Silver production for 2019 totalled 159,356 ounces
compared to 2018 production of 210,184 ounces

Revenue ($m)

$92.1m

All-in sustaining cost (“AISC”)*
($ per ounce)

71.8

2017

90.4

2018

92.1

2019

$591per oz

604

2017

541

2018

591

2019

Profit before taxation ($m)

$30.1m

Operating cash flow before
movements in working capital ($m)

5.7

2017

25.2

2018

30.1

2019

$50.5m

32.2

2017

50.1

2018

50.5

2019

• Total production target of between 75,000

Free cash flow ($m)*†

and 80,000 GEOs for 2020

$25.5m

Net bank (debt)/cash ($m)*†

$21.2m

19.4

2017

28.9

2018

25.5

2019

6.1

2018

21.2

2019

2017

(18.1)

* Non-IFRS indicators; see definition in financial review on pages 28 to 30.

† Including cash in transit.

Dividend per share for 2019

• Interim dividend of 2.8355 pence (US$ 3.5 cents)

paid on 31 October 2019

• Final dividend of US$ 4.5* cents will be paid on

30 July 2020

US$ cents

Interim paid

• Shareholders’ record date of 3 July 2020

and shares will go ex-dividend on 2 July 2020

Final proposed/paid

• Payable in sterling at the average US dollar
to pounds sterling rate on the 5 days from
6 to 10 July 2020

Total for the year

2019

2018

3.0
3.5
4.5* 4.0
7.0
8.0

* Subject to approval at the annual general meeting.

Anglo Asian Mining has a portfolio of gold,
copper and silver production and exploration
assets in Azerbaijan. It combines both mature
assets and a pipeline of highly prospective new
mining targets. An extensive programme of
geological exploration is currently underway.

Occupied territories (dark grey area)

Gosha

Gedabek

Soutely

Baku

Vejnali

Gyzilbulakh

Ordubad

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.

Azerbaijan 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.

Anglo Asian Mining PLC Annual report and accounts 2019Gedabek, Gosha and Ordubad

Gedabek contract area

Gosha contract area

Ordubad contract area

300 square

kilometre contract area

300 square

kilometre contract area

462 square

kilometre contract area

Currently the location of a small,
high grade, underground mine.

Exploration area in Nakhchivan,
south-west Azerbaijan which
contains numerous targets.

Ore mined at Gosha is transported
by road to Gedabek for processing.

Contract area is regarded as
under explored and exploration
has been ramped up in the
previous two years.

Mineralisation at depth has been
discovered beneath an existing
adit of the Gosha mine.

New polymetallic copper
discovery made at the Asrichay
target in 2018.

Geology suggests that the
area is favourable for porphyry
formation.

Targets include Shakadara (gold),
Dirnis (copper and silver prospect),
Keleki (gold prospect), Destabashi
(copper prospect) and Aylis.

WorldView-3 satellite image
collection took place in 2019.

Geologists from the Natural
History Museum, London visited
in 2019.

Location of the Group’s main
mine, the Gedabek open pit,
the Ugur open pit mine and
the Gadir underground mine.

Combined life of three mines
based on current JORC reserves
until at least 2024.

All processing facilities are
located at Gedabek and comprise
an agitation leaching plant,
a flotation plant and SART
processing. Heap leaching
is also carried out.

Mining and exploration rights
until March 2022 which can be
extended by ten years.

Extensive exploration programme
currently underway – positive
exploration results in the vicinity
of existing mines, good potential
to extend mine life.

Two new mineral occurrences
discovered in 2019 – Avshancli
and Gilar.

Gedabek open pit.

Chairman’s statement
Khosrow Zamani

“ I am very pleased to report on another year of excellent

performance for Anglo Asian. We continue to enjoy
higher precious metal prices and the Company increased
both its turnover and profits in 2019 with production
broadly similar to 2018.”

I am very pleased to report on another
year of excellent performance for
Anglo Asian. We continue to enjoy
higher precious metal prices and the
Company increased both its turnover
and profits in 2019 with production
broadly similar to 2018. The Company
is now debt free having repaid the last
instalment of its bank debt in February
2020 and has a robust balance sheet. We
continue to reward shareholders from
our reliable cash flow and I am delighted
to declare a final dividend for the year
ended 31 December 2019 of US 4.5 cents
per share, payable on 30 July 2020, giving
a total dividend of US 8 cents for 2019.

Our geological exploration programme
made very good progress in the year. We
announced two new significant copper and
gold discoveries at Avshancli and Gilar.
The mineral reserves and life of our existing
mines are being extended and several
promising new mineral occurrences are
under investigation. We are proceeding
at pace to classify our exploration
targets and new discoveries as mineral
resources and reserves with the aim of
starting their commercial exploitation as
soon as possible.

The COVID-19 health emergency has
necessarily raised concerns about our
current trading. The Government of
Azerbaijan acted swiftly and imposed
many restrictions to prevent the spread
of the coronavirus. However, whilst the
safety of our employees is paramount, we
have been able to maintain production and
continue to sell our gold doré and copper
concentrate. Our production forecast for
2020 is currently unchanged. Although
the future evolution of the COVID-19 health
emergency and its final effects are unknown
at this time, the Company is well placed
to weather the situation and continue to
provide returns to its shareholders.

Operational review
A total of 81,399 gold equivalent ounces
was produced in 2019, a three per cent.
decrease compared to 2018. Copper
production increased to 2,210 tonnes
compared to 1,645 tonnes in 2018. Gold
production was 70,098 ounces compared
to 72,798 ounces in 2018 which was a four
per cent. decrease. Silver production in
2019 was 159,356 ounces, a decrease of
24 per cent. compared to 2018.

Gold production was lower by 2,700
ounces due to lower production of gold
within gold doré of 1,465 ounces and
lower gold within copper concentrate of
1,235 ounces. The lower gold production
was due to the lower gold grade of ore
processed by both the agitation leaching
and flotation plants. Copper production
increased due to a full year of independent
operation of the flotation plant.

The Company has done much to improve
the efficiency and safety of the Gedabek
site during the previous few years. This
has included major enhancements such
as the construction of an electrical
sub-station and connection of the site to
the national power grid and the construction
of a water treatment plant. The site is now
well developed but the Company continues
to make improvements wherever possible.
New equipment including a reverse
circulation drill rig and four excavators
were deployed during 2019 and an on-site
vehicle repair facility constructed. The
gold room was also refurbished and new
equipment installed.

Our tailings dam was inspected in June
2019 by Knight Piésold, a leading
environmental engineering company.
Knight Piésold reported that the dam had
been properly constructed and showed
no signs of instability or seepage. Various
recommendations were made by Knight
Piésold, which have now been implemented.

The dam wall is being raised this year by
six metres to increase the capacity of the
dam by 1.4 million cubic metres. This will
provide enough storage capacity for the
next two years and will be the final raise
of the wall. The Company is looking at
alternative sites to build another dam and
alternative treatment options for its
tailings.

Financial results and dividend
Our financial performance in 2019 was
again exceptional with revenues increasing
by $1.7 million to $92.1 million and profit
after tax by $3.0 million to $19.3 million.
Increased gold prices more than offset
the marginally lower production. Gold
bullion was sold at an average price of
$1,410 per ounce in 2019 compared to
$1,265 in 2018. Revenues continued to be
subject to an effective royalty of 12.75 per
cent. in 2019. We anticipate this effective
royalty rate will continue until at least 2023
and further details are in the financial
review on pages 29 and 30. The all-in
sustaining cost (“AISC”) per ounce of
gold produced increased in the year to
$591 from $541 in 2018. This was due to a
full year’s operation of the flotation plant
and increased mining from the Gedabek
open pit. The Company’s AISC remains
amongst the lowest quartile in the industry.

The Group’s financial position continued
to strengthen in 2019. Cash from
operations including cash in transit was
$42.9 million and free cash flow was
$25.5 million. The final instalment of its
bank debt was repaid in February 2020.
The Company had over $50 million of
bank debt in 2015 and it was therefore a
significant milestone to become debt free
in early 2020. The Company has agreed
terms for a $15 million standby credit
facility as a precautionary measure in light
of the uncertainty caused by the COVID-19
health emergency.

Anglo Asian Mining PLC Annual report and accounts 2019Creating sustainable
value for our stakeholders

Profitable production

Strong financials

Growth strategy

The Group has steadily increased its
profitability for the last five years from a
loss before taxation of $14.4m in 2014
to the profit before taxation of $30.1m
in 2019.

The Group had net cash (including cash in
transit) of $21.2m at the end of 2019
compared to net debt of over $50m in
2015. The Group is now making regular
payments of dividends.

The Company has over 1,000 square
kilometres of land under concession and
has embarked upon a 3-year geological
exploration programme to exploit its full
potential. Two new mineral discoveries
were announced in 2019.

Financial results and dividend continued
The Company is committed to delivering
returns to shareholders by dividends and
has a target of distributing approximately
25 per cent. of free cash flow to its
shareholders. I am therefore delighted to
announce a final dividend for the year
ended 31 December 2019 of 4.5 US cents
per share giving a total dividend for 2019
of 8 US cents per share.

Mineral resources and geological
exploration
Current mineral resource and ore reserves
for the Company’s three mines at Gedabek,
together with recent near-mine exploration
work, provide confidence of a combined
mine life of Anglo Asian’s existing mines
to at least 2024. It is the Company’s
intention to produce new JORC resource
and reserves statements for its existing
mines during the course of 2020, which
is likely to further extend the mine life.
This work is ongoing with completion
expected during quarter three 2020.

The Company’s geological exploration
programme continued throughout 2019
with considerable success. Work on
investigating the targets identified in 2018
by the aerial ZTEM survey continued
during the year. We were delighted to
announce the discovery of two new
mineral occurrences “Avshancli” and
“Gilar” and positive exploration results
were obtained in the vicinity of our

existing mines. Mineralisation remains
open both down dip and to the east of
the Gedabek open pit and copper
mineralisation was discovered in the
vicinity of the Ugur open pit. We also had
success at the Gosha contract area which
has historically been under explored.
Mineralisation at depth was discovered
beneath an existing adit of the existing
Gosha mine and several new polymetallic
targets were identified. WorldView-3
satellite remote sensing image collection
took place over Ordubad and the area
was visited by geologists from the Natural
History Museum of London. Their work
suggests that the geology at Ordubad is
favourable for porphyry formation. A
revised geological map of the contract
area is under preparation using all available
geological data. A targeted drill programme
will then be planned to produce data for
resource estimation.

COVID-19 health emergency
The Government of Azerbaijan (the
“Government”) implemented various
strict restrictions starting from early
March 2020 to contain the spread of the
coronavirus. All international land borders
were closed to passengers (but not to
freight) and all scheduled air flights in and
out of the country together with domestic
flights were suspended. Domestic travel
around the country and the movement of
people were also severely curtailed.

81,399

A total of 81,399 gold equivalent
ounces was produced in 2019

$92.1m

Revenue for 2019

$19.3m

Profit after tax for 2019

$21.2m

Net cash including cash in transit
at 31 December 2019

8 US cents

Total dividend for 2019

Anglo Asian Mining PLC Annual report and accounts 2019Strategic reportFinancial reviewCorporate governanceGroup financial statementsCompany financial statementsAnnual general meetingAnglo Asian MiningChairman’s statementChairman’s statement continued

COVID-19 health emergency continued
The Government suspended the operation
of many of Azerbaijan’s industries but
metallurgical companies were not
required to close. Gedabek continues to
operate and our office in Baku remains
open. Gedabek is fortuitously in a fairly
isolated location and most of its operations
do not require the close gathering of
many people. No cases of COVID-19 have
so far occurred in Gedebek. The health of
our staff is paramount and many measures
have been taken to ensure their safety
including carrying out an extensive
education programme and implementing
many hygiene measures. Operating
during the COVID-19 health emergency
has not added significantly to our costs.

Gold doré is usually shipped to Switzerland
by scheduled air flights which have been
temporarily suspended. However, the
Company continues to ship gold doré by
chartered aircraft. The refineries in
Switzerland were temporarily closed in
March and early April but have since
reopened with initially limited operations.

Annual General Meeting for 2020
Due to the UK Government’s COVID-19
“Stay Alert” measures which prohibits
amongst other things, public gatherings of
more than two people, the annual general
meeting for 2020 is being convened as a
“closed meeting” with only the necessary
quorum of two members. Other shareholders
will not be allowed to attend the meeting
on the grounds of safety.

The directors have very reluctantly taken
this measure as previous annual general
meetings have been a valuable forum for
directors to meet with shareholders. To
ensure shareholders can still ask directors
questions about the Company, shareholders
will be able to submit questions to the board

prior to the annual general meeting via the
Company’s web site. The Company will
publish all relevant questions together with
the Company’s response as soon as practical
following the annual general meeting.

Shareholders are strongly encouraged to still
vote by proxy. However, shareholders should
ensure they appoint the Chairman of the
meeting as their proxy as other individuals
will not be allowed to attend the meeting.
Further details of the annual general
meeting and the notice can be found
on pages 86 to 88 of this annual report.

Outlook
The Company achieved considerable
success in 2019 but the COVID-19 health
emergency has made the short-term
outlook uncertain. However, Anglo Asian
is now financially robust and well placed
to weather the challenges of COVID-19.
The Company’s main priority during this
period is to protect the health and safety
of its staff whilst maintaining normal
operations wherever possible.

The Company has over 1,000 square
kilometers of land within its contract areas.
As set out above and elsewhere in this
annual report, the Company has a
comprehensive exploration programme
underway to extensively explore this land
for new deposits. This programme is
yielding results with the identification of
several major targets at Gedabek and
Gosha and the new mineral occurrences at
Avshancli and Gilar. We are also extending
the mineral reserves at our existing mines.
We still regard Ordubad as an untapped
value opportunity and work there has
been promising. The Company will also
consider any suitable opportunities
outside Azerbaijan which it believes
can be made commercially successful.

Geological field work at Avshancli.

We have set a production target of 75,000
to 80,000 gold equivalent ounces for
2020, which is a small decrease from 2019.
This includes up to 67,000 ounces of gold
and between 2,200 and 2,400 tonnes of
copper. We are currently still on track to
achieve this production target and I look
forward to updating shareholders with our
progress in the coming months. At current
metal prices achieving our production
guidance is expected to result in a
turnover in excess of $100 million.

I would like to conclude by saying that
Anglo Asian accomplished much in 2019.
We continue to look to the future, beyond
the abatement of the COVID-19 health
emergency, to build on our very solid
foundations to develop your Company
into a mid-tier gold, copper and silver
producer. Despite the current unprecedented
times, I continue to look forward to 2020
and beyond with optimism.

Appreciation
I would like to take this opportunity to
thank the employees of Anglo Asian, our
partners, the Government of Azerbaijan
and our advisors for their continued
support in these extraordinary times. I
also wish to sincerely thank the shareholders
for their continued investment and
support in Anglo Asian.

I look forward to sharing the successes
of 2020 with you.

Khosrow Zamani
Non-executive chairman
12 May 2020

Anglo Asian Mining PLC Annual report and accounts 2019Geological exploration*

The Group’s geological exploration programme in 2019 was the
second year of a rolling three-year exploration plan. The programme
was designed to both determine the further mineralisation potential
of the Group’s existing mines and identify new areas of mineralisation
which can be brought into the Group’s resource and reserves pipeline.

Summary of exploration results
The Group’s exploration programme yielded a number of very significant results during the year:

• It was demonstrated that mineralisation remains open both down dip and to the east at the Gedabek open pit

• Further mineable extensions both laterally and down dip were identified at the Gadir underground mine

• The existence of copper mineralisation in the vicinity of the Ugur mine was identified

• 31 targets were detected by the aerial ZTEM survey carried out in 2018 which are now being investigated including drilling

at Duzyurd

• Two new mineral occurrences were discovered at Gedabek – “Avshancli” and “Gilar”

• Mineralisation at depth was confirmed in an area (“Zone 5”) below an existing adit of the Gosha underground mine

• Several new polymetallic targets were identified at Gosha

• Drilling at a number of existing and new targets at Ordubad returned very good gold and copper grades

• Preliminary results from the Natural History Museum of London’s whole rock analyses of samples from Ordubad suggest

the presence of igneous rocks favourable for porphyry development

Gedabek contract area (“Gedabek”)
Gedabek open pit and Duzyurd
14 diamond drill holes were completed at the Gedabek open pit area from surface for a total length of 2,425 metres. 49 reverse
circulation drill holes with a total length of 2,772 metres were also completed. The drill holes were to provide confidence in the
continuity of copper mineralisation and their locations were focused on the north-western and south-eastern margins of the open pit.

Duzyurd was identified as a possible porphyry target by the ZTEM survey. Its centre lies approximately 2.4 kilometres south-east of
the Gedabek open pit. One drill hole was drilled at Duzyurd with a total length of 727 metres. Both the drill hole at Duzyurd and one
Gedabek open pit surface drill hole were designed to explore the geology at depth.

Analysis of the drilling results confirms the two distinct types of mineralisation that were established during the 2018 resource
estimation process, which are:

• gold mineralisation with variable copper content; and

• copper mineralisation with no gold content.

The drilling results demonstrate that both copper and gold mineralisation remains open, both down dip and to the east along strike.
The results will be utilised in the next Gedabek open pit mineral resource update. Notable diamond drilling intersections include:

Drill hole i.d.

19GBD04

19GBD07

19GBD08

Intersection

Weighted average grade

Depth
from
(metres)

Depth
to
(metres)

Downhole
length
(metres)

85.00

97.00

86.00

98.00

58.00

67.00

147.90

154.50

152.80

155.50

1.00

9.00

4.90

1.00

Gold
(g/t)

1.17

1.94

5.07

11.05

2.29

Silver
(g/t)

22.00

28.00

63.53

76.08

51.88

Copper
(per
cent.)

2.07

1.19

0.26

0.27

2.25

Zinc
(per
cent.)

0.10

0.20

0.63

0.77

4.51

An additional diamond drill hole and a reverse circulation drill hole were drilled from Pit 4 for geotechnical assessment for
construction of the ventilation shaft to allow for continued tunnelling below the open pit and for exploration drilling to take place.

Tunnelling from the Gadir underground mine to the target mineralisation beneath the Gedabek open pit continued throughout the
year. The ventilation shaft was constructed and 1,669 metres of tunnel were developed.

* This report on geological exploration forms part of the Group’s Strategic Report and is incorporated by reference.

Anglo Asian Mining PLC Annual report and accounts 2019Financial reviewCorporate governanceGroup financial statementsCompany financial statementsAnnual general meetingAnglo Asian MiningStrategic reportChairman’s statementGeological exploration continued

Gedabek contract area.

Anglo Asian Mining PLC Annual report and accounts 2019Gedabek contract area (“Gedabek”) continued
Gadir underground mine
The following diamond drill holes were completed:

• 8 deep exploration drill holes from the surface with a total length

of 3,809 metres targeting lateral extensions of the deposit;

• 80 underground exploration drill holes of either HQ

(63.5 millimetre diameter) or NQ (47.6 millimetre diameter)
with a total length of 12,447 metres which targeted previously
untested areas; and

• 153 shorter underground drill holes producing BQ-sized
(36.5 millimetre) core designed to increase confidence
around sites for stoping.

Surface drill holes showing significant grades were as follows:

Underground drilling in the Gadir mine.

Drill hole i.d.

19GDD02

19GDD08

19GDD09

Intersection

Weighted average grade

Depth
from
(metres)

Depth
to
(metres)

Downhole
length
(metres)

363.00

364.00

427.10

437.10

447.10

428.10

438.10

449.10

438.50

439.50

1.00

2.00

1.00

Gold
(g/t)

5.86

10.05

2.81

10.78

2.02

Silver
(g/t)

12.00

5.00

8.50

2.88

Copper
(per
cent.)

0.09

0.02

0.61

0.05

0.39

Zinc
(per
cent.)

0.02

0.10

The drilling has resulted in defining ore that extends the current Gadir mineralisation footprint both laterally and down dip. These
positive results demonstrate the expansion potential of the Gadir mine. In-house geological wireframe modelling of the drill results
commenced in the 2019 which will be utilised to update the geological model of Gadir.

A surface Induced Polarisation (“IP”) geophysical survey over the Gadir deposit using an advanced wireless system was completed
in the second half of the year. This technique involves transmitting an electrical current into the sub-surface which is then monitored
by further electrodes. The results have been interpreted and are currently being analysed in conjunction with drill hole and other
geological data. In-house preliminary interpretation of the IP data has established that the Gadir type geological system shows
continuation in a south-westerly direction.

Ugur regional
11 surface drill holes were completed around the western, south-western and eastern flanks of the Ugur open pit, with a total length
of 4,388 metres targeting down dip extensions. Two of the drill holes were for geotechnical purposes. Several drill holes in the
eastern area (19UGDD03 and 19UGDD06) returned particularly positive results for copper, silver and zinc. Notable intersections,
including 25 metres at 1.9 per cent. copper, were as follows:

Intersection

Weighted average grade

Drill hole i.d.

19UGDD01

19UGDD03

19GED03

19UGDD06

Depth
from
(metres)

Depth
to
(metres)

Downhole
length
(metres)

79.00

91.60

80.00

92.40

356.30

357.00

761.60

762.80

309.40

310.40

321.40

761.90

764.50

334.40

315.40

326.40

1.00

0.80

0.70

0.30

1.70

25.00

5.00

Gold
(g/t)

0.10

0.24

0.03

0.73

1.38

0.06

0.04

0.07

Silver
(g/t)

28.00

38.00

48.00

150.00

99.00

124.80

68.60

182.20

Copper
(per
cent.)

Zinc
(per
cent.)

1.14

1.46

0.01

0.59

1.93

2.78

2.50

0.00

0.01

0.03

7.19

6.70

1.47

3.87

0.83

Gedabek contract area (“Gedabek”) continued
ZTEM aerial survey
The aerial ZTEM survey was carried out in the last quarter of 2018.
The survey identified 31 favourable targets as follows:

• shallow: 20 targets at 300 metres or less depth;

• deep: 5 targets at between 201 to 500 metres; and

• porphyry: 6 targets at various depths.

The shallow targets are possible epithermal-porphyry mineralisation
deposits. Several of the targets straddle or lie outside of the boundary
of the Gedabek contact area. However, under the production sharing
agreement, the Group has the right to explore and exploit mineral
deposits outside its contract area provided they can be demonstrated
to have geological continuity to within the contract area.

New drill rig deployed in the vicinity of the Gedabek open pit.

Outcrop sampling was carried out in 2019 at those high priority targets selected for evaluation. The targets identified and the
outcrop sampling results are as follows:

ZTEM Anomaly

Number
of samples

Summary of results

Current Status

Mount Okuzdag Zs2

36 One sample returned copper grade of 0.93 per cent.

Outcrop sampling to continue

Agamaly

Yagublu

Zs4

Zs9

12 No sample returned reportable grade

11 One sample returned significant gold grades

Outcrop sampling to continue

Almalytala Shallow

66 One sample returned significant gold grades

Gyzyljadag East

Zs8

194 Two sample returned significant gold grades

Panning stream sediment
sampling planned

Complex integrated
interpretation planned

Parakend Bugor

409 47 samples returned significant gold assays

Trench sampling to be carried out

Korogly

Zs15

166 12 Samples returned grades over reportable limits

Soyugbulag

35 One sample returned grade above the reportable limits

Complex integrated data
interpretation planned

Panning stream sediment
sampling planned

Zehmetkend

Zs18

214 51 samples returned grades above the reportable limits
with highest being 95.4 grammes per tonne of gold

Trench sampling to be carried out

Deyegarabulag

Zd5

4 No sample reported returnable grades

Panning stream sediment
sampling planned

Narzan

Masxit

Hachagaya

Zs20

Zs19

8 No sample returned reportable grade

Outcrop sampling to continue

541 110 Samples returned significant grades

Trench sampling to be carried out

12 Two adjacent samples returned grades above the

reportable limits

Complex integrated data
interpretation planned

Ertepe East

59 10 samples returned grades above the reportable limits

Trench sampling to be carried out

Drilling was also carried out at Duzyurd (M6) and the results of the investigation of the target is discussed above along with the
Gedabek open pit.

Anglo Asian Mining PLC Annual report and accounts 2019Gedabek contract area (“Gedabek”) continued
Avshancli district
Avshancli is a mineral district which is 10.5 kilometres north-east of the Gedabek open pit. Avshancli is a gold-copper occurrence
comprising three defined areas; Avshancli 1,2 and 3. It was discovered in the second half of the year whilst fieldwork was being
conducted over the area. It was not directly identified through the ZTEM survey. However, it lies immediately south of the
Zehmetkend and Masxit ZTEM targets and was defined by structural mapping of trends linking ZTEM targets.

A significant amount of exploration work took place in the second half of the year following completion of preliminary field mapping:

• 466 outcrop samples were collected;

• 1,732 metres of trenching was carried out; and

• nine surface drill holes of 1,732 metres total length were completed.

Of the 466 outcrop samples, 156 returned reportable assay grades with gold grades as high as 4 to 6 grammes per tonne and
copper grades as high as 1.5 per cent. These results are significant as they indicate the area could be a potential near-surface
mineralised system.

Trenching was carried out over all three Avshancli areas. Two trenches were dug in Avshancli 1 and one each in Avshancli 2 and 3.
Notable intersections were as follows:

Trench i.d.

AV1TR1

Intersection

Weighted average grade

Metres

4.00

5.50

13.00

19.00

5.00

10.00

14.00

27.00

1.00

4.50

1.00

8.00

Gold
(g/t)

5.27

4.29

0.05

Silver
(g/t)

28.00

8.33

5.00

Copper
(per
cent.)

0.30

0.49

0.44

0.55

Zinc
(per
cent.)

0.02

0.03

0.05

0.11

Nine surface drill holes with a total length of 1,732 metres were completed at the Avshancli district to commence the initial drill
programme. There was one notable intersection as follows:

Drill hole i.d.

19BFDD05

Intersection

Weighted average grade

Depth
from
(metres)

Depth
to
(metres)

Downhole
length
(metres)

0.90

2.00

1.10

Gold
(g/t)

7.03

Silver
(g/t)

5.00

Copper
(per
cent.)

0.45

Zinc
(per
cent.)

0.04

A ground based magnetic survey covering approximately 0.15
square kilometres was completed over the Avshancli 1 region in
October 2019. This was to determine if there was any subsurface
magnetic response to help target drilling. The survey utilised a
GEM System Overhauser GSM-19 magnetometer. Three key
magnetic anomalies were identified which are believed to be
associated with alteration zones. This study will enable
optimisation of the drilling programme by identifying geological
favourable targets. Further use of this technique together with
ground based IP geophysics is planned over both Avahancli-2
and -3 during 2020.

Portable ground-based magnetometer being used at Avshancli.

Gedabek contract area (“Gedabek”) continued
Gilar
Gilar is a new mineral occurrence located approximately two
kilometres south of Avshancli-1. It was identified during geological
fieldwork in the region. It is a quartz vein deposit. Following
preliminary field mapping, outcrop sampling and a preliminary
drilling programme were carried out.

A total of 72 outcrop sampling assays were taken over the entire
area. 35 of these returned gold grades, with 14 samples having
elevated gold grades in the range of 3 to 12 grammes per tonne.
One sample returned a gold grade of 16.02 grammes per tonne.

Four drill holes with a total length of 692 metres were completed at
Gilar in the fourth quarter of the year. Assay results have been returned
from all of the drill holes with the following significant intersections.

Bespoke mobile auger used for soil sampling.

Drill-hole i.d.

19GLDD01

19GLDD02

19GLDD03

Intersection

Weighted average grade

Depth
from
(metres)

Depth
to
(metres)

Downhole
length
(metres)

13.00

23.00

28.20

14.00

24.40

29.40

21.40

22.10

16.00

17.00

1.00

1.40

1.20

0.70

1.00

Gold
(g/t)

0.03

5.48

0.03

0.55

0.41

Silver
(g/t)

5.00

20.00

5.00

Copper
(per
cent.)

0.35

0.01

0.03

0.01

Zinc
(per
cent.)

0.21

0.01

WorldView-3 Remote Sensing Project (“WorldView-3”)
WorldView-3 remote sensing took place over Gedabek in
September 2019 with data and image processing conducted by
Exploration Mapping Group Inc. This is the second WorldView
satellite reconnaissance carried out by the Company, following
the one carried out at Ordubad (see below). The area covered
by the survey is in the north-west of Gedabek in the region of
the Agamaly, Narzan and Hachagaya ZTEM anomalies. These
areas are being targeted to test the satellite capabilities over
heavily vegetated terrain, where access is difficult. Follow-up
field validation is planned to test the initial interpretation that
showed significant amounts of alteration, structural trends and
potential areas of mineralisation.

Natural history Museum (London) (“NHM”) site visit
Geologists from the NHM visited Gedabek in late November 2019
and worked with the Company’s geology team to assess the
porphyry potential at Gedabek. Correlation work with the
WorldView-3 data also provided information relating to
alteration and structural patterns that may relate to buried
porphyry systems, above which is the surface expression of the
epithermal style gold-copper mineralisation seen. Samples were
collected by the visiting team for further analysis at the NHM
research facilities in London. Discussions are ongoing with the
NHM to assess the potential to further utilise their services to
assist with mineral target definition, rock age dating and
geochemical interpretation.

Trenching at Avshancli.

Anglo Asian Mining PLC Annual report and accounts 2019Gosha contract area (“Gosha”)
The Gosha contract area is underexplored and during the year geological fieldwork was undertaken to increase our understanding
of the area. Drilling, trenching and outcrop sampling were all carried out in the near-mine region of Gosha. The results confirm the
dominance of gold mineralisation around the vicinity of the Gosha mine and that gold mineralisation exists at depth below an
existing adit of the Gosha mine (“Zone 5”).

Exploration also took place in the Gosha region at two prospects – “Asrikchay” and “Khatinca”.

Near mine exploration and “Zone 5”
Seventeen core drill holes were completed in the year with a total length of 5,700 metres in the vicinity of the Gosha mine. The aim
of this drilling was to test the Gosha vein system at depth below and adjacent to the current adit (“Zone 5”). Notable intersections of
the drill holes are as follows:

Intersection

Weighted average grade

Drill hole i.d.

GSHDD02

GSHDD04

GSHDD06

GSHDD10

GSHDD11

GSHDD15

GSHDD16

GSHDD17

GSHDD12

Depth
from
(metres)

Depth
to
(metres)

Downhole
length
(metres)

269.15

304.40

312.40

339.00

364.00

273.00

306.00

313.00

343.20

368.00

187.00

189.00

259.80

265.20

125.00

208.80

142.40

149.00

155.30

296.60

52.00

97.00

108.60

110.30

59.60

62.00

260.00

265.30

126.00

210.00

142.60

149.30

155.70

297.30

52.20

97.50

108.80

110.60

60.20

63.00

68.20

68.50

117.00

118.00

3.85

1.60

0.60

4.20

4.00

2.00

0.20

0.10

1.00

1.20

0.20

0.30

0.40

0.70

0.20

0.50

0.20

0.30

0.60

1.00

0.30

1.00

Gold
(g/t)

1.05

0.91

0.90

0.88

0.81

0.83

0.77

5.92

1.97

11.86

1.05

1.30

1.24

3.07

1.11

1.29

1.06

10.08

1.44

1.75

10.10

1.68

Silver
(g/t)

Copper
(per
cent.)

Zinc
(per
cent.)

5.00

0.04

0.01

0.02

0.04

0.05

0.01

0.14

0.01

0.02

0.06

0.05

0.13

0.04

0.01

0.02

3.79

0.01

0.03

1.08

0.02

0.00

0.01

0.00

0.07

0.00

0.01

0.00

0.01

0.05

0.01

0.00

0.01

0.00

0.28

0.00

Gosha contract area (“Gosha”) continued
A total of 10 trenches were completed in the Gosha near mine region in 2019 of total length 88 metres. 104 samples were obtained
taken at one metre intervals unless geological constraints warranted adjustments in sample length. Significant intersections were
as follows:

Intersection

Weighted average grades

Copper
(per
cent.)

Zinc
(per
cent.)

Trench i.d.

TR19-01

TR19-02

TR19-04

TR19-06

TR19-10

Metres

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

0.00

0.50

1.00

3.00

0.00

0.50

1.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

0.50

1.00

1.50

3.50

0.50

1.00

1.50

1.00

19.20

19.70

0.50

Gold
(g/t)

0.49

1.30

0.55

0.31

0.44

0.37

0.32

0.36

0.30

0.36

0.32

0.81

0.34

0.31

0.37

0.41

0.32

0.34

0.78

Silver
(g/t)

5.00

10.00

5.00

0.02

0.04

0.01

0.02

0.03

0.04

0.17

0.01

A total of 169 outcrop samples were collected with five samples returning positive grades for both gold and copper as follows:

Weighted average grades

Gold
(g/t)

0.35

0.34

0.05

0.53

0.07

Silver
(g/t)

5.00

Copper
(per
cent.)

0.06

0.07

0.01

0.32

Sample i.d.

GSHCHA2-05

GSHCHA2-06

GSHCHS-04

GSHCHS-110

GSHCHS-116

Drilling at Gosha targeting ‘Zone 5’.

0.01

0.05

0.00

0.01

0.00

0.01

0.00

0.01

0.00

Zinc
(per
cent.)

0.01

0.00

0.03

0.16

Anglo Asian Mining PLC Annual report and accounts 2019Gosha contract area (“Gosha”) continued
Asrikchay
Asrikchay is a recent polymetallic mineralisation discovery within the Gosha contract area. It is approximately seven kilometres north
of the existing Gosha underground mine within the Asrikchay valley. No drilling was conducted during the year at Asrikchay, however
interpretation of the drilling in the previous year continued. An IP geophysical survey was completed but initial interpretation of the
data did not correlate well with the drill results. Further refinement of the data processing algorithms is ongoing to define the
locations of mineralisation from drilling and to then expand the target area.

Asrikchay has been divided into two adjacent areas – “QS” and “ASKL”. 19 and 8 outcrop samples were obtained during the year
from areas QS and ASKL, respectively. Some notable grades were obtained from the QS area as follows:

Sample number

QS02

QS03

QS04

QS14

QS16

QS17

QS18

QS19

Gold grade
(grammes
per tonne)

Silver grade
(grammes
per tonne)

Copper grade
(per cent.)

2.77

0.82

4.13

0.08

7.46

2.52

4.38

1.82

33.50

19.00

30.72

31.97

99.34

22.27

38.77

35.36

9.75

0.19

10.32

0.38

9.26

0.98

0.10

0.54

A small stream sediment sampling programme was also carried out in the Asrikchay valley and surrounding water courses but none
of the samples returned notable grades.

Khatinca
Exploration commenced in the year at Khatinca which is a target one kilometre from the village of Khatyndzhan and approximately
four kilometres from the existing Gosha mine. Khatinca has been selected for its favourable geology, which is similar to the Gosha
mine and its easy surface conditions for access. 22 outcrop samples were collected in 2019 but none returned notable grades.

Ordubad contract area (“Ordubad”)
Shakardara and surrounding area (copper, gold and silver prospects)
Results were returned in the year for all 5,504 litho-geochemical samples obtained during 2018, collected over the Shakardara, Dirnis
and Keleki targets. All samples passed QAQC checks and the data are currently being interpreted in-house. 48 element multi-element
analysis and gold determination were completed on each sample and show positive results. Study of these results to define anomaly
trends with integration of other geological data is ongoing. Based on preliminary interpretation of the geochemical data, two new
areas of vein-style mineralisation were identified, namely Aylis and Unus.

Dirnis (copper and silver prospect)
The Dirnis prospect is located approximately 2.5 kilometres west of Dirnis village. It is a copper-silver occurrence and significant grades
have previously been returned from malachite veining occurring in areas hosting both “White Rock” and “Green Rock” alteration.

A total of 18 diamond drill holes were completed during the year at Dirnis. Notable intersections of these drill holes are as follows:

Intersection

Weighted average grades

Hole I.d.

DRDD06A

DRDD09A

DRDD09B

DRDD13A

DRDD21

Depth
from
(metres)

Depth
to
(metres)

Downhole
length
(metres)

47.00

85.00

0.00

7.50

46.00

34.00

41.40

70.50

25.00

48.00

87.00

4.10

3.5

16.00

48.00

36.40

41.80

71.00

26.00

1.00

2.00

4.10

3.5

8.50

2.00

2.40

0.40

0.50

1.00

Gold
(g/t)

0.03

203.89

10.61

8.76

7.23

0.03

126.61

Silver
(g/t)

5.00

18.91

17.46

11.55

23.48

62.79

5.00

Copper
(per
cent.)

Zinc
(ppm)

0.20

0.09

0.67

2.69

1.23

0.28

1.95

4.51

0.66

0.08

552

134

105

159

104

421

Ordubad contract area (“Ordubad”) continued
Dirnis (copper and silver prospect) continued
Due to the high gold grades of DRDD06A and DRDD21 and holes previously reported, a study is being carried out on the coarseness
of the gold mineralisation and the assays are being verified. Sampling pulps for the check assays are planned to be sent with the
next batch of QAQC samples to the external independent laboratory used by AIMC.

Keleki (gold prospect)
The Keleki mineral target is located approximately 500 metres north of the village of Keleki and 500 metres east of the village of
Unus with easy site access. Geologically, Keleki is similar to the Shakardara deposit and host rocks are various volcanic facies of
Lower Eocene age. A total of ten drill holes were completed in the year to assess the depth of the extensions of the gold bearing
vein system and to better understand the orientation of the ore body. Due to the very high gold grades returned, further checks of
the data are planned. Significant intersections were as follows:

Hole I.d.

KLDD03

KLDD05

Intersection

Weighted average grades

Depth
from
(metres)

Depth
to
(metres)

Downhole
length
(metres)

20.00

86.50

20.80

87.50

142.50

143.20

106.00

107.00

0.80

1.00

0.70

1.00

Gold
(g/t)

158.80

86.06

249.17

139.56

Silver
(g/t)

5.00

Copper
(per
cent.)

0.08

0.04

0.15

0.14

Zinc
(ppm)

518

255

828

602

Destabashi
Destabashi is a copper prospect in the south-western corner of Ordubad. The Destabashi area hosts lower volcanic units capped by
Cretaceous sedimentary rocks. A small-scale surface geochemical sampling campaign was completed during the year. The total area
covered was 4.2 square kilometres, spread over two zones. In total, 244 samples were collected, and detailed geological mapping
was completed of the sampling area. 82 samples were collected from ‘Zone 1’ (approximately two kilometres southeast of the village
of Khanagha) and 162 samples were obtained from ‘Zone 2’ (adjacent to the village of Desta). Geochemical results have been
received from ALS Minerals “OMAC” laboratory in Ireland and are being assessed for reporting.

Aylis
Aylis is a target recently identified through the Shakardara geochemical programme, which lies approximately 2.5 kilometres
north-east of Dirnis and 2 kilometres east of Keleki. Geological mapping of total area four square kilometres was carried out in the
year. Trench sampling also commenced at Aylis in late 2019. A total of 48 trenches were dug totalling 327 linear metres until the
sampling was stopped due to unfavourable weather conditions. The work will recommence when weather conditions allow. The
quartz veins range from 0.4 metres to 1.2 metres in thickness and contain polymetallic mineralisation. Exploration will continue of
this epithermal system.

WorldView-3 satellite remote sensing
WorldView-3 satellite image collection took place over Ordubad in the second half of the year. Data were collected over an area
of 244 square kilometres. Studies were completed in the final quarter of the year in collaboration with a member of the From Arc
Magmas to Ores (‘FAMOS’) research team of the NHM to corroborate preliminary interpretations of the Worldview-3 imaging and
data against field observations.

Natural History Museum of London (“NHM”) whole rock analysis study
A field visit took place by geologists from the NHM in late 2018. The results of the study were published separately alongside the
results of Q3 2019 exploration report for Ordubad. The potential indicators suggest that the geochemistry of the igneous sites is
favourable for porphyry formations.

Detailed reports on Geological exploration
Detailed reports on all exploration activities in 2019 can be found on the Group’s website at
https://www.angloasianmining.com/operations/exploration-and-development/.
16

Drilling at Avshancli.

Anglo Asian Mining PLC Annual report and accounts 2019Strategic report
Reza Vaziri

“ The total production target for the year to 31 December 2020 is

65,000 ounces to 67,000 ounces of gold and 2,200 tonnes to 2,400
tonnes of copper. This total production target expressed as gold
equivalent ounces (“GEOs”) is between 75,000 GEOs and 80,000
GEOs, compared to total production for the year to 31 December 2019
of 81,399 GEOs.”

The directors present their
strategic report for the year
ended 31 December 2019.

Principal activities
The principal activity of Anglo Asian Mining
PLC (the “Company”) is that of a holding
company and a provider of support and
management services to its main operating
subsidiary R.V. Investment Group Services
LLC. The Company, together with its
subsidiaries (the “Group”), owns and
operates gold, silver and copper producing
properties in the Republic of Azerbaijan
(“Azerbaijan”). It also explores for and
develops other potential gold and copper
deposits in Azerbaijan.

The Group has a 1,962 square kilometre
portfolio of gold, silver and copper
properties in western Azerbaijan, at
various stages of the development cycle.
The Group’s primary operating site is
Gedabek, which is the location of the
Group’s main gold, silver and copper
open pit mine, the Ugur open pit mine
and Gadir, an underground mine. The
Group’s processing facilities to produce
gold doré and copper, silver and gold
concentrates are also located at
Gedabek. Gosha, the Group’s second
underground 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 Nakhchivan, south-west Azerbaijan.

Overview of 2019 and
2020 production target
In 2019, the Company continued its strategy
to increase shareholder value by progressing
the development of Anglo Asian into a
mid-tier gold, copper and silver miner.
The key pillars of the strategy are as follows:

• formalise mineral resources and ore

reserves for all existing mines;

• optimisation of gold and copper

production at its Gedabek site from
existing mines;

• identify further resources and reserves in
proximity to its existing mines which can
be brought into production quickly and
efficiently in the short to medium term to
increase the annual level of production;

• pursue a comprehensive geological
exploration programme of all of the
accessible land at its contract areas
for new deposits with the potential
to become new mines; and

• ramp-up exploration at Ordubad which

is an untapped value opportunity.

In 2019, the publication of resource and
reserve statements in accordance with
the JORC Code (2012) were completed
for all the Company’s mines. The Company’s
three-year geological exploration
programme, which commenced in 2018,

is now starting to yield very positive results
with many new targets and potential deposits
identified. The exploration activities at
Ordubad have also increased significantly,
with approximately $1.2 million spent on
exploration in 2019.

The Group has a production target for
the year to 31 December 2020 of 65,000
ounces to 67,000 ounces of gold and
2,200 tonnes to 2,400 tonnes of copper.
The total production target for the year
to 31 December 2020 expressed as gold
equivalent ounces (“GEOs”) is between
75,000 GEOs and 80,000 GEOs, compared
to total production for the year to
31 December 2019 of 81,399 GEOs. Silver
and copper production were converted
into GEOs using the following budget
metal prices:

Price of metal

Gold equivalent ounces of metal

Metal

Unit

Actual
31 December
2019
$

Budget
2020
$

Actual
31 December
2019
Ounces

Gold

Silver

per ounce

1,517.00

1,400.00

17.85

17.00

Copper

per tonne

6,174.00

5,800.00

1.000

0.012

4.070

Budget
2020
Ounces

1.000

0.011

3.851

Gedabek
Introduction
The Gedabek mining operation is located
in a 300 square kilometre contract area in
the Lesser Caucasus mountains in western
Azerbaijan on the Tethyan Tectonic Belt,
one of the world’s most significant copper
and gold-bearing geological structures.
Gedabek is the location of the Group’s
Gedabek open pit mine, its Ugur open pit
mine, its Gadir underground mine and the
Company’s processing facilities.

Gold was first poured from ore mined from
the Gedabek open pit and processed by
heap leaching in May 2009, with production
commencing fully in September 2009.
Copper and precious metal concentrate
production began in 2010 when the
Sulphidisation, Acidification, Recycling
and Thickening (SART) plant was
commissioned. The Group’s agitation
leaching plant commenced production
in 2013 and its flotation plant in 2015.

Underground extraction of ore at
Gedabek started in June 2015 when the
Gadir mine was opened. During 2017, the
Group brought Ugur, a newly-discovered
gold deposit three kilometres north-west
of its processing facilities, into production
as an open pit mine. In July 2018, a
second crusher line was added to the
flotation plant to enable independent
operation and processing by the agitation
leaching plant and the flotation plant.

Mineral resources and ore reserves
Key to the future development of the
Gedabek site is our knowledge of the
mineral resources and ore reserves within
the Company’s contract areas. The
Group’s most recent mineral resources
and ore reserves estimates for its
Gedabek open pit were published as of
18 September 2018. Full JORC (2012)
reporting with unchanged mineral
resources and ore reserves estimates was
subsequently released on 14 March 2019.
17

Gedabek continued
Mineral resources and ore reserves continued
The mineral resource estimate showed a total mineral resource (at a cut-off grade of 0.3 grammes per tonne of gold) of approximately
986 thousand ounces of gold, 63.4 thousand tonnes of copper and 8,172 thousand ounces of silver. The economically mineable ore
reserves are over 343 thousand ounces of gold and more than 36 thousand tonnes of copper, which has extended the current life of
the Gedabek open pit until 2024. Table 1 shows the Gedabek open pit mineral resources estimate at 14 March 2019 and Table 2
shows the Gedabek open pit ore reserves estimate at 14 March 2019.

Table 1 – Gedabek open pit mineral resources estimate at 14 March 2019

Mineral resources

Measured

Indicated

Measured and indicated

Inferred

Total

Gold (and copper) mineral resources
(cut-off grade ≥ 0.3g/t gold)

Contained metal

In situ
(million
of tonnes)

Gold
grade
(g/t)

Copper
grade
(per cent.)

Silver
grade
(g/t)

Gold
(thousand
of ounces)

Copper
(thousand
of tonnes)

Silver
(thousand
of ounces)

18.0

11.1

29.1

8.5

37.6

0.9

0.7

0.9

0.7

0.8

0.2

0.1

0.2

0.1

0.2

8.3

5.6

7.3

5.0

6.8

532

264

38.0

15.7

4,800

2,011

796

53.7

6,811

189

9.7

1,361

986

63.4

8,172

Some of the totals in the above table do not sum due to rounding.

Mineral resources

Measured

Indicated

Measured and indicated

Inferred

Total

Copper mineral resources (additional to gold mineral resource)
(cut-off grade gold <0.3g/t and copper ≥ 0.3 per cent.)

In situ
(million
of tonnes)

Gold
grade
(g/t)

Copper
grade
(per cent.)

Silver
grade
(g/t)

Gold
(thousand
of ounces)

Copper
(thousand
of tonnes)

Silver
(thousand
of ounces)

5.3

0.9

6.2

0.5

6.7

0.1

0.5

0.4

0.5

2.1

1.6

2.0

1.5

2.0

26.3

4.4

30.7

1.9

356

404

32.6

426

Some of the totals in the above table do not sum due to rounding.

Table 2 – Gedabek open pit ore reserves estimate at 14 March 2019

Ore reserves

Proved

Probable

In situ grades

Contained metal

Tonnage
(thousand
of tonnes)

10.9

1.2

Gold
grade
(g/t)

0.89

0.82

Copper
grade
(per cent.)

0.29

0.34

Silver
grade
(g/t)

8.83

9.52

Gold
(thousand
of ounces)

Copper
(thousand
of tonnes)

Silver
(thousand
of ounces)

311

31.9

3,084

4.1

373

Proved and probable

12.1

0.88

0.30

8.90

343

36.0

3,457

Some of the totals in the above table do not sum due to rounding.

The above proved and probable ore reserves estimate is based on that portion of the Measured and Indicated Mineral Resource of the
deposit within the scheduled mine designs that may be economically extracted, considering all “Modifying Factors” in accordance
with the JORC (2012) Code.

The latest JORC (2012) mineral resources and ore reserves statements for the Ugur deposit were completed in 2017. Table 3 shows
the Ugur open pit mineral resources estimate at 1 August 2017 and Table 4 shows the Ugur open pit ore reserves estimate at
1 August 2017.

Anglo Asian Mining PLC Annual report and accounts 2019Gedabek continued
Table 3 – Ugur open pit mineral resources estimate at 1 August 2017

Mineral resources

Measured

Indicated

Measured and indicated

Inferred

Total

Some of the totals in the above table do not sum due to rounding.

Table 4 – Ugur open pit ore reserves estimate at 1 August 2017

Ore reserves

Proved

Probable

Proved and probable

Mineral resources
(cut-off grade ≥ 0.2g/t gold)

In situ grades

Contained metal

In situ.
(million of
tonnes)

Gold
grade
(g/t)

Silver
grade
(g/t)

Gold
(thousand
of ounces)

Silver
(thousand
of ounces)

4.12

0.34

4.46

2.50

6.96

1.2

0.8

1.2

0.3

0.9

6.3

3.9

6.2

2.1

4.7

164

172

841

884

165

199

1,049

Ore reserves

In situ grades

Contained metal

In situ.
(million of
tonnes)

Gold
grade
(g/t)

Silver
grade
(g/t)

Gold
(thousand
of ounces)

Silver
(thousand
of ounces)

3.37

0.22

3.59

1.3

0.8

1.3

7.2

4.1

7.0

142

779

147

808

In March 2019, the Group published the mineral resources statement and ore reserves estimate in accordance with the JORC (2012)
Code for its Gadir underground mine. The mineral resources statement showed measured plus indicated mineral resources (at a
cut-off grade of 0.5 grammes per tonne of gold) of 1,775,000 tonnes containing 145,200 ounces of gold, 736,100 ounces of silver,
3,295 tonnes of copper and 14,470 tonnes of zinc. Table 5 shows the Gadir underground mine mineral resources estimate as at
20 August 2018. Table 6 shows the Gadir underground mine ore reserves estimate as at 20 August 2018.

Table 5 – Gadir underground mine mineral resources estimate at 20 August 2018

Mineral resources
(cut-off grade ≥ 0.5g/t gold)

Mineral resources

Measured

Indicated

In situ
(thousand of
tonnes)

540

1,235

Gold

Silver

Copper

Zinc

(thousand of
ounces)

(g/t)

(thousand of
ounces)

(g/t)

3.70

2.04

17.49

10.89

304

432

(per cent.)

(tonnes)

(per cent.)

(tonnes)

0.29

1,566

1.01

5,454

0.14

1,729

0.73

9,016

Measured and indicated

1,775

2.54

145

12.90

736

0.21

3,295

0.84 14,470

Inferred

Total

571

1.48

5.68

104

0.10

571

0.52

2,972

2,347

2.29

172

11.14

840

0.19

3,866

0.78 17,442

Some of the totals in the above table do not sum due to rounding.

Gedabek continued
Table 6 – Gadir underground mine ore reserves estimate at 20 August 2018

One reserves

Proved

Probable

Proved and probable

Ore reserves

Gold

Silver

Copper

(thousand
of ounces)

(g/t)

(per cent.)

(tonnes)

14.13

10.99

101

203

0.24

0.15

535

852

11.86

304

0.17

1,387

(g/t)

2.81

2.41

2.73

In situ
(thousand
of tonnes)

222

575

797

Some of the totals in the above table do not sum due to rounding.

Mining operations
The principal mining operation at the Gedabek contract area is conventional open-cast mining using truck and shovel from the
Gedabek open pit (which comprises several contiguous smaller open pits) and the Ugur open pit. Ore is first drilled and blasted
and then transported either to a processing facility or to a stockpile for storage. The mining activities of blast-hole drilling, and
haulage of ore and waste rock, are carried out by contractors. Blasting and other mining activities are carried out by the Company.

Production commenced from the Ugur open pit mine in September 2017. To enable production, a 4.6 kilometre road was
constructed between the mine and the Company’s processing facilities. All necessary surface infrastructure, including geology,
medical and HSE offices, hygiene facilities, a mechanical workshop, lubricants and spares stores, a weighbridge and a diesel store
was also constructed at the mine site.

Ore is also mined from the Gadir underground mine, the portal of which is situated approximately one kilometre from the Gedabek
open pit. Table 7 shows the ore mined in the year ended 31 December 2019 from all the Company’s mines at Gedabek and Gosha.

Table 7 – Ore mined at Gedabek from all mines (including Gosha) for the year ended 31 December 2019

Mine

Gedabek open pit

Ugur – open pit

Gadir – underground

Gosha – underground

Total

Total ore mined
(12 months to
31 December 2019)

Ore mined
(tonnes)

1,475,278

1,283,437

147,316

7,235

Average
gold grade
(g/t)

0.73

1.24

2.73

2.81

2,913,266

1.06

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

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

1 Heap leaching of crushed ore. Crushed ore is heaped into permeable “pads” onto which is sprayed a solution of cyanide.

The solution dissolves the metals as it percolates through the ore by gravity and it is then collected by the impervious base under
the pad.

2 Heap leaching of run of mine (“ROM”) ore. The process is similar to heap leaching for crushed ore, except the ore is not crushed,
instead it is heaped into pads as received from the mine (ROM) without further treatment or crushing. This process is used for
very low grade ores.

3 Agitation leaching. Ore is crushed and then milled in a grinding circuit. The finely ground ore is placed in stirred (agitation) tanks
containing cyanide solution and the contained metal is dissolved in the solution. Depending on the composition of the ore, an
option is available to process the finely ground ore through the flotation plant prior to, or after treatment by the agitation leaching
plant. However, since installation of the second crusher line for the flotation plant in 2018, the two plants have been operating
independently. Any coarse, free gold is separated using a centrifugal-type Knelson concentrator.

Anglo Asian Mining PLC Annual report and accounts 2019Gedabek continued
Processing operations continued
Slurries produced by the above processes with dissolved metal in solution are then transferred to a resin-in-pulp (“RIP”) plant. A
synthetic ion exchange resin, in the form of small spherical plastic beads designed to absorb gold selectively over copper and silver,
is mixed 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, comprising an alloy of gold and silver.

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

1 Sulphidisation, Acidification, Recycling and Thickening (“SART”). The cyanide solution after gold absorption by resin-in-pulp
processing is transferred to the SART plant. The pH of the solution is then changed by the addition of reagents. This precipitates
the copper from the solution in the form of a finely divided copper sulphide concentrate containing silver and minor amounts of
gold. The process also recovers cyanide from the solution, which is recycled back to leaching.

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

In the early years of the mine’s life, gold doré was produced at Gedabek only by heap leaching crushed and agglomerated ore.
Heap leaching is a low capital cost method of production commonly used by mines when they first move into production. Currently,
heap leaching at Gedabek is being carried out with ore crushed to less than 25mm in size and the resultant gold recovery is
approximately 60 per cent. to 70 per cent. of the contained gold over leaching cycles which extend typically beyond one year.

To increase gold recoveries and production, in 2013 the Group constructed 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 topography of the Gedabek site, this is a constraint. The capacity of the agitation
leaching plant was increased in 2016 by the installation of a second semi-autogenous grinding (“SAG”) mill.

The ore at Gedabek is polymetallic containing significant amounts of copper. Initially, the SART processing plant was constructed
to recover some of the copper as a copper and precious metal chemical concentrate. However, to further exploit the high copper
content of the Group’s ore reserves, the Group constructed a flotation plant whose function is primarily to produce a copper-rich
mineral concentrate, containing gold and silver as by-products. The flotation plant commenced production in November 2015.
The flotation plant has the flexibility to be configured for various methods of operation.

In 2018, a second crusher line was installed for the flotation plant. This has a budgeted capacity of 95 tonnes per hour compared
to the original crusher of up to 120 tonnes per hour. This removed a large bottleneck and enabled independent operation of the
agitation leaching and flotation plants using separate sources of feedstock. The addition of this second crusher not only significantly
increases the capacity of our processing plants, but also their flexibility.

Production and sales
For the year ended 31 December 2019, total gold production as doré bars and as a constituent of the copper and precious metal
concentrate totalled 70,098 ounces, which was a decrease of 2,700 ounces in comparison to the production of 72,798 ounces for the
year ended 31 December 2018.

Table 8 summarises the amount of ore and its gold grade processed by leaching at Gedabek for the year ended 31 December 2019.

Gedabek continued
Production and sales continued
Table 8 – Ore and its gold grade processed by leaching at Gedabek for the year ended 31 December 2019

Quarter ended

31 March 2019

30 June 2019

30 September 2019

31 December 2019

Total for the year

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

127,990

133,194

171,211

152,173

286,163

176,602

148,269

261,414

192,097

98,280

288,583

181,710

0.80

0.90

0.93

0.86

0.51

0.49

0.46

0.49

2.50

2.40

2.25

2.44

526,712 969,354 721,620

0.88

0.49

2.40

Table 9 summarises the amount of ore and its gold, silver and copper content processed by flotation for the year ended
31 December 2019.

Table 9 – Ore and its gold, silver and copper content processed by flotation for the year ended 31 December 2019

Quarter ended

31 March 2019

30 June 2019

30 September 2019

31 December 2019

Total for the year

Ore
processed
(tonnes)

Gold
content
(ounces)

Silver
content
(ounces)

Copper
content
(tonnes)

127,204

131,162

127,761

121,067

3,498

2,412

2,887

3,797

44,810

27,288

28,586

51,139

633

616

703

790

507,194

12,594 151,823

2,742

Table 10 summarises the gold and silver bullion produced from doré bars and sales of gold bullion for the year ended 31 December 2019.

Table 10 – Gold and silver bullion produced from doré bars and sales of gold bullion for the year ended 31 December 2019

Quarter ended

31 March 2019

30 June 2019

30 September 2019

31 December 2019

Total for the year

Including Government of Azerbaijan’s share.

** Excluding Government of Azerbaijan’s share.

Gold
produced*
(ounces)

Silver
produced*
(ounces)

Gold
sales **

(ounces)

Gold sales
price
($/ounce)

15,547

16,073

16,619

15,912

6,634

4,773

4,420

3,880

13,122

13,467

14,894

12,509

1,306

1,332

1,513

1,481

64,151

19,707

53,992

1,410

Table 11 summarises the total copper, gold and silver produced as concentrate by both SART and flotation processing for the year
ended 31 December 2019.

Table 11 – Total copper, gold and silver produced as concentrate by both SART and flotation processing for the year ended
31 December 2019

Quarter ended

31 March 2019

30 June 2019

30 September 2019

31 December 2019

Copper (tonnes)

Gold (ounces)

Silver (ounces)

SART

Flotation

Total

SART

Flotation

Total

SART

Flotation

Total

113

450

383

450

616

513

448

520

729

1,687

1,068

1,168

1,979

1,698

1,076

1,178

1,995

16,201

28,461

12,794

15,491

11,754

17,142

11,159

26,647

44,662

28,285

28,896

37,806

Total for the year

311

1,899

2,210

5,902

5,947

51,908 87,741 139,649

Anglo Asian Mining PLC Annual report and accounts 2019Gedabek continued
Production and sales continued
Table 12 summarises the total copper concentrate (including gold and silver) production and sales from both SART and flotation
processing for the year ended 31 December 2019.

Table 12 – Total copper concentrate (including gold and silver) production and sales from both SART and flotation processing
for the year ended 31 December 2019

Quarter ended

31 March 2019

30 June 2019

30 September 2019

31 December 2019

Total for the year

Concentrate
production*
(dmt)

Copper
content*
(tonnes)

Gold
content*
(ounces)

3,013

2,395

2,947

3,593

513

448

520

729

1,698

1,076

1,178

1,995

Silver
content*
(ounces)

44,662

28,285

28,896

37,806

Concentrate

sales**
(dmt)

275

4,030

2,246

3,730

sales**
($000)

625

6,069

3,189

6,770

11,948

2,210

5,947

139,649

10,281

16,653

Including the Government of Azerbaijan’s share.

** These are invoiced sales of the Group’s share of production before any accounting adjustments in respect of IFRS 15. The total for the year does not therefore

agree to the revenue disclosed in note 6 – “Revenue” to the Group financial statements.

Infrastructure
The Gedabek contract area is served by excellent infrastructure. The main site is located at the village of Gedabek which is
connected by a good tarmacadam road to the regional capital of Ganja. Baku, the capital of Azerbaijan to the south and the
country’s border with Georgia to the north, are both approximately a four to five hour drive over excellent roads. The site is
connected to the Azeri national power grid and there is a dedicated sub-station located at the main Gedabek processing facilities.

Water management
The Gedabek site has its own water treatment plant which was constructed in 2017 and which uses the latest reverse osmosis
technology. In the last few years, Gedabek village has experienced water shortages in the summer and this plant reduces to the
absolute minimum the consumption of fresh water required by the Company.

Wastewater evaporation equipment is also deployed in the tailings dam. This is mobile, skid mounted equipment into which water is
pumped without treatment direct from the tailings dam. The equipment then evaporates the water by jetting it into the atmosphere
as a fine spray. It can evaporate approximately 25 litres per second of water depending upon climatic conditions.

Tailings (waste) storage
The Company is very mindful of the importance of proper storage of tailings both for efficient operation of its processing plants and
to fulfil its environmental responsibilities. The Company stores its tailings in a purpose built dam approximately seven kilometres
from its processing facilities, topographically at a lower level than the processing plant, thus allowing gravity assistance of tailings
flow in the slurry pipeline. Immediately downstream of the tailings dam is a reed bed biological treatment system to purify any
seepage from the dam before discharge into the nearby Shamkir river.

The current capacity of the tailings dam is 4.3 million cubic metres. There are two pipelines from the Company’s processing facilities
to the tailings dam to increase capacity and provide redundancy.

The tailings dam was inspected in early June 2019 by Knight Piésold (“KP”), a leading environmental engineering company. KP
reported that the dam had been properly constructed, showed no visible signs of instability and that there were no signs of seepage.
Various minor recommendations, including moving the location of the tailings discharge pipes to better spread sediment within the
dam, were made to ensure that the dam operates to best practice. These have now been implemented.

Health, safety and environmental
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 senior management team. The health, safety and environmental (“HSE”) department at Gedabek has a
qualified HSE manager, who is assisted by a team of 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. The HSE and technical committee
meets twice a year at the Gedabek site.

During 2019, there were 21 reportable safety incidents (2018: 44), of which ten involved injuries to personnel. Three of these cases
were minor injuries, but seven (2018: four) were lost time incidents (LTI), where the casualty had to take time off work. A comprehensive
HSE training schedule is being implemented in 2020.

Gosha
The Gosha contract area is 300 square
kilometres in size and is located in western
Azerbaijan, 50 kilometres north-west of
Gedabek. Gosha is currently the location
of a small, high grade, underground gold
mine. Ore mined at Gosha is transported
by road to Gedabek for processing.

A total of 7,235 tonnes of ore of average
gold grade 2.81 grammes per tonne were
mined at Gosha in the year ended
31 December 2019.

The Company carried out considerable
geological exploration work at Gosha in
2019, details of which are set out in the
report on geological exploration.

Ordubad
The 462 square kilometre Ordubad
contract area is located in Nakhchivan,
south-west Azerbaijan and contains
numerous targets. The Company carried
out considerable geological exploration
work at Ordubad in 2019, details of
which are set out in the report on
geological exploration.

Geological exploration
The Group’s report on geological
exploration during 2019 is on pages 7 to 16.

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.

Until late 2018, the Group shipped all its
gold doré to MKS Finance SA in Switzerland
for refining. In late 2018, the Group signed
an additional contract with Argor-Heraeus
SA, also in Switzerland, for the refining of
gold doré. The Group contracted with a
second refiner to ensure refining services
are obtained on the best commercial terms.
The Group now ships its gold doré to both
refiners. 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 can be settled within one to
two days of receipt of the doré. The Group,
at its discretion, can sell the resulting
refined gold bullion to the refiner. The
Group experienced very minor delays to
its export of gold doré in 2019 due to
delays in obtaining export permission
following a reorganisation of the Ministry
of Finance of the Government of Azerbaijan.
The delays had no significant effect on the
operations of the Group and the protocol
for gold export was subsequently amended
by the Government of Azerbaijan. Since the
protocol was amended, no delay in the
export of gold doré has been experienced
other than delays due to the temporary

suspension of scheduled air flights due to
the COVID-19 pandemic.

The Gedabek mine site has good road
transportation links and our copper and
precious metal concentrate is collected
by truck from the Gedabek site by the
purchaser. In 2014, the Group commenced
selling its copper concentrate produced by
SART processing to Industrial Minerals SA,
a Swiss-based integrated trading, mining
and logistics group under an exclusive
three year contract. This contract has been
subsequently renewed and expanded
to include copper concentrate produced
by flotation, in addition to the SART
concentrate. The latest renewal of the
contract was signed in early 2020 for a
period of one year, but the contract will
automatically extend unless terminated
by either party.

In June 2018, the Group signed a contract
with Trafigura Pte. Limited (“Trafigura”) for
the sale of copper concentrates produced
by flotation processing. The contract has
no expiry date unless terminated by either
party and the first shipment of concentrate
was made under the contract in September
2018. In 2019, Trafigura purchased all
concentrate produced by flotation and
Industrial Minerals SA purchased all
concentrate produced by SART processing.
The Group experienced minor delays in
the shipment of flotation concentrates
in the first half of 2019 whilst Trafigura
established its logistical procedures.
These have now been settled and no delays
have subsequently been experienced
in the sale of concentrates.

Section 172(1) Statement
The Company’s Section 172(1) Statement
is on pages 26 and 27.

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 expenditure to ensure it can
withstand any prolonged period of
commodity price weakness.

The Group actively monitors all changes
in commodity prices to understand
the impact on the business. The Group
has previously hedged against the future
movement in the price of gold. The
directors keep under review the
potential benefit of hedging.

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.
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 23 to the financial statements below.

Liquidity and interest rate risk
During 2019, the only material borrowing
of the Group has been the Pasha Bank
refinancing loan which had a fixed rate of
interest. The Group has not therefore
used any interest rate swaps or other
instruments to manage its interest rate
profile during 2019, but this recourse is
reviewed on a periodic basis. The approval
of the board of directors is required for all
new borrowing facilities. The Group occasionally
has minor borrowings in connection with
providing letters of credit to suppliers.

The Group’s surplus cash deposits have
steadily increased since the beginning of
2019. The Group places these on deposit
in United States dollars with a range of
banks to both ensure it obtains the best
return on these deposits and to minimise
counterparty risk. The amount of interest
received on these deposits is not material
to the financial results of the Company
and therefore any decrease in interest
rates would not have any adverse effect.

Anglo Asian Mining PLC Annual report and accounts 2019Principal risks and uncertainties
continued
COVID-19 pandemic in 2020
The COVID-19 pandemic has resulted
in restrictions being put in place on the
ability of the Group to operate since early
March 2020. International travel generally
and domestic travel in Azerbaijan has
been either temporarily suspended or
curtailed. The operations of many
businesses in Azerbaijan have also been
temporarily suspended and the Group’s
gold refiners in Switzerland were closed
for a period in March and April 2020
but have now reopened with initially
limited operations.

The measures taken by the board of
directors (the “Board”) to manage the
risk of the COVID-19 pandemic are set
out in the Corporate Governance section
on page 34. These include informally
convening weekly Board meetings during
the pandemic to ensure all possible
actions are put in place to protect the
health and safety of its staff and to
maintain production.

Despite the restrictions, the Company
has continued in operation and to sell its
products. It has also put in place actions
to safeguard the health of its employees
at Gedabek. These include many hygiene
measures such as the provision of hand
disinfectants, deep cleaning of work areas
and key employee homes and the
provision of take away food to avoid the
close gathering of people in canteens. An
education progamme for employees was
carried out and the Gosha accommodation
camp has been redeployed as a quarantine
facility. It has also chartered aircraft to
ship its gold doré to Switzerland.

The main risk to the Group from the
COVID-19 pandemic would be a lower
level, or a complete cessation, of
production. This could occur due to an
outbreak of COVID-19 at Gedabek or
further action by the Government of
Azerbaijan to prevent the spread of the
Coronavirus. The Group may also be
required to operate at a lower level of
production or cease production
altogether due to its inability to obtain
necessary supplies and services or
to adequately staff or maintain its
operations. There is also the risk that the
Group can continue in production but will
be unable to ship and sell its finished
products. However, given that the future
evolution and duration of the COVID-19
pandemic is currently unknown, it is not
possible to quantify at this time its
long-term effect on the Group.

Key performance indicators
The Group has adopted certain key
performance indicators (“KPIs”) which
enable it to measure its financial
performance. These KPIs are as follows:

1 Profit before taxation. This is the key
performance indicator used by the
Group. It gives insight into cost
management, production growth
and performance efficiency.

2 Net cash provided by operating
activities. This is a complementary
measure to profit before taxation and
demonstrates conversion of underlying
earnings into cash. It provides additional
insight into how we are managing
costs and increasing efficiency and
productivity across the business in
order to deliver increasing returns.

3 Free cash flow (“FCF”). FCF is
calculated as net cash flow from
operating activities less capital
expenditure. This is a measure of the
amount of cash generated which can
either be distributed to investors or
used for expansion of the business.

4 All-in sustaining cost (“AISC”)

per ounce. AISC is a widely used,
standardised industry metric and is a
measure of how our operation compares
to other producers in the industry.
AISC is calculated in accordance with
the World Gold Council’s Guidance
Note on Non-GAAP Metrics dated
27 June 2013. The AISC calculation
includes a credit for the revenue
generated from the sale of copper and
silver, which are classified by the Group
as by-products. There are no royalty
costs included in the Company’s AISC
calculation as the Production Sharing
Agreement with the Government of
Azerbaijan is structured as a physical
production sharing arrangement.
Therefore, the Company’s AISC is
calculated using a cost of sales, which
is the cost of producing 100 per cent.
of the gold and such costs are
allocated to total gold production
including the Government of
Azerbaijan’s share.

Reza Vaziri
President and chief executive
12 May 2020

Aerial view of the Group’s production facilities at Gedabek.

The new reporting legislation around stakeholder engagement is
welcomed by the Board and the commentary and table below sets
out the Company’s section172(1) statement.

Engagement with key stakeholders
The table on page 27 sets out the Board’s
key stakeholders and provides examples
of how the Board engaged with them in
the year as well as demonstrating
stakeholder consideration in the decision-
making process. However, the Board
recognise that depending on the nature
of an issue, the interests of each
stakeholder group may differ. The Board
seeks to understand the relative interests
and priorities of each stakeholder and to
have regard to these, as appropriate, in
its decision making. However, the Board
acknowledges that not every decision it
makes will necessarily result in a positive
outcome for all stakeholders.

COVID-19
The Board are very focused on the
COVID-19 Health emergency and the
effect on its stakeholders. Further details
are set out in Corporate Governance on
page 34. The Board has ensured its
shareholders are regularly updated by
issuing press releases setting out in detail
its effect on the Group’s operations.

Principal decisions and other key
factors in maintaining shareholder value
For the year ended 31 December 2019,
the Board consider that the following
are examples of the principal decisions
that it made in the year:

• consideration and agreement of the
Group’s budget together with the
associated production guidance for
the year ended 31 December 2019; and

• consideration of the final dividend

payable for the year ended
31 December 2018 and the interim
dividend payable for the year
ending 31 December 2019.

The Group, like all companies operating
in the extractive industries, is required
to continually replace and increase its
mineral reserves to maintain and improve
the sustainability of its business. This
concern is a high priority of the Board.
To address this priority, a three-year
geological exploration campaign of its
existing mining concessions was started
in 2018 which the Board monitor through
regular reports and site visits by directors.
The Company is also looking at other
opportunities and the Board receive
regular updates on progress in this area.

The Board and senior managers of the
Company hold in total 44.6 per cent. of
the shares of the Company with the
remainder held by a wide range of
individual and institutional shareholders.
The Board are extremely mindful that all
shareholders must be treated equally. This
is reflected in the Board’s behaviour to
ensure all decisions do not disadvantage
external shareholders compared to the
interests of the directors and senior
management and that external
shareholders are fully and timely informed
of all company developments.

Introduction
The board of directors of Anglo Asian
Mining PLC (the “Board”) consider that
they have adhered to the requirements
of section 172 of the Companies Act 2006
(the “Act”) and have, in good faith, acted
in a way that they consider would be most
likely to promote the success of the
Company for the benefit of its shareholders
as a whole. In acting this way, the Board
have had regard to and recognise the
importance of considering all stakeholders
and other matters as set out in section 172(1)
(a to f) of the Act in its decision-making.

The Board members are directors of
Anglo Asian Mining PLC which is a
holding company. The Group carries out
its business of mining in Azerbaijan through
its wholly owned subsidiaries. Given the
nature and size of the Group, the Board
consider it reasonable that executive
decision making for the entire Group,
including its subsidiaries in Azerbaijan,
is the responsibility of the Board. The
section 172(1) statement has accordingly
been prepared for the entire Group.

The new reporting legislation around
stakeholder engagement is welcomed
by the Board and the commentary and
table on page 27 sets out the Company’s
section 172(1) statement. This statement
provides details of key stakeholder
engagement undertaken by the Board
during the year and how this helps the
Board to factor in potential impacts on
stakeholders in the decision-making
process.

General
The Group promotes the highest
standards of governance as set out in
Corporate Governance on pages 32 to 34.
The principles of Corporate Governance
underpin how the Board conducts itself.
The Board is very conscious of the impact
that the Group’s business and decisions
has on its direct stakeholders as well as its
societal impact. The Company operates
to the highest ethical standards as
discussed in Corporate Governance
Section on pages 32 to 34.

* This section 172(1) statement forms part of the Group’s Strategic Report and is incorporated by reference.

Anglo Asian Mining PLC Annual report and accounts 2019Stakeholder

How the Board has approached their engagement

How the Board has taken their interests into account

Shareholders

The Board aims to provide clear and timely
information to its shareholders which gives an
honest and transparent view of the performance
of the business.

The Board maintains a dialogue with external
shareholders and keeps them informed in a variety of
ways as set out in section 10 of Corporate Governance.

Customers

The Board aims to maintain a mutually beneficial
relationship based on trust through a continuous
dialogue with each of its customers.

Visits to its customers by senior staff are undertaken
and visits are made by customers to the Company in
Azerbaijan to show them the Group’s production facilities.

The Company maintains a continuous dialogue with its
customers regarding the technical specifications of its
products to ensure the most beneficial sales terms are
obtained for both parties.

The Company also assisted its customers in fulfilling
their responsibilities under the LBMA Responsible
Sourcing Programme.

All significant purchases are discussed with
suppliers and prices and delivery terms agreed
which are mutually beneficial to both parties.

Technical staff work in close collaboration with
suppliers of specialist services to ensure the supplier
provides the highest quality service to the Company
within the commercial terms of the contract.

The results of the employee survey have been
reviewed and action taken to implement suggestions
where appropriate.

The health and safety committee considered
all reportable safety incidents during the year in
consultation with employee representatives and all
appropriate actions were taken to prevent further
occurrences in the future.

Suppliers

Employees

The Board has ensured an appropriately qualified
and professional procurement department is in place
which maintains close contact with all suppliers.
All procurement is carried out via a transparent
tender process.

For specialised goods and services, senior
management will maintain a dialogue with the
supplier and report their engagement to the Board.

The Board has mandated a mainly informal approach
to engage with employees in light of their number
and to ensure appropriate upward communication
channels exist for employees.

Directors and senior management regularly visit
Gedabek where the majority of the employees
are located.

There are also two formal mechanisms for engaging
with employees:

• An employee survey is carried out once a year
and the results are circulated to directors.

• The health and safety committee meet twice

a year at Gedabek and the meetings are attended
by directors.

Community

Board members regularly visit Gedabek and meet
with the local administration and other community
leaders to hear their views on community relations.

The Group has carried out significant community and
social development in the region.

Government
of Azerbaijan

The Board has set up a formal mechanism for
engaging with the Government of Azerbaijan as set
out in Corporate Governance on pages 32 to 34.

The Company has promptly complied with all requests
from the Government for information about the
Company’s business.

Directors also meet with high level Government
officials on a regular basis.

An open relationship based on trust has been
formed with the Government. This enabled the
Company to quickly obtain a new protocol from the
Government regarding export of gold doré following
a Government reorganisation.

“ The Group recorded a profit before taxation in 2019 of $30.1m

compared to $25.2m in 2018. This was due to higher revenues and
lower cost of sales and finance costs.”

The directors present their
financial review for the year
ended 31 December 2019.
This financial review forms
part of the strategic report
on pages 17 to 25.

Group statement of income
The Group generated revenues in 2019
of $92.1m (2018: $90.4m) from the sales
of gold and silver bullion and copper
and precious metal concentrate.

The revenues in 2019 included $76.4m
(2018: $75.5m) generated from the sales
of gold and silver bullion from the Group’s
share of the production of doré bars.
Bullion sales in 2019 were 53,992 ounces
of gold and 16,471 ounces of silver (2018:
59,481 ounces of gold and 25,394 ounces
of silver) at an average price of $1,410 per
ounce and $16 per ounce respectively
(2018: $1,265 per ounce and $16 per
ounce respectively). In addition, the
Group generated revenue in 2019 of
$15.7m (2018: $14.9m) from the sale of
10,281 (2018: 7,675) dry metric tonnes of
copper and precious metal concentrate.
The Group’s revenue benefited in the year
from a higher average price of gold at
$1,404 per ounce (2018: $1,269 per ounce)
offset by a lower average price of copper
at $6,015 per metric tonne (2018: $6,527
per metric tonne).

The Group did not hedge any metal sales
during 2018 or 2019.

The Group incurred lower cost of sales in
2019 of $54.6m (2018: $56.5m) due to
lower depreciation. Cash costs were
higher at $48.0m (2018: $40.5m). Reagent
costs were higher due to the independent
operation of the flotation plant throughout
2019 and mining costs were higher due to
increased mining from the open pit in 2019.
Stripping costs were $1.4m (2018: credit
of $4.7m). The higher cash and stripping
costs were offset by lower depreciation of
$3.8m and a credit of $9.2m (2018: cost of
$1.4m) in respect of an increase of inventory.

Depreciation and amortisation in 2019
was lower at $19.2m compared to $22.9m
in 2018. 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 depreciation and amortisation were
lower in 2019 due to the lower amount of
gold produced. Amortisation of $0.8m
was incurred in 2019 (2018: $nil) in respect
of depreciation on right of use assets due
to the adoption in 2019 of IFRS 16 – “Leases”.

The Group incurred administration
expenses in 2019 of $5.2m (2018: $5.3m).
The Group’s administration expenses
comprise the cost of the administrative
staff and associated costs at the Gedabek
mine site, the Baku office and maintaining
the Group’s listing on AIM. The majority
of the administration costs are incurred in
either Azerbaijan New Manats, the United
States dollar or United Kingdom pounds
sterling. United Kingdom pounds sterling
weakened against the US dollar in 2019
compared to 2018 whilst the Azerbaijan
New Manat was stable. Administration
costs in 2019 were similar to 2018 as a
marginally higher level of sterling
denominated costs were offset by the
weaker exchange rate. Finance costs in
2019 were $1.3m compared to $1.6m in
2018. The costs reduced in the year due
to both a significant reduction in the
average bank debt in 2019 and a
reduction in the average interest rate on
the bank debt. In the 2019, the finance
costs included $0.4m (2018: $nil) interest
expense on lease liabilities due to the
adoption in 2019 of IFRS 16 – “Leases”.

The Group recorded a profit before
taxation in 2019 of $30.1m compared to
$25.2m in 2018. This was due to higher
revenues and lower cost of sales and
finance costs.

The Group had a taxation charge in 2019
of $10.8m (2018: $8.9m). This comprised
a current income tax charge of $7.2m
(2018: $7.3m) and a deferred tax charge of
$3.6m (2018: $1.6m). The current income
tax charge of $7.2m was incurred by R.V.
Investment Group Services (“RVIG”) in
Azerbaijan. RVIG generated taxable
profits in 2019 of $22.6m which were
taxed at 32 per cent. (the corporation tax
rate stipulated in the Group’s production
sharing agreement). RVIG had no tax
losses carried forward at 1 January 2019
or 31 December 2019.

The taxable profits of the operating
company in Azerbaijan are taxed at
32 per cent. However, the Group’s
overall tax rate in 2019 was 36 per cent.
(2018: 35 per cent.). The overall tax rate is
higher than 32 per cent. because the UK
administrative costs and depreciation
of mining rights in Azerbaijan cannot be
offset against the taxable profits arising
in Azerbaijan. These costs in 2019 totalled
$3.6m (2018: $3.3m).

All-in sustaining cost of gold production
The Group produced gold at an all-in
sustaining cost (“AISC”) per ounce of
$591 in 2019 compared to $541 in 2018.
The Group reports its cash cost as an
AISC calculated in accordance with the
World Gold Council’s guidance which is
a standardised metric in the industry.
The reason for the increase in 2019 compared
to 2018 was the independent operation of
the flotation plant throughout 2019 and
increased mining from the Gedabek open
pit. Production also decreased which
increases the AISC as many of the costs
are fixed or semi-fixed.

Group statement of financial position
Non-current assets decreased from
$98.6m at the end of 2018 to $93.4m at
the end of 2019. The main reason for
the decrease was property, plant and
equipment being lower by $11.4m due
to depreciation in the year. Non-current
assets at 31 December 2019 included

Anglo Asian Mining PLC Annual report and accounts 2019Group statement of financial position
continued
$3.6m (2018: $nil) in respect of right of use
assets due to the adoption in 2019 of IFRS
16 – “Leases”. Intangible assets increased
from $17.0m at the end of 2018 to $20.0m
at the end of 2019 due to expenditure on
geological exploration and evaluation of
$4.5m offset by amortisation.

Net current assets were $55.5m at the end
of 2019 compared to $33.5m at the end of
2018. The main reason for the increase in
net current assets was an increase in cash
and cash in transit of $8.3m and a decrease
in the current portion of bank loans payable
of $5.0m. The Group’s cash balances at
31 December 2019 including cash in
transit were $22.9m (2018: $14.5m).
Surplus cash is maintained in US dollars
and was placed on fixed deposit with
several banks at tenors of between one to
three months at interest rates of around
1.5 to 2.2 per cent.

Net assets of the Group at the end of
2019 were $109.0m (2018: $98.4m). The
net assets were higher due to the increase
in retained earnings. There were no
shares issued in 2019.

The Group is financed by a mixture of equity
and debt. The Group’s bank borrowings
continued to reduce during 2019 and at
31 December 2019 were $1.7m, a significant
reduction from $8.4m at 31 December
2018. The Group refinanced $13.5m of its
outstanding debt during 2018 with a
3-year refinancing loan which was the only
outstanding bank borrowing at 31 December
2019. The interest rate on the refinancing
loan was 7 per cent. (2018: 7 per cent.).
Total Group debt at 31 December 2019
was $5.5m which also includes $3.8m
(2018: $nil) of lease liabilities due to the
adoption in 2019 of IFRS 16 – “Leases”.

There were no movements of the Group’s
share capital or share premium account in
2019. The Group’s holding company,
Anglo Asian Mining PLC received in 2019
an intercompany dividend of $10m (2018:
$nil) which gives it the capacity to pay
dividends of $9.1m at 31 December 2019.

Group cash flow statement
Operating cash inflow before movements
in working capital for 2019 was $50.5m
(2018: $50.1m). The main source of operating
cash flow was operating profit before
the non-cash charges of depreciation
and amortisation in 2019 of $49.4m
(2018: $49.8m) after adding back
finance cost net of finance income.

Working capital movements excluding
cash in transit absorbed cash of $7.6m
(2018: generated cash of $0.6m) largely
due to an increase in inventories of $9.7m
(2018: $0.4m). This was due to increased
stockpiles of ore and increased heap
leaching at the end of 2019.

Net cash from operating activities excluding
cash in transit of $5.1m in 2019 was
$34.8m compared to $47.1m in 2018 due
to cash absorbed by working capital and
higher tax payments.

The Company paid corporation tax in
2019 of $8.2m (2018: $3.6m) in Azerbaijan
in accordance with local requirements. This
was the final payment of its liability for 2018
and payments on account of its liability
for the year ended 31 December 2019.

Expenditure on property, plant and
equipment and mine development was
$4.7m (2018: $15.3m). The main items of
expenditure in 2019 were mine development
of $2.2m and heap leach pad expansion
of $0.5m.

Exploration and evaluation expenditure in
2019 of $4.5m (2018: $2.9m) was incurred
and capitalised. This arose on exploration
at the Gedabek, Gosha and Ordubad
contract areas.

COVID-19 pandemic in 2020
The Group has operated since early 2020
under restrictions imposed by governments
around the world to combat the spread of
the coronavirus. The Group has managed
to maintain production and ship and sell
its products. It is estimated that the
Group is incurring additional operating
costs of approximately $0.1m per month
during the restrictions. These include the
cost of chartering aircraft to ship its gold
doré to Switzerland, staff overtime due to
reorganisation of staff shifts to prevent
the spread of the coronavirus and
additional logistical costs.

The evolution and duration of the
emergency is not known but should the
Group be required to temporarily suspend
its operations it would incur costs of
approximately $1.0m per month to place
the operation on care and maintenance. It
currently costs approximately $4.0m to $5.0m
million a month to maintain full production.

The Group has agreed terms for a $15m
standby credit facility as a precautionary
measure. It is for 3 years at an interest rate
of 4.5 per cent. The documentation for the
loan is currently being processed.

Dividends
In respect of 2019, the Group paid an
interim dividend of $0.035 per share and
has proposed a final dividend of $0.045
per share giving a total for the year of
$0.08 per share (2018: total for the year
of $0.07 per share). Dividends are declared
in United States dollars but paid in
United Kingdom pounds sterling.
The total cost of the 2018 dividends was
$8.0m (£6.3m) and the estimated total cost
of the dividends for 2019 is $9.2m (£7.5m).
The proposed final dividend for 2019 is
subject to the approval of the shareholders
and has not been accrued in the 2019
financial statements.

The directors have announced a policy to
target a distribution to shareholders each
year comprising approximately 25 per cent.
of the Group’s free cash flow. This distribution
will be made in two approximately equal
instalments comprising an interim and
final dividend. The amounts and timing
of payment of the interim and final
dividends will be announced each year
along with the Group’s interim and final
results respectively. The board will review
this policy each year taking into account
the financing needs of the business at
that time. Free cash flow is defined as net
cash flow from operating activities less
capital expenditure and for 2019 was
$25.5m (2018: $28.9m) including cash
in transit of $5.1m (2018: $nil).

Production Sharing Agreement
Under the terms of the Production Sharing
Agreement (“PSA”) with the Government
of Azerbaijan (“Government”), the Group
and the Government share the commercial
products of each mine. The Government’s
share is 51 per cent. of “Profit Production”.
Profit Production is defined as the value
of production, less all capital and
operating cash costs incurred during the
period when the production took place.
Profit Production for any period is subject
to a minimum of 25 per cent. of the value
of the production. This is to ensure the
Government always receives a share of
production. The minimum Profit Production
is applied when the total capital and
operating cash costs (including any
unrecovered costs from previous periods)
are greater than 75 per cent. of the value
of production. All operating and capital
cash costs in excess of 75 per cent. of
the value of production can be carried
forward indefinitely and set off against
the value of future production.

Anglo Asian Mining PLC Annual report and accounts 2019Corporate governanceGroup financial statementsCompany financial statementsAnnual general meetingAnglo Asian MiningChairman’s statementFinancial reviewStrategic reportFinancial review continued

Production Sharing Agreement
continued
Profit Production for the Group has been
subject to the minimum 25 per cent. for
all years since commencement of production
including 2019. The Government’s share
of production in 2019 (as in all previous
years) was therefore 12.75 per cent. being
51 per cent. of 25 per cent. with the
Group entitled to the remaining 87.25 per
cent. The Group was therefore subject to
an effective royalty on its revenues in 2019
of 12.75 per cent. (2018: 12.75 per cent.)
of the value of its production.

The Group can recover the following
costs in accordance with the PSA:

• 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 United

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

Unrecovered costs are calculated
separately for the three contract areas of
Gedabek, Gosha and Ordubad and can
only be recovered against production
from their respective contract areas. The
total unrecovered costs for the Gedabek
and Gosha contract areas at 31 December
2019 were $59.0m and $25.5m respectively
(2018: $76.9m and $23.3m respectively).
The Group’s current business plans
indicate that these costs will not be fully
recovered until at least 2023 and the
effective royalty of 12.75 per cent. will
therefore continue until then.

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 2021
and satisfying themselves that the Group
will have sufficient funds on hand to meet
its obligations as and when they fall due
over the period of their assessment.
Appropriate rigour and diligence has
been applied by the directors who believe
the assumptions are prepared on a realistic
basis using the best available information.

The Group had cash balances of
$26.0 million and no bank debt at
31 March 2020. The Group is able to fund
its working capital requirements from cash
generated from its operations at Gedabek
provided production is maintained and
finished products sold. The Group has
access to local sources of both short and
long term finance should this be required
and has agreed terms for a $15 million
standby credit facility with Pasha Bank as
a contingency measure.

It is currently costing between $4.0 million
to $5.0 million per month to continue in
production and estimated it would cost
approximately $1.0 million per month to
place the business on care and maintenance.
The directors will manage any disruption
to, or cessation of, production or inability
to sell the Company’s products as
circumstances dictate. The Group has the
financial resources to continue as a going
concern in the unlikely event of a very
prolonged cessation of production of at
least one year or more.

The Group’s business activities, together
with the factors likely to affect its future
development, performance and position,
can be found within the chairman’s statement
and the strategic report on pages 4 to 27.
The financial position of the Group, its
cash flow, liquidity position and borrowing
facilities are discussed within this financial
review. In addition, note 23 to the Group
financial statements below includes the
Group’s financial management risk
objectives and details of its financial
instrument exposures to credit risk and
liquidity risk.

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

Reza Vaziri
President and chief executive
12 May 2020

William Morgan
Chief financial officer
12 May 2020

Anglo Asian Mining PLC Annual report and accounts 2019Board of directors

Mr Khosrow Zamani*
Non-executive chairman, age 77
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 was formerly a non-executive board member
and chairman of the corporate governance committee of
Sekerbank A.S., a publicly listed commercial bank in Turkey,
and a non-executive board member and a member of the
compensation committee of Komercijalna Bank, Serbia.

Mr Reza Vaziri
President and chief executive, age 67
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 80
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 62
Richard Round has held senior finance and leadership roles in
a range of quoted and private companies. Richard now maintains
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 77
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 to 1996, 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.

Introduction
The board of directors (the “Board”)
applied throughout 2019 the principles
of the 2018 Quoted Companies Alliance
Corporate Governance Code (the “QCA
Code”) to support the Company’s
corporate governance framework. The
directors acknowledge the importance
of the ten principles set out in the QCA
Code. The QCA Code is a code of best
practice for AIM companies.

Set out below are the ten principles of
corporate governance in the QCA Code,
the Company’s compliance with each of
the ten principles and the required annual
report and accounts disclosure. A table
of the ten principles is also available
on the Company website (https://www.
angloasianmining.com/wp-content/
uploads/2019/09/CORPORATE_
GOVERNANCE_12_September_update.
pdf) which also sets out the Company’s
compliance, or an explanation for any
non-compliance, with the QCA Code.

Compliance with the principles
of the QCA code

1 Establish a strategy and business
model which promote long-term
value for shareholders
The Company has a portfolio of gold,
copper and silver exploration and
production assets in Azerbaijan. The
Company has a clear strategy of growing a
sustainable mining business in Azerbaijan
which is fully set out in the chairman’s
statement, strategic report and other
sections of this annual report. As with any
other company in the extractive industries,
a key challenge is to replace the mineral
resources mined. This was addressed by
the Company commencing in 2018
a three-year programme of geological
exploration for new mineral resources.
A further key challenge is the safe working
of its operations and this annual report sets
out measures adopted by the Company
in 2019 to address this challenge.

2 Seek to understand and meet

shareholders’ needs and expectations
The Board maintains an extensive two-way
dialogue with its shareholders. The Board
meets shareholders at its annual general
meeting each year. Directors and senior
management regularly meet shareholders
at investor events and other forums.
Individual meetings are held with larger
shareholders who occasionally visit the
Company’s operations in Azerbaijan.
The Company also regularly updates
shareholders on its activities through press
releases via the LSE RNS and RNS Reach
systems. Podcasts and video interviews by
senior management are also disseminated
via well-known investor websites such as

Proactive and Vox. The Company has an
active and effective investor relations
programme that includes institutional
roadshows and presentations. The
Company website is monitored and
regularly updated to be a current and
comprehensive source of information
to stakeholders.

3 Take into account wider stakeholder
and social responsibilities and their
implications for long term success
The Company takes its wider
responsibilities for corporate and social
responsibilities very seriously and has
contributed to the economic and social
development of the local communities in
which it operates. This includes refurbishing
schools and building infrastructure in the
region and assisting local agriculture.
The Company regularly meets with
community leaders in the areas in which
it operates. In addition, the Company
uses the annual report and financial
statements, the interim statements and
its website (www.angloasianmining.com)
to provide further information to
shareholders and wider stakeholders.

One of the main corporate risks is the safe
operation of its mines and processing
operations. To address this specific risk,
the Company has a well-developed and
adequately staffed Health, Safety and
Environment (“HSE”) department to ensure
safe and clean working at its mines and
processing sites. The Company also
has a Health, Safety, Environment and
Technology (“HSET”) committee
comprising John Monhemius and
Reza Vaziri. The committee’s primary
function is to assist the Board in fulfilling
its HSE oversight responsibilities. Its
oversight responsibilities are set out in
section 9 below.

The HSET committee, chaired by
John Monhemius, convened twice during
2019 at the Company’s main Gedabek
operating site. The committee discussed all
aspects of the safe operation of its mines
and processing plants and any reportable
safety incidents together with
recommendations and follow-up
actions from previous meetings.

5 Maintain the Board as a well-functioning,

balanced team led by the chair
The Board is a well-balanced team
including specialists of the major
technical disciplines required in the
mining industry. Their names and
biographies are set out in this annual
report on page 31. Three of the five
directors, being Khosrow Zamani,
Richard Round and Professor
John Monhemius are independent.
Anglo Asian’s board composition
complies with the QCA Code and each
independent director has been assessed
and is considered to be independent by
the Board. The biographies of Board
members of the Company are also
available on the Company website at
http://www.angloasianmining.com/
about_us/board_of_directors/.

All directors are expected to devote the
necessary time commitments required by
their position and are expected to attend
at least six board meetings each year.

4 Embed effective risk management,
considering both opportunities and
threats, throughout the organisation
The Company and its directors have
identified and keep under consideration
the risks facing the Company. It has an
established framework of internal financial
controls including an audit committee
to address financial risks. The Company
does not have a formal corporate risk
management programme for non-financial
risks although the Board regularly discuss
and review exposure and management of
all risks. The requirement for a formal risk
management programme is kept under
review and the Company may reassess
the need to establish such a programme
in the future.

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 Group and the Board review the
adequacy of the cover regularly.

The principal risks and uncertainties
section of this annual report details a
number of other risks which the Company
is subject to and how these are addressed.
In particular:

a. country risk;

b. operational risk;

c. commodity price risk;

d. foreign currency risk; and

e. liquidity and interest rate risk.

Anglo Asian Mining PLC Annual report and accounts 2019Compliance with the principles of the QCA code continued

5 Maintain the Board as a well-functioning, balanced team led by the chair continued

The number of board meetings held during 2019 and the attendance of the directors
are as follows:

Number of board meetings each director attended

Number of board
meetings in 2019

John
Monhemius

Richard
Round

John
Sununu

Reza
Vaziri

Khosrow
Zamani

The role and duties of the audit,
nomination and remuneration committees
are set out in the respective reports of
the committees in section 10 below. The
respective reports also set out the number
of times the committees met in the year
and the attendance of the directors.

The meetings of the health, safety,
environmental and technological
committee are set out in section 4 above.

6 Ensure that between them the

directors have the necessary up-to-date
experience, skills and capabilities
The directors are all highly experienced
with a total over 200 years of experience
in all areas of business, particularly the
natural resource industries. All directors
are able to seek outside advice wherever
necessary. The Company’s chief financial
officer acted as Company Secretary
throughout 2019. He was supported by an
employee of the Company who is highly
experienced in Company Secretarial and
related legal matters. The Board has a
nominations committee which reviews
and considers the Board structure and
composition. The nominations committee
meets as required to consider and make
recommendations on the appointment of
directors to the Board and senior
management as well as recommendations
in relation to professional training and
development. The biographies of the
directors can be found on page 31 of this
annual report and on the Company
website at http://www.angloasianmining.
com/about_us/board_of_directors.

There is no formal process to keep
directors’ skill sets up-to-date given
their wealth of experience.

The Board obtained tax advice from Ernst
& Young LLP on the financial aspects of
the Company paying dividends in 2019.
The Company’s broker and NOMAD
(S P Angel Corporate Finance LLP) also
advised the Board on various regulatory
and commercial matters during 2019.

7 Evaluate board performance based
on clear and relevant objectives,
seeking continuous improvement
The Board believes its clear objective
is the financial performance of the
business whilst closely ensuring the
interests of all other stakeholders
are properly upheld. The financial
performance of the business is closely
monitored. The Company reviews board,
committee and individual director
performance on an on-going basis in
the context of their contribution to the
Company’s financial performance. The
chairperson will normally take leadership
of the performance assessment process
and allows for feedback from other board
members about their performance.

8 Promote a corporate culture

that is based on ethical values
and behaviours
The Company operates to the highest
ethical standards. The Board is very mindful
that it operates in the extractive industries
in an emerging market economy.
Accordingly, the Board takes every
opportunity, including the induction process
of senior management, to reinforce its high
ethical standards. A large part of the
Company’s activities is centred upon
what needs to be an open and respectful
dialogue with employees, clients and other
stakeholders. Therefore, the importance
of sound ethical values and behaviour is
crucial to the ability of the Company to
successfully achieve its corporate objectives.
The Company is also aware that the safe
operation of its mines and processing
plants is determined in large part by a
culture which is highly “safety conscious”.
The Board has taken actions during the
year to promote this culture of safe
working such as strengthening its HSE
department and regular safety reviews.

There is no formal mechanism to monitor
the Company’s corporate culture which
the Board believes is appropriate given
the size of the business. However, the
Board investigates very thoroughly any
instance of serious malpractice etc. which
is brought to its attention. There were
no instances during 2019 of any failing
of the Company due to poor culture brought
to the attention of the Board.

The effectiveness of the “safety
conscious” culture can be monitored
directly by the HSET committee and
indirectly through the number of reported
safety incidents etc. These showed that
the safe working of its operations had
improved during the year.

The Company has adopted, with effect
from the date on which its shares were
admitted to AIM, a code for directors’
and employees’ dealings in securities
which is appropriate for a company
whose securities are traded on AIM
and is in accordance with AIM Rule 21
of the requirements of the Market Abuse
Regulation which came into effect in 2016.

9 Maintain governance structures

and processes that are fit for purpose
and support good decision-making
by the board
The Company’s governance structures are
appropriate for a company of its size and
all necessary committees such as audit and
remuneration regularly meet. The Board
also meets regularly and the directors
continuously maintain an informal dialogue
between themselves.

The Board has audit, nomination and
remuneration committees. The role and
duties of the audit, nomination and
remuneration committees are set out in
the respective reports of the committees
in section 10 below.

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.

Anglo Asian Mining PLC Annual report and accounts 2019Anglo Asian MiningChairman’s statementStrategic reportFinancial reviewCorporate governanceGroup financial statementsCompany financial statementsAnnual general meetingCorporate governance continued

Communicate how the Company
is governed by maintaining a dialogue
with shareholders and other
relevant stakeholders
The Company maintains an adequate
dialogue with its shareholders as set
out in section 2 above. Anglo Asian
is committed to providing full and
transparent disclosure of its activities,
via the RNS and RNS Reach systems
of the London Stock Exchange.
Furthermore the historical annual
reports and interim accounts are
available on the Company website at
http://www.angloasianmining.com.

Details of all shareholder communications
are provided on the Company website.
The Board holds meetings with larger
shareholders and regards the annual
general meeting as a good opportunity
to communicate directly with all
shareholders, including presentations on
current business that are subsequently
made available on the website.

The outcome of each vote in the annual
general meeting is always reported to
shareholders and released as an RNS
on the market announcements platform.
It can also be obtained on the
Company website.

There is a formal process of maintaining
the relationship between the Company
and the Government of Azerbaijan led
by the Company’s Vice President for
Government affairs who regularly
meets Government officials.

10.1 Report of the audit committee

Members of the audit committee
The audit committee comprises
Richard Round and John Sununu.
The non-executive chairman and
the chief financial officer are invited
to all meetings.

Meetings of the audit committee
held in 2019
The audit committee met twice in 2019,
to approve the financial statements for
the year ended 31 December 2018 and
to approve the financial statements for
the six months ended 30 June 2019.
Richard Round, John Sununu,
Khosrow Zamani and William Morgan
attended both meetings. The external
auditor attended the meeting approving
the financial statements for the year
ended 31 December 2018.

Role of the audit committee
The main duties of the audit committee
are as follows:

• provide formal and transparent

arrangements for considering the
application of all applicable financial
reporting standards;

10.2 Report of the remuneration committee
The remuneration committee 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.

• ensure the interim and full year

financial statements are properly
prepared in accordance with all
applicable accounting standards,
legal and all other requirements
and reflect best practice;

• review the findings of any

management letter or other
communication from the external
auditor regarding internal controls;

• ensure the full year financial

statements are audited by the
external auditor in accordance with
all applicable audit standards, legal
and other requirements;

• assessment of the need for an
internal audit function; and

• ensure the independence and

objectivity of the external auditor
and approve all non-audit work by
the external auditor.

Non-audit work
The external auditor performed certain
tax compliance work and gave tax advice
as set out in section 6 above and note 8
to the Group financial statements.
This work was approved by the audit
committee as it did not affect the
independence or objectivity of the
external auditor.

Internal audit
The Group does not currently have an
internal audit function due to the small
size of the Group and limited resources
available. The requirement for an internal
audit function is kept under review.

Whistleblowing

The Group does not currently have a
formal whistleblowing policy due to
the small size of the Group. The Group
maintains a very open dialogue with
all its employees which gives every
opportunity for employees to raise
concerns about possible improprieties
in financial reporting or other matters.

There were no changes in senior
management or directors in 2019.
The committee met once in 2019
to review the remuneration of the
directors. The remuneration paid to the
directors is disclosed in the report on
directors remunerations on page 38.

10.3 Report of the nomination committee

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

There were no changes to directors in
2019 and therefore the committee did
not meet in the year.

11 COVID-19 health emergency

Mining is highly international with the
Company’s operations in Azerbaijan,
where several of the senior management
reside, whilst the directors reside in the
United Kingdom and the United States
of America. The Board and senior
managers habitually convene meetings
electronically using telephonic and
video conferencing. The COVID-19
pandemic has therefore had no effect
on the ability of the Board and senior
management to communicate.

The Board have been very focused on
the potential impact of the COVID-19
pandemic on the Group’s operations
since the start of the health emergency.
Given the fast-evolving nature of the
health emergency, since early March
2020, the Board have been convening
informal weekly meetings which are
also attended by senior management.
At each meeting, full reports on current
operations at Gedabek and Baku are
given to the Board by staff located at
those locations. All recent developments
of the COVID-19 health emergency on
the Group’s operations are discussed
and all necessary actions taken.

Anglo Asian Mining PLC Annual report and accounts 2019

Directors’ report
year ended 31 December 2019

Annual report and financial statements
The directors present their annual report together with the audited Group financial statements on pages 47 to 79.

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

Business review and future prospects
A review of the activities of the business throughout the year and up to 12 May 2020 is set out in the chairman’s statement
on pages 4 to 6 and the strategic report on pages 17 to 25 which includes information on the Group’s risks, uncertainties
and key performance indicators. These sections are incorporated in this directors’ report by reference.

Dividends
Full details of the Company’s dividend policy and dividend payments paid and proposed for the year ended 31 December 2019 are
set out in the chairman’s statement on pages 4 to 6, the financial review on pages 28 to 30 and note 27 to the Group financial statements.

Capital structure
Details of the Company’s authorised and issued share capital, together with the movements for the years ended 31 December 2018
and 2019 are disclosed in note 24 – ‘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.

Each director owns 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. The Company has a scheme to grant directors
and employees options to acquire ordinary shares. There were no options outstanding for the year ended 31 December 2019 and
details of the scheme are disclosed in note 25 – ‘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 Quoted Companies Alliance Corporate Governance Code.
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 pages 32 to 34.

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 12 May 2020 are set out on page 31.

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

Company secretary
William Morgan
7 Devonshire Square
Cutlers Gardens
London EC2M 4YH
United Kingdom

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

Registration of the Company
The Company is registered
in England and Wales.
Its registered number is 5227012.

Directors’ interests
The beneficial interests of the directors who held office at 31 December 2019 and their connected parties in the share capital of the
Company at 31 December were as follows:

2019
Number of
ordinary shares

2018
Number of
ordinary shares

John Monhemius
Richard Round
John Sununu
Reza Vaziri
Khosrow Zamani

All directors’ interests are beneficially held.

341,890
361,680
10,734,540
32,796,830
1,418,352

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 12 May 2020:

Reza Vaziri
John Sununu
Limelight Industrial Developments

Number of
ordinary shares

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

Per cent.

28.7
9.4
3.5

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 2021 and satisfying themselves that the Group will have sufficient funds on hand to meet its
obligations as and when they fall due over the period of their assessment. Appropriate rigour and diligence has been applied by the
directors who believe the assumptions are prepared on a realistic basis using the best available information.

The Group had cash balances of $26.0 million and no bank debt at 31 March 2020. The Group is able to fund its working capital
requirements from cash generated from its operations at Gedabek provided production is maintained and finished products sold.
The Group has access to local sources of both short and long term finance should this be required and has agreed terms for a
$15 million standby credit facility with Pasha Bank as a contingency measure.

From early March 2020, the Government of Azerbaijan gradually implemented restrictions to prevent the spread of the coronavirus.
These included closing the country’s international borders to passengers, temporarily suspending all scheduled air traffic and
restricting domestic travel. Despite these restrictions, the Company has continued production at Gedabek and to ship and sell gold
doré and copper concentrate. The Company estimates the restrictions are increasing operating costs by approximately $0.1 million
per month which is not significant. Given the uncertain effect of the COVID-19 pandemic, various scenarios are possible under which
the business may in future be required to operate. However, the directors believe the most likely scenarios would be a period of
continuing production but having to stockpile finished product for later sale or alternatively a period where production is either
disrupted or shut down and the business placed on care and maintenance. It is currently costing between $4.0 million to $5.0 million
per month to continue in production and estimated it would cost approximately $1.0 million per month to place the business on care
and maintenance. The directors will manage any disruption to, or cessation of, production or inability to sell the Company’s products
as circumstances dictate. The Group has the financial resources to continue as a going concern in the unlikely event of a very
prolonged cessation of production of at least one year or more.

The Group’s business activities, together with the factors likely to affect its future development, performance and position, can be
found within the chairman’s statement and the strategic report on pages 4 to 27. The financial position of the Group, its cash flow,
liquidity position and borrowing facilities are discussed within this financial review. In addition, note 23 to the Group financial
statements below includes the Group’s financial management risk objectives and details of its financial instrument exposures to
credit risk and liquidity risk.

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

Anglo Asian Mining PLC Annual report and accounts 2019Auditors
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 pages 32 to 34.

Annual general meeting
The Company will hold its annual general meeting for 2020 on 23 June 2020. Notification of the meeting has been included in this
annual report.

Listing
The Company’s ordinary shares have been traded on London’s 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 2019 was 152.00 pence (2018: 90.18 pence).

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. The Company website, www.angloasianmining.com, was relaunched in 2019 and 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 (2018: $nil). Political donations of $nil (2018: $nil) were made.

Research and development
There was no expenditure on research and development during the year (2018: $nil).

Related party transactions
Related party transactions are disclosed in note 30 – ‘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 23 – ‘Financial instruments’ to the Group financial statements.

By order of the board of directors

William Morgan
Company secretary
12 May 2020

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 Group does not make any contribution to any pension plan of any of the directors.

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.

Directors’ emoluments
Amounts paid by the Group in respect of directors’ services are as follows:

Year ended 31 December 2019

John Monhemius
Richard Round
John Sununu
Reza Vaziri
Khosrow Zamani

Year ended 31 December 2018

John Monhemius
Richard Round
John Sununu
Reza Vaziri
Khosrow Zamani

Consultancy
$

8,452
—
19,344
578,962
—

606,758

Consultancy
$

10,329
—
—
576,913
—

587,242

Fees
$

51,134
51,134
75,129
51,134
125,726

354,257

Fees
$

53,183
53,183
78,224
53,183
130,906

368,679

Benefits
$

—
—
—
32,891
—

32,891

Benefits
$

—
—
—
33,095
—

33,095

Total
$

59,586
51,134
94,473
662,987
125,726

993,906

Total
$

63,512
53,183
78,224
663,191
130,906

989,016

Directors’ fees and consultancy fees for 2018 and 2019 were paid in cash.

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 25 – ‘Share-based payment’ to the
Group financial statements.

No director held or exercised any share options during the year ended 31 December 2019.

The Company’s share price has ranged from 90.18 pence at 28 December 2018 to a high of 176.50 pence and a low of 66.50 pence
during the year ended 31 December 2019 with a closing price of 152.00 pence at 31 December 2019.

By order of the board of directors

William Morgan
Company secretary
12 May 2020

Anglo Asian Mining PLC Annual report and accounts 2019Statement 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 AIM 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. The directors
have also elected to prepare the financial
statements of the parent company
(the “Company”) in accordance with
United Kingdom Generally Accepted
Accounting Practice (United Kingdom
Accounting Standards and applicable law),
including FRS 101 ‘Reduced Disclosure
Framework’. The directors are also
responsible for preparing the directors’
report in accordance with the Companies
Act 2006 and applicable regulations.

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
12 May 2020

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 applicable UK Accounting
Standards have been followed, subject
to any material departures disclosed
and explained in the financial
statements; and

• prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
Company will continue in business.

Our opinion on the financial statements
In our opinion:

• Anglo Asian Mining PLC’s Group financial statements and Parent company financial statements (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 2019 and of the Group’s profit
for the year then ended;

• the Group financial statements have been properly prepared in accordance with International Financial Reporting Standards (IFRSs)

as adopted by the European Union;

• 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.

We have audited the financial statements of Anglo Asian Mining PLC which comprise:

Group

Parent company

Group statement of financial position as at 31 December 2019

Group income statement for the year then ended

Group statement of comprehensive income for the year then ended

Consolidated statement of changes in equity for the year then ended

Consolidated statement of cash flows for the year then ended

Related notes 1 to 31 to the financial statements, including a summary
of significant accounting policies

Company statement of financial position as at
31 December 2019

Company statement of changes in equity for the year
then ended

Related notes 1 to 15 to the financial statements
including a summary of significant accounting policies

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, including FRS 101 “Reduced Disclosure Framework” (United Kingdom Generally Accepted Accounting Practice).

Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our
report below. We are independent of the Group and Parent company in accordance with the ethical requirements that are relevant
to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

• the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

• the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt
about the Group’s or the Parent company’s ability to continue to adopt the going concern basis of accounting for a period of at
least twelve months from the date when the financial statements are authorised for issue.

Anglo Asian Mining PLC Annual report and accounts 2019Overview of our audit approach

Key audit matters

• Improper revenue recognition.

• Impairment of mining assets – management override risk.

• Going concern basis used in the preparation of the annual report and accounts.

Audit scope

• We performed an audit of the complete financial information of two components.

Materiality

• Overall group materiality of $1.5m which represents 5% of Profit before tax.

• The components where we performed full or specific audit procedures accounted for 100%

of Profit before tax, 100% of Revenue and 100% of Total assets.

Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements
of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we
identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in
the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial
statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on these matters.

Key observations communicated
to the Audit Committee

As a result of the procedures performed,
we reported to the Audit Committee that
the Group’s revenue transactions have been
properly recognised and the government’s
portion of production has been appropriately
accounted for.

Risk

Our response to the risk

Improper revenue recognition

Our approach focused on the following procedures:

Refer to accounting policies (page 53
and 54); and note 6 of the consolidated
financial statements (page 67)

For the year ended 31 December 2019 the
Group recognised revenue from operations
of US$92.1m (2018: US$90.4m).

In accordance with ISAs (UK) there is a
presumed fraud risk relating to revenue
recognition and management override.
We consider the fraud risk to relate to:

• Sales cut-off; and

• Accounting for the government’s portion

of production

The risk relating to revenue recognition has
remained stable in comparison to the prior
year as no significant changes were noted
in sales agreements.

• Obtained an understanding of the key controls

over revenue recognition and assessed their design
effectiveness in supporting the prevention and
detection of material errors in the financial statements;

• Performed revenue cut off testing by focusing on
sales recorded either side of 31 December 2019 and
validating the transactions to relevant supporting
documents to ensure revenue is recognised in the
correct period;

• For 100% of the sales transactions taking place

during the year, we agreed the amounts recorded
in the financial statements to supporting evidence,
such as bill of lading, invoices and cash receipts;

• Reconciled the Group’s accounting records with
the amounts of revenue recalculated based on
approved gold alloys shipment documentation,
lab results of gold content in those alloys and
respective market prices for each date of sale;

• Obtained confirmation of outstanding receivables
with the counterparty, which includes the portion
related to the government’s gold; and

• Read the disclosures in the financial statements to
ensure that all disclosure requirements in respect
of revenue have been met.

The audit procedures over this risk area were performed
by the component team in one full scope audit
component, covering 100% of the reported revenues.

Key observations communicated
to the Audit Committee

As a result of the audit procedures
performed, we are satisfied with management’s
conclusion that there are no impairment
indicators in relation to the Group’s mining
assets as of 31 December 2019 and for the
year then ended.

Key audit matters continued

Risk

Our response to the risk

Impairment of mining assets –
management override risk

Refer to accounting policies (page 58
and 65); and notes 13 and 14 of the
consolidated financial statements
(page 70)

At 31 December 2019 the carrying value of the
Group’s mining assets were:

• Property, plant and equipment: US$69.7m

(2018: US$81.2m);

•

Intangible assets: US$20.0m
(2018: US$17.0m).

IFRS requires impairment testing to be
undertaken when there are indicators that
an impairment may exist. There is a risk that
management will not identify impairment
indicators when they exist, and/or use
assumptions, as part of their impairment
assessment, that are not appropriate.

Consistent with the prior year, the Group’s
CGUs are:

• Operating mines (property, plant and
equipment): one CGU that combines
Gedabek, Gadir, Gosha and Ugur; and

• Exploration asset (intangible asset): Ordubad

This risk has not changed as compared to
the prior year as there have been no adverse
operational or other relevant factors impacting
the Group’s mining assets.

Our approach focused on the following procedures:

• Obtained an understanding of management’s

process and controls related to the impairment
evaluation for mining assets;

• Verified, through discussions with management and
review of supporting evidence, the appropriateness
of management’s determination of CGUs;

• Searched for any indicators of impairment during
2019 for operating mines and the exploration asset,
with reference to the requirements of IAS 36 and
IFRS 6 respectively. Our work included the
following procedures:

• We examined macro-economic factors including
market interest rates and both spot and future
gold, silver and copper prices;

• For the operating mines, we evaluated

the performance of the CGU during 2019 by
comparing against management’s budget and
prior year actuals. We evaluated the existence
of any significant changes to the expected future
performance of the CGU through studying the
updated mine plans and assessing the key
assumptions reflected therein; and

• For Ordubad we gained an understanding of the
results from the exploration activities that occurred
in 2019 and obtained relevant supporting evidence
for management’s further plans to evaluate and
develop the asset in future periods.

The audit procedures over this risk area were
performed by the primary and component teams,
covering 100% of the risk amounts.

Anglo Asian Mining PLC Annual report and accounts 2019Key observations communicated
to the Audit Committee

Based on the audit procedures performed
we concur with the conclusion reached by
management that there is no material
uncertainty in relation to the going concern
basis of preparation of the consolidated
financial statements.

We are satisfied with the disclosures in the
consolidated financial statements related to
going concern and the impacts of COVID-19
on the Group’s business and operations.

Key audit matters continued

Risk

Our response to the risk

Going concern basis used in the
preparation of the Annual Report
and Accounts

Refer to note 2 and 31 of the consolidated
financial statements (page 51 and 79).

The Directors of the group are required to
perform an assessment of whether the Group
will remain a going concern for a period of at
least twelve months from the date of approval
of the financial statements and to assess whether
there are any material uncertainties in relation
to the going concern basis of preparation.

At 31 December 2019, the Group reported cash
and cash equivalents of $17.8 million plus cash in
transit of $5.1 million (2018: cash of $14.5m) and
net funds of $21.2 million (2018: $6.1m). The last
instalment of its loan from Pasha Bank was repaid
in February 2020.

To support the Board’s going concern assessment,
management prepared a cash flow forecast and
have undertaken sensitivity analysis to reflect
certain downside scenarios by changing key
assumptions that drive the forecasts. The Board’s
assessment has also included consideration of the
potential impacts of the COVID-19 pandemic on
the Group’s operations and future cash flows.

Our year end work on the Board’s going concern
assessment included specific consideration by senior
members of the audit team of the impact of the
COVID-19 pandemic on the group’s operations
and cash flow forecasts.

Our response to the going concern risk focused
on the following procedures:

• We evaluated the key assumptions used in the

model, including gold and copper prices and
exchange rates, comparing these to available
market data, which enabled us to conclude on the
reasonableness of management’s assumptions.

• We evaluated the stress tests performed by

management and performed our own sensitivity
analysis on the forecasts to assess the extent of
deterioration in prices or production and sales
that would materially impact the group’s liquidity
position. After considering controllable mitigations
we have concluded the risk of any liquidity
constraint was sufficiently low;

• We agreed the sources of liquidity to supporting
documents, including unused committed loan
facilities that can be drawn down in the event
they are needed;

• We evaluated management’s assessment of the

potential adverse impacts of the coronavirus on the
Group’s operations, including the risk of production
interruption or shutdown. We verified the availability
of controllable mitigating actions, including cost
reductions from placing the mining properties on
‘care and maintenance’, which would ensure the
group can operate within its liquidity constraints in
the event of a prolonged shutdown of its mine sites.

• We discussed local media and public

announcements made by the government
of Azerbaijan with our component team to assess
the severity of the COVID-19 pandemic in the
country and the government’s ability and
intentions to support the local economy;

• We tested the integrity and arithmetical accuracy

of the cash flow forecasts prepared by management;

• We also assessed the adequacy of the going concern
and COVID-19 disclosures included in notes 2 and
31 to the consolidated financial statements and
consider these to appropriately reflect the
assessments that management has performed.

The audit procedures over this risk area were performed
by the primary team.

As part of our audit, we also addressed the risk of management override of internal controls over other accounting estimates, including
evaluating whether there is evidence of bias by the Directors that may represent a risk of material misstatement due to fraud.

This year we have included a new key audit matter ‘Going concern basis used in the preparation of the Annual Report and Accounts’.
Following the impacts of COVID-19 pandemic worldwide, the uncertainty surrounding the Group’s near term cash flows has increased.
Given the level of judgement used in future cash flow projections, together with the focus on the going concern assessment from
senior members of the primary team, this has been included as a key audit matter in the year.

An overview of the scope of our audit
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope
for each entity within the Group. Taken together, this enables us to form an opinion on the consolidated financial statements. We take
into account size, risk profile, the organisation of the Group and effectiveness of Group-wide controls, changes in the business
environment and any other relevant factors when assessing the level of work to be performed at each entity.

In assessing the risk of material misstatement to the Group financial statements, and to ensure we had adequate quantitative coverage
of significant accounts in the financial statements, of the 6 reporting components of the Group, we selected 2 components covering
entities within the United Kingdom and Azerbaijan, which represent the principal business units within the Group.

We performed an audit of the complete financial information of those 2 components (“full scope components”) which were selected
based on their size or risk characteristics.

The reporting components where we performed audit procedures accounted for 100% (2018: 100%) of the Group’s Profit before tax,
100% (2018: 100%) of the Group’s Revenue and 100% (2018: 100%) of the Group’s Total assets.

The remaining 4 components together and individually represent less than 1% of the Group’s Profit before tax. For these components,
we performed other procedures, including analytical reviews, testing of consolidation journals and intercompany eliminations and
inquiries of management about unusual transactions in these components, to respond to any potential risks of material misstatement
to the Group financial statements.

Changes from the prior year
The scoping is consistent with the prior year audit.

Involvement with component teams
In establishing our overall approach to the Group audit, we determined the type of work that needed to be undertaken at each of the
components by us, as the primary audit engagement team, or by component auditors from other EY global network firms operating
under our instruction. Of the two full scope components, audit procedures were performed on one of these directly by the primary
audit team.

The primary audit team had intended on a visit to Baku, Azerbaijan as part of the year end audit process that had been designed to
ensure that the Senior Statutory Auditor visits the client’s Baku headquarters site once a year. However, given the restrictions placed on
travel following the COVID-19 pandemic, this has not been possible in the current year. To ensure the same oversight and involvement
occurred in the audit work of the Azerbaijan component team as had been planned, we performed alternative oversight procedures
including regular video calls with the component team; this involved discussing the audit approach with the senior component team
members and the issues arising from their work and reviewing key audit working papers on the identified risk areas in the same way
we would have done had we been on site in Baku. The primary audit team also interacted frequently with Azeri-based management
throughout the audit process. The primary team were responsible for the scope and direction of the audit process. This, together with
the additional procedures performed at Group level, gave us appropriate evidence for our opinion on the Group financial statements.

Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the
audit and in forming our audit opinion.

Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the
economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our
audit procedures.

We determined materiality for the Group to be $1.5m (2018: $1.3m), which is 5% of Profit before tax (2018: 5%). We believe that
Profit before tax provides us with a reliable measure that is significant to users since it is one of the main key performance indicators
for operating entities. Materiality has increased in 2019 following the improved operating results of the Group.

We determined materiality for the Parent Company to be $134k (2018: $110k), which is 0.88% (2018: 1%) of Total assets (2018: Equity).
We have changed the basis on which materiality is calculated as we believe total assets represents a more accurate basis with which
the users of the financial statements base their decisions upon.

During the course of our audit, we reassessed initial materiality and no changes were required to our initial assessment.

Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level
the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.

On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our judgement was that
performance materiality was 50% (2018: 50%) of our planning materiality, namely $740k (2018: $630k). We have set performance materiality
at this percentage based on our assessment of the likelihood of misstatements based on our review of prior year audit adjustments.

Anglo Asian Mining PLC Annual report and accounts 2019Performance materiality continued
Audit work at component locations for the purpose of obtaining audit coverage over significant financial statement accounts is undertaken
based on a percentage of total performance materiality. The performance materiality set for each component is based on the relative
scale and risk of the component to the Group as a whole and our assessment of the risk of misstatement at that component. In the
current year, the range of performance materiality allocated to components was $222k to $740k (2018: $245k to $630k).

Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.

We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of $75k (2018: $63k),
which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted reporting on
qualitative grounds.

We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light
of other relevant qualitative considerations in forming our opinion.

Other information
The other information comprises the information included in the annual report set out on pages 1 to 39, other than the financial
statements and our auditor’s report thereon. The directors are responsible for the other information.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated
in this report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise
appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required
to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information.
If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required
to report that fact.

We have nothing to report in this regard.

Opinions 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; and

• the strategic report and directors’ report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception
IIn the light of the knowledge and understanding of the Group and the Parent company and its environment obtained in the course
of the audit, we have not identified material misstatements in the strategic report or the directors’ report.

We have nothing to report in respect of the following matters in relation to which 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 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

Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 39, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine
is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the Group and Parent company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless
the directors either intend to liquidate the Group or the Parent company or to cease operations, or have no realistic alternative but
to do so.

Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s
website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Use of our report
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.

Andrew Smyth (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
12 May 2020

Anglo Asian Mining PLC Annual report and accounts 2019Group statement of income
year ended 31 December 2019

Continuing operations

Revenue

Cost of sales

Gross profit

Other income

Administrative expenses

Other operating expenses

Operating profit

Finance costs

Finance income

Profit before tax

Income tax expense

Profit attributable to the equity holders of the parent

Profit per share attributable to the equity holders of the parent

Basic (US cents per share)

Diluted (US cents per share)

Notes

2019
$000

92,052

(54,576)

37,476

(5,208)

(943)

31,326

(1,269)

30,130

(10,787)

2018
$000

90,354

(56,530)

33,824

(5,291)

(1,777)

26,824

(1,642)

25,246

(8,911)

19,343

16,335

16.91

14.32

Group statement of comprehensive income
year ended 31 December 2019

Profit for the year

Total comprehensive profit

Attributable to the equity holders of the parent

2019
$000

19,343

2018
$000

16,335

Non-current assets

Intangible assets

Property, plant and equipment

Leased assets

Other receivables

Current assets

Inventory

Trade and other receivables

Cash and cash equivalents

Total assets

Current liabilities

Trade and other payables

Income tax payable

Interest-bearing loans and borrowings

Lease liabilities

Net current assets

Non-current liabilities

Provision for rehabilitation

Interest-bearing loans and borrowings

Lease liabilities

Deferred tax liability

Total liabilities

Net assets

Equity

Share capital

Share premium account

Merger reserve

Retained earnings

Total equity

Notes

2019
$000

19,965

69,728

3,622

2018
$000

17,031

81,150

—

436

93,382

98,617

43,881

26,783

17,801

88,465

34,159

8,496

14,540

57,195

181,847

155,812

(27,510)

(2,760)

(1,688)

(1,015)

(13,224)

(3,700)

(6,750)

—

(32,973)

(23,674)

55,492

33,521

(10,485)

—

(2,741)

(26,596)

(9,028)

(1,688)

—

(23,017)

(39,822)

(33,733)

(72,795)

(57,407)

109,052

98,405

2,016

46,206

60,797

109,052

2,016

46,206

50,150

98,405

The Group financial statements were approved by the board of directors and authorised for issue on 12 May 2020. They were signed
on its behalf by:

Reza Vaziri
President and chief executive

Anglo Asian Mining PLC Annual report and accounts 2019Group statement of cash flows
year ended 31 December 2019

Cash flows from operating activities

Profit before tax

Adjustments to reconcile profit before tax to net cash flows:

Finance costs

Finance income

Depreciation of owned assets

Depreciation of leased assets

Amortisation of mining rights and other intangible assets

Disposal of obsolete equipment

Write down of unrecoverable inventory

Operating cash flow before movements in working capital

Increase in trade and other receivables

Increase in inventories

(Decrease)/increase in trade and other payables

Cash from operations

Income taxes paid

Net cash flow from operating activities

Cash flows from 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

Cash flows from financing activities

Proceeds from issue of shares

Dividends paid

Proceeds from borrowings

Repayments of borrowings

Interest paid – borrowings

Interest paid – lease liabilities

Repayment of lease liabilities

Net cash used in financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents at the beginning of the year

Cash and cash equivalents at the end of the year

Notes

2019
$000

2018
$000

30,130

25,246

1,269

(73)

16,767

795

1,600

—

50,488

(2,502)

(9,722)

(462)

37,802

(8,148)

1,642

(64)

20,957

—

1,990

209

136

50,116

(1,767)

(314)

2,670

50,705

(3,588)

29,654

47,117

(4,703)

(4,499)

(15,324)

(2,875)

(9,129)

(18,135)

—

(8,696)

537

(7,287)

(804)

(353)

(661)

149

(3,432)

13,995

(26,208)

(1,480)

—

(17,264)

(16,976)

3,261

14,540

17,801

12,006

2,534

14,540

1 January 2018

Profit for the year

Shares issued

Share options exercised

Share premium reduction

Cash dividends paid

31 December 2018

Profit for the year

Cash dividends paid

31 December 2019

Notes

24 & 26

Share
capital
$000

2,008

—

2,016

—

2,016

Share
premium
$000

32,484

—

141

—

(32,592)

—

Share-based
payment
reserve
$000

—

(74)

—

Merger
reserve
$000

46,206

—

46,206

—

Retained
earnings
$000

4,581

16,335

—

32,592

(3,432)

50,150

19,343

(8,696)

Total
equity
$000

85,353

16,335

149

—

(3,432)

98,405

19,343

(8,696)

46,206

60,797

109,052

Anglo Asian Mining PLC Annual report and accounts 2019Notes to the Group financial statements
year ended 31 December 2019

General information
Anglo Asian Mining PLC (the “Company”) is a company incorporated and limited by shares in England and Wales under the
Companies Act 2006. The address of its registered office is set out in Company information on page 89 of this annual report.
The Company’s ordinary shares are traded on the AIM exchange of the London Stock Exchange. The Company is a holding
company. The principal activities and place of business of the Company and its subsidiaries (the “Group”) are set out in note 28,
the chairman’s statement on pages 4 to 6 and the strategic report on pages 17 to 25 of this annual report.

Basis of preparation
The Group’s annual report is for the year ended 31 December 2019 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 and trade receivables at fair value. 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 36, 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 2021 and satisfying themselves that the Group will have sufficient funds on hand to meet its
obligations as and when they fall due over the period of their assessment. Appropriate rigour and diligence has been applied
by the directors who believe the assumptions are prepared on a realistic basis using the best available information.

The Group had cash balances of $26.0 million and no bank debt at 31 March 2020. The Group is able to fund its working
capital requirements from cash generated from its operations at Gedabek provided production is maintained and finished
products sold. The Group has access to local sources of both short and long term finance should this be required and has
agreed terms for a $15 million standby credit facility with Pasha Bank as a contingency measure.

From early March 2020, the Government of Azerbaijan gradually implemented restrictions to prevent the spread of the
coronavirus. These included closing the country’s international borders to passengers, temporarily suspending all scheduled
air traffic and restricting domestic travel. Despite these restrictions, the Company has continued production at Gedabek and
to ship and sell gold doré and copper concentrate. The Company estimates the restrictions are increasing operating costs by
approximately $0.1 million per month which is not significant. Given the uncertain effect of the COVID-19 pandemic, various
scenarios are possible under which the business may in future be required to operate. However, the directors believe the most
likely scenarios would be a period of continuing production but having to stockpile finished product for later sale or alternatively
a period where production is either disrupted or shut down and the business placed on care and maintenance. It is currently
costing between $4.0 million to $5.0 million per month to continue in production and estimated it would cost approximately
$1.0 million per month to place the business on care and maintenance. The directors will manage any disruption to, or cessation of,
production or inability to sell the Company’s products as circumstances dictate. The Group has the financial resources to continue
as a going concern in the unlikely event of a very prolonged cessation of production of at least one year or more.

The Group’s business activities, together with the factors likely to affect its future development, performance and position, can
be found within the chairman’s statement and the strategic report on pages 4 to 27. The financial position of the Group, its
cash flow, liquidity position and borrowing facilities are discussed within this financial review. In addition, note 23 to the Group
financial statements below includes the Group’s financial management risk objectives and details of its financial instrument
exposures to credit risk and liquidity risk.

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

Adoption of new and revised standards

3
3.1 New and amended standards and interpretations – IFRS 16 “Leases”

Overview
IFRS 16 supersedes IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases
– Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The standard sets out
the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to recognise most
leases on the balance sheet under a single on-balance sheet model.

Lessor accounting under IFRS 16 is substantially unchanged from IAS 17 other than the requirements applying to subleases.
Lessors will continue to classify all leases as either operating leases or finance leases using similar principles as in IAS 17. IFRS 16
does not have any impact for leases where the Group is the lessor.

IFRS 16 also requires lessees and lessors to make more extensive disclosures than under IAS 17.

3
3.1 New and amended standards and interpretations – IFRS 16 “Leases” continued

Adoption of IFRS 16
The Group’s operations are entirely within Azerbaijan which is a developing country with a limited and immature marketplace
for the lease financing of assets. The Group has lease contracts for mining equipment, motor vehicles, warehouses, office
accommodation and miscellaneous assets. Lease contracts in Azerbaijan are typically short term (one year or less) and there
is usually the right for either party to terminate the lease contract at short notice (typically one to six months) without penalty.
The Group has leased its office space in Baku on a three year lease. It has also leased various vehicles and mining equipment
on short term leases which are routinely renewed or leases which are of greater duration than 12 months. For these leases,
right of use assets and corresponding lease liabilities have been recognised in accordance with IFRS 16. For short term leases
which are routinely renewed, the length of the lease has been determined by reference to the broader economics of the lease.

The Group has no leases under which the payments are variable, it does not generate income from sub-leasing right of use
assets and it does not undertake any sale and leaseback transactions. It does not have any leases which it regards as onerous.
There are no restrictions or covenants imposed by any of its leases.

The Group adopted IFRS 16 using the modified retrospective transition method, with the date of initial application of
1 January 2019. The standard has been applied retrospectively with the cumulative effect of initially applying the standard
recognised as an adjustment to the opening balance of retained earnings at the date of initial application and prior year
comparatives have not been adjusted. The Group has applied the IFRS 16 definition of a lease to all contracts still effective
at the date of initial application.

Upon adoption of IFRS 16, The Group applied a single recognition and measurement approach for all leases except short
term leases.

The Group elected to apply the recognition exemptions for short-term leases. It also elected to apply the transition practical
expedient that permits the Company not to reassess if a contract is, or contains, a lease at the date of initial application. The entity
also elected to apply the practical expedient for short term leases to leases for which the lease term ends within 12 months of the
date of initial application.

Effect on the Group financial statements of adopting IFRS 16
Prior to the implementation of IFRS 16 the Group accounted for all leases as operating leases and did not recognise any right
of use asset or lease liability in respect of any lease. All lease payments were expensed as incurred on a straight-line basis.

The transition method used consisted of recognising each right of use asset at 1 January 2019 at the discounted value of the
estimated remaining future lease payments at 1 January 2019. The remaining future lease payments were discounted at rates
between 7.9 and 8.1 per cent. which equates to the Group’s estimated incremental cost of borrowing at that date. The
contractual lease payments corresponding to short term leases (less than 12 months) are recognised as an expense.

The Group used the following practical expedients when applying IFRS 16 retrospectively to leases previously classified as
operating leases:

• applied a single discount rate to a portfolio of leases with reasonably similar characteristics; and

• used hindsight to determine lease term in relation to options to extend or terminate.

The Group has elected to present right of use assets and lease liabilities separately in the statement of financial position.
Depreciation of right to use assets and finance expense relating to lease liabilities are presented separately in the income
statement. The cash outflows related to the principle portion of the lease liability and the related interest are also presented
separately within financing activities in the Group statement of cash flows.

The implementation of IFRS 16 at 1 January 2019 on the Group accounts was to include the following additional assets
and liabilities in its statement of financial position at 1 January 2019:

Assets
Right of use assets

Liabilities
Lease liabilities – current
Lease liabilities – non-current

Total liabilities

$000

4,417

1,014
3,403

4,417

The operating lease commitments at 31 December 2018 can be reconciled to the lease liabilities at 1 January 2019 as follows:

Operating lease commitments at 31 December 2018 (undiscounted)
Add:
Lease payments relating to renewal periods not included in operating lease commitments as at 31 December 2018

Discounted recognised lease liabilities at 1 January 2019

$000

—

4,417

Anglo Asian Mining PLC Annual report and accounts 2019Notes to the Group financial statements continuedyear ended 31 December 20193
Adoption of new and revised standards continued
3.2 New and amended standards and interpretations – other

The amendments and interpretations listed below also apply for the first time from 1 January 2019. None of the standards
have an impact on the Group financial statements or interim Group condensed financial statements.

• IFRIC Interpretation 23 – “Uncertainty over Income Tax Treatments”

• Amendments to IFRS 9 – “Prepayment Features with Negative Compensation”

• Amendments to IAS 28 – “Long-term Interests in Associates and Joint Ventures”

• Amendments to IAS 19 – “Plan Amendment, Curtailment or Settlement”

• Annual IFRS Improvement Process

• IFRS 3 Business Combinations – “Previously held Interests in a joint operation”

• IFRS 11 Joint Arrangements – “Previously held Interests in a joint operation”

• IAS 12 Income Taxes – “Income tax consequences of payments on financial instruments classified as equity”

• IAS 23 Borrowing Costs – “Borrowing costs eligible for capitalisation”

3.3 Standards issued but not yet effective

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

• IFRS 17 – “Insurance Contracts”

• Amendments to IFRS 3 – “Definition of a Business”

• Amendments to IAS 1 and IAS 8 – “Definition of Material”

IFRS 17 – “Insurance Contracts” is not applicable to the Group as it does not issue insurance contracts.

Since the amendments to the definition of a business in Amendments to IFRS 3 – “Definition of a Business” apply prospectively
to transactions or other events that occur on or after the date of first application, the Group will not be affected by these
amendments on the date of transition.

In October 2018, the IASB issued amendments to IAS 1 – “Presentation of Financial Statements and IAS 8 Accounting Policies,
Changes in Accounting Estimates and Errors” to align the definition of ‘material’ across the standards and to clarify certain aspects
of the definition. The new definition states that, ’Information is material if omitting, misstating or obscuring it could reasonably
be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those
financial statements, which provide financial information about a specific reporting entity.’ The amendments to the definition
of material is not expected to have a significant impact on the Group financial statements.

Significant accounting policies

4
4.1 Basis of consolidation

The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 31 December 2019.
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.

4
4.1 Basis of consolidation continued

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

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

4.2 Revenue

The Group is principally engaged in the business of producing gold and silver bullion and gold and copper concentrate.
Revenue from contracts with customers is recognised when control of the goods is transferred to the customer at an amount
that reflects the consideration to which the Group expects to be entitled in exchange for those goods.

The Group has generally concluded that it is the principal in its revenue contracts because it typically controls the goods
before transferring them to the customer.

i) Contract balances
a) Contract assets
A contract asset is the right to consideration in exchange for goods transferred to the customer. If the Group performs by
transferring goods to a customer before the customer pays consideration or before payment is due, a contract asset is recognised
for the earned consideration that is conditional. The Group does not have any contract assets as performance and a right to
consideration occurs within a short period of time and all rights to consideration are unconditional.

b) Trade receivables
A trade receivable represents the Group’s right to an amount of consideration that is unconditional (i.e., only the passage
of time is required before payment of the consideration is due). Refer to accounting policy 4.12 for the accounting policies
for financial assets and accounting policy 4.13 for the accounting policy for trade receivables.

c) Contract liabilities
A contract liability is the obligation to transfer goods to a customer for which the Group has received consideration (or an amount
of consideration is due) from the customer. If a customer pays consideration before the Group transfers goods to the customer,
a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are
recognised as revenue when the Group performs under the contract.

ii) Gold and silver sales to the refiner
For gold sales, these are sold under spot sales contracts with the Company’s gold refiners. The Group initially sends its unrefined doré
to the refiner. The refiner is contracted by the Company to perform two separate and distinct functions, to process the doré into
gold and silver bullion and to purchase gold and silver. The gold contained in the doré may be purchased at two different times
at the discretion of the Company and instruction is given to the refiner as to the method of sale on a shipment-by-shipment basis:

• Upon receipt of the doré. In this circumstance, the refiner will purchase 90 per cent. of the estimated gold content of the doré.
The balance of the gold will be sold to the refiner as gold bullion following refining and agreement of final gold content of the
doré with the refiner.

• Following production of gold bullion by the refining process. During the refining process ownership (i.e., control of the gold)

does not pass to the refiner, it is simply providing refining services to the Group.

There is no formal sales agreement for each sale of gold. Instead, there is a deal confirmation, which sets out the terms of the
sale including the applicable spot price and this is considered to be the enforceable contract. The only performance obligation
is the sale of gold within the doré or as bullion.

Silver is only sold to the refiner as silver bullion following the refining process. The process of sale of the silver bullion is the
same as for gold bullion.

Revenue is recognised at a point in time when control passes to the refiner. As the gold and silver is at this time already on
the premises of the refiner, physical delivery has already taken place when the sales are made.

With these arrangements, there are no advance payments received from the refiner, no conditional rights to consideration,
i.e., no contract assets are recognised. A trade receivable is recognised at the date of sale and there are only several days between
recognition of revenue and payment. The contract is entered into and the transaction price is determined at outturn by virtue
of the deal confirmation and there are no further adjustments to this price. Also, given each spot sale represents the enforceable
contract and all performance obligations are satisfied at that time, there are no remaining performance obligations (unsatisfied
or partially unsatisfied) requiring disclosure. Refer to note 16 – ‘Trade and other receivables’ for details of payment terms.

iii) Gold and copper in concentrate (metal in concentrate) sales
For gold and copper in concentrate (metal in concentrate) sales, the enforceable contract is each purchase order, which is an
individual, short-term contract. The performance obligation is the delivery of the concentrate to the customer.

The Group’s sales of metal in concentrate allow for price adjustments based on the market price at the end of the relevant
quotational period (“QP”) stipulated in the contract. These are referred to as provisional pricing arrangements and are such
that the selling price for metal in concentrate is based on prevailing spot prices on a specified future date (or average of future
spot prices over a defined period, usually a week) after shipment to the customer. Adjustments to the sales price occur based
on movements in quoted market prices up to the end of the QP. The period between provisional invoicing and the end of the
QP can be between one and four months.

Anglo Asian Mining PLC Annual report and accounts 2019Notes to the Group financial statements continuedyear ended 31 December 2019Significant accounting policies continued

4
4.2 Revenue continued

iii) Gold and copper in concentrate (metal in concentrate) sales continued
Revenue is recognised when control passes to the customer, which occurs at a point in time when the metal in concentrate
is physically delivered to the customer at the mine site. The revenue is measured at the amount to which the Group expects
to be entitled, being the estimate of the price expected to be received at the end of the QP, i.e., the forward price, and a
corresponding trade receivable is recognised.

For these provisional pricing arrangements, any future change that occur over the QP is an embedded derivative within
the provisionally priced trade receivables and are, therefore, within the scope of IFRS 9 and not within the scope of IFRS 15.
The Group does not separately account for the embedded derivative in each transaction as the short transaction cycle of one
to four months would result in any changes to the Group’s financial statements being immaterial. Any difference between the
provisional and final price is adjusted through revenue from contracts with customers. Changes in fair value over, and until the
end of, the QP, are estimated by reference to updated forward market prices for gold and copper as well as taking into
account relevant other fair value considerations as set out in IFRS 13, including interest rate and credit risk adjustments. See
accounting policy 4.10 for further discussion on fair value. Refer to note 16 for details of payments terms for trade receivables.

As noted above, as the enforceable contract for most arrangements is the purchase order, the transaction price is determined
at the date of each sale (i.e., for each separate contract) and, therefore, there is no future variability within scope of IFRS 15 and
no further remaining performance obligations under those contracts.

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

4.3 Leases

Accounting policy applicable prior to 1 January 2019
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 an 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 2018 and 2017.

Accounting policy applicable from 1 January 2019
The Group assesses at contract inception, all arrangements to determine whether they are, or contain, a lease. That is, if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The
Group is not a lessor in any transactions, it is only a lessee.

i) Group as a lessee
The Group applies a single recognition and measurement approach for all leases, except for short term leases. The Group
recognises lease liabilities to make lease payments and right of use assets representing the right to use the underlying assets.

a) Right of use assets
The Group recognises right of use assets at the commencement date of the lease (i.e., the date when the underlying asset is
available for use). Right of use assets are measured at cost, less any accumulated depreciation and impairment losses, and
adjusted for any remeasurement of lease liabilities. The cost of right of use assets includes the amount of lease liabilities
recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease
incentives received. Right of use assets are depreciated on a straight line basis over the shorter of the lease term and the
estimated useful lives of the assets, as follows:

• Plant and equipment – six years

• Motor vehicles – four years

• Land and buildings – eight years

If ownership of the leased asset transfers to the Group at the end of the lease term or the cost reflects the exercise of a
purchase option, depreciation is calculated using the estimated useful life of the asset.

The right of use assets are also subject to impairment. Refer to the accounting policies in note 4.9 – “Impairment of tangible
and intangible assets”.

4
4.3 Leases continued

i) Group as a lessee continued
b) Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease
payments to be made over the lease term. The lease payments include fixed payments less any lease incentives receivable,
variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees.

In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement
date because the interest rate implicit in the lease is generally not readily determinable. After the commencement date, the
amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition,
the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term or a change in the
lease payments.

The Group’s lease liabilities are separately disclosed in the Group statement of financial position.

c) Short-term leases
The Group applies the short term lease recognition exemption to its short term leases of equipment and other assets (i.e.,
those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option).
Lease payments on short term leases are recognised as an expense on a straight line basis over the lease term.

4.4 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. Deferred tax assets
and liabilities are classified as non-current assets and liabilities.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the Group
income statement because it excludes items of income or expense that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have
been enacted or substantively enacted at the reporting date.

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

ii) Value-added taxes (“VAT”)
The Group pays VAT on purchases made in both the Republic of Azerbaijan and the United Kingdom. Under both jurisdictions,
VAT paid is refundable. Azerbaijani jurisdiction permits offset of an Azerbaijani VAT credit against other taxes payable to the
state budget.

4.5 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.

Anglo Asian Mining PLC Annual report and accounts 2019Notes to the Group financial statements continuedyear ended 31 December 2019Significant accounting policies continued

4
4.6 Borrowing costs

Borrowing costs directly relating to the acquisition, construction or production of a qualifying capital project under construction
are capitalised and added to the project cost during construction until such time the assets are considered substantially ready
for their intended use, i.e. when they are capable of commercial production. Where funds are borrowed specifically to finance
a project, the amount capitalised represents the actual borrowing costs incurred. Where surplus funds are available for a short
term out of money borrowed specifically to finance a project, the income generated from the temporary investment of such
amounts is also capitalised and deducted from the total capitalised borrowing cost. Where the funds used to finance a project
form part of general borrowings, the amount capitalised is calculated using a weighted average of rates applicable to relevant
general borrowings of the Group during the period. All other borrowing costs are recognised in the Group income statement
in the period in which they are incurred.

Even though exploration and evaluation assets can be qualifying assets, they generally do not meet the ‘probable economic
benefits’ test. Any related borrowing costs are therefore generally recognised in the Group income statement in the period
they are incurred.

4.7

Intangible assets
i) Exploration and evaluation assets
The costs of exploration properties and leases, which include the cost of acquiring prospective properties and exploration
rights and costs incurred in exploration and evaluation activities, are capitalised as intangible assets as part of exploration
and evaluation assets.

Exploration and evaluation assets are carried forward during the exploration and evaluation stage and are assessed for impairment
in accordance with the indicators of impairment as set out in IFRS 6 – ‘Exploration for and Evaluation of Mineral Resources’.

In circumstances where a property is abandoned, the cumulative capitalised costs relating to the property are written off in the
period. No amortisation is charged prior to the commencement of production.

Once commercially viable reserves are established and development is sanctioned, exploration and evaluation assets are
transferred to assets under construction.

Upon transfer of exploration and evaluation costs into assets under construction, all subsequent expenditure on the construction,
installation or completion of infrastructure facilities is capitalised within assets under construction.

When commercial production commences, exploration, evaluation and development costs previously capitalised are amortised
over the commercial reserves of the mining property on a units-of-production basis.

Exploration and evaluation costs incurred after commercial production start date in relation to evaluation of potential mineral
reserves and resources that are expected to result in increase of reserves are capitalised as evaluation and exploration assets
within intangible assets. Once there is evidence that reserves are increased, such costs are tested for impairment and transferred
to producing mines.

ii) Mining rights
Mining rights are carried at cost to the Group less any provisions for impairments which result from evaluations and assessments
of potential mineral recoveries and accumulated depletion. Mining rights are depleted on the units-of-production basis over
the total reserves of the relevant area.

iii) Other intangible assets
Other intangible assets are mainly the costs of agricultural compensation paid to landowners for the use of land ancillary to
the Group’s mining operations. These costs 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.

4
4.8 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 under construction’ are transferred into ‘Plant
and equipment and motor vehicles’ or ‘Producing mines’. Items of ‘Plant and equipment and motor vehicles’ and
‘Producing mines’ are stated at cost, less accumulated depreciation and accumulated impairment losses.

During the production period expenditures directly attributable to the construction of each individual asset are capitalised as
‘Assets under construction’ up to the period when the asset is ready to be put into operation. When an asset is put into operation
it is transferred to ‘Plant and equipment and motor vehicles, or ‘Producing mines’. Additional capital costs incurred subsequent
to the date of commencement of operation of the asset are charged directly to ‘Plant and equipment and motor vehicles’ or
‘Producing mines’, i.e. where the asset itself was transferred.

The initial cost of an asset comprises its purchase price or construction cost, any costs directly attributable to bringing the asset
into operation, the initial estimate of the rehabilitation obligation and, for qualifying assets, borrowing costs. The purchase
price or construction cost is the aggregate amount paid and the fair value of any other consideration given to acquire the asset.

When a mine construction project moves into the production stage, the capitalisation of certain mine construction costs ceases
and costs are either regarded as inventory or expensed, except for costs which qualify for capitalisation relating to mining asset
additions or improvements, underground mine development or mineable reserve development.

i) Depreciation and amortisation
Accumulated mine development costs within producing mines are depreciated and amortised on a units-of-production basis
over the economically recoverable reserves of the mine concerned, except in the case of assets whose useful life is shorter
than the life of the mine, in which case the straight line method is applied. The unit of account for run of mine (“ROM”) costs
and for post-ROM costs is recoverable ounces of gold. The units-of-production rate for the depreciation and amortisation
of mine development costs takes into account expenditures incurred to date plus future field development costs required to
recover the commercial reserves remaining. Changes in the estimates of commercial reserves or future field development
costs are dealt with prospectively.

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.

Other plant and equipment such as mobile mine equipment is generally depreciated on a straight line basis over their
estimated useful lives as follows:

• Temporary buildings – eight years (2018: eight years)

• Plant and equipment – eight years (2018: eight years)

• Motor vehicles – four years (2018: four years)

• Office equipment – four years (2018: four years)

• Leasehold improvements – eight years (2018: eight years)

An item of property, plant and equipment, and any significant part initially recognised, is derecognised upon disposal or when
no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated
as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Group income
statement when the asset is derecognised.

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.

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.

4.9

Anglo Asian Mining PLC Annual report and accounts 2019Notes to the Group financial statements continuedyear ended 31 December 20194
4.9

Significant accounting policies continued
Impairment of tangible and intangible assets continued
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 Group statement of comprehensive income. Impairment losses recognised in relation to indefinite life intangibles are
not reversed for subsequent increases in its recoverable amount.

4.10 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 16 – ‘Trade and other receivables’;

• Note 18 – ‘Cash and cash equivalents’;

• Note 19 – ‘Trade and other payables’; and

• 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 marketplace 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.

4.11 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 risk-free 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.

4
4.11 Provisions continued

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.

4.12 Financial instruments – initial recognition and subsequent measurement

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument
of another entity.

a) Financial assets
i) Initial recognition and measurement
Financial assets are classified, at initial recognition, and subsequently measured at amortised cost, fair value through other
comprehensive income (“OCI”), or fair value through profit or loss.

The classification of financial assets at initial recognition that are debt instruments depends on the financial asset’s contractual
cash flow characteristics and the Group’s business model for managing them. With the exception of trade receivables that do
not contain a significant financing component or for which the Group has applied the practical expedient, the Group initially
measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction
costs. Trade receivables that do not contain a significant financing component or for which the Group has applied the practical
expedient for contracts that have a maturity of one year or less, are measured at the transaction price determined under IFRS 15.
Refer to the accounting policy 4.2 – ‘Revenue from contracts with customers’.

In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to
cash flows that are ‘solely payments of principal and interest’ (“SPPI”) on the principal amount outstanding. This assessment is
referred to as the SPPI test and is performed at an instrument level.

The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate
cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the
financial assets, or both.

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

ii) Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:

• financial assets at amortised cost (debt instruments);

• financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments);

• financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition

(equity instruments); and

• financial assets at fair value through profit or loss.

Anglo Asian Mining PLC Annual report and accounts 2019Notes to the Group financial statements continuedyear ended 31 December 2019Significant accounting policies continued

4
4.12 Financial instruments – initial recognition and subsequent measurement continued

a) Financial assets continued
iii) Financial assets at amortised cost (debt instruments)
This category is the most relevant to the Group. The Group measures financial assets at amortised cost if both of the following
conditions are met:

• the financial asset is held within a business model with the objective to hold financial assets in order to collect contractual

cash flows; and

• the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal

and interest on the principal amount outstanding.

Financial assets at amortised cost are subsequently measured using the ‘effective interest rate’ (“EIR”) method and are subject to
impairment. Interest received is recognised as part of finance income in the statement of profit or loss and other comprehensive
income. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.

The Group’s financial assets at amortised cost include trade receivables (not subject to provisional pricing) and other receivables.
Refer below to ‘Financial assets at fair value through profit or loss’ for a discussion of trade receivables (subject to provisional pricing).

iv) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for trading, e.g., derivative instruments, financial
assets designated upon initial recognition at fair value through profit or loss, e.g., debt or equity instruments, or financial assets
mandatorily required to be measured at fair value, i.e., where they fail the SPPI test. Financial assets are classified as held for trading
if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including separated embedded
derivatives, are also classified as held for trading unless they are designated as effective hedging instruments. Financial assets
with cash flows that do not pass the SPPI test are required to be classified and measured at fair value through profit or loss,
irrespective of the business model. Notwithstanding the criteria for debt instruments to be classified at amortised cost or at
fair value through OCI, as described above, debt instruments may be designated at fair value through profit or loss on initial
recognition if doing so eliminates, or significantly reduces, an accounting mismatch.

Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes
in fair value recognised in the profit or loss account.

A derivative embedded in a hybrid contract with a financial liability or non-financial host, is separated from the host and
accounted for as a separate derivative if: the economic characteristics and risks are not closely related to the host; a separate
instrument with the same terms as the embedded derivative would meet the definition of a derivative; and the hybrid contract
is not measured at fair value through profit or loss. Embedded derivatives are measured at fair value with changes in fair value
recognised in profit or loss. Reassessment only occurs if there is either a change in the terms of the contract that significantly
modifies the cash flows that would otherwise be required or a reclassification of a financial asset out of the fair value through
profit or loss category.

As IFRS 9 now has the SPPI test for financial assets, the requirements relating to the separation of embedded derivatives is no
longer needed for financial assets. An embedded derivative will often make a financial asset fail the SPPI test thereby requiring
the instrument to be measured at fair value through profit or loss in its entirety. This is applicable to the Group’s trade receivables
(subject to provisional pricing). These receivables relate to sales contracts where the selling price is determined after delivery
to the customer, based on the market price at the relevant QP stipulated in the contract. This exposure to the commodity price
causes such trade receivables to fail the SPPI test. As a result, these receivables are measured at fair value through profit or loss
from the date of recognition of the corresponding sale, with subsequent movements where material being recognised in ‘fair
value gains/losses on provisionally priced trade receivables’ in the statement of profit or loss and other comprehensive income.

The Group does not currently account separately for embedded derivatives in its trade receivables subject to provisional
pricing. The short one to four month transaction cycle would result in any change to the Group’s financial statements being
immaterial. Any adjustment to the trade receivable subsequent to initial recording is adjusted through revenue.

v) Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily
derecognised (i.e., removed from the Group’s consolidated statement of financial position) when:

• the rights to receive cash flows from the asset have expired; or

• the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received
cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Group has
transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially
all the risks and rewards of the asset, but has transferred control of the asset.

4
4.12 Financial instruments – initial recognition and subsequent measurement continued

a) Financial assets continued
v) Derecognition of financial assets continued
When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement,
it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has neither transferred nor retained
substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Group continues to recognise the
transferred asset to the extent of its continuing involvement. In that case, the Group also recognises an associated liability.
The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the
Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original
carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

vi) Impairment of financial assets
Further disclosures relating to impairment of financial assets are also provided in the following notes:

• Disclosure of significant assumptions: accounting policy 4.20

• Trade and other receivables:

accounting policy 4.13 and note 16

The Group recognises an allowance for expected credit loss (“ECL”) for all debt instruments not held at fair value through
profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all
the cash flows that the Group expects to receive, discounted at an approximation of the original EIR. The expected cash flows
will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since
initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months
(a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition,
a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the
default (a lifetime ECL).

For trade receivables (not subject to provisional pricing) and other receivables due in less than 12 months, the Group applies
the simplified approach in calculating ECLs, as permitted by IFRS 9. Therefore, the Group does not track changes in credit risk,
but instead, recognises a loss allowance based on the financial asset’s lifetime ECL at each reporting date. For any other financial
assets carried at amortised cost (which are due in more than 12 months), the ECL is based on the 12-month ECL. The 12-month
ECL is the proportion of lifetime ECLs that results from default events on a financial instrument that are possible within 12 months
after the reporting date. However, when there has been a significant increase in credit risk since origination, the allowance will
be based on the lifetime ECL. When determining whether the credit risk of a financial asset has increased significantly since initial
recognition and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and available
without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group’s
historical experience and informed credit assessment including forward-looking information.

The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases,
the Group may also consider a financial asset to be in default when internal or external information indicates that the Group
is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by
the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows
and usually occurs when past due for more than one year and not subject to enforcement activity.

At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit- impaired. A financial
asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the
financial asset have occurred.

b) Financial liabilities
i) Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans
and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly
attributable transaction costs.

The Group’s financial liabilities include trade and other payables and loans and borrowings including bank overdrafts.

Anglo Asian Mining PLC Annual report and accounts 2019Notes to the Group financial statements continuedyear ended 31 December 2019Significant accounting policies continued

4
4.12 Financial instruments – initial recognition and subsequent measurement continued

b) Financial liabilities continued
ii) Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:

Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities
designated upon initial recognition as at fair value through profit or loss.

Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term.
This category also includes derivative financial instruments entered into by the Group that are not designated as hedging
instruments in hedge relationships as defined by IFRS 9. Separated embedded derivatives are also classified as held for
trading unless they are designated as effective hedging instruments.

Gains or losses on liabilities held for trading are recognised in the statement of profit or loss and other comprehensive income.

Loans and borrowings and trade and other payables
After initial recognition, interest-bearing loans and borrowings and trade and other payables are subsequently measured at
amortised cost using the EIR method. Gains and losses are recognised in the statement of profit or loss and other comprehensive
income when the liabilities are derecognised, as well as through the EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral
part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss and other comprehensive income.

This category generally applies to interest-bearing loans and borrowings and trade and other payables.

iii) Derecognition of financial liabilities
A financial liability is derecognised when the associated obligation is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms
of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original
liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in profit or loss
and other comprehensive income.

c) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial
position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on
a net basis, to realise the assets and settle the liabilities simultaneously.

d) Cash and cash equivalents
Cash and cash equivalents in the statement of financial position comprise cash at banks and on hand and short-term deposits
with an original maturity of three months or less, but exclude any restricted cash. Restricted cash is not available for use by the
Group and therefore is not considered highly liquid, for example, cash set aside to cover rehabilitation obligations.

For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash and short-term deposits
as defined above, net of outstanding bank overdrafts.

4.13 Trade and other receivables

The Group presents trade and other receivables in the statement of financial position based on a current or non-current classification.
A trade and other receivable is classified as current as follows:

• expected to be realised or intended to be sold or consumed in the normal operating cycle;

• held primarily for the purpose of trading; and

• expected to be realised within 12 months after the date of the statement of financial position.

Gold bullion held on behalf of the Government of Azerbaijan is classified as a current asset and valued at the current market
price of gold at the statement of financial position date. A current liability of equal amount representing the liability of the
gold bullion to the Government of Azerbaijan is also established.

Advances made to suppliers for fixed asset purchases are recognised as non-current prepayments until the fixed asset is
delivered when they are capitalised as part of the cost of the fixed asset.

4
4.14 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.

4.15 Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs, or value of services
received net of any issue costs.

4.16 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
ore body. Components are specific volumes of a mine’s ore body that are determined by reference to the life of mine plan.

In certain instances significant levels of waste removal may occur during the production phase with little or no associated production.

All amounts capitalised in respect of waste removal are depreciated using the unit-of-production method based on the ore
reserves of the component of the ore body to which they relate.

The effects of changes to the life of mine plan on the expected cost of waste removal or remaining reserves for a component
are accounted for prospectively as a change in estimate.

4.17 Employee leave benefits

Liabilities for wages and salaries, including non-monetary benefits and accrued but unused annual leave, are recognised in
respect of employees’ services up to the reporting date. They are measured at the amounts expected to be paid when the
liabilities are settled.

4.18 Retirement benefit costs

The Group does not operate a pension scheme for the benefit of its employees but instead makes contributions to their
personal pension policies. The contributions due for the period are charged to the Group income statement.

4.19 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 condition assumptions are reviewed during each reporting period to ensure they reflect current expectations.

Anglo Asian Mining PLC Annual report and accounts 2019Notes to the Group financial statements continuedyear ended 31 December 2019Significant accounting policies continued

4
4.20 Significant accounting judgements

The preparation of the Group financial statements in conformity with IFRS requires management to make judgements that
affect the reported amounts of assets, liabilities and contingent liabilities at the date of the Group financial statements and
reported amounts of revenues and expenses during the reporting period.

i) 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.

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 from future exploitation. If information becomes available suggesting
that the recovery of expenditure is unlikely, the amount capitalised is written off in the consolidated statement of profit or loss
in the period when the new information becomes available.

iii) Impairment of intangible and tangible assets (notes 13, 14 and 15)
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 cost to dispose (“FVLCD”) 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 FVLCD 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.

iv) Production start date (note 14)
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.

v) Leases (note 15)
The implementation of IFRS 16 requires the Group to make judgments as to whether any contract entered into by the Group
contains a lease. In making this judgement, the Group looks at a number of factors including the broader economics of each
contract. Once a contract has been determined to contain a lease, the Group is required to make judgements and estimates
that affect the measurement of right to use assets and lease liabilities. In determining the lease term, the Group considers all
facts and circumstances that determine the likely total length of time the asset will be leased. Estimates are required to
determine the appropriate discount rates used to measure lease liabilities.

vi) Renewal of Production Sharing Agreement (“PSA”) (note 29)
The Group operates its mines and processing facilities on contract areas licenced under a PSA with the Government of Azerbaijan.
The majority of the Group’s fixed assets, including its processing facilities and its main producing mines, are located on the Gedabek
contract area which has a mining licence expiring in March 2022. The Group depreciates each tangible fixed asset over its estimated
useful life regardless of whether or not the end of its useful life is later than March 2022. There is an option to extend the Gedabek
licence for a further ten years conditional upon satisfaction of certain requirements stipulated in the PSA. The directors have
judged that the requirements to renew the licence for a further 10 years will be satisfied and therefore it is valid to depreciate
assets over useful lives which end later than the end date of the current Gedabek licence.

4
4.21 Significant accounting estimates

The preparation of the Group financial statements in conformity with IFRS requires management to make estimates that affect
the reported amounts of assets, liabilities and contingent liabilities at the date of the Group financial statements and reported
amounts of revenues and expenses during the reporting period. Estimates are continuously evaluated and are based on management’s
experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
However, actual outcomes can differ from these estimates. In particular, information about significant areas of estimation uncertainty
considered by management in preparing the Group financial statements is described below.

i) Impairment of intangible and tangible assets (notes 13,14 and 15)
Once an intangible or tangible asset has been judged as impaired, an estimate is made of its recoverable amount.
Recoverable amount is determined as the higher of fair value less costs to sell and value in use. Determining whether the
projects are impaired requires an estimation of the recoverable value of the individual areas to which value has been ascribed.
The value in use calculation requires the entity to estimate the future cash flows expected to arise from the projects and a
suitable discount rate in order to calculate present value.

ii) Ore reserves and resources (notes 13 and 14)
Ore reserves are estimates of the amount of ore that can be economically and legally extracted from the Group’s mining properties.
The Group estimates its ore reserves and mineral resources, based on information compiled by appropriately qualified persons
relating to the geological data on the size, depth and shape of the ore body and requires complex geological judgements to
interpret the data. The estimation of recoverable reserves is based upon factors such as estimates of foreign exchange rates,
commodity prices, future capital requirements and production costs along with geological assumptions and judgements made
in estimating the size and grade of the ore body. Changes in the reserve or resource estimates may impact upon the carrying
value of exploration and evaluation assets, mine properties, property, plant and equipment, provision for rehabilitation and
depreciation and amortisation charges.

iii) Inventory (note 17)
Net realisable value tests are performed at least annually and represent the estimated future sales price of the product based
on prevailing spot metals prices at the reporting date, less estimated costs to complete production and bring the product to sale.

Stockpiles are measured by estimating the number of tonnes added and removed from the stockpile, the number of contained
gold ounces based on assay data and the estimated recovery percentage based on the expected processing method. Stockpile
tonnages are verified by periodic surveys. The ounces of gold sold are compared to the remaining reserves of gold for the purpose
of charging inventory costs to operations.

iv) Mine rehabilitation provision (note 22)
The Group assesses its mine rehabilitation provision annually. Significant estimates and assumptions are made in determining
the provision for mine rehabilitation as there are numerous factors that will affect the ultimate liability payable. These factors
include estimates of the extent and costs of rehabilitation activities, technological changes, regulatory changes and changes
in discount rates. Those uncertainties may result in future actual expenditure differing from the amounts currently provided.
The provision at the reporting date represents management’s best estimate of the present value of the future rehabilitation
costs required. Changes to estimated future costs are recognised in the Group statement of financial position by either increasing
or decreasing the rehabilitation liability and rehabilitation asset if the initial estimate was originally recognised as part of an
asset measured in accordance with IAS 16 ‘Property, Plant and Equipment’. Expenditure on mine rehabilitation is expected
to take place between 2023 and 2025.

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.

Anglo Asian Mining PLC Annual report and accounts 2019Notes to the Group financial statements continuedyear ended 31 December 20196

Revenue
The Group’s revenue consists of sales to third parties of:

• gold contained within doré and gold and silver bullion to the Group’s refiners; and

• gold and copper concentrate.

Gold within doré and gold bullion
Silver bullion
Gold and copper concentrate

2019
$000

76,123
264
15,665

92,052

2018
$000

75,078
403
14,873

90,354

All revenue from sales of gold within doré and gold and silver bullion and gold and copper concentrate is recognised at the
time when control passes to the customer.

Sales of gold within doré and gold and silver bullion were made to two customers, the Group’s gold refiners, MKS Finance SA
and Argor-Heraeus SA, both based in Switzerland.

The gold and copper concentrate was sold in 2019 and 2018 to Industrial Minerals SA and Trafigura PTE Ltd.

Other income and operating expenses

Other income
Interest receivable
Provisions no longer required

Other operating expenses
Transportation and refining costs
Foreign exchange loss
Advances and inventory written off
Disposal of obsolete equipment

Operating profit

Operating profit is stated after charging:
Depreciation on property, plant and equipment – owned
Depreciation on property, plant and equipment – right of use assets
Amortisation of mining rights and other intangible assets
Employee benefits and expenses
Foreign currency exchange net 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
Audit related assurance services – half year review

Total audit services

Amounts paid to auditor for other services:
Tax compliance services
Tax advice regarding dividend and share premium reduction

Total non-audit services

Total

The audit fees for the parent company were $107,000 (2018: $107,000).

Notes

14
15
13
9

2019
$000

1
—

399
139
405
—

943

2019
$000

16,767
795
1,600
8,026
139
24,470
—

155
119
2

276

13
48

337

2018
$000

5
63

647
704
217
209

1,777

2018
$000

20,957
—
1,990
8,708
704
19,270
1,058

135
119
2

256

13
39

308

Staff numbers and costs
The average number of staff employed by the Group (including directors) during the year, analysed by category, was as follows:
2018

2019

Management and administration
Exploration
Mine operations

The aggregate payroll costs of these persons were as follows:

Wages and salaries
Social security costs
Costs capitalised as exploration

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

44
29
705

778

2019
$000

6,750
1,701
(425)

8,026

47
42
656

745

2018
$000

7,559
1,580
(431)

8,708

2019
$

2018
$

1,674,133

1,943,329

The key management personnel of the Group comprise the chief executive officer, the vice president of government affairs, the
vice president of technical services, the director of geology 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 page 38.

Finance costs

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

2019
$000

466
12
353
438

1,269

2018
$000

1,150
3
—
489

1,642

Interest on interest-bearing loans and borrowings represents charges incurred on those credit facilities as set out in note 20
– ”Interest-bearing loans and borrowings”.

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 2019, $nil (2018: $nil) interest was capitalised.

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 before tax
in the Group financial statements) of the estimated assessable profit 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 2019 were $nil (2018: $nil).

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

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

Income tax charge for the year

2019
$000

7,208

3,579

10,787

2018
$000

7,288

1,623

8,911

Anglo Asian Mining PLC Annual report and accounts 2019Notes to the Group financial statements continuedyear ended 31 December 2019
11

Taxation continued
Deferred income tax at 31 December relates to the following:

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

Deferred income tax liability

Deferred income tax asset
Trade and other payables and provisions*
Lease liabilities
Asset retirement obligation*
Carry forward losses**

Deferred income tax asset

Deferred income tax charge

Statement of financial position

Income statement

2019
$000

2018
$000

2019
$000

(18,072)
(1,159)
(21)
(2,062)
(12,604)

(33,918)

2,765
1,202
3,355
—

7,322

(18,165)
—
(139)
(1,280)
(9,493)

(29,077)

3,171
—
2,889
—

6,060

93
(1,159)
118
(782)
(3,111)

(406)
1,202
466
—

2018
$000

(331)
—
141
(484)
(58)

804
—
(192)
(1,503)

(3,579)

(1,623)

Net deferred income tax liability

(26,596)

(23,017)

* 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 profit and the total taxation charge for the years ended 31 December is as follows:

Profit before tax

Theoretical tax charge at statutory rate of 32 per cent. for RVIG*
Effects of different tax rates for certain Group entities (20 per cent.)
Tax effect of items which are not deductible or assessable for taxation purposes:
– non-deductible expenses
– non-taxable income

Income tax charge for the year

* This is the tax rate stipulated in RVIG’s production sharing agreement.

2019
$000

2018
$000

30,130

25,246

9,642
198

947
—

10,787

8,079
161

732
(61)

8,911

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 2019, the Group had unused tax losses available for offset against future profits of $20,181,000 (2018: $18,648,000).
Unused tax losses in the Republic of Azerbaijan at 31 December 2019 were $nil (2018: $nil). 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 Profit per share

The calculation of basic and diluted profit per share is based upon the retained profit for the financial year of $19,343,000
(2018: $16,335,000).

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

2019

2018

Basic

Diluted

114,392,024

114,047,503

114,392,024

114,047,503

At 31 December 2019 there were no unexercised share options that could potentially dilute basic earnings per share (2018: nil).

Intangible assets

Exploration and
evaluation
Gedabek
$000

Exploration and
evaluation
Gosha
$000

Exploration and
evaluation
Ordubad
$000

Cost
1 January 2018
Additions

31 December 2018
Additions

31 December 2019

Amortisation and impairment*
1 January 2018
Charge for the year

31 December 2018
Charge for the year

31 December 2019

Net book value
31 December 2018

31 December 2019

1,110
2,326

3,436
2,838

6,274

—
—

—

3,436

6,274

—
350

350
480

830

—
—

—

350

830

Mining
rights
$000

41,925
—

4,153
192

4,345
1,191

5,536

41,925

—
—

—

4,345

5,536

31,207
1,948

33,155
1,578

34,733

8,770

7,192

Other
intangible
assets
$000

529
8

537
25

562

365
42

407
22

429

130

133

Total
$000

47,717
2,876

50,593
4,534

55,127

31,572
1,990

33,562
1,600

35,162

17,031

19,965

* 355,000 ounces of gold at 1 January 2019 were used to determine amortisation of producing mines, mining rights and other intangible assets

(2018: 367,000 ounces). A 5 per cent. increase or decrease in the ounces of gold used to compute the amortisation of intangible assets would result in
a decrease in amortisation of $76,000 and an increase in amortisation of $84,000 respectively.

14 Property, plant and equipment

Cost
1 January 2018
Additions
Transfer to producing mines
Disposal
Decrease in provision for rehabilitation

31 December 2018
Additions
Transfer to producing mines
Increase in provision for rehabilitation

31 December 2019

Depreciation and impairment*
1 January 2018
Charge for the year

31 December 2018
Charge for the year

31 December 2019

Net book value
31 December 2018

31 December 2019

Plant and
equipment and
motor vehicles
$000

Producing
mines
$000

Assets under
construction
$000

21,899
2,205
—
—
—

24,104
484
—
—

188,972
10,091
7,581
—
(1,089)

205,555
3,835
241
1,018

24,588

210,649

16,421
1,751

18,172
1,851

111,444
19,206

130,650
14,916

20,023

145,566

5,932

4,565

74,905

65,083

4,381
3,722
(7,581)
(209)
—

313
8
(241)
—

—
—

—

313

Total
$000

215,252
16,018
—
(209)
(1,089)

229,972
4,327
—
1,018

235,317

127,865
20,957

148,822
16,767

165,589

81,150

69,728

* 355,000 ounces of gold at 1 January 2019 were used to determine depreciation of producing mines, mining rights and other intangible assets

(2018: 367,000 ounces). A 5 per cent. increase or decrease in the ounces of gold used to compute the depreciation of property plant and equipment
would result in a decrease in depreciation of $512,000 and an increase in depreciation of $556,000 respectively.

No impairment losses were recognised by the Group at 31 December 2019 or 31 December 2018.

Anglo Asian Mining PLC Annual report and accounts 2019Notes to the Group financial statements continuedyear ended 31 December 2019
14 Property, plant and equipment continued

The Group assesses at each balance sheet date whether any indicators exist of impairment of its fixed assets. Should any
indicators exist, the Group will perform an impairment analysis at that 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.

The management assessed that there were no indicators of impairment at 31 December 2018 and 31 December 2019.
Accordingly, no impairment analysis was performed for the balance sheet at 31 December 2018 and 31 December 2019.

The capital commitments by the Group have been disclosed in note 29.

Leases
Right of use assets

Cost
1 January and 31 December 2019

Depreciation
1 January 2019
Charge for the year

31 December 2019

Net book value
31 December 2018

31 December 2019

Lease liabilities

1 January 2019
Interest expense
Repayment

31 December 2019

Current liabilities
Non-current liabilities

Amount recognised in the profit and loss account

Depreciation expense of right of use assets
Interest expense
Expenses relating to short term leases
Operating leases

Plant and
equipment and
motor vehicles
$000

Land and
building
$000

3,934

—
657

657

—

3,277

483

—
138

138

—

345

2019
$000

795
353
200
—

1,348

Total
$000

4,417

—
795

795

—

3,622

Total
$000

4,417
353
(1,014)

3,756

1,015
2,741

3,756

2018
$000

—
—
—
1,058

1,058

The amount of future lease commitments for short-term leases at 31 December 2018 and 2019 are similar to the amounts
expensed in 2018 and 2019 respectively as the level of leasing activity has not changed. As these amounts are not dissimilar to
the expense for the respective years, the amount of the lease commitments have not been disclosed.

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 – amortised cost*
Trade receivables – fair value**
Prepayments and advances
Loans
Cash in transit***

* Trade receivables not subject to provisional pricing.

** Trade receivables subject to provisional pricing.

2019
$000

67
—

18,684
735
207
—
—
2,012
60
5,085

26,783

2018
$000

436
—

436

2,898
312
1,016
250
1,988
1,927
105
—

8,496

1 January
2018
$000

860
15

875

7,445
206
891
440
—
2,187
107
—

11,276

*** This was a payment from a customer prior to the year-end which was not received until early January 2020 due to a delay by the bank.

Trade receivables (not subject to provisional pricing) are for sales of gold and silver to the refiner and are non interest-bearing
and payment is usually received one to two days after the date of sale.

Trade receivables (subject to provisional pricing) are for sales of gold and copper concentrate and are non interest-bearing,
but as discussed in accounting policy 4.2, are exposed to future commodity price movements over the ‘quotational period’ (“QP”)
and, hence, fail the ‘solely payments of principal and interest’ test and are measured at fair value up until the date of settlement.
These trade receivables are initially measured at the amount which the Group expects to be entitled, being the estimate of
the price expected to be received at the end of the QP. Approximately 90 per cent. of the provisional invoice (based on the
provisional price) is received in cash within one to two weeks from when the concentrate is collected from site, which reduces
the initial receivable recognised under IFRS 15. The QPs can range between one and four months post shipment and final
payment is due between 30-90 days from the end of the QP. Refer to accounting policy 4.10 for details of fair value measurement.

The Group does not consider any trade or other receivable as past due or impaired. All receivables at amortised cost have been
received shortly after the balance sheet date and therefore the Group does not consider that there is any credit risk exposure.
No provision for any expected credit loss has therefore been established in 2018 or 2019.

The VAT refund due at 31 December 2019, 2018 and 2017 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.

Inventory

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

2019
$000

1,973
863
17,041
10,615
13,389

43,881

2018
$000

319
458
14,105
6,371
12,906

34,159

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

Anglo Asian Mining PLC Annual report and accounts 2019Notes to the Group financial statements continuedyear ended 31 December 2019

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 2019 (including short-term cash deposits)
comprised $8,000 and $17,793,000 respectively (2018: $39,000 and $14,501,000).

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

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

2019
$000

4,950
2,544
18,684
1,332

27,510

2018
$000

5,581
3,065
2,898
1,680

13,224

Trade creditors primarily comprise amounts outstanding for trade purchases and ongoing costs. Trade creditors are non-interest
bearing and the creditor days were 16 (2018:18). 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.

Interest-bearing loans and borrowings

Pasha Bank – refinancing loan

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

2019
$000

1,688

1,688
—

1,688

2018
$000

8,438

6,750
1,688

8,438

The directors consider that the carrying amount of interest-bearing loans and borrowings approximates to their fair value.

Pasha Bank – refinancing loan
In 2018, the Group entered into a refinancing agreement with Pasha Bank OJSC, as arranger, for a syndicated loan facility for
up to $15 million to refinance the majority of the Group’s existing loans. The facility is for two years with a fixed interest rate
of 7 per cent. and early repayment is permitted. Loan principal is repayable in 8 equal, quarterly instalments. The loan facility
is unsecured and there are no financial covenants.

A total of $13.5 million of the facility was drawn-down in February 2018 and used to repay the following loans:

• $2.2 million to Yapi Credit Bank;

• $3.7 million to Amsterdam Trade Bank N. V.;

• $3.7 million to Gazprombank (Switzerland) Ltd; and

• $3.9 million to the Chief Executive.

The loan refinancing was completed by the end of March 2018.

Unused credit facilities
The Group had a $2.0 million credit facility from Yapi Credit Bank at 31 December 2019 which was not utilised (2018: $2.0 million).

21 Changes in liabilities arising from financing activities

Current interest-bearing loans and borrowings
Non-current interest-bearing loans and borrowings
Lease liabilities

Total liabilities from financing activities

2019

1 January
$000

Cash flows
$000

6,750
1,688
—

8,438

(5,062)
(1,688)
(1,014)

(7,764)

2018

Other
$000

—
—
4,770

4,770

31 December
$000

1,688
—
3,756

5,444

1 January
$000

Cash flows
$000

Other
$000

31 December
$000

Current interest-bearing loans and borrowings
Non-current interest-bearing loans and borrowings

Total liabilities from financing activities

20,051
600

20,651

(13,301)
1,088

(12,213)

—
—

—

Other in 2019 results from the implementation of IFRS 16 – “Leases” (note 15).

22 Provision for rehabilitation

1 January
Additions
Accretion expense
Effect of passage of time and change in discount rate

31 December

2019
$000

9,028
292
438
727

10,485

6,750
1,688

8,438

2018
$000

9,629
654
489
(1,744)

9,028

The Group has a liability for restoration, rehabilitation and environmental costs arising from its mining operations. Estimates of the
cost of this work including reclamation costs, close down and pollution control are made on an ongoing basis, based on the
estimated life of the mine. The provision represents the net present value of the best estimate of the expenditure required to
settle the obligation to rehabilitate any environmental disturbances caused by mining operations. The undiscounted liability
for rehabilitation at 31 December 2019 was $12,211,000 (2018: $12,100,000). The undiscounted liability was discounted using
a risk-free rate of 2.94 per cent. (2018: 4.83 per cent.). Expenditures on restoration and rehabilitation works are expected
between 2023 and 2025 (2018: between 2023 and 2025).

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 2019 and 2018 using the amounts of debt and other financial
assets and liabilities held as at those reporting dates.

Anglo Asian Mining PLC Annual report and accounts 2019Notes to the Group financial statements continuedyear ended 31 December 2019
23

Financial instruments continued
Capital risk management
The capital structure of the Group consists of debt, which includes the borrowings disclosed in note 20, lease liabilities, 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 AIM, part of the London Stock Exchange, and loans from banks in Azerbaijan and
elsewhere. In managing its capital, the Group’s primary objective is to ensure its continued ability to provide a consistent
return for its equity shareholders through capital growth. In order to achieve this objective, the Group seeks to maintain a
gearing ratio that balances risk and returns at an acceptable level and also to maintain a sufficient funding base to enable the
Group to meet its working capital and strategic investment needs.

The Group is not subject to externally imposed capital requirements and 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.

Interest rate risk
The Group’s cash deposits, letters of credit, borrowings and interest-bearing loans subsequent to the loan refinancing by
Pasha Bank in 2018 are at a fixed rate of interest.

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 2019 and 2018.

Liquidity risk
Ultimate responsibility for liquidity risk management rests with the board of directors, which has built an appropriate liquidity risk
management framework for the management of the Group’s short, medium and long-term funding and liquidity management
requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities
by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial liabilities. 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 2019

Interest-bearing loans and borrowings
Lease liabilities
Trade and other payables

Year ended 31 December 2018

Interest-bearing loans and borrowings
Trade and other payables

On
demand
$000

—
—
—

—

On
demand
$000

—
—

—

Less than
3 months
$000

1,688
170
27,510

29,368

Less than
3 months
$000

1,688
13,224

14,912

3 to 12
months
$000

—
846
—

846

3 to 12
months
$000

5,062
—

5,062

1 to 5
years
$000

—
2,740
—

2,740

1 to 5
years
$000

1,688
—

1,688

Total
$000

1,688
3,756
27,510

32,954

Total
$000

8,438
13,224

21,662

Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group.
The maximum credit risk exposure relating to financial assets is represented by their carrying value as at the consolidated
statement of financial position date.

The Group has adopted a policy of only dealing with creditworthy banks and has cash deposits held with reputable financial
institutions. These usually have a lower to upper medium grade credit rating. Trade receivables consist of amounts due to the
Group from sales of gold and silver bullion and copper and precious metal concentrates. Sales of gold and silver bullion are made
to MKS Finance SA and Argor Heraeus SA, Switzerland-based gold refineries, and copper concentrate is sold to Industrial Minerals
SA and Trafigura PTE Ltd. Due to the nature of the customers, the board of directors does not consider that a significant credit
risk exists for receipt of revenues. The board of directors continually reviews the possibilities of selling gold to alternative customers
and also the requirement for additional measures to mitigate any potential credit risk.

Financial instruments continued
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 United States 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

2019
$000

—
5,226
139

2018
$000

1
3,228
297

2019
$000

130
1,044
—

2018
$000

334
1,784
3

Foreign currency sensitivity analysis
The Group is mainly exposed to the currency of the United Kingdom (UK Sterling), the currency of the European Union (Euro)
and the currency of the Republic of Azerbaijan (Azerbaijan Manat).

The following table details the Group’s sensitivity to a 9 per cent., 8 per cent. and 10 per cent. (2018: 8 per cent., 7 per cent.
and 12 per cent.) increase in a 9 per cent, 8 per cent and 3 per cent. (2018: 11 per cent., 11 per cent. and 3 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 profit
before tax
Decrease – effect on profit
before tax

UK Sterling impact

Azerbaijan Manat impact

Euro impact

2019
$000

(12)

2018
$000

(27)

2019
$000

418

(125)

2018
$000

173

(43)

2019
$000

(11)

2018
$000

(32)

Market risk
The Group’s activities are exposed to the financial risk of changes in the price of gold, silver and copper. These changes have
a direct impact on the Group’s revenues. The management and board of directors continuously monitor the spot price of these
commodities. The forward prices for these commodities are also regularly monitored. The majority of the Group’s production
is sold by reference to the spot price of the commodity on the date of sale. However, the board of directors will enter into forward
and option contracts for the purchase and sale of commodities when it is commercially advantageous.

A 10 per cent. decrease in gold price in the year ended 31 December 2019 would result in a reduction in revenue of $8.5 million
and a 10 per cent. increase in gold price would have the equal and opposite effect. A 10 per cent. decrease in silver price would
result in a reduction in revenue of $0.3 million and a 10 per cent. increase in silver price would have an equal and opposite effect.
A 10 per cent. decrease in copper price would result in a reduction in revenue of $1.2 million and a 10 per cent. increase in copper
price would have an equal and opposite effect.

24 Equity

Authorised
Ordinary shares of 1 pence each

Ordinary shares issued and fully paid
1 January and 31 December

2019

2018

Number

600,000,000

6,000,000

600,000,000

6,000,000

$000

114,392,024

2,016

114,392,024

2,016

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

Anglo Asian Mining PLC Annual report and accounts 2019Notes to the Group financial statements continuedyear ended 31 December 2019

24 Equity continued

Share options
The Group has a share option scheme under which options to subscribe for the Company’s shares are granted to certain
executives and senior employees. There were no share options outstanding at 31 December 2018 and 2019 (note 25).

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.

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:

1 January
Exercised during the year

31 December

There were no share options issued in 2018 or 2019.

Share premium account

1 January
Issue of shares
Court approved reduction

31 December

2019

Number

—
—

—

WAEP
pence

—
—

—

2018

Number

631,000
(631,000)

—

2019
$000

33
—
—

WAEP
pence

17
17

—

2018
$000

32,484
141
(32,592)

On 13 July 2018, the Company issued a circular to its shareholders proposing a resolution to reduce its share premium account
to $nil. This resolution was passed by its shareholders at a meeting of its shareholders on 30 July 2018.

The reduction in the share premium account to $nil was approved by the court on 28 August 2018. The share premium account
of $33,000 at 31 December 2018 and 2019 is the share premium on shares issued subsequent to the court approved reduction.

27 Distributions made and proposed

Cash dividends on ordinary shares declared and paid:
Interim dividend for 2018: 3.0 US cents per share
Final dividend for 2018: 4.0 US cents per share
Interim dividend for 2019: 3.5 US cents per share

Proposed dividends on ordinary shares:
Final dividend for 2019: 4.5 US cents per share*

2019
$000

—
4,592
4,104

8,696

5,148

2018
$000

3,432
—
—

3,432

—

Cash dividends are declared in US dollars but paid in pounds Sterling. Dividends are converted into pounds Sterling using a
five day average of the sterling closing mid-price published by the Bank of England at 4pm each day for a specified week prior
to payment of the dividend.

27 Distributions made and proposed continued

The rates used to convert the dividends from US dollars into pounds Sterling for the dividends above which have been paid
and the corresponding sterling amount of dividend are as follows:

Interim dividend for 2018: 3.0 US cents per share
Final dividend for 2018: 4.0 US cents per share
Interim dividend for 2019: 3.5 US cents per share

Conversion
rate

1.3121
1.2580
1.2344

Dividend
pence

2.2864
3.1797
2.8533

The proposed final dividend for the year ending 31 December 2019 is subject to approval by shareholders at the annual general meeting for 2020
at a rate to be announced. It has not been recognised as a liability in the Group statement of financial position at 31 December 2019.

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 2019 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 2019.

* See note 5 – “Subsidiaries” of notes to the Company financial statements.

29 Contingencies and commitments

Primary place
of business

Percentage
of holding
per cent.

United Kingdom
Azerbaijan
Azerbaijan
Azerbaijan
Azerbaijan

100
100
100
100
100

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
(Piyazbashi, 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 Group
and the Government are still discussing the formal approval of the development programme.

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 in compliance with the environmental clauses contained in the PSA.

30 Related party transactions
Trading transactions
During the years ended 31 December 2018 and 2019, there were no trading transactions between Group companies.

Other related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation
and are not disclosed in this note. Transactions between the Group and other related parties are disclosed below.

a Remuneration paid to the directors is disclosed in the report on directors’ remuneration on page 38.

b During the year ended 31 December 2019, total payments of $887,000 (2018: $2,563,000) were made for processing

equipment and supplies purchased from Proses Muhendislik Danismanlik Inshaat ve Tasarim Anonim Shirket, an entity in
which the chief technical officer of Azerbaijan International Mining Company has a direct ownership interest.

At 31 December 2019 there is a payable in relation to the above related party transaction of $nil (2018: $51,000).

During the year ended 31 December 2019, total payments of $1,865,000 (2018: $nil) were made for processing equipment
and supplies purchased from F&H Group LLC (“F&H”), an entity in which the chief technical officer of Azerbaijan
International Mining Company has a direct ownership interest.

At 31 December 2019 there is a payable in relation to the above related party transaction of $134,000 (2018: $nil).

Anglo Asian Mining PLC Annual report and accounts 2019Notes to the Group financial statements continuedyear ended 31 December 2019

30 Related party transactions continued

Other related party transactions continued
d On 20 May 2015, the chief executive of the Company made a $4 million loan facility available to the Group. The principal
amount of the loan was fully repaid during the year ended 31 December 2018. The interest accrued and unpaid at
31 December 2018 was $325,000 (2017: $655,000). The Group made a payment of $333,000 in April 2019 to the chief
executive to settle the interest outstanding at 31 December 2018 together with the additional interest accrued in 2019.

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

Subsequent event
Between September and December 2019, an outbreak of a respiratory illness caused by the COVID-19 coronavirus started in
Wuhan, Hubei Province, China. To contain the spread of the virus in Azerbaijan, the Government of Azerbaijan (the “Government”)
implemented various restrictions starting from early March 2020. These included the closure of all land borders to passengers
(but not to freight) and the temporary suspension of all scheduled domestic and international flights on 3 April 2020. Domestic
travel around the country and the movement of people was also severely curtailed.

The Company produces gold doré and copper concentrate at its Gedabek facility. In response to the COVID-19 outbreak, the
Company implemented strict health measures to prevent an occurrence of the Coronavirus at its Gedabek production
facilities. These included many hygiene measures such as the provision of hand disinfectants, deep cleaning of work areas and
key employee homes and the provision of take away food to avoid the close gathering of people in canteens. An education
progamme for employees was carried out and the Gosha accommodation camp redeployed as a quarantine facility. The Company
has been able to continue in operation without serious disruption and maintain production of gold doré and copper concentrate.
The Company also agreed terms for a $15 million standby credit facility with Pasha Bank as a contingency measure.

The majority of the Group’s revenue is generated from the sale of gold bullion produced by refining gold doré at refiners
located in Switzerland. In March 2020, the refiners announced suspension of their operations after the Swiss authorities
announced the closure of all non-essential industry. The Company consigns its gold doré to Switzerland by scheduled air
flights which was no longer possible from March 2020. The Company shipped one consignment of gold doré in early April
2020 by air-charter and the refiners announced that from mid-April 2020 they have resumed limited operation. The Company
continues to ship copper concentrate by road.

The Company has implemented many measures to mitigate the effects of COVID-19 as set out above. However, the duration
and intensity of this global health emergency and related disruption is uncertain, including the effect it will have on the ability
of the Company to continue its operations and sell its products. No adjustments were made to the Group’s statement of
income or cash flows for the year ended 31 December 2019 or its statement of financial position at 31 December 2019.
The COVID-19 pandemic has not affected the ability of the Company to continue as a going concern as set out in note 2 on
page 51 and the Company does not expect any resultant impairment to assets in the financial statements for the year ending
31 December 2020. Given the dynamic nature of these circumstances, the final impact on the Group’s statement of income,
financial position and cash flows cannot be reasonably estimated at the time of signing these financial statements.

Non-current assets

Property, plant and equipment

Investments

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 profit

Total equity

Notes

2019
$000

142

1,325

1,467

161

13,722

13,883

15,350

2018
$000

168

1,325

1,493

270

13,428

13,698

15,191

(4,209)

(3,821)

11,141

9,877

(4,209)

(3,821)

11,141

11,370

2,016

9,092

2,016

9,321

11,141

11,370

The profit dealt with in the financial statements of the Company is $8,467,000 (2018: loss of $1,339,000).

These Company financial statements were approved by the board of directors and authorised for issue on 12 May 2020. They were
signed on its behalf by:

Reza Vaziri
President and chief executive

Anglo Asian Mining PLC Annual report and accounts 2019

Company statement of changes in equity
year ended 31 December 2019

1 January 2018

Loss for the year

Shares issued

Share premium reduction

Cash dividends paid

31 December 2018

Profit for the year

Cash dividends paid

31 December 2019

Notes

Share
capital
$000

2,008

—

2,016

—

2,016

Share
premium
$000

32,484

—

141

(32,592)

—

Accumulated
profit/(loss)
$000

(18,500)

(1,339)

—

32,592

(3,432)

9,321

8,467

(8,696)

Total
equity
$000

15,992

(1,339)

149

—

(3,432)

11,370

8,467

(8,696)

9,092

11,141

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 12 May 2020.

The parent company financial statements have been prepared using the accounting policies set out in note 2 which are consistent
with all applicable International Financial Reporting Standards (“IFRS”) and with those parts of the Companies Act 2006 applicable
to companies reporting under IFRSs and in accordance with Financial Reporting Standard 101, ‘Reduced Disclosure Framework’,
(“FRS 101”). 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 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 section 408 of the Companies Act 2006, the income
statement of the parent company is not presented as part of the parent company financial statements.

2
Significant accounting policies
2.1 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.

2.2

Investments
Investments in subsidiaries are stated at cost, and where appropriate, less any provision 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.

2.3 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.

2.4 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.

2.5 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.

Anglo Asian Mining PLC Annual report and accounts 20193

Property, plant and equipment

Cost
31 December 2018 and 2019

Depreciation
1 January 2018
Charge for the year

31 December 2018
Charge for the year

31 December 2019

Net book value
31 December 2018

31 December 2019

Investments

Shares in subsidiary undertakings
Anglo Asian Operations Limited

Office
equipment
$000

352

159
25

184
26

210

168

142

2018
$000

2019
$000

1,325

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

The Company’s subsidiaries at 31 December 2019 are set out in the table below. All subsidiaries are 100 per cent. owned and
their financial statements are included in the consolidated group financial statements:
Registered office address
Name

Primary activity

Anglo Asian Operations Limited

Holance Holdings Limited

Anglo Asian Cayman Limited

R.V. Investment Group Services LLC

Azerbaijan International Mining Company Limited

7 Devonshire Square
Cutlers Gardens
London EC2 4YH
United Kingdom

P.O. Box 3136
Akara Building
Main Street
Road Town
British Virgin Islands

Zephyr House
P.O. Box 709
122 Mary Street
Grand Cayman KY1 1107
Cayman Islands

15 East North Street
Dover
Kent
Delaware
United States of America

Zephyr House
P.O. Box 709
122 Mary Street
Grand Cayman KY1 1107
Cayman Islands

There has been no change in subsidiary undertakings since 1 January 2019.

Holding company

Mineral development

Mining

Notes to the Company financial statements continued
year ended 31 December 2019

Other receivables

Current assets
Prepayments
Loans
Advances

2019
$000

40
60
61

161

2018
$000

23
105
142

270

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.

Trade and other payables

Trade creditors
Accruals
HMRC
Amounts owed to subsidiary undertakings

Deferred taxation

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

Unrecognised deferred tax asset

2019
$000

121
232
30
3,826

4,209

2019
$000

2018
$000

97
335
30
3,359

3,821

2018
$000

20,181

4,036

18,648

3,730

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.

Share capital

Authorised
Ordinary shares of 1 pence each

Ordinary shares issued and fully paid
1 January

2019

2018

Number

600,000,000

6,000,000

600,000,000

6,000,000

$000

114,392,024

2,016

114,392,024

2,016

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

Share-based payments
Equity-settled share option scheme
Details of the Company’s equity-settled share option scheme are given in note 25 to the Group financial statements.

Anglo Asian Mining PLC Annual report and accounts 2019

Share premium account

1 January
Issue of shares
Court approved reduction

31 December

2019
$000

33
—
—

2018
$000

32,484
141
(32,592)

13 Distributions made and proposed

Proposed dividends on ordinary shares:
Final dividend for 2019: 4.5 US cents per share*

2019
$000

—
4,592
4,104

8,696

5,148

2018
$000

3,432
—
—

3,432

—

The rates used to convert the dividends from US dollars into pounds Sterling for the dividends above which have been paid
and the corresponding sterling amount of dividend are as follows:

Interim dividend for 2018: 3.0 US cents per share
Final dividend for 2018: 4.0 US cents per share
Interim dividend for 2019: 3.5 US cents per share

Conversion
rate

1.3121
1.2580
1.2344

Dividend
pence

2.2864
3.1797
2.8533

Subsequent events
No significant events took place for Anglo Asian Mining PLC after the balance sheet date. Note 31 of the Group financial
Statements details the subsequent event of the COVID-19 coronavirus health emergency.

15 Auditor’s remuneration

The Company paid $107,000 (2018: $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 from the Chairman

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

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

1 June 2020

To the holders of ordinary shares 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 2019 together with
the attached notice of the annual general meeting to be held on 23 June 2020 (the “Meeting”) and a form of proxy. This letter is
to explain procedure for the annual general meeting and give the background to some of the resolutions to be put to shareholders
at the Meeting.

Annual General Meeting (“AGM”) for 2020
In order to comply with the UK Government’s COVID-19 “Stay Alert” measures which prohibits, amongst other things, public
gatherings of more than two people, the AGM is being convened as a “Closed Meeting”. The meeting will be convened with the
necessary quorum of two shareholders in accordance with the Company’s Article’s of Association. Other Shareholders will not be
allowed to attend on the grounds of safety and any present at the venue will be refused entry to the AGM.

Shareholders are strongly encouraged to exercise their right to vote by appointing the Chairman of the meeting as their proxy. A
shareholder nominating any other person as their proxy will not have their votes counted as that person will not be allowed to attend
the meeting. A reply-paid form of proxy is included with this Annual Report with its instructions. Shareholders should complete the
form in accordance with its instructions and return it to the address given on the form of proxy.

The directors always welcome the opportunity afforded by the AGM to answer questions from shareholders. To ensure that
shareholders still have the ability to submit questions about the business, a form has been set up on the Company’s web-site
(https://www.angloasianmining.com/) where shareholders can submit questions. Shareholders will need to submit their name, email
address and the number of shares held to ask a question. Responses relevant to the business will be published on the Company’s
web-site in due course after the AGM.

The situation with regard to COVID-19 is fast moving and should any change be required to the arrangements of the AGM, the
Company will release an RNS and publish the change on its web-site.

Background to resolutions

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

Resolution 4 – Declaration of a Dividend
This is an ordinary resolution to declare a dividend as recommended by the directors. The dividend is payable out of distributable
profits available for the purpose and set aside by the Company for the payment of a dividend. The directors have a responsibility to
examine the accounts of the Company to ensure that a distribution can be made to the shareholders without placing the Company into
any difficulties.

Resolution 5 – 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 5 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 12 May 2020
(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; or (ii) 30 June 2021 (being six months
after the Company’s accounting reference date).

Anglo Asian Mining PLC Annual report and accounts 2019Resolution 6 – 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 5
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.

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.

Yours faithfully

Khosrow Zamani
Non-executive chairman

NOTICE IS HEREBY GIVEN that the annual general meeting (“AGM”) of the shareholders of Anglo Asian Mining PLC (the “Company”) will
be held on 23 June 2020 at 10.30am at The London Marriott Hotel Twickenham, 198 Whitton Road, Twickenham TW2 7BA for the purpose of
considering and, if thought fit, passing the following resolutions, of which resolutions 1 to 5 (inclusive) will be proposed as ordinary
resolutions and resolution 6 will be proposed as a special resolution:

Ordinary resolutions
1

3
4.

THAT the consolidated financial statements and the reports of the board of directors and of the auditors for the year ended
31 December 2019 be received.
THAT Ernst & Young LLP be re-appointed as the auditors of the Company and that the board of directors be authorised to fix their
remuneration.
THAT John Monhemius be re-elected as a director, having retired by rotation in accordance with the Company’s articles of association.
THAT a dividend shall be declared of 4.5 US cents per issued share to the ordinary shareholders on the registrar of members on the 3
July 2020.
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 £381,307*; and
(b) up to an aggregate nominal amount of £762,613** (including within such limit any equity securities issued under paragraph (a) above)

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

in connection with an offer by way of a rights issue:
(i)
(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 2020, 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
6

THAT subject to the passing of resolution 5 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 5 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 £114,392†,

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 2021 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

William Morgan
7 Devonshire Square
Culters Gardens
London EC2M 4YH
United Kingdom
1 June 2020

* Calculated as one third of the nominal value of the total issued ordinary share capital (i.e. 114,392,024 shares of nominal value £1,143,920.24).
** Calculated as two thirds of the nominal value of the total issued ordinary share capital (£1,143,920.24).
† 10 per cent. of the ordinary issued share capital of the Company (£1,143,920.24).

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 Link Asset Services, PXS, 34 Beckenham Road, Kent BR3 4TU not later
than 10.30am on 21 June 2020.
In accordance with Regulation 41 of the Uncertificated Securities Regulations 2001, only those members entered on the register of members of the Company
at close of business on 21 June 2020 shall be entitled to vote in respect of shares registered in their name at that time. Changes to the register of members
after close of business on 21 June 2020 shall be disregarded in determining the rights of any person to attend or vote at the AGM.

Notes
1

Anglo Asian Mining PLC Annual report and accounts 2019

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
Blytheweigh
4–5 Castle Court
London EC3V 9DL
United Kingdom

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