Contents
Strategic Report
Principal Activities
Strategy & Business Model
2019 Production Highlights
Chairman’s Statement
Operations Review
Financial Review
Organisation Review
Directors
Operational Team
Key Performance Indicators
Risks & Uncertainties
Section 172(1) Statement
Governance
Corporate Governance
Corporate Responsibility
Report of the Directors
Independent Auditor’s Report
Financial Statements
Annual General Meeting COVID-19 Statement
Notice of the 2020 Annual General Meeting of Ariana Resources PLC
Advisors
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ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019 Principal Activities
The principal activities of the Company and its
subsidiaries are the exploration and development of
precious and technology metals. The primary area
of geological focus is the globally significant Tethyan
Metallogenic Belt, which spans over 10,000km from
central Europe through to the Himalayas and beyond.
This metallogenic belt hosts some of the world’s largest
gold, silver and copper deposits.
The Company aims to advance mineral resource
opportunities both within its primary area of operations
in Turkey and across the wider European and Eastern
Mediterranean regions, within which the Company
has specific expertise. Beyond its primary interest
in precious metals, specific opportunities are being
evaluated in the context of the demand for mineral
resources which contribute toward technological
development, energy efficiency and the global
decarbonisation agenda.
Red Rabbit
50:50 Joint Venture - Proccea
Salinbaş
100% Ariana owned
Kizilçukur & Ivrindi
100% Ariana owned
Magellan & Mariner
100% Venus Minerals owned
Ariana earning in to 50%
SALINBAŞ
Istanbul
TAVŞAN
IVRINDI
KIZILÇUKUR
KIZILTEPE
Izmir
SALINBAŞ
Ankara
Turkey
Antalya
MAGELLAN
Cyprus
MARINER
KILOMETERS
0
100
200
2
STRATEGIC REPORTARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019 Strategy & Business Model
The Company’s primary strategy is to achieve sustainable long-term growth of the Company via robust and cost-
efficient gold exploration and development.
This approach has led Ariana to identify, advance and develop projects rapidly, with a discovery cost per ounce of
gold that is less than half that of its peers.
The Company plans to achieve its goals by:
Focusing on the
discovery of sizeable
mineral systems
Building positive long-term
relationships with local government,
communities and key stakeholders
Developing a strong team
with excellent commercial,
technical and financial skills
Forming robust business
partnerships for the development
of gold and other mineral projects
Executing selective, high-impact
exploration programmes and joint
venture (‘JV’) opportunities
Ensuring safe operating
procedures and minimising
environmental impact
3
ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORT
2019 Production Highlights
Total JV Revenue*
Revenue / US$
Average Cash Costs: US$507/oz per oz FY2019
Average Gold Recovery: 93.7%
Average Milled Grade: 4.5 g/t Au, 67.9 g/t Ag
Total Ore Milled: 204,866 tonnes
4
STRATEGIC REPORTARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019*JV Revenue is based on total gold and silver sales as recorded by the 50:50 JV with Proccea Construction Co. Please refer to Note 6, Share of Profit of Interest in JV for further detail.2018 37.8m2019 45.1m Gold
Revenue / US$
Production / oz
Silver
Revenue / US$
Production / oz
5
Chairman’s Statement
Fellow shareholders,
I am pleased to report on the Company’s audited
results for the year ended 31 December 2019. This
has been another outstanding year for Ariana,
which has delivered production and profitability
well above its plans. The Kiziltepe Mine, which is
held within Zenit Madencilik San. ve Tic. A.S. (a
50:50 JV with Proccea Construction Co.), achieved
gold production of 27,985 ounces, 12% above
production guidance at an average cash cost of just
US$507/oz. This, once again, places the Kiziltepe
Mine comfortably amongst the lowest-cost gold
producers in the world. The profitability from our
Turkish operations has enabled Ariana to report
a significant improved earnings per share of 0.65
pence and a price earnings ratio of 6, which is a
respectable position in the junior gold mining sector.
Production at the Kiziltepe Mine has remained well
above the planned feasibility rates since start-up
in 2017, resulting in accelerated depletion of the
Arzu South open-pit. Post-period end, this enabled
timely completion of repayments against the US$33
million capital expenditure loan, in addition to the
JV partners receiving a return of capital invested
and their respective share of profits. This allowed
for the payment of a maiden dividend of £1.6
million from our Turkish operating subsidiary to
Ariana Resources plc, representing the first profit
cash-flow in the Company’s history. This places
Ariana in a particularly strong position in a time of
general uncertainty. We are, therefore, well-placed
to deploy our resources to the ongoing development
of our existing portfolio of wholly-owned projects
in Turkey, particularly Salinbas, as well as our new
earn-in on Cyprus-focused Venus Minerals.
At Kiziltepe, resource extension work was completed
earlier this year, which is currently targeting an
extension of the life of mine to a total of 10 years.
In addition, further drilling and resource work is
currently being undertaken at Kiziltepe to test down-
dip extensions of the Arzu South vein with a view
to assessing possible underground or additional
open-pit potential. Similar resource extension and
other project development work has been completed
at Tavsan with a view to bringing this project into
production from 2022. Salinbas has also seen
extensive work during the year, achieving proof of
concept on both the origin and potential extent of
this very large mineral system. The area has attracted
significant international interest following the
spectacular recent drilling results from the nearby
Hot Maden project, validating the perceptive decision
by Ariana to continue investing in this region.
ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORT2018 3.4m2019 5.9m2018 241,6162019 363,6502018 34.4m2019 39.2m2018 27,1102019 27,985Production of gold 12% above guidance for 2019. Chairman’s Statement continued
while not yet part of our current revenue stream, but
part of our exploration portfolio, is also likely to see a
price improvement following a post-pandemic price
correction. It already has a broad base of demand
in the evolving electrification of vehicles and other
low-carbon technological developments, but is now
being mooted as having anti-viral/microbial uses
where it could be applied to frequently touched
surfaces. This may well become an industry standard
following the experience of our current crisis.
Meanwhile, the long-term trend for gold has been
upwards for much of the last two decades and there
is little to detract from this trajectory. Increasing
levels of global uncertainty, marked differences
between the paper and physical prices of precious
metals, physical accumulation by hoarders, central
banks and exchange-traded funds (‘ETFs’), and the
expansive nature of government spending will all
undoubtedly result in hard currency inflation, all of
which support the long-term price of our primary
product, gold. Gold is, after all, a currency without
a government. Ariana is well placed, both in terms
of its balance sheet and its project portfolio of the
correct metals, to prosper through the coming years.
The new year started positively for the Company, with
management able to report excellent first quarter
production results and guidance for the year well
above the feasibility plan. This sound start to the year
has, however, been overshadowed by the scale and
significance of the COVID-19 pandemic sweeping
across the world, touching all of our lives. Having
seen, early on in my mining career in Namibia, some
of the gruesome consequences of the 1918 Spanish
Flu epidemic, I am well aware of the serious impact
this could have on both our personal and business
lives. The Ariana and Zenit management teams
have put in place all the recommended procedures
for the well-being and safety of our employees and
contractors at both exploration and mining sites,
allowing operations to continue unhindered. I must pay
tribute to all the people working for Ariana and those
at the Kiziltepe Mine for their prompt and no-nonsense
approach in adjusting to the required precautionary
steps and then just getting on with life. By facing
these challenges head on and adopting new working
practices we have been able to operate much as we
did before. Thus far, we have not had any incidence
of COVID-19 in any of our spheres of operations.
The business of mineral exploration is well versed
in the process of defining uncertainty and risk and
is also adept at managing these factors, evidenced
by the way in which both current exploration and
mining operations have adapted to this current
climate of uncertainty. Our industry has been a long-
term adopter of remote work and distributed working
teams, and for a while it has been the norm for our
work to be carried out in the field on one continent
and be collated and analysed on another. Despite
international travel restrictions, it is a great credit
to our dedicated team that they have been able to
carry on with normal work commitments, enabling
us to meet all our ongoing work and reporting
requirements within a reasonable timeframe. We
will continue to review ways we might need to
adapt in response to this worldwide crisis in order to
mitigate risks and to continue working effectively.
The last financial year has been particularly good for
gold but not quite so for silver. As the bulk of Ariana’s
production revenue (>85%) comes from gold, the
lacklustre silver price in response to market sentiment
has not had a material impact on overall revenue.
Interestingly, the gold-silver ratio has for most of
modern history been around 1 to 50, while the current
ratio is closer 1 to 100; a marked departure from the
norm, which is an indication that the silver price is
overdue for a positive correction. The diverse industrial
usage of silver is an additional driver for the market
price firming, including the requirement for silver in
medical and anti-viral/microbial settings. Copper,
6
STRATEGIC REPORTARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019 With this long-term perspective in mind across our
commodities of prime interest, the Company has been
exceptionally busy on the exploration and development
front during the past year. We have made significant
progress across our pipeline of strategic projects in
Turkey and for our new earn-in focused on Cyprus. For
the latter, we are not alone in recognising the potential
of this ancient source of copper, which also appears
to host significant and previously unrecognised gold
potential. Consequently, Ariana is very well positioned
to deploy existing resources and attract other industry
partners to contribute to the development of an
attractive portfolio of prospective development assets.
With the shake-up in the resources sector, it is probable
that we will see other industry sectors, such as energy,
starting to look at the minerals sector to progress their
long-term green development objectives, given that
the decarbonisation agenda requires the identification
and consumption of substantial mineral resources.
Exploration like all other frontier industries is only as
successful as its philosophy will allow it to be. It is
on reflection of this that I think of how the legendary
geologist J David Lowell, the world’s best mine finder,
expressed himself. He was noted for saying he was
good at being wrong and was never afraid of that.
Drilling out a ‘duster’ was nothing to be afraid of, as the
mistake would have been not to try. You had to ignore
existing dogma in order to have a chance of success.
Above all else he was successful at finding some of the
best mines in the world today, over one of the longest
careers in our industry. It is particularly poignant that
such a legendary man should pass at the ripe old age
of 92 in the very year that we need such courage and
inspiration. I think that we should all take a leaf out of
his book as we step out into this changed new world
to find the materials we need to build our future.
Like all companies, Ariana exists for the benefit of
its stakeholders and in particular its shareholders,
who must be rewarded through increasing market
capitalisation and a potential dividend stream. Your
Board remains focused on these outcomes and we
are particularly pleased to see that the market price
of Ariana shares is substantially higher than it was
this time last year. The Board would particularly like
to thank its shareholders for the close and personal
interest you have shown in the Company over the last
few years. We appreciate your support and we look
forward to meeting you on future occasions. It seems
unlikely we will be able to hold face-to-face meetings
or the AGM as we have done before, and we are instead
looking at participating in virtual events accordingly.
Either way, we would like to ask you all to exercise your
proxy votes well in advance of the AGM date, as it is
unlikely that we will be able to accommodate online
voting at this stage. We look forward to the day when
we are all able to meet in the same room as before.
Last but not least I would like to thank our
employees, professional advisors and our joint
venture partners for their dedication and support
in helping Ariana achieve its ongoing success.
Michael de Villiers
Chairman
7
ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORT Operations Review
The year under review marked an extraordinary period of development for the Company, unlike any other
in its history. This development was financed internally from the proceeds of our profitable gold and silver
mining operation in western Turkey. Production continued at the Kiziltepe Mine and this was accompanied
by an intense period of exploration and development work undertaken across all project areas. In addition,
the Company completed its first earn-in agreement into a portfolio of advanced and greenfield projects
in Cyprus. The Company remains well-financed for its planned work programmes across all projects.
As in previous periods, the year ended positively, with forecast production figures reporting 12% over guidance for
the period. As at year end, the JV had also repaid close to 90% of the construction capital loan of US$33m to Turkiye
Finans Katilim Bankasi A.S.; post-period end the JV had completed all repayments against this loan. The JV reported
total revenue of about US$45m for 2019 from the Kiziltepe Mine, in contrast with the annual feasibility target of
US$26m. This represents a 75% increase over the target.
Ariana is now one of a handful of junior mining companies on AIM capable of internally financing its operations.
We have achieved this success through a combination of low-cost and effective exploration, prudent financial
management, strong partnerships and through fostering positive relationships with key stakeholders at all levels,
including among local communities and government entities.
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STRATEGIC REPORTARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019 S I N D I R G I G O L D C O R R I D O R
Sindirgi Gold Corridor
Licence Areas
Production
Exploration
Resources
100% Ariana Owned
Roads
Karakavak North
Kepez West
Karakavak
Kepez North
Kepez South
Kiziltepe
Kizilçukur
KILOMETERS
KILOMETERS
0
0
2.5
2.5
5
5
9
ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORT Operations Review continued
Red Rabbit Gold Project Area
Life of Mine to Date (up to Q4 2019)
The Red Rabbit Gold Project (‘RRGP’)
comprises the Kiziltepe and Tavşan sectors,
located within the Tethyan Metallogenic
Belt of western Turkey. The project is being
advanced in partnership with Proccea
Construction Co. (‘Proccea’) via a 50:50
JV. The Kiziltepe Mine has produced in
excess of 65,555 ounces of gold since
production commenced up to the end of Q4
2019, with production guidance of 18,000
ounces of gold provided for 2020. The
Company remains focused on increasing
its production profile through targeted
exploration and development work across
both the Kiziltepe and Tavşan sectors. The
JV is focused on achieving production from
both sectors simultaneously in the coming
years, with the aim of increasing output to
approximately 50,000 ounces per annum.
Gold produced (troy oz)
Silver produced (troy oz)
Gross Revenue (US$’000)
65,555
670,861
96,910
Average realised gold price (US$/oz)
1,316
Average revenue per gold ounce (US$/oz)
1,478*
* Average revenue per gold ounce is a measure of the
Total Revenue divided by the number of Troy ounces of
gold produced within a given period. It accounts for the
contribution of by-product silver.
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STRATEGIC REPORTARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019
Resource Estimate table for Kiziltepe/Tavşan (RRGP JV):
Kiziltepe and Kepez
Main Vein Zones
Measured
Indicated
Measured & Indicated
Inferred
Global Total
Tonnes
(t)
Grade Au
(g/t)
Grade Ag
(g/t)
Gold
(oz)
Silver
(oz)
970,000
1,044,000
2,014,000
1,011,000
3,025,000
2.46
2.54
2.51
2.23
2.33
43.64
43.35
43.49
29.58
77,000
77,000
1,361,000
1,377,000
154,000
2,738,000
73,000
961,000
38.03
227,000
3,699,000
Summary 2020 Kiziltepe and Kepez JORC 2012 compliant Mineral Resource Estimate (depleted for mining). Reporting is based on a 1.0 g/t Au
cut-off grade. Resource estimate dated 22 April 2020.
Tavşan
Measured
Indicated
Measured & Indicated
Inferred
Global Total
Tonnes
(t)
611,000
2,556,000
3,167,000
1,322,000
4,489,000
Grade Au
(g/t)
Grade Ag
(g/t)
Gold
(oz)
Silver
(oz)
2.77
1.70
1.91
1.39
1.75
4.84
5.19
5.12
4.72
5.01
54,000
95,000
140,000
427,000
194,000
522,000
59,000
201,000
253,000
723,000
Summary 2020 Tavsan JORC 2012 compliant Mineral Resource Estimate. Reporting is based on a 0.7 g/t Au cut-off grade. Resource estimate
dated 8 June 2020.
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ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORT Operations Review continued
Kiziltepe Gold Mine
Commercial production was initiated at Kiziltepe
during July 2017 as the Company’s first mine.
Gold mineralisation occurs within an area of 3km
by 1.5km containing a series of quartz veins and
associated alteration zones hosted by dacitic
volcanic rocks. Mining commenced on the
Arzu South pit and during 2020 these activities
will be shifted gradually to other planned pits.
Processing is undertaken using a combined CIL/
CIC plant producing a gold-silver doré on site,
which is shipped to a refinery in Istanbul. Detailed
technical and economic assessments are also
being completed on several satellite vein systems,
which are not currently part of the mining plan,
in anticipation of these being developed in future
years. The Company is targeting a minimum
ten-year mine life (eight years according to the
Feasibility Study), which will require the addition
of a further 40,000 oz gold equivalent in reserves
outside of the four main pits at Arzu South, Arzu
North, Banu and Derya, which are included as
part of the current mining schedule. Management
is confident that this can be achieved, should
existing resources be converted to reserves as a
result of this ongoing work.
Kiziltepe 2019 Production Table
Mine Life
Cash Costs
Q1 2019
Q2 2019
Q3 2019
Q4 2019
Processing
c. 6 years remaining (up to 10 years potential)
US$399
US$589
US$540
US$500
CIL/CIC
Production Rate (Life of mine average)
20,000 oz Au p.a. (up to c. 25,000 oz Au p.a.)
Global JORC Resource
2.01Mt @ 2.51 g/t Au, 43.49 g/t Ag (Measured, Indicated)
1.01Mt @ 2.23 g/t Au, 29.58 g/t Ag (Inferred)*
Payback
Royalty
100% of construction loan (US$33 million) repaid on 1 May 2020
State Right and 2.5% NSR to Franco-Nevada
* Resource figures include Reserves. Depleted resource figures are provided on page 11.
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STRATEGIC REPORTARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019
Kepez Prospect
Kepez is located up to 14km haulage
distance to the northeast from the
Kiziltepe processing plant. It is likely to
be the first of the satellite mines to be
developed in the periphery of Kiziltepe.
Gold mineralisation occurs in a series of
quartz veins and associated alteration
zones hosted by dacitic volcanic
rocks. A recent resource update for
the Kepez Prospect demonstrated the
potential to add at least one year of
production from this satellite deposit
to the Kiziltepe mining operations. An
Environmental Impact Assessment
(‘EIA’) extension covering part of the
Kepez North area was completed
in 2018. A revised mineral resource
estimate and pit optimisation studies
were recently completed.
1 3
ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORT Operations Review continued
Tavşan Development Project
The Tavşan Sector is located
approximately 75km to the north-
east of the Kiziltepe Mine. Gold
mineralisation occurs within a
jasperoid unit located between
ophiolites and limestones. A recent
Resource Estimate, completed
post-period end, substantially de-
risks the project following a material
improvement in the size of the
resource and its classification, with
77% of the resource in Measured and
Indicated categories. The new estimate
has enabled the JV to proceed with the
completion of its Feasibility Study and
EIA, without further resource drilling.
The JV is targeting the development
of Tavşan as a heap-leach project
in parallel with the Kiziltepe Mine,
within the broader context of the Red
Rabbit Joint Venture. Further work
is required to be completed on the
Feasibility Study and EIA, which the
JV is completing in-house, along with
associated permitting.
Scoping Study Summary
Mine Life
Cash Costs
Processing
Production Rate
6 years (based on revised resources)
US$630/oz
Heap Leach
30,000 oz Au p.a.
Global JORC Resource
4.0Mt @ 1.3g/t Au, 4.5g/t Ag (Measured, Indicated & Inferred)
In-pit Grade
Net Present Value
Internal Rate of Return
Payback
Royalty
1.6 g/t Au, 3.0 g/t Ag
US$42 million*
80%*
1.1 years on US$20 million initial capital*
State Right and 2% NSR to Sandstorm Gold
*Pre-tax base case at US$1,250/oz for gold as at November 2016 (completed by Auralia Mining Consulting).
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STRATEGIC REPORTARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019
TA V Ş A N S I T E P L A N
Licence Boundary
Jasperoid
Designed Pit Outlines
EIA Boundary
Waste Rock Dump
Heap Leach Pad
Village
Roads
North Zone
Main Zone
Orencik
West Zone
South Zone
KILOMETERS
0
1
2
TA V Ş A N E X P L O R AT I O N U P S I D E
ODX99A 11m @ 5.11g/t Au + 6.8g/t Ag
T6 75m @ 1.19g/t Au + 6.5g/t Ag
T4 170m @ 1.04g/t Au + 4.1g/t Ag
OR3 9m @ 1.30g/t Au + 4.3g/t Ag
North Zone
8
7
T3 140m @ 1.11g/t Au + 5.2g/t Ag
T1 60m @ 1.30g/t Au + 4.3g/t Ag
13
15
12
11
6
9
5
4
14
10
West Zone
Kiziltepe
70km to mine site
Main Zone
16
ODX53 6m @ 3.37g/t Au + 3.7g/t Ag
KILOMETERS
0
0.5
1
Selected Historic Collars
1
Exploration Target
Untested Trenches
Designed Pit
Jasperoid Outcrops
Priority Target Area
Licenses
Trial Open Pit
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ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORT Operations Review continued
Other Projects
Kizilҫukur Development Project
The Kizilҫukur Project is located 25km to the north-east of the Kiziltepe Mine and
is wholly owned by the Company. Gold mineralisation occurs in a series of quartz
veins within dominantly basaltic host rocks. The latest resource estimation and
scoping study for Kizilҫukur highlights the potential for the project to become a
satellite source of ore for the Kiziltepe Mine, providing for at least a further year of
mine life. Metallurgical test work demonstrates that the Kizilҫukur ore responds
well to the leach conditions utilised within the Kiziltepe processing plant, with
high gold recoveries ranging from c. 83% to 92%. Further work will be conducted
on the ore to determine the variability of recovery over a greater range of grade
and other characteristics. Current plans involve the bulk trial-processing of
Kizilcukur material at the Kiziltepe processing plant. Under the terms of the JV
agreement with Proccea, Kizilcukur can be sold into the JV at three times the
exploration cost.
Resource Estimate table for Kizilҫukur (100% Ariana owned):
Classification
Measured
Indicated
Measured & Indicated
Inferred
Global Total
Tonnes
(t)
130,511
87,805
218,317
37,344
255,660
Grade Au
(g/t)
Grade Ag
(g/t)
Gold
(oz)
Silver
(oz)
2.79
2.60
2.72
1.75
2.57
84.11
69.01
78.04
57.31
75.01
12,000
353,000
7,000
195,000
19,000
548,000
2,000
69,000
21,000
617,000
Summary 2020 Kizilcukur JORC 2012 compliant Mineral Resource Estimate. Reporting is based on a 1.0 g/t Au cut-off grade. Resource estimate
dated 9 May 2020.
Ivrindi Exploration Project
The Ivrindi Project is located 70km to the north-west of the Kiziltepe Mine and is
wholly owned by the Company. Gold mineralisation is encountered within several
discrete zones of clay alteration in andesitic volcanic rocks. Recent exploration
in 2018 identified a new zone of mineralisation; a 1.3km long geochemical
anomaly identified through soil analyses. While this zone will need to be tested
further, this discovery has indicated the potential to grow the resource at Ivrindi
substantially. Metallurgical test work demonstrates that the Ivrindi ore responds
well to the leach conditions utilised within the Kiziltepe processing plant, with
high gold recoveries ranging from c. 85% to 91%. Ivrindi is envisaged as a satellite
to the Kiziltepe operations, though remains at an earlier stage in its development
compared with other projects. The Company is working towards developing Ivrindi
to a point at which it may be sold to the RRGP joint venture.
Resource Estimate table for Ivrindi (100% Ariana owned):
Classification
Inferred
1 6
Tonnes
(t)
207,000
Grade Au
(g/t)
Grade Ag
(g/t)
1.7
n/a
Gold
(oz)
11,000
Silver
(oz)
n/a
STRATEGIC REPORTARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019 K I Z I LT E P E E X P L O R AT I O N U P S I D E
Balikesir
Ivrindi
50/50 JV
100% Ariana Owned
Projects with Resources
Exploration Projects
Open Pit Operation
Major Cities / Towns
Sindirgi Gold Corridor
Proposed Trucking Routes
Kizilçukur
Bigadiç
Kepez
Karakavak
Sindirgi
Kiziltepe Hub
KILOMETERS
0
10
20
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ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORT the understanding that the Ardala area represents a
significantly gold enriched porphyry system. Further
work will be required to determine if there are other
gold-rich porphyry intrusions or breccia-pipes within
the broader Ardala Intrusive Complex, which potentially
underlie part of the Salinbaş deposit.
Operations Review continued
Salinbaş Exploration Project
The Salinbaş Project is located in north-eastern Turkey
and is wholly owned by the Company. The project
represents a transition in mineralisation styles from
porphyry to epithermal, including skarnoid replacement
in a variety of host rocks in the vicinity of the
intrusions. Confidence in the potential for the Salinbaş
Project to host a multi-million ounce gold system in
the area surrounding the Ardala Au-Cu-Mo porphyry
has increased as a result of the exploration and
development work conducted during recent years. In
2019, fifteen Reverse Circulation (‘RC’) drill holes were
completed and this work is informing further resource
modelling and estimation work.
During 2018, a JORC Exploration Target of up to 2.7Moz
gold and 16.1Moz silver was established for the project,
in addition to current JORC Indicated and Inferred
Resources of c.1Moz gold. There is potential for further
resource extensions to be delineated within high-grade
and steeply plunging breccia pipes (akin to the nearby
Hot Maden deposit), which likely feed in to the Salinbaş
gold-silver zone.
Recent exploration has demonstrated that gold
mineralisation continues to the immediate north of the
Salinbaş deposit over c.500m of strike, as predicted
by the geological model and the JORC Exploration
Target. Furthermore, recent work continues to reaffirm
Scoping Study Summary
Mine Life
Cash Costs
Processing
Production Rate
JORC Resource
Net Present Value
Internal Rate of Return
Payback
Royalty
10 years
US$770/oz
CIL
50,000 oz Au p.a.
9.9Mt @ 2.0 g/t Au, 10.2 g/t Ag (Indicated & Inferred)
US$108 million*
28%*
3.3 years on US$53.3 million initial capital*
State Right and 2% NSR to Eldorado Gold
*Pre-tax base case at US$1,250/oz for gold as at April 2015 (completed by Auralia Mining Consulting).
S
E
R
U
G
I
F
Y
E
K
1 8
STRATEGIC REPORTARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019
Cu-Au-Mo porphyry:
16.3Mt for 323,000 oz Au at 0.6 g/t Au
4.7Mt for 10,000t Cu at 0.22% Cu
18Mt for 2,400t Mo at 0.014% Mo
(Inferred)
S A L I N B A Ş E X P L O R AT I O N U P S I D E
Berta
100% Ariana Tenements
Prospects
Hot Gold Corridor
Inferred Faults
Mapped Intrusions
Alteration
Artvin
Au-Ag epithermal:
10Mt for
650,000 oz Au
at 2 g/t Au and 10g/t Ag
(Inferred and Indicated)
Derinkoy North
Ardala
Salinbas
R
O
D
I
R
R
O
D C
L
O
T G
O
H
Cu-Au-Zn epithermal:
9.2Mt for 3.87 Moz Au eq.
at 13 g/t Au eq.
(Inferred and Indicated)
Hizarliyayla
Hot Maden
KILOMETERS
0
2.5
5
Resource Estimate table for Salinbaş / Ardala (100% Ariana owned):
Zone
Salinbaş1
Indicated
Inferred
Zone
Ardala
Inferred
Inferred
Inferred
Tonnes
(t)
Grade Au
(g/t)
Grade Ag
(g/t)
Gold
(oz)
Silver
(oz)
2,290,000
7,760,000
2.10
2.00
Tonnes
(t)
Grade
(g/t)
11.90
9.70
Metal2
156,000
878,000
493,000
2,396,000
Metal
(t)
Gold
(oz)
16,270, 000
4,660,000
18,000,000
0.60
2,175
136
Au
Cu
Mo
-
323,000
10,000
2,400
-
-
1. Figures for the Salinbaş Zone are revised according to a Scoping Study announced in Q2 2015.
2. Separate resource domains have been established for the Au, Cu and Mo components of the Ardala porphyry. It is considered reasonable
to estimate these domains in this manner because the resource is classified as Inferred in this location and mining parameters have not
yet been established. There is a 95% coincidence of the Au and Cu domains, and a 40-50% coincidence of the Au and Mo domains.
1 9
ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORT Operations Review continued
Investments
Venus Minerals Ltd
Asgard Metals Pty Ltd
Ariana is acquiring up to 50% of UK-registered Venus
Minerals Ltd (‘Venus’) via an earn-in agreement
completed in Q4 2019. Venus is a Cyprus-
based exploration company which is developing
Volcanogenic Massive Sulphide (‘VMS’) copper-
gold deposits in the ophiolite terranes of south-
eastern Europe, principally the Troodos Ophiolite
in Cyprus. Venus has been active in Cyprus for
more than 15 years. During this time, it has secured
a substantial exploration portfolio, ranging from
brownfield properties with demonstrated resources
at Kokkinoyia and Klirou, to grass roots projects
displaying the hallmarks of highly prospective
VMS deposits. As at year end, Ariana is required to
spend a further 2.4 million Euro to earn into its full
entitlement of 50%.
Asgard is a 100%-owned Australian subsidiary of
Ariana Resources, which was established to focus
on technology-commodity opportunities globally.
Projects hosting metals utilised in renewable-energy
applications, such as antimony and lithium, are
being reviewed. Such commodities are potential
economic game-changers for a growing global
population driven towards green-energy platforms.
Asgard originally held interests in several lithium
pegmatite projects in Western Australia and the
Northern Territory and vended these into two
separate ASX-listed companies, Dakota Minerals Ltd
and Kingston Resources Ltd. Asgard remains well-
financed and on the look-out for new opportunities
in the technology-metals space which could be
developed in conjunction with experienced partners.
2 0
STRATEGIC REPORTARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019 Outlook
During 2019, Ariana consolidated its position as a
sustainable mineral exploration and development
enterprise. This has established a solid platform on
which Ariana can develop its strategy, which is all the
more important given the current global challenges.
We have started 2020 facing several new and
unexpected circumstances. The developing trade-war
between the USA and China, coupled with decadal
lows in the oil price, have now been compounded by
the COVID-19 virus pandemic originating in China.
At the time of writing, the pandemic has sadly had
a significant cost in human lives and is creating
a profound global economic shock in its wake.
Factories in China, which are attempting to gear-up
following a reduction in output in the early phase of
the pandemic, are now producing for a market that
no longer exists; the rest of the world economy is in
the process of severe contraction. As the consumer-
producer dynamic becomes strained, supply lines are
becoming choked. Meanwhile, to try and save the day,
governments are scrambling to apply a band-aid to
systemic problems with an obscenely leveraged and
derivatives driven global financial system based on the
US dollar.
What this will mean for commodity markets and
producers is, as yet, unknown. However, as a gold
producer, we are expecting that demand for the
ultimate form of money will continue unabated.
Unlike paper money, gold does not represent debt
(a consequence of fractional-reserve banking), it
presents no counterparty risk and acts as the only
real hedge against inflation in the long term. It is
no surprise that central banks around the world,
particularly those which wish to maintain some
resilience and independence outside of the US dollar
denominated global order (including Turkey), have
been buying gold in ever increasing amounts during
recent years. In fact, central bank gold purchases in
2018 and 2019 were at 50-year highs as part of this
effort to spread risks away from the US dollar, with
some 650 tons of gold added to central bank reserves
in 2019. Consequently, we are in the fortunate position
of producing the only commodity which represents
the ultimate final form of payment for the international
banking system. Whatever the headwinds, this financial
demand will remain.
2 1
Operationally we are well-positioned to take advantage
of these unusual circumstances. Despite the current
crisis, we have been fortunate in the commitment of
our staff in the UK and Turkey at a time when families
and communities have been under great strain. We
have also seen a very supportive approach to our
business at both local and national government levels
in Turkey. Our JV operation at Kiziltepe is continuing
to produce gold and silver at high margins due to the
low-cost operating environment. This has resulted
in sufficient cashflow to satisfy our operational
requirements and has created opportunities to
diversify and make new investments, such as Venus
Minerals. Our portfolio of assets and investments
represents projects at every stage of a self-sustaining
investment cycle, which we have spent the past 15
years developing methodically as part of our long-term
strategy. In addition to an operating mine, this includes
near-term development assets, a major large-scale
exploration asset, and is supported by both current and
nascent investments.
We are a unique exploration and development
company, with a strategy geared toward longevity,
sustainability and the growth of value in the long-term,
which is ultimately underpinned and driven by our
exploration success. At the beginning of a new and
uncertain decade, we look forward to the future and
remain resolved on delivering upon the immutable
certainty of pure gold.
Dr Kerim Sener
Managing Director
ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORT Financial Review
The Group’s profit after tax grew by more than threefold
in the year under review rising to £6.9m (2018: £2.2m)
primarily due to the excellent operational performance
of our Joint Venture investment in Zenit. This company’s
turnover grew by 21% reflecting the favourable
movement in the gold price and increased production
year on year, with their profits after tax rising from
£7.4m to £15.8m, our 50% share of which amounted
to £7.9m (2018: £3.7m). The year’s performance also
benefited from the disposal of our Kiziltepe property
owning subsidiary, Camyol, being sold to Zenit at a book
profit of £0.6m. The Directors are confident that Zenit
will continue to finance the Group’s operations for the
foreseeable future through dividends declared and paid
over the course of the year.
Aside from the performance of Zenit, the results
are generally consistent with the prior year, with
administrative costs slightly improved at £1.2m, and
net exploration costs written off also broadly consistent
amounting to £0.4m (2018: £0.3m). The effect of the
declining value of the Turkish Lira on the underlying
value of our subsidiaries in Turkey is £0.4m better than
the previous year, but still a significant cost reflected
though Other Comprehensive Income at £1.8m.
Nonetheless, our earnings per share has shown a very
healthy increase from 0.21 pence per share in 2018 to
0.65 pence per share in 2019.
Our net assets as recorded in the Statement of Financial
Position have increased by £5.3m primarily on account
of our share of the net assets of Zenit increasing by
£3.8m. The company also capitalised a further £0.5m
of expenditure within Intangible exploration assets,
being our Turkish exploration work, as well as incurring
a further £0.5m of expenditure included within debtors
on our Cypriot project, ahead of it being converted into
shares under our earn in agreement with Venus Minerals
Limited in May 2020.
Overall this was a very satisfactory year for the Group
from a financial perspective, and we look forward
to building on these foundations to enhance our
performance for our shareholders going forward.
Dr Kerim Sener
Managing Director
2 2
STRATEGIC REPORTARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019 Organisation Review
ARIANA EXPLORATION
& DEVELOPMENT LTD
NON-GOLD INTERESTS
PORTSWOOD
RESOURCES LTD
(BVI)
ASGARD METALS
PTY LTD
(AUSTRALIA)
GALATA MADENCILIK
SAN VE TIC LTD
GREATER PONTIDES
EXPLORATION BV
(NETHERLANDS)
100% Ariana
100% Ariana
100% Ariana
ZENİT MADENCILIK SAN
VE TIC AS
PONTID MADENCILIK SAN
VE TIC LTD
50% Proccea
50% Galata
100% Greater Pontides
TURKEY
Note: Simplified organisational structure.
Ownership structures as at 27 July 2020.
2 3
ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORT Directors
Michael de Villiers B. Comm.
Professional Accountant (SA) MIOD
Chairman and Company Secretary
Michael qualified as a Professional Accountant
with Ernst & Young in Cape Town. He gained his
experience as Financial Manager at mining and
chemicals operations in Botswana, Bulgaria, FSU,
Ghana, Namibia and the United Kingdom. He was
previously CFO of Eurasia Mining plc, Finance
Director of Mercator Gold (now ECR Minerals plc),
Oxus Gold plc and Navan Mining plc. He has over
30 years’ experience in the mining industry.
Michael is Chairman of the Audit Committee
and serves on the Sustainability Committee.
2 4
Kerim Sener BSc (Hons) MSc DIC PhD
Managing Director
Kerim graduated from the University of Southampton
with a first-class BSc (Hons) degree in Geology in
1997 and from the Royal School of Mines, Imperial
College, with an MSc in Mineral Exploration in 1998.
After working in gold exploration and mining in
Zimbabwe, he completed a PhD at the University of
Western Australia in 2004. Since then he has been
responsible for the discovery of over 3.8Moz of gold
in eastern Europe. Kerim is also Non-Executive
Chairman of LSE-listed Panther Metals plc and
an Adjunct Research Associate at the Centre for
Exploration Targeting, University of Western Australia.
Kerim is a Fellow of The Geological Society of
London, Member of The Institute of Materials,
Minerals and Mining, Member of the Chamber of
Geological Engineers in Turkey and a member
of the Society of Economic Geologists.
STRATEGIC REPORTARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019
William Payne BA (Hons) ACA
Chris Sangster BSc (Hons), ARSM, GDE, FIMMM
Non-Executive Director and Chief Financial Officer
Non-Executive Director
William studied Accountancy at Exeter University
before training and qualifying as a Chartered
Accountant with KPMG in London. In 2003,
he became a partner in top 20 accountancy
practice Wilkins Kennedy LLP at their London
office, which is now part of the Cogital Group.
William is Chairman of the Remuneration
Committee and serves on the Audit Committee.
Chris is a mining engineer with over 40 years’
experience in the mining industry. He has a BSc Hons
in Mining Engineering from the Royal School of Mines,
Imperial College in London and a GDE in Mineral
Economics from the University of Witwatersrand
and is a Fellow of the Institute of Materials Minerals
and Mining. Chris has extensive experience in gold,
diamond and base metal production environments.
He held positions of Vice President Mining Services at
KCM PLC and Principal Mining Engineer for Australian
Mining Consultants. He co-founded ASX / AIM listed
Scotgold Resources and was its Managing Director
following which he became a Non- Executive
Director and Technical Consultant from late 2014.
Chris is Chairman of the Sustainability Committee
and serves on the Remuneration Committee.
2 5
ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORT Operational Team
Fatma Yildiz BSc (Hons) General Manager
Fatma is a Turkish national and has 12 years of experience
in the mining sector in Turkey. She graduated from
Cukurova University in 2007 with a BSc degree in Mining
Engineering. In addition to being our General Manager,
she is also responsible for managing the administrative
and legal requirements of our exploration/operational
licenses, applications and formal reporting for licenses.
Fatma is a member of the Chamber of Mining Engineers
of Turkey, holder of a technical inspector certificate
and an occupational health and safety certificate
Berkin Uğurlu BSc (Hons) Exploration Manager
Berkin graduated from the Middle East Technical University
with a BSc degree in Geology in 2004. He worked with Teck
in Turkey for four years before spending a further four years
as a Senior Consultant. Following this he was appointed as
Country Manager for Tigris-Eurasia Madencilik, originally
a subsidiary of Royal Road Minerals, where he worked for
four years. He has experience managing all aspects of
mineral exploration programmes from project generation
through to resource and reserve drilling and technical
reporting including to 43-101 and JORC standards.
He is a member of the Society of Economic
Geologists, a board member of the Mining
Geologists Association and a member of the
Chamber of Geological Engineers in Turkey. He
holds a IHA0 drone pilot qualification in Turkey.
Zack van Coller BSc (Hons) Special Projects Geologist
Zack graduated from Cardiff University with a BSc (Hons)
degree in Exploration and Resource Geology in 2010. As
leader of our Special Projects Team, he is responsible
for advancing our project pipeline, in addition to being
involved in various exploration programmes across
Turkey. He was involved in the development of the
highly successful lithium strategy pursued by Asgard
Metals Pty. Ltd. on behalf of Ariana. He has also been
involved in advanced project development of a high-
sulphidation Cu-Au deposit in the Republic of North
Macedonia. Zack is bilingual in English and Afrikaans.
Zack is a member of the Geological Society of London
and the Southampton Mineral and Fossil Society and
operates primarily between the UK and Turkey.
Our full team can be viewed at
arianaresources.com
2 6
STRATEGIC REPORTARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019 Key Performance Indicators
Financial KPIs
Production Success
Enhancing profits through efficient mining operations and
successful conversion of Resources to Reserves.
Exploration Expenditure
Enhancing intangible exploration assets through targeted expenditure.
Cash Flow Forecasts
Regular cash flow monitoring to ensure exploration targets
are met and that working capital is maintained.
Operational KPIs
Operational Success
Increasing JORC compliant resources and progressing Red Rabbit
Gold Project through development and into production.
Advance Portfolio
Through acquisition or discovery of new exploration properties
utilising on-going exploration to target new ground.
Environmental, Health & Safety
Ensuring that all efforts are made to minimise adverse
personal, corporate and environmental outcomes, through
best practice training, implementation and monitoring.
2 7
ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORT Risks & Uncertainties
Risk
Description
Mitigation
Production risk
Mining activity involves a variety
of potential risks to production or
interruptions to output. These can
include geological, mining, processing,
environmental and financial risks.
The Joint Venture company reviews mining
progress on a regular basis to determine
any potential risk factors that could affect
production negatively. The Joint Venture
employs experienced management staff.
Exploration and
development risk
Inherent risks associated with the
failure to discover or develop an
economically recoverable ore reserve,
to conclude a definitive feasibility
study, and to obtain the necessary
consents and approvals for the
conduct of exploration and mining.
Partner risk
Any joint venture arrangement
contains an element of
counterparty risk.
Political /
in-country risk
Political instabilities, which could
cause the loss of an asset through
expropriation, war or unrest. Exploration
or mining licences applied for might
not be granted or renewed.
The Board is committed to reviewing
progress relating to the development
of its various exploration targets and
assesses this against planned expenditure
and expected outcomes. The Group
employs highly trained geologists with
extensive knowledge of the style of gold/
silver mineralisation located in Turkey.
The Company maintains good
working relationships with our
Joint Venture partners and monitor
their financial condition and
commitment on a regular basis.
Turkey benefits from a robust political
environment and has established fiscal
and mining codes. The Group enjoys
a good working relationship with the
relevant authorities in Turkey and has
a permanent management team in the
country to monitor developments.
2 8
STRATEGIC REPORTARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019 Risks & Uncertainties continued
Risk
Description
Mitigation
Environmental /
safety risk
Major pollution arising from
operations and/or loss of life due
to systems or equipment failure.
The Group adopts best practice in the
industry with on-site, country level and
corporate level policies and procedures.
The Group’s principal interest is gold and
silver and the outlook for gold remains
broadly positive as a continuing safe
haven vehicle for wealth protection. The
Group will consider the use of appropriate
hedging products to mitigate this risk.
The Group relies primarily on cash flow
from its joint venture investment in an
operational gold mine as well as the
issue of share capital, to include bank
borrowing where appropriate, to finance
its activities. The Group maintains tight
financial and budgetary control to keep
its operations cost effective. Forward
planning helps ensure it is adequately
funded to reach its objectives.
The group finances its operations though
the cash flow generated from its share
of profits from our investment in our
Turkish gold mining company. On receipt
of funds by the Group in Turkey in Lira,
surpluses after local operating costs
are then generally transferred by way of
dividend to the UK as Pounds Sterling.
The Group maintains the majority of its
cash in Pounds Sterling and continues
to monitor relevant currency movements
and considers action where appropriate.
Staff have been supportive of
these new methods of working and
have adapted quickly to them.
Commodity risk
A potential fall in commodity
prices which could lead to it
becoming uneconomic for the
Group to mine its assets.
Financing risk
This is the risk of running out of
working and investment capital.
Foreign
currency risk
The Group’s results are sensitive to
foreign currency movements and in
particular with its exposure to the
Turkish Lira, arising from the Group’s
primary operations being in Turkey.
COVID-19 risk
The recent escalation in the spread of
COVID-19 worldwide poses a threat to
the continuation of business operations
if a widespread infection were to occur at
the Kiziltepe Mine. Government guidance
on the pandemic in the UK and Turkey is
being kept under review. Risk mitigation
procedures were implemented rapidly
and well-ahead of government guidance,
to ensure safe working practices were
maintained for Ariana staff and staff
working at the Kiziltepe Mine site.
2 9
ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORT 3 0
STRATEGIC REPORTARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019 Section 172(1) Statement - Promotion of the Company
for the benefit of the members as a whole
The Directors believe they have acted in the way most likely to promote the success of the Company for the benefit
of its members as a whole, as required by s172 of the Companies Act 2006.
The requirements of s172 are for the Directors to:
• Consider the likely consequences of any decision in the long term;
• Act fairly between the members of the Company;
• Maintain a reputation for high standards of business conduct;
• Consider the interests of the Company’s employees;
• Foster the Company’s relationships with suppliers, customers and others; and
• Consider the impact of the Company’s operations on the community and the environment.
The application of the s172 requirements can be demonstrated in relation to the some of the key decisions made
during 2019:
• Continuing evaluation of existing license areas and assessment of projects;
• Undertaking pre-feasibility studies as part of the operating licence process;
• Identifying and refining both new and previously defined drill targets;
• Further identification of drill targets across projects whether held within the joint venture or not;
• Completion of diamond and Reverse Circulation drill programmes at various projects;
• Commencement of resource estimation for the projects in accordance with JORC reporting standards; and
• Continued assessment of corporate overheads, expenditure levels and wider market conditions.
As a mining exploration and development Group operating primarily in Turkey, the Board takes seriously its ethical
responsibilities to the communities and environment in which it works. We abide by the local and relevant UK laws
on anti-corruption and bribery. Wherever possible, local communities are engaged in the geological operations and
support functions required for field operations, providing much needed employment and wider economic benefits
to the local communities. In addition, we follow international best practice on environmental aspects of our work.
Our goal is to meet or exceed standards, in order to ensure we maintain our social licence to operate from the
communities with which we interact. The interests of our employees are a primary consideration for the Board.
Personal development opportunities are supported and a health and security support network is in place to assist
with any issues that may arise on field expeditions.
3 1
ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORT Corporate Governance
The Ariana Board of Directors aims to conform
to statutory responsibilities and industry good
practice in relation to corporate governance
of Ariana and its subsidiaries. The Board has
adopted the latest version of the QCA Corporate
Governance Code (2018) (“QCA Code”) and strives
to follow the 10 principles outlined within it to the
fullest extent possible taking into consideration
the stage of development of the Company.
Details of how the Company addresses the key
governance principles defined in the QCA code are
set out below, and are found in more detail on the
Company’s website in accordance with AIM Rule 26.
1. Business model and strategy
The Board has developed and implemented a strategy
and business model which it believes will achieve
long term value for shareholders. This strategy
and business model is clearly explained in the
strategic report and on the Company’s website. The
Company believes that this strategy and business
model is appropriate to protect the Company from
unnecessary risk and secure its long-term future.
2. Understanding shareholder
needs and expectations
The Board is committed to maintaining good
communications and seeks to understand and meet
shareholder needs and expectations by engaging
with them across a range of platforms. This includes
regular investor presentations, Q&A forums, investor
relations company services, an investor portal
available on the website, and social media sites as
well as its Annual General Meeting. The Company
provides phone numbers on all its updates and RNS
announcements where shareholders can contact
the appropriate senior Company representatives or
advisors directly with their queries together with a
dedicated email address for shareholder feedback.
3. Considering wider stakeholder
and social responsibilities
The Board recognises that the long-term success
of the Company is reliant upon the efforts of
the employees of the Company and its partners,
contractors, suppliers, regulators and other
stakeholders. The Board has put in place a range
of processes and systems to ensure that there is
close oversight and contact with its key resources
and relationships. For example, all employees of
the Company participate in a structured Company-
wide annual assessment process which is designed
3 2
to ensure that there is an open and confidential
dialogue with each person in the Company to help
ensure successful two way communication with
agreement on goals, targets and aspirations of
the employee and the Company. These feedback
processes help to ensure that the Company can
respond to new issues and opportunities that arise to
further the success of employees and the Company
The Company’s principal areas of operation (project
locations) are in Turkey and the surrounding regions.
The Company is committed to cultivating and
maintaining good relations with all stakeholders and its
strategy and business model are designed to minimise
any potential negative impact of its activities and of
those working on its behalf, on the communities where
it operates and on the environment. The Company
has established a positive working relationship
with governments, non- government organisations
and local communities with whom it holds regular
meetings to appraise them of the Company’s plans.
The Company firmly believes that the mining and
exploration development projects that form the
basis of its business model will substantially benefit
the countries and regions in which it operates. The
Company provides open and clear communication
channels and points of contact for all its stakeholders
and has a robust communication system in place
to ensure all concerns are quickly brought to the
Board and senior management’s attention.
4. Risk management
In addition to its other roles and responsibilities,
the Audit Committee is responsible to the Board for
ensuring that procedures are in place and are being
implemented effectively to identify, evaluate and
manage the risks faced by the Company. The Company
recognises that it is exposed to risks which may
negatively impact on its business operations. It takes all
reasonable steps to identify, assess the impact of and
mitigate these risks wherever possible. These risks are
clearly identified on page 28-29 of the Strategic Report.
The following risk assessment matrix sets out
those risks, and identifies their ownership and the
controls that are in place. This matrix is updated
as changes arise in the nature of risks or the
controls that are implemented to mitigate them.
The Audit Committee reviews the risk matrix
and the effectiveness of scenario testing on a
regular basis. The following principal risks and
controls to mitigate them, have been identified:
GOVERNANCEARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019 Activity
Risk
Impact
Control(s)
Operation
Injury to staff
Injury to staff whilst operating heavy
machinery in remote location
Regulatory
adherence
Breach of rules
Censure or withdrawal of authorisation
Strategic
Market downturn
Change in Macro economic conditions
Creating a safe working
environment through strict
procedures and regular training
Strong compliance regime instilled
at all levels of the Company
Ongoing monitoring of economic
events and markets.
Failure to deliver
commercially
Inability to operate efficiently
and economically
Active operational monitoring and
experienced management
Financial
Misappropriation
of funds
Fraudulent activity and loss of funds
IT security
Loss of critical financial data
Robust financial controls and
segregation of duties
Regular back up of data online
and locally
The Directors have established procedures, as
represented by this statement, for the purpose of
providing a system of internal control. An internal
audit function is not considered necessary or practical
due to the size of the Company and the close day
to day control exercised by the executive Director.
However, the Board will continue to monitor the
need for an internal audit function. The Board works
closely with and has regular ongoing dialogue with
the outsourced finance function and has established
appropriate reporting and control mechanisms to
ensure the effectiveness of its control systems.
The outbreak of the recent global COVID-19
virus has resulted in increased risks within the
global economy. The extent of the effect of the
virus, including its long-term impact, remains
uncertain and the Company continues to monitor
the situation while adopting the recommended
precautions to ensure the safety of employees.
5. A well-functioning Board of Directors
The Board comprises a Chairman, Michael de Villiers,
a Managing Director, Dr Kerim Sener and two non-
executive directors, William Payne and Chris Sangster.
Chris Sangster is considered by the Board to be an
independent director, having been appointed in 2016
and since having acted in a primary technical capacity.
In accordance with the Articles of Association of
the Company, one third of the Board is required to
retire each year at the Company’s AGM but directors
resigning can put their name forward for re-election.
The executive director dedicates 100% of his
contractually required time to the Group. The non-
executive directors dedicate as much time as is
3 3
required for them to fully carry out their duties for the
Group including overseeing corporate governance
arrangements and serving on board committees
with the ultimate responsibility for the quality of,
and approach to, corporate governance lying with
the Chairman. Michael de Villiers also serves as
the Company Secretary and William Payne acts as
the Chief Financial Officer. It is recognised that an
additional independent non-executive director will
benefit the Company and it will appoint such an
independent director at the appropriate time so as
to comply with the Code. It is also recognised that
whilst the finance function is currently carried out by
a Non-Executive Director and his supporting team in
the UK, given not only William Payne’s accountancy
experience but also that of Michael de Villiers, it
is effective and well suited to the Company.
The Board is responsible for formulating, reviewing and
approving the Group’s strategy, budgets, major items of
capital expenditure and acquisitions. An agenda and all
supporting documentation is circulated to the directors
before each Board meeting. Open and timely access
to all information is provided to directors to enable
them to bring independent judgement on issues
affecting the Group and facilitate them in discharging
their duties. The Board met regularly during the last
financial year to 31 December 2019. Generally, no
individual director is absent for more than one board
meeting during any given year. The Board has three
sub-committees: the Audit Committee, Remuneration
Committee and Sustainability Committee. Governance
and Nominations are dealt with by the entire Board.
The Company shall report annually on the number of
Board and committee meetings held during the year
and the attendance record of individual Directors.
In order to be efficient, the Directors meet formally
and informally both in person and by telephone.
ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019GOVERNANCE Corporate Governance continued
5. A well-functioning Board
of Directors continued
Details of the Directors’ attendance at formal
quarterly board meetings are set out below:
Meetings
Attended
Meetings eligible
to attend
Kerim Sener
Michael de Villiers
William Payne
Chris Sangster
4
4
4
4
4
4
4
4
The Board is accountable to the shareholders for
delivery of sustained value growth. In order to
support its duties and responsibilities the Board
implements control procedures that assess and
manage risk and ensure robust financial and
operational management within the Group.
The Board sets the Group’s strategy and monitors
its implementation through operational and financial
performance reviews. It also works to ensure that
adequate resources are available to implement strategy
and exploit opportunities in an appropriate manner.
6. Appropriate skills and
experience of the directors
The Board members have a diverse range of skills
and experience spanning technical, financial and
operational areas relevant to the development and
management of the Company. Summary biographies
of each Board member are shown on pages 24-25.
Directors keep their skill sets up to date by attendance
at, and participation in, various events organised by
their respective industry sectors and by participation
in continuing professional development courses. As
the Company evolves, the Board will be reviewed
and expanded if necessary to ensure appropriate
expertise is always in place to support its business
activities. The Board recognises that it currently has a
limited diversity and this will form a part of any future
recruitment consideration if the Board concludes that
replacement or additional directors are required.
Where necessary the Board has engaged external
professional consultants on an ongoing basis to
ensure the Company is meeting it’s strategies. The
key advisers to the Company are set out on page 76.
The Board engages external geologists, environmental
specialists and a number of other specialised
3 4
consultants to produce the required surveys and
reports for the Environmental Impact Assessment,
Social Impact Assessment and Pre-Feasibility
Study. The key advisers to the Group were 76.
The Board have ensured that the all external advisers
are knowledgeable and provide the required skillset.
7. Evaluation of board performance
The performance of the executive management of
the Company is evaluated on an on-going basis by
the Remuneration Committee (“Remcom”) which is
composed of William Payne and Chris Sangster. The
results of these evaluations are reflected in changes
in the executive remuneration levels recommended
by the Remcom from time to time and in awards
under the Company’s Share Option and Management
Incentive Schemes where it considers such awards
are warranted. As the Company grows, the Board will
develop more comprehensive human resource policies
to provide both internal and external performance
evaluations of its Board, senior management and staff
including the provision for upskilling where necessary
and to provide for Board member succession
planning. The Board considers that the corporate
governance policies it has currently in place for Board
performance reviews is commensurate with the size
and development stage of the Company and well
within the norms of the peer group and industry.
8. Corporate culture
The Company operates across several countries
including the UK, Turkey, Holland, BVI and Australia.
In line with its international reach, the Company
recognises the cultural diversity both internally and
among its business partners, service providers and
other stakeholders. The Board recognises that their
decisions regarding strategy and risk will impact the
corporate culture of the Company as a whole and
that this will impact the performance of the Company.
The Board is very aware that the tone and culture set
by the Board will impact all aspects of the Company
as a whole and the way that employees behave. The
corporate governance arrangements that the Board
has adopted are designed to ensure that the Company
delivers long-term value to its shareholders and that
shareholders have the opportunity to express their
views and expectations for the Company in a manner
that encourages open dialogue with the Board. A large
part of the Company’s activities is centred upon what
needs to be an open and respectful dialogue with
employees, partners and other stakeholders. Therefore,
the importance of sound ethical values and behaviours
is crucial to the ability of the Company to successfully
GOVERNANCEARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019 achieve its corporate objectives. The Board places
great importance on this aspect of corporate life
and seeks to ensure that this flows through all
that the Company does. The directors consider
that at present the Company has an open culture
facilitating comprehensive dialogue and feedback
and enabling positive and constructive challenge.
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 the requirements of the Market
Abuse Regulation which came into effect in 2016.
9. Maintenance of governance
structures and processes
Ultimate authority for all aspects of the Company’s
activities rests with the Board, the respective
responsibilities of the Chairman and Managing
Director arising as a consequence of delegation
by the Board. The Board has adopted appropriate
delegations of authority which set out matters
which are reserved to the Board. The Chairman
is responsible for the effectiveness of the Board,
while management of the Company’s business
and primary contact with shareholders has been
delegated by the Board to the Managing Director.
Audit Committee
Michael de Villiers and William Payne
This committee has primary responsibility for
monitoring the quality of internal controls and ensuring
that the financial performance of the Company is
properly measured and reported. It receives reports
from the executive management and auditors
relating to the interim and annual accounts and
the accounting and internal control systems in use
throughout the Company. The Audit Committee shall
meet not less than twice in each financial year and it
has unrestricted access to the Company’s auditors.
Remuneration Committee
William Payne and Chris Sangster
The Remuneration Committee reviews the performance
of the executive directors and employees and makes
recommendations to the Board on matters relating
to their remuneration and terms of employment.
The Remuneration Committee also considers and
approves the granting of share options pursuant to
the share option plan and the award of shares in lieu
of bonuses pursuant to the Company’s Remuneration
Policy. The Remuneration Committee reviews
overall remuneration against industry peer group
3 5
companies on a regular basis and takes professional
advice as and when it is deemed necessary.
Sustainability Committee
Chris Sangster and Michael de Villiers
The Sustainability Committee is formed of the
two directors who have prior operational and
industry experience and may include other
management who are responsible for developing
and implementing policy and procedures.
The Company is committed to providing all employees
a safe place to work in accordance with our HSE goals.
This will be accomplished by providing safe equipment
to operate, proper training and safe methods and
procedures. The Company will at a minimum, comply
with all applicable industry norms for rules and
regulations. The Company takes the approach that
no job is so important that it cannot be accomplished
without injury. The Sustainability Committee also
deals with the CSR policy outlined below.
Nominations Committee
The Board has agreed that appointments to the
Board will be made by the Board as a whole and
so has not created a Nominations Committee.
Directors Fiduciary Duties
In accordance with the Companies Act 2006, the
Board complies with: a duty to act within their powers;
a duty to promote the success of the Company; a
duty to exercise independent judgement; a duty to
exercise reasonable care, skill and diligence; a duty
to avoid conflicts of interest; a duty not to accept
benefits from third-parties and a duty to declare any
interest in a proposed transaction or arrangement.
10. Shareholder communication
The Board is committed to maintaining good
communication and having constructive dialogue
with its shareholders. The Company has close
ongoing relationships with its private shareholders.
Institutional shareholders and analysts have
the opportunity to discuss issues and provide
feedback at meetings with the Company. In
addition, all shareholders are encouraged to
attend the Company’s Annual General Meeting.
Investors also have access to current information
on the Company though its website, https://
www. arianaresources.com, and via management,
who are available to answer investor relations
enquiries. The Company proposed in 2018,
subject to the necessary formalities, to move to
more enhanced electronic communications with
shareholders in order to maximise efficiency.
ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019GOVERNANCE Corporate Responsibility
Since commencing work on our Red Rabbit Gold
Project, which includes the Kiziltepe gold mine, Ariana
has been committed to building strong links with
local communities and to establishing relationships
of trust with stakeholders across Turkey. In addition,
the Company has in place an Anti-Corruption and
Anti-Bribery Policy. Since inception, we have been
committed to socially responsible and environmentally
conscious exploration and mining. Whilst work on
establishing vital stakeholder links often occurs in
the background, its importance cannot be under-
estimated. Without such concerted efforts over many
years, we would not be in the strong position of having
an operating a gold mine today.
Shareholders
The Board of Directors actively encourages
communications with shareholders and
seeks to protect shareholders’ interests at
all times. More information can be found in
the Corporate Governance section.
Employees
Ariana has always attached great importance
to professional development and the creation of
employment in the localities where we operate. The
Company provides fair remuneration, flexible working
arrangements where practical and exposure to wider
aspects of the Company’s operations. The Company
gives full and fair consideration to applications for
employment received irrespective of age, gender,
colour, ethnicity, disability, nationality, religious beliefs
or sexual orientation. More information on Ariana’s
Employee policy can be found on its corporate website.
Local Community
Ariana has a strong track record of working with
local suppliers and employing local people. Ariana
has run many training programmes to focus on
the mechanical, physical, technical and safety
aspects of its exploration programmes. The Joint
Venture company, Zenit Madencilik, employs
local personnel, including professionally qualified
mining engineers, from nearby villages and
towns. More information on Ariana’s Communities
policy can be found on its corporate website.
3 6
GOVERNANCEARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019 Suppliers & Contractors
Human Rights
The Company has a prompt payment policy and
seeks to ensure that all liabilities are settled within the
supplier’s terms. Through fair dealings the Company
aims to cultivate the goodwill of its contractors,
consultants and suppliers.
The Environment and Environmental
Standard Compliance
Ariana has established operating guidelines to ensure
that specific environmental standards are met by its
exploration and mining teams (through Zenit). We
comply with various local environmental standards
in Turkey and operate under the relevant certification
from government departments accordingly.
Ariana is committed to best-practice in socially and
ethically responsible exploration and mining for the
benefit of all stakeholders. The activities of the Company
are in line with applicable laws on human rights.
Health and Safety
Company activities are carried out in accordance
with its Health and Safety Policy, which adheres to all
applicable laws. Relevant to their job roles, members
of the team have received certification in occupational
health and safety, advanced off-road driving, first-aid
and survival.
3 7
ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019GOVERNANCE Report of the Directors
For the year ended 31 December 2019
The Directors present their report with the audited financial statements of the Company and the Group for the year
ended 31 December 2019.
Principal activity
Ariana Resources PLC (the “Company”) is a public limited company incorporated and domiciled in Great Britain. The
address of its registered office and principal place of business is disclosed at the end of this report. The Company’s
shares are listed on the AIM market of the London Stock Exchange. The principal activities of the Company and its
subsidiaries (the “Group”) are related to the exploration for and development of gold and other minerals principally
in Turkey.
Directors
The Directors during the year under review were:
M J de Villiers
A K Sener
W J B Payne
C J S Sangster
The beneficial interests of the Directors holding office either directly or indirectly (including interests held by spouses,
children or associated parties) on 31 December 2019 in the ordinary issued share capital and options of the Company
were as follows:
M J de Villiers
A K Sener
W J B Payne
C J S Sangster
Total
2019
Ordinary Shares
2019
Share Options
2018
Ordinary Shares
2018
Share Options
54,845,000
19,564,252
9,359,314
3,716,844
17,000,000
19,000,000
4,000,000
4,000,000
54,845,000
19,564,252
9,359,314
3,716,844
17,000,000
19,000,000
4,000,000
4,000,000
87,485,410
44,00,000
87,485,410
44,000,000
Further details on share options can be found in note 18 to the financial statements.
Annual General Meeting (AGM)
COVID-19 ARRANGEMENTS – PLEASE READ CAREFULLY
The Board takes its responsibility to safeguard the health of its shareholders, stakeholders and employees very
seriously and so the following measures will be put in place for the AGM in response to the COVID-19 pandemic and
the current social distancing measures being implemented by the Government in the United Kingdom, which may
continue until after the date of the AGM.
The formal business of the Annual General Meeting will only be to consider and vote upon the resolutions set out
in the notice of meeting. Based on current measures implemented by the Government in the United Kingdom
shareholders will not be admitted to the physical meeting and are therefore advised not to travel to the AGM. It is
intended that the meeting will be held with the minimum number of shareholders and directors present required to
form a quorum as per the Company’s Articles of Association. In line with corporate governance best practice and
in order that any proxy votes of those shareholders who are not allowed to attend and to vote in person are fully
reflected in the voting on the resolutions, the Chairman of the meeting will direct that voting on all resolutions set
out in the notice of meeting will take place by way of a poll. Shareholders wishing to vote on any matters of business
are strongly urged to do so through registering their proxy appointment and voting by proxy online and to appoint
the Chairman of the Meeting as your proxy. This will enable the Chairman of the Meeting to vote on your behalf, and
in accordance with your instructions, at the AGM. The final poll vote on each resolution will be published immediately
after the AGM on the Company’s website.
3 8
GOVERNANCEARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019 Share capital
Section 561 of the Companies Act 2006 provides that
subject to limited exceptions any shares being issued
must be issued to all existing shareholders pro-rata to
their holding. However, where Directors have a general
authority to allot shares they may be given the power
by the Articles or by a special resolution to allot shares
pursuant to the authority as if the statutory pre-emption
rights did not exist.
An ordinary resolution will be proposed at the forthcoming
Annual General Meeting for the renewal of the Directors’
general authority to issue relevant securities up to an
aggregate nominal amount of £500,000.
A special resolution will also be proposed at the
forthcoming Annual General Meeting for the renewal
of the Directors’ authority to allot relevant securities
for cash without first offering them to the shareholders
pro-rata to their holdings, pursuant to section 570 of
the Companies Act 2006 up to an aggregate nominal
amount of £250,000.
The authorities mentioned above will, if passed, expire at
the earlier of the following Annual General Meeting or the
date being 15 months from the passing of the resolutions.
A special resolution will also be proposed to allow that
the Company’s Articles of Association be replaced in
their entirety with the draft new Articles of Association
which have been updated to allow new forms of
company meetings to be held as physical meeting,
virtual meetings, or a combination of the two.
Substantial share interests
The Company had been notified of the following
interests in the Company’s shares held on 16 July 2020.
Shareholder
Hargreaves Lansdown
Nominees Limited
Barclays Direct Investing
Nominees Limited
Ordinary
Shares
% of Issued
Share
Capital
195,418,346
18.44%
132,638,608
12.52%
Interactive Investor Services
Nominees Limited
83,103,448
7.84%
Mr Michael de Villiers
Share Nominees Ltd
54,845,000
54,792,413
Jim Nominees Limited
45,969,900
HSDL Nominees Limited
37,025,290
Steve Bingham
34,450,000
5.18%
5.17%
4.34%
3.49%
3.25%
3 9
Strategic Report
The Company has chosen, in accordance with Section
414C of the Companies Act 2006, to set out the
following information in the Strategic Report which
would otherwise be required to be contained in the
Directors’ Report:
• Financial risk management objectives;
• Indication of exposure to principal risks;
• Corporate Governance including committee
objectives and memberships;
• Disclosures required by s172 of the Companies
Act 2006;
• Future developments of the business.
The Impact of COVID-19 on the Group
Since March 2020, the Board has made preparations to
mitigate the impact of COVID-19 on the business through
several action plans and mitigation strategies. These will
continue to be monitored and updated as required.
The Impact of Brexit on the Group
The Board has considered the extent of challenges
to its business model and operations arising from the
withdrawal of the United Kingdom from the European
Union (“Brexit”). The Board does not envisage Brexit
having a significant impact on the Group, based on
operations and cash flow generating elements of
the business residing outside the EU. The Group is
sensitive to foreign currency movements and details of
this risk, and mitigation thereof, are outlined within the
Strategic Report on page 29.
The Board will continue to follow the development of
the UK’s negotiations with the European Union and
evaluate the impact on the Group accordingly
Dividends
No dividends will be distributed for the year ended
31 December 2019 (2018: £nil) and the retained profit
has been transferred to reserves.
Group’s policy on payment of creditors
It is the Group’s normal practice to settle the terms
of payment when agreeing a transaction, to ensure
suppliers are aware of those terms and to abide by
them. Trade creditor days based on creditors at
31 December 2019 were 30 days (2018: 30 days).
Political and charitable contributions
During the year, the Group made a charitable donation of
£3,000 to the University of Exeter towards the Richard
Osman Memorial Fund. The Group has committed to
supporting this charitable fund until 2022.
No contributions were made for political purposes.
ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019GOVERNANCE Report of the Directors
For the year ended 31 December 2019
Going concern
The Directors confirm that they are satisfied the Group
has adequate resources to continue in business for the
foreseeable future, having regard to the factors set out
in more detail in Note 1 to the financial statements.
Post year end events
Further details on post balance sheet events can be
found in note 25 to the financial statements.
Statement of directors’ responsibilities in respect
of the Annual Report and the financial statements
The Directors are responsible for preparing the Annual
Report, Strategic Report, the Directors’ Report and the
financial statements in accordance with applicable law
and regulations.
Company law requires the directors to prepare group
and parent company financial statements for each
financial year. Under that law they have elected to
prepare both the group and the parent company
financial statements in accordance with International
Financial Reporting Standards as adopted by the
European Union (IFRSs as adopted by the EU) and
applicable law.
Under company law the directors must not approve
the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of
the Group and parent Company and of their profit or
loss for that period. In preparing each of the Group and
parent Company financial statements, the Directors are
required to:
• select suitable accounting policies and then
apply them consistently;
• make judgements and estimates that are
reasonable, relevant and reliable;
• state whether they have been prepared in
accordance with IFRSs as adopted by the EU;
• assess the Group and parent Company’s ability
to continue as a going concern, disclosing, as
applicable, matters related to going concern; and
• use the going concern basis of accounting unless
they either intend to liquidate the Group or the
parent Company or to cease operations or have no
realistic alternative but to do so.
The directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the parent Company’s transactions and
4 0
disclose with reasonable accuracy at any time the
financial position of the parent Company and enable
them to ensure that its financial statements comply
with the Companies Act 2006. They are responsible for
such internal control as they determine is necessary to
enable the preparation of financial statements that are
free from material misstatement, whether due to fraud
or error, and have general responsibility for taking such
steps as are reasonably open to them to safeguard the
assets of the Group and to prevent and detect fraud
and other irregularities.
The Company is compliant with AIM Rule 26 regarding
the Company’s website.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information
included on the Company’s website. Legislation in
the UK governing the preparation and dissemination
of financial statements may differ from legislation in
other jurisdictions.
Disclosure of information to auditor
The Directors who held office at the date of approval
of this Directors’ report confirm that, so far as they are
each aware, there is no relevant audit information of
which the Company’s auditor is unaware; and each
Director has taken all the steps that he ought to have
taken as a Director to make himself aware of any
relevant audit information and to establish that the
Company’s auditors are aware of that information.
Corporate governance
The Board of Directors
The Directors are responsible for the Group’s system
of internal control and for reviewing its effectiveness.
The risk management process and systems of internal
control are designed to manage rather than eliminate
the risk of failure to achieve the Group’s objectives.
Any such system of internal control can only provide
reasonable but not absolute assurance against
material misstatement or loss.
Full meetings are held quarterly to review Group
strategy, direction and financial performance.
The Directors meet regularly to review operational
reports from all of the Group’s areas of operations.
The process is used to identify major business risks,
evaluate their financial implications, and ensure an
appropriate control environment.
GOVERNANCEARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019 Certain control over expenditure is delegated to on site
project managers subject to Board control by means of
monthly budgetary reports.
of the issued share capital in options for the Company’s
management and employees.
Total Directors’ emoluments are disclosed in note 3 to
the financial statements and the Directors’ options are
disclosed above.
Auditor
In accordance with Section 489 of the Companies
Act 2006, a resolution for the re-appointment of PKF
Littlejohn LLP as auditor of the Company is to be
proposed at the forthcoming Annual General Meeting.
By order of the Board.
Michael de Villiers
Company Secretary
Internal financial control procedures include:
• preparation and regular review of operating
budgets and forecasts;
• prior approval of all capital expenditure;
• review and debate of treasury policy; and
• unrestricted access of Non-Executive Directors
to all members of senior management.
Audit Committee
The Audit Committee comprises Michael de Villiers and
William Payne. The Audit Committee may examine any
matters relating to the financial affairs of the Group and
the Group’s audits.
This includes reviews of the annual financial statements
and announcements, internal control procedures,
accounting procedures, accounting policies, the
appointment, independence, objectivity, terms of
reference and fees of external auditors and such other
related functions as the Board may require.
Remuneration Committee
The committee comprises William Payne and Chris
Sangster. It determines the terms and conditions of the
employment and annual remuneration of the Executive
Director(s). It consults with the Managing Director, takes
into consideration external data and comparative third-
party remuneration and has access to professional
advice outside the Company.
The key policy objectives of the Remuneration
Committee in respect of the Company’s Executive
Director and other senior executives are:
• to ensure that individuals are fairly rewarded for
their personal contribution to the Company’s overall
performance; and
• to act as the independent committee ensuring that
due regard is given to the interest of the Company’s
shareholders and to the financial and commercial
health of the Company.
Remuneration of the Executive Director comprises
basic salary, discretionary bonuses, participation in the
Company’s share option scheme and other benefits.
The Company’s remuneration policy with regard to
options is to maintain an amount of not more than 10%
4 1
ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019GOVERNANCE
Independent Auditor’s Report
To the members of Ariana Resources PLC
Opinion
We have audited the financial statements of
Ariana Resources plc (the parent company) and
its subsidiaries (the group) for the year ended 31
December 2019 which comprise the Consolidated
Statement of Comprehensive Income, the Consolidated
and Parent Company Statements of Financial Position,
the Consolidated and Parent Company Statements
of Changes in Equity, the Consolidated and Parent
Company Statements of Cash Flows and notes to
the financial statements, including a summary of
significant accounting policies. The financial reporting
framework that has been applied in their preparation
is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European
Union and as regards the parent company financial
statements, as applied in accordance with the
provisions of the Companies Act 2006.
In our opinion:
• The financial statements give a true and fair
view of the state of the group’s and of the parent
company’s affairs as at 31 December 2019 and of
the group’s profit and parent company’s loss for the
year then ended;
• The group financial statements have been properly
prepared in accordance with IFRSs as adopted by
the European Union;
• The parent company financial statements have
been properly prepared in accordance with IFRSs
as adopted by the European Union and as applied
in accordance with the provisions of the Companies
Act 2006; and
• The financial statements have been prepared
in accordance with the requirements of the
Companies Act 2006.
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. 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.
4 2
Emphasis of matter
We draw your attention to note 1 of the financial
statements, which describes the directors of the group
and parent company’s assessment of the COVID-19
impact on its ability to continue as a going concern. The
directors have explained that the events arising from
the COVID-19 outbreak do not impact the group’s use
of the going concern basis of preparation nor do they
cast significant doubt about the group’s and parent
company’s ability to continue as a going concern for a
period of at least twelve months from the date when the
financial statements are authorised for issue.
Our opinion is not modified in this respect.
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.
Our application of materiality
The materiality applied to the group financial
statements was £490,000 based on thresholds of
2% of net assets. The performance materiality for
the group was £294,000. The net asset benchmark
was concluded as most relevant to shareholders and
investors for an exploration and evaluation group
where the operating mine is held in a joint venture
which is equity accounted.
The materiality applied to the parent company financial
statements was £93,000 based on a threshold of 1% of
gross assets. The performance materiality of the parent
company was £55,800. The gross asset benchmark
was concluded as most relevant to shareholders and
investors for a non-trading parent undertaking.
Whilst materiality for the group financial statements as
a whole was set at £490,000, component materiality
for the joint venture was set at £430,000 based upon
3% of the average of profit before tax and net assets.
Performance materiality was set at 60%. Component
materiality for the subsidiary undertakings ranged
between £116,900 and £294,000.
GOVERNANCEARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019 We agreed to report to the Audit Committee any
corrected or uncorrected identified misstatements
exceeding £24,500 and £4,650 for the group and
parent company respectively, in addition to other
identified misstatements that warranted reporting on
qualitative grounds.
An overview of the scope of the audit
In designing our audit, we determined materiality
and assessed the risk of material misstatement in
the financial statements. In particular, we looked at
areas involving significant accounting estimates and
judgement by the directors and considered future
events that are inherently uncertain. We also addressed
the risk of management override of internal controls,
including among other matters consideration of
whether there was evidence of bias that represented a
risk of material misstatement due to fraud.
The accounting records of the parent company and
all subsidiary undertakings are centrally located and
audited by us based upon materiality or risk. The
key audit matters addressed, and how these were
addressed are outlined below. The Turkish registered
joint venture company was audited by a component
auditor under our instruction. The group audit team
instructed the component auditor as to the significant
risk areas to be covered and determined component
materiality. There was regular interaction with the
component auditor during all stages of the audit.
Key audit matters
Key audit matters are those matters that, in our
professional judgment, were of most significance in
our audit of the financial statements of the current
year and include the most significant assessed risks of
material misstatement (whether or not due to fraud)
we identified, including 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 forming our opinion thereon, and we do
not provide a separate opinion on these matters.
Key Audit Matter
Valuation and recoverability of intangible
exploration assets (refer note 11).
The carrying value of intangible exploration assets
as at 31 December 2019 is £16,404,000 (2018:
£16,975,000) which represents 56% (2018: 70%) of
the group’s total assets. Exploration and evaluation
assets comprise costs associated with early stage
licenses through to advanced exploration projects.
These carrying values are tested annually for
impairment. Determining whether impairment
indicators exist involves significant judgement
by management, including considering specific
impairment indicators prescribed in IFRS 6.
How the scope of our audit responded
to the key audit matter
Our work included but was not restricted to:
• A review of the Group’s exploration licences and
permits to confirm good title and standing.
• We reviewed and discussed management’s
assessment of impairment in accordance with
the requirements of IFRS 6. We discussed with
management the scope of their future budgeted
and planned expenditure on the licence areas,
together with a review of subsequent events.
• We performed an independent assessment to
identify any indicators of impairment.
• We reviewed independently prepared reports and
resource estimates, including an assessment of
the competence and objectivity of the preparer.
• We assessed the appropriateness of the Group’s
disclosure in respect of the judgement on whether
impairment indicators exist (refer note 1).
4 3
ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019GOVERNANCE Independent Auditor’s Report
To the members of Ariana Resources PLC
Key Audit Matter
Equity accounting for joint venture entity Zenit
Madencilik San ve Tic Ltd (“Zenit”) (refer note 6).
The investment in joint venture has a carrying
value at 31 December 2019 of £7,768,000
(2018: £3,968,000). The Group’s share of profit
during the year ended 31 December 2019
amounted to £7,891,000 (2018: £3,710,000).
The accuracy of equity accounting for
the joint venture is directly reliant on the
accuracy of the financial statements of Zenit
which contain a number of risk areas.
How the scope of our audit responded
to the key audit matter
Our work included but was not restricted to:
• We instructed, monitored and reviewed the
component auditor working papers. Revenue
recognition, recoverability of mining assets,
inventory valuation and compliance with laws and
regulations were among the areas designated as
significant or identified risks.
• We checked and agreed the GAAP transition
adjustments between the local jurisdiction financial
statements and the group accounting framework.
• We checked the joint venture had been correctly
equity accounted for, including the adequacy of
disclosures, in the financial statements.
Other information
The other information comprises the information
included in the Annual Report, other than the financial
statements and our auditor’s report thereon. The
directors are responsible for the other information. Our
opinion on the group and parent company financial
statements does not cover the other information and,
except to the extent otherwise explicitly stated in
our 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 this
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 our 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 the Directors’ Report
have been prepared in accordance with applicable
legal requirements.
Matters on which we are required to report
by exception
In the light of the knowledge and understanding of
the group and parent company and their 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 where the Companies Act 2006 requires us to
report to you if, in our opinion:
4 4
GOVERNANCEARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019 A further description of our responsibilities for the audit
of the financial statements is located on the Financial
Reporting Council’s website at:
http://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.
David Thompson (Senior Statutory Auditor)
for and on behalf of PKF Littlejohn LLP
Statutory Auditor
15 Westferry Circus
Canary Wharf
London
E14 4HD
27 July 2020
• adequate accounting records have not been kept
by the parent company, or returns adequate for our
audit have not been received from branches not
visited by us; or
• the parent company financial statements are not
in agreement with the accounting records and
returns; or
• certain disclosures of directors’ remuneration
specified by law are not made; or
• we have not received all the information and
explanations we require for our audit.
Responsibilities of directors
As explained more fully in the Statement of Directors’
Responsibilities, the directors are responsible for the
preparation of the group and parent company 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 group and parent company financial
statements, the directors are responsible for assessing
the group’s and the 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 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.
4 5
ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019GOVERNANCE Consolidated Statement of Comprehensive Income
For the year ended 31 December 2019
Continuing operations
Administrative costs
General exploration expenditure
Intangible exploration assets - written off
Other gains
Other income
Operating loss
Profit/(loss) on disposal of equity securities at FVOCI
Share of profit of Joint Venture accounted for using the equity method
Investment income
Profit before tax
Taxation
Profit for the year from continuing operations
Earnings per share (pence) attributable to equity holders of the company
Basic and diluted
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations
Items that will not be classified subsequently to profit or loss:
Net change in fair value of equity securities at FVOCI
Other comprehensive loss for the year net of income tax
Total comprehensive profit/(loss) for the year
The accompanying notes form part of these financial statements.
Note
11
4
5
13
6
8
10
13
2019
£’000
(1,242)
(18)
(364)
627
61
(936)
20
7,891
5
6,980
(46)
6,934
2018
£’000
(1,355)
(153)
(181)
-
-
(1,689)
(2)
3,710
158
2,177
-
2,177
0.65
0.21
(1,774)
(2,162)
49
(1,725)
5,209
(26)
(2,188)
(11)
4 6
FINANCIAL REPORTARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019 Consolidated Statement of Financial Position
For the year ended 31 December 2019
Assets
Non-current assets
Trade and other receivables
Intangible exploration assets
Intangible assets
Land, property, plant and equipment
Investment in Joint Venture accounted for using the equity method
Total non-current assets
Current assets
Trade and other receivables
Equity securities at FVOCI
Cash and cash equivalents
Total current assets
Total assets
Equity
Called up share capital
Share premium
Other reserves
Share based payments
Translation reserve
Retained earnings
Total equity attributable to equity holders of the parent
Total equity
Liabilities
Non-current liabilities
Deferred tax liabilities
Other financial liabilities
Total non-current liabilities
Current liabilities
Trade and other payables
Total current liabilities
Total equity and liabilities
Note
2019
£’000
2018
£’000
15
11a
11b
12
6
16
13
18
18
18
19
20
17
93
16,404
187
50
7,768
24,502
4,574
-
453
5,027
29,529
6,054
11,821
720
364
(5,970)
12,298
25,287
25,287
2,273
1,651
3,924
318
318
83
16,975
-
278
3,968
21,304
1,860
35
938
2,833
24,137
6,054
11,821
720
250
(4,196)
5,315
19,964
19,964
2,273
1,651
3,924
249
249
29,529
24,137
The financial statements were approved by the Board of Directors and authorised for issue on 27 July 2020. They were signed on its behalf by:
M J de Villiers
Chairman
A.K.Sener
Managing Director
The accompanying notes form part of these financial statements.
4 7
ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019FINANCIAL REPORT Company Statement of Financial Position
For the year ended 31 December 2019
Assets
Non-current assets
Trade and other receivables
Investments in group undertakings
Total non-current assets
Current assets
Trade and other receivables
Equity securities at FVOCI
Cash and cash equivalents
Total current assets
Total assets
Equity
Called up share capital
Share premium
Share based payments reserve
Retained earnings
Total equity
Liabilities
Current liabilities
Trade and other payables
Total current liabilities
Total equity and liabilities
Company’s loss for the financial year
Note
2019
£’000
2018
£’000
15
14
16
13
18
18
18
17
8,508
365
8,873
534
-
-
534
9,407
6,054
11,821
364
(8,838)
9,401
6
6
9,407
828
9,749
337
10,086
-
35
-
35
10,121
6,054
11,821
250
(8,010)
10,115
6
6
10,121
907
The financial statements were approved by the Board of Directors and authorised for issue on 27 July 2020.
They were signed on its behalf by:
M J de Villiers
Chairman
A.K.Sener
Managing Director
Registered number : 05403426
The accompanying notes form part of these financial statements.
4 8
FINANCIAL REPORTARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019 Consolidated Statement of Changes in Equity
For the year ended 31 December 2019
Share
capital
£’000
Share
premium
£’000
Other
reserves
£’000
Share
based
payments
reserve
£’000
Translation
on reserve
£’000
Retained
earnings
£’000
Total
attributable
to equity
holders of
parent
£’000
Changes in equity to
31 December 2018
Balance at 1 January 2018
6,054
11,821
720
93
(2,034)
-
(2,162)
(2,162)
-
-
-
3,071
2,177
(26)
2,151
-
93
93
19,725
2,177
(2,188)
(11)
250
-
250
(4,196)
5,315
19,964
-
(1,774)
(1,774)
-
-
6,934
49
6,983
-
-
6,934
(1,725)
5,209
114
114
(5,970)
12,298
25,287
Profit for the year
Other comprehensive income
Total comprehensive income
Share options
Transfer of share options
Transactions with owners
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at 31 December 2018
6,054
11,821
720
Changes in equity to
31 December 2019
Profit for the year
Other comprehensive income
Total comprehensive income
Share options
Transactions with owners
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at 31 December 2019
6,054
11,821
720
The accompanying notes form part of these financial statements.
-
-
-
250
(93)
157
250
-
-
-
114
114
364
4 9
ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019FINANCIAL REPORT Company Statement of Changes in Equity
For the year ended 31 December 2019
Share
capital
£’000
Share
premium
£’000
Share
based
payments
reserve
£’000
Changes in equity to
31 December 2018
Balance at 1 January 2018
Loss for the year
Other comprehensive income
Total comprehensive income
Share options
Transfer of share options
Transactions with owners
6,054
11,821
-
-
-
-
-
-
-
-
-
-
-
-
Balance at 31 December 2018
6,054
11,821
Changes in equity to
31 December 2019
Loss for the year
Other comprehensive income
Total comprehensive income
Share options
Transactions with owners
Balance at 31 December 2019
-
-
-
-
-
-
-
-
-
-
6,054
11,821
Company statement of cash flows
For the year ended 31 December 2019
93
-
-
-
250
(93)
157
250
-
-
-
114
114
364
Retained
earnings
£’000
(7,196)
(907)
-
Total
£’000
10,772
(907)
-
(907)
(907)
-
93
93
250
-
250
(8,010)
10,115
(828)
(828)
-
-
(828)
(828)
-
-
114
114
(8,838)
9,401
All bank transactions are undertaken by Ariana Exploration & Development Limited on behalf of Ariana Resources PLC and recharged accordingly.
As such the Company had no cash transactions directly, as was the case in 2018.
The accompanying notes form part of these financial statements.
5 0
FINANCIAL REPORTARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019 Consolidated Statement of Cash Flows
For the year ended 31 December 2019
Cash flows from operating activities
Profit for the year
Adjustments for:
Profit on disposal of land owning operations
(Profit)/loss on disposal of equity securities at FVOCI
(Profit) on disposal of equipment
Depreciation of non-current assets
Write down of intangible exploration assets
Fair value adjustments
Share of profit in Joint Venture
Share based payments charge
Investment income
Income tax expense
Movement in working capital
Decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Cash outflow from operating activities
Taxation paid
Net cash from operating activities
Cash flows from investing activities
Purchase of land, property, plant and equipment
Payments for intangible assets
Proceeds from disposal of equity securities at FVOCI
Proceeds from disposal of equipment
Dividends from Joint Venture
Investment income
Net cash used in investing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Exchange adjustment on cash and cash equivalents
Cash and cash equivalents at end of year
The accompanying notes form part of these financial statements.
5 1
2019
£’000
2018
£’000
6,934
2,177
(627)
(20)
(53)
20
364
(49)
-
2
-
1
181
26
(7,891)
(3,710)
114
(5)
46
250
(158)
-
(1,167)
(1,231)
918
253
4
(8)
(4)
(12)
(516)
104
55
-
5
(364)
(368)
938
(117)
453
183
(49)
(1,097)
-
(1,097)
(36)
(353)
146
-
1,369
158
1,284
187
773
(22)
938
ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019FINANCIAL REPORT Notes to the Consolidated Financial Statements
For the year ended 31 December 2019
1. General Information
Ariana Resources PLC (the “Company”) is a public limited
company incorporated, domiciled and registered in the UK. The
registered number is 05403426 and the registered address is
2nd Floor, Regis House, 45 King William Street, London, EC4R 9AN.
The Company’s shares are listed on the Alternative Investment
Market of the London Stock Exchange. The principal activities
of the Company and its subsidiaries (together the “Group”) are
related to the exploration for and development of gold and
technology-metals, principally in Turkey.
The consolidated financial statements are presented in Pounds
Sterling (£), which is the parent company’s functional and
presentation currency, and all values are rounded to the nearest
thousand except where otherwise indicated. The financial
information has been prepared on the historical cost basis
modified to include revaluation to fair value of certain financial
instruments and the recognition of net assets acquired including
contingent liabilities assumed through business combinations at
their fair value on the acquisition date modified by the revaluation
of certain items, as stated in the accounting policies.
Basis of Preparation
The Group financial statements have been prepared and
approved by the Directors in accordance with International
Financial Reporting Standards as adopted by the EU (“Adopted
IFRSs”) and effective for the Group’s reporting for the year ended
31 December 2019.
The separate financial statements of the Company are presented
as required by the Companies Act 2006. As permitted by that
Act, the separate financial statements have been prepared in
accordance with IFRS. These financial statements have been
prepared under the historical cost convention (except for
financial assets at FVOCI) and the accounting policies have been
applied consistently throughout the period.
Going Concern
These financial statements have been prepared on the going
concern basis.
The Directors are mindful that there is an ongoing need to
monitor overheads and costs associated with delivering the
exploration programme and to raise additional working capital
to support the Group’s specific activities on occasion. The
Group has no bank facilities and has been meeting its working
capital requirements from cash resources. At the year end the
Group had cash and cash equivalents amounting to £453,000
(2018: £938,000). Since the year end the Group has received
the outstanding consideration owed for the sale of its land
owning subsidiary and the part repayment of a loan from Zenit,
amounting in total to £3.3m.
The Directors have prepared cash flow forecasts for the Group
for the period to 31 July 2021 based on their assessment of the
prospects of the Group’s operations. The cash flow forecasts
include expected future cash flows from our Joint Venture
investment in Zenit Madencilik San. ve Tic. A.S. (“Zenit”), be
they loan repayments or dividends paid, along with the normal
operating costs for the Group over the period together with
the discretionary and non-discretionary exploration and
development expenditure. The forecasts indicate that on the
basis of existing cash and other resources, and expected future
repayments of loans and dividend payments from Zenit, the
Group will have adequate resources to meet all its expected
obligations in delivering its work programme for the forthcoming
year. In the event that the forecast cash flow from Zenit is not
5 2
forthcoming, the Group has the ability to reduce its operating
expenditure and in particular its discretionary exploration
expenditure, in order to assist the Group to meet its financial
obligations as they fall due.
If this should not prove adequate to meet the Group’s financial
obligations, the Directors would be obliged to consider a variety
of options as regards to the financing of the Group going forward,
and this may include an equity raise via an open-offer if thought
appropriate. Despite challenging capital markets for junior
exploration and mining companies, the Company and Group
have been successful historically in raising equity finance and
in light of this, the directors have a reasonable expectation of
securing sufficient funding to continue in operational existence
for the foreseeable future. For these reasons, they continue to
adopt the going concern basis in preparing the consolidated
financial statements.
The Group believes there should be no significant material
disruption to the mining operations in Zenit from COVID-19, but
the Board continues to monitor these risks and Zenit’s business
continuity plans.
In preparing these financial statements the Directors have given
consideration to the above matters and on this basis they believe
that it remains appropriate to prepare the financial statements on
a going concern basis.
New Accounting Standards & Interpretations
(a) New and amended standards mandatory for the first time for
the financial periods beginning on or after 1 January 2019.
As of 1 January 2019, the Company adopted IFRS 16 Leases,
Amendments to IFRS 2 – classification and measurement of
share based payments transactions, Annual improvements to
IFRS Standards 2015-2017 cycle and IFRIC 23 Uncertainty over
income tax treatments.
IFRS 16 Adoption
The Group has applied the exemption not to recognise right-of-
use assets and liabilities for leases with less than 12 months of
lease term when applying IFRS 16 to leases previously classified
as operating leases under IAS 17.
Of the other IFRSs and IFRICs, none have had a material effect
on the Group and Company financial statements.
(b) New standards, amendments and Interpretations that are not
yet effective and have not been early adopted are as follows:
Standards/interpretations
Application
Effective
IAS 1 & IAS 8 amendments.
Definition of Material
IFRS 3 amendments.
Business Combinations
IAS 1 amendments.
Classification of
Liabilities as Current or
Non-Current
*subject to EU endorsement
*1 January
2020
* 1 January
2020
*1 January
2022
The Group is evaluating the impact of the new and amended
standards above which are not expected to have a material
impact on the Group’s results or shareholders’ funds statements.
FINANCIAL REPORTARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019 Basis of consolidation
The consolidated financial statements comprise the
financial statements of Ariana Resources PLC and its
subsidiaries for the year ended 31 December 2019.
Subsidiaries are all entities over which the Group has power to
direct relevant activities and an exposure to variable returns.
Subsidiaries are fully consolidated from the date on which control
is transferred to the Group. They are de-consolidated from the
date that control ceases. The cost of an acquisition is measured
at fair value of the assets and equity instruments acquired, and
the liabilities incurred or assumed at the date of exchange.
The acquisition of subsidiaries is accounted for using the
purchase method. The cost of acquisition is measured at
the fair values, at the date of exchange, of the assets given,
liabilities incurred or assumed, and equity instruments issued.
The acquirer’s identifiable assets, liabilities and contingent
liabilities that meet the conditions for recognition under IFRS3
are recognised at their fair values at the acquisition date. Where
the Group acquires a subsidiary for less than the fair value of
its assets and liabilities, this results in negative goodwill or
gain on acquisition which is recognised in profit and loss.
If a business combination is achieved in stages, the
acquisition date carrying value of the Group’s previously
held equity interest in the acquiree is remeasured to fair
value at the acquisition date; any gains or losses arising
from such remeasurements are recognised in the income
statement. Where necessary, adjustments are made to the
financial statements to bring the accounting policies used
into line with those used by other members of the Group.
All significant intercompany transactions and balances
between group entities are eliminated on consolidation.
The Group has applied IFRS 11 to all joint arrangements as of
1 January 2015. The Group identifies joint arrangements as
those arrangements in which two or more parties have joint
control, where joint control is evidenced by the contractually
agreed sharing of control of an arrangement, which exists
where the decisions about the relevant activities require
the unanimous consent of the parties sharing control.
Investments in joint arrangements are classified as
either joint operations or joint ventures depending on the
contractual rights and obligations of each investor.
Joint operations are identified as those agreements whereby
the parties have rights to the assets and obligations for
liabilities relating to the arrangement. Joint operations
are accounted for by recognising the operator’s relevant
share of assets, liabilities, revenues and expenses. The
Group currently has no joint operations in existence.
Joint ventures are identified as those agreements whereby
the parties have rights to the net assets of the arrangement
and are accounted for using equity accounting in accordance
with IAS 28. Interest in joint ventures are initially recognised at
cost and adjusted thereafter to recognise the Group’s share of
the post-acquisition profits or losses and movements in other
comprehensive income. When the Group’s share of losses
in a joint venture equals or exceeds its interests in the joint
ventures (which includes any long-term interests that form
part of the Group’s net investment in the joint ventures), the
Group does not recognise further losses, unless it has incurred
5 3
obligations or made payments on behalf of the Joint Venture.
An associate is an entity over which the Group is in a position
to exercise significant influence, but not control or joint control,
through participation in the financial and operating policy
decisions of the investee. Significant influence is the power to
participate in the financial and operating policy decisions of the
investee but is not control or joint control over those policies.
The results and assets and liabilities of our investments in
our associates are incorporated in these financial statements
using the equity method of accounting except when classified
as held for sale. Investments in associates are carried in the
Group statement of financial position at cost as adjusted
by post-acquisition changes in the Group’s share of the net
assets of the associates, less any impairment in the value of
individual investments. Losses of the associates in excess of
the Group’s interest in those associates are not recognised.
In the Company accounts, investments in subsidiary
undertakings are held at cost less impairment losses.
Foreign currency translation
Functional and presentational currency
Items included in the financial statements are measured using
the currency of the primary economic environment in which
the entity operates (the ‘functional currency’). The consolidated
financial statements are presented in Pounds Sterling, which is
the Group’s presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation
at year end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the
comprehensive income statement.
Group companies
The results and financial position of all the Group entities (none
of which has the currency of a hyperinflationary economy) that
have a functional currency different from the presentation
currency are translated into the presentation currency as follows:
• assets and liabilities for each statement of financial position
presented are translated at the closing rate at the date of that
statement of financial position;
• income and expenses for each income statement are
translated at average exchange rates (unless this average
is not a reasonable approximation of the cumulative effect
of the rates prevailing on the transaction dates, in which
case income and expenses are translated at the dates of the
transaction); and
• all resulting exchange differences are recognised as a
separate component of equity. On consolidation, exchange
differences arising from the translation of monetary items
receivable from foreign subsidiaries for which settlement is
neither planned nor likely to occur in the foreseeable future
are taken to shareholders’ equity. When a foreign operation
is sold, such exchange differences are recognised in the
statement of comprehensive income as part of the gain or
loss on sale.
ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019FINANCIAL REPORT Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2019
Earnings per share
Basic earnings per share amounts are calculated by dividing
the profit after taxation of the Group by the weighted average
number of shares outstanding during the year.
Land, property, plant and equipment
Land, property, plant and equipment are stated at cost less
accumulated depreciation and any accumulated impairment losses.
Depreciation is charged so as to write off the cost of assets over
their estimated useful lives, using the straight-line method. The
estimated useful lives, residual values and depreciation method
are reviewed at each year end, with the effect of any changes in
estimate accounted for on a prospective basis.
Land
– not depreciated
Computer equipment – between 25% & 33%
Drilling equipment
– between 10% & 20%
Fixtures and fittings
– between 5% & 33%
Motor vehicles
– between 20% & 25%
The gain or loss arising on the disposal or retirement of an item
of property, plant and equipment is determined as the difference
between the sales proceeds and the carrying amount of the asset
and is recognised in the statement of comprehensive income.
Intangible assets
Intangible assets include expenditure on software and databases
acquired to develop the Group’s geological expertise. Assets
within this category that have a finite useful life are amortised
over 20 years.
Intangible exploration assets
Intangible assets represent exploration and evaluation assets
(IFRS 6 assets), being the cost of acquisition by the Group of
rights, licences and know-how. Such expenditure requires the
immediate write-off of exploration and development expenditure
that the Directors do not consider to be supported by the
existence of commercial reserves.
All costs associated with mineral exploration and investments,
are capitalised on a project-by-project basis, pending
determination of the feasibility of the project. Costs incurred
include appropriate technical and administrative expenses but
not general overheads and these assets are not amortised until
technical feasibility and commercial viability is established. If an
exploration project is successful, the related expenditures will be
transferred to mining assets and amortised over the estimated
life of the commercial ore reserves on a unit of production basis.
Where a licence is relinquished or a project abandoned, the
related costs are written off.
The recoverability of all exploration and development costs
is dependent upon the discovery of economically recoverable
reserves, the ability of the Group to obtain necessary financing
to complete the development of reserves and future profitable
production or proceeds from the disposition thereof.
Exploration and evaluation assets shall no longer be classified as
such when the technical feasibility and commercial viability of
extracting mineral resources are demonstrable. When relevant,
such assets shall be assessed for impairment, and any impairment
loss recognised, before reclassification to mine development.
5 4
Impairment of tangible and intangible assets
At each balance sheet date, the Group reviews the carrying
amounts of its tangible and intangible assets (except for
intangible exploration assets) to determine whether there is
any indication that those assets have suffered an impairment
loss. If any such indication exists, the recoverable amount of
the asset is estimated in order to determine the extent of the
impairment loss (if any). Where it is not possible to estimate the
recoverable amount of an individual asset, the Group estimates
the recoverable amount of the cash-generating unit to which the
asset belongs. Where a reasonable and consistent basis of
allocation can be identified, corporate assets are also allocated to
individual cash-generating units, or otherwise they are allocated
to the smallest group of cash-generating units for which a
reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets
not yet available for use are tested for impairment annually, and
whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell
and value in use. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset for which
the estimates of future cash flows have not been adjusted.
Investment in Group undertakings
The Company’s investments in Group undertakings are carried at
historical cost less any provision for impairment. The Company’s
investments arose from either incorporation of, or acquisition
of subsidiary companies primarily based in Turkey. As these
investments are not amortised, their carrying values are at risk
of impairment. The carrying value of investments is compared
to their recoverable amounts which are assessed with reference
to the discounted cash flow forecasts associated with these
territories where available or in accordance with the impairment
indicators listed in IFRS 6 where projects are not advanced
enough to have discounted cash flow forecasts.
Equity securities designated as at FVOCI
At 1 January 2019, the Group designated investments in equity
securities at FVOCI because these equity securities represent
investments that the Group intended to hold for the long term for
strategic purposes.
These assets are subsequently measured at fair value.
Dividends are recognised as income in profit or loss unless the
dividend clearly represents a recovery of part of the cost of the
investment. Other net gains and losses are recognised in OCI,
and are never reclassified to profit or loss.
Financial instruments
Financial assets and financial liabilities are recognised on
the Group’s Statement of Financial Position when the Group
becomes a party to the contractual provisions of the instrument.
The Group derecognises a financial asset only when the
contractual rights to cash flows from the asset expire, or it
transfers the financial asset and substantially all the risks and
rewards of ownership of the asset to another entity. If the
Group neither transfers nor retains substantially all the risks and
rewards of ownership and continues to control the transferred
asset, the Group recognises its retained interest in the asset and
an associated liability for the amount it may have to pay. If the
Group retains substantially all the risks and rewards of ownership
FINANCIAL REPORTARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019 of a transferred financial asset, the Group continues to recognise
the financial asset and also recognises a collateralised borrowing
for the proceeds received.
The Group derecognises financial liabilities when the Group’s
obligations are discharged, cancelled or expired.
Financial Assets
Trade and other receivables
Trade and other receivables are measured at initial recognition
at fair value, and are subsequently measured at amortised
cost less any provision for impairment. The Group applies the
IFRS 9 simplified approach to providing for expected credit
losses in accordance with applicable guidance for non-banking
entities. Under the simplified approach the Group is required to
measure lifetime expected credit losses for all trade receivables.
No bad debts have been identified during the period.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and on-
demand deposits and other short-term highly liquid investments
that are readily convertible to a known amount of cash with
three months or less remaining to maturity and are subject to an
insignificant risk of changes in value.
Financial liabilities and equity instruments
Financial liabilities and equity instruments are classified according
to the substance of the contractual arrangements entered into.
Equity instruments
Financial instruments issued by the Company are treated as equity
only to the extent that they meet the following two conditions:
• they include no contractual obligations upon the
Company to deliver cash or other financial assets or
to exchange financial assets or financial liabilities
with another party under conditions that are
potentially unfavourable to the Company; and
• where the instrument will or may be settled in the
Company’s own equity instruments, it is either a non-
derivative that includes no obligation to deliver a variable
number of the Company’s own equity instruments
or is a derivative that will be settled by the Company
exchanging a fixed amount of cash or other financial
assets for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds
of issue are classified as a financial liability. Where the
instrument so classified takes the legal form of the Company’s
own shares, the amounts presented in these financial
statements for called up share capital and share premium
account exclude amounts in relation to those shares.
Financial liabilities are classified as measured at amortised
cost or FVTPL. A financial liability is classified as at FVTPL if it is
classified as held-for-trading, it is a derivative or it is designated
as such on initial recognition. Financial liabilities at FVTPL are
measured at fair value and net gains and losses, including any
interest expense, are recognised in profit or loss. Other financial
liabilities are subsequently measured at amortised cost using
the effective interest method. Interest expense and foreign
exchange gains and losses are recognised in profit or loss. Any
gain or loss on derecognition is also recognised in profit or loss.
5 5
Share-based payments
For grants of share options, the fair value as at the date of grant
is calculated using the Black-Scholes option pricing model,
taking into account the terms and conditions upon which the
options were granted. The amount recognised as an expense
is adjusted to reflect the actual number of share options that
are likely to vest, except where forfeiture is only due to market
based conditions not achieving the threshold for vesting. Where
shares are issued in settlement of goods or services supplied,
the relevant expense is recorded in the consolidated statement
of comprehensive income, with the related share issue recorded
within share capital and share premium.
Provisions
Provisions are liabilities where the exact timing and amount
of the obligation is uncertain. Provisions are recognised when
the Group has a present obligation (legal or constructive)
as a result of past events, when an outflow of resources
is probable to settle the obligation and when an amount
can be reliably estimated. Where the time value of money
is material, provisions are discounted to current values
using appropriate rates of interest. The unwinding of any
discount is recorded in net finance income or expense.
Taxation
Current income tax assets and liabilities comprise those
obligations to, or claims from, fiscal authorities relating to
the current or prior reporting year, that are unpaid at 31
December 2019. They are calculated according to the tax
rates and tax laws applicable to the fiscal periods to which
they relate, based on the taxable profit for the year.
Deferred income taxes are calculated using the liability
method on temporary differences. Deferred tax is generally
provided on the difference between the carrying amounts of
assets and liabilities and their tax bases. However, deferred
tax is not provided on the initial recognition of goodwill or
on the initial recognition of an asset or liability unless the
related transaction is a business combination or affects tax
or accounting profit. Deferred tax on temporary differences
associated with shares in subsidiaries is not provided if
reversal of these temporary differences can be controlled
by the Group and it is probable that reversal will not occur
in the foreseeable future. In addition tax losses available to
be carried forward as well as other income tax credits to the
Group are assessed for recognition as deferred tax assets.
Deferred tax liabilities are provided in full, with no discounting.
Deferred tax assets are recognised to the extent that it is
probable that the underlying deductible temporary differences
will be able to be offset against future taxable income. Current
and deferred tax assets and liabilities are calculated at tax
rates that are expected to apply to their respective period of
realisation, provided they are enacted or substantively enacted
as at 31 December 2019. Changes in deferred tax assets or
liabilities are recognised as a component of tax expense in
the consolidated statement of comprehensive income, except
where they relate to items that are charged or credited directly
to equity in which case the related deferred tax is also charged
or credited to equity. The deferred tax asset arising from
trading losses carried forward as referred to in Note 8 has not
been recognised. The deferred tax asset will be recognised
when it is more likely than not that it will be recoverable.
ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019FINANCIAL REPORT
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2019
Segmental reporting
2. Staff costs
Operating segments are reported in a manner consistent with
the internal reporting provided to the Board of Directors who
have been identified as responsible for allocating resources
and assessing performance of the operating segments,
and who act as the Chief Operating Decision Maker.
Accounting judgements
The following are the critical judgements, apart from those
involving estimations (which are dealt with separately below),
that the directors have made in the process of applying the
Group’s accounting policies and that have the most significant
effect on the amounts recognised in the financial statements.
Accounting for Joint Venture
Management have reviewed the criteria of IFRS 11 and made
a judgement that despite its 50% shareholding, Zenit is a
Joint Venture rather than a subsidiary due to the contractual
agreement to share control of that company. The Group
accounts for its Joint Venture with Proccea in Zenit using
the equity method in accordance with IAS 28 (revised).
Intangible exploration assets
Determining whether intangible exploration assets are impaired
requires an assessment of whether there are any indicators
of impairment, by reference to specific impairment indicators
prescribed in IFRS 6. This includes the assessment, on a project
by project basis, of the likely recovery of the cost of the Group’s
Intangible exploration assets in the light of future production
opportunities based upon ongoing geological studies. This also
involves the assessment of the period for which the entity has
the right to explore in the specific area, or if it has expired during
the period or will expire in the near future if it is not expected to
be renewed.
The Group determines that exploration costs are capitalised at
the point the Group has a valid exploration licence or is in the
process of renewal.
Impairment of assets, excluding intangible exploration assets
The Group assesses impairment at each reporting date on a
project by project basis by evaluating conditions specific to
the Group that may indicate an impairment of assets. Where
indicators of impairment exist, the recoverable amount of
the asset is determined based on value in use or fair value
less cost to sell, both of which require the Group to make
estimates. The directors are aware that one licence Kiziltepe
West area is pending conversion to operational status at
the General Directorate of Mining and Petroleum Affairs
(“MAPEG”); a process expected to be concluded in 2020.
Ivrindi received its operational licence renewal during 2020.
5 6
Wages and salaries
Social security costs
Share based payments
(option scheme)
Pension contributions
Group
Company
2019
£’000
2018
£’000
2019
£’000
2018
£’000
305
36
114
35
490
336
31
250
16
635
288
32
85
33
438
315
27
187
16
545
Total staff costs, including those capitalised within
intangible assets, amounts to £771,000 (2018: £856,000).
The average monthly number of employees (including
Executive Directors) during the year was as follows:
Exploration activities
Administration
2019
Group
Number
2018
Group
Number
12
5
17
10
5
15
The only employees within the Company in the
current and previous year were the directors.
3. Directors’ emoluments
Short term incentives
Basic salary and fees
Pension contributions
2019
£’000
2018
£’000
342
33
375
360
17
377
Key management personnel consist of only the Directors. Details
of share options and interests in the Company’s shares of each
Director are highlighted in the Directors’ Report on page 39.
Michael de Villiers
Kerim Sener
William Payne
Year
2019
2018
2019
2018
2019
2018
Christopher Sangster
2019
2018
Salary & fees
£’000
Pension
£’000
Total
£’000
132
130
115
150
40
40
55
40
10
-
23
16
-
-
1
1
142
130
138
166
40
40
56
41
William Payne’s services are provided by a firm of Accountants,
further details of which are set out in Note 24.
FINANCIAL REPORTARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019 4. Other gains
The group entered into a sale agreement to dispose of its 99%-owned subsidiary, Çamyol Gayrimenkul, Madencilik, Turizm, Tarim ve
Hayvancilik Ltd (“Camyol”). Camyol carried out a significant part of the Group’s land purchases prior to the commencement of construction
of the Kiziltepe Mine.
The disposal was effected in order that all freehold land pertaining to the Kiziltepe Mine is owned directly by the operating company, Zenit
Madencilik San ve Tic AS (“Zenit”) and in order to release cash to Galata Madencilik San. ve Tic. Ltd for advancement of the Group’s other
exploration projects in Turkey. The disposal was completed on 31 December 2019, on which date full control of Camyol passed to Zenit, for
a consideration of 6,200,000 Turkish Lira. Settlement of this transaction was completed in full during 2020.
(a) Profit on disposal of land owning operations
Trading loss on operations for the year
Translation reserve transferred to statement of comprehensive income
Exchange loss on revaluation of Intercompany loan
Profit on disposal of subsidiary (5b)
(b) Profit on disposal of subsidiary
At the time of the disposal of the Group’s subsidiary, Camyol, the carrying amount of its assets and liabilities were as follows:
Non- current assets
Land
Current assets
Trade receivables
Cash at bank
Current liabilities
Trade payables
Net assets derecognised
Consideration receivable on disposal
Profit on disposal of subsidiary
5. Operating loss
The operating loss is stated after charging/(crediting):
2019
£’000
(1)
23
(217)
822
627
2019
£’000
119
1
4
(115)
9
(831)
822
Depreciation and amortisation – owned assets
Other income – disposal of drilling equipment and other miscellaneous income.
Write down of Intangible exploration assets
Net foreign exchange losses
Fees payable to the Company’s auditor for the audit of the Group’s and Company’s annual accounts
Fees payable to the Company’s auditor for other services:
– The audit of the Company’s subsidiaries
5 7
2019
£’000
2018
£’000
20
(61)
364
144
50
1
-
181
96
65
20
28.5
ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019FINANCIAL REPORT Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2019
6. Share of profit of interest in Joint Venture
In July 2010 the Group entered into an agreement with Proccea Construction Co. (“Proccea”) such that Galata Madencilik San. ve Tic.
Ltd. (“Galata”) would transfer its principal assets at Kiziltepe and Tavşan, collectively known as the “Red Rabbit Gold Project” into a new
wholly owned subsidiary, Zenit Madencilik San. ve Tic. A.S. (“Zenit”). Proccea earned their 50% share in Zenit by investing US$8 million
in the capital of Zenit, US$1.4 million of such funds having been spent on a Feasibility Study and an Environmental Impact Assessment
(“EIA”), with the balance on initial mine construction, once the Feasibility Study and EIA were completed satisfactorily. Shareholdings in
Zenit represents the ratio of 50% to the Group and 50% to Proccea, with Proccea in management control, but with key decisions requiring
approval from both the Group and Proccea.
Zenit entered production during March 2017, with commercial production declared from 1 July 2017. Operational revenues and costs
arising from pre-commercial production were capitalised in 2017 along with any new capital expenditure incurred during 2018 including
the construction of the district road diversion necessary for the full development of the Arzu South open pit. Total revenue for the year
was c. US$45.1m (2018: US$37.8 m) in gold and silver sales.
The liability of the Joint Venture includes current and non-current portions of a bank loan repayable to Turkiye Finans Katilim Bankasi A.S.
Management does not foresee any significant restrictions on the ability of the Joint Venture to repay this loan.
The Group accounts for its Joint Venture with Proccea in Zenit using the equity method in accordance with IAS 28 (revised). At 31
December 2019 the Group has a 50% (2018: 50%) interest in Zenit. Ultimately profits from Zenit are shared in the ratio of 50:50 between
the Group and Proccea.
Principal place of business for Zenit is Ankara, Turkey. Zenit was also incorporated in Ankara, Turkey.
Financial information of the Joint Venture, based on its translated financial statements, and reconciliations with the carrying amount of
the investment in the consolidated financial statements are set out below:
2019
£’000
2018
£’000
35,337
29,254
(15,444)
(13,548)
19,893
(1,636)
18,257
(4,762)
2,667
16,162
(380)
15,782
50%
7,891
15,706
(969)
14,737
(12,196)
4,552
7,093
327
7,420
50%
3,710
Statement of Comprehensive Income
For the year ended 31 December 2019
Revenue
Cost of sales
Gross Profit
Administrative expenses
Operating profit
Finance expenses including foreign exchange losses
Finance income including foreign exchange gains
Profit before tax
Taxation charge/(credit)
Profit for the year
Proportion of the Group’s profit share
Group's share of profit for the year
5 8
FINANCIAL REPORTARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019
6. Share of profit of interest in Joint Venture continued
Statement of financial position
As at 31 December 2019
Assets
Non-current assets
Other receivables
Intangible exploration assets
Kiziltepe Gold Mine (including capitalised mining costs, land, property, plant and equipment)
Total non-current assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other receivables, VAT and prepayments
Total current assets
Total assets
Liabilities
Non-current liabilities
Borrowings
Asset retirement obligation
Total non-current liabilities
Current liabilities
Borrowings
Trade payables
Other payables (including shareholder loans)
Total current liabilities
Total liabilities
Equity
Proportion of the Group’s profit share
Carrying amount of investment in Joint Venture
Movement in Equity – our share
Opening balance
Profit for the year
Translation and other reserves
Dividend receivable
Closing balance
5 9
2019
£’000
2018
£’000
440
837
23,275
24,552
7,184
752
1,745
2,187
11,868
513
370
24,538
25,421
3,570
1,098
1,474
1,074
7,216
36,420
32,637
3,241
1,000
4,241
5,776
1,883
8,984
16,643
20,884
15,536
50%
7,768
3,968
7,891
(1,049)
(3,042)
7,768
8,959
978
9,937
9,272
2,081
3,411
14,764
24,701
7,936
50%
3,968
2,467
3,710
(840)
(1,369)
3,968
ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019FINANCIAL REPORT Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2019
7. Segmental analysis
Management currently identifies one division as an operating segment – mineral exploration. This operating segment is monitored
and strategic decisions are made based upon this and other non-financial data collated from exploration activities.
Principal activities for this operating segment is as follows
• Mining - incorporates the acquisition, exploration and development of gold resources.
• Reconciling items include non-mineral exploration costs and transactions between Group and associate companies.
2019
Other
reconciling
items
£’000
Mining
£’000
2018
Other
reconciling
items
£’000
Group
£’000
Group
£’000
Mining
£’000
Administrative costs
-
(1,242)
(1,242)
-
(1,355)
(1,355)
General and specific exploration expenditure
Profit/(loss) on disposal of investments
Other gains
Share of profit in Joint Venture
Investment and other income
Profit before taxation
Taxation
Profit after taxation
Assets
Segment assets
Liabilities
Segment liabilities
Additions to segment assets
Intangible assets
Property, plant & equipment
Depreciation and amortisation
Geographical segments
(382)
-
627
7,891
-
8,136
(43)
-
20
-
-
66
(382)
(334)
20
627
(2)
-
7,891
3,710
-
-
-
-
66
-
158
(334)
(2)
-
3,710
158
(1,156)
6,980
3,374
(1,197)
2,177
(3)
(46)
-
-
-
8,093
(1,159)
6,934
3,374
(1,197)
2,177
28,706
823
29,529
23,523
614
24,137
(4,003)
(239)
(4,242)
(3,966)
(207)
(4,173)
516
32
-
-
-
(20)
516
32
(20)
369
36
-
-
-
(1)
369
36
(1)
The Group’s mining assets and liabilities are located primarily in Turkey.
Carrying amount of segment non-current assets
24,314
188
24,502
20,584
720
21,304
2019
United
Kingdom
£’000
Turkey
£’000
Group
£’000
Turkey
£’000
2018
United
Kingdom
£’000
Group
£’000
6 0
FINANCIAL REPORTARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019 8. Taxation
(a) Current tax expense in respect of the current year
The charge for the year can be reconciled to the profit per the statement of comprehensive income as follows:
Profit before tax – continuing operations
Profit multiplied by the standard rate of corporation tax in the UK of 19% (2018:19%)
Effect of tax on share of Joint Venture profit
Disallowable expenses and other adjustments
Exempt gain on disposal of subsidiary
Effect of different tax rates and laws of subsidiaries operating in other jurisdictions
Losses for the year to carry forward
Tax charge
2019
£’000
46
2018
£’000
-
2019
£’000
6,980
1,326
(1,499)
23
(137)
108
225
46
2018
£’000
2,177
413
(704)
58
-
(8)
241
-
The Group has UK losses carried forward on which no deferred tax asset is recognised in the financial statements as the recovery of this
benefit is dependent on future profitability, the timing of which cannot be reasonably foreseen. Total UK losses carried forward amount to
£9,313,000 (2018: £10,104,000).
Turkish tax losses carried forward at the year end amounted to £104,000 (2018: £128,000). These losses can be carried forward and used
against future taxable income rate at rates of 22%, although the Turkish losses expire after five years.
Australian tax losses have been fully utilised during the year. Dutch tax losses carried forward at the year end amounted to £65,000
(2018: £90,000).
No deferred tax assets had been recognised against the Group’s and Company’s tax losses as the entities do not have sufficient taxable
temporary differences in the year which the losses could be utilised against.
9. Loss of parent company
As permitted by Section 408 of the Companies Act 2006, the statement of comprehensive income of the parent Company is not
presented as part of these financial statements. The parent Company’s loss for the financial year was £828,000 (2018: £907,000).
10. Earnings per share on continuing operations
The calculation of basic profit per share is based on the profit attributable to ordinary shareholders of £6,934,000 (2018: £2,177,000)
divided by the weighted average number of shares in issue during the year being 1,059,677,953 shares (2018: 1,059,677,953). There is no
material effect on the basic earnings per share for the dilution provided by the share options.
6 1
ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019FINANCIAL REPORT Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2019
11a. Intangible exploration assets
Cost
At 1 January 2018
Additions and capitalised depreciation
Exchange movements
Expenditure written off
At 31 December 2018
Additions and capitalised depreciation
Reclassification of expenditure
Exchange movements
Expenditure written off
At 31 December 2019
Net book value
At 1 January 2018
At 31 December 2018
At 31 December 2019
Deferred exploration
expenditure
£’000
17,527
369
(740)
(181)
16,975
516
(206)
(517)
(364)
16,404
17,527
16,975
16,404
None of the Group’s intangible assets are owned by the Company.
On review of the likely recovery of the costs capitalised as intangible exploration assets management has determined that £364,000
(2018: £181,000) is not recoverable and hence written off these costs.
The technical feasibility and commercial viability of extracting a mineral resource are not yet fully demonstrable in the above intangible
exploration assets. These assets are not amortised, until technical feasibility and commercial viability is established. Intangible exploration
costs written off represent costs relating to certain projects that are no longer considered economically viable or where exploration
licences have been relinquished.
11b. Intangible assets
Cost
At 1 January 2019
Reclassification of expenditure from exploration assets
Amortisation charge
At 31 December 2019
Net book value
At 1 January 2019
At 31 December 2019
6 2
Software and
database
expenditure
£’000
-
206
(19)
187
-
187
FINANCIAL REPORTARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019 12. Land, property, plant & equipment
Cost
At 1 January 2018
Additions
Disposals
Exchange movements
At 31 December 2018
Additions
Disposals
Exchange movements
At 31 December 2019
Depreciation
At 1 January 2018
Charge
Disposals
Exchange movements
At 31 December 2018
Charge
Disposals
Exchange movements
At 31 December 2019
Net book value
At 1 January 2018
At 31 December 2018
At 31 December 2019
Land
£’000
Computer
equipment
£’000
Drilling
equipment
£’000
Fixtures &
fittings
£’000
Motor
vehicles
£’000
Totals
£’000
182
-
-
(44)
138
-
(119)
(19)
-
-
-
-
-
-
-
-
-
-
182
138
-
40
11
-
(4)
47
2
-
(15)
34
32
6
-
(5)
33
5
-
(8)
30
8
14
4
256
-
-
(5)
251
26
(87)
(164)
26
178
1
-
(21)
158
5
(85)
(72)
6
78
93
20
37
13
-
(5)
45
4
-
(15)
34
35
4
-
(4)
35
4
-
(16)
23
2
10
11
60
12
-
(33)
39
-
-
(5)
34
41
6
-
(31)
16
5
-
(2)
19
19
23
15
575
36
-
(91)
520
32
(206)
(218)
128
286
17
-
(61)
242
19
(85)
(98)
78
289
278
50
Of the total depreciation expense, £18,000 has been capitalised to intangible exploration assets (2018: £16,000).
6 3
ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019FINANCIAL REPORT Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2019
13. Equity securities designated as FVOCI
Group and Company
At 1 January 2018
Adjustment to fair value
Disposals
Exchange movement
At 31 December 2018
Adjustment to fair value
Disposals
At 31 December 2019
Net book value
At 31 December 2018
At 31 December 2019
Group
£’000
218
(26)
(146)
(11)
35
49
(84)
-
35
-
Company
£’000
63
(26)
-
(2)
35
49
(84)
-
35
-
The Company sold its remaining shares in Royal Road Minerals Ltd during 2019 and hence holds no further investments at the year end.
14. Investments in Group undertakings
Company
At 1 January 2019
Additions
At 31 December 2019
Shares in Group undertakings
£’000
337
28
365
The Company’s investments at the balance sheet date comprise ownership of the ordinary share capital of the following companies:
Subsidiaries
Ownership
Country of
incorporation
Nature
of business
Ariana Exploration &
Development Limited
100%
United Kingdom
Exploration
Address
2nd Floor, Regis House,
45 King William Street
London, EC4R 9AN
Portswood Resources Limited
100%
British Virgin Islands
Holding
company
Kingston Chambers P.O. Box 173
Road Town, Tortola, British Virgin Islands
Galata Madencilik San. ve Tic. Ltd.
100%
Turkey
Exploration
Çankaya Mah. Farabi Sok. 7/5 Çankaya,
Ankara, Turkey
6 4
FINANCIAL REPORTARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019 14. Investments in Group undertakings continued
Ariana Exploration & Development Limited’s investments at the balance sheet date comprise the following companies:
Subsidiaries
Ownership
Country of
incorporation
Nature
of business
Address
Greater Pontides Exploration B.V.
100%
Netherlands
Holding
company
Herengracht 500,
1017 CB Amsterdam, Netherlands
Pontid Madencilik San. ve Tic. Ltd.
100%
Turkey
Exploration
Asgard Metals Pty. Ltd.
100%
Australia
Exploration
Hilal Mahallesi, Konrad Adenauer Cd.
15A, 06550 Çankaya, Ankara, Turkey
10 Wygonda Rd,
Roleystone WA 6111, Australia
15. Non-current trade and other receivables
Amounts owed by Group undertakings
Other receivables
Group
Company
2019
£’000
2018
£’000
-
93
93
-
83
83
2019
£’000
8,508
-
2018
£’000
9,749
-
8,508
9,749
Other receivables falling due after more than one year represent amounts due from the government of Turkey in respect of VAT relating to
the Group’s exploration projects. The amounts owed to the Company by Group undertakings are interest free and repayable on demand.
16. Trade and other receivables
Amounts owed by Joint Venture Company
Other receivables
Earn-In advances
Prepayments
Group
Company
2019
£’000
3,383
598
534
59
2018
£’000
1,402
442
-
16
4,574
1,860
2019
£’000
2018
£’000
-
-
534
-
534
-
-
-
-
-
The amount repayable to Galata Madencilik San. ve Tic. Ltd. by the Joint Venture Company (“Zenit”) has no scheduled repayment terms
and is repayable on demand. The prior year loan amounting to £1,402,000 was settled by Zenit in full during the year. Interest is not
charged by Galata Madencilik San. ve Tic. Ltd. on dividends declared, but unpaid by Zenit.
Trade and other receivables include Earn-In advances of £534,000 which relate to Venus Minerals Ltd (“Venus”), an entity focused
on the exploration and development of copper and gold on the island of Cyprus. Ariana Resources PLC has the option to acquire up
to 50% of Venus through an earn-in agreement, requiring total expenditure of 3.0M Euro over five years. Investment rights continue
to accrue as at 31 December 2019 on expenditure of 0.6M Euros. This capital expenditure has been carried forward under other
receivables as at 31 December 2019, pending conversion into ordinary shares in Venus (post-period end, in May 2020, total expenditure
to date of 0.92M Euros was converted to shares comprising 9.24% of Venus). Additional capital support has been agreed, in principal
under the terms of the earn-in agreement, by the Board of up to a further 2.08M Euros over the next three years. Ariana has the
option to cease funding unilaterally at any point in time but is committed under the terms of the earn-in agreement to a minimum
expenditure per annum of 0.5M Euros during the option exercise period from October 2019 to October 2022, such that the minimum
total expenditure commitment is greater than 1.0M Euros.
The carrying values of other receivables approximate their fair values because these balances are expected to be cash settled in the
near future.
6 5
ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019FINANCIAL REPORT Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2019
17. Trade and other payables
Trade and other payables
Social security and other taxes
Other creditors and advances
Accruals and deferred income
Group
Company
2019
£’000
2018
£’000
2019
£’000
2018
£’000
109
66
7
136
318
104
22
10
113
249
-
-
-
6
6
-
-
-
6
6
The above listed payables are all unsecured. Due to the short-term nature of current payables, their carrying values approximate their
fair value.
18. Called up share capital and premium
Allotted, issued and fully paid ordinary 0.1p shares
Number
Ordinary
Shares
£’000
Deferred
shares
£’000
Called up
Share capital
£’000
Share
Premium
£’000
In issue at 1 January 2019 and 31 December 2019
1,059,677,953
1,059
4,995
6,054
11,821
During 2013 the existing ordinary shares were sub-divided into one new ordinary share of 0.1 pence (“New Ordinary Share”) and one
deferred share of 0.9 pence (“Deferred Share”). The New Ordinary Shares have a nominal value of 0.1 pence. The percentage of New
Ordinary Shares held by each shareholder following the subdivision is the same as the percentage of existing ordinary shares held by the
shareholder before the change.
Fully paid Ordinary Shares carry one vote per share and carry the right to dividends. Deferred Shares have attached to them the following
rights and restrictions:
• they do not entitle the holders to receive any dividends and distributions;
• they do not entitle the holders to receive notice or to attend or vote at General Meetings of the Company;
• on return of capital on a winding up the holders of the Deferred Shares are only entitled to receive the amount paid up on such shares
after the holders of the Ordinary Shares have received the sum of 0.1p for each ordinary share held by them and do not have any other
right to participate in the assets of the Company.
Potential issue of ordinary shares
Share options
The Company issued 64,000,000 new options to directors and staff at an exercise price of 1.55 pence, vesting over 3 years, commencing
on 1 January 2018. At 31 December 2019 the Company had options outstanding for the issue of ordinary shares as follows:
Date of grant
Exercisable from
Exercisable to
Exercise price Number granted
Options cancelled
during the year
Number at 31
December 2019
Options
1 January 2018
1 January 2018 31 December 2023
1.55p
64,000,000
-
64,000,000
Total
64,000,000
64,000,000
No options were exercised in the year. The fair value of services received in return for share options are measured by reference to the fair
value of share options granted. The fair value of employee share options is measured using the Black-Scholes model. Measurement inputs
and assumptions are as follows:
6 6
FINANCIAL REPORTARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019 18. Called up share capital and premium continued
Costs associated with options issued on the 1 January 2018 and exercisable by 2023
Share price when options issued
Expected volatility (based on closing prices over the last 7 years)
Expected life
Risk free rate
Expected dividends
1.25p
67.84%
5 years
0.75%
0%
The expected volatility is wholly based on the historic volatility (calculated based on the weighted average of the last 7 years of quotation).
Share based payments reserve
At 1 January 2019
Charge during the year
At 31 December 2019
Group and Company
2019
£’000
250
114
364
As set out in note 2 the Group recognised an expense of £114,000 (2018: £250,000) relating to equity share based payment transactions
in the year.
19. Deferred tax liabilities
Opening and closing deferred tax liability
Group
Company
2019
£’000
2,273
2018
£’000
2,273
2019
£’000
-
2018
£’000
-
Deferred tax has been provided against the fair value uplift of intangible exploration assets that resulted from the business combination
that happened in 2016.
20. Other financial liabilities
Contingent consideration payable
Group
Company
2019
£’000
1,651
2018
£’000
1,651
2019
£’000
-
2018
£’000
-
The consideration above relates to a 2% net smelter returns royalty on the future production revenue at Salinbaş. This liability arose as a
result of the business combination as noted in note 19 and will be remeasured at each reporting date and any gain or loss will be charged/
(credited) through the income statement.
Given this provision is based on future production revenue, there are uncertainties relating to the timing and amount of this liability.
6 7
ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019FINANCIAL REPORT Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2019
21. Operating lease arrangements
Management have completed a detailed assessment of existing operating contracts and have not identified any contracts requiring
adjustment on the adoption of IFRS 16 as the operating leases held by the Group are of low value and short-term in nature.
At the year end, the Group had outstanding short term commitments for future minimum lease payments under non-cancellable
operating leases, which fall due as follows:
Within one year
22. Capital commitments
2019
16
2018
16
The Group had no authorised or unauthorised capital commitments at the year end other than as disclosed in note 16 (2018: £nil).
23. Contingent liabilities
Following the disposal of the Group’s 99%-owned subsidiary, Çamyol Gayrimenkul, Madencilik, Turizm, Tarim ve Hayvancilik Ltd
(“Camyol”) 75% of the resulting gain on disposal is exempt from Turkish corporation tax provided the gain is retained under equity by
Galata Madencilik San. ve Tic. Ltd. for a period of 5 years. This potentially exempt taxable gain amounts to Turkish Lira 4,529,343 with an
associated corporation tax liability of Turkish Lira 996,455, or approximately £137,000.
24. Related party transactions
Group companies
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation.
Ariana Resources PLC is the beneficial owner and controls, or is in joint venture with, the following companies and as such are considered
related parties:
Ariana Exploration & Development Limited
Portswood Resources Limited
Galata Madencilik San. ve Tic. Ltd.
Zenit Madencilik San. ve Tic. A.S. (Joint Venture)
Asgard Metals Pty. Ltd.
Greater Pontides Exploration B.V.
Pontid Madencilik San. ve Tic. Ltd.
The only transactions during the year between the Company and its subsidiaries were intercompany loans, which were interest free and
payable on demand and included the following:
Loans payable by Ariana Exploration & Development Limited and Galata Madencilik San. ve Tic. Ltd. to Ariana Resources PLC amounted to
£8,508,203 (2018: £9,735,206) and £nil (2018: £14,294) respectively.
William Payne is a partner in Wilkins Kennedy, a firm of Accountants that provides his services. During the year end 31 December 2019,
Wilkins Kennedy were paid £40,000 (2018: £40,000) in respect of his services as a Director, and £101,500 (2018: £64,000) in respect of
accounting and management services. Fees paid for William Payne’s services are included as part of Directors emoluments declared in
Note 3. At the year end the Group owed Wilkins Kennedy £40,451 (2018: £39,618). This remuneration is included as part of his emoluments
as disclosed in note 3.
Independent Executive Consultants Limited, a company jointly controlled by Michael de Villiers, charged the Company £37,000 (2018:
£130,000) in respect of his services as a Director. This remuneration is included as part of his emoluments as disclosed in note 3.
At 31 December 2019, Kerim Sener had received £109,583 or TL795, 621 (2018: £52,756 or TL353,792) from Zenit Madencilik San. ve Tic.
A.S. for his services as a director of the joint venture subsidiary, in accordance with the Turkish Commercial Code and an Extraordinary
General Meeting resolution dated 1 November 2018. This remuneration is in addition to his emoluments disclosed in note 3.
As part of the Group’s earn in agreement described in detail in note 16, Kerim Sener was appointed a director of Venus Minerals Ltd
(“Venus”) on 13 August 2019. Kerim Sener received no remuneration during the period to 31 December 2019. The Group made payments
under the terms of the earn-in agreement of £534,000 which are eligible for conversion into ordinary shares in Venus and recognised in
other receivables at 31 December 2019. There were no other transactions with Venus during the year.
6 8
FINANCIAL REPORTARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019 Joint Venture company
Loans including unpaid dividends payable on demand by Zenit Madencilik San. ve Tic. A.S. to Galata Madencilik San. ve Tic. Ltd. amounted
to £3,383,297 (2018: £1,402,055).
25. Post year end events
On 11 March 2020, the World Health Organisation declared the Coronavirus outbreak to be a pandemic in recognition of its rapid spread
across the globe. For the Group’s 31 December 2019 financial statements, the Coronavirus outbreak and the related impacts are
considered non-adjusting events. Consequently, there is no impact on the recognition and measurement of assets and liabilities. The risks
to the overall business activity and the operations of the Group and the mitigating actions being taken have been set out in the Strategic
Report. While the outcome of the COVID-19 pandemic cannot be estimated with reasonable certainty at this stage, the Group has not
experienced any substantial disruptions to production or sales at our jointly owned Kiziltepe Gold Mine.
On 1 July 2020 the Company announced that Özaltin Holding A.S., through its subsidiary, Özaltin Insaat, Ticaret and Sanayi A.S.
(collectively “Özaltin”), has formally committed to proceeding with its acquisition of 53% of both the Salinbas Project (“Salinbas”) and
the Zenit Madencilik San. ve Tic. A.S. (“Zenit”) joint venture which is currently owned by Ariana in a 50:50 partnership with Proccea
Construction Co. (“Proccea”).
Further to the Memorandum of Understanding (“MoU”) announced on 25 November 2019, the Group intends to partially dispose of various
interests held in Turkey to Özaltin, including jointly with Proccea, 53% of Zenit for US$50 million (to be split equally by Ariana and Proccea),
as well as an initial 17% of the Salinbas Project for US$5 million. In addition, Özaltin commits to injecting a further US$8 million of equity
into the Salinbas Project in order to acquire 53% of the project. It is envisaged Özaltin will ultimately hold 53% of Zenit, with Ariana and
Proccea each holding 23.5% and that the Salinbas Project ultimately will be acquired by Zenit, such that the respective shareholdings
do not change. Özaltin are now seeking Ministerial approval for the transaction, and the Company also intends to seek approval from
Shareholders for the transaction as soon as practically possible.
26. Capital management policies and procedures
The Group’s capital management objectives are:
• To ensure the Group’s ability to continue as a going concern;
• To increase the value of the assets of the business; and
• To provide an adequate return to shareholders in the future when exploration assets are taken into production.
These objectives will be achieved by identifying the right exploration projects, adding value to these projects and ultimately taking them
through to production and cash flow, either with partners or by our own means.
The Group monitors capital on the basis of the carrying amount of equity, cash and cash equivalents as presented on the face of the
consolidated statement of financial position. Movements in capital for the year under review are summarised in Note 18 and in the
consolidated statement of changes in equity.
The Group manages its capital structure in response to changes in economic conditions and in accordance with the Group’s objective to
finance additional work on existing and new projects to enhance their overall value.
In the normal course of its operations, the Group and Company are exposed to gold prices, currency, interest rate and liquidity risk.
The Group and Company use financial instruments, other than derivatives, comprising short term deposits, cash, liquid resources and
various items such as sundry debtors and creditors that arise directly from its operations. The main purpose of these financial instruments
is to finance the Group’s operations.
The main risks arising from the Group’s and Company’s financial instruments are liquidity and currency differences on foreign currency net
investments. The Directors review and agree policies for managing these risks and these are summarised below.
Liquidity risk
Liquidity risk is the risk that the Group and Company will not be able to meet their financial obligations as they fall due.
The Group and Company seek to manage financial risk to ensure sufficient liquidity is available to meet foreseeable needs and to invest
cash assets safely and profitably. The Board will seek additional funds from the issue of share capital where appropriate, by reviewing
financial and operational budgets and forecasts. The Group and Company’s financial liabilities, including interest bearing liabilities and
trade and other payables will all be settled within six months of the year end with the exception of the contingent consideration payable
which is not expected to become payable for a period beyond 5 years.
6 9
ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019FINANCIAL REPORT 2018
£’000
-
9,749
9,749
2018
£’000
9,735
14
-
2019
£’000
9,042
-
-
9,042
9,749
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2019
26. Capital management policies and procedures continued
Credit risk
Credit risk is the risk of financial loss to the Group and Company if a customer or counterparty to a financial instrument fails to meet its
contractual obligations. The Group and Company have borrowings outstanding from its subsidiaries and joint ventures, the ultimate
realisation of which depends on the successful exploration and realisation of the Group’s intangible exploration assets:
Trade and other receivables (current and excluding prepayments)
Trade and other receivables (non-current)
Group
Company
2019
£’000
3,981
93
4,074
2018
£’000
1,844
83
1,927
2019
£’000
534
8,508
9,042
The concentration of credit risk for trade and other receivables at the balance sheet date by geographic region was:
Group
Company
United Kingdom
Turkey
Other
Market risk
2019
£’000
520
3,552
2
4,074
2018
£’000
386
1,539
2
1,927
Foreign exchange risk arises due to the Group’s and Company’s primary operations being in Turkey. The Group and Company have a
general policy of not hedging against its exposure of foreign investments in foreign currencies. The Group and Company are exposed to
translation and transaction foreign exchange risks and take profits or losses on these as they arise.
GBP
Turkish Lira
Other
Total
Group
Cash and cash equivalents
Trade and other receivables
Available for sale financial assets
Trade and other payables
Other financial liabilities
2019
£’000
2018
£’000
48
1,113
-
241
1,651
56
400
-
206
1,651
2019
£’000
157
3,459
-
70
-
2018
£’000
812
1,458
-
29
-
2019
£’000
248
2
-
7
-
2018
£’000
70
2
35
14
-
2019
£’000
453
4,574
-
318
1,651
2018
£’000
938
1,860
35
249
1,651
GBP
Turkish Lira
Other
Total
Company
2019
£’000
2018
£’000
2019
£’000
2018
£’000
2019
£’000
2018
£’000
2019
£’000
2018
£’000
Cash and cash equivalents
-
-
Trade and other receivables
9,042
9,735
Available for sale financial assets
Trade and other payables
Other financial liabilities
-
6
-
-
6
-
-
-
-
-
-
-
14
-
-
-
-
-
-
-
-
-
-
35
-
-
-
-
9,042
9,749
-
6
-
35
6
-
7 0
FINANCIAL REPORTARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019 26. Capital management policies and procedures continued
Sensitivity analysis
Foreign exchange risk arises due to the Group’s and Company’s primary operations being in Turkey.
A 10% strengthening/weakening of Turkish Lira against the Sterling at the reporting date would have increased/decreased net assets by
£1,020,000. This calculation assumes that the change occurred at the balance sheet date and had been applied to risk exposures existing
at that date.
Market risk - Borrowing facilities and interest rate risk
The Group and Company finances its operations primarily through its share of profits from its joint venture investment, and the issue of equity
share capital to ensure sufficient cash resources are maintained to meet short-term liabilities and future project development requirements.
Cash deposits are kept under regular review, with reference to future expenditure requirements and to maximise interest receivable.
Sensitivity analysis
(a) The Group and Company have limited exposure to changes to interest rates both locally and in Turkey since the interest accruing on
bank deposits was relatively immaterial.
(b) The Group and Company have no interest rate exposure on the loan finance provided during the year as the amounts owed by Group
undertakings are interest free.
Market risk – Equity price risk
The Group and Company’s exposure to equity price risk arises from its investment in equity securities ceased during the year following the
disposal of its remaining investment as set out in note 13.
Fair values of financial instruments
The fair value of a financial instrument is defined as 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. Where applicable, further information about the assumptions
made in determining fair values is disclosed in the notes specific to that asset or liability.
Set out below is a comparison by category of carrying amounts and fair values of all the Group’s financial instruments:
Carrying Amount
Fair Value
2019
£’000
2019
£’000
2018
£’000
2018
£’000
2019
£’000
2019
£’000
2018
£’000
2018
£’000
Group Company
Group Company
Group Company
Group Company
Financial assets
Cash and cash equivalents
Financial assets at FVOCI – Level 1
Loans and receivables
453
-
-
-
938
35
-
35
453
-
-
-
938
35
Trade and other receivables (current)
4,574
534
1,860
-
4,574
534
1,860
-
35
-
Trade and other receivables (non-current)
93
8,508
83
9,749
93
8,508
83
9,749
Financial liabilities measured at
amortised cost
Trade and other payables
Other financial liabilities (non-current)
(318)
(1,651)
(6)
-
(249)
(1,651)
(6)
-
(318)
(1,651)
(6)
-
(249)
(1,651)
(6)
-
7 1
ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019FINANCIAL REPORT Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2019
26. Capital management policies and procedures continued
The fair value of trade and other receivables is estimated as the present value of future cash flows discounted at the market rate of
interest at the reporting date. For receivables and payables with a remaining life of less than one year, the notional amount is deemed to
reflect fair value. All other receivables and payables are, where material, discounted to determine the fair value.
When measuring the fair value of an asset or a liability, the Group and Company uses observable market data as far as possible. Fair values
are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices).
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Differences arising between the carrying amount and fair value are considered not significant to adjust for in these accounts. The carrying
amount and fair value of intercompany balances are the same as if they are repayable on demand.
7 2
FINANCIAL REPORTARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019 Please note that this document is important and requires your immediate attention.
If you are in any doubt as to the action to be taken, please consult an independent adviser immediately. If you have sold or transferred
or otherwise intend to sell or transfer all of your holding of ordinary shares in the Company prior to the record date (as described in Note
12) for the Annual General Meeting of the Company on 28 August 2020 12:00 noon, you should send this document, together with the
accompanying Form of Proxy, to the (intended) purchaser or transferee or to the stockbroker, bank or other agent through whom the sale
or transfer was or is to be effected for transmission to the (intended) purchaser or transferee. If you have sold some only of your ordinary
shares then please retain this document.
COVID-19 – IMPORTANT – PLEASE READ
The Board takes its responsibility to safeguard the health of its shareholders, stakeholders and employees very seriously and so the
following measures will be put in place for the AGM in response to the COVID-19 pandemic and the current social distancing measures
being implemented by the Government in the United Kingdom, which may continue until after the date of the AGM.
The formal business of the Annual General Meeting (AGM) will only be to consider and vote upon the resolutions set out in the notice
of meeting. The holding of the AGM will be kept under review in line with Public Health England guidance. However, based on current
measures implemented by the Government in the United Kingdom SHAREHOLDERS WILL NOT BE ADMITTED TO THE PHYSICAL
MEETING AND ARE THEREFORE ADVISED NOT TO TRAVEL TO THE AGM. It is intended that the meeting will be held with the minimum
number of shareholders and directors present required to form a quorum as per the Company’s Articles of Association. The Company is
taking these precautionary measures to safeguard its shareholders’, stakeholders’ and employees’ health and make the AGM as safe and
efficient as possible.
SHAREHOLDERS WISHING TO VOTE ON ANY OF THE MATTERS OF BUSINESS ARE STRONGLY URGED TO DO SO THROUGH
COMPLETION OF A FORM OF PROXY which must be completed and submitted in accordance with the instructions thereon. It is
emphasised that any forms of proxy being returned via a postal service should be submitted as soon as possible to allow for any delays
to or suspensions of postal services in the United Kingdom as a result of measures being implemented by the Government of the United
Kingdom. Shareholders wishing to vote on any matters of business are strongly urged to do so through registering their proxy
appointment and voting by proxy online and to appoint the Chairman of the Meeting as your proxy. This will enable the Chairman
of the Meeting to vote on your behalf, and in accordance with your instructions, at the AGM.
In line with corporate governance best practice and in order that any proxy votes of those shareholders who are not allowed to attend and
to vote in person are fully reflected in the voting on the resolutions, the Chairman of the meeting will direct that voting on all resolutions
set out in the notice of meeting will take place by way of a poll. The final poll vote on each resolution will be published immediately after
the AGM on the Company’s website.
Further information on voting procedures follows the resolutions below. Queries regarding these procedures may be directed to the
Company’s registrars, Computershare Investor Services plc, The Pavilions, Bridgewater Road, Bristol BS99 6ZY (+44 (0) 370 889 3196).
7 3
ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019FINANCIAL REPORT Notice of the 2020 Annual General Meeting of
Ariana Resources PLC
Company Number: 05403426
Notice is hereby given that the Annual General Meeting of Ariana Resources PLC (the “Company”) will be held at the 2nd Floor, Regis
House, 45 King William Street, London, EC4R 9AN on 28 August 2020 at 12.00 noon in order to consider and, if thought fit, pass
resolutions 1 to 6 as Ordinary Resolutions and Resolutions 7 and 8 as a Special Resolutions:
Ordinary resolutions
1. To receive the Annual Report and Accounts for the year ended 31 December 2019.
2. To re-elect Chris Sangster who is retiring pursuant to Article 27.1.2 of the Articles of Association as a Director of the Company.
3. To re-elect Dr Kerim Sener who is retiring pursuant to Article 27.1.2 of the Articles of Association as a Director of the Company
4. To re-elect William Payne who is retiring pursuant to Article 27.1.3 of the Articles of Association as a Director of the Company.
5. To re-appoint PKF Littlejohn LLP as auditors and to authorise the Directors to fix their remuneration.
6. That the directors be generally and unconditionally authorised to allot Relevant Securities (as defined in the notes to this Notice) up to a
maximum nominal amount of £500,000 comprising:
a.
equity securities (as defined by section 560 of the Companies Act 2016) of ordinary shares of 0.1p each in the capital of the Company
(“Ordinary Shares”) up to an aggregate nominal amount of £250,000 in connection with an offer by way of a rights issue:
i.
ii.
to holders of Ordinary Shares in proportion (as nearly as may be practicable) to their respective holdings; and
to holders of other equity securities as required by the rights of those securities or as the directors otherwise consider necessary,
but subject to such exclusions or other arrangements as the directors may deem necessary or expedient in relation to treasury
shares, fractional entitlements, record dates, legal or practical problems in or under the laws of any territory or the requirements
of any regulatory body or stock exchange; and
b.
in any other case, up to an aggregate nominal amount of £250,000.
Provided that this authority shall, unless renewed, varied or revoked by the Company, expire on the date which is 15 months after the date
on which this resolution is passed or, if earlier, the date of the next annual general meeting of the Company save that the Company may,
before such expiry, make offers or agreements which would or might require Relevant Securities to be allotted and the directors may allot
Relevant Securities in pursuance of such offer or agreement notwithstanding that the authority conferred by this resolution has expired.
This resolution revokes and replaces all unexercised authorities previously granted to the directors to allot Relevant Securities but without
prejudice to any allotment of shares or grant of rights already made, offered or agreed to be made pursuant to such authorities.
Special resolutions
7. That, subject to the passing of Resolution 6 the Directors be given the general power to allot equity securities (as defined by Section 560 of
the 2006 Act) for cash, either pursuant to the authority conferred by Resolution 6 or by way of a sale of treasury shares, as if Section 561(1)
of the 2006 Act did not apply to any such allotment, provided that this power shall be limited to:
a.
the allotment of equity securities in connection with an offer by way of a rights issue:
i.
ii.
to the holders of ordinary shares in proportion (as nearly as may be practicable) to their respective holdings; and
to holders of other equity securities as required by the rights of those securities or as the Directors otherwise consider necessary,
but subject to such exclusions or other arrangements as the Board may deem necessary or expedient in relation to treasury
shares, fractional entitlements, record dates, legal or practical problems in or under the laws of any territory or the requirements
of any regulatory body or stock exchange; and
b.
the allotment (otherwise than pursuant to paragraph 6a above) of equity securities up to an aggregate nominal amount of £250,000.
The power granted by this resolution will unless renewed, varied or revoked by the Company, expire at the conclusion of the next Annual
General Meeting of the Company following the date of the passing of this resolution or (if earlier) 15 months from the date of passing this
resolution, save that the Company may, before such expiry make offers or agreements which would or might require equity securities to be
allotted after such expiry and the Directors may allot equity securities in pursuance of any such offer or agreement notwithstanding that the
power conferred by this resolution has expired.
This resolution revokes and replaces all unexercised powers previously granted to the Directors to allot equity securities as if section 561(1)
of the 2006 Act did not apply, but without prejudice to any allotment of equity securities already made or agreed to be made pursuant to
such authorities.
8. That the Company’s Articles of Association be replaced in their entirety with the draft new Articles of Association which have been uploaded
to the Company’s website at https://arianaresources.com/investors/aim-rule-26.
By Order of the Board dated
27 July 2020.
7 4
FINANCIAL REPORTARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019
Notes:
1.
The notes in connection with the appointment of a proxy must be read subject to the overriding circumstances concerning attendance at
the AGM as dictated by the COVID-19 pandemic, and described on page 73 of the annual report, which you are urged to read.
2.
3.
As a member of the Company you are entitled to appoint a proxy to exercise all or any of your rights to attend, speak and vote at a general
meeting of the Company. You can only appoint a proxy using the procedures set out in these notes.
A proxy does not need to be a member of the Company but must attend the meeting to represent you. To appoint as your proxy a person
other than the Chairman of the meeting, insert their full name in the box. If you sign and return this proxy form with no name inserted
in the box, the Chairman of the meeting will be deemed to be your proxy. Where you appoint as your proxy someone other than the
Chairman, you are responsible for ensuring that they attend the meeting and are aware of your voting intentions. If you wish your proxy to
make any comments on your behalf, you will need to appoint someone other than the Chairman and give them the relevant instructions
directly. Shareholders are reminded of the COVID 19 restrictions.
4. You may not appoint more than one proxy to exercise rights attached to any one share.
5.
6.
7.
8.
9.
10.
11.
12.
To direct your proxy how to vote on the resolutions mark the appropriate box with an ‘X’. To abstain from voting on a resolution, select the
relevant “Vote withheld” box. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes
for or against the resolution. If you give no voting indication, your proxy will vote or abstain from voting at his or her discretion. Your proxy
will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the meeting.
To appoint a proxy you must ensure that the attached proxy form is completed, signed and sent to Computershare Investor Services PLC,
The Pavilions, Bridgwater Road, Bristol BS99 6ZY by no later than 12 noon on 26 August 2020.
In the case of a member which is a company, the Form of Proxy must be executed under its common seal or signed on its behalf by an
officer of the company or an attorney for the company.
Any power of attorney or any other authority under which this proxy form is signed (or a duly certified copy of such power or authority)
must be included with the proxy form.
In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the
most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the Company’s
register of members in respect of the joint holding (the first-named being the most senior).
If you submit more than one valid proxy appointment, the appointment received last before the latest time for the receipt of proxies will
take precedence. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may
do so for the meeting (and any adjournment of the meeting) by following the procedures described in the CREST Manual available on the
website of Euroclear UK and Ireland Limited (“Euroclear”) at www.euroclear.com. CREST Personal Members or other CREST sponsored
members (and those CREST members who have appointed a voting service provider) should refer to their CREST sponsor or voting service
provider, who will be able to take the appropriate action on their behalf. In order for a proxy appointment or instruction made by means
of CREST to be valid, the appropriate CREST message (a “CREST Proxy Instruction”) must be properly authenticated in accordance
with Euroclear’s specifications and must contain the information required for such instructions, as described in the CREST Manual. The
message (regardless of whether it constitutes the appointment of a proxy or an amendment to the instruction given to a previously
appointed proxy) must, in order to be valid, be transmitted so as to be received by Computershare Investor Services PLC.
You may not use any electronic address provided in this proxy form to communicate with the Company for any purposes other than those
expressly stated.
Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, the time by which a person must be entered on the register of
members in order to have the right to attend and vote at the Annual General Meeting is 6pm on 26 August 2020, (being not more than 48
hours prior to the time fixed for the Meeting) or, if the Meeting is adjourned, such time being not more than 48 hours prior to the time fixed
for the adjourned meeting. Changes to entries on the register of members after that time will be disregarded in determining the right of
any person to attend or vote at the Meeting.
13.
Copies of the proposed new articles are available on the Company’s website by following this link https://arianaresources.com/investors/
aim-rule-26. A hard copy can be made available by calling on or by request in writing to Company Secretary at Ariana Resources plc, 2nd
Floor, Regis House, 45 King William Street, London, EC4R 9AN.
Relevant Securities means:
• Shares in the Company other than shares allotted pursuant to:
• an employee share scheme (as defined by section 1166 of the Act);
• a right to subscribe for shares in the Company where the grant of the right itself constituted a Relevant Security; or
• a right to convert securities into shares in the Company where the grant of the right itself constituted a Relevant Security.
• Any right to subscribe for or to convert any security into shares in the Company other than rights to subscribe for or
convert any security into shares allotted pursuant to an employee share scheme (as defined by section 1166 of the
Act). References to the allotment of Relevant Securities in the resolution include the grant of such rights.
7 5
ARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019FINANCIAL REPORT Advisors
Directors
M J de Villiers
A K Sener
W J B Payne
C J S Sangster
Secretary
M J de Villiers
Registered Office
2nd Floor, Regis House
45 King William Street
London, EC4R 9AN
Registered Number
05403426
Auditors
PKF Littlejohn LLP
15 Westferry Circus, London, E14 4HD
Bankers
HSBC
186 Broadway, Didcot, Oxfordshire, OX11 8RP
Solicitors
Gowling WLG (UK) LLP
4 More London Riverside, London, SE1 2AU, United Kingdom
Joint Broker
Panmure Gordon (UK) Limited
1 New Change, London, EC4M 9AF
Nominated Advisor and Joint Broker
Beaumont Cornish Limited
Bowman House, 29 Wilson Street, London, EC2M 2SJ
Registrars
Computershare Investor Services PLC
The Pavilions, Bridgwater Road, Bristol, BS13 8AE
Public Relations
Yellow Jersey PR
Top Floor, 70-71 Wells Street, London, W1T 3QE
Design & Production by
haywoodsener.com
7 6
FINANCIAL REPORTARIANA RESOURCES PLC - ANNUAL REPORT & ACCOUNTS 2019