Anglo Asian Mining plc ('Anglo Asian' or 'the Company')
Q2 2012 and H1 2012 Operations Update - Gedabek Gold/Copper Mine in Azerbaijan
Anglo Asian Mining plc, the AIM listed gold producer, is pleased to provide an update on operations and production for the three months to 30 June 2012 ('Q2 2012') and the first half of the 2012 financial year ('H1 2012') at its flagship Gedabek gold/copper/silver mine ('Gedabek') in Azerbaijan.
ˇ Gold production from heap leach processing totalled 11,716 oz at Gedabek for Q2 2012 (Q1 2012: 9,925 oz)
ˇ Gold sales of 9,883 oz of gold at an average of US$1,609 per oz completed for the quarter
ˇ Silver dore production for Q2 2012 totalled 4,504 oz (Q1 2012: 7,670 oz)
ˇ Improving ore stacking process - 238,058 tonnes of dry ore transferred during Q2 2012 onto the leach pad with an average gold content of 3.24 g/t
ˇ Copper, silver and gold production from SART operations for Q2 2012 totalled 105 tonnes of copper concentrate, 25,853 oz of silver and 9 oz of gold
ˇ For H1 2012 gold production from heap leach operations totalled 21,641 oz, silver production in dore totalled 12,174 oz and copper metalconcentrateproduction from SART totalled 253 tonnes and silver in SART totalled 60,500 oz
ˇ Sales of gold for H1 2012 totalled 18,135 oz of gold at an average of US$1,644 per oz
ˇ Production target of 54,000 oz of gold and 26,000 oz silver from dore remains for the year to 31 December 2012 from heap leach operations
ˇ Target of 720 tonnes of copper concentrate expected from SART operations
ˇ Maiden JORC compliant reserve estimate of 20,312,879 tonnes at Gedabek at 1.139 g/t gold for 744,038 ounces, 0.293% copper for 59,479 tonnes, and 9.456 g/t silver for 6,175,531 ounces (as at 30 December 2011) - exceeded management's expectations
ˇ Net debt, being interest-bearing loans and borrowings less cash and cash equivalents totals US$11.9 million
ˇ Cash in the bank as at 30 June 2012 - US$3 million
Anglo Asian CEO Reza Vaziri said, "Gold production for Q2 2012 has increased substantially from that of the previous quarter due to increased loading and efficiency of stacking ore onto the leach pad for processing. This trend is expected to continue into H2 2012, and as a result we maintain our target of 54,000 ounces of gold production for FY 2012. Additionally copper concentrate production from our SART operations for FY 2012 is expected to exceed FY2011 and in-turn this should positively impact our bottom line in the future when product sales are made. With many new initiatives underway at Gedabek to increase the production profile, life of mine and economic efficiencies this is a highly active time at the mine and indeed the Company and we look forward to reporting on such developments over the coming months."
During Q2 2012, the Company produced 11,716 oz of gold and 4,504 oz of silver at Gedabek from its heap leach operations, bringing the total production for H1 2012 to 21,641 oz of gold. Due to an unseasonably harsh winter H1 2012 production figures fell marginally below management's internal estimates, however Q3 and Q4 2012 are expected to be stronger in terms of production levels due to revised processing targets. In light of this the Board still maintains its gold production target of 54,000 ounces ('oz') for FY 2012.
In terms of gold sales completed for the three months to 30 June 2012, Anglo Asian sold 9,883 oz at an average of US$1,609 per oz and for H1 2012 sold 18,135 oz* of gold at an average of US$1,644 per oz.
The following summary table of gold production and prices outlines quarter-on-quarter gold production at Gedabek over so far for FY 2012.
Gold Produced (including Govt. of Azerbaijan's share)
Weighted Average Gold Sale Price
31 March 2012
30 June 2012
Total H1 2012
Gedabek's heap leach stacking operation has performed strongly in Q2 2012 with the Company transferring 238,058 tonnes of dry ore onto the leach pad with an average gold content of 3.24 g/t (Q1 2012: 176,438 tonnes of dry ore onto the leach pad with an average gold content of 2.83 g/t Au). As a result of this improvement the Company has increased processing targets which will ensure that the annual budget tonnes of gold and silver dore targeted are achieved.
During the quarter, Anglo Asian also produced 105 tonnes of copper concentrate, 25,853 oz of silver and 9 oz of gold from the Company's Sulphidisation, Acidification, Recycling, and Thickening ('SART') plant (Q1 2012: copper concentrate production contained 148 tonnes of copper, 34,658 oz of silver and 27 oz of gold). In order to reduce the moisture content of the copper concentrate to improve its saleability a dryer was ordered in Q1 2012 which has now been installed. During the period the Company sold 500 wet tonnes of copper concentrate to Glencore International Plc ('Glencore'). Glencore is currently conducting test smelting of the product and if successful it is envisaged further sales will be made in the future. The Company's copper concentrate stockpiles now total 814 tonnes of copper, and 178,000 oz of silver and Anglo Asian is also in discussions with other parties regarding finding a long-term sales partner and will update on this progress in due course.
Increasing Gedabek's production profile, life of mine has remained a priority for Anglo Asian during Q2 2012. In this vein, the Company was delighted to announce a maiden JORC compliant reserve estimate of 20,312,879 tonnes at 1.139 g/t gold for 744,038 ounces, 0.293% copper for 59,479 tonnes, and 9.456 g/t silver for 6,175,531 ounces (as at 30 December 2011) in June 2012. The ore reserve report significantly exceeded the Company's previous internal estimate of recoverable ounces of gold at Gedabek and in turn has increased the life of mine. An extensive 30,000 m drilling programme is underway of which 10,500m has been drilled to date, targeting the extension of the existing mine at Gedabek with the aim of further increasing the mineral reserves and the resource base, which currently stands at over 1 million ounces of gold in the Measured and Indicated categories.
During the quarter the Company also announced its decision to start construction of an agitation plant to further improve gold recoveries at Gedabek (see press release 10 May 2012). The Company committed US$4 million to purchasing the first equipment for the proposed plant during the quarter. The plant which has an estimated CAPEX of US$52 million is expected to be commissioned in H2 2013. With this in mind, the Company agreed a further loan from the International Bank of Azerbaijan ('IBA') for $7.5 million in May 2012 to support its early stage construction.
Under the terms of the loan agreement, an all inclusive annual interest rate of 12% will apply on funds drawn, payable on a quarterly basis. Repayment of the loan will be in 12 equal quarterly instalments starting two years from the date that each tranche of funds is drawn down. There is no penalty for early repayment. The Company is in advanced discussions regarding additional debt funding and will update the market in due course.
The Company has also been committed to maintaining operational efficiency and its cost controls amidst increasing mining activity at Gedabek and implementing new initiatives.
The Company's cash and net debt position totals US$11.9 million and the cash in the bank as at 30 June 2012 stood at US$3 million.
The technical information contained in this announcement and the Updated Ore Reserves Report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Guillermo Turner-Saad of CAE Mining International Ltd. Mr Turner-Saad is a Fellow of The Australasian Institute of Mining and Metallurgy and he has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves' and a 'qualified person' as defined in the Guidance Note for Mining, Oil and Gas Companies, June 2009, of the London Stock Exchange.
he Company has a Production Sharing Agreement ('PSA') in place with the Government of Azerbaijan which governs how the production of each of the Company's Contract Areas under the PSA is divided between the Company and the Government of Azerbaijan. Currently, the Company takes ownership of 87.25% of the production at Gedabek, which accounts for the difference between the total gold produced at Gedabek and the amount of gold sold by the Company. It should also be noted that there will always be short-term timing differences between gold production and sales.
Anglo Asian Mining plc (AIM:AAZ) is a gold producer in Central Asia with a broad portfolio of production and exploration assets in Azerbaijan. The Company has a 1,962 sq km prospective exploration portfolio, assembled on the back of analysis of historic Soviet geological data and held under a Production Sharing Agreement ('PSA') based on the Azeri oil industry. The Company developed Azerbaijan's first operating gold/copper mine, Gedabek, which commenced gold production in May 2009. Gold production for the year ended 31 December 2011 totalled 57,068 oz of gold and it targeted to reach 54,000 oz of gold for FY 2012.
Anglo Asian is actively looking to exploit its first mover advantage in Azerbaijan to identify additional projects, as well as looking for other properties in Central Asia and Caucasia in order to fulfil its expansion ambitions and become a mid-tier gold and base metal production company focussed in these regions.
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