Last checked at 4 Aug 2009 13:00
Anglo Asian Mining plc / Ticker: AAZ / Index: AIM / Sector: Mining
4 August 2009
Anglo Asian Mining plc ('Anglo Asian' or 'the Company')
Corporate Update
Anglo Asian Mining plc, the AIM listed emerging gold producer, announces its first sale of gold ('Au'), in July 2009, as well as an update on operations and production forecasts at its Gedabek gold/copper mine ('Gedabek') in Azerbaijan. Additionally, the Company announces that it has agreed further financing of US$6.5 million with the International Bank of Azerbaijan ('the IBA') to provide working capital through the early period of Gedabek's operations.
The open pit, heap leach operation at Gedabek, which poured its first gold and silver in May 2009, is in operation and tuning its processes. Anglo Asian has refined 795oz of Au, of which 630oz has been sold to the account of the Company and circa 64oz will be sold shortly on completion of the assay results. However, the Company has been working through certain start-up problems at the processing facility, including the need to improve the leach pad area, to address some technical and geological issues which were identified in the start-up phase. This is likely to adversely impact the speed of ramp-up. As such, production for the first 12 months of operation is now targeted to be circa 50,000 oz Au, which is below the management's initial forecast of 70,000 oz Au.
In order to help address the working capital constraints caused by this delay in ramp-up, the Company has signed a further loan agreement ('the Agreement') with the IBA for US$6.5 million. The proceeds of this facility have been received by Anglo Asian and used to settle certain outstanding interest payments, trade creditors and other working capital commitments. Under the terms of the Agreement, an all inclusive annual interest rate of 15% will apply on funds drawn. Repayment is scheduled in 13 instalments of US$500,000 with the first instalment due in June 2010 and then every three months until June 2013. There is no penalty for early repayment. The Agreement is in addition to two other loan agreements with the IBA totalling US$34.4 million, which will be repaid from cash generated from production at Gedabek.
Anglo Asian is also in the process of negotiating a further loan with its CEO and largest shareholder, Mr. Reza Vaziri. The documentation in respect of this loan is at an advanced stage and both parties anticipate signing a binding agreement shortly. A further announcement will be made at that stage.
As previously stated in the Company's announcement of its final results on 23 June 2009, should operating costs increase significantly, ramp-up be delayed further or revenues otherwise fall short of expectations, there may be insufficient cash flows for the Group to sustain its day to day operations without seeking and relying on further financing.
Anglo Asian CEO Reza Vaziri said, "We are delighted to have completed our first gold sale and look forward to a buoyant gold market and the anticipated low cost production at Gedabek delivering healthy margins for the Company. While the next few months will require much effort to manage our working capital position, it is our intention to develop additional resources within the Gedabek Contract Area and extend the initial six year mine life to realise the mine's economic potential.
"This progress could not have been achieved without the support of the IBA so I would like to take this opportunity to thank it for its continued commitment to the Company as we cement our position as the only producing gold miner in Azerbaijan."
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For further information please visit www.aamining.com or contact:
| Reza Vaziri | Anglo Asian Mining plc | Tel: +994 12 596 3350 |
| Andrew Herbert | Anglo Asian Mining plc | Tel: +994 12 596 3350 |
| John Harrison | Numis Securities Limited, as Nominated Adviser | Tel: +44 (0) 20 7260 1000 |
| James Black | Numis Securities Limited, as Corporate Broker | Tel: +44 (0) 20 7260 1000 |
| Hugo de Salis | St Brides Media & Finance Ltd | Tel: +44 (0) 20 7236 1177 |
| Felicity Edwards | St Brides Media & Finance Ltd | Tel: +44 (0) 20 7236 1177 |