Anglo Asian Regulatory News (AAZ)

Anglo Asian Mining plc / Ticker: AAZ / Index: AIM / Sector: Mining

10 May 2012

Anglo Asian Mining plc ('Anglo Asian' or 'the Company')

Gold Recovery Enhancements at Gedabek

Anglo Asian Mining plc, the AIM listed gold producer in Azerbaijan, announces that the Board has decided to construct an agitation leaching plant to improve gold recoveries at its flagship Gedabek gold/copper/silver mine ('Gedabek') in Azerbaijan with a view to commissioning in H2 2013. Gold production for FY 2012 remains on track to achieve 54,000 ounces of gold.

Overview

·; Decision to build agitation leaching plant in line with conclusions from pre-feasibility study completed in January 2012

o Anticipated improved gold recovery rates for oxide and sulphide materials - initially 85% and 69% respectively

o Plant designed to treat 100 tonnes of ore per hour

o Estimated capex US$52 million

·; Recent JORC resource update, indications from 2012 drilling and expectations from imminent JORC reserve update provides both the confidence in future gold production at Gedabek to justify a new agitation leaching plant and the best financial return

·; First plant equipment ordered and expected to arrive on site Q3 2012

·; In discussions with local and international banks regarding funding facilities

·; Submitting business plan to the Government of Azerbaijan for final approval

Anglo Asian's CEO Reza Vazari said, "We have enormous confidence in Gedabek as a long-term producing project and the exciting potential to improve its production profile and in turn life of mine. In conjunction with a recent 50% increase to Gedabek's resource base to over 1 million ounces in the Measured and Indicated classifications, first indications from 2012 drilling and imminent reserve report, we truly believe that the construction of a new agitation leaching plant, which would vastly improve recovery rates at the mine, is a natural development step for the future success of Gedabek as the first gold mine in Azerbaijan in modern times and will provide the best return for shareholders."

Further Information

Gedabek is an open pit mining operation, which currently utilises a conventional heap leach process and a resin adsorption recovery plant. The heap leach process required less capital than the proposed agitation leaching plant to establish. However, heap leaching has limitations with regards to the size of ore being leached (-25mm), which results in gold recoveries of circa 70% with leaching cycles extending up to typically a year depending on the ore mineralogy. In comparison, agitation leaching of milled ore can deliver higher recoveries with the immediate production of gold.

During 2011, Anglo Asian concluded a pre-feasibility study at Gedabek, in conjunction with mining consultants Arcardis Chile, to assess the viability and suitability of building a new agitation leaching plant to improve gold recoveries. The plant, if commissioned, is expected to process high grade ore and additional resources that are not suitable for the current heap leaching processing operation, together with spent ore from the leach heaps to further improve total gold recoveries. Agitation leaching recoveries have been initially estimated at 85% for oxide material and 69% for sulphide material although the Company is carrying out further tests to see if these recoveries can be improved. The new plant will be designed to treat 100 tonnes of ore per hour.

The Company recently reported a 50% increase in Gedabek's JORC-compliant gold resource to 37,111,577 tonnes at 0.884 g/t of gold for 1,054,382 ounces; 0.220% of copper for 81,765 tonnes; and 7.215 g/t of silver for 8,608,551 ounces in the Measured and Indicated classifications at a cut-off grade of 0.3 g/t of gold. This, in tandem with the latest drilling results from 2012 and high expectations from the forthcoming reserve update due to be published in Q2 2012, has given the Board the confidence in future gold production at Gedabek to justify investment in a new agitation leaching plant. 

The equipment associated with the proposed agitation leaching plant includes a jaw crusher, SAG mill, two ball mills, seven agitated leaching tanks, a pump cell carousel for gold adsorption onto resin, a gravity concentration circuit and thickeners for liquid/solid separation. The gold-loaded resin will be treated in the Company's existing facility. The Board of Anglo Asian has so far committed US$4 million to purchasing the first equipment for the proposed plant.

The expected cost of designing, building and commissioning the new plant and its infrastructure is approximately US$52 million and the Company is currently in discussions with local and international banks with regards to securing finance for this capital investment. In 2011, the Company significantly reduced its debt and built its cash position. At 31 December 2011 its net debt, being interest-bearing loans and borrowings less cash and cash equivalents, stood at US$3.2 million (2010: US$25.6 million) and cash in the bank stood at US$9.8 million. 

The Company is submitting the final paperwork to the Government of Azerbaijan to gain final permission for the construction and commissioning of the agitation plant. The Board remains confident that permission will be granted and looks forward to updating on this development in due course.

**ENDS**

For further information please visit www.angloasianmining.com or contact:

Notes:

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.

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.