Anglo Asian Mining PLC Regulatory News (AAZ)

11 Oct 2006 07:00

Anglo Asian Mining PLC11 October 2006 11 October 2006 ANGLO ASIAN MINING PLC ('Anglo Asian' or 'the Company') OPERATIONAL UPDATE Anglo Asian Mining PLC (AIM: AAZ), the gold and copper development company withprojects in Azerbaijan, today issues the following operational update: Gedabek The Company is moving towards feasibility at its Gedabek gold, copper and silverproject in north-west Azerbaijan and a resource estimate is being prepared,following an in-fill drilling programme on 40m x 40m spacing. It is expectedthat this resource estimate will be announced in November 2006 and follows thetwo releases by the Company detailing encouraging results from drilling atGedabek made on 2 June 2006 and 24 August 2006. Early indications show that a high proportion of the resource is amenable toheap leaching and further metallurgical leaching tests are underway at SGSLakefield laboratories in Canada and at Gekko Systems in Australia. Under aheap leaching scenario the Directors estimate that an initial annual productionrate of 50,000 to 70,000 oz of gold with silver and copper credits can beachieved. Heap leaching is a less capital intensive option than the CIL/flotation alternatives, resulting in both a lower capital cost and shorterconstruction period. It is therefore expected that under this option theconstruction could be completed before the end of 2007 allowing production tocommence shortly thereafter. The Company is in the process of commissioning a geophysical survey on the sitein order to establish potential extensions to the ore body. Funding In light of the positive drilling results and the encouraging metallurgical testwork at Gedabek, the Company has decided to direct all financial and humanresources towards this project with minimal focus on other contract areas. TheCompany is working towards early production at Gedabek as its first priority. The Company has put in place a cost reduction programme throughout theorganisation with the aim of ensuring that the current cash resource issufficient to provide funding for the Company through to the end of 2007. It isanticipated that additional funding will be required to cover the capital andworking capital costs for the Gedabek project. Should the heap leach optioncontinue to be the process of choice, the sale of the CIL plant now located inSingapore will provide a significant proportion of the required funding and willalso allow construction to start in early 2007, pending the necessary governmentapprovals. A decision on the plant will be taken when the results of the resource estimateand current metallurgical test-work are completed in November 2006. Gosha Exploration work continues in the adits at the Gosha property, some 50km fromGedabek. The results of the adit sampling carried out to date are consistentwith the Soviet data incorporated in the Company's AIM Admission Document dated26 July 2005 (the 'Admission Document'), which identified an inferred resourceof 424,000 oz gold. Further limited evaluation and sampling of this prospect isplanned over the coming winter months Ordubad In light of the progress made at Gedabek and the prioritisation of earlyproduction at this project, the exploration work in Ordubad will be put on holdand the camp currently located in Ordubad will be relocated to Gedabek. Previous releases on 17 January 2006 and 24 August 2006 detailed the outcome ofthe work carried out to date, which is summarised as follows: The drilling programme at Piyazbashi was completed in March 2006. The resultsof the drilling and adit sampling provided confirmation of gold grade in theveins broadly in line with the Soviet data. An assessment of the resource isstill to be completed. Adit sampling at Shakardara, as announced in January 2006, was disappointing anda brief drilling campaign did not provide any further encouragement. Inaddition, as reported in the same release, the retesting and resampling of grabsamples from the dump outside adit 12 gave two results around 1 gram per tonne('g/t'), in contrast to the significantly higher grades of two grab samplestaken by Behre Dolbear, which were included in table 3.1 of the AdmissionDocument of 14.88 and 33.6 g/t gold. These discrepancies have been the subjectof discussion between the Company and Behre Dolbear, however, the Directors notethat the results of the said grab samples were excluded from Behre Dolbear'sresource estimates and project valuations stated in the Admission Document. TheDirectors and their advisers therefore believe that the information released todate on Shakardara provides an accurate summary of the situation. Further methodical exploration work is planned in due course for the othercontract areas of Ordubad, namely Misdag, Diakahchy, Agyurt and Shalala and theCompany will also complete its assessment of Shakardara. The remainder of theprogramme in Ordubad will be carried out when it is considered appropriate andthe utilisation of cash and human resources will not affect the chances ofsuccess on the Gedabek project. The Company has a minimum of two and a halfyears under the Production Sharing Agreement to complete the exploration work inthis area. Chief Geologist To strengthen the Company's technical management, Mr Kevin Shugg has beenappointed as Chief Geologist. Mr Shugg, an Australian, has extensive experiencein both exploration and mine geology and has previously worked in Central Asia. -Ends- For further details, please contact: Anglo Asian Mining PLC Gordon Lewis, Chief Executive +44 20 7409 3232 Richard Round, Finance Director +44 20 7409 3232 Numis Securities Limited John Harrison +44 20 7776 1590 Parkgreen Communications Victoria Thomas +44 20 7493 3713 This information is provided by RNS The company news service from the London Stock Exchange