Last checked at 17 Sep 2009 07:00
Anglo Asian Mining plc / Ticker: AAZ / Index: AIM / Sector: Mining
17 September 2009
Anglo Asian Mining plc ('Anglo Asian' or 'the Company')
Operations Update
Anglo Asian Mining plc, the AIM listed emerging gold producer, provides an operations update at its Gedabek gold/copper mine ('Gedabek') in Azerbaijan, including production analysis and the conclusion of further gold sales during August 2009.
The Company produced 1,409 ounces ('oz') and sold 1,229 oz of gold ('Au') at Gedabek during August 2009. Gold sales were completed at an average of US$977, ahead of the Company's forecast projections. Additionally, 700 oz Au has been produced from 1-8 September 2009 and has now been shipped to the refinery where 546 oz Au has been sold. The Company is now projected to produce 2,200 oz of Au for the month ending 30 September 2009 which is broadly inline with management's expectations. However, due to start-up problems at the processing facility, including the operational consistency of the secondary and tertiary crushers and issues with the leach pad, October 2009 production forecasts of 3,300 oz of Au may be affected.
During August 2009, 34,000 tonnes of dry ore with an average gold content of 4 g/t was crushed and transferred to the leach pad, which was below the forecast of 50,000 tonnes at 3g/t. The Company expect to gradually ramp this up to 60,000 tonnes by November 2009 and will seek to make further increases during 2010.
To deliver lower operational costs, improve the plant's performance and attain production targets of 4,000 oz of Au per month and circa 50,000 oz of Au for the first 12 months of operations, the Company has put a number of initiatives in place. These include the purchase of two cone crushers complete with spare parts, which the Company believes will have significantly superior performance levels than the existing crushers. The two new crushers are expected to be operational by the end of September 2009. Additionally, the stacker is being retrofitted with upgraded key mechanical parts. The retrofitting is due to be completed by mid-October 2009, which will further raise the plant's operational performance.
Anglo Asian is also planning longer-term plant modifications and improvements and is currently in discussions with various major crusher/stacker suppliers in the USA and Europe with a view to expanding production and improving efficiencies. Any future equipment modifications will be installed in parallel to the existing ore handling system.
During the initial development of the mine, it has become evident that in a number of areas the ore has higher grades than forecast by the original ore body model and there are also extensions beyond the predicted final pit boundaries. In fact, the ore which is currently being mined and processed, which to date amounts to 150,000 tonnes at a grade of 3 g/t, was not included in the original reserve estimations. In order to help clarify the situation, management enlisted the help of SGS Mineral Services ('SGS') and, at the end of August 2009, a consultant from SGS visited the mine to review Gedebek's geology and existing drill logs. Subsequently, a re-modelling and a geometallurgical study have been commissioned to create a more accurate ore body model of the Gedabek deposit. The study is due to commence in the first week of October 2009 and it is anticipated that this will result in improved ore reserve estimations and overall gold recoveries in the long term.
As previously stated in the Company's final results statement announced on 23 June 2009 and in a corporate update on 4 August 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 Company to sustain its day to day operations without seeking and relying on further financing. Accordingly, the Company continues to monitor the situation carefully and is working on various contingency plans, including seeking major shareholder support if cash flow is at insufficient levels.
In terms of financing, as previously announced on 4 August 2009, the Company signed a US$1 million unsecured loan agreement with its CEO, Mr. Reza Vaziri, to provide additional working capital. To date Anglo Asian has drawn down $450,000 of the $US1 million loan agreement. Additionally, Mr. Vaziri is owed a further US$434,000 outstanding from the previous unsecured interest free loan agreement with the Company announced on 19 March 2009.
Anglo Asian CEO Reza Vaziri said, "Naturally we were delighted to have moved into production with the opening of the Gedabek gold/copper mine earlier this year; however, the initial start-up of the mine has not been without its difficulties. With this in mind, the next few months will require the management's channelled focus, time and dedication to manage our working capital position and achieve full ramp-up of production at Gedabek, to realise the mine's potential and profit from the opportunity of being the first gold producer 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 |
Notes to Editor:
Anglo Asian Mining plc (AIM: AAZ) is an emerging 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 and is targeted to produce in excess of 300,000 oz gold in the first six years of production.
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.