Anglo Asian Regulatory News (AAZ)

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

8 October 2012

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

Q3 2012 Operations Update - Gedabek Gold/Copper/Silver 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 September 2012 ('Q3 2012') at its flagship Gedabek gold/copper/silver mine ('Gedabek') in Azerbaijan.

Overview

·; Gold production from heap leach processing totalled 14,044 oz at Gedabek for Q3 2012 (Q2 2012: 11,716 oz)

·; Gold sales of 13,111 oz at an average price of US$1,655 per oz completed for the quarter

·; Silver dore production for Q3 2012 totalled 3,168 oz (Q2 2012: 4,504 oz)

·; Ore stacking process continuing to perform well during Q3 2012 - 204,720 tonnes of dry ore transferred onto the leach pad with an average gold content of 2.94g/t

·; Production target for FY 2012 remains at 49,000 - 51,000oz of gold and 26,000 oz silver from heap leach operations

·; US$18 million funding agreed (plus an additional US$42, subject to certain conditions) for new agitation leaching plant to improve gold recoveries of oxides and sulphides at Gedabek to levels of 85% and 69% respectively and lower production costs - commissioning expected in H1 2013

·; Copper, silver and gold production from SART operations for Q3 2012 totalled 132 tonnes of copper concentrate, 23,397 oz of silver and 36 oz of gold

·; US$1.4 million of copper sales completed with Glencore - Glencore is currently conducting test smelting of the concentrate and if successful it is envisaged further sales will be made

·; Target of 720 tonnes of dry copper concentrate expected from SART operations for FY 2012

·; Net Debt, being interest-bearing loans and borrowings less cash and cash equivalents totals US$14.1 million

·; Cash in the bank as at 30 September 2012 - US$4.9 million

Anglo Asian CEO Reza Vaziri said, "I am pleased to report that gold production for the quarter has significantly increased due to further fine tuning of our heap leach stacking operationand improved weather conditions. We expect this trend to continue into Q4 2012 and to achieve our gold production target of between 49,000 - 51,000 oz of gold from Gedabek for FY 2012.

"Our primary objective is to further improve the gold recoveries at Gedabek and continue to unlock the operation's intrinsic value. We have been actively exploring and developing the greater Gedabek area and have to date delineated a JORC reserve base in excess of 700,000 oz of gold and a Measured and Indicated resource base of over 1 million oz of gold, which has increased the life of mine of Gedabek. Furthermore a new agitation leaching plant is being constructed which will have a capacity to treat 100 tph of ore and improve gold recovery of oxides and sulphides at Gedabek initially to 85% and 69% respectively and lower production costs. The plant is expected to be commissioned in H1 2013 and will represent a major milestone in the progressive development of Gedabek's success as a leading gold mine in central Caucasia."

Full Details

During Q3 2012, the Company produced 14,044oz of gold and 3,168oz of silver at Gedabek from its heap leach operations, bringing the total production for nine months to 30 September 2012 to 35,685 oz of gold. The increase in production for Q3 2012 compared with Q1 and Q2 2012 is due mainly to the improved weather conditions. In light of this, the Board maintains its gold production target between 49,000 and 51,000 ounces ('oz') for FY 2012 from its Gedabek operations.

In terms of gold sales completed for the three months to 30 September 2012, Anglo Asian sold 13,111 oz at an average of US$1,655 per oz and for the nine months to 30 September 2012 sold 31,246 oz of gold at an average of US$1,647 per oz for its own account*. 

The following summary table of gold production and prices outlines quarter-on-quarter gold production at Gedabek so far for FY 2012. 

Gedabek's heap leach stacking operation has continued to performed strongly in Q3 2012 with the Company transferring 204,720 tonnes of dry ore onto the leach pad with an average gold content of 2.94 g/t Au (Q2 2012: 194,969 tonnes at 3.24 g/t Au).

During the quarter, Anglo Asian also produced 132 tonnes of copper, 23,397 oz of silver and 36 oz of gold from the Company's Sulphidisation, Acidification, Recycling, and Thickening ('SART') plant (Q2 2012: 105 tonnes of copper, 25,853 oz of silver and 9 oz of gold). During the period the Company shipped and sold US$1.4 million worth 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. The Company's copper concentrate stockpiles now total 787 tonnes of copper, and 176,636 oz of silver and discussions are under way with other parties regarding finding a long-term sales partner.

Anglo Asian is committed to improving the gold recovery efficiency and increasing the production profile of Gedabek. With this in mind the Company has commenced the construction of a new agitation leaching plant that will initially treat 100 tonnes of ore per hour, increasing to 150 tons per hour, which is expected to improve the gold recoveries of both oxide and sulphide ores at Gedabek to levels of 85% and 69%, respectively. As at 30 September 2012, all the process equipment has been ordered and is expected to be delivered and installed by end Q4 2012. The construction of the plant facilities and tailings dam are well under way and are also expected to be completed by the end of Q4 2012.

The plant has an estimated capex of US$52 million and is targeted to be commissioned in H1 2013. The project is currently within budget and on time. During the quarter, the Company secured a further US10.5 million loan from the International Bank of Azerbaijan (IBA), a long-term supporter of Anglo Asian, to help fund the construction of the new plant. In addition Anglo Asian also received a letter of intent from the Bank stating that, subject to internal consideration and approval, it will provide up to an additional US$42 million loan to the Company for the new agitation plant. Including the US$18 million already agreed, (US$12.6 million has been drawn upon to date) this would bring the total funding provided to the Company by the IBA to US$60m. On the funds already committed, an all-inclusive annual interest rate of 12% will apply on funds drawn, payable on a quarterly basis. The loan can be drawn down in tranches of up to US$1,500,000. Repayment will be within 36 months in equal quarterly instalments, starting two years from the date that each tranche of funds is drawn down. There is no penalty for early repayment.

In terms of resource and reserve development, as previously reported in June 2012, Gedabek has 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). This ore reserve report significantly exceeded the Company's previous internal estimate of recoverable ounces of gold at Gedabek and has increased the life of the mine. An extensive 30,000 m drilling programme is underway, of which 17,891 m 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. The Company's net debt position totalled US$14.1 million and the cash in the bank at 30 September 2012 was US$4.9 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.

**ENDS**

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

\* The 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.

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 from 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 is targeted to reach 49-51,000 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.