Anglo Asian Mining PLC Regulatory News (AAZ)

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

21 May 2020

Anglo Asian Mining PLC

Strategic Update

Anglo Asian Mining PLC ("Anglo Asian" or the "Company"), the AIM listed gold, copper and silver producer focused in Azerbaijan, is pleased to announce an update of the Company's ongoing growth and exploration strategy. The Company's strategy is focused on three key objectives:

1 Prioritising discoveries identified by current exploration to increase production and mine life

2 Long term upside potential of existing concessions

3 Evaluating other opportunities, both within and outside Azerbaijan

Significant work has already been carried out on each of these objectives.

Highlights

Prioritising discoveries identified by current exploration to increase production and mine life

· The Company is now focused on five discoveries which can be fast tracked into production

· Gold and copper mineralisation exist on or near the surface for each discovery giving good potential for mine development - production anticipated from 2022 onwards

· Development programmes completed for the five discoveries as follows:

o Avshancli 1 and Avshancli 3

§ Located in the north-east sector of Gedabek, 6.5 kilometres from existing processing facilities

§ Potential for open pit mines producing gold-rich ore for leaching and copper-rich ore for flotation, with production potentially commencing in 2022

o Gilar

§ Located in the north-east sector of Gedabek close to Avshancli

§ Gold in quartz on surface with underlying copper

§ Open pit mine anticipated, but further exploration required before exploitation, with potential production in 2023

o Ugur Deeps

§ Located close to the south-east flank of the Ugur mine

§ Potential underground mine with portal access from the valley - existing infrastructure and road access of the Ugur mine will facilitate development.

§ Potential production from 2023

o Zefer Cell 9

§ Located 600 metres west of the leach pad processing facility

§ Very favourable geology on the mineralisation trend of the existing open pit mine with production possible from 2024

Long term upside potential of existing concessions

· Gedabek is highly prospective with the potential to host a large porphyry system

o Porphyry evaluation is planned for three years from 2021 to identify a mineral deposit suitable for mine development by 2024

o A porphyry ore body could potentially provide sufficient ore to extend production into at least the mid-2030s

· Several regional exploration targets have been identified at Gosha

o Asrikchay is high-grade poly-metallic occurrence and the mineralisation continues to be assessed

o A new geological map of the Gosha contract area has been completed to better target future work

· Ordubad has significant potential to provide resources for future production

o A targeted programme is underway to evaluate the highest priority assets and to assess when they could be developed and brought into production

· There is also the expectation of extending the life of existing mines at both Gedabek and Gosha by near-mine exploration

Evaluating other opportunities, both within and outside Azerbaijan

· The Company will also consider any suitable opportunities, both inside and outside Azerbaijan, which it believes will enhance shareholder value

JORC Resource and Reserves of existing mines

· Near-mine exploration to prolong the lives of the existing mines continues at Gedabek and Gosha. A JORC Code (2012) update of the resources and reserves for all three currently producing mines at Gedabek is underway, with completion expected during the third quarter of 2020.

Stephen Westhead, Director of Geology and Mining, commented: "The Company has a very strong portfolio of exploration assets that can be fast tracked into production, provided they are demonstrated to be of sufficient size. The evaluation process includes preliminary exploration, detailed exploration including drilling to provide data for resource estimation, metallurgical test-work and financial assessments for reserve estimation and mine design.

"The Company has previously demonstrated its ability to rapidly develop mineral discoveries into both open pit and underground mines. The schedules below assume that assay results yield mineable grades and the work proceeds to the planned timeline.

"The geology and mining teams continue to work with enthusiasm to progress the development pipeline and bring exploration targets to production from both within its current project portfolio and through new opportunities."

Reza Vaziri, CEO, commented: "I am delighted to present this strategic update detailing our exploration and growth strategy, which clearly demonstrates the considerable potential for extending mine life and increasing production from our existing assets.

"The five new exploration discoveries now prioritised for development have the potential to significantly increase the production and mine life of the Company. Each project has gold and copper mineralisation at, or near, surface. We have developed extensive work programmes for each of these projects and this work will be a key focus for the Company in the near to medium term.

"Gedabek also has exceptional potential to host a porphyry system which, if proven, could provide tens of millions of tonnes of ore and increase mine life through to the mid 2030s and beyond. This is something we intend to focus on from 2021 onwards.

"This current plan demonstrates our confidence in the abundant resource base of the Company, which we believe will continue to generate significant shareholder value."

Prioritising discoveries identified by current exploration to increase production and mine life

The Company's exploration work has predominately been concentrated on the 300 square kilometre Gedebek Contract Area. Based on current exploration data, the Company has decided to prioritise five discoveries and work plans have been completed to commercially exploit these projects which are Avshancli 1, Avshancli 3, Gilar, Ugur Deeps and Zefer Cell 9.

Avshancli 1 and Avshancli 3

The Avshancli area, located in the north-east sector of the Gedabek Contract Area, 6.5 kilometres from the Company's main processing facilities, is a potentially significant mineral district. The ground topography is suited for road construction to haul ore back to the existing processing plant. Alternately, if justified by the size of the mineral occurrences, additional processing facilities could be constructed proximate to the mines.

Avshancli 1 is gold-rich with significant gold grades on surface and at depth. An open pit concept, similar to the Ugur mine, producing ore for leaching is envisaged. Avshancli 3 is copper- rich and is considered a potential source of copper-rich ore for flotation. Exploration to determine the size of the potential deposits will take until the end of 2020 and, if successful, likely open pit mine construction will begin next year, with production potentially starting in 2022.

Gilar

Gilar is also located in the north-east sector of the Gedabek Contract Area near Avshancli 1. Gold has been found at surface hosted in a quartz vein deposit. Exploration to determine the continuity of the mineralisation and size of the deposit is planned between now and the end of 2021 with mine construction potentially taking place in 2022 and production commencing in 2023.

Ugur Deeps

This area is several hundred metres from the south-east flanks of the existing Ugur open pit. Drilling continues to provide significant copper mineralisation with grades of up to 2.5 per cent. copper encountered over significant widths up to 25 metres at depths of about 350 metres. This project will benefit from its proximity to the existing mining infrastructure at Ugur and the ground topography which would allow for adit and ramp access to the mineralisation. Exploration will continue in 2020 and 2021, with potential underground mine construction in 2022 and production commencing in 2023.

Zefer Cell 9 ("Zefer")

Zefer is located approximately 600 metres west of the leach pad processing facility. It lies on the trend of mineralisation from the main Gedabek open pit. Exploration of this area is likely to take longer due to the depth of drilling from the surface, with production possibly commencing in 2025.

High-level work programmes and budgets have been developed for each of the above five targets. These plans allow for mineral zone definition, exploration activity to develop resources, metallurgical test work and other studies for conversion of resources to reserves, culminating in a mine construction commencement date estimate.

Anticipated time to bring new discoveries into production

The anticipated time to bring these new discoveries into production is as follows:

Extending life of existing mines through near mine development

Current near-mine exploration has identified further mineable extensions to our existing mines. The anticipated time to bring these discoveries into production is as follows:

Long Term Upside Potential of existing concessions

Gedebek

Gedabek is highly prospective for porphyry style mineralisation, a view which is shared by the world class geologists in the From Arc Magmas to Ores ('FAMOS') research team from the Natural History Museum ("NHM") of London, who visited Gedabek in November 2019.

The evaluation of a large porphyry deposit can take many years and hence current exploration at Gedabek is concentrated on deposits which can be fast-tracked into production. The porphyry evaluation will start later and is currently planned to commence in 2021.

Gosha

Several regional exploration targets have been identified at Gosha. One of these, Asrikchay, which has provided high-grade polymetallic mineralisation in a drilled intersection, continues to be assessed. A new geological map of the Gosha contract area has been compiled to better target future work.

Ordubad

Although no specific mineral deposit target has yet been prioritised for production in the Ordubad contract area, the region is considered very prospective, hosting a large number of gold and copper mineral deposits.

The current geological model being tested is that of the possibility of a large porphyry system. This is supported by the presence of operating porphyry mines in adjacent countries hosted within the same mineral belt. The NHM team, following their visit to Ordubad last year, stated that the potential indicators suggest that the geochemistry of the region is favourable for porphyry formations. Drilling conducted last year at a number of existing and new targets at Ordubad returned very good gold and copper grades.

A targeted programme to evaluate the highest priority assets to commence production in Ordubad will be the next stage of development.

Evaluating Other Opportunities

Anglo Asian Mining is assessing opportunities to further expand in both Azerbaijan and other countries. These projects are assessed together with the production capacity of the Company's existing mines and development options.

Competent Person Statement

The information in the announcement that relates to exploration results, minerals resources and ore reserves is based on information compiled by Dr Stephen Westhead, who is a full-time employee of Anglo Asian Mining with the position of Director of Geology & Mining, and who is a Fellow of The Geological Society of London, a Chartered Geologist, Fellow of the Society of Economic Geologists, Member of The Institute of Materials, Minerals and Mining and a Member of the Institute of Directors.

 Stephen Westhead has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Stephen Westhead consents to the inclusion in the announcement of the matters based on his information in the form and context in which it appears.

Stephen Westhead has sufficient experience, relevant to the style of mineralisation and type of deposit under consideration and to the activity that he is undertaking, to qualify as a "competent person" as defined by the AIM rules. Stephen Westhead has reviewed the resources and reserves included in this announcement.

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

**ENDS**

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Notes:

Anglo Asian Mining plc (AIM:AAZ) is a gold, copper and silver producer in Central Asia with a broad portfolio of production and exploration assets in Azerbaijan. The Company has a 1,962 square kilometre portfolio, assembled from analysis of historic Soviet geological data and held under a Production Sharing Agreement modelled on the Azeri oil industry.

The Company's main operating location is the Gedabek contract area ("Gedabek") which is a 300 square kilometre area in the Lesser Caucasus mountains in western Azerbaijan. The Company developed Azerbaijan's first operating gold/copper/silver mine at Gedabek which commenced gold production in May 2009. Mining at Gedabek was initially from its main open pit which is an open cast mine with a series of interconnected pits. The Company also operates the high grade Gadir underground mine which is co-located at the Gedabek site. In September 2017, production commenced at the Ugur open pit mine, a recently discovered gold ore deposit at Gedabek. The Company has a second underground mine, Gosha, which is 50 kilometres from Gedabek. Ore mined at Gosha is processed at Anglo Asian's Gedabek plant.

The Company produced 81,399 gold equivalent ounces ("GEOs") for the year ended 31 December 2019. Gedabek is a polymetallic ore deposit that has gold together with significant concentrations of copper in the main open pit mine, and an oxide gold-rich zone at Ugur. The Company therefore employs a series of flexible processing routes to optimise metal recoveries and efficiencies. The Company produces gold doré through agitation and heap leaching operations, copper concentrate from its Sulphidisation, Acidification, Recycling, and Thickening (SART) plant and also a copper and precious metal concentrate from its flotation plant.

The Company has a production target for the year to 31 December 2020 of 65,000 ounces to 67,000 ounces of gold and 2,200 tonnes to 2,400 tonnes of copper. This total production target expressed as gold equivalent ounces ("GEOs") at budgeted metal prices is between 75,000 GEOs and 80,000 GEOS.

Anglo Asian is also actively seeking to exploit its first mover advantage in Azerbaijan to identify additional projects, as well as looking for other properties elsewhere in order to fulfil its expansion ambitions and become a mid-tier gold and copper metal production company.