Anglo Asian Regulatory News (AAZ)

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

24 July 2017

Anglo Asian Mining plc

Ugur Gold Deposit Development and Gedabek Exploration Update

Anglo Asian Mining plc ("Anglo Asian" or the "Company"), the AIM listed gold, copper and silver producer, is pleased to announce an exploration and development update for the Ugur gold deposit ("Ugur" or the "Ugur deposit") located at the Company's Gedabek licence area ("Gedabek Licence") in Western Azerbaijan, together with an exploration update on the wider Gedabek Licence.

Ugur development highlights

· Development at Ugur progressing on schedule for first production in Q4 2017

· Core and reverse circulation ("RC") drilling and assaying completed to enable an independent JORC classified Resource and Reserve report expected in Q3 2017

· A preliminary sectional estimate of Azeri classified reserves by the Company shows approximately 195,000 ounces of in-situ gold*

· Completed drilling expands the total resource at the Gedabek Licence, providing significant potential upside to the Company's future gold production

· Geotechnical studies show no issues with the competency of the rock and independent environmental impact assessments have been completed

· Condemnation drilling prior to final siting of surface infrastructure expected to be completed by end of July 2017

· Good progress made with the road between the Ugur deposit and the Company's processing facilities

· Top soil pre-strip and storage planned for late Q3 2017

* note this is not a JORC compliant reserve or resource

Other Gedabek exploration highlights

• Further exploration in the main Gedabek open pit mine underway with 61 RC and two core drill-holes completed

• 216 metres of a planned 465 metres tunnel between the Gadir underground mine and the down dip extension of the main Gedabek open pit now completed

Anglo Asian CEO, Reza Vaziri, said "Anglo Asian will have progressed from making our first exploratory drill-hole of the Ugur deposit to producing ore from an open pit mine in little over one year. This is a testament to the speed at which the Company can react when presented with value accretive opportunities.

"Production flexibility, expansion and opportunity are resulting from the development of the Ugur gold deposit together with the exploration and optimisation of other deposits in the Gedabek contract area. The resultant production profile will allow a timeframe for expanded exploration and evaluation of other mineralisation indicators for future growth."

Anglo Asian Group Director of Geology & Mining, Stephen Westhead, said "The Ugur deposit clearly demonstrates Anglo Asian's ability to rapidly progress projects from exploration to reserves and, if viable, into production. The first Ugur drill hole was completed in September 2016 and we are planning to commence mining in Q4 2017. Our geology and mining team has maximised the opportunity of very good exploration potential of possible ore deposits close to the Company's existing extraction and processing facilities. This provides significant benefit to Anglo Asian by increasing reserves for future production, as well as for replacement of gold ounces previously mined.

"Ugur is likely to provide the Company with an easily mineable, 50-metre-deep gold oxide ore body containing an in-house estimate of approximately 195,000 ounces of in-situ gold, which is highly amenable to agitation and heap leach processing."

Ugur Gold Deposit Exploration and Development Update

Discovery and development

Anglo Asian's in-house exploration team defined a new mineral occurrence in 2016 named "Ugur" (meaning "good luck" or "success" in the Azeri language) from geological mapping. Ugur is located three kilometres north-west from the Company's processing facilities at its Gedabek Licence. Since the discovery of Ugur, the Company has been extensively exploring the deposit to define its resource and reserves and constructing the required infrastructure, including road access between the Ugur deposit and the Company's processing facilities, to enable mining to commence. Pre-stripping of the top soil is planned to commence in late July 2017 with mining by conventional shovel and truck haulage commencing in Q4 2017. Metallurgical test-work has confirmed the amenability of the Ugur gold ore to both heap and agitation leaching.

Drilling and geological evaluation

55 "phase one" RC drill holes totalling 1,842 metres, 50 core drill holes totalling 6,355 metres, and 33 infill RC drill holes totalling 2,766 metres have now been drilled at Ugur, which has resulted in confirmation of an oxide gold-rich zone to a depth varying between 50 to 60 metres. The area covered by this drilling and proposed open pit outline is 350 metres (east-north-east) by 250 metres (north-north-west).

A summary of the drilling is as follows:

Maps showing the location of the core diamond drill holes and reverse circulation drill holes are available on the Company's web site at http://www.angloasianmining.com/operations/reserves-exploration-and-development/. Full results from the Ugur drilling programme are set out in Appendix one below.

External quality assurance and quality control assaying is nearing completion. Independent check assaying of 760 samples and full multi-element analysis are being undertaken by western consultants. These assays will provide a check of the grades of mineralisation as assayed and analysed by the Company's laboratories. Extensive in-house quality assurance and control assaying is also being carried out by Anglo Asian. External quality assurance and control data is now being received by the Company and compared to in-house laboratory results. The data will form part of the JORC resource and reserve report. Extensive specific gravity tests have also been completed for ore tonnage calculations.

Condemnation drilling to prove the absence of mineralisation below proposed areas of infrastructure, including the waste dump areas, soil storage areas and lay down area for office facilities and mechanical workshops has commenced. Three condemnation drill holes with a total of 373 metres have been completed and a further nine drill holes will be undertaken. The work is planned to be completed by the end of August 2017.

Geotechnical and environmental assessment studies

Independent geotechnical studies have been completed by the environmental engineering company, CQA International Limited, to assess rock mass strength and structural geological relationships for mine design parameters. Two geotechnical drill holes (76 metres and 164 metres in length) from the position of the "ore" in the proposed open pit area into the preliminary designed backwall have been completed and geo-technically assessed. Independent rock strength tests, which showed good rock competency, are complete and will be utilised in the open pit wall design.

Independent environmental impact assessments have been completed and hydrogeological baseline monitoring will be established.

Resources and reserves

The drilling and assaying of drill samples from Ugur for the purpose of resource estimation is completed. A sectional resource and reserve estimate made by Anglo Asian to Azeri standards resulted in an in-situ resource of 195,000 ounces of gold.

Three-dimensional geological modelling of Ugur has been successfully completed. An independent JORC resource estimation and reserve calculation report is being prepared and is anticipated to be published in Q3 2017.

Road construction and other surface infrastructure development

The construction of a 4.6 kilometre road between the Ugur deposit and the Company's processing facilities commenced in May 2017. Road access from the processing facilities to the proposed pit is now complete. Culvert construction is to be completed and an estimated 25 per cent. of top sheeting remains to be completed to finish the road. Safety berms and windrows are 80 per cent constructed along the full length of the road, and road delineators are being installed every 50 metres. It is estimated that the road will be fully completed by the end of July 2017.

A schematic plan of the road layout showing the extent of the completed road and photographs of the road construction are available on the Company's web site at http://www.angloasianmining.com/operations/reserves-exploration-and-development/.

Infrastructure sites for soil storage area, waste dump and equipment laydown and workshop areas have been delineated. Containers for office, emergency workshop and maintenance facilities, hygiene and other facilities are being fitted out in preparation for production.

2017 Exploration and Production Optimisation Update

Strategy

Anglo Asian is undertaking an extensive exploration and production optimisation programme during 2017 with the aim of creating future flexibility and growth at its Gedabek Licence. This programme will be achieved by utilising ore from the Company's extensive stockpiles for processing to maintain production while mining in the main open pit is temporarily suspended. The utilisation of ore stockpiles reduces the ore inventory of the Company and makes space available, if required, for future stockpiling of ore. Certain mining operations will be temporarily ceased to enable development exploration, optimisation and redeployment of equipment to other tasks. Mining in the Gedabek open pit was reduced during May 2017 until the end of the year and some of the Company's heavy earthmoving equipment is being redeployed for transporting stockpiled ore, construction of the infrastructure for the new Ugur open pit mine and raising the tailings dam wall.

The Company's strategy for 2017 is expected to have a positive impact on production starting from Q4 2017. In this quarter, the Company will be able to recommence mining in both the Gadir and Gosha underground mines. In addition, production will commence from the new Ugur open pit. These various sources of ore will enable the Company to quickly increase production and give it flexibility to optimise its processing strategy. The resumption of full production from the main open pit in Q1 2018 will further enhance the ability of the Company to increase production and give it additional flexibility in processing.

Surface and Gedabek Open Pit Exploration

Surface core drilling targeted to intersect the down dip extension of Gadir mineralisation comprised six drill-holes with a total of 2,640 metres of drilling. These drill holes intersected Gadir style mineralisation and confirm the extended resource potential.

H1 2017 work at the Gedabek open pit relating to production comprised the drilling of 61 reverse circulation drill-holes with a total of 2,134 metres. Sampling included 7,624 samples from bench drill-holes as part of the mining grade control and 1,213 mining block samples. The exploration and optimisation drilling commenced in June 2017 with two core drill-holes completed with a total of 357 metres and assay results are awaited. On completion of the condemnation drilling work at Ugur, an additional two core drill rigs and one reverse circulation drill rig will be redeployed to the Gedabek open pit area.

Gedabek Deep Mineralisation Study

Tunnelling from the Gadir underground mine to the down dip extension of the Gedabek open pit mineralisation has commenced. 215 metres of the planned 465 metres have been completed to date. It is expected that the tunnel will be completed by the end of August/early September 2017. This will allow the Company to assess the extent of the higher-grade gold mineralisation below the Gedabek open pit as found in exploration drill holes. The future project plan is to construct a tunnel following the mineralisation under the Gedabek open pit and to carry out underground fan drilling to assess the future underground mining potential. This work will also provide geotechnical data for assessing the rock characteristics for underground stability that would be used in mine design work. Data collected will be utilised to evaluate the future open pit to underground transition. The fan drilling work is planned for 2018.

Ore production has been reduced from the Gadir underground mine (from February 2017 until September 2017) to allow for development and exploration drilling. Any ore mined from Gadir during this exploration development phase will be mainly stockpiled for Q4 2017 production, however, 24,000 tonnes of ore were sent for processing during the six months to 30 June 2017.

Competent Person Statement

The information in the announcement that relates to exploration results is based on information compiled by Dr Stephen Westhead, Director of Geology & Mining at Anglo Asian Mining, who is a Fellow of The Geological Society of London, a Chartered Geologist, Fellow of the Society of Economic Geologists and a Member of The Institute of Materials, Minerals and Mining.

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 qualified person as defined by the AIM rules. Stephen Westhead has reviewed the exploration results 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.

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

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 developed Azerbaijan's first operating gold/copper/silver mine, Gedabek, which commenced gold production in May 2009. Gedabek 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. 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.

Gold production for the year ended 31 December 2016 from Gedabek totaled 65,394 ounces with 1,941 tonnes of copper also produced. Gedabek is a polymetallic deposit and its ore has a high copper content, and as a result the Company produces copper concentrate from its Sulphidisation, Acidification, Recycling, and Thickening (SART) plant. Anglo Asian also produces a copper and precious metal concentrate from its flotation plant, which is processing tailings from the agitation leach plant.

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 in order to fulfil its expansion ambitions and become a mid-tier gold and copper metal production company.

APPENDIX 1

FULL RESULTS OF UGUR DRILLING PROGRAMME

Core drill holes (drill holes 7 to 50)

Reverse Circulation drill holes (RC holes 1 to 32)