Anglo Asian Regulatory News (AAZ)

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

8 May 2017

Anglo Asian Mining plc

Ugur Gold Deposit Development & 2017 Strategy Update

Anglo Asian Mining plc ("Anglo Asian" or "the Company"), the AIM listed gold, copper and silver producer, is pleased to announce the completion of Phase II core drilling and additional development progress at its "Ugur" gold deposit, located on the Company's Gedabek licence area ("Gedabek Licence") in Western Azerbaijan, ahead of targeted first mining in Q4 2017.

Overview

· Considerable progress made at newly discovered Ugur gold deposit ahead of intended first production in Q4 2017

· Supports Anglo Asian's strategy to increase exploration activities at its Gedabek Licence alongside continuing production to optimise long-term profitable and sustainable production

· Ugur production will contribute to Anglo Asian's total gold equivalent target for 2017 of 64,000 to 72,000 ounces

Ugur Development Highlights

· Phase II core drilling programme completed at end April 2017 to enable resource and reserve estimation in Q3 2017

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

· Independent quality assurance and quality control assaying of drill samples is underway

· Independent geotechnical-hydrogeological study completed for open pit mine design

· Further metallurgical test-work confirms the amenability of gold ores to leaching (both agitation and heap leaching)

· Haul road design finalised following completion of a detailed topographic survey of the area between the Ugur gold deposit and the Gedabek processing facilities

· JORC reserve calculation and ore extraction plan targeted for completion in Q3 2017

· Significant upside potential from results of alteration mapping - core drilling of flanks of main zone planned

Anglo Asian CEO, Reza Vaziri, said "As a result of the accelerated work programme conducted at Ugur over recent months, we are on track to deliver a JORC reserve and ore extraction plan in Q3 2017 - less than a year after the deposit's initial discovery. As a production company with multiple mines, both open pit and underground, the Ugur deposit will be an important new component of our evolving production portfolio. During the remainder of 2017, when production from stockpiles will play an important role in contributing to our total gold equivalent target of 64,000 to 72,000 ounces, bringing Ugur into production will be a welcome new development. It demonstrates the value we are creating due to our increased emphasis on exploration to create future flexibility and growth at our Gedabek Licence. We look forward to seeing the results of our optimisation efforts in 2018 when full production recommences at Gedabek."

Anglo Asian Group Director of Geology & Mining, Stephen Westhead, said "The Ugur gold deposit significantly benefits Anglo Asian in allowing for increasing future gold production. The exploration and evaluation of this deposit forms part of the on-going near mine exploration, assessment of extensions of existing known zones, and future open pit and underground mine optimisation. Production flexibility, expansion and opportunity are resulting from this exciting phase that will provide a platform for future growth."

Development of the Ugur Deposit Discovery

Anglo Asian's in-house exploration group defined from geological mapping a new mineral occurrence in 2016 named "Ugur" (meaning "good luck" or "success" in the Azeri language) located three kilometres north-west from its agitation leaching plant and heap leach facilities at its Gedabek Licence.

55 vertical reverse circulation ("RC") drill holes totalling 1,842 metres and 39 core drill holes totalling 5,472 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).

On receipt of the assays from the final four core drill holes, a sectional resource and reserve estimate will be made by Anglo Asian for the Azerbaijan Government. It is further planned for an independent JORC resource estimate and reserve calculation to be compiled which will be available in Q3 2017. Work towards providing the required data for this evaluation includes:

· On-going RC drilling to provide "infill" data of the core drill data on a 20 metre grid for JORC estimates and preliminary mine planning and scheduling. Five RC drill holes have been completed and a further 25 drill holes with a total of 3,000 metres are planned;

· Independent check assaying of 515 samples and full multi-element analysis are underway by external western consultants;

· Extensive specific gravity tests have been completed for ore tonnage calculations;

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

· Independent geotechnical studies to assess rock mass strength and structural geology relationships for mine design parameters is complete;

· Two geotechnical drill holes (76.5 metres and 163.75 metres in length) from the position of the "ore" in the proposed open pit area into the preliminary designed backwall have been completed and geotechnically assessed;

· Further independent rock strength tests are underway following initial tests that resulted in good competency;

· Infrastructure sites for soil storage area, waste dump and equipment laydown and workshop areas have been delineated;

· On completion of the resource drilling, condemnation drilling over the proposed infrastructure area to confirm the absence of mineralisation will be completed; and

· Detailed topographic surveying of the proposed road position between the Ugur deposit and plant is complete. This will allow for finalising the road layout and design.

Results will be released on completion of the resource estimation and reserve calculation.

Full results from the Ugur drilling programme are set out in Appendix I below.

2017 Exploration & Production Optimisation

Anglo Asian is undertaking extensive exploration and production optimisation during 2017 with the aim of creating future flexibility and growth at its Gedabek Licence. This will be achieved by utilising ore from the Company's extensive stockpiles for processing to maintain production, so that certain mining operations can be temporarily suspended to enable development exploration, optimisation and redeployment of equipment to other tasks. Mining in the Gedabek open pit will be reduced during May 2017 until the end of the year. Some of the heavy earthmoving equipment will be redeployed for transporting stockpiled ore, construction of the infrastructure and a new open pit mine at Ugur, and raising the tailings dam wall.

Ore production has also been stopped from the Gadir underground mine (from February 2017 until September 2017) to allow development and exploration drilling. Any ore mined from Gadir during this exploration development phase will be stockpiled for Q4 2017 production.

Based on successful process test work, process flexibility between agitation leaching and flotation is possible, whereby the Company can utilise flotation first followed by agitation leaching, or vice versa. The benefits of the flotation-first configuration are increased copper concentrate production, while saving costs by removing the cyanide consuming copper before the leach circuit.

The production plan is to configure the plant to flotation-leaching between February 2017 to August 2017, and then revert to leaching-flotation from September 2017 to the end of year. In the latter period, plant feed will be sourced from Gadir, stockpiles, Ugur and Gosha (the Company's second underground mine, which is 50 kilometres from Gedabek). Full production mining in the Gedabek open pit is planned to resume at the beginning of 2018.

Total production target for FY 2017 expressed as gold equivalent ounces is between 64,000 ounces and 72,000 ounces compared to FY 2016 actual total production of 72,304 gold equivalent ounces, thus maintaining the Company's position as a gold and copper producing company supported by mineral resource development and exploration.

The strategic plan outlined above provides a unique opportunity to enhance sustainable production for Anglo Asian:

· Removal of stockpile inventory, providing space for future stockpile management. This also allows for the reduction in mining, thus providing opportunity for mine drilling and mine development;

· The development of the new Ugur open pit mine that Anglo Asian will have brought into production in only 18 months from discovery;

· Ore body delineation in the open pit and Gadir underground mines;

· Drilling of the Gedabek open pit area to target further copper-gold mineralisation for future production;

· Ore body delineation in the Gadir mine for future production;

· Staff development in the use of advanced software for exploration and mine planning.

Production flexibility, expansion and further opportunities will result from this exciting phase in the Company's development that will provide a platform for future growth.

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 the Anglo Asian Mining group, 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, which 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

Further Information

Core drill holes (drill holes 7 to 33)

Note: awaiting assays for drill holes 34 to 39.

Reverse Circulation drill holes