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Update on the Company’s Restored Contract Areas

21 Jan 2021 07:00

RNS Number : 3801M
Anglo Asian Mining PLC
21 January 2021

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


21 January 2021

Anglo Asian Mining plc

Update on the Company's Restored Contract Areas in the formerly Occupied Territories and Nagorno Karabakh


Anglo Asian Mining plc ("Anglo Asian" or the "Company"), the AIM listed gold, copper and silver producer in Azerbaijan welcomes the agreement between Armenia, Azerbaijan and Russia which has ended the military conflict over the enclave of Nagorno Karabakh. It is pleased to provide an update on its three restored contract areas located in the formerly Occupied Territories and Nagorno Karabakh.




· Three contract areas have been restored to the Company

o Soutely in the Kalbajar district of the formerly Occupied Territories

o Kyzlbulag in Nagorno Karabakh

o Vejnaly in the Zangilan district of the formerly Occupied Territories

· The Company will fully evaluate the potential of the three restored contract areas when permission to access is received from the Government of Azerbaijan

o The production sharing agreement in respect of the three restored contract areas will be "reset" to year zero upon notification of access

· The two contract areas in the formerly Occupied Territories are fully under the control of the Government of Azerbaijan, with Russian peacekeepers present at its Nagorno Karabakh contract area

· Mineral exploitation has been carried out illegally during the Armenian occupation at all three contract areas

o Soutely - location of the Zod gold and silver mine, the largest in the Caucasus region, and which was reported to be producing approximately 120,000 ounces of gold per year prior to the conflict

o Kyzlbulag - location of the Kashan deposit hosting a copper and molybdenum mine

o Vejnaly - mining has been carried out at the deposit but the current situation is unknown

· Very considerable exploration potential exists both near the existing mines and on known geological trends in the restored contract areas

· It has been proposed as part of the ceasefire agreement that Armenia will grant territory in its Syunik region to Azerbaijan to allow construction of direct road and rail links between the exclave of Nakhchivan and the rest of Azerbaijan

o The proposed transport corridor will greatly improve access to the Company's Ordubad contract area


Reza Vaziri, President and CEO of Anglo Asian Mining, said, "It is a tragedy that this long-standing territorial dispute has resulted in a humanitarian crisis and significant loss of life. Anglo Asian Mining very warmly welcomes the recent ceasefire agreement which ended the hostilities. The conflict has resulted in extensive damage across the region which will require substantial investment to repair and rebuild.

"Anglo Asian Mining will work with the Government of Azerbaijan, pursuant to its contractual rights, in the three restored contract areas within the Zangilan and Kalbajar districts as well as in Nagorno Karabakh. The Company will properly manage and invest in the mineral resources of the region to the benefit of the local communities and other stakeholders. Anglo Asian Mining has been a model of sustainable and sound mining practices at its current operations while working with, and investing in, the local communities. The Company intends to bring that commitment to high-quality development to its restored contract areas in the regions internationally recognised as part of Azerbaijan and which have now been returned to Azerbaijan, following the declaration by the Governments of Armenia and Azerbaijan and cessation of hostilities."



Nagorno Karabakh is a mountainous enclave wholly within the borders of Azerbaijan. Nagorno Karabakh is bordered by seven districts of Azerbaijan which were occupied by Armenia in 1994 (the "Occupied Territories").


With the cessation of the recent hostilities over Nagorno Karabakh and the Occupied Territories, the seven districts which surround Nagorno Karabakh, which have always been recognised by international bodies as being part of Azerbaijan, have been returned to Azeri administration. These districts of Azerbaijan have been occupied by Armenia since the end of the first Karabakh war in 1994 and have been the subject of four United Nations Security Council Resolutions (822, 853, 874 and 884), each calling for the withdrawal of Armenian forces.


In 1997, Anglo Asian obtained six mineral resource contract areas under a Production Sharing Agreement ("PSA") with the Government of Azerbaijan. Two of the contract areas (Soutely and Vejnaly) are located in the formerly Occupied Territories. The Soutely contract area is in the mountainous Kalbajar district and the Vejnaly contract area in the Zangilan district in the southwest of Azerbaijan. The third contract area Kyzlbulag, is located in Nagorno Karabakh.


The three restored contract areas in the formerly Occupied Territories and Nagorno Karabakh were part of Anglo Asian's original Production Sharing Agreement, along with the three contract areas where the Company is currently active (Gedabek, Gosha and Ordubad in Nakhchivan). All contract areas were reaffirmed to the Company by the Azerbaijan Government in 2006 and continue in good standing. A map showing the location of the three restored contract areas can be accessed at http://www.rns-pdf.londonstockexchange.com/rns/3801M_1-2021-1-20.pdf


The three restored contract areas have continued to be held under the Company's existing PSA. However, the PSA will only commence in respect of each of these contract areas upon notification by the Government of Azerbaijan to the Company of the cessation of all hostilities and that it is safe to access the district. This notification will therefore "reset" the PSA to year zero for that contract area. Accordingly, the Company then has the right to explore the contract area for up to five years and then develop and produce for 15 years, with two five-year extensions allowed.


Anglo Asian has always stated its intention to develop its contract areas in the formerly Occupied Territories and Nagorno Karabakh upon settlement of the conflict over Nagorno Karabakh and surrounding regions. The Company therefore plans to pursue its legal rights under the PSA to develop these mineral resources. Development will commence when the Company receives notice in accordance with its PSA that the Organisation on Security and Cooperation in Europe ("OSCE") (or comparable international organisation) has acknowledged a liberation of the previously occupied territories and the Company is satisfied the districts are secure.


Current situation at the three contract areas in the formerly Occupied Territories and Nagorno Karabakh

The situation in the formerly Occupied Territories and Nagorno Karabakh is still developing and the Company will evaluate its newly restored contract areas as soon as it is able to access them. However, each contract area has been subject to mineral exploitation and mining whilst occupied, which provides an indication of the resource potential within these contract areas.


Soutely - Kalbajar district in the formerly Occupied Territories

The Soutely contract area in the Kalbajar district is the location of the Zod gold and silver mine. The mine is a very large open pit with some underground workings and is the largest gold mine in the Caucasus region. The mine straddles the international border between Armenia and the Kalbajar district of Azerbaijan, with an estimated 75 per cent. of the mine lying within Azerbaijan. The international border has been restored to that which existed when Azerbaijan and Armenia declared independence following the dissolution of the Soviet Union. The Zod mine was owned and operated during the Armenian occupation by GeoProMining Gold, a subsidiary of the Russian-owned GeoProMining Investment (CYP) Limited ("GPM"). There is currently no mining being carried out in the part of the Zod mine now lying within Azerbaijan.


According to a prospectus issued by GPM in 2019 for the issue of loan notes, the gold Resources and Reserves of the world-class Zod mine are over eight million ounces. At 1 January 2019, these were estimated as follows:


































According to GPM, ore mined from Zod was transported by rail to processing facilities in Armenia and used to produce gold and silver doré. However, according to the Azerbaijan Government, processing facilities (together with other plant and mining fleet equipment) have been found adjacent to the mine in the Kalbajar district. Access to the contract area is difficult as it is located in the north of the Kalbajar district with no direct road to western Azerbaijan and the terrain is mountainous. However, the Government of Azerbaijan has proposed to build a road to give direct access to the Kalbajar region through the northern border of the region.


Kyzlbulag - Nagorno Karabakh

This contract area contains the Kashen deposit in Nagorno Karabakh's northern Martkert region. Estimates have been recently published that the deposit contains 275,000 metric tonnes of copper and 3,200 metric tonnes of molybdenum. The deposit has been mined by open pit and in 2016, an Armenian Company "Vallex Group", inaugurated an ore processing plant in which Vallex Group claimed to have invested US$130 million. The Armenian Government also announced at that time that they believed the non-ferrous metal reserves of the Kashen deposit were sufficient to keep the new plant operational for at least 25 years. As far as the Company is aware, the plant is intact and together with the mine is not currently operating. Russian peacekeepers are currently present in the area and our access to Kyzlbulag will depend on the final resolution of the status of Nagorno Karabakh.


Vejnaly - Zangilan district in the formerly Occupied Territories

The Vejnaly deposit is located in the Zangilan district of southwestern Azerbaijan. There has been some mining carried out at the deposit during the Armenian occupation but this has now stopped. The potential for exploration and further production is currently unknown. The region has been secured by the Government of Azerbaijan and Anglo Asian is determining how to best access the area to evaluate its resources and infrastructure.


Exploration and mineral potential of the restored contract areas

The three restored contract areas all host known significant gold and copper-gold mineral deposits, two of which support major mining operations. These mines are located on geological trends known to contain other geochemical and geological anomalies. The Company has requested exploration data from the Government of Azerbaijan and has commenced compilation of this geological information. The preliminary assessments are very promising and the geological team are looking forward to further developing the mineral resources of the region. High level exploration planning is underway and, given the significant mining operations in the region, the upside resource potential could be very great. Once these areas are secure and Anglo Asian has access, the Company's technical and administrative experience in the region provides a solid foundation for a major increase in resources and reserves.


Access to the Nakhchivan exclave via the Syunik district of Armenia

The exclave of Nakhchivan hosts the Company's Ordubad contract area. Nakhchivan is currently separated from the rest of Azerbaijan by the Syunik region of southern Armenia. As part of the agreement to cease hostilities, a corridor through the southern part of the region will be given to Azerbaijan to build direct road and rail links between Nakhchivan and the rest of Azerbaijan. These projected transport links will greatly aid the Company in its efforts to develop and exploit the resource potential of its Ordubad contract area in Nakhchivan.


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 or contact:

Reza Vaziri

Anglo Asian Mining plc

Tel: +994 12 596 3350

Bill Morgan

Anglo Asian Mining plc

Tel: +994 502 910 400

Stephen Westhead

Anglo Asian Mining plc

Tel: +994 502 916 894

Ewan Leggat

SP Angel Corporate Finance LLP

Nominated Adviser and Broker

Tel: +44 (0) 20 3470 0470

Adam Cowl

SP Angel Corporate Finance LLP

Tel + 44 (0) 20 3470 0470

Megan Ray

Blytheweigh Financial PR

Tel: +44 (0) 20 7138 3224



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 at its active Gedabek, Gosha and Ordubad contract areas assembled from analysis of historic Soviet geological data and held under a Production Sharing Agreement ("PSA") modelled on the Azeri oil industry. The Company also has three recently restored contract areas in the formerly Occupied Territories and Nagorno Karabakh under its PSA which will be evaluated as soon as access permission is received from the Government of Azerbaijan.


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. 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 67,249 gold equivalent ounces ("GEOs") for the year ended 31 December 2020. 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.


Anglo Asian is also actively seeking to exploit its first mover advantage in Azerbaijan to identify additional projects, as well as looking for properties in other jurisdictions in order to fulfil its expansion ambitions and become a mid-tier gold and copper metal production company. It has announced that it is negotiating a joint venture with Conroy Gold and Natural resources PLC to explore and develop various gold properties in The Republic of Ireland and Northern Ireland.


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