Gedabek & Financing Update

10 Apr 2008 07:00

Anglo Asian Mining PLC10 April 2008 10th April 2008 ANGLO ASIAN MINING PLC ('Anglo Asian' or 'the Company') Gedabek Project and Financing Update Anglo Asian Mining PLC (AIM:AAZ) announces that the International Bank ofAzerbaijan ('IBA') has agreed to provide a further US$20 million term loan forits Gedabek project in West Azerbaijan. This is in addition to the existing US$5million credit facility previously announced. A loan agreement ('Agreement') has been signed by the IBA, of which the finaldrafting of full facility documentation is being concluded, incorporating theprovision for syndication of a portion of the loan to reduce overall borrowingcosts to the Company. The Agreement bears no commitment or front end fee, an allinclusive annual interest rate of 15% is to apply on funds drawn. The term ofthe Agreement is four years with a two year grace period to repay the loan, $8mis scheduled for repayment in equal quarterly instalments in 2010 and $5m and$7m in March and June 2011 respectively. There is no penalty for earlyrepayment. The Board is now confident of funding the construction of the Gedabek Projectand work has already commenced to prepare the site accordingly. Orders have beenplaced for major equipment and tenders are in the process of being issued andevaluated for the major work packages. Capital cost estimates for the Gedabek project remain under revision followingsharp increases in the price of steel and heavy equipment hiring costs inAzerbaijan. Once major tenders have been issued and bids received, the Companywill be able to better define total financing requirements. Current estimatesindicate that the total capital cost for the project, including working capitaland contingencies, is unlikely to exceed US$40 million. After building the construction camp, purchasing various pieces of equipment andmaking necessary land purchases, current group cash balances remain in excess of$5 million. The Company anticipates that it will therefore require additionalfunding of $5 to $15 million, over and above the IBA term loan and the existingcash balance, to complete construction and to cover costs of further explorationat both Gedabek and new targets it has identified and corporate overheads.Certain Directors who are major existing shareholders have agreed, in principle,to provide additional funding at their pro-rata shareholding level(approximately 40% of current shares on issue) to support this cash requirement,if and when it is needed. Production from Gedabek is forecast, by the Company, to exceed 85,000 oz of goldin its first full year of production. The Company is currently revisingoperating cost estimates for the operation in light of rising prices. However,using the Sulphidation-Acidification-Recycle-Thickening (SART) process, the netcash cost, after by-product credits, is anticipated to be less than US$150 peroz of gold, at current metal prices. The Directors expect that the mine willproduce approximately 310,000 ounces of gold over its six year life and providea strong capital base for on-going developments in the Asian region. An experienced management team has recently been recruited for the constructionphase and is now in place in Azerbaijan. Expatriates with extensive heap leachexpertise have been recruited from Kazakhstan and Indonesia to supplement theuse of experienced Azeri management and contractors. Gordon Lewis, CEO, commented: "The Company is excited to have reached thissignificant milestone and the local community and Azerbaijan government remainhighly supportive of the development of Gedabek." Enquiries Anglo Asian Mining PLC Numis Securities Limited Parkgreen CommunicationsGordon Lewis, Chief Executive John Harrison Justine Howarth+994 12 499 3350 +44 20 7260 1000 +44 20 7851 7480Richard Round, FinanceDirector+44 1525 211 988 This information is provided by RNS The company news service from the London Stock Exchange