Gedabek and Gosha Q1 2014 Update

RNS Number : 0539F

Anglo Asian Mining PLC

17 April 2014

 



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

17 April 2014

Anglo Asian Mining plc ('Anglo Asian' or 'the Company')

Q1 2014 Operations Update - Gedabek and Gosha Gold/Copper/Silver Mine in Azerbaijan

Anglo Asian Mining plc, the AIM listed gold producer in Azerbaijan, is pleased to provide a production and operations update from its Gedabek gold/copper/silver mine ('Gedabek') and Gosha gold mining operation in western Azerbaijan for the three months to 31 March 2014 ('Q1 2014').

Overview

·    Gold production at Gedabek for Q1 2014 totalled 11,312oz     (8,597oz from the agitation leaching plant and 2,715oz from heap leach operations)

·    Q1 2014 gold production represents a 32% increase over the comparable period in 2013 (Q1 2013: 8,585oz Au)

·    Q1 2014 gold sales of 10,403oz at an average of US$1,303 per oz

·    Silver production in doré for Q1 2014 totalled 3,890oz (2,688oz from agitation leaching and 1,222oz from heap leach)

·    A continuous Knelson concentrator was installed at the agitation leaching plant in March 2014 -  early results have shown enhanced gold recovery from high-copper sulphide ore along with reduced cyanide consumption

·    Gold production target for the year to 31 December 2014 ('FY 2014') is between 62,000oz Au and 67,000oz Au

·    Copper production from SART processing operations increased by 50% for Q1 2014 from previous quarter - 141t of copper, together with 9,249oz of silver and 6oz of gold (Q4 2013: 71t of copper)

·    Target production of copper from SART for FY 2014 is 595t

·    Gosha mining operation in Azerbaijan progressing - 1,095 tonnes of ore mined and 250 tonnes of ore sent to Gedabek for processing at an average grade of 12 g/t Au - targeting 58,000 tonnes of mined ore for 2014 at an average grade of 6 g/t, which will contribute circa 10,000oz of gold production

·    Net debt, being interest-bearing loans and borrowings less cash and cash equivalents, totals US$50.4 million at 31 March 2014 (US$46.3 million at 31 December 2013)

Anglo Asian CEO Reza Vaziri said, "Our revised FY 2014 gold production target of between 62,000 and 67,000oz of gold represents an increase on FY2013 production of 52,068oz Au, and highlights our commitment to achieving production growth over the coming year.  This new target however is reduced from the previous management forecast of 80,000oz Au to 90,000oz Au and has been based upon our revised expected production from the new agitation leaching plant at Gedabek and the heap leach operations where we are working to improve efficiencies.  

"In line with this we have taken steps to maximise output and improve efficiencies including initiatives such as the commissioning of the new continuous Knelson concentrator at Gedabek's agitation leaching plant to enhance gold recovery from high-copper sulphide ore and reduce cyanide consumption.  In addition, copper production for Q1 2014 has significantly increased for the period due to improvements in the SART plant and the new dedicated SART management team on site and we hope to see this trend continue throughout the rest of the year.

"Furthermore we are making good progress at our second mining project in Azerbaijan, Gosha, having processed 250 tonnes of ore, of a total of 1,095 tonnes mined to date, at our nearby Gedabek agitation leaching plant in the month of March.  With the above developments in place I look forward to updating shareholders on our progress."

Full Details

During the quarter ended 31 March 2014, the Company produced 11,312oz of gold ('Au') at Gedabek from its agitation leaching plant and heap leach operations.  In line with the Company's mine plan, 8,597oz of this has been produced from the agitation leaching plant and 2,715oz from the heap leach operations.  Anglo Asian has completed gold sales of 10,403oz Au at an average of US$1,303 per oz during Q1 2014.

The following summary table of gold production and prices outlines quarter-on-quarter gold production at Gedabek for the past year. 

Quarter Ended		Gold Produced (including Govt. of Azerbaijan's share) (oz)	Weighted Average Gold Sale Price (US$)
31 March 2013	8,585		1,638
30 June 2013	8,912		1,438
30 September 2013	20,242		1,328
31 December 2013	14,329		1,280
Total for FY 2013	52,068		1,387
31 March 2014	11,312		1,303

At Gedabek, the Company is currently processing ore through its agitation leaching plant and heap leach plants.  During Q1 2014 the Company transferred 110,564 tonnes of dry ore onto the heap leach pads with an average gold content of 1.14g/t.  As previously reported, since commissioning agitation leaching plant in June 2013, low grade ore (<1.5 g/t) has been treated by heap leaching, with higher grade ore being sent to the agitation leaching plant.  For Q1 2014, 152,554 tonnes of ore with an average gold content of 2.51g/t was processed through the agitation leaching plant.  In addition, waste removal is currently being conducted at Gedabek to further improve the tonnage and grade of ore being processed at both the agitation plant and heap leach.

To further improve gold recoveries and combat problems that have occurred with sulphide ore with higher copper content as mining at Gedabek reaches deeper levels, a continuous Knelson concentrator was installed at the agitation leaching plant in March 2014.  Initial results show that 26% of the gold in the sulphide ore is recovered in the gravity concentrate.  Leaching this concentrate by intensive cyanide leaching gives gold recoveries up to 92%, thus increasing the overall leaching efficiency of the sulphide ore to more than 80% in the AGL plant.

In addition, the Company has commenced development of its second mining operation Gosha, which is located 50km away from Gedabek, and expects regular ore production at Gosha later this year.  In Q1 2014, a total of 1,095 tonnes of ore were mined and 250 tonnes at an average grade of 12 g/t Au were sent to Gedabek for processing.  The Company is targeting 58,000 tonnes of mined ore from Gosha for 2014 at an average grade of 6 g/t Au, which will contribute circa 10,000oz of gold production to Anglo Asian's FY 2014 production.

During the period, significant development work was completed at Gosha including the completion of all supporting facilities such as the residential area, canteen, repair shop and working offices.  Additionally, the Company reached the 470 metre mark with the access ramp and the associated galleries were completed.

In terms of copper concentrate production from the Company's Sulphidisation, Acidification, Recycling, and Thickening ('SART') plant at Gedabek, production for Q1 2014 totalled 141t of copper, 9,249oz of silver and 6oz of gold. This is an increase of 50% from the previous quarter (Q4 2013 where 71t of copper was produced).  As a result of improvements to the SART processing operations and the new management team in place to oversee Gedabek's SART operation, FY 2014 copper production is targeted to reach 595t.

Net debt as at 31 March 2014 stands at:

                                                                                                US$(M)

            ATB Agitation Plant loan balance                                  37.0

            IBA Loan Balance                                                        11.6

            Yapikredi bank LC credit line                                         0.6

            Atlas Copco equipment finance loan                                1.7

Total Loans                                                                50.9

            Cash on hand and at bank                                               0.5

            Net debt                                                                      50.4

The amount of the loans with the International Bank of Azerbaijan ('IBA') and the Amsterdam Trade Bank N.V. ('ATB') were US$11.6 million and US$37.0 million, respectively, and cash in the bank was US$0.5 million at 31 March 2014. In January 2013, the company entered into an arrangement with the industrial group Atlas Copco for financing of underground mining equipment for the Gosha gold project for US$3.8 million (representing 85% of the equipment value); this has now reduced to $1.7million.  Including this loan and our credit line facility for Letters of Credit at the Yapikredi bank of US$0.6 million, the net debt, being interest-bearing loans and borrowings, less cash and cash equivalents, therefore stood at US$50.4 million at 31 March 2014. The Yapikredi bank facility was a line of credit for US$1 million to cover an LC payment and was repaid within one week.

**ENDS**

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

Reza Vaziri	Anglo Asian Mining plc	Tel: [phone]
Sean Duffy	Anglo Asian Mining plc	Tel: [phone]
Ewan Leggat	SP Angel Corporate Finance LLP (Nomad & broker)	Tel: [phone]
Laura Harrison	SP Angel Corporate Finance LLP	Tel: [phone]
Felicity Edwards	St Brides Media & Finance Ltd	Tel: [phone]
Lottie Brocklehurst	St Brides Media & Finance Ltd	Tel: [phone]

Notes:

Anglo Asian Mining plc (AIM:AAZ) is a gold producer in Central Asia with a broad portfolio of production and exploration assets in Azerbaijan.  The Company has a 1,962 sq km prospective exploration portfolio, assembled from analysis of historic Soviet geological data and held under a Production Sharing Agreement ('PSA') based on the Azeri oil industry.  The Company developed Azerbaijan's first operating gold/copper mine, Gedabek, which commenced gold production in May 2009.  Gold production for the year ended 31 December 2013 totalled 52,068oz.

Anglo Asian is actively looking 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 base metal production company

 

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