Operations Update

RNS Number : 1966I

Anglo Asian Mining PLC

08 March 2010

 



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

8 March 2010

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

Operations Update

4,007 oz February Gold Production and Commencement of SART process

Anglo Asian Mining plc, the AIM listed emerging gold producer, is pleased to provide an update on operations at its Gedabek gold/copper mine ('Gedabek') in Azerbaijan.

In the month ended 28 February 2010, the Company produced 4,007 ounces gold ('oz Au').  This brings total production to date from Gedabek, which commenced production in July 2009, to 18,855 oz Au. 

The following summary table of gold production and prices highlights the month-on-month increase in production.  The Board anticipates that this trend will continue and therefore remains confident that it will exceed its revised production target for the first 12 months of operation to 30 June 2010 of 25,000 oz Au, while simultaneously benefiting from the buoyant gold price and a reduced cost base.

Month	Gold Produced (Including Govt. of Azerbaijan's share) (oz)	Weighted Average Gold Sale Price (US$)
July 2009	802	944
August 2009	751	951
September 2009	2,192	997
October 2009	2,208	1,037
November 2009	2,549	1,129
December 2009	2,863	1,105
January 2010	3,483	1,106
February 2010	4,007	1,090

It should be noted that under the Production Sharing Agreement, the Government of Azerbaijan receives 12.75% of gold produced until Anglo Asian has recovered its capital, operating and financing costs in full at which point the Government of Azerbaijan will then be entitled to a 51% share of profits.   

In terms of processing, for the month of February 2010, the Company transferred a further 70,118 tonnes of dry ore onto the leach pad with an average gold content of 5 g/t, significantly above predicted grades.  Blending of high and low grade ore has been carried out in a ratio that will increase tonnes whilst maintaining the grade quality.   The Company expects gradually to ramp this up to a target of 75,000 tonnes of dry ore per month onto the leach pad.

The installation of new plant equipment has impacted positively on the plant's performance and production figures.  The secondary and tertiary crushers, as well as a reconditioned cone crusher, that acts as a standby to increase the plant's operational flexibility, have been installed.  Additionally, as previously stated in our last operations update on 3 February 2010, the Company has purchased a new stacker system which is planned to be operational by April 2010. 

February also saw the commencement of the Sulphidisation, Acidification, Recycling, and Thickening ('SART') process, which will facilitate the recovery of the copper dissolved in the leaching solution.  The copper will be recovered in the form of a precipitated copper sulphide concentrate by-product, which will also contain silver with commercial value.  Initial results appear promising.  Following process optimisation, a plant automation system will be installed. The plant capacity is 1,800 tonnes of copper concentrate per year although the amount produced will depend on ore mineralogy and process efficiencies.  Initial assay results show that the copper concentrate contains 60-70% copper and 4,000 to 6,000 g/t of silver.  

Anglo Asian CEO Reza Vaziri said, "This was a record month for Gedabek. These month-on-month gold production increases are highly encouraging, and we believe that this growth will continue as our operational efficiencies continue to improve.  With SART coming on line and copper production expected  in the coming months, we look forward to achieving full ramp-up of gold and copper production at Gedabek, to realise the mine's potential and in turn build value for our shareholders."

Additionally, Anglo Asian has signed a debt rescheduling agreement ('the Agreement') with the International Bank of Azerbaijan ('IBA'), in regards to its US$5 million credit facility signed in October 2007; US$20 million loan signed in 2008; and US$3 million loan signed in November 2009.  New repayment terms under the Agreement for these loans are as follows:

·    US$5 million repayment is scheduled in six monthly instalments of US$416,667 beginning from May 2010 with three final monthly payments of US$833,328 from November 2010 to January 2011.

·    US$20 million repayment is scheduled over a two year period to December 2012 with US$8 million scheduled in equal quarterly instalments in 2011 and US$12 million scheduled in equal quarterly instalments in 2012.

·    US$3 million is rescheduled in five equal monthly tranches from May 2010 to September 2010.

In total, Anglo Asian has five loan agreements with the IBA for US$43.9 million in aggregate, which will be repaid from cash generated from production at Gedabek. 

Following the Agreement, Anglo Asian is now scheduled to pay approximately US$8.67 million in repayments to the IBA during 2010 instead of US$17.1 million.

Also, the Company has recently signed a US$1 million unsecured credit line with JSC Bank Standard repayable in December 2010. The loan will be used for the purchase of essential assets and spares that will be used to ramp up production providing the Company with additional financial flexibility. The loan carries an interest rate of 19% per annum.

The Company is also pleased to announce that it has been awarded the following certificates: ISO 9001:2008 Quality Management System, ISO 14001:2004 Environmental Management System and OHSAS 18001:2007 Occupational Health and Safety Management System for its mining and gold and copper processing operations at Gedabek. 

As previously stated in the Company's operations update on 3 February 2010, should operating costs increase significantly or revenues otherwise fall short of expectations, there may be a reliance on further financing.  Accordingly, the Board and management continue to monitor the situation carefully, but are pleased with the recent improvements in production, cash flow, working capital and the debt rescheduling all of which have succeeded in putting the Company on a firmer financial footing.

**ENDS**

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

Reza Vaziri	Anglo Asian Mining plc	Tel: [phone]
Andrew Herbert	Anglo Asian Mining plc	Tel: [phone]
John Harrison	Numis Securities Limited, as  Nominated Adviser	Tel: [phone]
James Black	Numis Securities Limited, as Corporate Broker	Tel: [phone]
Hugo de Salis	St Brides Media & Finance Ltd	Tel: [phone]
Felicity Edwards	St Brides Media & Finance Ltd	Tel: [phone]

Notes:

Anglo Asian Mining plc (AIM:AAZ) is an emerging 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 on the back of 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. 

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 Central Asia and Caucasia in order to fulfil its expansion ambitions and become a mid-tier gold and base metal production company focussed in these regions.

 

END

 

 

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