Q4 & FY 2016 Operations and Production Update

RNS Number : 2770U

Anglo Asian Mining PLC

17 January 2017

 

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

17 January 2017

Anglo Asian Mining plc

Quarter 4 and Full Year 2016, operations and production update - Gedabek gold, copper and silver mine, Azerbaijan

Anglo Asian Mining plc ("Anglo Asian" or "the Company"), the AIM listed gold, copper and silver producer focused in Azerbaijan, is pleased to provide an operations and production update from its Gedabek gold, copper and silver mine ("Gedabek") in western Azerbaijan for the three months to 31 December 2016 ("Q4 2016") and the year ended 31 December 2016 ("FY 2016").  Note that all references to "$" are to United States dollars.

Production overview

·    Gold production for Q4 2016 totalled 15,483 ounces - 14,221 ounces contained within gold dorè, 7 ounces from SART processing and 1,255 ounces from flotation (Q3 2016: total 16,534 ounces)

·    Copper production for Q4 2016 totalled 578 tonnes - 219 tonnes from SART processing and 359 tonnes from flotation (Q3 2016: 485 tonnes)

·    Silver production for Q4 2016 totalled 50,216 ounces - 2,845 ounces contained within gold dorè, 6,751 ounces from SART processing and 40,620 ounces from flotation (Q3 2016: total 33,899 ounces)

·    Anglo Asian's FY 2016 production was as follows:

o Gold: 65,394 ounces, a 9 per cent. decrease over FY 2015 production of 72,032 ounces

o Copper: 1,941 tonnes of copper, a 100 per cent. increase over FY 2015 production of 969 tonnes

o Silver: 165,131 ounces, a 5.8 times increase over FY 2015 production of 28,626 ounces

Sales overview

·    Q4 2016 gold bullion sales of 12,995 ounces at an average of $1,227 per ounce - FY 2016 gold bullion sales of 53,366 ounces at an average of $1,253 per ounce

·    Q4 2016 copper concentrate shipments to the customer totalled 2,147 dry metric tonnes ("dmt") with a sales value of $3.9 million (excluding Government of Azerbaijan production share) - FY 2016: 6,830 tonnes with a sales value of $12.6 million

·    In Q4 2016, put options over 3,000 ounces of gold at $1,200 per ounce exercised generating additional revenue of $80,400

Operational exploration update

·    Gedabek site connected to the Azerbaijan national power grid in November 2016

·    Extensive exploration of the Gedabek site continues - mineral resource delineation drilling of the Gadir underground mine and core drilling of the Ugur discovery deposit underway with encouraging initial results

Company financials

·    Net debt, being interest-bearing loans and borrowings less cash and cash equivalents, totaled $35.1 million at 31 December 2016 ($37.7 million at 30 September 2016)

·    Loan from chief executive officer extended for another twelve months to 8 January 2018, all other terms remaining the same

Anglo Asian CEO Reza Vaziri commented, "This has been a year of progress for Anglo Asian. Whilst disappointing that gold production for 2016 was marginally below our revised forecast of 67,000 to 69,000 ounces due to lower than expected grades in December, there were other successful developments in the year and copper production doubled due to the operation of the flotation plant. Progress was made in cost reduction and sustainability at Gedabek, and in particular, the connection of the Gedabek site to the national power grid in quarter four was a major milestone and will result in significant future cost savings. Having made a gold discovery at Ugur, only three kilometres from our Gedabek processing facilities, we are excited to have commenced a significant exploration programme which is already yielding potential new sources of ore.  I look forward to this progress continuing and updating shareholders further in 2017." 

Gedabek - mining, production and sales

During Q4 2016, the Company mined 309,984 tonnes of ore from its Gedabek open pit (Q3 2016: 409,572 tonnes) and 40,663 tonnes of ore with an average content of 4.79 grammes of gold per tonne from its Gadir underground mine (Q3 2016: 27,582 tonnes average grade content of 5.13 grammes of gold per tonne). Total ore mined in 2016 was 1,554,935 tonnes from the Gedabek open pit and 123,732 tonnes with an average content of 5.40 grammes of gold per tonne from its Gadir underground mine.

As previously reported, low grade ore (less than 1.5 grammes per tonne of gold) is being treated by heap leaching, whilst higher grade ore (more than 1.5 grammes per tonne of gold) is being processed through the agitation leaching plant.

During Q4 2016, Anglo Asian stacked 80,976 tonnes of dry crushed ore on to heap leach pads with an average gold content of 1.21 grammes of gold per tonne (Q3 2016: 92,437 tonnes with an average gold content of 1.21 grammes per tonne). The Company also heap leached uncrushed Run of Mine ("ROM") ore. During Q4 2016, Anglo Asian stacked 90,310 tonnes of ROM ore on to heap leach pads with an average gold content of 0.84 grammes of gold per tonne (Q3 2016: 190,185 tonnes with an average gold content of 0.80 grammes per tonne).

During Q4 2016, the Company processed 192,502 tonnes of ore with an average gold content of 2.26 grammes of gold per tonne through the agitation leaching plant (Q3 2016: 164,492 tonnes with an average gold content of 2.50 grammes per tonne).

There was a 72 per cent. gold recovery in agitation leaching for Q4 2016 (Q3 2016: 77 per cent.). Gold doré is produced from both heap and agitated leach intermediate solutions, which are combined for final processing and also re-circulated around the plant, heap leach pads and tailings dam. Heap leaching is a long-term process and recoveries are therefore only estimates calculated from available metallurgical statistics.

During Q4 2016, the Company produced gold doré containing 14,221 ounces of gold and 2,845 ounces of silver at Gedabek (Q3 2016: 15,407 ounces of gold and 2,502 ounces of silver). During Q4 2016, the agitation leaching plant produced 10,183 and 1,799 ounces of gold and silver, respectively, and the heap leach operations produced 4,038 and 1,046 ounces of gold and silver, respectively.

During Q4 2016, 148,119 dmt of agitation leaching plant tailings was processed by the flotation plant. The gross metal contained within this feed-stock was 3,441 ounces of gold, 96,774 ounces of silver and 640 tonnes of copper. Copper concentrate of 2,059 dmt was produced containing 359 tonnes of copper, 1,255 ounces of gold and 40,620 ounces of silver. SART processing produced 445 dmt of copper concentrate containing 219 tonnes of copper, 7 ounces of gold and 6,751 ounces of silver.

The following table summarises gold doré production and sales at Gedabek for FY 2015 and FY 2016:

	Gold produced* (ounces)	Silver produced* (ounces)	Gold sales** (ounces)	Gold sales price ($/ounce)
Quarter ended
31 March 2015	17,185	597	17,206	1,214
30 June 2015	18,739	900	16,088	1,193
H1 2015	35,924	1,497	33,294	1,204
30 Sept 2015	18,158	907	14,871	1,123
31 Dec 2015	17,588	1,858	15,759	1,108
H2 2015	35,746	2,765	30,630	1,115
FY 2015	71,670	4,262	63,924	1,161
31 March 2016	13,383	1,958	12,143	1,184
30 June 2016	17,926	2,983	15,661	1,265
H1 2016	31,309	4,941	27,804	1,230
30 Sept 2016	15,407	2,502	12,567	1,332
31 Dec 2016	14,221	2,845	12,995	1,227
H2 2016	29,628	5,347	25,562	1,278
FY2016	60,937	10,288	53,366	1,253

 * including Government of Azerbaijan's share.

 ** excluding Government of Azerbaijan's share.

The following table summarises copper concentrate production from both its SART and flotation plants for FY 2016 by quarter:

	Concentrate	Copper	Gold	Silver
	production*	content*	content*	content*
2016	(dmt)	(tonnes)	(ounces)	(ounces)
Quarter ended 31 March
SART processing	363	181	12	7,789
Flotation**	1,458	200	607	19,055
Total	1,821	381	619	26,844
Quarter ended 30 June
SART processing	373	195	4	10,047
Flotation**	1,988	302	1,445	39,184
Total	2,361	497	1,449	49,231
Quarter ended 30 Sept
SART processing	418	225	4	7,291
Flotation	1,426	260	1,123	24,106
Total	1,844	485	1,127	31,397
Quarter ended 31 Dec
SART processing	445	219	7	6,751
Flotation	2,059	359	1,255	40,620
Total	2,504	578	1,262	47,371

* including Government of Azerbaijan's share.

** certain figures for flotation production are different to those previously disclosed due to final reconciliation of production and sales.

The following table summarises total copper concentrate production and sales at Gedabek for FY 2015 and FY 2016. Note that sales of concentrates are initially recorded at provisional amounts until agreement of final assay:

	Concentrate	Copper	Gold	Silver	Concentrate	Concentrate
	production*	content*	content*	content*	sales**	sales**
	(dmt)	(tonnes)	(ounces)	(ounces)	(dmt)	($000)
Quarter ended
31 March 2015	298	182	8	1,354	234	660
30 June 2015	391	236	6	3,627	372	1,076
H1 2015	689	418	14	4,981	606	1,736
30 Sept 2015	406	216	7	3,532	279	661
31 Dec 2015	955	335	341	15,851	817	1,285
H2 2015	1,361	551	348	19,383	1,096	1,946
FY 2015	2,050	969	362	24,364	1,702	3,682
31 March 2016***	1,821	381	619	26,844	1,319	2,137
30 June 2016***	2,361	497	1,449	49,231	1,582	2,977
H1 2016	4,182	878	2,068	76,075	2,901	5,114
30 Sept 2016	1,844	485	1,127	31,397	1,782	3,612
31 Dec 2016	2,504	578	1,262	47,371	2,147	3,865
H2 2015	4,348	1,063	2,389	78,768	3,929	7,477
FY2016	8,530	1,941	4,457	154,843	6,830	12,591

*   including Government of Azerbaijan's share.

** excluding Government of Azerbaijan's share.

*** certain figures are different to those previously disclosed due to final reconciliation of concentrate production and sales.

Gedabek - operational update

The Gedabek site was connected to the Azerbaijan national power grid in Q4 2016. This involved the construction of seven kilometres of 35 kilovolt overhead power cable and five kilometres of 6.3 kilovolt overhead distribution line, the installation of two main and five auxiliary electricity transformers and the construction of an electrical power house. The total cost of the installation was $2.1 million and it will result in significant cost savings and improve availability of the processing plant.

The water treatment plant is now being manufactured by the supplier and is expected to be installed at site at the beginning of Q2 2017 with a target start-up date of end April 2017. The water evaporation equipment is expected to be received and installed by the end of Q1 2017.

Gedabek - exploration update

Area adjacent to the current operational mine

Geological mapping was carried out over 0.7 square kilometres from which 290 outcrop samples were taken and 20 metres of follow-up trenching was carried out. In addition, two drill holes with a total of 530 metres of diamond drilling were completed.

Gadir underground mine

Efforts focused on underground mapping that comprised 596 linear metres backed up with 596 linear metres of channel sampling. Mineral resource delineation drilling continued with the aim of assessing the down dip and lateral extensions of the known ore bodies. In Q4 2016, four core drill holes (HQ size core) with a total of 365 metres had been completed. These drill holes were designed to confirm and extend mineralisation at Gadir. An additional 21 drill holes (BQ size core) with a total of 598 metres were drilled to define ore zone geometry.

Ugur discovery

Geological mapping was carried out over 0.6 square kilometres from which 220 outcrop samples were taken and 290 metres of follow-up trenching that was sampled every metre was carried out. In addition, 55 reverse circulation drill holes with a total of 1,842 metres and 12 drill holes with a total of 1,893 metres of diamond core drilling were completed. Encouraging results have been received from the newly discovered Ugur deposit which enhance the Company's understanding of the deposit and show that the oxide zone extends deeper than initially determined by previous drilling. Ugur is only three kilometres from the processing facilities at the main Gedabek site, highlighting the clear strategic value of developing this deposit.

The Bittibulag mineral occurrence 

A surface mapping exercise was completed covering an area of 1.1 square kilometres that included taking 190 outcrop samples for analysis. Preparation and analysis of 648 samples is on-going from the soil geochemistry sampling programme conducted earlier in 2016. A total of 40 metres of trenches were excavated and mapped from which 54 samples were taken.

Company financials

Net debt

The Company had net debt at 31 December 2016 of $35.1 million, a reduction of $14.9 million since 31 December 2015.        

	$m
Kapital Bank	1.0
Amsterdam Trade Bank - Agitation plant loan	17.3
International Bank of Azerbaijan - loan International Bank of Azerbaijan - letter of credit financing	6.4 0.5
Atlas Copco equipment finance loan YapiKredit Pasha Bank Reza Vaziri - director's loan	0.8 0.7 5.9 3.9
Total loans	36.5
Cash on hand and at bank	(1.4)
Net debt	35.1

The amount of the loan facility from Reza Vaziri is $4.0 million and the term of the loan has been extended until 8 January 2018. The amount currently outstanding under the facility is $3.9 million. All other terms of the loan remain unchanged.

As Mr. Vaziri is a director of the Company, the loan constitutes a related party transaction pursuant to AIM Rule 13. The independent directors (being Khosrow Zamani, Richard Round, John H. Sununu and John Monhemius) consider, having consulted with the Company's nominated adviser, SP Angel Corporate Finance LLP, that the terms of the Loan are fair and reasonable insofar as its shareholders are concerned.

Exercise of options for sale of gold

On 29 June 2016, the Company entered into a series of net zero cost options with a lower (PUT option) sales price of $1,200 per ounce and an upper (CALL option) sales price of $1,426 per ounce. The options matured in lots of 1,500 ounces of gold every two weeks from inception date with the final lot maturing on 13 December 2016.

The final two lots of PUT options expired on 29 November and 13 December 2016. On both these dates the spot price of gold was below the PUT option price of $1,200 per ounce. Accordingly, the company exercised both these options yielding additional revenue of $80,400.

**ENDS**

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

Reza Vaziri	Anglo Asian Mining plc	Tel: [phone]
Bill Morgan	Anglo Asian Mining plc	Tel: [phone]
Ewan Leggat	SP Angel Corporate Finance LLP Nominated Adviser and Broker	Tel: [phone]
Laura Harrison	SP Angel Corporate Finance LLP	Tel + 44 (0) 20 3470 0470
Susie Geliher	St Brides Partners Ltd	Tel: [phone]
Lottie Brocklehurst	St Brides Partners Ltd	Tel: [phone]

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 is also mines high grade ore from the 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 2015 from Gedabek totalled 72,032 ounces with 969 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 commenced production in the last quarter of 2015. This is initially 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.

 

END

 

 

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