29 September 2021

Anglo Asian Mining plc

Right to three new concessions bordering the Gedabek and Kyzlbulag Contract Areas

Garadagh porphyry deposit acquired hosting over 300,000 tonnes of copper together with other major resources with significant development potential

Milestone agreement underpins Anglo Asian's vision to become a mid-tier copper and gold producer

Anglo Asian Mining plc ("Anglo Asian" or the "Company"), an AIM-listed gold, copper and silver producer operating in Azerbaijan has signed 'Heads of Terms' (the "Agreement") with the Government of Azerbaijan (the "Government") which awards the Company three new concessions with a combined area of 882 square kilometres. The new concessions will be immediately effective following ratification by the Parliament of the Republic of Azerbaijan. The Agreement is a transformational milestone in the history of the Company with the Garadagh porphyry deposit alone containing over 300,000 tonnes of copper with an in-situ value of over $3.0 billion at current prices. This acquisition underpins the Company's vision of becoming a mid-tier gold and copper miner.

Prior to negotiation of the Agreement, the Company undertook a detailed review of its existing assets and their surrounding regions which identified the new concessions with high potential that contain copper resources and reserves in quantities previously unavailable to the Company. The new concessions also have considerable synergies and geographical proximity with the Company's existing mining properties. The Company is currently evaluating how best to exploit the economically mineable copper resources contained within the new concessions.

Two of the new concessions border the existing Gedabek and Gosha Contract Areas. They contain the large-scale Garadagh porphyry deposit and the adjacent Xarxar copper deposit and assessment of these valuable assets will start immediately. A comprehensive exploration programme to prepare JORC compliant mineral resource and ore reserve estimates will commence after ratification of the new concessions. Development will follow the finalisation of the ore reserve estimates and the Company anticipates ore will be extracted by open pit mining.

The third new concession area is called Demirli and is adjacent to the Kyzlbulag Contract Area in the Karabakh economic region. The Demirli concession contains the Demirli copper-molybdenum deposit. According to an unsubstantiated report in January 2016, the deposit contained an estimated 275,000 tonnes of copper and 3,200 tonnes of molybdenum. Further details of the report are available on the Company's website at https://www.angloasianmining.com/operations/new-concessions/.

As part of the Agreement, the Company will relinquish its rights to the Soutely mine in the Kalbajar district. This follows the Company's assessment of Soutely's security risks and the significant capital expenditure required to develop the mine over the longer timeframe. However, the Company is in discussion with the Government to obtain alternative exploration territory in the Kalbajar district.  

The three new concessions will be incorporated into the Company's existing Production Sharing Agreement ("PSA") without payment of any acquisition consideration. The changes to the PSA are subject to, and conditional upon, ratification by the Parliament of the Republic of Azerbaijan.

Anglo Asian CEO Reza Vaziri commented:

"The recent cessation of hostilities with Armenia has presented an opportunity for Anglo Asian to develop its remaining contract areas, granted in 1998 (when its PSA was ratified), and to significantly accelerate its growth strategy towards becoming a mid-tier gold and copper producer. Following extensive negotiations, we are very pleased to have secured two additional highly strategic mining properties immediately adjacent to the north of the Gedabek contract area. Together with the new Demirli mining property, they ensure the Company is now in an excellent position to generate long-term sustainable growth with a greatly increased resource and reserve base with outstanding exploration potential.

"We highly value our long-standing collaboration and partnership with the Azerbaijan government and appreciate their flexibility in granting us these exciting new concessions, which recognises Anglo Asian's successful track record of developing assets in the region for the benefit of all stakeholders."

Further details

Maps of the three new concessions have been published today on the Company's website and are available at https://wp-angloasianmining-2020.s3.eu-west-2.amazonaws.com/media/2021/09/28165525/AAM-New-Maps.pdf. 

·   Following ratification of the amendments to the PSA, the Company will have eight concessions in Azerbaijan with a total area of 2,544 square kilometres.

·  Two new concessions ("Garadagh" and "Xarxar") will be granted which will infill 808 square kilometres of territory between the current Gedabek and Gosha Contract Areas to create one continuous area of 1,408 square kilometres containing the four concessions. The territory will include the Garadagh and Xarxar deposits which are situated 4.0 and 1.5 kilometres respectively from the northern boundary of the Gedabek Contract Area.

o Garadagh contains 168,000 and 150,700 tonnes of copper in Soviet resource classifications C1 and C2 respectively totalling 318,700 tonnes (see Appendix One) with an average grade of 0.64 per cent. copper.

o The nearby Xarxar deposit shows significant potential as it is likely part of the same mineral system.

·     The third new concession ("Demirli") is adjacent to the existing Kyzlbulag Contract Area in the Karabakh economic region, which will expand the area under concession to the northeast. The new Demirli concession contains the Demirli mining property.

·     The Company's rights over the three new concessions will commence immediately after their incorporation into the Company's existing PSA.

·   The PSA in respect of the Kyzlbulag and Vejnaly Contract Areas will be "reset" to year zero upon notification of access.

·     The Government will use all reasonable endeavours to grant physical access to the Kyzlbulag and Demirli contract areas.

·     The rights to the Soutely mining property have been relinquished due to ongoing security concerns, the impracticality of operating a mine straddling the border with Armenia, the high level of risk developing the mine and an absence of infrastructure on the Azerbaijan side of the border. The timing of any access to the area is also unknown.

The incorporation of the new concessions into the PSA will require the ratification of the Parliament of the Republic of Azerbaijan. The Company and the Government anticipates this will be completed in a few months. Shareholders should note that there is no guarantee that the changes to the PSA will receive Parliamentary ratification.

Anglo Asian Vice-President, Stephen Westhead commented:

"We are very excited about the acquisition of these new territories and the significant geographical and operational synergies they bring. In regard to Garadagh and Xarxar, we have considerable expertise and understanding of the area after extensive exploration and mining around Gedabek for many years. These new concessions, which have previously had some exploration, represent great upside potential for Anglo Asian in terms of additional resources, with Garadagh alone containing a reported 318,000 tonnes of copper. In addition to the known deposits and mines, significant exploration upside exists at both the new areas based on historical exploration information and the more recent ZTEM and satellite interpretation work by the Company. 

"The substantial volumes of copper within the Garadagh and Demirli deposits significantly strengthen our copper inventory and future production. Copper is playing a vital role for global economies in transitioning to more sustainable practices. The long-term supply constraints that the market faces support both the metal pricing and this transformational opportunity for Anglo Asian. The increasing focus on copper will support the sustainable growth and continued income generation for the Company and its shareholders.

"I look forward to sharing further details of these new mining properties with shareholders as they become available."

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, which was incorporated into UK law by the European Union (Withdrawal) Act 2018, until the release of this announcement.

For further information please contact:

Notes to Editors:

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 produced 67,249 gold equivalent ounces ("GEOs") for the year ended 31 December 2020.  The Company has a production target for the year to 31 December 2021 of 48,000 ounces to 54,000 ounces of gold and 2,500 tonnes to 2,800 tonnes of copper. This total production target expressed as gold equivalent ounces ("GEOs") at budgeted prices is between 64,000 GEOs and 72,000 GEOs.

https://www.angloasianmining.com/

Operational review

2020 was a very challenging year for Anglo Asian. In addition to the global COVID-19 pandemic, the Company had to cope with the conflict between Azerbaijan and Armenia which resulted in the return of control of the Occupied Territories to Azerbaijan. Over the past 25 years, Anglo Asian has focused its efforts on the three Contract Areas in its PSA which are located in stable and peaceful areas of Azerbaijan, namely Gedabek, Gosha and Ordubad. The Company now believes that access to the newly liberated regions that contain its other contract areas will soon be opened. This puts the Company in a position where it wants to develop these assets, which had in the past been inaccessible, within a reasonable timeframe.

In view of these new opportunities, the Company undertook an operational review to assess development opportunities under its existing PSA and to identify prospective new areas. The review carefully examined the perceived size of deposits, location, access, security issues, vulnerability to new conflicts, the impact of logistical issues, capital requirements and the projected time to achieve production for each current property, or potential new property.

Garadagh and Xarxar

Garadagh and Xarxar are situated 4.0 and 1.5 kilometres respectively from the northern boundary of the Gedabek Contract Area. The acquisition of these mineral deposits through the granting of two new concessions will infill the territory between Gedabek and Gosha to create a contiguous area totalling 1,408 square kilometres containing the four concessions. It will include areas to the north, northeast and west of the current Gedabek Contract Area, connecting the Gedabek and Gosha Contract Areas. The PSA for the new concessions will become operative on the effective date of incorporating the two new concessions into the Company's PSA. It is expected by the Company and the Government that Parliamentary ratification for the incorporation process will be completed in a few months. Maps of the two new concessions can be accessed on the Company's website at the following https://wp-angloasianmining-2020.s3.eu-west-2.amazonaws.com/media/2021/09/28165525/AAM-New-Maps.pdf.

The Avshancli and Gilar discoveries are situated close to the northern boundary of the existing Gedabek Contract Area. Our geological exploration of Avshancli and Gilar indicates that these discoveries trend to the north towards Xarxar. The extension of the exploration territory to the north will therefore enable these discoveries to be fully incorporated into the Company's expansion plans. Given the close proximity of the Gilar, Avshancli, Xarxar and Garadagh deposits, which are all situated within a ten square kilometre region, coordinated development across the properties will be advantageous as the Company invests to exploit these substantial resources.

Kyzlbulag and the new Demirli concession

The Kyzlbulag Contract Area in the Karabakh economic region contains several mines and has excellent potential for exploration, as indicated by the presence of many mineral deposits and known targets in the region. The new Demirli concession contains the Demirli mining property. There are indications that up to 35,000 ounces of gold per year were extracted from the Kyzlbulag copper-gold mine, before the mine was closed several years ago, indicating the presence of a gold mineralising system.

Russian peacekeepers are currently present in the area ensuring the region is safe. The Government will use its all reasonable endeavours to ensure that the Company has physical access to the region to undertake mineral exploration.

The new Demirli concession is 74 square kilometres and extends by about 10 kilometres to the northeast from the Kyzlbulag Contract Area. A map of the new concession can be accessed on the Company's website at the following https://wp-angloasianmining-2020.s3.eu-west-2.amazonaws.com/media/2021/09/28165525/AAM-New-Maps.pdf.

Vejnaly

The Vejnaly mine, in southwest Azerbaijan, was illegally exploited for many years. With the cessation of hostilities and access to the mine now possible, Anglo Asian has been able to visit the Vejnaly Contract Area which is part of the Company's original PSA that was ratified in 1998. The Company hopes to begin additional exploration and processing of some ore from Vejnaly before the end of 2021.

Kalbajar district and Soutely mine

The Soutely mine is located in the Kalbajar district, in an area which is regarded by the Company as a significant and on-going security risk, due to its proximity to the border with Armenia. It is likely thousands of land mines are still to be removed or destroyed, and most of the roads and infrastructure in the region have been damaged. The region is also very mountainous. While the Soutely mine remains a substantial resource, it straddles the Armenian border with operations still being carried out in the part of the mine situated in Armenia. Security issues continue in the area and Anglo Asian could not guarantee the safety and security of its workers under these circumstances.

All of the existing infrastructure for the Soutely mine, including the electricity supply, rail access, and processing facilities are located within Armenia. This includes the processing plant which is 200 kilometres from the mine in Ararat, Armenia. Ore is transported by rail to this facility for processing. The Company estimates it would cost a minimum of between $200 million to $300 million to build the infrastructure in Azerbaijan required to operate the mine.

Considering the security risks and the large infrastructure and capital requirements to develop the mine, the opportunity at Soutely no longer appears attractive to the Company when considered against the potential to develop its other concessions which will be readily accessible to the Company. The timing of access to the area is also uncertain. The Company has therefore concluded after much deliberation that it is not feasible to exploit the mine in the foreseeable future and has decided to relinquish its rights under the PSA to the Soutely mining property, in return for the new development opportunities provided by the Agreement that it believes are far more favourable.

The Company is, nevertheless, keen to explore in the Kalbajar and adjoining regions when conditions permit. The Agreement contains provisions that the Company and the Government will agree in future in which areas of Kalbajar the Company can explore and potentially develop.

Access to new concessions

Access to the new concessions will be as follows:

o Garadagh and Xarxar - upon incorporation of the new concessions into the PSA

o Demirli - the Government will use all reasonable endeavours to grant access as soon as possible following incorporation of the concession into the PSA.

Competent Person Statement

The information in the announcement that relates to exploration results, minerals resources and ore reserves is based on information compiled by Dr Stephen Westhead, who is a full-time employee of Anglo Asian Mining with the position of Vice President, Geology & Mining, who is a Fellow of The Geological Society of London, a Chartered Geologist, Fellow of the Society of Economic Geologists, Member of The Institute of Materials, Minerals and Mining and a Member of the Institute of Directors.

Stephen Westhead has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Stephen Westhead consents to the inclusion in the announcement of the matters based on his information in the form and context in which it appears.

Stephen Westhead has sufficient experience, relevant to the style of mineralisation and type of deposit under consideration and to the activity that he is undertaking, to qualify as a "competent person" as defined by the AIM rules. Stephen Westhead has reviewed the mineral resources included in this announcement.

**ENDS**

APPENDIX ONE

Soviet resources of the Garadagh deposit at 1 January 1992

Data extracted from the report of the Geological Committee of the Azerbaijan Republic - Small Caucasian geological search expedition titled "Report on the initial results of exploration of porphyry copper ore in the central part of Garadagh for 1983-92" dated: Baku 1992.