Q4 2012 Production and Operations Update - Gedabek

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

9 January 2013

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

Q4 Operations and FY 2012 Update - Gedabek Gold/Copper/Silver Mine in Azerbaijan

Anglo Asian Mining plc, the AIM listed gold producer in Azerbaijan, is pleased to provide an update on production and operations at its flagship Gedabek gold/copper/silver mine ('Gedabek') in western Azerbaijan for the three months to 31 December 2012 ('Q4 2012') and the year ended 31 December 2012 ('FY 2012').

Overview

·    Gold production from heap leach processing for Q4 2012 at Gedabek totalled 14,530 oz

·    FY 2012 gold production totalled 50,215 oz - achieving management's target for the year

·    Buoyant gold price - Q4 2012 gold sales of 11,497 oz at an average of US$1,694 per oz bringing the full year sales to 42,743 oz of gold at an average of US$1,660 per oz for FY 2012

·    Silver dore production from heap leach operations for Q4 2012 totalled 4,790 oz and 20,133 oz for FY 2012

·    Agitation leaching plant construction continues on budget and on-time - expected to improve gold recoveries significantly at Gedabek when commissioned in 2013

·    Copper, silver and gold production from SART processing operations for Q4 2012 totalled 116 tonnes of copper, 14,242 oz of silver and 14 oz of gold

·    Copper concentrate production for FY 2012 from SART processing of 502 tonnes of copper and 98,158 oz of silver and 86 oz of gold

·    Contract signed with Glencore International plc during Q4 2012 for the sale of 2,500 wet metric tonnes ('WMT') and 550 dry metric tonnes of copper concentrate

·    Net debt, being interest-bearing loans and borrowings less cash and cash equivalents  totals US$29.0 million

Anglo Asian CEO Reza Vaziri said, "We are delighted to report another strong production performance from our flagship Gedabek gold/copper/silver mine in Azerbaijan having achieved our gold production target for FY 2012 by producing 50,215 ounces.

"Looking ahead to 2013, we are committed to increasing Gedabek's gold production and are in the process of the construction a new agitation leaching plant which is set to improve production from the mine substantially once commissioned. The agitation leaching plant is expected to improve gold recoveries of oxides and sulphides to 85% and 69%, respectively and with the plant's commissioning on target to start in April 2013 we are ideally placed to capitalise on the on-going strong gold price environment. In terms of our copper production, we achieved 502 tonnes for the year and sold US$2.1 million worth of product. Importantly we have signed a sales agreement with Glencore International in Q4 2012 which positively impact our bottom line."

"Furthermore as a company we remain dedicated to establishing our second mining project in Azerbaijan, Gosha, located 50km away from Gedabek, which will be another significant step for Anglo Asian as we look to consolidate our position as a leading mid-tier gold producer in Caucasia and Central Asia."

Full Details

During the quarter ended 31 December 2012, the Company produced 14,530 oz of gold ('Au') at Gedabek from its heap leach operations.  This brings total production for the year ended 31 December 2012 from Gedabek to 50,215 oz of gold which met the Company's expectations.  The continuing buoyant gold price enabled Anglo Asian to complete gold sales* of 11,497 oz Au at an average of US$1,694 per oz for Q4 2012 and gold sales* of 42,743 oz Au at an average of US$1,660 per oz for FY 2012.  It should be noted that 6,246 ounces of gold were transferred to the government of Azerbaijan as part of the Company's Product Sharing Agreement in FY 2012*. 

The following summary table of gold production and prices outlines quarter-on-quarter gold production at Gedabek for FY 2012.  

Gebabek's heap leach stacking operation has continued to perform strongly in FY 2012.  During the fourth quarter of 2012 the Company transferred 209,386 tonnes of dry ore onto the leach pad with an average gold content of 3.07 g/t.  For the year to 31 December 2012, Anglo Asian transferred 753,601 tonnes of dry ore onto the leach pad with an average gold content of 3.03 g/t.

As previously disclosed, to improve gold recovery and production at Gebabek the Company has commenced the construction of a new agitation leaching plant that will initially treat 100 tonnes of ore per hour, increasing to 150 tonnes per hour in due course, and which is expected to improve the gold recoveries of both oxide and sulphide ores at Gedabek to levels of 85% and 69%, respectively.  As at 31 December 2012, the tailing dam and pipe route construction, plant construction, tank fabrication and steel structure are all on schedule. Equipment installation will start in January 2013 and commissioning is on track for H1 2013. The Project is expected to be completed within the original budget of US$52m.

Copper concentrate production from the Company's Sulphidisation, Acidification, Recycling, and Thickening ('SART') plant, production for FY 2012 totalled 502 tonnes Cu, 98,158 oz Ag and 86 oz Au.  For Q4 2012 copper concentrate production contained 116 tonnes Cu, 14,242 oz Ag and 14 oz Au.

During FY 2012 total sales of copper concentrate were US$2.1 million. During Q4 2012 the Company signed a contract with Glencore International plc ('Glencore') for the sale of 2,500 wet metric tonnes ('WMT') and 550 dry metric tonnes of copper concentrate.  Under the terms of the agreement, which is already underway, Glencore will purchase 250 WMT per month of copper concentrate product.  There is also an option for the Company to stop selling copper concentrate product to Glencore after 1,500 WMT has been sold. Anglo Asian is now intending to arrange further sales contracts for its copper concentrate stockpiles, which currently total 2,900 WMT.

Total funds drawn down from the International Bank of Azerbaijan ('IBA') for the Agitation Leaching Plant were US$29.6 million at 31 December 2012. The amount of the first loan with the IBA was US$1.8m and cash in the bank was US$2.4 million at 31 December 2012. Net debt, being interest-bearing loans and borrowings less cash and cash equivalents therefore, stood at US$29.0 million at 31 December 2012.

Net debt as at 31 December 2012 stands at:

                                                                                                US$(M)

            Agitation Plant IBA Loan Balance                                    29.6

            First IBA Loan Balance                                                     1.8

            Total IBA Loan Balance                                                  31.4

            Less Cash in the Bank                                                      2.4

            Net debt                                                                         29.0

**ENDS**

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

*The Company has a Production Sharing Agreement ('PSA') in place with the Government of Azerbaijan which governs how the production of each of the Company's Contract Areas under the PSA is divided between the Company and the Government of Azerbaijan. Currently, the Company takes ownership of 87.25% of the production at Gedabek, which accounts for the difference between the total gold produced at Gedabek and the amount of gold sold by the Company. It should also be noted that there will always be short-term timing differences between gold production and sales.

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 2012 totalled 50,215 oz of gold.

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