Q1 2013 Production and Operations Update - Gedabek

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

10 April 2013

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

Q1 2013 Operations 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 March 2013 ('Q1 2013').

Overview

·    Gold production from heap leach processing for Q1 2013 at Gedabek totalled 8,585oz

·    Q1 2013 gold sales of 8,725oz of gold at an average of US$1,638 per oz

·    Silver dore production from heap leach operations for Q1 2013 totalled 6,655oz

·    Agitation leaching plant construction continues on budget and on-time - expected to improve gold recoveries significantly at Gedabek when commissioned in H1 2013

·    Gold production target for FY 2013 is 60,000oz Au

·    Copper, silver and gold production from SART processing operations for Q1 2013 totalled 93 tonnes of copper, 9,875oz of silver and 16oz of gold

·    Following the contract signed with Glencore International plc ('Glencore') in Q4 2012, copper sale shipments during Q1 2013 included 510 wet metric tonnes ('WMT') and a trial shipment of 200WMT to Seagate Minerals and metals Inc ('Seagate')

·    Net debt, being interest-bearing loans and borrowings less cash and cash equivalents, totals US$37.5 million

Anglo Asian CEO Reza Vaziri said, "Our production target of 60,000oz for FY 2013, which represents a 20% increase on the 2012 figures, highlights our commitment to achieving significant growth and increasing value over the coming year.  This target has been set in view of the commissioning of the agitation leaching plant which is in the final stages of its construction and on track for commissioning in H1 2013.  

"In Q1 2013, our gold production figures for the period are in line with the 2013 mine plan and managements' expectations and we look forward to providing further positive production updates throughout the year with the commissioning of the new agitation leaching plant.  Our profitability has increased following the contract signed at the end of last year with Glencore resulting in the shipment of 510 wet metric tonnes of copper to Glencore and an additional trial shipment of 200 WMT to Seagate late in the quarter. We are focussed on increasing this further by arranging additional sales contracts for our copper concentrate stockpiles which currently total 2,535 WMT.  I look forward to updating shareholders on our progress as we continue to consolidate our position as a leading mid-tier gold producer in Caucasia and Central Asia."

Full Details

During the quarter ended 31 March 2013, the Company produced 8,585oz of gold ('Au') at Gedabek from its heap leach operations.  Anglo Asian has completed gold sales* for the period of 8,725oz Au at an average of US$1,638 per oz.

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

Gedabek's heap leach stacking operation continued to perform in line with management's expectation in Q1 2013.  During the period the Company transferred 186,555 tonnes of dry ore onto the leach pad with an average gold content of 1.35g/t.  It will be noticed that the grade and tonnage of ore stacked on the heaps in Q1 2013 are lower than in previous years, with a consequent reduction in gold production during the quarter.  This is a planned change in the production schedules, as higher grade ore is now being stockpiled in order to provide a supply of ore to feed the new agitation leaching plant.

The Company's agitation leaching plant to improve gold recovery and production at Gebabek is moving into its final phase of development. The new plant will initially treat 100 tonnes of ore per hour, increasing to 150 tonnes per hour in due course, and 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 March 2013, the tailings dam and pipe route construction, plant steelwork and tank fabrication have been completed and the equipment installation is underway, with the plant commissioning on target for start up in H1 2013, under the original budget of US$52million.

Copper concentrate production from the Company's Sulphidisation, Acidification, Recycling, and Thickening ('SART') plant, production for Q1 2013 totalled 93 tonnes Cu, 9,875oz Ag and 16oz Au.

During Q4 2012 the Company signed a contract with Glencore for the sale of 2,500 wet metric tonnes and 550 dry metric tonnes of SART copper concentrate.  Under the terms of the agreement, Glencore is purchasing 250 WMT per month of copper concentrate product.  Anglo Asian is now intending to arrange further sales contracts for its copper concentrate stockpiles, which currently total 2,535 WMT. A trial shipment of 200 WMT was sent to Seagate in late March 2013.

Total funds drawn down from the International Bank of Azerbaijan ('IBA') for the Agitation Leaching Plant were US$40.1 million at 31 March 2013. The remaining amount of the first loan with the IBA was US$0.8 million and cash in the bank was US$3.4 million at 31 March 2013. Net debt, being interest bearing loans and borrowings less cash and cash equivalents therefore, stood at US$37.5 million at 31 March 2013.

Net debt as at 31 March 2013 stands at:

                                                                                                US$(M)

            Agitation Plant IBA Loan Balance                                   40.1

            First IBA Loan Balance                                                   0.8

            Total IBA Loan Balance                                                 40.9

            Less Cash in the Bank                                                      3.4

            Net debt                                                                         37.5

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 and FY 2013 gold production target is 60,000 oz of gold in line with commissioning of a new agitation leaching plant at Gedabek in H1 2013.

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