Q2 and H1 2017 Production and Operations Update

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

 

17 July 2017

 

Anglo Asian Mining plc

Q2 & HY1 2017 Production Update and Operations Review

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 for its Gedabek gold, copper and silver mine ("Gedabek") in western Azerbaijan for the three months to 30 June 2017 ("Q2 2017") and the six months to 30 June 2017 ("HY1 2017").

 

Note that all references to "$" are to United States dollars.

 

Production overview

 

Q2 2017

·   Gold production for Q2 2017 totalled 12,140 ounces - 9,131 ounces contained within gold doré, 4 ounces from SART processing and 3,005 ounces from flotation (Q1 2017: total 11,078 ounces)

·    Copper production for Q2 2017 totalled 716 tonnes - 187 tonnes from SART processing and 529 tonnes from flotation (Q1 2017: total 606 tonnes)

·   Silver production for Q2 2017 totalled 45,718 ounces - 3,266 ounces contained within gold doré, 4,717 ounces from SART processing and 37,735 ounces from flotation (Q1 2017: total 39,369 ounces)

·   Total production for Q2 2017 expressed as gold equivalent ounces of 14,775 ounces (Q1 2017: 13,779 gold equivalent ounces)

 

HY1 2017

·    Gold production for HY1 2017 totalled 23,218 ounces - 18,389 ounces contained within gold doré, 9 ounces from SART processing and 4,820 ounces from flotation (HY1 2016: total 33,837 ounces)

·  Copper production for HY1 2017 totalled 1,322 tonnes - 397 tonnes from SART processing and 925 tonnes from flotation (HY1 2016: total 969 tonnes)

·    Silver production for HY1 2017 totalled 85,087 ounces - 5,713 ounces contained within gold doré, 10,240 ounces from SART processing and 69,134 ounces from flotation (HY1 2016: total 90,782 ounces)

·    Total production for H1 2017 expressed as gold equivalent ounces of 28,554 ounces (H1 2016: 36,729 gold equivalent ounces)

 

FY 2017

·   Target production for the 12 months to 31 December 2017 expressed as gold equivalent ounces remains at between 64,000 ounces and 72,000 ounces compared to FY 2016 actual total production of 72,304 gold equivalent ounces

 

Sales overview

 

·   Q2 2017 gold bullion sales of 7,406 ounces at an average of $1,258 per ounce (Q1 2017: 8,283 ounces at an average of $1,220 per ounce)

·  Q2 2017 copper concentrate shipments to the customer totalled 3,166 dry metric tonnes ("dmt") with a sales value of $6.1 million (excluding Government of Azerbaijan production share) (Q1 2017: 2,230 dmt with a sales value of $4.4 million)

 

Operational update

·    Water treatment plant installation is complete and commissioning to start imminently

·  Development of Ugur deposit progressing on schedule with anticipated commencement of mining in Q4 2017

·    Ugur development update by RNS news release expected before the end of July 2017

 

Company financials

 

· Net debt, being interest-bearing loans and borrowings, less cash and cash equivalents, totalled $29.0 million at 30 June 2017 ($33.1 million at 31 March 2017)

 

Anglo Asian CEO Reza Vaziri commented, "This has been a strong quarter for Anglo Asian with a 7 per cent. increase in production to 14,775 ounces expressed as gold equivalent ounces despite the introduction of our production optimisation activities which we had anticipated would temporarily impact our production profile.  Our net debt also continues to decrease. The continuation of mining activities at the Gedabek open pit, whilst simultaneously developing the new open pit at the Ugur deposit, was possible due to careful utilisation of equipment and personnel. Maintaining production during this phase of optimisation is a significant achievement for Anglo Asian and puts us in a strong position as we look to increase production from current levels with the introduction of ore from Ugur in Q4 2017.   

"Our forecast for FY 2017 remains at between 64,000 ounces and 72,000 ounces whilst we continue our production optimisation programme, providing a very solid platform for us to build on in 2018 and beyond."

 

Production and sales details

The Company has continued in Q2 2017 with its strategy for 2017 as announced on 18 April 2017. This strategy was in response to ore mined from the open pit in H2 2016 having a lower gold grade and a higher percentage of copper than ore previously mined. An extensive programme of exploration and production optimisation is therefore being carried out in 2017. Ore production from a new open pit at the Ugur gold deposit discovered in 2016 is also planned to start before the end of the year. The Company will also process part of its 1.1 million tonnes of high copper content ore stockpiles in 2017. To process this stockpiled ore, the flotation plant is being used to treat the ore to remove copper prior to leaching. Mining will be temporarily reduced or stopped in the open pit during 2017 and approximately 15,000 metres of drilling will be carried out in furtherance of this programme.

During Q2 2017, the Company mined 336,096 tonnes of ore from its Gedabek open pit (Q1 2017: 398,028 tonnes of ore from its Gedabek open pit).  Continued mining was made possible during the quarter due to careful utilisation of equipment and human resources. 9,591 tonnes of ore with an average grade of 5.17 grammes per tonne was also mined, in conjunction with its exploration programme, from the Gadir underground mine in Q2 2017.

 

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 combined agitation leaching and flotation plants.

 

During Q2 2016, the Company stacked 162,147 tonnes of dry crushed ore onto heap leach pads with an average gold grade of 1.05 grammes per tonne (Q1 2017: 110,348 tonnes with an average gold content of 1.00 grammes per tonne). The Company also heap leached uncrushed (Run of Mine - "ROM") ore. During Q2 2017, the Company stacked 115,559 tonnes of ROM ore onto heap leach pads with an average gold grade of 0.89 grammes per tonne (Q1 2017: 103,622 tonnes with an average gold grade of 0.87 grammes per tonne).

 

During Q2 2017, the Company processed 179,454 tonnes of ore with an average gold content of 1.77 grammes per tonne through the combined agitation leaching and flotation plants (Q1 2017: 184,074 tonnes of ore with an average gold content of 1.52 grammes per tonne). Of the ore processed, 108,417 tonnes were mined during Q2 2017 from the open pit and the Gadir and Gosha underground mines and 71,037 tonnes were from the Company's stockpiles.

 

During Q2 2017, the Company produced gold doré containing 9,131 ounces of gold and 3,266 ounces of silver at Gedabek. The agitation leaching plant produced 4,606 and 1,641 ounces of gold and silver, respectively, and the heap leach operations produced 4,525 and 1,625 ounces of gold and silver, respectively. (Q1 2017, gold doré containing 9,258 ounces of gold and 2,447 ounces of silver at Gedabek. The agitation leaching plant produced 5,508 and 1,352 ounces of gold and silver, respectively, and the heap leach operations produced 3,750 and 1,095 ounces of gold and silver, respectively).

 

Operational update

 

The Company continues to make solid progress with its water treatment plant and installation of the plant is finished. Commissioning is expected to start imminently and take around two weeks to complete.

 

Development of the new Ugur gold deposit continues on schedule with good progress being made building the road between the deposit and the Company's processing facilities. A full update on the exploration and development activities at Ugur is anticipated by RNS news release before the end of July 2017.

 

Production Details

 

The following table summarises gold doré production and sales at Gedabek for FY 2016 and H1 2017:

 

	Gold produced* (ounces)		Silver Produced* (ounces)		Gold sales** (ounces)		Gold Sales price ($/ounce)
Quarter ended
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
FY 2016	60,937		10,288		53,366		1,253
31 March 2017	9,258		2,447		8,283		1,220
30 June 2017	9,131		3,266		7,406		1,258
H1 2017	18,389		5,713		15,689		1,238

* including Government of Azerbaijan's share

** excludes Government of Azerbaijan's share

 

The following table summarises copper concentrate production from both its SART and flotation plants at Gedabek for FY 2016 and H1 2017:

 

	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 December
SART processing	445	219	7	6,751
Flotation	2,059	359	1,255	40,620
Total	2,504	578	1,262	47,371
2017
Quarter ended 31 March
SART processing	428	210	5	5,523
Flotation	2,312	396	1,815	31,399
Total	2,740	606	1,820	36,922
Quarter ended 30 June
SART processing	418	187	4	4,717
Flotation	3,273	529	3,005	37,735
Total	3,691	716	3,009	42,452

* including Government of Azerbaijan's share.

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

 

The following table summarises copper concentrate production and sales at Gedabek for FY 2016 and H1 2017. 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 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 2016	4,348	1,063	2,389	78,768	3,929	7,477
FY 2016	8,530	1,941	4,457	154,843	6,830	12,591
31 March 2017	2,740	606	1,820	36,922	2,230	4,424
30 June 2017	3,691	716	3,009	42,452	3,166	6,104
H1 2017	6,431	1,322	4,829	79,374	5,396	10,528

 

* including Government of Azerbaijan's share

** excludes Government of Azerbaijan's share

 

The Company had net debt at 30 June 2017 of $29.0 million, a reduction of $4.1 million since 31 March 2017. The net debt at 30 June 2017 was as follows:                      

	$m
Amsterdam Trade Bank -  Agitation plant loan	6.2
Gazprombank -  Agitation plant loan	6.2
International Bank of Azerbaijan -  loan	3.9
International Bank of Azerbaijan -  credit line	0.5
Atlas Copco equipment finance loan	0.5
YapiKredit	2.6
Pasha Bank	6.2
Kapital bank	0.5
Director	3.8
Total loans	30.4
Cash on hand and at bank	(1.4)
Net debt	29.0

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 until the release of this announcement.

**ENDS**

 

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

 

Reza Vaziri	Anglo Asian Mining plc	Tel: +994 12 596 3350
Bill Morgan	Anglo Asian Mining plc	Tel: +994 502 910 400
Ewan Leggat	SP Angel Corporate Finance LLP Nominated Adviser and Broker	Tel: +44 (0) 20 3470 0470
Soltan Tagiev	SP Angel Corporate Finance LLP	Tel + 44 (0) 20 3470 0470
Susie Geliher	St Brides Partners Ltd	Tel: +44 (0) 20 7236 1177
Lottie Brocklehurst	St Brides Partners Ltd	Tel: +44 (0) 20 7236 1177

 

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 also operates the high grade 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 2016 from Gedabek totalled 65,394 ounces with 1,941 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 is 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.