Q4 & FY 2017 Production and Operations Review

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

 

16 January 2018

 

Anglo Asian Mining plc

Q4 & FY 2017 Production and operations review

 

Anglo Asian delivers total production in top percentile of forecast

 

Anglo Asian Mining plc ("Anglo Asian" or the "Company"), the AIM listed gold, copper and silver producer focused in Azerbaijan, is pleased to provide a production, sales and operations review for its Gedabek gold, copper and silver mining and production contract area ("Gedabek") in western Azerbaijan for the three months to 31 December 2017 ("Q4 2017") and the year ended 31 December 2017 ("FY 2017").  Note that all references to "$" are to United States dollars.

 

Overview

 

·    71,461 gold equivalent ounces ("GEOs") produced during FY 2017 - at the uppermost level of the Company's forecast of 64,000 to 72,000 GEOs

·    Production for FY 2017 was just over one per cent. lower than FY 2016 of 72,304 GEOs despite suspension of mining for part of the year from the main open pit and the Gadir underground mine whilst production optimisation was carried out

·    Increased copper and silver production during FY 2017 with a small decrease in gold production

o 2.6 per cent. increase in copper produced to 1,991 tonnes of copper (FY 2016: 1,941 tonnes)

o 4.7 per cent. increase in silver produced to 172,853 ounces (FY 2016: 165,131 ounces)

o 8.8 per cent. decrease in gold produced to 59,617 ounces (2016: 65,394 ounces)

·    Solid upward trajectory in total production during 2017 reflecting the expansion initiatives undertaken at Gedabek with a significant increase in Q4 2017 due to the commencement of production in September from the new Ugur open pit mine as follows:

 

2017 quarter ended	Total production (GEOs)
31 March	14,577
30 June	15,985
30 September	17,714
31 December	23,185
Total - FY 2017	71,461

 

 

·    Net debt reduced by approximately 47 per cent. during FY 2017 to $18.3 million at 31 December 2017 (31 December 2016: $34.6 million)

·    Water treatment plant now producing around 200,000 litres of clean water per day and a six-metre raise of the tailings dam wall completed in Q4 2017

·    Operational performance anticipated to be further enhanced in 2018 due to

o Recommencement of mining operations from the main Gedabek open pit in Q1 2018

o Recommencement of flotation processing, independent of the agitation leaching plant, following installation of a second, dedicated crusher line targeted for Q2 2018 - this will increase processing capacity significantly 

 

Anglo Asian CEO Reza Vaziri commented, "I am delighted to report that following a very strong performance in Q4 2017, Anglo Asian has delivered full year production at the very top of its published forecast range. This is a considerable achievement in itself, but when taken together with the recent expansion and production optimisation initiatives put in place and commencement of production from Ugur, it is clear that 2017 was an overwhelmingly successful year for Anglo Asian. The almost halving of net debt in the year is also a significant achievement as the Company returns to financial health.

 

"Anglo Asian is continuing to lay the foundations for long term sustainable production growth and to deliver value to its shareholders. Mining is expected to recommence at our main open pit at Gedabek in the near-term together with the installation of a second, dedicated crusher line for the flotation plant. These should significantly enhance our production profile throughout 2018. I look forward to providing further updates on forecast 2018 production and expansion and exploration objectives in the coming weeks."

 

Production and sales review

 

Q4 2017

 

·    31 per cent. increase in total production expressed as GEOs for Q4 2017 to 23,185 GEOs (Q3 2017: 17,714 GEOs)

·    52 per cent. increase in gold production for Q4 2017 to 21,931 ounces (Q3 2017: total 14,468 ounces) due to production from Ugur

·    Copper production for Q4 2017 totalled 119 tonnes (Q3 2017: 550 tonnes) from SART processing only. No flotation concentrate produced in Q4 2017 as the agitation leaching plant treated Ugur ore which does not contain copper

·    18 per cent. increase in silver production for Q4 2017 to 47,478 ounces (Q3 2017: total 40,288 ounces)

·    Gold bullion sales of 18,520 ounces at an average of $1,278 per ounce (Q3 2017: 9,287 ounces at an average of $1,286 per ounce)

·    Copper concentrate shipments to the customer totalled 196 dry metric tonnes ("dmt") with a sales value of $1.0 million (excluding Government of Azerbaijan production share) (Q3 2017: 2,905 dmt with a sales value of $5.5 million)

 

FY 2017

 

·    Total production expressed as gold equivalent ounces was 71,461 GEOs (FY 2016: 72,304 GEOs) compared to target production of between 64,000 and 72,000 GEOs

·    Gold production for FY 2017 totalled 59,617 ounces (FY 2016: total 65,394 ounces) - lower production earlier in the year was partially offset by production from Ugur commencing in September 2017

·    Copper production for FY 2017 totalled 1,991 tonnes (FY 2016: 1,941 tonnes) despite flotation plant idled in Q4 2017

·    Silver production for FY 2017 totalled 172,853 ounces (FY 2016: total 165,131 ounces)

·    Gold bullion sales of 43,496 ounces at an average of $1,265 per ounce (FY 2016: sales of 53,281 ounces at an average of $1,253 per ounce)

·    Copper concentrate shipments to the customer totalled 8,497 dmt with a sales value of $16.8 million (excluding Government of Azerbaijan production share) (FY 2016: 6,830 dmt with a sales value of $12.3 million)

 

Company financial review

 

Net debt

The Company had net debt at 31 December 2017 of $18.3 million, a reduction of $16.3 million since 31 December 2016.        

	$m
Kapital Bank	1.0
Amsterdam Trade Bank and Gazprombank (Switzerland)	7.4
International Bank of Azerbaijan	2.1
Atlas Copco equipment finance loan YapiKredit Pasha Bank Reza Vaziri - director's loan	0.3 2.2 3.7 3.9
Total loans	20.6
Cash on hand and at bank	(2.3)
Net debt	18.3

 

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 2019. The amount currently outstanding under the facility is $3.9 million. The interest rate of the loan has been reduced from 10 per cent. to 7 per cent. from 9 January 2018 with all other terms of the loan remaining unchanged.

Operations review

 

The Company mined the following ore in the year ended 31 December 2017:

 

	9 months to 30 September 2017		3 months to 31 December 2017		12 months to  31 December 2017
Mine	Ore mined	Average gold grade	Ore mined	Average gold grade	Ore mined	Average gold grade
	(tonnes)	(g/t)	(tonnes)	(g/t)	(tonnes)	(g/t)
Open pit	712,444	1.18	-	-	712,444	1.18
Ugur - o/pit	57,155	3.34	181,663	3.16	238,818	3.20
Gadir - u/g	40,176	3.51	40,438	3.61	80,614	3.56
Gosha - u/g	24,826	4.07	3,458	3.45	28,284	3.99
Total	834,601	1.52	225,559	3.24	1,060,160	1.89

 

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 2017, Anglo Asian stacked 201,097 tonnes of dry crushed ore on to heap leach pads with an average gold content of 0.86 grammes of gold per tonne (Q3 2017: 173,616 tonnes with an average gold content of 1.02 grammes per tonne). The Company also heap leached uncrushed Run of Mine ("ROM") ore. During Q4 2017, Anglo Asian stacked 99,046 tonnes of ROM ore on to heap leach pads with an average gold content of 0.68 grammes of gold per tonne (Q3 2017: 87,979 tonnes with an average gold content of 0.95 grammes per tonne).

 

During Q4 2017, the Company processed 211,421 tonnes of ore with an average gold content of 2.92 grammes of gold per tonne through the agitation leaching plant (Q3 2017: 176,997 tonnes with an average gold content of 2.04 grammes per tonne through the combined agitation leaching and flotation plants).

 

During Q4 2017, the Company produced gold doré containing 21,924 ounces of gold and 12,634 ounces of silver at Gedabek (Q3 2017: 12,221 ounces of gold and 4,381 ounces of silver). During Q4 2017, the agitation leaching plant produced 16,952 and 9,777 ounces of gold and silver, respectively, and the heap leach operations produced 4,972 and 2,857 ounces of gold and silver, respectively. During FY 2017 the Company produced gold doré containing 52,534 ounces of gold and 22,728 ounces of silver (FY 2016: 60,937 ounces of gold and 10,288 ounces of silver).

 

During Q4 2017, the flotation plant was idled as the agitation leaching plant was processing Ugur ore which does not contain copper. During FY 2017, the flotation plant processed 374,202 tonnes of ore in the form of feed-stock of both milled ore and tailings from the agitation leaching plant (FY 2016: 531,840 tonnes). The gross metal contained within this feed-stock was 14,978 ounces of gold, 198,751 ounces of silver and 1,861 tonnes of copper (FY 2016: 15,808 ounces of gold, 335,820 ounces of silver and 2,331 tonnes of copper). Copper concentrate of 7,894 dmt was produced containing 1,310 tonnes of copper and 7,063 ounces of gold (FY 2016: copper concentrate of 6,931 dmt was produced containing 1,121 tonnes of copper and 4,430 ounces of gold).

 

During Q4 2017, SART processing produced 256 dmt of copper concentrate containing 119 tonnes of copper and 7 ounces of gold (Q3 2017: 333 dmt of copper concentrate containing 165 tonnes of copper and 4 ounces of gold). During FY 2017, SART processing produced 1,436 dmt of copper concentrate containing 681 tonnes of copper and 20 ounces of gold (FY 2016: 1,599 dmt of copper concentrate containing 820 tonnes of copper and 27 ounces of gold).

 

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

 

	Gold produced* (ounces)		Silver Produced* (ounces)		Gold sales** (ounces)		Gold Sales price ($/ounce)
Quarter ended
31 March 2016	13,383		1,958		12,058		1,184
30 June 2016	17,926		2,983		15,661		1,265
H1 2016	31,309		4,941		27,719		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		53,281		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
30 Sept 2017	12,221		4,381		9,287		1,286
31 Dec 2017	21,924		12,634		18,520		1,278
H2 2017	34,145		17,015		27,807		1,281
FY 2017	52,534		22,728		43,496		1,265
NOTE

* 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 for FY 2016 and FY 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	419	187	4	4,717
Flotation	3,203	529	3,005	37,735
Total	3,622	716	3,009	42,452
Quarter ended 30 Sept
SART processing	333	165	4	9,097
Flotation	2,379	385	2,243	26,810
Total	2,712	550	2,247	35,907
Quarter ended 31 December
SART processing	256	119	7	34,844
Flotation	-	-	-	-
Total	256	119	7	34,844

 

* including Government of Azerbaijan's share.

Note that certain amounts 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 2016 and FY 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	2,043
30 June 2016	2,361	497	1,449	49,231	1,582	3,019
H1 2016	4,182	878	2,068	76,075	2,901	5,062
30 Sept 2016	1,844	485	1,127	31,397	1,782	3,577
31 Dec 2016	2,504	578	1,262	47,371	2,147	3,615
H2 2016	4,348	1,063	2,389	78,768	3,929	7,192
FY 2016	8,530	1,941	4,457	154,843	6,830	12,254
31 March 2017	2,740	606	1,820	36,922	2,230	4,220
30 June 2017	3,622	716	3,009	42,452	3,166	6,104
H1 2017	6,362	1,322	4,829	79,374	5,396	10,324
30 Sept 2017	2,712	550	2,247	35,907	2,905	5,480
31 Dec 2017	256	119	7	34,844	196	977
H2 2017	2,968	669	2,254	70,751	3,101	6,457
FY 2017	9,330	1,991	7,083	150,125	8,497	16,781

* including Government of Azerbaijan's share.

** excluding Government of Azerbaijan's share.

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

 

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
Stephen Westhead	Anglo Asian Mining plc	Tel: +994 502 916 894
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 Wadham	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's main operating location is the Gedabek contract area ("Gedabek") which is a 300 square kilometer area in the lower Caucasus mountains in western Azerbaijan. The Company developed Azerbaijan's first operating gold/copper/silver mine at Gedabek which commenced gold production in May 2009.  Mining at Gedabek was initially from its main open pit which 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, In September 2017, production commenced at the Ugur open pit mine, a recently discovered gold ore deposit at Gedabek. 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.

The Company produced 71,461 gold equivalent ounces ('GEOs') for the year ended 31 December 2017.  Gedabek is a polymetallic project which demonstrates a high copper content at the main open pit mine, and an oxide gold-rich zone at Ugur.  The Company therefore employs a series of flexible processing routes through which to optimise recoveries and efficiencies.  The Company produces gold doré through agitation and heap leaching operations, copper concentrate from its Sulphidisation, Acidification, Recycling, and Thickening (SART) plant and also a copper and precious metal concentrate from its flotation plant, which is processing tailings from the agitation leach plant. A second dedicated crusher line is also currently being installed for the flotation plant to enable it to operate independently of the agitation leaching 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.