Q1 2018 Production and Operations Review

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

16 April 2018

 

Anglo Asian Mining plc

Q1 2018 Production and operations review

 

Anglo Asian Delivers 26 per cent. Increase in Year-on-Year Production and Further Reduction in net debt of $7.9 million

 

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 March 2018 ("Q1 2018").

 

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

 

Overview

 

·    26% increase in year-on-year gold equivalent ounces ("GEOs") production highlights strong growth trajectory following implementation of expansion and optimisation programme at Gedabek in 2017

·    18,307 GEOs produced during Q1 2018 (Q1 2017: 14,577 GEOs) - historically the Company's weakest production quarter

·    Net debt reduced by 43% during Q1 2018 to $10.4 million at 31 March 2018 (31 December 2017: $18.3 million)

·    Gross cash of $8.6 million at 31 March 2018

·    Reconfiguration of processing facilities successfully initiated in March 2018 to utilise the combined flotation and agitation leaching plants

·    Optionality of the processing configuration highlights flexibility of operations in order to maximise production depending on composition of plant feedstock

 

Anglo Asian CEO Reza Vaziri commented, "This has again been another excellent quarter for the Company given that production in the first quarter of the year is always our lowest due to the winter weather conditions.  This strong increase in performance can be attributed to the optimisation and expansion initiatives which we implemented during the course of 2017, and, perhaps most importantly, the commencement of production from our new Ugur open pit. 

 

"The increased production that Anglo Asian is now achieving, coupled with improved metal prices, is flowing through strongly to our cash generation.  I am delighted to report that net debt was further reduced by $7.9 million during Q1 2018, down from $33.1 million at end March 2017, with a healthy gross cash balance of $8.6 million at the end of the period.

 

"The discovery of new potential mines, such as Ugur, together with the conversion of already known but under-explored prospects across our contract lease areas, is crucial to the continued growth and enhancement of our total production profile.  With this in mind, I look forward to reporting on our exploration and appraisal activities over the coming months as we look to continue and increase the upward trajectory in production that we are now delivering."

 

Production overview

 

·    26% year-on-year increase in GEO production to 18,307 GEOs (Q1 2017: 14,577 ounces)

·    49% year-on-year increase in gold production to 16,479 ounces (Q1 2017: 11,078 ounces):

o 15,738 ounces contained within gold doré

o 6 ounces from SART processing

o 735 ounces from flotation

·    Copper production for Q1 2018 totalled 255 tonnes (Q1 2017: 606 tonnes):

o 114 tonnes from SART processing

o 141 tonnes from flotation processing in March

·    Silver production for Q1 2018 totalled 40,583 ounces (Q1 2017: 39,369 ounces):

o 7,109 ounces contained within gold doré

o 21,887 ounces from SART processing

o 11,587 ounces from flotation

 

Sales overview

 

·    Q1 2018 gold bullion sales of 14,956 ounces at an average of $1,328 per ounce (Q1 2017: 8,283 ounces at an average of $1,220 per ounce)

·    Q1 2018 copper concentrate shipments to the customer totalled 608 dry metric tonnes ("dmt") with a sales value of $1.7 million (excluding Government of Azerbaijan production share) (Q1 2017: 2,230 dmt with a sales value of $4.2 million)

 

Company financials

 

·    Net debt, being interest-bearing loans and borrowings, less cash and cash equivalents, totalled $10.4 million at 31 March 2018 ($18.3 million at 31 December 2017)

 

Operations review

 

The Company mined the following ore in the 3 months ended 31 March 2018:

 

	12 months to  31 December 2017		3 months to 31 March 2018
Mine	Ore mined	Average gold grade	Ore mined	Average gold grade
	(tonnes)	(g/t)	(tonnes)	(g/t)
Open pit	712,444	1.18	28,326	0.92
Ugur - o/pit	238,818	3.20	288,214	0.96
Gadir - u/g	80,614	3.56	19,948	5.86
Gosha - u/g	28,284	3.99	-	-
Total	1,060,160	1.89	336,488	1.25

 

The lower grade of ore mined from Ugur in Q1 2018 with an average gold content of 0.96 g/t of gold was because 198,564 tonnes of ore of with an average gold content of 0.57 g/t of gold was mined for heap leaching.

 

Anglo Asian stacked 170,655 tonnes of dry crushed ore on to heap leach pads with an average gold content of 0.92 g/t of gold (Q4 2017: 201,097 tonnes with an average gold content of 0.86 g/t of gold) in the quarter. The Company also heap leached uncrushed Run of Mine ("ROM") ore. During Q1 2018, Anglo Asian stacked 188,364 tonnes of ROM ore on to heap leach pads with an average gold content of 0.51 g/t of gold (Q4 2017: 99,046 tonnes with an average gold content of 0.68 g/t of gold).

 

The Company changed the configuration of its processing facilities in March 2018 in conjunction with the recommencement of mining at the Gedabek main open pit. Ore from the main open pit together with stockpiled ore was treated initially by flotation and then by agitation leaching. This configuration will continue until the second crusher line is commissioned, when the flotation plant can operate as a stand-alone processing facility, which is anticipated during the current quarter. In Q1 2018, flotation processing produced 819 dmt of copper concentrate containing 141 tonnes of copper and 735 ounces of gold.

 

The Company processed 184,846 dry tonnes of ore with an average gold content of 2.07 g/t of gold through the agitation leaching plant (Q4 2017: 211,421 tonnes with an average gold content of 2.92 g/t of gold through the combined agitation leaching and flotation plants) in the quarter.

 

The Company produced gold doré containing 15,738 ounces of gold and 7,109 ounces of silver at Gedabek (Q4 2017: 21,924 ounces of gold and 12,634 ounces of silver) in the quarter. During Q1 2018, the agitation leaching plant produced 10,629 and 4,877 ounces of gold and silver, respectively, and the heap leach operations produced 5,109 and 2,232 ounces of gold and silver, respectively.

 

SART processing produced 223 dmt of copper concentrate containing 114 tonnes of copper and 6 ounces of gold (Q4 2017: 256 dmt of copper concentrate containing 119 tonnes of copper and 7 ounces of gold) in the quarter.

 

The Company sold 608 dmt of copper concentrate in Q1 2018 for $1.7 million compared to 198 dmt for $0.9 million in Q4 2017 (excluding Government of Azerbaijan production share).  The lower average selling price per tonne in Q1 2018 was because 432 tonnes (Q4 2017 - nil) of the concentrate sold was produced by flotation processing which has a much lower average copper content than concentrate produced by SART processing.

 

The following table summarises gold doré production and sales at Gedabek for FY 2017 and Q1 2018:

 

	Gold produced* (ounces)		Silver Produced* (ounces)		Gold sales** (ounces)		Gold Sales price ($/ounce)
Quarter ended
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
31 March 2018	15,738		7,109		14,956		1,328
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 2017 and Q1 2018:

 

	Concentrate	Copper	Gold	Silver
	production*	content*	content*	content*
	(dmt)	(tonnes)	(ounces)	(ounces)
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
2018
Quarter ended 31 March
SART processing	223	114	6	21,887
Flotation	819	141	735	11,587
Total	1,042	255	741	33,474

 

* 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 2017 and Q1 2018. 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 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	198	854
H2 2017	2,968	669	2,254	70,751	3,103	6,334
FY 2017	9,330	1,991	7,083	150,125	8,499	16,658
31 March 2018	1,042	255	741	33,474	608	1,715

* 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.

 

Company financial review

 

Net debt

The Company had net debt at 31 March 2018 of $10.4 million, a reduction of $7.9 million since 31 December 2017.      

	$m
International Bank of Azerbaijan	0.9
Kapital Bank	1.0
Pasha Bank - refinancing loan	13.5
Pasha Bank - other loans	3.5
Atlas Copco equipment finance loan	0.1
Total loans	19.0
Cash on hand and at bank	(8.6)
Net debt	10.4

 

The loan from Reza Vaziri of $3.9 million was fully repaid in March 2018 from the proceeds of the Pasha Bank refinancing loan.

 

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.

The Company has forecast production for FY 2018 of between 78,000 to 84,000 GEOs an increase for the mid-point of this guidance of over 13 per cent. compared to FY 2017 production of 71,461 GEOs.

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.