Q2 & H1 2019 Production and Operations Review

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

15 July 2019

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

Q2 & H1 2019 Production and Operations Review

 

H1 2019 Year-on-Year Production up 7 per cent. and Increase in net cash to $15.4 million

 

Anglo Asian Mining plc, 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 30 June 2019 ("Q2 2019") and six months to 30 June 2019 ("H1 2019").

 

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

 

Overview

 

·    Continued improvement in total production expressed as gold equivalent ounces ("GEOs"):

o  Q2 2019 production of 19,618 GEOs up 3 per cent. compared to Q2 2018

o  H1 2019 production of 39,905 GEOs up 7 per cent. year-on-year ("y-o-y")

·    Q2 2019 production lower than Q1 2019 production by 669 GEOs mainly due to copper production reduced by 63 tonnes following planned mining of lower copper grade ore in the quarter - copper grades expected to increase in remainder of the year

·    Backlog of concentrate production now sold due to resolution of logistical issues by off-taker - gross concentrate sales of $7.6 million in Q2 2019

·    Strong cash generation with $4.6 million generated in the quarter and $9.3 million in H1 2019

o  $15.4 million net cash at 30 June 2019 ($10.8 million at 31 March 2019)

 

Anglo Asian CEO Reza Vaziri commented, "This is another good quarter's production with a 7 per cent year-on-year increase in the first half compared to 2018. The production in the quarter was slightly less than the previous quarter due to the planned mining of lower grade copper ore, however, we are expecting copper grades to increase for the rest of the year. The logistical issues in selling concentrate reported last quarter were resolved and the Company had gross sales of $7.6 million of concentrate in the quarter. The Company continues to be a strong cash generator and our net cash increased by $4.6 million in the quarter."

 

Production Overview

 

Q2 2019

·    Three per cent. y-o-y increase in total production to 19,618 GEOs (Q2 2018: 19,042 ounces)

·    Gold production totalled 17,149 ounces (Q2 2018: 16,764 ounces):

o  16,073 ounces contained within gold doré

o  8 ounces from SART processing

o  1,068 ounces from flotation

·    Copper production totalled 450 tonnes (Q2 2018: 332 tonnes):

o  67 tonnes from SART processing

o  383 tonnes from flotation processing

·    Silver production totalled 33,292 ounces (Q2 2018: 44,201 ounces):

o  4,734 ounces contained within gold doré

o  13,067 ounces from SART processing

o  15,491 ounces from flotation

H1 2019

·    Seven per cent. y-o-y increase in total production to 39,905 GEOs (H1 2018: 37,349 GEOs)

·    Gold production totalled 34,394 ounces (H1 2018: 33,255 ounces)

·    Copper production totalled 963 tonnes (H1 2018: 587 tonnes)

·    Silver production totalled 84,586 ounces (H1 2018: 84,785 ounces)

·    On track to achieve forecast production for FY 2019 of between 82,000 to 86,000 GEOs

 

Sales overview

·    Q2 2019 gold bullion sales of 13,467 ounces at an average of $1,332 per ounce (Q2 2018: 10,822 ounces at an average of $1,307 per ounce)

·    Q2 2019 copper concentrate shipments to the customer totalled 4,007 dry metric tonnes ("dmt") with a sales value of $6.7 million (excluding Government of Azerbaijan production share) (Q2 2018: 1,736 dmt with a sales value of $4.2 million)

 

 

Company financials

·    Net cash, being cash less interest-bearing loans and borrowing equivalents, totalled $15.4 million at 30 June 2019 ($10.8 million at 31 March 2019)

 

Operations review

The Company mined the following ore in the six months ended 30 June 2019:

 

	12 months to  31 December 2018		3 months to 31 March 2019		3 months to 30 June 2019
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)
Gedabek open pit	362,412	1.06	447,496	0.73	370,153	0.70
Ugur - o/pit	1,245,104	1.27	212,788	1.88	345,461	1.32
Gadir - u/g	125,806	4.53	40,020	2.84	49,902	2.59
Gosha - u/g	10,988	3.44	-	-	-	-
Total	1,744,310	1.47	700,304	1.20	765,516	1.10

 

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.

 

Anglo Asian stacked 152,173 tonnes of dry crushed ore on to heap leach pads with an average gold content of 0.9 grammes per tonne of gold during Q2 2019 (Q1 2019: 127,990 tonnes with an average gold content of 0.80 grammes per tonne of gold). The Company also heap leached uncrushed Run of Mine ("ROM") ore. During Q2 2019, Anglo Asian stacked 286,163 tonnes of ROM ore on to heap leach pads with an average gold content of 0.49 grammes per tonne of gold (Q1 2019: 133,194 tonnes of ROM ore with an average gold content of 0.51 grammes per tonne of gold).

 

The Company processed 176,602 dry tonnes of ore with an average gold content of 2.4 grammes per tonne of gold through the agitation leaching plant in Q2 2019 (Q1 2019: 171,211 dry tonnes with an average gold content of 2.50 grammes per tonne of gold). 131,161 dry tonnes of ore containing an average copper content of 0.46 per cent. were processed by the flotation plant in Q2 2019 (Q1 2019: 130,012 dry tonnes of ore containing an average copper content of 0.49 per cent.).

 

The Company produced gold doré containing 16,073 ounces of gold and 4,734 ounces of silver at Gedabek in Q2 2019 (Q1 2019: 15,547 ounces of gold and 6,634 ounces of silver). During Q2 2019, the agitation leaching plant produced 12,810 and 3,776 ounces of gold and silver, respectively, and the heap leach operations produced 3,263 and 958 ounces of gold and silver, respectively (Q1 2019: the agitation leaching plant produced 12,649 and 5,345 ounces of gold and silver, respectively, and the heap leach operations produced 2,898 and 1,288 ounces of gold and silver, respectively).

 

SART processing produced 143 dmt of copper concentrate containing 67 tonnes of copper, 8 ounces of gold and 13,067 ounces of silver in Q2 2019 (Q1 2019: 142 dmt of copper concentrate containing 63 tonnes of copper, 11 ounces of gold and 16,201 ounces of silver).

 

In Q2 2019, flotation processing produced 2,252 dmt of copper concentrate containing 383 tonnes of copper, 1,068 ounces of gold and 15,491 ounces of silver (Q1 2019: 2,871 dmt of copper concentrate containing 450 tonnes of copper, 1,687 ounces of gold and 28,461 ounces of silver).

 

The Company sold 4,007 dmt of copper concentrate in Q2 2019 for $6.7 million compared to 279 dmt for $0.7 million in Q1 2019 and 1,736 dmt for $4.2 million in Q2 2018 (excluding Government of Azerbaijan production share). The copper content of the total concentrate production has decreased in the year to 30 June 2019 due to the increasing proportion produced by flotation. Flotation concentrate typically has a lower percentage of copper (around 15 to 17 per cent.) compared to SART concentrate (around 45 to 55 per cent.). The backlog of concentrate which had built up in previous quarters due to logistical issues of the off-taker was sold in Q2 2019.

 

The following table summarises gold doré production and sales at Gedabek for FY 2018 and H1 2019:

 

	Gold produced* (ounces)		Silver Produced* (ounces)		Gold sales** (ounces)		Gold sales price ($/ounce)
Quarter ended
31 March 2018	15,750		7,110		14,956		1,328
30 June 2018	15,537		6,014		10,822		1,307
H1 2018	31,287		13,124		25,778		1,319
30 Sept 2018	18,885		7,416		18,637		1,216
31 Dec 2018	15,444		5,646		15,066		1,231
H2 2018	34,329		13,062		33,703		1,223
FY 2018	65,616		26,186		59,481		1,265
31 March 2019	15,547		6,634		13,121		1,306
30 June 2019	16,073		4,734		13,467		1,332
H1 2019	31,620		11,368		26,588		1,319

Note that some of the figures in the above table may differ from previously reported due to agreement of final assay.

* 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 2018 and H1 2019:

 

	Concentrate	Copper	Gold	Silver
	production*	content*	content*	content*
	(dmt)	(tonnes)	(ounces)	(ounces)
2018
Quarter ended 31 March
SART processing	223	114	6	22,118
Flotation	819	141	735	11,587
Total	1,042	255	741	33,705
Quarter ended 30 June
SART processing	260	137	6	21,800
Flotation	1,136	195	1,226	16,387
Total	1,396	332	1,232	38,187
Quarter ended 30 Sept
SART processing	162	81	7	17,357
Flotation	2,501	389	2,437	34,573
Total	2,663	470	2,444	51,930
Quarter ended 31 December
SART processing	109	67	13	14,229
Flotation	3,557	521	2,752	45,947
Total	3,666	588	2,765	60,176
2019
Quarter ended 31 March
SART processing	142	63	11	16,201
Flotation	2,871	450	1,687	28,461
Total	3,013	513	1,698	44,662
Quarter ended 30 June
SART processing	143	67	8	13,067
Flotation	2,252	383	1,068	15,491
Total	2,395	450	1,076	28,558

 

Note that some of the figures in the above table may differ from previously reported due to agreement of final assay.

* including Government of Azerbaijan's share.

 

The following table summarises copper concentrate production and sales at Gedabek for FY 2018 and H1 2019. 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 2018	1,042	255	741	33,705	608		1,715
30 June 2018	1,396	332	1,232	38,187	1,736		4,221
H1 2018	2,438	587	1,973	71,892	2,344		5,936
30 Sept 2018	2,663	470	2,444	51,930	1,557		3,368
31 Dec 2018	3,666	588	2,765	60,176	3,774		6,131
H2 2018	6,329	1,058	5,209	112,106	5,331		9,499
FY 2018	8,767	1,645	7,182	183,998	7,675		15,435
31 March 2019	3,013	513	1,698	44,662	279		718
30 June 2019	2,395	450	1,076	28,558	4,007		6,713
H1 2019	5,408	963	2,774	73,220	4,286	7,431

* including Government of Azerbaijan's share

** excludes Government of Azerbaijan's share

 

Company financial review

 

Net cash

The Company had net cash at 30 June 2019 of $15.4 million, an increase of $4.6 million since 31 March 2019.

	$m
Cash on hand and at bank	20.5
Pasha Bank refinancing loan	(5.1)
Net cash	15.4

 

The Company paid corporation taxation of $2.2 million in Q2 2019 ($3.0 million in Q1 2019).

 

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 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 Nominated Adviser and Broker	Tel + 44 (0) 20 3470 0470
Isabel de Salis	St Brides Partners Ltd	Tel: +44 (0) 20 7236 1177
Gaby Jenner	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 kilometre area in the Lesser Caucasus mountains in western Azerbaijan. The Company developed Azerbaijan's first modern 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 83,736 gold equivalent ounces ('GEOs') for the year ended 31 December 2018. Gedabek is a polymetallic ore deposit that has gold together with significant concentrations of copper in the main open pit mine, and an oxide gold-rich zone at Ugur. The Company therefore employs a series of flexible processing routes to optimise metal 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. A second dedicated crusher line has been commissioned and is now in operation for the flotation plant to enable it to operate independently of the agitation leaching plant.

 

The Company has forecast metal production for FY 2019 of between 82,000 to 86,000 gold equivalent ounces ("GEOs"). Of the forecast production for FY 2019, between 28,000 to 30,000 GEOs is in the form of copper and gold flotation concentrate.

 

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.