Q4 & Full Year 2019 Production & Operations Review

 

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

 

14 January 2020

 

Anglo Asian Mining plc

Quarter 4 and Full Year 2019 Production and Operations review

 

Full year production of 82,795 gold equivalent ounces calculated at budgeted prices and net cash of $21.2 million at 31 December 2019

 

Anglo Asian Mining plc ("Anglo Asian" or the "Company"), the AIM listed gold, copper and silver producer focused on 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 2019 ("Q4 2019") and the year ended 31 December 2019 ("FY 2019").

 

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

 

Overview

 

·    Record revenues anticipated for FY 2019 in excess of $90.0 million driven by sustained gold and increased copper production and strong commodity prices

·    Strong cash generation of $31.3 million before payment of corporation taxes and dividends driven by strong sales and continued operational efficiencies as one of the lowest cash cost gold producers

o Net cash increased to $21.1 million at the end of December 2019 from $6.1 million at the beginning of the year

o Company will make its final debt repayment in early February 2020 delivering on its strategic plan to be debt free

·    82,795 gold equivalent ounces ("GEOs") produced during FY 2019 calculated using budgeted metal prices

o Reportable GEOs marginally lower at 81,399 due to the increase in the market price of gold relative to the market price of copper during the year

 

Anglo Asian CEO Reza Vaziri commented: 

"We have had another strong year, delivering production in line with expectations and also making good progress with our exploration programme. We report our production in gold equivalent ounces which have reduced due to the increase in the market price of gold relative to the market price of copper during the year. Our production calculated as gold equivalent ounces using our budgeted metal prices was 82,795 ounces and within our original production forecast.

 

"The Company's financial performance continues to be exceptional. We have increased net cash in 2019 by $15.1 million, notwithstanding paying dividends of $8.7 million and corporation taxes of $7.5 million in the year. The Company will achieve the significant milestone of becoming debt free early next month when the final installment of the refinancing loan is repaid. This strong cash generation will allow the Company to continue to enhance our announced dividend policy.

 

"The Company is in a strong operational position and robust financial health as we move into 2020. I look forward to updating you on the progress of our exploration programme which we anticipate releasing within quarter one and other activities which the Company will be carrying out during the rest of the year."

 

Production Overview

 

Q4 2019

·    Three per cent. year on year ("y-o-y") decrease in total production to 21,284 GEOs (Q4 2018: 21,945 ounces)

·    Copper production totalled 729 tonnes (Q4 2018: 588 tonnes)

o 113 tonnes from SART processing

o 616 tonnes from flotation

·    Gold production totalled 17,907 ounces (Q4 2018: 18,209 ounces):

o 15,912 ounces contained within gold doré

o 16 ounces from SART processing

o 1,979 ounces from flotation

·    Silver production totalled 41,686 ounces (Q4 2018: 65,822 ounces):

o 3,880 ounces contained within gold doré

o 11,159 ounces from SART processing

o 26,647 ounces from flotation

 

FY 2019

 

·    Total production of 82,795 GEOs (FY 2018: 83,736 GEOs) at budgeted metal prices (81,399 GEOs at actual metal prices)

·    34 per cent y-o-y increase in copper production to 2,210 tonnes (FY 2018: 1,645 tonnes)

·    Four per cent. y-o-y decrease in gold production to 70,098 ounces (FY 2018: 72,798 ounces)

·    Silver production totalled 159,356 ounces (FY 2018: 210,184 ounces)

 

Sales

 

Q4 2019

·    Q4 2019 gold bullion sales of 12,509 ounces at an average of $1,481 per ounce (Q3 2019 gold bullion sales of 14,894 ounces at an average of $1,513 per ounce)

·    Q4 2019 copper concentrate shipments to the customer totalled 3,723 dry metric tonnes ("dmt") with a sales value of $6.9 million (excluding Government of Azerbaijan profit share) (Q3 2019: 2,255 dmt with a sales value of $3.4 million)

FY 2019

·    FY 2019 gold bullion sales of 54,061 ounces at an average of $1,410 per ounce (FY 2018 gold bullion sales of 59,481 ounces at an average of $1,265 per ounce)

·    FY 2019 copper concentrate shipments to the customer totaled 10,264 dmt with a sales value of $17.9 million (excluding Government of Azerbaijan profit share) (FY 2018: 7,675 dmt with a sales value of $15.4 million)

 

Company financials

 

·    Net cash, being cash and cash equivalents less interest-bearing loans and borrowings, totalled $21.2 million at 31 December 2019 (Net cash of $19.1 million at 30 September 2019 and $6.1 million at 1 January 2019)

 

Gedabek - mining, production and sales

 

The Company mined the following ore in the year ended 31 December 2019:

 

	9 months to 30 September 2019		3 months to 31 December 2019		12 months to  31 December 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)
Open pit	1,140,657	0.72	334,621	0.78	1,475,278	0.73
Ugur - o/pit	906,499	1.35	376,938	1.02	1,283,437	1.24
Gadir - u/g	127,028	2.78	20,288	2.43	147,316	2.73
Gosha - u/g	-	-	7,235	2.81	7,235	2.81
Total	2,174,184	1.10	739,082	0.97	2,913,266	1.06

Note that there may have been some minor changes to the previously reported figures following reconciliation of ore stockpiles.

 

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 98,280 tonnes of dry crushed ore onto heap leach pads with an average gold content of 0.86 grammes per tonne during Q4 2019 (Q3 2019: 148,269 tonnes with an average gold content of 0.93 grammes per tonne). The Company also heap leached uncrushed Run of Mine ("ROM") ore. During Q4 2019, Anglo Asian stacked 288,583 tonnes of ROM ore onto heap leach pads with an average gold content of 0.49 grammes per tonne (Q3 2019: 261,414 tonnes with an average gold content of 0.46 grammes per tonne).

The Company processed, during Q4 2019, 181,710 dry tonnes of ore with an average gold content of 2.44 grammes per tonne through the agitation leaching plant (Q3 2019: 192,097 dry tonnes with an average gold content of 2.25 grammes per tonne).  125,205 dry tonnes of ore containing an average copper content of 0.63 per cent. were processed by the flotation plant in Q4 2019 (Q3 2019: 127,762 dry tonnes of ore containing an average copper content of 0.55 per cent).

 

During Q4 2019, the Company produced gold doré containing 15,912 ounces of gold and 3,880 ounces of silver at Gedabek (Q3 2019: 16,619 ounces of gold and 4,420 ounces of silver). During Q4 2019, the agitation leaching plant produced 12,647 and 3,037 ounces of gold and silver, respectively, and the heap leach operations produced 3,265 and 843 ounces of gold and silver, respectively.

 

SART processing in Q4 2019 produced 165 dmt of copper concentrate containing 113 tonnes of copper and 16 ounces of gold (Q3 2019: 154 dmt of copper concentrate containing 70 tonnes of copper and 10 ounces of gold). During FY 2019 SART produced 311 tonnes of copper and 45 ounces of gold compared to FY 2018 production of 399 tonnes of copper and 32 ounces of gold.

 

Flotation processing in Q4 2019 produced 3,354 dmt of copper concentrate containing 616 tonnes of copper, 1,979 ounces of gold and 26,647 ounces of silver (Q3 2019: 2,793 dmt of copper concentrate containing 450 tonnes of copper, 1,168 ounces of gold and 17,142 ounces of silver).

 

The following table summarises gold doré production and sales at Gedabek for FY 2018 and FY 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	13,191	1,306
30 June 2019	16,073	4,773	13,467	1,332
H1 2019	31,620	11,407	26,658	1,319
30 Sept 2019	16,619	4,420	14,894	1,513
31 Dec 2019	15,912	3,880	12,509	1,481
H2 2019	32,531	8,300	27,403	1,498
FY 2019	64,151	19,707	54,061	1,410

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 the Company's SART and flotation plants at Gedabek for FY 2018 and FY 2019:

	Concentrate	Copper	Gold	Silver
	production*	content*	content*	content*
2018	(dmt)	(tonnes)	(ounces)	(ounces)
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 September
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	65	8	12,794
Flotation	2,252	383	1,068	15,491
Total	2,395	448	1,076	28,285
Quarter ended 30 September
SART processing	154	70	10	11,754
Flotation	2,793	450	1,168	17,142
Total	2,947	520	1,178	28,896
Quarter ended 31 December
SART processing	165	113	16	11,159
Flotation	3,354	616	1,979	26,647
Total	3,519	729	1,995	37,806

Certain amounts for flotation production may different to those previously disclosed due to final reconciliation of production.

* including Government of Azerbaijan's share.

 

The following table summarises total copper concentrate production and sales at Gedabek for FY 2018 and FY 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	448	1,076	28,285	4,007	6,771
H1 2019	5,408	961	2,774	72,947	4,286	7,492
30 Sept 2019	2,947	520	1,178	28,896	2,255	3,438
31 Dec 2019	3,519	729	1,995	37,806	3,723	6,931
H2 2019	6,466	1,249	3,173	66,702	5,978	10,369
FY 2019	11,874	2,210	5,947	139,649	10,264	17,861

 

* including Government of Azerbaijan's share.

** excludes Government of Azerbaijan's share.

 

FY 2019 production expressed as gold equivalent ounces

The Company calculates the gold equivalent of copper and silver by multiplying the quantity of the metal by its price and then dividing by the price of gold. This is done at the following prices:

For calculation of forecast production: Budget prices set prior to the start of the financial year.

For calculation of actual production: Actual market prices at the time of production.

 

The budgeted prices of gold, silver and copper and their market prices at the start and end of 2019 together with their corresponding gold equivalent ounces are as follows:

 

	Price of metal			Gold equivalent ounces of metal
Metal	Budget   $	1 January 2019   $	31 December 2019 $	Budget   Ounces	1 January 2019   Ounces	31 December 2019 Ounces
Gold	1,250	1,283	1,517	1.000	1.000	1.000
Silver	15.00	15.51	17.85	0.012	0.012	0.012
Copper	6,100	5,965	6,174	4.880	4.649	4.070

 

The increase in the market price of gold relative to the market price of copper throughout the year has resulted in the steady decrease of one tonne of copper expressed as gold equivalent ounces from 4.88 ounces used for the budget to 4.07 ounces at 31 December 2019.

 

Net cash

The Company had net cash at 31 December 2019 of $21.2 million, an increase in net cash of $2.1 million from $19.1 million at 30 September 2019 and an increase of $15.1 million from $6.1 million at 1 January 2019

	$m
Cash at bank and on hand	22.9
Pasha Bank refinancing loan	(1.7)
Net cash	21.2

 

The Company made payments of $0.5 million in Q4 2019 in respect of corporation tax in Azerbaijan (FY 2019: $7.5 million). The Company paid an interim dividend in Q4 2019 in respect of the financial year 2019 of $4.1 million (FY 2019: total dividends paid of $8.7 million).

 

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
Camilla Horsfall	Blytheweigh Financial	Tel: +44 (0) 20 7138 3224
Megan Ray	Blytheweigh Financial	Tel: +44 (0) 20 7138 3224

 

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 Lesser 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 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.

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.