Q1 2020 Production and Operations review

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

 

15 April 2020

 

 

Anglo Asian Mining plc

Q1 2020 Production and Operations review

 

Production of 18,609 gold equivalent ounces calculated using budget metal prices - in line with guidance

Increase in Net Cash to $26 million despite disruption to shipping of gold doré

Operations at Gedabek continue and Baku office remains open

 

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 2020 ("Q1 2020").

 

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

 

Overview

 

·    18,609 gold equivalent ounces ("GEOs") produced calculated using budgeted metal prices - in line with guidance as announced on 11 March 2020

·    Reportable production at actual metal prices of 18,216 GEOs (Q1 2019: 20,287 GEOs) - price of gold continues to increase relative to copper

·    Current FY 2020 production guidance of 75,000 GEOs to 80,000 GEOs and revenue guidance of over $100 million at current metal prices remains unchanged

·    Gold production of 15,874 ounces (Q1 2019: 17,245 ounces)

·    Copper production increased to 559 tonnes (Q1 2019: 513 tonnes)

·    Gold doré production in March shipped to refiner in April due to COVID-19 delay - despite this delay, cash generation in Q1 2020 of $4.8 million

·    Company achieved debt free milestone - cash of $26.0 million at 31 March 2020

·    Operations at Gedabek continue and the Baku office remains open

 

Anglo Asian CEO Reza Vaziri commented, "I am very pleased to report the first quarter 2020 production in line with the Company's guidance despite the COVID-19 emergency. The protection of our staff remains paramount and all possible measures are being implemented at Gedabek to safeguard their health. We did not ship our March gold doré production until April but the Company still generated significant cash in the quarter due to the increasing gold price and is now debt free.

 

"These are unprecedented times which are placing exceptional demands upon the Company and its staff. Whilst the future evolution of the COVID-19 health emergency is currently unknown, your Company is well placed to weather the challenges and benefit from the increasing gold price."    

 

Production overview

 

·    10 per cent. year-on-year decrease in reportable GEO production to 18,219 GEOs (Q1 2019: 20,287 ounces)

·    Eight per cent. year-on-year decrease for Q1 2020 in gold production to 15,874 ounces (Q1 2019: 17,245 ounces):

o 15,041 ounces contained within gold doré

o Eight ounces from SART processing

o 825 ounces from flotation

·    Copper production for Q1 2020 increased by nine per cent. to 559 tonnes (Q1 2019: 513 tonnes):

o 114 tonnes from SART processing

o 445 tonnes from flotation processing

·    Silver production for Q1 2020 totalled 34,645 ounces (Q1 2019: 51,295 ounces):

o 3,852 ounces contained within gold doré

o 12,898 ounces from SART processing

o 17,895 ounces from flotation

 

Sales overview

 

·    Q1 2020 gold bullion sales of 11,236 ounces at an average of $1,577 per ounce (Q1 2019: 13,191 ounces at an average of $1,306 per ounce)

·    Q1 2020 copper concentrate shipments to the customer totalled 2,018 dry metric tonnes ("dmt") with a sales value of $2.9 million (excluding Government of Azerbaijan production share) (Q1 2019: 279 dmt with a sales value of $0.7 million)

 

Company financials

 

·    Cash of $26.0 million at 31 March 2020 with no bank debt (Cash of $22.9 million and bank debt of $1.7 million at 31 December 2019 giving net cash of $21.2 million)

·    Gold doré production from 5 to 31 March 2020 was shipped to the refiner in April due to the delay caused by COVID-19. An estimated 90 per cent. of the Company's share of the contained gold bullion was sold on 6 April 2020 for $5.9 million

 

Operations review

 

The Company mined the following ore in the three months ended 31 March 2020:

 

	12 months to  31 December 2019		3 months to 31 March 2020
Mine	Ore mined	Average gold grade	Ore mined	Average gold grade
	(tonnes)	(g/t)	(tonnes)	(g/t)
Open pit	1,475,278	0.73	292,480	0.86
Ugur - o/pit	1,283,437	1.24	285,600	1.08
Gadir - u/g	147,316	2.73	20,243	2.64
Gosha - u/g	7,235	2.81	-	-
Total	2,913,266	1.06	598,323	1.03

 

Anglo Asian stacked 132,731 tonnes of dry crushed ore on to heap leach pads with an average gold content of 0.84 grammes per tonne of gold during Q1 2020 (Q4 2019: 98,280 tonnes with an average gold content of 0.86 grammes per tonne of gold). The Company also heap leached uncrushed Run of Mine ("ROM") ore. During Q1 2020, Anglo Asian stacked 258,121 tonnes of ROM ore on to heap leach pads with an average gold content of 0.49 grammes per tonne of gold (Q4 2019: 288,583 tonnes with an average gold content of 0.49 grammes per tonne of gold).

 

The Company processed 163,379 dry tonnes of ore with an average gold content of 2.53 grammes per tonne of gold through the agitation leaching plant in Q1 2020 (Q4 2019: 181,710 dry tonnes with an average gold content of 2.44 grammes per tonne of gold). 126,354 dry tonnes of ore containing an average copper content of 0.49 per cent. were processed by the flotation plant (Q4 2019: 125,205 dry tonnes of ore containing an average copper content of 0.63 per cent.).

 

The Company produced gold doré containing 15,041 ounces of gold and 3,852 ounces of silver at Gedabek (Q4 2019: 15,912 ounces of gold and 3,880 ounces of silver) in the quarter. During Q1 2020, the agitation leaching plant produced 11,862 and 3,030 ounces of gold and silver, respectively, and the heap leach operations produced 3,179 and 822 ounces of gold and silver, respectively.

 

SART processing produced 221 dmt of copper concentrate containing 114 tonnes of copper, eight ounces of gold and 12,898 ounces of silver in Q1 2020 (Q4 2019: 165 dmt of copper concentrate containing 113 tonnes of copper, 16 ounces of gold and 11,159 ounces of silver).

 

In Q1 2020, flotation processing produced 2,773 dmt of copper concentrate containing 445 tonnes of copper, 825 ounces of gold and 17,895 ounces of silver (Q4 2019, 3,354 dmt of copper concentrate containing 616 tonnes of copper, 1,979 ounces of gold and 26,647 ounces of silver).

 

The Company sold 2,018 dmt of copper concentrate in Q1 2020 for $2.9 million compared to 3,723 dmt for $7.5 million in Q4 2019 (excluding Government of Azerbaijan production share).

 

The following table summarises gold doré production and sales at Gedabek for FY 2019 and Q1 2020:

 

	Gold produced* (ounces)		Silver Produced* (ounces)		Gold sales** (ounces)		Gold Sales price ($/ounce)
Quarter ended
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
31 March 2020	15,041		3,852		11,236		1,577
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 2019 and Q1 2020:

 

	Concentrate	Copper	Gold	Silver
	production*	content*	content*	content*
	(dmt)	(tonnes)	(ounces)	(ounces)
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 Sept
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
2020
Quarter ended 31 March
SART processing	221	114	8	12,898
Flotation	2,773	445	825	17,895
Total	2,994	559	833	30,793

 

* including Government of Azerbaijan's share.

Note that certain amounts for flotation production maybe 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 2019 and Q1 2020. 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 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	7,350
H2 2019	6,466	1,249	3,173	66,702	5,978	10,788
FY 2019	11,874	2,210	5,947	139,649	10,264	18,280
31 March 2020	2,994	559	833	30,793	2,018	2,863

* including Government of Azerbaijan's share.

** excluding Government of Azerbaijan's share.

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

 

Company financial review

 

Cash

The Company had cash at 31 March 2020 of $26.0 million and no bank debt, an increase in net cash of $4.8 million since 31 December 2019 when net cash was $21.2 million.

 

As estimated 90 per cent. of the Company's share of the contained gold bullion was sold on 6 April 2020 for $5.9 million from the gold doré production from 5 to 31 March 2020.  

 

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 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
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 kilometre 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 81,399 gold equivalent ounces ("GEOs") for the year ended 31 December 2019.  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.

 

The Company has a production target for the year to 31 December 2020 of 65,000 ounces to 67,000 ounces of gold and 2,200 tonnes to 2,400 tonnes of copper. This total production target expressed as gold equivalent ounces ("GEOs") is between 75,000 GEOs and 80,000 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.