Q3 2020 Production and Operations Review

 

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

 

14 October 2020

 

Anglo Asian Mining plc

Q3 2020 Production and Operations review

Production of 18,451 gold equivalent ounces in Q3 2020 calculated using budget metal prices

Cash of $21.4 million and unsold gold inventory of $12.1 million at 30 September 2020

 

 

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 and nine months to 30 September 2020 ("Q3 2020" and "YTD Q3 2020" respectively).

 

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

 

Overview

 

·    Significant improvement in Q3 2020 production expressed as gold equivalent ounces ("GEOs") with a 25 per cent. increase to 18,451 GEOs compared to the previous quarter (Q2 2020: 14,819 GEOs) using budget metal prices

·    Reportable production at actual metal prices of 18,190 GEOs (Q3 2019: 20,227 GEOs)

·    YTD Q3 2020 total production of 50,702 GEOs (YTD Q3 2019: 60,122 GEOs)

·    Cash of $21.4 million at 30 September 2020 (H1 2020: $29.2 million)

o Dividend of $5.1 million and corporation tax of $3.0 million paid in Q3 2020

o Unsold Company gold inventory held by refiner of 6,335 ounces at 30 September 2020

·    Sale of 6,335 ounces of gold at refiner at 30 September 2020 was delayed until early October to take advantage of anticipated higher metal prices

o 6,335 ounces sold in early October at average price of $1,910 per ounce generating proceeds of $12.1 million

·    Significant increase in average price of gold bullion sold in Q3 2020 to $1,947 per ounce (H1 2020: $1,649 per ounce) 

·    Full Year 2020 ("FY 2020") production guidance is currently under review following some minor delays in the underground development arising from the effects of the Azeri and Armenian conflict due to the conscription of a number of engineering staff and some recently encountered temporary delays  due to underground rock faulting

o An estimated five to ten per cent. reduction may be required from the current guidance of 75,000 to 80,000 GEOs

o The Company will announce revised guidance on completion of the review

·    As announced on 23 September 2020, an interim dividend of US$0.045 per share will be paid gross in respect of the year ending 31 December 2020 to shareholders on 5 November 2020

 

Anglo Asian CEO Reza Vaziri commented: "I am very pleased with the better performance so far in the second half of this year with production increasing by twenty seven percent to 18,190 gold equivalent ounces compared to the previous quarter. The actions we took to improve production in the first half of the year are now taking effect. We will soon start underground mining below the Gedabek open pit which  is expected to lead to a further improvement in performance.

 

"We delivered 6,335 ounces of gold to the refiner in September when the gold price was below $1,900, a dip we decided was likely to be temporary. In accordance with our policy of timing gold sales this was not sold until October at an average price of $1,910 per ounce. This demonstrates our ability to generate increased revenue by timing gold sales.

 

"We are very saddened by the resumption of the conflict between Azerbaijan and Armenia, especially as the country was recovering well from the COVID-19 pandemic which now seems under control. The length and final resolution of the conflict are currently unknown. The Company is operating normally but we are experiencing some operational inefficiencies due to the conflict which has required us to review our full year production guidance. It is estimated a reduction of around five to ten percent will be required from the current guidance. We will update shareholders once the review is finalised."

 

Production Overview

 

Q3 2020

·    Total production of 18,190 GEOs (Q3 2019: 20,227 GEOs)

·    Gold production of 15,461 ounces (Q3 2019: 17,804 ounces):

o 14,978 ounces contained within gold doré

o 7 ounces from sulfidisation, acidification, recycling and thickening ("SART") processing

o 476 ounces from flotation processing

·    Copper production totalled 688 tonnes (Q3 2019: 521 tonnes):

o 165 tonnes from SART processing

o 523 tonnes from flotation processing

·    Silver production totalled 31,036 ounces (Q3 2019: 33,354 ounces):

o 5,472 ounces contained within gold doré

o 17,148 ounces from SART processing

o 8,416 ounces from flotation processing

 

YTD Q3 2020

 

·    Total production of 50,702 GEOs (YTD Q3 2019: 60,122 GEOs)

·    Gold production of 43,384 ounces (YTD Q3 2019: 52,198 ounces)

·    Copper production totalled 1,894 tonnes (YTD Q3 2019: 1,478 tonnes)

·    Silver production totalled 89,564 ounces (YTD Q3 2019: 117,708 ounces)

 

Sales

 

·    Q3 2020 gold bullion sales of 6,599 ounces at an average of $1,947 per ounce (Q3 2019 gold bullion sales of 14,894 ounces at an average of $1,513 per ounce) - sales were lowered in Q3 2020 due to 6,335 ounces of unsold Company inventory held at 30 September 2020

·    Unsold inventory of 6,335 ounces of gold at 30 September 2020 sold in early October for $12.1 million

·    Q3 2020 copper concentrate shipments to the customer totalled 2,084 dry metric tonnes ("dmt") with a sales value of $3.4 million (excluding Government of Azerbaijan profit share) (Q3 2019: 2,255 dmt with a sales value of $3.4 million)

 

Company financials

 

·    Cash and cash equivalents totalled $21.4 million at 30 September 2020 (Cash and cash equivalents of $29.2 million at 30 June 2020)

·    Cash generation in Q3 2020 of $9.5 million before payment of final dividend for 2019 in Q3 2020 of $5.1 million and including sales proceeds in October of gold inventory of $12.1 million

 

Gedabek - mining, production and sales

 

The Company mined the following ore in the nine months to 30 September 2020:

 

	6 months to 30 June 2020*		3 months to 30 September 2020		9 months to  30 September 2020
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	526,235	0.91	363,039	1.01	889,274	0.95
Ugur - o/pit	420,139	0.99	85,287	0.76	505,426	0.95
Gadir - u/g	46,688	2.55	40,105	2.87	86,793	2.70
Gosha - u/g	4,517	2.80	1,507	1.91	6,024	2.58
Total	997,579	1.03	489,938	1.12	1,487,517	1.06

* There have been some minor changes to the previously reported figures following reconciliation of ore stockpiles.

 

Anglo Asian stacked 168,945 tonnes of dry crushed ore on to heap leach pads with an average gold content of 0.87 grammes per tonne of gold during Q3 2020 (Q2 2020: 139,752 tonnes with an average gold content of 0.79 grammes per tonne of gold). The Company also heap leached uncrushed Run of Mine ("ROM") ore. During Q3 2020, Anglo Asian stacked 149,031 tonnes of ROM ore on to heap leach pads with an average gold content of 0.50 grammes per tonne of gold (Q2 2020: 134,675 tonnes with an average gold content of 0.44 grammes per tonne of gold).

 

The Company processed 181,200 dry tonnes of ore with an average gold content of 2.39 grammes per tonne of gold through the agitation leaching plant in Q3 2020 (Q2 2020: 161,079 dry tonnes with an average gold content of 1.95 grammes per tonne of gold). 127,100 dry tonnes of ore containing an average copper content of 0.58 per cent. were processed by the flotation plant (Q2 2020: 136,314 dry tonnes of ore containing an average copper content of 0.56 per cent.).

 

The Company produced gold doré containing 14,978 ounces of gold and 5,472 ounces of silver at Gedabek (Q2 2020: 11,468 ounces of gold and 3,449 ounces of silver) in the quarter. During Q3 2020, the agitation leaching plant produced 9,584 and 3,452 ounces of gold and silver, respectively, and the heap leach operations produced 5,394 and 2,020 ounces of gold and silver, respectively.

 

SART processing produced 301 dmt of copper concentrate containing 165 tonnes of copper, seven ounces of gold and 17,148 ounces of silver in Q3 2020 (Q2 2020: 267 dmt of copper concentrate containing 151 tonnes of copper, seven ounces of gold and 10,893 ounces of silver).

 

In Q3 2020, flotation processing produced 2,965 dmt of copper concentrate containing 523 tonnes of copper, 476 ounces of gold and 8,416 ounces of silver (Q2 2020, 2,904 dmt of copper concentrate containing 497 tonnes of copper, 573 ounces of gold and 9,542 ounces of silver).

 

The Company sold 2,084 dmt of copper concentrate in Q3 2020 for $3.4 million compared to 3,526 dmt for $4.7 million in Q2 2020 (excluding Government of Azerbaijan production share).

 

The following table summarises gold doré production and sales at Gedabek for FY 2019 and Q3 2020:

 

	Gold produced* (ounces)		Silver Produced* (ounces)		Gold sales** (ounces)		Gold Sales price ($/ounce)
Quarter ended
31 March 2019	15,547		6,634		13,122		1,306
30 June 2019	16,073		4,773		13,467		1,332
H1 2019	31,620		11,407		26,589		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		53,992		1,410
31 March 2020	15,041		3,852		11,236		1,577
30 June 2020	11,468		3,449		12,743		1,713
H1 2020	26,509		7,301		23,979		1,649
30 Sept 2020	14,978		5,472		6,599		1,947
NOTE

* 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 2019 and Q1 to Q3 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
Quarter ended 30 June
SART processing	267	151	7	10,893
Flotation	2,904	497	573	9,542
Total	3,171	648	580	20,435
Quarter ended 30 September
SART processing	301	165	7	17,148
Flotation	2,965	523	476	8,416
Total	3,266	688	483	25,564

 

 * including Government of Azerbaijan's share.

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

 

The following table summarises total copper concentrate production and sales at Gedabek for FY 2019 and Q1 to Q3 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
30 June 2020	3,171	648	580	20,435	3,526	4,707
H1 2020	6,165	1,207	1,413	51,228	5,544	7,570
30 Sept 2020	3,266	688	483	25,564	2,084	3,377

 

* including Government of Azerbaijan's share

** excludes Government of Azerbaijan's share

 

Cash

The Company had cash at 30 September 2020 of $21.4 million ($29.2 million at 30 June 2020).

 

In Q3 2019, the Company paid the final dividend for 2019 of $5.2 million and corporation tax of $3.0 million. Company inventory of 6,335 ounces of gold at 30 September 2020 was sold in early October for $12.1 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.

The Company has forecast production for FY 2019 of between 82,000 to 86,000 GEOs which is currently being revised.

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.