Q1 2021 Production and Operations Review

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

 

15 April 2021

 

 

Anglo Asian Mining plc

Q1 2021 Production and Operations Review

Production of 15,810 gold equivalent ounces calculated using budget metal prices

Full year production guidance for 2021 of 64,000 to 72,000 gold equivalent ounces

 

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 2021 ("Q1 2021") together with its production guidance for the full year to 31 December 2021 ("FY 2021").

 

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

 

Q1 2021 Production Update

 

·    Gold production for Q1 2021 of 11,907 ounces (Q1 2020: 15,867 ounces)

·    Copper production for Q1 2021 increased by 14 per cent. to 638 tonnes (Q1 2020: 559 tonnes)

·    Silver production for Q1 2021 totalled 35,365 ounces (Q1 2020: 34,642 ounces)

·    15,810 gold equivalent ounces ("GEOs") produced calculated using budgeted metal prices

 

Q1 2021 Sales and Cash Update

 

·    Cash of $22.9 million at 31 March 2021 (31 December 2020: $38.8 million)

o Dividend of $1.7 million paid in Q1 2021

o Balance of corporation tax for FY 2020 of $6.3 million paid in Q1 2021

o Post Q1 2021 sales of inventory

·    Unsold Company inventory at 31 March 2021 valued at $15.2 million (5,592 ounces of gold valued at $9.7 million and $5.5 million worth of copper concentrate)

 

FY 2021 Production Guidance

·    Forecast gold production for FY 2021 of 48,000 to 54,000 ounces (FY 2020 actual production: 56,864 ounces of gold)

o Lower gold production forecast due to mining only from the Company's existing Gedabek and Gadir mines in 2021 with no contribution from Ugur which has now been depleted

·    Forecast copper production for FY 2021 of 2,500 to 2,800 tonnes of copper (FY 2020 actual production: 2,591 tonnes of copper)

·    Forecast production assumes no production from the newly restored contract areas during 2021

·    Forecast total metal production for FY 2021 of 64,000 to 72,000 GEOs (FY 2020 actual production: 67,249 GEOs)

 

Anglo Asian CEO Reza Vaziri commented: "This year we will only be mining from our existing Gedabek open pit and Gedabek and Gadir underground mines. Gold production is therefore expected to be lower as there will be no contribution from Ugur, which was depleted in 2020. However, we are expecting an increase in copper production as we take more ore from the Gedabek open pit. The first quarter's production and the full year production guidance reflect this fact.

 

"Our successful exploration programme, which has progressed significantly during 2020, is continuing. We are looking forward to starting to reap the benefits of this exploration with production next year from Avshancli. The drilling results from Zafer continue to be encouraging and we have now engaged third party consultants to provide indicative estimates of resources. We are also just starting to understand the potential of the newly-restored contract areas. A recent visit to the Vejnaly contract area in Zangilan has identified some high grade ore stockpiles and the feasibility of transporting this ore to Gedabek for processing is being evaluated. I look forward to updating shareholders further throughout the year."

 

Production Overview for Q1 2021

 

·    Q1 2021 gold production of 11,907 ounces (Q1 2020: 15,867 ounces):

o 11,541 ounces contained within gold doré

o   13 ounces from sulphidisation, acidification, recycling and  thickening ("SART") processing

o 353 ounces from flotation

·    Copper production for Q1 2021 increased by 14 per cent. to 638 tonnes (Q1 2020: 559 tonnes):

o 276 tonnes from SART processing

o 362 tonnes from flotation processing

·    Silver production for Q1 2021 totalled 35,365 ounces (Q1 2020: 34,642 ounces):

o 4,916 ounces contained within gold doré

o 19,850 ounces from SART processing

o 10,599 ounces from flotation

·    Reportable total metal production of 15,431 GEOs (Q1 2020: 18,219 ounces)

o The actual price of gold was higher than the budgeted price which decreased the gold equivalent value of the copper

 

Sales overview

 

·    Q1 2021 gold bullion sales of 5,635 ounces at an average of $1,697 per ounce (Q1 2020: 11,236 ounces at an average of $1,577 per ounce)

·    No copper concentrate shipments were made in Q1 2021 as the renegotiated contracts with off-takers were waiting the approval of the Government of Azerbaijan (Q1 2020: sales of 2,018 dry metric tonnes ("dmt") with a value of $2.9 million)

o Government approval for the new contracts has now been obtained

 

Company financials

 

·    Cash of $22.9 million at 31 March 2021 (Cash of $38.8 million at 31 December 2020)

·    Unsold gold doré and copper concentrate inventory of $15.2 million at 31 March 2021

·    Gold doré production from 11 February to 31 March 2021 was not shipped to the refiner until April to minimise shipping costs. 2,000 ounces of the contained gold bullion was sold on 6 April 2021 for $3.5 million

 

Operations review

 

The Company mined the following ore in the three months ended 31 March 2021:

 

	12 months to  31 December 2020		3 months to 31 March 2021
Mine	Ore mined	Average gold grade	Ore mined	Average gold grade
	(tonnes)	(g/t)	(tonnes)	(g/t)
Open pit	1,303,956	0.94	537,044	0.90
Ugur - o/pit	505,426	0.95	-	-
Gadir - u/g	125,001	2.53	27,017	2.02
Gosha - u/g	6,024	2.58	-	-
Gedabek - u/g	16,376	2.37	40,768	1.41
Total	1,956,783	1.06	604,829	0.98

 

Anglo Asian stacked 110,612 tonnes of dry crushed ore on to heap leach pads with an average gold content of 0.90 grammes per tonne ("g/t") during Q1 2021 (Q4 2020: 107,22 tonnes with an average gold content of 0.89 g/t). The Company also heap leached uncrushed Run of Mine ("ROM") ore. During Q1 2021, Anglo Asian stacked 258,097 tonnes of ROM ore on to heap leach pads with an average gold content of 0.61 g/t (Q4 2020: 173,812 tonnes with an average gold content of 0.59 g/t).

 

The Company processed 154,373 dry tonnes of ore with an average gold content of 1.84 g/t through the agitation leaching plant in Q1 2021 (Q4 2020: 177,487 dry tonnes with an average gold content of 1.81 g/t). 114,903 dry tonnes of ore containing an average copper content of 0.56 per cent. were processed by the flotation plant (Q4 2020: 110,772 dry tonnes of ore containing an average copper content of 0.63 per cent.).

 

The Company produced gold doré containing 11,541 ounces of gold and 4,916 ounces of silver at Gedabek in Q1 2021 (Q4 2020: 13,276 ounces of gold and 4,614 ounces of silver). During Q1 2021, the agitation leaching plant produced 7,196 and 3,092 ounces of gold and silver, respectively, and the heap leach operations produced 4,345 and 1,824 ounces of gold and silver, respectively.

 

SART processing produced 473 dmt of copper concentrate containing 276 tonnes of copper, 13 ounces of gold and 19,850 ounces of silver in Q1 2021 (Q4 2020: 421 dmt of copper concentrate containing 196 tonnes of copper, 15 ounces of gold and 21,327 ounces of silver).

 

In Q1 2021, flotation processing produced 2,375 dmt of copper concentrate containing 362 tonnes of copper, 353 ounces of gold and 10,599 ounces of silver (Q4 2020: 2,929 dmt of copper concentrate containing 500 tonnes of copper, 243 ounces of gold and 7,086 ounces of silver).

 

The Company sold no copper concentrate in Q1 2021 compared to 4,211 dmt sold for $6.8 million in Q4 2020 (excluding Government of Azerbaijan production share). The Company was waiting approval from the Government of Azerbaijan for the renegotiated sales contracts with the off-takers. This approval has now been obtained.

 

The following table summarises gold doré production and sales at Gedabek for FY 2020 and Q1 2021:

 

	Gold produced* (ounces)		Silver produced* (ounces)		Gold sales** (ounces)		Gold Sales price ($/ounce)
Quarter ended
31 March 2020	15,034		3,852		11,236		1,577
30 June 2020	11,455		3,562		12,743		1,713
H1 2020	26,489		7,414		23,979		1,649
30 Sept 2020	14,945		5,487		6,599		1,947
31 Dec 2020	13,276		4,614		18,072		1,884
H2 2020	28,221		10,101		24,671		1,901
FY 2020	54,710		17,515		48,650		1,777
31 March 2021	11,541		4,916		5,635		1,697
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 2020 and Q1 2021:

 

	Concentrate	Copper	Gold	Silver
	production*	content*	content*	content*
	(dmt)	(tonnes)	(ounces)	(ounces)
2020
Quarter ended 31 March
SART processing	221	114	8	12,895
Flotation	2,773	445	825	17,895
Total	2,994	559	833	30,790
Quarter ended 30 June
SART processing	267	151	7	10,957
Flotation	2,904	497	573	9,542
Total	3,171	648	580	20,499
Quarter ended 30 Sept
SART processing	301	165	7	17,329
Flotation	2,965	523	476	8,416
Total	3,266	688	483	25,745
Quarter ended 31 December
SART processing	421	196	15	21,327
Flotation	2,929	500	243	7,086
Total	3,350	696	258	28,413
2021
Quarter ended 31 March
SART processing	473	276	13	19,850
Flotation	2,375	362	353	10,599
Total	2,848	638	366	30,449

 

* 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 2020 and Q1 2021. 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 2020	2,994	559	833	30,790	2,018	2,863
30 June 2020	3,171	648	580	20,499	3,526	4,707
H1 2019	6,165	1,207	1,413	51,289	5,544	7,570
30 Sept 2020	3,266	688	483	25,745	2,084	3,377
31 Dec 2020	3,350	696	258	28,413	4,211	6,763
H2 2020	6,616	1,384	741	54,158	6,295	10,140
FY 2020	12,781	2,591	2,154	105,447	11,839	17,710
31 March 2021	2,848	638	366	30,499	-	-

* 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 2021 of $22.9 million, a decrease in cash of $15.9 million since 31 December 2020 when cash was $38.8 million and no bank debt.

 

A dividend of $1.7 million and the balance of the FY 2020 corporation tax of $6.3 million were paid in Q1 2021. Additionally, the Company had unsold inventory at 31 March 2021 of 5,592 ounces of gold and $5.5 million of copper concentrate which totalled $15.2 million in value.

 

2,000 ounces of the gold doré production from 11 February 2021 to 31 March 2021  was sold on 6 April 2021 for $3.5 million.     

 

FY 2021 production guidance

The production guidance has been calculated using the following metal prices used for the 2021 budget:

 

-     Gold: $1,650 per ounce

-     Silver: $25 per ounce

-     Copper: $8,700 per tonne 

 

The production guidance is for 100 per cent. of the Company's production which will be subject to an expected 12.75 per cent. production share throughout 2021 with the Government of Azerbaijan under the Company's existing production sharing agreement.

 

The production guidance contains no production from the three new restored territories. The Company is evaluating whether ore stockpiled at the Vejnaly contract area can be transported to Gedabek for processing.

 

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 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
Adam Cowl	SP Angel Corporate Finance LLP Nominated Adviser and Broker	Tel + 44 (0) 20 3470 0470
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 at its active Gedabek, Gosha and Ordubad contract areas assembled from analysis of historic Soviet geological data and held under a Production Sharing Agreement ("PSA") modelled on the Azeri oil industry. The Company also has three recently restored contract areas in the formerly Occupied Territories and Karabakh under its PSA and which the Company has started to preliminary evaluate.

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. 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 67,249 gold equivalent ounces ("GEOs") for the year ended 31 December 2020.  Gedabek is a polymetallic ore deposit that has gold together with significant concentrations of copper in the main open pit mine. 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 2021 of 48,000 ounces to 54,000 ounces of gold and 2,500 tonnes to 2,800 tonnes of copper. This total production target expressed as gold equivalent ounces ("GEOs") at budgeted prices is between 64,000 GEOs and 72,000 GEOS.

Anglo Asian is also actively seeking to exploit its first mover advantage in Azerbaijan to identify additional projects, as well as looking for properties in other jurisdictions in order to fulfil its expansion ambitions and become a mid-tier gold and copper metal production company.