AGM 2021 - Letter from CEO to Company Shareholders

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

29 June 2021

Anglo Asian Mining PLC

("Anglo Asian" or the "Company")

AGM 2021 - Letter from Reza Vaziri (President and Chief Executive) to Shareholders of the Company

Anglo Asian Mining plc, the AIM-listed gold, copper and silver producer focused in Azerbaijan, is holding its Annual General Meeting ("AGM") at 11:00am today at 33 St James's Square, London SW1Y 4JS. As previously notified, this is a closed AGM and shareholders will not be able to attend due to COVID-19 safety concerns. Accordingly, the following letter to shareholders has been released by Reza Vaziri, the Company's President and Chief Executive.

Dear Shareholders

As you are all aware, I cannot be with you today. This is the second year the Company will hold a closed AGM and is again a big personal disappointment. I always enjoy meeting shareholders at our AGMs, which are valuable occasions to exchange views. However, there are now increasing signs that the COVID-19 pandemic is starting to abate, and I am hopeful that I can look forward to meeting you all next year. The Company gave serious consideration to holding a virtual "hybrid" meeting but decided it would not be practical.

2020 was a year without precedent in the history of the Company. It commenced with the rapidly evolving COVID-19 pandemic, which gradually restricted our ability to operate. In September, the conflict between Azerbaijan and Armenia broke out, which lasted until the ceasefire in November. During this conflict Ganja, the regional capital which is less than 50 kilometres from our operations at Gedabek, was attacked several times by ballistic missiles. Both physical and cyber communications were severely disrupted. Sadly, one of our employees who was conscripted into the army, lost his life in the conflict. Thankfully, all our other conscripted employees are now safely back at work.

COVID-19 restrictions in Azerbaijan have now mostly all been lifted so that daily life has more or less returned to normal. However, the COVID-19 pandemic and the conflict with Armenia were extremely demanding for all our employees and not only for those who fought in the conflict. Despite the numerous challenges, the Company delivered an excellent financial performance helped by higher metal prices. More importantly for the Company's future, we continued our successful exploration programme culminating in the discovery of Zafar, a major new deposit at Gedabek. Exploration at several other sites at Gedabek is ongoing. The year's operational performance was an outstanding achievement of which all employees are justifiably proud.

The Company's financial performance in 2020 was excellent with revenues of $102 million and profits before taxation of $36 million. The Company became debt-free during 2020 and ended the year with a cash balance of $39 million.  The Company is one of the few AIM-listed mining companies which pay a dividend and for 2020 will pay a total dividend of 9.5 US cents a share, which includes a special dividend of 1.5 US cents per share. The Company decided to maintain the dividend at the 8 US cents per share (excluding the special dividend) paid in 2019 to conserve capital for the opportunities opening up in the restored territories.

The Company's main priority is to now increase production by developing new mines as the Gedabek open pit nears the end of its life. I was therefore delighted at the recent discovery of the Zafar deposit, which is situated very close to our processing facilities. Zafar will be a major new underground copper and zinc mine at Gedabek and work is now rapidly ramping up on the large development project to design and construct the mine. We have separately published today the key milestones for bringing the mine into production. A maiden mineral resource estimate will be published next month and it is anticipated to show around 8 million tonnes of mineralisation with average grades of 0.6 per cent. copper, 0.5 per cent. zinc and 0.3 grammes per tonne of gold. We plan to mine the deposit from underground via a decline and we anticipate that the Company's flotation facilities will be upgraded to increase their capacity and a section will be added to produce zinc concentrate. We are also expecting limited production later this year or early next year from Avshancli, which is a free digging oxide gold ore similar to the ore from the now depleted Ugur open pit mine.

The ceasefire agreement between Azerbaijan and Armenia restored three previously inaccessible contract areas to the Company totalling 900 square kilometres. These have all been previously illegally exploited by the Armenians and contain various mines and processing facilities. The contract areas each have excellent exploration potential and the Company believes these regions offer exceptional opportunities for the future. As you might expect, the political situation is fast-moving and the Company is closely monitoring developments. We are working with the Government on the timing and practicalities to safely access and evaluate these licence areas. Roads to access the restored areas from elsewhere in Azerbaijan are already under construction, but civilian access to these areas remains restricted due to uncleared minefields. We were permitted to make a short inspection visit to the Vejnaly concession in Zangilan and are working to obtain regular access to the site for development, but access to other areas remains limited.

We continue to maintain our excellent relationship with the Government of Azerbaijan and we were routinely granted the first of the two five-year permitted extensions of the Gedabek Production Sharing Agreement in 2021. We are also in discussions with the Government to obtain additional contract areas in Azerbaijan which will mostly be contiguous with our Gedabak contract area. These discussions are progressing satisfactorily but are taking longer than anticipated.

We continue to look at opportunities outside of Azerbaijan which will add shareholder value as we believe the market places a higher value on miners which operate in multiple jurisdictions. We also believe operating in multiple jurisdictions will be valuable experience for the Company. Our increasing public profile means that we are now often approached with opportunities to participate in mining projects around the world. Regrettably, negotiations with Conroy Gold in Ireland were terminated in early 2021 as it had become apparent the two companies had very different visions for the development of the proposed joint ventures.

I was very pleased to welcome Michael Sununu to our board during the year. Michael is the son of Governor Sununu and is an experienced businessman who has excellent knowledge of the Company and its operations having previously made several visits to Azerbaijan. He replaced Richard Round who I would like to sincerely thank for his work and commitment to the Company over many years.

Finally, I would like to take this opportunity to thank my fellow board members, our management team and our employees for their hard work and dedication through these extraordinary times and our shareholders for their continued support and encouragement.

With kind regards

Reza Vaziri

President and Chief Executive

Competent Person Statement

The information in the announcement that relates to exploration results, minerals resources and ore reserves is based on information compiled by Dr Stephen Westhead, who is a full time employee of Anglo Asian Mining with the position of Director of Geology & Mining, who is a Fellow of The Geological Society of London, a Chartered Geologist, Fellow of the Society of Economic Geologists, Member of The Institute of Materials, Minerals and Mining and a Member of the Institute of Directors.

Stephen Westhead has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'; who is a Member or Fellow of a 'Recognised Professional Organisation' (RPO) included in a list that is posted on the ASX website from time to time (Chartered Geologist and Fellow of the Geological Society and Member of the Institute of Material, Minerals and Mining).

Stephen Westhead has sufficient experience, relevant to the style of mineralisation and type of deposit under consideration and to the activity that he is undertaking, to qualify as a "competent person" as defined by the AIM rules.

Stephen Westhead has reviewed the resources and reserves included in this announcement and consents to the inclusion in the announcement of the matters based on his information in the form and context in which it appears.

Market Abuse Regulation (MAR) Disclosure

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

**ENDS**

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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.