Anglo Asian Mining Announcement

03 April 2012
Anglo Asian Mining Announcement

50% Increase in JORC-compliant Resource at Gedabek Gold/Copper Mine to over One Million Ounces of Gold

Anglo Asian Mining plc, the AIM listed gold producer, announces a 50%* increase in the JORC-compliant gold resource at its Gedabek gold/copper mine ('Gedabek') located in the Republic of Azerbaijan to 37,111,577 tonnes at 0.884 g/t of gold for 1,054,382 ounces; 0.220% of copper ('Cu') for 81,765 tonnes ('t'); and 7.215 g/t of silver ('Ag') for 8,608,551 oz in the Measured and Indicated classifications at a cut-off grade of 0.3 g/t of gold.

Overview

  • Significant milestone achieved - over 1 million oz Au in Measured and Indicated classifications delineated
  • Total JORC mineral resource, including Inferred category, of 48,138,979 tonnes at 0.825 g/t Au for 1,276,422 oz Au (a 61% increase); 0.197 % Cu for 94,890 t (a 93% increase); and 6.66 g/t Ag for 10,305,653 oz (a 36% increase) at a cut-off grade of 0.3 g/t of gold
  • Increased geological knowledge and confidence in the quantity and quality of the mineral resources and ore reserves within the current economic open pit limit at Gedabek
  • Drilling continues south and southeast of the Gedabek Mineral Deposit, with a further 3,420 m of drilling undertaken since completion of the JORC mineral resource drilling programme
  • JORC compliant ore reserves estimate due in H2 2012
  • Technical and economic feasibility of future mineral processing alternatives are being assessed to increase the gold, copper and silver recovery and economics of Gedabek

Anglo Asian CEO Reza Vaziri said, "Reaching over one million ounces of gold in the Measured and Indicated resource category is a significant milestone for the Company, underpinning the production potential and the inherent value of Gedabek that we first saw when we commenced mining in 2009. With steady gold, copper and silver production at Gedabek (FY 2011 57,068 oz of gold, 611 tonnes of copper and 46,940 oz of silver), and continuing strong metal prices, our position as a profitable and cash generative production company is strengthening.

"Indications from the 3,420 metres of drilling completed since Phase 1 and Phase 2 drilling included in the JORC-compliant mineral resource estimate highlight the significant potential to further upgrade and increase the size of this deposit. In line with this, we are now planning to conduct a further 24,567 m drilling programme with the aim of further increasing the mineral resources of the Gedabek deposit. In addition, the Company aims to complete a JORC compliant ore reserves estimate in H2 2012. This will help us to assess mineral processing options for the proposed agitation leaching plant at Gedabek, which would potentially enable an increase in Gedabek's mine life and thereby further improve the economic fundamentals of the mine. We look forward to reporting on these developments in due course.

"In tandem with this, we are also actively establishing our second mining project in Azerbaijan, Gosha, located 50km away from Gedabek. This will be another significant step for Anglo Asian as we look to become a leading mid-tier gold producer in Caucasia and Central Asia."

Background

CAE Mining was engaged by the Company to update the mineral resources estimation of Gedabek, as an extension of the previous mineral resources estimations by SRK Consulting Incorporated (SRK, 2007) and SGS Canada Incorporated (SGS, 2010) in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The Joint Ore Reserves Committee, 2004 ('JORC')).

The updated mineral resources estimation was completed taking into consideration the information of the 2006 and 2010-2011 exploration drilling campaigns, which has consisted of 34,936 m of drilling at Gedabek. The first objective of the 2010-2011 exploration drilling campaign was to increase the level of geological knowledge and the confidence of the quantity (tonnage) and quality (gold, copper and silver grades) of the mineral resources and ore reserves within the current economic open pit limit at Gedabek. This objective was reached by completing Phase I of the exploration drilling campaign consisting of 60 drill holes over 5,452 metres with 4,626 samples prepared and assayed. The second objective of the 2010 - 2011 exploration programme was to look at the mineral resources around the current economic open pit limit with a view to its possible future expansion. This was reached by completion of the Phase II exploration drilling campaign that consisted of 56 drill holes with 9,058.48 metres drilled and 4,080 samples prepared and assayed.

Another aim of the 2010 - 2011 exploration drilling campaign was to assess the technical and economic feasibility of mineral processing alternatives for the oxide and sulphide mineralisation to increase the recovery of gold, copper and silver and the economic value of the expected final products. The Company has been assessing the viability and suitability of building a new agitation leaching plant at Gedabek. The plant, if commissioned, will process high grade ore and additional reserves that are not suitable for heap leaching, together with spent ore from the leach heaps to further improve total gold recoveries. Agitation leaching recovery rates are typically over 90% compared to circa 70% normally achieved in heap leaching. The Company will announce a full update containing the pre-feasibility results and the Board's review of the suitability of a new agitation leaching plant at Gedabek in due course.

The updated mineral resource evaluation has also resulted in an improved understanding of the geological and structural geology setting of the mineral deposit. This knowledge was obtained by a recent re-interpretation of the information taking into account surface and open pit structural geology mapping.

The Gedabek Mineral Deposit has the style of mineralisation typical of porphyry gold deposits (Robert, Poulsen and Dube, 1997), which is confirmed by the extensive analysis, interpretation and processing of the previous and recent sources of geological and chemical information.

The statement is also supported by the geological and structural geology cross sections which show that the spatial distribution of the gold, copper and silver mineralisation is located under, or immediate to, the geological contact between the andesitic and dacitic lavas and volcaniclastic tuffs and the dacitic quartz porphyry.

Based on an extensive analysis, 95% of the drillholes composited with an interval length equal to two meters and gold grade greater than or equal to 0.3 g/t, intercepted the economic mineralisation. This information also confirms the hypothesis that the gold, copper and silver mineralisation is widely spread and disseminated in the geological contact between the andesitic and dacitic lavas and volcaniclastic tuffs and dacitic quartz porphyry.

The updated mineral resource of Gedabek was spatially estimated by applying the ordinary kriging geostatistical algorithm and by accessing the information of the updated, integrated and validated drillhole database. The updated mineral resource was constrained with both the original surface topography and the open pit surface topography dated on 30 December 2011.

The updated measured, indicated and inferred mineral resources of both the oxide and sulphide mineralisation based on a cut-off grade of 0.3 g/t of gold is described in the following table.

Classification Tonnage Grades Products
    Au Cu Ag Au Cu Ag
  t g/t % g/t Oz T Oz
Measured 22,349,562 1.028 0.255 8.249 738,958 57,069 5,927,487
Indicated 14,762,015 0.665 0.167 5.649 315,424 24,696 2,681,064
Measured & Indicated 37,111,577 0.884 0.220 7.215 1,054,382 81,765 8,608,551
Inferred 11,027,402 0.626 0.119 4.787 222,040 13,125 1,697,102

CAE Mining recommends that the Company continues the implementation and improvement of best practices in the exploration and estimation processes at Gedabek. Additionally, the development and implementation of several activities are recommended that will contribute to the understanding of the geological and structural geology settings of the deposit and thus enhance the mineral resources estimation of the deposit.

The information contained in this announcement and the Updated Mineral Resources Report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Guillermo Turner-Saad, who is a full-time employee of CAE Mining. Mr Turner-Saad is a Fellow of The Australasian Institute of Mining and Metallurgy and he has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves' and a 'qualified person' as defined in the Guidance Note for Mining, Oil and Gas Companies, June 2009, of the London Stock Exchange. Mr Turner-Saad has reviewed and approved the technical information contained in this announcement and consents to the inclusion in the Updated Mineral Resources Report of the matters based on his information in the form and context in which it appears. The full Updated Mineral Resources Report prepared by CAE Mining will be available shortly at www.angloasianmining.com

* The 50% increase in the Updated Mineral Resources Report does not take in to account the ore that has been mined at Gedabek from the date of the first report October 2010 to now and ore that is currently in the leach pad process, or contained in ore stock piles.