Anglo Asian Exploration Update : News from McNeill.org.uk

Anglo Asian Exploration Update

07 April 2011
Anglo Asian Exploration Update

Q1 Operations Update - Gedabek Gold/Copper Mine

Anglo Asian Mining plc, the AIM listed gold producer, is pleased to provide an update for the quarter ended 31 March 2011 on operations at its flagship Gedabek gold/copper mine ('Gedabek') in Azerbaijan.

Overview

  • Gold production of 14,028 ounces at Gedabek for Q1 2011 - 3% increase on production for comparable quarter in 2010
  • Production target of a minimum of 60,000 ounces of gold for the year to 31 December 2011 from heap leach operations - target does not include additional SART copper, silver and gold production
  • 208,000 tonnes of dry ore transferred during Q1 2011 onto the leach pad with an average gold content of 3.32 g/t
  • Significant increase in copper and silver production from SART operations - 104 tonnes of copper, 762 kg/26,879 oz of silver and 2.3 kg/81 oz gold produced during Q1 2011
  • First 400 tonnes of copper concentrate has arrived at the refinery and is awaiting final assay before sales value is agreed 
  • A further sales protocol for the sale of copper concentrate is in advanced discussion with government partners
  • Outstanding loans reduced from $30.6 million at 31 Dec 2010 to $22.0 million at 31 March 2011

Anglo Asian CEO Reza Vaziri said, "I am extremely pleased with the Company's progress and believe that our target of producing a minimum 60,000 ounces of gold by the end of 2011 is highly achievable.  In tandem with this, robust gold prices have hit an average of $1,385 per ounce, whilst the SART operation is also delivering improving copper and silver production - all of which bode well for the Company's bottom line.  Importantly, this is enabling us to rapidly repay our loan - during the quarter we repaid $8.6 million bringing the total outstanding loan balance to $22.0 million." 

During the quarter ended 31 March 2011, the Company produced 14,028 ounces ('oz') of gold at Gedabek.  Extreme winter weather conditions over the recent months at Gedabek have resulted in leaching becoming sluggish, and as a result, Q1 2011 production of 14,028 oz gold is below that of Q4 2010, but represents a 3% increase on the comparable period for 2010, which saw gold production of 13,660 oz.  The Company is confident that it will achieve an annual production at Gedabek of a minimum of 60,000 oz gold for FY 2011.  In terms of gold sales, the buoyant gold price has seen Anglo Asian completing sales of 11,269 oz gold at an average of $1,385 per oz for the three months to 31 March 2011.

The following summary table of gold production and prices highlights the quarter-on-quarter gold production at Gedabek over the past year. 

Quarter Ended

Gold Produced (including Govt. of Azerbaijan's share) (oz)

Weighted Average Gold Sale Price

(US$)

30 June 2010

14,836

1,197

30 Sept 2010

19,214

1,229

31 Dec 2010

19,555

1,371

31 March 2011

14,028

1,385

In terms of processing, Gebabek's operations have been performing in line with management's expectations.  During the quarter the Company transferred 208,000 tonnes of dry ore onto the leach pad with an average gold content of 3.32 g/t (Q4 2010: 240,208 tonnes of dry ore onto the leach pad with an average gold content of 4.32 g/t).

The Company's Sulphidisation, Acidification, Recycling, and Thickening ('SART') process for the recovery of the copper and silver dissolved in the leaching solution for the three months to 31 March 2011 produced copper concentrate that contained approximately 104 tonnes of copper, 762 kg/26,879 oz of silver and 2.3 kg/81 oz of gold (Q4 2010:  47.5 tonnes of copper, 380 kg/13,404 oz of silver and 6.8 kg/240 oz of gold).  It must be noted that gold produced through the SART process is in addition to the Q1 2011 gold production quoted of 14,028 oz produced through Gedabek's heap leach operation and that of the FY 2011 minimum gold production target of 60,000 oz Au.

In Q4 2010 the Company agreed a one-off sales protocol for the sale of 400 tonnes of copper concentrate which represented production from the start of operations to the end of July 2010.  The copper concentrate has been transferred to the refiner during Q1, 2011 and is awaiting final assay before being sold to an agreed buyer, Seagate Minerals and Metals Inc.  In terms of future sales protocols, Anglo Asian is currently in discussions with Government partners regarding a further one-off sale agreement and will update the market on developments in due course.

The Company has been making steady progress in terms of exploration and development of the greater Gedabek Contract Area with, as reported in February 2011, the completion of a 6,000 metre infill drill programme within the existing pit boundary with the aim of increasing the confidence in the current resource and adding valuable close - spaced information for mine planning purposes.  The results are expected to be completely reported in Q2, 2011.  The current JORC compliant resource estimate, as stated by SGS Geostat in October 2010 (Press Release October 29, 2010), stands at 791,000 oz of gold, 49,300 tonnes of copper and 7,597,000 oz of silver.

During Q1 2011, the Company repaid $8.6 million of its loan with the International Bank of Azerbaijan ('IBA') bringing the outstanding loan balance with IBA to $21.0 million as at 31 March 2011.  Including  Anglo Asian's loan of $1m with its CEO Reza Vaziri, the value of total outstanding loans at 31 March 2011 is $22.0m, (31 March 2010: $46 million).