Anglo Asian Mining Q3 Operations Update

17 October 2011
Anglo Asian Mining Q3 Operations Update

Anglo Asian Mining plc Q3 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 30 September 2011 on operations at its flagship Gedabek gold/copper mine ('Gedabek') in Azerbaijan.

Overview

  • Gold production of 13,166 oz at Gedabek for Q3 2011 (Q2 2011: 14,582 oz)
  • Production target between 58,000-60,000 oz of gold for the year to 31 December 2011 from heap leach operations (not including SART copper, silver and gold production)
  • Silver production from the heap leach operation totalled 7,531 oz
  • Transferred 233,217 tonnes of dry ore onto the leach pad with an average gold content of  3.22 g/t
  • Copper, silver and gold production from SART operations increased - 179 tonnes of copper, 45,111 oz of silver and 29 oz of gold
  • Further US$2.0 million of loan repaid to the IBA ahead of schedule and US$0.2 million repaid to CEO Reza Vaziri - debt at 30 September 2011 totals US$15.8 million

Anglo Asian CEO Reza Vaziri said, "Gedabek continues to perform as a profitable producing gold/copper mine and despite changes in the physical characteristics of the ore currently being processed we remain confident that Gedabek will achieve its production target of 58,000-60,000oz of gold for FY 2011.  With this in mind we remain highly active in developing and implementing efficiency initiatives which we believe will ensure the future production growth and success of our flagship project. 

"Copper production from our SART operation continues to increase quarter on quarter and we believe we are well within target to produce 525 tonnes of copper for FY 2011.  Additionally we continue to secure copper concentrate sales bringing in further revenues for the Company with another sale for 300 wet tonnes agreed during the quarter to Glencore International."    

During the quarter ended 30 September 2011, the Company produced 13,166 ounces ('oz') of gold at Gedabek, bringing the total production since the beginning of 2011 to 41,770 oz of gold.  In addition Anglo Asian produced 7,531 oz of silver through its heap leach operations.  In terms of sales*, the buoyant gold price has seen Anglo Asian completing sales of 11,342 oz of gold at an average of US$1,704 per oz for the three months to 30 September 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$)

31 Dec 2010

19,555

1,371

31 Mar 2011

14,028

1,385

30 Jun 2011

14,582

1,506

30 Sept 2011

13,166

1,704

 

Whilst the Company's management is confident that Anglo Asian will hit its internal production target of between 58,000 oz to 60,000 oz of gold for the year ending 31 December 2011, there are still ongoing notable changes in the physical characteristics of the ore which continues to effect gold recovery and production at Gedabek.  During the first half of the year there was a significant change in density and structure associated more with a zone of transitional ore, which in turn has had an effect on the leaching rate.  However, Anglo Asian has implemented initiatives to improve gold production in Q4 2011.  These include the acceleration of waste removal to open up new areas of oxide ore which have characteristics more suitable to the heap leach process, crushing the ore finer to become more accessible to cyanide leaching, and speeding up the construction and extension of heap leach pads to allow the ore to be stacked at a lesser height which will increase leaching rate.

As previously announced the Company has appointed mining consultants Arcardis Chile in June 2011 to undertake a pre-feasibility study assessing the viability and suitability of building a new agitation leaching plant at Gedabek.  The plant, if commissioned, would process high grade ore and additional resources that are not suitable for heap leaching, to further improve total gold recoveries.  Agitation leaching recovery rates for mineral extraction are typically measured at over 90% compared to circa 70% normally achieved in heap leaching.  Furthermore, residual gold in high grade ore that has been processed by heap leaching and left on the heap leach pad during 2009 through to the end of 2011 could be processed through agitation leaching, again improving total metal extraction from Gedabek's orebody.  The pre-feasibility study is anticipated to be completed by the end of October 2011.

In terms of processing, Gebabek's operations have been performing in line with management's expectations.  During the quarter the Company transferred 233,217 tonnes of dry ore onto the leach pad with an average gold content of 3.22 g/t. 

Copper concentrate production from the Company's Sulphidisation, Acidification, Recycling, and Thickening ('SART') plant has improved quarter on quarter.  For the three months to 30 September 2011 the SART operation produced copper concentrate that contained approximately 179 tonnes of copper, 45,111 oz of silver and 29oz of gold, which in terms of copper and silver production is a significant increase on the previous quarter (Q2 2011:  157 tonnes of copper, 26,254 oz of silver and 49 oz of gold).  Furthermore Anglo Asian has just agreed a sale of 300 wet tonnes of copper concentrate during the quarter to Glencore International AG, which when concluded will positively impact 2H 2011 revenues.

During Q3 2011, the Company repaid US$2.0 million of its loan with the International Bank of Azerbaijan ('IBA') bringing the outstanding loan balance with IBA to US$15.0 million as at 30 September 2011.  In addition, the Company repaid US$0.2 million of its loan with the Company's CEO Reza Vaziri bringing the outstanding loan balance to US$0.8 million.  Including Anglo Asian's loan of $0.8m with Reza Vaziri, the value of total outstanding loans at 30 September 2011 is US$15.8 million.  Net debt, being interest-bearing loans and borrowings less cash and cash equivalents, reduced from US$16.6 million at 30 June 2011 to US$11.6 million at 30 September 2011.