TIDMAAZ
RNS Number : 4939C
Anglo Asian Mining PLC
18 April 2017
Anglo Asian Mining plc / Ticker: AAZ / Index: AIM / Sector:
Mining
18 April 2017
Anglo Asian Mining plc
Strategy update and Q1 2017 review - Gedabek gold, copper and
silver mine, Azerbaijan
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 strategy update relating to exploration and
production optimisation together with a quarterly review from its
Gedabek gold, copper and silver mine ("Gedabek") in western
Azerbaijan for the three months to 31 March 2017 ("Q1 2017").
Note that all references to "$" are to United States
dollars.
Strategy update
-- Strategic review completed to optimise long term production at Gedabek
-- Extensive exploration and production optimisation planned for
both the main open pit and Gadir underground mines in 2017
-- Gedabek ore stockpiles to be processed whilst exploration and
production optimisation is on-going during a temporary pause in
mining ore
-- Flotation treatment of ore prior to leaching now underway to
process ore stockpiles with high copper content and to improve
flexibility of processing operations
-- Ore mining to commence from a new open pit at the recently discovered Ugur deposit in Q4 2017
-- Conservative gold production target for Gedabek for the year
to 31 December 2017 ("FY 2017") of between 52,000 ounces and 58,000
ounces (which includes approximately 8,000 ounces to 10,000 ounces
of production from the flotation plant and 8,000 to 10,000 ounces
from the new Ugur open pit), reflecting the strategy of exploration
and long term production optimisation
-- Copper production target for FY 2017 is between 2,000 tonnes
and 2,400 tonnes, comprising between 600 tonnes to 700 tonnes from
SART processing and between 1,400 tonnes to 1,700 tonnes from
flotation
-- Total production target for FY 2017 expressed as gold
equivalent ounces is between 64,000 ounces and 72,000 ounces
compared to FY 2016 actual total production of 72,304 gold
equivalent ounces
Production overview
-- Gold production for Q1 2017 totalled 11,078 ounces - 9,258
ounces contained within gold doré, 5 ounces from SART processing
and 1,815 ounces from flotation (Q4 2016: total 15,483 ounces)
-- Copper production for Q1 2017 totalled 606 tonnes - 210
tonnes from SART processing and 396 tonnes from flotation (Q4 2016:
total 578 tonnes)
-- Silver production for Q1 2017 totalled 39,369 ounces - 2,447
ounces contained within gold doré, 5,523 ounces from SART
processing and 31,399 ounces from flotation (Q4 2016: total 50,216
ounces)
Sales overview
-- Q1 2017 gold bullion sales of 8,283 ounces at an average of
$1,220 per ounce (Q4 2016: 12,995 ounces at an average of $1,227
per ounce)
-- Q1 2017 copper concentrate shipments to the customer totalled
2,230 dry metric tonnes ("dmt") with a sales value of $4.4 million
(excluding Government of Azerbaijan production share) (Q4 2016:
2,147 dmt with a sales value of $3.9 million)
Company financials
-- Net debt, being interest-bearing loans and borrowings, less
cash and cash equivalents, totaled $33.1 million at 31 March 2017
($35.1 million at 31 December 2016)
Anglo Asian CEO Reza Vaziri commented, "Following completion of
a wide ranging strategic review we are now implementing various
initiatives to ensure sustainable, long-term production at Gedabek.
This is in response to our discovery of the Ugur deposit and a
recent reduction in ounces of gold produced due to the decreasing
gold grade of ore mined. These initiatives include extensive
exploration and production optimisation of both the main open pit
and the Gadir underground mines to enable the Company to gain a
better understanding of the resource so that we can develop Gedabek
in the most effective way. We are also testing a new configuration
of the flotation and agitation leaching plants to give us added
flexibility in processing. Important to this strategy is that we
have extensive stockpiles of ore at Gedabek, which can now be
processed initially by flotation, whilst mining is temporarily
paused. Given the increasing proportion of copper in our production
we will now also be presenting our total production target as gold
equivalent ounces to aid comparability.
"The temporary cessation of mining in the main open pit for the
remainder of 2017 will also enable redeployment of the equipment
necessary to develop the newly discovered Ugur deposit into an open
pit mine located three kilometres from Gedabek. This is an exciting
development for Anglo Asian and we plan to start production from
the open pit at the Ugur deposit in Q4 2017.
"Whilst we undertake this exploration and optimisation
throughout the remainder of 2017, we will understandably see a
reduction from the level of gold production seen in the past two
years, and this has been reflected in our gold production target
for the year. However, this will be offset by increasing production
of copper and we are confident that the initiatives that we are
taking this year will provide the foundation of future sustained
growth and development of the Company.
"I look forward to updating our shareholders on our progress
throughout 2017."
Strategy update
The Group has recently completed an extensive strategic review
of its Gedabek mining operation. This was in response to the
declining gold grades of ore mined from the main open pit and the
recent successful exploration programme during which the Company
discovered the Ugur deposit. The result of this review is that an
extensive programme of exploration and production optimisation will
be carried out in 2017, together with starting ore production from
a new open pit at the Ugur deposit, by the end of the year. The
Company will also process part of its 1.1 million tonnes of high
copper content ore stockpiles in 2017. To process this stockpiled
ore, the flotation plant will be used to treat the ore to remove
copper prior to leaching. This re-configuration of the processing
facilities will enhance the flexibility of Anglo Asian's
operations.
Ore mined from the open pit has recently had a lower gold grade
and a higher percentage of copper than ore previously mined. It was
therefore decided to carry out an extensive programme of
exploration and production optimisation to better understand the
distribution of copper in the ore body and to define the resource
and reserve. Mining will therefore be temporarily stopped in the
open pit in Q2 2017, and during the remainder of 2017 approximately
15,000 metres of drilling will be carried out, in furtherance of
this programme. It is anticipated that mining from the open pit
will recommence in Q1 2018.
Mining of ore from the Gadir underground mine was suspended in
February 2017. Extensive underground exploration is being carried
out and development tunneling undertaken. It is expected that
mining of underground ore will recommence in Q4 2017. Any ore mined
from Gadir during this exploration and development phase will be
stockpiled for later processing.
To provide ore feed to the processing plants for those periods
when ore is not being mined, the Company will process its current
extensive stockpiles. Approximately 50 per cent. of the ore
processed by the flotation and agitation leaching plants in Q1 2017
came from stockpiles. This stockpiled ore was blended with mined
ore to ascertain the suitability of stockpiled ore for processing.
Stockpiled ore also has the additional advantage of being a lower
cost feedstock.
The Company's flotation plant is designed either to treat
tailings from its agitation leaching plant or to treat fresh ore
prior to leaching. Until the end of 2016, the Company initially
treated ore via its agitation leaching plant, with the tailings
from its leaching plant being further treated by flotation. Given
the increasing copper content of the mined ore and the Company's
stockpiles, it was decided in February 2017 to reverse the
processing route by treating the ore initially by flotation,
followed by leaching. This increases copper production and saves
costs by removing copper minerals which consume cyanide before
leaching.
The temporary cessation of mining in the open pit will enable
the heavy earth moving equipment used in the open pit to be
redeployed. The fleet will be used for transporting ore from the
stockpiles and also for the road building and other development
work necessary to bring the Ugur deposit into production as an open
pit mine. It is expected ore will be mined from the Ugur open pit
mine in Q4 2017.
Given the increasing proportion of copper in the production at
Gedabek, the Company will from now on present its total production
target in gold equivalent ounces ("GEOs"). The comparative GEOs for
FY 2016 production have been calculated using actual selling prices
of metal. The FY 2017 production target in GEOs has been calculated
using budget selling prices of $1,200 per ounce, $17 per ounce and
$5,900 per tonne for gold, silver and copper respectively.
Q1 2017 review
During Q1 2017, the Company mined 316,354 tonnes of ore from its
Gedabek open pit. 14,477 tonnes of ore with an average grade of
2.97 grammes per tonne was mined from its Gadir underground mine
until mining ceased in February 2017.
As previously reported, low grade ore (less than 1.5 grammes per
tonne of gold) is being treated by heap leaching, whilst higher
grade ore (more than 1.5 grammes per tonne of gold) is being
processed through the combined agitation leaching and flotation
plants.
During Q1 2017, Anglo Asian stacked 111,701 tonnes of dry
crushed ore on to heap leach pads with an average gold content of
1.00 grammes per tonne. The Company also heap leached uncrushed
(Run of Mine - "ROM") ore. During Q1 2017, Anglo Asian stacked
101,163 tonnes of ROM ore on to heap leach pads with an average
gold content of 0.87 grammes per tonne.
During Q1 2017, the Company processed 184,074 tonnes of ore with
an average gold content of 1.46 grammes per tonne through the
combined agitation leaching and flotation plants. Of the ore
processed, 93,740 tonnes was mined during Q1 2017 from the open pit
and Gadir mines and 90,334 tonnes was from the Company's
stockpiles. Until 6 February 2017, ore was fed into the agitation
leach plant and the tailings from the plant processed by flotation.
After 6 February 2017, the ore was fed into flotation prior to
leaching to remove some of the copper contained within the ore.
There was a total 84 per cent. gold recovery in agitation
leaching and flotation for Q1 2017. This is higher than previously
reported recoveries from the agitation leaching plant. However, due
to the changing configuration of the processing plant in Q1 2017,
the figures are not directly comparable. Gold doré is produced from
both heap and agitated leach intermediate solutions, which are
combined for final processing and also recirculated around the
plant, heap leach pads and tailings dam. Heap leaching is a long
term process and recoveries are therefore only estimates calculated
from available metallurgical statistics.
During Q1 2017, the Company produced gold doré containing 9,258
ounces of gold and 2,447 ounces of silver at Gedabek. The agitation
leaching plant produced 5,508 and 1,352 ounces of gold and silver,
respectively, and the heap leach operations produced 3,750 and
1,095 ounces of gold and silver, respectively. The reduced gold
doré production from agitation leaching was due to the lower amount
of crushed ore feedstock processed by the plant and lower gold
grades of ore.
The Company is making good progress with building its water
treatment plant. Tanks for the plant have now been constructed at
the Gedabek site. The equipment for the water treatment plant has
been manufactured and is currently being shipped to the Gedabek
site.
The following table summarises gold doré production and sales at
Gedabek for FY 2016 and Q1 2017:
Gold produced* Silver Gold sales** Gold Sales
(ounces) Produced* (ounces) price
(ounces) ($/ounce)
Quarter ended
31 March 2016 13,383 1,958 12,143 1,184
30 June 2016 17,926 2,983 15,661 1,265
H1 2016 31,309 4,941 27,804 1,230
30 Sept 2016 15,407 2,502 12,567 1,332
31 Dec 2016 14,221 2,845 12,995 1,227
H2 2016 29,628 5,347 25,562 1,278
FY 2016 60,937 10,288 53,366 1,253
31 March 2017 9,258 2,447 8,283 1,220
-------------- -------------- ----------- ------------- ----------
* 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 at Gedabek for FY 2016 and
Q1 2017:
Concentrate Copper Gold Silver
production* content* content* content*
2016 (dmt) (tonnes) (ounces) (ounces)
Quarter ended 31
March
SART processing 363 181 12 7,789
Flotation** 1,458 200 607 19,055
Total 1,821 381 619 26,844
Quarter ended 30
June
SART processing 373 195 4 10,047
Flotation** 1,988 302 1,445 39,184
Total 2,361 497 1,449 49,231
Quarter ended 30
Sept
SART processing 418 225 4 7,291
Flotation 1,426 260 1,123 24,106
Total 1,844 485 1,127 31,397
Quarter ended 31
December
SART processing 445 219 7 6,751
Flotation 2,059 359 1,255 40,620
Total 2,504 578 1,262 47,371
2017
Quarter ended 31
March
SART processing 428 210 5 5,523
Flotation 2,312 396 1,815 31,399
Total 2,740 606 1,820 36,922
------------------ ------------ --------- --------- ---------
* including Government of Azerbaijan's share.
** certain amounts for flotation production are different to
those previously disclosed due to final reconciliation of
production and sales.
The following table summarises copper concentrate production and
sales at Gedabek for FY 2016 and Q1 2017. 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
2016 1,821 381 619 26,844 1,319 2,137
30 June
2016 2,361 497 1,449 49,231 1,582 2,977
H1 2016 4,182 878 2,068 76,075 2,901 5,114
30 Sept
2016 1,844 485 1,127 31,397 1,782 3,612
31 Dec
2016 2,504 578 1,262 47,371 2,147 3,865
H2 2016 4,348 1,063 2,389 78,768 3,929 7,477
FY 2016 8,530 1,941 4,457 154,843 6,830 12,591
31 March
2017 2,740 606 1,820 36,922 2,230 4,424
---------- ------------ --------- --------- --------- ------------- --------------
* including Government of Azerbaijan's share
** excludes Government of Azerbaijan's share
The Company had net debt at 31 March 2017 of $33.1 million, a
reduction of $2.0 million since 31 December 2016. The net debt at
31 March 2017 was as follows:
$m
Amsterdam Trade Bank - Agitation plant
loan 7.4
Gazprombank - Agitation plant loan 7.4
International Bank of Azerbaijan - loan 5.4
International Bank of Azerbaijan - credit
line 1.3
International Bank of Azerbaijan - letter
of credit 0.5
Atlas Copco equipment finance loan 0.7
YapiKredit 3.0
Pasha Bank 3.9
Kapital bank 1.0
Director 3.8
Total loans 34.4
Cash on hand and at bank (1.3)
Net debt 33.1
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.
**S**
For further information please visit www.angloasianmining.com or
contact:
Anglo Asian Mining Tel: +994 12 596
Reza Vaziri plc 3350
-------------------- ------------------- ------------------
Anglo Asian Mining Tel: +994 502 910
Bill Morgan plc 400
-------------------- ------------------- ------------------
Ewan Leggat SP Angel Corporate Tel: +44 (0) 20
Finance LLP 3470 0470
Nominated Adviser
and Broker
-------------------- ------------------- ------------------
Laura Harrison SP Angel Corporate Tel + 44 (0) 20
Finance LLP 3470 0470
-------------------- ------------------- ------------------
Lottie Brocklehurst St Brides Partners Tel: +44 (0) 20
Ltd 7236 1177
-------------------- ------------------- ------------------
Susie Geliher St Brides Partners Tel: +44 (0) 20
Ltd 7236 1177
-------------------- ------------------- ------------------
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, assembled from analysis of historic Soviet
geological data and held under a Production Sharing Agreement
modelled on the Azeri oil industry.
The Company developed Azerbaijan's first operating
gold/copper/silver mine, Gedabek, which commenced gold production
in May 2009. Gedabek 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.
Gold production for the year ended 31 December 2016 from Gedabek
totaled 65,394 ounces with 1,941 tonnes of copper also produced.
Gedabek is a polymetallic deposit and its ore has a high copper
content, and as a result the Company produces copper concentrate
from its Sulphidisation, Acidification, Recycling, and Thickening
(SART) plant. Anglo Asian also produces a copper and precious metal
concentrate from its flotation plant, which is processing tailings
from the agitation leach plant.
Anglo Asian is also actively seeking to exploit its first mover
advantage in Azerbaijan to identify additional projects, as well as
looking for other properties in order to fulfil its expansion
ambitions and become a mid-tier gold and copper metal production
company.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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