TIDMAAZ
RNS Number : 1338E
Anglo Asian Mining PLC
14 July 2016
Anglo Asian Mining plc / Ticker: AAZ / Index: AIM / Sector:
Mining
14 July 2016
Anglo Asian Mining plc
Q2 and H1 2016, Production Update and Operations 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 an operations and production update for its
Gedabek gold, copper and silver mine ("Gedabek") in western
Azerbaijan for the three months to 30 June 2016 ("Q2 2016") and the
six months to 30 June 2016 ("HY1 2016"). Note that all references
to "$" are to United States dollars.
Production overview
Q2 2016
-- Gold production for Q2 2016 increased to 19,665 ounces with
17,926 ounces contained within gold doré, 4 ounces from SART
processing and 1,735 ounces from flotation (Q1 2016: total 14,172
ounces)
-- Copper production for Q2 2016 totalled 537 tonnes, 195 tonnes
from SART processing and 342 tonnes from flotation (Q1 2016: total
432 tonnes)
-- Silver production for Q2 2016 totalled 56,440 ounces with
2,983 ounces contained within gold doré, 8,979 ounces from SART
processing and 44,478 ounces from flotation (Q1 2016: total 34,342
ounces)
H1 2016
-- Gold production for HY1 2016 totalled 33,837 ounces (HY1 2015: total 35,938 ounces)
-- Copper production for HY1 2016 totalled 969 tonnes (HY1 2015: 418 tonnes)
-- Silver production for HY1 2016 totalled 90,782 ounces (HY1 2015: total 6,477 ounces)
FY 2016 target production
-- Target production for the year to 31 December 2016 ("FY
2016") remains at between 73,000 ounces and 77,000 ounces of gold
and 1,700 to 2,100 tonnes of copper
Sales
-- Q2 2016 gold doré sales of 15,661 ounces of gold at an
average of $1,265 per ounce (Q1 2016: 12,058 ounces at an average
of $1,184 per ounce)
-- Q2 2016 copper concentrate shipments to the customer totalled
1,582 dry metric tonnes ("dmt") with a sales value of $3 million
(excluding Government of Azerbaijan profit share) (Q1 2016: 1,330
dmt with a sales value of $2.1 million)
-- 18,000 ounces of gold sales in HY2 2016 now hedged at no cost
with a minimum and maximum sales price per ounce of $1,200 and
$1,426 respectively
Operational update
-- Second SAG mill expected to be operational by early August
-- Contracts for water treatment plant and evaporation equipment now executed
-- Contract to build electrical sub-station and associated
overhead power lines executed with completion expected by end of
2016 - anticipated annual savings of $1.8 to $2.0 million from 2017
onwards
-- New underground equipment now fully deployed
Company financials
-- Net debt, being interest-bearing loans and borrowings less
cash and cash equivalents, totaled $40.8 million at 30 June 2016
($47.5 million at 31 March 2016)
Anglo Asian CEO Reza Vaziri said, "We are delighted to report
these highly encouraging second quarter production numbers which
show a substantial increase over the first quarter. The second half
of the year has historically been our best performing half due to
the seasonally better weather and our production will also benefit
from the second SAG mill which is due to start operating next
month. We are therefore confident of meeting our production target
for 2016 of between 73,000 and 77,000 ounces of gold and 1,700 to
2,100 tonnes of copper.
"The Company continues to invest at Gedabek both to improve the
sustainability of the operation and to lower costs to further
enhance our operational and financial performance. In addition to
the second SAG mill, two other major initiatives were undertaken in
the first half. The first initiative is to purify water from the
tailings dam so it can be released into the environment and the
second is to use cleaner and cheaper electric power from the grid.
These will both be highly beneficial for your company and also
lower costs. The new underground equipment which is now in full
time use at Gadir is also improving our productivity. That these
investments have been undertaken whilst we have also significantly
reduced the Company's net debt shows that the Company's financial
position is improving as we work towards our goal of returning the
Company towards profitability.
"The Company also took the opportunity to hedge some future gold
sales due to the recent strength in the gold price resulting from
the uncertainty of the UK's EU referendum decision. This protects
the Company against any significant downside in the price of gold
whilst still giving us considerable exposure to any further
increases in this volatile gold market. This is the first time
Anglo Asian has hedged gold sales and this transaction therefore
marks another stage in the development of your Company.
"I look forward to providing further updates in due course as we
continue to improve our production performance and lower costs in
order to deliver the utmost value for shareholders."
Production and sales details
During Q2 2016, the Company mined 491,210 tonnes of ore from its
Gedabek open pit (Q1 2016: 344,171 tonnes). In Q2 2016, 37,732
tonnes of ore with an average grade of 9.29 grammes per tonne was
mined from its Gadir underground mine (Q1 2016: 17,756 tonnes with
an average grade of 7.91 grammes per tonne).
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 agitation leaching plant.
During Q2 2016, Anglo Asian stacked 110,202 tonnes of dry
crushed ore on to heap leach pads with an average gold content of
1.36 grammes per tonne (Q1 2016: 91,450 tonnes with an average gold
grade of 1.46 grammes per tonne). The Company also heap leached
uncrushed (Run of Mine - "ROM") ore. During Q2 2016, Anglo Asian
stacked 263,432 tonnes of ROM ore on to heap leach pads with an
average gold content of 0.76 grammes per tonne (Q1 2016: 114,508
tonnes with an average gold grade of 0.88 grammes per tonne).
During the quarter, the Company processed 151,649 tonnes of ore
with an average gold content of 3.59 grammes per tonne through the
agitation leaching plant (Q1 2016: 131,930 tonnes with an average
gold grade of 2.93 grammes per tonne).
There was a 74 per cent. gold recovery in agitation leaching for
Q2 2016, an increase from 70 per cent. seen in the previous
quarter. The increased gold recovery was as a result of the higher
grade of ore processed. 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 Q2 2016, the Company produced gold doré containing 17,926
ounces of gold and 2,983 ounces of silver at Gedabek (Q1 2016:
13,383 ounces of gold and 1,958 ounces of silver). The agitation
leach plant produced 12,928 and 2,122 ounces of gold and silver,
respectively, and the heap leach operations produced 4,998 and 869
ounces of gold and silver, respectively. The increased gold doré
production from agitation leaching was due to the higher amount of
crushed ore feedstock processed by the plant, the higher grade of
ore and the increased recoveries.
During Q2 2016, 140,570 dmt of agitation leach plant tailings
were processed by the flotation plant. The gross metal contained
within this feed-stock was 5,724 ounce of gold, 99,416 ounces of
silver and 606 tonnes of copper. Copper concentrate totaling 1,988
dmt was produced containing 342 tonnes of copper and 1,735 ounces
of gold.
The following table summarises gold doré production and sales at
Gedabek for FY 2015 and Q1 and Q2 2016:
Gold produced* Silver Gold sales** Gold Sales
(ounces) Produced* (ounces) price
(ounces) ($/ounce)
Quarter ended
31 March 2015 17,185 597 17,206 1,214
30 June 2015 18,739 900 16,088 1,193
30 Sept 2015 18,158 907 14,871 1,123
31 Dec 2015 17,588 1,858 15,759 1,108
FY 2015 -
total 71,670 4,262 63,924 1,161
31 March 2016 13,383 1,958 12,058 1,184
30 June 2016 17,926 2,983 15,661 1,265
-------------- -------------- ----------- ------------- ----------
* 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 for Q1 and Q2 2016:
Concentrate Copper Gold Silver
production* content* content* content*
(dmt) (tonnes) (ounces) (ounces)
Quarter ending
31 March 2016
SART processing 363 181 12 7,789
Flotation 1,458 251 777 24,595
Sub - total 1,821 432 789 32,384
Quarter ending
30 June 2016
SART processing 373 195 4 8,979
Flotation 1,988 342 1,735 44,478
Sub - total 2,361 537 1,739 53,457
6 months ending
30 June 2016
SART processing 736 376 16 16,768
Flotation 3,446 593 2,512 69,073
Total 4,182 969 2,528 85,841
----------------- ------------ --------- --------- ---------
* including Government of Azerbaijan's share
The following table summarises total copper concentrate
production and sales at Gedabek for FY 2015 and H1 2016. Note that
sales of concentrate 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
2015 298 182 8 1,354 234 660
30 June
2015 391 236 6 3,627 372 1,076
30 Sept
2015 406 216 7 3,532 279 661
31 Dec
2015 955 335 341 15,851 817 1,285
FY 2015
- total 2,050 969 362 24,364 1,702 3,682
31 March
2016 1,821 432 789 32,384 1,330 2,137
30 June
2016 2,361 537 1,739 53,457 1,582 3,019
---------- ------------ --------- --------- --------- ------------- --------------
* including Government of Azerbaijan's share
** excludes Government of Azerbaijan's share
Operational update
The agitation leaching plant's second semi-autogenous grinding
("SAG") mill is now in place at Gedabek and is being commissioned.
It is expected that commissioning will be completed by early
August. Once in operation, it will ensure sustainable production
and assist in achieving our 2016 annual production target.
The Company has started on several initiatives to improve the
sustainability and lower costs at Gedabek. Contracts totalling $1.7
million have been signed to purify, and dispose of, waste water. A
membrane filtration plant will produce water of sufficient purity
from water in the tailings dam that it can be discharged into the
environment. Further water can also be disposed of by the ancillary
evaporation equipment which is also being installed. A by-product
concentrate will also be produced from which metal and cyanide can
be recovered. This will improve the water balance of the site and
save costs as it will reduce the tailings dam capacity required. It
will also enable the recovery of metal currently in the tailings
dam. The system is estimated to be installed and in operation by Q4
2016.
The Company has also contracted for $2 million to construct and
install a 35/6 kV 2x16 MVA electrical sub-station and associated
overhead power lines to connect the site to the electricity grid.
This will result in cleaner and cheaper electrical power at
Gedabek. It is expected that the work will be completed and power
will be available from the electricity grid by the end of 2016.
Once in operation, purchasing electricity from the grid compared to
generating electricity using diesel generators will result in cost
savings of approximately $1.8 to $2.0 million per annum.
The new underground equipment which was purchased from Atlas
Copco comprising an underground drill machine, loader and truck is
now fully deployed in the Gadir underground mine.
Company financial details
On 27 June 2016, the Company entered into a series of net zero
cost options with a lower (PUT option) sales price of US$1,200 per
ounce and an upper (CALL option) sales price of US$1,426 per ounce.
The options mature in lots of 1,500 ounces of gold with the first
lot maturing on 12 July 2016. The remainder of the lots mature
every two weeks from this date with the final lot maturing on 13
December 2016. The PUT options give the right to the Company (but
not the obligation) to sell gold at the option price. The CALL
options give the right to the holder (but not the obligation) to
buy gold at the option price. The 18,000 ounces will therefore have
a minimum and maximum sales price per ounce of $1,200 and $1,426
respectively. Where the spot price on date of sale is between
$1,200 and $1,426, sales will take place at spot price and the
options will expire without exercise.
The Company had net debt at 30 June 2016 of $40.8 million, a
reduction of $8.2 million since 31 December 2015. The net debt at
30 June 2016 was as follows:
$m
Amsterdam Trade Bank - Agitation plant
loan 22.2
International Bank of Azerbaijan - loan 8.7
International Bank of Azerbaijan - credit 2.8
line
Atlas Copco equipment finance loan 1.5
YapiKredit 1.4
Pasha Bank 3.3
Director 3.9
Total Loans 43.8
Cash on hand and at bank (3.0)
Net debt 40.8
**ENDS**
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 is also mines high grade ore from
the 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 2015 from Gedabek
totaled 72,032 ounces with 969 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 commenced production in
the last quarter of 2015. This is initially 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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