Anglo Asian Mining PLC Q3 2014 Production and Operational Update (3674U)

TIDMAAZ

RNS Number : 3674U

Anglo Asian Mining PLC

15 October 2014

Anglo Asian Mining plc / Ticker: AAZ / Index: AIM / Sector: Mining

15 October 2014

Anglo Asian Mining plc

Quarter 3, 2014 Operations and Production update - Gedabek and Gosha Gold, Copper and Silver mines, 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 production and operations update for its Gedabek and Gosha gold, copper and silver mines in western Azerbaijan for the three months to 30 September 2014 ("Q3 2014").

Production overview

-- Gold production for Q3 2014 increased to 16,178 ounces (9,147 ounces from the agitation leaching plant; 7,009 ounces from heap leach operations and 22 ounces from SART) (Q2 2014: total 15,736 ounces)

   --    Q3 2014 gold production included 998 ounces produced from ore mined at Gosha 

-- Silver production for Q3 2014 totalled 5,504 ounces (171 ounces from the agitation leaching plant; 532 ounces from heap leach operations and 4,801 ounces from SART) (Q2 2014: total 8,785 ounces)

   --    Copper production for Q3 2014 from SART processing at Gedabek totalled 210 tonnes 
   --    Anglo Asian's cumulative production in the nine months to 30 September 2014 was as follows: 

o Gold production of 43,232 ounces

o Silver production of 27,419 ounces

o Copper production of 580 tonnes

-- Gold production target for the year to 31 December 2014 ('FY 2014') remains at circa 62,000 ounces

   --    Copper production target from SART for FY 2014 remains at 750 tonnes 

Gold and copper sales

   --    Q3 2014 gold sales of 13,797 ounces at an average of US$1,281 per ounce 

-- Q3 2014 copper concentrate shipments to the customer totalled 250 dry metric tonnes ('dmt'), containing 123 tonnes of copper and 6,639 ounces of silver

-- Cumulative gold sales in the nine months to 30 September 2014 of 37,343 ounces at an average of US$1,291 per ounce and cumulative sales of copper concentrate of US$2.9m

Other highlights

-- The Company is evaluating the construction of a small scale, low capital expenditure flotation plant to produce copper, gold and silver concentrate from sulphide ore - this plant will be a pilot plant for a future full scale copper recovery plant.

Anglo Asian CEO Reza Vaziri commented, "We are pleased to report our Q3 2014 production and operational results which have seen us produce 16,178 ounces of gold for the quarter and 210 tonnes of copper. Whilst we achieved solid gold sales for the period, the Company's three year sales contract for copper concentrate also positively impacted our bottom line for the quarter. In light of the ore currently being mined at Gedabek, which has a high copper content, we are actively pursuing options from which to increase gold recovery to achieve our target of circa 62,000 ounces for the year. Although the considerable amount of ore mined with a high copper content has been unexpected, we believe our stockpiles of ore totalling 379,000 tonnes also presents an attractive opportunity. In light of this, we are evaluating the construction of a small scale flotation plant suited to process this type of ore to produce a copper and precious metals concentrate. This will be a pilot plant for a future full scale copper recovery plant. This would create a further production stream which will enhance our production profile as a leading precious metals and copper producer in Caucasia."

Full details

During Q3 2014, the Company produced 16,178 ounces of gold at Gedabek. The agitation leaching plant produced 9,147 ounces; the heap leach operations 7,009 ounces and SART 22 ounces. Of the gold produced in Q3 2014, 998 ounces were produced from ore mined at Gosha. For the nine months ended 30 September 2014, the Company produced 43,232 ounces of gold. The agitation leaching plant produced 28,594 ounces; the heap leach operations 14,606 ounces and 32 ounces from SART. The Company has completed gold sales of 13,797 ounces at an average of US$1,281 per ounce during Q3 2014 and 37,343 ounces of gold at an average of US$1,291 per oz for the nine months to 30 September 2014.

The following summary table of gold production and sales demonstrates the quarter-on-quarter increase in gold production at Gedabek.

 
 Quarter ended           Gold produced*   Gold sales   Weighted average 
                               (ounces)     (ounces)    gold sale price 
                                                                  (US$) 
 Total for FY 2013               52,068       46,076              1,387 
 31 March 2014                   11,318       10,403              1,303 
 30 June 2014                    15,736       13,142              1,292 
 30 September 2014               16,178       13,797              1,281 
  Total for 9 months 
   ended 30 September 
   2014                          43,232       37,342              1,291 
 

*including Government of Azerbaijan's share

The Company continues to process ore through its agitation leaching plant and heap leach operation at Gedabek. During Q3 2014 the Company stacked 144,861 tonnes of dry ore onto the heap leach pads with an average gold content of 1.27 grammes per tonne. As previously reported, low grade ore (less than 1.5 grammes per tonne) has been treated by heap leaching, with higher grade ore being sent to the agitation leaching plant. During Q3 2014 the Company processed 151,473 tonnes of ore with an average gold content of 2.99 grammes per tonne through the agitation leaching plant. Of that, 9,340 tonnes of ore with a higher average gold grade of 4.15 grammes per tonne was transferred from Gosha and processed at Gedabek's agitation leaching plant in Q3 2014. We achieved a 71.0 per cent. gold recovery for agitation leaching in Q3 2014 compared to 73.5 per cent. for H1 2014. Our recovery rate for heap leach remained at 66.0 per cent. in Q3 2014. In terms of recovery rates, the management team remain committed to improving the recovery rate of the agitation leaching plant. Note that gold doré is produced from both heap and agitated leach intermediate products which are combined for final processing and also recirculated around the plant, heap leach pads and tailings dam. Recovery rates are therefore only estimates calculated from available metallurgical statistics.

As mentioned in our recent interim results, whilst the new agitation leaching plant helped increase our gold recoveries and production potential at Gedabek, there are continuing problems with low recovery of gold from the ore currently being mined which has a high copper content, and is often associated with deeper mining. This has led to increased operational costs due to the high consumption of cyanide. With the lower than expected recoveries continuing longer than expected, as announced in the Company's interim results, the Company is targeting gold production of circa 62,000 ounces for FY 2014.

The Company is evaluating a number of different options to process sulphide ore mined which has a high copper content. These include both increasing the gold recoveries when it is processed by the agitation leach plant; and to separately process the ore to produce a copper and precious metals concentrate. During the quarter, the Company has been evaluating the future exploitation of the known high copper content mineral resource at Gedabek. To fully exploit the potential of the copper resource, in addition to the gold resource, the Company has hired CAE Mining, England to develop a new life of mine plan based on the most recent JORC resource model dated April 2014 (see Anglo Asian press release dated 5 June 2014). The new mine plan, expected to be completed in December 2014/January 2015, will take account of both the copper and gold cut-off grades. The Company has also decided to construct a small scale, low capital cost flotation plant as a pilot plant for a future full scale copper recovery plant. The plant will also be able to treat the Company's existing stockpile of sulphide ore with a high copper content. The Company is also examining opportunities to finance the plant, including 100 per cent. debt financing. Anglo Asian looks forward to updating shareholders with this latest initiative in due course.

In terms of Anglo Asian's current copper production profile, the Company's Sulphidisation, Acidification, Recycling, and Thickening ("SART") plant has been performing strongly, and for Q3 2014 copper concentrate totalled 210 tonnes of copper, 4,801 ounces of silver and 22 ounces of gold. The Company's target for copper production from its SART operation remains at 750 tonnes for FY 2014.

Cash and net debt

The Company's cash and net debt position was as follows:

 
                                             30 June 2014   30 September 
                                                                    2014 
                                                     US$m           US$m 
 Amsterdam Trade Bank, Agitation Plant 
  loan                                               37.0           37.0 
 International Bank of Azerbaijan                    11.6           11.6 
 International Bank of Azerbaijan, credit 
  line                                                0.7            1.4 
 Atlas Copco equipment finance loan                   1.8            1.3 
                                            -------------  ------------- 
 Total Loans                                         51.1           51.3 
 Cash on hand and at bank                           (5.1)          (1.4) 
                                            -------------  ------------- 
 Net Debt                                            46.0           49.9 
                                            -------------  ------------- 
 

**ENDS**