Anglo Asian Mining PLC Flotation Plant Update - Gedabek Mine Azerbaijan (8820G)

TIDMAAZ

RNS Number : 8820G

Anglo Asian Mining PLC

09 March 2015

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

9 March 2015

Anglo Asian Mining plc

Update on flotation plant to increase copper, gold and silver production at Gedabek 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 positive update on the development and construction of its small scale flotation plant at the Gedabek gold, copper, silver mine, in western Azerbaijan, aimed at increasing future metal production; and a corporate update on potential cost savings and the net debt position.

Highlights

-- Construction of the small scale 20 tonne per hour flotation plant progressing well - the main building has been completed and the flotation cells are now being installed

-- Small scale flotation plant originally designed to increase copper production, however, in-house test work and engineering studies have demonstrated the feasibility of a modified small scale flotation plant improving not only copper but also gold and silver recoveries

-- Final design of the small scale flotation plant will accordingly be modified - plant targeted to be commissioned Q3 2015

-- Additional capital cost of design modifications will be approximately US$1.0 million to bring the total capital expenditure to US$4.7 million

-- Recent devaluation of the Azerbaijan manat against the US dollar expected to result in Company cost savings of approximately US$6.5 million for the rest of FY 2015

-- Net debt decreased by US$2.0 million to US$50.4 million at 27 February 2015 from US$52.4 million at 31 December 2014

Anglo Asian CEO Reza Vaziri said, "I am delighted to report on the significant progress being made with regards to the construction of our small scale flotation plant with commissioning targeted for Q3 2015. Recent test work and engineering studies have shown that flotation should enable us to achieve much higher production of precious metal and copper than previously anticipated. It should also help solve the issue of the low recoveries recently being experienced by the agitation leaching plant, which is the main process to recover gold at Gedabek. In addition, the revised specification of the small scale flotation plant will give us flexibility in processing the poly-metallic ore at Gedabek.

"The recent 34 per cent. devaluation of the Azerbaijan manat against the US dollar due to the effect of the current low oil price on the economy is obviously an unwelcome development for Azerbaijan and its people. However, as a Company which sells its products for US dollars and which has a significant portion of its costs in Azerbaijan manats, this will have a beneficial effect for us."

Full details

Small scale flotation plant

The construction of the small scale flotation plant is proceeding to plan. The foundations and main building structures have been installed. The flotation cells are on site and the installation of the cell stands is 40 per cent. complete. The mills and agitators have been constructed and are ready for shipment to site.

The Company has been exploring a number of options to overcome the lower than expected metal recoveries and high cyanide usage resulting from the high copper sulphide content of its high grade ore. In order to demonstrate how the flotation process can be used to enhance recoveries, in-house test work has shown that by applying the flotation process to the agitation leaching plant tailings, overall recoveries can be increased to 80 per cent. for copper, 70 per cent. for silver and 90 per cent. for gold. The flotation process can produce a saleable copper concentrate with approximately 20 per cent. copper content. The tailings require no further treatment prior to flotation as the material has already been through grinding and is of a proper size to be treated. On-going test work is examining the effects on the overall process of applying flotation to the ore ahead of agitation leaching.

The small scale flotation plant was originally designed as a pilot to treat different types of ore at Gedabak at a feed rate of up to 20 tonnes per hour. Further engineering studies have determined that by the addition of an extra 6 large flotation cells, each of 50 cubic meters, the plant can be configured to treat 90 tons of ore per hour which is equivalent to the current throughput of the agitation leaching plant.

The design of the necessary modifications to the small scale flotation plant for plant layout, piping and electrical works etc. has been completed and in such a way to minimise their cost. Together with the cost of the new flotation cells, the revised design specification for the modified small scale flotation plant are expected to add an additional US$1 million, revising its total cost from US$3.7 million to US$4.7 million.

The modified small scale flotation plant will have the flexibility to be configured for various methods of operation. It will be able to process the stockpiles of high copper sulphide ore as initially envisaged. However, it will now also be able to be configured to treat ore feed to, or tailings from, the agitation leaching plant. In such configurations, the plant would no longer be a pilot but an integral part of the agitation leaching plant.

Azerbaijan manat devaluation

Over the weekend of 22/23 February, Azerbaijan devalued its currency by 34 per cent. against the US dollar. The exchange rate moved from US$1 equals Azerbaijan manat 0.78 to US$1 equals Azerbaijan manat 1.05. The exchange rate has remained at this rate since the devaluation.

The future exchange rate of the US dollar against the Azerbaijan manat is uncertain. Additionally, the devaluation of the Azerbaijan manat is also likely to cause an increase in the inflation rate in Azerbaijan. However, the Company has estimated that provided the exchange rate remains at its new value, and in the absence of significant Azerbaijan manat inflation, this devaluation will result in a cost saving for the Company of approximately US$6.5m in the current year.

Net debt

The Company had net debt at 27 February of US$50.4 million, a reduction of US$2 million since 31 December 2014. The movement in net debt was as a result of making the scheduled principal loan repayment to Amsterdam Trade Bank of US$2.6 million due on 27 February partially offset by an increase in the International Bank of Azerbaijan working capital facility of US$ 0.5 million and a decrease in cash balances of US$0.1 million.

**ENDS**

For further information please visit www.angloasianmining.com or contact:

 
 Reza Vaziri           Anglo Asian Mining plc          Tel: [phone] 
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 Bill Morgan           Anglo Asian Mining plc          Tel: [phone] 
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 Ewan Leggat           SP Angel Corporate Finance      Tel: [phone] 
                        LLP                             0470 
                        Nominated Adviser and Broker 
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 Stuart Gledhill       SP Angel Corporate Finance      Tel + 44 (0) 20 3470 
                        LLP                             0470 
--------------------  ------------------------------  ---------------------- 
 Felicity Winkles      St Brides Partners Ltd          Tel: [phone] 
                                                        1177 
--------------------  ------------------------------  ---------------------- 
 Lottie Brocklehurst   St Brides Partners Ltd          Tel: [phone] 
                                                        1177 
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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 prospective exploration 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. Production for the year ended 31 December 2014 from Gedabek totalled 60,285 ounces of gold and 784 tonnes of copper. The Company is also developing a second resource area, Gosha, which is 50 kilometres from Gedabek, and the ore produced at Gosha is processed at Anglo Asian's Gedabek plant. 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 is also constructing a small scale, low capital expenditure flotation plant to produce a copper and precious metal concentrate. This will initially process ore from its existing stockpiles of sulphide ore with a high copper content.

Anglo Asian is also actively looking 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

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