Q4 & FY 2016 Operations and Production Update

RNS Number : 2770U
Anglo Asian Mining PLC
17 January 2017
 

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

 

17 January 2017

 

Anglo Asian Mining plc

Quarter 4 and Full Year 2016, operations and production update - 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 from its Gedabek gold, copper and silver mine ("Gedabek") in western Azerbaijan for the three months to 31 December 2016 ("Q4 2016") and the year ended 31 December 2016 ("FY 2016").  Note that all references to "$" are to United States dollars.

 

Production overview

 

·    Gold production for Q4 2016 totalled 15,483 ounces - 14,221 ounces contained within gold dorè, 7 ounces from SART processing and 1,255 ounces from flotation (Q3 2016: total 16,534 ounces)

·    Copper production for Q4 2016 totalled 578 tonnes - 219 tonnes from SART processing and 359 tonnes from flotation (Q3 2016: 485 tonnes)

·    Silver production for Q4 2016 totalled 50,216 ounces - 2,845 ounces contained within gold dorè, 6,751 ounces from SART processing and 40,620 ounces from flotation (Q3 2016: total 33,899 ounces)

·    Anglo Asian's FY 2016 production was as follows:

o Gold: 65,394 ounces, a 9 per cent. decrease over FY 2015 production of 72,032 ounces

o Copper: 1,941 tonnes of copper, a 100 per cent. increase over FY 2015 production of 969 tonnes

o Silver: 165,131 ounces, a 5.8 times increase over FY 2015 production of 28,626 ounces

 

Sales overview

 

·    Q4 2016 gold bullion sales of 12,995 ounces at an average of $1,227 per ounce - FY 2016 gold bullion sales of 53,366 ounces at an average of $1,253 per ounce

·    Q4 2016 copper concentrate shipments to the customer totalled 2,147 dry metric tonnes ("dmt") with a sales value of $3.9 million (excluding Government of Azerbaijan production share) - FY 2016: 6,830 tonnes with a sales value of $12.6 million

·    In Q4 2016, put options over 3,000 ounces of gold at $1,200 per ounce exercised generating additional revenue of $80,400

 

Operational exploration update

 

·    Gedabek site connected to the Azerbaijan national power grid in November 2016

·    Extensive exploration of the Gedabek site continues - mineral resource delineation drilling of the Gadir underground mine and core drilling of the Ugur discovery deposit underway with encouraging initial results

 

Company financials

 

·    Net debt, being interest-bearing loans and borrowings less cash and cash equivalents, totaled $35.1 million at 31 December 2016 ($37.7 million at 30 September 2016)

·    Loan from chief executive officer extended for another twelve months to 8 January 2018, all other terms remaining the same

 

Anglo Asian CEO Reza Vaziri commented, "This has been a year of progress for Anglo Asian. Whilst disappointing that gold production for 2016 was marginally below our revised forecast of 67,000 to 69,000 ounces due to lower than expected grades in December, there were other successful developments in the year and copper production doubled due to the operation of the flotation plant. Progress was made in cost reduction and sustainability at Gedabek, and in particular, the connection of the Gedabek site to the national power grid in quarter four was a major milestone and will result in significant future cost savings. Having made a gold discovery at Ugur, only three kilometres from our Gedabek processing facilities, we are excited to have commenced a significant exploration programme which is already yielding potential new sources of ore.  I look forward to this progress continuing and updating shareholders further in 2017." 

 

Gedabek - mining, production and sales

 

During Q4 2016, the Company mined 309,984 tonnes of ore from its Gedabek open pit (Q3 2016: 409,572 tonnes) and 40,663 tonnes of ore with an average content of 4.79 grammes of gold per tonne from its Gadir underground mine (Q3 2016: 27,582 tonnes average grade content of 5.13 grammes of gold per tonne). Total ore mined in 2016 was 1,554,935 tonnes from the Gedabek open pit and 123,732 tonnes with an average content of 5.40 grammes of gold per tonne from its Gadir underground mine.

 

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 Q4 2016, Anglo Asian stacked 80,976 tonnes of dry crushed ore on to heap leach pads with an average gold content of 1.21 grammes of gold per tonne (Q3 2016: 92,437 tonnes with an average gold content of 1.21 grammes per tonne). The Company also heap leached uncrushed Run of Mine ("ROM") ore. During Q4 2016, Anglo Asian stacked 90,310 tonnes of ROM ore on to heap leach pads with an average gold content of 0.84 grammes of gold per tonne (Q3 2016: 190,185 tonnes with an average gold content of 0.80 grammes per tonne).

 

During Q4 2016, the Company processed 192,502 tonnes of ore with an average gold content of 2.26 grammes of gold per tonne through the agitation leaching plant (Q3 2016: 164,492 tonnes with an average gold content of 2.50 grammes per tonne).

 

There was a 72 per cent. gold recovery in agitation leaching for Q4 2016 (Q3 2016: 77 per cent.). Gold doré is produced from both heap and agitated leach intermediate solutions, which are combined for final processing and also re-circulated 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 Q4 2016, the Company produced gold doré containing 14,221 ounces of gold and 2,845 ounces of silver at Gedabek (Q3 2016: 15,407 ounces of gold and 2,502 ounces of silver). During Q4 2016, the agitation leaching plant produced 10,183 and 1,799 ounces of gold and silver, respectively, and the heap leach operations produced 4,038 and 1,046 ounces of gold and silver, respectively.

 

During Q4 2016, 148,119 dmt of agitation leaching plant tailings was processed by the flotation plant. The gross metal contained within this feed-stock was 3,441 ounces of gold, 96,774 ounces of silver and 640 tonnes of copper. Copper concentrate of 2,059 dmt was produced containing 359 tonnes of copper, 1,255 ounces of gold and 40,620 ounces of silver. SART processing produced 445 dmt of copper concentrate containing 219 tonnes of copper, 7 ounces of gold and 6,751 ounces of silver.

 

The following table summarises gold doré production and sales at Gedabek for FY 2015 and FY 2016:

 


Gold produced*

(ounces) 

Silver

produced*

(ounces)

Gold sales**

(ounces)

Gold sales price

($/ounce)

Quarter ended





31 March 2015

17,185

597

17,206

  1,214

30 June 2015

18,739

900

16,088

  1,193

H1 2015

35,924

1,497

33,294

1,204






30 Sept 2015

18,158

907

14,871

1,123

31 Dec 2015

17,588

1,858

15,759

1,108

H2 2015

35,746

2,765

30,630

1,115

FY 2015

71,670

4,262

63,924

1,161






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

FY2016

60,937

10,288

53,366

1,253

 * including Government of Azerbaijan's share.

 ** excluding Government of Azerbaijan's share.

 

The following table summarises copper concentrate production from both its SART and flotation plants for FY 2016 by quarter:

 


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 Dec





SART processing

445

219

7

6,751

Flotation

2,059

359

1,255

40,620

Total

2,504

578

1,262

47,371

* including Government of Azerbaijan's share.

** certain figures for flotation production are different to those previously disclosed due to final reconciliation of production and sales.

 

The following table summarises total copper concentrate production and sales at Gedabek for FY 2015 and FY 2016. 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 2015

298

182

8

1,354

234

660

30 June 2015

391

236

6

3,627

372

1,076

H1 2015

689

418

14

4,981

606

1,736








30 Sept 2015

406

216

7

3,532

279

661

31 Dec 2015

955

335

341

15,851

817

1,285

H2 2015

1,361

551

348

19,383

1,096

1,946

FY 2015

2,050

969

362

24,364

1,702

3,682








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 2015

4,348

1,063

2,389

78,768

3,929

7,477

FY2016

8,530

1,941

4,457

154,843

6,830

12,591

*   including Government of Azerbaijan's share.

** excluding Government of Azerbaijan's share.

*** certain figures are different to those previously disclosed due to final reconciliation of concentrate production and sales.

 

Gedabek - operational update

 

The Gedabek site was connected to the Azerbaijan national power grid in Q4 2016. This involved the construction of seven kilometres of 35 kilovolt overhead power cable and five kilometres of 6.3 kilovolt overhead distribution line, the installation of two main and five auxiliary electricity transformers and the construction of an electrical power house. The total cost of the installation was $2.1 million and it will result in significant cost savings and improve availability of the processing plant.

 

The water treatment plant is now being manufactured by the supplier and is expected to be installed at site at the beginning of Q2 2017 with a target start-up date of end April 2017. The water evaporation equipment is expected to be received and installed by the end of Q1 2017.

 

Gedabek - exploration update

 

Area adjacent to the current operational mine

Geological mapping was carried out over 0.7 square kilometres from which 290 outcrop samples were taken and 20 metres of follow-up trenching was carried out. In addition, two drill holes with a total of 530 metres of diamond drilling were completed.

 

Gadir underground mine

Efforts focused on underground mapping that comprised 596 linear metres backed up with 596 linear metres of channel sampling. Mineral resource delineation drilling continued with the aim of assessing the down dip and lateral extensions of the known ore bodies. In Q4 2016, four core drill holes (HQ size core) with a total of 365 metres had been completed. These drill holes were designed to confirm and extend mineralisation at Gadir. An additional 21 drill holes (BQ size core) with a total of 598 metres were drilled to define ore zone geometry.

 

Ugur discovery

Geological mapping was carried out over 0.6 square kilometres from which 220 outcrop samples were taken and 290 metres of follow-up trenching that was sampled every metre was carried out. In addition, 55 reverse circulation drill holes with a total of 1,842 metres and 12 drill holes with a total of 1,893 metres of diamond core drilling were completed. Encouraging results have been received from the newly discovered Ugur deposit which enhance the Company's understanding of the deposit and show that the oxide zone extends deeper than initially determined by previous drilling. Ugur is only three kilometres from the processing facilities at the main Gedabek site, highlighting the clear strategic value of developing this deposit.

 

The Bittibulag mineral occurrence 

A surface mapping exercise was completed covering an area of 1.1 square kilometres that included taking 190 outcrop samples for analysis. Preparation and analysis of 648 samples is on-going from the soil geochemistry sampling programme conducted earlier in 2016. A total of 40 metres of trenches were excavated and mapped from which 54 samples were taken.

 

Company financials

 

Net debt

The Company had net debt at 31 December 2016 of $35.1 million, a reduction of $14.9 million since 31 December 2015.        


$m   

Kapital Bank

1.0

Amsterdam Trade Bank - Agitation plant loan

17.3

International Bank of Azerbaijan - loan

International Bank of Azerbaijan - letter of credit financing

6.4

0.5

Atlas Copco equipment finance loan

YapiKredit

Pasha Bank

Reza Vaziri - director's loan

0.8

0.7

5.9

3.9

Total loans     

36.5

Cash on hand and at bank

(1.4)

Net debt

35.1

 

The amount of the loan facility from Reza Vaziri is $4.0 million and the term of the loan has been extended until 8 January 2018. The amount currently outstanding under the facility is $3.9 million. All other terms of the loan remain unchanged.

 

As Mr. Vaziri is a director of the Company, the loan constitutes a related party transaction pursuant to AIM Rule 13. The independent directors (being Khosrow Zamani, Richard Round, John H. Sununu and John Monhemius) consider, having consulted with the Company's nominated adviser, SP Angel Corporate Finance LLP, that the terms of the Loan are fair and reasonable insofar as its shareholders are concerned.

 

Exercise of options for sale of gold

On 29 June 2016, the Company entered into a series of net zero cost options with a lower (PUT option) sales price of $1,200 per ounce and an upper (CALL option) sales price of $1,426 per ounce. The options matured in lots of 1,500 ounces of gold every two weeks from inception date with the final lot maturing on 13 December 2016.

 

The final two lots of PUT options expired on 29 November and 13 December 2016. On both these dates the spot price of gold was below the PUT option price of $1,200 per ounce. Accordingly, the company exercised both these options yielding additional revenue of $80,400.

 

 

**ENDS**

 

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

 

 

Reza Vaziri

Anglo Asian Mining plc

Tel: +994 12 596 3350

Bill Morgan

Anglo Asian Mining plc

Tel: +994 502 910 400

Ewan Leggat

SP Angel Corporate Finance LLP

Nominated Adviser and Broker

Tel: +44 (0) 20 3470 0470

Laura Harrison

SP Angel Corporate Finance LLP

Tel + 44 (0) 20 3470 0470

Susie Geliher

St Brides Partners Ltd

Tel: +44 (0) 20 7236 1177

Lottie Brocklehurst

St Brides Partners Ltd

Tel: +44 (0) 20 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 totalled 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
 
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