TIDMAAZ
RNS Number : 6957U
Anglo Asian Mining PLC
30 March 2023
30 March 2023
Anglo Asian Mining plc
Strategic plan for transformation to mid-tier copper and gold
production
Anglo Asian Mining plc ("Anglo Asian" or the "Company"), the AIM
listed gold, copper and silver producer primarily focused in
Azerbaijan, is pleased to announce details of its strategic plan
for growth.
Highlights
-- Well-defined strategy to more than double production in the
next five years with the Company transitioning to a multi-asset,
mid-tier copper and gold producer by 2028
-- The Company forecasts total production increasing by 30 to
50 per cent. to 70,000 to 75,000 gold equivalent ounces for
2024 and 2025 (copper equivalent of 15,000 to 15,500 tonnes)
-- Copper equivalent production increasing to approximately
36,000 plus tonnes per annum (gold equivalent of 175,000
ounces) from 2028
-- Production growth delivered through the sequential opening
of four new mines in Azerbaijan
-- Copper, a critical metal for the energy transition to net
zero, expected to become the principal product of the Company
from 2026
-- Positive cash-flow, current cash and an undrawn $32 million
debt facility to support near to medium term capital expenditure
requirements
-- Growth strategy underpins the continued commitment to deliver
attractive returns to shareholders
Production targets for 2023 to 2028
Anglo Asian anticipates production of between 50,000 to 54,000
gold equivalent ounces for 2023 ( see RNS announcement dated 23
February 2023). The Company's anticipated production targets for
2024 to 2028 in its strategic plan for growth are tabulated below.
Detailed production guidance will be given as mine development
progresses.
Years Production target*
Gold equivalent ounces Copper equivalent tonnes**
----------------------- ---------------------------
2023 c. 50,000 to 54,000 c. 10,300 to 11,200
----------------------- ---------------------------
2024 and 2025 c. 70,000 to 75,000 c. 15,000 to 15,500
----------------------- ---------------------------
2026 and 2027 c. 115,000 to 125,000 c. 24,000 to 26,000
----------------------- ---------------------------
2028 c. 175,000 c. 36,000
----------------------- ---------------------------
* Anglo Asian's share of the production tabulated above is based
on its Production Sharing Agreement ("PSA"), further details of
which are set out below.
**Copper equivalent calculated at $1,650 per ounce of gold and
$8,000 per tonne of copper.
Reza Vaziri, Chief Executive Officer of Anglo Asian,
commented:
"This is an exciting time for Anglo Asian. We have devised a
strategic plan for growth to drive the Company to multi-asset,
mid-tier producer status. This focuses on a very substantial
increase in copper production, augmented by our on-going
significant gold and silver production. We have an ambitious, but
realistic, plan to deliver this through sequential asset
development and the opening of four new mines in Azerbaijan over
the next five years.
"Our upcoming increased copper exposure is timely and
value-accretive. Copper is a critical metal for the energy
transition to net zero that is expected to benefit from increased
demand as the move towards electrification intensifies.
"Critically this plan will deliver long term, sustainable value
to all our stakeholders. We look forward to updating the market on
our progress as we embark on this exciting and ambitious path to
growth."
Investor presentation
The Company will provide an online investor presentation via
Investor Meets Company on 31 March 2023 at 12:00pm BST. Further
details and registration are available at:
https://www.investormeetcompany.com/anglo-asian-mining-plc/register-investor
A copy of the investor presentation will be available on the
Company's website: https://www.angloasianmining.com/
Strategic plan for growth
The Company has a strong track record of developing and
operating mines in Azerbaijan, consistently meeting production
guidance and delivering dependable shareholder returns while
maintaining a robust balance sheet.
Having assembled a portfolio of high-quality production and
development assets, the Company is well positioned to establish a
significant copper-gold mining district in the Gedabek region in
Azerbaijan, supplemented by other in-country assets and overseas
investments.
In July 2022, Anglo Asian was awarded the Garadag and Xarxar
licences. These assets underpin the Company's new strategic plan
for growth. Since September 2022, when the Company received the
historical geological data relating to Garadag and Xarxar, it has
undertaken extensive analysis of the assets and the opportunities
and options for their development.
The strategy has two phases of growth. In Phase 1
('Transition'), production at the currently operating Gedabek and
Gadir mines will be managed to maximise their output as they come
to the end of their expected mine lives. Concurrently, the Company
plans to bring into production during 2023 to 2026 three new mines
at Zafar, Gilar and Xarxar.
Phase 2 ('Transformation') builds on this growth with the
development of Garadag. The Company assesses Garadag to have the
potential to produce over 300,000 tonnes of copper ( see RNS
announcement dated 27 March 2023). The Company forecasts Garadag
commencing production in 2028.
The strategy anticipates that the contribution of copper
production to the Company's revenue will exceed that of gold dor é
from 2026. The overall value of metal output is expected to more
than double from 2023 to 2027 and could treble by 2028.
Mine development schedule to deliver strategic plan
Project Metal Contract (licence) Estimated mine
area commissioning date
-------- ----------------- ------------------- --------------------
Zafar Copper-gold+zinc Gedabek 2023/24
----------------- ------------------- --------------------
Gilar Copper-gold Gedabek 2023/24
----------------- ------------------- --------------------
Xarxar Copper Xarxar 2026
----------------- ------------------- --------------------
Garadag Copper Garadag 2027/28
----------------- ------------------- --------------------
Production Sharing Agreement ("PSA") with the Government of
Azerbaijan
The exploration period for each mining property located in a
contract area of the PSA commences upon approval by the Government
of Azerbaijan (the "Government") of an "Exploration Work Program"
and lasts up to 48 months with a 12-month extension permitted. By
the end of the exploration period, the Company must issue a "Notice
of Discovery and Its Commerciality" followed by submission to the
Government of a "Development and Production Program" for the ore
deposit. The development and production period for each mining
property is up to 15 years with two 5-year extensions permitted.
The licensing of all contract areas is in good standing.
The Company finances the operations of each mining property and
shares with the Government the commercial products of each mine.
The Government receives 51 per cent. of "Profit Production" which
is defined as the value of production less all cash operating and
capital costs incurred in its production. Profit Production is
subject to a 25 per cent. minimum of the value of production and
unrecovered capital and operating costs can be carried forward and
offset against future production.
Financing the strategic growth plan
In the near to medium term, the new mine development will be
financed with cash flow generated from the Company's existing
mines, current cash, local bank debt and equipment vendor
financing. The Company has recently secured a AZN55 million ($32
million) debt facility with the International Bank of Azerbaijan
(see RNS announcement dated 09 March 2023). The Company may seek
additional sources of finance depending on the final processing
methods chosen.
Commitment to value creation and shareholder returns
The Company and its directors believe this strategic plan for
growth will provide the necessary growth and cash flow to provide
long term value for shareholders. Under the forecasts based on the
current strategic plan for growth, Anglo Asian intends to maintain
its prevailing dividend practice as it moves to become a mid-tier
mining company.
Our mining properties are developed for the benefit of all
stakeholders. The Company has always upheld strong ESG practices
and will develop its new mines continuing to utilise
internationally recognised best standards.
Details of the development projects and exploration
potential
Further details of the development projects are set out in
Appendix One and their further exploration upside is discussed in
Appendix Two.
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014, which was incorporated into UK law by
the European Union (Withdrawal) Act 2018, until the release of this
announcement.
All references to "$" are to United States dollars. All
references to "AZN" are to the Azerbaijan New Manat.
For further information please contact:
Anglo Asian Mining plc
Tel: +994 12 596
Reza Vaziri, Chief Executive Officer 3350
Tel: +994 502 910
Bill Morgan, Chief Financial Officer 400
Tel: +994 502 916
Stephen Westhead, Vice President 894
SP Angel Corporate Finance LLP (Nominated Tel: +44 (0) 20
Adviser and Broker) 3470 0470
Ewan Leggat
Adam Cowl
Hudson Sandler (Financial PR) Tel: +44 0) 20 7796
Charlie Jack 4133
Harry Griffiths
Appendix One
Asset portfolio and details of development projects
The Company will continue gold production from the Gedabek and
Gadir mines during the Transition phase.
Initially the new mines at Zafar and Gilar will feed
higher-grade copper-gold ore into the existing Gedabek processing
plant to raise copper production, targeting start-up with Gilar in
2023/24 followed by Zafar. The Gedabek plant is being expanded and
adapted to increase throughput capacity in time for new feedstock
ore from the Zafar and Gilar mines. The expansion will double
capacity at a capital cost of approximately $3 million, taking the
plant throughput to around 1,300,000 tonnes per annum ("tpa") from
650,000 tpa. The two mines (Zafar and Gilar) are planned to produce
a total of approximately 120,000 tonnes of copper equivalent by
2037. Underground tunnelling work has already started at Zafar and
Gilar with 5 metre x 5 metre portals constructed, which are
designed for production. The tunnels will initially enable rapid
infill and exploration drilling from underground for better
definition of the mineral resource and low-cost development and
expansion of both mines.
The longer-term production growth will focus on the Xarxar and
Garadag copper deposits, which contain larger resources of copper
and will likely be developed using shared infrastructure due to
their proximity and to generate operational synergies. Processing
is likely to be accomplished either by conventional flotation or
bacterial heap and/or in-situ leaching.
Figure 1: Key mines and ongoing projects showing contract area
boundaries of Anglo Asian Mining (source: Google Earth).
At Gedabek, a new copper zone at the edge of the Gedabek open
pit will extend the mine life and provide further copper ore to the
Gedabek processing plant. The preliminary non-JORC resource of the
new zone is 1.4 million tonnes grading 0.48 per cent. copper.
Gedabek currently has a total non-JORC resource estimate containing
144,000 ounces of gold and over 23,600 tonnes of copper, excluding
the residual metal inventory in processed tailings impounded in the
tailings dam.
The Zafar mine will be constructed during 2023 with production
planned from 2024. Zafar will provide back up production should
there be any delay or interruption to mining of the higher-grade
ores at Gilar. Zafar's JORC resource contains 6.8 million tonnes
grading 0.5 per cent. copper and 0.4 grammes per tonnes of gold
with around 1 per cent. zinc.
Gilar is targeted to start to supply ore to the processing plant
at Gedabek in 2023/24. Recent drill results show mineral
intersections of 5.1 to 61.7 metres grading 0.90 to 4.85 grammes
per tonne of gold combined with 0.28 to 4.43 per cent. copper.
These results further validate the decision to start construction
of an underground tunnel at Gilar for exploration and production.
Gilar's non-JORC resource currently contains 5.64 million tonnes
grading 0.82 per cent. copper, 0.87 per cent. zinc and 1.37 grammes
per tonne of gold.
Xarxar and Garadag contain larger tonnages and our current plan
is to develop them using shared infrastructure and building a
processing plant to serve both mines. Processing methods are yet to
be finalised. The Company is currently considering conventional
flotation or bacterial heap leaching with conventional open pit
and/or underground mining. In-situ recovery methods are also being
investigated.
At Xarxar, a 500 metre long, 3.5 metre by 3.5 metre tunnel
constructed into the mineral deposit is providing representative
bulk samples for test processing. The Xarxar deposit appears to fit
a Corbett model for classic copper porphyry structures with
mineralised copper ore between the phyllic and potassic alternation
zones. One 600 metre vertical intersection shows argillic
mineralisation with chalcopyrite and chalcocite. Samples from the
deposit show specks of native copper visible to the naked eye.
The topography of the deposit lends itself towards open pit
mining. Trucking of ore will be downhill which will minimise costs.
The open pit should eventually finish at a depth of 205 metres.
The Company is currently optimising the Xarxar mine plan using a
base case of $8,000 per tonne for the extraction of 20.1 million
tonnes of ore grading 0.46 per cent. copper at a 1.6 strip ratio
for 93,500 tonnes of contained copper based on the current
published non-JORC resource. Production is due to start in 2026 at
circa 9,000 tonnes of copper per annum for around seven years.
Above level 1,200 Above level 1,000
metres metres
------------------------- ---------- ------------- ------------------------- ---------- -------------
cut-off Mineralisation Resultant Metal cut-off Mineralisation Resultant Metal
(Cu (tonnes) (Cu %) (Cu tonnes) (Cu (tonnes) (Cu %) (Cu tonnes)
%) %)
--------------- ---------- ------------- -------- ---------- -------------
0.15 41,394,352 0.34 140,741 0.15 64,915,146 0.32 207,728
--------------- ---------- ------------- -------- --------------- ---------- -------------
0.30 17,095,640 0.53 90,607 0.30 23,428,520 0.51 119,485
--------------- ---------- ------------- -------- --------------- ---------- -------------
0.45 8,150,558 0.72 58,684 0.45 10,212,706 0.71 72,510
--------------- ---------- ------------- -------- --------------- ---------- -------------
At Garadag, the Company is relogging around 23,000 metres of
core drilled by AzerGold CJSC to rematch the assay results.
Non-JORC internal "open pit boundary" constrained "Indicated and
Inferred Mineral" Resource estimates show 70 million tonnes grading
0.5 per cent. copper (historical resources estimated were 49
million tonnes grading 0.64 per cent. copper, C1 & C2 Russian
classification.)
Garadag and Xarxar are only four kilometres apart and connected
by a main road. The mines will therefore share infrastructure and
processing facilities, which will accelerate Garadag's development.
Garadag is planned to be commissioned in 2027/28 and is expected to
produce over 20,000 tonnes of copper per annum from 2029.
Appendix Two
Exploration and Investment upside
The Company holds eight contract areas in Azerbaijan, with a
total area of 2,544 square kilometres (Figure 2). These include
four with a total area of 1,400 square kilometres around the
Gedabek gold-copper production area (Figure 1). The exploration
upside is extensive with further copper, gold and polymetallic
targets located in all of the Company's contract areas, including
anomalies discovered by airborne electromagnetic ('ZTEM') surveying
(20 shallow, 5 deep and 6 "porphyry") and 7 identified mineral
occurrences in and adjacent to the Gedabek area. There are 6 copper
targets in the Xarxar and Garadag areas, 28 known mineralisation
occurrence targets in the Gosha area with up to 3 per cent. copper
and 3 per cent. zinc seen in surface samples, and 9 known mineral
deposits in Ordubad. Additionally, significant exploration
potential exists in the Kyzlbulag, Demirli and Vejnaly contract
areas.
The contract areas
The locations of the eight contact areas with a total land area
of over 2,500 square kilometres are shown in figure 2.
Figure 2: Location map of contract areas in Azerbaijan
The Company currently holds in excess of 1 million tonnes of
in-situ copper in the various resource categories within its total
portfolio.
A number of copper-rich porphyry systems have been identified in
and around the Gedabek mine area. These porphyritic structures
appear to be responsible for high-grade mineralisation at Zafar and
Gilar and larger lower-grade copper mineralisation at Xarxar and
Garadag. The Company plans to use remote sensing to identify areas
of phyllic and potassic alternation which indicate potential for
further porphyry-style copper mineralisation.
Exploration at Ordubad in Nakhchivan shows classic Corbett
model, argillic and phyllic alteration either side of propylitic
alteration. The team is relogging 19,725 metres of historic drill
core from 112 drill holes. Geochemical surveying shows an 8
kilometre diameter structure of malachite in soils and outcrop. The
area shows significant potential for both copper and gold
mineralisation and development opportunities. Drilling recommenced
in March 2023. The Company has also established an office in
Nakhchivan to support the ongoing exploration programme.
There is potential to restart the Demirli copper-molybdenum
porphyry mine in the northern part of the Karabakh economic region,
when the political situation allows. The mine has the capability to
add over 6,000 tonnes per annum of copper equivalent to the
Company's production from 2025. This is not included in the current
strategic plan for growth and represents upside potential to the
above targets.
This strategy plan is focused on Azerbaijan and demonstrates the
outstanding organic growth prospects of the Company's in-country
portfolio. In addition, the Company has invested in Libero Copper
& Gold Corporation, whose project portfolio includes several
copper exploration properties in North and South America, including
Mocoa in Colombia, one of the world's largest undeveloped
copper-molybdenum resources.
Mineral resource estimates
The Company has used its own in-house estimate of resources and
economically extractable copper in this announcement and these
figures are not based on a Standard, such as JORC. The Company
intends to carry out JORC reporting on completion of the ongoing
drilling and exploration programme.
Competent Person Statement
The information in the announcement that relates to exploration
results, minerals resources and ore reserves is based on
information compiled by Dr Stephen Westhead, who is a full-time
employee of Anglo Asian Mining with the position of Vice-President,
who is a Fellow of The Geological Society of London, a Chartered
Geologist, Fellow of the Society of Economic Geologists, Fellow of
the Institute of Materials, Minerals and Mining and a Member of the
Institute of Directors.
Stephen Westhead has sufficient experience that is relevant to
the style of mineralisation and type of deposit under consideration
and to the activity being undertaken to qualify as a Competent
Person as defined in the 2012 Edition of the 'Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore
Reserves'. Stephen Westhead consents to the inclusion in the
announcement of the matters based on his information in the form
and context in which it appears.
Stephen Westhead has sufficient experience, relevant to the
style of mineralisation and type of deposit under consideration and
to the activity that he is undertaking, to qualify as a "competent
person" as defined by the AIM rules. Stephen Westhead has reviewed
the mineral resources included in this announcement. For the
avoidance of doubt, resources and economically extractable copper
figures in this notification are not based on a Standard for the
reporting of reserves and resources, such as JORC, as defined in
the AIM Rules for Companies.
About Anglo Asian Mining
Anglo Asian Mining plc (AIM:AAZ) is a gold, copper and silver
producer with a high-quality portfolio of production and
exploration assets in Azerbaijan. The Company produced 57,618 gold
equivalent ounces ("GEOs") for the year ended 31 December 2022.
In December 2021, the Company undertook a private placement
which acquired 19.8 per cent. of Libero Copper & Gold
Corporation ("Libero"). Libero is listed on the TSX Venture
Exchange in Canada and owns, or has the option to acquire, several
copper exploration properties in North and South America, including
Mocoa in Colombia, one of the world's largest undeveloped
copper-molybdenum resources. Two further follow-on investments have
been made in Libero to maintain the Company's shareholding at 19.8
per cent.
On 5 July 2022, the Parliament of Azerbaijan ratified amendments
to the Company's Production Sharing Agreement, which granted it
legal title to three additional concessions with a combined area of
882 square kilometres, including the Garadag porphyry copper
deposit, with a Soviet classified resource of over 300,000 tonnes
of copper.
https://www.angloasianmining.com/
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