TIDMAAZ
RNS Number : 5975T
Anglo Asian Mining PLC
21 July 2020
Anglo Asian Mining plc / Ticker: AAZ / Index: AIM / Sector:
Mining
21 July 2020
Anglo Asian Mining PLC
Formation of a Joint Venture with Conroy Gold and Natural
Resources PLC
to acquire up to a 55 per cent. interest in the Longford Down
Massif gold project in Ireland
Initial 17.5 per cent. interest to be earned by Anglo Asian
investing EUR2 million in further exploration, with its interest
increasing progressively to 55 per cent., by developing
the Clontibret gold deposit to mine construction-ready
status
Anglo Asian awarded warrants over 325,000 Ordinary Shares in
Conroy Gold and Natural Resources PLC, with an additional 1,625,000
warrants to be awarded on completion of the Joint Venture
Agreement
Anglo Asian Mining PLC ("Anglo Asian" or the "Company"), the AIM
listed gold, copper and silver producer focused in Azerbaijan, is
pleased to announce that it has entered into a non-binding Heads of
Terms Agreement ("HoT") with Conroy Gold and Natural Resources PLC
("Conroy Gold") for a proposed joint venture. Anglo Asian will
acquire, by way of the joint venture, up to a 55 per cent. interest
in the Longford Down Massif gold project (the "Project") in Ireland
currently wholly-owned by Conroy Gold in exchange for committing to
meet certain expenditures.
Anglo Asian has also been awarded warrants to acquire 325,000
Ordinary Shares in Conroy Gold which are exercisable immediately.
Anglo Asian will be awarded an additional 1,625,000 warrants to
acquire Ordinary Shares in Conroy Gold upon completion of the joint
venture agreement. The additional warrants will become exercisable
at certain milestones as Anglo Asian invests funds into the joint
venture as set out below. The total of 1,950,000 warrants represent
7.44 per cent. of the current issued share capital of Conroy
Gold.
Note that all references to "$" are to United States dollars,
"GBP" and "pence" are references to the United Kingdom pound
sterling and " EUR" are references to the Euro.
Highlights
-- HoT signed to acquire up to a 55 per cent. interest in the
Longford Down gold project in Ireland currently wholly-owned by
Conroy Gold
-- The licences cover over 800 square kilometres in a major gold
district in the north-east of the island of Ireland, known as the
Longford Down Massif, containing significant gold targets
including:
o Clontibret - an existing JORC Resource of over 500,000 ounces
of gold, situated in County Monaghan, in the Republic of
Ireland
o Clay Lake in County Armagh, Northern Ireland - a gold target
that extends for two kilometres by one kilometre and lies at the
north-eastern end of the 40 mile Longford Down gold trend
o An additional 8.8 million ounces of gold exploration targets
in the Longford Down trend providing significant upside
potential
-- The joint venture will increase the Company's inventory of
JORC resources with a well-defined path to production
-- Anglo Asian has a track record as a successful builder of
mines and this experience will prove complementary to the
exploration skills and local knowledge of the existing Conroy Gold
team and enable the Company to rapidly drive the Project forward to
production
-- Many synergies such as the type of exploration and the
potential mining techniques exist between the Company's current
activities in Azerbaijan and at the Longford Down Massif
-- Clontibret is of a scale which will add significantly to the
Company's operations but is well within the capability of the
Company to manage without impacting the development of its projects
in Azerbaijan
-- Ireland is an attractive mining jurisdiction, with highly
prospective geology - the Republic hosts Europe's largest zinc mine
and gold mining projects are being developed across the border in
Northern Ireland
Key terms of the joint venture
-- The licences (and associated intellectual property) will be
segregated, upon formation of the joint venture, into three
separate companies in which Anglo Asian will have an initial 17.5
per cent. interest in exchange for committing to meet certain
expenditures of the Primary Expenditure Programme (as defined
below) subject to regulatory approvals.
-- No initial payment required for the Project - Anglo Asian to
acquire its 17.5 per cent. interest in each company by investing
EUR2 million in further exploration (the Primary Expenditure
Programme). Anglo Asian can increase its interest by a further 7.5
per cent. in each company on a pro rata basis in exchange for
spending a further EUR2 million (in aggregate across the three
companies) on the Primary Expenditure Programme. A minimum
expenditure of EUR4 million will secure an interest of 25 per cent.
in each company. The additional funding required to take the
Clontibret licences to mine construction-ready status, together
with a further EUR3 million in exploration work on the other
licences in the Project (the Secondary Expenditure Programme) will
secure the full 55 per cent. interest in each of the three joint
venture companies.
-- Anglo Asian will retain an interest in each of the three
joint venture companies even if it does not proceed to the
Secondary Expenditure Programme, the amount of which will depend on
the total amount of its investment.
-- The joint venture is subject to satisfactory due diligence,
concluding a binding joint venture agreement (the "JV Agreement")
between Anglo Asian and Conroy Gold, regulatory approvals and the
approval of Conroy Gold shareholders.
-- 325,000 warrants for Anglo Asian to acquire Ordinary Shares
at 16p in Conroy Gold have been issued which can be exercised
immediately.
-- A further 975,000 warrants at 16p per Ordinary Share and
650,000 at 26p per Ordinary Share will be issued on concluding the
JV Agreement and are exercisable subject to meeting certain
expenditure milestones.
Reza Vaziri, CEO, commented: "These are exciting times at Anglo
Asian and I am delighted to announce this proposed joint venture
with Conroy Gold which will be the Company's first enterprise
outside of Azerbaijan.
"The proposed joint venture is in keeping with the Company's
stated strategy and ambitions and will complement the Company's
existing pipeline of projects in Azerbaijan. It is of sufficient
scale to considerably add to the Company's operations, but of a
size which will not adversely impact the development of our assets
in Azerbaijan. Our experience in building and operating mines will
combine well with Conroy Gold's exploration skills and local
knowledge and together we can drive the Project forward. Ireland,
like Azerbaijan, has a stable and predictable jurisdiction for
mining.
"The transaction has been designed to minimise the risk to the
Company. The licences will be segregated into three companies. The
joint venture agreement will ensure that all funds invested to
acquire our interest will be used to further explore and develop
the properties. The Company is envisaging an initial commitment to
the joint venture of EUR4 million and will still retain a
significant interest in the licences even if it decides to proceed
no further after this initial expenditure. The warrants awarded to
the Company will enable us to benefit from any increase in the
share price of Conroy Gold as a result of their success in the
joint venture."
Stephen Westhead, Director of Geology & Mining, commented:
"The Longford Down Massif includes some very highly prospective
gold targets and the proposed joint venture immediately adds to the
Company's inventory of JORC resources, while also increasing
exploration upside potential to the shorter term mine development
targets. The Company has demonstrated its expertise in exploration
through to developing projects into production. This expertise will
prove transferrable to Ireland, where the proposed exploration and
development programme has the potential to add to shareholder
value."
Rationale for the transaction and the benefits to Anglo
Asian
Anglo Asian's participation in the joint venture in Ireland is
in line with the Company's stated strategy of considering
opportunities outside Azerbaijan which it believes can be made a
commercial success. The joint venture will complement the current
pipeline of projects under way in Azerbaijan and in due course will
lead to growth in the overall business of the Company.
Ireland, like Azerbaijan, is considered an excellent
jurisdiction in which to operate. The Republic is a stable,
predicable country within the European Union with a well-developed
mining industry and a government that is keen to foster further
growth in the industry, as is the administration in Northern
Ireland. This favourable climate will assist us to develop
efficient, practicable management of our activities in both
countries.
This joint venture will immediately add gold resources to our
inventory and there is a well-defined path to production at
Clontibret. There is also very considerable exploration upside
along the rest of the Longford Down Massif.
Anglo Asian has a track record as a successful builder of mines.
This experience in developing mines will prove complementary to the
geological skills and local knowledge of the existing Conroy Gold
team and enable the Company to rapidly drive the Project forward.
It is of a scale which will add to the Company's operations, but is
also well within the capability of the Company to manage, without
impacting the development of our Azerbaijan assets. Successful
exploitation of this opportunity has the potential to generate real
value for our shareholders.
Structure of the joint venture transaction
HoT have been signed with Conroy Gold that, subject to
satisfactory due diligence, regulatory approvals and Conroy Gold
Shareholder approval, will lead to a joint venture agreement
between Anglo Asian Mining and Conroy Gold being concluded on the
following principal terms:
-- The Longford Down Massif exploration licences (and associated
intellectual property) will be segregated into three joint venture
companies as follows:
o Company A: Clontibret licence
o Company B: Clay Lake licences
o Company C: Other licences
-- A 17.5 per cent. interest in each company will be issued to
Anglo Asian on concluding the JV Agreement which will commit Anglo
Asian to meet certain expenditures of up to EUR2 million of the
Primary Expenditure Programme (as defined below).
-- Anglo Asian can increase its interest by a further 7.5 per
cent. in each company on a pro rata basis in exchange for spending
a further EUR2 million (in aggregate across the three companies) on
the Primary Expenditure Programme. A minimum expenditure of EUR4
million for the Primary Expenditure Programme will secure an
interest of 25 per cent. in each joint venture company.
-- The full 55 per cent. holding in each company will be earned
in the event of Anglo Asian committing to the Secondary Expenditure
Programme (see below) .
-- Anglo Asian is to meet the following expenditure requirements
for the three licence holding companies:
o Primary expenditure programme: Exploration expenditure to
determine whether to proceed to the secondary stage. It is
anticipated this expenditure will be around EUR4 million and be
incurred over 18 months following the commencement of
exploration.
o Secondary stage expenditure:
-- The compilation of a detailed study and obtaining all
necessary consents for the mine construction for Company A. This
will bring the Clontibret licence area to "Construction Ready"
project status; and
-- Additional exploration expenditure for Companies B and C,
totalling EUR3 million.
-- The obligation for the land acquisition required for the
Clontibret mine will be negotiated between the parties following
the preparation of detailed budgets for the second stage
expenditure during due diligence.
-- If Anglo Asian decides not to proceed to the Secondary stage,
it will retain an interest in each of the three Companies depending
upon the amount of Primary stage expenditure incurred as
follows:
o Less than EUR2 million: zero interest
o EUR2 million: 17.5 per cent. interest
o EUR2 million to EUR4 million: the percentage interest will be
calculated pro-rata between 17.5 to 25 per cent.
o EUR4 million: 25 per cent. interest
-- Following the Primary and Secondary stage expenditure being
incurred, all further development expenditure will be met by the
shareholders of the three companies in proportion to their equity
holding.
-- Anglo Asian has deposited EUR250,000 into a segregated bank
account and will deposit an additional EUR250,000 into that account
upon signing the JV Agreement. These funds will provide the initial
funds for the exploration programme.
-- A management committee with equal representation from both
Anglo Asian and Conroy Gold will be established to run the three
joint venture companies. Final control of the management committee
shall in principle rest with Anglo Asian, until either Anglo Asian
does not proceed to the Secondary stage or does not complete the
Secondary stage expenditure.
The Longford Down Massif
The licences cover an area of over 800 square kilometres in a
new "district scale" 40 mile gold trend located in the Longford
Down Massif in the north-east of the island of Ireland. The trend
lies along a major geological structure, the Orlock Bridge Fault
Zone. A series of major gold targets have been identified along
this trend. These include Clontibret and Glenish in County Monaghan
and Slieve Glah in County Cavan, in the Republic of Ireland, and
Clay Lake in County Armagh, Northern Ireland.
Clontibret
Clontibret is a significant discovery within the trend. The
local geology at Clontibret consists of Ordovician sedimentary
rocks, which lie some 1,500 metres north of the regional-scale
Orlock Bridge Fault. The stratigraphy is made up of alternating
units of argillite (shale or siltstone) and arenite (greywacke or
sandstone) rocks. The mineralisation in Clontibret occurs in two
styles - high grade lodes and a disseminated stockwork zone. A JORC
Compliant resource of over 500,000 ounces of gold has been defined
as part of a scoping study.
The current JORC (2012) Resource of 320,000 ounces of gold
(Indicated) and 197,000 ounces of gold (Inferred) totals 517,000
ounces of gold at 2 grammes per tonne gold at a cut-off grade of
1.0 gramme per tonne of gold. According to Conroy Gold, the
majority of the drilling to date is to a depth of less than 200
metres and a maximum depth of 350 metres. The deposit remains open
in all directions, as well as to depth, and excellent gold
intersections, e.g. 16.6 metres at 6.5 grammes per tonne of gold,
have been recorded outside the current resource area.
Clay Lake
The Clay Lake gold target extends for two kilometres by one
kilometre and lies at the north-eastern end of the 40 mile gold
trend discovered by Conroy Gold. Gold-in-soil values averaging over
50 parts per billion of gold, including the highest gold-in-soil
value seen to date, 1.53 grammes per tonne of gold, were recorded
in soil samples collected over the Clay Lake target area during the
area's exploration programme. Rock chip samples in the exposed rock
returned 18 metres at 0.47 grammes per tonne of gold and included
three metres at 1.30 grammes per tonne gold before the exposure
ceased. Subsequent drilling identified a 450 metre open-ended zone
of black carbonaceous stockwork, with the second drill hole
intersecting 63 metres at 0.62 grammes per tonne of gold, including
nine metres at 1.48 grammes per tonne of gold.
Longford Down Trend
Additional to the Clontibret and Clay Lake targets is an area of
ground of over 372 square kilometers covered by 10 exploration
licences known as the Longford Down trend. An exploration target
estimate of some 8.8 million ounces of gold has been published by
Conroy Gold. The targets have been defined by soil geochemistry and
supported by geophysical data. The Longford Down Trend forms an
important part of the longer-term potential of resource to reserve
development.
Warrants to acquire ordinary shares of Conroy Gold and Natural
Resources PLC
Anglo Asian has been issued with 325,000 warrants to acquire new
ordinary shares in Conroy Gold at 16p and will be issued with a
further 1,625,000 warrants to acquire new ordinary shares in Conroy
Gold (the "Warrants") upon completion of the JV Agreement as
follows:
-- 975,000 Warrants to acquire ordinary shares in Conroy Gold at a price of 16p
-- 650,000 Warrants to acquire ordinary shares in Conroy Gold at a price of 26p
The Warrants are exercisable as follows:
-- The 325,000 already issued at 16p are exercisable immediately
-- 325,000 at 16p upon EUR1 million being spent by Anglo Asian
pursuant to a completed JV Agreement
-- 650,000 at 16p upon a further EUR1 million being spent by
Anglo Asian pursuant to a completed JV Agreement
-- 650,000 at 26p upon a further EUR1 million being spent by
Anglo Asian pursuant to the completed JV Agreement.
The Warrants can be exercised up to the third anniversary of
signing the commencement of the field work protocol for the Primary
stage exploration expenditure. If a JV Agreement is not concluded,
the 325,000 Warrants already vested will expire on 19 January 2021
which is six months after signing the HoT. These warrants will,
when exercised, together represent 7.44 per cent. of the current
existing Ordinary Share Capital of Conroy Gold.
Competent Person Statement
The information in this 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 Director of
Geology & Mining, who is a Fellow of The Geological Society of
London, a Chartered Geologist, Fellow of the Society of Economic
Geologists, Member 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 this
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 resources and reserves included in this announcement.
Market Abuse (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 until the release of this
announcement.
For further information please visit or contact:
Reza Vaziri Anglo Asian Mining plc Tel: +994 12 596 3350
Bill Morgan Anglo Asian Mining plc Tel: +994 502 910 400
--------------------------- ----------------------
Stephen Westhead Anglo Asian Mining plc Tel: +994 502 916 894
--------------------------- ----------------------
Ewan Leggat SP Angel Corporate Finance Tel: +44 (0) 20 3470
LLP 0470
Nominated Adviser and
Broker
--------------------------- ----------------------
Soltan Tagiev SP Angel Corporate Finance Tel + 44 (0) 20 3470
LLP 0470
--------------------------- ----------------------
Camilla Horsfall Blytheweigh Financial Tel: +44 (0) 20 7138
3224
--------------------------- ----------------------
Megan Ray Blytheweigh Financial Tel: +44 (0) 20 7138
3224
--------------------------- ----------------------
**ENDS**
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's main operating location is the Gedabek contract
area ("Gedabek") which is a 300 square kilometre area in the Lesser
Caucasus mountains in western Azerbaijan. The Company developed
Azerbaijan's first operating gold/copper/silver mine at Gedabek
which commenced gold production in May 2009. Mining at Gedabek was
initially from its main open pit which is an open cast mine with a
series of interconnected pits. The Company also operates the high
grade Gadir underground mine which is co-located at the Gedabek
site. In September 2017, production commenced at the Ugur open pit
mine, a newly discovered gold ore deposit at Gedabek. 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.
The Company produced 81,399 gold equivalent ounces ("GEOs") for
the year ended 31 December 2019. Gedabek is a polymetallic ore
deposit that has gold together with significant concentrations of
copper in the main open pit mine, and an oxide gold-rich zone at
Ugur. The Company therefore employs a series of flexible processing
routes to optimise metal recoveries and efficiencies. The Company
produces gold doré through agitation and heap leaching operations,
copper concentrate from its Sulphidisation, Acidification,
Recycling, and Thickening (SART) plant and also a copper and
precious metal concentrate from its flotation plant.
The Company has a production target for the year to 31 December
2020 of 65,000 ounces to 67,000 ounces of gold and 2,200 tonnes to
2,400 tonnes of copper. This total production target expressed as
gold equivalent ounces ("GEOs") at budgeted prices is between
75,000 GEOs and 80,000 GEOS.
Anglo Asian is also actively seeking to exploit its first mover
advantage in Azerbaijan to identify additional projects, as well as
looking for properties in other jurisdictions 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 news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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