TIDMAAZ
RNS Number : 3801M
Anglo Asian Mining PLC
21 January 2021
Anglo Asian Mining plc / Ticker: AAZ / Index: AIM / Sector:
Mining
21 January 2021
Anglo Asian Mining plc
Update on the Company's Restored Contract Areas in the formerly
Occupied Territories and Nagorno Karabakh
Anglo Asian Mining plc ("Anglo Asian" or the "Company"), the AIM
listed gold, copper and silver producer in Azerbaijan welcomes the
agreement between Armenia, Azerbaijan and Russia which has ended
the military conflict over the enclave of Nagorno Karabakh. It is
pleased to provide an update on its three restored contract areas
located in the formerly Occupied Territories and Nagorno
Karabakh.
Highlights
-- Three contract areas have been restored to the Company
o Soutely in the Kalbajar district of the formerly Occupied
Territories
o Kyzlbulag in Nagorno Karabakh
o Vejnaly in the Zangilan district of the formerly Occupied
Territories
-- The Company will fully evaluate the potential of the three
restored contract areas when permission to access is received from
the Government of Azerbaijan
o The production sharing agreement in respect of the three
restored contract areas will be "reset" to year zero upon
notification of access
-- The two contract areas in the formerly Occupied Territories
are fully under the control of the Government of Azerbaijan, with
Russian peacekeepers present at its Nagorno Karabakh contract
area
-- Mineral exploitation has been carried out illegally during
the Armenian occupation at all three contract areas
o Soutely - location of the Zod gold and silver mine, the
largest in the Caucasus region, and which was reported to be
producing approximately 120,000 ounces of gold per year prior to
the conflict
o Kyzlbulag - location of the Kashan deposit hosting a copper
and molybdenum mine
o Vejnaly - mining has been carried out at the deposit but the
current situation is unknown
-- Very considerable exploration potential exists both near the
existing mines and on known geological trends in the restored
contract areas
-- It has been proposed as part of the ceasefire agreement that
Armenia will grant territory in its Syunik region to Azerbaijan to
allow construction of direct road and rail links between the
exclave of Nakhchivan and the rest of Azerbaijan
o The proposed transport corridor will greatly improve access to
the Company's Ordubad contract area
Reza Vaziri, President and CEO of Anglo Asian Mining, said , "It
is a tragedy that this long-standing territorial dispute has
resulted in a humanitarian crisis and significant loss of life.
Anglo Asian Mining very warmly welcomes the recent ceasefire
agreement which ended the hostilities. The conflict has resulted in
extensive damage across the region which will require substantial
investment to repair and rebuild.
"Anglo Asian Mining will work with the Government of Azerbaijan,
pursuant to its contractual rights, in the three restored contract
areas within the Zangilan and Kalbajar districts as well as in
Nagorno Karabakh. The Company will properly manage and invest in
the mineral resources of the region to the benefit of the local
communities and other stakeholders. Anglo Asian Mining has been a
model of sustainable and sound mining practices at its current
operations while working with, and investing in, the local
communities. The Company intends to bring that commitment to
high-quality development to its restored contract areas in the
regions internationally recognised as part of Azerbaijan and which
have now been returned to Azerbaijan, following the declaration by
the Governments of Armenia and Azerbaijan and cessation of
hostilities."
Background
Nagorno Karabakh is a mountainous enclave wholly within the
borders of Azerbaijan. Nagorno Karabakh is bordered by seven
districts of Azerbaijan which were occupied by Armenia in 1994 (the
"Occupied Territories").
With the cessation of the recent hostilities over Nagorno
Karabakh and the Occupied Territories, the seven districts which
surround Nagorno Karabakh, which have always been recognised by
international bodies as being part of Azerbaijan, have been
returned to Azeri administration. These districts of Azerbaijan
have been occupied by Armenia since the end of the first Karabakh
war in 1994 and have been the subject of four United Nations
Security Council Resolutions (822, 853, 874 and 884), each calling
for the withdrawal of Armenian forces.
In 1997, Anglo Asian obtained six mineral resource contract
areas under a Production Sharing Agreement ("PSA") with the
Government of Azerbaijan. Two of the contract areas (Soutely and
Vejnaly) are located in the formerly Occupied Territories. The
Soutely contract area is in the mountainous Kalbajar district and
the Vejnaly contract area in the Zangilan district in the southwest
of Azerbaijan. The third contract area Kyzlbulag, is located in
Nagorno Karabakh.
The three restored contract areas in the formerly Occupied
Territories and Nagorno Karabakh were part of Anglo Asian's
original Production Sharing Agreement, along with the three
contract areas where the Company is currently active (Gedabek,
Gosha and Ordubad in Nakhchivan). All contract areas were
reaffirmed to the Company by the Azerbaijan Government in 2006 and
continue in good standing. A map showing the location of the three
restored contract areas can be accessed at
http://www.rns-pdf.londonstockexchange.com/rns/3801M_1-2021-1-20.pdf
The three restored contract areas have continued to be held
under the Company's existing PSA. However, the PSA will only
commence in respect of each of these contract areas upon
notification by the Government of Azerbaijan to the Company of the
cessation of all hostilities and that it is safe to access the
district. This notification will therefore "reset" the PSA to year
zero for that contract area. Accordingly, the Company then has the
right to explore the contract area for up to five years and then
develop and produce for 15 years, with two five-year extensions
allowed.
Anglo Asian has always stated its intention to develop its
contract areas in the formerly Occupied Territories and Nagorno
Karabakh upon settlement of the conflict over Nagorno Karabakh and
surrounding regions. The Company therefore plans to pursue its
legal rights under the PSA to develop these mineral resources.
Development will commence when the Company receives notice in
accordance with its PSA that the Organisation on Security and
Cooperation in Europe ("OSCE") (or comparable international
organisation) has acknowledged a liberation of the previously
occupied territories and the Company is satisfied the districts are
secure.
Current situation at the three contract areas in the formerly
Occupied Territories and Nagorno Karabakh
The situation in the formerly Occupied Territories and Nagorno
Karabakh is still developing and the Company will evaluate its
newly restored contract areas as soon as it is able to access them.
However, each contract area has been subject to mineral
exploitation and mining whilst occupied, which provides an
indication of the resource potential within these contract
areas.
Soutely - Kalbajar district in the formerly Occupied
Territories
The Soutely contract area in the Kalbajar district is the
location of the Zod gold and silver mine. The mine is a very large
open pit with some underground workings and is the largest gold
mine in the Caucasus region. The mine straddles the international
border between Armenia and the Kalbajar district of Azerbaijan,
with an estimated 75 per cent. of the mine lying within Azerbaijan.
The international border has been restored to that which existed
when Azerbaijan and Armenia declared independence following the
dissolution of the Soviet Union. The Zod mine was owned and
operated during the Armenian occupation by GeoProMining Gold, a
subsidiary of the Russian-owned GeoProMining Investment (CYP)
Limited ("GPM"). There is currently no mining being carried out in
the part of the Zod mine now lying within Azerbaijan.
According to a prospectus issued by GPM in 2019 for the issue of
loan notes, the gold Resources and Reserves of the world-class Zod
mine are over eight million ounces. At 1 January 2019, these were
estimated as follows:
Tonnage Grade Content
(kt) (g/t) (koz)
Reserves
Proved - - -
Probable 26,373 3.41 2,813
-------- ------- --------
Resources
Indicated 28,838 3.28 3,037
Inferred 19,445 3.66 2,288
-------- ------- --------
According to GPM, ore mined from Zod was transported by rail to
processing facilities in Armenia and used to produce gold and
silver doré. However, according to the Azerbaijan Government,
processing facilities (together with other plant and mining fleet
equipment) have been found adjacent to the mine in the Kalbajar
district. Access to the contract area is difficult as it is located
in the north of the Kalbajar district with no direct road to
western Azerbaijan and the terrain is mountainous. However, the
Government of Azerbaijan has proposed to build a road to give
direct access to the Kalbajar region through the northern border of
the region.
Kyzlbulag - Nagorno Karabakh
This contract area contains the Kashen deposit in Nagorno
Karabakh's northern Martkert region. Estimates have been recently
published that the deposit contains 275,000 metric tonnes of copper
and 3,200 metric tonnes of molybdenum. The deposit has been mined
by open pit and in 2016, an Armenian Company "Vallex Group",
inaugurated an ore processing plant in which Vallex Group claimed
to have invested US$130 million. The Armenian Government also
announced at that time that they believed the non-ferrous metal
reserves of the Kashen deposit were sufficient to keep the new
plant operational for at least 25 years. As far as the Company is
aware, the plant is intact and together with the mine is not
currently operating. Russian peacekeepers are currently present in
the area and our access to Kyzlbulag will depend on the final
resolution of the status of Nagorno Karabakh.
Vejnaly - Zangilan district in the formerly Occupied
Territories
The Vejnaly deposit is located in the Zangilan district of
southwestern Azerbaijan. There has been some mining carried out at
the deposit during the Armenian occupation but this has now
stopped. The potential for exploration and further production is
currently unknown. The region has been secured by the Government of
Azerbaijan and Anglo Asian is determining how to best access the
area to evaluate its resources and infrastructure.
Exploration and mineral potential of the restored contract
areas
The three restored contract areas all host known significant
gold and copper-gold mineral deposits, two of which support major
mining operations. These mines are located on geological trends
known to contain other geochemical and geological anomalies. The
Company has requested exploration data from the Government of
Azerbaijan and has commenced compilation of this geological
information. The preliminary assessments are very promising and the
geological team are looking forward to further developing the
mineral resources of the region. High level exploration planning is
underway and, given the significant mining operations in the
region, the upside resource potential could be very great. Once
these areas are secure and Anglo Asian has access, the Company's
technical and administrative experience in the region provides a
solid foundation for a major increase in resources and
reserves.
Access to the Nakhchivan exclave via the Syunik district of
Armenia
The exclave of Nakhchivan hosts the Company's Ordubad contract
area. Nakhchivan is currently separated from the rest of Azerbaijan
by the Syunik region of southern Armenia. As part of the agreement
to cease hostilities, a corridor through the southern part of the
region will be given to Azerbaijan to build direct road and rail
links between Nakhchivan and the rest of Azerbaijan. These
projected transport links will greatly aid the Company in its
efforts to develop and exploit the resource potential of its
Ordubad contract area in Nakhchivan.
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 until the release of this
announcement.
**ENDS**
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
------------------------------ ----------------------
Adam Cowl SP Angel Corporate Finance Tel + 44 (0) 20 3470
LLP 0470
------------------------------ ----------------------
Megan Ray Blytheweigh Financial PR Tel: +44 (0) 20 7138
3224
------------------------------ ----------------------
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 at its active Gedabek, Gosha and Ordubad
contract areas assembled from analysis of historic Soviet
geological data and held under a Production Sharing Agreement
("PSA") modelled on the Azeri oil industry. The Company also has
three recently restored contract areas in the formerly Occupied
Territories and Nagorno Karabakh under its PSA which will be
evaluated as soon as access permission is received from the
Government of Azerbaijan.
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. 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 67,249 gold equivalent ounces ("GEOs") for
the year ended 31 December 2020. 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.
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. It has announced that it is negotiating a joint
venture with Conroy Gold and Natural resources PLC to explore and
develop various gold properties in The Republic of Ireland and
Northern Ireland.
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