TIDMAAZ
RNS Number : 2904N
Anglo Asian Mining PLC
29 September 2021
29 September 2021
Anglo Asian Mining plc
Right to three new concessions bordering the Gedabek and
Kyzlbulag Contract Areas
Garadagh porphyry deposit acquired hosting over 300,000 tonnes
of copper together with other major resources with significant
development potential
Milestone agreement underpins Anglo Asian's vision to become a
mid-tier copper and gold producer
Anglo Asian Mining plc ("Anglo Asian" or the "Company"), an
AIM-listed gold, copper and silver producer operating in Azerbaijan
has signed 'Heads of Terms' (the "Agreement") with the Government
of Azerbaijan (the "Government") which awards the Company three new
concessions with a combined area of 882 square kilometres. The new
concessions will be immediately effective following ratification by
the Parliament of the Republic of Azerbaijan. The Agreement is a
transformational milestone in the history of the Company with the
Garadagh porphyry deposit alone containing over 300,000 tonnes of
copper with an in-situ value of over $3.0 billion at current
prices. This acquisition underpins the Company's vision of becoming
a mid-tier gold and copper miner.
Prior to negotiation of the Agreement, the Company undertook a
detailed review of its existing assets and their surrounding
regions which identified the new concessions with high potential
that contain copper resources and reserves in quantities previously
unavailable to the Company. The new concessions also have
considerable synergies and geographical proximity with the
Company's existing mining properties. The Company is currently
evaluating how best to exploit the economically mineable copper
resources contained within the new concessions.
Two of the new concessions border the existing Gedabek and Gosha
Contract Areas. They contain the large-scale Garadagh porphyry
deposit and the adjacent Xarxar copper deposit and assessment of
these valuable assets will start immediately. A comprehensive
exploration programme to prepare JORC compliant mineral resource
and ore reserve estimates will commence after ratification of the
new concessions . Development will follow the finalisation of the
ore reserve estimates and the Company anticipates ore will be
extracted by open pit mining.
The third new concession area is called Demirli and is adjacent
to the Kyzlbulag Contract Area in the Karabakh economic region. The
Demirli concession contains the Demirli copper-molybdenum deposit.
According to an unsubstantiated report in January 2016, the deposit
contained an estimated 275,000 tonnes of copper and 3,200 tonnes of
molybdenum. Further details of the report are available on the
Company's website at
https://www.angloasianmining.com/operations/new-concessions/ .
As part of the Agreement, the Company will relinquish its rights
to the Soutely mine in the Kalbajar district. This follows the
Company's assessment of Soutely's security risks and the
significant capital expenditure required to develop the mine over
the longer timeframe. However, the Company is in discussion with
the Government to obtain alternative exploration territory in the
Kalbajar district.
The three new concessions will be incorporated into the
Company's existing Production Sharing Agreement ("PSA") without
payment of any acquisition consideration. The changes to the PSA
are subject to, and conditional upon, ratification by the
Parliament of the Republic of Azerbaijan.
Anglo Asian CEO Reza Vaziri commented :
"The recent cessation of hostilities with Armenia has presented
an opportunity for Anglo Asian to develop its remaining contract
areas, granted in 1998 (when its PSA was ratified), and to
significantly accelerate its growth strategy towards becoming a
mid-tier gold and copper producer. Following extensive
negotiations, we are very pleased to have secured two additional
highly strategic mining properties immediately adjacent to the
north of the Gedabek contract area. Together with the new Demirli
mining property, they ensure the Company is now in an excellent
position to generate long-term sustainable growth with a greatly
increased resource and reserve base with outstanding exploration
potential.
"We highly value our long-standing collaboration and partnership
with the Azerbaijan government and appreciate their flexibility in
granting us these exciting new concessions, which recognises Anglo
Asian's successful track record of developing assets in the region
for the benefit of all stakeholders ."
Further de tails
Maps of the three new concessions have been published today on
the Company's website and are available at
https://wp-angloasianmining-2020.s3.eu-west-2.amazonaws.com/media/2021/09/28165525/AAM-New-Maps.pdf
.
-- Following ratification of the amendments to the PSA, the
Company will have eight concessions in Azerbaijan with a total area
of 2,544 square kilometres.
-- Two new concessions ("Garadagh" and "Xarxar") will be granted
which will infill 808 square kilometres of territory between the
current Gedabek and Gosha Contract Areas to create one continuous
area of 1,408 square kilometres containing the four concessions.
The territory will include the Garadagh and Xarxar deposits which
are situated 4.0 and 1.5 kilometres respectively from the northern
boundary of the Gedabek Contract Area.
o Garadagh contains 168,000 and 150,700 tonnes of copper in
Soviet resource classifications C1 and C2 respectively totalling
318,700 tonnes (see Appendix One) with an average grade of 0.64 per
cent. copper.
o The nearby Xarxar deposit shows significant potential as it is
likely part of the same mineral system.
-- The third new concession ("Demirli") is adjacent to the
existing Kyzlbulag Contract Area in the Karabakh economic region,
which will expand the area under concession to the northeast. The
new Demirli concession contains the Demirli mining property.
-- The Company's rights over the three new concessions will
commence immediately after their incorporation into the Company's
existing PSA.
-- The PSA in respect of the Kyzlbulag and Vejnaly Contract
Areas will be "reset" to year zero upon notification of access.
-- The Government will use all reasonable endeavours to grant
physical access to the Kyzlbulag and Demirli contract areas.
-- The rights to the Soutely mining property have been
relinquished due to ongoing security concerns, the impracticality
of operating a mine straddling the border with Armenia, the high
level of risk developing the mine and an absence of infrastructure
on the Azerbaijan side of the border. The timing of any access to
the area is also unknown.
The incorporation of the new concessions into the PSA will
require the ratification of the Parliament of the Republic of
Azerbaijan. The Company and the Government anticipates this will be
completed in a few months. Shareholders should note that there is
no guarantee that the changes to the PSA will receive Parliamentary
ratification.
Anglo Asian Vice-President, Stephen Westhead commented:
"We are very excited about the acquisition of these new
territories and the significant geographical and operational
synergies they bring. In regard to Garadagh and Xarxar, we have
considerable expertise and understanding of the area after
extensive exploration and mining around Gedabek for many years.
These new concessions, which have previously had some exploration,
represent great upside potential for Anglo Asian in terms of
additional resources, with Garadagh alone containing a reported
318,000 tonnes of copper. In addition to the known deposits and
mines, significant exploration upside exists at both the new areas
based on historical exploration information and the more recent
ZTEM and satellite interpretation work by the Company.
"The substantial volumes of copper within the Garadagh and
Demirli deposits significantly strengthen our copper inventory and
future production. Copper is playing a vital role for global
economies in transitioning to more sustainable practices. The
long-term supply constraints that the market faces support both the
metal pricing and this transformational opportunity for Anglo
Asian. The increasing focus on copper will support the sustainable
growth and continued income generation for the Company and its
shareholders.
"I look forward to sharing further details of these new mining
properties with shareholders as they become available."
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.
For further information please contact:
Tel: +994 12 596
Reza Vaziri Anglo Asian Mining plc 3350
Tel: +994 502 910
Bill Morgan Anglo Asian Mining plc 400
--------------------------- ---------------------
Tel: +994 502 916
Stephen Westhead Anglo Asian Mining plc 894
--------------------------- ---------------------
Ewan Leggat SP Angel Corporate Finance Tel: +44 (0) 20 3470
Adam Cowl LLP 0470
Nominated Adviser and
Broker
--------------------------- ---------------------
Charlie Jack Hudson Sandler Tel: +44(0) 20 7796
Elfie Kent 4133
--------------------------- ---------------------
Notes to Editors:
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 produced 67,249 gold
equivalent ounces ("GEOs") for the year ended 31 December 2020. The
Company has a production target for the year to 31 December 2021 of
48,000 ounces to 54,000 ounces of gold and 2,500 tonnes to 2,800
tonnes of copper. This total production target expressed as gold
equivalent ounces ("GEOs") at budgeted prices is between 64,000
GEOs and 72,000 GEOs.
https://www.angloasianmining.com/
Operational review
2020 was a very challenging year for Anglo Asian. In addition to
the global COVID-19 pandemic, the Company had to cope with the
conflict between Azerbaijan and Armenia which resulted in the
return of control of the Occupied Territories to Azerbaijan. Over
the past 25 years, Anglo Asian has focused its efforts on the three
Contract Areas in its PSA which are located in stable and peaceful
areas of Azerbaijan, namely Gedabek, Gosha and Ordubad. The Company
now believes that access to the newly liberated regions that
contain its other contract areas will soon be opened. This puts the
Company in a position where it wants to develop these assets, which
had in the past been inaccessible, within a reasonable
timeframe.
In view of these new opportunities, the Company undertook an
operational review to assess development opportunities under its
existing PSA and to identify prospective new areas. The review
carefully examined the perceived size of deposits, location,
access, security issues, vulnerability to new conflicts, the impact
of logistical issues, capital requirements and the projected time
to achieve production for each current property, or potential new
property.
Garadagh and Xarxar
Garadagh and Xarxar are situated 4.0 and 1.5 kilometres
respectively from the northern boundary of the Gedabek Contract
Area. The acquisition of these mineral deposits through the
granting of two new concessions will infill the territory between
Gedabek and Gosha to create a contiguous area totalling 1,408
square kilometres containing the four concessions. It will include
areas to the north, northeast and west of the current Gedabek
Contract Area, connecting the Gedabek and Gosha Contract Areas. The
PSA for the new concessions will become operative on the effective
date of incorporating the two new concessions into the Company's
PSA. It is expected by the Company and the Government that
Parliamentary ratification for the incorporation process will be
completed in a few months. Maps of the two new concessions can be
accessed on the Company's website at the following
https://wp-angloasianmining-2020.s3.eu-west-2.amazonaws.com/media/2021/09/28165525/AAM-New-Maps.pdf
.
The Avshancli and Gilar discoveries are situated close to the
northern boundary of the existing Gedabek Contract Area. Our
geological exploration of Avshancli and Gilar indicates that these
discoveries trend to the north towards Xarxar. The extension of the
exploration territory to the north will therefore enable these
discoveries to be fully incorporated into the Company's expansion
plans. Given the close proximity of the Gilar, Avshancli, Xarxar
and Garadagh deposits, which are all situated within a ten square
kilometre region, coordinated development across the properties
will be advantageous as the Company invests to exploit these
substantial resources.
Kyzlbulag and the new Demirli concession
The Kyzlbulag Contract Area in the Karabakh economic region
contains several mines and has excellent potential for exploration,
as indicated by the presence of many mineral deposits and known
targets in the region. The new Demirli concession contains the
Demirli mining property. There are indications that up to 35,000
ounces of gold per year were extracted from the Kyzlbulag
copper-gold mine, before the mine was closed several years ago,
indicating the presence of a gold mineralising system.
Russian peacekeepers are currently present in the area ensuring
the region is safe. The Government will use its all reasonable
endeavours to ensure that the Company has physical access to the
region to undertake mineral exploration.
The new Demirli concession is 74 square kilometres and extends
by about 10 kilometres to the northeast from the Kyzlbulag Contract
Area. A map of the new concession can be accessed on the Company's
website at the following
https://wp-angloasianmining-2020.s3.eu-west-2.amazonaws.com/media/2021/09/28165525/AAM-New-Maps.pdf
.
Vejnaly
The Vejnaly mine, in southwest Azerbaijan, was illegally
exploited for many years. With the cessation of hostilities and
access to the mine now possible, Anglo Asian has been able to visit
the Vejnaly Contract Area which is part of the Company's original
PSA that was ratified in 1998. The Company hopes to begin
additional exploration and processing of some ore from Vejnaly
before the end of 2021.
Kalbajar district and Soutely mine
The Soutely mine is located in the Kalbajar district, in an area
which is regarded by the Company as a significant and on-going
security risk, due to its proximity to the border with Armenia. It
is likely thousands of land mines are still to be removed or
destroyed, and most of the roads and infrastructure in the region
have been damaged. The region is also very mountainous. While the
Soutely mine remains a substantial resource, it straddles the
Armenian border with operations still being carried out in the part
of the mine situated in Armenia. S ecurity issues continue in the
area and Anglo Asian could not guarantee the safety and security of
its workers under these circumstances.
All of the existing infrastructure for the Soutely mine,
including the electricity supply, rail access, and processing
facilities are located within Armenia. This includes the processing
plant which is 200 kilometres from the mine in Ararat, Armenia. Ore
is transported by rail to this facility for processing. The Company
estimates it would cost a minimum of between $200 million to $300
million to build the infrastructure in Azerbaijan required to
operate the mine.
Considering the security risks and the large infrastructure and
capital requirements to develop the mine, the opportunity at
Soutely no longer appears attractive to the Company when considered
against the potential to develop its other concessions which will
be readily accessible to the Company. The timing of access to the
area is also uncertain. The Company has therefore concluded after
much deliberation that it is not feasible to exploit the mine in
the foreseeable future and has decided to relinquish its rights
under the PSA to the Soutely mining property, in return for the new
development opportunities provided by the Agreement that it
believes are far more favourable.
The Company is, nevertheless, keen to explore in the Kalbajar
and adjoining regions when conditions permit. The Agreement
contains provisions that the Company and the Government will agree
in future in which areas of Kalbajar the Company can explore and
potentially develop.
Access to new concessions
Access to the new concessions will be as follows:
o Garadagh and Xarxar - upon incorporation of the new
concessions into the PSA
o Demirli - the Government will use all reasonable endeavours to
grant access as soon as possible following incorporation of the
concession into the PSA.
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,
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 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.
**S**
APPIX ONE
Soviet resources of the Garadagh deposit at 1 January 1992
Copper content
Category C1 Category C2 Total C1 and
C2
------------- ------------
Millions of
Ore tonnes 25.35 23.69 49.04
------------- ------------ ------------ -------------
Thousands
Copper content of tonnes 168.0 150.7 318.7
------------- ------------ ------------ -------------
Grade Per cent. 0.65 0.64 0.64
------------- ------------ ------------ -------------
Data extracted from the report of the Geological Committee of
the Azerbaijan Republic - Small Caucasian geological search
expedition titled "Report on the initial results of exploration of
porphyry copper ore in the central part of Garadagh for 1983-92"
dated: Baku 1992.
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