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Azerbaijan sells gold for $977 an ounce in August

17 September 2009 15:51 (UTC +04:00)

Baku. Rashad Suleymanov, Elmin Ibrahimov â€“ APA-Economics. Anglo Asian Mining PLC (AAZ.LN), an AIM listed emerging gold producer, said Thursday that it produced 1,409 ounces, or oz, and sold 1,229 oz of gold at its Gedabek gold/copper mine in Azerbaijan during August, with gold sales completed at an average of $977, ahead of the Company’s forecast projections.

Additionally, 700 oz Gold has been produced from 1-8 September 2009 and has now been shipped to the refinery where 546 oz gold has been sold. The Company is now projected to produce 2,200 oz of Gold for the month ending 30 September 2009 which is broadly inline with managementâ€™s expectations. However, due to start-up problems at the processing facility, including the operational consistency of the secondary and tertiary crushers and issues with the leach pad, October 2009 production forecasts of 3,300 oz of gold may be affected.

During August 2009, 34,000 tonnes of dry ore with an average gold content of 4 g/t was crushed and transferred to the leach pad, which was below the forecast of 50,000 tonnes at 3g/t. The Company expect to gradually ramp this up to 60,000 tonnes by November 2009 and will seek to make further increases during 2010.

To deliver lower operational costs, improve the plantâ€™s performance and attain production targets of 4,000 oz of Au per month and circa 50,000 oz of Au for the first 12 months of operations, the Company has put a number of initiatives in place. These include the purchase of two cone crushers complete with spare parts, which the Company believes will have significantly superior performance levels than the existing crushers. The two new crushers are expected to be operational by the end of September 2009. Additionally, the stacker is being retrofitted with upgraded key mechanical parts. The retrofitting is due to be completed by mid-October 2009, which will further raise the plantâ€™s operational performance.
Anglo Asian is also planning longer-term plant modifications and improvements and is currently in discussions with various major crusher/stacker suppliers in the USA and Europe with a view to expanding production and improving efficiencies. Any future equipment modifications will be installed in parallel to the existing ore handling system.
During the initial development of the mine, it has become evident that in a number of areas the ore has higher grades than forecast by the original ore body model and there are also extensions beyond the predicted final pit boundaries. In fact, the ore which is currently being mined and processed, which to date amounts to 150,000 tonnes at a grade of 3 g/t, was not included in the original reserve estimations. In order to help clarify the situation, management enlisted the help of SGS Mineral Services (â€˜SGSâ€™) and, at the end of August 2009, a consultant from SGS visited the mine to review Gedebekâ€™s geology and existing drill logs. Subsequently, a re-modelling and a geometallurgical study have been commissioned to create a more accurate ore body model of the Gedabek deposit. The study is due to commence in the first week of October 2009 and it is anticipated that this will result in improved ore reserve estimations and overall gold recoveries in the long term.
As previously stated in the Companyâ€™s final results statement announced on 23 June 2009 and in a corporate update on 4 August 2009, should operating costs increase significantly, ramp-up be delayed further, or revenues otherwise fall short of expectations, there may be insufficient cash flows for the Company to sustain its day to day operations without seeking and relying on further financing. Accordingly, the Company continues to monitor the situation carefully and is working on various contingency plans, including seeking major shareholder support if cash flow is at insufficient levels.
In terms of financing, as previously announced on 4 August 2009, the Company signed a US$1 million unsecured loan agreement with its CEO, Mr. Reza Vaziri, to provide additional working capital. To date Anglo Asian has drawn down $450,000 of the $US1 million loan agreement. Additionally, Mr. Vaziri is owed a further US$434,000 outstanding from the previous unsecured interest free loan agreement with the Company announced on 19 March 2009.
Anglo Asian CEO Reza Vaziri said, "Naturally we were delighted to have moved into production with the opening of the Gedabek gold/copper mine earlier this year; however, the initial start-up of the mine has not been without its difficulties. With this in mind, the next few months will require the managementâ€™s channelled focus, time and dedication to manage our working capital position and achieve full ramp-up of production at Gedabek, to realise the mineâ€™s potential and profit from the opportunity of being the first gold producer in Azerbaijan."