Azerbaijan took control over the Zangilan District containing Anglo Asian Mining’s Vejnaly Contract Area

Anglo Asian Mining plc (“Anglo Asian” or the “Company”), the AIM listed gold, copper and silver producer, announces an update on the conflict with Armenia and the liberation of the Zangilan district of Azerbaijan, which contains the Company’s Vejnaly contact area (“Vejnaly”). This district forms part of the territory of Azerbaijan which has been occupied by Armenia since 1994 in defiance of the United Nations Security Council resolutions 822, 853, 874 and 884.

On 22 October 2020, the Ministry of Ecology and Natural Resources of Azerbaijan announced that the Zangilan district is now under the control of Azerbaijan. The announcement (in Azeri) is available at http://eco.gov.az/az/nazirlik/xeber?newsID=11555. An English translation of the announcement is available at http://www.rns-pdf.londonstockexchange.com/rns/2554D_1-2020-10-26.pdf.

The Zangilan district is a mineral-rich district in the south west of Azerbaijan. Under the terms of the Company’s existing Production Sharing Agreement (“PSA”), the Company has been granted the right to exploit Vejnaly, which is close to the villages of Amirkhanly and Aghband. The contract area covers approximately 300 square kilometres and contains the Vejnaly deposit which, according to the Soviet Classification, contains 6.5 tonnes of gold (C1 + C2) and 2.3 tonnes of gold (P1). A map showing the location of the Vejnaly deposit is available at http://www.rns-pdf.londonstockexchange.com/rns/2554D_2-2020-10-26.pdf and its co-ordinates at 
http://www.rns-pdf.londonstockexchange.com/rns/2554D_3-2020-10-26.pdf.

Vejnaly is held under the Company’s existing PSA. However, the PSA will only commence in respect of Vejnaly 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 contract areas in the occupied territories. 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.

There has been exploitation of the natural resources in the Zangilan district during the Armenian occupation and conflicting reports on whether minimal mining has been carried out at Vejanly. However, the Company’s best information is that the Vejnaly deposit has had limited exploitation. It is the intention of the Government of Azerbaijan to thoroughly inspect and assess the mineral resources in the area.

The Company welcomes these developments and is in close contact with the Government of Azerbaijan regarding co-operation on the future development of the Zangilan district. However, the timeline for any investigation and commercial exploitation of Vejnaly is unknown as it depends, inter alia, upon safe access to the Zangilan district and security of the contract area. However, once secure, the Company plans to immediately start work at Vejnaly. The Company will update its shareholders with further developments.

The Company has two other contract areas in the occupied territories, Soutely and Gyzilbulakh, see http://www.rns-pdf.londonstockexchange.com/rns/2554D_2-2020-10-26.pdf. The Company is monitoring developments regarding these properties and will update shareholders accordingly.

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. 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 which is currently being revised. 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. It has recently announced that it will enter into 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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