Anglo Asian gold production down in first quarter

Azerbaijan-focussed gold, silver and copper producer Anglo Asian Mining updated the market on production, sales and operations at its Gedabek mining and production contract area in the first quarter on Thursday, reporting gold production of 11,907 ounces, down from 15,867 ounces year-on-year.

The AIM-traded firm said copper production increased 14% for the three months ended 31 March to 638 tonnes, from 559 tonnes a year earlier, while silver production improved slightly to 35,365 ounces from 34,642 ounces.

A total of 15,810 gold equivalent ounces was produced, calculated using budgeted metal prices.

Cash at period end stood at $22.9m, down from $38.8m at the end of December, after the company paid a dividend of $1.7m in the quarter.

The balance of its 2020 corporation tax bill of $6.3m was also paid in the period.

Unsold company inventory as at 31 March was valued at $15.2m, consisting of 5,592 ounces of gold valued at $9.7m and $5.5m worth of copper concentrate.

Anglo Asian said it was forecasting gold production for 2021 of 48,000 to 54,000 ounces, compared to 2020 production of 56,864 ounces.

The board said the lower gold production forecast was due to mining only from its existing Gedabek and Gadir mines in 2021, with no contribution from Ugur, which had now been depleted.

Forecast copper production for the year was for between 2,500 and 2,800 tonnes, compared to 2020 production of 2,591 tonnes, with the forecast assuming no production from the newly-restored contract areas during the year.

The company said it was anticipating total metal production for 2021 of 64,000 to 72,000 gold equivalent ounces, following 2020 production of 67,249 ounces.

“This year we will only be mining from our existing Gedabek open pit and Gedabek and Gadir underground mines,” said chief executive officer Reza Vaziri.

“Gold production is therefore expected to be lower as there will be no contribution from Ugur, which was depleted in 2020.

“However, we are expecting an increase in copper production as we take more ore from the Gedabek open pit.”

Vaziri noted that the first quarter's production and the full-year production guidance reflected that.

“Our successful exploration programme, which has progressed significantly during 2020, is continuing.

“We are looking forward to starting to reap the benefits of this exploration with production next year from Avshancli.”

The drilling results from Zafer continued to be “encouraging”, Vaziri said, and the company had now engaged third party consultants to provide indicative estimates of resources.

“We are also just starting to understand the potential of the newly-restored contract areas.

“A recent visit to the Vejnaly contract area in Zangilan has identified some high grade ore stockpiles and the feasibility of transporting this ore to Gedabek for processing is being evaluated.”

At 1046 BST, shares in Anglo Asian Mining were down 8.06% at 123.2p.