Covid restrictions affecting productivity for Anglo Asian Mining

Azerbaijan-focussed gold, silver and copper producer Anglo Asian Mining reported a $3.2m (£2.53m) increase in cash in its second quarter on Wednesday, to $29.2m.

The AIM-traded firm said 14,819 gold equivalent ounces were produced in the three-month period ended 30 June, calculated using budgeted metal prices, with reportable production at actual metal prices coming in at 14,301 gold equivalent ounces, down from 19,618 ounces year-on-year.

Of that, it said gold production totalled 12,048 ounces, falling from 17,149 ounces, with the lower figure put down to the lower grade of ore processed from the Gedabek open pit, and less ore mined from the Gadir underground mine.

Covid-19 restrictions also had some impact on efficiency at Gedabek, the board reported.

Copper production, meanwhile, increased to 648 tonnes from 448 tonnes in the prior year.

Anglo Asian said gold doré production between 7 May and 22 June was shipped to the refiner, with 90% of its share received before the end of June.

Current 2020 production guidance stood at between 75,000 and 80,000 gold equivalent ounces, with revenue guidance of over $100m at current metal prices remaining unchanged.

The board said “various measures” were being taken to increase production in the second half of the year, including the opening of a new portal with a decline to allow underground mining of high-grade ore beneath the Gedabek open pit from the fourth quarter.

Previously heap-leached ore, with high residual gold grades, was also being recovered from old heaps and reprocessed by agitation leaching.

A new JORC resource and reserves statements would be released by the end of the third quarter, the company said, adding that its Baku office remained open.

“The first half of the year has presented a number of challenges for the company,” said chief executive officer Reza Vaziri.

“However, it is pleasing to note that we have maintained gold shipments and increased our net cash position by $3.2m during the quarter and by $8m since the start of the year.

“The Covid-19 pandemic has had some effect on our operations at Gedabek including our second quarter production.”

Vaziri said the workforce remained “highly committed”, but the restrictions in Azerbaijan had resulted in staff working without rotation continuously at Gedabek since March, with reduced social interaction.

“The constraints placed on obtaining supplies, maintaining equipment and shipping gold have also required extra effort.

“Whilst we are largely overcoming the issues, Gedabek is not yet operating as efficiently as prior to the pandemic.

“The lower gold production than the previous quarter was also a result of lower-than-anticipated gold grades.”

A number of measures were currently ongoing to ensure the company met its production guidance for the year, Vaziri explained, including constructing a new decline to allow underground mining of the high-grade ore below the Gedabek open pit, and the reprocessing by agitation leaching of previously heap-leached ore with residual high gold grades.

“The gold price continues to perform favourably and, in the second quarter, we received an increase of approximately $400 per ounce for gold bullion sales compared to the same period last year.

“With prices expected to remain at these levels, this bodes well for the future financial performance of the company.”

At 1311 BST, shares in Anglo Asian Mining were down 3.31% at 138.75p.