Gedabek

Production

The Company holds mining and exploration rights for a minimum period of 15 years from 26 February 2007 over the 300 sq km Gedabek Contract Area, which is 55 km from Azerbaijan's second biggest city, Ganja. The area includes Azerbaijan's first operating gold mine as well as a number of exploration targets. Its current JORC compliant resource stands at 791,000 ounces of gold, 49,300 of copper and 7,597,000 ounces of silver for all categories.

Mining activity at Gedabek is reported to have started as long as 2,000 years ago. More recent activity began around 1849 when the Mekhor Brothers, followed by the German Siemens Bros Company, developed and operated a copper mine at Gedabek. At least five large (>100,000 tonne) and numerous smaller sulphide lenses were mined during the period between 1849 and 1917. Mining activity ceased in 1917 with the onset of the Russian Revolution.

Mining activity commenced once more when Anglo Asian began construction of an open pit mine and a conventional heap leach and processing facility for the recovery of gold, copper and silver in 2008. The Company poured its first gold in May 2009, making it the first gold/copper producer in Azerbaijan in modern times. Since that time it has seen production increase steadily as efficiencies of the mine continue to improve. (See table 1 for the summary of gold production at Gedabek).

For the year to 31 December 2010 the Company exceeded its 60,000 oz gold production forecast at Gedabek, producing 67,267 oz with an average cash operating cost of US$358 per oz Au including the Government of Azerbaijan's share and US$412 per oz Au net of the Government of Azerbaijan's share. This positions Gedabek as a low cost producer relative to its peers.

Improving Gedabek's processing capabilities remains a key focus for AIMC as the Company seeks to hit its full year production target for FY2011 of a minimum of 60,000 oz Au. In terms of long-term targets AIMC is aiming to produce in excess of 300,000 ounces of gold in the first six years of Gedabek's production.

Initially the mine is open pit in design. However, if further exploration activities demonstrate the resource increases at depth, in the mid to long term the Company may move to an underground mining operation, utilising some of the existing historical infrastructure and adits.

A Sulphidisation, Acidification, Recycling and Thickening ('SART') plant for the recovery of the copper and silver dissolved in the leach solution is also operating. The copper is recovered in the form of a precipitated copper sulphide concentrate by-product, which also contains silver with commercial value. The plant capacity is 1,800 tonnes of copper concentrate per year, although the amount produced will depend on ore mineralogy and process efficiencies. The total copper concentrate produced in 2010 contained 182.5 tonnes of copper, 1,460 kg (46,940 oz) of silver and 25.9 kg (833 oz) of gold. For FY 2011 the Company is targeting to produce 525 tonnes of copper. (See table 2 for the summary table of quarterly copper/silver/gold production from SART at Gedabek).

Table 1: Summary of gold production at Gedabek

Quarter ended
Gold produced
(including Government of Azerbaijan's share)
(oz)
Weighted average
gold sale price
(US$)
30 September 2010 19,214 1,229
31 December 2010 19,555 1,371
31 March 2011 14,028 1,385
30 June 2011 14,582 1,506
30 September 2011 13,166 1,704


Table 2: Summary of quarterly copper/silver/gold production from SART at Gedabek

Copper
concentrate
produced
(dry tonnes)
Copper
recovered
(tonnes)
Silver
produced
(kg)
Gold
produced
(kg)
Quarter ended 30 September 2010 110 81 648 10.9
Quarter ended 31 December 2010 86 48 380 6.8
Total for year to 31 December 2010 316 183 1,460 25.9
Quarter ended 31 March 2010 175 104 762 2.3
Quarter ended 30 June 2011 258 157 816 1.52
Quarter ended September 2011 290 179 1,409 0.9

 

Exploration

The Company has implemented a defined exploration strategy aimed at increasing Gedabek's resource, proving reserves and in turn extending Gedabek's life of mine which currently stands at six years with a target production in excess of 300,000 oz of gold.

Gedabek's JORC compliant resource currently stands at 791,000 oz of gold, 49,300 tonnes of copper and 7,597,000 oz of silver at cut-off grade of 0.3 g/t Au for all categories.

Phase 2 of the resource development programme is in progress concentrating on boundaries of the existing pit, which aims to increase the confidence of the JORC compliant resource and will add valuable close spaced information for mine planning purposes.