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Anglo Asian beats expectations with record production

Anglo Asian Mining has reported record production numbers for 2015, and looks well set up for 2016
Anglo Asian beats expectations with record production
Moving earth at Gedabek

Fourth quarter production from Anglo Asian Mining’s (LON:AAZ) Gedabek mine in Azerbaijan rang in at 17,390 ounces of gold, 335 tonnes of copper and 17,710 ounces of silver, beating expectations in the City by a small margin and stimulating a small rally in the shares, which rose 2.5% on the news in morning trade.

The numbers round off what was a significant year for the company, as it hit record gold production and successfully installed a small scale flotation plant to improve processing.

Analysts at SP Angel had been expecting quarterly production of around 16,400 ounces of gold and attributed the out-performance to better processing grades and an improvement in recoveries at the agitation leach circuit.

The broker also highlighted that full year production had come in at just over 72,000 ounces, a level 19% higher than that delivered in the previous year.

However, on its own back-of-the-envelope calculations, SP Angel also reckoned that copper output might not be as high next year as had previously been thought.

We’ll have to wait for the company’s next set of financials before the full effects become clear.

But it’s worth noting at this stage that significant improvements had already come through by the time Anglo Asian put out its previous set of financials back in September.

The company reported at the time that cash costs per ounce had dropped from a previous figure of well over US$1,000 to a much more manageable US$736 per ounce.

Given that the gold price now appears to have stabilised in the face of the confusing signals coming out of China and the ongoing political uncertainty relating to Islamic extremism, the economics of Gedabek ought to be secure.

There remains the matter of company debt, an issue which is by no means unique to Anglo Asian, which has been bedevilling the entire mining sector of late.

In fact, Anglo Asian’s overall debt position was reduced by US$3.2mln during 2015 and stood at the end of the year at US$49.2mln.

Specifically, the company’s US$4mln debt to its chief executive Reza Vaziri, has been rolled over for a further six months at no extra cost, and is now due for repayment in early July.

All of which sets up Anglo Asian nicely for 2016, and allows it to continue to establish itself, in the words of Reza Vaziri, “as a leading mid-tier gold producer in Caucasia.”

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January 17 2017

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