The ramp-up of Anglo Asian Mining’s (LON:AAZ) flotation plant, at its Gedabek gold mine in Azerbaijan, is crucial for the company, says SP Angel.
Anglo Asian will use the plant to process its own ore, helping it to avoid the costs of shipping the ore to third party processors.
SP Angel said the key aspect will be to cut unit costs, which will lead to a “significant step up in underlying earnings [EBITDA]”.
The broker said: "Establishing commercial production from the flotation circuit is a crucial step in ensuring the company is on a sustainable financial and operational footing."
The so-called concentrate from the plant could help Anglo to raise annual gold equivalent output and monetise available some 102,000 ounces contained in reserves.
Concentrate revenues are forecast to surge to 33% of total sales in 2016 and account for 80% of sales after the available agitation leaching treatable ore is depleted in 2018.
EBITDA is expected to come in at US$35.1mln next year, boosted by lower costs due to a ramp-up in production and reduced costs at its leaching plant.
Overall, the broker recommends a ‘hold’ pending the operational and financial results of the plant ramp-up.