Aim-listed gold, copper and silver producer Anglo Asian Mining has declared an interim dividend of $0.04 apiece for the six months ended June 30, which is 29% higher year-on-year.
The company says it will consider a special dividend in the first quarter of 2021 on the back of ongoing strong cash generation.
Anglo Asian reported profit before tax of $11.8-million for the six months under review, compared with a profit before tax of $10.3-million reported for the prior comparable six months.
The company increased its free cash flow in the first half of the year to $13.4-million, compared with cash flow of $10-million in the first half of last year, and had cash of almost $30-million at the end of the reporting period, as well as no debt.
Anglo Asian produced 32 501 gold-equivalent ounces (GEOs) in the six months under review, which was lower than the 39 905 GEOs produced in the prior comparable six months.
In the first half of the year, gold output totalled 27 922 oz, copper output totalled 1 207 t and silver output totalled 58 529 oz. The company sold 23 979 oz of gold bullion in the reporting period, at an average price of $1 649/oz.
The company’s main operating location is the Gedabek contract area, which is a 300 km2 area in the Lesser Caucasus mountains in western Azerbaijan. Mining at Gedabek had been initially from a main openpit, with a series of interconnected pits, as well as the high-grade Gadir underground mine, which is co-located at the Gedabek site.
The company in 2017 started producing from the Ugur openpit and a second underground mine, Gosha, which are located a few kilometres from Gedabek.
Given Anglo Asian’s lower-than-forecast production for the first half of the year, the company has taken various measures to increase production in the second half of the year to maintain guidance.
These include building a new decline to allow underground mining of the high-grade ore below the Gedabek openpit and the reprocessing by agitation leaching of previously heap-leached ore with high residual gold grades.
Anglo Asian anticipates financial performance to be stronger in the second half of the year owing to increased production and previous metal prices remaining high; the company is targeting production of between 75 000 and 80 000 GEOs.
Anglo Asian continues to make progress on its geological exploration programme, including fast-tracking five new discoveries in the Gedabek area. The company targets production from new mines in 2022, while finalising a new mineral reserve and resource estimate for its existing mines.
Current mineral resource and ore reserves for the company's three mines at Gedabek, together with recent near-mine exploration work, provide confidence of a combined mine life of Anglo Asian's existing mines to at least 2024.
The new mines will be called Avshancli 1 and 3, Gilar, Ugur Deep and Zefer.
The company is also in the process of extending its Gedabek mining licence, which is valid until March 2022, for a further ten years and applying for new additional exploration concessions to be granted.
Meanwhile, the company, in the six months under review, raised its tailings dam wall by 6 m to increase storage capacity by 1.4-million cubic metres. This will give sufficient capacity for the next two years and will be the last raise of the wall as the dam has reached final design height.
Anglo Asian has started identifying sites to build a second tailings dam and is also considering alternative treatment options for its tailings.
Moreover, the company says it has long been its intention to pursue opportunities outside Azerbaijan that complement its existing operations. To this end, the company had reached an agreement with Conroy Gold for a proposed joint venture in Ireland.
Anglo Asian will acquire up to 55% interest in the Longford Down Massif gold project in the country, which is currently wholly owned by Conroy, in exchange for committing to meet certain expenditures.
The Longford licence area covers an area of about 800 km2 in a new “district-scale” 65 km gold trend in north-east Ireland, with gold discoveries already having been made at the Clontibret deposit, which is estimated to contain 517 000 oz of gold.
There is no initial purchase consideration payable for the licences; however, in return for Anglo Asian investing €2-million to explore the properties, the company will acquire 17.5% of the companies holding the licences.
The company’s interest can increase to 25% once it has spent a total €4-million on the licences. This holding will be retained even if Anglo Asian does not explore further, but should the company proceed, it can increase its interest to 55% by progressing a discovery to “construction ready” status.
CFO Bill Morgan tells Mining Weekly that the company decided on this project because it is in a mining-friendly jurisdiction and the project has a lot of potential, while Conroy had been looking for the right funding partner.
He says the company will get drill rigs working on the Clontibret target before the end of the year.