Foreign gold producer in Azerbaijan may develop fields in Zangilan

Anglo Asian Mining plc (Anglo Asian or the Company), the AIM-listed gold, copper and silver producer, announces an update on the conflict with Armenia and the liberation of the Zangilan district of Azerbaijan, which contains the Company's Vejnaly contact area (Vejnaly), Report informs.

The Zangilan district is a mineral-rich district in the southwest of Azerbaijan. Under the terms of the Company's existing Production Sharing Agreement (PSA), the Company has been granted the right to exploit Vejnaly, which is close to the villages of Amirkhanly and Aghband. The contract area covers approximately 300 square kilometers and contains the Vejnaly deposit, according to the Soviet Classification, which includes 6.5 tonnes of gold (C1 + C2) and 2.3 tonnes of gold (P1).

However, the PSA will only commence in respect of Vejnaly upon notification by the Government of Azerbaijan to the Company of the cessation of all hostilities and that it is safe to access the district. Therefore, this notification will "reset" the PSA to year zero for contract areas in the occupied territories. Accordingly, the Company then has the right to explore the contract area for up to five years and then develop and produce for 15 years with two five-year extensions allowed.

There has been exploitation of the natural resources in the Zangilan district during the Armenian occupation and conflicting reports on whether minimal mining has been carried out at Vejanly.

However, the Company's best information is that the Vejnaly deposit has had limited exploitation: "The Government of Azerbaijan intends to inspect and assess the mineral resources in the area thoroughly. The Company welcomes these developments and is in close contact with the Government of Azerbaijan regarding co-operation on the future development of the Zangilan district. However, the timeline for any investigation and commercial exploitation of Vejnaly is unknown as it depends, among other things, upon safe access to the Zangilan district and security of the contract area."

Nevertheless, once secure, the Company plans to start work at Vejnaly immediately.

The Company has two other contract areas in the occupied territories, Soutely and Kyzlbulag. The Company is monitoring developments regarding these properties.

Anglo-Asian Mining is engaged in production in Azerbaijan under the PSA signed on August 21, 1997. Azerbaijan's share in the agreement is 51%, Anglo-Asian Mining - 49%. The first gold production (in the Gadabay field) began in 2009.

Gadabay is an open-pit deposit with integrated mines. The Company is also engaged in production at the Gosha underground mine, 50 km from the Gadir and Gadabay fields, and the newly discovered Ugur field.