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Anglo Asian Mining expects at least 50% upgrade to Gedabek gold-copper mine’s resource

Anglo Asian Mining (AIM: AAZ) expects to issue a JORC-compliant report shortly which will upgrade the resource at its Gedabek gold-copper mine in Azerbaijan. Today, the company told investors that the initial results of a Phase I Realistic Mineral Resources Model Report indicates upgrades for the measured, indicated and inferred gold, copper and silver metal contents of at least 50%.

"These upgraded numbers are very good news for Anglo Asian and increase our confidence in the rising value of the Gedabek mine”, Anglo Asian chief executive Reza Vaziri said. “The plant is now running well and with the report providing initial indications of a significantly larger resource, we are increasingly confident of achieving our objective of becoming a mid-tier gold and base metal production company in Azerbaijan".

The report re-assesses the data employed in making the JORC Code compliant mineral resources statement provided by SRK in 2006, together with additional drilling information. The company noted that whilst the report has been prepared in accordance with JORC Code, it has yet to be signed-off by a JORC Qualified Person.

A further report, which complies with the JORC Code, is expected within the next four weeks. The Phase I report was produced on behalf of Anglo Asian by SGS Canada Incorporated Geometallurgy Group. The mineral resources in the report was estimated by accessing, reviewing, validating and processing the whole geological and chemical information from 141 exploration diamond and reverse circulation drill-holes and 262 production blast-holes.

SGS’s Phase II will involve infill drilling to increase the reliability of the results obtained from the original drill holes. The work is expected to be completed in late 2010 and it is expected to increase the confidence in the new resource evaluations.

This latest announcement is the second piece of good news from Gedabek this week. Yesterday Anglo Asian reported it has already achieved its full-year gold production target for the mine - three months ahead of schedule.

At Gedabek total gold production has now reached 25,022 oz, exceeding the company’s production target for the mine’s first full year of operation to 30 June 2010. In March, Anglo Asian produced 6,167oz of gold at Gedabek, and achieved a weighted average gold sale price of US$1,111, both up from the previous month. In February, Anglo Asian produced 4,007oz with a weighted average sale price of US$1,090.

Furthermore Anglo Asian also upped its new full-year production forecast to 53,500 oz gold for the ending 31 December 2010, following a switch to calendar year reporting.

Following yesterday’s statement, London-based stockbroker Numis Securities issued a positive note on Anglo Asian, noting that the group appears to have resolved most of the technical problems following the commissioning of Gedabeck and the company has subsequently been ramping up smoothly.

Numis noted that at 53,500oz the full-year forecast is above its own forecast of 43,000oz.

Furthermore, following today’s statement, Numis emphasised that the outlook for Anglo Asian has changed markedly for the better over the last 6 months. The broker also noted that upon the release of the official JORC update, it is likely that any significant increase in estimated reserves will feed through to an increased forecast annual production and/or the total mine life.

Disclosure: The author holds no positions in the company