10th April 2008
ANGLO ASIAN MINING PLC
('Anglo Asian' or 'the Company')
Gedabek Project and Financing Update
Anglo Asian Mining PLC (AIM:AAZ) announces that the International Bank of Azerbaijan ('IBA') has agreed to provide a further US$20 million term loan for its Gedabek project in West Azerbaijan. This is in addition to the existing US$5 million credit facility previously announced.
A loan agreement ('Agreement') has been signed by the IBA, of which the final drafting of full facility documentation is being concluded, incorporating the provision for syndication of a portion of the loan to reduce overall borrowing costs to the Company. The Agreement bears no commitment or front end fee, an all inclusive annual interest rate of 15% is to apply on funds drawn. The term of the Agreement is four years with a two year grace period to repay the loan, $8m is scheduled for repayment in equal quarterly instalments in 2010 and $5m and $7m in March and June 2011 respectively. There is no penalty for early repayment.
The Board is now confident of funding the construction of the Gedabek Project and work has already commenced to prepare the site accordingly. Orders have been placed for major equipment and tenders are in the process of being issued and evaluated for the major work packages.
Capital cost estimates for the Gedabek project remain under revision following sharp increases in the price of steel and heavy equipment hiring costs in Azerbaijan. Once major tenders have been issued and bids received, the Company will be able to better define total financing requirements. Current estimates indicate that the total capital cost for the project, including working capital and contingencies, is unlikely to exceed US$40 million.
After building the construction camp, purchasing various pieces of equipment and making necessary land purchases, current group cash balances remain in excess of $5 million. The Company anticipates that it will therefore require additional funding of $5 to $15 million, over and above the IBA term loan and the existing cash balance, to complete construction and to cover costs of further exploration at both Gedabek and new targets it has identified and corporate overheads. Certain Directors who are major existing shareholders have agreed, in principle, to provide additional funding at their pro-rata shareholding level (approximately 40% of current shares on issue) to support this cash requirement, if and when it is needed.
Production from Gedabek is forecast, by the Company, to exceed 85,000 oz of gold in its first full year of production. The Company is currently revising operating cost estimates for the operation in light of rising prices. However, using the Sulphidation-Acidification-Recycle-Thickening (SART) process, the net cash cost, after by-product credits, is anticipated to be less than US$150 per oz of gold, at current metal prices. The Directors expect that the mine will produce approximately 310,000 ounces of gold over its six year life and provide a strong capital base for on-going developments in the Asian region.
An experienced management team has recently been recruited for the construction phase and is now in place in Azerbaijan. Expatriates with extensive heap leach expertise have been recruited from Kazakhstan and Indonesia to supplement the use of experienced Azeri management and contractors.
Gordon Lewis, CEO, commented: "The Company is excited to have reached this significant milestone and the local community and Azerbaijan government remain highly supportive of the development of Gedabek."
Enquiries
|
Anglo Asian Mining PLC Gordon Lewis, Chief Executive +994 12 499 3350 Richard Round, Finance Director +44 1525 211 988 |
Numis Securities Limited John Harrison +44 20 7260 1000 |
Parkgreen Communications Justine Howarth +44 20 7851 7480 |
Bex Sanders-Hewett
Parkgreen Communications
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