Anglo Asian Mining : Interim results 2021

Anglo Asian Mining plc / Ticker: AAZ / Index: AIM / Sector: Mining

23 September 2021

Final

Anglo Asian Mining plc

Interim Results for the six-months to 30 June 2021

FY 2021 Production Guidance maintained

Interim Dividend for 2021 of US 4.5 cents per ordinary share

Anglo Asian Mining plc ("Anglo Asian", the "Company" or the "Group"), the AIM-listed copper, gold, and silver producer in Azerbaijan, is pleased to announce its interim results for the six- month period ended 30 June 2021 ("H1 2021").1

The Company also announces its 2021 interim dividend of US 4.5 cents per ordinary share payable on 4 November 2021 to shareholders at the record date of 8 October 2021.

Financial highlights

• Total revenues in H1 2021 of $43.5 million (H1 2020: $45.8 million)
• Profit before taxation in H1 2021 of $5.9 million (H1 2020: $11.8 million)
• Free cash flow in H1 2021 was a net outflow of $0.4 million (H1 2020: inflow of $13.4 million); forecast free cash flow for FY 2021 is between $10 million to $15 million
• Interim dividend declared for 2021 of US 4.5 cents per ordinary share
• Cash at 30 June 2021 of $36.6 million (31 December 2020: $38.8 million) and the Company remains debt free

Operational highlights

• Total reportable production in H1 2021 of 32,171 gold equivalent ounces ("GEOs") (H1

2020: 32,501 GEOs)

• o Gold production totalled 24,249 ounces (H1 2020: 27,922 ounces)

  o Copper production totalled 1,333 tonnes (H1 2020: 1,207 tonnes)

  o Silver production totalled 78,981 ounces (H1 2020: 58,529 ounces)

• Gold bullion sales in H1 2021 of 19,582 ounces (H1 2020: 23,979 ounces) completed at
  an average price of $1,776 per ounce (H1 2020: $1,649 per ounce)
• All-insustaining cost ("AISC") of gold production in H1 2021 of $848 per ounce (H1 2020: $743 per ounce) due to the fixed cost impact of lower production and increased consumption and prices of certain consumables including diesel and reagents
• No major environmental incidents or significant safety incidents during the period
• FY 2021 Production guidance of between 64,000 to 72,000 GEOs remains unchanged

1 Note that all references to "$" and "cents" are to United States dollars and cents, "€" are to European Euros and "£" and "pence" are to Pounds Sterling.

• The Company is in negotiations with the Government of Azerbaijan regarding its portfolio of contract areas in the country and will provide an update to shareholders as soon as any binding agreement is reached

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014, which was incorporated into UK law by the European Union (Withdrawal) Act 2018, until the release of this announcement.

For further information please contact:

Reza Vaziri	Anglo Asian Mining plc	Tel: [phone]
Bill Morgan	Anglo Asian Mining plc	Tel: [phone]
Stephen Westhead	Anglo Asian Mining plc	Tel: [phone]
Ewan Leggat	SP Angel Corporate Finance LLP	Tel: [phone]
Adam Cowl	Nominated Adviser and Broker
Charlie Jack	Hudson Sandler	Tel: [phone]
Elfie Kent

A presentation on the Company's H1 2021 financial results will be available later today on the Anglo Asian website: https://www.angloasianmining.com

Chairman's Statement

Dear Shareholders

It gives me great pleasure to present our interim report for 2021. Despite inflationary headwinds, the Company has continued to deliver with production levels in line with our expectations. In view of our current performance and expected improved cash generation in the second half of the year, the board is declaring an interim dividend of US 4.5 cents per ordinary share.

We continue to see compelling opportunities for growth and for achieving our ambition to become a mid-tier producer. In April, we were also highly encouraged to receive governmental approval for the first of two five-year extensions of the production sharing agreement for our Gedabek contract area, which will allow us to continue expanding our operations in Azerbaijan. We also continue to make excellent progress with our exploration programme at Gedabek. In particular, the completion of the maiden JORC Mineral Resource estimate for Zafar is an important development that will underpin our future long-term production, with significant potential for operational and geographical synergies with our current facilities.

The Company has reviewed its current concessions and is in negotiations with the Government of Azerbaijan regarding its portfolio of contract areas in the country. As soon as any binding agreement has been reached, we will update shareholders accordingly.

We continue to highly value our long-standing collaboration and partnership with the Government of Azerbaijan and were encouraged by the easing of the COVID-19 restrictions in Azerbaijan. Together with reduced restrictions internationally, the Company is now seeing very little impact on its operations of the COVID-19 pandemic.

Our annual general meeting ("AGM") for 2021 took place as a "closed" meeting with only the necessary quorum of two shareholders due to the COVID-19 restrictions. Shareholders were invited to submit written questions to the board prior to the AGM and responses to all questions were published on the Company's website. The directors are very much looking forward to meeting shareholders in person at the AGM in 2022.

The directors remain committed to engaging with all shareholders, prospective investors and other stakeholders through face-to-face meetings whenever possible. The directors are very aware that the COVID-19 pandemic has severely curtailed these activities, and we very much look forward to resuming them once the situation permits.

We reiterate our full year production guidance of between 64,000 to 72,000 gold equivalent ounces. We are making encouraging progress with our exploration programme and expect to complete the final mineral resource estimate for Zafar by the end of 2021 or early 2022, while we also continue to assess other high-priority ZTEM targets. I look forward to providing a further update on our progress at the year end.

I would like to take this opportunity to thank all Anglo Asian employees, our partners and the Government of Azerbaijan for their continued partnership in these extraordinary times. I also wish to sincerely thank our shareholders for their ongoing support.

Khosrow Zamani

Non-executive Chairman

22 September 2021

Chief Executive Review

I am pleased to present the results of our half year performance. The Company's overall profitability in the first half of 2021 reduced compared to the previous year, however results were in line with expectations and we anticipate an improved financial performance in the second half of 2021. Our financial position remains robust and the board has recommended an interim dividend for 2021 of US 4.5 cents per ordinary share.

Operational review

This year has seen the easing of most COVID-19 restrictions that had placed constraints on our business both in Azerbaijan and elsewhere, and the Gedabek site now operates normally. We are now regularly shipping doré to Switzerland by scheduled airflights and our refiners are in full operation. There are no restrictions on the movement of employees and staff are now able freely to rotate to and from the Gedabek site.

A total of 32,171 gold equivalent ounces ("GEOs") were produced in the six months to 30 June 2021 compared to 32,501 GEOs in H1 2020. Copper production increased to 1,333 tonnes from 1,207 tonnes and gold production was 24,249 ounces compared to 27,922 ounces in H1 2020. The production profile changed in H1 2021 as only sulphide ore containing copper was processed, since the Ugur open pit was exhausted in late 2020. This change in the composition of the ore feed increased copper production, especially from the SART plant, but reduced gold production. Previously heaped leached ore was also blended with run of mine ('ROM') ore to reduce the hardness of the feedstock to the agitation leaching plant.

An ore sorter is currently being commissioned at Gedabek. It can remove waste rock particles from an ore using various discriminating techniques such as X-Ray diffraction, thus increasing the head grade of the feed to the processing plant. A potential site has been identified for a new tailings dam and design for the new tailings dam will commence later this year. The Company is also draining a large fresh-water pond at Gedabek, which is no longer required as the Company can now purify water in its water treatment plant. The reclaimed land will provide considerable additional space for expanding heap leaching.

Financial results

The Company's financial performance in H1 2021 was in line with expectations with revenues of $43.5 million compared to $45.8 million in H1 2020, as lower sales of gold bullion were partially offset by higher sales of copper concentrate. Profit before tax in H1 2021 decreased to $5.9 million from $11.8 million in H1 2020 reflecting an increase in the all-in sustaining cost ("AISC") of production at $848 per ounce compared to $743 in H1 2020. The Company experienced cost inflation in H1 2021 for many of its consumables, especially imported reagents. The price of diesel fuel in Azerbaijan also increased in January 2021 by 33.3 per cent. to US 47 cents per litre, adding approximately $0.5 million to the costs for H1 2021. The cyanide consumption of the agitation leaching plant also increased significantly due to the change in production profile, processing only sulphide ores containing copper.

Revenues continued to be subject to an effective royalty of 12.75 per cent. in H1 2021. The Company anticipates that this same royalty rate will continue until at least 2023 and further details are set out in the financial review below.

The Company continues not to hedge gold sales, although the policy remains under constant review. Selling at spot prices in H1 2021 enabled the Company to achieve an average selling price of $1,776 per ounce (H1 2020: $1,649 per ounce) for its gold bullion.

The Company's balance sheet remains strong, despite the reduction in cash generation. Cash flow from operations in H1 2021 was $14.0 million compared to $21.5 million in H1 2020 and the Company ended the period with $36.6 million of cash and no debt. The Company's free cash flow was a usage of $0.4 million. This arose due a combination of cost increases, increased tax payments and increases in working capital. However, the Company forecasts that free cash flow for the full year to 31 December 2021 will be in the range of $10 million to $15 million.

The Board has recommended an interim dividend for 2021 of US 4.5 cents per ordinary share payable to shareholders that are on the share register at the record date of 8 October 2021.

Mineral resources and exploration

The Company continues its extensive exploration programme at Gedabek. This programme focused on Zafar in H1 2021 and the Company was very pleased to recently publish Zafar's maiden mineral resource estimation. This resource comprises 8.47 million tonnes of mineralisation with a metal content of 51,000 tonnes of copper, 82,000 ounces of gold and 40,000 tonnes of zinc. Substantial exploration continues to be carried out at the Zafar deposit with the aim of producing its maiden ore reserve estimation in early 2022. We were also encouraged that the first of the two five-year permitted extensions of the production sharing agreement for Gedabek was granted during the period.

The Company continues its exploration at Zafar and other targets at Gedabek including Avshancli and Gilar. There was no geological field work carried out at Ordubad in H1 2021 as there was no access due to COVID-19 travel restrictions. There was also no geological field work carried out at Gosha whilst drill planning was carried out. Drilling at Gosha has recommenced in H2 2021 focusing on near mine exploration of the existing Gosha underground mine.

Reza Vaziri

President and Chief Executive Officer

22 September 2021

Dividend

An interim dividend, in respect of the year ending 31 December 2021, of US 4.5 cents per ordinary share will be paid gross on 4 November 2021 to shareholders that are on the shareholders record at the record date of 8 October 2021. The shares will go ex-dividend on