Anglo Asian into profit

02/09/2010 Robert Tyerman

Central Asian gold producer Anglo Asian Mining has turned a $2 million (£1.28 million) interim loss into $6.2 million first-half pre-tax profits.

In the six months to June, the AIM-quoted company produced 28,493 oz of gold from the Gedabek mine in Azerbaijan at an average cost of $372 an ounce and sold 24,360 oz at an average price of $1,155 an ounce, with silver sales of $300,000, chalking up first-half turnover of $28.4 million.

Chief executive Reza Vaziri says the company, which has an 87.25 per cent/12.75 per cent production sharing agreement with the government of Azerbaijan lasting until it covers all its forward, carried costs, is now targeting gold production of 60,000 oz for 2010.

Anglo Asian, whose formal estimated resources in 2006 stood at 702,000 oz gold, 37,500 tonnes of copper and 6.1 million oz of silver, all in the comparatively tentative 'indicated' and 'inferred' categories, suggests an imminent report from independent consultant SGS could show a 25 to 30 per cent uplift, together with a shift of significant quantities from the 'indicated' to the more confident 'measured' category.

According to Vaziri, the company, which has received $43.9 million of loan finance from the state-owned International Bank of Azerbaijan, is confident it will have repaid $8.7 million out of production revenues by the end of this year, with the entire sum to be repaid by 2013.

Highlighted by Growth Company Investor at 16p last year, the shares, which had at one point fallen from 2005's 77p float price to a mere 3p, have rallied further to 29.5p, valuing the company at £32.3 million and should move higher still if progress at Gedabek is maintained.