Operations

Gedabek contract area

Gedabek Contract Area

1. Introduction

The Company holds mining and exploration rights for a minimum period of 15 years from 26 February 2007 over the 300 square kilometres Gedabek Contract Area, which is 55 kilometres from Azerbaijan's second biggest city, Ganja. The area includes Azerbaijan's first operating gold mine as well as a number of exploration targets.

Mining activity at Gedabek is reported to have started as long as 2,000 years ago. More recent activity began around 1849 when the Mekhor Brothers, followed by the German Siemens Bros Company, developed and operated a copper mine at Gedabek. At least five large (>100,000 tonne) and numerous smaller sulphide lenses were mined during the period between 1849 and 1917. Mining activity ceased in 1917 with the onset of the Russian Revolution.

Mining activity commenced once more when Anglo Asian began construction of an open pit mine and a conventional heap leach and processing facility for the recovery of gold, copper and silver in 2008. The Company poured its first gold in May 2009, making it the first gold/copper producer in Azerbaijan in modern times. Since that time it has seen steady gold production as efficiencies of the mine continue to improve. In addition, in 2015 the Group commenced production from Gadir, an underground mine co-located at Gedabek.

2. Mining operations

The principal mining operation at Gedabek is conventional open cast mining from several contiguous open pits. Ore is first drilled and blasted and then transported either to a processing facility or to a stockpile for storage. The major mining activities of drilling and blasting and subsequent transportation of ore are carried out by contractors. Table 2 summarises the ore mined from the open pit at Gedabek for the year ended 31 December 2015.

Table 2 – ore mined from the open pit at Gedabek for the year ended 31 December 2015
Quarter ended Ore mined (tonnes) Waste mined
(tonnes)
High Grade Low Grade Sulphide Total
31 March 2015 134,334 257,472 9,410 401,216 1,482,906
30 June 2015 145,132 260,264 58,059 463,455 1,515,311
30 September 2015 154,913 304,726 16,305 475,944 1,484,146
31 December 2015 130,800 300,264 50,492 481,556 1,444,114
Total for the year 565,179 1,122,726 134,266 1,822,171 5,926,477

Ore is also mined at Gedabek from the Gadir underground mine which is situated approximately one kilometre from the main open pit at the Gedabek site. Development of the Gadir mine commenced in 2014 with the construction of a decline and the mine started producing ore in June 2015. Table 3 summarises the ore mined from the Gadir underground mine for the year ended 31 December 2015.

Table 3 – ore mined from the Gadir underground mine for the year ended 31 December 2015
Quarter ended Ore mined (tonnes)
Ore mined (tonnes) Average gold grade (g/t)
30 June 2015 2,116 9.45
30 September 2015 6,945 8.69
31 December 2015 28,819 7.71
Total for the year 37,880 7.98

3. Processing operations

Ore is processed at Gedabek to produce either gold doré (an alloy of gold and silver with small amounts of impurities) or a copper and precious metal concentrate.

Gold doré is produced by cyanide leaching. Initial processing is to leach (i.e. dissolve) the precious metal (and copper) in a cyanide solution. This is done by various methods:

  1. Heap leaching of crushed ore. Crushed ore is heaped into permeable “pads” onto which is sprayed a solution of cyanide. The solution dissolves the metals as it percolates through the ore by gravity and it is then collected.
  2. Heap leaching of run of mine (“ROM”) ore. The process is similar to heap leaching for crushed ore except the ore is not crushed and is heaped into pads as received from the mine (ROM) without further treatment or crushing.
  3. Agitation leaching. Ore is crushed and then processed through a grinding circuit. The finely ground ore is then placed in stirred tanks containing a cyanide solution and the contained metal is dissolved in the solution.

Slurries produced by the above processes with dissolved metal in solution are then transferred to a resin in pulp (“RIP”) plant. A synthetic resin, in the form of small spherical plastic beads designed to absorb gold selectively over copper and silver, is placed in contact with the leach slurry, or “pulp”. After separation from the pulp, the gold-loaded resin is treated with a second solution, which “strips” (i.e. desorbs) the gold, plus the small amounts of absorbed copper and silver, transferring the metals from the resin back into solution. The gold and silver dissolved in this final solution are recovered by electrolysis and are then smelted to produce the doré metal, containing gold and silver.

Copper and precious metal concentrates are produced by two processes, SART processing and flotation.

  1. Sulphidisation, Acidification, Recycling and Thickening (“SART”). The cyanide solution after metal absorption by resin in pulp processing is transferred to the SART plant. The pH of the solution is then changed by the addition of reagents. This recovers the copper from the solution in the form of a precipitated copper sulphide concentrate containing silver and minor amounts of gold.
  2. Flotation. Flotation is carried out in a separate flotation plant. Feedstock is mixed with water and other chemicals including flocculants to produce a slurry called “pulp”. This pulp is processed in flotation cells (tanks). The flotation cells are agitated and air introduced as small bubbles. The sulphide minerals attach to the air bubbles and float to the surface where they form a froth which is collected. This froth is dewatered to form a concentrate containing copper, gold and silver. Feedstock can be either tailings from the agitation leaching plant or freshly crushed and milled ore.

Initially, gold doré was produced at Gedabek by heap leaching crushed ore. Heap leaching is a low capital cost method of production traditionally used by mines when they first move into production. However, heap leaching has limitations with regards to the minimum size of the ore being leached limited to around 25 millimetres. This limitation results in only approximately 60 to 70 per cent. of the gold within the ore being recovered with leaching cycles typically extending up to one year, depending on the detailed composition of the ore.

To increase gold recoveries and production, the Group constructed and commissioned in July 2013 an agitation leaching plant. Compared to heap leaching, agitation leaching can deliver higher recoveries of gold without long leaching cycles. Heap leach pads also require considerable space for their construction and due to the topology of the Gebabek site, this was a constraint.

The agitation leaching plant's initial performance was not as planned due to the mineralogical variation of the ore. Due to very high copper values in the ore, recoveries of gold were not as high as anticipated and the plant's usage of cyanide was higher than planned. Throughout 2014 and 2015, the Group has therefore expended considerable effort in improving the performance of the plant. This has been focused on both increasing metal recoveries to increase production and lowering cyanide consumption to decrease costs.

During the year ended 31 December 2015, ore has been processed by three methods at Gedabek: whole ore heap leaching; crushed ore heap leaching; and agitation leaching. Table 4 shows the amounts of ore and its grade processed at Gedabek for the year ended 31 December 2015.

Table 4 – amount of ore and its grade processed at Gedabek for the year ended 31 December 2015
Quarter ended Amount of ore processed (tonnes) Gold grade of ore processed (g/t)
Heap leach pad (Crushed ore) Heap leach pad (ROM ore) Agitation leaching plant Heap leach pad (Crushed ore) Heap leach pad (ROM ore) Agitation leaching plant
31 Mar 2015 92,586 135,531 136,717 1.47 1.00 3.63
30 Jun 2015 127,510 243,444 141,552 1.50 0.84 3.43
30 Sep 2015 72,817 135,731 150,370 1.43 1.07 3.25
31 Dec 2015 101,086 32,004 148,240 1.48 1.09 3.60
Total for the year 393,999 546,710 576,879 1.47 0.95 3.45

The Group’s experience of processing has shown the ore at Gedabek to be polymetallic containing significant amounts of copper. Initially, the SART processing plant was constructed to produce a copper and precious metal concentrate. However, to further exploit the high copper content of the Group’s ore reserves, the Group commenced construction of a flotation plant in the fourth quarter of 2014 whose function is primarily to produce copper with gold and silver as by-products.

The flotation plant has the flexibility to be configured for various methods of operation. It is able to process the Company’s stockpiles of high copper content ore. It can also treat ore feed to, or tailings from, the agitation leaching plant. In such configurations, the plant is an integral part of the agitation leaching plant.

The flotation plant was commissioned in the fourth quarter of 2015 and is now producing a copper and precious metal concentrate from tailings of the agitation leaching plant. The plant is currently producing at around 75 to 80 per cent, of its design capacity which equates to approximately 1,000 wet tonnes of mineral concentrate per month.

4. Production and sales

For the year ended 31 December 2015, total gold production as doré bars and as a constituent of the copper and precious metal concentrate totalled 72,032 ounces, which was an increase of 11,747 ounces in comparison to the production of 60,285 ounces in the year ended 31 December 2014.

Table 5 summarises the gold and silver produced as doré bars and sales of gold bullion for the year ended 31 December 2015.

Table 5 – gold and silver produced as doré bars and sales of gold bullion for the year ended 31 December 2015
Quarter ended Gold produced (ounces) * Silver produced (ounces) Gold Sales (ounces) ** Gold sales price ($)
31 Mar 2015 17,185 596 17,206 1,214
30 Jun 2015 18,739 900 16,088 1,193
30 Sept 2015 18,158 907 14,871 1,123
31 Dec 2015 17,588 1,858 15,759 1,108
Total for the year 71,670 4,261 63,924 1,161
* Including Government of Azerbaijan’s share.
** Excludes Government of Azerbaijan’s share.

Table 6 summarises the total copper and precious metal production as concentrate from both SART processing and flotation for the year ended 31 December 2015.

Table 6 – total copper and precious metal production as concentrate for the year ended 31 December 2015
Quarter ended Copper (tonnes) Gold (ounces) Silver (ounces)
SART Flotation Total SART Flotation Total SART Flotation Total
31 March 2015 182 - 182 8 - 8 1,354 - 1,354
30 June 2015 236 - 236 6 - 6 3,628 - 3,628
30 September 2015 216 - 216 7 - 7 3,532 - 3,532
31 December 2015 205 130 335 6 335 341 6,589 9,264 15,853
Total for the year 839 130 969 27 335 362 15,103 9,264 24,367

Table 7 summarises the total copper concentrate sales from both SART processing and flotation for the year ended 31 December 2015.

Table 7 – total copper concentrate sales for the year ended 31 December 2015
Quarter ended SART processing Flotation Total
Sales (dmt) $000 Sales (dmt) $000 Sales (dmt) $000
31 March 2015 234 635 - - 234 635
30 June 2015 372 1,021 - - 372 1,021
30 September 2015 279 601 - - 279 601
31 December 2015 425 891 392 630 817 1,521
Total for the year 1,310 3,148 392 630 1,702 3,778

5. Tailings (waste) storage

The Company is very mindful of the importance of proper storage of tailings both for efficient operation of the plant and to fulfil its environmental responsibilities. The Company stores its tailings in a purpose built dam approximately seven kilometres from its processing operations. The project to approximately double the capacity of the tailings dam by raising its wall 14 metres to 64 metres is now complete. The tailings dam now has a capacity of approximately 3.2 million cubic metres. The tailings dam seepage water return pumping system has been greatly improved with many failsafe features added. The reed bed biological treatment system immediately downstream of the dam to process any seepage has also been completed. This will enable seepage water to be purified before discharge into the Shamkir river. The new dam construction and pumping system has now been inspected and approved by third-party consultant engineers. Work has also been carried out to relocate the pipes from the agitation leaching plant to the tailings dam into a fully lined trench designed to capture any seepage should any pipe rupture.

Due to the high rainfall in the Gedabek region, there is a positive water balance over the mine property, which accumulates water at a rate of about 300,000 cubic metres per year. To date, all excess water is stored in the tailings dam, but in 2015 a project was initiated to design and construct a water detoxification system that will enable clean water to be discharged from the site into local water courses. The treatment system will involve reverse osmosis and ion exchange and the first phase of this project is expected to start operation during 2016.

6. Personnel and health and safety

The health and safety of our employees and the protection of the environment in and around our mine properties are prime concerns for the Company’s board and management team. The Health, Safety and Environmental (“HSE”) department at Gedabek has a qualified HSE manager, who is assisted by four HSE officers. Overall strategy for HSE matters in the Company is overseen by the HSE and Technical committee, which is chaired by a board director, Professor John Monhemius.

During 2015, there were 78 (2014: 65) reportable safety incidents, of which ten (2014: four) were lost time incidents (“LTI”), where the casualty had to take time off from work. The increased number of incidents is partly explained by the increasing size and complexity of the mining and processing operations across our properties as the Company’s activities progress. However, the Company is actively monitoring the situation and taking action to reduce the number of incidents.

To improve medical coverage over all the operations, 85 managers and supervisors have undergone first aid training, so that they can provide first responder help in the event of accidents or other emergencies, before professional medical assistance arrives from the local hospital.

A geotechnical inspection of the new Gadir underground mine was carried out in August 2015 by AMC Consultancy, United Kingdom. Their report identified a number of short and medium term issues that are in the process of being addressed.

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