Anglo Asian shares dive after reporting gold output drop

Azerbaijan-focused miner Anglo Asian Mining (LON:AAZ), the country’s top gold producer, said Wednesday that output of the precious metal fell 17.6% to 14,172 ounces in the first quarter of the year, due mainly to harsh winter conditions.

Copper production, in contrast, went up. Gedabek, Azerbaijan's main mine, and the Gosha operation together produced 432 tonnes in Q1, significantly more than the 182 tonnes registered in the same period last year.

“The first quarter of the year has always had lower production due to the difficult winter weather conditions,” Anglo Asian CEO Reza Vaziri said in a statement. “However, the harder rock that has been encountered together with its lower grade has also further lowered production compared to the previous quarter."

Anglo Asian plans to develop seven mines in western Azerbaijan with estimated gold reserves of 430 tonnes.

The executive added they have contracted for a second SAG mill to be installed in the agitation leach plant to combat the harder rock, which he expects it to be operational in the third quarter of the year.

The London-listed miner is now targeting gold output for 2016 of 73,000 to 77,000 ounces, while copper production is expected to hit between 1,700 tonnes and 2,100 tonnes.

Investors reacted negatively to the news. The stock was trading almost 14% down in London early afternoon to 5.29p.

The firm highlighted that Q1 was the first full quarter of production from a small flotation plant installed at the end of last year, and said it expects to ramp up output from this facility in the months ahead.

Anglo Asian, which started mining at its flagship Gedabek operation six years ago, plans to develop seven mines in western Azerbaijan with estimated gold reserves of 430 tonnes.