Anglo Asian Mining's 2012 profits hit by fall in production

Anglo Asian Mining's 2012 pre-tax profit was 9.4 per cent lower than a year earlier as production declined due to adverse weather conditions.

The AIM-listed gold producer reported pre-tax profit of $28m, compared to $31.6m in 2011, reflecting a drop in revenue to $73.5m from $83.8m.

Newly appointed Chief Financial Officer, Sean Duffy, blamed weaker results on a slump in gold and copper production in Azerbaijan.

Gold production decreased to 50,215 ounces (oz) from 57,068 oz while sales dropped to 42,557 oz from 49,304 oz. It fell short of the company's target by 6,000 oz.

"Production was impacted by adverse weather with snow and ice making it harder to leach," Duffy told Sharecast.

"It was a freak situation in terms of the history of the area."

The fall in production offset a rise in the average price of gold to $1,666 per oz from the prior year's $1,573 per oz.

The metal was produced at an average cash operating cost of $668 per oz, up from $448 per oz.

In light of this year's volatile gold prices, Duffy said the company was focused on improving efficiency to bring down costs of production.

An agitation leaching plant at Gedabek, Azerbaijan, is expected to increase gold production and recovery and to reduce cash operating costs per oz.

Construction of the plant began last August and the plant is in the process of full-scale commissioning.

It is expected to come in $7.0m under budget and will initially treat 100 tonnes of ore per hour.

Duffy said it will increase gold oxide and sulphide recovery and allow the company to meet its 60,000 oz production target at the mine this year at a cash cost of $450 to $500 per oz.

The group is also this year turning its attention to its second gold project Gosha, a mine located 50 kilometres from Gedabek.

Work is currently underway to develop a small, high-grade, underground gold mine, which is expected to produce 15,000 to 20,000 oz of gold per annum.

The input ore from Gosha combined with increase recoveries from Gedabek with the new plant, is anticipated to push total production up to 80,000 to 90,000 oz by the end of 2014.

Duffy said Anglo is about to turn into a "whole new company" with double the output.

Shares rose 6.48% to 28.75p at 14:59 Tuesday.

RD