AzerGold becomes party to contract for fields operated by British company

Anglo Asian Mining plc, the AIM-listed gold, British copper and silver producer focused in Azerbaijan, announced amendments to its production sharing agreement (PSA) held by its subsidiary, Azerbaijan International Mining Company Limited (AIMC), Report informs.

Anglo Asian Mining said that the current local party, the Ministry of Ecology and Natural Resources (MENR), is to be replaced by AzerGold Closed Joint Stock Company (AzerGold). Minor amendments have also been made in respect of the use of facilities for the Kyzlbulag, Demirli and Vejnaly contract areas.

The original PSA was signed by the predecessor to the MENR. This was due to there being no state body in Azerbaijan operating in the mining sector at the time. Since the signing of the PSA, AzerGold has been established to undertake the development of the mining sector in Azerbaijan.

The usual business practice in Azerbaijan is for state organizations that operate in the relevant sector to be the local parties in production-sharing agreements. This enables them to assist the development of the activity of the production sharing agreement and the relevant business sector. It is therefore natural that AzerGold now becomes the local party to AIMC's PSA since AzerGold has more operational mining experience than the MENR.

The revised PSA also includes a revision to the “Use of Facilities” article within the PSA. This has been amended to allow AIMC the right to use all mining workings, drill core, machines and other equipment present within the Kyzlbulag, Demirli and Vejnaly contract areas at the date of the handover of those contract areas to AIMC.

A law to replace MENR with AzerGold has recently been ratified by the Milli Majlis, the Azerbaijan Parliament. It has now been signed by the President and will be adopted into the laws of Azerbaijan.

“These amendments provide a considerable benefit to Anglo Asian Mining, as the Company will now work with AzerGold on exploration, development and mining projects under the production sharing agreement. AzerGold fully understands the mining sector in Azerbaijan, including the obtaining of permits and associated governmental procedures. We look forward to continuing to develop the portfolio with the support of AzerGold while maintaining our strong relationship with the MENR,” said Reza Vaziri, Chief Executive Officer of Anglo Asian Mining.