LONDON (ShareCast) - (Sharecast News) - Copper, gold and zinc producer Anglo Asian Mining updated the market on the conflict with Armenia and the liberation of the Zangilan district of Azerbaijan on Tuesday, which contains the company's Vejnaly contact area.
The AIM-traded firm said the district forms part of the territory of Azerbaijan which has been "occupied by Armenia since 1994, in defiance of the United Nations Security Council resolutions 822, 853, 874 and 884".

On 22 October, the Ministry of Ecology and Natural Resources of Azerbaijan announced that the Zangilan district was now under the control of Azerbaijan.

The firm described the Zangilan district as a mineral-rich district in the south west of Azerbaijan.

Under the terms of its existing production sharing agreement, it has been granted the right to exploit Vejnaly, which is close to the villages of Amirkhanly and Aghband.

The contract area covers around 300 square kilometres, and contains the Vejnaly deposit which, according to the Soviet Classification, contains 6.5 tonnes of gold at C1 and C2, and 2.3 tonnes of gold at P1.

"Vejnaly is held under the company's existing production sharing agreement, however, the agreement will only commence in respect of Vejnaly upon notification by the government of Azerbaijan of the cessation of all hostilities, and that it is safe to access the district," the Anglo Asian board said in its statement.

"This notification will therefore 'reset' the production sharing contract to year zero for contract areas in the occupied territories.

"Accordingly, the company then has the right to explore the contract area for up to five years and then develop and produce for 15 years, with two five-year extensions allowed."

Anglo Asian said there had been exploitation of the natural resources in the Zangilan district during the Armenian occupation, and conflicting reports on whether minimal mining had been carried out at Vejanly.

However, the company's best information was that the Vejnaly deposit had limited exploitation.

"It is the intention of the government of Azerbaijan to thoroughly inspect and assess the mineral resources in the area."

The board said it "welcomed" the developments, and was in close contact with the Government of Azerbaijan regarding co-operation on the future development of the Zangilan district.

"However, the timeline for any investigation and commercial exploitation of Vejnaly is unknown as it depends on safe access to the Zangilan district and security of the contract area.

"Once secure, the company plans to immediately start work at Vejnaly."

Anglo Asian noted that it has two other contract areas in the occupied territories, being Soutely and Gyzilbulakh.

It said it was monitoring developments regarding those properties, and would update shareholders accordingly.

At 1340 GMT, shares in Anglo Asian Mining were down 2.93% at 112.6p.

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