Azerbaijan's gold opportunities

Azerbaijan will soon start exports of precious metals. Anglo Asian Mining Plc, a manufacturer of gold in Azerbaijan, carried out the first sale of copper concentrate in the first half of 2011.

According to the Company, the income in amount of $2.1 million was generated through the sale of 87.25 percent of developed 90 tons of copper, 29,132 ounces of silver and 335 ounces of gold.

Since early second half-year, regular copper concentrate has been supplied, sales of which will be completed in the coming months.

As of late August 2011, copper concentrate reserves hit approximately 383 tons of copper, 2,422 kg of silver, and 3 kg of gold.

"We are negotiating with the government, partners and potential buyers on the sale of these reserves and hope to sign an agreement to sell it in the near future," the company said.

Azerbaijan had transferred all rights to exploit gold fields in the country to Canadian R.V. Investment Company in August 1997. The Government of Azerbaijan and R.V. Investment signed a production sharing agreement (PSA) to develop six fields of gold, silver and copper in the south-west of the country - Gadabay, Gosha, Ordubad group, Soyudlyu, Gizilbulag and Vyadzhnali.

However, during seven years after signing the contract, the company did not carry out any work on these fields, explaining its inaction through fall in world gold prices. Other reasons for delay in the development of gold fields included lack of working capital, which were later found in foreign banks. Beginning in late 2005, positive tendencies in the market of precious metals stimulated preparations. The first gold and silver were produced on the Gadabay field in May 2009.

The Anglo Asian Mining Plc plans to start gold production on all new fields. Previously, the company submitted to government a document confirming the discovery of gold reserves on new Gosha field, which was adopted by the Azerbaijani side. According to information, government's approval of the program for the development and production on the field is expected in October 2011.

According to State Statistics Committee, over eight months of 2011, Azerbaijan produced 2,073 kilograms of precious metal, which is 6.3 percent higher than the same period of 2010. The storage reserves of precious metals amounted to 125 kg. In January-August 2011, Azerbaijan produced 1,154 kg of gold and 919 kg of silver. Gold reserves as of Sept. 1 were produced at 68 kg, silver - 57 kg.

According to estimates of Azerbaijan's Ministry of Ecology and Natural Resources, the country is able to produce about 10-15 tons of gold per year. The global financial crisis showed that gold was one of the few investments that brought profits to investors. When all rapidly became cheaper and collapsed, gold continued to demonstrate an enviable stability and tended to increase.

December futures for gold in electronic trading in New York on Stock Exchange Comex as of 11:43 Moscow time rose in price by 0.2 percent to $1.746.1 per troy ounce.


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