Azerbaijan develops gold mining and production

Azerbaijan is seriously engaged in gold mining in its own deposits, and plans in 2012 to almost double the commercial production of gold. Proven gold reserves of Azerbaijan will increase gold production from 4.5 to 7.5 tons this year.

It should be noted that industrial gold mining in Azerbaijan began in May 2009 and only on one deposit, namely Gedabek, but it helped the country become one of the gold-mining countries. The volume of production in this deposit in 2011 totaled 57,068 ounces of gold.

And construction on this deposit of agitation leaching plant will several times increase production volumes of precious metals. Thus, the Anglo Asian Mining plc, a manufacturer of gold in Azerbaijan, decided to build on the Gedabek gold and copper deposit a plant that will to process high grade ore and additional resources that are not suitable for the current heap leaching processing operation, together with spent ore from the leach heaps to further improve total gold recoveries. The agitation leaching technology allows to extract more than 90 percent of the gold contained in ore, whereas for heap leaching, the figure is about 70 percent. The company believes that gold production at Gedabek will justify investment in a new agitation leaching plant.

At the same time, Azerbaijan has already completed construction of gold processing plant, which will allow production of pure gold of Azerbaijani production. At present, after the initial processing, gold, extracted from the Azerbaijani deposits, is sent to the factory in Switzerland for complete processing.

Construction in Azerbaijan of such a plant will also justify the investments, as the Geological Service of the Ministry of Ecology of Azerbaijan found along with a number of known, new deposits with unique in terms of gold reserves (more than one hundred tons) in Nakhchivan, Goygol, Dashkesen and other regions. This confirms the production potential and value of the country as the owner of one of the main natural resources.

Positive impact on the beginning of the gold mining industry in Azerbaijan has the growth in world gold prices, resulting in gold production in Azerbaijan has adopted a cost-effective nature. If you look at the dynamics of the gold price over the past 11 years, from 2000 to 2011 the price of gold has risen from $281 to $1,572, that is, the growth of asset value amounted to 560 percent. Such gains were not given by any asset. This gave the gold status of "saving harbor" in times of global economic crisis and increased its protective function in times of inflation and a falling dollar in the world.

The trend of getting rid of currency in favor of gold during the financial crisis was observed in every prosperous country, but with the revival of the global economy it has become not so important, because gold is a passive currency that does not attract investors.

Although Azerbaijan has streamlined the structure of its currency reserves long before the global financial crisis, but also initiated the formation of gold-exchange reserves. However, gold reserves in the country are not significant as they are formed mainly at the expense of its own production units and those that fall to the country.

Since the start of gold production in Azerbaijan the country's share in the amount of 513.6 kilograms of gold was deposited to the Central Bank of Azerbaijan. Its market value is $28.4 million.

State Oil Fund of Azerbaijan (SOFAZ) also began to invest in gold this year in order to diversify the investment portfolio. SOFAZ purchased more than 2.8 tons of gold (90,143 ounces) in the first quarter of 2012. Up to 5 percent of the total investment portfolio may be invested in gold in 2012 in accordance with the State Oil Fund's investment strategy approved by the President of Azerbaijan Ilham Aliyev on December 29, 2011. Since February of this year SOFAR started investing in gold bullion of the banks that are market-makers - members of the London Bullion Market Association.

At present, Azerbaijan is carrying out gold mining from only one deposit - Gedabek. However exploration work on Gosha deposit was completed in Tovuz region in 2011, and the Ministry of Ecology and Natural Resources has approved a program of Anglo Asian Mining plc for the development and production at this deposit. The reserves of the deposit are estimated between 10,000 and 15,000 ounces of gold per year over five years. Anglo Asian Mining plc also discovered a rich deposit of gold in the mines of Ordubad, which will be third operating deposit in the future.

The Anglo Asian Mining Company has the rights to develop six deposits in the south-west of Azerbaijan - Gedabek, Ordubad, Gosha Bulag, Gyzyl Bulag, Vezhnali and Soyutlu based on a PSA type agreement signed in August 1997 with Azerbaijani government. Under the contract, production of about 400 tons of gold, 2500 tons of silver and 1.5 million tons of copper is planned at the deposit.

One more consortium has a contract for the production of gold in Azerbaijan - Azerbaijan Nternational Mineral Resources Orerating Co., Ltd. This agreement was signed between the Azerbaijani government and the companies Londex Resources SA, Willy & Meyris SA, Fargate Mining Corporation, Globex International LLP and Mitsui Mineral Development Engineering Co. Ltd. on December 30, 2006. . The contract provides the exploration and development of Garadagh, Chovdar, Geydag, Dagkesaman ore-bearing areas, Kehnemedan area and Kurekchay field.

Currently preliminary work in connection with the start of operation and construction of the plant is being implemented at Chovdar gold mine, located in Dashkesan region. Industrial stocks at this deposit amount to 44.61 tons of gold and 164.25 tons of silver.


Ellada Khankishiyeva /Trend/