Good Morning, SP Angel Research Update on Anglo Asian Mining following a positive update on gold production having produced circa 50,000 ounces for FY 2012 from its flagship Gedabek mining operation in western Azerbaijan.

A new Agitation leaching plant is expected to begin commissioning in April 2013 which is set to improve gold recoveries at Gedabek of oxides and sulphides by 85% and 69% respectively. Kindest regards Felicity Anglo Asian Mining PLC (AAZ LN) 47p, mkt cap �53m � Q4 production gold sales and IBA loan updates BUY (Target price and earnings under review) � Anglo Asian reported Q4 operating results at the Gedabek gold mine and updated the market on the financing for the new processing plant. � Gold production from heap leach operations grew 3.5%qoq (-5%yoy) to 14,530oz. � The company mined and crushed 209kt of ore (+2%qoq , +10%yoy) for placement onto the leach pads at an average grade of 3.04g/t (+3%qoq, -6%yoy). � We estimated quarterly output at 15,415oz assuming higher throughput.

Grades were better than expected. � FY2012 gold production was in line with management�s estimates (49,000-51,000oz) and totalled 50,215oz (-12%yoy) on weaker throughput (-11%yoy) and lower grades (-8%yoy). � Q4 gold sales (ex.

government share of 12.75%) totalled US$19.5m (-10%qoq, -14%yoy) using an average price of US$1,694/oz (+2%qoq, unch.

yoy). � FY2012 gold sales were US$71.0m (-9%yoy) at an average price of US$1,660/oz (+6%yoy). � Silver production from heap leaching came in at 4,790oz in the last quarter and 20,133oz in during FY2012, below company�s expectations for 26,000oz. � The SART plant produced 116t of copper (-12%qoq, -32%yoy), 14,242oz of silver (-39%qoq, -63%yoy) and 14oz of gold in Q4.

FY2012 production totalled 502t of copper (-18%yoy), 98,158oz of silver (-27%yoy) and 86oz of gold.

This compares to a revised company�s target of 600t for annual production and our estimates for 580t. � In December the Company signed a contract with Glencore for the sale of 2,500wmt and 550dmt (equivalent to 1,100wmt assuming 50% water content) of copper concentrate.

Anglo Asian is estimated to have accumulated 2,900wmt of concentrate worth some US$7.9m. � SART sales amounted to US$2.1m during FY2012. � Glencore will be buying 250wmt/month under the current agreement and we expect Anglo Asian to sell out its stockpiles through FY2013. � IBA loan update announced yesterday said the International Bank of Azerbaijan released further US$25.5m for construction of the new processing plant.

In addition to previously committed US$18m this brings total available funds to US$43.5m.

The Company drew down US$29.6m as of Dec 31.

The agitated plant is estimated to cost US$52m and the IBA confirmed it is ready to provide a total of US$60m subject to internal considerations and approval.

Our calculations assume US$60m capex, allowing for potential contingencies. � Agitated leaching plant construction is progressing well and is on schedule to be commissioned in H1 2013. � Cash in the bank as of 31 December was US$2.4m with outstanding debt of US$31.4m. Conclusion: Gedabek gold production performed in line with revised targets.

The mine suffered a 12% fall in production yoy due to a poor start early last year in tough winter conditions.

This year should be easier and H2 2012 production was little changed from the previous year as the mine better performed to expectations. We estimate H2 cash costs (including 12.75% share of the Government share of production) to average US$540/oz, down from US$767/oz recorded in H1, on higher gold production and sales of copper concentrate.

Annual cash costs are forecast to average US$654/oz. Completion of the construction and commissioning of the agitated leaching plant should be a turning point for the Company and should increase recoveries of oxide ore to 85% from current 70s% and to 65% for sulphides. The IBA continue to support the company through ongoing and new funding for the construction of the agitated leach plant. Analysts Sergey Raevskiy � 0203 470 0474 John Meyer � 0203 470 0470 Carole Ferguson � 0203 470 0473 Sales Richard Parlons � 0203 470 0472 Jody Downes � 0203 470 0471 SP Angel Prince Frederick House 35-37 Maddox Street London W1S 2PP
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