Anglo Asian Mining Share Discussion Threads

[jbravo2] 28/9/2016 16:07

@cannon...

well sort of and sort of not.
We are allowed to claim all the costs of the plant and production from the govt share of production (upto a maximum rate of 75% of production).
So... clearly say for example a shiny new plant costs us $50m we can claim that $50m (plus its interest) back from the govt via their share. However if we say used that money to buy iced lollies instead of paying the debt then once we have claimed back the $50m all we would then be allowed to claim back would be the ongoing interest. And of course we would still have a $50m debt... (and a lot of ice lollies, in this example but nothing say if it had been given away in dividends)

So the kick in of the PSA isn't anything to do with "is there any of the debt left" more is there anything left we haven't claimed for.

Currently that is forecast to be 2018 as c_n_s states, however this has moved back year on year. I don't expect it to kick in in 2018. By then we will create new claims via new capex spend. Be that, our new water plant, new SAG mill, new electricity supply, expanded flotation etc etc.
Of course at some point it will be in our interest to stop capex spend but whilst the new investments will pay for themselves for years to come we can clearly expect capex to be topped up with plant improvements.

And even when capex does stop (and historically run out to claim back) of course the split will never reach 49/51 as we will still be claiming the opex from the govt share each year.

[cast_no_shadow] 28/9/2016 14:35

I loved this post CfDr.

It's a very interesting point. Why lose all the money in royalties when, if possible, you can spend more money on investing in the mine and exploration therefore increasing future cash flows?

Your point is you have two choices:

I) pay off the capex and then pay the huge royalty
II) defer paying the royally as much as possible by using that money instead to invest in the company

I think you're right although with a caveat. The company is currently geared too highly so maybe the focus should be on reducing the debt to more manageable levels - say under $20 million?

It's a balancing act between reducing risk and onerous debt repayments and keeping ahead of the PSA.

Doesn't the company state they expect to pay the additional PSA by 2018 so I'm not sure they see it this way although if they did they probably wouldn't come out and say it officially.

[cannonfodd3r] 28/9/2016 13:47

Gents, i tend to watch from the sidelines here as i cant stand the way this forumn works from a technical perspective but the chat is great.

However, there seems to be a massive error with folks perception of the debt as a negative. While it is costing them to have the debt that is an issue, however paying off the debt as far as i am aware is not in the interests of AIMC at all as the PSA will then kick in taking royalties from 12.5% to 50%. Now please feel free to correct me if im wrong however i feel there is a huge holding back of the price due to the debt which is massively incorrectly interpreted.

Ill leave this one with you, Matt, expect you can confirm

[zhockey] 27/9/2016 17:59

Jeanesy, gold has been weak since the fomc, yes the price has gone up but very tentitively. The gravitational pull of mean revertion is unavoidable. Look at where AAZ's 200SMA is.

Cast no Shadow, I get what you are saying but as there's nothing we can do about it what is the point of fretting. We just have to play the hand we are dealt, and I would not try to trade gold.

[zhockey] 27/9/2016 17:53

That was kinda my point :)

[jeanesy] 27/9/2016 17:20

Seems to me that any day that POG is weak then we move down and yet barely move up on good POG days. Will we go sub 15p as that seems to be the bottom recently.

[cast_no_shadow] 27/9/2016 17:18

Precisely.
Regardless of terminology it is what it is. If you can't understand why unlimited naked shorting of something doesn't restrict prices and ultimately destroy sentiment if used as a long terms stategy then I can't help you friend.

[crazycoops] 27/9/2016 16:53

Rem, surely a new economic paradigm, by definition, doesn't have a precedent, n'est pas?

[zhockey] 27/9/2016 16:42

Why should gold be higher? If this is a new economic paradigm then where is the precident?

[celeritas] 27/9/2016 15:53

The world is swimming in paper currency to the like we have never seen before, these are unprecedented times. Negative yielding bonds seem to be a norm now which is quite weird.
A world awash with huge debt which will need inflation to wash it away when we are in a world of deflation.
Gold should be way higher so I agree with cns it is being manipulated as letting gold run to where it should be will show the cracks in this have to have it now world.

[cast_no_shadow] 27/9/2016 15:41

Right like I said they've been forced in to a managed retreat.

Gold was down from $1920 to what $1050 ish? It was below the cost of production for many miners.

It got to a stage where the fundamentals were simply too strong and negative interest rates are the single strongest fundamental we now have in gold.

Also per my previous posts, one of the main inputs for hedge fund speculative zombie computer buying is the dollar yen. Once that reversed gold reversed along with it and it's now testing key support at around 100 having been as high as 125 in October last year.

Without these paper manipulation gold would be up a lot more given the fundamentals and collapse of the USDJPY IMO. Don't believe me? Go chart the USDJPY inverse on top of the gold price over the last five years. Almost identical. What a sham!!!

[zhockey] 27/9/2016 15:11

But hang on a minute, gold is up $200 this year?

[cast_no_shadow] 27/9/2016 14:52

Yes Celeritas, my thoughts exactly although I didn't do the math.

[celeritas] 27/9/2016 14:48

As debt lowers so will the interest paid which in turn will speed up debt repayments. This should really be adding circa 1p per month to the mkt cap.

[cast_no_shadow] 27/9/2016 14:48

Yes speculators take the long side in the rising market. And what's wrong with that?

I have no problem with naked, unallocated shorting but there has to be rules/limits. Imagine if AAZ had some good news about production but the price never went up because a bank was allowed to "print" as many naked AAZ shares short until they soaked up all the longs and then bought back later on as the speculators gave up.

We'd all be furious wouldn't we?

This is exactly what happens day in day out in the gold market.

[cast_no_shadow] 27/9/2016 14:43

Thanks for that ODR.
Although I'm not a big fan of Turk. He's made outrageous price predictions for years now and gold bugs like him haven't helped the overall cause IMO.

I just don't understand why producers don't get together, especially in this day and age of seemless communication.

They could effectively create their own unofficial "cartel" and manage prices by preventing these massive naked short positions from accumulating or st least discouraging them.

[zhockey] 27/9/2016 14:40

But large speculators are net long?

[onedayrodders] 27/9/2016 14:34

In support of your post cast_no_shadow

26SEP16 : James Turk CAUTION – Option Expiry Week
We face another month-end option expiry, which starts tomorrow (today) on the Comex and ends Thursday in the over-the-counter market. We know from experience that option expiry can be brutal. It looks like the slam down on Friday – particularly in silver – was contrived to set the stage for this week, namely, to keep precious metal prices under pressure so as many call options as possible expire out of the money.

So if this option expiry proves to be similar to just about every other option expiry we have seen for many years, we can forget about prices rising this week. Price manipulation at option expiry is just part of the picture of overall manipulation of the gold price. This manipulation has a couple of aims. First, it takes pressure off government central planners. When the electorate sees a rising gold price, people react. They intuitively know that a rising gold price is a red-flag signaling monetary problems, and policymakers don’t like to see their policies being discredited by market reactions.

[cast_no_shadow] 27/9/2016 14:23

Zhockey are you for real? Does anyone seriously still deny the manipulation that goes on in this market and many others.

Take the last few days for instance, 35000 new paper contracts added that's 110 metric tonnes of paper gold magically created from nothing!!! Are you seriously trying to suggest this is just the producers hedging? That's approx one tenth of total annual gold mining production shorted in a few days. And this is happening all the time.

Come on this has been going on now for years and there's more than enough evidence. Do any kind of Google search or go check out GATA's records. Jeez even ex fed officials have admitted as much and declassified fed minutes from years ago.

This market is absolute criminal. The banks have almost bottomless pockets and can issue naked paper sorts as and when they feel like it. In fact this is the first year that their paper raids seem to be having less and simply due to the incredible demand for physical and paper gold negative interest rates are creating.

They have been forced in to a managed retreat this year. The action in gold this week has been absolutely disgusting and yet these banks get away with it. It's beyond infuriating.

[zhockey] 27/9/2016 14:00

That is not correct, it is the producers that are net short. They are protecting their balance sheets to have a profitable year and get their bonuses.

Gold continues to mean revert.

[cast_no_shadow] 27/9/2016 13:52

It's sickening how distorted these markets are.

Gold should be absolutely flying with the Fed's interest rate decision and the fears over Deutsche bank. Open interest has risen massively yet the price has barely moved and is in fact now lower than before the Fed's decision.

The banks are creating ridiculous amounts of naked shorts to achieve this and it has been this way for 5 years now, it's criminal.

What I don't understand is why the gold producers don't all get together and fight it. They don't even seem to be vocal about these market manipulations.

If all the producers got together and say refused to sell their gold for two months these naked short positions could be anialiated.

Pathetic.

[jbe81] 26/9/2016 16:55

Yes, think we will be moving up this week

[mattjos] 26/9/2016 16:27

you can sell 100k+ at 15.75 but, not buy that quantity at 17 .. the quoted spread is stupid