Anglo Asian Mining Share Discussion Threads

[thomas11] 14/7/2018 15:53

Mattjos - thanks for your response, looking forward to the exploration results with increased intrigue

[thomas11] 14/7/2018 13:57

Mattjos - come on stop teasing, where is the information that Ottoman Mining is referring to surely all the info must have been in the IPO document

The IPO document focussed on Ordubad with an expectation of 240,000g per year output within 2 years of IPO

How have they lived up to this expectation ! Everyone here is saying what a well run company this is, yet they completely mislead all investors at the time of the IPO

I arrived here after the share price collapse and when reality set in, still in recovery mode in my view, with potential still to double in a year.

Biggest risk as I see it is old fashion resource nationalism, will the dictator like money leaving in terms of a divi ?.

[mattjos] 14/7/2018 11:41

From the document:

"The Group generated cash from operations for the years ended 31 December 2016 and 2017 of $29.6 million and $29.8 million respectively."

So for FY16 & FY17 combined, cash generated was $29.6 + $29.8 = US$59.4m

Current Mkt Cap is £48.5m. At GBPUSD of 1.33 that equals US$64.5m

So the previous two years cash generation = 92% of the current market capitalisation of the company.

The company has 1,062sqkm spread over Gedabek, Gosha & Ordubad. The main current area of interest and production being Gedabek at 300sqkm



Let's assume the worst case scenario, for a buyer at today's prices:

The current three year exploration initiatives do not find any further resources whatsoever. That the company will simply pack up shop when Gedabek open pit become uneconomic in 4 years time & they do not bother to switch over the underground mining there.
& over that timeframe, they generate just $20m cash for each of the four years.
That would be $80m cash. Knock of $10m for debt repayment & it would leave $70m cash. They would not even recover all the outstanding monies under the terms of the PSA and so this period would all be run on a 87.5/12.5% split with the state of Azerbaijan.
At the end of that period they sell all the plant & equipment for 10c on the $ and realise $10m for it all.

They could return say, 50% of the $70m cash generated to the shareholders ... equating to 31c / share or 23p/share & then divi up the $10m garage sale proceeds giving a final 8c or 6.5p closing down divi

Near as damn it 30p / share return to investors.

I see that as the possible downside right now (barring war, plague, pestilence, earthquakes, volcanoes, end of worlds scenario).

So, you're paying a 10p premium for equity in an extremely well-run business that is just embarking on the first really proper, modern, detailed exploration on 30% of its total estate. The company has never done exploration like this before, nor have the preceding Azeris, the Russians or the Siemens brothers.

Whilst it would be hugely exciting to find millions of new economic ounces of Gold/Copper/Silver, the reality is that we do not NEED to find such quantities.
Reza has incentivised the exploration teams with an additional month's salary for every 100koz they discover .... that is a very persuasive incentive to the workforce & one can easily imagine the teams are going to bust a gut to get their hands on as much of that as they possibly can. Staff attendance & work rates are going to be sky-high + the word will be out for any/all local titbits of info as to where more may be found .. each employee will have family & friends as excited at the prospect as they are (don't forget how the success of Gedabek has transformed the locality over recent years and given jobs and financial security where none existed before. Everyone will want to see that continue well into the future.)

I am quite confident that the 10p premium one is paying now, over and above the 'mined out' scenario is a very small risk.

for those in possession of the September 2004 "Ottoman Mining Ltd. Overview" document, you will know that there is still at least one very exciting known area to explore on Gedabek .. this area was explored in 1998 only to a depth of 5.8m by auger hole & trench sampling whereas the mineralisation is known to extend to at least 150m.
That work on 1998 concluded 755,000t at 2.3 Au g/t & 0.041% Cu. "Being reasonably conservative and assuming that the depth can be proven to a depth of 75m, the resource would increase to 9,762,000 tonnes."

Same document also advocated an magnetometer and induced polarisation survey ... we're just now going to be getting on with the aerial survey this year.

It's not the case that there is no more resources in/around Gedabek ... its simply the case that we have not yet done a proper detailed sustained programme of exploration to accurately identify exactly what we have, where we have it & start to flesh out a detailed mine plan beyond that which is already known.

since we are now to be rewarded with a progressive dividend policy, whilst we wait for the results of this very significant 3-year exploration initiative ... I for one am more than happy to sit tight and keep adding more cheap shares offered either as a result of boredom or forced-selling by others & that is what I believe the majority of the long term PI's here will/have concluded to do.

[homebrewruss] 14/7/2018 06:43

It's not 75% of all shareholdings though it's 75% of people that turn up to the meeting plus any proxy votes sent. Each shareholder gets 1 vote if they attend or send a form.

Should be fine but proxy votes do help

[catsick] 14/7/2018 01:25

Looks like the resolution gives them headroom to pay out a total of 10p in divs from now on, obviously that number increases over time by the profits made but should make any reasonable div policy work, I am guessing maiden div of 1-2p will be announced once we clear the vote which nobody is going to vote against.. but still need to clear 75% so I will do my bit and vote my shares ...

[celeritas] 13/7/2018 17:17

Can someone post the proxy form link up.

[brasso3] 13/7/2018 16:50

With such a large percentage held by management that will not be a problem. I will download it anyway as every little helps.

[mattjos] 13/7/2018 16:33

doubt they will struggle to get the necessary 75% Terropol :-)

[terropol] 13/7/2018 16:32

Shareholders should download the proxy vote form and vote by the 26th of July.
We need 75% of yes votes to get the dividends facility available.

[terropol] 13/7/2018 16:30

To the Shareholders
Dear Shareholder
PROPOSED CAPITAL REDUCTION
NOTICE TO SHAREHOLDERS OF GENERAL MEETING
1. Introduction
I am writing to provide you with details of a proposal to enhance the Company’s ability to pay dividends to Shareholders in the future.
The Company currently has negative distributable reserves and is therefore prohibited under the Act from making distributions,
including dividends, to its Shareholders.
Accordingly, your approval is being sought to carry out a reduction of the Company’s capital by way of the cancellation of the
amount standing to the credit of the Company’s Share Premium Account so as to create distributable reserves.
The Capital Reduction is conditional upon, amongst other things, the Company obtaining approval of the Shareholders at the
General Meeting. Part IV of this document contains a Notice of General Meeting, convening the General Meeting for 10:30 a.m.
on Monday 30 July 2018 at the Company’s registered office at Squire Patton Boggs, 7 Devonshire Square, Cutlers Gardens, London,
EC2M 4YH, United Kingdom.
The purpose of this document is to provide you with information about the Capital Reduction and to explain why the Board
considers the Capital Reduction to be in the best interests of the Company and its Shareholders as a whole and unanimously
recommends that you vote in favour of the Resolution to be proposed at the General Meeting. Shareholders should note
that, unless the Resolution is approved at the General Meeting (and the Court subsequently confirms the Capital Reduction),
the Capital Reduction will not take place.
Part II of this document contains definitions of words and terms that have been used throughout it. Please refer to Part II as you
review this document.
2. Background to, and reasons for, the Capital Reduction
The Group’s operational performance has been transformed over the past four years as a result of management initiatives and actions.
Such initiatives and actions included optimisation of the Group’s original agitation leaching facilities, construction of a flotation
processing plant and the commencement of production from the Gadir underground and Ugur open pit mines. The Group has also
made major improvements to the infrastructure at Gedabek, which has reduced costs, such as connecting the site to the national
power grid and construction of a water treatment plant. In early 2017, the Group carried out a strategic review which included
various other production and optimisation initiatives. The Group has also benefitted in the period from steadily increasing metal
selling prices.
www.angloasianmining.com Proposed Capital Reduction and Notice of General Meeting 05
The improvement in operational performance has resulted in a significant improvement in the Group’s financial performance
and position. The Group recorded a profit before taxation for the years ended 31 December 2016 and 2017 of $6.8 million and
$5.7 million respectively, compared to losses in the previous two years. The Group generated cash from operations for the years
ended 31 December 2016 and 2017 of $29.6 million and $29.8 million respectively. This cash generation enabled the Group to
significantly reduce net debt from $52.8 million at 31 December 2014 to $10.4 million at 31 March 2018. The Group’s remaining
borrowings have also been refinanced at lower cost and without financial covenants.
The Group is forecasting increased production for the year ended 31 December 2018, compared to 2017 and the Directors believe
that the Group is well positioned for future sustained growth and development. The Group has embarked on a three-year exploration
programme to further explore and develop the potential of Gedabek. The Group has also upgraded its processing facilities by the
addition of a second crusher line which will enable its main agitation leaching and flotation plants to operate on a stand-alone basis
and which is also expected to improve the flexibility of the Group’s processing operations.
In light of the Group’s prospects and current strong financial position, the Directors believe it is now desirable to consider the
payment of dividends to Shareholders. However, the Company currently has negative distributable reserves and is, therefore,
prohibited under the Act from making distributions to its Shareholders, including the payment of dividends.
The Directors, therefore, believe it is an appropriate time to undertake the Capital Reduction and create distributable reserves which
would enable the payment of dividends in the future, subject to the continuing satisfactory financial performance of the Group.
3. The Capital Reduction
Proposal
The Company does not have sufficient distributable reserves to enable the Board to recommend the payment of dividends should
it be considered desirable to do so in the future. The Board therefore proposes that the Capital Reduction be effected in order to
increase the distributable reserves of the Company.
At 31 December 2017, the Company had retained losses of $18,500,000. At the same date, the amount standing to the credit of the
Company’s Share Premium Account amounted to $32,484,000. As at 31 May 2018, the amount standing to the credit of the Share
Premium Account remained at $32,484,000 and the retained losses of the Company had increased to $19,083,000. The Capital
Reduction, if approved and made effective, will be sufficient to eliminate the retained losses and create distributable reserves.
The Capital Reduction is proposed to be effected by cancelling the balance standing to the credit of the Share Premium Account.
Cancelling the balance of the Share Premium Account will, subject to the discharge of any undertakings required by the Court
as explained below, be sufficient to eliminate the deficit on the retained loss account and create positive distributable reserves.
As a result, any positive distributable reserves generated by the Company after the date on which the Capital Reduction takes
effect would also be available for the Board to use for the purposes of paying dividends.
It is therefore proposed that the amount standing to the credit of the Company’s Share Premium Account (such amount being
$32,484,000, as at 31 May 2018,) is cancelled.
Approval and Consent of Shareholders
In order to effect the Capital Reduction the Company requires the approval of its Shareholders in the manner described in this
section. The Capital Reduction cannot be effected unless the Company receives the approval by the requisite majority of
Shareholders and in the requisite manner as set out in this section of this document.
The Shareholders, being holders of Ordinary Shares, are entitled to receive notice of, attend, speak and vote at the General Meeting.
The votes of the Shareholders will be added together at the General Meeting and the Resolution to approve the Capital Reduction,
which will be proposed as a special resolution, requires a majority in favour of at least 75% of those Shareholders attending and
voting in person or by proxy in order to be passed.
Court Approval
In addition to the approval by the Shareholders of the Resolution, the Capital Reduction requires the approval of the Court. Accordingly,
following the General Meeting, an application will be made to the Court in order to confirm and approve the Capital Reduction.
In providing its approval of the Capital Reduction, the Court may require protection for the creditors (including contingent creditors)
of the Company whose debts remain outstanding on the relevant date, except in the case of creditors which have consented to the
Capital Reduction. Any such creditor protection may include seeking the consent of the Company’s creditors to the Capital Reduction
or the provision by the Company to the Court of an undertaking to deposit a sum of money into a blocked account created for the
purpose of discharging the non-consenting creditors of the Company.
It is anticipated that the initial directions hearing in relation to the Capital Reduction will take place on Thursday 9 August 2018,
with the final Court Hearing taking place on Tuesday 28 August 2018 and the Capital Reduction becoming effective on the same
day, following the necessary registration of the Court Order at Companies House.
06 Anglo Asian Mining PLC Proposed Capital Reduction and Notice of General Meeting
Part III: Letter from the Chairman of the Company

[2sporrans] 13/7/2018 16:22

Finally, the buying has moved the quoted prices up significantly [42 bid v 44 offer quoted].

Will the selling kick in, in response?

With the Q2's so imminent and so probably value enhancing, it's a reasonable expectation it will be substantially less volume than the buying.
And the price, once on the move, tends to shift rapidly, even on modest volume.

[cyberbub] 13/7/2018 14:09

Gold still being pushed down, sighI continue to hold

[lefrene] 13/7/2018 13:58

It looks like just buyers, but of course it can't be, so the MM's presumably know there is still stock available to fill those buys.

[gutterhead] 13/7/2018 13:56

really does feel like MM's are surpressing price whilst the "seller" is disposing

what do I know lol

[mattjos] 13/7/2018 13:45

41.7 v 42.7

[gutterhead] 13/7/2018 13:35

just added some more-last top up before next update next week.
have a good weekend all.

[mattjos] 13/7/2018 11:03

They refinanced $13.5m debt on the syndicated loan early in 2018 which enabled them to slightly extend the term of the planned debt repayments this year and thereby reallocate that cash to the $8m exploration programme.

I doubt they will then immediately start to repay that $13.5m down ahead of plan so, with a net debt position of $10.4m as at 31/3/18, I assume it is reflective of their having $3.1m in cash as at 31/3/18 ... that figure will be increasing by circa $1.5m - $2m per month across this year. the 2p dividend looks likely to equate to 6 weeks of free cash flow .. more than well covered!

[sparkey_two] 13/7/2018 10:43

Actually just relooked at the Q1 update and it did quote that amount, mind playing tricks as I thought it was still higher. They are paying it off too quickly to keep up!

[sparkey_two] 13/7/2018 10:39

This may not be new news as I may have missed it but the last debt figure I saw was around £18m. Within the RNS today it quotes “This cash generation enabled the Group to significantly reduce net debt from $52.8 million at 31 December 2014 to $10.4 million at 31 March 2018”. Looking sweeter every month that passes.

Would buy more shares but AAZ is now by far my largest holding which is very dangerous but I can’t think of a better place for my money. Want to cash in Sept’19 to pay off my mortgage.

[mattjos] 13/7/2018 10:37

42.475p to buy right now ... expected 2p dividend for FY18 = 4.7% yield .. tax free if you get them into your ISA by the entitlement date.
more than 2p next year.

That is 2x the best Fixed rate cash isa on offer right now & likely to remain well above what a bank will offer you for some considerable time.