Anglo Asian Mining Share Discussion Threads

[the stigologist] 17/5/2020 11:10

One of the problems PYC Physiomics has had getting the respect/valuation it deserves has been the lack of a decent UK quoted comparitor to help analysts and investors gain a better understanding of the market it operates in, the industry dynamics and the appropriate valuation benchmark

Although there still remains no viable UK comparitor in recent months an interesting US comparitor has emerged which may help Investors understanding and appreciation of PYC

What is interesting is that this is no ordinary comparitor. This Company has been described by Citron Research as a 'Tesla type' industry disruptor, the most important IPO in the last 5 years and has Bill Gates and D.E.Shaw as major cornerstone investors (together owning c.50%). Citron Research are mainly known as a specialist 'Bear' research house often debunking 'hot' stocks so it's interesting that they are so positive on this particular concept stock.

The stock in question is SDGR Schrodinger a Company founded in 1990, the current CEO joined in c.2002. It has taken them up now to IPO (February 2020) since when the stock has tripled ! ($17 to $55) and the Company is currently valued at over 30x (yes THIRTY times!) Revenue (2019 revenue $86m ; Mkt Cap $2.7bn)

The underlying story of Schrodinger is that of applying computer modelling techniques to drug discovery. Global Pharma/Biotech spends c.$180bn a year on R&D. So SDGR has a potentially huge market still left to penetrate.

Faced with a US tech comparitor the usual response from UK cuck analysts/Fund Managers is 'well US equity investors apply higher ratings to US stocks that's just the way it is'

However there is very good reason to make the case that Physiomics should not only be valued at 30x revenue but could deserve a premium!

SDGR is valued at 30x Revenue because US investors believe it has a wide open growth opportunity to eat into the $180bn Global Pharma R&D market opportunity

If US investors are prepared to pay so much for future growth how much would PYC be worth as a 'growth option' acquisition for either SDGR or a peer such as Private Equity roll-up Certara ?

- PYC would give SDGR access to computer based modelling and simulation expertise in the Drug Development part of the R&D cycle rather then just Drug Discovery
- PYC would give SDGR access to European geography
- PYC would give SDGR access to customers SDGR might not otherwise have access to (Merck, Bicycle Therapeutics)

Applying a 30x valuation to PYC's trailing 12 month revenues would imply a valuation of £23m (compared to the current £2.9m) a share price of 32.5p versus current 4p

NB : That valuation applied to Physiomics 'bread and butter' modelling and simulation business which is analagous to Schrodinger.
Physiomics also have a 'blue sky' story in utilising their Virtual Tumour cancer modelling expertise to offer a 'Business to Consumer' Universal Cancer Decision Support System through NHS/Clinicians which could be worth... well name your price. UK unicorns in AI/ML pharma/bio space are valued at Billions on zero revenue.

[mad foetus] 17/5/2020 10:58

I think the depreciation point is important. Others have been here longer, but I'm sure I recall Bill saying something along the lines that the LOM has been 3-4 years for over a decade. Every year they produce some more and find a bit more. No reason to think that will change suddenly, unless the terms of the PSA do.

[waterloo01] 17/5/2020 10:51

Thanks you for the reply's. I take the points on-board. I was trying to understand the lack of share price appreciation and suspected the lease extension is primarily the reason, but do take some comfort that the relationships are good.

I guess for me, until that's proven in writing, I'd keep my investment 'right sized' but happy to have a decent starter position.

Again appreciate the reply's and insight.

[goodgrief] 17/5/2020 10:11

Someone pass my specs... hope AAZ slingshots higher very very soon!

[riggerbeautz] 17/5/2020 09:49

Sorrento gained 158% Friday with their antibody drug claims, as part of a Covid “shield” plan. Plenty going on in the states.

[jbravo2] 17/5/2020 09:44

Ah yes, now I’ve read crazycoops post that kind of reminds me about your other post re depreciation etc
The most important depreciation is on the plant and that occurs as a direct ratio of gold oz mined vs our reserve.
So in that sense it has always been good for our reserves to be as low as possible to allow for faster/earlier depreciation on the plant.
That means we declare smaller profits and pay less tax earlier if you get my drift

[crazycoops] 17/5/2020 09:39

I can't edit the above post (mobile app) but it crossed with jbravo's more eloquent explanation. Same gist but his post is the one to pay more attention to

[riggerbeautz] 17/5/2020 09:37

Gold miner porn

[crazycoops] 17/5/2020 09:33

AAZ have the right to extend for 5 years plus a further 5 years so long as certain conditions are met. In the recent FY report, the company confirmed they are currently meeting those conditions (they also confirmed that because of this, they can depreciate assets beyond 2022). And 2022 is just the milestone for one CA, there are others that are a year or two later. Extension should be a formality in all cases but of course, there is always some theoretical risk, albeit small.

[jbravo2] 17/5/2020 09:32

Hi Waterloo,
welcome to the board

The lease/PSA for Gedabek open mine runs to 2023. There is then the option to extend for a further 10 years to 2033 (2 5 year extensions at the company’s option so long as in compliance with PSA - the company is in compliance)
Gadir underground runs to 2027 with again those extension options to take it to 2037
Ugur runs to 2031 with those options available again for 2041.

I’m currently not sure if Gedabek or Ugur underground (which may be developed) would count as new mines or need to be included in the timetable currently outlined.

There is much chatter on these boards about needing a LOM extension and an extension to the PSA
The terms often get mixed up. A LOM increase could come about simply from increasing the resources/reserves. However we’re now at the point where we’d be extending into the extension periods so some people are saying we’d need to get that extension agreed now. I’m not sure whether that the case or not. The govt may simply say, it’s still too early to sign off on it now, come back in 2022/3 and we’ll check everything is ok then.
They may sign off on it and simply work on the premise that if we ever did step out of line they could revoke the PSA anyway.
It’s all kind of dancing on the head of a pin in some way.
In short you should fall into one of two camps.
Either you see the working relationship the govt and company have had up til now as entirely positive for both parties and believe it will continue, or you believe the govt are just looking for a way to do the company over and believe this will provide their chance.
If you fall in the latter then you shouldn’t invest and should sell any shares you hold as quickly as possible! (Undoubtedly plenty do take this view and this is no small part of the reason we’re so cheap)

The picture has been further added to by a news article disclosing the govt appointed lawyers to look into buying/selling the PSA. (Cant remember the exact translation)
The article wasn’t meant to have been published and caused a little discomfort. I don’t suspect they’ll make such a mistake again. It remains uncertain if the govt will meet any asking price Reza would want for the company and it may well be that this simply is a springboard for more detailed discussion about our PSA especially if we are about to exploit new mineral occurrences right on the border of Gedabek CA. It could lead to an expansion of our role in the country rather than us selling IMO.

Hopefully this week could clarify a few points by the sound of it

[waterloo01] 17/5/2020 08:22

Quick question re the lease. I thought I read it runs out in 2022.

[gold finger 1] 17/5/2020 08:20

I am interested in a gold Canadian play Pure gold (PUR).
Now they have very good management and are set to start pouring gold before end of year. They do have an expected LOM of 12 years, with opportunity for transformative growth through discovery.

Now i only mention this as they have a market cap of 191m pounds.
Yet AAZ has a M/C of just 147m.
They have debt finance of $90m but should have enough to get to production.
They also have a royalty payment to pay on the finance.
I don't like the look of the finance package.

So all in all the market value them today at more than AAZ, even though they have not got to production and have $90m debt.
All that extra M/C because they have a 12 year LOM?
So that is about 9 years more than AAZ,at this moment, with us to report on our
possible transformative growth through discoveries to come.

[mad foetus] 17/5/2020 07:41

On silver v gold I'm not sure anyone uses silver as a store of value anymore. I'm told in the Far East the gold shops still thrive but the silver ones have closed down. The ratio might close but I'm not convinced it has to. Gold and bitcoin are where the store of wealth brigade are looking now

[gold finger 1] 17/5/2020 07:24

I have to agree that this company is and has been run to perfection by the management. They have spent wisely and got into production to bring money in in record time. Is that not what business is all about,making money.
I mean it't not as if the mine life only has one or two years to run and it's finished. We all know this well run company have not been sat back doing nothing for the past two years on extending the live of the mines. Its not even the case that we might extend the life of just one mine, they have lots of targets they are working on. Yes the existing mines are reducing the recovery rate as they come to the end of there life. But they are still producing plenty of ore and don't forget record profits. I would think the azz government would not be happy if they just moved on and left so much gold in the ground,just because there are better pickings somewhere else.
So the management along with the workforce are doing us shareholder proud.
So to sum up. Get to production as fast and as cheaply as they could.
Doing it without diluting the shareholders to death.
Paying a increasing divi.
While at the same time spending some of the profits on new exploration to increase
the LOM. At the same time building a cash pile for future investments.
And to top it off getting us to debt free.
If you know all this, that is why you are invested,and why you have a massive advantage than most,and to be sat with the winning ticket.

[mabel 123] 17/5/2020 06:55

max,

The silver gold ratio is the number of ounces of silver that are required to buy one ounce of gold. Currently it takes 107oz of silver to buy 1oz of gold.

In the last 5 years that ratio has been between 77 and 122 and according to the so called 'experts' who talk silver and gold, there is between 10 and 15 times more silver in the ground than gold and they say that should be a better measurement of what the ratio should be.

Currently it costs more to dig the stuff out of the ground than to buy a 1oz silver coin and silver is essential in many products that we use today, even if just in tiny amounts.

The reason both gold and silver do not reflect their true value is to do with the paper market, where huge contracts of both metals are bought and sold in quantities that do not even exist.

All the evidence is that at some stage the metals will regain their true value, and silver has so much further to go than gold.

mabel

[maxplus2] 17/5/2020 01:31

What's all this silver gold ratio? Why does it matter?

[mabel 123] 17/5/2020 00:03

obbig,c0lin,

It is possible to buy silver coins VAT free, and if you are a UK taxpayer and buy silver coins of the realm ie 1oz Britannia, no CGT is payable. A win/win situation.

Snurkle on the AG thread sells her coins VAT free.

Silver has so much ground to make up if the gold silver ratio is anything to go by. It is almost at its all time high.

mabel

[mattjos] 16/5/2020 23:49

If you look at the chart of PM:XAUGBP ..... would you buy right now? Damn right you would! It's breaking out into Blue Sky after a hugely strong uptrend.That moron Gordon Brown sold 50% of UK Gold at the lows!

[baddeal] 16/5/2020 23:17

Mf I think you captured the aaz conundrum well in your last post. We need to demonstrate to the market that all this gold is there. Upcoming jorc should help. More expo results and then using our cash pile to increase towards 200k+ annual production and we'll see £5. It'll take some time but we'll get there

[obbig60] 16/5/2020 22:22

Thanks cOlin, although I`m not sure that is strictly correct. If you resell to a private buyer you could probably get back most of th VAT you paid but if you sell bsck to a bullion dealer all you will get is the value of the metal.

[c0lin1] 16/5/2020 21:04

If you're talking about vat you have to pay that on silver coins as well. Although with coins you dont pay cgt.Obviously with gold coins you dont pay either.You do pass on the cost of the vat onto the seller when you come to sell though

[obbig60] 16/5/2020 20:42

This is a genuine question so please forgive my stupidity. Why does anyone buy silver bars when you have to give 20% extra to the government? Am I missing something obvious?