Anglo Asian Mining Share Discussion Threads

[wanobi] 03/6/2020 13:31

that's great work by Ruffer Gold Fund
Year-to-date +40.6%
One year total return +95.1%

Cheers
Wan :-)

[wanobi] 03/6/2020 13:28

Copied from Terropol on the the main AAZ thread,,, many thanx Terropol (hope you don't mind me re-posting here),,, very useful for future reference,,,, apols to all here for no doubt seeing this info twice today, I have a reference table which is numbered for this thread (only at the moment :-) in my diary which helps me to quickly refer to things,,,,, Cheers Wan :-)

Managers of soaring gold funds say rally far from over
By Jeremy Gordon 01 Jun, 2020
6
Comments
Managers of soaring gold funds say rally far from over
The coronavirus pandemic has driven the gold price towards all-time highs, but some investors are arguing the best is still to come for companies which mine the precious metal.

Funds investing in gold miners, often dubbed a ‘leveraged play’ on the already volatile gold price, have soared over the last 12 months. The £1.2bn Ruffer Gold fund, managed by Citywire A-rated Paul Kennedy, has been especially strong, delivering 95% over the last year.

Despite March wobbles as most asset classes sold off, gold has reasserted its safe-haven status and is trading around $1,725 an ounce, having risen as high as $1,755, though that was still nearly $150 off its 2011 peak.

That leaves the precious metal up around 14% in 2020, but looking over a year its 35% rise from around $1,280 reflects the tailwinds at work before the current crisis.

Interest rates change the game


Evy Hambro (pictured), manager of the £1.4bn BlackRock Gold and General fund, up 65% over the last 12 months, said while gold had benefited from a flight to safety amid the coronavirus pandemic, longer term trends were behind the momentum for the precious metal.


‘It hasn’t just been the last year. It’s been on pretty much an upwards trend now for several years,’ he said.

‘The things that have been correlating with the strong performance of gold have mostly been related to the decline in interest rates, principally in the US, and the vast amounts of “money printing”.

‘The thing that has always been the enemy of gold has been the opportunity cost, with gold not paying you any interest.’

Citing the Bank of England’s recent issue of negative-yielding bonds for the first time, Hambro argued that with real interest rates negative in much of the world and ‘dramatically bigger’ rounds of financial easing now taking place than previously, gold had become more attractive.

‘It’s an environment that makes gold unbelievably competitive. It’s an opportunity carry rather than an opportunity cost,’ he said.

Miners better placed to benefit


George Cheveley (pictured), manager of the £389m Ninety One Global Gold fund, agreed the ‘amount of money being printed’ meant the argument for gold as a store of value and hedge against inflation remained as sound as it had ever been.

But more important, he argued, was that wider economic uncertainty meant gold was unlikely to fall far and that miners were in a better position to capitalise than when gold previously hit highs.

‘I think it’s unlikely it’s going to fall in the next year or two and on that basis I’m happy to own the equities because I think they can generate very good profits and increasingly pay high dividends, which I think will attract a broader investor base,’ he said.

‘I don’t need gold to go any higher from today’s price. In fact, even if it fell back by $100 from here, these companies are still very, very profitable.’

In April, Newmont (NEM.N), the world’s biggest gold miner, increased its quarterly dividend by 79%, illustrating the potential for higher income in the sector.

Cheveley’s fund is up 76% over the last 12 months, making it one of the few to beat the leading gold mining exchange-traded fund, VanEck Vectors Gold Miners (GDX), which has risen 72% over the same period.

The manager said the sector was in the best shape for 20 years, in contrast to 2011, the last peak for gold, when companies made some ‘crazy’ decisions in terms of acquisitions.

‘We sit here today with these companies with low debt levels, the highest margins we’ve seen in years and increasing returns to shareholders. Particularly this year, you compare that to any other sector and that’s pretty remarkable,’ he said.

‘We’ve got strong management teams. Costs have been brought under control,’ he added.

Additionally, less than a tenth of annual production around the world was hedged, Cheveley estimated, meaning increases in gold’s price go ‘straight to the bottom line’ of miners. The low oil price, reducing fuel costs, is another positive.

Hambro also emphasised the improved profitability of gold miners in contrast to their position in 2011, when ‘ you saw rapidly rising gold prices but at the same time you saw gold shares underperforming̵7;.

‘That is because costs in the sector were rising as fast if not faster than the price of gold was rising. In today’s environment what we’re seeing is a completely different situation.’

Gold funds shine
Fund Year-to-date total return (%) One year total return (%)
Ruffer Gold 40.6 95.1
Ninety One Global Gold 26.0 76.0
Charteris Gold and Precious Metals 13.7 71.9
BlackRock Gold and General 25.6 64.6
Quilter Investors Precious Metals Equity 24.7 60.7
Smith & Williamson Global Gold and Resources 22.6 60.6
Junior Gold 20.5 56.4
Merian Gold & Silver 6.8 53.7
VanEck Vectors Gold Miners ETF (GDX) 24.0 71.5
FTSE Gold Miners index 27.1 77.0
Source: Morningstar

Consolidation has become an important theme among gold miners. The merger of Barrick Gold (ABX.TO) with the formerly London-listed Randgold Resources at the beginning of the last year, has led to two dominant players in Barrick and Newmont. Both have significantly outperformed the wider sector over a year, with their shares up 112% and 93% respectively.

‘If you’re buying one of these index funds now you’re basically buying two companies that make up half the universe,’ said Hambro, referring to the FTSE Gold Mines index.

The index tracked by the GDX ETF caps the weights of the two giants, although even then Newmont and Barrick account for 14.5% and 13.1% of the portfolio respectively, well above the 10% limit for individual stocks that applies to active fund managers running gold mining funds. Hambro described this as a ‘huge hindrance’ to performance comparisons.

Both he and Cheveley, however, emphasised consolidation had also provided an opportunity, as it was allowing smaller and mid-cap miners to snap up some of the assets offloaded by others, in addition to the possibility for share prices across the sector to catch up with the giants. This is the area both manager are now focused on.

The strongly-performing Ruffer Gold fund had more than half of its exposure to companies worth less than $1bn at the end of March. Smaller miners can trade at discounts to larger peers, which can lead to extreme re-ratings if gold does rise.

From Citywire

[cordwainer] 03/6/2020 13:24

typical - all the downside and only a fraction of the upside.

[wanobi] 03/6/2020 13:11

AAZ - cannot think of a single question I should ask that they would give me an answer to :-) LOL,,, yes, I'm serious :-) GLA Holders, Cheers Wan :-)

[bumpa33] 03/6/2020 12:37

Hmm, didn’t realize it had leaked this morning clearly - out at 3.066 - not keen on arriving after the fact, as it were.

[doc_oj] 03/6/2020 12:35

I feel POG at 1700 has psychologically become the new ?1450-1500, it seems people/market just does not seem to believe POG will stay at 1700 or go higher, at least for the time being.

If you look around all goldies are pulling back last few days, AAZ including. Now the problem is on one hand the great majority are pulling back from recent/ATH whereas we never got properly re-rated since the covid drop so any drop from these levels is rather painful to watch. But as JB points out, if you believe in the story then this forms a good opportunity to buy.

Added to the pain is the fact that the markets in general are re-rating up every day despite a very clear sense that this should not be so.

I know what to do, avoid looking at the screen regularly!

[jbravo2] 03/6/2020 12:21

But that’s the nature of shares skeptic.
They’re driven by sentiment as well as by fundamentals.

If our faith is proven correct things will eventually change here. Eventually value the disconnect becomes too large. Sometimes that takes far longer than you can imagine it should.

As an aside... If fundamentals are largely flat you need to be buying when sentiment is poor and selling when sentiment is good.
If fundamentals are improving and sentiment is poor then you’ll mint it if you can buy in the troughs.

Your call!

[skeptic1] 03/6/2020 12:17

I agree with you, and of course have faith in the co. However, given that we believe that this board alone has a significant amount of shares in the co, and even we are getting a little disheartened, how must others feel? E.g. there is literally no reason for the drop today yet here we are.

[bumpa33] 03/6/2020 12:13

wow, UOG looks cheap on that news. Got some at 2.9

[jbravo2] 03/6/2020 12:12

@gf
So why are you bothering to post a reply to him?
He’s right to some degree of course. You either believe something more is going to happen after 2024 (or whenever) or you don’t but there is no definitive plan laid out at the moment.
If you do “believe”; it stands to reason the share price will move up and dividends improve as the future becomes clearer and developments are undertaken.
If not, you won’t be investing and if currently invested you’ll be selling out.


@skeptic
You’re right. See above.

[lefrene] 03/6/2020 12:04

gold finger 1, the life of the mines will be much longer given the 32 identified prospects, confidence would improve once more information becomes available.

The real value here remains outstanding, while the main indexes seem to be disconnected from what is happening in the real economy. It's as if stock markets have turned into the housing market of 2008. Probably for similar reasons, ie, easy loose credit looking for somewhere to go, just to get a commission for somebody not exposed to the risk.

[skeptic1] 03/6/2020 11:58

All very true, but this is becoming painful for relatively new holders. Why on earth would they stay and/or buy in if there is better opportunity elsewhere? Perceived opportunity I should say...

[gold finger 1] 03/6/2020 11:51

So lets just say we do only have a life of 3.5- 4years left on these mines.
How many companies wish they had customers for the last 3 months, never mind customers for the next 3-4 years.
The thing with people like dozyduck is, they only appear when the share price is flat or dropping. They voice their opinion until the news comes that the LOM has been increased, Then they are gone, but in the mean time people have to read their opinion.

I had a quick look at his posting history and to say he is nothing more than a troll
that goes from bb to bb spreading his sad opinion would be an understatement.

[jbe81] 03/6/2020 11:48

Odx looks a no brainer on today’s news. A few million shares just been gifted to charity( been done before), once they clear would expect a big rise in the next couple of weeks

[dozyduck] 03/6/2020 11:46

Filter away ! Otherwise known as blindfolding yourself. But, then, your obsessive posts show you've already done that.

[riggerbeautz] 03/6/2020 11:44

Correct user2007, so people either have to accept and wait or instead of stressing for a answer, opt to move on.

[user2007] 03/6/2020 11:34

The problem re the PSA situation is that until it is finalised with the gov no meaningfull answer will be provided.All of us can ask but the answer will be just very inconclusive.

[gold finger 1] 03/6/2020 11:20

dozyduck

It seems i had you on filter, I don't know from when or where.
So i unfiltered you.
I can see why after reading your post.
Sorry, i put you back.

[dozyduck] 03/6/2020 10:44

Goldfinger - "There is a real disconnect from reality here."
I'm Afraid YOUR disconnect is from
'reality' 1) current Market cap already reflects prospects up to 2024, after which
'reality' 2) there is a black hole.

[jeanesy] 03/6/2020 10:43

Why does that matter though , if you are a shareholder then you are a shareholder, you are still entitled to ask a question. If they answer it is another question altogether ?

[winston66] 03/6/2020 10:40

Yes, just qualifying the reply of sb1976, share registers are public domain.

[sportbilly1976] 03/6/2020 10:34

jeansey,

nope - they will communicate with the registrar to double check people have what they say they have

[jeanesy] 03/6/2020 10:30

You are now able to submit your questions to the board of AAZ on their website for the AGM later this month. The main concern for me really is all about the PSA agreement and government talks. Yes the corporate PR is also not good enough. I hope that if enough of us raise the same question we might get some sort of reply. The interesting thing to me is that when you enter your details it asks for the number of shares you hold and who with ... am I reading more into that than I should ? They will have a really good idea then how many shares are privately held and need to be bought back perhaps ? Thoughts anyone ?