Anglo Asian Mining Share Discussion Threads

[terropol] 18/5/2015 23:47

Brasso3, I was there then...and I am here now...for the next 10 bagger!

[brasso3] 18/5/2015 21:27

Looking at the charts I cannot help but think that 2009 is about to repeat itself. In 2009 we had a step change in production and the debt got paid back very quickly. It would have been a 10 bagger for anyone getting in at the bottom then.

[hedgehog33] 18/5/2015 19:20

Looks like a buy to me...

I know electronically reported trades are sometimes fluid around mid price but they're asking 6.00 and 6.00 it was.. Hopefully.. LOL

[brasso3] 18/5/2015 18:53

Found it!

£60k not bad but was it a buy or is that the end of our seller?

Either way good news.

[hedgehog33] 18/5/2015 18:44

1,000,000 buy... shows up on LSE at 16.35pm.... someone 'in the know' possibly..

Tomorrow could be interesting.

[brasso3] 18/5/2015 18:25

I cannot see it on ADVFN?

[mattjos] 18/5/2015 17:22

Big trade after the bell

[mattjos] 18/5/2015 14:19

We seem almost invisibly under the radar at present.Let's see what gold does when Greece inevitably call a referendum re their 'red lines' on pay & pensions. I'd expect them to announce it early but try to defer the vote until after summer .. That will buy them yet more time but, raise the uncertainty across Europe for an extended period of time .. Another negotiating tactic in effect

[brasso3] 18/5/2015 07:45

Gold above $1230...

[chipperfrd] 18/5/2015 00:59

You are welcome Mattjos. Must admit that I had not expected the outcome would be as positive as it has turned out!

I do expect the metal prices to go significantly higher, especially gold & silver. It also looks likely that the ALP will continue longer by the addition of ore from Ghadir.

However, I am not clear about what level of development Capex will be required and I also don't know what the sustaining costs will be for the Gedabek operation over the current LoM.

So I will keep a watching brief over this stock and see how things develop.

Just as an aside, I have estimated the AuEq oz by year (ie translated the copper & silver into their gold equivalents) in order to ease the calculation of cash costs and AISC (All-In-Sustaining Costs). Here is the breakdown by year assuming c. US$15m of sustaining capex/year:

Year . AuEq oz . Cost/oz .. AISC/oz
2015 .. 62,905 .. $714 ..... $953
2016 .. 89,244 .. $623 ..... $791
2017 . 110,228 .. $602 ..... $738
2018 . 115,327 .. $571 ..... $701
2019 . 125,524 .. $578 ..... $698
2020 . 125,524 .. $568 ..... $687
2021 .. 92,892 .. $590 ..... $751
2022 .. 92,892 .. $546 ..... $708

But I hasten to add that these are just estimates based on the CAE data for material movement and proposed mining schedule for the Gedabek reserve. It is very likely that reality will be somewhat different to these paper calculations.
Chip

[mattjos] 17/5/2015 23:32

Morning Chip ( as it is here in Tel Aviv already),That is some piece of work you have done there! Much appreciated personally & I am sure by others.Broadly suggests we are currently in the relatively early stages of quite significant production growth (already having achieved same since Gedabek come online).You are assuming that the Gedabek resource is exhausted in 7 years time? Perhaps based on the proven reserves to date but, if you look at the pre-IPO Bere Dolbear & prior Russian reports, they suggest the reserve is larger than this so, in exploration may further extend LOM.Your pricing looks comfortingly conservative also.How the Flotation affects the processing also yet to be proven & it is that which really interests me from Q4 this year. As you & Brasso say, so far this year looks to be getting off to a great start.

[chipperfrd] 17/5/2015 20:27

Mattjos (post 7513)

I thought I would see if I could answer your question regarding what range of parameters would solve the debt situation and provide cash for further expansion.

I used the data provided in the CAE report (Nov 2014) and then expanded it by year and production schedule to find the levels of production from each processing route (ALP, Heap & Flotation) throughout the current 9 year LoM as predicted by the reserve statement.

The situation is somewhat complicated at Gedabek by the multiple process routes, the use of SART for the heap and ALP streams, by the frequent push-backs of the pit, and by the need for extensive stock-piling in order to better meet plant throughput capacities.

Because of the differing grade range per year modelled in the CAE report I used the average for each process route across the LoM - which would appear to make sense because of the level of stock-piling that will be a feature of this mine.

This resulted in the following production numbers by year:
2015 ~ Au = 48,547oz, Cu = 3,190t, Ag = 72,345oz (although 1Q15 appears to be ahead of this target)
2016 ~ Au = 57,967oz, Cu = 6,961t, Ag = 149,781oz
2017 ~ Au = 68,425oz, Cu = 9,306t, Ag = 198,701oz
2018 ~ Au = 70,164oz, Cu = 10,055t, Ag = 214,141oz
2019 ~ Au = 73,643oz, Cu = 11,553t, Ag = 244,862oz
2020 ~ Au = 73,643oz, Cu = 11,553t, Ag = 244,862oz
2021 ~ Au = 41,428oz, Cu = 11,458t, Ag = 236,935oz
2022 ~ Au = 41,428oz, Cu = 11,458t, Ag = 236,935oz

At flat metal prices of Au = $1,200/oz, Cu = US$3/lb, Ag = $16/oz (which are very conservative in my view) and allowing for quoted NSRs for all metal sales and for 12.5% attributable to the State, the CAE production schedule would imply closing of the debt by early 2018. However, I have had to make a guess at sustaining Capex of $15m/year, which may well be wide of the mark.

AAZ will need to invest cash into enlarging the SART and pay for the full size flotation plant. It is also required to stop the level of cyanide leaching from the TSF and also needs to crush waste material and stockpile in readiness for eventual mine closure - all of which are an additional cost.

Assuming tax at 32% on closure of the debt and eventual attributable earnings of 49% I get an accumulated EPS of 51.4p over the LoM.

I note that the current reserve does not include Ghadir and that it is likely that underground ore from that deposit may well be available for ALP processing during the Gedabek LoM.

Chip

[brasso3] 17/5/2015 08:45

The 5250 oz figure for April was a bit below what I was hoping for but it is about on par for the time of year. At $1200/ ounce it is still $6.3m revenue gross. There are only 30 days in April! :)

If we look at the historical Q2 figures its clear that this April figure is on target to beat last years numbers.

2014 - 15736 oz
2013 - 8912 oz
2012 - 11716 oz

[aaples] 17/5/2015 08:21

The last recorded trade for AAZ on Fridy was 15:44:08 (from what I can see) - any ideas why all trades after this time have not been recorded yet. I know there were some as one was mine!

[brasso3] 16/5/2015 21:05

AAZs Q1 production has always been the worst quarter of the year. Here are the Q1 figures for the previous years and (total annual production):-

2015 - 17,193 oz (70,000 - 75,000 oz target)
2014 - 10,403 oz (60,285 oz)
2013 - 8,725 oz (52,068 oz)
2012 - 9,925 oz (50,215 oz)

As you can see from the historical production Q1 typically makes up less than 20% of the annual figures. 17,193 oz at 20% would reach 86,000 oz.

[jbravo2] 16/5/2015 19:06

Hi chip,
Thanks for your insight as you are one of the more level headed contributors across the gold boards.
Yep you're right, but I'm only anticipating a climb in share price as debt starts to decrease. Once the flotation plant and the Gadir ore starts to be used then things will really start to motor here. Things will change very rapidly in the twelve months from July.

As has been pointed out already, even with a level playing field $6.5m of costs have been removed by the currency devaluation.
It won't be a level playing field though.
I think 70k oz might be just hit, that's a big up on last year. The ore from Gadir will require far less chemical treatment. It is virtually copper free which means a lower copper output but that will be more than compensated for. That will be a big boost for a few years.

Granted the PSA seems onerous to some but I'm not sure I agree so readily. The govt will never take 51% in practice. The majority of costs will always come from their share, but yes ultimately the co won't take c.90% forever.

THE biggest difference though is in who owns this company. There are not many companies with the board owning over 40%. That is the single reason they refuse to issue more shares and the paltry 111m in issue is the reason why apparently healthy dividends (compared to today's share price) will be easy to pay.
THAT will drive the share price up once debt is sure to be managed.

It's not sure yet, granted. That's why it's 6p to buy. Will fortune smile on the brave? We will see.

[mattjos] 16/5/2015 18:19

I am wondering if, somewhere amongst all this data that we have, is there not a matrix that will show us at what blended ore grade (from Gosha, Gedabek & Gedabek North) & what pog does the current business model create +ve cash flow, sufficient to meet debt obligations & continue expansion.I am sure it is possible to model all this but, by no means an easy task. The company likely to have a clearer understanding & therefore we must assume that management have taken this into account in their decision to expand the flotation plant.The recent local currency devaluation and fuel cost reduction can only have had a very positive influence on the model.There must also be economies of scale available as consumption of processing consumables increases eg. Cost of acid

[mattjos] 16/5/2015 16:14

Chip, well aware of the EV to mkt cap comparator + the necessity to reduce costs.Several ways to reduce 'unit' costs, with economies of scale being one and particularly in the case of Gedabek, optimising the processing methodology according to the ore (blend) being run through.The latter has always been identified by management as the key to unlocking Gedabek hence the addition of SART, agitation & now flotation in addition to heap leach.

[wimbled] 16/5/2015 16:03

Suggest AAZ average $1350 per oz last year with 50,000 oz produced. Hence the losses.

40% increase would average production across this year as 70,000 oz. With factored costs equal $964 per oz.

Not factoring the devaluation. I am certain AAZ will return a good profit this year. $10 to $14 million

[chipperfrd] 16/5/2015 13:22

Excuse me for commenting guys but, the financials are far more important than simply production numbers in my view.

At the interims their gross margin was -2.5%!
Their operating margin was -13.4%.
Their Pre-tax margin was -22.9% and their Net profit margin was -21.1%.

They must improve on these numbers otherwise the operational figures are meaningless.

At the interims their debt was US$50.8m so their Ev is c. US$56.6m - which is much more relevant than their market cap. Interest costs alone are adding an effective cost/oz of c. $117/oz and they still need free cash flow to pay down principal on all that debt.

So margins must radically improve and better still they need to start generating free cash flow in order to begin to reduce debt - so they have an awful long and difficult path to tread before there is light at the end of their particular tunnel.

Difficult as all that may be, if they can eventually pay down their debt, they would still be faced by the PSA then reducing their earnings by half!

They obviously need a far higher gold price and static to reducing costs in order to help clear these financial hurdles.
Chip

[jbravo2] 16/5/2015 11:29

Production for April was 5,250oz

[brasso3] 16/5/2015 10:40

Oops i miscalculated. Its 22,400 troy ounces i think. 5200 oz gross for April

[mattjos] 16/5/2015 10:38

Well done for digging that one out Brasso.The production increase being maintained for the 4th month now & remain on target for 75koz for FY.Will be very interesting to see now what effect the flotation plant has on figures. Will we see a combination of increased production & reduced costs against a backdrop of strengthening gold prices? A fair amount of commentators suggest Q3-Q4 will see Gold pick up in earnest. An attack on $1250 in the coming week or so looks possible now