Anglo Asian Mining Share Discussion Threads

[mattjos] 21/12/2015 12:28

The 34% devaluation of the Manat in February resulted in the company advising on 9th March:

"Recent devaluation of the Azerbaijan manat against the US dollar expected to result in Company cost savings of approximately US$6.5 million for the rest of FY 2015"


Today's devaluation is circa 45% so, it would seem reasonable to assume that AAZ will save a further $7-8m in FY16

That saving in itself will afford them the lion's share of the interest payments due through all of next year I believe & is equivalent to Gold increasing in price by $100/oz

[jeanesy] 21/12/2015 11:11

Although we should not be affected by the weather as much it is also nice to see that it has warmed up in the area. Perhaps november's figures were also down because of the really cold weather !

[brasso3] 21/12/2015 10:08

Matt

I appreciate that but as costs are already below $700/oz as per the CFOs comments I do not think $500/oz is unrealistic. I think this makes AAZ one of the cheapest gold miners around.

[mattjos] 21/12/2015 09:50

Brasso .. there will certainly be a cost saving from the currency devaluation but, I do not expect it to be an exact match.
Some of the input costs will be commodities such as processing chemicals .. these will be priced in US$ on the global market and therefore will not benefit in any way from the local manat devaluation.

The company does have a large workforce now and their wages bill will be paid in manat from US$ revenues so, the impact there will be obvious but, at some point wage inflation will start to move upwards.

It is certainly good news for the company and should elicit a formal news piece indicating the anticipated cost savings in the next few weeks

[bsg] 21/12/2015 09:44

They probably have other cost that have gone up 50% as well.

[jeanesy] 21/12/2015 09:39

So why are we 'only' up 11% ?

[brasso3] 21/12/2015 09:34

This is now significantly undervalued compared to all AIM gold miners. The 2016 operational costs will now be down to around $500 per ounce.

2015
71,000oz x ($1100 - $736) = $25.8m

2016
70,000oz x (§1000 - $500) = $35m

[brasso3] 21/12/2015 09:18

The 250k trade was a buy!

[mattjos] 21/12/2015 09:18

the 250k was the first trade of the day at 08:00:26 and higher than the mid at the time so, I suspect was actually a buy

Pretty much as anticipated the defence of the manat peg has had to be abandoned. That policy has savaged the country's forex reserves.
With oil anticipated to continue to trend lower, the govt had no choice.

In addition to the reduction in input prices to the company's business model, for me, this introduces something much more interesting.

Govt revenues from oil will continue to take a battering. As the only producing gold miner in Az, there will surely now be a new centrally-motivated impetus to quickly facilitate the company's expansion in gold production as soon as possible.
This, I suspect, is what Reza will have been busy behind the scenes trying to get done & I'm sure we'll hear about sooner rather than later, now that the currency peg has been abandoned

[jeanesy] 21/12/2015 09:16

That would explain why i could not get a quote at that time.I was minutes late and did not get my order done until i returned from getting my puncture repaired. A costly one... just my luck!!

[jbe81] 21/12/2015 09:13

That "sell" was from 8am, looks like a buy.

[jeanesy] 21/12/2015 09:12

I wonder when the currency news will filter through to the general market. I would have expected this to be flying. I tried to buy some earlier today and could not get a quote. That is always a good sign. Perhaps the tide will turn here.

[jeanesy] 21/12/2015 09:03

Big sell order just gone through 250k . I wonder when the selling will stop? Volume up nicely already

[brasso3] 21/12/2015 08:10

This will now make our operation highly profitable!

The CFO said he expected full year costs for 2015 to be around $700 per ounce. With this news our costs must now come in below $500 going forward?

This takes away a lot of the risk with declining gold price. Could not resist a top up at these crazy prices.

[goldfund] 21/12/2015 07:59

"The central bank of Azerbaijan has abandoned its currency peg and floated the manat. Immediately, the US dollar soared 48 per cent against the currency"
All our costs go down by 48%!!!

[jeanesy2] 19/12/2015 10:19

Sadly i agree there are too many unanswered questions at the moment for the market to be interested. The pog will not help either until the picture is clearer. This may even drift a lit lower in the short term.

[ferries5] 19/12/2015 09:45

One of the reasons for the low production last month could be, That they had to adjust the mixture of ore for the agitation plant , so the flotation could produce a sellable product. ( No Gadir ore being used because of the zinc production.?)

I do not think we will here much about copper production until February at the least, they only really started commercial production end of November so they need a few months to wind up production.

But in the January statement I think Reza Vazira has a lot of explaining to do. He needs to tell us his business plan. Start giving us some figures, he has been very coy about those the last year.
What does he mean when he says he wants to expand the flotation plant at a cost of $10 to $15 million, Is that so he can get the Gadir ore through the flotation plant or is there more to it. Surely the mineralisation should have been checked before they built the plant. (though. to be fair it does change)

As for raising the money for the the expansion, that is going to be difficult. Azerbaijan banks are nursing big losses due to the manat devaluation. equity fund raise, Maybe as a last resort, it would hurt Vazira more than anyone.
They must get back into profit inclusive of all debt costs, If they can do that, pay down some debt , keep there debt ceiling at $52 million and use profits for expansion.
Or renegotiate the 12.5% of production that the Government take, even if it is only for a year, it is in there long term interests as wel to a certain degree.
Until these questions are answered the market does not want to know. So many ifs, Price of Gold etc..

[jeanesy2] 18/12/2015 19:49

The market has absorbed yet another 100k sale. I thought nov production figure was down. We really need some more info re copper but will have to wait until jan I suppose.

[brasso3] 18/12/2015 12:43

The 15th is a Friday so expect it will be issued by then. The Azerbaijan press sometimes have the production numbers by the 15th of each month.

[wrighty46] 18/12/2015 12:30

14th January released this year.

[captain_crash_and_burn] 18/12/2015 12:10

FY report for YE 2015 will be very interesting, surely it won't come that early will it Brasso?

[brasso3] 18/12/2015 10:16

They will issue the 2015 FY report before the 15th Jnauary.