Anglo Asian Mining Dividends - AAZ

Anglo Asian Mining Dividends - AAZ

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Stock Name Stock Symbol Market Stock Type Stock ISIN Stock Description
Anglo Asian Mining Plc AAZ London Ordinary Share GB00B0C18177 ORD 1P
  Price Change Price Change % Stock Price Low Price High Price Open Price Close Price Last Trade
-4.50 -3.23% 135.00 134.50 136.00 135.00 139.50 12:52:45
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Industry Sector

Anglo Asian Mining AAZ Dividends History

Announcement Date Type Currency Dividend Amount Period Start Period End Ex Date Record Date Payment Date Total Dividend Amount

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gold finger 1: Anglo Asian Metals (LON:AAZ) Share price: 141.2p Market cap: £156m Forecast revenue: $106m / £86m Production ounces: 81,399 All-in sustaining cost: $591 (I hold) AAZ is a highly cash-generative gold miner with four mines in Azerbaijan. Here are the bull points: A low all-in sustaining cost makes for high levels of cash generation, This cash generation has allowed AAZ to build a strong, debt-free balance sheet, It is piling up cash and paying strong dividends, It is well placed for acquisitions or new discoveries at existing sites, and It appears to be cheap according to cash flow, earnings, and dividend metrics As a relative gold novice, I hold AAZ because of its obviously attractive mining economics, safe balance sheet, dividend payments, and cash generation potential. It’s a fairly straightforward pitch. The Ranks love it as well, classing it as a Super Stock based on its attractive spread of Quality, Value and Momentum: BNhhqVXqsnUgihtygSn-8XptZhHNdwE89b-O_frYJL2-HKXV2SjO7hOeRwVAeIOBDKHM-Nu_7LdGS4KS6TW93aaZllXNRFXxg0_SRkhvXzeslP27DPMoolNBvkBcDJcqdjRWQl_6 What AAZ needs is to prove more resources. The group is dutifully doing so and the body language is positive, but I will believe it once I see confirmation. Until then, possible disappointment on this front remains a risk. Exploration opportunities at AAZ’s sites are ongoing and the signals are positive. The group’s recent updates suggest upgrades in the near future. On top of that, AAZ has five “fast-track221; production targets at Gedabek and the Ordubad Contract Area. There is always a risk these do not materialise, but the work sounds promising so far. Regardless of what happens here, if gold prices hold steady, at its current valuation AAZ could rack up cumulative free cash flow in excess of its market cap in under a decade. AISC, cash generation, and financial health The group’s open pit mining sites place it firmly in the lowest-cost quartile, with an all-in sustaining cost of just $591, making for a highly cash generative miner. See the free cash flow yields below. AAZ 2014 2015 2016 2017 2018 2019 Operating cash flow per share 13.3 20.5 26.3 26.3 41.3 25.9 Capex per share 15.1 13.1 9.83 9.24 16 8.04 Free cash flow per share -1.8 7.4 16.47 17.06 25.3 17.86 Share price 137 137 137 137 137 137 Free cash flow yield -1.31% 5.40% 12.02% 12.45% 18.47% 13.04% This has enabled AAZ to power its balance sheet from a net debt position of $52.4m in 2014 to a net cash position of $21.2m at end-December 2019. This will likely continue to grow even after dividend payments and capital expenditures over the next few years. m36E2-J6DKQtQnJ--KBfpk80DVsHoY5m67eZ0WYAuS1-UP3k0KYRW10h1nK4zsubcQLiSHmv6sdPniAWlbuOj8SNA0N9WcPXEHiCnyyuRXngHlhtZvLz1z082qqeFP6Oi1UEERid Trading and outlook AAZ has quoted a combined mine life to at least 2024 - a bit close for comfort. The miner has already identified mineable extensions to existing sites though. This is how management sees that timetable over the next few years: Oe4zf3bx_CU_g4rMq8dZw5-Uh9l8RQHKuxISwd_AAhwj2HZyJqwzcbNCJVZFIb0pcPK3Lpnqbro9BGn9Nxb5L4bw-z6Xjb8CUx6R7foHuO-su1X__sJWTivTLrw5I4UzrKAp94tG It sounds like the Gedabek and Ordubad Contract Areas have bigger “system” potential as well, although the scale of this has yet to be confirmed. In addition, there are five fast track exploration targets: Avshancli 1 and Avshancli 3 (Gedabek Contract Area); Gilar – (Gedabek Contract Area); Zefer Cell 9 – (Gedabek); and Ugur Deeps – (Ugur open pit mine). This fast-track plan sees Avshancli 1 and 3 potentially coming onstream in the second half of 2022 with the last one, Zefer, potentially onstream by the beginning of 2025. EJ8lfFEo1dAECwjUfkiNAiDupAyha_PBgeraD0j4hFHG4xA8aP8GWXV4QUopVOzeRKHERzjzIoK7Yzd5JHUCxct2bV0F155zt-Q377mmwBRh7eio8w6MkXt-F_fbOn3mebJ12Xzq Red flags AAZ operates under a Production Sharing Agreement (PSA) with the government of Azerbaijan, which it periodically has to renegotiate. Similar contracts have been used in the development of Azerbaijan’s oil sector in cooperation with oil majors, such as BP. Anglo Asian finances the operations and the government receives cash payments after certain expenses. AAZ is entitled to a maximum of 75% of sales proceeds. Thereafter, the remaining proceeds are allocated 51% to MENR and 49% to Anglo Asian. I think regulatory risk is a concern. In the 2020 CEO Letter to Shareholders, it says: August 2019 that the Government of Azerbaijan had announced it had appointed advisors with regard to a possible transaction with Anglo Asian Mining. There have been no significant subsequent events requiring further announcements by us. Nevertheless, I can assure shareholders that it is the Company's understanding that the Government of Azerbaijan has no intention to nationalise, purchase or otherwise take control of Anglo Asian Mining or its assets in Azerbaijan. Everything I’ve read in trading updates and financial statements indicates AAZ has a strong relationship with the government, at least. Beyond that there’s not much I can add to the matter besides flagging it up for others to make a decision on. As you might expect of a small cap Azerbaijani gold miner, the group’s Major Shareholders is populated by individual investors and slightly lacking in classy institutional names. Is this a corporate governance risk or an opportunity for nimble retail investors? I’d argue it’s a bit of both. Some shareholder churn at some point could act as a nice tailwind if there is institutional interest out there - perhaps in the event of confirmed new reserves. But then of course, there is also the risk that new discoveries fail to materialise - in which case AAZ will be compelled to seek acquisitions. A final point: AAZ qualifies for not one but two short screens: if7xlUKqA0k7tJN7Gn_YpvuK8SFQcGyN6W0QOmjsZWbLZwdkGoSnTqHoo2AXdJhwzkERq1hd990GNYroMX7phi20EkDb3BwBGjnbiNunHfKEH62XpxaqckFn4dIbi5MHw7uZ9A-7 The most notable point flagged here that I can see is that receivables are increasing in proportion to sales. This is a fair comment - you can see the increasing receivables on AAZ’s balance sheet. It’s a big jump: 1FMxmgaxQQS7SJzFAFhU7ovhpNYXZKDWJ7tcxtb-aYIcIC8bmDM09Y5Y63zkAKIVBqNsDRuBupDiH3v985uGSw8kNwO5IroT-l83mMprF-Oxll_0cWcADMZV22qqkNXc90htLQi4 The bulk of this (c$18.5m) is gold held due to the government of Azerbaijan. An offsetting balance has been recorded under Trade Payables. I’d hope this unwinds, but again, another example of the government’s presence. Conclusion and valuation To recap the dangers, I see: Regulatory risk, Scope for mine exploration disappointment, and A recent increase in receivables as a proportion of revenue … But I also think there is a reasonable margin of safety built into the share price at 7.4 times forecast earnings. An AISC of $591/oz puts the company in the lowest quartile of the gold mining industry’s cost curve. At its present rate of cash generation, I reckon AAZ will generate its current enterprise value in free cash flow over the next 10 years (although this assumes successful mine life extensions). What we know for sure is that AAZ has a strong balance sheet and highly cash generative operating characteristics. While we wait for announcements, the company has committed to pay out 25% of free cash flow to shareholders. Brokers aren’t making forecast dividend per share estimates right now, so this income potential might not be priced in. The FY19 dividend was 8c (around 5%) so it’s a useful amount. There’s compelling valuation and margin of safety here in my view - the only question is if there’s an even better deal out there somewhere.
mattjos: mf, i really am not bothered about trying to overlay some other explanation for how the price of gold will behave. Everything you said in your post are events in history which had an impact on the emotions of the participants in the gold market. Fear & Greed are the two market extremes. Events happen which influence the emotions of participants. You are a prime example. you are frustrated that AAZ share price is not going up and so you are casting about for a reason as to why. You have currently seized on the spread as the reason why this is the case. Your frustrations (your emotional state) is causing your brain to seek out a reason to zero in on. I'll wager that as a consequence of your emotions and frustrations you have sold some AAZ over the last 6 months and tried to do something else with the money & that you are far from the only one to do so. Therefore there has been some selling going on and all these individual actions influence the price & the price is reflected in the chart. The chart enables you to dispassionately look at the entity in question and see what the emotional state of the participants is / has been / & is likely to be.
farukequity: Comments from mad foetus are exactly right. AAZ used to be large part of my portfolio across ISA, spreadbet and SIPP accounts for well over 2 years. I now only hold in SIPP, having sold ISA and spreadbet positions in early May, due to mainly two reasons:- lack of momentum in the share price and no clear short-term growth catalysts- underwhelming production guidance (how & when will AAZ produce >100k ounces?)AAZ is a great long term hold for me & I will happily collect solid dividends - but that's SIPP strategy where I have all the time in the world.For other accounts I'm looking for quicker growth and it's been easier to find it elsewhere. I have for example put big chunk of AAZ sale proceeds into PUR, which has done very well indeed. After today's RNS, AAZ, it feels like momentum will start to build again so I'll be looking to but back in reasonable size again soon
bozzy_s: Final word on our wrong-with-hindsight investor. It's the easiest game in the world to pick AIM basket cases and talk them down. The market's littered with them. I see that's what this poster does, under various usernames. If he's short on AAZ - the highest yielding gold miner in London, with the 2020 payout estimated by Hardman today to be above anything anyone on here expected (10.5c vs I was expecting 9 or 9.5c) - he's either bloody brave, or recklessly losing his client's money. It was a brave call to say AAZ was overpriced at 120p last year, after the long-running rally. "NPV based 'values' are never, ever anywhere approached in practice....." then AAZ briefly went above his 'never ever anywhere near...' price. His call was initially wrong (due to the takeover rumours), then right (due to Covid-19 market collapse). And today the share price, plus dividends received since last June, are about 10p higher than his initial 'sell' call. I actually agree with him, that paid-for broker targets are usually pie in the sky. Always take with a pinch of salt. In many cases (see CNR) they precede a fundraising. Never buy a share on the back of a paid-for report. Look at the bigger picture, and look at the history. Which is why I don't understand why he's here!
brasso3: AAZ I think the JORC is likely which should increase LOM but I think the license extension will be more important than either. You are either comfortable with that extension being granted or you are not. That is the main reason why AAZs share price has languished in the last 12 months. If/ when that license extension is granted I hope to see a step change in the AAZ approach. The dividend is nice but I invest more for growth. I have a few rental properties that give me my dividend. :)
bozzy_s: I think the latest update is still being absorbed by the market, and by shareholders. As positive as the long term outlook is, overall production is still on a downwards trajectory. Realistically we're looking at 2019, 2020, 2021 and perhaps 2022 with lower year-on-year output. I was hoping we'd see some new processing facilities this summer / autumn. Then 2021 onwards would hopefully see our company start to grow again. The share price action has been reasonably fair I'd say, given the latest update. Of course the lower the price goes, the better the market-leading dividend yield. I'll be adding if we get to the 80-100p range. Very fair comments by JBravo above. If you believe the company will run out of ore in 2024/25, sell. If you believe they have enough to get through to the 2030s when PSAs expire, hold or buy. If you believe the PSAs will be extended and other mines brought online, buy.
bozzy_s: Understandable frustration today. I had exactly the same feeling when logging in. Knew AAZ would be red. Relieved to see it was just 2p down at the time. It's easy to forget the positives when we're in a funk like this. Just need to look at the share price chart; we've rallied from 70s pence to 140s, now back in the 120s. The dividend will underpin the share price at ~100p. So the downside from here is minimal. The company can go one of two ways. And whichever they choose, 125p is good value: 1) They can either have the ambition to expand to mid-tier status, while paying a very fair dividend in the meantime. 2) They can settle for steady production, bringing online just enough to replace mined out ground. Capex costs absolutely minimal as no new processing plant needed. And pay 90-95% of FCF as dividends. I'm sure they're still aiming for 1. That brings the potential of huge share price growth as plans are revealed, equipment purchased, and new processing plants begin to run. If they went for 2, the lack of expansion would limit the potential upside. But a steady annual dividend of ~15-20p would surely mean a share price above £2.
mattjos: Keeping the sums very simplistic & therefore using a fictional share price:Sell 10,000 AAZ at £1 per ea. From Trading Account & switch into SIPP at same price.That would be £10,000 SIPP contribution. you immediately get the 20% added to the SIPP account & later can claim the other 20-25% in your Tax've not got 10,000 AAZ in your SIPP + £2,000 Cash.Use the £2,000 Cash to buy a further 2,000 AAZ shares at £1've not got 12,000 AAZ shares in your SIPP.When the FY dividend is paid in July you will receive 12,000 * (circa) 3.65p = £438 (tax free).Assuming the share price stays pat for the period, you now have £12,4348 in your SIPP as compared to £10,350 which you would have had in your Trading Account had you done nothing + there is a further £2k you are claiming back off the tax man in your tax return (which may or may not be partially used up by Capital Gains Tax on the original sale if you breach the £12.5k limit).The above very simplistic but, seems sound to me if you can afford to do it.
wanobi: now then, that does lead one nicely into considering the facts in front of us and what options might indeed be going on behind the scenes at AAZ, if any,,, so here we go, I'll start the list and let's see what our combined brains come up with :-) Cheers Wan :-) 1) Plan is real, nothing else going on? 2) Plan has been constructed to minimise the potential AAZ has, downplay it, push out timescales,,,, why? To get the best PSA deal? 3) Nationalisation & game over - never, never, never? 4) Large fish in discussions with AAZ who wish to pay a sensible price, higher than now, but not too high,,, one which management will be happy with - keep the plan bland so the share price holds steady - remember Bill's comment..? 5) JV with AG being negotiated along with PSA..? 6) 7) 8) Please feel free to throw any thoughts my way and I shall add them to the list :-) Cheers Wan :-)
terropol: Anglo Asian Mining* (AAZ LN) 118p, Mkt Cap £134m – Strong FY19 results with the Board announcing an increase in dividends BUY Revenues increased to an all time high of $92.1m (2018: $90.4m) reflecting stronger gold prices and higher copper concentrate sales proceeds. Gold bullion sales came in at 54.0koz at an average realised gold price of $1,410/oz (2018: 59.5koz at $1,265/oz). Copper concentrate sales totalled 10.3kt with revenues contribution of $16.7m (2018: 7.7kt and $15.4m). AISCs of gold production averaged $591/oz (2018: $541/oz) remaining in the first quartile and highlighting operational efficiencies and low cost status of the jurisdiction. EBITDA amounted to $50.5m (2018: $49.8m) implying strong 55% EBITDA margins (2018: 55%). PAT was up 18%yoy at $19.3m (2018: $16.3m) and EPS of 16.91c per share (2018: 14.32c). FCF, including cash in transit, totalled $25.5m (2018: $28.9m) after accounting for an increase in the working capital ($7.6m v -$0.6m (ie cash generated) in 2018) largely driven by an increase in ore stockpiles and heap leaching at the end of 2019 (+$9.7m) as well as incurring $4.7m in capital expenditures (2018: $15.3m) and $4.5m in exploration costs (2018: $2.9m). The Company is debt free since February with $26m in the bank as at 31 March 2020 which does not include $5.9m worth of gold produced in March and sold in April. A stand by credit facility has been agreed for $15.0m as a precautionary measure should COVID-19 related restrictions require external sources of funds. The Company estimated that it would cost around $1m per month to place Gedabek on care and maintenance and around $4-5m per month to continue running it at full production. The Board advised a 4.5c final dividend taking the total payout for 2019 to 8.0c (2018: 7.0c) or $9.2m. Shares will go ex-dividend on 2 July 2020 with the dividend to be paid 30 July subject to approval by shareholders on 23 June 2020. Operationally, Gedabek production facilities continue as normal with no cases of COVID-19 recorded on site. Additional expenses related to VOICD-19 are estimated at just $0.1m per month attributed to chartering aircraft to ship gold dore to Switzerland, staff overtime and some other logistical costs. The team is continuing with extensive exploration programme focused on extending the life of mine at the existing mining operations as well as potentially bringing in new mineralised zones into production. Exciting exploration results point to a potential extension of the Gedabek life of mine that currently stands at 2024 with updated mineral resources and reserves expected in Q3/20. The Company reiterated 2020 production target of 75-80koz GE (2018: 82.8koz) comprised of 65-67koz of gold and 2.2-2.4kt of copper. Conclusion: Good earnings results highlight record generated revenues, high earnings margins led by low operating costs and strong FCF generation during the year with the Board announcing an increase in the final dividend payment bringing the total to 8.0c. This is equivalent to a 6.2% yield on the average share price in 2019 and 5.4% on the current spot price. The decision to distribute 36% of the annual FCF, above 25% envisaged in the dividend policy, reflects confidence of the Board and management in the business supported by strong team, earnings and balance sheet. Outlook remains strong with the Company reiterating 2020 production guidance at 65-67koz, exploration works returning encouraging results pointing to a potential extension of the Gedabek life of mine and gold prices trading at multi year highs.
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