Anglo Asian Mining Share Discussion Threads

[wrighty46] 08/8/2017 08:53

Not alot hopefully, and if our buyers aren't done yet we all know this will move.GLA

[jeanesy] 08/8/2017 08:50

looks like another big order has just gone through . How many are left ?

[ilostthelot] 08/8/2017 08:24

Good post 8212 again Matt. Thanks. £3-£5 per share is not out the question given enough time and a good resource improvement.

[petrusgazin] 08/8/2017 04:15

2018 production is going to be target of at least 80k oz and that will be maintained for 6 years min with just ugur and the main pit, only capex needed now is small additional floatation expansion which will pay for itself in 18 months. Debt will all be repaid by the end of 2018 easily and exploration team will increase from current 20 people out of 650 total workers. Exploration team is finding over 10,000 oz per staff per year which is a cost of under 5 usd per oz, finding additional ore wont be a problem. Ebitda in 2018 could be as high as 50 mio usd ( from 34 mio in 2016 ) In 2019 under the psa the gov take will increase but by then the cost per oz will be so low that the gov and aaz will be splitting 800 usd per oz , accumulated tax losses and high depreciation charge also mean income tax will not be paid for a while so after 2018 there will be lots of cash for shareholders ....

[celeritas] 07/8/2017 23:38

Solg was mentioned earlier which is still an explorer, look at the mkt cap. Plenty of others have much higher caps even without a producing a mine and the necessary plant to process different ores. Aaz is well positioned to grow, in my eyes £100m easily achievable.

[el_duderino_7885] 07/8/2017 22:45

But Matt it's not what you or I think it should be valued at, it's what the market thinks that is important.

It's never come close to £100m even during the gold rush.

I'm not saying there isn't potential here but I think it's folly talking up these kind of valuations at this present moment.

One step at a time. I'll be very happy with £40m this year.

We'll need a much larger proven resource and demonstrable track record of sustained profitability before the market agrees with your valuations IMO.

[mattjos] 07/8/2017 22:15

it is patently ridiculous that the company can be bought today for £28m & the free cash flow over the next two years (at current run rate) would see the buyer entirely reimbursed their purchase price. this time 2019, any notional buyer at this price, would own AAZs acreage, plant & equipment for nought.

The stacked sulphide ore alone will last for another 12-15 months & so too the flow from the heap leaches.
If you read back the history of the company & look at the recovery rates achieved from 2009 to now, there is circa 30koz of gold that has simply gone over the wall into the tailings pond. With the water processing plant they can quietly get that back now.

This is a productive, profitable, asset-rich mining company with a near-unique position in Azerbaijan. It should trade at a premium to its book value, not a 50% discount!
Behre Dolbear suggested A N Other entity would have to stump up some $300m for the opportunity & that was at far lower Gold & Copper prices.

a £100m+ mkt cap is cheap. A £200m mkt cap is achievable & a £300m mkt cap is possible

[el_duderino_7885] 07/8/2017 21:42

What's the valuation now? Around £25m? You're not going to see a valuation 4 times the current one any time soon at current gold prices. We have to be realistic here.

I think £40m is a sensible near term target.

I realise the company is a leaner, meaner machine now but the valuation never approached £100m back in 2011 when we had a gold mania and price of gold of $1,900.

What makes you think we can be valued well in excess of this any time soon with gold at $1,200?

[celeritas] 07/8/2017 21:34

£40m,more like £100m and that's with gold above 1200.

[el_duderino_7885] 07/8/2017 20:53

If we can prove a life of line of say 5 years @ 70k equivalent oz a year with say $500 free cash flow an oz you get a valuation of around £80 million using a PER of 3 before factoring in the profit sharing agreement and political risks.

A minimum market cap of £40 million should be achieved once the resource is proven assuming gold price near $1,300.

[mattjos] 07/8/2017 20:51

the 'issue' of limited proven resources has hung over AAZ since first gold pour in 2009.
I have lost track of the number of people who has shied away from the company on the basis that there are insufficient resources.

The reosurces are there .. the Russians knew it and proved it, so too the Azeris, Bashirov knew it & the management know it and Behre Dolbear were also persuaded.

The challenge has always been about how to profitably extract those resources, particularly given how varied and complex the ore has proven to be.

The company has been persistently challenged by this reality & has responded magnificently.
Heap --> SART -- Agitation --> Flotation & now recovery by tailings effluent purification.

It has now got the spectrum of processing assets in place, got the skills & know-how to operate them all & not far off paid for them all ... & now, very sensibly, it is going on an exploration drive to help identify exactly where to put their mining efforts to achieve the best returns.
It's been a long road since IPO & first gold pour but, hats-off to them all ... the company are now genuinely on the verge of being seen as a mid-tier miner & that should & will shortly be recognised by the markets

[el_duderino_7885] 07/8/2017 20:37

Matt agreed. I would apply a very low p/E ration to AAZ given its limited proven resources and life of mine. Say about 3.

This could be as high as 10 or more defo ending on drilling results etc.

So if you know the cash costs per oz and oz's per year it is very easy to calculate the earning and apply the P/E ratio to get a valuation.

You won't need to discount earning much given that interest rates are virtually zero.

Not sure yet what the cash costs per oz here given the changes in ratio of gold/silver/copper produced and rising price of oil.

[mattjos] 07/8/2017 20:20

recently subscribed to Stockopedia and fiddling about with it to get the hang of it. What an excellent product!

Anyway, straight to the 'Bargain' screens & then the 'Free Cash Flow Cows' screen as that is what I firmly believe is the real measure of value in the company - its ability to create free cash flow. Many other 'accountancy' metrics are just too easy to fudge but, you cannot fudge cash & ability to service and reduce debt & also to grow the business at the same time! ... lenders don't take accounting terminology as payment. Cash is Cash & is always King in my book.

Here is definition of the Free Cash Flow Cows screen:

"Free Cash Flow Cows is a deep value bargain strategy inspired by the investment writer, Jae Jun at Old School Value. It looks for companies that appear to be cheaply priced compared to the amount of free cash flow they generate. In particular, they should be stable, cash rich companies where free cash flow is actually growing. Among the ratios used in this strategy is Enterprise Value to Free Cash Flow and Free Cash Flow to Long Term Debt. Jae Jun says: "When it comes to true profitability, forget earnings and EBITDA. Free Cash flow is by far the best number to refer to."

This screen currently only picks up 18 stocks in London & AAZ is in there, right at the top.
It met the screen criteria on 27/5/16

If we look at it solely on a value basis:

Price to Book Ratio: 0.45
Price to Tangible Book: 0.47
Price to Free C/Flow: 2.0
Price to Sales: 0.47
Latest Annual Free Cashflow: $18.5m
FCF per share: 13p
Op C/Flow per share: 20p
Book value per share: 56p

Anyway, I could go on and on about various metrics but, what it clearly shows is that despite the rise over the last 18 months, this is still valued absurdly cheaply.

Bashirov started selling in the 55p-60p region and that is where this should be now .. at the very minimum!
Even if & when we get there, folk need to understand just how much bigger and more valuable AAZ has become in the intervening 4 years.

Little wonder the loose stock from the Director options sales is being picked up as fast as possible ... this is likely the last chance to buy quickly & in significant volume before the market cap moves up quickly.

[jbravo2] 07/8/2017 18:41

Yes closing price is always determined by the auction trade if one happens.
We'll presumably open down slightly tomorrow as they clear the last of the stock that came to market today.
It won't last long at the volumes we're seeing the last few days.

[el_duderino_7885] 07/8/2017 17:57

I bought some on the bell at 23.75

[jeanesy] 07/8/2017 17:49

Nice volume . I suspect true price is is about 23.75, so down on the day as one of the last trades shown was a UT. Maybe a chance to buy some at 24p tomorrow ?

[el_duderino_7885] 07/8/2017 17:38

Ps anyone who doesn't believe in the power of charting, go look at the AAZ charts Matt has been posting on here.

Recent breakout of that wedge and then a fall back down to kiss the upper line once more and away we go.

Very clear formation and breakout

[el_duderino_7885] 07/8/2017 17:29

Have to say some serious, consistent buying coming in here. The market is looking forward to the JORC.

Woukd be surprised if we didn't test 30p in the next week or so once the director's shares are cleared.

Volumes are always a clear sign that there is plenty of interest :).

[robo15] 07/8/2017 17:16

Unchanged on the day :-)

[mattjos] 07/8/2017 16:36

not many when the buyer is getting them in 150k chunks like that in the closing auction.
My ready-reckoner is about 250k remaining

[el_duderino_7885] 07/8/2017 16:29

Anyone got a handle on how many of those directors shares are left to sell?

[wrighty46] 07/8/2017 16:04

Doesn't matter they're through the system and the price has hardly moved. Strength in the background, bodes well. GLA

[puntogt] 07/8/2017 15:59

It is buys and sells all mixed up I suspect the 2 350k's are sells as the price dropped when they went through if you look at the Google chart. Mind you they could be buys that went through much earlier and were reported late?

[jbe81] 07/8/2017 15:44

nice opportunity to buy sub 24p