Anglo Asian Mining Share Discussion Threads

[yasx] 13/6/2018 02:19

Homebrewruss,

Thank you for referencing #13457 on the thread for cheerleaders and deluded optimists. Following your suggestion to read the aforementioned comment, I took it upon myself so to do. But then, after reading the first few lines I encountered the following inconsistency...

"My first post on this BB.
There is absolutely nothing I can say here that will add anything to the sum of knowledge....so I wont bother trying.
However, I do hopefully have something to add."

Eh? As you might have guessed, I chuckled and did not bother reading the rest.

[yasx] 13/6/2018 02:15

The reality is that this is an issue. It might be the geopolitical risk, but I have seen them promote even riskier propositions. This is of course not a low risk investment, and in order to lend it a greater degree of credibility the Co. needs to get some institutions on board as I have oft stated. But, that requires an institutional roadshow backed by the CO. broker issuing an upbeat assessment of the shares. Neither of these has been forthcoming and the shares continue to inch higher in increments with a significant degree of churn due to paltry retail traders.

[yasx] 13/6/2018 02:11

It does make me chuckle that several weeks ago when I raised the issue of why the Company and the Co. broker were finding it remarkably difficult to say anything even remotely positive about AAZ and why this was potentially a cause for concern, numpty FZarin indicated that if I did not like the product I ought to sell - fast forward a few weeks and each of the many contributions today is singularly focused on this very issue.

Oh well- better late than never.

[cflather2000] 12/6/2018 23:58

Interesting post. Thanks

[davidspringbank] 12/6/2018 23:32

Thechurch, welcome. AAZ is also my biggest position in miners. I like the way they have recently turned things around. Reza is a star with a plan, is very conservative and tends to play things down and I like the way he has got "skin in the game". The BOD is very impressive. I also like the massive area they operate in with potential for more exciting discoveries. Their new geologist is doing a great job. I like the way the price of commodities has bottomed out and turned around since early 2016. I think there is a lot more to come for patient investors. My second biggest holding is in GEO, which has recently attracted Lundin's top people. GEO has made some exciting discoveries and is worth investigating. They now have some serious people on board who know what they are doing. I am a long-term investor.

[homebrewruss] 12/6/2018 21:37

Yasx, there's an interesting post on the other thread #13457 reasoning why the broker forecast is currently so low

[brasso3] 12/6/2018 20:42

AAZ used to make up around 5% of my entire portfolio. At 45p its now around 30%! I don't normally stick out these long journeys as fear gets the better of me. I remember missing out on a massive rise in AYM many years back. Never again I hope.

[thechurch333] 12/6/2018 20:34

Thanks Brasso3

[thechurch333] 12/6/2018 20:33

Thanks Mattjos. I've found most of the answers to my questions in previous posts on this board. I've gone back quite a long way and it really gives a good feel for how this has unfolded as an investment.
As an aside I came to AAZ as I was looking for a leveraged investment in gold. I've looked at a lot of gold mining stocks and there are very few I am happy investing in. This is my biggest position in the sector.

[brasso3] 12/6/2018 20:29

Thechurch

Good post. Nice to have another perspective

[mattjos] 12/6/2018 20:22

Thechurch .. our posts crossed.Firstly welcome aboard .. ask anything you like and we'll do our best to help.Secondly, quite sure your career experience will certainly add a new & constructive insight to the thread.Am sure I speak for many here in thanking you for that post and look forward to others in the future.

[mattjos] 12/6/2018 20:17

Outfits like share price Angel need something new to get their teeth into & to earn fees .. that's their daily business.In many ways, it's good that share price Angel are not a pony outfit like Beaufort.I believe the behind the scenes dynamic is currently .."we need exploration data to update our model and raise our target" .. the company is countering with "have we not already done sufficient over last 3 years to warrant you moving up your target, whilst we carry out the next phase of exploration?"Both parties have fair points. The divi intent has changed the dynamic & obliged share price Angel to publicly acknowledge that intent but, still it's not what they 'ideally' want to hear. At least they have finally got ahead of the curve here but, all parties (inc. us) know the bigger prize is getting much, much closer. That said, I am convinced we're they IPO'ng AAZ just now .. they'd be pushing a lot, lot harder & leaning towards 80p+ right now

[thechurch333] 12/6/2018 20:17

My first post on this BB.
Firstly I want to say, quite sincerely, that the overall quality of the comments posted here is excellent and extremely helpful for new investors.
I've spent the last few weeks building an understanding of AAZ and have used the recent gyrations in the share price to build a decent position.
There is absolutely nothing I can say here that will add anything to the sum of knowledge about the company and its prospects, so I wont bother trying.
However, I do hopefully have something to add.
I was a professional UK equity fund manager for 25 years, working for a couple of major institutions. After a break from investing to do other things I have come back to investing with a renewed appetite to make money, but this time purely as a private investor.
There has been a lot of talk recently about share price Angel,the lack of institutional shareholders etc. I offer the following perspective.
Most institutional investors are not going to go anywhere near AAZ. A single asset gold mine in a "dodgy" country? No thanks! The market cap and lack of liquidity in the shares are further significant impediments to investing. Of those few that will get beyond these stumbling blocks, most will simply not have the time resources to invest in getting to properly understand this investment. Small cap fund managers are very busy people (the average small cap fund manager probably meets a dozen companies a week), they get little in-house analytical support and are hugely reliant on their brokers to feed them research/new ideas. They base a lot of decisions on the ideas fed to them by their trusted brokers and the "feel" they get from meeting company management.
The role of the broker is therefore quite important in raising the profile of a company, putting management in front of new investors and telling a positive story in their research.
I agree entirely with the post from Mattjos above. share price Angel do not yet feel confident enough to promote this company strongly. Why? Because in my opinion the investment case has one fundamental piece missing - the mine life. We all know that the near term cash flows are going to look fantastic, but if they are only going to last a short number of years it is difficult to get too excited.
This brings me to why I have invested. I think, and I know most if not all of you agree, that the company will at some point announce a significant increase in resources that will extend the life of the mining assets for several years. I really do believe this is what share price Angel are waiting for - and quite rightly so. The real upside to this share is in extending the mine life.
Don't get me wrong, the dividend is great news also, and I'm sure the results will also make people sit up and listen, but I'm more excited about what the $6m exploration spend is going to throw up.
In my opinion the early "institutional" buyers of this stock will be hedge funds. Typically they are a lot smarter, do their own research and run higher conviction portfolios. I would be surprised if AAZ is not already on a few radar screens. I know of one in particular who will be all over AAZ!
Hopefully I have added something to the debate.
Thanks again for your really helpful posts.

[brasso3] 12/6/2018 20:11

Matt

I think share price Angels performance is indefensible.

I see CERP 2017 results are out today. The share price is 4.6p and market cap is ~£34m. The 2017 revenue was £4.8m and they made a loss of £4.3m. From the house broker (VSA): "We reiterate our Buy recommendation and 26p target price."

How do they get to a market cap. of >£160m???

[celeritas] 12/6/2018 19:59

Spot on Matt.
I do wonder what valuation Angel would put on AAM if it was about to float with Angel getting a nice fee.

[crazycoops] 12/6/2018 18:48

Sorry if that came across a bit harsh Matt, it was a rant at share price Angel only - appreciate you posting details of the old note.

[crazycoops] 12/6/2018 18:13

I care not a jot for share price Angel's price target. Their analysis is of passing interest. However, what really matters is that 2018 forecasts are woefully out of date and the house broker has a responsibility to put that right.

[mattjos] 12/6/2018 17:58

the instis have never liked (I think more of case of never fully understood) the PSA that AAZ have with govt. of Az.

SP Angel are arguing that the they do not yet have sufficient data from the company with regards new resources to fully justify a bigger price target.
I have counter-argued that surely the progress the company has made since 'peak debt' and since Ugur was discovered, is plenty sufficient to warrant a sizeable upgrade in target price. share price Angel's hand was recently forced when the divi intent was declared (but there should be much more to come yet).

The analyst at share price Angel is a cautious chap and wont budge from his stance of wanting more data on resources before updating his detailed valuation model

To their credit, in their Nov 15 Note (then price 5p), share price Angel commented:

"The Company expects the PSA rate to increase from 2018 at which point currently outstanding unrecovered capital costs would have been used up. We estimate the balance of unrecovered costs at c.US$100m as of H1/15. Unlike the management, our estimates using SPA metal price and production assumptions indicate the PSA is likely to remain flat at current 12.75% (being 51% of remaining revenue 25% (post deduction of 75% in cost)) through the end of Gedabek mine life in 2023."

& "....We expect the Company to go Net Cash positive in 2018 generating c.US$8-11m in FCF per annum from 2019 until the end of life of the mine in 2022/23"

I agreed with share price Angel at the time with regards the PSA rate & time has proven them to be correct.
In terms of LOM at Gedabek .. I'm sure share price Angel's commentary concerns Open Pit LOM at Gedabek & there is zero consideration given to Underground mining at Gedabek & obviously nothing for Ugur or any other assets.

So, part of me has some sympathy for share price Angel ... they are not going to push the valuation until the drill results are in and analysed and close to, if not at, the JORC Stage .. the company will undoubtedly have the clearest understanding of what they have under their feet but, are not in a position to prove it up to JORC standards as yet.
Now though, we are well past peak debt (close to net cash +ve in fact) & we have the plant, equipment, people, data software & skills to get moving on exploration to a satisfactory standard .. as has been the case since pre-IPO days! Only we've built a profitable and sizeable mining enterprise in the interim, currently valued at Zero!

In fact, I think the question I will ask at the AGM is this:

All things being equal as they are today, in terms of shares, structure, location, Behre Dolbear analysis, experience in-country, plant & equipment etc etc.

At what PRICE would share price Angel set the valuation for AAZ were they responsible for IPO'ng this exact business next week?

I'd wager the answer is greater than today's mkt cap & for me, that's the real issue here right now.

[lefrene] 12/6/2018 16:11

I share your view gutterhead, but feel the AGM might be too soon for them to have decided upon the level of divi, but looking at crazycoops comment, the AGM would be a suitable moment for notifying holders of a change in broker. For whatever reasons share price Angel have failed to get AAZ on the institutional map.

[crazycoops] 12/6/2018 15:59

There has to be a reason, other than sheer incompetence, why share price Angel have not issued an updated note. My guess is that they have been given notice and a new broker will be announced (or a joint broker) - perhaps not until after the AGM. Apart from their appalling coverage, share price Angel have not been able to muster a single institutional investor with a notifiable holding. AAZ is now at the stage where a higher quality broker is required to bring those institutions on board.

[gutterhead] 12/6/2018 15:19

I guess we are hoping for DIV update at AGM so saying the same thing
There are a lot of posters on here who were holders sub 10p (myself included) but have no intention of selling, more like still adding.
I'm pretty sure that posters on this thread account for 10% shareholding and there seems little appetite for selling atm.
I've said before that ironically, the low SP/Valuation of this company holds it back!! it just looks so cheap that the ordinary punter or investor could be forgiven for thinking something is wrong.
I guess the DIV will help in this regard also as its a statement of cash, profit and optimism.
I suppose I'm a bit frustrated currently as thought we would be in 70-80p channels by now
value will out I'm sure

[lefrene] 12/6/2018 14:54

More likely it depends on how the divi shapes up. An investment is a combination of assets, income and future prospects. For anyone who got into this sub 10p, I imagine that they feel they have been rewarded for their risk, and may take their returns at this level and move on? But by any measure this business just looks cheap, I take the view that there is a good deal more mileage to come.

[jbe81] 12/6/2018 14:08

Some good sized trades today