Anglo Asian Mining Share Discussion Threads

[mattjos] 22/7/2018 14:00

Ye, those 'official' forecasts are quite ridiculous!

Still, not all bad CC .. Those here that are aware of the 'informal flash' note forecasts are getting in well ahead of when the broader market gets 'formally' updated.
However, there'll be no denying the figures come late September (Interims) and mid October (Q3 update).

[mattjos] 22/7/2018 13:41

re-posting this part of earlier post as compared to the FY Production Guidance given by the company on 6th February:

"Forecast production for FY 2018 of between 78,000 to 84,000 gold equivalent ounces ("GEOs"), an increase for the mid-point of this guidance of over 13 per cent. compared to FY 2017 production of 71,461 GEOs

Forecast production for FY 2018 of between 64,000 to 70,000 ounces of gold (FY 2017: 59,617 ounces of gold produced) and between 2,100 to 2,300 tonnes of copper (FY 2017: 1,991 tonnes of copper produced)"


H1 17 v H1 18, Daily Production rates:

H1'17 gave the following Ave. Prodn. / Day:
Au: 128.3oz
Ag: 470.1oz
Cu: 7.3t

H1'18 gave the following Ave. Prodn. / Day:
Au: 183.7oz
Ag: 468.4oz
Cu: 3.2t

First half production has been constrained by lack of new crusher but, from H2 the new crusher & flotation will now run, unconstrained, in parallel with agitation. If you therefore use the H1 18 Daily rates for Au & Ag & the H1'17 Daily rate for Cu (remember H2 17 was distorted by cessation of mining at Gedabek open pit), we get the following as a baseline FY18 production target:

Au: 183.7 * 184 = 33,800 + H1 production of 33,243 = 67,043oz
Ag: 468.4 * 184 = 86,185 + H1 production of 84,784 = 170,969oz
Cu: 7.3 * 184 = 1,343 + H1 production of 587 = 1,930t

I would expect us to exceed this as the full benefits of dedicated crushers & parallel production from Fl & Ag are, as yet, unknown. We will have to wait for the Q3 figures before we can fully understand this new production dynamic.


As best I can model the data available , we look bang on track for the forecast Gold figure. I believe the crusher did not get going absolutely as the company had hoped for, circa 2-3 weeks late, hence the small variance on the copper but, still achievable. I wish the company had given us an early heads-up on the performance through the new crusher/flotation plant. The only new element in that circuit was the crusher itself so, it should not have taken very long to optimise its performance. There is some gold recovered in the flotation process which should make up (in GE terms) for any minor deviation in copper production

[crazycoops] 22/7/2018 13:40

Indeed, I was hoping for an updated note following his site visit (the day of the Q2 results would have been most appropriate, perhaps?). I think you mentioned previously the analyst is a stickler for his process and was waiting for the resource upgrade before updating his DCF. My view is that the analyst should forget DCF and focus on production/earnings/dividend forecasts on a rolling 2/3 year basis. By all means add in caveats for resource longevity but just get the bloody forecasts right. At the moment, the forecast data in the system is completely ridiculous.I will be interested to hear how you get on with John Meyer.

[mattjos] 22/7/2018 13:28

that is interesting .. thanks crazycoops.
Think I will be dropping john Meyer another email to query why they have not formally issued a new broker note. As I understand it, the covering analyst did recently visit Gedabek so, maybe it is simply the 'holiday season' which is delaying issuance of the new note.

[crazycoops] 22/7/2018 13:25

Matt, the Stockopedia screens also use broker (consensus) forecasts. However, John Meyer's flash note doesn't get picked up by the data source, so AAZ is still constrained (from a data point of view) by the lack of a full, up-to-date broker note. Grrr!

[mattjos] 22/7/2018 13:24

lol ... yes, it is quite a high risk strategy.

I prefer to focus on a mixture of:

Price to Book / Tangible Book Value ... Is the valuation less than the 'physical' value of the company assets?
Price to Sales Value ... How many years of sales would it take cover the price of the company?
Price to Free Cashflow ... How many years of free cash-flow would it take to cover the price of the company?

In the case of AAZ, we are still valued at less than the 'physical' assets of the company, we are still valued at less than 1 year of sales & the free cash flow could buy the whole company in less than 3.5 years.

A larger mining operation who has cash on hand and is looking to expand, will surely look at this & be interested in acquiring it. If you put yourself in that mindset, there appears very little downside from the current value.
There is still a huge amount of untapped potential across the AAZ estate & the PSA, with its indemnity clause, offers further protection to a would-be buyer of AAZ.
The ability to pay a circa FY18 2p dividend is a clear signal as to the free cash-flow, as is the organically funded Exploration expenditure.
Valuation anomalies like this do occur but, they do not generally persist, particularly when there is a dividend coming which will reward the value investor with a return, while they wair for true value to be achieved.

[mattjos] 22/7/2018 12:45

In total, AAZ currently qualifies for 3 of the screens on Stockopedia:

Bargain Stocks - Free Cash Flow (Qualified 27/5/18)
Value Investing - Piotroski F-score Price to book value (Qualified 2/6/18)
Tiny Titans - Momentum Investing (Qualified 2/6/18)

I assume it is the formal Results data that is what mainly drives these type of data screens ... FY17 results were issued on 24/5/18 & hence they have picked up the data issued.
The stock traded around 47p on the day of the results so, those that use these screens can still buy around that price right now & the more recent Q2 update has given us no fresh negative data to invalidate the buy signals on the screens .. quite the reverse in fact as we have learnt the company is now net debt-free which should strengthen the validation for all the screens

[mattjos] 22/7/2018 12:26

Noticed that AAZ had once again gone to a BUY on the Stockopedia Tiny titans Screen & thought I would record its performance as a buy/sell signal since it started appearing on that particular screen.
I assume it has to use some of the news-flow from the company to update its governing metrics so, have included relevant newsflow to try and determine which news likely impacts the decision most.

Tiny Titans is described as a "small cap momentum investing strategy:

- Mkt Cap: >£15m but<£150m
- Price to sales below 1
- Minimum liquidity of £385k traded per day

Supposedly not a strategy for widows & orphans as performance is prone to massive volatility - 95% of the time, the returns were between a loss of 53% and a gain of 102%

[dianecarberry] 22/7/2018 11:37

Shares here are well overvalued. Should be about 10p

strong sell.

[peterpowell21] 22/7/2018 08:59

I have to say this must be one of the cheapest, well run and safest shares on AIM.
I see the gold price heading back in the right direction again.
Mr Trump will sort out the problem of the strength of the dollar.

[cflather2000] 21/7/2018 13:33

Voting. I hold my shares with HL. Should I be able to vote using the app? Do you need a certain size of holding to get to vote?

[celeritas] 21/7/2018 12:00

What's important is we are net cash positive after a long time living under net debt.
As an enterprise we are cheaper now than the beginning of the year.
Like gfm I expect aaz to make a huge run for what seems like for no reason other than a belated cash positive reaction.

I see Trump is now making waves with the dollar strenght making it hard for exporters. The Chinese currency is weakening, somewhat mitigating trade tarriffs which isn't what Trump wanted at all. I'm expecting the dollar to weaken from now on especially in the final qtr.

[mattjos] 21/7/2018 11:32

ok, thnx bravo .. forgotten about that :-)

[jbravo2] 21/7/2018 11:24

Re production/sales

They'll never quite match like that matt.
We quote production including govt share but sales excluding govt share so 12.75% will always be "lost". It's sometimes more than that too if the govt choose to take their share of the copper etc in gold bullion equivalence.

There is of course some lag etc as evidenced by the large disparity this quarter but I'm just pointing out we won't get it all

[dianecarberry] 21/7/2018 11:16

Shares here are well overvalued. Should be about 10p

strong sell.

[mattjos] 21/7/2018 11:00

It's abundantly clear that we now have a very efficient, net debt-free, mining operation at Gedabek. One which is capable of cost-effectively processing the varying local ore types.

We have yet to claim back the construction costs, via the PSA & will not do so for another 5 years.
Further resource finds on the Gedabek mining licence area will incur more development costs and likely push back the PSA split beyond 2023.
Within that timeframe, we will surely commence a satellite operation at Ordubad or elsewhere on our estate & further grow production.

As I've said before, we do not need to find or declare a multi-million oz resource find on the Gedabek licence area. At some point during this three year exploration initiative, I fully expect it will bring in a big find of some sort.
That may be Oxide biased (Au & Ag) or, it may be Sulphide biased (Cu & Au) but, between now and then, it only needs to bring in circa 150,000 GE oz/year to maintain the current production & cash-flow/profit dynamic.
The company demonstrated at Ugur how quickly they can convert a new resource to a production asset.

[peterpowell21] 21/7/2018 10:45

I find it funny when i see a share like UKOG with a share price of 120m and yet this is only at 49m. I wonder how many got burnt there when they went up to 8p.
Always chasing rainbows some people.

[mattjos] 21/7/2018 10:15

Couple of observatioons.

Production to Sales, time lag:

From the Q1 update:

"49% year-on-year increase in gold production to 16,479 ounces"
"Q1 2018 gold bullion sales of 14,956 ounces at an average of $1,328 per ounce"

16,479oz produced v 14,956oz sold, leaving 1,523oz of gold production to be sold in Q2

From the Q2 update:

"38 per cent. y-o-y increase in gold production to 16,764 ounces"
"Q2 2018 gold bullion sales of 10,822 ounces at an average of $1,307 per ounce"

16,7640z produced v 10,822oz, leaving 5,942oz of gold production to be sold in Q3

There will always a lag between production & credit for the gold from the Swiss refiner- Production in Transit.
The figure likely to vary each quarter according to when the quarter ends, for reporting purposes, and when the gold is physically shipped to Switzerland for refining and payment.
This is quite a chunk of money (5,942x$1,250) that will have hit the bank in July.


H1 17 v H1 18, Daily Production rates:

H1'17 gave the following Ave. Prodn. / Day:
Au: 128.3oz
Ag: 470.1oz
Cu: 7.3t

H1'18 gave the following Ave. Prodn. / Day:
Au: 183.7oz
Ag: 468.4oz
Cu: 3.2t

First half production has been constrained by lack of new crusher but, from H2 the new crusher & flotation will now run, unconstrained, in parallel with agitation. If you therefore use the H1 18 Daily rates for Au & Ag & the H1'17 Daily rate for Cu (remember H2 17 was distorted by cessation of mining at Gedabek open pit), we get the following as a baseline FY18 production target:

Au: 183.7 * 184 = 33,800 + H1 production of 33,243 = 67,043oz
Ag: 468.4 * 184 = 86,185 + H1 production of 84,784 = 170,969oz
Cu: 7.3 * 184 = 1,343 + H1 production of 587 = 1,930t

I would expect us to exceed this as the full benefits of dedicated crushers & parallel production from Fl & Ag are, as yet, unknown. We will have to wait for the Q3 figures before we can fully understand this new production dynamic.

[bo doodak] 21/7/2018 01:43

yasX,

Thanks for sharing your summary, most informative and interesting.

Agree that investors generally seem to underappreciate/ignore your point 7 when considering their individual risk exposure levels.

Those too fully invested in any market/share, with insufficient cash reserves are seriously exposed to a huge risk from which only time may eventually save them.

Its hard to know when the required degree of liquidity tightening will strike, but I'm reasonably sure, I won't see it coming. I am, however, looking forward to it.

Bo

[celeritas] 20/7/2018 16:26

Exactly loaf, they all have.

[cannonfodd3r] 20/7/2018 15:52

He will do LOBas he’sthe brains behind the new system they have operating there!

[loafofbread] 20/7/2018 15:06

I notice from the RNS the chap held on to his 136K of shares that vested.

[terropol] 20/7/2018 14:45

Well I had a few more this morning...Special offer sale will not last forever...
Gold back to 1250 next week??
Have a Great week-end all.