Anglo Asian Mining Share Discussion Threads

[wanobi] 07/8/2018 14:57

Cel, many thanx, 40's & I too moved to a sipp (with HL) hence now sat here wondering how best to invest etc... kenz, wow, as sebV used to say (i think it was him) "now that's what I'm talking about" 1 to 9x,, amazing returns, although I understand it's spotting the opportunity in the first place, buying in at the right time and holding etc etc.... wcc, found old thread, now 2233? can't seem to see a chart that makes any sense!?

[lefrene] 07/8/2018 14:43

Anyone who has been in the markets for a few years will have made awful mistakes simply because unless you are on the inside of a company it's near impossible to know what is really going on, especially with AiM where charlatans and deceivers prosper unmolested by the law.

The one thing I have learnt is, that if I find myself feeling the need to start digging deeper because I am unsure what the directors are REALLY up to, then I should just sell and PROTECT my capital. I might miss out on a good gain, but at least my powder is dry to prospect elsewhere.

As for AAZ, I concur with others who post here, it has an excellent management record, highly skilled who deliver on the talk without fail, and some of whom have put a lot of their own money on the line. It seems strange that the share price remains subdued, but all else is firing on all cylinders and in due course regardless of what is holding it back now, the price will rise to reflect the true and real value that is here. I am actually surprised now that this business has been brought to fruition, that there hasn't been a bid for it. At current production margins the whole shooting match would likely pay for itself in three years. So I'm happy to wait and draw a dividend and see how long it takes the market to arrive at a fair value.

[bo doodak] 07/8/2018 14:18

Wanobi,

One of the hardest lessons to learn is that there are times when it best to do nothing, strange as that might seem. Can often be a very profitable strategy!

[celeritas] 07/8/2018 13:41

Well its handy with huge dollar reserves and gold at 1213 to buy the real stuff while the Yanks play with paper.

[2sporrans] 07/8/2018 13:40

Gawd, that was a tome.

Maybe should have put the AAZ part in separate post, so here goes:

So, let's try and make these observations in my post above relate to AAZ here:

What I see, for what it's worth:

1 The Gold market pretty much going sideways past 2+half years; not expecting much change this/next year; copper in ascendancy looking 5 yr ahead.

2. Gold miners continuing to underperform the Gold market.
They had over-invested in duff ventures the past decade [2a], also loads of new shares issued, diluting the pool for existing holders [2b].
Investors, once bitten remain shy.

1 is roughly neutral for AAZ; 2 a decided discounter/drag .

AAZ an exception to both these 2 Cardinal sins as 2a+b:

2a. They invested very heavily in ~$100-mn plant + infrastructure, especially 2013-15, after which carried ~$50-mn debt, av. 12% interest, tight repayment schedule, during and up to some time in 2016, after when the debt got progressively paid down.
Now there is less than $10mn debt @7%, unsecured [!] and at least that much cash in the bank; so a tad in SURPLUS today.
+ They have kept the mine life at several year and even turned around a newly discovered one - Ugur - in about a year to highly profitable production.
AND their gold production is efficient, low cost now - thanks to their investments - with an AISC of $600/oz. That Wanobi means they are not only producing an oz of gold for $600-oz and selling it for over $1200/oz, they are finding another oz of gold in the ground to replace it.

2b. There has been a token amount of new share issuance over all the years since IPO.
This is almost unheard of for small gold miners!
It helps that the CEO owns 29% of the shares.
Now he doesn't want any dilution does he!
Nor do the other directors with large or substantial [and growing for some] share holdings.
THE PI SHAREHOLDER AND CEO-DIRECTORS INTERESTS ARE VERY ALLIGNED.
Not only this, but now AAZ is all set to pay dividend, later this year.
Better still, they intend for the dividend to be SUSTAINABLE over years ahead and all they are doing is geared to a long term resource growth and future mining it.
In short, they are going to RETURN ££ value to their investors, especially the long term ones, rather than fleece them for capital raisings as par for the small Gold miner course.

What is AAZ worth today:
Not quite $50-mn capitalisation.
About the next 2 years projected net cashflow.

Now I'm not say it cannot all go pear shaped.
Yes it can, however implausible that looks just now.
Yet for sure, if you are looking for a play on ALPHA, with good forward odds, imho you have a very good prospect with AAZ.
And that v any reasonably relevant benchmark you want to choose.
It will be ALPHA big time if their $18-mn exploration programme reveals resources in line with what the Soviets found, let alone another Ugur or 3 on top.

[2sporrans] 07/8/2018 13:35

Good series of posts Celeritas.

Taking your observations on fear:

"its amazing what fear makes you do"
and
"It seems you are a bit of a worrier [Wanobi] so maybe give the lot to the fund managers."

This is sound advice, especially as I'd be amazed to learn, as a fact, that more than a few - 10% at very most - individual, private investors consistently, over decades, outperform benchmarks such as related indices or "The funds" - whatever those are.

After all, even the most able fund managers [+teams] rarely manage unbroken records of outperformance of their benchmarks and peers over decade plus or even 5 yr+ periods.
Anthony Bolton was generally rated as the most successful UK fund manager, in terms of consistent, ongoing, outperformance going back maybe the past 50 years.
His record extended well over 20 years; with Fidelity mostly was it?
Anyway, he couldn't resist a comeback [was it 2010 or thereabouts]; tried to replicate similar success with a China fund, using similar value investing strategies and techniques as he has so successfully in UK orientated shares.
While he was doing OK after a couple of poor years 'initiation', AB never made the top ratings in Chinese or Far East funds. He quietly entered permanent retirement a few years back; his successor[s] did a little better I think.
Or what about Neil Woodford ?
His outperformance with Perpetual garnered a huge PI following.
Indeed, even most of his team followed him after he departed Perpetual to set up his own much trumpeted fund.
Then he promptly fell flat on his face!
In 2016 and 2017, the fund returned just 3.2% and 0.8%.
And when I looked in February, things had gotten worse.

My point about Bolton and Woodford is that if even they can end up blotting their erstwhile outstanding records, the 'average' Private Investor has no hope of beating the same benchmarks consistently over many years.

Having said, Terrapol is spot on when he advises you Wanobi that you will learn a lot and fast by having skin in the game.
You will learn a lot about yourself - not least your emotions and hopefully to curb them, fear, greed and hubris alike - by playing a game, one where YOU do the research, decide on strategems at so forth.
What you learn will assist you in your selection of funds that you have sensibly allotted 75% weight for in your portfolio build.
But maybe that should - for you - be as much as 90%?

Another basic facet of Investment Assets.
There is always a trade-off between risk and reward.
This fact coupled up with the very cyclical nature of markets and the assets therin lends itself to some deceptions where [out]performance is concerned.
If you are fortunate and buy a load of assets at the beginning of a multi-year bull cycle [or a new product/service phase - can be obsolesence!] - e.g. one where the assets are underpinned by rapid growth for their relevant companies products/services will be great for growth stocks - there will, by their very nature be those companies/shares that will tend to outperform their peers by a considerable margin in this rising market. Like in this example, smaller tend to grow faster than bigger....ditto more highly geared [with debt, capital or leverage}
In the investment world, such outperformance is known as "Beta" and isn't that hard to seek out.
There is a trap for the naive:
Beta works the same, inversely, on the downside.
High Beta funds crash the worst during corrections and bear markets.
Though, over a series of full cycles they MAY still outperform benchmarks and more staid, lower risk plays, this is a matter of probabilities not certainties.

What investors seek most is the holy grail of sustained "Alpha", where the asset outperforms in ALL market conditions; i.e. it rises faster when the general market is rising and falls less - or even keeps rising but slower - when the market reverses.

So, let's try and make these observations relate to AAZ here:

What I see, for what it's worth:

1 The Gold market pretty much going sideways past 2+half years; not expecting much change this/next year; copper in ascendancy looking 5 yr ahead.

2. Gold miners continuing to underperform the Gold market.
They had over-invested in duff ventures the past decade [2a], also loads of new shares issued, diluting the pool for existing holders [2b].
Investors, once bitten remain shy.

1 is roughly neutral for AAZ; 2 a decided discounter/drag .

AAZ an exception to both these 2 Cardinal sins as 2a+b:

2a. They invested very heavily in ~$100-mn plant + infrastructure, especially 2013-15, after which carried ~$50-mn debt, av. 12% interest, tight repayment schedule, during and up to some time in 2016, after when the debt got progressively paid down.
Now there is less than $10mn debt @7%, unsecured [!] and at least that much cash in the bank; so a tad in SURPLUS today.
+ They have kept the mine life at several year and even turned around a newly discovered one - Ugur - in about a year to highly profitable production.
AND their gold production is efficient, low cost now - thanks to their investments - with an AISC of $600/oz. That Wanobi means they are not only producing an oz of gold for $600-oz and selling it for over $1200/oz, they are finding another oz of gold in the ground to replace it.

2b. There has been a token amount of new share issuance over all the years since IPO.
This is almost unheard of for small gold miners!
It helps that the CEO owns 29% of the shares.
Now he doesn't want any dilution does he!
Nor do the other directors with large or substantial [and growing for some] share holdings.
THE PI SHAREHOLDER AND CEO-DIRECTORS INTERESTS ARE VERY ALLIGNED.
Not only this, but now AAZ is all set to pay dividend, later this year.
Better still, they intend for the dividend to be SUSTAINABLE over years ahead and all they are doing is geared to a long term resource growth and future mining it.
In short, they are going to RETURN ££ value to their investors, especially the long term ones, rather than fleece them for capital raisings as par for the small Gold miner course.

What is AAZ worth today:
Not quite $50-mn capitalisation.
About the next 2 years projected net cashflow.

Now I'm not say it cannot all go pear shaped.
Yes it can, however implausible that looks just now.
Yet for sure, if you are looking for a play on ALPHA, with good forward odds, imho you have a very good prospect with AAZ.
And that v any reasonably relevant benchmark you want to choose.
It will be ALPHA big time if their $18-mn exploration programme reveals resources in line with what the Soviets found, let alone another Ugur or 3 on top.

[mattjos] 07/8/2018 13:28

CNYUSD up 0.5% today .. gold up identical 0.5%.Good may be officially priced in US$ but, the relative price of Yuan seems to be having a greater effect on price of gold recently .... is that because the Chinese want the physical whilst the USA markets more paper oriented?

[s0lis] 07/8/2018 12:31

celeritas/wanobi

The normal attitude to risk is to reduce it as you near retirement. However, there is a train of thought that you can ignore that as it depends on the size of your pot but also on your confirmed pension. If you are fortunate enough to have an annuity or a defined benefit pension that is inflation proofed (wholly or to some extent) that covers all your requirements and your have an emergency fund for unforseen hiccups, then I would say that you can continue with a more risky portfolio (with some in AIM stocks as they do not fall into the IHT trap).

[celeritas] 07/8/2018 11:08

Also hold your ground, dont worry when the price falls below your avg, try not to be scared out. I was with Kenz in the 08 crash, sold circa 110 as I thought the financial world was done for, its amazing what fear makes you do. It eventually sold for over 900p.

[celeritas] 07/8/2018 11:02

Strategy, I cant say I have one as I tend to go with the flow. I try to hunt out what I think are undervalued stocks like AAZ. I've had many over the years, wcc was probably the best one but I think aaz could very easily do similar. I suppose that is a stategy.

I moved my pension from a managed pension to a sipp, I've certainty beaten the old managed pension by at least double.

It also depends on you age for risk, as you get closer to retirement then dividend paying stocks are preferential.

How old are you wanobi, decade will do? I'd say 20s 30s and 40s have more risk, 50s then probably look a little to cut it down. 60s,70s, take income with the odd risk for a bit of fun.

[wanobi] 07/8/2018 10:47

Hi Cel, you're right, I won't know till I try and initially I will buy 1 or 2 stocks only and see how it goes for a year or so... if I lose everything on those it won't cause me a problem and hopefully I won't be worrying about things for that reason.. I'd like to ask you so many questions; however, I don't want to irritate you so please feel free to tell me not to ask etc... I'm also aware that I do not understand the unwritten rules on this thread and others,, as to what can be asked and what shouldn't be asked etc,,, so,,, please excuse me if I overstep the mark so to speak...

1 - what's your top line risk strategy?

2 - what's been your overall % return on your chosen stocks since you've been doing this?

I'm presuming you've beaten the funds else why would you be doing this, unless its just for fun etc.

Cheers W

[celeritas] 07/8/2018 10:30

wanobi

I would also see the 75% vs 25% as a challenge, can I beat the funds.
You have a handle on your risk profile, 5% each, but you'll never know until you buy your first stock if you are cut out for it. It seems you are a bit of a worrier so maybe give the lot to the fund managers.

[wanobi] 07/8/2018 10:24

Hi S0lis, thanx again, yes, off the cuff comment, I was really highlighting to myself how easily it would be to screw up big time in doing exactly what you've said, putting too much into to few stocks etc & how easy it is to actually make that happen, just a few button clicks on HL etc.. my risk management plan is strictly 75% in funds and 25% in individual stocks & no more than 5% of the 25% in any single stock,,, so that's 20 stocks at 5%... appreciate your concern for me, cheers.

[s0lis] 07/8/2018 10:05

wanobi

I think one of the most important principles of investing is to spread you risk which has not been mentioned here. I think you will find that all the investors who have replied to you or given you advice will have a portfolio of shares. It depends on your personal preferences and how well one knows the companies invested in, (plus the size of your portfolio) but most people I know will be invested in 10-30 shares/stocks/funds.

Too many shares/stocks and you cannot keep up with what is happening in each one, too few and you dramatically increase the risk of something going wrong with one that will cost you dear (Lehman, Carillion, Northern Rock etc. etc. and they were all big, not AIM)

You frighten me when you say " if I were stupid enough to do so, put all my retirement funds on an AIM stock and lose the lot is a really scary prospect." I hope that was an off the cuff comment and not really in your thinking.

[wanobi] 07/8/2018 00:46

ah sorry, you mean they announce the ex divi day in advance right?

[celeritas] 07/8/2018 00:35

Yes you will, look out for ex divi day when it's announced.

[wanobi] 06/8/2018 23:46

if I bought aaz tomorrow would I be eligible for the first dividend? when is the deadline for me to buy to get the dividend? thanx

[wanobi] 06/8/2018 22:24

mf, 2sp, serious thanx guys, I will be looking into the details tomorrow for sure.

[mattjos] 06/8/2018 20:37

Assuming dividend is priced in US$ ( functional currency of the company) ... we're looking at circa 10% more in GBP since the company first announced intent to pay one earlier this year due to falling GBPUSD

[2sporrans] 06/8/2018 19:59

Oh, there's loads.....mf is spot on.
Another contender, just from the Henderson Stable, is HFEL [H. Far East Invest. Trust], if you like some of your gains crystalised as regular income. Dividend just raised, yet again; never been cut in over 3 decades since launch and only 1 year on hold. Now at 6.1%.
Decent Cap. gains too, if hardly up with the top guns.

Now, if that gets [indiscriminately] sold off, like in Autumn 2015, say 30% down, you'll be able to bag them with an 8.7% divi. [and it grows over time].
Not hugely exciting....but makes a lot of sense; esp. in ISA or pension pot.

A bonus is, If you are inclined to trade [on LSE] or 're-balance'....there is no stamp duty [Jersey HQ] and a pretty tight spread.

I put my missus into Fundsmith.....but never got around to buying any for myself :0(

[mad foetus] 06/8/2018 18:45

HSL is Henderson Smaller Companies, but there are others just as good (eg THRG) and SMT Scottish Mortgage Trust

[wanobi] 06/8/2018 18:26

mf, I found fundsmith thanx, what is HSL = HSL Investments Inc? & SMT? cheers

[wanobi] 06/8/2018 18:13

thanx again guys, this is all very sound 'feet firmly on the ground' advice which I appreciate greatly.. 2sp, thanx, yes, I must decide when is right so its my decision and not someone else's (even though you are most likely correct about the timing),,, cmbw, agreed, risk management needs a strong hand from me!! mf, will do and you may well be right, save myself the time and effort etc... much to consider guys, cheers