Anglo Asian Mining Share Discussion Threads

[2sporrans] 31/5/2019 17:10

Great, thanks for explanation KS

So, for the simpler like me, once we know a Gold Equivalent production forecast/target, for a year or 1/2 year, seek out the concurrent Total cost of production [though might be months in the coming], divide it by the GE oz and there's the true AISC.

Yes, wish this would be adopted from now on + a few years retro figures provided.

As LLB reminded, BM did say the cost curve was pretty much bottomed out now, so
$675/oz GE AISC can be committed to memory for onward guidance; not anticipating much divergence.

At least the % of GE oz that are gold or copper-silver should be pretty stable from 2019 on through 2020+21 at least, as the plant is pretty much going to remain as is and the plant will determine the [feed] production, rather than t'other way around.

So, the metal prices become the key variable going forward i guess.

Edit, as just read your 2nd post KS:
From 2018 FY report - AISC sub-section comment:
"The Group produced gold at an all-in sustaining cost ("AISC") per ounce of $541 in 2018 compared to $604 in 2017. The Group reports its cash cost as an AISC calculated in accordance with the World Gold Council's guidance which is a standardised metric in the industry. The reason for the decrease in 2018 compared to 2017 was the higher level of production. Although total costs increased, many of the Company's costs are fixed or semi-fixed and did not increase in direct proportion to the revenue."

But those economies of scale benefits are unlikely to be repeated going forward.

[king suarez] 31/5/2019 16:55

If you compare 2017 to 2018, the total cost of production are almost identical, yet an additional 12,000 odd GEO ounces were produced suggesting something like a 17% drop in the cost of production?

This is a greater % drop than in the reported AISC from 604 to 541 (approx 10%) so, whilst a useful proxy, it isn't telling the full picture.

If you do the math I think the total AISC for GEO production dropped from close to $800 to $675.

[wanobi] 31/5/2019 16:46

ORM lovely Cup & Handle forming :-) LOL cheers Wan


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[wanobi] 31/5/2019 16:43

Wan's Holdings, End of week assessment;
TSG very happy with markets response today :-)
AAZ very happy with share price action this week :-)
GOLD very happy with price movement this week :-)
STCM going very well :-)
ORM will have its day later in the year :-)
TXP should rise into the drill throughout June :-) (maybe, hope so :-)
AVCT will take off big time with the slightest of positive news :-)
TRUMP - well he certainly knows how to shake things up :-)
OIL is a downer :-) oh well, can't win them all right now :-)
Black Swans = none :-) let's hope it stays that way :-)

all in all, thanx to you guys and those on Mj's amazing AAZ thread, things don't look to bad right now,,,,, although that could easily change :-)

certainly ahead of what the banks would have given me in interest and beating inflation,,,,, which was all I set out to do initially :-)

fingers crossed for the future, good luck to you all and many, many thanx for all the guidance, support and knowledge you've all provided me with :-)

Cheers All
Wan :-)

[king suarez] 31/5/2019 16:43

Here's how I think it works:

2018 AISC per gold oz @ $541 x 72,798 oz = $39.4m
2018 Total cost of production however = $56.5m

Therefore $17.1m of revenue from copper/silver credits applied to the total cost of production to generate the $541 AISC per gold oz figure. Total cost of production, minus copper/silver revenue, divided by gold ounces produced = $541.

Total GEO oz = 83,736 so total AISC per GEO oz (all metal produced) was $676 - this is the figure I would like to see quoted going forward - for transparency and ease of comparison - as copper production increases.

A $60 drop in AISC per gold ounce based on 2018 production = the equivalent $4.4m of additional copper/silver revenue, which is about half what should be generated from the increase in forecast copper production. But offsetting that is the forecast drop in gold production, so it is becoming difficult to see whether costs are on an upward or downward trajectory overall without comparing the annual total cost of production v total GEO oz produced.

[celeritas] 31/5/2019 16:33

A few late buyers.

[mr roper] 31/5/2019 16:24

Jpm see two US rate cuts this year now.

[mattjos] 31/5/2019 16:20

chappie on the Cantor trading desk must wish he had not spivved out the Basher stock for a tu'penny turn at 6p in 2015 as he now sits on the bid at 94p

[laurence llewelyn binliner] 31/5/2019 16:13

Thanks #KS, I wasn't sure how we were going to achieve the AISC drop when Bill has already said that costs were pretty much at the bottom of the curve now...Spot POG now through $1300... :o)...

[2sporrans] 31/5/2019 16:02

Yes KS, I was intending to mention this in caveat in my last post ....but lapsed on it.

Having said, might not some of the AISC fall be down to reduced operational costs?

Looking at the 2018 split the AISC panned out $543-H1, $538-H2; context of fairly steady gold prod/revenues but a big ramp up in Copper [concerntrate] prod./revs for H2 over H1.
Isolating the purely copper production out of the concerntrate:
H1 copper - 587t
H2 copper - 1058t

Didn't budge the AISC much for H2 v H1; so other factors explain why not?

Annualising the H2 copper prod:
2018-H2*2=2116t

2019 f/c - 3200t

Given the 2018 figures....will an increment of tad under 50% in copper make a huge difference to the AISC figure?
Admittedly, context of small fall in 2019 gold prod.
Then again, SPA assuming POG to be $30/oz higher 2019 v 2018, pretty much evens out.
+ if the % of silver/gold in the concentrate is markedly different for 2019 v 2018...v 2020 too , won't that also come into the equation?
Ditto the copper price, though sPA f/c is just a modest decline y on y, so no big deal for their calcs i guess.

But yeah, you are right to explain/remind as you have and thanks for it.

In the absence of any other cost figures than AISC, won't we have to keep taking these as guidance.....or give less weight and cashflow/cash and ratios to revenue streams or whatever become adopted as cost and margin proxies?
Or something else?

[wanobi] 31/5/2019 15:49

that is indeed a thing of beauty Mj :-) cheers Wan

[mattjos] 31/5/2019 15:46

Charted like a dream this break from a falling wedge:

[wanobi] 31/5/2019 15:44

touched it now :-) GLA Cheers Wan


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[wanobi] 31/5/2019 15:41

almost :-)


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cheers Wan :-)

[jeanesy] 31/5/2019 15:31

1300 reached Wan !!!

[king suarez] 31/5/2019 15:25

LLB (and others),

Just to re-iterate the point I've made a few times before - the (forecast) drop in AISC (per gold oz) simply reflects the higher future contribution of copper/silver revenue (forecast to double) being deducted from costs of production attributed to (only) the gold oz produced in this metric. It does not actually imply our total costs of production for all metals produced are necessarily falling overall.

The AISC per GEO oz may in fact rise, whilst the metric 'AISC per gold oz produced' falls.

[jeanesy] 31/5/2019 15:25

1299... dont think 100p will be paid today though Wan :)

[wanobi] 31/5/2019 15:17

the day POG goes over 1300 will be the day AAZ shares are bought at 100p each :-) LOL,,, just a bit of fun,,,,,, lets see :-) cheers Wan

1296.11 at the mo!!! :-)

[cinoib] 31/5/2019 14:52

Lefren I think the yanks make up their own standards and expect everyone else to follow like sheep, sorry not this old dog I stick to what I was taught, it was right then so must be right now. All these billions are actually thousand million unless a thousand doesn't come after a hundred anymore. Core what's that smell smells like fur burning, I know it's bear fur, gold bears and aaz bears both burning at the same time no wonder it's an awfull stink.

[laurence llewelyn binliner] 31/5/2019 14:51

Spangles new note has some interesting data forecasts doesn't it..., a drop in our AISC to $506/Oz while POG is currently +30 an Ounce YTD...So around +$75/Oz over FY2018 results for free, that makes for some interesting results, and if Gold does break out over 1300, even better... :o)

[wanobi] 31/5/2019 14:48

markets think he will as well Mj :-) cheers Wan

[mattjos] 31/5/2019 14:43

am quite sure he will go ahead with tariffs on Mexico .. that is how he will fund the Wall … is how i would do it given Democrats wont play ball

[bumpa33] 31/5/2019 14:14

I doubt markets will go into free fall just yet, people will look for safe havens first, only if we get a full blown dump will everyone panic (and everything then sell off!).

[wanobi] 31/5/2019 14:01

and on that cheery note jeanesy let's sell everything and run for the hills :-) LOL,,, its coming, we can all sense it, question is when... I don't think Trump will go through with a 5% tariff on all Mexican imports; however, if he does I don't think that'll cause the big one on its own :-) but then what do I know :-) Cheers Wan :-)

[mattjos] 31/5/2019 13:53

Spot Gold is 1297 .. don't confuse Spot with COMEX futures.