Anglo Asian Mining Share Discussion Threads

[riggerbeautz] 15/4/2020 13:18

Yes Bumpa, fair play, I think I’ve been in and out too much like a trader by my standards, I’m getting dizzy with trades and more so too many watchlists.

My ISA and SIPP cash piles are on the whole growing but I’m feeling really uncomfortable with too many £‘S and Canadian$’s. AAZ will no doubt add a fair chunk to that in a couple of months. Think I need a period of reality checking next few days.

[polaris] 15/4/2020 13:14

Hi King Suarez,

Agree that some of my descriptors are not ideal - yes it would be FCF rather than cash from operations, as you rightly point out. My analysis is, effectively, a representation of AISC, rather than direct operating cash costs.

I also listened to/watched Bill's Youtube piece and know what you mean. I was trying to get an accounting approach to this in terms of when revenues are booked. The gold was produced in March but some would be sold in April, so for accounting purposes that is Q2 revenue. I don't know how often AAZ shipped pre-Covid-19 so i've attributed almost 2 k oz of gold into Q1, out of the 3603 oz sold on April 6th from the 3680 oz attributable to AAZ (albeit 90 % of contained value), and the copper concentrate. That's equivalent to about 1 week of gold production...but it's a bit inexact TBH! ;-)

Suppose simplest way to look at it would be 18.2 k oz GEO @$1577 = $28.7 M
$28.7 M x 0.875 = $25.1 M (Gov share)
Total costs = $15.8 M
FCF = $9.3 M

Even that is flawed as the reported GEO by AAZ is from budgeted prices, rather than $1577 received. We also know that last sale was at $1636 and Q2 sales are likely to be much higher price. Right now that gives almost $3 M higher revenues for Q2 attributable to AAZ, with constant costs.

Bottom line is AAZ are turning some record breaking FCF. :-D


Edit
Like the name too. As a fellow Liverpool fan i loved Suarez, even though he was a bit bitey.

[mr roper] 15/4/2020 13:09

Aaz is perplexing. On the face of it it's a diamond but when I look at the gold miners I follow it's one of the few that's still below its 200dma. Gold is on a tear at more than 1700 bucks but we are not following.

I can only conclude that the mkt wants clarity on the govt talks. For what it's worth I reckon 8 mths of chat is long enough. The bod should proactively be updating shareholders.

I suspect there is a lot of cash on the sidelines waiting to pile in on news and a break above the 200.

[pogue] 15/4/2020 12:59

Bumpa
I sold EVG at 0.98 will see if I can buy another dip later.

[bumpa33] 15/4/2020 12:44

Rb - yes, I know neither can I. If I had more confidence in the market I might’ve held on longer, but as per that quote - i’m here to make money.

[jbe81] 15/4/2020 12:41

Nice call on evg, been offine all morning and missed it

[bumpa33] 15/4/2020 12:40

Thanks pogue/jbe, was watching it this am.

[bumpa33] 15/4/2020 12:39

Out at 9.9

FCAP are bidding it up though and they’re the house.

[pogue] 15/4/2020 12:22

Bumpa
good timing on EVG! Almost instant profit.

[riggerbeautz] 15/4/2020 12:15

Sorry Bumpa, it was a 50/50 guess, you just confirmed as my phone a friend.

Can’t believe you’re out of AVCT lol Might ditch the rest of my smaller punt with YGEN, as noted earlier, all these Pharma types do have an air of the .com boom. Steered clear of it myself, I was too new to the game and too busy carpet bagging from memory.

Having to apply sunscreen, is this really the U.K in April, flipping hot out here.

[jeanesy] 15/4/2020 12:08

Are you still in CNG WAN ? The share price has been steadily ticking up from recent lows. As you know it doesn't take much for the shareprice to move up quickly and there are some that believe it is being overlooked especially as the POG has risen so strongly. For those that are interested there is a bit more discussion these days on the CNG thread. The level of debt still seems very high to me . Im more than happy with my holdings in AAZ.

[king suarez] 15/4/2020 12:07

Hi Polaris,

$5.9M was actually AAZ's NET share after govt stake. In the latest AAZ interview on Youtube Bill states they sold 3,603 oz of the 4,688 oz shipped at $1,636 (4,688 x 0.8725 x 0.9 = approx 3,680 oz so close enough?). The full $5.9m + 10% extra not yet received is attributable to AAZ so that is where I get my $11.3m cash flow for Q1 vs your $9m.

I agree in general with your cost/revenue/cash flow analysis, but to avoid confusion with anyone making comparisons to prior year accounting statements just want to point out $45m is the estimated free cash flow generated, not the 'operating cash flow' figure as defined in the accounts, which should be significantly higher as it comes before financing and investing activities in the cash flow statement (i.e debt/interest payments and mine development and exploration expenditure).

We know that the 'cash cost' of mining for AAZ was $40.5m in 2018 - then we add mine development + exploration capex + corp tax and we get to your estimate of c$60m 'all in costs' - which may come down if oil price remains subdued.

Net cash flow, after tax, from operating activities in 2018 was $47m - but then had $18m spent on mine development and exploration. Actual net increase in cash at bank was $12.0m. Company repaid $12.2m in borrowings and paid $3.4m in dividends + $1.5m in interest, so the free cash generated was $29.1m

We are forecasting an increase from $29.1m free cash generation in 2018 to $45m (or higher?) in 2019.

Enterprise value for AAZ is a little over current 3 x annual free cash flow.

[mattjos] 15/4/2020 12:05

Anglo Asian Mining* (AAZ LN) 125p, Mkt Cap £143m – 18.2koz produced in Q1/20 with 75-80koz FY19 guidance on target.

BUY

• Q1 production amounted to 18.2koz GE (Q1/19: 20.3koz) comprised of
o Gold – 15.9koz, -8%yoy (Q1/19: 17.2koz);
o Copper – 559t, +9%yoy (Q1/19: 513t);
o Silver – 34.6koz -32%yoy (Q1/19: 51.3koz).
o Process wise gold production split included:
 Heap leaching – 3.2koz (Q1/19: 2.9koz);
 Agitation leaching – 11.9koz (Q1/19: 12.6koz);
 Flotation – 0.8koz (Q1/19: 1.7koz).
 Quarterly gold sales totalled 11.3koz at an average realised gold price of $1,577/oz (Q1/19: 13.2koz at $1,306/oz) reflecting COVID-19 related disruptions to dore gold shipments.
 Gold dore production from 5 to 31 March was shipped to the refiner only in April with 90% of the Company’s sales share to the tune of $5.9m received on 6 April.
 Q1 copper concentrate sales continued unaffected with 2.0kt sold generating $2.9m (Q4/19: 3,723kt and $7.4m).
 Net cash position increased $26.0m by Q1/20 with no bank debt and up on $21.2m net cash position as of Dec/19; this also does not account for $5.9m in gold sales proceeds as highlighted above.
 FY20 production guidance reiterated at 75-80koz GE including 65-67koz gold and 2.2-2.4kt copper with Gedabek operations remaining in operation.

Conclusion: Robust quarterly production report see the team maintaining its FY20 production guidance with operations at Gedabek continuing as normal. The quarter marked a major milestone with the Company going debt free and posting $26.0m net cash position by quarter end (excluding some $5.9m in dore gold sales proceeds with regards to the March production).Strong FCF generation and balance sheet bodes well for the sustainability of dividend payments as well as a continuing investment in the exploration programme.

[bumpa33] 15/4/2020 11:39

Morons Rb, get it right ;)

Out completely of AVCT now, good luck to holders going forward.

Went short HUR this am, bit slow at 13, closed at 12.4. Short LVCG but no liquidity, 16 closed at the mid 13. Bought back some EVG at 7.5. Sorry 7.35

Closed part short on ES_f at 2795.

[bleepy] 15/4/2020 11:17

Well done all at Aaz, an excellent quarter achieved under stringent conditions imposed by the pandemic.

Full production and exploration continues in line with guidance and expectations laid out for 2020.

Cash being king alongside debt free status puts Aaz in an enviable position and the cash pile continues to grow.

Aaz will have many options present themselves emanating from news flow surrounding govt discussions, expected jorc reports outlining lom, recent new discoveries, ongoing exploration/further new discoveries, new production capacity/expansion, potential azergold tie up, other interests outside of Azer.

The vast amount of work carried out to date on Gedabek underground mine suggests that it would be part of next jorc update. The project has seen exploration tunnels, development tunnels, ongoing fan drilling, ventilation shaft completed, side chambers in preparation for further exploration and development. Can’t wait to see this report.

Gadir has four adjacent areas of great interest for further expansion.

The two new discoveries in corner of Gedabek estate has “Ugur” style fast track potential.

Many, many more targets on Gedabek under investigation.

Gosha shows promising expansion below its existing mine alongside ongoing exploration of its 300sqkm estate.

Ordubad the jewel in the crown showing potential to facilitate a heap leach operation as aa prelude to a larger investment/operation.

New highs on the horizon for Aaz...

[gold finger 1] 15/4/2020 10:46

well there is a gap to be filled from when we opened yesterday so we may as well go back and fill it now.
Looks like all miners are getting hit today though.
I personally would not want to risk selling for a few pence profit, and then try to get back in.

[polaris] 15/4/2020 10:44

Based on what was actually sold in the Q then i get this (rounded).

11236 oz gold sold at $1577 = $17.7 M
(15041 oz in dore + 3852 oz silver and around 13190 oz attributable to AAZ incl. silver conversion)

Cu/Au/Ag concentrate sold 2018 dmt for $2.9 M
(2620 dmt is attributable to AAZ from 2994 dmt produced in Q1)

Stated cash increase of $4.8 M in Q

Declared Revenues $20.6 M

Implied total Q costs = $20.6 M - $4.8 M = $15.8 M

Implied total costs pcm $5.25 M

So, while gold dore worth $5.9 M was sold in early April, not all of that is attributable to Q1 for AAZ from figures above (I made it 1954 oz).

AAZ also held around 602 dmt of attributable Cu/Au/Ag concentrate at period end, worth around $0.85 M.

It's all about the timing cf. previous years and so while the metals are produced, the bullion and concentrate sales are not necessarily booked within the Q (at least until you get to audited figures post period end for Q1).

Taking all that into account then i make it a 'final' cash generation of around $9 M for Q1 (adding the 1954 oz gold at $1636 from sale in early April and the value of the unsold copper concentrate).

Projecting forward, total production costs for the year will be $63 M or so.

Best guestimate is that attributable AAZ revenues will be over $100 M. My current spreadsheet has it at $108 M @ $1650 average gold, $5000 copper and $15 silver.

That means cash generation from operations of $45 M. (edit - as pointed out by KS this is actually FCF)

It is an incomplete piece of analysis from me so i may have overlooked some things. It also converts Q1 to FY and so any single Q costs may be over or under-estimated, depending on whether they are booked in Q1. The numbers include admin and head office costs, as i assume they are booked monthly.

[wanobi] 15/4/2020 10:42

Good morning Rb, pleased to hear all is well with you :-) Cheers Wan :-)

[riggerbeautz] 15/4/2020 10:39

Morning to all the idiots or was it morons that inhabit this thread :)

AAZ steady, as you were, counting cash. Should have gone after the builders but had a lie in.

Woodstaining this morning.

[brasso3] 15/4/2020 10:06

Whilst its nice to have a big pile of cash I would like to know how this can be put to work. In the short term its wise to keep it in the bank. There are lots of cash strapped explorers out there that would benefit for AAZs funds and expertise.