Anglo Asian Mining Share Discussion Threads

[bozzy_s] 09/6/2020 12:51

"NPV based 'values' are never, ever anywhere approached in practice"

I remember now. The Lurker post saying exactly the same at 120p. Then the shares shot up to and beyond Hardman's previous NPV based 'value'.

Try sticking to one username. You'd get a bit more respect that way. By chopping and changing, and claiming with hindsight to have been right under a different moniker, you look a fool.

Especially when the previous moniker got it wrong (see above quote, and look at what happened to AAZ's share price in 2019 - no ifs, no buts, no whining it was a short term spike.... it happened and you were wrong).

As for this Hardman report, as Matt says nothing particularly new. Interesting they're expecting a higher dividend than me for 2020. Hopefully that happens.

[onedayrodders] 09/6/2020 12:47

Gold firming and regaining $1700 handle ... shame Silver has decoupled again

[dozyduck] 09/6/2020 12:39

Those who have ears to hear - and brains to understand - should take careful note of the following extracts.

We are now more confident that AAZ can econmically exploit these additional M&I
gold resources (and the majority of related silver and copper resources). We expect
these M&I resources to be mined during 2026-32, as explained in more detail later
in the report.
(Hardmans may be 'confident' - But investors will need more reassurance that the mining engineers will be and that the funds are there to do it.

Our assumption is that the royalty rate remains at 12.75% until the end of 2025,
after which it moves up to 51% for the remainder of our forecasting period until
2032. In practice, this is likely to be conservative, because the capital costs of
constructing an underground mine at Gedabek (not currently in our model) will delay
the onset of higher royalty rates.

1) Quite a big assumption that ! Don't think investors will do so
2) Capex 'not included in our model' !!!! Quite !


Using these assumptions,
our fair value for the company is 181p per share, versus the current price of 125p
(as at 8 June 2020).

As explained ad nauseam elsewhere NPV based 'values' are never, ever anywhere approached in practice. (Work out why for yourselves) In other words the shares are 'fairly' priced for now. But investors wanting more certainty will strike camp.

[mad foetus] 09/6/2020 12:07

It's an interesting report that's for sure. I not that a porphyry expert from the Natural History Museum has been looking at the site since last November. It's just a waiting game imo

[lefrene] 09/6/2020 11:54

gutterhead, the quality here in all respects is such that one can sleep easy at night holding AAZ and there are precious few constituents of AiM where that can be said.

Thank you for the link Matjos an excellent thorough report, that leaves the door open for news on discoveries.

[2sporrans] 09/6/2020 11:53

Well, there's a 12 year LOM estimate and just based on main pit, Gadir
what's left of ugur [current pit] and a tad for Gosha; assumes
50% of current M&I resource can be extracted:

"Additional" M&I below means over and above Proved and Probable"




Though this has not attracted buyers today, i think it's a slow burner; a
guide to what to expect in RNS form; a fair few to come next few months.

[gutterhead] 09/6/2020 11:47

The obvious conflict of this report and the boards ongoing stated ambition is that they wish to become a "mid tier" producer
This has to be a question for the Board at the AGM (albeit I believe their ambition is still as stated)

Quite rightly, the report and its forecasts only include "knowns" and that makes it quite conservative.

The dividends alone are reason enough for me to be happily patient and hold

[2sporrans] 09/6/2020 11:19

Something that surprises me is that they see
the main open pit not only continuing to produce up until 2032
but it will provide for ALL of the deficit that results
from the exhaustion of Ugur [in its current phase], Ugur
producing maybe 28k [13k from stockpile] this year and 10k in 2021 as it runs out.
Gadir is seen as producing much the same from now until end 2025; the open pit
will produce a tad over 40% of the gold this year, rising to over 80% by 2023.
None of the 5 new production targets are supposed to make any contribution in this
forecast to end of 2025.
Very conservative.


Then we have a further 7 years of production forecast:
"Based on our current assumption, AAZ can maintain annual gold production in the range of 72,000-88,500oz p.a. during 2026-32."

This seems to be just from main pit, Gadir and a tad from Gosha; i.e. from the
M&I resource already estimated for those pits.

Note:
"We are not, at this stage, including any additional production from extending the lives of existing mines via near-mine development.As the following table shows, the company is planning to commission production from mineable extensions to three existing mines in the first quarter of 2023. However, this is likely to change with the publication of resource estimates for these projects in due course"

All the other prospects, including the 5 currently targeted to produce from H2-2022
onwards are excluded from their forecast.
And nowt in for Ordubad whatsoever.
Obviously the Porphyry prospects are an additional new dimension of resource.

[traderglt] 09/6/2020 11:03

Follow the company on twitter - they post everything there. @aazmining

[gutterhead] 09/6/2020 10:55

Detailed report, very thorough........

[2sporrans] 09/6/2020 10:55

Once again, thanks for posting Matt

Hardman are indeed addressing the resource and LOM issue
which is what we were hoping for:

"AAZ is now well advanced in extending production well beyond 2025 and likely increasing it from the plateau reached during the past several years. This report explains why and how we expect this to be achieved and the bigger potential for theGedabek and Ordubud Contracts Areas to evole into separate mineralised “systems”;."

Great.
OK, so now have to plough through.....

[goodgrief] 09/6/2020 10:54

Looking forward to a nice fat divi!

[mattjos] 09/6/2020 10:54

nothing there to move the price, imo.
In fact, i fully expect traders to sell up and to move on here as they are not interested in dividends.

My strategy is simple from hereon ….. use every tactic i can to move as many of trading a/c shares into my ISA/SIPP to avoid taxes on the dividends & that will be possible at least twice per year as the ISA/SIPP dividend can be used to buy the shares out of your trading account and place them into your ISA/SIPP.
That will markedly accelerate the transfer of shares into tax-free wrapper other than the £20k ISA annual allowance.

At some future point, I have no doubt the company will hit the jackpot that is under their feet & when they do, they will have amassed the necessary firepower and have access to debt to really do justice to the opportunity in a way that most people cannot yet imagine.

I'm very happy with the report & I'm sure all the existing LTH's will be too .. looking forward to the end July dividend and then Q3 when exploration news is clearly going to be forthcoming on several fronts

[wanobi] 09/6/2020 10:35

AAZ - here's the jackpot line :-) GLA Holders, Cheers Wan :-)

""We believe that AAZ’s flagship Gedabek Contract Area could be part of a much bigger epithermal-porphyry system of gold-silver-copper mineralisation.""

oh and,,

""AAZ is now well advanced in extending production well beyond 2025 and likely increasing it from the plateau reached during the past several years.""

[skeptic1] 09/6/2020 10:31

Good report - enough to move the needle?

[mattjos] 09/6/2020 10:31

"Investment summary: The outstanding aspect of AAZ’s financial performance is
its cash generation, which is reflected in our DCF valuation of 181p per share,
using a discount rate of 8% and long-term gold price of $1,600/oz.
We expect the company to pay a $0.105 dividend in 2020, implying a dividend yield of 6.8%. "

[wanobi] 09/6/2020 10:27

many thanx dd, cheers Wan :-)

[mattjos] 09/6/2020 10:23

jeez .. Net Cash of $84m by end 2022 & divis of 10.868c for 2020 & 2021 & 9.152 for 2022

"We expect cash generation to remain very strong during 2020-25. Our estimate of annual free cashflow generation during this period (defined as net income plus depreciation & amortisation – capex) will be in the range of $26.7m-$34.3m – with an average of $30.4m – versus AAZ’s current market capitalisation of $177.3m (£143.0m). This amounts to an average free cashflow yield of 17.2% p.a."

[droyden] 09/6/2020 10:19

Hardman note out for aaz

[mattjos] 09/6/2020 10:13

going to take a long time to read the 36 pages

[mad foetus] 09/6/2020 10:09

Hardman note out

[mattjos] 09/6/2020 10:09

Hardman report out