Ariana Resources Share Discussion Threads

[plasybryn] 11/7/2021 12:27

Thanks soulsauce & renninks. Until we see in black & white the long promised Tavsan mine schedule and E.I.A. plus the revised resource estimation, plus the updated Salinbas E.I.A. scoping study and future outline plan etc. etc. I think it is impossible to get anywhere near a sensible valuation. Panmure Gordon, from what I recall still only have Salinbas valued at $14m. Although already 7 months out of date, last year's Annual Report & Accounts, when finally released may also provide some forward thinking value pointers.
Having said all that, given the hard cash in our balance sheet following the J.V. payment, current mine assets (Infrastructure etc.), stock piles, the various reserves/resources, the fact we are debt free, our investments (Venus Minerals etc.)and current & future cash flow (discounted as per Renninks Note), I think it must be pretty easy to arrive at a fairly solid valuation of circa £100m (10p per share)as per the Panmure Gordon assessment. Once all the Salinbas & Tavsan stuff starts to get taken account of, who knows what a sensible valuation could be. Certainly a lot more than 10p. I'm sure the Board realise this and are constantly carefully considering how to prioritise and drip feed progress to ensure a steady and stable accumulation of value.
I tend to agree that the Special Dividend could be the catalyst to announce accretive news to support the share price given the inherent dilutive impact and the desire to encourage investors to reinvest all or some of the proceeds. At least that is what I'm hoping for. I think it is interesting also that the Technicals are looking stronger and seem to be anticipating an ongoing increase in the share price.

[soulsauce] 11/7/2021 11:47

Yes Plasybryn you have worked it out wrong. 78% undervalued so 23p x 0.22 = 5p

100 - 78 = 22. Transpose to 0.22 to get %age.

That said £230m is fanciful but I think £100m should be achievable.

[renniks2016] 11/7/2021 11:32

Below are the data sources, inputs and calculation used to determine the intrinsic value for Ariana Resources.

AIM:AAU Discounted Cash Flow Data Sources
Data Point Source Value
Valuation Model 2 Stage Free Cash Flow to Equity
Levered Free Cash Flow Average of 1 Analyst Estimates (S&P Global) See below
Discount Rate (Cost of Equity) See below 6.5%
Perpetual Growth Rate 5-Year Average of GB Long-Term Govt Bond Rate 0.9%
An important part of a discounted cash flow is the discount rate, below we explain how it has been calculated.

Calculation of Discount Rate/ Cost of Equity for AIM:AAU
Data Point Calculation/ Source Result
Risk-Free Rate 5-Year Average of GB Long-Term Govt Bond Rate 0.9%
Equity Risk Premium S&P Global 5.3%
Metals and Mining Unlevered Beta Simply Wall St/ S&P Global 1.06
Re-levered Beta = 0.33 + [(0.66 * Unlevered beta) * (1 + (1 - tax rate) (Debt/Market Equity))]
= 0.33 + [(0.66 * 1.063) * (1 + (1 - 19.0%) (0%))] 1.042
Levered Beta Levered Beta limited to 0.8 to 2.0
(practical range for a stable firm) 1.042
Discount Rate/ Cost of Equity = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)
= 0.92% + (1.042 * 5.31%) 6.46%
Discounted Cash Flow Calculation for AIM:AAU using 2 Stage Free Cash Flow to Equity

The calculations below outline how an intrinsic value for Ariana Resources is arrived at by discounting future cash flows to their present value using the 2 stage method. We use analyst's estimates of cash flows going forward 10 years for the 1st stage, the 2nd stage assumes the company grows at a stable rate into perpetuity.

AIM:AAU DCF 1st Stage: Next 10 years cash flow forecast
Levered FCF (GBP, Millions) Source Present Value
Discounted (@ 6.46%)
2022 3.5 Est @ 81.11% 3.29
2023 5.5 Est @ 57.05% 4.85
2024 7.71 Est @ 40.21% 6.39
2025 9.9 Est @ 28.42% 7.71
2026 11.9 Est @ 20.17% 8.7
2027 13.61 Est @ 14.4% 9.35
2028 15.02 Est @ 10.35% 9.69
2029 16.15 Est @ 7.52% 9.79
2030 17.04 Est @ 5.54% 9.71
2031 17.75 Est @ 4.16% 9.5
Present value of next 10 years cash flows £78
AIM:AAU DCF 2nd Stage: Terminal Value
Calculation Result
Terminal Value FCF2031 × (1 + g) ÷ (Discount Rate – g)
= £17.753 x (1 + 0.92%) ÷ (6.46% - 0.92% ) £323.66
Present Value of Terminal Value = Terminal Value ÷ (1 + r)10
£324 ÷ (1 + 6.46%)10 £173.14
AIM:AAU Total Equity Value
Calculation Result
Total Equity Value = Present value of next 10 years cash flows + Terminal Value
= £78 + £173 £251.14
Equity Value per Share
(GBP) = Total value / Shares Outstanding
= £251 / 1,085 £0.23
AIM:AAU Discount to Share Price
Calculation Result
Value per share (GBP) From above. £0.23
Current discount Discount to share price of £0.051
= (£0.23 - £0.051) / £0.23

[plasybryn] 11/7/2021 11:19

Fair value 23p. Wow. Shame it doesn't say how it arrives at such a price.
How do they know all those holdings when they are below the declarable level?
Does this site have any credibility.
78% undervalued/ 5p plus 78% equals 8.9p. Am I missing something?
I prefer the Panmure Gordon analysis which shows 10.32p at a 10% discount and $1700 gold.That was August 2020.

[renniks2016] 11/7/2021 10:40

If it gets people discussing value then happy days, as I said, not my words, but agree with being undervalued, I was thinking more like 50% than 78%, but Hey Ho Click on link below, go to valuation and click on View data.

[thanksamillion] 11/7/2021 09:51

Fair value - £230m - who says so, I believe we are undervalued, however, seems a bit of a stretch at the moment that one.

[soulsauce] 11/7/2021 09:13

Ahhhh if only the Aau mgt emulated your exuberance Renniks instead of wanting to keep it ultra conservative.

[renniks2016] 11/7/2021 08:16

Morning all, something to pass a few minutes on murky Sunday morning.

As of 21-02-21 so 5 months out of date but still relevant I think.
AAU Shareholders-
8.8% HBOS Investment Fund Managers Limited 95,399,255
7.62% Barclays Bank PLC, Wealth and Investment Management Division 82,682,635
7.05% Jarvis Securities plc, Asset Management Arm 76,499,916
5.38% Michael de Villiers 58,400,000
4.17% A J Bell Holdings Limited, Asset Management Arm 45,278,162
2.95% Stephen Bingham 32,003,422 £1.6m
2.88% Equiniti Group Limited, Asset Management Arm 31,276,131
2.86% Tilney Group 31,020,051
2.74% Integrated Financial Arrangements plc, Asset Management Arm 29,723,071
2.48% Rathbone Investment Management Limited 26,905,579
2.46% Charles Stanley & Co. Ltd, Asset Management Arm 26,735,330
1.91% Ahmet Sener 20,675,526
1.5% IEC Limited 16,222,041
1.39% IG Group Holdings Plc, Asset Management Arm 15,129,929 £771.6k -31.38% 0.08%
1.33% HSBC Global Asset Management (UK) Limited 14,420,998 £735.5k -2.62%
1.29% Killik Asset Management 13,965,593 £712.2k -1.29%
1.04% Idealing.com, Asset Management Arm 11,286,984 £575.6k -25.7%

What others think!
Is Ariana Resources undervalued compared to its fair value and its price relative to the market.

Analysis Checks 4/6 >50%

Undervalued compared to fair value
Share Price vs. Fair Value
78.0% Undervalued
Current Price UK£0.051
Fair Value UK£0.23

Not my words, simply wall street analysis, and I totally agree.

Build in what we know and what is happening currently, then there is a good chance this valuation would be a lot higher. Do not underestimate the potential of this company. The time is right, the time is now, its coming home. !

[konil] 10/7/2021 12:40

yup looks like the fix is in with regard to basel3 opt-outs/exemptions etc., but not a done deal yet. bis must have known this was likely, not clear to me what their gameplan is. the squealing from lbma/wgc suggests basel3 was not another co-ordinated attempt to continue the hoodwinking of the public, but in changing gold's status from tier 3 to tier 1 they are definitely lining up ducks for something further.
true price discovery was unlikely to be their motive as that would remove power from govts./central banks, though it might have been (and may still be) an unintended consequence.
are they planning for a new currency (or to put usd back on gold standard?) as they get increasingly nervous about the unsustainable dollar debt and seek alternatives? they wont want to see china take the lead with an alternative - may not be able to stop it though?

[charles clore] 10/7/2021 11:50

As long as everyone is competing on the same playing field it's irrelevant imho. We won't get mega rich holding gold and silver but I can't see the stock markets collapsing either as they seem to want them to continue no matter what. Meanwhile everything is being manipulated and propped up with splints and sticky tape

[linz22] 10/7/2021 08:04

Speechless?
Hardly surprising, though, is it.?
Expect it to be diluted further to as good as nothing...

[soulsauce] 10/7/2021 07:28

Cheers carcosa. Like you I was on the record as saying it would be a damp squib. Another one of those things trumpeted on king world news and other places that was going to shoot gold into the stratosphere. Very disappointing.

[charles clore] 10/7/2021 00:12

Nice find Plas - pity the price didn't make it to Zak's target this week though. Unbelievable lack of interest by the market considering the divi news which should, by rights, raise the share price considerably between the announcement and xd date.

[plasybryn] 09/7/2021 20:46

Anyone pick this up on Twitter on Wednesday - Zak Mir on the Ariana Resources "technicals"
Might be of interest to some.

hxxps://www.voxmarkets.co.uk/articles/traders-cafe-with-zak-mir-bulletin-board-heroes-july-7-dcf503b/

[renniks2016] 09/7/2021 20:02

Brad- I did want to over egg it! But I do agree, yes, yes, they were orgasmic ! ??

[8rad] 09/7/2021 19:05

Renniks...I can think of a more appropriate word than interesting which starts with O and ends with C.

[renniks2016] 09/7/2021 18:33

Pre-current drill results at Kokkinoyia were still very interesting. Following current results easy money!

Historical production records demonstrate average recovery of gold to copper concentrates of 5.0 g/t. Intermittent gold assays in historical drilling further highlight the gold potential, with the best intercept measuring 8m @ 2.2g/t. Check sampling by Venus demonstrates significant gold in composite waste dump samples, with individual samples grading up to 5.0 g/t, and an average grade of 0.8 g/t Au across all waste samples. Venus believes that further drilling will enable gold to be incorporated into a Resource upgrade.

Furthermore, examination of historical drill logs indicates that many holes were terminated in mineralisation, often due to caving of the hole walls, a common problem with the open-hole drilling techniques used at the time. It is the company’s understanding that there remains significant potential to extend the known mineralisation at depth and down plunge.

The relatively shallow and continuous nature of the mineralisation in the Western Block beneath the historical pit may lend itself to a starter mine and early cash flow. This concept is to be further developed in 2021.

[soulsauce] 09/7/2021 18:16

Hi DIG3Y putting a value on Cyprus is something that a good broker might be on top of. Shame we haven't got one.

[d1g3y] 09/7/2021 18:04

I was trying to get a ballpark value for AAUs 50% of Kokkinoyia. The RNS said JORC estimate of 36,000 tonnes of copper at $10k per tonne is 360 million. AAUs 50% would be 180 million. I read an article recently that stated a mid-tier / major might expect to pay 5% for resources in ground. That would put a figure of $9 million for AAUs portion. Fully appreciate JORC estimate might need to be indicated/inferred but it's a start. Secondly I didn't include gold which would defo help with the economics. Will be interesting to hear the results of the next 8 drills holes as the team start to build up a picture of the prospect. Starting to look like another good bit of business by the AAU team

[ironstorm] 09/7/2021 15:29

Dig - yes you are right of course but we did ge this brief update on the JV.

"Our joint venture operations in Turkey, comprising the Kiziltepe Mine and the Tavsan and Salinbas projects ("JV"), produced 18,645 ounces of gold to the end of 2020, as reported in January 2021. JV production has continued uninterrupted and the Kiziltepe Mine continues to perform in accordance with the guidance provided in March 2021, from which we are expecting 19,000 ounces of gold to be produced by year end. The JV has recently completed a 10,052m drilling programme at Kiziltepe, and drilling operations are now continuing on Kepez and other nearby prospects. Preparation for new drilling campaigns at Tavsan and Salinbas are also well underway and are expected to commence during the summer.

[charles clore] 09/7/2021 14:58

Masters - thanks for your reply.