Ariana Resources Share Discussion Threads

[jaynesdad] 28/8/2019 08:49

Hi Soul, I'm making no predictions about production next quarter. To an extent the management can choose (within limits) the result they want from various grades stockpiled. The target of 25000 oz this year came as a shock to some after the 2018 result (27000, including a very low 2018 Q1 result?) but it struck me as deliberate and I suspect the 2019 result will be closer to this target than some expected. I guess that means 6500 oz per quarter average. I say that because AS was known to be the highest grades as far as is known, and in fact turned out better than expected. The management has to manage the expectation gong forward, it would be hard to sell 30000+ oz this year followed by, say, 24000 oz next. I therefore expect there is some 'smoothing' going on. This is obviously pure & total supposition on my part, so cant defend it to those who disagree!

[charles clore] 28/8/2019 08:31

HG - what's not to like?

Note to self - factor the state right in to AISC for future years.

Looks like the seller has gone.

[georgethefourth] 28/8/2019 08:30

2tyke - with respect that all sounds a bit simplistic. Up for ten years then down for 20. If it were that easy everyone would make a killing. Besides, you've also got to take into account whatever the commodity is priced in. In sterling, gold has broken out to the upside already. In dollar terms, it went from 100 to 800 in the 1970s, then spent the next 20 years forming a base around 400. It never got anywhere near its former lows.

You could look at golds pricing in three different ways that I can see:
1. In and of itself. As you seem to.
2. Assume gold is stable and any price movements are really currency movements
3. A mixture of the two

I'd be more inclined to go with the last of those. Monetary policy is unsustainable. The global debt levels are unsustainable. The concept of negative interest rates are unsustainable (Denmark recently launched a fixed rate residential mortgage at negative rate! The bank paying customer to borrow... Insane). The pension funds cannot survive at these low interest rates and are unsustainable. The bond markets rely on governments buying up the issues, since few people want to be locked into long term products at marginal or negative rates - except spivs who just want to sell them on straight away. It can't last. Gold will though and people know this

[soulsauce] 28/8/2019 08:25

Nothing in Kerim's statement gives me confidence that we will be back in 7000oz territory next quarter but at least with the silver credit we will be getting nearly $1600 per oz.

No dixi I don't either.

[dixi] 28/8/2019 08:21

Is the reasoning for the increased costs for this quarter something that has been flagged up previously? I don't remember any previous references?

[highly geared] 28/8/2019 08:18

Simple maths on AAU in current environment:

12,500 net oz
$12.5 million profit after AISC
£10million net profit
Market cap gives PE around 2
Other assets
Good but prudent management
Simplistic yes but big picture suggests this should be valued higher than the current share price

[jc2706] 28/8/2019 08:16

As a mathematician I have to point out the flaw in this argument. We have the concept in mathematics of a valid sample i.e. sufficient data on which to base analysis. To say that gold has 10 and 20 year bull/bear cycles based on data since 1971 (a point in time when the price of gold bore no resemblance to any fundamental information and certainly wasn't able to move freely based on sentiment) is not sufficiently supported by the evidence available. That is not to say it is not true, it is just that the inference is not supported by a sufficient base of data.

[highly geared] 28/8/2019 08:15

Is $15 Trillion global QE and $13 trillion negative yielding govt debt ‘normal cycle’ stuff? The world has changed (not for the better) so I wouldn’t judge gold on previous cycles alone...

[2tyke] 28/8/2019 08:06

George

The alternative path you suggest for gold isn't really likely.

Gold undergoes secular bull markets of 10 years, followed by secular bear markets of around 20 years. As does most commodities.
Thus a bull run from 1971 to 1981, followed by a secular bear market from 1981 until 2001. The ensuing bull market was again a decade finishing in 2011 at $1921.
A bear market lasting only 4 or 5 years since 2011 is, I think you'd agree, unlikely.

Combine the above with the proportion of bulls currently being similar to in 2011, even though price is way lower, and the conclusion seems obvious.
I don't even have to start on the chart.

[gaddy88] 28/8/2019 08:00

Did you expect anything more?

[soulsauce] 28/8/2019 07:47

All pretty much as expected. That about sums it up Temujiin.

[temujiin] 28/8/2019 07:15

All pretty much as expected and still on ''track
to achieve annual production guidance of 25,000 ounces of gold''.

KIZILTEPE QUARTERLY OPERATIONAL UPDATE

Operational Highlights*:

· Gross income for the quarter is US$9.69 million at the average
realised gold price of US$1,307 per ounce, against an average revenue per gold
ounce of US$1,496 (due to silver credit).

· Production of 6,438 ounces of gold during the quarter ending 30
June 2019.

· Gold production at H1 2019 totals 13,734 ounces of gold; on track
to achieve annual production guidance of 25,000 ounces of gold.

· Operating cash costs for the quarter are estimated at US$589 per
ounce(#), inclusive of the annual State Right for 2018 paid during the
quarter.

· Operational mill availability running at 99.2% and utilisation at
95.8% for the period.

· 48,132 tonnes ore milled during the period ending 30 June 2019 at
an average head grade of 4.18 g/t Au.

· Process recoveries of gold remain high at 95.2% at the end of the
quarter.

· 69% of the US$33 million capital loan for Kiziltepe has been repaid
as at quarter ending 30 June 2019; on track to fully repay loan by April 2020.

* All figures are given gross with respect to the JV.

[alwaysevolving] 28/8/2019 00:32

Agree CC, that chart looks lovely for a reversal. Bring it.

[georgethefourth] 27/8/2019 23:33

2tyke - I predominantly trade on technicals so emotion doesn't have much to do with trading decisions.

"The usual mistake of linearly trying to project this into the future" - couldn't the same statement be levelled at your current perspective? Pog has dropped for 10 years so you assume the trend will remain down?

You could equally make a case that gold has been in a bull market since the 'brown bottom' and the last 10 years have just been a correction within that

[charles clore] 27/8/2019 23:31

Just a hunch. There's a long wick on the daily candle and my gut tells me the seller may be finished, Get in! NAI DYOR etc.

[charles clore] 27/8/2019 21:58

O m g the arrogance!!

[2tyke] 27/8/2019 21:25

Well done George, you are the one actually seeing things like they are...to some extent.

Most gold stocks (like AAU) have only 'bounced' higher, as in 're-traced'.
Just like gold metal they still remain within a bear market.
Sentiment is however currently very bullish. That's because gold and most stocks ( including AAU) have risen strongly recently, and investors are making the usual mistake of linearly trying to project this into the future.
If you trusted your observations more than your heart george, you could probably arrive at the complete picture.

[georgethefourth] 27/8/2019 21:02

Charles - that's the thing though, I don't really see the pm rally having started yet in most of the miners. A few have risen massively in the last 5 years - like Aaz or Solg ect - but most have dropped a long way. Then, in the last few months a few have followed gold/silver up, but most of these were coming off multi year lows and were well oversold to begin with. So naturally they'd be among the first to bounce regardless of quality.

I actually think it's a positive with Ariana that it rose before the rally in metals. It was one of the few to do that and shows that it's fundamentals were strong enough to warrant a move off its own steam, rather than just following the pog up. I think it's only a matter of time before it moves up again, especially as more money moves into the mining sector, which I think has got a lot further to go over the next couple of years

[soulsauce] 27/8/2019 20:01

Yes George using 2tykes crazy logic that contrarian is usually always right then the lack of bullishness is surely a screaming buy signal lol.

The entertainment continues 😁

[charles clore] 27/8/2019 19:48

eorge - I've been adding and feel optimistic for the future but at the same time feel that we are missing out on the pm rally despite doing everything right operationally (which is how profits are made). But what are investors seeing when they look at AAU? I think we may soon find out.

[georgethefourth] 27/8/2019 19:36

I've never known it so pessimistic on here in a long while. The contrarian in me is tempted to buy more. I don't know why the sentiment is so negative either, we doubled since November and then retraced a little - but were still only 20% off the recent highs. Comparing the stocks performance to others is perhaps not all that fair either. Sure, you could pick a stock like Aaz in which case you'd be right to be pessimistic. But for every comparison like that there are 5 where we have outperformed. A lot of small cap miners need to multibag from here to get to 20% off their 5 year highs...

[rjwoodrjwood] 27/8/2019 19:20

Profitable company,soon to be debt free, Good fundamentals......a no-brainer one might think, BUT, no buyers equals no price action! Simple!

[charles clore] 27/8/2019 19:18

Well I'd be grateful for a sensible analysis 2tyke but I rather doubt that even you could do that.

[8rad] 27/8/2019 19:14

A DIVIDEND.