RE: I suppose "what goes around comes around"25 Jan 2021 10:35
@mostyn I'm still doing my research after buying in myself over the past few days and there is a surprising amount of information that should help give you a good idea across the last 6 months RNSs alone.
My current view is:
(1) AAZ valuation: Really tricky but exploration upside is enormous across 6x PSAs granted with the last 3 having just been returned to AAZ and the timers reset to zero. AAZ have reported:
> $38m cashflow on 67k GEOs for 2020 from effectively one working low cost, high grade gold, copper and silver complex at Gedabek
> 49% Earn-In deal with Conroy Gold for 8Moz exploration opportunity in Ireland ... awaiting decision
> Soutely gold mine built with plant and recently operating with possibility to be restored to 120koz/annum production a distinct possibility but timeframe and eventual output unknown. Same at Kyzlbulag Copper/Moly mine
> share of war reparations seems likely but scale and timing unknown & could fund at lot of mine remediation and/or further exploration across their 6 PSAs
(2) Asset depletion in 3x PSAs = Soutely, Kyzlbulag & Vejnaly during 20+ years occupation?
> Soutely - Operator GeoProMining Gold (GPM) stated 8Moz resource remains in 2019 and prior production was 120Koz pa before the conflict. I understand from 21-Jan-21 RNS that plant and mine are believed to be intact but this needs to be assessed
> Vejnaly is believed to have been mined but I can find no details on processing plant and AAZ have said themselves that they need to be assessed when it is safe to do so. Anything seems to be speculation at this point.
> Kyzlbulag Copper/Moly mine (275kt Copper & 3.2kt Moly) was said to have a 25 year LOM and as the RNS says the ore processing plant was commissioned by Vallex in 2016 I cannot imagine any depletion was meaningful.
The above gives me a lot of comfort that there is considerable upside to be had here and when coupled with their dividend policy this provides a high risk, but very high upside play on a precious and base metal producer/explorer that could easily become a mid-tier producer in 1-2 years once the 2 or possibly 3 mine remediations have been resolved & brought back online. I haven't even begun to get my head around the exploration possibilities.
The Conroy Gold 8Moz opportunity is interesting as this will not be subject to a PSA with teh Azeri government (as I understand it) so any future value from the 49% Earn-In will accrue directly to AAZ.
AIMHO APR
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