Member Info for Daisan

I can understand that point of view. Personally I think that the VAT is a red herring but is has had an impact for sure. I think that the gold price wobbling is also a factor. The 30% ownership is unclear to me and I will be contacting the company to see what they have to say about this. I tend to disagree with your conclusions as I can see several potential positives in the next six months but it may well see the placement price before then. If that is the case then the investment case for the next few years would be overwhelming even if they gave away 80% of the company.

It does seem strange. Perhaps a delayed (end of week) response to the update? There were some rather odd trading patterns late on in the day that impacted the price towards the end.

21.75p paid now. Resistance in the 20-21p zone is looking like it is going to go which should see a pop up, although don't rule out a 'back test' before resuming an upward trend. It should be noted that if the resistance does not provide support for the back test then this would be a very negative outcome but I am optimistic that this will be the start of a move up.

It does look like it is coming to a head. A shame that today is Friday but it sets up well for next week. 21p is the battleground, if it breaks convincingly then I expect this to make fairly rapid progress up to the high 20s/30p.

It's an intriguing one and somewhat different to the BEE arrangement in South Africa. I have absolutely no problem with local ownership and would prefer the local communities to benefit more from these operations beyond just the jobs and local investment - real ownership so that they can benefit from success would be great. But it is actually going to be difficult to achieve here for precisely the reasons mentioned in the article. And if they just hive off 30% of the company to be traded on the Dar Es Salaam SE you will just create two different markets with less stock on AIM. Personally I am not sure that I can trade on the Dar Es Salaam stock exchange!

As long as there are people who see a big buyer as a selling opportunity, a long time apparently.

I believe that this is more than a threat. I genuinely think that they have curtailed this activity to ensure that the company does not require additional debt funding before underground production stabilises, capex reduces and the NL operation is cash generative. This strikes me as an appropriately conservative response to the VAT issue but is also useful in discussions with the government. I can well believe that there has been slow movement in returning the VAT to assist in the government spending plans. That is one thing. If it is never returned, that is something completely different as it would discourage inward investment in the country which can hardly be positive for the Tanzanian economy. As such, I do expect this to be resolved positively. However, it has already had the unfortunate consequence of delaying the Singida pilot and other exploration activities.

So you think the weakness in the share price over the last few months​ has been due to something that has never been mentioned before? I suspect not. I do, however, believe that the anticipation of weak production numbers has deterred investors and I suspect that this may continue until the move underground has been largely completed. It is unclear what the VAT situation is but you would have to give reasonable odds to thinking that they will get it back. Not much of an advertisement for investing in the country if the government is not going to refund VAT.

Strangely when it comes to that sort of news I tend to think more of the prospect for conflict rather than rejoicing at the impact on the gold price!

True. But still annoying that it has impacted Singida and exploration. There could be a very decent buying opportunity here if the Q2 numbers spook the market. 2018 could be an extremely strong year if gold does what I am looking for.

I have given up trying to rationalise investors (I use that term in the loosest possible way) decisions on AIM!

Visitor, Apologies for the delayed response. My earlier summary was based on a quick review of the summary. I have had a chance to skim through the rest and, in particular, look at the VAT issue you mention. I confess that I do not recall this being an issue previously and it is somewhat irritating as it has had an impact on development at Singida and exploration which, quite rightly, have been paused whilst they focus on the underground development. I am no expert on Tanzanian VAT but you do tend to get this sort of thing happening all too frequently in geographical regions where legislation is 'less stable' although, having scanned previous reports I don't see it has been an issue although there has been mention of VAT refund statutory delays. You would suspect that the company is due the money and I believe that they will likely get it but there appears to be some wrangling required. I suspect that an edict has gone out within the Tanzanian authorities to delay payment on items, presumably for cash flow reasons but this news does blot what was otherwise an extremely good update. The market reaction is typically stupid and I suspect would have been the same if production had been a record.

Comeonvog, Costs haven't increased. It is just that production numbers are lower than normal operations as they move underground. As such, there are less ozs to spread the costs over which gives a higher AISC currently than the average for the year. Even so the AISC compares favourably with many other gold miners. This figure will be higher next month as the production numbers will be lower.

I confess that this has taken me somewhat by surprise. Whilst the split between Q1 and Q2 production was always an unknown to us, I never thought that the Q1 figure would hit 20k oz. My optimist hat suggests that they will blow the annual production target out of the water on that basis whereas my pessimist hat suggests that Q2 will be horrible. I suspect that it will be somewhere in between as TB indicates that Q2 will be the worst quarter whilst also stating that the production and margin for Q1 was higher than planned. I anticipated 32k oz in the first half. I am tempted to increase that to 34k oz with production of 14k oz in Q2. The company seems to surprise on the upside so I wouldn't be shocked to see production higher than this. Particular positives from the report: - Gross debt actually fell. You don't pay off debt at this stage unless you are very confident of having the cash resources available - Net debt rose only slightly (considerably less than I was anticipating) - Production much higher than anticipated with associated cash generation - Grade of development ore is excellent One negative is the lost time injury. I hope that this was nothing serious and the person made a full recovery. All in all, that was much better than anticipated and surely better than the market anticipated. One more quarter to get through before we should be hitting more stable production numbers.

Not sure about that TA. It certainly isn't overbought. Everything looks well aligned - RSI supportive, Bollinger bands tight, slow stochastics heading up and we look to be on the verge of breaking the upper bound of the ascending triangle. Enough gobbledegook! All looks promising.

Ah, I see. Yes, I agree with pretty much all of that. The first half of this year will be the trickiest and net debt is likely to increase. I am optimistic that they have enough of a cash buffer and stockpiles to get them through this without resorting to more debt instruments, although it looks like the facilities are there should they need them. I still reflect on the fact that they terminated a line of credit and paid for the power station out of cash as a sign of confidence. If 2018 pans out the way I believe, with a rising production profile, reduced cash costs, increased resources, progress on Singida and a very supportive gold price, this should be generating a lot of cash. In fact, it could well be generating as much cash or more at that point as the current market capitalisation. At which point 1x cash generation would be much too low, especially given the potential in Singida to add significantly to the production levels. I am out of AAZ at the moment as the grade/production issues make the immediate future somewhat uncertain. I do like it though and if the strategy update can bring about production stability then the same arguments can be used for AAZ as here.

Well, I think I have been pretty clear that I view the long term prospects of gold as very positive. I have also been clear that I like AAZ but that they need to resolve the current issues and restore a consistent production profile before I would look to buy back in. As regards my 'negative' points, you could indulge in a discussion that refutes them. If you wish, I could restate the positives (these have all been stated previously): 1. Low cost base 2. Supportive administration (although the geopolitical environment is not one of the best) 3. Good resource/reserve base 4. Prospective area for further finds 5. First mover advantage in Azerbaijan 6. Undemanding market capitalisation (provided they can stabilise production :-)) 7. Long term prospects for gold price appear positive 8. Very professional and supportive board So, provided the production profile can be restored, this would be an attractive investment.

Even at the reduced levels of gold production and enhanced levels of copper production, copper is still only a fifth of the gold produced so we should be clear that this remains and will likely always remain a gold miner with significant copper credits. There is the potential for great confusion here if they go to quoting gold oz equivalents and work out the cash costs including copper credits as that would effectively be counting the copper twice. I hope that they quote gold and copper separately as well as gold equivalent as they would be open to the accusation of obfuscation otherwise. I confess that I see gold slightly differently although I expect we view the long term outcome the same. I think that there is a real risk of a pullback here as gold struggles to break $1300/oz. Gold is the most technically driven market there is so it can be the plaything of those analysts. The one thing I don't see is a slow, steady rise. Gold tends to explore or collapse, so I believe that we will likely see a series of jagged rises and drops. It wouldn't surprise me if the next one was a drop but it's anyone's call at the moment and there is always the potential for a black swan.

In which case you would have expected AAZ to drop on the news but it didn't. Clearly the market was reasonably well informed via the Azerbaijani press reports. The strategy update also seemed to take away attention from the headline figure. I am a bit surprised by the drop compared to the strength in gold as well but this has been sector wide. But as I said previously, I am also surprised that people would buy in before the quarterlies. I doubt whether the share price will jump so much on news release.

Very little downside and frustrating that people see the concert party buying as a sell signal. But we are pretty much at the apex of the triangle now so, if TA means anything, we should be resolving this situation very soon.