Member Info for M20ASH

Hi VanVan, yes I concur that any inter-company dividends from Turkey constitute income for the Plc and would be added to distributable reserves less ongoing Plc costs such as Directors Remuneration.
However, this needs to be balanced by pointing out that the amount of actual cash available will act as a further constraint.
Cheers, Ash

Hi B00ooom, get your point, but if anyone goes over to the SHG board, ColonelDrake is the first to fight their corner, so if he comes on here slating HUM, I think it’s fair game, if he’s incorrect on certain points.
Anyway, enough from me on the subject. I’m invested in both so no real axe to grind.
Cheers, Ash

ColonelDrake, your point about a windfall, if SHG are repaid the VAT. It is on the balance sheet as a debtor. Most of this debt is over 1 year old debt.
If they are not going to receive a repayment, it will need to be written off.
Presumably, as they keep adding more to the balance sheet, they are not including it in their AISC calculation? I think it works out at close to $100 per ounce that is added every year.
Cheers, Ash

Looks as though I missed a key part of the RNS regarding the special resolution, which will also seek to cancel the deferred shares with a value just under £5m and I now understand that this will also be credited to retained reserves and explains the difference I highlighted.
Cheers, Ash

No problem. Also, some chat on another board about the proposed buy back facility of up to 5% of issued share capital. I suspect this is just an annual renewal of the facility, which is permitted by the company's Memorandum & Articles of Association up to 5% (haven't checked). At the end of the day, there is also a requirement to have sufficient reserves to buy back shares, which can then be held in treasury or cancelled, but they can't pay out most of the retained reserves as a dividend and then buy back shares on top of this.
Cheers, Ash

I should have added that because the Plc will continue to incur losses due to it's ongoing costs, there may be a requirement to maintain a buffer without certainty of further inter-company dividends from Turkey to provide the income to offset the ongoing costs i.e. just because the funds are there now, the directors should not recommend a dividend payment in the knowledge that it will create negative retained reserves.
Cheers, Ash

Hi PbtoGold, I guess it's either that or a typo in the RNS and some further clarification by the company is required, I think.
Cheers, Ash

Actually, Shanta is registered in Guernsey, but same difference. All these channel islands look the same to me!

Hi John, the rules around dividends and distributable reserves contained within the Companies Act are designed to provide protection for the shareholders and creditors of a company ensuring there will be sufficient net assets. The reduction in share premium and distribution of reserves as a dividend will effectively mean that the share capital will be less than the shareholders paid to purchase the shares, but the dividend also represents a return of some of the shareholders original investment, which is fair enough. The rationale is that eventually all of the original investment is returned.
Different rules apply in different jurisdictions e.g Jersey so for anyone invested in, say, Shanta Gold, there is not the same requirement to have positive retained profits before making a dividend distribution.
Cheers, Ash

Good to see the company have at last issued a circular to convene a general meeting to approve the capital reorganisation, but I would question the amount of distributable reserves of £7.48m. My maths indicate the current value of the share premium account less the cumulative losses is only £2.48m.
Maybe, the net inter-company dividend is intended to be a further £5m? Or is it just a typo. No doubt we will learn more...
Anyway, if the special resolution is approved, the Court can be petitioned and we will be advised in due course of the date of the Court hearing.
Cheers, Ash

Lots of great comments and thinking in the debate here, which is much appreciated, and whether we agree or disagree with each other, the one thing that is still missing is a complete explanation from the BoD, who ultimately are accountable to the shareholders and know the facts. Rather than continuing to speculate, I feel we need to put the questions to the BoD and force them to provide the information. I have been in touch with kadavul and will happily support any efforts to realise the true potential here. I hope other shareholders do the same.
Cheers, Ash

As someone with an accounts background, I see no reason why the company cannot carry out some simple variance analysis on all the different inputs and outputs to determine the reasons why the AISC is so materially different from what was expected and then explain in layman’s terms to the shareholders.
After all it’s a production process and it’s not rocket science.
If the FD is worth his salt, then he should be able to provide the required information and I would be disappointed, if they were not already doing this to identify unexpected variances from the norms with a view to taking corrective action.
If they’re not doing it or not capable, then we’ve got a problem.
Cheers, Ash

As we’re all aware HUM management have an incentive scheme that rewards them for achieving targets.
If these latest production targets and AISC numbers are now used to incentivise management to under-achieve and we all get a whiff of the afore-mentioned HIPPO dung, taking the proverbial won’t even come close!
Sitting watching and waiting to hear how this is going to be turned around for the benefit of shareholders.
Completely agree that the potential is here, but happy to take what is now a meagre profit, mainly achieved through trading rather than an increment in value, and move on.
Cheers, Ash

Hi Paul, capital share raise? Where did that come from? Appreciate you can never say never, but nothing I’ve read indicates that will be an expected requirement to get Salinbas into production.
Cheers, Ash

Hi VanVan, yes the investment incentives are generous in terms of tax relief and support on loan interest payments - much of the interest on AAU’s initial construction loan was covered by the Turkish authorities.
I am hoping that the same will apply to the Tavsan construction loan cost.
Cheers, Ash

I just re-read what we were told in the RNS at the beginning of December. Ok, we could understand the reasons for lower production and higher AISC up to that point, but we were told that the original mine plan had expected to be mining the high grade ore below the pit floor and as at the date the RNS was released, this was now being mined.
Approx. 93k oz had been mined at that point suggested 14k oz in Oct-Nov due to ongoing wet season issues, etc so why only another 8k oz from that high grade ore being mined in Dec and why no indication in the latest RNS of improvement in output in January?
I could perhaps understand why the AISC was high in Q3 as it is the all-in cost of ounces sold, which was much less than ounces sold Q2 and when you multiply the AISC by the ounces sold each quarter, the total cost was comparable across Q2 and Q3, but this latest number indicates a further $5m jump in total cost in the quarter from $31m to $36m. We had already seen a big jump in total cost from Q1 to Q2 due to the epidemic, etc, etc, etc, but another $5m!!!
No more excuses please Dan. Detailed explanations required. There are other strong investment opportunities out there right now.

Hi Paul, the bulk of the cash will be paid to Galata, which currently holds the 50% stake in Zenit. An inter-company dividend will be required to repatriate the funds from Galata to Ariana Resources Plc, which is the company we hold shares in and will pay the special dividend. Can't remember what conclusion I came to on whether a withholding tax might be deducted from the dividend payment from Turkey. Without a dividend payment from Turkey, there are insufficient funds available within the Plc to pay the dividend.
This is a separate issue to the capital reorganisation to transfer the share premium account to profit and loss reserves, which will require a special resolution to be passed by the shareholders of Ariana and then approved by the Court here. This is required to create sufficient distributable reserves to allow a dividend to be paid in accordance with the Companies Act. The RNS doesn't make the sequence of events clear or give any indication of timescales, but until the special resolution is passed, it will not be possible to petition the court to approve it. MDV is dealing with this from what I understand.
Cheers, Ash

Evening VanVan et al, interesting debate this evening. I can't offer any definitive answers for the current sp malaise, but we all know the market is not always rational, especially AIM.
To some extent, the maxim "It is better to journey, than to arrive" would seem to apply more often than not and having arrived and started to produce, it seems as though further exploration doesn't derive any long-term benefit until the next asset is brought into production to add further benefit.
Simply exhausting one asset before commencing production on the next is a poor second to a cumulative approach, whilst AAU's approach to take a smaller share of it's current producing and declining asset together with it's short-term production pipeline with a view to achieving greater benefits in the future has perhaps not ticked all the boxes and the momentum of a substantial dividend payment has perhaps now been lost for those that bought in for this.
Whilst pottering around in Cyprus over the next couple of years to earn a 50% buy-in to a Harry Anagnostaros-Adams venture might also appeal to some, the past rhetoric on this board clearly indicates that it doesn't float everyone's boat.
So, where does that leave us - what exactly is the vision 'to become a major gold producer in Turkey'? Who exactly are our new partners and what do they have to say? Can we anticipate some acquisitions to achieve additional growth in the short-term? Or will we be sat here over the next 5 years plus whilst all this slowly comes to fruition? Panmure Gordon and Yellow Jersey are there to assist, but the message has to come from the Company.
Cheers, Ash

Hi VanVan, no problem. Cheers, Ash

Hi all, suggest you look at a chart of the price of gold for the same period - don’t think you’ll see much difference, if you laid one over the other. If POG goes up, so will the AAU sp and vice versa.
For something radical to happen, I would suggest there needs to be a major change in the fundamentals, such as increasing production.
Short term the special dividend should attract more interest because of the return and the cash pile will form a base, but growth is needed sooner rather than later to attract new investors when there are so many other opportunities in the same space.
Cheers, Ash