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The big surprise for me is the AISC number and don't understand how this has been calculated. It doesn't appear to stack up with the change in net debt. A sales price of $1,238 is stated (which is for Gold, not "Gold Equivalent Oz" (GEO) Basket Price) minus AISC of $564 multiplied by Production of 28,489 (as there is no GEO Total Sales) gives you a $17m operating margin. If you then take off the Capex costs of $3.4m (rightly or wrongly not in AISC) and financing costs of $1.9m not included in AISC, you're still left with over $11m, but net debt only improved by $5.6m? Net debt coming down fast, but to be fully transparent and entice new PIs they need to publish a GEO Total Sales and GEO Basket Price for investors to truly understand the potential "operating margins", so it is easy to understand.

Ran out of words - final sentence was going to say with reduced debt would assume reduced interest payments. So rather than $4m last year, may be approx. $3m this year.

I was being pragmatic so people invest for long-term with as much info as possible. It's spin and negative to clarify that $68m profit per year is unrealistic?! What are your thoughts then on Profit & AISC if you believe I’m being negative? Let’s be clear even half that number and AAZ is undervalued. AAZ is one of my biggest holdings for now. a) AISC: Conservatively I would guess anywhere between $750-825. With so many unknowns, the spend to get Ugur to where it is, additional work to prove up Gedabek, it is incredibly hard to guess without AAZ stating their estimate. Of what we do know, 12,000oz “GEO” of Copper and Silver can no longer be counted as a credit. That's a large sum. We also know that last year's production in "GEO" terms will be higher than this years, so the costs are spread across less Oz. Once again to be clear, $750-825 would be an amazing achievement and market leading in the lower percentile of miners. Miners that tend to have low AISCs tend to have high Capex costs not included, which from my understanding does not apply to AAZ, so again another positive. b) PSA: If I read the PSA will it state the Government will never receive 51%?! You can't excuse me of spin of questioning a $68m profit and on other hand say Government will never receive 51%. They most certainly will if AAZ are churning out that much profit! I also referred to long term - I am well aware it will be a long time until costs are recovered, but maybe my expectations of profit and life of mine are actually higher than yours and I do see an eventual point of 51% to the Government. So for now it remains 12.75%. The PSA terms are clear to me from the extracts in the Audited Accounts. I have to admit I was not aware the full PSA was in the public realm. I would like to see it if you have a link. c) GEO: the exact calculation has not been fully explained unless I missed it. But if it was covered I would like to know your thoughts. As per the April RNS, the annual GEO estimate was 64-72K Oz, of which Gold is 52-58K Oz and Copper 2,000-2,400tn. Not clear on Silver, but Copper + Silver therefore add up to 12-14K “GEO”. The GEO estimate was calculated based on prices of $1,200oz Gold, $17oz silver and $5,900tn for copper. The issue I already alluded to is that AAZ sell their copper concentrate to Industrial Minerals SA at significantly less than spot price, so PIs need to know the actual sale terms to understand how the GEO has been calculated. Revenue from 12K of Gold is $14.4m. Roughly speaking 12K “GEO” for copper (2,000T) and silver (assume 160K Oz) only reaches approx. $14.4m revenue if you use Spot Rates. This is not correct for Copper. I agree with you on net debt position and this is coming down fast. However my point was that you cannot simply take the AISC to try and work out profit – this goes for any miner. Last year financing costs were $4m. With reduced debts and therefo

Banter - you need to take into account a number of factors: a) AISC for 2016 of $616oz was on the basis of both Copper & Silver treated as by-products and therefore a credit reducing AISC. With the move to "Gold Equivalent Ounces", this is no longer the case. The Gedabek site connected to the Azerbaijan national power grid may have achieved some savings (with focus on Ugur, probably less relevant for 2017), but these savings may be offset by the work at Ugur and extensive work required at Gedabek. Expect AISC to be a lot more. b) PSA: at the moment Government receives 12.75%. Increases to 51% once AAZ recover their costs. So it's not strictly correct to attribute all of production & potential profit to AAZ, particularly for long-term investors. c) All-in cost: not only is AISC probably higher, but AISC is not an "all-in cost" per se. It does not include many costs such as financing (interest on loans, which last year was $4m), "non-sustaining" costs, income/ corporate taxes etc d) GEO calculation: it's never been crystal clear how AAZ have calculated their GEO or why Copper/ Silver make up approx. 20% of the GEO estimate. The copper concentrate is sold to Industrial Minerals SA in Switzland at considerably less than pure refined copper spot price we see in markets. All that being said, it's great achievement and positive on AAZ, but tempered somewhat compared to others

The problem is of course also an opportunity. I bought heavily in at 7-9p and sold a bit of my holding at 13p. When it went back to the 8-9p level recently, I loaded up again and then some. However the opportunity to take advantage of the "problem" is closing in my opinion. I have taken the opportunity to build a sizeable stake in SLP. At this basket price, if it is sustained, a dividend can't be far off now. Even without a dividend, at this basket price I see SLP getting back to 14-16p area when Q3 report released showing cash build up again. If (when) dividend is announced, it could make its way into the 20s (as long as its meaty enough - I like ragnar think 10% is easily sustainable and at this market cap, is only £3m from the cash pile). Instead of one 10%, I would of course also be happy with 2x 5% dividends or the like per year to spread it out a bit and smooth out the usual heavy buying and selling around only one dividend per year. Over time when investors are confident the dividend isn't just a one-off, the SP would be capable of going through the 20s and beyond. It is of course all dependant on the spot basket price. I'm bit wary of gold price reversing around $1,375 area and taking PGMs with them, but lets see. All good for now. Taking into account the Phoenix acquisition, SLP has cash of $8.7m. By Q1 18 this should be back to circa $14-17m. Even with Project Echo Capex, again unless there is an opportunistic acquisition, the Institutional Investors who have more clout than us will be clambering for a dividend.

With all due respect JLP is an absolute basket case of a company compared to SLP. History of losses, jam tomorrow and now huge $50m debt facility with no details on terms. SLP is proven to be money making, cash rich, institutional investors buy-in and after Phoenix acquisition, unless there is another opportunistic acquisition, very likely to provide dividend at this basket price and would expect update on policy in Q4 17 or early Q1 18. The fact JLP has larger market cap than SLP simply reinforces to me yet again how undervalued SLP is. Eventually such valuations disparities get corrected one way or another.

Daisan - agreed. Both GMs for New Luika and Singida have huge amount of experience too. Also very good to see a very experienced COO. I always have a concern when a CEO with a more banker/ accountant orientated background takes charge, but Shanta appear to have perfect balance. The balance of management positions bodes well for cash control, efficient streamlined operation at New Luika, without adversely impacting production and also progressing Singida. Looking forward to the Singida update in Q4 and Internal Feasibility Study Q1 2018 (refer to pg,24 of presentation)

Shareminator - I think from SLP's insinuation when they announced the acquisition and in current presentation too, the Phoenix cash costs will come down and potentially production increase when absorbed into SLP's operation. Both synergies and increasing production should ultimately lower cash costs. Sure PAF as a larger company also have more "fat" and hence larger cash costs too. I assume they don't want to give away their full plans until contract precedents finalised and acquisition complete. It fits far better in SLP's portfolio than PAF's.

Personally you would have to be mad to accept Ning's offer and take this on the cheap after his own fraud has collapsed the SP, but each to their own. Read last few paragraphs in attached link. It's clear the BoD strategy on putting ASA into Administration http://www.google.az/url?sa=t&rct=j&q=&esrc=s&source=newssearch&cd=1&ved=0ahUKEwjmr-fTkeHVAhVEG5oKHcMpBeUQqQIIISgAMAA&url=http%3A%2F%2Fwww.herald.co.zw%2Fasa-executives-wings-clipped%2F&usg=AFQjCNE3l4M1R2Wt2hi2Ps0ya1Ile33kzg

Thanks for info folks - very useful

Of...?

I didn't say there was no anti-western sentiment or bashing certain foreign companies doesn't gain populist points, of course it does, Acacia case in point. My point was simply it's not a "broad brush" and on the whole the bashing of Chinese goes down a whole lot better, in my experience. Strange the "proper locals" you frequent in Zambia seemingly have no gripes about the Chinese and their "no strings attached" money... But hey everyone's experience is different. I have had many roles and started out young far away from the heady heights of the antiquated image of a "monied boss". I have no idea what the cleaner thought of westerners or the Chinese, bizarrely never came up in conversation. When you live in a country you do tend to chat with friends and colleagues on same level outside of a "power relationship", unless of course you live in an expat bubble, which many do.

I've found during my time working in many African countries that the everyday person is far more suspicious of the cloak and dagger neo-colonists Chinese method of working. The Chinese companies are known for coming in and doing everything on the cheap with their own labour. In fact due to their emphasis on local and national content, many western companies have very good reputations... Acacia obviously does not with Magufuli or many locals to the mines. We will have to wait and see how the legislation is implemented on case by case basis for the likes of Shanta and Ashanti. All we can go on currently is how Acacia are being treated, which does not bode well, hence the collapse in SP

As Shareminator mentions SLP's cash costs are incredibly low, as is the Capex to ensure LoM for 10yrs (Project Echo - $12m of which circa $2m already spent Q1) Perversely this depressed Platinum price in long-term could benefit the low cost miners like SLP immensely, with a sharper correction when it finally comes. Lonmin has showed a strong turnaround this Q, but I'm not convinced it's sustainable in long-term and not sure how long they can bump along with platinum <$1,000. Remember traditional Platinum mines are deeper and more expensive to mine than Gold ones. All-in costs for most are > $1,000. One mine has just this week been suspended due to low prices: http://www.businessinsider.com/r-toronto-based-atlatsa-to-mothball-south-african-platinum-mine-2017-7 Palladium is still strong and Rhodium appears to have sneaked back above $1,000... Interesting times

Mystique - Acacia didn't screw the government nor did they mis-report their shipments - that's a claim by the inspectors accepted by the President which appears completely inaccurate. However politics plays out as it always does and the populism hurts the everyday person with long-term FDI drying up, jobs and the economy hit due to huge uncertainty. Acacia is a public company with fully auditable accounts. It is ludicrous to think they've been defrauding the Tanzanian Government and their Shareholders of billions of dollars over 20yrs with no one batting an eyelid until now or no huge holes and anomalies in the books. There is very useful link on Acacia's own website specific to the current issues. No other mining company is being accused of mis-reporting that i'm aware of. Acacia appear to have informally accepted in principle the 1% export fee and increase in royalties from 4 to 6%. Not sure off the top of my head how it compares to other countries, but you can't take royalties alone in a vacuum. You have to look at Corporation Tax, Government share of mining license etc. However with 30% Corp Tax, 7% royalties + export fee, Tanzania is on the high side and it should be clear most mining deals are not on "unconscionable terms", for the upfront investment and risk taken by mining companies and their investors. But then politics is never "clear".

The Q2 statement itself sheds bit more light on VAT. The rebates due now equate to $14m and Shanta have requested it be offset against future Corp Tax

The company specific problem at the moment (notwithstanding Tanzanian politics) is the cash generation is not yet translating into an improving net cash/ debt position, because of the substantial Capex over and above the stated AISC. Until we start to see couple of quarters of a naturally improving cash position, investors will no doubt be wary. With $19m Capex expended 1H and only some $11m left to go in 2017 (according to revised mine plan of 23 Mar 2017), we could finally have reached a turning point after a very long period of transformation. Capex for 2018 estimated at only $15m, 2019 $10m and 2020 $7.6m. These could of course go up if we incorporate the 1.45 million Oz outside the current mine plan, which would not be a bad thing and extend LoM 10yrs+

*debt has not increased due to these repayments

Ok had chance to read the full statement in addition to presentation and see $14m placement and $12.2m financing is taken into account. Paying off substantial debt in Q2 has eaten up the cash position and debt position has increased due to these repayments

Very good production with 40K Oz now reached for H1 2017 and with H1 the lowest production half, unless any gremlins or spanners materialise Shanta should easily meet the 80-85K Oz However once again I'm confused by the financials. Debt & Cash positions are relatively unchanged from Q1 2017, however in Q2 we had the $14m placing - where is this money in the cash position?! And they took out new loans of $12.2m - this does not appear to be added to the debt position, unless they only show it when it is actually spent? Based on their cash position of $13.8m and production of 20K Oz, I'm very confused why they need both $12.2m new financing and $14m placing on top of this? And then on top of this, the Investec debt restructuring will allow them access to a further $10m... Were they gearing up for some action far bigger than the Helios acquisition before the recent legislation created uncertainty? Unfortunately don't think i'll be able to attend analyst call to dig deeper at present.