You have this completely wrong. The last AGM was all about Demirli, a 20kTpa copper mine with $200m of plant in situ that AAZ has been given. For zero cost. It is likely to come into operation very soon, but the company is unlikely to announce anything until it is in production. It will have production costs of around $2k/T according to the last AGM.
As for Gilar...average grade from the gold there is 1.6 g/T. Last quarter the company made a profit producing from the dregs at Gedabek at 0.2g/T.
AAZ don't do investor relations. The board own over 40% of the shares. But there is a very clear path to Gilar being in full production, likely this month, and Demirli very soon after. But unless you went to the last AGM, you won't know about Demirli
Hi Donald, their Presentation dated February 2025 states relating to Demirli “Initial evaluation of property is being carried out” and “tailings dam is almost full” so if they’ve somehow managed to fast track their evaluation and heighten their tailings dam or remove tailings then of course that’s positive. Best of luck. OB
The "initial evaluation" is misleading. The mine was productive until the war in Nagorno Karabakh, when it was abandoned, leaving all the plant and even trucks behind. The company said at the AGM last June that it needed about $5m to bring it into production again.
They've had drills there for 12 months and knew most of the resource before that from accurate plans that had been left on site.
The tailings damaged was an issue: it was almost full and built upstream of the mine. So I expect they are planning on building a new one downstream. There are apparently 600 staff currently on site, and it is likely to be a flagship project for Azerbaijan in the plan to repopulate NK. Hence the relative quiet from the company: I would not be surprised if suddenly one day there was an announcement that the President of Azerbaijan was on site to open the mine.
The fact that all of this is news to you is probably the most important aspect of Demirli. Because people can see you do your research, and yet unless you were at the AGM or the Proactive evening the same week, you just wouldn't know.
Sorry, I went back to my notes and there’s a slight correction. There were incomplete plans on site and lots of sample drill cores but no cross referencing to where they were from. So they were trying to rebuild the model. But IIRC they were pretty confident it was a relatively uniform resource. And because they haven’t had to pay to develop it, they just need to get permissions for the new tailings dam, train the staff and start producing. They can learn on the job as the plant it all there and whatever they produce will, at next to zero capital cost, be hugely profitable.
Thank you for a detailed analysis of AAZ. Whilst generally agreeing with the negative points being raised, in particular the very high overall taxes and current operating costs , you do seem to be a little harsh on a few points. I assume the total operating costs shown in the first quarter also include the costs of the non revenue producing Gilar and Demirli development projects during the first quarter. Yes the legacy mines have very high costs, that cannot be disagreed with , but perhaps not quite as high in the quarter as you have suggested.
An efficient Gilar ramp up is critical to significantly reduce operating costs through higher levels of production during the remaining part of this financial year. Currently the company is being bailed out by very favourable commodity prices on low volumes.
It is a little unfair to suggest at this stage the copper production is behind schedule, when no copper has yet been processed from the new Gilar mine. Need the operating figures at end of Q2 to show how the ramp up is going to get a better idea of this.
Hi Michael, regarding timelines the measure I used was their own statements and having said Gilar would be operational by the end of 2024, I think in their 2023 annual report. I do fully appreciate how these things can take longer - and often do - the poor comms irritated me.
Regarding my estimate of costs you’re right some of that cash profit disclosure might be development capex (hence the question mark after “sustaining”). That means it might be a capital cost and not an operational cost. Hopefully readers (including yourself) could form your own view on how much or little that is (since you don’t get told by the company).
I was actually much more concerned about the very low revenues per ounce/tonne. Even if there was zero sustaining capex then those unit revenue figures are very worrying - no matter how many new mines are built.
You’re not the only one to voice concern and others replied too to say I was wrong and other information was given at the AGM. I was out walking yesterday thinking about AAZ. I guess you’re asking me to give it the benefit of the doubt. Whereas what worried me and even the replies regarding conflicting statements made at the AGM and “you had to be there to know” is that there is simply clear “doubt of the benefit”.
In any case presenting different info at the AGM is no way for a listed company to be run. In month 5 of 2025 and you don’t even know 2024’s performance with any clarity. Least not for a company valued at £142m.
Based on the evidence I found there’s no way I would hold this “bailed-out” share (using your words) at current prices.
You have this completely wrong. The last AGM was all about Demirli, a 20kTpa copper mine with $200m of plant in situ that AAZ has been given. For zero cost. It is likely to come into operation very soon, but the company is unlikely to announce anything until it is in production. It will have production costs of around $2k/T according to the last AGM.
As for Gilar...average grade from the gold there is 1.6 g/T. Last quarter the company made a profit producing from the dregs at Gedabek at 0.2g/T.
AAZ don't do investor relations. The board own over 40% of the shares. But there is a very clear path to Gilar being in full production, likely this month, and Demirli very soon after. But unless you went to the last AGM, you won't know about Demirli
Hi Donald, their Presentation dated February 2025 states relating to Demirli “Initial evaluation of property is being carried out” and “tailings dam is almost full” so if they’ve somehow managed to fast track their evaluation and heighten their tailings dam or remove tailings then of course that’s positive. Best of luck. OB
The "initial evaluation" is misleading. The mine was productive until the war in Nagorno Karabakh, when it was abandoned, leaving all the plant and even trucks behind. The company said at the AGM last June that it needed about $5m to bring it into production again.
They've had drills there for 12 months and knew most of the resource before that from accurate plans that had been left on site.
The tailings damaged was an issue: it was almost full and built upstream of the mine. So I expect they are planning on building a new one downstream. There are apparently 600 staff currently on site, and it is likely to be a flagship project for Azerbaijan in the plan to repopulate NK. Hence the relative quiet from the company: I would not be surprised if suddenly one day there was an announcement that the President of Azerbaijan was on site to open the mine.
The fact that all of this is news to you is probably the most important aspect of Demirli. Because people can see you do your research, and yet unless you were at the AGM or the Proactive evening the same week, you just wouldn't know.
Sorry, I went back to my notes and there’s a slight correction. There were incomplete plans on site and lots of sample drill cores but no cross referencing to where they were from. So they were trying to rebuild the model. But IIRC they were pretty confident it was a relatively uniform resource. And because they haven’t had to pay to develop it, they just need to get permissions for the new tailings dam, train the staff and start producing. They can learn on the job as the plant it all there and whatever they produce will, at next to zero capital cost, be hugely profitable.
Thank goodness I'd never heard of this.
Thank you for a detailed analysis of AAZ. Whilst generally agreeing with the negative points being raised, in particular the very high overall taxes and current operating costs , you do seem to be a little harsh on a few points. I assume the total operating costs shown in the first quarter also include the costs of the non revenue producing Gilar and Demirli development projects during the first quarter. Yes the legacy mines have very high costs, that cannot be disagreed with , but perhaps not quite as high in the quarter as you have suggested.
An efficient Gilar ramp up is critical to significantly reduce operating costs through higher levels of production during the remaining part of this financial year. Currently the company is being bailed out by very favourable commodity prices on low volumes.
It is a little unfair to suggest at this stage the copper production is behind schedule, when no copper has yet been processed from the new Gilar mine. Need the operating figures at end of Q2 to show how the ramp up is going to get a better idea of this.
Hi Michael, regarding timelines the measure I used was their own statements and having said Gilar would be operational by the end of 2024, I think in their 2023 annual report. I do fully appreciate how these things can take longer - and often do - the poor comms irritated me.
Regarding my estimate of costs you’re right some of that cash profit disclosure might be development capex (hence the question mark after “sustaining”). That means it might be a capital cost and not an operational cost. Hopefully readers (including yourself) could form your own view on how much or little that is (since you don’t get told by the company).
I was actually much more concerned about the very low revenues per ounce/tonne. Even if there was zero sustaining capex then those unit revenue figures are very worrying - no matter how many new mines are built.
You’re not the only one to voice concern and others replied too to say I was wrong and other information was given at the AGM. I was out walking yesterday thinking about AAZ. I guess you’re asking me to give it the benefit of the doubt. Whereas what worried me and even the replies regarding conflicting statements made at the AGM and “you had to be there to know” is that there is simply clear “doubt of the benefit”.
In any case presenting different info at the AGM is no way for a listed company to be run. In month 5 of 2025 and you don’t even know 2024’s performance with any clarity. Least not for a company valued at £142m.
Based on the evidence I found there’s no way I would hold this “bailed-out” share (using your words) at current prices.
OB
OB Thanks for your detailed response. Your comments have certainly made me think twice about this company.