Anglo Asian Mining becomes debt-free

Anglo Asian Mining (AIM All-Share, Market capitalisation: £163m, 142.5p and 4.8% of JIC Portfolio and 12.1% of JIC Top 10)
Anglo Asian announces that it has become debt-free.
Conclusion: I suppose it’s worth an announcement but given the cash the company has been generating over the last two years it should hardly come as a surprise. More important as far as the share price is concerned, is news on future development. Shareholders will want to hear about mine life extension and how it intends to increase production from the current 80,000 odd gold equivalent ounces per annum. The CEO says he looks forward to updating us when appropriate. Patience is a virtue! I rate it as Medium Risk (balance sheet is strong and it is a low-cost producer) and High Reward, (it has huge reserves, giving it good growth prospects and I’m bullish on gold). Medium Risk/High Reward leads, for me, to a 5.0% target weighting. On Stockopedia it has a StockRank of 93, Simply Wall St. reckons it is trading a little below fair value. On current forecasts, the shares are valued at 9.4x free cash flow, a 2019 PE ratio of 16.0x and a dividend yield of 4.0%. I’m up 64% since buying last May but think it will need more than today’s announcement to spark the next move upwards. Happy Holder!

In February 2018 it refinanced a loan with Pasha Bank for $15m at 7.0% annual interest rate. On 10th February it made the final repayment of this loan. Debt peaked at $50m back in 2015.

Anglo Asian CEO Reza Vaziri commented:
“I am delighted to announce that the Company has made the final repayment of the Pasha Bank refinancing loan, marking the significant milestone of Anglo Asian now being debt-free.

“The facility was taken out to improve the Company’s financial performance and provide operational flexibility. Given that the net debt of the Company peaked at over $50 million in 2015, this milestone is a remarkable achievement.

“Since 2015, as well as paying off its debt, the Company has continued to invest in its business, embarked on a three-year exploration programme at its contract areas, commenced payment of regular dividends and built up a significant holding of cash. This amply demonstrates the robust cash generation of the Company.

“The financial flexibility of being debt-free allows Anglo Asian to focus on the growth of the business which I look forward to updating the market on as and when appropriate.”

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