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Highlights:
- Strong Production Growth: Anglo Asian Mining is set for significant production growth following the restart of the Gedabek mine and development of Demirli.
- Increased Copper Focus: Copper’s rising share in output is seen as key to the company's future value, with SP Angel’s NAV sensitivity to copper price at 6x that of gold.
- Positive Market Reaction: Shares rose by 9.2% following SP Angel’s reaffirmation of its "buy" rating and confidence in Anglo Asian’s growth trajectory.
SP Angel has reaffirmed its "buy" rating for Anglo Asian Mining PLC (LSE:AAZ) with a revised target price of 308p, highlighting significant production growth potential following the reopening of the Gedabek Gold/Copper Mine and the promising development of the Demirli asset.
The positive outlook comes as Anglo Asian resumes operations at its flagship Gedabek mine in Azerbaijan, while the company looks to ramp up output at the nearby Demirli project. SP Angel's analysts pointed to the company’s increasing copper production as a crucial factor driving future growth, particularly given the limited number of copper producers listed in London.
Growing Copper Production to Boost Anglo Asian’s Value
Anglo Asian's production guidance for 2024 outlines gold equivalent production of between 15,000 and 19,500 ounces (GEO), comprising 14,000 to 16,000 ounces of gold and 250 to 850 tonnes of copper. With copper representing a growing share of the company’s output mix, SP Angel emphasized the company’s ability to leverage the global demand for copper, which has become increasingly crucial in green technologies such as electric vehicles and renewable energy systems. Analysts at SP Angel noted that the company’s NAV (Net Asset Value) sensitivity to copper price movements is six times that of gold, further underscoring the importance of copper in Anglo Asian’s future earnings potential.
Demirli Asset Poised for Fast-Track Development
In addition to Gedabek, SP Angel identified the Demirli project as a key contributor to Anglo Asian’s future growth, praising its low capital cost and accelerated route to production. The company’s ability to swiftly bring Demirli online could significantly bolster its output and strengthen its position in the market. SP Angel’s positive assessment also reflects confidence in the company’s operational expertise and ability to deliver value from its assets.
Market Reaction and Outlook
Following SP Angel’s reaffirmation of its "buy" rating and strong endorsement of Anglo Asian’s growth prospects, the company's shares surged by 9.2%, reaching 113p. The market responded positively to the renewed optimism surrounding Anglo Asian’s production potential and the robust demand outlook for copper. With Gedabek back in operation and Demirli poised for further development, Anglo Asian is well-positioned to capitalise on both gold and copper markets, cementing its role as a leading producer in the London market.
