Hardman & Co Research: Prodigious cash generation and FCF yield

Anglo Asian Mining (AAZ) is a highly cash-generative miner of gold, silver and copper from three mines in Azerbaijan, where it has a track record of close cooperation with the government. The company listed on AIM in 2005 and produced its first gold in 2009. In 2018, it produced 83,376 of Gold Equivalent Ounces (GEOs), paid its first dividend and the balance sheet moved into a net cash position. At this stage, we have made the highly conservative assumption of no production beyond 2025. Nevertheless, our DCF valuation of 146p reflects AAZ's prodigious cash generation. Indeed, we estimate that the annual free cash yield during 2019-25 will average 18.7%.

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