Should you be adding Anglo Asian Mining to your watch-list today?
That was the question posed on Monday by Simply Wall Street, a Sydney-based financial analysis site, as Azerbaijan appeared poised for victory over the Armenian enclave of Nagorno Karabakh and surrounding Azerbaijani districts, held since the Soviet Union’s collapse.
“The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past,” the author advised.
By Monday night, a comprehensive truce was announced, which will see Russian peacekeepers police new boundaries, including swathes of mineral-rich territory.
On October 27, as Azerbaijan advanced in its offensive, a little-known Azerbaijani company was heralding a victory of its own, the restoration of control over a gold mine.
In a press release, the Anglo Asian Mining plc, announced an important update: “The liberation of the Zangilan district of Azerbaijan, which contains the Company’s Vejnaly contract area.”
Zangilan is one of seven districts of Azerbaijan which were seized and held by Armenian forces since the Karabakh war of the early 1990s as a buffer against Azerbaijani attacks.
This “mineral-rich district” Anglo Asian Mining continues, contains the Vejnaly deposit “which, according to the Soviet Classification, contains 6.5 tonnes of gold (C1 + C2) and 2.3 tonnes of gold (P1)” for a grand total of 8.8 tonnes.
The London Stock Exchange-listed company, which already holds a production sharing agreement for Vejnaly, is poised to be the first and only one in. It may explore for five years and then develop and produce for 15 years, with two possible five-year extensions, the press release said.
A tonne of gold, which has been rising in value in recent months, is currently worth more than US$60 million.
While there are “conflicting reports on whether minimal mining” took place over the past three decades, the company insists that any such exploitation is believed to be “limited.”
“It is the intention of the Government of Azerbaijan to thoroughly inspect and assess the mineral resources in the area,” Anglo Asian said, adding that it was in “close contact” with the authorities to determine when it would be safe to begin work.
“Once secure, the Company plans to immediately start work at Vejnaly. The Company will update its shareholders with further developments.”
With the announcement of the Russian-brokered truce on Monday night, Zangilan is to remain firmly under control of Azerbaijani forces, while two other northern areas included in Anglo Asian’s October corporate overview of its holdings look as if they are also now under Azerbaijani control (see map).
The company’s stock value, which initially dipped following the outbreak of hostilities on September 27, rebounded in value following the Azerbaijani advance, from £110 on October 28 to nearly £129 as of Tuesday.
The Azerbaijani government, according to company literature, is entitled to 51% of the company’s profits.
Air Sununu in Baku
The Anglo Asian announcement may have flown under the radar, confined to a smattering of mining and investment publications, were it not for the ranking member of an American political dynasty on its board.
Republican John H. Sununu, former chief-of-staff to President George H. W. Bush and ex-governor of New Hampshire, today serves as Anglo Asian’s non-executive director.
Dubbed “Air Sununu” by the Washington Post in 1991 for his use of government aircraft for trips that included “incidental” personal activities such as skiing and a trip to his dentist in Boston, Sununu is Anglo Asian Mining’s second-largest shareholder.
According to publicly available data, Sununu holds a 9.38% stake in the Azerbaijani company, or nearly US$18 million in equities, and in 2019, he made nearly $100,000 between his salary and pension benefits.
“Many consider high insider ownership to be a strong sign of alignment between the leaders of a company and the ordinary shareholders,” a Simply Wall Street article said approvingly on Monday. “With 40% of the company to their names, insiders are profoundly invested in the business.
“With that sort of holding, insiders have about US$57m riding on the stock, at current prices. That’s nothing to sneeze at.”
Sununu’s son Chris, now entering his third term as governor of New Hampshire, in recent days disabled comments on his Instagram, following a flood of angry criticism of his father’s source of wealth. Neither father nor son has commented on the war.
The Armenian-American community in recent weeks has mounted a public pressure campaign aimed at naming and shaming those profiting from contracts with Baku.
They have succeeded in pushing several top PR firms to drop Baku as a client and convinced a number of Western companies to cease exporting parts used in Turkish Bayraktar drones, which along with Israeli drones, have proved a decisive weapon in the war.
While Azerbaijan has not disclosed its total military fatalities, the war for Nagorno Karabakh is believed to have killed more than 5,000 people before a Russian-guaranteed truce was announced on Monday night. Nearly the entire population of Nagorno Karabakh has been displaced by weeks of bombardments, which left population centers in smoldering ruin.
“Overall, it looks like there’s a somewhat speculative buying opportunity here, which could result in good returns,” read an article posted to investment site Seeking Alpha on 6 November titled, ‘The Nagorno-Karabakh Conflict Unlocks Value For Anglo Asian Mining’.
At $700 per ounce of gold reserves, it assessed, the company should now be worth more than $230 million.