One year ago, Anglo Asian Mining (LSE:AAZ) sat firmly within penny stock territory. But since then, the gold and copper mining enterprise has seen its valuation more than double. And if analysts’ forecasts are correct, the ex-penny stock could soon be repeating this performance over the next 12 months.
With that in mind, let’s drill deeper into what’s going on and whether now’s a good time to consider buying some shares.
Explosive potential
The last 12 months have been transformative for this business. During 2024, the company suffered through numerous production constraints as a result of lower ore grades and an open pit mine approaching the end of its life. However, skip ahead a few months, and most of these woes seem to have been resolved.
Its Gedabek project resumed production after a temporary halt in 2024. Its new Gilar mining project entered production earlier this year, on track to deliver 10,000 ounces of gold equivalents a year. And later this year, the Demirli project is set to begin production.
Combined, these mines are expected to send full-year production flying. Gold volumes are now anticipated to reach as high as 33,000 ounces versus 15,000 in 2024, while copper production is on track to explode from 377 tonnes to as much as 6,800 tonnes!
In terms of money, that’s enough to boost revenue to between $110m and $125m versus the $39.6m achieved in 2024. And with sales on track to almost triple, the analyst consensus is that the Anglo Asian Mining share price will continue its upward trajectory all the way to 308p. Compared to where the stock’s trading today, that represents an 80% potential return.
However, it’s important to note that there’s currently only one analyst tracking this business at the moment, with their forecast dependent on Anglo Asian hitting its production targets. So as with all broker forecasts, it’s prudent to take them with a healthy pinch of salt.
What could go wrong?
There’s a lot to be excited about when looking at the growth potential of this mining enterprise. But like all potentially explosive investments, there are also some significant risks to consider. Beyond the usual commodity price cycle risks that all mining enterprises have to endure, Anglo Asian also has other challenges to overcome.
One of the biggest concerns among institutional investors is the single-country risk. The company operates entirely out of Azerbaijan, a country not known for its political and regulatory stability. And with the relationship between Azerbaijan and Russia deteriorating, it introduces further geopolitical risks should the situation escalate even further.
For example, transport corridors and supply chains could be disrupted. And even if the impact on operations continues smoothly, disrupted banking relationships with Russian financial institutions could result in notable local currency volatility that drives up costs.
The bottom line
All things considered, Anglo Asian may no longer be a penny stock, but it still has a lot of risk attached to it. And that’s something investors will have to carefully consider before jumping in. Yet, given the tremendous progress made to date, I think the mining enterprise deserves a closer look.
