Penny stocks are not for the faint of heart. These small companies often fail, making them risky investments. However, once in a while, a hidden gem emerges, leading patient investors to great wealth. This is why penny stocks remain popular.
One micro-cap company on the London Stock Exchange catching the eye of savvy investors is Anglo Asian Mining (LSE:AAZ). This company could benefit greatly from the electric vehicle (EV) revolution.
Anglo Asian Mining operates in Azerbaijan, focusing on extracting gold, silver, and copper. Copper is crucial for manufacturing EVs, with an average of 83kg needed for each vehicle – four times more than a traditional combustion engine car. With governments phasing out gas-powered vehicles in the next 20 years, the demand for copper is set to soar.
Anglo Asian Mining is heavily investing in developing new copper projects, with an estimated 585,373 tonnes of copper waiting to be extracted across its sites, particularly in the Garadag project. This amount is valued at approximately £4.6 billion – 80 times the company’s market capitalization.
Despite the promising outlook and rising copper prices, Anglo Asian Mining’s shares have dropped by 40% in the past year. This presents a potential buying opportunity. However, the company is facing challenges, such as production delays due to regulatory approvals, leading to a significant decrease in revenue and profits.
Management remains optimistic about the production timelines for new sites, with Gilar expected to start production this year, Xarxar by 2026, and the Garadag project by 2028 – seven years ahead of the UK government’s ban on new petrol and diesel car sales.
While Anglo Asian Mining offers potential for long-term investors, there are risks involved, especially given the volatility of penny stocks. Investors must be comfortable with this level of risk before investing.
In conclusion, Anglo Asian Mining could benefit from the electric vehicle revolution, but investors should carefully consider the risks before making any investment decisions.