It moves to 70p a share from 50p - well above the current price of 43p. And it values AAZ at a middle-of-the-range 1.25 times NAV.
Anglo has taken Azerbaijan’s first modern day gold project into full production - at Gedabek, in the west of the former Soviet republic. It poured its first gold last year.
That puts it on course to hit its target of 60,000 ounces predicted for 2010.
“Having delivered on production, we believe management’s attention will now re-focus on exploration to deliver the next the next stage of growth both at Gedabek and in the region as Anglo looks to exploit its first mover advantage,” Davidson said in a note to clients.
The spectre of a second round of quantitative easing (QE2) and worries the global economic recovery could falter have sent investors scurrying for gold.
This has driven the price up to over US$1,300 an ounce and led to a re-appraisal of companies such as Anglo, where valuations were made base on some very conservative forecasts for the price of the precious metal.
At the same time investors are now looking at some of the junior miners – particularly that have made the transition into production – as an alternative to directly investing in gold or gold ETFs.
“We believe AAZ is a good play on the gold price with solid management and good growth potential,” Numis analyst Davidson told clients.
Away from Gedabek, the group is making good progress with its Gosha gold licence, which should be extended beyond April 2011.
And the company is confident that it will extend the Ordubad licence area, which is up for renewal 2011 and which will allow it to further develop the property to fast-track towards a discovery.
For the producing Gedabek mine the company has a production sharing agreement with the Azerbaijan authorities.
This is an almost exact facsimile of the deal the Azeris have with the established oil companies operating in the country.
The agreement allows for the group to recover 75 per cent of the cost associated with Gedabek, though the government will take 12.75 per cent of revenues during that claw-back period.
After that the Ministry of Ecology and Natural Resources is entitled to 51 per cent of the "remaining proceeds".
"However, for the next three years we will be recovering around 87 per cent of the revenue.
"We can recover against historic and capital and operating costs, plus charge an imputed rate of interest on those outstanding cost.
"However as a low cost producer we will make a decent profit margin,” chief financial officer Andrew Herbert told Proactive Investors recently.
"For many mining companies there are better arrangements. On the plus side we have a reasonably low costs base and constructive relations with the government. Overall it is a good environment in which to do business
Those close links with Azerbaijan have been fostered by the company’s chairman, Khosrow Zamani, a former director of the International Finance Corporation, and chief executive Reza Vaziri.
Vaziri has close ties to the country as a founder of the US-Azerbaijan Chamber of Commerce, which channelled investment into the nation after the collapse of the Soviet Union.
"We have got good relationship with the Azeri government, "Herbert said.
"Our CEO is on good terms with the Government of Azerbaijan.