Avocet Mining Share Discussion Threads

[rollerjohn2] 02/2/2006 21:29

With 3rd quarter production known I thought I'd have a stab at year end results.

Production - 215,000oz (P=118, NL=56, Z=41)
Cash Costs - $281 (P=240, NL=200, Z=510), Energy costs have increased
Ave Gold Price - $448 (incl. Hedge 48,000*$300)
Gross Profit - $35.8m
Other Costs - $14m (Depr'n=$6m, Explo=$5m, Admin=$3)
PBT - $21.8
Tax - $7.6 (I used 35% due to local tax Malaysia)
Earnings - $14.2
Earnings - £8.6
EPS - 8.1
P/E (@138p/share) - 17.0

Not a fantastic result on the face of it........

Until you plug in a very conservative POG=$550 next year. With NO increase in production or any improvement at ZGC - EPS then 16.3, P/E = 8.5.

By the way based on the above I carried out a sensitivity analysis.
1% change in production is worth 1.8p/share
1% change in cash cost is worth 1.9p/share
1% change in POG is worth 3.7p/share
$10 change in POG is worth 6.8p/share

Anyone care to make their own prediction, we can compare results later this year.

[kojak78] 02/2/2006 17:57

Production for ZGC is up, I did the same mistake today but the loss of production just compared last year. First half production was 18000, now 10700. Perhaps some dump leaching is already in the figures so that cash costs excluding stripping costs for Jilau could be near 400. North Lanut cash costs should be doww somewhat, too.

[jk8] 02/2/2006 17:45

If we are mining more ore at ZGC, but gold production is lower, does that mean that there will be an even bigger £loss being incurred. Presumably this will offset any gains elsewhere due to the POG rising - any thoughts?

[kojak78] 02/2/2006 17:42

Takeover is unlikely because management + elliot + artemis have a controlling stake above 50%.. any buyer would have to convince one of those parties. And once a takeover is announced analyst will put on reasonable values. Remember Normandy and how high they were valued all of a sudden?

[corrientes] 02/2/2006 17:25

Gold reserves generally are dropping and consolidation is the name of the game, but who are the major shareholders who would put the kibosh on any takeover of this eminently up for grabs company ? I can't even remember hearing rumours of a possible takeover of AVM at any time on this thread,which in the light of the assumed projections is a mystery.If the potential is apparently so good then the surprise is that the company is still independent.However.if the company's intent is to diversify its interests to such a degree that it throws up up smoke screens of uncertainty for buyers' analysts, and the company wants to remain independent, then the board is doing a good job.In that event, and assuming that everything pans out as hoped for, we may be thankful that this lumbering mini giant is sleeping its way to the top and that we'll see top dollar, rather than a few cents now.

[kojak78] 02/2/2006 17:23

Perhaps we should ask management for an announcement calender so that we can put in our sell orders in advance ;)

[kojak78] 02/2/2006 17:20

At least HUi and XAU are falling, too. In the last days I've sold all of my share positions except AVM, MFN and RSG. Plan to hold them during any correction (mentally prepared for 125p AVM).

If a correction is around the corner it won't last all and with Avocet's technicals already oversold it doesn't have to go down any further but could turn just here. Let's see. Up or down, anything is ok with me. The main thing is action and not boring trading ranges.

[kojak78] 02/2/2006 16:51

Ah, AVM..

Inetersting. AVM has more reserves, more resources, more production and lower cash costs than Desert Sun. Price: $266m. Desert Sun: above 600m

I don't care any more, I guess manipulation will go on as long as AVM pays no dividend. Perhaps I'll put in a sell offer of 30,000 or 50,000 tomorrow. At 150 or 160p limit, let those UBS guys get my (loaned out) shares back. For the beginning only part of them.

[kojak78] 02/2/2006 16:48

Don't think so, they have arranged financing already. I think times are tough for Minefinders because they chose not to dilute (strict anti dilution policy) and finance by debt. Look at GSS and how well they are doing suddenly now that they have financed by issuing equity. You know who buys all those units etc. Some guys are angry now because they didn't get any Minefinders units.

[wolstencroft] 02/2/2006 16:39

Kojak: "NAV" is a funny term which has been used rather suspicously by Canaccord as well as resource companies - e.g. they have 1moz indicated, value it at $30/oz so say they have a NAV of $30m. Famously Canaccord have been doing this with Peter Hambros for years - it trades well above NPV (basically Canaccord take the NPV of Hambros operations, multiply by 1.5 because thats what the rest of the sector trade at then adds in all the exploration ounces at various multiples per once etc and comes up with a "NAV"). Hasn't done the share price any hard an no doubts is ax exteremly well managed company but pricey (I'm just bitter cos I sold my last POG probably at around half the price it trades at now).

So are Minefinders doing the same thing. Also, to trade at a discount to NPV is quite reasonable for an explorer as it invariably goes wrong somewhere in the transition to producer.

BTW, can't believe AVM - its being given away by the MMs.

[ben gunn] 02/2/2006 16:06

Now selling. Will re-purchase when dollar weakens.

[holdontight] 02/2/2006 14:17

Stable at Penjom; progressing very well at Lanut...now 220k annualised, with far more to come from current actvities....I would expect at leats 250k in 06/07, probably more like 260k.....more than Peter Hambro, with its £1 billion mkt cap!!

[arja] 02/2/2006 10:53

richgit,
chart looks good but consolidatinb at present . But is this company run by honest people as it always concerns me when "investing" in "specs" although this one is a second line producer ? So many "spec" companies have directors who pay themselves handsomely for doing sweet fanny adams !! Hard to trade this one with the spread , SD etc.!! Interested to hear your thoughts . I notice this one is also on Finspreads list of stocks .

[saucepan] 02/2/2006 10:20

Richgit: well put

[pecker1] 02/2/2006 09:48

yikyak,

Well the French should know about the merits of gold - I think France has probably had more fiat paper money crashes to zero over the last 400 years than any other country in the world. And they are not averse from putting the boot into our American friends on gold - they did so several times during the 20th century.

[andy] 02/2/2006 09:48

yikyak,

Interesting, many thanks.

[richgit] 02/2/2006 09:42

People should open their eyes and start investing for what lies ahead next
year instead of jumping in and out of T+ trades like living life on some merrygoround.

When ZGC starts its full flow Avocet will start hitting its targets,but it doesnt end there.

Directors Buying-even Wives.
One fund Manager has targeted Avocet as his best junior Gold Play.

Dynasty has all the potential of being BIG plus the Idenberg JV.

However,this huge cash cow has the ability to raise substantial funds to
do just about anything Management wish - and I would bet there is going
to be a lot more potential added in the next couple of years.

I`ve started regularly buying again as not only is the stock undervalued now,
but I reckon there is going to be a hell of a lot more that is coming,and Id
rather buy that potential now before it happens and before the general
muppet investors start to realise.

[andy] 02/2/2006 09:26

Phillis,

That's another four months!

Hardly devastating.

[kojak78] 02/2/2006 08:40

54,326 x 4 = 217,000

Very close to the 220,000 I use for calculations. In fact I factor in Tajikistan dump leaching, that seems to be missing as production there declined once again slightly. Dump leaching takes time, though.

Seems to me 120000 Penjom + 60000 North Lanut is likely, most likely one of both will produce 5000 less per annum, so 175000 at below $200 (Penjom has higher costs, but will fall to 200 as much ore is in stockpiles now..).

Tajikistan still the 40,000 once stripping takes place and perhaps 10,000 (with potential for much more) for dump leaching. 220,000 to 225,000 annual production which will increase to ca. 250000 once stripping has ended and grades return to normal levels. Perhaps even more than that.

Not bad if one considers that at these 220,000 oz current production Avocet should cost 2.5 to 3x the current amount compared to others.

[saucepan] 02/2/2006 07:38

Increasing production and an increasing gold price has to be a "double whammy" for the bottom line.

What I particularly liked, (but whether the market will pick up on it remains to be seen) is: "We remain confident we will be mining higher grade ore in the Jilau Main pit by the middle of the year from which we will see a DRAMATIC improvement in ZGC's gold production".

[phillis] 02/2/2006 07:38

Postponed again til middle of year. Dear oh dear!

[cleo1601] 02/2/2006 07:29

any views on today's update? tia