Avocet Mining Share Discussion Threads

[doobydave] 08/3/2005 17:34

Welcome jsandrew,

You've hit on the main reason quoted here on this BB for the silly rating. I understand the hedge can be rolled for years, but if you think about it, the total cost to unhedge is $140 (rough price difference) x 80,000oz = $11.2m. That sounds a lot but it's only 5 months production for the whole company. If they do unfold the hedge position, it's highly likely they will spread the impact over several years.

Other reasons for being cheap include:

1) Low no. of years of residual mine life at Penjom. But a) further resources at Penjom have been defined and b) it's not AVM's only mine any more.
2) Perhaps you might add country risk, but that's more perceived than actual. Nowhere is completely free of political risk.
3) The last factor I can think of is that at the last results, costs at Zeravshan came in at a very expensive $322/oz.

Most of this info is in the header, BTW.

Can't think of any extra-large superlatives for bionicdog. Sorry to let the side down! :->
DD

[corrientes] 08/3/2005 17:28

That bloody hedge!!!!!!!!!!!!!!!!!!!!!!

[kojak78] 08/3/2005 16:49

The curious thing is: DRDGold fell from 6 US$ to .78 US$. And still they are more expensive than Avocet. 900000 vs. 300000 oz production and much lower margins. Buying Avocet at 13.5 pence was like bying DRDGold at US$.04

[jsandrew] 08/3/2005 16:18

quickly reply, more impressed by the speed than content

ive just scanend the wh ireland 2004 brokers note

and their hedged 80,000 ounces until 2006 @ 300$


that wasnt a wise move, the story starts off well, but then gets worse

[bionicdog] 08/3/2005 16:13

this has turned into dictionary corner.
i cannot be expected to know words like "promulgated" , but i would like to extend my most enthusiastic contrafibularities to you.

[corrientes] 08/3/2005 16:09

Now if this company's share price was to reflect its supposed potential promulgated by the techies here who know their mining stuff, why we'd all be laughing, but....................................................

[jsandrew] 08/3/2005 16:01

though looking on their website, they do have highish operating costs per ounce of gold, but the theory states their meant to peform best in a raising gold price environment, because their % in profits is greater!


ahhhhh!

[jsandrew] 08/3/2005 15:59

why is this company so lowly rated?

gold is up 4$ today, avm mines gold in indonesia, thus servicing chinese demand

yet its rated on a p/e of 8.03


can someone explain that?

[chambeaj] 04/3/2005 20:56

Dubai Study Endorses GATA's Findings on Gold Market Rigging, Warns Oil Producers

DALLAS--(BUSINESS WIRE)--March 3, 2005--A study published by a research foundation in Dubai has endorsed the Gold Anti-Trust Action Committee's findings that Western central and commercial banks have rigged the gold market but have much less gold than they claim to have and so are vulnerable to rising demand for gold. The study recommends that the oil-producing countries of the Middle East diversify their ever-depreciating U.S. dollar holdings into gold.

[richgit] 04/3/2005 14:44

Shush,!!

Dont wake the lemmings up-they may start realising what this Company
is worth.

[brad1] 28/2/2005 09:08

I have a feeling that when they they sort out the hedge it will be in one swoop. The increasing production (ignoring Q3) will mean they will be able to do this and probably show a profit in the same year.

Saucepan, I have also held JKX for a while and topped up very recently when they went up 4.5p out of 17.5p in the day. Fair enough not grabbing every little rise but much safer this way. Although I do believe in the future of AVM I will patiently wait fot the rise before further investing. I honestly believe that this still has a very long way to go, but need the buy signal before parting with the reddies. Recent director buying, and a large buy at that, reinforces the fact that there is massive future potential in the share price

[pecker1] 26/2/2005 19:21

mieke,

I agree about the Tajik problem. Much tougher nut to crack - very high cash costs per Oz - at least another year before they really show progress. So why not hold fire until that nice green line crosses the market price as it did last year? In other words, money could perhaps be better deployed elsewhere for the next couple of months or so, knowing that you can top up in good time. Don't expect drilling results from Indonesia until June so what else is going to light the fire?

Don't get me wrong, AVM is a core holding for me but they are not going to set the world on fire. I would love to be proved wrong just as I would like to see an RNS on Monday saying that AVM are making a start on reducing their hedge. Chance would be a fine thing!

[saucepan] 26/2/2005 15:47

I have lot of my money in JKX (JKX oil and gas): a stock I have held for quite a long time - the same as AVM. I thus know the price behaviour of both stocks well. They both go quiet for a while, and then - whoosh!

JKX has had its blow off this week, and it just demonstrates how quickly things can move, when the time comes. It can be very easy to miss 15-25% of gains.

Brad1 mentioned topping up when the share price makes it break. There is a certain logic to this. But if anyone is convinced of the AVM story, why not top up now? You will get more shares for your money :-)

It will just take one favourable announcement for the share price to be marked up substantially, pre-market.

I think the odds of such an announcement must be quite high: resource upgrades, decision to start a new mine, an acquisition, etc.

AVM has hardly been standing still and, like Mieke, I suspect a lot is going on behind the scenes. One of these days, not so very far away, we will get to know what has been happening. Just a matter of patience.

[corrientes] 26/2/2005 09:26

Up 25% since mid 2003, but then we can all choose the period that best suits our argument.Don't get me wrong I've AVM is a key holding for me, but I'm trying to see the reason why we've not done better. My gut suspicion is still that this hedge is a poison pill. Maybe that's the intention since management have the money to deal with it, and the way I read the game, a slowdown in the exploration wouldn't have been a total disaster.

[mieke] 26/2/2005 08:04

Its been range bound for all of 4 and a half months - hardly 'all the time in the world'. In the 6 months prior to that it almost doubled. The hedge is an irrelevancy IMO, it accounts for less than 8% (and falling) of total reserves. Look at the graph - its of the nature of this beast that it goes through periodic quiet periods.I believe there is a lot going on corporate wise behind the scenes that will shortly come to fruition. In due course the uptrend will begin again - and with oil induced inflation just around the corner I cant think of a better place to have a large piece of my wonga.

[brad1] 26/2/2005 03:17

Totally agree richgit, have been sitting with this one for some time and am very happy to hold. Once this recent barrier is broken this will definetely rise close to £2 and who knows maybe even further. Recent upgrades at the mines meant that Q3 production levels were slightly below previous BUT past levels will soon be surpassed and the market will wake up to the undervaluation. Must admit that the hedge does not help, but apart from that they are debt free. Will definetely increase my holding once resistance level is broken.

[richgit] 26/2/2005 01:00

It depends what you are comparing with and what amounts of money.
You can now move £250,000 in Avocet without too much problem.
Many of the speculative smaller stocks where we saw huge gains up to mid February 2004 then fell 50-60% whereas Avocet has solidly risen 50+%.

I keep Avocet as my big money investment,where knowing it will be somewhere
closer to £2 by the end of the year is a reasonable probability-makes me happy.

For some speculation and short term excitement for the masses of brain dead T+traders that dream of 100% gains in 10-25 ,days there are plenty of other stocks.

[goml] 26/2/2005 00:32

Yes, they DO need to unwind their hedge.

[corrientes] 25/2/2005 23:21

A matter of time ? What time ? 2015 ? Look at the length of time this incredible bargain has been bandied about by all and sundry.There's been all the time in the world for a re-rating, yet it still remains range bound. You really need to be more critical about the reasons why the share price is where it is. No use comforting yourself with what the market presently thinks is pie in the sky valuations.

[yikyak] 23/2/2005 09:01

Ah, another believer in the peak oil theory. As you say oil goes very much hand in hand with cash gold, a rising oil price is highly inflationary but more importantly it's inflation that's difficult to hide as it falls straight onto the laps of the general public.

Even now a few articles are dripping into the mass media about protecting savings from inflation.

I call the current situation neccesinflation, everything you can't do without has gone up and everthing you could quite happily live without has gone down.

[mieke] 22/2/2005 22:44

watch the oil price - overlay POG versus price of oil - oil will become a more and more important driver of POG IMO as supplies tighten - if you get a chance do some research on peak oil - we are very close to an energy crisis.