Avocet Mining Share Discussion Threads

[knowing] 25/6/2005 23:49

Just as a weekend OT very interesting article posted over on the RGM board.

[pecker1] 24/6/2005 15:49

That gap-up opening the other day is annoying as it's hanging over the share price Anybody got any ideas on what caused it?

[budevenwiser] 24/6/2005 15:25

best b
they already are debt free
also sorry about not ringing avm been out all day and am now off out again defo monday

[bestbuddy] 24/6/2005 10:29

Gold now at $443.
Last time Gold was at these prices AVM was in the 90's.
Also at that time it was speculated that by now gold would be back to $350's level.
With gold at these prices for so long now, AVM must be making loads of profit, also low interest rates and liekly further cuts, means any debt will be less negativ in impact. I agree with previous post that AVM could well be above £2 in the not too distant future. Stocks usually do the rigght thing eventually, in which case it wont be long before this share price starts to move north again.

[goml] 23/6/2005 22:49

OK Kojak, fair point wrt to AVM but my point was really a generic one rather than a specific one relating to AVM. Obviously if shares get placed in any company the existing shareholder base want them punted out at the highest possible price.

[kojak78] 23/6/2005 22:04

Selling shares at 70p when they're worth 245p??

Come on, production is already de facto 100000 in 6 month without capital spending.

Taror could be quite profitable. Spend 40 mio and get back 325 mio over the years. Or spend 40 mio an a share repurchase and get back 140 mio immediately.

Unfortunately most miners are very quick in deciding to build a new mine. Why not just make a feasibility study and add 1mio in reserves. That would lift the share price immediately and a few years down the road we can construct the mine without financing.

If the share price was 300p, then I would finance. Then I would buy up other companies. Avocet just is not able to buy a single gold producer because nobody is cheaper than Avocet.

Just checked Crew Gold. They could get to 300000 oz production. Could.. and are already valued at twice the market cap of Avocet.

[goml] 23/6/2005 18:55

One point to make here. Dilution isn't always something to be scared of, particularly when it is for expansion and not simply survival. Imagine AVM raising £50M and then immediately embarking on an agressive redevelopment of the Tajik property, such that 18months down the line, production is at 150,000 oz/annum.

[bionicdog] 23/6/2005 17:54

You still haven't answered that question bis.
I wonder why?

[corrientes] 23/6/2005 16:02

Lives in an Orwellian world where up is down and down is up.

[biswell] 23/6/2005 15:39

AVM on the slide as POG froths

When GOLD drops then AVM will crash to below 60p

B

[budevenwiser] 23/6/2005 15:27

yep will do was going to ring tomorrow anyway , just giving catchpole rest of today to see if he rings back

[phillis] 23/6/2005 15:08

Suggestion - speak to FD Henry.
FDs find it hard to tell anything but the truth!

[budevenwiser] 23/6/2005 14:28

what ever it is ( if there is something ) it looks like he does'nt want to waste any time

[kojak78] 23/6/2005 14:19

USA means either some old tungsten business or Indonesia or financing or stock listing in NA.

Perhaps Newmont is willing to sell some more properties as they received a beating in Indonesia lately. Mesel closedown could be something, too.

Another idea I just had: why not finance with royalties? I guess ZGC is just the type of company you would want to throw money at in the royalty business. Lots of blue sky potential. 16 mio oz in Russian categories and exploration only started in the 80s.

An AMEX stock listing would be really nice. AIM sucks, I can only buy at ask and sell at bid because I'm at UBS..

Hoewever, only speculation and nothing that would change anything significantly.

[shirishg] 23/6/2005 14:04

Post removed by ADVFN

[kojak78] 23/6/2005 13:21

Seems to be right, the current downward pressure began in November right above 100p. Whatever it is, it began then and not in March.

The last log. chart shows that a price rise from the lower boundary of the rising channel to the upper side equals 233% (because it is a log. chart).

The rising channel climbs 115% per annum.

We're at the lower boundary of that channel now. If Avocet reaches the upper level of that channel again in 2 years time it will rise 115%, then 115% again for the second year and then 233% from lower to upper boundary.
2.15 * 2.15 * 3.33 = 15.4 = +1440% = 1155p in 2007.

A little bit unrealistic, but why not?
US$2250 market cap / 3 mio oz reserves = US$750/oz
US$2250 market cap / .413 mio oz production = US$5450/oz (Goldcorp and Agnico already traded for that!!)
justified p/e? perhaps 20. US$112.5 net needed for that. US$160 mio needed before tax. US$185 mio needed with overhead + capex. US$448 needed above cash costs of perhaps US$200, so US$650 POG needed. Reasonable for 2007..

But that's just dreaming. The real important fact is that Avocet is undervalued 1:3 in comparison to its peers. At todays gold prices. IMO we're in a bull market that will bring us US$2000 pre inflation and US$8000-9000 after inflation until 2015. I exspect Avocet to reach something in the low to mid double digits in pounds at the bull market top 2012 to 2015. But that's just the icing on the cake. There are better stocks under such extreme scenarios.

However, such scenarios are absolutely possible. And I hope management is mentally prepared for such a scenario. Imagine POG climbing to US$1000. The desire to hedge after all those bad years will be very high. Imagine POG climbing higher to US$2000. Production costs in SA will be still US$400 for instance. Imagine then POG going to US$8500 and production costs rising to US$1700 in South Africa because of inflation. Bang, you're US$700/oz under water. All those new hedges that will be put on in the coming years will bankrupt many gold companies.
Some will get it right, some will hedge at the right time and be the new gold mining behemots of the 2020s..

[andy] 23/6/2005 12:26

211289,

good point!

[211289] 23/6/2005 12:21

Musings from RODIN:

Would directors have bought just before talk re dilution?

[budevenwiser] 23/6/2005 10:12

kojak
this is from a paragraph of the last evo note re zgc
a change from underground to open pit required ore stripping to prepare for recommencement of open pit operations.this followed the successful testing of dump leaching on low grade ore . this process will allow avm to mine ore and stockpiles previously classed as marginal and excluded from ore resources. dump leaching allows the mine to place blasted rocks directly onto leach pads. this eliminates the expencive stage of crushing the ore and will significantly decrease cost per ounce mined . we expect this to drop to $280/oz
if this is the case then all ore processed may be dump leached

[kojak78] 23/6/2005 09:08

Capital costs could be lowered significantly I guess. Taror costs only 6 mio in infrastructure, the costs for tailings and metallurgical plant could be reduced significantly. The problem seems to be the refractory ore at Taror and we know that Avocet is able to successfully fix such problems.

In fact there is such a thing as a "Taror mill" already existing.

It is the same plant where Jilau's ore is processed.

Unfortunately the plant seems to be working to full-capacity. Perhaps one could scale back production from the Jilau area 1/3 so that the production would decline from 46000 to 30000 oz and utilize the free capacity for Taror's .5 mio t per annum. That would add 55000 oz and lower cash costs as 15000 high cost oz are replaced by very low cost oz. The balance from 46000 to 100000 oz production is dump leaching and needs no milling. All in all such a solution would bring Tajikistan to 140000 oz at very low cost.

Perhaps Avocet is not able to finance Taror without dilution, but in 1 to 2 years they will be!

[andy] 22/6/2005 21:20

budenwiser,

thanks for your previous reply.

[doobydave] 22/6/2005 20:55

And that's thanks from me as well Kojak. Nicely done and here's hoping.

Interesting point about the potential dilution to fund development. At the interims (period ending 30/09/04), "The Group's cash position... was US$17.2 million (2003: US$23.5 million) with total debt at the end of the period reducing to US$5.8 million." Certainly not enough to self-fund but they could take out another loan. They will have paid off the ING one by now.

As a passing whimsy, I wonder if Avocet may have started provisionally consulting institutions in March w.r.t. to a placement (see graph)? Just a thought, having seen the phenomenon several times before.

I note year end accounts are due 13 July - not long now. Even after that, the cash position will be over 3 months out of date. Oh for Aussie or Candian reporting standards!
DD