Avocet Mining Share Discussion Threads

[andy] 14/9/2005 11:12

Kojak,

I see the sense in the first paragraph of your post above, ie the price will not rise with the hedge in place, so buy back shares whilst they are low rather than close the hedge, thus saving money on the share buyback.

Not sure about that personally, closing the hedge MAY result in a much higher price, rather than perhaps, at best, a modest increase if shares are bought back.

Surely shareholders want to see a higher price to maintain interest?

I feel your idea would work in the much longer term, but I would like to see some improvement in the near to mid term.

Maybe a combination of the two would work?

Sorry, probably me, but cannot undertand your last point at all.

[pecker1] 14/9/2005 10:37

Ash,

Take a look at budevenweiser's post 829 about the trip to Jakarta in early oct to announce drilling results. Also see Peter Flindell' presentation on exploration - page 24 onwards - in the July Financial Results review.

I'm optimistic that the news will be very good - hopefully enough to trigger a stepchange in share price performance. And given what's been happening between Newmont and the Indonesian government,I hope AVM will also snap up more Newmont properties if they want out. And who better to guide them than Peter Flindell?

[kojak78] 10/9/2005 22:39

That's even worse than just closing the hedge. Why close the hedge, let the share price climb and then buy at higher levels? Why not buy back shares at low prices and then close the hedge?

But I have to admit that I have made a wrong assumption. Closing a hedge is *not* investing into gold. It's investing into a gold call at the hedge price level.

Let's assume the shares are worth 3.5x the current price. Let's assume US$650 price of gold means 200 XAU. That means you gain 600% on the share investment while you gain 140% in the gold hedge closing. Invest US$140 per ounce to close and avoid being underwater US$350..

[andy] 10/9/2005 19:31

Kojak78,

Many people have summised over the years that the hedge is holding back the AVM shareprice, and I think that AVM think that too, hence the clearing of the hedge.

AVM are somewhat of an enigma, appearing to be an undervalued stock, but the market always seems to disagree, and I have always thought the hedge is at least part of the reason, though I may be wrong.

Surely they can buy back shares once the hedge is history?

And I would prefer that to a dividend due to BATR.

[kojak78] 10/9/2005 19:15

Eliminating a hedge is nothing more than investing in gold. Of course gold stocks will rise more than gold. Undervalued gold stocks will rise more than gold stocks.

Why not make the best investment and buy back stock? Barrick did it and I think it made much sense.

Many companies have hedges that could bankrupt them. With Avocet that's clearly not the case and has never been.

[kojak78] 09/9/2005 23:23

No tax at all. You have to own the stocks at least for one year and then it's tax free, one of the few reasonable German tax laws.

Since 1999 I made 3000% on my start capital. But considering tax I actually only made losses. Most gains came from very few deals.. Ranger Minerals, Ashanti, Normandy, Avocet. In each case I owned the shares for more than a year. I take losses very soon after they materialize.

[wolstencroft] 09/9/2005 20:01

kojak78 at least if you are a long term holder and you own the shares personally then gains are subject to just 10% tax

[kojak78] 09/9/2005 18:33

Why not leave the hedge alone, take on debt and buy back the shares? Or just delist the stock.

[kojak78] 09/9/2005 18:29

The fact is Avocet was worth 2.5x the price a few months back. Now it has fallen 15% vs. the XAU measured since November. Or 28% measured from march.

It has to rise 37% just to be not an *underperformer*.

And that's not taking into account Taror, Chore, Idenburg etc.

Time to sell for you folks. This stock will never begin to rise.

The old-timers like myself will stay onboard until the ship is sunk, I've got 100000 Avocet shares in the books written down to 0.00 since 15 months now.

Again. This one will never begin to rise. Perhaps if the fundamental situation turns out to be really good, with 3 or 4 mio in reserves or so, it will just be higher 50% or 100% one day down the road.

Had the bull market in Avocet shares continued since march it would have risen 2x the XAU as normally. XAU has risen 18%, Avocet would be higher 36% normally or at 132p.

[yikyak] 09/9/2005 16:45

wolstencroft, I agree, some stocks simply are as dull as watching paint dry and often investors leak away out of sheer boredom. Avocet falls firmly into this pigeon hole but the upside is that many investors are on the sidelines that either no longer have a position at all or one far smaller than they once did. The advantage of this is that when it does start to move (over the £ really) we should see a buying frenzy of investors who are already fully aware of it's significant undervaluation.

When it breaks it's reputation it's going to break hard. Until we reach that point though..........................yawn.

Still invested at the moment but I will be one of the many diving in!

[wolstencroft] 09/9/2005 12:39

...so buy some more - but remember the market can be wrong for years - KMR has had a nice run recently but for months last year people were bored of the stock and selling out - but its more than doubled in 1 year even thought the story had not fundamentally changed; AVM, I hope, will do the same

[trader horne] 09/9/2005 12:25

in other words AVM is still grossly undervalued ...

[kojak78] 09/9/2005 10:03

Another down day. Still I can't understand why companies like DRDGold (no production and reserve blue sky potential) are valued at 8x cash flow and Avocet at 3.5x cash flow.

Avocet can find several million oz in reserves which is impossible for DRDGold to do.

Production is probably 220 @250 on an annualized basis now and will go up to 265 @230 soon with a possible 395 @200.
That's price / cash flow 2.8 and 1.7 very soon.

Take a look at Minefinders. 120,000 oz @ 68. 130 market cap + 130 capital costs. Translates into a p/cf ratio of below 6.

The truth is, Minefinders is as expensive as Avocet without having even build the mine that costs 130 mio in capital. Nonetheless Minefinders is one of the lowest valued gold stocks in the market.

[budevenwiser] 07/9/2005 12:41

notice evo has come off the offer for first time since thursday morning , could be a good sign , onwards and upwards

[chipperfrd] 07/9/2005 12:30

We are not alone. Appears to be something to do with charts???

[chipperfrd] 07/9/2005 12:28

Bud,
I am having problems accessing lots of threads today - don't know why!

[wolstencroft] 07/9/2005 12:26

its not just you - needs reporting I guess

[budevenwiser] 07/9/2005 12:23

anyone know why i cant access the 300 000 thread

[saucepan] 07/9/2005 10:23

Made a small addition to my position this morning ;-)

[kojak78] 06/9/2005 21:32

"And even the timing of the construction boom that traditionally follows natural disasters is opaque, as it may be months before the flooded areas, largely in New Orleans, are drained, cleaned and deemed safe for habitation."

So no construction of new homes, no work for many months. In a cynical twist of fate this catastrophe could mean way lower oil prices as demand breaks down during a triggered worldwide recession.

[kojak78] 06/9/2005 21:25

End of the housing bubble and the stock market mania?

The pumping of New Orleans will take 6 months.

"It will take six months to pump out Jefferson Parish, Combe said. But at that point, areas of New Orleans will probably still be underwater and may take many more months to empty."

"With few homes left undamaged, Red Cross and FEMA officials will have to find property for long-term temporary housing for a possible 1 million refugees. After Hurricane Andrew, some of the 250,000 residents of south Miami-Dade County forced to find temporary housing remained in federally financed mobile homes for 2½ years."

source:

That was written long before the hurricane!

other links:



written before teh hurricane:
"It was a broiling August afternoon in New Orleans, Louisiana, the Big Easy, the City That Care Forgot. Those who ventured outside moved as if they were swimming in tupelo honey. Those inside paid silent homage to the man who invented air-conditioning as they watched TV "storm teams" warn of a hurricane in the Gulf of Mexico. Nothing surprising there: Hurricanes in August are as much a part of life in this town as hangovers on Ash Wednesday.

But the next day the storm gathered steam and drew a bead on the city. As the whirling maelstrom approached the coast, more than a million people evacuated to higher ground. Some 200,000 remained, however-the car-less, the homeless, the aged and infirm, and those die-hard New Orleanians who look for any excuse to throw a party.

The storm hit Breton Sound with the fury of a nuclear warhead, pushing a deadly storm surge into Lake Pontchartrain. The water crept to the top of the massive berm that holds back the lake and then spilled over. Nearly 80 percent of New Orleans lies below sea level-more than eight feet below in places-so the water poured in. A liquid brown wall washed over the brick ranch homes of Gentilly, over the clapboard houses of the Ninth Ward, over the white-columned porches of the Garden District, until it raced through the bars and strip joints on Bourbon Street like the pale rider of the Apocalypse. As it reached 25 feet (eight meters) over parts of the city, people climbed onto roofs to escape it.

Thousands drowned in the murky brew that was soon contaminated by sewage and industrial waste. Thousands more who survived the flood later perished from dehydration and disease as they waited to be rescued. It took two months to pump the city dry, and by then the Big Easy was buried under a blanket of putrid sediment, a million people were homeless, and 50,000 were dead. It was the worst natural disaster in the history of the United States."

Unbelievable, like a prophecy.

Some sources claim up to 50,000 death. Let's hope that's not true.

However, with that many homes destroyed, without flood insurance and with heavy debt, I guess the housing bubble will come apart.

The consensus in the market seems to be 1 month pumping time and a few thousand death people. I fear the damage is much much greater. This could really trigger a crash, markets are very overbought and the death toll could possibly rise by the hour as the water is slowly pumped away.

[saucepan] 06/9/2005 15:13

Fascinating again, Kojak - especially with regard to the gold / platinum comparisons: more grist to the mill that gold has some catching up to do to the benefit of AVM.