Avocet Mining Share Discussion Threads

[dixi] 03/10/2005 15:24

Ooops double post!

[dixi] 03/10/2005 15:24

Thanks for that - shame I sold GFM 3 years ago - shares bought at 3.75p!!!

[chipperfrd] 03/10/2005 15:12

Hi dixi,

O/T re GFM:
My own calculations put the initial value of the Zn production at 66p/share, and that was reasonably conservative.

However, with Zn rising and looking set fair to outperform other base metals in 06/07 things look even better.

They are planning to increase output, start Au production, increase Au resource - mostly not priced in yet.

DYOR but I reckon its a really great story :)

Sorry I have not received any broker projections.

All the best.

[pecker1] 03/10/2005 15:12

dixi,

IMHO, GFM are a pioneering, successful miner in the right place at the right time. Well worth their current valuation on zinc alone. Gold, and probably lots of it too, further down the line. It is also an uncomplicated, single location with admirable relations with local Chinese/authorities that would be very tempting to an Ivanhoe-type predator.

Most of us here know AVM undervalued compared to its peers. Am hoping for a re-rating during next three months. The hit to the P & l account from selling the hedge at $300- 50k oz this financial year should be offset by an increase in production and exploration results from Indonesia and Malaysia.

[dixi] 03/10/2005 14:52

Hmmm - starting to think I should have put some of my money into GFM also - I chose to invest more into AVM and expected a greater return!

I cannot find any projections for GFM to give me an idea on the true fair value from where the price stands today.

[dixi] 03/10/2005 14:22

Interesting to note that GFM market cap now exceeds that of AVM. I hold AVM, but sold GFM a good while ago - not so sure I quite follow the logic with this - is the potential of GFM in excess of AVM?

Any thoughts?

[retford1] 03/10/2005 08:57

Well thanks for that cheerful note, I hope that you feel better for having shared that with us.

[yikyak] 02/10/2005 19:32

RBA warning of 'meltdown'
David Uren, Economics correspondent
September 27, 2005

FURTHER rises in oil prices, the collapse of a major bank or an unexpected jump in inflation could be all it takes to send the increasingly fragile global financial system into meltdown.

The Reserve Bank of Australia warned yesterday that the current calm in financial markets could be the prelude to a storm that could wreak havoc in the world economy.

The RBA believes the boom in markets for shares, bonds and housing in many countries is unsustainable.

The warning came as share prices in Australia reached a new high point, while a rush to invest in Australian bonds is pushing down long-term interest rates.

"The preconditions are in place for quite abrupt swings in sentiment and a disruptive snap-back in pricing," the central bank says in its latest review of the health of the financial system.

The Australian share market soared yesterday, with the benchmark All Ordinaries index rising 51.3 points to a record 4565.3.

The share market has risen by more than 12.5per cent in the past four months.

And the RBA says a key measure of all the world's share markets is now 62per cent higher than its 2003 nadir, with the biggest gains made in the riskiest markets. The bank says that financial markets have been acting on a belief that there will be no sharp changes in interest rates around the world. This has resulted in huge investments in government bonds.

In Australia, the long-term interest rate, which is set by the 10-year government bond rate, has been below the cash rate set by the RBA since March.

The belief that rates will remain stable has made investors more willing to borrow to buy shares and bonds.

And with long-term interest rates at historically low levels, investors in international financial markets -- such as insurance companies, banks and superannuation funds -- have been seeking out riskier assets that pay higher returns.

The trend for people to borrow more heavily than before has extended to housing markets, which are still booming in many countries around the world.

"The concern is that the increase in prices and leverage across a range of asset markets might be sowing the seeds for future problems," the RBA says.

"In many markets, there seems to be considerably more scope for asset prices to fall than to increase."

The Reserve Bank says the sooner the correction occurs, the better, as the magnitude of the shock is likely to increase if the boom continues for a few more years.

It says world markets could be sent plunging by a general reassessment of risk in world financial markets.

The possible triggers for such a reassessment include a further increase in oil prices, which hit a record above $US70 a barrel this month, the default of a big borrower such as a bank, or an unexpected rise in inflation.

The RBA believes the risks of Australia's housing downturn triggering a recession have receded, although it warns that the risks have not entirely disappeared.

"The high levels of household debt make the household sector vulnerable to a change in the generally favourable economic and financial climate," the bank says.

Although housing prices levelled out over the past year, it says, home owners are still increasing their debts.

Household interest payments are now equivalent to a record 9.8per cent of household disposable income.

"Those with the highest debt-servicing burdens, or the smallest buffers on which to fall back in adverse circumstances, are often those that have taken out loans only recently, as well as lower-income households and investors," the bank says.

[pecker1] 30/9/2005 17:22

Ash,

By end of October at the latest - hopefully, a week or two earlier. Drilling started in June. Preliminary results already said to confirm surface indications but they will probably want to wait until all the drill results have been assayed and assessed before going public. Max impact this way and less chance of disappointment if subsequent results don't live up to the first ones.

[mr ashley james] 30/9/2005 14:07

Dixi, don't follow GFM and do not like investing in China, plus do not like polymetallic deposits so I am afraid well done on the Shareprice, but I can not invest in them all.

All the best with GFM

Cheers

Ash:)

[dixi] 30/9/2005 14:04

At this rate GFM mcap will surpass AVM! Is there any justification for such a situation.

Mr Ashley James - I seem to remember you being amused at the suggestion of a sucessful polymetallic mine in China - looks like GFM may have the last laugh this time??

[doobydave] 29/9/2005 23:55

Ashley,
Duly noted and duly nuked for blatant spamming of no earthly relevance to AVM.

To a fully qualified non-chartist like me, the chart looks very promising just now. With decent news I think we could see 130-140 this year.
DD

[mr ashley james] 29/9/2005 23:28

David,

I think Powerbooks needs to be nuked for extreme spamming.

BTW Minco is run by Roger Turner, the bloke that destroyed OXS 40.00p to 5.00p need I say more?

Cheers

Ash:)

[chipperfrd] 29/9/2005 22:50

Saucepan,

Thanks for the long-term chart - I was being far too short-term with my previous high!!

It does look like an enormous cup & handle formation (TA wise).

Kojak - sorry if I have not jumped to agree with your valuation. Your posts are highly valued and always interesting but I have found it difficult to get beyond the poor sentiment that has prevailed for so long amongst the gold miners and to really start to believe that the sort of valuation you predict could be on the horizon.

Don't get me wrong, I am very much a bull of the pm sector, I am just taking it a few months at a time.

Regards

[brad1] 29/9/2005 22:00

This has been a prize gem to me since late 2002. There is no doubt that the company is performing well, massively undervalued and with unaccountable (to date) potential. Have no intention of selling for a long while, as this has to be one of the best plays around at the moment. Todays rise was a definite break of recent highs. Wouldn't be surprised to see a small pullback b4 another good rise, but wouldn't dare get out! Head and shoulders on the handle of a cup - no stop I will not put a figure on future share price

[holdontight] 29/9/2005 21:04

Absolutely - agree with you entirely !!!!

[kojak78] 29/9/2005 20:21

@holdontonight

Finally.. I nearly thought I'm the only one thinking this one is worth above 500p.

I think Taror/Chore will soon be producing mines financed by cash flow and some bank debt only. So no dilution here. That will mean we have:
120,000 * 100% Penjom
60,000 * 80% North Lanut
(85,000 + 130,000) * 75% ZGC/Taror/Chore
= 330,000 production @ ca. 200

Reserves are ca. 1.8 mio now + 12*.13 mio for Taror/Chore = 3.36 * 80% (guesstimate of average ownership) = 2.7 mio oz

Everywhere in the market companies are valued as if they were already producing. Novagold, KRY etc.

US$170/reserve oz is average now. Perhaps US$2000/oz production. US$200 cash costs is way below average, so Avocet should cost 270 for the reserves and 400p for the production.

That is not some future dream scenario to sell. This is a now and here price valuation. Not taking into account the exploration potential. 20 mio oz gold mineralization in Tajikistan, several elephants possible, Idenburg + several in Tajikistan. 330,000 oz in production + 1 Idenburg elephant + 1 Tajikistan elephant + 1 more "Penjom" in Malaysia + 1 more in South Lanut + brownfield success for replacement of reserves could bring this company near the 1 mio oz production figure. At least they have the right people. And even if not, the 270p to 400p is just the right valuation in comparison to other miners which will rise 1000% before this bull market is over.

I would like to sell and diversify, but below the right valuation in comparison to other miners I'm just locked in, nothing I can do.

[holdontight] 29/9/2005 19:08

Some good and positive posts again today. Best BB of all the co's I am invested in....by far!!! AVM is indeed massively undervalued...all we long term investors know this all too well (have we had to be patient!). Recent movement is extremely encouraging and if the market dares, we will be proven correct in our investment rationale. I agree with a pullback circa 120p, but once 105 broken (closing price), then we are headed back to 250p and then much much higher. Rea; value of this company is as yet unproven, but the current value is iro 250p and potential anyone's guess....mine being >500p. We could hit this level sooner than any of us think as well...check out Peter Hambro for a similar (yet more expensive) profile.

[saucepan] 29/9/2005 18:44

Just for the record, AVM is a long way away from an "all time" high! But, I think it is on its way there; and maybe sooner rather than later :-)



In addition to the above, I was just studying the three-year chart in the header and reminded myself how AVM easily made a 100%+ leap in the period early 2003 to late 2003. The pattern could repeat itself this time. There has been a long period of consolidation. To me, it looks as if the pattern is reforming.

[kojak78] 29/9/2005 17:47

RSI overbought at 80? Yes. Let's not forget that RSI was at 20 when the share price was 86 and it still felt 20% towards 69p. So we still have 25% (opposite of -20% is 25% because 100% * 80% * 125% = 100%) upside left and a first correction should set in in the 120 to 130p range.

The big question remains: Why should Avocet trade at US$500/oz prod. while DRDGold is trading at US$1000/oz and Gold Fields (with worse risk profile and way higher cash costs) at US$1600/oz.