Avocet Mining Share Discussion Threads

[saucepan] 12/12/2005 08:13

I agree with the sentiments above, but AVM is at such an interesting juncture technically. Once it clears the 100p hurdle convincingly the "coiled spring" effect could be released: and most of us are of the opinion that AVM has quite a bit of catching up to do.

Today's further movement in gold, MAY just be all that it takes to trigger the process off. I think it cold be an interesting day.

[beckaroo] 12/12/2005 08:05

Even Zeravshan will make a profit soon if gold keeps rising at this rate!

[corrientes] 12/12/2005 07:55

Shares will go up after gold corrects or stabilises. It's happened before when the the momentum reduces.

[budevenwiser] 12/12/2005 07:48

golds going up to quickly for my liking , gonna come back with a bump and burn quite a few

[kickstart] 12/12/2005 00:42

Gold is up $5.50 at the moment as the Far East opens , if AVM cant move on this rise (if it holds) -I give up !

[holdontight] 11/12/2005 20:44

I agree with your final paragraph...AVM is still the better buy, safer with equally great potential....but share price is not moving enough.

[tim00] 11/12/2005 06:30

Go to p7 of Q3 Report, section headed "Labour relations". Staffing has been reduced by 27% in October, following which employee wages have gone up by around 7%. Most of the staff cuts are in non-production jobs. Added to closures of unprofitable shafts, the management is starting to make the mine efficient. Should have a dramatic impact on financials through next year. I agree, the hedge would only be carried out at prices above costs. Cash costs were very low in Q3, probably distorted but I don't understand how.



Harrison deserved to lose: more afraid of losing than taking the risk of actually going out and winning the fight.

[holdontight] 11/12/2005 00:33

One more point, I am NOT suggesting to anyone that I think TMG is a better buy than AVM.....FAR FROM IT. However, in my view it is worth watching and possibly a better bet than for example EUM. EUM announced last week that they have hedged at 575 50% of current production. I like EUM and think this was possibly a good move for them as they still have resources to mine that would reduce this 50% to 20%. However, they are now capped a little in terms of investment return potential(though at higher share price than current, imo) and TMG are not. So a few EUM for today and a few TMG for tomorrow, with masses of AVM for today AND tomorrow!!!

Was great to see Harrison beaten earlier, wasnt it??!! Boring fight overall though.

[holdontight] 11/12/2005 00:21

I actually cant find reference to the 20% reduction in costs anywhere...can you let me have details where I can. However, the Q3 costs of 553 included one time costs of 47 (ish, need to check to be precise). Additionally, they would hardly hedge below production costs and the hdge is 490. The hedge is also only 2000oz / mnth which is circa 10% of annual production for 2006, which is nothing much. Finally Steyn is only "trash" as you call it cos it has been loss making - addit, check the reserves and resources, as they have enormous potential. As they increase prod, costs / oz will reduce further, so 460 might still yet be higher than actual....they need to reduce anyway, but positive rand movement would obviously help. Assuming all stays as is, I would agree they look to have very large upside potential. Thinly traded market though, so be careful. I have bought previously at 17p ish and am looking to add if price doesnt move up too much. Think they're a buy upto 25p, but could hit £1 in a day!!!!!!!

[tim00] 10/12/2005 20:12

Kojak should read the latest TMG report in full. Labour costs have been reduced post-Q3 by around 20% or so. I was not previously aware of TMG, but my figures suggest around a zero cash outflow in Q4 and potential cash generation (though not profits) in 2006 roughly equal to Holdontight's figures. Risky yes, but a highly leveraged play on the gold price and very large potential upside IMO.

[kojak78] 10/12/2005 18:14

Thistle has trash mines, the President Steyn mine. I doubt they can contain costs below 500. If gold prices climb higher from here and stay there Thistle will survive. They need at least the current ca. 550 + 100 capex + higher costs by higher wages. IMO no favorable risk/return ratio. Current NPV value is 0 as they are not able to make a profit. I owned some shares before they went bust and sold in time above 0.35 Canadian.

"The total cost of sales per ounce in the third quarter was $553"
"On October 24 2005, President Steyn Gold Mine purchased put options on USD gold for the period January
2006 to December 2007 on 2,000ozs per month at a flat forward price of $490/oz."
"The Company recorded a gross loss of $5.1 million in the third quarter of 2005"
"At September 30, 2005 the Company's net debt was $32.2 million,"
"46,152,060 common shares outstanding upon completion of the restructuring,"

My calculations show me 411p AVM price at p/e 12 at US$900 gold price and 330p for Thistle. Assuming Taror/Chore success and South African discounts it looks more like 800p AVM and 220p Thistle. That's 700% for AVM and 1000% for Thistle with 0% risk for AVM in the case of falling gold prices and 100% risk in the case of Thistle. If you discount empowerment (25%) the upside of AVM and Thistle is the same.

[jeddah jo] 10/12/2005 03:49

Personally I think the US will be getting very edgy looking at the recent gold price action.

I suspect by far the majority of US economic expansion in recent years has been predicated on cheap credit. Like a junkie, unfortunately it has reached a stage where the US economy now relies and depends on it.

For global central banks to even start to consider to eschew US credit in favour of gold means foreign central banks likely feel they are overweight in US debt and need to diversify.

This only has one consequence, US Interest rates must rise further to attract the foreign capital the US cannot live without. Higher servicing costs for the mountains of debt the US now has would be very bad news for the US economy.

Like an over-mortgaged property buyer there must reach a point where interest rates become so onerous that budgets start to break down. Of course the US does have a mechanism to pay off all the globally held dollar denominated debt. Print lots and lots of them for free!

[holdontight] 10/12/2005 01:50

No it bloody well isn't...report him to ADVFN

[holdontight] 10/12/2005 01:49

??

Are any of you guys in TMG...Thistle Mining? As you will be aware, or maybe not, nearly went bust. Restructured financially and effectively wiped out previous shareholder value. However, last results showed total cost / oz of $510 ish and I am led to believe these are actually down to $460 ish. Production at circa 200000oz/year with huge reserves and resources. Current market cap (roughly) £8 million.....seem incredibly cheap, though high risk still, to me???

If costs are maintained at 460 and POG averages 530 in 2006, then 70 x 200000 = $14 mill profit, which would mean an EPS of between 17p and 20p.

Other than the obvious risk, can someone tell me what i am missing??

[Abuse team] 10/12/2005 01:20

Post removed by ADVFN

[holdontight] 10/12/2005 01:16

Cut and past of one of Energyi's posts from earlier....$30000 POG??!!!!!!
The news of Russian central bank gold buying is getting more press. Either the Russian buying, or the news of the Russians buying, is likely responsible for the recent run up in gold prices.

Analysis: The Russians have $165 billion in their central bank reserves.
500 tonnes x 32,152 oz/tonne = 16,076,000 oz. That's 16 million oz.
At $524/oz., 500 tonnes will be worth $8,423,824,000 That's $8.4 billion dollars.

That's not much money, and it's a lot of gold!

The Russians are only planning on putting 5% of their central bank reserves into gold.

Why is this such a big deal? The world has lots of dollars & not much gold.

Five hundred tonnes is huge in the gold world. World mine supply is a mere 2500 tonnes annually. Total gold mined in all of human history is a mere 150,000 tonnes. Source: gold.org

To put 16 million ounces of gold into context, as to how much that is, Barrick, the second largest gold mining company in the world, hedged, that is, presold, about 13 million oz. of gold at prices around $330/oz. At $524/oz., that's a loss of about $2.5 billion dollars. Barrick could go bankrupt from this "gold debt". If you own Barrick, or any of the other hedged gold miners such as Placer Dome, I strongly recommend that you sell them, and buy unhedged stocks, or exploration companies, or physical metal, instead. Barrick can no longer afford to buy 13 million oz. of gold to settle this gold debt, because it would take more cash than Barrick has.

However, buying 16 million oz. of gold will be no problem for the Russians. They have $165 billion dollars to diversify out of.

Let me continue to put 500 tonnes (16 mil. oz.) into perspective:

European central banks agreed to limit their gold selling to 400 tonnes per year, back in 1999. At this announcement back in the fall of 1999, it caused a $70 spike upwards in the gold price, and you can see this spike on any gold chart. Why the spike? Because people realized that the gold selling (and gold lending) by central banks was going to be slowing down. And it has.

And now it has reversed, and is turning into central bank gold buying.

Argentina, South Korea, & South Africa are also gold buyers now.

And now, China, and perhaps all of Asia!

Here's a news article on that:
Asian central banks likely to increase gold reserves!


The official China news source, the "People's Daily Online", reported that "Asian central banks are likely to increase gold reserves."

Quote: "Russia, Argentina and South Africa have decided this month to increase their gold reserves, which reversed the selling trend in six years by world central banks, especially European ones. It is only a question of time for Asian central banks to follow and buy in gold: they hold 2.6 trillion US dollars in foreign exchange reserves, and able to change more of them into gold as a hedge against US dollar falls."

So, how much gold can $2.6 trillion U.S. dollars, held by Asian central banks, buy? More gold than exists in the world! Remember, all the gold ever mined in the history of the world is 150,000 tonnes.

Let's convert that to ounces, shall we?

all the gold ever mined in the history of the world:
150,000 tonnes x 32,152oz./tonne = 4.8 billion ounces.
At current prices of $524/oz., that's 2.5 trillion dollars!

So, what we have is the Russians buying about $8.4 billion worth of gold, and this is causing the gold price to move up.

And now, Asia is going to spend a portion of $2.6 trillion, that's TRILLION, or $2,600 billion, on gold?

Where do you think gold prices are headed? At this point, guessing a final top is ridiculous, but you can know for certain that in the coming months and years, gold is going to go way, way, way up from here. Probably well beyond $10,000 to $30,000/oz.

And Asia's $2.6 trillion is nothing compared to the size of the bond markets. We have $22 trillion in U.S. bonds that could also be sold for gold. After all, big money is FORCED to seek out returns, and protect itself from being devalued.
And Japan alone has about $10 trillion dollars worth of yen that could also buy gold.

[corrientes] 09/12/2005 22:33

Oh dear - my wife rushed upstairs to tell me that gold price has just made into the national evening news, but the good part is they mentioned GB's folly.Still, whilst the public might take increasing notice they won't buy the story yet. That's for later, considerably later I hope.

[kojak78] 09/12/2005 20:38

@yikyak
My current "bearishness" applies only to Euro gold. I think there aren't any cover stories in the U.S. or in the U.K. so far. Don't forget gold has risen from 315 or so a year ago to current levels of 440 to 450! Everytime when the price advances so fast something has to happen in order to counter the move. Gold rose from 240 to 340 in 1999/2000 and then went sideways for years, perhaps the last upmove is already counterbalanced by that price behaviour. Maximum pain theory could also mean that we go just higher to 900 as that would leave out many of the old gold bugs and traders. After 900 (old tops broken) almost everybody of the oldtimers should be convinced to buy and I guess that would be a very nice correction point back down to 700 or 600 before we go higher into the 4 digits. Made my mind up and will sell only 20% of physical gold vs. Euro on monday.

@jmobrien
I don't know about gold customs in the U.K., at least you should be able to transfer physical in all E.U. countries without customs. However in Germany you have to declare all amounts of cash or valuable art objects if value is above Euro 15000,- when crossing borders. Even without being asked. If you declare how much cash you have (above 15000) a controll message to your local tax office will be written. If you don't declare and the money is found the whole sum can be seized. So it is a bad idea to cross German borders with any amount above Euro 15000. Similar things could apply in the U.K.?

Btw check out www.taxfreegold.co.uk, seems interesting although I don't have any personal experience with them.

[jmobrien] 09/12/2005 17:37

kojak78 Re your post 1454 - as far as you know, are there any customs regulations either bringing gold into the UK or taking it out? Would appreciate your opinion.

[chipperfrd] 09/12/2005 17:27

dixi,

Snap!
I really dislike selling OXS after living with their trials and tribulations for so long but I really do not like the lack of clarity following the news item.

I may go back in if the situation resolves itself (either way), as I cannot envisage going through the current pm bull without at least some OXS.

Chip.

[dixi] 09/12/2005 17:18

Ditto - chipperfrd - I feel that OXS is the more popular stock generally, but the uncertainty of Jerooy led me to do much the same as you with AVM. The Jerooy issue is a right pain with gold as it stands - to hold a gold stock that falls due to political problems with gold so high would be galling - so AVM has had some more of my pot at 97p.

[chipperfrd] 09/12/2005 17:10

Pretty glad that I transferred more into AVM from OXS this week.

It seems to be sticking to a good uptrending support (currently at 95p) so the downside appears very limited yet is already nudging the overhead resistance at around 103.

Have a good weekend :o)
Chip

[budevenwiser] 09/12/2005 16:55

well this is the best chance we will get to breakout next week , this is the first time we have been near breakout coming off oversold indicators as apposed to near breakout at overbought levels and no strengh left the other 2 times
good luck all

[holdontight] 09/12/2005 15:25

If 529 goes, all hell is gonna break loose, apparently!!