Avocet Mining Share Discussion Threads

[brad1] 13/2/2006 15:34

Am waiting for support to be found before topping up again. Large rise recently so half expected pullback, but I do not think any cause for concern. Mining sector taking a bit of a hit at the moment but cannot see this lasting for too long. Even if it did Avocet now have their position covered so will always be selling for a minimum price for next three years - therefore a lot of risk taken away. So more than happy to hold for however long.

[trader horne] 10/2/2006 12:45

Chip, thanks for the minweb rank table - great!
But a bit hard to understand: MINMET rank 8 $.02 change -48% ,
do the lower numbers means rubbish?

[kojak78] 10/2/2006 11:47

Assuming taror and Chore feasibility will fail.. that would mean AVM won't need 30 or 50 mio in cash to fund the mines so more profits will be available to be distributed as a dividend. I expect AVM to pay a symbolic dividend this year. Next year they could pay a huge dividend. Let's say 33 mio net profit, retain 10 mio for opprotunities/future capex (Bakan) and pay 23 mio dividend, 12.5p per share or over 9%.

[kojak78] 10/2/2006 10:26

I use production statistics of www.goldsheetlinks.com, trailing 12 months production. AVM figures aren't updated yet, they still show 172 or so instead of 217. Don't know if Peter Hambro numbers are up to date, so it could be that the rankings are slightly different.

[chipperfrd] 09/2/2006 21:37

Trader Horne,

You can see a table on Mineweb ....


Can be re-ordered by clicking the column headings.
Some of the data appears a bit dodgy/in error!

Chip

[pecker1] 09/2/2006 20:31

IMHO, there is another explanation for the absence of any promotion, namely that AVM are very much on a learning curve and are yet to feel confident that they have mastered what they are doing, particularly in Tajikistan. I remember Catchpole at an AGM waxing lyrical about using the old Russian transport equipment because it was very robust, cheap etc and employing local managers and companies everywhere, eg at Lanut.

Well, if you read the AR carefully, you'll see that has all changed. Skilled and competent expatriate managers and Western technology have been brought in to turn round these operations. And, sensibly, they got Gordon Toll to join the board. Lanut is now a success and the jury is still out on Tajikistan. When they have turned this round I expect we will see a new, more confident AVM emerge.

[trader horne] 09/2/2006 20:30

I used to check stock rankings on yahoo but that feature has sadly disappeared.
Where do you get yours, Kojak?

[holdontight] 09/2/2006 20:05

Sorry K, dont follow you (am I having a slow day today?!)......AVM BEFORE Peter Hambro......on what list is that?

[kojak78] 09/2/2006 19:53

Just had to laugh, isn't it funny. How many people know Avocet, even in the gold world? Then you take a look at all gold producers of this world (inclusive of the big ones that mine other stuff) and find Avocet on rank 36 before such names as BHP Billiton, Peter Hambro, Western Areas, Golden Star, Highland Gold, Oxus, Coeur d'Alene, Kingsgate, Hecla, Phelps Dodge, Yamana, Inco, Crystallex..

[holdontight] 09/2/2006 19:39

K: So what we have is a stock in the st is going to, to a certain extent, reflect the movement of pog and in the longer term (12 mnths ish) reflect the exploration. With ZGC increased prod and lower costs to expect in 6 months. Response to pog now a little more restricted due to derivatives position.

So movement is, lets just say, "controlled"....I could have written "contrived", which would reflect C's post above to an extent! But in a bull market for the commodity concerned. A gold stock for orphans and widows, perhaps! Which is fine, of course!

[holdontight] 09/2/2006 19:32

I agree with you 100%, now I understand what you are saying!

[corrientes] 09/2/2006 19:19

Maximising shareholder value is what we all want, but I suggest that management
thinks much longer term that we do and would wish for. Nice fat salaries and benefits for the Board et al.Why rock the boat. Of all people, the Chairman should be pushing hard with his very large shareholding, but the poor PR over a long period is sufficient proof of a sinecure. They can play this game because they know that the way the shares are held would thwart any hostile takeover bid to release value. Anyway that's my opinion which I've held for a long time, but like you I wish they'd get their skates on. But then over the past few years I've made a packet holding short and long term, so in fact you can use this management policy to your advantage.

[kojak78] 09/2/2006 19:06

Holdontight, Avocet is very very hard to put a value on. One thing is the reserve model. Gold price minus cash costs times reserves. That model shows very overvalued ratings compared to normal stocks (we have capital costs, taxes etc.), but most analysts forget that gold stocks are options on the gold price, too. They are something special. Then we have the fact that gold holds its value over time. So no discounted cash flow model, in the real world interest rates are 1 to maximum 2% (on gold and now perhaps real rates). The current interest rates in the western world are close to zero as shown by the gold lease rate, in a perfect world gold lease rate = real interest rate after inflation.

That model shows us 1.8 mio oz in reserves (though not JORC as we mine some inferred stuff at Penjom). Cash costs on average are perhaps 300 for Tajikistan (after resctructuring), 200 for Penjom (no nasty surprises, majority in stockpiles now) and say 180 for North Lanut, all in all ca. 250 (Tajikistan has 50% of reserves) or for conservative valuations 270.

That leaves us with 277p per share.

Now one must adress another issue. Some mines are just mines. Some miners have good business models, they explore (even grassroots), build and extract. Such miners should/could be valued at p/e ratios or production. I think AVM is such a miner (like Normandy, Newmont and a few others).

Then comes Taror/Chore. Idenburg. Here we deal with probabilities and how much money we should put on it. 12 to 15 months from now probabilities will become fact with Taror/Chore feasibility.

[holdontight] 09/2/2006 17:39

Sorry mate, you lost me with the word "sinecure"!
Since when has maximising shareholder value not been THE main focus of any listed company?

[corrientes] 09/2/2006 17:35

The objectives of management and the small shareholders are diametrically opposed. If you have a sinecure you don't want publicity.This has always been my view, but overall for a small investor it's still a good investment.

[holdontight] 09/2/2006 17:15

AVM is worth 3 times what it is today, not 2 (your own valuation calculation basis Kojak). The ability of Catchpole to capture the market's attention and imagination is poor. There are other stocks out there that look interesting now never mind 2 or 3 years down the line. Catchpole has a responsibility to maximise shareholder return and this is what I wrote to him about. No response after 2 months is further evidence of this shortcoming on his part. Note I say "maximise" not just "increase". Over a 7 year period, the return is still negative, is it not!?!

As a group of people, we do more to promote the company than he does, imo.

[kojak78] 09/2/2006 16:21

A very likely scenario. There are some gaps above 200 left to be filled. And of course without Taror/Chore (the big if) Avocet isn't worth that much more than now, only 100% instead of several hundred percent.

[brad1] 09/2/2006 15:56

Well the share price is still very close to 8 year high and it will only take some half decent news from exploration operations (due fairly shortly according to the interims) for this high to be broken then all-time high will be next target. The share price does not seam to go crazy (confusing sometimes)- however 10 bagger in just over 3 years is not bad. I will predict all-time high challenged by end of year assuming no crazy rise in gold price.

[holdontight] 09/2/2006 15:17

Yep, continued underperformance. I wrote to Catchpole about 2 mnths ago about it and no response whatsoever received.

[kojak78] 09/2/2006 14:49

HUI 325 vs AVM 135, relative performance -15%

[kojak78] 08/2/2006 20:18

At least my other major holding, MFN, is doing well today. Nonetheless MFN is more expensive than AVM. I would have preferred MFN going down 5% and AVM going up 5% today.

[kojak78] 08/2/2006 16:49

only a shade off?? yes, but after not rising the 10% the HUI made after AVM reached 145p. HUI 300 = AVM 145p, now HUI 315 = AVM 135p

[trader horne] 08/2/2006 16:48

everything is taking a caning this week , but AVM and KMR only a shade off, looking at the big picture. Staying long.

[kojak78] 08/2/2006 15:38

Under normal circumstances AVM should have risen to 160 and then declined back to 145, not 133. Unfortunately AVM isn't the typical HUI stock..