Avocet Mining Share Discussion Threads

[buywell2] 25/2/2013 09:43

Why would anyone want to buy the WEGA assets that have dragged AVM under

The AVM BOD overpaid to the African assets , production costs have rocketed and the grades are poor

WEGA offloaded a PILE at premium prices


Mali is a major problem that threatens to overflow into Burkina Faso as the flow of refugees suggests







Donald_Tramp
23 Feb'13 - 18:42 - 1061 of 1061 0 0


RSI showing oversold. Seems overdone imho. A bid would fill the gap. Any positive news on hedge book reduction would also move share price to gap. Sentiment could change very quickly.

[donald_tramp] 23/2/2013 18:42

RSI showing oversold. Seems overdone imho. A bid would fill the gap. Any positive news on hedge book reduction would also move share price to gap. Sentiment could change very quickly.

[lukeisbackontrack] 21/2/2013 17:13

I am a buyer at 10p ThanksL

[onceabroker] 21/2/2013 16:14

AVOCET MINING - GEARING UP FOR A CONVICTION BUY PIECE IN THE NEXT EDITION OF OUR MAGAZINE

POSTED ON WEDNESDAY, FEBRUARY 20, 2013 AT 9:13PM


Regular readers will know that we were somewhat scathing of our competitors round at Shares Magazine following their misleading calculations over the hedge book liability in a piece they published last week (see here -

) and that we note has been corrected now.

We are covering AVM extensively in the next edition of our magazine, out at the end of next week in which we reason for the Buy case. Here's a snippet -

It looks like they are going to bite the bullet on the hedge, and with a hedged price of $950 and a current gold price of $1600 (ironically the falling gold price actually helps them out here as it reduces the buy-back cost of the hedge) then on 173,250 oz's, the cost of the entire buy back is around $112m. Of course they currently have circa $60m in cash and so if they bought back pro rata the reduction in reserves on the hedge (50% of this - approx $56m) then the net cost would be covered entirely by the cash. This would however leave a relatively flimsy balance sheet and hence the speculation that a capital raising is imminent. The difference to the P&L profile going forward would be somewhat enhanced though as they would be able to sell their gold production at the prevailing market price. In effect, Avocet, should they buy back the hedge in part or whole, would be making a call that the gold price is actually going to go higher.

Let's look at the company another way, weighing up the Avocet's asset base adjusted for both the hedge book loss and the Inata reserves reduction. The balance sheet lists the mines value at $270m, let's be ultra conservative and cut this by one third. We also, in this exercise, write the intangibles down to zero and which is in the books at $50m. We are therefore reducing book value by $140m and which pre the write down is listed at $390M.

This results in an adjusted book value of $250m. Deduct again the hedge liability of $112m, and we get to $138m or around £90m at present FX rates - twice the current market cap.

However I slice and dice the numbers, it seems that for existing shareholders, if a rights issue is called for, and likely to be a 1 for 1 with a partial hedge buy back, then you should certainly take up your right. I see a similar situation to the Lonmin situation in which the shares shot up after the balance sheet was repaired. The company's profitability profile going forward will be dramatically enhanced and the discount to book value should narrow (its peer group trades around 0.8 times book on average).

Of course there is the very high probability of a bid an a price of 40-45p would still be an utter steal in many analysts eyes.

We are highlighting this today as we have an uncanny habit of writing about a stock only for it to rise in the days ahead of the publication. The price action yesterday and today smells of a drying up of the indiscriminate selling pressure, largely by Blackrock. The key level to close above is 23.75p and we may have a run back towards the open low at 30p on the morning of the shock announcement last week. If we can get through 24p on decent volume then there may be something in the bid talk as, at this level - less than one half of tangible, hedge adjusted book value there is latent value however you splice and dice it.

The declining gold price in the short term alleviates the cost of the hedge buy back and so is ironically a good thing for AVM.

The only tempering issue is the Vampire Squid, Goldman Sucks moving from Sell to Neutral! I like it when they are sellers as it usually means Buy!!

[hudson64] 21/2/2013 15:48

SB It wont open my end

[caw0909] 21/2/2013 11:47

Down 2% and change with fair volumes. Looks like people have lost patience. Might be worth bailing though GingerPlant is right...classic 'do or die' investment.

[ninja 19] 20/2/2013 20:00

My target is 5.27p

[bookbroker] 20/2/2013 11:56

Yeah, original hols rec. at around 70p, hardly sticking their necks out to upgrade when stock already lost two thirds of value!

[gingerplant] 20/2/2013 09:03

Well - I'm in for a death or glory punt; whichever appears first 70p or zilch!

[onceabroker] 20/2/2013 09:01

Headline: DJ MARKET TALK: Goldman Upgrades Avocet Mining, Cuts Amara Mining
Date/Time: 20/02/13 07:47:06-GMT ¥
Codes: AMA.LN AMZ.T AVM.LN GB0000663038 GB00B04M1L91 I/GLD I/PCS I/UKSC I/XDJGI 5005 N/DJG N/DJGS N/DJI N/DJQS N/DN N/ECR N/UKMR N/WED N/WER N/ALMT N/ANL N/ARG N/CNW N/DJMT N/DJWI N/ENTR N/GMS N/STK M/BSC M/NND P/AEQI P/EQE P/PSH P/UKMC R/EC R/EU R/UK R/WEU


0747 GMT [Dow Jones] Goldman Sachs upgrades Avocet Mining (AVM.LN) to neutral from sell. It says the move follows significant underperformance. It notes since being added to the sell list in Nov. 2012, the shares are down 68% versus the FTSE World Europe's rise of 14%. Still, it says Avocet is a poorly positioned company and faces a tough task restoring investor confidence after a series of disappointing results. Goldman lowers its target price for Avocet to 30p from 55p. It downgrades Amara Mining (AMA.LN) to neutral from buy and lowers its target price to 55p from 90p, owing to uncertainty over the company's transition to processing ore from the Sega deposit. But Goldman still considers the company's flagship project Boamahun to be a high-quality asset. Avocet shares closed Tuesday at 22p and Amara closed at 43p.

[insails] 20/2/2013 08:19

Goldman upgrade, Sell to Hold

[ccr1958] 18/2/2013 11:01

wtf have i bought here for ? ccr.

[empirestate] 18/2/2013 09:26

so with all that cash on the balance sheet, supposedly, why are they looking to raise more money? soz if am not up to speed on this one.

[pineapple1] 17/2/2013 15:23

AVM gets a mention in this article about a transaction with Perth Mint filed at the indonesian stock exchange

[purple11] 16/2/2013 20:12

I suppose we have to wait until the stock rises 5% before we get the obligatory 60 proceeding posts an hour.

[purple11] 15/2/2013 16:14

that depends what price you bought at. @25p im happy to buy.will see where we are in 6 months.
theres a lot of panic about and ppl giving away their stock i'm mr capitulation taking them off them.atb

[buywell2] 15/2/2013 15:51

Avocet Mining plummets on resource downgrade




By Darshini Shah | Thu, 14/02/2013 - 09:32






Shares in Avocet Mining (AVM) plunged 40% after the company downgraded the mineral reserve at its Inata gold mine in Burkina Faso, resulting in a "significant" non-cash impairment.

The new mineral reserve is likely to be between 0.9 and 1.2 million ounces (Moz) as at 31 December 2012, compared to the previous mineral reserve of 1.85 Moz as at 31 December 2011.

However, the company stressed the reserve was based on the mineral resource within the Inata mining licence area, which did not include the Souma deposit, 20 kilometres east of Inata, where a mineral resource of over 500,000 ounces already exists.

The lower end of the re-estimate range is based on pit shells run at a gold price of $1,200 per ounce, while the higher end of the range is based on pit shells run at a gold price of $1,400 per ounce.

Looking ahead, production in 2013 is now expected to be approximately 135,000 ounces, similar to that achieved in 2012. Cash costs in 2013, including royalty payments, are expected to be in the range of between $1,050 and $1,100 (£905 and £948) per ounce.

However, the company stressed production in subsequent years, through to the end of the life of mine in about 2020, is likely to be in the order of 100,000 ounces per year, pointing out that this may change the following development of Souma.

As a consequence of these developments, Avocet is engaged in discussions with Macquarie Bank regarding hedge arrangements at Inata, including the restricted cash at Société des Mines de Bélahouro (SMB), the company's trading subsidiary which holds Inata, which was disclosed in its third-quarter accounts as $38.3 million at 30 September 2012.

"Avocet believes that in order to increase cash flow generation at Inata and maximise funds returned from SMB to finance corporate activities and support the company's investment plans at other projects, it is necessary to reduce the hedge book substantially as soon as possible," the company said. It added that it was in discussion with MBL regarding arrangements to ease near-term liquidity constraints at Avocet.

Analyst view

"This is yet another disappointing result from Avocet and raises further significant concerns over the asset base," commented analysts at Investec. "Clearly, the need to clear the hedge book, as the production outlook may be less than previously expected, is a major issue."

They noted Avocet did have a "strong" balance sheet, but cautioned: "Indications are that this is not enough."

Interactive Investor view

Shares in the company have plummeted almost 90% over the past year. But while the company continues to look undervalued, it will need to demonstrate operational performance for a re-rating to ensue.

Having done so well to rebuild investor confidence with the disposal of its underperforming south-east Asian assets, it will once again take some time before investors can regain confidence in Avocet's ability to hit its targets in both production and costs.

[buywell2] 15/2/2013 15:48

When the ex WEGA Director sold all his 47m of AVM shares at 200p in March 2012 after getting them for selling Avocet the Burkina Faso mine and Mali prospect

Folks should have followed his lead


He got a great deal and the AVM shareholders bought a crock

[onceabroker] 15/2/2013 09:23

Google Avocet mining (last hour news)

ADVFN will not allow another competitors name! you will find its no small player in the magazine world, so basic research first before you come to your conclusion.

Best regards

John

[bookbroker] 15/2/2013 09:20

And by the way, what is the web domain address, seems there's a dash in place of the site!