Avocet Mining Share Discussion Threads

[jmobrien] 30/7/2005 15:03

FWIW I am a long term holder (since 2001) of AVM and have previously received 212 notices dated 24/7/2002, 22/04/2003, 15/07/2003 and 11/01/2005.

Letter states 'You have the right to apply to have this entry removed or corrected....... if the information on the basis of which the entry was made is incorrect.'

I presumed it was a kind of audit which might support goml's shorting theory. From memory, I believe the latest accounts recently issued mentioned that they did not have any imminent acquisition in mind... this would seem to contradict the M&A idea.

AVM is the only shareholding for which I've ever received a section 212.

[pecker1] 30/7/2005 11:33

goml,

Interesting stuff. The best way to find out if this is about shorting is to phone Jonathan Henry and ask him.

Frankly, as shareholders of fairly illiquid mining stocks, we should have our holdings in certificated form, precisely to prevent them being lent out to shorters by Barclays or whoever the nominees are. Hassle I know but very much in our interest.Maybe not possible in a SIPP? Will ask around when I get back from hols.

[goml] 30/7/2005 10:34

Thanks chaps. I'm sure Phillis wasn't trying to be rude, he/she probably just has a dry sense of humour and I can appreciate that.

Anyway, I was going to observe, that it is, without doubt, entirely possible for someone with stock in a nominee account to be unaware their stock can be loaned-out for others to sell (i.e. go short). Some brokers require you to tell them if you DON'T agree with that happening.

If that HAD happened, then the nominee account WOULD show a reduction in stock because shares would have really been sold from it. So probably the S212 notice would only seek clarification on the beneficial owner of the remaining holding, i.e. the amount listed in the register at the time when the noticies went out.

Thus the true beneficial owner would remain blissfully unaware that his 'holding' had been sold, because as far as he's concerned his broker' statements continue to show that he has the stock he originally bought. The risk then, would exist for the broker and his 'short' client, not the 'long' client, since the broker would always have to guarantee the benefit of the long position of his 'long' client.

I'm trying not to tie myself in knots this time, but what I think I'm saying is that Phillis is right. My speculative explanation for how S212's might expose a short position is....in fact....tosh.

:-)

PS chaps, I still think it's paving the way for some kind of Merger and Acquisition activity.

[andy] 29/7/2005 22:54

goml,

Thanks for a decent post, at least it sparked some thoughts, and hopefully if someone knows better, an informed response.

[chipperfrd] 29/7/2005 20:54

goml - must admit I thought that was a bit ungracious as you had made a really good effort and loads of typing. fwiw I found your post of interest.

All the best.

[goml] 29/7/2005 17:38

LOL. fine, all that hard work for nowt !

[phillis] 29/7/2005 16:16

Tosh I think

[jk8] 29/7/2005 16:16

...well all the recent selling may be indicative of some sort of fund raising. Of course, us small investors are always the last to find out!

[goml] 29/7/2005 15:04

Phillis,

I mentioned that first possibility of my list, because that was the explanation given to me by another company I had shares in many moons ago who also issued 212 notices. I confess I havn't thought the mechanism through (obviously in the case of ‘options 2 & 3’ it’s a little more transparent), but I'll speculate for you (unless you already know the truth and just want to watch me struggle ;-) .

The registrar keeps the details of the registered holders of all the company’s issued shares. They also receive a report when shares are sold in the market so they know if the numbers of shares sold exceeds the number of issued shares. So they know if a large short position is being built. ‘Large’ short positions are presumably the only ‘kind’ that would matter to a company, on the basis that they can distort the market and create a false shareprice. And large short positions can only reasonably be built up with loaned stock, and bearing in mind that the Registrar will also have a chronological history of stock ownership in the company, they will *probably* be able to identify an equivalent reduction in holding over the same timescale. If such an owner of stock has not notified the company of the reduction in their beneficial interest it may be because from they’re point of view they havn’t had such a reduction (they may merely hold stock with a broker who ‘lends out’ stock for the purpose of shorting), indeed they may be entirely unaware that their stock had been lent out. Bear with me here Phillis because I may be struggling even more. I think that S212 may NOT reveal the identity of short interest but may simply force the hand of dealers in loaned out stock because they will have to respond to the S212 notice stating that party A has X shares but it won’t necessarily tally with the share register because they have lent them to party B who has sold them. Any good or complete garbage?

Edit, just to add, that if party A IS unaware, the company could let them know that their stock has been loaned and they could demand it back forcing the closure of short position.

[phillis] 29/7/2005 12:47

Goml-explain please how a 212 exposes a short positon

[goml] 29/7/2005 09:39

Interesting, there are a number of reasons for S212 notices.

Sometimes if a company suspects their shares are being seriously shorted they will issue 212's to try and expose the position, unlikely in this case I would say.

Sometimes, the opposite to the above, i.e. if they believe a long position is being built under trusts and nominees without the necessary declarations to the company (eg. prelude to a hostile takeover) then the 212's should reveal beneficial interest underlying such blind holdings. More likely than the above but again I don't really think so.

Sometimes, 212's go out before fund raisings. In AVM's case, the only possible reason they may want to raise funds would be for a serious aquisition as they already have authority to issue more shares for that purpose. Or may be the two are linked. This is where my money is (both literally and metaphorically), I reckon some kind of M&A activity is on the way.

[phillis] 29/7/2005 09:03

Received a letter from AVM's registrars yesterday. Apparently Baclays Nominees who hold my shares were 212ed by AVM
Strange thing to do since every Co Sec must now that the Barclays holding is for the rag bag of PIs such as ourselves.
On the other hand maybe the Co is trying to pin down some unknown holding....

[mr ashley james] 28/7/2005 22:47

Rumours are abounding in the London Stock Market that Johnathan Henry has learnt to spend money on Public Relations (and a Portable M&S Sense of Humour Kit)

These rumours are highly unlikely to be true and well worth taking with a pinch of Tajikistan Camel Dung, but certainly worth mentioning in a tedious World.

How fair-est the Flat Footed Mud Warbler?

Cheers

Ash:)

[bangor] 28/7/2005 17:07

Cheers bionicdog

hopefully others can stop rising to the bait.

[bionicdog] 28/7/2005 16:35

Bangor
There is a new biswell proof thread that everyone else uses , that's why he keeps bringing these old ones up.

[bangor] 28/7/2005 15:43

This was once a useful thread. Pity to see it spoiled by responses to biswell when filtering him/her would save everyone wasted reading time.

[biswell] 28/7/2005 15:38

Look back on the thread you lazy git , it's all there

TOBIE_1 - 26 Jun'05 - 11:06 - 5159 of 5161


why, did it in when they moved the target to 2006 from 2005?

[kojak78] 26/7/2005 23:19

no, they have sold it all just back in February. 3.3 mio shares and 2 or 3 mio in loans as far as I can remember. Very unfortunate timing.

Today it would be worth 6 or 7 mio. And if Avocet still had the tungsten mine the gold assets would be valued still lower, who knows.

This is just an example. Tungsten business nothing worth to Avocet. Once it is sold it's suddenly worth 15 mio market cap and probably rising to much more.

Another such an example is the Idenburg property. I could very well imagine a North American miner with nothing else than the Idenburg property selling for dozens of mio.

While Primary Metals was a perfect buy for the lucky gambler (nobody could have guessed the price would triple after 20 years in a range) Avocet is the sure bet for the investor, far more profitable in the long run.

[goml] 26/7/2005 21:40

kojak, please remind us what AVM's current interest in the Tungsten Operation is. Are they minority shareholders in Primary Metals?

[kojak78] 26/7/2005 18:50

Just looked it up: The mine has 1 mio mtu resources. That means ca. 10 years production. current price: 290, cash costs 80, margin 210. Undiscounted cash flow 210 mio.

[kojak78] 26/7/2005 18:21

Remember Avocet before ZGC? 64 mio shares, Penjom 130000 oz, North Lanut 60000 oz. At US$180/oz?

That would translate at US$28 mio net earnings + 8 mio from tungsten operations. US$36 mio in 2006 and US$0.56/share. That means we would have a 2006 p/e of 2.2 at current gold prices. Very likely Avocet would trade at 300p just now..

[kojak78] 26/7/2005 18:07

That's the stuff Avocet is made of:

Primary Metals owns the former Tungsten mine of Avocet in Portugal. In February they decided to close the mine. They had 2 mio Euros costs per quarter and only 1.5 mio in revenue from tungsten per quarter. Suddenly tungsten prices trippled(!!). Now they have revenue of 4.5 mio Euro per annum and still 2 mio in costs. 2.5 mio Euros cash flow per quarter. 1.75 mio potential net earnings per quarter. 7 mio Euro net earnings per year. Market cap is ca. Euro 10 mio after making +500% this year. So a p/e of ca. 1.5 now.

The folks that bought back in February have bought at a p/e of just 0.25, incredible.

The mine could well be worth Euro 100 mio because it seems to be a very long life operation still operating after 100 years..

Nearly all of Avocet's market cap and they nearly threw it away for free.

[spooky] 25/7/2005 12:08

I haven't traded in these for quite a while but i do follow the stock.There was obviously something in the results which has caused one of the larger holders to throw a wobbly,does anyone have any idea what it may be.

[kojak78] 25/7/2005 10:45

Remember Thistle Mining? President Steyn operations in SA with ca. 220000 oz in production? Went bankrupt.
Now the company is out of bankruptcy. It's burning US$20 mio a your, though. They want to lay off 38% of the workforce so production should slow down to 135000 oz.

Well, that company has a market cap of US$40 mio.

Assuming a fair p/e of 10 Thistle is pricing in gold prices of US$550 to 600.

Assuming a p/e of 10 for Avocet at those gold prices we should have a share price between 280p and 470p.

Selling 74% below a bankrupt company???