Avocet Mining Share Discussion Threads

[chambeaj] 16/11/2005 20:11

Minews Story
Date: November 17, 2005
Avocet Mining Consolidates Position in Central Asia With Deal In Western China

[phillis] 16/11/2005 19:55

You can have mine for 6p!

[hectorp] 16/11/2005 19:17

Get them to buy CDN to increase their future mining opportunities in China.
you can have us for 8p a share.
- ooh Hi Phillis.

[pecker1] 16/11/2005 17:19

Wondering why hold back the results of the 10 hole scout drilling at Idenburg? Maybe further analysis needed and discussion of next stage? Or because they are stonking and merit a separate RNS? If they had been rather disappointing they could have been lumped in with the others and offset by the good exploration results from Bakan and Pusian.

I answered my own speculation with a top-up this morning and hope I'm right!

[yikyak] 16/11/2005 17:01

Last trade of the day @ 97, pathetic.

Sterling cash gold up 2.85%, Avocet down 7% - that's leverage???

[holdontight] 16/11/2005 16:26

Bargain of the bloody century if you ask me.....let's hope some of the China fun rubs off on us too

[phillis] 16/11/2005 16:24

I like:

1/ Expanding reserves
2/ Growth in output
3/ Above average growth in earnings
4/ Ability to hit forecasts

We don't have a full house with AVM yet and -for whatever reason -it's always jam tomorrow.
Perhaps it will be.

[kojak78] 16/11/2005 15:22

If we assume
1. gold price $475
2. ZGC dump leaching reaching full scale production in 2007
3. Jilau waste stripping completed in 2006
4. hedge reductions to continue

net earnings per share for financial 2007 will be 14p or p/e 6.5

[kojak78] 16/11/2005 14:58

@phillis

First half earnings per share were 3.30 cent. What is different in the second half? Still 4000 oz per month delivery into hedges, 80000 oz per half year at spot prices. Cash costs in general terms won't be higher because oil prices are lower and the US$ is stronger. Cash costs for ZGC could come down significantly during the second half because of completed waste stripping. Though we won't bet on that. Cash costs per oz were $289 in the first half. Costs for North Lanut should still come down a few $.

Then we have ZGC dump leaching. 1M tpa. At 0.5g/t and 60% recovery that means 9600 ozpa. Let's assume just one quarter of full production and the other quarter for startup (we're very conservative here). Means 2400 oz @ $200. In the end the best assumption seems to be 107,000 oz @ $280 cash costs. Gold price received climbs to $435 if we assume spot prices of $465. That means cash flow from production in the second half is (435-280)*.107 = 16.585 mio vs. (402-289)*.10427 = 11.78 mio in the first half. That's 4.8 mio more. After tax perhaps 3.2 mio or 3 cent per share more.

So that's 3.3 + 3.3 + 3 = 9.6 cent per share earnings *with* Jilau stripping *with* hedge reductions. Earnings without hedge reductions would have been ca. 13.7 cent. Jilau stripping is perhaps ca. 3 cent net per share per annum.

[yikyak] 16/11/2005 14:14

Sterling cash gold up a massive 2.58% today (£276.86)

Not that the above has anything to do with Avocet of course!

[brad1] 16/11/2005 13:23

Well this appears, at first sight, to be a complete over-reaction to a drop in profits. Production up nicely, hedge reduced - I will break my habit of a lifetime and buy these even though they have dropped in price (ie not going up). Severely undervalued, expansion into China. I need say no more. I have only skimmed over announcement/results so will read thoroughly tonight. I am sure this will bounce back when the actual results have been analysed.

[phillis] 16/11/2005 12:55

Kojak - re your last informed post.
The consensus f/cast for 06 eps is somewhere between 11 and 12 cents depending on exchange rate.
This puts the prospective P/E somewhere north of 15 before this am's pull back

AVM unfortunately won't now hit the forecast for the year

[pecker1] 16/11/2005 11:32

kojak,

re your near-term (4 years) production assets for Bakan. What's particularly encouraging about the Bakan drilling results, apart from grade (47m @ 16.2gt is good, incl. 4m @ 149gt which is bonanza in my book), is that we seem to be talking about a surface and near-surface deposit with minimal waste-stripping and ideal for an open pit.

IMHO, if AVM wanted to fast-track this, they could have a mine up and running by mid 2007.

[kojak78] 16/11/2005 11:06

Right, Avocet isn't the undervalued 300,000 oz producer anymore. Avocet has turned itself into an explorer. We have lots of blue sky potential in the producing assets (IMHO reserves will double or triple before the mines are closed). We have excellent "near term" (4 years) production assets with Taror/Chore and Bakan. We have excellent exploration assets (Idenburg, South Sulawesi, Tajikistan), each with elephant potential. We have corporate deals (Dynasty Gold). We have the right persons and a feasible business model in acquiring and developing assets. I have to admit that I have overestimated Avocet's assets (at least in the near term). But I have underestimated management. I guess Avocet's medium term goal of becoming a 1m oz producer (implying a reserve base of 10m oz) can be reached in 5 or 10 years.

Nonetheless, I am quite shocked that so many people are surprised by the interims. Don't they read corporate press releases? When Dynasty Gold states "Avocet's principal activities are gold mining and exploration in Asia and it currently produces over 200,000 oz of gold per year from its three mining operations in Malaysia, Tajikistan, and Indonesia." what do they expect? Todays interims didn't include anything that could have surprised any informed investor.

[goml] 16/11/2005 10:59

ditto, sold a bit first thing and just bought them back. it was too obvious how the mm's would play this today.

[chipperfrd] 16/11/2005 10:53

SteMiS,

I agree. That is the right way to view these results.
I added this morning.

[stemis] 16/11/2005 10:46

Cost of hedge knocked $3.3m off profits and cost of mining waste from the Jilau Main high wall knocked $3.0m off.

Without these profits would have been 140% higher (i.e 240% of disclosed).

Assuming that impacted EPS in same proportion, thats an EPS of 7.9c (4.5p).

So earnings up, reserves up, controlled expansion into Western China and still Idenburg to come. Looks fine to me!

[phillis] 16/11/2005 10:43

Am not a seller but there comes a time when you have to judge a business on what it ACTUALLY does and not what MIGHT have done if this hadn't happened and that had gone right etc etc ad nauseum
Confirms the general market impression of a rather stodgy performer

[deswalker] 16/11/2005 10:40

Results look good to me.

Numbers also look fine to me. Get rid of the hedge and the excess waste at ZGC and things look a whole lot better. Clearly costs have risen rapidly but then that is why I own oil and base metal shares too.

Loads of different projects being developed (some of which I'd never heard of before) and all seem to be yielding positive results. Idenburg drilling results to follow soon so fingers crossed there.

Happy to keep holding for another six months.

[yikyak] 16/11/2005 09:50

kojak - I agree completely, hedge reductions are a priority and the interims are ok considering. Doesn't stop the market makers from flushing out the weaker hands though for the next run up. I won't get into my usual rant about the London market but needless to say watching the price this morning they continued to chop the price despite zero volume going through in anticipation of triggering sales, it worked, not that well - but it did work.

We will end up around 3%-4% down on the day I suspect and what was highlighted only increases the numbers of investors deserting the London market and trading succesfully on the North American and Australian markets instead.

Sterling gold getting ready for 10 year breakout, currently @ £272.

[holdontight] 16/11/2005 09:40

Will the real kojak please stand up! I agree however with your summary. Share price will no doubt fall back some, but still plenty of positives to be taken from results. Production is rising, hedge is reducing and reserves and resources increasing. I will add today.

[kojak78] 16/11/2005 09:30

I don't understand it. Why wonder about less earnings when people were demanding hedge reductions in the first place? Interims are quite good, in fact I expected US$290 cash costs and 220,000 oz in production.

North Lanut is on track, 50,000 oz @ sub US$200. Penjom reserves increased to 560,000 oz @ sub US$200 (410000 @ US$235 and 150,000 oz @ US$100 cash costs).
ZGC suffered because of waste removal. Without that cash costs would have been US$500. 86% recovery and lower grades.. with 90% recovery and 50% higher grades cash costs would be US$320.

I expect current operations to stabilize at 120000@235 + 52000@195 + 54000@320 = 226000@246 without taking into account Penjoms US$100 cash costs for the stockpiles which will probably processed at the end of operations or could be used to lower or stabilize cash costs in the future.

[phillis] 16/11/2005 08:56

The one is connected to the other

[bionicdog] 16/11/2005 08:32

Personally I'm not really worried about EPS at present (there are good reasons for it) , but the thread title is more than a little in doubt.