Avocet Mining Share Discussion Threads

[saucepan] 20/4/2006 14:32

Thanks, Kojak

[supersturrock] 20/4/2006 14:23

Already doubled on this one but Kojak has sweet talked me into a small top - up. Just feel this will eventually get to 400p.

[kojak78] 20/4/2006 14:02

One of the best information available for gold stocks IMO, I've excluded the big mining houses and Chinese miners which are not investment grade IMO. Then a few calculations..

[saucepan] 20/4/2006 13:21

Yes, very interesting analysis Kojak; thanks. Where or how do you do your data "mining" of this kind?

[bestbuddy] 20/4/2006 12:44

Nice post Kojak

[bestbuddy] 20/4/2006 12:44

Nice post Kojak

[kojak78] 20/4/2006 12:30

Now the same list containing only the companies that have increased production recently:

1. Barrick
2. Newmont
3. Buenaventura
4. Newcrest
5. Goldcorp
6. Centerra Gold
7. Iamgold
8. Glamis Gold
9. Randgold
10. Bema Gold
11. Peter Hambro
12. Avocet
13. Golden Star
14. Oxiana
15. St. Barbara
16. Oxus

Now sorted by percentage increase of T12 vs. P12 (P12 = Previous 12 months trailing production T12 = Last 12 month trailing production):

1. St. Barbara 1687.6%
2. Glamis Gold 85.1%
3. Newcrest 64.4%
4. Oxiana 41.9%
5. Golden Star 35.9%
6. Peter Hambro 35%
7. Randgold 28.1%
8. Avocet 24.5%
9. Centerra Gold 22.9%
10. Bema Gold 11.8%
11. Oxus 8.7%
12. Buenaventura 7.7%
13. Barrick 5.6%
14. Newmont 3.4%
15. Iamgold 3.4%
16. Goldcorp 1.9%

Now miners with more than 10% production increase sorted by market cap/production oz in ascending order:

1. Avocet $1842/oz
2. St. Barbara $2092/oz
3. Golden Star $3527/oz
4. Centerra Gold $3781/oz
5. Newcrest $4064/oz
6. Randgold $6260/oz
7. Peter Hambro $8865/oz
8. Bema Gold $9300/oz
9. Glamis Gold $11682/oz
10. Oxiana 15635$/oz (copper miner)

Average (excl. Oxiana): $5713/oz
Avocet discount to average: 67.8%
Price target for average valuation: 633p

I think I have clearly demonstrated that Avocet has the best risk/reward ratio of all producing gold stocks. There may be better ones but those are building mines now and a lot can go wrong until they reach production (Yamana for instance).

[references] 20/4/2006 12:05

No it is not ISA-able

Kojak - it would then be interetsing to see them in market cap order!

[robow] 20/4/2006 12:00

is this share ISAable

[kojak78] 20/4/2006 11:46

World's investable primary gold mining companies sorted by size (annualized production):

1. Barrick
2. Newmont
3. Anglogold
4. Gold Fields
5. Harmony
6. Buenaventura
7. Kinross
8. Newcrest
9. Goldcorp
10. Centerra Gold
11. Cambior
12. Lihir
13. DRDGold
14. Iamgold
15. Glamis Gold
16. Meridian
17. Resolute
18. Northgate
19. Randgold
20. Bema Gold
21. Agnico Eagle
22. Peter Hambro
23. Western Areas
24. Avocet
25. Queenstake
26. Golden Star
27. Oxiana
28. St. Barbara
29. Oceana
30. Highland Gold
31. Oxus

500,000 ozs would catapult Avocet to rang 14. Rang 4b could be taken by Freeport if one considers them as gold miners.

[kojak78] 20/4/2006 11:35

SteMis

"Gold Stock Analyst, the average value placed on 'ounces in the ground' in 2005 was $120 for second tier companies about to start production"

That sums it up. Now gold prices are $200 higher. Avocet is not a second tier company about to start production.

IMHO we're in the same league as Gammon, Yamana, Glamis, Minefinders and perhaps even Agnico. I don't see any reason why we should accept fire-sale prices when every other company is valued much higher. Even Minefinders is now valued higher and they won't produce until mid 2007 and then only at ultra-high costs because of heap leaching taking a long time to get up to full scale production.

[corrientes] 20/4/2006 09:31

1980 = Afganistan ; 26 years later = Iran. See the similarity ? I feel that the huge Au spikes aren't there yet,so no problem at this time. Whether this huge wall of money inflating all asset types is going to diminish and more importantly have an effect on commodities, I wouldn't know, but OECD forecasts suggest this worry will stay on the back burner for some time.

[chipperfrd] 20/4/2006 09:30

SteMis - I use a set of percentages that seem to be a de-facto industry standard which are very close to the figures you quote.

Exploration ... Development ... Production ... Corporate
2.4% .......... 11.4% ......... 20.8% ........ 27.7%

Using current pog of $640 gives:

$15/oz ........ $73/oz ........ $133/oz ...... $177/oz

Although conservative valuations would likely use an average pog some way below the currrent price.

Chip

[kojak78] 20/4/2006 09:22

Could mean the U.S. is going to attack Iran. The result for the gold price would be obvious, it would go back at least to 600 in a "sell on the news" style. But gold shares are pricing in gold price 600 or even lower. AVM did cost 208p when the HUI was at 340 afaik, now HUI is at 385.

[stemis] 20/4/2006 09:20

I can only warn against using $120/oz valuation levels, take a look at GRS, AUY etc. and you'll see one reserve oz does cost $300 to $450.

The dangers of re-producing posts out of context, I'm afraid. The $120/oz are not my figures. I was actually responding to a post which used the following as a yardstick

"According to figures compiled by Galahad Gold and sourced from broker reports and the publication Gold Stock Analyst, the average value placed on 'ounces in the ground' in 2005 was $120 for second tier companies about to start production, $50 an ounce for those with resources that had been measured and/or indicated, and $32 an ounce for those with simply inferred resources. This compares with an average gold price for 2005 of $444, making the respective percentages 27%, 11.2%, and 7.2% – not too far from those quoted earlier."

[holdontightuk] 20/4/2006 09:10

K.....not so sure about the pull back to 600......broke resistance at 628 like it was not even there......could be up to 680 ish first, imo. Looks incredibly strong.

[holdontightuk] 20/4/2006 09:09

Here's a link to MCR valuation which is now out of date......AVM is used as one of the yardsticks.

[kojak78] 20/4/2006 09:03

Selling MFN yesterday was a huge mistake. Bought 4000 AVM shares, now 106000, today. At these gold prices HUI should be at 450, not 385.

MFN is worth less than AVM, both shares had the same market cap. Now MFN has 51m shares f.d., at $9.63 share price that's $490m, translates into 255p AVm share price at least.

I'm going to buy another 2000 shares in the afternoon.

I guess gold will correct back to 600 soon while the gold shares will continue to rise just as back in December.

IMHO 280p to 350p *now* would be something AVM should trade at, still way below fair value. I can only warn against using $120/oz valuation levels, take a look at GRS, AUY etc. and you'll see one reserve oz does cost $300 to $450.

How could I be so foolish to not buy more AVM shares?

[holdontightuk] 20/4/2006 08:45

C, I know that you dont like me doing this and I do respect your views. However, I wish you had done the same with Kirkland Lake 6 mnths ago.....btw, MCR up 10% so far.

This gold move since late 05 is truely astounding......now $200/0z up....wow!

[stemis] 20/4/2006 08:44

If anyone is interested I posted the following on TMF yesterday about valuing AVM
--------------------------------------------------------------------
Interesting discussion.

I hold Avocet Mining, whose market capitalisation at 202p is $375M.

Evolution's recent note (18 April)



sets their attributable reserves and resources, based on information in the 2005 interims, at M oz
Reserves 1.35
Other M&I 3.47
Inferred 1.65
Total 6.47Using $120/oz for reserves, $50/oz for other M&I and $32/oz for inferred gives a valuation of $388M i.e. pretty much in line with market capitalisation.

However, this does not take account of

- 0.8M oz increase in resources at Tajikistan announced on 20 March ("....and the Company is confident of future significant increases in the resource base for Jilau's operations")
- 11.3M oz of Russian category resources in Tajikistan (not sure if that is the total or AVM's 75% interest)
- Chinese interests (through its investment in Dynasty Gold Corp.) in an area of high potential (Hatu)
- exploration at Idenburg, Indonesia, where initial drilling looks very promising
- potential upgrades at existing mines, which look almost inevitable (AVM added 0.35M oz to resources at its Malaysian operations in the last interims)
- the recent increase in gold price

What makes AVM attractive to me however is not just the potential in its reserves and resources (where a case could easily be made that it should be double the price it is now) but the fact that it is debt free and producing (in 6 month ended 30 September 2005 it produced 104,000 oz gold). That cashflow gives it the firepower to pick up and develop further opportunities amongst the other junior miners (as the Dynasty Gold deal showed).

EVO's forecast for 2008 is a profit after tax and minority interests of $42M, based on output of 220,000 oz @ $600/oz. AVM's own objective is to increase production to 500,000 oz p.a.

Plenty of upside from here I believe.
--------------------------------------------------------------------

[bionicdog] 20/4/2006 08:44

Slightly out of order , but no real harm done.
Anyway , now back to the business of a pitiful 1% rise in the face of gold going ballistic.

[corrientes] 20/4/2006 08:41

H - The problem is that you've given a full spiel instead of simply referring to the article when you've already talked about it more than once or twice on this thread. In fairness, other people have mentioned it as well, but not to such a great degree.Gently Bentley.

[holdontightuk] 20/4/2006 08:36

get a life Taylor, BB's are for sharing investment ideas as well as company specifics. I have picked up several such ideas.

[corrientes] 20/4/2006 07:45

Holdontightuk - you're in danger of being taken as BLT Mk2. Stop it.

[taylor20] 20/4/2006 07:37

No offence but:

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