Avocet Mining Share Discussion Threads

[ninja 19] 24/7/2013 09:47

spread is closing.

tick tock 9p will be blown soon

[ninja 19] 24/7/2013 09:32

This is looking good 10p by mid day

[ninja 19] 24/7/2013 09:20

Looks like the mega dead cat bounce is starting


from 290p to 6p? now 8.5p

[ninja 19] 23/7/2013 15:57

dead cat bounce coming?

[a.fewbob] 09/7/2013 23:04

Another AIM company run into the ground.

[polaris] 09/7/2013 12:10

AVM in hedge trouble - read March announcement for details. They have cash but will be burning through it fast and 12M$ remains ring-fenced until hedge below certain thresholds. 15M$ loan with Elliott secured on Tri-K assets with repayment date at 31st Dec 2013. At current pog I just can't see them surviving without a cash injection that would dilute current holders to effectively nothing. Next results will be the key. Unless they have costs back below the hedge (938$) then a significant proportion of production is at a loss. I calculated that a few posts back and it does not include development admin and exploration, never mind the loan repayment. On any default I cannot see any value for normal shareholders. Only the banks and funds will see any returns.

Regards

Paul

[resourceful] 09/7/2013 09:00

excellent BB..unlike most
so what are the options
is a breakup worth more than the sum of the parts
how is Avocet structured..are there ring fenced operations

[bozzy_s] 04/7/2013 10:10

Thanks for the info Paul.

[polaris] 04/7/2013 09:25

Wait until half year figures and an update is my call. The cash position, burn and production costs are key here as I think AVM is now under water unless costs fall substantially. With the Tri-K assets used as collateral for the 15M US loan from Elliott due for repayment by 31st dec 2013, you can discount them until a new loan is secured. Inata is a profitable operation without the hedge, though much less so than a few months back. The lowered resource and reserve from earlier this year shortened the mine life considerably and so I doubt there would be too much interest unless they can get the reserve close to 2m oz. currently I cannot see shareholders getting anything if AVM go not administration as still over 120k oz outstanding at $938. Macquarie can repossess mine if AVM default on hedge as the value is way in excess of the current cash position.

Regards,

Paul

[bozzy_s] 04/7/2013 08:46

Just out of interest, with AVM running at a loss at these low gold prices, the share price absolutely battered, would their assets be of interest to a larger miner who could cover the hedge commitment - possibly at a profit - from their existing operations?

One who could suspend the loss-making mining operations until market conditions improve, without going bust? Buy AVM's assets or perhaps bid for the whole company? Or would they wait to cherry pick assets from the administrators?

In short, do you think there's any chance of shareholders making a profit from 7p?

[polaris] 03/7/2013 15:26

Some very nice intercepts there for the Tri-K project. Let's just hope that the assets still belong to AVM at the end of 2013!!

regards,

Paul

[buywell2] 03/7/2013 11:23

Somebody is getting out from under as best they can

I did try

[buywell2] 27/6/2013 18:59

From the POG thread .... posted Monday Morning


buywell2
24 Jun'13 - 07:42 - 16113 of 16493 0 0 edit

GOLD looks like it wants to test $1200 this week

Will SACHS and MORGAN agree and let it ?

They are in charge now

[giant steps] 27/6/2013 12:37

polaris, an excellent post #1125, an excellent reminder,
difficult to see how they can survive (no advice intended)



Also a worthy reminder from other AVM thread:

hairballradical 15 Apr'13 - 10:19 - 152 of 200

The problem that AVM have over and above the other mines is the high cost of recovery of the product and the low hedge price. This is a double whammy and as the gold price falls towards $1200 this means that the mines are producing nothing but hedge gold and loss-making gold.

[hairballradical] 26/6/2013 23:51

Polaris,

excellent post as it clarifies the vibe and of course the figures, so many thanks. I got out yesterday at a significant loss but now relieved. Gold may well recover but as you rightly point out, it's the commitment to repay the loan by year end that is so damaging. Share issue is not feasible as amount raised would super-dilute the share price but allow a limp towards the next loan or further issue or even a rise in POG. With production costs so high relative to POG, who would lend to the business further without sig collateral.

From here POG expected to challenge $1125 and may well bottom at this, but how long will it take to recover. A look at the lack of anything happening in Japan over the last 15 years should give everyone a clue where the West is heading. No serious inflation and no serious depression is not volatile enough for gold to move in the short term.


HBR

[a.fewbob] 26/6/2013 22:36

Ironic that the one thing that was to ensure AVM never goes to the wall (hedge) is the very thing that has eventually killed them.

[buywell2] 26/6/2013 19:49

Did anyone realize

theberg was AJ ..... I miss him lots of times ........................ but now I have got an AK47 ...... he would have liked that

yikyak was a AVM bull ... explains a lot that


AVM will be dead in the water if GOLD stays below $1300 for over 3 months

RIP little birdy

[polaris] 26/6/2013 16:11

Just to give some numbers to my point of view above. From announcement 25th March 2013.

44.23k oz of hedge to be delivered in Qs 2-4 2013 at a revised hedge price of $938.

Predicted production of 32.5k oz per Q at $1150 costs gives 97.5k oz production for Q2-4 and costs of $112.125m

44.23k of that will be sold at $938 giving revenue of $41.488m.

Just to cover costs the remaining gold (97.5-44.23k oz = 53.27k oz) must give revenue shortfall between costs and hedge revenues ($112.125-41.488m = $70.637m)

That requires an average pog for Q2-4 2013 of $1326 just to cover production costs, never mind G&A, cap-ex, exploration and finding the money to pay back the Elliott loans.

The 50DMA is the metric i use for pog to judge the average Qly price. At 1st April, this stood at $1616. Today that stands at $1398 and is falling every day.

Using the $1400 price we get the following for Q2:
32.5k oz production at $1150 = $37.375m costs
14.74k oz into hedge at $938 = $13.826m
17.76k oz at average spot of $1400 = $24.864m
That gives a profit from mining ops of $1.315m for this Q

I then use this to predict necessary pog for Q3-4
65k oz production at $1150 costs = $74.75m
29.49k oz into hedge at $938 = $27.661m
35.51k oz at average spot (as yet unknown)

To break even at an operating level the 35.51k oz must make at least the following in revenue:
$74.75-1.315-27.661m = $45.774m

Therefore, the average pog for the rest of the year from 1st July 2013 to reach breakeven is:
$1289

As i say that also misses all the other costs and the $15m to pay back Elliott or lose the Guinea assets. Gold is currently more than $60 below that level and probably another $100 below the price to cover the non production expenditure.

The writing is on the wall for me.

Regards,

Paul

[ukgeorge] 26/6/2013 16:10

quite similar to old european minerals.

amazing how they have messed up so badly, they couldn't have seemingly done anything worse even if they were trying.

[giant steps] 26/6/2013 15:57

7.40 > AVM < 7.46p, weakness continues (pog $1236, down $45)


edit : indeed the hedge saga is a worthy reminder and biting most hard

[polaris] 26/6/2013 15:43

Hi all,

Well the downward movement in gold has continued and stands a little under $1240. At this level, AVM cannot make a profit while delivering into the hedge with the planned programme. Neither can it put the mine on C&M as it must deliver into the hedge whether it produces or not - though at least it 'only' has to find around $300 per oz at this price. If there is no gold price recovery it can only be a matter of weeks before AVM have to throw in the towel or have Macquarie repossess the assets. This will be a nasty lesson that will be used as an example of how not to do things for years to come. I would expect an announcement at the HYly results as the writing should be plain for even the BoD to see by then. Good luck to any remaining holders.

regards,

Paul

[giant steps] 25/6/2013 08:10

7.50 > AVM < 7.70p, price weakness continues (pog $1281)