AVO - Avoca Resources

[JTLP]

Yes very pleasing direction all round, in the current climate do not be too surprised to see this go past the all time high soon and hit $3,

However I have been very wrong before so DYOR

this is just my own humble gut feeling based on fundamentals and the current direction of the gold price.

Hi Explod,

I honestly believe Avoca was well on it's way to $3 pre RPST. Trending up on good volume and gold hitting all time highs (just checked Kitco and it's up and away again).

I am a big fan of the fundamentals of this company as they have always delivered and maintained humility. Even delivering the paste plant under budget!

Do you hold Explod?

 

[explod]

Hi Explod,

I honestly believe Avoca was well on it's way to $3 pre RPST. Trending up on good volume and gold hitting all time highs (just checked Kitco and it's up and away again).

I am a big fan of the fundamentals of this company as they have always delivered and maintained humility. Even delivering the paste plant under budget!

Do you hold Explod?

No, (but have) wish I did, but too scared of the market overall at the moment. AVO does not suffer the soverign risk of most others.

Only physical for this little black duck at this time. However be ready, in my view, for any savage correction as even the best are dragged down in a market slaughter. Look back and check the happenings of the last correction. So tight stops Champ.

Cheers and good luck, explod

 

[lucifuge]

.....However be ready, in my view, for any savage correction as even the best are dragged down in a market slaughter. Look back and check the happenings of the last correction. So tight stops Champ.
....

I'd actually argue that AVO has been fairly resilient since the intial crash began in late 2007. Comparison charts of AVO vs All Ords shows AVO has consistently outperformed the index. It has a very robust long term trend as a backbone that seems fairly invariant to other market forces. If anything, it would be one of the few stocks I'd actually pipe money into in the interests of portfolio protection.

 

[Logique]

I am biased as a holder.

Like other gold producers/explorers, AVO benefits from the 'flight to safety' syndrome in volatile times, and if you look at the price history, as lucifuge says it is very consistent in the face of market volatility. In these times it actually has defensive characteristics. It's got gold in the ground, and actively and optimistically looking for more.

Hi explod. Market slaughter...europe is getting it together, volatility is fading imho. Not that there won't be scares, and/or fat finger trades to come.

With the proposed RSPT, remember that AVO would get rebates for all that exploration that they will continue to conduct.

 

[Logique]

Looks like you were right JTLP and Explod, just a few cents more and it hits $3. And I strongly doubt that will be the end of the growth either. Gold has been below $1,200 per oz this week, but lately just back above this again.

A re-rating appears to be underway, the company keeps finding more gold, and is moving into that mid-tier producer area, with little other competition in that space. What a colossus this company is turning out to be, and beautifully placed for the times.

 

[JTLP]

Looks like you were right JTLP and Explod, just a few cents more and it hits $3. And I strongly doubt that will be the end of the growth either. Gold has been below $1,200 per oz this week, but lately just back above this again.

A re-rating appears to be underway, the company keeps finding more gold, and is moving into that mid-tier producer area, with little other competition in that space. What a colossus this company is turning out to be, and beautifully placed for the times.

Thanks for the chart Logique.

They recently had a resource upgrade of 2.9M oz at the South Kalgoorlie operations to take Avoca's total resource to 6.7M oz (an increase of 76%).

Read all about it here: http://asx.com.au/asxpdf/20100715/pdf/31rbkkxxwv8h5z.pdf

They have had some astronomical resource upgrades and finds...loving this story more and more everyday.

 

[Logique]

Looks like some website upgrading is going on this weekend,
but checking out the links below should lead to a research report by Argonaut on Avoca's website, placing a Buy rating with revised valuation 3.88ps on AVO. But this was dated in early July, i.e. before the 15th July resource upgrade announcement you mention JTLP.

http://www.avocaresources.com.au/downloads/research/avo_research_argonaut_20100705.pdf

http://www.avocaresources.com.au/

 

[JTLP]

Looks like some website upgrading is going on this weekend,
but checking out the links below should lead to a research report by Argonaut on Avoca's website, placing a Buy rating with revised valuation 3.88ps on AVO. But this was dated in early July, i.e. before the 15th July resource upgrade announcement you mention JTLP.

http://www.avocaresources.com.au/downloads/research/avo_research_argonaut_20100705.pdf

http://www.avocaresources.com.au/

Brilliant! Thanks Logique

There has now been 5 research notes/upgrades uploaded onto the AVO website following the resource upgrade.

http://www.avocaresources.com.au/downloads/research/avo_research_merrilllynch_201007.pdf

Merrill Lynch have upgraded there forecast from $2.70 to $3.00 following hte find.

http://www.avocaresources.com.au/downloads/research/avo_research_jbwere_201007.pdf

Goldman Sachs have gone from $2.80 to $3.50

http://www.avocaresources.com.au/downloads/research/avo_research_ubs_201007.pdf

UBS targeting $3.80

http://www.avocaresources.com.au/downloads/research/avo_research_20100715.pdf

Deutsche Bank $3.30

http://www.avocaresources.com.au/downloads/research/avo_research_20100716.pdf

Ord Minnett from $3.30 to $4.16.

There was some nice buying on Friday to help the close and go against the trend of the other goldies...hopefully somebody taking a nice stake with confidence building in AVO.

 

[Logique]

Nothing personal Explod,
and not intending to be deliberately provocative, but this is frightening. Looking to the Australian investment future, I'm defensively staying overweight gold, at least until the election result and resulting composition of the Senate becomes clearer.

http://blogs.news.com.au/heraldsun/...mments/column_the_green_plan_to_kill_your_job

Vote Greens in this election and you won’t get cuddlier koalas, bigger hugs and cleaner rivers. In fact, you’ll be voting to “transition from coal exports”, which means ending a trade worth $55 billion a year .

You’ll be voting to “end ... the mining and export of uranium”, worth another $900 million a year.

You’ll be demanding farmers “remove as far as possible” all genetically modified crops, which includes GM cotton worth about $1.3 billion a year.

You’ll be voting to close down many other businesses and industries, including the export of woodchips from old-growth forests, certain kinds of fishing, oil and mineral exploration in parks or wildernesses, and new coal mines of any kind.

You’ll even be voting to close the Lucas Heights nuclear facility, even though it actually produces treatments for cancer.

In fact, you’ll be voting for policies deliberately intended to make us poorer. Less industrialised. Or as the Greens’ policy puts it, for a “reduction of Australia’s use of natural resources to a level that is sustainable and socially just”. Whatever that formula means.

....This is what a vote for the Greens really means. And it’s this party of vandals, tribalists and closet totalitarians that shameless Labor now helps to such threatening influence.

 

[Sharkymon]

Recent analyst reports have been more conservative than previous, providing predictions from $2.80 (Credit Suisse) to $3.30 (Deutsche Bank). This is pretty much where the price sits now.
Admittedly, the reports do admit being conservative - depending on the South Kal operations and the potential HBJ Superpit.

Avoca havent paid dividends and no indication as to weather they will or wont in the future. So is this stock worth holding on to (the eternal question) for the med term?
I've had this stock for a few years now and have had a pretty good ride, but is there much left in the tank?

(My first 'post', so be gentle)

 

[Logique]

Recent analyst reports have been more conservative than previous

Hi Sharkymon, it's a little bit to do with your own strategy and expectations, i.e. are you looking for a short term trade, or to move on to another stock, or another sector? It all depends.

In terms of analysts reports, check what the analysts were saying AND Andean was worth as recently as two weeks ago.

Avoca is a fav of mine, so I am biased, but since you ask, I'm not letting any of mine go.

Cheers, Logique

 

[JTLP]

Hi Sharkymon, it's a little bit to do with your own strategy and expectations, i.e. are you looking for a short term trade, or to move on to another stock, or another sector? It all depends.

In terms of analysts reports, check what the analysts were saying AND Andean was worth as recently as two weeks ago.

Avoca is a fav of mine, so I am biased, but since you ask, I'm not letting any of mine go.

Cheers, Logique

Tempted to take some off the table now. It's been in blue sky for a little bit and I wouldn't be surprised to see it take a breather - I would also expect a few brokers advising clients to sell now that it has reached most of their targets (one they can claim they got right!).

Can't see much that will drive it up in the near future - aside from POG and merger activity in the sector. Will decide in the next few days. Is there any material news Logique?

 

[mr. jeff]

Do you think the major resource upgrade for AVO been reflected in their SP yet?
There wasn't a big chase for them like there would have been for a smaller company... AVO is now a medium player in a field where there are a couple of big boys and plenty of small players... either AVO will be buying or someone will buy AVO!?

 

[Logique]

Will decide in the next few days. Is there any material news Logique?

No haven't heard anything JTLP.

I do know that once Newcrest have bedded in the Lihir takeover, they will be casting around for the next target. But there's a big field of potential acquisition targets out there.

Anyway for me it's more about the fundamental story of price of gold. I have confidence in the management of AVO to harness this. I'm happy to ride any sp volatility along the way, even buy the dips.

But what suits me may not suit Sharkymon, so it's great that other people came on to provide balance.

 

[JTLP]

http://af.reuters.com/article/metalsNews/idAFSGE6870GO20100908

If true then I am DISGUSTED if this pans out! A 9% premium? Is that a joke? What EAU were initially willing to do for AND...NCM for LGL?

I was tempted to sell but will see how this unfolds. The AVO story is a long way from finished and it will be a great sadness to see my boys get pulled from underneath me

 

[johenmo]

Sad to see another Oz company turn into foreign owned. Bought a few months ago and it's done ok for me. Will watch how it pans out with some interest. Tks for the article.

 

[JTLP]

I probably should mention that it is a merger, not a takeover, hence the crappy premium / effectively you don't get one, and also the fact that you will be able to trade the new company on the ASX (CDI's).

I'm just frustrated that they willbe merging. I liked AVO as a standalone and thought it had massive upside. I guess it still does; now it's just lumped with a mining operation in Turkey.

 

[Logique]

Many thanks JTLP.

Still digesting this, but my preliminary feeling is to adopt a 'wait and see' attitude, but overall I think it's a positive development. Anatolia seem to have some good holdings and reserves in Turkey, so there's promise in a new merged entity. Avoca will send out an explanatory booklet, so I'll study that.

The mechanics are interesting, it appears that initially (if they vote yes) AVO holders would receive 0.4453 TSX:ANO shares for each ASX:AVO, which will be tradeable as CDI's on the ASX.

I'm thinking that the final stage would then be that shares of TSX:ANO and ASX:AVO would be cancelled, with holders of ANO CDI's and AVO ordinary shares then receiving their pro-rata allocations in the new merged entity Alacer Gold, to be jointly listed on TSX and ASX.

With the premium to AVO holders on the initial ANO CDI allocations, I'm not too fussed, as it's not a takeover, but a 50%-50% merger. The real upside is in the value accretion from the merged entity. With a wider geopolitical focus - a plus I think.

 

[Logique]

http://bigpondnews.com/articles/Business/2010/09/09/Avoca_to_merge_with_Turkish_miner_511004.html
Avoca to merge with Turkish miner
Thursday, September 09, 2010 » 12:33pm

Perth-based Avoca Resources Ltd says it will merge with Turkish gold producer Anatolia Minerals Development to create an intermediate global gold producer.

Avoca says directors of both companies are supportive of the merger of equals, which will create a new company with a combined market capitalisation of about $US2 billion ($2.18 bil).

Avoca shareholders will each receive 0.4453 Anatolia shares for each Avoca ordinary share.

The exchange ratio represents a premium of approximately nine per cent to Avoca shareholders, based on the last closing share price prior to the announcement on Thursday.

Upon completion of the merger, existing Anatolia and Avoca shareholders will own Alacer Gold 50/50.

Avoca says Alacer Gold will own combined gold reserves of 3.5 million ounces (moz) and gold resources approaching 15moz.

The new company will be listed on both the Canadian and Australian stock exchanges.

'This combination represents a true merger of equals and provides the shareholders of both companies an opportunity to participate in a uniquely positioned global intermediate gold producer,' Avoca managing director Rohan Williams said.

 

[JTLP]

http://bigpondnews.com/articles/Business/2010/09/09/Avoca_to_merge_with_Turkish_miner_511004.html
Avoca to merge with Turkish miner
Thursday, September 09, 2010 » 12:33pm

After reading the merger Ann the bitterness in my mouth just got worse.

If you read the advantages to both companies...it would appear Anatolia absolutely rake it in - reduced sovereign risk, reduced single mine risk, exposure to Avocas technical expertise.

And what do we AVO holders get? Why not flip the situation around? Increased sovereign risk, a single mine - lots of risk...and a 9% premium to our closing sp...which finished DOWN 4% today?!?!!!

Anybody else feeling a little done over here? Management must be getting some sweet kickbacks for this disaster...