AVOCET MINING PLC

Avocet Mining Plc.

199.11m Shares In Issue

£29.34m Market cap            

Trade High 173.50p
Trade Low  14.25p

Avocet has on all accounts become locked into a period of erosion similar to a early 80's Chevrolet Cavalier however I think its fair that my stance to adopt very basic principles whilst looking at Avm.

Avocet Mining have come down off great highs to what now appears a extremely modest valuation by the market for what is not a completely flawed model, Yes we know there has been some issue and with recovery around $1600 per oz we could argue where's the value? Quiet simply the value is on the future price of gold and the cyclical trends in mining/natural resource stocks changing.

Recently Avocet announced that they had slowed down:

“Since announcing our reduced reserve, our objective has been to put in place financing 

that reduces the burden of Inata’s hedge while ensuring sufficient funds are available 
during 2013 to progress our key projects at Tri-K and Souma. 
Over the rest of the year we will complete the Tri-K feasibility study and Souma drilling programme,
Avm are confident that by the end of 2013 the Company will have clearly demonstrated the 
significant value to be realised from its portfolio of quality assets.”

After listening in to the recent CC. and looking at the hedge restructure there do not appear to be any major issue's other than! (This is where it gets tasty) The company will have some outstanding debt to tune by the time the Q3-4 financial address resurfaces. I'm happy as are Elliot to start backing the horse around the circuit and by Q2-Q3 I anticipate that Avocet will announce a return to increased recovery figures of its ore and for this reason I give a few basic reasons why I see a premium to today's price of 14.5p


Following the hedge restructure, the minimum cash balance required by Macquarie to be 
held in SMB has fallen from US$37 million to US$12 million. Subject to this ongoing 
minimum balance, the following has been agreed in respect of cash held in SMB:
* up to US$10 million may be spent on Souma exploration, although a payment will 
be required to buy back further hedge ounces (a “matching payment”), equal to the 
amount by which Souma expenditure exceeds US$5 million. Souma’s exploration 
programme budget for the remainder of 2013 is approximately US$9 million;
* once the level of hedged ounces falls below 100,000 ounces, which is currently 
scheduled in Q1 2014, the Company will have access to 50% of Inata’s surplus 
cash, with a matching payment being required to buy back further hedge ounces; 
and
* once the level of hedged ounces falls below 80,000 ounces, which is expected to 
occur in mid-2014, the Company will have access to Inata’s surplus cash (cash 
above the US$12 million minimum balance) without restrictions; and
* The Company has the option to defer Inata’s remaining US$5 million debt 
repayment to Macquarie to any date before 30 September 2013, at an interest rate 
of LIBOR plus 10%.


The company are on track to announce an increase in recovery by Q2-3 which will naturally be warmed to by market.

As the continuing silence of Europe's debt ceiling continues we have to accept that the worm will turn over the summer with further advances into gold. (Factoring points are disputes in the middle East,North Korea etc) Coupled with a reduction in the indicies.

Cyclical trend followers will be pointing to a mining uplift  again indicating towards the black sheep sector of today for growth tomorrow.

Keep a close eye on Gold's return to $1425 with a conscious focus on sub $1300 as you navigate the arena. Buy into the weakness over multiple tranches #Protect your position

Avocet Intangible value is ten fold which would explain the ten fold value assigned before Avm run into troubled waters, They are not alone yet present a clear strategy.

All the best Doc

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AVM