Following its sharp riser earlier in the year, Avocet Mining is looking good value again, particularly since the feasibility study was completed at Lanut. Results due on 23 July, which may well be accompanied by Q1 gold production figures.

Today's RNS shows a stock overhang of 14 million shares has been neatly placed. These - issued as part of the purchase price for Zerevshan - were released early by Avocet, allowing holders Nelson to concentrate their capital on their own interests, which no longer encompass gold.

Avocet is a gold mining play which used to be a large tungsten producer. However, most of the tungsten interests have been sold (see the note re: tungsten in today's RNS), and the company plans to be a gold producer, churning out 300k t/oz a year by the medium term, at cash costs which are decreasing steadily to a budgeted figure of $180 overall by 2007. I could post reams of facts and figures here, but it seems more sensible to simply post the relevant links - it avoids the difficulty of typing errors if nothing else!

The company's website is www.avocet.co.uk

There is an excellent presentation available on the site, as given at the 12 November Minesite forum (takes an age to download, but worth it), and a variety of broker reports. The most recent of these is an EBG review of the market as a whole, stuffed with useful information as well as specific references to Avocet.

For subscribers to the Wall Street Transcript, an interview is alleged to be available. For non-subscribers, there is a transcript of it on the ADVFN thread at post 801, courtesy of oliverleftwingtit. Here's the link to the correct page for the ADVFN FBB posting:

http://www.advfn.com/cmn/fbb/thread.php3?id=1587834&from=801

As a general overview, AVM claim reserves of 1.2 mill oz and resources of 5 mill t/oz of gold in their 3 locations in Asia. Rule of thumb calculations to value that in the ground are about 5% of the current commodity price for resources, and 10% for reserves. As producers, they should really be valued by production rates and the NPV method, but these are not my strong point, and often come up with similar values to the tried and tested rough-and-ready-reckoner in any case. Based on the percentages above, and an average gold price of $300/oz a crude valuation of AVM's assets is about 100 million. With 80 million shares in issue, that's about 1.25p per share. The EBG report referred to above gives a fair value of about 1.30 - so rule of thumb isn't too far out.....

There is a superb discussion of Avocet and its potential at Sardine's Plaice for those who are registered there and want all the background.

Just my opinion, of course - as with all minex companies, this one DOES need careful research.

Avocet Mining says Q1 gold production down 28 pct from Penjom, Lanut mines - AFX

LONDON (Thomson Financial) - Avocet Mining Plc., said its first quarter total gold production from continuing operations at Penjom in Malaysia and North Lanut in Indonesia fell 28 percent to 28,022 ounces compared with 38,802 ounces from continuing operations for the corresponding period last year.

CEO Jonathan Henry, said, 'Short term operational issues of lower treated grades at Penjom and lower recovery at North Lanut have reduced production compared with levels reported for the first quarter of last year.'

'The cash costs per ounce, as with many gold mining operations globally, have been additionally hit by significant price inflation of key consumables, especially diesel,' Henry added.

Avocet Mining said initiatives are in progress to access the higher grades at Penjom, close to the shear zone and to the south of the main Kalampong pit, and to improve recovery rates at North Lanut.

The company said it anticipates the benefit of the measures under way to improve production from both mines, with a corresponding decrease in unit costs, to be apparent during the second half of the financial year to March 31 2009.

TFN.newsdesk@thomson.com

never had a good feel about this company. Always appear to disappoint.

IMO sp is well overvalued