News

February 13, 2008

Avocet Is Slowly Expanding Resource and Production Ounces

By Alastair Ford

What a difference not operating in Tajikistan makes! Avocet Mining’s cash costs per ounce from its Malaysian and Indonesian projects are now running at lower than US$300 per ounce, compared to costs that were spiralling over US$600 not so long ago. And that was when the gold price wasn’t too much higher than that. But well clear of the old ball-and-chain that was the ZGC project, though not exultant to lose the resource base that went with it, Avocet is moving on. Last week chief executive Jonathan Henry, bemoaning the slump in his company’s share price since January, said clearly: “the problem for us has been that with such a large amount of cash the market is looking to us to do a deal”. This week he delivered a deal, and although the share price did dip a little on the day it was announced, it’s significantly up on the week.

The market now knows that Avocet is out there doing deals, even if this latest one, to acquire a 51 per cent stake in a ball-park 300,000 ounce resource for a US$800,000 exploration spending commitment, isn’t exactly off the scale. “This looks like a small deal”, says Mr Henry, “but this potentially looks like it could be another mine”. That’s not insignificant. And with Avocet’s strong cash position following its exit from ZGC, and its current sizeable cash flow from its operating mines in...