Avocet - SBM Conviction Buy
BACkgRouND Avocet mining was previously listed on the junior AIM market before joining the Official list as a constituent of the FTSE 250 index in early March 2012. Somewhat ominously now, with the benefit of hindsight, non executive director — Norwegian Harald Arnet — sold out of almost all his position in the group disposing of 23.7m shares at a price of 200p by way of a placing on the 16th March 2012. Arnet also resigned from the board after a period of three years. The stock is dual listed on the Norwegian bourse. Avocet currently operate one gold mine — Inata — in the small West African country of Burkina Faso, but they have a pipeline of exploration projects across 21 licenses in both Burkina Faso and Guinea. Avocet’s exploration licences at Bélahouro in Burkina Faso covers approximately 1,660 km2, whilst at its other main project, Tri-K in Guinea, their exploration license covers approximately 986 km2.
The company states that all of their mining licenses are located within the highly prospective Birimian greenstone belt that dominates West Africa’s geological landscape and is a proven gold resource hub. Avocet’s gold mining and exploration operations were previously located in South East Asia and these assets were sold in June 2011 for US$200 million in cash — a sum which thankfully underpins the Group’s balance sheet to this day, although there is litigation outstanding with former partner PT LT and who are claiming some $2bn, although most legal experts believe the vast majority of this claim is highly speculative to say the least.
TABLE - AVOCETS WEST AFRICAN OPERATIONS
March 2013
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