🕐26.03.13 - 09:54 Uhr

INVESTEC: AVOCET MINING - FINANCING STRUCTURE IMPROVING - HOLD




Avocet Mining In a significant step forward for the company, Avocet has completed financing discussions with Macquarie Bank concerning the hedge book on the Inata mine, and has agreed a US$15m debt facility with its major shareholder, Elliott Advisors, to advance the Tri K project in Guinea.

The hedge on Inata is to be reduced by 29koz for US$20m, with a shorter and more aggressive profile and distribution of the hedge, although at a slightly lower price of US$938/oz versus US$950/oz previously.

The agreements allow the company to make progress without issuing equity. * The Hedge book: Avocet has reduced its hedge book with the 29koz for US$20m just paid, and adjusted the terms such that it will deliver 44,230oz over the remainder of this year, followed by 36koz, 34koz and 30koz in subsequent years, closing the book by 2016 at a hedged price of US$938/oz.

Previously the hedge stood at 173,250oz to be cleared by mid-2018, delivering 8,250oz per quarter at a price of US$950/oz.

As part of the agreement, the restricted cash requirement has been reduced from US$38.4m to US$12m. * Debt: The US$15m debt facility agreed with Elliott Advisors allows AVM to advance the Tri-K project in Guinea without impacting cash requirements at Inata.

The facility is to be drawn in three tranches of US$5m at a 9% interest rate.

The first tranche is unsecured; thereafter the facility will be secured against all AVM assets in Guinea. * Valuation: We have adjusted our numbers to reflect today’s announcement which has resulted in a small NAV upgrade from 24p to 24.5p.

We retain our risked weighting of 50% for Inata as we await operational updates to give confidence in the latest mine plan.

In addition, we anticipate further financing discussions surrounding additional investment at Inata and surrounding projects and the refinancing of the Elliott facility when the loan period ends on 31st December.

Consequently, we maintain our Hold recommendation.
To access the full note please click here Analyst: Marc Elliott
To receive further information or change your Research Preferences please email: South Africa or United Kingdom and Australia
IMPORTANT NOTICE: This communication forms part of an electronic communication sent to the intended recipient (or such persons authorised representative) for their sole use and is subject to important legal and regulatory restrictions, qualifications and disclaimers that may be accessed and read in the attached research publication.

If you cannot access the disclaimer, please obtain a copy thereof from us by sending an e-mail to in the case of SA or in the case of the UK or Australia: The disclaimer is deemed to form part of this communication.

In the event of a conflict between the disclaimer and this notice, the disclaimer shall take precedence.

This communication is confidential for the information of the addressee only (and may not be reproduced in whole or in part, copies circulated, or disclosed to another party, unless permitted pursuant to and in accordance with the disclaimer. If you are not the intended recipient of this e-mail, then: (a) please notify the sender of this e-mail immediately by return e-mail, facsimile or telephone and delete this message from your system; (b) you may not print, store, forward or copy this message or any part thereof or disclose or cause information in this message to be disclosed to any other person. Nothing in this message constitutes an offer, warranty or representation from us.

None of our employees or representatives are permitted to send unsolicited messages ("spam") and our company cannot be held liable therefore.

If you regard this message as spam, please inform us immediately by sending an e-mail to in the case of SA or in the case of the UK or Australia: Unless otherwise agreed: (a) We are only deemed to have received an e-mail once we have confirmed receipt thereof to you; (b) We are deemed to have sent an e-mail once reflected as “sent” on our e-mail server. If this message contains offensive, derogatory or defamatory statements or materials, it means the message has been sent outside the sender’s scope of employment with us and only the sender can be held liable in his/her personal capacity.

Our corporate information and names of our office bearers can be accessed by sending an e-mail to in the case of SA or in the case of the UK or Australia: The disclaimer applies to our original message, any attachments and all subsequent messages or attachments we may send.
________________________________
-------------------------------------------------------------------------------- CONFIDENTIALITY NOTICE AND LEGAL LIABILITY WAIVER: The content of this email and any attachments are CONFIDENTIAL and may contain privileged information.

If you are not the addressee it may be UNLAWFUL for you to read, copy, distribute, disclose or otherwise use the information contained herein.

The content of the message and or attachments may not reflect the view and opinions of the originating company or any party it is representing.

If you are NOT the intended recipient then please email back to ------------------------------------------------------------------------------------






Products & Services | Jobs