Sitting back contemplating past investments.... I have some questions on this "price sensitive" announcement.
1. We find ourselves rapidly approaching November 1st, AVZ Management states in the release that they were going to receive tenders for the USD 300 million + ("approx") of pre-mining infrastructure spending in July and August...... there appears to be no mention of these tenders in Annual Report released today other than confirming the eye-watering capex spend of approx. USD 300 million (or AUD 425 million relative to our market cap of AUD 222 million, a little less than twice our current market cap).
2. Whoa people I know what you are thinking.... Hold those spears... COVID... the reason for every delay right !.... but no..... COVID is not a new situation and was well understood when the release was put out on June 24th.....
3. So stepping back to reality. If we can't manage to organise pre-mining infrastructure tenders, how on earth are we supposed to actually organise mining..... we've fumbled the ball on our own goal line....
4. Reminds me of a year ago when we had to drain our pits but managed to screw this up by undersizing the pumps needed....And then, we couldn't get new pumps to site........ lo and behold, rainy season is upon us again.. shakes head in disbelief, who would have thought.....
5. The question that I'm sure has already been asked by my learned colleagues here on HC, is how do you expect to receive credible tenders in a timely fashion when it is obvious that you do not have the funds available to pay for said tenders..... Everybody likes to be paid for the work they undertake, I suspect the contractors AVZ is hoping to entice are no different in the regard.....
The final point I would hypothesise, and have heard from others, is that if the tenders came in materially above the expected USD 300 million number... would the company then reject the offers and be forced to re-think their entire program? Do we need to then go back to the drawing board a re-do the scoping study again?
AVZ Price at posting:
8.0¢ Sentiment: Sell Disclosure: Not Held
