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AVB's leverage to copper price rises., page-5

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philh9

11,881 Posts.

612

12/02/17

20:10

Post #: 22553522

Originally posted by Kalenn ↑

KK,

The below numbers are based on 24,000 tonnes production which I believe we have the potential to achieve. Regardless of the actual tonnage of concentrate produced, the ratios are the same. Part of the reason we are seeing a re-rate IMO is that AVB were substantially under valued, the other reason is the leverage a debt free copper miner has to copper price rises. (Mind you we have reductions if copper goes down as well).

AVB's fortunes are now firmly tied to to copper price movements as one variable. This approximately 4.5:1 ratio or
leverage is the reason a vertical graph right now while copper is climbing is totally appropriate and not just a technical traders example of an over exuberant movement which might pull back. I know you can cope with this bad news

Other copper plays will have similar dynamics but OZL and SFR have done a lot of moving already as copper was rising...until recently AVB was being ignored but apparently no more. Copper rose 4.65% on Friday evening, multiply that by the ratio and you have my 'technical projection' of where we could be Monday...but then there will be traders, and Instos getting set, cappers and the whole zoo that is the market as well.

I also notice LME stock piles continue to drop and the cynical part of me says BHP could make a killing out of this strike; it will put pressure on supply, probably raise copper prices, maybe significantly which will give BHP extra cash flow once back mining to meet the eventual bonus payments to their miners and share holders. I wonder if they will want it concluded quickly?

See you in the queue on Monday

Column 1 Column 2 Column 3 Column 4 Column 5 Column 6 Column 7 Column 8 Column 9 Column 10 Column 11 Column 12

1

2 Antas North FS copper @ $2.20 AVB Earnings @ 1.43 cents per share increase in Cu price 0.00% increase in earnings 0.00%

3 copper @ $2.50 AVB Earnings @ 2.29 cents per share increase in Cu price 13.64% increase in earnings 60.14%

4 Current copper @ $2.75 AVB Earnings @ 3 cents per share increase in Cu price 25.00% increase in earnings 109.79%

5 copper @ $3.00 AVB Earnings @ 3.73 cents per share increase in Cu price 36.36% increase in earnings 160.84%

6 copper @ $3.50 AVB Earnings @ 5.16 cents per share increase in Cu price 59.09% increase in earnings 260.84%

7 copper @ $4.00 AVB Earnings @ 6.59 cents per share increase in Cu price 81.82% increase in earnings 360.84%

8 High of last cycle copper @ $4.50 AVB Earnings @ 8 cents per share increase in Cu price 104.55% increase in earnings 459.44%

9 copper @ $5.00 AVB Earnings @ 9.46 cents per share increase in Cu price 127.27% increase in earnings 561.54%

10

The HC formatting has made it harder to read, so I will follow with a screen capture/picture

Expand

Thanks Kalenn

Whilst your conviction on AVB has been solid as a rock you have had times to question where copper was going, you seek out good advice . Below some further details which points to an understanding of where we are going :-

Did you know the copper plating on the Statue of Liberty weighs 80 tons.

And it took 35 years for her green oxidisation complexion to be fully complete.

Cheers
Phil.

AVB Price at posting: 10.5¢ Sentiment: Buy Disclosure: Held

0 Great analysis

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