I believe, as many would no doubt, that the biggest hurdle to progress for AVB (and its share price) is the difficulty in getting cores assayed. For a company whose prime purpose is drilling and assaying, that lack of lab capacity is very problematic now (a kinder expression than disasterous).
The intention to halve its drilling from 6 rigs to 3 rigs was mentioned at the end of the announcement of Sept. 9th.
Three rigs presumably means what goes into storage comes out at the same rate, so there is sensibly no further core build-up.
TP stated these three rigs will be working Antas.... so I gather all other drilling including Serra Verde and nickel will be temporarily suspended. Ouch!
AVB has an abundance of cash and management resources and an exciting strategic exploration plan, highly prospective for defining a huge copper/gold resource.
And yet ! A relative trickle of drill reports can now be expected. A severe contraction. And one wonders why the SP has declined.
From other posts (and I also recall from my conversation with Scotty) that AVB is doing some of its own core prep. but is limited in what it can do because of the need for the lab to be independant.
Perhaps the theory is that if AVB is alloted a certain share/amount of lab time, then if the samples you submit have only half the work content to process compared to other companies, then they will do twice as many metres for you in the alloted time as an offset. Or something along those lines... which is a better deal than simply getting a reduced price for processing. At least I hope that is how they are approaching it.
Mining the HGZ is off the agenda, and has been for a long time. The Trial Mining Permit continues to sit in a drawer somewhere, because it is not wanted.
Any move to hive off the nickel must be on hold because of market conditions. AVB still has commitments to drill Conceicao ... and Agua Boa.
Shares were recently placed at 10c. The market is now closer to 6c.
Enterprise Value is $52m - $19m cash = $33m Miserable.
Some Positives.
1. Cashed up. No prospect of any capital raising.
2. Brilliant prospects that continue to grow. Excellent chance of defining valuable massive IOCG deposit at Antas South/North.
3. Top management. Company in a position to cruise through any temporary global downturn... (which those cashed up folk are determined to make happen)
5. Copper price goes up and down but is still solid. $A is falling against $US which is a positive for return to Australian shareholders.
So...... What can AVB Management do to support its share price for us shareholders, and recent sophisticated investors ???
Unless AVB does something pro-active, has a major change of course, with the difficult wet season and holiday time approaching why on earth would the SP change????
Some Suggestions...
1. Have a dynamic brainstorming meeting of Directors with the specific objective of making decisions that put AVB back on the map and support a SP rise.
2. Consider issuing an updated JORC without delay. Not something to be done next year. Right now! Management certainly have the time to do it with exploration activity halved. A dramatic increase would galvanise the market and get the brokers calculators humming. Not that I believe AVB is a takeover target. I don't. But if it is ever to get attention, the sooner you start stating what you have in the ground, the more chance of starting to appear on a radar screen. I for one have no clue what AVB has right now in the ground.... and I find this ridiculous and unacceptable!!! A release "AVB Triples jorc Copper Resource" please. Then the market can justify a price rise because it is buying something real.
3. Unless something dramatic happens (and the Vale iron buyout did not fire), why would the company be any different in 12 months to now.?? Does the $19m just sit in the bank getting interest, with the hamstrung 50km exploration programming dragging on for the next 10 years?? .. what Board would allow that? Is the fact that cashed-up interests are predicting the world is coming to an end soon, mean a hunkering down and passive cash preservation strategy? Acknowledge the need to facilitate putting more of the cash to work.
3. Re-examine the benefits of planning to mine the HGZ again. It was put off because the direction for the company was changed to pure Exploration, but this is rather hobbled now. So why not re-do the figures and see what it could add to company value.. err... I mean share price. Dig and direct ship ore. Get cracking.
Announcement heading "AVB Plans mine and Direct Ship Ore April 2012" What would THAT do to Share Price!!!! The money and management are there to do it.. easily.
4. Present a graphic 3D model of the Antas South/North deposit to date. It makes things clearer and more understandable. Other mining companies do.
..............
OK. Drill results are very good. Each time. But the Board has to do far more than rely on a trickle of these 30m at 1% type results over the next few years. You can only use the words very encouraging and potential so many times.
I am sure AVB Management is working HARD under VERY frustrating conditions. BUT.. you have Boards to Direct and some new radical direction and action needs to emerge from the heights or SP simply will not change.
Gaining more prospects, when you cannot handle what you have, and reporting more 30m at 1% type results every couple of months is just not good enough.
AVB.. I LOVE IT!!! The holdings are brilliant and forever improving.. no doubt....BUT it is the Board of AVB that needs to be dynamic for us shareholders and ACT, if it has it in it .... and the rest will, or should, flow from there.
cheers, PP
AVB Price at posting:
6.2¢ Sentiment: LT Buy Disclosure: Held
