Avocet Mining plc (lon:avm)
Avocet Mining A Comoany I Have Watched Drift Further And Further Downwards


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Title: Avocet Mining A Comoany I Have Watched Drift Further And Further Downwards
Company: AVM - Avocet Mining plc
Share Price Then: 34p
Author: Ian Smith
Date: Mon 07 Aug 2017
Comments: I have watched Avocet Mining, a smaller gold miner in Africa, for a long time.

Initially believing that they may be a good recovery stock, this was before I understood the phrase "Turnarounds rarely turnoround" is generally true.

The most important thing is that the Annual Report published in June 2017 says

It is indisputable that the ability of the Company to continue as a Going Concern for a 12 month period, let alone any longer term, is and has for some time, been a serious concern.

The fundament problem being debt, there is £27m payable on demand to Manchester Securities Corp and being charged at 11% - 14% this is unaffordable and MSC is an affiliate of Elliott Management (“Elliott”), the company’s largest shareholder.

There are also significantly overdue trade creditors and other debts.

It seem likely that the company is about to do a big debt for equity swap wiping out existing share holders or the assets will be sold in an orderly manner and the company closed.

Carrying on and hoping for a big gold price hike is not an option.

Having followed Gulf Keystone Petroleum through a similar process it is noticeable how long it takes for debt for equity swaps to be forgotten.

The resultant company may be viable and profitable but the mud has stuck to company and private share holders still avoid it.
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