Avocet Mining – Trading Buy call by SBM

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Avocet Mining has certainly caused pain and consternation amongst their shareholders in revent week with the publication of surprise negative update on. Output guidance was down, cost guidance up and expansion plans in the air!  The news was completely out of the blue which the market always punishes more severely than usual and does not reflect well on management or the group’s operational prowess.

Management were obviously caught on the hop here, evidenced by the recent dividend payout which patently implied confidence in the near term future of AVM. Avocet’s shares have plunged by over 60% since the warning but, with a large net cash balance of $80m and the stock now materially oversold, SBM now rate them a Trading Buy.

It is also noteworthy that out of favour, 2nd tier gold stocks have become bid targets recently and with an update due on the 31 July, any more negativity and/or weakness in the share price is likely to put them on the radar of a number of potential predators.

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