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Allied Nevada Gold ┼×irket Message Board

  • ada71boy ada71boy Apr 6, 2013 12:37 PM Flag

    Get a Grip!

    I don't post often, but ANV's performance over the past 6 weeks simply begs for some rational thinking to give some hope to longs and alert the shorts to the dangers ahead. I'm a CPA, so I'm always looking at the financial statements to assess risk. ANV does have some debt (as has been noted in other posts) - but it also has some remarkable growth that depends on this debt and long term leases to extract shareholder value. The question is can ANV service the debt (principal and interest) and simultaneously create future shareholder value through broadening its asset base. I strongly believe it can.

    The primary risks for ANV are achieving its gold and silver production numbers. Can't help but think it's change in CEOs from a primarly ex CFO person to a qualified engineer is the Board's vote to make sure that happens in line with their forecasted costs. If ANV gets anywhere close to it's low-end production targets for 2013, it will produce somewhere around $400M in gross sales - and that's even assuming prices stay in their current semi-depressed range. That should more than service their operating costs, admin costs + debt load (which will require approx. $65M + interest - per their 10-K) - and that does not count using any of their $120M in available revolving credit. Those posters who talk about BK have apparently never read the financial statements.

    Over the next 5 years, debt repayments total $300M - about $60M a year. With production more than doubling over that time, there should be more than adequate cash flow to paydown debt and loose itself from its debt covenants. One of those debt covenants precludes ANV from repurchasing its own shares. Understandibly creditors want first claim to cash flows. If this covenant did not exist, ANV would be hand-over fist buying its shares at these prices!

    To shorts, enjoy this brief moment. The future stock price lies much, much higher!

    Sentiment: Strong Buy

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    • Thanks for your fact filled posting, and providing the information on why ANV can't do a stock buyback at this time.

      Sentiment: Buy

    • Went long late on Friday through the options market

      Looks like a fantastic entry level here and we will see some upward movement this week, the stock will continue to be volatile IMH and could realistically hit both $10 and $20 this year

    • Excellent post by Ada71boy! It's nice to see an intelligent and rational analysis posted on this Board otherwise weighed down by reptiles.

      Could you easily extend your analysis to 2015 and 2016 to estimate profits for ANV, assuming current metals prices? To me it looks like close to $4 per share in 2016. What does your analysis say?

      Sentiment: Hold

    • I initiated a trading position in ANV on Friday based on the belief that the selling off of the stock price has climaxed and that the stock price will rebound at least to the mid teens short term and likely create a choppy base in that area, and then eventually begin an uptrend to reflect the growth in production . Looks to me like the entire sector has hit at least a short term bottom. Volatility is horrible if you are on the wrong side of it....and great if nimble enough to have cash to buy a technical collapse of a fundamentally good value. The options on ANV create some avenues to fine tune a trade by selling ootm puts against cash or selling ootm near-expiration covered calls to lower the position cost basiss.

    • Part of the problem has got to be margin calls not being met and forced liquidation.
      I am not a big fan of leverage.
      Irrational best describes AVN chaos for the moment.