Avanti Mining Inc. a high risk speculation

Oct 27th, 2014 – 1 Comment

Startup is not expected until 2017 and with metal prices depressed on weakness in global demand you would be well advised to be cautious with this investment.


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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Hi Lou,

I hope all is well.

Can you please provide your prospect on the Avanti Mining stock for the short to medium term?

I get the idea that this is a rare opportunity to make good money in the Canadian mining sector in a relatively short period of time with even more upside in the months & years that follow.

Thank you,

Flo

 

Hey Flo,

Thanks for the assignment. Avanti Mining Inc. (AVT TSXV) is an exploration and development company with a major molybdenum deposit in Canada. The Kitsault Molybdenum Project in Northern British Columbia was a previously producing property that was shut down in 1982 on weak metal prices. The revival of the deposit has an estimated mine life of 14 years with expected annual production of 23.4 million pounds of molybdenum and 14.5 million ounces of silver. According to the corporate presentation released as part of the 2013 Annual General Meeting in May of 2014 the capital costs for the project is forecast to reach $818 million. Management is looking to complete construction by the end of 2015 and reach start up by 2017.

Here’s the rub. AVT has a market capitalization of only $34.56 million. That looks like a lot of expectations heaped onto a small capital base. Also keep in mind that the lower the market capitalization the higher the risk for investors.

A review of the charts will inform my thoughts on this stock.

 

 

 

 

AVT

The three-year chart depicts a choppy trader which hit a 52-week low of $0.04 in May of 2014 where it caught a bounce to  its 52-week high of $0.14 in June. The MACD and the RSI both generated sell signals as the stock got overbought. From the high the stock began a retreat breaching the 50- and the 200-day moving averages by October.

 

 

 

 

 

 

 

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The six-month chart highlights the downtrend in place since May and the resistance that has formed at $0.0950. There are no signals indicating that we can expect a trend reversal in the near term as the MACD and the RSI are trending lower. All things considered you would have to place AVT in the high risk speculative portion of your portfolio. Startup is not expected until 2017 and with metal prices depressed on weakness in global demand you would be well advised to be cautious with this investment.

Make it a profitable day and happy capitalism!

 

 

 

 

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