Avion Gold Corp AVGCF

RE: RE: RE: RE: Operating Expenses

[ngobe]

I am upset about the amount of stock based compensation.  However, the major number $24 mil is what I would like to dissect.  It appears to me (and I still have not finished my research) that most of this which affected the net earnings is due to the fact that this is still a growing company so they are spending significant capital for developing areas where they are not yet mining.  So although they have a healthy profit margin based on their gold cash cost / oz (under $600/oz) they are using that money for the most part to develop other parts of their property where they are not mining yet for future production - thus, their zero net earnings.  In that case you cannot value this stock based on their net earnings alone and need to factor in their growth potential (or more specifically how well the money is spent specially in relation to the quality of asset). 

I think then when comparing to other growing junior miners one may for example factor in the resources and use price / resource as a tempering factor (e.g., $100-$150 / oz for junior mining stocks at this point compared to a $200-$250 / oz for a more mature and senior company).  I would also consider ignoring the loss as long as its is related to efficiently expanding mining operations within reasonable parameters / cost.  I believe these are ideas that institutions / smart money in particular is aware of rather than reacting to what appears on surface bad results.  That is why it is important to ask the right questions and dissect the news / info rather than fall prey to vultures (pumpers who set up high expectations, and bashers who talk doom and gloom) and miss a potential opportunity. 

That said I do not yet know the full nature of the expenses and if they were well justified so in no way I am recommending this stock yet.  Please do your own DD.