TIDMASO
RNS Number : 6013B
Avesoro Resources Inc.
10 June 2019
10 June 2019
Avesoro Resources Inc.
TSX: ASO
AIM: ASO
OPERATIONAL AND GUIDANCE UPDATE
Avesoro Resources Inc., ("Avesoro" or the "Company"), the TSX
and AIM listed West African gold producer, announces the following
operational update including revised full year production and cost
guidance.
Serhan Umurhan, Chief Executive Officer of Avesoro, commented:
"During Q1 and thus far in Q2, the Company has experienced
significant ore dilution at the Youga Gold Mine which we have
focussed on remediating to maintain sufficient ore grades to the
ROM pad.
Following a comprehensive cost review, we have implemented an
initiative to transition both Youga and New Liberty to contractor
mining to further reduce the mining cost at both mines whilst
increasing mining volumes. As part of this initiative we have seen
a temporary reduction in operating performance and associated
inefficiencies at both assets. At Youga, this has resulted in the
open pit mining fleet operators refusing to work. If the situation
at Youga is not resolved on or before June 12, 2019 gold production
at Youga will be temporarily suspended. Negotiations are on-going
between both parties and I am optimistic that we can find a
mutually acceptable resolution to this issue in the near future.
The planned transition to contractor mining at New Liberty has also
resulted in disruption to mining activities and gold production,
with production materially deviating from budget in April and May
as a result.
I expect the downside of this initiative to be short lived and
that the anticipated reduction in mining costs will be beneficial
to the Company over the longer term. However, as a result of the
aforementioned issues, production guidance for 2019 has been
reduced to 180,000 - 200,000 ounces (previous guidance 210,000 -
230,000 ounces). Assuming the stoppage in mining operations at
Youga is resolved quickly, we expect a funding shortfall of between
US$25milliion to US$30million later this year.
I am confident that these short-term challenges will be quickly
overcome, and the Company's focus remains firmly on delivering
production from both mines in line with the forecasts within the
Technical Reports whilst delivering a successful transition to
underground mining operations at New Liberty within the next two
years."
Youga Gold Mine, Burkina Faso ("Youga")
As highlighted in the Company's Q1 2019 Production Results
(announced on April 11, 2019) unexpected ore dilution had been a
feature in Q1 2019. This has continued into Q2 with the average
mined grade at the Gassore satellite pit during the five months
ended May 31, 2019 ("YTD") substantially lower than the reserve
grade of 3.74 g/t published in the updated Mineral Reserve estimate
announced on May 8, 2019.
In order to address the unplanned dilution, the mining rate at
Gassore has been reduced and as a consequence, mining volumes YTD
are c. 14% behind budget. The shortfall in ore tonnes mined has
been supplemented by low grade stockpiles to maintain mill feed
levels. This has resulted in a mill feed grade for the year to date
of 1.87 g/t compared with a budgeted feed grade of 2.94 g/t.
Provisional, unreconciled production from Youga for the YTD was
30,700 ounces.
An initiative, driven directly by the Company's Chairman Mr
Mehmet Nazif Günal (the "Chairman"), to transition Youga to
contractor mining is also being implemented with the objective of
further reducing mining costs. As part of this initiative and a
drive to reduce costs in general the Burkinabe employee headcount
has been reduced by c.300 employees, most of whom were employed
within the mining department.
The Company's proposed mining contractor, Orkun Group Sarl
("Orkun"), is currently in negotiation to re-hire the open pit
operators. However, they have refused to work since June 7, 2019
resulting in the suspension of open pit mining activity at Youga.
Gold production has continued using mill feed from existing
stockpiles and emergency lower grade stockpiles have been used
since June 8, 2019. However, the emergency stockpiles will be
depleted, and gold processing operations will be suspended on June
12, 2019 unless open pit mining operations resume before that
date.
In order to mitigate against the impact of this temporary
stoppage in mining activities and to increase future material
movement at Youga, Orkun has committed to supplement the existing
Heavy Mining Equipment ("HME") fleet, at their own cost, with five
additional excavators, 15 haul trucks and other associated
auxiliary equipment.
New Liberty Gold Mine ("New Liberty")
At New Liberty in Liberia, the Company, also under the direct
supervision of the Chairman, commenced an initiative to the
transition from owner mining operations to contractor mining
operations. During April 2019 a number of staff in the existing HME
maintenance team chose to resign rather than accept the alternative
employment terms being offered by the incoming mining contractor,
Demir Kose Insaat Turizm Tasimacilik Ithalat Ihracat Sanayi Ticeret
AS. As a consequence, production at New Liberty in April was
reduced to 3.4koz before increasing to 8.1koz in May 2019.
Provisional unreconciled production from New Liberty for the YTD
stands at 37,400 ounces. Total material movement in April and May
at New Liberty was 5,079kt. In order to increase material movement
to budgeted levels, the contractor is expected to supplement the
HME fleet with additional HME with an approximate value of EUR 7
million, at their own cost. The first shipments of this equipment
have already started to arrive at New Liberty, with the balance due
throughout the remainder of June and July 2019.
Revised Annual Guidance
As a consequence of the matters noted above, and following a
review of the Company's 2019 mine plans, the Company now expects
production for the full year to be in the range of 180,000 -
200,000 ounces, a reduction from the previous guidance of 210,000 -
230,000 ounces.
It is expected that, although a number of cost saving
initiatives are currently being implemented and mining unit costs
are decreasing on a per tonne basis, operating cash costs will
increase to between US$889 to US$960 per ounce sold (previously
US$850 to US$910) with all-in sustaining costs ("AISC") increasing
to between US$1,152 to US$1,248 per ounce sold (previously US$1,110
to US$1,190).
Appointment of Special Committee
A Special Committee has been formed to oversee the operational
performance at the Company's mines and to consider various
financing options available to the Company. The Special Committee
is comprised of three independent, non-executive directors, David
Netherway, Jean-Guy Martin and Loudon Owen, with Mr. Owen serving
as its Chair.
Contact Information
Avesoro Resources Inc.
Geoff Eyre / Nick Smith
Tel: +44(0) 20 3405 9160
Camarco finnCap
(IR / Financial PR) (Nominated Adviser and Joint Broker)
Gordon Poole / Nick Hennis Christopher Raggett / Scott Mathieson
/ Camille Gochez
Tel: +44(0) 20 3757 4980 Tel: +44(0) 20 7220 0500
Berenberg Hannam & Partners
(Joint Broker) (Joint Broker)
Matthew Armitt / Detlir Elezi Rupert Fane / Ingo Hofmaier / Ernest
Tel: +44(0) 20 3207 7800 Bell
Tel: +44(0) 20 7907 8500
About Avesoro Resources Inc.
Avesoro Resources is a West Africa focused gold producer and
development company that operates two gold mines across West Africa
and is listed on the Toronto Stock Exchange ("TSX") and the AIM
market operated by the London Stock Exchange ("AIM"). The Company's
assets include the New Liberty Gold Mine in Liberia ("New Liberty")
and the Youga Gold Mine in Burkina Faso ("Youga").
New Liberty has an estimated Proven and Probable Mineral Reserve
of 17Mt with 1,365,000 ounces of gold grading 2.49g/t and an
estimated Measured and Indicated Mineral Resource of 20.47Mt with
1,748,200 ounces of gold grading 2.66g/t and an estimated Inferred
Mineral Resource of 3.0Mt with 271,000 ounces of gold grading
2.8g/t. A supporting Technical Report summarising the PFS, prepared
in accordance with CIM guidelines, is set out in an NI 43-101
compliant Technical Report dated January 31, 2019 and entitled "NI
43-101 Pre-Feasibility Report, Mineral Resource and Mineral Reserve
Update for the New Liberty Gold Mine, Liberia" and is available on
SEDAR at www.sedar.com.
Youga has an estimated Proven and Probable Mineral Reserve of
14.7Mt with 814,900 ounces of gold grading 1.72g/t and a combined
estimated Measured and Indicated Mineral Resource of 22.16Mt with
1,189,100 ounces of gold grading 1.67g/t and an Inferred Mineral
Resource of 7.6Mt with 377,000 ounces of gold grading 1.5g/t. A
supporting Technical Report summarising the PFS, prepared in
accordance with the requirements of National Instrument 43-101 will
be filed on SEDAR at www.sedar.com and on the Company's corporate
website www.avesoro.com within 45 days of the date of May 8,
2019.
For more information, please visit www.avesoro.com
Qualified Persons
The Company's Qualified Person is Mark J. Pryor, who holds a BSc
(Hons) in Geology & Mineralogy from Aberdeen University, United
Kingdom and is a Fellow of the Geological Society of London, a
Fellow of the Society of Economic Geologists and a registered
Professional Natural Scientist (Pr. Sci.Nat) of the South African
Council for Natural Scientific Professions. Mark Pryor is an
independent technical consultant with over 25 years of global
experience in exploration, mining and mine development and is a
"Qualified Person" as defined in National Instrument 43 -101
"Standards of Disclosure for Mineral Projects" of the Canadian
Securities Administrators and has reviewed and approved this press
release. Mr. Pryor has verified the underlying technical data
disclosed in this press release.
Forward Looking Statements
Certain information contained in this press release constitutes
forward looking information or forward-looking statements within
the meaning of applicable securities laws. This information or
statements may relate to future events, facts, or circumstances or
the Company's future financial or operating performance or other
future events or circumstances. All information other than
historical fact is forward looking information and involves known
and unknown risks, uncertainties and other factors which may cause
the actual results or performance to be materially different from
any future results, performance, events or circumstances expressed
or implied by such forward-looking statements or information. Such
statements can be identified by the use of words such as
"anticipate", "plan", "continue", "estimate", "expect", "may",
"will", "would", "project", "should", "believe", "target",
"predict" and "potential". No assurance can be given that this
information will prove to be correct and such forward looking
information included in this press release should not be unduly
relied upon. Forward looking information and statements speak only
as of the date of this press release.
Forward looking statements or information in this press release
include production guidance for the full year 2019 to be in the
range of 180,000 - 200,000 ounces; operating cash costs of between
US$889 to US$960 per ounce sold and an all-in sustaining cost
("AISC") of between US$1,152 to US$1,248 per ounce sold.
In making the forward looking information or statements
contained in this press release, assumptions have been made
regarding, among other things: general business, economic and
mining industry conditions; interest rates and foreign exchange
rates; the continuing accuracy of Mineral Resource and Reserve
estimates; geological and metallurgical conditions (including with
respect to the size, grade and recoverability of Mineral Resources
and Reserves) and cost estimates on which the Mineral Resource and
Reserve estimates are based; the supply and demand for commodities
and precious and base metals and the level and volatility of the
prices of gold; market competition; the ability of the Company to
raise sufficient funds from capital markets and/or debt to meet its
future obligations and planned activities and that unforeseen
events do not impact the ability of the Company to use existing
funds to fund future plans and projects as currently contemplated;
the stability and predictability of the political environments and
legal and regulatory frameworks including with respect to, among
other things, the ability of the Company to obtain, maintain, renew
and/or extend required permits, licences, authorizations and/or
approvals from the appropriate regulatory authorities; that
contractual counterparties perform as agreed; and the ability of
the Company to continue to obtain and retain qualified staff
(including employees and contractors) and equipment in a timely and
cost-efficient manner to meet its demand.
Actual results could differ materially from those anticipated in
the forward-looking information or statements contained in this
press release as a result of risks and uncertainties (both foreseen
and unforeseen) and should not be read as guarantees of future
performance or results and will not necessarily be accurate
indicators of whether or not such results will be achieved. These
risks and uncertainties include the risks normally incidental to
exploration and development of mineral projects and the conduct of
mining operations (including exploration failure, cost overruns or
increases, and operational difficulties resulting from plant or
equipment failure, among others); the inability of the Company to
obtain required financing when needed and/or on acceptable terms or
at all; risks related to operating in West Africa, including
potentially more limited infrastructure and/or less developed legal
and regulatory regimes; health risks associated with the mining
workforce in West Africa; risks related to the Company's title to
its mineral properties; the risk of adverse changes in commodity
prices; the risk that the Company's exploration for and development
of mineral deposits may not be successful; the inability of the
Company to obtain, maintain, renew and/or extend required licences,
permits, authorizations and/or approvals from the appropriate
regulatory authorities and other risks relating to the legal and
regulatory frameworks in jurisdictions where the Company operates,
including adverse or arbitrary changes in applicable laws or
regulations or in their enforcement; competitive conditions in the
mineral exploration and mining industry; risks related to obtaining
insurance or adequate levels of insurance for the Company's
operations; that Mineral Resource and Reserve estimates are only
estimates and actual metal produced may be less than estimated in a
Mineral Resource or Reserve estimate; the risk that the Company
will be unable to delineate additional Mineral Resources; risks
related to environmental regulations and cost of compliance, as
well as costs associated with possible breaches of such
regulations; uncertainties in the interpretation of results from
drilling; risks related to the tax residency of the Company; the
possibility that future exploration, development or mining results
will not be consistent with expectations; the risk of delays in
construction resulting from, among others, the failure to obtain
materials in a timely manner or on a delayed schedule; inflation
pressures which may increase the cost of production or of
consumables beyond what is estimated in studies and forecasts;
changes in exchange and interest rates; risks related to the
activities of artisanal miners, whose activities could delay or
hinder exploration or mining operations; the risk that third
parties to contracts may not perform as contracted or may breach
their agreements; the risk that plant, equipment or labour may not
be available at a reasonable cost or at all, or cease to be
available or resign, or in the case of labour, may undertake strike
or other labour actions; the inability to attract and retain key
management and personnel; and the risk of political uncertainty,
terrorism, civil strife, or war in the jurisdictions in which the
Company operates, or in neighbouring jurisdictions which could
impact on the Company's exploration, development and operating
activities.
Although the forward-looking statements contained in this press
release are based upon what management believes are reasonable
assumptions, the Company cannot provide assurance that actual
results or performance will be consistent with these
forward-looking statements. The forward looking information and
statements included in this press release are expressly qualified
by this cautionary statement and are made only as of the date of
this press release. The Company does not undertake any obligation
to publicly update or revise any forward looking information except
as required by applicable securities laws.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
UPDUGUCGQUPBPGB
(END) Dow Jones Newswires
June 10, 2019 02:00 ET (06:00 GMT)
Avesoro Resources (LSE:ASO)
Historical Stock Chart
From Apr 2024 to May 2024
Avesoro Resources (LSE:ASO)
Historical Stock Chart
From May 2023 to May 2024