Avocet Mining PLC Update on business review and life of mine plan (4036J)
12 June 2014 - 4:00PM
UK Regulatory
TIDMAVM
RNS Number : 4036J
Avocet Mining PLC
12 June 2014
12 June 2014
Avocet Mining PLC
Update on business review and life of mine plan
Avocet Mining PLC ("Avocet" or "the Company") today provides an
update on its business review and on the life of mine plan for its
Inata operation in Burkina Faso.
The business review initiated in January to address the
Company's financial requirements is continuing, with discussions
ongoing with multiple parties about a range of potential investment
or asset sale transactions, with a view to repaying the outstanding
loan due to Avocet's largest shareholder Elliott Management, as
well as ensuring adequate working capital for the Company and Inata
in 2014.
In the meantime the Company has taken further steps aimed at
reducing costs and minimising capital expenditure at Inata, in
order to manage the mine's limited cash resources in the period
leading up to commissioning of the new carbon blinding circuit.
During the period leading up to commissioning of the new circuit,
Inata is reliant on low grade oxide ore, as it preserves higher
grade transitional and fresh ore, which is more carbonaceous and
would deliver much lower recoveries if processed through the
current plant configuration. Following commissioning of the carbon
blinding circuit, which is now expected in September 2014 following
late delivery to site of key components, Inata is forecast to
process the higher grade carbonaceous ore at higher recoveries.
On 20 December 2013, the Company reported that an estimated life
of mine plan for Inata showed negative cash flow in 2014 and a
requirement for further short term funding in 2014 of between US$20
million and US$30 million. It also stated that according to the
estimated life of mine plan Inata should generate pre-financing
cash flows in 2015-2018 of approximately US$180 million at a gold
price of US$1,200 per ounce (roughly US$200 million at US$1,250 per
ounce). Since then, further work has been undertaken on the plan
which indicates that the short term funding requirement in 2014 is
now between US$15 million and US$20 million. The pre-financing cash
flows in 2015-2018 have decreased to approximately US$115 million
at a gold price of US$1,250 per ounce.
These changes, which are provisional pending completion of
technical work in a number of areas, reflect a number of
amendments, including the following:
-- the exclusion from the life of mine plan of high grade
inferred material at Souma South pit representing approximately
56,000 contained ounces, pending further drilling work. The life of
mine plan still includes high grade inferred material at Souma
Central pit;
-- increased waste stripping volumes at Inata North and Central pits; and
-- higher operating costs, working capital and mine closure
costs towards the end of mine life than assumed in the previous
estimate.
Importantly, the life of mine plan does not include any of the
following possible sources of additional value at Inata, which the
Company will continue to investigate:
-- further cash savings from reducing Inata's cost base and
achieving working capital efficiencies;
-- Souma South pit, or any of the remaining areas at Souma other than Souma Central;
-- new sources of oxide elsewhere in the Belahouro district; and
-- heap leaching of lower grade material.
Further updates will be given as appropriate and when the work
on the new life of mine plan is complete.
FOR FURTHER INFORMATION PLEASE CONTACT
Avocet Mining Bell Pottinger J.P. Morgan NM Rothschild Investec
PLC Financial Cazenove Financial Bank Plc
PR Consultants Corporate Adviser Financial
Broker Adviser
David Cather, Daniel Thöle Michael Wentworth-Stanley Roger Ewart-Smith Jeremy Wrathall
CEO Sam Critchlow
Mike Norris,
FD
+44 20 7766 +44 20 7861 +44 20 7742 +44 20 7280 +44 20 7597
7676 3800 4000 5424 4180
NOTES TO EDITORS
Avocet Mining PLC ('Avocet' or the 'Company') is an unhedged
gold mining and exploration company listed on the London Stock
Exchange (ticker: AVM.L) and the Oslo Børs (ticker: AVM.OL). The
Company's principal activities are gold mining and exploration in
West Africa.
In Burkina Faso the Company owns 90% of the Inata Gold Mine.
Across the Bélahouro district, which includes both Inata and Souma,
there is a Mineral Resource of 6.1 million ounces and an Ore
Reserve of 0.5 million ounces. The Inata Gold Mine poured its first
gold in December 2009 and produced 118,443 ounces of gold in 2013.
Other assets in Burkina Faso include eight exploration permits
surrounding the Inata Gold Mine in the broader Bélahouro region.
The most advanced of these projects is Souma, some 20 kilometres
from the Inata Gold Mine, where there is a Mineral Resource
estimate of 0.8 million ounces.
In Guinea, Avocet owns 100% of the Tri-K Project in the north
east of the country. Drilling to date has outlined a Mineral
Resource of 3.0 million ounces, and in October 2013 the Company
announced a maiden Ore Reserve on the oxide portion of the orebody,
which is suitable for heap leaching, of 0.5 million ounces. As an
alternative, the potential exists to exploit the entire 3.0 million
ounce Tri-K orebody via CIL processing method.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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