Avocet Mining PLC Q4 and Full Year Production Results (1404V)

TIDMAVM

RNS Number : 1404V

Avocet Mining PLC

26 January 2017

2016 Q4 and Full Year Production Results

and General Update

Avocet Mining PLC ("Avocet" or "the Company"), the West African focused gold mining and exploration company with operations in Burkina Faso and Guinea, today announces production and cash costs for the fourth quarter of 2016.

Summary

-- Gold production in Q4 was 13,177 ounces at a cash cost of US$1,156 per ounce, compared with 17,694 ounces at a cash cost of US$1,047 per ounce in Q3

-- This fall in production was predominantly due to operations at the mine being interrupted for a period of four weeks

-- The 1,392 ounces of gold which had been seized in October, causing the interruption, have now been released and sold

-- Full year production totalled 72,485 ounces, slightly below guidance, at a cash cost of US$991 per ounce

   --      The Tri-K transaction with Managem was approved by shareholders on 22 December 2016 
   --      This transaction will allow Managem to commence a US$10 million work programme targeting a 1-million-ounce reserve and the completion of a bankable feasibility study for a Carbon-in-Leach ("CIL") operation. 

Q4 2016 and Full Year production at Inata

Gold production in Q4 was 13,177 ounces at a cash cost of US$1,156 per ounce compared with 17,694 ounces at a cash cost of US$1,047 per ounce in Q3 2016.

This fall in production was predominantly due to operations at the mine being interrupted for a period of four weeks between 27 October and 25 November 2016, following the seizure of the gold shipment on 7 October 2016. The increase in cash costs in the quarter reflected the fact that fixed costs were still incurred in spite of there being no gold production during this period.

Full year production totaled 72,485 ounces at a cash cost of US$991 per ounce, which was slightly below the guidance of 75-85,000 ounces notified prior to the stoppage in October.

Although production at Inata has returned to normal, the impact of the disruption on the cash position of the mine continues to be felt. Short term funding to allow for critical payments during the stoppage was provided by the mine's bankers, Ecobank and Coris Bank in Ouagadougou, and discussions are continuing with regard to the timing of repayments of these facilities as well as overdue balances with trade creditors.

The 1,392 ounces of gold which had been seized in October have now been released and sold, however the majority of the proceeds are to be used to settle agreed amounts in respect of the ex-workers' claim for back pay. Negotiations towards finalising the amount due in respect of this matter continue, however no further gold seizures are now expected.

Avocet's management has been concerned by the increase in security incidents in the Sahel region in the North of Burkina Faso, including in the vicinity of the Inata mine. The Company is treating the situation very seriously and is working with Burkinabe military representatives and third party advisers to identify and implement measures to mitigate these risks wherever possible.

The Company's full year financial results are due to be published on 13 April 2017.

Update on Tri-K project

The Tri-K transaction with Managem was approved by shareholders on 22 December 2016, and the only outstanding step ahead of completing the initial stage of the deal (defined as 'First Closing') is the ratification by the Guinean National Assembly of the project's Mining Convention, which is now expected to take place in February. The Mining Convention was signed by two Government Ministers, by Avocet and by Managem on 19 December 2016.

Once First Closing has been completed, Avocet will receive US$4 million in funds (less approximately US$1.5 million of transaction costs), and will transfer 40 per cent of its interest in the project to Managem, who will commence a US$10 million work programme targeting a 1 million ounce reserve and the completion of a bankable feasibility study for a CIL operation.

FOR FURTHER INFORMATION PLEASE CONTACT

 
Avocet Mining PLC  Blytheweigh        J.P. Morgan Cazenove 
                    Financial PR       Corporate Broker 
David Cather, CEO  Tim Blythe         Michael Wentworth-Stanley 
 Jim Wynn, FD       Camilla Horsfall 
                    Megan Ray 
[phone]   [phone]   [phone] 
 

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 per cent of the Inata Gold Mine. The Inata Gold Mine poured its first gold in December 2009 and produced 72,485 ounces of gold in 2016. Other assets in Burkina Faso include five exploration permits surrounding the Inata Gold Mine in the broader Bélahouro region. The most advanced of these projects is Souma, some 20 kilometers from the Inata Gold Mine.

The Company also holds an interest in the Tri-K project in Guinea. On 10 October 2016, the Company announced that it had agreed to dispose of 40 per cent of the project to Managem, a Moroccan group listed on the Casablanca stock exchange, which remains subject to approval by the Guinean National Assembly, and which will increase upon completion of a bankable feasibility study for a CIL plant at the site, the incurring of expenditures of at least US$10 million, and the enlarging of the ore reserve, to 70 per cent (in the event of an increase of the reserve to 1 million ounce or more) or 60 per cent (if less than 1 million ounces).

Appendix 1

Inata Gold Mine quarterly production information 2015-16

 
                                            2015                                    2016 
                               Q1      Q2      Q3      Q4    2015      Q1      Q2      Q3      Q4   YTD 
Ore mined (k tonnes)          393     397     233     290   1,313     310     397     214     420   1,341 
Waste mined (k tonnes)      1,420   3,563   4,349   3,494  12,826   2,993   2,855   2,505   1,458   9,811 
Total mined (k tonnes)      1,813   3,960   4,582   3,784  14,139   3,303   3,252   2,719   1,878  11,152 
Ore processed (k tonnes)      437     471     448     509   1,865     544     537     478     284   1,843 
Average head grade (g/t)     2.50    2.27    1.50    1.22    1.85    1.21    1.32    1.46    2.20    1.46 
Process recovery rate         52%     67%     72%     89%     67%     91%     93%     79%     68%     84% 
                           ------  ------  ------  ------  ------  ------  ------  ------  ------  ------ 
Gold Produced (oz)         17,011  22,848  17,517  17,379  74,755  20,528  21,086  17,694  13,177  72,485 
 
Cash costs (US$/oz)            Q1      Q2      Q3      Q4    2015      Q1      Q2      Q3      Q4     YTD 
Mining                        262     313     362     335     318     291     298     346     333     314 
Processing                    540     408     486     430     462     375     347     417     483     397 
Administration                236     155     188     251     203     183     163     182     270     193 
Royalties                      75      76      71      78      75      75      95     102      70      87 
                           ------  ------  ------  ------  ------  ------  ------  ------  ------  ------ 
                            1,113     952   1,107   1,094   1,058     925     903   1,047   1,156     991 
 

This information is provided by RNS

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January 26, 2017 02:00 ET (07:00 GMT)