Avocet Mining PLC Completion of hedge buy back (1035T)

TIDMAVM

RNS Number : 1035T

Avocet Mining PLC

15 November 2013

Completion of hedge buy back

- Avocet now a fully unhedged gold producer

Avocet Mining PLC ('Avocet' or the 'Company') announces that it has completed the buy back of its entire hedge position with Macquarie Bank Limited ('Macquarie') and is now a fully unhedged gold producer.

On 31 October 2013 the Company announced that it had closed, and drawn down, a five year loan facility with Ecobank Burkina Faso ("Ecobank") which would enable it to remove all existing hedge commitments. The loan amount is 30 billion Francs de la Communauté Financière d'Afrique ("FCFA"), which is the legal currency of Burkina Faso. The Ecobank loan, which has no hedge requirement, has been provided to the Company's 90% subsidiary Société des Mines de Bélahouro SA ('SMB'), which owns the Inata mine in Burkina Faso.

The Company has utilised approximately US$29 million of the loan proceeds, in addition to US$12 million of funds previously restricted by Macquarie, to buy back the Company's entire outstanding hedge commitment of 111,980 ounces at US$938 per ounce, for a total consideration of approximately US$41 million. Following the hedge buy back and the final debt repayment during Q3 2013, all obligations under the Macquarie finance facility have now been discharged. The Company is now an unhedged gold producer in respect of the presently defined eight year mine life at Inata.

Ecobank Burkina Faso is an affliate of Ecobank Transnational Inc., which has its headquarters in Lomé, Togo. Ecobank Transnational Inc. is a Pan African bank with operations in 33 countries across the continent and a strategy to build a world class African financial institution. Avocet has a long term relationship with Ecobank, with the bank having provided various banking services to meet SMB's needs since 2008.

The Ecobank facility has a five year term, bears an interest rate of 8% per annum, has no hedge requirement, and is secured against certain of the assets of SMB. The first repayment will be made in November 2013 and equal monthly repayments of 631 million FCFA (US$1.3 million), comprising interest and principal, will continue for the 60 month duration of the loan. The facility requires that an amount equal to two months' payments be held in a debt service reserve account. Subject to the debt service reserve account requirement, there are no restrictions on SMB's use of loan proceeds or cash flow generated, including the transfer of funds from SMB to Avocet for corporate purposes.

David Cather, Chief Executive Officer, commented:

"We are very pleased to have worked with Ecobank to secure such an important facility. Avocet has had a successful relationship with Ecobank in Burkina Faso over several years. The facility brings significant advantages for our operations, at favourable terms, and has allowed us to realise our goal of being an unhedged gold producer; we look forward to continuing to work with Ecobank as we develop our assets."

Cheikh Travaly, Managing Director of Ecobank Burkina Faso, commented:

"We are delighted to provide this loan to SMB, our first such move in support of Burkina Faso's growing mining industry. Avocet's success is central to Burkina Faso's ongoing emergence as a gold producer, and Ecobank is proud to be playing a role in this regard."

FOR FURTHER INFORMATION PLEASE CONTACT

 
Avocet Mining  Pelham Bell        J.P. Morgan Cazenove       Arctic Securities   SEB Enskilda 
 PLC            Pottinger          Corporate Broker           Financial Adviser   Financial 
                Financial                                                         Adviser 
                PR Consultants 
David Cather,  Daniel Thöle  Michael Wentworth-Stanley  Arne Wenger         Fredrik Cappelen 
 CEO                                                          Petter Bakken 
 Mike Norris, 
 FD 
 Rob Simmons, 
 IR 
[phone]    [phone]                                                       +47 2100 
 7676           3232              [phone]           [phone]         8500 
 

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. The deposit at Inata currently comprises a Mineral Resource of 4.7 million ounces and an Ore Reserve of 0.9 million ounces. The Inata Gold Mine poured its first gold in December 2009 and produced 135,189 ounces of gold in 2012.

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 an estimated Mineral Resource 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 over 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. Development of a CIL processing plant to exploit the remaining 2.4 million ounces will be considered once the heap leach feasibility study has been completed.

About Ecobank Group

Ecobank Transnational Corporation ('Ecobank'), a public limited liability company, is a leading pan-African bank with operations in 33 countries across the continent, and was established as a bank holding company in 1985 under a private sector initiative spearheaded by the Federation of West African Chambers of Commerce and Industry with the support of ECOWAS. The Group also has a licenced operation in Paris and representative offices in Beijing, Dubai, Johannesburg, London and Luanda. Ecobank's headquarters are in Lomé, Togo. As at the end 2012, the bank had assets of US$20 billion and revenue of close to US$2 billion.

For more information, please visit www.ecobank.com

This information is provided by RNS

The company news service from the London Stock Exchange

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