TIDMAVM
RNS Number : 1324L
Avocet Mining PLC
27 July 2011
Immediate Release 27 July 2011
AVOCET MINING PLC
STRATEGIC UPDATE AND RESULTS FOR THE QUARTER ENDED 30 JUNE
2011
Strategic Update:
-- Fully focused on West Africa, strong balance sheet positioned
for growth
-- Substantial completion of South East Asia asset sale in June
2011 for US$170 million, US$30 million expected in Q3 2011 for
remaining assets, conditional on relevant Indonesian approvals
being obtained
-- Scoping study initiated to significantly increase production
at Inata mine in Burkina Faso with a target for early 2013
-- Continued development of the resource base within Tri-K in
Guinea, with a focus to advance Koulekoun towards feasibility study
in Q4 2011
-- Adoption of a dividend policy at an initial level of US$20
million per annum, subject to production growth funding
requirements - interim dividend declared of 2.1 pence per share,
payable 30 September to shareholders on the register at close on 9
September
-- Cash at 30 June of US$179 million after repayment of
corporate debt of US$25 million to Standard Chartered Bank on 24
June 2011; Inata debt of US$41 million to continue to be repaid at
US$6 million per quarter
-- Twenty per cent of remaining Inata gold hedge of 292,165
ounces bought back for approximately US$40 million, balance
restructured over seven years, doubling exposure to spot prices at
current production levels
Q2 2011 Results:
-- Q2 2011 Group gold production of 62,803 ounces at a total
cash cost of US$802 per ounce; compared with Q1 2011 Group gold
production of 71,708 ounces at a total cash of US$678 per ounce
-- Inata production of 39,423 ounces at a cash cost of US$677
per ounce, compared with 47,963 ounces at a cash cost of US$533 per
ounce in Q1 2011
-- Inata Resources increased to 2.12 million ounces in Q2
2011
-- EBITDA of US$26.1 million in Q2 2011 compared with US$33.0
million in Q1 2011
Quarter
ended Quarter Quarter Quarter ended
31 March ended 31 ended 30 30 June
2010 March 2011 June 2010 2011
Period Unaudited Unaudited Unaudited Unaudited
=================== =========== ============= ============= ==============
Total gold
production
(ounces) 44,877 71,708 52,870 62,803
=================== =========== ============= ============= ==============
Average realised
gold price
(US$/oz) 1,107 1,241 1,203 1,292
=================== =========== ============= ============= ==============
Cash production
costs (US$/oz) 735 678 701 802
=================== =========== ============= ============= ==============
EBITDA(1) from
continuing
operations
(US$000) (4,148) 25,403 18,297 16,600
=================== =========== ============= ============= ==============
EBITDA from
continuing and
discontinued
operations
(US$000) 4,115 32,994 24,559 26,083
=================== =========== ============= ============= ==============
Profit/(loss)
before tax from
continuing
operations
(US$000) (4,143) 12,570 7,765 14,862
=================== =========== ============= ============= ==============
Profit before tax
(US$000) 196 20,321 10,900 96,973
=================== =========== ============= ============= ==============
(1. ) EBITDA represents earnings before exceptional items,
finance items, tax, depreciation and amortisation. EBITDA is not
defined by IFRS but is commonly used as an indication of underlying
cash generation.
Brett Richards, Chief Executive Officer, commented:
"In addition to our Q2 2011 results released today, I am pleased
to announce several strategic initiatives that will position Avocet
as a leading West African gold mining and exploration company.
These initiatives are designed to deliver additional production at
Inata; a new mine in Guinea; increased exposure to the spot price
of gold; and an interim dividend, all of which are aimed at
generating increased shareholder value."
Board of Directors statement:
The Board of Directors of Avocet Mining PLC would like to extend
its deepest sympathies to the people of Norway, and the families
and friends affected by the tragic events that occurred in Oslo and
on Utoya Island on Friday 22 July 2011. Over thirty five percent of
Avocet's shareholders are based in Oslo and throughout Norway, and
this terrible event will reach deep into the lives of many for a
long time to come. Our thoughts are with all those affected.
The Company has made a donation to the Norwegian Red Cross -
Rode Kors.
Avocet Mining will host a conference call on Wednesday 27 July
at 09:30am (London, UK time) to update investors and analysts on
its strategic update Q2 2011 results. Participants may join the
call by dialing one of the following three numbers, approximately
10 minutes before the start of the call.
From UK: (toll free) 0800 368 1895
From Norway: (toll free) 800 135 47
From rest of world: +44 (0)203 140 0693
Participant pass code: 175331#
A live audio webcast of the call will be available on:
http://mediaserve.buchanan.uk.com/2011/avocet270711/registration.asp
For further information
please contact:
Ambrian
Avocet Partners J.P. Morgan Arctic
Mining PLC Buchanan Limited Cazenove Securities SEB Enskilda
Financial
NOMAD & Adviser
Financial PR Joint & Market
Consultants Broker Lead Broker Maker Market Maker
Brett
Richards,
CEO Mike
Norris, FD
Hans-Arne
L'orange
EVP, BD &
IR Angela Arne
Parr, Bobby Morse Samantha Michael Wenger
Investor Katharine Harrison Jen Wentworth-Stanley Petter Fredrik
Relations Sutton Boorer Neil Passmore Bakken Cappelen
+44 20 7466
+44 20 5000
7766 +44 78 7260 +44 20 7634 +47 2101
7676 4783 4700 +44 20 7588 2828 3100 +47 21008500
www.avoce www.buchanan. www.ambrian www.jpmorgancazen www.arctic www.sebenski
t.co.uk uk.com .com ove.com sec.no lda.no
Notes to Editors
Avocet Mining PLC ("Avocet" or "the Company") is a gold mining
and exploration company listed on the AIM market of the London
Stock Exchange (Ticker: AVM.L) and the Oslo Bors (Ticker: AVM.OL).
The Company's principal activities are gold mining and exploration
in Burkina Faso (as 90 per cent owner of the Inata gold mine) and
exploration in Guinea.
In December 2010 Avocet announced that it had signed a binding
agreement for the conditional sale of its South East Asian assets
to PT Bara Kutai Energi, an affiliate J & Partners L.P., a
private company, for US$200 million. On 24 June 2011, the Company
announced it had completed the sale of its main South East Asian
assets, including its 100 per cent interest in the Penjom Gold Mine
("Penjom") in Malaysia and its 80 per cent interest in PT Avocet
Bolaang Mongondow ("PT ABM"), which owns the North Lanut mine and
Bakan project in North Sulawesi, Indonesia, for proceeds of US$170
million. The completion of the sale of Avocet's remaining South
East Asian assets pursuant to the same sale agreement is expected
to occur during Q3 2011.
The substantial completion of this transaction has left Avocet
as a West African gold producer and explorer, with a clear strategy
for growth in that region. Further details can be found in the
press releases dated 24 December 2010 and 27 June 2011, and in the
Company's preliminary results statement for 2010, dated 22 February
2011.
Background to Operations
The Inata deposit presently comprises a Mineral Resource of 2.12
million ounces and a Mineral Reserve of 1.08 million ounces. Inata
poured its first gold in December 2009 and has now reached a
production rate in excess of 13,500 ounces per month. Other assets
in West Africa include exploration permits in Burkina Faso (the
most advanced being the Souma trend at Belahouro, some 20
kilometers from Inata, with a Mineral Resource of 561,100 ounces),
Guinea and Mali (the most advanced being the Tri-K gold exploration
project in Guinea with a Mineral Resource of 1.10 million
ounces).
CHIEF EXECUTIVE OFFICER'S STATEMENT AND OPERATIONAL REVIEW
Strategic Update
The substantial completion of the sale of Avocet's South East
Asia assets for US$170 million on 24 June marks the beginning of a
new chapter for Avocet, with the Company now focused entirely on
growing a larger business in West Africa. The Company expects sale
completion in respect of the remaining assets for US$30 million to
take place during Q3 2011.
Avocet's first priority will be to exploit its existing land
packages in Burkina Faso and Guinea, and to expedite new production
growth in both countries.
In Burkina Faso, the Souma Trend currently has a resource of
561,000 ounces and will now be subject to a further drilling
campaign aimed at increasing the resource and generating a reserve
to supplement ore feed at the current Inata processing plant.
Inata's reserves are expected to double to 1.8 million ounces as a
result of drilling during 2011, notably within the existing pits
and from the comprehensive drilling program along the northern
strike from Inata's north pit. A drilling shortfall caused by
industrial action in May means that the 1.8 million ounce target
may now be achieved in two steps, with reserve announcements now
planned in September 2011 and January 2012, after exploration
drilling resumes following the July to September rainy season.
To support longer term production growth at Inata, the Company
will embark on a three year, US$20 million annual commitment to
exploration programmes in the Belahouro region effective
immediately. These programmes are intended to increase the resource
base in an effort to maintain regional mine life in excess of ten
years.
This increase in Mineral Resources and a further commitment to
extensive exploration programmes, has provided a platform for a
scoping study to be initiated with the aim of adding significant
new production capacity at Inata. The study will initially
incorporate mineralised areas within the Inata mine license area,
as well as the future processing of material from the Souma Trend.
The scoping study at Inata will evaluate the potential for future
reserves as well as the exact location, configuration and size of
new plant capacity. The expansion has a target of 80,000 additional
ounces per year with capital expenditure estimated in the region of
US$120 million, and with production commencing in early 2013.
In Guinea, drilling is on track to increase resources at
Koulekoun by the end of 2011 to underpin a feasibility study of the
large, highly mineralised region of the Tri-K district. During the
second half of 2011, further infill drilling and metallurgical test
work will be accelerated to advance Koulekoun towards a feasibility
study before the end of the year. The Company is targeting
commencing construction in 2013 and first gold production in 2014,
however the Guinean government will be introducing a new mining
code in September 2011 for parliamentary adoption, which requires
the review and approval of theFirst Minister (Minister of Mines)
before proceeding to the national assembly for vote. At this time,
the Guinean Minister of Mines Department has solicited input from
mining companies, but the exact timing and final terms and
conditions of the new Mining Code, as well as how these could
impact any development plans, are not yet clear.
The Company will announce at the appropriate time any
commitments it enters into to order long lead time items, as well
as the appointment of advisors and consultants to conduct
feasibility studies or Engineering, Procurement and Construction
Management work in both Burkina Faso and Guinea.
The sale proceeds from South East Asia means that the Company
had cash of US$179 million at 30 June 2011, after repaying the
Company's US$25 million debt facility from Standard Chartered Bank.
Further proceeds of approximately US$30 million are expected in the
third quarter of 2011 subject to sale completion of the Company's
remaining, minor assets in South East Asia.
The Company has today announced the adoption of a dividend
policy at an initial level of US$20 million per annum, or
approximately 6.3 pence per share. The Company has today declared
an interim dividend of 2.1 pence per share, payable to shareholders
on the register at the record date of 9 September 2011 and paid out
on 30 September 2011, in accordance with the policy set out below.
The Company has therefore adopted the following dividend policy:
"It is the intention of the Company to pay dividends to its
shareholders initially at a level totalling approximately US$20
million per annum, with one third to be declared at the interim and
two thirds as a final dividend. This level of payment strikes a
balance between returning profit to shareholders and being able to
invest in the growth of our business. It has been set after taking
into account the expected profitability of the business including
future growth plans, cash flow requirements to support future
production and expansions, and the availability of capital."
Today, Avocet has also announced that it has restructured
Inata's gold hedge, including a partial buy-back, in order to
increase the Company's exposure to spot gold prices. Under the
restructure, 20 per cent of the hedge book has been eliminated at a
cost of approximately US$40 million, and the remaining position of
233,733 ounces previously deliverable at approximately 25,000
ounces per quarter through to June 2014 at a price of US$970 per
ounce has been replaced by a new profile spread over the next seven
years with deliveries of 8,250 ounces per quarter through to June
2018 at a price of US$950 per ounce. The lower hedge price reflects
the funding and credit costs associated with extending the profile
by a further four years. As a result of the restructure, the
proportion of Inata's annual production in the next three years
that is exposed to spot prices will double from 40 per cent to
approximately 80 per cent, equivalent to additional EBITDA of
approximately US$32 million per annum for the original hedge term
of three years, at current gold prices. This percentage is expected
to climb to approximately 85 per cent when new production capacity
at Inata comes on line.
The Company remains ready and prepared to act on any merger and
acquisition opportunities in West Africa that can be demonstrated
as accretive, and which will add shareholder value.
Q2 2011 Gold Production and Cash Costs
2011
-----------------------------------------------
Gold produced (oz.) Cash costs (US$/oz.)
---------------------- -----------------------
Q1 Q2 Q1 Q2
------------- ---------- ---------- ----------- ----------
Inata 47,963 39,423 533 677
------------- ---------- ---------- ----------- ----------
Penjom 11,597 13,671 1,194 1,103
------------- ---------- ---------- ----------- ----------
North Lanut 12,148 9,709 759 890
------------- ---------- ---------- ----------- ----------
Total 71,708 62,803 678 802
------------- ---------- ---------- ----------- ----------
2010
----------------------------------------------------------------
Gold produced (oz.) Cash costs (US$/oz.)
---------------------------------- ----------------------------
Q1 Q2 Q3 Q4 Q1(1) Q2 Q3 Q4
------------ ------- ------- ------- ------- ------ ------ ---- ------
Inata 19,838 31,225 40,461 46,208 n/a 569 526 511
------------ ------- ------- ------- ------- ------ ------ ---- ------
Penjom 13,669 10,461 15,020 11,934 818 1,119 841 1,064
------------ ------- ------- ------- ------- ------ ------ ---- ------
North Lanut 11,370 11,184 12,311 12,715 635 678 657 722
------------ ------- ------- ------- ------- ------ ------ ---- ------
Total 44,877 52,870 67,792 70,857 735 701 619 641
------------ ------- ------- ------- ------- ------ ------ ---- ------
(1) Excludes Inata results prior to start of commercial operations on
1 April 2010
Gold production in the quarter totalled 62,803 ounces. As
expected, production at Inata was lower than Q1 due to lower grades
and the impact of a one week strike in May. In aggregate, Penjom
and North Lanut production up to the date of sale (24 June 2011)
was in line with Q1, with improved mining at Penjom offsetting a
drop in production at North Lanut, largely caused by a five day
strike early in the quarter.
The Group's average cost per ounce increased from US$678 in the
first quarter to US$802 in Q2, reflecting the combined effects of
lower production at Inata and rising input prices which have
affected the mining industry in general. Management is implementing
initiatives to minimise the impact of increasing costs.
The Group's average realised gold price for Q2 was US$1,292 per
ounce, which includes the impact of 24,792 ounces sold into the
hedge book at US$970 per ounce. The average realised price on
ounces sold at spot in the period was US$1,508 per ounce. On 30
June 2011, the hedge book had reduced to 299,401 ounces, and had
subsequently reduced to 292,165 ounces prior to the restructure
announced today.
On 24 June 2011, Avocet announced that it had completed the sale
of its main South East Asian assets, including its 100 per cent
interest in the Penjom gold mine and its 80 per cent interest in PT
Avocet Bolaang Mongondow, which owns the North Lanut mine and Bakan
project in North Sulawesi, Indonesia for proceeds of US$170
million. This outcome allows Avocet to focus on growing its West
African business, while realising a profit on disposal estimated to
be US$72.8 million (subject to finalisation of sale completion
accounts).
Avocet's remaining assets in South East Asia, including its
interests in the exploration projects at Doup, Seruyung and Pani,
are expected to be sold during Q3 2011, once relevant government
approvals have been obtained. The consideration for these assets
has been agreed as US$30 million on a debt-free cash-free basis,
and is expected to realise a profit on disposal of approximately
US$15 million.
West Africa Region: Inata - Burkina Faso
2010 2011
=============== ============================================== ======================
Q1 Q2 Q3 Q4 Q1 Q2
=============== ========== ========== ========== ========== ========== ==========
Production
statistics(1)
Ore mined
(tonnes) 342,000 418,000 481,000 638,000 618,000 634,000
Waste mined
(tonnes) 2,005,000 2,437,000 2,619,000 4,369,000 4,673,000 3,804,000
Ore and waste
mined
(tonnes) 2,347,000 2,855,000 3,100,000 5,007,000 5,291,000 4,438,000
Ore processed
(tonnes) 228,000 389,000 549,000 593,000 645,000 586,000
Average ore
head grade
(g/t Au) 2.80 2.87 2.43 2.68 2.37 2.24
Process
recovery
rate 94% 95% 94% 94% 94% 93%
=============== ========== ========== ========== ========== ========== ==========
Gold produced
(ounces) 19,838 31,225 40,461 46,208 47,963 39,423
=============== ========== ========== ========== ========== ========== ==========
Cash costs
(US$/oz.)(1)
- mining - 147 114 132 136 200
- processing - 211 211 209 205 238
- royalties
and
overheads - 211 201 170 192 239
=============== ========== ========== ========== ========== ========== ==========
Total cash
cost - 569 526 511 533 677
=============== ========== ========== ========== ========== ========== ==========
(1) Production statistics include figures for Q1 2010; however
cash costs are excluded for Q1 2010, as Inata did not reach
commercial production until 1 April 2010.
Gold production at Inata in Q2 totalled 39,423 ounces, compared
with 47,963 in Q1 2011, as an anticipated moderation in grades was
exacerbated by labour disruption in May, which impacted both mining
and plant operations as well as exploration.
Mining activities continued to focus primarily on the Inata
North and Central pits. In April, the higher grades which had been
seen in the first quarter began to normalise to lower levels more
consistent with the life of mine. Stripping ratios increased in
line with expectations, as operations moved into a period of higher
waste stripping expected to last for the next two years. However,
the impact of the labour dispute in May was seen not only on the
total tonnes mined, which at 4.4 million tonnes was 16 per cent
lower than Q1, but also in the strip ratio, as mining was
temporarily diverted from waste stripping in order to maintain ore
feed to the stockpile. It is anticipated that the shortfall in
waste clearance will be caught up over the remainder of 2011.
Mill throughput was also impacted by the strike action; however
plant throughput rates and availabilities were otherwise in line
with the previous quarter.
Cash costs increased to US$677 per ounce in Q2, which reflects
the lower gold production levels, but also the impact of input
price increases. Higher oil prices earlier in the year led to
substantial increases in fuel and lubricant costs, as well as
indirectly affecting other key input costs such as transportation
and reagents. In addition, higher gold prices have led to increased
royalty costs.
These factors and the higher royalty costs resulting from the
hedge restructure and doubling of exposure to spot prices, mean
that cash costs for the full year 2011 are now expected to be in
the order of US$675 per ounce.
West Africa Region: Exploration
Exploration in the second quarter of 2011 focused on continuing
programmes designed to define the scale of the resource in and
around Inata in Burkina Faso, and Koulekoun in the Tri-K block of
permits in Guinea.
On 12 April 2011, the Company announced an increase in Mineral
Resource at Inata to 2.1 million ounces. On 20 June 2011 Avocet
released another set of positive drill results from the Inata
mining license area, having received assays from approximately two
thirds of the drill samples that had been completed. Results from
the remaining assays are currently being analysed and expected to
be announced before the end of the third quarter.
Industrial action at Inata in May brought the drilling programme
to an early close ahead of the scheduled break for the rainy season
in June with only 15,070 metres of reverse circulation and diamond
drilling completed in the quarter, and approximately 9,000 metres
of deep drill holes still to be completed beneath the Inata Central
and Inata North pits. The outstanding drilling will be completed
once activity resumes in early Q4. The Company remains confident
that the targeted doubling of Inata's Mineral Reserve will be
achieved, but depending on the results of reserve modelling and
mine planning currently under way, the target may now be achieved
in two steps with reserve announcements now planned in September
2011 and January 2011 with an interim Mineral Resource scheduled in
August.
Once the Inata drilling programme has been completed, the drill
rigs will test the defined prospects of Filio and Souma, where the
Company sees further resource upside potential. The Company will
also accelerate a comprehensive Rotary Air Blast ("RAB") drilling
programme in the Pali and Damba areas in order to develop targets
for resource drilling.
The second quarter drill programme in Guinea focused on drilling
the northern and southern extents of the Koulekoun deposit and on
evaluating a number of targets in the vicinity of Koulekoun. A
total of 142 reverse circulation and diamond drill holes,
representing approximately 19,000 metres, was completed in the
second quarter.
On 11 May 2011, the Company announced an increase in the Mineral
Resource at Koulekoun from 0.7 to 1.1 million ounces, including
details of significant intercepts. Further analysis of drilling
results is currently underway with a view to completing a new
Mineral Resource update by the end of Q3. Scout drilling results
from other prospects, including Balandougou, Kourounin and Forowa,
are also being received and will be reported once the assays have
been validated.
In addition to the drilling programme, results from an airborne
geophysical survey of the Tri-K block undertaken in March have
recently been received. The programme has identified several
conductive and resistive anomalies and offsetting structures that
point to a number of potentially interesting drill targets, which
will be the subject of further drilling when the field season
recommences in October.
The Government of Guinea has released a draft of the New Mining
Code, which is expected to be passed into law by the end of the
year. The new Code modifies the old Mining Law with much of the
legislation remaining intact, including the Government's 15%
free-carried interest in mining ventures. Material changes include
a provision for the Government to purchase up to an additional 20%
equity and initiatives to encourage the employment of Guinean
nationals.
In Mali, low key field work has continued, the results of which
will be reviewed in the coming months.
South East Asia Region: Penjom - Malaysia
2010 2011
============ ============================================== ======================
Q1 Q2 Q3 Q4 Q1 Q2
============ ========== ========== ========== ========== ========== ==========
Production
statistics
Ore mined
(tonnes) 105,000 51,000 127,000 137,000 80,000 211,000
Waste mined
(tonnes) 3,736,000 4,115,000 3,871,000 3,772,000 3,286,000 3,408,000
Ore and
waste
mined
(tonnes) 3,841,000 4,166,000 3,998,000 3,909,000 3,366,000 3,619,000
Ore
processed
(tonnes) 186,000 187,000 193,000 180,000 187,000 187,000
Average ore
head grade
(g/t Au) 2.80 2.21 2.86 2.36 2.29 2.95
Process
recovery
rate 83% 79% 85% 87% 84% 85%
============ ========== ========== ========== ========== ========== ==========
Gold
produced
(ounces) 13,669 10,461 15,020 11,934 11,597 13,671
============ ========== ========== ========== ========== ========== ==========
Cash costs
(US$/oz.)
- mining 482 682 517 667 742 685
-
processing 218 293 201 255 310 273
- royalties
and
overheads 118 144 123 142 142 145
============ ========== ========== ========== ========== ========== ==========
Total cash
cost 818 1,119 841 1,064 1,194 1,103
============ ========== ========== ========== ========== ========== ==========
Gold production at Penjom in the second quarter, up until its
sale on 24 June 2011, amounted to 13,671 ounces at a cash cost of
US$1,103 per ounce. This improvement on the first quarter reflected
the impact of operating improvements as well as the benefit of
mining in areas where ore grades were higher and reconciled more
closely to the geological model.
Cash costs of US$1,103 per ounce reflect input cost increases as
well as the continued strength of the Malaysian ringgit compared
with the US dollar in 2011.
South East Asia Region: North Lanut - Indonesia
2010 2011
================== ====================================== ======== ========
Q1 Q2 Q3 Q4 Q1 Q2
================== ======== ======== ======== ======== ======== ========
Production
statistics
Ore mined
(tonnes) 415,000 295,000 305,000 341,000 298,000 251,000
Waste mined
(tonnes) 392,000 428,000 380,000 335,000 291,000 200,000
Ore and waste
mined (tonnes) 807,000 723,000 685,000 676,000 589,000 451,000
Ore treated
(tonnes) 265,000 267,000 368,000 400,000 366,000 236,000
Average ore head
grade (g/t Au) 1.93 1.70 1.92 1.88 2.06 2.15
Process recovery
rate 69% 77% 54% 53% 50% 60%
================== ======== ======== ======== ======== ======== ========
Gold produced
(ounces) 11,370 11,184 12,311 12,715 12,148 9,709
================== ======== ======== ======== ======== ======== ========
Cash costs
(US$/oz.)
- mining 330 343 329 383 412 449
- processing 155 172 177 186 201 235
- royalties and
overheads 150 163 151 153 146 206
================== ======== ======== ======== ======== ======== ========
Total cash cost 635 678 657 722 759 890
================== ======== ======== ======== ======== ======== ========
The North Lanut mine produced 9,709 ounces up until its sale on
24 June 2011, at a cash cost of US$890 per ounce. Mining and leach
pad stacking operations were affected by continued rainfall
throughout the quarter, as well as by industrial action in
April.
South East Asia Region: Exploration
Although the majority of Avocet's South East Asian assets were
disposed on 24 June 2011, the Company has yet to complete the
divestment of the Doup, Seruyung and Pani exploration projects and
will continue to expend minimum amounts on these to comply with
licence requirements. Sale completion in respect of these assets is
expected during Q3 2011.
Financial Results
Since the signing on 24 December 2010 of the conditional
agreement to sell the Group's assets in South East Asia, the
operating results of these assets have been presented in the
consolidated income statement as discontinued operations for the
current and comparative periods, and those assets and liabilities
that remained within the Group at 30 June 2011 have been presented
separately as a disposal group in the statement of financial
position at 31 December 2010 and 30 June 2011, as required by
International Financial Reporting Standards (IFRS). A detailed
analysis of the results, assets, and cash flows of the disposal
group is presented in the segmental information.
The Group reported a profit before tax from continuing and
discontinued operations for the quarter of US$97.0 million compared
with US$10.9 million in the quarter ended 30 June 2010 and US$20.3
million in the first quarter of 2011. The increase compared with Q1
is largely due to the inclusion of US$72.8 million of gain on
disposal resulting from the sale of the Group's assets in South
East Asia.
Net cash generated by operations during Q2 was US$10.8 million
compared with US$23.1 million in Q2 2010 and US$30.2 million in the
first quarter of 2011. Other cash flows during Q2 2011 included
capital expenditure at Inata of US$8.2 million, exploration
investment of US$9.2 million in West Africa and US$1.5 million in
South East Asia, and debt repayments of US$31 million.
Brett A. Richards
Chief Executive Officer
CONDENSED CONSOLIDATED INCOME STATEMENT
For the three months ended 30 June 2011
Three months ended 30 June Three months ended 30
2011 June 2010
Unaudited Unaudited
Continuing Discontinued Continuing Discontinued
Note operations operations Total operations operations Total
=================== ===== =========== ============= ========= =========== ============= =========
US$000 US$000 US$000 US$000 US$000 US$000
Revenue 3 44,749 35,215 79,964 36,604 28,280 64,884
Cost of sales 3 (34,200) (25,732) (59,932) (24,201) (25,049) (49,250)
=================== ===== =========== ============= ========= =========== ============= =========
Gross profit 10,549 9,483 20,032 12,403 3,231 15,634
=================== ===== =========== ============= ========= =========== ============= =========
Administrative
expenses (2,872) - (2,872) (1,157) - (1,157)
Share based
payments (305) - (305) (1,572) - (1,572)
=================== ===== =========== ============= ========= =========== ============= =========
Profit from
operations 7,372 9,483 16,855 9,674 3,231 12,905
=================== ===== =========== ============= ========= =========== ============= =========
Profit on disposal
of investments 11 8,990 - 8,990 1,986 - 1,986
Profit on disposal
of subsidiaries 2,11 - 72,807 72,807 - - -
Finance items
Exchange losses (144) - (144) (152) - (152)
Finance expense (1,356) - (1,356) (1,380) - (1,380)
Net finance items
- discontinued
operations - (179) (179) - (96) (96)
Expenses of
listing on Oslo
Bors 11 - - - (2,363) - (2,363)
=================== ===== =========== ============= ========= =========== ============= =========
Profit before
taxation 14,862 82,111 96,973 7,765 3,135 10,900
=================== ===== =========== ============= ========= =========== ============= =========
Analysed as:
Profit before
taxation and
exceptional
items 5,872 9,304 15,176 8,142 3,135 11,277
Exceptional items 11 8,990 72,807 81,797 (377) - (377)
=================== ===== =========== ============= ========= =========== ============= =========
Profit before
taxation 14,862 82,111 96,973 7,765 3,135 10,900
=================== ===== =========== ============= ========= =========== ============= =========
Taxation (1,981) (1,393) (3,374) (2,060) (1,521) (3,581)
Profit for the
period 12,881 80,718 93,599 5,705 1,614 7,319
=================== ===== =========== ============= ========= =========== ============= =========
Attributable to:
Equity
shareholders of
the parent
company 12,614 79,703 92,317 4,598 810 5,408
Non-controlling
interest 267 1,015 1,282 1,107 804 1,911
=================== ===== =========== ============= ========= =========== ============= =========
12,881 80,718 93,599 5,705 1,614 7,319
=================== ===== =========== ============= ========= =========== ============= =========
Earnings per share
Basic earnings per
share (cents per
share) 5 6.32 39.94 46.26 2.35 0.41 2.77
Diluted earnings
per share (cents
per share) 5 6.21 39.23 45.44 2.32 0.41 2.73
EBITDA(1) 16,600 9,483 26,083 18,297 6,262 24,559
=================== ===== =========== ============= ========= =========== ============= =========
(1) EBITDA represents earnings before exceptional items, finance items, taxation, depreciation and amortisation. EBITDA is not defined by IFRS but is commonly used as an indication of underlying cash generation.
CONDENSED CONSOLIDATED INCOME STATEMENT
For the six months ended 30 June 2011
Six months ended 30 June Six months ended 30 June
2011 2010
Unaudited Unaudited
Continuing Discontinued Continuing Discontinued
Note operations operations Total operations operations Total
=================== ===== =========== ============= ========== =========== ============= =========
US$000 US$000 US$000 US$000 US$000 US$000
Revenue 3 100,516 67,236 167,752 36,604 55,450 92,054
Cost of sales 3 (73,488) (50,162) (123,650) (25,139) (48,044) (73,183)
=================== ===== =========== ============= ========== =========== ============= =========
Gross profit 27,028 17,074 44,102 11,465 7,406 18,871
=================== ===== =========== ============= ========== =========== ============= =========
Administrative
expenses (4,806) - (4,806) (2,821) - (2,821)
Share based
payments (666) - (666) (3,148) - (3,148)
=================== ===== =========== ============= ========== =========== ============= =========
Profit from
operations 21,556 17,074 38,630 5,496 7,406 12,902
=================== ===== =========== ============= ========== =========== ============= =========
Profit on disposal
of investments 11 8,990 - 8,990 1,986 - 1,986
Profit on disposal
of subsidiaries 2,11 - 72,807 72,807 - - -
Finance items
Exchange losses (82) - (82) (117) - (117)
Finance expense (3,032) - (3,032) (1,380) - (1,380)
Net finance items
- discontinued
operations - (19) (19) - 68 68
Expenses of
listing on Oslo
Bors - - - (2,363) - (2,363)
=================== ===== =========== ============= ========== =========== ============= =========
Profit before
taxation 27,432 89,862 117,294 3,622 7,474 11,096
=================== ===== =========== ============= ========== =========== ============= =========
Analysed as:
Profit before
taxation and
exceptional
items 18,442 17,055 35,497 3,999 7,474 11,473
Exceptional items 11 8,990 72,807 81,797 (377) - (377)
=================== ===== =========== ============= ========== =========== ============= =========
Profit before
taxation 27,432 89,862 117,294 3,622 7,474 11,096
=================== ===== =========== ============= ========== =========== ============= =========
Taxation (4,602) (2,723) (7,325) (873) (1,600) (2,473)
Profit for the
period 22,830 87,139 109,969 2,749 5,874 8,623
=================== ===== =========== ============= ========== =========== ============= =========
Attributable to:
Equity
shareholders of
the parent
company 21,475 84,930 106,405 1,642 4,871 6,513
Non-controlling
interest 1,355 2,209 3,564 1,107 1,003 2,110
=================== ===== =========== ============= ========== =========== ============= =========
22,830 87,139 109,969 2,749 5,874 8,623
=================== ===== =========== ============= ========== =========== ============= =========
Earnings per share
Basic earnings per
share (cents per
share) 5 10.80 42.70 53.50 0.84 2.50 3.34
Diluted earnings
per share (cents
per share) 5 10.59 41.88 52.47 0.84 2.48 3.32
EBITDA(1) 42,003 17,074 59,077 14,149 14,525 28,674
=================== ===== =========== ============= ========== =========== ============= =========
(1) EBITDA represents earnings before finance items, taxation, depreciation and amortisation. EBITDA is not defined by IFRS but is commonly used as an indication of underlying cash generation.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the three months ended 30 June 2011
Three months ended 30 June Three months ended 30
2011 June 2010
Unaudited Unaudited
Continuing Discontinued Continuing Discontinued
Note operations operations Total operations operations Total
================= ===== =========== ============= ======== =========== ============= ========
US$000 US$000 US$000 US$000 US$000 US$000
Profit for the
period 12,881 80,718 93,599 5,705 1,614 7,319
Revaluation of
other financial
assets 12 204 - 204 (2,021) - (2,021)
Disposal of
other financial
assets 12 (9,725) - (9,725) 841 - 841
Exchange
differences on
translation of
foreign
operations - - - 191 - 191
Recycling of
foreign
exchange
translation
reserve on
disposal of
subsidiaries 2a (627) - (627) - - -
Total
comprehensive
income for the
period 2,733 80,718 83,451 4,716 1,614 6,330
Attributable to:
Equity holders
of the parent
company 2,466 79,703 82,169 3,609 810 4,419
Non-controlling
interest 267 1,015 1,282 1,107 804 1,911
================= ===== =========== ============= ======== =========== ============= ========
2,733 80,718 83,451 4,716 1,614 6,330
================= ===== =========== ============= ======== =========== ============= ========
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2011
Six months ended 30 June Six months ended 30 June
2011 2010
Unaudited Unaudited
Continuing Discontinued Continuing Discontinued
Note operations operations Total operations operations Total
================= ===== =========== ============= ======== =========== ============= ========
US$000 US$000 US$000 US$000 US$000 US$000
Profit for the
period 22,830 87,139 109,969 2,749 5,874 8,623
Revaluation of
other financial
assets 12 (2,903) - (2,903) (3,063) - (3,063)
Disposal of
other financial
assets 12 (9,725) - (9,725) 841 - 841
Recycling of
foreign
exchange
translation
reserve on
disposal of
subsidiaries 2a (627) - (627) - - -
================= ===== =========== ============= ======== =========== ============= ========
Total
comprehensive
income for the
period 9,575 87,139 96,714 527 5,874 6,401
Attributable to:
Equity holders
of the parent
company 8,220 84,930 93,150 (580) 4,871 4,291
Non-controlling
interest 1,355 2,209 3,564 1,107 1,003 2,110
================= ===== =========== ============= ======== =========== ============= ========
9,575 87,139 96,714 527 5,874 6,401
================= ===== =========== ============= ======== =========== ============= ========
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 June 2011
30 June 2011 31 December 2010 30 June 2010
Note Unaudited Audited Unaudited
====================== ===== ============= ================= =============
US$000 US$000 US$000
Non-current assets
Goodwill - - 11,071
Intangible assets 6 29,747 11,091 22,727
Property, plant and
equipment 7 241,528 239,979 294,862
Other financial
assets 12 - 20,293 6,183
Deferred tax assets 1,459 1,459 5,084
====================== ===== ============= ================= =============
272,734 272,822 339,927
Current assets
Inventories 27,865 20,379 39,429
Trade and other
receivables 25,998 16,157 21,104
Cash and cash
equivalents 9 179,293 49,523 45,347
====================== ===== ============= ================= =============
233,156 86,059 105,880
Assets of disposal
group classified as
held for sale 2,3 6,474 125,550 -
Current liabilities
Trade and other
payables 46,593 28,430 43,050
Current tax
liabilities - - 1,119
Other financial
liabilities 8 24,000 24,000 -
====================== ===== ============= ================= =============
70,593 52,430 44,169
Liabilities included
in disposal group
held for sale 2,3 1,244 45,432 -
Non-current
liabilities
Other financial
liabilities 8 17,000 54,000 90,000
Deferred tax
liabilities 13,330 9,593 5,183
Other liabilities 3,737 3,737 18,065
====================== ===== ============= ================= =============
34,067 67,330 113,248
Net assets 406,460 319,239 288,390
====================== ===== ============= ================= =============
Equity
Issued share capital 16,247 16,086 16,004
Share premium 149,915 144,571 144,271
Other reserves 17,852 30,632 13,582
Retained earnings 220,157 118,606 106,661
Total equity
attributable to the
parent 404,171 309,895 280,518
Non-controlling
interest 2,289 9,344 7,872
====================== ===== ============= ================= =============
Total equity 406,460 319,239 288,390
====================== ===== ============= ================= =============
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Total
attributable
6 months ended Share Share Other Retained to the Non-controlling Total
30 June 2010 capital premium reserves earnings parent interest equity
================= ======== ======== ========= ========= ============= ================ ========
US$000 US$000 US$000 US$000 US$000 US$000 US$000
At 31 December
2009 (Audited) 15,904 142,778 11,321 101,611 271,614 5,762 277,376
Profit for the
period - - - 6,513 6,513 2,110 8,623
Revaluation of
other financial
assets - - (3,063) - (3,063) - (3,063)
Disposal of
other financial
assets - - 841 - 841 - 841
================= ======== ======== ========= ========= ============= ================ ========
Total
comprehensive
income for the
period - - (2,222) 6,513 4,291 2,110 6,401
================= ======== ======== ========= ========= ============= ================ ========
Share based
payments - - - 448 448 - 448
Transfer between
reserves - - 1,569 (1,569) - - -
Issue of shares 100 1,493 - - 1,593 - 1,593
Loss on issue
from treasury
shares - - - (342) (342) - (342)
Movements on
investments in
treasury and
own shares - - 2,914 - 2,914 - 2,914
================= ======== ======== ========= ========= ============= ================ ========
At 30 June 2010
(Unaudited) 16,004 144,271 13,582 106,661 280,518 7,872 288,390
================= ======== ======== ========= ========= ============= ================ ========
Total
attributable
6 months ended Share Share Other Retained to the Non-controlling Total
30 June 2011 capital premium reserves earnings parent interest equity
================= ======== ======== ========= ========= ============= ================ ========
US$000 US$000 US$000 US$000 US$000 US$000 US$000
At 31 December
2010 (Audited) 16,086 144,571 30,632 118,606 309,895 9,344 319,239
Profit for the
period - - - 106,405 106,405 3,564 109,969
Revaluation of
other financial
assets - - (2,903) - (2,903) - (2,903)
Disposal of
other financial
assets - - (9,725) - (9,725) - (9,725)
Recycling of
foreign
exchange
translation
reserve on
disposal of
subsidiaries - - (627) - (627) - (627)
================= ======== ======== ========= ========= ============= ================ ========
Total
comprehensive
income for the
period - - (13,255) 106,405 93,150 3,564 96,714
================= ======== ======== ========= ========= ============= ================ ========
Share based
payments - - - 614 614 - 614
Issue of shares
- exercise of
share options 35 - - - 35 - 35
Issue of shares
- bonuses 75 3,177 - (3,200) 52 - 52
Issue of shares
into EBT 51 2,167 (2,218) - - - -
Non-controlling
interest share
of dividend
from
subsidiary - - - - - (2,000) (2,000)
Disposal of
subsidiaries - - - - - (8,619) (8,619)
Release of EBT
shares - - 701 (276) 425 - 425
Transfer
acquisition
reserve - - 1,992 (1,992) - - -
================= ======== ======== ========= ========= ============= ================ ========
At 30 June 2011
(Unaudited) 16,247 149,915 17,852 220,157 404,171 2,289 406,460
================= ======== ======== ========= ========= ============= ================ ========
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Six months ended 30 Six months ended 30 June
June 2011 2010
(Unaudited) (Unaudited)
Continuing Discontinued Continuing Discontinued
Note operations operations Total operations operations Total
===================== ===== =========== ============= ========= =========== ============= =========
US$000 US$000 US$000 US$000 US$000 US$000
Cash flows from
operating
activities
Profit for the
period 22,830 87,139 109,969 2,749 5,874 8,623
Adjusted for:
Depreciation of
non-current assets 7 20,447 - 20,447 8,653 7,119 15,772
Share based payments 666 - 666 3,148 - 3,148
Provisions - 574 574 (2) 375 373
Taxation in the
income statement 4,602 2,723 7,325 873 1,600 2,473
Non-operating items
in the income
statement 10 (5,988) (72,981) (78,969) 5,067 (17) 5,050
===================== ===== =========== ============= ========= =========== ============= =========
42,557 17,455 60,012 20,488 14,951 35,439
Movements in working
capital
(Increase)/decrease
in inventory (7,486) 341 (7,145) (8,133) (30) (8,163)
Increase in trade
and other
receivables (10,583) (1,274) (11,857) (7,296) (2,637) (9,933)
Increase/(decrease)
in trade and other
payables 6,675 (248) 6,427 (1,460) (687) (2,147)
===================== ===== =========== ============= ========= =========== ============= =========
Net cash generated
by operations 31,163 16,274 47,437 3,599 11,597 15,196
Interest received - 17 17 - 72 72
Interest paid (1,944) - (1,944) (2,398) (3) (2,401)
Income tax
(paid)/refunded (865) (3,679) (4,544) - 790 790
===================== ===== =========== ============= ========= =========== ============= =========
Net cash generated
by operating
activities 28,354 12,612 40,966 1,201 12,456 13,657
Cash flows from
investing
activities
Payments for
property, plant and
equipment 7 (21,996) (884) (22,880) (14,993) (1,321) (16,314)
Inata pre-commercial
revenues
capitalised 3 - - - 21,495 - 21,495
Inata pre-commercial
costs capitalised 3 - - - (14,296) - (14,296)
Deferred
consideration paid - (1,330) (1,330) (983) - (983)
Exploration and
evaluation
expenses 3,6 (19,231) (2,995) (22,226) (2,355) (2,315) (4,670)
Rehabilitation costs - (393) (393) - - -
Disposal of
discontinued
operation, net of
cash disposed of 2c 158,151 - 158,151 - - -
Net cash received
from disposal of
other investments 11 16,501 - 16,501 - - -
===================== ===== =========== ============= ========= =========== ============= =========
Net cash generated
by/(used in)
investing
activities 133,425 (5,602) 127,823 (11,132) (3,636) (14,768)
===================== ===== =========== ============= ========= =========== ============= =========
Cash flows from
financing
activities
Expenses of listing
on Oslo Bors 11 - - - (2,363) - (2,363)
Proceeds from issue
of equity shares 35 - 35 1,883 - 1,883
Loans repaid 8 (37,000) - (37,000) - - -
Non-controlling
interest share of
dividend from
subsidiary - (2,000) (2,000) - - -
===================== ===== =========== ============= ========= =========== ============= =========
Net cash used in
financing
activities (36,965) (2,000) (38,965) (480) - (480)
===================== ===== =========== ============= ========= =========== ============= =========
Net cash movement 124,814 5,010 129,824 (10,411) 8,820 (1,591)
Intercompany
transfers - - - 14,743 (14,743) -
Exchange
gains/(losses) 183 (237) (54) (117) (1) (118)
Transfer of cash not
held for sale 2,3 4,773 (4,773) - - - -
Total increase
(decrease) in cash
and cash
equivalents 129,770 - 129,770 4,215 (5,924) (1,709)
===================== ===== =========== ============= ========= =========== ============= =========
Cash and cash
equivalents at
start of the
period 49,523 - 49,523 29,463 17,593 47,056
===================== ===== =========== ============= ========= =========== ============= =========
Cash and cash
equivalents at end
of period 179,293 - 179,293 33,678 11,669 45,347
===================== ===== =========== ============= ========= =========== ============= =========
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of preparation
The condensed consolidated interim financial statements, which
are unaudited, have been prepared in accordance with the
requirements of International Accounting Standard 34 as adopted for
use in the European Union. This condensed interim report does not
include all the notes of the type normally included in an annual
financial report. Accordingly, this condensed report is to be read
in conjunction with the Annual Report for the year ended 31
December 2010, which has been prepared in accordance with IFRS as
adopted by the European Union, and any public announcements made by
the Group during the interim reporting period.
The financial information set out in this interim report does
not constitute statutory accounts as defined in Section 435 of the
Companies Act 2006. The unaudited condensed interim financial
statements for the three and six months ended 30 June 2011 have
been prepared using accounting policies and presentation expected
to be adopted in the Group's full financial statements for the year
ending 31 December 2011, which are not expected to be significantly
different to those set out in note 1 to the Group's audited
financial statements for the year ended 31 December 2010.
The Company's statutory financial statements for the year ended
31 December 2010 have been filed with the Registrar of Companies
and are available on the Company's website www.avocet.co.uk. The
auditor's report on those financial statements was unqualified and
did not contain a statement under sections 498(2) or (3) of the
Companies Act 2006.
After review of the Group's operations, the directors have a
reasonable expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future.
Accordingly, the directors continue to adopt the going concern
basis in preparing the unaudited condensed interim financial
statements.
2. Disposal group classified as held for sale and discontinued
operations
On 24 June 2011, Avocet completed the sale of its main South
East Asian assets, namely its 100 per cent interest in the Penjom
gold mine in Malaysia and its 80 per cent interest in PT Avocet
Bolaang Mongondow ("PT ABM"), which owns the North Lanut mine and
Bakan project in North Sulawesi, Indonesia, for proceeds of US$170
million. The sale was originally announced on 24 December 2010.
In accordance with IFRS 5, Non-current Assets Held for Sale and
Discontinued Operations, all of the assets and liabilities of the
Indonesian and Malaysian operations, apart from cash, were treated
as a disposal group from the date of the announcement of the sale
on 24 December 2010, and were disclosed separately in the statement
of financial position at 31 December 2010 and 31 March 2011. As the
transaction was on a cash free debt free basis, the cash held by
Penjom and PTABM was classified as continuing operations rather
than discontinued operations. Comparative statements of financial
position, prior to the signing of the agreement for sale, are not
re-presented. Prior to the reclassification, management reviewed
the carrying values and recognition of assets and liabilities
respectively, and no adjustments were required to measure assets
and liabilities at the lower of carrying value or fair value less
costs to sell. Since 24 December 2010, the date on which the
criteria for being held for sale were met, no depreciation has been
charged in the Group financial statements for the Malaysian and
Indonesian assets, in accordance with IFRS.
The results of the disposal group are presented separately in
the consolidated income statement and the segmental analysis, and
comparative income statements are represented on this basis, as
required by IFRS.
The provisional profit on disposal of PT ABM and the Penjom mine
is presented below in note 2a). The final profit will be determined
following the agreement of completion accounts.
C) Provisional unaudited profit on disposal of discontinued
operations
At 24 June 2011
======================================= ================
US$000
Consideration received 170,000
Cash held in subsidiaries at
completion 15,558
Working capital and other adjustments (4,565)
======================================= ================
Net consideration 180,993
Less transaction costs (17,450)
Net assets disposed (b) (91,363)
Foreign currency translation
reserve recycled on disposal 627
Pre-tax provisional profit on
disposal of discontinued operations 72,807
Taxation(1) -
======================================= ================
Post-tax provisional profit
on disposal of discontinued
operations 72,807
======================================= ================
(1) The Company anticipates that no UK tax will be payable on
the disposal of its operations in South East Asia on the basis that
the sale qualifies for the UK substantial shareholding
exemption.
b) Provisional and unaudited carrying amounts of assets and
liabilities of operations sold in the period
At 24 June 2011
================================ ================
Assets US$000
Goodwill 13,555
Intangible assets 17,467
Property, plant and equipment 62,547
Deferred tax assets 1,977
Inventories 21,199
Trade and other receivables 8,957
Cash 15,558
================================ ================
141,260
================================ ================
Liabilities
Trade and other payables (13,158)
Tax liabilities (3,108)
Deferred tax liabilities (3,492)
Other liabilities (21,520)
================================ ================
(41,278)
================================ ================
Net assets 99,982
================================ ================
Non-controlling interest share
of assets disposed (8,619)
================================ ================
Net assets disposed 91,363
================================ ================
c) Cash flows on disposal
At 24 June 2011
=============================================== ================
US$000
Disposal consideration 170,000
Advance payment in respect of cash
held by subsidiaries at completion 9,704
Transaction costs paid (5,995)
=============================================== ================
Net cash received in the period 173,709
=============================================== ================
Cash held in subsidiaries sold (15,558)
=============================================== ================
Net cash movement on disposal of subsidiaries 158,151
=============================================== ================
In addition to the cash-free debt-free purchase consideration of
US$170 million, a further US$9.7 million was paid on 24 June 2011
in respect of cash balances in the disposed subsidiaries as
estimated at the time of signing of the sale agreements in December
2011. Actual cash balances at that date, which are subject to
review and finalisation as part of the completion accounts, are
expected to be US$15.6 million. On agreement of the completion
accounts, the Company will receive a further payment in respect of
cash held at completion, which payment is estimated at US$5.9
million. The Company will also receive or pay amounts related to
working capital, being the difference between estimates at 24
December 2010 and actual balances in the completion accounts.
3. Segmental Reporting
Discontinued
Continuing operations operations
======================== ============================== ============= =========
For the three months West
ended 30 June 2011 UK Africa Total Total TOTAL
======================== ======== ========= ========= ============= =========
US$000 US$000 US$000 US$000 US$000
INCOME STATEMENT
Revenue - 44,749 44,749 35,215 79,964
======================== ======== ========= ========= ============= =========
Cost of Sales 167 (34,367) (34,200) (25,732) (59,932)
======================== ======== ========= ========= ============= =========
Cash production
costs:
- mining - (7,891) (7,891) (13,723) (21,614)
- processing - (9,381) (9,381) (6,007) (15,388)
- overheads - (6,221) (6,221) (2,611) (8,832)
- royalties - (3,211) (3,211) (1,369) (4,580)
======================== ======== ========= ========= ============= =========
- (26,704) (26,704) (23,710) (50,414)
Changes in inventory - 3,004 3,004 (145) 2,859
Other cost of
sales (a) 201 (1,473) (1,272) (1,877) (3,149)
Depreciation and
amortisation (b) (34) (9,194) (9,228) - (9,228)
================= ===== ======== ========= ========= ============= =========
Gross profit 167 10,382 10,549 9,483 20,032
Administrative expenses
and share based
payments (3,177) - (3,177) - (3,177)
======================== ======== ========= ========= ============= =========
(Loss)/profit from
operations (3,010) 10,382 7,372 9,483 16,855
Profit on disposal of
investments - 8,990 8,990 - 8,990
Profit on disposal of
subsidiaries - - - 72,807 72,807
Net finance items (301) (1,199) (1,500) (179) (1,679)
======================== ======== ========= ========= ============= =========
(Loss)/profit before
taxation (3,311) 18,173 14,862 82,111 96,973
Taxation (865) (1,116) (1,981) (1,393) (3,374)
======================== ======== ========= ========= ============= =========
(Loss)/profit for the
period (4,176) 17,057 12,881 80,718 93,599
======================== ======== ========= ========= ============= =========
Attributable to:
Non-controlling
interest - 267 267 1,015 1,282
Equity shareholders of
parent company (4,176) 16,790 12,614 79,703 92,317
======================== ======== ========= ========= ============= =========
(4,176) 17,057 12,881 80,718 93,599
======================= ======== ========= ========= ============= =========
EBITDA (c) (2,976) 19,576 16,600 9,483 26,083
================= ===== ======== ========= ========= ============= =========
(a) Other cost of sales represents costs not directly
attributable to production, including exploration expenditure
expensed;
(b) Includes amounts in respect of the amortisation of mine
closure provision at Inata;
(c) EBITDA represents earnings before exceptional items, finance
items, tax, depreciation and amortisation. EBITDA is not defined by
IFRS but is commonly used as an indication of underlying cash
generation.
3. Segmental Reporting (continued)
Continuing operations Discontinued
===================== ===== ================================ =============
West
At 30 June 2011 UK Africa Total Total TOTAL
===================== ===== ========= ========= ========== ============= ==========
US$000 US$000 US$000 US$000 US$000
STATEMENT OF
FINANCIAL POSITION
Non-current assets 1,646 271,088 272,734 2,761 275,495
Inventories - 27,865 27,865 - 27,865
Trade and other receivables 1,770 24,228 25,998 3,713 29,711
Cash and cash equivalents 159,021 20,272 179,293 - 179,293
Total assets 162,437 343,453 505,890 6,474 512,364
============================ ========= ========= ========== ============= ==========
Current liabilities (13,417) (57,176) (70,593) (1,244) (71,837)
Non-current liabilities (430) (33,637) (34,067) - (34,067)
============================ ========= ========= ========== ============= ==========
Total liabilities (13,847) (90,813) (104,660) (1,244) (105,904)
============================ ========= ========= ========== ============= ==========
Net assets 148,590 252,640 401,230 5,230 406,460
============================ ========= ========= ========== ============= ==========
For the three months West Discontinued
ended 30 June 2011 UK Africa Total Total TOTAL
US$000 US$000 US$000 US$000 US$000
CASH FLOW STATEMENT
(Loss)/profit for the
period (4,176) 17,057 12,881 80,718 93,599
Adjustments for
non-cash and
non-operating
items (d) 1,504 2,498 4,002 (71,132) (67,129)
Movements in working
capital 1,404 (13,767) (12,363) 278 (12,086)
============================ ========= ========= ========== ============= ==========
Net cash (used
in)/generated by
operations (1,268) 5,788 4,520 9,864 14,384
Net interest
(paid)/received (610) (631) (1,241) 10 (1,231)
Net tax paid (865) - (865) (1,497) (2,362)
Purchase of property, plant
and equipment (4) (8,194) (8,198) (290) (8,488)
Deferred exploration
expenditure - (9,220) (9,220) (1,531) (10,751)
Other cash movements (e) 133,915 9,857 143,772 (3,010) 140,762
Reclassification of
cash not held for
sale (f) 3,546 - 3,546 (3,546) -
Total increase/(decrease)
in cash and cash
equivalents 134,714 (2,400) 132,314 - 132,314
============================ ========= ========= ========== ============= ==========
(d) Includes depreciation and amortisation, share based
payments, movement in provisions, taxation in the income statement,
and other non-operating items in the income statement;
(e) Other cash movements include cash flows in respect of the
sale of subsidiaries, deferred consideration paid, cash flows from
financing activities, and exchange gains or losses;
(f) The sale of subsidiaries in South East Asia is for a
debt-free cash-free consideration. Therefore, cash held in
remaining Malaysian and Indonesian subsidiaries at 30 June has been
excluded from held for sales assets, and reported as Group cash in
the consolidated statement of financial position.
3. Segmental Reporting (continued)
Discontinued
Continuing operations operations
======================== ============================== =============
For the three months West
ended 30 June 2010 UK Africa Total Total TOTAL
======================== ======== ========= ========= ============= =========
US$000 US$000 US$000 US$000 US$000
INCOME STATEMENT
Revenue - 36,604 36,604 28,280 64,884
======================== ======== ========= ========= ============= =========
Cost of Sales (105) (24,096) (24,201) (25,049) (49,250)
======================== ======== ========= ========= ============= =========
Cash production
costs:
- mining - (4,585) (4,585) (10,969) (15,554)
- processing - (6,580) (6,580) (4,993) (11,573)
- overheads - (3,843) (3,843) (2,277) (6,120)
- royalties - (2,747) (2,747) (1,052) (3,799)
======================== ======== ========= ========= ============= =========
- (17,755) (17,755) (19,291) (37,046)
Changes in inventory - 3,469 3,469 (1,710) 1,759
Other cost of
sales (a) (75) (1,217) (1,292) (1,017) (2,309)
Depreciation and
amortisation (b) (30) (8,593) (8,623) (3,031) (11,654)
================= ===== ======== ========= ========= ============= =========
Gross (loss)/profit (105) 12,508 12,403 3,231 15,634
Administrative expenses
and share based
payments (2,729) - (2,729) - (2,729)
======================== ======== ========= ========= ============= =========
(Loss)/profit from
operations (2,834) 12,508 9,674 3,231 12,905
Profit on disposal of
investments 1,986 - 1,986 - 1,986
Net finance items (2,863) (1,032) (3,895) (96) (3,991)
======================== ======== ========= ========= ============= =========
(Loss)/profit before
taxation (3,711) 11,476 7,765 3,135 10,900
Taxation (2,060) - (2,060) (1,521) (3,581)
======================== ======== ========= ========= ============= =========
(Loss)/profit for the
period (5,771) 11,476 5,705 1,614 7,319
======================== ======== ========= ========= ============= =========
Attributable to:
Non-controlling
interest - 1,107 1,107 804 1,911
Equity shareholders of
parent company (5,771) 10,369 4,598 810 5,408
======================== ======== ========= ========= ============= =========
(5,771) 11,476 5,705 1,614 7,319
======================= ======== ========= ========= ============= =========
EBITDA (c) (2,804) 21,101 18,297 6,262 24,559
================= ===== ======== ========= ========= ============= =========
(a) Other cost of sales represents costs not directly
attributable to production, including exploration expenditure
expensed;
(b) Includes amounts in respect of the amortisation of mine
closure provisions at Inata, Penjom and North Lanut;
(c) EBITDA represents earnings before exceptional items, finance
items, tax, depreciation and amortisation. EBITDA is not defined by
IFRS but is commonly used as an indication of underlying cash
generation.
3. Segmental Reporting (continued)
Discontinued
Continuing operations operations
===================== ===== ================================ =============
West
At 30 June 2010 UK Africa Total Total TOTAL
===================== ===== ========= ========= ========== ============= ==========
US$000 US$000 US$000 US$000 US$000
STATEMENT OF
FINANCIAL POSITION
Non-current assets 11,825 238,707 250,532 89,395 339,927
Inventories - 17,019 17,019 22,410 39,429
Trade and other receivables 1,526 9,296 10,822 10,282 21,104
Cash and cash equivalents 11,440 22,238 33,678 11,669 45,347
Total assets 24,791 287,260 312,051 133,756 445,807
============================ ========= ========= ========== ============= ==========
Current liabilities (2,440) (26,711) (29,151) (15,018) (44,169)
Non-current liabilities (28,635) (66,768) (95,403) (17,845) (113,248)
============================ ========= ========= ========== ============= ==========
Total liabilities (31,075) (93,479) (124,554) (32,863) (157,417)
============================ ========= ========= ========== ============= ==========
Net assets (6,284) 193,781 187,497 100,893 288,390
============================ ========= ========= ========== ============= ==========
For the three months West
ended 30 June 2010 UK Africa Total Total TOTAL
US$000 US$000 US$000 US$000 US$000
===================== ===== ========= ========= ========== ============= ==========
CASH FLOW STATEMENT
(Loss)/profit for the
period (5,771) 11,476 5,705 1,614 7,319
Adjustments for
non-cash and
non-operating
items (d) 7,834 9,521 17,355 4,057 21,412
Movements in working
capital (7,163) 240 (6,923) 1,599 (5,324)
============================ ========= ========= ========== ============= ==========
Net cash (used
in)/generated by
operations (5,100) 21,237 16,137 7,270 23,407
Net interest
(paid)/received (557) (961) (1,518) - (1,518)
Net tax paid - - - 1,200 1,200
Purchase of property, plant
and equipment (8) (8,814) (8,822) (302) (9,124)
Deferred exploration
expenditure (25) (1,826) (1,851) (1,180) (3,031)
Other cash movements (e) 12,716 (9,627) 3,089 (4,147) (1,058)
Total increase in cash and
cash equivalents 7,026 9 7,035 2,841 9,876
============================ ========= ========= ========== ============= ==========
(d) Includes depreciation and amortisation, share based
payments, movement in provisions, taxation in the income statement,
and other non-operating items in the income statement;
(e) Other cash movements include deferred consideration paid,
cash flows from financing activities, and exchange gains or
losses.
3. Segmental Reporting
Discontinued
Continuing operations operations
======================== ============================== =============
For the six months West
ended 30 June 2011 UK Africa Total Total TOTAL
======================== ======== ========= ========= ============= ==========
US$000 US$000 US$000 US$000 US$000
INCOME STATEMENT
Revenue - 100,516 100,516 67,236 167,752
======================== ======== ========= ========= ============= ==========
Cost of Sales 425 (73,913) (73,488) (50,162) (123,650)
======================== ======== ========= ========= ============= ==========
Cash production
costs:
- mining - (14,398) (14,398) (27,336) (41,734)
- processing - (19,229) (19,229) (12,046) (31,275)
- overheads - (11,495) (11,495) (4,842) (16,337)
- royalties - (7,158) (7,158) (2,552) (9,710)
======================== ======== ========= ========= ============= ==========
- (52,280) (52,280) (46,776) (99,056)
Changes in inventory - 2,024 2,024 (44) 1,980
Other cost of
sales (a) 493 (3,278) (2,785) (3,342) (6,127)
Depreciation and
amortisation (b) (68) (20,379) (20,447) - (20,447)
================= ===== ======== ========= ========= ============= ==========
Gross profit 425 26,603 27,028 17,074 44,102
Administrative expenses
and share based
payments (5,472) - (5,472) - (5,472)
======================== ======== ========= ========= ============= ==========
(Loss)/profit from
operations (5,047) 26,603 21,556 17,074 38,630
Profit on disposal of
investments - 8,990 8,990 - 8,990
Profit on disposal of
subsidiaries - - - 72,807 72,807
Net finance items (692) (2,422) (3,114) (19) (3,133)
======================== ======== ========= ========= ============= ==========
(Loss)/profit before
taxation (5,739) 33,171 27,432 89,862 117,294
Taxation (865) (3,737) (4,602) (2,723) (7,325)
======================== ======== ========= ========= ============= ==========
(Loss)/profit for the
period (6,604) 29,434 22,830 87,139 109,969
======================== ======== ========= ========= ============= ==========
Attributable to:
Non-controlling
interest - 1,355 1,355 2,209 3,564
Equity shareholders of
parent company (6,604) 28,079 21,475 84,930 106,405
======================== ======== ========= ========= ============= ==========
(6,604) 29,434 22,830 87,139 109,969
======================= ======== ========= ========= ============= ==========
EBITDA (c) (4,979) 46,982 42,003 17,074 59,077
================= ===== ======== ========= ========= ============= ==========
(a) Other cost of sales represents costs not directly
attributable to production, including exploration expenditure
expensed;
(b) Includes amounts in respect of the amortisation of mine
closure provision at Inata;
(c) EBITDA represents earnings before exceptional items, finance
items, tax, depreciation and amortisation. EBITDA is not defined by
IFRS but is commonly used as an indication of underlying cash
generation.
3. Segmental Reporting (continued)
For the six months Discontinued
ended 30 June 2010 Continuing operations operations
======================== ============================== =============
West
UK Africa Total Total TOTAL
================= ===== ======== ========= ========= ============= =========
US$000 US$000 US$000 US$000 US$000
INCOME STATEMENT
Revenue - 36,604 36,604 55,450 92,054
======================== ======== ========= ========= ============= =========
Cost of Sales (1,043) (24,096) (25,139) (48,044) (73,183)
======================== ======== ========= ========= ============= =========
Cash production
costs:
- mining - (4,585) (4,585) (21,316) (25,901)
- processing - (6,580) (6,580) (9,731) (16,311)
- overheads - (3,843) (3,843) (4,428) (8,271)
- royalties - (2,747) (2,747) (2,215) (4,962)
======================== ======== ========= ========= ============= =========
- (17,755) (17,755) (37,690) (55,445)
Changes in inventory - 3,469 3,469 (652) 2,817
Other cost of
sales (a) (983) (1,217) (2,200) (2,583) (4,783)
Depreciation and
amortisation (b) (60) (8,593) (8,653) (7,119) (15,772)
================= ===== ======== ========= ========= ============= =========
Gross profit (1,043) 12,508 11,465 7,406 18,871
Administrative expenses
and share based
payments (5,969) - (5,969) - (5,969)
======================== ======== ========= ========= ============= =========
(Loss)/profit from
operations (7,012) 12,508 5,496 7,406 12,902
Profit on disposal of
investments 1,986 - 1,986 - 1,986
Net finance items (2,828) (1,032) (3,860) 68 (3,792)
======================== ======== ========= ========= ============= =========
(Loss)/profit before
taxation (7,854) 11,476 3,622 7,474 11,096
Taxation (873) - (873) (1,600) (2,473)
======================== ======== ========= ========= ============= =========
(Loss)/profit for the
period (8,727) 11,476 2,749 5,874 8,623
======================== ======== ========= ========= ============= =========
Attributable to:
Non-controlling
interest - 1,107 1,107 1,003 2,110
Equity shareholders of
parent company (8,727) 10,369 1,642 4,871 6,513
======================== ======== ========= ========= ============= =========
EBITDA (c) (6,952) 21,101 14,149 14,525 28,674
================= ===== ======== ========= ========= ============= =========
(a) Other cost of sales represents costs not directly
attributable to production, including exploration expenditure
expensed;
(b) Includes amounts in respect of the amortisation of mine
closure provisions at Inata, Penjom and North Lanut;
(c) EBITDA represents earnings before exceptional items, finance
items, tax, depreciation and amortisation. EBITDA is not defined by
IFRS but is commonly used as an indication of underlying cash
generation.
3. Segmental Reporting (continued)
Discontinued
Continuing operations operations
===================== ===== ============================== ============= =========
For the six months ended 30 West
June 2011 UK Africa Total Total TOTAL
============================ ======== ========= ========= ============= =========
US$000 US$000 US$000 US$000 US$000
CASH FLOW STATEMENT
(Loss)/profit for the
period (6,604) 29,434 22,830 87,139 109,969
Adjustments for
non-cash and
non-operating
items (d) 237 19,490 19,727 (69,684) (49,957)
Movements in working
capital (2,914) (8,480) (11,394) (1,181) (12,575)
============================ ======== ========= ========= ============= =========
Net cash (used
in)/generated by
operations (9,281) 40,444 31,163 16,274 47,437
Net interest
(paid)/received (610) (1,334) (1,944) 17 (1,927)
Net tax paid (865) - (865) (3,679) (4,544)
Purchase of property, plant
and equipment (9) (21,987) (21,996) (884) (22,880)
Deferred exploration
expenditure - (19,231) (19,231) (2,995) (22,226)
Other cash movements (e) 134,470 3,400 137,870 (3,960) 133,910
Reclassification of
cash not held for
sale (f) 4,773 - 4,773 (4,773) -
Total increase in cash and
cash equivalents 128,478 1,292 129,770 - 129,770
============================ ======== ========= ========= ============= =========
For the six months West
ended 30 June 2010 UK Africa Total Total TOTAL
===================== ===== ======== ========= ========= ========= =========
US$000 US$000 US$000 US$000 US$000
CASH FLOW STATEMENT
(Loss)/profit for the
period (8,727) 11,476 2,749 5,874 8,623
Adjustments for
non-cash and
non-operating
items (d) 8,218 9,521 17,739 9,077 26,816
Movements in working
capital (154) (16,735) (16,889) (3,354) (20,243)
============================ ======== ========= ========= ========= =========
Net cash (used
in)/generated by
operations (663) 4,262 3,599 11,597 15,196
Net interest
(paid)/received (557) (1,841) (2,398) 69 (2,329)
Net tax paid - - - 790 790
Purchase of property, plant
and equipment (20) (14,973) (14,993) (1,321) (16,314)
Inata pre-commercial
revenues
capitalised (g) - 21,495 21,495 - 21,495
Inata pre-commercial
costs capitalised (g) - (14,296) (14,296) - (14,296)
Deferred exploration
expenditure (50) (2,305) (2,355) (2,315) (4,670)
Other cash movements (e) (4,716) 17,879 13,163 (14,744) (1,581)
Total (decrease)/increase
in cash and cash
equivalents (6,006) 10,221 4,215 (5,924) (1,709)
============================ ======== ========= ========= ========= =========
(d) Includes depreciation and amortisation, share based
payments, movement in provisions, taxation in the income statement,
and other non-operating items in the income statement;
(e) Other cash movements include deferred consideration paid,
cash flows from financing activities, and exchange gains or
losses.
(f) The sale of subsidiaries in South East Asia is for a
debt-free cash-free consideration. Therefore, cash held in
remaining Malaysian and Indonesian subsidiaries at 30 June has been
excluded from held for sales assets, and reported as Group cash in
the consolidated statement of financial position. Cash remaining in
the subsidiaries sold in the period is compensated for in the
adjustment to consideration proceeds receivable.
(g) All costs and revenues at Inata between 1 January and 31
March 2010 related to the testing and development phase, prior to
the commencement of commercial operations. Therefore, these costs
and revenues were capitalised as part of mining property, plant and
equipment. Since 1 April 2010, all revenues and operating expenses
in respect of mining operations at Inata have been recognised in
the income statement.
4. Unaudited quarterly income statement
Q1 2011 Q2 2011 H1 2011 2010
(Unaudited) (Unaudited) (Unaudited) (Audited)
==================== ============= ============= ============= ===========
US$000 US$000 US$000 US$000
Revenue
Continuing
operations 55,767 44,749 100,516 132,779
Discontinued
operations 32,021 35,215 67,236 121,814
==================== ============= ============= ============= ===========
87,788 79,964 167,752 254,593
Cost of sales
Continuing
operations (39,288) (34,200) (73,488) (95,135)
Discontinued
operations (24,430) (25,732) (50,162) (105,533)
==================== ============= ============= ============= ===========
(63,718) (59,932) (123,650) (200,668)
Gross profit 24,070 20,032 44,102 53,925
==================== ============= ============= ============= ===========
Administrative
expenses -
continuing
operations (1,934) (2,872) (4,806) (7,040)
Share based
payments -
continuing
operations (361) (305) (666) (8,625)
==================== ============= ============= ============= ===========
Profit from
operations 21,775 16,855 38,630 38,260
==================== ============= ============= ============= ===========
Profit on disposal
of investments -
continuing
operations - 8,990 8,990 2,669
Profit on disposal
of discontinued
subsidiaries - 72,807 72,807 -
Loss on disposal of
property, plant
and equipment -
discontinued
operations - - - (151)
Finance items -
continuing
operations
Exchange
gains/(losses) 62 (144) (82) (49)
Finance income - - - 5
Finance expense (1,676) (1,356) (3,032) (4,766)
Expenses of listing
on Oslo Bors - - - (2,363)
Net finance items -
discontinued
operations 160 (179) (19) (56)
==================== ============= ============= ============= ===========
Profit before tax 20,321 96,973 117,294 33,549
==================== ============= ============= ============= ===========
Analysed as:
Profit before
taxation and
exceptional items 20,321 15,176 35,497 33,394
Exceptional items - 81,797 81,797 155
==================== ============= ============= ============= ===========
Profit before
taxation 20,321 96,973 117,294 33,549
==================== ============= ============= ============= ===========
Taxation
Continuing
operations (2,621) (1,981) (4,602) (12,021)
Discontinued
operations (1,330) (1,393) (2,723) (3,316)
==================== ============= ============= ============= ===========
(3,951) (3,374) (7,325) (15,337)
Profit for the
period
Profit from
continuing
operations 9,949 12,881 22,830 5,454
Profit from
discontinued
operations 6,421 80,718 87,139 12,758
==================== ============= ============= ============= ===========
Profit for the
period 16,370 93,599 109,969 18,212
==================== ============= ============= ============= ===========
5. Earnings per Share
Earnings per share are analysed in the table below, presenting
earnings per share for continuing and discontinued operations.
30 June 2011 30 June 2010 30 June 2011 30 June 2010
(three months) (three months) (six months) (six months)
Unaudited Unaudited Unaudited Unaudited
=================== =============== =============== ============= =============
Shares Shares Shares Shares
Weighted average
number of shares
in issue for the
period
- number of shares
with voting
rights 199,546,710 195,462,754 198,891,154 194,916,302
- effect of share
options in issue 3,604,795 2,391,189 3,879,369 1,467,754
=================== =============== =============== ============= =============
- total used in
calculation of
diluted earnings
per share 203,151,505 197,853,943 202,770,523 196,384,056
=================== =============== =============== ============= =============
US$000 US$000 US$000 US$000
Earnings per share
from continuing
operations
Profit for the
period from
continuing
operations 12,881 5,705 22,830 2,749
Less
non-controlling
interest (267) (1,107) (1,355) (1,107)
=================== =============== =============== ============= =============
Profit for period
attributable to
equity
shareholders of
the parent 12,614 4,598 21,475 1,642
=================== =============== =============== ============= =============
Earnings per share
- basic (cents per
share) 6.32 2.35 10.80 0.84
- diluted (cents
per share) 6.21 2.32 10.59 0.84
=================== =============== =============== ============= =============
Earnings per share from
discontinued operations
Profit for the period 80,718 1,614 87,139 5,874
Less non-controlling interest (1,015) (804) (2,209) (1,003)
================================== ========== ========== ======== ==========
Profit for period attributable
to equity shareholders of the
parent 79,703 810 84,930 4,871
================================== ========== ========== ======== ==========
Earnings per share
- basic (cents per share) 39.94 0.41 42.70 2.50
- diluted (cents per share) 39.23 0.41 41.88 2.48
================================== ========== ========== ======== ==========
Total earnings per share
- basic (cents per share) 46.26 2.77 53.50 3.34
- diluted (cents per share) 45.44 2.73 52.47 3.32
================================== =========== ======== ======= ======
6. Intangible assets
Intangible assets represent deferred exploration expenditure.
The movement in the period is analysed below:
30 June
2011
(6 months)
========================= ============
At 1 January 11,091
Additions 19,231
Transferred to disposal
group (575)
========================= ============
At 30 June 29,747
========================= ============
7. Property, plant and equipment
Mining property
and plant Office equipment
================ =================
Six months ended
30 June 2011 West Africa UK Total
======================= ================ ================= =======
US$000 US$000 US$000
Cost
At 1 January 2011 272,227 570 272,797
Additions 21,987 9 21,996
At 30 June 2011 294,214 579 294,793
Depreciation
At 1 January 2011 32,494 324 32,818
Charge for the period 20,379 68 20,447
At 30 June 2011 52,873 392 53,265
Net Book Value
At 30 June 2011 241,341 187 241,528
================ =================
At 1 January 2011 239,733 246 239,979
======================= ================ =================
The net book value of property plant and equipment in Malaysia
and Indonesia, of US$0.3 million and US$2.5 million respectively,
is included within the balance of the assets of disposal group held
for sale (note 2). Since 24 December 2010, the date on which the
criteria for being held for sale were met, no depreciation has been
charged in the Group financial statements for the Malaysian and
Indonesian assets, in accordance with IFRS. During the quarter,
US$0.9 million was spent on property, plant and equipment additions
in South East Asia.
8. Other financial liabilities
Other financial liabilities of US$41 million represent the
balance outstanding under a project finance facility from Macquarie
Bank Limited relating to the Inata gold project. US$6 million of
the project finance facility was repaid in the three month period,
in accordance with the facility terms. A total of US$12 million has
been repaid in the year to date. $24 million of this project
finance facility is due for repayment within one year.
US$25 million drawn under a corporate facility with Standard
Chartered Bank was repaid on 24 June 2011 following the substantial
completion of the sale of Company's South East Asian assets. The
facility was secured on the Penjom assets.
During the quarter, the Group continued to make deliveries of
gold from Inata production to meet forward sale contracts that were
entered into as part of the Macquarie project finance facility. The
contracts are considered to be outside the scope of IAS39, on the
basis that they are for own use and at the balance sheet date it
was intended that gold produced would continue to be delivered into
these contracts in future periods, and therefore no value is
reflected in the condensed consolidated financial statements.
24,792 ounces were delivered into the forward contracts during the
quarter, at an average realised price of US$970 per ounce. At 30
June 2011, the hedge book had reduced to 299,401 ounces.
On 27 July 2011, Avocet announced that it had restructured these
forward contracts, through a combination of a partial settlement
for cash and an extension of the term over which the remaining
hedged ounces are to be delivered. These changes mean that the 'own
use exemption' may no longer be applicable.
9. Cash and cash equivalents
Included in Group cash and cash equivalents is US$14.7 million
of restricted cash. US$14.0 million of restricted cash relates to
the minimum account balance held in Macquarie Bank Limited, a
condition of the Inata project finance facility, and US$0.7 million
relates to amounts held on restricted deposit in Burkina Faso for
the purposes of environmental rehabilitation work, as required by
the terms of the Inata mining licence.
US$130 million of cash and cash equivalent is held on short term
deposit, with a maturity of less than one month.
10. Non-operating items in the income statement
In arriving at net cash flow from operating activities, the
following non-operating items in the income statement have been
adjusted for:
30 June 2011 30 June 2010 30 June 2011 30 June 2010
(three months) (three months) (six months) (six months)
Unaudited Unaudited Unaudited Unaudited
US$000 US$000 US$000 US$000
Exchange
losses/(gains)
- continuing
operations 124 257 (28) 221
Exchange
(gains)/losses
- discontinued
operations (183) 97 (195) 2
Finance expense
- continuing
operations 1,356 1,380 3,032 1,380
Net finance
items -
discontinued
operations 179 - 19 (68)
(Profit)/loss
on disposal of
other
financial
assets (8,990) 1,152 (8,990) 1,152
Profit on
disposal of
subsidiaries (72,807) - (72,807) -
Expenses of
listing on
Oslo Bors - 2,363 - 2,363
================ ===============
Non-operating
items in the
income
statement (80,321) 5,249 (78,969) 5,050
11. Exceptional items
30 June 30 June 30 June
30 June 2011 2010 2011 2010
(3 months) (3 months) (6 months) (6 months)
Unaudited Unaudited Unaudited Unaudited
============= ============ ============ ============
US$000 US$000 US$000 US$000
Profit on disposal of
subsidiaries 72,807 - 72,807 -
Profit/(loss) on
disposal of other
financial assets 8,990 (1,152) 8,990 (1,152)
Profit on redemption
of debenture - 3,138 - 3,138
Expenses of listing
on Oslo Bors - (2,363) - (2,363)
=============
Exceptional
gain/(loss) 81,797 (377) 81,797 (377)
============= ============ ============ ============
Profit on disposal of subsidiaries
Profit on disposal of subsidiaries relates to the provisional
profit on disposal of the Penjom mine and Avocet's 80% interest in
PT Avocet Bolaang Mongondow, which holds the North Lanut mine.
Further details of the provisional profit on disposal are included
in note 2.
Profit/(loss) on disposal of other financial assets
During the period, Avocet disposed its entire holding of shares
in Avion Gold Corp (Avion) for cash consideration of US$16.5
million. The Avion shares were acquired as consideration for the
disposal of the Hounde group of licences in 2010. The shares were
recorded in the balance sheet at fair value, with movements in fair
value recognised in equity, in accordance with IAS39. On the
disposal of the shares, accumulated gains previously recognised in
equity were transferred to the income statement and recognised in
the profit on disposal.
During the comparative period, Avocet disposed of the shares
held in Dynasty Gold Corp (Dynasty). Shares in Dynasty were also
recorded in the balance sheet at fair value, with movements in fair
value recognised in equity. On the disposal of the shares,
accumulated losses previously recognised in equity were transferred
to the income statement and recognised in the loss on disposal.
Profit on redemption of debenture
In the comparative period, a profit on disposal arose from the
redemption of a debenture held by Wega Mining AS, a wholly-owned
subsidiary of Avocet Mining PLC, in Merit Mining Corp ("Merit").
This debenture, along with all remaining assets in Merit, had been
fully written down as part of the fair value adjustments on the
acquisition of Wega Mining. At the time of the acquisition it was
not considered likely that Merit would have the resources to settle
the debenture. Following the investment of approximately CA$16
million in Merit by Hong Kong Huakan Investment Co Ltd, the
repayment was possible, and the gain was therefore classified as
exceptional.
Oslo listing costs
On 16 June 2010 Avocet announced its successful listing on Oslo
Bors. Costs of the listing, which were not directly attributable to
new shares issued, were treated as exceptional costs in the period
of the listing. These included US$1.8 million of Stamp Duty Reserve
Tax costs following the transfer of existing Avocet shareholders
from the UK based registration system to the Norwegian VPS share
registration system.
12. Other financial assets
30 June 2011 30 June 2010 30 June 2011 30 June 2010
(3 months) (3 months) (6 months) (6 months)
Unaudited Unaudited Unaudited Unaudited
US$000 US$000 US$000 US$000
At 1 January/1 April 17,186 7,981 20,293 9,428
Disposals (17,390) (569) (17,390) (569)
Fair value adjustment 204 (1,229) (2,903) (2,676)
At 30 June - 6,183 - 6,183
Other financial assets disposed of during the year represented
the Company's interests in Avion Gold Corporation (see note
11).
Other financial assets disposed of during the comparative period
represented the Company's interests of 19 per cent in Dynasty Gold
Corporation (Dynasty) (see note 11).
Other financial assets at 30 June 2010 were a 15 per cent
holding in Monument Mining Limited, a company listed on the TSX
Venture Exchange in Canada.
All of the investments discussed above were accounted for as
other financial assets rather than equity accounted, on the basis
that the Company was not in a position to exercise significant
influence over the activities of, and has no board representation
in, any of the companies. The shares were measured at fair value,
with gains or losses on re-measurement recognised in equity. On
disposal, accumulated gains or losses previously recognised in
equity were recognised in the income statement as an exceptional
gain or loss (note 11).
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FMGZNGVZGMZZ
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