TIDMAVM
RNS Number : 5655N
Avocet Mining PLC
27 October 2016
2016 Q3 production and suspension of operations at Inata
Avocet Mining PLC ("Avocet" or "the Company") today announces
production and cash costs for the third quarter of 2016 from the
Inata gold mine and that operations at Inata have been suspended
from today.
-- Total gold production at Inata for the quarter was 17,694
ounces at a cash cost of US$1,047 per ounce, compared with
21,086 ounces produced in the second quarter of 2016 at
a cash cost of US$903 per ounce
-- Suspension of operations at Inata pending resolution of
gold seizure
-- Tri-K transaction with Managem aiming to complete before
end 2016
Q3 Production
Production in the quarter was lower than in Q2, as anticipated,
as a result of lower recoveries due primarily to the treatment of
ore types with a higher preg-robbing index (PRI), and the impact of
maintenance work on the plant.
Ore mined in the quarter was from Minfo North, Centre West and
South East, while work continued towards the completion of the
North Pit pushback (finally completed in October). Ore supply to
the mill was a combination of harder higher grade but carbonaceous
material from the mine, and marginal, predominantly oxide material
from stockpiles.
Plant availability, and therefore throughput, was also impacted
by mechanical issues, including a main circuit breaker failure in
the powerhouse in August.
Suspension of operations at Inata
Following the seizure of a gold shipment from the Inata mine on
7 October 2016, no further shipments have been made. On 24 October
2016, a hearing was held at which the Company challenged the
legality of the gold seizure, and requested its lifting. A verdict
is due to be heard on 7 November.
Accordingly, given the potential threat of further seizure of
gold shipments before the verdict, Société des Mines de Bélahouro
SA ("SMB", the owner of the Inata gold mine) has taken the decision
to temporarily suspend operations at Inata from today. A skeleton
crew will remain on site to ensure that the mill is properly
maintained to ensure a smooth re-start once a resolution to the
current situation has been found and it is appropriate to do
so.
A prolonged cessation of operations may mean that the mine
cannot be re-started without significant investment, if at all, and
will likely have a material adverse effect on both SMB's and the
Company's financial position. In particular, funding will likely be
required to support the Company's head office operations ahead of
the completion of the Tri-K transaction (as detailed below), which,
subject, inter alia, to shareholder and regulatory approvals, will
result in the receipt by the Company of an initial consideration of
US$4.0m (approximately US$2.5m after costs). However, meetings are
due to be held in Ouagadougou, the capital of Burkina Faso, in the
coming days between representatives of the mine, its workforce, and
government officials to try to find a resolution to the situation
and to avoid a prolonged cessation.
If funding is required before completion of the Tri-K
transaction and such funding is not available from Inata or the
Company is unable to secure alternative funding, the Company will
likely enter an insolvency process in which circumstance it is
highly unlikely that any value will remain for shareholders.
Update on Tri-K transaction
The transaction announced on 10 October 2016 to enter into a
Joint Venture agreement with Managem SA with respect to the Tri-K
project in Guinea remains subject, inter alia, to shareholder
approval, as well as the ratification of a Mining Convention by the
Guinean parliament. The Company is aiming to complete the
transaction before the end of 2016.
FOR FURTHER INFORMATION PLEASE CONTACT
Avocet Mining PLC Bell Pottinger J.P. Morgan Cazenove
Financial PR Consultants Corporate Broker
David Cather, CEO Daniel Thöle Michael Wentworth-Stanley
Jim Wynn, FD
+44 20 3709 2570 +44 (0)20 3772 2555 +44 20 7742 4000
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
Inata Gold Mine poured its first gold in December 2009 and produced
74,755 ounces of gold in 2015. Other assets in Burkina Faso include
five exploration permits surrounding the Inata Gold Mine in the
broader Bélahouro region. The most advanced of these projects is
Souma, some 20 kilometers from the Inata Gold Mine.
The Company also holds an interest in the Tri-K project in
Guinea. On 10 October 2016, the Company announced that it had
agreed to dispose of 40% of the project to Managem, a Moroccan
group listed on the Casablanca stock exchange, subject to, inter
alia, shareholder approval, and which will increase upon completion
of a bankable feasibility study for a CIL plant at the site, the
incurring of expenditures of at least US$10 million, and the
enlarging of the ore reserve, to 70% (in the event of an increase
of the reserve to 1 million ounce or more) or 60% (if less than 1
million ounces).
Appendix 1
Inata Gold Mine quarterly production information 2015-16
2015 2016
------------------------------
Q1 Q2 Q3 Q4 2015 Q1 Q2 Q3 YTD
Ore mined (k tonnes) 393 397 233 290 1,313 310 397 214 921
Waste mined (k tonnes) 1,420 3,563 4,349 3,494 12,826 2,993 2,855 2,505 8,353
Total mined (k tonnes) 1,813 3,960 4,582 3,784 14,139 3,303 3,252 2,719 8,734
Ore processed (k tonnes) 437 471 448 509 1,865 544 537 478 1,559
Average head grade (g/t) 2.50 2.27 1.50 1.22 1.85 1.21 1.32 1.46 1.33
Process recovery rate 52% 67% 72% 89% 67% 91% 93% 83% 89%
------ ------ ------ ------ ------ ------ ------ ------ ------
Gold Produced (oz) 17,011 22,848 17,517 17,379 74,755 20,528 21,086 17,694 59,308
Cash costs (US$/oz) Q1 Q2 Q3 Q4 2015 Q1 Q2 Q3 YTD
Mining 262 313 362 335 318 291 298 346 310
Processing 540 408 486 430 462 375 347 417 378
Administration 236 155 188 251 203 183 163 182 176
Royalties 75 76 71 78 75 75 95 102 90
------ ------ ------ ------ ------ ------ ------ ------ ------
1,113 952 1,107 1,094 1,058 925 903 1,047 954
This information is provided by RNS
The company news service from the London Stock Exchange
END
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