TIDMAVM
RNS Number : 8170R
Avocet Mining PLC
31 October 2013
Refinancing & Unaudited Interim Results for
the quarter ended 30 September 2013
Refinancing & Tri-K
-- Avocet poised to become a fully unhedged gold producer;
-- US$63 million medium term loan facility with Ecobank Burkina
Faso drawn down - no hedging required;
-- Ecobank loan term of five years at interest rate of 8% per annum;
-- Remaining Macquarie debt repaid during the quarter - entire
Macquarie hedge position to be bought back shortly;
-- Tri-K feasibility study:
- work to date confirms technical viability of low cash cost operation;
- mining licence application process commenced;
- government approval received for environmental and social impact assessment;
- key Koulékoun exploration licence valid for additional two years; and
- work underway to optimise project, including capital and
operating costs, to determine project economics.
Q3 results
-- Revised Inata life of mine plan announced in August, with 36%
increase in recovered ounces over the eight year mine life;
-- Quarterly gold production of 30,987 ounces (Q2: 31,245 ounces);
-- Total cash costs (including royalties) of US$1,195 per ounce (Q2: US$1,238 per ounce);
-- Average realised gold price of US$1,121 per ounce (including
18,000 ounces delivered into the hedge position at US$938 per
ounce); and
-- Loss before tax includes negative impact of accelerated hedge
delivery and change in the mark-to-market of hedge position during
the quarter (in aggregate approximately US$14m)
Quarter Quarter Quarter Quarter
ended ended ended ended
30 September 30 September 30 June 30 March
KEY FINANCIAL METRICS 2013 2012 2013 2013
Period Unaudited Unaudited Unaudited Unaudited
=========================================== ============== ============== =========== ===========
Gold production (ounces) 30,987 33,067 31,245 30,481
=========================================== ============== ============== =========== ===========
Average realised gold price (US$/oz) 1,121 1,506 1,304 1,422
=========================================== ============== ============== =========== ===========
Total cash production cost (US$/oz) 1,195 937 1,238 1,169
=========================================== ============== ============== =========== ===========
(Loss)/profit before tax and exceptional
items (US$000) (14,507) (323) (8,422) 181
=========================================== ============== ============== =========== ===========
(Loss)/profit before tax (US$000) (25,265) (323) (20,907) (44,792)
=========================================== ============== ============== =========== ===========
(Loss)/earnings per share
(US cents per share) (13.33) (0.46) (9.48) (20.30)
=========================================== ============== ============== =========== ===========
EBITDA (US$000) (6,124) 6,281 844 6,748
=========================================== ============== ============== =========== ===========
Net cash (used in)/generated by operating
activities (US$000) 5,033 1,411 (10,615) (15,374)
=========================================== ============== ============== =========== ===========
David Cather, Chief Executive Officer, commented:
"As an unhedged gold producer, the Company will be able to offer
shareholders full exposure to the gold spot price on Inata's
production. It has long been our goal to become an unhedged gold
producer and negotiation of the Ecobank loan will enable us to
achieve this target, as well as the flexibility to transfer surplus
funds to Avocet for corporate purposes. In the year to date we have
delivered the revised life of mine plan for Inata and are close to
completing the Tri-K feasibility study, both of which were critical
to our refinancing efforts. Our immediate priorities are to
complete the hedge buy back, continue to deliver operational
improvements at Inata and obtain the Exploitation Permit at
Tri-K."
Management Conference Call
The Company will host a conference call for investors and
analysts at 9am (UK) on Thursday
31 October 2013.
Dial in details are as follows:
UK: 0800 6940257
Norway: 21563013
Alternative number: +44 (0)1452 555 566
Conference ID: 82678864
A recording of the conference call will also be made available
on the Avocet website later on the same day.
FOR FURTHER INFORMATION PLEASE CONTACT
Avocet Mining Pelham Bell Pottinger J.P. Morgan Cazenove Arctic Securities SEB Enskilda
PLC Financial PR Corporate Broker Financial Financial Adviser
Consultants Adviser
============= ===================== ========================= ================= ==================
David Cather, Daniel Thöle Michael Wentworth-Stanley Arne Wenger Fredrik Cappelen
CEO Petter Bakken
Mike Norris,
FD
Rob Simmons,
IR
------------- --------------------- ------------------------- ----------------- ------------------
+44 20 7766 +47 2101
7676 +44 20 7861 3232 +44 20 7742 4000 3100 +47 2100 8500
NOTES TO EDITORS
Avocet Mining PLC ('Avocet' or the 'Company') is a gold mining
and exploration company listed on the London Stock Exchange
(ticker: AVM.L) and the Oslo Børs (ticker: AVM.OL). The Company's
principal activities are gold mining and exploration in West
Africa.
In Burkina Faso the Company owns 90% of the Inata Gold Mine. The
deposit at Inata currently comprises a Mineral Resource of 4.7
million ounces and an Ore Reserve of 0.9 million ounces. The Inata
Gold Mine poured its first gold in December 2009 and produced
135,189 ounces of gold in 2012.
Other assets in Burkina Faso include eight exploration permits
surrounding the Inata Gold Mine in the broader Bélahouro region.
The most advanced of these projects is Souma, some 20 kilometres
from the Inata Gold Mine, where there is a Mineral Resource
estimate of 0.8 million ounces.
In Guinea, Avocet owns 100% of the Tri-K Project in the north
east of the country. Drilling to date has outlined a Mineral
Resource of over 3.0 million ounces, and in October 2013 the
Company announced a maiden Ore Reserve on the oxide portion of the
orebody, which is suitable for heap leaching, of 0.5 million
ounces. Development of a CIL processing plant to exploit the
remaining 2.4 million ounces will be considered once the heap leach
feasibility study has been completed.
About Ecobank Group
Ecobank Transnational Corporation ('Ecobank'), a public limited
liability company, is a leading pan-African bank with operations in
33 countries across the continent, and was established as a bank
holding company in 1985 under a private sector initiative
spearheaded by the Federation of West African Chambers of Commerce
and Industry with the support of ECOWAS. The Group also has a
licenced operation in Paris and representative offices in Beijing,
Dubai, Johannesburg, London and Luanda. Ecobank's headquarters are
in Lomé, Togo. As at the end 2012, the bank had assets of US$20
billion and revenue of close to US$2 billion.
For more information, please visit www.ecobank.com
CHIEF EXECUTIVE OFFICER'S REVIEW
The Company today announces that it has closed, and drawn down,
a 30 billion FCFA (US$63 million) medium term loan facility with
Ecobank Burkina Faso ("Ecobank"). The loan amount is 30 billion
Francs de la Communauté Financière d'Afrique ("FCFA"), which is the
legal currency of Burkina Faso and the loan amount is currently
equivalent to approximately US$63 million. The Ecobank loan has
been provided to the Company's 90% subsidiary Société des Mines de
Bélahouro SA ('SMB'), which owns the Inata mine. Through this loan,
the Company intends shortly to remove all future hedge commitments,
and is therefore poised to become an unhedged gold producer.
The Ecobank facility has a five year term, bears an interest
rate of 8% per annum and is secured against certain of the assets
of SMB. The first repayment will be made in November 2013 and equal
monthly repayments of 631 million FCFA (US$1.3 million), comprising
interest and principal, will continue for the 60 month duration of
the loan. The facility requires that an amount equal to two months'
payments, 1.3 billion FCFA (US$2.6 million), be held as a debt
service reserve account. Subject to the debt service reserve
account requirement, there are no restrictions on SMB's use of loan
proceeds or cash flow generated, including the transfer of funds
from SMB to Avocet for corporate purposes. The Ecobank loan
facility has no hedge requirement.
The Company's decision to exit the hedge will provide Avocet
shareholders with full exposure to the gold price for Inata's
presently defined mine life of eight years. The Ecobank loan, which
has been drawn down in full, and removal of the hedge, which is
expected to occur shortly, will provide more flexibility than under
the previous Macquarie Bank Limited ('MBL') facility, including the
ability to pass surplus funds up to Avocet for corporate purposes.
The final hedge settlement is expected to total approximately US$47
million. This is equivalent to 111,980 ounces bought back at US$938
per ounce. Of the US$47 million total buy back, US$12 million will
be satisfied from cash previously held by Macquarie as restricted
funds, with the remaining US$35 million provided by the Ecobank
loan proceeds. Details of the hedge buy back will be announced to
the market following its completion.
During the quarter the Company made the final US$5.0 million
repayment of the Inata project finance facility with MBL and all
obligations to MBL will be satisfied once the Company removes its
hedge commitments.
As announced on 9(th) October 2013, third quarter gold
production of 30,987 ounces was below expectations for the period
as a result of lower than planned grades and mill availability. The
lower grades in the third quarter partly reflected reduced
availability of the mobile fleet, which caused delays in waste
stripping to access higher grade ore. Processing during the quarter
continued to target oxide ore sources prior to commissioning of the
carbon blanking circuit, and as a result recoveries increased to
89%.
Following the lower than expected production in the third
quarter, the Company also released revised full year guidance of
125,000-130,000 ounces for 2013, which takes into account the above
production issues and their impact on the fourth quarter. The
reduced production in H2 2013 means that cash costs per ounce in
the second half of 2013 are likely to be similar to those seen in
H1 2013.
Regrettably, during the quarter an employee at Inata suffered a
lost time injury ('LTI') arising from a hand injury, ending a run
for the Company of 517 days without an LTI.
Work on the feasibility study at Tri-K, which was submitted to
the government of Guinea in September, has confirmed the technical
viability of a low cash cost mining and heap leach operation on the
oxide portion of the resources. The Company is in discussions with
the Guinean Government with regards to an exploitation permit at
Tri-K, and in conjunction with this process the Company has
announced a maiden Ore Reserve on the oxide portion of the orebody
of 7.9 million tonnes at 1.89 g/t Au for 480,000 contained ounces.
The government has now approved the Environmental and Social Impact
Assessment and work is underway to optimise the project, including
the capital and operating cost estimates, to determine the
project's economics.
INATA OPERATIONAL REVIEW
Gold production and cash costs
2012 2013
Q1 Q2 Q3 Q4 FY 2012 Q1 Q2 Q3 YTD 2013
Ore mined (k tonnes) 578 610 559 906 2,653 817 971 591 2,379
Waste mined (k tonnes) 7,240 6,689 7,565 8,980 30,474 9,127 8,700 6,547 24,374
Total mined (k tonnes) 7,818 7,299 8,124 9,886 33,127 9,944 9,673 7,138 26,753
Ore processed (k tonnes) 608 651 643 654 2,556 616 620 620 1,856
Average head grade (g/t) 2.36 1.82 1.62 2.03 1.95 1.65 1.84 1.73 1.74
Process recovery rate 87% 86% 91% 83% 87% 82% 87% 89% 86%
------- ------- ------- ------- ========= ------- ------- ------- ---------
Gold Produced (oz) 38,296 32,917 33,067 30,909 135,189 30,481 31,245 30,987 92,713
Cash costs (US$/oz) Q1 Q2 Q3 Q4 FY 2012 Q1 Q2 Q3 YTD 2013
Mining 332 402 374 562 412 542 582 540 555
Processing 283 332 279 350 309 360 371 383 371
Administration 122 145 167 219 161 163 188 180 177
Royalties 113 127 117 115 118 104 97 92 98
------- ------- ------- ------- ========= ------- ------- ------- ---------
850 1,006 937 1,246 1,000 1,169 1,238 1,195 1,201
Results for the Quarter ended 30 September 2013
On 8 August the Company announced a revised life of mine plan
for Inata, with an increase in life of mine recoverable ounces of
36% and an increase of 21% in the average annual gold production to
116,000 ounces per annum, when compared with the previous plan
announced in March 2013. The revised life of mine plan at Inata
includes the construction of a carbon blanking circuit to improve
gold recoveries when processing carbonaceous ore types, at a total
project cost of US$6 million. September marked the start of the
engineering design for this project and a lead engineering
consultant has now been appointed. Long lead time items have been
ordered and the current focus is on process design and general
layout.
As referenced in the Company's press release of 9(th) October
2013, Inata's underlying operational performance in the quarter was
marginally behind expectations with gold production for the quarter
of 30,987 ounces.
Following the demobilisation of the additional rental mining
fleet in July, the revised life of mine plan envisages a mining
rate of 85,000 tonnes per day. Reduced equipment availability
contributed to average mining rates of approximately 83,000 and
78,000 tonnes per day in August and September respectively, and
access to higher grade ore was delayed as a result. Mining rates
were also adversely affected by the wet season, which runs between
July and September.
Plant throughput had been expected to improve in Q3 as a result
of processing softer oxide material from the Minfo Pit, compared to
harder ore sources that have a slower rate of processing.
Processing of alternative, harder ore types, in addition to lower
than planned mill availability resulted in the overall processing
of 620,000 tonnes during Q3, which was in line with Q2 2013, but
below Q3 expectations. As a consequence of mining volumes being
behind schedule from the Minfo and Sayouba pits, the plant feed was
supplemented by lower grade stockpile, lowering the overall head
grade for the quarter to 1.73 g/t Au.
Total cash costs (including royalties) in the period were
US$1,195 per ounce, a decrease compared to the prior quarter,
reflecting the standing down of the mining contractor at the end of
Q2 2013, and lower tonnes mined. This was partially offset by
higher maintenance costs, together with an increase in the cost of
fuel due to an additional 10 cents per litre fuel duty applied by
the government of Burkina Faso during the quarter.
Tri-K development project, Guinea
Work on the Tri-K project in Guinea during the quarter made
several significant steps towards a mining licence, with an
environmental and social impact assessment submitted to the
government in July, and technical documents submitted on schedule
in September. A feasibility study update was published to the
market shortly after the quarter end, which outlined the technical
viability of a low cost heap leach operation with a low strip
ratio. The maiden Ore Reserve for Tri-K, announced as part of the
feasibility study update, is shown in the table below.
Deposit Classification Tonnes Au g/t Ounces
--------------------- ---------------- ---------- ------- --------
Kodiéran Proven - - -
(cut off grade 0.45
g/t Au) Probable 4,776,000 2.00 307,000
--------------------- ---------------- ---------- ------- --------
Koulékoun Proven - - -
(cut off grade 0.65
g/t Au) Probable 3,133,000 1.72 173,000
--------------------- ---------------- ---------- ------- --------
Total 7,909,000 1.89 480,000
--------------------------------------- ---------- ------- --------
Notes: The information in this press release that relates to the
Tri-K Ore Reserves, has been estimated in conformance with JORC
2004 Code, and is based on information compiled by Clayton Reeves,
of Avocet Mining PLC. Clayton is a member of The Southern African
Institute of Mining and Metallurgy (SAIMM) and has sufficient
experience, which is relevant to the style of mineralisation and
type of deposit under consideration, and to the activity he is
undertaking, to qualify as a Competent Person in terms of the JORC
Code. Estimates are rounded to nearest significant figure. Rounding
errors may occur.
The technical work submitted to the Guinea Government in
September outlines a 1.2 million tonnes per annum heap leach plant
with an initial seven year mine life, averaging 55,000 ounces of
production per annum. The Tri-K project benefits from a low life of
mine strip ratio of 2.6 and high gold grades and recoveries (80%)
for a heap leach project. Pre-production capital costs are
currently estimated as US$88.5 million, and life of mine operating
cash costs (including royalty) are currently estimated to be US$787
per ounce.
Certain parameters, including capital expenditure and operating
costs, are expected to change as a result of project optimisation
work currently in progress.
Souma exploration project, Burkina Faso
In line with previous years, field-based exploration activities,
such as drilling, were reduced during the quarter as the rainy
season passed.
Resource definition drilling activities within the Inata mining
licence recorded results at Minfo that are expected to positively
impact the resource model. Results included:
- 25 metres at 3.9 g/t Au from 30 metres depth
- 4 metres at 16.5 g/t Au from 17 metres depth
- 24 metres at 2.5 g/t Au from 6 metres depth
- 20 metres at 1.9 g/t Au from 99 metres depth
In the broader Bélahouro region surrounding the mine site,
drilling results were received from the N'Darga Prospect during the
quarter, which forms part of the Souma project, and these included
25 metres at 3.9 g/t Au from 30 metres depth and 24 metres at 2.5
g/t Au from 6 metres depth. Geophysics IP dipole modelling on Souma
has been completed and a 3D model prepared for the entire Souma
trend, which will enhance the Company's understanding of the
mineralisation at Souma, as potential additional feed for Inata in
the future.
Financial Review
Revenue in the quarter was US$37.4 million, representing 33,385
ounces sold at an average realised price of US$1,121 per ounce. The
average spot price fell to US$1,338 per ounce (Q2: US$1,441 per
ounce), and an accelerated total of 18,000 ounces was delivered
into the hedge at a price of US$938 per ounce (Q2: 8,250 ounces),
as part of the strategic decision to reduce the Group's obligations
to Macquarie Bank Limited as early as possible.
With cash costs in the quarter averaging US$1,195 per ounce, the
impact of this hedge delivery strategy was to reduce gross margin
by approximately US$3.6 million resulting in a gross loss of
US$10.5 million. For similar reasons, EBITDA in the quarter was
also negative at US$6.1 million, while the loss from operations,
which includes exploration expenditure, corporate and head office
costs, and depreciation, was US$12.5 million.
At 30 September 2013, the mark-to-market liability of the hedge
book was US$46.6 million, compared with US$35.8 million at the
start of the quarter, resulting in an expense to the income
statement of US$10.8 million. Although the total ounces hedged
decreased by 18,000 to 117,980, the increase in mark-to-market
liability of the hedge reflects the fact that the quarter end spot
price increased from US$1,192 per ounce at 30 June 2013 to US$1,327
per ounce at 30 September 2013.
The loss before tax for the quarter was therefore US$25.3
million, compared with a loss of US$20.9 million in Q2.
Cash generated from operating activities was positive in the
quarter at US$5.0 million. This was partly due to movements in
stockpiles and gold inventories (amounting to US$1.5 million), but
also reflected a reduction in the value of spares held on site by
US$5.5m, as well as around US$3.7 million from VAT rebates, trade
creditors and other working capital movements.
With cash conservation measures in place, capex was restricted
to US$0.9 million in the quarter, while feasibility study work at
Tri-K and resource definition in the Inata surrounds amounted to
US$2.0 million of capitalised costs.
The final instalment of the Macquarie Bank Limited debt facility
of US$5.0 million was repaid on 30 September. The third tranche of
the US$15.0 million Elliott loan of US$5.0 million was also drawn
down in the quarter.
Net cash flow in the quarter totalled US$1.9 million. The
closing cash position of the Group at 30 September 2013 was US$19.5
million, with US$15.4 million of debt and accrued interest, a net
cash position of US$4.1 million.
Outlook
As previously announced, the impact of the mechanical issues
that affected both the mining fleet and plant is expected to extend
into the fourth quarter, and as a result, our full year production
is now forecast to be 125,000-130,000 ounces, with cash costs
similar to those seen year to date.
Our immediate priorities are to achieve operational improvements
at Inata and obtain the Exploitation Permit at Tri-K.
DAVID CATHER
Chief Executive Officer
CONDENSED CONSOLIDATED INCOME STATEMENT
For the three and nine months ended 30 September 2013
Three months ended Nine months ended
30 September 30 September 30 September 30 September
2013 2012 2013 2012
Note Unaudited Unaudited Unaudited Unaudited
====================================== ===== ============= ============= ============= =============
US$000 US$000 US$000 US$000
Continuing operations
Revenue 2 37,441 50,146 117,929 159,657
Cost of sales 2 (47,953) (45,689) (129,077) (124,430)
====================================== ===== ============= ============= ============= =============
Gross (loss)/profit (10,512) 4,457 (11,148) 35,227
====================================== ===== ============= ============= ============= =============
Administrative expenses (1,530) (3,630) (6,084) (8,950)
Share based payments (440) (517) (834) (1,547)
Partial reversal of impairment
of mining assets 3,8 - - 72,200 -
Impairment of mining and exploration
assets 3,9 - - (73,616) -
(Loss)/profit from operations (12,482) 310 (19,482) 24,730
====================================== ===== ============= ============= ============= =============
Gain and loss on financial
instruments
Restructure of forward contracts 3 - - (20,225) -
Loss on recognition of forward
contracts 3 - - (96,632) -
Change in fair value of forward
contracts 3 (10,758) - 50,057 -
Finance items
Exchange gains/(losses) 15 76 (107) 440
Finance expense (2,040) (720) (4,591) (2,321)
Finance income - 11 16 125
(Loss)/profit before taxation
from continuing operations (25,265) (323) (90,964) 22,974
====================================== ===== ============= ============= ============= =============
Analysed as:
(Loss)/profit before taxation
and exceptional items (14,507) (323) (22,748) 22,974
Exceptional items 3 (10,758) - (68,216) -
====================================== ===== ============= ============= ============= =============
(Loss)/profit before taxation
from continuing operations (25,265) (323) (90,964) 22,974
====================================== ===== ============= ============= ============= =============
Taxation (3,300) (486) (3,263) (7,959)
====================================== ===== ============= ============= ============= =============
(Loss)/profit for the period
from continuing operations (28,565) (809) (94,227) 15,015
====================================== ===== ============= ============= ============= =============
Discontinued operations
Loss on disposal on subsidiaries(1) 3 - - - (105)
====================================== ===== ============= ============= ============= =============
(Loss)/profit for the period (28,565) (809) (94,227) 14,910
====================================== ===== ============= ============= ============= =============
Attributable to:
Equity shareholders of the
parent company (26,542) (918) (85,843) 13,185
Non-controlling interest (2,023) 109 (8,384) 1,725
====================================== ===== ============= ============= ============= =============
(28,565) (809) (94,227) 14,910
====================================== ===== ============= ============= ============= =============
Earnings per share
- basic (cents per share) 5 (13.33) (0.46) (43.11) 6.63
- diluted (cents per share) 5 (13.33) (0.46) (43.11) 6.59
EBITDA (2) 4 (6,124) 6,281 1,468 43,061
====================================== ===== ============= ============= ============= =============
(1) During 2012, the Group disposed of its final South East
Asian asset. All operations for 2013 are
continuing. Refer to note 3 for further information.
(2) 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 STATEMENT OF COMPREHENSIVE INCOME
For the three months ended 30 September 2013
Three months ended
30 September 30 September
2013 2012
========================================= ===== ============= =============
Note Unaudited Unaudited
========================================= ===== ============= =============
US$000 US$000
Loss for the period (28,565) (809)
Revaluation of other financial assets 10 (73) (172)
========================================= ===== ============= =============
Total comprehensive loss for the period (28,638) (981)
========================================= ===== ============= =============
Attributable to:
Equity holders of the parent company (26,615) (1,090)
Non-controlling interest (2,023) 109
========================================= ===== ============= =============
Total comprehensive loss for the period (28,638) (981)
========================================= ===== ============= =============
Total comprehensive loss for the period
attributable to owners of the parent
arising from:
Continuing operations (28,638) (981)
Discontinued operations - -
========================================= ===== ============= =============
(28,638) (981)
========================================= ===== ============= =============
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the nine months ended 30 September 2013
Nine months ended
30 September 30 September
2013 2012
======================================= ===== ============= =============
Note Unaudited Unaudited
======================================= ===== ============= =============
US$000 US$000
(Loss)/profit for the period (94,227) 14,910
Revaluation of other financial assets 10 (445) (776)
======================================= ===== ============= =============
Total comprehensive (loss)/profit for
the period (94,672) 14,134
======================================= ===== ============= =============
Attributable to:
Equity holders of the parent company (86,288) 12,409
Non-controlling interest (8,384) 1,725
======================================= ===== ============= =============
Total comprehensive (loss)/profit for
the period (94,672) 14,134
======================================= ===== ============= =============
Total comprehensive (loss)/profit for
the period attributable to owners of
the parent arising from:
Continuing operations (94,672) 14,239
Discontinued operations - (105)
======================================= ===== ============= =============
(94,672) 14,134
======================================= ===== ============= =============
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 September 2013
30 September 30 June 2013 31 December
2013 Unaudited 2012
Note Unaudited Audited
=============================== ===== ============= ============= ============
US$000 US$000 US$000
Non-current assets
Intangible assets 6 55,271 53,016 49,442
Property, plant and equipment 7 142,144 147,910 145,653
Other financial assets 10 154 227 599
197,569 201,153 195,694
Current assets
Inventories 11 62,401 69,440 56,949
Trade and other receivables 12 23,404 27,614 25,124
Cash and cash equivalents 13 19,549 17,671 54,888
=============================== ===== ============= ============= ============
105,354 114,725 136,961
Current liabilities
Trade and other payables 45,193 44,867 42,023
Current tax liabilities 18 3,300 - -
Other financial liabilities 14 34,015 27,518 6,105
=============================== ===== ============= ============= ============
82,508 72,385 48,128
=============================== ===== ============= ============= ============
Non-current liabilities
Other financial liabilities 14 31,436 26,439 2,434
Deferred tax liabilities - - 37
Other liabilities 6,449 6,383 6,251
=============================== ===== ============= ============= ============
37,885 32,822 8,722
Net assets 182,530 210,671 275,805
=============================== ===== ============= ============= ============
Equity
Issued share capital 16,247 16,247 16,247
Share premium 146,040 146,040 146,040
Other reserves 15,737 15,769 16,117
Retained earnings 21,710 47,796 106,221
Total equity attributable
to the parent 199,734 225,852 284,625
Non-controlling interest (17,204) (15,181) (8,820)
=============================== ===== ============= ============= ============
Total equity 182,530 210,671 275,805
=============================== ===== ============= ============= ============
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Nine months ended 30 September 2013
=====================================================================================================================
Share Share Other Retained Total attributable Non-controlling Total
capital premium reserves earnings to the parent interest equity
===================== ========= ========= ========== ========== =================== ================ =========
US$000 US$000 US$000 US$000 US$000 US$000 US$000
At 31 December
2012 (Audited) 16,247 146,040 16,117 106,221 284,625 (8,820) 275,805
Loss for the
period - - - (85,843) (85,843) (8,384) (94,227)
Revaluation
of other financial
assets - - (445) - (445) - (445)
Total comprehensive
income for the
period - - (445) (85,843) (86,288) (8,384) (94,672)
===================== ========= ========= ========== ========== =================== ================ =========
Share based
payments - - - 1,235 1,235 - 1,235
Release of treasury
and own shares - - 65 97 162 - 162
At 30 September
2013 (Unaudited) 16,247 146,040 15,737 21,710 199,734 (17,204) 182,530
===================== ========= ========= ========== ========== =================== ================ =========
Nine months ended 30 September 2012
=====================================================================================================
Total
attributable
Share Share Other Retained to the Non-controlling Total
capital premium reserves earnings parent interest equity
=============== ======== ======== ========= ========= ============= ================ =========
US$000 US$000 US$000 US$000 US$000 US$000 US$000
At 31 December
2011
(Audited) 16,247 149,915 15,273 208,129 389,564 991 390,555
Profit for the
period - - - 13,185 13,185 1,725 14,910
Revaluation
of other
financial
assets - - (776) - (776) - (776)
Total
comprehensive
income for
the
period - - (776) 13,185 12,409 1,725 14,134
=============== ======== ======== ========= ========= ============= ================ =========
Share based
payments - - - 1,942 1,942 - 1,942
Release of
treasury
and own
shares - - 914 (865) 49 - 49
Exercise of
share options - - - (16) (16) - (16)
Final dividend - - - (13,505) (13,505) - (13,505)
=============== ======== ======== ========= ========= ============= ================ =========
At 30
September
2012
(Unaudited) 16,247 149,915 15,411 208,870 390,443 2,716 393,159
=============== ======== ======== ========= ========= ============= ================ =========
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the three and nine months ended 30 September 2013
Three months ended Nine months ended
30 September 30 September 30 September 30 September
2013 2012 2013 2012
====================================== ===== ============= ============= ============= =============
Note Unaudited Unaudited
====================================== ===== ============= ============= ============= =============
US$000 US$000
Cash flows from operating activities
(Loss)/profit for the period (28,565) (809) (94,227) 14,910
Adjusted for:
Depreciation of non-current
assets 2,7 6,358 5,971 19,534 18,331
Partial reversal of impairment
of mining assets 8 - - (72,200) -
Impairment of mining and exploration
assets 9 - - 73,616 -
Share based payments 440 517 834 1,547
Taxation in the income statement 3,300 486 3,263 7,959
Loss on recognition of forward - - 96,632 -
contracts
Change in fair value of forward
contracts 10,758 - (50,057) -
Non-operating items in the income
statement 1,970 1,796 3,627 3,746
Discontinued operations 3 - - - 105
====================================== ===== ============= ============= ============= =============
(5,739) 7,961 (18,978) 46,598
Movements in working capital
Decrease / (increase) in inventory 7,039 (111) (5,452) (12,305)
Decrease / (increase) in trade
and other receivables 4,210 1,396 1,719 1,055
(Decrease) / increase in trade
and other payables (340) (7,596) 2,129 1,460
====================================== ===== ============= ============= ============= =============
Net cash generated/ (used in)
by operations 5,170 1,650 (20,582) 36,808
Interest received - - 2 138
Interest paid (137) (239) (376) (966)
Net cash generated / (used in)
by operating activities 5,033 1,411 (20,956) 35,980
====================================== ===== ============= ============= ============= =============
Cash flows from investing activities
Payments for property, plant
and equipment (870) (8,876) (10,319) (22,592)
Exploration and evaluation expenses (2,014) (4,871) (12,801) (26,907)
Disposal of discontinued operation,
net of cash disposed of (4) - (4) 1,980
Net cash (used in)/generated
by investing activities (2,888) (13,747) (23,124) (47,519)
====================================== ===== ============= ============= ============= =============
Cash flows from financing activities
Loans repaid 14 (5,000) (6,000) (5,000) (18,000)
Proceeds from debt 5,000 - 15,000 -
Net exercise of share options
settled in cash - (14) - (155)
Final dividend - - - (13,166)
Financing costs (221) - (723) -
Payments in respect of finance
lease (61) (63) (427) (434)
Net cash (used in)/ generated
by financing activities (282) (6,077) 8,850 (31,755)
====================================== ===== ============= ============= ============= =============
Net cash movement 1,863 (18,413) (35,230) (43,294)
Exchange gains / (losses) 15 76 (109) 101
Total increase / (decrease)
in cash and cash equivalents 1,878 (18,337) (35,339) (43,193)
====================================== ===== ============= ============= ============= =============
Cash and cash equivalents at
start of the period 17,671 80,380 54,888 105,236
====================================== ===== ============= ============= ============= =============
Cash and cash equivalents at
end of period 19,549 62,043 19,549 62,043
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 2012, 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 financial statements
for the three and nine months ended 30 September 2013 have been
drawn up using accounting policies and presentation expected to be
adopted in the Group's full financial statements for the year
ending 31 December 2013. The accounting policies are not different
to those set out in note 1 to the Group's audited financial
statements for the year ended 31 December 2012, with the exception
of certain amendments to accounting standards or new
interpretations issued by the International Accounting Standards
Board, which were applicable from 1 January 2013. These have not
had a material impact on the Group.
The Company's statutory financial statements for the year ended
31 December 2012 are available on the Company's website
www.avocetmining.com. 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.
Going Concern
The Group announced today a new US$63 million financing facility
with Ecobank, which has a maturity of five years. Approximately
US$35 million of this facility will shortly be used to buy back the
outstanding hedge with Macquarie Bank Limited. The remaining
available loan proceeds, after deducting loan costs and debt
service reserve account requirements, of US$25 million exceed the
Elliott loan of US$16 million (including interest) that is due for
repayment on or before 31 December 2013. However, the possibility
exists that lower production or gold prices or other adverse
impacts on cash flow over the next six months could cause available
liquidity to be insufficient to repay the full US$16m Elliott loan
on or before 31 December 2013. The directors therefore believe that
a material uncertainty will continue to exist in respect of the
Elliott loan until it is either repaid or renegotiated.
In its assessment of going concern, the directors have
considered a number of factors including the Ecobank loan repayment
schedule, the repayment or the renegotiation of the Elliott loan,
the risk of lower production or gold prices, and the possibility of
higher than expected operating or capital costs. The directors have
also considered the Company's potential responses and actions to
mitigate or address these issues. As a result of this assessment,
the directors have concluded that they have a reasonable
expectation that the Company will have sufficient cash to meet its
obligations over the next 12 months. Accordingly, the directors
believe the going concern basis to be appropriate for the Q3
financial statements.
Estimates
Certain amounts included in the condensed consolidated interim
financial statements involve the use of judgement and/or
estimation. These are based on management's best knowledge of the
relevant facts and circumstances, having regard to prior
experience. However, judgements and estimations regarding the
future are a key source of uncertainty and actual results may
differ from the amounts included in the financial statements.
In preparing these condensed consolidated interim financial
statements, the significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those applied to the
consolidated financial statements for the year ended 31 December
2012, with the exception of those highlighted in the exceptional
items in notes of these statements.
2. Segmental reporting
IFRS 8 requires the disclosure of certain information in respect
of reportable operating segments. One of the criteria for
determining reportable operating segments is the level at which
information is regularly reviewed by the Chief Operating Decision
Maker (CODM) for the purposes of making economic decisions. In this
report, operating segments for continuing operations are determined
as the UK, West Africa mining operations (which includes
exploration activity within the Inata mine licence area), and West
Africa exploration (which includes exploration projects in Burkina
Faso, Guinea and Mali). Discontinued operations for 2012 represent
the disposal of one of the remaining assets in South East Asia that
was subject to the agreement with J&Partners L.P. (note 3).
2. Segmental Reporting
West Africa
For the three months ended mining West Africa
30 September 2013 UK operations exploration Total
========================================== ======== ============ ============= =========
US$000 US$000 US$000 US$000
INCOME STATEMENT
Revenue - 37,441 - 37,441
========================================== ======== ============ ============= =========
Cost of Sales 790 (47,893) (850) (47,953)
========================================== ======== ============ ============= =========
Cash production costs:
- mining - (16,744) - (16,744)
- processing - (11,858) - (11,858)
- overheads - (5,589) - (5,589)
- royalties - (2,853) - (2,853)
========================================== ======== ============ ============= =========
- (37,044) - (37,044)
Changes in inventory - (1,499) - (1,499)
Expensed exploration and other
cost of sales (a) 796 (2,998) (850) (3,052)
Depreciation and amortisation (b) (6) (6,352) - (6,373)
=================================== ===== ======== ============ ============= =========
Gross profit/(loss) 790 (10,452) (850) (10,512)
Administrative expenses and share
based payments (1,970) - - (1,970)
(Loss)/profit from operations (1,180) (10,452) (850) (12,482)
Change in fair value of forward
contracts - (10,758) - (10,758)
Net finance items (1,202) (828) 5 (2,025)
========================================== ======== ============ ============= =========
Loss before taxation (2,382) (22,038) (845) (25,265)
Taxation - (3,300) - (3,300)
========================================== ======== ============ ============= =========
Loss for the period (2,382) (25,338) (845) (28,565)
========================================== ======== ============ ============= =========
Attributable to:
Equity shareholders of parent
company (2,382) (23,315) (845) (26,542)
Non-controlling interest - (2,023) - (2,023)
(Loss)/profit for the period (2,382) (25,338) (845) (28,565)
========================================== ======== ============ ============= =========
EBITDA (c) (1,174) (4,100) (850) (6,124)
=================================== ===== ======== ============ ============= =========
(a) Other cost of sales represents costs not directly
attributable to production in the period, 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.
2. Segmental Reporting (continued)
West Africa
mining West Africa
At 30 September 2013 UK operations exploration Total
================================== ===== ========= ============ ============= ==========
US$000 US$000 US$000 US$000
STATEMENT OF FINANCIAL POSITION
Non-current assets 678 137,816 59,075 197,569
Inventories - 62,189 212 62,401
Trade and other receivables 355 19,361 3,688 23,404
Cash and cash equivalents 4,191 15,038 320 19,549
Total assets 5,224 234,404 63,295 302,923
========================================= ========= ============ ============= ==========
Current liabilities (18,951) (61,101) (2,456) (82,508)
Non-current liabilities (430) (37,455) - (37,885)
========================================= ========= ============ ============= ==========
Total liabilities (19,381) (98,556) (2,456) (120,393)
========================================= ========= ============ ============= ==========
Net assets (14,157) 135,848 60,839 182,530
========================================= ========= ============ ============= ==========
West Africa
For the three months ended 30 mining West Africa
September 2013 UK operations exploration Total
================================== ===== ========= ============ ============= ==========
US$000 US$000 US$000 US$000
CASH FLOW STATEMENT
Loss for the period (2,382) (25,338) (845) (28,565)
Adjustments for non-cash and
non-operating items (d) 1,531 21,632 (337) 22,826
Movements in working capital 333 10,973 (397) 10,909
========================================= ========= ============ ============= ==========
Net cash generated by / (used
in) operations (518) 7,267 (1,579) 5,170
Net interest paid - (137) - (137)
Purchase of property, plant
and equipment - (854) (16) (870)
Deferred exploration expenditure - - (2,014) (2,014)
Loan repayment - (5,000) - (5,000)
Proceeds from debt 5,000 - - 5,000
Financing costs (221) - - (221)
Other cash movements (e) (3,398) (54) 3,402 (50)
================================== ===== ========= ============ ============= ==========
Total increase / (decrease)
in cash and cash equivalents 863 1,222 (207) 1,878
========================================= ========= ============ ============= ==========
(d) Includes depreciation and amortisation, share based
payments, taxation in the income statement, and other non-operating
items in the income statement;
(e) Other cash movements include cash flows from financing
activities, intragroup transfers, and exchange gains or losses.
2. Segmental Reporting (continued)
West Africa
For the three months ended mining West Africa
30 September 2012 UK operations exploration Total
========================================== ======== ============ ============= =========
US$000 US$000 US$000 US$000
INCOME STATEMENT
Revenue - 50,146 - 50,146
========================================== ======== ============ ============= =========
Cost of Sales 718 (45,308) (1,099) (45,689)
========================================== ======== ============ ============= =========
Cash production costs:
- mining - (12,355) - (12,355)
- processing - (9,219) - (9,219)
- overheads - (5,521) - (5,521)
- royalties - (3,877) - (3,877)
========================================== ======== ============ ============= =========
- (30,972) - (30,972)
Changes in inventory - (5,662) - (5,662)
Expensed exploration and other
cost of sales (a) 751 (2,736) (1,099) (3,084)
Depreciation and amortisation (b) (33) (5,938) - (5,971)
=================================== ===== ======== ============ ============= =========
Gross profit/(loss) 718 4,838 (1,099) 4,457
Administrative expenses and share
based payments (4,147) - - (4,147)
========================================== ======== ============ ============= =========
(Loss)/profit from operations (3,429) 4,838 (1,099) 310
Net finance items 4 (641) 4 (633)
========================================== ======== ============ ============= =========
(Loss)/profit before taxation (3,425) 4,197 (1,095) (323)
Taxation - (486) - (486)
========================================== ======== ============ ============= =========
(Loss)/profit for the period (3,425) 3,711 (1,095) (809)
========================================== ======== ============ ============= =========
Attributable to:
Equity shareholders of parent
company (3,425) 3,602 (1,095) (918)
========================================== ======== ============ ============= =========
Non-controlling interest - 109 - 109
(Loss)/profit for the period (3,425) 3,711 (1,095) (809)
========================================== ======== ============ ============= =========
EBITDA (c) (3,396) 10,776 (1,099) 6,281
=================================== ===== ======== ============ ============= =========
(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.
2. Segmental Reporting (continued)
============================================================================================
West Africa
mining West Africa
At 30 September 2012 UK operations exploration Total
================================== ===== ========= ============ ============= =========
US$000 US$000 US$000 US$000
STATEMENT OF FINANCIAL POSITION
Non-current assets 1,616 271,548 49,399 322,563
Inventories - 52,426 394 52,820
Trade and other receivables 528 22,481 4,149 27,158
Cash and cash equivalents 13,587 48,140 316 62,043
Total assets 15,731 394,595 54,258 464,584
========================================= ========= ============ ============= =========
Current liabilities (3,085) (35,070) (3,094) (41,249)
Non-current liabilities (430) (29,746) - (30,176)
========================================= ========= ============ ============= =========
Total liabilities (3,515) (64,816) (3,094) (71,425)
========================================= ========= ============ ============= =========
Net assets 12,216 329,779 51,164 393,159
========================================= ========= ============ ============= =========
West Africa
For the three months ended 30 mining West Africa
September 2012 UK operations exploration Total
================================== ===== ========= ============ ============= =========
US$000 US$000 US$000 US$000
CASH FLOW STATEMENT
(Loss)/profit for the period (3,425) 3,711 (1,095) (809)
Adjustments for non-cash and
non-operating items (d) 546 8,414 (190) 8,770
Movements in working capital (677) (2,608) (3,026) (6,311)
========================================= ========= ============ ============= =========
Net cash (used in)/generated
by operations (3,556) 9,517 (4,311) 1,650
Net interest received/(paid) (4) (235) - (239)
Purchase of property, plant
and equipment (5) (8,784) (87) (8,876)
Loans repaid - (6,000) - (6,000)
Deferred exploration expenditure - - (4,871) (4,871)
Other cash movements (e) (25,867) 17,058 8,808 (1)
Total (decrease)/ increase in
cash and
cash equivalents (29,432) 11,556 (461) (18,337)
========================================= ========= ============ ============= =========
(d) Includes depreciation and amortisation, share based
payments, taxation in the income statement, and other non-operating
items in the income statement;
(e) Other cash movements include cash flows from financing
activities, intergroup transfers; and exchange gains or losses.
2. Segmental Reporting (continued)
West Africa
For the nine months ended 30 September mining West Africa
2013 UK operations exploration Total
============================================== ======== ============ ============= ==========
US$000 US$000 US$000 US$000
INCOME STATEMENT
Revenue - 117,929 - 117,929
============================================== ======== ============ ============= ==========
Cost of Sales 2,268 (128,129) (3,216) (129,077)
============================================== ======== ============ ============= ==========
Cash production costs:
- mining - (51,432) - (51,432)
- processing - (34,434) - (34,434)
- overheads - (16,433) - (16,433)
- royalties - (9,047) - (9,047)
============================================== ======== ============ ============= ==========
- (111,346) - (111,346)
Changes in inventory - 7,684 - 7,684
Expensed exploration and other
cost of sales (a) 2,307 (4,972) (3,216) (5,881)
Depreciation and amortisation (b) (39) (19,495) - (19,534)
======================================= ===== ======== ============ ============= ==========
Gross profit/(loss) 2,268 (10,200) (3,216) (11,148)
Administrative expenses and share
based payments (6,918) - - (6,918)
Partial reversal of impairment
of mining assets - 72,200 - 72,200
Impairment of mining and exploration
assets - (73,300) (316) (73,616)
Loss profit from operations (4,650) (11,300) (3,532) (19,482)
Gain and loss on financial instrument
Loss on recognition of forward
contracts - (96,632) - (96,632)
Restructure of forward contracts - (20,225) - (20,225)
Change in fair value of forward
contracts - 50,057 - 50,057
Net finance items (2,313) (2,356) (13) (4,682)
============================================== ======== ============ ============= ==========
Loss before taxation (6,963) (80,456) (3,545) (90,964)
Taxation - (3,263) - (3,263)
============================================== ======== ============ ============= ==========
Loss for the period (6,963) (83,719) (3,545) (94,227)
============================================== ======== ============ ============= ==========
Attributable to:
Equity shareholders of parent
company (6,963) (75,335) (3,545) (85,843)
============================================== ======== ============ ============= ==========
Non-controlling interest - (8,384) - (8,384)
Loss for the period (6,963) (83,719) (3,545) (94,227)
============================================== ======== ============ ============= ==========
EBITDA (c) (4,611) 9,295 (3,216) 1,468
======================================= ===== ======== ============ ============= ==========
(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.
2. Segmental Reporting (continued)
West Africa Continuing
For the nine months ended mining West Africa operations Discontinued
30 September 2012 UK operations exploration total operations Total
===================================== ========= ============ ============= ============ ============= ==========
US$000 US$000 US$000 US$000 US$000 US$000
INCOME STATEMENT
Revenue - 159,657 - 159,657 - 159,657
===================================== ========= ============ ============= ============ ============= ==========
Cost of Sales 2,576 (122,823) (4,183) (124,430) - (124,430)
===================================== ========= ============ ============= ============ ============= ==========
Cash production costs:
- mining - (38,287) - (38,287) - (38,287)
- processing - (30,960) - (30,960) - (30,960)
- overheads - (14,995) - (14,995) - (14,995)
- royalties - (12,398) - (12,398) - (12,398)
===================================== ========= ============ ============= ============ ============= ==========
- (96,640) - (96,640) - (96,640)
Changes in inventory - (596) - (596) - (596)
Expensed exploration
and other cost of
sales (a) 2,675 (7,355) (4,183) (8,863) - (8,863)
Depreciation and amortisation (b) (99) (18,232) - (18,331) - (18,331)
============================== ===== ========= ============ ============= ============ ============= ==========
Gross profit/(loss) 2,576 36,834 (4,183) 35,227 - 35,227
Administrative expenses
and share based payments (10,497) - - (10,497) - (10,497)
===================================== ========= ============ ============= ============ ============= ==========
(Loss)/profit from
operations (7,921) 36,834 (4,183) 24,730 - 24,730
Loss on disposal of
subsidiaries - - - - (105) (105)
Net finance items 433 (2,208) 19 (1,756) - (1,756)
===================================== ========= ============ ============= ============ ============= ==========
(Loss)/profit before
taxation (7,488) 34,626 (4,164) 22,974 (105) 22,869
Taxation - (7,959) - (7,959) - (7,959)
===================================== ========= ============ ============= ============ ============= ==========
(Loss)/profit for
the period (7,488) 26,667 (4,164) 15,015 (105) 14,910
===================================== ========= ============ ============= ============ ============= ==========
Attributable to:
Equity shareholders
of parent company (7,488) 24,942 (4,164) 13,290 (105) 13,185
Non-controlling interest - 1,725 - 1,725 - 1,725
===================================== ========= ============ ============= ============ ============= ==========
(Loss)/profit for
the period (7,488) 26,667 (4,164) 15,015 (105) 14,910
===================================== ========= ============ ============= ============ ============= ==========
EBITDA (c) (7,822) 55,066 (4,183) 43,061 - 43,061
============================== ===== ========= ============ ============= ============ ============= ==========
(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;
(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.
2. Segmental Reporting (continued)
For the nine months ended 30
September 2013 UK West Africa mining operations West Africa exploration Total
=============================== ===== ========= ============================== ======================== =========
US$000 US$000 US$000 US$000
CASH FLOW STATEMENT
Loss for the period (6,963) (83,719) (3,545) (94,227)
Adjustments for non-cash and
non-operating items (d) 3,068 72,099 82 75,249
Movements in working capital (726) (852) (25) (1,603)
====================================== ========= ============================== ======================== =========
Net cash used in operations (4,621) (12,472) (3,488) (20,581)
Net interest received/(paid) 2 (376) - (374)
Purchase of property, plant and
equipment (1) (10,083) (236) (10,320)
Deferred exploration expenditure - - (12,801) (12,801)
Loan repayment - (5,000) - (5,000)
Proceeds from debt 15,000 - - 15,000
Financing costs (723) - - (723)
Other cash movements (e) (12,859) (3,957) 16,276 (540)
Total decrease in cash and cash
equivalents (3,202) (31,888) (249) (35,339)
====================================== ========= ============================== ======================== =========
For the nine months West Africa Continuing
ended 30 September mining West Africa operations Discontinued
2012 UK operations exploration total operations Total
===================== ===== ========= =============== =============== =============== =============== =========
US$000 US$000 US$000 US$000 US$000 US$000
CASH FLOW STATEMENT
(Loss)/profit for the
period (7,488) 26,667 (4,164) 15,015 (105) 14,910
Adjustments for
non-cash and
non-operating items (d) 1,213 30,606 (236) 31,583 105 31,688
Movements in working
capital (4,772) (4,796) (222) (9,790) - (9,790)
============================ ========= =============== =============== =============== =============== =========
Net cash (used in)/
generated by operations (11,047) 52,477 (4,622) 36,808 - 36,808
Net interest
received/(paid) 134 (962) - (828) - (828)
Purchase of property, plant
and equipment (169) (20,557) (1,866) (22,592) - (22,592)
Deferred exploration
expenditure - (367) (26,540) (26,907) - (26,907)
Net proceeds from disposal
of discontinuing
operations 1,980 - - 1,980 - 1,980
Loans repaid - (18,000) - (18,000) - (18,000)
Final dividend (13,166) - - (13,166) - (13,166)
Other cash movements (e) (39,899) 6,834 32,577 (488) - (488)
Total (decrease)/increase
in cash and cash
equivalents (62,167) 19,425 (451) (43,193) - (43,193)
============================ ========= =============== =============== =============== =============== =========
(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. Exceptional items
30 September 2013 30 September 2012 30 September 2013 30 September 2012
(three months) Unaudited (three months) (nine months) Unaudited (nine months)
Unaudited Unaudited
======================= ========================== ================== ========================= ==================
US$000 US$000 US$000 US$000
Restructure of forward - - (20,225) -
contracts
Loss on recognition of - - (96,632) -
forward contracts
Change in fair value
of forward contracts (10,758) - 50,057 -
Partial reversal of - - 72,200 -
impairment of mining
assets
Impairment of Mali - - (316) -
exploration asset
Impairment of Inata - - (73,300) -
mining assets
Loss on disposal of
subsidiaries - - - (105)
Exceptional loss (10,758) - (68,216) (105)
======================= ========================== ================== ========================= ==================
Restructure and recognition of forward contracts
On 25 March 2013, Avocet announced the restructure of the
Macquarie forward contracts for delivery of gold bullion. The
restructure consisted of eliminating 29,020 ounces under the
forward contracts at a cost of US$20.2 million and shortening the
delivery profile of the remaining ounces by 18 months so that all
ounces would be delivered by December 2016.
The recognition of the liability was in accordance with IAS 39
(see note 14 for more information), and reflects the fact that the
buy back demonstrated a practice of cash-settling forward
contracts. Under IAS 39, this meant that the own-use exemption
previously applied was no longer appropriate. The fair value of the
forward contracts was recognised at 31 March 2013 at $96.6m.
Further details are provided in note 14.
Change in fair value of forward contracts
The forward contracts are required to be valued at each
reporting date and the movement recognised through the income
statement. At 30 September the forward contracts had a fair value
of $46.6 million based on a spot price on that date of
$1,326.50/oz. The reduction in fair value since recognition
resulted in a gain of $50.1 million for the nine months, while the
fair value increased since 30 June 2013 causing a loss of $10.8
million in the third quarter.
Partial reversal of impairment on mining assets
In March 2013 Avocet recognised a partial reversal of impairment
of non-current mining assets in respect of the Inata Gold Mine
driven by the requirement to recognise the forward contract
liability. Further details are provided in note 8.
Impairment of Mali exploration asset
During Q1 the company decided to discontinue operations at the
N'tjila permit located in the Republic of Mali. As a result the
$0.3m capitalised in relation to the permit was impaired and
recognised as an exceptional item.
Impairments of Inata mining assets
At 30 June 2013 Avocet recognised an impairment of non-current
mining assets in respect of the Inata Gold Mine driven by a
reduction in the forecasted gold price. Further details are
provided in note 9.
Loss on disposal of subsidiaries
Completion of one of the last two exploration assets occurred on
16 February 2012 for proceeds of US$2.0 million, resulting in a
loss of US$0.1 million. There are no remaining assets or
liabilities recognised in the Group statement of financial position
in respect of the last remaining South East Asian exploration
company, which the Company no longer expects to sell.
4. EBITDA
Earnings before interest, tax, depreciation and amortisation
(EBITDA) represents profit before depreciation/amortisation,
interest and taxes, as well as excluding any exceptional items and
profit or loss from discontinued operations and changes in fair
value of forward contracts.
30 September 30 September
2012 2012
30 September 30 September
2013 (three months) 2013 (nine months)
(three months) (nine months)
Unaudited Unaudited Unaudited Unaudited
US$000 US$000 US$000 US$000
(Loss)/profit before taxation (25,265) (323) (90,964) 22,974
Exceptional Items 10,758 - 68,216 -
Depreciation 6,358 5,971 19,534 18,331
Exchange (gain)/losses (15) (76) 107 (440)
Net finance income - (11) (16) (125)
Net finance expense 2,040 720 4,591 2,321
=============================== ================ ================ =============== ===============
EBITDA (6,124) 6,281 1,468 43,061
=============================== ================ ================ =============== ===============
30 September 30 September
2012 2012
30 September 30 September
2013 (three months) 2013 (nine months)
(three months) (nine months)
Unaudited Unaudited Unaudited Unaudited
US$000 US$000 US$000 US$000
EBITDA (6,124) 6,281 1,468 43,061
Working capital 10,909 (6,311) (1,604) (3,479)
Interest (137) (239) (374) (828)
Hedge restructure - - (20,200) -
Provisions and other costs 385 1,680 (246) (2,774)
Net cash generated by / (used
in) operating activities 5,033 1,411 (20,956) 35,980
=============================== ================ ================ =============== ===============
5. Earnings per Share
Earnings per share are analysed in the table below, presenting
earnings per share for continuing and discontinued operations.
30 September 30 September 30 September 30 September
2013 (three 2012 (three 2013 (nine 2012 (nine
months) months) months) 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 199,104,701 199,104,701 199,104,701 199,004,219
- effect of share options
in issue(1) - 6,915 23,194 1,212,506
====================================== ============= ============= ============= =============
- total used in calculation
of diluted earnings per share 199,104,701 199,111,616 199,127,895 200,216,725
====================================== ============= ============= ============= =============
US$000 US$000 US$000 US$000
Earnings per share from continuing
operations
(Loss)/profit for the period
from continuing operations (28,565) (809) (94,227) 15,015
Less non-controlling interest 2,023 (109) 8,384 (1,725)
====================================== ============= ============= ============= =============
(Loss)/profit for the period
attributable to equity shareholders
of the parent (26,542) (918) (85,843) 13,290
====================================== ============= ============= ============= =============
(Loss)/earnings per share
- basic (cents per share) (13.33) (0.46) (43.11) 6.68
- diluted (cents per share)
(1) (13.33) (0.46) (43.11) 6.64
====================================== ============= ============= ============= =============
Earnings per share from discontinued
operations
Profit/(loss) for the period - - - (105)
Less non-controlling interest - - - -
====================================== === === === =======
Profit/(loss) for the period
attributable to equity shareholders
of the parent - - - (105)
====================================== === === === =======
Earnings/(loss) per share
- basic (cents per share) - - - (0.05)
- diluted (cents per share) - - - (0.05)
====================================== === === === =======
Total (loss)/earnings per
share
- basic (cents per share) (13.33) (0.46) (43.11) 6.63
- diluted (cents per share)
(1) (13.33) (0.46) (43.11) 6.59
============================= ======== ======= ======== =====
(1) As a result of the loss for the period, in calculating the
diluted earnings per share the effect of share options in issue has
been ignored for the 3 months and 9 months ending 30 September
2013.
6. Intangible assets
Intangible assets represent deferred exploration expenditure.
The movement in the period is analysed below:
US$000
At 1 January 2013 (audited) 49,442
Additions 12,782
Capitalised depreciation(1) 849
Impairment of Mali exploration assets (316)
Transfer of exploration assets(2) (7,486)
======================================= ========
At 30 September 2013 (unaudited) 55,271
======================================= ========
30 September 31 December
2013 2012
(Unaudited) (Audited)
============== === ============== =============
US$000 US$000
Burkina Faso 25,595 26,577
Guinea 29,676 22,574
Mali - 291
=================== ============== =============
Total 55,271 49,442
=================== ============== =============
(1) Capitalised depreciation represents the depreciation of
items of property, plant, and equipment which are used exclusively
in the Group's exploration activities. The consumption of these
assets is capitalised as an intangible asset, in accordance with
accounting standards and industry practice.
(2) During 2013, US$7.5 million of drilling and other
exploration costs associated with the Inata reserve were
transferred into Property, Plant and Equipment, on the basis that
they related to areas of the orebody that were being mined, and
should therefore be depreciated as a Mine Development cost.
7. Property, plant and equipment
Mining property and plant
===============================================
Mine Vehicles, Exploration
development Plant and fixtures, and property Office
costs Machinery equipment and plant equipment
============== =============== ============== =============== ===============
Nine months
ended
30 Sept 2013 Note West Africa West Africa West Africa West Africa UK Total
================= ===== ============== =============== ============== =============== =============== =========
US$000 US$000 US$000 US$000 US$000 US$000
Cost
At 1 January
2013 (audited) 96,789 87,589 55,568 5,242 1,121 246,309
Additions 5,489 4,289 177 237 1 10,193
Addition to mine
closure
provision 295 - - - - 295
Transfer from
exploration
intangibles 6 7,486 - - - - 7,486
Partial reversal
of impairment
on mining
assets 8 72,200 - - - - 72,200
Impairment of
mining assets 9 (73,300) - - - - (73,300)
At 30 Sept 2013
(unaudited) 108,959 91,878 55,745 5,479 1,122 263,183
================= ===== ============== =============== ============== =============== =============== =========
Depreciation
At 1 January
2013 (audited) 56,958 23,624 18,677 822 575 100,656
Charge for the
period 6,449 8,465 4,597 - 23 19,534
Charge for the
period -
capitalised(1) - - - 849 - 849
================= ===== ============== =============== ============== =============== =============== =========
At 30 Sept 2013
(unaudited) 63,407 32,089 23,274 1,671 598 121,039
================= ===== ============== =============== ============== =============== =============== =========
Net Book Value
At 30 Sept 2013
(unaudited) 45,552 59,789 32,471 3,808 524 142,144
================= ===== ============== =============== ============== =============== =============== =========
At 1 January
2013 (audited) 39,831 63,965 36,891 4,420 546 145,653
================= ===== ============== =============== ============== =============== =============== =========
(1) Capitalised depreciation represents the depreciation of
items of property, plant, and equipment which are used exclusively
in the Group's exploration activities. The consumption of these
assets is capitalised as an intangible asset, in accordance with
accounting standards and industry practice.
8. Partial reversal of impairment on mining assets as at 31 March 2013
At 31 December 2012, the Group recognised an impairment of
$135.3m in respect of mining assets at Inata. In accordance with
IAS 36 Impairment of Assets, an entity is required to assess at the
end of each reporting period whether there is any indication that a
previous impairment loss may no longer exist or may have decreased.
If such an indication exists, the entity should estimate the
recoverable amount of that asset.
The forward contract liability at fair value in March 2013 was
excluded from both the carrying amount of the cash generating unit
('CGU') and the cash flows of the value in use ('VIU') calculation.
This avoids double counting of the liability's cash flow and
provides a more stable basis to assess the CGU's fair value. The
Company concluded that the requirements of an indication of a
reversal of impairment were identified in relation to the Inata
mining assets. An assessment was therefore carried out of the fair
value of Inata's assets, using the discounted cash flows of Inata's
latest estimated life of mine plan to calculate the VIU. As a
result of the review, a pre-tax partial reversal of impairment
losses of $72.2m was recorded in Q1 2013 and allocated to mine
development costs.
When calculating the VIU, certain assumptions and estimates were
made. Changes in these assumptions can have a significant effect on
the recoverable amount and therefore the value of the impairment
recognised. The key assumptions are outlined overleaf.
Assumption Judgements Sensitivity(2)
------------- --------------------------------------- -----------------------------------
Timing of Cash flows were forecast over the An extension or shortening
cash flows expected life of the mine. The of the mine life would result
life of mine plan in place in March in a corresponding increase
forecasted mining activities to or decrease in reversal
continue until 2017, with a further of impairment, the extent
3 years during which stockpiles of which it was not possible
would be processed and rehabilitation to quantify.
costs would be incurred.
------------- --------------------------------------- -----------------------------------
Production Production costs were forecast A change in production costs
costs based on detailed assumptions, of 10% would increase or
including staff costs, consumption decrease the pre-tax reversal
of fuel and reagents, maintenance, of impairment attributable
and administration and support by US$37.4 million(1) .
costs.
------------- --------------------------------------- -----------------------------------
Gold price Analyst consensus prices were used A change of 10% in the gold
for the forecast of revenue from price assumption would increase
gold sales, based on an average or decrease the pre-tax
consensus at March 2013 for the reversal of impairment recognised
period 2013-2020. Prices ranged in the year by US$79.1 million(1)
from US$1,775 per ounce in 2013 .
to US$1,293 per ounce from 2017.
------------- --------------------------------------- -----------------------------------
Discount A discount rate of 10% (pre-tax) A change in the discount
rate was used in the VIU estimation. rate of one percentage point
would increase or decrease
the pre-tax reversal of
impairment recognised in
the year by US$6.0 million(1)
.
------------- --------------------------------------- -----------------------------------
Ore Reserves The life of mine plan in place A 10% increase or decrease
and gold in March was based on Ore Reserves in ounces produced, compared
production of 0.92 million for the Inata Mine with the current Ore Reserve,
as at 31 December 2012, less the would increase or decrease
Q1 2013 production. The Ore Reserve the pre-tax reversal of
was estimated in accordance with impairment recognised in
the principles the JORC Code and the year by US$79.1 million(1)
was reviewed and approved by Clayton .
Reeves (refer to page 22 of the
31 December 2012 Annual Report).
------------- --------------------------------------- -----------------------------------
(1) Sensitivities provided are on a 100% basis, pre-tax. 10% of the
post-tax impairment would be attributed to the non-controlling interest.
(2) The impairment reversal on the Inata mining assets would be limited
to US$130.1 million, being the previous impaired value less the impact
on depreciation as a result of the impairment.
-------------------------------------------------------------------------------------------
9. Impairment of mining assets
At 30 June due to a review of impairment indicators, the Company
concluded that the fall in the gold spot price and market forecasts
was considered to be an indicator for impairment. An assessment was
therefore carried out of the fair value of Inata's assets, using
the discounted cash flows of Inata's latest estimated life of mine
plan to calculate their VIU. As a result of this review, a pre-tax
impairment loss of US$73.3 million was recorded in June 2013, being
an impairment of mine development costs.
When calculating the VIU, certain assumptions and estimates were
made. Changes in these assumptions can have a significant effect on
the recoverable amount and therefore the value of the impairment
recognised. Should there be a change in the assumptions which
indicated the impairment, this could lead to a revision of recorded
impairment losses in future periods. The key assumptions are
outlined in the table overleaf.
Assumption Judgements Sensitivity
---------------- ----------------------------------- ------------------------------------
Timing of cash Cash flows were forecast over An extension or shortening
flows the expected life of the mine. of the mine life would result
The life of mine plan in place in a corresponding increase
in June forecasted mining or decrease
activities to continue until in impairment, the extent
2018, with a further 17 months of which it was not possible
during which stockpiles would to quantify.
be processed and rehabilitation
costs would be incurred.
---------------- ----------------------------------- ------------------------------------
Production costs Production costs were forecast A change in production costs
based on detailed assumptions, of 10% would increase or decrease
including staff costs, consumption the pre-tax impairment attributable
of fuel and reagents, maintenance, by US$56.5 million(1) .
and administration and support
costs.
---------------- ----------------------------------- ------------------------------------
Gold price Analyst consensus prices were A change of 10% in the gold
used for the forecast of revenue price assumption would increase
from gold sales, based on or decrease the pre-tax impairment
an average consensus at July recognised in the year by
2013 for the period US$69.0 million(1) .
2013-2021. Prices ranged
from US$1,278 per ounce in
2013 to US$1,230 in 2015,
and US$1,260 per ounce from
2016.
---------------- ----------------------------------- ------------------------------------
Discount rate A discount rate of 10% (pre-tax) A change in the discount rate
was used in the VIU estimation. of one percentage point would
increase or decrease the pre-tax
impairment recognised in the
year by US$6.7 million(1)
.
---------------- ----------------------------------- ------------------------------------
Gold production The life of mine plan was A 10% increase or decrease
based on gold production of in ounces produced, compared
0.96 million for the Inata with the life of mine gold
Mine. production, would increase
or decrease the pre-tax impairment
recognised in the year by
US$81.8 million(1) .
---------------- ----------------------------------- ------------------------------------
1 Sensitivities provided are on a 100% basis, pre-tax. 10% of
the post-tax impairment would be attributed to the non-controlling
interest.
10. Other financial assets
30 September 30 September 30 September 30 September
2013 2012 2013 2012
(3 months) (3 months) (9 months) (9 months)
Unaudited Unaudited Unaudited Unaudited
======================= ============= ============= ============= =============
US$000 US$000 US$000 US$000
At 1 January/1 July 227 1,224 599 1,828
Fair value adjustment (73) (172) (445) (776)
======================= ============= ============= ============= =============
At 30 September 154 1,052 154 1,052
======================= ============= ============= ============= =============
Other financial assets represent available for sale financial
assets which are measured at fair value. The fair value adjustment
is the periodic re-measurement to fair value, with gains or losses
on re-measurement recognised in equity.
Other financial assets relate to shares in Golden Peaks
Resources Limited. The shares were acquired as consideration for
the disposal of two of the Group's assets in South East Asia in
2011. In January 2012 Golden Peaks announced that it had changed
its name to Reliance Resources. Reliance Resources is listed on the
Toronto Stock Exchange.
11. Inventories
30 September 31 December
2013 2012
Unaudited Audited
US$000 US$000
Consumables 31,614 33,844
Work in progress 27,033 20,001
Finished goods 3,754 3,104
62,401 56,949
================== ============= ============
Work in progress includes ore in stockpiles and gold in circuit.
Finished goods represent gold in transit or undergoing refinement
prior to sale.
12. Trade and other receivables
30 September 31 December
2013 2012
Unaudited Audited
US$000 US$000
Payments in advance to suppliers 4,753 9,524
VAT 16,919 14,766
Prepayments 1,732 834
23,404 25,124
================================== ============= ============
13. Cash and cash equivalents
Included in US$19.5 million cash and cash equivalents at 30
September 2013 is US$13.4 million of restricted cash (31 December
2012: US$38.4 million), representing a minimum account balance held
in Macquarie Bank Limited of US$12.0 million, a condition of the
Inata project finance facility, and US$1.4 million (31 December
2012: US$1.4 million) relating 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.
In relation to the minimum account balance held in Macquarie
Bank Limited ('MBL') of US$12.0 million, there were no restrictions
on the use of funds above the minimum amount by SMB. Restrictions
did apply to the availability of surplus funds above the US$12.0m
to other Group entities, as set out in the Company's press release
of 25 March 2013.
The repayment of the MBL debt during Q3, and the hedge buy back,
expected to take place shortly, will remove these restrictions.
Under the terms of the Ecobank loan, a minimum balance of
approximately US$2.6 million must be held in a restricted account,
equivalent to two monthly principal and interest payments.
14. Other financial liabilities
30 September 31 December
2013 2012
Unaudited Audited
US$000 US$000
Current liabilities
Warrant on company equity 455 -
Interest bearing debt 15,400 5,000
Finance lease liabilities 668 1,105
Forward contracts - held for 17,492 -
trading
Total current other financial
liabilities 34,015 6,105
=============================== ============= ============
30 September 31 December
2013 2012
Unaudited Audited
US$000 US$000
Non-current liabilities
Finance lease liabilities 2,353 2,434
Forward contracts - held for trading 29,083 -
Total non-current other financial liabilities 31,436 2,434
=============================================== ============= ============
Interest bearing debt
Interest bearing debt relates to the Elliott loan of US$15.0
million (31 December 2012: US$nil).
The remaining balance of US$5.0 million under the Macquarie
Inata project finance facility, previously due on 31 March 2013,
was paid on 30 September 2013.
The Elliott facility is repayable 30 December 2013. The facility
is held at amortised cost and includes the US$15.0 million drawn
down and accrued interest of US$0.4 million.
Warrant on company equity
A warrant on Avocet Mining PLCs equity was issued to the Elliott
Lender as consideration for the loan facility. The warrant has been
treated as a financial instrument rather than a share based payment
on the basis that the warrant was issued as part of the loan and
has not as a result of services provided. Further the warrant has
been considered a liability rather than equity as the exercise
price is quoted in GBP, and therefore the cash payment from Elliott
will not be fixed when accounting in the Company's functional
currency USD.
The warrant relates to 4,000,000 of ordinary shares with a
strike price of GBP 0.40 and expires three years from issuance on
28 May 2013. The warrant was valued using a Black-Scholes model
based on the 30 September 2013 closing share price of GBP
0.145.
Forward contracts
On 25 March 2013, Avocet announced a restructure of the
Macquarie forward contracts for delivery of gold bullion. The
partial settlement of the contract means that the remaining forward
contracts no longer qualify for the 'own use exemption' and are
therefore now within the scope of IAS 39 financial instruments.
Under IAS 39 the forward contracts are classified as a financial
liability designated at fair value through profit or loss (FVTPL)
as they meet the requirements to be classified as
held-for-trading.
The fair value of the forward contracts was assessed to be
US$46.6 million based on a closing spot price of US$1,326.50/oz,
analysed between current (US$17.5 million) and non-current (US$29.1
million) in accordance with the schedule of delivery of forward
sold ounces.
30 September 30 September 30 September 30 September
2013 2012 2013 2012
(3 months) (3 months) (9 months) (9 months)
Unaudited Unaudited Unaudited Unaudited
======================= ============= ============= ============= =============
US$000 US$000 US$000 US$000
At 1 January/1 July 35,817 - - -
Recognition - - 96,632 -
Fair value adjustment 10,758 - (50,057) -
======================= ============= ============= ============= =============
At 30 September 46,575 - 46,575 -
======================= ============= ============= ============= =============
15. Finance lease liabilities
Also included within other financial liabilities are liabilities
in respect of assets held under finance lease, US$0.7 million of
which is included within current financial liabilities, and US$2.4
million is included within non-current financial liabilities.
16. Deferred tax
30 September 31 December
2013 2012
US$000 US$000
Liabilities
At 1 January 37 14,566
Income statement movement (37) (14,529)
At 30 September/31 December - 37
At 31 December 2012 the Group had deferred tax liabilities of
less than US$0.1 million (31 December 2011: US$14.6 million) in
relation to continuing operations. This liability relates to
temporary differences on the Inata mine development costs and
property, plant, and equipment. The reduction in the liability
during 2012 reflects the impairment of mining assets, net of
additions to mining property and plant during the year and of tax
allowances on capital items used in the period.
17. Related party transactions
The table below sets out charges in the three month period and
balances at 30 September 2013 between the Company (Avocet Mining
PLC) and Group companies that were not wholly owned, in respect of
management fees and interest on loans. There were no other related
party transactions in the period requiring disclosure.
Avocet Mining PLC Wega Mining AS
Charged in Charged in
nine months Balance at nine months Balance at
to 30 September 30 September to 30 September 30 September
2013 2013 2013 2013
US$000 US$000 US$000 US$000
Société des
Mines de Bélahouro
SA (90%) 1,581 140,366 (194) 108,502
Compensation paid to key management of the Group during Q3 2013
was US$0.6 million, including pension contributions of US$0.02
million. A share based payment expense of US$0.4 million was
recognised in the six months ended June 2013 in respect of awards
made under the Performance Share Plan, the details of which were
reported in the announcement made on 13 March 2012. No dividends
were received by Directors during the period in respect of shares
held in the Company.
During 2013 the Company entered into a US$15.0 million loan
agreement with Manchester Securities Corp. ("the Elliott Lender"),
an affiliate of Avocet's largest shareholder, Elliott Management.
Under the UK listing rules, the Elliott Lender and Elliott
Management are related parties to the Company. US$5.0m was drawn
down in March 2013 under the initial facility in accordance with
the loan agreement. The terms of the initial facility, which was
unsecured were considered to be normal commercial terms. The
availability of the second facility under the agreement, which is
secured, was approved by the shareholders at a General Meeting held
on 28 May 2013. The amount owing on the initial facility was
subsequently transferred to the second facility and a further
US$5.0m was drawn down on the facility. Attached to the second
facility is a warrant for 4 million ordinary shares of the Company,
further details are provided in note 14.
18. Contingent liabilities
Burkina Faso tax claim
In 2012, Société des Mines de Bélahouro SA ('SMB', the
subsidiary in Burkina Faso which operates the Inata mine) underwent
a tax audit in respect of the fiscal years 2009, 2010, and 2011.
The initial assessment of this tax audit, which was undertaken by
the tax department of the Burkina Faso government, was that a total
of US$25.5 million was due in taxes and penalties. A review of the
assumptions underlying this conclusion led Avocet, along with its
tax advisers, to believe that this assessment was factually
inaccurate, and based on incorrect application and interpretation
of the Burkina Faso tax code. Avocet felt highly confident that,
with the exception of some minor items which were settled without
delay, the full amount would be revised on review and discussion
with the Burkinabe Director General of Taxes.
The possibility of such a liability coming to pass was therefore
judged to be sufficiently remote that no provision was deemed
necessary, nor in fact was disclosure required in the financial
statements at 31 December 2012 and at 31 March 2013.
Following a number of discussions with government
representatives, the Company is confident that an agreement will be
reached without the requirement to enter into legal action. A
provision of US$3.3 million, representing less than 13 per cent of
the original claim, has been recorded in the Group accounts,
however until the balance of the claim has been formally withdrawn,
the full claim remains a contingent liability.
PT Lebong Tandai claim
Note 32 to the financial statements for the year ended 31
December 2012 contained a description of the Indonesian civil cases
being brought by PT Lebong Tandai against Avocet and other parties,
and the reader is therefore referred to the Company's Annual Report
for 2012 for further details. As any financial settlement is
considered to be remote, this matter does not constitute a
contingent liability.
19. Unaudited quarterly income statement for continuing
operations
Year ended
Quarter ended Quarter ended Quarter ended YTD 31 December
31 March 30 September 30 September
2013 30 June 2013 2013 2013 2012
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
US$000 US$000 US$000 US$000 US$000
Revenue 40,885 39,603 37,441 117,929 204,110
Cost of sales (36,749) (44,375) (47,953) (129,077) (168,694)
Cash production costs:
- mining (16,495) (18,193) (16,744) (51,432) (55,659)
- processing (10,970) (11,606) (11,858) (34,434) (41,772)
- overheads (4,983) (5,861) (5,589) (16,433) (21,762)
- royalties (3,171) (3,023) (2,853) (9,047) (15,945)
(35,619) (38,683) (37,044) (111,346) (135,138)
Changes in inventory 4,074 5,109 (1,499) 7,684 10,202
Expensed exploration
and other cost of sales (128) (2,701) (3,052) (5,881) (15,762)
Depreciation and amortisation (5,076) (8,100) (6,358) (19,534) (27,996)
Gross profit/(loss) 4,136 (4,772) (10,512) (11,148) 35,416
Administrative expenses (2,135) (2,419) (1,530) (6,084) (13,002)
Share based payments (329) (65) (440) (834) (2,067)
Impairment of mining
and exploration assets (316) (73,300) - (73,616) (135,300)
Reversal of impairment
of mining assets 72,200 - - 72,200 -
Profit/(loss) from operations 73,556 (80,556) (12,482) (19,482) (114,953)
Loss on recognition of
forward contracts (96,632) - - (96,632) -
Restructure of forward
contracts (20,225) - - (20,225) -
Change in fair value
of forward contract - 60,815 (10,758) 50,057 -
Net finance costs (1,491) (1,166) (2,025) (4,682) (2,072)
Loss before taxation (44,792) (20,907) (25,265) (90,964) (117,025)
Analysed as:
Profit/(loss) before
taxation and exceptional
items 181 (8,422) (14,507) (22,748) 18,275
Exceptional items (44,973) (12,485) (10,758) (68,216) (135,300)
Loss before taxation (44,792) (20,907) (25,265) (90,964) (117,025)
Taxation 37 - (3,300) (3,263) 14,529
Loss for the period (44,755) (20,907) (28,565) (94,227) (102,496)
Attributable to:
Equity shareholders of
the parent company (40,416) (18,885) (26,542) (85,843) (92,685)
Non-controlling interest (4,339) (2,022) (2,023) (8,384) (9,811)
(44,755) (20,907) (28,565) (94,227) (102,496)
EBITDA (1) 6,748 844 (6,124) 1,468 48,343
(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.
20. All-in sustaining cost
The All-in sustaining cost ('AISC') has been reported in line
with the guidance issued by the World Gold Council during 2013. The
Company will continue to disclose cash costs in order to provide
comparability to prior periods.
Previously disclosed All-in cash costs were based on Inata life
of mine plans, while the AISCs are based on the Avocet group and
include share based payments and general and administrative
costs.
Quarter
ended
Quarter ended Quarter ended Quarter ended YTD 30 September
31 March 30 September 30 September
2013 30 June 2013 2013 2013 2012
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
US$000 US$000 US$000 US$000 US$000
Gold produced (oz) 30,482 31,245 30,987 92,714 33,067
Total cash production
cost (35,619) (38,683) (37,044) (111,346) (30,972)
Total cash production
cost (US$/oz) (1,169) (1,238) (1,195) (1,201) (937)
Other costs of sales
(US$k) (54) (1,022) (1,421) (2,497) (830)
Foreign exchange (US$k) 869 (791) (1,090) (1,012) (1,358)
Sustaining capital expenditure
(US$k) (5,304) (3,925) (854) (10,083) (8,789)
Share based payments
(US$k) (329) (65) (440) (834) (517)
Administrative expenses
(US$k) (2,135) (2,419) (1,552) (6,106) (3,630)
All-in Sustaining Costs
(US$k) (42,572) (46,905) (42,401) (131,878) (46,096)
All-in Sustaining Costs
(US$/oz) (1,397) (1,501) (1,368) (1,422) (1,394)
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR DDBDGBUXBGXG
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