TIDMAVM
RNS Number : 2865W
Avocet Mining PLC
06 November 2014
2014 Third quarter results
Avocet Mining PLC ("Avocet" or "the Company") today announces
its production and cash costs for the third quarter of 2014.
-- Total gold production for the quarter was 21,736 ounces at a
cash cost of US$1,183 per ounce, compared with 21,650 ounces
produced in the second quarter at a cash cost of US$1,317 per
ounce
-- The CBC was commissioned in September and has achieved
improvement in recoveries compared with processing the carbonaceous
ore without carbon blinding - performance testing continues in
Q4
-- Q3 production affected by lower than planned mill feed
grades, reflecting a proportion of low grade oxide ore processed in
early September
-- Full year gold production guidance for 2014 reduced to
approximately 95,000 ounces at a cash cost of approximately
US$1,200 per ounce, including impact of lower than expected Q3
production
-- Inata unaffected by recent unrest in Burkina Faso
Commissioning of the Carbon Blinding Circuit (CBC)
The CBC was commissioned during September and initial results
show an improvement in recoveries compared with processing the
carbonaceous ore without carbon blinding. For the period 11
September to 31 October 2014 an average recovery of approximately
70% was achieved. Work is ongoing to maximise recoveries, including
further performance test work to optimise processing of each ore
type. An additional CIL tank was commissioned in early October in
order to increase residence time and recovery. Production in
October was approximately 9,400 ounces, compared with average
monthly production in the first nine months of 7,400 ounces.
Q3 production
Total material mined were reduced to 2.7 million tonnes in the
quarter (compared with 4.4 million tonnes in Q2), in order to
conserve cash. Until commissioning of the CBC in September,
production was dependent on clean oxide ore, which had become
increasingly scarce and lower grade. During July and August, mill
head grades fell to below 1.3 g/t, compared with an average of 1.44
g/t in the previous quarter.
The commissioning and ramp-up of the CBC in September allowed
higher grade carbonaceous materials to be processed, bringing the
quarter average grade up to 1.52 g/t. Carbonaceous ore with a grade
of 2.52 g/t was processed in the first weeks of CBC operation. Very
heavy seasonal rainfall adversely impacted throughputs of ore off
the Rompad during the commissioning period, and wet ore stockpiles
are expected to cause further ore handling issues in early Q4.
Overall gold production of 21,736 ounces was in line with Q2
(21,650 ounces). The reduced mining rate, combined with a number of
cost saving measures, led to a reduction in cash costs to US$1,183
per ounce (Q2: US$1,317 per ounce).
As a result of lower than planned Q3 production, and current
expectations for Q4, full year production guidance has been revised
from 105,000 ounces to approximately 95,000 ounces at a cash cost
of approximately US$1,200 per ounce.
Nonetheless, over the coming months, further cost savings have
been targeted and these, together with higher production levels
from processing of higher grade ore, should lead to Inata's cost
per ounce lowering further into 2015. In dollar terms, costs and
cash flows will also benefit from lower prices for fuel, which
represents approximately 25% of total cash costs, and from the
strengthening of the US dollar against the FCFA, which is tied to
the Euro.
Cash flow at Inata remains tight, especially in view of the
recent fall in gold prices.
Development opportunities
A programme of in-fill drilling and metallurgical test work
costing US$2-3 million has been prepared to examine the potential
for heap leaching of material from Souma and other targets at
Bélahouro, which would significantly increase the Inata life of
mine and could reduce cash costs. Subject to available funds, the
Company intends to conduct this work as soon as possible.
Inata operations unaffected by recent unrest in Burkina Faso
Avocet's operations at the Inata mine in the north of the
country remain largely unaffected by the recent unrest, although
the Company continues to take all necessary precautions to ensure
the safety and security of its people and assets. The Company
welcomes news that Burkina Faso's opposition has decided to suspend
protests and hold talks with army chiefs regarding a transitional
government, and that the army, which last week took power after
President Blaise Compaoré's resignation, has agreed to end the
suspension of constitutional rights.
Tri-K project
On 21 October the Ministry of Mines in Guinea advised the
Company that its Tri-K feasibility study has been examined and
approved by the Department of Mines and Geology. However, the
Ministry of Mines has also advised that the processing of all
licence applications has been suspended pending completion of a
modernisation programme currently in progress for the management of
mining titles. This accounts for the delay in granting the
exploitation licence and means that the date when the exploitation
licence will actually be granted remains uncertain. Nonetheless,
Avocet remains confident the permit will be issued in due
course.
Business review
Business review discussions continue with a number of parties
about a range of potential transactions with a view to addressing
the Elliott loan as well as providing additional working capital
for Avocet and Inata. During August, a small equity placement of
US$1.2 million was concluded for corporate purposes and included
the participation of Elliott Management and Prelas AS, the
Company's two largest shareholders.
David Cather, Chief Executive Officer, commented:
"The commissioning of the Carbon Blinding Circuit in the third
quarter allows Inata to process higher grade ores with reduced gold
losses due to preg-robbing. In addition to Inata operations,
Avocet's focus is on Tri-K in Guinea and Souma in Burkina Faso,
where we have begun to explore the potential for a heap leach
operation."
FOR FURTHER INFORMATION PLEASE CONTACT
Avocet Mining Bell Pottinger J.P. Morgan NM Rothschild Investec Bank
PLC Financial PR Cazenove Financial Adviser Plc
Consultants Corporate Broker Financial Adviser
David Cather, Daniel Thöle Michael Wentworth-Stanley Roger Ewart-Smith George Price
CEO Sam Critchlow
Mike Norris,
FD
+44 203 709 +44 20 2772 +44 20 7742 +44 20 7280 +44 20 7597
2570 2555 4000 5424 4180
NOTES TO EDITORS
Avocet Mining PLC ('Avocet' or the 'Company') is an unhedged
gold mining and exploration company listed on the London Stock
Exchange (ticker: AVM.L) and the Oslo Børs (ticker: AVM.OL). The
Company's principal activities are gold mining and exploration in
West Africa.
In Burkina Faso the Company owns 90% of the Inata Gold Mine.
Across the Bélahouro district, which includes both Inata and Souma,
there is a Mineral Resource of 6.1 million ounces and an Ore
Reserve of 0.5 million ounces. The Inata Gold Mine poured its first
gold in December 2009 and produced 118,443 ounces of gold in 2013.
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 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. As an
alternative, the potential exists to exploit the entire 3.0 million
ounce Tri-K orebody via CIL processing method.
Appendix 1
Inata Gold Mine quarterly production information 2013-14
2013 2014
Q1 Q2 Q3 Q4 2013 Q1 Q2 Q3
Ore mined (k tonnes) 817 971 591 735 3,114 621 818 591
Waste mined (k tonnes) 9,127 8,700 6,547 5,726 30,100 4,351 3,583 2,116
Total mined (k tonnes) 9,944 9,671 7,138 6,461 33,214 4,972 4,401 2,707
Ore processed (k tonnes) 616 620 620 497 2,353 483 537 554
Average head grade (g/t) 1.65 1.84 1.73 1.77 1.75 1.61 1.44 1.53
Process recovery rate 82% 87% 89% 86% 86% 86% 88% 85%
------ ------ ------ ------ ------- ------ ------ ------
Gold Produced (oz) 30,481 31,245 30,987 25,730 118,443 23,148 21,650 21,736
Cash costs (US$/oz) Q1 Q2 Q3 Q4 2013 Q1 Q2 Q3
Mining 542 582 540 521 547 464 508 395
Processing 360 371 383 376 373 402 478 461
Administration 163 188 180 223 187 222 242 239
Royalties 104 97 92 89 96 90 89 88
------ ------ ------ ------ ------- ------ ------ ------
1,169 1,238 1,195 1,209 1,203 1,178 1,317 1,183
This information is provided by RNS
The company news service from the London Stock Exchange
END
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