TIDMAVM
RNS Number : 8977L
Avocet Mining PLC
30 April 2015
Annual Report and Accounts 2014
Avocet Mining PLC ("Avocet" or the "Company") has today
published its Annual Report and Accounts for the year ended 31
December 2014 on its website - www.avocetmining.com
In compliance with LR9.6.1, a copy of the Annual Report and
Accounts will shortly be available for inspection at the Financial
Conduct Authority's National Storage Mechanism website:
http://www.hemscott.com/nsm.do.
The Annual Report and Accounts will also be mailed to those
shareholders who have elected to receive it in hard copy.
The Notice of the Company's Annual General Meeting, which is
expected to be held on 19 June 2015, will be sent to shareholders
in due course.
Avocet's preliminary results announcement on 28 April 2015
(which is available via the Company's website) included, in
addition to the preliminary financial results for the year ended 31
December 2014, information on important events that occurred during
the year and their impact on those financial results. That
information, together with the information set out in the Appendix
below is provided in compliance with the requirements of
DTR6.3.5(2)(b). This information is not a substitute for reading
the full Annual Report and Accounts for the year ended 31 December
2014.
FOR FURTHER INFORMATION PLEASE CONTACT
Avocet Mining PLC Bell Pottinger J.P. Morgan Cazenove
Financial PR Consultants Corporate Broker
David Cather, CEO Daniel Thöle Michael Wentworth-Stanley
Mike Norris, FD
+44 203 709 2570 +44 20 2772 2555 +44 20 7742 4000
NOTES TO EDITORS
Avocet Mining PLC ("Avocet" or the "Company") is an unhedged
gold mining and exploration company listed on the London Stock
Exchange (ticker: AVM.L) and the Oslo Børs (ticker: AVM.OL). The
Company's principal activities are gold mining and exploration in
West Africa.
In Burkina Faso the Company owns 90% of the Inata Gold Mine. The
Inata Gold Mine poured its first gold in December 2009 and produced
86,037 ounces of gold in 2014. 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.
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 the CIL processing method. The Company
announced on 2 April 2015 that an exploitation permit had been
awarded for Tri-K.
Appendix
Principal Risks and Uncertainties
The principal risks and uncertainties facing the Avocet group
(the "Group") are set out below, together with details of how these
are currently mitigated. For further information on how the Group
manages risk, see pages 19 to 21 of the Strategic Report within the
Annual Report and Accounts.
Risk Comment Business Mitigation
Impact
---------------------- ------------------------------- --------------- ------------------------------
Economic risks
--------------------------------------------------------------------------------------------------------
Availability The Life of Mine High The Company has put
of finance Plan at Inata, as in place cash conservation
well as the construction and cost reduction measures
of a new mine at at Inata and continues
Tri-K in Guinea, performance testing
and repayment of with a view to improving
the Elliott loans gold recoveries. It
are dependent on has also commenced a
external financing. programme of drilling
and metallurgical test
work at Souma to determine
the extent to which
satellite ore feed from
Souma might increase
Inata's life of mine
and cash flow generation.
The Board believes that
the activities at Tri-K
and Souma should generate
value for the Group
and should assist the
Group in its discussions
regarding future financing
for Tri-K and for corporate
purposes including repaying
loans to Elliott. The
Company continues to
explore options for
longer term funding
for the remainder of
2015 and beyond. See
the disclosures on Going
Concern in Note 1 to
the Financial Statements
for more information.
---------------------- ------------------------------- ------------- --------------------------------
Exposure Avocet realises US Low The Company continually
to a strengthening dollars for all of monitors fluctuations
in local its gold sales, and in currency rates, and
currency reports its results may on occasion purchase
rates in US dollars. short term currency
hedges (although did
The Company is exposed not do so in 2014).
to the West African It is Avocet's policy
CFA, being the local to minimise the value
currency of Burkina of cash held in non-US
Faso, in which its dollar currencies where
Ecobank loan as well possible, while complying
as many of its costs with currency restrictions
are denominated. and other obligations
of the countries in
which it operates.
---------------------- ------------------------------- ------------- --------------------------------
Exposure The Company is exposed, Moderate The Company seeks to
to unfavourable both directly and minimise its usage of
movements indirectly, to the input materials. It
in purchase purchase price of also monitors commodity
prices diesel, steel, and prices constantly and
of input reagents used in considers whether hedging
materials gold production. might be appropriate.
No hedging was entered
into during 2014.
---------------------- ------------------------------- ------------- --------------------------------
Exposure Avocet is subject Moderate The Company seeks to
to increases to increases in the negotiate the best possible
in the market prices for rates for all services
market services and equipment and products it receives,
prices (e.g. mining contractors, taking into account
of the drilling, tyres, not only price, but
equipment vehicles, etc). service quality and
and services reliability.
it uses
---------------------- ------------------------------- ------------- --------------------------------
Exposure Avocet's revenue High Avocet maintains a policy
to a fall is dependent on the of exposure to the spot
in gold market price of gold. gold price however continues
prices to review whether a
form of hedge might
be appropriate.
---------------------- ------------------------------- ------------- --------------------------------
Operational risks
----------------------------------------------------------------------------------------------------------
Reliability The calculation of High Avocet's Mineral Resources
of Mineral Mineral Resources and Ore Reserve estimates
Resources and Ore Reserves are prepared either
and Ore involves significant by in-house staff or
Reserves assumptions and estimates by third party consultants
that may prove inaccurate, who have considerable
including gold price experience and are certified
assumptions. by appropriate bodies
such as JORC and NI43-101.
The Technical Committee
is responsible for ensuring
the appropriate controls
are in place to provide
assurance that Mineral
Resources and Ore Reserve
estimates are appropriately
prepared.
---------------------- ------------------------------- ------------- ----------------------------------
Exposure The Company is exposed Moderate Avocet's operational
to mining to a number of risks teams regularly monitor
hazards and hazards typically mining risks, and report
associated with mining to the Technical Committee,
- e.g. pit wall failure, which is responsible,
adverse weather, on behalf of the Board,
and mechanical breakdowns. for ensuring appropriate
measures are in place
for anticipating, and
responding to, such
matters.
---------------------- ------------------------------- ------------- ----------------------------------
Country risks
----------------------------------------------------------------------------------------------------------
Exposure In addition to political/social High Avocet is committed
to changes risks, Avocet is exposed to acting in partnership
in fiscal to changes in the with all stakeholders,
and regulatory mining, labour and including the governments
regime tax codes in Burkina and communities of
Faso and Guinea, which the countries in which
may result in a more it operates. It regularly
challenging, or costly, meets government ministers
operating environment. to discuss fiscal and
regulatory matters
and to ensure the Company
and its shareholders'
interests are well
represented.
-------------------- --------------------------------- --------------- --------------------------------
Exposure Avocet's assets are Moderate The Board closely monitors
to political located in Burkina the political and social
and social Faso and in Guinea, situations in the countries
risks and the Company is in which it operates,
in Burkina therefore exposed drawing on internal
Faso to any adverse changes and external advisors.
and Guinea in the political and
social situations
in those countries.
-------------------- --------------------------------- --------------- --------------------------------
Other risks
--------------------------------------------------------------------------------------------------------
Finance Many of Avocet's assets High The Company is in
risk at Inata are secured regular contact with
in favour of Ecobank. all of its financiers,
The Company is therefore including Ecobank
reliant on meeting and Elliott. Although
its loan obligations the gold price and
with Ecobank in order operating performance
to avoid the risk have made meeting
of this security being debt commitments difficult
enforced. In addition, during 2014, Avocet
the Company has an recognises the support
unpaid obligation it has received from
to Elliott, which its debt providers,
must be repaid or and continues to focus
renegotiated. on maintaining a strong
relationship of trust.
In addition, the Inata
mine has a number The management of
of trade creditors the Inata mine remain
whose balances are in regular contact
overdue, including with suppliers, who
critical suppliers. have been supportive
There is a risk that and understanding
one or more of these of the issues faced
might withhold supplies to date, and the difficulties
or initiate legal going forward. The
action, which in turn message communicated
might lead to the to all creditors of
inability of the mine the mine that the
to continue to operate. continued operation
of Inata will lead
to the maximum repayment
of outstanding debts.
---------------------- ------------------------------- --------------- ------------------------------
Portfolio Since the sale of Moderate It is the Company's
risk of Avocet's South East policy to pursue growth
having Asian assets, the opportunities through
a single Company has been reliant organic means (in
operating on a single revenue Guinea, as well as
asset generating asset in through expansion
Inata. Any factors in Burkina Faso),
that affect production as well as reviewing
at the Inata will acquisition opportunities
consequently have which can be shown
a significant impact to be value accretive.
on Group results.
---------------------- ------------------------------- --------------- ------------------------------
Licence Avocet holds a number Moderate Avocet maintains good
administration of exploration and relations with the
mining licences. These appropriate authorities
licences normally and management are
include conditions responsible for ensuring
for ongoing operation conditions are adhered
(e.g. minimum expenditure to and renewal applications
levels) and require submitted in good
periodic renewal. order.
Renewals are not normally
guaranteed.
---------------------- ------------------------------- --------------- ------------------------------
Litigation Avocet is the subject Moderate As explained in note
of legal action initiated (with 31, the courts in
by its former partner low Indonesia have to
in Indonesia, with probability) date accepted Avocet's
regard to the sale claim that the Indonesian
of various South East courts do not have
Asia entities in 2011. jurisdiction over
the dispute.
PT LT has appealed
this ruling, but the
Company is confident
that all the actions
taken in respect of
the transaction have
been in accordance
with prevailing rules
and regulations and
there are no grounds
for any such legal
action.
---------------------- ------------------------------- --------------- ------------------------------
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report,
the Remuneration Report, and the financial statements in accordance
with applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have to prepare the financial statements in accordance with
International Financial Reporting Standards (IFRSs) as adopted by
the European Union. Under company law the Directors must not
approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs and profit
or loss of the Company and group for that period. In preparing
these financial statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether applicable IFRSs have been followed, subject to
any material departures disclosed and explained in the financial
statements; and
-- prepare financial statements on the going concern basis
unless it is inappropriate to presume that the company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements and the Remuneration Report comply with
the Companies Act 2006 and Article 4 of the IAS Regulation. They
are also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The Directors confirm that:
-- so far as each Director is aware, there is no relevant audit
information of which the Company's auditors are unaware; and
-- the Directors have taken all steps that they ought to have
taken as Directors to make themselves aware of any relevant audit
information and to establish that the auditors are aware of that
information.
The Directors are responsible for preparing the Annual Report in
accordance with applicable law and regulations. Having taken advice
from the Audit Committee, the Directors consider the Annual Report
and the financial statements, taken as a whole, provide the
information necessary to assess the Company's performance, business
model and strategy and is fair, balanced and understandable.
The Directors believe that the Annual Report and accounts taken
as a whole are fair, balanced and understandable, and confirm that
the narrative sections of the Annual Report are consistent with the
financial statements, and accurately reflect the Company's
performance.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
To the best of my knowledge:
-- the Group financial statements, prepared in accordance with
IFRSs as adopted by the European Union, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Company and the undertakings included in the consolidation
taken as a whole; and
-- the Annual Report includes a fair review of the development
and performance of the business and the position of the Company and
the undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and
uncertainties that they face.
David Cather
Chief Executive Officer
This information is provided by RNS
The company news service from the London Stock Exchange
END
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