TIDMAVM
RNS Number : 8005V
Avocet Mining PLC
02 February 2017
Update on Inata Life of Mine Plan
Avocet Mining PLC ("Avocet" or "the Company") today announces an
updated Life of Mine Plan ("LoMP") at its Inata operation, and is
seeking US$11-14m financing aimed at substantially extending
Inata's life for the benefit all stakeholders, including the mine's
creditors and Avocet's shareholders.
Summary
-- Current Inata LoMP now extended to Q4 2019
-- Ore Reserves increased to 340,400 ounces from 235,100 ounces at 31 December 2015.
-- Financing of US$11-14 million sought for the development of
three satellite projects, including Souma, to add potentially up to
seven years and 500-600,000 ounces of gold production to the mine
life
Inata LoMP
The latest LoMP now includes additional Ore Reserves which have
extended the operation to the end of Q4 2019. Inata's Ore Reserves
are now estimated to be 340,400 ounces as at 31 December 2016, an
increase of 105,300 ounces from the Reserves declared at the end of
2015.
The increase in Ore Reserves can be primarily attributed to a
higher gold price assumption (US$1,150 per ounce compared with
US1,100 per ounce at 31 December 2015), the identification of
additional geological resources at Minfo, and improved recoveries
now assumed in the treatment of carbonaceous (preg-robbing)
ores.
Nevertheless, without the addition of further deposits
(particularly Souma, Pali or Ouzeni, as outlined below), the LoMP
at current gold prices remains unlikely to result in the full
repayment of creditors. Furthermore, the operation continues to
face ongoing day-to-day challenges, including:
-- Cashflow constraints - meeting the payment demands from
suppliers with overdue balances, at the same time as servicing bank
loans (including the obligation to repay a 2.5bn CFA loan to Coris
Bank by 31 March 2017)
-- Security issues - implementing measures in response to the
increase in security incidents in the region around the Inata
site
-- Mechanical availability - with stores of spare parts and
repair cycles impacted by cash shortages, production continues to
be exposed to mechanical outages affecting the mining fleet or the
plant
Full year guidance for 2017 is 75-85,000 ounces at cash cost of
US$900-1,000 per ounce
The revised Reserves and Resources for Inata and the surrounding
exploration licences at Souma, Pali and Ouzeni are shown in
Appendix 1.
Funding sought to extend the LoMP
The Company is now seeking finance of approximately $10-12
million for Souma and a further US$1-2 million for Pali and Ouzeni,
to extend the Inata LoMP by adding additional reserves at all three
of these development projects.
It has been estimated, by way of a desktop scoping study, that
the development of these three satellite sites could add a further
six to seven years to the LOMP and additional gold production of
500-600,000 ounces. The work needed will focus on upgrading the
largely inferred resources at the three projects, together with
carrying out feasibility studies based on hauling ore from the
satellite sites to the Inata processing plant.
In order to bring the Souma deposit into the mine life, an
estimated US$5-7 million will need to be spent on a drilling
programme, completing a feasibility study for the new deposit, and
submitting an application for a new mining permit. Upon receiving
approval, capex of approximately US$5 million has been estimated,
mainly for haulage roads and enhancements to the comminution
circuit at the Inata plant.
The deposits at Pali and Ouzeni are expected to require
expenditure of US$1-2 million, mainly for drilling work, in order
to improve confidence sufficiently to convert resources into
reserves. Although these sit outside the Inata mining permit, it is
anticipated that the permit can be extended to include these
deposits without the requirement for a separate mining permit
application.
FOR FURTHER INFORMATION PLEASE CONTACT
Avocet Mining PLC Blytheweigh J.P. Morgan Cazenove
Financial PR Corporate Broker
David Cather, CEO Tim Blythe Michael Wentworth-Stanley
Jim Wynn, FD Camilla Horsfall
Megan Ray
+44 20 3709 2570 +44 207 138 3204 +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 per cent of the Inata Gold
Mine. The Inata Gold Mine poured its first gold in December 2009
and produced 72,485 ounces of gold in 2016. Other assets in Burkina
Faso include five exploration permits surrounding the Inata Gold
Mine in the broader Bélahouro region. The most advanced of these
projects is Souma, some 20 kilometers from the Inata Gold Mine.
The Company also holds an interest in the Tri-K project in
Guinea. On 10 October 2016, the Company announced that it had
agreed to dispose of 40 per cent of the project to Managem, a
Moroccan group listed on the Casablanca stock exchange, which
remains subject to approval by the Guinean National Assembly, and
which will increase upon completion of a bankable feasibility study
for a CIL plant at the site, the incurring of expenditures of at
least US$10 million, and the enlarging of the ore reserve, to 70
per cent (in the event of an increase of the reserve to 1 million
ounce or more) or 60 per cent (if less than 1 million ounces).
Appendix 1
BURKINA FASO ORE RESERVES AND MINERAL RESOURCES
Avocet Mining PLC owns 90% of Société des Mines de Bélahouro SA
("SMB"), owner of the Inata gold mine. Avocet owns 100% of the
exploration permits surrounding the Inata mining licence through
its wholly owned subsidiary, Goldbelt Resources (West Africa)
SARL.
The Company's Burkina Faso Mineral Resource estimates are
presented in the tables below, quoted for blocks above a nominated
cut-off grade of 0.8g/t Au. The Inata and Minfo Mineral Resources
reflect the depletion of the mining surfaces up to the end of
December 2016.
Inata's Ore Reserves were estimated to be 0.34 million ounces as
at 31 December 2016 based on pit shells optimised at US$1,150 per
ounce, increased from 0.24 million ounces as at 31 December 2015.
Cut off grades within the US$1,150 per ounce pit shells were based
on a gold price assumption of US$1,250 per ounce. The increase in
Ore Reserves is attributable to an increased gold price assumption,
the identification of additional geological resources at Minfo, and
improved recoveries now assumed in the treatment of carbonaceous
(preg-robbing) ores.
Inata, Minfo and Filio Ore Reserves
Ore Reserve estimates are reported below the 31st December 2016
topographic surface and above an effective weighted average 0.8 g/t
Au economic cut-off grade within mine designs based on economic
shell optimisations. Mineral Resources are reported above a 0.8 g/t
Au cut-off and below the 31 December 2016 topographic surface.
Gross Attributable
Tonnes Grade (g/t) Contained ounces Tonnes Grade (g/t) Contained ounces
-------------------- ---------- ------------ ----------------- ---------- ------------ -----------------
Ore Reserves
Proven 3,066,000 1.89 186,000 2,759,000 1.89 167,400
Probable 1,823,000 1.81 106,000 1,641,000 1.81 95,400
ROM stockpiles 873,000 1.72 48,400 786,000 1.72 43,600
-------------------- ---------- ------------ ----------------- ---------- ------------ -----------------
Ore Reserves total 5,762,000 1.84 340,400 5,186,000 1.84 306,400
-------------------- ---------- ------------ ----------------- ---------- ------------ -----------------
Inata Mineral Resources
Gross Attributable
Tonnes Grade (g/t) Contained ounces Tonnes Grade (g/t) Contained ounces
------------------------- ----------- ------------ ----------------- ----------- ------------ -----------------
Mineral Resources
Measured 7,318,000 1.59 373,000 6,586,000 1.59 335,700
Indicated 22,217,000 1.74 1,245,300 19,995,000 1.74 1,120,800
------------------------- ----------- ------------ ----------------- ----------- ------------ -----------------
Measured+Indicated 29,535,000 1.70 1,618,300 26,581,000 1.70 1,456,500
------------------------- ----------- ------------ ----------------- ----------- ------------ -----------------
Inferred 29,018,000 1.61 1,506,000 26,116,000 1.61 1,355,400
------------------------- ----------- ------------ ----------------- ----------- ------------ -----------------
Mineral Resources Total 58,553,000 1.66 3,124,300 52,697,000 1.66 2,811,900
------------------------- ----------- ------------ ----------------- ----------- ------------ -----------------
Note: rounding errors may occur
Souma Mineral Resources
Gross Attributable
----------------------------------------- -----------------------------------------
Tonnes Grade (g/t) Contained ounces Tonnes Grade (g/t) Contained ounces
------------------------ ---------- ----------- ---------------- ---------- ----------- ----------------
Mineral Resources
Measured - - - - - -
Indicated 2,410,000 2.32 179,500 2,410,000 2.32 179,500
------------------------ ---------- ----------- ---------------- ---------- ----------- ----------------
Measured + Indicated 2,410,000 2.32 179,500 2,410,000 2.32 179,500
------------------------ ---------- ----------- ---------------- ---------- ----------- ----------------
Inferred 9,220,000 1.67 496,100 9,220,000 1.67 496,100
------------------------ ---------- ----------- ---------------- ---------- ----------- ----------------
Mineral Resources total 11,630,000 1.81 675,600 11,630,000 1.81 675,600
------------------------ ---------- ----------- ---------------- ---------- ----------- ----------------
Ouzeni and Pali Mineral Resources
Gross Attributable
---------------------------------------- ----------------------------------------
Tonnes Grade (g/t) Contained ounces Tonnes Grade (g/t) Contained ounces
------------------------ --------- ----------- ---------------- --------- ----------- ----------------
Mineral Resources
Measured - - - - - -
Indicated - - - - - -
------------------------ --------- ----------- ---------------- --------- ----------- ----------------
Measured + Indicated - - - - - -
------------------------ --------- ----------- ---------------- --------- ----------- ----------------
Inferred 5,190,000 1.62 269,700 5,190,000 1.62 269,700
------------------------ --------- ----------- ---------------- --------- ----------- ----------------
Mineral Resources total 5,190,000 1.62 269,700 5,190,000 1.62 269,700
------------------------ --------- ----------- ---------------- --------- ----------- ----------------
Total Burkina Faso Mineral Resources
Gross Attributable
------------------------------------------ ------------------------------------------
Tonnes Grade (g/t) Contained ounces Tonnes Grade (g/t) Contained ounces
------------------------ ----------- ----------- ---------------- ----------- ----------- ----------------
Mineral Resources
Measured 7,318,000 1.59 373,000 6,586,000 1.59 335,700
Indicated 24,627,000 1.80 1,424,800 22,405,000 1.80 1,300,300
------------------------ ----------- ----------- ---------------- ----------- ----------- ----------------
Measured + Indicated 31,945,000 1.75 1,797,800 28,991,000 1.75 1,636,000
------------------------ ----------- ----------- ---------------- ----------- ----------- ----------------
Inferred 43,428,000 1.62 2,271,800 40,526,000 1.62 2,121,200
------------------------ ----------- ----------- ---------------- ----------- ----------- ----------------
Mineral Resources total 75,373,000 1.68 4,069,600 69,517,000 1.68 3,757,200
------------------------ ----------- ----------- ---------------- ----------- ----------- ----------------
The information in this report that relates to Inata Ore
Reserves in Burkina Faso is based on information compiled by Mr
Martin Raml, who is a Qualified Person, as defined by NI 43.101.
Martin Raml is employed by Avocet Mining PLC.
The information in this report that relates to Exploration
results is based on information supplied by Mr Robert Seed, a
competent person. Robert Seed is employed by Avocet Mining PLC and
has sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration and to the
activity which he is undertaking to qualify as a Competent Person
as defined in the 2012 Edition of the "Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore
Reserves". Robert Seed consents to the inclusion in the report of
the matters based on his information in the form and context in
which it appears.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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