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Avocet Mining PLC (AVM)

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Friday 29 January, 2010

Avocet Mining PLC

Q3 Gold Production

RNS Number : 3174G
Avocet Mining PLC
29 January 2010
 



AVOCET MINING PLC


QUARTERLY GOLD PRODUCTION AND TRADING UPDATE


Period (1)

 

3 months ended 31 Dec 2009

9 months ended 31 Dec 2009

9 months ended 31 Dec 2008

Year ended 31 Dec 2009

Year ended 31 Mar 2009

 


 

 

 


 

Gold production

(Oz)

25,877  

82,174  

82,544  

109,548   

109,919  

Average realised gold price

(US$/oz)

1,103  

995  

855  

975  

870  

Average cash cost

(US$/oz)

766  

650  

600  

639   

602  

    

(1) On 28 October thCompany announced that it would change its year end from March to December with effect from 31 December 2009


  • Gold production of 25,877 ounces in the quarter ended 31 December 2009

  • Production of 82,174 ounces for the nine months ended 31 December 2009, at a cash cost of US$650/oz 

  • First gold pour at Inata on 20 December 2009

  • Inata production of approximately 3,200 ounces in January as start of ramp up - production expected to increase to over 10,000 ounces per month by July 2010



Jonathan Henry, Chief Executive Officer, commented:


"The Inata ramp up is progressing well and we remain focused on reaching design capacity in a timely and sustainable manner.  The last quarter was challenging for Penjom and North Lanut but both continued to generate cash margins in excess of US$300/oz, helping to underpin commissioning costs of our new mine in West Africa and further work on our exploration and development portfolio in both regions."


Avocet Mining PLC ("Avocet" or "the Company") today provides a trading update in advance of its audited preliminary results for the nine months ended 31 December 2009, which will be released on 17 March 2010.


Trading overview


Gold production for the quarter was 25,877 ounces from the Company's operations at Penjom in Malaysia and North Lanut in Indonesia All gold sales were into the spot market during the quarter with an average realised price of US$1,103/oz.  Total cash costs in the quarter were US$766/oz compared with US$595/oz in the previous quarterwith the increase accounted for equally by lower production and higher costs.


For the nine months ended 31 December 2009, gold production totaled 82,174 ounces, in line with the guidance given in November at the time of the Company's interim results announcement. Total cash costs of US$650/oz were slightly above expectations as mining and plant costs were higher than expected at Penjom and North Lanut for the last quarter


The appendix to this announcement sets out key operating statistics including production and cash costs by quarter for both Penjom and North Lanut.  


Inata, Burkina Faso 


Following the first gold pour at Inata on 20 December 2009, commissioning and ramp up of the plant has continued with progress currently ahead of schedule.  The planned ramp up was for gold production of 2,500 ounces in February 2010, with increases averaging 1,500 per month thereafter, and production of over 10,000 ounces per month from July 2010.  Steady increases are being achieved in mill throughput and preliminary estimates indicate gold recoveries are better than forecast.  Further gold pours have occurred since the first pour and total gold production to date is approximately 3,200 ounces.  


Penjom, Malaysia


Penjom produced approximately 5,300 ounces of gold in each of November and December and 3,900 ounces in October. The lower production in October was due to a scheduled SAG mill liner change previously announced.  Ore grades dipped to 2.95 g/t as mining in the quarter took place in areas of lower grade than in the previous quarters. Total gold production of 14,512 ounces in the quarter was therefore 12 per cent below the previous quarter.  Total cash costs in the quarter were US$11.8 million, nine per cent above the previous quarter of US$10.milliondue to a rise in mobile fleet maintenance costs.  Together with lower gold production, this resulted in an increase in cash costs to US$811/oz for the quarter.


For the nine months ended 31 December 2009, gold production totaled 46,577 ounces, slightly ahead of expectations. Excluding the impact of the SAG mill liner change shutdown, the quarter's production was broadly in line with the two previous quarters at a rate of approximately 5,000 ounces per month. The higher level of maintenance costs in the last quarter meant that cash costs for the nine month period were US$710/oz compared with US$586/oz in the corresponding period for 2008.


Gold production in 2010 is expected to continue at approximately 5,000 ounces per month.


North LanutIndonesia


North Lanut's gold production of 11,365 ounces in the quarter ended 31 December 2009 represented an eight per cent decrease from the previous quarter. Production was impacted by a dip in grades as the balance of mining in the quarter shifted from the Riska pit to the upper levels of the Rasik pit. Significant gains in ore tonnages from the upper benches of Rasik mean that mining of the deeper, higher grade material will now occur later in the second half of 2010.


Total cash costs in the quarter ended 31 December 2009 rose 29 per cent from the previous quarter to US$8.1 million.  The increase partly reflected higher costs associated with mining the additional ore encountered at Rasik. Together with the lower gold production, higher expenditure resulted in an increase in cash cost to US$710/oz for the quarter.


For the nine months ended 31 December 2009, gold production totaled 35,597 ounces. Cash cost per ounce for the same period rose to US$569/oz, nine per cent lower than in the corresponding period for 2008


The ore gains encountered at Rasik mean that North Lanut's mine life is expected to be extended by up to 12 months.  Gold production is now expected to average 3,500 ounces per month in the first half of 2010, as mining occurs in the upper benches of Rasik, and then to increase to 4,500 ounces per month in the second half as higher grades at depth are reached in Rasik.


Exploration


An assessment of the enlarged West African and South East Asian exploration portfolio is close to being finalised, with a view to determining the next steps on each prospect, including Doup and Seruyung in Indonesia. In West Africa, the Belahouro licences in Burkina Faso, incorporating the Souma Trend, will be a priority in view of its prospectivity and proximity to Inata. 


Group Results


The Company will announce its preliminary financial results on 17 March 2010.




For further information please contact:

Avocet Mining PLC

Buchanan Communications

Ambrian Partners Limited

J.P. Morgan Cazenove

Arctic Securities

First Securities


Financial PR Consultants

NOMAD and Joint Broker

Lead Broker

Financial Adviser 

Financial Adviser 

Jonathan Henry, CEO Mike Norris, FD

Hans-Arne L'orange, EVP Business Development & Investor Relations 

Bobby Morse

Katharine Sutton

Richard Brown

Richard Greenfield

Michael Wentworth-Stanley

Anish Patel

Arne Wenger

Kim Galtung Døsvik

Stein Hansen

Eirik Lilledahl


+44 20 7766 7676

+44 20 7466 5000

+44 7802 875227

+44 20 7634 4700

+44 20 7588 2828

+47 21013100

+47 2323 8000

www.avocet.co.uk

www.buchanan.uk.com

www.ambrian.com

www.jpmorgancazenove.com

www.arcticsec.no

www.first.no






Notes to Editors


Avocet Mining PLC ("Avocet" or "the Company") is a mining company listed on the AIM market of the London Stock Exchange (Ticker: AVM). The Company's principal activities are gold mining and exploration in Malaysia (as 100 per cent owner of the Penjom gold mine, the country's largest gold producer), Indonesia (as 80 per cent owner of the North Lanut gold mine and Bakan project in North Sulawesi) and Burkina Faso (as 90 per cent owner of the Inata gold mine). The Company has a number of other advanced exploration projects in South East Asia and West Africa.


Background to operations

Penjom is Malaysia's largest gold producer and was developed by Avocet after applying modern technology to grass roots exploration in an area of historic alluvial mining. The mine is located in Pahang State, approximately 120 km north of the country's capital, Kuala Lumpur. The mine was commissioned in December 1996 with reserves of 223,000 ounces. Successful resource development means Penjom has produced over one million ounces of gold to date and still has nearly one million ounces of resource. 


North Lanut in North Sulawesi, Indonesia, was developed by Avocet from the exploration stage and has produced over 270,000 ounces since it was commissioned in 2004. Avocet purchased an 80 per cent interest in PT Avocet Bolaang Mongondow, an Indonesian company holding a 6th generation Contract of Work ("CoW"), from Newmont Mining Corporation in 2002. North Lanut is located within the CoW, which includes exploration and mining rights over approximately 50,000 hectares in an area highly prospective for gold. An Indonesian company, PT Lebong Tandai, owns the remaining 20 per cent. 


Inata in Burkina Faso, West Africahas a resource of 1.7 million ounces and reserves of 944,000 ounces.  Inata poured first gold in December 2009 and is currently commissioning to full production rates in excess of 10,000 ounces per month. Other assets include exploration licences in Burkina Faso, Guinea and Mali (the most advanced being the Tri-K gold exploration project in Guinea with a resource of 667,000 ounces).




Appendix - Key operating statistics by quarter




Quarters ended

 


Quarters ended



Jun '08

Sep '08

Dec '08

Mar '09

Total

9 mths to Dec 08


Jun '09

Sep '09

Dec '09

Total














Penjom


























Ore mined (tonnes)


179,034

86,081

167,640

265,944

698,700

  432,756 


  372,145 

  247,958 

  86,285 

  706,388 

Waste mined (tonnes)


4,146,508

4,113,678

4,123,096

4,556,004

16,939,285

  12,383,281 


  4,396,358 

  4,165,516 

  4,124,764 

  12,686,638 

Ore and waste mined (tonnes)


4,325,542

4,199,759

4,290,736

4,821,948

17,637,985

  12,816,037 


  4,768,503 

  4,413,474 

  4,211,049 

  13,393,026 

Ore processed (tonnes)


190,516

179,059

168,884

180,480

718,939

  538,459 


  179,146 

  185,767 

  179,658 

  544,571 

Average ore head grade (g/t)


3.44

3.53

3.66

3.27

3.47

  3.54 


  3.38 

  3.34 

  2.95 

  3.22 

Process recovery rate


89%

88%

82%

85%

86%

86%


80%

82%

85%

83%

Gold Produced (oz)


18,729

17,793

16,303

16,077

68,902

  52,825 


  15,664 

  16,401 

  14,512 

  46,577 














Cash costs (US$/oz)













Mining


329

313

351

409

349

  330 


  395 

  390 

  476 

  419 

Processing


155

168

174

175

167

  165 


  170 

  168 

  215 

  183 

Royalties and overheads


92

95

82

107

94

  90 


  104 

  102 

  120 

  108 



576

576

607

691

610

  586 


  669 

  660 

  811 

  710 

Deferred stripping adjustment


(95)

(156)

(94)

28

(82)

    (116) 


  307 

  75 

  -  

  129 



481

420

513

718

528

  470 


  976 

  735 

  811 

  839 

Mining cost per tonne (US$)


1.25

1.33

1.33

1.36

1.36

  1.36 


  1.30 

  1.45 

  1.64 

  1.46 














North Lanut


























Ore mined (tonnes)


383,787

357,627

257,940

310,628

1,309,982

  999,354 


  300,837 

  422,528 

  396,136 

  1,119,501 

Waste mined (tonnes)


220,408

305,008

371,166

698,570

1,595,152

  896,582 


  457,032 

  554,861 

  579,875 

  1,591,768 

Ore and waste mined (tonnes)


604,195

662,635

629,106

1,009,198

2,905,134

  1,895,936 


  757,869 

  977,389 

  976,011 

  2,711,269 

Ore processed (tonnes)


380,181

437,917

257,308

262,810

1,338,216

  1,075,406 


  319,399 

  333,346 

  366,692 

  1,019,437 

Average ore head grade (g/t)


1.96

2.30

2.24

1.86

2.10

  2.16 


  2.04 

  1.54 

  1.41 

  1.65 

Process recovery rate


39%

31%

56%

72%

45%

40%


57%

75%

68%

66%

Gold Produced (oz)


9,293

9,963

10,463

11,297

41,017

  29,719 


  11,899 

  12,333 

  11,365 

  35,597 














Cash costs (US$/oz)













Mining


251

295

279

263

272

  276 


  275 

  271 

  350 

  297 

Processing


198

229

173

112

175

  200 


  125 

  123 

  188 

  145 

Royalties and overheads


152

137

165

113

141

  152 


  101 

  113 

  172 

  127 



601

661

617

488

588

  627 


  501 

  507 

  710 

  569 














Total 


























Gold Produced (oz)


28,022

27,756

26,766

27,374

109,919

  82,544 


  27,563 

  28,734 

  25,877 

  82,174 

Cash costs (US$/oz)













Mining


303

307

323

349

320

  311 


  343 

  339 

  420 

  366 

Processing


169

190

174

149

170

  178 


  151 

  149 

  203 

  167 

Royalties and overheads


112

110

114

110

112

112


  103 

  107 

  143 

  117 



584

607

611

608

602

600


  597 

  595 

  766 

  650 

Deferred stripping adjustment


(63)

(101)

(57)

16

(51)

(74)


  174 

  43 

  -  

  73 



521

506

554

624

551

  526 


  771 

  638 

  766 

  723 



This information is provided by RNS
The company news service from the London Stock Exchange
 
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