Avocet Mining PLC unaudited results for the quarter ended ...€¦ · Avocet Mining is a gold...

Registered Office 3rd Floor 30 Haymarket London SW1Y 4EX England Registered in England No 3036214 1

Avocet Mining PLC unaudited results for the quarter ended 31 March 2013

Q1 production at Inata in line with life of mine plan: 30,481 oz (Q4 2012: 30,909 oz)

produced at a total cash cost (including royalties) of US$1,169 per oz (Q4 2012: US$1,246

per oz).

Full year guidance remains 135,000 oz at a total cash cost of $1,100 per oz

EBITDA of US$6.7 million (Q4 2012: US$5.3 million) reflecting sale of 28,751 oz during

quarter

Cash outflow from operating activities US$15.4 million. Excluding US$20.2 million buyback of

forward contracts, positive cash generated from operating activities of US$4.8 million (Q4

2012: US$16.4 million)

Gold hedge restructured - total forward contracts reduced by 29,020 oz and remainder

rescheduled to be cleared 18 months earlier at 31 December 2016

Loan agreement with affiliate of largest shareholder, Elliott Management, to finance feasibility

study at Tri-K and corporate costs for remainder of 2013

Revised Inata Ore Reserves announced in quarter - reduction to 0.9 million ounces, based on

US$1,200/oz pit shells

KEY FINANCIAL METRICS1

Period

Quarter ended 31 March

2013 Unaudited

Quarter ended 31 December

2012 Unaudited


2012 Unaudited

Year ended 31 December

2012 Audited

Gold production (ounces) 30,481 30,909 38,296 135,189

Average realised gold price (US$/oz) 1,422 1,468 1,543 1,491

Total cash production cost (US$/oz) 1,169 1,246 850 1,000

Profit/(loss) before tax and exceptional items (US$000) 181 (4,699) 20,839 18,275

(Loss)/profit before tax (US$000)2 (44,792) (139,999) 20,839 (117,025)

(Loss)/earnings per share (US cents per share) (20.30) (53.23) 6.33 (46.57)

EBITDA3 (US$000) 6,748 5,282 28,101 48,343

Net cash generated by operating activities (US$000) (15,374) 16,401 13,852 52,381

1 Key Financial Metrics are presented for continuing operations only, and represent results excluding the Group’s former operations in South East Asia. 2 Q1 2013 includes net US$45.0 million of exceptional items: US$20.2 million cost of hedge buy-back; US$96.6 million loss on initial recognition of forward contracts; US$72.2 million gain on reversal of impairment; and US$0.3 million cost of impairment of discontinued Mali projects. See note 3 for further details. 3 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.


David Cather, Chief Executive Officer, commented:

“The recent revision to the input assumptions behind our Ore Reserves at Inata and the resulting

revised life of mine plan provides us with a more conservative platform on which to operate.

Inata’s Q1 production was a solid first step in achieving this year’s targets, with mining now moving

to include the Minfo pit as a source of higher grade ore for the rest of the year. Our focus at Inata

will also be on operating improvements in order to achieve better plant recoveries and throughputs.

We are on track to meet guidance of 135,000 ounces of production for the year, and by year end

we will have a greatly reduced hedge book.

Our Souma Project will add to these achievements by presenting an opportunity to enhance Inata’s

cash flows as a satellite operation and to extend its mine life. In Guinea, by year end we will also

have advanced our Tri-K Project through the milestones of a feasibility study and maiden reserve

estimate. Delivery on these key areas will serve to rebuild the Company’s asset base and enable us

to realise shareholder value.

Recent gold price volatility is a key concern of investors at present, and whilst we cannot control

the gold price, this has underlined the importance of our ongoing cost improvement initiatives and

conservative approach to mining at Inata – exemplified by our decision in March to rebase our

reserves on a gold price of US$1,200 per ounce.”

Management Conference Call

The Company will host a conference call for investors and analysts at 9am (UK) on Thursday

2 May 2013.

Dial in details are as follows:

UK: 08444 933800

Norway: 21563013

Alternative number: +44 (0)1452 555 566

Conference ID # 58502724

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 PLC Pelham Bell Pottinger Financial PR Consultants

J.P. Morgan Cazenove Corporate Broker

Arctic Securities Financial Adviser &

Market Maker

SEB Enskilda Financial Adviser &

Market Maker

David Cather, CEO

Mike Norris, FD

Rob Simmons, IR

Daniel Thöle

Michael Wentworth-Stanley

Arne Wenger

Petter Bakken

Fredrik Cappelen

+44 20 7766 7676 +44 20 7861 3232 +44 20 7742 4000

+47 2101 3100 +47 2100 8500

NOTES TO EDITORS

Avocet Mining 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

Resources estimate of 0.8 million ounces.

In Guinea, Avocet owns exploration licences in the north east of the country. Mineral Resource development has been ongoing since 2005 and the Tri-K project is the most advanced, which currently has a Mineral Resource estimate of 3.2 million ounces and where a feasibility study is underway.


CHIEF EXECUTIVE OFFICER’S REVIEW

During Q1, the Company made significant progress in the restructuring of its finances, and is now

funded for the 2013 work programme that will focus on optimising the Inata operation and

demonstrating value from Souma and Tri-K. Operations at Inata are progressing in line with

guidance for the year. We are encouraged by Souma’s potential as a satellite deposit, whilst we

are examining the effect it could have on the longer term economics at Inata.

In March 2013, the process to reassess Inata’s reserve concluded with a decrease from 1.8 million

ounces to 0.9 million ounces. This reduction was partly driven by the conservative approach we

have adopted in managing our assets, exemplified by the use of a lower gold price of US$1,200 per

ounce and the assumption of no additional major investment to achieve this production schedule.

In addition to the reduction in the assumed gold price and depletion during 2012, the key drivers

behind this decrease in reserves were metallurgy and ore hardness, both of which have proved

more challenging than estimated in the previous reserve.

The reserve reduction resulted in lower production forecasts over the life of mine, and required the

Company’s hedge book with Macquarie Bank Limited to be restructured. Consequently Avocet

bought back 29,020 hedged ounces at a cost of US$20 million, and shortened the period over which

the remaining 144,230 ounces are to be delivered by 18 months to 31 December 2016.

The hedge restructure utilised cash that would otherwise have been used to advance the

Company’s growth projects. As a result, a US$15 million loan was agreed with Manchester

Securities Corp, an affiliate of our largest shareholder, Elliott Management (‘Elliott’), to be drawn

down in three tranches (the ‘Elliott loan’). Being a transaction with a related party, the second and

third tranches of this loan, which are to be secured over Avocet’s assets in Guinea and will include

the provision of 4 million warrants at 40 pence per share, will require shareholder approval at a

General Meeting (‘GM’), which is scheduled for 28 May 2013. To this end, a circular will be issued to

our shareholders today outlining details of this proposal, and comes with the endorsement of the

Avocet Board.

Assuming shareholder approval is granted, the Elliott loan will be repayable in full on 31 December

2013, and the Company intends to put in place further financing by this time. Throughout the

remainder of 2013, we intend to remain focussed on evaluating lower capital cost options for the

development of Souma and Tri-K, and entrenching operational improvements at Inata. We believe

that the completion of the feasibility study at Tri-K in Guinea, as well as the advancement of Inata

and Souma, should demonstrate the potential value to be realised from the Group's portfolio of

assets during the rest of 2013, which ought to assist the Group in raising additional longer-term

financing by 31 December 2013..


OPERATIONAL REVIEW

Gold production and cash costs

2012 2013

Q1 Q2 Q3 Q4 FY 2012 Q1

Ore mined (k tonnes) 578 610 559 906 2,653 817

Waste mined (k tonnes) 7,240 6,689 7,565 8,980 30,474 9,127

Total mined (k tonnes) 7,818 7,299 8,124 9,886 33,127 9,944

Ore processed (k tonnes) 608 651 643 654 2,556 616

Average head grade (g/t) 2.36 1.82 1.62 2.03 1.95 1.65

Process recovery rate 87% 86% 91% 83% 87% 82%

Gold Produced (oz) 38,296 32,917 33,067 30,909 135,189 30,481

Cash costs (US$/oz) Q1 Q2 Q3 Q4 FY 2012 Q1

Mining 332 402 374 562 412 542

Processing 283 332 279 350 309 360

Administration 122 145 167 219 161 163

Royalties 113 127 117 115 118 104

850 1,006 937 1,246 1,000 1,169

Gold production in the first quarter of 2013 of 30,481 ounces was in line with the life of mine plan

announced in March 2013. Grades were nearly 20% lower than in Q4 2012, and tonnes milled

were also lower, but these were largely offset by favourable inventory movements, with 1,977

ounces drawn out of gold in circuit inventory in Q1, whereas in Q4 3,708 ounces had been added to

gold in circuit inventory. Mining of higher grade ore from Minfo has commenced and quarterly

production is scheduled to increase as a result. Guidance for the full year remains at 135,000

ounces.

Mining volumes exceeded 9.9 million tonnes in the quarter, not only an improvement on Q4 2012,

but also the highest quarterly tonnage since mining began at Inata in 2008. This improvement is in

part due to the performance initiatives put in place over the latter half of 2012, and is the

aggregate effect of a number of individual improvements, including training programmes,

supervision monitoring, and revised schedules and timetables. Improved mining performance has in

turn increased availability of ore stockpiles, and therefore enables greater flexibility in processing

ore going forward.

Plant throughput levels (616,000 tonnes) were 6% lower than Q4 2012 but remain in line with the

life of mine plan. Head grades fell from 2.03 g/t in Q4 to 1.65 g/t in this quarter, as ores fed to the

mill were from slightly lower grade areas (chiefly the Sayouba pit). Recoveries were also slightly

lower than the previous quarter, at 82%, as ores treated in January and February in particular were

lower grade and included carbonaceous material.

Total cash costs (including royalties) in the quarter were US$1,169 per ounce, a decrease of six per

cent compared with Q4 2012.

Total mining costs were US$16.5 million, lower than the previous quarter. Mining costs on a unit

basis were US$1.66 per tonne, a reduction of 6% compared to the previous quarter, reflecting cost

improvement initiatives being implemented at site.


The total processing cost for the quarter was US$11.0 million, which is in line with the previous

quarter. On a unit basis, the processing cost was US$17.81 per tonne, 8% higher than Q4 2012 as

a result of fewer tonnes milled and increased usage of consumables such as lime and cyanide. Cost

improvement initiatives are underway to optimise reagent usage, particularly with respect to lime

consumption.

Unit costs for both mining and processing are in line with the full year guidance given in March of

US$1,100 per ounce.

Souma exploration project, Burkina Faso

In January and February, a diamond drill rig collected geotechnical data and metallurgical samples

in support of planned feasibility work on the Souma project and new resources at Inata (Minfo East

and Filio). In March, a reverse circulation rig conducted scout drilling on geochemical and

geophysical anomalies at Souma with a view to identifying and prioritising resource candidates for

infill drilling in 2014.

During the quarter, an updated Mineral Resource estimate of 0.8 million ounces (16.3 million

tonnes grading 1.48 g/t Au) was announced, representing an increase of 38% on the previous

estimate. Souma’s geological setting is distinct from that at Inata, and preliminary testwork has

indicated gold recoveries of +90% for all nine samples that were submitted.

Testwork results from drilling undertaken in 2012, which were received during the quarter,

emphasise the high grade core at Souma, which will be the focus of any operation involving the

trucking of ore to the Inata processing plant. Results received during Q1 include:

- 16m @ 6.3 g/t Au from 35m;

- 11m @ 7.3 g/t Au from 61m;

- 21m @ 2.8 g/t Au from 6m;

- 6m @ 7.8 g/t Au from 72m; and

- 10m @ 3.9 g/t Au from 33m.

Tri-K development project, Guinea

The feasibility study for the phase 1 development of the Tri-K project is underway, targeting a heap

leach project exploiting oxide ore from two deposits at Tri-K – Koulékoun and Kodiéran. National,

regional and local authorities are supportive of the project, and discussions with regards to securing

a Mining Convention have commenced. The feasibility study is expected to be completed in H2

2013, and a mining licence application submitted shortly thereafter.

Exploration in Guinea has focused on supporting the Tri-K feasibility study by conducting infill

drilling on the upper oxide portion of the Kodiéran Mineral Resource. Geologists are undertaking a

geochemical survey of termite mound samples in an effort to generate new exploration targets for

2014 and help illustrate the upside potential of the Tri-K District.

As part of the feasibility study process, infill drilling is ongoing in order to establish a maiden

reserve estimate for Tri-K. Results received during the quarter for Kodieran include:

- 22m @ 5.5 g/t Au from 1m;

- 21m @ 5.7 g/t Au from 30m; and

- 14m @ 2.2 g/t Au from 45m.


FINANCIAL REVIEW

Revenue in the quarter was US$40.9 million, reflecting sales of 28,751 ounces of gold at an

average realised price of US$1,422 per ounce, (including 8,250 ounces delivered into forward

contracts at US$950 per ounce), compared with revenue of US$44.5 million in Q4 2012,

representing 30,276 ounces at an average realised price of US$1,468 per ounce.

EBITDA for the quarter totalled US$6.7 million, compared with US$5.3 million in Q4 2012.

Favourable inventory movements totalled US$4.1 million in the quarter, with increases in stockpile

(due to additional tonnes and higher average cost) and gold in transit, partly offset by a reduction

in gold in circuit.

A number of exceptional items arose in the quarter as a result of the restructure of the hedge book

with Macquarie Bank Limited. These include a charge of US$20.2 million representing the cost of

closing out 29,020 ounces of forward gold sales. In addition, a non-cash expense of US$96.6

million was recognised as a result of bringing onto the balance sheet the mark-to-market liability of

the remaining 144,230 ounces of forward sales at US$937.50 per ounce. The recognition of the

mark-to-market liability is in accordance with IAS 39 (see note 13 for more information), and

reflects the fact that the recent buy back demonstrates a practice of cash-settling forward

contracts. Under IAS 39, this means that the own-use exemption previously applied is no longer

appropriate.

The inclusion of the hedge liability resulted in a partial reversal of the impairment recognised in

December 2012. The original impairment reflected the shortfall between the net present value of

Inata’s cash flows, including the effect of hedge sales, and its net assets, which excluded the hedge

liability. Following the recognition of the mark-to-market liability at 31 March 2013 the net present

value of Inata’s cash flows is now significantly greater than Inata’s net assets, resulting in an

impairment reversal in Q1 2013 of US$81.7 million.

Profit from operations in the quarter was US$73.6 million, which included the effect of the

impairment reversal, compared with an operating loss of US$139.7 million in Q4 2012, which

included the original impairment. Excluding the impairment and impairment reversal, operating

profit in Q1 2013 would have been US$1.4 million compared with an operating loss of US$4.4

million in Q4 2012.

The loss before tax for the quarter, including exceptional items, was US$44.8 million, compared

with a loss of US$140.0 million in Q4 2012. Excluding exceptional items, the pre-tax profit was

US$0.2 million compared with a loss of US$4.7 million in Q4 2012. Net cash consumed by

operating activities in the period was US$15.4 million, including the impact of the US$20.2 million

hedge buy-back which is reported as an operating cash flow item. Excluding this, Net cash flow

from operating activities in Q1 2013 was US$4.8 million.

Other cash flow items in the quarter include capex of US$5.4 million (principally US$2.4 million

work on the second tailings facility at Inata and US$2.6 million on mining equipment and engine

rebuilds), US$5.7 million of capitalised exploration expenses (US$3.1 million in Burkina Faso and

US$2.5 million in Guinea), as well as US$5.0 million drawn down on the Elliott Loan.

Net cash decreased in the quarter by US$22.0 million, with closing cash standing at US$32.9

million, and US$10.0 million of external debt (US$5.0 million each with Macquarie Bank Limited and

Elliott).


OUTLOOK

Over the remainder of 2013, Avocet will be focussed on optimising cash flow at Inata, while

meeting its production guidance of 135,000 ounces at a total cash cost of US$1,100 per ounce.

Subject to shareholder approval, the Company expects to draw down a further US$10.0 million

under the Elliott Loan, to finance the completion of the feasibility study at Tri-K in Guinea, and to

meet corporate costs. Further low capital cost improvements at Inata are being investigated in

order to demonstrate the upside potential compared with the March life of mine plan, with work at

Souma geared to add longer term value to Inata.

Further financing is expected before the end of 2013 to provide funds for repayment of the US$15.0

million Elliott loan and for working capital for 2014. The Board is confident that undertaking the

value-generative initiatives outlined above should assist the Group in its discussions regarding

future financing.

DAVID CATHER

Chief Executive Officer


CONDENSED CONSOLIDATED INCOME STATEMENT

For the three months ended 31 March 2013

Three months ended

Note 31 March 2013 Unaudited

31 March 2012 Unaudited

US$000 US$000

Continuing operations

Revenue 2 40,885 60,256

Cost of sales 2 (36,749) (36,007)

Gross profit/(loss) 4,136 24,249

Administrative expenses (2,135) (2,154)

Share based payments (329) (559)

Partial reversal of impairment of mining assets 3,7 72,200 -

Impairment of exploration intangible assets 3 (316) -

Profit from operations 73,556 21,536

Loss on recognition of forward contracts 3 (96,632) -

Restructure of forward contracts 3 (20,225) -

Finance items

Exchange (losses)/gains (114) 145

Finance expense (1,379) (858)

Finance income 2 16

(Loss)/profit before taxation from continuing operations (44,792) 20,839

Analysed as:

Profit before taxation and exceptional items 181 20,839

Exceptional items 3 (44,973) -

(Loss)/profit before taxation from continuing operations (44,792) 20,839

Taxation 37 (6,884)

(Loss)/profit for the period from continuing operations (44,755) 13,955

Discontinued operations

Loss on disposal on subsidiaries(1) 3 - (105)

(Loss) / profit for the period (44,755) 13,850

Attributable to:

Equity shareholders of the parent company (40,416) 12,492

Non-controlling interest (4,339) 1,358

(44,755) 13,850

Earnings per share

- basic (cents per share) 5 (20.30) 6.28

- diluted (cents per share) 5 (20.30) 6.20

EBITDA (2) 6,748 28,101

(1) During 2011, the Group disposed of all of its trading subsidiaries which were classified as discontinued operations. All operations for 2012 are continuing. Refer to note 3 for further information.

(2) EBITDA represents earnings before 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


Three months ended

31 March 2013 31 March 2012

Note Unaudited Unaudited

US$000 US$000

(Loss)/profit for the period (44,755) 13,850

Revaluation of other financial assets 9 (206) 80

Total comprehensive income for the period (44,961) 13,930

Attributable to:

Equity holders of the parent company (40,622) 12,572

Non-controlling interest (4,339) 1,358

Total comprehensive income for the period (44,961) 13,930

Total comprehensive income for the period attributable to owners of the parent arising from:

Continuing operations (40,622) 12,677

Discontinued operations - (105)

(40,622) 12,572


CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 31 March 2013

Note

31 March 2013 Unaudited

31 December 2012 Audited

US$000 US$000

Non-current assets

Intangible assets 6 55,081 49,442

Property, plant and equipment 8 217,910 145,653

Other financial assets 9 393 599

273,384 195,694

Current assets

Inventories 10 62,904 56,949

Trade and other receivables 11 28,387 25,124

Cash and cash equivalents 12 32,933 54,888

124,224 136,961

Current liabilities

Trade and other payables 50,408 42,023

Other financial liabilities 13 46,159 6,105

96,567 48,128

Non-current liabilities

Other financial liabilities 13 63,551 2,434

Deferred tax liabilities - 37

Other liabilities 6,317 6,251

69,868 8,722

Net assets 231,173 275,805

Equity

Issued share capital 16,247 16,247

Share premium 146,040 146,040

Other reserves 15,911 16,117

Retained earnings 66,134 106,221

Total equity attributable to the parent 244,332 284,625

Non-controlling interest (13,159) (8,820)

Total equity 231,173 275,805


CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Three months ended 31 March 2012

Share

capital Share

premium Other

reserves Retained earnings

Total attributable

to the parent

Non-controlling

interest Total

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 - - - 12,492 12,492 1,358 13,850

Revaluation of other financial assets - - 80 - 80 - 80

Total comprehensive income for the period - - 80 12,492 12,572 1,358 13,930

Share based payments - - - 510 510 - 510

Release of treasury and own shares - - 230 (39) 191 - 191

At 31 March 2012 (Unaudited)

16,247 149,915 15,583 221,092 402,837 2,349 405,186

Three months ended 31 March 2013

Share capital

Share premium

Other reserves

Retained earnings

Total attributable

to the parent

Non-controlling

interest Total

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

- - - (40,416) (40,416) (4,339) (44,755)

Revaluation of other financial assets - - (206) - (206) - (206)

Total comprehensive income for the period - - (206) (40,416) (40,622) (4,339) (44,961)

Share based payments - - - 329 329 - 329

At 31 March 2013 (Unaudited) 16,247 146,040 15,911 66,134 244,332 (13,159) 231,173


CONDENSED CONSOLIDATED CASH FLOW STATEMENT


Three months ended

31 March 2013 31 March 2012

Note Unaudited

US$000 US$000

Cash flows from operating activities

(Loss)/profit for the period (44,755) 13,850

Adjusted for:

Depreciation of non-current assets 2,8 5,076 6,565

Partial reversal of impairment of mining assets (72,200) -

Impairment of exploration intangible assets 316 -

Share based payments 329 559

Taxation in the income statement (37) 6,884

Loss on recognition of forward contracts 96,632 -

Non-operating items in the income statement 491 914

Discontinued operations 3 - 105

(14,148) 28,877

Movements in working capital

Increase in inventory (5,955) (9,870)

Increase in trade and other receivables (3,264) (2,312)

Increase /(decrease) in trade and other payables 8,058 (2,500)

Net cash (used in)/generated by operations (15,309) 14,195

Interest received 2 66

Interest paid (67) (409)

Net cash (used in) generated by operating activities (15,374) 13,852

Cash flows from investing activities

Payments for property, plant and equipment 8 (5,403) (6,649)

Exploration and evaluation expenses 6 (5,671) (8,056)

Disposal of discontinued operation, net of cash disposed of 3 - 1,980

Net cash (used in)/generated by investing activities (11,074) (12,725)

Cash flows from financing activities

Proceeds from debt 5,000 -

Financing costs (150) -

Payments in respect of finance lease (243) -

Loans repaid 13 - (6,000)

Net cash generated by/(used in) financing activities 4,607 (6,000)

Net cash movement (21,841) (4,873)

Exchange (losses)/gains (114) 145

Total decrease in cash and cash equivalents (21,955) (4,728)

Cash and cash equivalents at start of the period 54,888 105,236

Cash and cash equivalents at end of period 32,933 100,508


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 months ended 31 March 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

On 25 March 2013, the Company announced it had completed discussions regarding financing with

Macquarie Bank Limited ("Macquarie") and an affiliate of its largest shareholder, Elliott Management

("Elliott"), which is the beneficial owner of 27% of the Company's shares. The Company has

executed financing agreements with both parties.

Due to Inata's reduction in Ore Reserves and revised life of mine plan Macquarie placed restrictions

on the use of cash within Société des Mines de Bélahouro SA (“SMB”), the Company's trading

subsidiary that holds Inata, pending agreement on restructuring Inata's hedge. Following the hedge

restructure announced on 25 March, the minimum cash balance required by Macquarie to be held in

SMB fell from US$37 million to US$12 million.

The hedge restructure agreed with Macquarie, including the US$20.2 million hedge buy back,

meant that funds previously held in SMB were no longer available to fund the Tri-K project in

Guinea and general corporate activities. The Company therefore entered into a loan agreement

with Manchester Securities Corp. ("the Elliott Lender"), which, as an affiliate of its largest

shareholder Elliott, made the Elliott Lender a related party under the UK Listing Rules. The Elliott

loan facility will ensure that sufficient funds are available to complete the feasibility study at Tri-K

as well as for general corporate purposes in 2013.

One of the covenants related to the MBL loan and hedge facility relates to the ratio between the

hedge liability and the future cash flows at the Inata mine over the term of the hedge. For the

purposes of calculating this ratio, the hedge liability is reduced by cash in SMB and the prevailing

spot price is applied to all sales, including hedge deliveries, in calculating future cash flow. The

directors have a reasonable expectation that SMB’s cash flow and hedge commitments can be

managed so that this and other covenants will not be breached.

The funding arrangements between the Elliott Lender and the Company consist of two facilities: an

initial facility of US$5 million, drawn down at the end of March 2013; and a second secured facility

of US$15 million, which is subject to shareholder approval. US$5 million of this second secured

facility will be used to repay the initial unsecured facility.

The Directors have concluded that the shareholder approval of this facility represents a material

uncertainty that may cast significant doubt upon the Company’s ability to continue as a going

concern and that, therefore, the possibility exists that the Company could be unable to continue to


fund its corporate and exploration activities as currently envisaged. However, the directors have a

reasonable expectation that shareholders will approve the Elliott funding.

Assuming shareholder approval is obtained, the Elliott loan facility of US$15m will be due for

repayment 31 December 2013. Further finance will be required in order to repay the Elliott Lender

at that date and provide working capital for 2014. The directors have concluded that obtaining the

required finance represents a material uncertainty that may cast significant doubt upon the

Company’s ability to continue as a going concern and that, therefore, the possibility exists that the

Company could be unable to repay amounts owed to the Elliott Lender and to fund its corporate

activities in 2014. Nevertheless, the directors have a reasonable expectation that the Company will

obtain sufficient funding prior to 31 December 2013 and for these reasons, they continue to adopt

the going concern basis of accounting in preparing the annual 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 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

(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.

For the three months ended 31 March 2013 UK

West Africa mining

operations West Africa exploration Total

US$000 US$000 US$000 US$000

INCOME STATEMENT

Revenue - 40,885 - 40,885

Cost of Sales 733 (36,262) (1,220) (36,749)

Cash production costs:

- mining - (16,495) - (16,495)

- processing - (10,970) - (10,970)

- overheads - (4,983) - (4,983)

- royalties - (3,171) - (3,171)

- (35,619) - (35,619)

Changes in inventory - 4,074 - 4,074

Expensed exploration and other cost of sales (a) 746 346 (1,220) (128)

Depreciation and amortisation (b) (13) (5,063) - (5,076)

Gross profit/(loss) 733 4,623 (1,220) 4,136

Administrative expenses and share based payments (2,464) - - (2,464)

Partial reversal of impairment of mining assets - 72,200 - 72,200

Impairment of exploration intangible - - (316) (316)

(Loss)/profit from operations (1,731) 76,823 (1,536) 73,556

Loss on recognition of forward contracts - (96,632) - (96,632)

Restructure of forward contracts - (20,225) - (20,225)

Net finance items (729) (744) (18) (1,491)

Loss before taxation (2,460) (40,778) (1,554) (44,792)

Taxation

- 37 - 37

Loss for the period

(2,460) (40,741) (1,554) (44,755)

Attributable to:

Equity shareholders of parent company (2,460) (36,402) (1,554) (40,416)

Non-controlling interest - (4,339) - (4,339)

(Loss)/profit for the period (2,460) (40,741) (1,554) (44,755)

EBITDA (c) (1,718) 9,686 (1,220) 6,748


2. Segmental Reporting (continued)

At 31 March 2013 UK

West Africa mining


US$000 US$000 US$000 US$000

STATEMENT OF FINANCIAL POSITION

Non-current assets 931 213,818 58,635 273,384

Inventories - 62,386 518 62,904

Trade and other receivables 347 24,079 3,961 28,387

Cash and cash equivalents 6,183 25,888 862 32,933

Total assets 7,461 326,171 63,976 397,608

Current liabilities (9,129) (82,664) (4,774) (96,567)

Non-current liabilities (430) (69,438) - (69,868)

Total liabilities (9,559) (152,102) (4,774) (166,435)

Net assets (2,098) 174,069 59,202 231,173


UK

West Africa mining


US$000 US$000 US$000 US$000

CASH FLOW STATEMENT

Loss for the period (2,460) (40,741) (1,554) (44,755)

Adjustments for non-cash and non-operating items (d) 1,071 28,982 554 30,607

Movements in working capital (127) (2,155) 1,121 (1,161)

Net cash (used in)/ generated by operations (1,516) (13,914) 121 (15,309)

Net interest paid 2 (67) - (65)

Purchase of property, plant and equipment (1) (5,303) (99) (5,403)

Deferred exploration expenditure - - (5,671) (5,671)

Proceeds from debt 5,000 - - 5,000

Financing costs (150) - - (150)

Other cash movements (e) (4,545) (1,754) 5,942 (357)

Total (decrease)/ increase in cash and cash equivalents (1,210) (21,038) 293 (21,955)

(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.



(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.

For the three months ended 31 March 2012 UK

West Africa mining

operations West Africa exploration


total Discontinued

operations Total

US$000 US$000 US$000 US$000 US$000 US$000

INCOME STATEMENT

Revenue - 60,256 - 60,256 - 60,256

Cost of Sales 827 (35,637) (1,197) (36,007) - (36,007)


- mining - (12,707) - (12,707) - (12,707)

- processing - (10,827) - (10,827) - (10,827)

- overheads - (4,685) - (4,685) - (4,685)

- royalties - (4,339) - (4,339) - (4,339)

- (32,558) - (32,558) - (32,558)

Changes in inventory - 5,163 - 5,163 - 5,163

Expensed exploration and other cost of sales (a) 860 (1,710) (1,197) (2,047) - (2,047)

Depreciation and amortisation (b) (33) (6,532) - (6,565) - (6,565)

Gross profit/(loss) 827 24,619 (1,197) 24,249 - 24,249

Administrative expenses and share based payments (2,713) - - (2,713) - (2,713)

(Loss)/profit from operations (1,886) 24,619 (1,197) 21,536 - 21,536

(Loss)/profit on disposal of subsidiaries and investments

- - - - (105) (105)

Net finance items 3 (724) 24 (697) - (697)

(Loss)/profit before taxation (1,883) 23,895 (1,173) 20,839 (105) 20,734

Analysed as:

(Loss)/profit before tax & exceptional items

(1,883) 23,895 (1,173) 20,839 - 20,839

Exceptional items

- - - - (105) (105)

(Loss)/profit before taxation (1,883) 23,895 (1,173) 20,839 (105) 20,734

Taxation

- (6,884) - (6,884) - (6,884)

(Loss)/profit for the period

(1,883) 17,011 (1,173) 13,955 (105) 13,850

Attributable to:

Equity shareholders of parent company (1,883) 15,653 (1,173) 12,597 (105) 12,492

Non-controlling interest - 1,358 - 1,358 - 1,358

(Loss)/profit for the period (1,883) 17,011 (1,173) 13,955 (105) 13,850

EBITDA (c) (1,853) 31,151 (1,197) 28,101 - 28,101



At 31 March 2012

UK

West Africa mining



total Discontinued

operations Total

US$000 US$000 US$000 US$000 US$000 US$000

STATEMENT OF FINANCIAL POSITION

Non-current assets 2,486 264,232 33,674 300,392 - 300,392

Inventories - 49,936 449 50,385 - 50,385

Trade and other receivables 412 26,075 4,662 31,149 - 31,149

Cash and cash equivalents 64,786 34,400 1,322 100,508 - 100,508

Total assets 67,684 374,643 40,107 482,434 - 482,434

Current liabilities (3,384) (39,066) (4,904) (47,354) - (47,354)

Non-current liabilities (430) (29,464) - (29,894) - (29,894)

Total liabilities (3,814) (68,530) (4,904) (77,248) - (77,248)

Net assets 63,870 306,113 35,203 405,186 - 405,186


UK

West Africa mining



total Discontinued

operations Total

US$000 US$000 US$000 US$000 US$000 US$000

CASH FLOW STATEMENT

(Loss)/profit for the period (1,883) 17,011 (1,173) 13,955 (105) 13,850

Adjustments for non-cash and non-operating items (d) 589 14,609 (276) 14,922 105 15,027

Movements in working capital (4,579) (11,153) 1,050 (14,682) - (14,682)

Net cash (used in)/ generated by operations

(5,873) 20,467 (399) 14,195 - 14,195

Net interest (paid)/received 66 (409) - (343) - (343)

Purchase of property, plant and equipment

(117) (4,881) (1,651) (6,649) - (6,649)

Loans repaid - (6,000) - (6,000) - (6,000)

Deferred exploration expenditure

- (263) (7,793) (8,056) - (8,056)

Net proceeds from disposal of discontinued operations

1,980 - - 1,980 - 1,980

Other cash movements (e) (7,024) (3,229) 10,398 145 - 145

Total (decrease)/increase in cash and cash equivalents

(10,968) 5,685 555 (4,728) - (4,728)

(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 cash flows in respect of the sale of subsidiaries, deferred consideration paid, cash flows

from financing activities, and exchange gains or losses;


3. Exceptional items

31 March 2013 (three months)

Unaudited


Unaudited

US$000 US$000

Restructure of forward contracts (20,225) -

Loss on recognition of forward contracts (96,632) -

Partial reversal of impairment of mining assets 72,200 -

Impairment of Mali exploration asset (316) -

Loss on disposal of subsidiaries - (105)

Exceptional loss (44,973) (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 are delivered by December 2016.

The recognition of the liability is in accordance with IAS 39 (see note 13 for more information), and

reflects that the recent buy back demonstrates a practice of cash-settling forward contracts. Under

IAS 39, this means that the own-use exemption previously applied is no longer appropriate. The

fair value of the forward contracts has been recognised at $96.6m. Further details are provided in

note 13.

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. Further details are provided in note 7.

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 has been impaired and

recognised as an exceptional item.

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.

31 March 2013

(three months) Unaudited


Unaudited

US$000 US$000)

(Loss)/profit before taxation (44,792) 20,734

Exceptional Items 44,973 105

Depreciation 5,076 6,565

Exchange (gain)/losses 114 (145)

Net finance income (2) (16)

Net finance expense 1,379 858

EBITDA 6,748 28,101


5. Earnings per Share Earnings per share are analysed in the table below, presenting earnings per share for continuing and discontinued operations.


Unaudited


Unaudited

Shares Shares

Weighted average number of shares in issue for the period

- number of shares with voting rights 199,104,701 198,905,882

- effect of share options in issue1 1,018,785 2,647,551

- total used in calculation of diluted earnings per share 200,123,486 201,553,433

US$000 US$000

Earnings per share from continuing operations

(Loss)/profit for the period from continuing operations (44,755) 13,955

Less non-controlling interest 4,339 (1,358)

(Loss)/profit for the period attributable to equity shareholders of the parent (40,416) 12,597

(Loss)/earnings per share

- basic (cents per share) (20.30) 6.33


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) (20.30) 6.28


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 ending 31 March 2013.


6. Intangible assets

Intangible assets represent deferred exploration expenditure. The movement in the period is analysed below:

31 March 2013

US$000

At 1 January (audited) 49,442

Additions 5,671

Capitalised depreciation1 284

Impairment of Mali exploration assets (316)

At 31 March (unaudited) 55,081

31 March

2013 (Unaudited)

31 December

2012 (Audited)

US$000 US$000

Burkina Faso 29,897 26,577

Guinea 25,184 22,574

Mali - 291

Total 55,081 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.

7. Partial reversal of impairment on mining assets

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 has been 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 has 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 has been 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 below:


Assumption Judgements Sensitivity2

Timing of

cash flows

Cash flows are forecast over the expected life

of the mine. The current life of mine plan

forecasts mining activities to continue until

2017, with a further 3 years during which

stockpiles will be processed and rehabilitation

costs will be incurred.

An extension or shortening of the

mine life would result in a

corresponding increase or decrease

in reversal of impairment, the

extent of which it is not possible to

quantify.

Production

costs

Production costs are forecast based on

detailed assumptions, including staff costs,

consumption of fuel and reagents,

maintenance, and administration and support

costs.

A change in production costs of

10% would increase or decrease the

pre-tax reversal of impairment

attributable by US$37.4 million1.

Gold price Analyst consensus prices were used for the

forecast of revenue from gold sales, based on

an average consensus at March 2013 for the

period 2013–2020. Prices range

from US$1,775 per ounce in 2013 to

US$1,293 per ounce from 2017.

A change of 10% in the gold price

assumption would increase or

decrease the pre-tax reversal of

impairment recognised in the year

by US$79.1 million1.

Discount

rate

A discount rate of 10% (pre-tax) has been

used in the VIU estimation.

A change in the discount rate of one

percentage point would increase or

decrease the pre-tax reversal of

impairment recognised in the year

by US$6.0 million1.

Ore

Reserves

and gold

production

The life of mine plan is based on Ore

Reserves of 0.92 million for the Inata Mine as

at 31 December 2012, less the Q1 2013

production. The Ore Reserve is estimated in

accordance with the principles the JORC Code

and was reviewed and approved by Clayton

Reeves (refer to page 22 of the 31 December

2012 Annual Report).

A 10% increase or decrease in

ounces produced, compared with

the current Ore Reserve, would

increase or decrease the pre-tax

reversal of impairment recognised

in the year by US$79.1 million1.

1Sensitivities provided are on a 100% basis, pre-tax. 10% of the post-tax impairment would be attributed to the non-controlling interest. 2The 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.


8. Property, plant and equipment

Mining property and plant

Mine development

costs Plant and

Machinery

Vehicles,

fixtures, and

equipment

Exploration property

and plant Office

equipment

Three months ended 31 March 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 2,917 2,243 157 99 1 5,417

Partial reversal of impairment on mining assets

7 72,200 - - - - 72,200

At 31 March 2013 (unaudited)

171,906 89,832 55,725 5,341 1,122 323,926

Depreciation


56,958 23,624 18,677 822 575 100,656

Charge for the period 2,670 1,537 860 - 9 5,076

Charge for the period – capitalised1

- - - 284 - 284


59,628 25,161 19,537 1,106 584 106,016

Net Book Value


112,278 64,671 36,188 4,235 538 217,910


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.

9. Other financial assets

31 March 2013

Unaudited

31 December 2012

Audited

US$000 US$000

At 1 January 599 1,828

Fair value adjustment (206) (1,229)

At 31 March/December 393 599

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.


10. Inventories

31 March

2013 Unaudited

31 December 2012

Audited

US$000 US$000

Consumables 35,727 33,844

Work in progress 21,502 20,001

Finished goods 5,675 3,104

62,904 56,949

Work in progress includes ore in stockpiles and gold in circuit. Finished goods represents gold in

transit or undergoing refinement, prior to sale.

11. Trade and other receivables

31 March

2013 Unaudited

31 December 2012

Audited

US$000 US$000

Payments in advance to suppliers 7,887 9,524

VAT 18,667 14,766

Prepayments 1,833 834

28,387 25,124

12. Cash and cash equivalents

Included in US$32.9 million cash and cash equivalents at 31 March 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 of US$12.0 million,

there are no restrictions on the use of funds above the minimum amount by SMB. Restrictions

apply to the other companies in the Group regarding access to the surplus funds above the $12.0m,

as set out per the press release on 25 March 2013.

13. Other financial liabilities

31 March

2013 Unaudited

31 December 2012

Audited

US$000 US$000

Current liabilities

Interest bearing debt 10,000 5,000

Finance lease liabilities 882 1,105

Forward contracts – held for trading 35,277 -

Total current other financial liabilities 46,159 6,105


31 March

2013 Unaudited

31 December 2012

Audited

US$000 US$000

Non-current liabilities

Finance lease liabilities 2,196 2,434

Forward contracts – held for trading 61,355 -

Total non-current other financial liabilities 63,551 2,434

Interest bearing debt

Interest bearing debt includes the remaining balance under the Macquarie Bank Limited Inata

project finance facility of US$5.0 million (31 December 2012: US$5.0 million) and the Elliott Lender

loan of US$5.0 million (31 December 2012: US$nil).

As announced on in the press release on 25 March 2013, the remaining balance of US$5.0 million

under the Macquarie Bank Limited Inata project finance facility, previously due on 31 March 2013,

was re-negotiated as part of the hedge restructure and is now due by 30 September 2013.

The initial facility of US$5.0 million, under the loan agreement with the Elliott Lender was drawn

down on 25 March 2013 and is payable on 24 September 2013. Subject to shareholder approval,

the Company intends to repay this loan facility earlier then the due date using the second Elliott

Lender facility.

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 qualifying 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 were assessed to be US$96.6 million based on a closing spot

rate of US$1,598.25/oz, analysed between current (US$35.2 million) and non-current (US$61.4

million) in accordance with the schedule delivery of forward sold ounces.

Finance lease liabilities

Also included within other financial liabilities are liabilities in respect of assets held under finance

lease, US$0.9 million of which is included within current financial liabilities, and US$2.2 million is

included within non-current financial liabilities.

14. Related party transactions

The table below sets out charges in the three month period and balances at 31 March 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

three months to 31 March

2013

Balance at

31 March 2013

Charged in

three months to 31 March

2013

Balance at

31 March 2013

US$000 US$000 US$000 US$000

Société des Mines de Bélahouro SA (90%)

703 139,488 1,257 109,993


Compensation paid to key management of the Group during the quarter was US$0.8 million,

including pension contributions of US$0.04 million. A share based payment expense of US$0.3

million was recognised in the quarter 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 the quarter 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 is unsecured are

considered to be normal commercial terms. The availability of the second facility under the

agreement, which is secured, is subject to shareholder approval at a GM to be held on 28 May

2013.

15. Contingent liabilities

There were no contingent liabilities at 31 March 2013 or 31 December 2012.

Note 32 to the financial statements for the year ended 31 December 2012 contains 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. The

Company is not aware of any change in circumstances and as any financial settlement is considered

to be remote, this matter does not constitute a contingent liability.


16. Unaudited quarterly income statement for continuing operations

1EBITDA 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.


2013 (Unaudited)

Quarter ended 31 December

2012 (Unaudited)

Quarter ended 30 September

2012 (Unaudited)

Quarter ended 30 June

2012 (Unaudited)


2012 (Unaudited)

US$000 US$000 US$000 US$000 US$000

Revenue 40,885 44,453 50,146 49,255 60,256

Cost of sales (36,749) (44,264) (45,689) (42,734) (36,007)


- mining (16,495) (17,372) (12,355) (13,225) (12,707)

- processing (10,970) (10,812) (9,219) (10,914) (10,827)

- overheads (4,983) (6,767) (5,521) (4,789) (4,685)

- royalties (3,171) (3,547) (3,877) (4,182) (4,339)

(35,619) (38,498) (30,972) (33,110) (32,558)

Changes in inventory 4,074 10,798 (5,662) (97) 5,163

Expensed exploration and other cost of sales

(128) (6,899) (3,084) (3,732) (2,047)

Depreciation and amortisation (5,076) (9,665) (5,971) (5,795) (6,565)

Gross profit 4,136 189 4,457 6,521 24,249

Administrative expenses (2,135) (4,052) (3,630) (3,166) (2,154)

Share based payments (329) (520) (517) (471) (559)

Impairment of mining assets - (135,300) - - -

Reversal of impairment of mining assets 72,200 - - - - Impairment of exploration intangible assets (316) - - - - Profit/(loss) from operations 73,556 (139,683) 310 2,884 21,536

Loss on recognition of forward contracts

(96,632) - - - -

Restructure of forward contracts (20,225) - - - - Net finance costs (1,491) (316) (633) (426) (697)

(Loss)/profit before taxation (44,792) (139,999) (323) 2,458 20,839

Analysed as:

Profit/(loss) before taxation and exceptional items 181 (4,699) (323) 2,458 20,839

Exceptional items (44,973) (135,300) - - -

(Loss)/profit before taxation (44,792) (139,999) (323) 2,458 20,839

Taxation 37 22,488 (486) (589) (6,884)

Profit/(loss) for the period (44,755) (117,511) (809) 1,869 13,955

Attributable to: Equity shareholders of the parent company (40,416) (105,975) (918) 1,611 12,597

Non-controlling interest (4,339) (11,536) 109 258 1,358

(44,755) (117,511) (809) 1,869 13,955

EBITDA 1 6,748 5,282 6,281 8,679 28,101

Avocet Mining PLC unaudited results for the quarter ended ...€¦ · Avocet Mining is a gold...

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