AVM.L Regulatory News (AVM)

6 March 2014 

Avocet Mining PLC2013 Full Year Results

2013 RESULTS SUMMARY

· Gold production of 118,443 ounces at Inata Gold Mine (2012: 135,189 oz.)

· Total cash cost of US$1,203 per oz. (2012: US$1,000 per oz.)

· Now a fully unhedged gold producer

· Inata mining licence footprint extended by 50%

· Baseline studies commenced at the Souma satellite deposit, 20km from Inata

· Completion of Tri-K heap leach feasibility study, including maiden Ore Reserve on the oxide portion of the orebody

· Potential exists to exploit the entire 3.0 million ounce Tri-K orebody via CIL processing method

KEY FINANCIAL METRICS1

1 Financial metrics are from continuing operations only

Commenting on the results, David Cather, Chief Executive Officer, said:

"While 2013 was a difficult year for both the gold price and the Company, we have now refocused our efforts at Inata and put in place several key initiatives to underpin the mine's future.

As we announced in December, the weaker gold price has led to a change in approach at the mine, and our engineers are in the process of completing a new plan for Inata, with smaller pit shells and higher grades to ensure the mine will deliver strong cash flow over its life. The new plan will feature operation of the carbon blinding circuit from mid-year, enabling us to process higher grade carbonaceous ore as it is mined, rather than stockpiling this material for processing later, as has been necessary to date. The Souma deposit is now being added to the Inata life of mine plan, and the Company is in the process of taking the initial steps towards a mining licence application for Souma. The Company remains confident that there is potential for additional ounces at both Inata and Souma in future.

During the year the hedge at Inata was removed through the use of the Ecobank loan facility, and the mine is now fully unhedged for the first time.

Tri-K advanced significantly during the year, with a feasibility study and maiden Ore Reserve announced in October. The Feasibility Study and exploitation permit application were submitted on the basis of a heap leach development to exploit the oxide portion of the orebody, but we intend to consider the merits of a CIL operation as an alternative, in view of the remaining 2.4 million ounces in the fresh and transitional material.

Corporately, we are conducting a business review of our assets to maximise shareholder value and we will make announcements as further progress is made."

Full Year 2013 Results Presentation

The Company will host a presentation at the offices of its PR Consultant (Bell Pottinger) for investors and analysts at 9am (UK) on the day to discuss these results. This presentation will be made available on Avocet's website (www.avocetmining.com) ahead of this meeting taking place.

A conference call facility is also available for this call; dial in details are as follows:

UK: 08444933800

Norway: 21563013

Alternative Number: +44 (0) 1452 555566

Conference ID # 52263025

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

NOTES TO EDITORS

Avocet Mining PLC ('Avocet' or the 'Company') is an unhedged gold mining and exploration company listed on the London Stock Exchange (ticker: AVM.L) and the Oslo Børs (ticker: AVM.OL). The Company's principal activities are gold mining and exploration in West Africa.

In Burkina Faso the Company owns 90% of the Inata Gold Mine. Across the Bélahouro district, which includes both Inata and Souma, there is a Mineral Resource of 6.1 million ounces and an Ore Reserve of 0.5 million ounces. The Inata Gold Mine poured its first gold in December 2009 and produced 118,443 ounces of gold in 2013. Other assets in Burkina Faso include eight exploration permits surrounding the Inata Gold Mine in the broader Bélahouro region. The most advanced of these projects is Souma, some 20 kilometres from the Inata Gold Mine, where there is a Mineral Resource estimate of 0.8 million ounces.

In Guinea, Avocet owns 100% of the Tri-K Project in the north east of the country. Drilling to date has outlined a Mineral Resource of 3.0 million ounces, and in October 2013 the Company announced a maiden Ore Reserve on the oxide portion of the orebody, which is suitable for heap leaching, of 0.5 million ounces. As an alternative, the potential exists to exploit the entire 3.0 million ounce Tri-K orebody via CIL processing method.

CHAIRMAN'S STATEMENT

There is no doubt that 2013 was a tough year for the gold mining industry as a whole, and indeed for Avocet Mining PLC.

In March 2013 we announced the completion of financing discussions with Macquarie Bank and our largest shareholder, Elliott Management, following a drop in Inata's ore reserves as a result of revised operating parameters and a lower gold price assumption. The drop in reserves necessitated a partial buy back of the mine's gold hedge and an acceleration of gold deliveries into the hedge during 2013 which significantly increased the number of ounces sold at US$937.50, well below spot prices. A US$15 million short term loan from Elliott Management was taken out to allow the Company to complete the Tri-K feasibility study and provide funding for corporate activities during the year, replacing funds that had been earmarked for these purposes but were instead used for the partial hedge buy back.

The significant fall in the gold price in the second quarter of 2013 was largely unanticipated by market commentators, investors and gold producers alike. Prices fell sharply in April and June, and remained flat in the second half of the year from US$1,233 per ounce at the start of July to US$1,205 per ounce at the end of the year. Lower gold prices, combined with the accelerated hedge delivery, inevitably impacted Avocet's finances during the second and third quarters and the decision was taken in October to eliminate the remaining hedge position through a new loan facility with Ecobank of approximately US$63 million. The Ecobank loan was also intended to provide sufficient working capital to allow Inata to optimise production in the fourth quarter of 2013.

Production at Inata has been disappointing during 2013, with the mine suffering from a number of mechanical problems affecting the availability of both the mining fleet and the processing plant. Gold production of 118,443 ounces at cash costs of US$1,203 per ounce fell considerably short of our original expectations for the year. In particular, a very weak fourth quarter meant that the Company was unable to repay its shareholder loan by the 31 December 2013 maturity date and the loan remains outstanding.

In response to its financial and operational difficulties, Avocet announced a number of measures designed to align its cost base to a lower price environment, notably the decision announced in December to base Inata's life of mine on pit shells optimised on lower assumed gold prices. The impact of smaller pit shells is to reduce the mine's overall waste strip ratio and increase the grade of material mined, therefore reducing mining and processing costs respectively, albeit over a shorter mine life.

This higher grade estimated life of mine plan for Inata indicates healthy cash generation in 2015 to 2018 but a need for additional financing of US$20-30 million in 2014 to rectify the production issues encountered in 2013. The Company is also investigating a number of operational changes to improve plant availability and minimise sustaining capital including moving to contract mining.

In Guinea, the feasibility study on our project at Tri-K was completed in 2013 and we await the granting of a mining licence, the application for which was submitted in Q4 2013. Work to date at Tri-K has outlined a heap leach project based on the oxide portion of the orebody, with average annual production of 55,000 ounces over an initial 7 year mine life.

Following exploration programmes undertaken during 2013 at the Company's projects in Burkina Faso and Guinea, the Group Mineral Resource estimate has grown to over 9 million ounces, with a significant increase in the Measured and Indicated categories at Souma and Tri-K following an infill drilling programme at these projects.

In December 2013, the Company announced that it was undertaking a business review to identify how best to deliver value from the assets held by the Group. The key objectives will be to ensure that the Inata business is optimised and the wider Group is adequately funded respectively for 2014 to meet its obligations and exploit opportunities. The business review remains ongoing, and further updates will be provided as appropriate.

At the end of 2013, Avocet announced that Nöel Harwerth had resigned from the Board after 18 months as a Non-Executive Director and Chair of the Remuneration Committee. In addition, it was announced in December that Robert Pilkington, who has been on the Board of Avocet Mining PLC since 1996, would also be standing down at the AGM in May 2014. On behalf of the Company, I would like to thank both Nöel and Robert for their contributions over the years. In order to realign the Board composition with the Company's current size and growth profile, the decision has been made not to replace Nöel and Robert. Following their departure, the Board will comprise four Non-Executive Directors, including two directors with a technical background, and two Executive Directors.

Russell Edey

Chairman

CHIEF EXECUTIVE'S STATEMENT

David Cather

Chief Executive Officer

2013 Highlights

• 118,443 ounces produced at Inata gold mine

• Health and safety standards maintained

• Avocet now a fully unhedged gold producer

• Inata mining licence footprint extended by 50%

• Baseline studies commenced at Souma

• Completion of Tri-K heap leach feasibility study, including maiden Ore Reserve on the oxide portion of the orebody

• Potential exists to exploit the entire 3.0 million ounce Tri-K orebody via CIL processing method

Review of Inata, Burkina Faso

2012 was the year in which Inata began to encounter operating difficulties; 2013 should be seen as the year in which the way forward was developed. Whilst the mine suffered operational issues during the year, important progress was made by becoming an unhedged gold producer and identifying how best to handle carbonaceous ores through the carbon blinding circuit, as announced in August 2013. Looking forward to 2014, for the first time in its history, the Inata mine is now fully unhedged and able to benefit from spot prices for 100% of production.

The Inata hedge, which had limited the mine's exposure to the upside in gold prices and imposed financial constraints over the past few years, was finally removed in 2013 using the Ecobank debt facility that was announced in October. Prior to the hedge removal in November, however, the mine's cash flow was constrained by a partial hedge buy back in early 2013. This was exacerbated by an accelerated hedge delivery profile later in the year, at a time of falling gold prices.

Safety remains a key focus for the mine's operational staff, and only one lost time injury ('LTI') occurred at the mine during the year, in line with the mine's performance in 2012. Until this injury, which occurred in September, the mine had recorded nearly 5 million hours worked without a LTI. Since production began in 2009, only 3 LTIs have occurred at Inata, and the mine has remained LTI free since the September incident.

Production during 2013 was disappointing at 118,443 ounces at a cash cost of US$1,203 per ounce. In particular, mining and processing were both adversely impacted by poor equipment availabilities, with the plant continuing to operate at lower than optimal throughputs due to mechanical issues still to be resolved. The mine's ability to maintain its equipment effectively was hampered by the financial constraints noted above, but improvements in maintenance procedures are also needed. During the year, Inata's life of mine plan ('LOMP') was adapted to a lower gold price environment. The mine began the year with a LOMP based on a gold price assumption of US$1,400 per ounce, and has ended the year with a plan based on a gold price of US$950 per ounce. This move to lower gold prices has been made in order to reduce costs and increase grades, which together should make the mine more robust at lower gold prices, albeit over a shorter mine life. Nonetheless, the mine retains a 4 year mine life, whilst also having a lower strip ratio and higher grades as a result of focusing on a higher grade portion of the orebody. Should gold prices rise significantly in the future, there remains the possibility of increasing this gold price planning assumption and restoring a longer life of mine, but for the time being management will retain a conservative approach with a focus on reducing costs rather than maximising reserves.

The two key factors in the current LOMP are the development of the carbon blinding circuit and the effective cost reduction measures being implemented across the whole operation. The carbon blinding circuit, costing approximately US$6.5 million, is a relatively low capex addition to the current processing plant that was developed during 2013 by Inata's management team to process the carbonaceous ore types that have historically had an adverse impact on gold recoveries. Through extensive testwork to assess the effect of naturally occurring carbon in the ore, in addition to a number of other factors, Inata's metallurgical team has also developed a recovery algorithm to predict more accurately the recoveries from processing of all ore types at Inata, including the carbonaceous material. Carbon blinding works by adding to the gold bearing ore slurry a reagent - sometimes kerosene - that prevents, or blinds, the ability of naturally occurring carbon in the ore to preferentially adsorb the gold. Inata's planned carbon blinding circuit is a pre-treatment step in the process plant whereby the effects of the carbonaceous ore are mitigated prior to the gold entering the leaching circuit. Construction of this blinding circuit has commenced and will be completed in mid-2014. The circuit will enable us to process carbonaceous ore, much of which is higher grade, when it is encountered during mining, rather than having to stockpile it for later processing. In the meantime, the mine will process lower grade oxide material.

A key theme in the mining industry, particularly in West Africa, is the implementation of cost reductions. Inata is no exception, and we implemented a number of cost saving initiatives during 2013. As mining is Inata's biggest cost, the greatest impact will come from reduced waste mining tonnages relative to the amount of gold produced. Savings also include a reduction in expatriate staff numbers which is planned to achieve a saving of over US$2 million per year. Other initiatives have included improved reagent usage through the installation of an improved lime dosage system, as well as down scaling large capital projects such as the expansion of the tailings management facility, which was originally designed with a larger plant throughput in mind.

Maintenance of the mobile mining fleet and processing plant remains an important area. The mine operates in a challenging environment, and the Company has experienced equipment availability issues, specifically excavators and power generators, during the year. As a result of the equipment issues faced during the second half of the year, we are implementing new preventative maintenance measures, as well as reviewing our critical spares inventory to ensure that, where possible, equipment failures are rectified with minimal delay.

After a poor quarter of production in Q4 2013, in December the Company announced that it anticipated a funding shortfall in 2014 of between US$20 million and US$30 million, depending on factors including gold production, gold prices, and whether the mine elects to switch to contract mining, in which case mobile maintenance sustaining capital expenditure needs would be lower. This funding shortfall is primarily maintenance related, with US$10 million accounted for by lost revenue during two or more maintenance shutdowns totalling 3-4 weeks in H1 2014, with the first phase to occur in March, and a further US$10 million potentially required for maintenance of the mobile mining fleet. The funding shortfall is being addressed as part of Avocet's business review which was announced in December.

During 2014, the SAG mill shutdown for required maintenance will enable the plant to operate once again at full capacity, while the mine will benefit from either refurbishing the mobile fleet or adopting contract mining. Together with the successful implementation of the carbon blinding circuit these measures should provide the platform on which to operate the mine at its full potential and achieve the healthy cash flows shown in the LoMP in 2015 onwards.

Review of Burkina Faso exploration, including Souma

Exploration at Inata and the surrounding area, including the Souma project, was reduced during the year as a result of the drop in gold prices and reduced cashflow from Inata. With an existing resource of 6.1 million ounces across Avocet's suite of licences in the Bélahouro region, the decision was made to conserve cash and focus on the development of near surface oxide material for the Inata plant that lie within the expanded mining permit. Two such areas were identified within the Inata mining licence, and following a small drilling programme, these are now included in the current LOMP. Successful exploration in previous years led to the Company applying for an extension to the Inata Mining Licence in 2013. This was granted, with the licence footprint now extending by a further 50% to include new areas such as Filio. This licence extension is testament to the close working partnership that the Company has with the Burkina Faso government, and the Company is confident of further mining licence applications being granted for additional areas within our package of tenements.

During 2013 the decision was made to apply for a mining licence for the Souma area, with the Company intending to process material from Souma at the Inata plant. The development of Souma as a satellite operation will enable the Company to generate cashflows from this project with minimal capital cost. The Souma trend remains highly prospective. Souma currently has an identified Mineral Resource estimate of 822,000 ounces, and the Company intends to continue exploration drilling in future years to add further ounces both along strike and at depth.

Review of Tri-K, Guinea

During 2013 the Tri-K feasibility study was completed, with extensive metallurgical testwork, infill drilling and environmental and social baseline work carried out during the year. The feasibility study, details of which were announced in October, is based on the development of a heap leach project at Tri-K, targeting only the oxide component of the orebody. The feasibility study and an application for a mining licence were submitted together in November 2013 and the grant of the licence is awaited.

As part of the feasibility study, the Company announced Tri-K's maiden Ore Reserve of 480,000 ounces, consisting of 7.9 million tonnes of oxide material at an average grade of 1.89 g/t Au. This represents an 88% conversion rate of oxide ounces in the Measured and Indicated Mineral Resource categories. Test work predicted gold recoveries of over 80% for Koulékoun oxide material and over 90% for Kodiéran oxide material. The feasibility study however conservatively assumes a life of mine gold recovery rate of 80%.

The Company also intends to review the alternative of a CIL plant to exploit the entire 3.0 million ounce resource at Tri-K, including 2.4 million ounces contained within the fresh and transitional material.

Corporate Review

In early 2013, following a decrease in Ore Reserves at Inata, the Company agreed a hedge buyback and restructure of the remaining hedged ounces with Macquarie Bank. This restructure cost the Company US$20 million, funds that were previously earmarked for completion of the Tri-K feasibility study and corporate uses. In order to bridge this gap, the Company put in place a shareholder loan with its largest shareholder, Elliot Management ('Elliott'), for US$15 million.

In December 2013 we announced that we had initiated a business review to maximise the value of our assets for the benefit of shareholders. This review process is designed to evaluate the Company's options to ensure Inata is optimised and adequately funded for 2014 to encompass treatment of the material from the Souma project, which lies 20 kilometres east of Inata, and to include scenarios for the development of Tri-K in Guinea. The announcement reflected a poor production quarter in Q4 which made it impossible for the Company to repay its shareholder loan with Elliott by the 31 December 2013 maturity date. As well as maximising the value of our assets, the business review also seeks to enable the Company to repay this loan, which remains outstanding. Further updates on the business review will be provided as appropriate.

REVIEW OF OPERATIONS

Inata Gold Mine

The Inata Gold Mine in Burkina Faso is located in the Bélahouro district, approximately 220 kilometres north east of the capital city, Ouagadougou. The Bélahouro district is on the eastern edge of a Birimian greenstone belt. Avocet holds licences over 1,673km2 within the Bélahouro district, of which 39km2 lies within the Inata mining licence. The mine is operated by Société des Mines de Bélahouro SA ('SMB') of which Avocet owns 90% and the government of Burkina Faso the remaining 10%. The licence extends to 2027.

Safety

During 2013, Inata had one lost time injury in the year, in the third quarter, when an employee sustained a hand injury. The mine's lost time injury frequency rate ('LTIFR') for 2013 was 0.05.

Mineral Resource development

Within the Bélahouro group of licences, which includes Inata and Souma, exploration during 2013 grew the Mineral Resource estimate to 6.1 million ounces, up 12% from 5.5 million ounces, which represents a 7% increase in tonnes to 132 million tonnes and a 4% increase in grade to 1.39 g/t Au. This followed 28,566 metres of exploration drilling in the licence areas, with activities focussed on delineating near surface sources of oxide material for the Inata plant and an infill drilling programme at Souma ahead of its inclusion in the Inata life of mine plan.

Ore Reserves

The Company's decision to mine smaller pit shells based on a reduced gold price has resulted in a decrease in the overall Ore Reserve estimate to 491,000 ounces as at 31 December 2013, down from the previous reported Ore Reserve of 951,000 ounces as announced in August 2013. In its announcement on 20 December 2013 regarding its decision to mine smaller pits using pit shells based on a lower gold price of US$950 per ounce, it indicated that an estimated life of mine plan on this basis should generate cash flow before financing of approximately US$180 million, based on an assumed gold spot price of US$1,200 per ounce. The Company is in the process of preparing the mining schedule for its new Ore Reserve, and expects to announce the revised life of mine plan, and production guidance for 2014, at the time of its Q1 2014 results on 8 May. The change to open pits based on US$950 per ounce pit shells is expected to result in a decrease in strip ratio for the project.

Operational performance

Production at Inata in 2013 of 118,443 ounces was below the guidance at the start of the year of 135,000 ounces and 2012 production of 135,189 ounces.

The performance of the mining fleet began strongly, with total tonnages in the first quarter of 2013 reaching 9.9 million tonnes, the highest level achieved since production began in 2009. At the end of Q2, the size of the mining fleet was reduced as hired equipment was demobilised as a phase of increased waste stripping came to an end. During the second half of the year, mechanical issues affecting the loading equipment (excavators and wheel loaders) caused further, unscheduled, reductions in the mined tonnages. The full year mining volumes were 33.2 million tonnes, in line with 2012, however mining rates in the second half were some 31% lower than in the first.

Mine plans were modified during the year in response to this lower rate of mining, to ensure a constant supply of clean (oxide, non-carbonaceous) ore for the mill. The original mine schedule for 2013 had envisaged accessing higher grade material in the latter part of the year, and initial production guidance was maintained until October, when a deterioration in mining rates made this target unlikely to be met. Although higher grades were mined in some areas, the slower progress in waste stripping meant that supplementary ore had to be sourced from alternative ore zones, which were lower in grade. As a result, head grades in Q3 and Q4, which had been expected to be closer to 2.0 g/t Au, were instead 1.73 g/t Au and 1.77 g/t Au respectively.

Careful management of the mill feed during the year meant that, other than a brief period in the first quarter where carbonaceous material was treated, recovery levels for the full year were sustained at an average of 86%. The treatment of higher grade carbonaceous material has been deferred where possible until work on the carbon blinding circuit is completed in H1 2014. The completion of this circuit will allow ore with a higher preg-robbing index (PRI) to be treated successfully with minimal loss of recoveries.

Processing plant throughput rates remained on or around the target levels for the first two quarters of the year, however the plant suffered mechanical issues in Q3 and Q4 that resulted in Q4 throughput falling to 497,000 tonnes, and full year throughput to 2.35 million tonnes. In particular, plant production in December was severely disrupted by generator failures, which caused down time and periods of reduced throughput.

In December 2013, the Company announced that it was revising its life of mine plan at Inata around smaller pits, optimised at a lower gold price assumption. In part this was in response to the fall in the gold price during the year, but it was also a deliberate change in focus towards cash generation in the near to medium term, albeit with a shorter mine life. Work remains ongoing in the refinement of this plan, which contemplates the potential to move to contractor mining.

Initial indications from the revised plans show that at a spot gold price of US$1,200 per ounce, Inata should generate positive cash flows (pre-financing) of approximately US$180 million over the life of the mine. However, as announced in December, investment is required during 2014 to achieve this target, not only in order to address mechanical issues with the mobile fleet and plant, but also to sustain the operations through a period of processing lower grade ore in the first half year, prior to processing higher grade, more carbonaceous material once the carbon blanking circuit is complete in mid-2014.

Souma

The Souma deposit is located on an exploration licence approximately 20 kilometres east of the Inata Gold Mine. Avocet owns 100% of the exploration licence which extends until 2015.

Through the course of 2013, Souma advanced from being a pure exploration project, to become part of the Inata life of mine plan, with first gold from Souma ore now planned for 2015.

A total of 25,379 metres of drilling, over 258 holes, was completed across the Souma trend in 2013. The main focus of this drilling was to infill drill the existing resource material to facilitate its upgrade from the Inferred category to Measured and Indicated categories, ahead of developing a maiden Ore Reserve. Ore from Souma will be included in the Inata life of mine plan that is currently being prepared.

Mineralisation at Souma has the advantage that the ore is quartz hosted and not associated with the carbonaceous shales as seen at Inata. Testwork conducted during 2013 has confirmed that material from Souma is amenable to standard CIL processing techniques and of the eight samples submitted, all returned gold recovery rates above 90%.

The current plan is therefore to develop Souma as a satellite operation to Inata, with high grade Souma ore trucked to the Inata plant. Development costs for Souma will include the construction of a haul road covering the 20 kilometres between Inata and Souma, and costs associated with a small satellite administrative office. Mining equipment will be transferred from Inata to Souma at the appropriate time, and haulage of ore to Inata may be carried out by a local contractor.

Tri-K

2013 was a busy year for Tri-K. After a year of extensive exploration at Tri-K in 2012, activities in 2013 turned towards completing a feasibility study for the project in a relatively short timeframe. Early in the year the decision was made to prepare the feasibility study on the basis of Tri-K's initial development as a heap leach project, rather than a CIL project, which would potentially require significantly more capital and time to develop.

Feasibility study work completed during the course of the year focused mainly on infill drilling of the oxide resources ahead of a maiden Ore Reserve estimate, metallurgical testwork for heap leaching of the Tri-K oxides, a Social and Environmental Impact Assessment ('ESIA'), and cost estimates. The development plan in the feasibility study is to construct a heap leach operation at the Kodiéran orebody, towards the south of the Tri-K group of permits. In parallel to mining of Kodiéran, a second mining operation will be established at the Koulékoun orebody, which is located 20 kilometres to the north of Kodiéran.

Metallurgical work completed during the year determined that oxide material at Tri-K is amenable to heap leaching. Samples of oxide material from both Kodiéran and Koulékoun were subjected to column leach tests to simulate the processing of ore on a heap leach pad, and both types of ore returned gold recovery rates in excess of 80%. Kodiéran ore exceeded expectations with overall recoveries in excess of 90%, although a conservative assumption of 80% has been assumed in the feasibility study for both ore types.

The ESIA was also completed in parallel to the feasibility study, and this was approved by the Guinea government in September. The study was completed to international and national standards and where a conflict arose between the international and national standards, the code with the more rigorous requirement was applied.

In announcing the completion of the Feasibility Study in October, the Company declared a maiden Ore Reserve for the oxide component of the Tri-K orebody of 480,000 ounces (7.9 million tonnes at a grade of 1.89 g/t Au). The life of mine plan announced for a heap leach development is for a total of 7 years, with average annual production of 55,000 ounces, through processing of 1.2 million tonnes of ore per annum.

Following submission of its exploitation permit application in Q4 2013, the Company expects to receive this permit in the first half of 2014. In parallel to this process, the Company is using the ongoing Business Review, as announced in December, to explore its options with regards to progressing Tri-K through to development. In addition, the Company intends to reconsider the merits of a CIL operation as an alternative to heap leach development. Whilst a heap leach project has the benefit of lower capital cost to commence production, it has the limitation that it is most effective only in processing the oxide portion of the orebody, which lies closest to the surface. The Company also has metallurgical testwork that has confirmed that the fresh and transitional ore would be amenable to standard CIL processing techniques, and CIL remains a potential alternative for development of the entire Tri-K Mineral Resource of 3.0 million ounces.

Ore Reserves and Mineral Resources

2013 was a year of consolidation for our exploration work, with drill programmes at both Souma and Tri-K focussed on infill drilling to prove up Inferred Mineral Resources to the Measured and Indicated categories, ahead of maiden Ore Reserve estimates at both projects. Overall, the Mineral Resource estimate increased by 429,000 ounces - a relatively small increase compared to previous years. The key change however was in the category of ounces within the Mineral Resource estimate, with over one million ounces added to the Measured and Indicated categories, either through upgrading of Inferred material, or delineation of additional ounces. The Company now has over six million ounces of gold in the Bélahouro region, all within 20km of the Inata processing plant, and over three million ounces at the Tri-K project in Guinea.

In 2013, 63,735 metres of reverse circulation and diamond drilling were completed across the Group and 429,000 ounces of gold was added to the Group's total Mineral Resource base. The rolling three-year average discovery cost for the Group in 2010-2013 was US$13.58 per Mineral Resource ounce, with comparable discovery costs in both Burkina Faso and Guinea.

Inata's Ore Reserves were re-estimated to be 0.49 million ounces as at 31 December 2013 based on optimised pits shells determined on a gold price assumption of US$950 per ounce, reduced from 0.95 million ounces as at 31 May 2013, based on optimised pits shells determined on a gold price assumption of US$1,200 per ounce. Cut off grades within both the US$950 per ounce shells and US$1,200 per ounce were based on a gold price assumption of US$1,200 per ounce. This reduction is largely attributable to a decrease in the gold price assumption. The Tri-K Ore Reserves estimate is based exclusively on the oxide portion of the orebody, and it is based on optimisedpits shells determined on a gold price assumption of US$1,200 per ounce, with cut off grades based on a gold price assumption of US$1,200 per ounce.

Ore Reserves were estimated by Mr Clayton Reeves (MSAIIM). Mr Reeves is a Competent Person as defined by the JORC Code. Mr Reeves has consented to the inclusion of the technical information in this report in the form and context in which it appears.

The Inata and Souma Mineral Resource estimates have been made and reported in accordance with the Australasian code for the reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code). The Mineral Resource estimates are based on information compiled by Mr Rob Seed (FAusIMM). Mr Seed has experience relevant to the style of mineralisation and type of deposit under consideration and qualifies as a Competent Person as defined by the JORC Code, for the reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Seed consents to the inclusion of the technical information in this announcement in the form and context in which it appears.

The Tri-K Mineral Resource estimate is based on information compiled by David Williams of CSA. David Williams takes overall responsibility for the Tri-K Mineral Resource. He is a Member of the Australian Institute of Geoscientists and has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration, and to the activity he is undertaking, to qualify as a Competent (or Qualified) Person in terms of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves' (JORC Code 2004 Edition). David Williams consents to the inclusion of such information in the form and context in which it appears.

Note: rounding errors may occur in the Mineral Resource and Ore Reserve tables below.

Bélahouro, Burkina Faso (including Inata and Souma)

Ore Reserves and Mineral Resources are at 31 December 2013. Inata includes the Mineral Resource and Ore Reserve estimates for the material located within the Bélahouro package of licences, which includes both the Inata Gold Mine and Souma.

Ore Reserve estimates are determined beneath the 31 December 2013 topographic surface and above an effective 0.63 g/t Au economic cut-off grade. Mineral Resources are reported above a 0.5 g/t Au cut-off and below the 31 December 2013 topographic surface. Changes to the Mineral Resource are after mining depletion during 2013. Mineral Resources exclude any stockpiles.

Avocet owns 90% of Société des Mines de Bélahouro SA, owner of the Inata Gold Mine. Avocet owns 100% of the permits surrounding the Inata mining permit through its wholly-owned subsidiary, Goldbelt Resources (West Africa) SARL.

Tri-K, Guinea

Mineral Resources as at 31 December 2013.

The table below reports the Mineral Resource above a 0.5 g/t Au cut-off.

Avocet owns 100% of the Tri-K permits through its wholly-owned subsidiary, Wega Mining Guinée SA.

FINANCIAL REVIEW

Financial highlights1

1 Prepared in accordance with International Financial Reporting Standards.

Revenue

Group revenue for the year was US$149.3 million compared with US$204.1 million in 2012. The Group sold 118,334 ounces at an average realised price, including hedge deliveries, of US$1,261 per ounce during 2013, compared with 136,856 ounces sold at an average realised price of US$1,491 per ounce in 2012. The lower revenue was partly due to the lower gold production in the year (18,522 fewer ounces sold), and partly due to the fall in the average spot price in the year from US$1,668 per ounce in 2012 to US$1,410 per ounce. In addition, the accelerated hedge delivery programme from April to October resulted in 7,500 additional ounces being sold into the forward contracts compared with the previous year.

Gross loss and unit cash costs

The Group gross loss in 2013 was US$30.4 million compared with a gross profit of US$35.4 million in 2012, an adverse variance of US$65.8 million caused principally by revenues. Lower gold prices reduced gross profit by US$27.2 million, while the impact of lower gold production was US$27.1 million (due to lower mill throughput, grades, recoveries, and adverse gold inventory movements). The balance of US$11.5 million reflects the net effect of additional hedge sales, higher mining and milling unit costs, favourable stockpile movements, lower depreciation, and lower other costs of sales (including foreign exchange and exploration costs).

Unit cash costs at Inata increased from US$1,000 per ounce in 2012 to US$1,203 per ounce in 2013. Of this US$203 per ounce increase, US$162 per ounce was due to lower head grades and mill throughput rates, with the balance largely due to higher costs per tonne mined and milled, offset by a reduction in royalty costs resulting from lower gold prices.

The table below reconciles the Group's cost of sales to the cash cost per ounce.

Loss before tax

The Group reported a loss before tax of US$149.4 million in the year ended 31 December 2013, compared with a loss of US$117.0 million in the year ended 31 December 2012.

In 2013 the Group recognised an exceptional impairment charge in respect of mining and exploration assets of US$40.7 million. The impairment was triggered by the reassessment of the future cash flows to be generated at Inata, following the amendment of the Life of Mine Plan and lower gold price assumptions. Further information regarding the assumptions underlying the calculation of the impairment and the related sensitivities is provided in note 7 to the financial statements. In 2012, an impairment of US$135.3 million was recorded, following the downgrade in Ore Reserves from 1.85 million ounces to 0.92 million ounces announced in March 2013, based on a revised gold price assumption of US$1,200 per ounce.

In addition, in 2013 losses totalling US$62.7 million were recognised in respect of forward contracts with Macquarie Bank Limited. In Q1 2013, a loss of US$20.2 million was recorded for a partial buy back of the forward contracts. As a result of this buy back, the US$96.6 million mark-to-market liability for this hedge book, which had been in place since before the acquisition of Inata in 2009, was for the first time recognised on the balance sheet following the cash settlement of 29,020 ounces for US$20.2 million in March 2013, which meant that the own-use exemption that had previously applied was no longer appropriate. Subsequent falls in the gold price reduced this liability, notably resulting in the reporting of a US$60.8 million gain in Q2. The balance of the hedge book was closed out for US$42.2 million in cash in November 2013, with the overall change in the fair value of the forward contracts amounting to a gain of US$54.2 million.

Before exceptional items, the loss before tax for the year ended December 2013 was US$46.0 million compared with a pre-tax profit of US$18.3 million for the year ended December 2012.

Taxation

The Group reported a tax charge in the income statement of US$3.5 million in 2013 (2012: credit US$14.5 million), analysed as follows:

The 2013 tax charge in Burkina Faso primarily relates to the recognition of a US$3.5 million tax charge in respect of a tax assessment undertaken in 2012 covering the years 2009-2011. Further details of this matter are covered in note 14 to the financial statements.

The 2012 tax credit in Burkina Faso represents the net effect of a deferred tax charge of US$9.2 million as a result of accelerated capital allowances on assets related to the construction of the Inata Mine, offset by a deferred tax credit of US$23.7 million related to the impairment of mining property.

EBITDA

EBITDA represents operating profit before depreciation/amortisation, interest and taxes, as well as excluding any exceptional items in the period. It is not defined by IFRS but is commonly used as an indicator of the underlying cash generation of the business.

EBITDA decreased from positive US$48.3 million in 2012 to a loss of US$10.5 million in 2013, a decrease of US$58.8 million. The reasons for this are outlined in the changes to gross profit as described above.

A reconciliation of (Loss)/profit before tax and exceptionals to EBITDA is set out below:

Cash flow and liquidity

A total cash outflow of US$78.7 million was reported for the year ended 31 December 2013. Net cash used in operating activities totalled US$36.3 million, with investments in the form of exploration costs of US$14.5 million and capital expenditures of US$15.7 million.

Financing during the year included the drawdown of debts of US$15.0 million from Elliott and US$62.8 million from Ecobank, the repayment of the US$5.0 million remaining on the Macquarie Bank Limited Project Finance Facility for Inata, and principal repayments to Ecobank in Q4 of US$1.8 million.

Included in the cashflow from operating activities, the cash paid to Macquarie Bank Limited to close out the forward contracts in Q1 was US$20.2 million and in Q4 was US$42.4 million.

 A summary of the movements in cash and debt is set out below:

Of the US$15.2 million cash at 31 December 2013, US$5.6 million was restricted, representing a US$2.7 million minimum account balance held in relation to the Ecobank loan, US$1.5 million held in escrow in relation to a Burkina Faso tax dispute, and 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. The Company was therefore unable to repay its US$15 million loan to Elliott Management on its maturity date of 31 December 2013 and the loan remains outstanding. At Inata, the combination of disappointing production in late 2013 and significant expected equipment refurbishment costs in 2014 mean that the mine has a requirement for further short term funding in 2014 of between US$20 million and US$30 million, depending on the extent of refurbishment costs, whether a decision is taken to adopt contract mining, and the level of production in 2014. Ensuring Inata is adequately funded and repaying the Elliott loan are key objectives of the Company's business review, which was announced in December and is ongoing. For further details, see the going concern section to note 1 to the financial statements.

Depreciation

The Group's depreciation charge increased from US$28.0 million in the year ended 31 December 2012 to US$29.4 million in the year ended 31 December 2013. The majority of this related to the deprecation of assets at Inata, which are predominantly calculated on a unit of production basis against the life of mine plan as established at the beginning of each financial year.

Capital expenditure

The Group's capital expenditure in the year was US$29.8 million analysed as follows:

Capital investment both in property plant and equipment and in exploration activity was reduced compared with 2012 in response to the fall in the gold price and lower production from Inata.

Capital expenditure on property, plant and equipment in West Africa totalled US$14.3 million. Significant investments in the year included the purchase of mining equipment and rebuilds (US$5.9 million), and tailings storage facility extension works (US$6.1 million).

Mike Norris

Finance Director

Consolidated income statement

For the year ended 31 December 2013

1 During 2012, the Group disposed of its final South East Asian asset. All operations for 2013 are continuing. Refer to note 3 for further information.

2 EBITDA represents earnings before exceptional items, finance items, depreciation and amortisation. EBITDA is not defined by IFRS but is commonly used as an indication of underlying cash generation.

The accompanying accounting policies and notes form an integral part of these financial statements.

 Consolidated statement of comprehensive income

For the year ended 31 December 2013

The accompanying accounting policies and notes form an integral part of these financial statements.

Consolidated statement of financial position

At 31 December 2013

These financial statements were approved and signed on behalf of the Board of Directors.

RP Edey AM Norris

The accompanying accounting policies and notes form an integral part of these financial statements.

Avocet Mining PLC is registered in England No 3036214

Consolidated statement of changes in equity

For the year ended 31 December 2013

The accompanying accounting policies and notes form an integral part of these financial statements.

Consolidated cash flow statement

For the year ended 31 December 2013

The accompanying accounting policies and notes form an integral part of these financial statements.

Notes to the financial statements

For the year ended 31 December 2013

1. BASIS OF PREPARATION AND ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS ('IFRS')

The Group financial statements consolidate those of the Company and of its subsidiary undertakings; the Group financial statements have been prepared in accordance with IFRS and International Financial Reporting Interpretations Committee ('IFRIC') interpretations as adopted by the European Union at 31 December 2013.

The Group financial statements have been prepared under the historical cost convention except for share based payments that are fair valued at the date of grant and other financial assets and liabilities that are measured at fair value. The accounting policies applied in these financial statements are unchanged from those used in the previous annual financial statements.

IAS 1 Presentation of Financial Statements (Revised 2007) requires presentation of a comparative statement of financial position as at the beginning of the first comparative period, in some circumstances. Management considers that this is not necessary in these financial statements as the 31 December 2012 statement of financial position is the same as previously published.

Certain amounts included in the consolidated financial statements involve the use of judgement and/or estimation. Judgements, estimations and sources of estimation uncertainty are discussed in note 2.

The Parent Company financial statements in notes 37 to 56 present information about the Company as a separate entity rather than about the Group, and have continued to be prepared under UK GAAP as permitted by the Companies Act 2006.

Accounting standards not yet in issue

At the date of authorisation of these financial statements, certain new accounting standards, and amendments to, or interpretations of, existing standards have been published but are not yet effective. The Group has not early adopted any of these pronouncements. The new standards, amendments and interpretations that are expected to be relevant to the Group's financial statements are as follows (effective dates stated below are for EU mandatory adoption for accounting periods commencing on or after those dates):

- IFRS 9 Financial Instruments (not yet adopted by the EU)

- IFRS 10 Consolidated Financial Statements (effective 1 January 2014)

- IFRS 11 Joint Arrangements (effective 1 January 2014)

- IFRS 12 Disclosure of Interests in Other Entities (effective 1 January 2014)

- IAS 27 (Revised), Separate Financial Statements (effective 1 January 2014)

- IAS 28 (Revised), Investments in Associates and Joint Ventures (effective 1 January 2014)

- Transition Guidance - Amendments to IFRS 10, IFRS 11 and IFRS 12 (effective date 1 January 2014)

- Investment Entities - Amendments to IFRS 10, IFRS 12 and IAS 27 (effective 1 January 2014)

- Offsetting Financial Assets and Financial Liabilities - Amendments to IAS 32 (effective 1 January 2014)

- IFRIC Interpretation 21 Levies (not yet adopted by the EU)

- Recoverable Amount Disclosures for Non-Financial Assets (Amendments to IAS 36) (effective 1 January 2014)

- Novation of Derivatives and Continuation of Hedge Accounting (Amendments to IAS 39) (effective 1 January 2014)

- Defined Benefit Plans: Employee Contributions (Amendments to IAS 19) (not yet adopted by the EU)

The Directors anticipate that the above pronouncements, where relevant, will be adopted in the Group's financial statements for the year beginning 1 January 2014 and will have little impact on the Group's accounting policies or results.

Audit Information

The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006. The consolidated statement of financial position at 31 December 2013 and the consolidated income statement, consolidated cash flow statement and other primary statements and associated notes (excluding notes 36 and 37) for the year then ended have been extracted from the Group's statutory financial statements for the year ended 31 December 2013 (which have not yet been filed with Companies House) upon which the auditor's opinion is unqualified, except for an emphasis of matter paragraph regarding going concern which is further explained below, and does not include any statement under Section 498 (2) or (3) of the Companies Act 2006. The audited financial statements for the year ended 31 December 2012 have been filed with Companies House. The auditor's opinion was unqualified, except for an emphasis of matter paragraph regarding going concern, and did not include any statement under Section 498 (2) or (3) of the Companies Act 2006.

Going concern

On 2 January 2014, the Company announced that it had not repaid the US$15.0 million loan due to an affiliate of Elliott Associates, its largest shareholder, which had been due on 31 December 2013 and is secured against the Tri-K exploration asset in Guinea. This was a consequence of a funding shortfall, due to the fall in the gold price during 2013, operational issues encountered during the year, and also the identification of investment requirements to repair mobile machinery and the processing plant during 2014, as part of an estimated revised Life of Mine Plan ('LoMP').

This estimated LoMP, based on pit shells optimized at lower gold prices, indicated that in the years 2015 to 2018 the Inata mine should generate cash flow before financing of approximately US$180 million based on an assumed gold spot price of US$1,200 per ounce. However, this plan shows negative cash flow in 2014 and therefore a requirement for further short term funding in 2014, amounting to between US$20 million and US$30 million, depending on the extent of refurbishment costs, whether a decision is taken to adopt contract mining, and the level of production in 2014.

The announcement of a business review on 20 December 2013 was in response to this funding requirement and disclosed that the board were considering various options for maximising the value of its assets for the benefits of shareholders, namely at Inata, Souma and Guinea. The aim of this review, which remains ongoing, is to secure sufficient funding to address the US$15 million Elliott loan and Inata's US$20 - US$30 million deficit, for a total of up to US$45 million.

While initial discussions with interested parties, including Ecobank, are ongoing, it cannot be guaranteed that such funding will be secured the combination of these circumstances represents a material uncertainty that casts significant doubt on the group's ability to continue as a going concern. Nevertheless, the Board has a reasonable expectation that the outcome of the financing process will be successful, based on the parties involved, the nature of early stage discussions, and feedback from its advisors. The Board has therefore continued to adopt the going concern basis in preparing the financial statements for the year ended 31 December 2013.

Should the Board's judgment prove wrong and sufficient funding arrangement are not obtained as envisaged, the presentation of the group financial statements on the going concern basis would be inappropriate and the group financial statements would need to be represented on a break up basis.

The estimated short term funding of between US$20 million and US$30 million is based on the best estimates and judgements surrounding the assumptions relevant to all gold mining companies within their life of mine plans. These estimates and judgements are fully disclosed in note 2 to the group financial statements and detailed sensitivity analysis for the Inata CGU are included within the impairment disclosures within note 7 to the group financial statements.

2. JUDGEMENTS IN APPLYING ACCOUNTING POLICIES AND SOURCES OF ESTIMATION UNCERTAINTY

Certain amounts included in the 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. Information about judgements and estimation is contained in the accounting policies and/or other notes to the financial statements. The key areas are summarised below:

Mineral Resources and Ore Reserves

Quantification of Mineral Resources requires a judgement on the reasonable prospects for eventual economic extraction. Quantification of Ore Reserves requires a judgement on whether Mineral Resources are economically mineable. These judgements are based on assessment of mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors involved, in accordance with the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Institute of Geoscientists and Minerals Council of Australia ('JORC code'). These factors are a source of uncertainty and changes could result in an increase or decrease in Mineral Resources and Ore Reserves. This would in turn affect certain amounts in the financial statements such as depreciation and closure provisions, which are calculated on projected life of mine figures, and carrying values of mining property and plant which are tested for impairment by reference to future cash flows based on LoMP Ore Reserves. Certain relevant judgements are discussed in note 7 in respect of the impairment of mining assets.

Deferred exploration expenditure

The recoverability of exploration expenditure capitalised within intangible assets is assessed based on a judgement about the feasibility of the project and estimates of its future cash flows. Future gold prices, operating costs, capital expenditure and production are sources of estimation uncertainty. The Group periodically makes judgements as to whether its deferred exploration expenditure may have been impaired, based on internal and external indicators. Any impairment is based on estimates of future cash flows. In particular, the Group recognises that, if it decides, or is compelled due to insufficient funding, to withdraw from exploration activity at a project, then the Company would need to assess whether an impairment is necessary based on the likely sale value of the property.

Carrying values of property, plant and equipment

The Group periodically makes judgements as to whether its property, plant and equipment may have been impaired, based on internal and external indicators. A detailed impairment assessment was undertaken at 31 December 2013, which was triggered by a reduction in the Inata Ore Reserve as a result of metallurgical testwork and increasing costs.

The carrying value of assets was compared to the recoverable amount. The recoverable amount used in the impairment review was calculated on the Value in Use ('VIU') basis, being the discounted cash flow of the Cash Generating Unit ('CGU'). A CGU is the smallest group of assets that generate cash inflows from continuing use. The Inata Mine has been identified as the CGU for the purposes of impairment testing.

Key assumptions used in the calculation of VIU involve judgement and estimation of uncertainties, including: assessment of recoverable Mineral Resources and Ore Reserves, gold prices, operating costs, capital expenditure, and discount rates. Further information is provided on key assumptions, and the judgements made, in note 17.

Deferred stripping costs

The recoverability of deferred stripping costs is assessed based on the projected future cash flows of the project. The Company does not anticipate deferring any stripping costs from its current operations.

Functional currencies

Identification of functional currencies requires a judgement as to the currency of the primary economic environment in which the companies of the Group operate. This is based on analysis of the economic environments and cash flows of the subsidiaries of the Group.

Taxation and deferred tax

Within the Group there are entities with significant losses available to be carried forward against future taxable profits. The quantum of the losses or available deductions for which no deferred tax asset is recognised is set out in note 14. Estimates of future profitability are required when assessing whether a deferred tax asset may be recognised. The entities in which the losses and available deductions have arisen are principally non-revenue generating exploration companies, and corporate management functions. It is not expected that taxable profits will be generated in these entities in the foreseeable future, and therefore the Directors do not consider it appropriate to recognise a deferred tax asset. Judgements made in estimating future profitability include forecasts of cash flows, and the timing of inter group recharges which are within the control of management.

In 2012, Société des Mines de Bélahouro SA ('SMB', the subsidiary in Burkina Faso which operates the Inata mine) underwent a tax audit in respect of the fiscal years 2009, 2010, and 2011. The initial assessment of this tax audit, which was undertaken by the tax department of the Burkina Faso government, was that a total of US$25.5 million was due in taxes and penalties. Following discussions with senior government representatives, the Company had understood that, provided the Company submitted a letter accepting the government's position and agreeing to forego legal contestation, it would receive a reduction of over 85% in the amount claimed to US$3.5 million.

However, after having submitted this letter, a revised assessment of US$8.2 million was received by the Company. The Company has communicated its disappointment in this revision, although has paid US$3.5 million in order to demonstrate its commitment to the original understanding. At the present time, government actions to recover the balance of the claim have been suspended, pending further discussions.

Management believes that it is unlikely that any further amounts will be paid in respect of this claim and therefore no provision has been recognised, although, as it cannot be certain of this, the remaining US$4.7 million should be considered a contingent liability. Refer to note 32 for further details.

Inventory valuations

Valuations of gold in stockpiles and in circuit require estimations of the amount of gold contained in, and recovery rates from, the various work in progress. These estimations are based on analysis of samples and prior experience. A judgement is also required about when stockpiles will be used and what gold price should be applied in calculating net realisable value; these are both sources of uncertainty.

Restoration, rehabilitation and environmental provisions

Such provisions require a judgement on likely future obligations, based on assessment of technical, legal and economic factors. The ultimate cost of environmental remediation is uncertain and cost estimates can vary in response to many factors, including changes to the relevant legal requirements, the emergence of new restoration techniques and changes to the life of mine.

Provisions and contingent liabilities

Judgements are made as to whether a past event has led to a liability that should be recognised in the financial statements or disclosed as a contingent liability. Quantifying any such liability often involves judgements and estimations. These judgements are based on a number of factors including the nature of the claim or dispute, the legal process and potential amount payable, legal advice received, previous experience and the probability of a loss being realised. Each of these factors is a source of estimation uncertainty.

Recoverability of VAT

Recoverability of the VAT receivable in Burkina Faso is assessed based on a judgement of the validity of the claim and, following review by management, the carrying value in the financial statements is considered to be fully recoverable. Included in the year end balance is an amount of US$3.8 million relating to claims made prior to 2013, which management consider recoverable.

Forward contracts

On 25 March 2013, the Company announced a restructure of the Macquarie forward contracts for delivery of gold bullion. Management reviewed the transaction and concluded that the partial settlement meant the remaining forward contracts no longer qualified for the 'own use exemption'. The conclusion was made on the basis that the transaction did not represent a one-off settlement as the Group anticipated making further settlements and therefore represented a practice of net settlement. In accordance with IAS 39 financial instruments the forward contracts were classified as a financial liability designated at fair value through profit or loss (FVTPL) as they met the requirements to be classified as held-for-trading.

Previously the Group deemed these contracts to be outside of the scope of IAS 39, as exempted by IAS 39.5, on the basis that they are for own use, and gold produced would be physically delivered to meet the contractual requirement in future periods. Following the disposal on 24 June 2011 of the Company's two producing mines in South East Asia, the forward contracts were restructured to buy back approximately 20% of the forward contracts and extend the delivery profile of the remaining ounces outstanding, with the result that the hedged proportion of production from the Company's one remaining producing mine, Inata, was reduced from approximately 60% to approximately 20%. Management at the time reviewed the transaction and concluded that the contract remained outside the scope of IAS 39 on the basis that a one-off settlement, in response to the changing operational profile of the Group following the disposal of South East Asian assets, did not represent a practice of net settlement such that the contracts should be treated as financial instruments under IAS 39.

3. ACCOUNTING POLICIES

Consolidation

The Group financial statements consolidate the results of the Company and its subsidiary undertakings using the acquisition accounting method. On acquisition of a subsidiary, all of the subsidiary's identifiable assets and liabilities which exist at the date of acquisition are recorded at their fair values reflecting their condition on that date. The results of subsidiary undertakings acquired are included from the date of acquisition. In the event of the sale of a subsidiary, the subsidiary results are consolidated up to the date of completion of the sale.

The cost of an acquisition is measured by the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition where the acquisition completed prior to accounting periods commencing 1 January 2010. For any acquisitions occurring after 1 January 2010, the costs of acquisition will be recognised in the income statement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date irrespective of the extent of any Non-controlling interest. The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. If the cost of the acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement as a gain.

Exchange differences arising from the translation of the net investment in foreign entities are taken to equity. All other transactions, balances and unrealised gains and losses on transactions between Group companies are eliminated, unless the unrealised loss provides evidence of an impairment of the asset transferred.

Exceptional items

Exceptional items are those significant items which are separately disclosed by virtue of their size or incidence to enable a full understanding of the Group's financial performance. Transactions which may give rise to exceptional items include the impairment of property, plant and equipment and deferred exploration expenditure, the cost of restructuring forward contracts, and material profit or losses on disposals.

Segmental reporting

An operating segment is a component of the Group engaged in exploration or production activity that is regularly reviewed by the Chief Operating Decision Maker ('CODM') for the purposes of allocating resources and assessing financial performance. The CODM is considered to be the Board of Directors and Executive Committee. The Group's operating segments 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). Exploration projects are aggregated into the single reportable segment because the projects are managed by a single operating division and reported to the CODM on this basis. 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 8). Comparative periods have been represented on this basis to allow for a consistent comparison.

The Group does not report geographic segments by location of customer as its business is the production of gold which is traded as a commodity on a worldwide basis. Sales are made into the bullion market, where the location of the ultimate customer is unknown. During the year, 40,500 ounces of gold were sold into forward contracts with MBL, an international bank with a stock exchange listing in Australia.

Foreign currency translation

1. Functional and presentational currency

The functional currency of the entities within the Group is the US dollar, as the currency which most affects each company's revenue, costs and financing. The Group's presentation currency is also the US dollar.

2. Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions, and from the translation at reporting period end exchange rates of monetary assets and liabilities denominated in foreign currencies, are recognised in the income statement.

Revenue

Revenue is the fair value of the consideration receivable by the Group for the sale of gold bullion. Currently, all revenue is derived from the sale of gold produced by the Inata Gold Mine. Gold doré is produced at Inata and shipped to South Africa for refining into gold bullion, being gold of 99.99% purity. Revenue is recognised when the risks and rewards of ownership pass to the purchaser, which occurs when confirmation is received of the conclusion of a trading instruction to sell gold into the bullion market at spot prices or to sell at pre-determined prices as part of a forward contract.

Intangible assets

All directly attributable costs associated with mineral exploration including those incurred through joint venture projects are capitalised within Non-current intangible assets pending determination of the project's feasibility. If an exploration project is deemed to be economically viable based on feasibility studies, the related expenditures are transferred to property, plant and equipment and amortised over the life of the mine on a unit of production basis. Where a project is abandoned or is considered to be no longer economically viable, the related costs are written off. The cost of ancillary services supporting the exploration activities are expensed when incurred.

Property, plant and equipment

Mining property and plant consists of mine development costs (including mineral properties, buildings, infrastructure, and an estimate of mine closure costs to be incurred at the end of the mine life), plant and machinery, and vehicles, fixtures and equipment.

Mining property and plant is initially recognised at the cost of acquisition, and subsequently stated at cost less accumulated depreciation and any impairment. The cost of acquisition is the purchase price and any directly attributable costs of acquisition or construction required to bring the asset to the location and condition necessary for the asset to be capable of operating in the manner intended by management.

Mining property and plant is depreciated over the shorter of the estimated useful life of the asset using the straight-line method, or the life of mine using the unit of production method and life of mine ('LOM') reserve ounces. Residual values and useful lives are reviewed on an annual basis and changes are accounted for over the remaining lives.

Exploration property, plant and equipment comprises vehicles and camp buildings specifically used in the Group's exploration programmes in the West Africa Exploration operating segment. Exploration property and plant is depreciated over 3-7 years on a straight-line basis.

The following depreciation methods and asset life estimates are used for the components of mining property and plant:

Deferred stripping costs

Stripping costs incurred during the development phase of the mine as part of initial pit stripping are capitalised as Mine Development Costs within Mining Property and Plant. Subsequently, these costs are depreciated from the point at which commercial production commences using the units of production method and life of mine ore reserves. Changes to life of mine ore reserves are accounted for prospectively.

Stripping costs incurred during the production stage of the mine are treated as either part of the cost of inventory produced or a non-current deferred stripping asset, depending on the expectation of when the benefit of the stripping activity is realised through the processing of ore.

To the extent that the benefit from the stripping activity is realised in the form of inventory produced in the current period, the directly attributable costs of that mining activity is treated as part of the ore stockpile inventory.

To the extent that the benefit from the stripping activity is the improved access to ore that will be mined in future periods, and the cost is material, the directly attributable costs should be treated as a non-current 'stripping activity asset'. Stripping activity costs are only capitalised during a sustained period of waste stripping, such as significant push backs or pit expansion, not the cost of short term variations from a life of mine stripping ratio which are absorbed as part of current period mining costs or ore stockpiles.

Stripping activity assets are depreciated using the unit of production method based on the ore reserves for the component of the orebody for which the stripping activity relates.

Treasury shares

Treasury shares are held at cost, and are deducted from equity. Any gain or loss on the sale or transfer of treasury shares is recognised in the statement of changes in equity.

Own shares

Own shares are held in the EBT and SIP, and are recorded at cost, and deducted from equity. Any gain or loss on the sale or transfer of these shares is recognised in the statement of changes in equity.

Impairment of intangible assets and property, plant and equipment

The Group carries out a review at each balance sheet date to determine whether there is any indication that the above assets are impaired. Assets are assessed for indicators of impairment (and subsequently tested for impairment if an indicator exists) at the level of a cash generating unit ('CGU'). A CGU is the smallest group of assets that generate cash inflows from continuing use. If an indication of impairment exists, the recoverable amount of the asset or CGU is estimated based on future cash flows, in order to determine the extent of impairment. Future cash flows are based on estimates of the life of mine Ore Reserves together with estimates of future gold prices and cash costs. Deferred exploration costs are tested for impairment at least annually.

The recoverable amount is the higher of fair value less cost to sell and value in use. An impairment is recognised immediately as an expense. Where there is a reversal of the conditions leading to an impairment, the impairment is reversed as income through the income statement.

Inventories

Inventories comprise consumables, work in progress and finished goods. Consumables are recognised at average cost and are subsequently held at the lower of cost less a provision for obsolescence, and net realisable value. Work in progress consists of ore in stockpiles and gold in process, and is valued at the lower of average production cost and net realisable value. Finished goods represent gold doré that is undergoing refining processes, or gold bullion awaiting sale. Finished goods are valued at the lower of average production cost and net realisable value. Net realisable value is the estimated selling price less the estimated cost of completion and any applicable selling expenses.

Financial assets

Financial assets are classified into the following specific categories which determine the basis of their carrying value in the statement of financial position and how changes in their fair value are accounted for: at fair value through profit and loss, available for sale financial assets, and loans and receivables. Financial assets are assigned to their different categories by management on initial recognition, depending on the purpose for which the investment was acquired.

Available for sale financial assets are included within non-current assets unless designated as held for sale in which case they are included within current assets. They are carried at fair value at inception and changes to the fair value are recognised in other comprehensive income; when sold the accumulated fair value adjustments recognised in other comprehensive income are reclassified through the income statement.

Trade and other receivables are measured on initial recognition at fair value and subsequently at amortised cost using the effective interest rates.

De-recognition of financial instruments occurs when the rights to receive cash flows from the investments expire or are transferred and substantially all of the risks and rewards of ownership have been transferred. An assessment for impairment is undertaken at least annually at each balance sheet date whether or not there is objective evidence that a financial asset or a group of financial assets is impaired.

Cash and cash equivalents

Cash and cash equivalents are defined as cash on hand, demand deposits and short-term highly liquid investments and are measured at cost which is deemed to be fair value as they have short-term maturities.

Leases

Finance leases are recognised as those leases that transfer substantially all the risks and rewards of ownership. Assets held under finance leases are capitalised and the outstanding future lease obligations are shown in liabilities at the fair value of the lease, or if lower at the present value of the lease payments. They are depreciated over the term of the lease or their useful economic lives, whichever is the shorter. The interest element (finance charge) of lease payments is charged to the income statement on a constant basis over the period of the lease.

All other leases are regarded as operating leases and the payments made under them are charged to the income statement in the period on a straight-line basis. The Company does not act as a lessor.

Financial liabilities

Financial liabilities include loans, overdrafts, forward contracts and trade and other payables. In the statement of financial position these items are included within Non-current liabilities and Current liabilities. Financial liabilities are recognised when the Group becomes a party to the contractual agreements giving rise to the liability. Interest related charges are recognised as an expense in Finance costs in the income statement unless they meet the criteria of being attributable to the funding of construction of a qualifying asset, in which case the finance costs are capitalised.

Trade and other payables and loans are recognised initially at their fair value and subsequently measured at amortised costs using the effective interest rate, less settlement payments.

Forward contracts are recognised as a financial designated at Fair Value through Profit or Loss (FVTPL) on the basis they qualify for "Held-for-Trading" as it meets the definition of a derivative under IAS 39 and management do not intend to apply hedge accounting. As a result the forward contracts are recognised at fair value as defined under IFRS 13.

Borrowing costs

Borrowing costs that are incurred in respect of the construction of a qualifying asset are capitalised where the construction of an asset takes a substantial period of time to be prepared for use. Other borrowing costs are expensed in the period in which they are incurred and reported in finance costs.

Income taxes

Current income tax liabilities comprise those obligations to fiscal authorities in the countries in which the Group carries out mining operations and where it generates its profits. They are calculated according to the tax rates and tax laws applicable to the financial period and the country to which they relate. All changes to current tax assets and liabilities are recognised as a component of the tax charge in the income statement.

Deferred income taxes are calculated using the liability method on temporary differences. This involves the comparison of the carrying amount of assets and liabilities in the consolidated financial statements with their respective tax bases. However, deferred tax is not provided on the initial recognition of goodwill, nor on the initial recognition of an asset or liability unless the related transaction is a business combination or affects taxes or accounting profit.

Deferred tax liabilities are provided for in full; deferred tax assets are recognised when there is sufficient probability of utilisation. Deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the balance sheet date.

Pension obligations

The only defined benefit pension scheme operated by the Group relates to a former US subsidiary undertaking which is no longer part of the Group. Accordingly full provision has been made for outstanding post retirement benefits. The liability recognised in the statement of financial position is the present value of the defined benefit obligation ('DBO') at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognised actuarial gains or losses and past service costs. The DBO is calculated annually by independent actuaries using the projected unit credit method or an accepted equivalent in the USA, and independent assumptions. The present value of the DBO is determined by discounting the estimated future cash outflows using interest rates of high quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating the terms of the related pension liability. Actuarial gains and losses are not recognised in the income statement.

Provisions, contingent liabilities and contingent assets

Other provisions are recognised when the present obligations arising from legal or constructive commitment, resulting from past events, will probably lead to an outflow of economic resources from the Group which can be estimated reliably. Provisions are measured at the present value of the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the balance sheet date. All provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

Restoration, rehabilitation and environmental costs

An obligation to incur restoration, rehabilitation and environmental costs arises when environmental disturbance is caused by the development or ongoing production of a mining property. Such costs arising from the decommissioning of plant and other site preparation work, discounted to their net present values, are provided for in full as soon as the obligation to incur such costs arises and can be quantified. On recognition of a full provision, an addition is made to property, plant and equipment of the same amount; this addition is then charged against profits on a unit of production basis over the life of the mine. Closure provisions are updated annually for changes in cost estimates as well as for changes to life of mine Ore Reserves, with the resulting adjustments made to both the provision balance and the net book value of the associated Non-current asset.

Share based payments

The Group operates equity-settled share based compensation plans for remuneration of its employees, which may be settled in cash under certain circumstances.

All employee services received in exchange for the grant of any share based compensation are measured at their fair values. These are indirectly determined by reference to the share based award. Their value is appraised at the grant date and excludes the impact of any non-market vesting conditions.

All share based compensation is ultimately recognised as an expense in profit and loss with a corresponding credit to retained earnings, net of deferred tax where applicable. Where share based compensation is to be cash settled, such as certain share based bonus awards, the corresponding credit is made to accruals or cash. The Group has certain share option schemes that may be settled in cash at the absolute discretion of the Board. Currently, it is the expectation that the options will be settled in shares, when exercised.

If any equity-settled share based awards are ultimately settled in cash, then the amount of payment equal to the fair value of the equity instruments that would otherwise have been issued is accounted for as a repurchase of an equity interest and is deducted from equity. Any excess over this amount is recognised as an expense.

If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. No adjustment to the expense recognised in prior periods is made if fewer share options are ultimately exercised than originally granted.

Upon exercise of share options, the proceeds received, net of any directly attributable transaction costs, up to the nominal value of the shares issued, are allocated to share capital with any excess being recorded in share premium.

Non-current assets and liabilities classified as held for sale and discontinued operations

A discontinued operation is a component of the entity that either has been disposed of, or is classified as held for sale, and represents a separate major line of business or geographical area of operations; is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations; or is a subsidiary acquired exclusively with a view to resale.

The results from discontinued operations, including reclassification of prior year results, are presented separately in the income statement.

When the Group intends to sell a non-current asset or a group of assets (a disposal group), and if sale within twelve months is judged to be highly probable, the assets of the disposal group are classified as held for sale and presented separately in the statement of financial position. Liabilities are classified as held for sale and presented as such in the statement of financial position if they are directly associated with a disposal group.

Assets classified as held for sale are measured at the lower of their carrying amounts immediately prior to their classification as held for sale and their fair value less costs to sell. However, some held for sale assets such as financial assets or deferred tax assets, continue to be measured in accordance with the Group's accounting policy for those assets. No assets classified as held for sale are subject to depreciation or amortisation subsequent to their classification as held for sale.

4. SEGMENTAL REPORTING

1 Expensed exploration and other cost of sales represents costs not directly related to production, including exploration expenditure not capitalised and intercompany charges.

2 Includes amounts in respect of the amortisation of closure provision at Inata.

3 EBITDA represents earnings before exceptional items, finance items, tax, depreciation and amortisation.

1 Includes impairments, depreciation and amortisation, share based payments, movement in provisions, taxation in the income statement and non-operating items in the income statement.

2 Other cash movements include cash flows from financing activities, and exchange losses.

1 Expensed exploration and other cost of sales represents costs not directly related to production, including exploration expenditure not capitalised.

2 Includes amounts in respect of the amortisation of closure provision at Inata.

3 EBITDA represents earnings before exceptional items, finance items, tax, depreciation and amortisation.

1 Includes impairments, depreciation and amortisation, share based payments, movement in provisions, taxation in the income statement and non-operating items in the income statement.

2 Other cash movements include deferred consideration paid, cash flows from financing activities, and exchange losses.

5. EXCEPTIONAL ITEMS

Restructure and recognition of forward contracts

On 25 March 2013, the Group announced the restructure of the forward contracts held with Macquarie Bank Limited for delivery of gold bullion. The restructure consisted of eliminating 29,020 ounces under those 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 would be delivered by December 2016.

The recognition of the liability was in accordance with IAS 39 financial instruments, and reflects the fact that the buy back demonstrated a practice of cash-settling forward contracts. Under IAS 39, this meant that the own-use exemption previously applied was no longer appropriate. The fair valuate liability of the forward contracts was recognised at 31 March 2013 at US$96.6 million. Between 31 March and 15 November 2013, when all remaining forward contracts were brought back, the fair value liability of the contracts fell by US$54.2 million to a liability of US$42.4 million due to the falling gold prices and the delivery of 32,250 ounces into the forward contracts. As a consequence, a US$54.2 million gain has been recognised reflecting the reduction in fair value liability.

Net impairments of Burkina Faso Assets

The Group recognised a net impairment of non-current assets of US$30.5 million (2012: US$135.3 million) in respect of the Inata Gold Mine cash generating unit driven by a reduction in the forecasted gold price and changes is the life of mine plan. Further details are provided in note 7.

Impairment of Mali exploration asset

During the year the Company decided to discontinue operations at the N'tjila permit located in the Republic of Mali. As a result the US$0.3 million capitalised costs in relation to the permit was impaired and recognised as an exceptional item.

Impairment of Guinea exploration asset

Work performed as a result of the business review indicated that the carrying value of the Guinea exploration assets were above their recoverable value, due to the fall in management's view of the gold price. From the review management determined a fair value of US$25 million for the Guinea exploration CGU resulting in a US$7.3 million impairment. Further details are provided in note 7.

Impairment of corporate fixed assets

The Group's accounting policy requires assets to be assessed for impairment in their smallest possible cash generating unit ('CGU'). The UK corporate assets are reviewed in the context of the entire Group, on the basis that this is the smallest CGU to which these assets can be allocated. At 31 December 2013, both the Guinea and Inata CGUs were being held at values equal to their fair value as a result of impairments and as a consequence no excess fair value exists to support the carrying value of corporate, which have therefore been fully impaired.

Impairment of available for sale financial assets

At 31 December 2013 management concluded that the decline in the share price of Golden Peaks Resources Limited reflects a permanent diminution in the value of that asset. Management consider the fall to be indicative of the investment's ability to provide a future return and is therefore not considered a short term fluctuation in the market value. The cumulative loss that had been recognised directly in other comprehensive income has been reclassified from equity and recognised in profit or loss. Further details are provided in note 18.

Loss on disposal of subsidiaries

Completion of the sale of one of the last exploration assets in SE Asia 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 Group's former South East Asian Assets.

6. 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 and changes in fair value of forward contracts.

Reconciliation of loss before taxation to EBITDA

Reconciliation of EBITDA to net cash (used in)/generated by operating activities 

7. IMPAIRMENT OF NON-CURRENT ASSETS

Net impairment of Burkina Faso assets

In accordance with IAS 36 Impairment of Assets, at each reporting date the Company assesses whether there are any indicators of impairment of non--current assets. When circumstances or events indicate that non--current assets may be impaired, these assets are reviewed in detail to determine whether their carrying value is higher than their recoverable value, and, where this is the result, an impairment is recognised. Recoverable value is the higher of value in use (VIU) and fair value less costs to sell. VIU is estimated by calculating the present value of the future cash flows expected to be derived from the asset cash generating unit (CGU). Fair value less costs to sell is based on the most reliable information available, including market statistics and recent transactions. The Inata mine has been identified as the CGU. This includes all tangible non-current assets, intangible exploration assets, and net current assets excluding cash. Since 31 December 2013 the exploration assets in Souma and Inata surrounds have now been included as part of the Inata CGU as they are not expected to become a separate CGU. The full amount was impaired as it would have been fully written down upon transfer of the asset to property, plant and equipment.

At 31 December 2013 the Company concluded that the reduction in the market forecasted gold price and the decrease in the expected gold recovered from the change in the Inata Mine's life of mine plan were indicators of impairment. An assessment was carried out of the fair value of Inata Mine's CGU, using the discounted cash flows of the mine's latest estimated life of mine plan to calculate their VIU. As a result of this review, a pre-tax impairment loss of US$30.5 million (2012: US$135.3 million) was recorded in 2013, being an impairment of intangible exploration costs of US$26.6 million (2012: US$6.4 million), and mine development costs of US$3.9 million (2012: US$128.9 million).

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. Should there be a change in the assumptions which indicated the impairment, this could lead to a revision of recorded impairment losses in future periods. The key assumptions are outlined in the table overleaf.

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

Impairment of Burkina Faso assets at prior reporting dates

At 31 December 2012 the Company concluded that the reduction in Inata's Mineral Reserve and subsequent revision to the life of mine represented an indication of impairment. A review was therefore carried out of the carrying value of Inata's assets, using the discounted cash flows of Inata's latest estimated life of mine plan to calculate their VIU. As a result of this review, a pre-tax impairment loss of US$135.3 million was recorded in 2012, being an impairment of intangible exploration costs of US$6.4 million, and mine development costs of US$128.9 million.

In accordance with IAS 36, the Company 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, as well as a requirement to review any indication of additional impairment. As a result of the Group's quarterly reporting and these requirements, such reviews are carried out on a quarterly basis and during 2013 resulted in a reversal of impairment and subsequent impairment as described below. The impairment in the accounts for 2013 was recognised on a net basis and was in line with the impairment charge that would have been recognised if reviewed on an annual basis.

At 31 March 2013 the recognition of the forward contract liability at fair value during March 2013 was excluded from both the carrying amount of the CGU and the cash flows of the VIU calculation. The Company 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 CGU, 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 US$72.2 million was recorded in 31 March 2013 and allocated to mine development costs

At 30 June 2013 the Company concluded that the fall in the gold spot price and market forecasts was considered to be an indicator for impairment. An assessment was 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 their VIU. As a result of this review, a pre-tax impairment loss of US$73.3 million was recorded at 30 June 2013, being an impairment of mine development costs.

Impairment of Guinea exploration asset

As a result of the business review performed in December 2013. The financing options for the Guinea exploration assets were reviewed and were used to inform the impairment review. The business review process indicated that management could value the Guinea assets on a number of different bases. Although the feasibility study submitted to the Guinean authorities was based on a heap leach operation, management are still considering other options such as a carbon-in-leach plant. Furthermore in order to assess market value the asset was compared to recent asset sales involving similar projects in West Africa.

From the review management determined a fair value based on comparable market transaction of US$25.0 million for the Guinea exploration CGU resulting in a US$7.3 million impairment.

8. DISPOSAL GROUP CLASSIFIED AS HELD FOR SALE AND DISCONTINUED OPERATIONS

Disposal of discontinued operations to J&Partners L.P.

On 24 June 2011, Avocet completed the sale of its main South East Asian assets, namely its 100% interest in the Penjom gold mine in Malaysia and its 80% interest in PT Avocet Bolaang Mongondow ('PT ABM'), which owns the North Lanut mine and Bakan project in North Sulawesi, Indonesia, for proceeds of US$170 million.

Completion of one of the last exploration asset occurred on 16 February 2012 for proceeds of US$2 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 Group's former South East Asian assets. The loss on disposal of the assets sold during 2012 is presented below in note 6a.

a) Profit on disposal of discontinued operations to J&Partners L.P.

1 UK tax was not deemed payable on the disposal the South East Asian operations on the basis that the sale qualifies for the UK substantial shareholding exemption.

b) Carrying amounts of assets and liabilities of discontinued operations sold to J&Partners L.P.

c) Cash flows on disposal of discontinued operations to J&Partners L.P.

9. LOSS FOR THE PERIOD BEFORE TAX