AVM.L Regulatory News (AVM)

30 Jan 2008 07:01

Avocet Mining PLC30 January 2008 AVOCET MINING30 January 2008 Q3 GOLD PRODUCTION CONTINUING OPERATIONS UP 15%, CASH COSTS DOWN BY 21% Avocet Mining PLC ("Avocet" or "the Company") announces third quarter goldproduction to December 2007 from the Company's continuing operations at Penjomin Malaysia and North Lanut in Indonesia of 39,248 ounces. This is up 15%compared with 34,177 ounces for the corresponding period last year at a cashcost of US$276/oz, 21% down from last year's US$351/oz. Reported production for the same period last year was 42,700 ounces at US$432/ozwhich included 8,523 ounces from the ZGC mine disposed on 9 July 2007. North Lanut continued to benefit from the operating efficiencies andsignificantly higher grades reported at the half year, with Q3 production up 87%from the prior year at 20,995 ounces. Q3 cash costs of US$276/oz were 29% lowerthan the same period last year. Higher production more than compensated forsteep rises in diesel and reagent costs as well as an increase in lime usagerequired to control pH while processing a higher proportion of transitional ore. At Penjom, total tonnes mined in the quarter of 4.6 million were 41% above thesame period last year, reflecting the ramp up of the pit expansion initiatedthis year and the new mining fleet becoming fully operational. Gold productionof 18,253 ounces was 21% lower than last year due to the lower grade of oretreated. Commissioning of the plant expansion should be complete in February2008 allowing for the treatment of 25% more ore going forward. Followinganother successful drilling campaign at Penjom, a revised resource and reserveestimate will be published prior to the end of the current financial year. Penjom's unit cash operating cost for the quarter fell from US$333/oz to US$275/oz, after adjustment for deferred stripping. Mining concentrated on wastestripping which resulted in a waste:ore stripping ratio of 81:1 for the quarter,compared with 33:1 in the same period last year and the current life of mineaverage of 23:1. As a consequence of the current stage of the mine's expansion,excess stripping costs of US$3.4 million were deferred in Q3, equivalent toUS$186/oz. If deferred stripping cost accounting had been applied in FY2007,prior to the pit expansion, the Q3 FY2007 cash cost would have been US$276/oz,in line with the Q3 FY2008 reported figure of US$275/oz despite significantlylower volumes mined last year. Importantly, unit mining costs decreased 22% fromthe same period last year to just over US$1/tonne as operational efficienciesmore than offset significant increases in consumable costs and the increasedroyalty, based on 7% of revenue, a consequence of the higher gold pricesreceived. Appendix 1 sets out Penjom's waste and ore volumes and mining cost per tonne foreach year, as well as the calculation of stripping costs deferred in Q3.Appendix 2 sets out production and cash costs by quarter for this year and theprior year for both Penjom and North Lanut. Jonathan Henry, Chief Executive Officer, commented: "In the current inflationary environment it is especially pleasing to be able toreport continuing cost reductions which firmly place Avocet in the lowestquartile of global gold producers. Meanwhile the strong gold price has improvedmargins and our operations continue to generate significant cash that we areinvesting in our portfolio of production, development and exploration assets." For further information please contact: Avocet Mining PLC Buchanan Communications Financial PR ConsultantsJonathan Henry, Chief Executive Officer Bobby MorseMike Norris, Finance Director Robin Haddrill020 7907 9000 020 7466 5000www.avocet.co.uk www.buchanan.uk.com Ambrian Partners Limited JPMorgan CazenoveNOMAD and Joint Broker Lead BrokerRichard Brown Michael Wentworth-Stanley Sam Critchlow020 7776 6417 020 7588 2828www.ambrian.com www.jpmorgancazenove.com Notes to Editors Avocet is a mining company listed on the AIM market of the London Stock Exchange(Ticker: AVM). The Company's principal activities are gold mining andexploration in Malaysia (as 100% owner of the Penjom mine, the country's largestgold producer), and Indonesia (as 80% owner of the North Lanut gold mine andBakan project in North Sulawesi). The Company has a number of other advancedmining and exploration projects in South East Asia. Appendix 1 - Waste and ore volumes (Penjom) Tonnes mined Bench Cubic Metres mined (1) FY2007 FY2008 Variance FY2007 FY2008 Variance Q3 Q3 Q3 Q3 Waste 3,136,184 4,490,503 43% 1,161,550 1,795,913 55%Ore 97,028 59,842 -38% 34,959 22,164 -37%Total 3,233,212 4,550,345 41% 1,196,509 1,818,077 52% Mining cost per tonne/BCM US$ 1.34 1.04 -22% 3.63 2.61 -28% Stripping ratio (2) (3) x 81.0Life of mine stripping ratio x 22.5Excess stripping ratio x 58.5Excess waste stripping(3) BCM 1,296,594Excess stripping cost deferred US$m 3.4(4) Notes (1) Bench cubic metre (BCM) is a measure of volumes mined and is equal to theweight of rock (measured in tonnes) divided by its bulk density. BCM is used inmine planning where volumes are the key driver and it is necessary to avoiddistortion due to differing bulk densities. The Group bases its deferredstripping calculations on BCM. (2) Ratio of waste to ore. (3) Represents the amount of waste BCM mined in the period in excess of thelife of mine stripping ratio. Calculated as: excess stripping ratio multipliedby ore BCM mined. (4) Represents cost of waste mining carried out as part of the long term pitexpansion, rather than associated with the ore mined in the quarter. Appendix 2 - Production and cash costs by quarter FY2007 FY2008 Q1 Q2 Q3 Q4 Total Q1 Q2 Q3Production (oz) Penjom 24,613 26,146 22,961 22,246 95,966 23,069 20,895 18,253North Lanut 10,273 13,206 11,216 13,475 48,170 15,733 23,133 20,995Continuing operations 34,886 39,352 34,177 35,721 144,136 38,802 44,028 39,248 ZGC 10,061 7,819 8,523 7,780 34,182 6,925 N/A N/ATotal 44,947 47,171 42,700 43,501 178,318 45,727 44,028 39,248 Cash costs (US$/oz) Penjom 381 360 333 324 351 292 351 275North Lanut 354 319 387 361 354 314 232 276Continuing operations 373 346 351 338 352 301 289 276 ZGC 683 830 757 771 750 983 N/A N/ATotal 443 426 432 415 428 404 289 276 Note If deferred stripping accounting had been applied in FY2007, prior to the pitexpansion, Q3 FY2007 cash cost would have been US$276/oz, in line with the Q3FY2008 reported figure of US$275/oz despite significantly lower volumes minedlast year. This information is provided by RNS The company news service from the London Stock Exchange