AVM.L Regulatory News (AVM)

For Immediate Release

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT JURISDICTION

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

Disposal of interest in Tri-K project

Avocet Mining Plc ("Avocet" or the "Company") announces that, pursuant to an agreement entered into today with its joint venture partner Managold Ltd ("Managold"), a subsidiary of Managem SA, it has sold its remaining interests in the Tri-K gold project in Guinea (the "Tri-K Project") to Managold for an aggregate consideration of USD 21 million (the "Disposal"). Signing and completion of the Disposal took place simultaneously today.

The Disposal is part of the restructuring of Avocet's overdue loans to its secured creditor Manchester Securities Corp. ("Elliott"). These loans total around USD 32 million, and Elliott has released the Company from all amounts outstanding thereunder against, amongst other things, the payment of the majority of the proceeds of the Disposal.

This payment, together with certain other third party debts, leaves the Company a minimal residual cash sum while it considers its future strategy.

Introduction

Discussions have been ongoing between the Company and Elliott regarding the restructuring of its overdue loans to Elliott which total USD 32.2 million to date.

In this context, the Company has sold its assets in Burkina Faso, including the Inata gold mine to the Balaji Group of companies ("Balaji") in February 2018. Further, with a view to minimising its costs and streamlining its remaining responsibilities, activities and group structure, the Company sold one of its subsidiary companies, Wega Mining AS, to Natholmen AS in March 2018.

The disposal by Avocet of its interests in the Tri-K Project and its related assets is also part of this restructuring effort.

Transaction Details

The transaction comprises a sale by the Company to Managold of the 30 per cent stake it holds in the issued share capital of Manacet SA ("Manacet") and the assignment by Avocet to Managold of all the intercompany receivables owed to the Company by Manacet's subsidiary Société des Mines de Mandiana for an aggregate consideration of USD 21 million pursuant to a shares and loans purchase agreement entered into today (the "Agreement").

The Agreement provides for the termination of certain other agreements and arrangements relating to the Tri-K Project, as well as general settlement of all matters between Avocet and Managold in relation to Manacet and the Tri-K Project.

Use of Proceeds

Given the Company's current circumstances and in order to enable the Company to resolve its affairs, Elliott agreed, subject to the settlement of Avocet's overdue loans, to the Disposal and to the release of its rights under the various facility agreements.

Elliott has released Avocet from all amounts outstanding (and all other obligations) under these agreements against the payment of the majority of the proceeds of the Disposal, the assignment of all of Avocet's rights under the Agreement and the assignment of Avocet's rights under a loan agreement relating to the February 2018 transaction with Balaji.

Avocet has applied part of the remaining proceeds received by it under the Agreement to settle certain other outstanding third party debts of the Company, leaving the Company with a minimal residual cash sum.

Approval of the Transaction

Avocet's Standard Listing does not require it to comply with the provisions of Listing Rule 10; this rule sets out requirements for shareholders to be notified of certain transactions and to have the opportunity to vote on proposed significant transactions.

Before entering into the Agreement, Avocet's board has made a thorough assessment of the Disposal, and of the settlement with Elliott. It has sought and obtained extensive advice from its financial and legal advisors, and has carefully considered the Disposal and the settlement with Elliott in light of the Company's current circumstances. Relevant factors in this respect include: the Company's obligations under the various facility agreements with Elliott; the existence of other outstanding third party debts; its ongoing holding costs; the contribution the Company is required to make to the Tri-K Project in order to avoid significant dilution; and the absence of any third party interest in the sale of the Company's stake in the Tri-K Project - all against the background of its weak liquidity position, having exhausted all sources of funding.

In this context, the board has obtained and relied upon an independent fairness opinion and presentation (the "Fairness Opinion and Presentation") which states, inter alia, that - based upon and subject to the factors, qualifications and assumptions set forth in the Fairness Opinion and Presentation - the Disposal is fair from a financial point of view.

Considering the above, the board believes that the Disposal and the settlement with Elliott are not unreasonable and do not disadvantage any other stakeholder of the Company given the high level of debt in the Company, enabling the Company to resolve its affairs. It has therefore entered into the Agreement, and has settled all of the sums owed by it to Elliott under the overdue loans as described above.

Next Steps

Avocet's interest in the Tri-K Project was its last significant equity interest, leaving Avocet with no significant subsidiaries or other equity investments, and, following payment by Avocet of the various amounts referred to above, a minimal residual cash sum.

The board of the Company is currently considering the future strategy of Avocet. Options being considered include entering into new investments or other commercial arrangements or the orderly winding up of the Company. A further announcement will be made in due course.

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NOTES TO EDITORS

Avocet Mining PLC ("Avocet" or the "Company") is a gold mining and exploration company listed on the London Stock Exchange (ticker: AVM.L) and the Oslo Børs (ticker: AVM.OL).