AVM.L Regulatory News (AVM)

7 Jul 2009 07:00



AVOCET MINING PLC

AVOCET RECEIVES POSITIVE GOLD GRADES IN DRILLING

AT SERUYUNG, KALIMANTAN, INDONESIA

Targeting in excess of 500,000 ounces of gold

Better intercepts are 70.4m @ 3.84 g/t Au, 77.0m @ 3.44 g/t Au and 68.0m @ 1.53 g/t Au

Significant lengths of higher grade mineralisation intersected by drill holes

Results from eight drill holes evaluating peripheral targets - mostly positive

Avocet Mining PLC ("Avocet" or "the Company") announces positive results from initial scout drilling on the Seruyung project in northeast Kalimantan, Indonesia. Seruyung is a heap leachable high-sulphidation epithermal system similar to the Company's North Lanut gold mine. The property was previously drilled by Indochina Goldfields Limited (Ivanhoe Mines) who estimated a contained gold resource of 330,000 ounces in 1999. Avocet is targeting a resource in excess of 500,000 ounces of gold.

Table 1 summarises the significant intercepts from the fourteen scout drill holes. The better intercepts are: 70.4m @ 3.84 g/t Au from 20.6 metres depth (including 10.5m @ 7.42 g/t Au), 77.0m @ 3.44 g/t Au from surface (including 25.0m @ 6.59 g/t Au) and 68.0m @ 1.53 g/t Au from 44m (including 14.0m @ 3.31 g/t Au). 

The results from the six drill holes in the core of the system show that Seruyung hosts significant lengths of coherent low to medium grade gold mineralisation. This is hosted by pervasive silica-alunite alteration similar to that hosting ore at the Company's North Lanut gold mine. The drill holes have also intersected significant lengths of higher grade mineralisation, which correspond to fracture and breccias zones representing feeders to the mineralised system. Significantly, the results received are higher grade and more extensive than indicated by the Indochina drill holes. It is of note that all intercepts are in oxide or transitional mineralisation. The top of the sulphide mineralisation, which is refractory to the heap leach process, occurs below approximately 160 metres vertical depth.

The results from the eight drill holes evaluating peripheral targets were mostly positive although three holes were unmineralised or poorly mineralised. Three holes indicate significant extensions to the core of the Seruyung system to the south and west, and two holes have yielded new targets for follow-up. The new targets include intersections of 20.8m @ 0.95 g/t Au from 2.7m, 15.5m @ 0.97 g/t Au from surface and 19.0m @ 0.95g/t Au from 23.5m.

The Company is earning an 80 per cent beneficial interest from PT Sago Prima Pratama ("Sago") by funding the project through to a decision to mine. Sago is an Indonesian company that owns 100 per cent of Seruyung and the surrounding area through two national exploration licenses (KP), covering an area of 158 km2. More details on the location of the property are laid out in the figure in the version of this announcement on the Company's website. The key terms of the earn-in agreement are contained in the Company's announcement dated 13 February 2008.

Avocet has completed an initial scout drilling programme consisting of 14 diamond drill holes (1,946 metres). Six holes targeted what is believed to be the core of the Seruyung deposit to assess intercepts reported by Indochina and evaluate the presence of high-grade feeders sub-parallel to the earlier drill holes. The remaining eight holes were drilled to evaluate peripheral targets that previous drilling suggested were poorly mineralised. 

An infill drilling programme designed to develop Inferred Mineral Resources reportable under the JORC Code (2004) will commence should the results from ongoing metallurgical test work prove positive and suggest that the mineralisation responds well to the heap leaching process.  The full results of the current test work will be known by the end of 2009. The Company is also awaiting finalisation of the Implementing Rules and Regulations that will govern the new Indonesian Mining Law, which received government approval early in 2009. The new Mining Law provides a transparent mechanism for foreign companies to hold direct equity in mining and exploration projects. The Company is pleased to be working with local officials during this year of transition to clarify many of the uncertainties with the new law and map a path towards mine development. 

Jonathan Henry, Chief Executive Officer, commented:

"These initial results highlight the potential of the Seruyung deposit and demonstrate Avocet's ability to identify potential resources that can underpin the organic growth of the Company. Indonesia continues to be a place of significant opportunity for mining companies and we look forward to announcing further progress on Seruyung and our other assets in the region in due course." 

Competent Person Statement

All references to resources and exploration results have been reviewed and approved for release by Mr Peter Flindell, BSc (Hons) MAusIMM, Chief Geologist for Avocet, who has more than 20 years experience in the field of activity concerned and is a Competent Person as defined by the JORC Code (2004). He has consented to the inclusion of the technical information in this announcement in the form and context in which it appears. 

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 in Malaysia (as 100 per cent owner of the Penjom mine, the country's largest gold producer), in Indonesia (as 80 per cent owner of the North Lanut gold mine and Bakan project in North Sulawesi), and in Burkina Faso (as 90 cent owner of the Inata gold project currently under construction) together with exploration projects in six countries (Malaysia, Indonesia, the Philippines, Burkina Faso, Mali and Guinea).

Background to operations

Penjom is Malaysia's largest gold producer and was developed by Avocet after applying modern technology to grass roots exploration in an area of historic alluvial mining. The mine is located in Pahang State, approximately 120 km north of the country's capital, Kuala Lumpur. The mine was commissioned in December 1996 with reserves of 223,000 ounces. Successful resource development means Penjom has produced over one million ounces of gold to date and still has nearly one million ounces of resource. Over the last two years Penjom has expanded its mining and plant capacity with plant throughput increasing from 570,000 to over 700,000 tonnes per annum to compensate for decreasing mined grades. Avocet was able to overcome initial problems of carbonaceous ore at Penjom by developing unique processing systems including complex gravity circuits and resin-in-leach ("RIL") technology. These processes have potential applications at other carbonaceous orebodies.

North Lanut in North Sulawesi, Indonesia, was developed by Avocet from the exploration stage and has produced over 220,000 ounces since it was commissioned in 2004. Avocet purchased an 80 per cent interest in PT Avocet Bolaang Mongondow ("PT ABM"), an Indonesian company holding a 6th generation Contract of Work ("CoW"), from Newmont Mining Corporation in 2002. North Lanut is located within the CoW, which includes exploration and mining rights over approximately 50,000 hectares in an area highly prospective for gold. An Indonesian company, PT Lebong Tandai, owns the remaining 20 per cent. The Company has a number of other advanced development and exploration projects in Indonesia.

The Inata gold project in Burkina Faso, West Africa, is currently under construction, with first gold production expected in late 2009, and full steady state production in FY2011. Inata is expected to produce greater than 120,000 ounces of gold per annum over an initial seven year mine life. 

Table 1 - Significant intercepts